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HomeMy WebLinkAbout2010 Comprehensive Annual Financial ReportCity of Edina, Minnesota 2010 Comprehensive Annual Financial Report CITY OF EDINA, MINNESOTA Comprehensive Annual Financial Report For the fiscal year ended December 31, 2010 Prepared by: Department of Finance John Wallin – Treasurer and Finance Director Eric Roggeman – Assistant Finance Director CITY OF EDINA, MINNESOTA TABLE OF CONTENTS Page No. I. INTRODUCTORY SECTION Letter of Transmittal 1 GFOA Certificate of Achievement 4 Organization 5 Organization Chart 6 II. FINANCIAL SECTION Independent Auditors' Report 7 Management's Discussion and Analysis9 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets 21 Statement of Activities 22 Fund Financial Statements: Balance Sheet - Governmental Funds25 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 26 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities27 Statement of Net Assets - Proprietary Funds28 Statement of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary Funds 29 Statement of Cash Flows - Proprietary Funds30 Statement of Fiduciary Net Assets - Fiduciary Funds32 Notes to the Financial Statements 33 Required Supplementary Information: Budgetary Comparison Information: Budgetary Comparison Schedule - General Fund63 Other Post-Employment Benefits Plan Schedule of Funding Progress68 Notes to Required Supplementary Information69 CITY OF EDINA, MINNESOTA TABLE OF CONTENTS Page No. Combining and Individual Non Major Fund Financial Statements and Schedules: Combining Balance Sheet - Nonmajor Special Revenue Funds72 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Special Revenue Funds73 Special Revenue Fund - Community Development Block Grant Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 74 Combining Statement of Net Assets - Nonmajor Proprietary Funds76 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets - Nonmajor Proprietary Funds77 Combining Statement of Cash Flows - Nonmajor Proprietary Funds78 Combining Statement of Changes in Assets and Liabilities - Agency Funds81 Supplementary Financial Information: Tax Capacity, Tax Levies and Tax Capacity Rates83 Combined Schedule of Bonded Indebtedness84 Schedule of Sources and Uses of Public Funds for Grandview Area Redevelopment District - #120286 Schedule of Sources and Uses of Public Funds for Southeast Edina Redevelopment District - #120387 Schedule of Sources and Uses of Public Funds for 70th Street and Cahill Road District - #1207 88 CITY OF EDINA, MINNESOTA TABLE OF CONTENTS Page No. III. STATISTICAL SECTION (UNAUDITED) Financial Trends: Net Assets by Component 90 Changes in Net Assets 92 Fund Balances of Governmental Funds94 Changes in Fund Balances of Governmental Funds96 Revenue Capacity: Assessed Value, Actual Value and Tax Capacity of Taxable Property98 Direct and Overlapping Tax Capacity Rates99 Principal Property Tax Payers 100 Property Tax Levies and Collections101 Debt Capacity: Ratios of Outstanding Debt by Type102 Ratios of General Bonded Debt Outstanding103 Direct and Overlapping Governmental Activities Debt104 Legal Debt Margin Information 105 Pledged Revenue Coverage 106 Demographic and Economic Information: Demographic and Economic Statistics107 Principal Employers 108 Operating Information: Full-Time Equivalent City Government Employees by Function109 Operating Indicators by Function 110 Capital Asset Statistics by Function111 This page left blank intentionally. 2 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 Metropolitan Council requires all cities in the seven-county metropolitan area to have a Comprehensive Plan and State law requires cities to update their plans every 10 years. The Comprehensive Plan guides development and redevelopment and addresses changes likely to occur due to various social and market forces. The City updated our Comprehensive Plan and submitted it to the Metropolitan Council for review in 2008. A final version was adopted by the City Council in 2009. 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, expanding recreational opportunities, expanding City services, and increasing communication between City representatives and the public. 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, compensated absences, and cash flow are all within the ranges specified in the policies. In addition, the City has $1,495,751 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. Awards a The Gove Certificate comprehe fourth con awarded organized accountin A Certific comprehe requireme The prepa Finance departme to the Ma profession Respectfu John Wal Finance D Eric Rogg Assistant and Acknowl ernment Finan e of Achieve ensive annua nsecutive yea a Certificate d comprehens g principles a cate of Achie ensive annua ents and we a aration of thi Department nt who assist ayor and the C nalism in the ully submitted lin Director geman Finance Dire ledgements nce Officers A ement for Ex l financial rep ar that the g of Achieveme sive annual f and applicable vement is va l financial rep are submitting s report wou staff. We w ted and contr City Council f management d, ctor 3 Association o xcellence in port for the f government h ent, a govern financial repo e legal require alid for a pe port continue g it to the GFO ld not have would like to ributed to the for their unfai t of the City’s 3 of the United Financial R fiscal year en has achieved nment must p ort. This repo ements. riod of one y es to meet th OA to determ been possibl express ou preparation iling support finances. States and C Reporting to nded Decemb this prestigi publish an eas ort must satis year only. W e Certificate ine its eligibili e without the r appreciatio of this report for maintainin Canada (GFO the City of ber 31, 2009 ious award. sily readable sfy both gene We believe th of Achievem ity for anothe e dedicated s on to all me t. Credit also ng the highes OA) awarded Edina for i . This was th In order to b and efficient erally accepte hat our curre ment Program r certificate. services of th embers of th must be give st standards o a ts he be tly ed nt m’s he he en of CITY OF EDINA, MINNESOTA ORGANIZATION December 31, 2010 Term Expires Mayor: James Hovland December 31, 2012 Council Members: Mary Brindle December 31, 2012 Ann Swenson December 31, 2012 Joni Bennett December 31, 2014 Josh Sprague December 31, 2014 City Manager: Scott Neal 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, 2010. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which precedes this report. Financial Highlights  The assets of the City exceeded its liabilities at the close of the most recent fiscal year by $187,912,913 (net assets). Of this amount, $58,750,650 (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 $17,334,727. $10,410,272 of this increase is due to special assessment revenues, which help support our road reconstruction program. Also, $2,410,314 was collected from the State of Minnesota during the year as part of the Municipal State Aid (MSA) program, which also helps pay for our road reconstruction program.  As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $49,824,472, an increase of $3,054,413 in comparison with the prior year. Of this total amount, $40,353,380, or 81%, 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 $12,868,952, or 47% of total general fund expenditures.  The City’s total bonded debt decreased by $3,255,000 during the current fiscal year, from $91,390,000 to $88,135,000. The City issued new debt during the year consisting of $8,515,000 general obligation bonds to finance equipment purchases and to refund a previously issued revenue bond, and $2,305,000 of permanent improvement revolving bonds to finance the cost of various improvement projects. 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. 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. Management’s Discussion and Analysis (Continued) 11 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 $187,912,913 at the close of the most recent fiscal year. The largest portion of the City's net assets ($118,590,968 or 63%) reflects its investment in capital assets (e.g. land, buildings, machinery, and equipment) less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Management’s Discussion and Analysis (Continued) 12 City of Edina’s Net Assets 2010 2009 2010 2009 2010 2009 Current and other assets66,496,469$ 60,453,175$ 21,442,067$ 23,418,500$ 87,938,536$ 83,871,675$ Capital assets129,590,209 122,558,594 71,644,476 68,987,531 201,234,685 191,546,125 Total assets196,086,678$ 183,011,769$ 93,086,543$ 92,406,031$ 289,173,221$ 275,417,800$ Long-term liabilities outstanding63,872,044$ 64,880,633$ 21,493,950$ 24,346,645$ 85,365,994$ 89,227,278$ Other liabilities10,769,501 10,670,301 5,124,813 4,942,035 15,894,314 15,612,336 Total liabilities74,641,545$ 75,550,934$ 26,618,763$ 29,288,680$ 101,260,308$ 104,839,614$ Net assets: Invested in capital assets, net of related debt69,783,162$ 69,622,370$ 48,807,806$ 47,333,794$ 118,590,968$ 116,956,164$ Restricted9,952,443 7,132,865 618,852 624,837 10,571,295 7,757,702 Unrestricted41,709,528 30,705,600 17,041,122 15,158,720 58,750,650 45,864,320 Total net assets121,445,133$ 107,460,835$ 66,467,780$ 63,117,351$ 187,912,913$ 170,578,186$ Governmental Activities Business-Type Activities Totals An additional portion of the City’s net assets ($10,571,295) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets ($58,750,650) 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 all of the categories of net assets reported, both for the government as a whole, as well as for its separate governmental and business-type activities. The same situation held true for the prior fiscal year. There was also an increase of $12,886,330 in unrestricted net assets, largely due to positive operating results in the Utility fund and a large new special assessment for the Country Club neighborhood reconstruction project. Management’s Discussion and Analysis (Continued) 13 As shown below, the City’s net assets increased by $17,334,727 during the current fiscal year. Factors contributing to this change are discussed in the next two sections. City of Edina's Changes in Net Assets 2010 2009 2010 2009 2010 2009 Revenues: Program revenues: Charges for services7,118,171$ 6,697,150$ 35,777,795$ 35,641,231$ 42,895,966$ 42,338,381$ Operating grants and contributions1,162,411 1,377,785 373,230 135,917 1,535,641 1,513,702 Capital grants and contributions13,325,431 2,582,999 - - 13,325,431 2,582,999 General revenues: Property taxes25,122,113 23,834,274 - 300,372 25,122,113 24,134,646 Other taxes5,180,361 8,255,177 - - 5,180,361 8,255,177 Gain on disposal of assets35,594 11,709 26,574 2,250 62,168 13,959 Unrestricted investment earnings474,444 387,177 205,965 209,371 680,409 596,548 Total revenues52,418,525 43,146,271 36,383,564 36,289,141 88,802,089 79,435,412 Expenses: General government6,961,082 7,362,560 - - 6,961,082 7,362,560 Public safety15,543,594 14,751,479 - - 15,543,594 14,751,479 Public works8,558,363 8,993,290 - - 8,558,363 8,993,290 Parks5,608,758 7,732,777 - - 5,608,758 7,732,777 Interest on long-term debt2,528,424 2,129,490 - - 2,528,424 2,129,490 Utilities- - 11,848,538 11,833,994 11,848,538 11,833,994 Liquor- - 11,594,643 11,449,194 11,594,643 11,449,194 Aquatic center- - 769,608 798,369 769,608 798,369 Golf course- - 3,561,573 3,588,831 3,561,573 3,588,831 Community activity centers- - 4,492,779 4,636,375 4,492,779 4,636,375 Total expenses 39,200,221 40,969,596 32,267,141 32,306,763 71,467,362 73,276,359 Increase in net assets before transfers13,218,304 2,176,675 4,116,423 3,982,378 17,334,727 6,159,053 Transfers765,994 743,025 (765,994) (743,025) - - Increase in net assets13,984,298 2,919,700 3,350,429 3,239,353 17,334,727 6,159,053 Net assets - January 1107,460,835 104,541,135 63,117,351 59,877,998 170,578,186 164,419,133 Net assets - December 31121,445,133$ 107,460,835$ 66,467,780$ 63,117,351$ 187,912,913$ 170,578,186$ Governmental Activities Business-type Activities Totals Management’s Discussion and Analysis (Continued) 14 Governmental Activities Governmental activities increased the City's net assets by $13,948,298, accounting for 81% of the total growth in net assets. Key elements of this increase are as follows:  Capital grants and contribution revenues increased by $10,742,432 (416%) during the year mainly due to increased special assessment revenue received in relation to the country club improvements.  Property tax revenues increased by $1,287,839 (5%) during the year, which is equal to the property tax levy increase of 5% outlined in our 2010 budget.  The City also collected $4,488,073 in tax increments, which were used to pay principal and interest on tax increment debt. This increases net assets because debt principal payments are not expensed on the Statement of Activities. Below are specific graphs which provide comparisons of the governmental activities revenues and expenses: Charges for services14% Operating grants and contributions 2% Capital grants and contributions 25% Property taxes 48% Other taxes 10% Other1% Revenues by Source -Governmental Activities - 2 4 6 8 10 12 14 16 General government Public safetyPublic worksParksInterest on long-term debt Millions Expenses and Program Revenues -Governmental Activities expenses program revenue Management’s Discussion and Analysis (Continued) 15 Business-type Activities Business-type activities increased net assets by $3,350,429 accounting for 19% of the City's growth in net assets. Key elements of the current year increase are as follows:  Operating grants and contributions for business-type activities increased 175% from 2009. The Community activity center funds operating grants and contributions increased $234,399 (1214%) from the previous year due to $222,000 in stimulus grant revenue received in the Arena fund.  Business-type activities made net transfers of $765,994 to governmental activities during 2010 to provide cash flow for operational and capital improvement needs. Charges for services 98.3% Operating grants and contributions 1.0% Other 0.6% Revenues by Source -Business-type Activities - 2 4 6 8 10 12 14 16 UtilitiesLiquorAquatic center Golf courseCommunity activity centers Millions Expenses and Program Revenues -Business-type Activities expenses program revenue Management’s Discussion and Analysis (Continued) 16 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. 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 $49,824,472, an increase of $3,054,413 in comparison with the prior year. Approximately 81% of this total amount ($40,353,380) constitutes unreserved fund balance. The remainder of the fund balance is reserved because it has already been committed 1) to provide for prepaid items ($10,258), 2) to pay committed contracts ($33,677), 3) for special projects ($186,219), 4) for construction projects ($3,136,080) or 5) to pay debt service ($6,104,858). 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 $12,868,952. As a measure of the general fund’s liquidity, unreserved fund balance represents 47% of total general fund expenditures. The fund balance of the City’s general fund increased by $829,611 during the current fiscal year. Key factors in this increase are as follows:  General fund license and permit revenues increased by 14.5% in the current fiscal year with a majority of the increase attributable to building permits.  The liquor fund transferred $765,100 of profits to the general fund.  