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HomeMy WebLinkAbout2011 CAFR 1685 CROSSTOWN BOULEVARD N.W. ANDOVER, MINNESOTA 55304 (763) 755-5100 FAX (763) 755-8923 WWW.CI.ANDOVER.MN.US . Comprehensive Annual Financial Report of the City of Andover, Minnesota For the Year Ended December 31, 2011 Prepared By: Finance Department City of Andover CITY OF ANDOVER, MINNESOTA TABLE OF CONTENTS Page ReferenceNo. I. INTRODUCTORY SECTION Letter of Transmittal2 Organization9 Organizational Chart10 Certificate of Achievement11 II. FINANCIAL SECTION Independent Auditor's Report14 Management's Discussion and Analysis16 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net AssetsStatement 129 Statement of ActivitiesStatement 230 Fund Financial Statements: Balance Sheet - Governmental FundsStatement 332 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental FundsStatement 434 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds Statement 537 Statement of Net Assets - Proprietary FundsStatement 638 Statement of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary FundsStatement 740 Statement of Cash Flows - Proprietary FundsStatement 842 Statement of Fiduciary Net Assets - Fiduciary FundsStatement 944 Notes to Financial Statements45 Required Supplementary Information: Budgetary Comparison Schedule - General FundStatement 1082 Schedule of Funding Progress - Other Post Employment Benefits PlanStatement 1184 Notes to Required Supplementary Information: Budgets85 Modified Approach for City Streets and Trails Infrastructure Capital Assets85 Combining and Individual Fund Statements and Schedules: Nonmajor Governmental Funds: Combining Balance Sheet - Nonmajor Governmental FundsStatement 1289 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental FundsStatement 1390 CITY OF ANDOVER, MINNESOTA TABLE OF CONTENTS Page ReferenceNo. Nonmajor Special Revenue Funds: Subcombining Balance Sheet - Nonmajor Special Revenue FundsStatement 1492 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Special Revenue FundsStatement 1594 Nonmajor Debt Service Funds: Subcombining Balance Sheet - Nonmajor Debt Service FundsStatement 1698 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Debt Service FundsStatement 17100 Nonmajor Capital Projects Funds: Subcombining Balance Sheet - Nonmajor Capital Project FundsStatement 18104 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Capital Project FundsStatement 19106 Special Revenue Funds: Schedules of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual: EDA GeneralStatement 20108 Community Development Block GrantStatement 21109 Community CenterStatement 22110 Drainage and MappingStatement 23111 LRRWMOStatement 24112 ForestryStatement 25113 Right-of-Way Management/UtilityStatement 26114 Charitable GamblingStatement 27115 Construction Seal CoatingStatement 28116 Internal Service Funds: Combining Statement of Net Assets - Internal Service FundsStatement 29118 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets - Internal Service FundsStatement 30119 Combining Statement of Cash Flows - Internal Service FundsStatement 31120 Agency Funds: Combining Statement of Net Assets - Fiduciary FundsStatement 32122 Combining Statement of Changes in Assets and Liabilities - Fiduciary FundsStatement 33123 III. STATISTICAL SECTION Net Assets by Component - Last Ten Fiscal Years Table 1126 Changes in Net Assets - Last Ten Fiscal YearsTable 2128 Fund Balances - Governmental Funds - Last Ten Fiscal YearsTable 3132 Changes in Fund Balances - Governmental Funds - Last Ten Fiscal YearsTable 4134 Assessed and Estimated Actual Value of Taxable Property - Last Ten Fiscal YearsTable 5136 Property Tax Rates - Per $1,000 of Assessed Tax Capacity Value - Years 2003 through 2012Table 6137 Property Tax Levies and Collections - Last Six Fiscal YearsTable 7138 Principal Taxpayers - Current Year and Ten Years AgoTable 8139 Estimated Market Values and New Construction - Last Ten Fiscal YearsTable 9140 Special Assessment Levies and Collections - Last Ten Fiscal YearsTable 10141 Ratio of Net Bonded Debt to Assessed Value and Net Bonded Debt Per Capita - Last Ten Fiscal YearsTable 11142 CITY OF ANDOVER, MINNESOTA TABLE OF CONTENTS Page ReferenceNo. Computation of Direct and Overlapping DebtTable 12143 Computation of Legal Debt Margin - Last Ten Fiscal YearsTable 13144 Pledged-Revenue Coverage - Last Ten Fiscal YearsTable 14146 Outstanding Debt by Type - Last Ten Fiscal YearsTable 15148 Demographic and Economic Statitistics - Last Ten YearsTable 16150 Principal Employers - Current Year and Ten Years AgoTable 17151 Full Time Equivalent Employees - City Government Employees by Function / Program - Last Ten Fiscal YearsTable 18152 Operating Indicators by Function / Program - Last Ten YearsTable 19154 Capital Asset Statistics by Function / Program - Last Ten YearsTable 20156 IV. OTHER INFORMATION Combined Schedule of IndebtednessExhibit 1158 Schedule of Tax Capacity Rates and LeviesExhibit 2160 Schedule of Deferred Tax Levies - General Obligation BondsExhibit 3161 Schedule of Fund TransfersExhibit 4162 I. INTRODUCTORY SECTION  1685 CROSSTOWN BOULEVARD N.W. ANDOVER, MINNESOTA 55304 (763) 755-5100 FAX (763) 755-8923 WWW.CI.ANDOVER.MN.US April 27, 2012 To the Honorable Mayor and City Council City of Andover 1685 Crosstown Blvd. NW Andover, Minnesota 55304 Dear Honorable Mayor and Council Members: The Comprehensive Annual Financial Report is submitted in conformance with all applicable governing laws and regulations. The following has set the standards forth: *Andover City Policy and Code *The State Auditor, State of Minnesota *Government Finance Officers Association *Governmental Accounting Standards Board RESPONSIBILITY. Responsibility for both the accuracy of the presented data and the completeness of the financial statements including all disclosures rests with the City. We believe the data, as presented, is accurate in all material aspects. This report has been presented in a manner designed to fairly set forth the financial position and results of operations as measured by the financial activity of its various funds. FINANCIAL STATEMENT FORMAT. This Comprehensive Annual Financial Report is presented in three main sections: I. Introductory II. Financial III. Statistical Introductionincludes a list of the City's principal officials as of December 31, 2011, the table of contents, the public The Financial Section officials, organizational chart, and this Letter of Transmittal. The includes: (1) independent auditor's report; (2) management’s discussion and analysis; (3) government wide and fund financial statements; (4) notes to the financial statements; (5) required supplementary information; (6) the combining statements, individual fund statements; and, (7) the Statistical Section supplemental information. The includes tables and reports of various economic, social, financial and fiscal data designed to reflect trends and ratios. Generally Accepted Accounting Principles (GAAP) requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City of Andover’s MD&A can be found immediately following the report of the independent auditors. REPORTING ENTITY. All City funds, departments, commissions, and other organizations for which the City of Andover is financially accountable are presented within the Comprehensive Annual Financial Report. The Andover Firefighters’ Relief Association does not meet the established criteria for inclusion in the reporting entity, and accordingly is excluded from this report. GENERAL INFORMATION. The city we know today as Andover was first organized in 1857 under the name “Round Lake Township.” However, in 1860 the name was changed to “Grow Township” in honor of Senator Galusha A. Grow of Pennsylvania. Senator Grow spoke at a political campaign in Anoka that year, and the town name was changed to reflect Senator Grow because of his strong advocacy of the Union cause. At that time, the population was 330 and included the geographical area we know today as Ham Lake. In fact, the area of Ham Lake was considered a part of Grow Township until 1871. In 1972, the Grow Township Board of Supervisors recognized that the town was growing at a very rapid rate. They felt a village form of government would provide better services to the community. Board supervisors then voted in favor of proceeding with the incorporation process. The board voted to submit a new name for the village. “Andover Village” was chosen because the name Andover had historical interest. The historical interest, we believe, came from the Andover train station. To the Honorable Mayor and City Council City of Andover, Minnesota You may have heard the popular “train myth” about how Andover received its name. The myth states that a train tipped over in a swamp, and an eyewitness, relaying the incident, said it “went over and over,” thereby naming the city “Andover.” However, Anoka County Union Newspaper research reveals that the name Andover first appeared in an article dated March 14, 1899 in the - before train tracks were ever built in the city. The article stated that the Eastern Minnesota line of the Great Northern Railway was in the process of constructing railroad tracks from the Coon Creek Cut-off to the North. The railway announced that new railroad stations with mathematical precision were to be located five miles apart from each other. The new stations (from Coon Creek to the North, along the new railroad line) were to be named Andover, Cedar, Bethel, Isanti, Cambridge, Stanchfield, Braham, Grasston, Cornell, and Brook Park. On July 4, 1899, the first train passed through the Andover station. Where the railway came up with the name Andover still remains unknown. Andover Village was established in 1972 and then became the City of Andover, a city of the fourth class, in 1974. Today the City of Andover’s population exceeds 20,000, classifying it as a second class city. The City of Andover as it exists today consists of 23,040 acres. Andover has a population estimated at 30,850. A growing suburb of the northern metropolitan area, the City of Andover is approximately sixteen miles from Minneapolis. SERVICES PROVIDED. The City of Andover provides various services to the residents in the community. The current services are: General Government: Mayor and City councilFinancial administrationInformation systems NewsletterElectionsFacility management City clerkAssessingEngineering AdministrationLegalRisk management Human resourcesPlanning and zoning y: Public Safet PoliceProtective inspectionAnimal control Fire protectionCivil defense Public Works: Streets and highwaysStreet signsTraffic signals Snow and ice removalCentral equipment maintenanceWater maintenance Street lighting Sanitation: Storm sewersSanitary sewer maintenance Parks and Recreation Recycling GOVERNMENT STRUCTURE. Andover is a statutory city with the City Council appointing a City Administrator. The City Administrator has operating responsibilities for all City functions. A list of public officials and organizational chart can be found on page 9 and 10 respectively. ECONOMIC CONDITION AND OUTLOOK Moderate population growth is expected to continue in 2011 and 2012, with an estimated population of 31,100 by 2012. The rate of residential growth as compared to the growth in the 90’s has significantly declined as the availability of residentially zoned property decreased. The City has experienced a significant amount of commercial growth from 2000 through current 2011. Continual commercial growth is anticipated over the next five to ten years, beyond that growth will slow as the amount of undeveloped commercially zoned property also declines. The City's General Fund has two major categories of revenue, which accounted for 85% of the total in 2011. They are general property taxes at 76%, and charges for services at 9%. In prior years, intergovernmental revenue was the second largest category of revenue for the General Fund. Intergovernmental revenue includes state aids, such as local government aid (LGA), market value homestead credit (MVHC), highway maintenance aid, fire relief aid and police aid; and county grants, such as recycling and community development. To the Honorable Mayor and City Council City of Andover, Minnesota During the past several years, the State of Minnesota has made numerous changes to laws pertaining to the distribution of LGA, Homestead and Agricultural Credit Aid (HACA) and MVHC resulting in a significant reduction in intergovernmental revenue. The City was able to make up this loss in aid through efficiencies and an increased tax levy, substantially increasing the local tax rate in 2002. The tax laws that resulted in this change also greatly reduced school district property tax levies, resulting in no net tax increase for most residential property owners. Sweeping changes approved in 2003 resulted in the loss of approximately $590,000 in aid to Andover, that loss in aid was originally intended to be for two years (2003 & 2004) but that loss was extended to include years 2005 and 2006. The state allowed cities the ability to levy up to 60% of the lost 2003 aid in 2004. Again, in 2008, 2009, 2010 and 2011, the State of Minnesota significantly reduced MVHC to help deal with the state budget deficit. LGA, HACA and MVHC for 1998 through 2011 are as follows: YearLGAHACAMVHCTotal 1998122,651$ 378,975$ 501,62 6 $ $ - 1999111,145 462,796 - 573,941 2000119,752 490,237 - 609,989 2001119,758 489,991 - 609,749 2002119,827 563,754 683,581 - 2003* - - 65,632 65,632 2004* -57,934 - 57,934 2005*- - 13,179 13,179 0 2006* -1,70 - 1,700 2007- 410,519410,519 - 2008* - 198,214198,214 - 2009*- - 54,629 54,629 2010* -3,872 - 3,872 2011*- - 853 853 *Due to the State Legislative actions to deal with the state budget deficits, the City will not be receiving any LGA and significantly reduced MVHC. For 1998 through 2000, cities with populations over 2,500 were under levy limit restrictions imposed by the State. Levy limits severely curb the ability of cities to generate additional tax revenue needed to respond to an increasing demand for services. For 1999 and 2000, the levy limit formula was modified to allow for increases based on commercial and industrial growth. This was a favorable change for Andover, as the City experienced a surge in commercial growth during the past few years. Levy limits were lifted for 2001 but were reinstated for 2002 - 2004. The 2004 levy limits were so severe that the State did not allow cities the ability to capture residential and commercial market value growth. Levy limits were lifted from 2005 to 2008, but reinstated for 2009, 2010 and 2011. The City’s General Fund receives a substantial amount of revenue from licenses and permits. The past ten years are shown below: RevenuesChange 2002588,965$n/a 2003551,385 $ (37,580) 2004674,008 122,623 2005724,436 50,428 2006598,094 (126,342) 2007475,893 (122,201) 2008525,339 49,446 2009291,903 (233,436) 2010329,901 37,998 2011387,206 57,305 Revenue from residential building continued to modestly increase through 2010 and 2011, but it is unlikely that those revenues will reach the levels of the early 2000’s as a reduced number of new residential lots are being added to the overall lot inventory. The decrease in 2006 and 2007 is largely due to a slowing economy and home building market. A slight increase in 2008 is primarily due to the commercial activity taking place but the decrease in 2009 is due to the continued downturn in the economy, To the Honorable Mayor and City Council City of Andover, Minnesota especially the construction industry. In 2010 and 2011, the home building market showed signs of improvement and some commercial activity taking place accounted for the increase in permit revenue. The City’s General Fund also receives a considerable amount of revenue from charges for services. The past ten years are shown below: RevenuesChange 2002689,427$n/a 2003647,813 $ (41,614) 2004798,795 150,982 2005933,365 134,570 2006780,273 (153,092) 20071,121,642 341,369 2008772,430 (349,212) 2009701,289 ( 71,141) 2010755,184 53,895 2011866,584 111,40 0 The City analyzes user fees every year as part of the budget process and makes adjustments where appropriate. Revenue from charges for services totaled $1,121,642 in 2007 and this increase can be linked to the number of public improvement projects being finalized and assessed in 2007. 2008 proved to be better than expected due to some residential plat activity taking place but the decrease in 2009 was expected due to the struggling economy. In 2010 and 2011, the home building market showed signs of improvement and some commercial activity taking place accounted for the increase in plan review revenue. EMPLOYMENT The City of Andover’s largest employers are government entities. The Anoka-Hennepin School District has a significant presence in the community and Anoka County’s Parks and Highway Departments and Sheriffs Office headquarters are located in Andover. The City of Andover is best classified as a bedroom community, since a majority of the residents commute outside of Andover for employment opportunities. The City does anticipate with the development of the Andover Station Commercial Park and other commercial developments that additional employment opportunities will be provided to residents in the near future. Major employers in Andover are as follows: Number of FirmType of Business / ProductEmployees Anoka-Hennepin ISD No 11Elementary and secondary education906 Fairview - Andover ClinicMedical clinic300 Anoka County Sherriff's OfficeCountygovernment and services250 Kottkes' Bus Service, Inc.Bus transportation225 rCounty government and services180 Bunker Hills Regional Park / Activity Cente TargetRetail170 Meadow Creek Christian SchoolPrivate education K-12127 Anoka County Highway DepartmentCountygovernment and services103 Andover County MarketRetail100 Presbyterian HomesSenior housing and assisted living facilities90 MAJOR INITIATIVES FOR THE YEAR. The City has many accomplishments to report for 2011. The following list is a summary of some of the major initiatives completed throughout the year. 1)Ongoing implementation of a single-family rental housing license program to provide property owners/landlords with educational materials and checklists on how to inspect and maintain the exterior of the property, a list of potential ordinance violations that may occur with a rental property, and an exterior inspection of the building and grounds with city staff. This program was authorized by the Andover City Council in 2009 and there are 263 rental licenses issued in 2011. To the Honorable Mayor and City Council City of Andover, Minnesota 2)Four street projects were completed in 2011. Three reconstruction projects (Rolling Forest, Genthon Pond, Crosstown Drive and Flintwood Street were funded by tax levy and special assessments. The Flintwood Street project did come to fruition after an Assessment Policy change where the City would contribute up to 50% of the cost to convert a gravel road to a paved road surface. The Crosstown Drive project was assessed at 15 % of total project cost, due primarily to the heavy traffic volumes on the street and the remaining projects were assessed at the standard 25%. In the all the projects (except the Flintwood project), the existing bituminous was reclaimed, concrete curb was added in the development, storm sewer structures were replaced or added, and a new bituminous surface was laid. 3)The City redeveloped Hawkridge Park in partnership with the North Metro Soccer Association. The outcome is three irrigated soccer fields, a hockey rink and an expanded parking area. The North Metro Soccer Association contributed $100,000 towards this project. 4)The City developed two hockey rinks and a warming house in cooperation with the Andover Huskies Youth Hockey Association on the Public Work Campus. 5)The City found a permanent home for a skate park facility at the Sunshine Park complex in 2011. The mobile skate park had been searching for a permanent home for close to ten years. 6)In 2011, the City welcomed the start of a $10 million expansion of the Anoka County Highway Department Facility on Bunker Lake Boulevard. 7)The City welcomed the expansion of Dynamic Sealing Technologies Inc. (DSTI) in 2011. The 43,000 sq. ft. expansion is expected to generate 50 new jobs for the community. In addition, DSTI acquired an adjacent parcel that will allow for the expansion of another 50,000 sq. ft. in the future. 8)The City Economic Development Authority (EDA) acquired the Parkside at Andover Station residential development. This development was sold to a developer originally in 2003 and when residential building stalled in 2009 it became a casualty of the poor townhome market. The EDA is in the process of remarketing the site for single family homes and is seeing renewed interest in the Parkside at Andover Station development. 9)The City of Andover EDA went through the public hearing process in 2011 to modify the City Development Plan to create redevelopment areas of the community and to facilitate the opportunity to acquire dilapidated and substandard multi-family homes within specified target areas. The EDA was successful in acquiring one 4-plex property in November of 2011 to start the redevelopment process. The Most Prolific Recycling Program in 2010 10)In 2011, the City of Andover received award from the Anoka County Board of Commissioners. Andover residents had the highest recycling rate per person for all materials of any Anoka County municipality. 11)The City Council adopted a goal to make a concerted effort toward promoting the City of Andover’s image and livability. The City is pursuing community monument entrance signs and electronic reader boards in strategic locations. One electronic reader board was installed at the City Hall campus to display community events. 12)The successful hosting of the City’s Annual Business Appreciation Day to recognize and build awareness of the local business community and strengthens relationships with this important element of the Andover community. This event was coordinated through the Community Development Department. In 2011, the City Economic Development Authority (EDA) helped add activity to the Andover Station Commercial area by holding four open air concerts titled “Music at the Station”. The music genre ranged from Jazz to Concertina, Blue Grass and Irish Folk. 13)The City Open Space Commission, appointed to assist in managing the successful $2,000,000 open space referendum ballot in 2006, continues to update a detailed natural amenity inventory, hold informational meetings with residents and made recommendations to the City Council on land that should be purchased as permanent open space in the community. The first purchase took place in December 2009 (Martins Meadows) and a second purchase in October 2010 (Northwoods Preserve), throughout 2011 the Parks Department focused on creating nature trails, appropriate signage and accessibility to the open space parcels. 14)The City continues to make significant progress after the implementation of new hardware and software to start the process of digital imaging documents retained by the City. The imaging project has helped the City reduce staffing through data storage retrieval efficiencies and eliminated the need for City Hall office expansion. To the Honorable Mayor and City Council City of Andover, Minnesota 15)The City continues to utilize updates to our financial management software to improve reporting and operating efficiencies. These updates continue to yield reduced personnel costs and more timely reports. Residential Development rd New residential development was limited to a replat of a residential project (Woodland Crossings 3 Addition) creating five single family urban lots from six detached townhome units. The City currently has a supply of 86 single family urban lots and 40 single family rural lots. There exists a reasonable lot supply for a variety of housing options including single family, townhomes and condominium units. Commercial Industrial Development New commercial / industrial construction did occur in Andover in 2011. Dynamic Sealing Technologies, Inc. add a 43,000 square foot addition to their current facility. FOR THE FUTURE. The City continues to focus on quality of life improvements throughout the City. These efforts cover a broad array of areas including: protecting and improving the environment, revitalization of parks and public areas, expanding recreational opportunities, providing cost-effective city services, increased communication between city representatives and the public and added commercial/retail opportunities. The City utilizes many avenues to reach its residents, whether through community access television, electronic reader boards, the City newsletter or the City’s webpage (www.ci.andover.mn.us). It is important to the City that our residents are informed and have the ability to participate in the activities of their City. The City did conduct a community survey in 2006, with the help of a polling firm, to secure opinions and suggestions from the public. RELEVANT FINANCIAL POLICIES The City has a policy regarding General Fund reserve balances. The City plans for a unassigned fund balance in the General Fund equivalent to 6-months of the current year’s budgeted expenditures to provide working capital between semi-annual property tax settlements. Since the property tax settlements are received by the City in July and December, the City needs sufficient cash reserves to avoid short-term borrowing to finance operations. The City also classifies fund balances for prepaid items, inventories and other legal obligations. The City may also classify a portion of fund balance for special purposes. The primary goal of the City’s investment policy is to ensure the safety of the principal invested. Cash temporarily idle during the year is invested in certificates of deposit, commercial paper, and obligations of the U.S. Treasury and government agencies. Cash balances from all City funds are pooled into an investment fund and investment income is distributed on a pro-rata basis at the end of each quarter. Extended maturities are utilized to take advantage of higher yields but staggered in a way to meet projected liquidity needs. Capital financing for major improvements is provided through improvement bonds, general obligation bonds, tax increment bonds, or revenue bonds. Depending on the project, special assessments may be levied upon properties to share in the cost of the improvement project. The special assessments are collected over a period of time and are used to help satisfy the improvement bond debt or reimburse the fund used to finance the project. The City Council has also adopted financial management policies in order to allow for the planning of adequate funding of services desired by the public, to manage City finances wisely, and to carefully account for public funds. These policies are reviewed each year when the annual budget is adopted. The financial management policies included: operating budget policies; revenue policies; accounting, auditing and financial reporting policies; investment policies; debt policies; capital improvement policies; and risk management policies. The City Council has adopted a comprehensive set of internal control procedures. The City’s accounting system was developed and is continually evaluated to assure the adequacy of internal accounting controls. Internal accounting controls are designed to provide reasonable but not absolute assurance in the areas of: safeguarding assets against loss from unauthorized use or disposition, reliability of financial records, and convenience of access for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance adopted by the City Council recognizes that the evaluation of cost and benefits requires estimates and judgments by management, and the cost of a control should not exceed the benefits likely to be derived. All internal controls are evaluated against the above criteria. It is our belief that the City’s internal accounting controls adequately safeguard the City’s assets and also provide reasonable assurance of properly recording financial transactions. To the Honorable Mayor and City Council City of Andover, Minnesota OTHER INFORMATION AWARDS. The Government Finance Officers Association (GFOA) of the United States and Canada presented a Distinguished Budget Presentation Award to the City of Andover for its annual budget for the fiscal year beginning January 1, 2011. This is the tenth year in a row the City of Andover has received this award. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan and as a communications device. This award is valid for a period of one year only. We believe that the annual budget for the fiscal year beginning January 1, 2012 continues to conform to the program requirements and have submitted it to the GFOA to determine its eligibility for another award. The GFOA also presented the Certificate of Achievement for Excellence in Financial Reporting Award to the City of Andover for its 2010 Comprehensive Annual Financial Report. This is the ninth time the City of Andover has received this award. In order to receive this award, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report whose contents conform to program standards. Such reports must satisfy both generally accepted accounting principles and applicable legal requirements. This award is valid for a period of one year only. We believe this report for 2011 continues to conform to the Certificate of Achievement Program requirements and have submitted it to the GFOA to determine its eligibility for another award. INDEPENDENT AUDIT. State statutes require an annual audit by independent certified public accountants. HLB Tautges Redpath, Ltd. was engaged by the City to render an opinion on the City's financial statements. The auditor's report on the basic financial statements and combining and individual fund statements and schedules is included in the financial section of this report. ACKNOWLEDGMENTS. The preparation of this report could not have been accomplished without the efficient services and dedication of the Finance Department staff and the consultation of the City's auditing firm. Staff members: Lee Brezinka, Melissa Knutson and Brenda Fildes have my sincere appreciation for their contribution to the preparation of this report. I also want to express our appreciation to the Mayor and members of the City Council for their interest and support in planning and conducting the financial operations of the City in a fiscally responsible manner. Respectfully submitted, James Dickinson City Administrator CITY OF ANDOVER, MINNESOTA ORGANIZATION December 31, 2011 OfficeNameTer m MayoMichael GamachJanuary 7, 2013 re Council MemberTony HowarNovember 6, 2012 d Council MemberMichael KnightJanuary 7, 2013 Council MemberSheri BukkilaJanuary 7, 2013 Council MemberJulie TrudeJanuary 5, 2015 City Administrator / City ClerJames DickinsoAppointed kn Community Development DirectoDavid CarlbergAppointed r Director of Public Works / City EngineerDavid BerkowitAppointed z Finance Manage rLee BrezinkaAppointed Building OfficialDon OlsonAppointed Fire ChiefDan WinkelAppointed AttorneHawkins & Baumgartner, P.A.Appointed y Fiscal ConsultantsEhlers & Associates, Inc.Appointed CITY OF ANDOVER Organizational Chart - This page intentionally left blank - II. FINANCIAL SECTION CITY OF ANDOVER, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2011 As management of the City of Andover, 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, 2011. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages 2 through 8 of this report. Financial Highlights The assets of the City exceeded its liabilities at the close of the most recent fiscal year by $158,452,179 (Net assets). Of this amount, $28,453,637 (unrestricted net assets) may be used to meet the government’s ongoing obligations to citizens and creditors in accordance with the City's fund designations and fiscal policies. The City’s total net assets increased by $2,756,774, primarily due to the budget savings and the pay-down of additional debt. As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $40,230,246. SpecialDebtCapital GeneralRevenueServiceProjectsTotals Nonspendable222,641$ $ 16,074$ -$ -$ 238,715 Restricted - 18,146,737-1,594,47719,741,214 Committed -650,766 - 650,766 - Assigned - 33,469 14,417,837-14,451,306 Unassigned5,665,496 (313,604) -(203,647) 5,148,245 $ 5,888,137$386,705$ 15,808,66718,146,737$ 40,230,246$ The City’s total long-term liabilities decreased by $4,261,314 during the current fiscal year, primarily due to the scheduled debt service payments made in 2011. BeginningEnding BalanceAdditionsReductionsBalance Governmental activities: Bonds payable$44,796,000$ 265,000$ 40,961,000(4,100,000)$ Other post employment benefits99,383 28,761 (5,158) 122,986 Compensated absences571,897 326,825 (314,409) 584,313 Total governmental activities45,467,280 620,586(4,419,567)41,668,299 Business-type activities: Bonds payable14,875,000 - (475,000)14,400,000 Other post employment benefits17,538 6,871 (983) 23,426 Compensated absences132,544 47,823 (41,014) 139,353 Total business-type activities15,025,082 54,694 (516,997)14,562,779 Total City long-term liabilities60,492,362$$ 675,280$ 56,231,078(4,936,564)$ Overview of the Financial Statements The discussion and analysis are intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements comprise three components: 1) 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. CITY OF ANDOVER, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2011 The statement of net assets presents information on all of the City’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, public works, sanitation, parks and recreation, recycling and economic development. The business-type activities of the City include water, sewer and storm sewer. The government-wide financial statements can be found on pages 29 through 31 of this report. 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 spend-able 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 eight 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 following major funds: General Fund, 2006 Economic Development Authority (EDA) Public Facility Lease Revenue Refunding Bonds Debt Service Fund, 2007 EDA Public Facility Lease Revenue Refunding Bonds Debt Service Fund and the following capital projects funds (CPF): Water Trunk, Sewer Trunk, anent Improvement Revolving. Road and Bridge, Tax Increment Projects and Perm Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non- major governmental funds is provided in the form of combining statements elsewhere in this report. The City adopts an annual appropriated budget for its general and special revenue funds. A budgetary comparison statement has been provided for those funds to demonstrate compliance with this budget. The basic governmental fund financial statements can be found on pages 32 through 37 of this report. Proprietary funds . When the City charges customers for the services it provided – whether to outside customers or to other departments of the City – these services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the statement of net assets and the statement of revenues, expenses and changes in net assets. The enterprise funds are the same as the business-type activities reported in the government-wide statements but provide more detail and additional information, such as cash flows, for proprietary funds. The City uses enterprise funds to account for its water, sanitary sewer and storm sewer operations. Internal service funds are used to report activities that provide supplies and services for the City’s other departments, such as the equipment maintenance and insurance funds. The internal service funds are reported with governmental activities in the government-wide financial statements. The basic proprietary fund financial statements can be found on pages 38 through 43 of this report. CITY OF ANDOVER, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2011 Fiduciary funds . Fiduciary funds are used to account for resources held for the benefit of parties outside the City. 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 program. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statement can be found on page 44 of this report. Notes to the financial statements . The notes provide additional information that is essential to a full understanding of the data provided in the government–wide and fund financial statements. The notes to the financial statements can be found on pages 45 through 79 of this report. Other information. The combining statements referred to earlier in connection with non-major governmental funds is presented immediately following the required supplementary information on budgetary comparisons, and on the modified approach for streets and trails infrastructure. Combining and individual fund statements and schedules can be found on pages 87 through 123 of this report. 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 $158,452,179 at the close of the most recent fiscal year. The largest portion of the City’s net assets ($126,177,740 or 80 percent) 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. It does not include any refunding debt that has not met the refunding date of the original issue. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. CITY OF ANDOVER’S NET ASSETS Governmental ActivitiesBusiness-Type ActivitiesTotals 201020112010201120102011 Current and other assets46,331,209$$ 46,074,309$ 12,142,91611,971,246$ 58,302,455$$58,217,225 Capital assets115,137,607 114,242,42144,445,05043,861,319159,582,657158,103,740 Total assets161,468,816 160,316,73056,416,29656,004,235217,885,112216,320,965 Long-term liabilities outstanding45,467,280 41,668,29915,025,08214,562,77960,492,36256,231,078 Other liabilities1,359,003 1,328,199338,342309,5091,697,3451,637,708 Total liabilities46,826,283 42,996,49815,363,42414,872,28862,189,70757,868,786 Net assets: Invested in capital assets, net of related debt87,206,607 90,859,97036,140,05036,031,319123,346,657126,891,289 Restricted6,364,714 3,107,253 -6,364,7143,107,253 - Unrestricted21,071,212 23,353,0094,912,8225,100,62825,984,03428,453,637 Total net assets$ 117,320,232114,642,533$ 41,052,872$ 41,131,947$ 155,695,405$ 158,452,179$ A portion of the City's net assets represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets ($28,453,637) may be used to meet the City's ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City is able to report positive balances in all three categories of net assets, both for the City as a whole, as well as for its separate governmental and business-type activities. CITY OF ANDOVER, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2011 Government-wide Activities Governmental activities increased the City's net assets by $2,677,699 and business-type activities increased net assets by $79,075. Key elements of the activities are as follows: City of Andover's Changes in Net Assets Governmental ActivitiesBusiness-Type ActivitiesTotal 201020112010201120102011 Revenues: Program revenues: Charges for services2,955,592$$ 3,164,239$4,380,245$4,468,880$ 7,335,837$7,633,119 Operating grants and contributions1,214,066 977,5539,380 - 1,223,446977,553 Capital grants and contributions1,461,834 1,356,091 - 1,461,8341,356,091 - General revenues: Property taxes10,336,536 10,292,674 10,336,536- 10,292,674 - Tax increment2,074,589 2,005,056 - 2,074,5892,005,056 - Grants and contributions not restricted to specific programs 84,875 86,802 - 84,87586,802 - Unrestricted investments earnings1,114,451 1,399,987317,796370,641 1,432,2471,770,628 Total revenues19,241,943 19,282,4024,707,4214,839,521 23,949,36424,121,923 Expenses: General government2,398,007 2,406,750 - 2,398,0072,406,750 - 4,157,050 4,214,316 - 4,157,0504,214,316 Public safety - Public works3,445,403 4,029,164 - 3,445,4034,029,164 - Parks and recreation3,447,730 2,945,742 - 3,447,7302,945,742 - Recycling 108,785 109,293 - 108,785109,293 - Economic development654,961 777,298 - 654,961777,298 - Interest on long-term debt1,936,731 1,796,782 - 1,936,7311,796,782 - Water - -2,585,4692,655,926 2,585,4692,655,926 Sewer - -1,915,0721,914,113 1,915,0721,914,113 Storm sewer - -532,168614,958 532,168614,958 Total expenses16,148,667 16,279,3455,032,7095,184,997 21,181,37621,464,342 Increase (decrease) in net assets before gain on the sale of capital assets and transfers3,093,276 3,003,057(325,288)(345,476) 2,767,9882,657,581 Gain on the sale of capital assets 22,500 91,693- 7,500 22,50099,193 Transfers 437,186 (417,051)(437,186)417,051 - - Increase in net assets3,552,962 2,677,699(762,474)79,075 2,790,4882,756,774 Net assets - beginning111,089,571114,642,53341,815,34641,052,872152,904,917155,695,405 Net assets - ending$ 117,320,232114,642,533$ 41,052,872$$41,131,947$ 158,452,179155,695,405$ CITY OF ANDOVER, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2011 Governmental Activities Following are specific graphs that provide comparisons of the governmental activities revenues and expenses: Governmental Activities - Revenues Grants and Unrestricted contributions not Charges for services investments earnings restricted for specific 16.3% 7.2% programs 0.4% Gain (loss) on the sale of capital assets Tax increment 0.5% 10.3% Capital grants and contributions 7.0% Operating grants and contributions 5.0% Property taxes 53.3% Governmental Activities - Expenses General government Interest on long-term 14.8% debt 11.0% Economic Recycling development 0.7% 4.8% Parks and recreation Public safety 18.1% 25.9% Public works 24.7% CITY OF ANDOVER, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2011 Business-Type Activities Business-type activities increased net assets by $79,075. Below are graphs showing the business-type activities revenue and expense comparisons: Business-Type Activities - Revenues Gain on sale of capital assets Unrestricted 0.2% investments earnings 7.6% Charges for services 92.2% Business-Type Activities - Expenses Storm sewer 12% Water 51% Sewer 37% CITY OF ANDOVER, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2011 Financial Analysis of the Government's Funds Governmental Funds . The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unreserved fund balance may serve as 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 $40,230,246. Approximately 12.8 percent of this total amount ($5,148,245) constitutes unassigned fund balance. The remainder of the fund balance ($35,082,001) is not available for new spending because it is either 1) nonspendable ($238,715), 2) restricted ($19,741,214), 3) committed ($650,766) or 4) assigned ($14,451,306). Major Funds The general fund increased by $777,232 in 2011, which was a $844,193 change from the final budget. The final budget showed a decrease in fund balance of $66,961. The increase in fund balance is due to various departments under-spending and revenues exceeding budgets with an increase in the number of homes being built over what was budgeted and some commercial/industrial construction taking place. The water and sewer trunk capital projects funds fluctuate based on development activity and whether there is any cost sharing for pipe over- sizing, extra depth, etc. The sewer trunk fund continues to receive funds from the sewer enterprise fund to be set aside for future replacements. The road and bridge capital projects fund increased by $680,422 primarily due to the collection of state aid construction dollars for prior year projects. The tax increment capital projects fund decreased by $2,091,588 due to operating transfers for debt service payments ($1,744,013) and future land purchases ($755,000). Additionally, a developer defaulted on their loan agreement with the City EDA and subsequently, the City EDA negotiated with the lending institution that financed the infrastructure improvements to take the land back with the improvements for $1,388,845. Nonmajor Funds The 2007A G.O. equipment certificates debt service fund decreased by $212,002 with the final payment being made. The 2004B G.O. tax increment refunding bonds debt service fund decreased by $17,750 with the final payment being made. The 2005A G.O. improvement bonds debt service fund decreased by $226,902 with the final payment being made. The capital equipment reserve capital projects fund increased by $107,601 due to monies being set aside for future expenditures, both planned and unforeseen. The fluctuation of fund balance for the equipment certificate capital projects funds depends on when the bonds are issued and when the purchases are actually made. Proprietary funds . The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The unrestricted net assets in the respective proprietary funds are enterprise funds of $5,046,041 (water $1,849,182, sewer $2,981,775 and storm sewer $215,084) and internal service funds of $515,898. The enterprise funds had a net increase in net assets in 2011 of $58,863 (water $62,702, sewer $31,353 and storm sewer ($35,192)). Internal service funds had a net increase in net assets of $102,083. 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, 2011, amounts to $158,103,740 (net of accumulated depreciation). This investment in capital assets includes land, buildings, infrastructure, machinery and equipment. The City has elected to use the modified approach as defined in GASB Statement No. 34 for infrastructure reporting for its Pavement Management Program, which includes streets and trails. Under GASB Statement No. 34, eligible infrastructure capital assets are not required to be depreciated under the following requirements: CITY OF ANDOVER, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2011 1) The City manages the eligible infrastructure capital assets using an asset management system with characteristics of (a) an up-to- date inventory; (b) perform condition assessments and summarize the results using a measurement scale; and (c) estimate annual amount to maintain and preserve at the established condition assessment level. 2)The City documents that the eligible infrastructure capital assets are being preserved approximately at or above the established and disclosed condition assessment level. The City’s policy is to achieve an average rating of good (56 – 70) for all streets and trails. In the fall of 2011, the City conducted a physical condition assessment of the streets and trails constructed since 1974. This assessment will be completed every three years. As of December 31, 2011, the City’s street and trail system was rated at an Overall Condition Index (OCI) of 83, which is higher than the City’s policy level. The City’s streets and trails are constantly deteriorating resulting from the following factors: (1) traffic using the system; (2) the sun’s ultra- violet rays drying out and breaking down the top layer of pavement; (3) utility company/private development trenching operations; (4) water damage from natural precipitation; and (5) frost heave. The City is continuously taking actions to prolong the life of the system through short-term maintenance activities such as pothole patching, crack sealing, seal coating and overlaying. The City expended $1,770,980 on street and trail maintenance for the year ending December 31, 2011. These expenditures delayed deterioration and the overall condition of the system remained constant at an 83 OCI through these maintenance expenditures. The City has estimated that the amount of annual expenditures required to maintain the City’s street and trail system at the average OCI rating of good is approximately $1,150,000. MaintenanceActualOCI YearEstimateExpendituresRating 2003950,000$ 956,688$ 82 20041,000,000 1,847,066 82 20051,000,000 1,655,715 83 20061,150,000 1,228,981 82 20071,150,000 1,256,433 81 20081,150,000 2,244,713 80 20091,150,000 1,666,216 81 20101,150,000 1,457,082 83 20111,150,000 1,770,980 83 CITY OF ANDOVER, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2011 Primary Government BeginningEnding BalanceAdditionsDeletionsBalance Governmental activities: Land and improvements9,319,699$ -$ (423,126)$ 8,896,573$ Streets and trails79,547,692 374,988 - 79,922,680 Construction in progress51,002 2,940 (53,942) - Buildings and improvements26,820,846223,854 27,044,700- Furniture and equipment411,11658,642 - 469,758 Machinery and equipment7,112,560399,776(190,012) 7,322,324 Other park improvements5,469,203134,181 (16,500) 5,586,884 Total capital assets 128,732,1181,194,381(683,580)129,242,919 Less accumulated depreciation for: Buildings and improvements6,244,130903,478 - 7,147,608 Furniture and equipment257,50737,726 - 295,233 Machinery and equipment5,148,567386,113(190,012) 5,344,668 Other park improvements1,944,307285,182 (16,500) 2,212,989 Total accumulated depreciation13,594,5111,612,499(206,512) 15,000,498 Governmental activities capital assets - net115,137,607(418,118)(477,068)114,242,421 Business-type activities: Land and improvements730,243 - 730,243 - Construction in progress- - - - Buildings and improvements15,846,86530,725 15,877,590- Furniture and equipment61,390 - 61,390 - Machinery and equipment1,251,188 - (44,258) 1,206,930 Collection and distribution49,377,3421,013,856 50,391,198- Total capital assets being depreciated67,267,0281,044,581 (44,258) 68,267,351 Less accumulated depreciation for: Buildings and improvements5,657,113556,031 - 6,213,144 Furniture and equipment33,5136,460 - 39,973 Machinery and equipment986,85760,646 (44,258) 1,003,245 Collection and distribution16,144,4951,005,175 17,149,670- Total accumulated depreciation22,821,9781,628,312 (44,258) 24,406,032 Business-type activities capital assets - net44,445,050(583,731) 43,861,319- Total capital assets$159,582,657$(1,001,849)$(477,068)$158,103,740 Additional information on the City’s capital assets can be found in Note 5. Long-term debt . At the end of the current fiscal year, the City had total long-term debt outstanding of $56,084,666, a decrease of $4,290,775 from 2010. Revenue bonds ($34,675,000) were used to finance the construction of the community center and the refunding of portions of the community center bonds. General obligation revenue bonds ($14,400,000) were used to finance the construction of, and addition to, the water treatment plant and the refunding of portions of the water treatment plant bonds. Certificates of indebtedness ($561,000) financed capital equipment purchases. Capital improvement bonds ($2,200,000) financed the construction of Fire Station #3, the purchase of the Public Works building from the EDA and some improvements done at the Public Works building and City Hall. Permanent improvement revolving bonds ($1,125,000) financed improvement projects within the City and are assessed to the benefiting properties. CITY OF ANDOVER, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2011 State aid bonds ($740,000) were used to finance Municipal State Aid (MSA) eligible road projects and the refunding of portions of the state aid bonds and the referendum bonds ($1,660,000) were used to finance land acquisitions for the preservation of open space. Additional long-term debt in the amount of $723,666 is for compensated absences. City of Andover’s Outstanding Debt GovernmentalBusiness-Type ActivitiesActivitiesTotal Bonds payable: Revenue bonds34,675,000$ -$ 34,675,000$ G.O. revenue bonds- 14,400,000 14,400,000 Certificates of indebtedness561,000 - 561,000 Capital improvement bonds2,200,000 - 2,200,000 Permanent improvement revolving bonds1,125,000 - 1,125,000 State aid bonds740,000 - 740,000 Referendum bonds1,660,000 - 1,660,000 Total bonds payable40,961,000 14,400,000 55,361,000 Compensated absences584,313 139,353 723,666 Total41,545,313$ 14,539,353$ 56,084,666$ The City maintains an AA+ rating with a stable outlook from Standard and Poor’s. State statutes limit the amount of general obligation debt a Minnesota city may issue to 3% of total Estimated Taxable Market Value. The current debt limitation for the City is $74,098,350. Only $21,316,036 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 6 and 7. Requests for information. This financial report is designed to provide a general overview of the City of Andover’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 City of Andover, Attn: Finance Manager, 1685 Crosstown Boulevard NW, Andover, Minnesota 55304 or by calling 763-755-5100. - This page intentionally left blank - BASIC FINANCIAL STATEMENTS - This page intentionally left blank - CITY OF ANDOVER, MINNESOTA STATEMENT OF NET ASSETSStatement 1 December 31, 2011 With Comparative Actual Amounts For The Year Ended December 31, 2010 Primary Government GovernmenBusiness-TypeTotals t ActivitiesActivities20112010 Assets: Cash and investments 22,953,866$ 4,328,154$ 27,282,020$ 26,915,807$ Cash and investments with escrow agent 17,277,066 6,490,755 23,767,821 23,729,706 Accrued interest 414,558 129,796 544,354 501,177 Due from other governmental units 27,009 9,224 36,233 41,932 Accounts receivable - net 188,447 1,078,796 1,267,243 1,252,817 Prepaid items 101,000 18,000 119,000 122,500 Property taxes receivable: Unremitted 88,786 - 88,786 107,367 Delinquent 482,867 - 482,867 441,904 Special assessments receivable: Unremitted 1,510 799 2,309 31,537 Delinquent 217,843 49,174 267,017 218,860 Deferred 2,519,409 - 2,519,409 3,187,639 Notes receivable 84,192 - 84,192 1,515,512 Inventories - at cost 227,256 38,218 265,474 235,697 Land held for resale1,490,500 - 1,490,500 - Capital assets - net Nondepreciable 88,819,253 730,243 89,549,496 89,648,636 Depreciable 25,423,168 43,131,076 68,554,244 69,934,021 Total assets 160,316,730 56,004,235 216,320,965 217,885,112 Liabilities: Interfund payable 54,587 (54,587) - - Accounts payable 207,470 20,118 227,588 234,283 Contracts payable69,12122,891 92,01259,477 Developer advances-- -20,000 Deposits payable56,8023,720 60,52257,973 Due to other governmental units36,97725,759 62,73652,674 Salaries payable150,62428,839 179,463180,749 Unearned revenue12,360- 12,36022,581 Accrued interest payable740,258262,769 1,003,0271,069,608 Other post employment benefits: Due in more than one year122,98623,426 146,412116,921 Compensated absences: Due within one year87,64720,903 108,550105,667 Due in more than one year496,666118,450 615,116598,774 Bonds/notes payable: Due within one year1,842,0006,980,0008,822,0004,575,000 Due in more than one year39,119,0007,420,000 46,539,00055,096,000 Total liabilities42,996,49814,872,288 57,868,78662,189,707 Net assets: Invested in capital assets, net of related debt90,859,97036,031,319 126,891,289123,346,657 Restricted for: Debt service608,515- 608,5151,265,441 Capital improvements51,876- 51,876792,421 Tax increment purposes2,446,862- 2,446,8624,306,852 Unrestricted23,353,0095,100,628 28,453,63725,984,034 Total net assets$117,320,232$41,131,947$ 158,452,179$155,695,405 The accompanying notes are an integral part of these financial statements. CITY OF ANDOVER, MINNESOTA STATEMENT OF ACTIVITIES For The Year Ended December 31, 2011 With Comparative Actual Amounts For The Year Ended December 31, 2010 Program Revenues ChargesOperatingCapital ForGrants anGrants an dd ExpensesServicesContributionsContributions Functions/Programs Primary government: Government activities: General government 2,406,750$ 532,764$ 7,545$ -$ Public safety 4,214,316 540,089 310,428 - Public works 4,029,164 309,066 593,553 1,301,660 Parks and recreation 2,945,742 1,498,847 - 54,431 Recycling 109,293 48,339 43,531 - Economic development 777,298 235,134 - - Interest on long-term debt 1,796,782 - 22,496 - Total government activities 16,279,345 3,164,239 977,553 1,356,091 Business-type activities: Water 2,655,926 2,119,954 - - Sewer 1,914,113 1,990,218 - - Storm sewer 614,958 358,708 - - Total business-type activities 5,184,997 4,468,880 - - Total primary government 21,464,342$ 7,633,119$ 977,553$ 1,356,091$ The accompanying notes are an integral part of these financial statements. Statement 2 Net (Expense) Revenue and Changes in Net Assets Primary Government GovernmentaBusiness-TypeTotals l ActivitiesActivities20112010 $ -(1,866,441)$ (1,866,441)$ (1,934,149)$ -(3,363,799) (3,363,799) (3,365,590) -(1,824,885) (1,824,885) (1,279,651) -(1,392,464) (1,392,464) (1,840,935) -(17,423) (17,423) (10,745) -(542,164) (542,164) (197,126) -(1,774,286) (1,774,286) (1,888,979) -(10,781,462) (10,781,462) (10,517,175) (535,972)- (535,972) (508,164) 76,105- 76,105 49,045 (256,250)- (256,250) (183,965) (716,117)- (716,117) (643,084) (716,117)(10,781,462) (11,497,579) (11,160,259) General revenues: General property taxes 10,292,674 - 10,292,674 10,336,536 Tax increment collections 2,005,056 - 2,005,056 2,074,589 Grants and contributions not restricted to specific programs 86,802 - 86,802 84,875 Unrestricted investment earnings 1,399,987 370,641 1,770,628 1,432,247 Gain on sale of capital assets 91,693 7,500 99,193 22,500 Transfers (417,051) 417,051 - - Total general revenues, gain on sale of capital assets and transfers 13,459,161795,19214,254,35313,950,747 Change in net assets2,677,69979,0752,756,7742,790,488 Net assets - beginning114,642,53341,052,872155,695,405152,904,917 Net assets - ending$117,320,232$41,131,947$158,452,179$155,695,405 CITY OF ANDOVER, MINNESOTA BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2011 2006 EDA Public 2007 EDA Public Facility Lease Facility Lease Revenue Revenue BondRefundin BondWater Trun Refundingsgsk GeneraDSFDSFCPF l Assets: Cash and investments 5,140,136$ 396$ 391$ 2,480,592$ ent9,758,026 6,703,187- Cash and investments with escrow ag - Accrued interest21,475176,331 121,22314,985 overnmental units27,009- Due from other g - - Accounts receivable - net75,312- - - Interfund receivable647,000215,000 - - Prepaid items91,000- - - taxes receivable: Property Unremitted 49,604- - - Delinquent250,344- - - Special assessments receivable: Unremitted141- - - Delinquent9,2216,561 - - Deferred407,799 - - - Notes receivable- - - - Inventories - at cost131,641- - - Land held for resal- e - - - Total assets6,442,8839,934,753 6,824,8013,124,937 Liabilities and Fund Balances Liabilities: able11,000 -11,000 Interfund pay - Accounts paable122,17116,806 y - - able18,00135,113 Contracts pay - - Deposits paable13,3245,741 y - - overnmental units18,775226 Due to other g - - Salaries paable122,910- y - - Deferred revenue259,565414,360 - - Total liabilities554,74611,000 11,000472,246 Fund balances: Nonspendabl222,641- e - - 9,923,753 6,813,801- Restricted - Committe- d - - - ne2,652,691 Assigd - - - Unassine5,665,496- gd - - Total fund balances5,888,1379,923,753 6,813,8012,652,691 Total liabilities and fund balances$6,442,883$9,934,753$ 6,824,801$3,124,937 Fund balance reported above Amounts reported for overnmental activities in the statement of net assets are different because: g overnmental activities are not financial resources and, therefore, are not reported in the funds. Capital assets used in g Other lon-term assets are not available to pa for current-period expenditures and, therefore, are deferred in the funds. gy manaement to chare the cost of equipment maintenance and insurance to individual funds. Internal service funds are used bygg The assets and liabilities are included in the overnmental activities statement of net assets alon with a deduction of net gg pe activities. revenue attributable to business-ty Lon-term liabilities, includin bonds paable and other post emploment benefits, are not due and paable in the current period and, ggyyy therefore, are not reported in the funds. Net assets of governmental activities The accompanin notes are an interal part of these financial statements. ygg Statement 3 TaxPermanen t Road &IncremenImprovemenOtheIntr ttra Sewer TrunBridProectRevolvinGovernmentaActivitGovernmental kgejsgly CPFCPFCPFCPFFundsEliminationFunds s $ 4,505,4964,034,729$ 816,042$ 1,162,033$ 4,362,395$ -$ 22,502,210$ -- -815,85317,277,066 - - 22,453 22,828 7,2615,77319,824412,153 - - --27,009 - - - - --111,624186,936 - - - -- (862,000) - - - - --8,25099,250 - - - 6,383 18,94113,85888,786 - - - 37,396 117,96977,158482,867 - - - 1,369-1,510 - - - 38 5,335-196,688217,843 - - 45,897 1,007,029 9,3411,049,3432,519,409 - - - 30,761-53,43184,192 - - - --7,824139,465 - - - - 1,490,5001,490,500 - - - 4,103,117 5,616,597 2,460,0542,413,8375,470,217 (862,000)45,529,196 - --840,000 (862,000) - - - - 3,57644,282186,835 - - - - 1,50714,50069,121 - - 5,741 --31,99656,802 - - 227 902 8,1099027,83636,977 - - --19,134-142,044 - 45,935 1,080,521 1,617,8101,246,031142,9494,807,171 - 51,903 1,081,423 1,631,0021,246,9331,100,697 (862,000)5,298,950 - --16,074238,715 - - -- 829,0522,174,60819,741,214 - - - --650,766650,766 - - 4,051,214 4,535,174-1,166,9042,045,32314,451,306 - - --(517,251)5,148,245 - - 4,051,214 4,535,174 829,0521,166,9044,369,52040,230,246 - $ 4,103,117$ 5,616,597$ 2,460,054$2,413,837$5,470,217$ (862,000)$45,529,196 $40,230,246 114,242,421 4,794,811 461,311 (42,408,557) $117,320,232 CITY OF ANDOVER, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS For The Year Ended December 31, 2011 With Comparative Actual Amounts For The Year Ended December 31, 2010 2006 EDA Public 2007 EDA Public Facility Lease Facility Lease Revenue Revenue Refunding Bonds Refunding Bonds Water TrunkSewer Trunk GeneralDSFDSFCPFCPF Revenues: General property taxes 7,115,936$ -$ -$$ -$- Tax increment collections --- -- Licenses and permits 387,206-- -- Intergovernmental 566,706-- -- Special assessments --- 47,74224,871 Charges for services 866,584-- -- Fines 99,777-- -- Investment income 130,367422,993290,734 88,543136,253 Miscellaneous: Park dedication fees --- -- Connection charges --- 24,2392,926 Rent --- -- Other 127,509-- -- Total revenues 9,294,085422,993290,734 160,524164,050 Expenditures: Current: General government 2,271,085-- -- Public safety 3,960,220-- -- Public works1,444,833-- 454,68113,085 Parks and recreation 889,178-- -- Recycling 109,911-- -- Economic development --- -- Unallocated 30,631-- -- Capital outlay: General government --- -- Public safety --- -- Public works 7,925-- -- Parks and recreation --- -- Economic development --- -- Debt service: Principal retirement --- -- Interest -424,227291,983 -- Paying agent fees -2,6762,676 -- Professional services -910915 -- Construction/acquisition costs --- 30,725- Total expenditures 8,713,783427,813295,574 485,40613,085 Revenues over (under) expenditures 580,302(4,820)(4,840)(324,882)150,965 Other financing sources (uses): Transfers in 196,930---400,000 Transfers out--- -- Bonds issued --- -- Refunding bonds issued --- -- Redemption of refunded bonds --- -- Bond premium --- -- Proceeds from the sale of capital assets --- -- Total other financing sources (uses) 196,930-- -400,000 Net increase (decrease) in fund balance 777,232(4,820)(4,840) (324,882)550,965 Fund balance - January 1 5,110,9059,928,5736,818,641 2,977,5733,500,249 Fund balance - December 31$ 5,888,137$9,923,753$6,813,801$ 2,652,691$4,051,214 The accompanying notes are an integral part of these financial statements. Statement 4 TaxPermanent Road &IncrementImprovementOtherIntraTotals Governmental Funds BridgeProjectsRevolvingGovernmentalActivity CPFCPFCPFFundsEliminations20112010 $ 1,046,339$ -$ -$2,117,692$-$10,279,967$ 10,267,085 - 1,976,800 ---1,976,800 2,015,123 - - ---387,206329,901 976,007 75,856 -258,116-1,876,685 1,989,420 263,410 3,563 552,356--891,942 1,725,695 - - -866,207-1,732,791 1,604,681 - - ---99,777104,780 147,395 35,273 24,987110,153-1,386,698 1,107,335 - - -51,706-51,70632,649 - - ---27,16548,086 - - -641,859-641,859638,037 921 - -235,162(30,600)332,992396,186 2,434,072 2,091,492 577,3434,280,895(30,600)19,685,588 20,258,978 - - -27,486-2,298,571 2,255,793 - - -5,321-3,965,541 3,920,073 1,760,250 - 949114,838-3,788,636 3,204,444 - - -1,037,042-1,926,220 2,433,495 - - ---109,911109,034 - 810,042 -156,645-966,687650,977 - - ---30,63124,953 - - -45,072-45,072163,387 - - -5,645- 5,645435,103 -374,988 -328,878-711,791- - - -197,782-197,782726,391 - - -25,109-25,109- -- -4,100,000-4,100,000 5,779,000 - - -1,139,328-1,855,538 2,030,267 - - -3,253- 8,6057,880 - - --- 1,82522,059 - 1,013,856 ---1,044,581101,153 1,760,250 2,198,886 9497,186,399-21,082,145 21,864,009 673,822 (107,394) 576,394(2,905,504)(30,600)(1,396,557) (1,605,031) 6,600 - -3,639,347(3,615,347)627,530627,530 - (2,499,013) (763,298)(383,636)3,645,947 -(89,191) ---265,000-265,000 1,660,000 - - --- - 1,480,000 - - --- - (2,416,834) - - --- -31,688 - 514,819 ---514,81943,217 6,600 (1,984,194) (763,298)3,520,71130,6001,407,349 1,336,410 680,422 (2,091,588) (186,904)615,207-10,792 (268,621) 3,854,752 2,920,640 1,353,8083,754,313-40,219,454 40,488,075 $ 4,535,174$ 829,052$ 1,166,904$4,369,520$-$40,230,246$ 40,219,454 - This page intentionally left blank - CITY OF ANDOVER, MINNESOTA RECONCILIATION OF THE STATEMENT OF REVENUES, Statement 5 EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS For The Year Ended December 31, 2011 With Comparative Actual Amounts For The Year Ended December 31, 2010 20112010 Amounts reported for governmental activities in the statement of activities (page 35) are different because: Net changes in fund balances - total governmental funds (page 35) 10,792$ (268,621)$ 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. (206,609)417,481 The net effect of various miscellaneous transactions involving capital assets is to increase (decrease) net assets (i.e., sales, trade-ins, and donations). (268,086) 25,497 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. (377,515) (1,073,640) The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. This amount is the net effect of these differences in the treatment of long-term debt and related items. 