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Home My WebLink AboutCAFR-2010 COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF BROOKLYNCENTER, MINNESOTA Cornelius L. Boganey City Manager Prepared By: FINANCE DIVISION DEPARTMENT OF FISCAL &SUPPORT SERVICES Daniel Jordet Director Clara Hilger Assistant Finance Director FOR THE YEAR ENDED DECEMBER 31, 2010 97 (Member of Government Finance Officers Association of the United States and Canada) blank page -T Table of Contents INTRODUCTORY SECTION Letter of Transmittal 1 Principal Officials 7 Organizational Chart 8 Certificate of Achievement 9 FINANCIAL SECTION Independent Auditor's Report 11 Management's Discussion and Analysis 13 Basic Financial Statements: Statement of Net Assets 23 Statement of Activities 24 Governmental Funds Balance Sheet 28 Reconciliation of the Balance Sheet of the Governmental Funds to the Statement of Net Assets 31 Statement of Revenues, Expenditures, and Changes in Fund Balances 32 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of the Governmental Funds to the Statement of Activities 35 Proprietary Funds Statement of Net Assets 36 Statement of Revenues, Expenses, and Changes in Fund Net Assets 38 Statement of Cash Flows 40 Notes to the Financial Statements 43 Required Supplementary Information: Budgetary Comparison Schedule - General Fund 75 Budgetary Comparison Schedule -Tax Increment District No. 3 80 Schedule of Funding Progress — Other Post Employment Benefits 81 Note to Required Supplementary Information 82 Combining and Individual Fund Statements and Schedules: Nonmaj or Governmental Funds Combining Balance Sheet 86 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 87 Combining Balance Sheet - Nonmaj or Special Revenue Funds 88 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Special Revenue Funds 90 i FINANCIAL SECTION (Continued) Combining Balance Sheet - Nonmaj or Capital Project Funds 92 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmaj or Capital Project Funds 94 Schedule of Revenues, Expenditures, and Changes in Fund Balance- Budget and Actual: Major Funds: Debt Service Fund -G.O. Improvement Bonds 96 Debt Service Fund -Tax Increment Bonds 97 Capital Project Fund - Infrastructure Construction 98 Nonmaj or Funds: Special Revenue Fund - Housing and Redevelopment Authority 99 Special Revenue Fund - Economic Development Authority 100 Special Revenue Fund -Earle Brown Tax Increment District 101 Special Revenue Fund -Tax Increment District No. 4 102 Special Revenue Fund - Community Development Block Grant 103 Special Revenue Fund -City Initiatives Grant 104 Debt Service Fund - General Obligation Bonds 105 Capital Project Fund - Capital Improvements 106 Capital Project Fund - Municipal State Aid for Construction 107 Capital Project Fund -Earle Brown Heritage Center Improvements 108 Capital Project Fund - Street Reconstruction 109 Capital Project Fund - Technology 110 Nonmaj or Enterprise Funds Combining Statement of Net Assets 112 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets 113 Combining Statement of Cash Flows 114 Internal Service Funds Combining Statement of Net Assets 116 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets 117 Combining Statement of Cash Flows 118 ii STATISTICAL SECTION (unaudited) Net Assets by Component 120 Changes in Net Assets 122 Governmental Activities Tax Revenue by Source 129 Fund Balances — Governmental Funds 130 Changes in Fund Balances — Governmental Funds 132 Assessed Tax Capacity and Estimated Actual Value of Taxable Property 134 Property Tax Rates — Direct and Overlapping Governments 136 Principal Property Taxpayers 138 Property Tax Levies and Collections 139 Ratios of Outstanding Debt by Type 140 Ratios of General Bonded Debt Outstanding 141 Computation of Direct and Overlapping Debt 142 Legal Debt Information 143 Pledged Revenue Coverage 144 Demographic and Economic Statistics 146 Principal Employers 147 Full Time City Government Positions by Function 148 Operating Indicators by Function 149 Capital Asset Statistics by Function 150 iii mj" This page has been left blank intentionally. iv City of Brooklyn Center A Millennium Community June 1, 2011 Honorable Mayor and Members of the City Council City of Brooklyn Center Transmitted herewith is the Comprehensive Annual Financial Report of the City of Brooklyn Center for the fiscal year ended December 31, 2010. Management of the City of Brooklyn Center assumes full responsibility for the completeness and reliability of the information contained in this report based on the current system of internal control . Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. Minnesota Statutes and City Charter Section 7.12 require that the financial statements of the City of Brooklyn Center be audited annually by the State Auditor or a certified public accountant selected by the City Council. These financial statements have been audited by Malloy, Montague, Karnowski, Radosevich, & Co., P.A. (MMKR). Their opinion is included in the financial section of this report. In addition, MMKR is required to issue an opinion on the City's management and accounting for grant funds from the federal government, often called the " "Single Audit" report. That report is required for 2010 because the City received more than $ 500,000 in total federal grants and has been issued under separate cover. Management's Discussion and Analysis (MD&A) immediately follows the independent auditor's report and provides a narrative introduction, overview, and analysis of the basic financial statements. Management's Discussion and Analysis complements this letter of transmittal and should be read in conjunction with it. Profile of the City of Brooklyn Center The City of Brooklyn Center was incorporated in 1911. It is a northern suburb of the Twin Cities metropolitan area, adjacent to the City of Minneapolis and located 10 miles from its downtown area. The City is wholly within Hennepin County and covers an area of about 8.5 square miles. The Mississippi River forms the City's eastern boundary. 6301 Shingle Creek Parkway Recreation and Community Center Phone & TDD Number Brooklyn Center, MN 55430 -2199 (763) 569 -3400 City Hall and TDD Number (763) 569 -3300 FAX (763) 569 -3434 FAX (763) 569 -3494 www. cityofbrooklyncenter. org The City has operated under the council- manager form of government since the adoption of the City Charter in 1966. The governing body is comprised of the Mayor and four Council Members elected at large. All members serve four -year terms with two of the Council Members standing for election during each national election year cycle. The Mayor and Council Members hire a City Manager who runs the daily operations of the City. The City provides a full range of municipal services to its citizens. These include police and fire protection and services, zoning and code enforcement, municipal planning, parks, recreation activities, construction and maintenance of streets, provision of water, wastewater collection and treatment, stormwater collection and treatment, and street lighting. Community and economic development are facilitated through a Housing and Redevelopment Authority and an Economic Development Authority. The Boards of those two organizations are comprised of the Mayor and members of the City Council. The City also has internal departments providing human resources, engineering, financial management and information technology support to these various functions. The City operates a conference and meeting facility at the Earle Brown Heritage Center, two municipal liquor stores, and Centerbrook, a nine -hole executive golf course. Financial planning and control for the City of Brooklyn Center is based on the Annual Operating Budget and the multi -year Capital Improvement Program. Under Minnesota Statutes, a preliminary property tax levy must be adopted no later than September 15 of each year for the ensuing year's collection. This establishes a maximum levy that may subsequently be lowered but not raised. A levy limit ceiling on that levy is established from time to time by the Minnesota Legislature. The ceiling is normally exclusive of levies for debt service and referendum approved levies. In recent years the Legislature has also exempted police and fire compensation and recapture of State aid dollars lost to changing State budget priorities. Effective establishment of this levy requires that a preliminary budget be prepared. The City Manager prepares such a budget each summer and presents it to the City Council in August, prior to the consideration of the preliminary tax levy. In addition, the City Council reviews the recommended rates and charges for utility funds and other operations on an annual basis as part of the budget process. Citizens receive a notice of taxes proposed for their individual properties in November based on the preliminary levies established by all taxing districts. Following the receipt of this notice citizens are invited to public hearings in each jurisdiction. The City's hearing includes information about the budget, the property tax levy and the priorities of the City Council for the coming year as made evident by the budget allocations. Public comment is received and considered at this hearing. The final property tax levy and the resulting operational budgets for the ensuing fiscal year are adopted at a subsequent meeting. In addition, a Capital Improvement Program is reviewed and revised during the budget process each year. This includes projects for which the City may issue debt and /or assess portions of the cost to adjacent or benefited property owners. Because there 2 are limited funds available each year and the City does not wish to issue excessive amounts of debt, these projects must be reviewed and reprioritized each year. Local Economy Brooklyn Center is a mature, fully developed first ring suburb of Minneapolis that is working to revitalize itself. With its affordable housing, excellent schools, beautiful parks, and convenient transportation access it has the attributes to continue as a vibrant community for many years to come. The City experienced its most rapid growth from 1950 to 1970 when the City's population grew from 4,300 to its peak of 35,173. The State Demographer estimates the population for Brooklyn Center at 29,810 as of April, 2009. The number of housing units has decreased from 11 in 1990 to an estimated 11 units in 2009. As in most mature, first -ring suburbs there is a slight trend toward conversion of single family homes to rental properties. The total taxable market value of real and personal property within the City decreased 11.19% for 2010 valuations. Residential housing, which makes up 54.48% of the overall tax capacity base, decreased 11.94% in value while the commercial and industrial portions of the tax base decreased 11.70% and 9.83% in value respectively. Values in all portions of the tax base are expected to drop in the foreseeable future. However, the proportionate makeup of the property tax base will remain relatively stable. Therefore, property tax burden is not expected to shift significantly between classifications of property. Residential foreclosures and vacant properties were another facet of the economic outlook for the City in 2010. 283 or 3.64% of non - apartment residential properties in the City went to Sheriff's Sale during 2010 with 135 of those properties still in the redemption period as of December 31, 2010. Vacant residential properties as of that same date numbered 387 or 4.97% of the City's non - apartment residential housing. Major transportation routes in and through the City, including Interstates 94 and 694, and State Highways 100 and 252, have provided a continued impetus for development of a strong commercial tax base in the City along these corridors. There are no large, undeveloped tracts of land in Brooklyn Center and no potential for annexation of additional undeveloped land. Therefore, the revitalization of Brooklyn Center is proceeding on three tracks: repurposing and renewal of the commercial areas of the City; reconstruction and enhancement of its streets, utilities, and parks; and the revitalization of neighborhoods. The hospitality industry contributes a significant amount to Brooklyn Center's economy. Lodging tax provided over $ 365,000 for 2010 fiscal year operations. An Embassy 3 Suites hotel facility, opened in 2009, w i l l be connected with the City's Earle Brown Heritage Center, a meeting, conference and event facility. This w i l l enhance and complement the conference facility operations. The State of Minnesota has provided significant funding to local governments through the Local Government Aid (LGA) and Market Value Homestead Credit (MVHC) programs over the past three decades. Projected funding shortfalls at the State budgetary level have affected the distribution of LGA and MVHC negatively. During 2009, the City lost $ 463,502 or about 31% of its certified LGA. In 2010 the State again reduced City aid funding during the fiscal year through unallotment of $ 504,022 in MVHC. Consequently, the City amended its operating budget in mid -year to reflect the loss of State Aid and to rebalance the operating budget. Long Term Financial Planning As part of a planned replacement of the aging infrastructure, the City continued the program for street and utility improvements in 2010 by reconstructing Dupont Avenue and portions of the Twin Lakes /Lakeview neighborhood. When streets are reconstructed in this program, aging water, sanitary and storm sewer infrastructure is also repaired or replaced. These improvements are funded by a combination of general obligation improvement bonds supported with special assessments against benefited properties and cash from the capital projects funds and utility enterprise funds. About one twenty -fifth of the City's streets and utilities are reconstructed each year. It is expected that this will be an ongoing process. The Capital Improvements Plan projects completion of the first citywide round of reconstruction of the streets and utilities throughout the entire community by 2021. An additional benefit of these neighborhood projects has been the increased activity by residents in the maintaining and cleaning up of their properties following reconstruction projects. Additionally, the City worked cooperatively with Hennepin County to upgrade streetsca pi ng, trail access, stormwater treatment and general safety along Bass Lake Road. This project included $ 2,000,000 of ARRA federal economic stimulus funding. The development of utility rate models has improved the City's ability to plan and generate cash flow for the scheduled improvements to the water and sewer systems. Separate funds for street lighting and stormwater drainage have also helped control and prioritize infrastructure improvements and operations in these areas. Major Initiatives Redevelopment continues to be the key to commercial and industrial tax base growth. The City acquired and cleared 14 acres of property adjacent to the intersection of Highway 100 and Interstate 94. This created a redevelopment site where, in the 4 summer of 2010, construction began on 140,000 square feet of Class A office space which will become the regional headquarters of the Federal Bureau of Investigation. A 14 acre redevelopment site at the intersection of Logan and 57 Avenues has encountered delays because of environmental clean -up of contaminants from a dry cleaning establishment. The extent of the contamination has been established and remediation is underway. Redevelopment proposals are being solicited for the site. The Brookdale Shopping Center, formerly a regional retail shopping mall, was closed in the spring of 2010 and subsequently sold. The new owners are working in concert with City officials to develop a new concept for the site with a large free standing retail anchor store and several additional shops and restaurants. Included in the plan is a reorientation of Shingle Creek in an effort to incorporate this important feature into the redeveloped property. Relevant Financial Policies The City of Brooklyn Center includes in its Financial Policies, as adopted by the City Council, a requirement that the General Fund balance at year end must be between 50% and 52% of the ensuing year's General Fund operating budget. This provides both for cash flow needs and emergency expenditures in the short term. Also included in the Financial Policies are internal control directives to protect the City's assets from loss, theft or misuse. These controls provide reasonable assurance of the safety of the City's assets while recognizing that management estimates and judgments as to the cost of such controls are also important to deriving maximum benefit from these controls. Because of the recent and ongoing instability of State aid payments, the policy requiring a balanced budget has been instrumental in dealing with mid -year adjustments in State aid funding projections. Budgets in both 2009 and 2010 were subject to major mid- year revisions and amendment which protected the City operations from deficit operational spending. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Brooklyn Center for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended December 31, 2009. The City was first awarded this certificate in 1966. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized CAFR. The CAFR must satisfy both accounting principles generally accepted in the United States and applicable federal, state and local legal requirements. 5 A Certificate of Achievement is valid for a period of one year. It is expected that the 2010 report conforms to Certificate of Achievement Program requirements. It w i l l be submitted to the GFOA to determine its eligibility for another certificate. The preparation and publication of this report would not have been possible without the efficient work of the Finance staff, most especially Clara H i lger, the Assistant Finance Director. We would like to acknowledge all staff that contributed their efforts to the Finance operations in 2010. We would also like to thank the Mayor and City Council for their support in promoting and maintaining the highest standards of professionalism and management of the City of Brooklyn Center. Respectfully Submitted, Cornelius L. Boganey Daniel Jerdet City Manager Di rector of Fiscal & Support S ervices 6 CITY OF BROOKLYN CENTER, MINNESOTA PRINCIPAL OFFICIALS December 31, 2010 Name Position Term of Office Term Expires ELECTED OFFICIALS Tim Willson Mayor Four Years December 31, 2010 Kay Lasman Council Member Four Years December 31, 2012 Tim Roche Council Member Four Years December 31, 2012 Dan Ryan Council Member Four Years December 31, 2010 Mark Yelich Council Member Four Years December 31, 2010 APPOINTED OFFICIALS Cornelius L. Boganey City Manager Appointed Charles LeFevre City Attorney Contractual Appointee Sharon Knutson City Clerk Appointed Vickie Schleuning Assistant City Manager /Building and Community Standards Director Appointed Kevin Benner Police Chief Appointed Steve Lillehaug Director of Public Works /City Engineer Appointed Lee Gatlin Fire Chief Appointed James Glasoe Community Activities, Recreation and Services Director Appointed Gary Eitel Business and Development Director Appointed Daniel Jordet Director of Fiscal and Support Services Appointed 7 City of Brooklyn Center Organization 2010 Electorate City Council Advisory Commissions Administration City Attorney City Manager • Human Resources/Payroll • Communications • Information Technology • Elections • Licenses • City Clerk 00 Public Works Police Department Community Activities, BuildinLF and Community • Engineering •Patrol Recreation, and Services Standards • Street Maintenance • Investigation • Community Programs • Building Inspections • Sanitary Sewer • Crime Prevention • Recreation Programs • Code Enforcement • Central Garage • Community Programs • Community Center • Storm Sewer • Support Services • Government Buildings • Water Department • Golf Course • Park Maintenance • Earle Brown Heritage Center Fire Department Fiscal and Support Services Business and Development • Fire Prevention • Accounting • Economic Development • Fire Suppression • Audit • Housing & Redevelopment • Emergency Preparedness • Utility Billing Authority • Risk Management • Planning and Zoning • Liquor Stores • Assessing Certificate of Achievement for Excellence in Financial Reporting Presented to City of Brooklyn Center Minnesota For its Comprehensive Annual Financial Report for the Fiscal Year Ended December 31, 2009 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. 3A E 0- iL � t�FW �NITE��TA��S � CO TI q l NU TION President Executive Director 9 m E7 This page has been left blank intentionally. 10 PRINCIPAIS� ThmrnasM. Monta CPA M Thomn /�xnmo^��Cpx Paul A.u.ui"se.ich, CPA NXIu|/amJ.|�uer,CPA C ExT Ip/E UuL/C ]anicse.Ei"hten, CPA ACC 0DN T'ANTS /iron]. Nielsen, CPA victoauL.nolinki, CPA INDEPENDENT AUDITOR'S REPORT To the City Council and Resident City of Brookl Center Minnesota We have audited the accompanyi financial statements of the governmental activities, the business-type activities, each major fund" and the aggregate remaining fund information of the City of Brooklyn Center (the City) as of and for the year ended December 31" 2010" n4zicb collectively comprise the City's basic financial statements as listed inthe table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express opinions on these financial statements based on our audit. YVe conducted our audit in accordance with auditi standards generally accepted in the United States of &rncrico and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as ubosis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressi on opinion on the effectiveness of the Chv"m internal control over financial report' Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the account princi used and significant estimates made by management, os well as evaluati the overall financial statement presentation. We believe that our audit provides ureomonable basis for our opinions. In our opinion" the financial u1oternen1u referred to above present fairly, in all material respects, the respective financial position ofthe governmental activities, the business-type activities, each major fund" and the aggregate remaining fund information of the City as of December 3l" 2010" and the respective changes in financial position and coub flows, vvben: applicable then:of for the year then ended, in conformity with accounti princi generally accepted inthe United States of America. |o accordance with Government Auditing Standards, vve have also issued a report dated May 26"20ll on our considerat of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, n:oulohonu" oontozotu" 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 n:suhy of that testi and not to provide an opinion on the internal control over financial reporting or on compliance. This report ivan integral part ofan audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. (continued) xx,[[ur. Mm"c=g"= Kurnm~,ski. Ila6osevic6 & Co. P.A. 5353 Wayzata a""/=,a"u � s"*= 410 9 Minneapolis, MN 55416 ~'lci"ph""=. 952'54»-0424 ^ Tc|=f",. 952-545-0569 ^ w~'.mmk,.="'" Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, which follows this report letter, and the required supplementary information, which follows the notes to basic financial statements, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with the management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements as a whole. The introductory section, combining and individual fund statements and schedules, and statistical section, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund statements and schedules are the responsibility of management and were derived from and relate directly to the underlying and accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. -J'e. ejo, ev. c4 May 26, 2011 12 MANAGEMENT'S DISCUSSION AND ANALYSIS As management of the City of Brooklyn Center (the City), we offer readers of the City of Brooklyn Center's Comprehensive Annual Financial Report (CAFR) this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2010. 