HomeMy WebLinkAboutItem 07June 26, 2013
ACKNOWLEDGE RECEIPT OF CITY OF LAKEVILLE COMPREHENSIVE ANNUAL
FINANCIAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2013
Proposed Action
Staff recommends adoption of the following motion: Move to acknowledge receipt of City of
Lakeville Comprehensive Annual Financial Report for the Year Ended December 31, 2012
Overview
The City of Lakeville Comprehensive Annual Financial Report for the Year Ended December
31, 2012 is attached for City Council review and approval. The certified public accounting firm
of Malloy, Montague, Karnowski, Radosevich & Co., P.A. (MMKR) has audited the financial
report. In their opinion, the financial statements, as presented, represent the financial
position of City of Lakeville as of December 31, 2012 and the results of operations for the year
ended. Mr. William Lauer, Partner with MMKR, will present an overview of the financial report
at the July 1 Council meeting.
Primary Issues to Consider
• Financial condition of the City of Lakeville. An overview of the financial operations
is provided in the Letter of Transmittal and Management's Discussion and
Analysis.
• MMKR has submitted the attached Management Report regarding their
observations during the course of the audit.
Supporting Information
A. City of Lakeville Comprehensive Annual Financial Report for the Year Ended December
31,2012
B. Management Report
C. Special Purpose Audit Reports - Internal Controls, and Compliance with Laws and
Finance Director
Item No._
Financial Impact: N/A Budgeted: N/A Source:
Related Documents (CIP, ERP, etc.):
Notes:
COMPREHENSIVE
ANNUAL FINANCIAL REPORT
2012
Year Ended December 31, 2012
City of Lakeville, Minnesota
COMPREHENSIVE
ANNUAL FINANCIAL
REPORT
City of
Minnesota
For the Year Ended
December 31, 2012
ISSUED BY THE FINANCE DEPARTMENT
Dennis Feller, Finance Director
INTRODUCTORY SECTION
CITY OF LAKEVILLE, MINNESOTA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
YEAR ENDED DECEMBER 31, 2012
TABLE OF CONTENTS
INTRODUCTORY SECTION
Page
Table of Contents 1 - 3
Elected and Appointed Officials 4
Organizational Structure 5
Letter of Transmittal 6 - 13
Certificate of Achievement 14
FINANCIAL SECTION
Independent Auditors' Report 15 - 17
Management's Discussion and Analysis 18 - 34
Basic Financial Statements
Government -wide Financial Statements
Statement of Net Position
Statement of Activities
1
35
36
Fund Financial Statements
Balance Sheet - Governmental Funds 37- 38
Reconciliation of the Governmental Funds Balance Sheet
to the Statement of Net Position 39
Statement of Revenues, Expenditures and Changes in Fund Balances -
Governmental Funds 40 - 41
Reconciliation of the Statement of Revenues, Expenditures, and Changes in
Fund Balances of Governmental Funds to the Statement of Activities 42
Statement of Net Position - Proprietary Funds 43
Statement of Revenues, Expenses and Changes in Net Position -
Proprietary Funds 44
Statement of Cash Flows - Proprietary Funds 45
Statement of Fiduciary Net Position - Agency Fund 46
Notes to Basic Financial Statements 47 - 84
Required Supplementary Information other than MD &A
General Fund - Schedule of Revenues, Expenditures and Changes in Fund Balances -
Budgetary Comparison 85 - 91
Notes to Required Supplementary Information 92
Other Post - Employment Benefits Plan - Schedule of Funding Progress 93
CITY OF LAKEVILLE, MINNESOTA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
YEAR ENDED DECEMBER 31, 2012
TABLE OF CONTENTS (CONTINUED)
Combining Governmental Funds
Special Revenue Funds (Nonmajor)
Combining Balance Sheet
Combining Statement of Revenues,
Debt Service Funds ( Nonmajor)
Combining Balance Sheet
Combining Statement of Revenues,
Capital Projects Funds (Nonmajor)
Combining Balance Sheet
Combining Statement of Revenues,
FINANCIAL SECTION (continued)
Combining and Individual Fund Statements and Schedules
Nonmajor Governmental Funds
Combining Balance Sheet
Combining Statement of Revenues, Expenditures and Changes in Fund Balances
Expenditures and
Expenditures and
Expenditures and
Special Revenue Funds - Budgetary Comparison Schedules
Communications
Economic Development
Downtown Special Service District
Combining Proprietary Funds
Internal Service
Combining Statement of Net Position
Combining Statement of Revenues, Expenses and Changes in Net Position
Combining Statement of Cash Flows
Agency Fund - Statement of Changes in Assets and Liabilities
Supplemental Information
Schedule of Changes in Bonded Indebtedness
Schedule of Bonded Indebtedness and Annual Interest Payable
Combined Schedule of Bonded Indebtedness
2
Changes in Fund Balance
Changes in Fund Balance
Changes in Fund Balance
Page
94
95
96
97
98
99
100 - 101
102 - 103
104
105
106
107
108
109
110
111
112 - 119
120 - 121
CITY OF LAKEVILLE, MINNESOTA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
YEAR ENDED DECEMBER 31, 2012
TABLE OF CONTENTS (CONTINUED)
STATISTICAL SECTION
Financial Trends
Net Position by Component - Government -wide
Changes in Net Position - Governmental Activities
Changes in Net Position - Business -type Activities
Changes in Net Position - Total Governmental and Business -type Activities
Fund Balances - Governmental Funds
Changes in Fund Balances - Governmental Funds
3
Page
122 - 123
124 - 125
126 - 127
128 - 129
130 - 131
132 - 133
Revenue Capacity
Tax Capacity Valuation and Assessor's Taxable Market Value of Taxable Property 134 - 135
Property Tax Rates - Direct and Overlapping Governments 136
Principal Property Taxpayers 137
Property Tax Levy and Collections 138
Debt Capacity
Ratio of Outstanding Debt by Type 139
Ratio of Net Bonded Debt Outstanding 140
Direct and Overlapping Governmental Debt 141
Legal Debt Margin 142
Pledged Revenue Coverage 143
Demographic and Economic Information
Demographic and Economic Statistics 144
Principal Employers 145
Commercial and Industrial Building Permits Issued 146
Operating Information
Employees by Function/Program (Full -Time Equivalent) 147
Operating Indicators by Function 148
Capital Assets Statistics by Function 149
CITY OF LAKEVILLE, MINNESOTA
ELECTED AND APPOINTED OFFICIALS
DECEMBER 31, 2012
ELECTED OFFICIALS Term of Office Expires
MAYOR
COUNCIL MEMBERS: Colleen Ratzlaff LaBeau December 31, 2014
Matt Little December 31, 2014
Laurie Rieb December 31, 2012
Kerrin Swecker December 31, 2012
APPOINTED OFFICIALS
City Administrator Steven C. Mielke
Finance Director /Treasurer Dennis Feller
City Clerk Charlene Friedges
Mark Bellows December 31, 2012
4
Human
Resources
Labor
Relations
Compensation
Benefits
Recruitment
CITY OF LAKEVILLE, MINNESOTA
Organizational Structure
December 31, 2012
Economic
Finance Development — Planning
Committee Commission Commission
Community
anc
Economic
.Develoomentj \
Finance
City Attorney
Citizens of Lakeville
Mayor and City Council
City Administrator
J
Fire
Building Accounting Communication Inspection
Inspection Accounts Investigation Prevention
Economic Receivable Patrol Suppression
Development Accounts Animal \ /
\ / Payable Control
Utility Billing \ /
Information
Systems
\ /
5
Housing anc
Redevelopment
Authority
Parks, Recreation
& Natural Lakeville Area
Resources Cable TV Board
Ads Center Board
Committee
■ l \ l /
Communications
\ /
Engineering
Plan Review
Design
Inspection
Survey
Special
Assessments
G.I.S.
Environmental
Resources
and
Recycling
Streets
Utilities
Physical
Facilities
Fleet
Management
Parks and
Recreation
Development
Maintenance
Planning
Recreation
Heritage
Center
` Arts Center
Off Sale
Liquor
Lakeville
June 5, 2013
The Honorable Mayor and Council Members
20195 Holyoke Avenue
Lakeville, Minnesota 55044
City of Lakeville
Positioned to Thrive
Honorable Mayor, Members of the City Council and Citizens of the City of Lakeville
The Comprehensive Annual Financial Report is hereby presented for the purpose of
providing you, the reader, with a thorough overview of the financial affairs of the City for
the year ended December 31, 2012. The Report was prepared in accordance with
Minnesota Statutes and Generally Accepted Accounting Principals (GAAP).
This report was prepared by the City' s Finance Department and consists of
management' s representations concerning the finances of the City. Consequently,
management assumes full responsibility for the completeness and reliability of all
information presented in this report. To provide a reasonable basis for making these
representations, management of the City has established internal controls designed to
protect the City's assets from loss, theft or misuse and to provide sufficient reliable
information for the preparation of these financial statements in conformity with GAAP.
Because the cost of internal controls should not outweigh their benefits, the City' s
internal controls have been designed to provide reasonable rather than absolute assurance,
that the financial statements will be free from material misstatements. As management,
we assert that to the best of our knowledge and belief this report is complete and reliable
in all material respects.
The City of Lakeville's financial statements have been audited by Malloy, Montague,
Karnowski, Radosevich & Co., P.A., a professional firm of certified public accountants.
The independent auditors report is included in the Financial Section of this report. The
auditors have given this report an unqualified ( "clean ") opinion, meaning that the
financial statements fairly present the City' s financial position at December 31, 2012 and
the changes in financial position for the year then ended.
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. MD &A complements this letter of transmittal and should be read in
conjunction with it.
20195 Holyoke Avenue, Lakeville, MN 55044
952 -985 -4400 • 952-985-4499 fax
www.lakevillemn.gov
6
Profile of Government
The City of Lakeville is a suburban community located 20 miles south of downtown
Minneapolis in the southeast corner of the Twin Cities metropolitan area within Dakota
County. Lakeville continues to be one of the fastest growing cities in Minnesota with a
population that has grown from 43,128 in 2000 to 57,380 in 2012.
The City of Lakeville operates under the Mayor - Council form of organization. The
governing City Council consists of the Mayor and four other Council members. The City
Council is responsible for, among other things, passing ordinances, adopting the budget,
appointing members to the various committees and commissions; and hiring the City
Administrator, heads of various departments and City employees. The City Administrator
is responsible for carrying out the policies, directions and ordinances of the City Council
and for overseeing the day -to -day operations of the City. The City Council is elected on a
non - partisan at large basis. The Mayor is elected to serve a two -year term, while Council
members serve four -year staggered terms, with two Council Members elected every two
years.
The City provides its residents and businesses with a full range of municipal services
consisting of public safety (police and fire), public works, parks and recreation, and
general government administration. The City also operates two enterprises: utilities
(public water, sanitary sewer, street lights and environmental resources) and off -sale
liquor stores. Sewage treatment and disposal is operated on a regional basis by the
Metropolitan Council Environmental Services (MCES) and refuse collection and disposal
are handled on a private basis through contractual arrangements by City residents with
private haulers. Further information regarding city services can be obtained from the
City's website at www.lakevillemn.gov
The City is financially accountable for the Housing and Redevelopment Authority
(HRA), which is included in the City's financial statement. Additional information on the
HRA can be found in Note 1A. — Summary of Significant Accounting Policies of the
Notes to Basic Financial Statements.
The annual budget serves as the foundation for the City of Lakeville' s financial planning
and control. The budgetary process is outlined in the notes within the required
supplementary information section of this report. The City applies budgetary controls to
ensure compliance with legal provisions of the laws of Minnesota. Budgets are adopted
on a basis consistent with GAAP. Annual appropriated budgets are adopted for the
general fund and special revenue funds. Budget to actual comparisons are provided in this
report for each individual governmental fund for which an annual budget has been
adopted. The general fund budgetary comparison schedules are presented within the
required supplementary information section for governmental funds and the special
revenue funds budgetary comparison schedules are presented in the nonmajor
governmental funds subsection of this report.
7
Local Economy
Factors Affecting Financial Condition
The City of Lakeville is committed to maintaining a strong financial condition, while
continuing to provide quality public services to its residents and businesses. The City' s
financial position, as reflected in the financial statements presented in this report, is
perhaps best understood when it is considered from the broader perspective of the
environment within which the City operates.
Our community has persevered through the economic struggles of the past five years.
The City responded in 2008 and 2009 to the economic challenges by downsizing its
operations and reducing personnel. The City has grown by almost 1,600 new residents
or approximately 3.0% since 2009, while the number of City employees has decreased by
7.6 %. According to the Bureau of Labor Statistics, Lakeville' s unemployment rate is
favorable compared to the State and National rates.
• -
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
Unemployment Rate
2008 2009 2010 2011 2012
United States
Minnesota
Lakeville
Source: www.positivelyminnesota.com
Building permit activity for single family homes and the number of newly platted lots or
applications from developers for new residential lots is on the rise. Building permits for
single family homes increased to 282 in 2012. The 2013 budget is premised on an
assumed steady growth of new single family homes in each of the next two years.
8
1-
E
W
500
400
300
200
100
0
RESIDENTIAL PERMITS
2006 2007 2008 2009 2010 2011 2012 2013 2014
YEAR
—*—Total Residential Units
.Actual Residential Units
Estimated Residential Units
El Actual Single Family
Estimated Single Family
The residential real estate markets have continued to experience a steady decline in
values. According to the Dakota County Assessor, as of January 1, 2012, the value of the
residential home was 6.6% less than the previous year. However, recent Minneapolis
Area Association of Realtors report shows low inventory and a decline in distressed sales
has caused an increase in median home values.
If the economic recovery is sustainable, as the data may suggest, property values will
increase and the tax base will grow. Community growth will result in expansion of the
infrastructure. The City' s financial plan provides for a continuation of services and
monitoring of community economic progress.
Long -term Financial Planning
There is an interrelationship between a community' s physical development and its long-
term financial plan. A comprehensive plan provides the guidance for current and future
land use and public infrastructure decisions to provide managed growth throughout the
community. The City of Lakeville completed an update of its Comprehensive Plan in
2008.
A Capital Improvement Plan (CIP) has been approved by the City which is a flexible,
five -year plan that identifies the City' s infrastructure, development objectives and
allocation of financial resources. It provides policy makers and the community with a
strategic (documented) approach to implementation and administration of improvement
projects. The City will invest $96 million in transportation, utility, equipment, facilities
and Parks in course of the next five years to achieve program objectives.
9
2013 -2017 PROJECTS
Roads & Bridges $96,037,276
$67,625,480
71%
Equipment] Facilities
$13,695,286 $2,221,646
14% 2%
Utility
Infrastructure
$6,581,540
7%
Parks and
Recreation
$5,913,324
6% _
As of December 31, 2012, the City of Lakeville had approximately $109.745 million of
debt outstanding including $22.450 million of (cross -over) refunding debt in August 2012
to refinance the G.O. Street Reconstruction Bonds Series 2003 A and G.O. Capital
Improvement Bonds series 2004 A. The City will issue general obligation improvement
bonds in the coming years to finance street reconstruction projects. All factors consider
the City debt will remain stable for the foreseeable future.
$140,000,000
$120,000,000
$100,000,000
tn
z $80,000,000
D
I $60,000,000
Z $40,000,000
$20,000,000
$-
LAKEVILLE BOND INDEBTEDNESS
COMPARISON WITH DEBT /HOUSEHOLDS
I l Indebtedness
=Crossover Refunding Indebtedness
—Debt per Household
o ,o ,o ,o ,o ,o ,o ,o ,o ,o ,o
AS OF DECEMBER 31
Actual
Estimated
10
Relevant Financial Policies
The City has a number of policies which are utilized in the management of its fiscal
affairs. The primary policies include, but not limited to, operating budget policy, budget
amendment process, revenue, debt, investment and fund balance.
• Operating Budgets. The City's operating budget policy sets forth guidance with
respect to balanced operating budgets, with an overriding goal of achieving structural
balance over a longer -term period, while recognizing that in certain periods, revenues
and expenditures may not be equal. A balanced budget for the General Fund is
defined as revenues and other sources equal to or exceeding operating expenditures
and other uses. Other sources can include that portion of General Fund balance that is
allowed to be budgeted for use per the City's fund balance policy. The budget will
provide for adequate maintenance of capital facilities and equipment and for their
orderly replacement.
Balanced budgets for the proprietary enterprise funds are defined as providing
sufficient revenues to support the operations of those funds, without subsidy from the
General Fund or property taxes. Charges from the Proprietary Internal Service Funds
shall be sufficient to support such activities, with no trend of operating deficits.
The legal level of budgetary control (i.e., the level at which expenditures may not
legally exceed appropriations) is at the department level for the General Fund and
total expenditures level for Special Revenue Funds. The City Administrator has
authorization to expend funds in excess of the appropriation for individual line items.
Budgeted expenditure appropriations lapse at year -end. Supplementary
appropriations can be carried forward to the following year if approved by the City
Council.
• Revenue Policies. The City will project its annual revenues by a conservative
objective and thorough analytical process. The City will endeavor to maintain a
diversified and stable revenue system to shelter it from annual fluctuations in any one
revenue source. All existing and potential revenue sources will be reexamined
annually. New sources of non - property -tax revenue should be actively explored at all
times. Where appropriate and not contrary to accepted public policy or statutes,
emphasis will be directed toward full cost recovery through user fees. User fees and
cost allocation formulas will be updated periodically (annually if needed). Ongoing,
the City will review the full cost of activities supported by user fees to identify the
impact of inflation and other factors. The fees along with the resulting net property
tax costs will be reviewed with the City Council during the budget process.
Sensitivity to market rates will also be considered in setting fees. Intergovernmental
grant requests are subject to fiscal review before the application is submitted. This
review is to ensure that the grants do not create an obligation for unfunded
expenditures by the City relating to the grant's purpose and to provide an overall
budgetary review of grant proposals.
• Debt. The City' s debt policy provides guidance to ensure that long -term debt is
utilized appropriately and in a fiscally prudent manner Limiting long -term
11
borrowing to capital improvements or other long -term projects which cannot, and
appropriately should not, be financed from current revenues. Final maturity of bonds
and notes should not exceed the expected useful life of the underlying project for
which it is being issued. Where possible, the City will endeavor to pledge special
assessments, State -aid or other non -tax revenues to debt service payments.
• Investments. The City's policy is to invest all available monies at competitive
interest rates, coordinated with projections of the City's operating and program cash
flow needs. Interest earnings will be distributed to the funds based on the average
cash balances. Investments will take into consideration safety, liquidity and yield as
well as complying with State regulations.
• Fund Balance. Fund balance or net position are terms used to define the difference
between a fund's assets, deferred outflows of financial resources, liabilities and
deferred inflows of financial resources. Fund balance is used in governmental fund
types and net position is used in proprietary fund types.
Major Initiatives
The City of Lakeville, in collaboration with the area schools and business community,
initiated a theme of "Positioned to Thrive." The purposes of the theme are accent and
accelerate the promotion of its commitment to investment in services, maintain the
quality of life and enhancing the economic vitality of our community.
The Heritage Center, which is home for the Lakeville Area Historical Society, Yellow
Ribbon and the area senior center operations, had its grand opening in October 2012.
The new facility serves as a recreation and resource center for community seniors, a
gathering and support center for our military veterans as well as a space to preserve and
honor Lakeville history.
The City is committed to maintaining its investment in the community's infrastructure.
The most significant 2012 project was street reconstruction and water main replacement
in the Valley Park area.
Awards and Acknowledgements
The Government Finance Officers Association (GFOA) of the United States awarded a
Certificate of Achievement for Excellence in Financial Reporting to the City of
Lakeville, Minnesota, for its comprehensive annual financial report for the fiscal year
ended December 31, 2011. This is the twenty -fourth consecutive year that the City of
Lakeville has received this prestigious award.
In order to be awarded a Certificate of Achievement for Excellence, a government must
publish an easily readable and efficiently organized comprehensive annual financial
12
report, and the contents must conform to the program standards. Such reports must satisfy
both generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement for Excellence in Financial Reporting is valid for a period
of one year only. We believe our current comprehensive annual financial report continues
to conform to the Certificate of Achievement for Excellence program requirements, and
we are submitting it to the GFOA to determine its eligibility for another certificate.
In addition, the City also received the GFOA' s Distinguished Budget Presentation Award
for its fiscal year 2012 annual budget document. In order to qualify for the Distinguished
Budget Presentation Award, the City's budget document was judged to be proficient in a
number of categories, including a policy document, a financial plan, an operations guide,
and a communications device. The City of Lakeville has received GFOA' s Distinguished
Budget Presentation Award for four consecutive years; the fiscal year 2013 annual budget
document has been submitted for another award and is currently under review.
The preparation of this report could not have been accomplished without the professional,
efficient and dedicated services of the entire staff of the Finance Department. We would
like to express our appreciation to all members of the department, with special
recognition to Senior Accountants David Lang, Tom Nesseth, and Julie Werner.
We would also like to express our sincere gratitude the City Council for its sincere
commitment and progressive leadership in the financial affairs of our community.
Respectfully submitted,
Steven Mielke
City Administrator
13
Dennis Feller
Finance Director
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Lakeville
Minnesota
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
December 31, 2011
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.
Executive Director
14
FINANCIAL SECTION
CERTIFIED PUBLIC
ACCOUNTANTS
To the City Council and Management
City of Lakeville, Minnesota
REPORT ON THE FINANCIAL STATEMENTS
AUDITOR'S RESPONSIBILITY
INDEPENDENT AUDITOR'S REPORT
We have audited the financial statements of the governmental activities, the business -type activities, each
major fund, and the aggregate remaining fund information of the City of Lakeville, Minnesota (the City)
as of and for the year ended December 31, 2012, and the related notes to the financial statements, which
collectively comprise the City's basic financial statements as listed in the table of contents.
MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Our responsibility is to express opinions on these financial statements based on our audit. We conducted
our audit in accordance with auditing standards generally accepted in the United States of America and
the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the City's preparation
and fair presentation of the financial statements in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's
internal control. Accordingly, we express no such opinion. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of significant accounting estimates
made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
15
(continued)
Malloy, Montague, Karnowski, Radosevich, & Co., P.A.
5353 Wayzata Boulevard • Suite 410 • Minneapolis. MN 55416 • Tcicphonc: 952- 545.0424 • Telefax: 952. 545 -0569 • www.rnmkr.com
PRINCIPALS
Thomas M. Montague, CPA
Thomas A. Karnowski, CPA
Paul A. Radosevich, CPA
William J. Lauer, CPA
James H. Eichren, CPA
Aaron J. Nielsen, CPA
Victoria L. Halinka, CPA
OPINIONS
In our opinion, the financial statements referred to on the previous page present fairly, in all material
respects, the respective financial position of the governmental activities, the business -type activities, each
major fund, and the aggregate remaining fund information of the City at December 31, 2012, and the
respective changes in financial position and, where applicable, cash flows thereof, in conformity with
accounting principles generally accepted in the United States of America.
As discussed in Note 1 of the notes to basic financial statements, the City has implemented Governmental
Accounting Standards Board (GASB) Statement No. 63, Financial Reporting of Deferred Outflows of
Resources, Deferred Inflows of Resources, and Net Position, and GASB Statement No. 65, Items
Previously Reported as Assets and Liabilities during the year ended December 31, 2012.
OTHER MATTERS
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's
Discussion and Analysis, the respective budgetary comparison information for the General Fund, and the
Other Post - Employment Benefits Plan — Schedule of Funding Progress, as listed in the table of contents,
be presented to supplement the basic financial statements. Such information, although not a part of the
basic financial statements, is required by GASB 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 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.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City's basic financial statements. The introductory section, combining and individual fund
statements and schedules, supplemental information, 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 and supplemental information are the
responsibility of management and were derived from and relate directly to the underlying accounting and
other records used to prepare the basic financial statements. Such 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 combining and individual fund statements and
schedules and supplemental information are 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.
16
(continued)
OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS
In accordance with Government Auditing Standards, we have also issued our report dated June 5, 2013 on
our consideration of the City's internal control over financial reporting and on our tests of its compliance
with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose
of that report is to describe the scope of our testing of internal control over financial reporting and
compliance and the results of that testing, and not to provide an opinion on internal control over financial
reporting or on compliance. That report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the City's internal control over financial reporting and
compliance.
Minneapolis, Minnesota
June 5, 2013
17
CITY OF LAKEVILLE, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
This discussion and analysis presents an overview of the financial activities and financial
position for the City of Lakeville (the "City ") for the year ended December 31, 2012.
Please read the information presented here in conjunction with our letter of transmittal.
Financial Highlights
• The assets of the City exceeded liabilities by $258,524,513 at the close of the
most recent fiscal year. Of this amount, $13,734,645 (unrestricted net position)
may be used to meet the government's ongoing obligations to citizens and
creditors.
• The City's total net position increased by $10,151,771.
• The City's governmental funds reported combined ending fund balances of
$61,706,702. Of this total amount, $22,863,189 or 37% is unrestricted and
available for spending at the government's discretion.
• As of the end of the current fiscal year, the City's unrestricted fund balance for
the general fund was $11,235,299 or 55.4% of total general fund expenditures of
$20,280,060.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the City's basic
financial statements. The City's basic financial statements are comprised of three
components: 1) government -wide financial statements, 2) fund financial statements, and
3) notes to basic financial statements. This report also contains other required
supplementary information in addition to the basic financial statements themselves.
Government -wide financial statements. The government -wide financial statements are
designed to provide readers with a broad overview of the City's finances, in a manner
similar to a private - sector business.
The statement of net position presents information on all of the City's assets, deferred
outflows of resources, liabilities and deferred inflows of resources, with the difference
reported as net position. Over time, increases or decreases in net position may serve as a
useful indicator of whether the financial position of the City is improving or
deteriorating.
18
The statement of activities presents information showing how the City's net position
changed during the most recent fiscal year. All changes in net position 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, and parks
and recreation. The business -type activities of the City include the enterprise activities of
the liquor operation, and utility operation.
The government -wide financial statements include not only the City itself (known as the
primary government), but also a legally separate housing and redevelopment authority
(HRA) for which the City is considered to be financially accountable or for which the
nature and significance of their relationship with the City is such that the exclusion would
cause the City's financial statements to be misleading or incomplete. Financial
information for this component unit is blended within the financial information presented
for the primary government itself.
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 three categories: governmental funds, proprietary
funds, and fiduciary 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
resources, 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 financing
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 statements. By doing so, readers may better understand the long -term
impact of the government's near -term financing decisions. Both the governmental fund
balance sheet and the governmental fund statement of revenues, expenditures, and
changes in fund balances provide a reconciliation to facilitate this comparison between
governmental funds and governmental activities.
19
The City maintains 22 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,
general obligation (debt service) fund, G 0 improvement (debt service) fund, building
(capital projects) fund, and the improvement construction (capital projects) fund, all of
which are considered to be major funds. Data from the other governmental funds is
combined into a single, aggregated presentation. Individual fund data for each of these
nonmajor governmental funds is provided in the form of combining statements following
the required supplementary information.
The City adopts annual appropriated budgets for its general fund and special revenue
funds. A budgetary comparison schedule has been provided as required supplementary
information for the general fund to demonstrate compliance with this budget. Special
revenue funds budgetary comparison schedules can be found in the nonmajor
governmental funds subsection of the report after the capital projects funds.
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 government -wide financial statements. The internal service fund is an
accounting device used to accumulate and allocate costs internally among the City' s
various functions.
The City uses enterprise funds to account for its off -sale liquor, and utility (water,
sanitary sewer, street light, and environmental resources) operations. The City uses
internal service funds to account for its risk management insurance liability program and
to account for compensation liability. These services benefit the governmental and
business -type functions; therefore, they have been included within governmental and
business -type activities in the government -wide financial statements.
Proprietary funds provide the same type of information as the government -wide financial
statements, only in more detail. The proprietary fund financial statements provide
separate information for each of the enterprise funds, all of which are considered to be
major funds of the City. The internal service funds are presented in a single aggregated
presentation in the proprietary fund financial statements. Individual fund data for each of
these internal service funds is provided in the form of combining statements following
the required supplementary information.
Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit
of parties outside the government. Fiduciary funds are not reflected in the government -
wide financial statement because the resources of those funds are not available to support
the City's own programs. The accounting used for fiduciary funds is much like that used
for proprietary funds.
Notes to basic 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.
Other information. In addition to the basic financial statements and accompanying
notes, this report also presents certain required supplementary information.
20
This section includes a budgetary comparison schedule and related notes for the general
fund, and a schedule of funding progress for the other post - employment benefits plan of
the City. The combining statements referred to earlier in connection with nonmajor
governmental and internal service funds are presented immediately following the
required supplementary information.
Government -wide Financial Analysis
As presented on the following table, the City's governmental and business -type assets
exceeded liabilities by $258,524,513 at the close of the fiscal year ending December 31,
2012. By far the largest portion or 87.8% of net position is reflected in its net investment
in capital assets (e.g. land, buildings and improvements, machinery and equipment,
infrastructure, and construction in process) 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 net investment in 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.
Governmental Activities Business -type Activities Total
2012 2011 Restated 2012 2011 Restated 2012 2011 Restated
Current and other assets $ 72,353,175 $ 44,732,398 $ 18,153,265 $ 18,937,742 $ 90,506,440 $ 63,670,140
Capital assets 185,030,218 181,172,567 105,426,488 103,958,303 290,456,706 285,130,870
Total assets $257,383,393 $ 225,904,965 $123,579,753 $ 122,896,045 $380,963,146 $ 348,801,010
Current and other liabilities $ 4,175,645 $ 3,952,783 $ 1,810,188 $ 1,576,109 $ 5,985,833 $ 5,528,892
Long -term liabilities 112,677,018 90,962,221 3,775,782 3,937,155 116,452,800 94,899,376
Total liabilities 116,852,663 94,915,004 5,585,970 5,513,264 122,438,633 100,428,268
Net position:
Net investment in
capital assets
Restricted
Unrestricted
Total net position
Total liabilities and
net position
125,051,058
17,403,167
(1,923,495)
140,530,730
120,485,858
16,474,815
(5,970,712)
130,989,961
102,009,893
325,750
15,658,140
117,993,783
100,390,175
325,750
16,666,856
117,382,781
227,060,951
17,728,917
13,734,645
258,524,513
220,876,033
16,800,565
10,696,144
248,372,742
$257,383,393 $ 225,904,965 $123,579,753 $ 122,896,045 $380,963,146 $ 348,801,010
The City's total restricted net position of $17,728,917 comprises 6.9% of total net
position at the close of the fiscal year ending December 31, 2012. These assets are
subject to external restrictions on how they may be used.
The 2012 remaining balance of $13,734,645 (5.3% of total net position), in unrestricted
net position may be used to meet the government's ongoing obligations to citizens and
creditors. Certain balances within unrestricted net position have internally imposed
commitments or limitations, which may further limit the purpose for which such net
position may be used.
21
Change in net position. The City's 2012 total net position during the current fiscal year
increased by $10,151,771 as shown in the following table. This increase is primarily
attributed to economic conditions, an increase in community growth, and reduction in
expenses related to the right -of -way land acquisitions from the Interstate Highway
35 /County Road 70 Interchange project that were settled and paid in 2011 for
approximately $2.8 million. Additional details that account for the change in net position
are provided in the following analysis of the governmental and business -type activities.
Governmental Activities
Business -type Activities Total
2012 2011 Restated 2012 2011 Restated 2012 2011 Restated
Revenues
Program revenues
Charges for services $ 9,126,942 $ 6,467,301 $ 13,382,007 $ 12,413,222 $ 22,508,949 $ 18,880,523
Operating grants and cont ibutions 2,236,183 2,299,434 107,287 63,469 2,343,470 2,362,903
Capital grants and contributions 6,051,234 3,229,676 2,903,043 1,129,764 8,954,277 4,359,440
General revenues
Property taxes 24,221,741 24,207,406 - - 24,221,741 24,207,406
Investment income 176,409 280,364 78,611 130,403 255,020 410,767
Gain on sale of capital assets 214,004 - - 214,004
Total revenues 42,026,513 36,484,181 16,470,948 13,736,858 58,497,461 50,221,039
Expenses
General government 5,258,319 5,134,169 - - 5,258,319 5,134,169
Public safety 11,202,018 11,068,287 - - 11,202,018 11,068,287
Public works 10,849,213 13,778,800 - - 10,849,213 13,778,800
Parks and recreation 4,780,666 4,796,035 - - 4,780,666 4,796,035
Interest on long-term debt 3,496,878 4,383,684 - - 3,496,878 4,383,684
Liquor - 2,392,945 2,439,261 2,392,945 2,439,261
Utility 10,365,651 10,401,650 10,365,651 10,401,650
Total expenses 35,587,094 39,160,975 12,758,596 12,840,911 48,345,690 52,001,886
Change in net position
before transfers 6,439,419 (2,676,794) 3,712,352 895,947 10,151,771 (1,780,847)
Transfers 3,101,350 2,692,671 (3,101,350) (2,692,671) -
Change in net position 9,540,769 15,877 611,002 (1,796,724) 10,151,771 (1,780,847)
Net position - beguumigasrestated 130,989,961 130,974,084 117,382,781 119,179,505 248,372,742 250,153,589
Net position - ending $ 140,530,730 $ 130,989,961 $ 117,993,783 $ 117,382,781 $ 258,524,513 $ 248,372,742
Governmental activities. Governmental activities change in net position before transfers
were an increase of $6,439,419. As previously discussed, this increase is primarily due to
community growth, and reduction in expenses related to the Interstate Highway
35 /County Road 70 Interchange reconstruction project paid in the previous year. The
governmental revenue increase in charges for services is directly related to the increase in
construction activity.
22
Revenues — The City's 2012 total revenues for governmental activities increased by
$5,542,332. Charges for services increased a total of $2,659,641 primarily due to recent
growth in the community as evidenced by an increase in building permit fees, connection
and area charges, and park dedication fees. A summary of the various increases are
shown as follows:
Charges for services
Licenses and building permit fees
Connection and area charges
Park dedication fees
Other
Total charges for services
2012
$ 2,429,951
2,474,810
970,360
3,251,821
$ 9,126,942
2011
$ 1,820,408
1,615,649
300,950
2,730,294
$ 6,467,301
Increase /
(Decrease)
$ 609,543
859,161
669,410
521,527
$ 2,659,641
Operating grants and contributions experienced an overall decrease of ($63,251). The
City receives state -aid for street revenue bonds; as a result of refunding the State -Aid
Street Bonds, Series 2001 C the state -aid payment was reduced by $57,406. A summary
of the various operating grants and contributions are shown as follows:
Increase /
Operating grants and contributions 2012 2011 (Decrease)
State -aid for street maintenance $ 374,335 $ 374,335 $ -
State -aid for street revenue bonds 770,762 828,168 (57,406)
Federal street reconstruction bonds payment 75,867 76,888 (1,021)
Other grants, contributions and donations 1,015,219 1,020,043 (4,824)
Total operating grants and contributions $2,236,183 $2,299,434 $ (63,251)
23
Capital grants and contributions increased by $2,821,558. Municipal state -aid decreased
by ($181,004). The City was awarded a Federal Energy Efficiency Conservation Block
grant in late 2009; the grant provides funding for energy efficiency upgrades to several
City facilities that will yield significant long -term operating electricity savings. The
remainder of the funds was spent in 2011. Special assessments increased by $1.7 million
primarily due to a major street reconstruction project that was levied against the
benefitting property owners. Contributed infrastructure from private land developers
increased by $1,403,340; the infrastructure consists of street, storm sewer, and park and
trail capital assets. The summary of capital grants and contributions is shown as follows:
Capital grants and contributions
Minnesota municipal state -aid
City facilites energy efficiency grant
Safe Routes to School grant
Special assessments
Contributed infrastructure from developers
Other grants and contributions
Total capital grants and contributions
2012
14,084
2,930,329
2,845,720
261,101
$ 6,051,234
2011
$ 181,004
76,101
164,195
1,235,704
1,442,380
130,292
$ 3,229,676
Increase /
(Decrease)
$ (181,004)
(76,101)
(150,111)
1,694,625
1,403,340
130,809
$ 2,821,558
Property tax revenue increased $14,335 or 0.1% primarily due to increase in prior year
delinquent collections. Investment income earnings decreased by ($ 103,955) or (37.1 %)
due to low yields consistent with prevailing market conditions. Gain on sale of capital
assets is related to the sale of the former Senior Center.
General revenues
Property taxes $ 24,221,741
Investment income 176,409
Gain on sale of capital assets 214,004
$ 24,398,150
Total general revenues
Increase /
2012 2011 (Decrease)
$ 24,207,406 $ 14,335
280,364 (103,955)
- 214,004
$ 24,487,770 $ (89,620)
24
A summary of 2012 revenues by source for governmental activities are shown as follows:
Property Taxes
$24,221,741
(57.6 %)
Gain on sale of
capital assets
$214,004
(0.6 %)
Revenue by Source - Governmental Activities
Total Revenues $42,026,513
Investment
Earnings
$176,409
(0.4 %)
Charges for
Services
$9,126,942
(21.7 %)
Grants and
Contributions -
Restricted
$8,287,417
(19.7 %)
A summary of 2012 expenses by function for governmental activities are shown as
follows:
Public Works
$4,867,136
(13.7 %)
Depreciation
$8,790,719
(24.7 %)
Expenses by Function - Governmental Activities
Total Expenses $35,587,094
General
Government Interest on Debt
$5,036,855 $3,496,878
(14.1 %) (9.8%) Parks and
Recreation
$3,162,250
(8.9 %)
Public Safety
$10,233,256
(28.8 %)
25
Expenses — The City's 2012 total governmental activities expenses (before depreciation
on capital assets and interest on long -term debt) decreased by ($2,744,509) or 10.5 %.
Total governmental activities expenses decreased by ($3,573,881) or 9.1 %, shown as
follows:
Governmental activities expenses
General government
Public safety
Public works
Parks and recreation
Total before depreciation and interest
Depreciation on capital assets
Interest on long -term debt
Total governmental activities expenses
2012
$ 5,036,855
10,233,256
4,867,136
3,162,250
23,299,497
8,790,719
3,496,878
$ 35,587,094
2011
$ 4,928,482
10,076,976
7,874,766
3,163,782
26,044,006
8,733,285
4,383,684
$ 39,160,975
Increase /
(Decrease)
$ 108,373
156,280
(3,007,630)
(1,532)
(2,744,509)
57,434
(886,806)
$ (3,573,881)
Following are explanations of various increases and (decreases) in expenses by
governmental function as shown above.
General government expenses increased by $108,373 or 2.2 %; which is primarily
attributed to the elections administration and personnel services.
Public safety expenses increased by $156,280 or 1.6 %; which is comprised of several
components that include personnel increases attributed to the addition of two full time
personnel, personnel costs such as salaries and benefits; motor fuels; and K -9 unit.
Public works expenses decreased by ($3,007,630) or (38.2 %); primarily due to the final
payment in 2011 for the right -of -way costs associated with the Interstate Highway 35 and
County Road 70 interchange reconstruction project. Construction overall was higher than
the prior year. The street department expenses in 2012 increased due to snow events at
year end and associated increase in overtime, motor fuels and road de -icing chemicals.
Parks and recreation expenses decreased slightly ($1,532) or (0.05 %); primarily as a
result of vacant director position which was offset by the increase in operating expense
for the Heritage Center.
Interest on long -term debt decreased by ($886,806) or (20.2 %); which is primarily due to
bonded debt refinancing.
26
Business -type activities. Business -type activities increased the City's 2012 total net
position by $611,002. Key elements of the increase in net position along with a
comparison of revenues, expenses, and changes in net position during fiscal years 2012
and 2011 are shown as follows:
Revenues
Charges for services
Liquor
Utility
Operating grants and contributions
Liquor
Utility
Capital contributions
Utility
Investment earnings
Total revenues
Expenses
Liquor
Utility
Total expenses
Change in net position before transfers
Transfers
Change in net position
Net position - beginning as restated
Net position - ending
Increase /
2012 2011 Restated (Decrease)
$ 3,839,723 $ 3,546,877 $ 292,846
9,542,284 8,866,345 675,939
3,762
103,525
2,903,043
78,611
16,470,948
2,392,945
10,365,651
12,758,596
3,712,352
(3,101,350)
611,002
1 17,382,781
3,762
59,707
1,129,764
130,403
13,736,858
2,439,261
10,401,650
12,840,911
895,947
(2,692,671)
(1,796,724)
119,179,505
43,818
1,773,279
(51,792)
2,734,090
(46,316)
(35,999)
(82,315)
2,816,405
(408,679)
2,407,726
(1,796,724)
$ 117,993,783 $ 117,382,781 $ 611,002
The City's 2012 business -type total revenues increased by $2,734,090 or 19.9 %; the
various revenue components are discussed in detail in the following paragraphs.
o The liquor fund 2012 charges for services (sales less cost of goods sold) increased
due to market conditions. The 2012 cost of goods sold as a percentage of sales
were 74.8 %, compared to 75.3% in 2011.
o The overall utility revenue charges for services increased by $675,939. This
overall increase is represented by a water revenue increase of $567,039, sanitary
sewer revenue increase of $81,855, street light revenue increase of $20,186 and
environmental resources revenue increase of $6,859. The water increase is due to
customer consumption as a result of changes in weather patterns and increase in
customers as a result of community growth. The sanitary sewer, street light and
environmental resources increases are due to increase in customers.