3,835,000 5,049,000 Vested post employment benefits are reported in the governmental funds when amounts are aid. The statement of activities reports the benefits earned during the years. This amount (23,603)(32,022) p is the net effect of employee benefits earned and paid during the year. Transfer out of governmental capital assets contributed to Enterprise Funds. (1,044,581)(101,153) Some expenses reported in the statement of activities do not require use of current financial resources and, therefore, are not reported as expenditures in governmental funds. 46,34063,245 Internal service funds are used by management to charge the cost of equipment maintenance and insurance to individual funds. This amount is the portion of net revenue attributable to governmental activities. 81,87197,265 Change in net assets of governmental activities (page 31)$ 2,677,699$3,552,962 The accompanying notes are an integral part of these financial statements. CITY OF ANDOVER, MINNESOTA STATEMENT OF NET ASSETS PROPRIETARY FUNDS December 31, 2011 With Comparative Actual Amounts For The Year Ended December 31, 2010 WaterSewerStorm Sewer Assets: Current assets: Cash and cash equivalents 1,776,959$ 2,408,924$ 142,271$ Restricted assets: Cash and cash equivalents 6,490,755 - - Accrued interest 117,258 11,876 662 Due from other governmental units - 9,224 - Accounts receivable - net 382,738 591,270 104,788 Prepaid items 8,250 9,750 - Special assessments receivable: Unremitted 282 461 56 Delinquent 15,881 28,305 4,988 Inventories - at cost 38,218 - - Total current assets 8,830,341 3,059,810 252,765 Noncurrent assets: Capital assets: Land 730,243 - - Buildings and structures 15,877,590 - - Machinery and equipment 311,465 485,014 471,841 Distribution and collection system 16,151,732 24,081,473 10,157,993 Total capital assets 33,071,030 24,566,487 10,629,834 Less: Allowance for depreciation (11,499,288) (9,216,630) (3,690,114) Total noncurrent assets 21,571,742 15,349,857 6,939,720 Total assets 30,402,083 18,409,667 7,192,485 Liabilities: Current liabilities: Accounts payable 16,959 2,818 341 Contracts payable 14,013 5,1453,733 Deposits payable 3,720 - - Interest payable 262,769 - - Due to other governmental units 17,497 8,262- Salaries payable 13,430 9,485 5,924 Bonds payable - due within one year 6,980,000 - - Compensated absences payable - due within one year 10,439 6,523 3,941 Total current liabilities 7,318,827 30,821 15,351 Noncurrent liabilities: Other post employment benefits - due in more than one year 13,177 10,249 - Bonds payable - due in more than one year 7,420,000 - - Compensated absences payable - due in more than one year 59,155 36,965 22,330 Total noncurrent liabilities 7,492,332 47,214 22,330 Total liabilities 14,811,159 78,035 37,681 Net assets: Invested in capital assets, net of related debt 13,741,742 15,349,857 6,939,720 Unrestricted 1,849,182 2,981,775 215,084 Total net assets$15,590,924$18,331,632$ 7,154,804 Net assets reported above Amounts reported for business-type activities in the statement of net assets are different because: Internal service funds are used by management to charge the cost of equipment maintenance and insurance to individual funds. This amount is the portion of net revenue attributable to business-type activities. Net assets of business-type activities The accompanying notes are an integral part of these financial statements. Statement 6 Totals Governmental Activities - TotalsInternal Service Funds 2011201020112010 $ 4,188,2374,328,154$ 451,656$ 370,709$ 6,491,5106,490,755 - - 124,452129,796 2,405 1,464 5,5879,224 - - 1,034,5161,078,796 1,511 - 19,75018,000 1,750 1,750 1,778799 - - 72,58949,174 - - 32,82738,218 87,791 81,000 11,971,24612,142,916 545,113 454,923 730,243730,243 - - 15,846,86515,877,590 - - 1,312,5781,268,320 - - 49,377,34250,391,198 - - 67,267,02868,267,351 - - (22,821,978)(24,406,032) - - 44,445,05043,861,319 - - 56,416,29656,004,235 545,113 454,923 29,24520,118 20,635 27,382 19,23822,891 - - 3,720 2,234 - - 262,769 270,594 - - 25,759 24,119 - 5,483 28,839 27,287 8,580 8,243 6,980,000 475,000 - - 20,903 19,882 - - 7,364,999 867,599 29,215 41,108 23,426 17,538 - - 7,420,000 14,400,000 - - 118,450 112,662 - - 7,561,876 14,530,200 - - 14,926,875 15,397,799 29,215 41,108 36,031,319 36,140,050-- 5,046,041 4,878,447 515,898 413,815 $ 41,077,360$ 41,018,497$ 515,898$413,815 $ 41,077,360$ 41,018,497 54,587 34,375 $ 41,131,947$ 41,052,872 CITY OF ANDOVER, MINNESOTA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS For The Year Ended December 31, 2011 With Comparative Actual Amounts For The Year Ended December 31, 2010 WateSeweStorm Sewe rrr Operating revenues: User charges 2,078,600$ 1,983,263$ 357,586$ Meters 12,168- - Permit fees2,900- - Penalties7,0076,593877 Other19,279362245 Total operating revenues2,119,9541,990,218358,708 Operating expenses: Personal services398,141284,493218,415 Supplies173,59616,93818,872 Other service charges596,861131,944135,506 Disposal charges1,000,520- - Depreciation882,941498,157247,214 Total operating expenses2,051,5391,932,052620,007 Operating income (loss)68,41558,166(261,299) Nonoperating revenues (expenses): Investment income299,59367,1563,892 Gain on sale of capital assets2,0005,500- Interest expense(632,211)- - Total nonoperating revenues (expenses)(330,618)72,6563,892 Income (loss) before contributions and transfers(262,203)130,822(257,407) Capital contributions475,155347,211222,215 Transfers: Transfers in- - - Transfers out(150,250)(446,680)- Total transfers(150,250)(446,680)- Change in net assets62,70231,353(35,192) Net assets - January 115,528,22218,300,279 7,189,996 Net assets - December 31$15,590,924 $18,331,632$ 7,154,804 Net changes in net assets reported above Amounts reported for business-type activities in the statement of activities are different because: Internal service funds are used by management to charge the cost of equipment maintenance and insurance to individual funds. This amount is the portion of net revenue attributable to usiness-type activities. b Change in net assets of business-type activities The accompanying notes are an intregral part of these financial statements. Statement 7 Totals Governmental Activities - Intra TotalsInternal Service Funds Activity Eliminations2011201020112010 $ -$ 4,419,449$4,331,497$1,005,389$ 1,004,447 - 12,16812,208 - - - 2,9003,300 - - - 14,47713,936 - - - 19,88628,68439,501 33,527 - 4,468,8804,389,6251,044,890 1,037,974 - 901,049902,327349,297 361,439 - 209,406220,736298,789 244,669 (30,600) 833,711686,994308,010 308,502 - 1,000,520989,972 - - - 1,628,3121,615,036 - - (30,600) 4,572,9984,415,065956,096 914,610 30,600 (104,118)(25,440)88,794 123,364 - 370,641317,79613,289 7,116 - 7,500 - - - - (632,211)(650,859) - - - (254,070)(333,063)13,2897,116 30,600 (358,188)(358,503)102,083 130,480 - 1,044,581101,153 - - - -89,191 - - (30,600) (627,530)(627,530) - - (30,600) (627,530)(538,339) - - - 58,863(795,689)102,083 130,480 - 41,018,49741,814,186413,815 283,335 $ -$ 41,077,360$41,018,497$515,898$ 413,815 $ 58,863$(795,689) 20,21233,215 $ 79,075$(762,474) CITY OF ANDOVER, MINNESOTA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For The Year Ended December 31, 2011 With Comparative Actual Amounts For The Year Ended December 31, 2010 WateSeweStorm Sewe rrr Cash flows from operating activities: Receipts from customers and users 2,094,287$ 1,996,971$ 354,099$ Payment to suppliers (778,830) (1,146,334) (155,062) Payment to employees (389,688) (280,371) (216,741) Net cash flows from operating activities 925,769 570,266 (17,704) Cash flows from noncapital financing activities: Transfers in- - - Transfers out(150,250)(446,680)- Net cash flows from noncapital financing activities(150,250)(446,680)- Cash flows from capital and related financing activities: Acquisition of capital assets- - - Interest paid on debt(640,036)- - Payment of bonds(475,000)- - Proceeds from the sale of capital asset 5,5002,000 - s Net cash flows from capital and related financing activities (1,113,036) 5,500 - Cash flows from investing activities: Investment income 298,308 63,175 3,814 Net increase in cash and cash equivalents (39,209) 192,261 (13,890) Cash and cash equivalents - January 1 8,306,923 2,216,663 156,161 Cash and cash equivalents - December 31 8,267,714$ 2,408,924$ 142,271$ Reconciliation of operating income to net cash provided (used) by operating activities: Operating income (loss) 68,415$ 58,166$ (261,299)$ Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Depreciation 882,941 498,157 247,214 Changes in assets and liabilities: (3,637)- Decrease (increase) in due from other governmental units - Decrease (increase) in accounts receivable(34,551)(5,083)(4,646) Decrease (increase) in prepaid items1,750- - Decrease (increase) in special assessments8,88415,47337 Decrease (increase) in inventory(5,391)- - Increase (decrease) in accounts payable(8,965)1,180(1,342) Increase (decrease) in contracts payable2,504491658 Increase (decrease) in deposits payable1,486- - Increase (decrease) in due to other governmental units 2431,397- Increase (decrease) in salaries payable(236)(692)2,480 Increase (decrease) in other post employment benefit 3,2342,654 - s Increase (decrease) in compensated absences 6,035 1,580 (806) Total adjustments 857,354 512,100 243,595 Net cash provided (used) by operating activities 925,769$ 570,266$ (17,704)$ Noncash investing, capital and financing activities: Assets contributed to the Enterprise Funds$475,155$347,211$222,215 The accompanying notes are an integral part of these financial statements. Statement 8 Totals Governmental Activities - TotalsInternal Service Funds 2011201020112010 $ 4,347,1394,445,357$ 1,043,379$ 1,037,974$ (2,080,226)(2,260,823)(625,820)(556,762) (886,800)(880,139)(348,960)(359,505) 1,478,3311,206,17768,599121,707 -89,191- - (596,930)(596,930)- - (596,930)(507,739)- - -(258,971)- - (640,036)(658,025)- - (475,000)(455,000)- - 7,500-- - (1,107,536)(1,371,996)- - 365,297318,59712,3486,469 139,162(354,961)80,947128,176 10,679,74711,034,708370,709242,533 $10,818,909$10,679,747$451,656$370,709 $(134,718)$(56,040)$88,794$123,364 1,628,3121,615,036- - (3,637)2,113- - (44,280)(43,865)(1,511) - 1,7501,750- - 24,394(734)- - (5,391)343(6,791)(17,935) (9,127)(18,221)(6,747)11,716 3,653(314,348)- - 1,486-- - 1,640(2,045)(5,483)2,628 1,5525,4823371,934 5,8884,708- - 6,80911,998- - 1,613,0491,262,217(20,195)(1,657) $1,478,331$1,206,177$68,599$121,707 $1,044,581$101,153$-$- CITY OF ANDOVER, MINNESOTA STATEMENT OF FIDUCIARY NET ASSETS Statement 9 FIDUCIARY FUNDS Agency Funds December 31, 2011 With Comparative Actual Amounts For The Year Ended December 31, 2010 20112010 Assets: Cash and investments 184,037$ 295,204$ Liabilities: Accounts payable 106 375 Due to other governments - 46 Deposits payable 183,931 294,783 Total liabilities 184,037$ 295,204$ The accompanying notes are an integral part of these financial statements. CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Andover was incorporated in 1974 and operates under the State of Minnesota Statutory Plan A 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 generally accepted accounting principles as applied to governmental units by the Governmental Accounting Standards Board (GASB). The following is a summary of the significant accounting policies. A. FINANCIAL REPORTING ENTITY As required by generally accepted accounting principles, the financial statements of the reporting entity include those of the City (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 units have been included in the financial reporting entity as blended component units. The Andover Economic Development Authority (EDA) is an entity legally separate from the City. However, for financial reporting purposes, the EDA is reported as if it were part of the City's operations because the members of the City Council serve as EDA Board Members and its purpose is to promote development within the City. The activity of the EDA is reported in the EDA General Special Revenue Fund. Separate financial statements are not prepared for the EDA. B.GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS The government-wide financial statements (i.e., the statement of net assets and the statement of changes in net assets) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the Governmental activities effect of interfund activity has been removed from these statements., which normally are supported by business-type activities taxes and intergovernmental revenues, are reported separately from , 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 Direct expenses are offset by program revenues. are those that are clearly identifiable with a specific function or business-type Program revenues activity. 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 general revenues included among program revenues are reported instead as . 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. C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION economic resources measurement focusaccrual basis The government-wide financial statements are reported using the and the of accounting , as are the Proprietary Fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes 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. The City’s only fiduciary funds are agency funds. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. current financial resources measurement focusmodified Governmental fund financial statements are reported using the and the accrual basis of accounting . Revenues are recognized as soon as they are both measurable and available. Revenues are available considered to be 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 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 collected within 60 days of the end of the current fiscal period. Reimbursement grants are considered available if they are collected within one year of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, special assessments, intergovernmental revenues, charges for services and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City. The City reports the following major governmental funds: General Fund Theis the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. 2006 EDA Public Facility Lease Revenue Refunding Bonds Debt Service Fund (DSF) The was established to refund portions of debt associated with the construction of the Andover YMCA Community Center. 2007 EDA Public Facility Lease Revenue Refunding Bonds DSF The was established to refund portions of debt associated with the construction of the Andover YMCA Community Center. Water Trunk Capital Projects Fund (CPF) The is used to account for water access fees and trunk improvements as part of development. It is also used to reserve monies that will be needed for capital infrastructure replacements in the future. Sewer Trunk CPF The is used to account for sewer access fees and sanitary sewer improvements. Road and Bridge CPF The accounts for all road projects and the pavement management program, which includes annual seal coating, crack sealing and overlays for roads. Tax Increment Projects CPF The is used to account for activities in TIF districts 1-1, 1-2, 1-3, 1-4 and all TIF land sales and expenditures to reach the goals of the TIF district plans. Permanent Improvement Revolving CPF The serves as a long-term funding source for large capital improvement expenditures. The City reports the following major proprietary funds: Water Fund The accounts for the water service charges, which are used to finance the water system operating expenses. Sewer Fund The accounts for the sewer service charges, which are used to finance the sanitary sewer system operating expenses. Storm Sewer Fund The accounts for the storm sewer utility charges, which are used to finance the storm sewer operating expenses. Additionally, the City reports the following fund types: Internal Service Funds (ISF) are used to provide equipment maintenance and insurance to other departments of the City on a cost reimbursement basis. Agency Funds The are used to account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations, and/or other governmental units. It is used to account for the collection and distribution of funds relating to development activities and retiree insurance premiums. 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 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 other funds of the City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. program revenues Amounts reported as 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. general revenues Internally dedicated resources are reported as rather than as program revenues. Likewise, general revenues include all taxes. operatingnonoperating Proprietary funds distinguish revenues and expenses from 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 water and sewer 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, and then unrestricted resources as they are needed. D.BUDGETS Budgets are legally adopted on a basis consistent with generally accepted accounting principles. Annual appropriated budgets are legally adopted for the General and Special Revenue Funds. Budgeted expenditure appropriations lapse at year-end. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the appropriation, is not employed by the City because it is at present not considered necessary to assure effective budgetary control or to facilitate effective cash management. E.LEGAL COMPLIANCE - BUDGETS The City follows these procedures in establishing the budgetary data reflected in the financial statements: 1.The City Administrator submits to the City Council a proposed operating budget for the fiscal year commencing the following January 1. The 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 through City Council action. 4. Expenditures may legally exceed budgeted appropriations at the fund level through City Council action. Also, the City Council may authorize transfers of budgeted amounts between departments within any fund. 5. Formal budgetary integration is employed as a management control device during the year for the General Fund and Special Revenue Funds. Budgetary control for Capital Projects Funds is accomplished through the use of project controls. 6.The legal level of budgetary control is at the department level for the General Fund and at the fund level for the Special Revenue Funds. Also inherent in this controlling function is the management philosophy that the existence of a particular item or appropriation in the approved budget does not automatically mean that it will be spent. The budget process has flexibility in that, where need has been properly demonstrated, an adjustment can be made within the department budget by the City Administrator or between departments by the City Council. 7. The City Council made supplemental budget appropriations throughout the year. Individual amendments were not material in relation to the original appropriations which were adjusted. The following is a listing of Special Revenue Funds whose expenditures exceed budget appropriations: CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 FinalOver BudgetActualBudget Special Revenue Funds: LRRWMO$ 34,70434,588$ 116$ Forestry12,500 2,137 14,637 The expenditures over budget were funded by greater than anticipated revenues and/or available fund balance. F. CASH AND INVESTMENTS Cash balances from all funds are combined and invested to the extent available in authorized investments. Earnings from such investments are allocated to the individual funds on the basis of applicable cash balance participation of each fund. 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. Investments are stated at fair value, based upon quoted market prices. Short-term investments, such as commercial paper and banker’s acceptances, are reported as amortized cost. Investments in 2a7, like external investment pools, are also stated at amortized cost. For purposes of the Statement of Cash Flows of Proprietary Fund Types, cash equivalents are defined as short-term, highly liquid investments that are both: a. readily convertible to known amounts of cash, or b. so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. The City’s policy considers cash equivalents to be those that meet the above criteria and have original maturities of three months or less. G. RECEIVABLES AND PAYABLES During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. Short-term interfund loans are classified as “interfund receivables/payables.” All short-term interfund receivables and payables at December 31, 2011 are planned to be eliminated in 2012. Long-term interfund loans are classified as “interfund loan receivable/payable.” Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.” Interfund loan receivables, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. Property taxes and special assessments receivable have been reported net of estimated uncollectible accounts. (See Note 1 H and I). 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. H. PROPERTY TAX REVENUE RECOGNITION The City levies its property tax for the subsequent year during the month of December and it is certified to Anoka County. December 30th is the last day the City can certify a tax levy to the County Auditor for collection the following year. Such taxes become a lien on the following January 1. Anoka County is the collecting agency for the levy and remits the collections to the City three times a year. Taxes not collected as of December 31 each year are shown as delinquent taxes receivable. CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 The County Auditor prepares the tax list for all taxable property in the City, applying the applicable tax rate to the tax capacity of individual properties, to arrive at the actual tax for each property. The County Auditor also collects all special assessments, except for certain prepayments paid directly to the City. The County Auditor submits a list of taxes to be collected on each parcel of property to the County Treasurer in January of each year. The County Treasurer collects all taxes and is required to mail copies of all personal property tax statements by April 15, and copies of all real estate tax statements by April 15, of each year. Property owners are required to pay one-half of their real estate taxes due by May 15 and the balance by October 15. If taxes due May 15 are not paid on time, a penalty of 3% is assessed on homesteaded property and 7% on nonhomesteaded property. An additional 1% penalty is added each month the taxes remain unpaid, until October 15. If the taxes due May 15 are not paid by October 15, a 2% penalty per month is added to homesteaded property and 4% per month to nonhomesteaded property until January 1. If the taxes are not paid by January 1, further penalties are added. Penalties and interest apply to both taxes and special assessments. There are some exceptions to the above penalties, but they are not material. Within 30 days after the tax settlement date, the County Treasurer is required to pay 70% of the estimated collections of taxes and special assessments to the City Treasurer. The County Treasurer must pay the balance to the City Treasurer within 60 days after settlement, provided that after 45 days interest accrues at the rate of 8% per annum. 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 is fully offset by deferred revenue because they are not available to finance current expenditures. I. 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. Proceeds of sales from tax forfeit properties are allocated first to the County’s costs of administering all tax forfeit properties. Pursuant to State Statutes, a property shall be subject to a tax forfeit sale after three years unless it is 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. CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 GOVERNMENTAL FUND FINANCIAL STATEMENTS The City recognizes revenue from special assessments 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 funding are completely offset by deferred revenues. J. INVENTORIES Inventories of the Governmental Funds and the Proprietary Funds are stated at cost, which approximates market, using the first-in, first-out (FIFO) method. Inventories of Governmental Funds are recorded as expenditures when consumed rather than when purchased. K. PREPAID ITEMS Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. Prepaid items are reported using the consumption method and recorded as expenditures/expenses at the time of consumption. L. LAND HELD FOR RESALE Land held for resale represents various property purchases made by the City with the intent to sell in order to increase tax base or attract new business. These assets are stated at the lower of cost or net realizable value. M. CAPITAL ASSETS Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items) and intangible assets such as easements and computer software, are reported in the applicable governmental or business- type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of more than $5,000 (except for easements which is $10,000) and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The City has chosen the modified approach for reporting street and trail system capital assets. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. For the year ended December 31, 2010, no interest was capitalized in connection with construction in progress. Accounting and Financial Reporting for Intangible Assets The City implemented GASB Statement No. 51. effective January 1, 2010 which required the City to capitalize and amortize intangible assets. Intangible assets include easements and computer software. Pursuant to GASB Statement 51, in the case of initial capitalization of intangible assets, the City chose to capitalize intangible assets retroactively to 1980, except for permanent easements and internally generated software. The City has already accounted for computer software at historical cost and therefore retroactive reporting was not necessary. The City does not have any temporary easements to record that meet the threshold of $10,000. Property, plant and equipment of the primary government, as well as the component units, are depreciated/amortized using the straight line method over the following estimated useful lives: CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 AssetsLife Buildins and imrovement10 - 30 ear gpsys Furniture and equipment ( including software)5 - 10 years Machinery and equipment5 - 10 years Other park improvements10 - 30 years Storm sewe50 years r Distribution and collection systems50 years Temporary easements5 - 15 years The City elected to use the modified approach as defined by GASB Statement No. 34 for infrastructure reporting of its streets and trails. The City conducted a physical assessment in the fall of 2011 of the condition of the streets and trails constructed since 1974. This condition assessment will be performed every 3 years. Each segment of City owned street or trail was assigned a physical condition based on potential defects. An Overall Condition Index (OCI) was assigned to each segment. The index is expressed in a continuous scale from 0 to 100, where 0 is assigned to the least acceptable physical condition and 100 is assigned to those segments that have the characteristic of a new street or trail. The following conditions were defined: RangeDescription 86 - 10Excellent 0 71 - 85Very good 56 - 70Good 41 - 55Fair 26 - 40Poo r 11 - 25Very poo r 0 - 10Substandard The City’s policy relative to maintaining the street and trail assets is to achieve an average rating of “Good” for all segments. This acceptable rating allows minor cracking and patching of the pavement along with minor roughness that could be noticeable to the users of the system. N. COMPENSATED ABSENCES City employees earn vacation and sick pay accruing each payroll period. Unused vacation can be accrued by the employees up to a maximum of 200 hours as of the anniversary date of the individual’s employment with the City, unless a specific authorization is granted to an employee. 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. Employees can also accrue an unlimited amount of unused sick leave. Employees with two or more years of service are entitled to receive severance pay equal to a percentage of unused sick pay ranging from 20-50 percent based on years of service, up to a maximum of 400 hours. The liability for severance pay is accounted for the same as accrued vacation pay. O. LONG-TERM OBLIGATIONS In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are immaterial and are expensed in the year of bond issuance. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 P. FUND BALANCE CLASSIFICATIONS In the fund financial statements, governmental funds report fund balance in classifications that disclose constraints for which amounts in those funds can be spent.These classifications are as follows: Nonspendable – consists of amounts that are not in spendable form, such as prepaid items. Restricted – consists of amounts related to externally imposed constraints established by creditors, grantors or contributors; or constraints imposed by state statutory provisions. Committed – consists of internally imposed constraints. These constraints are established by Resolution of the City Council. Assigned – consists of internally imposed constraints. These constraints reflect the specific purpose for which it is the City’s intended use. These constraints are established by the City Council and/or management. Pursuant to City Council Resolution, the City’s Administrator and Finance Director are authorized to establish assignments of fund balance. Unassigned – is the residual classification for the general fund and also reflects negative residual amounts in other funds. When both restricted and unrestricted resources are available for use, it is the City’s policy to first use restricted resources, and then use unrestricted resources as they are needed. When unrestricted resources are available for use, it is the City’s policy to use resources in the following order: 1) committed, 2) assigned, and 3) unassigned. Q. 