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Home My WebLink AboutCC June 2, 2009 1685 CROSSTOWN BOULEVARD N.W. . ANDOVER, MINNESOTA 55304. (763) 755-5100 FAX (763) 755-8923 . WWW.CI.ANDOVER.MN.US Regular City Council Meeting - Tuesday, June 2, 2009 Call to Order - 7:00 p.m. Pledge of Allegiance Resident Forum Agenda Approval 1. Approval of Minutes (5/19/09 Regular) Consent Items 2. Approve Payment of Claims - Finance 3. Approve Fee Ordinance Amendment/Establish Single Family Rental License Fee-- Planning 4. Update on Revised Planned Unit Development/Andover Clocktower CommonslNE Corner of Hanson & Crosstown Blvds . NW - Administration 5. Accept Petition/Order Feasibility ReportJ09-25/13758 Round Lake Blvd. NWIWM - Engineering Discussion Items 6. 2008 Audit PresentationlHLB Tautges Redpath - Finance 1. Consider Conditional Use PermitlUsed Vehicle Sale/3l49 - 162nd Lane NW (Continued) - Planning 8. Consider Business LicenselUsed Vehicle Sales/3149 - 1 62nd Lane NW (Continued}- Planning 9. Consider City Code Amendment/Changes to City Code Title 4/Abatement Process (Continued) - Planning Staff Items 10. Administrator's Report - Administration Mayor/Council Input Adjournment C I T Y o F CD NDOVE 1685 CROSSTOWN BOULEVARD N.W.. . ANDOVER, MINNESOTA 55304. (763) 755-5100 FAX (763) 755-8923 . WWW.CI.ANDOVER.MN.US TO: Mayor and City Council CC: Jim Dickinson, City Administrator FROM: Michelle Hartner, Deputy City Clerk SUBJECT: Approval of Minutes DATE: June 2, 2009 INTRODUCTION The following minutes were provided by TimeSaver for City Council approval: May 19,2009 Regular Meeting DISCUSSION The minutes are attached for your review. ACTION REQUIRED The City Council is requested to approve the above minutes. Respectfully submitted, G)f~~~ Michelle Hartner Deputy City Clerk Attach: Minutes 1 2 3 4 5 6 REGULAR ANDOVER CITY COUNCIL MEETING-MAY 19,2009 7 MINUTES 8 9 10 The Regular Bi-Monthly Meeting ofthe Andover City Council was called to order by Acting Mayor 11 Julie Trude, May 19,2009, 7:00 p.m., at the Andover City Hall, 1685 Crosstown Boulevard NW, 12 Andover, Minnesota. 13 14 Councilmembers present: Sheri Bukkila, Don Jacobson, Mike Knight 15 Councilmember absent: Mayor Mike Gamache 16 Also present: City Attorney, Scott Baumgartner 17 Director of Public Works/City Engineer, Dave Berkowitz 18 City Administrator, Jim Dickinson 19 Community Development Director, Will Neumeister 20 Assistant Public Works Director, Todd Haas 21 Others 22 23 24 PLEDGE OF ALLEGIANCE 25 26 27 RESIDENT FORUM 28 29 No one wished to address the Council. 30 31 AGENDA APPROVAL 32 33 Remove for discussion Item 6, (Accept Feasibility Report/Waive Public Hearing/Order Plans & 34 Specs/09-22/Bunker Lake Blvd NW) and Item 7, (Approve Final Plat/Woodland Crossings 2nd 35 Addition). 36 37 Motion by Jacobson, Seconded by Knight, to approve the Agenda. Motion carried unanimously. 38 39 40 CONSENT ITEMS 41 42 Acting Mayor Trude read the consent agenda items to be approved as follows: 43 44 Mr. Berkowitz reviewed the changes to Item 6 with the Council. 45 46 Councilmember Knight asked if the median going north in the turn lane to the west will be a 47 painted median. Mr. Berkowitz stated it will be a hard channelization for safety reasons. He 48 stated the entire location throughout this area is currently hard channelization. Regular Andover City Council Meeting Minutes - May 19, 2009 Page 2 1 2 Councilmember Knight asked why they would not just paint it in to save money. Mr. Berkowitz 3 stated by having the hard channelization here it will remain consistent throughout the area and it 4 would also be for safety reasons. 5 6 Item 2 Approval of Claims 7 Item 3 Approve Refuse/Recycler Hauler Licenses 8 Item 4 Approve Temporary 3.2% Malt Liquor License/Andover Lions/Fun Fest 9 Item 5 Approve Application for Exempt Permit! Andover Lions Club (See Resolution R043- 10 09) 11 12 Item 6 Accept Feasibility Report/Waive Public Hearing/Order Plans & Specs/09-22/Bunker 13 Lake Blvd. NW Frontage Road/Jay Street Realignment (See Resolution R044-09) 14 15 16 Item 7 Approve Final Plat!W oodland Crossings 2nd Addition (See Resolution R045-09) 17 18 Acting Mayor Trude stated there was sentence that needed to be added to the hard copy which is 19 to change the date of the plans. 20 21 Mr. Neumeister reviewed the changes to Item 7 with the Council. 22 23 Motion by Jacobson, Seconded by Knight, approval of the Consent Agenda as read and amended. 24 Motion carried unanimously. 25 26 27 APPROVAL OF MINUTES 28 29 April 28, 2009, Workshop Meeting: Correct as amended. 30 31 Acting Mayor Trude stated on page 4, they were talking with the individual about the park levy and 32 on line 40 she would like the following comments included: "... pressure off the levy to provide a 33 way to pay for more trails which are typically paid for by new housing." 34 35 Acting Mayor Trude stated on the inspections they discussed on page 7 she thought they could 36 simplify it by changing the wording to say "The Council continued to discuss with staff what an 37 inspection should include and what they should charge." 38 39 Councilmember Bukkila stated on page 4, line 38, the sentence should be changed to "...can not 40 choose not to" 41 42 Motion by Jacobson, Seconded by Bukkila, approval of Minutes as indicated above. Motion carried 43 unanimously. 44 Regular Andover City Council Meeting Minutes - May 19, 2009 Page 3 1 May 5, 2009, Regular Meeting: Correct as amended. 2 Acting Mayor Trude stated on page three, line 32 there was a misspelling "cognizant" and should be 3 corrected. 4 5 Motion by Jacobson, Seconded by Knight, approval of Minutes as indicated above. Motion carried 6 unanimously. 7 8 April 23, and May 5, 2009, Board of Review Meeting: Correct as amended. 9 10 Councilmember Jacobson stated on page two, line 29 of the April 23rd minutes the sentence reads 11 "sale took place after that date had no impact emphasis on his valuation". The word "emphasis" is 12 incorrect and should read "impact". 13 14 Motion by Jacobson, Seconded by Bukkila, approval of Minutes as indicated above. Motion carried 15 unanimously. 16 17 18 RECEIVEANOKA COUNTY SHERIFF DEPARTMENT MONTHLY REPORT 19 20 Captain Tom Wells, Anoka County Sheriffs Department, provided an update on law enforcement 21 activities occurring within Andover. 22 23 Councilmember Knight reminded people not to leave property in view in their vehicles and to close 24 garage doors. 25 26 27 CONSIDER CONDITIONAL USE PERMITIUSED VEHICLE SALE/3149162ND LANE NW 28 29 City Code requires Council approval of a Conditional Use Permit and a city license for used vehicle 30 sales in the Limited Industrial Zoning District. 31 32 Mr. Neumeister reviewed the information and changes with the Council. 33 34 Councilmember Trude stated the State License application states there needs to be room for five 35 vehicle stalls and the applicant information indicates they will have only one. Mr. Neumeister 36 stated there are extra stalls on the site for displaying vehicles. The applicant indicated he did not 37 need that many stalls, only one. Mr. Dickinson explained the site does have room for five stalls 38 if needed. 39 40 Mr. Neumeister stated a condition that should be added to this is: "the signage would be per City 41 Code." There is no record of the signage being requested. 42 43 Councilmember Bukkila noted that on a site visit on May 18, 2009 there has been a newly 44 installed fence around the parameter of the parking lot and she received an email from a resident Regular Andover City Council Meeting Minutes - May 19, 2009 Page 4 1 with a concern about having cars parked out along the boulevard or right-of-way or in front ofthe 2 business. She wondered if it is intended to keep the vehicle for sale within the fenced in area. 3 Mr. Dickinson stated it would be in a designated stall shown on the drawing. Based on where the 4 fencing is on the lot, it would need to be within the fence. 5 6 Councilmember Jacobson asked in their vehicle sales standards they have in their packets the 7 back page, item H reads "the estimated value of improvements to the licensed property shall 8 exceed the estimated land value of the licensed property as estimated by Anoka County." He 9 wondered how this article would or would not relate to the application they have before them. 10 City Attorney Baumgartner thought it was talking about conveying the requirement that they 11 cannot just have a lot there with cars for sale without improvements to the property itself 12 showing an investment to the property. 13 14 Councilmember Jacobson asked ifthis is leased office space, would this not apply. City 15 Attorney Baumgartner did not know if this is true and did not know if the distinction is being 16 made. He thought the intent is it would not just be a vacant lot to park vehicles in, there needed 17 to be more of an investment into the property. 18 19 The Council discussed possible improvements to the property that could be done. 20 21 Mr. Frank Sudd, 15956 Drake Street, described his business to the Council. 22 23 Acting Mayor Trude asked if Mr. Sudd noticed the fence that went around the lot. Mr. Sudd 24 stated he was not aware that the fence was put in and would need to talk to the owner about it. 25 Mr. Dickinson stated the City would also talk to the owner. 26 27 Mr. Joe Brabant, 16191 Round Lake Boulevard, read a letter to the Council that he is not 28 opposed to Mr. Sudd's application to sell vehicles but he is looking for someone to be 29 accountable to the expansion ofthe north end of the parking lot located at 3149 162nd Lane NW. 30 He stated he is required to do a lot of major improvements to his property when he opened his car 31 sales business but this property has not needed to do any major improvements. He continued to 32 express his concerns about issues related to the applicants proposed business site. 33 34 Acting Mayor Trude indicated staff did follow up on Mr. Brabant's questions and the staff report 35 indicates there was an review of the aerial photography and pavement for the parking area was 36 expanded from the north end of the building to where it exists today sometime between 2006 and 37 2008. There is no record of discussion with the property owner about expansion of the parking 38 area. The deficiencies of the parking area include lack of curb and gutter and the setback from 39 the east property line as noted in the table in the packet. She noted the owner of the property did 40 not appear to get a permit for the expansion and now a fence was installed possibly without a 41 permit and staff will be talking to the owner in regard to this. 42 43 Mr. Neumeister reviewed the improvements the owner did to the site and explained at the time 44 the parking area was paved there was no requirement to obtain a separate permit. Regular Andover City Council Meeting Minutes - May 19, 2009 Page 5 1 2 The Council discussed with staff improvement issues of the property and how they could get the 3 owner to correct them. 4 5 Motion by Jacobson, Seconded by Knight, to table this item to the next City Council meeting to 6 allow staff time to contact the owner of the property and discuss issues related to the property. 7 8 Councilmember Knight asked what the remaining stalls will be filled with. Mr. Dickinson 9 thought the remaining stalls will be used for the other business in the building along with 10 employee parking. 11 12 Acting Mayor Trude thought it would be important to clarify the State Licensing requirements 13 before the next meeting to make sure they can be met before continuing the application. She also 14 suggested that hours of operation be submitted and also a landscaping plan. 15 16 Motion carried unanimously. 17 18 19 CONSIDER BUSINESS LICENSE/USED VEHICLE SALES/314916~D LANE NW 20 21 The ordinance for vehicle sales requires Council approval of a business license. The applicant 22 has paid the application fee. 23 24 Motion by Jacobson, Seconded by Knight, to table this item to the next City Council meeting to 25 allow staff time to contact the owner of the property and discuss issues related to the property. 26 Motion carried unanimously. 27 28 29 CONSIDER VARIANCEIMINIMUM LOT WIDTH REQUIREMENTS/17285 ROUND LAKE 30 BOULEVARD NW 31 32 The applicant would like to divide their 9.69 acre parcel into two lots at some point in the future. 33 The property is long and narrow and without access to the rear of the lot. 34 35 Mr. Neumeister reviewed the information with the Council. 36 37 Councilmember Jacobson recused himself from this item because of a possible conflict of 38 interest. Since Connexus Energy is potentially involved in this transaction. 39 40 Councilmember Bukkila asked why the City needed to give the applicant access, could the 41 applicant purchase the property from Connexus. Mr. Neumeister stated the applicant is trying to 42 do that but the sixty-six feet is not three hundred, they need at least three hundred feet, pre 43 ordinance to accomplish what they are hoping to do. 44 Regular Andover City Council Meeting Minutes - May 19, 2009 Page 6 1 Councilmember Bukkila asked if the property owner owns the land and has an easement on the 2 property can't they use it without City permission as a point of access. Mr. Neumeister stated if 3 the owner is going to split the lot they need City permission. Councilmember Bukkila stated if 4 the owner is going to split the lot they should apply for a proposed lot split instead. Mr. 5 Neumeister stated that is correct but if split it would be in the future. 6 7 Councilmember Knight wondered what happens to the adjacent property since it is equally land 8 locked. Mr. Neumeister stated this raises a question about future development of the area and 9 they would want to know all the information at that time. 10 11 Acting Mayor Trude wondered if they could include a lot split with this to save the applicant 12 some money; She thought they were coming forward with this sideways and should be pursuing 13 other means. 14 15 Staff discussed with the Council options the applicant could do in regard to this property. 16 17 Ms. Susie Larson, 17285 Round Lake Boulevard, stated the initial idea of buying land from 18 Connexus was to be able to have access to the back of their property so they could. build a house 19 in the future further from Round Lake Boulevard for more peace and quiet. She indicated they 20 did not have any intention of developing their land. Acting Mayor Trude stated if the Council 21 approves this development of the land could be possible because a road would need to be run up 22 to the next property owners land. She stated the Council is a little reluctant to approve this since 23 the plans are so uncertain. 24 25 Mr. Dickinson asked if it is the desire of the applicant to pursue a lot split because if it was they 26 could table this to bring forward an administrative lot split along with the variance at the next 27 meet~ng. 28 29 Councilmember Bukkila asked if the neighbors would understand the expansion of this if the 30 applicant wanted this. Mr. Dickinson stated an administrative lot split would not require a public 31 hearing but would allow the applicant to continue on with the variance. 32 33 Mr. Matthews, 2857 172nd A venue, stated he did not care if the applicant built back there. They 34 can access the land by removing the trees. He stated he did not want an open road back there 35 because there is a lot of vandalism and he does not want to have to watch the area back there 36 along with the front. He wanted to make sure they did not take part of his land for the landlocked 37 parcels. 38 39 Motion by Knight, Seconded by Bukkila, to table this item. Motion carried unanimously. 40 41 Regular Andover City Council Meeting Minutes - May 19, 2009 Page 7 1 CONSIDER REVISED PLANNED UNIT DEVELOPMENT/ANDOVER CLOCKTOWER 2 COMMONS/NE CORNER OF HANSON AND CROSSTOWN BLVDS NW 3 4 BDT Holdings, the current owner of Andover Clocktower Commons, is seeking direct access to 5 Crosstown Boulevard NW. 6 7 Mr. Berkowitz reviewed the information with the CounciL 8 9 Councilmember Jacobson asked if this were constructed as the City was suggesting and ifthe 10 Holasek property were to develop in the future how much of the intersection would have to be 11 removed when the parcel to the south would develop. Mr. Berkowitz stated it all depends on 12 what access is approved. He stated if a right-in/right-out access is approved on the south side 13 then most of the improvements can stay the way they are currently designed. If they get into an 14 intersection improvement at Bluebird Street and Crosstown Boulevard along with some type of 15 access in mid block that might change what can stay and what cannot. They will work with what 16 is there and keep what is there and minimize the impact in the future. 17 18 Mr. Darren Lazan asked if the Clocktower Commons business owners present at the meeting 19 could talk so they could get back to their businesses. 20 21 Mr. Matt Zeece, BeefO'Brady's, 15190 Bluebird, stated he is in support of getting an 22 intersection and felt it would be good for business and would help bring in business. 23 24 Ms. Hailey Ryder, Manager Great Clips, stated they are a struggling mall and people do not 25 know they are even there because they cannot see what is in the mall. She stated the Bluebird 26 Street and Crosstown Boulevard intersection is already unsafe and she thought an alternate 27 access would be helpfuL She thought it would be safer to have turn lanes and would help bring 28 people in to the mall. 29 30 Ms. Kelly Casey, Computer Whatever, encouraged the Council to support the access. 31 32 Councilmember Jacobson stated the applicant and staffhave discussed many of the points in the 33 memorandum they received and agreed to most of them except three items. The first one is that 34 the applicant wants stripping and City staff wants concrete barriers, the second is the applicant 35 does not want a right turn lane and staff wants one and the third issue is the actual design of the 36 pork chop median. 37 38 Mr. Darren Lazan and Mr. Tom Roberts made a presentation to the Council about how they 39 wanted the intersection to look and the reasons for their design. 40 41 Acting Mayor Trude wondered if the road could be reclassified as urban instead of rural since the 42 road is now a City road and not a County road. Mr. Berkowitz stated there would have to be a lot 43 of improvements made on the road to bring it up to urban standards such as curb and gutter. 44 Regular Andover City Council Meeting Minutes - May 19, 2009 Page 8 1 Councilmember Knight thought this road is more urban than other roads in Andover that are 2 classified as urban. He thought 40mph is a better speed limit along this road than 55mph. 3 4 Mr. Lazan continued his presentation to the Council regarding the intersection, safety and layout. 5 6 Councilmember Knight suggested putting in posts and cables in the median in order to make the 7 area safer. Mr. Berkowitz stated it would likely not work because there needs to be a wider 8 median or separator for that design to work properly. 9 10 Mr. Lazan stated he did not believe a raised channelization is a fair and reasonable request as it 11 relates to this improvement since it is not done anywhere else. 12 13 Councilmember Bukkila thought the whole concept for this intersection is to bring business to 14 the mall so it will grow and there is a reasonable expectation that traffic will increase as the 15 population grows so they need to do the best they can to anticipate some level of growth. They 16 need to look a little bit more long term than this year. She stated that she found out the stopping 17 speed at 55mph is eighty feet therefore the right turn lane at a shortened distance would likely be 18 adequate. She thought a right turn lane was necessary and lessens the probability for accidents 19 and also the idea is if they want to go with painted versus a concrete median, she would want the 20 right turn lane so there is an exit option. Acting Mayor Trude supported the comment. 21 22 Mr. Lazan stated the first part of the statement is correct and they are looking forward to adding 23 the left turn lane even though it is not needed today. He stated they can provide the right turn 24 lane as long as there are no needed safety improvements along the ditch section already there. 25 26 Council consensus was they needed a westbound right turn lane on Crosstown Boulevard. 27 28 Councilmember Jacobson thought the biggest concern is the striping versus the concrete median 29 and thought that is where the safety issue came into play. He noted he is leaning towards the 30 concrete median in the road to prevent people from turning to the east. 31 32 Councilmember Knight stated he thought the painted striping is fine since they have it in many 33 places in the City including in front of City Hall. Acting Mayor Trude agreed. 34 35 Mr. Lazan thought it was important ifthey were directed to work with staff on this because there 36 is no storm sewer available and no place to pipe the water to. He stated there is nowhere to put 37 the water until storm sewer improvements are done, when the entire road is rebuilt. He stated in 38 regard to the concrete median it is not only a cost issue and they want to make a reasonable 39 improvement here but this is not reasonable because other intersections in the City, along 40 Crosstown, do not require concrete medians. He thought this was beyond reasonable. 41 42 Mr. Berkowitz gave the Council staffs assessment of the improvements and the reasons why 43 they were requesting the improvements to be made. He stated they have to look at this as a 44 permanent improvement and have to look into the future for the City. Regular Andover City Council Meeting Minutes - May 19, 2009 Page 9 1 2 Mr. Berkowitz indicated that what staff has proposed for improvements is what they are 3 comfortable with as far as safety concerns go. 4 5 Acting Mayor Trude summarized what the Council wanted to see with the intersection. She 6 stated there seemed to be support for adding a westbound right turn lane to the proposal the 7 applicant has. They want to see the access happen along with some of the safety issues done now 8 but she did not think there should be a full build out otherwise the entire project collapses. There 9 should be a shortened right turn lane that fits the intersection along with a pork chop median 10 extension. 11 12 Mr. Dickinson recapped the proposal from City Staff with the Council, clarifying the amount of 13 proposed concrete medians and reiterated why staff thought the medians are needed. 14 15 Councilmember Jacobson stated he would not vote in favor ofthis ifthere is not a concrete 16 median. Acting Mayor Trude did not think the majority of the Council wanted a concrete 17 median. Councilmember Jacobson stated it all depended on how long the median was and 18 should be discussed further. Councilmember Bukkila stated she would not be in favor of a 19 concrete median. Councilmember Knight stated he would be in favor of more striping. 20 21 There was further discussion between Council, Staff and the applicant regarding the median and 22 tabling this item. Mr. Lazan requested the Council approve this item with what was discussed 23 and what the Council wanted to have improved. Mr. Lazan indicated that if there are too many 24 requirements no project will likely be get done. Acting Mayor Trude stated they are discussing 25 to table this item in order to have staff rework their current plan to include what the Council 26 wanted and what the applicant discussed and bring it back to the next meeting for further 27 discussion and possible approval. 28 29 Mr. Dickinson summarized what would get discussed, a westbound right turn lane, a pork chop 30 median extension and appropriate channelization on Crosstown Boulevard. 31 32 Motion by Knight, Seconded by Trude, to table this to the June 2, 2009 meeting to allow staff to 33 rework the current plan to include Council's comments. Motion carried unanimously. 34 35 36 Motion by Jacobson, Seconded by Bukkila, to amend the agenda to move Items 14, 15 and 16 37 before Item 13. Motion carried unanimously. 38 39 40 CONSIDER CODE AMENDMENT/CHANGES TO CITY CODE TITLE 9/REGULATIONS 41 FOR RENTAL OF SINGLE FAMILY UNITS 42 43 The draft amendment incorporates changes to the Rental Housing Dwellings, Chapter #8 of the City 44 Code. The intent of the amendment is to facilitate a single family market value preservation Regular Andover City Council Meeting Minutes - May 19, 2009 Page 10 1 initiative by including rehtallicense requirements for single family dwelling units. The prominent 2 change proposed in the draft amendment attached, includes the requirement of a rental license for 3 single family dwelling units with the addition of Section 9-8-12. The City Code currently only 4 requires rental licenses for multi-family dwelling units. The draft amendment provides minor 5 changes to other sections within Chapter #8 while keeping all rental ordinances in the same chapter. 6 7 Mr. Neumeister reviewed the information with the Council. 8 9 Mr. Barry Swingle, 2547 140th Lane, asked if anyone could move out of their home and bring 10 renters in. The Council indicated they could. He explained some of the problems he is having in 11 his neighborhood with rental properties and indicated he would be in favor of this. 12 13 Mr. Ken Orttel, 2772 Bunker Lake Boulevard, wondered why this is being looked at since as far 14 as he knew there are not many problems. He stated he has had rental properties for years and has 15 never had any complaints that he was aware of. He wondered why the landlords were not 16 notified that this would apply to them. He did not think it would have been a big deal and the 17 City could have gotten feedback from them regarding this. He stated they have an ordinance for 18 multi-family that they want to adapt to single family and he wondered how much data they have 19 on multi-family problems. 20 21 .Mr. Dickinson stated there are a number of multi-family homes that are in the foreclosure 22 process, no occupied and not licensed. They do get calls for questions about rental units but did 23 not keep specific data outside of police calls. 24 25 Mr. Orttel stated he has an issue with selective enforcement being done in the City. He stated the 26 City cannot enforce the multi-family ordinance and now want to incorporate it into single family 27 rentals. He did not think it made sense. 28 29 Mr. Orttel stated he has an issue regarding Chapter 8 that puts the onus on the landlord to resolve 30 crime issues that the government is not able to solve and he thought this was absurd. He is 31 surprised the City has not done a study to find out if there are issues with the Police. 32 33 Mr. Orttel stated the greatest call areas are public areas such as parks, clinics, The Farmstead and 34 Target and they are inspected yearly, which the City residents pays for, but not licensed yearly 35 and he thought the City needed to look at this and think about requiring licensing for those places 36 also. 37 38 Mr. Orttel stated as a landlord he pays twice as much property tax versus owners and he 39 wondered where that money went. 40 41 Mr. Don Peterson, 1374 161 st Avenue NW, stated if Andover is having problems with rental 42 properties, as a landlord he can understand the City licensing to weed out the problem landlords 43 and properties but it would simply require applying for a license and obeying existing laws. A 44 license would cost around $20 and last asJong as the landlord was leasing out the property. If Regular Andover City Council Meeting Minutes - May 19, 2009 Page 11 1 there was a problem with the property the City would know the property was a rental and who 2 owned it and could work with the landlord to solve the problem. Most landlords would 3 appreciate knowing if there are any illegal actions happening on their properties. The single 4 family rental initiative goes beyond that. It is based on the assumption that renters and landlords 5 are lowlife and deserve to be treated that way. The rules that should apply to everyone are being 6 enforced disproportionately on renters and rental property and the money is being charged 7 beyond the cost of a simple license. He thought if the City needs money there are ways to 8 increase revenue that do not involve what amounts to taxing a minority of the citizens. He 9 thought this should be enforced to everyone. 10 11 Councilmember Bukkila stated on page 22, under 9-8-11 Section C, she would like to exclude 12 miscellaneous juvenile status crimes, curfew incidence as well as domestic disturbances. 13 14 Councilmember Jacobson stated on page 10, under Item 2-Inspections, Item A, Emergency, 15 " . . . representative is authorized to enter a rental dwelling without the permission of the property 16 owner." He understood an emergency or life threatening situation but he would not want 17 someone to enter a dwelling without owner or renter permission. City Attorney Baumgartner 18 thought at the end of the sentence some wording should be added reading" . . ., after reasonable 19 attempts to obtain said permission have failed." 20 21 Motion by Bukkila, Seconded by Jacobson, to adopt the ordinance with the two amendments 22 made in discussion and also adopt the summary ordinance that will be published in the Anoka 23 Union. Motion carried unanimously. (Ordinance 381) 24 25 Motion by Jacobson, Seconded by Knight, to approve the single family dwelling license 26 application and attached materials (F AQ). Motion carried unanimously. 27 28 29 DISCUSS WETLAND BUFFERSILRRWMO 30 31 The City Council is requested to discuss the status of the Lower Rum River WMO (LRRWMO) 3rd 32 Generation Comprehensive Watershed Management Plan and discuss items that will have an impact 33 to all the cities that are part of the organization. 34 35 Mr. Todd Haas reviewed the information with the Council. 36 37 Mr. Dennis Rodecker, Anoka Conservation District, made a presentation to the Council. 38 39 Councilmember Jacobson asked ifthe policy is adopted does the City have to conform to this or 40 could the City set their own policy. Mr. Rodecker stated if the Lower Rum adopts a buffer policy 41 then the city will have to conform to that policy. 42 43 Acting Mayor Trude stated she liked the comment about looking at the individual situation and 44 not just across the board because of the flat topography most of the City has and the sandy soils Regular Andover City Council Meeting Minutes - May 19, 2009 Page 12 1 in some areas so the buffer may be smaller. Mr. Rodecker stated that was correct. Acting Mayor 2 Trude stated once the buffer land disappears then the wetland starts to disappear and she has seen 3 a lot of that happen just in her neighborhood. 4 5 Mr. Berkowitz stated the way the Coon Creek Watershed gets around this is they put in the word 6 "may", "we may require a buffer to be fifteen to twenty-five feet", that allows an opening for 7 them. 8 9 Acting Mayor Trude thought there is a lot of value in protecting the waterways. Mr. Rodecker 10 stated buffers are only one tool. Acting Mayor Trude stated buffers are usually attractive, low 11 maintenance, natural landscapes. 12 13 Councilmember Jacobson asked if the permanent boundary markers and signage costs to be 14 borne by the developers and not cities. Mr. Rodecker stated that is usually the case. 15 16 Acting Mayor Trude wondered because of the lateness ofthe hour if they could have this brought 17 back for further discussion. 18 19 There was further discussion about what the Council would like to further discuss. 20 21 Acting Mayor Trude thought it would be helpful for residents to learn more about this and have 22 some articles included in the newsletter. 23 24 25 CONSIDER APPROVALIEXTENSION OF LIQUORLICENSE/BEEF O'BRAD Y'S 26 27 Mr. Tony Zeece, Beef O'Brady's, has submitted a request for an extension of his liquor license. 28 29 BeefO'Brady's is planning to hold an outdoor event May 23,2009 Memorial Day weekend and 30 would like Council to approve an extension of their liquor license to include a portion of the 31 parking lot in front of the patio area. Previous Council discussion was to limit these types of 32 events to the months of June, July and August. 33 34 Mr. Dickinson reviewed the information with the Council. 35 36 Motion by Knight, Seconded by Bukkila, to approve the extension of liquor license to include a 37 portion of the parking lot submitted by BeefO'Brady's for May 23,2009. Motion carried 38 unanimously. 39 Regular Andover City Council Meeting Minutes - May 19, 2009 Page 13 1 2 SCHEDULE EDA MEETING 3 4 The Council is requested to schedule an EDA meeting at 6:00 p.m. before the June 2, 2009 City 5 Council meeting. 6 7 Motion by Jacobson, Seconded by Knight, to schedule an EDA meeting for June 2, 2009 at 6:00 p.m. 8 Motion carried unanimously. 9 10 11 SCHEDULE JUNE WORKSHOP 12 13 The Council is requested to schedule a Council Workshop for the month of June for a number of 14 miscellaneous business items. 15 16 Motion by Jacobson, Seconded by Bukkila, to schedule a June Workshop for June 23, 2009 at 6:00 17 p.m. Motion carried unanimously. 18 19 20 CONSIDER CITY CODE AMENDMENT/CHANGES TO CITY CODE TITLE 4/ABATEMENT 21 PROCESS 22 23 The Council tabled this item until the next City Council meeting. 24 25 Motion by Jacobson, Seconded by Knight, to table this item until the next City Council meeting. 26 Motion carried unanimously. 27 28 29 ADMINISTRATOR REPORT 30 31 City Administrator Dickinson updated the Council on the administration and city department 32 Activities, CIP Projects and meetings. 33 34 35 .MAYOR/COUNCIL INPUT 36 37 There was none. 38 39 Motion by Knight, Seconded by Bukkila, to adjourn. Motion carried unanimously. The meeting 40 adjourned at 11:15 p.m. 41 42 Respectfully submitted, 43 44 Susan Osbeck, Recording Secretary Regular Andover City Council Meeting Minutes - May 19, 2009 Page 14 REGULAR ANDOVER CITY COUNCIL MEETING MINUTES -.MAY 19,2009 TABLE OF CONTENTS PLEDGE OF ALLEGIANCE ....................... ...................... ...................................... ...................... 1 RESIDENT FORUM............................................................................;......................................... 1 AGENDA APPROV AL.................................................................................................................. 1 CONSENT ITEMS......................................................................................................................... 1 Approval of Claims.................................................................................................................;... 2 Approve Refuse/Recycler Hauler Licenses......... .................................. .......... ...................... ...... 2 Approve Temporary 3.2% Malt Liquor License/Andover Lions/Fun Fest................................. 2 Approve Application for Exempt Permit/Andover Lions Club (See Resolution R043-09) ....... 2 Accept Feasibility Report/Waive Public Hearing/Order Plans & Specs/09-22/Bunker Lake Blvd. NW Frontage Road/Jay Street Realignment (See Resolution R044-09)..................... 2 Approve Final Plat/Woodland Crossings 2nd Addition (See Resolution R045-09).................... 2 APPROV AL OF MINUTES ....................... .................................................. .......... ........................ 2 RECEIVE ANOKA COUNTY SHERIFF DEPARTMENT MONTHLY REPORT..................... 3 CONSIDER CONDITIONAL USE PERMITIUSED VEHICLE SALE/3149 162ND LANE NW (Motion to Table)............................................................................................................................ 3 CONSIDER BUSINESS LICENSEIUSED VEHICLE SALES/3149 162ND LANE NW (Motion to Table) .........;................................................................................................................................ 5 CONSIDER V ARIANCE/MINIMUM LOT WIDTH REQUIREMENTS/17285 ROUND LAKE BOULEVARD NW (Motion to Table)......................................................................................5 CONSIDER REVISED PLANNED UNIT DEVELOPMENT/ANDOVER CLOCKTOWER COMMONSINE CORNER OF HANSON AND CROSSTOWN BL VDS NW (Motion to Table) .................................................................................................................................. ............ 7 CONSIDER CODE AMENDMENT/CHANGES TO CITY CODE TITLE 9/REGULATIONS FOR RENTAL OF SINGLE FAMILY UNITS (Ordinance 381).............................................. 9 DISCUSS WETLAND BUFFERS/LRRWMO ............................................................................ 11 CONSIDER APPROV AL/EXTENSION OF LIQUOR LICENSE/BEEF O'BRADY'S ............ 12 SCHEDULE EDA MEETING............ .............,.... .................. ...... .... ............................................ 13 SCHEDULE JUNE WORKSHOP ............... .................. .......................... ........ ........ .................... 13 CONSIDER CITY CODE AMENDMENT/CHANGES TO CITY CODE TITLE 4/ ABATEMENT PROCESS (Motion to Table) ...................................................................... 13 ADMINISTRATOR REPOR T ................................................................. .............. ...................... 13 MA YO R/COUN CIL. INPUT ............................. ........................................................................... 13 ADJOURNMENT......................................................................................................................... 13 C I T Y 0 F @ NDOVE 1685 CROSSTOWN BOULEVARD N.W. . ANDOVER, MINNESOTA 55304 . (763) 755-5100 FAX (763) 755-8923 . WWW.CI.ANDOVER.MN.US TO: Mayor and Councilmembers CC: Jim Dickinson, City Administrator / Finance Director FROM: Lee Brezinka, Assistant Finance Director SUBJECT: Payment of Claims DATE: June 2, 2009 INTRODUCTION Attached are disbursement edit lists for claims related to the on going business of the City of Andover. DISCUSSION Claims totaling $112,072,00 on disbursement edit lists #1- #2 from OS/21/09 to OS/29/09 have been issued and released. Claims totaling $35,524,14 on disbursement edit list #3 dated 06/02/09 will be issued and released upon approval. BUDGET IMPACT The edit lists consist of routine payments with expenses being charged to various department budgets and projects. ACTION REQUIRED The Andover City Council is requested to approve total claims in the amount of $147,596.14, Please note that Council Meeting minutes will be used as documented approval. Respectfully submitted, 'I7j~ Lee Brezinka Attachments: Edit Lists - Il) ~ P-. o 0 0 0 0 0 ~..... ~ ~ ~ ~ ~ ~ . ~ ~ ~ ~ ~ ~ 0 f-tQ ~z ~~ ~OO ~~~ ~~ ~O ~OO~ ~~ ~g~ ~~~ ~g ~~ ~~~~ _ U'!""""4 ON'!""""4 U"""""""-( U('1') C,)'f"""'I U'!"'""'l1""'""l'!""""4 ~ O~ O~~ ~~~ ~~ ~~ ~~~~ ,....c. Q} I Q.) I I (!) I I 0) I Q.) I C1) I I I S g.g g.g g g.b';l l!2 g.g g.g g.g g g = 1l)00 1l)0000 1l)0\0\ 1l)0\ 1l)0 Il)MMN Z 0000 000000 00-- 0000 OO~ OO~~~ ~ ~~ ~~~ ~~~ ~~ ~~ ~~~~ C.I 00 000 0__ 00 0_ 0000 C.I ~S ~SS ~SS ~g ~S ~~~~ < U~ U~~ UOO U~ Uo UNNN ~ .... c<l ~ 0\ 0\0\ 0\0\ 0\ 0\ 0\0\0\ = 0 00 00 0 0 000 o 00 00 0 0 000 ~ ~ ~~ ~~ ~ ~ ~~~ ~ ,....... 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",0 ~ ~ ~..c: 0\ Cl)CoH = ~C'l ~U '<I" _0 .S ~'5" ~'t; N ..0 0 .... 0~3 tf E-< .. c. o...-til ] !3 I ~d:: ~ 'C u~~ 0\ :':::<'10 u-s 0 ~~ Po. c:.l ~d8~ 5:l:;;,E-< 0 '" .... ::s 0\ d) ~.g] t:^ !3 ,.><: <8Z t:! ~ g '<I" ~ .8 ~ g 00 N ~U tiltil t:! rfJ....s::l I 1ZlE-<O ~~ .,., 0 ..f-lU 0\ S'\NDbVE~ Q) 1685 CROSSTOWN BOULEVARD N.W. . ANDOVER, MINNESOTA 55304 . (763) 755-5100 FAX (763) 755-8923 . WWW.CI.ANDOVER.MN.US TO: Mayor and Councilmemebers CC: Jim Dickinson, City Administrator Will Neumeister, Community Development Director wi FROM: Angie Perera, Associate Planner -Atu,f 1 DATE: June 2, 2009 SUBJECT: Approve Fee Ordinance Amendment/Establish Single Family Rental License Fee INTRODUCTION Section 1-7-3 of the City Code's fee schedule is being amended in conjunction with the fees discussed and approved conceptually with the ordinance amendment for rental license requirements at the May 19,2009 City Council meeting. The fee schedule amendment includes the following: . Change title of "Rental Housing License" to "Multi-family Rental Housing License". . Change the fee of Re-inspection Fee per Call (2nd) from $47 to $50. . Addition of "Single-family Rental Housing License" and include a $50 fee for this. Multi-Familv Rental Housing License (see ord.): Structures without fIre suppression systems $75.00 per unit inspected every two years (except owner occupied) Bldg code & fIre code inspections. Structures with fIre suppression systems $52.00 per unit inspected every two years (except owner occupied) Bldg. Code & fIre code inspections. This includes common areas in the building. Re-inspection Fee per Call (2nd) $41:00 $50.00 Sinl!le-Familv Rental Housinl! License $50.00 per unit inspected every two years (see ord. ): Re-inspection Fee per Valid Complaint $50.00 Attachments Summary Ordinance Proposed Ordinance Respectfully Submitted, ~ Ang' rera 1 CITY OF ANDOVER COUNTY OF ANOKA STATE OF MINNESOTA ORDINANCE NO. SUMMARY - AN ORDINANCE AMENDING CODE SECTION 1-7-3 (PERMIT FEES, SERVICE CHARGES, AND PENALTIES CODE) STATUTORY AUTHORIZATION AND POLICY Statutory Authorization This ordinance is adopted pursuant to the authorization and policies contained in Minnesota Statute 462. Policy Section 1-7-3 of Andover City Code contains the fee schedule for the year of 2009 and is being amended to include a single family rental license fee of $50 and to amend the re-inspection fee from $47 to $50. GENERAL PROVISIONS AND DEFINITIONS Jurisdiction The provisions of this Ordinance shall apply to the City of Andover. Enforcement The City Administrator or his/her designee shall have the authority to enforce the provisions of this ordinance. Interpretation Interpretation of the provisions of this ordinance shall be held to be the minimum requirements and shall be liberally construed in the favor of the governing body. A printed copy of this ordinance is available for inspection by any person during regular hours of the City Clerk. Adopted by the City Council ofthe City of Andover on this 2nd day of June, 2009. ATTEST: CITY OF ANDOVER Michelle Hartner, Deputy City Clerk Michael R. Gamache, Mayor CITY OF ANDOVER COUNTY OF ANOKA STATE OF MINNESOTA ORDINANCE NO. - AN ORDINANCE AMENDING CODE SECTION 1-7-3 (PERMIT FEES, SERVICE CHARGES, AND PENALTIES CODE) STATUTORY AUTHORIZATION AND POLICY Statutory Authorization This ordinance is adopted pursuant to the authorization and policies contained in Minnesota Statute 462. Policy Section 1-7-3 of Andover City Code contains the fee schedule for the year of 2009 and is being amended to include a single family rental license fee of $50 and to amend the re-inspection fee from $47 to $50. This was discussed and approved conceptually with the adoption of the ordinance amendment pertaining to the single family rental requirements that was approved by the City Council at the May 19,2009 City Council meeting. Multi-Familv Rental Housing License (see ord.): Structures without fIre suppression systems $75.00 per unit inspected every two years (except owner occupied) Bldg code & fIre code inspections. Structures with fIre suppression systems $52.00 per unit inspected every two years (except owner Occupied) Bldg. Code & fIre code inspections. This includes common areas in the building. Re-inspection Fee per Call (2nd) $41,00 $50.00 Sine:le-Familv Rental Housine: License $50.00 per unit inspected every two vears (see ord.): Re-inspection Fee per Valid Complaint $50.00 GENERAL PROVISIONS AND DEFINITIONS Jurisdiction The provisions ofthis Ordinance shall apply to the City of Andover. Enforcement The City Administrator or his/her designee shall have the authority to enforce the provisions of this ordinance. Interpretation Interpretation of the provisions of this ordinance shall be held to be the minimum requirements and shall be liberally construed in the favor of the governing body. A printed copy of this ordinance is available for inspection by any person during regular hours of the City Clerk. Adopted by the City Council of the City of Andover on this 2nd day of June, 2009. ATTEST: CITY OF ANDOVER Michelle Hartner, Deputy City Clerk Michael R. Gamache, Mayor (3) 1685 CROSSTOWN BOULEVARD N.W. . ANDOVER, MINNESOTA 55304 . (763) 755-5100 FAX (763) 755-8923 . WWW.CI.ANDOVER.MN.US TO: Mayor and Council Members FROM: Jim Dickinson, City Administrator SUBJECT: Update on Revised Planned Unit Development/Andover Clocktower Commons/NE Corner of Hanson & Crosstown Blvds. NW - Administration DATE: June 2, 2009 INTRODUCTION At the May 19, 2009 City Council meeting the Council directed staff to work with the applicant on design details for the requested access to Andover Clocktower Commons off of Crosstown Boulevard. The three items directed by Council were adding a west bound right turn lane, extending the "pork chop" median and determine what type of minimum channelization would be necessary on Crosstown Boulevard, striping or a modified concrete median. DISCUSSION Administration and Engineering Staff met with the applicant on May 22nd to begin the discussion on the items directed by the City Council. Based on the discussion at the May 22nd meeting, the applicant has decided to explore the possibility of requesting that the access improvements be pursued as a public improvement project and include the property owner to the south (Winslow Holasek) in the project discussion in order to facilitate access to that site and to limit the potential removal of , access improvements that are currently being contemplated for the Andover Clocktower Commons development. One important component would be what type of access will be acceptable to the City for the property to the south. Staff has requested that additional traffic study information be submitted that would include access to the southerly parcel. This subsequent report will be reviewed by the City's Traffic Consultant and City staff and brought forward to the City Council for discussion at a future meeting. If the project moves forward as a public improvement, the updated traffic study and waiver petitions from all benefitting properties were identified by staff as being required. The benefitting property owners would have an opportunity to opt out if the feasibility report identifies costs that are not acceptable or at the time the bid would be awarded if the cost comes in higher than anticipated. Mayor and Council Members June 2,2009 Page 2 of2 If the proposed access is acceptable to the benefitting property owners and the City, this project could then move forward as a public improvement 429 project. The project would be designed and constructed to meet current access needs to the north (3/4 intersection) and future access requirements to the south. Additional improvements for the south access will be needed. The design for the project at hand would provide for minimal future loss of the constructed portion of the improvement at the time the southerly property develops. A combination of hard channelization and striping would be provided on Crosstown Boulevard and a west bound right turn lane entering Clocktower Commons would provide for a permanent improvement that will function well into the future. ACTION REQUESTED This is an update only. Information will be brought back to the June 16, 2009 regular scheduled City Council meeting if the public improvement project is to be considered as an option. '- cc: Darren Lazan, Landform, 105 S. 5th Ave., Suite 513, Mpls, MN 55401 Tom Roberts, BDT Land, LLC, 6484 Pinnacle Dr., Eden Prairie, MN 55346 5'\NDbVE~ @ 1685 CROSSTOWN BOULEVARD N.W.. ANDOVER, MINNESOTA 55304. (763) 755-510.0 FAX (763) 755-8923 . WWW.CI.ANDOVER.MN.US TO: Mayor and Council Members CC: Jim Dickinson, City Administrator FROM: David D. Berkowitz, Director of Public orks/City Engineer SUBJECT: Accept Petition/Order Feasibility Report/09-25/13758 Round Lake Blvd. NW /WM - Engineering DATE: June 2, 2009 INTRODUCTION The City has received a petition from the property owner of 13758 Round Lake Boulevard NW requesting the improvement of water main (see attached petition), Project 09-25. DISCUSSION The petition is the first step in the assessment process. A feasibility report will be prepared and discussed with the petitioner. It will then be brought back to the City Council at a future City Council meeting. BUDGET IMPACT The cost of the improvement would be assessed to the property owner over a 5 year period. ACTION REQUIRED The City Council is requested to approve the resolution declaring adequacy of petition and ordering preparation of a feasibility report for the improvement of water main for Project 09-25, 13758 Round Lake Boulevard NW. Respectfully submitted, Q~,\ David D. Berkowitz Attachments: Resolution5"etitio~ Location Map ./ cc: Chris Fautsch, 13758 Round Lake Blvd. NW, Andover CITY OF ANDOVER COUNTY OF ANOKA STATE OF MINNESOTA RES. NO. MOTION by Councilmember to adopt the following: A RESOLUTION DECLARING ADEQUACY OF PETITION AND ORDERING PREPARATION OF A FEASIBILITY REPORT FOR THE IMPROVEMENT OF WATER MAIN , FOR PROJECT NO. 09-25, IN THE AREA OF 13758 ROUND LAKE BOULEVARD NW. WHEREAS, the City Council has received a petition, dated Mav 27.2009 requesting the construction of improvements; and WHEREAS, such petition has been validated to represent the signatures of 100% of the affected property owners requesting such improvement. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Andover that: 1. The petition is hereby declared to be 100% of owners of property affected, thereby making the petition unanimous. 2. Escrow amount for feasibility report is 0 3. The proposed improvement is hereby referred to the Citv Enqineer and he is instructed to provide the City Council with a feasibility report. MOTION seconded by Councilmember and adopted by the City Council at a reqular meeting this 2nd day of June , 2009, with Councilmembers voting in favor of the resolution, and Councilmembers voting against, whereupon said resolution was declared passed. CITY OF ANDOVER ATTEST: Michael R. Gamache - Mayor Michelle Hartner - Deputy City Clerk O~ - tA 6 RECEIVED Date :J/~7 / () i MAY 2 7 2009 Andover City Engineer CITY OF ANDOVER 1685 Crosstown Boulevard NW Andover, 'MN 55304 Re: Municipal Improvements Dear City Engineer: C; .~( iN ^'}e' Co /t\ V\ e.. ct.' I Ol.,,- We do hereby petition for improvements of ~ter~ sanitary sewer, storm sewer and streets (circle one or more) with the costs of the improvement to be assessed against my benefiting property. Said petition is unanimous and the public hearing may be waived. We would like to be assessed over a 5 year period. Sincerely, ~ ~ propertyOW~ F:u-\-scV\ ~ Address /]757; 1'-0" V\Q I~ \z~ b\ v~ !