27
o The utility fund experienced a total increase of $1,773,279 in capital contributions.
Majority of the increase is derived from water and sanitary sewer contributed from
developer improvement projects. City improvement project infrastructure assets of
$29,395 were contributed to the utility fund which is within the net transfer
amount of ($3,101,350) on the Statement of Activities. The total amount of
contributed infrastructure assets received by the utility fund varies yearly.
o Investment earnings decreased ($51,792) or (39.7 %) consistent with prevailing
market conditions.
The City's 2012 business -type total expenses decreased by ($82,315) or (0.6 %) are as
follows:
Business -type activities expenses
Personnel services
Commodities
Other charges and services
Sanitary sewage treatment and disposal
Depreciation on capital assets
Interest, fiscal charges, bond premium (net)
Total increase /(decrease)
Financial Analysis of the City's Funds
28
Increase /(Decrease) From 2011
Liquor Utility
Fund Fund Total
$ 40,468 $ 6,299 $ 46,767
9,089 (10,899) (1,810)
(18,083) (83,517) (101,600)
110 110
573 52,008 52,581
(78,363) - (78,363)
$ (46,316) $ (35,999) $ (82,315)
o The liquor fund personnel services increase of $40,468 is primarily the result of
compensation and benefit adjustments and employee transitions.
o The utility fund other charges and services decrease of ($83,517) is attributed to
reduction in major maintenance projects compared to previous year on lift stations.
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance
with finance - related legal requirements. Some funds are required statutorily while others
are established internally to assist management in accounting for certain activities.
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,
unrestricted fund balance may serve as a useful measure of a government's net resources
available for spending at the end of the fiscal year.
As of the end of the current fiscal year, the City's governmental funds reported combined
ending fund balances of $61,706,702. Of this amount, $22,863,189 or 37% of this
combined ending fund balance constitutes unrestricted fund balance that is available for
spending at the government's discretion. Nonspendable fund balances of $256,476 are
amounts that are not in a spendable form, such as prepaid items, and inventory. The
remaining fund balance is restricted for (a) debt service of $32,787,368, (b) capital
acquisition of $5,773,866, and (c) other restricted purposes of $25,803.
The general fund is the chief operating fund of the City. At the end of the current fiscal
year, the fund balance was $11,491,775. The 2012 net change in fund balance of
$943,437 surpassed the final adopted budget net change in fund balance of ($1,227,840)
by $2,171,277. The 2012 ending fund balance surpassed the beginning 2013 budgeted
fund balance of $10,198,765, by $1,293,010.
The G.O. obligation (debt service) fund balance increased by $22,276,992 mainly due to
the issuance of $22.45 million of crossover refunding bonds, the proceeds of which were
placed in an escrow account to call outstanding bonds from another issue in the future.
The G.O. improvement (debt service) fund balance increased by $1,013,225. The City
levies the required property taxes and special assessments levied against benefited
property owners to meet the bonded debt service requirements in the following year. The
change in fund balance may fluctuate yearly based on fluctuating principal and interest
requirements of existing debt and that of new debt issuance.
The building (capital projects) fund expended $1,523,741 for the remodeling of the
Heritage Center, fire station #4 administration offices, and major maintenance projects.
Financing was provided by $212,977 of revenues from sale of the Senior Center building,
investment income and other revenue sources. An additional $371,833 of financing was
provided from donations and transfers from the enterprise liquor fund for the Heritage
Center. The fund balance provided the remaining financing of $938,931.
The improvement construction (capital projects) fund accounts for major infrastructure
improvement projects that require debt issuance for financing purposes. The activity in
this fund may fluctuate from year to year depending on the demand for infrastructure
expansion. Large projects such as the interstate highway interchange and bridge
reconstruction projects may take several years to complete. The fund balance increased
by $1,148,183 due to the issuance of the 2012 General Obligation Improvement Bonds
Series A for $6,805,000. These bonds were issued to fund the 2012 Street
Reconstruction project in the Valley Park area.
Other Post - Employment Benefits (OPEB)
In accordance with the provisions of the Governmental Accounting Standards Board
(GASB) Statement No. 45, Accounting and Financial Reporting by Employers for Post -
employment Benefits Other Than Pensions, an actuarial valuation was required to be
computed and reported for the City's post - employment health insurance benefits
provided to eligible employees through the City's Other Post - Employment Benefits Plan.
The net OPEB obligation and corresponding expense for governmental activities is
reported within the government -wide financial statements. The net OPEB obligation
liability and corresponding expense for enterprise funds are recorded within those funds.
29
Refer to Note 14. - Other Post - Employment Benefits (OPEB) Plan, of the Notes to Basic
Financial Statements for complete information concerning the City' s OPEB Plan.
General Fund Budgetary Highlights
With the exception of the legal counsel, planning and heritage center departments, all
other general fund departments expended their 2012 budget appropriations at or below
the final adopted budget. A schedule of revenues, expenditures and changes in fund
balances - budgetary comparison is disclosed in the required supplemental information
section of this report. A summary of general fund revenues, expenditures, other
financing sources (uses), variance with final budget, and net change in fund balance is as
follows:
Revenues
Property taxes
Licenses and permits
Intergovernmental
Charges for services
Fines
Investment income
Donations
Miscellaneous
Total revenues
Budget As
Originally
Adopted
$ 16,135,591
972,953
664,317
1,520,711
279,301
91,795
14,115
50,712
19,729,495
Final
Budget Actual
Variance
With Final
Budget
$ 16,135,591 $ 16,529,500 $ 393,909
972,953 1,831,073 858,120
775,688 804,276 28,588
1,521,116 1,885,622 364,506
279,301 281,879 2,578
91,795 44,159 (47,636)
29,568 33,257 3,689
50,712 59,794 9,082
19,856,724 21,469,560 1,612,836
Expenditures
Personnel services 14,834,432 14,831,908 14,585,714
Commodities 1,634,235 1,639,149 1,549,443
Other charges and services 4,311,780 4,326,929 4,108,002
Capital outlay 44,447 55,137 36,901
Other 104,000
Total expenditures 20,928,894 20,853,123 20,280,060 573,063
Other financing sources (uses) 680,253 (231,441) (246,063) (14,622)
246,194
89,706
218,927
18,236
Net change in fund balance $ (519,146) $ (1,227,840) $ 943,437 $ 2,171,277
The 2012 actual general fund revenues exceeded the final budget by $1,612,836 and
expenditures were under final adopted budget by $573,063. Other financing sources
(uses) were slightly under final budget by $14,622. The general fund actual net change in
fund balance surpassed final budget by $2,171,277.
30
The following is a brief summary explanation of the various budgets to actual variances
for revenues:
o Property taxes were greater than anticipated by $393,909 due to collection of
delinquent taxes and county tax adjustments for development of agricultural land.
o Licenses and permits exceeded estimates by $858,120 due to greater than
anticipated building permit fees. Commercial and industrial permits increased
significantly due the addition of Kingsley Shores Senior Living housing project
which includes 101 units. The number of residential building permits issued
increased from 124 in 2011 to 282 units in 2012.
o Intergovernmental exceeded estimates by $28,588 due to greater than expected
federal and state grants for storm related damages.
o Charges for services exceeded estimates by $364,506 which is primarily related to
public safety activities for security charges and public works engineering fees
related to improvement projects.
o Fines experienced slight variance of $2,578.
o Investment income was below estimates by ($47,636) due to prevailing market
conditions. The City's Management employs prudent investment practices and
cash management techniques to maximize investment income while protecting the
City' s treasury.
o Donations and miscellaneous revenues experienced slight variances of $3,689 and
$9,082, respectively.
The following is a brief summary explanation of the various budgets to actual variances
for expenditures:
o Personnel costs including benefits variance of $246,194 below budget due to
reductions related to vacant positions due to retirements and resignations, lower
than anticipated benefit costs and fire emergency calls.
o Commodities were $89,706 below budget due to a number of factors the most
significant of which is the number and quantity of snow events which resulted in a
reduction in de -icing chemicals.
o Other charges and services were $218,927 below budget which is attributed to a
energy reduction programs which resulted in overall lower cost of natural gas and
electricity.
o Capital outlay is $18,236 less than budget due to voting equipment which was
donated.
31
Capital Asset and Debt Administration
Capital assets. The City' s capital assets for governmental and business -type activities as
of December 31, 2012 are $290.5 million (net of accumulated depreciation). This amount
represents an increase (including additions, deletions, and depreciation) of approximately
$5.4 million from 2011.
The net investment in capital assets including land, historical treasures, buildings,
machinery and equipment, other improvements, infrastructure, and construction in
process are shown as follows:
Land
Historical treasures
Buildings and improvements
Machinery and equipment
Other improvements
Infrastructure
Streets
Storm sewer
Parks
Water
Sanitary sewer
Construction in process
Total
Governmental Business -type
Activities
$ 22,213,543 $
100,000
43,883,427
6,573,062
2,966,782
55,175,348
39,231,469
8,086,310
6,800,277
$ 185,030,218
Activities Total
1,800,456 $ 24,013,999
100,000
19,020,097 62,903,524
1,116,895 7,689,957
2,966,782
46,859,137
35,001,323
1,628,580
$ 105,426,488
55,175,348
39,231,469
8,086,310
46,859,137
35,001,323
8,428,857
$ 290,456,706
The City's 2013 adopted budget provides funding for $27.9 million in infrastructure
capital assets, public buildings improvements and upgrades, and equipment capital assets
such as vehicle replacements for public safety and public works, and technology
equipment. Refer to Note 3. - Capital Assets, of the Notes to Basic Financial Statements
for additional information.
Debt administration. At the end of the current fiscal year, the City of Lakeville had total
bonded debt outstanding of $109,745,000, which is an increase of ($19.73 million)
compared to the prior year. The increase is due to the issuance of two new bond issues
totaling $29.255 million, and principal bond maturities of ($9.525 million).
The City manages its debt structure by utilizing approaches that take full advantage of its
financial position, revenue trends and conditions in municipal bond markets. During
2012, the City issued the General Obligation Refunding Bonds Series 2012 B to call the
Street Reconstruction Bonds Series 2003 A and the Capital Improvement Plan Bonds
Series 2004 A on February 1, 2014, and February 1, 2015, respectively. The refunding
transaction yielded a net savings to the City of $2,768,474 with a present value economic
32
gain of $2,235,119. Refer to Note 5. — Long -Term Liabilities, of the Notes to Basic
Financial Statements for additional information about the City's governmental and
business -type long -term debt activity.
The City's outstanding bonded obligation debt as of December 31, 2012 is shown as
follows:
Balance Balance
January 1 Issued Redeemed December 31
Governmental bonds
General obligation bonds
Equipment certificates $ 450,000 $ $ 450,000 $
Park 2,780,000 - 1,565,000 1,215,000
Capital improvement 27,625,000 12,765,000 660,000 39,730,000
Street reconstruction 22,130,000 9,685,000 1,100,000 30,715,000
G.O. Improvement 7,365,000 6,805,000 985,000 13,185,000
Tax increment 3,180,000 - 425,000 2,755,000
State -aid street revenue 6,505,000 - 1,225,000 5,280,000
Water revenue 4,630,000 - 870,000 3,760,000
Arena revenue 1,305,000 - 130,000 1,175,000
HRA lease revenue 10,500,000 - 1,965,000 8,535,000
Total governmental 86,470,000 29,255,000 9,375,000 106,350,000
Business -type bonds
Liquor revenue 3,545,000 - 150,000 3,395,000
Total bonds payable
$ 90,015,000 $ 29,255,000 $ 9,525,000 $ 109,745,000
The City of Lakeville's general obligation bond rating as of December 31, 2012 is "Aal"
as rated by Moody's Investors Service.
State statutes limit the amount of general obligation debt a Minnesota city may issue to
3% of total assessor's taxable market valuation. The City has $51,110,442 of net bonded
debt, which is subject to the $150,900,095 current debt limitation, thereby resulting in a
legal debt margin of $99,789,653. Refer to the Statistical Section of this report for a
detailed computation of the City's legal debt margin.
33
Economic Conditions and Next Year's Budget
The City of Lakeville remains one of the top growth cities in the Minnesota twin city
metro area albeit at a level far below the peak years of the early 2000's. The number of
residential building permits for new construction was up in 2012 (282 residential
dwelling units compared to 124 residential dwelling units in 2011). In our opinion, the
modest resurgence is due primarily to an unemployment rate that is below the national
average and improving. The budget and five year capital improvement plan are
premised on the assumption growth will continue at a subdued level for the foreseeable
future.
The adopted 2013 — 2014 budget reflects a continuation of the program and service levels
established by the City Council over the past several years. No new programs or services
were included in the adopted budget. The 2013 budget also focuses on City efforts to
position the City to thrive through investments in community planning to prepare for the
future, investments in technology to maximize efficiencies, developing effective
partnerships to capitalize on opportunities and multi- agency resources, infrastructure
improvements to promote economic and community development and service continuity
through staffing enhancements to meet the expectations of community residents and
businesses.
Requests for Information
This financial report is designed to provide a general overview of the City of Lakeville'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 directed to the City of Lakeville Finance Department at 20195
Holyoke Avenue, Lakeville, Minnesota 55044, (952) 985 -4400, or email request to
dfeller @ci.lakeville.mn.us.
34
BASIC FINANCIAL STATEMENTS
CITY OF LAKEVILLE, MINNESOTA
STATEMENT OF NET POSITION
DECEMBER 31, 2012
ASSETS:
Cash and investments
Receivables
Internal balances
Inventory
Prepaid items
Restricted assets (temporarily):
Cash and investments
Investments held by trustee
Capital assets
Non - depreciable
Depreciable, net
Total capital assets
LIABILITIES:
NET POSITION:
Total assets
Salaries, accounts, contracts, interest, and deposits
Unearned revenue
Non - current Iiabilities
Due within one year
Due in more than one year
Total Iiabilities
Net investment in capital assets
Restricted for
Special purposes
Debt service
Capital acquisition
Unrestricted
Total net position
See accompanying notes to basic financial statements.
35
Governmental Business -type
Activities Activities
$ 37,811,737 $ 13,421,352 $ 51,233,089
10,130,194 2,629,462 12,759,656
(208,516) 208,516
243,870 1,533,191 1,777,061
12,606 34,994 47,600
24,363,284
29,113, 820
155,916,398
185,030,218
257,383,393
3,797,758 1,810,188
377,887
6,922,897 389,243
105,754,121 3,386,539
116,852,663 5,585,970
125,051,058
26,357
10,935,596
6,441, 214
(1,923,495)
325,750
3,429,036
101,997,452
105,426,488
123,579,753
102,009,893
325,750
15, 658,140
Total
325,750
24,363,284
32,542,856
257, 913, 850
290,456,706
380, 963,146
5,607,946
377,887
7,312,140
109,140, 660
122,438,633
227,060,951
26,357
11, 261, 346
6,441, 214
13,734,645
$ 140,530,730 $ 117,993,783 $ 258,524,513
CITY OF LAKEVILLE, IVI NNESOTA
STATEMENT OF ACTIVITIES
YEAR ENDED DECEMBER 31, 2012
Function /Programs
Governmental activities
General government
Public safety
Public works
Parks and recreation
Interest on long -term debt
Total governmental activities
Business -type activities
Liquor
Utility
Total business -type activities
Total primary government
$ 5,258,319
11,202,018
10,849,213
4,780,666
3,496,878
35,587,094
Net position - ending
See accompanying notes to basic financial statements.
Program Revenues
Operating Capital
Charges for Grants and Grants and
Expenses Services Contributions Contributions
2,392,945 3,839,723
10,365,651 9,542,284
12,758, 596 13,382,007
$ 2,736,653 $ 40,359 $ 91,735 $ (2,389,572)
714,587 698,949 19,530 (9,768,952)
3,588,062 1,396,560 5,569,732 (294,859)
2,087,640 100,315 370,237 (2,222,474)
(3,496,878)
9,126,942 2,236,183 6,051,234 (18,172,735)
36
3,762
103,525
107,287
General revenues
Property taxes
Investment income
Gain on sale of capital assets
Transfers
Total general revenues and transfers
Change in net position
Net position - beginning as previously reported
Change in accounting principle
Net position - beginning as restated
2,903,043
2,903,043
$48,345,690 $ 22,508,949 $ 2,343,470 $ 8,954,277
Net (Expense) Revenue and
Changes in Net Position
Governmental Business -type
Activities Activities Total
$ (2,389,572)
(9,768,952)
(294,859)
(2,222,474)
(3,496,878)
(18,172,735)
$ 1,450,540 1,450,540
2,183,201 2,183,201
3,633,741 3,633,741
(18,172,735) 3,633,741 (14,538,994)
24,221,741 - 24,221,741
176,409 78,611 255,020
214,004 - 214,004
3,101,350 (3,101,350) -
27,713,504 (3,022,739) 24,690,765
9,540,769 611,002 10,151,771
131,943,686 117,449,171 249,392,857
(953,725) (66,390) (1,020,115)
130,989,961 117,382,781 248,372,742
$ 140,530,730 $ 117,993,783 $ 258,524,513
CITY OF LAKEVILLE, MINNESOTA
BALANCE SHEET - GOVERNMENTAL FUNDS
DECEMBER 31, 2012
See accompanying notes to basic financial statements.
General
Debt Service Capital Projects Nonmajor Total
General G.O. Improvement Governmental Governmental
Oblia Improvement Building Construction Funds Funds
Assets
Cash and investments $ 10,912,850 $ 3,882,807 $ 2,196,737 $ 514,825 $ 1,940,782 $ 17,505,579 $ 36,953,580
Investments held by trustee - 23,667,928 - - - 695,356 24,363,284
Interest receivable 42,664 166,297 5,513 4,466 5,356 76,733 301,029
Taxes receivable 1,536,258 343,737 52,464 - - 205,001 2,137,460
Accounts receivable 444,999 - - 970,000 - 227,556 1,642,555
Loan receivable - - - - - 115,000 115,000
Special assessments receivable - 764,669 4,648,730 - - 601,025 6,014,424
Inventory 243,870 - - - - - 243,870
Prepaid items 12,606 - - - - - 12,606
Total assets $ 13,193,247 $ 28,825,438 $ 6,903,444 $ 1,489,291 $ 1,946,138 $ 19,426,250 $ 71,783,808
Liabilities
Salaries payable $ 379,064 $ - $ - $ - $ - $ 6,440 $ 385,504
Accounts payable 637,853 1,007 663 167,392 193,289 253,861 1,254,065
Contracts payable - - - 22,873 480,319 17,765 520,957
Deposits payable 13,840 - - - - 86,395 100,235
Unearned revenue 377,887 - - - - - 377,887
Total liabilities 1,408,644 1,007 663 190,265 673,608 364,461 2,638,648
Deferred inflows of resources
Unavailable revenue - taxes 292,828 48,794 6,992 - - 24,966 373,580
Unavailable revenue - special assessments - 763,923 4,615,185 - - 600,216 5,979,324
Unavailable revenue - other - - - 970,000 - 115,554 1,085,554
Total deferred inflows of resources 292,828 812,717 4,622,177 970,000 - 740,736 7,438,458
Fund balances
Nonspendable 256,476 - - - - - 256,476
Restricted - 28,011,714 2,280,604 - 923,987 7,370,732 38,587,037
Committed - - - 329,026 582,453 10,950,321 11,861,800
Assigned 620,725 - - - - - 620,725
Unassigned 10,614,574 - - - (233,910) - 10,380,664
Total fund balances 11,491,775 28,011,714 2,280,604 329,026 1,272,530 18,321,053 61,706,702
Total liabilities, deferred inflows of
resources, and fund balances $ 13,193,247 $ 28,825,438 $ 6,903,444 $ 1,489,291 $ 1,946,138 $ 19,426,250 $ 71,783,808
37 -38
CITY OF LAKEVILLE, MINNESOTA
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION
DECEMBER 31, 2012
Fund balance - total governmental funds $ 61,706,702
Amounts reported for governmental activities in the statement of net position
are different because:
1. Capital assets used in governmental activities are not current financial
resources and therefore are not reported in the governmental funds.
Governmental capital assets
Less accumulated depreciation
2. Grant receivable that is applicable towards accrued bond interest payable
is susceptible to full accrual on the government -wide statements. 31,575
3. Long term liabilities are not payable with current financial resources
and therefore are not reported in the governmental funds.
Bonds (106,350,000)
Accrued interest (1,533,053)
Loan (1,159,843)
Unamortized bond discount 8,911
Unamortized bond premium (2,711,537) (111,745,522)
4. Accrued compensated absences and net OPEB obligations are not
Payable with current financial resources and therefore are not reported
in the governmental funds.
5. Deferred inflows of resources in governmental funds is susceptible to full
accrual on the government -wide statements. 7,323,458
6. The City uses an internal service fund to charge the cost of insurance
activities to individual funds. A portion of the assets and liabilities of the
municipal reserves fund are included in governmental activities in the
statement of net position.
Net position of governmental activities $140,530,730
See accompanying notes to basic financial statements.
39
$ 299,713,182
(114,682,964) 185,030,218
(2,464,549)
648,848
CITY OF LAKEVILLE, MINNESOTA
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS
YEAR ENDED DECEMBER 31, 2012
Debt Service Capital Projects Nonmajor Total
General G.O. Improvement Governmental Governmental
Gen Ob liaatio n Im Building Construction Funds Funds
Revenues
Property taxes $ 16,529,500 $ 4.122,480 $ 645,090 $ - $ - $ 2,297,624 $ 23,594,694
Tax increment - 859,155 859,155
Licenses and permits 1,831,073 - 598,878 2,429,951
Intergovernmental 804,276 76,308 1,410,792 2,291,376
Charges for services 1,885,622 3,948,154 5,833,776
Special assessments 162,506 885,052 - 84,568 1,132,126
Fines 281,879 - - - 281,879
Investment income 44,159 36,389 5,687 4,605 4,401 79,117 174,358
Donations 33,257 - - 71,381 - 102,753 207,391
Miscellaneous 59,794 8,372 6,660 515,093 589,919
Total revenues 21,469,560 4,397,683 1,535,829 84,358 11,061 9,896,134 37,394,625
Expenditures - current
General government 4,103,042 469,735 4,572,777
Public safety 9,844,232 9,844,232
Public works 3,245,103 3,245,103
Parks and recreation 3,050,782 3,050,782
Total expenditures - current 20,243,159 469,735 20,712,894
Expenditures - capital outlay
General government 17,108 70,160 130,804 518,394 736,466
Public safety 11,301 239,483 341,586 592,370
Public works 5,739 51,559 6,410,036 2,738,332 9,205,666
Parks and recreation 2,753 1,162,539 - 713,566 1,878,858
Total expenditures - capital outlay 36,901 1,523,741 6,540,840 4,311,878 12,413,360
Expenditures - debt service
Principal maturities 2,585,000 985,000 4,072,027 7,642,027
Interest on debt 2,240,703 154,676 962,945 3,358,324
Fiscal charges 147,205 5,702 20,165 173,072
Total expenditures - debt service 4,972,908 1,145,378 5,055,137 11,173,423
Total expenditures 20,280,060 4,972,908 1,145,378 1,523,741 6,540,840 9,836,750 44,299,677
Excess (deficiency) of revenues over expenditures
Other financing sources and (uses)
Transfers from other funds
Transfers to other funds
Issuance of debt
Refunding bonds issued
Payment to refunded bonds escrow agent
Premium on bonds issued
Sale of capital assets
Total other financing sources and (uses)
Net change in fund balance
Fund balance, January 1
Fund balance, December 31
See accompanying notes to basic financial statements.
1,189,500 (575,225) 390,451 (1,439,383) (6,529,779) 59,384 (6,905,052)
665,631 100,000 622,774 300,452 542,000 4,468,590 6,699,447
(911,694) - (133,871) (1,793,767) (2,839,332)
- 6,805,000 - 6,805,000
22,450,000 - - 22,450,000
(1,190,000) - (640,000) (1,830,000)
1,492,217 464,833 - 1,957,050
200,000 - 200,000
(246,063) 22,852,217 622,774 500,452 7,677,962 2,034,823 33,442,165
943,437 22,276,992 1,013,225 (938,931) 1,148,183 2,094,207 26,537,113
10,548,338 5,734,722 1,267,379 1,267,957 124,347 16,226,846 35,169,589
$ 11,491,775 $ 28,011,714 $ 2,280,604 $ 329,026 $ 1,272,530 $ 18,321,053 $ 61,706,702
40 -41
CITY OF LAKEVILLE, MINNESOTA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
YEAR ENDED DECEMBER 31, 2012
Net change in fund balances - total governmental funds $ 26,537,113
Amounts reported for governmental activities in the statement of activities are
different because:
1. Governmental funds report capital outlays as expenditures while the government -wide
statement of activities reports depreciation expense to allocate those expenditures
over the life of the assets. As a result, fund balance decreases by the amount of
financial resources expended, whereas net position decreases by the amount of
depreciation expense charged for the year. This is the amount by which depreciation
expense exceeded capital outlay.
Capital outlay $10,153,263
Capital contributed by developer 2,845,720
Depreciation expense (8,790,719) 4,208,264
2. In the government -wide statement of activities, only the gain or loss on the sale of
capital assets is reported, whereas in the governmental funds, the proceeds from the
sales increase financial resources. Thus, the change in net position differs from the
change in fund balance by the net book value of the capital assets disposed of. (350,613)
3. Revenues in the government -wide statement of activities that do not provide current
financial resources are not reported as revenues in the governmental funds.
Deferred inflows of resources - December 31, 2011 (5,617,972)
Deferred inflows of resources - December 31, 2012 7,323,458 1,705,486
4. Bond proceeds are reported as other financing sources in governmental funds and thus
contribute to the increase in fund balance. Bond, loan, and capital lease principal
maturities are reported as expenditures in governmental funds thus reducing fund
balance. In the government -wide statements, however, issuing debt increases long-
term liabilities while debt repayment reduces long -term liabilities thus affecting the
statement of activities.
Bond proceeds (29,255,000)
Bond, loan, and capital lease principal maturities 9,472,027 (19,782,973)
5. Interest and debt premium /discounts in the government -wide statement of activities
differs from the amounts reported in governmental funds because accrued interest was
calculated for long -term debt payable in addition to the amortizations of debt premiums/
discounts which are recognized respectively as expenditures and other financing sources
and uses in the governmental fund statements.
Accrued interest payable (104,692)
Grant applicable towards accrued interest payable (441)
Premium on 2012 bonds issued (1,957,050)
Amortization of debt premiums /discounts 139,210 (1,922,973)
6. Accrued compensated absences and net OPEB obligations are not payable with
current financial resources and therefore are not reported in the governmental funds.
Net compensated absences increase - December 31, 2012 (66,765)
Net OPEB obligation increase - December 31, 2012 (47,219) (113,984)
7. Internal service funds are used by management to charge the costs of certain activities,
such as insurance, to individual funds. This amount represents a portion of the change
in net position of the internal service fund, which are reported in with governmental activities.
Change in net position of governmental activities $ 9,540,769
See accompanying notes to basic financial statements.
42
(739,551)
CITY OF LAKEVILLE, MINNESOTA
STATEMENT OF NET POSITION - PROPRIETARY FUNDS
DECEMBER 31, 2012
Total assets
Liquor
43
Business -type Activities - Governmental
Enterprise Funds Activities -
Internal Service
Utility Total Funds
ASSETS
Current assets
Cash and investments $ 4,512,813 $ 8,908,539 $ 13,421,352 $ 858,157
Interest receivable 25,604 50,009 75,613 2,617
Accounts receivable 1,002 2,552,847 2,553,849 534
Inventory 1,403,501 129,690 1,533,191
Prepaid expenses 21,494 13,500 34,994
Total current assets 5,964,414 11,654,585 17,618,999 861,308
Non - current assets
Restricted cash and investments 325,750 325,750
Capital assets
Land 1,272,296 528,160 1,800,456
Buildings and improvements 3,866,890 22,041,706 25,908,596
Machinery and equipment 420,956 2,136,623 2,557,579
Infrastructure - 124,861,812 124,861,812
Construction in process 4,700 1,623,880 1,628,580
Accumulated depreciation (1,240,335) (50,090,200) (51,330,535)
Net capital assets 4,324,507 101,101,981 105,426,488
Total non- current assets 4,650,257 101,101,981 105,752,238
10, 614, 671 112, 756, 566 123, 371,237 861,308
LIABILITIES
Current liabilities
Salaries payable 27,027 40,381 67,408
Accounts payable 1,140,870 369,955 1,510,825 3,944
Contracts payable - 147,009 147,009
Accrued interest payable 70,729 - 70,729
Deposits payable 8,317 5,900 14,217
Accrued compensated absences 101,369 127,874 229,243
Bonds payable 160,000 - 160,000
Total current liabilities 1,508,312 691,119 2,199,431 3,944
Non - current liabilities
Accrued compensated absences 24,917 73,481 98,398
Unamortized bond premium 21,595 - 21,595
Net OPEB obligation 11,375 20,171 31,546
Bonds payable 3,235,000 - 3,235,000
Total non - current liabilities 3,292,887 93,652 3,386,539
Total liabilities 4,801,199 784,771 5,585,970 3,944
NET POSITION
Net investment in capital assets 907,912 101,101,981 102,009,893
Restricted for debt service 325,750 - 325,750
Unrestricted 4,579,810 10,869,814 15,449,624 857,364
Total net position $ 5,813,472 $ 111,971,795 117,785,267 $ 857,364
Explanation of difference between proprietary funds statement of net position
and the government -wide statement of net position:
The City uses an internal service fund to charge the cost of its insurance
activities to individual funds. This amount consists of the necessary
adjustment to reflect the consolidation of internal service fund activities: 208,516
Net position of business -type activities $ 117,993,783
See accompanying notes to basic financial statements.
CITY OF LAKEVILLE, MINNESOTA
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - PROPRIETARY FUNDS
YEAR ENDED DECEMBER 31, 2012
Sales and cost of sales
Sales
Cost of sales
Gross profit
Operating revenues
User charges
Other
Total operating revenues
Gross profit and total operating revenues
Operating expenses
Personnel services
Commodities
Other charges and services
Disposal charges
Depreciation
Total operating expenses
Operating income (loss)
Non - operating revenue (expense)
Intergovernmental - grants
Investment income
Interest, fiscal charges, bond premium (net)
Disposal of capital assets
Total non - operating revenue (expense)
Income (loss) before contributions and transfers
Contributed capital from governmental activities
Contributed capital from developers
Transfers from other funds
Transfers to other funds
Total contributions and transfers (net)
Change in net position
Net position, January 1 as previously reported
Change in accounting principle
Net position, January 1 as restated
Liquor
$ 15,220,064
11,380,341
3,839,723
Business -type Activities -
Enterprise Funds
Utility
Net position, December 31 $ 5,813,472 $ 111,971,795
Explanation of difference between proprietary funds statement of revenue,
expenses, and changes in fund net position and the statement of activities:
The City uses an internal service fund to charge the cost of its insurance activities
to individual funds. This amount represents the income that has been allocated
back to the business -type activities in the government -wide statement of
activities that is attributable to the City's business -type activities:
Change in net position of business -type activities
See accompanying notes to basic financial statements.
44
Total
$ 15,220,064
11,380,341
3,839,723
Governmental
Activities -
Internal Service
Funds
$ 9,356,521 9,356,521 $ 293,779
180,785 180,785 164,456
9,537,306 9,537,306 458,235
3,839,723 9,537,306 13,377,029 458,235
1,274,805
57,869
765,980
117,168
2,215,822
1,623,901
3,762
26,400
(169,362)
(8,267)
(147, 467)
1,476,434
1,711,932
387,863
2,200,264
2,950,600
3,116, 774
10,367,433
(830,127)
- 29,395 29,395 -
- 2,903,043 2,903,043 -
- 3,122 3,122 -
(2,554,609) (579,258) (3,133,867)
(2,554,609) 2,356,302 (198,307)
(1,078,175) 1,681,115 602,940
6,958,037 110, 290, 680
(66,390)
6,891,647 110, 290, 680
2,986,737 -
445,732 -
2,966,244 484,415
2,950,600 -
3,233,942 -
12,583,255 484,415
793,774 (26,180)
98,398 102,160 21,363
51,564 77,964 2,698
(169,362) -
4,978 (3,289) -
154,940 7,473 24,061
(675,187) 801,247 (2,119)
8,062
$ 611,002
(729,370)
(729,370)
(731,489)
1,588,853
1,588,853
$ 857,364
CITY OF LAKEVILLE, MINNESOTA
STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS
YEAR ENDED DECEMBER 31, 2012
Cash flows from operating activities
Cash received from customers
Cash received from general service charges
Cash paid to suppliers
Cash paid to and for employees
Net cash flows from operating activities
Cash flows from noncapital financing activities
Intergovernmental - grant
Transfers from other funds
Transfers to other funds
Net cash flows from noncapital financing activities
Cash flows from capital and related financing activities
Acquisition of capital assets
Proceeds from sale of capital assets
Interest and fiscal charges
Principal maturities
Net cash flows from capital and related financing activities
Cash flows from investing activities
Investment income received
Net change in cash and cash equivalents
Cash and cash equivalents, January 1
Cash and cash equivalents, December 31
(including restricted cash account of $325,750)
Reconciliation of operating income (loss) to net cash flows
from operating activities
Operating income (loss)
Adjustments
Depreciation expense
(Increase) decrease in assets
Accounts receivable
Inventory
Prepaid expenses
Increase (decrease) in liabilities
Salaries payable
Accounts payable
Contracts payable
Deposits payable
Accrued compensated absences
Net OPEB obligation
Total adjustments
Net cash flows from operating activities
Supplemental schedule of non -cash financing activities:
The City assumes ownership of utility capital assets
from governmental projects and land developers.
Capital assets assumed were as follows:
See accompanying notes to basic financial statements.
45
Liquor
$ 15,219,829 $
(12,142, 076)
(1,292,954)
1,784,799
(2,554,609)
(2,550,847)
Business -type Activities -
Enterprise Funds
3,762
Utility
(5,451,389)
(1,691,512)
2,236,398
Total
9,379,299 $ 24,599,128 $
(17,593,465)
(2,984,466)
4,021,197
98,398 102,160
3,122 3,122
(579,258) (3,133,867)
(477,738) (3,028,585)
(4,700) (1,774,013) (1,778,713)
757 4,978 5,735
(174, 020) (174, 020)
(150, 000) (150, 000)
(327,963) (1,769,035) (2,096,998)
43,969 63,749 107,718 8,867
(1,050,042) 53,374 (996,668) (733,445)
5,888,605 8,855,165 14, 743, 770 1,591,602
$ 4,838,563 $ 8,908,539 $ 13,747,102 $ 858,157
$ 1,623,901 $ (830,127) $ 793,774 $ (26,180)
117,168 3,116,774 3,233,942
(235) (158,007) (158,242)
(11,064) (57,970) (69,034)
993 (7,600) (6,607)
$ 2,932,438 $ 2,932,438
Governmental
Activities -
Internal Service
Funds
457,701
(492,006)
(34,305)
21,363
(729,370)
(708,007)
(534)
3,878 8,233 12,111
72,535 4,399 76,934 (7,591)
147,009 147,009
(350) 1,500 1,150
(24,804) 6,633 (18,171)
2,777 5,554 8,331
160,898 3,066,525 3,227,423 (8,125)
$ 1,784,799 $ 2,236,398 $ 4,021,197 $ (34,305)
CITY OF LAKEVILLE, MINNESOTA
STATEMENT OF FIDUCIARY NET POSITION -
AGENCY FUND
DECEMBER 31, 2012
Escrow
Fund
Assets
Cash and investments $ 5,890,114
Liabilities
Deposits payable
See accompanying notes to basic financial statements.
46
$ 5,890,114
NOTES TO BASIC
FINANCIAL STATEMENTS
Note 1 — Summary of Significant Accounting Policies
Note 2 — Cash and Investments
Note 3 — Capital Assets
Note 4 — Operating Leases
Note 5 — Long -Term Liabilities
Note 6 — Net Investment in Capital Assets
Note 7 — Net Position (Restricted)
Note 8 — Construction Commitments
Note 9 — Fund Balances
Note 10 — Contributed Capital Assets from Private Land Developers and City
Government
Note 11 — Excess of Expenditures over Appropriations
Note 12 — Interfund Transfers
Note 13 — Joint Powers Debt Commitment
Note 14 — Other Post - Employment Benefits (OPEB) Plan
Note 15 — Risk Financing and Related Insurance Issues
Note 16 — Defined Benefit Pension Plans - Statewide
Note 17 — Defined Contribution Plan — Statewide
Note 18 — Lakeville Fire Relief Association
Note 19 — Deferred Compensation Plan
Note 20 — Litigation
Note 21 — Conduit Debt
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 1 — Summary of Significant Accounting Policies
The City of Lakeville operates under the "Optional Plan A" form of government, according to applicable
State of Minnesota Statutes. The Statutes prescribe a Mayor - Council form of organization. The City
provides the following services: public safety, highways and streets, water and sanitary sewer, public
improvements, planning and zoning, culture - recreation, and general administration.
The basic financial statements of the City of Lakeville have been prepared in conformity with United States
generally accepted accounting principles (GAAP) as applied to government units. The Governmental
Accounting Standards Board (GASB) is the accepted standard- setting body for establishing governmental
accounting and financial reporting principles. The City's more significant accounting policies are
described below.
A. Financial Reporting Entity of the City
The City of Lakeville is a municipal corporation governed by an elected mayor and a four- member
council. In accordance with GASB Statement No. 39, Determining Whether Certain Organizations
Are Component Units — an amendment of GASB Statement No. 14, these financial statements
represent the City of Lakeville and its sole component unit. The City includes all funds,
organizations, agencies, departments, and offices that are not legally separate from such.
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 based on
the nature and the significance of their operational or financial relationships with the City.
Blended Component Unit
The Housing and Redevelopment Authority (HRA) of Lakeville, Minnesota was created by the City
to provide housing and redevelopment assistance to its citizens. The HRA provides this assistance
through the administration of various programs. The HRA is governed by a five - member Board of
Commissioners comprised of the City of Lakeville Council in accordance with Minnesota Statutes
469.003, Subdivision 6. Although it is legally separate from the City, the HRA is reported as if it
were a part of the City (blended) because the City Council is also the HRA governing board. The
Commissioners terms of office coincide with those of the City Council member. The City
Administrator serves as the HRA Executive Director.
During fiscal year 2006, the HRA issued $9,230,000 in Ice Arena Lease Revenue Bonds, Series
2006, to finance the construction of the single sheet Hasse ice arena facility. Debt service will be
payable from equal lease payments to be made by the City pursuant to the lease agreement between
the HRA and the City, and in conjunction with the joint powers agreement between the City and
Independent School District No. 194.
These HRA bond obligations are combined and presented separately in the debt service funds as
debt supported by HRA lease revenue.
The HRA has not issued separate financial statements for the period ending December 31, 2012.
Information of a non - financial matter regarding the HRA can be obtained at the City's Finance
offices, located at 20195 Holyoke Avenue, Lakeville, Minnesota 55044.
47
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 1— Summary of Significant Accounting Policies (continued)
B. Government -wide and Fund Financial Statements
The basic financial statements include both government -wide and fund financial statements. The
government -wide financial statements focus on the City as a whole (consolidation of the City,
excluding fiduciary funds) while the fund financial statements focus on the major individual funds
(reported as separate columns within the fund financial statements). Separate financial statements
are provided for governmental funds, proprietary funds, and fiduciary funds.
Both the government -wide and fund financial statements (within the basic financial statements)
categorize primary activities as either governmental or business -type. In the governmental -wide
Statement of Net Position, both the governmental and business -type activities columns (a) are
presented on a consolidated basis by column, and (b) are reflected, on a full accrual, economic
resources measurement focus, which incorporates long -term assets and receivables as well as long-
term debt and obligations. The City generally first uses restricted assets for expenses incurred for
which both restricted and unrestricted assets are available. The City may defer the use of restricted
assets based on a review of the specific transaction.
The government -wide Statement of Activities reflects both the gross cost and the net cost per
function category (general government, public safety, public works, and parks and recreation) which
are otherwise being supported by both program and general revenues (charges for services, grants
and contributions, property taxes, etc.). The Statement of Activities reduces gross expenses
(including depreciation) by the related program revenues and operating/capital grants and
contributions.