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 6 of this CAFR. Financial Hi2hli2hts • The assets of the City exceeded liabilities by a 5.3 to 1 margin at the close of the most recent fiscal year. Current assets exceed current liabilities by a 9.4 to 1 margin. The $ 121,505,655 of net assets includes cash and investments, streets, buildings, equipment, land and other City assets. Of this amount, $ 16,333,757 is classified as unrestricted net assets which may be used to meet the government's ongoing obligations to citizens and creditors in accordance with the City's fund designations and fiscal policies. • The City's total net assets increased by $ 3,711,256 or 3.2% from 2009 to 2010. • As of the close of the current fiscal year, the City's governmental funds reported combined ending fund balances of $ 25,518,303. Of this total amount, $ 27,748,475, or 109% is designated or reserved through legal restrictions and City Council authorization. • At the end of the current fiscal year the general fund balance of $ 8,830,347 included $ 1,774 reserved for committed contracts, $ 24,131 reserved for inventories, $ 500 reserved for prepaid items, $ 8,529,338 designated for cash flow purposes, and $ 274,604 undesignated. • The City's total outstanding debt decreased by $ 1,995,000 during the current fiscal year, from $ 25,385,000 to $ 23,39000. Overview of the Financial Statements The discussion and analysis are intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements include three components: 1) government -wide financial statements, 2) fund financial statements, and 3 ) notes to the financial statements. This CAFR also contains other supplementary information in addition to the basic financial statements themselves. Government -wide financial statements. The government -wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a consolidated financial statement. The statement of net assets presents information on all of the City's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave). Both of the government -wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City include general government, public safety, public works, community services, recreation and economic development. The business - type activities of the City include water and sewer, street lighting, liquor operations, golf course, convention center, storm drainage and recycling. The government -wide financial statements can be found on pages 23 through 25 of this CAFR. 13 Management's Discussion and Analysis Fund Financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. All of the funds of the City can be divided into two categories: governmental funds and proprietary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near -term inflows and outflows of spendable resource, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near -term financial requirements. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statement. By doing so, readers may better understand the long -term impact of the City's near -term financial decisions. Both the governmental fund balance sheet and governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains nineteen individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General fund, Tax Increment District No. 3 special revenue fund, the G.O. Improvement Bonds debt service fund, the Tax Increment Bonds debt service fund, and the Infrastructure Construction capital project fund, which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmaj or governmental funds is provided in the form of combining statements elsewhere in this CAFR. The basic governmental fund financial statements can be found on pages 28 through 35 of this CAFR. Proprietary funds. The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business -type activities in the governmental -wide financial statements. The City uses enterprise funds to account for its municipal liquor, golf course, Earle Brown Heritage Center, water, sanitary sewer, storm drainage, recycling /refuse, and street lighting operations. Internal service funds are an accounting device to accumulate and allocate costs internally among the City's various functions. The City uses internal service funds for its central garage, employee retirement, and compensated absences. Because all of these services predominantly benefit governmental rather than business -type functions, they have been included within the governmental activities in the government -wide financial statements. Proprietary funds provide similar information to the government -wide financial statements but in more detail. The proprietary fund financial statements provide separate information for the municipal liquor, golf course, Earle Brown Heritage Center, water utility, sanitary sewer utility, and storm drainage utility operations, each of which are considered to be major funds of the City. Conversely, all internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. The basic proprietary fund financial statements can be found on pages 36 through 41 of this CAFR. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government—wide and fund financial statements. The notes to the financial statements can be found on pages 43 through 73 of this CAFR. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information on budgetary compliance for its major funds and a schedule of funding progress for other postemployment benefits (OPEB). The City adopts an annual appropriated budget for its general, special revenue, debt service, and capital project funds. A budgetary comparison statement has been provided for the general and major special revenue fund to demonstrate compliance with this budget. These can be found on pages 75 through 80 of this CAFR. The schedule of funding progress can be found on page 81 of this CAFR. 14 Management's Discussion and Analysis The combining statements referred to earlier in connection with nonmaj or governmental funds, nonmaj or enterprise funds, and internal service funds are presented immediately following the required supplementary information on budgetary comparisons. Combining and individual fund statements and schedules can be found on pages 86 through 118 of this CAFR. Government -wide Financial Analysis As noted earlier, net assets may serve over time as a useful indictor of a government's financial position. In the case of the City, assets exceeded liabilities by $ 121,505,655 at the close of the most recent fiscal year. The largest portion of the City's net assets ($ 83,104,172 or 68 percent) reflects its investment in capital assets (e.g. land, infrastructure, buildings, machinery, and equipment) less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. CITY'S NET ASSETS Governmental Activities Business -type Activities Total 2010 2009 2010 2009 2010 2009 Current and other assets $ 48,783,211 $ 55,797,109 $ 11,997,697 $ 9,783,325 $ 60,780,908 $ 65,580434 Capital assets 46,333,548 40,296,371 420024 42,297,110 89,134,172 82,593481 Total assets 95,116,759 96,093480 54,798,321 5200435 149,91500 148,173,915 Long -term liabilities outstanding 19,739,004 22,312,824 2,21000 - 21,949,004 22,312,824 Other liabilities 5,345,892 7,119,011 1,114,529 94701 6460421 8,06602 Total liabilities 2504,896 29,431,835 3,324,529 94701 28409425 30,379,516 Net assets: Invested in capital assets, net of related debt 40,978,165 33,55004 420024 42,297,110 83,104,172 7503481 Restricted 22,067,726 29,027,991 - - 22,067,726 29,027,991 Unrestricted 6,985,972 402,990 8,673,168 8,835,644 16,333,757 13,762,927 Total net assets $ 70,031,863 $ 6601,645 $ 51473,792 $ 51,132,754 $ 121,505,655 $ 117,794,399 As of the close of the current year, there is $ 674,617 in G.O. Improvement Bond debt included in the long -term liabilities outstanding reported in the Governmental Activities that was issued to finance capital assets reported in the Business -type Activities. This amount is not used to reduce invested in capital assets net of related debt in the Governmental Activities. Neither does it reduce invested in capital assets of the Business -type Activities. However, it does reduce the invested in capital assets, net of related debt in the total column. A portion of the of the City's net assets represents resources that are subject to external restrictions on how they may be used. These restrictions include debt payment from assessments and taxes collected, and tax increments collected for qualified projects. The remaining balance of unrestricted net assets ($ 16,333,757) may be used to meet the City's ongoing obligations. At the end of the current fiscal year, the City is able to report positive balances in all three categories of net assets, both for the government as a whole, as well as for its separate governmental and business -type activities. The same was true for the prior fiscal year. Current assets decreased in the governmental activities primarily due to the additional costs to prepare redevelopment property for sale. In addition, the City postponed issuing debt to fund the 2009 and 2010 construction projects. Funds on hand and interfund borrowing were used to pay for the projects until the debt is issued. Capital assets increased due to new capitalized assets exceeding depreciation on existing assets for the year. Total liabilities decreased due to the payment of principal and interest payments on bonded debt as scheduled. The decrease in restricted net assets can be attributed to costs associated with the acquisition of redevelopment property in excess of the estimated net realizable value of that property. 15 Management's Discussion and Analysis Current assets in the business -type activities increased due to the issuance of utility revenue bonds to finance the project to install auto -read meters in all properties on the City's water system in 2009. Total liabilities increased significantly also due to the issuance of the utility revenue bonds. These liabilities will be paid from future utility revenue collections. Governmental Activities Governmental activities resulted in an increase of the City's net assets by $ 3,370,218, while the increase in total net assets was $ 3,711,256. Key elements of the changes are as follows: CITY'S CHANGES IN NET ASSETS Governmental Activities Business -type Activities Total 2010 2009 2010 2009 2010 2009 Revenues: Program revenues: Charges for services $ 3,358,121 $ 3,104,292 $ 11,035,798 $ 10,939,435 $ 14,393,919 $ 14,043,727 Operating grants and contributions 2,013,099 1,034,905 - - 2,013,099 1,034,905 Capital grants and contributions 6,627,777 1,566,224 - - 6,627,777 1,566,224 General revenues: Property taxes 12M%069 12,899,250 - - 12M%069 12,899,250 Other taxes 3,824,119 4,207,448 - - 3,824,119 4,207,448 Grants and contributions not restricted to specific programs 411,378 1,019,990 - - 411,378 1,019,990 Unrestricted investment earnings 3305 309,715 20,707 87,499 54,592 397,214 Gain on sale of assets - 40,632 - - - 40,632 Total revenues 29,217,448 24,182,456 11,056,505 11,026,934 40,273,953 35,209,390 Expenses: General government 3,553,737 3,653,956 - - 3,553,737 3,653,956 Public safety 9,125,547 9,036,176 - - 9,125,547 9,036,176 Public works 2,747,641 207,980 - - 2,747,641 207,980 Community services 82,645 71,519 - - 82,645 71,519 Parks and recreation 2,732,401 2,773,528 - - 2,732,401 2,773,528 Economic development 6,504,034 2,151,916 - - 6,504,034 2,151,916 Interest on long -term debt 974,950 1,143,546 - - 974,950 1,143,546 Municipal liquor - - 1,262,076 1,249,946 1,262,076 1,249,946 Golf course - - 317,539 323,340 317,539 323,340 Earle Brown Heritage Center - - 2,345,920 2,36305 2,345,920 2,36305 Recycling and refuse - - 278,381 276,058 278,381 276,058 Street light utility - - 213,752 220,020 213,752 220,020 Water utility - - 1,792,628 3,448,819 1,792,628 3,448,819 Sanitary sewer utility - - 3,282,472 3,736,989 3,282,472 3,736,989 Storm drainage utility - - 1,348,974 1,282,505 1,348,974 1,282,505 Total expenses 25,720,955 21,518,621 10,841,742 12,900,762 36,56207 34,419,383 Increase in net assets before transfers 3,496,493 203,835 214,763 (1,873,828) 3,711,256 790,007 Trans fers (126,275) 3207 126,275 (32,697) - - Change in net assets 3,370,218 206,532 341M38 (1,906,525) 3,711,256 790,007 Net assets - January 1 6601,645 63,965,113 51J32,754 53,039,279 117,794,399 117,004,392 Net assets - December 31 $ 70,031,863 $ 6601,645 $ 51,473,792 $ 51J32,754 $ 121,505,655 $ 117,794,399 16 Management's Discussion and Analysis In the Governmental Activities, operating grants and contributions increased due to an additional $ 100,000 received for protective inspection related to activities performed in the area of code enforcement. In addition, $ 839,000 in federal funds were received in 2010 under the Community Development Block Grant and Neighborhood Stabilization Grant programs. Capital grants and contributions increased due to three major street reconstruction projects that were funded by $ 2,000,000 in federal funds, $ 2,430,000 in state and local grant funds, and $2,177,000 in special assessments. Non - restricted grants and contributions decreased due to a decrease in the general aid received from the State. Unrestricted investment earnings decreased due to the sharp decline in rates earned on investments in 2010 in comparison to those earned in 2009 and in prior years. Economic development expenses increased due to the purchase of property for redevelopment and the continuation of the housing rehabilitation program funded by tax increment. Below are specific graphs which provide comparisons of the governmental activities revenues and expenses: Governmental Activities - 2010 Revenues Other revenues Unrestricted investment 1.4% earnings Other taxes 0.1% Charges for services 11.5% Operating grants and contribtutions 6.9% Property taxes 44.3% Capital grants and contributions 22.7% Governmental Activities - 2010 Expenses Economic development 25.3% nterest on long-term debt 3.8% F General government 13.8% Parks and recreation 10.6 % Community services 0.3% Public works Public safety 10.7% 35.5% 17 Management's Discussion and Analysis Business - typ e activities Business -type activities increased net assets by $ 341,038. Below are graphs showing the business -type activities revenue and expense comparisons: Business -type Activities - 2010 Revenues Storm drainage utility 14.3% on -major enterprise 4.9% _ Unrestricted investment .g earnings rs,e �r 0.2% Sanitary sewerutility, �- 30.0% `� �� '.r unicipalliquor -- -- -c 13.9% Golf course r 2.0% k arle Brown Heritage Center Water utility 17.0% 17.7% Business - type Activities - 2010 Expenses Storm drainage utility 12.4% Non -mayor enterprise 4.5% unicipal liquor 11.6% Sanitary sewerutility 30.4% Golf course 2.9% Earle Brown Heritage Water utility Center 21 7% 16.5% Water Utility and Sanitary Sewer Utility expenses decreased due to the costs associated with the replacement of the water meters in 2009. 18 Management's Discussion and Analysis Financial Analysis of the Government's Funds Governmental Funds. The focus of the City's governmental funds is to provide information on near -term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unreserved fund balance may serve as useful measure of a government's net resources available at the end of the fiscal year. At the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $ 25,518,303. Approximately 29% of this amount, $ 7,414,893, is reserved (restricted in its use) because it has already been committed to specific uses by outside influences or action of the City Council; 1) $ 3,904,119 to provide for debt service, 2) $ 792,488 for advances to other funds, 3) $ 875,436 for committed contracts, 4) $ 500 for prepaid items, 5) $ 24,131 for inventories, and 6) $ 1,818,219 for statutory housing obligation. The unreserved fund balance of $ 18,103,410 includes designations of 1) $ 8,529,338 for general fund working capital, 2) $ 6,949,818 for economic development, and 3) $ 4,854,426 for capital improvements. The remaining deficit balance of $ 2,230,172 is undesignated and unreserved. The general fund is the primary operating fund of the City. At the end of the current fiscal year, total fund balance reached $ 8,830,347, of which 97% ($ 8,555,743) 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 57% of total general fund expenditures for 2010. The fund balance of the City's general fund increased by $ 300,342 in 2010. This increase was due in large part to a building permit for the redevelopment of a parcel of land previously owned by the City. Additionally, reductions in expenditures in several departments occurred due to positions not being filled immediately after a vacancy. Additional federal funds were received in 2010 for protective inspection activities performed in the area of code enforcement. The Tax Increment District No. 3 fund had a total fund balance of $ 3,888,167 at the end of 2010. The net decrease in the fund balance was $ 4,287,264. This decrease was due to the expenditure of funds for the statutory housing program and for the relocation of utility services on properties held for resale. The G.O. Improvement Bonds fund had a fund balance of $ 2,708,004 at the end of 2010, all of which was reserved for debt service. The net decrease in fund balance for 2010 was $ 346,052, which was due to the use of collections in previous years to pay the scheduled bond principal and interest payments. The Tax Increment Bonds Fund had a fund balance of $ 0 at the end of 2010. The net change in the fund balance for 2010 was $ 0. Transfers from the Tax Increment District No. 3 fund offset the scheduled bond principal and interest payments. The fund balance of the Infrastructure Construction fund at the end of 2010 is $ (1,796,770); a deficit. This represents a larger deficit than the 2009 fund balance of $ (606,62 1). This additional deficit is due to the City postponing the issuance of improvement debt until 2011 to fund the 2009 and 2010 reconstruction projects. Proprietary funds. The City's proprietary funds provide the same type of information found in the government -wide financial statements, but in more detail. The unrestricted net assets in the respective major proprietary funds are the municipal liquor fund - $ 1,994,458, golf course - $ (894,589), Earle Brown Heritage Center - $ 848,733, water utility - $ 1,436,923, sanitary sewer utility - $ 2,434,608 and storm drainage utility - $ 3,005,573. The increases (decreases) in net assets for the major enterprise funds were: municipal liquor $ 54,125, golf course $ (95,413), Earle Brown Heritage Center $ (343,867), water utility $ 127,585, sanitary sewer utility $ 35,554, and storm drainage utility $ 643,497. General Fund Budgetary Highlights During the year, the City Council reduced the appropriations in the General Fund budget by approximately $ 348,000. This amendment was made in anticipation of cuts in financial aid from the State in 2010. Additional amendments were made to increase the transfers to other funds by $ 326,701 to finance the capital building maintenance projects. Actual revenues and other financing sources exceeded the amended budget by $ 197,837. The major contributors to this were an increase in licenses and permits due to a permit for the redevelopment of a parcel of land previously owned by the City and an increase 19 Management's Discussion and Analysis in federal funds received for code enforcement activities. Actual expenditures and other financing uses were lower than the amended budget for the year by $ 409,206. This resulted from several staff positions being left unfilled during a portion of 2010, lower than expected expenditures in Police Protection, Protective Inspection, Street Department and Park Maintenance, and a conscientious effort to reduce expenditures due to the cuts in state financial aid. Capital Asset and Debt Administration Capital assets. The City's investment in capital assets for governmental and business type activities as of December 31, 2010 totals $ 89,134,172 (net of accumulated depreciation). This investment in capital assets includes land, buildings, infrastructure, machinery and equipment. The total increase in the City's investment in capital assets from 2009 to 2010 was 7.9 percent (15.0 percent increase for governmental activities and a 1.2 percent increase for business -type activities). Major capital asset events during the year included the following: • Two large infrastructure reconstruction projects were completed during the year, with a final total cost of $ 5,869,284. • Two infrastructure reconstruction projects and two major streetscape projects were begun and substantially completed during the 2010. These projects account for $ 11,055,543 in construction -in- progress at the end of the year. CITY'S CAPITAL ASSETS (net of depreciation) Governmental Activities Business -type Activities Total 2010 2009 2010 2009 2010 2009 Land $ 3,537473 $ 3,537473 $ 3,194,983 $ 3,194,983 $ 6,732456 $ 6,732456 Construction in progress 9,198,436 4,155,434 3,028,670 2,990,969 12,227,106 7,146,403 Land improvements - - 207,935 222,586 207,935 222,586 Other park improvements 1,384,932 874,595 - - 1,384,932 874,595 Buildings and structures 10,062,177 10,77901 5484,252 6,186,552 15,546429 16,966433 Departmental equipment 3,707,178 3,968,016 191,582 187424 3,898,760 4,155,440 Streets 18443,352 16,980,972 - - 18443,352 16,980,972 Street light systems - - 414,727 77,974 414,727 77,974 Mains and lines - - 30,278475 29436,622 30,278475 29436,622 Total $ 46,333,548 $ 40,296,371 $ 420024 $ 42,297,110 $ 89,134,172 $ 82,593481 Additional information on the City's capital assets can be found in Note 4.C. on pages 56 through 57 of this CAFR. Long -term debt. At the end of the current fiscal year, the City had long -term bonded debt outstanding of $ 23,390,000, all of which is backed by the full faith and credit of the government. Of the total outstanding debt, $ 2,025,000 is general obligation bonds payable from directly levied property tax, $ 15,010,000 is tax increment bonds payable with the collected proceeds of tax increment projects, $ 4,005,000 is improvement bonds payable from special assessment levies against individual properties adjacent to the improvements, and $ 2,350,000 is payable from water and sanitary sewer utility revenues. Additional long -term liabilities include $ 1,101,024 for compensated absences, the accumulated vacation and vested sick leave not used by employees at the end of 2010, $ 18,231 for net pension obligation related to the Brooklyn Center Fire Relief Association pension plan, and $ 364,851 for net OPEB obligation related to health insurance costs paid by and for retirees. 20 Management's Discussion and Analysis CITY'S OUTSTANDING DEBT General Obligation Bonds, General Obligation Tax Increment Bonds, General Obligation Improvement Bonds, General Obligation Revenues Bonds, Compensated Absences, Net Pension Obligation, and OPEB Governmental Activities Business -type Activities Total 2010 2009 2010 2009 2010 2009 General obligation bonds $ 2,025,000 $ 2,665,000 $ - $ - $ 2,025,000 $ 2,665,000 General obligation tax increment bonds 15,010,000 17,795,000 - - 15,010,000 17,795,000 General obligation improvement bonds 4,005,000 4,925,000 - - 4,005,000 4,925,000 General obligation revenue bonds - - 2,350,000 - 2,350,000 - Compensated absences 1,101,024 1,091,553 - - 1,101,024 1,091,553 Net pension obligation 18,231 - - - 18,231 - Net OPEB obligation 364,851 290,426 - - 364,851 290426 Total $ 22,524,106 $ 26,766,979 $ 2,350,000 $ - $ 24,874,106 $ 26,766,979 The City's total bonded debt decreased by $ 1,995,000 during the current fiscal year due to the net result of the scheduled payments of bond obligations and the issuance of the 2010A GO Revenue Bonds. The City's bond rating was raised to an AA rating by Standard & Poor's Ratings Services with the issuance of the Taxable General Obligation Utility Revenue Bonds, Series 2010A in March 2010. State statutes limit the amount of general obligation debt a Minnesota city may issue to 3% of total Estimated Market Value. The current debt limitation for the City is $ 56,747,742. Only $ 828,885 of the City's net outstanding debt is counted within the statutory limitation representing about 1.5 percent of the total limit. Additional information on the City's long -term debt can be found in Note 4.F. on pages 61 through 63 of this CAFR. Economic Factors and Next Year's Budget and Rates • The unemployment rate for the City is 8.1 percent at the end of the 2010 fiscal year, which is a decrease from the rate of 8.7 percent a year ago. This compares to the State's average unemployment rate of 6.8 percent and the national average of 9.1 percent. • Redevelopment of the Opportunity Site /Central Business District and other commercial properties will yield net growth in tax base and stability in tax base through mixed use development goals. • Acquisition of strategic properties by the Economic Development Authority of the City will allow redevelopment of those properties to provide both tax base growth and job growth. • Utility rates have been projected into a rolling 15 year model to allow for funding of system maintenance, technology changes and capital repair and replacements while moderating annual rate adjustments. • It is anticipated that mid -term reductions of state financial aid that occurred in 2008, 2009, and 2010 will continue to occur in the foreseeable future. This will adversely affect the operations of the General Fund and require reprioritization of General Fund programs and procedures. All of these factors were considered in the preparation of the City's budget for the 2011 fiscal year. During the year, unreserved fund balance in the general fund increased by $ 301,930. The City's policy is to maintain a General Fund fund balance of 50 to 52 percent of the ensuing year's budgeted General Fund operations. While the unreserved fund balance at 12/31/2010 was 53.67% of the 2011 budgeted expenditures, the amount of fund balance beyond the 52% policy requirement will be retained in the General Fund because of the continuing uncertainties in State financial aid funding. Water utility rates were changed in 2010 to encourage conservation as required by State Statute. The single per thousand gallon charge for water was replaced by a quarterly base charge plus a per thousand gallon charge that increases as the usage increases. Sanitary sewer, storm, and street light utility rates were increased for the 2010 budget year. Residential sanitary sewer rates were increased by 1.0 percent, storm drainage by 1.0 percent, recycling by 6.0 percent, and street lights by 3.0 21 Management's Discussion and Analysis percent. These increases were necessary to ensure that the municipal utilities be self - supporting through revenue, as required by the City charter. These rates along with future projected rate increases are reviewed annually to ensure compliance with the requirements of the charter. Requests for information This financial report is designed to provide a general overview of the City's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Director of Fiscal and Support Services, City of Brooklyn Center, 6301 Shingle Creek Parkway, Brooklyn Center, Minnesota 55430. 