The general fund made transfers totaling $936,499 to the construction fund to finance our Capital Improvement Program, as stipulated in the fund balance section of our financial management policies. The Housing and Redevelopment Authority fund balance increased by $1,997,899 in the current fiscal year because there were no large spending projects planned from tax increment funds during the year. The debt service fund has a total fund balance of $6,104,858, all of which is reserved for the payment of debt service. The net increase in fund balance during the current year in the debt service fund was $650,726. Fund balance increased during the year as the result of $930,820 and $20,672 transfers made from the Housing and Redevelopment Authority fund and Construction fund, respectively. The construction fund balance decreased by $945,945 in 2010 due to capital outlay related to various projects with the majority attributable to the public works facility. Also, new debt was issued in 2010 to help finance various improvement projects and equipment purchases. Management’s Discussion and Analysis (Continued) 17 Proprietary funds. The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Unrestricted net assets of the utility fund at the end of the year amounted to $13,815,574. The total growth in net assets was $3,272,552. Operating revenues and expenses in the utilities fund increased by 1.2% and 2.8%, respectively, in 2010, due to rate increases that are intended to help replace aging infrastructure. The City invested $2,867,147 in utility fund capital assets during 2010. Unrestricted net assets of the liquor fund at the end of the year amounted to $1,324,792. Total net assets increased by $17,321. The liquor fund continues to transfer profits back into other City funds, including the general, construction, golf course, arena and art center funds. The liquor fund made transfers totaling $1,245,100 to other funds during 2010. The majority of this amount ($765,100) was transferred to the general fund according to the budget. Unrestricted net assets of the aquatic center fund at the end of the year amounted to $917,592. Aquatic center revenues increased slightly from 2009 due to favorable weather for the aquatic center in 2010. The aquatic center remains profitable. Unrestricted net assets of the golf course fund at the end of the year amounted to a deficit of ($1,448,433), a decrease of $39,592 from the prior year. Unrestricted net assets have been declining for a number of years; with the exception of 2009, in the golf course fund because cash flow is not sufficient to make principal and interest payments on outstanding debt. General Fund Budgetary Highlights During the year there was a $936,499 increase in appropriations between the original and final amended budget. The increase was a transfer to the construction fund of unreserved and undesignated general fund balance according to the City’s fund balance policy. During the year, revenues were $1,022,262 more than budget, as the improving economy affected our property tax, permit, and charges for services revenues. The largest increase from 2009 was in the licenses and permits category, which exceeded budget by $152,181. Many City departments were under budget for the year, particularly the administration and street maintenance departments, which were under staffed during the year because positions that came open in those departments through attrition were not immediately filled. The parks maintenance department was under budget due partially to lower than expected paths and hard surfaces repair spending. The City also saved money through lower than expected fuel, commodities, and insurance prices. 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, 2010, amounted to $201,234,685 (net of accumulated depreciation). This investment in capital assets included land, land improvements, buildings, vehicles and equipment. The total increase in the City’s investment in capital assets for the current fiscal year was 5 percent (a 6 percent increase for governmental activities and a 4 percent increase for business-type activities). Management’s Discussion and Analysis (Continued) 18 Major capital asset events during the current fiscal year included the following:  The City continued construction on a new public works facility in 2010; construction in progress as of the close of the fiscal year has reached $22,073,413.  A variety of street construction, sidewalk and traffic signal projects began in 2010.  A variety of utility infrastructure improvements, including watermain, sanitary and storm sewer; construction in progress as of the close of the fiscal year reached $2,933,281. City of Edina’s Capital Assets (Net of Depreciation) 2010 2009 2010 2009 2010 2009 Land and land improvements26,867,389$ 26,040,078$ 4,497,718$ 4,634,890$ 31,365,107$ 30,674,968$ Buildings and improvements37,983,299 34,810,399 5,608,857 5,924,799 43,592,156 40,735,198 Machinery and equipment7,419,573 8,108,214 2,601,682 2,771,677 10,021,255 10,879,891 Infrastructure32,138,548 24,727,802 53,486,360 44,202,165 85,624,908 68,929,967 Construction in progress25,181,400 28,872,101 5,449,859 11,454,000 30,631,259 40,326,101 Total129,590,209$ 122,558,594$ 71,644,476$ 68,987,531$ 201,234,685$ 191,546,125$ Governmental Activities Business-Type Activities Totals 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 $88,135,000, a decrease of $3,255,000 from 2009. This decrease resulted from the payment of previously scheduled principal payments partially offset by $2,535,000 in new debt issued. There was also a refunding of existing debt during the year. $31,800,000 is for general obligation improvement debt that is supported by property tax levies and special assessments. This amount increased from 2009 due to a new debt issued to finance equipment purchases and the refunding of a previously issued public project revenue bond. $16,270,000 is for permanent improvement revolving (PIR) bonds, which finance the City’s special assessment program. This amount increased from 2009 due to a new debt issue to finance the cost of various improvement projects. An additional $3,320,000 of general obligation tax increment debt financed the City’s economic development program. This amount decreased in 2010 due to regularly scheduled principal payments on outstanding issues. Also outstanding is $13,370,000 public project revenue bonds which financed two gymnasiums and the new public works facility. This amount decreased in 2010 due to refunding debt issued and regularly scheduled principal payments on outstanding issues. There is a total of $23,375,000 in revenue bonds for improvements to the enterprise funds. Management’s Discussion and Analysis (Continued) 19 City of Edina’s Outstanding Debt 2010 2009 2010 2009 2010 2009 Tax increment bonds3,320,000$ 4,125,000$ -$ -$ 3,320,000$ 4,125,000$ General obligation bonds31,800,000 24,020,000 - - 31,800,000 24,020,000 Public improvement bonds16,270,000 14,620,000 - - 16,270,000 14,620,000 Public project revenue bonds13,370,000 22,650,000 - - 13,370,000 22,650,000 Revenue bonds- - 23,375,000 25,975,000 23,375,000 25,975,000 Total64,760,000$ 65,415,000$ 23,375,000$ 25,975,000$ 88,135,000$ 91,390,000$ 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 3% of total Estimated Market Value. The current debt limitation for the City is $298,494,213. Only $45,170,000 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 relatively healthy local economy helps to make this goal a reality. The unemployment rate in Edina for February 2011 was 5.0%, well below the state and national levels. 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-five percent of seniors go to college and eighty-six percent finish in five years. Property values in Edina increased at a rapid pace for several years through 2006, but the growth has slowed since then. Estimated market value of all real estate actually decreased 5.2% for taxes payable in 2011 after a 1.5% decrease the year before. -25.0%-20.0% -15.0% -10.0%-5.0% 0.0%5.0%10.0% 15.0%20.0% 25.0% 2001200220032004200520062007200820092010 Market Value and Tax Capacity Annual Changes Tax Capacity Market Value Management’s Discussion and Analysis (Continued) 20 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 for real estate decreased 5.7% for taxes payable in 2011, but had been increasing steadily ever since the state revised property tax law in 2001 for taxes payable in 2002, although that growth has slowed since 2006 along with values. Due to the recent increases in market value and tax capacity, property tax rates had been decreasing through 2007, although tax rates now appear to be rising slightly. All of these factors above were considered in preparing the City’s budget for the 2011 fiscal year. The City’s adopted 2011 budget includes a property tax levy of $21,004,000 for the general fund, an increase of 1.3% from the 2010 general fund levy. Requests for Information This financial report is designed to provide a general overview of the City’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Office of the Finance Director, 4801 West 50th Street, Edina, Minnesota 55424. The City’s Comprehensive Annual Financial Report can also be found on the internet at www.cityofedina.com. CITY OF EDINA, MINNESOTA STATEMENT OF NET ASSETS December 31, 2010 GovernmentalBusiness-type Activities Activities Total Assets: Current assets: Cash and cash equivalents118,206$ 259,086$ 377,292$ Investments50,418,907 13,881,800 64,300,707 Restricted investments3,169,757 729,090 3,898,847 Accrued interest 188,638 62,381 251,019 Accounts receivable, net521,636 3,203,169 3,724,805 Special assessments receivable11,706,726 434,505 12,141,231 Internal balances(1,155,000) 1,155,000 - Due from other governments507,112 21,258 528,370 Prepaid items10,258 365,308 375,566 Inventory - 1,200,509 1,200,509 Total current assets65,486,240 21,312,106 86,798,346 Noncurrent assets: Deferred charges1,010,229 129,961 1,140,190 Nondepreciable capital assets 42,615,229 6,538,824 49,154,053 Depreciable capital assets (net)86,974,980 65,105,652 152,080,632 Total noncurrent assets 130,600,438 71,774,437 202,374,875 Total assets196,086,678 93,086,543 289,173,221 Liabilities: Current liabilities: Accounts payable 2,446,141 975,372 3,421,513 Salaries payable1,101,055 262,049 1,363,104 Accrued interest payable876,462 357,532 1,233,994 Contracts payable207,557 71,056 278,613 Due to other governments12,164 83,880 96,044 Deposits payable 28,084 112,216 140,300 Unearned revenue160,041 116,473 276,514 Compensated absences payable1,457,997 391,235 1,849,232 Bonds payable 4,480,000 2,755,000 7,235,000 Total current liabilities10,769,501 5,124,813 15,894,314 Noncurrent liabilities: Net OPEB obligation719,686 96,340 816,026 Compensated absences payable2,186,996 586,850 2,773,846 Bonds payable, net of unamortized discount 60,965,362 20,810,760 81,776,122 Total noncurrent liabilities 63,872,044 21,493,950 85,365,994 Total liabilities74,641,545 26,618,763 101,260,308 Net assets: Invested in capital assets, net of related debt69,783,162 48,807,806 118,590,968 Restricted for tax increments9,952,443 - 9,952,443 Restricted for debt service- 618,852 618,852 Unrestricted41,709,528 17,041,122 58,750,650 Total net assets121,445,133$ 66,467,780$ 187,912,913$ Primary Government The accompanying notes are an integral part of these financial statements 21 CITY OF EDINA, MINNESOTA STATEMENT OF ACTIVITIES For The Year Ended December 31, 2010 OperatingCapital Charges forGrants andGrants and ExpensesServicesContributionsContributions Functions/Programs Primary government: Governmental activities: General government6,961,082$ 946,107$ 130,227$ -$ Public safety15,543,594 5,448,505 809,046 156,510 Public works8,558,363 309,858 195,000 12,853,304 Parks5,608,758 413,701 28,138 315,617 Interest on long-term debt2,528,424 - - - Total government activities39,200,221 7,118,171 1,162,411 13,325,431 Business-type activities: Utilities11,848,538 15,036,016 119,529 - Liquor11,594,643 12,857,064 - - Aquatic center769,608 945,529 - - Golf course3,561,573 3,443,204 - - Community activity centers4,492,779 3,495,982 253,701 - Total business-type activities32,267,141 35,777,795 373,230 - Total primary government71,467,362$ 42,895,966$ 1,535,641$ 13,325,431$ The accompanying notes are an integral part of these financial statements. Program Revenues 22 GovernmentalBusiness-type ActivitiesActivitiesTotal (5,884,748)$ -$ (5,884,748)$ (9,129,533) - (9,129,533) 4,799,799 - 4,799,799 (4,851,302) - (4,851,302) (2,528,424) - (2,528,424) (17,594,208) - (17,594,208) - 3,307,007 3,307,007 - 1,262,421 1,262,421 - 175,921 175,921 - (118,369) (118,369) - (743,096) (743,096) - 3,883,884 3,883,884 (17,594,208) 3,883,884 (13,710,324) General revenues: Property taxes25,122,113 - 25,122,113 Tax increment collections4,488,073 - 4,488,073 Franchise taxes692,288 - 692,288 Unrestricted investment earnings474,444 205,965 680,409 Gain on disposal of capital assets35,594 26,574 62,168 Transfers765,994 (765,994) - Total general revenues and transfers31,578,506 (533,455) 31,045,051 Change in net assets13,984,298 3,350,429 17,334,727 Net assets - beginning107,460,835 63,117,351 170,578,186 Net assets - ending121,445,133$ 66,467,780$ 187,912,913$ Net (Expense) Revenue and Changes in Net Assets 23 This page left blank intentionally. 24 CITY OF EDINA, MINNESOTA BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2010 Housing &NonmajorTotal RedevelopmentDebtGovernmentalGovernmental GeneralAuthorityServiceConstructionFundsFunds Assets Cash and cash equivalents307$ 6,455$ 26,435$ 1,672$ 83,337$ 118,206$ Investments - unrestricted13,956,397 14,105,835 6,044,147 15,067,875 1,244,653 50,418,907 Investments - restricted- - - 3,169,757 - 3,169,757 Accrued interest 34,682 93,420 9,259 44,835 6,442 188,638 Accounts receivable297,223 - 750 26,526 197,137 521,636 Special assessments receivable- - 10,068,960 1,637,766 - 11,706,726 Due from other funds20,571 - - - 570,000 590,571 Due from other governments446,789 13,524 26,367 20,057 375 507,112 Prepaid items10,258 - - - - 10,258 Total assets14,766,227$ 14,219,234$ 16,175,918$ 19,968,488$ 2,101,944$ 67,231,811$ Liabilities and fund balances Liabilities: Accounts payable518,126$ 866,194$ 2,100$ 989,202$ 70,519$ 2,446,141$ Salaries payable1,076,722 - - 9,094 15,239 1,101,055 Contracts payable - - - 207,557 - 207,557 Due to other funds120,000 20,571 - 1,605,000 - 1,745,571 Due to other governments4,392 7,772 - - - 12,164 Deposits payable15,159 - - 12,925 - 28,084 Unearned revenue152,618 - - - 7,423 160,041 Deferred revenue- - 10,068,960 1,637,766 - 11,706,726 Total liabilities1,887,017 894,537 10,071,060 4,461,544 93,181 17,407,339 Fund balance: Reserved for: Prepaid items10,258 - - - - 10,258 Encumbrances- - - 33,677 - 33,677 Special projects- - - 186,219 - 186,219 Construction projects- - - 3,136,080 - 3,136,080 Debt service- - 6,104,858 - - 6,104,858 Unreserved: Designated, reported in: General Fund11,373,201 - - - - 11,373,201 Capital Project Funds- - - 12,150,968 - 12,150,968 Undesignated, reported in: General Fund1,495,751 - - - - 1,495,751 Special Revenue Funds- 13,324,697 - - 2,008,763 15,333,460 Total fund balance12,879,210 13,324,697 6,104,858 15,506,944 2,008,763 49,824,472 Total liabilities and fund balances14,766,227$ 14,219,234$ 16,175,918$ 19,968,488$ 2,101,944$ 67,231,811$ Fund balance reported above 49,824,472$ Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources, and therefore, are not reported in the funds 129,590,209 Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds 11,706,726 Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds.(69,676,274) Net assets of governmental activities 121,445,133$ The accompanying notes are an integral part of these financial statements. 25 CITY OF EDINA, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For The Year Ended December 31, 2010 Housing &NonmajorTotal RedevelopmentDebtGovernmentalGovernmental GeneralAuthorityServiceConstructionFundsFunds Revenues: General property taxes20,444,587$ -$ 3,758,251$ 919,275$ -$ 25,122,113$ Tax increment collections- 4,488,073 - - - 4,488,073 Special assessments- - 1,339,350 5,406,836 - 6,746,186 Franchise fees- - - - 692,288 692,288 License and permits2,383,941 - - 26,373 - 2,410,314 Intergovernmental777,694 - - 2,753,469 195,686 3,726,849 Charges for services2,893,068 - - 105,333 16,493 3,014,894 Fines and forfeitures1,162,973 - - - 40,794 1,203,767 Investment income101,165 207,464 31,457 95,535 38,823 474,444 Rental of property425,005 - - 1,512 - 426,517 Other revenues31,587 - - 6,306 375,507 413,400 Total revenues28,220,020 4,695,537 5,129,058 9,314,639 1,359,591 48,718,845 Expenditures: Current: General government4,177,267 1,550,889 - 28,193 767,049 6,523,398 Public safety13,948,313 - - 164,994 64,080 14,177,387 Public works5,632,895 - - 265,128 - 5,898,023 Parks3,460,535 - - 57,404 7,011 3,524,950 Capital outlay: General government- - - 106,201 - 106,201 Public safety- - - 839,787 - 839,787 Public works- - - 11,869,892 - 11,869,892 Parks- 215,929 - 474,018 - 689,947 Debt service: Bond principal - - 2,975,000 - - 2,975,000 Interest and fiscal charges- - 2,584,006 - - 2,584,006 Total expenditures27,219,010 1,766,818 5,559,006 13,805,617 838,140 49,188,591 Revenues over (under) expenditures1,001,010 2,928,719 (429,948) (4,490,978) 521,451 (469,746) Other financing sources (uses): Transfers in765,100 - 951,492 1,186,499 671 2,903,762 Transfers out(936,499) (930,820) - (270,449) - (2,137,768) Sale of capital assets- - - 134,329 - 134,329 Bonds issued- - 65,070 2,469,930 - 2,535,000 Refunding bonds issued- - 8,285,000 - - 8,285,000 Payment to refunding escrow- - (9,094,822) - - (9,094,822) Premium on bonds issued- - 873,934 24,724 - 898,658 Total other financing sources (uses)(171,399) (930,820) 1,080,674 3,545,033 671 3,524,159 Net increase (decrease) in fund balance829,611 1,997,899 650,726 (945,945) 522,122 3,054,413 Fund balance - January 112,049,599 11,326,798 5,454,132 16,452,889 1,486,641 46,770,059 Fund balance - December 3112,879,210$ 13,324,697$ 6,104,858$ 15,506,944$ 2,008,763$ 49,824,472$ The accompanying notes are an integral part of these financial statements. 