The program revenues must be directly associated with the function (general government, public
safety, public works, and parks and recreation) or a business -type activity. Program revenues are
derived directly from the program itself or from parties outside the City' s taxpayers or citizenry, as a
whole. The City does not allocate indirect expenses. The operating grants and contributions column
include operating- specific and discretionary grants while the capital grants and contributions column
includes capital specific grants and contributions.
The governmental fund financial statements are presented using the current financial resources
measurement focus and the modified accrual basis of accounting. This is the manner in which these
funds are normally budgeted. Since the governmental fund statements are presented using a
measurement focus and basis of accounting different from that used in the government -wide
statement' s governmental column, a reconciliation is presented that briefly explains the adjustments
necessary to reconcile ending net position and the change in net position.
Both the City as a whole and the City's major funds, including both governmental and enterprise
funds, as well as an agency fund, are presented utilizing the focus of the GASB Statement No. 34
reporting model. Each presentation provides valuable information that can be analyzed and
compared (between years and between governments) to enhance the usefulness of the information.
48
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 1— Summary of Significant Accounting Policies (continued)
B. Government -wide and Fund Financial Statements (continued)
In the fund financial statements, financial transactions and accounts of the City are organized on the
basis of funds. The operation of each fund is considered to be an independent fiscal and separate
accounting entity, with a self - balancing set of accounts recording cash and/or other financial
resources together with all related liabilities and residual equities or balances, and changes therein,
which are segregated for the purpose of carrying on specific activities or attaining certain objectives
in accordance with special regulations, restrictions, or limitations.
Major governmental funds — The City reports the following major governmental funds:
• General fund — The general fund is the general operating fund of the City. It is used to
account for all financial resources except for those required to be accounted for in another
fund. This fund records revenues such as property taxes, licenses and permits,
intergovernmental revenues, charges for services, fines, and investment income. Most of
the current day -to -day operations of the City are financed from this fund.
• Debt service general obligation fund — This fund accounts for those bond issues that
financed debt approved by voter referendum, equipment certificates of indebtedness, and
capital improvement bonds. Revenues are provided primarily from property taxes.
• Debt service G.O. Improvement fund — This fund accounts for those bond issues that
financed street, storm sewer, water, and sanitary sewer improvements. The special
assessments levied against benefited property owners are pledged toward the repayment of
the principal and interest on these bonds.
• Capital projects building fund — This fund accounts for the accumulation and disbursement
of funds for the construction or improvement of public buildings.
• Capital projects improvement construction fund — This fund accounts for complex
construction contracts that involve multiple financing resources from the City and other
government entities. Construction projects usually extend over several years before
completion.
Major proprietary funds — The City reports the following major proprietary funds:
• Enterprise liquor fund — This fund is used to account for the retiil operations of three off -
sale liquor stores.
• Enterprise utility fund — This fund is used to account for water, sanitary sewer service,
street lighting, and environmental resources provided to City customers.
49
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 1— Summary of Significant Accounting Policies (continued)
B. Government -wide and Fund Financial Statements (continued)
Other funds — The City reports the following other funds:
• Internal service fund Municipal Reserves — The internal service fund accounts for the City' s
risk management program relating to general liability, excess liability, property, and
casualty insurance costs which are charged to other departments of the City.
• Internal service fund Compensation Liability — The internal service fund accounts for
expenditures attributable to severance and paid time off employee benefits disbursed at the
time of termination including annual paid time off cash -outs, which are charged to
benefited departments of the City.
• Agency fund — The agency fund is used to record the receipt and remittance of monies held
by the City as an agent primarily for land developers and builders that will be refunded to
the respective depositors when the conditions are satisfied in accordance with the respective
agreements.
C. Measurement Focus and Basis of Accounting
The accounting and reporting treatment applied to a fund is determined by its measurement focus.
Funds are classified into three categories: Governmental, Proprietary, and Fiduciary. To provide an
accurate cost measurement of individual activities in the fund financial statement consolidation
process, the City' s interfund activity relating to services provided by and used between functions has
been removed from these statements; exceptions are for charges between the government's liquor
and utility function and other functions of the government.
Governmental Funds:
• Measurement focus: Governmental funds are accounted for using a current financial
resources measurement focus. With this measurement focus, only current assets and
current liabilities generally are included on the balance sheet. Reported fund balance is
considered a measure of "available spendable resources." Governmental fund operating
statements represent increases (i.e., revenues and other financing sources) and decreases
(i.e., expenditures and other financing uses) in net current assets.
• Basis of accounting: Governmental funds are accounted for using the modified accrual
basis of accounting. Their revenues are recognized when susceptible to accrual (i.e., when
they become measurable and available). "Measurable" means the amount of the transaction
can be determined and "available" means collectible within the current fiscal year or soon
enough thereafter to be used to pay liabilities of the current fiscal year. For this purpose the
City generally considers revenues to be available if collected within 60 days of year end.
50
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 1— Summary of Significant Accounting Policies (continued)
C. Measurement Focus and Basis of Accounting (continued)
Governmental Funds: (continued)
• Revenues: Major revenues that are susceptible to accrual include property taxes, excluding
delinquent taxes received over 60 days after current fiscal year -end; special assessments,
intergovernmental revenue, charges for services, investment income, and donations. Major
revenues that are not susceptible to accrual (i.e., license and permit revenues, and
miscellaneous revenues) are recorded when received because they are not measurable until
collected.
• Expenditures: Expenditures are generally recognized under the modified accrual basis of
accounting when the related fund liability is incurred, except for principal and interest on
long -term debt, other post - employment benefits, and compensated absences which are
recognized when due.
Proprietary and Fiduciary Funds:
• Measurement focus: Proprietary funds and fiduciary funds (with the exception of agency
funds) are accounted for on a flow of economic resources measurement focus. This means
that all assets, including capital assets, and all liabilities, including long -term liabilities,
associated with fund activity are included on the Statement of Net Position. Proprietary
fund types Statement of Revenues, Expenses and Changes in Net Position present increases
(i.e., revenues) and decreases (i.e., expenses) in net total position.
• Basis of accounting: Proprietary funds and fiduciary funds (including agency funds) are
accounted for using the accrual basis of accounting. Revenues are recognized when earned
and expenses are recorded at the time the liabilities are incurred. Unbilled utility service
receivables are recorded at current fiscal year -end.
• Operating versus non - operating items: Proprietary funds distinguish operating revenues
and expenses from non - operating 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 revenue of the
City's 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 non - operating revenues
and expenses.
51
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 1— Summary of Significant Accounting Policies (continued)
D. Assets, Liabilities, Deferred Inflows of Resources, and Net Position or Equity
1. Cash and investments, and interest receivable
Cash balances from all funds are combined and invested to the extent available in certificates of
deposit, commercial paper, U.S. Government securities, and other securities authorized by State
Statutes. Earnings from such investments are allocated to the respective funds on the basis of
applicable cash balance participation by each fund.
2. Investments held by trustee
Cash and investments held by trustee represent in part the fair value of deposits that are required
to be held in trust for various City obligations. These established escrow accounts will remain in
effect until the terms and conditions of the obligations have been fulfilled.
3. Taxes receivable
Property tax levies are set by the City Council in December each year and are certified to Dakota
County for collection in the following year. Such taxes become a receivable of the City and
become a lien on the respective property as of January 1. In Minnesota, most counties act as
collection agents for all property taxes. Dakota County spreads the levies over all taxable
property within the City of Lakeville. Real and personal property taxes are payable in equal
installments by property owners to Dakota County on May 15 and October 15 of each year.
Dakota County remits these and delinquent collections to the City twice a year, in January and
July. Unpaid taxes on December 31 are classified in the fund financial statements as delinquent
taxes receivable.
Taxes receivable include the following components:
Unremitted - amounts collected by Dakota County but not yet remitted to the City by December 31.
Delinquent - amounts billed to property owners but not paid.
4. Loan receivable
The capital projects storm sewer fund has a loan receivable of $115,000; the loan repayment is
fully supported by annual tax increment revenue generated by the Di Hed Yokes (DHY) Tax
Increment Financing District 17. The loan receivable is fully offset by deferred inflow of
resources, as it is not available to finance current expenditures.
52
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 1— Summary of Significant Accounting Policies (continued)
D. Assets, Liabilities, Deferred Inflows of Resources, and Net Position or Equity (continued)
5. Special assessments receivable
Special assessments are levied against the benefited properties for the assessable costs of special
assessment improvement projects in accordance with State Statutes. The City usually adopts the
assessment rolls when the individual projects are complete or substantially complete. The City is
obligated for the payment of special assessment debt not covered through the collection of
special assessments from property owners. Any obligation by the City would be paid by property
taxes. Special assessments are collectable over a term of years generally consistent with the term
of years of the related bond issue. Collection of annual special assessment installments
(including interest) is administered by Dakota County in the same manner as property taxes.
Property owners are allowed to prepay total future installments without interest or prepayment
penalties. Special assessments receivable includes the following components:
6. Inventory
Unremitted - amounts collected by Dakota County but not yet remitted to the City by December 31.
Delinquent - amounts billed to property owners but not paid.
Deferred - assessment installments that will be billed to property owners in future years.
Other - assessments for which payment has been delayed based on State Statutes or City Council action.
The inventory in the general fund is stated at FIFO (first -in, first -out) cost and consists of
expendable supplies held for consumption. Under FIFO, the cost is recognized as an expenditure
at the time the inventory items are used (consumption method). The inventories of the
proprietary funds are stated at the lower of FIFO cost or replacement market.
7. Prepaid items
Payments made to vendors for services that will benefit periods beyond the current year are
recorded as prepaid items. Prepaid items are also accounted for using the consumption method.
8. Unamortized bond premium and bond discount
In the governmental fund financial statements, bond premiums and discounts are recognized as
other financing sources and uses, respectively in the current fiscal year. Bond discounts and
bond premiums for the City' s government -wide financial statements are deferred and amortized
over the term of the bonds using the straight -line method. Unamortized bond premiums and
discounts are included within the non - current liabilities due in more than one year of the City's
government -wide statement of net position.
The enterprise liquor fund includes a non - current liability for unamortized bond premium
associated with the issuance of the liquor revenue bonds of 2007. The bond premium is
amortized over the term of the bonds using the straight -line method.
53
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 1— Summary of Significant Accounting Policies (continued)
D. Assets, Liabilities, Deferred Inflows of Resources, and Net Position or Equity (continued)
9. Restricted assets (temporarily)
The government -wide Statement of Net Position "restricted assets (temporarily)" represents cash
and investments, and investments held by trustee that have imposed restrictions placed on them
by parties outside the government. These restricted amounts are pledged by bond covenants to
the repayment of City indebtedness. The assets are temporarily restricted until the terms and
conditions of the obligations have been fulfilled
10. Capital assets
Capital assets, which include land, historical treasures, construction in process, buildings and
improvements, machinery and equipment, other improvements, and infrastructure, are reported in
the applicable governmental or business -type activity columns of the government -wide Statement
of Net Position. Such assets are capitalized at historical cost, or estimated historical cost for
assets where actual historical cost is not available. Donated assets are recorded as capital assets
at their estimated fair value on the date of donation. The City defines capital assets as those with
an initial, individual cost of $5,000 or more with an estimated useful life of not less than three
years. The cost of normal maintenance and repairs that do not add to the value of the asset or
materially extend the life of the asset are not capitalized.
Capital outlays are recorded as expenditures in the City's governmental fund financial
statements, which use the modified accrual basis of accounting. Capital outlays that meet the
City's capitalization criteria are reported in the government -wide Statement of Net Position and
proprietary funds Statement of Net Position, both of which use the full accrual basis of
accounting. Interest incurred during the construction phase of capital assets for business -type
activities is included as part of the capitalization value of assets constructed.
Depreciation on the capital assets is recorded on a government -wide basis. Land, historical
treasures, and construction in process are not depreciated. Capital assets are depreciated using
the straight -line method over their estimated useful lives as follows:
Buildings and improvements 50 -75 years
Machinery and equipment 3 -15 years
Other improvements 10 -50 years
Infrastructure 20 -50 years
54
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 1— Summary of Significant Accounting Policies (continued)
D. Assets, Liabilities, Deferred Inflows of Resources, and Net Position or Equity (continued)
11. Deferred inflows of resources
In addition to liabilities, statements of financial position or balance sheets will sometimes report a
separate section for deferred inflows of resources. This separate financial statement element
represents an acquisition of net position that applies to future periods and so will not be
recognized as an inflow of resources (revenue) until that time. The City has only one type of
item, which arises under a modified accrual basis of accounting, which qualifies for reporting in
this category. Accordingly, the item, unavailable revenue, is reported only in the governmental
funds Balance Sheet. The governmental funds report unavailable revenue from three sources:
property taxes, special assessments, and other receivables not collected within 60 days of year-
end. These amounts are deferred and recognized as an inflow of resources in the period the
amounts became available.
12. Compensated absences
It is the City' s policy to permit employees to accumulate earned but unused leave benefits as
either paid time off (PTO), or vacation and sick leave. Under the City' s personnel policies and
collective bargaining contracts, City employees are granted leave benefits in varying amounts
based on length of services. PTO accruals vary from 18 to 30 days per year, vacation accruals
vary from 10 to 20 days per year and sick leave accrues at a rate of 12 days per year.
As benefits accrue to employees, the accumulated PTO, vacation and vested sick leave is
reported as an expense and liability in the government -wide and proprietary fund financial
statements. Accrued PTO, vacation and a percentage of sick leave is paid to employees upon
termination (severance) and is reported as an expenditure in the governmental fund that will pay
for it. No liability is recorded for non - vesting accumulating rights to receive sick leave benefits.
13. Net other post - employment benefits (OPEB) obligation
In accordance with the provisions of GASB Statement No. 45, Accounting and financial
Reporting by Employers for Post - employment Benefits Other Than Pensions, an actuarial
valuation is required to be computed and reported for the City's post - employment health
insurance benefits provided to eligible employees through the City's Other Post - Employment
Benefits Plan. OPEB is reported as an expense on a pay -as- you -go basis and is accrued as it is
earned. The net OPEB obligation liability and corresponding expense for governmental activities
is reported within the government -wide financial statements. The net OPEB obligation liability
and corresponding expense for enterprise funds are recorded within those funds.
14. Long -term obligations
Long -term obligations are recorded in the City' s government -wide Statement of Net Position
when they become a liability of the City. Long -term obligations are recognized as a liability of a
governmental fund only when due or when payment is made to the paying agent.
55
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 1— Summary of Significant Accounting Policies (continued)
D. Assets, Liabilities, Deferred Inflows of Resources, and Net Position or Equity (continued)
15. Net Position Classifications
In the government -wide and proprietary fund financial statements, net position represents the
difference between assets, deferred outflows of resources (if any), liabilities, and deferred inflows
of resources. Net position is displayed in three components:
• Net Investment in Capital Assets — Consists of capital assets, net of accumulated
depreciation reduced by any outstanding debt attributable to acquire capital assets.
• Restricted Net Position — Consists of net position restricted when there are
limitations imposed on their use through external restrictions imposed by creditors,
grantors, or laws or regulations of other governments.
• Unrestricted Net Position — All other elements of net position that do not meet the
definition of "restricted" or "net investment in capital assets."
16. Fund balance classifications
In the fund financial statements, governmental fund reports fund balance in classifications that
disclose constraints for which amounts in those funds can be spent. These classifications are as
follows:
• Nonspendable — Consists of amounts that are not in spendable form, such as prepaid
items, inventory, and other long -term assets.
• Restricted — Consists of amounts related to externally imposed constraints
established by creditors, grantors, or contributors; or constraints imposed by state
statutory provisions.
• Committed — Consists of amounts that can be used only for the specific purposes
determined by a formal action of the government's highest level of decision - making
authority. The City Council is the highest level of decision - making authority for the
government that can, by adoption of a resolution prior to the end of the fiscal year,
commit fund balance. Once adopted, the limitation imposed by the resolution
remains in place until a similar action is taken (the adoption of another resolution) to
remove or revise the limitation.
• Assigned — Consists of internally imposed constraints. These constraints consist of
amounts intended to be used by the City for specific purposes but do not meet the
criteria to be classified as restricted or committed. Pursuant to City resolution, the
City Administrator and the Finance Director are authorized to establish assignments
of fund balance.
• Unassigned — The residual classification for the General Fund, which also reflects
negative residual amounts in the other funds.
The City will endeavor to maintain an unrestricted (committed, assigned and unassigned) fund
balance in the General fund of an amount not less than 40 and not greater than 50 percent of the
next year' s budgeted expenditures of the General fund. This will assist in maintaining an adequate
level of fund balance to provide for cash flow requirements and contingency needs. At December
31, 2012, the unrestricted fund balance of the General Fund was 52.9 percent of the subsequent
year's budgeted expenditures.
56
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 1— Summary of Significant Accounting Policies (continued)
D. Assets, Liabilities, Deferred Inflows of Resources, and Net Position or Equity (continued)
16. Fund balance classifications (continued)
When both restricted and unrestricted resources are available for use, it is the City' s policy to first
use restricted resources, and then use unrestricted resources as they are needed.
When committed, assigned or unassigned resources are available for use, it is the City's policy to
use resources in the following order; 1.) committed, 2.) assigned, and 3.) unassigned.
E. Revenue, Expenditures and Expenses
1. In the governmental fund financial statements property tax revenue is recognized when it
becomes measurable and available to finance expenditures of the current fiscal year. All
delinquent taxes receivable are fully offset by deferred inflow of resources in the governmental
fund financial statements. Taxes due from Dakota County on December 31 are included in
revenue since they are remitted to the City within 60 days after December 31. In the
government -wide Statement of Activities property tax revenue is recognized when levied.
2. In the governmental fund financial statements special assessments principal and interest are
recognized as revenue when they become measurable and available to finance expenditures of the
current fiscal year. All delinquent and deferred assessments receivable are fully offset by
deferred inflow of resources in the fund financial statements. Both the principal and interest on
special assessments are payable in installments over a term of years that matches the scheduled
payments for the bond issue which financed the project. In the government -wide Statement of
Activities special assessments revenue is recognized when levied.
3. Investment income is recorded as revenue in the year earned. Elements of investment income
include interest earned on investments and unrealized gains or (losses) on net increases or
decreases in the fair value of investments.
4. Certain grants and aids received by the City require that eligible expenditures be made in order to
earn the grant. Revenue for these grants is recorded in the period of which eligible expenditures
are made.
5. Enterprise utility fund service charges are recognized when earned with no allowance for
uncollectibles because delinquent accounts deemed uncollectible during the normal billing
process are certified to Dakota County as a property tax lien. Quarterly utility service charges
provided to customers but unbilled are included as receivables as of December 31.
6. Interfund service transactions are accounted for as expenditures or expenses. Service transaction
payments to a fund are recorded as an expenditure or expense in the paying fund and conversely
recorded as a reduction of expenditure or expense in the fund that is receiving payment.
Interfund service transactions within the respective categories of governmental activities and
business -type activities in the government -wide Statement of Activities are eliminated
57
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 1— Summary of Significant Accounting Policies (continued)
F. Cash Flows
For purposes of the Statement of Cash Flows, the City considers all highly liquid debt
instruments with an original maturity from the time of purchase of three months or less to be cash
equivalents. The proprietary funds equity in the government -wide cash and investments
management pool is considered to be a cash equivalent.
G. Prior Year Comparative Information
Certain prior year information presented has been reclassified to conform to the current year
presentation.
H. Change in Accounting Principle
During the year ended December 31, 2012, the City has implemented GASB Statement No. 63,
Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net
Position and GASB Statement No 65, Items Previously Reported as Assets and Liabilities.
GASB Statement No. 63 created two new financial statement elements, deferred outflows of
resources (a consumption of net position that is applicable to a future reporting period), and
deferred inflows of resources (an acquisition of net position that is applicable to a future
reporting period), which are distinct from assets and liabilities. It also defined Net Position as the
residual of all other elements presented in a statement of net position (assets + deferred outflows
of resources — liabilities — deferred inflows of resources = net position). GASB Statement No. 65
identified specific items previously reported as assets that will now be classified as either
deferred outflows of resources or outflows (expenditures /expenses), and items previously
reported as liabilities that will now be reported as either deferred inflows of resources or inflows
(revenues). Both standards require retroactive implementation, which resulted in the restatement
of net position as of December 31, 2011 due to the write -off of bond issuance costs, which had
been recorded as deferred charges and amortized in the past.
Note 2 — Cash and Investments
A. Components of Cash and Investments
The City' s cash surpluses are pooled and invested in accordance with State Statute and City investment
policy. Investment earnings and unrealized gains and losses are allocated to funds on the basis of average
cash balances. Investments are stated at fair value, which is the amount that a financial instrument could be
exchanged for in a current transaction between willing parties. The investments are not identified with
specific funds. Investments held by trustee include balances held in segregated accounts for specific
purposes. Interest earned on these trustee accounts is allocated directly to the responsible fund. The
amounts represent funds held as required by the debt obligation covenants and other agreements.
58
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 2 — Cash and Investments (continued)
A. Components of Cash and Investments (continued)
The City's cash and investments as of December 31, 2012 consist of the following:
B. Deposits
Cash on hand $ 12,915
Deposits 1,513,803
Investments 80,285,519
Total cash and investments $ 81,812,237
The City's cash and investments as of December 31, 2012 are presented in the financial statements as
follows:
Statement of Net Position
Cash and investments
Temporarily restricted cash and investments
Temporarily restricted investments held by trustee
Statement of Fiduciary Net Position
Cash and investments
Total cash and investments
$ 51,233,089
325,750
24,363,284
5,890,114
$ 81,812,237
In accordance with applicable Minnesota Statutes, the City is permitted to maintain deposits at depository
banks authorized by the City Council, including checking accounts, savings accounts, and non - negotiable
certificates of deposits. The City' s deposit policy does not limit depository choices. The following is
considered the most significant risk associated with deposits:
Custodial Credit Risk — In the case of deposits, this is the risk that in the event of a bank failure,
the City's deposits may be lost.
Minnesota Statutes require that all deposits be protected by federal deposit insurance, corporate
surety bond, or collateral. The market value of collateral pledged must equal 110 percent of the
deposits not covered by federal deposit insurance or corporate surety bonds. Authorized collateral
includes treasury bills, notes, and bonds; issues of U.S. government agencies; general obligations
rated "A" or better; revenue obligations rated "AA" or better; irrevocable standard letters of credit
issued by the Federal Home Loan Bank; and certificates of deposit. Minnesota Statutes require
that securities pledged as collateral be held 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 carrying amount of the City' s deposits was $1,513,803 while the balance on the
bank records was $1,534,641. The City does not have any custodial credit risk for its deposits
since all City deposits held in safekeeping by the City's banks are fully protected by insurance
and /or collateral as required by Minnesota Statutes and authorized by the City Council.
59
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 2 — Cash and Investments (continued)
C. Investments
The City's investments as of December 31, 2012 are as follows:
Investment Type
Money market funds
Minnesota Municipal (4M)
Wells Fargo Advantage
First American Treasury
Obligation
Certificates of deposit
U.S. treasury securities
U.S. government agencies
Municipal Bonds
Municipal Bonds
Municipal Bonds
Municipal Bonds
Municipal Bonds
Municipal Bonds
Municipal Bonds
Municipal Bonds
Municipal Bonds
N/R - Not rated
Total investments
Interest Risk -
Maturity Duration in Years
Credit Risk Less
Rating A2ency Fair Value Than 1 1 - 5 6 - 10
N/R N/A $ 1,385,630 $ $ $
AAAm S &P 388,061 - -
AAAm S &P 695,356
N/R N/A 13,127,252
N/R N/A 47,246
AA+ S &P 55,378,623
AAA S &P 559,956
Aal Moody's 535,780
AA S &P 1,919,204
Aa2 Moody's 546,269
AA- S &P 250,822
Aa3 Moody's 1,257,085
A+ S &P 500,150
A S &P 1,584,650
A- S &P 2,109,435
60
$ 80,285,519 $ 28,638,872
N/A - Not applicable
6,756,000 6,371,252
47,246 -
17,604,341 29,838,447 7,935,835
559,956
535,780
1,513,216 125,695 280,293
546,269
250,822
914,001 343,084
500,150 -
1,000,000 584,650
303,918 1,805,517
The 4M Fund is regulated by Minnesota Statutes and the Board of Directors of the League of Minnesota
Cities and is an external investment pool not registered with the Securities and Exchange Commission
(SEC) that follows the same regulatory rules of the SEC under rule 2a7. The City's investment in the 4M
Fund is measured at the net asset value per share provided by the pool, which is based on an amortized cost
method that approximates fair value. The City's investment policy does not place any further limitations
beyond the state statute requirements for the risk categories described below. Investments are subject to
various risks, the following of which are considered the most significant;
Custodial Credit Risk — For investments, this is the risk that in the event of a failure of the
counterparty to an investment transaction (typically a broker - dealer) the City would not be able to
recover the value of its investments or collateral securities that are in the possession of an outside
party. The City does not have any custodial credit risk for its investments since all of the City's
investments held in safekeeping by the City's brokerage firm in the City's name are insured and
registered.
$ 40,961,472 $ 8,216,128
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 2 — Cash and Investments (continued)
C. Investments (continued)
Credit Risk — This is the risk that an issuer or other counterparty to an investment will not fulfill
its obligations. State Statutes authorize investments in money market funds, certificates of
deposit, commercial paper, U.S. treasury securities, U.S. government agencies, and other
securities provided they meet the two highest quality ratings of nationally recognized rating
organizations.
Concentration Risk — This is the risk associated with investing a significant portion of the City's
investments (considered 5 percent or more) in the securities of a single issuer, excluding U.S.
guaranteed investments (such as treasuries), investment pools, and mutual funds.
As of December 31, 2012, the City' s investment portfolio includes the following securities of
single issuers exceeding 5 percent:
D. Investment Policy
Federal National Mortgage Association
Federal Home Loan Bank
Federal Home Loan Mortgage Corporation
• United States Treasury obligations
• Federal Agency Securities
• Certificates of Deposit
• Commercial Paper
• Banker's Acceptance
• Money Market Funds
• State and local securities
61
35.5%
24.0%
6.7%
Interest Rate Risk — This is the risk of potential variability in the fair value of fixed rate
investments resulting from changes in interest rates (the longer the period for which an interest
rate is fixed, the greater the risk).
The City's investment policy limits exposure to interest rate risk by investing in shorter term
securities (maturing in one year or less) to meet current operating cash requirements. Longer term
investments are to be purchased with the intent to match maturity periods with future funding
needs for capital replacement and debt obligations. The City will not purchase investments that, at
the time of investment, cannot be held to maturity. This does not mean that an investment cannot
be sold prior to maturity.
Investment activity will focus upon protection of taxpayer dollars and investment income,
consistent with statutory authorization and financial prudence. The City will conduct its
investment transactions with several legal competing, reputable investment security dealers and
qualifying banks. The City will invest only in the following instruments or those others that may
subsequently be permitted by State Statute.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 3 — Capital Assets
A summary of changes in governmental capital assets during the year ended December 31, 2012 are as
follows:
Balance Balance
January 1 Additions Deletions Transfers December 31
Governmental Activities
Depreciable
Buildings and improvements $ 53,401,653 $ 1,315,247 $ (407,228) $
Machinery and equipment 17,366,389 1,496,681 (542,672)
Other improvements 4,729,462 392,340 (194,637)
Infrastructure
Streets 118,714,936 2,744,484 (617,356)
Storm sewer 51,264,484 1,992,966 -
Parks 18,496,261 612,632 (195,411)
Total depreciable at cost 263,973,185 8,554,350 (1,957,304)
Less accumulated depreciation
Buildings and improvements (9,529,349) (1,115,841) 218,945
Machinery and equipment (10,924,669) (1,356,319) 533,652
Other improvements (1,898,418) (242,815) 180,850
Infrastructure
Streets (61,873,627) (4,270,922) 477,833
Storm sewer (12,975,479) (1,050,502) -
Parks (10,268,263) (754,320) 195,411
Total accumulated depreciation (107,469,805) (8,790,719) 1,606,691
Total depreciable, net
Non - depreciable
Land
Historical treasures
Construction in process
Total non - depreciable
Depreciable, net
Total capital assets, net
- $ 54,309,672
29,131 18,349,529
4,927,165
29,131
(29,131)
(29,131)
120,842,064
53,257,450
18,913,482
270,599,362
(10,426,245)
(11,776,467)
(1,960,383)
(65,666,716)
(14,025,981)
(10,827,172)
(114,682,964)
$ 156,503,380 $ (236,369) $ (350,613) $ - $ 155,916,398
$ 21,755,670 $ 457,873 $ - $ - $ 22,213,543
100,000 - - - 100,000
2,813,517 6,642,906 (2,656,146) - 6,800,277
24,669,187 7,100,779 (2,656,146) - 29,113,820
156,503,380 (236,369) (350,613) - 155,916,398
$ 181,172,567 $ 6,864,410 $ (3,006,759) $ - $ 185,030,218
Depreciation expense was charged to governmental functions as follows:
General government
Public safety
Public works
Parks and recreation
Total depreciation expense
62
$ 221,464
968,762
5,982,077
1,618,416
$ 8,790,719
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 3 — Capital Assets (continued)
A summary of changes in business -type capital assets during the year ended December 31, 2012 are as
follows:
Balance Balance
Business -tune Activities January 1 Additions Deletions Transfers December 31
Depreciable
Buildings and improvements $ 25,925,500 $ - $ (16,904) $ - $ 25,908,596
Machinery and equipment 2,590,725 58,173 (62,188) (29,131) 2,557,579
Infrastructure
Water 68,942,195 1,747,974 - - 70,690,169
Sanitary sewer 52,895,219 1,276,424 - - 54,171,643
Total depreciable at cost 150,353,639 3,082,571 (79,092) (29,131) 153,327,987
Less accumulated depreciation
Buildings and improvements (6,350,039) (546,340) 7,880 - (6,888,499)
Machinery and equipment (1,356,889) (175,114) 62,188 29,131 (1,440,684)
Infrastructure
Water (22,382,788) (1,448,244) - - (23,831,032)
Sanitary sewer (18,106,076) (1,064,244) - - (19,170,320)
Total accumulated depreciation (48,195,792) (3,233,942) 70,068 29,131 (51,330,535)
Total depreciable, net $ 102,157,847 $ (15L371) $ (9,024) $ $ 101,997,452
Non - depreciable
Land $ 1,800,456 $ - $ $ $ 1,800,456
Construction in process - 1,628,580 - - 1,628,580
Total non - depreciable 1,800,456 1,628,580 - 3,429,036
Depreciable, net 102,157,847 (151,371) (9,024) - 101,997,452
Total capital assets, net $ 103,958,303 $ 1,477,209 $ (9,024) $ - $ 105,426,488
Depreciation expense was charged to enterprise funds as follows:
Liquor fund $ 117,168
Utility fund 3,116,774
Total depreciation expense $ 3,233,942
63
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 4 — Operating Leases
Operating Lease (Ames Arena):
On December 1, 2006, the City (as lessor) entered into a joint powers agreement with the Lakeville Arenas
(a Minnesota Joint Powers entity, as lessee), whereas the Lakeville Arenas is responsible for operations and
maintenance of the Ames Arena. Lakeville Arenas shall pay all debt service requirements due on the Gross
Revenue Recreation Facility Bonds of 1999 less payments received by Lakeville Hockey Association, Inc.
(Boosters) towards debt service payments in accordance with the revised and restated gaming revenue
agreement dated February 16, 1999. The agreement will remain in effect until August 1, 2019. The cost of
the leased space is included in the total Ames ice arena cost of $4,143,826, of which $1,308,854 has been
depreciated to date. These amounts are recorded in the City' s capital assets. The 2012 lease revenue totaled
$88,626.
Operating Sublease (Hasse Arena):
On December 1, 2006, the City (as sublessor) entered into a joint powers agreement with the Lakeville
Arenas (a Minnesota Joint Powers entity, as sublessee), whereas the Lakeville Arenas is responsible for
operations and maintenance of the Hasse Arena. In addition, the joint powers agreement calls for
Independent School District No. 194 to provide for one -half of all future ice arena lease payments to the
City. Lease agreement payments coinciding with the bonded debt service schedule commencing February
1, 2007 will remain in effect until February 1, 2032. The 2012 lease revenue totaled $281,033.
Operating Lease (Heritage Liquor Store):
The Heritage Liquor Store (located in Heritage Shopping Center) consists of 8,859 square feet of space at a
monthly lease cost of $14,600 plus a proportionate share of real estate taxes, property insurance, special
assessments, common area maintenance, and management fees. The fiscal year 2012 lease expense totaled
$175,200. The lease has a term of fifteen years expiring on June 30, 2014. The City owns the land and
buildings of its remaining two liquor stores.
Note 5 — Long -Term Liabilities
General Obligation Bonds
The City's general obligation bonds are supported primarily from revenues derived from property tax
levies, special assessment levies, tax increment levies, state -aid street revenue, water connection revenue
charges, ice arena operations, and contributions by an organization conducting lawful gaming at approved
locations. These bonds are backed by the full -faith and credit of the City.
64
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 5 — Long -Term Liabilities (continued)
Revenue Bonds
The following revenue bonds are not general obligations of the City and accordingly are not backed by the
full -faith and credit of the City.
Governmental Activities
The Gross Revenue Recreation Facility Bonds, Series 1999, are supported primarily from revenues
derived from ice arena operations and contributions from gaming revenues. The HRA Ice Arena Lease
Revenue Bonds, Series 2006, will be payable from equal lease payments to be made by the City
pursuant to the lease agreement between the HRA of Lakeville, the City, and in conjunction with the
joint powers agreement between the City and Independent School District No. 194. The City's portion
of the lease payments are supported by property tax levies. The Water Revenue Refunding Bonds,
Series 2004, are payable solely from water connection revenues.
The lease, consisting of land, building and equipment of the Hasse Arena located at 8525 215 Street
West, requires the City to provide lease payments sufficient to pay when due, the principal and interest
on the HRA Ice Arena Lease Revenue Bonds, Series 2006 ($9,230,000 original amount issued), of
which the City paid $580,175 in 2012. Title to the arena will transfer to the City upon completing the
prescribed lease payments coinciding with the bonded debt service schedule commencing February 1,
2007 and maturing February 1, 2032. The cost of the leased space is included in the total Hasse ice
arena cost of $7,505,840, of which $687,087 has been depreciated to date. These amounts are
recorded in the HRA's capital assets.
Business -type Activities
The Liquor Revenue Bonds, Series 2007, are payable solely from enterprise liquor fund revenues.
Future revenue pledged for the payment of long -term debt is as follows:
Bond Issue
Recreation Facility
Ice Arena Lease Revenue
Liquor Revenue
Water Connection Revenue
Use of Proceeds
Ice arena
Additional ice arena
Additional Liquor Store
Water system infrastructure
Type
Arena Revenues
Lease Revenues
Liquor Sales Revenue
Water Connections
65
Revenue Pledged
Term of Pledge
2013 -2019
2013 -2032
2013 -2027
2013 -2016
Remaining
Principal and
Interest
$ 1,405,603
13,142,206
4,820,625
4,069,400
Current Year
Pledged
Principal and Revenue
Interest Paid Received
$ 185,535 $ 183,626
580,175 281,033
323,500 3,839,723
1,037,800 5,304,238
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 5 — Long -Term Liabilities (continued)
Metropolitan Council Loan Agreement 2006
On February 21, 2006, the City entered into a loan agreement with the Metropolitan Council for the
purpose of acquiring property for a commuter vehicle park and pool lot located within a proposed state
trunk highway right -of -way. The Metropolitan Council provided a loan to the City in the amount of
$1,466,300 to finance the acquisition of the property. In 2012, the City made no payments on this loan. As
of December 31, 2012 the balance of the loan is $1,159,843. The loan (free of interest charge) will be
discharged by the Metropolitan Council upon the conveyance of the property to the highway authority at an
undetermined future date.
General Obligation Refunding Bonds, Series 2011 B
On December 1, 2011, the City issued $1,880,000 in General Obligation Refunding Bonds, Series 2011 B,
in a refunding transaction. The new bonds were issued to call the remaining principal amounts of the State -
Aid Street Bonds, Series 2001 C ($640,000 for years maturing 2016 — 2021) and Park Refunding Bonds,
Series 2003 B ($1,190,000 for years maturing 2013 —2015) on February 1, 2012. The new bonds will
mature on April 1, 2021 (without a provisional call) and bear interest rates ranging from 0.5% to 2.15 %.
As with the 2001 C and 2003 B refunded bonds, debt service for the 2011 B bonds will be payable
primarily from property taxes. The refunding transaction yielded a net savings to the City of $129,954 with
a present value economic gain of $132,805.
General Obligation Improvement Bonds, Series 2012 A
On August 15, 2012, the City issued $6,805,000 in General Obligation Improvement Bonds, Series 2012 A
to finance various improvement projects in the City. The bonds mature February 1, 2033, with a
provisional call date of February 1, 2022, bearing interest rates ranging from 2.0% to 3.1 %. Debt service
will be payable from property taxes and special assessments levied to benefiting properties.
General Obligation Refunding Bonds, Series 2012 B
On August 15, 2012, the City issued $22,450,000 in General Obligation Refunding Bonds, Series 2012 B.
The proceeds of this issue will be used to retire, in advance of their stated maturities, the 2015 through
2026 maturities of the Street Reconstruction Bonds, Series 2003 A (refunded principal of $10,035,000) on
their February 1, 2014 call date; and the 2016 through 2030 maturities of the Capital Improvement Plan
Bonds, Series 2004 A (refunded principal $12,460,000) on their February 1, 2015 call date.
The proceeds of the new bonds were placed in an escrow account (established by the City) whereby Open
Market Securities were purchased by the trustee in adequate amounts sufficient to be responsible for the
payment of the total called principal amount ($22,495,000) in addition to the series 2012 B accrued interest
payments of $673,066 due August 1, 2013, $350,150 due February 1, 2014, $199,425 due August 1, 2014,
and $199,425 due on the crossover refunding date of February 1, 2015. The refunding transaction yielded a
net savings to the City of $2,768,474 with a present value economic gain of $2,235,119.
66
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 5 — Long -Term Liabilities (continued)
The total long -term bonded debt outstanding as of December 31, 2012 (including amounts to be called
2/1/2014 of $10,035,000 and 2/1/2015 of $12,460,000) is summarized as follows:
Governmental Activity Bonds
General obligation bonds
Park bonds
Capital improvement bonds
Street construction bonds
G.O. Improvement bonds
Tax increment bonds
State -aid street revenue bonds
Water connection revenue bonds
Arena revenue bonds
Total general obligation bonds
HRA lease revenue bonds
Total governmental activity bonds
Business -type Bonds
Liquor revenue bonds
Total long -term bonded debt outstanding
Maturities Interest Rates Amount
2015 0.50 % - 0.75%
2030, 2032 2.0 % -5.0%
2014 -2030 2.00 % - 5.95%
2016 -2033 0.50 % - 4.125%
2014 -2022 2.00 % - 5.10%
2018 -2021 0.5% - 4.0%
2016 4.00%
2015 -2019 3.0 % -5.4%
The City is in compliance with all significant bond covenants. The annual requirements to amortize all
outstanding bonded debt as of December 31, including interest payments of $31,045,275 are as follows:
Year Ending Governmental Business -type
December 31, Principal Interest Principal Interest Total
2013 $ 5,825,000 $ 3,948,607 $ 160,000 $ 165,750 $ 10,099,357
2014 16,030,000 3,584,730 165,000 157,625 19,937,355
2015 18,535,000 2,903,771 175,000 149,125 21,762,896
2016 5,915,000 2,431,769 180,000 140,250 8,667,019
2017 4,895,000 2,259,248 190,000 131,000 7,475,248
2018 -2022 22,810,000 8,620,193 1,110,000 498,250 33,038,443
2023 -2027 18,930,000 4,605,783 1,415,000 183,625 25,134,408
2028 -2032 13,285,000 1,263,611 - - 14,548,611
2033 125,000 1,938 - - 126,938
Total $ 106,350,000 $ 29,619,650 $ 3,395,000 $ 1,425,625 $140,790,275
67
2032 4.25 % - 4.625%
2027
5.00%
$ 1,215,000
39,730,000
30,715,000
13,185,000
2,755,000
5,280,000
3,760,000
1,175,000
97, 815,000
8,535,000
106,350,000
3,395,000
$109,745,000
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 5 — Long -Term Liabilities (continued)
Equipment Capital Lease (ice arena dehumidification equipment):
During fiscal year 2005, the City entered into a capital lease purchase agreement (as lessee) to finance the
acquisition of dehumidification equipment at the Lakeville Ames Arena. The carrying value of the
dehumidification system within machinery and equipment of governmental capital assets is $130,500. Title
to the equipment will transfer to the City at the time the lease expires on February 1, 2021. On August 1,
2012 the City paid off the lease in the amount of $97,027 to reduce immediate and future interest costs.
