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HomeMy WebLinkAboutCC - May 3, 20111685 CROSSTOWN BOULEVARD N.W. • ANDOVER, MINNESOTA 55304 • (763) 755 -5100 FAX (763) 755 -5923 • WWW.ANDOVERMN,GOV Regular City Council Meeting — Tuesday, May 3, 2011 Call to Order — 7:00 p.m. Pledge of Allegiance Proclamation - Arbor Day Resident Forum Agenda Approval 1. Approval of Minutes (3/29/11 Workshop; 4/11/11 Board of Review; 4/19/11 Regular) Consent Items 2. Approve Payment of Claims — Finance 3. Approve Resolution and Letter of Support/Transportation Enhancement Funding/ 11- 17Bunker Lake Blvd. Regional Trail Connection - Engineering 4. Order Improvement/Order Plans & Specs /11 -11 /Andover Station North Ball Field Parking Lot Expansion - Engineering 5. Accept Petition/Order Amended Assessment Roll/Adopt Amended Assessment Roll/11- 26/13562 Crooked Lake Blvd. NW /WM - Engineering 6. Approve Application for Exempt Permit/Ducks Unlimited Anoka —Administration 7. Accept Petition/Order Feasibility Report/11- 24/Butternut St. NW, 173`d Ave. NW & Flintwood St. NW - Engineering 8. Order Feasibility Report/11- 2a/Flintwood St. NW —Engineering 9. Approve Application for Exempt Permit/Andover Lions Club — Administration 10. Approve Concrete Quotes /11 -22 /Andover YMCA/Community Center Shelter - Engineering 11. Approve Temporary 3.2% Malt Liquor License /Andover Lions/Fun Fest — Administration Discussion Items 12. 2010 Audit Presentation -Administration 13. Consider Approval/Extension of Liquor License/Beef O'Brady's — Administration Staff Items 14. Schedule EDA Meeting 15. Schedule June Workshop 16. Administrator's Report —Administration Mayor /Council Input Adjournment 1685 CROSSTOWN BOULEVARD N.W. • ANDOVER, MINNESOTA 55304 . (763) 755 -5100 FAX (763) 755 -8923 • WWW.CI.AN DOVER. MN. US TO: Mayor and City Council CC: Jim Dickinson, City Administr; FROM: Michelle Hartner, Deputy City SUBJECT: Approval of Minutes DATE: May 3, 2011 INTRODUCTION The following minutes were provided by Timesaver for City Council approval: March 29, 2011 April 11, 2011 April 19, 2011 DISCUSSION Workshop Board of Review Regular The minutes are attached for your review. ACTION REQUIRED The City Council is requested to approve the above minutes. Respectfully submitted, Michelle Hartner Deputy City Clerk Attach: Minutes (S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 ANDOVER CITY COUNCIL WORKSHOP MEETING —MARCH 29, 2011 MINUTES The Workshop Meeting of the Andover City Council was called to order by Mayor Mike Gamache, March 29, 2011, 6:00 p.m., at the Andover City Hall, 1685 Crosstown Boulevard NW, Andover, Minnesota. Councilmembers present: Sheri Bukkila, Don Jacobson, Mike Knight, Julie Trude Councilmember absent: None Also present: City Administrator, Jim Dickinson City Attorney, Scott Baumgartner Director of Public Works /City Engineer, Dave Berkowitz Fire Chief, Dan Winkel Natural Resource Technician, Kameron Kytonen Utilities Manager, Brian Kraabel Others AWARD BID /11 -14 /TOWER #I /PAINTING& REHABILITATION Mr. Dickinson presented bids received on March 17, 2011, for painting and rehabilitating Tower #1, Project 11 -14, noting the low bid from LC United Painting was nonconforming because it failed to provide a 10% bid bond, as required in the specifications. The low qualified bid was received from M.K. Painting, Inc. with a base bid of $384,000 (construction this spring) and Alternate 1 bid of $10,000 (add or deduct for construction the spring of 2012). Motion by Jacobson, Seconded by Trude, to approve the resolution accepting bids and awarding the contract to M.K. Painting Inc. in the amount of $384,000 (Total Base) for painting and rehabilitation for Tower 41, Project 11 -14. Motion Carried Unanimously. UPDATE / 10 -27 / BUNKER LAKE BOULEVARD NW RECONSTRUCTION / CSAH 7 TO 38THAVENUE Mr. Berkowitz acknowledged the attendance of Anoka County Highway Department representatives: Jack Corkle, Jason Orcutt and Andrew Witter. It was noted that an open house for this project had been held prior to tonight's Workshop and the turnout was very good. Ms. Corkle, Anoka County Senior Multimodal Transportation Planner, updated the Council regarding its proposed Bunker Lake Boulevard reconstruction project from 38`h Avenue to 7h 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Andover City Council Workshop Meeting Minutes March 29, 2011 Page 2 Avenue that is scheduled for 2012. She noted there have been some changes that focus in the area around 7 "h Avenue and Bunker Lake Blvd. She indicated on a map the location. One concern is access for the Ice Arena and buses in/out of that site. They have worked with the City of Anoka on that and are reviewing the relocating of Castle Fields to an area close to this intersection. Councilmember Knight asked where specifically the ballfields will be relocated. Ms. Corkle indicated the location on a map, noting they would be north of the soccer fields between the soccer fields and the ice arena. Mr. Orcutt explained the City of Anoka has not determined when that will move forward. The current Castle Field site can be turned into a commercial/retail development site. It will be driven by development and will remain where it is until there is a potential developer. The County is trying to plan for the future relocation. Ms. Corkle stated there are apparently a number of interested developers in the current Castle Field site. Councilmember Knight stated he spoke with Slim at the Auto Repair Shop and he wasn't happy to begin with but now with the changes he is ok with it. His driveway access will be changed for a right in/right out. Ms. Corkle stated they are working with the Cities of Anoka and Andover regarding access points and plans. There are some plans, but they are not firm. Mr. Orcutt stated they want to have a good plan for the future. There needs to be proper width for access in the future to Rosella Sonsteby's property. They have talked with the City of Anoka about how to access that property from the south. Andover and Anoka along with input of Anoka County Highway are working with WSB Consultants to evaluate access points for development into the future. Councilmember Knight asked if there is future potential for a cut in the median east of 7th Avenue to access Rosella Sonsteby's property. Ms. Corkle stated the study will determine that. Mr. Orcutt indicated important points on a map showing where full accesses will be located. Councilmember Jacobson asked if there would be a traffic signal Blackfoot Street. Ms. Corkle stated there would be a side street stop. Councilmember Jacobson asked how the traffic would be re- routed during this project. Mr. Orcutt showed on a map how the traffic would be detoured. 