() lY) --- CIty, State, Zip AV\&o\Je.1( V~ {\J sr;?, 0,/ . Phone (~) .) I (W r) ~ e U) G I ? - 51()~ () 2o'i) C:\Documents and Settings\DaveB\Local Settings\Temporary Internet Files\Content.Outlook\35L TMHM2\PETITION.DOC CD :;;0.. :> co 0:2: -= - c ..c '-I..~,.,.I. <C <:>> ~._~l - en ~ ~ "" 0 0<..> ~ '" ~.;: ;a~ ~ '" 0> ~w .- ~~~ ." <:> UU ." <:> ",,,, = 0> '" '" , II C) - ""..: w .. <:> - :>>- CI ~ ~ ..- 01- = = ~ Z Z -- N C'I:I C::> UJ '" ...-- =;; ::E Zo C> o:i:i1 ~ 2 ~ ":0 LLJ ~ W U ::;..: ---J 0: ~ 0: u ~ ~ J "- tt. ;;: tt. '" c C u><: .0 c...o..~ ~o ~ ;:OIllD ~ ~ ~ = Z :;z, "'" "'" c "'..: t 9tl' t~ 6tl't 8tl't 9t~ ~ '" ~ I- 8tl't 6tl't ~ C'? 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WWW.CI.ANDOVER.MN.US TO: Mayor and Councilmembers CC: Jim Dickinson, City Administrator / Finance Director FROM: Lee Brezinka, Assistant Finance Director SUBJECT: 2008 Audit Presentation - HLB Tautges Redpath DATE: June 2, 2009 INTRODUCTION Peggy Moeller, CPA, an Audit Partner with the City's auditing firm, HLB Tautges Redpath, will be providing a presentation to the City Council related to the City of Andover Comprehensive Annual Financial Report (CAFR) as of December 31,2008 and the corresponding Management Report. A December 31,2008 CAFR, the corresponding Management Report, a report on internal controls and a legal compliance report are attached and will be the basis of Ms. Moeller's presentation. DISCUSSION The City is required to have an independent audit conducted annually. The 2008 Audit was conducted throughout the months of January, February, March and April. The Finance Staff was very involved in the audit process and enjoyed our excellent working relationship with HLB Tautges Redpath. Ms. Moeller's presentation will touch on the highlights of the City's finances and provide suggestions for improvement on reporting and internal controls. Of significant importance to the Council is that the City received an "unqualified opinion" and received no significant reportable condition comments. BUDGET IMPACT No budget impact; the presentation, financial report, corresponding management report, report on internal controls and report on legal compliance are provided as informational. ACTION REOUIRED The Andover City Council is requested to receive a presentation from HLB Tautges Redpath and receive the City of Andover CAFR as of December 31, 2008, the corresponding Management Report, report on internal controls and report on legal compliance. Respectfully submitted, ;;i Lee Brezinka City of Andover, Minnesota 2008 Audit Review June 2,2009 Presenter: Peggy A. Moeller, CPA Memberof HLB International 1 .ifllf~!li;lli~~IIII:~i~ Reports Issued Memoor ~ HLB International 2 .,~jJt;~~~~~liiill;~~~~. Comprehensive Annual Financial Re ort . City's financial statements . Independent auditor reports on the fair presentation of the financial statements . "Clean opinion" on the 2008 financial statements . The City received the 2007 GFOA Certificate of Achievement for Excellence in Financial Reporting Program ~... . Memoo, m HLB Inte,naUonal 3 u\lj5lt~~;ii~II~JII Report on Internal Control . Consideration of internal control as a basis for designing audit procedures. No opinion on internal control. . No findings for 2008. uu._...................._..__. . lIiii........ .. Membe' of HLB Ihtemm;onal 4. .:l!:I~jlJl~~II~!~!llll State Legal Compliance Report . Required by Minnesota Statute 96.65 . OSA established a task force to develop audit guide for legal compliance . Audit guide covers seven categories 1) contracting and bidding 2) deposits and investments 3) conflicts of interest 4) public indebtedness 5) claims and disbursement 6) other miscellaneous provisions 7)' Tax increment financing . No compliance findings Member of HLB International 5 ,.lfliillllll'lllr. Management Letter + Distinguished Budget Presentation Award - The City was awarded the Government Finance Officers Association Distinguished Budget Presentation Award for the City's past seven budgets and is submitting the 2009 budget for the award. - The City has spent considerable time and resources publishing a comprehensive budget that is a valuable working document, policy document and operations guide for the City's various activities. - The 2009 budget includes an overview of all financial activity, including tax levy, revenue/expenditures budgets, and statistical and demographic information. - The City is one of only 18 Minnesota cities receiving both the Certificate of Achievement for Excellence in Financial Reporting and the Distinguished Budget Award. ~//,,' : '",;",,,,,;,;"" . .. Memoor of HLB International 6 Wi;~:::~~;:~:;~I.Wf~1 Management Letter . General Fund: - Fund balance increased $284,575 during 2008. Budget Actual Variance Revenue $8,619,938 $8,615,877 ($4,061) Expenditures 8,885,654 8,522,496 363,158 Increase (decrease) before other financing sources (265,716) 93,381 359,097 Other financing sources: Transfers in 191,194 191,194 - Increase (decrease) in General Fund balance ($74,522) $284,575 $359,097 ,....'..-...---."'."'.-......'.--...--, Member of HLB International 7 ,.jjl~;ti~1/~~ril)~Ii: Management Letter . General Fund: - Fund balance at December 31,2008 was $4,175,035. - Working Capital Reserve: · Approximately 79% of the General Fund's revenue sources are from property taxes and state aids. These revenue sources are not received until the second half of the fiscal year. As such, a working capital reserve at December 31 is required to finance operations for the first six months of the year. Member of HLB International 8 .1,I!t~~~:;I}li;jJ;~~I. Management Letter . General Fund: · For the City of Andover, the required working capital reserve is computed as follows: 2009 General Fund budgeted expenditures $9,183,646 Recommended working capital reserve (fifty percent of total) $4,591,823 · The current working capital reserve in the General Fund is 40%. Member of HLB International 9 .illl:i~iif~l~iiril~l! Management Letter + Bonded Debt - The City has the following bond issues outstanding at December 31, 2007 and 2008: December 31, 2007 2008 Public Facility Lease Revenue Bonds $51,115,000 $50,565,000 G.O. Special Assessment Bonds 3,560,000 3,015,000 G.O. Tax Increment Bonds 4,010,000 3,275,000 G.O. Certificates of Indebtedness 1,280,000 1,525,000 G.O.Permanent Improvement Revolving Bonds 4,835,000 3,755,000 G.O. Capital Improvement Bonds 3,525,000 3,155,000 G.O. State Aid Bonds 1,915,000 1,760,000 Subtotal 70,240,000 67,050,000 Less refunded bonds paid by escrow (22,945,000) (22,945,000) Net $47,295,000 $44,105,000 ~Cnj':':r:%;:j"jj::!;::::::i'::jjjj Membe, of HLB International 1 0 liWl::;;;~::::::;=~::;:~~~ Management Letter + Bonded Debt - The City analyzes its debt position annually as part of the budget and CIP process. - The City's debt rating was upgraded to AA+ by Standard & Poor's for the bonds issued on March 26, 2009. The City continually monitors call dates on outstanding debt to take advantage of opportunities to save on long-term interest expense. Member of HLB International 11 .lli'il;lllil;;liI1:;;i! Communication With Those Charged With Governance - Required Communication · Audit firm responsibility under U.S. audit standards. · Planned scope and timing of audit · Significant audit results · Difficulties encountered in performing the audit (none) · Corrected and uncorrected misstatements · Disagreements with management (none) · Management representations · Consultations with other auditors · Other audit findings and issues Member of HLB International 12 .c~~lft~~ Other Matters - Other Matters · 2008 property tax collection rate was 99.30;0. · The City implemented GASB Statement No. 45, Accounting and Financial Reporting by Employers for Post Employment Benefits Other Than Pensions, during 2008. ,. .......u........u.... Member ofHLB International 13 .~~IJ;~i:li(!III,?rl~l 5'\NDbVE~ G) 1685 CROSSTOWN BOULEVARD N.W. . ANDOVER, MINNESOTA 55304 . (763) 755-5100 FAX (763) 755-8923 . WWW.CI.ANDOVER.MN.US TO: Mayor and Councilmembers CC: Jim Dickinson, City Administrato Will Neumeister, Community Develop nt Director b'~, FROM: Courtney Bednarz, City Plann~ SUBJECT: Consider Conditional Use PermitIU sed Vehicle Sale/3149 I 62nd Lane NW - Planning DATE: June 2,2009 INTRODUCTION The Council tabled this item to tonight's meeting to allow the applicant and staff to address the following items: 1. Previously constructed fence 2. Previous parking area expansion 3. Difference between the number of required parking stalls between the city and state. 4. Hours of operation 5. Landscaping of bare ground area A time line of recent changes that have affected the industrial park is also attached to provide additional background information.. DISCUSSION Previously constructed fence A fence permit was issued for the fence on October 17, 2008. The fence conforms to city requirements. Previous parking area expansion The parking area was expanded from the north end of the building to where it exists today sometime between 2006 and 2008. The deficiencies of the parking area include the lack of curb and gutter and the setback from the east property line. Difference between the number of required parking stalls between the city and state. The state requires a vehicle display area designated for the exclusive use of the dealership large enough for at least five vehicles. The city requires a total of nine dedicated stalls for customer, employee and display parking. These nine stalls are more than enough for five display vehicles. However, the applicant has offered to limit himse1fto one display vehicle through his approval with the city. Hours of operation The applicant expressed that due to the limited scope of the business, office hours would be by appointment only. Landscaping of bare ground area The condition of approval has been modified to require seed or sod to establish a uniformly maintained lawn area. Comparison to City Code City Code 12-13-9 Off Street Parking Requirements: Parking Stall Quantity Use Parking Stall Requirements Required Proposed (within Stalls existin~ narkinl! area) Employee Parking: 3 stalls plus 1 per 400 sf beyond the fIrst 1,000 gross floor area 3 3 Vehicle Customer Parking: 5 stalls plus 5 stalls per acre Sales above the fIrst acre 5 5 Vehicle Display Parking: (as proposed by applicant) I I Other I stall per 250 sf (Office) 13 26 TOTAL 22 35 Parking Area Performance Standards Item Conforms? Notes: Surface Yes The surface of the parking area is paved. Curb No The parking area does not have curb and gutter as would be required for a new parking area. Dimensions Yes The parking stalls and drive lane meet the dimensional requirements Setback No The existing parking lot is 5 feet from the east property line. A 10 foot setback is required for new parking areas. Parking areas are required to be screened from public right-of-way to a Screening No minimum height of three feet. This applies to the portions of the parking area directly visible from Round Lake Boulevard and 162nd lane NW. Other No an unpaved turnaround has worn away the ground cover to the north of the parking area. This area needs to be restored or paved as part of the parking area City Code 12-13-6 Landscaping Requirements: City Code 12-13-6 Measurement Ratio Required Required Trees Shrubs Area Site PerimeterI 1,048 feet 1 tree/50 feet 21 52 1 shrub/20 feet Building Perimeter 288 feet 1 shrub/l 0 feet NA 29 Total Required Plant Material 21 81 Total Existing Plant Material 10 28 I Site perimeter does not include northerly area of site that is undeveloped. 2 City Code 3-8 Vehicle Sales Businesses This section of the code provides additional regulations for vehicle sales busin~sses. It is attached for review. Staff Recommendation The limited scope of the proposed business will have minimal impact on the site. No expansion of the building or parking area is proposed. As a result, any improvements that are required should also be limited. Staff recommends the areas of bare ground on the site be re-vegetated to establish ground cover and that the exterior storage oflumber, block, brick and other miscellaneous items be removed from the property. Planning Commission Recommendation The Planning Commission recommended approval of the conditional use permit subject to the conditions of the attached resolution. The motion included a request to determine how the parking area on the site was expanded. ACTION REQUESTED The Council is asked to approve or deny the conditional use permit, including the level of site improvements that will be required. Attachments Resolution Timeline of Recent Changes Affecting the Industrial Park Location Map Site Drawing Letter from applicant City Code 13-8 Vehicle Sales Businesses City Code 12-13-22 Interim Performance Standards Summary of Previous Application of Interim Performance Standards E-mails opposing request Planning Commission Minutes Council Minutes (Item 1. In the packet) Cc: Frank Sud 15956 Drake St NW Jim Larson 3149 162nd Lane NW 3 CITY OF ANDOVER COUNTY OF ANOKA STATE OF MINNESOTA RES. NO. R A RESOLUTION APPROVING CONDITIONAL USE PERMIT FOR USED VEHICLE SALES ON PROPERTY LOCATED AT 3149 162ND LANE NW LEGALLY DESCRIBED AS LOT 1, BLOCK 1 HUGHS INDUSTRIAL PARK, ANOKA COUNTY MINNESOTA, SUBJECT TO EASEMENT OF RECORD WHEREAS, the applicant has requested approval of a conditional use permit for used vehicle sales on the subject property, and; WHEREAS, the Planning Commission finds the request would not have a detrimental effect upon the health, safety, and general welfare of the City of Andover, and; WHEREAS, the Planning Commission recommends to the City Council approval of the conditional use permit request, and; NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of Andover has received the recommendation of the Planning Commission and approves used vehicle sales on the subject property subject to the following: 1. The applicant shall be required to obtain approval of a vehicle sales business license from the City Council. 2. Vehicle display parking, customer parking and employee parking shall be limited to the number and location described in the June 2, 2009 staff report to the City Council. 3. The areas of bare ground on the subject property shall be seeded or sodded to establish a uniformly maintained lawn area. 4. Exterior storage of lumber, block, brick and other miscellaneous items shall be removed from the property. Adopted by the City Council ofthe City of Andover on this _th day of ,2009. CITY OF ANDOVER ATTEST: Michael R. Gamache, Mayor Michelle Hartner, Deputy City Clerk 4 Timeline of Recent Changes Affecting the Industrial Park City debates ordinance amendment for vehicle sales in the Industrial Zoning January-April 2006 District. It is determined that performance standards are necessary and these are discussed over several meetings. April 2006 City approves ordinance amendment to allow used vehicle sales in the Industrial Zoning District City approves conditional use permit and business license for Twin Rivers Auto September 2006 Sales to allow used vehicle sales at 16191 Round lake Boulevard. City approves variances to reduce to the level of required site improvements. City discusses ways to encourage cleaning up and improving Hughs Industrial July - September Park. Interim performance standards to reduce the level of required site 2007 improvements for expansion of businesses are discussed along with increased code enforcement. September 2007 Council approves interim performance standards (City Code 12-13-22). Code enforcement policy for this area changes from reactive to proactive. City approves conditional use permit for outdoor storage at 3118 162nd lane October 2007 NW. The interim standards are used to reduce the level required improvements 5 'f\NDbVE~ Conditional Use Permit Incorporated Used Vehicle Sales 1974 3149 162nd Lane NW co L _~:_~-___~~___-::L:I6:41B:-----L--=~-!==j-~ co "<t co ..- 1643 "<t "<t --...-'- J a a a ~--- --- N a co "<t N 1642 ..- ..- a a a C') C') C') C') C') /,/' _w__ __.______.____ ..._-- ______ m ..- 1641 LO LO co ..- ..- ..- m ---- ----- N a co C') N N - 1640 ..- ..- a a a C') C') C') C') C') C') 0 co ::J A\L - C') C') 3251 a:l "<t a a 3153 N "<t N ..- W C') a a ~ C') C') N <( I"- C') ...J co N co ..- I"- a 0 C') N co C') C') N Z 3055 C') C') co C') 5 16315 16351 N 3126 3100 C') 0:: LO m I"- ..- C') c;:; co m l!) l!) l!) l!) l!) l!) ..- C') N C') N ..- a m I"- C') LO N C') ..- ..- ..- ..- a a a a C') C') C') C') C') C') C') C') N 3368 a 16223 co ..- 3240 C') co co LO C') ..- 3098 I"- ..- ..- m 5 ..- C') C') N m '\6'\B2 ..- 16177 co ..- - 1615 3231 3121 16138 3017 16135 1612 161ST AVE 41 16070 16071 3261 m N "<t co a l"- N CO a a 1 ..- C') C') 16020 3260 - Subject Property Location Map N w-<rE -~ S ___. ___ d_'_ _....~. 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':~- "'3' .' p:+~:~:S;"~:-~ .~~ ,,:. ." ..a,_,'RED.,:W.I."'-_Cl"'",WOOD ,,,s,,,,-r.;.__,..I"f"=" ~HRU"'... oR~ t :} , ;:t .f;./v:PU>V;e..; '==c..,. ..,-.:-~-.--_.:,,- .~' : .....! ".. . H~'; ~- ~ 41~pt.. r;;7t;, ;:." s-tAU.. . .3::.:.~:t.:I~M~"N~"P.cn:Sf;r"CI.I.:.!.;r} 5'~Al-;' ;. LoW SJ;-lRUb ~. Z . ' ,.,- ? t.""''''/ " . ~ r:v:l ~lN'tr,.,,..q: :J . 4.~:WaoP':,..ttt1.t:t:1~:.:.:j:!:~":t1~e:p':.~/'\1l1j'i't.. ~"-- ~ . L. "1" '. ~ ..' . l ~ .' . : ..=s;:eG.T!:r::.:GD(fi<:.i:::;)"':i::;".~:r-Jl.Jt.:Jpr.:..-;, - "-'VI::!a.O C\.tec[<: I I" C) ~ .. /1' . ....j. ~'~:'. ,- .!. .:: f Ir : I:::' . . ,ti i ;' e,L.o' ~ '24'f~';;t.;(y<../. '"1.~ 5-0, ,- t~.:t. j ~: ,I" ,//., ,;;' Q- I ...<~:.)./ ;. t{ .' ,JO. ". 0\, .' .' ~ 01ii:: f'1..^~- l!':=zo'",d' ..;. ~p c".~ I &l.' (;b~ .s 621 . fZi~ I :..r- i. -:I:: =J'- ,a .~ ..0,: l- "_r;JC' \1, .:. I' :. ~. .; .~. . '-:rLA N'D 5CA'P i ~h::;.: .FLAN' ~:.;; , .:1<t~ . " 1 k, __', .....~. . ~ ;.~. I/O. .::,\ /., ;. D \'''''"'. 9l . *o:;c \ ," I.L 1..1, " . O' ~r~ ' . ~_ /L.. It. I. I'<~ I - .,.~ \ \ ;'_." ;/. W, \ / \'. /'" / . .; U J \ X. '. . " f" cj "( ,--"", .. . '\ ' ---....1' ___' 111' '--.... , .' ----; ____ ="-'---- , G:::' S'; . --=,_.:.~~.:;~::~..~.:..~.~tio.2;.1$':::"'l.;if,Je:::.... ,'-, -';.:'.~1;,:::", " J' C ;;j City of Andover 4/20/09 RE: Dealer License I'm in the process of getting my Dealer License. State requires I have an office. I'm leasing existing office and parking space from Jim Larson. This is a small business; I plan to have one car for sale and broker for other clients. Sincerely, Frank Sud Sud Superior Auto Sales Inc fB -~--- CHAPTER 8 VEHICLE SALES BUSINESS 3-8-1: Purpose and Intent 3-8-2: Definitions 3-8-3: License Required 3-8-4: Application for License 3-8-5: Review of Application; Issuance or Denial 3-8-6: License Fees and Term; Renewals 3-8-7: Conditions of License 3-8-8: Standards 3-8-9: Violation Provisions 3-8-10: Revocation of License 3-8-1: PURPOSE AND INTENT: It is the purpose of this chapter to regulate vehicle sales to establish reasonable and uniform regulations to prevent adverse impacts on the health, safety, morals and general welfare of the citizens of the city. 3-8-2: DEFINITIONS: A. Gross Vehicle Weight Rating: The total weight of a fully equipped vehicle and payload including the amount of weight that can be carried and towed. B. Vehicle Sales: the sale of cars and trucks as limited by the City Code, excluding recreational vehicles. 3-8-3: LICENSE REQUIRED: No person shall engage in the business of selling, trading or advertising the sale of new or used vehicles within the city without first obtaining a license as provided in this Chapter. For the purposes of this chapter, anyone who, as a part of their livelihood, engages in the regular sale, trade or exchange of vehicles shall be deemed to be doing business as a new or used vehicle dealer. 3-8-4: APPLICATION FOR LICENSE: A. Information Required: Any person, partnership or corporation desiring to secure a license shall make application to the City Clerk including the following: 1. Completed city application form 2. Fee as established by City Code. -C;v 3. Completed Minnesota Vehicle Dealer License Commercial Location Checklist 3-8-5: REVIEW OF APPLICATION; ISSUANCE OR DENIAL: The City Clerk shall submit the application to the City Council for its consideration. The Council, by motion, may grant or refuse to grant the license after consideration of the application. 3-8-6: LICENSE FEES AND TERM; RENEWALS: The fee for every such license shall be established by resolution of the City Council. Every such license shall expire on December 31 next after it is issued. 3-8-7: CONDITIONS OF LICENSE: A. Transferability: The license shall not be transferable from one person to another, and a new license must be applied for each time a place of business is changed. B. Posting: Every such license shall be kept conspicuously posted in the place for which the license is issued and shall be exhibited to any person upon request. C. Inventory: Vehicles allowed to be sold or stored on site shall be limited to a vehicles that are eligible to be issued a title up to a gross vehicle weight rating of 12,500 pounds. D. Restrictions and Conditions: The Council may impose any conditions or restrictions it deems necessary or advisable in the public interest, including but not limited to the hours of operation, building materials, fencing, landscaping, screening, lighting and signage. E. Review: The Council may review the license at any time for the purpose of adding additional conditions to mitigate adverse impacts on the health, safety, morals and general welfare of the citizens of the city. 3-8-8: STANDARDS: The following standards are established for all businesses engaged in the selling, trading or advertising the sale of new or used vehicles within the city: A. Parking areas shall conform to the requirements of City Code 12-13-9. The Site Plan shall clearly identify parking for customers and parking for display of vehicles for sale. Parking shall be prohibited in drive lanes, on landscaped areas and any place other than approved on the site plan. B. All businesses engaged in the sales, trade or advertising the sale of new or used vehicles within the City limits shall conduct these activities only on ~~-- properties for which they have been granted a license under this chapter. This provision shall not apply to promotional events and activities conducted outside the city limits. C. Vehicles that are visibly damaged shall not be visible from public streets and shall not be stored outdoors for more than 48 hours. D. Outdoor storage of vehicle parts or other materials, including but not limited to tires, scrap metal, glass, pallets and refuse shall be prohibited. E. Sales of used vehicle parts shall be prohibited. F. The dismantling or reduction of vehicles shall be prohibited. G. Signage shall conform to City Code 12-13-8 and shall be further restricted as follows: 1. All signs posted on vehicles shall be inside the vehicle. 2. No sign posted on vehicles shall contain text font or other information that is larger than three inches in height. H. The estimated value of improvements to the licensed property shall exceed the estimated land value of the licensed property as estimated by Anoka County. 3-8-9: VIOLATION PROVISIONS: Any person who shall violate any portion of this chapter shall be guilty of a misdemeanor. 3-8-10: REVOCATION OF LICENSE: Every such license may be revoked by the Council after the license has been given reasonable notice and an opportunity to be heard for the violation of any provision of this chapter or for the violation of any conditions or restrictions in the motion granting the license or any motion thereafter passed by the Council. (Amended 4-4-06, Ord. 324) -- //-- C. Single-family dwellings other than approved earth sheltered homes shall have at least a 4: 12 roof pitch and shall be covered with shingles or tiles. This requirement shall not apply to three-season porches, four-season porches, greenhouses and solariums, provided they meet the State Building Code and are approved by the Building Official. D. All single-family dwellings shall have roof overhangs that extend a minimum of one foot (1 ') from all the walls of the structure unless the style of the house dictates otherwise and said plan is approved by the Building Official prior to any permits being granted. E. All single-family structures must be built in conformance with Minnesota statutes sections 327.31 to 327.35 or the State Building Code as adopted in Section 9-1-1 of this code. F. Any metal siding upon single-family residential structures shall have horizontal edges and overlapping sections no wider than twelve inches (12"). Sheet metal siding shall not be permitted in such districts. G. All exterior construction, including finish and the final grading, shall be completed in accordance with plans and specifications within one year following date of permit issuance. All existing buildings not meeting the provisions of this title shall comply within one year following adoption of this title. (Amended Ord. 8, 10-21-1970; amd. 2003 Code) 12-13-22: INTERIM PERFORMANCE STANDARDS: A. Purpose: Interim performance standards are intended to establish an alternative level of site improvements for properties located in the rural industrial area generally referred to as the Hughs/Westview industrial park area. The City acknowledges that the lack of municipal utilities limits the development potential of these properties. These performance standards are intended to allow continued use, expansion and redevelopment with a level of site improvements that is commensurate with the development potential of the properties. B. Applicability and Scope: This section shall apply to any expansion of use requiring a conditional use permit or commercial site plan on all properties generally described as the Hughs/Westview industrial park area and legally described as the southwest quarter of the northwest quarter of Section 16, Township 32, Range 24, Anoka County, Minnesota and the west half of the west half of the southeast quarter of the northwest quarter of section 16, Township 32, Range 24, Anoka County, Minnesota. C. Procedure: Applications shall be processed under the Conditional Use --le-- Permit procedures described in City Code 12-14-6 except as follows: 1. Application: The property owner or designee shall submit a complete application to the Community Development Department. A complete application consists of the following: a. A completed Conditional Use Permit form and fee as described in City Code 1-7-3. b. A site plan that describes all of the existing and proposed site improvements, including the dimensions of the property, buildings, parking, landscaping and storage areas and distances from property lines. c. A letter describing the existing use of the property, the proposed use of the property and all of the proposed site improvements. d. Other information deemed necessary by staff to review the request. 2. Council Determination: The City Council shall approve or deny the application based on the factors established in this section. The City Council may attach such conditions as they determine necessary to provide the appropriate level of site and building improvements to accomplish the purpose of this section. The level of required improvements shall be determined on a case-by-case basis. Applications shall be reviewed based on the following factors: a. Existing appearance of the building and site; b. Compatibility of the proposed site development plan with the other industrial properties in the area; c. Effect of the proposed use and the proposed site development plan on the adjacent residential neighborhood, including traffic, noise, glare, buffers, and environmental impacts; D. Deviations to the performance standards will be considered in the following areas: 1. Parking and Impervious Surface Areas: a. Screening, landscaping, visual appeal, and lighting of parking lot areas. b. Paving of parking areas for customers. ---/3 - c. Dust control measures for unpaved parking and storage areas. 2. The amount, type, location, and screening of exterior storage requested as a part of any Conditional Use Permit. 3. Screening of mechanical equipment and trash bins/dumpsters. 4. Other factors related to the new development proposal, as the City Council may deem relevant. E. Term of Approval: Interim performance standards approved under this section shall endure until City sewer and water are extended into the area affected by this section. At that time, any future expansion or redevelopment of the affected properties shall be required to fully conform to the regular performance standards of City Code 12-13. F. Other Requirements: Proposed improvements or changes in use will be reviewed by the Building Official and Fire Chief. They will make a determination of whether or not the building(s) on the site need to be brought into compliance with applicable building and fire codes. Site improvements must also be made to meet the requirements of the National Pollutant Discharge Elimination System (NPDES). No portion of this section shall be used to vary from these requirements. (Amended 9/18/07; Ord. 353) -.1;9'- Summary of Previous Application of Interim Performance Standards 3118 162nd Lane NW CUP for Outdoor Storage Approved October 2, 2007 What was Required: 1. Painting of the exterior of the building. 2. Paving of the driveway and front parking lot. 3. Striping of the front parking lot. 4. Landscaping in the front of the building, in conformance with an approved landscaping plan. 5. Dust control measures used in the rear storage yard. 6. Construction of a new fence to screen the rear storage yard from 162nd Lane. 7. Removal of the radio tower on the front of the building. 8. All dumpsters stored on the site shall be screened from view from adjacent properties. 9. No dumpster or material shall be stacked above the fence line. 10. A maximum of 13 dumpster shall be allowed on the site. 11. Dumpsters with material in them shall not be stored on the site longer than 3 days. What was not Required: 1. Curb or pavement for parking area/storage yard behind the building and fence 2. Turf establishment or landscaping behind the building and fence 16191 Round Lake Boulevard CUP for Used Vehicle Sales Approved September 5, 2006 Note: this site preceded the interim standards but was the catalyst for their creation What was Required: 1. Pavement and curb for new parking area 2. Storm water pond for drainage from new parking area 3. Some trees and shrubs What was not Required: 1. Parking area dimensional standards for vehicle display area 2. Parking area screening requirements 3. Appropriate size and number of trees and shrubs ,..~ - Courtney Bednarz From: bndprescott@comcast.net Sent: Saturday, May 02,200912:49 PM To: Courtney Bednarz Subject: Conditional use permit for used car dealership We already have a used car dealership about 100 feet south of the proposed location in the notice we received about the location for 3149 162nd Lane NW. We don't need another dealership 100 feet away. The traffic is already heavy at certain times of the day. Adding more conjestion is impractical. We live in the first house on the northwest corner of Round Lake Blvd and 162nd Lane NW, and we don't need any more hassle getting on to Round Lake Blvd than already exists. I also believe that having the dealership will negatively impact the value of my property. We are definitely not in favor of issuing the-the Conditional Use Permit for this location. Bill and Nance Prescott -J6- James Dickinson From: Dana Peitso Sent: Friday, May 22, 2009 8:26 AM To: James Dickinson Subject: FW: Conditional Use permit for 3149-162nd Ln -----~------~<-_.~ ,.---- -~.~--~-------_._---~~------_.._~~- From: joe@twinriversauto.com [mailto:joe@twinriversauto.com] Sent: Saturday, May 16, 2009 3: 13 PM To: Sheri Bukkila; Mike Gamache; Don Jacobson; Mike Knight; Julie Trude Subject: Conditional Use permit for 3149-162nd Ln Mr. Mayor and Distinguished Council members: I would like to begin by stating that I am not opposed to Mr. SUD's application to sell used vehicles, but I am looking for someone to be accountable for the expansion of the north-end of the parking lot located at 3149 162nd Lane NW. As you know, when I petitioned for my business application, I was required to install a parking lot which included curb and gutter. At that time I asked why the property in question was not required to include curb and gutter that I was being required to install. I was informed that staff had no knowledge about the northern addition to the parking lot at 3149 162nd Ln NW and was told that nothing could be done unless a before and after aerial view of the property was seen. I presented these photos and have not seen any evidence that this property is in compliance to date. At this time, two things still concern me: 1) Fairness to all businesses - Requiring all businesses to operate under the same rules and regulations; not allowing a business to profit while "flying under the radar". Currently the parking lot located at 3149 162nd Ln NW does not exist according to the aerial photos provided; this means it not only has inadequate parking for the three existing businesses, it will definitely have inadequate parking to sell used vehicles (to have a dealers license in the State of Minnesota it is required to have 5 parking spaces). 2) Cleaning up the Huqhes Industrial Complex - This area is considered a "blight" area and not only do I own a business here, I live right behind it. One reason I chose to purchase the building was so I can be the starting point to cleaning up this area and I thought I had the support of the city. The improvements we have made exceed what other businesses in this complex have had to do. At least three new businesses have moved in since I h~ve completed our project and not one of them has been forced to be in compliance. With all of this said, I believe before council can approve the motion for Mr. SUD's application to sell used vehicles, the need to re-investigate and resolve this issue. I welcome your comments and ask that you contact me if you have any questions or comments. Thank you for your consideration. '/7- Joe Brabant Twin Rivers Auto Sales 16191 Round Lake Boulevard Andover, MN 55304 612-718-3112 httD :/ /www.twinriversauto.com .-/ IY'- Regular Andover Planning and Zoning Commission Meeting Minutes - May 12, 2009 Page 3 . PUBLIC HEARING: CONDITIONAL USE PERMIT (09-04) TO ALLOW A USED CAR DEALER AT 314916ZVD LANE NW. Mr. Bednarz stated the City Code requires Council approval of a conditional use permit and a city license for used vehicles sales in the Limited Industrial Zoning District. The applicant is obtaining a dealer's license from the state. This license requires commercial office space. The applicant proposed to have a small office in the existing building and one display vehicle in the existing parking lot. The applicant's letter also indicates that he would provide brokering services for clients. Commissioner Cleveland asked if the proposed building was what was currently there. Mr. Bednarz indicated that was correct. Chairperson Daninger indicated an email was received by Dan and Nancy Prescott indicating they were against this Conditional Use Permit application. Motion by Casey, seconded by Kirchoff, to open the public hearing. Motion carried on a 6-ayes, O-nays, O-present, I-absent (Holthus) vote. Mr. Joe Brabant, 16191 Round Lake Boulevard, stated he was not opposed to business but his question was the parking situation and if it was indeed a legal parking lot because he understood that a permit was never given for this parking lot so in reality it could not be considered adequate parking for a business. Mr. Bednarz did not think Mr. Brabant was ever told there was not any parking at this site and shows parking in the aerial photo. He stated he was not privy to all the details or history of this site. Commissioner Kirchoff asked if the parking lot was bituminous. Mr. Bednarz indicated it was. Commissioner Kirchoff wondered if a permit was pulled for this parking area. Mr. Bednarz explained he could not answer that but there was a parking lot on site at this point in time. Mr. Frank Sudd, 15956 Drake Street, stated he was looking for the opportunity to start this business. He noted he planned on having an extremely small operation and looking to get his dealers license. He also noted there will be minimal impact to the area. Chairperson Daninger asked if Mr. Sudd planned on having only one display vehicle on site. Mr. Sudd indicated he did because he mostly needed to CUP in order to get his dealers license in order to broker. Commissioner Falk asked if Mr. Sudd would consider looking into consignment of vehicles. Mr. Sudd stated that is something he may look into and would like to keep his business somewhat diverse. He would not keep a vehicle parked in the lot trying to sell it but may help others use his resources to sell their vehicle on consignment. -1'-- Regular Andover Planning and Zoning Commission Meeting Minutes - May 12, 2009 Page 4 Chairperson Daninger asked if Mr. Sudd did this anywhere else. Mr. Sudd stated he did not. Chairperson Daninger asked if Mr. Sudd was comfortable with staff suggestion with the vegetation and upgrade of plantings. Mr. Sudd stated he has not seen those plans yet but did talk to the owner of the building but was not aware of the requirements. Motion by Walton, seconded by Kirchoff, to close the public hearing. Motion carried on a 6-ayes, O-nays, O-present, I-absent (Holthus) vote. Commissioner Kirchoff stated he would support this item as written. Chairperson Daninger agreed and wanted to make sure it was also fair to the existing businesses and have staff follow up on the parking area that was discussed. Motion by Walton, seconded by Cleveland, to approve as written and following up with staff to see if the parking lot is legal. Chair Daninger stated the resolution was read and restated and the concern with the one vehicle was understood by the applicant. Motion carried on a 5-ayes, I-nays (Casey), I-absent (Holthus) vote. Mr. Bednarz stated that this item would be before the Council at the May 19,2009 City Council meeting. HEARING: REVISED PLANNED UNIT DEVELOPMENT FOR ANDO CLOCKTOWER COMMONS LOCATED AT THE NORTHEAST CORNER 0 'SON BOULEVARD AND CROSSTOWN BOULEVARD NW. Mr. Bednarz stated B Holdings, the current owner of Andover Clocktower Commons is seeking direct access to osstown Boulevard NW. This item follows from the sketch plan reviewed by the Planning ommission at the February 10th meeting. The applicant requested a full movem access to Crosstown Boulevard at that meeting. The Planning Commission recommended ight-in/right-out access only. The Council appeared in favor of a % intersection. The Co cil also discussed the speed limit along Crosstown Boulevard, the potential for developme of the Holasek property to the south and staging roadway improvements over time. Mr. Bednarz turned the discussion over to Mr. Berkowitz who with the Commission. Commissioner Kirchoff stated Crosstown is currently separated by a conc te median up to the point where this access would begin and he wondered if the concrete w d be tore - l~- 5'\NDbVE~ (] 1685 CROSSTOWN BOULEVARD N.W. . ANDOVER, MINNESOTA 55304. (763) 755-5100 FAX (763) 755-8923 . WWW.CI.ANDOVER.MN.US TO: Mayor and Councilmembers CC: Jim Dickinson, City Administrator ~ Will Neumeister, Community Development Director- -- FROM: Courtney Bednarz, City Plann" SUBJECT: Consider Business LicenselU sed Vehic1e Sales/ 3149 162nd lane NW - P tanning DATE: June 2, 2009 INTRODUCTION As mentioned in the conditional use permit report, the ordinance for vehicle sales requires Council approval of a business license. DISCUSSION The completed application form and required materials are attached. The applicant has paid the application fee. A motion is required to act on the business license application. ACTION REQUESTED The Council is asked to approve or deny the business license. Attachments Application Cc: Frank Sud 15956 Drake St NW Jim Larson 3149 162nd Lane NW C I T Y o F NDOVE 1685 CROSSTOWN BOULEVARD N.W. . ANDOVER, MINNESOTA 55304 .. (763) 755-5100 FAX (763) 755-8923 . WWW.CI.ANDOVER.MN.US RENEWAL APPLICATION Used Vehicle Sales Business License Application Required Documents: . Completed Application Form . Vehicle Sales LiCense Fee: $105.00 . Copy of State Dealers License . Workers Compensation Form Person Applying For License: LastName .1 U J -- MiddleNameS~-'1-fO First Name1-'rr(..\'!A lc Home Address I S- 4 S- k-.J f)(/' Ut- k ( s~/ I7tJ ';Z 'logO "Ie&? '3./. ~/q Home Phone h3/~Z3' Business Phorr' '-2,u/2,-' t Fax I (We) agree to operate such business in accordance with the laws of Minnesota and the ordinances of the City of Andover. Information in this application is classified as public data and will be pro"ided to the public upon request. Licenses expire on December 31 st of ~ach year. Lack of payment of annual licensing fee shall be cause for revocation of license. jlI.a,/~ ~ / S:-/3---o9 SIgnature Date License Renewal Fee $105.00 Receipt # -c. City Council Action MINNESOT A DEPARTMENT OF PUBLIC SAFETY OFFICE USE ONLY DRIVER AND VEHICLE SERVICES DEALER NUMBER: 445 Minnesota Street, Suite 186, St. Pa'ul, MN 55101-5186 PHONE: 651-296-2977 DATE RECEIVED: FAX: 651-297-1480 INITIALS: ' EMAIL: DealerQuestion mndriveinfo.org Minnesota Vehicle Dealer Lice e - Commercial Location Checklist This checklist describes (check one): o Additional Location (Attach a separate checklist for each location) DEALER NA~mS~wt vi ('(7" (/ I;; if #vvh ~~~ k<; DEALER NUMBER j j&lq I Street L It; l VI) &wVl,{/ n!JU City .1} fl' d tJ \I tv 'Stat/YIflZipS-S- S{.;;)"/!county .A/!-o U-~ Commercial Building Requir~ment: New, Used, Salvage Pool, and Auctioneer dealers must have a Commercial Building, which means a permanent, enclosed building that is on a permanent foundation and is connected to local sewer and water facilities or otherwise complies with local sanitation codes, is adapted to commercial use and conforms to local government zoning requirements. (Minnesota Statutes, section 168.27 subdivision 1) Commercial Office Space Requirement: Lessors, Wholesalers, and Brokers must have at least a Commercial Office Space, which means a space occupying all or part ofa commercial building. (Minnesota Statutes, section 168.27 subdivision 1) Instructions . Check the type of dealer's license that applies . Answer T (True) or ;E.(False) to each statement that applies to the license type you checked. . tJ,,",,,,hip OWD" 0' offi,,, mu,t ,igu on """'Zf form Check the licens~ type that applies to you: 0 New Used 0 Salvage Pool ~-:(' o Additional LocationlDisplay Lot - respond to statements 2. 7, & 8 only The dealer keeps all books and records necessary to conduct business at the main dealership location. The dealer maintains copies of the books and records at any additional locations they may have. 2. .f The dealer owns the above location or leases the location (minimum one-year lease required). Please attach proof of ownership or Verification of Property Lease - form PS2407. 3 The dealership has a separate and identifiable entrance that leads to the outdoors: (See definition of commercial building ~ above) , May include a strip mall or commercial garage building. Other entrances that lead from other areas ofthe building ml,lst be closed and lockable. (Commercial office space within a commercial building does not meet the statutory license requirements) 4. .~ The-public cannot access the dealership by entering through any other business or residence that is located in the same building as the dealership. 5. 1, The dealership location is enclosed with floor to ceiling walls, a door that can be shut and locked to close off the entire entrance, and is designated for exclusive use ofthe dealership. 6. ,;r The dealership location has an address that is separate from any other address in the building. 7. -;r The dealership has a display area, either indoors or outdoors, large enough to display at least 5 vehicles. This display area is designated for the exclusive use of the dealership and is distinguished from any other business' inventory. 8. The dealership has a sign outside of the commercial building, in a public area that identifies the dealership. . ' The sign must be in letters that contrast sharply in color with the sign background. { . If the sign is on a commercial building or a display area, it must be readily legible during daylight hours from the nearest road or street. . If the dealer's display area is not adjacent to the dealer's commercial building, the sign at the display area must also indicate where the commercial building is located. 9. -~ The dealership's normal business hours are conspicuously posted and readily viewable by the public. 10. /( Personnel or automatic telephone answering service is available during normal business hours. 11. /( The above location meets all local zoning requirements as indicated on the Zoning Verification - form PS2421. 12. (New Vehicle Dealers Only) The dealership has a facility for the repair and service of motor vehicles and the storage of parts, not more than ten miles distance from the principal place of business. @ 1685 CROSSTOWN BOULEVARD N.W. . ANDOVER, MINNESOTA 55304 . (763) 755-5100 FAX (763) 755-8923. WWW.CI.ANDOVER.MN.US TO: Mayor and Councilmemebers CC: Jim Dickinson, City Administrator Will Neumeister, Community Develop nt Director wL FROM: Angie Perera, Associate Planner'~ SUBJECT: Consider City Code Amendment/Changes to City Code Title 4/ Abatement Process (Continued). DATE: June 2, 2009 INTRODUCTION This item was first introduced at the April 14, 2009 Planning Commission meeting where a public hearing was held and was continued to the May 12th Planning Commission meeting. Staff has found some inadequacies with current language in Title 4 of the City Code, mainly pertaining to abatement. With the number of foreclosed and rental properties rising due to current economic conditions, this is a good time to bring forward these amendments. The concept of adding a chapter #5 was previously considered in an attempt to try to streamline an abatement process that could be used for chapters # 1, 2, and 4. The idea was to eliminate duplication within chapters by establishing a standard abatement process for potential violations. In discussions with the City Attorney, it has been determined that it would be better to keep each abatement process separate within each of the chapters since there are unique situations in each. The primary amendments being proposed include the following: . Staff authorization to enter onto a property (if necessary) to conduct an inspection in conjunction with an abatement of a violation. . Establish more consistent language in the abatement procedures of each chapter. . Eliminate the hearing examiner step in the code enforcement process. . Establish separate criteria for dealing with code enforcement related to a general abatement versus an emergency abatement in each of the chapters. Minor adjustments made throughout Title 4 to incorporate language preference and to provide basic clarification. DISCUSSION The draft amendment has been summarized in an outline below. The draft amendment proposes several minor adjustments to incorporate language preference and clarification. Those adjustments are outlined in the draft amendment attached but not specified within this report since they do not change the intent of the current ordinance. 1 CHAPTER # 1, NUISANCES Section 4-1-2: PUBLIC NUISANCES ENUMERATED Subsections E, F, and G have been added to include accumulation of debris, junk motor vehicles, and dilapidated structures. Section 4-1-3: HEARING EXAMINER This section is proposed to be removed from the ordinance. A hearing examiner is someone who would essentially review an appeal from a property owner who may be in violation of this chapter of the City Code. In the practice of code enforcement, staff has been flexible with property owners who need deadline extensions for bringing their property into compliance and checks with a department head if a request seems unreasonable. This practice has generally been an informal process that replaces the role of the hearing examiner and replaces the appeal process within the current abatement procedures that is proposed to be amended in another section. The hearing examiner role as. currently specified in the City Code, is a more formal practice that may be an unnecessary step in the code enforcement process. Section 4-1-3: INSPECTIONS AND INVESTIGATIONS: This language specifically states who has the authority to inspect and enforce this chapter of the City Code. It also provides language that allows staff to enter onto the property to inspect and abate a nuisance violation. Section 4-1-5: ABATEMENT PROCEDURES: This section has been removed and renumbered. Section 4-1-4: ABATEMENT PROCEDURES: This section separates the abatement process for general and emergency abatement. The purpose for this is to include a detailed process for each. General abatement situations would require a notification to the property owner with a deadline for compliance. If the violation is not corrected upon sufficient notification, staff may request that the situation be reviewed by the City Council to request that the violation be abated or that the situation proceed with legal action through the district court system. An emergency abatement situation would be a situation that constitutes an imminent danger to the public safety or health. This situation may be abated upon a reasonable attempt to contact the property owner. This section also provides details regarding the costs of abatement, outlining steps that would be taken to try to recover the costs associated with abatement. CHAPTER # 2, GARBAGE, RECYCLABLES AND REFUSE Section 4-2-2: DEFINITIONS: Additional definitions for "City Health Inspector" and "Enforcement Officials" are being proposed in this chapter of the City Code for clarification purposes. Section 4-2-9 ABATEMENT PROCEDURES: This section separates the abatement process for general and emergency abatement similar to the procedures drafted for Chapter # 1 pertaining to nuisances. The main difference in Chapter # 2 2 pertaining to garbage, etc...is that the emergency abatement involves the health inspector and the notice is posted on the actual premises and abated within a shorter deadline (not less than 2 hours and not more than 2 days) with the assumption that the violation presents an immediate hazard to the health or safety of any person. Section 4-2-9 (C) ABATEMENT BY CITY; COSTS: This section includes similar language from the abatement costs section in Chapter # 1 pertaining to nuisances. Chapter # 1 pertaining to nuisances may involve a court order to have the violation abated whereas Chapter # 2 pertaining to garbage would most likely be abated without a court order depending on the situation. CHAPTER #4, WEEDS, GRASSES AND OTHER HARMFUL VEGETATION Section 4-4-4: PERMITTING A NUISANCE; NOTICE REQUIREMENTS: This section provides a weed inspector authorization to enter onto a property to inspect or abate a violation. It also specifies the notice requirements in more detail. Abatement of weeds, etc. would most likely be abated without a court order depending on the situation. Planning Commission Recommendation The Planning Commission recommended approval of the proposed ordinance amendment with a 6 to 0 vote. ACTION REQUESTED The Council is requested to adopt the ordinance as proposed or with modifications and also adopt the_~ummary ordinance !hat will be published in the Anoka Union. Attachments Summary Ordinance Proposed Ordinance Planning Commission Minutes 3 CITY OF ANDOVER COUNTY OF ANOKA STATE OF MINNESOTA ORDINANCE NO. SUMMARY - AN ORDINANCE AMENDING CODE SECTIONS 4-1-1 through 4-1-7, 4-2-1 through 4-2-10, and 4-4-1 through 4-4-7 (PUBLIC HEALTH AND SAFETY CODES) STATUTORY AUTHORIZATION AND POLICY Statutory Authorization This ordinance is adopted pursuant to the authorization and policies contained in Minnesota Statute 462. Policy These sections of the Andover City Code contain language that is being amended with modifications to the definitions, declaration of certain nuisances, and the requirements and procedures for abatement. The code changes do not change the intent of the ordinance. The amendments provide clarification for code enforcement purposes. GENERAL PROVISIONS AND DEFINITIONS Jurisdiction The provisions of this Ordinance shall apply to the City of Andover. Enforcement The City Administrator or his/her designee shall have the authority to enforce the provisions. of this ordinance. Interpretation Interpretation of the provisions of this ordinance shall be held to be the minimum requirements and shall be liberally construed in the favor of the governing body. A printed copy of this ordinance is available for inspection by any person during regular hours of the City Clerk. Adopted by the City Council ofthe City of Andover on this 2nd day of June, 2009. ATTEST: CITY OF ANDOVER Michelle Hartner, Deputy City Clerk Michael R. Gamache, Mayor -Ll- TITLE 4 PUBLIC HEALTH AND SAFETY Subject Chapter Nuisances................ .... .................... ...... .......... ......... 1 Garbage, Recyclab les And Refuse........ ................... 2 Shade Trees.......................................... ...................3 Weeds, Grasses And Other Harmful Vegetation........4 -.-$-,-- CHAPTER 1 NUISANCES SECTION: 4-1-1: Policy And Purpose 4-1-2: Public Nuisances Enumerated 4 1 3: Hearing Examiner 4-1-43: Inspections And Investigations 4-1-a~: Abatement Procedures 4-1-e5: Interference With Enforcement Officials Prohibited 4-1-+Q: Violation; Penalty 4-1-1: POLICY AND PURPOSE: The City Council has determined that I health, safety, good order, general welfare, and convenience of the public +sare , threatened by certain public nuisances on property within the city limits. It is declared to be the intention of the Council to abate these nuisances, and this chapter is enacted for that purpose. (Amended Ord. 72, 10-15-1985) 4-1-2: PUBLIC NUISANCES ENUMERATED: Whoever, by his act or failure to perform a legal duty, intentionally does any of the following, is g'uilty of maintaining a public nuisance and may be ordered to abate the nuisance as provided herein, charged with a misdemeanor, or both: A. Dangerous Conditions: Maintains or permits a condition which unreasonably annoys, injures, or endangers the safety, health, morals, comfort or repose of any considerable number of members of the public. B. Obstructing Public Ways And Waterways: Interferes with, obstructs, or renders dangerous for passage any public highway or right-of-way, or waters used by the public. C. Interference With Health Officials: Willfully opposes or obstructs a health officer or physician charged with the enforcement of the health laws in performing any legal duties. D. Deposits Of Used Tires: Deposits or allows depositing of used or waste tires upon public or private property which is not a tire recycling, processing or receiving site approved by the city. --.t- E. Accumulation of Debris: Maintains or permits the accumulation of discarded or unused machinery, household appliances, automobile bodies, lumber, wood trash, debris, or other material. or the rank qrowth of veqetation amonq the items so accumulated, in a manner conducive to the harborinq of rats, mice, snakes, mosquitoes or vermin, or in any manner creatinq fire, health, or safety hazards. F. Junk Motor Vehicles: Parks, keeps, stores or accumulates iunk motor vehicles upon any private land or premises owned, occupied or controlled by any person or leqal entity unless authorized by this code or other ordinance. No person shall park, keep or place any such iunk vehicle upon land not owned by such person. For purposes of this section, a iunk vehicle means any motor vehicle as defined in Minn. Stat. ~169.011, subd. 42, part of a motor vehicle, or former motor vehicle stored in the open which is (1) unusable or inoperable because of a lack of or defects in component parts; (2) unusable or inoperable because of damaqe from collision, deterioration, or otherwise: (3) beyond repair, and, therefore, not intended for future use as a motor vehicle; (4) beinq retained on the property for possible use of salvaqeable parts: or (5) is not properly and currently licensed for operation within the State of Minnesota. G. Dilapidated Structures: Maintains or permits the existence of any structure or part of any structure which due to fire, wind, other natural disaster, physical deterioration, or any other cause, is no lonqer habitable as a dwellinq or is no lonqer useful for any other purpose for whi<?h it may have been intended. €H. Integrity of Dwelling Unit: All exterior elements of residential dwelling units in the City shall be kept in a clean, sanitary and structurally safe condition and in sound repair, including: 1. Stairways, porches, balconies, or decks; 2. Windows and Doors; 3. Soffit and Facia; 4. Roofs; 5. Siding, bricks, stone or stucco; 6. All other exterior elements not specifically listed. I fJ Remodeling Projects: All residents undertaking remodeling projects must keep all materials being used in the remodeling project in a neat and orderly appearance and out of view from adjoining property for the duration of the project. -7- G,.L-AII garbage and refuse shall be kept in proper storage containers (bins or dumpsters) and regularly disposed of, as set forth in Article 4, Chapter 2, of the Andover City Code. (Amended Ord. 371, 5-20-2008) I MK. Other Conditions: Is guilty of any other act or omission declared by state law or city ordinance to be a public nuisance. (Amended Ord. 72,10-15-1985) 4 1 3: HEARING EXAMINER: 11 Position Created: The position of hearing examiner is hereby created. The I ,. City Council may contract with third parties for the furnishing of all services of the hearing examiner as contained in this chapter and set the rate of compensation therefore. B. Duties: The hearing examiner shall have the following duties: 1. Set dates and hear all contested cases follmving appeals or orders of the Zoning !\dministrator or Building Official. 2. Take testimony from all interested parties. 3. Make a complete record of all proceedings. 1. ^ffirm, repeal or modify the order of the Zoning ^dministrator or Building Official and prepare '.vritten findings of fact. (f\,monded Ord. 72, 10 15 1985) 4-1-4~: INSPECTIONS AND INVESTIGATIONS: A. Periodic Inspections; Investigations: The Zoning Administrator, Building Official, or other such officers, employees, or aqents as the City Council or city administrator may desiqnate ("enforcement officers"), shall enforce the provisions of this ordinance. Such enforcement officers shall have -;j- the power to enter upon and inspect Zoning Administrator or Building Official shall cause to be inspected all public and private places within the city and take all reasonable precautions to prevent the commission and maintenance of public nuisances.which might contain a "public nuisance" as defined in this code as often as practicable to determine whether any such conditions exist. Tho Zoning /\dministrator or Building Official shall also investigate all reports of public nuisances located '.vithin the city. 1 1 5: 4-1-4: ABATEMENT PROCEDURES: A. General Abatement: Whenever an enforcement officer determines that a public nuisance is beinq maintained or exists on premises in the city, the officer shall notify. in writinq, the owner and occupant of the premises of such fact and order that such nuisance be terminated and abated. The notice shall be served in person or bv mail. and as to an absentee owner, addressed to the last known address of the owner. If the property is unoccupied and the owner is unknown. the notice may be served bv postinq of the notice on the premises upon which the nuisance is located. The notice shall describe the nuisance and the actions required to abate the nuisance and the time limit within which the nuisance must be abated. Such time limit shall be reasonable under the circumstances, but shall not be less than ten (10) days after service of the notice. If the notice is not complied with within the time specified, the enforcement officer shall report that fact forthwith to the City Council. Thereafter, the City Council. after notice and hearinq, may cause or direct such action as is necessary to be taken to abate the nuisance includinq, but not limited to, authorizinq the initiation of district court action to enforcement any abatement orders issued bv the City Council. B. Emerqencv Abatement: When the enforcement officer determines that a public nuisance constitutes a serious and imminent danqer to the public safety or health, the officer may summarilv abate the nuisance after a reasonable attempt to notify the owner or occupant of the property. The officer shall immediatelv thereafter notify. in writinq, the owner and/or occupant of the premises of the action taken. The notice shall be served in person or bv reqistered or certified mail. C. Costs of Abatement. The owner of the premises shall be liable for all costs of a qeneral or emerqencv abatement bv the city, includinq a twenty percent (20%) administrative cost. As soon as the abatement work is completed and the costs determined, the enforcement officer shall prepare a written notice to the owner, identifvinq all the work done and the costs and expenses involved. which shall be served upon the owner of the property in person or bv reqistered or certified mail. addressed to the last known address of the owner. If the property is unoccupied and the owner is unknown, the notice may be served bv postinq of the notice on the premises. Such notice shall further provide that if the -7- total amount is not paid to the city within sixty (60) days, the costs, expenses and maximum allowable interest shall be collected as an unpaid special assessment pursuant to Minn. Stat. & 429.101. The city may also seek to recover such costs in an action aqainst the owners, occupants or other responsible parties. The sanctions and remedies herein are not exclusive and the city may also proceed by any other leqal remedy includinq iniunction. declaratory action, criminal penalties or otherwise. ABATEMENT PROCEDURES: ^ /\.b3tement Required: Upon 3 determin3tion by the Zoning I\dministmtor or I". Building Official that a public nuisance exists on any public or private property 'Nithin the city, the Zoning Administrator or Building Offici31 sh311 order the public nuisance to be 3b3ted in a manner consistent "'.'ith the city ordin3nces and state la'N. (Amended Ord. 72, 10 15 1985) B. Notice To Abate: 'Nhenever the Zoning Administrator or Building Official finds .../ith reason3ble certainty that a public nuis3nce exists on any public or private property in the city, he shall notify the affected property mvner by personal service or by certified mail that the nuisance must be ab3ted .....ithin a reasonable time, not less than ten (10) days from the date of service of the notice. Service by certified mail shall be deemed complete upon mailing. 1. The order shall state '.vith specificity the n3ture of the viol3tions 3nd the requirements for compliance. 2. The order shall also state that the property owner may, within ten (10) d3Ys of the date of the order, request a hearing before the he3ring eX3miner 3nd sh311 set out the procedure by which that hearing m3Y be requested. 3. The order sh311 31so st3te th3t f3ilure to abate the nuisance or request a hearing '.vithin the applicable time periods will result in summary ab3tement procedures, and th3t the cost of 3b3tement will be assessed against the subject property. C. Abatement By City: Upon expir3tion of the time required by the notice, the Zoning Administr3tor or Building Official m3Y 3b3te the nuisance unless a request for 3 he3ring has been timely filed. -/0 '- . . Decisions: . D, Griovancos; Hoarlng, , <od by an order of thOt zo~~~ request a f I a99no\ th' eha~ er 'th 1, ^ny proporty ':,~I~;~~h~;'c~a~ issuod p~rs~:~~~ Sh:1I bo filod in writing WI Administrator or h aring examiner. Suc ' , f the e hoaring bo fO;~o City Clerk within ton , , tmtor or Building tho offleo 0 Zoning ^dmlms . of the notice by the ft F service (10) days a 0 h II notify tho proporty OffiCial. , xaminor who s a 'f ' the hearrng e 2 The City Clerk s~all notld~ place of the hearing. . er of the date, time an O't.:n 'S after the hearing t d no more than ten (1 ~a~:~s mutually agreed to . R II be conduc e less a later 3, The heanng,.~ a notieo of tho roquost:"un r and tho city. examiner receives iner the property o..ne . ~ exam , by the hearrn . '^'itR counsel t the hearrng.. . , the and the city may appe~~e~ce as is determined by Ft 9'^'Rer SR e"l "1 Both the prope Y." es and present su v . sh '^'Itness and may call ~u r t~ be relevant. hearing examine . miner shall affirm, . the hearrng exa . . . Official. The Itor such hoanng, "tmtor or BUilding f. t (10) days a '^dmlms 'd' s ef ac, 5 Within ten ''- der oltho Zomng .. 'd by writton fin Ing r~peal or modify t~oo~~or shall be accompamo hearing examiner s . , I3l3eal that ^ eals' miner may a E. < .pp , , ion of tho hoaring e~~;;'ih the offico of tho 'e"ed by the decls. f such appea ..I 1 A ny person ag.grr v cil by filing notice 0 . ':. t the City Coun deCISion 0 City Clerk. . . of a notice of appe~l, I r meeting, follow.ing th~ :~~~~f the hearing examiner 2 At its next availab~e ret~~ ~ecision and !i~dlngs 0 .. II e"le'" d SIOR the Council sha r · i"or modify that OCI . and shall affirm, repea -/;- F. Stay Of Proceedings: The city shall take no action to abate any nuisance while the matter is pending before the hearing examiner or the City Council. G. Costs: 1. Records Kept: The Zoning Administrator or Building Official shall keep a record of the costs of abatements done under this chapter and shall report monthly to the City Clerk or other appropriate officer all work done for '.vhich assessments are to be made, stating and certifying the description of the land, lots or parcels involved and the amount assessable to each. 2. On or before September 1 of each year, the City Clerk shall list the total unpaid charges for each abatement against each separate lot or parcel to 'Nhich they are attributable under this chapter. The Council may then spread the charges or any portion thereof against the property involved as a special assessment under pertinent statutes, for certification to the County /\uditor for collection the following year along with current taxes. Such assessment shall be payable in no more than one annual installment, pursuant to Minnesota Statutes Section 429.061, Subdivision 2. (Amended Ord. 72, 10 15 1985; amd. 2003 Code) 4-1-6Q: INTERFERENCE WITH ENFORCEMENT OFFICIALS PROHIBITED: No person shall prevent, delay or interfere with tHe Zoning Administrator, Building Official or their agentsan enforcement officer while they are I engaged in the performance of their duties as set forth in this chapter. (Amended Ord. 72, 10-15-1985) I 4-1-+2: VIOLATION; PENAL TV: Any person violating any provision of this chapter shall be guilty of a misdemeanor as defined by state law and subject to the penalties therefore. Each day in which such violation continues shall constitute a separate offense. (Amended Ord. 72,10-15-1985) -/2_- CHAPTER 2 GARBAGE, RECYCLABLES AND REFUSE SECTION: 4-2-1: Purpose 4-2-2: Definitions 4-2-3: Accumulation Prohibited; Disposal Required 4-2-4: Prohibited Acts And Conditions 4-2-5: Composting 4-2-6: Refuse Collectors 4-2-7: Refuse And Recyclable Collection Requirements 4-2-8: Enforcement Officials; Investigations And Inspections 4-2-9: Immediate Health Hazards 4-2-10: Violation A Misdemeanor 4-2-1: PURPOSE: It is the purpose of this chapter to protect the public health, safety and general welfare of the citizens of the city by requiring each residential, commercial or industrial property to properly store and dispose of "garbage", "recyclables" and"refuse" as defined in this chapter. This chapter will also require that all garbage, recycling and refuse collectors operating within the city be licensed. (Ord. 102, 12-15-1992) 4-2-2: DEFINITIONS: For the purpose of this chapter, the terms defined in this section shall have the meanings given them as follows: CITY HEALTH INSPECTOR: That person or persons desiqnated by the City Administrator to act on behalf of the city as the city's health inspector. COMPOST: Yard waste and other biodegradable matter that, under proper conditions, will be converted to a soil-like substance used as a soil. ENFORCEMENT OFFICIALS: The City Administrator. or his/her authorized representatives, responsible for the enforcement of the provisions of this chapter. GARBAGE: Animal and vegetable wastes resulting from the handling, preparation, cooking, and consumption of food. RECYCLABLES: Includes newsprint, corrugated cardboard and office paper, -/3-- plastics, tin cans, aluminum, used motor oil, glass and other metal goods and other items identified as reusable or re- processable materials. REFUSE: Includes garbage and rubbish. RUBBISH: All inorganic solid wastes such as ashes and other non- reusable waste. YARD WASTE: The garden wastes, leaves, lawn cuttings, weeds, and prunings generated at residential, commercial and industrial properties. (Ord. 102, 12-15-1992) 4-2-3: ACCUMULATION PROHIBITED; DISPOSAL REQUIRED: Every I householdJ. Gf-occupant or owner of any residence, commercial or industrial establishment shall, in a sanitary manner, dispose of refuse and recyclables that may accumulate upon the owner's or occupant's property on a weekly basis through a collection service licensed by the city or by other methods approved by the city. Recyclables shall be collected at a minimum, every two (2) weeks. (Ord. 102,12-15-1992; amd. 2003 Code) 4-2-4: PROHIBITED ACTS AND CONDITIONS: A. Prohibited Deposits Of Refuse, Recyclables And Yard Wastes: No person shall place any refuse, recyclables aA€l-or yard wastes in any street or public placeJ. or upon any private propertyJ. except in proper containers for collection,-,-3nd no No person shall throw or deposit refuse, recyclables aA€l-QLyard waste in any body of water or in such manner as to cause litter or contamination of the environment. B. Burying Refuse: No person shall bury any refuse in the city except in an approved sanitary landfill. (Ord. 102, 12-15-1992) 4-2-5: COMPOSTING: Composting shall be allowed only on properties where there is a single-family detached dwelling or property operated by the city as an essential service. Composting is permitted on private property if all of the following conditions are met: A. Permitted Materials: Only organic materials, yard wastes and easily biodegradable, nonpoisonous garbage may be composted. B. Dimensions Of Compost Area: Composting shall be placed in a _JIY_ container or pile not to exceed fifty (50) square feet in area and shall not exceed three feet (3') in height. C. Location: The compost piles or containers shall be located in the rear I yard, and at least five feet (5') from any property line or twenty feet (20') te-from a side lot line if adjacent to any public street right-of-way. If a rear yard location is unavailable or impractical, the compost materials may be placed in another location approved by the City Administrator or authorized designee. D. Screening Required: All compost piles and containers shall be fully screened so as not to be visible from adjacent properties and public I rights-of-way as viewed from qround level. E. Maintenance Required: Compost containers and compost materials shall be maintained so as not to create odors, rodent harborage, fire hazard I aR€f-QLother nuisances. (Ord. 1028,8-5-2002) 4-2-6: REFUSE COLLECTORS: A. License Required: It is unlawful to collect, haul or convey refuse from any premises in the city, other than from one's own residence, without a valid license therefore. Each such vehicle so used, except for personal I disposal, must also be licensed for such activity. 8. Application For License: The applicant for a collector's license or renewal of such license shall provide the following: 1. The name and address of the owner of the collection service who is to be the licensee; 2. A description of each piece of equipment proposed to be used in the collection operation; 3. A schedule of services to be made to the customer including, but not I limited to, proposed days of collection, and the in different areas of the city within which those days of collection shall occur; 4. A schedule of varying rates based on the volume or weight of the refuse collected shall be kept on file in the office of the City Clerk indicating the charge for each size container or other schedule of charges to be applied by the licensee (the city may designate the number of categories in regard to the size of the containers); 5. The frequency of service to be rendered; --/r- 6. The place to which the refuse is to be hauled; 7. The manner in which the refuse is to be disposed; 8. Proof of insurance as required in Subsection D of this section; and 9. Any other information the city deems necessary. C. Processing Application: Applications for a license hereunder shall be I submitted to the city for review and recommendationconsideration. If the Council is satisfied that the public need, convenience and good order will be served thereby, it may grant a license to such applicant. . D. Insurance Requirements: No license shall be issued until the applicant files with the city a current copy of the policy of public liability insurance. The public liability insurance shall be in the amount of at least one hundred thousand dollars ($100,000.00) for injuries, including accidental death, to any one person,-~and in an amount not less thanat least three hundred thousand dollars ($300,000.00) for each accident; and at least fifty thousand dollars ($50.000.00) for loss or damage to property:. ffi-tI:le amount of fifty thousand dollars ($50,000.00). Every such policy shall provide that it shall not be canceled, terminated or amended for any reason without at least ten (10) days' written notice given to the city. (Ord. 102,12-15-1992) E. Term Of License: License Fee: Licenses shall be issued for a period of one year, expiring on May 31 of each year. The license fee shall be as I established by ordinance and may be adjusted adiusted1. F. Suspension Or Revocation Of License: Any license issued hereunder may be revoked or suspended by the City Council if false statements have been made in the application therefore and may be revokedor upon failure of a licensee to comply with any state law or local ordinancethe requirements of the ordinances of the city. (Ord. 102, 12- 15-1992) 4-2-7: REFUSE AND RECYCLABLE COLLECTION REQUIREMENTS: A. Refuse Collection Required: Each licensee shall provide weekly collection and removal of refuse from its customers' premises in residences within the city.. and complete collection of all refuse which normally results from day to day use of the type of property, except furnishings, appliances, construction waste and similar bulky waste for 1 See subsection 1-7 -3A of this code. -/.6_ I which individuals shall make special collection arrangements. B. Curbside Recycling: Each licensee shall provide curbside recycling to each of its customers residential property within the city at least every two (2) weeks. Recvclables to be collected shall consist The licensee shall provide monthly pickups of at least four (4) broad types (plastic bottles, glass bottles, metal cans and newspaper) of recyclable materials. The licensee shall also provide to the city~ by July 10 and January 10 of each year~ a report on the tonnage of recyclable materials collected. (Ord. 102, 12-15-1992; amd. 2003 Code) C. Neat And Orderly Collections: 1. The licensee shall assure that reasonable care in transfertransferrinq the contents of the containers to his/herits vehicle is used to avoid 'l.:ithout spilling themspillaqe. If any spilling spillaqe occurs, licensee, or its emplovee then performinq the collections services, he/she shall clean it immediately and completely. 2. Vehicles shall be equipped with brooms and shovels for cleaning any spills associated with collecting or hauling garbage, recyclables or refuse. 3. Collection shall be conducted in such a manner as to not create a nuisance. 4. Upon each collection, the containers shall be completely emptied and replaced with lids in place. D. Hours: Collection in residential zones shall be between the hours of seven o'clock (7:00) A.M. and six o'clock (6:00) P.M. No collection whatsoever shall be permitted in residential districts on Sundays. Violation of these collection conditions shall constitute a misdemeanor. E. Defective Containers: Whenever a container is in poor repair, or otherwise defective so as to permit insects, vermin or rodents to enter, it shall be replaced. Notice shall be given to the owner of the defective I container, which shall state that if the deficiency is not corrected, a tag shall be affixed condemninq the containerstating such condemnation. It is unlawful for any person to place or deposit refuse in a condemned container. F. Collection Vehicles: -')7- 1. Vehicles used by the licensee to collect or transport garbage, refuse, or recyclables over any city street shall be properly maintained and operated, and have a fully enclosed metal body capable of completely containinq the contents so as which is tightly sealed and properly maintained and operated to prevent offensive odors escaping therefrom and solids or liquids from leaking, spilling, dropping, or blowing from the vehicle. 2. Vehicles used to transport rocyclables or refuse over city streets shall completely contain said recyclables or refuse in a tightly sealed unit to prevent the recyclables or refuse from leaking, spilling, dropping, or blO'....ing from the vehicle. (Ord. 102, 12 15 1992) 4-2-8: ENFORCEMENT OFFICIALS; INVESTIGATIONS AND INSPECTIONS: The City I\dministrator or his authorized representatives Enforcement officials shall have the primary responsibility for the enforcement of the provisions of this chapter. The City Health Inspector sAaU may assist in the enforcement of the provisions of this chapter and, when requested by the City Administrator, shall make inspections or investigations as are necessary to determine whether an immediate health hazard exists as a result of a violation of this chapter. The findings of the City Health Inspector shall I then be reported to the City Administrator. The City Health Inspector and enforcement officials may enter upon any land without consent of the owner and without being subject to any action of trespass; provided, however, that should I entry into an enclosed building be necessary to perform his/hertheir dutiesy, they shall. Health Inspector, prior to entry, sRalI-obtain the consent of the owner, occupant, or person in control of such premises to enter the building. If permission cannot be obtained, the inspector shall obtain a warrant to enter the building may be obtained. The City l\dministr3tor, City Health Inspector and tfle.H: representativesenforcement officers shall carry and produce, at the request of any owner, occupant, or person in control of the premises upon which such officials request access in the performance of their duties under this chapter, identification in a form approved by the City Council. (Ord. 102, 12-15-1992) 4-2-9 ABATEMENT PROCEDURES: A. General Abatement: Whenever an enforcement official determines that a violation of the provisions of Section 4-2-3, 4-2-4, or 4-2-5 of this chapter is beinq maintained or exists on premises in the city, the officer shall notify, in writinq, the owner, occupant. and/or person in control of the premises of such fact and order that such violation be immediately terminated and abated. The notice shall be served in person or by mail. and as to an absentee owner, addressed to the last known address of the owner. If the property is unoccupied and the owner is unknown, the notice may be served by postinq of the notice on the premises upon which the violation is located. The notice shall describe the violation and the actions required to abate the violation and the time limit within which the -~4- violation must be abated. The notice shall further state that if the violation is not remedied within the time specified, the citvwill take whatever steps may be necessary to remedy the violation and that the owner, occupant. or person in control of the premises, or all of them, will be billed for the actual costs incurred bv the city, includinq the costs of inspection. .., 2 9: IMMEDIATE HEAL TH HAZARDS: B. Emerqencv Abatement: Should an enforcement official determine that a violation exists on any premises which may pose an immediate health hazard)-\. Determination Of Viol::ltion: Should the City J\dministrator or his authorized representatives determine that a violation of the provisions of Section 4 2 3, .., 2 4 or 4 2 5 of this chapter exists on any premises, the City Health Inspector, upon receiving a report describing such violation, shall make an immediate inspection or investigation of the premises to determine whether the violation presents an immediate hazard to the health or safety of any person. B. Notice Of Violation: 1. If such a violation is determined to exist by the City Health Inspector, he/she shall prepare a written notice of the violation outlininq . The notice shall contain the following information: a. The street address of the premises where the violation exists. b. The name of the owners of the premises as shown on the records of the County Auditor or Treasurer. c. An itemized list of the conditions that constitute the violation. d. A statement of the actions necessary to remedy the violation. e. The date and time by which such violation must be corrected. Such period for correcting the violation shall be not less than two (2) hours nor more than two (2) days from the time such notice is posted as provided in this section. -/,-- 2. The notice shall also state that if the violation is not remedied within the period stated, the city will take actions necessary to remedy the I violation as set forth in the notice and that -=-+!he owner, occupant, or person in control of the premises, or any and all of them, will be billed for the actual cost incurred by the city, including the costs of inspection. 3. The notice of violation shall be immediately posted on the premises where the violation is located. which shall constitute sufficient notice and. ^ copy of the notice shall be mailed, certified, with return receipt requested, to the o'lIner and the occupant or person in control of the premises. If the return receipt is not returned, the posting of the notice on the premises is sufficient grounds for the city to remedy the violation and charge the costs thereof to the owner, occupant, or person in control of the premises. C. Abatement By City; Costs: If a violation is not remedied within the period stated in the notice provided to the owner. occupant and/or person in control of the premises. the violation h3s not been remedied 'Nithin the period specified on the notice, the City Health Inspector or enforcement official his authorized representative shall arrange for immediate disposal abatement of the condition creating the violationhaz3rd. As soon as the abatement work is completed and the costs determined. the City Health Inspector or enforcement official shall prepare a written notice to the owner. occupant and/or person in control of the premises identifyinq all the work done and the costs and expenses involved. which shall be served upon the owner of the property in person or by reqistered or certified mail. addressed'to the last known address of the owner. If the property is unoccupied and the owner is unknown. the notice upon him/her may be served by postinq of the notice on the premises. . Such notice shall further provide that if the total amount is not paid to the city within thirty (30) days. the costs. expenses and maximum allowable interest shall be collected /\n itemized statement of the dispos31 costs shall be prepared by the Health Inspector and fOr\varded to the City Clerk. The City Clerk shall bill the O'Nner, occupant and/or person in control of such premises, or ::my of them, for such costs. If such costs are not paid '.vithin thirty (30) days, the ,City Clerk 'Nill certify such costs to the County Auditoras an assessment against the property pursuant to Minnesota Statutes Sections 443.31 and 443.29. (Ord. 102, 12-15-1992) -~ 2_4~ 4-2-10: VIOLATION A MISDEMEANOR: Any person, firm, or corporation 'Nho viol3tesviolatinq any of the provisions of this chapter &shall be guilty of a misdemeanor, as defined bv state law and subiect to the penalties therefore. aA€l-eEach day in which such violation person.continues to violate the provisions of this chapter shall constitute a separate offense. (Ord. 102, 12-15-1992) - z- 1- CHAPTER 4 WEEDS, GRASSES AND OTHER HARMFUL VEGETATION SECTION: 4-4-1 : Findings; Purpose; Nuisance Declared 4-4-2: Definitions 4-4-3: Maintenance Standards 4-4-4: Permitting A Nuisance; Notice Requirements 4-4-5: Abatement Costs 4-4-6: Interference With City Officials 4-4-7: Penalties 4-4-1 : FINDINGS; PURPOSE; NUISANCE DECLARED: Noxious weeds and other harmful vegetation create a detriment to public health, comfort and convenience of the residents of the city as well as creating a general aesthetic depreciation. The growth of such vegetation is hereby declared to be a nuisance. The purpose of this chapter is to ensure proper maintenance of noxious weeds, vegetation and grasses. The City Council finds that establishing a height I limitation for certain vegetation is et:-loJhe best interest of the public health, safety and welfare and is a reasonable maintenance standard. (Ord. 219A, 10-2- 2001 ) 4-4-2: DEFINITIONS: The following words shall have the meanings as specified: GRASS: Any vegetative ground cover that does not include "noxious weeds" as defined by State Statute or "natural area" as defined by this chapter. HEAVILY FORESTED AREA: Any area that is impractical to maintain due to the density of trees. NATURAL I AREA: An area that does not include noxious weeds~ tAat-is purposely left to grow in a natural state~ and contains vegetation that can maintain itself in a stable condition. -2-2..- WEED INSPECTOR: The City Administrator or his/her designee. WEEDS: Include all "noxious weeds" as defined by the statutes of the State of Minnesota and all such useless and troublesome plants as are commonly known as weeds to the general public. (Ord. 219A, 10-2-2001) 4-4-3: MAINTENANCE STANDARDS: A. Removal Of Noxious Weeds: All "noxious weeds", as defined by State Statute, are required to be removed within ten (10) days of notification from the city. B. Grass Height Requirements: 1. Less Than One Acre: All properties less than one acre in size are required to maintain a uniform grass height of less than eight inches (8") with the following exceptions: a. Wetlands. b. Wetland buffer areas. c. Storm water ponds. d. Heavily forested areas. e. Parks and nature preserves. f. Natural area not to exceed one-quarter (1/4) lawn area. g. Slopes greater than three to one (3:1). 2. More Than One Acre: All properties with a lot area greater than one acre are required to maintain a uniform grass height of less than twelve inches (12") in the following areas of the property: a. In "public rights-of-way" as defined in Title 8, Chapter 2 of this code. b. An area thirty feet (30') in width adjacent to maintained lawns of neighboring properties. This area need not exceed the minimum front yard setback of the adjacent property. -~- c. All lawn areas within the minimum front yard setback that are located directly in front of the dwelling. This area need not exceed one hundred feet (100') in width. d. On corner lots, all areas within the minimum side yard setback that are adjacent to the side of the principal structure. This area need not exceed fifty feet (50') in width. e. Exceptions to these requirements include: (1) Wetlands. (2) Wetland buffer areas. (3) Storm water ponds. (4) Heavily forested areas. (5) Parks and nature preserves. (6) Agricultural property. (7) Slopes greater than three to one (3: 1). (Ord. 219A, 10-2- 2001 ) 4-4-4: PERMITTING A NUISANCE; NOTICE REQUIREMENTS: The weed inspector shall have the power to enter upon and inspect all public and private places within the city and take all reasonable precautions to prevent the commission and maintenance of public nuisances under this chapter. Whenever... durinq an inspection. it is determined an adj3cont property ol/mer files :3 complaint that such a public nuisance is being maintained or exists on an 3dj3cent property in the city, the city shall inspect the property to determine the v3lidity of the compl3int. If the complaint is v3lid, the city shall notify... in writing... the owner/occupant of the premises of such fact and shall order that said nuisance be terminated and abated. The notice shall be served in person or by certified or registered mail. addressed to the last known address of the owner. Jf the property is unoccupied and the owner is unknown. the notice may be served by postinq of the notice on the premises upon which the violation is located. The notice shall specify the steps to be taken to abate the nuisance and the time, not I exceeding ten (10) days from the date of said notice, within which the nuisance is to be abated. Such notice shall also state that in the event of noncompliance, abatement will be done by the city at the owner's expense. 'Nhen no owner, occupant, or agent of the mvner C3n be found, notice shall be sent by registered or certified mail to the person l.."ho is listed on the records of the County Auditor or County Treasurer as the O\vner. Service lo\'ill be complete with m3iling. (Ord. 219A, 10-2-2001) --2~ 4-4-5: ABATEMENT COSTS: A. Liability For Costs: If the nuisance is not abated within the period stated inthe notice provided to the owner, the weed inspector may arranqe for the immediate abatement of the nuisance. The owner of the premises on which such a nuisance has been abated by the weed inspector shall be personally liable for the cost to the city of the abatement, including a twenty percent (20%) administrative cost. B. Notice Of Costs: As soon as the abatement work is completed and the costs determined, the weed inspector shall prepare a written notice fA writing to the owner-;-, identifyinq The notice shall state the work done and a tabulation of the costs and expenses involved, aR4-which shall be served on the owner or occupant of the property in accordance with the individual notice provisions stated in Section 4-4-4 of this chapter. Such notice shall further provide a tabulation of the total costs and expenses involved and shall indicate that if the total amount is not paid to the city within thirty (30) days or before the follO'.ving October 1, 'Nhichever is later, the costs~ aR4-expenses, and maximum allowable interest shall be collected as an unpaid special assessment pursuant to Minn. Stat. ~ 429.101. a lien in favor of the city, and maximum allowable interest 'NiII be added to the 3mount due as of that d3te with a total cost, expenses 3nd penalties thereupon to be certified to the County ^uditor and entered by him or her on his or her t3X books as 3 lien upon such property. (Ord. 219A, 10-2-2001) 4-4-6: INTERFERENCE WITH CITY OFFICIALS: It is a misdemeanor for any person to prevent, delay or interfere with city employees or agents of the city when they are engaged in the performance of duties set forth in this chapter. (Ord. 219A, 10-2-2001) 4-4-7: PENALTIES: A. Financial Penalty: Upon the first abatement of a nuisance, the property shall be subject only to the costs outlined in Section 4-4-5 of this chapter. An additional financial penalty will be imposed on properties that have a I second nuisance abated~ as defined determined by the City Council. Each successive nuisance abated thereafter shall be subject to a I cumulative penalty per occurrence as defined determined by the City Council. B. Misdemeanor Penalty: Any person violating any provision of this chapter shall be guilty of a misdemeanor and, upon conviction thereof, shall be punished in accordance with the provisions as defined by state law. -~ Regular Andover Planning and Zoning Commission Meeting Minutes - May 12, 2009 Page 7 Motion by Kirchoff, seconded by Falk, to move the resolution as written and include the staff memo including the engineer recommendation. Motion carried on a 5-ayes, I-nays (Walton), I-absent (Holthus) vote. Mr. Bednarz stated that this item would be before the Council at the May 19,2009 City Council meeting. PUBLIC HEARING: CITY CODE AMENDMENT TO CONSIDER CHANGES TO CITY CODE 4: PUBLIC HEALTH AND SAFETY PERTAINING TO THE ABATEMENT PROCESS. Ms. Perera stated this item was first introduced at the April 14, 2009 Planning & Zoning Commission meeting where a public hearing was held and is being continued. Staff has found some inadequacies with current language in Title 4 of the City Code, mainly pertaining to abatement. With the number of foreclosed and rental properties rising due to current economic conditions, this is a good time to bring forward these amendments. Ms. Perera reviewed the staff report with the Commission. The public hearing was continued from the April 14, 2009 Planning & Zoning Commission meeting. No one wished to address the Commission. Motion by Casey, seconded by Falk, to close the public hearing. Motion carried on a 6- ayes, O-nays, O-present, I-absent (Holthus) vote. Commissioner Cleveland asked if the hearing examiner was an official position or was it whomever was available to hear the person's issues. Ms. Perera thought it was the City Administrator who took that role and it was more of an informal process. Motion by Walton, seconded by Falk, to approve as written. Motion carried on a 6-ayes, O-nays, I-absent (Holthus) vote. Mr. Bednarz stated that this item would be before the Council at the May 19, 2009 City Council meeting. ~Z6;"- C I T Y 0 F @ NDOVE 1685 CROSSTOWN BOULEVARD N.W. . ANDOVER, MINNESOTA 55304 . (763) 755-5100 FAX (763) 755-8923 . WWW.CI.ANDOVER.MN.US TO: Mayor and Councilmembers FROM: Jim Dickinson, City Administrator SUBJECT: Administrator's Report DATE: June 2, 2009 The City Administrator will give a brief verbal update on various items of interest to the City Council and to the residents at the meeting. Listed below are a few areas of interest: 1. Administration & City Department Activities 2. Update on Development Activity 3. Update on CIP Projects 4. Strategic Planning Update 5. Meeting reminders Upon receipt of the meeting packet, if a member of the Council would like an update on a particular item, please notify me so an adequate update can be made. - . . Or8'IrvJ rIITautges Redpath. Ltd. Certified Public Accountants and Consultants REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Honorable Mayor and Members of the City Council City of Andover, Minnesota We have audited the financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the City of Andover, Minnesota, as of and for the year ended December 31, 2008 which collectively comprise the City of Andover, Minnesota's basic financial statements, and have issued our report thereon, dated May 7, 2009. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City of Andover, Minnesota's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City of Andover, Minnesota's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City of Andover, Minnesota's internal control over financial reporting. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the entity's financial statements that is more than inconsequential will not be prevented or detected by the entity's internal control. 4810 White Bear Parkway White Bear Lake, Minnesota 55110 I 651 4267000 651 426 5004 Fax I www.hlbtr.com HLB Tautges Redpath. Ltd. is a member of !!In Intemational. a world-wide organization of accounting firms and business advisors. I Equal Opportunity Employer . , . City of Andover, Minnesota Report on Internal Control over Financial Reporting and on Compliance and Other Matters Page 2 A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the entity's internal control. Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in the internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City of Andover, Minnesota's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of the City of Andover, Minnesota's management, City Council, and others within the entity, and is not intended to be, and should not be, used by anyone other than these specified parties. ~,tfJ-r~~I*d... HLB TAUTGES REDPATH, LTD. White Bear Lake, Minnesota May 7, 2009 . Tautges Redpath. Ltd. Certified Public Accountants and Consultants REPORT ON COMPLIANCE WITH MINNESOTA LEGAL COMPLIANCE AUDIT GUIDE FOR LOCAL GOVERNMENTS To the Honorable Mayor and Members of the City Council City of Andover, Minnesota We have audited the basic financial statements of the City of Andover, Minnesota, as of and for the year ended December 31, 2008 and have issued our report thereon dated May 7,2009. We conducted our audit in accordance with auditing standards generally accepted in the United States of America, and the provisions of the Minnesota Legal Compliance Audit Guide for Local Government promulgated by the State Auditor pursuant to Minnesota Statutes Section 6.65. Accordingly, the audit included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. The Minnesota Legal Compliance Audit Guide for Local Government covers seven categories of compliance to be tested: contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, miscellaneous provisions, and tax increment financing. Our study included all of the listed categories. The results of our tests indicate that for the items tested, the City of Andover, Minnesota complied with the material terms and conditions of applicable legal provisions. This report is intended solely for the information and use of the City of Andover, Minnesota's management, City Council, and others within the entity, and is not intended to be, and should not be, used by anyone other than these specified parties. ~;j6 7~ tJ.J,.Jtv otkJ.. HLB TAUTGES REDPATH, LTD. White Bear Lake, Minnesota May 7, 2009 4810 White Bear Parkway White Bear Lake, Minnesota 55110 I 651 4267000 651 426 5004 Fax I www.hlbtr.com HLB Tautges Redpath, Ltd. is a member of f!llnternational, a world-wide organization of accounting firms and business advisors. I Equal Opportunity Employer I 11II Tautges Redpath. Ltd. Certified Public Accountants and Consultants COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE To the Honorable Mayor and Members of the City Council City of Andover, Minnesota Andover, Minnesota We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Andover, Minnesota (the City) for the year ended December 31, 2008, and have issued our report thereon dated May 7,2009. Professional standards require that we provide you with the following information related to our audit. Our Responsibility under u.s. Generally Accepted Auditing Standards and Government Auditing Standards As stated in our engagement letter dated July 24, 2007 our responsibility, as described by professional standards, is to express opinions about whether the financial statements prepared by management with your oversight are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles. Our audit of the financial statements does not relieve you or management of your responsibilities. As part of our audit, we considered the internal control of the City. Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests ofthe City's compliance with certain provisions of laws, regulations, contracts and grants. However, the objective of our tests was not to provide an opinion on compliance with such provisions. Planned Scope and Timing of the Audit We performed the audit according to the planned scope and timing previously communicated to you in our engagement letter and the Audit Communication Letter dated January 6,2009. 4810 White Bear Parkway White Bear Lake, Minnesota 55110 I 651 4267000 651 426 5004 Fax I www.hlbtr.com HLB Tautges Redpath. Ltd. is a member of r!llnternational, a world-wide organization of accounting firms and business advisors. I Equal Opportunity Employer . City of Andover, Minnesota To the Honorable Mayor and Members of the City Council May 7, 2009 Page 2 Significant Audit Results Oualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financial statements. For 2008, the City implemented GASB Statement No. 45 regarding Other Post Employment Benefits (OPEB). We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. There are no significant transactions that have been recognized in the financial statements in a different period than when the transaction occurred. Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were management's estimates of the depreciation of capital assets, fair value of investments and net OPEB obligaton which are based on estimated useful lives, quoted market prices and the OPEB actuarial study. We evaluated the key factors and assumptions used to develop the estimates for depreciation, fair value of investments and net OPEB obligation in determining that they are reasonable in relation to the financial statements taken as a whole. The disclosures in the financial statements are neutral, consistent, and clear. Certain financial statement disclosures are particularly sensitive because of the significance to financial statement users. The City does not have any particularly sensitive disclosures in its financial statements. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. The attached schedule summarizes uncorrected misstatements of the financial statements. Management has determined that their effects are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. City of Andover, Minnesota To the Honorable Mayor and Members of the City Council May 7, 2009 Page 3 Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction that could be significant to the financial statements or the auditor's report. Weare pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated May 7, 2009. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the government unit's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Closing This report is intended solely for the information and use of the City of Andover, Minnesota's management, City Council, and others within the entity, and is not intended to be, and should not be, used by anyone other than these specified parties. ~0(t3 T~ ~, hi. HLB TAUTGES REDPATH, LTD. White Bear Lake, Minnesota May 7, 2009 or. - \O~~ 00 \0 '<:tN\O <'l 0 '<:t - or. 00" t-" l/"')^ .-.:" \0" \0 t--oo - - '-' ~ iLl ,-... or. or. \0 \0 '" \0 \0 Cl) , 0\"0\' <H ;::l 0 5 \0:::::- ~ ;>- Cl) , ~ "0 8 ~~ <+-< t<l ,-...,-... 00 iLlCi5 0 or. 00 0 .... 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WWW.CI.ANDOVER.MN.US Comprehensive Annual Financial Report of the City of Andover, Minnesota For the Year Ended December 31, 2008 Prepared By: Finance Department City of Andover CITY OF ANDOVER, MINNESOTA TABLE OF CONTENTS Page Reference No. I. INTRODUCTORY SECTION Letter of Transmittal 2 Organization 10 Organizational Chart 11 Certificate of Achievement 12 II. FINANCIAL SECTION Independent Auditor's Report 14 Management's Discussion and Analysis 16 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Assets Statement 1 29 Statement of Activities Statement 2 30 Fund Financial Statements: Balance Sheet - Governmental Funds Statement 3 32 Statement of Revenues, Expenditures, and Changes in Fund Balances- Governmental Funds Statement 4 34 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds Statement 5 37 Statement of Net Assets - Proprietary Funds Statement 6 38 Statement of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary Funds Statement 7 40 Statement of Cash Flows - Proprietary Funds Statement 8 42 Statement of Fiduciary Net Assets - Fiduciary Funds Statement 9 44 Notes to Financial Statements 45 Required Supplementary Information: Budgetary Comparison Schedule - General Fund Statement 10 80 Schedule of Funding Progress - Other Post Employment Benefits Plan Statement 11 82 Notes to Required Supplementary Information: Budgets 83 Modified Approach for City Streets and Trails Infrastructure Capital Assets 83 Combining and Individual Fund Statements and Schedules: Nonmajor Governmental Funds: Combining Balance Sheet - Nonmajor Governmental Funds Statement 12 87 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds Statement 13 88 CITY OF ANDOVER, MINNESOTA TABLE OF CONTENTS Page Reference No. Nonmajor Special Revenue Funds: Subcombining Balance Sheet - Nonmajor Special Revenue Funds Statement 14 90 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Special Revenue Funds Statement 15 92 Nonmajor Debt Service Funds: Subcombining Balance Sheet - Nonmajor Debt Service Funds Statement 16 96 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Debt Service Funds Statement 17 98 Nonmajor Capital Projects Funds: Subcombining Balance Sheet - Nonmajor Capital Project Funds Statement 18 102 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Capital Project Funds Statement 19 104 Special Revenue Funds: Schedules of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual: EDA General Statement 20 106 Community Development Block Grant Statement 21 107 Community Center Statement 22 108 Drainage and Mapping Statement 23 109 LRRWMO Statement 24 110 Forestry Statement 25 III Trail and Transportation Statement 26 112 Right-of-Way ManagementJUtility Statement 27 113 Capital Equipment Reserve Statement 28 114 Charitable Gambling Statement 29 115 Construction Seal Coating Statement 30 116 Internal Service Funds: Combining Statement of Net Assets - Internal Service Funds Statement 31 118 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets- Internal Service Funds Statement 32 119 Combining Statement of Cash Flows - Internal Service Funds Statement 33 120 Agency Funds: Combining Statement of Net Assets - Fiduciary Funds Statement 34 122 Combining Statement of Changes in Assets and Liabilities - Fiduciary Funds Statement 35 123 Supplementary Financial Information: Combined Schedule ofIndebtedness Exhibit 1 126 Schedule of Tax Capacity Rates and Levies Exhibit 2 128 Schedule of Deferred Tax Levies - General Obligation Bonds Exhibit 3 129 Schedule of Fund Transfers Exhibit 4 130 CITY OF ANDOVER, lVllNNESOTA TABLE OF CONTENTS Page Reference No. III. STATISTICAL SECTION Net Assets by Component - Last Five Fiscal Years Table 1 134 Changes in Net Assets - Last Five Fiscal Years Table 2 135 Fund Balances - Governmental Funds - Last Five Fiscal Years Table 3 137 Changes in Fund Balances - Governmental Funds - Last Five Fiscal Years Table 4 138 Assessed and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years Table 5 139 Property Tax Rates - Per $1,000 of Assessed Tax Capacity Value - Years 1999 through 2008 Table 6 140 Property Tax Levies and Collections - Last Four Fiscal Years Table 7 141 Principal Taxpayers - Current Year and Eleven Years Ago Table 8 142 Estimated Market Values and New Construction - Last Ten Fiscal Years Table 9 143 Special Assessment Levies and Collections - Last Ten Fiscal Years Table 10 144 Ratio of Net Bonded Debt to Assessed Value and Net Bonded Debt Per Capita- Last Ten Fiscal Years Table 11 145 Computation of Direct and Overlapping Debt Table 12 146 Computation of Legal Debt Margin - Last Five Fiscal Years Table 13 147 Pledged-Revenue Coverage - Last Five Fiscal Years Table 14 148 Outstanding Debt by Type - Last Five Fiscal Years Table 15 149 Demographic and Economic Statitistics - Last Five Years Table 16 150 Principal Employers - Previous Year and Nine Years Ago Table 17 151 Full Time Equivalent Employees - City Government Employees by Function / Program - Last Five Fiscal Years Table 18 152 Operating Indicators by Function / Program - Last Five Years Table 19 153 Capital Asset Statistics by Function / Program - Last Five Years Table 20 154 I I I I. INTRODUCTORY SECTION I I I I I I I I I I I I I I I I 1 c C 1685 CROSSTOWN BOULEVARD N.W. . ANDOVER, MINNESOTA 55304 . (763) 755-5100 C FAX (763) 755-8923 . WWW.CI.ANDOVER.MN.US May 7, 2009 C To the Honorable Mayor and City Council C City of Andover 1685 Crosstown Blvd. NW Andover, Minnesota 55304 Dear Honorable Mayor and Council Members: C The Comprehensive Annual Financial Report is submitted in conformance with all applicable governing laws and regulations. C The following has set the standards forth: * Andover City Policy and Code C *The State Auditor, State of Minnesota *Government Finance Officers Association *Governmental Accounting Standards Board RESPONSmILITY. Responsibility for both the accuracy of the presented data and the completeness ofthe [mancial statements C 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 [mancial activity of its various funds. C FINANCIAL STATEMENT FORMAT. This Comprehensive Annual Financial Report is presented in three main sections: I. Introductory C II. Financial III. Statistical The Introduction includes a list of the City's principal officials as of December 31, 2008, the table of contents, organizational C chart, and this Letter of Transmittal. The Financial Section includes: (1) independent auditor's report; (2) management's discussion and analysis; (3) government wide and fund [mancial statements; (4) notes to the financial statements; (5) required supplementary information; (6) the combining statements, individual fund statements; and, (7) the supplemental information. The Statistical Section includes tables and reports of various economic, social, financial and fiscal data designed to reflect trends C 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 C 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 ofthe independent auditors. REPORTING ENTITY. All City funds, departments, commissions, and other organizations for which the City of Andover is C 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 are 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 C area we know today as Ham Lake. In fact, the area of Ham Lake was considered apart 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. 2 ~ I I To the Honorable Mayor and City Council City of Andover, Minnesota I 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, research reveals that the name Andover first appeared in an article dated March 14, 1899 in the Anoka County Union Newspaper - before train tracks were ever built in the city. I 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 I 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. I 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. I The City of Andover as it exists today consists of 23,040 acres. Andover has a population estimated at 30,750. A rapidly 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: I General Government: Mayor and City council Financial administration Information systems Newsletter Elections Facility management I City clerk Assessing Engineering Administration Legal Risk management Human resources Planning and zoning I Public Safety: Police Protective inspection Animal control Fire protection Civil defense I Public Works: Streets and highways Street signs Traffic signals Snow and ice removal Central equipment maintenance Water maintenance I Street lighting Sanitation: Storm sewers Tree preservation & weed control Sanitary sewer maintenance I Parks and Recreation Recycling I 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 10 and 11 respectively. I IMPLEMENTATION OF GASB 34 I In June 1999, the GASB issued Statement 34, which is the most comprehensive government accounting rule ever developed. This standard substantially changes the way state and local governments report their financial activity. Andover had implemented these changes in 2002. A summary of the most significant changes is as follows: I 1. Government-wide financial statements are prepared using full accrual accounting 2. Basic fund financial statements present major funds instead of fund types 3. Budgetary comparisons include original and amended budgets 4. All infrastructures have been capitalized and all capital assets are depreciated except streets and trails that are under the I modified approach. 5. A management discussion and analysis is included as required supplemental information I 3 C To the Honorable Mayor and City Council City of Andover, Minnesota C ECONOMIC CONDITION AND OUTLOOK C Very moderate population growth is expected to continue in 2008 and 2009, with an estimated population of33,000 by 2010. The rate of residential growth as compared to the growth in the 90's has significantly declined as the availability of residentially C zoned property decreased. The City has experienced a significant amount of commercial growth from 2000 through current 2008. 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 81% of the total in 2008. They are general C property taxes at 72%, 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 C and community development. 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. C 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, the State of Minnesota significantly reduced MVHC to help deal with the state budget deficit. LGA, HACA and MVHC for 1998 through 2008 are as follows: C Year LGA HACA MVHC Total 1998 $ 122,651 $ 378,975 $ - $ 501,626 C 1999 111,145 462,796 - 573,941 2000 119,752 490,237 - 609,989 2001 119,758 489,991 - 609,749 2002 119,827 - 563,754 683,581 C 2003 * - - 65,632 65,632 2004 * - - 57,934 57,934 2005 * - - 13,179 13,179 2006 * - - 1,700 1,700 C 2007 - - 410,519 410,519 2008 * - - 198,214 198,214 *Due to the State Legislative actions to deal with the state budget deficits, C 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 E 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. C C C 4 C I I To the Honorable Mayor and City Council City of Andover, Minnesota I The State's property tax reform efforts have also included modifications to property class rates. Reductions in the class rates for all major types of property have occurred in 1998, 1999,2000, and for 2002. These changes resulted in a decrease in the taxable value of most properties. These changes and the impact on various valued properties are shown in the following table: I Class Rate 1998 1999 2000 & 2001 2002 & 2003 Residential Homestead I Value to $75,000 1.00% 1.00% 1.00% 1.00% $76,000 to $500,000 1.85% 1.70% 1.65% 1. 00% Over $500,000 1.85% 1.70% 1.65% 1.25% I Commercial/Industrial Value to $150,000 2.70% 2.45% 2.40% 1.50% Value above $150,000 4.00% 3.50% 3.40% 2.00% I Tax Capacity 1998 1999 2000 & 2001 2002 & 2003 I Taxable Market Value Residential Homestead $ 100,000 $ 1,213 $ 1,175 $ 1,163 $ 1,000 I 150,000 2,138 2,025 1,988 1,500 200,000 3,063 2,875 2,813 2,000 250,000 3,988 3,725 3,638 2,500 300,000 4,913 4,575 4,463 3,000 I Commercial/Industrial $ 550,000 $ 20,050 $ 17,675 $ 17,200 $ 10,250 750,000 28,050 24,675 24,000 14,250 I 1,000,000 38,050 33,425 32,500 19,250 2,500,000 98,050 85,925 83,500 49,250 The City's General Fund receives a substantial amount of revenue from licenses and permits. The past ten years are shown I below: Revenues Change I 1999 $ 609,344 n/a 2000 623,662 $ 14,318 2001 720,712 97,050 2002 588,965 (131,747) I 2003 551,385 (37,580) 2004 674,008 122,623 2005 724,436 50,428 2006 598,094 (126,342) I 2007 475,893 (122,201) 2008 525,339 49,446 The $131,747 decrease in revenue for 2002 is due to reclassification of plan check fees ($263,535), which were previously I recorded as license and permit fee and are now recorded as a charges for services revenue. Revenue from residential building continued to modestly increase through 2002 but declined in 2003, as a reduced number of new residential lots were being added to the overall lot inventory. License and permit fees increased substantially in 2004 as the number of residential lots available and built on has increased and the value of new construction is on the rise. The decrease in 2006 and 2007 is largely due to a I slowing economy and home building market. A slight increase in 2008 is primarily due to the commercial activity taking place but a decrease is expected for 2009. I I 5 C To the Honorable Mayor and City Council City of Andover, Minnesota C The City's General Fund also receives a considerable amount of revenue from charges for services. The past ten years are shown C below: Revenues Change C 1999 $ 754,629 nJa 2000 900,235 $ 145,606 2001 722,690 (177,545) C 2002 689,427 (33,263) 2003 647,813 (41,614) 2004 798,795 150,982 2005 933,365 134,570 C 2006 780,273 (153,092) 2007 1,121,642 341,369 2008 772,430 (349,212) The City analyzes user fees every year as part of the budget process and makes adjustments where appropriate. Revenue from C 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 a decrease is expected for 2009. e EMPLOYMENT The City of Andover's largest employers are government entities. The Anoka-Hennepin School District has a significant C 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 C 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 C Finn Type of Business / Product Em ployees ISDNo 11 Anoka-Hennepin Elementary and secondary education 574 C Anoka County Parks and Highway Departments County government and services 378 Kottkes' Bus Service, Inc. Bus transportation 200 Target Retail 167 Columbia Park Medical Group Medical clinic 107 C Meadow Creek Christian School Private education K-12 100 Festival Foods Grocery store . 97 Farmstead at Andover Senior housing and assisted living facilities 94 City of Andover Municipal government and services 85 C MAJOR INITIATIVES FOR THE YEAR. The City has many accomplislunents to report for 2008. The following list is a summary of some of the C major initiatives completed throughout the year. I) The response to significant storm damage continues. The Building Department had been very busy with various C permits related to 2007 severe storm activity in the community that has damaged a significant number of roofs and siding on resident homes. That again continued in 2008 as the City was hit by severe storms that produced high winds and hail. 2) Implementation of the roadway reconstruction and assessment policy that was developed throughout 2006 and 2007. C This was done with a successful 2008 roadway reconstruction project. The roadway reconstruction and assessment policy was approved which provided a clear understanding for staff and the Council on how the process is handled. The clear policy provided information for the residents and was supported by the Council during public hearings. C 6 C I I To the Honorable Mayor and City Council City of Andover, Minnesota I 3) Construction of the wayside horn at Crosstown Boulevard and the construction of the Railroad Quiet Zone at Constance Boulevard (161 sl Avenue). These two projects were a challenge from the standpoint of this being something new and the challenges of working and communicating with the Burlington Northern Santa Fe (BNSF) Railroad. Most of this work (design and project administration) was done in-house which was a substantial cost savings to the City. I 4) The construction of the new Anoka County Law Enforcement Center and Regional Forensic Laboratory got underway in the summer of 2008. This project has been in the planning stage for over ten years and was able to move forward with the help of a $3 million grant from the State of Minnesota It is anticipated that the center will be open in the fall I of2009. 5) 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 I was coordinated through the Community Development Department. 6) The City has continued the planning for the future expansion of the City Center campus to the west of existing Public Works facilities. Land negotiations with the property owner resulted in a three-phase acquisition schedule of I approximately 29 acres of land and the acquisition of two additional parcels of land along Crosstown Boulevard just west of the Water Treatment facility. The 2008 property acquisitions will allow for a staged development in preparation for the completion of the ultimate expansion of the Public Works facilities, potential expansion of the Community Center and additional recreational amenities. The planning will continue to be part of the capital I improvement planning process. 7) The development of three baseball fields at the Andover Station North complex which includes ball field lighting, a new playscape, parking lot, pavilion building and paved trail. This park was designed by the City's Engineering I Department and constructed by a partnership of Public Works staffmg, contracted service and volunteer labor. The fmal product is a true testament of what can be accomplished when residents and City staff work together toward a common goal. I 8) The successful negotiation with Anoka County of intersection improvements at Crosstown Boulevard and Nightingale Street. This improvement has significantly improved the traffic flow around Andover High School. 9) The marketing of Andover Station North within the City of Andover. The Andover Economic Development Authority I along with City staff has developed this commercial park and has seen commercial building activity throughout 2008, such as Foundation Hill Montessori, Dynamic Sealing Technologies and Blue Fin Pool and Spa 10) In 2008, the City Planning Department facilitated the updating of the various City Codes, including the Building I Maintenance Code. The completion of this update has provided the City staff with needed tools to help preserve single family market values. 11) The City staff completed various studies as part of a Comprehensive Plan Update including: a park dedication study, I sanitary sewer study, water system study and transportation system study. The City, as required, submitted these documents to the Metropolitan Council after the completion of a public hearing and a six-month review by neighboring cities. It is anticipated that the Comprehensive Plan Update will be approved by the Met Council in the spring of 2009. I 12) The City Open Space Commission, appointed to assist in managing the successful $2,000,000 open space referendum ballot in 2006, developed a detailed natural amenity inventory, held informational meetings with residents and has made recommendations to the City Council on land that should be purchased as permanent open space in the community. It is anticipated that the first purchase will take place in 2009. I 13) The City's Comprehensive Annual Financial Report (CAFR) for the year ended December 31, 2007 was awarded the Government Finance Officers Association's "Excellence in Financial Reporting Award." The City completes this document internally and recognized significant cost savings in the form of reduced financial consulting fees. This is I the sixth consecutive year receiving the award and it is anticipated that the City's CAFR for the year ended December 31, 2008 will also achieve this award. 14) For the seventh year in a row, the City of Andover was awarded the Government Finance Officers Association I Distinguished Budget Presentation Award for the City's 2008 Annual Budget. This award recognizes excellence in the preparation of the City's budget document as a policy document, an operations guide, as a financial plan and as a communications device. I 7 I C To the Honorable Mayor and City Council City of Andover, Minnesota C 15) The City continues to make significant progress after the implementation of new hardware and software to start the C 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. 16) The City continues to utilize updates to our financial management software to improve reporting and operating C efficiencies. These updates continue to yield reduced personnel costs and more timely reports. Residential Development Residential development slowed to 49 new housing starts in 2008. The current lot supply of single family lots does provide an C adequate supply of buildable lots for the current economy, so it is anticipated that very few residential plats will occur in 2009. Two residential project sketch plans were introduced near the end of 2008 and if ultimately approved in 2009 would add 48 new residential lots. Commercial Industrial Development C The majority of growth in 2008 came from commercial projects. These projects included review and approval of Minnco Credit C Union, Dynamic Sealing Technologies, Inc., Beef 0' Brady's Restaurant, Foundation Hill Daycare and Montessori School, Coon Rapids United Methodist Church, Anoka County Public Safety Campus and Blue Fin Pool and Spa When completed, these buildings will add 60,000 square feet of commercial tax base and 135,000 square feet of government and institutional space. FOR THE FUTURE. The City continues to focus on quality of life improvements throughout the City. These efforts cover a C 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 commerciaVretail opportunities. The City utilizes many avenues to reach its residents, whether through community access television, the City newsletter or the C 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. C FINANCIAL INFORMATION INTERNAL CONTROL. The City's accounting system was developed and is continually evaluated to assure the adequacy of C internal accounting controls. Internal accounting controls are designed to provide reasonable but not absolute assurance in the areas of: (1) safeguarding assets against loss from unauthorized use or disposition; and (2) reliability of fmancial records and convenience of access for preparing financial statements and maintaining accountability for assets. The concept of reasonable C assurance adopted by the City of Andover recognizes that: (1) the evaluation of cost and benefits requires estimates and judgments by management; and (2) 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 fmancial transactions. ~ BUDGETING CONTROLS. In addition to internal accounting controls, the City maintains budgetary controls. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual budget approved by the City Council. Activities of the General Fund and Special Revenue Funds are included in the annual budget. C As demonstrated by the statements and schedules included in the financial section of this report, the City continues to meet its responsibility for sound financial management. CASH MANAGEMENT. Cash temporarily idle during the year was invested in demand deposits, certificates of deposit, U.S. e government and agency securities, state and local government securities and commercial paper. The City's investment policy is to minimize credit and market risks while maintaining a competitive yield on its portfolio. ; Accordingly, deposits are required to be insured by federal depository insurance or collateralized. The City, its agent or a financial institution's trust department in the City's name held all collateral on deposits. RISK MANAGEMENT. The City Finance Department performs the duties of risk management. The Finance C Department continually reviews the City's exposures to losses, evaluates insurance specifications, coordinates with an insurance broker the placement and renewal of coverage and reviews programs to reduce costs and improve cash flow. Although the City experiences population growth, additional miles of road, payroll, and expenditures increase, the City has been able to keep insurance costs fairly flat over the past five years. C 8 C I I To the Honorable Mayor and City Council City of Andover, Minnesota I OTHER INFORMATION I AWARDS. The Govermnent Finance Officers Association (GFOA) of the United States and Canada presented a Distinguished Budget Presentation Awai'd to the City of Andover for its annual budget for the fiscal year beginning January 1,2008. This is the seventh 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 I 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 1,2009 continues to conform to the program requirements and have submitted it to the GFOA to determine its eligibility for another award. I The GFOA also presented the Certificate of Achievement for Excellence in Financial Reporting Award to the City of Andover for its 2007 Comprehensive Annual Financial Report. This is the sixth time the City of Andover has received this award. In order to receive this award, a governnlent unit must publish an easily readable and efficiently organized comprehensive armual financial report whose contents conform to progranl standards. Such reports must satisfy both generally accepted accounting I principles and applicable legal requirements. This award is valid for a period of one year only. We believe this report for 2008 continues to conform to the Celtificate of Achievement Program requirements and have submitted it to the GFOA to determine its eligibility for another award. I 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 [mancial statements and combining and individual fund statements and schedules is included in the financial section of this report. I 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 Rustman and Brenda Fildes have my sincere appreciation for their contribution to the preparation of this report. I 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 responsible and progressive manner. I '-- I I I I I I I I 9 C CITY OF ANDOVER, MINNESOTA ORGANlZA TION C December 31, 2008 Office Name Term C Mayor Michael Gamache January 6, 2009 C Council Member Don Jacobson Janumy 2,2011 Council Member Michael Knight January 6, 2009 Council Member Ken Orttel January 6, 2009 C Council Member Julie Trude January 2, 2011 City Administrator / City Clerk James Dickinson Appointed C Community Development Director Will Neumeister Appointed Director of Public Works / City Engineer David Berkowitz Appointed Finance Manager Lee Brezinka Appointed C Building Official Don Olson Appointed Fire Chief Dan Winkel Appointed Attorney Hawkins & Baumgartner, P.A. Appointed C Fiscal Consultants Ehlers & Associates, Inc. Appointed C C C C C C C C C C 10 C I I CITY OF ANDOVER I Organizational Chart I I City Council I -I I City Attorney I I City Administrator I I Advisory Boards I I I I I Administrative I Building Inspections I Engineering I Finance I Fire Protection I Planning I I Public Works II Police Protection I Services I Administration Civil Defense Engineering Financial ~ Fire Protection l Planning & Zoning Streets/Highways Services Administratioo Services I Human Resources Protective Right-of-Way Assessing Snow & Ice Inspections Management Removal Newsletter Drainage & Facilities Storm Sewer I Mapping Management ~ Economic Lower Rum River Unallocated Street Lighting I Development WateishedMgmt Authority Organization Community ForeslIy Capital Equipment Signage Center Reserve I Clerk's Office Trail & Debt Service Funds Traffic Signals Transportation I Elections Construction Unfinanced Projects Parks & Recreation Seal Coating I Animal Control Water Trunk Tax Increment Recycling H Projec1s I Information Storm Sewer Building Fund Water Systems City Cled< Sewer Trunk Permanent Sewer I Improvement Revolving Road & Bridge G.O. Capital Central Equipment H Notes I Park Dedication Risk Projects Management I I I I 11 c C Certificate of C Achievement for Excellence C in Financial C Reporting C Presented to City of Andover C Minnesota C FillrtsCom~ffi~NeAnoo~ ~ Financial Report .. for the Fisc~ Year Ended December 31, 2007 D A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers II! Association of the United States and Canada to Ii government units and public employee retirement systems whose comprehensive annual fmancial c. reports (CAFRs) achieve the highest- standards in government accounting and financial reporting. ~I-.f-t : President ~/~ C Executive Director ~ C I 12 ~ "iii I I I II. FINANCIAL SECTION I I I I I I I I I I I I I I D a 13 c III Tautges Redpath, Ltd. C C Certified Public Accountants and Consultants INDEPENDENT AUDITOR'S REPORT C To the Honorable Mayor and C Members of the City Council City of Andover, Minnesota C We have audited the accompanying financial statements of the governmental activities, the C business-type activities, each major fund, and the aggregate reniaining fund information of the City of Andover, Minnesota, as of and for the year ended December 31, 2008, which collectively comprise the City of Andover, Minnesota's basic financial statements as listed in C the table of contents. These financial statements are the responsibility of the City of Andover, Minnesota's management. Our responsibility is to express opinions on these financial statements based on our audit. C We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in C Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes C examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement C presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material C respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Andover, Minnesota, as of December 31, 2008, and the respective changes in financial C position and cash flows, where applicable, thereof, for the year then ended in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 9 to the financial statements, the City of Andover, Minnesota C implemented Government Accounting Standards Board Statement 45, Accounting and Financial Reporting by Employersfor Post-Employment Benefits Other than Pensions, as of ~ and for the year ended December 31, 2008. This Statement results in the City of Andover, Minnesota reporting a liability for post-employment benefits other than pensions that the City of Andover, Minnesota provides to its employees. C 4810 White Bear Parkway White Bear Lake, Minnesota 55110 I 651 426 7000 651 426 5004 Fax I www.hlbtr.com C HLB Tautges Redpath. Ltd. is a member of nil International. a world-wide organization of accounting fi1~ and business advisors. I Equal Opportunity Employer C I I I I In accordance with Government Auditing Standards, we have also issued a report dated I May 7,2009 on our consideration of the City of Andover, Minnesota's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is I to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit I performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. I The Management's. Discussion and Analysis on pages 16 through 25 and the required supplementary information on pages 80 through 84, are not a required part of the basic financial statements but are supplementary information required by accounting principles I generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did I not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that I collectively comprise the City of Andover, Minnesota's basic financial statements. The introductory section, combining and individual nonmajor fimd financial statements and schedules, supplementary financial information and statistical section are presented for I purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fimd financial statements and schedules and supplementary financial information have been subjected to the auditing procedures applied I in the audit ofthe basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory and statistical sections have not been subjected to the auditing procedures I applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. I Wj(67~~/';/:tJ. HLB TAUTGES REDPATH, LTD. I White Bear Lake, Minnesota , May 7, 2009 I I I 15 C CITY OF ANDOVER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS C December 31, 2008 As management of the City of Andover, we offer readers of the City of Andover's financial statements this narrative overview and analysis C of the financial activities of the City for the fiscal year ended December 31, 2008. 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 9 of this report. C Financial Hil!hlil!hts The assets of the City of Andover exceeded its liabilities at the close of the most recent fiscal year by $149,505,540 (Net assets). Of this C amount, $7,485,640 (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 $920,526, primarily due to the change in recording of tax increment revenues. Starting in 2008, all C tax increment revenues will be receipted in the Tax Increment Projects Capital Projects Fund and transferred over to make debt service payments as needed, thus avoiding any arbitrage penalties. In 2008, the tax increment debt service funds had sufficient funds to make its debt service payments so no tax increment funds were transferred. C As of the close of the current fiscal year, the City of Andover's governmental funds reported combined ending fund balances of $39,286,726. Special Debt Capital C General Revenue Service Projects Totals Reserved $ 193,805 $ 17,206 $20,132,603 $ 604,494 $ 20,948,108 Designated 3,981,230 1,540,720 - 13,483,426 19,005,376 C Undesignated - (599,461) - (67,297) (666,758) $ 4,175,035 $ 958,465 $20,132,603 $ 14,020,623 $ 39,286,726 The City's total long-term liabilities decreased by $3,135,387 during the current fiscal year, primarily due to the scheduled debt service C payments made in 2008. Beginning Ending C Balance Additions Reductions Balance Governmental activities: Bonds payable $ 55,200,000 $ 630,000 $ (3,460,000) $ 52,370,000 r\ Other post employment benefits - 45,132 (9,036) 36,096 ~ Compensated absences 509,851 283,804 (288,762) 504,893 Total governmental activities 55,709,851 958,936 (3,757,798) 52,910,989 C Business-type activities: Bonds payable 15,040,000 - (360,000) 14,680,000 Other post employment benefits - 7,964 (1,594) 6,370 C Compensated absences 90,228 54,463 (37,358) 107,333 Total business-type activities 15,130,228 62,427 (398,952) 14,793,703 C Total City long-term liabilities $ 70,840,079 $ 1,021,363 $ (4,156,750) $ 67,704,692 Overview of the Financial Statements C The discussion and analysis are intended to serve as an introduction to the City of Andover'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 C 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 of Andover's fmances, in a manner similar to a private-sector business. C 16 C I I CITY OF ANDOVER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2008 I The statement of net assets presents information on all of the City of Andover'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 I City of Andover 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, I revenues and expenses are reported in this statement for some items that wi1\ 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 of Andover 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 I costs through user fees and charges (business-type activities). The governmental activities of the City of Andover include general government, public safety, public works, sanitation, parks and recreation, recycling and economic development. The business-type activities of the City of Andover include water, sewer and storm sewer. I The government-wide fmancial 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 of Andover, like other state and local governments, uses fund accounting to ensure I and demonstrate compliance with finance-related legal requirements. All of the funds of the City of Andover 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 I government-wide financial statements. However, unlike the government-wide fmancial 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. I 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 I reconciliation to facilitate this comparison between governmental funds and governmental activities. The City of Andover 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: I 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, Road and Bridge, Tax Increment Projects and Permanent Improvement Revolving. I 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 of Andover adopts an annual appropriated budget for its general and special revenue funds. I 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 ofthis report. D 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. D 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 of Andover uses enterprise funds to account for its water, sanitary sewer and storm sewer operations. I 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 \\-ith governmental activities in the government-wide financial statements. a The basic proprietary fund financial statements can be found on pages 38 through 43 of this report. a 17 C CITY OF ANDOVER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS C December 31, 2008 Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds C are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City of Andover'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. C 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 77 of this report. C 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 85 through 123 ofthis report. C Government-wide Financial Analvsis 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 of Andover, C assets exceeded liabilities by $149,505,540 at the close of the most recent fiscal year. The largest portion of the City of Andover's net assets ($117,250,821 or 78 percent) reflects its investment in capital assets (e.g. land, C 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 of Andover uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City of Andover'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 C capital assets themselves cannot be used to liquidate these liabilities. CITY OF ANDOVER'S NET ASSETS Governmental Activities Business-Type Activities Totals C 2007 2008 2007 2008 2007 2008 Current and other assets $ 48,179,407 $ 47,312,524 $ 10,717,872 $ 11,067,643 $ 58,897,279 $ 58,380,167 C Capital assets 115,620,905 115,149,769 47,050,630 45,716,052 162,671,535 160,865,821 Total assets 163,800,312 162,462,293 57,768,502 56,783,695 221,568,814 219,245,988 C Long-term liabilities outstanding 55,709,851 52,910,989 15,130,228 14,793,703 70,840,079 67,704,692 C Other liabilities 1,745,964 1,657,287 397,757 378,469 2,143,721 2,035,756 Total liabilities 57,455,815 54,568,276 15,527,985 15,172,172 72,983,800 69,740,448 Net assets: C Invested in capital assets, net of related debt 77,285,905 79,644,769 38,580,630 37,606,052 115,866,535 117,250,821 Restricted 24,271,706 24,769,079 - - 24,271,706 24,769,079 C Unrestricted 4,786,886 3,480,169 3,659,887 4,005,471 8,446,773 7,485,640 Total net assets $ 106,344,497 $ 107,894,017 $ 42,240,517 $ 41,611,523 $ 148,585,014 $ 149,505,540 ~ A portion of the City of Andover's net assets represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets ($7,485,640) may be used to meet the City's ongoing obligations to citizens and creditors. C At the end of the current fiscal year, the City of Andover is able to report positive balances in all three categories of net assets, both for the government as a whole, as well as for its separate governmental and business-type activities. C 18 C I I CITY OF ANDOVER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2008 I Government-wide Activities I Governmental activities increased the City of Andover's net assets by $1,549,520 and business-type activities decreased net assets by $628,994. Key elements of the activities are as follows: City of Andover's Changes in Net Assets Governmental Activities Business- Type Activities Total I 2007 2008 2007 2008 2007 2008 Revenues: Program revenues: I Charges for services $ 2,931,779 $ 3,080,182 $ 4,085,494 $ 4,153,884 $ 7,017,273 $ 7,234,066 Operating grants and contributions 1,129,099 917,618 - - 1,129,099 917,618 I Capital grants and contributions 8,794,164 1,069,607 158,113 142,133 8,952,277 1,211,740 General revenues: Property taxes 8,897,755 9,752,701 - - 8,897,755 9,752,701 I Tax increment 1,661,204 1,783,270 - - 1,661,204 1,783,270 Grants and contributions not restricted to specific programs 486,626 274,402 - - 486,626 274,402 I Unrestricted investments earnings 1,967,583 1,514,012 337,378 372,510 2,304,961 1,886,522 Total revenues 25,868,210 18,391,792 4,580,985 4,668,527 48,840,987 27,641,304 I Expenses: General government 2,509,011 2,505,105 - - 2,509,011 2,505,105 Public safety 3,851,086 4,035,884 - - 3,851,086 4,035,884 I Public works 3,783,509 5,144,197 - - 3,783,509 5,144,197 Parks and recreation 2,954,753 2,963,218 - - 2,954,753 2,963,218 Recycling 94,929 85,397 - - 94,929 85,397 Economic deve lopment 2,265,605 540,285 - - 2,265,605 540,285 I Interest on long-term debt 2,303,567 2,219,130 - - 2,303,567 2,219,130 Water - - 2,587,847 2,563,781 2,587,847 2,563,781 Sewer - - 1,631,224 1,794,891 1,631,224 1,794,891 Storm sewer - - 537,151 521,975 537,151 521,975 I Total expenses 17,762,460 17,493,216 4,756,222 4,880,647 22,518,682 22,373,863 Increase (decrease) in net I assets before gain on the sale of capital assets and transfers 8,105,750 898,576 (175,237) (212,120) 7,930,513 686,456 I Gain on the sale of capital assets 191,735 234,070 - - 191,735 234,070 Transfers (714,577) 416,874 714.577 (416,874) - - I Increase in net assets 7,582,908 1,549,520 539,340 (628,994) 8,122,248 920,526 Net assets - beginning 98,761,589 106,344,497 41,701.177 42,240,517 140,462,766 148,585,014 I Net assets - ending $ 106,344,497 $ 107,894,017 $ 42.240.517 $ 41,611,523 $ 148,585,014 $ 149,505,540 I I 19 C CITY OF ANDOVER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS C December 31, 2008 Governmental Activities C Following are specific graphs that provide comparisons of the governmental activities revenues and expenses: Governmental Activities - Revenues C Grants and Unrestricted contributions not C investments earnings restricted for s ~cific 8.1% programs 1.5% Tax increment Gain (loss) on the sale C 9.6% of capital assets 1.3% Capital grants and C contributions 5.7% C Opemting grants and contributions 4.9% C C C Governmental Activities - Expenses C lnterest on long-tenn debt C 12.7% Economic development 3.1% C Parl<:s and recreation Public safety C 16.9"/0 23.1% C C C 20 C I I CITY OF ANDOVER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31,2008 I Business-Type Activities Business-type activities decreased net assets by $628,994. Below are graphs showing the business-type activities revenue and expense I comparisons: Business-Type Activities - Revenues I Unrestricted investm::nts earnings I 8.0% Capital grants and contributions I 3.0"10 I I I Charges for I services 89.0% I Business-Type Activities - Expenses Stonn sewer I 11% I I Water 52% Sewer I 37% I I I 21 C CITY OF ANDOVER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2008 C ' ' Financial Analvsis ofthe Government's Funds C Governmental Funds. The focus of the City of Andover'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 of Andover's financing requirements. In particular, e unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end ofthe fiscal year. At the end of the current fiscal year, the City of Andover's governmental funds reported combined ending fund balances of $39,286,726. Approximately 47 percent of this total amount ($18,338,618) constitutes unreserved fund balance. The remainder of the fund balance C ($20,948,108) is reserved because it has already been committed I) to provide for prepaid items ($114,915), 2) to provide for inventory ($93,836), 3) to provide for economic development ($2,260), 4) to pay debt service ($20,132,603) and 5) bond proceeds specified for a project ($604,494). Maior Funds C The general fund increased by $284,575 in 2008, which was a $359,097 change from the final budget. The adopted and final budget showed a decrease in fund balance of $74,522. The increase in fund balance is due to employee vacancies and various departments under-spending. C 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. In 2008, the water trunk fund expenditures are primarily for the refurbishing of a water tower. The sewer trunk fund continues to receive funds from the sewer enterprise fund to be set aside for future replacements. C The road and bridge capital projects fund decreased by $684,789 primarily due to the City's share of the reconstruction of Hanson Blvd NW, an Anoka County Highway Department project. Also included in the decrease was the completion of a wayside horn at the railroad crossing on Crosstown Blvd NW and a quiet zone at the railroad crossing on 161 sj Avenue. C The tax increment capital projects fund increased by $2,091,407 due to the recording of tax increment revenue. Starting in 2008, all tax increment revenues will be receipted in the capital projects fund and transferred, as needed, to the debt service funds to make the debt service payments. In 2008, the debt service funds had sufficient funds to make its debt service payments so no monies were transferred. C Nonmaior Funds The community center special revenue fund decreased by $112,11 9, primarily due to the transfer of monies to the debt service fund. Half of the building is leased to the Greater Minneapolis YMCA and they started making lease payments in 2008. The City received a partial lease C payment in 2008 of $235,686 and years 2009 through 2033 will be receiving scheduled lease payments between $626,020 and $635,000 annually with a final lease payment in 2034 of $287,567. Future YMCA lease payments will significantly reduce the City's obligation to finance annual debt service. In 2008, the capital equipment reserve special revenue fund decreased by $178,726. This change was due to the transfer of $75,000 to the C park dedication capital projects fund to help offset the construction costs of the Andover Station North ball field building. Also reducing fund balance by $80,000 was the installation of an irrigation well for Sunshine Park. Upon completion, this well will save the general fund over $40,000 a year in water expenditures. C The 2003B and 2004B G.O. TIF refunding debt service funds decreased by $242,644 and $573,869, respectively. As explained earlier, all tax increment revenues will be receipted in the tax increment projects capital projects fund and transferred, as needed, to the TIF debt service funds to make the debt service payments. In 2008, the debt service funds had sufficient funds to make its debt service payments so no C monies were transferred. The 2005A G.O. improvement bonds debt service fund decreased by $637,560 due to its annual debt service payment. The open space referendum bonds debt service fund increased by $162,810 due to the collection of its annual debt service levy and no debt C service payments because the bonds have yet to be sold. Proprietary funds. The City of Andover's proprietary funds provide the same type of information found in the government-wide financial C statements, but in more detail. The unrestricted net assets in the respective proprietary funds are enterprise funds of $4,112,464 (water $1,528,409, sewer $2,416,570 and storm sewer $167,485) and internal service funds of $139,225. The enterprise funds had a net decrease in net assets in 2008 of $629,532 C (water ($272,577), sewer ($124,683) and storm sewer ($232,272)). Internal service funds had a net decrease in net assets of$5,457. C 22 C I I CITY OF ANDOVER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2008 I Capital Asset and Debt Administration I Capital assets. The City of Andover's investment in capital assets for its governmental and business type activities as of December 31, 2008, amounts to $160,865,821 (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 I 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: 1) The City manages the eligible infrastructure capital assets using an asset management system with characteristics of (a) an up-to- I 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 I 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 2008, 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 I 31,2008, the City's street and trail system was rated at an Overall Condition Index (OCI) of 80, 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 I 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 $2,244,713 on street and trail maintenance for the year ending December 31, 2008. These expenditures delayed deterioration; however, the overall condition of the system declined slightly (81 OCI to an 80 OCI) through these maintenance expenditures. The City has estimated that the I 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. Maintenance Actual OCI I Year Estimate Expenditures Rating 2003 $ 950,000 $ 956,688 82 2004 1,000,000 1,847,066 82 I 2005 1,000,000 1,655,715 83 2006 1,150,000 1,228,981 82 2007 1,150,000 1,256,433 81 2008 1,150,000 2,244,713 80 I I I I I I I 23 C CITY OF ANDOVER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS C December 31, 2008 Primary Government C Beginning Ending Balance Additions Deletio s Balance Governmental activities: C Land and improvements $ 7,889,177 $ 468,531 $ 316,400) $ 8,041,308 Streets and trails 78,688,609 464,807 - 79,153,416 Construction in progress 360,741 170,905 (222,232) 309,414 C Buildings and improvements 26,265,061 116,523 - 26,381,584 Furniture and equipment 319,222 88,236 (43,204) 364,254 Machinety and equipment 6,241,186 231,029 (53,864) 6,418,351 Other park improvements 4,898,020 