Accrued Compensated Absences
Governmental Activities
The governmental funds accumulated liability for accrued PTO, vacation and vested sick pay
(including applicable salary - related payments) as of December 31, 2012 is $2,281,421. This amount is
included in the non - current liabilities of the government -wide Statement of Net Position.
In the event of employee separation from City, the general fund and the responsible special revenue
fund will pay the accumulated vacation portion, while the internal service compensation liability fund
paid the PTO and vested sick pay portion. In future years the general fund and the responsible special
revenue fund will pay the PTO and vested sick pay portion.
Business -type Activities
The accumulated liability for accrued PTO, vacation and vested sick pay for proprietary enterprise
funds (including applicable salary- related payments) as of December 31, 2012 is $327,641. In the
event of employee separation from City, the responsible enterprise fund will pay the accumulated
severance portion. These amounts are recorded as a liability and as an expense when earned in the
responsible funds.
Unamortized Bond Premium and Discount
Unamortized bond premium and bond discount included within non - current liabilities are as follows:
Governmental Business -type
Unamortized bond premium $ 2,711,537 $
Unamortized bond discount (8,911)
Total unamortized (net)
Net Other Post - Employment Benefit (OPEB) Obligation
68
21,595
$ 2,702,626 $ 21,595
Other post - employment benefit obligations in prior years have been liquidated primarily by the general
fund for governmental activities and by the liquor fund and utility fund for business -type activities.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 5 — Long -Term Liabilities (continued)
During the year ended December 31, 2012 the following changes occurred in non - current liabilities:
Governmental Activities
General obligation bonds
Other bonds
Total bonds
Capital lease
Metropolitan Council loan
Total long -term debt
Accrued compensated absences
Unamortized bond premium/discount
Net OPEB obligation
Total governmental activities
Business -type Activities
Liquor revenue bonds
Accrued compensated absences
Unamortized bond premium
Net OPEB obligation
Total business -type activities
Total governmental and
business -type activities
Balance Balance Due Within
Janu 1 Additions Deletions December 31 One Year
$ 52,985,000 $ 22,450,000 $ (3,775,000) $ 71,660,000 $ 2,250,000
33,485,000 6,805,000 (5,600,000) 34,690,000 3,575,000
86,470,000 29,255,000 (9,375,000) 106,350,000 5,825,000
97,027 - (97,027)
1,159,843 - - 1,159,843
87,726,870 29,255,000 (9,472,027) 107,509,843 5,825,000
2,214,656 1,164,662 (1,097,897) 2,281,421 1,097,897
884,786 1,957,050 (139,210) 2,702,626
135,909 61,323 (14,104) 183,128
90,962,221 32,438,035 (10,723,238) 112,677,018 6,922,897
3,545,000 - (150,000) 3,395,000 160,000
345,812 211,072 (229,243) 327,641 229,243
23,128 - (1,533) 21,595 -
23,215 10,821 (2,490) 31,546 -
3,937,155 221,893 (383,266) 3,775,782 389,243
$ 94,899,376 $ 32,659,928 $(11,106,504) $ 116,452,800 $ 7,312,140
Note 6 — Net Investment in Capital Assets
Net investment in capital assets as of December 31, 2012 is calculated as follows:
Governmental Business -type Total
Capital assets, net of depreciation $ 185,030,218 $ 105,426,488 $ 290,456,706
Less applicable:
Bonds payable (58,605,000) (3,395,000) (62,000,000)
Loan payable (1,159,843) (1,159,843)
Unamortized bond premium/
discount (net) (1,138,304) (21,595) (1,159,899)
Unspent bond proceeds 923,987 923,987
Invested in capital assets, net $ 125,051,058 $ 102,009,893 $ 227,060,951
69
The City has $47,745,000 in bonds and $1,564,322 in bond premium/discount (net) that are unrelated in the
calculation above.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 7 — Net Position (Restricted)
The government -wide Statement of Net Position reports restricted amounts in the net position section.
These amounts represent assets (less any related liabilities) that have imposed restrictions placed on them
by parties outside the City government. Net position restricted for debt service represents assets pledged by
bond covenant to the repayment of City bond obligations. The government -wide restricted net position is
as follows:
Restricted Net Position
Cash and investments
Temporarily restricted
Cash and investments
Investments held by trustee
Receivables
Less related liabilities
Total restricted net position
Note 8 — Construction Commitments
Governmental Business -type
Activities Activities
Total
$ 13,679,167 $ - $ 13,679,167
325,750 325,750
24,363,284 24,363,284
6,188,716 6,188,716
(26,828,000) (26,828,000)
$ 17,403,167 $ 325,750 $ 17,728,917
The City has outstanding construction and build projects as of December 31, 2012. These projects include
a fuel system upgrade and other sanitary sewer projects. The City's commitments with contractors and
other governmental entities are shown as follows:
Remaining
Projects Spent -to -Date Commitment
Governmental Activities
Fuel System Upgrade $ 57,706 $ 12,648
City of Lakeville /City of Apple Valley
sanitary sewer interceptor 53,591 55,614
Total governmental $ 111,297 $ 68,262
70
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 9 — Fund Balances
At December 31, 2012, a summary of the governmental fund balance classification are as follows:
Debt Service Capital Projects
General G.O. Improvement
General Fund Obligation Improvement Building Construction Nonmajor Total
Nonspendable
Inventory $ 243,870 $ $ $ $ $ $ 243,870
Prepaid items 12,606 — — — — — 12,606
Total nonspendable 256,476 — — — — — 256,476
Restricted
Debt Service — 28,011,714 2,280,604 — — 2,495,050 32,787,368
Public improvements — — — — 923,987 — 923,987
Street construction — — — — — 3,396,712 3,396,712
Park development — — — — — 1,397,039 1,397,039
Tax increment — — — — — 56,128 56,128
Special Service District — — — — — 25,803 25,803
Total restricted — 28,011,714 2,280,604 — 923,987 7,370,732 38,587,037
Committed
Public improvements — — — — 582,453 — 582,453
Public buildings — — — 329,026 — — 329,026
Pavement management — — — — — 1,126,938 1,126,938
Storm sewer trunk system 676,510 676,510
Water trunk system — — — — — 1,537,508 1,537,508
Sanitary sewer trunk system — — — — — 3,306,837 3,306,837
Trail improvement — — — — — 1,007,973 1,007,973
Capital acquisitions — — — — — 2,444,869 2,444,869
Public communications 782,910 782,910
Economic development — — — — — 66,776 66,776
Total committed — — — 329,026 582,453 10,950,321 11,861,800
Assigned
Subsequent year budget 620,725 — — — — — 620,725
Unassigned 10,614,574 — — — (233,910) — 10,380,664
Total $ 11,491,775 $28.011.714 $ 2.280.604 $ 329,026 $ 1.854.983 $ 18,321,053 $61.706.702
71
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 10 — Contributed Capital Assets from Private Land Developers and City Government
The ownership of local streets, storm sewer, parks, water and sanitary sewer infrastructure capital assets
that are constructed and completed during the year by private land developers becomes contributed
property of the City. Storm sewer, water and sanitary sewer infrastructure assets constructed within Dakota
County and State of Minnesota right -of -way boundaries also become City capital assets since they are
serviced and maintained by the City. Roads and highways constructed within Dakota County and State of
Minnesota right -of -way boundaries are excluded from City capital assets. The City assumed ownership of
the following governmental and business -type capital assets contributed through private land developers
during the current fiscal year as follows:
Enterprise
From Private Land Developers Governmental Utility Fund
Infrastructure
Streets $ 1,237,986 $ -
Storm sewer 1,346,581 -
Parks 261,153 -
Water 1,626,619
Sanitary sewer 1,276,424
Total $ 2,845,720 $ 2,903,043
The ownership of water and sanitary sewer infrastructure assets that are constructed and completed during
the year by City governmental activities (through various funding sources at cost) becomes contributed
property of the City's enterprise utility fund. The City's enterprise utility fund assumed ownership of the
following capital assets contributed during the current fiscal year as follows:
Enterprise
From governmental activities Utility Fund
Infrastructure
Water $ 29,395
Note 11— Excess of Expenditures over Appropriations
For the year ended December 31, 2012, total expenditures (the legal level of budgetary control) in the
special revenue economic development fund exceeded appropriations. The expenditures exceeding budget
of ($93,014) were funded by greater than anticipated revenues.
72
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 12 - Interfund Transfers
The City provides financing for a variety of operations and capital projects utilizing resources from certain
funds, interfund transfers used for these various activities during the current fiscal year are as follows:
Transfers To:
Debt Service Capital Project Nomnajor Enterprise
General G.O. Improv. Govntl.
Transfers From Fund G.O. Improve. Bldg. Const. Funds Utility Total
General fund $ $ - $ - $ - $ 542,000 $ 369,694 $ - $ 911,694
Improve Const. Fund - - 133,871 - - - - 133,871
Nonmajor govntl. funds 58,171 - 488,903 - - 1,246,693 - 1,793,767
Total 58,171 - 622,774 - 542,000 1,616,387 - 2,839,332
Enterprise - Liquor 152,434 100,000 - 300,452 - 1,998,601 3,122 2,554,609
Enterprise - Utility 409,258 - - - - 170,000 - 579,258
Internal service funds 45,768 - - - - 683,602 - 729,370
Total $ 665,631 $ 100,000 $ 622,774 $ 300,452 $ 542,000 $ 4,468,590 $ 3,122 6,702,569
(1) (2) (3) (4) (5) (6)(7)(8)
Less: Utility fund
Total governmental funds
The following are explanations to interfund transfers sub -notes 1 through 9.
(3)
Abbreviation key:
(SR) special revenue fund, (DS) debt service fund, (CP) capital projects fund,
(E) enterprise fund, (IS) internal service fund.
Fund
Amount Description
(9)
(1) The transfers to general fund were provided mainly as overhead and maintenance costs from the
following funds:
Communications (SR) $ 58,171 Public communications and city hall overhead costs.
Liquor (E) 152,434 Patrol, chemical awareness, and city hall overhead costs.
Utility (E) 409,258 City hall overhead costs.
Municipal reserves (IS) 45,768 City hall overhead costs.
Total $ 665,631
(2) The total transfer to debt service general obligation fund was provided by the liquor fund ($100,000)
to be applied towards the debt service of the new station completed in 2008.
The total transfer to debt service G.O. improvement fund was provided by the improvement
construction fund ($133,871) to reduce the future special assessment fee requirements and provide
adequate cash flow and by various capital projects funds ($488,903) related to City improvement
projects whereby user connection service charges are pledged towards the improvement bonds debt
service requirements.
73
(3,122)
$ 6.699.447
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 12 — Interfund Transfers (continued)
(4) The total transfer to capital projects building fund was provided by the enterprise liquor fund
($300,452) to provide interim financing for the major remodel of the Heritage Center.
(5) The total transfer to capital projects improvement construction fund was provided by the general
fund ($542,000) to finance various future road construction projects.
(6) The total transfer to nonmajor governmental funds ($1,616,387) was provided from the following
governmental funds:
From: Amount To:
(7)
(9)
General Fund
Communications (SR)
Tax increment (DS)
Water (CP)
Total other govntl. 1,616,387
$ 369,694 Equipment (CP) for equipment acquisition
148,416 Equipment (CP) for equipment acquisition
59,900 Storm sewer (CP) for DHY TIF district loan.
1,038,377 Water revenue (DS) for debt service requirements.
The total transfer to nonmajor governmental funds was provided by the enterprise liquor fund
($1,399,467) to provide funding for debt service requirements within the HRA revenue fund and
($599,134) to fund various equipment purchases, and by enterprise utility fund ($170,000) to provide
funding for debt service requirements within the water capital projects fund.
(8) The total transfer to nonmajor governmental funds was provided by the internal service fund
($683,602) to close out the compensation liability internal service fund.
The total transfer to enterprise utility fund was provided by the enterprise liquor fund ($3,122) for
customer service billing overhead costs.
Included within the transfers to governmental activities from business -type activities of $3,101,350 on the
Statement of Activities is the City's contributed capital from governmental activities to enterprise utility
fund capital assets of ($29,395).
Note 13 — Joint Powers Debt Commitment
On August 25, 2005 the City of Lakeville entered into a joint powers agreement with the Cities of Apple
Valley, Burnsville, Eagan, Farmington, Hastings, Inver Grove Heights, Mendota Heights, Rosemount,
South St. Paul, West St. Paul, Minnesota, and Dakota County Minnesota, to establish the Dakota
Communications Center (DCC), a Minnesota nonprofit corporation. The purpose of the DCC is to engage
in the operation and maintenance of a countywide public safety answering point and communications
center for law enforcement, fire, emergency medical services, and other public safety services for the
mutual benefit of residents residing in the above mentioned cities and county, (members). Pursuant to the
joint powers agreement, members are required to provide DCC their pro rata share of cost of operations and
maintenance, and capital projects.
74
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 13 — Joint Powers Debt Commitment (continued)
On May 1, 2007, the DCC issued Public Safety Revenue Bonds, Series 2007 in the amount of $7,315,000
to provide financing for the acquisition of equipment and reimbursement for conversion costs. The bonds
are special obligations of the DCC, payable from revenues to be received from members. Pursuant to the
joint powers agreement, members will levy taxes for the payment of their pro rata share of the principal and
interest payments due on the bonds. The bonds maturing February 1, 2014, bear interest rates ranging from
4.5% - 5.0 %. The debt will be re -paid with member assessments over a seven year amortization. All
members reserve the right to prepay, in whole or in part on any date, its allocated share of principal and
interest on the bonds.
Payments from the City of Lakeville are provided from general fund appropriations. The City of
Lakeville's future member payments to DCC as of December 31, 2012 are as follows:
Pursuant to Section 9.5 of the joint powers agreement, member payments are submitted monthly and held
in escrow by U.S. Bank National Association (trustee) until the funds are remitted to the bond holders
according to the established bond principal and interest due dates. The interest earnings from the escrow
account will reduce future member obligations on the debt. Information regarding the Dakota
Communications Center can be obtained at the website www.mn - dcc.org /stats.asp or by contacting Dennis
Feller at the City of Lakeville, 20195 Holyoke Avenue, Lakeville, Minnesota 55044. Telephone 952 -985-
4481 or email address dfeller @ci.lakeville.mn.us.
Note 14 — Other Post - Employment Benefits (OPEB) Plan
A. Plan Description
Payment Year Amount
2013 $ 147,000
The City provides post - employment insurance benefits to certain eligible employees through the
City's Other Post - Employment Benefits Plan, a single - employer defined benefit plan administered
by the City. All post - employment benefits are based on contractual agreements with employee
groups. These contractual agreements do not include any specific contribution or funding
requirements. These benefits are summarized as follows:
Post- Employment Insurance Benefits - All retirees of the City have the option under state law to
continue their medical insurance coverage through the City from the time of retirement until the
employee reaches the age of eligibility for Medicare. For members of all employee groups, the
retiree must pay the full premium to continue coverage for medical and dental insurance.
The City is legally required to include any retirees for whom it provides health insurance coverage in
the same insurance pool as its active employees, whether the premiums are paid by the City or the
retiree. Consequently, participating retirees are considered to receive a secondary benefit known as
an "implicit rate subsidy."
75
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 14 — Other Post - Employment Benefits (OPEB) Plan (continued)
A. Plan Description (continued)
This benefit relates to the assumption that the retiree is receiving a more favorable premium rate than
they would otherwise be able to obtain if purchasing insurance on their own, due to being included
in the same pool with the City's younger and statistically healthier active employees.
B. Funding Policy
The required contribution is based on projected pay -as- you -go financing requirements, with
additional amounts to pre -fund benefits as determined annually by the City.
C. Annual OPEB Cost and Net OPEB Obligation
The City's annual OPEB cost (expense) is calculated based on annual required contributions (ARC)
of the City, an amount determined on an actuarially determined basis in accordance with the
parameters of GASB Statement No. 45. The ARC represents a level funding that, if paid on an
ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial
liabilities (or funding excess) over a period not to exceed 30 years. The following table shows the
components of the City's annual OPEB cost for the year, the amount actually contributed to the plan,
and the changes in the City's net OPEB obligation to the plan:
Annual required contribution $ 75,006
Interest on net OPEB obligation 6,365
Adjustment to annual required contribution (9,227)
Annual OPEB cost (expense) 72,144
Contributions made (16,594)
Increase in net OPEB obligation 55,550
Net OPEB obligation - beginning of year 159,124
Net OPEB obligation - end of year $ 214,674
The City's annual OPEB cost; the percentage of annual OPEB cost contributed to the plan; and the
net OPEB obligation for the year are as follows:
Fiscal
Year Ended
December 31, 2010
December 31, 2011
December 31, 2012
D. Funded Status and Funding Progress
Annual Employer
OPEB Cost Contribution
$ 41,447
$ 73,281
$ 72,144
$ 9,809
$ 11,356
16,594
As of January 1, 2011, the most recent actuarial valuation date, the plan was zero percent funded.
The actuarial accrued liability for benefits was $588,458, and the actuarial value of assets was $0,
resulting in an unfunded actuarial accrued liability (UAAL) of $588,458.
76
Annual OPEB
Cost Contributed
23.7%
15.5%
23.0%
Net OPEB
Obligation
$ 97,199
$ 159,124
$ 214,674
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 14 — Other Post - Employment Benefits (OPEB) Plan (continued)
D. Funded Status and Funding Progress (continued)
The covered payroll (annual payroll of active employees covered by the plan) was $11,683,196, and
the ratio of the UAAL to the covered payroll was 5.0 percent.
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability occurrence of events far into the future. Examples include
assumptions about future employment, mortality, and the healthcare cost trend. Amounts
determined regarding the funded status of the plan and ARC' s 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 immediately following the notes to the basic
financial statements presents multi -year trend information about whether the actuarial value of plan
assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.
E. Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood by the employer and the 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 effects 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, 2011 actuarial valuation, the projected unit credit actuarial cost method was used.
The actuarial assumptions included: a 4.0 percent investment rate of return (net of administrative
expenses) based on the City's own investments; a 2011 annual healthcare cost trend rate of 8.0
percent, and reduced by decrements of .5 percent to an ultimate rate of 5.0 percent after six years for
medical insurance. Both rates included a 2.5% inflation assumption. The UAAL is being amortized
on a level dollar basis over a closed period. The remaining amortization periods at January 1, 2011
for the various amortization layers ranged from 27 to 30 years.
Note 15 — Risk Financing and Related Insurance Issues
The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets;
errors and omissions; injuries to employees; and natural disasters. The City purchased the following
insurance coverage 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, excess liability, workers compensation, property, automobile, marine, crime, employee
dishonesty, boiler, petro fund, and open meeting law.
The City pays an annual premium to the LMCIT for its insurance coverage. The LMCIT is self - sustaining
through member premiums and will reinsure through commercial companies for claims in excess of
reserved amounts for each insured event. The LMCIT allows for the pool to make additional assessments
to make the pool self- sustaining. Current state statutes (Minnesota statutes subd. 466.04) provide limits of
liability for the City.
77
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 15 — Risk Financing and Related Insurance Issues (continued)
These limits are that the combination of defense expense and indemnification expense shall not exceed
$1,500,000 for any number of claims arising out of a single occurrence. The Minnesota statutory limit on
claims is $1,500,000 per occurrence. The City self - insures the risk of any potential judicial ruling in excess
of the statutory maximum. The City has never had a claim in excess of the statutory maximum.
There have been no significant reductions in insurance coverage from the prior year and insurance
settlements have not exceeded coverage in the past three years.
Workers compensation premiums for 2012 and 2011 were $368,868 and $368,923, respectively. The City
is enrolled in the LMCIT workers compensation "regular" program. The LMCIT regular program provides
a fixed premium based on payroll and provides no claim risk to the City as a result of high claims
experience. The City's workers compensation premiums are accounted for directly in the responsible
funds.
Note 16 — Defined Benefit Pension Plans - Statewide
A. Plan Description
All full -time and certain part-time employees of the City of Lakeville 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 Statutes, Chapters 353 and 356.
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. The City does not have any
members enrolled in the Basic Plan; therefore all new members must participate in the Coordinated
Plan. All police officers are covered by 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.
Two methods are used to compute benefits for PERA's Coordinated Plan members. The retiring
member receives the higher of a step -rate benefit accrual formula (Method 1) or a level accrual
formula (Method 2). Under Method 1, the annuity accrual rate is 1.2 percent of average salary for
each of the first 10 years of service and 1.7 percent for each remaining year. Under Method 2, the
annuity accrual rate is 1.7 percent of average salary for each year of service.
For PEPFF members, the annuity accrual rate is 3.0 percent for each year of service.
For all GERF and PEPFF members hired prior to July 1, 1989 whose annuity is calculated using
Method 1, a full annuity is available when age plus years of service equal 90. Normal retirement age
is 55 for PEPFF members and 65 for Coordinated Plan members hired prior to July 1, 1989.
78
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 16 — Defined Benefit Pension Plans — Statewide (continued)
A. Plan Description (continued)
Normal retirement age is the age for unreduced Social Security benefits capped at 66 for
Coordinated Plan members hired on or after July 1, 1989. A reduced retirement annuity is also
available to eligible members seeking early retirement.
There are different types of annuities available to members upon retirement. A single -life annuity is
a lifetime annuity that ceases upon death of the retiree - -no survivor annuity is payable. There are
also various types of joint and survivor annuity options available which will be payable over joint
lives. Members may also leave their contributions in the fund upon termination of public service in
order to qualify for a deferred annuity at retirement age. Refunds of contributions are available at
any time to members who leave public service, but before retirement benefits begin.
The benefit provisions stated in the previous paragraphs of this section are current provisions and
apply to active plan participants. Vested, terminated employees who are entitled to benefits but are
not receiving them yet are bound by the provisions in effect at the time they last terminated their
public service.
PERA issues a publicly available financial report that includes financial statements and required
supplementary information for GERF and PEPFF. That report may be obtained on the internet at
www.mnpera.org, or by writing to PERA at 60 Empire Drive #200, Saint Paul, Minnesota, 55103-
2088 or by calling (651) 296 -7460 or 1- 800 - 652 -9026.
B. 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
were required to contribute 6.25% of their annual covered salary in 2012. PEPFF members were
required to contribute 9.6% of their annual covered salary in 2012. In 2012, the City of Lakeville
was required to contribute the following percentages of annual covered payroll: 7.25% for
Coordinated Plan members, and 14.4% for PEPFF members.
The City's contributions to the GERF Coordinated Plan for the years ending December 31, 2012,
2011, and 2010 were $587,750, $596,142, and $583,884, respectively. The City's contributions to
the PEPFF for the years ending December 31, 2012, 2011, and 2010 were $679,673, $650,578, and
$621,658, respectively. The City's contributions were equal to the contractually required
contributions for each year as set by state statute.
Note 17 — Defined Contribution Plan — Statewide
A. Plan Description
Two Council members of the City of Lakeville are covered by the Public Employees Defined
Contribution Plan (PEDCP), a multiple- employer deferred compensation plan administered by the
Public Employees Retirement Association of Minnesota (PERA).
79
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 17 — Defined Contribution Plan — Statewide (continued)
A. Plan Description (continued)
The PEDCP is a tax qualified plan under Section 401 (a) of the Internal Revenue Code and all
contributions by or on behalf of employees are tax deferred until time of withdrawal.
B. Funding Pg old
Plan benefits depend solely on amounts contributed to the plan plus investment earnings, less
administrative expenses. Minnesota Statutes, Chapter 353D.03, specifies plan provisions, including
the employee and employer contribution rates for those qualified personnel who elect to participate.
An eligible elected official who decides to participate contributes 5 percent of salary which is
matched by the elected official's employer.
Employer and employee contributions are combined and used to purchase shares in one or more of
the seven accounts of the Minnesota Supplemental Investment Fund. For administering the plan,
PERA receives 2 percent of employer contributions and twenty -five hundredths of one percent of the
assets in each member's account annually. Total contributions made by the City of Lakeville for the
year ending December 31, 2012 were as follows:
Contribution Amount
Employee Employer
$ 1,311 $ 1,311
Note 18 — Lakeville Fire Relief Association
A. Plan Description
Covered Payroll
Employee Employer
5.0% 5.0%
Required
Rates
5.0%
Firefighters of the City of Lakeville Fire Department are members of the Lakeville Fire Relief
Association. There are no covered salaries or related fringe benefits in connection with the Relief
Association plan. Since members are volunteers, City of Lakeville contributions to the Lakeville
Fire Relief Association are not based on payroll, but rather on years of active service.
The Association is the administrator of a single employer defined benefit pension plan available to
firefighters that was established in 1972 and operates under the provisions of Minnesota State
Statutes Chapter 424A. The plan is governed by a board of six members elected by the members of
the Association for three year terms. One City Council member, Finance Director, and Fire Chief
are ex officio, nonvoting members of the Board of Trustees.
Non - employer pension contributions include state -aid from the State of Minnesota and municipal
contributions from the City of Lakeville. On- behalf state -aid payments from the State of Minnesota
are received initially by the City of Lakeville and subsequently remitted to the Relief Association.
These on- behalf state -aid payments in addition to the City's municipal contribution payments to the
Relief Association plan are recognized as revenues and expenditures in the City's general fund
during the period.
80
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 18 — Lakeville Fire Relief Association (continued)
A. Plan Description (continued)
The Lakeville Fire Relief Association issues a publicly available financial report that includes
financial statements and required supplementary information. That report may be obtained by
writing to Lakeville Volunteer Firefighters' Relief Association, 20195 Holyoke Avenue, Lakeville,
Minnesota, 55044 or by calling (952) 985 -4480.
B. Current Plan Membership
At December 31, 2012, membership data related to the Association was as follows:
Members
C. Benefit Provisions
Retired members entitled to benefits,
but not yet receiving them 26
Active Plan Participants
Vested 2
Partially vested 39
Non - vested 31
Total plan membership 98
Authority for payment of pension benefits is established in Minnesota State Statue 69.77 and may be
amended only by the Minnesota State Legislature.
Twenty -Year Service Pension - Each member who is at least 50 years of age, has retired from the
Fire Department, has served at least 20 years of active service with the department before retirement
and has been a member of the Association in good standing at least 7 years prior to retirement, shall
be entitled to a lump sum service pension in the amount of $6,417 for each year of service (including
each year over 20) but not exceeding the maximum amount per year of service allowed by law for
the minimum average amount of available financing per firefighter. The Association's benefit
amount will remain at $6,417 for calendar year 2013.
Any member who retires after 20 years of service and is under the age of 50 is placed on the deferred
pension roll. In 2009, the Association amended their bylaws on March 30, 2009 which changed how
interest is earned on a deferred member's retirement account. All moneys deferred prior to the
amendment shall earn interest at 5 percent compounded annually. All moneys deferred after the
amendment will be placed in a separate investment account and will earn interest at the current
market rate.
Seven -Year Service, but Less than Twenty -Year Service Pension - Each member who is at least 50
years of age; who has retired from the Fire Department; who has served at least 7 years of active
service with the department before retirement, but has not served at least 20 years of active service;
and, who has been a member of the Association in good standing at least 7 years prior to retirement,
shall be entitled to a pro -rated lump sum service pension based on the percentages shown in the
following table:
81
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 18— Lakeville Fire Relief Association (continued)
C. Benefit Provisions (continued)
For Duty of:
More Less % of
Than Than Pension
7 Years 8 Years 48%
8 9 52%
9 10 56%
10 11 60%
11 12 64%
12 13 68%
13 14 72%
14 15 76%
15 16 80%
16 17 84%
17 18 88%
18 19 92%
19 20 96%
20 100%
The payment amount will be calculated by using the amount payable per year of service in effect at
the time of such early retirement, multiplied by the number of accumulative years of service,
multiplied by the appropriate percentage as defined above.
Death Benefit - Upon the death of any member who is in good standing, the Association will pay a
death benefit equal to the full annual service pension amount for each year the member has served.
Disability Benefits - In the event of total permanent disability incurred in the line of duty, a member
shall be eligible to collect a disability benefit in an amount equal to his /her full years of active
service on the Fire Department multiplied by the base sum pension benefit. The benefit is payable
immediately upon approval by the Association regardless of age. For total permanent disability not
incurred in the line of duty, a member shall be paid in accordance with the seven -year partial vesting
provision described above.
State Supplemental Benefits - Minnesota Statutes provide for the payment of a supplemental benefit
equal to 10 percent of a regular lump sum distribution up to a maximum of $1,000.
D. Contributions and Reserves
The Lakeville Fire Relief Association's funding policy provides for contributions from the State of
Minnesota and the City of Lakeville, in amounts sufficient to accumulate assets to pay benefits when
due.
82
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 18 — Lakeville Fire Relief Association (continued)
D. Contributions and Reserves (continued)
The Volunteer Firefighters' Relief Association Financing Guidelines Act of 1971 (Chapter 261 as
amended by Chapter 509 of Minnesota Statutes 1980) specifies minimum contributions required on
an annual basis. The minimum support rates from the municipality and state aid are determined in
the amount required to meet the normal cost plus amortizing any existing prior year service costs
over a closed 10 -year period. The minimum contribution from the City of Lakeville and state aid is
determined as follows:
Normal cost
+ Amortization payment on unfunded accrued liability prior to any change
+ Amortization contribution on unfunded accrued liability prior to any change
= Total contribution required
Annual pension cost (APC) contributed from the State of Minnesota and the City of Lakeville for the
last three years are as follows:
Total
State of City of Pension
Year Minnesota Lakeville Contribution
2012 $ 221,958 $ 44,804 $ 266,762
2011 213,067 44,804 257,871
2010 196,224 178,380 374,604
E. Funding Progress
F. Additional Information:
Actuarial
Valuation Date
December 31
2012
2011
2010
Actuarial valuation date:
Actuarial valuation method:
Actuarial cost method:
Actuarial assumptions rate of
investment return:
Annual covered payroll:
Age and service retirement age:
Amortization method:
Amortization period:
Inflation rate:
Net
% of APC Pension
APC Contributed Obligation
$ 266,762 100% $
257,871 100%
374,604 100%
Actuarial
Value Accrued (Unfunded) Funded
of Assets Liability Overfunded Ratio
$ 5,852,995 $ 5,485,211 $ 367,784 106.7%
5,619,763 5,480,096 139,667 102.5%
5,677,470 5,297,410 380,060 107.2%
August 1, 2012
Fair Value
Entry age normal cost
5% per annum, compounded annually
None (all volunteer firefighters)
Assumed to occur at age 50. No turnover or early retirement
Level Dollar Closed
10 Years
Not applicable
83
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 19 — Deferred Compensation Plan
The City offers its employees an optional deferred compensation plan created in accordance with Internal
Revenue Service Code Section 457. The plan is available to all City employees, which permits them to tax
defer a portion of their salary until future years. The deferred compensation is not available to employees
until termination, retirement, death or unforeseeable emergency. Under provisions of Section '72(p) of the
Internal Revenue Code, a plan may permit participant loans once 457 plan assets are held in a trust. As of
the current fiscal year, the City's plan does not have a loan provision for its participants. All amounts of
compensation deferred under the plan must be held in trust for the exclusive benefit of plan participants
and /or beneficiaries. Investments are managed by the plan's trustee under various investment options or a
combination thereof. The choice of investment options is made by the participant.
Note 20 — Litigation
There are several lawsuits pending in which the City is involved. The City Attorney has indicated that
existing and pending lawsuit claims and other actions in which the City is a defendant are either covered by
insurance, fully reserved for by the City, or the cases are in the early stages of discovery, and accordingly,
the ultimate outcome cannot presently be determined. It is the opinion of City management that in each
case the possibility of material loss, net of amounts reserved is remote.
Note 21— Conduit Debt
On April 7, 2008, the Housing and Redevelopment Authority (HRA) of Lakeville approved the issuance of
the Housing and Redevelopment Authority of Lakeville, Minnesota Education Facilities Revenue Note (All
Saints School Project), Series 2008. The HRA acted as the conduit for a bank qualified tax - exempt
refinancing of existing debt for All Saints School under the responsibility of All Saints Church of
Lakeville, Dakota County, Minnesota, a religious corporation organized under the laws of the State of
Minnesota and constituting a nonprofit corporation under the laws of the State of Minnesota. The note
funds will provide non - religious portions of the renovation and equipping of, and construction of additions
to, a school for grades kindergarten through 8th grade known as All Saints School, owned and operated by
the All Saints Church, and located at 19795 Holyoke Avenue in Lakeville.
The HRA authorized the revenue note in the principal amount of $2,000,000. The note provides needed
financial assistance to a private- sector entity deemed to be in the public interest. Neither the HRA nor the
City is obligated in any circumstance for repayment of this note, and accordingly the note is not reported as
a liability in the accompanying financial statements. As of December 31, 2012, $2,000,000 remains
outstanding on this note.
84
REQUIRED SUPPLEMENTARY INFORMATION
CITY OF LAKEVILLE, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGETARY COMPARISON
YEAR ENDED DECEMBER 31, 2012
Revenues
Property taxes
General property taxes
Current
Delinquent
Fiscal disparities
Mobile home tax
Gravel tax
Total property taxes
Licenses and permits
Intergovernmental
Market value homestead credit
Market value homestead mobile home credit
State -aid police
State -aid fire
State -aid PERA
State police and fire grants
State other grants
Federal other grants
County and other grants
Charges for services
General government
Public safety
Public works
Parks and recreation
Fines
Investment income
(continued)
Total intergovernmental
Total charges for services
85
Budget As
Originally
Adopted
16,135,591
972,953
18,050
342,585
213,067
21,303
18,616
8,034
2,100
40,562
664,317
193,678
326,149
445,581
555,303
1,520,711
279,301
91,795
Final
Budget
Variance
With Final
Actual Budget
$ 13,816,776 $ 13,816,776 $ 14,221,745 $ 404,969
257,928 257,928 349,108 91,180
2,006,780 2,006,780 1,895,748 (111,032)
45,200 45,200 46,000 800
8,907 8,907 16,899 7,992
16,135,591 16,529,500 393,909
972,953 1,831,073 858,120
3,195
18,050 -
342,585 336,571
219,958 219,958 -
21,303 21,303 -
18,616 28,773 10,157
8,034 34,918 26,884
106,580 112,631 6,051
40,562 46,927 6,365
3,195
(18,050)
(6,014)
775,688 804,276 28,588
193,678 209,277 15,599
326,149 412,748 86,599
445,581 655,067 209,486
555,708 608,530 52,822
1,521,116 1,885,622 364,506
279,301 281,879 2,578
91,795 44,159 (47,636)
CITY OF LAKEVILLE, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGETARY COMPARISON
YEAR ENDED DECEMBER 31, 2012
Expenditures
(continued)
Total committees /commissions
86
Budget As Variance
Originally Final With Final
Adopted Budget Actual Budget
Revenues (continued)
Donations $ 14,115 $ 29,568 $ 33,257 $ 3,689
Miscellaneous 50,712 50,712 59,794 9,082
Total revenues 19,729,495 19,856,724 21,469,560 1,612,836
General government
Mayor and Council
Personnel services 49,752 49,752 48,792 960
Commodities 50 50 - 50
Other charges and services 44,922 44,922 44,976 (54)
Total Mayor and Council 94,724 94,724 93,768 956
Committees /Commissions
Personnel services 47,538 47,538 46,106 1,432
Commodities 1,924 1,924 1,033 891
Other charges and services 16,941 16,941 12,455 4,486
66,403 66,403
59,594 6,809
City administration
Personnel services 308,853 306,541 309,881 (3,340)
Commodities 900 900 293 607
Other charges and services 10,742 10,742 7,913 2,829
Capital outlay 1,032 1,032 1,032
Total city administration 321,527 319,215 319,119 96
CITY OF LAKEVILLE, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGETARY COMPARISON
YEAR ENDED DECEMBER 31, 2012
Expenditures (continued)
General government (continued)
City Clerk
Personnel services $ 104,248 $ 103,530 $ 108,696 $ (5,166)
Commodities 1,900 1,900 2,422 (522)
Other charges and services 61,367 61,367 62,128 (761)
Capital outlay 11,553 11,553 2,601 8,952
Legal counsel
Other charges and services 65,132
Planning
Personnel services 324,879 322,528 326,917 (4,389)
Commodities 2,210 2,210 1,154 1,056
Other charges and services 15,439 15,439 15,301 138
Capital outlay 1,377 1,377 1,577 (200)
Community and economic development
Personnel services 253,105 251,237 255,075 (3,838)
Commodities 205 205 258 (53)
Other charges and services 46,180 46,180 26,518 19,662
Capital outlay 688 688 688
(continued)
Total City Clerk
Total planning
Total community and economic development
Total inspections
87
Budget As Variance
Originally Final With Final
Adopted Budget Actual Budget
179,068 178,350
343,905 341,554
300,178 298,310
175,847 2,503
65,132 79,935 (14,803)
344,949 (3,395)
282,539 15,771
Inspections
Personnel services 649,708 644,414 623,085 21,329
Commodities 13,244 13,244 11,473 1,771
Other charges and services 110,281 110,281 127,496 (17,215)
Capital outlay 2,753 2,753 2,753
775,986 770,692
764,807 5,885
CITY OF LAKEVILLE, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGETARY COMPARISON
YEAR ENDED DECEMBER 31, 2012
Expenditures (continued)
General government (continued)
General government facilities
Personnel services $ 186,185 $ 184,780 $ 186,123 $ (1,343)
Commodities 31,025 31,025 22,875 8,150
Other charges and services 267,563 247,224 199,685 47,539
Capital outlay 1,032 1,032 1,032 -
Finance
Personnel services 543,445 538,675 538,533 142
Commodities 4,545 4,545 4,261 284
Other charges and services 64,310 64,310 60,906 3,404
Capital outlay 2,409 2,409 2,753 (344)
(continued)
Total general government facilities
Total finance
Information systems
Personnel services 305,180 302,927 307,982 (5,055)
Commodities 6,648 6,648 4,437 2,211
Other charges and services 159,784 159,784 131,993 27,791
Capital outlay 11,107 11,107 3,640 7,467
Total information systems
Total human resources
Total general government
88
Budget As Variance
Originally Final With Final
Adopted Budget Actual Budget
485,805 464,061
614,709 609,939
482,719 480,466
409,715 54,346
606,453 3,486
448,052 32,414
Human resources
Personnel services 252,616 250,734 249,198 1,536
Commodities 1,570 1,570 1,935 (365)
Other charges and services 105,783 105,783 59,932 45,851
Capital outlay 1,032 1,032 1,032
361,001 359,119
Insurance coverage
Other charges and services 223,275 223,275 223,275
312,097 47,022
4,314,432 4,271,240 4,120,150 151,090
CITY OF LAKEVILLE, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGETARY COMPARISON
YEAR ENDED DECEMBER 31, 2012
Expenditures (continued)
Public safety
Police
Personnel services $ 6,574,843 $ 6,530,232 $ 6,569,777 $ (39,545)
Commodities 336,255 336,255 318,851 17,404
Other charges and services 1,707,955 1,707,955 1,647,697 60,258
Capital outlay - 10,690 11,301 (611)
(continued)
Total police
Fire protection
Personnel services 951,382 957,263 959,571 (2,308)
Commodities 135,772 135,772 119,389 16,383
Other charges and services 266,694 266,694 228,947 37,747
Total fire protection 1,353,848 1,359,729 1,307,907 51,822
Total public safety
Public works
Engineering
Personnel services 660,919 655,762 535,411 120,351
Commodities 11,157 11,157 9,754 1,403
Other charges and services 50,471 50,471 83,913 (33,442)
Capital outlay 5,959 5,959 5,739 220
Total engineering 728,506 723,349 634,817 88,532
Street maintenance
Personnel services 1,530,445 1,549,613 1,535,355 14,258
Commodities 786,690 788,092 761,338 26,754
Other charges and services 258,999 330,495 319,332 11,163
Total street maintenance 2,576,134 2,668,200 2,616,025 52,175
Total public works
89
Budget As Variance
Originally Final With Final
Adopted Budget Actual Budget
8,619,053 8,585,132
9,972,901 9,944,861 9,855,533
8,547,626 37,506
89,328
3,304,640 3,391,549 3,250,842 140,707
CITY OF LAKEVILLE, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGETARY COMPARISON
YEAR ENDED DECEMBER 31, 2012
Expenditures (continued)
Budget As Variance
Originally Final With Final
Adopted Budget Actual Budget
Parks and recreation
Park maintenance
Personnel services $ 1,540,362 $ 1,531,691 $ 1,398,158 $ 133,533
Commodities 254,196 254,196 245,147 9,049
Other charges and services 391,010 391,010 376,026 14,984
Capital outlay 2,752 2,752 - 2,752
Total park maintenance
Recreation
Personnel services 329,124 326,497 326,482 15
Commodities 23,444 23,444 16,862 6,582
Other charges and services 244,613 244,613 223,060 21,553
Capital outlay 2,065 2,065 2,065
Total recreation
Total heritage center
2,188,320 2,179,649 2,019,331 160,318
599,246 596,619
568,469 28,150
Heritage Center
Personnel services - 7,303 7,456 (153)
Commodities - 3,512 9,001 (5,489)
Other charges and services - 14,692 18,088 (3,396)
- 25,507 34,545 (9,038)
Arts Center
Personnel services 221,848 270,891 253,116 17,775
Commodities 22,500 22,500 18,960 3,540
Other charges and services 200,319 149,619 158,426 (8,807)
Capital outlay 688 688 688 -
Total arts center 445,355 443,698 431,190 12,508
Total parks and recreation 3,232,921 3,245,473 3,053,535 191,938
Other 104,000 - -
Total expenditures 20,928,894 20,853,123 20,280,060 573,063
Excess (deficiency) of revenues
over expenditures (1,199,399) (996,399) 1,189,500 2,185,899
(continued)
90
CITY OF LAKEVILLE, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGETARY COMPARISON
YEAR ENDED DECEMBER 31, 2012
(continued)
Budget As Variance
Originally Final With Final
Adopted Budget Actual Budget
Other financing sources (uses)
Transfers from /(to)
Special Revenue - Communications Fund $ 72,793 $ 72,793 $ 58,171 $ (14,622)
Capital Projects - Improvement Construction - (542,000) (542,000)
Capital Projects - Equipment Fund - (369,694) (369,694)
Enterprise - Liquor Fund 152,434 152,434 152,434
Enterprise - Utility Fund 409,259 409,258 409,258
Internal Service - Municipal Reserves Fund 45,767 45,768 45,768
Total other financing sources (uses)
Net change in fund balance
Fund balance, January 1
Fund balance, December 31
91
680,253
10,548,338
$ 11,491,775
(231,441) (246,063) (14,622)
$ (519,146) $ (1,227,840) 943,437 $2,171,277
CITY OF LAKEVILLE, MINNESOTA
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
DECEMBER 31, 2012
A. Budgetary Information
Budgets are adopted on a basis consistent with U.S. generally accepted accounting principals. Annual
appropriated budgets are adopted for the General Fund and Special Revenue Funds. Budgeted amounts are
as originally adopted or as amended by the City Council. The City follows these procedures in establishing
the budgetary data reflected in the financial statements:
1. The City Administrator submits a proposed operating budget to the City Council.
2. Public hearings are conducted to obtain taxpayer comments.
3. Upon Council approval the budget is legally adopted and employs formal budgetary
integration during the year.