26 CITY OF EDINA, MINNESOTA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For The Year Ended December 31, 2010 Amounts reported for governmental activities in the statement of activities (page 22-23) are different because: Net changes in fund balances - total governmental funds (page 26)3,054,413$ 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.7,130,350 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.(98,735) 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.3,664,086 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.438,889 Some expenses reported in the statement of activities do not require the use of current financial resources (OPEB obligations, accrued interest and amortization on debt and compensated absences payable) and, therefore, are not reported as expenditures in governmental funds.(204,705) Change in net assets of governmental activities (page 23)13,984,298$ The accompanying notes are an integral part of these financial statements. 27 CITY OF EDINA, MINNESOTA STATEMENT OF NET ASSETS PROPRIETARY FUNDS December 31, 2010 Nonmajor AquaticGolfEnterprise Utilities Liquor Center Course Funds Total Assets: Current assets: Cash and cash equivalents329$ 4,348$ 244,052$ 3,011$ 7,346$ 259,086$ Investments - unrestricted11,012,686 - - - 2,869,114 13,881,800 Investments - restricted440,384 - - - 288,706 729,090 Interest receivable43,180 - - - 19,201 62,381 Accounts receivable, net3,080,783 - - 22 122,364 3,203,169 Special assessments receivable434,505 - - - - 434,505 Due from other funds- 890,000 1,298,000 - 220,000 2,408,000 Due from other governments21,258 - - - - 21,258 Prepaid expenses365,308 - - - - 365,308 Inventory14,752 1,111,745 - 60,933 13,079 1,200,509 Total current assets15,413,185 2,006,093 1,542,052 63,966 3,539,810 22,565,106 Noncurrent assets: Deferred charges87,864 - 7,788 7,553 26,756 129,961 Net capital assets57,660,634 1,265,207 1,563,392 4,671,123 6,484,120 71,644,476 Total noncurrent assets57,748,498 1,265,207 1,571,180 4,678,676 6,510,876 71,774,437 Total assets73,161,683 3,271,300 3,113,232 4,742,642 10,050,686 94,339,543 Liabilities: Current liabilities: Accounts payable387,989 264,352 1,960 62,326 258,745 975,372 Salaries payable61,456 66,846 2,880 41,924 88,943 262,049 Accrued interest payable304,855 - 8,514 8,663 35,500 357,532 Contracts payable13,657 - - - 57,399 71,056 Due to other funds135,000 - - 1,110,000 8,000 1,253,000 Due to other governments7,799 60,623 42 4,177 11,239 83,880 Deposits payable112,216 - - - - 112,216 Unearned revenue- 4,007 - 56,287 56,179 116,473 Compensated absences payable 77,706 107,526 - 85,277 120,726 391,235 Bonds payable - current2,270,000 - 125,000 280,000 80,000 2,755,000 Total current liabilities3,370,678 503,354 138,396 1,648,654 716,731 6,377,813 Noncurrent liabilities: Net OPEB obligation27,855 16,658 - 23,382 28,445 96,340 Compensated absences payable116,558 161,289 - 127,916 181,087 586,850 Bonds payable, net of unamortized discounts17,236,574 - 599,547 601,658 2,372,981 20,810,760 Total noncurrent liabilities17,380,987 177,947 599,547 752,956 2,582,513 21,493,950 Total liabilities20,751,665 681,301 737,943 2,401,610 3,299,244 27,871,763 Net assets: Invested in capital assets, net of related debt38,594,444 1,265,207 838,845 3,789,465 4,319,845 48,807,806 Restricted for debt service- - 618,852 - - 618,852 Unrestricted13,815,574 1,324,792 917,592 (1,448,433) 2,431,597 17,041,122 Total net assets52,410,018$ 2,589,999$ 2,375,289$ 2,341,032$ 6,751,442$ 66,467,780$ Business-type Activities - Enterprise Funds The accompanying notes are an integral part of these financial statements. 28 CITY OF EDINA, MINNESOTA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS For The Year Ended December 31, 2010 Nonmajor AquaticGolfEnterprise Utilities Liquor Center Course Funds Total Operating revenues: Sales - liquor-$ 12,854,693$ -$ 144,541$ -$ 12,999,234$ Sales - retail- - 7,442 218,585 47,995 274,022 Sales - utilities14,635,480 - - - - 14,635,480 Sales - concessions- - 123,879 213,250 64,881 402,010 Memberships- - 436,524 119,981 82,919 639,424 Admissions- - 334,851 228,126 687,434 1,250,411 Building rental- - 42,245 70,726 1,304,781 1,417,752 Rental of equipment- - - 362,763 131,059 493,822 Greens fees- - - 1,738,261 176,124 1,914,385 Other fees399,401 - 588 346,971 994,289 1,741,249 Total operating revenues15,034,881 12,854,693 945,529 3,443,204 3,489,482 35,767,789 Operating expenses: Cost of sales and services10,075 9,467,169 35,902 328,821 74,663 9,916,630 Personal services1,555,506 1,343,408 270,844 1,636,091 2,037,798 6,843,647 Contractual services6,240,639 449,087 113,170 557,828 1,222,427 8,583,151 Commodities795,569 75,228 115,070 479,783 395,038 1,860,688 Central Services543,293 191,168 22,080 116,958 158,734 1,032,233 Depreciation1,973,971 68,583 194,701 424,077 513,227 3,174,559 Total operating expenses11,119,053 11,594,643 751,767 3,543,558 4,401,887 31,410,908 Operating income (loss)3,915,828 1,260,050 193,762 (100,354) (912,405) 4,356,881 Nonoperating revenues (expenses): Intergovernmental119,529 - - - 222,000 341,529 Investment income48,380 - - - 157,585 205,965 Donations- - - - 31,701 31,701 Interest and fiscal charges(737,737) - (17,248) (17,568) (90,170) (862,723) Amortization of bond deferred charges (discounts)8,252 - (593) (447) (722) 6,490 Gain on sale of capital asset17,165 - - 5,222 4,187 26,574 Miscellaneous 1,135 2,371 - - 6,500 10,006 Total nonoperating revenues (expenses)(543,276) 2,371 (17,841) (12,793) 331,081 (240,458) Income (loss) before transfers3,372,552 1,262,421 175,921 (113,147) (581,324) 4,116,423 Transfers: Transfers in- - - 100,000 479,777 579,777 Transfers out(100,000) (1,245,100) - (671) - (1,345,771) Total transfers (100,000) (1,245,100) - 99,329 479,777 (765,994) Change in net assets3,272,552 17,321 175,921 (13,818) (101,547) 3,350,429 Net assets - January 1 49,137,466 2,572,678 2,199,368 2,354,850 6,852,989 63,117,351 Net assets - December 3152,410,018$ 2,589,999$ 2,375,289$ 2,341,032$ 6,751,442$ 66,467,780$ Business-type Activities - Enterprise Funds The accompanying notes are an integral part of these financial statements. 29 CITY OF EDINA, MINNESOTA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For The Year Ended December 31, 2010 Nonmajor AquaticGolfEnterprise Utilities Liquor Center Course Funds Total Cash flows from operating activities: Receipts from customers and users15,024,754$ 12,855,105$ 945,529$ 3,455,941$ 3,497,768$ 35,779,097$ Payment to suppliers(7,561,451) (10,402,191) (285,379) (1,465,731) (1,662,207) (21,376,959) Payment to employees(1,578,797) (1,314,243) (268,979) (1,743,889) (2,063,262) (6,969,170) Donations received- - - - 31,701 31,701 Miscellaneous received1,135 2,371 - - 6,500 10,006 Net cash provided by (used in) operating activities5,885,641 1,141,042 391,171 246,321 (189,500) 7,474,675 Cash flows from noncapital financing activities: State grant119,529 - - - - 119,529 Transfer from other funds- - - 100,000 479,777 579,777 Transfer to other funds(100,000) (1,245,100) - (671) - (1,345,771) Proceeds from interfund borrowing135,000 1,000,000 1,200,000 1,110,000 124,000 3,569,000 Payment of interfund borrowing- (890,000) (1,298,000) (1,000,000) (336,000) (3,524,000) Net cash provided by (used in) noncapital financing activities154,529 (1,135,100) (98,000) 209,329 267,777 (601,465) Cash flows from capital and related financing activities: Capital grant- - - - 222,000 222,000 Acquisition of capital assets(2,867,147) (2,165) - (173,300) (2,800,612) (5,843,224) Proceeds from sale of capital assets22,106 - - 12,000 4,187 38,293 Principal paid on bonds(2,185,000) - (135,000) (280,000) - (2,600,000) Interest paid on bonds(768,160) - (21,967) (24,288) (54,670) (869,085) Net cash provided by (used in) capital and related financing activities(5,798,201) (2,165) (156,967) (465,588) (2,629,095) (9,052,016) Cash flows from investing activities: Proceeds from sale of investments- - - - 2,386,003 2,386,003 Purchase of investments(723,271) - - - - (723,271) Interest received23,161 - - - 155,096 178,257 Net cash flows provided by (used in) investing activities(700,110) - - - 2,541,099 1,840,989 Net increase (decrease) in cash and cash equivalents(458,141) 3,777 136,204 (9,938) (9,719) (337,817) Cash and cash equivalents - January 1458,470 571 107,848 12,949 17,065 596,903 Cash and cash equivalents - December 31329$ 4,348$ 244,052$ 3,011$ 7,346$ 259,086$ Business-type Activities - Enterprise Funds The accompanying notes are an integral part of these financial statements. 30 CITY OF EDINA, MINNESOTA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For The Year Ended December 31, 2010 Nonmajor AquaticGolfEnterprise Utilities Liquor Center Course Funds Total Business-type Activities - Enterprise Funds Reconciliation of operating income to net cash provided (used) by operating activities: Operating income (loss) 3,915,828$ 1,260,050$ 193,762$ (100,354)$ (912,405)$ 4,356,881$ Adjustments to reconcile operating income (loss) to net cash flows provided by (used in) operating activities: Depreciation1,973,971 68,583 194,701 424,077 513,227 3,174,559 Donations- - - - 31,701 31,701 Miscellaneous revenue1,135 2,371 - - 6,500 10,006 Changes in assets and liabilities: Decrease (increase) in receivables47,058 950 - 1,591 8,066 57,665 Decrease (increase) in special assessments(39,767) - - - - (39,767) Decrease (increase) in due from other governments(17,418) - - - - (17,418) Decrease (increase) in inventory10,075 (53,546) - (8,311) (336) (52,118) Decrease (increase) in prepaid items(9,802) - - - - (9,802) Increase (decrease) in accounts payable106,074 (77,402) 1,368 28,608 128,078 186,726 Increase (decrease) in salaries payable(325) 10,640 1,865 (9,079) 7,186 10,287 Increase (decrease) in contracts payable(71,959) - - - 57,399 (14,560) Increase (decrease) in due to other governments(6,263) (88,591) (525) (1,967) 3,514 (93,832) Increase (decrease) in deposits payable- - - (671) - (671) Increase (decrease) in unearned revenue- (538) - 11,146 220 10,828 Increase (decrease) in net OPEB obligation7,837 4,325 - 6,008 7,617 25,787 Increase (decrease) in compensated absences(30,803) 14,200 - (104,727) (40,267) (161,597) Total adjustments1,969,813 (119,008) 197,409 346,675 722,905 3,117,794 Net cash provided by (used in) operating activities5,885,641$ 1,141,042$ 391,171$ 246,321$ (189,500)$ 7,474,675$ Noncash investing activities: Increase (decrease) in fair value of investments(14,050)$ -$ -$ -$ 3,073$ (10,977)$ The accompanying notes are an integral part of these financial statements. 31 CITY OF EDINA, MINNESOTA STATEMENT OF FIDUCIARY NET ASSETS AGENCY FUNDS December 31, 2010 Agency Funds Assets Cash 171,159$ Investments 260,000 Total assets 431,159$ Liabilities Accounts payable 44,892$ Salaries payable 5,018 Due to other governmental units 381,249 Total liabilities 431,159$ The accompanying notes are an integral part of these financial statements. 32 CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 33 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 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. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 34 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. 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. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 35 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. 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, Public Safety Training Facility, and I-494 Corridor Commission 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). CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 36 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. 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. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 37 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 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. 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, 2010 are planned to be eliminated in 2011. 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. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 38 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. 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 CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 39 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 expenses 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. 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 $10,000 (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. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 40 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 15 - 50 years Buildings and structures 15 - 40 years Furniture and office equipment 5 - 10 years Vehicles and equipment 3 - 20 years Parks 5 - 100 years Utility infrastructure 20 - 50 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. 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. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 41 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. 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. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 42 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 payable64,760,000$ Plus: issuance premium977,544 Less: issuance discount(292,182) Less: deferred charges(1,010,229) Accrued interest payable876,462 OPEB obligation719,686 Compensated absences3,644,993 Net adjustment to reduce fund balance - total governmental funds to arrive at net assets - governmental activities69,676,274$ 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: CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 43 Capital outlay13,014,850$ Depreciation expense(5,884,500) Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental funds7,130,350$ Another element of that reconciliation states that “The issuance of long-term debt 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.” The details of this difference are as follows: Debt issued or incurred: Issuance of general obligation bonds8,515,000$ Issuance of permanent improvement revolving bonds2,305,000 Less deferred charges(682,547) Plus premiums898,658 Principal repayments: Tax increment debt(805,000) General obligation debt(735,000) Permanent improvement revolving debt(655,000) Public project revenue debt(9,280,000) Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities(438,889)$ 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: CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 44 OPEB obligation(206,627)$ Compensated absences(53,660) Accrued interest109,533 Amortization of deferred charges(40,021) Amortization of bond discounts and premiums(13,930) Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities(204,705)$ Note 3 CASH AND INVESTMENTS A. COMPONENTS OF CASH AND INVESTMENTS Cash and investments at year-end consist of the following: Deposits529,266$ Cash on hand19,185 Investments68,459,554 69,008,005$ Cash and investments are presented in the financial statements as follows: Cash and cash equivalents - Statement of Net Assets377,292$ Investments - Statement of Net Assets64,300,707 Restricted investments - Statement of Net Assets3,898,847 Cash and investments - Statement of Fiduciary Net Assets431,159 69,008,005$ The City had restricted investments of $3,898,847 as of December 31, 2010 that represent unspent bond proceeds to be used for construction projects. 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: CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 45 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 $529,266 while the balance on the bank records was $1,224,033. At December 31, 2010, all deposits were fully covered by federal depository insurance, surety bonds, or by collateral held by the City’s agent in the City’s name. C. INVESTMENTS The City has the following investments at year end: Rating Agency < 1 1 to 5 5 to 10 10 +Total U.S. TreasuriesN/AN/A69,182$ 455,367$ 773,834$ 598,119$ 1,896,502$ GNMAAAA/AaaS&P/Mdy's- - - 29,015 29,015 SBA NotesAAA/AaaS&P/Mdy's2,868 300,905 107,937 - 411,710 SBA NotesN/RN/A- 98,744 82,796 202,167 383,707 U.S. AgenciesAAA/AaaS&P/Mdy's11,095,220 18,026,810 2,430,021 2,613,477 34,165,528 U.S. AgenciesA-1+Mdy's5,999,840 - - - 5,999,840 MunicipalsN/RN/A- 1,400,000 - - 1,400,000 MunicipalsAAAS&P- 10,720 - - 10,720 MunicipalsAAA/AaaS&P/Mdy's- 76,845 - - 76,845 MunicipalsAA/Aa1S&P/Mdy's- 699,176 - 2,595,000 3,294,176 Commercial paperP1S&P1,676,114 - - - 1,676,114 Negotiable CD'sN/RN/A10,045,288 495,877 - - 10,541,165 28,888,512$ 21,564,444$ 3,394,588$ 6,037,778$ 59,885,322 Money Market*AAAS&P7,331,894 4M Fund*N/RN/A1,242,338 Total investments 68,459,554$ 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 CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 46 The Minnesota Municipal Money Market Fund (4M Fund) is regulated by Minnesota Statutes and the Board of Directors of the League of Minnesota Cities. The 4M Fund is an unrated 2a7-like pool and the fair value of the position in the pool is the same as the value of pool shares. 