142,863 (20,963) 5,019,920 C Total capital assets 124,662,016 1,682,894 (656,663) 125,688,247 Less accumulated depreciation for: C Buildings and improvements 3,564,453 888,847 - 4,453,300 Furniture and equipment 142,352 49,907 (43,204) 149,055 Machinety and equipment 4,118,234 420,354 (50,454) 4,488,134 C Other park improvements 1,216,072 246,067 (14,150) 1,447,989 Total accumulated depreciation 9,041,111 1,605,175 (107,808) 10,538,478 Governmental activities C capital assets - net 115,620,905 77,719 (548,855) 115,149,769 Business-type activities: C Land and improvements 730,243 - - 730,243 Buildings and improvements 14,810,983 - - 14,810,983 Furniture and equipment 65,115 25,630 (29,355) 61,390 Machinety and equipment 1,114,383 112,390 - 1,226,773 C Collection and distribution 48,347,421 135,179 - 48,482,600 Total capital assets C being depreciated 65,068,145 273,199 (29,355) 65,311,989 Less accumulated depreciation for: Buildings and improvements 4,073,813 522,319 - 4,596,132 C Furniture and equipment 39,723 6,853 (29,355) 17,221 Machinety and equipment 714,379 102,814 - 817,193 Collection and distribution 13,189,600 975,791 - 14,165,391 Total accumulated depreciation 18,017,515 1,607,777 (29,355) 19,595,937 C Business-type activities capital assets - net 47,050,630 (1,334,578) - 45,716,052 C Total capital assets $ 162,671,535 $ (1,256,859) $ (548,855) $ 160,865,821 Additional information on the City of Andover's capital assets can be found in Note 5. C Long-term debt. At the end of the current fiscal year, the City of Andover had total long-term debt outstanding of $67,662,226, a decrease ~ of $3,177,853 from 2007. General obligation revenue bonds ($50,565,000) were used to finance the construction of the water treatment facility and the community center, and the refunding of portions of the community center bonds and water treatment facility bonds. Special assessment bonds ($3,015,000) fmanced improvement projects within the City and are assessed to the benefiting properties. Tax increment bonds ($3,275,000) financed the City's economic development plan within tax increment districts. Certificates of indebtedness ($1,525,000) financed capital equipment purchases. Capital improvement bonds ($3,155,000) financed the construction of Fire Station #3, the purchase of C the Public Works building from the EDA and some improvements done at the Public Works building and City Hall. Permanent improvement 24 C I I CITY OF ANDOVER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31,2008 I revolving bonds ($3,755,000) financed improvement projects within the City and are assessed to the benefiting properties. State aid bonds ($1,760,000) were used to finance Municipal State Aid (MSA) eligible road projects. I Additional long-term debt in the amount of $612,226 is for compensated absences. City of Andover's Outstanding Debt I Governmental Business-Type Activities Activities Total I Bonds payable: G.O. revenue bonds $ 35,885,000 $ 14,680,000 $ 50,565,000 Special assessment bonds 3,015,000 - 3,015,000 Tax increment bonds 3,275,000 - 3,275,000 Certificates of indebtedness 1,525,000 - 1,525,000 I Capital improvement bonds 3,155,000 - 3,155,000 Permanent improvement revolving bonds 3,755,000 - 3,755,000 State aid bonds 1,760,000 - 1,760,000 I Total bonds payable 52,370,000 14,680,000 67,050,000 Compensated absences 504,893 107,333 612,226 I Total $ 52,874,893 $ 14,787,333 $ 67,662,226 The City of Andover maintains an AA- rating with a stable outlook from Standard and Poor's. I 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 of Andover is $89,089,179. Only $22,625,041 of the City's outstanding debt is counted within the statutory limitation. I Additional information on the City of Andover'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 I with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional [mancial 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. I I I I I I I 25 c c c c c ~ I.i - This page intentionally left blank - C C C C C C C C c m c ~ I~ .: III 26 ~ I I I BASIC FINANCIAL STATEMENTS I I I I I I I a D I a I I I I I 27 c c c c c c - This page intentionally left blank - C C C C ~ C ~ ~ ~ c c C 28 C I I CITY OF ANDOVER, MINNESOTA STATEMENT OF NET ASSETS Statement 1 December 31, 2008 I Primary Govermnent Govermnent Business-Type Totals Activities Activities 2008 2007 I Assets: Cash and investments $ 21,621,198 $ 3,299,931 $ 24,921,129 $ 24,632,884 Cash and investments with escrow agent 17,194,324 6,493,019 23,687,343 23,704,147 Accrued interest 611,855 126,280 738,135 625,730 I Due from other govermnental units 69,842 7,606 77,448 111,204 Accounts receivable - net 203,914 1,027,568 1,231,482 1,182,052 Prepaid items 116,665 20,000 136,665 144,808 D Property taxes receivable: Unremitted 93,071 - 93,071 92,884 Delinquent 326,285 - 326,285 247,536 Special assessments receivable: I Unremitted 272 2,390 2,662 1,579 Delinquent 112,605 62,205 174,810 76,419 Deferred 5,265,719 - 5,265,719 6,371,533 Notes receivable 1,537,488 - 1,537,488 1,527,013 D Inventories - at cost 159,286 28,644 187,930 179,490 Capital assets - net Nondepreciable 87,504,138 730,243 88,234,381 87,668,770 Depreciable 27,645,631 44,985,809 72,631,440 75,002,765 D Total assets 162,462,293 56,783,695 219,245,988 221,568,814 Liabilities: I Interfund payable (30,012) 30,012 - - Accounts payable 182,835 17,240 200,075 316,566 Contracts payable 219,503 13,789 233,292 50,427 Developer advances 10,000 - 10,000 5,000 I Deposits payable 55,955 , 3,684 59,639 24,410 Due to other govermnental units 84,944 23,097 108,041 138,918 Salaries payable 113,067 20,729 133,796 95,963 Unearned revenue 97,172 - 97,172 279,128 I Accrued interest payable 923,823 269,918 1,193,741 1,233,309 Other post employment benefits: Due in more than one year 36,096 6,370 42,466 - Compensated absences: D Due within one year 50,489 10,733 61,222 60,008 Due in more than one year 454,404 96,600 551,004 540,071 Bonds/notes payable: Due within one year 3,865,000 375,000 4,240,000 3,820,000 D Due in more than one year 48,505,000 14,305,000 62,810,000 66,420,000 Total liabilities 54,568,276 15,172,172 69,740,448 72,983,800 I Net assets: Invested in capital assets, net of related debt 79,644,769 37,606,052 117,250,821 115,866,535 Restricted for: Debt service 20,649,324 - 20,649,324 21,993,711 D Capital improvements 485,494 - 485,494 735,141 Tax increment purposes 3,634,261 - 3,634,261 1,542,854 Unrestricted 3,480,169 4,005,471 7,485,640 8,446,773 D Total net assets $ 107,894,017 $ 41,611,523 $ 149,505,540 $ 148,585,014 D The accompanying notes are an integral part of these financial statements. I 29 C CITY OF ANDOVER, MINNESOTA STATEMENT OF ACTIVITIES C For The Year Ended December 31, 2008 Program Revenues C Charges Operating Capital For Grants and Grants and C Expenses Services Contributions Contributions Functions/Programs Primary govermnent: C Govermnent activities: General govermnent $ 2,505,105 $ 647,081 $ - $ - Public safety 4,035,884 721,289 350,395 - Public works 5,144,197 427,043 507,330 888,800 ~ Parks and recreation 2,963,218 1,049,032 - 180,807 Recycling 85,397 35,897 47,580 - Economic development 540,285 199,840 12,313 - Interest on long-term debt 2,219,130 - - - ~ Total govermnent activities 17,493,216 3,080,182 917,618 1,069,607 Business-type activities: C Water 2,563,781 1,987,432 - - Sewer 1,794,891 1,869,327 - 142,133 Storm sewer 521,975 297,125 - - Total business-type activities 4,880,647 4,153,884 - 142,133 C Total primary govermnent $ 22,373,863 $ 7,234,066 $ 917,618 $ 1,211,740 C C C C C The accompanying notes are an integral part of these financial statements. C ~ C C 30 C I I Statement 2 I Net (Expense) Revenue and Changes in Net Assets Primary Government I Govermnental Business-Type Totals Activities Activities 2008 2007 I $ $ $ $ (1,858,024) - (1,858,024) (1,705,718) (2,964,200) - (2,964,200) (2,855,393) I (3,321,024) - (3,321,024) 5,904,538 (1,733,379) - (1,733,379) (1,853,239) (1,920) - (1,920) (10,969) (328,132) - (328,132) (2,083,070) I (2,219,130) - (2,219,130) (2,303,567) (12,425,809) - (12,425,809) (4,907,418) I - (576,349) (576,349) (512,372) - 216,569 216,569 199,171 I - (224,850) (224,850) (199,414) - (584,630) (584,630) (512,615) I (12,425,809) (584,630) (13,010,439) (5,420,033) General revenues: I General property taxes 9,752,701 - 9,752,701 8,897,755 Tax increment collections 1,783,270 - 1,783,270 1,661,204 Grants and contributions not restricted to specific programs 274,402 - 274,402 486,626 I Unrestricted investment earnings 1,514,012 372,510 1,886,522 2,304,961 Gain on sale of capital assets 234,070 - 234,070 191,735 Transfers 416,874 (416,874) - - I Total general revenues, gain on sale of capital assets and transfers 13,975,329 (44,364) 13,930,965 13,542,281 Change in net assets 1,549,520 (628,994) 920,526 8,122,248 D Net assets - beginning 106,344,497 42,240,517 148,585,014 140,462,766 Net assets - ending $ 107,894,017 $ 41,611,523 $ 149,505,540 $ 148,585,014 I I I I I 31 C CITY OF ANDOVER, MINNESOTA BALANCE SHEET C GOVERNMENTAL FUNDS December 31, 2008 2006 EDA Public 2007 EDA Public C Facility Lease Facility Lease Revenue Revenue Refunding Bonds Refunding Bonds Water Trunk Sewer Trunk General DSF DSF CPF CPF Assets C Cash and investments $ 3,309,939 S 686 $ 686 $ 3,071 ,906 $ 2,721,585 Cash and investments with escrOw agent 9,761,125 6,706,325 Accrued interest 15,904 176,331 121,224 21,211 17,286 Due from other governmental units 30,280 C Accounts receivable - net 64,231 Interfund receivable 776,000 60,000 Prepaid items 108,415 Property taxes receivable: Unremitted 55,769 - C Delinquent 177,770 Special assessments receivable: Unremitted 266 Delinquent 7,989 6,523 384 Deferred 355,390 97,342 ~ Notes receivable Inventory 85,390 Total assets 4,631,953 9,938,142 6,828,235 3,515,030 2,836,597 Liabilities and Fund Balances C Liabilities: Interfund payable 3,000 3,000 C Accounts payable 74,058 - Contracts payable 22,071 193,527 Developer advances Deposits payable 10,503 5,741 5,741 Due to other governmental units 72,947 C Salaries payable 91,580 Deferred revenue 185,759 361,913 97,726 Total liabilities 456,918 3,000 3,000 561,181 103,467 Fund balances: C Reserved for: Prepaid items 108,415 - Inventory 85,390 Economic development C Debt service 9,935,142 6,825,235 - Projects - Unreserved reported in: Designated: General fund 3,981,230 ~ Special revenue funds Capital projects funds - - 2,953,849 2,733,130 Undesignated: Special revenue funds C Capital projects funds Total fund balances 4,175,035 9,935,142 6,825,235 2,953,849 2,733,130 Total liabilities and fund balances $ 4,631,953 $ 9,938,142 $ 6,828,235 $ 3,515,030 $ 2,836,597 C Fund balance reported above Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds, ~ Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds, 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 activities statement of net assets along with a deduction of net revenue attributable to business-type activities. 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. Net assets of governmental activities The accompanying notes are an integral part of these financial statements. C 32 C I I Statement 3 I Tax Permanent Road & Increment Improvement Other Intra Totals Bridge Projects Revolving Governmental Activity Govenl1nental Fnnds I CPF CPF CPF Funds Eliminations 2008 2007 $ 2,477,516 $ 3,342,690 $ 1,618,745 S 4,978,035 $ $ 21,521,788 $ 21,498,262 726,874 17,194,324 17,210,373 13,378 182,805 11,461 51,142 610,742 501,962 I 39,562 69,842 104,039 139,683 203,914 207,096 10,000 (846,000) 6,500 114,915 126,558 D 8,011 10,028 19,263 93,071 92,884 31,538 50,921 66,056 326,285 247,536 6 272 387 I 22,433 64,884 10,392 112,605 32,334 1,247,566 2,008 3,114,905 448,508 5,265,719 6,371,533 36,636 1,431,000 69,852 1,537,488 1,527,013 8,446 93,836 89,854 I 3,837,084 5,019,452 4,809,995 6,574,313 (846,000) 47,144,801 48,009,831 D 840,000 (846,000) 1,530 2 84,985 160,575 261,192 3,905 - 219,503 33,636 10,000 10,000 5,000 - 33,970 55,955 22,176 D 6,355 2,210 3,332 84,844 115,603 15,349 106,929 76,969 1,338,173 1,364,929 3,179,789 691,980 7,220,269 8,338,544 D 1,339,703 1,385,191 3,181,999 1,669,616 (846,000) 7,858,075 8,853,120 6,500 114,915 126,558 I 8,446 93,836 89,854 2,260 2,260 4,261 3,372,226 20,132,603 21,359,062 119,000 485,494 604,494 735,141 D - 3,981,230 3,682,244 1,540,720 1,540,720 1,685,045 2,497,381 3,515,261 1,627,996 155,809 13,483,426 12,011,083 I (599,461) (599,461) (480,592) (67,297) (67,297) (55,945) 2,497,381 3,634,261 1,627,996 4,904,697 39,286,726 39,156,711 I $ 3,837,084 $ 5,019,452 $ 4,809,995 $ 6,574,313 S (846,000) $ 47,144,801 $ 48,009,831 $ 39,286,726 $ 39,156,711 I 115,149,769 115,620,905 7,123,097 8,059,416 I 169,237 175,232 (53,834,812) (56,667,767) $ 107,894,017 $ 106,344,497 D D 33 C CITY OF ANDOVER, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES AND C CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS For The Year Ended December 31,2008 2006 EDA Public 2007 EDA Public C Facility Lease Facility Lease Revenue Revenue Refunding Bonds Refunding Bonds Water Trunk Sewer Trunk C General DSF DSF CPF CPF Revenues: General property taxes $ 6,249,011 $ - $ $ $ Tax increment collections C Licenses and permits 525,339 Intergovernmental 709,251 - Special assessments 51,442 131,888 Charges for services 772,430 C Fines 104,930 - Investment income 137,966 423,115 290,862 143,983 122,750 Miscellaneous Park dedication fees Connection charges 253,728 1,175 C Other 116,950 - Total revenues 8,615,877 423,115 290,862 449,153 255,813 Expenditures: C Current: General government 2,315,872 Public safety 3,785,803 - C Public works 1,445,111 5 I 8,634 26,813 Parks and recreation 867,652 Recycling 86,63 I Economic development - - C Unallocated 17,999 Capital outlay: General government - - Public safety Public works ~ Parks and recreation 3,428 Economic development Debt service: Principal retirement C Interest - 424,228 291,982 Paying agent fees 2,112 2,112 Professional services Construction/acquisition costs C Total expenditures 8,522,496 426,340 294,094 518,634 26,813 Revenues over (under) expenditures 93,381 (3,225) (3,232) (69,481) 229,000 Other financing sources (uses): ~ Transfers in 191,194 350,000 Transfers out - (163,469) Bonds issued C Refunding bonds issued Bond premium Proceeds from the sale of capital assets - - - Total other financing sources (uses) 191,194 (163,469) 350,000 C Net increase (decrease) in fund balance 284,575 (3,225) (3,232) (232,950) 579,000 Fund balance - January I 3,890,460 9,938,367 6,828,467 3,186,799 2,154,130 ~ Fund balance - December 31 $ 4,175,035 $ 9,935,142 $ 6,825,235 $ 2,953,849 $ 2,733,130 ~ The accompanying notes are an integral part of these financial statements. C 34 ~ B I Statement 4 I Tax Permanent I Road & Increment Improvement Other Intra Totals Bridge Projects Revolving Governmental Activity Governmental Funds CPF CPF CPF Funds Eliminations 2008 2007 I $ 1,089,557 $ $ $ 2,356,535 $ $ 9,695,103 $ 8,833,249 1,762,119 1,762,119 1,659,222 525,339 475,893 89,784 66,095 310,075 1,175,205 1,644,914 I 253,542 1,095 1,1 19,384 80,655 1,638,006 3,342,039 951,622 - 1,724,052 2,035,735 104,930 101,445 107,224 199,692 32,825 49,848 1,508,265 1,962,379 I - - 133,585 133,585 113,013 - - - 254,903 829,624 7,810 3,000 20,678 681,568 (29,149) 800,857 621,798 I 1,547,917 2,032,00 I 1,172,887 4,563,888 (29,149) 19,322,364 21,619,311 B 50,702 2,366,574 2,399,297 11,162 3,796,965 3,580,240 2,015,973 14,387 822,370 4,843,288 3,491,353 1,086,170 1,953,822 1,825,706 - - 86,63 I 94,669 D 408,92 I 129,372 - 538,293 2,265,605 - 17,999 6,915 368,094 368,094 D 82,152 216,733 441,104 657,837 1,397,806 - - 351,625 355,053 1,032,589 - 79,678 79,678 290,938 I - 3,460,000 3,460,000 3,275,000 1,537,013 2,253,223 2,089,857 - 7,421 - 11,645 8,362 4,000 4,000 158,825 B 360,742 2,232,706 488,599 14,387 8,269,033 - 20,793,102 22,360,056 I (684,789) 1,543,402 1,158,500 (3,705,145) (29,149) (1,470,738) (740,745) 1,475,826 (1,436,677) 580,343 578,925 I (1,165,000) (300,826) 1,465,826 (163,469) (57,671) 630,000 630,000 760,000 - 6,865,000 3,401 548,005 5,874 553,879 706,386 D 548,005 (1,165,000) 1,810,874 29,149 1,600,753 8,856,04 I (684,789) 2,091,407 (6,500) (1,894,271) 130,QI 5 8,115,296 D 3,182,170 1,542,854 . 1,634,496 6,798,968 39,156,711 31,041,415 $ 2,497,381 $ 3,634,26 I $ 1,627,996 $ 4,904,697 $ $ 39,286,726 $ 39,156,71 I D D 35 c c c c c c - This page intentionally left blank- C C ~ C C C ~ C C ~ C C 36 C I I CITY OF ANDOVER, MINNESOTA RECONCILIATION OF THE STATEMENT OF REVENUES, Statement 5 EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS I For The Year Ended December 31, 2008 2008 2007 I Amounts reported for governmental activities in the statement of activities (page 35) are different because: I Net changes in fund balances - total governmental funds (page 35) $ 130,015 $ 8,115,296 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 I as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. (144,513) 1,631,628 The net effect of various miscellaneous transactions involving capital assets is to increase (decrease) net assets (i.e., sales, trade-ins, and donations). (326,623) (483,651 ) I Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. (936,319) 4,212,695 I The issuance oflong-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal oflong-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 I long-term debt and related items. 2,830,000 (4,350,000) Vested post employment benefits are reported in the governmental funds when amounts are paid. The statement of activities reports the benefits earned during the years. This amount (36,096) I is the net effect of employee benefits eamed and paid during the year. Transfer out of governmental capital assets contributed to Enterprise Funds. (1,235,83 I) I Some expenses reported in the statement of activities do not require use of current fmancial resources and, therefore, are not reported as expenditures in governmental funds. 39,051 (264,262) Internal service funds are used by management to charge the cost of equipment maintenance I and insurance to individual funds. This amount is the portion of net revenue attributable to governmental activities. (5,995) (42,967) Change in net assets of governmental activities (page 31) $ 1,549,520 $ 7,582,908 I The accompanying notes are an integral part of these financial statements. I I I I I I 37 C CITY OF ANDOVER, MINNESOTA STATEMENT OF NET ASSETS C PROPRIETARY FUNDS December 3 I, 2008 C Water Sewer Storm Sewer Assets C Current assets: Cash and cash equivalents $ 1,359,835 $ 1,843,360 $ 96,736 Restricted assets: C Cash and cash equivalents 6,493,019 Accrued interest 115,553 10,307 420 Due from other governmental units 7,606 Accounts receivable - net 364,078 572,091 91,399 Prepaid items 11,750 8,250 C Special assessments receivable: Unremitted 1,009 1,222 159 Delinquent 30,593 28,107 3,505 Inventories - at cost 28,644 - Total current assets 8,404,481 2,470,943 192,219 C : J Noncurrent assets: Capital assets: Land 730,243 - C Buildings and structures 14,810,983 : I Machinery and equipment 322,939 510,476 454,748 Distribution and collection system 15,267,409 23,453,461 9,761,730 Total capital assets 31,131,574 23,963,937 10,216,478 C Less: Allowance for depreciation (8,901,990) (7,740,384) (2,953,563) Total noncurrent assets 22,229,584 16,223,553 7,262,915 Total assets 30,634,065 18,694,496 7,455,134 C Liabilities Current liabilities: Accounts payable 14,949 898 1,393 C Contracts payable 7,709 2,238 3,842 Deposits payable 3,684 - Interest payable 269,918 - Due to other governmental units 17,617 5,480 C Salaries payable 10,250 8,427 2,052 Bonds payable - due within one year 375,000 - Compensated absences payable - due within one year 5,510 3,478 1,745 Total current liabilities 704,637 20,52 I 9,032 Noncurrent liabilities: C Other post employment benefits - due in more than one year 3,822 2,548 Bonds payable - due in more than one year 14,305,000 Compensated absences payable - due in more than one year 49,594 31,304 15,702 C Total noncurrent liabilities 14,358,416 33,852 15,702 Total liabilities 15,063,053 54,373 24,734 Net assets C Invested in capital assets, net of related debt 14,042,603 16,223,553 7,262,915 Unrestricted 1,528,409 2,416,570 167,485 Total net assets $ 15,571,012 $ 18,640,123 $ 7,430,400 C Net assets reported above Amounts reported for business-type activities in the statement of net assets are different because: C 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 C The accompanying notes are an integral part of these financial statements. 38 C I I Statement 6 I Totals Governmental Activities - Totals Internal Service Funds I 2008 2007 2008 2007 I $ 3,299,93 I $ 3,034,428 $ 99,410 $ 100,194 6,493,019 6,493,774 126,280 123,011 1,113 757 7,606 7,165 I 1,027,568 974,956 20,000 16,500 1,750 1,750 2,390 1,192 I 62,205 44,085 28,644 22,761 65,450 66,875 11,067,643 10,717,872 167,723 169,576 I 730,243 730,243 14,810,983 14,810,983 1,288,163 1,179,498 - I 48,482,600 48,347,422 - - 65,3 I 1,989 65,068,146 (19,595,937) (18,017,516) 45,716,052 47,050,630 I 56,783,695 57,768,502 167,723 169,576 I 17,240 35,218 22,260 20,156 13,789 16,691 100 3,684 2,234 - 269,918 275,393 I 23,097 23,315 100 20,729 14,356 6,138 4,638 375,000 360,000 10,733 9,023 - I 734,190 736,230 28,498 24,894 6,370 I 14,305,000 14,680,000 96,600 81,205 - - 14,407,970 14,761,205 15,142,160 15,497,435 28,498 24,894 I 37,529,071 38,504,404 - 4,112,464 3,766,663 139,225 144,682 I $ 41,641,535 $ 42,271,067 $ 139,225 $ 144,682 $ 41,641,535 $ 42,271,067 I (30,012) (30,550) I $ 41,611,523 $ 42,240,517 I 39 C CITY OF ANDOVER, MINNESOTA STATEMENT OF REVENUES, EXPENSES AND ~ CHANGES IN FUND NET ASSETS L I PROPRIETARY FUNDS III For The Year Ended December 31, 2008 ~ LJ Water Sewer Storm Sewer C Operating revenues: User charges $ 1,963,192 $ 1,860,622 $ 296,024 ~ Meters 12,252 - - ~ Permit fees 2,650 - - Penalties 8,561 8,687 1,101 Other 777 19 - C Total operating revenues 1,987,432 1,869,328 297,125 Operating expenses: ~ Personal services 395,651 306,139 158,524 it Supplies 191,362 21,546 28,179 Other service charges 485,557 108,035 95,839 Disposal charges - 862,827 - C Depreciation 857,330 509,042 241,405 Total operating expenses 1,929,900 1,807,589 523,947 Operating income (loss) 57,532 61,739 (226,822) C Nonoperating revenues (expenses): Investment income 301,195 66,765 4,550 C Interest expense (648,899) - - Total nonoperating revenues (expenses) (347,704) 66,765 4,550 Income (loss) before contributions C and transfers (290,172) 128,504 (222,272) Capital contributions - 142,133 - C Transfers: Transfers in 163,469 - - Transfers out (145,874) (395,320) (10,000) ~ t'l -- Total transfers 17,595 (395,320) (10,000) Change in net assets (272,577) (124,683) (232,272) C Net assets - January 1 15,843,589 18,764,806 7,662,672 Net assets - December 31 $ 15,571,012 $ 18,640,123 $ 7,430,400 C Net changes in net assets reported above C Amounts reported for business-type activities in the statement of activities are different because: Transfer in of capital assets from govermnental activities. Contribution revenue reported above. Internal service funds are used by management to charge the cost of equipment maintenance C and insurance to individual funds. This amount is the portion of net revenue attributable to business-type activities. Change in net assets of business-type activities C The accompanying notes are an intregral part of these financial statements. 40 C I I Sta ement 7 I Totals I Intra Govermnental Activities - Activity Totals Internal Service Funds Eliminations 2008 2007 2008 2007 I $ - $ 4,119,838 $ 4,027,143 $ 808,392 $ 783,128 - 12,252 17,503 - - - 2,650 4,500 - - I - 18,349 24,395 - - - 796 11,953 13,148 26,611 - 4,153,885 4,085,494 821,540 809,739 I - 860,314 759,720 311,804 299,857 - 241,087 264,219 286,800 290,400 I (29,149) 660,282 758,896 234,140 288,054 - 862,827 748,678 - - - 1,607,777 1,595,616 - - I (29,149) 4,232,287 4,127,129 832,744 878,311 29,149 (78,402) (41,635) (11,204) (68,572) I - 372,510 337,378 5,747 5,204 - (648,899) (608,692) - - I - (276,389) (271,314) 5,747 5,204 29,149 (354,791) (312,949) (5,457) (63,368) I - 142,133 1,393,944 - - D - 163,469 57,671 - - (29,149) (580,343) (578,925) - - (29,149) (416,874) (521,254) - - I - (629,532) 559,741 (5,457) (63,368) - 42,271,067 41,711,326 144,682 208,050 I $ - $ 41,641,535 $ 42,271,067 $ 139,225 $ 144,682 I $ (629,532) $ 559,741 - 1,235,831 - (1,235,831 ) I 538 (20,401) I $ (628,994) $ 539,340 I 41 ~ CITY OF ANDOVER, MINNESOTA STATEMENT OF CASH FLOWS r! PROPRIETARY FUNDS For The Year Ended December 31,2008 II C Water Sewer Storm Sewer ~ Cash flows from operating activities: Ii I ,I I Receipts from customers and users $ 1,961,739 $ 1,827,287 $ 292,488 ill Payment to suppliers (686,273) (1,005, I 74) (130,929) Payment to employees (378,904 ) (295,695) (155,867) ~ Net cash flows from operating activities 896,562 526,418 5,692 ~ Cash flows from noncapital financing activities: C Receipt of advances from other funds - Payment of advances to other funds - Transfers in 163,469 Transfers out (145,874) (395,320) (10,000) Net cash flows from noncapitaI financing activities 17,595 (395,320) (10,000) ~ b Cash flows from capital and related financing activities: Acquisition of capital assets (29,037) (56,165) (45,864) "~ Interest paid on debt (654,374) Receipt of bonds -.~ Payment of bonds (360,000) Net cash flows from capital and related financing activities (1,043,4 II) (56,165) (45,864) ~ Cash flows from investing activities: ~ Investment income 300,036 64,509 4,696 Net increase in cash and cash equivalents 170,782 139,442 (45,476) ~ Cash and cash equivalents - January I 7,682,072 1,703,918 142,212 Cash and cash equivalents - December 3 I $ 7,852,854 $ 1,843,360 $ 96,736 ~ Reconciliation of operating income to net cash provided ,.~ (used) by operating activities: Operating income (loss) $ 57,532 $ 61,739 $ (226,822) I, i .. Adjustments to reconcile operating income (loss) to net cash flows from operating activities: .~ Depreciation 857,330 509,042 241,405 ~ Changes in assets and liabilities: Decrease (increase) in due from other governmental units (441) Decrease (increase) in accounts receivable (12,838) (35,992) (3,782) C Decrease (increase) in prepaid items 4,750 (8,250) Decrease (increase) in special assessments (12,855) (5,608) (855) Decrease (increase) in inventory (5,883) Increase (decrease) in accounts payable (11,503) (4,792) (1,683) Increase (decrease) in contracts payable 2,034 292 (5,228) ~j Increase (decrease) in deposits payable 1,450 Increase (decrease) in due to other governmental units (202) (16) Increase (decrease) in salaries payable 4,060 2,250 63 Increase (decrease) in other post employment benefits 3,822 2,548 ~ Increase (decrease) in compensated absences 8,865 5,646 2,594 Total adjustments 839,030 464,679 232,514 Net cash provided by operating activities $ 896,562 $ 526,418 $ 5,692 ~ Ii i .. Noncash investing, capital and financing activities: Assets contributed to the Enterprise Funds $ $ 142,133 $ The accompanying notes are an integral part of these financial statements. ~ 42 .. ~J I I Statement 8 I Totals Governmental Activities - Totals Internal Service Funds U 2008 2007 2008 2007 $ 4,081,514 $ 3,957,775 $ 821,540 $ 809,739 I (1,822,376) (1,783,031) (517,41 I) (578,190) (830,466) (741,184) (310,304) (298,793) 1,428,672 1,433,560 (6,175) (67,244) I (20,000) 80,000 20,000 (80,000) 163,469 57,671 I (551,194) (550,625) (387,725) (492,954) I (131,066) (18,000) (654,374) (502,685) 6,570,000 I (360,000) (345,000) (1,145,440) 5,704,315 I 369,241 223,288 5,391 5,233 264,748 6,868,209 (784) (62,011) I 9,528,202 2,659,993 100,194 162,205 $ 9,792,950 $ 9,528,202 $ 99,410 $ 100,194 I $ (107,551) $ (69,935) $ (11,204) $ (68,572) I 1,607,777 1,595,616 I (441) 3,180 (52,612) (106,373) (3,500) (6,740) (670) (19,318) (24,526) (5,883) 22,012 1,425 (4,839) I (17,978) (2,473) 2,104 6,390 (2,902) 3,732 (100) 1,450 (2 I 8) 531 100 (617) I 6,373 2,983 1,500 1,064 6,370 17,105 15,553 1,536,223 1,503,495 5,029 1,328 I $ 1,428,672 $ 1,433,560 $ (6,175) $ (67,244) I $ 142,133 $ 1,393,944 $ $ I 43 C CITY OF ANDOVER, MINNESOTA STATEMENT OF FIDUCIARY NET ASSETS Statement 9 C FIDUCIARY FUNDS Agency Funds December 31, 2008 C 2008 2007 ~ Assets Cash and investments $ 488,384 $ 283,056 r Accounts receivable - net - 5,000 ~ Total assets 488,384 288,056 Liabilities ~ Accounts payable 11,000 3,649 ~ Due to other govermnents - 92 Deposits payable 477,383 284,315 II~ Total liabilities $ 488,383 $ 288,056 ~ C The accompanying notes are an integral part of these financial statements. ' 1 ! ' C ~ .. ~ C ' , ~ ,. C ~~ , I .. M .. ~ I , . I ~ 44 M at I I CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31,2008 B Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES I 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 of Andover have been prepared in conformity with generally accepted accounting principles as I applied to govermnental units by the Governmental Accounting Standards Board (GASB). The following is a summary of the significant accounting policies. I A. FINANCIAL REPORTING ENTITY As required by generally accepted accounting principles, the financial statements of the reporting entity include those of the City of Andover (the primary govermnent) and its component units. The component units discussed below are included in the D 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 I 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 fmancial reporting purposes, the EDA is reported as if it were part of the City's operations because the members of the City Council I serve as EDA Board Members and its purpose is to promote development within the City of Andover. The activity of the EDA is reported in the EDA General Special Revenue Fund. Separate financial statements are not prepared for the EDA. D B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS The govermnent-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 govermnent and its component units. For the most part, the D effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovermnental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. D The statement of activities demonstrates the degree to which the direct expenses of a given function or business-type activity are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or business-type activity. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or business-type activity and 2) grants and contributions that are restricted D to meeting the operational or capital requirements of a particular function or business-type activity. Taxes and other items not included among program revenues are reported instead as general revenues. Separate financial statements are provided for govermnental funds, proprietary funds, and fiduciary funds, even though the D latter are excluded from the govermnent-wide financial statements. Major individual govermnental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. D C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINAJ"JCIAL STATEMENT PRESENTATION The govermnent-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the Proprietary Fund financial statements. Revenues are recorded when earned and expenses are recorded D 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. I Govermnental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the D current period. For this purpose, the govermnent considers all revenues, except reimbursement grants, to be available if they D 45 ~ .. CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS ~ December 31,2008 ~ are collected within 60 days of the end of the current fiscal period. Reimbursement grants are considered available if they are C 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, intergovermnental 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 govermnent. The govermnent reports the following major govermnental funds: ~ The General Fund is the govermnent's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. ~ The 2006 EDA Public Facility Lease Revenue Refunding Bonds Debt Service Fund (DSF) was established to refund portions of debt associated with the construction of the Andover YMCA Community Center. The 2007 EDA Public Facility Lease Revenue Refunding Bonds DSFwas established to refund portions of debt associated ~ with the construction of the Andover YMCA Community Center. The Water Trunk Capital Projects Fund (CPF) 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. The Sewer Trunk CPF is used to account for sewer access fees and sanitary sewer improvements. The Road and Bridge CPF accounts for all road projects and the pavement management program, which includes armual ~ seal coating, crack sealing and overlays for roads. The Tax Increment Projects CPFis used to account for activities in TIF districts 1-1, 1-2, 1-3, 1-4 and all TIP land sales ~ and expenditures to reach the goals of the TIF district plans. The Permanent Improvement Revolving CPF serves as a long-term funding source for large capital improvement expenditures. C The govermnent reports the following major proprietary funds: The Water Fund accounts for the water service charges, which are used to finance the water system operating expenses. C The Sewer Fund accounts for the sewer service charges, which are used to finance the sanitary sewer system operating expenses. The Storm Sewer Fund accounts for the storm sewer utility charges, which are used to finance the storm sewer operating ~ expenses. Additionally, the govermnent reports the following fund types: C ; 1 Internal Service Funds (ISF) are used to provide equipment maintenance and insurance to other departments of the City on a cost reimbursement basis. The Agency Funds are used to account for assets held by the City in a trustee capacity or as an agent for individuals, rM private organizations, and/or other govermnental units. It is used to account for the collection and distribution of funds 1M relating to development activities and retiree insurance premiums. Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both C the govermnent-wide and proprietary-fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Govermnental Accounting Standards Board. Govermnents also have the option of following C 46 C I I CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31,2008 I subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The govermnent has elected not to follow subsequent private-sector guidance. I As a general rule the effect of interfund activity has been eliminated from the govermnent-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 I other funds of the City of Andover. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges I provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. I Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the 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 I 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 govermnent's policy to use I restricted resources first, and then unrestricted resources as they are needed. D. BUDGETS I 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. I 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. I E. LEGAL COMPLIANCE - BUDGETS The City follows these procedures in establishing the budgetary data reflected in the financial statements: I 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. I 2. Public hearings are conducted to obtain taxpayer comments. 3. The budget is legally enacted through City Council action. I 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 I 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 I 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. I I 47 C CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS C December 31, 2008 7. The City Council made supplemental budget appropriations throughout the year. Individual amendments were not C material in relation to the original appropriations which were adjusted. The following is a listing of Special Revenue Funds whose expenditures exceed budget appropriations: C Final Over Budget Actual Budget C General Fund: Current - Streets and highways $ 602,225 $ 613,896 $ 11,671 Capital Outlay - General govermnent - 3,428 3,428 ~ Special Revenue Funds: ~ Community Center 870,123 900,228 30,105 Forestry 15,000 22,389 7,389 C The over expenditures 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. C 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. For purposes of the Statement of Cash Flows of Proprietary Fund Types, cash equivalents are defmed as short-term, highly C 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. C G. RECEIVABLES AND P A YABLES During the course of operations, numerous transactions occur between individual funds for goods provided or services C rendered. Short-term interfund loans are classified as "interfund receivables/payables." All short-term interfund receivables and payables at December 31, 2008 are planned to be eliminated in 2009. Long-term interfund loans are classified as "interfund loan receivable/payable." Any residual balances outstanding between the govermnental activities and business-type C activities are reported in the govermnent-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 govermnental funds to indicate that they are not available for appropriation and are not expendable available C 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. 0 Uncollectible amounts are not material for other receivables and have not been reported. C 48 C I I CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 I H. PROPERTY TAX REVENUE RECOGNITION I 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. I 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. I 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 I 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 I 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 I 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 I days after settlement, provided that after 45 days interest accrues at the rate of 8% per armum. GOVERNMENT-WIDE FINANCIAL STATEMENTS I 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 I 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 I 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 I. SPECIAL ASSESSMENT REVENUE RECOGNITION Special assessments are levied against benefited properties for the cost or a portion of the cost of special assessment I 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 armual installments (including interest) is handled by the County Auditor in the same marmer as property taxes. Property owners are allowed to (and often do) prepay future installments without interest or prepayment penalties. I 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 I 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. I I 49 C CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS C December 31, 2008 C GOVERNMENT-WIDE FINANCIAL STATEMENTS The City recognizes special assessment revenue in the period that the assessment roll was adopted by the City Council. ~ Uncollectible special assessments are not material and have not been reported. GOVERNMENTAL FUND FINANCIAL STATEMENTS C 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 assessinents received by the City are recognized as C 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 govermnental funding are completely offset by deferred revenues. J. INVENTORIES C Inventories of the Govermnental Funds and the Proprietary Funds are stated at cost, which approximates market, using the C first-in, first-out (FIFO) method. Inventories of Govermnental Funds are recorded as expenditures when consumed rather than when purchased. K. PREP AID ITEMS C Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both C govermnent-wide and fund financial statements. L. CAPITAL ASSETS ~ Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewalks, and similar ~ items), are reported in the applicable govermnental or business-type activities columns in the govermnent-wide financial statements. Capital assets are defined by the govermnent as assets with an initial, individual cost of more than $5,000 (amount C not rounded) 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 C capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the C 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, 2008, no interest was capitalized in connection with construction in progress. Property, plant and equipment of the primary govermnent, as well as the component units, are depreciated using the straight C line method over the following estimated useful lives: Assets Life Buildings and improvements 10 - 30 years ~ Furniture and equipment 5 - 10 years Machinery and equipment 5 - 10 years Other park improvements 10 - 30 years ~ Storm sewer 50 years Distribution and collection systems 50 years ~ 50 ~ I I CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 I 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 2007 of the condition of the streets and trails constructed I 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: I Range Description 86 - 100 Excellent I 71 - 85 Very good 56 - 70 Good 41 - 55 Fair 26 - 40 Poor I 11 - 25 Very poor 0-10 Failed The City's policy relative to maintaining the street and trail assets is to achieve an average rating of "Good" for all segments. I 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. I M. 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 armiversary date of the individual's employment with the City, unless a specific I authorization is granted to an employee. All vacation pay is accrued when incurred in the govermnent-wide and proprietary fund financial statements. A liability for these amounts is reported in govermnental funds only if they have matured, for example, as a result of employee resignations and retirements. I 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. I N. LONG-TERM OBLIGATIONS In the govermnent-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and I other long-term obligations are reported as liabilities in the applicable govermnental 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. I In the fund financial statements, govermnental 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. I O. FUND EQUITY I In the fund financial statements, govermnental funds report reservations of fund balance for amounts not appropriable for expenditure or legally segregated for a specific future use. Designated fund balances represent tentative plans for future use of financial resources. I P. INTERFUND TRANSACTIONS Interfund services provided and used are accounted for as revenues, expenditures or expenses. Transactions that constitute I reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund, are I 51 C CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS C December 31,2008 recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the fund that is C 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. C Q. RESTRICTED ASSETS Certain assets in the water fund are restricted for future debt service payments. C R. 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. C S. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS 1. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND BALANCE SHEET C AND THE GOVERNMENT-WIDE STATEMENT OF NET ASSETS The govermnental fund balance sheet includes a reconciliation between fund balance - total governmental funds and net C assets - governmental activities as reported in the govermnent-wide statement of net assets. One element of that reconciliation explains that "long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds." The details of this ($53,834,812) difference are as follows: Bonds payable $(52,370,000) C Accrued interest payable (923,823) Other post employment benefits (36,096) Compensated absences (504,893) ~ . ' , Net adjustment to reduce fund balance - total govermnental funds to arrive at net assets - govermnental activities $(53,834,812) Another element of that reconciliation states that "internal service funds are used by management to charge the cost of C i ' equipment maintenance and insurance to individual funds. The assets and liabilities are included in the govermnental statement of net assets along with a deduction of net revenue attributable to business-type activities." The details of this $169,237 difference are as follows: ,., Internal Service Funds net assets $ 169,775 .. Net revenue attributable to business-type activities (538) Net adjustment to increase fund balance - total govermnental C funds to arrive at net assets - govermnental activities $ 169,237 C C C C 52 C I I CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 I 2. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND STATEMENT OF REVENUES. EXPENDITURES. AND CHANGES IN FUND BALANCES AND THE GOVERNMENT-WIDE I STATEMENT OF ACTIVITIES The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances - total governmental funds and changes in net assets of governmental activities as I reported in the govermnent-wide statement of activities. One element of that reconciliation explains that "Govermnental 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 ($144,513) difference are as follows: I Capital outlay $ 1,460,662 Construction/acquisition costs - Depreciation expense (1,605,175) I Net adjustment to increase net changes in fund balances- total govermnental funds to arrive at changes in net assets of govermnental activities $ (144,513 ) I Another element of that reconciliation states that "The net effect of various miscellaneous transactions involving capital assets (Le., sales, trade-ins, and donations) is to increase (decrease) net assets." The details of this ($326,623) difference are as follows: I In the statement of activities, only the gain on the sale of capital assets is reported. However, in the govermnental funds, the I proceeds from the sale increase financial resources. Thus, the change in net assets difrers from the change in fund balance by the cost of the capital assets sold. $ (326,623) D 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 ($936,319) difference are as follows: I General property taxes deferred revenue: At December 31,2007 $ (217,766) At December 31, 2008 275,364 D Tax increment taxes deferred revenue: At December 31, 2007 (29,770) At December 31, 2008 50,921 D Special assessments dererred revenue: At December 31, 2007 (6,403,867) At December 31,2008 5,378,324 D Notes receivable deferred revenue: At December 31, 2007 (1,408,013) At December 31,2008 1,418,488 D Net adjustments to decrease net changes in fund balances - total govermnental funds to arrive at changes in net assets of govermnental activities $ (936,319 ) D a D 53 C CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS C December 31, 2008 Another element of that reconciliation states "the issuance of long-term debt (e.g., bonds, leases) provides current C financial resources to govermnental funds, while the repayment of the long-term debt consumes the current financial resources of govermnental funds." Neither transaction, however, has any effect on net assets. The details of this $2,830,000 difference is as follows: ~ " Debt issued or incurred: Issuance of certificatl;s of indebtedness (630,000) C Princi pal repayments: Revenue bonds 190,000 Capital improvement bonds 370,000 C Special assessment bonds 1,625,000 Tax increment bonds 735,000 Certificates of indebtedness 385,000 State aid bonds 155,000 C Net adjustment to increase net changes in fund balances- total govermnental funds to arrive at changes in net assets of govermnental activities $ 2,830,000 C 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 govermnental funds." The details of this $2,955 difference are as follows: C ' ' Compensated absences $ 4,958 Other post employment benefits (36,096) Accrued interest 34,093 C Net adjustment to increase net changes in fund balances- total govermnental funds to arrive at changes in net assets of govermnental activities $ 2,955 D 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 govermnental activities." The details of this ($5,995) difference are as follows: C Internal Service Funds change in net assets $ (5,457) Net revenue attributable to business-type activities (538) Net adjustment to increase fund balance - total .~ govermnental funds to arrive at net assets - govermnental activities $ (5,995) ~ Note 2 DEPO~TSANDINVESTMENTS DEPOSITS ~ In accordance with Minnesota Statutes, the City maintains deposits at those depository banks authorized by the City Council, all of which are members ofthe 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. ~ C 54 C B I CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 I 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: I a) United States govermnent treasury bills, treasury notes, treasury bonds; b) Issues of United States government agencies and instrumentalities as quoted by a recognized industry quotation service I available to the government entity; c) General obligation securities of any state or local govermnent with taxing powers which is rated "A" or better by a national bond rating service, or revenue obligation securities of any state or local govermnent with taxing powers which is rated "AA" I or better by a national bond rating service; d) Unrated general obligation securities of a local govermnent with taxing powers may be pledged as collateral against funds deposited by that same local govermnent entity; I 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 I f) Time deposits that are fully insured by the Federal Deposits Insurance Corporation. Custodial Credit Risk - Deoosits: 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 I collateral pledged must equai 110% of deposits not covered by insurance or bonds. As of December 31, 2008, the bank balance of the City's deposits was covered by federal depository insurance or covered by collateral pledged and held in the City's name. INVESTMENTS I 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 I by an act of congress, excluding mortgage-backed securities defined as high risk. 