38"h Street will be a likely road that will be taken. Signage of the detour will be necessary. The County is taking Andover's needs into account on this project. Councilmember Knight asked how much of the current road is floated and Mr. Orcutt indicated on the map. Mr. Berkowitz stated if you look where the wetlands are that will indicate where the road was floated. Mr. Berkowitz stated that at the open house there was a request that we close the intersection of 1401h Avenue and Bunker Lake Boulevard. Mr. Berkowitz indicated this would not be acceptable to the Fire Department. The traffic patterns due to these imrrovements will change with the high school traffic. The Council agreed that the access at 140" Avenue should remain open. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Andover City Council Workshop Meeting Minutes March 29, 2011 Page 3 Councilmember Trude asked about the Aztec townhomes on Blackfoot Street. She stated it was very controversial not to connect that street to the north; Blackfoot Street is currently a long cul- de -sac. As it developed, it is the home for a number of retirees and there is not much traffic. She asked if there was a fire access. Mr. Berkowitz stated a 10 foot wide trail with 15 feet width of gravel under it. There are 35 -40 townhomes in that development. Councilmember Trude asked if that access could be opened up temporarily during the construction. Mr. Orcutt stated access will be provided during construction from Bunker Lake Boulevard. Councilmember Knight stated East -West traffic has increased dramatically in the last year on Bunker Lake Boulevard going across 7`h Avenue. Mr. Dickinson responded this is most likely due to the fact that Bunker Lake Boulevard is a better road now. Councilmember Trude asked what the response was to a sound wall. Ms. Corkle stated there was some interest. She indicated on the map the potential locations for a wall. Mr. Berkowitz stated right now the way the plan is, if the County responded during the plat review process that noise mitigation may be needed in the future, the City would be responsible to pay for it. This comment was never made regarding this plat years ago, so under the current policy the County would pay for it. Federal guidelines are coming out that say the agency that is building the roadway is responsible to pay for the sound wall. Mr. Berkowitz stated the project should commence in Spring 2012 and should be open to traffic by November. The following year there will be some work that will need to be completed and final completion would be August 2013. Councilmember Trude noted on previous projects when paving work was done for the day they would just stop and a "dropoff' from one pavement surface to another would remain. Cars were damaged by this. She would prefer to see some tapering of pavement done before they left for the day. Another concern is children will be going by during the summer to the library and schools for activities and their safety needs to be a concern. Mr. Orcutt stated safety is the contractor's responsibility and the County does monitor this closely. Mr. Berkowitz stated the plan will be brought to a future workshop for Council in depth review. He stated Ms. Corkle and he will meet with Karen Blaska from Anoka County Parks on preparing the grant application for the trail from Round Lake Boulevard to 38th Street. We believe with Ms. Corkle's and Ms. Blaska's lead, this is a great candidate for funding. If the funding is not received, the Council will be asked again whether to move forward. Through the comments received, a lot of people feel this is important. This is our opportunity to get a trail connection that will get residents from the library all the way to Bunker Hills Regional Park. Mr. Berkowitz stated the right -of -way along the trail section will not be a problem since it is all city - owned. Councilmember Jacobson asked if there is interest to light that corridor. Councilmember Knight stated if there will be people on foot or bikes it would definitely need to be lighted. Staff will look at street lights on the east side. Councilmember Trude asked about planting of trees and whether there will be a change to the canopy. Mr. Witter, Assistant County Engineer responded there will be a little bit. Councilmember Trude requested any old trees come 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Andover City Council Workshop Meeting Minutes March 29, 2011 Page 4 down taking into consideration oak wilt impacts. Ms. Corkle stated there is liability if trees are not removed and someone drives off the road and hits the tree. Mr. Berkowitz stated they do receive a lot of calls from residents complaining about trees impairing their line of sight at intersections. Councilmember Knight stated he was told by a Deputy that 7`' Avenue is the worst deer kill zone in the County. Mr. Dickinson stated there are over 100 deer accidents a year and over 50% of them occur on 7`h Avenue. Informational; no action required. The Council thanked the County Representatives for the presentation and discussion. BUNKER LAKE BOULEVARD NW FUNDING APPLICATIONI LWASON BOULEVARD NW TO JEFFERSON STREET Mr. Berkowitz explained the Anoka County Highway Department representatives would also like to discuss the proposed Surface Transportation Policy (STP) federal funding application for improvements to Bunker Lake Boulevard from Crane Street in Andover to Jefferson Street in the City of Ham Lake. Ms. Corkle, Anoka County Senior Multimodal Transportation Planner, updated the Council on the STP funding application and advised if funding is approved, the project would be constructed in 2015 -2016. She indicated the location on a map. A trail would be added to both sides of the corridor. It would be similar to what is currently on County Road 14 where you have the roadway, and bus and truck pullout lanes at the railroad tracks. There may be separate rail crossing funds available. Mr. Berkowitz questioned if there is a collaborative effort do the grant givers look favorable when there are two groups paying. Ms. Corkle stated when dealing with rail crossing funds there would not be enough given to make or break the project. Discussion continued on a grade separation at the railroad tracks. Ms. Corkle indicated the grade separation can change how access works. This is a heavier railroad line. The clearance to get over that is a little higher. Ms. Corkle stated if we were to get the grant for the road project to move forward we have some flexibility and time to figure things out on the railroad crossing. Mr. Berkowitz asked to apply for this federal funding you take a certain corridor that hits a certain dollar amount because you want to maximize your federal money. That's why the County has looked at this section. Mr. Dickinson stated the City is going to need to be willing to put a substantial amount of money into a grade separation for the rail line to get the County to cost share. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Andover City Council Workshop Meeting Minutes —March 29, 2011 Page 5 Ms. Corkle indicated on a map the area where it is very difficult to see around the curve near Shadowbrook West Park. On the plan Butternut and Wintergreen Streets would be limited to right in/right out. The trail would be continued through out the corridor. The reason the County is coming forward before the application is presented is to show the City the access changes so that when it comes down to design there is no problem. The ballfield access will be impacted at Shadowbrook East Park, but the more access you reduce to improve safety, the better chance you have to get the funding. Mr. Berkowitz showed on a map the access points. Fire Chief Dan Winkel stated he would be concerned about the limited access at Butternut Street. Mr. Orcutt stated they will try to address his concerns, but would recommend using full access locations. Councilmember Knight asked if they would be B4 medians. Mr. Berkowitz stated when you are removing some of the access points especially a left out egress; you are improving the safety of that corridor. Councilmember Trude asked if ambulances can go over a 4" median, Mr. Orcutt responded yes. Mr. Berkowitz stated a divided roadway is much safer then a two lane undivided. Generally the County looks at drive over medians for emergency response. The potential for head -on crashes on the current road is greater than with a divided roadway. Ms. Corkle stated the County would request a letter of support signed by the Mayor on this project. Mr. Dickinson reminded the Council if there were to be an overpass the City would need to contribute a significant amount of money towards that overpass. Councilmember Trude asked if traffic count was driving this and from her perspective traffic hasn't increased substantially because development has come to a halt in this area. Pressure is being put on County Roads because MN -DOT is not doing what they should be doing. Mr. Dickinson asked when the application needed to be submitted and Ms. Corkle stated she has begun work on the application now. Councilmember Knight asked when County Road 14 in Coon Rapids would be completed. Ms. Corkle stated June -July timeframe. Mr. Dickinson stated at the second Council meeting in April, Staff will bring to the meeting a resolution for consideration by Council to support this project in concept based on what was presented today. ANOKA COUNTYBROADBAND PROJECT UPDATE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Andover City Council Workshop Meeting Minutes March 29, 2011 Page 6 Mr. Dickinson advised of Anoka County's effort to increase the amount of fiber optic cable in Anoka County through the "Connect Anoka County" project in partnership with Zayo Bandwidth LLC and Anoka County. Through this project, Zayo Broadband received a National Telecommunications Information Administration (NTIA) grant paying 70- percent of the fiber construction cost and initial equipment. This grant program will construct an approximately 286 mile fiber network throughout Anoka County, linking 145 governmental institutions. They are working on the environmental assessment currently. City Staff is also talking to them about right -of -way utilization. To date the County has been asking for good faith non - binding commitments from the City. Andover submitted 7 locations throughout the City that we would like to have connected, one was removed because it would be redundant. Mr. Dickinson presented the Connectivity Service Agreement the City is being asked to approve. He stated the original target was to have all written agreements in place by April I", but with multiple entities and numerous questions to be answered, that date has been pushed out. Mr. Dickinson presented the current version of the "Connectivity Services Agreement" the City of Andover is being requested to approve. He noted the cost is reasonable. Councilmember Knight asked what the city sites identified were. Mr. Dickinson stated the fire stations, water towers, and main municipal building. Mr. Baumgartner stated the problem from his standpoint is a lot of the obligations and responsibilities to the City is coming from Zayo who is not a party to our agreement with the County. This is odd. In this case the County is primarily acting as the agent. Mr. Baumgartner asked the County if Zayo has obligations to us and we have obligations to them why aren't they part of our agreement. Zayo does not want to have agreements with all the Cities in Anoka County. Mr. Baumgartner's next concern is what if we have a problem that is caused by Zayo's default, who then is responsible and who do we turn our attention to. Who is going to remedy us. The County responded the County will. Mr. Baumgartner then suggested that be included in the agreement. Some additional language was added. Mr. Baumgartner also asked if the County breaches its agreement with Zayo how will the City ever know. That would affect the service to the City. There was nothing in the agreement but language was added. Mr. Dickinson stated the County is taking the lead in the legal aspects, but they are not experts in these types of agreements. The County Attorney's office is plowing some new ground. It is good there is a number of legal counsel reviews on this. Councilmember Bukkila stated she does not want to see Mr. Baumgartner spending a lot of his time on this and the City needing to pay him. The City should pay their share of legal costs only. Mr. Baumgartner stated it is a good project, but he did have a problem as to how it was presented. It is a terrible draft and they should have gotten input from the Cities before they went forward. There will be another meeting on Friday, April 1, 2011 to review the agreements. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Andover City Council Workshop Meeting Minutes March 29, 2011 Page 7 Councilmember Knight asked what the Council can do until this is resolved. Mr. Baumgartner stated just listen to the presentation and periodic updates. Councilmember Jacobson stated Andover has Comcast serving the City now through a non- exclusive contract. Zayo will use our right -of -way and not pay the City anything. Comcast is currently paying the City 5 %. Mr. Dickinson stated they will be paying through a right -of -way management permit. Councilmember Jacobson asked when this would go away if not agreed to. Mr. Dickinson stated he believes Blaine is not agreeing to the contract. Councilmember Jacobson stated we could have this put in and keep it dark until we want to use it which could be 5 -10 years from now. Mr. Dickinson stated we would pay $75 for this building and for our fire stations. When the contract is set Andover will have 6 sites for the City. Infrastructure is required to maintain the equipment. Mr. Baumgartner recommends Council and the City wait until after the meeting on April 1, 2011. Councilmember Trude asked about collocation. She asked if