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HomeMy WebLinkAbout2006 Comprehensive Annual Financial ReportCITY OF EDINA 2006 COMPREHENSIVE ANNUAL FINANCIAL REPORT CITY OF EDINA, MINNESOTA Comprehensive Annual Financial Report For the fiscal year ended December 31, 2006 Prepared by: Department of Finance John Wallin – Treasurer and Finance Director Eric Roggeman – Assistant Finance Director Paula Nelson – Accountant CITY OF EDINA, MINNESOTA TABLE OF CONTENTS Page ReferenceNo. I. INTRODUCTORY SECTION Letter of Transmittal 1 Organization 5 Organization Chart 6 II. FINANCIAL SECTION Independent Auditors' Report 7 Management's Discussion and Analysis 9 Basic Financial Statements: Government-wide Financial Statements: Statement of Net AssetsStatement 123 Statement of ActivitiesStatement 224 Fund Financial Statements: Balance Sheet - Governmental FundsStatement 327 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental FundsStatement 428 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of ActivitiesStatement 529 Statement of Net Assets - Proprietary FundsStatement 630 Statement of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary FundsStatement 731 Statement of Cash Flows - Proprietary FundsStatement 832 Statement of Fiduciary Net Assets - Fiduciary FundsStatement 934 Notes to the Financial Statements 35 Required Supplementary Information: Budgetary Comparison Information: Budgetary Comparison Schedule - General FundStatement 1063 Notes to Required Supplementary Information69 CITY OF EDINA, MINNESOTA TABLE OF CONTENTS Page ReferenceNo. Combining and Individual Non Major Fund Financial Statements and Schedules: Combining Balance Sheet - Nonmajor Special Revenue FundsStatement 1172 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Special Revenue FundsStatement 1273 Special Revenue Fund - Community Development Block Grant Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and ActualStatement 1374 Combining Statement of Net Assets - Nonmajor Proprietary FundsStatement 1476 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets - Nonmajor Proprietary FundsStatement 1577 Combining Statement of Cash Flows - Nonmajor Proprietary FundsStatement 1678 Combining Statement of Changes in Assets and Liabilities - Agency FundsStatement 1781 Supplementary Financial Information: Combined Schedule of IndebtednessExhibit 184 Tax Capacity, Tax Levies and Tax Capacity RatesExhibit 286 Schedule of Sources and Uses of Public Funds for 50th & France - #1200Exhibit 387 Schedule of Sources and Uses of Public Funds for Southeast Edina Redevelopment District - #1201Exhibit 488 Schedule of Sources and Uses of Public Funds for Grandview Area Redevelopment District - #1202Exhibit 589 Schedule of Sources and Uses of Public Funds for Southeast Edina Redevelopment District - #1203Exhibit 690 Schedule of Sources and Uses of Public Funds for 70th Street and Cahill Road District - #1207Exhibit 791 CITY OF EDINA, MINNESOTA TABLE OF CONTENTS Page ReferenceNo. III. STATISTICAL SECTION (UNAUDITED) Financial Trends: Net Assets by Component 94 Changes in Net Assets 95 Fund Balances of Governmental Funds96 Changes in Fund Balances of Governmental Funds98 Revenue Capacity: Assessed Value, Actual Value and Tax Capacity of Taxable Property100 Direct and Overlapping Tax Capacity Rates101 Principal Property Tax Payers 102 Property Tax Levies and Collections 103 Debt Capacity: Ratios of Outstanding Debt by Type 104 Ratios of General Bonded Debt Outstanding105 Direct and Overlapping Governmental Activities Debt106 Legal Debt Margin Information 107 Pledged Revenue Coverage 108 Demographic and Economic Information: Demographic and Economic Statistics109 Principal Employers 110 Operating Information: Full-Time Equivalent City Government Employees by Function111 Operating Indicators by Function 112 Capital Asset Statistics by Function 113 This page left blank intentionally. 2 The City provides a full range of services, including police and fire protection; the construction and maintenance of highways, streets, and other infrastructure; water and sewer services and recreational and cultural activities and events. The Council is required to adopt a final budget by no later than the close of the fiscal year. The annual budget serves as the foundation for the City’s financial planning and control. The budget is prepared by fund, function (e.g., public safety), and department (e.g. police). Department heads may use resources within a department as they see fit. The City Manager may authorize transfers of budgeted amounts between departments. Local economy The City currently enjoys a favorable economic environment and local indicators point to continued stability. The region, while noted for a strong retail sector, enjoyed considerable re-development in recent years. The re-development consisted of varied manufacturing, medical and high-tech base that adds to the relative stability of the unemployment rate. Major industries with headquarters or divisions within the government’s boundaries or in close proximity include medical services, retail operations and banking services. Edina is home to over 50,000 jobs that are expected to remain stable over the coming years. The City has become known for its quality residential housing stock and attractive neighborhoods. To date, approximately 98% of the housing stock is in place. Although the emphasis has changed over the years from exclusively single family housing to a more balanced mix of housing types, the City’s concern for overall quality in residential development remains a top priority. The City enjoys a AAA bond rating and a Aaa bond rating from Standard and Poors and Moody’s, respectively. Long-term financial planning The City has begun the process of updating its Comprehensive Plan, which guides development and redevelopment and addresses changes likely to occur due to various social and market forces. The Metropolitan Council requires all cities in the seven-county metropolitan area to have such a plan and State law requires cities to update their plans every 10 years. Edina’s revised Comprehensive Plan is due in 2008. The City continues to focus on quality of life improvements throughout Edina. These efforts cover a broad array of areas including protecting and improving the environment, revitalization of parks and public areas, expending recreational opportunities, expanding City services, and increasing communication between City representatives and the public. 3 The City is working closely with state government, federal government and neighboring communities to improve the area’s state and county transportation network, which includes upgraded highways and well-placed pathways. Funding for most of the transportation improvements will need to come from state, county and federal sources, with some minor portion supported by the local taxpayers. Relevant financial policies The City recently adopted a set of financial management policies that focus on long-term financial planning. Policies cover areas such as cash and investments, the operating budget, revenue, fund balance, capital outlay, and debt management. Designations for park dedication, investments, equipment replacement, compensated absences, and cash flow are all within the ranges specified in the policies. In addition, the City has $1,194,745 unreserved, undesignated fund balance in the general fund. Major initiatives The City is continually working to update our aging infrastructure. Our annually adopted five-year Capital Improvement Plan includes spending and financing projections for these projects. Acknowledgements The preparation of this report would not have been possible without the dedicated services of the Finance Department staff. We would like to express our appreciation to all members of the department who assisted and contributed to the preparation of this report. Credit also must be given to the Mayor and the City Council for their unfailing support for maintaining the highest standards of professionalism in the management of the City’s finances. Respectfully submitted, John Wallin Finance Director Eric Roggeman Assistant Finance Director 4 This page left blank intentionally. CITY OF EDINA, MINNESOTA ORGANIZATION December 31, 2006 Term Expires Mayor: James Hovland December 31, 2008 Council Members: Joni Bennett December 31, 2010 Scot Housh December 31, 2010 Linda Masica December 31, 2008 Ann Swenson December 31, 2008 City Manager: Gordon Hughes Appointed Finance Director/Treasurer: John Wallin Appointed City Clerk: Debra Mangen Appointed 5 City of Edina Boards andCommissions HRA Personnel Elections City Clerk Human Resources Human Services Communications Technology Liquor Administration Assessing Recycling Health Water and Sewer Street Maintenance Engineering Public Works Planning Recreational Facilities Recreational Programs Park Maintenance Parks and Recreation Building Inspections Finance Civil Defense Animal Control Police Operations Police Prevention and Control EMS Special Operations Fire Public Safety City Manager City Council City Attorney Citizens 9 MANAGEMENT’S DISCUSSION AND ANALYSIS As management of the City of Edina (the City), we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2006. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which precedes this report. Financial Highlights • The assets of the City exceeded its liabilities at the close of the most recent fiscal year by $138,455,340 (net assets). Of this amount, $21,659,573 (unrestricted net assets) may be used to meet the City’s ongoing obligations to citizens and creditors in accordance with the City's fund designations and fiscal policies. • The City’s total net assets increased by $9,518,467. • As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $32,856,265. Of this total amount, $30,137,178, or 92%, is available for spending at the City’s discretion (unreserved fund balance). • At the end of the current fiscal year, unreserved fund balance for the general fund was $13,797,189, or 54% of total general fund expenditures. • The City’s total bonded debt decreased by $16,565,000 during the current fiscal year, from $68,380,000 to $51,815,000. The City issued no new debt during the year. 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 comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business. The statement of net assets presents information on all of the City’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. Management’s Discussion and Analysis (Continued) 10 The statement of activities presents information showing how the City’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, public works and parks. The business-type activities of the City include utilities, liquor, aquatic center, golf course and community activity centers. 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 financial requirements. Because the focus of governmental funds is narrower than that of the government- wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statement. By doing so, readers may better understand the long-term impact of the City's near term financial decisions. Both the governmental fund balance sheet and governmental fund statement of revenues, expenditures, and change in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains 4 individual major 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, Housing and Redevelopment Authority fund, debt service fund and the construction fund. Management’s Discussion and Analysis (Continued) 11 Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds are provided in the form of combining statements elsewhere in this report. The City adopts an annual appropriated budget for its general fund and one of its special revenue funds. A budgetary comparison statement has been provided for those funds to demonstrate compliance with these budgets. Proprietary funds. The City maintains four major enterprise funds. Enterprise funds are used to report the same functions presented as business-type activities in the governmental-wide financial statements. The City uses enterprise funds to account for its utility, liquor, aquatic center and golf course operations. Data from the other proprietary funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major proprietary funds are provided in the form of combining statements elsewhere in this report. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. 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 statements 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 the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government–wide and fund financial statements. Other information. The combining statements referred to earlier in connection with non- major governmental and enterprise funds are presented immediately following the required supplementary information on budgetary comparisons. Government-wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the City, assets exceeded liabilities by $138,455,340 at the close of the most recent fiscal year. The largest portion of the City's net assets ($116,795,767 or 84%) reflects its investment in capital assets (e.g. land, buildings, machinery, and equipment) less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Management’s Discussion and Analysis (Continued) 12 Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. City of Edina’s Net Assets 2006 2005 2006 2005 2006 2005 Current and other assets41,259,640$ 50,732,285$ 9,491,418$ 13,162,400$ 50,751,058$ 63,894,685$ Capital assets94,526,473 86,694,237 55,071,948 49,664,376 149,598,421 136,358,613 Total assets135,786,113$ 137,426,522$ 64,563,366$ 62,826,776$ 200,349,479$ 200,253,298$ Long-term liabilities outstanding39,182,228$ 46,150,081$ 7,067,320$ 8,855,261$ 46,249,548$ 55,005,342$ Other liabilities11,509,815 19,308,677 4,134,776 2,805,626 15,644,591 22,114,303 Total liabilities50,692,043$ 65,458,758$ 11,202,096$ 11,660,887$ 61,894,139$ 77,119,645$ Net assets: Invested in capital assets, net of related debt69,814,012$ 36,092,020$ 46,981,755$ 40,044,169$ 116,795,767$ 76,136,189$ Restricted- 78,943 - - - 78,943 Unrestricted15,280,058 35,796,801 6,379,515 11,121,720 21,659,573 46,918,521 Total net assets85,094,070$ 71,967,764$ 53,361,270$ 51,165,889$ 138,455,340$ 123,133,653$ Governmental Activities Business-Type Activities Totals The remaining balance of unrestricted net assets ($21,659,573) may be used to meet the City's ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City is able to report positive balances in both of the categories of net assets reported for the government as a whole. Management’s Discussion and Analysis (Continued) 13 As shown below, the City’s net assets increased by $9,518,467 during the current fiscal year. Factors contributing to this change are discussed in the next two sections. City of Edina's Changes in Net Assets 2006 2005 2006 2005 2006 2005 Revenues: Program revenues: Charges for services7,671,523$ 6,864,089$ 30,302,318$ 28,577,344$ 37,973,841$ 35,441,433$ Operating grants and contributions1,423,302 1,512,366 122,358 131,408 1,545,660 1,643,774 Capital grants and contributions4,013,617 2,252,491 - - 4,013,617 2,252,491 General revenues: Property taxes20,414,298 19,071,202 - - 20,414,298 19,071,202 Other taxes7,727,208 7,518,165 - - 7,727,208 7,518,165 Gain on disposal of asset8,418 63,674 25,210 22,538 33,628 86,212 Unrestricted investment earnings1,230,264 977,956 283,771 236,654 1,514,035 1,214,610 Total revenues42,488,630 38,259,943 30,733,657 28,967,944 73,222,287 67,227,887 Expenses: General government6,493,340 4,967,008 - - 6,493,340 4,967,008 Public safety13,300,351 12,019,027 - - 13,300,351 12,019,027 Public works8,973,031 7,185,784 - - 8,973,031 7,185,784 Parks5,341,682 5,901,648 - - 5,341,682 5,901,648 Interest on long-term debt1,895,370 2,288,524 - - 1,895,370 2,288,524 Utilities- - 9,234,651 8,254,409 9,234,651 8,254,409 Liquor- - 9,968,963 9,749,313 9,968,963 9,749,313 Aquatic center- - 795,614 725,936 795,614 725,936 Golf course- - 3,652,169 3,580,307 3,652,169 3,580,307 Community activity centers- - 4,048,649 3,825,562 4,048,649 3,825,562 Total expenses 36,003,774 32,361,991 27,700,046 26,135,527 63,703,820 58,497,518 Increase in net assets before transfers6,484,856 5,897,952 3,033,611 2,832,417 9,518,467 8,730,369 Transfers838,230 841,500 (838,230) (841,500) - - Increase in net assets7,323,086 6,739,452 2,195,381 1,990,917 9,518,467 8,730,369 Net assets - January 1, previously reported71,967,764 65,228,312 51,165,889 49,174,972 123,133,653 114,403,284 Infrastructure change (footnote 1P)5,803,220 - - - 5,803,220 - Net assets - January 1, as restated77,770,984 65,228,312 51,165,889 49,174,972 128,936,873 114,403,284 Net assets - December 3185,094,070$ 71,967,764$ 53,361,270$ 51,165,889$ 138,455,340$ 123,133,653$ Governmental Activities Business-type Activities Totals Management’s Discussion and Analysis (Continued) 14 Governmental Activities Governmental activities increased the City's net assets by $7,323,086, accounting for 77% of the total growth in net assets. Key elements of this increase are as follows: • Property tax revenues increased by $1,343,096 (7%) during the year. Most of this increase is due to a new levy added in 2006 to pay for debt service on the City’s two new gymnasiums. • Charges for services increased by $807,434 (12%) during the year due to increases in permit activity and court fines. • Capital grants and contributions increased by $1,761,126 (78%)during the year due to a large Minnesota State Aid (MSA) reimbursement that was applied for and received during the year. Below are specific graphs which provide comparisons of the governmental activities revenues and expenses: Revenues by Source - Governmental Activities Property taxes 49% Charges for services 18% Operating grants and contributions 3% Capital grants and contributions 9% Other 3% Other taxes 18% Management’s Discussion and Analysis (Continued) 15 - 2 4 6 8 10 12 14 Millions General government Public safetyPublic worksParksInterest on long-term debt Expenses and Program Revenues - Governmental Activities expenses program revenue Business-type Activities Business-type activities increased net assets by $2,195,381 accounting for 23% of the City's growth in net assets. Key elements of the current year increase are as follows: • Charges for services for business-type activities increased 6% from 2005. The Utilities fund charges for services increased $1,181,093 (11.5%) from the previous year due to increased rates and consumption. • Business-type activities made net transfers of $838,230 to governmental activities during 2006 to provide cash flow for operational and capital improvement needs. Management’s Discussion and Analysis (Continued) 16 Revenues by Source - Business-type Activities Other 1.0%Operating grants and contributions 0.4% Charges for services 98.6% - 2 4 6 8 10 12 Millions UtilitiesLiquorAquatic centerGolf courseCommunity activity centers Expenses and Program Revenues - Business-type Activities expenses program revenue Financial Analysis of the City's Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Management’s Discussion and Analysis (Continued) 17 Governmental Funds. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. At the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $32,856,265, a decrease of $10,518,608 in comparison with the prior year. Approximately 92% of this total amount ($30,137,178) constitutes unreserved fund balance. The remainder of the fund balance is reserved because it has already been committed 1) to provide for prepaid items ($36,849), 2) to pay committed contracts ($261,972), 3) for special projects ($225,953), or 4) to pay debt service ($2,194,313). The general fund is the chief operating fund of the City. At the end of the current fiscal year, unreserved fund balance of the general fund was $13,797,189. As a measure of the general fund’s liquidity, unreserved fund balance represents 54% of total general fund expenditures. The fund balance of the City’s general fund increased by $2,015,254 during the current fiscal year. Key factors in this growth are as follows: • Total general fund revenues increased by 6.7% in the current fiscal year. The largest increase was in the fines and forfeits category, which increased 38%. • Total general fund expenditures increased 6.2% in the current fiscal year. Current expenditures increased in all four functional areas (general government, public safety, public works, and parks), and were very close to the increase planned for in our 2006 budget, which projected an expenditure increase of 5.7%. • The liquor fund transferred $700,230 of profits to the general fund. The Housing and Redevelopment Authority fund balance increased by $656,819 in the current fiscal year. The debt service fund has a total fund balance of $2,194,313, all of which is reserved for the payment of debt service. The construction fund balance decreased by $4,321,573 in 2006 due to construction costs for two new gymnasiums, which was financed with a bond issue in 2005 and ongoing street reconstruction costs to be financed with special assessments. Proprietary funds. The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Operating revenues and expenses in the Utilities fund increased by 11.6% and 12.3%, respectively, in 2006, due to rate increases that are intended to help replace aging infrastructure. The City’s continuing investments in infrastructure are reported as increases in net capital assets, which increased $5,407,572 from 2005. Management’s Discussion and Analysis (Continued) 18 The liquor fund made transfers totaling $995,230 to other funds during 2006. The majority of this amount ($700,230) was transferred to the general fund according to the budget. Smaller transfers were also made to the construction fund and to nonmajor proprietary funds. Aquatic center revenues increased 2% in 2006 after a very good year in 2005. Operating revenues for the golf course fund increased by 4.6% in 2006, but were offset by increased expenses. Combined with the effects of increasing expenses, the golf course fund lost $5,549 in 2006. Budgetary Highlights General Fund. There were no changes made to the original budget. During the year, revenues and expenditures exceeded budgetary estimates, and since increased revenues easily covered the increased expenditures, there was no need to draw upon existing fund balance. Major variances from budget include revenues from licenses and permits that exceeded budget by $1,201,590 due to high activity in the City’s Inspections department. The City also exceeded budgeted revenues in several other categories, mostly due to increases in demand for City services, some of which we receive revenue for. There were no major variances from budgeted expenditures, although there were many smaller variances mostly due to the erratic nature of spending for the replacement of the City’s equipment. Capital Asset and Debt Administration Capital assets. The City’s investment in capital assets for its governmental and business type activities as of December 31, 2006, amounted to $149,598,421 (net of accumulated depreciation). This investment in capital assets included land, land improvements, buildings, vehicles and equipment. Major capital asset events during the current fiscal year included the following: • Two new Gymnasiums were completed in 2006 after starting construction in 2005. • A variety of street construction, sidewalk and traffic signal projects began in 2006; construction in progress as of the close of the year reached $13,855,020. Management’s Discussion and Analysis (Continued) 19 City of Edina’s Capital Assets (Net of Depreciation) 2006 2005 2006 2005 2006 2005 Land and land improvements27,634,036$ 28,392,856$ 5,437,869$ 5,553,727$ 33,071,905$ 33,946,583$ Buildings and improvements29,644,961 30,219,684 7,306,756 7,747,988 36,951,717 37,967,672 Machinery and equipment8,573,184 8,859,303 2,297,256 2,296,740 10,870,440 11,156,043 Infrastructure20,645,464 19,629,680 34,203,875 31,432,356 54,849,339 51,062,036 Construction in progress8,028,828 5,395,934 5,826,192 2,633,565 13,855,020 8,029,499 Total94,526,473$ 92,497,457$ 55,071,948$ 49,664,376$ 149,598,421$ 142,161,833$ Governmental Activities Business-Type Activities Totals The City restated infrastructure assets as of January 1, 2006, to comply with GASB 34 and related statements and this chart reflects the adjusted balances. Additional information about this change can be found in Note 1P. Additional information on the City’s capital assets can be found in Note 4. Long-term debt. At the end of the current fiscal year, the City had total bonded long-term debt outstanding of $51,815,000, a decrease of $16,565,000 from 2005. $5,670,000 is for general obligation improvement debt that is supported by property tax levies and special assessments. This amount decreased from 2005 due to the issuance of crossover refunding bonds in 2005 to refund general obligation bonds on their call date of February 1, 2006. $1,460,000 is for permanent improvement revolving (PIR) bonds, which finance the City’s special assessment program. An additional $20,460,000 of general obligation tax increment debt financed the City’s economic development program. This amount decreased in 2006 due to a crossover refunding initiated in 2005 in addition to regularly scheduled principal payments on other issues. Also outstanding is $16,080,000 public project revenue bonds which financed the City Hall and Police facility as well as two gymnasiums. There is a total of $8,145,000 in revenue bonds for improvements to the enterprise funds. Management’s Discussion and Analysis (Continued) 20 City of Edina’s Outstanding Debt 2006 2005 2006 2005 2006 2005 Tax increment bonds20,460,000$ 28,905,000$ -$ -$ 20,460,000$ 28,905,000$ General obligation bonds5,670,000 11,765,000 - - 5,670,000 11,765,000 Public improvement bonds1,460,000 1,460,000 - - 1,460,000 1,460,000 Public project revenue bonds16,080,000 16,560,000 - - 16,080,000 16,560,000 Revenue bonds- - 8,145,000 9,690,000 8,145,000 9,690,000 Total43,670,000$ 58,690,000$ 8,145,000$ 9,690,000$ 51,815,000$ 68,380,000$ Governmental Activities Business-Type Activities Totals The City maintains an Aaa rating from Moody's and an AAA rating from Standard & Poor’s. State statutes limit the amount of general obligation debt a Minnesota city may issue to 2% of total Estimated Market Value. The current debt limitation for the City is $188,282,998. Only $3,690,954 of the City's outstanding debt is counted within the statutory limitation. Additional information on the City’s long-term debt can be found in Note 5. Economic Factors and Next Year’s Budget The City strives to provide an uncommonly high quality of life for our residents and businesses and the healthy local economy helps to make this goal a reality. The unemployment rate in Edina for February 2007 was 3.0%, well below the state and national levels. In fact, according to the State of Minnesota Department of Employment and Economic Development, the City’s unemployment rate has been lower than the national rate every month since at least 1990. The City is home to Southdale Center, the nation’s first fully enclosed climate-controlled regional shopping mall, Fairview Southdale hospital, as well as several corporate headquarters. In addition to its healthy economy, Edina is known for excellent public schools, as the Edina school system has been consistently selected as one of the best in the country. Ninety-seven percent of seniors go to college and eighty-six percent finish in five years. Property values in Edina have been increasing at a rapid pace for several years. Estimated market value of all parcels increased over 10% for taxes payable in 2007 after a 8% increase the year before. The City Council is currently reviewing several redevelopment projects that would make this trend likely to continue. Management’s Discussion and Analysis (Continued) 21 Market Value and Tax Capacity Annual Changes -25.0%-20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 1997199819992000200120022003200420052006 Tax Capacity Market Value The City collects property taxes based on tax capacity, which roughly equals estimated market value multiplied by class rates for different types of parcels (commercial, residential, etc.). Class rates are set by state statute. Tax capacity increased over 11% for taxes payable in 2007, and has been increasing steadily ever since the state revised property tax law in 2001. Due to the recent increases in market value and tax capacity, property tax rates have been decreasing since the property tax law changes mentioned earlier. The City’s adopted 2007 budget includes a property tax levy of $19,427,890 for the general fund, an increase of 4.7% from the 2006 general fund levy. Requests for Information This financial report is designed to provide a general overview of the City’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Office of the Finance Director, 4801 West 50th Street, Edina, Minnesota 55424. The City’s Comprehensive Annual Financial Report can also be found on the internet at www.cityofedina.com. 22 This page left blank intentionally. CITY OF EDINA, MINNESOTA STATEMENT OF NET ASSETS Statement 1 December 31, 2006 GovernmentalBusiness-type ActivitiesActivitiesTotal Assets: Current assets: Cash and cash equivalents80,364$ 102,798$ 183,162$ Investments35,169,247 4,672,647 39,841,894 Accrued interest 76,908 43,552 120,460 Accounts receivable, net362,089 3,368,984 3,731,073 Special assessments receivable4,772,621 168,274 4,940,895 Due from other governments492,636 1,687 494,323 Prepaid items36,849 - 36,849 Inventory- 1,112,458 1,112,458 Total current assets40,990,714 9,470,400 50,461,114 Noncurrent assets: Deferred charges268,926 21,018 289,944 Nondepreciable capital assets 25,344,392 6,915,157 32,259,549 Depreciable capital assets (net)69,182,081 48,156,791 117,338,872 Total noncurrent assets94,795,399 55,092,966 149,888,365 Total assets135,786,113 64,563,366 200,349,479 Liabilities: Current liabilities: Accounts payable2,502,378 1,002,505 3,504,883 Salaries payable369,942 99,865 469,807 Accrued interest payable655,841 141,161 797,002 Contracts payable219,015 146,649 365,664 Pooled cash payable175,000 550,000 725,000 Due to other governments46,181 133,315 179,496 Deposits payable 70,925 19,464 90,389 Unearned revenue2,520 79,411 81,931 Compensated absences payable1,278,013 367,406 1,645,419 Bonds payable6,190,000 1,595,000 7,785,000 Total current liabilities11,509,815 4,134,776 15,644,591 Noncurrent liabilities: Compensated absences payable1,917,020 551,109 2,468,129 Bonds payable, net of unamortized discount37,265,208 6,516,211 43,781,419 Total noncurrent liabilities39,182,228 7,067,320 46,249,548 Total liabilities50,692,043 11,202,096 61,894,139 Net assets: Invested in capital assets, net of related debt69,814,012 46,981,755 116,795,767 Unrestricted15,280,058 6,379,515 21,659,573 Total net assets85,094,070$ 53,361,270$ 138,455,340$ Primary Government The accompanying notes are an integral part of these financial statements 23 CITY OF EDINA, MINNESOTA STATEMENT OF ACTIVITIES For The Year Ended December 31, 2006 OperatingCapital Charges forGrants andGrants and ExpensesServicesContributionsContributions Functions/Programs Primary government: Governmental activities: General government6,493,340$ 731,613$ 187,674$ -$ Public safety13,300,351 6,146,114 1,017,531 - Public works8,973,031 352,354 195,000 4,013,617 Parks5,341,682 441,442 23,097 - Interest on long-term debt1,895,370 - - - Total government activities36,003,774 7,671,523 1,423,302 4,013,617 Business-type activities: Utilities9,234,651 11,421,474 109,348 - Liquor9,968,963 11,029,445 - - Aquatic center795,614 867,626 - - Golf course3,652,169 3,646,620 - - Community activity centers4,048,649 3,337,153 13,010 - Total business-type activities27,700,046 30,302,318 122,358 - Total primary government 63,703,820$ 37,973,841$ 1,545,660$ 4,013,617$ The accompanying notes are an integral part of these financial statements. Program Revenues 24 Statement 2 GovernmentalBusiness-type ActivitiesActivitiesTotal (5,574,053)$ -$ (5,574,053)$ (6,136,706) - (6,136,706) (4,412,060) - (4,412,060) (4,877,143) - (4,877,143) (1,895,370) - (1,895,370) (22,895,332) - (22,895,332) - 2,296,171 2,296,171 - 1,060,482 1,060,482 - 72,012 72,012 - (5,549) (5,549) - (698,486) (698,486) - 2,724,630 2,724,630 (22,895,332) 2,724,630 (20,170,702) General revenues: Property taxes20,414,298 - 20,414,298 Tax increment collections7,228,002 - 7,228,002 Franchise taxes499,206 - 499,206 Unrestricted investment earnings1,230,264 283,771 1,514,035 Gain on disposal of capital assets8,418 25,210 33,628 Transfers838,230 (838,230) - Total general revenues and transfers30,218,418 (529,249) 29,689,169 Change in net assets7,323,086 2,195,381 9,518,467 Net assets - beginning, as restated77,770,984 51,165,889 128,936,873 Net assets - ending85,094,070$ 53,361,270$ 138,455,340$ Net (Expense) Revenue and Changes in Net Assets 25 This page left blank intentionally. 26 CITY OF EDINA, MINNESOTA BALANCE SHEET Statement 3 GOVERNMENTAL FUNDS December 31, 2006 Housing &NonmajorTotal RedevelopmentDebtGovernmentalGovernmental GeneralAuthorityServiceConstructionFundsFunds Assets Cash and cash equivalents55,054$ 9,058$ 5,449$ 8,568$ 2,235$ 80,364$ Investments - unrestricted13,425,777 12,990,459 1,798,597 6,333,325 621,089 35,169,247 Accrued interest - 57,389 21 15,050 4,448 76,908 Accounts receivable208,310 - - 13,544 140,235 362,089 Special assessments receivable- - 1,384,170 3,388,451 - 4,772,621 Due from other funds1,750,000 79,299 375,000 - 13,000 2,217,299 Due from other governments421,490 33,237 15,741 9,972 12,196 492,636 Prepaid items36,849 - - - - 36,849 Total assets15,897,480$ 13,169,442$ 3,578,978$ 9,768,910$ 793,203$ 43,208,013$ Liabilities and fund balances Liabilities: Accounts payable1,353,516$ 656,987$ 495$ 399,947$ 91,433$ 2,502,378$ Salaries payable365,482 - - 562 3,898 369,942 Contracts payable - - - 219,015 - 219,015 Pooled cash payable- - - 175,000 - 175,000 Due to other funds279,299 - - 1,925,000 13,000 2,217,299 Due to other governments7,145 14,903 - 24,133 - 46,181 Deposits payable58,000 - - 12,925 - 70,925 Unearned revenue- - - - 2,520 2,520 Deferred revenue- - 1,384,170 3,364,318 - 4,748,488 Total liabilities2,063,442 671,890 1,384,665 6,120,900 110,851 10,351,748 Fund balance: Reserved for: Prepaid items36,849 - - - - 36,849 Encumbrances- - - 261,972 - 261,972 Special projects- - - 225,953 - 225,953 Debt service- - 2,194,313 - - 2,194,313 Unreserved: Designated, reported in: General Fund12,602,444 - - - - 12,602,444 Capital Project Funds- - - 3,160,085 - 3,160,085 Undesignated, reported in: General Fund1,194,745 - - - - 1,194,745 Special Revenue Funds- 12,497,552 - - 682,352 13,179,904 Total fund balance13,834,038 12,497,552 2,194,313 3,648,010 682,352 32,856,265 Total liabilities and fund balances15,897,480$ 13,169,442$ 3,578,978$ 9,768,910$ 793,203$ 43,208,013$ Fund balance reported above 32,856,265$ Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources, and therefore, are not reported in the funds94,526,473 Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds4,748,488 Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds.(47,037,156) Net assets of governmental activities 85,094,070$ The accompanying notes are an integral part of these financial statements. 27 CITY OF EDINA, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES AND Statement 4 CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For The Year Ended December 31, 2006 Housing &NonmajorTotal RedevelopmentDebtGovernmentalGovernmental GeneralAuthorityServiceConstructionFundsFunds Revenues: General property taxes18,166,020$ -$ 2,248,278$ -$ -$ 20,414,298$ Tax increment collections- 7,228,002 - - - 7,228,002 Special assessments- - 85,656 1,665,563 - 1,751,219 Franchise fees- - - - 499,206 499,206 License and permits3,458,140 - - 30,757 - 3,488,897 Intergovernmental1,049,523 - - 1,536,153 187,674 2,773,350 Charges for services2,641,720 - - 49,634 - 2,691,354 Fines and forfeitures1,023,935 - - - - 1,023,935 Investment income298,299 422,015 57,641 427,156 25,153 1,230,264 Rental of property308,535 - - 1,610 - 310,145 Other revenues112,418 - - 90,513 43,866 246,797 Total revenues27,058,590 7,650,017 2,391,575 3,801,386 755,899 41,657,467 Expenditures: Current: General government3,955,036 1,165,686 - 70,508 804,574 5,995,804 Public safety12,273,940 - - 157,174 - 12,431,114 Public works5,021,311 - - 212,596 - 5,233,907 Parks3,185,088 - - 115,287 - 3,300,375 Capital outlay: General government2,501 - - 77,462 - 79,963 Public safety899,462 - - 175,002 - 1,074,464 Public works316,615 - - 3,126,805 - 3,443,420 Parks94,070 - - 4,288,609 - 4,382,679 Debt service: Bond principal - - 5,985,000 - - 5,985,000 Interest and fiscal charges- - 2,107,036 - - 2,107,036 Total expenditures25,748,023 1,165,686 8,092,036 8,223,443 804,574 44,033,762 Revenues over (under) expenditures1,310,567 6,484,331 (5,700,461) (4,422,057) (48,675) (2,376,295) Other financing sources (uses): Transfers in700,230 - 5,915,028 250,000 - 6,865,258 Transfers out(50,000) (5,827,512) - (149,516) - (6,027,028) Sale of capital assets54,457 - - - - 54,457 Principal paid by escrow- - (9,035,000) - - (9,035,000) Total other financing sources (uses)704,687 (5,827,512) (3,119,972) 100,484 - (8,142,313) Net increase (decrease) in fund balance2,015,254 656,819 (8,820,433) (4,321,573) (48,675) (10,518,608) Fund balance - January 111,818,784 11,840,733 11,014,746 7,969,583 731,027 43,374,873 Fund balance - December 3113,834,038$ 12,497,552$ 2,194,313$ 3,648,010$ 682,352$ 32,856,265$ The accompanying notes are an integral part of these financial statements. 28 CITY OF EDINA, MINNESOTA RECONCILIATION OF THE STATEMENT OF REVENUES,Statement 5 EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For The Year Ended December 31, 2006 Amounts reported for governmental activities in the statement of activities (page 24-25) are different because: Net changes in fund balances - total governmental funds (page 28)(10,518,608)$ Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period.2,103,511 In the statement of activities, only the gain on the sale of capital assets is reported. However, in the governmental funds, the proceeds from the sale increases financial resources. Thus, the change in net assets differs from the change in fund balance by the cost of the capital assets sold.(74,495) Revenues in the statement of activities that do not provide current financial resources (property tax and special assessment receivables) are not reported as revenues in the funds.822,745 The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items.15,020,000 Some expenses reported in the statement of activities do not require the use of current financial resources (accrued interest and amortization on debt and compensated absences payable) and, therefore, are not(30,067) reported as expenditures in governmental funds. Change in net assets of governmental activities (page 25)7,323,086$ The accompanying notes are an integral part of these financial statements. 29 CITY OF EDINA, MINNESOTA STATEMENT OF NET ASSETS Statement 6 PROPRIETARY FUNDS December 31, 2006 Nonmajor AquaticGolfEnterprise UtilitiesLiquorCenterCourseFundsTotal Assets: Current assets: Cash and cash equivalents4,700$ 28,422$ 5,626$ 15,616$ 48,434$ 102,798$ Investments301,245 - - - 4,371,402 4,672,647 Interest receivable12,245 - - - 31,307 43,552 Accounts receivable, net3,153,268 - 510 1,039 214,167 3,368,984 Special assessments receivable168,274 - - - - 168,274 Due from other funds- 1,025,000 800,000 - - 1,825,000 Due from other governments1,687 - - - - 1,687 Inventory5,339 1,039,845 - 51,409 15,865 1,112,458 Total current assets3,646,758 2,093,267 806,136 68,064 4,681,175 11,295,400 Noncurrent assets: Deferred charges11,428 - 2,398 4,411 2,781 21,018 Net capital assets41,567,645 1,356,755 2,317,234 5,728,123 4,102,191 55,071,948 Total noncurrent assets41,579,073 1,356,755 2,319,632 5,732,534 4,104,972 55,092,966 Total assets45,225,831 3,450,022 3,125,768 5,800,598 8,786,147 66,388,366 Liabilities: Current liabilities: Accounts payable511,816 241,055 445 64,518 184,671 1,002,505 Salaries payable18,188 29,908 319 19,501 31,949 99,865 Accrued interest payable49,881 - 24,578 57,379 9,323 141,161 Contracts payable146,649 - - - - 146,649 Pooled cash payable- - - 550,000 - 550,000 Due to other funds1,425,000 - - 340,000 60,000 1,825,000 Due to other governments1,614 120,335 526 5,479 5,361 133,315 Deposits payable15,681 - - 3,783 - 19,464 Unearned revenue- 4,274 - 21,029 54,108 79,411 Compensated absences payable 83,684 74,723 - 98,225 110,774 367,406 Bonds payable - current690,000 - 115,000 590,000 200,000 1,595,000 Total current liabilities2,942,513 470,295 140,868 1,749,914 656,186 5,959,776 Noncurrent liabilities: Compensated absences payable125,527 112,085 - 147,336 166,161 551,109 Bonds payable, net of unamortized discounts2,845,889 - 1,072,556 2,154,476 443,290 6,516,211 Total noncurrent liabilities2,971,416 112,085 1,072,556 2,301,812 609,451 7,067,320 Total liabilities5,913,929 582,380 1,213,424 4,051,726 1,265,637 13,027,096 Net assets: Invested in capital assets, net of related debt38,043,184 1,356,755 1,132,076 2,988,058 3,461,682 46,981,755 Unrestricted1,268,718 1,510,887 780,268 (1,239,186) 4,058,828 6,379,515 Total net assets39,311,902$ 2,867,642$ 1,912,344$ 1,748,872$ 7,520,510$ 53,361,270$ Business-type Activities - Enterprise Funds The accompanying notes are an integral part of these financial statements. 