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. R. RESTRICTED ASSETS Certain assets in the water fund are restricted for future debt service payments. S. USE OF ESTIMATES The preparation of financial statements in accordance with generally accepted accounting principles (GAAP) requires management to make estimates that affect amounts reported in the financial statements during the reporting period. Actual results could differ from such estimates. T. RECLASSIFICATIONS Certain amounts presented in prior year data have been reclassified in order to be consistent with the current year’s presentation. U. COMPARATIVE TOTALS Comparative total data for the prior year have been presented only for enterprise funds in the fund financial statements in order to provide an understanding of the changes in the financial position and operations of these funds. CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 V. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS 1. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND BALANCE SHEET AND THE GOVERNMENT-WIDE STATEMENT OF NET ASSETS fund balance – total governmental funds net The governmental fund balance sheet includes a reconciliation between and 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 and other post employment benefits, are not due and payable in the current period and therefore are not reported in the funds.” The details of this ($42,408,557) difference are as follows: Bonds payable$(40,961,000) Accrued interest payable (740,258) Other post employment benefits (122,986) Compensated absences (584,313) Net adjustment to reduce fund balance - total governmental funds to arrive at net assets - governmental activities$(42,408,557) Another element of that reconciliation states that “internal service funds are used by management to charge the cost of equipment maintenance and insurance to individual funds. The assets and liabilities are included in the governmental statement of net assets along with a deduction of net revenue attributable to business-type activities.” The details of this $461,311 difference are as follows: Internal Service Funds net assets$ 515,898 Net revenue attributable to business-type activities (54,587) Net adjustment to increase fund balance - total governmental funds to arrive at net assets - governmental activitie$ 461,311 s 2. 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 net changes in fund balances – total governmental fundschanges in net assets of governmental activities between and 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 $417,481 difference are as follows: Capital outlay$ 985,399 Construction/acquisition costs 1,044,581 Depreciation expense(1,612,499) Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities417,481$ Another element of that reconciliation states that “The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, and donations) is to increase (decrease) net assets.” The details of this ($268,086) difference are as follows: CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 In the statement of activities, only the gain on the sale of capital assets is reported. However, in the governmental funds, the proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balance by the cost of the capital assets sold.$ (423,126) Donations of capital assets increase net assets in the statement of activities, but do not appear in the governmental funds because they are not financial resources.155,040 justment to increase net changes in fund balances - total governmental Net ad funds to arrive at changes in net assets of governmental activities.(268,086)$ Another element of that reconciliation states “Revenues on the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds.” The details of this ($377,515) difference are as follows: General property taxes deferred revenue: At December 31, 201$ (352,191) 0 At December 31, 2011364,898 Tax increment taxes deferred revenue: 0 (89,713) At December 31, 201 At December 31, 2011117,969 Special assessments deferred revenue: At December 31, 2010 (3,333,910) At December 31, 20112,737,252 Notes receivable deferred revenue: At December 31, 2010 (1,396,512) At December 31, 20111,574,692 Net adjustments to decrease net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities$ (377,515) Another element of that reconciliation states “the issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the long-term debt consumes the current financial resources of governmental funds.” Neither transaction, however, has any effect on net assets. The details of this $3,835,000 difference are as follows: Debt issued or incurred: Issuance of equipment certificates(265,000)$ Principal repayments: Revenue bonds 415,000 Capital improvement bonds 295,000 Secial assessment bonds 955,00 p0 Tax increment bonds 1,735,000 Certificates of indebtedness 485,000 State aid bonds 215,000 l Net adjustment to increase net changes in fund balances - total governmenta funds to arrive at changes in net assets of governmental activities$ 3,835,000 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 $46,340 difference are as follows: CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Compensated absences$ (12,416) Accrued interest 58,75 6 Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities46,340$ Another element of that reconciliation states that “internal service funds are used by management to charge the cost of equipment maintenance and insurance to individual funds. This amount is the portion of net revenue attributable to governmental activities.” The details of this $81,871 difference are as follows: Internal Service Funds change in net assets$ 102,083 Net revenue attributable to business-type activities (20,212) Net adjustment to increase fund balance - total governmental funds to arrive at net assets - governmental activities$ 81,871 Note 2 DEPOSITS AND INVESTMENTS DEPOSITS In accordance with Minnesota Statutes, the City maintains deposits at those depository banks authorized by the City Council, all of which are members of the Federal Reserve System. Minnesota Statutes require that all City deposits be protected by insurance, surety bond, or collateral. The market value of collateral pledged must equal 110% of the deposits not covered by insurance or bonds. Minnesota Statutes require that securities pledged as collateral be held in safekeeping by the City Clerk/Treasurer or in a financial institution other than that furnishing the collateral. Authorized collateral includes the following: a)United States government treasury bills, treasury notes, treasury bonds; b)Issues of United States government agencies and instrumentalities as quoted by a recognized industry quotation service available to the government entity; c)General obligation securities of any state or local government with taxing powers which is rated “A” or better by a national bond rating service, or revenue obligation securities of any state or local government with taxing powers which is rated “AA” or better by a national bond rating service; d)Unrated general obligation securities of a local government with taxing powers may be pledged as collateral against funds deposited by that same local government entity; e)Irrevocable standby letters of credit issued by Federal Home Loan Banks to a municipality accompanied by written evidence that the bank’s public debt is rated “AA” or better by Moody’s Investors Service, Inc. or Standard & Poor’s Corporation; and f)Time deposits that are fully insured by the Federal Deposits Insurance Corporation. Custodial Credit Risk – Deposits: Custodial credit risk is the risk that in the event of a bank failure, the City’s deposits may not be returned to it. State statutes require that insurance, surety bonds or collateral protect all City deposits. The market value of collateral pledged must equal 110% of deposits not covered by insurance or bonds. As of December 31, 2011, the bank balance of the City’s deposits was covered by federal depository insurance or covered by perfected collateral pledged and held in the City’s name. The City has no additional deposit policies addressing custodial credit risk. INVESTMENTS Minnesota Statutes authorize the City to invest in the following: a) Direct obligations or obligations guaranteed by the United States or its agencies, its instrumentalities or organizations created by an act of congress, excluding mortgage-backed securities defined as high risk. CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 b) Shares of investment companies registered under the Federal Investment Company Act of 1940 and whose only investments are in securities described in (a) above, general obligation tax-exempt securities, or repurchase or reverse repurchase agreements. c)Obligations of the State of Minnesota or any of its municipalities as follows: 1)any security which is a general obligation of any state or local government with taxing powers which is rated “A” or better by a national bond rating service; 2)any security which is a revenue obligation of any state or local government with taxing powers which is rated “AA” or better by a national bond rating service; and 3)a general obligation of the Minnesota housing finance agency which is a moral obligation of the State of Minnesota and is rated “A” or better by a national bond rating agency. d) Bankers acceptance of United States banks eligible for purchase by the Federal Reserve System. e) Commercial paper issued by United States corporations or their Canadian subsidiaries, of the highest quality, and maturing in 270 days or less. f)Repurchase or reverse repurchase agreements with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000; a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York; certain Minnesota securities broker-dealers; or, a bank qualified as a depositor. g)General obligation temporary bonds of the same governmental entity issued under section 429.091, subdivision 7; 469.178, subdivision 5; or 475.61, subdivision 6. As of December 31, 2011, the City had the following investments and maturities: Investment Maturities (in Years) CreditFairLess ThanMore Than Investment TypeRatingValue11 - 56 - 1010 Money market fundsN/A4,152,331$ 4,152,331$ - $ $ -$ - Minnesota Municipal Money Market FundN/A1,049,783 1,049,783 - - - Certificates of depositN/A3,347,477 973,440 2,374,037 - - Local governmentsA/A1/A2645,146 15,001 397,571 - 2 32,574 AA1/AA2/AA38,974,198 2,316,470 4,000,104 1,428,075 1,229,549 AAA2,899,395 331,358 485,611 1,577,882 504,544 U.S. agenciesAAA26,783,869 6,502,525 18,560,217 662,659 1,058,468 FNMA REMICN/A 89,177 - 89,177 - - U.S. agenciesN/A 66,423 - 37,752 25,844 2 ,827 Total investment 15,340,90848,007,799$25,820,367$3,795,545$ 3,050,979$ s Deposits 3,226,079 Total cash and investments$51,233,878 The following is a reconciliation of the City’s total cash and investment balances at December 31, 2011: CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Government-wide statement of net assets: Cash and investments27,282,020$ Cash and investments with escrow agent23,767,821 Fiduciary funds statement of net assets 184,037 Total$ 51,233,878 The Minnesota Municipal Money Market Fund is regulated by Minnesota Statutes and the Board of Directors of the League of Minnesota Cities and is an external investment pool not registered with the Securities Exchange Commission (SEC) that follows the same regulatory rules of the SEC under rule 2a7. The fair value of the position in the pool is the same as the value of the pool shares. Custodial credit risk - investments – For investments in securities, custodial credit risk is the risk that in the event of a failure of the counterparty, the City will not be able to recover the value of its investment securities that are in the possession of an outside party. As of December 31, 2011, $250,000 of the City’s $48,007,799 investments was uninsured and unregistered, with securities held in the City’s name. Interest rate risk - The City has a formal investment policy that states the City will minimize the risk that the market value of securities in the portfolio will fall due to the changes in general interest rates, by: 1)Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity. 2) Investing operating funds primarily in shorter-term securities, money market mutual funds or similar investment pools. FNMA REMIC – The City invests in REMIC’s in accordance with State law and the City’s investment policy. These securities are based on cash flows from payments on underlying mortgages. Therefore, they are sensitive to prepayments by mortgages, which may result from a decline in interest rates. Credit Risk - The City has a formal investment policy that states the City will minimize the credit risk, the risk of loss due to the failure of the security issuer or backer, by: 1)Limiting investments to the safest types of securities. 2)Pre-qualifying the financial institutions, broker/dealers, intermediaries and advisers with which the City will do business. A list will be maintained of financial institutions authorized to provide investment services. In addition, a list also will be maintained of approved security broker/dealers selected by creditworthiness. These may include “primary” dealers or regional dealers that qualify under Securities and Exchange Commission (SEC) Rule 15C3-1. All financial institutions and broker/dealers who desire to become qualified for investment transactions must supply: audited financial statements, proof of National Association of Securities Dealers (NASD) certification, proof of state registration, completed broker/dealer questionnaire, and certification of having read and understood and agreeing to comply with the City’s investment policy. An annual review of the financial condition and registration of qualified financial institutions and broker/dealers will be conducted by the City Administrator. Concentration of Credit Risk - More than 56% of the City’s investments are in various holdings with U.S. agencies; Federal Home Loan Bank (2.1%), Federal Farm Credit Bank (1.3%), Federal National Mortgage Association (4.1%), Federal Home Loan Mortgage Corporation (0.3%) and U.S. Treasury (48.3%). The City’s policy on concentration of investments is as follows: 1) Diversification - The investments shall be diversified by: a) investments to avoid over concentration in securities from a specific issuer or business sector (excluding U.S. Treasury securities), b) limiting investment in securities that have higher credit risks, c) investing in securities with varying maturities, and d) continuously investing a portion of the portfolio in readily available funds such as local government investment pools (LGIPs), money market funds or overnight repurchase agreements to ensure that appropriate liquidity is maintained in order to meet ongoing obligations. CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 2) Maximum Maturities - To the extent possible, the City shall attempt to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the City will not directly invest in securities maturing, or having average lifes, of more than five (5) years from the date of purchase or in accordance with state and local statutes and ordinances. Reserve funds and other funds with longer-term investment horizons may be invested in securities exceeding five (5) years if the maturity of such investments are made to coincide as nearly as practicable with the expected use of funds. The intent to invest in securities with longer maturitues shall be disclosed in writing to the legislative body. Because of inherent difficulties in accurately forecasting cash flow requirements, a portion of the portfolio should be continuously invested in readily available funds such as local government investment pools, money market funds, or overnight repurchase agreements to ensure that appropriate liquidity is maintained to meet ongoing obligations. Note 3 RECEIVABLES Significant receivables balances not expected to be collected within one year of December 31, 2011 are as follows: DelinquentDelinquentSpecial PropertyTaxAssessmenNote t TaxesIncrementReceivableReceivableTota l Major Funds: General Fun$ 152,710$ -$ d $ 9,221$ -161,931 Water Trunk CPF - - 379,711 - 379,711 Sewer Trunk CPF - - 32,457 - 32,457 Road and Bridge CPF 22,812 22,392 -861,019 906,223 Tax Increment Projects CPF - 37,750 6,435 - 44,185 Permanent Imrovement Revolvin CPF - 1,142,813-- pg 1,142,813 Nonmajor Funds 44,478 - - 5 0,275 94,753 Tota 220,000 37,750 72,6672,431,656 2,762,073 l$$$$$ Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of deferred revenue reported in the governmental funds were as follows: CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 UnavailableUnearned Delinuent roert taxes receivable: qppy General Fund$ -250,344$ Road & Bridge CPF37,396 - jor Funds 77,158 Nonma - Delinquent tax increment collections: Tax Increment Projects CPF117,969 - pecial assessments not yet due: S General Fun9,221 d - Water Trunk CPF 414,360 - Sewer Trunk CPF 45,935 - Road & Bridge CPF 1,012,364 - Tax Increment Projects CPF 9,341 - Permanent Imrovement Revolvin CPF 1,246,031 - pg Notes receivable not yet due: Road & Bridge CPF 30,761 - Nonmajor Funds 53,431 - Land held for resale: Tax Increment Projects CPF 1,490,500 - Unearned construction seal coat fees: Nonmajor Funds - 12,360 Total$ 4,794,811$ 12,360 Note 4 LOANS RECEIVABLE As part of a development agreement entered into with a private developer in June 2006, the City received a promissory note for $50,000. The note is for intersection improvements on Hanson Blvd. The note bears an interest rate of 5.5% and calls for semi-annual payments to be made to the City through July 2014 and then was amended to July 1, 2016, the payoff date. As of December 31, 2011, the remaining balance due of $30,761 is offset by deferred revenue, as it is not available to finance current activities. As part of a rental rehabilitation revolving loan program, the City entered into a loan agreement with a property owner in October 2006. The loan is for the rehabilitation of a rental property located within the City. The loan bears an interest rate of 3.0 % and calls for 180 equal monthly payments to be made to the City through November 2021. As of December 31, 2011, the remaining balance due of $45,239 is offset by deferred revenue, as it is not available to finance current activities. As part of a housing rehabilitation revolving loan program, the City entered into a loan agreement with a property owner in July 2007. The loan is for the rehabilitation of a property located within the City. The loan bears an interest rate of 3.0 % and calls for 57 equal monthly payments to be made to the City through August 2012. As of December 31, 2011, the remaining balance due of $1,422 is offset by deferred revenue, as it is not available to finance current activities. As part of a housing rehabilitation revolving loan program, the City entered into a loan agreement with a property owner in September 2010. The loan is for the rehabilitation of a property located within the City. The loan bears an interest rate of 3.0 % and calls for 60 equal monthly payments to be made to the City through September 2015. As of December 31, 2011, the remaining balance due of $6,770 is offset by deferred revenue, as it is not available to finance current activities. Note 5 CAPITAL ASSETS In accordance with GASB Statement No. 34, the City has reported all capital assets including infrastructure in the government-wide statement of net assets. The City elected to use the modified approach as defined by GASB Statement No. 34 for infrastructure reporting CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 for its streets and trails. As a result, no accumulated depreciation or depreciation expense has been recorded for this system. A more detailed discussion of the modified approach is presented in the Required Supplementary Information section of this report. All other capital assets including other infrastructure systems were reported using the basic approach whereby accumulated depreciation and depreciation expense have been recorded. Capital asset activity for the year ended December 31, 2011 was as follows: BeginningEnding Primary Government BalanceAdditionsDeletionsBalance Governmental activities: Capital assets not being depreciated: Land and improvements9,319,699$ -$ (423,126)$ 8,896,573$ Streets and trails79,547,69 374,988 2 -79,922,680 Construction in progress 51,0022,940 (53,942) - Total capital assets not being depreciated 88,918,393 377,928 (477,068) 88,819,253 Capital assets being depreciated: Buildings and improvements 26,820,846223,854 -27,044,700 Furniture and equipment (including software) 411,116 58,642 469,758 - Machinery and equipment 7,112,560 399,776 (190,012) 7,322,324 Other park improvements 134,1815,469,203 (16,500) 5,586,884 Total capital assets being depreciated 39,813,725 816,453 (206,512) 40,423,666 Less accumulated depreciation for: Buildings and improvements 6,244,13 903,478 7,147,608 0 - Furniture and equipment 257,507 37,726 295,233 - Machinery and equipment 5,148,567 386,113 (190,012) 5,344,668 Other park improvements 285,1821,944,307 (16,500) 2,212,989 Total accumulated depreciation13,594,511 1,612,499 (206,512) 15,000,498 Total capital assets being depreciated - net26,219,21 4 (796,046) -25,423,168 Governmental activities capital assets - net115,137,607$ $ (418,118)$ (477,068)$114,242,421 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 BegnnngEnng iidi Primar Government BalanceAdditionsDeletionsBalance y Business-type activities: apta assets not eng eprecate: Cilbidid Land and imrovements$ 730,243$ -$ 730,243 p $ - Capital assets being depreciated: Bungs anmprovements 5,,5,755,77,5 ildidi1846863021890 - Furniture and equipment (including software)61,39 61,390 0 - - Macnery an equpment ,5, ,5 ,, hidi121188(4428)1206930 - Collection and distribution49,377,34 1,013,85 26 -50,391,198 Tota capta assets eng eprecate ,5,75,,5 ,57,57, lilbidid66368104481(4428)63108 Less accumuateeprecaton or: lddiif Buildings and improvements5,657,113 556,031 4 -6,213,14 Furnture an eument ,5, ,7 idqip331364603993 - Machinery and equipment986,857 60,646 (44,258) 1,003,245 oecton anstruton ,,5,5,757,,7 Clliddiibi16144491001114960 - accumuateeprecaton ,,7,, ,5,, Tota llddii22821981628312(4428)24406032 Tota capta assets eng eprecate - net ,7,75,7,,7 lilbidid431480(8331)4313106 - Business-type activities capital assets - net44,445,05$ $ (583,731)$ 43,861,319-$ 0 Depreciation/amortization expense was charged to functions/programs of the primary government as follows: overnmenta actvtes: Gliii General overnmen$ 78,771 gt Puc saety 7, blif26684 Public work 247,793 s Pars an recreaton ,, kdi1013640 Economic develomen 4,611 pt Total depreciation/amortization expense - governmental activitie$ 1,612,499 s Business-te activities: yp Wate , r$882941 Sewe 498,157 r torm sewe 7, Sr24214 Total depreciation/amortization expense - business-type activities1,628,312$ CONSTRUCTION COMMITMENTS At December 31, 2011, the City had no construction project contracts in progress. Note 6 LONG-TERM DEBT The City issues general obligation bonds and equipment certificates to provide funds for the acquisition and construction of major capital facilities. The reporting entity’s long-term debt is segregated between the amounts to be repaid from governmental activities and amounts to be repaid from business-type activities. CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 IssueMaturityInterestOriginalPayable DateDateRateIssue12/31/11 GOVERNMENTAL ACTIVITIES: Revenue Bonds: 2004 EDA Pub Fac Lease Rev Bonds4/23/20042/1/20142.125-5.400%19,580,000$ 17,810,000$ 2006 EDA Pub Fac Lease Rev Ref Bonds12/1/20062/1/20344.00-4.50%10,000,000 10,000,000 2007 EDA Pub Fac Lease Rev Ref Bonds1/1/20072/1/20344.00-4.50%6,865,000 6,865,000 Total revenue bonds 34,675,00036,445,000 Certificates of Indebtedness: 2008A G.O. Equipment Certificates9/23/20082/1/20123.50%630,000 166,000 2009A G.O. Equipment Certificates3/26/20092/1/20122.00-2.25%385,000 130,000 2011A G.O. Equipment Certificates3/1/20112/1/20142.00%265,000 265,000 Total certificates of indebtedness1,280,000 561,000 Capital Improvement Bonds: 2004A G.O. Capital Improvement Bonds3/16/20042/1/20172.00-3.75%3,890,000 2,200,000 Permanent Improvement Revolving (PIR) Bonds: 2010A G.O. PIR Refunding Bonds2/18/20102/1/20142.00%1,480,000 1,125,000 State Aid Bonds: 2009A G.O. State Aid Street Refunding Bonds3/26/20092/1/20152.25-2.80%955,000 740,000 Referendum Bonds: 2010A G.O. Open Space Referendum Bonds2/18/20102/1/20222.00-3.125%1,660,000 1,660,000 Total - bonded indebtedness45,710,000 40,961,000 Compensated absences payable- 584,313 Total governmental activities indebtedness45,710,000 41,545,313 BUSINESS-TYPE ACTIVITIES: General Obligation Revenue Bonds: 2002 G.O. Water Revenue Bonds5/9/20028/1/20122.30-5.00%9,780,000 6,925,000 2007B G.O. Water Revenue Refunding Bonds3/13/20072/1/20234.00-4.25%6,570,000 6,570,000 2009A G.O. Water Revenue Bonds3/26/20092/1/20242.00-4.25%1,025,000 905,000 Total general obligation revenue bonds17,375,000 14,400,000 Compensated absences payable- 139,353 Total business-type activities indebtedness 14,539,35317,375,000 Total City indebtedness63,085,000$ 56,084,666$ CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Annual debt service requirements to maturity for general obligation bonds are as follows: Governmental Activities Revenue BondsCertificates of IndebtednessCapital Improvement Bonds PrincipalInterestPrincipalInterestPrincipalInterest 2012$ 1,613,666435,000$ 372,000$ 8,907$ 315,00$ 0$ 70,993 2013 450,000 1,594,744 330,000 60,905 94,000 2,840 201 16,925,00 1,150,583 355,00 49,59 4006 95,000 950 2015 560,000 705,010 380,000 37,000 - - 2016 682,11585,000 0 400,000 23,050 - - 2017-20213,290,000 3,032,854 420,000 7,875 - - 2022-20264,005,000 2,289,043 - - - - 2027-20314,925,000 1,342,56 4 - - - - 0 2032-20343,500,000 240,75 - - - - Tota$ 34,675,00$ 12,651,32$ 561,000$ 12,697$ 2,200,000$ 249,419 l04 Governmental Activities Permanent Improvement State Aid Bondss Revolving BondsReferendum Bond PrincipalInterestPrincipalInterestPrincipalInterest 2012$ 18,85365,000$ 0$ 220,000$ 16,115$ 135,000$ 40,215 2013 375,000 11,450 230,000 135,000 37,515 10,765 2014 3,850385,000 230,000 4,785 140,00 0 34,765 2015 - 145,00 31,915 0 - 60,000 840 2016 - 145,000 28,942 - - - 2017-2021 - 790,000 85,704 - 2022-2026- 170,000 2,656 - - - ,5,,57, ,55 ,, ,7 Tota l$112000$3410$40000$320$1660000$26112 ype Activities Business-T G.O. Revenue Bonds PrincipalInterest 2012$ 620,6756,980,000$ 2013545,000 285,16 6 201 263,80565,000 46 2015590,000 241,48 6 2016 218,101615,000 2017-20213,440,000 702,618 2022-20261,665,000 76,104 Tota$14,400,00$ 2,407,956 l0 It is not practical to determine the specific year for payment of long-term accrued compensated absences. CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 CHANGE IN LONG-TERM LIABILITIES Long-term liability activity for the year ended December 31, 2011, was as follows: BeginningEndingDue Within BalanceAdditionsReductionsBalanceOne Year Governmental activities: Bonds payable: Revenue bonds$ -35,090,000$ (415,000)$ 34,675,000$ 435,000$ Special assessment bonds600,000 (600,000) - - - Tax increment bonds 1,735,000 - -(1,735,000) - Certificates of indebtedness 781,000 265,000 (485,000) 561,000 372,000 Capital improvement bonds 2,495,000 (295,000) 2,200,000 315,000 - Permanent improvement revolving bonds1,480,000 (355,000) 1,125,000 365,000 - State aid bonds 955,000 (215,000) 740,000 220,000 - Referendum bonds 1,660,000 1,660,000- 135,000 - Total bonds payable 44,796,000 265,000 (4,100,000) 40,961,000 1,842,000 Compensated absences 571,897 326,825 (314,409) 584,313 87,647 Total governmental activities long-term liabilities$ 591,82545,367,897$ $ 41,545,313(4,414,409)$$ 1,929,647 Business-type activities: Bonds payable: G.O. revenue bonds$14,875,000$ -$ (475,000)$14,400,000$ 6,980,000 Compensated absences 132,544 47,823 (41,014) 139,353 20,903 Total business-type activities $ 47,823$ (516,014)$ 14,539,353$ 7,000,903$ long-term liabilities15,007,54 4 For the governmental activities, bonds payable can be summarized in the following categories: revenue bonds The were used to construct a 132,000 square foot community center. The bonds are payable from annual lease payments received by the EDA from the YMCA, operating revenues from the ice arena and field house, and, if necessary, a debt service tax levy. These bonds do constitute debt for the purpose of computing statutory debt limits. special assessment bonds The are used to finance assessable improvements within the City, including but not limited to sanitary sewer and water line connections, storm sewer, streets, sidewalks and curb & gutter. The bonds are payable primarily from special assessments levied against properties benefited by the improvements. In addition, the bonds are general obligations of the City for which its full faith, credit and taxing powers are pledged without limitation as to rate or amount. tax increment bonds The are used to finance land acquisition and other public costs to facilitate development in the City’s tax increment districts. The bonds are payable from tax increment revenues generated by existing and new development within the district. In addition, the bonds are general obligations of the City for which its full faith, credit and taxing powers are pledged without limitation as to rate or amount. certificates of indebtedness The are used to finance the purchase of capital equipment. The certificates are general obligations of the City for which it pledges its full faith, credit and taxing powers to the payment of principal and interest on the certificates. capital improvement bonds The were used to purchase the 30,000 square foot public works building from the EDA and to finance the construction of a new fire station. The bonds are general obligations of the City for which it pledges its full faith, credit and taxing powers to the payment of principal and interest on the bonds. CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 permanent improvement revolving bonds The are used to finance assessable improvements within the City, including but not limited to sanitary sewer and water line connections, storm sewer, streets, sidewalks and curb & gutter. The bonds are payable primarily from special assessments levied against properties benefited by the improvements. In addition, the bonds are general obligations of the City for which its full faith, credit and taxing powers are pledged without limitation as to rate or amount. state aid bonds The were used to finance the Municipal State Aid (MSA) eligible costs of the Andover Boulevard project. The bonds are payable entirely from state-aid received by the City from construction and maintenance of the state aid street system. The City has pledged an amount of money from its account in the state-aid street fund sufficient to pay the principal and interest of the bonds. In addition, the bonds are general obligations of the City for which its full faith, credit and taxing powers are pledged without limitation as to rate or amount. referendum bonds The were used to finance various land acquisitions for open space preservation within the City. The bonds are general obligations of the City for which it pledges its full faith, credit and taxing powers to the payment of principal and interest on the certificates. compensated absences For the governmental activities, are generally liquidated through the General Fund. G.O. revenue bonds For the business-type activities, the were used to finance the construction of a water treatment plant. The bonds are payable from net revenues of the water system and are general obligations of the City for which its full faith, credit and taxing powers are pledged. REVENUES PLEDGED 2004 EDA Public Facility Lease Revenue Bonds. The EDA has pledged future lease revenue, operating revenues (net of operating expenses) and, if necessary, a debt service tax levy to repay the $19,580,000 bonds issued in April 2004. Proceeds from the bonds provided financing for the construction of Andover YMCA Community Center. Lease revenues were projected to produce 100% of the debt service requirements over the life of the bonds. Total principal and interest remaining on the bonds is $20,020,363, payable through February 2014. For the current year, principal and interest paid and total net operating revenues, lease revenue and tax levy were $1,329,891 and $1,332,413, respectively. A portion of the Series 2004 Bonds were refunded by the 2006 Series Refunding Bonds of $10,000,000 and the 2007 Series Refunding Bonds of $6,865,000, both with a crossover date of February 1, 2014. At which time, future lease revenues, net operating revenues and, if necessary, debt service tax levy will be used to repay the Series 2006 and Series 2007 Refunding Bonds through 2034. 