22 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF NET ASSETS Statement 1 December 31, 2010 Governmental Business -Type ASSETS Activities Activities Total Cash and investments $ 29 $ 9 $ 39 Receivables: Accounts 302 1 2 Taxes 659 - 659 Special assessments 4 485 4 Internal balances 1 (1 - Due from other governments 3 - 3 Prepaid expenses 500 227 227 Inventories 50 749 799 Assets held for resale 9 - 9 Restricted assets: Cash and investments 50 - 50 Capital assets: Nondepreciable 12 6 18 Depreciable 33 36 70 Total assets 95 54 149 LIABILITIES Accounts payable 431 243 674 Accrued salaries and wages 458 89 548 Due to other governments 46 78 125 Contracts payable 1 117 1 Deposits payable 2 225 227 Accrued interest payable 394 68 462 Unearned revenue 3 151 155 Liabilities payable from restricted assets: Deposits payable 50 - 50 Compensated absences payable: Due within one year 110 - 110 Due in more than one year 990 - 990 Net pension obligation: Due in more than one year 18 - 18 Net OPEB obligation: Due in more than one year 364 - 364 Bonds payable: Due within one year 2 140 2 Due in more than one year 18 2 20 Total liabilities 25 3 28 NET ASSETS Invested in capital assets, net of related debt 40 42 83 Restricted for: Debt service 6 - 6 Tax increment purposes 15 - 15 Unrestricted 6 8 16 Total net assets $ 70 $ 51 $ 121 The accompanying notes are an integral part of these financial statements. 23 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF ACTIVITIES For the Year Ended December 31, 2010 Charges For FUNCTIONS/PROGRAMS Expenses Services Primary government: Government activities: General government $ 3 $ 1 Public safety 9 1 Public works 2 43 Community services 82 442 Parks and recreation 2 725 Economic development 6 5 Interest on long -term debt 974 - Total government activities 25 3 Business -type activities: Municipal liquor 1 1 Golf course 317 219 Earle Brown Heritage Center 2 1 Recycling and refuse 278 283 Street light utility 213 258 Water utility 1 1 Sanitary sewer utility 3 3 Storm drainage utility 1 1 Total business -type activities 10 11 Total primary government $ 36 $ 14 The accompanying notes are an integral part of these financial statements. 24 Statement 2 Program Revenues Net (Expense) Revenue and Changes in Net Assets Operating Capital Primary Government Grants and Grants and Governmental Business -Type Contributions Contributions Activities Activities Total $ 50 $ 19 $ (2 $ - $ (2 933 - (6 - (6 90 6 3 - 3 - - (82,203) - (82,203) 42 - (1 - (1 896 - (5 - (5 - - (974,950) - (974,950) 2 6 (13,721,958) - (13,721,958) - - - 276 276 - - - (98,374) (98,374) - - - (466,018) (466,018) - - - 4 4 - - - 44 44 - - - 167 167 - - - 38 38 - - - 226 226 - - - 194 194 $ 2 $ 6 (13,721,958) 194 (13,527,902) General revenues: Property taxes 12 - 12 Tax increments 3 - 3 Lodging taxes 696 - 696 Grants and contributions not restricted to specific programs 411 - 411 Unrestricted investment earnings 33 20 54 Transfers (126,275) 126 - Total general revenues and transfers 17 146 17 Change in net assets 3 341 3 Net assets - beginning 66 51 117 Net assets - ending $ 70 $ 51 $ 121 25 m E7 This page has been left blank intentionally. 26 FUND FINANCIAL STATEMENTS 27 CITY OF BROOKLYN CENTER, MINNESOTA BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2010 Tax Increment General District No. 3 ASSETS Cash and investments $ 9 $ 3 Receivables: Accounts 66 - Current taxes 100 70 Delinquent taxes 367 57 Special assessments 38 - Due from other governments 26 - Interfund receivable 99 - Prepaid items 500 - Inventories 24 - Advances to other funds - - Asset held for resale - 8 Restricted assets: Cash and investments - performance deposits 50 - Total assets 10 12 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 280 215 Accrued salaries and wages 428 - Due to other governments 34 - Contracts payable 32 - Deposits payable 2 - Interfund payable - - Deferred revenue 406 9 Liabilities payable from restricted assets: Deposits payable 50 - Total liabilities 1 9 Fund balances: Reserved: Advances to other funds - - Committed contracts 1 - Debt service - - Inventories 24 - Prepaid items 500 - Statutory housing obligation - 1 Unreserved: Designated, reported in: General Fund 8 - Special Revenue Funds - 2 Capital Project Funds - - Undesignated, reported in: General Fund 274 - Special Revenue Funds - - Capital Project Funds - - Total fund balances (deficit) 8 3 Total liabilities and fund balances $ 10 $ 12 The accompanying notes are an integral part of these financial statements. 28 Statement 3 G.O. Improvement Infrastructure Other Nonmajor Total Bonds Construction Governmental Governmental $ 2 $ - $ 10 $ 25 - 4 168 240 20 - 9 180 7 - 45 478 2 1 - 4 - 1 2 3 - - 34 134 - - - 500 - - - 24 - - 792 792 - - 537 9 - - - 50 5 2 14 45 425 31 102 415 - - 16 444 - 1 11 46 - 1 61 1 - - - 2 - 1 1 3 2 1 586 14 - - - 50 2 4 2 19 - - 792 792 - 853 19 875 2 - 1,196,115 3 - - - 24 - - - 500 - - - 1 - - - 8 - - 4 6 - - 4 4 - - - 274 - - 145 145 - (2 - (2 2 (1 11 25 $ 5 $ 2 $ 14 $ 45 29 m E7 This page has been left blank intentionally. 30 CITY OF BROOKLYN CENTER, MINNESOTA RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE Statement 4 STATEMENT OF NET ASSETS December 31, 2010 Fund balance - governmental funds is different from net assets - governmental activities because: Total fund balances (Statement 3) $ 25 Capital assets used in governmental activities are not financial resources, and therefore, are not reported in the funds. 42 Other long -term assets are not available to pay for current- period expenditures and, therefore, are deferred in the funds. 14 Long -term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds. (21,453,087) Internal service funds are used by management to charge the cost of certain activities to individual funds. The assets and liabilities are included in the governmental statement of net assets. 9 Net assets of governmental activities (Statement 1) $ 70 The accompanying notes are an integral part of these financial statements. 31 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended December 31, 2010 Tax Increment General District No. 3 REVENUES Property taxes $ 11 $ - Tax increments - 1 Franchise fees - - Lodging taxes 696 - Special assessments 8 - Licenses and permits 1 - Intergovernmental 937 9, 616 Charges for services 985 - Fines and forfeits 359 - Investment earnings (net of market value adjustment) 1 7 Miscellaneous 73 1 Total revenues 16 1 EXPENDITURES Current: General government 3,3 56,231 - Public safety 8 - Public works 2 - Community services 82 - Parks and recreation 2 - Economic development 330 1 Nondepartmental 300 - Administrative services reimbursement (1 - Capital outlay: General government - - Public safety 14 - Public works - - Parks and recreation - - Economic development - 1 Debt service: Principal retirement - - Interest - - Fiscal agent fees - - Total expenditures 15 2 Revenues over (under) expenditures 517 (716,040) OTHER FINANCING SOURCES (USES) Transfers in 179 - Transfers out (396,701) (3 Total other financing sources (uses) (217,187) (3 Net increase (decrease) in fund balances 300 (4 Fund balances - January 1 8 8 Fund balances - December 31 $ 8 $ 3 The accompanying notes are an integral part of these financial statements. 32 Statement 5 G.O. Improvement Tax Increment Infrastructure Other Nonmaj or Total Bonds Bonds Construction Governmental Governmental $ (483) $ - $ - $ 1 $ 13 - - - 1 3 - - - 647 647 - - - - 696 750 - 731 - 1 - - - - 1 - - 2 2 6 - - - 15 1 - - - - 359 2 - - 12 24 - - 37 174 285 752 - 3 6 28 - - - 490 3 - - - 295 8 - - 15 129 2 - - - - 82 - - - 129 2 - - - 1 3 - - - - 300 - - - - (1 - - - 110 110 - - - - 14 - - 5 2 7 - - - 265 265 - - - - 1 920 2 - 971 4 167 783 - 75 1 11 2 - 756 14 1 3 5 5 33 (346,052) (3 (1 288 (5 - 3 92 1 4 - - - (528,023) (4 - 3 92 516 392 (346,052) - (1 805 (4 3 - (606,621) 11 30 $ 2 $ - $ (1 $ 11 $ 25 33 m E7 This page has been left blank intentionally. 34 CITY OF BROOKLYN CENTER, MINNESOTA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES Statement 6 IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended December 31, 2010 Amounts reported for governmental activities in the statement of activities are different because: Net changes in fund balances - total governmental funds (Statement 5) $ (4 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. 6 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. (2 The issuance of long -term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long -term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. This amount is the net effect of these differences in the treatment of long -term debt and related items. 4 Internal service funds are used by management to charge the cost of certain activities to individual funds. This amount is net revenue attributable to governmental activities. (179,308) Somes expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. 47 Change in net assets of governmental activities (Statement 2) $ 3 The accompanying notes are an integral part of these financial statements. 35 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF FUND NET ASSETS PROPRIETARY FUNDS December 31, 2010 Major Municipal Golf Earle Brown ASSETS Liquor Course Heritage Center Current assets: Cash and cash equivalents $ 1 $ - $ 987 Receivables: Accounts - net 7 - 252 Special assessments - - - Interfund receivable - - - Prepaid items 25 - 28 Inventories 672 1 35 Total current assets 2 1 1 Noncurrent assets: Capital assets: Land - 1 1 Land improvements - 65 327 Buildings and structures 192 487 11 Machinery and equipment 99 11 293 Street lights - - - Mains and lines - - - Construction in progress - - 19 Total capital assets 292 1 13 Less: Allowance for depreciation (257,872) (350,657) (8 Net capital assets 34 1 5 Total assets 2 1 6 LIABILITIES Current liabilities: Accounts payable 90 877 69 Accrued salaries payable 21 2 32 Due to other governments 51 8 9 Contracts payable - - 117 Deposits payable - - 223 Interfund payable - 99 - Accrued interest payable - - - Unearned revenue 921 - 1 Current portion of long -term debt - - - Advances from other funds - 792 - Compensated absences payable - current - - - Total current liabilities 164 895 454 Noncurrent liabilities: Bonds payable - - - Compensated absences payable- long -term - - - Net OPEB obligation - - - Total noncurrent liabilities - - - Total liabilities 164 895 454 NET ASSETS Invested in capital assets 34 1 5 Unrestricted 1 (894,589) 848 Total net assets $ 2 $ 709 $ 6 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Net assets of business -type activities The accompanying notes are an integral part of these financial statements. 36 Statement 7 Business -Type Activities Governmental Enterprise Other Activities - Water Sanitary Sewer Storm Drainage Nonmajor Total Internal Total Utility Utility Utility Enterprise Enterprise Service Proprietary $ 2 $ 2 $ 2 $ 76 $ 9 $ 3 $ 13 386 820 349 109 1 62 1 483 1 - - 485 - 485 9 - - - 9 3 3 500 172 - - 227 - 227 40 - - - 749 26 775 3 3 3 186 13 6 19 20 3 287 - 3 - 3 - - - - 393 166 559 3 2 - - 17 - 17 128 179 - - 712 7 8 - - - 425 425 - 425 17 16 22 - 57,111,711 - 57,111,711 965 1 954 - 3 - 3 22 20 24 425 82 8 90 (12,820,644) (10,279,211) (8 (11,133) (39,905,610) (4 (44,260,250) 9 9 15 414 42 3 46 12 13 18 600 56 10 66 47 7 2 25 243 16 259 18 7 7 - 89 13 103 1 16 - - 78 - 78 - - - - 117 - 117 1 - - - 225 - 225 - - - 9 109 - 109 51 17 - - 68 - 68 149 - - - 151 - 151 105 35 - - 140 - 140 - - - - 792 - 792 - - - - - 110 110 373 83 10 35 2 139 2 1 552 - - 2 - 2 - - - - - 990 990 - - - - - 364 364 1 552 - - 2 1 3 2 635 10 35 4 1 5 9 9 15 414 42 3 46 1 2 3 150 8 5 14 $ 10 $ 12 $ 18 $ 565 51 $ 8 $ 60 (303,353) $ 51 37 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS For the Year Ended December 31, 2010 Major Municipal Golf Earle Brown Liquor Course Heritage Center OPERATING REVENUES Sales and user fees $ 5 $ 219 $ 3 Cost of sales 4 - 1 Total operating revenues 1 219 1 OPERATING EXPENSES Personal services 618 147 850 Supplies 42 17 137 Other services 241 90 476 Insurance 9 7 47 Utilities 38 23 193 Rent 287 - - Depreciation 18 28 628 Total operating expenses 1 314 2 Operating income (loss) 276 (95,419) (455,773) NONOPERATING REVENUES (EXPENSES) Intergovernmental - - - Investment earnings 2 - 1 Special assessments - - - Gain (loss) on sale of capital asset - - - Other revenue 5 6 85 Interest and fiscal agent fees - - - Bond issuance costs - - - Total nonoperating revenues (expenses) 7 6 1 Income (loss) before contributions and transfers 284 (95,413) (454,035) Capital contributions - - 110 Transfers out (23 0,199) - - Change in net assets 54 (95,413) (343,867) Net assets - January 1 1 805 6 Net assets - December 31 $ 2 $ 709 $ 6 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Change in net assets of business -type activities (Statement 2) The accompanying notes are an integral part of these financial statements. 38 Statement 8 Business -Type Activities Governmental Enterprise Other Activities - Water Sanitary Sewer Storm Drainage Nonmajor Total Internal Total Utility Utility Utility Enterprise Enterprise Service Proprietary $ 1 $ 3 $ 1 $ 541 $ 16 $ 1 $ 18 - - - - 5 - 5 1 3 1 541 10 1 12 485 191 126 - 2 739 3 148 13 4 556 364 451 816 353 2 324 320 4 146 4 20 5 2 2 96 44 140 130 32 - 163 581 1 583 - - - - 287 - 287 550 584 886 5 2 638 3 1 1 3 1 344 1 929 492 10 2 12 239 75 230 49 320 (305,439) 15 1 1 - - 2 15 17 4 6 4 417 20 9 30 27 111 - - 27 - 27 - - - - - 55 55 1 - 150 - 7 8 15 (51,623) (17,208) - - (68,831) - (68,831) (43,078) (14,359) - - (57,437) - (57,437) (59,125) (24,112) 4 417 (68,398) 88 20 180 51 235 49 252 (216,792) 35 699 - 407 - 518 - 518 (53,262) (16,292) - (92,835) (392,588) - (392,588) 127 35 643 (42,959) 378 (216,792) 161 10 12 18 608 51 8 60 $ 10 $ 12 $ 18 $ 565 $ 8 $ 60 (37,484) $ 341,038 39 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2010 Major Municipal Golf Earle Brown Liquor Course Heritage Center CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users $ 5 $ 219 $ 3 Receipts from interfund services provided - - - Payments to suppliers (4 (137,767) (2 Payments to employees (617,545) (147,625) (845,657) Miscellaneous revenue 5 6 85 Net cash flows provided (used) by operating activities 286 (66,227) 218 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Proceeds from non - capital debt - - - Transfers out (23 0,199) - - Special assessments - - - Interfund receivable - - - Interfund payable - 66 - Interest paid on non - capital debt - - Net cash flows provided (used) by noncapital financing activities (230,199) 66 - CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (31,037) - - Proceeds from sale of assets - - Net cash flows provided (used) by capital and related financing activities (31,037) - - CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments 2 - 1 Net increase (decrease) in cash and cash equivalents 28 - 220 Cash and cash equivalents - January 1 1 - 767 Cash and cash equivalents - December 31 $ 1 $ - $ 987 Reconciliation of operating income to net cash provided (used) by operating activities: Operating income (loss) $ 276 $ (95,419) $ (455,773) Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Depreciation 18 28 628 Changes in assets and liabilities: (Increase) decrease in receivables - - 64 (Increase) decrease in inventories (37,720) 707 (5 (Increase) decrease in prepaid expenses 943 - 1 Increase (decrease) in payables 23 3 (19,681) Increase (decrease) in accrued expenses 635 292 4 Increase (decrease) in unearned revenue 83 - - Other nonoperating income 5 6 85 Total adjustments 10 29 674 Net cash flows provided (used) by operating activities $ 286 $ (66,227) $ 218,561 Noncash financing activities: Capital contributions $ - $ - $ 110 Gain on sale of assets - - - The accompanying notes are an integral part of these financial statements. 40 Statement 9 Business -Type Activities Governmental Enterprise Other Activities - Water Sanitary Sewer Storm Drainage Nonmajor Total Internal Total Utility Utility Utility Enterprise Enterprise Service Proprietary $ 1 $ 3 $ 1 $ 543 $ 16 $ - $ 16 - - - - - 1 1 (741,914) (2 (331,568) (478,462) (11,628,595) (794,102) (12,422,697) (481,332) (191,187) (121,891) - (2 (655,200) (3 3 1 150 - 9 23 32 669 643 1 65 2 282 3 1 573 - - 2 - 2 (53,262) (16,292) - (92,835) (392,588) - (392,588) 35 130 231 - 36 - 36 (1 - 14 - 13 (3 (3 - (13,283) (50,826) (4 (2 - (2 (562) (188) - - (750) - (750) 1 543 (36,258) (97,234) 1 (3 (1 (975,156) (1 (581,239) (9 (2 (439,213) (3 - - - - - 105 105 (975,156) (1 (581,239) (9 (2 (334,164) (3 4 6 4 417 20 9 30 1 103 522 (40,949) 2 (3 (934,729) 1 1 2 117 7 6 14 $ 2 $ 2 $ 2 $ 76 $ 9 $ 3 $ 13 $ 239 $ 75 $ 230 $ 49 $ 320 $ (305,439) $ 15 550 584 886 5 2 638 3 (46,686) (25,942) 13 2 7 (8 (662) (6 - - - (48,715) 901 (47,814) - 1 - - 3 - 3 (82,159) 6 365 8 (63,417) (152,015) (215,432) 4 195 4 - 15 85 100 7 - - - 7 - 7 3 1 150 - 9 23 32 429 567 905 16 2 588 3 $ 669 $ 643 $ 1 $ 65 $ 2 $ 282 $ 3 $ 699 $ - $ 407 $ - $ - - - - - 55 41 m E7 This page has been left blank intentionally. 42 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 The City of Brooklyn Center was incorporated in 1911 and has operated under a Council /Manager form of government since the adoption of the City charter in 1966. The governing body consists of a mayor and four City Council members elected at- large to serve four -year staggered terms. The City provides a full range of municipal services to its citizens, including public safety (police and fire protection), highways and streets, parks and recreation, public improvements, planning and inspections, economic development, sanitary and storm sewer, water, and general administrative services. Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the City have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), as applied to governmental units by the Governmental Accounting Standards Board (GASB). The City also applies Financial Accounting Standards Board (FASB) statements and interpretations issued prior to December 1, 1989 to its governmental and business -type activities at the government -wide financial reporting level and to its proprietary funds at the fund reporting level, provided they do not conflict with or contradict GASB pronouncements. The City's significant accounting policies are described below. A. REPORTING ENTITY The City includes all funds, organizations, institutions, agencies, departments, boards, and offices that are not legally separate from the City. Component units are legally separate organizations for which the elected officials of the City are financially accountable and are included within the basic financial statements of the City because of the significance of their operational or financial relationships with the City. The City is considered financially accountable for a component unit if it appoints a voting majority of the organization's governing body and is able to impose its will on the organization by significantly influencing the programs, projects, activities, or level of services performed or provided by the organization, or there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the City. Blended component units, although legally separate, are, in substance, part of the government's operations. A blended component unit is reported as if it were a fund of the City throughout the year. It is included at both the government - wide and fund financial reporting levels. A description of the City's blended component units follows: City of Brooklyn Center Housing and Redevelopment Authority (HRA) - The City Council serves as the Board of Directors for the HRA. The Council reviews and approves the tax levy and all expenditures for the HRA. The HRA is reported as a Special Revenue Fund. The HRA does not issue separate financial statements. Financial information may be obtained at the City's offices. City of Brooklyn Center Economic Development Authority (EDA) — The governing board for the EDA is the City Council. The council reviews and approves major community development improvement activities. City general obligation tax increment financing bonds are issued to finance EDA activities. The EDA is reported in the Economic Development Authority, Earle Brown TIF District, TIF District No. 3, TIF District No. 4, and the Community Development Block Grant Special Revenue Funds; the Tax Increment Bonds Debt Service Fund; the Earle Brown Heritage Center Improvements Capital Project Fund; and the Earle Brown Heritage Center Enterprise Fund. The EDA does not issue separate financial statements. Financial information may be obtained at the City's offices. 43 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS The government -wide financial statements (i.e., the statement of net assets and the statement of changes in net assets) report information on all activities of the primary government and its component units. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or business -type activity and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or business -type activity. Taxes and other items not included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes and special assessments are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers all revenues, except reimbursement grants, to be available if they are collected within 60 days of the end of the current fiscal period. Reimbursement grants are considered available if they are collected within one year of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to claims and judgments, are recorded only when payment is due. Property taxes, special assessments, intergovernmental revenues, charges for services and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the government. 44 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION (Continued) The government reports the following major governmental funds: The General Fund is the government's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Tax Increment District No. 3 Special Revenue Fund has the authority to collect tax increments which are used for various redevelopment projects within the City and for debt service payments of bonds which were issued for the same purpose. The G. O. Improvement Bonds Debt Service Fund is used to account for the accumulation of resources for the payment of improvement bonds. These bonds were sold to finance certain public improvements such as residential streets and storm sewers or the provision of services which are to be paid for wholly or in part from special assessments levied against benefited property. The Tax Increment Bonds Debt Service Fund is used to account for the payment of tax increment financing bonds. These bonds were sold to finance the purchase and redevelopment of various redevelopment projects within the City. The Infrastructure Construction Capital Project Fund was established to account for the resources and expenditures required for the acquisition and construction of capital facilities or improvements financed wholly or in part by special assessments levied against benefited properties. The government reports the following major enterprise funds: The Municipal Liquor Fund accounts for the operations of the City's municipal off -sale liquor stores. The Golf Course Fund accounts for operations of Centerbrook Golf Course, a 9 hole executive golf course owned by the City. The Earle Brown Heritage Center Fund accounts for the operation of a convention center. The Earle Brown Heritage Center is a pioneer farmstead that has been historically preserved and restored as a modern multipurpose facility. Its convention center can host conferences, trade shows, and concerts. The Water Utility Fund accounts for the pumping, treatment and distribution of water to customers. Administration, wells, water storage, and distribution are included. The Sanitary Sewer Utility Fund accounts for the collection and pumping of sanitary sewage through a system of sewer lines and lift stations. Sewage is treated by the Metropolitan Council Environmental Services whose fees represent about 63% of this fund's expenses. The Storm Drainage Utility Fund accounts for the collection and treatment of surface runoff water that does not require sanitary wastewater treatment. It incorporates not only the storm sewer collection system, but also structures such as holding ponds and facilities to improve water quality. Fees are based upon the quantity of water running off a property and vary with both size and absorption characteristics of the parcel. 