30 CITY OF EDINA, MINNESOTA STATEMENT OF REVENUES, EXPENSES AND Statement 7 CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS For The Year Ended December 31, 2006 Nonmajor AquaticGolfEnterprise UtilitiesLiquorCenterCourseFundsTotal Operating revenues: Sales - liquor-$ 11,014,491$ -$ 108,898$ -$ 11,123,389$ Sales - retail- - 4,173 284,204 77,048 365,425 Sales - utilities11,178,314 - - - - 11,178,314 Sales - concessions- - 113,066 238,162 28,765 379,993 Memberships- - 449,957 113,899 80,120 643,976 Admissions- - 278,150 319,653 521,686 1,119,489 Building rental- - 22,280 71,332 1,365,810 1,459,422 Rental of equipment- - - 398,833 56,225 455,058 Greens fees- - - 1,772,173 165,649 1,937,822 Other fees238,047 - - 336,649 1,041,850 1,616,546 Total operating revenues11,416,361 11,014,491 867,626 3,643,803 3,337,153 30,279,434 Operating expenses: Cost of sales and services38,847 8,111,021 32,477 378,055 41,555 8,601,955 Personal services1,381,144 1,188,028 270,889 1,682,997 1,814,725 6,337,783 Contractual services5,293,230 355,934 120,804 559,631 1,267,403 7,597,002 Commodities671,100 63,039 98,375 356,662 309,595 1,498,771 Central Services385,229 169,262 30,009 103,473 177,174 865,147 Depreciation1,337,593 73,087 192,284 441,148 417,085 2,461,197 Total operating expenses9,107,143 9,960,371 744,838 3,521,966 4,027,537 27,361,855 Operating income (loss)2,309,218 1,054,120 122,788 121,837 (690,384) 2,917,579 Nonoperating revenues (expenses): Intergovernmental109,348 - - - - 109,348 Investment income103,124 - - - 180,647 283,771 Donations- - - - 13,010 13,010 Miscellaneous 5,113 14,954 - 2,817 - 22,884 Interest and fiscal charges(121,364) - (49,671) (116,017) (18,866) (305,918) Gain (loss) on sale of capital asset16,059 (8,592) - (8,695) 9,151 7,923 Amortization of bond discount(6,144) - (1,105) (5,491) (2,246) (14,986) Total nonoperating revenues (expenses)106,136 6,362 (50,776) (127,386) 181,696 116,032 Income (loss) before transfers2,415,354 1,060,482 72,012 (5,549) (508,688) 3,033,611 Transfers: Transfers in- - - - 257,000 257,000 Transfers out(100,000) (995,230) - - - (1,095,230) Total transfers (100,000) (995,230) - - 257,000 (838,230) Change in net assets2,315,354 65,252 72,012 (5,549) (251,688) 2,195,381 Net assets - January 1 36,996,548 2,802,390 1,840,332 1,754,421 7,772,198 51,165,889 Net assets - December 3139,311,902$ 2,867,642$ 1,912,344$ 1,748,872$ 7,520,510$ 53,361,270$ Business-type Activities - Enterprise Funds The accompanying notes are an integral part of these financial statements. 31 CITY OF EDINA, MINNESOTA STATEMENT OF CASH FLOWS Statement 8 PROPRIETARY FUNDS For The Year Ended December 31, 2006 Nonmajor AquaticGolfEnterprise UtilitiesLiquorCenterCourseFundsTotal Cash flows from operating activities: Receipts from customers and users10,316,252$ 11,016,176$ 867,116$ 3,657,461$ 3,258,506$ 29,115,511$ Payment to suppliers(5,940,326) (8,747,388) (282,439) (1,431,847) (1,739,706) (18,141,706) Payment to employees(1,357,826) (1,150,274) (270,922) (1,663,346) (1,786,183) (6,228,551) Donations- - - - 13,010 13,010 Miscellaneous revenue5,113 14,954 - 2,817 - 22,884 Net cash provided by (used in) operating activities3,023,213 1,133,468 313,755 565,085 (254,373) 4,781,148 Cash flows from noncapital financing activities: State grant109,348 - - - - 109,348 Transfer (to) from Enterprise Funds- (195,000) - - 195,000 - Transfer (to) from General Fund- (700,230) - - - (700,230) Transfer (to) from Capital Project Funds(100,000) (100,000) - - 62,000 (138,000) Net interfund borrowing1,145,000 (245,000) (170,000) 260,000 60,000 1,050,000 Net cash provided by (used in) noncapital financing activities1,154,348 (1,240,230) (170,000) 260,000 317,000 321,118 Cash flows from capital and related financing activities: Acquisition of capital assets(7,503,269) (8,592) (35,333) (138,996) (215,600) (7,901,790) Sale of capital assets18,614 (8,592) - 21,472 9,450 40,944 Principal paid on bonds(665,000) - (105,000) (575,000) (200,000) (1,545,000) Interest paid on bonds(129,607) - (51,461) (125,865) (21,935) (328,868) Net cash provided by (used in) capital and related financing activities(8,279,262) (17,184) (191,794) (818,389) (428,085) (9,734,714) Cash flows from investing activities: Net changes in investments3,999,137 - - - 153,902 4,153,039 Investment income102,743 - - - 186,098 288,841 Net cash flows provided by (used in) investing activities4,101,880 - - - 340,000 4,441,880 Net increase (decrease) in cash and cash equivalents179 (123,946) (48,039) 6,696 (25,458) (190,568) Cash and cash equivalents - January 14,521 152,368 53,665 8,920 73,892 293,366 Cash and cash equivalents - December 314,700$ 28,422$ 5,626$ 15,616$ 48,434$ 102,798$ Business-type Activities - Enterprise Funds The accompanying notes are an integral part of these financial statements. 32 CITY OF EDINA, MINNESOTA STATEMENT OF CASH FLOWS Statement 8 PROPRIETARY FUNDS For The Year Ended December 31, 2006 Nonmajor AquaticGolfEnterprise UtilitiesLiquorCenterCourseFundsTotal Business-type Activities - Enterprise Funds Reconciliation of operating income to net cash provided (used) by operating activities: Operating income (loss) 2,309,218$ 1,054,120$ 122,788$ 121,837$ (690,384)$ 2,917,579$ Adjustments to reconcile operating income (loss) to net cash flows provided by (used in) operating activities: Depreciation1,337,593 73,087 192,284 441,148 417,085 2,461,197 Donations- - - - 13,010 13,010 Miscellaneous revenue5,113 14,954 - 2,817 - 22,884 Changes in assets and liabilities: Decrease (increase) in receivables(1,084,790) - (510) 51 (80,234) (1,165,483) Decrease (increase) in special assessments(17,114) - - - - (17,114) Decrease (increase) in due from other governments1,795 - - - - 1,795 Decrease (increase) in inventory18,812 15,269 - (36,511) (37) (2,467) Increase (decrease) in accounts payable269,856 (61,343) (221) 8,271 56,400 272,963 Increase (decrease) in salaries payable4,096 12,596 (33) 2,533 8,704 27,896 Increase (decrease) in contracts payable145,819 - - - - 145,819 Increase (decrease) in due to other governments(116) (2,058) (553) 28 (342) (3,041) Increase (decrease) in deposits13,709 - - (5,814) - 7,895 Increase (decrease) in unearned revenue- 1,685 - 13,607 1,587 16,879 Increase (decrease) in compensated absences19,222 25,158 - 17,118 19,838 81,336 Total adjustments713,995 79,348 190,967 443,248 436,011 1,863,569 Net cash provided by (used in) operating activities3,023,213$ 1,133,468$ 313,755$ 565,085$ (254,373)$ 4,781,148$ The accompanying notes are an integral part of these financial statements. 33 CITY OF EDINA, MINNESOTA STATEMENT OF FIDUCIARY NET ASSETS Statement 9 AGENCY FUNDS December 31, 2006 Agency Funds Assets Cash 542,839$ Investments 270,000 Total assets 812,839$ Liabilities Accounts payable 48,215$ Salaries payable 1,607 Due to other governmental units 763,017 Total liabilities 812,839$ The accompanying notes are an integral part of these financial statements. 34 CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 35 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Edina (the City) was incorporated in 1888 and operates under the State of Minnesota Statutory Plan B form of government. The governing body consists of a five-member City Council elected by voters of the City. The financial statements of the City have been prepared in conformity with accounting principles generally accepted in the United States of America (generally accepted accounting principles) as applied to governmental units by the Governmental Accounting Standards Board (GASB). The following is a summary of significant accounting policies. A. FINANCIAL REPORTING ENTITY In accordance with GASB Statement No. 14, “The Financial Reporting Entity” the City’s financial reporting entity consists of (a) the primary government, (b) organizations for which the primary government is financially accountable, and (c) other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity’s financial statements to be misleading or incomplete. The primary government is financially accountable for the component unit if it appoints a voting majority of the component unit’s governing body and is able to impose its will on the component unit or there is a potential for the component unit to provide specific financial benefits to, or impose specific financial burdens on, the primary government. As required by generally accepted accounting principles, the financial statements of the reporting entity include those of the City of Edina (the primary government) and its component units. The component units discussed below are included in the City's reporting entity because of the significance of their operational or financial relationships with the City. COMPONENT UNITS In conformity with generally accepted accounting principles, the financial statements of the component unit have been included in the financial reporting entity as a blended component unit. The Housing and Redevelopment Authority (HRA) is an entity legally separate from the City. However, for financial reporting purposes, the HRA is reported as if it were part of the City's operations because the members of the City Council serve as HRA board members and its activity is confined to the City of Edina. The activity of the HRA is reported in the Special Revenue Funds. Separate financial statements are not prepared for the HRA. B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS The government-wide financial statements (i.e., the statement of net assets and the statement of changes in net assets) report information on all of the nonfiduciary activities of the City. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 36 The statement of activities demonstrates the degree to which the direct expenses of a given function or business-type activity are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or business-type activity. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or business-type activity and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or business type activity. Taxes and other items not included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Aggregated information for the remaining nonmajor governmental and enterprise funds is reported in a single column in the fund financial statements C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. The City’s only fiduciary fund type, agency funds, are custodial in nature and do not have a measurement focus. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers all revenues, except reimbursement grants, to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments are recorded only when payment is due. Property taxes, special assessments, intergovernmental revenues, charges for services and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 37 The City reports the following major governmental funds: The general fund is the government’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The special revenue Housing and Redevelopment Authority fund is used to account for revenues from several sources (property taxes, bond proceeds, investment earnings, etc.) that are designated for housing and redevelopment. The debt service fund accounts for the payment of principal and interest on the Tax Increment, General Obligation, Permanent Improvement Revolving, and Public Project Revenue Bonds. The capital projects construction fund accounts for the various special assessment and state aid projects throughout the City. This fund also provides financing for capital improvements as designated in the City’s capital improvement budget. The City reports the following major proprietary funds: The utility fund accounts for the provision of water, sewer and recycling services to the City’s residents. The liquor fund accounts for the operation of the City’s three liquor stores. The aquatic center fund accounts for the operation of the City’s aquatic center. The golf course fund accounts for the operation of the City’s three golf courses and a golf dome. Additionally, the City reports the following fund type: Agency - the police seizure and Public Safety Training Facility funds account for fees collected for other government agencies and the payroll fund accounts for payroll deductions withheld from employee paychecks but not yet sent to the appropriate party (includes federal and state taxes, health care deductions, etc). Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private- sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The City has elected not to follow subsequent private-sector guidance. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 38 As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are transactions that would be treated as revenues, expenditures or expenses if they involved external organizations, such as buying goods and services or payments in lieu of taxes, are similarly treated when they involve other funds of the City of Edina. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the utilities, liquor, aquatic center, golf course, arena, art center and Edinborough Park/Centennial Lake enterprise funds are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for an allowable use, it is the City’s policy to use restricted resources first, then unrestricted resources as they are needed. Depreciation expense is included in the direct expenses of each function. Interest on long-term debt is considered an indirect expense and is reported separately on the Statement of Activities. D. CASH AND INVESTMENTS The City’s cash and cash equivalents are considered to be deposits and cash on hand for purposes of the cash flow statement. Cash balances from all funds are pooled together and invested to the maximum extent at favorable rates. This also allows certain funds to generate a temporary cash overdraft. Interest earned is allocated as determined by the Investment Advisory Committee. The City provides temporary advances to funds that have insufficient cash balances by means of an advance from another fund shown as interfund receivables in the advancing fund, and an interfund payable in the fund with the deficit, until adequate resources are received. These interfund balances are eliminated on the government-wide financial statements. The City may at times show a temporary cash overdraft of all funds in the aggregate. When this happens, the overdraft will appear in the financial statements as pooled cash payable. The City reports its investments at fair value based on quoted market prices. Changes in fair value of securities in the City’s investment portfolio are recorded as a net change in fair value of investments in the City’s fund financial statements and within general revenues in the government-wide financial statements. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 39 E. RECEIVABLES AND PAYABLES During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. Short-term interfund loans are classified as “due to/from other funds.” All short-term interfund receivables and payables at December 31, 2006 are planned to be eliminated in 2007. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.” Property taxes and special assessments receivables have been reported net of estimated uncollectible accounts. Because utility bills are considered liens on property, no estimated uncollectible amounts are established. Uncollectible amounts are not material for other receivables and have not been reported. F. REVENUE RECOGNITION 1. PROPERTY TAX REVENUE RECOGNITION The City Council annually adopts a tax levy and certifies it to the County in December (levy/assessment date) of each year for collection in the following year. The County is responsible for billing and collecting all property taxes for itself, the City, the local School District and other taxing authorities. Such taxes become a lien on January 1 and are recorded as receivables by the City at that date. Real property taxes are payable (by property owners) on May 15 and October 15 of each calendar year. Personal property taxes are payable by taxpayers on February 28 and June 30 of each year. These taxes are collected by the County and remitted to the City on or before July 7 and December 2 of the same year. Delinquent collections for November and December are received the following January. The City has no ability to enforce payment of property taxes by property owners. The County possesses this authority. GOVERNMENT-WIDE FINANCIAL STATEMENTS The City recognizes property tax revenue in the period for which the taxes were levied. Uncollectible property taxes are not material and have not been reported. GOVERNMENTAL FUND FINANCIAL STATEMENTS The City recognizes property tax revenue when it becomes both measurable and available to finance expenditures of the current period. In practice, current and delinquent taxes and State credits received by the City in July, December and January are recognized as revenue for the current year. Taxes collected by the County by December 31 (remitted to the City the following January) and taxes and credits not received at the year end are classified as delinquent and due from County taxes receivable. The portion of delinquent taxes not collected by the City in January are fully offset by deferred revenue because they are not available to finance current expenditures. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 40 2. SPECIAL ASSESSMENT REVENUE RECOGNITION Special assessments are levied against benefited properties for the cost or a portion of the cost of special assessment improvement projects in accordance with State Statutes. These assessments are collectible by the City over a term of years usually consistent with the term of the related bond issue. Collection of annual installments (including interest) is handled by the County Auditor in the same manner as property taxes. Property owners are allowed to (and often do) prepay future installments without interest or prepayment penalties. Once a special assessment roll is adopted, the amount attributed to each parcel is a lien upon that property until full payment is made or the amount is determined to be excessive by the City Council or court action. If special assessments are allowed to go delinquent, the property is subject to tax forfeit sale. Pursuant to State Statutes, a property shall be subject to a tax forfeit sale after three years unless it is homesteaded, agricultural or seasonal recreational land in which event the property is subject to such sale after five years. GOVERNMENT-WIDE FINANCIAL STATEMENTS The City recognizes special assessment revenue in the period that the assessment roll was adopted by the City Council. Uncollectible special assessments are not material and have not been reported. GOVERNMENTAL FUND FINANCIAL STATEMENTS Revenue from special assessments is recognized by the City when it becomes measurable and available to finance expenditures of the current fiscal period. In practice, current and delinquent special assessments received by the City are recognized as revenue for the current year. Special assessments that are collected by the County by December 31 (remitted to the City the following January) and are also recognized as revenue for the current year. All remaining delinquent, deferred and special deferred assessments receivable in governmental funds are completely offset by deferred revenues. G. INVENTORIES, PREPAID ITEMS AND DEFERRED CHARGES Inventories of the proprietary funds are stated at cost and are recorded as expenditures when consumed rather than when purchased. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. Deferred charges represent deferred issuance costs. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 41 H. CAPITAL ASSETS Capital assets, which include property, plant, equipment and parks, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are also reported in the proprietary fund financial statements but not in the governmental fund financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 (amount not rounded) and an estimated useful life in excess of three years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Infrastructure assets include all of the City’s assets since inception. Property, plant and equipment of the primary government is depreciated using the straight line method over the following estimated useful lives: Assets Life Golf course 10 - 35 years Land improvements 20 – 50 years Buildings and structures 20 - 40 years Furniture and office equipment 5 - 10 years Vehicles and equipment 3 - 20 years Parks 5 - 100 years Distribution system 50 years Collection system 10 - 50 years Storm sewers 50 years Wells 7 - 30 years I. COMPENSATED ABSENCES It is the City's policy to permit employees to accumulate earned but unused vacation and sick pay benefits. All vacation pay is accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. In accordance with the provisions of Statement of Governmental Accounting Standards No. 16, Accounting for Compensated Absences, no liability is recorded for nonvesting accumulating rights to receive sick pay benefits. However, a liability is recognized for that portion of accumulating sick leave benefits that is vested as severance pay. According to City policy, vested sick leave benefits are liquidated into a health care savings plan upon separation. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 42 J. LONG-TERM OBLIGATIONS In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bond using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued plus any premium received is reported as other financing sources. Discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. K. FUND EQUITY In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. L. INTERFUND TRANSACTIONS Interfund services provided and used are accounted for as revenues, expenditures or expenses. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund, are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the fund that is reimbursed. Interfund loans are reported as an interfund loan receivable or payable which offsets the movement of cash between funds. All other interfund transactions are reported as transfers. M. NET ASSETS Net assets represent the difference between assets and liabilities in the government-wide and proprietary fund financial statements. Net assets invested in capital assets, net of related debt, consists of capital assets, net of accumulated depreciation, reduced by the outstanding balance of any long-term debt used to build or acquire the capital assets. Net assets are reported as restricted when there are limitations imposed on their use through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 43 N. USE OF ESTIMATES The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates that affect amounts reported in the financial statements during the reporting period. Actual results could differ from such estimates. O. JOINT VENTURES The City’s investment in joint venture is reported in the statement of net assets as governmental activities capital assets and is equal to the City’s interest in the net assets of the joint venture. The City’s interest is based on the allocation in the joint powers agreement. P. CHANGES IN ACCOUNTING PRINCIPLE The Governental Accounting Standards Board (GASB) issued Statement No. 34, Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments, Statement No. 37, Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments – Omnibus, and Statement No. 38, Certain Financial Statement Note Disclosures. These statements collectively comprise a change in financial reporting requirements for state and local governments. The City of Edina began implementation of these changes during fiscal year 2003, as required by the statements. In 2003, the City began prospective reporting of all general infrastructure assets in the Statement of Net Assets, but elected to delay retroactive reporting of roadway infrastructure assets until an accurate inventory could be completed. The City completed an inventory of roadway infrastructure assets in 2006. As a result of changes in the City’s infrastructure inventory, the previously reported governmental activities net assets as of December 31, 2005 reconcile to the governmental net assets, as restated in the current report, as follows: Governmental activities net assets, previously reported71,967,764$ Historical cost of infrastructure added43,230,246 Accumulated depreciation on added assets(37,427,026) Governmental activities net assets, as restated77,770,984$ CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 44 Note 2 RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS A. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND BALANCE SHEET AND THE GOVERNMENT-WIDE STATEMENT OF NET ASSETS The governmental fund balance sheet includes a reconciliation between fund balance – total governmental funds and net assets – governmental activities as reported in the government- wide statement of net assets. One element of that reconciliation explains that “long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds.” The details of this difference are as follows: Bonds payable43,670,000$ Plus: issuance premium61,498 Less: issuance discount(276,290) Less: deferred charge for issuance costs(268,926) Accrued interest payable655,841 Compensated absences3,195,033 Net adjustment to reduce fund balance - total governmental funds to arrive at net assets - governmental activities47,037,156$ B. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES AND THE GOVERNMENT-WIDE STATEMENT OF ACTIVITIES The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances – total governmental funds and changes in net assets of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation explains that “Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense.” The details of this difference are as follows: Capital outlay6,727,940$ Depreciation expense(4,624,429) Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental funds2,103,511$ CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 45 Another element of that reconciliation states that “Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds.” The details of this difference are as follows: Compensated absences(241,733)$ Accrued interest297,897 Amortization of issuance costs(58,433) Amortization of bond discounts(27,798) Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities(30,067)$ Note 3 CASH AND INVESTMENTS A. COMPONENTS OF CASH AND INVESTMENTS Cash and investments at year-end consist of the following: Deposits(15,885)$ Cash on hand16,886 Investments40,111,894 40,112,895$ Cash and investments are presented in the financial statements as follows: Cash and cash equivalents - Statement of Net Assets183,162$ Investments - Statement of Net Assets39,841,894 Pooled cash payable - Statement of Net Assets(725,000) Cash and investments - Statement of Fiduciary Net Assets812,839 40,112,895$ CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 46 B. DEPOSITS In accordance with applicable Minnesota Statutes, the City maintains deposits at depository banks authorized by the City Council, including checking accounts, savings accounts and certificates of deposit. 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% 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. The City’s investment policy does not contain further restrictions on the types of collateral required. At year-end, the carrying amount of the City’s deposits was ($15,885) while the balance on the bank records was $1,182,339. At December 31, 2006, all deposits were fully covered by federal depository insurance, surety bonds, or by collateral held by the City’s agent in the City’s name. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 47 C. INVESTMENTS The City has the following investments at year end: Rating Agency < 1 1 to 5 5 to 10 10 +Total U.S. TreasuriesN/AN/A-$ 67,399$ 576,417$ 603,019$ 1,246,835$ GNMAN/AN/A- - - 63,181 63,181 SBA PoolsN/RN/A- - 203,390 1,043,304 1,246,694 U.S. AgenciesAA-/Aa2S&P/Mdy's- - 247,519 - 247,519 U.S. AgenciesAAA/AaaS&P/Mdy's1,542,777 2,246,268 367,877 3,703,554 7,860,476 MunicipalsAS&P- 14,856 - - 14,856 MunicipalsAA-/Aa2S&P/Mdy's19,869 29,125 - - 48,994 MunicipalsAAA/Aa1S&P/Mdy's30,283 127,777 76,937 10,247 245,244 MunicipalsSP1/MIG1S&P/Mdy's10,000 - - - 10,000 Commercial PaperA1/P1/S&P/Mdy's/ F1Fitch24,286,427 - - - 24,286,427 Negotiable CD'sN/RN/A934,700 - - - 934,700 Interfund DebtN/RN/A1,400,000 - - - 1,400,000 28,224,056$ 2,485,425$ 1,472,140$ 5,423,305$ 37,604,926 Money Market*AAAS&P2,484,060 Money Market*N/RN/A22,908 Total investments 40,111,894$ N/A - Not Applicable N/R - Not Rated * - The City's money market investments don't have maturities Credit Risk Investment Interest Risk - Maturity Duration in Years 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’s investment policy specifically addresses custodial credit risk, requiring the City to limit its exposure by purchasing insured or registered investments, or by the control of who holds the securities. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 48 Credit risk – This is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Minnesota Statutes limit the City’s investments to direct obligations or obligations guaranteed by the United States or its agencies; shares of investment companies registered under the Federal Investment Company Act of 1940 that receive the highest credit rating, are rated in one of the two highest rating categories by a statistical rating agency, and all of the investments have a final maturity of thirteen months or less; general obligations rated “AA” or better; general obligations of the Minnesota Housing Finance Agency rated “A” or better; bankers’ acceptances of United States banks eligible for purchase by the Federal Reserve System; commercial paper issued by United States corporations or their Canadian subsidiaries, rated of the highest quality category by at least two nationally recognized rating agencies, and maturing in 270 days or less; Guaranteed Investment Contracts guaranteed by a United States commercial bank, domestic branch of a foreign bank, or a United States insurance company, and with a credit quality in one of the top two highest categories; repurchase or reverse repurchase agreements and securities lending agreements with financial institutions qualified as a “depository” by the government entity, with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000, that are a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York, or certain Minnesota securities broker-dealers. The City’s investment policies specifically address credit risk, further limiting the City’s exposure to credit risk by requiring that all state and local government obligations to be rated “AA” or better by a national rating agency. Concentration risk – This is the risk associated with investing a significant portion of the City’s investment (considered 5 percent or more) in the securities of a single issuer, excluding U.S. guaranteed investments (such as Treasuries), investment pools, and mutual funds. The City’s investment policies specifically address the City’s desire to limit concentration risk, but do not set specific guidelines for measurement of this risk. At year-end, the City’s investments include 6.97%, 12.37%, and 12.35% in securities issued by FNMA, General Electric, and New Center, respectively. Interest rate risk – This is the risk of potential variability in the fair value of fixed rate investment resulting in changes in interest rates (the longer the period for which an interest rate is fixed, the greater the risk). The City’s investment policies specifically address the City’s desire to limit interest rate risk, but do not set specific guidelines for measurement of this risk. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 49 Note 4 CAPITAL ASSETS Capital asset activity for the year ended December 31, 2006 is as follows: Beginning Balance,Ending As Restated Increases Decreases Balance Governmental activities: Capital assets not being depreciated: Land15,783,410$ 79,689$ -$ 15,863,099$ Investment in joint venture1,452,465 - - 1,452,465 Construction in progress5,395,934 8,150,950 (5,518,056) 8,028,828 Total capital assets not being depreciated22,631,809 8,230,639 (5,518,056) 25,344,392 Capital assets being depreciated: Land improvements21,717,062 - - 21,717,062 Buildings and structures30,413,428 - - 30,413,428 Furniture and office equipment2,579,251 43,483 (42,255) 2,580,479 Vehicles and equipment12,536,853 1,154,688 (693,894) 12,997,647 Infrastructure60,618,207 2,309,526 - 62,927,733 Parks10,955,421 660,524 (53,402) 11,562,543 Total capital assets being depreciated138,820,222 4,168,221 (789,551) 142,198,892 Less accumulated depreciation for: Land improvements(9,107,616) (838,509) - (9,946,125) Buildings and structures(7,588,497) (810,021) - (8,398,518) Furniture and office equipment(774,193) (192,534) 50,208 (916,519) Vehicles and equipment(5,482,608) (1,084,672) 478,857 (6,088,423) Infrastructure(40,988,527) (1,293,742) - (42,282,269) Parks(5,013,133) (404,951) 33,127 (5,384,957) Total accumulated depreciation(68,954,574) (4,624,429) 562,192 (73,016,811) Total capital assets being depreciated, net69,865,648 (456,208) (227,359) 69,182,081 Governmental activities capital assets, net92,497,457$ 7,774,431$ (5,745,415)$ 94,526,473$ Certain capital assets were reclassified to different categories during the year, and these reclassifications are reflected in the “Increases” and “Decreases” columns above. GASB Statement No. 34, Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments permits a phase-in period for reporting major infrastructure assets retroactively through the City’s fiscal year ending December 31, 2006. As a result of implementing this statement using the phase-in period, the City has retroactively added historical costs for streets and right- of-way in this schedule as of January 1, 2006. The previously reported capital assets historical cost was increased by $43,230,246 and accumulated depreciation was increased by $37,427,026 for a net total of $5,803,220 due to this change. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 50 BeginningEnding Balance Increases Decreases Balance Business-type activities: Capital assets not being depreciated: Land1,088,965$ -$ -$ 1,088,965$ Construction in progress2,633,565 6,767,629 (3,575,002) 5,826,192 Total capital assets not being depreciated3,722,530 6,767,629 (3,575,002) 6,915,157 Capital assets being depreciated: Land improvements & golf course7,935,804 194,291 (9,616) 8,120,479 Buildings and structures15,762,208 182,625 (37,800) 15,907,033 Furniture and office equipment149,436 - - 149,436 Vehicles and equipment4,822,084 385,206 (322,812) 4,884,478 Utility infrastructure54,476,004 3,947,041 (122,043) 58,301,002 Lease property capital lease468,580 - - 468,580 Total capital assets being depreciated83,614,116 4,709,163 (492,271) 87,831,008 Less accumulated depreciation for: Land improvements & golf course(3,471,042) (310,149) 9,616 (3,771,575) Buildings and structures(8,014,220) (623,557) 37,500 (8,600,277) Furniture and office equipment(86,003) (21,157) - (107,160) Vehicles and equipment(2,588,777) (330,812) 290,091 (2,629,498) Utility infrastructure(23,043,648) (1,175,522) 122,043 (24,097,127) Lease property capital lease(468,580) - - (468,580) Total accumulated depreciation(37,672,270) (2,461,197) 459,250 (39,674,217) Total capital assets being depreciated, net45,941,846 2,247,966 (33,021) 48,156,791 Business-type activities capital assets, net49,664,376$ 9,015,595$ (3,608,023)$ 55,071,948$ CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 51 Depreciation expense was charged to functions/programs of the primary government as follows: Governmental activities: General government484,465$ Public safety606,850 Public works2,017,622 Parks1,515,492 Total depreciation expense - governmental activities4,624,429$ Business-type activities: Utilities1,337,593$ Liquor73,087 Aquatic Center192,284 Golf Course441,148 Arena298,916 Art Center30,497 Edinborough Park/Centennial Lakes87,672 Total depreciation expense - business-type activities2,461,197$ CONSTRUCTION COMMITMENTS At December 31, 2006, the City had construction project contracts in progress. The commitments related to the remaining contract balances are summarized as follows: ContractRemaining Project #Project DescriptionAmountCommitment N/AGymnasiums532,839$ 720$ N/ACourtney Field788,123 256,287 05-6 EngStreet/Sidewalk Reconstruction48,706 4,965 05-3 PWWatermain107,450 6,280 06-1 PWBackwash Recycling2,711,763 52,613 06-8 EngStorm Sewer189,476 16,807 337,672$ Note 5 LONG-TERM DEBT The City has five types of bonded debt outstanding at December 31, 2006: tax increment bonds, general obligation bonds, public improvement revolving bonds, public project revenue bonds and G.O. revenue bonds. The first type of bond is payable solely from tax increment monies with any deficiency to be provided for by general property taxes. The second type is payable from general property taxes. The third type is payable from special assessments. The fourth type is payable solely from annual appropriation lease payments received from the City of Edina pursuant to a lease between the Edina Housing and CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 52 Redevelopment Authority and the City. The fifth type is payable primarily from enterprise revenue with any deficiency to be provided for by general property taxes. The reporting entity’s long-term debt is segregated between the amounts to be repaid from governmental activities and amounts to be repaid from business-type activities. GOVERNMENTAL ACTIVITIES As of December 31, 2006, the governmental long-term bonded debt of the financial reporting entity consisted of the following: Final InterestIssueMaturityOriginalPayable Rates Date Date Issue 12/31/06 Tax Increment Bonds: Tax Increment Bonds, Series 2000A4.30-4.809/6/20002/1/20112,620,000$ 1,465,000$ Tax Increment Bonds, Series 2002B3.00%8/5/20022/1/20091,400,000 1,400,000 Tax Increment Refunding Bonds, Series 2005B3.00%7/19/20052/1/200910,520,000 8,870,000 Tax Increment Taxable Refunding Bonds, Series 2005C3.75-4.257/19/20052/1/20096,220,000 5,220,000 Tax Increment Refunding Bonds, Series 2005D3.00-3.407/19/20052/1/20133,505,000 3,505,000 Total Tax Increment Bonds24,265,000 20,460,000 General Obligation Bonds: General Obligation Equipment Certificates, Series 2003A1.05-2.043/1/20032/1/20081,540,000 295,000 General Obligation - Park & Recreation Refunding, 2005A3.50-4.007/19/20052/1/20175,375,000 5,375,000 Total General Obligation Bonds6,915,000 5,670,000 Permanent Improvement Revolving (PIR) Bonds: Permanent Improvement Revolving, 2005E3.00-3.759/13/20052/1/20161,460,000 1,460,000 Total PIR Bonds1,460,000 1,460,000 Public Project Revenue Bonds: Public Project Revenue, Series 20024.00-5.251/1/20022/1/202112,410,000 10,655,000 Public Project Revenue, Series 20053.50-4.139/13/20055/1/20265,425,000 5,425,000 Total Public Project Revenue Bonds17,835,000 16,080,000 Total bonded indebtedness - governmental activities50,475,000$ 43,670,000$ CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 53 BUSINESS-TYPE ACTIVITIES Final InterestIssueMaturityOriginalPayable Rates Date Date Issue 12/31/06 Revenue Bonds: Recreational Facility Bonds, Series 1999B3.70-4.455/3/19991/1/20133,270,000$ 2,260,000$ Recreational Facility Bonds, Series 2001A2.25-4.6511/1/20011/1/20174,620,000 2,335,000 Utility Revenue Bonds, Series 1999A3.20-4.205/3/19992/1/20093,600,000 1,215,000 Utility Revenue Bonds, Series 2003C1.10-3.553/1/20032/1/20133,200,000 2,335,000 Total Revenue Bonds14,690,000 8,145,000 Total bonded indebtedness - business-type activities14,690,000$ 8,145,000$ Annual debt service requirements to maturity for the City’s bonds are as follows: Principal Interest Principal Interest Principal Interest 20074,795,000$ 625,606$ 545,000$ 197,188$ 160,000$ 46,694$ 20085,650,000 445,694 570,000 179,587 155,000 41,969 20095,890,000 244,236 435,000 162,825 150,000 37,206 2010805,000 125,820 455,000 147,250 150,000 32,331 2011840,000 94,359 470,000 131,062 150,000 27,363 2012-20162,480,000 57,795 2,620,000 379,294 695,000 62,046 2017-2021- - 575,000 11,500 - - Total20,460,000$ 1,593,510$ 5,670,000$ 1,208,706$ 1,460,000$ 247,609$ Principal Interest Principal Interest 2007690,000$ 725,855$ 1,595,000$ 276,999$ 2008715,000 696,118 1,560,000 221,821 2009745,000 665,192 1,600,000 163,542 2010780,000 632,880 715,000 120,095 2011810,000 598,880 750,000 92,524 2012-20164,645,000 2,383,255 1,835,000 123,442 2017-20215,890,000 1,121,597 90,000 2,092 2022-20261,805,000 192,535 - - Total16,080,000$ 7,016,312$ 8,145,000$ 1,000,515$ Public ProjectRevenue Business-type Activities Bonds Governmental Activities Revenue Bonds Increment Bonds Obligation Bonds Revolving Bonds Governmental Activities GeneralPublic ImprovementTax Year Ending December 31 Year Ending December 31 CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 54 CHANGE IN LONG-TERM LIABILITIES Long-term liability activity for the year ended December 31, 2006, was as follows: BeginningEndingDue Within Balance Additions Reductions Balance One Year Governmental activities: Bonds payable: Tax increment28,905,000$ -$ (8,445,000)$ 20,460,000$ 4,795,000$ General obligation11,765,000 - (6,095,000) 5,670,000 545,000 PIR1,460,000 - - 1,460,000 160,000 Public project revenue16,560,000 - (480,000) 16,080,000 690,000 Less deferred amounts: Discount on bonds(319,593) - 43,303 (276,290) - Premiums77,003 - (15,505) 61,498 - Total bonds payable58,447,410 - (14,992,202) 43,455,208 6,190,000 Compensated absences2,953,300 1,573,290 (1,331,557) 3,195,033 1,278,013 Governmental activity Long-term liabilities 61,400,710$ 1,573,290$ (16,323,759)$ 46,650,241$ 7,468,013$ Business-type activities: Bonds payable: Revenue bonds9,690,000 - (1,545,000) 8,145,000 1,595,000 Less deferred amounts: Discount on bonds(43,201) - 9,412 (33,789) - Total bonds payable9,646,799 - (1,535,588) 8,111,211 1,595,000 Compensated absences837,179 336,759 (255,423) 918,515 367,406 Business-type activity Long-term liabilities 10,483,978$ 336,759$ (1,791,011)$ 9,029,726$ 1,962,406$ For governmental activities, compensated absences are generally liquidated by the general fund. The City issued $5,375,000 of General Obligation Park & Recreation Refunding Bonds, Series 2005A to provide resources for a “crossover refunding” of the 2007 through 2017 maturities of the $5,575,000 General Obligation Park & Recreation Bonds, Series 1996B. The proceeds of the 2005 issue were placed in an escrow account until the February 1, 2006 call date of the refunded issue. The crossover refunding included $199,747 of City funds in addition to the refunding bond proceeds. The crossover refunding was undertaken to reduce total debt service payments by $957,250 and resulted in an economic gain of $565,887. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 55 The City issued $3,505,000 of General Obligation Tax Increment Refunding Bonds, Series 2005D to provide resources for a “crossover refunding” of the 2007 through 2013 maturities of the $3,460,000 General Obligation Tax Increment Bonds, Series 1997B. The proceeds of the 2005 issue were placed in an escrow account until the February 1, 2006 call date of the refunded issue. The crossover refunding was undertaken to reduce total debt service payments by $263,373 and resulted in an economic gain of $229,532. Note 6 LEGAL DEBT MARGIN The City is subject to a statutory limitation by the State of Minnesota for bonded indebtedness payable principally from property taxes. The City of Edina's legal debt margin for 2006 is computed as follows: December 31, 2006 Market Value (after fiscal disparities)9,598,697,600$ Debt Limit (2% of Market Value)191,973,952$ Amount of debt applicable to debt limit: Total bonded debt51,815,000$ Less: Tax increment bonds(20,460,000) Public improvement revolving bonds(1,460,000) Public project revenue bonds(16,080,000) Revenue bonds(8,145,000) Fund balance in related Debt Service Funds(1,979,046) Total debt applicable to debt limit 3,690,954$ Legal debt margin 188,282,998$ Note 7 DEFINED BENEFIT PENSION PLANS - STATEWIDE A. PLAN DESCRIPTION All full-time and certain part-time employees of the City of Edina are covered by defined benefit plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the Public Employees Retirement Fund (PERF) and the Public Employees Police and Fire Fund (PEPFF) which are cost-sharing, multiple-employer retirement plans. These plans are established and administered in accordance with Minnesota Statute, Chapters 353 and 356. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 56 PERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. All new members must participate in the Coordinated Plan. All police officers, firefighters and peace officers who qualify for membership by statute are covered by the PEPFF. PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by State Statute, and vest after three years of credited service. The defined retirement benefits are based on a member’s highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. Two methods are used to compute benefits for PERF’s Coordinated and Basic 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 for a Basic Plan member is 2.2% of average salary for each of the first 10 years of service and 2.7% for each remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2% of average salary for each of the first 10 years and 1.7% for each remaining year. Under Method 2, the annuity accrual rate is 2.7% of average salary for Basic Plan members and 1.7% for Coordinated Plan members for each year of service. For PEPFF members, the annuity accrual rate is 3.0% for each year of service. For all PEPFF and PERF 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 and 65 for Basic and Coordinated members hired prior to July 1, 1989. Normal retirement age is the age for unreduced Social Security benefits capped at 66 for Coordinated 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 the 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 PERF and PEPFF. That report may be obtained on the internet at www.mnpera.org, by writing to PERA at 60 Empire Drive #200, St. Paul, Minnesota, 55103-2088 or by calling (651) 296-7460 or 1-800-652-9026. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 57 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. PERF Basic Plan members and Coordinated Plan members were required to contribute 9.10% and 5.50%, respectively, of their covered salary in 2006. Contribution rates in the Coordinated Plan will increase in 2007 to 5.75%. PEPFF members were required to contribute 7.00% of their covered salary in 2006. That rate will increase to 7.8% in 2007. The City of Edina is required to contribute the following percentages of annual covered payroll: 11.78% for Basic Plan PERF members, 6.0% for Coordinated Plan PERF members, and 10.5% for PEPFF members. Employer contribution rates for the Coordinated Plan and PEPFF will increase to 6.25% and 11.7% respectively, effective January 1, 2007. The City’s contributions to the Public Employees Retirement Fund for the years ending December 31, 2006, 2005 and 2004 were $696,014, $619,212, and $614,321, respectively. The City’s contributions to the Public Employees Police and Fire Fund for the years ending December 31, 2006, 2005 and 2004 were $632,892, $539,000, and $537,552, respectively. The City’s contributions were equal to the contractually required contributions for each year as set by state statute. Note 8 INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS The composition of internal balances as of December 31, 2006, is as follows: Payable FundAmount GeneralConstruction1,750,000$ Debt ServiceConstruction175,000 General200,000 HRAGeneral79,299 LiquorUtilities1,025,000 Aquatic CenterUtilities400,000 Golf Course340,000 Edinborough/Centennial Lakes60,000 CommunicationCommunity Development Block Grant13,000 Total 4,042,299$ Receivable Fund The City’s interfund receivables and payables eliminate what would have been negative cash balances. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 58 DebtNonmajor General Service Construction Business-type Total Transfer out: General Fund-$ -$ 50,000$ -$ 50,000$ HRA Fund- 5,827,512 - - 5,827,512 Construction Fund- 87,516 - 62,000 149,516 Utilities Fund- - 100,000 - 100,000 Liquor Fund700,230 - 100,000 195,000 995,230 700,230$ 5,915,028$ 250,000$ 257,000$ 7,122,258$ Transfer In: Interfund transfers allow the City to allocate financial resources to the funds that receive benefit from services provided by another fund. Many of the City’s interfund transfers fall under that category. Non- routine transfers include the following: 1. The liquor fund transferred $700,230, $110,000, and $85,000 to the general fund, art center, and arena funds, respectively, to subsidize operations. 2. The construction fund transferred $37,000 and $25,000 to the art center and arena funds, respectively to subsidize capital improvements to those facilities. 3. The general fund transferred $50,000 to the construction fund to fund the capital improvement program. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 59 Note 9 TAX INCREMENT DISTRICTS The City of Edina is the administering authority for the following Tax Increment Districts: District number 1200 (50th and France Commercial Area) is a redevelopment district established in 1974 pursuant to Minnesota Statutes with a termination date of 2009. District number 1201 (Southeast Edina Redevelopment District – Edinborough) is a redevelopment district established in 1977 pursuant to Minnesota Statutes with a termination date of 2009. District number 1202 (Grandview Commercial Area) is a redevelopment district established in 1984 pursuant to Minnesota Statutes with a termination date of 2010. District number 1203 (Southeast Edina Redevelopment District – Centennial Lakes) is a redevelopment district established in 1988 pursuant to Minnesota Statutes with a termination date of 2016. District number 1207 (70th and Cahill Economic Development District) is an economic district established in 1990 pursuant to Minnesota Statutes with a decertification date of 2000. Increment previously collected is available for expenditures within the larger development district that includes the Wooddale – Valley View commercial area. Tax capacity and debt for this district is not included in the following schedule as county reports no longer indicate captured tax capacity for this district and no debt is outstanding. The following table reflects values as of December 31, 2006: TIF #1200TIF #1201TIF #1202TIF #1203Total Original tax capacity112,826$ 94,319$ 164,885$ 229,691$ 601,721$ Current tax capacity1,129,577 2,944,638 1,274,613 3,232,962 8,581,790 Tax capacity change1,016,751 2,850,319 1,109,728 3,003,271 7,980,069 Captured tax capacity value: Retained captured tax capacity 1,016,751$ 2,850,319$ 1,109,728$ 3,003,271$ 7,980,069$ Total bonds issued (general obligation)5,360,000$ 22,445,000$ 9,637,555$ 35,894,724$ 73,337,279$ Amounts redeemed5,360,000 22,445,000 6,772,555 18,299,724 52,877,279 Outstanding bonds at December 31, 2006-$ -$ 2,865,000$ 17,595,000$ 20,460,000$ CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 60 Note 10 CONTINGENCIES A. RISK MANAGEMENT The City is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters. Worker’s compensation insurance is provided through the League of Minnesota Cities Insurance Trust (LMCIT). The City has a $10,000 deductible per occurrence, with a $500,000 annual maximum. Automobile and general liability coverage is provided through an insurance company. The City pays an annual premium for this coverage and all claims are paid from the plan up to the annual maximum of $600,000. The City is not subject to a deductible for automobile or general liability coverage. Property coverage is also provided by an insurance company. The City pays an annual premium for this coverage, and all claims are paid for by the plan. The City has $2,500 - $25,000 deductibles per occurrence depending on claim type, with an annual maximum of $83,446,936. Police professional insurance coverage is provided by an insurance company. The City pays an annual premium for this coverage, and has a $10,000 deductible per occurrence, with a $500,000 annual maximum. Settlement claims have not exceeded insurance coverage for each of the past three years. There were not significant reductions in insurance coverage during 2006. B. LITIGATION The City attorney has indicated that existing and pending lawsuits, claims and other actions in which the City is a defendant are either covered by insurance; of an immaterial amount; or, in the judgment of the City attorney, remotely recoverable by plaintiffs. C. FEDERAL AND STATE FUNDS The City receives financial assistance from federal and state governmental agencies in the form of grants. The disbursement of funds received under these programs generally requires compliance with the terms and conditions specified in the grant agreements and is subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the applicable fund. However, in the opinion of management, any such disallowed claims will not have a material effect on any of the financial statements of the individual fund types included herein or on the overall financial position of the City at December 31, 2006. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 61 D. TAX INCREMENT DISTRICTS The City’s tax increment districts are subject to review by the State of Minnesota Office of the State Auditor (OSA). Any disallowed claims or misuse of tax increments could become a liability of the applicable fund. Management is not aware of any instances of noncompliance which would have a material effect on the financial statements. Note 11 CONDUIT DEBT OBLIGATION As of December 31, 2006, the City of Edina had 3 series of Housing and Health Care Revenue Bonds, with an aggregate principal amount payable of $29,850,000. The bonds are payable solely from revenues of the respective organizations and do not constitute an indebtedness of the City, and are not a charge against its general credit or taxing power. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. Note 12 JOINT VENTURE The City is a participant with the City of Bloomington, the City of Eden Prairie and the Metropolitan Airport Commission in a joint venture to construct and operate a facility to be used for the training of law enforcement officers and firefighters. The South Metro Public Safety Training Facility Association (PSTF) is governed by a Board consisting of one representative from each Member. On dissolution of the Association, the Facility shall revert to the City of Edina, and all remaining assets shall be divided among the members based on the Cost Sharing Formula. In accordance with the joint venture agreement, each member of the association will share in the cost of the construction and operation based on the Cost Sharing Formula. The City’s net investment is reported in the governmental activities capital assets. The City’s equity interest in the PSTF was $1,452,465. Complete financial statements for PSTF can be obtained from the City of Edina, 4801 West 50th Street, Edina, MN 55424. Note 13 RELATED PARTY TRANSACTIONS The City pays an annual membership fee to the South Metro Public Safety Training Facility as part of the joint venture agreement. The membership fee is paid by the Police and Fire departments and is based on a Cost Sharing Formula. For the year ended December 31, 2006, the City paid a total of $34,505 in membership fees to the PSTF. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2006 62 Note 14 DESIGNATIONS AND RESERVATIONS OF FUND BALANCE At December 31, 2006 the City had designated and reserved portions of its various fund balances through legal restriction and City Council authorization. A summary of such designations is as follows: December 31, 2006 General Fund: Reserved for prepaid items36,849$ Designated for park dedication192,918 Designated for investments51,481 Designated for equipment replacement2,512,308 Designated for compensated absences1,278,013 Designated for cash flow8,567,724 Debt Service Fund: Reserved for debt service2,194,313 Construction Fund: Reserved for encumbrances261,972 Reserved for special projects225,953 Designated for capital improvements3,160,085 18,481,616$ Note 15 SUBSEQUENT EVENTS On May 24, 2007, the City issued $5,865,000 of General Obligation Capital Improvement Plan Bonds, Series 2007A to finance the demolition of Fire Station #1 and construction of a new Fire Station at the same site. The interest rate on the bonds ranges from 4.0 – 4.25 percent and the final maturity date is February 1, 2028. On May 24, 2007, the City issued $8,210,000 of General Obligation Utility Revenue Bonds, Series 2007B to finance various utility improvement projects. The interest rate on the bonds is 4.0 percent and the final maturity date is February 1, 2017. On May 24, 2007, the City issued $5,870,000 of General Obligation Permanent Improvement Revolving Fund Bonds, Series 2007C to finance various special assessment projects. The interest rate on the bonds ranges from 3.6 – 4.25 percent and the final maturity date is February 1, 2019. CITY OF EDINA, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2006 Variance with 2006Final Budget - ActualOver OriginalFinalAmounts(Under) Revenues: General property taxes: Current18,087,487$ 18,087,487$ 18,153,570$ 66,083$ Penalties and interest15,000 15,000 12,450 (2,550) Total general property taxes18,102,487 18,102,487 18,166,020 63,533 Licenses and permits:2,256,550 2,256,550 3,458,140 1,201,590 Intergovernmental: Federal:35,000 35,000 197,308 162,308 State: Municipal state aid195,000 195,000 195,000 - Other170,608 170,608 181,322 10,714 State aid - police 320,000 320,000 354,676 34,676 Health programs- - 121,217 121,217 Total intergovernmental720,608 720,608 1,049,523 328,915 Charges for services: Building Department1,800 1,800 6,730 4,930 City Clerk- - 10,473 10,473 Fire Department33,000 33,000 29,710 (3,290) Ambulance fees1,237,300 1,237,300 1,452,299 214,999 Police Department235,360 235,360 199,046 (36,314) Engineering117,000 117,000 227,757 110,757 Health Department6,200 6,200 7,978 1,778 Planning Department24,000 24,000 38,443 14,443 Housing Foundation Contract31,700 31,700 23,655 (8,045) HRA Services20,000 20,000 22,604 2,604 Park Registration78,800 78,800 93,218 14,418 Senior Center104,300 104,300 104,419 119 Other fees5,500 5,500 78,900 73,400 50th & France Assessment69,000 69,000 69,000 - Charges to other funds271,413 271,413 277,488 6,075 Total charges for services2,235,373 2,235,373 2,641,720 406,347 Fines and forfeits875,000 875,000 1,023,935 148,935 Miscellaneous: Rental of property285,000 285,000 308,535 23,535 Investment income150,000 150,000 298,299 148,299 Donations5,000 5,000 15,539 10,539 Other5,000 5,000 96,879 91,879 Total miscellaneous445,000 445,000 719,252 274,252 Total revenues24,635,018 24,635,018 27,058,590 2,423,572 Budgeted Amounts 63 CITY OF EDINA, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND (CONTINUED) For The Year Ended December 31, 2006 Variance with 2006Final Budget - ActualUnder OriginalFinalAmounts(Over) Expenditures: General government: Mayor and Council: Current: Personal services32,258$ 32,258$ 30,224$ 2,034$ Contractual services4,800 4,800 6,905 (2,105) Commodities1,100 1,100 558 542 Central services28,548 28,548 31,063 (2,515) Total mayor and council66,706 66,706 68,750 (2,044) Administration: Current: Personal services799,481 799,481 722,525 76,956 Contractual services144,000 144,000 120,989 23,011 Commodities3,100 3,100 2,114 986 Central services58,956 58,956 63,043 (4,087) Total current1,005,537 1,005,537 908,671 96,866 Capital outlay5,996 5,996 2,464 3,532 Total administration1,011,533 1,011,533 911,135 100,398 Planning: Current: Personal services322,919 322,919 353,400 (30,481) Contractual services35,500 35,500 123,423 (87,923) Commodities1,650 1,650 1,456 194 Central services41,844 41,844 44,828 (2,984) Total current401,913 401,913 523,107 (121,194) Capital outlay1,800 1,800 37 1,763 Total planning403,713 403,713 523,144 (119,431) Finance: Current: Personal services453,064 453,064 448,212 4,852 Contractual services97,600 97,600 91,893 5,707 Commodities2,100 2,100 1,234 866 Central services51,672 51,672 55,093 (3,421) Total current604,436 604,436 596,432 8,004 Capital outlay5,990 5,990 - 5,990 Total finance610,426 610,426 596,432 13,994 Election: Current: Personal services127,344 127,344 178,242 (50,898) Contractual services19,745 19,745 6,769 12,976 Commodities5,440 5,440 8,181 (2,741) Central services22,368 22,368 23,360 (992) Total election174,897 174,897 216,552 (41,655) Budgeted Amounts 64 CITY OF EDINA, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND (CONTINUED) For The Year Ended December 31, 2006 Variance with 2006Final Budget - ActualUnder OriginalFinalAmounts(Over) Budgeted Amounts Assessing: Current: Personal services594,826$ 594,826$ 582,281$ 12,545$ Contractual services102,610 102,610 79,403 23,207 Commodities2,500 2,500 1,301 1,199 Central services61,020 61,020 65,050 (4,030) Total current760,956 760,956 728,035 32,921 Capital outlay12,695 12,695 - 12,695 Total assessing773,651 773,651 728,035 45,616 Legal and court services: Current: Contractual services430,000 430,000 355,906 74,094 Contingencies: Current: Contractual services119,616 119,616 271,267 (151,651) Commodities- - 268 (268) Total contingencies119,616 119,616 271,535 (151,919) City's share of special assessment: Current: Contractual services30,000 30,000 23,056 6,944 Human Rights Commission: Current: Contractual services85,635 85,635 84,378 1,257 Suburban Rate Authority: Current: Contractual services4,000 4,000 4,000 - Edina Resource Center Current: Contractual services34,040 34,040 34,040 - Human Services Planning & Coordination Current: Contractual services23,190 23,190 28,287 (5,097) Records management: Current: Contractual services27,000 27,000 - 27,000 Employee programs Current: Personal services118,200 118,200 68,884 49,316 Contractual services10,800 10,800 11,204 (404) Total employee programs129,000 129,000 80,088 48,912 Dial-a-Ride: Current: Contractual services23,000 23,000 15,434 7,566 Public Artscape: Current: Contractual services- - 16,765 (16,765) Total general government3,946,407 3,946,407 3,957,537 (11,130) 65 CITY OF EDINA, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND (CONTINUED) For The Year Ended December 31, 2006 Variance with 2006Final Budget - ActualUnder OriginalFinalAmounts(Over) Budgeted Amounts Public safety: Police protection: Current: Personal services5,474,994$ 