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 I 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 govermnent with taxing powers which is rated "A" or I better by a national bond rating service; 2) any security which is a revenue obligation of any state or local govermnent 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 I 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. I 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 I exceeding $10,000,000; a primary reporting dealer in U.S. govermnent 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 govermnental entity issued under section 429.091, subdivision 7; 469.178, I subdivision 5; or 475.61, subdivision 6. I I 55 C CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS C December 31, 2008 As of December 31, 2008, the City had the following investments and maturities: C Investment Maturities (in Years) ~ Credit Fair Less Than More Than Investment Type Rating Value 1 1 - 5 6 - 10 10 . Money market N/A $ 1,565,741 $ 1,565,741 $ - $ - $ - C Commercial paper Al/A2 2,099,274 2,099,274 - - - Certificates of deposit FDIC 7,372,425 6,487,581 846,320 38,524 C Local govermnents NAl/A2 1,181,098 299,842 367,731 162,127 351,398 Ml/M2/AA3 827,082 69,973 757,109 - - MA 2,403,750 1,025,202 1,006,141 39,520 132,887 C U.S. agencies MA 29,248,275 1,992,693 7,708,738 8,185,095 1,361,749 N/A 678,266 - - 305,789 372,477 Total investments 45,375,911 $13,540,306 $10,686,039 $18,892,531 $ 2,257,035 C Deposits 3,720,945 C Total cash and investments $49,096,856 The following is a reconciliation of the City's total cash and investment balances at December 31,2008: C Govermnent-wide statement of net assets: Cash and investments $ 24,921,129 C Cash and investments with escrow agent 23,687,343 Fiduciary funds statement of net assets 488,384 Total $ 49,096,856 C 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 31,2008, $250,000 of the City's $45,375,911 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 C 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 C 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. 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 C failure ofthe 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. C 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 (SEe) Rule 15C3-1. C 56 C D I CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 I 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 I registration, completed broker/dealer questionnaire, and certification of having read and understood and agreeing to comply with the City's investment policy. An armual review of the financial condition and registration of qualified financial institutions and broker/dealers will be I conducted by the City Administrator. Concentration of Credit Risk - More than 65% of the City's investments are in various holdings with U.S. agencies; Federal Home Loan Bank (4.1%), Federal National Mortgage Association (6.0%), Federal Home Loan Mortgage Corporation (4.3%) and U.S. I Treasury (51.6%). 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. I 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 govermnent investment I pools (LGIPs), money market funds or overnight repurchase agreements to ensure that appropriate liquidity is maintained in order to meet ongoing obligations. 2) Maximum Maturities - To the extent possible, the City shall attempt to match its investments with anticipated cash flow I 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. I 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. I 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 govermnent investment pools, money market funds, or overnight repurchase agreements to ensure that appropriate liquidity is maintained to meet ongoing obligations. I Note 3 RECEIVABLES Significant receivables balances not expected to be collected within one year of December 31, 2008 are as follows: I Delinquent Delinquent S peci al Property Tax Assessment Taxes Increment Receivable Total I Major Funds: General Fund $ 71,108 $ - $ - $ 71,108 Water Trunk CPF - - 333,126 333,126 I Sewer Trunk CPF - - 88,457 88,457 Road and Bridge CPF 12,615 - 1,137,387 1,150,002 Tax Increment PrQiects CPF - 21,387 1,033 22,420 Permanent Improvement Revolving CPF - - 2,846,880 2,846,880 I Nonmajor Funds 26,422 404,327 430,749 Total $ 110,145 $ 21,387 $ 4,811,210 $ 4,942,742 I I I 57 ~ CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS ~ December 31, 2008 Govermnental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to 0 liquidate liabilities of the current period. Govermnental 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 C govermnental funds were as follows: Unavailable Unearned Delinquent property taxes receivable: 0 General Fund $ 177,770 $ - Road & Bridge CPF 31,538 - N onmlYor Funds 66,056 - C Delinquent tax increment collections: Tax Increment Projects CPF 50,921 - Special assessments not yet due: C General Fund 7,989 - Water Trunk CPF 361,913 - Sewer Trunk CPF 97,726 - C Road & Bridge CPF 1,269,999 - Tax Increment Projects CPF 2,008 - Permanent Improvement Revolving CPF 3,179,789 - NonmlYor Funds 458,900 - 0 Notes receivable not yet due: Road & Bridge CPF 36,636 - Tax Increment Proj ects CPF 1,312,000 - C Nonmajor Funds 69,852 - ' , Unearned construction seal coat fees: NonmlYor Funds - 97,172 C Total $ 7,123,097 $ 97,172 ~ Note 4 LOANS RECEIVABLE i.I 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 16 semi-annual C payments to be made to the City through July 2014. As of December 31, 2008, the remaining balance due of $36,636 is offset by deferred revenue, as it is not available to finance current activities. As part of a development agreement entered into with a private developer in June 2005, the City received a promissory note for C $1,505,000. The note is for the purchase of land within Andover Station North. The note bears an interest rate of 6% and calls for the note to be paid off by May 2010. As of December 31,2008, the remaining balance due of $1,312,000 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. C 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, 2008, the remaining balance due of $44,698 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 31,2008, the remaining balance due of $5,810 is offset C by deferred revenue, as it is not available to finance current activities. C 58 C I I CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31,2008 I As part of a housing rehabilitation revolving loan program, the City entered into a loan agreement with a property owner in July 2008. 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 84 equal I monthly payments to be made to the City through September 2015. As of December 31,2008, the remaining balance due of $19,344 is offset by deferred revenue, as it is not available to finance current activities. I Note 5 CAPITAL ASSETS In accordance with GASB Statement No. 34, the City has reported all capital assets including infrastructure in the govermnent-wide statement of net assets. The City elected to use the modified approach as defined by GASB Statement No. 34 for infrastructure reporting I 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. Adjustments due to restatement represent the changes due to an extensive inventory of all I capital assets, implementation of GASB Statement No. 34 and a policy change related to capitalization thresholds. Capital asset activity for the year ended December 31, 2008 as previously reported was as follows: Beginning Ending I Primary Government Balance Additions Deletions Balance Govermnental activities: Capital assets not being depreciated: I Land and improvements $ 7,889,177 $ 468,531 $ (316,400) $ 8,041,308 Streets and trails 78,688,609 464,807 - 79,153,416 Construction in progress 360,741 170,905 (222,232) 309,414 I Total capital assets not being depreciated 86,938,527 1,104,243 (538,632) 87,504,138 Capital assets being depreciated: Buildings and improvements 26,265,061 116,523 - 26,381,584 I Furniture and equipment 319,222 88,236 (43,204) 364,254 Machinery and equipment 6,241,186 231,029 (53,864) 6,418,351 Other patk improvements 4,898,020 142,863 (20,963) 5,019,920 I Total capital assets being depreciated 37,723,489 578,651 (118,031) 38,184,109 Less accumulated depreciation for: I Buildings and improvements 3,564,453 888,847 - 4,453,300 Furniture and equipment 142,352 49,907 (43,204) 149,055 Machinery and equipment 4,118,234 420,354 (50,454) 4,488,134 Oth~patkimprovemems 1,216,072 246,067 (14,150) 1,447,989 I Total accumulated depreciation 9,041,111 1,605,175 (107,808) 10,538,478 Total capital assets being depreciated - net 28,682,378 (1,026,524 ) (10,223) 27,645,631 I Govermnental activities capital assets - net $ 115,620,905 $ 77,719 $ (548,855) $ 115,149,769 I I I I 59 C CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS ~ December 31, 2008 Beginning Ending C Primary Government Balance Additions Deletions Balance Business-type activities: C Capital assets not being depreciated: Land and improvements $ 730,243 $ - $ - $ 730,243 Capital assets being depreciated: 0 Buildings and improvements 14,810,983 - - 14,810,983 Furniture and equipment 65,115 25,630 (29,355) 61,390 Machinery and equipment 1,114,383 112,390 - 1,226,773 Collection and distribution 48,347,421 135,179 - 48,482,600 Total capital assets being depreciated 64,337,902 273,199 (29,355) 64,581,746 C Less accumulated depreciation tor: Buildings and improvements 4,073,813 522,319 - 4,596,132 ,. Furniture and equipment 39,723 6,853 (29,355) 17,221 ~ Machinery and equipment 714,379 102,814 - 817,193 Collection and distribution 13,189,600 975,791 - 14,165,391 Total accumulated depreciation 18,017,515 1,607,777 (29,355) 19,595,937 C Total capital assets being depreciated - net 46,320,387 (1,334,578) - 44,985,809 Business-type activities capital assets - net $ 47,050,630 $ (1,334,578) $ - $ 45,716,052 C Depreciation expense was charged to functions/programs of the primary govermnent as follows: Govermnental activities: General govermnent $ 99,531 C ' , Public safety 29,455 Public works 86,068 Parks and recreation 988,129 Economic development 1,992 C Total depreciation expense - govermnental activities $ 1,605,175 Business-type activities C Water $ 857,330 Sewer 09,042 Storm sewer 41,405 Total depreciation expense - business-type activities $ 1,607,777 ~ ~ CONSTRUCTION COMMITMENTS At December 31, 2008, the City had construction project contracts in progress. The commitments related to the remaining contract C ' , balances are summarized as follows; Contract Remaining Project # Proj ect Amount Commitment C 07-48 Water Tower Reh ab $ 519,400 $ 154,660 Note 6 LONG-TERM DEBT 0 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 govermnental activities and 0 amounts to be repaid from business-type activities. ' , C 60 C D I CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31,2008 I Issue Maturity Interest Original Payable Date Date Rate Issue 12/31/08 I GOVERNMENTAL ACTIVITIES: General Obligation Revenue Bonds: 2004 EDA Pub Fac Lease Rev Bonds 4/23/2004 2/1/2014 2.125-5.400% $ 19,580,000 $ 19,020,000 I 2006 EDA Pub Fac Lease Rev RefBonds 12/1/2006 2/1 /2034 4.00-4.50% 10,000,000 10,000,000 2007 EDA Pub Fac Lease Rev RefBonds 1/1/2007 2/1/2034 4.00-4.50% 6,865,000 6,865,000 Total general obligation revenue bonds 36,445,000 35,885,000 I Special Assessment Bonds: 2005A G.O. Improvement Bonds 4/28/2005 2/1/2013 2.95-3.65% 3,560,000 3,015,000 Tax Increment Bonds: I 2003B G.O. Tax Increment Refunding Bonds 6/1/2003 8/1/2010 2.00-3.00% 1,530,000 490,000 2004B G.O. Tax Increment Refunding Bonds 3/16/2004 8/1/2010 2.00-3.25% 4,260,000 2,785,000 Total tax increment bonds 5,790,000 3,275,000 I Certificates ofIndebtedness: 2006B G.O. Equipment Certificates 5/10/2006 2/1/2010 3.60-3.65% 460,000 315,000 2007A G.O. Equipment Certificates 3/13/2007 02/01/011 4.00% 760,000 580,000 I 2008 G.O. Equipment Certificates 9/23/2008 2/1/2012 3.50% 630,000 630,000 Total certificates of indebtedness 1,850,000 1,525,000 Capital Improvement Bonds: I 2004A G.O. Capital Improvement Bonds 3/16/2004 2/1/2017 2.00-3.75% 3,890,000 3,040,000 2005B G.O. Capital Improvement Bonds 4/28/2005 2/1/2009 2.65-3.10% 340,000 115,000 Total capital improvement bonds 4,230,000 3,155,000 I Permanent Improvement Revolving (PIR) Bonds: 2003A G.O. PIRBonds 6/1/2003 2/1/2010 2.00-2.60% 4,580,000 1,615,000 2006A G.O. PIRBonds 5/10/2006 2/1/2014 3.60-3.85% 2,450,000 2,140,000 I Total penn anent improvement revolving bonds 7,030,000 3,755,000 State Aid Bonds: 200m G.O. State Aid Street Bonds 6/5/2001 2/1/2017 2.90-5.00% 2,755,000 1,760,000 I Total- bonded indebtedness 61,660,000 52,370,000 Compensated absences payable - 504,893 I Total govermnental activities indebtedness 61,660,000 52,874,893 BUSINESS-TYPE ACTIVITIES General Obligation Revenue Bonds: I 2002 G.O. Water Revenue Bonds 5/9/2002 8/1/2012 2.30-5.00% 9,780,000 8,110,000 2007B G.o. Water Revenue Refunding Bonds 3/13/2007 2/1/2023 4.00-4.25% 6,570,000 6,570,000 Total general obligation revenue bonds 16,350,000 14,680,000 I Compensated absences payable - 107,333 Total business-type activities indebtedness 16,350,000 14,787,333 I Total City indebtedness $ 78,010,000 $ 67,662,226 I I 61 ~ CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS C December 31,2008 Annual debt service requirements to maturity for general obligation bonds are as follows: ~ overmnental Activities C G.O. Revenue Bonds Special Assessment Bonds Tax Increment Bonds Princi pal Interest Principal Intere 51 Principal Interest 2009 $ 390,000 $ 1,661,016 $ 565,000 $ 93,738 $ 760,000 $ 87,620 C 2010 405,000 1,646,894 580,000 75,555 780,000 68,313 2011 415,000 1,631,101 600,000 55,930 565,000 45,050 2012 435,000 1,613,666 625,000 34,636 580,000 27,875 2013 450,000 1,594,744 645,000 11,771 590,000 9,588 0 2014-2018 19,305,000 3,829,623 - - - - 2019-2023 3,555,000 2,755,854 - - - - 2024-2028 4,355,000 1,937,442 - - - - 2029-2033 5,360,000 892,657 - - - - t: 2034 1,215,000 27,338 - - - - Total $ 35,885,000 $ 17,590,335 $ 3,015,000 $ 271,630 $ 3,275,000 $ 238,446 ~, overnmentalActivrr~s ... Permanent Improvement Certificates ofIndebtedness Capital Improvement Bonds Revolving Bonds [' Princi pal Interest Principal Intere 51 Principal Interest '. 2009 $ 490,000 $ 44,389 $ 380,000 $ 97,363 $ 1,120,000 $ 104,493 2010 509,000 28,925 280,000 88,418 1,155,000 72,686 r, 2011 360,000 12,610 295,000 80,143 345,000 49,530 .. 2012 166,000 2,905 315,000 70,993 360,000 36,398 2013 - - 330,000 60,905 380,000 22,428 2014-2018 - - 1,555,000 117,521 395,000 7,604 r Total $ 1,525,000 $ 88,829 $ 3,155,000 $ 515,343 $ 3,755,000 $ 293,139 i~ Govermnental Activities Business- Type Activities C State Aid Bonds G.O. Revenue Bonds Princi pal Interest Principal Interest [j 2009 $ 160,000 $ 78,583 $ 375,000 $ 640,585 2010 170,000 71,568 395,000 625,367 2011 175,000 64,063 415,000 608,654 tJ 2012 185,000 56,050 6,925,000 590,586 2013 195,000 47,354 485,000 256,446 2014-2018 875,000 89,480 2,745,000 968,231 2019-2023 - - 3,340,000 357,859 [J Total $ 1,760,000 $ 407,098 $14,680,000 $ 4,047,728 It is not practical to determine the specific year for payment oflong-term accrued compensated absences. tJ tJ [~ i. 2 [~ i I . I I CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31,2008 I CHANGE IN LONG-TERM LIABILITIES I Long-term liability activity for the year ended December 31, 2008, was as follows: Balance Additions Reductions Balance One Year I Govermnental activities: Bonds payable: G.O. revenue bonds $ 36,075,000 $ - $ (190,000) $ 35,885,000 $ 390,000 Special assessment bonds 3,560,000 - (545,000) ,015,000 565,000 I Tax increment bonds 4,010,000 - (735,000) 3,275,000 760,000 Certificates of indebtedness 1,280,000 630,000 (385,000) 1,525,000 490,000 Capital improvement bonds 3,525,000 - (370,000) ,155,000 380,000 Permanent improvement revolving bonds 4,835,000 - (1,080,000) 3,755,000 1,120,000 I State aid bonds 1,915,000 - (155,000) 1,760,000 160,000 Total bonds payable 55,200,000 630,000 (3,460,000) 52,370,000 3,865,000 I Compensated absences 509,851 283,804 (288,762) 04,893 50,489 Total govermnental activities long-term liabilities $ 55,709,851 $ 913,804 $ (3,748,762) $ 52,874,893 $ 3,915,489 I Business-type activities: Bonds payable: GO. revenue bonds $ 15,040,000 $ - $ (360,000) $ 14,680,000 $ 375,000 I Compensated absences 90,228 54,463 (37,358) 107,333 10,733 I Total business-type activities long-term liabilities $ 15,130,228 $ 54,463 $ (397,358) 14,787,333 $ 385,733 For the govermnental activities, bonds payable can be summarized in the following categories: I The G.o. revenue bonds 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. I The special assessment bonds 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 I obligations of the City for which its full faith, credit and taxing powers are pledged without limitation as to rate or amount. The tax increment bonds 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 I 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. The certificates of indebtedness are used to finance the purchase of capital equipment. The certificates are general obligations I of the City for which it pledges its full faith, credit and taxing powers to the payment of principal and interest on the certificates. The capital improvement bonds were used to purchase the 30,000 square foot public works building from the EDA and to I 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. The permanent improvement revolving bonds are used to finance assessable improvements within the City, including but not I limited to sanitary sewer and water line connections, storm sewer, streets, sidewalks and curb & gutter. The bonds are payable I 63 ~J CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS .~ December 31, 2008 ~ primarily from special assessments levied against properties benefited by the improvements. In addition, the bonds are general C obligations of the City for which its full faith, credit and taxing powers are pledged without limitation as to rate or amount. The state aid bonds were used to finance the Municipal State Aid (MSA) eligible costs of the Andover Boulevard project. The ~J 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. I For the govermnental activities, compensated absences are generally liquidated through the General Fund. For the business-type activities, the G.o. revenue bonds were used to fmance the construction of a water treatment plant. The bonds C are payable from net revenues of the water system and are general obligations of the City for which its full faith, credit and taxing ! I powers are pledged. REVENUES PLEDGED ~J 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 C 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 $24,020,744, i I payable through February 2014. For the current year, principal and interest paid and total net operating revenues, lease revenue and tax levy were $1,144,381 and $988,768, respectively. A portion of the Series 2004 Bonds were refunded by the 2006 Series tJ 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 C 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 ofthe bonds. Total principal and interest remaining on the bonds is $3,286,630, payable through February 2013. For the current year, principal and interest paid and C total special assessment revenues were $655,534 and $65,544, respectively. 2003B G.o. Tax Increment Refunding Bonds. The City has pledged future tax increment revenue to repay the $1,530,000 bonds issued in June 2003. Proceeds from the bonds refunded the Series 1996 Bonds. Incremental property taxes were projected to C produce 100% of the debt service requirements over the life of the bond issue. Total principal and interest remaining on the bonds is $510,520, payable through August 2010. For the current year, principal and interest paid were $247,620. All tax increment revenues will now be receipted in the Tax Increment Projects Capital Projects Fund and transferred over as needed to make the debt service payments. In 2008, the debt service fund had sufficient funds to make its debt service payment. tJ 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. Total principal and interest remaining on the bonds ,~ is $3,002,925, payable through August 2013. For the current year, principal and interest paid were $592,413. All tax increment revenues will now be receipted in the Tax Increment Projects Capital Projects Fund and transferred over as needed to make the debt i~ service payments. In 2008, the debt service fund had sufficient funds to make its debt service payment. 2006B G.o. Equipment Certificates. The City has pledged future property tax revenue to repay the $460,000 bonds issued in May tJ 2006. Proceeds from the bonds were used to fmance 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 $326,569, payable through February 2010. For the current year, principal and interest paid and total property tax revenues were $159,069 and [j $163,771, respectively. 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 fmance the purchase of capital equipment. Property taxes were projected to produce C 100% of the debt service requirements over the life of the bonds. Total principal and interest remaining on the bonds is $615,400, payable through February 2011. For the current year, principal and interest paid and total property tax revenues were $206,800 and $224,732, respectively. C 64 C I I CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31,2008 I 2008 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 I to produce 100% of the debt service requirements over the life of the bonds. Total principal and interest remaining on the bonds is $671,860, payable through February 2012. For the current year, principal and interest paid and total property tax revenues were $0 and $157,274, respectively. I 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 $3,553,560, payable through February 2017. For the current year, I principal and interest paid and total property tax revenues were $357,080 and $357,545, respectively. 200SB G.o. Capital Improvement Bonds. The City has pledged future property tax revenue to repay the $340,000 bonds issued in April 2005. Proceeds from the bonds were used to finance improvements at city hall and public works. Property taxes were I projected to produce 100% of the debt service requirements over the life of the bonds. Total principal and interest remaining on the bonds is $116,783, payable through February 2009. For the current year, principal and interest paid and total property tax revenues were $117,290 and $116,952, respectively. I 2003A Permanent Improvement Revolving Bonds. The City has pledged future special assessment revenue to repay the $4,580,000 bonds issued in June 2003. Proceeds from the bonds provided financing for the construction of public improvements in the following developments: Foxborough Crossing, Shady Oak Cove, Woodland Estates 4th Addition, Constance Corner, Maple Hollow, Woodland Creek Golf Course Villas and City View Farms. Special assessments were projected to produce 100% of the I 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 $1,656,122, payable through February 2010. For the current year, principal and interest paid and monies transferred from the Permanent Improvement Revolving CPF were $817,305 and $785,000, respectively. I 2006A Permanent Improvement Revolving Bonds. The City has pledged future special assessment revenue to repay the $2,450,000 bonds issued in May 2006. Proceeds from the bonds provided financing for the construction of public improvements in the following developments: Andover Station North Ballfields, Cardinal Ridge, Shaw's Glen and Woodland Crossing. Special I 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 $2,392,016, payable through February 2014. For the current year, principal and interest paid and monies transferred from the Permanent Improvement Revolving CPF were $395,501 and $380,000, respectively. I 200lB State Aid Street Bonds. The City has pledged future municipal state aid (MSA) allotments to repay the $2,755,000 bonds issued in June 2001. Proceeds of the bonds provided fmancing for the construction of the Andover Boulevard Project. The bonds are payable solely from MSA allotments through 2017. Total principal and interest remaining on the bonds is $2,167,096, payable I through February 2017. For the current year, principal and interest paid and MSA revenues were $240,120 and $241,943, respectively. 2002 G.o. Water Revenue Bonds. The City has pledged future water customer revenues, net of operating expenses, to repay the I $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 $9,510,607. The principal and interest paid for the current year and total customer net revenues were $742,753 and $932,457, respectively. A portion ofthe Series 2002 Bonds were refunded by the 2007 Series Refunding Bonds of$6,570,000 with I 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. ADVANCE CROSSOVER REFUNDING I 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 I 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. I I 65 ~ ~ CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS C December 31,2008 ~~ 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. ~~ : I 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 $9,761,125 at December 31, 2008. e 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. Govermnent Securities. Those securities were deposited in an irrevocable t~ 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 [J 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 C 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 $6,706,325 at December 31, 2008. Refunded De bt Service Commitment Payment Bonds Refunding Bonds Escrow Account C Date Total Series 2006 Series 2007 Series 2006 Series 2007 City '. 2009 $ 1,334,806 $ 424,227 $ 291,983 $ 424,227 $ 291,983 $ 1,334,806 t~ 2010 1,335,684 424,227 291,983 424,227 291,983 1,335,684 2011 1,329,891 424,227 291,983 424,227 291,983 1,329,891 " 2012 1,332,456 424,227 291,983 424,227 291,983 1,332,456 2013 1,328,534 424,227 291,983 424,227 291,983 1,328,534 [j 2014 17,359,373 424,227 291,983 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 tJ 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 [j $ 24,020,744 $ 17,446,654 $ 12,007,938 $ 12,088,249 $ 8,305,907 $ 33,081,180 On March 13, 2007, the City issued $6,570,000 in General Obligation Water Revenue Refunding Bonds, Series 2007B with an tJ 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. Govermnent Se~urities. 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 C 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. tj 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 t~ escrow agent total $6,493,019 at December 31, 2008. e 66 tj I I CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 I Refunded Refunding Debt Service Commitment Payment Bonds Bonds Escrow I Date Total Total Account City 2009 $ 749,439 $ 266,146 $ 266,146 $ 749,439 I 2010 754,221 266,146 266,146 754,221 2011 757,507 266,146 266,146 757,507 2012 7,249,440 266,146 6,756,146 759,440 2013 - 741,446 - 741,446 I 2014 - 741,646 - 741,646 2015 - 741,046 - 741,046 2016 - 744,546 - 744,546 2017 - 742,146 - 742,146 I 2018 - 2022 - 3,701,299 - 3,701,299 2023 - 740,406 - 740,406 $ 9,510,607 $ 9,217,119 $ 7,554,584 $ 11,173,142 I Note 7 LEGAL DEBT MARGIN I The City is subject to a statutory limitation by the State of Minnesota for bonded indebtedness payable principally from property taxes. The City of Andover's legal debt margin for 2008 and 2007 is computed as follows: I December 31, 2008 2007 Estimated taxable market value $ 2,969,639,300 $ 2,800,462,600 I Debt limit (3% of market value for 2008) 89,089,179 De bt limit (2% of market val ue for 2007) 56,009,252 I Amount of debt applicable to debt limit: Total bonded debt 67,050,000 $ 70,240,000 Less: Nonapplicable debt G.O. water revenue bonds (14,680,000) (15,040,000) I Special assessment bonds (3,015,000) (3,560,000) Tax increment bonds (3,275,000) (4,010,000) Permanent improvement revolving bonds (3,755,000) (4,835,000) State aid bonds (1,760,000) (1,915,000) I Less: Cash and investments in related debt service funds (17,939,959) (17,822,418) Total debt applicable to debt limit 22,625,041 23,057,582 I Legal debt margin 66,464,138 $ 32,951,670 I Note 8 DEFINED BENEFIT PENSION PLANS - STATEWIDE A. PLAN DESCRIPTION I All full-time and certain part-time employees of the City of Andover are covered by defined benefit plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the Public Employees Retirement Fund (pERF) and the Public Employees Police and Fire Fund (PEPFF), which are cost-sharing, multiple-employer retirement plans. These plans are established and administered in accordance with JIinnesota Statute, Chapters 353 and 356. I I 67 . ! CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS ~ December 31, 2008 PERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social ~~ Security and Basic Plan members are not. All new members must participate in the Coordinated Plan. All police officers, firefighters and peace officers who qualifY for membership by statute are covered by the PEPFF. ~. I ! 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 C credit at termination of service. I Two methods are used to compute benefits for PERF's Coordinated and Basic Plan members. The retiring member receives the higher of a step-rate benefit accrual formula (Method 1) or a level accrual formula (Method 2). Under Method 1, the 0 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 ofthe 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 0 3.0% for each year of service. For all PEPFF and PERF members hired prior to July 1, 1989 whose annuity is calculated using Method 1, a full annuity is available when age plus years of service equal 90. Normal retirement age is 55 for PEPFF 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. :J 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 r, 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 [J participants. Vested, terminated employees who are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. PERA issues a publicly available financial report that includes financial statements and required supplementary information for. [~ PERF and PEPFF. That report may be obtained on the internet at www.mnperaorg, by writing to PERA, 60 Empire Drive i~ #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 [J amended by the state legislature. The City makes annual contributions to the pension plans equal to the amount required by state statutes. PERF Basic Plan members and Coordinated Plan members were required to contribute 9.10% and 6.00%, respectively, of their annual covered salary in 2008. PEPFF members are required to contribute 8.60% of their annual covered salary in 2008. That rate will increase to 9.40% in 2009. The City of Andover is required to contribute the following [J percentages of annual covered payroll: 11.78% for Basic Plan PERF members, 6.50% for Coordinated Plan PERF members, and 12.90% for PEPFF members. Employer contribution rates for the Coordinated Plan and PEPFF will increase to 6.75% and 14.10% respectively, effective January 1,2009. The City's contributions to the Public Employees Retirement Fund for the years ending December 31, 2008, 2007 and 2006 were $225,073, $213,396 and $194,241, respectively. The City's [J contributions to the Public Employees Police and Fire Fund for the years ending December 31, 2008, 2007 and 2006 were $21,367, $18,060 and $14,782, 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 C ASSOCIATION PLAN DESCRIPTION :J 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 ~, 68 J I I CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 I October 9, 1979 and operates under the provisions of Minnesota Statutes 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 I 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. I 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 I 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. I 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. I 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. I 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. I 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, Andover, Minnesota 55304. I 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 I 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: I Year Ending City State Total I 12/31/2006 $ 50,000 $ 165,915 $ 215,915 12/31/2007 50,000 143,666 193,666 12/31/2008 50,000 121,813 171,813 I Note 9 OTHERPOSTEMWLOYMENTBENEFITS I In 2008, the City prospectively implemented the requirement of a new accounting pronouncement, GASB Statement No. 45, Accounting and Financial Reporting by Employers for Post Employment Benefits Other than Pensions. A. PLAN DESCRIPTION I In addition to providing the pension benefits described in Note 8, the City provides post employment health care benefits (as defined in paragraph B) for retired employees through a single employer defined benefit plan. The term plan refers to the I 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. I 69 C CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS :~ December 31,2008 '. 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. : i II B. BENEFITS PROVIDED C 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 C 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. ~ {; i 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, II. 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. t~ C. P ARTICIP ANTS I, As of the actuarial valuation dated January 2008, participants consisted of: ~ Retirees and beneficiaries currently .. purchasing health insurance through the City 3 Active employees 52 C Total 55 Participating employers 1 C [~ 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 C 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 ofGASB 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 C any unfunded actuarial liabilities (or funding excess) over period not to exceed 30 years. The net OPEB obligation as of December 31,2008, was calculated as follows: ~J " w.. 70 ~, . I I CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 I Annual required contribution (ARC) $ 53,096 Interest on net OPEB obligation - I Annual OPEB cost 53,096 Contributions made during the year (10,630) I Increase (decrease) in net OPEB obligation 42,466 Net OPEB obligation - beginning of year - I Net OPEB obligation - end of year $ 42,466 The City first had an actuarial valuation performed for the plan as of January 1,2008 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 31,2008. The I City's annual OPEB cost (expense) of $53,096 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 2008 is as follows: I ercentage of Annual Employer Annual OPEB Net OPEB Fiscal Year Ended OPEB Cost Contributions Cost Contributed Obligation I December 31, 2008 $ 53,096 $ 10,630 20.0% $ 42,466 I 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: I nfunded ctuarial UAAL as a I Actuarial Actuarial Accrued Percentage of Actuarial Value of Accrued Liability Fund Covered Covered Valuation Date Assets Liability (UAAL) Ratio Payroll Payroll (a) (b) ( b-a) (a/b) (c) (( boa) / c) I January 1, 2008 $ - $ 324,387 $ 324,387 0.00% $ 5,400,000 6.01% I G. ACTUARIAL METHODS AND ASSUMPTIONS Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the I 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 I 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. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the I 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. I I 1 ~~ CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS [~ December 31,2008 In the January 1, 2008 actuarial valuation, the Entry-age Normal Actuarial cost method was used. The actuarial assumptions r~ in included a 4.0% investment rate of return (net of administrative expenses) and an initial armual health care cost trend of 10.0% reduced by 0.5% each year to arrive at an ultimate health care cost trend of 5.0%. The actuarial value of assets was $0. The [J plan's unfunded actuarial accrued liability is being amortized using the level percentage of projected payroll method over 30 years on a closed basis. The remaining amortization period at December 31, 2008, was 29 years. Note 10 INTERFUND RECEIV ABLES/P A YABLES. LOANS AND TRANSFERS [j Individual fund interfund receivable and payable balances at December 31, 2008 are as follows: Fund Receivable Payable C Govermnental Funds: Major Funds: [' General Fund $ 776,000 $ - 2006 EDA Public Facility Lease Revenue Refunding Bonds DSF - 3,000 II 2007 EDA Public Facility Lease Revenue Refunding Bonds DSF - 3,000 Water Trunk CPF 60,000 - ,~ Nonmajor Governmental Funds 10,000 840,000 ~. Total govermnental funds $ 846,000 $ 846,000 Proprietary Funds: [J Internal S~rvice Funds: Central Equipment ISF $ - $ 60,000 Risk Management ISF 60,000 - t: Total proprietary funds $ 60,000 $ 60,000 Interfund receivables and payables are representative of lending/borrowing arrangements to cover deficit cash balances at the end of the C fiscal year. Interfund transfers: Fund Transfer In Transfer Out C ' , Govermnental Funds: Major Funds: t: General Fund $ 191,194 $ - Water Trunk CPF - 163,469 Sewer Trunk CPF 350,000 - Permanent Improvement Revolving CPF - 1,165,000 t: Nonmajor Funds 1,475,826 300,826 Total govermnental funds 2,017,020 1,629,295 Proprietary Funds: r~ Enterprise Funds: .. Water 163,469 145,874 Sewer - 395,320 I~ Storm Sewer - 10,000 '. Total proprietary funds 163,469 551,194 Total $ 2,180,489 $ 2,180,489 n 'I e 72 [~ '~ I I CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 I 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 $75,000 to the Park I Dedication CPF from the Capital Equipment Reserve SRF for completion of the Andover Station North ball field building. 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 Govermnent- Wide Statement of Activities as follows: I Transfer In Transfer Out Govermnental Activities $ 29,149 $ - I Business- Type Activities - 29,149 Total $ 29,149 $ 29,149 I Note 11 TAX INCREMENT DISTRICTS I The City of Andover is the administering authority for the following tax increment finance districts: 1. Name of District: Andover Redevelopment District 1-1 I Type of District: Redevelopment Authorizing Law: M.S. Section 472 Established: 1986 Duration of District: Through 2011 I Original net tax capacity: $ 4,542 Current net tax capacity: 246,574 Captured net tax capacity - retained by the City $ 242,032 I 2. Name of District: Andover Redevelopment District 1-2 Type of District: Redevelopment Authorizing Law: M.S. Section 472 I Established: 1986 Duration of District: Through 2011 Original net tax capacity: $ 134,512 Current net tax capacity: 1,921,197 I Captured net tax capacity - retained by the City $ 1,786,685 Total District Bonds issued $ 19,250,000 I Amount redeemed (15,975,000) Bonds outstanding December 31, 2008 $ 3,275,000 I 3. Name of District: Tax Increment Financing District 1-3 (Farmstead Project) Type of District: Redevelopment Authorizing Law: M.S. Section 469 I Established: 1997 Duration of District: Through 2024 Original net tax capacity: $ 7,314 Current net tax capacity: 164,899 I Captured net tax capacity - retained by the City $ 157,585 I I 73 ,~ ,- CITY OF ANDOVER,MINNESOTA NOTES TO FINANCIAL STATEMENTS ~~ December 31,2008 : ! i ,~ 4. Name of District: Tax Increment Financing District 1-4 li .- Type of District: Redevelopment Authorizing Law: M.S. Section 469 Established: 2005 ~~ Duration of District: Through 203 1 ,~ Original net tax capacity: $ 67,471 Current net tax capacity: 92,974 Captured net tax capacity - retained by the City $ 25,503 ~~ .. Note 12 DEFICIT FUND BALANCES r~ The City has deficit fund balances at December 31, 2008 as follows: ti_ Fund Amount [: Special Revenue Funds: Community Center $ 584,515 Capital Proj ects Funds: ~J Storm Sewer Project 58,444 Open Space Rererrendum Bonds 8,853 [J Note 13 CONTINGENCIES A. RISK MANAGEMENT ~J 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), tJ 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. For workers compensation, .. the City enrolls with a state-certified managed care organization to receive a 2% premium credit towards the cost of coverage. The City also has a $2,500 deductible per occurrence to further decrease the cost of coverage. Final premiums are determined t: after an audit of payroll 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. r~ 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. rj . [~ , , '. 74 I~ I I CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31,2008 I B. LITIGATION I 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. I C. FEDERAL AND STATE FUNDS The City receives financial assistance from federal and state govermnental 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 I 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 ofthe City at December 31, 2008. I D. TAX INCREMENT DISTRICTS I 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. I 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 I 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 I all tax increment received and will be completed February 1,2015. Note 14 DEFERRED AD VALOREM TAX LEVIES - BONDED DEBT I 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 I 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. I These future scheduled tax levies are not shown as assets in the accompanying fmancial statements at December 31, 2008. Future scheduled tax levies for all bonds outstanding at December 31, 2008 totaled $25,255,649. I I I I I 75 C CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS ~ December 31,2008 II Note 15 DESIGNATIONS AND RESERVATIONS OF FUND EOUlTY C Fund equities are classified as follows to reflect limitations and restrictions of the respective funds: C 2008 2007 Govermnental Funds: Major Funds: General Fund C Reserved for prepaid items $ 108,415 $ 126,558 Reserved for inventory 85,390 81,658 Designated for sno w emergency 70,000 60,000 ~ Designated for public safety 70,000 60,000 Designated for facility management 70,000 60,000 III Designated for economic development - 25,000 Designated for information technology 70,000 60,000 C Designated for working cash flow 3,701,230 3,417,244 2006 EDA Public Facility Lease Revenue Refunding Bonds DSF Reserved for debt service 9,935,142 9,938,367 C 2007 EDA Public Facility Lease Revenue Refunding Bonds DSF Reserved for debt service 6,825,235 6,828,467 Water Trunk CPF C ' , Designated for projects 2,953,849 3,186,799 Sewer Trunk CPF ,., Designated for projects 2,733,130 2,154,130 ill Road & Bridge CPF Designated for projects 2,497,381 3,182,170 C I: Tax Increment Projects CPF Reserved for notes receivable 119,000 - Designated for projects 3,515,261 1,542,854 " Permanent Improvement Revolving CPF till Designated for projects 1,627,996 1,634,496 Nonmajor Funds C Reserved for prepaid items 6,500 - Reserved for inventory 8,446 8,196 Reserved for economic development 2,260 4,261 " Reserved for debt service 3,372,226 4,592,228 Reserved for proj ects 485,494 735,141 . Designated for working cash flow 466,978 374,402 Designated for projects 600,422 951,422 ~ ~ Designated for equipment 629,129 669,855 i ! Total Govermnental Funds $ 39,953,484 $ 39,693,248 ,., ~ Note 16 CONDUIT DEBT OBLIGATION Conduit debt obligations are certain limited-obligation revenue bonds or similar debt instruments issued for the express purpose of C 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 C 76 C I I CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31,2008 I 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. I As of December 31, 2008, the following revenue bonds were outstanding: Date of Original Outstanding I Project Issue Issue Retired 12/31/2008 Downtown Center 7/15/1997 $ 5,645,000 $ (3,905,000) $ 1,740,000 Downtown Center 7/15/1997 1,250,000 (1,250,000) - I Presbyterian Homes of Andover, Inc. 12/1/1998 720,000 (720,000) - Presbyterian Homes of Andover, Inc. 11/1/2003 13,145,000 (1,133,284) 12,011,716 Total $ 20,760,000 $ (7,008,284) $ 13,751,716 I Note 17 OPERATING LEASES I The City received revenue from two agreements for the lease of space for antennas placed on the water tower. 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: I 2008 Lease Annual Lease Expiration Renewal Location Lessee Amount Adjustment Factor Date Options I City Hall water tower Sprint Nexte I $ 23,557 Greater of CPI or 4% 12/31/2012 3 - 5 year terms City Hall water tower T-Mobile USA, Inc 19,212 Greater of CPI or 4% 12/31/2011 3 - 5 year terms Emergency Siren Pole T-Mobile USA, Inc 2,000 $1,000 armual increase 6/17/2013 3 - 5 year terms Andover YMCA Comm Ctr Greater Minneapolis YMCA 235,686 None 8/1/2035 N/A I Future minimum lease payments are unavailable at this time due to changing variables: CPI and the completion ofthe capital campaign for the community center. I Note 18 SUBSEOUENT EVENTS The City of Andover sold $1,025,000 of General Obligation Water Revenue Bonds, Series 2009A on March 26, 2009 to fmance various I water system improvements within the City. The rates of the bonds per year ranged from 2.00% - 4.25% with a true interest cost of 3.18%. Principal payments are due in 2010-2024. The City of Andover sold $385,000 of General Obligation Equipment Certificates, Series 2009A on March 26, 2009 to finance the I purchase of public safety and public works equipment. The rates of the bonds per year ranged from 2.00% - 2.25% with a true interest cost of3.18%. Principal payments are due in 2010 - 2012. The City of Andover sold $955,000 of General Obligation State Aid Refunding Bonds, Series 2009A on March 26, 2009 to provide I monies for the advance crossover refunding of the City's $2,755,000 General Obligation State Aid Bonds, Series 200m dated June 1, 2001. The rates of the bonds per year ranged from 2.25% - 2.80% with a true interest cost of3.18%. Principal payments are due in 2011 -2015. I Note 19 RECENTLY ISSUED ACCOUNTING STANDARDS The Govermnental Accounting Standards Boards (GASB) recently approved the following statements which were not implemented for I these fmancial statements: Statement No. 51 Accounting and Financial Reporting for Intangible Assets. The provisions of this Statement are effective for financial statements for periods beginning after June 15,2009. I I 77 C CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS C December 31,2008 Statement No. 53 Accounting and Financial Reporting for Derivative Instruments. The provisions of this Statement are effective C for financial statements for periods beginning after June 15,2009. Statement No. 54 Fund Balance and Government Fund Type Definitions. The provisions of this Statement are effective for .. t' ! financial statements for periods beginning after June 15,2009. III The effect these standards may have on future financial statements is not determinable at this time. C C C ~ .. C C C C C C ~ ~ r-\ .. ~ . C 78 ~ I I I REQUIRED SUPPLEMENTARY INFORMATION I I I I I I I I I I I I I I I I 79 C CITY OF ANDOVER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 C BUDGETARYCOMPARISONSCHEDULE-GENERALFUND For The Year Ended December 31,2008 With Comparative Actual Amounts For The Year Ended December 3 I, 2007 Variance with C Final Budget - Budgeted Amounts Positive 2007 C Original Final Actual (Negative) Actual Revenues: General property taxes $ 6,560,435 $ 6,300,020 $ 6,249,011 $ (51,009) $ 5,776,653 C Licenses and permits 477,150 477,150 525,339 48,189 475,893 Intergovermnental 579,653 840,068 709,251 (130,817) 853,305 Charges for services 729,700 729,700 772,430 42,730 1,121,642 Fines 91,500 91,500 104,930 13,430 101,445 C Investment income 100,000 100,000 137,966 37,966 157,513 Miscellaneous 81,500 81,500 116,950 35,450 90,293 Total revenues 8,619,938 8,619,938 8,615,877 (4,061) 8,576,744 C Expenditures: Current: General govermnent: C Mayor and City council 106,561 106,561 103,067 3,494 102,883 Administration 152,253 152,253 127,771 24,482 155,623 Newsletter 25,700 25,700 19,667 6,033 18,334 Human resources 65,852 65,852 59,006 6,846 58,573 C Legal 173,250 173,250 171,300 1,950 167,110 City clerk 163,356 163,356 158,203 5,153 150,843 Elections 41,989 41,989 40,907 1,082 7,072 Financial administration 253,293 253,293 212,761 40,532 202,664 C Assessing 122,000 122,000 119,090 2,910 117,174 Information systems 149,705 149,705 137,286 12,419 117,523 Planning and zoning 390,871 390,871 359,140 31,731 364,982 Engineering 434,424 434,424 399,436 34,988 420,320 C Facility management 464,410 464,410 408,238 56,172 436,665 Total general govermnent 2,543,664 2,543,664 2,315,872 227,792 2,319,766 Public safety: C Police 2,318,241 2,318,241 2,318,241 - 2,083,861 Fire protection 1,038,020 1,038,020 991,636 46,384 969,162 Protective inspection 468,559 468,559 455,526 13,033 463,859 C Civil defense 16,536 16,536 13,305 3,231 13,748 Animal control 9,875 9,875 7,095 2,780 7,486 Total public safety 3,851,231 3,851,231 3,785,803 65,428 3,538,116 C Public works: Streets and highways 602,225 602,225 613,896 (11,671) 581,459 Snow and ice removal 498,769 498,769 457,587 41,182 505,579 C Street signs 186,322 186,322 170,358 15,964 180,277 Traffic signals 22,000 22,000 15,057 6,943 11,399 Street lighting 190,400 190,400 188,213 2,187 175,572 C Total public works $ 1,499,716 $ 1,499,716 $ 1,445,111 $ 54,605 $ 1,454,286 (Continued) C ~ 80 C I I CITY OF ANDOVER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND (Continued) For The Year Ended December 31, 2008 I With Comparative Actual Amounts For The Year Ended December 31, 2007 Variance with I Final Budget - Budgeted Amounts Positive 2007 Original Final Actual (Negative) Actual I Expenditures: Current: (continued) Parks and recreation $ 875,176 $ 875,176 $ 867,652 $ 7,524 $ 850,907 I Recycling 96,867 96,867 86,631 10,236 94,669 Unallocated 19,000 19,000 17,999 1,001 6,915 I Total current 8,885,654 8,885,654 8,519,068 366,586 8,264,659 Capital outlay General govermnent - - 3,428 (3,428) - I Parks and recreation - - - - 63 Total capital outlay - - 3,428 (3,428) 63 I Total expenditures 8,885,654 8,885,654 ,522,496 363,158 8,264,722 Revenues over (under) expenditures (265,716) (265,716) 93,381 359,097 312,022 I Other fmancing sources (uses): Transfers in 191,194 191,194 191,194 - 185,625 Net increase (decrease) in fund balance $ (74,522) $ (74,522) $ 284,575 $ 359,097 $ 497,647 I Fund balance - January 1 3,890,460 3,392,813 Fund balance - December 31 $ 4,175,035 $ 3,890,460 I I I I I I I I 81 C CITY OF ANDOVER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 11 C SCHEDULE OF FUNDING PROGRESS - OTHER POST EMPLOYMENT BENEFITS PLAN For The Year Ended December 31, 2008 Unfunded C Actuarial UAAL as a Actuarial Actuarial Accrued Percentage of C Actuarial Value of Accrued Liability Fund Covered Covered Valuation Date Assets Liability (UAAL) Ratio Payroll Payroll (a) (b) ( boa ) (a/b) (c) ((b-a)/c) January 1,2008 $ - $ 324,387 $ 324,387 0.00% $ 5,400,000 6.01% C C The City implemented GASB Statement No. 45 for the year ended December 31,2008. Information for prior years is not available. C C C C C C C C C C C C 82 C I I CITY OF ANDOVER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION NOTES TO REQUIRED SUPPLEMENTARY INFORMATION December 31,2008 I Note A BUDGETS I 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. I Final Over Budget Actual Budget I General Fund: Current: Public works: Snow and ice removal $ 602,225 $ 613,896 $ 11,671 I Capital outlay: General govermnent - 3,428 3,428 I Note B MODIFIED APPROACH FOR CITY STREETS AND TRAILS INFRASTRUCTURE CAPITAL ASSETS I 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 I 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. I 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: I 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. I 2) The City documents that the eligible infrastructure capital assets are being preserved approximately at or above the established and disclosed condition assessment level. In the fall of 2008, the City conducted a physical condition assessment of the streets and trails constructed