4. Expenditures may legally exceed budgeted appropriations at the fund level through
City Council action.
5. The legal level of budgetary control (i.e., the level at which expenditures may not
legally exceed appropriations) is at the department level for the General Fund and
total expenditures for the Special Revenue Funds. The City Administrator has
authorization to expend funds in excess of the appropriation for individual line items.
6. Budget appropriations of all funds lapse at year -end to the extent they were not
encumbered. Encumbrances are re- appropriated in the following year's budget.
92
CITY OF LAKEVILLE, MINNESOTA
OTHER POST - EMPLOYMENT BENEFITS PLAN - SCHEDULE OF FUNDING PROGRESS
DECEMBER 31, 2012
Actuarial
Valuation
Date
Unfunded
Actuarial Actuarial Actuarial
Accrued Value of Accrued Funded Covered
Liability Plan Assets Liability Ratio Payroll
Janaury 1, 2008 $ 290,424 $ $ 290,424
Janaury 1, 2011 $ 588,458 $ $ 588,458
93
$ 11,365,890
$ 11,683,196
Unfunded
Liability as a
Percentage
of Payroll
2.6%
5.0%
NONMAJOR GOVERNMENTAL FUNDS
Special Revenue Funds - These funds are used to account for revenues and expenditures that
have a legally restricted use for a specific purpose.
Communications Fund
This fund accounts for franchise fees from cable TV provider operations.
Expenditures and other financing uses are used to finance the City's cable TV
channels and public communications, including long -term replacement of
equipment.
Economic Development Fund
This fund accounts for a $125,000 Economic Recovery Grant received from the
State of Minnesota Department of Trade and Economic Development in 1995.
The grant purpose is to provide loans to businesses expanding in or locating to
Lakeville. The fund also accounts for administrative fees received from the
issuance of conduit debt.
(continued)
Downtown Special Service District Fund
The Downtown Special Service District was created in 1998 pursuant to
Minnesota Statute 428A. A service charge, payable with property taxes, is levied
against the commercial properties in the Downtown Business District for the
purpose of financing budgeted programs and activities within the District.
Debt Service Funds — These funds account for the accumulation of resources that are restricted
to the payment of long -term debt principal and interest, but excluding debt issued for and serviced
by an enterprise fund.
Tax Increment Fund
Debt issued to finance construction of public improvements in accordance with
approved tax increment plans. Property tax increments received from designated
tax increment financing districts are pledged to the payment of the bonds.
State -aid Revenue Fund
Debt issued to finance construction of State -aid street projects within the City.
The primary revenue source is municipal state aid allotments from the State of
Minnesota Department of Transportation.
Water Revenue Fund
Debt issued to finance the construction of wells, pump houses, towers, water
main systems, and the City's water treatment facility. Water connection fees are
pledged toward the repayment of the principal and interest on these bonds.
Arena Revenue Fund
Debt issued for the construction of the Lakeville Ames Ice Arena first and second
sheet of ice, spectator seating and locker rooms. Revenue sources include
donations from net operating ice arena revenues and other sources pledged to
the payment of the bonds. The Ice Center Refunding Bonds, Series 2008 A and
the 2005 Capital Dehumidification Lease - Purchase agreement are general
obligations that are backed by the full -faith and credit of the City. The Gross
Revenue Recreation Facility Bonds of 1999 are not general obligations and
accordingly are not backed by the full -faith and credit of the City.
NONMAJOR GOVERNMENTAL FUNDS
Debt Service Funds (continued)
HRA Revenue Fund
The HRA also issued the HRA Ice Arena Lease Revenue Bonds, Series 2006 for
the Hasse single sheet ice arena facility. Debt service will be payable from
property taxes and lease payments to be made to the City pursuant to the lease
agreement between the Authority and Independent School District 194. These
HRA bonds are not general obligations and accordingly are not backed by the
full -faith and credit of the City.
Capital Projects Funds — These funds account for financial resources used in the acquisition of
capital facilities, equipment, and infrastructure (except those financed by enterprise funds).
Municipal State -aid Fund
This fund accounts for an annual allotment from the State of Minnesota Municipal
State -aid street construction account.
Pavement Management Fund
This fund accounts for pavement management activities relating to cracksealing,
patching, seal coating and overlays. These major maintenance projects are
financed with property taxes.
Storm Sewer Fund
This fund accounts for fees and area charges to land developers for construction
of storm sewer systems.
Water Fund
This fund accounts for revenues derived primarily from connection charges
collected at the time building permits are issued and antenna site leases with
wireless communications companies. Funds are appropriated towards the
construction costs of water supply lines, wells and water storage facilities, and
provide the debt service to bonds issued to finance the construction of the City's
water treatment facility and other trunk infrastructure improvements.
Sanitary Sewer Fund
This fund accounts for sewer connection and area fees charged to land
developers for connecting to the City's sanitary sewer system, appropriations are
applied to the construction of sanitary sewer trunk systems.
Park Dedication Fund
This fund accounts for park dedication fees received from land developers. The
expenditures consist of acquiring and developing City parks and trails.
Trail Improvement Fund
This fund accounts for the long term maintenance, repairs and replacement of
City trails.
Tax Increment Fund
This fund accounts for revenue received from tax increment property districts that
does not require debt financing. The expenditures are for current and future
development of tax increment property.
Equipment Fund
This fund accounts for the purchase of equipment for general government, public
safety, public works, and park maintenance.
CITY OF LAKEVILLE, MINNESOTA
NONMAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEET
DECEMBER 31, 2012
Total
Special Debt Capital Nonmajor
Revenue Service Projects Governmental
Funds Funds Funds Funds
Assets
Cash and investments $ 789,450 $ 1,709,684 $ 15,006,445 $ 17,505,579
Investments held by trustee - 695,356 - 695,356
Interest receivable 4,712 5,178 66,843 76,733
Taxes receivable
Unremitted - 41,398 138,637 180,035
Delinquent - 3,847 21,119 24,966
Accounts receivable 155,892 47,500 24,164 227,556
Loan receivable - - 115,000 115,000
Special assessments
Unremitted - - 809 809
Delinquent - - 705 705
Deferred - - 215,886 215,886
Other - - 383,625 383,625
Total assets $ 950,054 $ 2,502,963 $ 15,973,233 $ 19,426,250
Liabilities
Salaries payable $ 6,440 $ - $ - $ 6,440
Accounts payable 67,571 4,066 182,224 253,861
Contracts payable - - 17,765 17,765
Deposits payable - - 86,395 86,395
Total liabilities 74,011 4,066 286,384 364,461
Deferred inflows of resources
Unavailable revenue - taxes 3,847 21,119 24,966
Unavailable revenue - special assessments 600,216 600,216
Unavailable revenue - other 554 - 115,000 115,554
Total deferred inflows of resources 554 3,847 736,335 740,736
Fund balance
Restricted 25,803 2,495,050 4,849,879 7,370,732
Committed 849,686 - 10,100,635 10,950,321
Total fund balance 875,489 2,495,050 14,950,514 18,321,053
Total liabilities, deferred inflows of
resources, and fund balances $ 950,054 $ 2,502,963 $ 15,973,233 $ 19,426,250
94
CITY OF LAKEVILLE, MINNESOTA
NONMAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
YEAR ENDED DECEMBER 31, 2012
Revenues
Property taxes
Tax increment
Licenses and permits
Intergovernmental
Charges for services
Special assessments
Investment income
Donations
Miscellaneous
Total revenues
Total
Special Debt Capital Nonmajor
Revenue Service Projects Governmental
Funds Funds Funds Funds
$ - $ 337,209 $ 1,960,415 $ 2,297,624
667,362 191,793 859,155
598,878 - - 598,878
96,751 770,762 543,279 1,410,792
33,105 469,879 3,445,170 3,948,154
84,568 84,568
4,859 5,337 68,921 79,117
500 95,000 7,253 102,753
515,093 515,093
734,093 2,345,549 6,816,492 9,896,134
Expenditures - current
General government 469,735 469,735
Expenditures - capital outlay
General government 132,006 386,388 518,394
Public safety 341,586 341,586
Public works - 2,738,332 2,738,332
Parks and recreation 713,566 713,566
Total expenditures - capital outlay 132,006 4,179,872 4,311,878
Expenditures - debt service
Principal bond maturities 3,975,000 3,975,000
Principal lease maturities 97,027 97,027
Interest on debt 962,945 962,945
Fiscal charges 20,165 20,165
Total expenditures - debt service 5,055,137 5,055,137
Total expenditures 601,741 5,055,137 4,179,872 9,836,750
Excess (deficiency) of revenues over expenditures 132,352 (2,709,588) 2,636,620 59,384
Other financing sources (uses)
Transfers from other funds 2,437,844 2,030,746 4,468,590
Transfers to other funds (206,587) (59,900) (1,527,280) (1,793,767)
Payment to refunded bonds escrow agent (640,000) - (640,000)
Total other financing sources (uses) (206,587) 1,737,944 503,466 2,034,823
Net change in fund balance (74,235) (971,644) 3,140,086 2,094,207
Fund balance, January 1 949,724 3,466,694 11,810,428 16,226,846
Fund balance, December 31 $ 875,489 $ 2,495,050 $ 14,950,514 $ 18,321,053
95
CITY OF LAKEVILLE, MINNESOTA
SPECIAL REVENUE FUNDS (NONMAJOR)
COMBINING BALANCE SHEET
DECEMBER 31, 2012
Downtown
Economic Special
Communications Development Service District Total
Assets
Cash and investments $ 696,800 $ 67,702 $ 24,948 $ 789,450
Interest receivable 4,359 353 - 4,712
Accounts receivable 154,483 1,409 155,892
Total assets
$ 855,642 $ 68,055 $ 26,357 $ 950,054
Liabilities
Salaries payable $ 6,440 $ - $ - $ 6,440
Accounts payable 66,292 1,279 - 67,571
Total liabilities 72,732 1,279 - 74,011
Deferred inflows of resources
Unavailable revenue - other 554 554
Fund balance
Restricted 25,803 25,803
Committed 782,910 66,776 - 849,686
Total fund balance 782,910 66,776 25,803 875,489
Total liabilities, deferred inflows of
resources, and fund balances
$ 855,642 $ 68,055 $ 26,357 $ 950,054
96
CITY OF LAKEVILLE, MINNESOTA
SPECIAL REVENUE FUNDS (NONMAJOR)
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
YEAR ENDED DECEMBER 31, 2012
Downtown
Economic Special
Communications Development Service District Total
Revenues
Licenses and permits $ 598,878 $ - $ - $ 598,878
Intergovernmental
Federal grants 4,500 91,735 - 96,235
State -aid PERA 516 - 516
Charges for services 2,500 30,605 33,105
Investment income 4,495 364 - 4,859
Donations 500 500
Total revenues 608,389 94,599 31,105 734,093
Expenditures
Current
General government
Capital outlay
General government
Total expenditures
Excess of revenues over expenditures
Other financing uses
Transfer to
General Fund
Capital Projects - Equipment Fund
Total other financing uses
Net change in fund balance
Fund balance, January 1
Fund balance, December 31
97
439,416
38,992
478,408
93,014
93,014
30,319 469,735
30,319
132,006
601,741
129,981 1,585 786 132,352
(58,171) - (58,171)
(148,416) - (148,416)
(206,587) - (206,587)
(76,606) 1,585 786 (74,235)
859,516 65,191 25,017 949,724
$ 782,910 $ 66,776 $ 25,803 $ 875,489
CITY OF LAKEVILLE, MINNESOTA
DEBT SERVICE FUNDS (NONMAJOR)
COMBINING BALANCE SHEET
DECEMBER 31, 2012
Assets
Cash and investments $ 1,114,599 $ 28,128 $ 91 $ 210,215 $ 356,651 $ 1,709,684
Investments held by trustee 695,356 695,356
Interest receivable 3,467 408 877 426 5,178
Taxes receivable
Unremitted 20,896 - 20,502 41,398
Delinquent 432 - 3,415 3,847
Accounts receivable - - 47,500 - 47,500
Total assets
Liabilities
Accounts payable
Deferred inflows of resources
Unavailable revenue - taxes
Fund balance
Restricted for debt service
Bonds
Tax State -aid Water Arena HRA
Increment Revenue Revenue Revenue Revenue Total
$ 1,139,394 $ 28,536 $ 91 $ 258,592 $ 1,076,350 $ 2,502,963
$ 2,804 $ 944 $ 91 $ 136 $ 91 $ 4,066
432 - 3,415 3,847
1,136,158 27,592 258,456 1,072,844 2,495,050
Total liabilities, deferred inflows of
resources, and fund balances $ 1,139,394 $ 28,536 $ 91 $ 258,592 $ 1,076,350 $ 2,502,963
98
CITY OF LAKEVILLE, MINNESOTA
DEBT SERVICE FUNDS (NONMAJOR)
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
YEAR ENDED DECEMBER 31, 2012
Revenues
General property taxes
Current and delinquent
Fiscal disparities
Total general property taxes
Fund balance, January 1
Fund balance, December 31
Bonds
Tax State -aid Water Arena HRA
Increment Revenue Revenue Revenue Revenue Total
$ 45,794 $ - $ - $ - $ 252,405 $ 298,199
6,052 - - 32,958 39,010
51,846 - - 285,363 337,209
Tax increment 667,362 - - 667,362
Intergovernmental - State -aid - 770,762 - - 770,762
Charges for services - - 188,846 281,033 469,879
Investment income 3,574 420 - 904 439 5,337
Donations - - 95,000 95,000
Total revenues 722,782 771,182 - 284,750 566,835 2,345,549
Expenditures - debt service
Principal bond maturities 425,000 585,000 870,000 130,000 1,965,000 3,975,000
Principal lease maturities - - 97,027 97,027
Interest on debt 111,586 185,762 167,800 62,133 435,664 962,945
Fiscal charges 9,454 1,898 577 705 7,531 20,165
Total expenditures - debt service 546,040 772,660 1,038,377 289,865 2,408,195 5,055,137
Excess (deficiency) of revenues
over expenditures 176,742 (1,478) (1,038,377) (5,115) (1,841,360) (2,709,588)
Other financing sources (uses)
Transfer from /(to)
Capital Projects
Storm Sewer Fund (59,900) - - (59,900)
Water Fund - - 1,038,377 - 1,038,377
Enterprise - Liquor Fund - - - 1,399,467 1,399,467
Payment to refunded bond escrow agent - (640,000) - - (640,000)
Total other financing sources (uses) (59,900) (640,000) 1,038,377 - 1,399,467 1,737,944
Net change in fund balance 116,842 (641,478) - (5,115) (441,893) (971,644)
1,019,316 669,070 - 263,571 1,514,737 3,466,694
$1,136,158 $ 27,592 $ - $ 258,456 $1,072,844 $2,495,050
99
CITY OF LAKEVILLE, MINNESOTA
CAPITAL PROJECTS FUNDS (NONMAJOR)
COMBINING BALANCE SHEET
DECEMBER 31, 2012
Municipal Pavement Storm
State -aid Management Sewer
Water
Assets
Cash and investments $ 3,404,152 $ 1,046,938 $ 673,905 $ 1,590,439 $ 3,316,202 $ 1,404,602 $ 1,019,721 $ 132,250 $ 2,418,236 $ 15,006,445
Interest receivable 19,083 4,783 2,605 2,891 16,183 6,096 6,609 332 8,261 66,843
Taxes receivable - unremitted - 89,458 - - - - - 2,089 47,090 138,637
Taxes receivable - delinquent - 13,975 - - - - - 1,245 5,899 21,119
Accounts receivable - - - - - 14,084 - - 10,080 24,164
Loan receivable - - 115,000 - - - - - - 115,000
Special assessments
Unremitted - - - 232 577 - - - - 809
Delinquent - 112 - 2 591 - - - - 705
Deferred - 10,963 1,730 113,246 89,659 288 - - - 215,886
Other - - 58,890 48,452 276,283 - - - - 383,625
Total assets $ 3,423,235 $ 1,166,229 $ 852,130 $ 1,755,262 $ 3,699,495 $ 1,425,070 $ 1,026,330 $ 135,916 $ 2,489,566 $ 15,973,233
Liabilities
Accounts payable $ 26,523 $ 14,241 $ $ - $ - $ 12,371 $ 18,357 $ 78,543 $ 32,189 $ 182,224
Contracts payable - - - - - 11,156 - - 6,609 17,765
Deposits payable - - - 56,054 26,125 4,216 - - - 86,395
Total liabilities 26,523 14,241 - 56,054 26,125 27,743 18,357 78,543 38,798 286,384
Deferred inflows of resources
Unavailable revenue - taxes 13,975 - 1,245 5,899 21,119
Unavailable revenue - special assessments - 11,075 60,620 161,700 366,533 288 - - - 600,216
Unavailable revenue - other - - 115,000 - - - - - - 115,000
Total deferred inflows of resources - 25,050 175,620 161,700 366,533 288 - 1,245 5,899 736,335
Fund balance
Restricted 3,396,712 - - - - 1,397,039 - 56,128 - 4,849,879
Committed - 1,126,938 676,510 1,537,508 3,306,837 - 1,007,973 - 2,444,869 10,100,635
Total fund balance 3,396,712 1,126,938 676,510 1,537,508 3,306,837 1,397,039 1,007,973 56,128 2,444,869 14,950,514
Total liabilities, deferred inflows of
resources, and fund balances $ 3,423,235 $ 1,166,229 $ 852,130 $ 1,755,262 $ 3,699,495 $ 1,425,070 $ 1,026,330 $ 135,916 $ 2,489,566 $ 15,973,233
100 - 101
Sanitary Park Trail Tax
Sewer Dedication Improvement Increment Equipment Total
CITY OF LAKEVILLE, MINNESOTA
CAPITAL PROJECTS FUNDS (NON
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
YEAR ENDED DECEMBER 31, 2012
Municipal Pavement Storm
State -aid Management Sewer
Water
Sanitary Park Trail Tax
Sewer Dedication Improvement Increment Equipment Total
Revenues
General property taxes
Current S - $ 1,118,025 $ $ S S S S - $ 614,763 $ 1,732,788
Fiscal disparities - 146,428 - - - - - - 81,199 227,627
Total general property taxes - 1,264,453 - - - - - 695,962 1,960,415
Tax increment - - - - - - 191,793 191,793
Intergovernmental
Municipal state -aid - 374,335 - - - - - 374,335
Federal grants - - - - - 20,654 - - 55,443 76,097
State grants - - - - - - - 18,481 18,481
County and local grants - - 54,836 - - 19,530 74,366
Charges for services - 653,980 1,463,245 357,585 970,360 - - 3,445,170
Special assessments 210 955 45,094 38,239 70 84,568
Investment income 19,676 4,932 2,686 2,980 16,686 6,286 6,815 342 8,518 68,921
Donations - - - 5,678 - 1,575 7,253
Miscellaneous 273 20,867 220,390 515,093
Total revenues 19,676 1,643,930 657,621 1,785,155 412,510 1,078,751 6,815 192,135 1,019,899 6,816,492
Expenditures - capital outlay
General government - - - - - - - 161,691 224,697 386,388
Public safety - - 341,586 341,586
Public works 26,522 1,481,789 235,852 29,786 143 - 964,240 2,738,332
Parks and recreation - - - - 307,755 329,971 75,840 713,566
Total expenditures - capital outlay 26,522 1,481,789 235,852 29,786 143 307,755 329,971 161,691 1,606,363 4,179,872
Excess (deficiency) of revenues
over expenditures (6,846) 162,141 421,769 1,755,369 412,367 770,996 (323,156) 30,444 (586,464) 2,636,620
Other financing sources (uses)
Transfer from /(to)
General Fund - - - - - - - - 369,694 369,694
Special Revenue - Communications - - - - - 148,416 148,416
Debt Service - G.O. Improvement Fund - - (331,000) (136,093) - - - (21,810) - (488,903)
Debt Service - Tax Increment Fund - - 59,900 - - - - 59,900
Debt Service - Water Revenue Fund - - - (1,038,377) - - - - - (1,038,377)
Enterprise - Liquor Fund - - - - - - - 599,134 599,134
Enterprise - Utility Fund - - - 170,000 - - - - - 170,000
Internal Service - Comp. Liability Fund - - - - - - 683,602 683,602
Total other financing sources (uses) - - (271,100) (1,004,470) - - - (21,810) 1,800,846 503,466
Net change in fund balance
Fund balance, January 1
Fund balance, December 31
(6,846) 162,141 150,669 750,899 412,367 770,996 (323,156) 8,634 1,214,382 3,140,086
3,403,558 964,797 525,841 786,609 2,894,470 626,043 1,331,129 47,494 1,230,487 11,810,428
$ 3,396,712 $ 1,126,938 $ 676,510 $ 1,537,508 $ 3,306,837 $ 1,397,039 $ 1,007,973 $ 56,128 $ 2,444,869 $ 14,950,514
102 - 103
CITY OF LAKEVILLE, MINNESOTA
COMMUNICATIONS - SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
YEAR ENDED DECEMBER 31, 2012
Budget Variance With
As Originally Final Final
Adopted Budget Actual Budget
Revenues
Licenses and permits $ 607,523 $ 607,523 $ 598,878 $ (8,645)
Intergovernmental 516 516 5,016 4,500
Investment income 4,106 4,106 4,495 389
Total revenues
Expenditures - general government
Current
Personnel 318,770 315,615 316,273 (658)
Commodities 8,876 8,876 3,179 5,697
Other charges and services 107,995 148,170 119,964 28,206
Capital outlay 27,227 27,227 38,992 (11,765)
Total expenditures - general government 462,868 499,888 478,408 21,480
Excess of revenues over expenditures 149,277 112,257 129,981 17,724
Other financing uses
Transfer to
General Fund (72,793) (72,793) (58,171) 14,622
Capital Projects - Equipment Fund (148,416) (148,416) (148,416) -
Total other financing uses (221,209) (221,209) (206,587) 14,622
Net change in fund balance $ (71,932) $ (108,952) (76,606) $ 32,346
Fund balance, January 1 859,516
Fund balance, December 31 $ 782,910
104
612,145 612,145 608,389 (3,756)
CITY OF LAKEVILLE, MINNESOTA
ECONOMIC DEVELOPMENT - SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
YEAR ENDED DECEMBER 31, 2012
Variance With
Original and Final
Final Budget Actual Budget
Revenues
Intergovernmental - Federal grants $ - $ 91,735 $ 91,735
Charges for services 2,250 2,500 250
Investment income 652 364 (288)
Total revenues
2,902 94,599 91,697
Expenditures - General government
Capital outlay - 93,014 (93,014)
Excess of revenues over expenditures $ 2,902 1,585 $ (1,317)
Fund balance, January 1 65,191
Fund balance, December 31 $ 66,776
105
CITY OF LAKEVILLE, MINNESOTA
DOWNTOWN SPECIAL SERVICE DISTRICT - SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
YEAR ENDED DECEMBER 31, 2012
Variance With
Original and Final
Final Budget Actual Budget
Revenues
Charges for services $ 27,534 $ 30,605 $ 3,071
Donations 500 500
Miscellaneous 4,000 - (4,000)
Total revenues 31,534 31,105 (429)
Expenditures - general government
Current
Personnel 11,250 10,436 814
Commodities 650 449 201
Other charges and services 21,190 19,434 1,756
Total expenditures - general government 33,090 30,319 2,771
Excess (deficiency) of revenues over expenditures $ (1,556) 786 $ 2,342
Fund balance, January 1 25,017
Fund balance, December 31 $ 25,803
106
INTERNAL SERVICE FUNDS
Internal Service Funds — The Internal Service Funds are used to account for services provided by
one City department to other City departments on a cost reimbursement basis.
Municipal Reserves Fund
This fund accounts for the City's risk management program relating to general
liability, excess liability, property and casualty insurance premiums. Premiums
are based upon a $50,000 deductible per occurrence with a $100,000 aggregate
maximum. The Statutory Municipal Tort Liability has a maximum limit of
$1,500,000. This fund also accounts for excess liability self- insurance coverage
in excess of the statutory maximum of $1,500,000.
Compensation Liability Fund
This fund accounts for expenses attributable to severance and paid time off
employee benefits disbursed at the time of termination including annual paid time
off cash -outs. Funding is provided by investment income and transfers.
CITY OF LAKEVILLE, MINNESOTA
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF NET POSITION
DECEMBER 31, 2012
ASSETS
Current Assets
Cash and investments $ 858,157 $ - $ 858,157
Interest receivable 2,617 - 2,617
Accounts receivable 534 - 534
Total current assets 861,308 - 861,308
LIABILITIES
Current liabilities
Accounts payable
NET POSITION
Unrestricted $ 857,364 $ - $ 857,364
107
Municipal Compensation
Reserves Liability
Fund Fund
Total
3,944 - 3,944
CITY OF LAKEVILLE, MINNESOTA
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
YEAR ENDED DECEMBER 31, 2012
Municipal Compensation
Reserves Liability
Fund Fund Total
Operating revenues
Charges for services $ 293,779 $ - $ 293,779
Other 164,456 - 164,456
Total revenues 458,235 - 458,235
Operating expenses
Other charges and services 402,934 81,481 484,415
Operating income (loss) 55,301 (81,481) (26,180)
Non - operating revenue
Intergovernmental - grants 21,363 - 21,363
Investment income 2,698 - 2,698
Total non - operating revenue 24,061 - 24,061
Income (loss) before contributions and transfers 79,362 (81,481) (2,119)
Transfers to other funds (45,768) (683,602) (729,370)
Change in net position 33,594 (765,083) (731,489)
Net position, January 1 823,770 765,083 1,588,853
Net position, December 31 $ 857,364 $ - $ 857,364
108
CITY OF LAKEVILLE, MINNESOTA
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2012
Total
109
Municipal Compensation
Reserves Liability
Fund Fund
Cash flows from operating activities
Cash received from general service charges $ 457,701 $ - $ 457,701
Cash paid to suppliers (410,525) (81,481) (492,006)
Net cash flows from operating activities 47,176 (81,481) (34,305)
Cash flows from noncapital financing activities
Intergovernmental - grant 21,363 - 21,363
Transfers to other funds (45,768) (683,602) (729,370)
Net cash flows from noncapital financing activities (24,405) (683,602) (708,007)
Cash flows from investing activities
Investment income received 2,974 5,893 8,867
Net change in cash and cash equivalents 25,745 (759,190) (733,445)
Cash and cash equivalents, January 1 832,412 759,190 1,591,602
Cash and cash equivalents, December 31 $ 858,157 $ - $ 858,157
Reconciliation of operating income (loss) to net cash flows
from operating activities
Operating income (loss) $ 55,301 $ (81,481) $ (26,180)
Adjustments
(Increase) decrease in assets
Accounts receivable (534) - (534)
Increase (decrease) in liabilities
Accounts payable (7,591) (7,591)
Total adjustments (8,125) - $ (8,125)
Net cash flows from operating activities $ 47,176 $ (81,481) $ (34,305)
AGENCY FUND
Agency Fund — The Agency Fund is used to account for assets held by the City as an agent for
other City funds, governments, and individuals.
Escrow Fund
This fund accounts for deposits paid by land developers, builders, and other
individuals for future disbursements. The disbursements relating to these events
will be made when specific terms and conditions have been satisfied.