2005A G.O. Improvement Bonds. The City has pledged future special assessment revenue to repay the $3,560,000 bonds issued in April 2005. Proceeds from the bonds provided financing for the construction of Jay Street located in Andover Station North. Special assessments were projected to produce 100% of the debt service requirements over the life of the bonds. For the current year, principal and interest paid and monies transferred from the PIR CPF were $610,200 and $383,298, respectively. In 2011, the debt service fund had sufficient funds to make its final debt service payment. 2004B G.O. Tax Increment Refunding Bonds. The City has pledged future tax increment revenue to repay the $4,260,000 bonds issued in March 2004. Proceeds from the bonds refunded the Series 1995D Bonds. Incremental property taxes were projected to produce 100% of the debt service requirements over the life of the bond issue. All tax increment revenues are receipted in the Tax Increment Projects CPF and transferred over as needed to make the debt service payments. For the current year, principal and interest paid and monies transferred from the Tax Increment Projects CPF were $1,761,763 and $1,744,013, respectively. In 2011, the debt service fund had made its final debt service payment. 2007A G.O. Equipment Certificates. The City has pledged future property tax revenue to repay the $760,000 bonds issued in March 2007. Proceeds from the bonds were used to finance the purchase of capital equipment. Property taxes were projected to produce 100% of the debt service requirements over the life of the bonds. For the current year, principal and interest paid was $204,000. In 2011, the debt service fund had sufficient funds to make its final debt service payment. 2008A G.O. Equipment Certificates. The City has pledged future property tax revenue to repay the $630,000 bonds issued in September 2008. Proceeds from the bonds were used to finance the purchase of capital equipment. Property taxes were projected to produce 100% of the debt service requirements over the life of the bonds. Total principal and interest remaining on the bonds is $168,905, payable through February 2012. For the current year, principal and interest paid and total property tax revenues were $168,610 and $178,752, respectively. 2009A G.O. Equipment Certificates. The City has pledged future property tax revenue to repay the $385,000 bonds issued in March 2009. Proceeds from the bonds were used to finance the purchase of capital equipment. Property taxes were projected to produce CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 100% of the debt service requirements over the life of the bonds. Total principal and interest remaining on the bonds is $131,462, payable through February 2012. For the current year, principal and interest paid and total property tax revenues were $129,331 and $135,061, respectively. 2011A G.O. Equipment Certificates. The City has pledged future property tax revenue to repay the $265,000 bonds issued in March 2011. Proceeds from the bonds were used to finance the purchase of capital equipment. Property taxes were projected to produce 100% of the debt service requirements over the life of the bonds. Total principal and interest remaining on the bonds is $273,330, payable through February 2014. For the current year, principal and interest paid was $1,766. 2004A G.O. Capital Improvement Bonds. The City has pledged future property tax revenue to repay the $3,890,000 bonds issued in March 2004. Proceeds from the bonds were used to purchase the public works facility from the EDA and to finance the construction of a new fire station. Property taxes were projected to produce 100% of the debt service requirements over the life of the bonds. Total principal and interest remaining on the bonds is $2,449,419, payable through February 2017. For the current year, principal and interest paid and total property tax revenues were $375,143 and $390,022, respectively. 2010A Permanent Improvement Revolving Refunding Bonds . The City has pledged future special assessment revenue to repay the $1,660,000 bonds issued in February 2010. Proceeds from the bonds refunded the Series 2006A Bonds. Special assessments were projected to produce 100% of the debt service requirements over the life of the bonds. All revenues from the special assessments are paid into the Permanent Improvement Revolving CPF and used to pay debt service as needed. Total principal and interest remaining on the bonds is $1,159,150, payable through February 2014. For the current year, principal and interest paid and monies transferred from the Permanent Improvement Revolving CPF were $381,050 and $380,000, respectively. 2009A State Aid Street Refunding Bonds . The City has pledged future municipal state aid (MSA) allotments to repay the $955,000 bonds issued in March 2009. Proceeds of the bonds refunded the Series 2001B Bonds. The bonds are payable solely from MSA allotments through 2015. Total principal and interest remaining on the bonds is $772,505, payable through February 2015. For the current year, principal and interest paid and MSA revenues were $236,009 and $242,496, respectively. 2010A G.O. Open Space Referendum Bonds. The City has pledged future property tax revenue to repay the $1,660,000 bonds issued in February 2010. Proceeds from the bonds were used to finance various land acquisitions for open space preservation within the City. Property taxes were projected to produce 100% of the debt service requirements over the life of the bonds. Total principal and interest remaining on the bonds is $1,921,712, payable through February 2022. For the current year, principal and interest paid and total property tax revenues were $41,565 and $138,081, respectively. 2002 G.O. Water Revenue Bonds. The City has pledged future water customer revenues, net of operating expenses, to repay the $9,780,000 bonds issued in May 2002. Proceeds of the bonds provided financing for the construction of a water treatment plant. The bonds are payable from water customer net revenues and are payable through 2012. The total principal and interest remaining on the bonds is $7,249,440. The principal and interest paid for the current year and total customer net revenues were $757,507 and $801,106, respectively. A portion of the Series 2002 Bonds were refunded by the 2007 Series Refunding Bonds of $6,570,000 with a crossover date of August 1, 2012. At which time, future water customer revenues, net of operating expenses, will be used to repay the Series 2007 Refunding Bonds through 2023. 2009A G.O. Water Revenue Bonds. The City has pledged future water customer revenues, net of operating expenses, to repay the $1,025,000 bonds issued in March 2009. Proceeds of the bonds provided financing for the addition to the water treatment plant. The bonds are payable from water customer net revenues and are payable through 2024. The total principal and interest remaining on the bonds is $1,139,834. The principal and interest paid for the current year and total customer net revenues were $91,382 and $801,106, respectively. ADVANCE CROSSOVER REFUNDING On December 1, 2006, the City issued $10,000,000 in Public Facility Lease Revenue Refunding Bonds, Series 2006 with an average interest rate of 4.29% to advance refund $9,755,000 of outstanding 2004 Series Bonds with an average interest rate of 5.17%. The net proceeds of $9,782,338 were used to purchase U.S. Government Securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for the interest on the refunding bonds before the crossover date and called principal on the refunded bonds on February 1, 2014. The City advance refunded a portion of the 2004 Public Facilities Lease Revenue Bonds to reduce its total debt service payments over the last twenty years of the bond by $755,979 and to obtain an economic gain (difference between the present value of the debt service payments on the old and new debt) of $375,573. CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 The City is responsible for the debt service of the refunded bonds and the debt service of the refunding bonds after the crossover date. The debt service of the refunding bonds before the crossover date is payable from the escrow account. Assets held with the escrow agent total $9,758,026 at December 31, 2011. On January 1, 2007, the City issued $6,865,000 in Public Facility Lease Revenue Refunding Bonds, Series 2007 with an average interest rate of 4.31% to advance refund $6,700,000 of outstanding 2004 Series Bonds with an average interest rate of 5.17%. The net proceeds of $6,710,306 were used to purchase U.S. Government Securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for the interest on the refunding bonds before the crossover date and called principal on the refunded bonds on February 1, 2014. The City advance refunded a portion of the 2004 Public Facilities Lease Revenue Bonds to reduce its total debt service payments over the last twenty years of the bond by $517,163 and to obtain an economic gain (difference between the present value of the debt service payments on the old and new debt) of $250,417. The City is responsible for the debt service of the refunded bonds and the debt service of the refunding bonds after the crossover date. The debt service of the refunding bonds before the crossover date is payable from the escrow account. Assets held with the escrow agent total $6,703,187 at December 31, 2011. Refunded Debt Service Commitment PaymentBondsRefunding BondsEscrow Account DateTotalSeries 2006Series 2007Series 2006Series 2007City 2012$ 424,2271,332,456$ 291,983$ 424,227$ 291,983$ 1,332,456$ 20131,328,534 424,227 291,983 424,227 291,983 1,328,53 4 2014 424,22717,359,373 291,983 9,967,114 6,845,992 1,262,477 2015- 752,527 512,483 1,265,010 - - 2016 753,827- 513,283 1,267,110 - - 2017 - 749,628 513,683 1,263,311 - - 2018 - 2022 - 3,748,675 2,568,704 - 6,317,379 - 2023 - 2027 - 3,729,195 2,563,655 - 6,292,850 - 2028 - 2032 - 3,693,314 2,565,020 - 6,258,334 - 2033 - 2034- 1,474,126 1,019,212 - 2,493,338 - $ 20,020,363$ 16,173,973$ 11,131,989$ 10,815,568$ 7,429,958$ 29,080,799 On March 13, 2007, the City issued $6,570,000 in General Obligation Water Revenue Refunding Bonds, Series 2007B with an average interest rate of 4.07% to advance refund $6,490,000 of outstanding 2002 Series Bonds with an average interest rate of 4.90%. The net proceeds of $6,491,509 were used to purchase U.S. Government Securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for the interest on the refunding bonds before the crossover date and called principal on the refunded bonds on August 1, 2012. The City advance refunded the 2002 General Obligation Water Revenue Bonds to reduce its total debt service payments over the last ten years of the bond by $265,904 and to obtain an economic gain (difference between the present value of the debt service payments on the old and new debt) of $164,664. The City is responsible for the debt service of the refunded bonds and the debt service of the refunding bonds after the crossover date. The debt service of the refunding bonds before the crossover date is payable from the escrow account. Assets held with the escrow agent total $6,490,755 at December 31, 2011. CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 RefundedRefundingDebt Service Commitment PaymentBondsBondsEscrow DateTotalTotalAccountCity 2012$ 7,249,440$ 266,146$ 6,756,146$ 759,440 2013 - 741,446 741,446 - 2014 - 741,646 741,646 - 2015 - 741,046 741,046 - 2016 - 744,546 744,546 - 2017 - 742,146 742,146 - 2018 - 2022 - 3,701,299 3,701,299 - 2023 - 740,406 740,406 - $ 7,249,440$ 8,418,681$ 6,756,146$ 8,911,975 Note 7 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's legal debt margin for 2011 and 2010 is computed as follows: December 31, 20112010 Estimated taxable market value$ 2,710,514,8002,469,945,000$ Debt limit (3% of market value) 74,098,350 81,315,444 Amount of debt applicable to debt limit: Total bonded debt55,361,00$ $ 59,671,00 00 Less: Nonapplicable debt G.O. water revenue bonds (14,400,000) (14,875,000) Special assessment bonds - (600,000) Tax increment bonds - (1,735,000) Permanent improvement revolving bonds (1,125,000) (1,480,000) State aid bonds (740,000) (955,000) Less: Cash and investments in related debt service funds (17,768,743)(17,779,964) Total debt applicable to debt limit 21,316,03 22,257,257 6 Legal debt margin$ 52,782,314$ 59,058,187 Note 8 DEFINED BENEFIT PENSION PLANS - STATEWIDE A. PLAN DESCRIPTION All full-time and certain part-time employees of the City are covered by defined benefit plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the General Employees Retirement Fund (GERF) and the Public Employees Police and Fire Fund (PEPFF), which are cost-sharing, multiple-employer retirement plans. Minnesota Statutes These plans are established and administered in accordance with , 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 ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 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 members 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, 60 Empire Drive #200, St. Paul, Minnesota, 55103-2088 or by calling (651) 296-7460 or 1-800-652-9026. B. FUNDING POLICY Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. These statutes are established and amended by the state legislature. The City makes annual contributions to the pension plans equal to the amount required by state statutes. GERF Basic Plan members and Coordinated Plan members were required to contribute 9.10% and 6.25%, respectively, of their annual covered salary in 2011. PEPFF members are required to contribute 9.60% of their annual covered salary in 2011. In 2011, the City was required to contribute the following percentages of annual covered payroll: 11.78% for Basic Plan members, 7.25% for Coordinated Plan members, and 14.4% for PEPFF members. The City’s contributions to the Public Employees Retirement Fund for the years ending December 31, 2011, 2010 and 2009 were $255,552, $231,360 and $231,302, respectively. The City’s contributions to the Public Employees Police and Fire Fund for the years ending December 31, 2011, 2010 and 2009 were $27,004, $24,152 and $24,464, respectively. The City’s contributions were equal to the contractually required contributions for each year as set by state statute. C. DEFINED CONTRIBUTION LUMP SUM SERVICE PENSION PLAN – VOLUNTEER FIREFIGHTERS RELIEF ASSOCIATION PLAN DESCRIPTION Members of the City’s volunteer fire department are members of the Andover Firefighters’ Relief Association. The Association is the administrator of a single-employer defined contribution plan available to firefighters that was established Minnesota Statutes October 9, 1979 and operates under the provisions of Section 424A. It is governed by a board of six members elected by the members of the Association for three-year terms. The City’s Mayor, Finance Manager and Fire Chief are ex-officio members of the Board of Trustees. The Association provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 1.Twenty-Year Service Pension – In order to be entitled to a pension benefit, a firefighter must have completed a minimum of five years of service with the Department and five years membership in the Association and attain the age of 50 years. The firefighter will then be 40% vested. This percentage increases 4% per year until the twentieth year when 100% vesting will occur. Because this is a defined contribution plan, the amount of the retirement benefit is not predetermined, but rather is based on the individual member’s allocable portion of contributions made during the participation period. 2.Deferred Pension – If the retired or terminated member has not attained age 50 and is otherwise eligible for the pension benefit, the balance of the member’s account will be credited with earned interest at the rate permitted by Minnesota Statutes Section 424.A02, Subd.7. 3.Disability Benefit – If a member of the Association becomes totally and permanently disabled due to injury, disability, sickness or dismemberment as a result of performance of duty, a disability payment will be made after one hundred days of disability. 4.Death Benefit – In the event of death of an active member or deferred pensioner, the member’s individual account balance will be paid to the surviving spouse, surviving children or the estate of the member after approval by the Board. The Association issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to Andover Firefighters’ Relief Association, 13875 Crosstown Boulevard NW, Andover, Minnesota 55304. FUNDING POLICY The State of Minnesota contributes amortization aid, or two percent fire aid, in accordance with state statute requirements. Plan members are not required to contribute to the plan. The state legislature may amend contribution requirements of the City and State. The City is allowed to make voluntary contributions of other public funds pursuant to Minnesota Statutes Chapter 69. The City receives the State aid contribution and is required by state statutes to pass this through as payment to the Association. This transaction is recorded as revenue and expenditure in the City’s financial statements. Contributions for the last three years are as follows: Year EndingCitStateTotal y 12/31/200950,000$ $ 103,492 $ 153,492 12/31/201050,000 104,210 154,210 12/31/201150,000 106,170 156,170 Note 9 OTHER POST EMPLOYMENT BENEFITS (OPEB) Accounting In 2008, the City prospectively implemented the requirement of a new accounting pronouncement, GASB Statement No. 45, and Financial Reporting by Employers for Post Employment Benefits Other than Pensions. A.PLAN DESCRIPTION In addition to providing the pension benefits described in Note 8, the City provides post employment health care benefits (as plan defined in paragraph B) for retired employees through a single employer defined benefit plan. The term refers to the City’s requirement by State Statute to provide retirees with access to health insurance. The OPEB plan is administered by the City. The authority to provide these benefits is established in Minnesota Statutes Sections 471.61 Subd. 2a, and 299A.465. The benefits, benefit levels, employee contributions and employer contributions are governed by the City and can be amended by the City through its personnel manual and collective bargaining agreements with employee groups. The Plan is not accounted for as a trust fund, as an irrevocable trust has not been established to account for the plan. The Plan does not issue a separate report. CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 B.BENEFITS PROVIDED Retirees The City is required by State Statute to allow retirees to continue participation in the City’s group health insurance plan if the individual terminates service with the City through service retirement or disability retirement. Employees who satisfy the rule of 90 or attain age 55 and have completed 10 years of service at termination can immediately commence medical benefits. Retirees may obtain dependent coverage while the participating retiree is under age 65. Covered spouses may continue coverage after the retiree’s death. The surviving spouse of an active employee may continue coverage in the group health insurance plan after the employee’s death. All health care coverage is provided through the City’s group health insurance plan. The retiree is required to pay 100% of their premium cost for the City-sponsored group health insurance plan. The premium is a blended rate determined by the entire active and retiree population. Since the projected claims costs for retirees exceed the blended premium paid by retirees, the retirees are receiving an implicit rate subsidy (benefit). The coverage levels are the same as those afforded to active employees. Upon a retiree reaching age 65 years of age, Medicare becomes the primary insurer and the City’s plan becomes secondary. C.PARTICIPANTS As of the actuarial valuation dated January 2011, participants consisted of: Retirees and beneficiaries currently purchasing health insurance through the City2 Active employees53 Total55 Participating employers 1 D.FUNDING POLICY The additional cost of using a blended rate for actives and retirees is currently funded on a pay-as-you-go basis. The City Council may change the funding policy at any time. E.ANNUAL OPEB COSTS AND NET OPEB OBLIGATION The City’s annual other post employment benefit (OPEB) cost is calculated based on the annual requirement contribution (ARC) of the employer, an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortized any unfunded actuarial liabilities (or funding excess) over period not to exceed 30 years. The net OPEB obligation as of December 31, 2011, was calculated as follows: CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Annual required contribution (ARC)$37,717 Amortization of net OPEB obligation(6,762) Interest on net OPEB obligation4,677 Annual OPEB cost35,632 Contributions made during the year(6,141) Increase (decrease) in net OPEB obligation29,491 Net OPEB obligation - beginning of year116,921 Net OPEB obligation - end of year$146,412 The City had an actuarial valuation performed for the plan as of January 1, 2011 to determine the funded status of the plan as of that date as well as the employer’s annual required contribution (ARC) for the fiscal year ended December 31, 2011. The City’s annual OPEB cost (expense) of $37,717 was equal to the ARC for the fiscal year, as the transition liability was set at zero as of December 31, 2007. The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB obligation for 2009, 2010 and 2011 are as follows: Percentage of AnnualEmployerAnnual OPEBNet OPEB Fiscal Year EndedOPEB CostContributionsCost ContributedObligation December 31, 200952,340$ 14,615$ 27.9%80,191$ December 31, 201051,667 14,937 28.9%116,921 December 31, 201135,632 6,141 17.2%146,412 For the governmental activities, other post employment benefits are generally liquidated through the General Fund. F.FUNDED STATUS AND FUNDING PROGRESS The City currently has no assets that have been irrevocably deposited in a trust for future health benefits; therefore, the actuarial value of assets is zero. The funded status of the plan was as follows: Unfunded ActuarialUAAL as a ActuarialActuarialAccruedPercentage of ActuarialValue ofAccruedLiabilityFundCoveredCovered Valuation DateAssetsLiability *( UAAL )RatioPayrollPayroll ( a )( b )( b-a )( a/b )( c )(( b-a ) / c ) January 1, 2011$-$273,046$ 273,0460.00%5,298,367$5.15% *using the Projected Unit Credit actuarial method G.ACTUARIAL METHODS AND ASSUMPTIONS Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events for into the future. Examples include assumptions about future employment, mortality and the health care cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions (ARC) of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes of the financial statements, presents multi-year trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit cost between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effect of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The plan’s unfunded actuarial accrued liability is being amortized as a level dollar amount over 30 years on an open basis. The remaining amortized period at 12/31/2011 was 30 years. The actuarial value of assets was $0. In the January 1, 2011 actuarial valuation, the Projected Unit Credit Actuarial cost method was used. The following actuarial assumptions were used: 1. Discount rate – 4.0% 2. Inflation rate – 3.0% 3. Monthly rates – life expectancies were based on mortality tables at the National Center for Health Statistics 4. Retirement age – latest of age 62, plan eligibility or current age 5. Participation rate – 75% of future retirees employees expected to retire in the future will elect coverage at retirement and continue coverage to age 65; 100% of current retirees will continue their coverage until age 65 6. Spouse participation – spouse continue coverage until age 65 7. Health care cost rate – 10% reduced by 0.5% each year to arrive at an ultimate health care cost trend 5.0%. Note 10 INTERFUND RECEIVABLES/PAYABLES, LOANS AND TRANSFERS Individual fund interfund receivable and payable balances at December 31, 2011 are as follows: FundReceivablePayable Governmental Funds: Major Funds: $ - General Fund$ 6 47,000 2006 EDA Public Facility Lease Revenue Refunding Bonds DSF - 11,000 2007 EDA Public Facility Lease Revenue Refunding Bonds DSF - 11,000 Water Trunk CPF 215,000 - Nonmajor Governmental Funds - 840,000 Total governmental funds$ 862,00$ 862,000 0 Interfund receivables and payables are representative of lending/borrowing arrangements to cover deficit cash balances at the end of the fiscal year. Interfund transfers: CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Transfer InTransfer Out Fund Governmental Funds: Major Funds: General Fund196,930$ -$ Sewer Trunk CPF400,000 - Road & Bridge CPF6,600 - Tax Increment Projects CPF- 2,499,013 Permanent Improvement Revolving CPF- 763,298 Nonmajor Funds3,639,347 383,636 Total governmental funds4,242,877$ 3,645,947$ Proprietary Funds: Enterprise Funds: Water-$ 150,250$ Sewer- 446,680 Total proprietary funds- 596,930 Total4,242,877$ 4,242,877$ Interfund transfers allow the City to allocate financial resources to the funds that receive benefit from services provided by another fund. Most of the City’s interfund transfers fall under that category. Non-routine transfers include a one-time transfer of $755,000 to the Building CPF from the TIF Projects CPF for future land purchases. Additionally, computer service fees paid by the Water, Sewer and Storm Sewer Enterprise Funds to the General Fund have been reclassified as transfers on the Government-Wide Statement of Activities as follows: Transfer InTransfer Out Governmental Activities30,600 $ $ - Business-Type Activities - 30,600 Total$ 30,600$ 30,600 Note 11 TAX INCREMENT DISTRICTS The City is the administering authority for the following tax increment finance districts: 1.Name of District:Andover Redeveloment District 1-1 p Type of District:Redevelopment Authorizing Law:M.S. Section 472 Established:1986 Duration of District:Through 201 2 Original net tax capacity:$ 152,14 0 Current net tax caacit: 1,784,718 py $ 1,632,578 Captured net tax capacity - retained by the Cit y Total District Bonds issue$19,250,000 d d(19,250,000) Amount redeeme s outstanng Decemer,- Bon ddib312011$ CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 2.Name of District:Andover Redevelopment District 1- 2 Type of District:Redevelopment Authorizing Law:M.S. Section 472 Established:1986 Duration of District:Through 201 4 Original net tax capacity:$ 4,542 Current net tax capacity: 234,858 Captured net tax capacity - retained by the Cit$ 230,31 y6 3.Name of District:Tax Increment Financing District 1-3 (Farmstead Project) Type of District:Redevelopmen t Authorizing Law:M.S. Section 469 Established:1997 Duration of District:Through 2025 Original net tax capacity:$ 7,31 4 Current net tax capacity:151,809 apture net tax capacty - retaney tet,5 CdiidbhCiy$14449 4.Name of District:Tax Increment Financing District 1-4 Type of District:Redevelopmen t Authorizing Law:M.S. Section 469 Established:2005 Duration of District:Through 2031 Original net tax capacity:$ 67,010 Current net tax capacity: 87,178 apture net tax capacty - retaney tet, CdiidbhCiy$20168 Note 12 DEFICIT FUND BALANCES The City has deficit fund balances at December 31, 2011 as follows: Amount Fund Special Revenue Funds: Community Center297,53$ 0 Capital Projects Funds: Storm Sewer Project62,460 Equipment Cert 2012A141,187 Note 13 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. The City participates in the League of Minnesota Cities Insurance Trust (LMCIT), a public entity risk pool for its general property and casualty, workers’ compensation, and other miscellaneous insurance coverages. Workers compensation coverage is provided through a pooled self-insurance program through the LMCIT. The City pays an annual premium to LMCIT. The City is subject to supplemental assessments if deemed necessary by the LMCIT. The LMCIT reinsures through Workers Compensation Reinsurance Association (WCRA) as required by law. The City also has a $2,500 deductible per occurrence to further decrease the cost of coverage. Final premiums are determined after an audit of payroll CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 subsequent to the close of the agreement year and are subject to revisions in rates, payrolls and experience modification. The amount of premium adjustment, if any, is considered immaterial and not recorded until received or paid. Property, casualty, and automobile insurance coverage are provided through a pooled self-insurance program through the LMCIT. The City pays an annual premium to the LMCIT. The LMCIT reinsures through commercial companies for claims in excess of various amounts. The City retains risk for the deductible portions. These deductibles are considered immaterial to the financial statements. The City continues to carry commercial insurance for all other risks of loss, including employee health and disability insurance. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three fiscal years. 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 are 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, 2011. 