5,474,994$ 5,646,093$ (171,099)$ Contractual services333,081 333,081 325,614 7,467 Commodities70,632 70,632 94,429 (23,797) Central services796,608 796,608 848,792 (52,184) Total current6,675,315 6,675,315 6,914,928 (239,613) Capital outlay250,290 250,290 658,888 (408,598) Total police protection6,925,605 6,925,605 7,573,816 (648,211) Fire protection: Current: Personal services3,217,342 3,217,342 3,212,805 4,537 Contractual services275,019 275,019 338,817 (63,798) Commodities137,000 137,000 147,973 (10,973) Central services265,272 265,272 277,928 (12,656) Total current3,894,633 3,894,633 3,977,523 (82,890) Capital outlay189,695 189,695 239,952 (50,257) Total fire protection4,084,328 4,084,328 4,217,475 (133,147) Civil defense: Current: Personal services34,121 34,121 36,691 (2,570) Contractual services9,220 9,220 7,407 1,813 Commodities1,375 1,375 15 1,360 Total current44,716 44,716 44,113 603 Capital outlay5,356 5,356 - 5,356 Total civil defense50,072 50,072 44,113 5,959 Animal Control: Current: Personal services54,517 54,517 58,428 (3,911) Contractual services8,088 8,088 7,572 516 Commodities3,934 3,934 665 3,269 Central services9,252 9,252 9,692 (440) Total current75,791 75,791 76,357 (566) Capital outlay7,102 7,102 - 7,102 Total animal control82,893 82,893 76,357 6,536 Public health: Current: Personal services253,416 253,416 227,741 25,675 Contractual services178,985 178,985 174,807 4,178 Commodities1,325 1,325 508 817 Central services31,812 31,812 33,959 (2,147) Total current465,538 465,538 437,015 28,523 Capital outlay 5,355 5,355 - 5,355 Total public health470,893 470,893 437,015 33,878 66 CITY OF EDINA, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND (CONTINUED) For The Year Ended December 31, 2006 Variance with 2006Final Budget - ActualUnder OriginalFinalAmounts(Over) Budgeted Amounts Inspections: Current: Personal services619,507$ 619,507$ 659,171$ (39,664)$ Contractual services86,145 86,145 77,756 8,389 Commodities6,100 6,100 7,530 (1,430) Central services74,496 74,496 79,547 (5,051) Total current786,248 786,248 824,004 (37,756) Capital outlay17,915 17,915 622 17,293 Total inspections804,163 804,163 824,626 (20,463) Total public safety12,417,954 12,417,954 13,173,402 (755,448) Public works: Administration: Current: Personal services161,737 161,737 154,960 6,777 Contractual services5,700 5,700 4,760 940 Commodities1,000 1,000 - 1,000 Central services24,492 24,492 26,086 (1,594) Total administration192,929 192,929 185,806 7,123 Engineering: Current: Personal services576,959 576,959 555,356 21,603 Contractual services94,842 94,842 123,288 (28,446) Commodities18,000 18,000 13,542 4,458 Central services81,624 81,624 86,921 (5,297) Total current771,425 771,425 779,107 (7,682) Capital outlay48,152 48,152 70,992 (22,840) Total engineering819,577 819,577 850,099 (30,522) Supervision and overhead: Current: Personal services218,658 218,658 168,077 50,581 Contractual services27,000 27,000 28,246 (1,246) Commodities500 500 - 500 Central services167,436 167,436 174,127 (6,691) Total supervision and overhead413,594 413,594 370,450 43,144 Street maintenance: Current: Personal services1,723,594 1,723,594 1,672,522 51,072 Contractual services667,380 667,380 641,844 25,536 Commodities730,490 730,490 810,183 (79,693) Central services535,908 535,908 561,399 (25,491) Total current3,657,372 3,657,372 3,685,948 (28,576) Capital outlay489,635 489,635 245,623 244,012 Total street maintenance4,147,007 4,147,007 3,931,571 215,436 Total public works5,573,107 5,573,107 5,337,926 235,181 67 CITY OF EDINA, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND (CONTINUED) For The Year Ended December 31, 2006 Variance with 2006Final Budget - ActualUnder OriginalFinalAmounts(Over) Budgeted Amounts Parks: Administration: Current: Personal services570,499$ 570,499$ 561,471$ 9,028$ Contractual services50,102 50,102 74,738 (24,636) Commodities3,301 3,301 4,190 (889) Central services61,008 61,008 65,035 (4,027) Total current684,910 684,910 705,434 (20,524) Capital outlay6,682 6,682 2,278 4,404 Total administration691,592 691,592 707,712 (16,120) Recreation: Current: Personal services185,811 185,811 129,501 56,310 Contractual services152,482 152,482 157,445 (4,963) Commodities43,982 43,982 43,913 69 Total recreation382,275 382,275 330,859 51,416 Maintenance: Current: Personal services1,404,514 1,404,514 1,416,037 (11,523) Contractual services327,275 327,275 258,424 68,851 Commodities182,680 182,680 167,945 14,735 Central services280,452 280,452 293,311 (12,859) Total current2,194,921 2,194,921 2,135,717 59,204 Capital outlay114,542 114,542 91,792 22,750 Total maintenance2,309,463 2,309,463 2,227,509 81,954 Deer control: Current: Contractual services9,450 9,450 13,078 (3,628) Total deer control9,450 9,450 13,078 (3,628) Total parks3,392,780 3,392,780 3,279,158 113,622 Total expenditures25,330,248 25,330,248 25,748,023 (417,775) Revenues over (under) expenditures(695,230) (695,230) 1,310,567 2,005,797 Other financing sources (uses): Transfer from other funds700,230 700,230 700,230 - Transfer to other funds(50,000) (50,000) (50,000) - Sale of capital assets45,000 45,000 54,457 9,457 Total financing sources (uses)695,230 695,230 704,687 9,457 Net increase (decrease) in fund balance-$ -$ 2,015,254 2,015,254$ Fund balance - January 1 11,818,784 Fund balance - December 31 13,834,038$ 68 CITY OF EDINA, MINNESOTA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION December 31, 2006 69 Note A LEGAL COMPLIANCE – BUDGETS The City follows these procedures in establishing the budgetary data reflected in the financial statements: 1. The City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following January 1. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted to obtain taxpayer comments. 3. The budget is legally enacted by the passage of a resolution by the City Council. 4. Formal budgetary integration is employed as a management control device during the year. 5. Budgets for the General Fund and the Community Development Block Grant Fund are adopted on a basis consistent with generally accepted accounting principles (GAAP). 6. The City Manager may authorize transfers of budgeted amounts between departments. 7. Reported budget amounts are as originally adopted or as amended by Council-approved supplemental appropriations and budget transfers. 8. Expenditures may not legally exceed appropriations by department unless offset by increases in revenues. All unencumbered appropriations lapse at year-end. CITY OF EDINA, MINNESOTA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION December 31, 2006 70 Note B EXCESS OF EXPENDITURES OVER APPROPRIATIONS The General Fund budget is legally adopted on a basis consistent with accounting principles generally accepted in the United States of America. The legal level of budgetary control is at the department level for the General Fund. The following is a listing of General Fund departments whose expenditures exceed budget appropriations. FinalOver BudgetActualBudget General Government: Mayor and council66,706$ 68,750$ 2,044$ Planning403,713 523,144 119,431 Elections174,897 216,552 41,655 Contingencies119,616 271,535 151,919 Human services planning23,190 28,287 5,097 Public artscape- 16,765 16,765 Public Safety: Police protection6,925,605 7,573,816 648,211 Fire protection4,084,328 4,217,475 133,147 Inspections804,163 824,626 20,463 Public Works: Engineering819,577 850,099 30,522 Parks: Administration691,592 707,712 16,120 Deer control9,450 13,078 3,628 Excess expenditures in the mayor and council, planning, elections, contingencies, human services planning and coordination, public artscapes, engineering, parks administration and deer control departments are funded by available general fund balance. Excess expenditures in the police protection department are by available general fund balance designated for our equipment replacement program. Excess expenditures in the fire protection and inspections department are funded by greater than anticipated charges for services and license and permit revenue. Excess expenditures in the CDBG fund are due to timing differences between the grant period and the City’s fiscal year. All CDBG expenditures are reimbursed by the County. A Special Revenue Fund is used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. The following are nonmajor special revenue funds: Community Development Block Grant Fund - This fund was established to account for funds received under Title I of the Housing and Community Development Act of 1974. Communications Fund - This fund was established to account for funds received from the franchise fee of the local cable television service. NONMAJOR GOVERNMENTAL FUNDS Special Revenue Funds 71 CITY OF EDINA, MINNESOTA COMBINING BALANCE SHEET Statement 11 NONMAJOR SPECIAL REVENUE FUNDS December 31, 2006 CommunityTotal Nonmajor DevelopmentSpecial Revenue Block GrantCommunicationFunds Assets Cash and cash equivalents904$ 1,331$ 2,235$ Investments- 621,089 621,089 Accounts receivable- 140,235 140,235 Accrued interest receivable- 4,448 4,448 Due from other funds- 13,000 13,000 Due from other governments12,096 100 12,196 Total assets13,000$ 780,203$ 793,203$ Liabilities and Fund Balance Liabilities: Accounts payable-$ 91,433$ 91,433$ Salaries payable- 3,898 3,898 Due to other funds13,000 - 13,000 Unearned revenue- 2,520 2,520 Total liabilities13,000 97,851 110,851 Fund balance: Unreserved: Undesignated- 682,352 682,352 Total fund balance- 682,352 682,352 Total liabilities and fund balance13,000$ 780,203$ 793,203$ 72 CITY OF EDINA, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES Statement 12 AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS For The Year Ended December 31, 2006 CommunityTotal Nonmajor DevelopmentSpecial Revenue Block GrantCommunicationFunds Revenues: Franchise fees-$ 499,206$ 499,206$ Intergovernmental187,674 - 187,674 Investment income- 25,153 25,153 Other- 43,866 43,866 Total revenues187,674 568,225 755,899 Expenditures: Current: General government187,674 616,900 804,574 Total expenditures187,674 616,900 804,574 Net increase (decrease) in fund balance- (48,675) (48,675) Fund balance - January 1- 731,027 731,027 Fund balance - December 31-$ 682,352$ 682,352$ 73 CITY OF EDINA, MINNESOTA SPECIAL REVENUE FUND - COMMUNITY DEVELOPMENT BLOCK GRANT Statement 13 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2006 Actual OriginalFinalAmounts Revenues: Intergovernmental167,594$ 167,594$ 187,674$ Total revenues167,594 167,594 187,674 Expenditures: Current: General government167,594 167,594 187,674 Net increase (decrease) in fund balance-$ -$ -$ Fund balance - January 1 - Fund balance - December 31 -$ Budgeted Amounts 74 Enterprise funds account for the financing of self-supporting activities of governmental units which render services to the general public on a user charge basis. The following are nonmajor enterprise funds: Arena Fund - This fund accounts for activities related to the Braemar Ice Arena. Art Center Fund - This fund accounts for activities related to the City's Art Center. Edinborough/Centennial Lakes Fund - This fund accounts for activities at two of the City's parks; Edinborough Park and Centennial Lakes Park. NONMAJOR PROPRIETARY FUNDS Enterprise Funds 75 CITY OF EDINA, MINNESOTA COMBINING STATEMENT OF NET ASSETS Statement 14 NONMAJOR PROPRIETARY FUNDS December 31, 2006 Total ArtEdinborough ParkNonmajor ArenaCenterCentennial LakesProprietary Funds Assets Current assets: Cash and cash equivalents30,466$ 12,533$ 5,435$ 48,434$ Investments- - 4,371,402 4,371,402 Interest receivable- - 31,307 31,307 Accounts receivable211,044 1,268 1,855 214,167 Inventory- 15,865 - 15,865 Total current assets241,510 29,666 4,409,999 4,681,175 Noncurrent assets: Deferred charges2,781 - - 2,781 Net capital assets2,975,558 322,138 804,495 4,102,191 Total noncurrent assets2,978,339 322,138 804,495 4,104,972 Total assets3,219,849 351,804 5,214,494 8,786,147 Liabilities: Current liabilities: Accounts payable37,630 26,380 120,661 184,671 Salaries payable12,666 3,776 15,507 31,949 Accrued interest payable9,323 - - 9,323 Due to other funds- - 60,000 60,000 Due to other governments293 1,103 3,965 5,361 Unearned revenue- 4,529 49,579 54,108 Compensated absences payable46,970 16,345 47,459 110,774 Bonds payable200,000 - - 200,000 Total current liabilities306,882 52,133 297,171 656,186 Noncurrent liabilities: Compensated absences70,455 24,518 71,188 166,161 Bonds payable, net443,290 - - 443,290 Total noncurrent liabilities513,745 24,518 71,188 609,451 Total liabilities820,627 76,651 368,359 1,265,637 Net assets: Invested in capital assets, net of related debt2,335,049 322,138 804,495 3,461,682 Unrestricted64,173 (46,985) 4,041,640 4,058,828 Total net assets2,399,222$ 275,153$ 4,846,135$ 7,520,510$ 76 CITY OF EDINA, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENSES Statement 15 AND CHANGES IN FUND NET ASSETS NONMAJOR PROPRIETARY FUNDS For The Year Ended December 31, 2006 Total Edinborough ParkNonmajor ArenaArt CenterCentennial LakesProprietary Funds Operating revenues: Sales - retail9,902$ 67,146$ -$ 77,048$ Sales - concessions- 4,566 24,199 28,765 Memberships5,601 27,965 46,554 80,120 Admissions92,728 - 428,958 521,686 Building rental1,143,211 - 222,599 1,365,810 Rental of equipment4,218 - 52,007 56,225 Greens fees- - 165,649 165,649 Class registration & other fees162,895 387,786 491,169 1,041,850 Total operating revenues1,418,555 487,463 1,431,135 3,337,153 Operating expenses: Cost of sales and services1,128 26,843 13,584 41,555 Personal services580,849 250,249 983,627 1,814,725 Contractual services563,845 236,046 467,512 1,267,403 Commodities49,754 49,295 210,546 309,595 Central Services47,606 41,057 88,511 177,174 Depreciation298,916 30,497 87,672 417,085 Total operating expenses1,542,098 633,987 1,851,452 4,027,537 Operating loss(123,543) (146,524) (420,317) (690,384) Nonoperating revenues (expenses): Investment income- - 180,647 180,647 Donations- 13,010 - 13,010 Interest and fiscal charges(18,866) - - (18,866) Gain (loss) on sale of capital asset- - 9,151 9,151 Amortization of bond discount(2,246) - - (2,246) Total nonoperating revenues (expenses)(21,112) 13,010 189,798 181,696 Income (loss) before transfers(144,655) (133,514) (230,519) (508,688) Transfers: Transfers in110,000 147,000 - 257,000 Total transfers 110,000 147,000 - 257,000 Change in net assets(34,655) 13,486 (230,519) (251,688) Net assets - January 1 2,433,877 261,667 5,076,654 7,772,198 Net assets - December 312,399,222$ 275,153$ 4,846,135$ 7,520,510$ 77 CITY OF EDINA, MINNESOTA COMBINING STATEMENT OF CASH FLOWS Statement 16 NONMAJOR PROPRIETARY FUNDS For The Year Ended December 31, 2006 Total ArtEdinborough ParkNonmajor ArenaCenterCentennial LakesProprietary Funds Cash flows from operating activities: Receipts from customers and users1,338,029$ 487,657$ 1,432,820$ 3,258,506$ Payment to suppliers(684,737) (353,136) (701,833) (1,739,706) Payment to employees(566,022) (249,802) (970,359) (1,786,183) Donations- 13,010 - 13,010 Net cash provided by (used in) operating activities87,270 (102,271) (239,372) (254,373) Cash flows from noncapital financing activities: Transfer (to) from Enterprise Funds85,000 110,000 - 195,000 Transfer (to) from Capital Project Funds25,000 37,000 - 62,000 Net interfund borrowing25,000 - 35,000 60,000 Net cash provided by noncapital financing activities135,000 147,000 35,000 317,000 Cash flows from capital and related financing activities: Acquisition of capital assets(32,153) (41,772) (141,675) (215,600) Sale of capital assets- - 9,450 9,450 Principal paid on bonds(200,000) - - (200,000) Interest paid on bonds(21,935) - - (21,935) Net cash used in capital and related financing activities(254,088) (41,772) (132,225) (428,085) Cash flows from investing activities: Proceeds from sales of investments- - 153,902 153,902 Investment income- - 186,098 186,098 Net cash flows provided by (used in) investing activities- - 340,000 340,000 Net increase (decrease) in cash and cash equivalents(31,818) 2,957 3,403 (25,458) Cash and cash equivalents - January 162,284 9,576 2,032 73,892 Cash and cash equivalents - December 3130,466$ 12,533$ 5,435$ 48,434$ Reconciliation of operating loss to net cash provided (used) by operating activities: Operating loss (123,543)$ (146,524)$ (420,317)$ (690,384)$ Adjustments to reconcile operating loss to net cash flows from operating activities: Depreciation298,916 30,497 87,672 417,085 Donations- 13,010 - 13,010 Changes in assets and liabilities: Decrease (increase) in receivables(80,526) (1,268) 1,560 (80,234) Decrease (increase) in inventory- (37) - (37) Increase (decrease) in accounts payable(22,034) 397 78,037 56,400 Increase (decrease) in salaries payable4,772 398 3,534 8,704 Increase (decrease) in due to other governments(370) (255) 283 (342) Increase (decrease) in unearned revenue- 1,462 125 1,587 Increase (decrease) in compensated absences10,055 49 9,734 19,838 Total adjustments210,813 44,253 180,945 436,011 Net cash provided by (used in) operating activities87,270$ (102,271)$ (239,372)$ (254,373)$ 78 Agency funds are used to report resources held by the City in a purely custodial capacity. The following are agency funds: Police Seizure Fund - This fund accounts for assets seized by the Police Department. Public Safety Training Facility - This fund accounts for assets and liabilities of the South Metro Public Safety Training Facility, which is a joint venture that the City has fiduciary responsibilities for. Payroll Fund - This fund accounts for assets withheld from employee paychecks that the City plans to remit to various third parties, including state & local governments, insurance providers, and others. FIDUCIARY FUNDS Agency Funds 79 This page left blank intentionally. 80 CITY OF EDINA, MINNESOTA COMBINING STATEMENT OF CHANGES IN Statement 17 ASSETS AND LIABILITIES AGENCY FUNDS For The Year Ended December 31, 2006 BalanceBalance January 1AdditionsDeductionsDecember 31 POLICE SEIZURE Assets: Cash 300,673$ 60,580$ -$ 361,253$ Liabilities: Due to other governmental units 300,673$ 60,580$ -$ 361,253$ PUBLIC SAFETY TRAINING FACILITY Assets: Cash9,083$ -$ 7,062$ 2,021$ Investments 135,000 135,000 - 270,000 Total Assets 144,083$ 135,000$ 7,062$ 272,021$ Liabilities: Accounts payable10,966$ -$ 6,381$ 4,585$ Salaries payable951 656 - 1,607 Due to other governmental units 132,166 133,663 - 265,829 Total Liabilities 144,083$ 134,319$ 6,381$ 272,021$ PAYROLL Assets: Cash 229,971$ -$ 50,406$ 179,565$ Liabilities: Accounts payable70,677$ -$ 27,047$ 43,630$ Due to other governmental units 159,294 - 23,359 135,935 Total Liabilities 229,971$ -$ 50,406$ 179,565$ TOTALS - ALL AGENCY FUNDS Assets: Cash539,727$ 60,580$ 57,468$ 542,839$ Investments 135,000 135,000 - 270,000 Total Assets 674,727$ 195,580$ 57,468$ 812,839$ Liabilities: Accounts payable81,643$ -$ 33,428$ 48,215$ Salaries payable951 656 - 1,607 Due to other governmental units 592,133 194,243 23,359 763,017 Total Liabilities 674,727$ 194,899$ 56,787$ 812,839$ 81 This page left blank intentionally. 82 This page left blank intentionally. 