45 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION (Continued) Additionally, the government reports the following fund type: Internal Service Funds account for compensated absences, health care insurance benefits and central garage services provided to other departments of the City on a cost reimbursement basis. As a general rule, the effect of interfund activity has been eliminated from the government -wide financial statements. Exceptions to this general rule are transactions that would be treated as revenues, expenditures or expenses if they involved external organizations, such as buying goods and services or payments in lieu of taxes. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the enterprise funds and internal service funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. D. CASH AND INVESTMENTS The City considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. All of the cash and investments allocated to the proprietary funds have original maturities of 90 days or less. The City's investment policy authorizes the City to invest in the following: a) Securities which are direct obligations or are guaranteed or insured issues of the United States, its agencies, its instrumentalities, or organizations created by an act of Congress, including governmental bonds, notes, bills, mortgages (excluding high -risk mortgage- backed securities), and other securities. b) State and local securities: 1) Any security which is a general obligation of any state or local government with taxing powers which is rated "A" or better by a national bond rating service. 2) Any security which is a revenue obligation of any state or local government with taxing powers which is rated "AA" or better by a national bond rating agency. 3) A general obligation of the Minnesota housing finance agency which is a moral obligation of the state of Minnesota and is rated "A" or better by a national bond rating agency. c) Commercial paper issued by U.S. corporations or their Canadian subsidiaries that is rated in the highest quality by at least two nationally recognized rating agencies and matures in 270 days or less. d) Time deposits that are fully insured by the Federal Deposit Insurance Corporation or bankers acceptances of U.S. banks. 46 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES D. CASH AND INVESTMENTS (Continued) e) Repurchase agreements and reverse repurchase agreements with financial institutions identified by Minnesota Statutes Chapter 118A. f) Securities lending agreements may be entered into with financial institutions identified by Minnesota Statutes Chapter 118A. g) Minnesota joint powers investment trusts may be entered into with trusts identified by Minnesota Statutes Chapter 118A h) Money market mutual funds regulated by the Securities and Exchange Commission and whose portfolios consist only of short term securities permitted by Minnesota Statutes 118A. i) Bonds of the City of Brooklyn Center issued in prior years, may be redeemed at current market price, which may include a premium, prior to maturing using surplus funds of the debt service fund set up for that issue. Investments are reported at fair value, based on quoted market prices as of the balance sheet date. Adjustments necessary to record investments at fair value are recorded in the operating statement as increases or decreases in investment earnings. Investment income on commingled funds is allocated monthly, based on month -end balances. E. RECEIVABLES AND PAYABLES During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. Short -term interfund loans are classified as "interfund receivable /payable." All short -term interfund receivables and payables at December 31, 2010 are planned to be eliminated in 2011. Long -term interfund loans are classified as "advances to /from other funds." Any residual balances outstanding between the governmental activities and business -type activities are reported in the government -wide financial statements as "internal balances." Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable financial resources. All miscellaneous accounts receivable and trade receivables, other than utility, are presented net of an allowance for doubtful accounts. All utility trade receivables are reported at gross because it is the City's policy to certify delinquent account balances as special assessments. The City expects to make full collection of all property tax and special assessment receivables, so no allowance is considered necessary. Property tax levies are submitted to the County in December each year. The County allocates these levies across taxable properties in the City based on valuations certified in the prior year. The County collects these levies and distributes the City's proceeds in June and December of the fiscal year. These taxes are reported as general revenues in the government -wide financial statements in the year levied. Unpaid taxes at December 31 become liens on the respective property and are classified as delinquent receivables and are fully offset by deferred revenue in the fund financial statements. F. INVENTORIES AND PREPAID ITEMS Inventories in the governmental funds are reported using the consumption method and valued at cost, using the first in/first out (FIFO) method. Inventories in the proprietary funds are valued at cost, using the weighted average method in the Municipal Liquor and Earle Brown Heritage Center Funds and the FIFO method in all other funds. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government -wide and fund financial statements. Prepaid items are reported using the consumption method and recorded as expenditures /expenses at the time of consumption. 47 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) G. ASSETS HELD FOR RESALE Assets held for resale represent various property purchases made by the City with the intent to sell in order to increase tax base or to attract new businesses. These assets are stated at the lower of cost or net realizable value. During the year ended December 31, 2010, management has reviewed the cost value reported for these assets and has indicated the properties are fairly presented for financial reporting purposes. H. CAPITAL ASSETS Capital assets, which include property, plant, equipment, infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), and intangible assets such as easements and computer software, are reported in the applicable governmental or business -type activities columns in the government -wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost in excess of the amounts in the table below and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. Infrastructure $ 25000 Buildings and Building Improvements 5000 Land Improvements 2500 Heavy Equipment 2500 Furniture and furnishings 1000 Motorized vehicles 1000 Technology equipment 1000 The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business -type activities is included as part of the capitalized value of the assets constructed. For the year ended December 31, 2010 no interest was capitalized in connection with construction in progress. The City implemented GASB Statement No. 51, Accounting and Financial Reporting for Intangible Assets effective January 1, 2010, which required the City to capitalize and amortize intangible assets. Pursuant to GASB Statement No. 51, in the case of initial capitalization of intangible assets, the City chose to capitalize intangible assets that had a contractually limited life retroactively to 1980. The City had already accounted for computer software at historical cost and therefore retroactive reporting was not necessary. The City was able to obtain historical costs and estimated fair value of donated intangible assets as of the date of donation for the initial reporting of easements through public works project records. Capital assets of the City, as well as the component units, are depreciated using the straight line method over the following estimated useful lives: Land improvements 25 years Buildings and structures 25 years Water and sewer mains and lines, wells and storage tanks, sewer lift stations 25 years Infrastructure 25 years Street and traffic light systems 15 years Machinery and equipment 5 -15 years 48 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) I. COMPENSATED ABSENCES It is the City's policy to permit employees to accumulate earned but unused vacation and sick pay benefits. All vacation and vested sick leave pay is accrued in the Public Employees Compensated Absences fund. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. In accordance with the provisions of Statement of Government Accounting Standards No. 16, Accounting for Compensated Absences, a liability is recognized for that portion of accumulating sick leave benefits that is vested, or expected to vest, as severance pay. J. LONG TERM OBLIGATIONS In the government -wide financial statements and proprietary fund types in the fund financial statements, long -term debt and other long -term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are immaterial and are expensed in the year of bond issuance. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. K. FUND EQUITY Fund equity in the fund financial statements is classified as fund balance for governmental funds and net assets for proprietary funds. Fund equity in the government -wide financial statements is classified as net assets for both governmental and business -type activities. Fund balance — Generally, fund balance represents the difference between current assets and current liabilities. The City reserves those portions of fund balance which are legally segregated for a specific future use or which do not represent available, spendable resources and are therefore not available for general appropriation or expenditure. Unreserved fund balance indicates that portion of fund balance that is available for appropriation in future periods. Designations are management's intent to set aside these resources for specific purposes. Net assets — Net assets represent the difference between assets and liabilities. Net assets, invested in capital assets net of related debt, consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any bonds used for the acquisition, construction, or improvement of those assets. Net assets are reported as restricted when there are limitations imposed on their use either through constitutional provisions or enabling legislation, or through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. All other net assets are reported as unrestricted. When both restricted and unrestricted resources are available for an allowable use, it is the government's policy to use restricted resources first, then unrestricted resources as they are needed. L. INTERFUND TRANSACTIONS Interfund services provided and used are accounted for as revenues and expenditures or expenses. Transactions that constitute reimbursements to a fund for expenditures /expenses initially made from it that are properly applicable to another fund, are recorded as expenditures /expenses in the reimbursing fund and as reductions of expenditures /expenses in the fund that is reimbursed. All other interfund transactions are reported as transfers. 49 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) M. USE OF ESTIMATES The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ from such estimates. N. NEW ACCOUNTING PRONOUNCEMENTS The Governmental Accounting Standards Board (GASB) recently approved the following statement which was not implemented in these financial statements. The effect this standard may have on future financial statements has not been determined at this time. Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. This statement establishes fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds and clarifies the existing governmental fund type descriptions. The provisions of this statement are effective for periods beginning after June 15, 2010. Note 2 RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS A. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND BALANCE SHEET AND THE GOVERNMENT -WIDE STATEMENT OF NET ASSETS The governmental fund balance sheet includes a reconciliation between fund balance — total governmental funds and net assets — governmental activities as reported in the government -wide statement of net assets. One element of that reconciliation explains that "Long -term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds." The details of this $ 21,453,087 difference are as follows: Bonds payable $ 21 Accrued interest payable 394 Net pension obligation 18 Net adjustment to decrease fund balance - total governmental funds to arrive at net assets - governmental activities $ 21 Another element of that reconciliation explains that "Internal service funds are used by management to charge the costs of certain activities to individual funds. The assets and liabilities are included in the governmental statement of net assets." The details of this $ 9,069,165 difference are as follows: Net assets of internal service funds $ 8 Plus: Internal receivable representing charges in excess of cost to business -type activities - prior years 265 Plus: Internal receivable representing charges in excess of cost to business -type activities - current year 37 Net adjustment to decrease fund balance - total governmental funds to arrive at net assets - governmental activities $ 9 50 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 2 RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS (Continued) 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 $ 6,286,3 87 difference are as follows: Capital outlay $ 8,549,489 Net transfers to proprietary funds (518,863) Loss on disposal of assets (54,146) Depreciation expense (1,690,093) Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities $ 6,286,387 Another element of that reconciliation states that "Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds." The details of this $ 2,412,041 difference are as follows: General property taxes deferred revenue: At December 31, 2009 $ (484,569) At December 31, 2010 421,321 Tax increment taxes deferred revenue: At December 31, 2009 (41,730) At December 31, 2010 57,221 Special assessments deferred revenue: At December 31, 2009 (3,622,416) At December 31, 2010 4,308,644 Other deferred revenues: At December 31, 2009 (12,534,529) At December 31, 2010 9,484,017 Net adjustments to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities $ (2,412,041) 51 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 2 RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS B. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES AND THE GOVERNMENT -WIDE STATEMENT OF ACTIVITIES (Continued) Another element of that reconciliation states that "The issuance of long -term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of principal of the long -term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets." The details of this $ 4,345,000 difference are as follows: Principal repayments: General obligation bonds $ 64000 General obligation improvement bonds 92000 General obligation tax increment bonds 2,78500 Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities $ 4,34500 Another element of that reconciliation states that "Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds." The details of this $ 47,723 difference are as follows: Accrued interest $ 65,954 Net pension obligation (18,231) Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities $ 47,723 Note 3 STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. BUDGETARY INFORMATION Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States for all governmental funds, except for the Police Drug Forfeiture and Capital Reserve Emergency Funds. All annual appropriations lapse at fiscal year end. In August, the City Manager submits to the City Council proposed operating budgets for the fiscal year commencing the following January. The proposed general fund budget and preliminary tax levy must be certified to the County prior to September 15. The Council holds public hearings on the certified budget and levy and must submit a final levy to the County prior to the end of December. The appropriated budget is prepared by fund and department. The City Council must authorize any transfer of budgeted amounts between departments or funds. Transfers of budgeted amounts within departments in the General Fund must be authorized by the City Manager. The legal level of budgetary control is the department level for the General Fund and the fund level for all other governmental funds. There were no material supplemental budgetary appropriations during 52 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 3 STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. BUDGETARY INFORMATION (Continued) the year, however, reductions in appropriations were made by the City Council in May 2010 in anticipation of reductions in intergovernmental aids from the State of Minnesota. For the year ended December 31, 2010 expenditures exceeded appropriations in the following General Fund departments and other governmental funds: Final Over Budget Actual Budget Major Funds: General Fund: Elections and voter registration $ 99 $ 101 $ (1 Government buildings 748 860 (111,568) Information technology 378,364 382,442 (4 Engineering department 541,304 614 (73,431) Parks and recreation administration 188 191 (2 Recreation programs 696 708 (12,135) Special Revenue Funds: Tax Increment District No. 3 101 2 (2 Nonmaj or Funds: Special Revenue Funds: Economic Development Authority 379 499 ( 120,772) Tax Increment District No. 4 305 332,566 (27 Community Development Block Grant 193 854 (660,523) City Initiatives Grant 195 305 (110,052) Capital Project Funds: Capital Improvements 339 580 (241,784) Municipal State Aid for Construction 133 1 (1 Technology 91,345 165 (73,913) B. DEFICIT FUND EQUITY Deficit fund equity exists at December 31, 2010 in the following funds: Unreserved deficit fund balance Major Funds: Infrastructure Construction $ 2,65003 Unrestricted deficit net assets Major Funds: Golf Course 894,589 The deficits are being funded through internal borrowing and will be repaid from construction transfers from utility funds, future bond issuance, investment earnings, and internal transfers. 53 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 4 DETAILED NOTES ON ALL FUNDS A. DEPOSITS AND INVESTMENTS In accordance with Minnesota Statutes, the City maintains deposits at only those depository banks authorized by the City Council. All such depositories are members of the Federal Reserve System. Minnesota Statutes require that all City deposits be protected by insurance, surety bond, or collateral. The market value of collateral pledged must equal 110% of the deposits not covered by insurance or bonds. Authorized collateral includes the legal investments described in Note 1.D., as well as certain first mortgage notes, and certain other state or local government obligations. Minnesota Statutes require that securities pledged as collateral be placed in safekeeping in a restricted account at the Federal Reserve bank, or in an account at a trust department of a commercial bank or other financial institution that is not owned or controlled by the financial institution furnishing the collateral. At year -end, the City's carrying value amount of deposits was $ (285,582) composed of bank balances of $ 0. As of December 31, 2010 the City had the following investments and maturities: Investment Maturities Investment Type Rating Fair Value < 1 year 1 -5 years 6 -10 years No maturity Negotiable Certificates of Deposit N/A $ 97,988 $ 97,988 - Federal Farm Credit Banks AAA 996,634 - 996,634 - - Federal Home Loan Bank Notes AAA 4,953,541 - 4,953,541 - Federal National Mortgage Ass'n Notes AAA 044,366 - 044,366 - Federal Home Loan Mortgage Corp AAA 2,021,810 - - 2,021,810 - E�dernal investment pool - 4M Fund N/A 24,177,537 - - - 24,177,537 Money market AAA 5,217,797 - - - 5,217,797 Total investments 39,409,673 $ 97,988 $ 7,894,541 $ 2,021,810 $ 29,395,334 Deposits (285,582) Petty cash and change funds 13,485 Total cash and investments $ 39,137,576 Reconciliation to Statement of Net Assets (Statement 1): Cash, cash equivalents, and investments 39,087,076 Restricted cash and investments 50,500 Total cash and investments $ 39,137,576 N/A - not rated Interest rate risk — The City's investment policy requires interest earnings remain stable and predictable through at least the next budget cycle and that at least 50% of the investment portfolio remain for two or more years with known interest rates. The policy also states that the portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably expected. 54 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 4 DETAILED NOTES ON ALL FUNDS A. DEPOSITS AND INVESTMENTS (Continued) Credit risk — The City's investment policy restricts investment instruments to those authorized by Minnesota Statutes § 118A. The policy also requires that any counterparty in investment transactions be pre - qualified and approved by the City Council and that the portfolio be diversified to limit potential losses on individual securities. As of December 31, 2010 the City's investment in Federal Farm Credit Banks, Federal Home Loan Banks, Federal National Mortgage Association, and Federal Home Loan Mortgage Corporation notes were all rated AAA by Moody's Investor Service. The City's external investment pool is with the Minnesota Municipal Money Market Fund which is regulated by Minnesota Statutes and the Board of Directors of the League of Minnesota Cities. The 4M fund is an unrated 2a7 -like pool and the fair value of the position in the pool is the same as the value of the pool shares. Concentration of credit risk — The City's investment policy requires that the investment portfolio be diversified to minimize potential losses on individual securities. As of December 31, 2010, the City's portfolio was allocated as follows: External Investment Pool -4M Fund 61.35 %, Money Market 13.24 %, Federal Home Loan Bank Notes 12.57 %, Federal Home Loan Mortgage Corp 5.13 %, Federal National Mortgage Ass'n Notes 4.93 %, Federal Farm Credit Banks 2.53 %, and Negotiable Certificates of Deposit 0.25 %. Custodial credit risk — The City's investment policy requires that securities purchased from any bank or dealer be placed with an independent third party for custodial safekeeping. All of the City's investments were held in an institutional trust under contract with the City for safekeeping services. B. RECEIVABLES Significant receivable balances not expected to be collected within one year of December 31, 2010 are as follows: Major Funds Tax Increment G.O. Sanitary District Improvement Infrastructure Water Sewer Nonmajor General No.3 Bonds Construction Utility Utility Funds Total Delinquent property taxes $ 91,985 $ - $ 1,865 $ - $ - $ - $ 11495 $ 105,345 Delinquent tax increments - 14,310 - - - - - 14,310 Special assessments 22496 - 2,101,424 1,529,255 121,198 1,042 - 3,775,415 $ 114481 $ 14,310 $ 2,103,289 $ 1,529,255 $ 121,198 $ 1,042 $ 11495 $ 3,895,070 The City has leased a portion of the police second floor expansion area to the Local Government Information Systems Association (LOGIS) as a backup computer facility. The lease has a term of six years, commencing on August 1, 2005 and calls for monthly lease payments based on square- footage. Lease revenue for the year ended December 31, 2010 was $ 9,057. Future minimum lease payments are $ 5,296 for 2011. Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of deferred revenue and unearned revenue reported in the governmental funds were as follows: 55 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 4 DETAILED NOTES ON ALL FUNDS B. RECEIVABLES (Continued) Unavailable Unearned Totals Delinquent property taxes receivable (General Fund) $ 367,935 $ - $ 367,935 Delinquent property taxes receivable (G O. Improvement Bonds) 7444 - 7444 Delinquent property taxes receivable (Nonmajor Funds) 45,942 - 45,942 Delinquent tax increment receivable (Tax Increment District No. 3) 57,221 - 57,221 Special assessments not yet due (General Fund) 38,387 - 38,387 Special assessments not yet due (G O. Improvement Bonds) 2,54805 - 2,54805 Special assessments not yet due (Infrastructure Construction) 1,722,172 - 1,722,172 Grants received but unspent (Nonmajor Funds) - 3458 3458 Assets held for resale (Tax Increment District No. 3) 8,947,017 - 8,947,017 Assets held for resale (Nonmajor Funds) 53700 - 53700 Total deferred /unearned revenue for governmental funds $ 14,271,203 $ 3458 $ 14,27401 C. CAPITAL ASSETS Capital asset activity for the year ended December 31, 2010 was as follows: Beginning Ending Balance Increases Decreases Balance Governmental activities: Capital assets, not being depreciated: Land $ 3,537,473 $ - $ - $ 3,537,473 Construction in progress 4,155,434 7,865,882 (2,822,880) 9,198,436 Total capital assets, not being depreciated 7,692,907 7,865,882 (2,822,880) 12,735,909 Capital assets, being depreciated: Buildings and improvements 19,410,596 - (148,760) 19,261,836 Park improvements 4,412,941 591,455 - 5,004,396 Departmental equipment 8,196,385 453,376 (334,435) 8,315,326 Streets 28,018,834 2,382,006 - 30,400,840 Total capital assets, being depreciated 60,038,756 3,426,837 (483,195) 62,982,398 Less accumulated depreciation for: Buildings and improvements 8,630,715 663,558 (94,614) 9,199,659 Park improvements 3,538,346 81,118 - 3,619,464 Departmental equipment 4,228,369 664,627 (284,848) 4,608,148 Streets 11,037,862 919,626 - 11,957,488 Total accumulated depreciation 27,435,292 2,328,929 (379,462) 29,384,759 Total capital assets being depreciated - net 32,603,464 1,097,908 (103,733) 33,597,639 Governmental activities capital assets -net $ 40,296,371 $ 8,963,790 $ (2,926,613) $ 46,333,548 56 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 4 DETAILED NOTES ON ALL FUNDS C. CAPITAL ASSETS (Continued) Beginning Ending Balance Increases Decreases Balance Business -type activities: Capital assets, not being depreciated: Land $ 3,194,983 $ - $ - $ 3,194,983 Construction in progress 2,990,969 3,084,105 (3,046,404) 3,028,670 Total capital assets, not being depreciated 6,185,952 3,084,105 (3,046,404) 6,223,653 Capital assets, being depreciated: Land improvements 393,467 - - 393467 Buildings and improvements 17,800,069 90,534 (51,816) 17,838,787 Department equipment 724,003 31,037 (42,284) 712,756 Street light systems 83,540 342,320 - 425,860 Mains and lines 54,407,627 2,704,084 - 57,111,711 Total capital assets, being depreciated 73,408,706 3,167,975 (94,100) 76,482,581 Less accumulated depreciation for: Land improvements 170,881 14,651 - 185,532 Buildings and improvements 11,613,517 792,834 (51,816) 12,354,535 Department equipment 536,579 26,879 (42,284) 521,174 Street light systems 5,566 5,567 - 11,133 Mains and lines 24,971,005 1,862,231 - 26,833,236 Total accumulated depreciation 37,297,548 2,702,162 (94,100) 39,905,610 Total capital assets being depreciated - net 36,111,158 465,813 - 36,576,971 Business -type activities capital assets - net $ 42,297,110 $ 3,549,918 $ (3,046,404) $ 42,800,624 Depreciation expense was charged to functions /programs of the primary government as follows: Governmental activities: General government $ 90,470 Public safety 384,575 Public works 991,295 Parks and recreation 223,753 Capital assets held by the governments internal service funds are charged to the various functions based on their usage of the assets 638,836 Total depreciation expense - governmental activities $ 2,328,929 Business -type activities: Municipal liquor $ 18,066 Golf course 28,184 Earle Brown Heritage Center 628,867 Water utility 55002 Sanitary sewer utility 584,169 Storm drainage utility 886,647 Street light utility 5,567 Total depreciation expense - business -type activities $ 2,702,162 57 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 4 DETAILED NOTES ON ALL FUNDS C. CAPITAL ASSETS (Continued) CONSTRUCTION COMMITMENTS At December 31, 2010 the City had construction project contracts in progress. The commitments related to remaining contract balances are summarized as follows: Contract Remaining Project Responsible Fund Amount Commitment Trail rehabilitation General Fund $ 24,566 $ 1,774 Shingle Creek /69th Ave Improvements Infrastructure Construction 814,158 60,988 Bass Lake Road Streetscape Infrastructure Construction 3,531,038 87,295 Dupont Avenue Infrastructure Construction 2 109,102 Twin Lake North Infrastructure Construction 3,440 50803 Co Rd 57 Streetscape Infrastructure Construction 485,781 87,645 Central Park Trails Nonmajor Capital Projects Fund 139,717 12,429 Capital building maintenance for 2010 Nonmajor Capital Projects Fund 202,900 7,400 Total governmental funds $ 11,159,291 $ 875 D. INTERFUND BALANCES AND TRANSFERS Individual fund interfund receivable and payable balances at December 31, 2010 are as follows: Advances to Advances From Fund Other Funds Other Funds Major Funds: Golf Course $ - $ 792,488 Nonmajor Funds: Capital Improvements 792,488 - $ 792,488 $ 792,488 The $792,488 advance between the Golf Course and Capital Improvements funds is not expected to be eliminated within one year of December 31, 2010. 58 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 4 DETAILED NOTES ON ALL FUNDS D. INTERFUND BALANCES AND TRANSFERS (Continued) Interfund Interfund Fund Receivable Payable Major Funds: General $ 99,649 $ - Infrastructure Construction - 1,74000 Golf Course - 9%649 Water Utility 9,938 - Nonmajor Funds: Economic Development Authority 34,413 - Community Development Block Grant - 34,413 Municipal State Aid for Construction - 1,419,051 Recycling and Refuse - 9,938 Central Garage 3,159,731 - $ 3,303,731 $ 3,303,731 Interfund payables /receivables are representative of lending /borrowing arrangements to cover deficit cash balances at the end of the fiscal year. Balance will be paid with transfers from other funds, collections of outstanding receivables, and the issuance of bonds to finance completed infrastructure projects. Interfund transfers: Transfer In Transfer Out Governmental Funds: Major Funds: General $ 179 $ 396 Tax Increment District No. 3 - 3 Tax Increment Bonds 3 - Infrastructure Construction 92 - Nonmaj or Funds: Housing and Redevelopment Authority - 348 Economic Development Authority 348 - Community Development Block Grant - 179 Capital Improvements 626 - Technology 70 1 000 - Total governmental funds 4 4 59 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 4 DETAILED NOTES ON ALL FUNDS D. INTERFUND BALANCES AND TRANSFERS (Continued) Transfer In Transfer Out Proprietary Funds: Major Funds: Municipal Liquor - 230,199 Water Utility - 53,262 Sanitary Sewer Utility - 16,292 Nonmajor Funds: Street Light Utility - 92,835 Total proprietary funds - 392,588 Total all funds $ 408,536 $ 408,536 Governmental Business -Type Activities Activities Reconciliation to Government -Wide Statement of Activities: Net Transfers - Fund Statements $ 392,588 $ (392,588) Capital Asset Transfers (518, 863) 518, 863 Total Transfers - Government -Wide Statement of Activities $ (126,275) $ 126,275 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 2010, the transfers from the General fund, Water Utility fund, and Sanitary Sewer fund to the Capital Improvements fund were to pay for the capital building maintenance programs for 2009 and 2010. Transfers from the Tax Increment District No. 3 fund to the Tax Increment Bonds fund were made to pay the 2010 debt service requirements for the bonds. The transfer from the Community Development Block Grant fund to the General fund was made to transfer federal grant money received to pay for housing inspection and code enforcement costs. The transfers from the Street Light Utility fund to the Infrastructure Construction fund were to pay the street light portion of construction projects. E. OPERATING LEASES The City leases space for its municipal liquor stores. The leases are ten -year leases and began in 2003 and 2010. The lease that began in 2003 has an option for a ten -year extension; the extension has been exercised on the lease that began in 2010. The leases provide for a minimum monthly base rent payment, plus a pro -rata share of common area expenses. Additional lease payments are required if agreed -upon revenue thresholds are attained. These leases may be cancelled at the City's option if the City ceases liquor operations. Total rental expense under the lease agreements for the year ended December 31, 2010 was $ 287,687. Future minimum base rent payments under the current agreements are as follows: 2011 $ 224,940 2012 224,940 2013 224,940 2014 131,580 2015 136,554 2016 -2020 636,876 $ 1,579,830 60 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 4 DETAILED NOTES ON ALL FUNDS (Continued) F. LONG -TERM DEBT The City issues general obligation bonds to provide funds for the construction of major capital facilities, construction of infrastructure, and economic development and redevelopment. General obligation bonds have been issued for governmental activities. As of December 31, 2010 the long -term debt of the financial reporting entity consisted of the following: GOVERNMENTAL ACTIVITIES Final Interest Maturity Original Payable Rates Date Date Issue 12/31/10 General Obligation Bonds: Police and Fire Building Refunding Bonds 2.00 % -3.35% 12/01/2004 02/01/2013 $ 5,045,000 $ 2,025,000 Total General Obligation Bonds 5,045,000 2,025,000 G.O. Tax Increment Bonds: Taxable Tax Increment Refunding Bonds of 2004 2.25 % -4.40% 12/01/2004 02/01/2011 2,470,000 415,000 Taxable Tax Increment Bonds of 2004 4.75 % - 5.125% 12/01/2004 02/01/2020 17,245,000 13,595,000 Taxable Tax Increment Bonds of 2008 3.00 % -5.30% 05/01/2008 02/01/2018 4,335,000 1,000,000 Total G.O. Tax Increment Bonds 24,050,000 15,010,000 G.O. Improvement Bonds: 2000 Improvement Bonds 4.30 % -4.95% 12/01/2000 02/01/2011 735,000 65,000 2001 Improvement Bonds 2.60 % -4.40% 12/01/2001 02/01/2012 730,000 130,000 2003 Improvement Bonds 1.45 % -4.00% 01/01/2003 02/01/2013 1,205,000 325,000 2004 Improvement Bonds 2.10 % -3.65% 12/01/2004 02/01/2015 1,010,000 470,000 2006 Improvement Bonds 3.55 % -3.80% 12/01/2006 02/01/2017 1,460,000 900,000 2008 Improvement Bonds 3.25 % -4.25% 12/15/2008 02/01/2019 2,390,000 2,115,000 Total G.O. Improvement Bonds 7,530,000 4,005,000 Total- bonded indebtedness $ 36,625,000 21,040,000 Other Liabilities: Compensated absences payable 1,101,024 Net pension obligation 18,231 Net OPEB obligation 364,851 Total - other liabilities 1,48406 Total governmental activities $ 22,524,106 All long -term bonded indebtedness outstanding at December 31, 2010 is backed by the full faith and credit of the City, including improvement and tax increment bond issues. Bonds in the governmental activities will be retired by future property tax levies, tax increments or special assessments accumulated in the specific debt services funds. In the event that a deficiency exists because of unpaid or delinquent tax increments or special assessments at the time a debt service payment is due, the City must provide resources to cover the deficiency until other resources are available. Delinquent tax increments in the governmental funds at December 31, 2010 were $ 57,221; delinquent special assessments in the governmental funds at December 31, 2010 were $ 55,704, which is included in the special assessments receivable balance of $ 4,323,368. 61 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 4 DETAILED NOTES ON ALL FUNDS F. LONG -TERM DEBT GOVERNMENTAL ACTIVITIES (Continued) The G.O. Improvement Bonds were issued to finance the construction and replacement of street and storm drainage capital assets. Of the $ 4,005,000 outstanding at December 31, 2010 the amounts applicable to street and storm capital assets is $ 3,330,383 and $ 674,617, respectively. Annual debt service requirements to maturity for governmental activities long -term debt are as follows: Governmental Activities Year Ending General Obligation Bonds G.O. Tax Increment Bonds G.O. Improvement Bonds December 31 Principal Interest Principal Interest Principal Interest 2011 $ 64000 $ 55,632 $ 1,29000 $ 702,530 $ 74500 $ 136,890 2012 68500 34,581 92500 651,744 67000 111,460 2013 70000 11,725 1,36500 598,107 59000 8809 2014 - - 1,43000 532,100 47500 69,427 2015 - - 1,50500 462,394 46500 51,695 2016 -2020 - - 8,49500 1,104,651 1,06000 72,737 Total $ 2,02500 $ 10038 $ 15,010,000 $ 4,051,526 $ 4 0500 $ 531,078 BUSINESS -TYPE ACTIVITIES Final Interest Maturity Original Payable Rates Date Date Issue 12/31/10 General Obligation Taxable Utility Revenue Bonds (Build America Bonds - Direct Pay) 0.70 % -5.10% 03/08/2010 02/01/2025 $ 2,35000 $ 2,35000 Annual debt service requirements to maturity for business -type activities long -term debt are as follows: Business -Type Activities Year Ending G.O. Revenue Bonds December 31 Principal Interest 2011 $ 14000 $ 116,915 2012 13500 82,237 2013 13500 80,247 2014 14000 77,490 2015 140, 000 74M95 2016 -2020 76500 296,288 2021 -2025 89500 114,182 Total $ 2,35000 $ 841,454 62 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 4 DETAILED NOTES ON ALL FUNDS F. LONG -TERM DEBT BUSINESS -TYPE ACTIVITIES (Continued) The utility revenue bonds are backed by the full faith and credit of the City. Bonds in the business -type activities will be retired with the net revenues of the Water Utility and Sanitary Sewer Utility systems. (Net revenues of each system are defined as the excess of gross revenues and earnings over the normal, reasonable, and current costs of operating and maintaining the system.) In the event that a deficiency exists because of inadequate net revenues at the time a debt service payment is due, the City must provide resources to cover the deficiency until other resources are available. Net revenues in the Water Utility and Sanitary Sewer Utility Funds at December 31, 2010 were $ 398,262 which exceeds the amount required for payment of principal and interest in 2011. CHANGE IN LONG -TERM LIABILITIES Long -term liability activity for the year ended December 31, 2010 was as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental activities: Bonds payable: General obligation bonds $ 2 0500 $ - $ (640,000) $ 2,02500 $ 64000 G.O. tax increment bonds 17,79500 - (2,785,000) 15,010,000 1,29000 G.O. improvement bonds 4,92500 - (920,000) 4 0500 74500 Total bonds payable 25,38500 - (4,345,000) 21,040,000 2,67500 Compensated absences 1,091,553 90,915 (81,444) 1,101,024 110,102 Net pension obligation - 183,928 (165,697) 18,231 - Net OPEB obligation 290,426 266,232 (191,807) 364,851 - Total government activity long -term liabilities $ 26,766,979 $ 541M75 $ (4,783,948) $ 22,524,106 $ 2,785,102 Business -type activities: Utility revenue bonds $ - $ 2,350,000 $ - $ 2,350,000 $ 140,000 Compensated absences are liquidated by the Public Employees Compensated Absences Fund, the net pension obligation by the General Fund, and the net OPEB obligation by the Public Employees Retirement Fund. CONDUIT DEBT OBLIGATIONS From time to time, the City has issued Housing Revenue Bonds and Industrial Revenue Bonds or Notes to provide assistance to qualified private sector entities for the acquisition and construction of housing, industrial, or commercial facilities deemed to be in the public interest. The bonds or notes are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. The City has no obligation of its assets or of its general tax base for the repayment of any of these bonds or notes. Accordingly, the bonds or notes are not reported as liabilities in the accompanying financial statements. Upon final redemption of the bonds or notes, ownership of the property transfers to the private sector entity served by the bond or note issue. As of December 31, 2010 there were two series of fixed rate Multifamily Housing Revenue Refunding bonds, one Housing Revenue Development Refinancing Note, one series of Variable Rate Demand Refunding Industrial Revenue Bonds, two Healthcare Revenue Notes, and four Senior Housing Development Revenue Notes outstanding. The aggregate amount of conduit debt obligations at December 31, 2010 is $ 29,405,648. 63 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 4 DETAILED NOTES ON ALL FUNDS (Continued) G. FUND EQUITY Net assets reported in the government -wide statement of net assets at December 31, 2010 include the following: Governmental activities Invested in capital assets, net of related debt: Land $ 3,537,473 Construction in progress 9,198,436 Other capital assets, net of depreciation 33,597,639 Less: related long -term debt outstanding (5,355,383) Total invested in capital assets, net of related debt 40,978,165 Restricted: Debt service 6,097,254 Tax increment purposes 15,970,472 Total restricted 22,067,726 Unrestricted 6,985,972 Total governmental activities net assets $ 70,031,863 Related debt for governmental activities capital assets includes $ 2,025,000 in General Obligation Bonds and $ 3,330,383 in G.O. Improvement Bonds, the amount issued to finance the street portion of construction projects. The remaining $ 674,617 of the G.O. Improvement Bonds outstanding was issued to finance the storm drainage portion of construction projects. Business-type activities Invested in capital assets: Land $ 3,194,983 Construction in progress 3,028,670 Other capital assets, net of depreciation 36,576,971 Total invested in capital assets 420024 Unrestricted 073,168 Total bus ines s -type activities net as s ets $ 51,473,792 64 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 4 DETAILED NOTES ON ALL FUNDS G. FUND EQUITY (Continued) Governmental fund balances reported on the fund financial statements as of December 31, 2010 include the following: Reserved Major Funds: General: Committed contracts $ 1 Inventories 24 Prepaid items 500 Tax Increment District No. 3: Statutory housing obligation 1 G. O. Improvement Bonds: Debt service 2 Infrastructure Construction: Committed contracts 853 Nonmaj or Funds: Advances to other funds 792 Committed contracts 19 Debt service 1,196,115 Total $ 7 Unreserved, designated Major Funds: General: Working capital $ 8 Tax Increment District No. 3: Economic development 2 Nonmaj or Funds: Economic development 4 Capital improvements 4 Total $ 20 Unreserved, Undesignated (deficit) Major Funds: General $ 27404 Capital Project (2,650,603) Nonmajor Funds: Special Revenue 145,827 Total $ (2,230,172) 65 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 5 OTHER INFORMATION A. RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions and natural disasters. Property and casualty insurance is provided through the League of Minnesota Cities Insurance Trust (LMCIT), a public entity risk pool currently operating as a common risk management and insurance program for Minnesota cities: general liability, property, automobile, mobile property and marine, crime, employee dishonesty, boiler, and open meeting law. The City pays an annual insurance premium to the LMCIT for its insurance coverage. The City is subject to supplemental assessments if deemed necessary by the LMCIT. Currently, the LMCIT is self - sustaining through member premiums and reinsures through commercial companies for claims in excess of various amounts. The City retains risk for the deductible portions of the insurance policies. The amount of these deductibles is considered immaterial to the financial statements. Workers' compensation coverage is provided through a pooled self - insurance program through the LMCIT. The City pays an annual premium to the LMCIT. The City is subject to supplemental assessments if deemed necessary by the LMCIT. The LMCIT reinsures through Workers' Compensation Reinsurance Association (WRCA) as required by law. For workers' compensation, the City is not subject to a deductible. The City's workers' compensation is retroactively rated. With this type of coverage, final premiums are determined after loss experience is known. The amount of premium adjustment, if any, is considered immaterial and not recorded until received or paid. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three years. B. EMPLOYEE RETIREMENT PLANS 1. DEFINED BENEFIT PENSION PLAN PLAN DESCRIPTION All full -time and certain part -time employees of the City are covered by defined benefit plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the General Employees Retirement Fund (GERF) 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 3 5 3 and 3 5 6. GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. All new members must participate in the Coordinated Plan. All police officers, firefighters and peace officers who qualify for membership by statute are covered by the PEPFF. PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by State Statute, and vest after three years of credited service. The defined retirement benefits are based on a member's highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. PERA issues a publicly available financial report that includes financial statements and required supplementary information for GERF and PEPFF. That report may be obtained by writing to PERA, 60 Empire Drive Suite 200, St. Paul, Minnesota, 55103 -2088 or by calling 651- 296 -7460 or 800 - 652 -9026. 66 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 5 OTHER INFORMATION B. EMPLOYEE RETIREMENT PLANS 1. DEFINED BENEFIT PENSION PLAN (Continued) 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. GERF Coordinated Plan members are required to contribute 6.00% of their annual covered salary. PEPFF members are required to contribute 9.40% of their annual covered salary. The City is required to contribute the following percentages of annual covered payroll: 7.00% for Coordinated Plan GERF members and 14.10% for PEPFF members. The City's contributions to the Public Employees Retirement Fund for the years ending December 31, 2010, 2009, and 2008 were $ 470,559, $ 460,816, and $ 428,616, respectively. The City's contributions to the Public Employees Police and Fire Fund for the years ending December 31, 2010, 2009, and 2008 were $ 497,538 $ 508,226, and $ 444,527, respectively. The City's contributions were equal to the contractually required contributions for each year as set by state statute. 2. PENSION PLAN — BROOKLYN CENTER FIRE DEPARTMENT RELIEF ASSOCIATION PLAN DESCRIPTION The City contributes to the Brooklyn Center Fire Department Relief Association (the Association) which is the administrator of a single employer, public employee defined benefit retirement system to provide a retirement plan (the Plan) to volunteer firefighters of the City who are members of the Association. The Association is organized and operates under the provisions of Minnesota State Statutes 424A, and provides benefits in accordance with those statutes. The Association provides retirement benefits to members and survivors, upon death of eligible members. Benefits are established by the Association and approved by the City Council under the applicable statutes. The defined retirement benefits are based on a member's years of service. Vesting begins after the 10th year of service with a 60% benefit increasing to 100% after the 20th year of service. Full benefits are available after 20 years of service by the member and having attained the age of 50. The current benefit available is a lump sum distribution of $ 7,500 per year of service. Vested, terminated members who are entitled to benefits but are not yet receiving them are bound by the provisions in effect at the time of termination of membership. The Association issues a financial report that includes financial statements and required supplementary information for the Brooklyn Center Fire Department Relief Association. That report is available at the City of Brooklyn Center City offices. FUNDING POLICY The City levies property taxes at the direction of and for the benefit of the Plan and passes through state aids allocated to the Plan, all in accordance with enabling State statutes. The minimum tax levy obligation is the financial contribution requirement for the year less anticipated state aids. 67 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 5 OTHER INFORMATION B. EMPLOYEE RETIREMENT PLANS 2. PENSION PLAN — BROOKLYN CENTER FIRE DEPARTMENT RELIEF ASSOCIATION (Continued) CONTRIBUTIONS Total contributions to the plan in 2010 were $ 165,697 of which $ 99,752 was from the State of Minnesota and $ 65,945 was contributed by the City. The actuarially determined contribution based on an actuarial valuation performed at January 1, 2009 was $ 183,928, which represents funding for normal cost of $ 111,682 and amortization of the unfunded actuarial accrued liability of $ 72,246. The City's $ 165,697 contribution to the Association in 2010 was recorded as intergovernmental revenue ($ 99,752) and property tax revenue ($ 65,945) and fire department expenditure in the General Fund. The information below is the most recent data available. Actuarial valuation date 1/ 1/2009 Actuarial cost method Entry age normal cost method Amortization method Level dollar amount amortized on a closed basis Remaining amortization period 10 years Asset valuation method fair value Actuarial assumptions: Investment rate of return 6.0% compounded annually Discount rate for obligations 6.00% Projected salary increases Not applicable Post retirement benefits None Inflation rate Not applicable THREE YEAR TREND INFORMATION Annual Percentage Net Year Pension of APC Pension Ending Cost (APC) Contributed Obligation 12/31/2008 $ 117,983 100% $ 12/31/2009 97,725 100% - 12/31 /2010 183,928 90% 18 68 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 5 OTHER INFORMATION B. EMPLOYEE RETIREMENT PLANS 2. PENSION PLAN — BROOKLYN CENTER FIRE DEPARTMENT RELIEF ASSOCIATION (Continued) SCHEDULE OF FUNDING PROGRESS Assets in Excess of Actuarial Actuarial Actuarial (Unfunded) Valuation Value of Accrued Accrued Funded Date Assets Liability Liab ility Ratio 01/01/2005 $ 3,38103 $ 2,986,223 $ 395,380 113.2% 01/01/2007 4,024,987 3,713,292 311,695 108.4% 01/01/2009 2,654,832 3,240,590 (585,758) 81.9% C. OTHER POST - EMPLOYMENT BENEFITS PLAN DESCRIPTION In addition to providing the pension benefits described in Note 5.B., the City provides postemployment health care benefits for retired employees and police disabled in the line of duty, through a single- employer defined benefit plan administered by the City. The authority to provide these benefits is established in Minnesota Statutes Sections 471.61 subd. 2a. and 299A.465. The benefits, benefit levels, employee contributions and employer contributions are governed by the City and can be amended by the City through its personnel manual and collective bargaining agreements with employee groups. The Plan is not accounted for as a trust fund, as an irrevocable trust has not been established to account for the Plan. The Plan does not issue a separate report. BENEFITS PROVIDED Retirees The City is required by State Statute to allow retirees to continue participation in the City's group health insurance plan if the individual terminates service with the City through service retirement or disability retirement. Former employees who are receiving, or who have met age and service requirements to receive, an annuity from a Minnesota public pension plan and those receiving a disability benefit from such a plan are immediately eligible to participate in this Plan. Retirees may obtain dependent coverage if the employee received dependent coverage immediately before leaving employment. Covered spouses may continue coverage after the death of a retiree. In addition, the surviving spouse of an active employee may continue coverage in the group health insurance plan after the employee's death. All health care coverage is provided through the City's group health insurance plans. The retiree is required to pay the premium as described below: Employees hired before January 1, 1992 with continuous full -time employment Employees who, on the date of their retirement, meet eligibility requirement for a full retirement annuity under PERA or PERA Police without reduction of benefits because of age, disability, or any other reason for reduction shall be eligible for the City to pay 100% of the single - person premium until such time as the retiree is eligible for Medicare or at age 65, whichever is sooner. If the retiree desires to continue coverage in excess of single coverage, the additional cost for the coverage shall be paid to the City on a monthly basis. 