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 has indicated that they are not aware of any instances of noncompliance that would have a material effect on the financial statements. E.PAY-AS-YOU-GO TAX INCREMENT The City has one tax increment pay-as-you-go agreement. The agreement is not a general obligation of the City and is payable solely from tax increments. Accordingly, this agreement is not reflected in the financial statements of the City. Details of the pay-as-you-go are as follows: TIF District #1-3, Farmstead Project: The pay-as-you-go agreement for TIF District #1-3 provides for the payment of 90% of all tax increment received and will be completed February 1, 2015. Note 14 DEFERRED AD VALOREM TAX LEVIES - BONDED DEBT General Obligation bond issues sold by the City are financed by ad valorem tax levies and special assessment bond issues sold by the City are partially financed by ad valorem tax levies in addition to special assessments levied against the benefiting properties. When a bond issue to be financed partially or completely by ad valorem tax levies is sold, specific annual amounts of such tax levies are stated in the bond resolution and the County Auditor is notified and instructed to levy these taxes over the appropriate years. The future tax levies are subject to cancellation when and if the City has provided alternative sources of financing. The City Council is required to levy any additional taxes found necessary for full payment of principal and interest. CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 These future scheduled tax levies are not shown as assets in the accompanying financial statements at December 31, 2011. Future scheduled tax levies for all bonds outstanding at December 31, 2011 totaled $19,446,549. Note 15 FUND BALANCE CLASSIFICATIONS A. At December 31, 2011, a summary of the governmental fund balance classifications are as follows: 2006 EDA2007 EDA PublicPublic Fac Lease Fac Lease TaxPermanent Revenue Revenue WaterSewerRoad &IncrementImprovementOther Ref BondsRef BondsTrunkTrunBridgeProjectsRevolvingGovernmental k GeneralDSFDSFCPFCPFCPFCPFCPFFundsTotal Nonspendable: Prepaid items$ 91,000$ -$ -$ -$ -$ 8,250$ 99,250 $ -$ -$ - Inventory 131,641 - - -- 7,824 139,465 - - - Total nonspendable 222,641 16,074 238,715 ---- - - - Restricted for: 9,923,753 6,813,801 1,409,183 18,146,737 Debt service --- - - - Tax increment - - - - 829,052- - 829,052 - - Open space referendum- 765,425 765,425 - - - - - - - Total restricted 9,923,753 6,813,801 2,174,608 19,741,21 ---4 - - 829,052 Committed to: Economic development 497,47 497,47 -----22 - - - City's mapping system - - - -- 9898,010 ,010 - - - Surface water management - - - -- 11,079 11,079 - - - Public right of ways managemen 43,647 43,647 t----- - - - Seal coating new developments 558 558 ----- - - - Total committe 650,76 650,76 d-----66 - - - Assigned to: Water system- 2,652,691 - - - - - - -2,652,691 4,051,214 4,051,214 Sanitary sewer syste m------ - - Street rehabilitation 4,535,174 4,535,174 ----- - - - Development purposes 1,166,904 1,166,904 ----- - - - 25,240 25,240 Community development ----- - - - Forest resources programs - - - -- 77,813 ,813 - - - Community services- 416 416 - - - - - - - Park improvements 170,82 170,82 -----99 - - - Facilities managemen 815,39 815,39 t-----22 - - - Pedestrian trails 73,293 73,293 ----- - - - Capital improvements 952,34 952,34 -----00 - - - Total assigned - - - 42,652,691 4,051,214,535,174 21,166,904 14,045,323,451,306 - Unassigne 5,665,496 (517,251) 5,148,245 d---- - - - Total$ 5,888,137$ 9,923,753$ 6,813,801$ 2,652,691$ 4,051,214$ 4,535,174$ 829,052$ 1,166,904$ 4,369,520$40,230,24 6 B. MINIMUM UNASSIGNED FUND BALANCE POLICY The City Council has formally adopted a policy regarding the minimum unassigned fund balance for the General Fund. The most significant revenue source of the General Fund is property taxes. This revenue source is received in two installments during the year – July and December. As such, it is the City’s goal to begin each fiscal year with sufficient working capital to fund operations between each semi-annual receipt of property taxes. The policy established a year-end targeted unassigned fund balance amount for cash-flow timing needs in the range of 51-53% of the subsequent year’s budgeted expenditures. At December 31, 2011, the unassigned fund balance of the General Fund targeted for cash-flow needs was 53% of the subsequent year’s budgeted expenditures. Note 16 CONDUIT DEBT OBLIGATION Conduit debt obligations are certain limited-obligation revenue bonds or similar debt instruments issued for the express purpose of providing capital financing for a specific third party. The City has issued various revenue bonds to provide funding to private-sector entities for projects deemed to be in the public interest. Although these bonds bear the name of the City, the City has no obligation for such debt beyond the resources provided by related leases or loans. Accordingly, the bonds are not reported as liabilities in the financial statements of the City. CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 As of December 31, 2011, the following revenue bonds were outstanding: Date ofOriginalOutstanding Project IssueIssueRetired12/31/2011 r7/15/19975,645,000$ $ (5,490,000)$ 155,000 Downtown Cente Presbyterian Homes of Andover, Inc.11/1/200313,145,000 (2,000,698)11,144,302 $ Total18,790,000$ (7,490,698)$ 11,299,30 2 Note 17 OPERATING LEASES The City received revenue from agreements for the lease of space for antennas placed on the water tower and an emergency siren pole. The City also has a lease with the Greater Minneapolis YMCA for building space at the Andover YMCA Community Center. Terms of each lease are as follows: 2011 LeaseAnnual LeaseExpirationRenewal LocationLesseeAmountAdjustment FactorDateOptions rSprint Nextel$ Greater of CPI or 426,499%12/31/20123 - 5 year terms City Hall water towe rT-Mobile USA, Inc Greater of CPI or 421,611%12/31/20113 - 5 year terms City Hall water towe gency Siren PoleT-Mobile USA, Inc $1,000 annual increase6/17/20133 - 5 5,000year terms Emer rGreater Minneapolis YMCA635,000None8/1/2035N/A Andover YMCA Comm Ct rClear Wireless LLC 3% annuall14,575y7/31/20145 - 5 year terms Rose Park water towe Future minimum lease payments are unavailable at this time due to changing variables: CPI and the completion of the capital campaign for the community center. Note 18 SUBSEQUENT EVENTS The City of Andover sold $585,000 of General Obligation Equipment Certificates, Series 2012A on March 22, 2012 to finance the purchase of public safety and public works equipment. The rates of the bonds per year are 2.00% with a true interest cost of 0.88%. Principal payments are due in 2016 – 2017. The City of Andover sold $1,570,000 of Taxable General Obligation Capital Improvement Refunding Bonds, Series 2012B on March 22, 2012 to refund the General Obligation Capital Improvement Bonds, Series 2004A. The rates of the bonds per year are 2.00% with a true interest cost of 0.95%. Principal payments are due in 2013 – 2016. Note 19 RECENTLY ISSUED ACCOUNTING STANDARDS The Governmental Accounting Standards Boards (GASB) recently approved the following statements which were not implemented for these financial statements: Statement No. 60Accounting and Financial Reporting for Service Concession Arrangements. The provisions of this Statement are effective for financial statements for periods beginning after December 15, 2011. Statement No. 61Financial Reporting Entity: Omnibus – an amendment of GASB Statements No. 14 and No. 34. The provisions of this Statement are effective for financial statements for periods beginning after June 15, 2012. Statement No. 63inancial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. FThe provisions of this Statement are effective for financial statements for periods beginning after December 15, 2011. Statement No. 65Items Previously Reported as Assets and Liabilities. The provisions of this Statement are effective for financial statements for periods beginning after December 15, 2012. CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Statement No. 66Technical Corrections – 2012 .The provisions of this Statement are effective for financial statements for periods beginning after December 15, 2012. The effect these standards may have on future financial statements is not determinable at this time. Note 20 ACCOUNTING CHANGE, IMPLEMENTATION OF GASB 54 Fund Balance Reporting and The City adopted the provisions of Governmental Accounting Standards Board Statement No.54, Governmental Fund Type Definitions for the year ended December 31, 2011. Changes to the reporting of the fund balance of the governmental funds are reflected in the financial statements and related disclosures in Note 1.P. and Note 15. The implementation of GASB Statement 54 also resulted in the reclassification of the Trail & Transportation and Capital Equipment Reserve Funds. These funds had been presented as nonmajor special revenue funds and have been reclassified as nonmajor capital projects funds. - This page intentionally left blank - REQUIRED SUPPLEMENTARY INFORMATION CITY OF ANDOVER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2011 With Comparative Actual Amounts For The Year Ended December 31, 2010 Variance with Final Budget - Budgeted AmountsPositive2010 OriginalFinalActual(Negative)Actual Revenues: General property taxes 7,217,219$ 7,217,219$ 7,115,936$ (101,283)$ 7,191,602$ Licenses and permits 250,080 250,080 387,206 137,126 329,901 Intergovernmental 558,215 558,215 566,706 8,491 570,097 Charges for services 580,200580,200866,584 286,384755,184 Fines 105,750105,75099,777 (5,973)104,780 Investment income 65,00065,000130,367 65,36770,368 Miscellaneous 84,90084,900127,509 42,609136,684 Total revenues 8,861,3648,861,3649,294,085 432,7219,158,616 Expenditures: Current: General government: Mayor and City council 106,956106,956101,372 5,584100,710 Administration 138,157138,157135,523 2,634131,218 Newsletter 27,50027,50022,897 4,60317,094 Human resources 36,22136,22131,854 4,36754,968 Legal 178,300178,300171,062 7,238172,775 City clerk 103,333103,333100,693 2,64095,166 Elections6,7506,7506,398 35237,927 Financial administration 212,967212,967 207,033 5,934194,865 Assessing 152,500152,500143,693 8,807144,760 Information systems 149,871154,871142,963 11,908136,931 Planning and zoning 355,258355,258324,302 30,956327,566 Engineering 413,408414,408413,819 589389,037 Facility management 543,739528,739469,476 59,263421,850 Total general government 2,424,9602,415,9602,271,085 144,8752,224,867 Public safety: Police 2,615,4072,615,4072,615,4072,599,246 - Fire protection 1,077,0841,077,084974,988 102,096967,716 Protective inspection 363,789363,789342,437 21,352330,709 Civil defense 16,46316,46316,301 16215,450 Animal control9,9709,97011,087 (1,117)6,952 Total public safety 4,082,7134,082,7133,960,220 122,4933,920,073 Public works: Streets and highways 578,050578,050594,293 (16,243)518,989 Snow and ice removal 489,315489,315434,602 54,713537,948 Street signs 196,712196,712167,908 28,804166,244 Traffic signals 36,00036,00026,569 9,43125,830 Street lighting217,205 242,400242,400221,46120,939 Total public works$ 1,542,477$1,542,477$1,444,833$ 97,644$1,466,216 (Continued) CITY OF ANDOVER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND (Continued) For The Year Ended December 31, 2011 With Comparative Actual Amounts For The Year Ended December 31, 2010 Variance with Final Budget - Budgeted AmountsPositive2010 OriginalFinalActual(Negative)Actual Expenditures: Current: (continued) Parks and recreation 908,832$ 916,832$ 889,178$ 27,654$ 826,694$ Recycling 122,273 122,273 109,911 12,362 109,034 Unallocated 45,000 45,000 30,631 14,369 24,953 Total current 9,126,255 9,125,255 8,705,858 419,397 8,571,837 Capital outlay: 7,925 (7,925) Public works - - - Parks and recreation1,216 - - - - Total capital outlay7,925 (7,925)1,216 - - Total expenditures 9,126,2559,125,2558,713,783 411,4728,573,053 Revenues over (under) expenditures (264,891)(263,891)580,302 844,193585,563 Other financing sources (uses): Transfers in 196,930196,930196,930196,930 - Net increase (decrease) in fund balance (67,961)$ $(66,961)$777,232$ 844,193$782,493 Fund balance - January 15,110,9054,328,412 Fund balance - December 31$5,888,137$5,110,905 CITY OF ANDOVER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 11 SCHEDULE OF FUNDING PROGRESS - OTHER POST EMPLOYMENT BENEFITS PLAN For The Year Ended December 31, 2011 Unfunded ActuarialUAAL as a ActuarialActuarialAccruePercentage of d ActuarialValue ofAccrueLiabilitFundCovereCovere dydd Valuation DateAssetsLiabilit( UAAL )RatioPayrollPayroll y ( a )( b )( b-a )( a/b )( c )(( b-a ) / c ) January 1, 2008$ 324,387$324,3870.00%5,400,000$ 6.01% $ - January 1, 2011 273,046273,0460.00%5,298,367 5.15% - The City implemented GASB Statement No. 45 for the year ended December 31, 2008. Information for prior years is not available. CITY OF ANDOVER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION NOTES TO REQUIRED SUPPLEMENTARY INFORMATION December 31, 2011 Note A BUDGETS 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 departmental level for the General Fund. The following is a listing of General Fund departments whose expenditures exceed budget appropriations. FinalOver BudgetActualBudget General Fund: Current: Public safety: Animal contro$ 9,97$ 11,087$ 1,117 l0 Public works: Streets and highways 578,050 594,293 16,243 Capital outlay: Public works - 7,925 7,925 Note B MODIFIED APPROACH FOR CITY STREETS AND TRAILS INFRASTRUCTURE CAPITAL ASSETS In accordance with GASB Statement No. 34, the City is required to account for and report infrastructure capital assets. The City defines infrastructure as the basic physical assets including the street and trail system; water treatment and distribution system; wastewater collection system; park and recreation lands and improvement system; storm water conveyance system; and building combined with site amenities such as parking and landscape areas used by the City in the conduct of its business. Each major infrastructure can be divided into subsystems. For example, the street and trail system can be divided into pavement widths, curb type and sidewalk. City owned streets could further be classified as collector or local. Subsystem detail is not presented in these basic financial statements; however, the City maintains detailed information on these subsystems. The City has elected to use the modified approach as defined in GASB Statement No. 34 for infrastructure reporting for its Pavement Management Program. Under GASB Statement No. 34, eligible infrastructure capital assets are not required to be depreciated under the following requirements: 1)The City manages the eligible infrastructure capital assets using an asset management system with characteristics of (1) an up to-date inventory; (2) perform condition assessments and summarize the results using a measurement scale; and (3) estimate annual amount to maintain and preserve at the established condition assessment level. 2) The City documents that the eligible infrastructure capital assets are being preserved approximately at or above the established and disclosed condition assessment level. The City’s policy relative to maintaining the street and trail assets is to achieve an average rating of “Good” for all segments. This acceptable rating allows minor cracking and patching of the pavement along with minor roughness that could be noticeable to the users of the system. In the fall of 2011, the City conducted a physical condition assessment of the streets and trails constructed since 1974. This assessment will be performed every three years. Each street and trail segment was assigned a physical condition based on potential defects. An Overall Condition Index (OCI) was assigned to each street and trail and expressed in a continuous scale from 0 to 100, where 0 is assigned to the least acceptable physical condition and 100 is assigned the physical characteristics of a new street or trail. The following conditions were defined: CITY OF ANDOVER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION NOTES TO REQUIRED SUPPLEMENTARY INFORMATION December 31, 2011 ConditionRating Excellent86 - 100 Very Good71 - 85 Good56 - 70 Fai41 - 55 r Poo26 - 40 r Very Poo11 - 25 r Substandard0 - 10 As of December 31, 2011, the City’s street and trail system was rated at an OCI index of 83 on the average with detail condition as follows: % of Street Conditionand Trails Excellent to Good95.7% Fair3.9% Poor to Substandard0.4% The City’s streets and trails are constantly deteriorating resulting from the following factors: (1) traffic using the system; (2) the sun’s ultra-violet rays drying out and breaking down the top layer of pavement; (3) utility company/private development trenching operations; (4) water damage from natural precipitation; and (5) frost heave. The City is continuously taking actions to prolong the life of the system through short-term maintenance activities such as pothole patching, crack sealing, seal coating and overlaying. The City expended $1,770,980 on street and trail maintenance for the year ending December 31, 2011. These expenditures delayed deterioration; however, the overall condition of the system was not improved through these maintenance expenditures. The City has estimated that the amount of annual expenditures required to maintain the City’s street and trail system at the average OCI rating of good is approximately $1,150,000. MaintenanceActualOCI YearEstimateExpendituresRating 2003950,000$ 956,688$ 82 20041,000,000 1,847,066 82 20051,000,000 1,655,715 83 20061,150,000 1,228,981 82 20071,150,000 1,256,433 81 20081,150,000 2,244,713 80 20091,150,000 1,666,216 81 20101,150,000 1,457,082 83 20111,150,000 1,770,980 83 The City has an on-going street and trail rehabilitation program funded in the Capital Improvement Program that is intended to improve the condition rating of the City streets and trails. The rehabilitation program is formulated based on the deficiencies identified as a part of its Pavement Management Program. COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS A Special Revenue Fund is used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. Revenues for these funds can come from a variety of sources, such as taxes, fees, gifts and grants or contributions from other governmental entities. Expenditures from these funds are normally restricted by statute, local ordinance or grant agreements. The funds may be used for either operations or capital outlay as legal restrictions mandate. DEBT SERVICE FUNDS A Debt Service Fund accounts for the accumulation of resources for, and the payment of general long-term principal, interest and other related costs. CAPITAL PROJECTS FUNDS A Capital Projects Fund is used to account for acquisition or construction of major capital facilities financed mainly with governmental fund resources, general obligation debt, special assessments, special assessment debt, grants or other resources that are not part of Proprietary Funds or Trust Funds. CITY OF ANDOVER, MINNESOTA COMBINING BALANCE SHEET Statement 12 NONMAJOR GOVERNMENTAL FUNDS December 31, 2011 Nonmajor SpecialDebtCapitalGovernmental RevenueServiceProjectsFunds Assets: Cash and investments 726,855$ 856,453$ 2,779,087$ 4,362,395$ Cash and investments with escrow agent 76,459815,853 739,394 - Accrued interest3,6971,251 14,87619,824 Accounts receivable - net111,624111,624 - - Prepaid items8,2508,250 - - Property taxes receivable: Unremitted22912,085 1,54413,858 Delinquent1,07067,036 9,05277,158 Notes receivable53,43153,431 - - Inventories - at cost7,8247,824 - - Total assets989,439 5,470,217 1,676,219 2,804,559 Liabilities and Fund Balance Liabilities: Interfund payable425,000840,000 200,000 215,000 Accounts payable41,343 2,93944,282 - Contracts payable14,50014,500 - - Deposits payable31,99631,996 - - Due to other governmental units3,900 3,9367,836 - Salaries payable19,13419,134 - - Deferred revenue66,86167,036 9,052142,949 Total liabilities602,734 1,100,697 267,036 230,927 Fund balance (deficit): Nonspendable16,07416,074 - - Restricte 2,174,608 d - 1,409,183 765,425 Committe650,766 d 650,766 - - Assigne33,469 2,045,323 d - 2,011,854 Unassigne(313,604)(203,647)(517,251) d - Total fund balance386,705 4,369,520 1,409,183 2,573,632 Total liabilities and fund balance$989,439$1,676,219$2,804,559$ 5,470,217 CITY OF ANDOVER, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND Statement 13 CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For The Year Ended December 31, 2011 With Comparative Totals For The Year Ended December 31, 2010 Totals Special DebtCapitalNonmajor Governmental Funds RevenueServiceProjects20112010 Revenues: General property taxes 33,198$ 1,831,213$ 253,281$ 2,117,692$ 2,090,652$ Intergovernmental 10,299 242,496 5,321 258,116 262,752 31,593 Special assessments - - - - Charges for services 866,207 866,207849,497 - - Investment income 13,80913,84482,500 110,15388,416 Miscellaneous: Park dedication fees51,706 51,70632,649 - - Rent 641,859 641,859638,037 - - Other 215,59519,567 235,162288,410 - Total revenues 1,780,9672,087,553412,375 4,280,8954,282,006 Expenditures: Current: General government 9,17018,316 27,48630,926 - Public safety5,321 5,321 - - - Public works 93,89320,945 114,838161,356 - Parks and recreation 991,09845,944 1,037,0421,606,801 - Economic development 156,645 156,645152,311 - - Capital outlay: General government45,072 45,072163,387 - - Public safety5,645 5,645435,103 - - Public works328,878 328,878 - - - Parks and recreation 36,176161,606 197,782725,175 - Economic development 25,109 25,109 - - - Debt service: Principal retirement4,100,000 4,100,0005,779,000 - - Interest1,139,328 1,139,3281,314,057 - - Paying agent fees3,253 3,2533,880 - - Professional service21,499 - - - - Total expenditures 1,312,0915,242,581631,727 7,186,39910,393,495 Revenues over (under) expenditures 468,876(3,155,028)(219,352) (2,905,504)(6,111,489) Other financing sources (uses): Transfers in2,876,345763,002 3,639,3475,144,721 - Transfers out(375,634)(8,002)- (383,636)(716,612) Bonds issued265,000 265,0001,660,000 - - Refunding bonds issued1,480,000 - - - - Redemption of refunded bonds - - - -(2,416,834) Bond premium31,688 - - - - Proceeds from sale of capital assets27,717 - - - - Total other financing sources (uses) (375,634) 2,868,3431,028,002 3,520,7115,210,680 Net increase (decrease) in fund balance 93,242 (286,685)808,650 615,207(900,809) Fund balance - January 1 293,4631,695,8681,764,982 3,754,3134,655,122 Fund balance - December 31$ 386,705$1,409,183$2,573,632$ 4,369,520$3,754,313 NONMAJOR SPECIAL REVENUE FUNDS The City of Andover had the following Special Revenue Funds during the year: EDA General - This fund was established to account for activities designed to promote quality economic development within the community. - This fund accounts for the financial operations of a federal grant for rental Community Development Block Grant housing rehabilitation. Community Center - This fund is used to account for the operations of the Andover YMCA / Community Center, particularly the ice arena, field house and concessions. The aquatic’s portion of the Community Center is under the operations of the YMCA. Drainage and Mapping - This fund accounts for resources necessary to maintain existing maps and developing new maps and mapping systems for the City. LRRWMO - This fund is used to account for the City’s involvement with the Lower Rum River Watershed Management Organization (LRRWMO). Forestry - This fund was established to account for the protection of forest resources and the development of control plans to ensure preservation or restoration of these resources. - This fund is used to account for activity associated with the management of the Right-of-Way Management/Utility public right-of-ways. Charitable Gambling - This fund accounts for the 10% of net profits received from gambling activities by local non- profit organizations. According to state statute, all expenditures from this fund must be for public services and police, fire and other emergency or public safety-related services, equipment, and training, excluding pension obligations. - This fund accounts for the contributions associated with land development to be used Construction Seal Coating for the respective developments first application of crack seal and seal coat. CITY OF ANDOVER, MINNESOTA SUBCOMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS December 31, 2011 CommunitDrainage y EDADevelopmenCommunitand ty GeneralBlock GranCenteMapping tr Assets: Cash and investments 504,148$ 25,112$ 23,576$ 97,467$ 76,459 Cash and investments with escrow agent - - - Accrued interest2,802128543 - Accounts receivable9,971101,153 - - Prepaid items 8,250 - - - Property taxes receivable: Unremitted - - - - Delinquent - - - - Notes receivable53,431 - - - Inventories - at cost 7,824 - - - Total assets516,92178,671217,26298,010 Liabilities and Fund Balance Liabilities: Interfund payable425,000 - - - Accounts payable1,59239,605 - - Contracts payable14,500 - - - Deposits payable31,996 - - - Due to other governmental units 3,900 - - - Salaries payable3,35714,291 - - Deferred revenue53,431 - - - Total liabilities19,44953,431514,792 - Fund balance (deficit): Nonspendable16,074 - - - Committe497,47298,010 d - - Assigne25,240 d - - - Unassigne(313,604) d - - - Total fund balance (deficit)497,47225,240(297,530)98,010 Total liabilities and fund balance$516,921$78,671$217,262$98,010 Statement 14 Nonmajor Right-of-WaSpecial y ManagementCharitableConstructionRevenue / LRRWMOForestrUtilitGamblinSeal CoatingFunds yyg $ 7,81311,770$ 43,635$ 416$ 12,918$ 726,855$ 76,459 - - - - - 224 3,697 - - - - 500 111,624 - - - - 8,250 - - - - - 229 229 - - - - 1,070 1,070 - - - - 53,431 - - - - - 7,824 - - - - - 13,069 7,813 44,35941612,918 989,439 425,000 - - - - - 146 41,343 - - - - 14,500 - - - - - 31,996 - - - - - 3,900 - - - - - 774 712 19,134 - - - 1,07012,360 66,861 - - - 1,990 71212,360 602,734 - - 16,074 - - - - - 11,079 43,647558 650,766 - - 7,813416 33,469 - - - (313,604) - - - - - 11,079 7,813 43,647416558 386,705 $ 13,069$ 7,813$ 44,359$416$12,918$ 989,439 CITY OF ANDOVER, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS For The Year Ended December 31, 2011 With Comparative Totals For The Year Ended December 31, 2010 CommunitDrainage y EDADevelopmenCommunitand ty GeneralBlock GranCenteMapping tr Revenues: General property taxes $ -$ -$ -$ - Intergovernmental - - - - Charges for services199,030 629,3968,657 - Investment income15,148921 (7,228)3,126 Miscellaneous: Rent 641,859 - - - Othe 17,72834,196 150,590 r - Total revenues 248,374 18,649 1,414,617 11,783 Expenditures: Current: General government - - - - Public works6,327 - - - Parks and recreation 991,098 - - - Economic development156,453192 - - Capital outlay: Parks and recreation36,176 - - - Economic development25,109 - - - Total expenditures217,738192 991,0986,327 Revenues over (under) expenditures30,63618,457 423,5195,456 Other financing sources (uses): Transfers out(369,034) - - - Net increase (decrease) in fund balance30,63618,457 54,4855,456 Fund balance (deficit) - January 1466,8366,783(352,015)92,554 Fund balance (deficit) - December 31$497,472$25,240$(297,530)$98,010 Statement 15 Right-of-WaTotals y ManagementCharitableConstructionNonmajor Special Revenue Funds / LRRWMOForestrUtilitGamblinSeal Coating20112010 yyg 33,198$ 33,198$33,244 $ $ -$ -$ -$ - 10,299 10,299 - - - - - 19,3039,821 866,207845,481 - - - (96) 270 1,13165472 13,8093,509 641,859638,037 - - - - - 6,1376,944 215,595175,159 - - - 33,102 16,706 20,4347,00910,293 1,780,9671,695,430 9,170 9,17012,384 - - - - 34,704 14,637 27,49510,730 93,893159,593 - 991,098882,364 - - - - - 156,645152,311 - - - - - 36,176 - - - - - - 25,109 - - - - - - 34,704 14,637 27,4959,17010,730 1,312,0911,206,652 (1,602) 2,069 (7,061)(2,161)(437) 468,876488,778 (6,600) (375,634)(401,481) - - - - (1,602) 2,069 (13,661)(2,161)(437) 93,24287,297 12,681 5,744 57,3082,577995 293,463206,166 $ 11,079$ 7,813$ 43,647$416$558$ 386,705$293,463 - This page intentionally left blank - NONMAJOR DEBT SERVICE FUNDS The City's Debt Service Funds account for eight types of bonded indebtedness: Certificates of Indebtedness Capital Improvement Bonds Revenue Bonds Tax Increment Bonds Permanent Improvement Revolving Bonds State Aid Bonds Special Assessment Bonds Referendum Bonds Certificates of Indebtedness - (G.O. Equipment Certificates - 2007A, 2008A, 2009A and 2011A) are repaid primarily from general property taxes. Capital Improvement Bonds - (G.O. Capital Improvement Bonds 2004A) are repaid primarily from general property taxes - (EDA Public Facility Lease Revenue Bonds 2004) are repaid from annual lease payments from Revenue Bonds the YMCA, Community Center operations and general property tax. Tax Increment Bonds - (Tax Increment Refunding Bonds of 2004B) are repaid primarily from tax increments. Permanent Improvement Revolving (PIR) Bonds - (G.O. PIR Refunding Bonds of 2010A) are used to finance assessable improvements within the City and are repaid primarily from special assessments levied against benefited properties. State Aid Bonds - (2009A State Aid Refunding Bonds) are used to finance MSA eligible cost for road construction and improvements. These bonds are repaid from a portion of state aid allotments received by the City. - (G.O. Improvement Bonds 2005A) are used to finance assessable improvements within Special Assessment Bonds the City and are repaid primarily from special assessments levied against benefited properties. Referendum Bonds – (Open Space Referendum Bonds of 2010A) are used to finance the purchase of land to remain as open space. CITY OF ANDOVER, MINNESOTA SUBCOMBINING BALANCE SHEET NONMAJOR DEBT SERVICE FUNDS December 31, 2011 EDA Public G.O.G.O.G.O.G.O. CapitalFacility Leas e EquipmentEquipmentEquipmentImprovemenRevenue t CertificateCertificateCertificateBondsBonds R 2008A2009A2011A2004A2004 Assets: Cash and investments $ 1 75,510$ 132,552$ 79,221$ 11,499$ 8,270 Cash and investments with escrow agent - - - - 739,394 Accrued interest - - 200 - - Property taxes receivable: Unremitted 1 ,201 907 540 2,620 6,105 Delinquent - - 3,661 17,758 41,375 Total assets 1 76,711 133,459 83,622 31,877 795,144 Liabilities and Fund Balance Liabilities: Interfund payable - - - - 200,000 Deferred revenue - - 3,661 17,758 41,375 Total liabilities - - 3,661 17,758 241,375 Fund balance: Restricte d 1 76,711 133,459 79,961 14,119 553,769 Total liabilities and fund balance $ 1 76,711$ 133,459$ 83,622$ 31,877$ 795,144 Statement 16 G.O.State AiOpen SpaceNonmajor d PIR FundRefundingReferenduDebt m efunding BondsBondsBondsService R 2010A2009A2010AFunds $ 8,857$ 171,518 $ 2 69,026$ 856,453 - - - 739,394 632 - 4 19 1,251 712 - - 12,085 4,242 - - 67,036 8,857 177,104 2 69,445 1,676,219 - - - 200,000 4,242 - - 67,036 4,242 - - 267,036 8,857 172,862 2 69,445 1,409,183 $ 8,857$ 177,104 $ 2 69,445$ 1,676,219 CITY OF ANDOVER, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR DEBT SERVICE FUNDS For The Year Ended December 31, 2011 With Comparative Totals For The Year Ended December 31, 2010 EDA Public G.O.G.O.G.O.G.O.G.O. CapitalFacility Leas e EquipmentEquipmentEquipmentEquipmentImprovemenRevenue t CertificateCertificateCertificateCertificateBondsBonds 2007A2008A2009A2011A2004A2004 Revenues: General property taxes $ -$ 178,752$ 135,061$ 80,403$ 3 90,022$ 908,894 Intergovernmental - - - - - - Special assessments - - - - - - Investment income (5,128) - (588) (477) 1,324 12,031 Total revenues - 178,164 134,584 81,727 3 84,894 920,925 Expenditures: Debt service: Principal retirement 2 00,000 160,000 125,000 - 2 95,000 415,000 Interest 4 ,000 8,610 4,331 1,766 8 0,143 914,891 Paying agent fees - - 65 - 4 03 2,000 Professional services - - - - - - Total expenditures1,331,891 2 04,000 168,610 129,396 1,766 3 75,546 Revenues over (under) expenditures (204,000) 9,554 5,188 79,961 9 ,348 (410,966) Other financing sources (uses): Transfers in - - - - - 369,034 Transfers out (8,002) - - - - - Refunding bonds issued - - - - - - Redemption of refunded bonds - - - - - - Bond premium - - - - - - Total other financing sources (uses) (8,002) - - - - 369,034 Net increase (decrease) in fund balance (212,002) 9,554 5,188 79,961 9,348 (41,932) Fund balance - January 1 2 12,002 167,157 128,271 - 4 ,771 595,701 Fund balance - December 31 $ -$ 176,711$ 133,459$ 79,961$ 1 4,119$ 553,769 Statement 17 G.O. G.O. TIFPIR FundG.O.Open Space e RefundingRefundingStateImprovemenReferenduTotals tm BondsBondsAid BondsBondsBondsNonmajor Debt Service Funds 2004B2010A2009A2005A2010A20112010 $ 1,805,7841,831,213$ $ -$ -$ -$ -$ 138,081 - - 2 42,496 - - 242,496 2 62,752 - - - - - - 3 1,593 - 270 2 ,226 - 4,186 13,844 3 4,681 - 270 2 44,722 - 142,267 2,087,553 2 ,134,810 600,000 1 ,735,000 355,000 2 15,000 - 4,100,000 5 ,779,000 10,200 2 6,763 26,050 2 1,009 41,565 1,139,328 1 ,314,057 - 212 3 60 - 213 3,253 3 ,880 - - - - - - 2 1,499 610,200 1 ,761,763 381,262 2 36,369 41,778 5,242,581 7 ,118,436 (1,761,763) (380,992)(610,200)(3,155,028)(4,983,626) 8 ,353 100,489 383,298 1 ,744,013 380,000 - - 2,876,345 4 ,110,864 (73,131) - - - - - (8,002) - - - - - - 1 ,480,000 - - - - - -(2,416,834) - - - - - - 27,205 383,298 1 ,744,013 380,000 - - 2,868,343 3 ,128,104 (17,750)(226,902)(1,855,522) (992) 8 ,353 100,489 (286,685) 226,902 1 7,750 9,849 2 61,092 72,373 1,695,868 3 ,551,390 $ 1,695,8681,409,183$ $ -$ 8,857$ 2 69,445$ -$ 172,862 - This page intentionally left blank - NONMAJOR CAPITAL PROJECT FUNDS The City of Andover had the following Capital Projects Funds during the year: Storm Sewer Project - This fund was established to account for storm sewer fees and improvements