CITY OF LAKEVILLE, MINNESOTA
AGENCY FUND
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
YEAR ENDED DECEMBER 31, 2012
Escrow Fund
Balance Balance
January 1 Increases Decreases December 31
Assets
Cash and investments $ 5,512,751 $ 1,126,680 $ 749,317 $ 5,890,114
Liabilities
Deposits payable $ 5,512,751 $ 1,126,680 $ 749,317 $ 5,890,114
110
SUPPLEMENTAL INFORMATION
CITY OF LAKEVILLE, MINNESOTA
SCHEDULE OF CHANGES IN BONDED INDEBTEDNESS
YEAR ENDED DECEMBER 31, 2012
Outstanding Outstanding
January 1 Issued Redeemed December 31
Governmental Activities:
General obligation bonds $ 52,985,000 $ 22,450,000 $ 3,775,000 $ 71,660,000
G.O. Improvement bonds 7,365,000 6,805,000 985,000 13,185,000
Tax increment bonds 3,180,000 425,000 2,755,000
State -aid street revenue bonds 6,505,000 1,225,000 5,280,000
Water connection revenue bonds 4,630,000 870,000 3,760,000
Arena revenue bonds 1,305,000 130,000 1,175,000
HRA lease revenue bonds 10,500,000 1,965,000 8,535,000
Total governmental activity bonds 86,470,000 29,255,000 9,375,000 106,350,000
Business -type Activities:
Liquor revenue bonds 3,545,000 150,000 3,395,000
Total bonded indebtedness $ 90,015,000 $ 29,255,000 $ 9,525,000 $ 109,745,000
111
CITY OF LAKEVILLE, MINNESOTA
SCHEDULE OF BONDED INDEBTEDNESS AND ANNUAL INTEREST PAYABLE
DECEMBER 31, 2012
General Obligation Bonds:
Park Refunding Bonds of 2011 B
Principal and Interest
Principal and Interest
Principal and Interest
Total
Issue Interest Principal Maturity Annual
Date Rate Date Amount Interest
12/1/11
0.50 4/1/13 $ 400,000 $ 6,505
0.60 4/1/14 405,000 4,290
0.75 4/1/15 410,000 1,538
1,215,000 12,333
Capital Improvement Bonds of 2004 A 11/1/04
(Central Maintenance Facility)
Principal and interest 4.00 2/1/13 280,000 598,506
Principal and interest 4.00 2/1/14 320,000 586,506
Principal and interest 4.00 2/1/15 360,000 290,053
Principal (call 2/1/15) 12,460,000 -
Total 13,420,000 1,475,065
Capital Improvement Refunding Bonds of 2012 B 8/15/12
(Central Maintenance Facility)
Interest August 1, 2013 - 383,339
Interest 2.00 2/1/14 - 398,850
Interest 2.00 2/1/15 - 398,850
Principal and interest 2.00 2/1/16 505,000 393,800
Principal and interest 2.00 2/1/17 530,000 383,450
Principal and interest 4.00 2/1/18 570,000 366,750
Principal and interest 4.00 2/1/19 635,000 342,650
Principal and interest 4.00 2/1/20 670,000 316,550
Principal and interest 4.00 2/1/21 750,000 288,150
Principal and interest (call provision date) 3.00 2/1/22 770,000 261,600
Principal and interest 3.00 2/1/23 810,000 237,900
Principal and interest 3.00 2/1/24 865,000 212,775
Principal and interest 3.00 2/1/25 930,000 185,850
Principal and interest 3.00 2/1/26 1,040,000 156,300
Principal and interest 3.00 2/1/27 1,070,000 124,650
Principal and interest 3.00 2/1/28 1,125,000 91,725
Principal and interest 3.00 2/1/29 1,200,000 56,850
Principal and interest 3.00 2/1/30 1,295,000 19,425
Total 12,765,000 4,619,464
Capital Improvement Bonds of 2007 D 8/1/07
(Police Station)
Principal and interest 5.00 2/1/13 435,000 652,238
Principal and interest 5.00 2/1/14 450,000 630,113
Principal and interest 5.00 2/1/15 470,000 607,113
Principal and interest 5.00 2/1/16 490,000 583,113
Principal and Interest (call provision date) 5.00 2/1/17 515,000 557,988
Principal and interest 5.00 2/1/18 535,000 531,738
Principal and interest 5.00 2/1/19 560,000 504,363
Principal and interest 5.00 2/1/20 585,000 475,738
Principal and interest 5.00 2/1/21 610,000 445,863
(continued)
112
CITY OF LAKEVILLE, MINNESOTA
SCHEDULE OF BONDED INDEBTEDNESS AND ANNUAL INTEREST PAYABLE
DECEMBER 31, 2012
General Obligation Bonds: (continued)
Issue Interest Principal Maturity Annual
Date Rate Date Amount Interest
Capital Improvement Bonds of 2007 D
(Police Station, continued)
Principal and interest 5.00 2/1/22 $ 635,000 $ 414,738
Principal and interest 5.00 2/1/23 665,000 382,238
Principal and interest 5.00 2/1/24 695,000 348,238
Principal and interest 5.00 2/1/25 730,000 312,613
Principal and interest 5.00 2/1/26 765,000 275,238
Principal and interest 5.00 2/1/27 800,000 236,113
Principal and interest 5.00 2/1/28 835,000 195,238
Principal and interest 4.625 2/1/29 875,000 154,128
Principal and interest 4.625 2/1/30 920,000 112,619
Principal and interest 4.625 2/1/31 965,000 69,028
Principal and interest 4.625 2/1/32 1,010,000 23,356
Total 13,545,000 7,511,814
Street Reconstruction Bonds of 2003 A 3/15/03
Principal and interest 3.50 2/1/13 680,000 464,283
Principal and Interest 4.00 2/1/14 700,000 226,191
Principal (call 2/1/14) 10,035,000
Total 11,415,000 690,474
Street Reconstruction Refunding Bonds of 2012 B 8/15/12
Interest August 1, 2013 - 289,727
Interest 2.00 2/1/14 - 301,450
Principal and interest 2.00 2/1/15 645,000 295,000
Principal and interest 2.00 2/1/16 725,000 281,300
Principal and interest 2.00 2/1/17 675,000 267,300
Principal and interest 4.00 2/1/18 730,000 245,950
Principal and interest 4.00 2/1/19 765,000 216,050
Principal and interest 4.00 2/1/20 805,000 184,650
Principal and interest 4.00 2/1/21 835,000 151,850
Principal and interest (call provision date) 3.00 2/1/22 850,000 122,400
Principal and interest 3.00 2/1/23 880,000 96,450
Principal and interest 3.00 2/1/24 905,000 69,675
Principal and interest 3.00 2/1/25 935,000 42,075
Principal and interest 3.00 2/1/26 935,000 14,025
Total 9,685,000 2,577,902
Street Reconstruction Bonds of 2005 A 12/1/05
Principal and interest 3.85 2/1/13 140,000 98,205
Principal and interest 3.85 2/1/14 145,000 92,719
Principal and interest 3.75 2/1/15 150,000 87,115
Principal and Interest (call provision date) 3.75 2/1/16 155,000 81,396
Principal and interest 3.85 2/1/17 160,000 75,410
Principal and interest 3.85 2/1/18 170,000 69,058
Principal and interest 3.90 2/1/19 175,000 62,373
Principal and interest 3.90 2/1/20 180,000 55,450
Principal and interest 4.00 2/1/21 190,000 48,140
Principal and interest 4.00 2/1/22 195,000 40,440
(continued)
113
CITY OF LAKEVILLE, MINNESOTA
SCHEDULE OF BONDED INDEBTEDNESS AND ANNUAL INTEREST PAYABLE
DECEMBER 31, 2012
General Obligation Bonds: (continued)
Issue Interest Principal Maturity Annual
Date Rate Date Amount Interest
Street Reconstruction Bonds of 2005 A (continued)
Principal and interest 4.10 2/1/23 $ 205,000 $ 32,338
Principal and interest 4.10 2/1/24 215,000 23,728
Principal and interest 4.20 2/1/25 225,000 14,595
Principal and interest 4.20 2/1/26 235,000 4,935
Total 2,540,000 785,902
Street Reconstruction Bonds of 2007 H 12/15/07
Principal and interest 3.50 2/1/13 115,000 101,658
Principal and interest 3.50 2/1/14 120,000 97,545
Principal and interest 4.00 2/1/15 125,000 92,945
Principal and interest 4.00 2/1/16 125,000 87,945
Principal and interest 4.00 2/1/17 130,000 82,845
Principal and Interest (call provision date) 4.00 2/1/18 140,000 77,445
Principal and interest 4.00 2/1/19 145,000 71,745
Principal and interest 4.00 2/1/20 150,000 65,845
Principal and interest 4.10 2/1/21 155,000 59,668
Principal and interest 4.125 2/1/22 160,000 53,190
Principal and interest 4.20 2/1/23 170,000 46,320
Principal and interest 4.375 2/1/24 175,000 38,922
Principal and interest 4.375 2/1/25 185,000 31,047
Principal and interest 4.50 2/1/26 190,000 22,725
Principal and interest 4.50 2/1/27 200,000 13,950
Principal and interest 4.50 2/1/28 210,000 4,725
Total 2,495,000 948,520
Taxable Street Reconstruction Bonds of 2009 A
(Build America Bonds) 12/30/09
Principal and interest 2.20 2/1/13 200,000 214,313
Principal and interest 2.70 2/1/14 205,000 209,345
Principal and interest 3.00 2/1/15 205,000 203,503
Principal and interest 3.50 2/1/16 210,000 196,753
Principal and interest 4.00 2/1/17 215,000 188,778
Principal and interest 4.25 2/1/18 225,000 179,696
Principal and interest 4.50 2/1/19 230,000 169,740
Principal and Interest (call provision date) 4.65 2/1/20 235,000 159,101
Principal and interest 4.75 2/1/21 245,000 147,819
Principal and interest 4.90 2/1/22 250,000 135,875
Principal and interest 5.00 2/1/23 260,000 123,250
Principal and interest 5.20 2/1/24 270,000 109,730
Principal and interest 5.30 2/1/25 280,000 95,290
Principal and interest 5.40 2/1/26 290,000 80,040
Principal and interest 5.50 2/1/27 300,000 63,960
Principal and interest 5.65 2/1/28 310,000 46,953
Principal and interest 5.80 2/1/29 320,000 28,915
Principal and interest 5.95 2/1/30 330,000 9,818
Total 4,580,000 2,362,879
Total General Obligation Bonds $ 71,660,000 $ 20,984,353
114
CITY OF LAKEVILLE, MINNESOTA
SCHEDULE OF BONDED INDEBTEDNESS AND ANNUAL INTEREST PAYABLE
DECEMBER 31, 2012
G.O. Improvement Bonds:
Issue Interest Principal Maturity Annual
Date Rate Date Amount Interest
Improvement Refunding Bonds of 2007 B 2/1/07
Principal and interest 3.875 2/1/13 $ 295,000 $ 16,566
Principal and interest 3.875 2/1/14 95,000 9,009
Principal and interest 3.875 2/1/15 90,000 5,425
Principal and interest 3.875 2/1/16 95,000 1,841
Total 575,000 32,841
Improvement Bonds of 2007 F 8/1/07
Principal and interest 4.00 2/1/13 50,000 11,113
Principal and Interest (call provision date) 4.00 2/1/14 50,000 9,113
Principal and interest 4.00 2/1/15 50,000 7,113
Principal and interest 4.00 2/1/16 50,000 5,113
Principal and interest 4.00 2/1/17 50,000 3,088
Principal and interest 4.125 2/1/18 50,000 1,031
Total 300,000 36,571
Improvement Bonds of 2008 A 10/1/08
Principal and interest 3.00 2/1/13 30,000 6,855
Principal and interest 3.10 2/1/14 30,000 5,940
Principal and interest 3.25 2/1/15 30,000 4,988
Principal and interest 3.75 2/1/16 30,000 3,938
Principal and interest 3.75 2/1/17 30,000 2,813
Principal and interest 3.75 2/1/18 30,000 1,688
Principal and interest 3.75 2/1/19 30,000 563
Total 210,000 26,785
Improvement Refunding Bonds of 2009 B 12/30/09
Principal and interest 2.00 2/1/13 510,000 66,563
Principal and interest 2.00 2/1/14 385,000 57,613
Principal and interest 2.00 2/1/15 380,000 49,963
Principal and interest 2.50 2/1/16 390,000 41,288
Principal and interest 2.75 2/1/17 375,000 31,256
Principal and interest 3.00 2/1/18 355,000 20,775
Principal and interest 3.00 2/1/19 360,000 10,050
Principal and interest 3.00 2/1/20 155,000 2,325
Total 2,910,000 279,833
Improvement Bonds of 2011 A 12/1/11
Principal and interest 0.500 2/1/13 345,000 39,983
Principal and interest 0.700 2/1/14 190,000 38,455
Principal and interest 0.950 2/1/15 195,000 36,864
Principal and interest 1.200 2/1/16 190,000 34,798
Principal and interest 1.400 2/1/17 190,000 32,328
Principal and interest 1.700 2/1/18 190,000 29,383
Principal and interest 1.900 2/1/19 190,000 25,963
Principal and interest 2.100 2/1/20 190,000 22,163
Principal and interest 2.250 2/1/21 195,000 17,974
Principal and interest 2.600 2/1/22 50,000 15,130
Principal and interest 2.600 2/1/23 50,000 13,830
Principal and interest 3.100 2/1/24 50,000 12,530
(continued)
115
CITY OF LAKEVILLE, MINNESOTA
SCHEDULE OF BONDED INDEBTEDNESS AND ANNUAL INTEREST PAYABLE
DECEMBER 31, 2012
G.O. Improvement Bonds: (continued)
Issue Interest Principal Maturity Annual
Date Rate Date Amount Interest
Improvement Bonds of 2011 A (continued)
Principal and interest 3.100 2/1/25 $ 45,000 $ 11,183
Principal and interest 3.100 2/1/26 45,000 9,788
Principal and interest 3.100 2/1/27 45,000 8,393
Principal and interest 3.500 2/1/28 45,000 6,998
Principal and interest 3.500 2/1/29 45,000 5,513
Principal and interest 3.500 2/1/30 45,000 3,938
Principal and interest 3.500 2/1/31 45,000 2,363
Principal and interest 3.500 2/1/32 45,000 788
Total 2,385,000 368,365
Improvement Bonds of 2012 A 8/15/12
Interest August 1, 2013 - 177,109
Principal and interest 2.000 2/1/14 505,000 179,225
Principal and interest 2.000 2/1/15 550,000 168,675
Principal and interest 2.000 2/1/16 550,000 157,675
Principal and interest 2.000 2/1/17 555,000 146,625
Principal and interest 2.000 2/1/18 550,000 135,575
Principal and interest 3.000 2/1/19 550,000 121,825
Principal and interest 3.000 2/1/20 555,000 105,250
Principal and interest 3.000 2/1/21 565,000 88,450
Principal and interest (call provision date) 3.000 2/1/22 565,000 71,500
Principal and interest 4.000 2/1/23 575,000 51,525
Principal and interest 4.000 2/1/24 135,000 37,325
Principal and interest 3.000 2/1/25 130,000 32,675
Principal and interest 3.000 2/1/26 130,000 28,775
Principal and interest 3.000 2/1/27 130,000 24,875
Principal and interest 3.000 2/1/28 130,000 20,975
Principal and interest 3.000 2/1/29 130,000 17,075
Principal and interest 3.000 2/1/30 125,000 13,250
Principal and interest 3.000 2/1/31 125,000 9,500
Principal and interest 3.000 2/1/32 125,000 5,750
3.100 2/1/33 125,000 1,938
Total 6,805,000 1,595,572
Total G.O. Improvement Bonds $ 13,185,000 $ 2,339,967
Tax Increment Bonds:
Tax Increment Refunding 2/1/07
Bonds of 2007 A
Principal and interest 4.00 2/1/13 $ 55,000 $ 80,661
Principal and interest 4.00 2/1/14 70,000 78,161
Principal and interest 4.00 2/1/15 210,000 72,561
Principal and Interest (call provision date) 4.00 2/1/16 220,000 63,961
Principal and interest 4.00 2/1/17 220,000 55,161
Principal and interest 4.00 2/1/18 230,000 46,161
Principal and interest 4.00 2/1/19 240,000 36,761
Principal and interest 4.125 2/1/20 245,000 26,908
Principal and interest 4.125 2/1/21 260,000 16,493
Principal and interest 4.20 2/1/22 265,000 5,565
Total 2,015,000 482,393
(continued)
116
CITY OF LAKEVILLE, MINNESOTA
SCHEDULE OF BONDED INDEBTEDNESS AND ANNUAL INTEREST PAYABLE
DECEMBER 31, 2012
Tax Increment Bonds: (continued)
Tax Increment Refunding
Bonds of 2009 B
Principal and interest
Principal and interest
Total
Issue Interest Principal Maturity Annual
Date Rate Date Amount Interest
Taxable Tax Increment Refunding 2/1/07
Bonds of 2007 C
Principal and interest 5.10 2/1/13 $ 130,000 $ 10,200
Principal and interest 5.10 2/1/14 135,000 3,443
Total 265,000 13,643
12/30/09
2.00 2/1/13 235,000 7,150
2.00 2/1/14 240,000 2,400
475,000 9,550
Total Tax Increment Bonds $ 2,755,000 $ 505,586
State -aid Street Revenue Bonds:
State -aid Street Bonds of 2007 G 12/15/07
Principal and interest 4.00 4/1/13 $ 365,000 $ 88,700
Principal and interest 4.00 4/1/14 375,000 73,900
Principal and interest 4.00 4/1/15 390,000 58,600
Principal and Interest (call provision date) 4.00 4/1/16 405,000 42,700
Principal and interest 4.00 4/1/17 425,000 26,100
Principal and interest 4.00 4/1/18 440,000 8,800
Total 2,400,000 298,800
State -aid Street Refunding
Bonds of 2010 A
Principal and interest
Principal and interest
Principal and interest
Principal and interest
Principal and interest
Principal and interest
Principal and interest
Principal and interest
Total
Total State -aid Street Revenue Bonds $ 5,280,000 $ 642,532
State -aid Street Refunding 12/1/11
Bonds of 2011 B
Principal and interest 0.50 4/1/13 70,000 8,928
Principal and interest 0.60 4/1/14 70,000 8,543
Principal and interest 0.75 4/1/15 75,000 8,051
Principal and interest 1.25 4/1/16 70,000 7,333
Principal and interest 1.25 4/1/17 75,000 6,426
Principal and interest 1.75 4/1/18 75,000 5,301
Principal and interest 1.75 4/1/19 75,000 3,989
Principal and interest 2.15 4/1/20 75,000 2,526
Principal and interest 2.15 4/1/21 80,000 860
665,000 51,957
117
1 /1 /10
2.00 4/1/13 255,000 60,000
2.00 4/1/14 255,000 54,900
2.00 4/1/15 260,000 49,750
3.00 4/1/16 275,000 43,025
3.00 4/1/17 280,000 34,700
3.00 4/1/18 285,000 26,225
3.25 4/1/19 300,000 17,075
4.00 4/1/20 305,000 6,100
2,215,000 291,775
CITY OF LAKEVILLE, MINNESOTA
SCHEDULE OF BONDED INDEBTEDNESS AND ANNUAL INTEREST PAYABLE
DECEMBER 31, 2012
Water Connection Revenue Bonds:
Arena Revenue Bonds:
Issue Interest Principal Maturity Annual
Date Rate Date Amount Interest
Water Revenue Refunding 11/1/04
Bonds of 2004 B
Principal and interest 4.00 2/1/13 $ 895,000 $ 132,500
Principal and Interest (call provision date) 4.00 2/1/14 890,000 96,800
Principal and interest 4.00 2/1/15 960,000 59,800
Principal and interest 4.00 2/1/16 1,015,000 20,300
Total Water Connection Revenue Bonds $ 3,760,000 $ 309,400
Ice Center Refunding Bonds of 2008 A 10/1/08
(Ames Ice Arena)
Principal and interest 3.00 2/1/13 $ 130,000 $ 10,685
Principal and interest 3.10 2/1/14 135,000 6,643
Principal and interest 3.25 2/1/15 140,000 2,275
Total 405,000 19,603
Gross Revenue Recreation Facility 4/1/99
Bonds of 1999 (Ames Ice Arena)
Interest 5.30 2/1/13 & 8/1/13 41,145
Interest 5.30 2/1/14 & 8/1/14 41,145
Principal and interest 5.30 8/1/15 135,000 41,145
Principal and interest 5.30 8/1/16 145,000 33,990
Principal and interest 5.30 8/1/17 155,000 26,305
Principal and interest 5.40 8/1/18 165,000 18,090
Principal and interest 5.40 8/1/19 170,000 9,180
Total 770,000 211,000
Total Arena Revenue Bonds $ 1,175,000 $ 230,603
HRA Lease Revenue Bonds:
HRA Ice Arena Lease Revenue 12/01/06
Bonds of 2006 (Hasse Ice Arena)
Principal and interest 4.25 2/1/13 $ 210,000 $ 381,675
Principal and interest 4.25 2/1/14 225,000 372,431
Principal and interest 4.25 2/1/15 245,000 362,444
Principal and interest 4.25 2/1/16 270,000 351,500
Principal and Interest (call provision date) 4.50 2/1/17 315,000 338,675
Principal and interest 4.50 2/1/18 340,000 323,938
Principal and interest 4.50 2/1/19 355,000 308,300
(continued)
118
CITY OF LAKEVILLE, MINNESOTA
SCHEDULE OF BONDED INDEBTEDNESS AND ANNUAL INTEREST PAYABLE
DECEMBER 31, 2012
HRA Lease Revenue Bonds: (continued)
Issue Interest Principal Maturity Annual
Date Rate Date Amount Interest
HRA Ice Arena Lease Revenue
Bonds of 2006 (Hasse Ice Arena continued)
Principal and interest 4.50 2/1/20 $ 370,000 $ 291,988
Principal and interest 4.50 2/1/21 390,000 274,888
Principal and interest 4.50 2/1/22 415,000 256,775
Principal and interest 4.50 2/1/23 435,000 237,650
Principal and interest 4.50 2/1/24 450,000 217,738
Principal and interest 4.50 2/1/25 470,000 197,038
Principal and interest 4.50 2/1/26 495,000 175,325
Principal and interest 4.625 2/1/27 520,000 152,163
Principal and interest 4.625 2/1/28 545,000 127,534
Principal and interest 4.625 2/1/29 575,000 101,634
Principal and interest 4.625 2/1/30 605,000 74,347
Principal and interest 4.625 2/1/31 635,000 45,672
Principal and interest 4.625 2/1/32 670,000 15,494
Total HRA Lease Revenue Bonds $ 8,535,000 $ 4,607,209
Total Governmental Activity Bonds $ 106,350,000 $ 29,619,650
Liquor Revenue Bonds:
Liquor Revenue Bonds of 2007 5/1/07
Principal and interest 5.00 2/1/13 $ 160,000 $ 165,750
Principal and interest 5.00 2/1/14 165,000 157,625
Principal and interest 5.00 2/1/15 175,000 149,125
Principal and interest 5.00 2/1/16 180,000 140,250
Principal and Interest (call provision date) 5.00 2/1/17 190,000 131,000
Principal and interest 5.00 2/1/18 200,000 121,250
Principal and interest 5.00 2/1/19 210,000 111,000
Principal and interest 5.00 2/1/20 220,000 100,250
Principal and interest 5.00 2/1/21 235,000 88,875
Principal and interest 5.00 2/1/22 245,000 76,875
Principal and interest 5.00 2/1/23 255,000 64,375
Principal and interest 5.00 2/1/24 270,000 51,250
Principal and interest 5.00 2/1/25 285,000 37,375
Principal and interest 5.00 2/1/26 295,000 22,875
Principal and interest 5.00 2/1/27 310,000 7,750
Total Business -type Activity Bonds $ 3,395,000 $ 1,425,625
Total Bonded Indebtedness and Annual Interest Payable $ 109,745,000 $ 31,045,275
119
CITY OF LAKEVILLE, MINNESOTA
COMBINED SCHEDULE Of BONDED INDEBTEDNESS
DECEMBER 31, 2012
Governmental Activities:
General Obligation Bonds:
Equipment Certificates of 2007 E
Park Refunding Bonds of 2003 B
Park Refunding Bonds of 2011 B
Capital Improvement Bonds of 2004 A
Capital Improvement Refunding Bonds of 2012 B
Capital Improvement Bonds of 2007 D
Street Reconstruction Bonds of 2003 A
Street Reconstruction Refunding Bonds of 2012 B
Street Reconstruction Bonds of 2005 A
Street Reconstruction Bonds of 2007 H
Street Reconstruction Bonds of 2009 A (Taxable)
Total Park, Capital, and Street Bonds
Total General Obligation Bonds
G.O. Improvement Bonds:
Improvement Refunding Bonds of 2007 B
Improvement Bonds of 2007 F
Improvement Bonds of 2008 A
Improvement Refunding Bonds of 2009 B
Improvement Refunding Bonds of 2011 A
Improvement Refunding Bonds of 2012 A
Total G.O. Improvement Bonds
Tax Increment Bonds:
Tax Increment Refunding Bonds of 2007 A
Tax Increment Refunding Bonds of 2007 C (Taxable)
Tax Increment Refunding Bonds of 2009 B
Total Tax Increment Bonds
State -aid Street Revenue Bonds:
State -aid Street Bonds of 2001 C
State -aid Street Bonds of 2007 G
State -aid Street. Refunding Bonds of 2010 A
State -aid Street Refunding Bonds of 2011 B
Total State -aid Street Revenue Bonds
Water Connection Revenue Refunding Bonds of 2004 B
Arena Revenue Bonds:
Ice Center Refunding Bonds of 2008 A
Gross Revenue Recreation Facility Bonds of 1999
Total Arena Revenue Bonds
HRA Lease Revenue Bonds:
HRA Public Facility Lease Revenue Bonds of 2002 A
HRA Ice Arena Lease Revenue Bonds of 2006
Total HRA Lease Revenue Bonds
Total Governmental Activity Bonds
Business -type Activity'
Liquor Revenue Bonds of 2007
Total Bonded Indebtedness
Interest Issue Call Maturity Bonds Due in 2013
Rates % Date Date Date Authorized Issued Retired Outst Principal Interest
4.25 Aug -01 -07 n/a Feb -01 -12 1,690,000 1,690,000 1,690,000
3.50 -3.75 Mar -15 -03 Feb -01 -12 Feb -01 -15 3,225,000 3,225,000 3,225,000 - - -
0.50 -0.75 Dec -01 -11 n/a Apr -01 -15 1,215,000 1,215,000 - 1,215,000 400,000 6,505
3.50 -4.75 Nov -01 -04 Feb -01 -15 Feb -01 -30 14,445,000 14,445,000 1,025,000 13,420,000 280,000 598,506
2.00 -4.00 Aug -15 -12 Feb -01 -22 Feb -01 -30 12,765,000 12,765,000 12,765,000 - 383,339
4.625 -5.00 Aug -01 -07 Feb -01 -17 Feb -01 -32 15,115,000 15,115,000 1,570,000 13,545,000 435,000 652,238
3.50 -4.50 Mar -15 -03 Feb -01 -14 Feb -01 -26 14,890,000 14,890,000 3,475,000 11,415,000 680,000 464,283
2.00 -4.00 Aug -15 -12 Feb -01 -22 Feb -01 -30 9,685,000 9,685,000 9,685,000 - 289,727
3.85 -4.20 Dec -01 -05 Feb -01 -16 Feb -01 -26 5,430,000 5,430,000 2,890,000 2,540,000 140,000 98,205
3.50 -4.50 Dec -15 -07 Feb -01 -18 Feb -01 -28 2,810,000 2,810,000 315,000 2,495,000 115,000 101,658
1.55 -5.95 Dec -30 -09 Feb -01 -20 Feb -01 -30 4,945,000 4,945,000 365,000 4,580,000 200,000 214,313
84,525,000 84,525,000 12,865,000 71,660,000 2,250,000 2,808,774
2.70 -3.25 Oct -01 -08 n/a Feb -01 -15
5.30 -5.40 Apr -01 -99 Callable Aug -01 -19
120 -121
86,215,000 86,215,000 14,555,000 71,660,000 2,250,000 2,808,774
3.875 Feb -01 -07 n/a Feb -01 -16 3,165,000 3,165,000 2,590,000 575,000 295,000 16,566
4.00 -4.125 Aug -01 -07 Feb -01 -14 Feb -01 -18 1,310,000 1,310,000 1,010,000 300,000 50,000 11,113
2.70 -3.75 Oct -01 -08 n/a Feb -01 -19 620,000 620,000 410,000 210,000 30,000 6,855
2.00 -3.00 Dec -30 -09 n/a Feb -01 -20 4,250,000 4,250,000 1,340,000 2,910,000 510,000 66,563
0.50 -3.50 Dec -01 -11 Feb -01 -21 Feb -01 -32 2,385,000 2,385,000 - 2,385,000 345,000 39,983
2.00 -4.00 Aug -15 -12 Feb -01 -22 Feb -01 -33 6,805,000 6,805,000 6,805,000 - 177,109
18,535,000 18,535,000 5,350,000 13,185,000 1,230,000 318,189
4.00 -4.20 Feb -01 -07 Feb -01 -16 Feb -01 -22 2,265,000 2,265,000 250,000 2,015,000 55,000 80,661
5.10 Feb -01 -07 n/a Feb -01 -14 820,000 820,000 555,000 265,000 130,000 10,200
2.00 Dec -30 -09 n/a Feb -01 -14 930,000 930,000 455,000 475,000 235,000 7,150
4,015,000 4,015,000 1,260,000 2,755,000 420,000 98,011
4.35 Dec -01 -01 Feb -01 -12 Apr -01 -21 1,080,000 1,080,000 1,080,000
4.00 Dec -15 -07 Apr -01 -16 Apr -01 -18 3,675,000 3,675,000 1,275,000 2,400,000 365,000 88,700
2.00 -4.00 Jan -01 -10 n/a Apr -01 -20 2,680,000 2,680,000 465,000 2,215,000 255,000 60,000
0.50 -2.15 Dec -01 -11 n/a Apr -01 -21 665,000 665,000 - 665,000 70,000 8,928
8,100,000 8,100,000 2,820,000 5,280,000 690,000 157,628
4.00 Nov -01 -04 Feb -01 -14 Feb -01 -16 9,735,000 9,735,000 5,975,000 3,760,000 895,000 132,500
775,000 775,000
1,250,000 1,250,000
2,025,000 2,025,000
370,000 405,000 130,000 10,685
480,000 770,000 - 41,145
850,000 1,175,000 130,000 51,830
4.70 -5.35 Apr -15 -02 Feb -01 -12 Feb -01 -23 2,535,000 2,535,000 2,535,000 - - -
4.25 -4.625 Dec -01 -06 Feb -01 -17 Feb -01 -32 9,230,000 9,230,000 695,000 8,535,000 210,000 381,675
11,765,000 11,765,000 3,230,000 8,535,000 210,000 381,675
140,390,000 140,390,000 34,040,000 106,350,000 5,825,000 3,948,607
5.00 May -01 -07 Feb -01 -17 Feb -01 -27 3,955,000 3,955,000 560,000 3,395,000 160,000 165,750
$ 144,345,000 $ 144,345,000 $ 34,600,000 $ 109,745,000 $ 5,985,000 $4,114,357
STATISTICAL SECTION
This part of the City of Lakeville's Comprehensive Annual Financial Report presents detailed
information as a context for understanding the current year's financial statements, note disclosures,
and required supplementary information about the government's overall financial health. This
information has not been audited by the independent auditor.
Financial Trends
These schedules present trend information that may assist the reader in assessing the City's
financial performance from a historical perspective.
Net Position by Component - Government -wide
Changes in Net Position - Governmental Activities
Changes in Net Position - Business -type Activities
Changes in Net Position - Total Governmental and Business -type Activities
Fund Balances - Governmental Funds
Changes in Fund Balances - Governmental Funds
Revenue Capacity
These schedules contain information that may assist the reader in assessing the City's most
significant revenue source, the property tax.
Tax Capacity Valuation and Assessor's Taxable Market Value of Taxable Property
Property Tax Rates - Direct and Overlapping Governments
Principal Property Taxpayers
Property Tax Levy and Collections
Debt Capacity
These schedules provide information that may assist the reader in evaluating the affordability of the
City's current levels of outstanding debt and the City's ability to issue additional debt in the future.
Ratio of Outstanding Debt by Type
Ratio of Net Bonded Debt Outstanding
Direct and Overlapping Governmental Debt
Legal Debt Margin
Pledged Revenue Coverage
Demographic and Economic Information
These schedules present demographic and economic indicators that are commonly used for
financial analysis in understanding the City's ongoing and future financial status.
Demographic and Economic Statistics
Principal Employers
Commercial and Industrial Building Permits Issued
Operating Information
These schedules contain service and infrastructure indicators that may assist the reader in
understanding the information in the City's financial report as it relates to the services the City
provides and the activities it performs.
Employees by Function /Program (Full -Time Equivalent)
Operating Indicators by Function
Capital Assets Statistics by Function
Source:
Unless otherwise noted, the information contained within these schedules is derived from
comprehensive annual financial reports for the relevant year.
CITY OF LAKEVILLE, MINNESOTA
Net Position by Component - Government -wide
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Governmental Activities
Net investment in capital assets (1) $ 1,519,076 $ 13,712,628 $ 34,629,141 $ 47,013,052 $ 125,574,976 $120,954,521 $ 119,699,102 $ 119,249,751 $ 120,485,858 $125,051,058
Restricted 8,247,639 7,079,763 7,728,450 7,200,932 9,727,357 9,037,087 10,542,926 10,027,737 16,474,815 17,403,167
Unrestricted 17,064,853 9,463,615 1,834,965 2,727,757 2,225,861 3,100,244 1,210,922 2,324,315 (5,970,712) (1,923,495)
Total governmental activities 26,831,568 30,256,006 44,192,556 56,941,741 137,528,194 133,091,852 131,452,950 131,601,803 130,989,961 140,530,730
Business -type Activities
Net investment in capital assets 92,379,808 95,869,103 102,503,832 105,571,786 103,156,352 104,535,771 103,150,022 101,893,442 100,390,175 102,009,893
Restricted 84,000 72,000 59,000 45,500 326,133 311,133 295,133 295,133 325,750 325,750
Unrestricted 7,922,652 6,741,613 7,396,116 7,423,725 11,770,501 14,107,347 15,828,861 16,363,211 16,666,856 15,658,140
Total business -type activities 100,386,460 102,682,716 109,958,948 113,041,011 115,252,986 118,954,251 119,274,016 118,551.,786 117,382,781 117,993,783
Total Government -wide
Net investment in capital assets
Restricted
Unrestricted
Total government -wide
Notes:
(2) Includes a restatement of $186,003 in Business -type activities.
93,898,884 109,581,731 137,132,973 152,584,838 228,731,328 225,490,292 222,849,124 221,143,193 220,876,033 227,060,951
8,331,639 7,151,763 7,787,450 7,246,432 10,053,490 9,348,220 10,838,059 10,322,870 16,800,565 17,728,917
24,987,505 16,205,228 9,231,081 10,151,482 13,996,362 17,207,591 17,039,783 18,687,526 10,696,144 13,734,645
$127,218,028 $132,938,722 $154,151,504 $169,982,752 $252,781,180 $252,046,103 $250,726,966 $250,153,589 $248,372,742 $258,524,513
( (3)
(1) The net investment in capital assets amount for fiscal years 2003 through 2006 excludes infrastructure assets
that were acquired prior to January 1, 2003. 2007 includes the addition of these infrastructure assets acquired
(net of depreciation) for $76,014,220.
(3) The City implemented GASB Statement No. 65 in 2012. Net position for 2011 was restated for the effects of
implementing this standard. Net position for previous years has not been restated.
122- 123
CITY OF LAKEVILLE, MINNESOTA
Changes in Net Position - Governmental Activities
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Expenses
General government $ 3,404,145 $ 3,593,032 $ 3,733,657 $ 4,452,707 $ 4,712,995 $ 6,169,957 $ 5,916,590 $ 5,248,677 $ 5,134,169 $ 5,258,319
Public safety 7,634,812 8,439,118 8,928,681 10,057,597 10,308,296 10,019,681 9,726,394 10,858,447 11,068,287 11,202,018
Public works 7,985,301 18,238,780 12,970,903 7,507,095 15,844,963 15,706,515 12,866,216 12,197,868 13,778,800 10,849,213
Parks and recreation 2,826,918 3,044,450 3,535,082 3,819,806 4,556,759 4,900,341 4,774,745 4,775,015 4,796,035 4,780,666
Interest on long -term debt 2,784,308 3,109,159 4,032,004 3,278,091 3,867,395 4,218,695 3,994,790 3,740,076 4,383,684 3,496,878
Total expenses 24,635,484 36,424,539 33,200,327 29,115,296 39,290,408 41,015,189 37,278,735 36,820,083 39,160,975 35,587,094
Program Revenues
Charges for services
General government 3,758,735 3,965,377 3,313,130 2,960,761 2,495,649 2,238,739 1,940,423 1,834,856 2,108,396 2,736,653
Public safety 693,486 674,034 691,070 850,033 659,989 581,930 643,174 654,226 746,207 714,587
Public works 8,430,227 7,618,764 9,123,403 6,064,174 4,985,965 4,239,190 2,817,604 1,967,309 2,313,334 3,588,062
Parks and recreation 1,299,975 1,924,946 2,598,033 1,556,284 1,437,308 1,937,523 984,206 1,555,560 1,299,364 2,087,640
Operating grants and contributions
General government 11,347 30,269 42,748 114,152 43,839 25,083 44,648 42,661 37,970 40,359
Public safety 604,281 636,132 683,047 741,342 698,926 639,173 1,048,160 846,553 649,253 698,949
Public works 106,707 152,216 105,659 106,871 6,604,149 783,843 1,142,494 1,399,661 1,451,359 1,396,560
Parks and recreation 9,893 12,658 15,906 33,575 13,456 46,058 20,294 30,144 160,852 100,315
Capital grants and contributions
General government 50,337 - 171,400 - 91,735
Public safety 49,900 4,651 326,143 5,000 50,000 21,576 26,325 19,530
Public works 17,164,034 9,872,250 13,320,961 6,169,357 3,384,857 1,420,813 2,783,528 3,025,905 2,906,106 5,569,732
Parks and recreation 1,312,088 806,770 1,595,022 2,272,358 550,757 871,266 187,699 267,360 297,245 370,237
Total program revenues 33,491,010 25,698,067 31,488,979 21,366,450 20,879,895 12,833,618 11,612,230 11,645,811 11,996,411 17,414,359
Net (Expense) Revenue
General government 416,274 402,614 (377,779) (1,206,394) (2,173,507) (3,906,135) (3,931,519) (3,371,160) (2,987,803) (2,389,572)
Public safety (6,287,145) (7,124,301) (7,554,564) (8,140,079) (8,944,381) (8,748,578) (8,035,060) (9,336,092) (9,646,502) (9,768,952)
Public works 17,715,667 (595,550) 9,579,120 4,833,307 (869,992) (9,262,669) (6,122,590) (5,804,993) (7,108,001) (294,859)
Parks and recreation (204,962) (300,076) 673,879 42,411 (2,555,238) (2,045,494) (3,582,546) (2,921,951) (3,038,574) (2,222,474)
Interest on long -term debt (2,784,308) (3,109,159) (4,032,004) (3,278,091) (3,867,395) (4,218,695) (3,994,790) (3,740,076) (4,383,684) (3,496,878)
Total net (expense) revenue 8,855,526 (10,726,472) (1,711,348) (7,748,846) (18,410,513) (28,181,571) (25,666,505) (25,174,272) (27,164,564) (18,172,735)
General Revenues and Other
Property taxes
Investment earnings
Gain on sale of capital assets
Transfers in (out)
Total general revenues and other (net)
Change in net position
12,176,835 13,049,107 15,491,536 18,009,237 20,873,431 23,391,055 23,912,318 24,369,009 24,207,406 24,221,741
557,709 794,732 1,023,616 1,505,062 1,977,519 1,383,236 463,092 340,336 280,364 176,409
1,434,692 214,004
484,702 307,071 (867,254) (450,960) 131,796 (2,029,933) (347,807) 613,780 2,692,671 3,101,350
13,219,246 14,150,910 15,647,898 20,498,031 22,982,746 22,744,358 24,027,603 25,323,125 27,180,441 27,713,504
$22,074,772 $ 3,424,438 $13,936,550 $12,749,185 $ 4,572,233 $(5,437,213) $(1,638,902) $ 148,853 $ 15,877 $ 9,540,769
Note: The City implemented GASB Statement No. 65 in 2012. Change in net position for 2011
was restated for the effect of implementing this standard. Change in net position for
previous years has not been restated.
124- 125
CITY OF LAKEVILLE, MINNESOTA
Changes in Net Position - Business -type Activities
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Expenses
Liquor $ 1,597,300 $ 1,648,759 $ 1,791,612 $ 1,940,626 $ 2,164,440 $ 2,407,714 $ 2,437,654 $ 2,424,290 $ 2,439,261 $ 2,392,945
Utility 7,247,801 6,699,466 7,020,440 7,925,809 8,029,064 8,319,303 9,086,172 9,903,296 10,401,650 10,365,651
Total expenses 8,845,101 8,348,225 8,812,052 9,866,435 10,193,504 10,727,017 11,523,826 12,327,586 12,840,911 12,758,596
Program Revenues
Charges for services
Liquor 2,382,723 2,590,308 2,911,820 3,080,692 3,314,721 3,603,240 3,611,777 3,612,321 3,546,877 3,839,723
Utility 5,083,820 5,105,936 5,263,274 5,855,346 6,553,811 7,355,207 7,491,674 7,432,391 8,866,345 9,542,284
Operating grants and contributions
Liquor - 7,762 3,762 3,762 3,762 3,762 3,762 3,762 3,762 3,762
Utility - 3,264 3,264 3,264 3,264 3,264 3,264 3,264 59,707 103,525
Capital grants and contributions
Liquor 17,050
Utility 6,922,442 3,114,733 6,911,241 3,239,467 1,394,810 975,410 158,252 999,716 1,129,764 2,903,043
Total program revenues 14,388,985 10,822,003 15,093,361 12,182,531 11,270,368 11,940,883 11,268,729 12,068,504 13,606,455 16,392,337
Net (Expense) Revenue
Liquor 785,423 949,311 1,123,970 1,143,828 1,154,043 1,199,288 1,177,885 1,208,843 1,111,378 1,450,540
Utility 4,758,461 1,524,467 5,157,339 1,172,268 (77,179) 14,578 (1,432,982) (1,467,925) (345,834) 2,183,201
Total net (expense) revenue 5,543,884 2,473,778 6,281,309 2,316,096 1,076,864 1,213,866 (255,097) (259,082) 765,544 3,633,741
General Revenues and Other
Investment income 104,970 129,549 127,669 315,007 468,478 457,466 227,055 150,632 130,403 78,611
Disposal of capital assets - - 798,429 -
Transfersin(out) (484,702) (307,071) 867,254 450,960 (131,796) 2,029,933 347,807 (613,780) (2,692,671) (3,101,350)
Total general revenues and other (net) (379,732) (177,522) 994,923 765,967 1,135,111 2,487,399 574,862 (463,148) (2,562,268) (3,022,739)
Change in net position $ 5,164,152 $ 2,296,256 $ 7,276,232 $ 3,082,063 $ 2,211,975 $ 3,701,265 $ 319,765 $ (722,230) $(1,796,724) $ 611,002
(1)
Note: The City implemented GASB Statement No. 65 in 2012. Change in net position for 2011 was
restated for the effect of implementing this standard. Change in net position for previous
years has not been restated.
(1) Includes a restatement of $186,003.
126 - 127
CITY OF LAKEVILLE, MINNESOTA
Changes in Net Position - Total Governmental and Business -type Activities
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
Expenses
Governmental activities
Business -type activities
Total expenses
Program Revenues
Governmental activities
Business -type activities
Total program revenues
Net (Expense) Revenue
Governmental activities
Business -type activities
Total net (expense) revenue
Change in Net Position
Governmental activities
Business -type activities
(1) Includes a restatement of $186,003.
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
$ 24,635,484 $ 36,424,539 $ 33,200,327 $ 29,115,296 $ 39,290,408 $ 41,015,189 $ 37,278,735 $ 36,820,083 $ 39,160,975 $ 35,587,094
8,845,101 8,348,225 8,812,052 9,866,435 10,193, 504 10, 727, 017 11, 523, 826 12, 327, 586 12, 840, 911 12, 758, 596
33,480,585 44,772,764 42,012,379 38,981,731 49,483,912 51,742,206 48,802,561 49,147,669 52,001,886 48,345,690
33,491,010 25,698,067 31,488,979 21,366,450 20,879,895 12,833,618 11,612,230 11,645,811 11,996,411 17,414,359
14,388,985 10, 822,003 15, 093,361 12,182,531 11,270, 368 11,940, 883 11,268,729 12,068,504 13,606, 455 16,392,337
47,879,995 36,520,070 46,582,340 33,548,981 32,150,263 24,774,501 22,880,959 23,714,315 25,602,866 33,806,696
8,855,526 (10,726,472) (1,711,348) (7,748,846) (18,410,513) (28,181,571) (25,666,505) (25,174,272) (27,164,564) (18,172,735)
5,543,884 2,473,778 6,281,309 2,316,096 1,076,864 1,213,866 (255,097) (259,082) 765,544 3,633,741
14,399,410 (8,252,694) 4,569,961 (5,432,750) (17,333,649) (26,967,705) (25,921,602) (25,433,354) (26,399,020) (14,538,994)
General Revenues and Other
Governmental activities 13,219,246 14,150,910 15,647,898 20,498,031 22,982,746 22,744,358 24,027,603 25,323,125 27,180,441 27,713,504
Business -type activities (379,732) (177,522) 994,923 765,967 1,135,111 2,487,399 574,862 (463,148) (2,562,268) (3,022,739)
Total general revenues and other (net) 12,839,514 13,973,388 16,642,821 21,263,998 24,117,857 25,231,757 24,602,465 24,859,977 24,618,173 24,690,765
22,074,772 3,424,438 13,936,550 12,749,185 4,572,233 (5,437,213) (1,638,902) 148,853 15,877 9,540,769
5,164,152 2,296,256 7,276,232 3,082,063 2,211,975 3,701,265 319,765 (722,230) (1,796,724) 611,002
Total change in net position $ 27,238,924 $ 5,720,694 $21,212,782 $ 15,831,248 $ 6,784,208 $ (1,735,948) $ (1,319,137) $ (573,377) $ (1,780,847) $10,151,771
(1)
Note: The City implemented GASB Statement No. 65 in 2012. Change in net position for 2011 was
restated for the effects of implementing this standard. Change in net position for previous years
has not been restated.
128 - 129
CITY OF LAKEVILLE, MINNESOTA
Fund Balances - Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
General Fund
Reserved $ - $ - $ 10,322 $ 8,238 $ 8,483 $ 7,420 $ 9,899 $ 10,726 $ - $
Unreserved 8,756,931 9,089,470 10,012,455 11,010,426 11,698,291 11,238,093 11,196,826 9,385,202
Nonspendable - - - - - - - - 384,329 256,476
Assigned - - - - - - - - 519,146 620,725
Unassigned - - - - - - - - 9,644,863 10,614,574
Total general fund 8,756,931 9,089,470 10,022,777 11,018,664 11,706,774 11,245,513 11,206,725 9,395,928 10,548,338 11,491,775
All Other Governmental Funds
Reserved 8,323,038 29,655,447 19,548,472 15,314,937 16,217,023 10,464,632 16,713,410 11,060,144
Unreserved
Special revenue 841,832 799,538 810,972 937,978 1,083,601 1,107,202 1,325,731 1,444,846
Capital projects 24,862,284 16,213,118 13,076,770 9,839,833 17,115,258 11,074,322 12,549,905 15,384,343
Nonspendable - - - - - - - - 75
Restricted - - - - - - - - 14,744,057 38,587,037
Committed - - - - - - - - 9,989,221 11,861,800
Unassigned - - - - - - - - (112,102) (233,910)
Total all other governmental funds 34,027,154 46,668,103 33,436,214 26,092,748 34,415,882 22,646,156 30,589,046 27,889,333 24,621,251 50,214,927
Total Governmental Funds
Reserved
Unreserved
8,323,038 29,655,447 19,558,794 15,323,175 16,225,506 10,472,052 16,723,309 11,070,870
34,461,047 26,102,126 23,900,197 21,788,237 29,897,150 23,419,617 25,072,462 26,214,391
Nonspendable - - - - - - - - 384,404 256,476
Restricted - - - - - - - - 14,744,057 38,587,037
Committed - - - - - - - - 9,989,221 11,861,800
Assigned - - - - - - - - 519,146 620,725
Unassigned - - - - - - - - 9,532,761 10,380,664
Total governmental funds $ 42,784,085 $ 55,757,573 $ 43,458,991 $ 37,111,412 $ 46,122,656 $ 33,891,669 $ 41,795,771 $ 37,285,261 $ 35,169,589 $ 61,706,702
All governmental funds
percentage change
90.3% -22.1% -14.6% 24.3 % -26.5% 23.3% -10.8% -5.7
Note: The implementation of Governmental Accounting Standards Board Statement No. 54,
Fund Balance Reporting and Governmental Type Definitions, in fiscal year 2011
resulted in significant change in the City's fund balance classifications. Information
prior to 2011 has not been restated.
130 - 131
CITY OF LAKEVILLE, MINNESOTA
Changes in Fund Balances - Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year
Revenues
Property taxes and tax increment
Licenses and permits
Intergovernmental
Charges for services
Special assessments
Investment income
Donations
Miscellaneous
Total revenues
Expenditures
General government
Public safety
Public works
Parks and recreation
Capital outlay
Debt service
Principal retirement
Interest on debt
Fiscal charges
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
Other financing sources (uses)
Transfers in
Transfers out
Bond, note, loan and lease proceeds
Payment on refunded bonds called
Premium on bonds issued
Discount on bonds issued
Sale of capital assets
Total other financing sources (uses)
Net change in fund balances
Debt service as a % of noncapital
expenditures (excl. fiscal charges)
2003
2004
2005
$ 11,989,619 $ 12,982,754 $ 15,398,468 $ 17,882,708 $ 20,171,031 $ 22,901,637 $ 23,785,468 $ 24,435,538 $ 24,057,622 $ 24,453,849
3,471,896 3,674,865 2,984,753 2,651,382 2,182,252 1,936,532 1,603,909 1,565,028 1,820,408 2,429,951
3,352,557 5,716,864 1,305,587 2,400,581 8,420,985 2,250,332 3,158,128 4,242,195 2,622,487 2,291,376
10,524,322 10,310,238 12,460,552 8,207,104 7,105,600 6,713,370 4,145,717 4,002,246 3,938,204 5,833,776
1,804,620 1,247,294 931,771 709,126 826,453 777,153 769,624 573,301 622,799 1,132,126
554,428 789,600 1,019,087 1,496,836 1,970,411 1,379,315 459,967 337,788 270,378 174,358
246,613 281,576 319,949 896,414 475,676 1,008,326 305,146 155,477 269,762 207,391
429,347 289,499 381,247 371,033 326,059 366,680 635,781 732,816 731,763 871,798
32,373,402 35,292,690 34,801,414 34,615,184 41,478,467 37,333,345 34,863,740 36,044,389 34,333,423 37,394,625
2,972,240 3,233,316 3,199,306
6,961,425 7,776,381 8,063,605
3,513,913 3,888,882 3,437,161
2,169,700 2,175,558 2,446,065
13,307,291 23,770,126 29,290,726
3,165,244 3,783,000 4,016,900
2,642,352 3,346,744 3,726,938
12,522 13,821 37,072
6,241,430
(4,990,500)
20,497,274
(50,733)
3,361,954
(2,138,784)
24,180,000
346,672
(81,216)
Note: The City has no other taxes than property taxes and tax increment.