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. 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 $10,000,000, that are a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York, or certain Minnesota securities broker-dealers. The City’s investment policies specifically address credit risk, further limiting the City’s exposure to credit risk by requiring that all state and local government obligations to be rated “AA” or better by a national rating agency. Concentration risk – This is the risk associated with investing a significant portion of the City’s investment (considered 5 percent or more) in the securities of a single issuer, excluding U.S. guaranteed investments (such as Treasuries), investment pools, and mutual funds. The City’s investment policies specifically address the City’s desire to limit concentration risk, but do not set specific guidelines for measurement of this risk. At year-end, the City’s investments CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 47 include 16%, 13% and 19% in securities issued by FNMA, FHLMC, and FHLB, respectively. Interest rate risk – This is the risk of potential variability in the fair value of fixed rate investment resulting in changes in interest rates (the longer the period for which an interest rate is fixed, the greater the risk). The City’s investment policies specifically address the City’s desire to limit interest rate risk, but do not set specific guidelines for measurement of this risk. Note 4 CAPITAL ASSETS Capital asset activity for the year ended December 31, 2010 is as follows: BeginningEnding Balance Increases Decreases Balance Governmental activities: Capital assets not being depreciated: Land17,433,829$ -$ -$ 17,433,829$ Construction in progress28,872,101 12,584,221 (16,274,922) 25,181,400 Total capital assets not being depreciated46,305,930 12,584,221 (16,274,922) 42,615,229 Capital assets being depreciated: Land improvements22,392,896 157,163 - 22,550,059 Buildings and structures35,362,431 5,922,568 - 41,284,999 Furniture and office equipment3,370,733 219,845 - 3,590,578 Vehicles and equipment13,860,148 559,230 (465,433) 13,953,945 Infrastructure70,198,748 9,444,573 (1,470,120) 78,173,201 Parks14,983,108 402,171 (35,280) 15,349,999 Total capital assets being depreciated160,168,064 16,705,550 (1,970,833) 174,902,781 Less accumulated depreciation for: Land improvements(12,334,182) (782,317) - (13,116,499) Buildings and structures(10,749,973) (1,138,161) - (11,888,134) Furniture and office equipment(1,319,075) (298,652) - (1,617,727) Vehicles and equipment(7,803,592) (1,120,990) 417,359 (8,507,223) Infrastructure(45,470,946) (1,983,167) 1,419,460 (46,034,653) Parks(6,237,632) (561,213) 35,280 (6,763,565) Total accumulated depreciation(83,915,400) (5,884,500) 1,872,099 (87,927,801) Total capital assets being depreciated, net76,252,664 10,821,050 (98,734) 86,974,980 Governmental activities capital assets, net122,558,594$ 23,405,271$ (16,373,656)$ 129,590,209$ CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 48 Balance Increases Decreases Balance Business-type activities: Capital assets not being depreciated: Land1,088,965$ -$ -$ 1,088,965$ Construction in progress11,454,000 5,244,382 (11,248,523) 5,449,859 Total capital assets not being depreciated12,542,965 5,244,382 (11,248,523) 6,538,824 Capital assets being depreciated: Land improvements & golf course8,183,318 170,058 - 8,353,376 Buildings and structures16,138,390 286,238 - 16,424,628 Furniture and office equipment160,142 - (6,839) 153,303 Vehicles and equipment5,932,877 303,719 (171,858) 6,064,738 Utility infrastructure72,168,726 11,087,350 - 83,256,076 Lease property capital lease468,580 - - 468,580 Total capital assets being depreciated103,052,033 11,847,365 (178,697) 114,720,701 Less accumulated depreciation for: Land improvements & golf course(4,637,393) (307,230) - (4,944,623) Buildings and structures(10,213,591) (602,180) - (10,815,771) Furniture and office equipment(121,634) (5,607) 5,866 (121,375) Vehicles and equipment(3,199,708) (456,387) 161,111 (3,494,984) Utility infrastructure(27,966,561) (1,803,155) - (29,769,716) Lease property capital lease(468,580) - - (468,580) Total accumulated depreciation(46,607,467) (3,174,559) 166,977 (49,615,049) Total capital assets being depreciated, net56,444,566 8,672,806 (11,720) 65,105,652 Business-type activities capital assets, net68,987,531$ 13,917,188$ (11,260,243)$ 71,644,476$ CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 49 Depreciation expense was charged to functions/programs of the primary government as follows: Governmental activities: General government534,736$ Public safety806,846 Public works2,726,247 Parks1,816,671 Total depreciation expense - governmental activities5,884,500$ Business-type activities: Utilities1,973,971$ Liquor68,583 Aquatic Center194,701 Golf Course424,077 Arena292,892 Art Center26,573 Edinborough Park/Centennial Lakes193,762 Total depreciation expense - business-type activities3,174,559$ CONSTRUCTION COMMITMENTS At December 31, 2010, the City had construction project contracts in progress. The commitments related to the remaining contract balances are summarized as follows: ContractRemaining Project #Project DescriptionAmountCommitment 10-12 EngLift Station Rehabilitation294,960 21,823$ VariousNew Public Works Facility12,289,647 33,677 55,500$ Note 5 LONG-TERM DEBT The City has five types of bonded debt outstanding at December 31, 2010: 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 solely from special assessments with any deficiency to be provided for by general property taxes. 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 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. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 50 GOVERNMENTAL ACTIVITIES As of December 31, 2010, the governmental long-term bonded debt of the financial reporting entity consisted of the following: Final InterestIssueMaturityOriginalPayable Rates Date Date Issue 12/31/10 Tax Increment Bonds: Tax Increment Bonds, Series 2000A4.30-4.80%9/6/20002/1/20112,620,000$ 325,000$ Tax Increment Bonds, Series 2002B3.00%8/5/20022/1/20121,400,000 1,400,000 Tax Increment Refunding Bonds, Series 2005D3.00-3.40%7/19/20052/1/20133,505,000 1,595,000 Total Tax Increment Bonds7,525,000 3,320,000 General Obligation Bonds: General Obligation - Park & Recreation Refunding, 2005A3.50-4.00%7/19/20052/1/20175,375,000 3,665,000 General Obligation - Capital Improvement Plan, 2007A4.00-4.25%5/24/20072/1/20285,865,000 5,465,000 General Obligation - Capital Improvement Plan, 2009A3.00-4.40%4/29/20092/1/203014,000,000 14,000,000 General Obligation - Equipment Certificates, 2009B2.00-3.00%4/29/20091/1/2012230,000 155,000 General Obligation - Capital Improvement Plan, 2010A2.00-4.00%11/18/20102/1/20218,285,000 8,285,000 General Obligation - Equipment Certificates, 2010B2.00%11/18/20102/1/2013230,000 230,000 Total General Obligation Bonds33,985,000 31,800,000 Permanent Improvement Revolving (PIR) Bonds: Permanent Improvement Revolving, 2005E3.00-3.75%9/13/20052/1/20161,460,000 845,000 Permanent Improvement Revolving, 2007C3.60-4.00%5/24/20072/1/20195,870,000 5,365,000 Permanent Improvement Revolving, 2008B3.00-4.00%8/28/20082/1/20207,755,000 7,755,000 Permanent Improvement Revolving, 2010B2.00-3.00%11/18/20102/1/20222,305,000 2,305,000 Total PIR Bonds17,390,000 16,270,000 Public Project Revenue Bonds: Public Project Revenue, Series 20053.50-4.13%9/13/20055/1/20265,425,000 4,650,000 Public Project Revenue, Series 2009A2.10-4.55%11/24/20092/1/20302,595,000 2,595,000 Public Project Revenue, Series 2009B1.95-5.80%11/24/20092/1/20306,125,000 6,125,000 Total Public Project Revenue Bonds14,145,000 13,370,000 Total bonded indebtedness - governmental activities73,045,000$ 64,760,000$ CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 51 BUSINESS-TYPE ACTIVITIES InterestIssueMaturityOriginalPayable Rates Date Date Issue 12/31/10 Revenue Bonds: Recreational Facility Bonds, Series 2009B2.00-3.00%4/29/20091/1/20132,010,000$ 1,595,000$ Recreational Facility Bonds, Series 2009C2.00-4.00%12/10/20092/1/20302,440,000 2,440,000 Utility Revenue Bonds, Series 2003C1.10-3.55%3/1/20032/1/20133,200,000 1,075,000 Utility Revenue Bonds, Series 2007B4.00%5/24/20072/1/20178,210,000 6,010,000 Utility Revenue Bonds, Series 2008A3.00-4.25%8/28/20082/1/201913,985,000 12,255,000 Total Revenue Bonds29,845,000 23,375,000 Total bonded indebtedness - business-type activities29,845,000$ 23,375,000$ Annual debt service requirements to maturity for the City’s bonds are as follows: Principal Interest Principal Interest Principal Interest 2011840,000$ 94,359$ 2,100,000$ 1,065,389$ 1,330,000$ 524,964$ 20121,930,000 48,445 2,020,000 1,097,868 1,375,000 496,169 2013550,000 9,350 2,000,000 1,030,105 1,625,000 447,269 2014- - 1,985,000 957,899 1,670,000 393,981 2015- - 2,080,000 882,868 1,720,000 337,222 2016-2020- - 9,640,000 3,287,774 8,045,000 774,554 2021-2025- - 6,280,000 1,782,956 505,000 15,225 2026-2030- - 5,695,000 581,763 - - Total3,320,000$ 152,154$ 31,800,000$ 10,686,622$ 16,270,000$ 2,989,384$ Principal Interest Principal Interest 2011210,000$ 574,681$ 2,755,000$ 808,335$ 2012345,000 565,388 2,880,000 718,226 2013595,000 551,251 2,985,000 622,636 2014615,000 532,811 2,330,000 531,925 2015630,000 512,211 2,415,000 444,300 2016-20203,475,000 2,178,626 8,595,000 917,508 2021-20254,170,000 1,358,459 645,000 220,100 2026-20303,330,000 414,206 770,000 79,400 Total13,370,000$ 6,687,633$ 23,375,000$ 4,342,430$ Governmental Activities GeneralPublic ImprovementTax Public ProjectRevenue Business-type ActivitiesGovernmental Activities Obligation Bonds BondsRevenue Bonds Revolving Bonds Year Ending December 31 Year Ending December 31 Increment Bonds CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 52 CHANGE IN LONG-TERM LIABILITIES Long-term liability activity for the year ended December 31, 2010, was as follows: BeginningEndingDue Within Balance Additions Reductions Balance One Year Governmental activities: Bonds payable: Tax increment4,125,000$ -$ (805,000)$ 3,320,000$ 840,000$ General obligation24,020,000 8,515,000 (735,000) 31,800,000 2,100,000 PIR 14,620,000 2,305,000 (655,000) 16,270,000 1,330,000 Public project revenue22,650,000 - (9,280,000) 13,370,000 210,000 Less deferred amounts: Discount on bonds(321,268) - 29,086 (292,182) - Premiums94,042 898,658 (15,156) 977,544 - Total bonds payable65,187,774 11,718,658 (11,461,070) 65,445,362 4,480,000 Compensated absences3,591,333 1,750,340 (1,696,680) 3,644,993 1,457,997 Governmental activity Long-term liabilities68,779,107$ 13,468,998$ (13,157,750)$ 69,090,355$ 5,937,997$ Business-type activities: Bonds payable: Revenue bonds25,975,000$ -$ (2,600,000)$ 23,375,000$ 2,755,000$ Less deferred amounts: Discount on bonds(13,670) - 3,698 (9,972) - Premiums230,952 - (30,220) 200,732 - Total bonds payable26,192,282 - (2,626,522) 23,565,760 2,755,000 Compensated absences1,139,682 314,155 (475,752) 978,085 391,235 Business-type activity Long-term liabilities27,331,964$ 314,155$ (3,102,274)$ 24,543,845$ 3,146,235$ For governmental activities, compensated absences are generally liquidated by the general fund. During 2010 the City issued $8,285,000 of General Obligation Refunding bonds, Series 2010A to provide resources to purchase U.S. Government State and Local Government Series securities that were placed in an irrevocable trust for the purpose of generating resources for all future debt services payments of $8,500,000 of Public Project Revenue bonds, Series 2002. As a result, the refunded bonds are considered to be defeased and the liability has been removed from the governmental activities column of the statement of net assets. The reacquisition price exceeded the net carrying amount of the old debt by $594,822. This amount is being netted against the new debt and amortized over the remaining life of the refunded debt, which is the same life as the new debt issued. This advance refunding was undertaken to reduce total debt service payments over the next 11 years by $1,026,852 and resulted in an economic gain of $926,925. The face value of defeased debt outstanding as of December 31, 2010 related to this transaction is $8,500,000. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 53 Note 6 LEGAL DEBT MARGIN The City is subject to a statutory limitation by the State of Minnesota for bonded indebtedness payable principally from property taxes. The City of Edina's legal debt margin for 2010 is computed as follows: December 31, 2010 Market Value (after fiscal disparities)9,949,807,100$ Debt Limit (3% of Market Value)298,494,213$ Amount of debt applicable to debt limit: Total bonded debt88,135,000$ Less: Tax increment bonds(3,320,000) Public improvement revolving bonds(16,270,000) Revenue bonds(23,375,000) Total debt applicable to debt limit45,170,000$ Legal debt margin253,324,213$ 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 General Employees Retirement Fund (GERF) and the Public Employees Police and Fire Fund (PEPFF) which are cost-sharing, multiple- employer retirement plans. These plans are established and administered in accordance with Minnesota Statute, Chapters 353 and 356. GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. 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. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 54 PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by State Statute, and vest after three years of credited service. The defined retirement benefits are based on a member’s highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. Two methods are used to compute benefits for PERA’s Coordinated 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 GERF 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 GERF 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, 2010 55 B. FUNDING POLICY Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. These statutes are established and amended by the state legislature. The City makes annual contributions to the pension plans equal to the amount required by state statutes. GERF Basic Plan members and Coordinated Plan members were required to contribute 9.1% and 6.0%, respectively, of their covered salary in 2010. PEPFF members were required to contribute 9.4% of their covered salary in 2010. The City of Edina is required to contribute the following percentages of annual covered payroll: 11.78% for Basic Plan GERF members, 7% for Coordinated Plan GERF members, and 14.1% for PEPFF members. The City’s contributions to the Public Employees Retirement Fund for the years ending December 31, 2010, 2009, and 2008 were $951,791, $930,938, and $860,091, respectively. The City’s contributions to the Public Employees Police and Fire Fund for the years ending December 31, 2010, 2009, and 2008 were $920,988, $941,561, and $855,910, respectively. The City’s contributions were equal to the contractually required contributions for each year as set by state statute. Note 8 OTHER POST-EMPLOYMENT BENEFITS PLAN A. Plan Description The City provides post-employment insurance benefits to certain eligible employees through City’s Other Post-Employment Benefits Plan, a single-employer defined benefit plan administered by the City. All post-employment benefits are based on contractual agreements with employee groups. These contractual agreements do not include any specific contribution or funding requirements. These benefits are summarized as follows: Post-Employment Insurance Benefits – All retirees of the City have the option under state law to continue their medical insurance coverage through the City from the time of retirement until the employee reaches the age of eligibility for Medicare. For members of all employee groups, the retiree must pay the full premium to continue coverage for medical and dental insurance. The City is legally required to include any retirees for whom it provides health insurance coverage in the same insurance pool as its active employees, whether the premiums are paid by the City or the retiree. Consequently, participating retirees are considered to receive a secondary benefit known as an “implicit rate subsidy.” This benefit relates to the assumption that the retiree is receiving a more favorable premium rate than they would otherwise be able to obtain if purchasing insurance on their own, due to being included in the same pool with the City’s younger and statistically healthier active employees. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 56 B. Funding Policy The required contribution is based on projected pay-as-you-go financing requirements, with additional amounts to pre-fund benefits as determined annually by the City. C. Annual OPEB Cost and Net OPEB Obligation The City’s annual OPEB cost (expense) is calculated based on annual required contributions (ARC) of the City, an amount determined on an actuarially determined basis in accordance with the parameters of GASB Statement Nos. 43 and 45. The ARC represents a level funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. The following table shows the components of the City’s annual OPEB cost for the year, the amount actually contributed to the plan, and the changes in the City’s net OPEB obligation to the plan: Annual required contribution302,143$ Interest on net OPEB obligation27,051 Adjustment to annual required contribution(21,313) Adjustment for 2008 and 2009 costs17,520 Annual OPEB cost (expense)325,401 Contributions made(92,987) Increase in net OPEB obligation232,414 Net OPEB obligation - beginning of year583,612 Net OPEB obligation - end of year816,026$ The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the past three years are as follows: Percentage of FiscalAnnualEmployerAnnual OPEBNet OPEB Year Ended OPEB Cost Contribution Cost Contributed Obligation December 31, 2008439,466$ 131,962$ 30.0%307,504$ December 31, 2009443,317 167,209 37.7%583,612 December 31, 2010325,401 92,987 28.6%816,026 D. Funded Status and Funding Progress As of January 1, 2010, the most recent actuarial valuation date, the plan was zero percent funded. The actuarial accrued liability for benefits was $2,966,250, and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $2,966,250. The covered payroll (annual payroll of active employees covered by the plan) was $17,786,616, and the ratio of the UAAL to the covered payroll was 16.7 percent. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 57 Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and ARCs of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The Schedule of Funding Progress immediately following the notes to the basic financial statements presents multi- year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. E. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the January 1, 2010 actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions included: a 4.5 percent investment rate of return (net of administrative expenses) based on the City’s own investments; an annual healthcare cost trend rate of 9.0 percent initially, reduced by decrements to an ultimate rate of 5.0 percent after twelve years. The UAAL is being amortized as a level percentage of payroll. The remaining amortization period at January 1, 2010 was 30 years. Note 9 INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS The composition of internal balances as of December 31, 2010, is as follows: Payable FundAmount GeneralHRA20,571$ Police Special RevenueConstruction350,000 Communication Special RevenueConstruction100,000 General120,000 LiquorConstruction890,000 Aquatic CenterUtility135,000 Golf Course1,110,000 Edinborough Park/Centennial Lakes8,000 Construction45,000 ArenaConstruction80,000 Art CenterConstruction140,000 Total 2,998,571$ Receivable Fund CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 58 The City’s interfund receivables and payables eliminate what would have been negative cash balances. DebtNonmajorNonmajor General Service Construction Golf Course Governmental Business-type Total Transfer out: General Fund-$ -$ 936,499$ -$ -$ -$ 936,499$ HRA Fund- 930,820 - - - - 930,820 Construction Fund- 20,672 - - - 249,777 270,449 Utilities Fund- - 100,000 - - - 100,000 Liquor Fund765,100 - 150,000 100,000 - 230,000 1,245,100 Golf Course Fund- - - - 671 - 671 765,100$ 951,492$ 1,186,499$ 100,000$ 671$ 479,777$ 3,483,539$ 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 $765,100, $100,000 and $230,000 to the general fund, golf course fund, art center, and arena funds, respectively, to subsidize operations. 2. The construction fund transferred $10,000, $116,406 and $123,371 to the art center, arena, and edinborough funds, respectively, to subsidize capital improvements to those facilities. 3. The HRA fund transferred $930,820 of tax increment revenues to the debt service fund to pay principal and interest on outstanding tax increment debt. 4. The utilities fund and liquor fund transferred $100,000 and $150,000, respectively, to the construction fund to fund the capital improvement program, as planned in the 2010 budget. 5. The construction fund transferred $20,672 to the debt service fund to pay a portion of the debt service on the gymnasium bonds. 6. The general fund transferred $936,499 of the 2009 unreserved and undesignated fund balance to the construction fund according to the City’s fund balance policies to fund the capital improvement program. 7. The golf course fund transferred $671 to the Braemar memorial fund to move the accumulated assets for this program to the newly created fund. Note 10 TAX INCREMENT DISTRICTS The City of Edina is the administering authority for the following Tax Increment Districts: District number 1202 (Grandview Commercial Area) is a redevelopment district established in 1984 pursuant to Minnesota Statutes with a termination date of 2010. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 59 District number 1203 (Southeast Edina Redevelopment District – Centennial Lakes) is a redevelopment district established in 1988 pursuant to Minnesota Statutes with a termination date of 2016. District number 1207 (70th and Cahill Economic Development District) is an economic district established in 1990 pursuant to Minnesota Statutes with a decertification date of 2000. Increment previously collected is available for expenditures within the larger development district that includes the Wooddale – Valley View commercial area. Tax capacity and debt for this district is not included in the following schedule as county reports no longer indicate captured tax capacity for this district and no debt is outstanding. The following table reflects values as of December 31, 2010: TIF #1202TIF #1203Total Original tax capacity164,885$ 229,691$ 394,576$ Current tax capacity1,611,759 3,743,154 5,354,913 Tax capacity change1,446,874 3,513,463 4,960,337 Captured tax capacity value: Retained captured tax capacity1,446,874$ 3,513,463$ 4,960,337$ Total bonds issued (general obligation)9,637,555$ 35,894,724$ 45,532,279$ Amounts redeemed7,912,555 34,299,724 42,212,279 Outstanding bonds at December 31, 20101,725,000$ 1,595,000$ 3,320,000$ Note 11 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. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 60 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 2010. 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, 2010. 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. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 61 Note 12 CONDUIT DEBT OBLIGATION As of December 31, 2010, the City of Edina had 4 series of Housing and Health Care Revenue Bonds, with an aggregate principal amount payable of $31,245,000. 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 13 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 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 14 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, 2010, the City paid a total of $38,720 in membership fees to the PSTF. The City also pays an annual membership fee to the I-494 Corridor Commission as part of the joint venture agreement. The membership fee is paid by the commissions and projects department and is based on a Cost Sharing Formula. For the year ended December 31, 2010, the City paid a total of $11,079 in membership fees to the I-494 Corridor Commission. CITY OF EDINA, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 62 Note 15 DESIGNATIONS AND RESERVATIONS OF FUND BALANCE At December 31, 2010 the City had designated and reserved portions of its various fund balances through legal restriction and City Council authorization. A summary of such designations and reservations is as follows: December 31, 2010 General Fund: Reserved for prepaid items10,258$ Designated for park dedication178,295 Designated for investments13,079 Designated for compensated absences1,457,997 Designated for cash flow9,723,830 Debt Service Fund: Reserved for debt service6,104,858 Construction Fund: Reserved for encumbrances33,677 Reserved for special projects186,219 Reserved for construction projects3,136,080 Designated for equipment replacement3,258,633 Designated for capital improvements8,892,335 32,995,261$ CITY OF EDINA, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2010 Variance with 2010Final Budget - ActualOver OriginalFinalAmounts(Under) Revenues: General property taxes: Current20,103,348$ 20,103,348$ 20,405,035$ 301,687$ Penalties and interest12,000 12,000 39,552 27,552 Total general property taxes20,115,348 20,115,348 20,444,587 329,239 Licenses and permits:2,231,760 2,231,760 2,383,941 152,181 Intergovernmental: Federal:36,000 36,000 21,442 (14,558) State: Municipal state aid195,000 195,000 195,000 - Other51,000 51,000 109,645 58,645 State aid - police 355,000 355,000 332,572 (22,428) Health programs120,000 120,000 119,035 (965) Total intergovernmental757,000 757,000 777,694 20,694 Charges for services: Building Department5,400 5,400 23,997 18,597 City Clerk6,000 6,000 97,429 91,429 Fire Department30,000 30,000 22,683 (7,317) Ambulance fees1,545,000 1,545,000 1,648,575 103,575 Police Department201,000 201,000 183,568 (17,432) Engineering170,000 170,000 155,524 (14,476) Health Department7,700 7,700 12,933 5,233 Planning Department27,500 27,500 24,857 (2,643) Housing Foundation Contract25,000 25,000 35,748 10,748 HRA Services21,500 21,500 21,812 312 Park Registration96,000 96,000 112,048 16,048 Senior Center100,000 100,000 90,636 (9,364) Other fees5,000 5,000 1,090 (3,910) 50th & France Assessment69,000 69,000 69,000 - Charges to other funds393,168 393,168 393,168 - Total charges for services2,702,268 2,702,268 2,893,068 190,800 Fines and forfeits950,000 950,000 1,162,973 212,973 Miscellaneous: Rental of property315,000 315,000 425,005 110,005 Investment income109,382 109,382 101,165 (8,217) Donations11,000 11,000 28,798 17,798 Other6,000 6,000 2,789 (3,211) Total miscellaneous441,382 441,382 557,757 116,375 Total revenues27,197,758 27,197,758 28,220,020 1,022,262 Budgeted Amounts 63 CITY OF EDINA, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - GENERAL FUND (CONTINUED) For The Year Ended December 31, 2010 Variance with 2010Final Budget - ActualUnder OriginalFinalAmounts(Over) Expenditures: General government: Mayor and Council: Current: Personal services45,928$ 45,928$ 45,826$ 102$ Contractual services11,855 11,855 8,626 3,229 Commodities1,200 1,200 1,116 84 Central services29,340 29,340 25,037 4,303 Total mayor and council88,323 88,323 80,605 7,718 Administration: Current: Personal services874,348 874,348 795,681 78,667 Contractual services147,200 147,200 134,883 12,317 Commodities3,100 3,100 1,146 1,954 Central services72,204 72,204 61,449 10,755 Total administration1,096,852 1,096,852 993,159 103,693 Planning: Current: Personal services370,377 370,377 373,295 (2,918) Contractual services28,100 28,100 10,195 17,905 Commodities4,500 4,500 419 4,081 Central services54,960 54,960 46,511 8,449 Total planning457,937 457,937 430,420 27,517 Finance: Current: Personal services518,249 518,249 493,771 24,478 Contractual services103,500 103,500 95,647 7,853 Commodities3,400 3,400 3,564 (164) Central services55,908 55,908 47,307 8,601 Total finance681,057 681,057 640,289 40,768 Election: Current: Personal services142,932 142,932 191,543 (48,611) Contractual services23,069 23,069 18,389 4,680 Commodities19,000 19,000 8,369 10,631 Central services15,180 15,180 12,746 2,434 Total election200,181 200,181 231,047 (30,866) Assessing: Current: Personal services657,612 657,612 631,813 25,799 Contractual services110,200 110,200 88,781 21,419 Commodities2,800 2,800 1,309 1,491 Central services71,616 71,616 61,541 10,075 Total assessing842,228 842,228 783,444 58,784 Legal and court services: Current: Contractual services381,800 381,800 347,418 34,382 Budgeted Amounts 64 CITY OF EDINA, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - GENERAL FUND (CONTINUED) For The Year Ended December 31, 2010 Variance with 2010Final Budget - ActualUnder OriginalFinalAmounts(Over) Budgeted Amounts Commissions and projects: Current: Personal services130,000$ 130,000$ 391,111$ (261,111)$ Contractual services443,248 443,248 278,958 164,290 Commodities1,990 1,990 816 1,174 Total commissions and projects575,238 575,238 670,885 (95,647) Total general government4,323,616 4,323,616 4,177,267 146,349 Public safety: Police protection: Current: Personal services6,425,381 6,425,381 6,596,810 (171,429) Contractual services399,650 399,650 369,443 30,207 Commodities67,182 67,182 59,065 8,117 Central services912,648 912,648 849,738 62,910 Total police protection7,804,861 7,804,861 7,875,056 (70,195) Fire protection: Current: Personal services3,576,126 3,576,126 3,617,741 (41,615) Contractual services321,500 321,500 338,585 (17,085) Commodities166,000 166,000 184,095 (18,095) Central services320,052 320,052 301,241 18,811 Total fire protection4,383,678 4,383,678 4,441,662 (57,984) Civil defense: Current: Personal services38,848 38,848 40,146 (1,298) Contractual services10,026 10,026 13,314 (3,288) Commodities8,780 8,780 32 8,748 Total civil defense57,654 57,654 53,492 4,162 Animal Control: Current: Personal services69,543 69,543 70,875 (1,332) Contractual services8,424 8,424 15,171 (6,747) Commodities2,400 2,400 862 1,538 Central services7,980 7,980 7,503 477 Total animal control88,347 88,347 94,411 (6,064) Public health: Current: Personal services268,158 268,158 266,556 1,602 Contractual services195,306 195,306 188,086 7,220 Commodities2,325 2,325 501 1,824 Central services32,328 32,328 28,047 4,281 Total public health498,117 498,117 483,190 14,927 65 CITY OF EDINA, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - GENERAL FUND (CONTINUED) For The Year Ended December 31, 2010 Variance with 2010Final Budget - ActualUnder OriginalFinalAmounts(Over) Budgeted Amounts Inspections: Current: Personal services857,199$ 857,199$ 843,052$ 14,147$ Contractual services74,765 74,765 66,575 8,190 Commodities8,100 8,100 8,194 (94) Central services93,192 93,192 82,681 10,511 Total inspections1,033,256 1,033,256 1,000,502 32,754 Total public safety13,865,913 13,865,913 13,948,313 (82,400) Public works: Administration: Current: Personal services189,884 189,884 167,153 22,731 Contractual services6,450 6,450 5,979 471 Commodities500 500 153 347 Central services22,320 22,320 18,905 3,415 Total administration219,154 219,154 192,190 26,964 Engineering: Current: Personal services816,287 816,287 827,882 (11,595) Contractual services76,900 76,900 60,591 16,309 Commodities14,900 14,900 7,534 7,366 Central services118,716 118,716 104,242 14,474 Total engineering1,026,803 1,026,803 1,000,249 26,554 Street maintenance: Current: Personal services2,200,543 2,200,543 1,954,735 245,808 Contractual services737,950 737,950 649,425 88,525 Commodities983,050 983,050 980,542 2,508 Central services850,356 850,356 855,754 (5,398) Total street maintenance4,771,899 4,771,899 4,440,456 331,443 Total public works6,017,856 6,017,856 5,632,895 384,961 66 CITY OF EDINA, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - GENERAL FUND (CONTINUED) For The Year Ended December 31, 2010 Variance with 2010Final Budget - ActualUnder OriginalFinalAmounts(Over) Budgeted Amounts Parks: Administration: Current: Personal services648,019$ 648,019$ 641,697$ 6,322$ Contractual services32,344 32,344 20,025 12,319 Commodities2,986 2,986 2,107 879 Central services76,176 76,176 64,387 11,789 Total administration759,525 759,525 728,216 31,309 Recreation: Current: Personal services183,806 183,806 166,307 17,499 Contractual services177,343 177,343 121,396 55,947 Commodities51,655 51,655 48,641 3,014 Total recreation412,804 412,804 336,344 76,460 Maintenance: Current: Personal services1,559,357 1,559,357 1,577,598 (18,241) Contractual services504,091 504,091 331,587 172,504 Commodities199,608 199,608 161,339 38,269 Central services320,088 320,088 325,451 (5,363) Total maintenance2,583,144 2,583,144 2,395,975 187,169 Total parks3,755,473 3,755,473 3,460,535 294,938 Total expenditures27,962,858 27,962,858 27,219,010 743,848 Revenues over (under) expenditures(765,100) (765,100) 1,001,010 1,766,110 Other financing sources (uses): Transfer from other funds765,100 765,100 765,100 - Transfer to other funds- (936,499) (936,499) - Total financing sources (uses)765,100 (171,399) (171,399) - Net increase (decrease) in fund balance-$ (936,499)$ 829,611 1,766,110$ Fund balance - January 1 12,049,599 Fund balance - December 3112,879,210$ 67 CITY OF EDINA, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION OTHER POST-EMPLOYMENT BENEFITS PLAN SCHEDULE OF FUNDING PROGRESS For The Year Ended December 31, 2010 UnfundedUnfunded ActuarialActuarialActuarialActuarialLiability as a ValuationAccruedValue ofAccruedFundedCoveredPercentage of Date Liability Plan Assets Liability Ratio Payroll Payroll January 1, 20084,638,477$ -$ 4,638,477$ 0.0%17,071,318$ 27.2% January 1, 20102,966,250$ -$ 2,966,250$ 0.0%17,786,616$ 16.7% 68 CITY OF EDINA, MINNESOTA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION December 31, 2010 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, 2010 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 Budget Actual Budget General Government: Election200,181$ 231,047$ 30,866$ Commisions and projects575,238 670,885 95,647 Public Safety: Police protection7,804,861 7,875,056 70,195 Fire protection4,383,678 4,441,662 57,984 Animal control88,347 94,411 6,064 Excess expenditures in the election department are due to the general election in 2010 and are funded by available general fund balance. Excess expenditures in the commissions and projects department are due to employee severance payments made during the year and are funded by available general fund balance designated for compensated absences. Excess expenditures in the police protection, fire protection, and animal control departments are due to labor contracts that were settled after the budget was set for higher than expected amounts. These expenditures are funded by available general fund balance. 