83 CITY OF EDINA, MINNESOTA COMBINED SCHEDULE OF BONDED INDEBTEDNESS December 31, 2006 Final InterestMaturityOriginal RatesDateDateIssueRedeemed Tax Increment Bonds: Tax Increment Bonds, Series 1997B4.50 - 5.2004/01/9702/01/135,090,000$ 1,225,000$ Tax Increment Bonds, Series 2000A4.30 - 4.8009/06/0002/01/112,620,000 900,000 Tax Increment Bonds, Series 2002B3.00%08/05/0202/01/091,400,000 - Tax Increment Taxable Refunding Bonds, Series 2003B1.128 - 1.74903/01/0302/01/066,570,000 4,895,000 Tax Increment Refunding Bonds, Series 2005B3.00%07/19/0502/01/0910,520,000 - Tax Increment Taxable Refunding Bonds, Series 2005C3.75 - 4.2507/19/0502/01/096,220,000 - Tax Increment Refunding Bonds, Series 2005D3.00 - 3.4007/19/0502/01/133,505,000 - Total Tax Increment Bonds35,925,000 7,020,000 General Obligation Bonds: GO Park & Recreation, Series 1996B4.25 - 5.7508/01/9602/01/178,090,000 2,140,000 GO Equipment Certificates, Series 2003A1.05 - 2.4003/01/0302/01/081,540,000 1,100,000 GO Park & Recreation Refunding Bonds, Series 2005A3.50 - 4.0007/19/0502/01/175,375,000 - Total General Obligation Bonds15,005,000 3,240,000 Permanent Improvement Revolving (PIR) Bonds: GO Permanent Improvement Revolving, Series 2005E3.00 - 3.7509/13/0502/01/161,460,000 - Total PIR Bonds1,460,000 - Public Project Revenue Bonds: Public Project Revenue, Series 20024.00 - 5.2501/01/0202/01/2112,410,000 1,275,000 Public Project Revenue, Series 20053.00 - 4.1309/13/0505/01/265,425,000 - Total Public Project Revenue Bonds17,835,000 1,275,000 Revenue Bonds: Recreational Facility Bonds, Series 1999B3.70 - 4.4505/03/9901/01/133,270,000 740,000 Recreational Facility Bonds, Series 2001A2.25 - 4.6511/01/0101/01/174,620,000 1,675,000 Utility Revenue Bonds, Series 1999A3.20 - 4.2005/03/9902/01/093,600,000 2,010,000 Utility Revenue Bonds, Series 2003C1.10 - 3.5503/01/0302/01/133,200,000 575,000 Total Public Project Revenue Bonds14,690,000 5,000,000 Total - Bonded indebtedness84,915,000$ 16,535,000$ Prior Years 84 Exhibit 1 PrincipalInterestInterest OutstandingPayableDueDuePayable 12/31/2005IssuedPayments12/31/2006In 2007In 2007to Maturity 3,865,000$ -$ 3,865,000$ -$ -$ -$ -$ 1,720,000 - 255,000 1,465,000 265,000 62,329 179,434 1,400,000 - - 1,400,000 - 42,000 231,000 1,675,000 - 1,675,000 - - - - 10,520,000 - 1,650,000 8,870,000 2,550,000 227,850 419,700 6,220,000 - 1,000,000 5,220,000 1,520,000 187,650 346,387 3,505,000 - - 3,505,000 460,000 105,777 416,989 28,905,000 - 8,445,000 20,460,000 4,795,000 625,606 1,593,510 5,950,000 - 5,950,000 - - - - 440,000 - 145,000 295,000 145,000 5,050 6,850 5,375,000 - - 5,375,000 400,000 192,138 1,201,856 11,765,000 - 6,095,000 5,670,000 545,000 197,188 1,208,706 1,460,000 - - 1,460,000 160,000 46,694 247,609 1,460,000 - - 1,460,000 160,000 46,694 247,609 11,135,000 - 480,000 10,655,000 505,000 515,174 4,534,558 5,425,000 - - 5,425,000 185,000 210,681 2,481,754 16,560,000 - 480,000 16,080,000 690,000 725,855 7,016,312 2,530,000 - 270,000 2,260,000 290,000 91,580 361,218 2,945,000 - 610,000 2,335,000 615,000 76,579 285,075 1,590,000 - 375,000 1,215,000 390,000 42,045 76,807 2,625,000 - 290,000 2,335,000 300,000 66,795 277,415 9,690,000 - 1,545,000 8,145,000 1,595,000 276,999 1,000,515 68,380,000$ -$ 16,565,000$ 51,815,000$ 7,785,000$ 1,872,342$ 11,066,652$ 2006 85 CITY OF EDINA, MINNESOTA TAX CAPACITY, TAX LEVIES AND TAX CAPACITY RATES Exhibit 2 (shown by year of tax collectibility) 20032004200520062007 Total tax capacity77,665,879$ 83,447,880$ 91,309,672$ 101,947,912$ 113,428,895$ Increment valuation(6,909,331) (6,949,064) (7,330,826) (7,980,069) (8,771,951) Contribution to fiscal disparities pool(7,587,409) (7,945,664) (7,635,854) (7,107,862) (8,486,997) Tax capacity used for rate calculation63,169,139 68,553,152 76,342,992 86,859,981 96,169,947 Fiscal disparities distribution1,975,365 2,202,656 2,374,371 2,411,937 2,595,376 Adjusted net tax capacity65,144,504$ 70,755,808$78,717,363$89,271,918$ 98,765,323$ Tax levies: General fund16,171,875$ 16,489,129$ 17,772,350$ 18,560,151$ 19,427,890$ Public project revenue1,026,437 1,028,837 1,058,840 1,501,741 1,497,500 Certificates of indebtedness586,163 604,275 162,200 159,100 - Total certified tax levies17,784,475 18,122,241 18,993,390 20,220,992 20,925,390 Referendum market value levy721,967 686,662 674,161 599,138 605,138 Total levy18,506,442$ 18,808,903$19,667,551$20,820,130$ 21,530,528$ Tax capacity rate: General fund revenue24.58623.18322.53620.75519.598 Bonds & interest2.5532.3821.5491.8581.557 Total tax capacity rate27.13925.56524.08522.61321.155 Market value rate0.0110.0100.008800.007030.00600 86 CITY OF EDINA, MINNESOTA SCHEDULE OF SOURCES AND USES OF PUBLIC FUNDS Exhibit 3 FOR 50TH & FRANCE-NO. 1200, A TAX INCREMENT FINANCING DISTRICT (Districts 1200, 1201, 1203 and 1204 are pooled) December 31, 2006 (Unaudited) Accounted OriginalAmendedfor inCurrentAmount BudgetBudgetprior yearsyearremaining Source of funds: Bond proceeds2,200,000$ 5,280,000$ 5,251,998$ -$ 28,002$ Tax increments received- 31,748,489 22,591,144 917,923 8,239,422 Real estate sales *800,000 170,782 170,782 - - State aid- 418,871 418,871 - - Special assessments- 1,321,096 728,505 - 592,591 Parking permits- 268,524 268,524 - - Community development- 186,064 186,064 - - Interest on invested funds- 2,000,000 2,730,770 14,573 (745,343) Other- 73,881 73,881 - - Total sources of funds:3,000,000 41,467,707 32,420,539 932,496 8,114,672 Uses of funds: Land acquisition- 873,061 873,061 - - Installation of public utilities and improvements3,000,000 7,867,034 7,862,032 - 5,002 Bond payments: Principal- 5,280,000 5,360,000 - (80,000) Interest- 4,738,329 4,140,864 - 597,465 Administrative costs- 1,230,000 1,205,451 - 24,549 Paid to other governments- 21,000 15,642 1,650 3,708 Work orders- 16,257 16,257 - - Contingencies- 11,644 11,644 - - Interest- 463,037 463,037 - - Miscellaneous- 62,095 63,010 - (915) Transfer- 15,000,000 12,350,000 975,000 1,675,000 Total uses of funds:3,000,000 35,562,457 32,360,998 976,650 2,224,809 Funds remaining (deficit)-$ 5,905,250$ 59,541$ (44,154)$ 5,889,863$ Cost to authorityPrice paid by developer * Real estate sales Liquor store site128,064$ 105,002$ Union oil site134,506 65,780 262,570$ 170,782$ 87 CITY OF EDINA, MINNESOTA SCHEDULE OF SOURCES AND USES OF PUBLIC FUNDS Exhibit 4 FOR SOUTHEAST EDINA REDEVELOPMENT DISTRICT-NO. 1201, A TAX INCREMENT FINANCING DISTRICT (Districts 1200, 1201, 1203 and 1204 are pooled) December 31, 2006 (Unaudited) Accounted OriginalAmendedfor inCurrentAmount BudgetBudgetprior yearsyearremaining Source of funds: Bond proceeds6,165,177$ 21,470,000$ 20,219,852$ -$ 1,250,148$ Tax increments received- 75,000,000 52,245,257 2,585,493 20,169,250 Real estate sales *598,005 3,000,000 2,642,115 - 357,885 Loan proceeds- 1,321,096 - - 1,321,096 Community development- 189,221 189,221 - - Interest on invested funds- 3,500,000 2,660,148 808 839,044 Other- 50,000 1,357 - 48,643 Total sources of funds:6,763,182 104,530,317 77,957,950 2,586,301 23,986,066 Uses of funds: Land acquisition6,682,998 12,200,000 6,894,303 - 5,305,697 Installation of public utilities and improvements- 16,000,000 14,278,823 - 1,721,177 Site improvements or preparation costs2,885,484 2,000,000 468,098 - 1,531,902 Bond payments: Principal- 21,470,000 20,770,000 1,675,000 (975,000) Interest- 20,100,000 19,751,326 20,938 327,736 Administrative costs194,700 1,800,000 1,673,988 - 126,012 Paid to other governments- 110,000 75,544 8,375 26,081 Transfers out- 17,000,000 12,496,699 1,635,000 2,868,301 Interest reduction- 1,850,000 - - 1,850,000 Parkland dedication fees- 767,852 767,852 - - Total uses of funds:9,763,182 93,297,852 77,176,633 3,339,313 12,781,906 Funds remaining (deficit)(3,000,000)$ 11,232,465$ 781,317$ (753,012)$ 11,204,160$ Cost to authorityPrice paid by developer * Real estate sales Retail site8,350$ 11,899$ Hotel site192,915 192,915 Elderly site453,740 346,534 Office site1,027,277 784,563 Coventry Townhouses1,318,103 1,318,103 3,000,385$ 2,654,014$ 88 CITY OF EDINA, MINNESOTA SCHEDULE OF SOURCES AND USES OF PUBLIC FUNDS Exhibit 5 FOR GRANDVIEW AREA REDEVELOPMENT DISTRICT-NO. 1202, A TAX INCREMENT FINANCING DISTRICT December 31, 2006 (Unaudited) Accounted OriginalAmendedfor inCurrentAmount BudgetBudgetprior yearsyearremaining Source of funds: Bond proceeds4,500,000$ 9,900,000$ 9,475,915$ -$ 424,085$ Tax increments received- 29,737,107 11,806,583 1,003,575 16,926,949 Real estate sales *- 4,700,000 5,402,344 - (702,344) Interest on invested funds- 300,000 901,494 33,335 (634,829) Other- - 61,068 - (61,068) Total sources of funds:4,500,000 44,637,107 27,647,404 1,036,910 15,952,793 Uses of funds: Land acquisition- 6,500,000 3,749,499 86,620 2,663,881 Installation of public utilities and improvements4,310,000 17,127,000 9,738,935 - 7,388,065 Bond payments: Principal- 9,900,000 6,517,555 255,000 3,127,445 Interest- 9,190,000 2,818,377 116,094 6,255,529 Loan/note interest- - 2,367,006 533,514 (2,900,520) Paid to other governments- - 193,548 1,731 (195,279) Administrative costs190,000 1,920,107 1,318,699 13,131 588,277 Total uses of funds:4,500,000 44,637,107 26,703,619 1,006,090 16,927,398 Funds remaining (deficit)-$ -$ 943,785$ 30,820$ (974,605)$ Cost to authorityPrice paid by developer * Real estate sales 5229 Eden Ave.1,822,319$ 5220 Eden Circle995,000 5244 Eden Circle (condemnation deposit)309,937 5201 Eden Circle598,411 2,070,119 Project area23,832 4,005,694 3,749,499$ 6,075,813$ 89 CITY OF EDINA, MINNESOTA SCHEDULE OF SOURCES AND USES OF PUBLIC FUNDS Exhibit 6 FOR SOUTHEAST EDINA REDEVELOPMENT DISTRICT-NO. 1203, A TAX INCREMENT FINANCING DISTRICT (Districts 1200, 1201, 1203 and 1204 are pooled) December 31, 2006 (Unaudited) Accounted OriginalAmendedfor inCurrentAmount BudgetBudgetprior yearsyearremaining Source of funds: Bond proceeds41,400,000$ 41,400,000$ 33,761,677$ -$ 7,638,323$ Tax increments received80,000,000 90,000,000 29,163,006 2,721,011 58,115,983 Real estate sales *5,000,000 11,637,070 11,637,070 - - Special assessment- 1,321,096 - - 1,321,096 Interest on invested funds- 2,500,000 2,789,766 322,379 (612,145) Transfer in- 32,000,000 25,957,924 2,610,000 3,432,076 Sale of material- 255,710 255,710 - - Developer payments- 297,826 297,826 - - Other- 20,000 21,799 - (1,799) Total sources of funds:126,400,000 179,431,702 103,884,778 5,653,390 69,893,534 Uses of funds: Land acquisition13,900,000 22,981,425 22,981,425 - - Installation of public utilities and improvements26,677,000 25,871,230 16,594,753 41,197 9,235,280 Bond payments: Principal41,400,000 41,400,000 15,244,724 3,055,000 23,100,276 Interest38,000,000 38,000,000 32,408,600 705,479 4,885,921 Administrative costs1,140,800 1,600,000 1,288,542 15,654 295,804 Paid to other governments- 42,000 26,864 3,147 11,989 Loan/note interest- 14,684,711 3,512,845 458,245 10,713,621 Parkland dedication fees- 2,030,345 2,030,345 - - Total uses of funds:121,117,800 146,609,711 94,088,098 4,278,722 48,242,891 Funds remaining (deficit)5,282,200$ 32,821,991$ 9,796,680$ 1,374,668$ 21,650,643$ Cost to authorityPrice paid by developer * Real estate sales Retail and theater site3,213,720$ 3,213,720$ Medical office site815,092 815,092 Office site1,107,160 1,107,160 Office building #1449,300 449,300 Office building #21,280,702 1,280,702 Office building #31,341,533 1,341,533 Office building #41,625,849 1,625,849 Office building #51,803,714 1,803,714 11,637,070$ 11,637,070$ 90 CITY OF EDINA, MINNESOTA SCHEDULE OF SOURCES AND USES OF PUBLIC FUNDS Exhibit 7 FOR 70TH STREET AND CAHILL ROAD DISTRICT-NO. 1207, A TAX INCREMENT FINANCING DISTRICT December 31, 2006 (Unaudited) Accounted OriginalAmendedfor inCurrentAmount BudgetBudgetprior yearsyearremaining Source of funds: Bond proceeds1,911,000$ 1,911,000$ -$ -$ 1,911,000$ Tax increments received2,177,855 2,177,855 746,863 - 1,430,992 Interest on invested funds- - 198,332 12,333 (210,665) Total sources of funds:4,088,855 4,088,855 945,195 12,333 3,131,327 Uses of funds: Land acquisition529,400 529,400 33,237 2,436 493,727 Installation of public utilities and improvements325,000 325,000 540,279 - (215,279) Demolition150,000 150,000 - - 150,000 Relocation160,000 160,000 - - 160,000 Capitalized interest150,000 150,000 - - 150,000 Debt service2,178,455 2,178,455 - - 2,178,455 Paid to other governments- - 2,730 - (2,730) Administrative costs596,000 596,000 74,830 - 521,170 Total uses of funds:4,088,855 4,088,855 651,076 2,436 3,435,343 Funds remaining (deficit)-$ -$ 294,119$ 9,897$ (304,016)$ 91 This page left blank intentionally. 92 Contents Financial Trends Revenue Capacity Debt Capacity Demographic and Economic Information Operating Information STATISTICAL SECTION ThispartoftheCity'scomprehensiveannualfinancialreportpresentsdetailed informationasacontextforunderstandingwhattheinformationinthefinancial statements,notedisclosures,andrequiredsupplementaryinformationsaysaboutthe City's overall financial health. Page 93 Sources:Unlessotherwisenoted,theinformationintheseschedulesisderivedfromthe comprehensiveannualfinancialreportsfortherelevantyear.TheCityimplementedGASBStatement 34in2003;schedulespresentinggovernment-wideinformationincludeinformationbeginninginthat year. Theseschedulescontaintrendinformationtohelpthereader understandhowtheCity'sfinancialperformanceandwell- being have changed over time. Theseschedulescontaininformationtohelpthereaderassess theCity'smostsignificantlocalrevenuesource,theproperty tax. Theseschedulescontaininformationtohelpthereaderassess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. Theseschedulesofferdemographicandeconomicindicators tohelpthereaderunderstandtheenvironmentwithinwhich the City's financial activities take place. Theseschedulescontainserviceandinfrastructuredatato helpthereaderunderstandhowtheinformationintheCity's financialreportrelatestotheservicestheCityprovidesand the activities it performs. 100 104 109 111 93 CITY OF EDINA, MINNESOTA NET ASSETS BY COMPONENT LAST FOUR FISCAL YEARS (accrual basis of accounting) 2003200420052006 Governmental activities Invested in capital assets, net of related debt21,792,377$ 34,320,784$ 36,092,020$ 69,814,012$ Restricted4,676,748 2,145,488 78,943 - Unrestricted31,876,783 28,762,040 35,796,801 15,280,058 Total governmental activities net assets58,345,908$ 65,228,312$ 71,967,764$ 85,094,070$ Business-type activities Invested in capital assets, net of related debt29,952,549$ 37,240,476$ 40,044,169$ 46,981,755$ Restricted1,672,828 - - - Unrestricted15,344,474 11,934,496 11,121,720 6,379,515 Total business-type activities net assets46,969,851$ 49,174,972$ 51,165,889$ 53,361,270$ Primary government Invested in capital assets, net of related debt51,744,926$ 71,561,260$ 76,136,189$ 116,795,767$ Restricted6,349,576 2,145,488 78,943 - Unrestricted47,221,257 40,696,536 46,918,521 21,659,573 Total primary government net assets105,315,759$ 114,403,284$ 123,133,653$ 138,455,340$ Fiscal Year 94 CITY OF EDINA, MINNESOTA CHANGES IN NET ASSETS LAST FOUR FISCAL YEARS (accrual basis of accounting) 2003200420052006 Expenses Governmental activities: General government5,839,893$ 6,934,045$ 4,967,008$ 5,414,961$ Public safety10,784,215 11,063,767 12,019,027 13,300,351 Public works5,621,291 5,834,490 7,185,784 8,973,031 Parks4,484,685 4,248,060 5,901,648 5,341,682 Interest on long-term debt2,760,022 2,399,682 2,288,524 2,973,749 Total governmental activities expenses29,490,106 30,480,044 32,361,991 36,003,774 Business-type activities: Utilities7,930,502 7,801,580 8,254,409 9,234,651 Liquor8,764,081 9,110,888 9,749,313 9,968,963 Aquatic center711,061 701,768 725,936 795,614 Golf course3,555,243 3,508,741 3,580,307 3,652,169 Community activity centers3,833,026 3,850,192 3,825,562 4,048,649 Total business-type activities expenses24,793,913 24,973,169 26,135,527 27,700,046 Total primary government expenses54,284,019$ 55,453,213$ 58,497,518$ 63,703,820$ Program Revenues Governmental activities: Charges for services: General government930,391$ 454,603$ 619,526$ 731,613$ Public safety4,213,081 4,634,744 5,614,406 6,146,114 Other activities898,141 748,398 630,157 793,796 Operating grants and contributions1,215,745 1,154,808 1,512,366 1,423,302 Capital grants and contributions7,214,393 4,192,947 2,252,491 4,013,617 Total governmental activities program revenues14,471,751 11,185,500 10,628,946 13,108,442 Business-type activities: Utilities9,694,981 9,875,078 10,240,381 11,421,474 Liquor9,659,631 10,030,067 10,752,724 11,029,445 Aquatic center861,340 764,134 849,380 867,626 Golf course3,684,079 3,538,122 3,482,999 3,646,620 Community activity centers2,966,731 3,254,012 3,251,860 3,337,153 Operating grants and contributions132,031 138,447 131,408 122,358 Total business-type activities program revenues26,998,793 27,599,860 28,708,752 30,424,676 Total primary government program revenues41,470,544$ 38,785,360$ 39,337,698$ 43,533,118$ Net (Expense)/Revenue Governmental activities(15,018,355)$ (19,294,544)$ (21,733,045)$ (22,895,332)$ Business-type activities2,204,880 2,626,691 2,573,225 2,724,630 Total primary government net expense(12,813,475)$ (16,667,853)$ (19,159,820)$ (20,170,702)$ General Revenues and Other Changes in Net Assets Governmental activities: Property taxes17,815,426$ 17,865,757$ 19,071,202$ 20,414,298$ Tax increment collections7,342,270 6,761,934 7,060,744 7,228,002 Franchise taxes- 450,956 457,421 499,206 Unrestricted investment earnings286,209 443,074 977,956 1,230,264 Gain on disposal of capital assets26,669 - 63,674 8,418 Transfers(4,053,805) 655,227 841,500 838,230 Total governmental activities21,416,769 26,176,948 28,472,497 30,218,418 Business-type activities: Unrestricted investment earnings387,117 227,167 236,654 283,771 Gain on disposal of capital assets(177,051) 6,490 22,538 25,210 Transfers4,053,805 (655,227) (841,500) (838,230) Total business-type activities4,263,871 (421,570) (582,308) (529,249) Total primary government25,680,640$ 25,755,378$ 27,890,189$ 29,689,169$ Change in Net Assets Governmental activities6,398,414$ 6,882,404$ 6,739,452$ 7,323,086$ Business-type activities6,468,751 2,205,121 1,990,917 2,195,381 Total primary government12,867,165$ 9,087,525$ 8,730,369$ 9,518,467$ Fiscal Year 95 CITY OF EDINA, MINNESOTA FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) 1997199819992000 General fund Reserved1,642,733$ 1,379,739$ 2,407,155$ 141,939$ Unreserved8,301,559 9,540,670 10,051,978 13,755,160 Total general fund9,944,292$ 10,920,409$ 12,459,133$ 13,897,099$ All other governmental funds Reserved19,646,068$ 1,171,943$ 496,581$ 16,729,995$ a Unreserved, reported in: Special revenue funds882,504 948,079 942,791 1,147,917 Capital projects funds16,370,743 16,096,645 18,216,440 22,454,859 Total all other governmental funds36,899,315$ 18,216,667$ 19,655,812$ 40,332,771$ a The substantial increase in reserved fund balance in 2000 is due to a crossover refunding bond issue that was outstanding as of December 31, 2000. b The substantial decrease in unreserved fund balance in 2003 is due to the transfer of investment assets to the Edinborough Park/Centennial Lakes enterprise fund. c The substantial increase in reserved fund balance in 2005 is due to two crossover refunding bond issues that were outstanding as of December 31, 2005. Fiscal Year 96 200120022003200420052006 15,872$ 417,093$ 412,991$ 390,771$ 223,351$ 36,849$ 14,359,821 14,325,972 9,961,074 b 10,226,055 11,595,433 13,797,189 14,375,693$ 14,743,065$ 10,374,065$ 10,616,826$ 11,818,784$ 13,834,038$ 2,319,839$ 4,186,436$ 4,084,987$ 3,465,440$ 13,792,312$ c 2,682,238$ 1,435,949 1,589,518 686,777 781,458 731,027 13,179,904$ 22,869,578 26,750,351 19,608,849 16,651,788 17,032,750 3,160,085 26,625,366$ 32,526,305$ 24,380,613$ 20,898,686$ 31,556,089$ 19,022,227$ Fiscal Year 97 CITY OF EDINA, MINNESOTA CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) 1997199819992000 Revenues General property taxes17,653,621$ 20,567,867$ 21,995,230$ 22,904,512$ Tax increment collections- - - - Special assessments955,206 844,070 990,330 1,159,876 Franchise fees331,527 296,427 297,866 336,678 License and permits1,388,968 2,091,365 2,135,541 1,835,828 Intergovernmental1,996,744 2,551,452 3,185,008 1,880,680 Charges for services2,842,923 1,833,148 3,215,441 2,902,666 Fines and forfeitures562,910 691,355 794,710 967,421 Investment income2,238,101 1,396,852 415,114 2,376,137 Rental of property152,398 86,639 284,085 1,156,526 Other revenues194,679 604,099 478,788 96,932 Total revenues28,317,077 30,963,274 33,792,113 35,617,256 Expenditures General government4,185,297 3,967,091 3,899,660 4,558,424 Public safety7,717,334 8,131,293 8,516,673 8,846,360 Public works3,537,441 4,084,651 3,744,124 3,672,057 Parks2,031,261 1,960,111 2,240,730 2,150,588 Capital outlay16,796,824 7,530,051 6,117,215 8,352,494 Debt service Principal2,120,000 2,224,724 3,275,000 6,050,000 Interest and other charges4,502,948 4,099,809 3,262,266 3,108,601 Total expenditures40,891,105 31,997,730 31,055,668 36,738,524 Revenues over (under) expenditures(12,574,028) (1,034,456) 2,736,445 (1,121,268) Other Financing Sources (Uses) Transfers in5,189,852 5,639,866 5,983,107 6,976,639 Transfers out(6,789,852) (5,711,866) (6,006,107) (6,165,639) Parkland dedication331,466 387,136 264,424 85,520 Sale of capital assets- - - - Proceeds from borrowing12,573,354 - - 21,742,116 Premium on bonds issued- - - - Discount on bonds issued- - - - Proceeds from refunding- - - - Payment to refunding escrow(8,080,000) (17,260,276) - - Principal paid by escrow- - - - Total other financing sources (uses)3,224,820 (16,945,140) 241,424 22,638,636 Net change in fund balances(9,349,208)$ (17,979,596)$ 2,977,869$ 21,517,368$ Debt service as a percentage of noncapital expenditures27.5%25.8%26.2%32.3% Fiscal Year 98 200120022003200420052006 24,409,785$ 24,735,336$ 17,903,618$ 17,865,757$ 19,071,202$ 20,414,298$ - - 7,342,270 6,761,934 7,060,744 7,228,002 1,086,093 998,908 1,019,461 966,879 1,354,264 1,751,219 473,702 418,153 393,627 450,956 457,421 499,206 2,239,611 1,939,207 2,182,263 2,247,759 3,240,622 3,488,897 5,085,981 2,254,968 4,678,735 3,933,540 1,539,169 2,773,350 1,962,172 2,096,806 2,076,519 2,279,302 2,466,663 2,691,354 976,952 910,407 785,227 863,073 742,917 1,023,935 1,357,701 1,178,211 286,209 443,074 977,956 1,230,264 4,262,984 1,782,063 354,266 385,707 315,542 310,145 184,466 180,081 200,551 294,136 227,446 246,797 42,039,447 36,494,140 37,222,746 36,492,117 37,453,946 41,657,467 5,353,002 5,372,431 5,709,741 5,213,469 5,477,308 5,995,804 9,409,291 9,893,428 10,352,816 11,125,388 11,373,763 12,431,114 4,313,065 4,161,373 4,142,668 4,386,669 4,882,811 5,233,907 2,375,565 2,602,266 2,974,164 2,954,372 3,146,029 3,300,375 11,193,155 11,059,757 15,539,676 7,772,321 8,227,191 8,980,526 3,740,000 5,885,000 5,700,000 6,450,000 6,830,000 5,985,000 3,148,719 3,094,480 2,908,787 2,484,291 2,543,639 2,107,036 39,532,797 42,068,735 47,327,852 40,386,510 42,480,741 44,033,762 2,506,650 (5,574,595) (10,105,106) (3,894,393) (5,026,795) (2,376,295) 6,215,411 12,308,480 8,752,126 8,367,595 7,797,369 6,865,258 (6,201,152) (11,552,990) (12,805,931) (7,712,368) (6,955,869) (6,027,028) 60,280 - - - - - - - - - 135,045 54,457 - 13,637,416 1,540,000 - 15,816,165 - - - 59,219 - - - - - - - (36,275) - - - 6,570,000 - 16,764,721 - (15,810,000) (2,550,000) (6,525,000) - (16,635,000) - - - - - - (9,035,000) (15,735,461) 11,842,906 (2,409,586) 655,227 16,886,156 (8,142,313) (13,228,811)$ 6,268,311$ (12,514,692)$ (3,239,166)$ 11,859,361$ (10,518,608)$ 24.3%29.0%27.1%27.4%27.4%23.1% Fiscal Year 99 CITY OF EDINA, MINNESOTA ASSESSED VALUE, ACTUAL VALUE AND TAX CAPACITY OF TAXABLE PROPERTY LAST TEN FISCAL YEARS City TaxCity CapacityReferendum EstimatedLimitedTaxableTotalUsed for RateAdjusted NetRateRate 4,071,654$ DNADNA91,587$ 77,684$ 80,087$ 15.626%0.01659%3.074$ 4,074,714 DNADNA87,727 75,545 77,762 16.813%0.01788%3.209 4,267,759 DNADNA85,964 72,221 74,421 17.810%0.01704%3.106 4,535,762 DNADNA90,807 74,705 77,166 17.669%0.01634%3.006 4,861,730 DNADNA99,650 80,964 83,716 17.233%0.01495%2.967 5,821,567 DNADNA72,584 c 59,176 c 61,007 c 27.806%c 0.01200%2.914 6,328,581 DNADNA77,666 63,169 65,145 27.139%0.01100%2.794 6,909,477 DNADNA83,448 68,553 70,756 25.565%0.01000%2.618 8,052,704 7,674,983$ 7,668,117$ 91,310 76,343 78,717 24.085%0.00880%2.354 8,713,166 8,541,954 8,536,086 101,948 86,860 89,272 22.613%0.00703%2.317 Source: Hennepin County Taxpayer Services. 