4,343,025
(2,775,293)
5,564,000
(13,955)
2006
3,582,410
8,865,167
3,551,118
2,706,898
15,745,297
4,097,026
3,597,771
24,707
5,634,822
(4,997,410)
12,281,300
(12,825,000)
68,479
1,045,440
132 - 133
2007
3,939,573
9,346,490
3,970,680
2,968,924
29,913,271
7,021,291
3,449,720
123,438
4,327,025
(3,600,158)
30,850,000
(3,945,000)
610,404
(3,242)
27,135
2008
5,172,645
8,911,017
4,535,118
3,233,422
18,133,199
5,301,622
4,367,257
46,136
34,744,687 47,987,828 54,217,773 42,170,394 60,733,387 49,700,416 38,335,608 36,613,325 42,062,336 44,299,677
(2,371,285) (12,695,138) (19,416,359) (7,555,210) (19,254,920) (12,367,071) (3,471,868) (568,936) (7,728,913) (6,905,052)
7,688,315
(6,857,231)
2,280,000
(2,975,000)
2009
4,850,726
8,835,563
3,906,485
2,881,402
7,140,715
6,436,971
4,157,176
126,570
5,156,485 5,740,982
(4,386,727) (5,046,945)
10,125,000 2,680,000
(7,955,000)
116,016 99,322
365,196 540,067
2010 2011
4,687,662 4,493,368
9,337,884 9,755,251
3,593,862 3,019,293
3,038,433 3,047,906
4,611,659 10,345,908
7,337,338 7,689,182
3,945,265 3,633,285
61,222 78,143
5,324,043
(2,524,276)
4,265,000
2012
4,572,777
9,844,232
3,245,103
3,050,782
12,413,360
7,642,027
3,358,324
173,072
6,699,447
(2,839,332)
29,255,000
(1,830,000)
1,957,050
200,000
21,697,471 25,668,626 7,117,777 1,207,631 28,266,164 136,084 11,375,970 (3,941,574) 7,064,767 33,442,165
$ 19,326,186 $ 12,973,488 $(12,298,582) $ (6,347,579) $ 9,011,244 $(12,230,987) $ 7,904,102 $ (4,510,510) $ (664,146) $ 26,537,113
51.1% 21.4% 33.7% 40.7% 29.2% 24.4% 90.7% 32.9% 91.8% 32.2%
CITY OF LAKEVILLE, MINNESOTA
Tax Capacity Valuation and Assessor's Taxable Market Value of Taxable Property
Last Ten Fiscal Years
Fiscal Year
Less:
Captured tax increment tax capacity
Contributions to fiscal disparities pool
Plus:
Distribution from fiscal disparities pool
Taxable Net Tax Capacity Valuation
Homestead residential
Commercial/industrial, public utility,
and personal property
Non - homestead residential /apartments
Agriculture and seasonal /recreational
Total taxable net tax capacity
Assessor's taxable market valuation
by Class of Property
Source: Dakota County Auditor and Treasurer's Office.
2003 2004 2005 2006
Taxable Net Tax Capacity Valuation of Taxable Property
Tax capacity value $ 35,160,455 $ 41,253,071 $ 48,211,759 $ 55,521,140 $ 62,477,351 $ 66,208,936 $ 67,887,456 $ 65,235,789 $ 61,005,594 $ 57,583,990
(1,512,956) (1,684,734)
3,976,442 4,281,367
Taxable net tax capacity as a percentage of
assessor's taxable market value 1.110% 1.107% 1.100
(1,821,312) (1,935,093)
(2,243,786) (2,434,792) (2,848,021) (3,429,966) (3,848,084) (4,416,898) (4,888,029) (5,623,626) (5,845,456) (5,591,597)
4,416,475 4,707,601
Total taxable net tax capacity $ 35,380,155 $ 41,414,912 $ 47,958,901 $ 54,863,682 $ 61,829,382 $ 65,586,013 $ 67,986,992 $ 65,043,115 $ 62,063,161 $ 58,325,034
$ 28,508,725 $ 32,609,971 $ 37,990,902 $ 44,087,330 $ 49,458,056 $ 52,038,379 $ 51,916,328 $ 48,558,421 $ 44,951,025 $ 41,780,807
5,661,002 7,466,958 8,512,830 9,178,530 10,660,273 11,801,273 14,325,341 14,626,593 15,226,802 14,711,893
853,597 892,175 913,735 939,412 1,008,576 1,000,649 1,082,546 1,127,962 1,271,776 1,265,526
356,831 445,808 541,434 658,410 702,477 745,712 662,777 730,139 613,558 566,808
$ 35,380,155 $ 41,414,912 $ 47,958,901 $ 54,863,682 $ 61,829,382 $ 65,586,013 $ 67,986,992 $ 65,043,115 $ 62,063,161 $ 58,325,034
$3,188,207,500 $3,742,588,600 $4,361,601,400 $5,034,819,600 $5,642,591,100 $5,951,319,600 $6,024,665,500 $5,736,602,200 $5,356,855,900 $5,030,003,164
Direct tax capacity rate 97 944 %/ 90 050 %1
Notes:
Taxes are determined by multiplying the taxable net tax capacity by the direct tax capacity rate as expressed
as a percentage.
The foregoing direct tax capadty rates do not reflect reductions for state property tax credits.
1.090%
91 326% 91 610%/
134 - 135
2007
2008
(2,129,445) (2,173,426)
5,329,560 5,967,401
1.096%
1.102%
91 583% 94.195 %/
2009
1.128%
2010
(2,127,819) (1,998,923)
7,115,384 7,429,875
1.134%
93 973%/ 96 624
2011
(904,389)
7,807,412 7,194,884
1.159%
2012
(862,243)
1.160
9R 950% 99.051
CITY OF LAKEVILLE, MINNESOTA
Property Tax Rates - Direct and Overlapping Governments
Last Ten Fiscal Years
City of Lakeville
Direct Rates
General Referendum
Levy (Tax Levy (Market
Fiscal Capacity- Value -
Year based) based)
2003 32.944% 0.00851% 32.463% 0.00935%
2004 30.050% 0.00729% 30.300% 0.00754%
2005 31.326% 0.00616% 28.267% 0.00666%
2006 31.610% 0.00830% 26.318% 0.00592%
2007 31.583% 0.00743% 25.127% 0.00516%
Notes:
Dakota County
General Referendum
Levy (Tax Levy (Market
Capacity- Value -
based) based)
Overlapping Rates
Total Direct and
School District Special Overlapping Rates
General Referendum Districts
Ind. Levy (Tax Levy (Market Levy (Tax Tax Market
School Capacity- Value- Capacity- Capacity- Value -
District based) based) based) based based
192 39.614% 0.03539% 3.904% 108.925% 0.05325%
194 30.962% 0.12336% 100.273% 0.14122%
196 27.638% 0.16120% 96.949% 0.17906%
192 35.599% 0.04003% 3.518% 99.467% 0.05486%
194 26.901% 0.20593% 90.769% 0.22076%
196 26.740% 0.13978% 90.608% 0.15461%
192 36.540% 0.04078% 3.752% 99.885% 0.05360%
194 25.411% 0.17349% 88.756% 0.18631%
196 22.065% 0.10862% 85.410% 0.12144%
192 43.708% 0.05599% 3.780% 105.416% 0.07021%
194 25.670% 0.17079% 87.378% 0.18501%
196 27.554% 0.22437% 89.262% 0.23859%
192 44.190% 0.05679% 3.771% 104.671% 0.06938%
194 25.252% 0.16868% 85.733% 0.18127%
196 23.607% 0.20824% 84.088% 0.22083%
2008 34.195% 0.00714% 25.184% 0.00471% 192 45.831% 0.13781% 3.749% 108.959% 0.14966%
194 26.272% 0.17167% 89.400% 0.18352%
196 21.136% 0.21274% 84.264% 0.22459%
2009 33.973% 0.00696% 25.821% 0.00471% 192 49.238% 0.13660% 4.301% 113.333% 0.14827%
194 27.062% 0.17413% 91.157% 0.18580%
196 21.109% 0.21032% 85.204% 0.22199%
2010 36.624% 0.00738% 27.269% 0.00501% 192 53.452% 0.14742% 4.987% 122.332% 0.15981%
194 27.714% 0.18363% 96.594% 0.19602%
196 25.391% 0.22268% 94.271% 0.23507%
2011 38.250% 0.00803% 29.149% 0.00537% 192 52.157% 0.14558% 5.199% 124.755% 0.15898%
194 32.138% 0.19241% 104.736% 0.20581%
196 26.959% 0.22601% 99.557% 0.23941%
2012 39.051% 0.00784% 31.426% 0.00551% 192 55.308% 0.14005% 5.562% 131.347% 0.15340%
194 32.061% 0.18932% 108.100% 0.20267%
196 28.440% 0.22131% 104.479% 0.23466%
Taxes are determined by multiplying the taxable net tax capacity by the tax capacity rate and market valued based rate expressed as
a percentage. The foregoing tax capacity rates do not reflect reductions for state property tax credits credits.
Special Districts include: Metropolitan Mosquito Control, Metropolitan Council, Metropolitan Transit District, Dakota County
Community Development Agency, Light Rail Authority, and Vermillion River Watershed District.
Source: Dakota County Auditor and Treasurer's Office.
136
CITY OF LAKEVILLE, MINNESOTA
Principal Property Taxpayers
Fiscal Year Ended December 31, 2012 and December 31, 2003
Principal Property Taxpayer
Lakeville 2004 LLC
Heritage Commons LLC
Dakota Electric Association
Target Corporation
Argonne Investments LLC
LTF Real Estate Company Inc.
Xcel Energy
Walker Highview Hills LLC
CenterPoint Energy
Southfork Apts. Ltd. Partnership
Muller Family Theatres of Lakeville
International Home Food, Inc.
Mills Property Inc.
Wausau Supply Company
CRW Lakeville LLC
Fulford Group LLC
Total principal taxpayers
All other taxpayers
Total City of Lakeville taxpayers
Type of Business
Commercial
Retail
Utility
Retail
Retail
Real estate
Utility
Senior Housing
Utility
Apartments
Commercial
Food manufacturing
Retail
Lumber supply distributor
Retail
Warehouse distribution
Source: Dakota County Auditor and Treasurer's Office.
$ 57,583,990
137
2,576,864
55, 007,126
2012
Percentage
Taxable of Taxable
Tax Tax
Capacity Capacity
Value Rank Value
256,414 4 0.4%
255,123 5 0.4%
242,738 6 0.4%
242,352 7 0.4%
220,599 8 0.4%
199,264 9 0.3%
191,100 10 0.3%
Taxable
Tax
Capacity
Value
2003
$ 333,532 1 0.6%
320,908 2 0.6%
314,834 3 0.5% $ 297,000 1
Percentage
of Taxable
Tax
Capacity
Rank Value
0.8%
145,916 4 0.4%
115,325 8 0.3%
238,031 2 0.7%
153,740 3 0.4%
136,226 5 0.4%
130,394 6 0.4%
118,434 7 0.3%
109,431 9 0.3%
100,106 10 0.3%
4.5% 1,544,603 4.4%
95.5% 33,615,852 95.6%
100.0% $ 35,160,455
100.0%
CITY OF LAKEVILLE, MINNESOTA
Property Tax Levy and Collections
Last Ten Fiscal Years
Percentage
Current of Total
Year Collection of Current Collection Collections
Fiscal Tax Levy Year's Levy of Prior Total To Tax Levy
Year Certified Amount Percent Year Levy Collections Certified
2003 (1) $ 11,924,189 $ 11,144,545 93.46% $ 114,295 $ 11,258,840 94.42%
2004 (1) 12,838,429 12,068,753 94.00% 116,556 12,185,309 94.91%
2005 (1) 15,232,317 14,460,888 94.94% 98,266 14,559,154 95.58%
2006 (1) 17,741,065 16,943,054 95.50% 162,281 17,105,335 96.42%
2007 19,942,716 19,652,615 98.55% 289,187 19,941,802 99.99%
2008 (1) 22,690,614 22,023,558 97.06% 399,978 22,423,536 98.82%
2009 (1) 23,527,163 22,473,650 95.52% 401,335 22,874,985 97.23%
2010 (1) 24,041,653 22,982,110 95.59% 278,247 23,260,357 96.75%
2011 (1) 24,036,652 22,837,484 95.01% 379,170 23,216,654 96.59%
2012 23,126,960 23,050,840 99.67% - 23,050,840 99.67%
Note: (1) The State of Minnesota unalloted state aid for property tax relief -
Market Value Homestead Credit (MVHC) in the fiscal years as follows:
As a
MVHC Percentage
Loss of Tax Levy
Fiscal Year Amount Certified
2003 $ 562,069 4.71%
2004 611,064 4.76%
2005 607,574 3.99%
2006 632,238 3.56%
2007 - -
2008 305,479 1.35%
2009 630,561 2.68%
2010 731,494 3.04%
2011 835,005 3.47%
2012
138
CITY OF LAKEVILLE, MINNESOTA
Ratio of Outstanding Debt by Type
Last Ten Fiscal years
Governmental Activities
General
Fiscal Obligation Other Capital
Year Bonds Bonds Leases
2003 $ 64,965,000 $ 3,610,000 $ 263,192 $ 179,900
2004 85,560,000 3,485,000 219,888
2005 87,270,000 3,355,000 210,142
2006 72,110,000 12,445,000 183,697
2007 92,180,000 12,300,000 152,037
2008 86,390,000 12,100,000 119,061
2009 90,380,000 11,805,000 112,090
2010 78,800,000 10,780,000 104,752
2011 75,970,000 10,500,000 97,027
2012 97,815,000 8,535,000
Business -type
General Activity
Obligation Revenue
Capital Note Bond
$ 955,000 $ 69,973,092 47,523
136,900 840,000 90,241,788 49,097
720,000 91,555,142 51,472
590,000 85,328,697 52,323
4,410,000 109,042,037 53,829
4,265,000 102, 874, 0 61 54,828
3,985,000 106,282,090 55,772
3,690,000 93,374,752 55,954
3,545,000 90,112,027 56,534
3,395,000 109,745,000 57,380
Source:
(1) Metropolitan Council as of April 1, (except for 2010 Federal Census, 2012 City estimate).
(2) See Demographic and Economic Statistics page.
139
Total
Total % of Outstanding
Outstanding Population Personal Debt
Debt Income (2) Per Capita
3.7 $ 1,472
4.5 1,838
4.2 1,779
3.7 1,631
4.4 2,026
4.0 1,876
4.3 1,906
3.7 1,669
3.4 1,594
N/A 1,913
CITY OF LAKEVILLE, MINNESOTA
Ratio of Net Bonded Debt Outstanding
Last Ten Fiscal Years
Gross Debt Payable Debt Service Net Taxable
Fiscal Bonded From Other Monies Bonded Net Tax
Year Debt Sources (1) Available Debt Capacity
2003 $ 69,709,900 $ 43,469,900 $ 4,693,676 $ 21,546,324 $ 35,380,155
2004 90,021,900 50,536,900 4,340,477 35,144,523 41,414,912
2005 91,345,000 47,625,000 4,649,080 39,070,920 47,958,901
2006 85,145,000 34,855,000 4,894,911 45,395,089 54,863,682
2007 108,890,000 42,870,000 5,171,284 60,848,716 61,829,382
2008 102,755,000 38,030,000 5,925,387 58,799,613 65,586,013
2009 106,170,000 39,015,000 6,941,902 60,213,098 67,986,667
2010 93,270,000 29,460,000 6,527,316 57,282,684 65,043,115
2011 90,015,000 28,305,000 5,663,237 56,046,763 62,063,161
2012 109, 745, 000 29, 550, 000 29, 084, 558 51,110, 442 58, 325, 034
Source:
(1) G.O. Improvement bonds, tax increment bonds, State -aid street revenue bonds, water connection revenue bonds,
arena revenue bonds, HRA public facility lease revenue bonds, and liquor revenue bonds.
(2) Metropolitan Council as of April 1, (except for 2010 Federal Census, 2012 City estimate).
140
Percentage Net
of Net Bonded Bonded
Debt to Taxable (2) Debt
Net Tax Capacity Population Per Capita
60.90%
84.86%
81.47%
82.74%
98.41%
89.65%
88.57%
88.07%
90.31%
87.63%
47,523 $ 453
49,097 716
51,472 759
52,323 868
53,829 1,130
54,828 1,072
55,772 1,080
55,954 1,024
56,534 991
57,380 891
CITY OF LAKEVILLE, MINNESOTA
Direct and Overlapping Governmental Debt
As of December 31, 2012
Debt Applicable to Taxable
Debt Net Tax Capacity in the City
Governmental Unit Outstanding (2) Percentage (2) Amount
Overlapping Debt (1)
Independent School District
194 (City of Lakeville) $176,262,884 87.70% $ 154,582,549
192 (City of Farmington) 205,270,000 19.00% 39,001,300
196 (Cities of Rosemount, Apple Valley, Eagan) 101,792,334 5.40% 5,496,786
Dakota County 52,415,000 14.20% 7,442,930
Notes:
Special District
Metropolitan Council
302,445,000 2.36% 7,152,680
Total overlapping debt 213,676,245
Direct Debt
City of Lakeville bonded debt
106,350,000 100.00% 106,350,000
Total direct and overlapping debt $ 320,026,245
(1) Overlapping governments are those that coincide, at least in part, with the geographical
boundaries of the City. This schedule estimates the portion of the outstanding debt of those
overlapping governments that is borne by the residents and businesses of the City of Lakeville.
This process recognizes that, when considering the government's ability to issue and repay
long -term debt, the entire debt burden borne by the residents and businesses should be taken
into account. However, this does not imply that every taxpayer is a resident, and therefore
responsible for repaying the debt, of each overlapping government.
(2) Debt figures and applicable percentages for other than the City of Lakeville are supplied
by the City's fiscal consultant Springsted.
141
CITY OF LAKEVILLE, MINNESOTA
Legal Debt Margin
Last Ten Fiscal Years
Fiscal
Year
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Assessor's
Taxable
Market
Valuation
$ 3,188,207,500
3, 742, 588, 600
4,361,601,400
5,034,819,600
5, 642, 591,100
5,951,319,600
6, 024, 665, 500
5, 736, 602,200
5,356,855,900
5,030,003,164
Legal Debt Margin Calculation:
Assessor's taxable market valuation
Legal debt limit:
3% of Assessor's taxable market valuation
Amount of debt applicable to legal debt limit:
Gross bonded debt
Less debt payable from sources other than taxes:
G.O. Improvement bonds
Tax increment bonds
State -aid street revenue bonds
Water connection revenue bonds
Arena revenue bonds
Liquor revenue bonds
Debt payable from taxes
Legal
Debt Limit
$ 63,764,150
74,851,772
87,232, 028
100,696,392
112, 851, 822
178,539,588
180,739,965
172,098,066
160, 705, 677
150,900,095
$ 13,185,000
2,755,000
5,280,000
3,760,000
1,175, 000
3,395,000
Less debt service monies available to pay
principal and interest
Net bonded debt applicable to debt limit
Legal debt margin
Source: Dakota County Auditor and Treasurer's Office.
142
Net Bonded
Debt
Applicable to
Debt Limit
Net Bonded
Debt Applicable
Legal to Debt Limit as
Debt a Percentage of
Margin Legal Debt Limit
$ 21,546,324 $ 42,217,826 33.79%
35,144,523 39,707,249 46.95%
39,070,920 48,161,108 44.79%
45,395,089 55,301,303 45.08%
60,848,716 52,003,106 53.92%
58,799,613 119,739,975 32.93%
60,213,098 120,526,867 33.31%
57,282,684 114,815,382 33.28%
56,046,763 104,658,914 34.88%
51,110,442 99,789,653 33.87%
$ 109,745,000
(29,550,000)
80,195,000
(29,084,558)
Fiscal Year 2012
$ 5,030,003,164
$ 150,900,095
51,110,442 51,110,442
$ 99,789,653
Note: Minnesota Statutes 475.53, Subdivision 1, No municipality, except a school district or a city of the frist
class, shall incur or be subject to a net debt in excess of two percent of the taxable market value of
taxable property in the municipality for years 2007 and prior; three percent for years beginning in 2008.
CITY OF LAKEVILLE, MINNESOTA
Pledged Revenue Coverage
Last Ten Fiscal Years
Net Revenue
Available
Fiscal Gross (1) Operating For Debt Requirements (2) Times
Year Revenues Expenses Service Principal Interest Total Coverage
2003 $ 7,743,699 $ 3,022,154 $ 4,721,545 $ 910,000 $ 982,067 $ 1,892,067 2.50
2004 8,358,002 3,350,666 5,007,336 1,045,000 902,036 1,947,036 2.57
2005 9,048,259 3,587,604 5,460,655 1,095,000 848,550 1,943,550 2.81
2006 8,094,630 4,113,336 3,981,294 1,150,000 920,015 2,070,015 1.92
2007 8,731,414 3,945,627 4,785,787 1,335,000 1,011,204 2,346,204 2.04
2008 9,615,243 4,094,080 5,521,163 1,400,000 1,161,886 2,561,886 2.16
2009 8,507,945 4,485,946 4,021,999 1,575,000 1,066,238 2,641,238 1.52
2010 7,380,163 4,749,304 2,630,859 1,685,000 998,751 2,683,751 0.98
2011 8,146,497 4,307,467 3,839,030 1,635,000 937,952 2,572,952 1.49
2012 9,608,620 4,296,022 5,312,598 3,115,000 832,499 3,947,499 1.35
Notes:
(1) The primary revenue source for debt service include water system connection charges,
water system user fees, ice arena net operating revenue and contributions from one
organization conducting lawful gambing at approved locations, and liquor fund gross profits.
(2) Revenue bonds include water connection revenue, arena revenue, and liquor revenue.
143
CITY OF LAKEVILLE, MINNESOTA
Demographic and Economic Statistics
Last Ten Fiscal Years
Percentage Personal Per Capita Building Permits Issued
(1) Increase from Income (2) Personal Family Dwellings (3) Housing units
Year Population Previous Year (in thousands) Income Single Multiple Total Valuation
2003 47,523 2.67% 1,882,861 39,620 422 367 789 149,884,000
2004 49,097 3.31% 2,021,323 41,170 382 524 906 160,871,000
2005 51,472 4.84% 2,174,229 42,241 237 428 665 131,774,000
2006 52,323 1.65% 2,287,875 43,726 221 223 444 101,474,955
2007 53,829 2.88% 2,456,163 45,629 183 195 378 72,128,000
2008 54,828 1.86% 2,541,333 46,351 137 279 416 71,062,000
2009 55,772 1.72% 2,474,827 44,374 127 54 181 41,010,000
2010 55,954 0.33% 2,519,161 45,022 138 2 140 38,718,000
2011 56,534 1.04% 2,617,468 46,299 122 2 124 37,621,000
2012 57,380 1.50% N/A N/A 280 2 282 84,444,000
Annual percentage
increase average last
ten fiscal years 2.18%
Source:
N/A - Not available.
Labor Force and Unemployment Rate (sesonally adjusted) (2)
City of Lakeville Dakota County Rates
Labor Unempl. Labor Unempl. State of United
Year Force Rate Force Rate Minnesota States
2003 28,302 2.5%
2004 27,950 3.1%
2005 28,745 3.2%
2006 29,677 3.9%
2007 30,492 4.3%
2008 30,471 5.6%
2009 30,727 6.4%
2010 30,782 6.0%
2011 31,237 4.8%
*2012 31,221 4.5%
(3) City of Lakeville Inspections Department.
230,968 3.6%
229,734 4.2%
231,322 4.0%
230,427 4.1%
232,670 4.6%
229,716 6.1%
231,391 6.9%
230,247 6.6%
232,257 5.2%
231,902 4.9%
(1) Metropolitan Council as of April 1, (except for 2010 Federal Census, 2012 City estimate).
(2) U.S. Department of Commerce Bureau of Economic Analysis as of December 31, 2012.
* Not seasonally adjusted, information is not available.
144
4.5% 5.4%
5.0% 5.4%
4.8% 4.8%
4.9% 4.5%
4.7% 5.1%
6.8% 7.1%
7.4% 10.0%
6.9% 9.4%
5.7% 8.5%
5.4% 7.6%
CITY OF LAKEVILLE, MINNESOTA
Principal Employers
Fiscal Year Ended December 31, 2012 and December 31, 2003
Principal Employer (1)
Independent School District 194
Ryt -Way Industries, Inc.
ConAgra Store Brands
Target
Imperial Plastics, Inc.
Despatch Industries, Inc.
MOM Brands
Life Time Fitness
Menasha Corporation
City of Lakeville (2)
Fleet Farm
Hearth & Home Technologies, Inc
Jeff Belzer's Chevy- Dodge -KIA
Carquest Distribution Center
Product/Service
Total principal employers
All other employers
Total City of Lakeville civilian labor force (3)
Elementary & secondary schools
Food service contractors
Breakfast cereal products
Retail
Plastics material & resin mfg.
Industrial furnace & oven mfg.
Cereal production
Fitness clubs
Corrugated & solid fiber box mfg.
City government
Retail
. Fireplaces /metal work
New & used auto dealership
General warehousing & storage
145
2012
Employees Rank % Employees Rank %
1,273 1 4.1%
830 2 2.7%
515 3 1.6%
360 4 1.2%
320 5 1.0%
300 6 1.0%
250 7 0.8%
230 8 0.7%
204 9 0.7%
201 10 0.6%
4,483
26,738
31,221
Source:
(1) Telephone survey of individual employers, August 2012.
(2) As of December 31, 2012 (full -time equivalent).
(3) U.S. Department of Commerce Bureau of Economic Analysis as of December 31, 2012.
14.4%
85.6%
100.0%
2003
1,400 1 4.9%
500 3 1.8%
504 2 1.8%
360 4 1.3%
200 6 0.7%
200 7 0.7%
250 5 0.9%
153 8 0.5%
150 9 0.5%
140 10 0.5%
3,857 13.5%
24,445 86.5%
28,302 100.0%
CITY OF LAKEVILLE, MINNESOTA
Commercial and Industrial Building Permits Issued
Years 2012 and 2011
BUSINESS
Wal-Mart
Goodwill
McDonalds Corp
NEW BUILDING PERMITS 2012 AND 2011 (in excess of $250,000)
PRODUCT /SERVICE
Retail
Retail
Restaurant
VALUATION (1)
$ 8,495,000
1,400,000
800,000
EXPANSION OR REMODEL BUILDING PERMITS 2012 AND 2011 (in excess of $250,000)
BUSINESS PRODUCT /SERVICE VALUATION (1)
Jeff Belzer's Chevy- Dodge -KIA New & used auto dealership $ 2,420,000
Gander Mountain Retail 2,400,000
Image Trend Software development 2,050,000
National Polymers Plastic products 1,865,000
ConAgra Foods Store brand /private label food products 1,625,000
McDonalds Corp Restaurant 650,000
Timbercrest Multi- tenant retail 385,000
Pizza Ranch Restaurant 300,000
Computer Science Corp Mail transport /equipment service center 260,000
Dayton Freight Freight carrier 260,000
MOM Brands Admin. offices /technology center 250,000
Notes:
(1) Valuation excludes land and personal property.
Source: City of Lakeville Inspections Department.
146
CITY OF LAKEVILLE, MINNESOTA
Employees by Function /Program (Full -Time Equivalent)
Last Ten Fiscal Years
Function /Program 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
General government
City administration 3.0 3.0 3.0 3.0 3.0 3.0 2.8 2.5 2.5 2.5
Communications 4.9 4.7 4.7 4.7 4.8 4.1 3.9 4.0 4.0 4.0
City clerk 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0
Finance 6.0 6.0 6.0 5.6 6.6 6.6 6.5 6.4 6.0 7.0
Information systems 2.6 2.6 3.0 3.9 4.0 4.0 3.3 3.0 3.0 3.0
Human resources 2.6 2.6 2.8 2.9 3.0 3.0 2.8 2.8 2.8 2.8
Planning 5.5 5.5 5.5 5.5 5.5 4.5 3.8 3.0 3.0 3.0
Community and economic development 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5
Protective inspection 11.0 12.0 12.0 12.0 12.0 12.4 8.7 8.0 8.0 7.0
General government buildings 2.5 2.0 2.0 2.5 3.1 3.1 3.0 3.0 3.0 3.0
Total general government 41.6 41.9 42.5 43.6 45.5 44.2 38.3 36.2 35.8 35.8
Public safety
Police officers (sworn) 44.3 46.0 48.0 49.5 51.2 52.8 51.0 51.5 51.9 53.0
Police dispatchers 8.0 8.4 10.0 10.0 - - - - - -
Police administration 11.9 12.0 11.4 11.4 12.9 12.4 11.1 10.8 11.3 12.2
Fire (excluding volunteer firefighters) 3.0 3.0 3.5 4.5 4.6 4.6 4.6 4.6 4.6 4.6
Total public safety 67.2 69.4 72.9 75.4 68.7 69.8 66.7 66.9 67.8 69.8
Public works
Engineering 12.9 13.0 13.0 14.0 14.0 12.3 9.3 9.0 6.8 7.0
Street maintenance 17.0 17.0 17.6 18.5 19.8 20.0 19.4 19.0 19.0 19.3
Total public works 29.9 30.0 30.6 32.5 33.8 32.3 28.7 28.0 25.8 26.3
Parks and recreation
Park maintenance 14.0 14.0 14.8 15.0 15.0 15.0 14.5 15.0 15.0 15.0
Recreation 4.7 4.7 4.7 4.7 5.3 5.3 4.9 4.7 4.7 4.7
Arts center 3.0 3.0 3.0 3.0 3.2 3.6 3.7 3.7 3.7 3.7
Total parks and recreation 21.7 21.7 22.5 22.7 23.5 23.9 23.1 23.4 23.4 23.4
Total governmental activities 160.4 163.0 168.5 174.2 171.5 170.2 156.8 154.5 152.8 155.3
Liquor 24.2 24.8 24.8 25.9 26.4 25.9 25.7 25.7 25.8 25.7
Utility 18.0 15.0 15.5 16.5 17.5 18.0 18.0 18.0 20.0 20.0
Total business -type activities 42.2 39.8 40.3 42.4 43.9 43.9 43.7 43.7 45.8 45.7
Total employees 202.6 202.8 208.8 216.6 215.4 214.1 200.5 198.2 198.6 201.0
Source: City of Lakeville Human Resources Department.
147
CITY OF LAKEVILLE, MINNESOTA
Operating Indicators by Function
Last Ten Fiscal Years
Function 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
General government
Number of registered voters N/A 26,834 N/A 30,072 N/A 31,024 N/A 32,617 N/A 32,200
Number of final plats approved 26 26 34 21 18 10 8 10 12 13
Number of building permits issued 2,528 2,623 2,179 3,970 3,487 1,878 1,428 1,421 1,467 2,349
Valuation of building permits
issued (in millions) $ 250 $ 230 $ 187 $ 165 $ 126 $ 111 $ 62 $ 49 $ 77 $ 119
Public safety
Crimes against person reported 215 201 194 141 155 158 151 151 142 133
Crimes against property reported 1,755 1,198 1,376 1,165 1,477 1,424 1,245 1,259 1,161 1,186
Traffic citations issued 3,871 4,404 5,020 4,229 6,086 6,985 6,487 5,441 4,914 4,789
Number of volunteer firefighters 77 75 88 80 80 90 78 74 83 77
Number of annual fire calls 762 852 1,048 1,078 1,149 1,230 1,343 1,189 1,262 1,208
Public works
City street miles added 9.6 5.8 9.8 3.5 2.1 1.0 0.5 2.3 2.2 1.4
Parks and recreation
Park acres mowed 434 442 453 465 465 171 471 471 473 473
Park facility reservations taken 379 363 312 400 432 479 559 661 655 717
Program activity registrations taken 5,146 6,627 5,396 6,749 6,836 7,994 8,201 8,369 9,051 9,850
Liquor
Annual sales (in millions) $ 9.9 $ 10.5 $ 11.5 $ 12.1 $ 13.0 $ 14.4 $ 14.6 $ 14.7 $ 14.4 $ 15.2
Utility (in millions of gallons)
Water (average daily consumption) 6.0 5.7 5.6 6.0 6.5 6.3 6.1 4.8 5.7 6.7
Sanitary sewer (1) 4.3 4.2 4.1 3.9 3.9 4.0 3.3 3.3 3.3 3.4
(average daily treatment)
Notes:
(1) Sewage is treated by the Metropolitan Council Environmental Services.
N/A Indicates information is not available for this period at the printing of this report.
Source: Various City of Lakeville Departments.
148
CITY OF LAKEVILLE, MINNESOTA
Capital Assets Statistics by Function
Last Ten Fiscal Years
Function (1) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Public safety
Police stations 1 1 1 1 1 1 1 1 1 1
Fire stations 4 4 4 4 4 4 4 4 4 4
Public works
City streets (miles) 236.0 241.8 251.6 255.1 257.2 258.2 258.7 261.0 263.2 264.6
Parks and recreation
Acres of parks, conservation areas,
and greenways 1,306 1,314 1,325 1,610 1,610 1,623 1,636 1,663 1,671 1,712
Parks 52 53 53 53 55 56 59 59 59 59
Conservation areas 18 18 18 18 18 18 18 18 18 20
Trails and sidewalks - paved (miles) 77 79 83 86 88 91 91 91 100 100
Ice rinks - outdoor (fully boarded) 10 11 11 12 12 12 12 12 12 12
Ice rinks - indoor 2 2 2 2 3 3 3 3 3 3
Fields (softball, soccer, baseball,
football, Lacrosse) 120 122 125 125 135 136 136 136 150 150
Courts (basketball, volleyball, tennis) 23 26 27 27 36 39 39 39 38 38
Playgrounds 33 33 36 38 38 39 39 40 40 40
Swimming beaches 3 3 3 3 3 3 3 3 3 3
Liquor
Number of on -sale stores owned 2 2 2 2 2 2 2 2 2 2
Number of on -sale stores leased 1 1 1 1 1 1 1 1 1 1
Utility
Water
Water mains (miles) 247 270 290 297 304 310 311 311 313 313
Fire hydrants 2,634 2,840 3,031 3,128 3,313 3,374 3,386 3,386 3,434 3,434
Wells 13 14 15 15 16 16 17 17 17 17
Water Towers 4 4 4 5 5 5 5 5 5 5
Sanitary sewer
Sanitary sewer mains (miles) 208 221 230 238 253 255 256 259 261 261
Sanitary sewer lift stations 21 21 21 20 20 20 20 19 19 19
Notes:
(1) Indicators for general government functions are not available.
Source: Various City of Lakeville Departments.
149
Management Report
for
City of Lakeville, Minnesota
December 31, 2012
rt
C ERTIFIED PUBLIC
ACCOUNTANT S
To the City Council and Management
City of Lakeville, Minnesota
PRINCIPALS
Thomas M. Montague, CPA
Thomas A. Karnowski, CPA
Paul A. Radosevich, CPA
William J. Lauer, CPA
James H. Eichren, CPA
Aaron J. Nielsen, CPA
Victoria L. Halinka, CPA
We have prepared this management report in conjunction with our audit of the City of Lakeville,
Minnesota's (the City) financial statements for the year ended December 31, 2012. The purpose of this
report is to provide comments resulting from our audit process and to communicate information relevant
to city finances in Minnesota. We have organized this report into the following sections:
• Audit Summary
• Funding Cities in Minnesota
• Governmental Funds Overview
• Enterprise Funds Overview
• Government -Wide Financial Statements
• Accounting and Auditing Updates
We would be pleased to further discuss any of the information contained in this report or any other
concerns that you would like us to address. We would also like to express our thanks for the courtesy and
assistance extended to us during the course of our audit.
The purpose of this report is solely to provide those charged with governance of the City, management,
and those who have responsibility for oversight of the financial reporting process comments resulting
from our audit process and information relevant to city finances in Minnesota. Accordingly, this report is
not suitable for any other purpose.
` j ,` t ,4.4 , d PA.
Minneapolis, Minnesota
June 5, 2013
Malloy, Montague, Karnowski, Radosevich, & Co., P.A.
5353 Wayzata Boulevard • Suite 410 • Minneapolis. MN 55416 • Tcicphonc: 952- 545.0424 • Telefax: 952. 545 -0569 • www.rnmkr.com
PLANNED SCOPE AND TIMING OF THE AUDIT
AUDIT SUMMARY
The following is a summary of our audit work, key conclusions, and other information that we consider
important or that is required to be communicated to the City Council, administration, or those charged
with governance of the City.
OUR RESPONSIBILITY UNDER AUDITING STANDARDS GENERALLY ACCEPTED IN THE UNITED
STATES OF AMERICA AND GOVERNMENT AUDITING STANDARDS
We have audited the financial statements of the governmental activities, the business -type activities, each
major fund, and the aggregate remaining fund information of the City as of and for the year ended
December 31, 2012. Professional standards require that we provide you with information about our
responsibilities under auditing standards generally accepted in the United States of America and
Government Auditing Standards, as well as certain information related to the planned scope and timing of
our audit. We have communicated such information to you verbally and in our audit engagement letter.
Professional standards also require that we communicate the following information related to our audit.
We performed the audit according to the planned scope and timing previously discussed and coordinated
in order to obtain sufficient audit evidence and complete an effective audit.
AUDIT OPINION AND FINDINGS
Based on our audit of the City's financial statements for the year ended December 31, 2012:
• We have issued an unqualified opinion on the City's financial statements.
• We reported no deficiencies in the City's internal control over financial reporting that we
considered to be material weaknesses.
• The results of our testing disclosed no instances of noncompliance required to be reported under
Government Auditing Standards.
• We reported no findings based on our testing of the City's compliance with Minnesota laws and
regulations.
Overall, we found the City's financial records to be in excellent condition. This not only provides for an
efficient year -end audit, but should also provide confidence in the interim financial data used to manage
the City throughout the year.
FOLLOW -UP ON PRIOR YEAR FINDINGS AND RECOMMENDATIONS
As a part of our audit of the City's financial statements for the year ended December 31, 2012, we
performed procedures to follow -up on the findings and recommendations that resulted from our prior year
audit. We reported the following finding that was corrected by the City in the current year:
Minnesota Statutes require any political subdivision that provides group insurance for 25 or more
employees to comply with certain bidding requirements in contracting for or renewing insurance.
The City solicited new bids to change health insurance providers in 2011 without complying with the
required bid process. Based on our testing procedures performed, we noted no similar findings in the
current year.
SIGNIFICANT ACCOUNTING POLICIES
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the City are described in Note 1 of the notes to basic financial statements.
For the fiscal year ended December 31, 2012, the City implemented Governmental Accounting Standards
Board (GASB) Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred
Inflows of Resources, and Net Position, and GASB Statement No. 65, Items Previously Reported as
Assets and Liabilities. GASB Statement No. 63 changed how governmental entities present a statement
of net position, adding two new basic financial statement elements, and replacing "net assets" with "net
position" as the terminology used to describe the difference between the other four elements. The two
basic financial statement elements added are "deferred inflows of resources" and "deferred outflows of
resources." These new elements are differentiated from assets (deferred outflows of resources) and
liabilities (deferred inflows of resources), but have similar effects on net position.
GASB Statement No. 65 identifies specific items previously presented as assets that will now be
presented as either deferred outflows of resources or outflows (expenses /expenditures), and items
previously reported as liabilities that will now be presented as deferred inflows of resources or inflows
(revenues).
We noted no transactions entered into by the City during the year for which there is a lack of authoritative
guidance or consensus. All significant transactions have been recognized in the financial statements in
the proper period.
CORRECTED AND UNCORRECTED MISSTATEMENTS
Professional standards require us to accumulate all known and likely misstatements identified during the
audit, other than those that are trivial, and communicate them to the appropriate level of management.
Where applicable, management has corrected all such misstatements. In addition, none of the
misstatements detected as a result of audit procedures and corrected by management, when applicable,
were material, either individually or in the aggregate, to each opinion unit's financial statements taken as
a whole.
ACCOUNTING ESTIMATES AND MANAGEMENT JUDGMENTS
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management's knowledge and experience about past and current events and assumptions about
future events. Certain accounting estimates are particularly sensitive because of their significance to the
financial statements and because of the possibility that future events affecting them may differ
significantly from those expected.