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. Police Special Revenue Fund - This fund was established to account for funds received for specific purposes within the police department, including E-911 and forfeiture funds. Braemar Memorial Fund - This fund was established to account for funds donated to the City for the purpose of enhancing the Braemar golf course with equipment and amenities that might not otherwise be affordable or viewed as a necessity to the golf course. NONMAJOR GOVERNMENTAL FUNDS Special Revenue Funds 71 CITY OF EDINA, MINNESOTA COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS December 31, 2010 CommunityTotal Nonmajor DevelopmentPoliceBraemarSpecial Revenue Block Grant Communication Special Revenue Memorial Funds Assets Cash and cash equivalents-$ 17,036$ 3,684$ 62,617$ 83,337$ Investments- 754,602 245,052 244,999 1,244,653 Accrued interest receivable- 5,050 727 665 6,442 Accounts receivable- 189,659 5,818 1,660 197,137 Due from other funds- 220,000 350,000 - 570,000 Due from other governments- 375 - - 375 Total assets-$ 1,186,722$ 605,281$ 309,941$ 2,101,944$ Liabilities and Fund Balance Liabilities: Accounts payable-$ 45,197$ 25,322$ -$ 70,519$ Salaries payable- 15,239 - - 15,239 Unearned revenue- 7,423 - - 7,423 Total liabilities- 67,859 25,322 - 93,181 Fund balance: Unreserved: Undesignated- 1,118,863 579,959 309,941 2,008,763 Total fund balance- 1,118,863 579,959 309,941 2,008,763 Total liabilities and fund balance-$ 1,186,722$ 605,281$ 309,941$ 2,101,944$ 72 CITY OF EDINA, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS For The Year Ended December 31, 2010 CommunityTotal Nonmajor DevelopmentPoliceBraemarSpecial Revenue Block Grant Communication Special Revenue Memorial Funds Revenues: Franchise fees-$ 692,288$ -$ -$ 692,288$ Intergovernmental126,921 - 68,765 - 195,686 Charges for services- 16,493 - - 16,493 Fines and forfeitures- - 40,794 - 40,794 Investment income- 37,122 1,037 664 38,823 Other- 59,890 - 315,617 375,507 Total revenues126,921 805,793 110,596 316,281 1,359,591 Expenditures: Current: General government126,921 640,128 - - 767,049 Public safety- - 64,080 - 64,080 Parks- - - 7,011 7,011 Total expenditures126,921 640,128 64,080 7,011 838,140 Revenues over (under) expenditures- 165,665 46,516 309,270 521,451 Other financing sources: Transfers in- - - 671 671 Total other financing sources- - - 671 671 Net increase (decrease) in fund balance- 165,665 46,516 309,941 522,122 Fund balance - January 1- 953,198 533,443 - 1,486,641 Fund balance - December 31-$ 1,118,863$ 579,959$ 309,941$ 2,008,763$ 73 CITY OF EDINA, MINNESOTA SPECIAL REVENUE FUND - COMMUNITY DEVELOPMENT BLOCK GRANT SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2010 Variance with Final budget - ActualOver OriginalFinalAmounts(Under) Revenues: Intergovernmental161,303$ 161,303$ 126,921$ (34,382)$ Expenditures: Current: General government161,303 161,303 126,921 (34,382) 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 NONMAJOR PROPRIETARY FUNDS December 31, 2010 Total Nonmajor ArtEdinborough ParkProprietary Arena Center Centennial Lakes Funds Assets Current assets: Cash and cash equivalents1,324$ 5,628$ 394$ 7,346$ Investments - unrestricted- - 2,869,114 2,869,114 Investments - restricted288,706 - - 288,706 Interest receivable- - 19,201 19,201 Accounts receivable114,846 - 7,518 122,364 Due from other funds80,000 140,000 - 220,000 Inventory- 13,079 - 13,079 Total current assets484,876 158,707 2,896,227 3,539,810 Noncurrent assets: Deferred charges26,756 - - 26,756 Net capital assets4,575,331 231,668 1,677,121 6,484,120 Total noncurrent assets4,602,087 231,668 1,677,121 6,510,876 Total assets5,086,963 390,375 4,573,348 10,050,686 Liabilities: Current liabilities: Accounts payable147,211 14,022 97,512 258,745 Salaries payable30,264 8,743 49,936 88,943 Accrued interest payable35,500 - - 35,500 Contracts payable57,399 - - 57,399 Due to other funds- - 8,000 8,000 Due to other governments1,636 784 8,819 11,239 Unearned revenue- 7,862 48,317 56,179 Compensated absences payable35,819 20,962 63,945 120,726 Bonds payable - current80,000 - - 80,000 Total current liabilities387,829 52,373 276,529 716,731 Noncurrent liabilities: OPEB payable9,837 2,690 15,918 28,445 Compensated absences53,728 31,442 95,917 181,087 Bonds payable, net of unamortized discounts2,372,981 - - 2,372,981 Total noncurrent liabilities2,436,546 34,132 111,835 2,582,513 Total liabilities2,824,375 86,505 388,364 3,299,244 Net assets: Invested in capital assets, net of related debt2,411,056 231,668 1,677,121 4,319,845 Unrestricted(148,468) 72,202 2,507,863 2,431,597 Total net assets2,262,588$ 303,870$ 4,184,984$ 6,751,442$ 76 CITY OF EDINA, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS NONMAJOR PROPRIETARY FUNDS For The Year Ended December 31, 2010 Total Nonmajor Edinborough ParkProprietary Arena Art Center Centennial Lakes Funds Operating revenues: Sales - retail6,992$ 41,003$ -$ 47,995$ Sales - concessions- 479 64,402 64,881 Memberships5,406 24,998 52,515 82,919 Admissions117,843 - 569,591 687,434 Building rental1,035,429 - 269,352 1,304,781 Rental of equipment1,652 - 129,407 131,059 Greens fees- - 176,124 176,124 Class registration & other fees134,184 361,619 498,486 994,289 Total operating revenues1,301,506 428,099 1,759,877 3,489,482 Operating expenses: Cost of sales and services1,045 17,236 56,382 74,663 Personal services591,912 219,647 1,226,239 2,037,798 Contractual services524,060 253,025 445,342 1,222,427 Commodities75,679 54,725 264,634 395,038 Central Services41,948 34,897 81,889 158,734 Depreciation292,892 26,573 193,762 513,227 Total operating expenses1,527,536 606,103 2,268,248 4,401,887 Operating loss(226,030) (178,004) (508,371) (912,405) Nonoperating revenues (expenses): Intergovernmental222,000 - - 222,000 Investment income (loss)10,285 - 147,300 157,585 Donations- 31,701 - 31,701 Interest and fiscal charges(90,170) - - (90,170) Amortization of bond discount(722) - - (722) Gain (loss) on sale of capital asset4,187 - - 4,187 Miscellaneous6,500 - - 6,500 Total nonoperating revenues (expenses)152,080 31,701 147,300 331,081 Income (loss) before transfers(73,950) (146,303) (361,071) (581,324) Transfers: Transfers in196,406 160,000 123,371 479,777 Total transfers 196,406 160,000 123,371 479,777 Change in net assets122,456 13,697 (237,700) (101,547) Net assets - January 1 2,140,132 290,173 4,422,684 6,852,989 Net assets - December 312,262,588$ 303,870$ 4,184,984$ 6,751,442$ 77 CITY OF EDINA, MINNESOTA COMBINING STATEMENT OF CASH FLOWS NONMAJOR PROPRIETARY FUNDS For The Year Ended December 31, 2010 Total Nonmajor ArtEdinborough ParkProprietary Arena Center Centennial Lakes Funds Cash flows from operating activities: Receipts from customers and users1,315,650$ 428,694$ 1,753,424$ 3,497,768$ Payment to suppliers(473,333) (365,197) (823,677) (1,662,207) Payment to employees(645,052) (213,150) (1,205,060) (2,063,262) Donations received- 31,701 - 31,701 Miscellaneous received6,500 - - 6,500 Net cash provided by (used in) operating activities203,765 (117,952) (275,313) (189,500) Cash flows from noncapital financing activities: Transfer from other funds196,406 160,000 123,371 479,777 Proceeds from interfund borrowing- 116,000 8,000 124,000 Payment of interfund borrowing(196,000) (140,000) - (336,000) Net cash provided by noncapital financing activities406 136,000 131,371 267,777 Cash flows from capital and related financing activities: Capital grant222,000 - - 222,000 Acquisition of capital assets(2,515,947) (27,255) (257,410) (2,800,612) Proceeds from sale of capital assets4,187 - - 4,187 Interest paid on bonds(54,670) - - (54,670) Net cash used in capital and related financing activities(2,344,430) (27,255) (257,410) (2,629,095) Cash flows from investing activities: Proceeds from sales of investments2,136,885 - 249,118 2,386,003 Interest received4,213 - 150,883 155,096 Net cash flows provided by (used in).investing activities 2,141,098 - 400,001 2,541,099 Net increase (decrease) in cash and cash equivalents839 (9,207) (1,351) (9,719) Cash and cash equivalents - January 1485 14,835 1,745 17,065 Cash and cash equivalents - December 311,324$ 5,628$ 394$ 7,346$ Reconciliation of operating loss to net cash provided (used) by operating activities: Operating loss (226,030)$ (178,004)$ (508,371)$ (912,405)$ Adjustments to reconcile operating loss to net cash flows from operating activities: Depreciation292,892 26,573 193,762 513,227 Donations- 31,701 - 31,701 Miscellaneous revenue6,500 - - 6,500 Changes in assets and liabilities: Decrease (increase) in receivables14,144 - (6,078) 8,066 Decrease (increase) in inventory- (336) - (336) Increase (decrease) in accounts payable112,135 (5,019) 20,962 128,078 Increase (decrease) in salaries payable(1,937) 579 8,544 7,186 Increase (decrease) in contracts payable57,399 - - 57,399 Increase (decrease) in due to other governments(135) 41 3,608 3,514 Increase (decrease) in unearned revenue- 595 (375) 220 Increase (decrease) in OPEB payable2,687 717 4,213 7,617 Increase (decrease) in compensated absences(53,890) 5,201 8,422 (40,267) Total adjustments429,795 60,052 233,058 722,905 Net cash provided by (used in) operating activities203,765$ (117,952)$ (275,313)$ (189,500)$ Noncash investing activities: Increase (decrease) in fair value of investments6,146$ -$ (3,073)$ 3,073$ 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. I-494 Corridor Commission - This fund accounts for assets and liabilities of the I-494 Corridor Commission, which is a joint venture that the City has fiduciary responsibilities for. FIDUCIARY FUNDS Agency Funds 79 This page left blank intentionally. 80 CITY OF EDINA, MINNESOTA COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS For The Year Ended December 31, 2010 BalanceBalance January 1AdditionsDeductionsDecember 31 POLICE SEIZURE Assets: Cash 22,689$ -$ -$ 22,689$ Liabilities: Due to other governmental units 22,689$ -$ -$ 22,689$ PUBLIC SAFETY TRAINING FACILITY Assets: Cash4,502$ 3,050$ -$ 7,552$ Investments 245,000 15,000 - 260,000 Total Assets 249,502$ 18,050$ -$ 267,552$ Liabilities: Accounts payable4,157$ 9,868$ -$ 14,025$ Salaries payable4,716 302 - 5,018 Due to other governmental units 240,629 7,880 - 248,509 Total Liabilities 249,502$ 18,050$ -$ 267,552$ PAYROLL Assets: Cash 30,249$ 618$ -$ 30,867$ Liabilities: Accounts payable 30,249$ 618$ -$ 30,867$ I-494 CORRIDOR COMMISSION Assets: Cash 119,608$ 334,753$ 344,310$ 110,051$ Liabilities: Due to other governmental units 119,608$ 334,753$ 344,310$ 110,051$ TOTALS - ALL AGENCY FUNDS Assets: Cash177,048$ 338,421$ 344,310$ 171,159$ Investments 245,000 15,000 - 260,000 Total Assets 422,048$ 353,421$ 344,310$ 431,159$ Liabilities: Accounts payable34,406$ 10,486$ -$ 44,892$ Salaries payable4,716 302 - 5,018 Due to other governmental units 382,926 342,633 344,310 381,249 Total Liabilities 422,048$ 353,421$ 344,310$ 431,159$ 81 This page left blank intentionally. 82 CITY OF EDINA, MINNESOTA TAX CAPACITY, TAX LEVIES AND TAX CAPACITY RATES (shown by year of tax collectibility) 2007 2008 2009 2010 2011 Total tax capacity113,428,895$ 120,084,430$ 122,532,149$ 120,816,822$ 113,981,017$ Increment valuation(8,771,951) (9,771,137) (10,307,195) (4,960,337) (4,043,859) Contribution to fiscal disparities pool(8,486,997) (9,358,999) (10,393,526) (10,942,782) (11,039,952) Tax capacity used for rate calculation96,169,947 100,954,294 101,831,428 104,913,703 98,897,206 Fiscal disparities distribution2,595,376 2,895,523 3,298,549 3,537,906 3,421,345 Adjusted net tax capacity98,765,323$ 103,849,817$ 105,129,977$ 108,451,609$ 102,318,551$ Tax levies: General fund19,427,890$ 20,314,404$ 21,202,691$ 20,737,472$ 21,004,000$ Equipment- - - 940,494 992,072 Debt service1,497,500 1,695,827 2,351,030 3,212,757 3,174,308 Total certified tax levies20,925,390 22,010,231 23,553,721 24,890,723 25,170,380 Referendum market value levy605,138 595,438 600,212 602,250 615,837 Total levy21,530,528$ 22,605,669$ 24,153,933$ 25,492,973$ 25,786,217$ Tax capacity rate: General fund revenue19.636 19.563 20.204 20.004 21.548 Bonds & interest1.514 1.634 2.243 2.968 3.112 Total tax capacity rate21.150 21.197 22.447 22.972 24.660 Market value rate0.00641 0.00601 0.00597 0.00606 0.00654 83 CITY OF EDINA, MINNESOTA COMBINED SCHEDULE OF BONDED INDEBTEDNESS December 31, 2010 Final InterestMaturityOriginal RatesDateDateIssue Redeemed Tax Increment Bonds: Tax Increment Bonds, Series 2000A4.30 - 4.8009/06/0002/01/112,620,000$ 1,990,000$ Tax Increment Bonds, Series 2002B3.00%08/05/0202/01/121,400,000 - Tax Increment Refunding Bonds, Series 2005D3.00 - 3.4007/19/0502/01/133,505,000 1,410,000 Total Tax Increment Bonds7,525,000 3,400,000 General Obligation Bonds: GO Park & Recreation Refunding Bonds, Series 2005A3.50 - 4.0007/19/0502/01/175,375,000 1,255,000 GO Capital Improvement Plan, Series 2007A4.00 - 4.2505/24/0702/01/285,865,000 195,000 GO Capital Improvement Plan, Series 2009A3.00 - 4.4004/29/0902/01/3014,000,000 - GO Equipment Certificates, Series 2009B2.00 - 3.0004/29/0901/01/12230,000 - GO Capital Improvement Plan, Series 2010A2.00 - 4.0011/18/1002/01/21- - GO Equipment Certificates, Series 2010B2.0011/18/1002/01/13- - Total General Obligation Bonds25,470,000 1,450,000 Permanent Improvement Revolving (PIR) Bonds: GO Permanent Improvement Revolving, Series 2005E3.00 - 3.7509/13/0502/01/161,460,000 465,000 GO Permanent Improvement Revolving Series 2007C3.60 - 4.2505/24/0702/01/195,870,000 - GO Permanent Improvement Revolving Series 2008B3.00 - 4.0008/28/0802/01/207,755,000 - GO Permanent Improvement Revolving Series 2010B2.00 - 3.0011/18/1002/01/22- - Total PIR Bonds15,085,000 465,000 Public Project Revenue Bonds: Public Project Revenue, Series 20053.00 - 4.1309/13/0505/01/265,425,000 570,000 Taxable Public Project Revenue, Series 2009A2.10 - 4.5511/24/0902/01/302,595,000 - Taxable Public Project Revenue, Series 2009B1.95 - 5.8011/24/0902/01/306,125,000 - Total Public Project Revenue Bonds14,145,000 570,000 Revenue Bonds: Recreational Facility Bonds, Series 2009B2.00 - 3.0004/29/0901/01/172,010,000 - Recreational Facility Bonds, Series 2009C2.00 - 4.0012/10/0902/01/302,440,000 - Utility Revenue Bonds, Series 2003C1.10 - 3.5503/01/0302/01/133,200,000 1,795,000 Utility Revenue Bonds, Series 2007B4.00%05/24/0702/01/178,210,000 1,470,000 Utility Revenue Bonds, Series 2008A3.00 - 4.0008/28/0802/01/1913,985,000 605,000 Total Public Project Revenue Bonds29,845,000 3,870,000 Total - Bonded indebtedness92,070,000$ 9,755,000$ Prior Years 84 PrincipalInterestInterest OutstandingPayableDueDuePayable 12/31/09 Issued Payments 12/31/10 In 2011 In 2011 to Maturity 630,000$ -$ 305,000$ 325,000$ 325,000$ 7,800$ 7,800$ 1,400,000 - - 1,400,000 - 42,000 63,000 2,095,000 - 500,000 1,595,000 515,000 44,559 81,354 4,125,000 - 805,000 3,320,000 840,000 94,359 152,154 4,120,000 - 455,000 3,665,000 470,000 131,062 521,857 5,670,000 - 205,000 5,465,000 210,000 218,744 2,267,503 14,000,000 - - 14,000,000 510,000 500,524 6,079,377 230,000 - 75,000 155,000 75,000 2,350 3,151 - 8,285,000 - 8,285,000 755,000 210,276 1,809,301 - 230,000 - 230,000 80,000 2,433 5,433 24,020,000 8,515,000 735,000 31,800,000 2,100,000 1,065,389 10,686,622 995,000 - 150,000 845,000 150,000 27,362 89,410 5,870,000 - 505,000 5,365,000 525,000 195,613 961,518 7,755,000 - - 7,755,000 655,000 263,969 1,542,710 - 2,305,000 - 2,305,000 - 38,020 395,746 14,620,000 2,305,000 655,000 16,270,000 1,330,000 524,964 2,989,384 4,855,000 - 205,000 4,650,000 210,000 183,119 1,679,191 2,595,000 - - 2,595,000 - 100,203 1,285,614 6,125,000 - - 6,125,000 - 291,359 3,722,828 13,575,000 - 205,000 13,370,000 210,000 574,681 