1997-2004 estimated market values obtained from previous CAFRs and do not include personal property. DNA: Historical data is not available a Property in the City is assessed annually. Assessed value is equal to market value, although taxable value may be different, as shown. b This value is estimated by the City Finance Department by taking City taxes as a rate of estimated market value (rate per $1,000 of assessed value). The property tax system in Minnesota uses a tax capacity system whereby each parcel is assigned a tax capacity based on taxable value and class. In Minnesota, local taxes are usually expressed as a percentage of this calculated tax capacity (see column titled "City Tax Capacity Rate"). Therefore, this rate is only theoretical and shown for comparative purposes only. c The State of Minnesota passed property tax reform legislation that significantly reduced tax capacity in 2002. Estimated Direct Rate b Market Value (In Thousands) a Tax Capacity (In Thousands)Fiscal Year 1997 1998 1999 2000 2005 2006 2001 2002 2003 2004 100 CITY OF EDINA, MINNESOTA DIRECT AND OVERLAPPING TAX CAPACITY RATES LAST TEN FISCAL YEARS Total BasicDebtTotal TaxDirect & RateRateCapacityRMVHennepinTax Cap.RMVOtherOverlap DNADNA15.626%0.017%35.515%57.213%DNA6.659%115.013% DNADNA16.813%0.018%38.388%47.499%DNA7.538%110.238% DNADNA17.810%0.017%40.994%50.766%DNA8.553%118.123% DNADNA17.669%0.016%39.655%51.678%DNA8.426%117.428% DNADNA17.233%0.015%37.624%46.839%DNA8.126%109.822% 26.116%1.690%27.806%a 0.012%50.409%a 18.504%a DNA9.847%106.566% 24.586%2.553%27.139%0.011%50.607%23.312%DNA8.993%110.051% 23.183%2.382%25.565%0.010%47.324%22.670%DNA8.256%103.815% 22.536%1.549%24.085%0.009%44.172%19.694%0.166%8.547%96.498% 20.755%1.858%22.613%0.007%41.016%19.226%0.154%8.104%90.959% Source: Hennepin County Taxpayer Services. Some 1997-2004 data obtained from previous CAFR's. RMV: Referendum Market Value DNA: Historical data is not available Geographic boundaries for overlapping district are not identical to the City's boundaries. City boundaries contain six different school districts but only ISD #273 is shown here. Other districts include Mosquito Control, Met Council, Metro Transit, Hennepin Parks, Park Museum and Regional Railroad Authority. In addition, there are two watershed districts in the City, Nine Mile Creek and Minnehaha Creek, and rates for Nine Mile are included in Other. Total rates do not include RMV rates. a The State of Minnesota passed property tax reform legislation that significantly reduced tax capacity in 2002. At the same time, the state took on greater responsibility for school district funding. 2000 2005 2006 2001 2002 2003 2004 Year 1997 1998 1999 City RatesOverlapping Rates ISD #273 EdinaFiscal 101 CITY OF EDINA, MINNESOTA PRINCIPAL PROPERTY TAX PAYERS CURRENT YEAR AND NINE YEARS AGO Percentage ofPercentage of Tax CapacityRankTotal CapacityTax CapacityRankTotal Capacity Southdale Shopping Center3,497,098$ 13.43%6,333,776$ 16.92% Galleria Shopping Center1,525,906 21.50%1,406,890 31.54% Southdale Office Park738,790 30.72%1,384,050 41.51% Centennial Lakes Phase V581,944 40.57%- 0.00% Centennial Lakes Phase IV570,650 50.56%- 0.00% May Department Stores513,070 60.50%- 0.00% 7700 France Office Bldg461,750 70.45%- 0.00% Southdale Medical Bldg361,116 80.35%696,480 50.76% Centennial Lakes Phase III356,748 90.35%- 0.00% Centennial Lakes Phase II 344,800 100.34%- 0.00% Pentagon Office Park- 0.00%1,477,916 21.61% United Healthcare Corporation- 0.00%875,345 60.96% National Car- 0.00%573,480 70.63% Centennial Lakes Retail- 0.00%560,218 80.61% Cedars of Edina- 0.00%519,002 90.57% Target- 0.00%425,842 100.46% Totals8,951,872$ 8.78%14,252,999$ 15.56% Source: City of Edina Assessing Office 19972006 Taxpayer 102 CITY OF EDINA, MINNESOTA PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS TotalCollections TaxPercentagein SubsequentPercentage LevyAmountof LevyYearsAmountof Levy 13,206,919$ 13,051,497$ 98.82%65,549$ 13,117,046$ 99.32% 13,827,840 13,728,640 99.28%76,483 13,805,123 99.84% 14,012,337 13,868,630 98.97%81,173 13,949,803 99.55% 14,391,078 14,290,698 99.30%91,042 14,381,740 99.94% 15,165,091 15,053,569 99.26%100,594 15,154,163 99.93% 17,728,603 16,985,098 a 95.81%a 80,839 17,065,937 96.26% 18,506,442 17,808,469 96.23%49,669 17,858,138 96.50% 18,808,903 18,066,892 96.06%89,192 18,156,084 96.53% 19,667,551 19,090,016 97.06%89,974 19,179,990 97.52% 20,820,130 20,310,889 97.55%- 20,310,889 97.55% Source: Hennepin County Taxpayer Services. a Beginning in 2002, the State of Minnesota quit reimbursing the City for the homestead market value credit (HMVC) program. The HMVC program reduces property taxes for certain residential properties and is phased out once a property reaches a certain assessed value. The program is designed so the State "pays" the amount property taxes were reduced by to local governments. When the State ended reimbursing the City for HMVC in 2002, tax collections as a percent of levy dropped, as shown in this table. Due to the phase out provision in the HMVC program, the City anticipates that the impact of this lost revenue will decrease over time as property values rise above the phase out level. Total Collections to Date Taxes Payable 1997 1998 Collected within the Fiscal Year of the Levy 1999 2004 2005 2006 2000 2001 2002 2003 103 CITY OF EDINA, MINNESOTA RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS (dollars in thousands, except per capita) GeneralPublicTaxPermanentRecreationalUtilityTotalPercentage ObligationProjectIncrementImprovementFacilityRevenuePrimaryof PersonalPer DebtRevenueBondsRevolvingBondsBondsGovernmentIncomeCapita 8,090$ -$ 72,390$ 715$ 12,370$ 820$ 94,385$ 6.52%2,007$ 8,090 - 53,090 530 8,130 420 70,260 4.51%1,491 7,825 - 50,260 350 10,970 3,600 73,005 4.48%1,546 7,550 - 66,670 170 10,520 3,265 88,175 5.05%1,859 7,250 - 47,590 - 14,670 2,955 72,465 4.08%1,527 6,950 12,410 40,855 - 7,890 2,630 70,735 3.94%1,490 8,165 12,035 35,900 - 7,145 5,495 68,740 3.72%1,445 7,295 11,595 30,760 - 6,325 4,860 60,835 3.09%1,263 11,765 16,560 28,905 1,460 5,475 4,215 68,380 3.48%1,423 5,670 16,080 20,460 1,460 4,595 3,550 51,815 2.67%1,092 Details regarding the City's outstanding debt may be found in the notes to the financial statements. Business-Type ActivitiesGovernmental Activities 1999 2000 Year 1997 1998 Fiscal 2005 2006 2001 2002 2003 2004 104 CITY OF EDINA, MINNESOTA RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS (dollars in thousands, except per capita) GeneralPublicTaxPercentage ObligationProjectIncrementof PropertyPer DebtRevenueBondsTotal Value a Capita 8,090$ -$ 72,390$ 80,480$ 1.98%1,711$ 8,090 - 53,090 61,180 1.50%1,299 7,825 - 50,260 58,085 1.36%1,230 7,550 - 66,670 74,220 1.64%1,565 7,250 - 47,590 54,840 1.13%1,155 6,950 12,410 40,855 60,215 1.03%1,269 8,165 12,035 35,900 56,100 0.89%1,179 7,295 11,595 30,760 49,650 0.72%1,031 11,765 16,560 28,905 57,230 0.71%1,191 5,670 16,080 20,460 42,210 0.48%890 Details regarding the City's outstanding debt may be found in the notes to the financial statements. a See statistical schedule titled "Assessed Value, Actual Value and Tax Capacity of Taxable Property" for estimated property value data. General Bonded Debt Year 1997 1998 Fiscal 1999 2000 2005 2006 2001 2002 2003 2004 105 CITY OF EDINA, MINNESOTA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AS OF DECEMBER 31, 2006 Net GeneralPercentage Obligation BondedApplicableCity Share Debt Outstanding a in City b of Debt Hennepin County445,110,130$ 7.04%31,335,753$ Hennepin Suburban Park District63,899,496 9.30%5,942,653 Hennepin Regional Rail Authority45,565,046 7.04%3,207,779 School Districts: ISD No. 273 (Edina)95,408,121 98.43%93,910,214 ISD No. 270 (Hopkins)109,872,926 8.70%9,558,945 ISD No. 271 (Bloomington)220,057,777 0.00%- ISD No. 272 (Eden Prairie)113,715,767 0.93%1,057,557 ISD No. 280 (Richfield)19,072,456 16.35%3,118,347 ISD No. 283 (St. Louis Park)82,963,459 0.02%16,593 Metro Council142,497,686 3.16%4,502,927 Total Overlapping Debt1,338,162,864 152,650,768 City of Edina24,396,122 100.00%24,396,122 Total Overlapping and Direct Debt1,362,558,986$ 177,046,890$ Ratio of debt per capita (47,448 population)3,731$ Ratio of debt to estimated market valuation of $8,713,166,0002.03% Source: Hennepin County Taxpayer Services a Calculation excludes revenue and special assessment bonds as well as sinking fund balance, if any. b The percentage of overlapping debt applicable is estimated using tax capacity. Applicable percentages were estimated by determining the portion of another governmental unit's tax capacity that is within the City's boundaries and dividing it by each unit's total tax capacity. Overlapping Debt: Direct Debt: Debt Ratios: 106 CITY OF EDINA, MINNESOTA LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS (dollars in thousands) 1997199819992000200120022003200420052006 Debt limit81,494$ 85,355$ 90,715$ 97,235$ 116,431$ 138,279$ 138,190$ 160,674$ 173,867$ 191,974$ Total net debt applicable to limit8,090 8,090 7,825 7,550 7,250 6,950 8,165 7,295 11,765 3,691 Legal debt margin73,404$ 77,265$ 82,890$ 89,685$ 109,181$ 131,329$ 130,025$ 153,379$ 162,102$ 188,283$ Total net debt applicable to the limit as a percentage of debt limit9.93%9.48%8.63%7.76%6.23%5.03%5.91%4.54%6.77%1.92% Market value (after fiscal disparities) Debt limit (2% of market value) Debt applicable to limit: General obligation bonds Less: Fund balance set aside for repayment of general obligation debt Total debt applicable to limit Legal debt margin 191,974 (1,979) 188,283$ Fiscal Year Legal Debt Margin Calculation for Fiscal Year 2006 9,598,698$ 5,670 3,691 107 CITY OF EDINA, MINNESOTA PLEDGED REVENUE COVERAGE Last Ten Fiscal Years Less: operatingNet available RevenueexpensesrevenuePrincipalInterestTotalCoverage Public Project Revenue Bonds (Annual Appropriation Lease Revenue) 20031,026,437 - 1,026,437 375,000 15,000 390,000 2.63 20041,028,837 - 1,028,837 440,000 557,636 997,636 1.03 20051,058,840 - 1,058,840 460,000 558,486 1,018,486 1.04 20061,501,741 - 1,501,741 480,000 779,778 1,259,778 1.19 Tax Increment Bonds 19974,881,825 - 4,881,825 5,015,000 4,000,869 9,015,869 0.54 19986,784,208 - 6,784,208 19,300,000 4,247,389 23,547,389 0.29 19998,084,657 - 8,084,657 2,830,000 2,797,897 5,627,897 1.44 20008,590,313 - 8,590,313 5,595,000 2,677,383 8,272,383 1.04 20019,309,360 - 9,309,360 3,270,000 3,205,971 6,475,971 1.44 20027,053,836 - 7,053,836 4,570,000 2,355,928 6,925,928 1.02 20037,342,270 - 7,342,270 5,000,000 1,889,329 6,889,329 1.07 20046,761,934 - 6,761,934 5,140,000 1,520,376 6,660,376 1.02 20057,060,744 - 7,060,744 5,465,000 1,327,983 6,792,983 1.04 20067,228,002 - 7,228,002 8,445,000 902,607 9,347,607 0.77 Permanent Improvement Revolving Bonds (Special Assessment) 1997840,238 - 840,238 185,000 39,425 224,425 3.74 1998699,354 - 699,354 185,000 31,008 216,008 3.24 1999855,137 - 855,137 180,000 22,250 202,250 4.23 2000721,871 - 721,871 180,000 13,340 193,340 3.73 2001684,660 - 684,660 170,000 4,420 174,420 3.93 2002 - - - - - - - 2003 - - - - - - - 2004 - - - - - - - 2005 - - - - - - - 200685,656 - 85,656 - 43,366 43,366 1.98 Utility Bond 19978,110,744 7,526,033 584,711 390,000 40,744 430,744 1.36 19988,108,612 7,226,648 881,964 400,000 22,184 422,184 2.09 19998,502,423 6,713,673 1,788,750 420,000 83,429 503,429 3.55 20008,793,386 7,205,934 1,587,452 335,000 127,525 462,525 3.43 20018,556,810 7,065,589 1,491,221 310,000 116,794 426,794 3.49 20028,561,287 7,399,773 1,161,514 325,000 105,205 430,205 2.70 20039,668,434 7,769,810 1,898,624 335,000 160,691 495,691 3.83 20049,473,355 7,643,129 1,830,226 635,000 158,451 793,451 2.31 200510,225,975 8,107,039 2,118,936 645,000 141,226 786,226 2.70 200611,416,361 9,107,143 2,309,218 665,000 129,608 794,608 2.91 Recreational Facility Bonds 19974,440,202 3,945,975 494,227 295,000 762,411 1,057,411 0.47 19985,042,394 4,270,042 772,352 4,240,000 372,390 4,612,390 0.17 19995,141,606 4,332,932 808,674 430,000 522,050 952,050 0.85 20005,727,930 5,209,610 518,320 450,000 553,962 1,003,962 0.52 20015,430,507 5,231,143 199,364 470,000 531,176 1,001,176 0.20 20025,424,422 5,031,839 392,583 6,780,000 611,509 7,391,509 0.05 20035,866,300 5,511,730 354,570 745,000 265,602 1,010,602 0.35 20045,621,743 5,492,510 129,233 820,000 241,387 1,061,387 0.12 20055,708,827 5,604,464 104,363 850,000 214,108 1,064,108 0.10 20065,929,984 5,808,902 121,082 880,000 199,260 1,079,260 0.11 Debt service requirementsFiscal Year 108 CITY OF EDINA, MINNESOTA DEMOGRAPHIC AND ECONOMIC STATISTICS Last Ten Fiscal Years Estimated PersonalPer CapitaHigh School IncomePersonalGraduationUnemployment Population(In thousands)IncomeRateRate 47,0291,446,612$ 30,760$ 88.2%1.60% 47,1131,556,896 33,046 88.2%1.50% 47,2351,628,002 34,466 88.2%1.60% 47,4251,747,042 36,838 88.2%2.40% 47,4651,774,194 37,379 91.5%3.30% 47,4651,796,693 37,853 91.5%4.00% 47,5701,847,429 38,836 91.5%4.10% 48,1561,970,303 40,915 93.1%3.90% 48,0501,965,966 40,915 93.1%3.30% 47,4481,941,335 40,915 93.1%3.00% Sources: Population data from U.S. Census Bureau/Metropolitan Council. Personal income estimates based on U.S. Department of Commerce Bureau of Economic Analysis data for the entire seven-county metropolitan area. Per-capita personal income data from U.S. Department of Commerce Bureau of Economic Analysis for the entire seven-county metropolitan area. High school graduation rate data from U.S. Census Bureau for all of Hennepin County. Unemployment rate data from State of Minnesota Department of Employment and Economic Development. 1998 1997 Fiscal Year 2006 2005 2004 2003 2002 2001 2000 1999 109 CITY OF EDINA, MINNESOTA PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO Percentage ofPercentage of Total CityTotal City EmployeesRankEmploymentEmployeesRankEmployment Jerry's Enterprises, Inc.4,500 119.09%2,000 27.87% Fairview Southdale Hospital2,500 210.61%2,400 19.45% Marshall Field's1,200 35.09%500 51.97% Edina Public Schools ISD #2731,172 44.97%DNA0.00% Nash Finch Co.350 51.48%350 81.38% International Dairy Queen Inc.300 61.27%300 91.18% City of Edina262 71.11%261 101.03% JC Penney Co.250 81.06%400 61.57% Edina Realty210 90.89%DNA0.00% Con Agra Foods-Snack Food Gr.196 100.83%DNA0.00% Golden Valley Microwave Foods- 0.00%650 32.56% Health Risk Management Inc.- 0.00%552 42.17% Norwest Funding- 0.00%358 71.41% Totals10,940 46.41%7,771 30.59% Source: State of Minnesota Department of Employment and Economic Development (DEED). DNA: Historical data is not available 19972006 Employer 110 CITY OF EDINA, MINNESOTA FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS 1997199819992000200120022003200420052006 General Government Administration8.00 8.00 8.00 8.00 8.00 8.25 8.25 8.25 8.25 8.25 Planning3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75 Finance5.40 5.40 5.40 5.50 5.75 5.50 5.50 5.50 5.50 5.50 Elections0.50 0.50 0.50 0.50 0.50 1.00 1.00 1.00 1.00 1.00 Assessing6.00 6.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 Public Works Administration1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 Engineering7.50 7.50 7.50 7.50 7.50 7.50 6.50 7.50 7.50 7.50 Supervision2.00 2.00 2.00 2.00 2.50 2.50 2.50 2.50 2.50 2.50 Maintenance28.00 28.00 28.00 28.00 27.00 28.00 28.00 28.00 28.00 28.00 Public Safety Police Protection66.00 66.00 66.00 67.00 70.00 69.00 68.00 66.00 69.00 69.00 Animal Control1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Fire Protection30.00 30.00 30.00 31.00 32.00 32.00 32.00 32.00 32.00 32.00 Public Health2.58 3.58 3.08 3.08 3.08 3.75 2.75 2.75 2.75 2.75 Inspections5.00 5.00 5.75 5.75 6.75 6.50 6.50 6.50 6.50 6.50 Parks & Recreation Administration7.00 7.00 7.00 7.00 7.00 7.00 7.00 6.80 6.80 6.80 Maintenance16.00 16.00 16.00 16.00 17.00 17.00 16.00 16.50 16.40 16.40 Central Services General1.00 1.00 1.00 1.00 2.00 2.00 2.00 2.00 2.00 2.00 City Hall1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10 Public Works Building0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.90 Equipment Operation7.00 7.00 7.00 7.00 6.50 6.50 6.50 6.50 6.50 6.50 Utilities 15.50 15.50 16.25 16.25 15.70 14.50 14.50 15.50 15.75 15.75 Liquor 10.00 10.00 10.00 10.00 9.30 9.75 9.75 9.75 9.75 9.75 Aquatic Center - - - - - - - 0.20 0.55 0.55 Golf Course 14.00 14.00 14.00 14.00 14.00 15.00 15.00 13.00 13.00 13.00 Arena 4.00 4.00 4.00 5.00 5.00 5.00 6.00 6.00 6.00 6.00 Art Center 2.00 2.00 3.00 3.00 3.00 3.00 3.00 3.00 2.50 2.00 Edinborough/Centennial 13.00 13.00 13.00 12.00 13.00 12.00 12.00 12.00 12.00 11.00 Other 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 Total 260.73 261.73 264.73 266.83 272.83 273.00 270.00 268.50 271.50 270.00 Source: City of Edina Finance Department a Employee counts do not include Council members, part-time, contract or seasonal employees. Budgeted Full-time Employees for Fiscal Year a Function 111 CITY OF EDINA, MINNESOTA OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARS 1997199819992000200120022003200420052006 General Government Total City employees- - - 801 868 860 879 870 909 887 Votes cast a 3,190 27,246 3,099 30,483 10,008 28,156 10,721 31,730 1,367 26,270 Public Works Asphalt placed (tons)- - - - - - - - - 9,000 Concrete (cu. yds.)- - - - - - - - - 650 Public Safety Crimes reported- - - - 2,411 2,139 2,073 1,983 1,908 1,937 Fire calls1,133 1,155 1,131 1,091 1,142 1,106 1,062 1,060 1,055 963 Medical calls2,755 2,700 2,812 2,914 2,931 3,153 3,030 3,199 3,423 3,470 Central Services Vehicle fixes- - - - - - - - - 2,398 Utilities Daily consumption b - - - - - - - - - 7,209 Sewer cleaned (miles)- - - - - - - - - 48 Aquatic Center Attendance90,000 130,000 132,000 125,000 115,000 111,056 96,419 88,636 139,415 120,406 Golf Course Total rounds played140,631 149,776 142,862 137,838 120,898 112,078 123,770 116,734 113,679 114,737 Source: Various City departments Note: The City prepared this schedule for the first time in 2006, therefore, some historical data is not readily available. a The City Elections department runs general elections in even-numbered years and school district elections in odd-numbered years. Number of votes cast tend to vary between even and odd-numbered years and based on presidential election cycles. b Daily average of water pumped from city wells, measured in thousands of gallons. Fiscal Year Function 112 CITY OF EDINA, MINNESOTA CAPITAL ASSET STATISTICS BY FUNCTION LAST TEN FISCAL YEARS 1997199819992000200120022003200420052006 Public Works Miles of streets224 224 224 224 224 224 224 224 224 224 City parking ramps4 4 4 4 4 4 4 4 4 4 Public Safety Fire stations2 2 2 2 2 2 2 2 2 2 Parks & Recreation City parks39 39 39 39 39 39 40 40 40 40 Acreage of parks1,552 1,552 1,552 1,552 1,552 1,552 1,553 1,553 1,553 1,553 Park buildings26 26 26 26 26 27 27 27 27 27 Utilities Wells18 18 18 18 18 18 18 18 18 18 Watermain miles199 199 199 199 199 199 199 199 199 199 Sanitary sewer miles186 186 186 186 186 186 186 186 186 186 Sewer connections13,783 13,984 13,984 13,984 13,984 13,984 13,984 14,851 14,851 14,851 Arena Ice sheets3 3 3 3 3 3 3 3 3 3 Source: Various City departments Note: The City prepared this schedule for the first time in 2006, therefore, some historical data is not readily available. Fiscal Year Function 113