any of Andover's sites would be collocation sites and Mr. Baumgartner stated all sites would be collocation sites. The County is paying $3 million and there is a $17 million grant. The County is proportionally charging themselves. Mr. Baumgartner stated there is a warranty period on the equipment they would install. After the warranty period, it is our responsibility to repair and replace the equipment. The concern he had was if the warranty expired, and we need to replace the $4500 piece of equipment, and it says in the agreement that if the agreement terminates they can come and get their equipment. Mr. Baumgartner wants to make sure that the replacement equipment that we replaced is not considered Zayo's equipment. Mr. Dickinson stated this type of equipment, which we have in other locations, is rather problem -free. Councilmember Trude asked if this would be available to businesses within the City and Mr. Dickinson stated the lines will be run along Hanson and Bunker Lake Boulevards and go near businesses and they will have the opportunity to hook -up at a fee. Mr. Dickinson stated Mr. Baumgartner will continue to keep the Council updated on the process and the contract will be brought before the Council when both Administrator and the City Attorney have determined we have achieved the best agreement the city can get. 148TH LANE PARKING Mr. Dan Stay, 1668 — 1461h Avenue NW aUeared regarding 148th Lane Parking. He was the resident who circulated the petition for 148 Lane to reinstate parking on the south side. Mr. Berkowitz stated on June 15, 2010, the City received a petition and the City Council had approved a no parking resolution for 148th Lane, just south of Andover Elementary School, from 8 a.m. to 10 a.m. and 3 p.m. to 5 p.m. Monday — Friday, from September 1St to June 1St. The 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Andover City Council Workshop Meeting Minutes —March 29, 2011 Page 8 petition received recently from Mr. Stay did not include signatures from any residents who live on 148h Lane. This was discussed at a February workshop and Council had requested information of what the school sends out to the parents of the students. Mr. Berkowitz read the communication from the school as to the places students can be picked up. Mr. Stay provided the petition and some photographs showing cars in violation of the no parking ban. The petition is to eliminate the no parking on one side of the street. Parking would be permitted on the south side of the street. Mr. Stay stated he lives approximately .75 mile from the school and his 3 children will be attending Andover Elementary for the next 6 years. He occasionally picks up his children from school and other times they walk with the other neighborhood children. Mr. Berkowitz distributed the original petition. Councilmember Trude stated she believes Andover Elementary is the only elementary school that requires the parents to park their car and pick up their children from a designated spot. Mr. Dickinson questioned if Council wanted this to come before them at a Regular City Council meeting for consideration. Further dialog would need to take place at a Regular Meeting and a resolution considered for changes to occur. Motion by Jacobson, Seconded by Bukkila, to bring this forward to the April 19, 2011 Regular Council Meeting. Motion carried unanimously. Mr. Berkowitz stated he can notify the entire neighborhood or just Mr. Stay and the person that presented the original petition and they can notify their support. FENCE PERMITTING DISCUSSION Mr. Berkowitz stated the City Council is requested to discuss the fence ordinance and determine what the intent of the ordinance should be and how it should be properly stated. As discussed at the January Workshop all new fences are not allowed in drainage and utility easements with public utilities, ponds or wetlands or those needed for maintenance access. To install a fence a fence permit is required and at that time allowable fence locations are determined and approved. Councilmember Jacobson reviewed the ordinance and provided some proposed revisions. Mr. Berkowitz reviewed Councilmember Jacobson's revisions. Councilmember Trude also submitted comments on the Ordinance. Mr. Berkowitz stated they have experienced many issues with easements and ponds. Councilmember Trude stated fences could be permitted with gates and those that do not affect water flow. She does not feel the Council can't restrict rights only to meet government's interests, but should be in a reasonable way, using the least restrictive methods to meet our goals. Staff is requesting direction from the City Council on revisions to the current fence ordinance to provide clarity and flexibility in placement of fences. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Andover City Council Workshop Meeting Minutes —March 29, 2011 Page 9 Mr. Baumgartner reviewed the property owner, generally a developer works with the City when developing the property when the easements are originally set. Mr. Berkowitz stated the developers want to have the easements be as small as possible to make the lot more saleable. Councilmember Jacobson asked when a pond is maintained what is actually done? Is a backhoe used or is just the pipe cleaned out. Mr. Kraabel responded both. Mayor Gamache stated he doesn't recall this being an issue to keep fences out of these easements on the urban lots. There have been issues with the rural lots. Mr. Berkowitz stated the pond is up to the 100 year flood elevation. Mayor Gamache stated it seems the current fence ordinance is working. Mr. Berkowitz stated when the City receives a request for a fence Staff works with the resident. Mayor Gamache stated we are trying to find a solution to a problem we don't have. Councilmember Jacobson stated there seems only to be a problem with paragraph three. He suggested the Council adopt all but paragraph three and more work be done on that. Mr. Berkowitz stated this will be brought back to a public hearing. Councilmember Bukkila stated she has a concern with the difference between an urban lot and a rural lot. Motion by Jacobson, seconded by Bukkila to take to the public hearing the recommended wording provided. Councilmember Trude abstained. All others voted in favor. DISCUSS EMERALD ASH BORE DRAFT MANAGEMENT PLAN Mr. Kytonen reviewed the Emerald Ash Borer (EAB) is a devastating insect that attacks all species of ash trees. It was found in Minneapolis in 2010, and threatens to spread into other parts of Minnesota. Since first being found near Detroit, Michigan in 2002, this insect has killed millions of ash trees in Michigan, Ohio, Indiana and some Canadian provinces. Staff has drafted an EAB Management Plan for review and will summarize the main points of the plan at the meeting. Staff will bring this item back to future workshops for additional discussion. This would not be an ordinance or policy, but rather a template or guideline. The following were some points of discussion: - The City may need to provide a marshalling yard, which could be used for storing and processing diseased wood. Anoka County may create one for the whole county. EAB spreads primarily thru infected firewood being transported from county to county. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Andover City Council Workshop Meeting Minutes —March 29, 2011 Page 10 - The diseased tree ordinance will need revision to cover EAB - The City will need to decide if chemical treatments should be used on select ash trees; and - An EAB budget may need to be created to cover costs of management. Councilmember Trude suggested an inventory would be a good idea. Mayor Gamache agreed. Councilmember Jacobson suggested a draft plan be developed no longer than two pages. Mr. Kytonen stated currently he enters properties without permission (according to the Ordinance). Councilmember Bukkila recommended Mr. Kytonen make every attempt to knock at the door and advise the residents before entering their property. Mr. Kytonen stated education and inventory of trees are the most critical. He noted the City of Coon Rapids is starting tree removal and some of which are currently healthy trees. Councilmember Bukkila asked if a tree is chemically treated does it need to be continued to be treated and Mr. Kytonen stated the tree would need to be continually treated. Councilmember Bukkila asked if the chipped ash trees can be used. Mr. Kytonen stated it can be used. It was the Council's consensus to support doing continued education, doing an inventory and shortening up the policy. Staff should also look at a storage site. Councilmember Trude suggested the City enlist the help of the High School Science Club to assist with the inventory. Mr. Kytonen stated it may be a benefit to keep the EAB Management Plan the length it is if any funding should come available. The Ordinance could be shorter. Councilmember Trude stated she does not want to see an Ordinance until it hits the City. Mayor Gamache stated we should have things in place before it hits the City. SINGLE FAMILY RESIDENTIAL MARKET VALUE PRESERVATION PROGRAM UPDATE Mr. Dickinson reviewed when this program was initially put in place, the thought process was it would be reviewed in 2 years to determine whether or not we wanted to go forward with it. We are at that 2 year review point. Licenses are at a point to be renewed. Councilmember Knight asked if it was working. Mr. Dickinson stated there is value indicating the single family market value preservation program that has been in place for almost two years currently has 237 licensed single - family rental properties with 186 being due for renewal in 2011, 41 in 2012, and 10 in 2013. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Andover City Council Workshop Meeting Minutes —March 29, 2011 Page 11 Councilmember Bukkila stated she has gotten some feedback on the program and have heard it is working well. Mr. Dickinson stated we are having some success. The way the County updates their system is not how the Cities do business and a new process addressing this has been developed. Mr. Dickinson stated the primary types of crime incidents that have come up the most significant one is disturbing the peace, drug violations, and domestic assault. It was the Council's consensus to continue the single family market value preservation program. CROSSTOWN B OULEVARDIDRI VE Mr. Berkowitz stated there is a public hearing scheduled for Tuesday, April 5`h for the improvement of Crosstown Drive. Not the intersection of Crosstown Drive and Crosstown Boulevard. There will be some concerns expressed by the neighborhood during the public hearing regarding what we are looking at doing at this intersection. Most of the concern is the speed through this section. The speed can be lowered to 30 mph by current definition of the road. Mr. Berkowitz showed the area on a map. He discussed the gap analysis for the crossing. John Gray, from SEH has been hired as a consultant to determine if it meets warrants for a 4 way stop. Mr. Berkowitz noted the County has applied for funding for this intersection. The funding is not available until 2015 -2016, if it is received. The Council may wish to put this on hold until we can secure funding for a signal or a roundabout or something different for a solution rather than just an interim solution. Mr. Berkowitz stated if we can get a 4 -way stop at the intersection we could say to the public we have put this on hold to take a closer look at it with possible funding received for a better long tern solution. In the interim a 4 -way stop could be installed and the speed reduced per the Statute. Genthon Ponds Mr. Berkowitz stated a petition has been received from the resident on the gravel road section (Flintwood and Butternut streets) and the residents would like to get it done this year. If approved to go forward it would not be assessed until next year. Based on the current interest, Mr. Berkowitz stated he would be recommending that the bid alternate for Genthon Ponds be approved at the next Council meeting. The Council meeting was recessed and reconvened. 2010 PRE AUDIT YEAR END UPDATE Mr. Dickinson updated the Council on the 2010 General Fund budget. He explained the 2010 Budget and Levy were adopted on December 15, 2009. The 2010 Budget included a total 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Andover City Council Workshop Meeting Minutes March 29, 2011 Page 12 property tax levy of $10,856,299: $7,631,494 (70.3 %) operational levy $1,900,566 (17.5 %) debt service levy, and $1,324,239 (12.2 %) capital levy. Mr. Dickinson provided an update to the Council on how the 2010 General Fund budget progressed. The numbers provided are unaudited, but deemed reliable. He noted the expenditure limitation policy was for all departments to target 97% of expenditures, the 2010 Pre -Audit Year -end numbers looks to be ending around 95% of expenditures. Mr. Dickinson explained certain line items from the Summary Trial Balance — General Fund. He noted the reserve should not be needed to be dipped into to cover the 2011 budget and recommended a 40% working capital fund balance designation. Mr. Dickinson summarized the City is in excellent financial shape. Councilmember Knight suggested an article be written for the newsletter in layman's terms about the City's financial situation and suggested Mr. Dickinson writes the article. 2011 BUDGET IMPLEMENTATION PROGRESS & INVESTMENT MATURITIES REPORT Mr. Dickinson summarized the monthly 2011 budget contains total revenues of $28,910,245 and total expenditures of $30,785,805. The $1,875,560 of expenditures over revenues is largely due to prepaying debt in order to save on interest expenditures. Mr. Dickinson reviewed City Administration directives and departmental expectations for 2011. He provided attachments to assist discussion in reviewing 2011 progress. In particular pointing to the challenges with snow removal and that department will be over budget because of the tough winter. He reviewed the February 2011 Investment Maturities report. 