6,687,633 2,010,000 - 415,000 1,595,000 405,000 30,650 86,050 2,440,000 - - 2,440,000 80,000 84,400 1,031,000 1,405,000 - 330,000 1,075,000 345,000 31,248 57,161 6,740,000 - 730,000 6,010,000 760,000 225,200 879,200 13,380,000 - 1,125,000 12,255,000 1,165,000 436,837 2,289,019 25,975,000 - 2,600,000 23,375,000 2,755,000 808,335 4,342,430 82,315,000$ 10,820,000$ 5,000,000$ 88,135,000$ 7,235,000$ 3,067,728$ 24,858,223$ 2010 85 CITY OF EDINA, MINNESOTA SCHEDULE OF SOURCES AND USES OF PUBLIC FUNDS FOR GRANDVIEW AREA REDEVELOPMENT DISTRICT-NO. 1202, A TAX INCREMENT FINANCING DISTRICT December 31, 2010 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 16,435,582 1,329,251 11,972,274 Real estate sales *- 4,700,000 5,402,344 - (702,344) Interest on invested funds- 300,000 1,056,264 43,762 (800,026) Other- - 61,068 - (61,068) Total sources of funds:4,500,000 44,637,107 32,431,173 1,373,013 10,832,921 Uses of funds: Land acquisition- 6,500,000 4,598,131 386,597 1,515,272 Installation of public utilities and improvements4,310,000 17,127,000 9,738,935 - 7,388,065 Bond payments: Principal- 9,900,000 7,607,555 305,000 1,987,445 Interest- 9,190,000 3,209,337 64,767 5,915,896 Loan/note interest- - 4,594,258 556,030 (5,150,288) Paid to other governments- - 201,046 2,938 (203,984) Administrative costs190,000 1,920,107 1,362,163 12,860 545,084 Total uses of funds:4,500,000 44,637,107 31,311,425 1,328,192 11,997,490 Funds remaining (deficit)-$ -$ 1,119,748$ 44,821$ (1,164,569)$ 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 Circle1,447,043 2,070,119 Project area23,832 4,005,694 4,598,131$ 6,075,813$ 86 CITY OF EDINA, MINNESOTA SCHEDULE OF SOURCES AND USES OF PUBLIC FUNDS FOR SOUTHEAST EDINA REDEVELOPMENT DISTRICT-NO. 1203, A TAX INCREMENT FINANCING DISTRICT (Districts 1200, 1201, 1203 and 1204 are pooled) December 31, 2010 Accounted OriginalAmendedfor inCurrentAmount BudgetBudgetprior yearsyearremaining Source of funds: Bond proceeds41,400,000$ 34,400,000$ 33,761,677$ -$ 638,323$ Tax increments received80,000,000 90,000,000 42,170,896 3,158,822 44,670,282 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 4,020,154 152,623 (1,672,777) Transfer in- 40,000,000 38,646,971 - 1,353,029 Sale of material- 255,710 255,710 - - Developer payments- 297,826 297,826 - - Other- 20,000 21,799 - (1,799) Total sources of funds:126,400,000 180,431,702 130,812,103 3,311,445 46,308,154 Uses of funds: Land acquisition13,900,000 22,981,425 22,981,425 - - Installation of public utilities and improvements26,677,000 25,871,230 20,972,054 213,985 4,685,191 Bond payments: Principal41,400,000 41,400,000 33,799,724 500,000 7,100,276 Interest38,000,000 38,000,000 34,154,750 61,052 3,784,198 Administrative costs1,140,800 1,600,000 1,377,153 21,032 201,815 Paid to other governments- 42,000 41,003 4,834 (3,837) Loan/note interest- 14,684,711 5,683,307 566,966 8,434,438 Parkland dedication fees- 2,030,345 2,030,345 - - Total uses of funds:121,117,800 146,609,711 121,039,761 1,367,869 24,202,081 Funds remaining (deficit)5,282,200$ 33,821,991$ 9,772,342$ 1,943,576$ 22,106,073$ 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$ 87 CITY OF EDINA, MINNESOTA SCHEDULE OF SOURCES AND USES OF PUBLIC FUNDS FOR 70TH STREET AND CAHILL ROAD DISTRICT-NO. 1207, A TAX INCREMENT FINANCING DISTRICT December 31, 2010 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- - 259,423 17,067 (276,490) Total sources of funds:4,088,855 4,088,855 1,006,286 17,067 3,065,502 Uses of funds: Land acquisition529,400 529,400 41,993 1,944 485,463 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 4,088,855 659,832 1,944 3,427,079 Funds remaining (deficit)-$ -$ 346,454$ 15,123$ (361,577)$ 88 Contents Financial Trends Revenue Capacity Debt Capacity Demographic and Economic Information Operating Information STATISTICAL SECTION ThispartoftheCity'scomprehensiveannualfinancialreportpresents detailedinformationasacontextforunderstandingwhattheinformationin thefinancialstatements,notedisclosures,andrequiredsupplementary information says about the City's overall financial health. Page 90 Sources:Unlessotherwisenoted,theinformationintheseschedulesisderivedfromthe comprehensiveannualfinancialreportsfortherelevantyear.TheCityimplementedGASB Statement34in2003;schedulespresentinggovernment-wideinformationinclude information beginning in that year. Theseschedulescontaintrendinformationtohelpthe readerunderstandhowtheCity'sfinancialperformance and well-being have changed over time. Theseschedulescontaininformationtohelpthereader assesstheCity'smostsignificantlocalrevenuesource, the property tax. Theseschedulescontaininformationtohelpthereader assesstheaffordabilityoftheCity'scurrentlevelsof outstandingdebtandtheCity'sabilitytoissueadditional debt in the future. Theseschedulesofferdemographicandeconomic indicatorstohelpthereaderunderstandthe environmentwithinwhichtheCity'sfinancialactivities take place. Theseschedulescontainserviceandinfrastructuredata tohelpthereaderunderstandhowtheinformationinthe City'sfinancialreportrelatestotheservicestheCity provides and the activities it performs. 98 102 107 109 89 CITY OF EDINA, MINNESOTA NET ASSETS BY COMPONENT LAST EIGHT FISCAL YEARS (accrual basis of accounting) 2003 2004 2005 Governmental activities Invested in capital assets, net of related debt21,792,377$ 34,320,784$ 36,092,020$ Restricted4,676,748 2,145,488 78,943 Unrestricted31,876,783 28,762,040 35,796,801 Total governmental activities net assets58,345,908$ 65,228,312$ 71,967,764$ Business-type activities Invested in capital assets, net of related debt29,952,549$ 37,240,476$ 40,044,169$ Restricted1,672,828 - - Unrestricted15,344,474 11,934,496 11,121,720 Total business-type activities net assets46,969,851$ 49,174,972$ 51,165,889$ Primary government Invested in capital assets, net of related debt51,744,926$ 71,561,260$ 76,136,189$ Restricted6,349,576 2,145,488 78,943 Unrestricted47,221,257 40,696,536 46,918,521 Total primary government net assets105,315,759$ 114,403,284$ 123,133,653$ Fiscal Year 90 2006 2007 2008 2009 2010 69,814,012$ 67,680,882$ 71,601,227$ 69,622,370$ 69,783,162$ - - 3,362,446 7,132,865 9,952,443 15,280,058 25,136,312 29,577,462 30,705,600 41,709,528 85,094,070$ 92,817,194$ 104,541,135$ 107,460,835$ 121,445,133$ 46,981,755$ 43,046,160$ 46,851,736$ 47,333,794$ 48,807,806$ - - 954,486 624,837 618,852 6,379,515 13,649,355 12,071,776 15,158,720 17,041,122 53,361,270$ 56,695,515$ 59,877,998$ 63,117,351$ 66,467,780$ 116,795,767$ 110,727,042$ 118,452,963$ 116,956,164$ 118,590,968$ - - 4,316,932 7,757,702 10,571,295 21,659,573 38,785,667 41,649,238 45,864,320 58,750,650 138,455,340$ 149,512,709$ 164,419,133$ 170,578,186$ 187,912,913$ Fiscal Year 91 CITY OF EDINA, MINNESOTA CHANGES IN NET ASSETS LAST EIGHT FISCAL YEARS (accrual basis of accounting) 2003 2004 2005 Expenses Governmental activities: General government5,839,893$ 6,934,045$ 4,967,008$ Public safety10,784,215 11,063,767 12,019,027 Public works5,621,291 5,834,490 7,185,784 Parks4,484,685 4,248,060 5,901,648 Interest on long-term debt2,760,022 2,399,682 2,288,524 Total governmental activities expenses29,490,106 30,480,044 32,361,991 Business-type activities: Utilities7,930,502 7,801,580 8,254,409 Liquor8,764,081 9,110,888 9,749,313 Aquatic center711,061 701,768 725,936 Golf course3,555,243 3,508,741 3,580,307 Community activity centers3,833,026 3,850,192 3,825,562 Total business-type activities expenses24,793,913 24,973,169 26,135,527 Total primary government expenses54,284,019$ 55,453,213$ 58,497,518$ Program Revenues Governmental activities: Charges for services: General government930,391$ 454,603$ 619,526$ Public safety4,213,081 4,634,744 5,614,406 Other activities898,141 748,398 630,157 Operating grants and contributions1,215,745 1,154,808 1,512,366 Capital grants and contributions7,214,393 4,192,947 2,252,491 Total governmental activities program revenues14,471,751 11,185,500 10,628,946 Business-type activities: Charges for services: Utilities9,694,981 9,875,078 10,240,381 Liquor9,659,631 10,030,067 10,752,724 Aquatic center861,340 764,134 849,380 Golf course3,684,079 3,538,122 3,482,999 Community activity centers2,966,731 3,254,012 3,251,860 Operating grants and contributions132,031 138,447 131,408 Total business-type activities program revenues26,998,793 27,599,860 28,708,752 Total primary government program revenues41,470,544$ 38,785,360$ 39,337,698$ Net (Expense)/Revenue Governmental activities(15,018,355)$ (19,294,544)$ (21,733,045)$ Business-type activities2,204,880 2,626,691 2,573,225 Total primary government net expense(12,813,475)$ (16,667,853)$ (19,159,820)$ General Revenues and Other Changes in Net Assets Governmental activities: Property taxes17,815,426$ 17,865,757$ 19,071,202$ Tax increment collections7,342,270 6,761,934 7,060,744 Franchise taxes- 450,956 457,421 Unrestricted investment earnings286,209 443,074 977,956 Gain on disposal of capital assets26,669 - 63,674 Transfers(4,053,805) 655,227 841,500 Total governmental activities21,416,769 26,176,948 28,472,497 Business-type activities: Property taxes-$ -$ -$ Unrestricted investment earnings387,117 227,167 236,654 Gain (loss) on disposal of capital assets(177,051) 6,490 22,538 Transfers4,053,805 (655,227) (841,500) Total business-type activities4,263,871 (421,570) (582,308) Total primary government25,680,640$ 25,755,378$ 27,890,189$ Change in Net Assets Governmental activities6,398,414$ 6,882,404$ 6,739,452$ Business-type activities6,468,751 2,205,121 1,990,917 Total primary government12,867,165$ 9,087,525$ 8,730,369$ Fiscal Year 92 2006 2007 2008 2009 2010 5,414,961$ 7,039,298$ 6,836,248$ 7,362,560$ 6,961,082$ 13,300,351 13,743,194 14,833,647 14,751,479 15,543,594 8,973,031 8,757,022 9,046,873 8,993,290 8,558,363 5,341,682 5,025,560 5,971,565 7,732,777 5,608,758 2,973,749 1,887,633 1,923,821 2,129,490 2,528,424 36,003,774 36,452,707 38,612,154 40,969,596 39,200,221 9,234,651 10,036,844 10,625,811 11,833,994 11,848,538 9,968,963 10,361,998 11,049,223 11,449,194 11,594,643 795,614 780,981 787,663 798,369 769,608 3,652,169 3,621,977 3,612,482 3,588,831 3,561,573 4,048,649 4,168,534 4,502,849 4,636,375 4,492,779 27,700,046 28,970,334 30,578,028 32,306,763 32,267,141 63,703,820$ 65,423,041$ 69,190,182$ 73,276,359$ 71,467,362$ 731,613$ 784,659$ 840,070$ 811,087$ 946,107$ 6,146,114 5,632,642 5,839,683 5,081,563 5,448,505 793,796 736,329 763,130 804,500 723,559 1,423,302 1,384,024 1,170,183 1,377,785 1,162,411 4,013,617 4,299,509 7,710,015 2,582,999 13,325,431 13,108,442 12,837,163 16,323,081 10,657,934 21,606,013 11,421,474 13,125,773 13,713,249 14,858,488 15,036,016 11,029,445 11,436,175 12,122,599 12,655,777 12,857,064 867,626 868,833 925,388 859,816 945,529 3,646,620 3,630,538 3,680,584 3,660,466 3,443,204 3,337,153 3,517,111 3,517,218 3,606,684 3,495,982 122,358 127,492 147,456 135,917 373,230 30,424,676 32,705,922 34,106,494 35,777,148 36,151,025 43,533,118$ 45,543,085$ 50,429,575$ 46,435,082$ 57,757,038$ (22,895,332)$ (23,615,544)$ (22,289,073)$ (30,311,662)$ (17,594,208)$ 2,724,630 3,735,588 3,528,466 3,470,385 3,883,884 (20,170,702)$ (19,879,956)$ (18,760,607)$ (26,841,277)$ (13,710,324)$ 20,414,298$ 21,459,001$ 22,242,276$ 23,834,274$ 25,122,113$ 7,228,002 7,793,577 8,578,434 7,587,386 4,488,073 499,206 570,871 647,466 667,791 692,288 1,230,264 1,581,702 1,185,899 387,177 474,444 8,418 58,377 1,265 11,709 35,594 838,230 919,625 967,800 743,025 765,994 30,218,418 32,383,153 33,623,140 33,231,362 31,578,506 -$ -$ -$ 300,372$ -$ 283,771 510,678 607,312 209,371 205,965 25,210 7,604 14,505 2,250 26,574 (838,230) (919,625) (967,800) (743,025) (765,994) (529,249) (401,343) (345,983) (231,032) (533,455) 29,689,169$ 31,981,810$ 33,277,157$ 33,000,330$ 31,045,051$ 7,323,086$ 8,767,609$ 11,334,067$ 2,919,700$ 13,984,298$ 2,195,381 3,334,245 3,182,483 3,239,353 3,350,429 9,518,467$ 12,101,854$ 14,516,550$ 6,159,053$ 17,334,727$ Fiscal Year 93 CITY OF EDINA, MINNESOTA FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) 2001 2002 2003a 2004 General fund Reserved15,872$ 417,093$ 412,991$ 390,771$ Unreserved14,359,821 14,325,972 9,961,074 10,226,055 Total general fund14,375,693$ 14,743,065$ 10,374,065$ 10,616,826$ All other governmental funds Reserved2,319,839$ 4,186,436$ 4,084,987$ 3,465,440$ Unreserved, reported in: Special revenue funds1,435,949 1,589,518 686,777 781,458 Capital projects funds22,869,578 26,750,351 19,608,849 16,651,788 Total all other governmental funds26,625,366$ 32,526,305$ 24,380,613$ 20,898,686$ a 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. b 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.c The substantial decrease in general fund unreserved fund balance in 2009 is due to the transfer of the equipment replacement program to the construction fund. The substantial increase in other governmental funds reserved fund balance in 2009 is due to unspent bond proceeds related to the new Public Works Facility, which is under construction. Fiscal Year 94 2005b 2006 2007 2008 2009c 2010 223,351$ 36,849$ 28,637$ 13,982$ 18,241$ 10,258$ 11,595,433 13,797,189 14,078,220 14,365,021 12,031,358 12,868,952 11,818,784$ 13,834,038$ 14,106,857$ 14,379,003$ 12,049,599$ 12,879,210$ 13,792,312$ 2,682,238$ 6,247,539$ 8,467,918$ 15,223,353$ 9,460,834$ 731,027 13,179,904 14,750,448 14,950,538 12,813,439 15,333,460 17,032,750 3,160,085 5,853,322 4,270,440 6,683,668 12,150,968 31,556,089$ 19,022,227$ 26,851,309$ 27,688,896$ 34,720,460$ 36,945,262$ Fiscal Year 95 CITY OF EDINA, MINNESOTA CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) 2001 2002 2003 2004 Revenues General property taxes24,409,785$ 24,735,336$ 17,903,618$ 17,865,757$ Tax increment collections- - 7,342,270 6,761,934 Special assessments1,086,093 998,908 1,019,461 966,879 Franchise fees473,702 418,153 393,627 450,956 License and permits2,239,611 1,939,207 2,182,263 2,247,759 Intergovernmental5,085,981 2,254,968 4,678,735 3,933,540 Charges for services1,962,172 2,096,806 2,076,519 2,279,302 Fines and forfeitures976,952 910,407 785,227 863,073 Investment income1,357,701 1,178,211 286,209 443,074 Rental of property4,262,984 1,782,063 354,266 385,707 Other revenues184,466 180,081 200,551 294,136 Total revenues42,039,447 36,494,140 37,222,746 36,492,117 Expenditures General government5,353,002 5,372,431 5,709,741 5,213,469 Public safety9,409,291 9,893,428 10,352,816 11,125,388 Public works4,313,065 4,161,373 4,142,668 4,386,669 Parks2,375,565 2,602,266 2,974,164 2,954,372 Capital outlay11,193,155 11,059,757 15,539,676 7,772,321 Debt service Principal3,740,000 5,885,000 5,700,000 6,450,000 Interest and other charges3,148,719 3,094,480 2,908,787 2,484,291 Total expenditures39,532,797 42,068,735 47,327,852 40,386,510 Revenues over (under) expenditures2,506,650 (5,574,595) (10,105,106) (3,894,393) Other Financing Sources (Uses) Transfers in6,215,411 12,308,480 8,752,126 8,367,595 Transfers out(6,201,152) (11,552,990) (12,805,931) (7,712,368) Parkland dedication60,280 - - - Sale of capital assets- - - - Bonds issued- 13,637,416 1,540,000 - Premium on bonds issued- - 59,219 - Discount on bonds issued- - - - Refunding bonds issued- - 6,570,000 - Payment to refunding escrow(15,810,000) (2,550,000) (6,525,000) - Principal paid by escrow- - - - Total other financing sources (uses)(15,735,461) 11,842,906 (2,409,586) 655,227 Net change in fund balances(13,228,811)$ 6,268,311$ (12,514,692)$ (3,239,166)$ Debt service as a percentage of noncapital expenditures24.3%29.0%27.1%27.4% a The substantial change in debt service as a percentage of noncapital expenditures in 2007 is due to a change in the way this ratio is calculated. The City did not recalculate previously reported ratios. Fiscal Year 96 2005 2006 2007a 2008 2009 2010 19,071,202$ 20,414,298$ 21,459,001$ 22,242,276$ 23,834,274$ 25,122,113$ 7,060,744 7,228,002 7,793,577 8,578,434 7,587,386 4,488,073 1,354,264 1,751,219 1,750,444 2,442,490 2,703,833 6,746,186 457,421 499,206 570,871 647,466 667,791 692,288 3,240,622 3,488,897 2,909,521 2,915,455 2,104,967 2,410,314 1,539,169 2,773,350 3,699,006 3,005,883 1,507,170 3,726,849 2,466,663 2,691,354 2,748,709 3,093,941 2,905,410 3,014,894 742,917 1,023,935 971,486 1,073,174 1,224,983 1,203,767 977,956 1,230,264 1,581,702 1,185,899 387,177 474,444 315,542 310,145 355,734 255,607 343,616 426,517 227,446 246,797 225,839 126,723 160,035 413,400 37,453,946 41,657,467 44,065,890 45,567,348 43,426,642 48,718,845 5,477,308 5,995,804 6,544,307 6,235,352 6,895,329 6,523,398 11,373,763 12,431,114 12,985,215 13,788,797 13,692,686 14,177,387 4,882,811 5,233,907 5,787,619 6,189,594 5,911,758 5,898,023 3,146,029 3,300,375 3,455,789 3,693,595 3,688,063 3,524,950 8,227,191 8,980,526 11,991,122 14,666,907 22,997,065 13,505,827 6,830,000 5,985,000 6,190,000 7,090,000 7,415,000 2,975,000 2,543,639 2,107,036 1,677,770 1,967,021 1,841,342 2,584,006 42,480,741 44,033,762 48,631,822 53,631,266 62,441,243 49,188,591 (5,026,795) (2,376,295) (4,565,932) (8,063,918) (19,014,601) (469,746) 7,797,369 6,865,258 7,290,391 7,983,585 11,347,773 2,903,762 (6,955,869) (6,027,028) (6,370,766) (7,015,785) (10,604,748) (2,137,768) - - - - - - 135,045 54,457 66,845 96,825 34,592 134,329 15,816,165 - 11,735,000 7,755,000 22,950,000 2,535,000 - - - - 64,765 898,658 (36,275) - (53,637) (35,848) (75,621) - 16,764,721 - - - - 8,285,000 (16,635,000) - - - - (9,094,822) - (9,035,000) - - - - 16,886,156 (8,142,313) 12,667,833 8,783,777 23,716,761 3,524,159 11,859,361$ (10,518,608)$ 8,101,901$ 719,859$ 4,702,160$ 3,054,413$ 27.4%23.1%20.9%22.6%21.7%15.4% Fiscal Year 97 CITY OF EDINA, MINNESOTA ASSESSED VALUE, ACTUAL VALUE AND TAX CAPACITY OF TAXABLE PROPERTY LAST TEN FISCAL YEARS City TaxCity Used AdjustedCapacity Referendum EstimatedLimitedTaxableTotalfor RateNetRateRate 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 9,619,356 9,456,650 9,451,668 113,429 96,170 98,765 21.150%0.00641%2.172 9,986,738 9,933,166 9,928,907 120,084 100,954 103,850 21.197%0.00601%2.204 10,112,498 10,091,005 10,079,499 122,532 101,831 105,130 22.447%0.00597%2.334 9,960,341 9,960,341 9,949,807 120,817 104,914 108,452 22.972%0.00606%2.501 Source: Hennepin County Taxpayer Services. 