as part of development and ongoing maintenance. - This fund was established to account for contributions associated with land development to be Park Dedication used for constructing and upgrading the City’s park system. Building Fund - This fund was established to account for miscellaneous building improvements for all facilities. Trail and Transportation - This fund is used to account for contributions associated with land development to be used for constructing and upgrading the City’s trail system. - This fund is used to account for the capital equipment/projects levy and the various Capital Equipment Reserve capital expenditures it will be used for. Equipment Certificates 2011A - This fund was established to account for the purchase of capital equipment that was financed through the issuance of capital notes. Equipment Certificates 2012A - This fund was established to account for the purchase of capital equipment that was financed through the issuance of capital notes. Open Space Referendum Bonds 2010A - This fund was established to account for the purchase of various land acquisitions for open space preservation within the City. CITY OF ANDOVER, MINNESOTA SUBCOMBINING BALANCE SHEET NONMAJOR CAPITAL PROJECTS FUNDS December 31, 2011 Stor m SeweParkBuildingTrail & r ProjectDedicationFundTransportation Assets: Cash and investments$2,540$171,717$810,879$72,884 Accrued interest-8664,513409 Property taxes receivable: Unremitted-349 -- Delinquent-2,048 -- Total assets2,540174,980815,39273,293 Liabilities and Fund Balance Liabilities: Interfund payables65,000- -- Accounts payable-2,005 -- Due to other government units-98 -- Deferred revenue-2,048 -- Total liabilities65,0004,151 -- Fund balance (deficit): Restricte -- - - d Assigne 170,829- 815,392 73,293 d Unassigne -(62,460) - - d Total fund balance (deficit) (62,460) 170,829 815,392 73,293 Total liabilities and fund balance 2,540$ 174,980$ 815,392$ 73,293$ Statement 18 Open SpaceNonmajo r CapitalEquipmentReferenduCapital m EquipmentCertificatesBondsProjects Reserve2012A2010AFunds $ 950,314$ 9,561$ 761,192$2,779,087 4,855 - 4,23314,876 1,195 - -1,544 7,004 - -9,052 963,368 9,561 765,4252,804,559 - 150,000 -215,000 186 748 -2,939 3,838 - -3,936 7,004 - -9,052 11,028 150,748 -230,927 - - 765,425765,425 952,340 - -2,011,854 - (141,187) -(203,647) 952,340 (141,187) 765,4252,573,632 $ 963,368$ 9,561$ 765,425$2,804,559 CITY OF ANDOVER, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR CAPITAL PROJECTS FUNDS For The Year Ended December 31, 2011 With Comparative Totals For The Year Ended December 31, 2010 Stor m SeweParkBuildingTrail & r ProjectDedicationFundTransportation Revenues: General property taxes$57,300 $ -$ -$ - Intergovernmental - - - - Charges for services - - - - Investment income(1,318)3,94528,7982,417 Miscellaneous: Park dedication fees51,706 - - - Other7,487 - - - Total revenues(1,318)28,7982,417 120,438 Expenditures: Current: General government3,166 - - - Public safety - - - - Public works671 - - - Parks and recreation43,308 - - - Capital outlay: General government - - - - Public safety - - - - Public works - - - - Parks and recreation47,803 - - - Total expenditures91,1113,166671 - Revenues over (under) expenditures(1,318)29,32725,6321,746 Other financing sources (uses): Transfers in - - 763,002 - Transfers out - - - - Bonds issued - - - - Bond premium - - - - Proceeds from sale of capital assets - - - - Total other financing sources (uses) - - 763,002 - Net increase (decrease) in fund balance(1,318)29,3271,746 788,634 Fund balance (deficit) - January 1(61,142)26,758 71,547 141,502 Fund balance (deficit) - December 31$(62,460)$170,829$815,392$ 73,293 Statement 19 Open Space CapitalEquipmentEquipmentReferenduTotals m EquipmentCertificatesCertificatesBondsNonmajor Capital Projects Funds Reserve2011A2012A2010A20112010 195,981$253,281$251,624 $ $ -$ -$ - 5,3215,321 - - - - 4,016 - - - - - (41)25,151 (299) 23,847 82,500 50,226 51,70632,649 - - - - 12,08019,567 - - - 113,251 238,533 (41) (299)23,847 412,375 451,766 15,15018,31618,542 - - - 5,3215,321 - - - - 15,954 3,975 34520,9451,763 - 2,63645,944 - - - 724,437 45,07245,072 - - - 163,387 3,894 1,7515,645 - - 435,103 188,335 140,543 - - 328,878 - 42,905 70,898 - - 161,606 725,175 130,932 264,959 140,888 - 631,727 2,068,407 107,601 (265,000) (141,187)23,847(219,352)(1,616,641) - - - - 763,002 1,033,857 (242,000) - - - - - 265,000 - - - 265,000 1,660,000 4,483 - - - - - 27,717 - - - - - 265,000 - - - 1,028,002 2,484,057 107,601 (141,187)23,847 - 808,650 867,416 844,739 - - 741,578 1,764,982 897,566 $ 952,340$ (141,187)$765,425$2,573,632$1,764,982 $ - CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - EDA GENERAL Statement 20 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2011 With Comparative Actual Amounts For The Year Ended December 31, 2010 Variance with Final Budget - Budgeted AmountsPositive2010 OriginalFinalActual(Negative)Actual Revenues: Charges for services 165,400$ $165,400$ 33,630199,030$ 199,403$ Investment income 6,000 6,00015,148 9,1489,300 Miscellaneous35,00034,196 (804)546 - Total revenues 171,400206,400248,374 41,974209,249 Expenditures: Current: Economic development 224,218199,109156,453 42,656143,243 Capital outlay: Parks and recreation35,00036,176 (1,176) - - Economic development25,10925,109 - - - Total expenditures 224,218259,218217,738 41,480143,243 Net increase (decrease) in fund balance$ (52,818)$(52,818)30,636$ 41,97466,006 Fund balance (deficit) - January 1466,836400,830 Fund balance (deficit) - December 31$497,472$466,836 CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - COMMUNITY DEVELOPMENT BLOCK GRANT Statement 21 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2011 With Comparative Actual Amounts For The Year Ended December 31, 2010 Variance with Final Budget - Budgeted AmountsPositive2010 OriginalFinalActual(Negative)Actual Revenues: Intergovernmental25,000$ $25,000$ (25,000) $ -$ - Investment income100100921 82191 Miscellaneous 4,0004,00017,728 13,7285,932 Total revenues 29,10029,10018,649 (10,451)6,023 Expenditures: Current: Economic development 25,00025,000192 24,8089,068 Net increase (decrease) in fund balance$ 4,100$4,10018,457$ 14,357(3,045) Fund balance (deficit) - January 16,7839,828 Fund balance (deficit) - December 31$25,240$6,783 CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - COMMUNITY CENTER Statement 22 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2011 With Comparative Actual Amounts For The Year Ended December 31, 2010 Variance with Final Budget - Budgeted AmountsPositive2010 OriginalFinalActual(Negative)Actual Revenues: Charges for services 615,500$ $615,500$ 13,896629,396$ 571,801$ (7,228) (7,228)(8,255) Investment income - - Miscellaneous: Rent 635,000635,000641,859 6,859638,037 Othe 154,400154,400 150,590 (3,810) 149,486 r Total revenues 1,404,900 1,404,900 1,414,617 9,717 1,351,069 Expenditures: Current: Parks and recreation 1,024,339 1,024,339 991,098 33,241 882,364 Revenue over (under) expenditures 380,561 380,561 423,519 42,958 468,705 Other financing sources (uses) Transfers out (369,034) (369,034)(369,034)(401,481) - Net increase (decrease) in fund balance$ 11,527$11,52754,485$ 42,95867,224 Fund balance (deficit) - January 1(352,015)(419,239) Fund balance (deficit) - December 31$(297,530)$(352,015) CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - DRAINAGE AND MAPPING Statement 23 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2011 With Comparative Actual Amounts For The Year Ended December 31, 2010 Variance with Final Budget - Budgeted AmountsPositive2010 OriginalFinalActual(Negative)Actual Revenues: Charges for services 9,000$ $9,000$8,657$ (343)$8,770 Investment income 1,6001,6003,126 1,5261,891 Total Revenues 10,60010,60011,783 1,18310,661 Expenditures: Current: Public works 10,50010,5006,327 4,1735,653 Net increase (decrease) in fund balance$100$1005,456$ 5,3565,008 Fund balance (deficit) - January 192,55487,546 Fund balance (deficit) - December 31$98,010$92,554 CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - LRRWMOStatement 24 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2011 With Comparative Actual Amounts For The Year Ended December 31, 2010 Variance with Final Budget - Budgeted AmountsPositive2010 OriginalFinalActual(Negative)Actual Revenues: General property taxes 35,000$ $35,000$33,198$ (1,802)$33,244 Investment income300300(96) (396)125 Total revenues 35,30035,30033,102 (2,198)33,369 Expenditures: Current: Public works 34,58834,58834,704 (116)39,000 Net increase (decrease) in fund balance$712$712(1,602)$ (2,314)(5,631) Fund balance (deficit) - January 112,68118,312 Fund balance (deficit) - December 31$11,079$12,681 CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - FORESTRYStatement 25 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2011 With Comparative Actual Amounts For The Year Ended December 31, 2010 Variance with Final Budget - Budgeted AmountsPositive2010 OriginalFinalActual(Negative)Actual Revenues: Intergovernmental 12,500$ $12,500$10,299$ (2,201) $ - Investment income100100270 17051 Miscellaneous6,137 6,1379,756 - - Total revenues 12,60012,60016,706 4,1069,807 Expenditures: Current: Public works 12,50012,50014,637 (2,137)9,893 Net increase (decrease) in fund balance$100$1002,069$ 1,969(86) Fund balance (deficit) - January 15,7445,830 Fund balance (deficit) - December 31$7,813$5,744 CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - RIGHT-OF-WAY MANAGEMENT/UTILITY Statement 26 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2011 With Comparative Actual Amounts For The Year Ended December 31, 2010 Variance with Final Budget - Budgeted AmountsPositive2010 OriginalFinalActual(Negative)Actual Revenues: Charges for services 10,000$ $10,000$19,303$ 9,303$19,131 Investment income 2,5002,5001,131 (1,369)765 Total revenues 12,50012,50020,434 7,93419,896 Expenditures: Current: Public works 32,11432,11427,495 4,61950,865 Revenue over (under) expenditures (19,614)(19,614)(7,061) 12,553(30,969) Other financing sources (uses): Transfers out (6,600)(6,600)(6,600) - - Net increase (decrease) in fund balance$ (26,214)$(26,214)(13,661)$ 12,553(30,969) Fund balance (deficit) - January 157,30888,277 Fund balance (deficit) - December 31$43,647$57,308 CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - CHARITABLE GAMBLING Statement 27 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2011 With Comparative Actual Amounts For The Year Ended December 31, 2010 Variance with Final Budget - Budgeted AmountsPositive2010 OriginalFinalActual(Negative)Actual Revenues: $65$ 65$(79) Investment income $ -$ - Miscellaneous 9,5009,5006,944 (2,556)9,439 Total revenues 9,5009,5007,009 (2,491)9,360 Expenditures: Current: General government 9,5009,5009,170 33012,384 Net increase (decrease) in fund balance(2,161)$ (2,161)(3,024) $ -$ - Fund balance (deficit) - January 12,5775,601 Fund balance (deficit) - December 31$416$2,577 CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - CONSTRUCTION SEAL COATING Statement 28 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2011 With Comparative Actual Amounts For The Year Ended December 31, 2010 Variance with Final Budget - Budgeted AmountsPositive2010 OriginalFinalActual(Negative)Actual Revenues: Charges for services 19,000$ $19,000$9,821$ (9,179)$46,376 Investment income400400472 72(380) Total revenues 19,40019,40010,293 (9,107)45,996 Expenditures: Current: Public works 19,00019,00010,730 8,27054,182 Net increase (decrease) in fund balance$400$400(437)$ (837)(8,186) Fund balance (deficit) - January 19959,181 Fund balance (deficit) - December 31$558$995 INTERNAL SERVICE FUNDS Internal Service Funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the government and to other government units, on a cost reimbursement basis. The City of Andover had the following Internal Service Funds during the year: Central Equipment Maintenance – This fund accounts for the maintenance of the equipment for the City. Risk Management – This fund accounts for the expenditures in payment of insurance deductibles, loss reduction, safety training and administrative expense. CITY OF ANDOVER, MINNESOTA COMBINING STATEMENT OF NET ASSETS Statement 29 INTERNAL SERVICE FUNDS December 31, 2011 With Comparative Totals for December 31, 2010 Central EquipmentRisTotals k MaintenanceManagemen20112010 t Assets: Current assets: Cash and cash equivalents 222,266$ 229,390$ 451,656$ 370,709$ Accrued interest 1,443 962 2,405 1,464 Accounts receivable1,511 1,511 - - Prepaid items1,750 1,7501,750 - Inventories - at cost87,79187,79181,000 - Total assets314,761230,352545,113454,923 Liabilities: Current liabilities: Accounts payable19,69993620,63527,382 Due to other governmental units5,483 - - - Salaries payable8,093487 8,5808,243 Total liabilities27,7921,42329,21541,108 Net assets: Unrestricted$286,969$228,929$515,898$413,815 CITY OF ANDOVER, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENSES AND Statement 30 CHANGES IN FUND NET ASSETS INTERNAL SERVICE FUNDS For The Year Ended December 31, 2011 With Comparative Totals For The Year Ended December 31, 2010 Central EquipmentRisTotals k MaintenanceManagemen20112010 t Operating revenues: User charges$680,440$324,949$1,005,389$1,004,447 Other-39,501 39,50133,527 Total operating revenues680,440364,4501,044,8901,037,974 Operating expenses: Personal services221,514127,783349,297361,439 Supplies298,789-298,789244,669 Other service charges95,769212,241308,010308,502 Total operating expenses616,072340,024956,096914,610 Operating income (loss)64,36824,426 88,794123,364 Nonoperating revenues (expenses): Investment income8,7414,548 13,2897,116 Change in net assets73,10928,974102,083130,480 Net assets - January 1213,860199,955413,815283,335 Net assets - December 31$286,969$228,929$515,898$413,815 CITY OF ANDOVER, MINNESOTA COMBINING STATEMENT OF CASH FLOWSStatement 31 INTERNAL SERVICE FUNDS For The Year Ended December 31, 2011 With Comparative Totals For The Year Ended December 31, 2010 Central Totals EquipmentRisk MaintenanceManagemen20112010 t Cash flows from operating activities: Receipts from customers and users$678,929$364,450$ 1,043,379$1,037,974 Payment to suppliers(408,327)(217,493) (625,820)(556,762) Payment to employees(221,189)(127,771) (348,960)(359,505) Net cash flows from operating activities49,41319,186 68,599121,707 Cash flows from investing activities: Investment income8,1194,229 12,3486,469 Net increase in cash and cash equivalents57,53223,415 80,947128,176 Cash and cash equivalents - January 1164,734205,975 370,709242,533 Cash and cash equivalents - December 31$222,266$229,390$ 451,656$370,709 Reconciliation of operating income to net cash provided (used) by operating activities: Operating income (loss)$64,368$24,426$ 88,794$123,364 Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Changes in assets and liabilities: Decrease (increase) in accounts receivable(1,511)- (1,511) - Decrease (increase) in inventory(6,791)- (6,791)(17,935) Increase (decrease) in accounts payable(6,978)231 (6,747)11,716 Increase (decrease) in due to other governmental units-(5,483) (5,483)2,628 Increase (decrease) in salaries payable32512 3371,934 Total adjustments(14,955)(5,240) (20,195)(1,657) Net cash provided by operating activities$49,413$19,186$ 68,599$121,707 AGENCY FUNDS Agency Funds are used to account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations and/or other governmental units. The City of Andover had the following Agency Funds during the year: General Escrow – This fund is used to account for distribution of funds for insurance premiums of retirees. General Agency – This fund is used to account for the collection and distribution of funds relating to building and land development activities. CITY OF ANDOVER, MINNESOTA COMBINING STATEMENT OF NET ASSETS Statement 32 FIDUCIARY FUNDS December 31, 2011 GeneralGeneral EscroAgencTotal wy Assets: Cash and investments 9,447$ 174,589$ 184,036$ Liabilities: Accounts payable 106 - 106 Deposits payable 9,341 174,589 183,930 Total liabilities 9,447$ 174,589$ 184,036$ CITY OF ANDOVER, MINNESOTA COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES Statement 33 FIDUCIARY FUNDS For The Year Ended December 31, 2011 BalanceBalance January 1,December 31, 2011AdditionsDeletions2011 General Escrow Fun d Assets: Cash and investments 9,013$ 41,912$ (41,478)$ 9,447$ Liabilities: Accounts payable 110 20,291 (20,295) 106 Deposits payable 8,903 21,621 (21,183) 9,341 Total liabilities 9,013$ 41,912$ (41,478)$ 9,447$ General Agency Fun d Assets: Cash and investments 286,191$ 583,122$ (694,723)$ 174,590$ Liabilities: Accounts payable 265 245,007 (245,272) - Due to other governments 46 - (46) - Deposits payable 285,880 338,115 (449,405) 174,590 Total liabilities 286,191$ 583,122$ (694,723)$ 174,590$ Total Fiduciary Funds Assets: Cash and investments 295,204$ 625,034$ (736,201)$ 184,037$ Liabilities: Accounts payable 375 265,298 (265,567) 106 Due to other governments 46 - (46) - Deposits payable 294,783 359,736 (470,588) 183,931 Total liabilities 295,204$ 625,034$ (736,201)$ 184,037$ - This page intentionally left blank - III.STATISTICAL SECTION This part of the City of Andover’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City’s overall financial health. Contents Page Financial Trends 126 These tables contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time. Revenue Capacity136 These tables contain information to help the reader assess the City’s most significant local revenue source, the property tax. Debt Capacity142 These tables present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future. 150 Demographic and Economic Information These tables offer demographic and economic indicators to help the reader understand the environment within which the City of Andover’s financial activities take place. Operating Information152 These tables contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs. CITY OF ANDOVER, MINNESOTA NET ASSETS BY COMPONENT Last Ten Fiscal Years (accrual basis of accounting) 2002200320042005 Governmental Activities Invested in capital assets, net of related debt64,911,479$ 61,941,541$ 52,230,713$ 67,652,236$ Restricted5,882,451 4,277,835 17,182,422 6,565,168 Unrestricted16,262,706 18,992,188 19,617,813 19,740,176 Total governmental activities net assets87,056,636 85,211,564 89,030,948 93,957,580 Business-Type Activities Invested in capital assets, net of related debt23,170,434 33,379,384 35,111,309 35,588,013 Restricted4,337,170 437,077 - - Unrestricted3,298,487 2,898,244 3,197,522 3,032,746 Total business-type activities net assets30,806,091 36,714,705 38,308,831 38,620,759 Primary Government Invested in capital assets, net of related debt88,081,913 95,320,925 87,342,022 103,240,249 Restricted10,219,621 4,714,912 17,182,422 6,565,168 Unrestricted19,561,193 21,890,432 22,815,335 22,772,922 Total primary government net assets117,862,727$ 121,926,269$ 127,339,779$ 132,578,339$ Note: The City began to report accrual information when it implemented GASB 34 in 2002. Table 1 200620072008200920102011 $ 64,114,553$ 77,285,905$ 79,644,769$ 83,394,872$ 87,206,607$ 90,859,970 14,838,788 7,763,716 8,345,185 8,252,691 6,364,714 3,107,253 19,808,248 21,294,876 19,904,063 19,442,008 21,071,212 23,353,009 98,761,589 106,344,497 107,894,017 111,089,571 114,642,533 117,320,232 38,580,63038,249,916 37,606,052 36,939,962 36,140,050 36,031,319 -- - - - - 3,659,8873,451,261 4,005,471 4,875,384 4,912,822 5,100,628 42,240,51741,701,177 41,611,523 41,815,346 41,052,872 41,131,947 115,866,535102,468,182 117,250,821 120,334,834 123,346,657 126,891,289 7,763,71614,838,788 8,345,185 8,252,691 6,364,714 3,107,253 24,954,76323,259,509 23,909,534 24,317,392 25,984,034 28,453,637 $ 148,585,014140,566,479$ 149,505,540$ 152,904,917$ 155,695,405$ 158,452,179$ CITY OF ANDOVER, MINNESOTA CHANGES IN NET ASSETS Last Ten Fiscal Years (accrual basis of accounting) 2002200320042005 Expenses Governmental activities: General government2,355,954$ 2,431,252$ 2,265,215$ 2,432,433$ Public safety2,474,284 2,766,694 3,138,069 3,353,798 Public works4,819,429 3,361,255 5,268,813 3,937,423 Sanitation264,671 160,548 26,843 - Parks and recreation856,806 802,131 2,028,177 1,575,582 Recycling116,344 115,016 113,234 118,599 Economic development720,460 470,172 941,624 459,635 Unallocated30,614 - - - Interest on long-term debt 1,667,943 1,255,888 1,708,303 1,797,469 Total governmental activities expenses 13,306,505 11,362,956 15,490,278 13,674,939 Business-type activities: Water 1,526,526 1,737,596 1,956,995 2,160,502 Sewer 1,206,865 1,344,857 1,351,506 1,555,010 Storm sewer 168,203 389,290 400,114 - Total business-type activities expenses 2,733,391 3,250,656 3,697,791 4,115,626 Total primary government expenses 16,039,896 14,613,612 19,188,069 17,790,565 Program Revenues Governmental activities: Charges for services: General government 536,000 593,568 814,518 709,538 Public safety 876,631 793,306 936,061 1,001,912 Public works 358,194 312,110 495,835 379,890 Parks and recreation -29,683 461,679 - Recycling 30,947 22,450 29,062 32,810 Economic development - - - - Operating grants and contributions 946,495 732,011 1,640,389 2,535,140 Capital grants and contributions 5,849,683 5,350,283 7,010,826 3,934,686 Total governmental activities program revenue8,597,950 7,803,728 10,956,374 9,055,655 Business-type activities: Charges for services: Water 1,128,182 1,399,798 1,723,068 1,510,119 Sewer 1,249,932 1,309,584 1,361,839 1,550,745 Storm sewer 118,638 242,090 248,753 - Operating grants and contributions - - - - Capital grants and contributions 373,550 214,920 823,797 - Total business-type activities program revenue2,751,664 2,828,020 3,541,917 4,133,414 Total primary government program revenues 11,349,614 10,631,748 14,498,291 13,189,069 Net (Expense)/Revenue Governmental activities (4,708,555) (3,559,228) (4,533,904) (4,619,284) Business-type activities 18,273 (422,636) (155,874) 17,788 Total primary government net expense$ (4,690,282)$ (3,981,864)$ (4,689,778)$ (4,601,496) Table 2 200620072008200920102011 $ 2,509,0112,637,584$ 2,505,105$ 2,413,916$ 2,398,007$ 2,406,750$ 3,851,0863,443,285 4,035,884 4,237,401 4,157,050 4,214,316 3,783,5093,031,459 5,144,197 3,776,367 3,445,403 4,029,164 - - - - - - 2,442,305 2,954,753 2,963,218 2,880,595 3,447,730 2,945,742 91,378 94,929 85,397 86,949 108,785 109,293 626,103 2,265,605 540,285 481,632 654,961 777,298 - - - - - - 1,668,444 2,303,567 2,219,130 2,146,960 1,936,731 1,796,782 13,940,558 17,762,460 17,493,216 16,023,820 16,148,667 16,279,345 2,232,144 2,587,847 2,563,781 2,594,713 2,585,469 2,655,926 1,585,548 1,631,224 1,794,891 1,831,505 1,915,072 1,914,113 408,003 537,151 521,975 536,619 532,168 614,958 4,225,695 4,756,222 4,880,647 4,962,837 5,032,709 5,184,997 18,166,25322,518,682 22,373,863 20,986,657 21,181,376 21,464,342 471,573 785,600 647,081 483,639 454,419 532,764 804,447 662,299 721,289 412,113 479,516 540,089 325,672 408,656 427,043 316,451 337,360 309,066 749,407 859,531 1,049,032 1,495,779 1,432,672 1,498,847 35,379 33,158 35,897 29,479 40,504 48,339 218,605 182,535 199,840 185,539 211,121 235,134 959,286 1,129,099 917,618 966,635 1,214,066 977,553 4,920,694 8,794,164 1,069,6071,631,9291,461,834 1,356,091 8,485,063 12,855,042 5,067,407 5,521,564 5,631,492 5,497,883 1,768,388 2,025,452 1,987,432 2,127,676 2,077,305 2,119,954 1,691,728 1,771,670 1,869,327 1,967,997 1,964,117 1,990,218 287,397 288,372 297,125 325,392 338,823 358,708 9,380 - - - - - 2,761,282 158,113 142,133 793,589- - 6,508,795 4,243,607 4,296,017 5,214,654 4,389,625 4,468,880 14,993,858 17,098,649 9,363,424 10,736,218 10,021,117 9,966,763 (5,455,495) (4,907,418) (12,425,809) (10,502,256) (10,517,175) (10,781,462) 2,283,100 (512,615) (584,630) 251,817 (643,084) (716,117) $ (3,172,395)$ (5,420,033)$ (13,010,439)$ (10,250,439)$ (11,160,259)$ (11,497,579) CITY OF ANDOVER, MINNESOTA CHANGES IN NET ASSETS Last Ten Fiscal Years (accrual basis of accounting) 2002200320042005 General Revenues and Other Changes in Net Assets Governmental activities: Taxes: General property taxes5,076,374$ 5,682,498$ 6,260,772$ 7,066,852$ Tax increment collections842,607 1,140,040 1,186,396 1,285,195 Unrestricted grants and contributions763,049 158,694 141,870 86,906 Unrestricted investment earnings821,002 568,042 681,563 690,648 Gain on sale of capital assets1,316,054 591,063 1,817,938 251,504 Transfers770,062 (6,426,181) (1,735,251) (438,426) Total governmental activities9,589,148 1,714,156 8,353,288 8,942,679 Business-type activities: Unrestricted investment earnings458,311 (94,931) 7,895 47,620 6,854 Gain on sale of capital assets - - - Transfers(770,062) 6,426,181 1,735,251 438,426 Total business-type activities(311,751) 6,331,250 1,750,000 486,046 Total primary government9,277,397 8,045,406 10,103,288 9,428,725 Change in Net Assets Governmental activities4,880,593 (1,845,072) 3,819,384 4,323,395 Business-type activities(293,478) 5,908,614 1,594,126 503,834 Total primary government4,587,115$ 4,063,542$ 5,413,510$ 4,827,229$ Note: The City began to report accrual information when it implemented GASB 34 in 2002. Table 2 cont 200620072008200920102011 $ 8,897,7558,084,559$ 9,752,701$ 10,175,519$ 10,336,536$ 10,292,674$ 1,661,2041,562,131 1,783,270 1,930,669 2,074,589 2,005,056 486,62677,642 274,402 131,084 84,875 86,802 1,967,5831,019,304 1,514,012 1,032,507 1,114,451 1,399,987 219,910 191,735 234,070 6,144 22,500 91,693 (704,042) (714,577) 416,874 421,887 437,186 (417,051) 10,259,504 12,490,326 13,975,329 13,697,810 14,070,137 13,459,161 87,376 337,378 372,510 373,893 317,796 370,641 5,900 7,500 - - - - 704,042 714,577 (416,874) (421,887) (437,186) 417,051 797,318 1,051,955 (44,364) (47,994) (119,390) 795,192 11,056,822 13,542,281 13,930,965 13,649,816 13,950,747 14,254,353 4,804,009 7,582,908 1,549,520 3,195,554 3,552,962 2,677,699 3,080,418 539,340 (628,994) 203,823 (762,474) 79,075 $7,884,427$ 8,122,248$ 920,526$ 3,399,377$ 2,790,488$ 2,756,774 CITY OF ANDOVER, MINNESOTA FUND BALANCES - GOVERNMENTAL FUNDS Last Ten Fiscal Years (modified accrual basis of accounting) 2002200320042005 General Fund Reserved72,327$ 87,766$ 85,586$ 126,320$ Unreserved2,742,645 2,505,261 3,216,979 3,076,157 Nonspendable- - - - Unassigned- - - - Total general fund2,814,972 2,593,027 3,302,565 3,202,477 All Other Governmental Funds Reserved2,564,689 2,176,704 13,263,819 3,267,027 Unreserved reported in: Special revenue funds- 1,225,626 1,951,529 1,264,369 Debt service funds1,082,162 (9,706) - - Capital project funds10,769,854 13,690,391 14,982,950 14,526,468 Nonspendable- - - - Restricted- - - - Committed- - - - Assigned- - - - Unassigned- - - - Total all other governmental funds 14,416,705 17,083,015 30,198,298 19,057,864 Total governmental funds$ 17,231,677$ 19,676,042$ 33,500,863$ 22,260,341 (1) Note : In 2006, the EDA issued $10,000,000 of Public Facility Lease Revenue Refunding Bonds to refund a portion of the 2004 EDA's $19,580,000 Public Facility Lease Revenue Bonds, Series 2004. (2) In 2007, the EDA issued $6,865,000 of Public Facility Lease Revenue Refunding Bonds to refund a portion of the 2004 EDA's $19,580,000 Public Facility Lease Revenue Bonds, Series 2004. Fund Balance Reporting In 2011, the City adopted the provisions of Governmental Accounting Standards Board Statement No. 54, and Governmental Fund Type Definitions. Table 3 200620072008200920102011 $ 144,496$ 208,216$ 193,805$ 207,515$ 206,666 $ - 3,248,317 3,682,244 3,981,230 4,120,897 4,904,239 - - - 222,641 - - - - - 5,665,496 - - - 3,392,813 3,890,460 4,175,035 4,328,412 5,110,905 5,888,137 (1)(2) 12,022,454 22,106,660 20,756,19520,754,303 19,258,490 - 1,246,388 1,204,453 941,259 1,233,202 1,135,919 - - - - - - - 14,379,760 11,955,138 13,416,129 14,170,266 14,714,140 - - - 16,074 - - - - - - - - 19,741,214 - - 650,766 - - - - - - - - 14,451,306 - - (517,251) - - - 27,648,602 35,266,251 35,111,691 36,159,663 35,108,549 34,342,109 $ 31,041,415$ 39,156,711$ 39,286,726$ 40,488,075$ 40,219,454$ 40,230,246 CITY OF ANDOVER, MINNESOTA CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS Last Ten Fiscal Years (modified accrual basis of accounting) 2002200320042005 Revenues General property taxes5,060,053$ 5,671,277$ 6,272,762$ 7,033,613$ Tax increment collections878,567 1,136,574 1,193,467 1,285,639 Licenses and permits588,965 551,385 674,008 724,436 Intergovernmental1,764,078 890,705 1,755,041 2,663,683 Special assessments4,183,796 5,121,636 4,243,328 2,045,969 Charges for services870,941 863,794 1,389,245 1,692,316 Fines73,475 68,686 79,450 90,530 Investment income812,896 563,824 678,308 684,173 Miscellaneous: Park dedication fees280,312 357,483 842,042 286,316 Connection charges1,281,670 1,044,752 1,720,520 1,311,426 Rent - - - - Other 338,905 392,752 658,037 578,389 Total revenues 16,133,658 16,662,868 19,506,208 18,396,490 Expenditures General government 2,173,992 2,181,354 2,171,248 2,349,965 Public safety 2,352,909 2,631,991 2,915,958 3,093,298 Public works 4,603,715 3,136,081 4,944,489 3,650,351 Sanitation 110,213 80,901 26,732 - Parks and recreation 689,161 613,078 1,315,100 1,309,987 Recycling 116,005 114,784 114,052 116,506 Economic development720,960 471,172 918,451 426,708 Unallocated 30,614 25,865 21,992 9,798 Capital outlay 1,965,273 2,610,333 1,420,387 1,616,709 Debt service: Principal 7,070,000 6,124,000 6,839,000 8,487,000 Interest 1,768,509 1,276,057 1,063,363 2,042,003 Other 28,265 31,436 94,869 13,226 Construction/acquisition costs 758,953 3,513,115 12,154,653 11,146,387 Total expenditures 22,388,569 22,810,167 34,000,294 34,261,938 Revenues over (under) expenditures(6,254,911)(6,147,299) (14,494,086) (15,865,448) Other Financing Sources (Uses) Transfers in 754,062 1,328,909 1,076,000 224,000 Transfers out (485,170) (739,438) - - Bonds issued 6,904,000 21,280,000 4,210,000 - Refunding bonds issued 6,450,000 - - - Payment to refunded bonds escrow agent (2,145,864) - - - Bond premium 5,188 23,438 - - Bond discount (3,169) (497,883) (28,961) - Proceeds from the sale of capital assets 2,139,961 841,906 2,872,654 219,887 Total other financing sources (uses) 2,894,023 8,591,664 28,318,907 4,624,926 Net increase (decrease) in fund balances$ (3,360,888)$ 2,444,365$ 13,824,821$ (11,240,522) Debt service as a percentage of noncapital expenditures44.95%44.35%38.69%48.97% Table 4 200620072008200920102011 $ 8,057,592$8,833,249$10,168,143$10,267,085$10,279,967 $ 9,695,103 1,546,394 1,951,343 2,015,123 1,976,800 1,659,222 1,762,119 598,094 291,903 329,901 387,206 475,893 525,339 2,661,726 1,654,614 1,989,420 1,876,685 1,644,914 1,175,205 1,289,590 1,421,591 1,725,695 891,942 3,342,039 1,638,006 1,770,156 1,579,659 1,604,681 1,732,791 2,035,735 1,724,052 91,490 110,779 104,780 99,777 101,445 104,930 1,014,801 1,029,683 1,107,335 1,386,698 1,962,379 1,508,265 626,567 41,216 32,649 51,706 113,013 133,585 372,133 20,119 48,086 27,165 829,624 254,903 637,305 638,037 641,859 - - - 395,789 381,548 396,186 332,992 621,798 800,857 18,424,33221,619,311 19,287,903 20,258,978 19,685,588 19,322,364 2,343,332 2,242,662 2,255,793 2,298,571 2,399,297 2,366,574 3,268,236 4,015,410 3,920,073 3,965,541 3,580,240 3,796,965 2,817,475 3,545,132 3,204,444 3,788,636 3,491,353 4,843,288 - - - - - - 1,599,885 1,891,1252,433,4951,926,220 1,825,706 1,953,822 90,590 85,527 109,034 109,911 94,669 86,631 626,103 477,648 650,977 966,687 2,265,605 538,293 8,454 19,540 24,953 30,631 6,915 17,999 987,075 1,519,944 1,324,881 985,399 2,803,485 1,460,662 5,254,000 3,865,000 5,779,000 4,100,000 3,275,000 3,460,000 1,683,599 2,178,233 2,030,267 1,855,538 2,089,857 2,253,223 253,134 39,265 29,939 10,430 167,187 15,645 4,579,910 101,153 1,044,581 360,742 - - 23,511,79322,360,056 19,879,486 21,864,009 21,082,145 20,793,102 (5,087,461) (740,745) (1,470,738) (591,583) (1,605,031) (1,396,557) 522,000 587,530627,530 627,530 578,925 580,343 (167,424) (57,671) (163,469) (165,643) (89,191) - 2,910,000 385,000 1,660,000 265,000 760,000 630,000 10,000,000 955,000 1,480,000 6,865,000 - - (2,416,834)- - - - - 18,781 31,688 - 