since 1974. This assessment I 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: I Condition Rating Excellent 86 - 100 I Very Good 71 - 85 Good 56 - 70 Fair 41 - 55 Poor 26 - 40 I Very Poor 11 - 25 Substandard 0-10 I I 83 C CITY OF ANDOVER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION C NOTES TO REQUIRED SUPPLEMENTARY INFORMATION December 31,2008 C As of December 31, 2008, the City's street and trail system was rated at an OCI index of 80 on the average with detail condition as follows: % of Street ~ Condition and Trails Excellentto Good 91.0% ~ Fair 5.5% ~ Poor to Substandard 3.5% 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 $2,244,713 on street and trail maintenance for the year ending December 31,2008. These expenditures delayed deterioration; f 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. C Maintenance Actual OCI Year Estimate Expenditures Rating 2003 $ 950,000 $ 956,688 82 C 2004 1,000,000 1,847,066 82 2005 1,000,000 1,655,715 83 2006 1,150,000 1,228,981 82 C 2007 1,150,000 1,256,433 81 2008 1,150,000 2,244,713 80 The City has an on-going street and trail rehabilitation program funded in the Capital Improvement Program that is intended to improve C 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. C C C C C ~ ~ C 84 C I I I COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES I I I I I I I g I I I I I D I I 85 c C NONMAJOR GOVERNMENTAL FUNDS C SPECIAL REVENUE FUNDS C A Special Revenue Fund is used to account for the proceeds of specific revenue sources that are legally restricted to C 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. e DEBT SERVICE FUNDS A Debt Service Fund accounts for the accumulation of resources for, and the payment of general long-term C principal, interest and other related costs. CAPITAL PROJECTS FUNDS C A Capital Projects Fund is used to account for acquisition or construction of major capital facilities financed mainly C 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. C C C C C C C C C 86 C I I CITY OF ANDOVER, MINNESOTA COMBlNlNG BALANCE SHEET Statement 12 NONMAJOR GOVERNMENTAL FUNDS December 31, 2008 I With Comparative Totals For December 31, 2007 I Totals Special Debt Capital Nonmajor Governmental Funds Revenue Service Projects 2008 2007 Assets I Cash and investments $ 1,645,670 $ 2,654,913 $ 677,452 $ 4,978,035 $ 7,017,483 Cash and investments with escrow agent 726,874 - 726,874 740,859 Accrued interest 12,547 33,325 5,270 51,142 48,075 Due from other governmental units 39,562 - 39,562 43,780 I Accounts receivable - net 139,683 - - 139,683 136,758 Interfund receivable 10,000 10,000 - Prepaid items 6,500 6,500 - Property taxes receivable: I Unremitted 1,748 17,114 401 19,263 30,736 Delinquent 6,654 57,821 1,581 66,056 80,065 Special assessments receivable: Delinquent - 10,392 10,392 - I Deferred - 448,508 - 448,508 561,695 Notes receivable 69,852 - - 69,852 53,813 Inventory 8,446 - - 8,446 8,196 I Total assets 1,930,662 3,958,947 684,704 6,574,313 ,721,460 Liabilities and Fund Balance I Liabilities: Interfund payable 700,000 70,000 70,000 840,000 730,000 Accounts payable 45,868 - 39,117 84,985 155,790 Contracts payable - - - 9,259 I Deposits payable 33,970 - - 33,970 10,050 Due to other governmental units 3,332 - 3,332 32,750 Salaries payable 15,349 - 15,349 9,941 Deferred revenue 173,678 516,721 1,581 691,980 974,702 I Total liabilities 972,197 586,721 110,698 1,669,616 1,922,492 Fund balance (deficit): I Reserved 17,206 3,372,226 485,494 3,874,926 ,339,826 Unreserved: Designated 1,540,720 - 155,809 1,696,529 1,995,679 Undesignated (599,461) - (67,297) (666,758) (536,537) I Total fund balance 958,465 3,372,226 574,006 4,904,697 6,798,968 Total liabilities and fund balance $ 1,930,662 $ 3,958,947 $ 684,704 $ 6,574,313 $ 8,721,460 I g I I I 87 C CITY OF ANDOVER, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND Statement 13 C CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For The Year Ended December 31, 2008 With Comparative Totals For The Year Ended December 31,2007 C Totals Special Debt Capital Nonmajor Govermnental Funds C Revenue Service Projects 2008 2007 Revenues: General property taxes $ 231,103 $ 2,070,804 $ 54,628 $ 2,356,535 $ 2,022,449 C Tax increment collections - - - - 1,474,219 Intergovermnental 27,646 281,291 1,138 310,075 423,566 Special assessments - 80,655 - 80,655 2,021,621 Charges for services 951,622 - - 951,622 914,093 C Investment income 59,693 (13,848) 4,003 49,848 337,595 Miscellaneous Park dedication fees - - 133,585 133,585 113,013 Other 511,763 - 169,805 681,568 348,564 C Total revenues 1,781,827 2,418,902 363,159 4,563,888 7,655,120 Expenditures: C Current: General govermnent 41,764 - 8,938 50,702 79,531 Public safety - - 11,162 11,162 42,124 Public works 350,765 - 471,605 822,370 212,487 C Parks and recreation 893,791 - 192,379 1,086,170 974,799 Economic development 129,372 - - 129,372 160,051 Capital outlay: C General govermnent - - 368,094 368,094 - Public safety - - - - 82,152 Public works 162,242 - 278,862 441,104 503,191 Parks and recreation 183,034 - 168,591 351,625 818,796 Economic development - - - - 140,162 C Debt service: Principal retirement - 3,460,000 - 3,460,000 3,275,000 Interest - 1,537,013 - 1,537,013 1,636,716 Paying agent fees - 7,421 - 7,421 8,132 C Professional service - 4,000 - 4,000 1,430 Construction/acquisition costs - - - - 266,935 Total expenditures 1,760,968 5,008,434 1,499,631 8,269,033 8,201,506 C Revenues over (under) expenditures 20,859 (2,589,532) (1,136,472) (3,705,145) (546,386) Other fmancing sources (uses): C Transfers in - 1,385,178 90,648 1,475,826 2,334,610 Transfers out (285,178) (15,648) - (300,826) (368,565) Bonds issued - - 630,000 630,000 760,000 Bond premium - - - - 3,401 C Proceeds from sale of capital assets 5,874 - - 5,874 47,143 Total other fmancing sources (uses) (279,304) 1,369,530 720,648 1,810,874 2,776,589 C Net increase (decrease) in fund balance (258,445) (1,220,002) (415,824) (1,894,271) 2,230,203 Fund balance - January 1 1,216,910 4,592,228 989,830 6,798,968 4,568,765 C Fund balance - December 31 $ 958,465 $ 3,372,226 $ 574,006 $ 4,904,697 $ 6,798,968 C 88 C D D I NONMAJOR SPECIAL REVENUE FUNDS D 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 I development within the community. Community Development Block Grant - This fund accounts for the financial operations of a federal grant for rental D 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 arId concessions. The aquatic's portion of the Community Center is under the D operations of the YMCA. Drainage and Mapping - This fund accounts for resources necessary to maintain existing maps and developing new D 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). I Forestrv - 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. D 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. D Right-of-Wav MarIagement/Utility - This fund is used to account for activity associated with the management of the public right-of-ways. Capital Equipment Reserve - This fund is used to account for the capital equipment/projects levy and the various D capital expenditures it will be used for. Charitable Gambling - This fund accounts for the 10% of net profits received from gambling activities by local non- profit orgarIizations. According to state statute, all expenditures from this fund must be for public services and I police, fire and other emergency or public safety-related services, equipment, and training, excluding pension obligations. I Construction Seal Coating - This fund accounts for the contributions associated with land development to be used for the respective developments first application of crack seal and seal coat. I I I D I 89 C CITY OF ANDOVER, MINNESOTA SUB COMBINING BALANCE SHEET C NONMAJOR SPECIAL REVENUE FUNDS December 31, 2008 With Comparative Totals For December 31,2007 Community Drainage C EDA Development Community nd General Block Grant Center Mapping LRRWMO Assets C Cash and investments $ 318,023 $ 2,260 $ 31,001 $ 78,578 $ 18,285 Accrued interest 2,161 467 Due from other governmental units 35,663 Accounts receivable 12,943 126,740 C Prepaid items 6,500 Property taxes receivable: Unremitted 295 Delinquent 936 C Notes receivable 69,852 Inventory 8,446 Total assets 333,127 72,112 208,350 79,045 19,516 Liabilities and Fund Balance C Liabilities: Interfund payable 700,000 Accounts payable 1,196 44,672 C Contracts payable Deposits payable 33,970 Due to other governmental units 3,332 Salaries payable 2,279 10,891 627 C Deferred revenue 69,852 - 936 Total liabilities 3,475 69,852 792,865 1,563 Fund balance (deficit): C Reserved for: Prepaid items 6,500 Inventory 8,446 Economic development 2,260 Unreserved: C Designated for working capital 329,652 13,500 17,953 Designated for projects 65,545 Designated for equipment - Undesignated (599,461) ~ Total fund balance (deficit) 329,652 2,260 (584,515) 79,045 17,953 Total liabilities and fund balance $ 333,127 $ 72,112 $ 208,350 $ 79,045 $ 19,516 ~ C C C ~ C 90 ~ I I Statement 14 I Right-of-Way Capital Totals Trail and Management! Equipment Charitable Construction Nonmajor Special Revenue Funds Forestry Transportation Utility Reserve Gambling Seal Coating 2008 2007 I $ 2,419 $ 54,560 $ 147,870 $ 863,102 $ 16,437 $ 113,135 $ 1,645,670 $ 2,003,115 304 996 ,574 2,045 12,547 10,399 I 3,899 39,562 43,780 139,683 136,758 6,500 ,453 1,748 2,025 I ,718 6,654 5,808 - 69,852 53,813 8,446 8,196 I 6,318 54,864 148,866 876,847 16,437 115,180 1,930,662 2,263,894 I 700,000 600,000 45,868 46,234 9,259 33,970 10,050 3,332 32,750 I 1,552 15,349 9,941 ,718 97,172 173,678 338,750 1,552 ,718 97,172 972,197 1,046,984 I 6,500 - - 8,446 8,196 I 2,260 4,261 6,318 83,118 16,437 466,978 374,402 - 54,864 64,196 42,000 18,008 444,613 640,788 29,129 629,129 669,855 I (599,461) (480,592) 6,318 54,864 147,314 871,129 16,437 18,008 958,465 1,216,910 $ 6,318 $ 54,864 $ 148,866 $ 876,847 $ 16,437 $ 115,180 $ 1,930,662 $ 2,263,894 I I I I I I I 1 C CITY OF ANDOVER, MINNESOTA SUB COMBINING STATEMENT OF REVENUES, EXPENDITURES C AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS For The Year Ended December 31, 2008 With Comparative Totals For The Year Ended December 3 1,2007 Community Drainage C EDA Development Community nd General Block Grant Center apping LRRWMO C Revenues: General property taxes $ $ $ $ $ 33,546 Intergovernmental 12,313 687 Charges for services 173,096 553,984 8,147 C Investment income 13,387 105 (28,156) 3,361 324 Miscellaneous 1,693 6,012 472,459 281 Total revenues 188,176 18,430 998,287 11,789 34,557 Expenditures: C Current: General goverrunent Public safety - C Public works 7,010 28,438 Parks and recreation 886,276 Economic development 108,94 I 20,431 - Capital outlay: Public works C Parks and recreation 13,952 Total expenditures 108,94 I 20,431 900,228 7,010 28,438 Revenues over (under) expenditures 79,235 (2,001) 98,059 4,779 6,119 C Other financing sources (uses): Transfers out (210,178) Proceeds from sale of capital assets C Total financing sources (uses) (210,178) Net increase (decrease) in fund balance 79,235 (2,001) (112,119) 4,779 6,119 Fund balance (deficit) - January I 250,417 4,261 (472,396) 74,266 11,834 C Fund balance (deficit) - December 31 $ 329,652 $ 2,260 $ (584,515) $ 79,045 $ 17,953 C C C C C C C 92 C I I Statement 15 I Right-of-Way Capital Totals I Trail and Management! Equipment Charitable Construction Nonmajor Special Revenue Funds Forestry Transportation Utility Reserve Gambling Seal Coating 2008 2007 $ $ $ $ 197,557 $ $ $ 231,103 $ 230,301 I 10,527 4,119 27,646 34,950 21,434 14,503 180,458 951,622 914,093 76 889 7,047 7,994 396 14,270 59,693 93,306 11,586 5.163 14,569 511,763 348,469 I 22,189 22,323 21,550 254,833 14,965 194,728 1,781,827 1,621,119 I - - 2,264 19,500 41,764 64,422 8,453 22,389 60,858 3,330 228,740 350,765 186,117 ,515 893,791 793,414 129,372 160,05 I I - 62,242 162,242 148,107 69,082 183,034 98,951 22,389 60,858 364,433 19,500 228,740 1,760,968 1,459,515 I (200) 22,323 (39,308) (109,600) (4,535) (34,012) 20,859 161,604 I 75,000) (285,178) (285,074) ,874 - 5,874 47,143 69,126) - (279,304) (237,931) I (200) 22,323 (39,308) (178,726) (4,535) (34,012) (258,445) (76,327 6,518 32,541 186,622 1,049,855 20,972 52,020 1,216,910 1,293,237 $ 6,318 $ 54,864 $ 147,314 $ 871,129 $ 16,437 $ 18,008 $ 958,465 $ 1,216,910 I I I I I I I I 3 c c c c u c - This page intentionally left blank - C C C r .. C C C C n .. C C ~ ~ ' , 94 C I I I NONMAJOR DEBT SERVICE FUNDS I The City's Debt Service Funds account for six types of bonded indebtedness: . Certificates of Indebtedness I . Capital Improvement Bonds . G.O. Revenue Bonds . Tax Increment Bonds I . Permanent Improvement Revolving Bonds . State Aid Bonds . Special Assessment Bonds . Open Space Referendum Bonds I Certificates ofIndebtedness - (G.O. Equipment Certificates - 2005B, 2006B, 2007A and 2008) are repaid primarily from general property taxes. I Capital Improvement Bonds - (G.O. Capital Improvement Bonds 2004A and 2005B) are repaid primarily from general property taxes I G.O. Revenue Bonds - (EDA Public Facility Lease Revenue Bonds 2004) are repaid from annual lease payments from the YMCA, Community Center operations and general property tax. I Tax Increment Bonds - (Tax Increment Refunding Bonds of 2003B and 2004B) are repaid primarily from tax increments. Permanent Improvement Revolving (PIR) Bonds - (G.O. PIR Bonds of 2003A and 2006A) are used to finance I assessable improvements within the City and are repaid primarily from special assessments levied against benefited properties. I State Aid Bonds - (200lB State Aid 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. Special Assessment Bonds - (G.O. Improvement Bonds 2005A) are used to finance assessable improvements within I the City arId are repaid primarily from special assessments levied against benefited properties. Open Space Referendum Bonds - are used to finance the purchase of land to remain as open space. I I I I I I 95 c ' I CITY OF ANDOVER, MINNESOTA SUB COMBINING BALANCE SHEET ~ NONMAJOR DEBT SERVICE FUNDS December 31,2008 .. With Comparative Totals For December 3 I, 2007 EDA Public C G.O. G.O. G.O. G.O. Capital G.O. Capital Facility Lease Equipment Equipment Equipment Improvemenl Improvement Revenue C Certificate Certificate Certificate Bonds Bonds Bonds 2006B 2007 A 2008 2004A 2005B 2004 Assets ~ Cash and investments $ 219,488 $ 224,082 $ 161,591 $ 11,389 $ 124,90 I $ 2,812 Cash and investments with escrow agent - 726,874 ~ Accrued interest 977 839 618 - - 10,750 Due from other funds - - - - - - Property taxes receivable: ~ Unremitted 1,378 1,891 1,323 3,009 984 7,494 .. Delinquent 4,670 6,409 4,485 10,196 3,335 25,400 Special assessments receivable: Delinquent - - - C Deferred - - - - - - Total assets 226,513 233,221 168,017 24,594 129,220 773,330 Liabilities and Fund Balance C Liabilities: Interfund payable - - - - 70,000 C Deferred revenue 4,670 6,409 4,485 10,196 3,335 25,400 Total liabilities 4,670 6,409 4,485 10,196 3,335 95,400 Fund balance: Reserved for debt service 221,843 226,812 163,532 14,398 125,885 677,930 C ! I Total liabilities and fund balance $ 226,513 $ 233,221 $ 168,017 $ 24,594 $ 129,220 $ 773,330 ~ ~ C ' ' ~ ~ ~ ill JIIIll C I ~ C C ' , C 96 ~ ~ g I Statement 16 I G.O. TIF G.O. TIF G.O. G.O. G.O. I Refunding Refunding PIR Fund PIR Fund State Improvement Open Space Totals Bonds Bonds Bonds of Bonds of Aid Bonds Bonds Referendum Nonmajor Debt Service Funds 2003B 2004B 2003A 2006A 200 IB 2005A Bonds 2008 2007 I $ 45,752 $ 12,151 $ 11,281 $ 12,435 $ 225,359 $ 1,452,506 $ 151,166 $ 2,654,913 $ 3,862,978 - - 726,874 740,859 296 - - 323 18,913 609 33,325 30,152 I - - 10,000 10,000 - - - - - 1,035 17,114 28,239 - - - - - - 3,326 57,821 72,954 I - - 10,392 10,392 - - 16,966 - - - 431,542 - 448,508 561,695 I 46,048 29,117 11,281 12,435 225,682 1,913,353 166,136 3,958,947 5,296,877 I - - - - - 70,000 70,000 - 16,966 - - 441,934 3,326 516,721 634,649 - 16,966 - 441,934 3,326 586,721 704,649 I 46,048 12,151 11,281 12,435 225,682 1,471,419 162,810 3,372,226 4,592,228 $ 46,048 $ 29,117 $ 11,281 $ 12,435 $ 225,682 $ 1,913,353 $ 166,136 $ 3,958,947 $ 5,296,877 I I I I I I I I I 97 C CITY OF ANDOVER, MINNESOTA SUB COMBINING STATEMENT OF REVENUES, EXPENDITURES AND C CHANGES IN FUND BALANCES NONMAJOR DEBT SERVICE FUNDS For The Year Ended December 31, 2008 With Comparative Totals For The Year Ended December 3 1,2007 C EDA Public G.O. G.O. G.O. G.O. G.O. Capital G.O. Capital Facility Leas( C Equipment Equipment Equipment Equipment Improvement Improvement Revenue Certificate Certificate Certificate Certificate Bonds Bonds Bonds 2005B 2006B 2007A 2008 2004A 2005B 2004 Revenues: C General property taxes $ $ 163,771 $ 224,732 $ 157,274 $ 357,545 $ 116,952 $ 890,709 Tax increment collections - - Intergovernmental 3,374 4,629 3,236 7,356 2,413 18,340 Special assessments C Investment income 5,386 3,425 3,022 (10,348) 801 11,279 Total revenues 172,53 I 232,786 163,532 354,553 120,166 920,328 Expenditures: ~ Debt service: .. Principal retirement 60,000 145,000 180,000 255,000 115,000 190,000 Interest 900 14,069 26,800 102,080 5,290 954,381 Paying agent fees 543 543 III 514 2,111 C Professional services - Total expenditures 60,900 159,612 207,343 357,191 120,804 1,146,492 Revenues over (under) expenditures (60,900) 12,919 25,443 163,532 (2,638) (638) (226, I 64) C Other financing sources (uses): Transfers in 10,000 - 210,178 C Transfers out (15,648) Total other financing sources (uses) (15,648) 10,000 - - - 210,178 Net increase (decrease) in fund balance (76,548) 22,919 25,443 163,532 (2,638) (638) (15,986) C Fund balance - January I 76,548 198,924 201,369 17,036 126,523 693,916 Fund balance - December 31 $ $ 221,843 $ 226,812 $ 163,532 $ 14,398 $ 125,885 $ 677,930 C ~ ill C C C ' , C r\ .. 98 C I I Statement 17 I I ~ G.O.TIF G.O.TIF G,O. .O. G.O. Refunding Refunding PIR Fund PIR Fund State Improvement Open Space Totals Bonds Bonds Bonds of Bonds of Aid Bonds Bonds Referendum Nonmajor Debt Service Funds 2003B 2004B 2003A 006A 200 IB 2005A Bonds 2008 2007 I $ $ $ $ $ $ $ 159,821 $ 2,070,804 $ 1,739,742 1,474,219 I 241,943 281,291 323,798 15,1 I I 65,544 80,655 2,021,621 7,718 4,349 365 ,178 3,045 (47,057) 2,989 (13,848) 147,116 7,718 19,460 365 ,178 244,988 18,487 162,810 2,4 18,902 5,706,496 I 230,000 505,000 770,000 3 I 0,000 155,000 545,000 3,460,000 3,275,000 I 17,620 87,413 47,305 5,501 85,120 110,534 - 1,537,013 1,636,716 542 916 542 43 543 513 7,421 8,132 2,200 1,800 4,000 1,430 I 250,362 593,329 819,647 396,044 240,663 656,047 - 5,008,434 4,921,278 (242,644) (573,869) (8 I 9,282) (394,866) 4,325 (637,560) 162,810 (2,589,532) 785,218 I 785,000 380,000 1,385,1 78 2,26 I ,360 (15,648) I - 785,000 380,000 1,369,530 2,26 I ,360 (242,644) (573,869) (34,282) (14,866) 4,325 (637,560) 162,810 (1,220,002) 3,046,578 I 288,692 586,020 45,563 27,301 221,357 2,108,979 - 4,592,228 1,545,650 $ 46,048 $ 12,151 $ 11,281 $ 12,435 $ 225,682 $ 1,471,419 $ 162,810 $ 3,372,226 $ 4,592,228 I I I I I I I 99 c c c c c c - This page intentionally left blank - C ~ .. c c c c -- ~ ~ L./ C C C C 100 C I I I NONMAJOR CAPITAL PROJECT FUNDS I The City of Andover had the following Capital Projects Funds during the year: Storm Sewer Proiect - This fund was established to account for storm sewer fees and improvements as part of I development and ongoing maintenance. Park Dedication - This fund was established to account for contributions associated with land development to be I 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. I Equipment Certificates 2007 A - This fund was established to account for the purchase of capital equipment that was financed through the issuance of capital notes. a Equipment Certificates 2008 - This fund was established to account for the purchase of capital equipment that was financed through the issuance of capital notes. Improvement Bonds 2005A - This fund was established to account for the various improvement projects at Andover I Station North, including the construction of Jay Street. Open Space Referendum Bonds - This fund was established to account for the purchase of various land acquisitions for open space preservation within the City. I D I I I I I I I I 101 C CITY OF ANDOVER, MINNESOTA SUBCOMBINING BALANCE SHEET C NONMAJOR CAPITAL PROJECTS FUNDS December 31, 2008 Comparative Totals For December 3 1,2007 C Storm Equipment Sewer Park Building Certificates C Project Dedication Fund 2008 Assets Cash and investments $ 1,556 $ 82,269 $ 75,119 $ 515,669 Accrued interest 308 1,970 2,992 C Property taxes receivable: Unremitted 401 Delinquent 1,581 Total assets 1,556 84,559 77,089 518,661 C Liabilities and Fund Balance Liabilities: C Interfund payables 60,000 - Accounts payable 4,258 33,167 Deferred revenue 1,581 Total liabilities 60,000 5,839 - 33,167 C Fund balance (deficit): Reserved for projects 485,494 C Unreserved: Designated for projects 78,720 77,089 Undesignated (58,444 ) Total fund balance (deficit) (58,444) 78,720 77,089 485,494 C Total liabilities and fund balance $ 1,556 $ 84,559 $ 77,089 $ 518,661 ~ ~ C C C C C C 102 C I I Statement 18 I Open Space Totals I Referendum Nonmajor Capital Projects Funds Bonds 2008 2007 I $ 2,839 $ 677,452 $ 1,151,390 5,270 7,524 401 472 I 1,581 1,303 2,839 684,704 1,160,689 I 10,000 70,000 60,000 1,692 39, II 7 109,556 I 1,581 1,303 11,692 110,698 170,859 I 485,494 735,141 155,809 310,634 I (8,853) (67,297) (55,945) (8,853) 574,006 989,830 $ 2,839 $ 684,704 $ I, I 60,689 I I I I I I I I I 103 ~ CITY OF ANDOVER, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND ~ CHANGES IN FUND BALANCES NONMAJOR CAPITAL PROJECTS FUNDS For The Year Ended December 3 I, 2008 With Comparative Totals For The Year Ended December 31, 2007 C Storm Equipment Equipment C Sewer Park Building Certificates Certificates Project Dedication Fund 2007 A 2008 Revenues: General property taxes $ - $ 54,628 $ - $ $ - C Intergovernmental 1,138 - - - Investment income (2,499) 836 8,262 (3,749) 12,905 MisceIIaneous Park dedication fees 133,585 - - Other - 4,176 165,629 - C Total revenues (2,499) 194,363 173,89 I (3,749) 12,905 Expenditures: C Current: General government - 5,286 - 3,652 Public safety - 11,162 - Public works - - - - C Parks and recreation - 183,562 - - Capital outlay: General government 256,288 45,278 66,528 Public safety - - - C Public works - - - 191,63 I 87,23 I Parks and recreation - 168,591 - - - Economic development - - - - - Construction/acquisition costs - - - - Total expenditures - 352,153 261,574 248,071 157,411 C Revenues over (under) expenditures (2,499) (157,790) (87,683) (251,820) (144,506) Other financing sources (uses): C Transfers in 75,000 15,648 - - Transfers out - - - - Bonds issued - - - 630,000 C Bond premium - - - - Total other financing sources (uses) - 75,000 15,648 - 630,000 Net increase (decrease) in fund balance (2,499) (82,790) (72,035) (251,820) 485,494 C Fund balance (deficit) - January 1 (55,945) 161,510 149,124 251,820 - Fund balance (deficit) - December 3 I $ (58,444) $ 78,720 $ 77,089 $ - $ 485,494 C C C C C 104 ~ ~ I I Statement 19 I I Improvemen1 Open Space Totals Bonds Referendum Nonmajor Capital Projects Funds 2005A Bonds 2008 2007 I $ $ - $ 54,628 $ 52,406 - - 1,138 64,818 (11,716) (36) 4,003 97,173 I - - 133,585 113,013 169,805 95 (11,716) (36) 363,159 327,505 I - - 8,938 15,109 I - - 11,162 33,671 471,605 471,605 26,370 8,817 192,379 181,385 368,094 - I - - - 82,152 278,862 355,084 - - 168,591 719,845 - - 140,162 I - - 266,935 471,605 8,817 1,499,631 1,820,713 I (483,321) (8,853) (1,136,472) (1,493,208) - 90,648 73,250 I (83,491) - - 630,000 760,000 - 3,401 I 720,648 753,160 (483,321) (8,853) (415,824) (740,048) 483,321 - 989,830 1,729,878 I $ - $ (8,853) $ 574,006 $ 989,830 I I I I I 105 C i I CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - EDA GENERAL Statement 20 C SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31,2008 With Comparative Actual Amounts For The Year Ended December 31, 2007 C Variance with C Final Budget - Budgeted Amounts Positive 2007 Original Final Actual (Negative) Actual Revenues: C Charges for services $ 155,000 $ 155,000 $ 173,096 $ 18,096 $ 162,553 Investment income 2,000 2,000 13,387 11,387 12,190 Miscellaneous - - 1,693 1,693 11,253 C Total revenues 157,000 157,000 188,176 31,176 185,996 Expenditures: C Current: Economic development 143,017 143,017 108,941 34,076 116,638 Net increase (decrease) in fund balance $ 13,983 $ 13,983 79,235 $ 65,252 69,358 C Fund balance (deficit) - January 1 250,417 181,059 Fund balance (deficit) - December 31 $ 329,652 $ 250,417 C C C C C : I C C C C C 106 C I I 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 I For The Year Ended December 31, 2008 With Comparative Actual Amounts For The Year Ended December 31, 2007 I Variance with Final Budget - Budgeted Amounts Positive 2007 Original Final Actual (Negative) Actual I Revenues: Intergovermnental $ 50,000 $ 50,000 $ 12,313 $ (37,687) $ 7,300 Investment income 300 300 105 (195) 178 I Miscellaneous 3,500 3,500 6,012 2,512 3,501 Total revenues 53,800 53,800 18,430 (35,370) 10,979 I Expenditures: Current: Economic development 50,000 50,000 20,431 29,569 43,413 I Net increase (decrease) in fund balance $ 3,800 $ 3,800 (2,001) $ (5,801) (32,434) Fund balance (deficit) - January 1 4,261 36,695 I Fund balance (deficit) - December 31 $ 2,260 $ 4,261 a I D a a D D D D I 107 C CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - COMMUNITY CENTER Statement 22 C SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2008 With Comparative Actual Amounts For The Year Ended December 31, 2007 C Variance with C Final Budget - Budgeted Amounts Positive 2007 Original Final Actual (Negative ) Actual Revenues: C Charges for services $ 603,000 $ 603,000 $ 553,984 $ (49,016) $ 590,935 Investment income - - (28,156) (28,156) (19,170) Miscellaneous 446,586 446,586 472,459 25,873 304,371 C Total revenues 1,049,586 1,049,586 998,287 (51,299) 876,136 Expenditures: C Current: Parks and recreation 859,123 859,123 886,276 (27,153) 793,414 Capital outlay: Parks and recreation 11,000 11,000 13,952 (2,952) 6,495 C Total expenditures 870,123 870,123 900,228 (30,105) 799,909 Revenue over (under) expenditures 179,463 179,463 98,059 (81,404) 76,227 C Other financing sources (uses) Transfers out (210,178) (210,178) (210,178) - (237,274) Net increase (decrease) in fund balance $ (30,715) $ (30,715) (112,119) $ (81,404) (161,047) C Fund balance (deficit) - January 1 (472,396) (311,349) C Fund balance (deficit) - December 31 $ (584,515) $ (472,396) C C ~ C ~ C C 108 ~ I I CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - DRAINAGE AND MAPPING Statement 23 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL I For The Year Ended December 31,2008 With Comparative Actual Amounts For The Year Ended December 31, 2007 I Variance with Final Budget- Budgeted Amounts Positive 2007 Original Final Actual (Negative) Actual I Revenues: Charges for services $ 10,000 $ 10,000 $ 8,147 $ (1,853) $ 46,579 Investment income 1,000 1,000 3,361 2,361 3,480 I Miscellaneous - - 281 281 - Total Revenues 11,000 11,000 11,789 789 50,059 I Expenditures: Current: Public works 13,251 13,251 7,010 6,241 8,291 I Capital outlay: Public works - - - - 5,187 Total expenditures 13,251 13,251 7,010 6,241 13,478 I Net increase (decrease) in fund balance $ (2,251) $ (2,251) 4,779 $ 7,030 36,581 Fund balance (deficit) - January 1 74,266 37,685 I Fund balance (deficit) - December 31 $ 79,045 $ 74,266 I I I a I I I a I 109 C CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - LRRWMO Statement 24 C SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31,2008 With Comparative Actual Amounts For The Year Ended December 31, 2007 C Variance with C Final Budget - Budgeted Amounts Positive 2007 Original Final ctual (Negative) Actual Revenues: C General property taxes $ 35,000 $ 35,000 $ 33,546 $ (1,454) $ 33,254 Intergovermnental - - 87 687 1,554 Investment income - - 24 324 (71) C Total revenues 35,000 35,000 34,557 (443) 34,737 Expenditures: C Current: Public works 30,489 30,489 28,438 2,051 26,265 Net increase (decrease) in fund balance $ 4,511 $ 4,511 6,119 $ 1,608 8,472 C Fund balance (deficit) - January 1 11,834 3,362 Fund balance (deficit) - December 31 $ 17,953 $ 11,834 C C C C C C C C C C 110 C I I CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - FORESTRY Statement 25 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL I For The Year Ended December 31, 2008 With Comparative Actual Amounts For The Year Ended December 3 1,2007 I Variance with Final Budget- Budgeted Amounts Positive 2007 Original Final Actual (Negative) Actual I Revenues: Intergovermnental $ 12,500 $ 12,500 $ 10,527 $ (1,973) $ 16,896 Investment income - - 76 76 343 I Miscellaneous - - 11,586 11,586 9,706 Total revenues 12,500 12,500 22,189 9,689 26,945 I Expenditures: Current: Public works 15,000 15,000 22,389 (7,389) 18,526 I Net increase (decrease) in fund balance $ (2,500) $ (2,500) (200) $ 2,300 8,419 Fund balance (deficit) - January 1 6,518 (1,901) I Fund balance (deficit) - December 31 $ 6,318 $ 6,518 D D D D D D D D D I 111 C CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - TRAIL AND TRANSPORTATION Statement 26 C SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31,2008 With Comparative Actual Amounts For The Year Ended December 31,2007 C Variance with C Final Budget - Budgeted Amounts Positive 2007 Original Final ctual (Negative ) Actual Revenues: C Charges for services $ 30,600 $ 30,600 $ 21,434 $ (9,166) $ 16,541 Investment income 2,500 2,500 889 (1,611) 6,324 Total revenues 33,100 33,100 22,323 (10,777) 22,865 C Expenditures: Current: C Public works - - - 1,810 Capital outlay: Public works - - - 142,920 Total expenditures - - - 144,730 C Net increase (decrease) in fund balance $ 33,100 $ 33,100 22,323 $ (10,777) (121,865) Fund balance (deficit) - January 1 32,541 154,406 C Fund balance (deficit) - December 31 $ 54,864 $ 32,541 C C C C C 0 C C C 112 C I I CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - RlGHT-OF- WAY MANAGEMENT/UTlLITY Statement 27 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL I For The Year Ended December 31, 2008 With Comparative Actual Amounts For The Year Ended December 31,2007 I Variance with Final Budget - Budgeted Amounts Positive 2007 Original Final Actual (Negative) Actual D Revenues: Charges for services $ 40,000 $ 40,000 $ 14,503 $ (25,497) $ 25,088 Investment income 5,000 5,000 7,047 2,047 11,206 D Total revenues 45,000 45,000 21,550 (23,450) 36,294 D Expenditures: Current: Public works 71,410 71,410 60,858 10,552 56,955 I Revenue over (under) expenditures (26,410) (26,410) (39,308) (12,898) (20,661) Other financing sources (uses) Transfers out - - - - (47,800) I Net increase (decrease) in fund balance $ (26,410) $ (26,410) (39,308) $ (12,898) (68,461) Fund balance (deficit) - January 1 186,622 255,083 D Fund balance (deficit) - December 31 $ 147,314 $ 186,622 I I I a a I I I I 113 C CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - CAPITAL EQUIPMENT RESERVE Statement 28 C SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31,2008 With Comparative Actual Amounts For The Year Ended December 31,2007 C Variance with C Final Budget - Budgeted Amounts Positive 2007 Original Final Actual (Negative) Actual Revenues: C General property taxes $ 210,000 $ 210,000 $ 197,557 $ (12,443) $ 197,047 Intergovermnental - - 4,119 4,119 9,200 Investment income 15,000 15,000 47,994 32,994 57,221 C Miscellaneous - - 5,163 5,163 1,945 Total revenues 225,000 225,000 254,833 29,833 265,413 Expenditures: C Current: General govermnent 43,000 43,000 22,264 20,736 47,878 Public safety - - - - 8,453 C Public works 242,000 242,000 3,330 238,670 - Parks and recreation 45,000 45,000 7,515 37,485 - Capital outlay: Public works - - 162,242 (162,242) - ~ Parks and recreation 50,000 50,000 169,082 (119,082) 92,456 Total expenditures 380,000 380,000 364,433 15,567 148,787 Revenues over (under) expenditures (155,000) (155,000) (109,600) 45,400 116,626 C Other financing sources (uses): Transfers out - (75,000) (75,000) - - C Proceeds from the sale of capital assets - - 5,874 5,874 47,143 Total other finance sources (uses) - (75,000) (69,126) 5,874 47,143 Net increase (decrease) in fund balance $ (155,000) $ (230,000) (178,726) $ 51,274 163,769 C Fund balance (deficit) - January 1 1,049,855 886,086 C Fund balance (deficit) - December 31 $ 871,129 $ 1,049,855 C C C C C 114 C I I CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - CHARITABLE GAMBLING Statement 29 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL I For The Year Ended December 31, 2008 With Comparative Actual Amounts For The Year Ended December 31, 2007 I Variance with Final Budget - Budgeted Amounts Positive 2007 Original Final Actual (Negative) Actual I Revenues: Investment income $ - $ - $ 396 $ 396 $ 1,114 Miscellaneous 13,000 13,000 14,569 1,569 17,693 D Total revenues 13,000 13,000 14,965 1,965 18,807 I Expenditures: Current: General govermnent 25,500 25,500 19,500 6,000 16,544 I Net increase (decrease) in fund balance $ (12,500) $ (12,500) (4,535) $ 7,965 2,263 Fund balance (deficit) - January 1 20,972 18,709 I Fund balance (deficit) - December 31 $ 16,437 $ 20,972 I I I D I I I I I I 115 . ~ CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - CONSTRUCTION SEAL COATING Statement 30 C SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2008 With Comparative Actual Amounts For The Year Ended December 31,2007 C Variance with C Final Budget - Budgeted Amounts Positive 2007 Original Final Actual (Negative) Actual Revenues: C Charges for services $ 278,919 $ 278,919 $ 180,458 $ (98,461) $ 72,397 Investment income 10,000 10,000 14,270 4,270 20,491 Total revenues 288,919 288,919 194,728 (94,191) 92,888 C Expenditures: Current: D Public works 278,919 278,919 228,740 50,179 74,270 Net increase (decrease) in fund balance $ 10,000 $ 10,000 (34,012) $ (44,012) 18,618 Fund balance (deficit) - January 1 52,020 33,402 C Fund balance (deficit) - December 31 $ 18,008 $ 52,020 C C C C C C C C C C 116 C D I a INTERNAL SERVICE FUNDS D 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: I Central Equipment Maintenance - This fund accounts for the maintenance of the equipment for the City. B Risk Management - This fund accounts for the expenditures in payment of insurance deductibles, loss reduction, safety training and administrative expense. I I I I B I B I I I I I I 117 C CITY OF ANDOVER, MINNESOTA COMBINING STATEMENT OF NET ASSETS Statement 31 C INTERNAL SERVICE FUNDS December 31, 2008 With Comparative Totals for December 31,2007 ~ Central Intra Equipment Risk Activity Totals Maintenance Management Elimination 008 2007 C Assets Current assets: Cash and cash equivalents $ 8,461 $ 90,949 $ - $ 99,410 $ 100,194 C Accrued interest 165 948 - 1,113 757 Interfund receivable - 60,000 (60,000) - - Prepaid items 1,750 - - 1,750 1,750 Inventories - at cost 65,450 - - 65,450 66,875 ~ Total assets 75,826 151,897 (60,000) 167,723 169,576 Liabilities Current liabilities: ~ Interfund payable 60,000 - (60,000) - - al.I Accounts payable 21,192 1,068 - 22,260 20,156 Contracts payable - - - - 100 Due to other govermnental units - 100 - 100 - C Salaries payable 5,779 359 - 6,138 4,638 Total liabilities 86,971 1,527 (60,000) 28,498 24,894 Net assets C Unrestricted $ (11,145) $ 150,370 $ - $ 139,225 $ 144,682 ~ C C C C C C C C 118 C D D CITY OF ANDOVER, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENSES AND Statement 32 CHANGES IN FUND NET ASSETS INTERNAL SERVICE FUNDS D For The Year Ended December 31, 2008 With Comparative Totals For The Year Ended December 3 1,2007 D Central Equipment Risk Totals Maintenance Management 2008 2007 D Operating revenues: User charges $ 562,503 $ 245,889 $ 808,392 $ 783,128 Other 172 12,976 13,148 26,611 D Total operating revenues 562,675 258,865 821,540 809,739 Operating expenses: D Personal services 217,198 94,606 311,804 299,857 Supplies 285,623 1,177 286,800 290,400 Other service charges 39,206 194,934 234,140 288,054 D Total operating expenses 542,027 290,717 832,744 878,311 Operating income (loss) 20,648 (31,852) (11,204) (68,572) D Nonoperating revenues (expenses): Investment income 97 5,650 5,747 5,204 Change in net assets 20,745 (26,202) (5,457) (63,368) D Net assets - January 1 (31,890) 176,572 144,682 208,050 Net assets - December 31 $ (11,145) $ 150,370 $ 139,225 $ 144,682 D I D I I I I I I 119 CITY OF ANDOVER, MINNESOTA COMBINING STATEMENT OF CASH FLOWS Statement 33 INTERNAL SERVICE FUNDS For The Year Ended December 31, 2008 With Comparative Totals For The Year Ended December 31, 2007 Central Equipment Risk Totals Maintenance Management 2008 2007 Cash flows from operating activities: Q Receipts from customers and users $ 562,675 $ 258,865 $ 821,540 $ 809,739 Payment to suppliers (321,252) (196,159) (517,411) (578,190) Payment to employees (215,803) (94,501) (310,304) (298,793) Net cash flows from operating activities 25,620 (31,795) (6,175) (67,244) Cash flows from noncapital financing activities: Receipt of advances from other funds (20,000) - (20,000) 80,000 Payment of advances to other funds 20,000 20,000 (80,000) Net cash flows from noncapital financing activities (20,000) 20,000 - Cash flows from investing activities: Investment income (68) 5,459 5,391 5,233 Net increase in cash and cash equivalents 5,552 (6,336) (784) (62,011) Cash and cash equivalents - January 1 2,909 97,285 100,194 162,205 Cash and cash equivalents - December 31 $ 8,461 $ 90,949 $ 99,410 $ 100,194 Reconciliation of operating income to net cash provided (used) by operating activities: Operating income (loss) $ 20,648 $ (31,852) $ (11,204) $ (68,572) Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Changes in assets and liabilities: Decrease (increase) in prepaid items - - (670) Decrease (increase) in inventory 1,425 - 1,425 (4,839) Increase (decrease) in accounts payable 2,152 (48) 2,104 6,390 Increase (decrease) in contracts payable - (100) (100) - Increase (decrease) in due to other governmental units - 100 100 (617) Increase (decrease) in salaries payable 1,395 105 1,500 1,064 Total adjustments 4,972 57 5,029 1,328 Net cash provided by operating activities $ 25,620 $ (31,795) $ (6,175) _§____L67,244 u 120 0 a a AGENCYFUNDS 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. a a 121 CITY OF ANDOVER, MINNESOTA COMBINING STATEMENT OF NET ASSETS Statement 34 FIDUCIARY FUNDS December 31, 2008 General General y Escrow Agency Total Assets Cash and investments $ 36,087 $ 452,297 $ 488,384 Liabilities Accounts payable 27 10,973 11,000 Deposits payable 36,060 441,323 477,383 Total liabilities $ 36,087 $ 452,296 $ 488,383 Q 4 122 0 CITY OF ANDOVER, MINNESOTA COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES Statement 35 FIDUCIARY FUNDS For The Year Ended December 31, 2008 Balance Balance January 1, December 31, 2008 Additions Deletions 2008 General Escrow Fund Assets Cash and investments $ 16,742 $ 60,596 $ (41,250) $ 36,088 Liabilities Accounts payable - 20,202 (20,175) 27 Deposits payable 16,742 40,394 (21,075) 36,061 Total liabilities $ 16,742 $ 60,596 $ (41,250) $ 36,088 General Agency d Assets Cash and investments $ 266,314 $ 2,461,706 $ (2,275,723) $ 452,297 Accounts receivable - net 5,000 2,000 (7,000) Total assets $ 271,314 $ 2,463,706 $ (2,282,723) $ 452,297 Liabilities Accounts payable 3,650 1,082,112 (1,074,788) 10,974 Due to other governments 92 - (92) - Deposits payable 267,572 1,381,594 (1,207,843) 441,323 Total liabilities $ 271,314 $ 2,463,706 $ (2,282,723) $ 452,297 Total Fiduciary Funds Assets Cash and investments $ 283,056 $ 2,522,302 $ (2,316,973) $ 488,385 Accounts receivable - net 5,000 2,000 (7,000) - Total assets $ 288,056 $ 2,524,302 $ (2,323,973) $ 488,385 Liabilities Accounts payable 3,650 1,102,314 (1,094,963) 11,001 Due to other governments 92 - (92) - Deposits payable 284,314 1,421,988 (1,228,918) 477,384 Total liabilities $ 288,056 $ 2,524,302 $ (2,323,973) $ 488,385 123 c - This page intentionally left blank - a J a 0 124 Q o SUPPLEMENTARY FINANCIAL INFORMATION 1 ' 125 CITY OF ANDOVER, MINNESOTA COMBINED SCHEDULE OF INDEBTEDNESS December 31, 2008 Authorized a Issue Maturity Interest and Date Date Rate Issue GOVERNMENTAL ACTIVITIES: General Obligation Revenue Bonds: 2004 EDA Pub Fac Lease Revenue Bonds 4/23/2004 2/1/2014 2.215 - 5.400% $ 19,580,000 2006 EDA Pub Fac Lease Revenue Refunding Bonds 12/1/2006 2/1/2034 4.00 -4.50% 10,000,000 2007 EDA Pub Fac Lease Revenue Refunding Bonds 1/1/2007 2/1/2034 4.00 -4.50% 6,865,000 Total general obligation revenue bonds 36,445,000 Special Assessment Bonds: 2005A G.O. Improvement Bonds 4/28/2005 2/1/2013 2.95 -3.65% 3,560,000 Tax Increment Bonds: 2003B G.O. Tax Increment Refunding Bonds 6/1/2003 8/1/2010 2.00 -3.00% 1,530,000 2004B G.O. Tax Increment Refunding Bonds 3/16/2004 8/1/2010 2.00 -3.25% 4,260,000 Total tax increment bonds 5,790,000 Certificates of Indebtedness: 2005B G.O. Equipment Certificates 4/28/2005 2/1/2008 2.65 -3.10% 310,000 2006B G.O. Equipment Certificates 5/10/2006 2/1/2010 3.60 -3.65% 460,000 2007A G.O. Equipment Certificates 3/13/2007 2/1/2011 4.00% 760,000 2008 G.O. Equipment Certificates 9/23/2008 2/1/2012 3.50% 630,000 Total certificates of indebtedness 2,160,000 Capital Improvement Bonds: 2004A G.O. Capital Improvement Bonds 3/16/2004 2/1/2017 2.00 -3.75% 3,890,000 2005B G.O. Capital Improvement Bonds 4/28/2005 2/1/2009 2.65 -3.10% 340,000 Total capital improvement bonds 4,230,000 Permanent Improvement Revolving Bonds: 2003A Permanent Improvement Revolving Bonds 6/1/2003 2/1/2010 2.00 -2.60% 4,580,000 2006A Permanent Improvement Revolving Bonds 5/10/2006 2/1/2014 3.60 -3.85% 2,450,000 Total permanent improvement revolving bonds 7,030,000 State Aid Bonds: 2001B State Aid Street Bonds 6/5/2001 2/1/2017 2.90 -5.00% 2,755,000 Total Bonded Indebtedness 61,970,000 Compensated absences 504,893 Total governmental activities indebtedness 62,474,893 BUSINESS -TYPE ACTIVITIES: General Obligation Revenue Bonds: 2002 G.O. Water Revenue Bonds 5/9/2002 8/1/2012 2.30 -5.00% 9,780,000 2007B G.O. Water Revenue Refunding Bonds 3/13/2007 2/1/2023 4.00 -4.25% 6,570,000 Total general obligation revenue bonds 16,350,000 Compensated absences 107,333 Total business -type activities indebtedness 16,457,333 Total City indebtedness $ 78,932,226 126 O Exhibit 1 Principal Payments Prior Current Outstanding 2009 Payment Years Year 12/31/08 Principal Interest Total $ 370,000 $ 190,000 $ 19,020,000 $ 390,000 $ 944,806 $ 1,334,806 10,000,000 424,228 424,228 - 6,865,000 - 291,983 291,983 370,000 190,000 35,885,000 390,000 1,661,017 2,051,017 - 545,000 3,015,000 565,000 93,738 658,738 810,000 230,000 490,000 240,000 13,020 253,020 970,000 505,000 2,785,000 520,000 74,600 594,600 1,780,000 735,000 3,275,000 760,000 87,620 847,620 970,000 250,000 60,000 - - 145,000 315,000 155,000 8,649 163,649 - 180,000 580,000 185,000 19,500 204,500 630,000 150,000 16,240 166,240 250,000 385,000 1,525,000 490,000 44,389 534,389 595,000 255,000 3,040,000 265,000 95,580 360,580 110,000 115,000 115,000 115,000 1,783 116,783 705,000 370,000 3,155,000 380,000 97,363 477,363 2,195,000 770,000 1,615,000 795,000 30,463 825,463 - 310,000 2,140,000 325,000 74,031 399,031 2,195,000 1,080,000 3,755,000 1,120,000 104,494 1,224,494 840,000 155,000 1,760,000 160,000 78,582 238,582 6,140,000 3,460,000 52,370,000 3,865,000 2,167,203 6,032,203 _ - 504,893 - - 6,140,000 3,460,000 52,874,893 3,865 2,167,203 6,032,203 1,310,000 360,000 8,110,000 375,000 374,439 749,439 - 6,570,000 - 266,146 266,146 1,310,000 360,000 14,680,000 375,000 640,585 1,015,585 - 107,333 - - 1,310,000 360,000 14,787,333 375,000 640,585 1,015,585 $ 7,450,000 $ 3,820,000 $ 67,662,226 $ 4,240.000 $ 2,807,788 $ 7,047,788 127 CITY OF ANDOVER, MINNESOTA SCHEDULE OF TAX CAPACITY RATES AND LEVIES Exhibit 2 a Taxes Payable 2009 2008 Tax capacity values $ 31,446,280 $ 31,165,079 Captured tax increment value (2,343,333) (2,211,805) 0 Fiscal disparities - contribution (1,070,166) (989,404) Local taxable value 28,032,781 27,963,870 p Fiscal disparities - distribution 4,395,187 3,903,250 Adjusted tax capacity $ 32,427,968 $ 31,867,120 2009 2008 a Certified Tax Capacity Certified Tax Capacity Levy Rate Levy Rate General Revenue Levy: General Fund $ 6,844,236 $ 6,526,135 Capital Equipment/Projects 210,000 210,000 Parks Projects 59,410 57,680 Road and Bridge 1,151,136 1,107,341 Pedestrian Trail Maintenance 51,773 50,265 Total General Revenue Levy 8,316,555 25.755% 7,951,421 24.953% Debt Service Levy: 2004A G.O. Capital Improvement Bonds 378,609 374,934 2004 EDA Public Facility Revenue Bonds 980,914 934,203 2005B G.O. Capital Improvement Bonds - 122,622 2006B G.O. Equipment Certificate 171,066 171,832 2007A G.O. Equipment Certificate 221,340 235,806 2008 G.O. Equipment Certificate 179,895 165,000 2009 G.O. Equipment Certificate 147,241 - Total Debt Service Levy 2,079,065 6.426% 2,004,397 6.323% Lower Rum River Watershed 35,000 0.303% 35,000 0.309% Total 10,430,620 32.484% 9,990,818 31.585% Voter - Approved Open Space Referendum - MV 162,900 0.00551% 162,900 0.00555% $ 10,593,520 $ 10,153,718 !! 4 a 0 128 O CITY OF ANDOVER, MINNESOTA SCHEDULE OF DEFERRED TAX LEVIES Exhibit 3 GENERAL OBLIGATION BONDS December 31, 2008 Q Taxes Tax Increment Bonds Certificates of Indebtedness Payable 2003B 2004B Total 2006B 2007A 2008 Total Q 2009 $ 253,020 $ 594,600 $ 847,620 $ 162,920 $ 210,800 $ 170,800 $ 544,520 2010 257,500 590,812 848,312 - 208,000 171,410 379,410 2011 - 610,050 610,050 - 171,810 171,810 2012 _ 607,875 607,875 2013 599,588 599,588 $ 510,520 $3,002,925 $3,513,445 $ 162,920 $ 418,800 $ 514,020 $ 1,095,740 0 EDA Public Facility Lease Revenue Refunding Refunding Total a Taxes Capital Improvement Bonds Bonds Bonds Bonds Deferred Tax payable 2004A 2005B Total of 2004 of 2006 of 2007 Total Levies 2009 $ 360,580 $ 116,783 $ 477,363 $ 699,806 $ $ - $ 699,806 $ 2,569,309 2010 368,418 - 368,418 700,684 - - 700,684 2,296,824 2011 375,143 375,143 694,891 694,891 1,851,894 2012 385,993 - 385,993 697,456 - 697,456 1,691,324 2013 390,905 - 390,905 693,534 - - 693,534 1,684,027 2014 404,596 _ 404,596 269,373 212,114 145,991 627,478 1,032,074 2015 417,000 417,000 371,528 258,483 630,011 1,047,011 2016 423,050 - 423,050 372,828 259,283 632,111 1,055,161 2017 427,875 - 427,875 369,589 260,323 629,912 1,057,787 a 2018 - - = 369,064 259,773 628,837 628,837 2019 368,628 264,183 632,811 632,811 2020 - 372,525 258,214 630,739 630,739 2021 - - 366,328 262,249 628,577 628,577 2022 - _ - 369,921 256,145 626,066 626,066 2023 370,234 253,020 623,254 623,254 2024 365,207 264,423 629,630 629,630 2025 - - 367,812 257,461 625,273 625,273 2026 - - 364,346 261,447 625,793 625,793 2027 _ _ _ 363,444 261,889 625,333 625,333 2028 359,127 264,770 623,897 623,897 2029 - - 362,690 259,468 622,158 622,158 2030 - - - 363,030 262,191 625,221 625,221 2031 - _ _ _ 359,379 262,286 621,665 621,665 2032 362,592 258,641 621,233 621,233 2033 - - 362,313 262,667 624,980 624,980 2034 - - - 563,660 391,111 954,771 954,771 $3,553,560 $ 116,783 $3,670,343 $3,755,744 $7,736,359 $5,484,018 $ 16,976,121 $ 25,255,649 129 CITY OF ANDOVER, MINNESOTA SCHEDULE OF FUND TRANSFERS Exhibit 4 December 31, 2008 Transfer Transfer a In Out General Fund Water Fund EF $ 145,874 $ - General Fund Admin Allocation Sewer Fund EF 45,320 - General Fund Admin Allocation Total General Fund 191,194 - Special Revenue Funds (SRF) Community Center SRF Lease Revenue Bonds - Community Center DSF - 210,178 Debt Service Allocation Capital Equipment Reserve SRF Park Dedication CPF - 75,000 Andover Station North Building Total Special Revenue Funds - 285,178 Debt Service Funds (DSF) a 2003A PIR DSF Permanent Improvement Revolving CPF 785,000 - Debt Service Allocation 2004 EDA Public Facility Lease Revenue Bond DSF Lease Revenue Bonds - Community Center SRF 210,178 - Debt Service Allocation 2005B G.O. Equipment Certificate DSF Building Fund CPF - 15,648 Close Fund 2006A PIR DSF Permanent Improvement Revolving CPF 380,000 - Debt Service Allocation 2006B G.O. Capital Note DSF Storm Sewer Fund EF 10,000 - Debt Service Allocation Total Debt Service Funds 1,385,178 15,648 Capital Proiects Funds (CPF) Water Trunk Fund CPF Water Fund EF - 163,469 Debt Service Allocation Sewer Trunk Fund CPF Sewer Fund EF 350,000 - Replacement Reserve Park Dedication CPF Capital Equipment Reserve SRF 75,000 - Andover Station North Building Building Fund CPF a 2005B G.O. Equipment Certificate DSF 15,648 - Close Fund Permanent Improvement Revolving CPF a 2003A PIR DSF - 785,000 Debt Service Allocation 2006A PIR DSF - 380,000 Debt Service Allocation 1,165,000 Total Capital Projects Funds $ 440,648 $ 1,328,469 a 0 130 a CITY OF ANDOVER, MINNESOTA SCHEDULE OF FUND TRANSFERS Exhibit 4 Continued December 31, 2008 Transfer Transfer In Out Q Enterprise Funds (EF) - Water Fund EF Water Trunk Fund CPF 163,469 Debt Service Allocation General Fund - 145,874 General Fund Admin Allocation Q 163,469 145,874 Sewer Fund EF General Fund 45,320 General Fund Admin Allocation Sewer Trunk Fund CPF - 350,000 Replacement Reserve 8 = 395 Storm Sewer Fund EF 2006B G.O. Capital Note DSF 10,000 Debt Service Allocation Total Enterprise Funds 163,469 551,194 Total All Funds $ 2,180,489 $ 2,180,489 0 a a v 0 m v v 131 a o a - This page intentionally left blank - r 132 0 0 0 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 134 These tables contain trend information to help the reader understand how the City's financial performance and well -being have changed over time. Revenue Capacity 139 These tables contain information to help the reader assess the City's most significant local revenue source, the property tax. Debt Capacity 145 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. Demographic and Economic Information 150 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 Information 152 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. 