2001-2004 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. The City receives reports from Hennepin County showing total market value, but not separated by property classification. 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. 2010 Year 2001 2009 Estimated Rate b Market Value (In Thousands) a Tax Capacity (In Thousands) 2008 Fiscal Direct 2006 2007 2002 2003 2004 2005 98 CITY OF EDINA, MINNESOTA DIRECT AND OVERLAPPING TAX CAPACITY RATES LAST TEN FISCAL YEARS Total BasicDebtTotal TaxDirect & RateRateCapacity RMVHennepinTax Cap.RMVOther Overlap 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% 19.636%1.514%21.150%0.006%39.110%18.244%0.147%8.417%86.921% 19.563%1.634%21.197%0.006%38.571%16.951%0.177%8.546%85.265% 20.204%2.243%22.447%0.006%40.413%17.766%0.183%8.413%89.039% 20.004%2.968%22.972%0.006%42.640%18.746%0.194%9.431%93.789% Source: Hennepin County Taxpayer Services. Some 2001-2004 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. City RatesOverlapping Rates ISD #273 EdinaFiscal Year 2010 2001 2006 2007 2002 2003 2004 2005 2008 2009 99 CITY OF EDINA, MINNESOTA PRINCIPAL PROPERTY TAX PAYERS CURRENT YEAR AND NINE YEARS AGO PercentagePercentage of Totalof Total Tax CapacityRankCapacityTax CapacityRankCapacity Southdale Shopping Center2,988,940$ 12.47%2,987,632$ 13.00% Galleria Shopping Center1,188,800 20.98%964,866 30.97% Southdale Office Park782,790 30.65%839,688 40.84% Centennial Lakes Retail679,250 40.56%409,952 110.41% Southdale Medical Bldg620,285 50.51%496,792 80.50% National Car536,870 60.44%- 0.00% Centennial Lakes Phase V527,364 70.44%473,362 90.48% Centennial Lakes Phase IV517,146 80.43%552,218 60.55% Macy's Department Stores439,250 90.36%- 0.00% Target344,580 100.29%- 0.00% Pentagon Office Park- 0.00%1,016,172 21.02% United Healthcare Corporation- 0.00%524,504 70.53% Cedars of Edina- 0.00%612,748 50.61% 7700 France- 0.00%469,250 100.47% Totals8,625,275$ 7.14%9,347,184$ 9.38% Source: City of Edina Assessing Office 20012010 Taxpayer 100 CITY OF EDINA, MINNESOTA PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS TotalCollections in TaxPercentageSubsequentPercentage LevyAmountof LevyYearsAmountof Levy 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 85,589 17,070,687 96.29% 18,506,442 17,808,469 96.23%50,633 17,859,102 96.50% 18,808,903 18,066,892 96.06%22,734 18,089,626 96.18% 19,667,551 19,090,016 97.06%82,177 19,172,193 97.48% 20,820,130 20,310,889 97.55%62,009 20,372,898 97.85% 21,530,528 21,347,789 b 99.15%b 57,641 21,405,430 99.42% 22,605,669 22,178,719 c 98.11%c 154,546 22,333,265 98.79% 24,153,933 23,484,137 d 97.23%d 142,022 23,626,159 97.81% 25,492,973 24,904,346 97.69%- 24,904,346 97.69% Source: Hennepin County Taxpayer Services. a Beginning in 2002, the State of Minnesota quit reimbursing the City for the market value homestead credit (MVHC) program. The MVHC 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 MVHC in 2002, tax collections as a percent of levy dropped, as shown in this table. Due to the phase out provision in the MVHC program, the City anticipates that the impact of this lost revenue will decrease over time as property values rise above the phase out level. b In 2007 the State of Minnesota reimbursed the City for MVHC after five years of not making payments. c In 2008 the State of Minnesota reimbursed the City for only 50% of MVHC. d In 2009 the State of Minnesota once again quit reimbursing the City for MVHC. Total Collections to Date Taxes Payable 2006 2007 2010 Collected within the Fiscal Year of the Levy 2005 2001 2002 2003 2004 2009 2008 101 CITY OF EDINA, MINNESOTA RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS (dollars in thousands, except per capita) GeneralPublicTaxPermanentRec.Utility TotalPercentage ObligationProjectIncrementImprovement Facility RevenuePrimary of PersonalPer DebtRevenueBondsRevolvingBondsBondsGovernment IncomeCapita 7,250$ -$ 47,590$ -$ 14,670$ 2,955$ 72,465$ 3.51%1,527$ 6,950 12,410 40,855 - 7,890 2,630 70,735 3.31%1,490 8,165 12,035 35,900 - 7,145 5,495 68,740 2.97%1,445 7,295 11,595 30,760 - 6,325 4,860 60,835 2.58%1,263 11,765 16,560 28,905 1,460 5,475 4,215 68,380 2.92%1,441 5,670 16,080 20,460 1,460 4,595 3,550 51,815 2.19%1,105 10,990 15,390 15,665 7,170 3,690 11,070 63,975 2.39%1,359 10,420 14,675 10,015 14,770 2,845 23,570 76,295 3.00%1,584 24,020 22,650 4,125 14,620 4,450 21,525 91,390 3.54%1,897 31,800 13,370 3,320 16,270 4,035 19,340 88,135 3.32%1,781 Details regarding the City's outstanding debt may be found in the notes to the financial statements. 2010 2002 2003 2004 2005 2008 2009 2006 2007 Business-Type ActivitiesGovernmental Activities 2001 Year Fiscal 102 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 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%1,206 5,670 16,080 20,460 42,210 0.48%900 10,990 15,390 15,665 42,045 0.44%893 10,420 14,675 10,015 35,110 0.35%729 24,020 22,650 4,125 50,795 0.50%1,055 31,800 13,370 3,320 48,490 0.49%980 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. 2010 2009 2008 2007 2002 2003 2004 2005 General Bonded Debt Year Fiscal 2001 2006 103 CITY OF EDINA, MINNESOTA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AS OF DECEMBER 31, 2010 Net GeneralPercentage Obligation Bonded ApplicableCity Share Debt Outstanding a in City b of Debt Overlapping Debt: Hennepin County683,934,500$ 7.49%51,226,694$ Hennepin Suburban Park District67,630,065 10.06%6,803,585 Hennepin Regional Rail Authority39,570,778 7.49%2,963,851 School Districts: ISD No. 273 (Edina)76,181,729 98.72%75,206,603 ISD No. 270 (Hopkins)158,041,582 8.64%13,654,793 ISD No. 271 (Bloomington)46,746,081 0.00%- ISD No. 272 (Eden Prairie)69,846,622 0.89%621,635 ISD No. 280 (Richfield)28,475,818 23.02%6,555,133 ISD No. 283 (St. Louis Park)47,481,739 0.02%9,496 Metro Council181,078,903 3.42%6,192,898 Total Overlapping Debt1,398,987,817 163,234,688 City of Edina22,686,467 100.00%22,686,467 Total Overlapping and Direct Debt1,421,674,284$ 185,921,155$ Ratio of debt per capita (47,941 population)3,878$ Ratio of debt to estimated market valuation of $9,960,3411.87% Source: Hennepin County Taxpayer Services a Calculation excludes revenue and special assessment bonds as well as sinking fund balance, if any. b The percentage of overlapping debt applicable is estimated using tax capacity. Applicable percentages were estimated by determining the portion of another governmental unit's tax capacity that is within the City's boundaries and dividing it by each unit's total tax capacity. Direct Debt: Debt Ratios: 104 CITY OF EDINA, MINNESOTA LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS (dollars in thousands) 2001 2002 2003 2004 2005 2006 2007 2008a 2009 2010 Debt limit 116,431$ 138,279$ 138,190$ 160,674$ 173,867$ 191,974$ 199,775$ 302,385$ 301,369$ 298,494$ Total net debt applicable to limit 7,250 19,360 20,200 18,890 29,785 21,750 26,380 25,095 46,670 45,170 Legal debt margin 109,181$ 118,919$ 117,990$ 141,784$ 144,082$ 170,224$ 173,395$ 277,290$ 254,699$ 253,324$ Total net debt applicable to the limit as a percentage of debt limit 6.23%14.00%14.62%11.76%17.13%11.33%13.20%8.30%15.49%15.13% Market value (after fiscal disparities) Debt limit (3% of market value) Debt applicable to limit: General obligation bonds Public project revenue bonds Total debt applicable to limit Legal debt margin a The State of Minnesota changed the legal debt limit from 2% of taxable market value to 3% during 2008. 298,494,213 13,370,000 253,324,213$ Fiscal Year 9,949,807,100$ 31,800,000 45,170,000 Legal Debt Margin Calculation for Fiscal Year 2010 105 CITY OF EDINA, MINNESOTA PLEDGED REVENUE COVERAGE Last Ten Fiscal Years Less: operatingNet available Revenue expenses revenue Principal Interest Total Coverage 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 20071,497,500 - 1,497,500 690,000 725,855 1,415,855 1.06 20081,425,186 - 1,425,186 715,000 696,118 1,411,118 1.01 20091,424,405 - 1,424,405 745,000 665,193 1,410,193 1.01 20101,421,354 - 1,421,354 9,280,000 901,535 10,181,535 0.14 Tax Increment Bonds 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 20077,793,577 - 7,793,577 4,795,000 625,606 5,420,606 1.44 20088,578,434 - 8,578,434 5,650,000 445,694 6,095,694 1.41 20097,587,386 - 7,587,386 5,890,000 244,236 6,134,236 1.24 20104,488,073 - 4,488,073 805,000 125,820 930,820 4.82 Permanent Improvement Revolving Bonds (Special Assessment) 2001684,660 - 684,660 170,000 4,420 174,420 3.93 200685,656 - 85,656 - 43,366 43,366 1.98 2007391,921 - 391,921 160,000 46,694 206,694 1.90 2008564,534 - 564,534 155,000 306,759 461,759 1.22 20091,508,662 - 1,508,662 150,000 513,708 663,708 2.27 20101,339,350 - 1,339,350 655,000 520,278 1,175,278 1.14 Utility Bond 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 200713,125,419 9,735,839 3,389,580 690,000 108,840 798,840 4.24 200813,544,728 10,076,422 3,468,306 1,485,000 459,983 1,944,983 1.78 200914,857,798 10,815,216 4,042,582 2,045,000 803,157 2,848,157 1.42 201015,034,881 11,119,053 3,915,828 2,185,000 768,160 2,953,160 1.33 Recreational Facility Bonds 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 20075,870,485 5,798,005 72,480 905,000 168,159 1,073,159 0.07 20086,005,571 5,972,558 33,013 845,000 135,956 980,956 0.03 20095,932,900 5,977,793 (44,893) 860,000 92,128 952,128 (0.05) 20105,690,239 5,822,861 (132,622) 415,000 100,926 515,926 (0.26) Debt service requirementsFiscal Year 106 CITY OF EDINA, MINNESOTA DEMOGRAPHIC AND ECONOMIC STATISTICS Last Ten Fiscal Years Estimated PersonalPer CapitaHigh School IncomePersonalGraduationUnemployment Population(In thousands)IncomeRateRate 47,4652,065,867$ 43,524$ 91.5%3.30% 47,4652,134,976 44,980 91.5%4.00% 47,5702,317,801 48,724 91.5%4.10% 48,1562,356,369 48,932 93.3%3.90% 47,4482,341,464 49,348 92.1%3.30% 46,8962,365,434 50,440 92.0%3.00% 47,0902,673,959 56,784 92.0%3.45% 48,1692,547,369 52,884 92.0%4.33% 48,1692,582,436 53,612 92.4%6.38% 49,4912,653,311 53,612 91.6%5.56% Sources: Population data from U.S. Census Bureau/Metropolitan Council. Personal income and per capita income estimates based on MN Department of Employment and Economic Development Quarterly Census of Employment and Wages. 2009 is the most recent. High school graduation rate data from U.S. Census Bureau for all of Hennepin County. 2009 is the most recent estimate. Unemployment rate data from State of Minnesota Department of Employment and Economic Development. 2010 2008 2009 Fiscal Year 2007 2006 2005 2004 2003 2002 2001 107 CITY OF EDINA, MINNESOTA PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO Percentage of Percentage of Total City Total City EmployeesRankEmployment EmployeesRankEmployment Fairview Southdale Hospital1,000 14.62%2,000 28.41% Edina Public Schools ISD #273600 22.77%DNADNADNA Promenade Salon Concepts500 32.31%DNADNADNA City of Edina280 41.29%DNADNADNA Phoenix Direct250 51.15%DNADNADNA Design Studio of Gabberts250 51.15%DNADNADNA Westin250 51.15%DNADNADNA Super Target250 51.15%DNADNADNA JC Penny Co.250 51.15%400 61.68% Express Scripts Inc.250 51.15%DNADNADNA Regis Salons Corporate Office250 51.15%DNADNADNA Jerry's Enterprises, Inc.- 0.00%2,400 110.10% Golden Valley Microwave Foods- 0.00%650 32.73% Macy's (Marshall Field's or Dayton's)- 0.00%500 52.10% Nash Finch Co.- 0.00%350 81.47% International Dairy Queen Inc.- 0.00%300 91.26% Health Risk Management Inc.- 0.00%552 42.32% Norwest Funding- 0.00%358 71.51% Roach Organization Inc.- 0.00%140 100.59% Totals4,130 19.08%7,650 32.18% Sources: 2010 data from www.mnprospector.com, ISD #273's annual report, and the cities employee count. For data obtained from www.mnprospector.com, low number in the range was used. 2001 data from State of Minnesota Department of Employment and Economic Development (DEED). DNA: Historical data is not available 20012010 Employer 108 CITY OF EDINA, MINNESOTA FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 General Government Administration8.00 8.25 8.25 8.25 8.25 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 3.85 3.85 Finance5.75 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 Elections0.50 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Assessing7.00 7.00 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 6.50 7.50 7.50 7.50 8.50 8.50 8.50 8.50 Supervision2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 Maintenance27.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 27.00 27.00 Public Safety Police Protection70.00 69.00 68.00 66.00 69.00 69.00 70.00 70.00 71.00 70.00 Animal Control1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Fire Protection32.00 32.00 32.00 32.00 32.00 32.00 33.00 33.00 33.00 33.00 Public Health3.08 3.75 2.75 2.75 2.75 2.75 2.75 2.75 2.65 2.65 Inspections6.75 6.50 6.50 6.50 6.50 6.50 7.50 7.50 7.50 7.50 Parks & Recreation Administration7.00 7.00 7.00 6.80 6.80 6.80 6.80 6.80 6.80 6.80 Maintenance17.00 17.00 16.00 16.50 16.40 16.40 16.40 16.40 16.40 16.40 Central Services General2.00 2.00 2.00 2.00 2.00 2.00 3.00 3.00 3.00 3.00 City Hall1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10 Public Works Bldg0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.90 Equipment Ops6.50 6.50 6.50 6.50 6.50 6.50 6.50 6.50 6.50 6.50 Utilities 15.70 14.50 14.50 15.50 15.75 15.75 15.25 15.75 18.75 18.75 Liquor 9.30 9.75 9.75 9.75 9.75 9.75 9.75 9.75 9.75 9.75 Aquatic Center - - - 0.20 0.55 0.55 0.55 0.55 0.55 0.55 Golf Course 14.00 15.00 15.00 13.00 13.00 13.00 13.00 13.00 13.00 13.00 Arena 5.00 5.00 6.00 6.00 6.00 6.00 6.00 6.00 5.00 5.00 Art Center 3.00 3.00 3.00 3.00 2.50 2.00 2.00 2.00 2.00 2.00 Edinborough Park/ Centennial Lakes 13.00 12.00 12.00 12.00 12.00 11.00 12.00 12.00 12.00 12.00 Other 2.00 2.00 2.00 2.00 2.00 2.00 4.00 4.00 5.00 5.00 Total 272.83 273.00 270.00 268.50 271.50 270.00 277.50 278.00 281.00 280.00 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 109 CITY OF EDINA, MINNESOTA OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARS 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 General Government Total City employees868 860 879 870 909 887 890 918 885 869 Votes cast a 10,008 28,156 10,721 31,730 1,367 26,270 7,930 31,512 2,733 25,463 Public Works Asphalt placed (tons)- - - - - 9,000 8,000 7,500 9,500 7,643 Concrete (cu. yds.)- - - - - 650 850 480 640 503 Public Safety Crimes reported2,411 2,139 2,073 1,983 1,908 1,937 2,010 2,025 NANA Fire calls1,142 1,106 1,062 1,060 1,055 963 1,012 913 852 910 Medical calls2,931 3,153 3,030 3,199 3,423 3,470 3,510 3,516 3,496 3,599 Central Services Vehicle fixes- - - - - 2,398 2,460 2,967 2,539 2,431 Utilities Daily consumption b - - - - - 7,209 7,372 7,376 7,596 6,790 Aquatic Center Attendance115,000 111,056 96,419 88,636 139,415 120,406 114,173 110,000 64,836 86,654 Golf Course Total rounds played120,898 112,078 123,770 116,734 113,679 114,737 112,821 112,663 117,819 101,314 Source: Various City departments Note: The City prepared this schedule for the first time in 2006, therefore, some historical data is not readily available. NA: Data not available when this report was compiled. 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 110 CITY OF EDINA, MINNESOTA CAPITAL ASSET STATISTICS BY FUNCTION LAST TEN FISCAL YEARS 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 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 40 40 40 40 40 40 40 40 Acreage of parks1,552 1,552 1,553 1,553 1,553 1,553 1,553 1,553 1,553 1,553 Park buildings26 27 27 27 27 27 27 27 27 27 Utilities Wells18 18 18 18 18 18 19 19 19 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 connections13,984 13,984 13,984 14,851 14,851 14,851 14,851 14,851 13,933 13,933 Arena Ice sheets3 3 3 3 3 3 3 3 3 3 Source: Various City departments Fiscal Year Function 111