The most sensitive estimates affecting the financial statements were:
• Depreciation — Management's estimates of depreciation expense are based on the estimated
useful lives of the assets.
• Net Other Post - Employment Benefit (OPEB) Liabilities — Actuarial estimates of the net OPEB
obligation is based on eligible participants, estimated future health insurance premiums, and
estimated retirement dates.
• Compensated Absences — Management's estimate is based on current rates of pay and sick leave
balances estimated to be paid out as future severance pay.
We evaluated the key factors and assumptions used to develop these accounting estimates in determining
that they are reasonable in relation to the financial statements taken as a whole.
The financial statement disclosures are neutral, consistent, and clear.
-2-
DIFFICULTIES ENCOUNTERED IN PERFORMING THE AUDIT
We encountered no significant difficulties in dealing with management in performing and completing our
audit.
DISAGREEMENTS WITH MANAGEMENT
For purposes of this report, professional standards define a disagreement with management as a financial
accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be
significant to the financial statements or the auditor's report. We are pleased to report that no such
disagreements arose during the course of our audit.
MANAGEMENT REPRESENTATIONS
We have requested certain representations from management that are included in the management
representation letter dated June 5, 2013.
MANAGEMENT CONSULTATIONS WITH OTHER INDEPENDENT ACCOUNTANTS
In some cases, management may decide to consult with other accountants about auditing and accounting
matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves
application of an accounting principle to the City's fmancial statements or a determination of the type of
auditor's opinion that may be expressed on those statements, our professional standards require the
consulting accountant to check with us to determine that the consultant has all the relevant facts. To our
knowledge, there were no such consultations with other accountants.
OTHER AUDIT FINDINGS OR ISSUES
We generally discuss a variety of matters, including the application of accounting principles and auditing
standards, with management each year prior to retention as the City's auditors. However, these
discussions occurred in the normal course of our professional relationship and our responses were not a
condition to our retention.
OTHER INFORMATION IN DOCUMENTS CONTAINING AUDITED FINANCIAL STATEMENTS
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City's basic financial statements. Other information, including the introductory section,
combining and individual fund statements and schedules, supplemental information, and the statistical
section accompanying the basic financial statements are presented for purposes of additional analysis and
are not required parts of the basic financial statements.
With respect to the combining and individual fund statements and schedules and supplemental
information accompanying the financial statements, we made certain inquiries of management and
evaluated the form, content, and methods of preparing the information to determine that the information
complies with accounting principles generally accepted in the United States of America, the method of
preparing it has not changed from the prior period, and the information is appropriate and complete in
relation to our audit of the fmancial statements. We compared and reconciled the combining and
individual fund statements and schedules and supplemental information to the underlying accounting
records used to prepare the basic financial statements or to the basic financial statements themselves.
With respect to the introductory and statistical sections accompanying the fmancial statements, our
procedures were limited to reading this other information, and in doing so we did not identify any
material inconsistencies with the audited fmancial statements.
-3-
LEGISLATION
FUNDING CITIES IN MINNESOTA
The 2011 Legislative Session was very long and difficult. It featured a large budget deficit and a very
contentious battle between the Democratic Governor and the Republican-led House and Senate; and
resulted in numerous vetoes, a special session, and the longest shutdown of non - essential state
government services in Minnesota history.
The outlook going into the 2012 Legislative Session was brightened somewhat by positive economic
news. The November 2011 financial forecast projected a surplus of $876 million in the state general fund
for the biennium ending June 30, 2013, later revised to a surplus of almost $1.2 billion in the
February 2012 forecast. This meant that the Legislature would not have to pass a "supplemental budget"
to deal with projected shortfalls for the second half of the biennium, as was the case in the previous short
session.
The positive feeling was short- lived, however, as the 2012 Legislative Session quickly degenerated into
more partisan squabbling. Once again, the Governor exercised his veto power a number of times to block
Republican legislative initiatives. The Republican Legislature reacted by introducing several potential
amendments to the state constitution, which once passed would be subject to a public vote and could not
be vetoed by the Governor. Two potential amendments, addressing voter identification and the legal
definition of marriage, made it on the ballot for the November 2012 election and were voted down by the
public. In the end, the main accomplishment of the session was a hard - fought compromise on partial
public funding for a Vikings stadium.
The 2012 Legislature did pass a state bonding bill, a technical tax bill (after two omnibus tax bills were
vetoed), and a few other bills that impacted Minnesota cities. The following is a summary of recent
legislative activity affecting the finances of Minnesota cities in 2012 and into the future:
Local Government Aid (LGA) — The state -wide LGA appropriation for fiscal 2012 was
$425.2 million For fiscal 2012, cities received the lesser of their 2010 actual or 2011 certified
LGA allocations. For fiscal 2013 and beyond, the state -wide LGA appropriation had been set to
increase to $426.4 million; however, the 2012 Legislature made some changes. LGA payments for
2013 are frozen at 2012 levels for cities with a population of 5,000 or more. For cities with
populations below 5,000, 2013 LGA will be the greater of their 2012 aid or the amount they would
have received for 2013 under existing law. The Legislature also froze the base for calculating the
maximum increases and decreases for a city's 2013 and 2014 LGA to their 2012 aid. Beginning in
2015, the previous year's LGA payment will be used to calculate the minimum and maximum
increases.
Market Value Homestead Credit (MVHC) — The 2011 Legislature eliminated the MVHC
reimbursement program beginning in fiscal 2012. Rather than receiving a property tax credit,
qualifying homeowner taxpayers had a portion of the market value of their house excluded from their
taxable market value. This new system provides homeowners property tax relief by shifting a portion
of their potential tax burden to other property classifications, rather than directly reducing their taxes
through a state paid tax credit reimbursement. While this new homestead exclusion is calculated in a
similar manner to the repealed MVHC, the actual tax relief to individual homeowner taxpayers varies
depending on the makeup of the taxing jurisdictions that levy on their particular property.
Depositories Authorized to Redeposit City Funds — Banks designated as depositories of city funds
are authorized to redeposit the funds in another bank, savings and loan, or credit union located within
the United States, provide the redeposited funds are fully covered by federal depository insurance
(FDIC or NCUA). This law change was enacted to make additional federal depository insurance
available to cover municipal deposits in anticipation of the December 31, 2012 sunset of the
temporary unlimited coverage for non - interest bearing municipal accounts provisions of the
Dodd -Frank Act.
-4-
Municipal State Aid (MSA) Eligibility — Three changes were made that protect the MSA of cities
dropping below a population of 5,000, which is the eligibility threshold for receiving MSA for street
maintenance. Under previous law, if a city that formerly had a population of 5,000 or more fell below
a 5,000 population at the 2010 decennial census, it would have been ineligible for MSA beginning in
fiscal 2012. The first change enacted allows previously eligible cities falling below 5,000 population
at a decennial census to continue to be considered to have a population of 5,000 for purposes of
calculating MSA, thereby remaining eligible, until the end of the fourth year of the decade. The
second change enacted states that for purposes of calculating MSA, which is based 50 percent on
population, a city is deemed to have a population equal to the greater of 5,000 or as otherwise
determined by statute. The final change requires that, for 2013 MSA only, the aid be allocated in a
manner that backfills the MSA cities lost in 2012 due to population drops.
Contractor Bond Threshold — The threshold at which a municipality is required to obtain contractor
performance and payment bonds for public construction contracts was increased from $75,000 to
match the current competitive bid law threshold of $100,000.
Municipal Detachment of Parcels — A number of corrections and clarifications were made related to
petitions for the detachment of parcels from a municipality. The changes affect petition requirements,
the hearing process, and the sharing of associated hearing and mediation costs with the landowners.
Tort Liability Limits for Cities Contracting With Certain Nonprofits — The liability limit on
claims against cities involving nonprofit organizations that are engaged in or administer outdoor
recreational activities that are funded or authorized by a municipality were lowered from $1 5 million
to $1.0 million
PROPERTY TAXES
Minnesota cities rely heavily on local property tax levies to support their governmental fund activities. In
recent years this dependence has been heightened due to reductions in state aids and fees from new
development due to the struggling economy. As a result, many cities have repeatedly been faced with the
difficult choice of either reducing services or increasing taxes on their already overburdened constituents.
Property values within Minnesota cities experienced average decreases of 5.7 percent and 8.8 percent for
taxes payable in 2011 and 2012, respectively, as market values have continued to slide despite recent
signs of improvement in other areas of the economy. In comparison, the City's taxable market value
decreased 6.6 percent for taxes payable in 2011 and 6.1 percent for taxes payable in 2012. The market
value for taxes payable in 2012 is based on estimated values as of January 1, 2011.
The following graph shows the City's changes in taxable market value over the past 10 years:
$7,000,000, 000
$6,000,000, 000
$5,000,000,000
$4,000,000,000
$3,000,000, 000
$2,000,000, 000
$1,000,000,000
$70,000,000
$60,000,000
$50,000,000
$40,000,000
$30,000,000
$20,000,000
$10,000,000
i
I
Taxable Market Value
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Tax capacity is considered the actual base available for taxation. It is calculated by applying the state's
property classification system to each property's market value. Each property classification, such as
commercial or residential, has a different calculation and uses different rates. Consequently, a city's total
tax capacity will change at a different rate than its total market value, as tax capacity is affected by the
proportion of the City's tax base that is in each property classification from year -to -year, as well as
legislative changes to tax rates. The City's tax capacity decreased 6.5 percent and 5.6 percent for taxes
payable in 2011 and 2012, respectively. The following graph shows the City's change in tax capacities
over the past 10 years:
Local Net Tax Capacity
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
The following table presents the average tax rates applied to city residents for each of the last two levy
years, along with comparative state -wide and metro -area rates. The general increase in rates reflects both
the increased reliance of local governments on property taxes and the recent decline in tax capacities.
Rates expressed as a percentage of net tax capacity
All Cities Seven - County City of
State -Wide Metro Area Lakeville
2011 2012 2011 2012 2011 2012
Average tax rate
City 42.5 46.3 40.0 43.4 38.3 39.1
County 43.7 46.8 42.1 45.0 29.1 31.4
School 25.2 27.3 26.8 28.5 33.2 33.6
Special taxing 6.4 6.8 8.1 8.7 5.2 5.4
Total 117.8 127.2 117.0 125.6 105.9 109.6
Both the total tax rate applied to Lakeville taxpayers, and the city portion of the tax rate, have been lower
than the state -wide and metro averages in recent years. The increase in the city tax rate for 2012 was
caused by the decline in property market values, as the City's tax levy for 2012 was almost $910,000
lower than the previous year.
The school tax rate for the City represents an average of Independent School District Nos. 192,
Farmington; No. 194, Lakeville; and No. 196, Rosemount — Apple Valley — Eagan.
GOVERNMENTAL FUNDS OVERVIEW
This section of the report provides you with an overview of the fmancial trends and activities of the City's
governmental funds, which includes the General Fund, special revenue, debt service, and capital project
funds. These funds are used to account for the basic services the City provides to all of its citizens, which
are financed primarily with property taxes. The governmental fund information in the City's financial
statements focuses on budgetary compliance, and the sufficiency of each governmental fund's current
assets to finance its current liabilities.
GOVERNMENTAL FUND BALANCES
The following table summarizes the changes in the fund balances of the City's governmental funds during
the year ended December 31, 2012, presented both by fund balance classification and by fund:
Fund Balance
as of December 31, Increase
2012 2011 (Decrease)
Total governmental funds
Governmental Funds Change in Fund Balance
Fund balances of governmental funds
Total by classification
Nonspendable $ 256,476 $ 384,404 $ (127,928)
Restricted 38,587,037 14,744,057 23,842,980
Committed 11,861,800 9,989,221 1,872,579
Assigned 620,725 519,146 101,579
Unassigned 10,380,664 9,532,761 847,903
Total governmental funds $ 61,706,702 $ 35,169,589 $ 26,537,113
Total by fund
General $ 11,491,775 $ 10,548,338 $ 943,437
General Obligation Debt Service 28,011,714 5,734,722 22,276,992
G. O. Improvement Debt Service 2,280,604 1,267,379 1,013,225
Building Capital Projects 329,026 1,267,957 (938,931)
Improvement Construction Capital Projects 1,272,530 124,347 1,148,183
Nonmajor funds 18,321,053 16,226,846 2,094,207
$ 61,706,702 $ 35,169,589 $ 26,537,113
In total, the fund balances of the City's governmental funds increased by $26,537,113 during the year
ended December 31, 2012. The significant increase in the General Obligation Debt Service Fund balance,
as well as the increase in total restricted fund balances in the governmental funds, is directly related the
issuance of the 2012B General Obligation Crossover Refunding Bonds in the amount of $22.45 million
The increase in committed fund balances is mainly due to utility connection charges from new
development, collected in the nonmajor capital project funds. The increase in unassigned fund balances is
primarily the result of positive operating results in the City's General Fund.
GOVERNMENTAL FUNDS REVENUE AND EXPENDITURES
The following table presents the per capita revenue of the City's governmental funds for the past three
years, along with state -wide averages.
We have included the most recent comparative state -wide averages available from the Office of the State
Auditor to provide a benchmark for interpreting your City's data. The amounts received from the typical
major sources of governmental fund revenue will naturally vary between cities based on factors such as
the City's stage of development, location, size and density of its population, property values, services it
provides, and other attributes. It will also differ from year -to -year due to the effect of inflation and
changes in the City's operation. Also, certain data on these tables may be classified differently than how
they appear on the City's fmancial statements in order to be more comparable to the state -wide
information, particularly in separating capital expenditures from current expenditures.
We have designed this section of our management report using per capita data in order to better identify
unique or unusual trends and activities of your city. We intend for this type of comparative and trend
information to complement, rather than duplicate, information in the Management's Discussion and
Analysis. An inherent difficulty in presenting per capita information is the accuracy of the population
count, which for most years is based on estimates.
Governmental Funds Revenue per Capita
With State -Wide Averages by Population Class
State -Wide City of Lakeville
Year December 31, 2011 2010 2011 2012
Population 20,000 - 100,000 55,954 56,534 57,380
Property taxes $ 406 $ 420 $ 410 $ 411
Tax increments 51 17 16 15
Franchise and other taxes 30 10 10 10
Special assessments 56 10 11 20
Licenses and permits 31 18 22 32
Intergovernmental revenues 152 76 46 40
Charges for services 78 72 70 102
Other 65 22 22 22
Total revenue $ 869 $ 645 $ 607 $ 652
The City's governmental funds have typically generated less revenue per capita in total than other
Minnesota cities in its population class. The City's revenue from property taxes has been higher than
average in recent years as the City has had to increase its levy to make up for lost state aid and to provide
for debt service of recent bond issues.
The City's governmental funds received total revenues of $37.4 million in 2012, about $3 1 million
(8.9 percent) more than the prior year. On a per capita basis, governmental fund revenue for 2012
increased $45 from the prior year. Revenue from charges for services and licenses and permits increased
$32 and $10 per capita, respectively, due mostly to the improvement in the real estate market conditions
and increase in new development. Special assessments increased $9 per capita due to street
reconstruction projects assessed in the current year.
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The expenditures of governmental funds will also vary from state -wide averages and from year -to -year,
based on the City's circumstances. Expenditures are classified into three types as follows:
• Current — These are typically the general operating type expenditures occurring on an annual
basis, and are primarily funded by general sources such as taxes and intergovernmental revenues.
• Capital Outlay and Construction — These expenditures do not occur on a consistent basis, more
typically fluctuating significantly from year -to -year. Many of these expenditures are
project- oriented, and are often funded by specific sources that have benefited from the
expenditure, such as special assessment improvement projects.
• Debt Service — Although the expenditures for debt service may be relatively consistent over the
term of the respective debt, the funding source is the important factor. Some debt may be repaid
through specific sources such as special assessments or redevelopment funding, while other debt
may be repaid with general property taxes.
The City's expenditures per capita of its governmental funds for the past three years, together with
state -wide averages, are presented in the following table:
Governmental Funds Expenditures per Capita
With State -Wide Averages by Population Class
State -Wide City of Lakeville
Year December 31, 2011 2010 2011 2012
Population 20,000- 100,000 55,954 56,534 57,380
Current
General government $ 82 $ 84 $ 79 $ 80
Public safety 238 167 173 172
Public works 89 64 53 57
Parks and recreation 87 54 54 53
All other 82
$ 578 $ 369 $ 359 $ 362
Capital outlay
and construction $ 233 $ 82 $ 183 $ 216
Debt service
Principal $ 109 $ 131 $ 136 $ 133
Interest and fiscal 41 72 66 62
$ 150 $ 203 $ 202 $ 195
Total expenditures in the City's governmental funds for 2012 were $44.3 million, an increase of about
$2.2 million (5.3 percent) from the previous year. On a per capita basis, the City's funds expended a total
of $773 in 2012, up $29 from the prior year.
The City's current governmental operating expenditures increased $3 per capita, mainly due to higher
election (general government) and street maintenance (public works) costs. Capital outlay costs increased
$33 per capita from the prior year due to an increase in street reconstruction activity. Debt service
principal and interest costs were $7 per capita less than the prior year due to refunding bonds issued in
recent years, which have lowered the City's scheduled payments on outstanding debt.
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GENERAL FUND
The City's General Fund accounts for the financial activity of the basic services provided to the
community. The primary services included within this fund are the administration of the municipal
operation, police and fire protection, building inspection, streets and highway maintenance, and parks and
recreation. The graph below illustrates the change in the General Fund financial position over the last
five years. We have also included a line representing annual expenditures and operating transfers out to
reflect the change in the size of the General Fund operation over the same period.
$22, 000,000
$20, 000,000
$18,000,000
$16,000,000
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
2008
Fund Balance
General Fund Financial Position
Year Ended December 31,
2009
2010
2011
2012
Cash Balance (Net) Expenditures
The City's General Fund cash and investments balance at December 31, 2012 was $10,912,850, an
increase of $1,114,296. Total fund balance at December 31, 2012 was $11,491,775, which is an increase
of $943,437 from the prior year, and $2,171,277 higher than projected in the City's final budget.
As the graph illustrates, the City has generally been able to maintain healthy cash and fund balance levels
as the volume of financial activity has grown. This is an important factor because a government, like any
organization, requires a certain amount of equity to operate. A healthy financial position allows the City
to avoid volatility in tax rates; helps minimize the impact of state funding changes; allows for the
adequate and consistent funding of services, repairs, and unexpected costs; and is a factor in determining
the City's bond rating and resulting interest costs. Maintaining an adequate fund balance has become
increasingly important given the fluctuations in state funding for cities in recent years.
A trend that is typical to Minnesota local governments, especially the General Fund of cities, is the
unusual cash flow experienced throughout the year. The City's General Fund cash disbursements are
made fairly evenly during the year other than the impact of seasonal services such as snowplowing, street
maintenance, and park activities. Cash receipts of the General Fund are quite a different story. Taxes
comprise about 77 percent of the fund's total annual revenue. Approximately half of these revenues are
received by the City in July and the rest in December. Consequently, the City needs to have adequate
cash reserves to finance its everyday operations between these payments.
The City's General Fund balance at the end of the 2012 fiscal year represents approximately 56.7 percent
of annual expenditures based on 2012 levels, compared to 52.8 percent at the end of the previous year.
The following chart reflects the City's General Fund revenue sources for 2012 compared to budget:
Taxes
Intergovernmental
Charges for Services
Licenses and Permits
All Other
$18,000,000
$16,500,000
$15,000,000
$13,500,000
$12,000,000
$10,500,000
$9,000,000
$7,500,000
$6,000,000
$4,500,000
$3,000,000
$1,500,000
Taxes
$2
$4
General Fund Revenue
Budget and Actual
$6
Intergovernmental
$8
• Budget • Actual
$10
General Fund Revenue by Source
Year Ended December 31,
Charges for
Services
❑ 2008 ■ 2009 ■ 2010 ■ 2011 ■ 2012
$12
$14
Licenses and
Permits
$16 $18
Millions
General Fund revenue for 2012 was $21,469,560, which was $1,612,836 (8.1 percent) more than budget.
Property tax revenue was over budget by $393,909, due to improved collections of delinquent taxes and
adjustments for agricultural land developed during the year. Charges for services were $364,506 over
budget, mostly due to engineering costs related to the increased development activity in the City. Finally,
licenses and permits income was $858,120 higher than projected, mainly due to more building permits
issued in 2012 than expected.
The following graph presents the City's General Fund revenues by source for the last five years. The
graph reflects the City's reliance on property taxes and other local sources of revenue, and shows the
virtual elimination of general state aid revenue in recent years.
All Other
Overall, General Fund revenues increased $966,189 (4.7 percent) from the previous year.
Intergovernmental revenue was $100,980 higher than last year, mainly due to Federal Emergency
Management Assistance funding received for storm clean -up. Charges for services increased $268,904
from last year, due to an increase in engineering services related to development. Licenses and permits
revenue was $592,369 more than last year due to an increase in development activity, as discussed above.
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The following graphs illustrate the components of General Fund spending for 2012 compared to budget:
General Fund Expenditures
Budget and Actual
General Government
Public Safety
Public Works
Parks and Recreation
$10,000,000
$9,000,000
$8,000,000
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
1
$1
$2
$3
$4 $5
• Budget • Actual
Total General Fund expenditures for 2012 were $20,280,060, which was $573,063 (2.7 percent) under the
final budget. General Fund expenditures were under budget in every department. General government
expenditures were $151,090 under budget, mainly in purchased services for general government facilities,
information systems, and human resources. Public safety expenditures were $89,328 lower than
anticipated, mainly due to lower utility costs at the new police facility. Public works expenditures were
$140,707 under budget due mostly to an unfilled position in engineering and lower street maintenance
costs than anticipated. Parks and recreation costs were under budget $191,938, due to unplanned
personnel vacancies and decreased maintenance needs.
The following graph presents the City's General Fund expenditures by function for the last five years.
General Fund Expenditures by Function
Year Ended December 31,
General Government Public Safety
❑ 2008 ■ 2009 ■ 2010 02011 ■ 2012
Total General Fund expenditures for 2012 were $296,091 (1.5 percent) higher than the previous year. The
majority of the increases were in public safety ($99,434) and public works ($210,960). The increase in
public safety costs is due to a combination of contracted wage increases, more overtime, and an increase
in staffing. The increase in public works was primarily due to a combination of increased supply costs
and maintenance related to storm damage during the year.
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$6 $7 $8 $9 $10 $11
Millions
Public Works Parks and Recreation
ENTERPRISE FUNDS OVERVIEW
The City maintains two enterprise funds to account for services the City provides that are financed
primarily through fees charged to those utilizing the service. This section of the report provides you with
an overview of the financial trends and activities of the City's enterprise funds, which include the (water,
sewer, street light, and environmental resources) Utility Fund and Liquor Fund.
ENTERPRISE FUNDS FINANCIAL POSITION
The following table summarizes the changes in the fmancial position of the City's enterprise funds during
the year ended December 31, 2012, presented both by classification and by fund:
Net position of enterprise funds
Total by classification
Net investment in capital assets $ 102,009,893 $ 100,390,175 $ 1,619,718
Restricted for debt service 325,750 325,750 —
Unrestricted 15,449,624 16,466,402 (1,016,778)
Total enterprise funds
Enterprise Funds Change in Financial Position
Net Position
as of December 31, Increase
2012 2011 (restated) (Decrease)
$ 117,785,267 $ 117,182,327 $ 602,940
Total by fund
Liquor $ 5,813,472 $ 6,891,647 $ (1,078,175)
Utility 111,971,795 110,290,680 1,681,115
Total enterprise funds $ 117,785,267 $ 117,182,327 $ 602,940
In total, the net position of the City's enterprise funds increased by $602,940 during the year ended
December 31, 2012. The Liquor Fund net position decreased by $1,078,175 due mostly to transfers of
$2 6 million to governmental funds to provide funding for debt service requirements and various
equipment purchases. The increases in both the net investment in capital assets and the net position of the
Utility Enterprise Fund were due to capital infrastructure contributions of $2 9 million received from
developers.
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LIQUOR FUND
The following graphs present five years of operating results for the Liquor Fund:
$16,000,000
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
30%
24.9%
25%
20% —
15%
10%
5%
Liquor Fund — Revenues, Expenses, and Income
Year Ended December 31,
2008 2009 2010 2011 2012
❑ Sales • Cost of Sales • Operating Expenses • Operating Income
The Liquor Fund ended 2012 with net position of $5,813,472, a decrease of $1,078,175 from the prior
year. Of this, $907,912 represents the net investment in capital assets, and $325,750 is restricted in
accordance with revenue bond covenants, leaving $4,579,810 of unrestricted net position.
Gross liquor sales for 2012 were $15,220,064, an $846,803 (5.9 percent) increase from last year. The
Liquor Fund generated a gross profit of $3,839,723 in 2012, or about 25.2 percent, of gross sales.
Operating expenses for 2012 were $2,215,822, an increase of $19,064 from last year, primarily in
personnel services. Net operating income for 2012 was $1,623,901, about 10.7 percent, of gross sales.
The Liquor Fund also made transfers out of $2,554,609 to support the General Fund, for debt service, and
for various capital needs.
9.8 °/
Liquor Fund — Operating Ratios
Year Ended December 31,
24.7%
24.5% 24.7%
• Gross Profit as a Percentage of Sales
❑ Operating Income as a Percentage of Sales
-
9.3%
9A%
25.2%
2008 2009 2010 2011 2012
10.7%
UTILITY FUND
The following graph presents five years of comparative operating results for the City's (water, sewer,
street light, and environmental resources) Utility Fund:
$11,000,000
$9,000,000
$7,000,000
$5,000,000
$3,000,000
$1,000,000
$(1,000,000)
1
Utility Fund
Year Ended December 31,
-16-
2008 2009 2010 2011 2012
Operating Expense ■ Depreciation 0 Operating Revenue — Income Before Depreciation
The Utility Fund ended 2012 with net position of $111,971,795, an increase of $1,681,115 from prior
year operations. Of the net position balance, $101,101,981 represents the City's net investment in capital
assets, leaving $10,869,814 of unrestricted net position.
Utility Fund operating revenue was $9,537,306 for 2012, an increase of $671,027 (7.6 percent). Most of
the increase was in water revenue. Water revenue was about $530,000 higher than last year due to a
15 percent increase in water usage, mainly attributable to an increase in irrigation usage caused by drier
weather. Operating expenses (including depreciation of $3,116,774) were $10,367,433, which represents
a decrease of $51,541 (0.5 percent).
The Utility Fund also received capital contributions of $2,932,438 in 2012, the majority of which was
contributed by developers.
GOVERNMENT -WIDE FINANCIAL STATEMENTS
In addition to fund -based information, the current reporting model for governmental entities also requires
the inclusion of two government -wide financial statements designed to present a clear picture of the City
as a single, unified entity. These government -wide financial statements provide information on the total
cost of delivering services, including capital assets and long -term liabilities.
STATEMENT OF NET POSITION
The Statement of Net Position essentially tells you what your city owns and owes at a given point in time,
the last day of the fiscal year. Theoretically, net position represents the resources the City has leftover to
use for providing services after its debts are settled. However, those resources are not always in
spendable form, or there may be restrictions on how some of those resources can be used. Therefore, net
position is divided into three components: net investment capital assets, restricted, and unrestricted.
The following table presents the components of the City's net position as of December 31, 2012 and
2011, for governmental activities and business -type activities:
Net position
Governmental activities
Net investment in capital assets
Restricted
Unrestricted
Total governmental activities
Business -type activities
Net investment in capital assets
Restricted
Unrestricted
Total business -type activities
Total net position
2012 2011 (Restated)
$ 125,051,058
17,403,167
(1,923,495)
140,530,730
102,009,893
325,750
15,658,140
117,993,783
As of December 31,
Increase
(Decrease)
$ 120,485,858 $ 4,565,200
16,474,815 928,352
(5,970,712) 4,047,217
130,989,961 9,540,769
100,390,175 1,619,718
325,750 —
16,666,856 (1,008,716)
117,382,781 611,002
$ 258,524,513 $ 248,372,742 $ 10,151,771
The City's total net position at December 31, 2012 was $10,151,771 higher than the total net position
reported at the previous year -end. Of the increase, $9.5 million came from governmental activities and
$0.6 million from business -type activities.
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STATEMENT OF ACTIVITIES
The Statement of Activities tracks the City's yearly revenues and expenses, as well as any other
transactions that increase or reduce total net positions. These amounts represent the full cost of providing
services. The Statement of Activities provides a more comprehensive measure than just the amount of
cash that changed hands, as reflected in the fund -based financial statements. This statement includes the
cost of supplies used, depreciation of long -lived capital assets, and other accrual -based expenses.
The following table presents the change in the net position of the City for the years ended December 31,
2012 and 2011:
Expenses
2012 2011
Program Net Change
Revenues Net Change as Restated
Net (expense) revenue
Governmental activities
General government $ 5,258,319 $ 2,868,747 $ (2,389,572) $ (2,957,513)
Public safety 11,202,018 1,433,066 (9,768,952) (9,646,502)
Public works 10,849,213 10,554,354 (294,859) (7,108,001)
Parks and recreation 4,780,666 2,558,192 (2,222,474) (3,038,574)
Interest on long -term debt 3,496,878 — (3,496,878) (3,429,959)
Business -type activities
Liquor 2,392,945 3,843,485 1,450,540 1,182,169
Utility 10,365,651 12,548,852 2,183,201 (345,834)
Total net (expense) revenue $ 48,345,690 $ 33,806,696 (14,538,994) (25,344,214)
General revenues
Property taxes and tax increments 24,221,741 24,207,406
Investment earnings 255,020 410,767
Other revenues 214,004 —
Total general revenues 24,690,765 24,618,173
Change in net position $ 10,151,771 $ (726,041)
One of the goals of this statement is to provide a side -by -side comparison to illustrate the difference in the
way the City's governmental and business -type operations are financed. The table clearly illustrates the
dependence of the City's governmental operations on general revenues, such as property taxes and
unrestricted grants. It also shows that, for the most part, the City's business -type activities are generating
sufficient program revenues (service charges and program - specific grants) to cover expenses. This is
critical given the current downward pressures on the general revenue sources.
ACCOUNTING AND AUDITING UPDATES
GASB STATEMENT NO. 61— THE FINANCIAL REPORTING ENTITY: OMNIBUS
This statement amends the current guidance in GASB Statement No. 14, The Financial Reporting Entity,
for identifying and presenting component units. Potential component units that meet the fiscal
dependency criterion for inclusion in the financial reporting entity under existing guidance will only be
included if there is also "fmancial interdependency" (an ongoing relationship of potential financial benefit
or burden) with the primary government. This statement also clarifies the types of relationships that are
considered to meet the "misleading to exclude" criterion for inclusion as a component unit; changes the
criteria for blending component units; gives direction for the determination and disclosure of major
component units; and adds a requirement to report an explicit, measurable equity interest in a discretely
presented component unit in a statement of position prepared using the economic resources measurement
focus. The requirements of this statement must be implemented for periods beginning after June 15,
2012, with earlier implementation encouraged.
GASB STATEMENT NO. 67 — FINANCIAL REPORTING FOR PENSION PLANS - AN AMENDMENT OF
GASB STATEMENT NOS. 25 AND 50
The primary objective of this statement is to improve financial reporting by state and local government
pension plans. GASB Statement No. 67 replaces the requirements of GASB Statement Nos. 25 and 50
for pension plans that are administered through trusts or equivalent arrangements that meet the following
criteria: contributions from employers and nonemployer contributing entities to the pension plan and
earnings on those contributions are irrevocable; pension plan assets are dedicated to providing pensions to
plan members in accordance with the benefit terms; and pension plan assets are legally protected from the
creditors of employers, nonemployer contributing entities, and the pension plan administrator. If the plan
is a defined benefit pension plan, plan assets also are legally protected from creditors of the plan
members. The requirements of GASB Statement Nos. 25 and 50 remain applicable to pension plans that
are not administered through trusts covered by the scope of this statement and to defined contribution
plans that provide post- employment benefits other than pensions. The statement makes a number of
changes in the financial statement presentation, measurement, and required disclosures relating to the
reporting of these types of pension plans. This statement is effective for financial statements for fiscal
years beginning after June 15, 2013. Earlier application is encouraged.
GASB STATEMENT NO. 68 — ACCOUNTING AND FINANCIAL REPORTING FOR PENSIONS - AN
AMENDMENT OF GASB STATEMENT NOS. 27 AND 50
The primary objective of this statement is to improve accounting and financial reporting by state and local
governments for pensions. This statement replaces the requirements of GASB Statement Nos. 27 and 50,
as they relate to pensions that are provided through pension plans administered as trusts or equivalent
arrangements that meet certain criteria (as described earlier for GASB Statement No. 67). The
requirements of GASB Statement Nos. 27 and 50 remain applicable for pensions that are not covered by
the scope of this statement.
This statement establishes standards for measuring and recognizing liabilities, deferred outflows of
resources, deferred inflows of resources, and expense /expenditures. In addition, this statement details the
recognition and disclosure requirements for employers with liabilities (payables) to a defined benefit
pension plan and for employers whose employees are provided with defined contribution pensions. This
statement also addresses circumstances in which a nonemployer entity has a legal requirement to make
contributions directly to a pension plan. This statement is effective for fmancial statements for fiscal
years beginning after June 15, 2014. Earlier application is encouraged.
-19-
Included in this statement are major changes in how employers that participate in cost - sharing pension
plans, such as 'IRA and PERA, account for pension benefit expenses and liabilities. In financial
statements prepared using the economic resources measurement focus and accrual basis of accounting
(government -wide and proprietary funds), a cost - sharing employer that does not have a special funding
situation is required to recognize a liability for its proportionate share of the net pension liability of all
employers with benefits provided through the pension plan. A cost - sharing employer is required to
recognize pension expense and report deferred outflows of resources and deferred inflows of resources
related to pensions for its proportionate share of collective pension expense and collective deferred
outflows of resources and deferred inflows of resources related to pensions. In addition, the effects of
(1) a change in the employer's proportion of the collective net pension liability and (2) differences during
the measurement period between the employer's contributions and its proportionate share of the total of
contributions from employers included in the collective net pension liability are required to be
determined. These effects are required to be recognized in the employer's pension expense in a
systematic and rational manner over a closed period equal to the average of the expected remaining
service lives of all active and inactive employees that are provided with pensions through the pension
plan.
GASB STATEMENT NO. 69 — GOVERNMENT COMBINATIONS AND DISPOSALS OF GOVERNMENT
OPERATIONS
This statement provides accounting and financial reporting guidance, including disclosure requirements,
for government combinations and disposals of government operations. Government combinations
include mergers, acquisitions, and transfers of operations. Included within the scope of this statement are
combinations of governmental entities or combinations of governmental entities, with nongovernmental
entities (such as a nonprofit entity) as long as the new or continuing organization is a government. This
statement does not apply to combinations in which a government acquires an organization that continues
to exist as a separate entity, or acquires an equity interest in an organization that remains legally separate
from the acquiring government. A disposal of operations occurs when a government either transfers or
sells specific operations. The provisions of this statement are effective for financial statements for
periods beginning after December 15, 2013. Earlier application is encouraged.
PROPOSED CHANGES TO REQUIREMENTS FOR FEDERAL GRANTS
The U.S. Office of Management and Budget (OMB) has issued for comment Proposed OMB Uniform
Guidance: Cost Principles, Audit, and Administrative Requirements for Federal Awards, which proposes
broad revisions to OMB Circular A -133 and other key grant reforms. The proposed guidance includes a
number of significant changes to the federal Single Audit process, including; an increase in dollar
threshold for requiring a Single Audit, changes to the process for determining major programs, a
reduction in the percentage of expenditures required to be covered by a Single Audit, revised criteria for
determining low -risk auditees, a reduction in the types of compliance requirements to be tested, and an
increase in the threshold for reporting questioned costs. The proposed guidance would also consolidate
OMB circulars and cost principles; and change certain federal requirements related to indirect costs, time
and effort reporting, and grant administration.
CITY OF LAKEVILLE
DAKOTA COUNTY, MINNESOTA
Special Purpose Audit Reports
Year Ended
December 31, 2012
CITY OF LAKEVILLE
DAKOTA COUNTY, MINNESOTA
Year Ended December 31, 2012
Table of Contents
Independent Auditor's Report on Internal Control Over Financial Reporting and on
Compliance and Other Matters Based on an Audit of Financial Statements Performed
in Accordance With Government Auditing Standards
Page
1 -2
Independent Auditor's Report on Minnesota Legal Compliance 3
rt tsiv
CERTIFIE[) PUBLIC
ACCOUNTANTS
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the City Council and Management
City of Lakeville, Minnesota
We have audited, in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States, the financial statements of the governmental
activities, the business -type activities, each major fund, and the aggregate remaining fund information of
the City of Lakeville, Minnesota (the City) as of and for the year ended December 31, 2012, and the
related notes to the financial statements, which collectively comprise the City's basic financial statements,
and have issued our report thereon dated June 5, 2013.
INTERNAL CONTROL OVER FINANCIAL REPORTING
In planning and performing our audit of the financial statements, we considered the City's internal control
over financial reporting (internal control) to determine the audit procedures that are appropriate in the
circumstances for the purpose of expressing our opinions on the financial statements, but not for the
purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do
not express an opinion on the effectiveness of the City's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination
of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement
of the City's financial statements will not be prevented, or detected and corrected, on a timely basis. A
significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less
severe than a material weakness, yet important enough to merit attention by those charged with
governance
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any
deficiencies in internal control that we consider to be material weaknesses. However, material
weaknesses may exist that have not been identified.
(continued)
Malloy, Montague, Karnowski, Radosevich, & Co., P.A.
5353 Wayzata noulei,,rd • Suite 410 • Minneapolis. MN 55416 • Telephone: 952- 545.0424 • Telefax: 952. 545 -0569 • www.rnmkr.com
PRINCIPALS
Thomas M. Montague, CPA
Thomas A. Karnowski, CPA
Paul A. Radosevich, CPA
William J. Lauer, CPA
James H. Eichren, CPA
Aaron J. Nielsen, CPA
Victoria L. Halinka, CPA
COMPLIANCE AND OTHER MATTERS
As part of obtaining reasonable assurance about whether the City's financial statements are free from
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on compliance with those
provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The
results of our tests disclosed no instances of noncompliance or other matters that are required to be
reported under Government Auditing Standards.
In addition, we noted certain other matters that we have reported to management of the City in a separate
letter dated June 5, 2013.
PURPOSE OF THIS REPORT
The purpose of this report is solely to describe the scope of our testing of internal control and compliance
and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal
control or on compliance. This report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the City's internal control and compliance. Accordingly,
this communication is not suitable for any other purpose.
7
Minneapolis, Minnesota
June 5, 2013
rt
C ERTIFIED PUBLIC
ACCOUNTANT S
To the City Council and Management
City of Lakeville, Minnesota
INDEPENDENT AUDITOR'S REPORT
ON MINNESOTA LEGAL COMPLIANCE
We have audited, in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States, the financial statements of the governmental
activities, the business -type activities, each major fund, and the aggregate remaining fund information of
the City of Lakeville, Minnesota (the City) as of and for the year ended December 31, 2012, and the
related notes to the financial statements, which collectively comprise the City's basic financial statements,
and have issued our report thereon dated June 5, 2013.
The Minnesota Legal Compliance Audit Guide for Political Subdivisions, promulgated by the Office of
the State Auditor pursuant to Minnesota Statute § 6.65, contains seven categories of compliance to be
tested: contracting and bidding, deposits and investments, conflicts of interest, public indebtedness,
claims and disbursements, miscellaneous provisions, and tax increment financing. Our audit considered
all of the listed categories.
In connection with our audit, nothing came to our attention that caused us to believe that the City failed to
comply with the provisions of the Minnesota Legal Compliance Audit Guide for Political Subdivisions.
However, our audit was not directed primarily toward obtaining knowledge of such noncompliance.
Accordingly, had we performed additional procedures, other matters may have come to our attention
regarding the City's noncompliance with the above referenced provisions.
The purpose of this report is solely to describe the scope of our testing of compliance and the results of
that testing, and not to provide an opinion on compliance. Accordingly, this report is not suitable for any
other purpose.
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Minneapolis, Minnesota
June 5, 2013
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Malloy, Montague, Karnowski, Radosevich, & Co., P.A.
5353 Wayzata Boulevard • Suite 410 • Minneapolis. MN 55416 • Tcicphonc: 952- 545.0424 • Telefax: 952. 545 -0569 • www.rnmkr.com
PRINCIPALS
Thomas M. Montague, CPA
Thomas A. Karnowski, CPA
Paul A. Radosevich, CPA
William J. Lauer, CPA
James H. Eichren, CPA
Aaron J. Nielsen, CPA
Victoria L. Halinka, CPA