69 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 5 OTHER INFORMATION C. OTHER POST - EMPLOYMENT BENEFITS BENEFITS PROVIDED (Continued) Employees hired after January 1, 1992 The retiree is required to pay 100% of their premium cost for the City- sponsored group health insurance plan in which they participate. The premium is a blended rate determined on the entire active and retiree population. Since the projected claims costs for retirees exceed the blended premium paid by retirees, they are receiving an implicit rate subsidy (benefit). The coverage levels are the same as those afforded to active employees. Disabled police and firefighter The City is required to continue to pay the employer's contribution toward health coverage for police or firefighters disabled in the line of duty per Minnesota Statute 299A.465, until age 65. Dependent coverage is included, if the dependents were covered at the time of the disability. PARTICIPANTS As of the actuarial valuation dated January 1, 2010, participants consisted of: Retirees for which the City is paying the single premium 13 Retirees and beneficiaries currently purchasing health insurance through the City 3 Disabled police officers 3 Active employees 151 Total 170 FUNDING POLICY The additional cost of using a blended rate for actives and retirees is currently funded on a pay -as- you -go basis. The City Council may change the funding policy at any time. ANNUAL OPEB COSTS AND NET OPEB OBLIGATION The City's annual other post employment benefit (OPEB) cost is calculated based on the annual required contribution (ARC) of the employer, an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and amortize any unfunded actuarial obligation (or funding excess) over a period not to exceed 30 years. The net OPEB obligation as of December 31, 2010 was calculated as follows: 70 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 5 OTHER INFORMATION C. OTHER POST - EMPLOYMENT BENEFITS ANNUAL OPEB COSTS AND NET OPEB OBLIGATION (Continued) Annual required contribution $ 255,075 Interest on net OPEB obligation 13,781 Adjustment to ARC (18,448) Adjustment for 2008 and 2009 15,824 Annual OPEB cost 266,232 Employer Contributions Direct 142,310 Indirect Implicit Rate Subsidy 49,497 Increase (decrease) in net OPEB obligation 74,425 Net OPEB obligation, beginning of year 290,426 Net OPEB obligation, end of year $ 364,851 The City had an actuarial valuation performed for the plan as of January 1, 2010 to determine the funded status of the plan as of that date as well as the employer's ARC for the fiscal year ended December 31, 2010. The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2010 were as follows: Percentage of Fiscal Year Annual OPEB Employer Annual OPEB Cost Net OPEB Ended Cost Contributions Contributed Obligation December 31, 2008 $ 314,184 $ 167,139 53.20% $ 147,045 December 31, 2009 311,623 168,242 53.99% 290,426 December 31, 2010 266,232 19107 72.05% 364,851 FUNDED STATUS AND FUNDING PROGRESS The City currently has no assets that have been irrevocably deposited into a trust for future benefits; therefore, the actuarial value of assets is zero. The funded status of the plan was as follows: Unfunded Actuarial Actuarial Actuarial Actuarial UAAL as a Valuation Value of Accrued Accrued Funded Covered Percentage of Date Assets Liability (AAL) * Liability (UAAL) Ratio Payroll Covered Payroll January 1, 2008 $ - $ 3,996,136 $ 3,996,136 0.00% $ 8,882,315 44.99% January 1, 2010 - 3,012,383 3,012,383 0.00% 9,143,276 32.95% * Using projected unit credit actuarial cost method Note - the first OPEB actuarial valuation was conducted as of January 1, 2008. There is no data available prior to the first valuation. 71 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 5 OTHER INFORMATION C. OTHER POST - EMPLOYMENT BENEFITS (Continued) ACTUARIAL METHODS AND ASSUMPTIONS Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the health care cost trend. Amounts determined regarding the funding status of the plan and the annual required contribution of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi -year trend information that shows whether the actuarial value of the plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effect of short -term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long -term perspective of the calculations. In the January 1, 2010 actuarial valuation, the Projected Unit Credit actuarial cost was used. The actuarial assumptions included a 4.5% investment rate of return (net of administrative expenses) and an initial annual health care cost trend rate of 9.0% reduced by 0.33% each year to arrive at an ultimate health care cost trend rate of 5.0 %. The actuarial value of assets as $0. The plans' unfunded actuarial accrued liability is being amortized using a 4.5% payroll growth rate method over 30 years on a closed basis. The remaining amortization period at December 31, 2010 was 28 years. D. ARBITRAGE REBATE The Tax Reform Act of 1986 requires governmental entities to pay to the federal government income earned on the proceeds from the issuance of debt in excess of interest costs, pending the expenditure of the borrowed funds. This rebate of interest income (known as arbitrage) applies to governmental debt issued after August 31, 1986. The City issued greater than $5 million of bonds in 2004 and therefore is required to rebate excess investment income relating to these issues to the federal government. The extent of the City's liability for arbitrage rebates on the remaining bond issues is not determinable at this time. However, in the opinion of management, any such liability would be immaterial. E. LITIGATION The City is subject to certain legal claims in the normal course of business. Management does not expect the resolution of these claims will have a material impact on the City's financial condition or results of operations. F. CONTINGENT LIABILITIES Tax Increment Notes In May 2002, the City entered into two limited tax increment notes with developers whereby the City will pay the developers a percentage of the available tax increment. Whether payments will occur and the amount of the payments is unpredictable since all payments are dependent on the City receiving tax increment revenues from the developer's project. As such, this liability has not been recorded in the financial statements. Any potential liability ends with the decertification of the tax increment district. 72 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 5 OTHER INFORMATION F. CONTINGENT LIABILITIES (Continued) A schedule of the notes outstanding at December 31, 2010 is as follows: Amended Original 12/31/2010 Interest Maturity Note Principal Balance Rate Date Twin Lakes Bus in e s s Park $ 2,424,199 $ 1,720,740 8.00% 1/31/2021 G. JOINT VENTURES AND JOINTLY GOVERNED ORGANIZATIONS The City has several agreements with other entities that provide reduced costs, better service, and additional benefits to the participants. The programs in which the City participates are listed below and amounts recorded within the current year's financial statements are disclosed. Local Government Information Systems Association ( LOGIS) This consortium of approximately 30 government entities provides computerized data processing and support services to its members. LOGIS is legally separate; the City does not appoint a voting majority of its board, and the Consortium is fiscally independent of the City. The total amount recorded within the 2010 financial statements of the City is $ 408,775 for general services and application upgrades provided. Costs were allocated to the various funds based on applications and /or use of services. Complete financial statements for LOGIS may be obtained at the LOGIS offices located at 5750 Duluth Street, Golden Valley, Minnesota 55422. LOGIS Insurance Group This group provides cooperative purchasing of health and life insurance benefits for approximately 45 governmental entities. The total of 2010 health and life insurance costs paid by the City was $ 1,364,936. Complete financial statements may be obtained from Gallagher Benefit services, Inc. located at 3600 American Blvd West, Bloomington, MN 55431. The Brooklyn Center Fire Department Relief Association (the Association) The Association is organized as a nonprofit organization, legally separate from the City, by its members to provide pension and other benefits to members in accordance with Minnesota Statutes. Its board of directors is elected by the membership of the Association and not by the City Council. The Association issues its own set of financial statements. All funding is conducted in accordance with applicable Minnesota Statutes, whereby state aids flow to the Association, tax levies are determined by the Association and are only reviewed by the City. The Association pays benefits directly to its members. The Association may certify tax levies to Hennepin County directly if the City does not carry out this function. Because the Association is fiscally independent of the City, the financial information of the Association has not been included within the City's financial statements. (See Note 5.B.2. for disclosures relating to the pension plan operated by the Association.) Complete financial statements for the Association may be obtained at the City offices located at 6301 Shingle Creek Parkway, Brooklyn Center, Minnesota 5 543 0. 73 m E7 This page has been left blank intentionally. 74 CITY OF BROOKLYN CENTER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 1 of 5 For the Year Ended December 31, 2010 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Taxes: Property taxes $ 12 $ 11 $ 11 $ (171,687) Market value homestead credit - - 125 125 Penalties and interest 15 15 19 4 Lodging tax 750 750 696 (53,254) Total taxes 13 12 12 (95,667) Special assessments - - 8 8 Licenses and permits: Liquor and beer licenses 71 71 98 27 Building permits 282 282 482 200 Mechanical permits 53 53 141 88 Sewer and water permits 1 1 2 1 Plumbing permits 30 30 65 35 Garbage licenses 3 3 3 163 Taxicab licenses - - 100 100 Mechanical licenses 6 6 8 2 Service station licenses 2 2 2 628 Vehicle dealer licenses 1 1 1 - Bowling licenses 720 720 720 - Cigarette licenses 3 3 3 288 Sign permits - - 2 2 Rental dwelling licenses 201 201 184 (17,465) Amusement licenses 950 950 775 (175) Electrical Permits 45 45 58 13 ROW permits 3 3 790 (2 Miscellaneous licenses and permits 6 6 5 (440) Total licenses and permits 710 710 1 353 Intergovernmental: Federal: Other federal grants 150 150 2 (147,567) State: Local government aid 411 411 411 (166) Police pension aid 305 305 293 (11,035) PERA aid 34 34 34 - Fireperson pension aid 140 140 99 (40,248) Police training - - 15 15 Other state grants - 30 12 (18,178) Local: Miscellaneous grants 68 68 68 382 Total intergovernmental 1 1 937 (201,755) Charges for services: General government charges 123 123 262 138 Public safety charges 50 50 72 21 Community development fees 12 12 12 20 Recreation fees 291 311 295 (16,085) Community Center fees 381 3 81,3 80 343 (37,420) Total charges for services 859 878 985 107 75 CITY OF BROOKLYN CENTER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 2 of 5 For the Year Ended December 31, 2010 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) Revenues (continued): Fines and forfeits $ 345 $ 345 $ 359 $ 14 Miscellaneous: Investment earnings (net of market value change) 100 100 1 (98,956) Other 65 65 73 7 Total miscellaneous 165 165 74 (91,014) Total revenues 16 15 16 95 EXPENDITURES General government: Mayor and council: Current: Personal services 48 48 49 (297) Supplies 100 100 945 (845) Services and other charges 81 81 73 7 Total mayor and council 130 130 123 6 Administrative (Manager, Clerk, HR) offices: Current: Personal services 656 653 655 (1 Supplies 5 4 4 232 Services and other charges 43 41 38 2 Total administrative office 705 699 698 1 Elections and voter registration: Current: Personal services 64 64 66 (1 Supplies 1 700 1 (591) Services and other charges 35 34 33 389 Total elections and voter registration 101 99 101 (1 Assessor's office: Current: Personal services 269 269 264 4 Supplies 4 4 3 670 Services and other charges 42 42 45 (2 Total assessor's office 316 316 313 2 Finance: Current: Personal services 478 457 452 4 Supplies 6 5 5 518 Services and other charges 21 19 21 (1 Total finance 506 482 479 3 Legal: Current: Services and other charges 401 401 397 4 76 CITY OF BROOKLYN CENTER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 3 of 5 For the Year Ended December 31, 2010 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) Expenditures: General government (continued): Government buildings: Current: Personal services $ 294 $ 294 $ 299 $ (4 Supplies 74 74 85 (10,667) Services and other charges 398 378 475 (96 Total government buildings 768 748 860 (111,568) Information technology: Current: Personal services 202 202 201 933 Supplies 5 4 4 271 Services and other charges 174 171 177 (5 Total information technology 382 378 382 (4 Total general government 3 3 3 (99,368) Public safety: Police protection: Current: Personal services 5 5 5 182 Supplies 109 109 117 (7 Services and other charges 939 939 931 7 Total current 6 6 6 182 Capital outlay 12 12 14 (1 Total police protection 6 6 6 180 Fire protection: Current: Personal services 619 619 601 18 Supplies 71 69 59 10 Services and other charges 264 253 257 (3 Total fire protection 955 942 917 24 Protective inspection: Current: Personal services 859 804 608 195 Supplies 4 4 5 (906) Services and other charges 131 131 177 (45,456) Total protective inspection 995 940 791 148 Emergency preparedness: Current: Personal services 67 67 66 930 Supplies 21 21 18 2 Services and other charges 6 6 3 3 Total emergency preparedness 95 95 88 7 Total public safety 8 8 8 360 77 CITY OF BROOKLYN CENTER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 4 of 5 For the Year Ended December 31, 2010 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) Expenditures (continued): Public works: Engineering department: Current: Personal services $ 511 $ 500 $ 570 $ (70,396) Supplies 4 3 3 133 Services and other charges 38 37 40 (3 Total engineering department 554 541 614 (73,431) Street department: Current: Personal services 775 708 712 (4 Supplies 132 131 129 2 Services and other charges 625 619 558 60 Total street department 1 1 1 58 Total public works 2 2 2 (14,906) Community services: Social services: Current: Services and other charges 80 80 77 3 Civic events: Current: Services and other charges 5 5 5 - Total community services 85 85 82 3 Parks and recreation: Administration: Current: Personal services 182 182 186 (3 Supplies - - 157 (157) Services and other charges 6 6 4 1 Total administration 188 188 191 (2 Recreation programs: Current: Personal services 460 460 463 (3 Supplies 35 35 37 (2 Cost of good sold to public 7 7 2 5 Services and other charges 192 192 204 (11,502) Total recreation programs 696 696 708 (12,135) Community center: Current: Personal services 448 448 428 19 Supplies 32 32 11 21 Services and other charges 84 79 79 433 Total community center 566 561 519 41 78 CITY OF BROOKLYN CENTER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 5 of 5 For the Year Ended December 31, 2010 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) Expenditures: Parks and recreation (continued): Park maintenance: Current: Personal services $ 564 $ 564 $ 537 $ 27 Supplies 50 47 38 9 Services and other charges 334 327 317 10 Total park maintenance 949 939 893 46 Total parks and recreation 2 2 2 73 Economic development: Convention bureau: Current: Services and other charges 356 356 330 25 Nondepartmental: Expenditures not charged to departments: Current: Supplies 22 22 23 (1 Services and other charges 459 359 277 81 Total nondepartmental 481 381 300 80 Total expenditures 17 17 16 429 Revenues over (under) expenditures (975,277) (1 (557,046) 524 OTHER FINANCING SOURCES (USES) Transfers in - administrative services reimbursed 1 1 1 (77,169) Transfers from other funds - - 179 179 Transfers to other funds (70,000) (396 (396,701) - Total other financing sources (uses) 975 755 857 102 Net increase (decrease) in fund balance $ - $ (326,701) 300 $ 627 Fund balance - January 1 8 Fund balance - December 31 $ 8 79 CITY OF BROOKLYN CENTER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 11 BUDGETARY COMPARISON SCHEDULE - TAX INCREMENT DISTRICT NO. 3 For the Year Ended December 31, 2010 Variance with Final Budget - Budgeted Amounts Positive Original Final Actual (Negative) REVENUES Taxes: Tax increments $ 2 $ 2 $ 1 $ (328,264) Market value homestead credit - - 7 7 Intergovernmental - - 9 9 Investment earnings (net of market value adjustment) 60 60 7 (52,045) Miscellaneous - - 1 1 Total revenues 2 2 1 (363,527) EXPENDITURES Current: Economic development: Services and other charges 101 101 1 (1 Capital outlay: Economic development - - 1 (1 Total expenditures 101 101 2 (2 Revenues over (under) expenditures 2 2 (716,040) (2,790,3 81) OTHER FINANCING SOURCES (USES) Transfers out (3 (3 (3 2 Net increase (decrease) in fund balance $ (1 $ (1 (4 $ (2 Fund balance - January 1 8 Fund balance - December 31 $ 3 80 CITY OF BROOKLYN CENTER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 12 SCHEDULE OF FUNDING PROGRESS - OTHER POSTEMPLOYMENT BENEFITS For the Year Ended December 31, 2010 Unfunded Actuarial Actuarial Actuarial Actuarial UAAL as a Valuation Value of Accrued Accrued Funded Covered Percentage of Date Assets Liability (AAL) Liability (UAAL Ratio Payroll Covered Payroll January 1, 2008 $ - $ 3 $ 3 0.00% $ 8 44.99% January 1, 2010 - 3,012,3 83 3,012,3 83 0.00% 9 32.95% Percentage Annual of Annual Fiscal Year OPEB Employer OPEB Cost Net OPEB Ended Cost Contribution Contributed Obligation December 31, 2008 $ 314 $ 167 53.20% $ 147 December 31, 2009 311 168 53.99% 290 December 31, 2010 266 191 72.05% 364 The City implemented GASB Statement No. 45 for the year ended December 31, 2008. Information for prior years is not available. 81 CITY OF BROOKLYN CENTER, MINNESOTA NOTE TO REQUIRED SUPPLEMENTARY INFORMATION December 31, 2010 Note A LEGAL COMPLIANCE — BUDGET The General Fund and Tax Increment District No. 3 Special Revenue Fund budgets are legally adopted on a basis consistent with accounting principles generally accepted in the United States of America. The legal level of budgetary control is the department level for the General Fund and the fund level for all other governmental funds. The following General Fund departments and major special revenue funds had expenditures in excess of budgeted appropriations: Final Over Budget Actual Budget Major Funds: General Fund: Elections and voter registration $ 99 $ 101 $ (1 Government buildings 748 860 (111,568) Information technology 378 382 (4 Engineering department 541 614 (73,431) Parks and recreation administration 188 191 (2 Recreation programs 696 708 (12,135) Special Revenue Funds: Tax Increment District No. 3 101 2 (2 82 NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS A Special Revenue Fund is used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. Housing and Redevelopment Authority Fund (H - This fund has authority to levy an ad valorem property tax for the purpose of conducting housing and redevelopment projects. These projects are accounted for in the EDA Fund; all tax proceeds are transferred to that fund. Economic Development Authority Fund (EDA) - This fund was established to account for the Economic Development Authority (EDA) of Brooklyn Center. The EDA carries out development activities; it has authority to operate an enterprise. The Earle Brown Heritage Center operates under this authority, as well as the tax increment financing activities. The EDA also does redevelopment and housing projects, funded by an ad valorem property tax levy and transfers from the CDBG and HRA funds. Earle Brown Tax Increment District — This fund has the authority to collect tax increments which are used for the historic restoration of the Earle Brown Farm and for debt service payments on bonds which were issued for the same purpose. Tax Increment District No. 4 Fund — This fund has the authority to collect tax increments which are used for various redevelopment projects within the City and for debt service payments of bonds which were issued for the same purpose. Police Drug Forfeiture Fund - This fund was established to account for property and /or cash seized by Police Department personnel. Community Development Block Grant Fund (CDBG) - This fund was established to account for funds received under Title I of the Housing and Community Development Act of 1974. City Initiatives Grant Fund — Revenues and expenditures from grants received from outside entities are accounted for in this fund. Programs include several federal, state, and local public safety grants, and state and local recreation grants. 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. General Obligation Bonds Fund — This fund is used to account for the accumulation of resources for payment of general obligation bonds and interest thereon. 83 NONMAJOR GOVERNMENTAL FUNDS (Continued) 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). Capital Reserve Emergency Fund - This fund was established in 1997 to account for monies held in reserve for catastrophic losses or unforeseen capital items. Capital Improvements Fund - This fund was established in 1968 to provide funds, and to account for the expenditure of such funds, for major capital outlays including, but not limited to, construction or acquisition of major permanent facilities having a relatively long life; and /or to reduce debt incurred for capital outlays. The financing sources of the fund include ad valorem taxation, transfers from other funds, issuance of bonds, federal and state grants, and investment earnings. Municipal State Aid Fund - This fund was established to account for the state allotment of gasoline tax collections used for transportation related construction and maintenance projects. Earle Brown Heritage Center Improvements Fund - This fund was established to provide a stable source of funds to pay for periodic capital improvements needed at the facility. Street Reconstruction Fund — This fund accounts for franchise fees collected, which have been dedicated to the reconstruction of the City's infrastructure. Technology Fund - This fund, established in 2003, accounts for funds set aside for technology improvements or major technology renovations /replacements. 84 m E7 This page has been left blank intentionally. 