2012 BUDGET DEVELOPMENT STRATEGIES DISCUSSION Mr. Dickinson presented the 2012 budget development guidelines and asked the Council to establish guidelines for the preparation of the 2012 Annual Operating Budget. He stated he will soon begin the process with the City Staff. Mr. Dickinson reviewed some guidelines for Council consideration. It was the Council's consensus that the budget development guidelines, as presented, are appropriate for developing the 2012 Annual Operating Budget and directed staff to proceed. Mr. Dickinson discussed the difficulties that may be presented by the current legislative session, in particular the financing of capital equipment. 2011 -2012 COUNCIL GOAL DISCUSSION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Andover City Council Workshop Meeting Minutes —March 29, 2011 Page 13 Mr. Dickinson provided a summary of the Councilmember goals and arranged the submissions into a document in the following categories: - Fiscal Goals - Commercial /Residential Development/Redevelopment Goals - Collaboration Goals - Service Delivery Goals - Livability /Image Goals Mr. Dickinson stated he has spoken with some experienced marketing contractors who could be hired to help out with economic development activities. The goals discussion will be held at the April workshop. OTHER TOPICS Mr. Dickinson stated there is a demand for senior housing in Andover, referencing a recent housing study. Grey Oaks may be an area that could provide the housing demand, but in the current market financing construction is difficult. ADJOURNMENT Motion by Jacobson, Seconded by Knight, to adjourn. Motion carried unanimously. The meeting adjourned at 10:30 p.m. Respectfully submitted, Debbie Wolfe, Recording Secretary 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 ANDOVER BOARD OF REVIEW APRIL 11, 2011— MINUTES The Annual Board of Review was called to order by Mayor Mike Gamache at 7:00 p.m., Thursday, April 11, 2011, at the Andover City Hall, 1685 Crosstown Boulevard NW, Andover, Minnesota. Councilmembers Present: Sheri Bukkila, Don Jacobson, Mike Knight, Julie Trude Councilmembers Absent: None Also Present: Mike Sutherlund, Anoka County Assessor Jason Dagastino, Anoka County Residential Assessor John Leone, Anoka County Commercial Assessor Jim Dickinson, City Administrator Molly Johnson, Appraiser Mayor Gamache noted that official notices of the public meeting had been sent to the homes of residents and is posted outside the Council Chambers. He explained the purpose of the meeting and advised that they would only review assessments from the current year. Mr. Dagastino reported the Residential Property Value for 2011 is $2,255,669,100 for Residential and $108,543,000 for Commercial Industrial for a total estimated market value of $2,364,212,100 with a Percent of Change -4.8 %. The evaluation notices went out the second week of March. 41 calls were received and 16 properties were reviewed. For every property and land zone in Andover, values went down. There were 220 "good sales" and there were 160 sales under duress (foreclosures and short sales). $220,700 was the average selling price in 2010. Jim and Marie Miller, 624 142 "d Avenue NW, PIN#28- 32 -24 -33 -0118 Mr. Jim Miller, 624 142 d Avenue NW, stated he has never had any official business with the City before this evening. He stated Jason visited his property after he had called requesting his property be re- assessed. His petition is based on a devaluation of his property based on a carcinogen smoke hazard (wood burner) on an adjacent property. The neighbor next door burns a constant fire throughout the winter. He believes this issue will continue. He has complained about the smoke to the neighbor. Mr. Miller asked his neighbor if the fireplace is ever shut down. The neighbor responded it is a very expensive fireplace, designed to heat the house and reduce the cost of natural gas. Mr. Miller was also told he needed to get "green" and stay indoors if he does not like the smoke. Mr. Miller stated he loses 35% of the enjoyment of his property due to the smoke. Mr. Miller stated the neighbors haul in truckloads of wood. The man of the house does not work during the winter months so he is home and runs a continuous fire. He is concerned that the carcinogen particles are going to find their way into his house. He did 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Andover Board of Review Meeting Minutes —April 11, 2011 Page 2 look into selling the house. He was told he has special knowledge and is required to tell a potential buyer of his experience with his neighbor. He is concerned he has a property he can't sell and is over valued. He had no complaints before February 2010 when the fireplace began being used. He fears retaliation from the neighbors. He believes if the taxes are lowered he may have a chance of selling his house. This is his second new home in Andover. Mr. Dagastino stated the original value was $217,000. He visited the property and feels $217,000 is a fair value for the property. Councilmember Jacobson asked if there was any statute relating to issues such as this. Mr. Dagastino stated not that he is aware of. Councilmember Trude stated she can smell the smoke in the winter when driving down Prairie Road. Councilmember Knight asked if Mr. Miller had spoken to a real estate agent. Mr. Miller stated he spoke with someone in real estate, but not to the extent of discussing selling. He was told about the "special knowledge" issue. Councilmember Trude stated the Council cannot assume there are particulates being burned without more knowledge. There can be a wood burning odor without it being dangerous. Mr. Miller stated he visited with an environmental expert regarding this. He was told his experience was dueling scientists. Mr. Miller has tried to find out more about this fireplace. He researched the building permit and there was not a lot of information available. Councilmember Jacobson stated after hearing Mr. Miller's appeal and Mr. Dagastino's comments he does not feel the City can remedy anything at this point. Mr. Dagastino stated he spoke with two other assessors and Ms. LeDoux, Anoka County Commissioner. Councilmember Trude stated she does not feel this concern merits a decrease in value. Councilmember Bukkila stated she feels this is between Mr. Miller and his neighbor. Wood burning fireplaces are common place in Andover. Mayor Gamache stated he agrees there was not much information available with the request for a building permit. He suggested Staff should require more information when building permits such as this are received. The height of the smoke stack is based on the height of the house it's attached to not the height of the neighboring home. Mr. Dickinson stated the stove that was installed and it is in compliance with the Building Code adopted by Andover. The City does have photographs of the stove, but it is not the practice for the City to share photos inside people's homes. Councilmember Knight stated he heard the issue is the height of the smoke stack. Mr. Miller provided photographs for Council review. Mr. Dickinson showed some additional photographs. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 Andover Board of Review Meeting Minutes —April 11, 2011 Page 3 Mr. Miller agreed with Councilmember Trude that the building code is set to protect the homeowner who is installing a wood burning stove. Mayor Gamache suggested for the long range plan issues such as this should be considered. Motion by Jacobson, Second by Bukkila, to deny the devaluation, after consulting with the County Assessor and others to keep the current value of the property. Councilmember Jacobson stated June 13th is County Board of Appeal where Mr. Miller could bring his concerns if he wishes. Mr. Miller stated he appreciated the Council's time and the fact Jason came to visit his home and offered to visit again next winter. He will not be making an appeal to the County. Mayor Gamache suggested if Mr. Miller had spoken with a real estate agent and found the selling price of his home would be reduced that information would be considered by the Council. Mr. Miller stated he may gather more information and appeal to the County Board. Councilmember Trude stated the County Assessment Board is not necessarily the Anoka County Commissioners. Motion carried unanimously. ADJOURNBOARD OFREVIEW Motion by Jacobson, Seconded by Trude to close the meeting. Motion carried unanimously. The meeting adjourned at 8:00 p.m. Respectfully submitted, Debbie Wolfe Timesaver Off Site Secretarial, Inc. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 REGULAR ANDOVER CITY COUNCIL MEETING —APRIL 19, 2011 MINUTES The Regular Bi- Monthly Meeting of the Andover City Council was called to order by Mayor Mike Gamache, April 19, 2011, 7:00 p.m., at the Andover City Hall, 1685 Crosstown Boulevard NW, Andover, Minnesota. Councilmembers present: Sheri Bukkila, Don Jacobson, Mike Knight, Julie Trude Councilmember absent: None Also present: City Attorney, Scott Baumgartner Director of Public Works /City Engineer, Dave Berkowitz City Administrator, Jim Dickinson City Planner, Courtney Bednarz Others PLEDGE OFALLEGIANCE RESIDENT FORUM No one wished to address the Council. AGENDA APPROVAL Councilmember Trude asked for Consent item #3 to move to Discussion. Councilmember Trude asked about hours for serving food vs. hours for operation in Item 47 and Mr. Dickinson stated they would need to adhere to the Ordinance as part of the liquor license. Councilmember Jacobson suggested since there are a number of residents present to discuss Item #13, it be moved up on the agenda after the Anoka County Sheriff's Monthly Report. Motion by Trude, Seconded by Jacobson, to approve the Agenda as amended. Motion carried unanimously. APPROVAL OF MINUTES April 5, 2011, Regular Meeting: Councilmember Trude requested a correction on page six, line three, adding "Councilmember Trude requested the posting of signs directing traffic to businesses on Crosstown Drive during 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Regular Andover City Council Meeting Minutes —April 19, 2011 Page 2 the construction project ". Councilmember Trude requested a correction on page eight, line eight, adding "based on the fact there are no alternates, and with the sudden opening there would be nearly a 50% turnover if a new member were to be added this year." Councilmember Jacobson questioned page seven, line 21, and whether that was what Mr. Bednarz had said. Mr. Bednarz stated it was and the minutes are correct. Motion by Knight, Seconded by Trude, to approve the minutes as amended. Motion carried unanimously. CONSENT ITEMS Item 2 Approve Payment of Claims Item 4 Approve Resolution Accepting Donation/ABA/Andover Station North Park/Scoreboards for Ball Fields /11 -23 (See Resolution R030 -11) Item 5 Approve Plans & Specs /Order Quotes /11- 12/2011 Parking Lot Maintenance (See ResolutionR03 1 -11) Item 6 Approve Plans & Specs /Order Advertisement for Bids /10 -30 /Crosstown Drive NW Reconstruction (See Resolution R032 -11) Item 7 Approve On -Sale Intoxicating Liquor & Sunday Licenses /Andover Lanes Item 8 Approve Resolution Calling for a Public Hearing on the Proposed Adoption of a Modification to the Development Program for Development District No. 1 and the Proposed Adoption of the Modifications to the Tax Increment Financing Plans for Tax Increment District Nos. 1 -1 and 1 -2, Both Redevelopment Districts (See Resolution R033 -11) Item 9 Accept Resignation/Appoint New Board Member /Youth First Motion by Jacobson, Seconded by Bukkila, approval of the Consent Agenda as revised moving Item #3 to Discussion Items and Item #13 to Discussion after the Sheriff's Report. Motion carried unanimously. ANOKA COUNTY SHERIFF'S OFFICE MONTHL Y REPOR T Commander Kevin Halweg from the Anoka County Sheriff's Office presented to Council and the citizens of Andover an update on law enforcement activities within the City. Councilmember Jacobson asked what was going on yesterday at the intersection of Bunker Lake Boulevard and Round Lake Boulevard as there were about a dozen squad cars around there. Mr. Halweg stated he just returned to town and was not aware of what went on. He will find out and advise Council. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Regular Andover City Council Meeting Minutes —April 19, 2011 Page 3 Mayor Gamache questioned the increase in extra patrol and Commander Halweg stated the County has a new system in squads for doing house checks when people are on vacation. They have a better system for documenting when houses are checked, so this may not necessarily be an increase in extra patrols. DISCUSS NO PARKING1148TH LANE NW BETWEEN JAYST. NW & GROUSE ST. NW Mr. Berkowitz reviewed the City Council has been requested to discuss the conditional no parking restriction along 148th Lane NW between Jay Street NW and Grouse Street NW. Mr. Berkowitz explained a petition was received in June 2010 requesting conditional no parking signs be placed along 148th Lane NW between Jay Street NW and Grouse Street NW. The request was made because of the concern of congestion in this area due to parents dropping children off and picking them up from Andover Elementary School. On June 15, 2010, the City Council approved a no parking resolution that restricted parking along both the north and south side of 148th Lane NW from 8:00 — 10:00 a.m. and 3:00 — 5:00 p.m., Monday through Friday from September 1St to June 1St. Signs were installed