3,401 - - - - - - - - 603,959 12,264 43,217 514,819 706,386 553,879 13,868,535 1,792,932 1,336,410 1,407,349 8,856,041 1,600,753 $ 8,781,074$8,115,296$ 130,015$ 1,201,349$ (268,621)$ 10,792 38.66%27.95%29.55%32.92%38.21%31.26% CITY OF ANDOVER, MINNESOTA ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTYTable 5 Last Ten Fiscal Years Real PropertyPersonal PropertyTotalTotalNet Tax Capacity TaxableNet TaxTaxableNet TaxTaxableNet TaxDirectas a Percentage YearMarket ValueCapacityMarket ValueCapacityMarket ValueCapacityTax Rateof Market Value 20021,539,835,500$ 15,336,075$ 17,999,800$ 359,540$ 1,557,835,300$ 15,695,615$ 33.511%1.01% 20031,699,227,100 17,549,064 20,202,300 1,719,429,400 17,951,90433.376%1.04% 402,840 20041,945,523,200 20,142,088 20,761,100 1,966,284,300 20,556,10431.592%1.05% 414,016 20052,222,567,900 23,027,376 21,718,900 2,244,286,800 23,461,04531.415%1.05% 433,669 20062,521,587,700 26,204,279 22,003,500 2,543,591,200 26,643,63531.894%1.05% 439,356 20072,778,464,100 28,897,916 21,998,500 2,800,462,600 29,337,16231.327%1.05% 439,246 20082,948,801,500 30,749,076 20,837,800 2,969,639,300 31,165,07631.603%1.05% 416,000 20092,961,410,400 31,023,349 21,185,200 2,982,595,600 31,446,28032.484%1.05% 422,931 20102,685,802,600 28,233,178 24,712,000 2,710,514,600 28,726,61936.814%1.06% 493,441 20112,444,519,600 25,667,544 25,425,400 2,469,945,000 26,174,35038.731%1.06% 506,806 Source : Anoka County Property Tax Division CITY OF ANDOVER, MINNESOTA PROPERTY TAX RATES - PER $1,000 OF ASSESSED TAX CAPACITY VALUE Table 6 DIRECT AND OVERLAPPING GOVERNMENTS Years 2003 through 2012 Direct City GeneralDebtLower TaxesOperServiceRumOverlapping Governments PayableLevyLevyWatershedTotalSchoolCountyOtherTotalTotal 200328.899%4.138%0.339%33.376%27.802%37.714%3.755%69.271%102.647% 200426.651%4.547%0.394%31.592%21.218%35.340%3.482%60.040%91.632% 200524.182%6.895%0.338%31.415%21.492%33.080%4.021%58.593%90.008% 200624.790%6.757%0.347%31.894%20.046%32.096%3.755%55.897%87.791% 200724.948%6.055%0.324%31.327%19.337%30.675%3.671%53.683%85.010% 200824.962%6.333%0.308%31.603%16.962%31.041%4.604%52.607%84.210% 200925.755%6.426%0.303%32.484%18.247%32.051%3.251%53.549%86.033% 201030.507%5.977%0.330%36.814%20.236%35.273%3.436%58.945%95.759% 201131.914%6.461%0.356%38.731%24.023%39.884%4.872%68.779%107.510% 201235.138%6.952%0.449%42.539%21.447%41.056%3.626%66.129%108.668% Source : Anoka County Property Tax Division CITY OF ANDOVER, MINNESOTA PROPERTY TAX LEVIES AND COLLECTIONSTable 7 Last Six Fiscal Years Collected Within the Fiscal Year of Levy TotalMarket ValueCollections InTotal Collections to Date TaxTaxTotalPercentageSubsequentPercentageHomestead YearLevyLevyCollectedof LevyYearsAmountof LevyCredit 20068,550,919$ 7,977,278$ 1,700$ *7,978,978$ 93.31%106,700$ 8,085,678$ 94.56% 20079,316,427 8,738,606 410,519 9,149,125 98.20%143,847 9,292,972 99.75% 200810,153,718 9,554,131 198,214 *9,752,345 96.05%168,706 9,921,051 97.71% 200910,593,520 9,992,240 54,629 *10,046,869 94.84%124,901 10,171,770 96.02% 201010,856,299 10,125,752 3,905 *10,129,657 93.31%110,306 10,239,963 94.32% 201110,856,299 10,119,681 853 *10,120,534 93.22% Not Available * Included in the total tax levy is approximately $400,000 of market value homestead credit (MVHC) that the City will not be receiving. Due to State legislative actions to deal with the State budget deficit, the MVHC program was significantly reduced for the City. Information for years prior to 2006 is not available. CITY OF ANDOVER, MINNESOTA PRINCIPAL TAXPAYERSTable 8 Current Year and Ten Years Ago 20112001 NetPercentage ofNetPercentage of TaxTotal CityTaxTotal City TaxpayersCapacityRankTax CapacityCapacityRankTax Capacity Connexus Energy$217,17010.83%$324,7691.71% 1 Minnegasco, Inc.201,86020.77%143,0850.75% 3 Target Corporation191,46030.73% - Andover Limited Partnership159,02840.61%257,6721.36% 2 Great River Energy153,13650.59% - Presbyterian Homes of Andover151,80960.58% - Andover Station LLC104,25070.40% - Fairbanks Properties LLC79,26080.30% - Columbia Park Properties73,60690.28%66,3640.35% 6 Maxwell Kearns Inc.68,538100.26% - 116 LLC-131,7940.69% 4 Individual - Commercial/Industrial-87,6730.46% 5 Northern States Power-51,4730.27% 7 Health Partners-44,3220.23% 8 MN Interstate Pipeline-40,0520.21% 9 Minnesota Pipeline Company-38,9980.21% 10 Total$1,400,1175.35%$1,186,2026.25% Net Tax Capacity$26,174,350$18,969,459 Source: Anoka County Property Tax Division CITY OF ANDOVER, MINNESOTA ESTIMATED MARKET VALUES AND NEW CONSTRUCTION Table 9 Last Ten Fiscal Years Estimated Market ValuesNew Construction Commercial / IndustrialResidential Commercial / YeaIndustrial (1)ResidentiaTotaPermitsValuPermitsValu rllee 2002107,671,600$ 1,450,163,700$ 1,557,835,300$ 19 10,616,851$31,848,000 $ 2 18 2003127,728,400 1,778,643,800 1,906,372,2004,764,04628,973,300 13 1 82 2004144,629,100 1,936,079,400 2,080,708,50036,224,546 16 19,926,817 2 51 2005168,684,200 2,174,640,000 2,343,324,2006,571,67134,309,393 20 2 26 2006191,931,800 2,433,776,200 2,625,708,00025,236,120 8 1,791,896 1 53 2007211,760,900 2,663,389,900 2,875,150,800 9 2,403,831 9 118,347,873 2008233,801,700 2,813,037,200 3,046,838,900 11 16,878,603 4 911,116,400 2009248,129,500 2,807,144,500 3,055,274,000767,4309,246,347 11 4 7 2010229,977,800 2,526,288,900 2,756,266,7001,247,106 11 7 114,700,800 2011199,728,200 2,305,897,900 2,505,626,100 24 11,461,453 5 811,803,000 Note: (1) Also includes agricultural, public utility, railroad operating property, and personal property. CITY OF ANDOVER, MINNESOTA SPECIAL ASSESSMENT LEVIES AND COLLECTIONSTable 10 Last Ten Fiscal Years TotalDelinquent CollectionsAssessments CurrentCurrentPercent ofDelinquentTotalas a Percent ofOutstandingas a Percent of AssessmentsAssessmentsAssessmentsAssessmentAssessmentCurrentDelinquentCurrent YearDue (1)CollectedCollectedCollectionsCollectionsAssessments DueAssessmentsAssessments Due 93.38%$ 5,69495.11%$ 37,40411.37% 2002$ 328,831$ 3 07,051$ 3 12,745 98.03% 5,91799.14% 49,3299.25% 2003 533,340 5 22,851 5 28,768 98.39% 7,921102.51% 15,1577.88% 2004 192,373 1 89,279 1 97,200 98.34% 4,002100.58% 22,21712.45% 2005 178,434 1 75,471 1 79,473 85.41% 4,79087.53% 51,72122.95% 2006 225,365 1 92,477 1 97,267 87.14% 12,46094.75% 76,42046.65% 2007 163,817 1 42,750 1 55,210 90.20% 1,47990.60% 174,81047.74% 2008 366,203 3 30,304 3 31,783 104.16%36,693 115.65% 202,99963.55% 2009 319,448 3 32,739 3 69,432 96.54% 61,247115.36% 218,86067.27% 2010 325,361 3 14,097 3 75,344 87.37% 5,11288.84% 267,01676.70% 2011 348,129 3 04,164 3 09,276 Note : (1) Only includes assessments certified to Anoka County. CITY OF ANDOVER, MINNESOTA RATIO OF NET BONDED DEBTTable 11 TO ASSESSED VALUE AND NET BONDED DEBT PER CAPITA Last Ten Fiscal Years General Bonded Debt Outstanding (2) GrossLess DebtNetPercentageNet Bonded FiscalEstimatedBondedServiceBondedof EstimatedDebt YearPopulation (1)Market ValueDebtFundDebtMarket ValuePer Capita 200228,664 1,557,835,300$ 3,680,000$ (112,848)$ 3,567,152 $ 0.23%$ 1 24.45 200328,939 1,906,372,200 3,710,000 (88,875) 3,621,125 0.19% 1 25.13 200429,262 2,080,708,500 24,236,000 (815,322) 23,420,678 *1.13% 8 00.38 200530,080 2,343,324,500 24,389,000 (1,041,140) 23,347,860 1.00% 776.19 200630,222 2,625,708,000 33,850,000 (10,739,510) 23,110,490 0.88% 764.69 200730,263 2,875,150,800 40,880,000 (17,822,418) 23,057,582 0.80% 761.91 200831,023 3,046,838,900 40,565,000 (17,939,959) 22,625,041 0.74% 729.30 200931,298 3,055,274,000 39,690,000 (17,973,588) 21,716,412 0.71% 693.86 201030,598 2,756,266,700 40,026,000 (17,768,743) 22,257,257 0.81% 727.41 201130,850 2,505,626,100 39,096,000 (17,779,964) 21,316,036 0.85% 690.96 Notes: (1) Source: Metropolitan Council (2) Only includes debt supported by tax levy. * 2004 is the start of the 2004 EDA Public Facility Revenue Bonds of which approximately half of the annual debt service payments will come from a lease with the YMCA. CITY OF ANDOVER, MINNESOTA COMPUTATION OF DIRECT AND OVERLAPPING DEBT Table 12 December 31, 2011 Gross General ObligationPercentageNet Amount Bonded DebtApplicableApplicable Outstandingto Cityto City Direct: City of Andover39,096,000$ (1)100.0000%39,096,000$ Overlapping: Anoka County 145,945,000(2)8.7473%12,766,238 ISD No. 11 Anoka-Hennepin 102,510,572(2)12.6498%12,967,400 ISD No. 15 St. Francis 36,810,000(2)6.4470%2,373,146 Metropolitan Council 168,665,000(2)0.8474%1,429,220 Total Overlapping Debt 29,536,004 Total Overlapping and Direct Debt$ 68,632,004 Notes: (1) Only includes debt supported by tax levy. (2) Information obtained from Anoka County. CITY OF ANDOVER, MINNESOTA COMPUTATION OF LEGAL DEBT MARGIN Last Ten Fiscal Years 2002200320042005 Estimated Taxable Market Value1,497,078,400$ 1,719,429,400$ 2,080,708,500$ 2,343,324,200$ Debt limitation: Debt limit percent2%2%2%2% Debt limit in dollars29,941,568 34,388,588 41,614,170 46,866,484 Debt applicable to limit: Total bonded debt 37,625,000 38,405,000 56,941,000 52,344,000 Less: Nonapplicable debt G.O. water revenue bonds (9,780,000) (9,780,000) (9,470,000) (9,150,000) Special assessment bonds (2,795,000) (1,255,000) - (3,560,000) Tax increment bonds (10,450,000) (9,815,000) (13,215,000) (7,065,000) Permanent improvement revolving bonds (8,325,000) (11,375,000) (7,680,000) (5,975,000) State aid bonds (2,595,000) (2,470,000) (2,340,000) (2,205,000) Less: Cash and investments in (112,848) (88,875) (815,322) (1,041,140) Total debt applicable to limitation 3,567,152 3,621,125 23,420,678 23,347,860 Legal debt margin$ 26,374,416$ 30,767,463$ 18,193,492$ 23,518,624 Total debt applicable to the limit as a percentage of debt limit11.91%10.53%56.28%49.82% Table 13 200620072008200920102011 $ 2,800,462,6002,625,708,000$ 2,969,639,300$ 2,982,595,600$ 2,710,514,800$ 2,469,945,000$ 2%2%3%3%3%3% 56,009,25252,514,160 89,089,179 89,477,868 81,315,444 74,098,350 70,240,00059,665,000 67,050,000 65,175,000 59,671,000 55,361,000 (15,040,000)(8,815,000) (14,680,000) (15,330,000) (14,875,000) (14,400,000) (3,560,000)(3,560,000) (3,015,000) (2,450,000) (600,000) - (4,010,000)(4,715,000) (3,275,000) (2,515,000) (1,735,000) - (4,835,000)(6,660,000) (3,755,000) (2,635,000) (1,480,000) (1,125,000) (1,915,000)(2,065,000) (1,760,000) (2,555,000) (955,000) (740,000) (17,822,418)(10,739,510) (17,939,959) (17,973,588) (17,768,743) (17,779,964) 23,057,58223,110,490 22,625,041 21,716,412 22,257,257 21,316,036 $ 32,951,67029,403,670$ 66,464,138$ 67,761,456$ 59,058,187$ 52,782,314$ 44.01%41.17%25.40%24.27%27.37%28.77% CITY OF ANDOVER, MINNESOTA PLEDGED-REVENUE COVERAGETable 14 Last Ten Fiscal Years Water Revenue Bonds Water Enterprise Fund FiscalOperatingLess: OperatingTransfersNet AvailableDebt Service YearRevenuesExpenses (1)In (2)RevenuePrincipalInterestCoverage 2003$ 1,904,968$ 1,339,225$ 505,170$ 565,743$ -$ 216,501 2.61 2004 2,462,506 1,492,307 739,438 970,199 310,000 429,438 1.31 2005 1,510,119 1,111,874 398,245 320,000 421,393 - 0.54 2006 1,935,812 1,139,500 167,424 796,312 335,000 411,720 1.07 2007 2,025,452 1,264,370 57,671 818,753 345,000 395,775 1.11 2008 1,987,432 1,218,444 163,469 932,457 360,000 382,753 1.26 2009 2,127,676 1,264,398 165,643 1,028,921 375,000 393,828 1.34 2010 2,077,305 1,249,420 89,191 917,076 455,000 384,713 1.09 2011 2,119,954 1,318,848 801,106 475,000 366,065 - 0.95 2004 EDA Public Facility Lease Revenue Bonds (3) Community Center Special Revenue FundDebt Service FiscalOperatingLess: OperatingNet AvailableGeneral PropertyDebt Service YearRevenueExpensesRevenueTax RevenuePrincipalInterestCoverage 2005522,839$ 589,900$ (67,061)$ 748,376$ -$ 1,194,167 $ ( 0.06) 2006741,241 748,146 (6,905) 800,349 185,000 964,102 ( 0.01) 2007876,136 799,909 76,227 844,123 185,000 959,731 0.80 2008998,287 900,228 98,059 890,709 190,000 954,381 0.86 20091,422,614 903,446 519,168 940,640 390,000 944,806 1.09 20101,351,069 882,364 468,705 885,349 405,000 930,684 1.01 20111,414,617 991,098 423,519 908,894 415,000 914,891 1.00 Special Assessment and Permanent Improvement Revolving Bonds FiscalSpecial AssessmentDebt Service YearRevenuePrincipalInterestCoverage 20024,183,796$ 3,697,500$ 830,264$ 0.92 20035,121,636 3,070,000 426,375 1.46 20044,243,328 2,210,000 283,657 1.70 20052,045,969 1,705,000 192,153 1.08 20061,289,590 1,765,000 289,174 0.63 20072,966,380 1,825,000 314,152 1.39 20081,184,928 1,625,000 243,340 0.63 2009993,703 1,685,000 198,232 0.53 20101,210,641 3,005,000 110,822 0.39 2011552,356 955,000 36,250 0.56 Tax Increment Financing Bonds FiscalTax IncrementDebt Service YearRevenuePrincipal (4)InterestCoverage 2002732,555$ 590,000$ 598,203$ 0.62 2003991,980 2,165,000 565,473 0.36 20041,072,852 675,000 450,139 0.95 20051,160,190 1,975,000 419,220 0.48 20061,414,254 2,350,000 193,045 0.56 20071,474,219 705,000 120,545 1.79 20081,614,651 735,000 105,033 1.92 20091,790,279 760,000 87,620 2.11 20101,849,644 780,000 68,313 2.18 20111,808,563 1,735,000 26,763 1.03 Notes:Details regarding the City's outstanding debt can be found in the notes to the financial statements. (1) Operating expenses includes transfers out because the administrative allocation and replacement reserve transfer is built into the user fees. Operating expenses does not include interest and depreciation. (2) The transfer in is included because a portion of the trunk connection charge associated with adding additional users to the water system is designated to compensate prior years capital investment in water utility infrastructure and the treatment plant. (3) Half of the facility financed by these bonds is leased to the Greater Minneapolis YMCA, their lease payments started in 2008. Future YMCA lease payments will significantly reduce the City's obligation on debt service payments. (4) Net of crossover refundings. - This page intentionally left blank - CITY OF ANDOVER, MINNESOTA OUTSTANDING DEBT BY TYPE Last Ten Fiscal Years 2002200320042005 City of Andover's Outstanding Debt Governmental activities Revenue bonds2,115,000$ 2,045,000$ 19,580,000$ 19,580,000$ Special assessment bonds2,795,000 1,255,000 - 3,560,000 Tax increment bonds10,450,000 9,815,000 13,215,000 7,065,000 Certificates of indebtedness1,565,000 1,665,000 766,000 699,000 Capital improvement bonds- 3,890,000 4,110,000 Permanent improvement revolving bonds8,325,000 11,375,000 7,680,000 5,975,000 State aid bonds2,595,000 2,470,000 2,340,000 2,205,000 Referendum bonds- - - - Compensated absences314,213 347,534 359,355 410,402 Total governmental activities28,159,213 28,972,534 47,830,355 43,604,402 Business-type activities G.O. revenue bonds9,780,000 9,780,000 9,470,000 9,150,000 Compensated absences48,630 58,967 65,234 66,816 Total business-type activities 9,828,630 9,838,967 9,535,234 9,216,816 Total outstanding debt$ 37,987,843$ 38,811,501$ 57,365,589$52,821,218 Total outstanding debt as a percentage of personal income5.31%5.34%7.74%6.41% Total outstanding debt per capita$ 1,325$ 1,341$ 1,960$ 1,756 Table 15 200620072008200920102011 $ 36,075,00029,395,000$ 35,885,000$ 35,495,000$ 35,090,000$ 34,675,000$ 3,560,000 3,560,000 3,015,000 2,450,000 600,000 - 4,715,000 4,010,000 3,275,000 2,515,000 1,735,000 - 580,000 1,280,000 1,525,000 1,420,000 781,000 561,000 3,875,000 3,525,000 3,155,000 2,775,000 2,495,000 2,200,000 6,660,000 4,835,000 3,755,000 2,635,000 1,480,000 1,125,000 2,065,000 1,915,000 1,760,000 2,555,000 955,000 740,000 - - - 1,660,000 1,660,000 - 459,299 509,851 504,893 541,606 571,898 584,313 51,309,299 55,709,851 52,874,893 50,386,606 45,367,898 41,545,313 8,815,000 15,040,000 14,680,000 15,330,000 14,875,000 14,400,000 74,675 90,228 107,333 120,546 132,544 139,353 8,889,675 15,130,228 14,787,333 15,450,546 15,007,544 14,539,353 $ 60,198,974$ 70,840,079$67,662,226$ 65,837,152$ 60,375,442$ 56,084,666 7.04%8.05%7.69%7.18%6.73%6.25% $1,987 $ 2,341$ 2,181$ 2,104$ 1,973$ 1,818 CITY OF ANDOVER, MINNESOT A DEMOGRAPHIC AND ECONOMIC STATISTICTable 16 S Last Ten Years City of AndoverAnoka County PersonalPersonalPer CapitaUnemploymen t YeaPopulationIncome (2)Population (3)Income (2)Income (3)Percentage r $ 714,994,816$7,650,898,5124.5% 2002 2 8,664 306,723$ 2 4,944 726,687,2297,808,491,4494.8% 2003 2 8,939 310,959 2 5,111 741,235,7228,024,303,5184.5% 2004 2 9,262 316,778 2 5,331 824,041,6008,788,398,1853.8% 2005 3 0,080 320,803 2 7,395 852,774,1749,227,100,0854.0% 2006 3 0,222 327,005 2 8,217 879,549,0039,482,028,2654.6% 2007 3 0,263 326,252 2 9,064 880,029,4419,278,562,0305.5% 2008 3 1,023 327,090 2 8,367 917,375,6789,719,000,0028.5% 2009 3 1,298 331,582 2 9,311 897,408,7429,834,248,3327.1% 2010 3 0,598 335,308 2 9,329 897,087,1509,620,612,6765.8% (1) 2011 3 0,850 330,844 2 9,079 Notes: (1) Estimates from Metropolitan Council (2) The personal income is calculated by taking the per capita income of Anoka County and multiplying it y the population for both the City and County. b (3) Information from U.S. Census Bureau CITY OF ANDOVER, MINNESOTA PRINCIPAL EMPLOYERSTable 17 Current Year and Ten Years Ago 20112001 PercentagePercentage of Total Cityof Total City TaxpayerEmployeesRankEmploymentEmployeesRankEmployment 37.0%23.5% Anoka Hennepin I.S.D. No. 11906 (1) 1 3 08 1 Fairview Andover Clinic 30012.2% 2 - Anoka County Sheriff's Office 25010.2% 3 - Kottkes' Bus Service, Inc. 2259.2%13.0% 4 1 70 3 Bunker Hills Regional Park/Activity Center 1807.3%3.1% 5 4 0 1 0 Target 1706.9% 6 - Meadow Creek Christian School 1275.2%6.2% 7 8 1 5 Anoka County Highway Department 1034.2%7.6% 8 1 00 4 Andover County Market 1004.1% 9 - Presbyterian Homes 903.7% 1 0 - Festival Foods13.8% - 1 80 2 Ed Fields & Sons, Inc.7.6% - 1 00 4 McDonald's6.1% - 8 0 6 City of Andover5.0% - 6 6 7 Ace Solid Waste, Inc.3.8% - 5 0 8 Riccar Heating & Air Conditioning3.8% - 5 0 8 Larson Plumbing & Heathing3.3% - 4 3 9 POV's Sports Bar & Grill3.1% - 4 0 1 0 Total 2,451100.0%100.0% 1 ,308 Source: Minnesota Department of Employment and Economic Development (1) Number of district employees that work in school buildings located within the City. CITY OF ANDOVER, MINNESOTA FULL TIME EQUIVALENT EMPLOYEESTable 18 CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM Last Ten Fiscal Years Function/Program2002200320042005200620072008200920102011 Governmental: Administration 1 .40 1 .40 1 .34 1 .47 1 .30 1 .45 1 .15 1 .15 1 .15 1 .15 Human resources 0 .01 0 .06 0 .06 0 .06 0 .07 0 .02 0 .01 0 .02 0 .02 0 .02 City clerk 1 .91 1 .91 1 .84 1 .84 1 .84 1 .91 1 .43 1 .29 1 .34 1 .34 Elections 0 .03 0 .03 0 .10 0 .10 0 .10 0 .10 0 .08 0 .10 0 .10 0 .10 Financial administration 3 .95 3 .80 3 .72 2 .99 3 .95 2 .35 1 .97 1 .85 1 .85 1 .85 Information systems 1 .01 1 .01 1 .01 0 .91 0 .91 0 .91 0 .91 0 .91 0 .91 0 .91 Planning and zoning 3 .57 3 .57 3 .57 4 .57 4 .75 4 .75 4 .25 3 .70 3 .70 3 .70 Engineering 5 .05 4 .69 4 .57 4 .67 4 .57 4 .78 4 .41 4 .28 4 .33 4 .33 Facility Management - - - - - - - 0.33 0 .20 0 .20 EDA general 1 .38 1 .38 1 .38 1 .21 0 .70 0 .70 0 .85 0 .90 0 .85 0 .85 LRRWMO 0 .31 0 .31 0 .31 0 .21 0 .21 0 .21 0 .21 0 .20 0 .20 0 .20 Risk management 0.13 0 .12 0 .13 0.13 0 .18 0 .10 0 .10 0 .10 0 .10 0 .10 Public Safety: Fire 3 .16 3 .16 3 .31 3 .25 3 .10 3 .10 3 .10 3 .10 3 .10 3 .10 Protective inspection 6 .43 6 .56 5 .91 5 .58 6 .03 6 .08 5 .78 3 .93 3 .93 3 .93 Civil defense 0 .05 0 .05 0 .05 0 .05 0 .05 0 .05 0 .05 0 .05 0 .05 0 .05 Public Works: Streets and highways 5 .42 4 .61 5 .02 5 .35 6 .12 6 .20 6 .00 5 .05 5 .10 5 .10 Snow and ice 2 .85 3 .48 3 .85 3 .92 3 .27 3 .49 3 .21 2 .45 2 .45 2 .45 Street signs 1 .22 1 .26 1 .17 1 .20 1 .35 1 .44 1 .41 1.31 1 .41 1 .41 Forestry - - 0 .10 0 .10 0 .10 - - - - - ROW management / utility 0 .70 0 .70 0 .75 0 .85 0 .85 0 .60 0 .65 0 .50 0 .20 0 .20 Water4.93 5 .87 5 .46 5 .04 5 .57 4 .78 4 .84 4 .63 4 .63 4 .63 Sewer 2 .69 2 .83 2 .77 3 .15 2 .97 3 .18 3 .24 3 .38 3 .38 3 .38 Storm sewer 0 .75 1 .24 1 .60 1 .60 2 .01 1 .95 2 .20 2 .55 2 .55 2 .55 Central equipment 2 .94 2 .90 2 .90 2 .91 2 .92 2 .96 2 .96 2 .87 2 .90 2 .90 Park & Recreation: Park and recreation 5 .90 6 .00 6 .66 6 .85 7 .33 7 .05 6 .85 6 .66 6 .71 6 .70 Community center - - - 2 .10 2 .12 2 .12 2 .23 2 .96 3 .11 3 .12 Recycling 1 .31 1 .33 1 .21 1 .26 0 .93 0 .88 0 .86 1 .23 1.23 1 .23 5 8.32 5 8.16 5 8.55 6 1.37 6 3.30 6 1.16 5 8.75 5 5.50 5 5.50 5 5.50 Source:City Finance Department Note: Employees are allocated to various departments based on the functions that they perform. - This page intentionally left blank - CITY OF ANDOVER, MINNESOTA OPERATING INDICATORS BY FUNCTION/PROGRAM Last Ten Years Function/Program20022003200420052006 General government: Registered voters 15,500n/a 16,094n/a 1 7,500 Voters registering election day 2,035n/a 2,000n/a 2,200 Number of precinctsn/an/a 10 1 0 10 Public safety: Police: Number of calls for services 1 2,000 12,375 1 2,675 12,861 1 4,500 Number of traffic citations 1,500 1 ,645 1,795 1 ,795 1,850 Number of patrol hours 26,280 2 8,776 30,856 3 0,856 30,858 Fire: Fire responses 4 25 410 4 20 325 4 60 Emergency medical responses 5 50 590 5 80 594 6 90 Protective inspections: Inspections 6,629 5 ,272 6,396 6 ,536 8,117 Residential permits 2 18 182 2 51 226 1 53 Other permits 1,234 1 ,140 1,162 2 ,473 3,128 Public works: Streets and highways: Asphalt streets maintained (miles) 1 75 176 1 76 178 1 82 Gravel roads maintained (miles) 7 8 8 8 7 Cul-de-sacs and dead ends maintained 3 06 309 3 10 320 3 24 Parks and recreation: Number of City parks 5 8 58 5 8 58 6 3 Total acreage mowed 2 55 268 2 72 265 2 73 Ballfields maintained 24 2 9 2 6 25 2 5 Number of playgrounds 3 6 37 3 6 33 3 6 Soccer fields maintained 1 8 22 2 2 20 1 9 Trail maintained (miles) 2 0 23 2 4 26 2 9 Community center bookings (hrs): Fieldhousen/an/a n/a 1 ,405 7,450 Ice arenan/an/a n/a 2 ,002 2,405 Water: New connections 200 2 48 2 20 247 1 97 Total customers 4,990 5 ,190 5,410 5 ,657 5,854 Annual consumption (thousands of gallons) 7 41,776 9 17,918 8 62,265 8 56,671 911,712 Sanitary Sewer: New connections 2 53 139 1 98 229 1 86 Total customers 5,895 6 ,017 6,291 6 ,528 6,717 Storm Sewer: Total customers n/a 9 ,140 9 ,446 9 ,516 9,744 Storm sewer lines maintained (miles) 3 0 32 3 9 43 4 7 Sourc e: Various City Departments Table 19 20072008200920102011 n/a n/a 1 7,830n/a 1 8,713 n/a n/a 2 ,727n/a 1 ,020 n/an/an/a 1 0 1 0 1 2,150 11,617 1 1,075 11,441 1 1,650 1 ,710 2,475 2 ,848 1,926 2 ,000 3 0,240 30,240 30,240 3 0,240 29,200 3 66 326 3 05 323 2 65 7 36 797 7 54 722 7 64 5,456 5 ,020 3,716 2 ,860 3,074 9 1 49 4 2 71 5 8 2,095 1 ,862 1,543 1 ,773 1,755 1 89 189 1 89 190 1 91 8 8 8 8 7 3 30 336 3 38 338 3 38 6 5 66 6 6 47 5 0 297 2 97 293 2 93 302 27 2 8 28 2 8 28 37 3 7 37 3 8 38 16 19 1 9 19 2 1 3 5 35 3 5 35 3 5 8,514 8 ,282 9,718 1 1,099 11,461 2,497 2 ,393 2,640 2 ,583 2,575 6 3 33 1 45 56 7 8 5,950 5,917 6,095 6 ,151 6,229 1 ,046,789 9 93,626 1 ,000,971 9 05,561 854,672 1 20 23 1 83 75 7 7 6,777 6 ,800 6,983 7 ,058 7,135 9,785 9 ,800 9,950 1 0,042 10,126 6 5 66 6 9 69 6 9 CITY OF ANDOVER, MINNESOTA CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAMTable 20 Last Ten Years Function/Program2002200320042005200620072008200920102011 Public Safety: Fire: Stations 3 3 3 3 3 3 3 3 3 3 Fire vehicles 19 19 18 18 18 20 20 21 22 21 Protective inspections: Vehicles 4 4 4 3 3 3 3 3 3 4 Public Works: Streets and Highways: Streets (miles) 182 184 184 186 189 189 189 189 190 191 Street lights 6,795 6,959 7,505 7,551 8,101 1,204 1,212 1,215 1,218 1,225 Traffic signals 15 16 18 20 20 22 23 23 24 24 Parks and Recreation: Parks 58 58 58 58 63 65 66 66 47 50 Ball fields 31 35 35 25 28 27 28 28 28 28 Soccer fields 19 22 25 16 16 16 19 19 19 21 Playgrounds 36 37 36 33 36 37 37 37 38 38 Trails (miles) 35 20 23 24 26 29 35 35 35 35 Community centers - - - 1 1 1 1 1 1 1 Water: Water treatment plants - 1 1 1 1 1 1 1 1 1 Storage facilities 2 3 3 3 3 3 3 3 2 2 Water main (miles)n/a 1 1 79 84 108 108 108 108 109 Connections 4,983 5,160 5,300 5,450 5,760 5,917 5,950 6,095 6,151 6,229 Sanitary sewer: Sewer main (miles)n/an/an/a 82 87 91 91 91 93 93 Connections 5,824 5,981 6,100 6,250 6,560 6,777 6,800 6,983 7,058 7,135 Number of lift stations 4 7 7 8 9 9 9 9 9 9 Storm sewer: Storm sewer lines (miles) 30 32 39 43 47 65 66 69 69 69 IV. OTHER FINANCIAL INFORMATION CITY OF ANDOVER, MINNESOTA COMBINED SCHEDULE OF INDEBTEDNESS December 31, 2011 Authorized IssueMaturitInterestand y DateDateRateIssue GOVERNMENTAL ACTIVITIES: Revenue Bonds: 2004 EDA Pub Fac Lease Revenue Bonds4/23/20042/1/20142.215-5.400%19,580,000$ 2006 EDA Pub Fac Lease Revenue Refunding Bonds 12/1/20062/1/20344.00-4.50%10,000,000 2007 EDA Pub Fac Lease Revenue Refunding Bonds 1/1/20072/1/20344.00-4.50%6,865,000 Total revenue bonds36,445,000 Special Assessment Bonds: 2005A G.O. Improvement Bonds4/28/20052/1/20112.95-3.65%3,560,000 Tax Increment Bonds: 2004B G.O. Tax Increment Refunding Bonds3/16/20042/1/20112.00-3.25%4,260,000 Certificates of Indebtedness: 2007A G.O. Equipment Certificates3/13/20072/1/20114.00%760,000 2008A G.O. Equipment Certificates9/23/20082/1/20123.50%630,000 2009A G.O. Equipment Certificates3/26/20092/1/20122.00-2.25%385,000 2011A G.O. Equipment Certificates3/1/20112/1/20142.00%265,000 Total certificates of indebtedness2,040,000 Capital Improvement Bonds: 2004A G.O. Capital Improvement Bonds3/16/20042/1/20172.00-3.75%3,890,000 Permanent Improvement Revolving Bonds: 2010A Permanent Improvement Revolving Refunding Bond2/18/20102/1/20142.00%1,480,000 s State Aid Bonds: 2009A State Aid Street Refunding Bonds3/26/20092/1/20152.25-2.80%955,000 Referendum Bonds: 2010A G.O. Open Space Referendum Bonds2/18/20102/1/20222.00 - 3.125%1,660,000 Total bonded indebtedness54,290,000 Compensated absences payable - Total governmental activities indebtedness54,290,000 BUSINESS-TYPE ACTIVITIES: General Obligation Revenue Bonds: 2002 G.O. Water Revenue Bonds5/9/20028/1/20122.30-5.00%9,780,000 2007B G.O. Water Revenue Refunding Bonds3/13/20072/1/20234.00-4.25%6,570,000 2009A G.O. Water Revenue Bonds3/26/20092/1/20242.00-4.25%1,025,000 Total general obligation revenue bonds17,375,000 Compensated absences payable - Total business-type activities indebtedness17,375,000 Total City indebtedness$71,665,000 Exhibit 1 Principal Payments PriorCurrentOutstanding2012 Payment YearsYea12/31/11PrincipalInterestTotal r $ 1,355,000$ 415,000$17,810,000$435,000$897,456$ 1,332,456 10,000,000424,227 424,227 - - - 6,865,000291,982 291,982 - - - 1,355,000 415,000 34,675,000435,0001,613,665 2,048,665 2,960,000 600,000 - - - - 2,525,000 1,735,000 - - - - 560,000 200,000 - - - - 304,000 160,000 166,000166,0002,905 168,905 130,000 125,000 130,000130,0001,462 131,462 265,00076,0004,540 80,540 - - 994,000 485,000 561,000372,0008,907 380,907 1,395,000 295,000 2,200,000315,00070,993 385,993 355,000 1,125,000365,00018,850 383,850 - 215,000 740,000220,00016,115 236,115 - 1,660,000135,00040,215 175,215 - - 9,229,000 4,100,000 40,961,0001,842,0001,768,745 3,610,745 584,313 - - - - - 9,229,000 4,100,000 41,545,3131,842,0001,768,745 3,610,745 2,440,000 415,000 6,925,0006,925,000324,440 7,249,440 6,570,000266,146 266,146 - - - 60,000 60,000 905,00055,00030,089 85,089 2,500,000 475,000 14,400,0006,980,000620,675 7,600,675 139,353- - - - - 2,500,000 475,000 14,539,3536,980,000620,675 7,600,675 $11,729,000$ 4,575,000$56,084,666$8,822,000$2,389,420$11,211,420 CITY OF ANDOVER, MINNESOT A SCHEDULE OF TAX CAPACITY RATES AND LEVIESExhibit 2 Taxes Payable 20122011 Tax capacity value$23,477,711$26,174,350 s Captured tax increment value(1,871,779)(2,027,557) Fiscal disparities - contribution(1,091,258)(1,229,714) Local taxable value20,514,67422,917,079 Fiscal disparities - distribution4,649,558 5,153,518 Adjusted tax capacit$25,164,232$28,070,597 y 20122011 Tax CapacitCertifieTax Capacit Certifiedydy LevRateLevRate yy General Revenue Levy: General Fund7,332,857$ 7,500,802$ Capital Equipment/Projects210,000 210,000 Parks Projects61,500 61,500 Road and Bridge1,022,817 1,064,959 Pedestrian Trail Maintenance56,574 54,926 Total General Revenue Lev 35.138%8,892,1878,683,748 31.941% y Debt Service Levy: 2004A G.O. Capital Improvement Bonds405,292 412,320 2004 EDA Public Facility Revenue Bonds1,092,684 960,858 188,972 2008A G.O. Equipment Certificate - 2009A G.O. Equipment Certificate 142,783 - 2011A G.O. Equipment Certificate102,017 85,000 2012 G.O. Equipment Certificate125,000 - Total Debt Service Lev 6.952%1,789,9331,724,993 6.466% y Lower Rum River Watershe 0.449%35,00040,000 0.339% d Total10,448,741 42.539%10,717,120 38.746% Voter-Approved Open Space Referendum - MV182,558 0.00778%139,179 0.00568% $ 10,856,29910,631,299$ CITY OF ANDOVER, MINNESOTA SCHEDULE OF DEFERRED TAX LEVIESExhibit 3 GENERAL OBLIGATION BONDS December 31, 2011 Certificates o f TaxesIndebtedness Payable2011A 2012$ 9 7,780 2013 9 6,900 $ 1 94,680 CapitalEDA Public Facility LeaseOpen Space ImprovemenRevenueRefundingRefundingReferenduTotal tm TaxesBondsBondsBondsBondsBondsDeferred Ta x Payable2004Aof 2004of 2006of 2007Total2010ALevies $697,456$1,356,444 2012$ 3 85,993$ 6 97,456$ -$ -$ 1 75,215 1,353,854 2013 3 90,905 6 93,534 - - 693,534 1 72,515 1,206,839 2014 4 04,596 2 69,373 212,114 145,991 627,478 1 74,765 1,223,926 2015 4 17,000 - 371,528 258,483 630,011 1 76,915 1,229,103 2016 4 23,050 - 372,828 259,283 632,111 1 73,942 1,233,444 2017 4 27,875 - 369,589 260,323 629,912 1 75,657 2018805,678 - - 369,064 259,773 628,837 1 76,841 2019810,318 - - 368,628 264,183 632,811 1 77,507 2020803,566 - - 372,525 258,214 630,739 1 72,827 2021801,447 - - 366,328 262,249 628,577 1 72,870 2022798,722 - - 369,921 256,145 626,066 1 72,656 2023623,254 - - 370,234 253,020 623,254 - 2024629,630 - - 365,207 264,423 629,630 - 2025625,273 - - 367,812 257,461 625,273 - 2026625,793 - - 364,346 261,447 625,793 - 2027625,333 - - 363,444 261,889 625,333 - 2028623,897 - - 359,127 264,770 623,897 - 2029622,158 - - 362,690 259,468 622,158 - 2030625,221 - - 363,030 262,191 625,221 - 2031621,665 - - 359,379 262,286 621,665 - 2032621,233 - - 362,592 258,641 621,233 - 2033624,980 - - 362,313 262,667 624,980 - 2034954,771 - - 563,660 391,111 954,771 - $2,449,419$ 14,880,7405,484,018$$1,921,710$19,446,549 $ 1 ,660,363$ 7 ,736,359 CITY OF ANDOVER, MINNESOTA SCHEDULE OF FUND TRANSFERSExhibit 4 December 31, 2011 Transfe Transferr IOu nt General Fund Water E150,250 Fn $ $ -General Fund Admin Allocatio Sewer E46,680 Fn -General Fund Admin Allocatio Total General Fund196,930 - Special Revenue Funds (SRF) Communit Center SR yF 2004 EDA Public Facilit Lease Revenue Bond DS369,034Debt Service Allocatio yFn - Riht of Wa Manaement / Utilit SR gygyF Road and Bride CP6,600Roadwa Deredatio gFygn - Total Special Revenue Funds375,634 - Debt Service Funds (DSF) 2004 EDA Public Facilit Lease Revenue Bonds DS yF Communit Center SR369,034 yFn -Debt Service Allocatio 2004B G.O. TIF Refundin Bonds DS gF TIF Proects CP1,744,013 jFn -Debt Service Allocatio 2005A G.O. Improvement Bonds DS F PIR CPF383,298 n -Debt Service Allocatio 2007A G.O. Capital Note DS F Buildin CP8,002Close Debt Service Fun gFd - 2010A PIR Refundin Bonds DS gF PIR CPF380,000 n -Debt Service Allocatio Total Debt Service Funds2,876,3458,002 Capital Proects Funds (CPF j) Sewer Trunk CP F Sewer E400,000 Fe -Replacement Reserv Road and Bride CP gF Riht of Wa Manaement / Utilit SR6,600 Deredatio gygyFygn -Roadwa Buildin CP gF 2007A G.O. Capital Note DS8,002 Fd -Close Debt Service Fun TIF Proects CP755,000 jFs -Future Land Purchase 763,002 - TIF Proects CP jF 2004B G.O. TIF Refundin Bonds DS1,744,013Debt Service Allocatio gFn - Buildin CP755,000Future Land Purchase gFs - 2,499,013 - PIR CPF 2005A G.O. Improvement Bonds DS383,298Debt Service Allocatio Fn - 2010A PIR Refundin Bonds DS380,000Debt Service Allocatio gFn - 763,298 - Total Capital Proects Funds1,169,6023,262,311 j CITY OF ANDOVER, MINNESOTA SCHEDULE OF FUND TRANSFERSExhibit 4 December 31, 2011(Continued ) Enterprise Funds Water EF General Fun$150,250General Fund Admin Allocatio dn $ - Sewer E F General Fun46,680General Fund Admin Allocatio dn - Sewer Trunk CP400,000Replacement Reserv Fe - 446,680 - Total Enterprise Funds596,930 - Total All Funds$4,242,877$4,242,877 - This page intentionally left blank -