133 CITY OF ANDOVER, MINNESOTA NET ASSETS BY COMPONENT Table 1 Last Five Fiscal Years (accrual basis of accounting) 2004 2005 2006 2007 2008 Governmental Activities Invested in capital assets, net of related debt $ 52,230,713 $ 67,652,236 $ 74,858,759 $ 77,285,905 $ 79,644,769 Restricted 17,182,422 6,565,168 14,838,788 24,271,706 24,769,079 Unrestricted 19,617,813 19,740,176 9,064,042 4,786,886 3,480,169 Total governmental activities net assets 89,030,948 93,957,580 98,761,589 106,344,497 107,894,017 Business -Type Activities Invested in capital assets, net of related debt 35,111,309 35,588,013 38,419,302 38,580,630 37,606,052 Unrestricted 3,197,522 3,032,746 3,281,875 3,659,887 4,005,471 Total business -type activities net assets 38,308,831 38,620,759 41,701,177 42,240,517 41,611,523 Primary Government Invested in capital assets, net of related debt 87,342,022 103,240,249 113,278,061 115,866,535 117,250,821 Restricted 17,182,422 6,565,168 14,838,788 24,271,706 24,769,079 a Unrestricted 22,815,335 22,772,922 12,345,917 8,446,773 7,485,640 Total primary government net assets $ 127,339,779 $ 132,578,339 $ 140,462,766 $ 148,585,014 $ 149,505,540 a Note: The City began to report accrual information when it implemented GASB 34 in 2002. a 0 a 0 134 CITY OF ANDOVER, MINNESOTA CHANGES IN NET ASSETS Table 2 Last Five Fiscal Years (accrual basis of accounting) 2004 2005 2006 2007 2008 Expenses Governmental activities: General government $ 2,265,215 $ 2,432,433 $ 2,637,584 $ 2,509,011 $ 2,505,105 Public safety 3,138,069 3,353,798 3,443,285 3,851,086 4,035,884 Public works 5,268,813 3,937,423 3,031,459 3,783,509 5,144,197 Sanitation 26,843 Parks and recreation 2,028,177 1,575,582 2,442,305 2,954,753 2,963,218 Recycling 113,234 118,599 91,378 94,929 85,397 Economic development 941,624 459,635 626,103 2,265,605 540,285 Interest on long -term debt 1,708,303 1,797,469 1,668,444 2,303,567 2,219,130 Total governmental activities expenses 15,490,278 13,674,939 13,940,558 17,762,460 17,493,216 Business -type activities: Water 1,956,995 2,160,502 2,232,144 2,587,847 2,563,781 Sewer 1,351,506 1,555,010 1,585,548 1,631,224 1,794,891 Storm sewer 389,290 400,114 408,003 537,151 521,975 Total business -type activities expenses 3,697,791 4,115,626 4,225,695 4,756,222 4,880,647 Total primary government expenses 19,188,069 17,790,565 18,166,253 22,518,682 22,373,863 Program Revenues Governmental activities: Charges for services: General government 814,518 709,538 471,573 785,600 647,081 Public safety 936,061 1,001,912 804,447 662,299 721,289 Public works 495,835 379,890 325,672 408,656 427,043 Parks and recreation 29,683 461,679 749,407 859,531 1,049,032 Recycling 29,062 32,810 35,379 33,158 35,897 Economic development - - 218,605 182,535 199,840 Operating grants and contributions 1,640,389 2,535,140 959,286 1,129,099 917,618 Capital grants and contributions 7,010,826 3,934,686 4,920,694 8,794,164 1,069,607 Total governmental activities program revenue 10,956,374 9,055,655 8,485,063 12,855,042 5,067,407 Business -type activities: Charges for services: Water 1,723,068 1,510,119 1,768,388 2,025,452 1,987,432 Sewer 1,361,839 1,550,745 1,691,728 1,771,670 1,869,327 Storm sewer 242,090 248,753 287,397 288,372 297,125 Capital grants and contributions 214,920 823,797 2,761,282 158,113 142,133 Total business -type activities program revenue 3,541,917 4,133,414 6,508,795 4,243,607 4,296,017 Total primary government program revenues 14,498,291 13,189,069 14,993,858 17,098,649 9,363,424 Net (Expense)/Revenue Governmental activities (4,533,904) (4,619,284) (5,455,495) (4,907,418) (12,425,809) Business -type activities (155,874) 17,788 2,283,100 (512,615 (584,630) Total primary government net expense $ (4,689,778) $ (4,601,496) $ (3,172,395) $ (5,420,033) $ (13,010,439) 135 a CITY OF ANDOVER, MINNESOTA CHANGES IN NET ASSETS Table 2 a Last Five Fiscal Years (Continued) (accrual basis of accounting) 2004 2005 2006 2007 2008 General Revenues and Other Changes in Net Assets Governmental activities: Taxes General property taxes $ 6,260,772 $ 7,066,852 $ 8,084,559 $ 8,897,755 $ 9,752,701 Tax increment collections 1,186,396 1,285,195 1,562,131 1,661,204 1,783,270 Unrestricted grants and contributions 141,870 86,906 77,642 486,626 274,402 Unrestricted investment earnings 681,563 690,648 1,019,304 1,967,583 1,514,012 Gain on sale of capital assets 1,817,938 251,504 219,910 191,735 234,070 Transfers (1,735,251) (438,426) (704,042) (714,577) 416,874 Total governmental activities 8,353,288 8,942,679 10,259,504 12,490,326 13,975,329 a Business -type activities: Unrestricted investment earnings 7,895 47,620 87,376 337,378 372,510 Gain on sale of capital assets 6,854 - 5,900 - - Transfers 1,735,251 438,426 704,042 714,577 (416,874) Total business -type activities 1,750,000 486,046 797,318 1,051,955 (44,364) a Total primary government 10,103,288 9,428,725 11,056,822 13,542,281 13,930,965 Change in Net Assets Governmental activities 3,819,384 4,323,395 4,804,009 7,582,908 1,549,520 Business -type activities 1,594,126 503,834 3,080,418 539,340 (628,994) Total primary government $ 5,413,510 $ 4,827,229 $ 7,884,427 $ 8,122,248 $ 920,526 Note: The City began to report accrual information when it implemented GASB 34 in 2002. a 0 Q 0 136 CITY OF ANDOVER, MINNESOTA FUND BALANCES - GOVERNMENTAL FUNDS Table 3 Last Five Fiscal Years (modified accrual basis of accounting) 2004 2005 2006 2007 2008 General Fund Reserved $ 85,586 $ 126,320 $ 144,496 $ 208,216 $ 193,805 Unreserved 3,216,979 3,076,157 3,248,317 3,682,244 3,981,230 Total general fund 3,302,565 3,202,477 3,392,813 3,890,460 4,175,035 All Other Governmental Funds Reserved for: Special revenue funds 35,783 58,570 46,849 12,457 17,206 Debt service funds 5,934,346 1,872,599 11,342,527 Ill 21,359,062 Capital project funds 7,293,690 1,335,858 633,078 735,141 604,494 Unreserved reported in: Designated: Special revenue funds 1,927,381 1,262,882 1,569,792 1,685,045 1,540,720 Capital project funds 15,213,110 15,018,317 14,433,934 12,011,083 13,483,426 Undesignated: Special revenue funds 24,148 1,487 (323,404) (480,592) (599,461) Capital project funds (230,160) (491,849) (54,174) (55,945) (67,297) Total all other governmental funds 30,198,298 19,057,864 27,648,602 35,266,251 35,111,691 Total governmental funds $ 33,500,863 $ 22,260,341 $ 31,041,415 $ 39,156,711 $ 39,286,726 Note: (D 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. (Zl 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. 137 CITY OF ANDOVER, MINNESOTA CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS Table 4 Last Five Fiscal Years (modified accrual basis of accounting) 2004 2005 2006 2007 2008 Revenues General property taxes $ 6,272,762 $ 7,033,613 $ 8,057,592 $ 8,833,249 $ 9,695,103 Tax increment collections 1,193,467 1,285,639 1,546,394 1,659,222 1,762,119 Licences and permits 674,008 724,436 598,094 475,893 525,339 Intergovernmental 1,755,041 2,663,683 2,661,726 1,644,914 1,175,205 Special assessments 4,243,328 2,045,969 1,289,590 3,342,039 1,638,006 Charges for services 1,389,245 1,692,316 1,770,156 2,035,735 1,724,052 Fines 79,450 90,530 91,490 101,445 104,930 Investment income 678,308 684,173 1,014,801 1,962,379 1,508,265 Miscellaneous Park dedication fees 842,042 286,316 626,567 113,013 133,585 Connection charges 1,720,520 1,311,426 372,133 829,624 254,903 Other 658,037 578,389 395,789 621,798 800,857 Total Revenues 19,506,208 18,396,490 18,424,332 21,619,311 19,322,364 Expenditures a General government 2,171,248 2,349,965 2,343,332 2,399,297 2,366,574 Public safety 2,915,958 3,093,298 3,268,236 3,580,240 3,796,965 Public works 4,944,489 3,650,351 2,817,475 3,491,353 4,843,288 Sanitation 26,732 - - - - Parks and recreation 1,315,100 1,309,987 1,599,885 1,825,706 1,953,822 Recycling 114,052 116,506 90,590 94,669 86,631 Economic development 918,451 426,708 626,103 2,265,605 538,293 Unallocated 21,992 9,798 8,454 6,915 17,999 Capital outlay 1,420,387 1,616,709 987,075 2,803,485 1,460,662 Debt service Principal 6,839,000 8,487,000 5,254,000 3,275,000 3,460,000 Interest 1,063,363 2,042,003 1,683,599 2,089,857 2,253,223 Other 94,869 13,226 253,134 167,187 15,645 Construction/acquisitioncosts 12,154,653 11,146,387 4,579,910 360,742 - Total expenditures 34,000,294 34,261,938 23,511,793 22,360,056 20,793,102 Excess (deficiency) of revenues over expenses (14,494,086) (15,865,448) (5,087,461) (740,745) (1,470,738) Other Financing Sources (Uses) Transfers in 1,076,000 224,000 522,000 578,925 580,343 Transfers out (739,438) - (167,424) (57,671) (163,469) Bonds issued 21,280,000 4,210,000 2,910,000 760,000 630,000 Refunding bonds issued 6,450,000 - 10,000,000 6,865,000 - Payment to refunded bonds escrow agent (2,145,864) - - - - Bond premium 23,438 - - 3,401 - Bond discount (497,883) (28,961) - - - Proceeds from the sale of capital assets 2,872,654 219,887 603,959 706,386 553,879 Total other financing sources (uses) 28,318,907 4,624,926 13,868,535 8,856,041 1,600,753 Net change in fund balances $ 13,824,821 $ (11,240,522) $ 8,781,074 $ 8,115,296 $ 130,015 Debt service as a percentage of noncapital expenditures 39.15% 49.04% 40.07% 28.82% 29.63% a 138 0 CITY OF ANDOVER, MINNESOTA ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY Table 5 Last Ten Fiscal Years Q Real Property Personal Property Total Total Net Tax Capacity Taxable Net Tax Taxable Net Tax . Taxable Net Tax Direct as a Percentage Year Market Value Capacity Market Value Capacity Market Value Capacity Tax Rate of Market Value 1999 $1,051,879,200 n/a $17,547,300 n/a $1,069,426,500 $14,605,633 23.508% n/a 2000 1,171,553,600 $ 15,690,055 18,139,600 $ 615,830 1,189,693,200 16,305,885 22.735% 1.37% 2001 1,354,146,000 18,348,662 18,285,500 620,797 1,372,431,500 18,969,459 22.736% 1.38% 2002 1,539,835,500 15,336,075 17,999,800 359,540 1,557,835,300 15,695,615 33.511% 1.01% 2003 1,886,169,900 17,549,064 20,202,300 402,840 1,906,372,200 17,951,904 33.376% 0.94% 2004 2,059,947,400 20,142,088 20,761,100 414,016 2,080,708,500 20,556,104 31.584% 0.99% 2005 2,321,605,300 23,027,376 21,718,900 433,669 2,343,324,200 23,461,045 31.414% 1.00% 2006 2,603,704,500 26,204,279 22,003,500 439,356 2,625,708,000 26,643,635 31.556% 1.01% 2007 2,800,462,600 28,897,916 21,998,500 439,246 2,875,150,800 29,337,162 31.003% 1.02% 2008 2,969,639,300 30,749,076 20,837,800 416,000 3,046,838,900 31,165,076 31.276% 1.02% Source: Anoka County Property Tax Division 139 CITY OF ANDOVER, MINNESOTA PROPERTY TAX RATES - PER $1,000 OF ASSESSED TAX CAPACITY VALUE Table 6 D DIRECT AND OVERLAPPING GOVERNMENTS Years 2000 through 2009 Taxes Direct Overlapping Governments Payable City (1) School County Other Total Total 2000 22.735 55.589 30.861 3.134 89.584 112.319 2001 22.736 50.230 28.859 2.850 81.939 104.675 2002 33.511 29.070 37.976 3.745 70.791 104.302 a 2003 33.376 27.802 37.714 3.755 69.271 102.647 2004 31.584 21.218 35.340 3.482 60.040 91.624 2005 31.414 21.492 33.080 4.021 58.593 90.007 2006 31.556 20.046 32.096 3.755 55.897 87.453 2007 31.003 19.337 30.675 3.671 53.683 84.686 2008 31.414 16.962 31.041 4.604 52.607 84.021 2009 32.049 18.247 32.051 3.251 53.549 85.598 Q Source: Anoka County Property Tax Division Note: (1) Includes the Lower Rum River Watershed a a a a a 0 140 CITY OF ANDOVER, MINNESOTA PROPERTY TAX LEVIES AND COLLECTIONS Table 7 Last Five Fiscal Years 0 Collected Within the Fiscal Year of Levy Total Market Value Collections In Total Collections to Date Tax Tax Homestead Total Percentage Subsequent Percentage Year Levy Levy Credit Collected of Levy Years Amount of Levy 2004 $ 6,781,700 $ 6,184,626 $ 57,934 S 6,242,560 92.05% $ 56,875 $ 6,299,435 92.89% 2005 7,556,813 6,973,307 13,179 6,986,486 92.45% 79,399 7,065,885 93.50% 2006 8,550,919 7,977,279 1,700 7,978,979 93.31% 79,450 8,058,428 94.24% 2007 9,316,427 8,738,606 410,519 9,149,125 98.20% 110,593 9,259,718 99.39% 2008 10,153,718 9,554,130 198,214 * 9,752,344 96.05% Not Available e * 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 of Andover. O 141 CITY OF ANDOVER, MINNESOTA PRINCIPAL TAXPAYERS Table 8 Current Year and Twelve Years Ago 2008 1997 Net Percentage of Net Percentage of Tax Total City Tax Total City Taxpayers Capacity Rank Tax Capacity Capacity Rank Tax Capacity Connexus Energy $ 226,488 1 0.71% $ 364,462 1 2.03% a Target Corporation 221,656 2 0.70% - - Andover Limited Partnership 169,706 3 0.53% 228,823 2 1.27% Presbyterian Homes of Andover 164,899 4 0.52% - - 116 LLC 141,966 5 0.45% - - Minnegasco, Inc. 137,886 6 0.43% 137,038 3 0.76% Andover Station LLC 109,680 7 0.34% - - BDT Holdings LLC 109,416 8 0.34% n Grey Oaks Inc. 100,798 9 0.32% - - - t Great River Energy 98,944 10 0.31 % - 57,740 7 0.32% Individual - Residential - - 76,481 4 0.43% Xcel Energy - 75,468 5 0.42% Minnesota Pipe Line Company - - 63,616 6 0.35% Individual - Restaurant - - 49,289 8 0.27% MN Interstate Pipeline - - 46,097 9 0.26% Kottke Bus Service, Inc. - - 41,499 10 0.23% a Total $ 1,481,439 4.65% $ 1,140,513 6.35% Net Tax Capacity $ 31,867,123 $ 17,951,904 Source: Anoka County Property Tax Division 0 a a 142 CITY OF ANDOVER, MINNESOTA ESTIMATED MARKET VALUES AND NEW CONSTRUCTION Table 9 Last Ten Fiscal Years Estimated Market Values New Construction Commercial / Commercial / Industrial Residential Year Industrial (1) Residential Total Permits Value Permits Value 1999 $ 73,940,400 $ 995,486,100 $ 1,069,426,500 5 $ 1,404,084 411 $ 47,763,200 2000 82,616,300 1,107,076,900 1,189,693,200 14 12,672,448 342 46,322,000 2001 95,215,200 1,277,216,300 1,372,431,500 8 21,086,481 285 43,378,128 2002 107,671,600 1,450,163,700 1,557,835,300 19 10,616,851 218 31,848,000 2003 127,728,400 1,778,643,800 1,906,372,200 13 4,764,046 182 28,973,300 2004 144,629,100 1,936,079,400 2,080,708,500 16 19,926,817 251 36,224,546 2005 168,684,200 2,174,640,000 2,343,324,200 20 6,571,671 226 34,309,393 2006 191,931,800 2,433,776,200 2,625,708,000 8 1,791,896 153 25,236,120 2007 211,760,900 2,663,389,900 2,875,150,800 9 2,403,831 91 18,347,873 2008 233,801,700 2,813,037,200 3,046,838,900 11 16,878,603 49 11,116,400 Note: (1) also includes agricultural, public utility, railroad operating property, and personal properb 143 CITY OF ANDOVER, MINNESOTA SPECIAL ASSESSMENT LEVIES AND COLLECTIONS Table 10 Last Ten Fiscal Years u Total Delinquent Collections Assessments Current Current Percent of Delinquent Total as a Percent of Outstanding as a Percent of Assessments Assessments Assessments Assessment Assessment Current Delinquent Current a Year Due (1) Collected Collected Collections Collections Assessments Due Assessments Assessments Due 1999 $ 472,647 $ 444,080 93.96% $ 38,568 $ 482,648 102.12% $ 71,489 15.13% 2000 433,242 424,854 98.06% 36,374 461,228 106.46% 15,871 3.66% 2001 432,207 410,380 94.95% 5,933 416,313 96.32% 26,264 6.08% 2002 328,831 307,051 93.38% 5,694 312,745 95.11% 37,404 11.37% 2003 533,340 522,851 98.03% 5,917 528,768 99.14% 49,329 9.25% Q 2004 192,373 189,279 98.39% 7,921 197,200 102.51% 15,157 7.88% 2005 178,434 175,471 98.34% 4,002 179,473 100.58% 22,217 12.45% 2006 225,365 192,477 85.41% 4,790 197,267 87.53% 51,721 22.95% 2007 163,817 142,750 87.14% 12,460 155,210 94.75% 76,420 46.65% 2008 366,203 330,304 90.20% 1,479 331,783 90.60% 174,809 47.74% Note: (1) Only includes assessments certified to Anoka County. Q 144 CITY OF ANDOVER, MINNESOTA RATIO OF NET BONDED DEBT Table 11 TO ASSESSED VALUE AND NET BONDED DEBT PER CAPITA Last Ten Fiscal Years General Bonded Debt Outstanding (2) Gross Less Debt Net Percentage Net Bonded Fiscal Taxable Bonded Service Bonded of Estimated Debt Year Population (1) Market Value Debt Fund Debt Market Value Per Capita 1999 24,358 $ 1,069,426,500 $ 3,500,000 $ (123,675) $ 3,376,325 0.32% $ 138.61 2000 26,588 1,189,693,200 3,280,000 (48,001) 3,231,999 0.27% 121.56 2001 27,446 1,372,431,500 4,210,000 (94,728) 4,115,272 0.30% 149.94 2002 28,664 1,557,835,300 3,680,000 (112,848) 3,567,152 0.23% 124.45 2003 28,939 1,906,372,200 3,710,000 (88,875) 3,621,125 0.19% 125.13 2004 29,262 2,080,708,500 24,236,000 (815,322) 23,420,678 * 1.13% 800.38 2005 30,080 2,343,324,500 24,389,000 (1,041,140) 23,347,860 1.00% 776.19 2006 30,222 2,625,708,000 33,850,000 (10,739,510) 23,110,490 0.88% 764.69 2007 30,263 2,875,150,800 40,880,000 (17,822,418) 23,057,582 0.80% 761.91 e 2008 30,750 3,046,838,900 40,565,000 (17,939,959) 22,625,041 0.74% 735.77 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. 145 CITY OF ANDOVER, MINNESOTA COMPUTATION OF DIRECT AND OVERLAPPING DEBT Table 12 December 31, 2008 Gross General Obligation Percentage Net Amount Bonded Debt Applicable Applicable Outstanding to City to City Direct: City of Andover $ 40,565,000 (1) 100.0000% $ 40,565,000 Q Overlapping: Anoka County $ 136,775,000 (2) 8.9805% 12,283,147 ISD No. 11 Anoka - Hennepin 124,306,689 (2) 12.8285% 15,946,682 0 ISD No. 15 St. Francis 43,265,000 (2) 6.9699% 3,015,507 Metropolitan Council 157,950,000 (2) 0.8867% 1,400,471 Total Overlapping Debt 32,645,807 Total Overlapping and Direct Debt $ 73,210,807 Notes: (1) Only includes debt supported by tax levy. (2) Information obtained from Anoka County. Q a 0 c a a 0 Q 146 CITY OF ANDOVER, MINNESOTA COMPUTATION OF LEGAL DEBT MARGIN Table 13 Last Five Fiscal Years 2004 2005 2006 2007 2008 Estimated Taxable Market Value $ 1,966,284,300 $ 2,244,286,800 $ 2,543,591,200 $ 2,800,462,600 $ 2,969,639,300 Q Debt limitation Debt limit percent 2% 2% 2% 2% 3% Debt limit in dollars 39,325,686 44,885,736 50,871,824 56,009,252 89,089,179 Debt applicable to limit: Total bonded debt 56,941,000 52,344,000 59,665,000 70,240,000 67,050,000 Q Less: Nonapplicable debt G.O. water revenue bonds (9,470,000) (9,150,000) (8,815,000) (15,040,000) (14,680,000) Special assessment bonds (3,560,000) (3,560,000) (3,560,000) (3,015,000) Tax increment bonds (13,215,000) (7,065,000) (4,715,000) (4,010,000) (3,275,000) Permanent improvement revolving bonds (7,680,000) (5,975,000) (6,660,000) (4,835,000) (3,755,000) State aid bonds (2,340,000) (2,205,000) (2,065,000) (1,915,000) (1,760,000) Less: Cash and investments in related debt service funds (815,322) (1,041,140) (10,739,510) (17,822,418) (17,939,959) Total debt applicable to limitation 23,420,678 23,347,860 23,110,490 23,057,582 22,625,041 Legal debt margin $ 15,905,008 $ 21,537,876 $ 27,761,334 $ 32,951,670 $ 66,464,138 Total debt applicable to the limit as Q a percentage of debt limit 59.56% 52.02% 45.43% 41.17% 25.40% D D D 0 a 147 i� CITY OF ANDOVER, MINNESOTA PLEDGED - REVENUE COVERAGE Table 14 Last Five Fiscal Years 2002 G.O. Water Revenue Bonds Water Enterprise Fund Less: Net Fiscal Operating Operating Transfers Available Debt Service Year Revenues Expenses (1) In (2) Revenue Principal Interest Coverage 2004 $ 1,723,068 $ 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 1,768,388 1,139,500 167,474 796,362 335,000 411,720 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 2004 EDA Public Facility Lease Revenue Bonds (3) O Community Center Special Revenue Fund Debt Service Less: Net General Fiscal Operating Operating Available Property Tax Debt Service Year Revenue Expenses Revenue Revenue Principal Interest Coverage 2005 $ 522,839 $ 589,900 $ (67,061) $ 748,376 $ - $ 1,194,167 0.57 2006 741,241 748,146 (6,905) 800,349 185,000 964,102 0.69 2007 876,136 799,909 76,227 844,123 185,000 959,731 0.80 2008 998,287 900,228 98,059 890,709 190,000 954,381 0.86 Special Assessment and Permanent Improvement Revolving Special Fiscal Assessment Debt Service Year Collections Principal Interest Coverage 2004 $ 4,243,328 $ 2,210,000 $ 283,657 1.70 2005 2,045,969 1,705,000 192,153 1.08 2006 1,289,590 1,765,000 289,174 0.63 2007 3,342,039 1,825,000 314,152 1.56 2008 1,638,006 1,625,000 243,340 0.88 Tax Increment Financing Bonds Tax Fiscal Increment Debt Service Year Revenue Principal (4) Interest Coverage 2004 $ 1,072,852 $ 675,000 $ 450,139 0.95 2005 1,160,190 1,975,000 419,220 0.48 2006 1,414,254 2,350,000 193,045 0.56 2007 1,474,219 705,000 120,545 1.79 2008 1,614,651 (5) 735,000 105,033 1.92 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 start in 2008. Future YMCA lease payments will significantly reduce the City's obligation on debt service payments. w (4) Net of crossover refundings. (5) Starting in 2008, all tax increment revenues will now be receipted in the Tax Increment Projects Capital Projects Fund and transferred over as needed to make the debt service payments. In 2008, the debt service fund had sufficient funds to make its debt service payment. 148 0 CITY OF ANDOVER, MINNESOTA OUTSTANDING DEBT BY TYPE Table 15 Last Five Fiscal Years 2004 2005 2006 2007 2008 City of Andover's Outstanding Debt Governmental activities G.O. revenue bonds $ 19,580,000 $ 19,580,000 $ 29,395,000 $ 36,075,000 $ 35,885,000 Special assessment bonds - 3,560,000 3,560,000 3,560,000 3,015,000 Tax increment bonds 13,215,000 7,065,000 4,715,000 4,010,000 3,275,000 Certificates of indebtedness 766,000 699,000 580,000 1,280,000 1,525,000 Capital improvement bonds 3,890,000 4,110,000 3,875,000 3,525,000 3,155,000 Permanent improvement revolving bonds 7,680,000 5,975,000 6,660,000 4,835,000 3,755,000 State aid bonds 2,340,000 2,205,000 2,065,000 1,915,000 1,760,000 a Compensated absences 359,355 410,402 459,299 509,851 504,893 Total governmental activities 47,830,355 43,604,402 51,309,299 55,709,851 52,874,893 Business -type activities G.O. revenue bonds 9,470,000 9,150,000 8,815,000 15,040,000 14,680,000 Compensated absences 65,234 66,816 74,675 90,228 107,333 Total business -type activities 9,535,234 9,216,816 8,889,675 15,130,228 14,787,333 Total outstanding debt $ 57,365,589 $ 52,821,218 $ 60,198,974 $ 70,840,079 $ 67,662,226 D Total outstanding debt as a percentage of personal income 7.74% 6.41% 7.06% 8.05% 7.76% Total outstanding debt per capita $ 1,960 $ 1,756 $ 1,992 $ 2,341 $ 2,200 149 CITY OF ANDOVER, MINNESOTA DEMOGRAPHIC AND ECONOMIC STATISTICS Table 16 Last Five Years City of Andover Anoka County Personal Personal Per Capita Unemployment Year Population Income (2) Population (3) Income (2) Income (3 ) Percentage 2004 29,262 $ 741,235,722 316,778 $ 8,024,303,518 $ 25,331 4.5% 2005 30,080 824,041,600 320,803 8,788,398,185 27,395 3.8% 2006 30,222 852,769,641 327,005 9,227,051,034 28,217 3.9% 2007 30,263 879,544,327 326,252 9,481,977,859 29,063 4.5% 2008 30,750 (1) 872,285,250 331,246 9,396,455,282 28,367 6.9% Notes: (1) Estimates from Metropolitan Council (2) The personal income is calculated by taking the per capita income of Anoka County and multiplying it by the population for both the City and County. (3) Information from U.S. Census Bureau 150 CITY OF ANDOVER, MINNESOTA PRINCIPAL EMPLOYERS Table 17 Current Year and Twelve Years Ago 2008 1997 Percentage Percentage of Total City of Total City Taxpayer Employees Rank Employment Employees Rank Employment Anoka Hennepin I.S.D. No. 11 574 1 31.9% 266 1 26.8% Bunker Hills Regional Park/Activity Center 237 2 13.2% - 0.0% Kottkes' Bus Service, Inc. 200 ( 3 11.1% 190 2 19.2% Target 167 4 9.3% Anoka County Highway Department 141 5 7.8% 110 4 11.1% Columbia Park Medical Group - Andover 107 6 5.9% - - Meadow Creek Christian School 100 7 5.5% 75 6 7.6% Festival Foods 97 8 5.4% 120 3 12.1% Farmstead at Andover 94 9 5.2% City of Andover 85 10 4.7% - Merwin Drug Company - 86 5 8.7% POV's Sports Bar & Grill = 55 7 5.5% Ed Fields & Sons, Inc. 50 8 5.0% City of Andover - - - 40 9 4.0% a Total 1,802 100.0% 992 100.0% Source: Minnesota Department of Employment and Economic Development D (1) Number of employees as of March, 2006 151 I CITY OF ANDOVER, MINNESOTA FULL TIME EQUIVALENT EMPLOYEES Table 18 CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM Last Five Fiscal Years Function/Program 2004 2005 2006 2007 2008 Governmental p Administration 1.34 1.47 1.30 1.45 1.15 Human resources 0.06 0.06 0.07 0.02 0.01 City clerk 1.84 1.84 1.84 1.91 1.43 Elections 0.10 0.10 0.10 0.10 0.08 t�l Financial administration 3.72 2.99 2.85 2.35 1.97 Information systems 1.01 0.91 0.91 0.91 0.91 Planning and zoning 3.57 4.57 4.75 4.75 4.25 Engineering 4.57 4.67 4.57 4.78 4.41 EDA general 1.38 1.21 0.70 0.70 0.85 LRRWMO 0.31 0.21 0.21 0.21 0.21 Risk management 0.13 0.13 0.10 0.10 0.10 W Public Safety Fire 3.31 3.25 3.10 3.10 3.10 Protective inspection 5.91 5.58 6.03 6.08 5.78 Civil defense 0.05 0.05 0.05 0.05 0.05 Public Works a Streets and highways 5.02 5.35 6.12 6.20 6.00 Snow and ice 3.85 3.92 3.27 3.49 3.21 Street signs 1.17 1.20 1.35 1.44 1.41 a Tree preservation 0.12 - - - - Weed control 0.17 - - - - Forestry 0.10 0.10 0.10 - - ROW management / utility 0.75 0.85 0.85 0.60 0.65 Water 4.93 5.04 5.57 4.78 4.84 Sewer 2.77 3.15 2.97 3.18 3.24 Storm sewer 1.60 1.60 2.01 1.95 2.20 Central equipment 2.90 2.91 2.92 2.96 2.96 Park & Recreation Park and recreation 6.66 6.85 7.33 7.05 6.85 Community center - 2.10 2.12 2.12 2.23 Recycling 1.21 1.26 0.93 0.88 0.86 58.55 61.37 62.12 61.16 58.75 Source: City Finance Department Note: Employees are allocated to various departments based on the functions that they perform. 152 i CITY OF ANDOVER, MINNESOTA OPERATING INDICATORS BY FUNCTION/PROGRAM Table 19 Last Five Years Function/Program 2004 2005 2006 2007 2008 General government Registered voters 16,094 n/a 16,813 n/a 17,830 Voters registering election day 2,000 n/a 2,200 n/a 2,727 Number of precincts 10 n/a 10 n/a 10 Public safety Police Number of calls for services 12,675 12,861 11,516 12,150 11,617 Number of traffic citations 1,795 1,795 1,673 1,710 2,475 Number of patrol hours 30,856 30,856 30,856 30,240 30,240 Fire Fire responses 420 325 443 366 352 Emergency medical responses 580 594 645 736 700 Protective inspections Inspections 6,396 6,536 8,128 5,456 4,012 Residential permits 251 226 153 91 42 Other permits 1,162 2,473 2,481 2,095 2,179 Public works Streets and highways Asphalt streets maintained (miles) 176 178 187 189 189 Gravel roads maintained (miles) 8 8 8 8 8 Cul -de -sacs and dead ends maintained 310 320 329 330 336 Parks and recreation Number of City parks 58 58 63 65 66 Total acreage mowed 272 265 200 297 297 Ballfields maintained 26 25 24 27 28 Number of playgrounds 36 33 35 37 37 Soccer fields maintained 22 20 16 16 19 Trail maintained (miles) 24 26 23 35 35 Community center bookings (hrs) Fieldhouse n/a 1,405 7,450 8,514 8,282 Iee arena n/a 2,002 2,405 2,497 2,393 Water New connections 220 247 197 63 33 Total customers 5,410 5,657 5,854 5,917 5,950 Annual consumption (thousands of gallons) 862,265 856,671 1,014,251 1,046,789 993,626 Sanitary Sewer New connections 198 229 129 120 23 Total customers 6,291 6,528 6,657 6,777 6,800 Storm Sewer Total customers 9,446 9,516 9,744 9,785 9,800 Storm sewer lines maintained (miles) 39 43 51 65 66 Source: Various City Departments 153 CITY OF ANDOVER, MINNESOTA CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM Table 20 Last Five Years Function/Program 2004 2005 2006 2007 2008 Public Safety Fire Stations 3 3 3 3 3 Fire vehicles 18 18 18 20 20 Protective inspections Vehicles 4 3 3 3 3 Public Works Streets and Highways Streets (miles) 184 186 187 189 189 Street lights 1,080 1,105 1,187 1,204 1,212 Traffic signals 18 20 22 22 23 Parks and Recreation Parks 58 58 63 65 66 Ball fields 35 25 24 27 28 Soccer fields 25 16 16 16 19 Playgrounds 36 33 35 37 37 Trails (miles) 24 26 23 35 35 Community centers n/a 1 1 1 1 Water Water treatment plants 1 1 1 1 1 a' Storage facilities 3 3 3 3 3 Water main (miles) 79 79 107 108 108 Connections 5,300 5,450 5,854 5,917 5,950 Sanitary sewer Sewer main (miles) n/a 82 90 91 91 Connections 6,100 6,250 6,657 6,777 6,800 Number of lift stations 7 8 9 9 9 Storm sewer Storm sewer lines (miles) 39 43 51 65 66 154 tI CITY OF ANDOVER, MINNESOTA AUDIT MANAGEMENT LETTER December 31, 2008 Audit Management Letter Table of Contents Table of Contents Report Summa Certificate of Achievement ..................................... ............................... 3 Distinguished Budget Presentation Award ............. ............................... 4 Government -Wide Financial Statements ............... ............................... 5 GeneralFund ......................................................... ............................... 12 Debt Service Funds ............................................... ............................... 19 To the Honorable Mayor and Members of the City Council City of Andover, Minnesota We have completed the 2008 audit of the City of Andover, Minnesota and have issued our report thereon. Our Independent Auditor's Report is included in the City's Comprehensive Annual Financial Report. This Audit Management Letter provides a summary of audit results. Thank you for the opportunity to serve the City. We are available to discuss this report with you at your convenience. N, 13 7a, dZ4df -a4 HLB TAUTGES REDPATH, LTD. White Bear Lake, Minnesota May 7, 2009 0 0 .. 1 i IRT, • Audit Management Letter Report Summary o Report Summary Several reports are issued in conjunction with the audit. A summary is as follows: Report Name Elements of Report Overview REQUIRED REPORTS Comprehensive Annual Financial • Financial statements • Unqualified ( "clean ") Report (CAFR) • Footnotes opinion on the Financial • Supplemental information Statements Report on Internal Control Over Results of testing • No compliance findings Financial Reporting and on • Internal controls over • No internal control Compliance and Other Matters financial reporting findings • Compliance with laws, regulations, contracts and grants State Legal Compliance Report • Results of testing certain • No compliance finding provisions of Minnesota Statutes Communication with Those • Required Communications Charged with Governance DISCRETIONARY REPORTS Audit Management Letter Intended to be a working tool for City Council 0 0 0 0 0 1 1 Audit Management Letter Certificate of Achievement Certificate of Achievement for Excellence in Financial Reporting The "Certificate of Achievement for Excellence in Financial Reporting" is an award program offered by the Government Finance Officers Association of the United States and Canada (GFOA). The City of Andover, Minnesota submitted their Comprehensive Annual Financial Report (CAFR) to the GFOA and received the award for 2002 through 2007. The City of Andover is one of 124 Minnesota entities receiving the award in 2007. We commend the City on this achievement. The City is submitting the 2008 CAFR to the Certificate Program. • IUMNTR no , Audit Management Letter Distinguished Budget Presentation Award DISTINGUISHED BUDGET PRESENTATION AWARD The City was awarded the Government Finance Officers Association Distinguished Budget Presentation Award for the City's budget from 2002 through 2008 and is submitting the 2009 budget for the award. The City has spent considerable time and resources publishing a comprehensive budget that is a valuable working document, policy document and operations guide for the City's various activities. The 2009 budget includes an overview of all financial activity, including tax levy, revenue /expenditures budgets, and statistical and demographic information. The 2009 budget includes detail on all debt issues, capital projects, public safety, public works and enterprise operations. The budget also includes 16 "noteworthy events /activities" which occurred in 2008. We commend the City on its thorough preparation of this Distinguished Budget. We encourage all City Council members, department heads and interested citizens to read this document. The City is one of only 18 Minnesota cities receiving both the Certificate of Achievement for Excellence in Financial Reporting and the Distinguished Budget Award for 2007 (information for 2008 is not yet available). Audit Management Letter Government -Wide Financial Statements GOVERNMENT -WIDE FINANCIAL STATEMENTS The government -wide financial statements of the City of Andover, Minnesota are presented in Statements 1 and 2 of the 2008 Comprehensive Annual Financial Report. The following comments relate to the Statement of Net Assets (Statement 1) and the Statement of Activities (Statement 2). Cash and Investments Cash and investment balances of Minnesota cities are commonly restricted by statutory requirements and long range financial planning objectives. The following schedule presents cash and investment balances by fund type: Cash and Investment Balances December 31, Increase Fund Type 2007 2008 (Decrease) General $3,096,704 $3,309,939 $213,235 Special Revenue 2,003,115 1,645,670 (357,445) Debt Service 3,863,748 2,656,285 (1,207,463) Capital Projects 12,534,695 13,909,894 1,375,199 Enterprise 3,034,428 3,299,931 265,503 Internal Service 100,194 99,410 (784) $24,632,884 $24,921,129 $288,245 a Audit Management Letter Government -Wide Financial Statements Governmental accounting standards require the reporting of investments at fair value (i.e., market value). Therefore, investment income consists of interest, dividends and the change in market value of investments. Investment income of the City for 2007 and 2008 was as follows: 2007 2008 Interest and dividends $1,985,336 $2,129,713 Market value change 319,625 (243,191) Total $2,304,961 $1,886,522 ton • •• • , Audit Management Letter Government -Wide Financial Statements Pro er Taxes Receivable A schedule of property tax activity for the past three years is as follows: 2006 2007 2008 Delinquent taxes - January 1 $126,293 $153,260 $217,766 Current levy 8,099,320 * 8,907,580 * 9,761,417 * Total collectible 8,225,613 9,060,840 9,979,183 Collections 8,056,582 * 8,829,697 * 9,689,439 * Less adjustment to County (15,771) (13,377) (14,379) Delinquent taxes - December 31 $153,260 $217,766 $275,365 Total collections as a percent of current levy 99.5% 99.1% 99.3% *Net of MVHC As presented above, the City is experiencing a consistently solid collection rate for property taxes. In addition to the $275,365 of delinquent taxes above, the City has $50,920 in delinquent tax increments receivable. See later discussion of tax increments (page 8). The Minnesota Property Tax System is complex with the number of different classes of property defined in State Statutes. However, the formulas are based on a simple equation, which is as follows: Market Value x Class Rate = Tax Capacity Audit Management Letter Government -Wide Financial Statements Market value is the starting point in the property tax equation and in theory is consistently applied to all properties. Class rate is the mechanism used to allocate property taxes on a basis other than market value. Tax Increments A schedule of tax increment revenues by district is as follows: Delinquent 2008 Collection Balance TIF District Fund TIF District Current Delinquent 12/31/08 1-1,1-2 3505, 3506, 4501 TIF Refunding Bonds of 2003B and 2004B $1,597,558 $17,093 $43,830 1 -3 4510 Tax Increment Projects 131,480 - - 1-4 4502 Tax Increment Projects 15,988 - 7,090 $1,745,026 $17,093 $50,920 TIF District 1 -3, Fund 4510, is a pass - through, pay -as- you -go district. The City has 4 active tax increment districts. Reporting requirements implemented by the Office of the State Auditor (OSA) require reporting of tax increment activity by district. The City currently maintains separate Funds for TIF Districts 1 -1, 1 -2, 1 -3 and 1 -4. Audit Management Letter Government -Wide Financial Statements Bonded Debt The City has the following bond issues outstanding at December 31, 2008 and 2007: December 31, 2007 2008 G.O. Revenue Bonds $51,115,000 $50,565,000 G.O. Special Assessment Bonds 3,560,000 3,015,000 G.O. Tax Increment Bonds 4,010,000 3,275,000 G.O. Certificates /Capital Notes 1,280,000 1,525,000 G.O. Permanent Improvement Revolving Bonds 4,835,000 3,755,000 G.O. Capital Improvement Bonds 3,525,000 3,155,000 G.O. State Aid Bonds 1,915,000 1,760,000 70,240,000 67,050,000 Less amount to be paid by escrow: Public Facility Lease Revenue Bonds (16,455,000) (16,455,000) Water Revenue Bonds (6,490,000) (6,490,000) Net $47,295,000 $44,105,000 The tax increment bond issues will be repaid by increments generated by the City's tax increment districts. The Permanent Improvement Revolving Bonds will be paid by special assessments. The City issued the $10,000,000 Public Facility Lease Revenue Refunding Bonds of 2006 to advance refund $9,755,000 of outstanding 2004 Series Bonds. The City issued the $6,865,000 Public Facility Lease Revenue Refunding Bonds of 2007 to advance refund $6,700,000 of outstanding 2004 Series Bonds. The City is responsible for the debt service of the refunded bonds through the crossover date (February 1, 2014) 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. • • •• • Audit Management Letter Government -Wide Financial Statements The City issued the $6,570,000 G.O. Water Revenue Bonds, Series 2007B to advance refund $6,490,000 of outstanding 2002 Series Debt. The City is responsible for the debt service of the refunded bonds through the crossover date (August 1, 2012) and the debt service of the refunding bonds after the crossover date. The debt service of the refunding bonds before the crossover date is p a Y able from the escrow account. The financial statements present each bond issue and the escrow account assets pursuant to GASB No. 7. The effect on the financial statements is to report greater debt than, of substance, the City will be responsible for paying. The City's debt rating was upgraded to AA+ by Standard and Poor's for the bonds issued on March 26, 2009. Two of the factors cited by Standard and Poor's for this rating upgrade were; 1) a very strong financial position as well as strong management practices, and 2) a low to moderate debt burden with limited additional debt needs. The City continually monitors call dates on outstanding debt to take advantage of opportunities to save on long- term interest expense. Audit Management Letter Government -Wide Financial Statements Other Post Employment Benefits OPEB The City implemented GASB Statement No. 45, Accounting and Financial Reporting by Employers for Post Employment Benefits Other Than Pensions, during 2008. The City is required by State Statute to allow retirees to continue participation in the City's group health insurance plan. The retiree is required to pay 100% of their premium cost which is based on a blended rate. Since the projected claims costs for retirees exceed the blended premium paid by retirees, the retirees are receiving an implicit rate subsidy (benefit). The City is currently funding the post employment benefits on a pay -as- you -go basis. The City's 2008 annual required contribution was $53,096 of which $10,630 was contributed resulting in an OPEB liability of $42,466 at December 31, 2008. Audit Management Letter General Fund GENERAL FUND The General Fund of the City is maintained to account for the current operating and capital outlay expenditures common to all cities. These basic services include (but are not limited to) public safety, public works, parks and recreation and general government. A history of major revenue sources is as follows: State Aids Property Taxes All Other Revenue Total Revenue Year Amount Percent Amount Percent Amount Percent Amount Percent 1998 $850,723 15% $2,804,065 48% $2,150,582 37% $5,805,370 100% 1999 849,429 15% 3,125,776 55% 1,725,890 30% 5,701,095 100% 2000 948,259 15% 3,571,186 55% 1,936,635 30% 6,456,080 100% 2001 1,074,805 15% 3,982,174 58% 1,867,945 27% 6,924,924 100% 2002 1,005,219 16% 3,782,334 58% 1,708,234 26% 6,495,787 100% 2003 330,845 5% 4,286,838 68% 1,665,554 27% 6,283,237 100% 2004 372,550 5% 4,541,227 65% 2,084,201 30% 6,997,978 100% 2005 424,634 6% 4,550,918 64% 2,163,539 30% 7,139,091 100% 2006 478,795 6% 5,324,649 70% 1,809,320 24% 7,612,764 100% 2007 710,459 8% 5,776,653 67% 2,089,632 25% 8,576,744 100% 2008 555,758 6% 6,249,011 73% 1,811,108 21% 8,615,877 100% LGA for Andover was eliminated beginning in 2003. The second half of market value homestead credit was unallotted by the State in 2008. Audit Management Letter General Fund A graph of the 2008 and 2007 revenue is as follows: $7,000,000 $6,500,000 $6,000,000 $5,500,000 $5,000,000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $ General property Licenses and Chazges for Intergovernmental Fines Investm taxes services ent income Miscellaneous permits 02008 $6,249,011 $525,339 $709,251 $772,430 $104,930 $137,966 $116,950 02007 $5,776,653 $475,893 $853,305 $1,121,642 $101,445 $157,513 $90,293 Detail of the 2008 revenue is presented in Statements 4 and 10 of the Comprehensive Annual Financial Report. Audit Management Letter General Fund A graph of 2008 and 2007 expenditures is as follows: $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $ General public safety Public works Parks and Recycling Unallocated government recreation 02008 $2,315,872 $3,785,803 $1,445,111 $867,652 $86,631 $17,999 ■2007 $2,319,766 $3,538,116 $1,454,286 $850,970 $94,669 $6,915 Detail of the 2008 expenditures is presented in Statements 4 and 10 of the Comprehensive Annual Financial Report. Audit Management Letter General Fund The fund balance of the General Fund increased by $284,575 in 2008 as follows: 2008 Over Final (Under) Budget Actual Budget Revenues: General property taxes $6,300,020 $6,249,011 ($51,009) Licenses and permits 477,150 525,339 48,189 Intergovernmental 840,068 709,251 (130,817) Charges for services 729,700 772,430 42,730 Fines 91,500 104,930 13,430 Investment income 100,000 137,966 37,966 Miscellaneous 81,500 116,950 35,450 Total revenues 8,619,938 8,615,877 (4,061) Expenditures: Current: General government 2,543,664 2,315,872 (227,792) Public safety 3,851,231 3,785,803 (65,428) Public works 1,499,716 1,445,111 (54,605) Parks and recreation 875,176 867,652 (7,524) Recycling 96,867 86,631 (10,236) Unallocated 19,000 17,999 (1,001) Capital outlay - 3,428 3,428 Total expenditures 8,885,654 8,522,496 (363,158) Revenues over (under) expenditures (265,716) 93,381 359,097 Other financing sources: Transfers in 191,194 191,194 - Net change in fund balance ($74,522) $284,575 $359,097 Audit Management Letter General Fund The City's December 31, 2008 General Fund balance totaled $4,175,035. The City's General Fund balance has been as follows for the past ten years: $4,000,000 General Fund Balance $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 1999 2000 2001 2002 2003 2004 2005 2006 1 2007 1 2008 ®Series2 $2,778,379 $2,682,786 $3,420,072 $2,814,972 $2,593,027 $3,302,565 $3,202,477 $3,392,813 1 $3,890,460 1 $4,175,035 • Audit Management Letter General Fund The fund balance at December 31, 2008 has been reserved or designated as follows. General Fund Fund Balance Designations Designation Amount e Reserved for inventory $85,390 Reserved for prepaid items 108,415 Total reserved 193,805 Designated for working capital: Designated for snow emergency 70,000 Designated for public safety 70,000 Designated for facility management 70,000 Designated for information technology 70,000 Designated for working cash flow 3,701,230 Total designated for working capital 3,981,230 Total reservations and designations $4,175,035 The designations are planning for emergency expenditures so that the City can maintain a consistent tax rate. Audit Management Letter General Fund WorkinjZ Capital Reserve As previously noted, approximately 79% of the General Fund's revenue sources are from property taxes and state aids. These revenue sources are not received until the second half of the fiscal year. As such, a working cash flow reserve at December 31 is required to finance operations for the first six months of the year. For the City of Andover, the required working capital reserve is computed as follows. 2009 General Fund budgeted expenditures $9,183,646 Recommended working cash flow reserve (fifty percent of total) $4,591,823 The current working capital reserve in the General Fund is 40 %. A summary of the purposes of General Fund reserve balances is as follows: ME //1 is revenues S j 1 . tl t 'S� S y�/f ✓�i Ih hn 1 lroarre Intergowmalarltall 1 Capital Outla Revenue Cutbacks F l �✓` �// /� /6 // /!' P tar Awtls temporary au p qed .... a ft pn., to j a^ PrdM use CM "� was owriburdening ' Em ge Y r 6 // -: greater option 1 tl al h I 'y / / /�!� ofannual budgets for u l p t tl i/ ' sp ml m arm —ietl e / i� `'' iii/ na vt outlay ' E p tl to y � "S:. Pmfects h ✓ `i/ i • • • r i Mrs • , 1 Audit Management Letter Debt Service Funds DEBT SERVICE FUNDS The financial statements for the EDA Public Facility Lease Revenue Refunding Bonds of 2006 and EDA Public Facility Lease Revenue Refunding Bonds of 2007 are presented in Statements 3 and 4 and the combining financial statements for the nonmajor Debt Service Funds are presented in Statements 16 and 17 of the 2008 Comprehensive Annual Financial Report. Debt Service Funds are a type of governmental fund to account for the accumulation of resources for the payment of interest and principal on debt (other than Enterprise Fund debt). Current governmental reporting standards do not provide for the matching of long -term debt with its related financing sources. Although this information can be found in the City's Comprehensive Annual Financial Report, it is located in several separate sections of the Comprehensive Annual Financial Report. The following schedule extracts information from these sections of the Comprehensive Annual Financial Report to provide an overview analysis of long -term debt and its related funding. The reader is cautioned that 1) future interest revenue from assessments and investments, and 2) future interest expense on bonded debt, is not included in the following schedule. • 1 Audit Management Letter Debt Service Funds December 31, 2008 Final Fund Fund Deferred Outstanding Maturity Description Balance Revenues Total Debt Date General Obligation Bonds: EDA Public Facility Lease Revenue Bonds of 2004 $677,930 $25,400 $703,330 $19,020,000 02/01/14 EDA Public Facility Lease Revenue Bonds of 2006 9,935,142 - 9,935,142 10,000,000 02/01/34 EDA Public Facility Lease Revenue Bonds of 2007 6,825,235 6,825,235 6,865,000 02/01/34 Total general obligation bonds 17,438,307 25,400 17,463,707 35,885,000 Special Assessment Bonds: G.O. Improvement Bonds of 2005A 1,471,419 441,934 1,913,353 3,015,000 02/01/13 Tax Increment Bonds: G.O. TIF Refunding Bonds of 2003B 46,048 - 46,048 490,000 08/01/10 G.O. TIF Refunding Bonds of 2004B 12,151 16,966 29,117 2,785,000 08/01/10 Total tax increment bonds 58,199 16,966 75,165 3,275,000 Certificates of Indebtedness: G.O. Equipment Certificate of 2006B 221,843 4,670 226,513 315,000 02/01/10 G_O. Equipment Certificate of 2007A 226,812 6,409 233,221 580,000 02/01/11 G.O. Equipment Certificate of 2008 163,532 4,485 168,017 630,000 02/01/12 Total certificates of indebtedness 612,187 15,564 627,751 1,525,000 Permanent Improvement Revolving Bonds: G.O. PIR Bonds of 2003A 11,281 - 11,281 1,615,000 02/01/10 G.O. PIR Bonds of 2006A 12,435 12,435 2,140,000 02/01/14 Total permanent improvement revolving bonds 23,716 0 23,716 3,755,000 Capital Improvement Bonds: G.O. Capital Improvement Bonds of 2004A 14,398 10,196 24,594 3,040,000 02/01/17 G.O. Capital Improvement Bonds of 2005B 125,885 3,335 129,220 115,000 02/01/09 Total capital improvement bonds 140,283 13,531 153,814 3,155,000 State Aid Bonds of 2001B 225,682 - 225,682 1,760,000 02/01/17 Totals -All Debt Service Funds $19,969,793 $513,395 $20,483,188 $52,370,000 * Tax increment collections are subject to future valuations within the District. The City analyzes its debt position annually as part of the budget and CIP process and the City's fiscal agent prepares a refunding/call review with each new issuance. We recommend the City continue to annually review debt service requirements and long -term funding for the above bond issues, especially in the Tax Increment Bonds where rate !t compression can affect future TIF collections. The TIF Bonds will be repaid with tax increments from current districts and present and future land sales. The PIR Capital Projects 1 r Audit Management Letter Debt Service Funds Fund has deferred revenue of $3,179,789 at December 31, 2008. The City employs a frugal fiscal management policy. The following decision chart prompts questions to further evaluate a fund's financial position: Condition A Condition B Fund balance plus Fund balance plus deferred revenue deferred revenue meets or exceeds is less than bonds payable. bonds payable. Cautions Questions 1 1. Are sufficient future assets . Is the City experiencing favorable scheduled (such as property taxes) collection rates for special assess- to meet bonded debt payments? ments? 2. Are cash assets sufficient to 2. Are anticipated investment interest generate investment earnings? rates earned on prepayments ade- 3. Are transfers or other funding quate to replace assessment interest? sources available? 1 ? 3. Is the timing of receipts sufficient to 4. Are there future assets to pledge meet bonded debt payments as such as assessments, MSA allot - they become due? ments, etc.? 4. Are significant portions of assess- ments not scheduled for collection (green acres, tax forfeit, etc.)? 5. Is arbitrage or negative arbitrage an issue? The debt service fund is Variables and possible The debt service fund outcomes are too diverse. is clearly adequately uatel clearly not adequately y q y funded. Plan for altern- Prepare projections to funded. Plan for eventual analyze possible use of sur lus. ative funding (taxes, p transfers, other sources). scenarios and options. r Conclusion 1 Conclusion 2 Conclusion 3 r 60� 04 4 k-f me - t T"lh : 763-427-7680 LARSON PROPERTIES & ASSOCIATES LLC PHO FAX: 763 -427 -9448 June 1, 2009 To whom it may concern: RE: 3149 162 Lane NW We hired Northern Asphalt to extend and resurface the parking lot on and Bob Yonke hired Freedom Fence out of Andover to install the fence. We assumed that the 2 professional contractors would pull any necessary permit, if required. Sincerely, Larson Properties & Associates, LLC 3095 162n Lane NW, Andover, MN 55304 CITY OF ANDOVER 1685 CROSSTOWN BOULEVARD N.W. *,ANDOVER, MINNESOTA 55304 • CITY 0 F (763) 755 -5100 FAX (763) 755 -8923 • WWW.CI.ANDOVER.MN.US NDOVEI FENCE PERMIT APPLICA TION Permit No.: Date: ,9 Property Owner: M i ^A CS 0 4v--- �r-r owwkk l Phone: Address L / oZ „Z A )o Contractor: F e c x i^:01 c'c Signature: Provide lot survey or plat showing the proposed fe location. If a survey or plat is no '.- available, provide a sketch drawing in the space provided below. The accuracy of the survey and /or sketch will be the responsibility of the applicant. The City is not held liable for inaccuracies. Fences for pools do not require a Fence Permit. That type of fence is reviewed and permitted through the Swimming Pool Permit. r .. .._ ......... __..._ ............. _ _.__....__•_ __..___.....w......._ ........ __ __ _._. ..... _....... Sketch (location of house, garage, streets, property lines) f E E . ( i £ i e e F ........ ............ _ _ __ ...._ .._ ...._._.__ ....... ..._.... ....... ...._....._.. ..... _ .... _ ... .. ......... ........... _.._..__... _ ___...._.._._.. ..... ...._. .... .... .. .... __ .... . _._...__ _... ..m_._...._. F nc s placed in drainage & utility easements or in locations other than approved by th p rmit are subject to removal at the homeowner's expense. No site inspection is required. Staff c mments: Setback from front property line Located outside of drainage & (adjacent to public street): utility easement: Maximum height: Outside of wetland: Located outside of sight lines: Note: Include Fence Handout, Boulevard Restriction & Easement Restriction Handout with the permit application. F $25.00, Approved By: \? �— Dat TOTAL: $25.00 (Double f if failure t obtain a p rmit.) G:\.STAFFIRHONDAACFORMS\Pe=t APPlications\F'encP, Pemut.doc CAINE a ASSOCIATES LAND SURVEYORS, INC. 17720 Highway 65 N.E. - Ham Lake, Minnesota 55304 SURVEY FOR: Barry Gusk. 434-7646 DESCRIBED AS: Lot 1, Block 1, HUGHS INDUSTRIAL PARK, according to the recorded plat thereof,'Anoka County, Minnesota. I 3a ' 73' C4 o N � a v D ` - /al 53 / HEREBY CERT/FY T/EQT TH/S SURVEY, PLAN, OR REPORT WAS PREPARED - Or . ME OR "VO£R MY O/RECT SUPERVISION AND THAT / AM A _ DULY REGISTERED LAND SURVEWN UNDER THE LAWS OF THE STATE OF MINNCSOTA. Some: / /NCNe D P1''ET.--,-..--.-- Q DENOTES //r INCH IRON PIPE SET. OEA*7W POUND /RON NOA7/A/ENT. L' SEARM►6S diNOWN ARE ASSI/MED DA v 5 sm, T 9�7 RES. nro /zzai ✓09 Afa SEG /gyp T• R 2