85 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING BALANCE SHEET Statement 13 NONMAJOR GOVERNMENTAL FUNDS December 31, 2010 General Total Special Obligation Capital Nonmaj or Revenue Debt Service Project Governmental ASSETS Cash and investments $ 4 $ 1 $ 4 $ 10 Receivables: Accounts - net 1 - 167 168 Current taxes 2 6 - 9 Delinquent taxes 13 32 - 45 Due from other governments 121 - 2 2 Interfund receivable 34 - - 34 Advances to other funds - - 792 792 Assets held for resale 537 - - 537 Total assets 5 1 7 14 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 14 - 88 102 Accrued salaries and wages 16 - - 16 Due to other governments 11 - - 11 Contracts payable - - 61 61 Interfund payable 34 - 1 1 Deferred revenue 553 32 - 586 Total liabilities 630 32 1 2 Fund balances: Reserved: Advances to other funds - - 792 792 Committed contracts - - 19 19 Debt service - 1,196,115 - 1,196,115 Unreserved: Designated: Economic development 4 - - 4 Capital improvements - - 4 4 Undesignated 145 - - 145 Total fund balances 5 1,196,115 5 11 Total liabilities and fund balances $ 5 $ 1 $ 7 $ 14 86 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND Statement 14 CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended December 31, 2010 General Total Special Obligation Capital Nonmaj or Revenue Debt Service Project Governmental REVENUES Property taxes $ 348 $ 707 $ - $ 1 Tax increments 1 - - 1 Franchise fees - - 647 647 Intergovernmental 1 - 1 2 Charges for services 15 - - 15 Investment earnings (net of market value adjustment) 4 175 7 12 Miscellaneous 74 - 100 174 Total revenues 3,131,652 707 2 6 EXPENDITURES Current: General government 1 - 489 490 Public safety 295 - - 295 Public works - - 129 129 Parks and recreation 79 - 49 129 Economic development 1 - - 1 Capital outlay: General government - - 110 110 Public works - - 2 2 Parks and recreation - - 265 265 Debt service: Principal retirement 331 640 - 971 Interest - 75 - 75 Fiscal agent fees - 756 - 756 Total expenditures 2 715 3 5 Revenues over (under) expenditures 1 (8 (771,682) 288 OTHER FINANCING SOURCES (USES) Transfers in 348 - 696 1 Transfers out (528,023) - - (528,023) Total other financing sources (uses) (179,514) - 696 516 Net increase (decrease) in fund balances 889 (8 (75,228) 805 Fund balances - January 1 4 1 5 11 Fund balances - December 31 $ 5 $ 1,196,115 $ 5 $ 11 87 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS December 31, 2010 Housing and Economic Earle Brown Redevelopment Development Tax Increment Authority Authority District ASSETS Cash and investments $ - $ 1 $ 2 Receivables: Accounts - - - Current taxes 2 - - Delinquent taxes 13 - - Due from other governments - - - Interfund receivable - 34 - Asset held for resale - 537 - Total assets 16 2 2 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable - 4 - Accrued salaries and wages - 8 - Due to other governments - - - Interfund payable - - - Deferred revenue 13 537 - Total liabilities 13 549 - Fund balances: Unreserved: Designated: Economic development 2 1 2 Undesignated - - - Total fund balances 2 1 2 Total liabilities and fund balances $ 16 $ 2 $ 2 88 Statement 15 Total Tax Police Community City Nonmaj or Increment Drug Development Initiatives Special District No. 4 Forfeiture Block Grant Grant Revenue $ 178 $ 7 $ - $ 94 $ 4 - - - 1 1 - - - - 2 - - - - 13 - - 46 74 121 - - - - 34 - - - - 537 178 7 46 170 5 - - - 9 14 - - - 7 16 - 1 - 10 11 - - 34 - 34 - - - 3 553 - 1 34 31 630 178 - 12 - 4 - 6 - 139 145 178 6 12 139 5 $ 178 $ 7 $ 46 $ 170 $ 5 89 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS For the Year Ended December 31, 2010 Housing and Economic Earle Brown Redevelopment Development Tax Increment Authority Authority District REVENUES Property taxes $ 348 $ - $ - Tax increments - - 977 Intergovernmental - 50 - Charges for services - - - Investment earnings (net of market value adjustment) - 2 2 Miscellaneous - 5 - Total revenues 348 58 979 EXPENDITURES Current: General government: Services and other charges - - - Public safety: Personal services - - - Supplies - - - Services and other charges - - - Total public safety - - - Parks and recreation: Personal services - - - Supplies - - - Services and other charges - - - Total parks and recreation - - - Economic development: Personal services - 247 - Supplies - 9 - Services and other charges - 243 - Total economic development - 499 - Debt service: Principal - - - Total expenditures - 499 - Revenues over (under) expenditures 348 (441,623) 979 OTHER FINANCING SOURCES (USES) Transfers in - 348 - Transfers out (348,509) - - Total other financing sources (uses) (348,509) 348 - Net increase (decrease) in fund balances (453) (93,114) 979 Fund balances - January 1 3 1 1 Fund balances - December 31 $ 2 $ 1 $ 2 90 Statement 16 Total Tax Police Community City Nonmaj or Increment Drug Development Initiatives Special District No. 4 Forfeiture Block Grant Grant Revenue $ - $ - $ - $ - $ 348 339 - - - 1 - 273 1 275 1 - - - 15 15 (324) 139 - 119 4 - 43 - 24 74 339 44 1 315 3 - - - 1 1 - - - 193 193 - 7 - 15 23 - 62 - 15 78 - 70 - 224 295 - - - 7 7 - - - 11 11 - - - 60 60 - - - 79 79 - - - - 247 - - - - 9 1 - 854 - 1 1 - 854 - 1 331 - - - 331 332 70 854 305 2 6 (26,274) 191 10 1 - - - - 348 - - (179,514) - (528,023) - - (179,514) - (179,514) 6 (26,274) 12 10 889 171 32 - 129 4 $ 178 $ 6 $ 12 $ 139 $ 5 91 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING BALANCE SHEET NONMAJOR CAPITAL PROJECT FUNDS December 31, 2010 Capital Reserve Capital Emergency Improvements ASSETS Cash and investments $ 1 $ 352 Receivables: Accounts - net - - Due from other governments - - Advances to other funds - 792 Total assets 1 1 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable - 3 Contracts payable - 61 Interfund payable - - Total liabilities - 64 Fund balances: Reserved: Advances to other funds - 792 Committed contracts - 19 Unreserved: Designated for capital improvements 1 269 Total fund balances 1 1 Total liabilities and fund balances $ 1 $ 1 92 Statement 17 Municipal Earle Brown Total State Aid Heritage Nonmaj or for Center Street Capital Construction Improvements Reconstruction Technology Projects $ - $ 587 $ 1 $ 176 $ 4 - - 167 - 167 2 19 - - 2 - - - - 792 2 607 1 176 7 27 15 - 41 88 - 351 - - 61 1 - - - 1 1 15 - 41 1 - - - - 792 - - - - 19 773 591 1 135 4 773 591 1 135 5 $ 2 $ 607 $ 1 $ 176 $ 7 93 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR CAPITAL PROJECT FUNDS For the Year Ended December 31, 2010 Capital Reserve Capital Emergency Improvements REVENUES Franchise fees $ - $ - Intergovernmental - - Investment earnings (net of market value adjustment) 2 (355) Miscellaneous - 263 Total revenues 2 (92) EXPENDITURES Current: General government: Supplies - - Services and other charges - 264 Total general government - 264 Public works: Supplies - - Services and other charges - - Total public works - - Parks and recreation: Services and other charges - 49 Capital outlay General government - - Public works - - Parks and recreation - 265 Total capital outlay - 265 Total expenditures - 580 Revenues over (under) expenditures 2 (580,876) OTHER FINANCING SOURCES (USES) Transfers in - 626 Net increase (decrease) in fund balances 2 45 Fund balances - January 1 1 1 Fund balances - December 31 $ 1 $ 1 94 Statement 18 Municipal Earle Brown Total State Aid Heritage Nonmaj or for Center Street Capital Construction Improvements Reconstruction Technology Projects $ - $ - $ 647 $ - $ 647 1 19 - - 1 233 1 4 110 7 - 100 - - 100 1 121 652 110 2 - - - 154 154 - 59 - 11 335 - 59 - 165 489 42 - - - 42 86 - - - 86 129 - - - 129 - - - - 49 - 110 - - 110 1 - 592 - 2 - - - - 265 1 110 592 - 2 1 169 592 165 3 (38,487) (48,866) 59 (165,148) (771,682) - - - 70 696 (38,487) (48,866) 59 (95,148) (75,228) 811 640 1 230 5 $ 773 $ 591 $ 1 $ 135 $ 5 95 CITY OF BROOKLYN CENTER, MINNESOTA DEBT SERVICE FUND - G.O. IMPROVEMENT BONDS Statement 19 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2010 Budgeted Amounts Actual Original Final Amounts REVENUES Property taxes $ - $ - $ (483) Special assessments 1 1 750 Investment earnings (net of market value adjustment) 5 5 2 Total revenues 1 1 752 EXPENDITURES Debt service: Principal 920 920 920 Interest 169 169 167 Fiscal agent fees 10 10 11 Total expenditures 1 1 1 Net increase (decrease) in fund balance $ (58,780) $ (58,780) (346,052) Fund balance - January 1 3 Fund balance - December 31 $ 2 96 CITY OF BROOKLYN CENTER, MINNESOTA DEBT SERVICE FUND - TAX INCREMENT BONDS Statement 20 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2010 Budgeted Amounts Actual Original Final Amounts EXPENDITURES Debt service: Principal $ 2 $ 2 $ 2 Interest 783 783 783 Fiscal agent fees 4 4 2 Total expenditures 3 3 3 Revenues over (under) expenditures (3 (3 (3 OTHER FINANCING SOURCES (USES) Transfers in 3 3 3 Net increase (decrease) in fund balance $ - $ - - Fund balance - January 1 - Fund balance - December 31 $ - 97 CITY OF BROOKLYN CENTER, MINNESOTA CAPITAL PROJECT FUND - INFRASTRUCTURE CONSTRUCTION Statement 21 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2010 Budgeted Amounts Actual Original Final Amounts REVENUES Special assessments $ 405 $ 405 $ 731 Intergovernmental - - 2 Miscellaneous 95 95 37 Total revenues 500 500 3 EXPENDITURES Current: Public works: Services and other charges - - 15 Capital outlay: Public works 10 10 5 Total expenditures 10 10 5 Revenues over (under) expenditures (10,365,085) (10,365,085) (1 OTHER FINANCING SOURCES (USES) Transfers in 8 8 92,835 Net increase (decrease) in fund balance $ (1 $ (1 (1 Fund balance - January 1 (606,621) Fund balance - December 31 $ (1 98 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - HOUSING AND REDEVELOPMENT AUTHORITY Statement 22 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2010 Budgeted Amounts Actual Original Final Amounts REVENUES Taxes: Property taxes $ 349 $ 349 $ 331 Market value homestead credit - - 16 Total revenues 349 349 348 Revenues over (under) expenditures 349 349 348 OTHER FINANCING SOURCES (USES) Transfers out (349,745) (349,745) (348,509) Net increase (decrease) in fund balance $ - $ - (453) Fund balance - January 1 3 Fund balance - December 31 $ 2 99 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - ECONOMIC DEVELOPMENT AUTHORITY Statement 23 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2010 Budgeted Amounts Actual Original Final Amounts REVENUES Intergovernmental $ - $ - $ 50 Investment earnings (net of market value adjustment) 15 15 2 Miscellaneous - - 5 Total revenues 15 15 58 EXPENDITURES Current: Economic development: Personal services 230 230 247 Supplies 1 1 9 Services and other charges 146 146 243 Total expenditures 379 379 499 Revenues over (under) expenditures (364,104) (364,104) (441,623) OTHER FINANCING SOURCES (USES) Transfers in 349 349 348 Net increase (decrease) in fund balance $ (14,3 59) $ (14,3 59) (93,114) Fund balance - January 1 1 Fund balance - December 31 $ 1 100 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - EARLE BROWN TAX INCREMENT DISTRICT Statement 24 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2010 Budgeted Amounts Actual Original Final Amounts REVENUES Taxes: Tax increments $ 805 $ 805 $ 977 Investment earnings (net of market value adjustment) - - 2 Total revenue 805 805 979 EXPENDITURES Current: Economic development: Services and other charges 18 18 - Net increase (decrease) in fund balance $ 787 $ 787 979 Fund balance - January 1 1 Fund balance - December 31 $ 2 101 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - TAX INCREMENT DISTRICT NO. 4 Statement 25 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2010 Budgeted Amounts Actual Original Final Amounts REVENUES Tax increments $ 305 $ 305 $ 339 Investment earnings (net of market value adjustment) - - (324) Total revenues 305 305 339 EXPENDITURES Current: Economic development: Services and other charges 15 15 1 Debt service: Principal 290 290 331 Total expenditures 305 305 332 Net increase (decrease) in fund balance $ 274 $ 274 6 Fund balance - January 1 171 Fund balance - December 31 $ 178 102 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - COMMUNITY DEVELOPMENT BLOCK GRANT Statement 26 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2010 Budgeted Amounts Actual Original Final Amounts REVENUES Intergovernmental $ 193 $ 193 $ 1 EXPENDITURES Current: Economic development: Services and other charges 193 193 854 Revenues over (under) expenditures - - 191 OTHER FINANCING SOURCES (USES) Transfers out - - (179,514) Net increase (decrease) in fund balance $ - $ - 12 Fund balance - January 1 - Fund balance - December 31 $ 12 103 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - CITY INITIATIVES GRANT Statement 27 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2010 Budgeted Amounts Actual Original Final Amounts REVENUES Intergovernmental $ 146 $ 146 $ 275 Charges for services 12 12 15 Investment earnings (net of market value adjustment) - - 119 Miscellaneous 15 15 24 Total revenues 174 174 315 EXPENDITURES Current: General government: Services and other charges - - 1 Public safety: Personal services 154 154 193 Supplies - - 15 Services and other charges - - 15 Total public safety 154 154 224 Parks and recreation: Personal services 7 7 7 Supplies 10 10 11 Services and other charges 22 22 60 Total parks and recreation 40 40 79 Total expenditures 195 195 305 Net increase (decrease) in fund balance $ (20,979) $ (20,979) 10 Fund balance - January 1 129 Fund balance - December 31 $ 139 104 CITY OF BROOKLYN CENTER, MINNESOTA DEBT SERVICE FUND - GENERAL OBLIGATION BONDS Statement 28 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2010 Budgeted Amounts Actual Original Final Amounts REVENUES Property taxes $ 715 $ 715 $ 707 Investment earnings (net of market value adjustment) 1 1 175 Total revenues 716 716 707 EXPENDITURES Debt service: Principal 640 640 640 Interest 75 75 75 Fiscal agent fees 1 1 756 Total expenditures 716 716 715 Net increase (decrease) in fund balance $ (470) $ (470) (8 Fund balance - January 1 1 Fund balance - December 31 $ 1,196,115 105 CITY OF BROOKLYN CENTER, MINNESOTA CAPITAL PROJECT FUND - CAPITAL IMPROVEMENTS Statement 29 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2010 Budgeted Amounts Actual Original Final Amounts REVENUES Investment earnings (net of market value adjustment) $ 1 $ 1 $ (355) Miscellaneous - - 263 Total revenues 1 1 (92) EXPENDITURES Current: General government: Services and other charges - - 264 Public works: Services and other charges 339 339 - Parks and recreation: Services and other charges - - 49 Capital outlay: Parks and recreation - - 265 Total expenditures 339 339 580 Revenues over (under) expenditures (337,274) (337,274) (580,876) OTHER FINANCING SOURCES (USES) Transfers in 461 461 626 Net increase (decrease) in fund balance $ 124 $ 124 45 Fund balance - January 1 1 Fund balance - December 31 $ 1 106 CITY OF BROOKLYN CENTER, MINNESOTA CAPITAL PROJECT FUND - MUNICIPAL STATE AID FOR CONSTRUCTION Statement 30 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2010 Budgeted Amounts Actual Original Final Amounts REVENUES Intergovernmental $ 749 $ 749 $ 1 Investment earnings (net of market value adjustment) - - 233 Total revenues 749 749 1 EXPENDITURES Current: Public works: Supplies 42 42 42 Services and other charges 91 91 86,641 Total public works 133 133 129 Capital outlay: Public works - - 1 Total expenditures 133 133 1 Revenues over (under) expenditures 615 615 (38,487) OTHER FINANCING SOURCES (USES) Transfers out (1 (1 - Net increase (decrease) in fund balance $ (541,609) $ (541,609) (38,487) Fund balance - January 1 811 Fund balance - December 31 $ 773 107 CITY OF BROOKLYN CENTER, MINNESOTA CAPITAL PROJECT FUND - EARLE BROWN HERITAGE CENTER IMPROVEMENTS Statement 31 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2010 Budgeted Amounts Actual Original Final Amounts REVENUES Intergovernmental $ - $ - $ 19 Investment earnings (net of market value adjustment) - - 1 Miscellaneous - - 100 Total revenues - - 121 EXPENDITURES Current: General government: Services and other charges 366 366 59 Capital outlay: General government - - 110 Total expenditures 366 366 169 Revenues over (under) expenditures (366,000) (366,000) (48,866) OTHER FINANCING SOURCES (USES) Transfers in 200 200 - Net increase (decrease) in fund balance $ (166,000) $ (166,000) (48,866) Fund balance - January 1 640 Fund balance - December 31 $ 591 108 CITY OF BROOKLYN CENTER, MINNESOTA CAPITAL PROJECT FUND - STREET RECONSTRUCTION Statement 32 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2010 Budgeted Amounts Actual Original Final Amounts REVENUES Franchise fees $ 680 $ 680 $ 647 Investment earnings (net of market value adjustment) 6 6 4 Total revenues 686 686 652 EXPENDITURES Capital outlay: Public works 1 1 592 Net increase (decrease) in fund balance $ (816,929) $ (816,929) 59 Fund balance - January 1 1 Fund balance - December 31 $ 1 109 CITY OF BROOKLYN CENTER, MINNESOTA CAPITAL PROJECT FUND - TECHNOLOGY Statement 33 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2010 Budgeted Amounts Actual Original Final Amounts REVENUES Investment earnings (net of market value adjustment) $ - $ - $ 110 EXPENDITURES Current: General government: Supplies 79 79 154 Services and other charges 12 12 11 Total expenditures 91 91 165 Revenues over (under) expenditures (91,345) (91,345) (165,148) OTHER FINANCING SOURCES (USES) Transfers in 70 70 70 Net increase (decrease) in fund balance $ (21,345) $ (21,345) (95,148) Fund balance - January 1 230 Fund balance - December 31 $ 13 5 1 215 110 NONMAJOR ENTERPRISE FUNDS The City of Brooklyn Center had the following nonmaj or Enterprise Funds during the year: Recycling and Refuse Fund - This fund accounts for the operation of a state - mandated recycling program. Street Light Utility Fund - This fund was created to account for expenses related to streetlights within the City. Benefiting properties are billed for these expenses. 111 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF NET ASSETS Statement 34 NONMAJOR ENTERPRISE FUNDS December 31, 2010 Total Recycling and Street Light Nonmaj or Refuse Utility Enterprise ASSETS Current assets: Cash and cash equivalents $ - $ 76 $ 76 Receivables: Accounts - net 54 54 109 Total current assets 54 131 186 Noncurrent assets: Capital assets: Street light systems - 425 425 Less: Allowance for depreciation - (11,133) (11,133) Net capital assets - 414 414 Total assets 54 546 600 LIABILITIES Current liabilities: Accounts payable 488 24 25 Interfund payable 9 - 9 Total liabilities 10 24 35 NET ASSETS Invested in capital assets - 414 414 Unrestricted 44 106 150 Total net assets $ 44 $ 521 $ 565 112 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENSES, AND Statement 35 CHANGES IN FUND NET ASSETS NONMAJOR ENTERPRISE FUNDS For the Year Ended December 31, 2010 Total Recycling and Street Light Nonmaj or Refuse Utility Enterprise OPERATING REVENUES Sales and user fees $ 283 $ 258 $ 541 OPERATING EXPENSES Supplies 90 466 556 Other services 276 43 320 Insurance 1 1 2 Utilities - 163 163 Depreciation - 5 5 Total operating expenses 278 213 492 Operating income (loss) 4 44 49 NONOPERATING REVENUES (EXPENSES) Investment earnings (net of market value adjustment) 1 416 417 Income (loss) before transfers 4 45 49 Transfers out - (92,835) (92,835) Change in net assets 4 (47,636) (42,959) Net assets - January 1 39 568 608 Net assets - December 31 $ 44 $ 521 $ 565 113 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF CASH FLOWS Statement 36 NONMAJOR ENTERPRISE FUNDS For the Year Ended December 31, 2010 Total Recycling and Street Light Nonmaj or Refuse Utility Enterprise CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers $ 283 $ 260 $ 543 Payments to suppliers (278,867) (199,595) (478,462) Net cash flows provided (used) by operating activities 4 61 65 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers out - (92,835) (92,835) Interfund payable (4 - (4 Net cash flows provided (used) by noncapital financing activities (4 (92,835) (97,234) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets - (9 (9 CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments 1 416 417 Net increase (decrease) in cash and cash equivalents - (40,949) (40,949) Cash and cash equivalents - January 1 - 117 117 Cash and cash equivalents - December 31 $ - $ 76 $ 76 Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) $ 4 $ 44 $ 49 Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Depreciation - 5 5 Changes in assets and liabilities: (Increase) decrease in receivables 208 2 2 Increase (decrease) in payables (486) 8 8 Total adjustments (278) 16 16 Net cash flows provided (used) by operating activities $ 4 $ 61 $ 65 114 INTERNAL SERVICE FUNDS The City's Internal Service Funds included in this section are: 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 and repair costs are charged to the departments as incurred. Replacement costs are charged to the departments over the estimated useful life of the vehicles and equipment. Public Employees Retirement Fund - This fund accounts for certain health care insurance benefits for City employees who retire before age 65. Substantially all of the City's full -time police and fire employees and all other full -time employees hired before July 1, 1989 may be eligible for those benefits from the time they qualify for an unreduced PERA pension until they reach age 65 or become eligible for Medicare. In the event that future costs would exceed earnings, other funds would be charged for the costs associated with their employees. Public Employees Compensated Absences Fund - This fund accounts for payment of unused vacation and sick leave time and the allocation of such costs to user departments. 115 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF NET ASSETS Statement 37 INTERNAL SERVICE FUNDS December 31, 2010 Total Central EE Retirement EE Comp Internal Garage Benefit Absences Service ASSETS Current assets: Cash and cash equivalents $ 959 $ 1 $ 1 $ 3 Receivables: Accounts - net 58 3 - 62 Interfund receivable 3 - - 3 Inventories 26 - - 26 Total current assets 4 1 1 6 Noncurrent assets: Capital assets: Land improvements 166 - - 166 Machinery and equipment 7 - - 7 Total capital assets 8 - - 8 Less: Allowance for depreciation (4 - - (4 Net capital assets 3 - - 3 Total assets 7 1 1 10 LIABILITIES Current liabilities: Accounts payable 16 - - 16 Accrued salaries payable 13 - - 13 Compensated absences payable - current - - 110 110 Total current liabilities 29 - 110 139 Noncurrent liabilities: Compensated absences payable- long -term - - 990 990 Net OPEB obligation - 364 - 364 Total noncurrent liabilities - 364 990 1 Total liabilities 29 364 1 1 NET ASSETS Invested in capital assets 3 - - 3 Unrestricted 4 884 - 5 Total net assets $ 7 $ 884 $ - $ 8 116 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENSES, AND Statement 38 CHANGES IN FUND NET ASSETS INTERNAL SERVICE FUNDS For the Year Ended December 31, 2010 Total Central EE Retirement EE Comp Internal Garage Benefit Absences Service OPERATING REVENUES Sales and user fees $ 1 $ 48 $ 126 $ 1 OPERATING EXPENSES Personal services 345 265 127 739 Supplies 451 - - 451 Other services 146 - - 146 Insurance 44 - - 44 Utilities 1 - - 1 Depreciation 638 - - 638 Total operating expenses 1 265 127 2 Operating income (loss) (87,005) (216,735) (1 (305,439) NONOPERATING REVENUES (EXPENSES) Intergovernmental - 15 - 15 Investment earnings (net of market value adjustment) 5 2 1 9 Gain (loss) on sale of capital assets 55 - - 55 Other revenue 8 - - 8 Total nonoperating revenues (expenses) 69 17 1 88 Change in net assets (17,158) (199,634) - (216,792) Net assets - January 1 7 1 - 8 Net assets - December 31 $ 7 $ 884 $ - $ 8 117 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF CASH FLOWS Statement 39 INTERNAL SERVICE FUNDS For the Year Ended December 31, 2010 Total Central EE Retirement EE Comp Internal Garage Benefit Absences Service CASH FLOWS FROM OPERATING ACTIVITIES Receipts from interfund services provided $ 1 $ 48 $ 126 $ 1 Payments to suppliers (794,102) - - (794,102) Payments to employees (344,808) (192,005) (118,387) (655,200) Miscellaneous revenue 8 15 - 23 Net cash flows provided (used) by operating activities 403 (128,499) 7 282 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Interfund receivable (3 - - (3 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (439,213) - - (439,213) Proceeds from sale of capital assets 105 - - 105 Net cash flows provided (used) by capital and related financing activities (334,164) - - (334,164) CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments 5 2 1 9 Net increase (decrease) in cash and cash equivalents (3 (126,413) 9 (3 Cash and cash equivalents - January 1 4 1 1 6 Cash and cash equivalents - December 31 $ 959 $ 1 $ 1 $ 3 Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) $ (87,005) $ (216,735) $ (1 $ (305,439) Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Depreciation 638 - - 638 Changes in assets and liabilities: (Increase) decrease in receivables (6 (1 - (8 (Increase) decrease in inventories 901 - - 901 Increase (decrease) in payables (152,015) - - (152,015) Increase (decrease) in accrued expenses 1 74 9 85 Other nonoperating income 8 15 - 23 Total adjustments 490 88 9 588 Net cash provided (used) by operating activities $ 403 $ (128,499) $ 7 $ 282 Noncash financing activities: Gain on sale of assets $ 55 $ - $ - 118 STATISTICAL SECTION This part of the City of Brooklyn Center's comprehensive annual financial report presents detailed information as a context for understanding the financial statements, note disclosures, and supplementary information. This section includes information for the primary government, including any blended component units. Contents Page Financial Trends 120 These tables contain trend information to help the reader understand the City's financial performance by placing it in historical perspective. Revenue Capacity 134 These tables contain information to help the reader assess the City's most significant "own - source " revenue, property taxes. Debt Capacity 140 These tables present information to help the reader assess the affordability of the government's current levels of outstanding debt and the City's ability to issue debt in the future. Demographic and Economic Information 146 These tables offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place. Operating Information 148 These tables contain service and infrastructure data to help the reader understand how the City's financial report relates to the services the City provides and the activities it performs. Sources: unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 119 CITY OF BROOKLYN CENTER, MINNESOTA NET ASSETS BY COMPONENT Last eight fiscal years (accrual basis of accounting) (Unaudited) 2003 2004 2005 Governmental activities Invested in capital assets, net of related debt $ 14 $ 12 $ 25 Restricted 14 39 29 Unrestricted 17 3 652 Total governmental activities net assets $ 47 $ 55 $ 55 Business -type activities Invested in capital assets $ 37 $ 36 $ 38 Unrestricted 6 7 7 Total business -type activities net assets $ 44 $ 43 $ 45 Primary government Invested in capital assets, net of related debt $ 52 $ 48 $ 64 Restricted 14 39 29 Unrestricted 24 10 7 Total primary government net assets $ 91 $ 98 $ 101 Note: Data for 2000 -2002 is not available; the City did not prepare government -wide financial statements on an accrual basis for those years. 120 Table 1 2006 2007 2008 2009 2010 $ 25 $ 31 $ 31 $ 33 $ 40 27 28 31 29 22 4 4 690 4 6 $ 57 $ 64 $ 63 $ 66 $ 70 $ 40 $ 40 $ 42 $ 42 $ 42 7 9 10 8 8 $ 48 $ 50 $ 53 $ 51 $ 51 $ 65 $ 70 $ 72 $ 75 $ 83 27 28 31 29 22 13 15 12 13 16 $ 105 $ 114 $ 117 $ 117 $ 121 121 CITY OF BROOKLYN CENTER, MINNESOTA CHANGES IN NET ASSETS - GOVERNMENTAL ACTIVITIES Last eight fiscal years (accrual basis of accounting) (Unaudited) 2003 2004 2005 Expenses General government $ 2 $ 2 $ 2 Public safety 7 7 7 Public works 2 1 3 Community services 225 67 86 Parks and recreation 2 2 2 Economic development 1 1 3 Interest on long -term debt 922 1 1 Total expenses 17 17 21 Program Revenues Charges for services: General government 227 927 960 Public safety 951 687 1 Parks and recreation 624 618 681 Other activities 24 23 9 Operating grants and contributions 1 933 855 Capital grants and contributions 1 2 2 Total program revenues 4 5 5 Net revenue /(expense) (13,029,583) (11,956,870) (16,008,216) General Revenues and Transfers Taxes: Property 10 10 11 Tax increments 3 4 3 Lodging taxes 661 656 710 Unrestricted grants and contributions 1 923 577 Investment earnings 426 491 1 Gain on disposal of capital asset 13 29 31 Miscellaneous 588 660 - Transfers 100 2 (1 Total general revenues and transfers 17 19 16 Change in Net Assets $ 4 $ 7 $ 307 122 Table 2 Page 1 of 3 2006 2007 2008 2009 2010 $ 2 $ 2 $ 3 $ 3 $ 3 8 8 8 9 9 2 2 2 2 2 123 74 72 71 82 2 2 2 2 2 2 3 3 2 6 1 1 1 1 974 19 21 22 21 25 947 902 1 1 1 800 847 780 1 1 665 692 754 740 725 423 290 151 26 49 748 818 1 1 2 2 2 2 1 6 5 6 6 5 11 (13,678,146) (15,304,405) (16,168,110) (15,813,200) (13,721,958) 11 12 12 12 12 2 2 2 3 3 738 706 619 591 696 702 1 607 1 411 1 1 903 309 33 23 88 73 40 - 186 (273 (1 32 (126 17 18 15 18 17 $ 4 $ 3 $ (285,828) $ 2 $ 3 123 CITY OF BROOKLYN CENTER, MINNESOTA CHANGES IN NET ASSETS - BUSINESS -TYPE ACTIVITIES Last eight fiscal years (accrual basis of accounting) (Unaudited) 2003 2004 2005 Expenses Municipal liquor 724 939 978 Golf course 290 271 273 Earle Brown Heritage Center 2 2 2 Water utility 1 222 1 Sanitary sewer 2 165 2 Storm drainage 838 1 899 Recycling and refuse 223 2 254 Street light utility 147 756 213 Total expenses 8 8 9 Program Revenues Charges for services: Municipal liquor 853 991 1 Earle Brown Heritage Center 1 1 1 Water utility 1 1 1 Sanitary sewer 2 2 2 Storm drainage 1 1 1 Other activities 706 707 706 Total program revenues 8 9 9 Net revenue /(expense) 426 687 493 General Revenues and Transfers Investment earnings 82 102 199 Other 241 117 - Transfers (100,000) (2 1 Total general revenues and transfers 223 (1 1 Change in Net Assets $ 650 $ (1 $ 2 124 Table 2 Page 2 of 3 2006 2007 2008 2009 2010 970 1 1 1 1 282 313 304 323 317 2 2 2 2 2 1 1 1 3 1 3 2 3 3 3 1 1 1 1 1 245 257 265 276 278 161 191 182 220 213 10 10 10 12 10 1 1 1 1 1 2 2 1 1 1 1 2 2 2 1 3 3 3 3 3 1 1 1 1 1 714 732 763 770 760 10 11 11 10 11 535 1 790 (1 194 337 406 243 87 20 (186,675) 273 1 (32 126 150 679 1 54 146 $ 686 $ 1 $ 2 $ (1 $ 341 125 CITY OF BROOKLYN CENTER, MINNESOTA CHANGES IN NET ASSETS - TOTAL Last eight fiscal years (accrual basis of accounting) (Unaudited) 2003 2004 2005 Expenses Governmental activities $ 17 $ 17 $ 21 Business -type activities 8 8 9 Total expenses 26 25 31 Program Revenues Governmental activities 4 5 5 Business -type activities 8 9 9 Total program revenues 13 14 15 Net revenue /(expense) (12,602,604) (11,269,254) (15,514,795) General Revenues and Transfers Governmental activities 17 19 16 Business -type activities 223 (1 1 Total general revenues and transfers 17 18 18 Change in Net Assets $ 4 $ 6 $ 2 Note: Data for 2000 -2002 is not available; the City did not prepare government -wide financial statements on an accrual basis for those years. 126 Table 2 Page 3 of 3 2006 2007 2008 2009 2010 $ 19 $ 21 $ 22 $ 21 $ 25 10 10 10 12 10 29 31 32 34 36 5 6 6 5 11 10 11 11 10 11 16 17 17 16 23 (13,142,632) (14,292,947) (15,377,522) (17,774,527) (13,527,902) 17 18 15 18 17 150 679 1 54 146 18 19 17 18 17 $ 4 $ 4 $ 2 $ 790 $ 3 127 m E7 This page has been left blank intentionally. 128 CITY OF BROOKLYN CENTER, MINNESOTA GOVERNMENTAL ACTIVITIES TAX REVENUE BY SOURCE Table 3 Last eight fiscal years (accrual basis of accounting) (Unaudited) Property Tax Lodging Tax Increments Tax Total 2003 $ 10 $ 3 $ 661 $ 14 2004 10 4 656 15 2005 11 3 710 15 2006 11 2 738 15 2007 12 2 706 15 2008 12 2 619 15 2009 12 3 591 17 2010 12 3 696 16 Note: Data for 2001 -2002 is not available; the City did not prepare government -wide financial statements on an accrual basis for those years 129 CITY OF BROOKLYN CENTER, MINNESOTA FUND BALANCES - GOVERNMENTAL FUNDS Last ten fiscal years (modified accrual basis of accounting) (Unaudited) 2001 2002 2003 2004 General Fund Reserved $ 105 $ 173 $ 110 $ 106 Unreserved 7 7 7 6 Total general fund $ 7 $ 7 $ 8 $ 6 All other governmental funds Reserved $ 7 $ 7 $ 7 $ 13 Unreserved, reported in: Special revenue funds 3 4 6 25 Capital project funds 5 1 2 4 Total all other governmental funds $ 16 $ 13 $ 15 $ 43 130 Table 4 2005 2006 2007 2008 2009 2010 $ 11 $ 500 $ 700 $ 21 $ 27 $ 26 7 7 7 7 8 8 $ 7 $ 7 $ 7 $ 7 $ 8 $ 8 $ 5 $ 5 $ 11 $ 9 $ 8 $ 7,3 88,488 24 22 11 10 9 7 3 4 3 4 3 2 $ 33 $ 32 $ 26 $ 24 $ 21 $ 16 131 CITY OF BROOKLYN CENTER, MINNESOTA CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS Last ten fiscal years (modified accrual basis of accounting) (Unaudited) 2001 2002 2003 2004 Revenues Property taxes $ 7 $ 10 $ 10 $ 10 Tax increments 3 3 3 3 Franchise fees - - - 612 Lodging taxes 826 717 661 656 Special assessments 1 1 1 1 Licenses and permits 788 823 827 678 Intergovernmental 5 7 3 3 Charges for services 688 575 709 711 Fines and forfeits 230 278 290 254 Investment earnings 2 648 317 385 Miscellaneous 150 267 607 609 Total revenues 23 25 21 22 Expenditures General government 2 2 2 2 Public safety 5 6 6 7 Public works 2 1 2 1 Community services 106 103 91 67 Parks and recreation 2 2 2 1 Economic development 2 2 1 1 Nondepartmental 372 366 331 333 Administrative services reimbursement (767,504) (596,541) (607,221) (784,084) Capital outlay 6 9 1 4 Debt service Principal 2 3 3 3 Interest 1 1 905 881 Other charges 8 28 26 126 Total expenditures 25 28 20 23 Revenues over (under) expenditures (1 (3 1 (629,126) Other financing sources (uses) Issuance of debt 730 - 1 25 Discount on issuance of debt - - (8 (96,503) Premium on issuance of debt - - - - Sale of capital assets 572 474 73 - Transfers in 4 4 3 5 Transfers out (3 (4 (3 (3 Refunded bonds redeemed - - - - Total other financing sources (uses) 1 674 1 27 Net change in fund balances $ (233,214) $ (2 $ 2 $ 27 Debt service as a percentage of noncapital expenditures 18.41% 16.81% 21.88% 24.89% 132 Table 5 2005 2006 2007 2008 2009 2010 $ 11,641,177 $ 11 $ 12 $ 12 $ 12 $ 13 4 2 2 2 3 3 662 658 658 643 656 647 710 738 706 619 591 696 1 1 1 1 1 1 675 722 673 643 616 1 2 2 3 2 2 6 754 722 705 761 1 1 253 256 291 302 340 359 1 1 1 733 247 24 427 477 404 449 370 285 24 22 24 22 24 28 2 2 2 3 3 3 7 7 7 8 8 8 2 1 2 2 2 2 86 123 74 72 71 82 2 2 2 2 2 2 2 1 5 7 2 3 315 363 354 301 313 300 (754,085) (529,362) (744,590) (802,775) (859,456) (1 8 5 4 4 2 8 2 3 2 2 4 4 1 1 1 1 1 1 23 53 12 73 15 14 27 25 28 31 27 33 (3 (2 (4 (9 (2 (5 - 1 - 6 - - - (445) - (28,178) - - - - - 1 - - 2 2 5 1 3 4 (2 (2 (6 (1 (3 (4 (7 - (529,138) - - - (7 2 (666,510) 7 550 392 $ (10,387,818) $ (819,247) $ (5 $ (1 $ (2 $ (4 18.37% 19.14% 15.90% 14.65% 22.92% 22.76% 133 CITY OF BROOKLYN CENTER, MINNESOTA ASSESSED TAX CAPACITY AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY Last ten fiscal years (Unaudited) 2001 2002 2003 2004 Real Property: Residential $ 8 $ 8 $ 9 $ 10 Nonresidential 14 9 9 9 Area -wide allocation 746 635 875 1 Personal property 452 262 273 281 Less: Tax increment districts 3 2 2 3 Total Assessed Tax Capacity 20 16 17 18 Direct Tax Rate 1 35.996 58.901 52.792 53.693 Estimated Market Value 1 1 1 1,840,115,300 Total Assessed Tax Capacity as a percentage of Estimated Market Value 1.58% 1.09% 1.04% 1.01% 1 Beginning in 2002, the State of Minnesota significantly reduced state aids to the City and allowed these amounts to be included in the propery tax levy. Source: City Assessing Department 134 Table 6 2005 2006 2007 2008 2009 2010 $ 12 $ 13 $ 15 $ 16 $ 14 $ 12 9 9 9 9 10 10 1 1,161,174 1 2 2 4 294 298 283 291 283 278 3 2 2 2 2 2 20 22 24 25 25 24 51.723 48.069 45.366 45.081 49.138 52.412 1 2 2 2 2 1 1.03% 1.10% 1.14% 1.18% 1.21% 1.29% 135 CITY OF BROOKLYN CENTER, MINNESOTA PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS Last ten fiscal years (Unaudited) Overlapping Rates Metro City 1 County Dist 11 Dist 279 Dist 281 Dist 286 Districts 2001 36.740 37.679 52.224 56.784 46.678 47.139 5.830 2002 58.901 50.789 29.082 30.092 30.213 26.338 3.537 2003 54.021 50.607 26.941 35.042 29.179 49.817 3.825 2004 53.693 47.324 21.050 23.709 34.258 39.892 3.502 2005 51.723 44.172 21.492 24.336 29.989 36.159 3.304 2006 48.069 41.016 20.046 21.815 28.489 39.781 2.924 2007 45.366 39.110 19.353 23.758 28.750 36.154 2.671 2008 45.081 38.571 16.983 19.710 27.243 37.519 2.562 2009 49.138 40.413 18.263 21.033 27.214 43.163 2.579 2010 52.412 42.640 19.939 22.381 28.621 51.173 2.620 Source: City Assessing Department and Hennepin County Property Tax Services 1 The City's direct rate is an operating rate only. z Watershed levy was levied in 2006, 2008, 2009, and 2010 in schools districts 279 and 281, and parts of school districts 11 and 286. 136 Table 7 Total Direct and Overlapping Rates Other District 11 District 11 District District District 286 District 286 Districts Watershed L no watershed with watershed 279 281 no watershed with watershed 2.294 - 134.767 - 139.327 129.221 129.682 - 3.844 - 146.153 - 147.163 147.284 143.409 - 5.161 - 140.555 - 148.656 142.793 163.431 - 3.986 - 129.555 - 132.214 142.763 148.397 - 4.078 - 124.769 - 127.613 133.266 139.436 - 4.074 0.073 116.129 116.202 117.971 124.645 135.864 13 5.93 7 4.639 - 111.139 - 115.544 120.536 127.940 - 4.835 0.265 108.032 108.297 111.024 118.557 128.568 128.833 4.575 0.047 114.968 115.015 117.785 123.966 139.868 139.915 5.518 0.081 123.129 123.210 125.652 131.892 154.363 154.444 137 CITY OF BROOKLYN CENTER, MINNESOTA PRINCIPAL PROPERTY TAXPAYERS Table 8 Current Year and Nine Years Ago (Unaudited) 2010 2001 Percentage of Percentage of Net Tax Total Tax Net Tax Total Tax Taxpayer Capacity Rank Capacity Value Capacity Rank Capacity Value Luther Properties $ 487 1 1.92% $ - - Twin Lakes LLC 438 2 1.72% - - Brooks Mall Properties LLC 414 3 1.63% 1 1 5.18% Lang- Nelson 295 4 1.16% - - BCC Associates, LLC 267 5 1.05% - - Regal Cinemas, Inc. 245 6 0.97% - - CSM Corporation 236 7 0.93% - - Medtronic, Inc. 216 8 0.85% - - Brookdale Corner, LLC 216 8 0.85% - - Target 165 10 0.65% 498 2 2.38% Hennepin County Hotel Ass'n - - 336 3 1.61% Brookdale Ass'n Limited Partnership - - 302 4 1.45% Sears Roebuck and Co. - - 300 5 1.44% Wickes Furniture Company - - 261 6 1.25% CSM Freeway Airport LLC - - 256 7 1.22% Brookdale Center Limited Partnership - - 248 8 1.19% Bradley Real Estate Inc. - - 229 9 1.10% Twin Lake North - - 197 10 0.95% Totals $ 2 11.72% $ 3 17.76% Source: City Assessing Department 138 CITY OF BROOKLYN CENTER, MINNESOTA PROPERTY TAX LEVIES AND COLLECTIONS Table 9 Last ten fiscal years (Unaudited) Collected within the Certified Adjusted Fiscal Year of the Levy Collections in Total Collections to Date Property Property Percentage of Subsequent Precentage Tax Levy Adjustments * Tax Levy Amount Adjusted Levy Years Amount to Date 2001 $ 8,420,720 $ (48,553) $ 8,372,167 $ 8,132,527 97.1% $ 239,640 $ 8,372,167 100.0% 2002 10,442,518 (925,619) 9,516,899 9,262,641 97.3% 254,258 9,516,899 100.0% 2003 10,355,103 (829,475) 9,525,628 9,280 97.4% 245,585 9,525 100.0% 2004 10,779 (806,306) 9,973,115 9 95.3% 455 9,960,309 99.9% 2005 11,319,404 (803,101) 10,516 10,403 98.9% 112,944 10 100.0% W 2006 11 (675,638) 10 10 92.0% 237,236 10 94.0% 2007 11 (610,873) 11 11,070,387 92.6% 256,227 11,326,614 94.7% 2008 12,437,093 (597,963) 11,839,130 11,577,739 93.1% 218 11,796,427 94.8% 2009 12,893,208 (651,676) 12,241,532 11,983,738 92.9% 194 12 94.5% 2010 13,568,972 (659,774) 12,909,198 12,633,425 93.1% - 12,633,425 93.1% Source: Hennepin County Property Tax Division * - Adjustments for subsequent abatements. Beginning in 2002, adjustments also include Market Value Homestead Credit. CITY OF BROOKLYN CENTER, MINNESOTA RATIOS OF OUTSTANDING DEBT BY TYPE Table 10 Last ten fiscal years (Unaudited) Business -Type Governmental Activities Activities General Tax Storm Sewer Utility Less: Percentage Obligation Increment Improvement Revenue Revenue Total Debt Service Bonded of Personal Per Bonds Bonds Bonds Bonds Bonds (BAB) Debt Fund Balance Debt Income Capita 2001 $ 8,10500 $ 7,69000 $ 6,15000 $ 86000 $ - $ 220500 $ 5,472,514 $ 17,332,486 1.37% $ 594 2002 7,42500 6,150,000 5,37000 66000 - 190500 5,741,191 130309 1.09% 475 2003 6,72000 4,50500 5,70500 45000 - 17,380 5,321,277 12,058 0.92% 413 2004 11,025,000 22,445 5,71000 23000 - 39,410 13,230 26,179,460 1.88% 903 2005 5,340 19 4,720 - - 29 4,158 25 1.78% 896 ° 2006 4,46500 18 5,180,000 - - 27 4,202 23 1.61% 851 2007 3,87500 17 4,28000 - - 25 6,724 18 1.19% 670 2008 3,27500 20 5,690,000 - - 29 5,187 24 1.42% 802 2009 2 0 5 0 0 17 4,92500 - - 25 4,258 21 * * 709 2010 2,02500 15 4 0 5 0 0 - 2,350 23 3,904,119 19 * * 647 1 - See Table 15, Demographics and Economic Statistics for personal income and population data. * * - personal income data not available for these years CITY OF BROOKLYN CENTER, MINNESOTA RATIOS OF GENERAL BONDED DEBT OUTSTANDING Table 11 Last ten fiscal years (Unaudited) Less: Amounts Percentage of General Available in Net General Estimated Obligation Debt Service Obligation Market Value Per Bonds Fund Debt of Property Capita 2001 $ 6 $ 831 $ 5 0.45% $ 203 2002 6 871 5 0.37% 187 2003 5 907 4 0.30% 170 2004 10 5 4 0.25% 157 2005 5 1 3 0.20% 142 2006 4 1 3 0.17% 120 2007 3 1 2 0.13% 97 2008 3 1 2 0.09% 68 2009 2 1 1 0.07% 49 2010 2 1,196,115 828 0.04% 28 141 CITY OF BROOKLYN CENTER, MINNESOTA COMPUTATION OF DIRECT AND OVERLAPPING DEBT Table 12 as of December 31, 2010 (Unaudited) Estimated Estimated Share Debt Percentage of Overlapping Governmental Unit Outstanding Applicable 1 Debt Overlapping debt: School Districts: No. 11 Anoka $ 141,761,165 1.50% $ 2 No. 279 Osseo 163 5.20% 8 No. 281 Robbinsdale 172 5.40% 9 No. 286 Brooklyn Center 31 100.00% 31 Metropolitan Council 16 0.70% 114 Metropolitan Transit District 162 0.80% 1 Hennepin County 758 1.60% 12 Hennepin Regional RR Authority 42 1.60% 681 Hennepin County Park Reserve District 85 2.10% 1 Total overlapping debt $ 1 67 City of Brooklyn Center direct debt 2 828 Total direct and overlapping debt $ 68 Source: City Finance Department, Hennepin County, and Springsted Financial Advisors. 1 The percentage of overlapping debt applicable is estimated using tax capacity values. Applicable percentages were estimated by determining the portion of each entity's tax capacity that is within the City's boundaries and dividing it by that entity's total tax capacity. 2 Includes only general obligation debt which is repaid through property taxes, net of amounts available. 142 CITY OF BROOKLYN CENTER, MINNESOTA LEGAL DEBT INFORMATION Table 13 Last ten fiscal years (Unaudited) Total net debt applicable to the limit Total net debt as a percentage of Debt Limit applicable to limit Legal debt margin debt limit 2001 $ 25 $ 5 $ 19 23.36% 2002 27 5 21 19.93% 2003 29 4 24 16.78% 2004 32 4 27 13.99% 2005 36 3 32 11.08% 2006 39 3 35 8.57% 2007 42 2 39 6.42% 2008 65 2 63 3.16% 2009 62 1 61 2.33% 2010 56 828 55 1.46% Legal Debt Margin Calculation for Fiscal Year 2010 Taxable Market Value $ 1,891,591,400 Debt limit (3% of Taxable Market Value) 56 Debt applicable to limit Net general obligation bonds 828 Legal debt margin $ 55 143 CITY OF BROOKLYN CENTER, MINNESOTA PLEDGED - REVENUE COVERAGE Last ten fiscal years (Unaudited) Special Assessment Bonds Special Assessment Debt Service Collections Principal Interest Coverage 2001 $ 1 $ 700 $ 252 1.08 2002 928 780 249 0.90 2003 1 870 242 1.04 2004 1 1 218 1.15 2005 1 990 197 0.89 2006 1 1 167 0.89 2007 884 900 162 0.83 2008 816 980 145 0.73 2009 1 765 166 1.26 2010 750 920 167 0.69 Tax Increment Bonds Tax Increment Debt Service Collections Principal Interest Coverage 2001 $ 3 $ 1 $ 519 1.89 2002 2 1 433 1.46 2003 3 1 340 1.58 2004 3 1 286 1.75 2005 3 770 729 2.38 2006 1 1 887 0.85 2007 1 1 847 0.90 2008 1 1 804 1.04 2009 2 2 922 0.64 2010 1 2 783 0.50 144 Table 14 Storm Drainage Bonds Storm Drainage Less: Net Utility Operating Available Debt Service Charges Expenses Revenue Principal Interest Coverage $ 1 $ 327 $ 802 $ 190 $ 49 3.34 1 662 714 200 40 2.98 1 809 455 210 29 1.90 1 756 520 220 18 2.18 1 1 207 230 6 0.88 Utility Revenue Bonds Water and Sanitary Sewer Less: Net Utility Operating Available Debt Service Charges Expenses Revenue Principal Interest Coverage 5 4 315 - 68 4.63 145 CITY OF BROOKLYN CENTER, MINNESOTA DEMOGRAPHIC AND ECONOMIC STATISTICS Table 15 Last ten fiscal years (Unaudited) School Enrollments Per Capita No. 286 Personal Personal Unemployment No. 11 No. 279 No. 281 Brooklyn Population Income Income Rate Anoka Osseo Robbinsdale Center 2001 29 $1 $ 43 4.2% 41 22 13 1 2002 29 1 43 5.2% 41 21 13 1 2003 29 1 45 5.9% 41 21 13 1 2004 29 1 48 5.6% 41 21 16 1 2005 28 1 50 4.8% 41 21 13 1 2006 27 1 52 4.6% 41 22 13 1 2007 27 1 56 5.6% 40 21 12 1 2008 30 1,715,586,120 56 7.6% 40 21 12 2 2009 29 * * * * 8.7% 39 20 11 2 2010 30 * * * * 8.1% 39 20 12 2 Sources: Population - Metropolitan Council Personal income - Bureau of Economic Analysis Unemployment rate - Minnesota Department of Employment and Economic Development School Enrollments - Minnesota Department of Education * * - personal income data not available for these years 146 CITY OF BROOKLYN CENTER, MINNESOTA PRINCIPAL EMPLOYERS Table 16 Current Year and Nine Years Ago (Unaudited) 2010 2001 Percentage of Percentage of Total City Total City Employer Employees Rank Employment Employees Rank Employment Promeon, Division of Medtronics 1 1 6.69% 300 3 1.85% Independent School District #286 300 2 2.01% Cub Foods 160 3 1.07% City of Brooklyn Center 156 4 1.04% 510 2 3.15% Target 140 5 0.94% TCR Corporation 140 6 0.94% 175 5 1.08% Best Buy 100 7 0.67% Kohl's 100 8 0.67% Nations Care Link 100 9 0.67% Cass Screw Machine Products 79 10 0.53% 125 7 0.77% Brookdale Center 1 1 10.49% Hoffman Engineering 270 4 1.67% Ault, Inc. 160 6 0.99% Graco, Inc. 100 8 0.62% Precision, Inc. 100 9 0.62% Haiwatha Rubber Company 85 10 0.52% Totals 2 15.21% 3 21.75% Source: Official Statements for 2001A GO Improvement Bonds and 2010A Taxable GO Utility Revenue Bonds 147 CITY OF BROOKLYN CENTER, MINNESOTA FULL TIME CITY GOVERNMENT POSITIONS BY FUNCTION Table 17 Last ten fiscal years (Unaudited) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 General government Administrative 6.5 6.5 6.5 6.0 6.0 6.0 6.0 7.0 7.0 7.0 Elections 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 Finance 7.0 7.0 6.0 6.0 6.0 6.0 6.0 5.0 5.0 5.0 Assessor 4.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 Government buildings 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 Information technology 1.0 1.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 Total general government 24.5 23.5 23.5 23.0 23.0 23.0 23.0 23.0 23.0 23.0 Public safety Police Officers 42.0 42.0 42.0 42.0 42.0 42.0 43.0 46.0 46.0 47.0 Civilians 16.0 16.0 15.0 15.0 15.0 15.0 12.0 12.0 12.0 12.0 Fire 1.0 1.0 1.0 1.0 1.0 2.0 2.0 2.0 2.0 2.0 Building inspection 5.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 Code enforcement - - - - - - - 2.0 5.0 5.0 Total public safety 64.0 63.0 62.0 62.0 62.0 63.0 61.0 66.0 69.0 70.0 Public works Engineering 10.0 10.0 8.0 7.0 7.0 6.0 6.0 5.0 6.0 6.0 Streets 10.9 11.0 11.0 10.0 9.0 10.0 10.0 11.0 10.0 10.0 Total public works 20.9 21.0 19.0 17.0 16.0 16.0 16.0 16.0 16.0 16.0 Parks and recreation Administration 6.0 6.0 5.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 Community center 5.5 5.0 5.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 Park maintenance 10.0 10.0 10.0 8.0 8.0 7.0 7.0 7.0 7.0 7.0 Total park and recreation 21.5 21.0 20.0 17.0 17.0 16.0 16.0 16.0 16.0 16.0 Economic development 4.5 4.5 4.5 4.0 4.0 4.0 4.0 4.0 4.0 4.0 Municipal liquor 4.0 3.0 3.0 3.0 3.0 3.0 4.0 4.0 4.0 4.0 Golf course 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 Earle Brown Heritage Center 13.0 11.0 11.0 11.0 11.0 11.0 11.0 11.0 11.0 11.0 Water 5.0 5.0 5.0 5.0 5.0 5.3 5.3 5.3 5.3 5.3 Sanitary sewer 2.0 2.0 2.0 2.0 2.0 2.3 2.3 2.3 2.3 2.3 Storm sewer - - - - 1.0 1.4 1.4 1.4 1.4 1.4 Central garage 5.1 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 Total 165.5 160.0 156.0 150.0 150.0 151.0 150.0 155.0 158.0 159.0 Source: City Annual Budget documents 148 CITY OF BROOKLYN CENTER, MINNESOTA OPERATING INDICATORS BY FUNCTION Table 18 Last ten fiscal years (Unaudited) Function 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Police Violent Crimes 133 136 134 165 174 191 210 192 166 138 Serious Crimes 2,057 1,915 2,150 1,893 1,951 2,054 1,992 2,049 1,696 1,358 Total Calls for Service 26,501 25,644 25,945 26,328 26,738 28,644 34,185 36,923 44,152 43,069 Fire Fires /All other calls 658 681 617 545 692 697 677 684 688 772 Medical calls 305 373 331 279 212 326 386 419 538 980 Fire inspections performed 216 133 100 98 45 0 0 106 105 245 Streets Total miles 105.53 105.53 105.53 105.53 105.53 105.78 105.78 105.78 105.78 105.73 Miles of streets reconstructed 3.40 7.80 1.90 2.80 4.60 2.50 4.20 4.15 2.64 5.17 Parks and recreaton �. Community Center Admissions 67,476 42,873 66,427 62,458 59,288 6100 61,022 60,323 61,272 59,310 Acres of park maintained 527 527 527 527 527 527 527 527 527 527 Municipal liquor Number of stores 2 1 1 2 2 2 2 2 2 2 Sales (in thousands) $3,552 $3,436 $3,408 $4,027 $4,610 $5,159 $5,475 $5,485 $5,610 $5,543 Golf course Rounds sold 29,448 21,072 27,010 22,847 20,780 21,100 1500 1502 14,040 13,524 Earle Brown Heritage Center Bookings 757 579 572 577 579 611 570 522 421 433 Functions 2,145 2,105 1,527 1,734 1,725 1,870 1,720 1,412 1,178 1,119 Inn occupancy (average)' 23.46% 7.23% 9.53% 8.14% 8.58% 11.55% 8.16% 4.00% n/a n/a Water Connections 8,905 8,934 8,949 8,963 8,938 8,904 8,997 8,986 8,990 8,960 Miles of water mains 114.40 114.62 114.82 114.82 118.25 120.50 121.80 121.80 121.80 121.80 Average daily consumption 3,63 8,490 3,127,214 3,723,769 3,551,104 3,697,790 309,903 3,621,122 3,550,126 3,73302 3,19000 Sanitary sewer Connections 8,764 8,786 8,798 8,799 804 807 8,793 8,837 8,837 8,829 Miles of sanitary sewer 105.51 105.61 105.61 105.61 105.61 105.61 105.61 105.61 105.61 105.61 Source: Various City departments Police indicators for current year are preliminary I- in 2002 the Heritage Center Inn ceased daily occupancy and moved to a retreat concept with an 8 room minimum. In 2009, the Heritage Center Inn ceased operations. CITY OF BROOKLYN CENTER, MINNESOTA CAPITAL ASSET STATISTICS BY FUNCTION Table 19 Last ten fiscal years (Unaudited) Function 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Public safety Police Stations 1 1 1 1 1 1 1 1 1 1 Patrol units Marked squads 10 10 7 7 8 8 8 9 9 9 Other vehicles 21 15 13 16 16 16 16 14 18 18 Fire Stations 2 2 2 2 2 2 2 2 2 2 Fire trucks 7 7 7 7 7 7 7 7 7 7 Public works Streets (miles) 112.35 112.35 112.35 112.35 112.35 112.60 112.60 112.60 112.60 112.60 Heavy duty trucks (snow plows) 11 11 12 13 12 13 13 13 13 13 o Parks and recreation Parks acreage 527 527 527 527 527 527 527 527 527 527 Trails (miles) 11.2 11.2 11.2 11.2 21.6 21.6 21.6 21.6 21.6 21.6 Community centers 1 1 1 1 1 1 1 1 1 1 Ground maintenance equipment 18 13 13 13 13 13 13 15 15 15 Other vehicles /equipment 21 12 11 14 14 14 14 15 14 14 Water Water mains (miles) 114.40 114.62 114.82 114.82 118.25 120.50 121.80 121.80 121.80 121.80 Wells 9 9 9 9 9 9 9 9 9 9 Sewer Sanitary sewers (miles) 105.51 105.61 105.61 105.61 105.61 105.61 105.61 105.61 105.61 105.61 Lift Stations 10 10 10 10 10 10 10 10 10 10 Storm sewers (miles) 74.20 74.20 74.20 74.20 74.20 74.20 74.20 74.20 74.20 74.20 Source: City capital asset records