before the beginning of the 2010 -2011 school year. Mr. Berkowitz noted in February 2011, a petition was received requesting that parking be reinstated on the south side of 148th Lane NW within the section described. The various reasons were listed on the petition cover letter. Mayor Gamache asked if there are fewer walkers this year. Mr. Berkowitz showed a map of the current walking area and noted the walk area is smaller. Councilmember Trude stated she is on the Community Education Advisory Council and she is aware of that change as the School Board members explained that to the Advisory Council. It was part of the approval of a recent levy referendum and she noted it was related to the fact that more families are eligible for free or reduced lunch which entitles them to free bus rides so they are needing to run the buses outside these walk zones. Mr. Berkowitz indicated on the map the location of the Andover Elementary walk zone. Councilmember Trude asked Commander Halweg if he has driven through the neighborhood. Commander Halweg stated he spoke with Chief Deputy Wells and no parking would be sufficient on one side of the road. Parking on both sides of the roads was creating some hazards from a public safety perspective. Councilmember Trude asked if people can be ticketed while sitting in a running car and when approached they drive around and return (airport circling). Commander Halweg stated they could ticket, but would not want to tie the deputies up doing this. He noted the current no parking has just pushed the parking to other areas (Jay Street and Grouse Street). Mayor Gamache stated the Council has two options either to stay with the current no parking on 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Regular Andover City Council Meeting Minutes — April 19, 2011 Page 4 both sides of the streets or to allow parking on the south side of the street. Mayor Gamache stated the Andover Elementary School pickup policy gives specific options for where to pick up children. The school district policy would remain in place. The Council is only discussing walkers in this area. Councilmember Jacobson asked if the seven people who signed the original petition, if there has been a change in opinion. Mr. Richard Wagner, 1735 148th Lane, lives directly next to the path. He does not feel there should be any parking allowed on the street. There were 58 people that signed the petition and if there were 58 cars there would be much congestion. The parents should not be permitted to park their cars in the non - designated pick -up area. Mr. Wagner stated people are not obeying the no parking signs. He feels the area needs to be policed. It is not a school picku zone and it is for walkers. If parking is allowed on one side of the street, the residents on 148` Lane would be very upset. The children that have to walk have to walk among these cars. He is sometimes unable to pull into his driveway. Mr. Wagner stated the officers have been there and given out some tickets but it has to be policed. Councilmember Trude stated the decision should be made according to what is best for the kids. All parties have been invited to the meeting tonight. Mr. Wagner stated everyone needs to follow the rules and it is an ongoing problem. Nothing has changed since the signs went up. Mr. Wagner referred to the pictures submitted with the new petition. As it is now you can not see children running across the street. Mr. Wagner stated this has to be enforced and if that means giving tickets out so be it. If a change is made it will be a mess. Mr. Wagner stated another point in the new petition was that the Andover High School students are racing through the neighborhood and he disagreed they are not racing around there at 3:35. He lives there and he knows what happens. There are some kids that do race through there after the soccer games. He stated this needs to be enforced. Mr. Wagner noted they also gave up their rights to park on the street in front of their houses. Councilmember Bukkila asked if there was anyone that lives on that street that wants the no parking lifted. No one present responded. Mayorbamache asked about 168th Lane just south of Rum River Elementary School. Mr. Berkowitz stated a trail is provided for the walkers and the same no parking restrictions are in place. Mr. Berkowitz noted he has not heard any complaints in that area. Councilmember Bukkila asked how far the no parking signs are on 148th Lane. Mr. Berkowitz stated they are posted from Jay Street to Grouse Street. Ms. Tina Eggleston, 1717 148th Lane. Her concern is for the children's safety. Her mother does daycare for her and she has a difficult time getting through during the after school hours. She has difficulty getting into her driveway. Her property is trampled with children running across her yard through her flowers. She does not appreciate that. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Regular Andover City Council Meeting Minutes —April 19, 2011 Page 5 Mr. Dan Stay, 1668 146th Avenue NW. He has three children. He will have children at Andover Elementary for the next 6 years. They pick up their children on 148th Lane when the weather is bad. They go there because it is convenient. The inner circle of Pinewood Estates is roughly one mile to drive around from his house all the way around. Sunshine Park would be 2.9 miles from his home. That would be $1,750 more spent in gas over the next six years. He stated the main reason they go there is safety. He feels this is the safest way for his children to get from school home. He stated there are high school students that do drive through the areas. He pushed 7 cars out of his snowbank. Mr. Stay stated he wants to eliminate any danger and the safest place for he or his wife to pick up their children is on 148th Lane. He stated the number of cars have decreased this year. Today he counted seven cars. When people are parking on Jay Street where it is not posted, as the children approach the cars move closer to the children and sometimes stop in the middle of the road. He has not noticed much airport circling. No parking on the north side will open up the visibility. He stated they had 58 signatures from the neighborhood that all do not have children currently attending the school. These are people from the neighborhood who do not like the idea of no parking on 1481h Lane. He does not want to start a neighborhood war only keep the children safe, but he would like to see parking allowed on the south side of 148th Lane. Councilmember Knight asked if the designated pickup area for the school is there a wait when going to pickup children. Mr. Stay is not sure about Sunshine Park, but if picked up at the school his wife would need to go inside and take the preschoolers with her. Parents sign a card at the beginning of the year as to how they will be leaving the school and where they were to go after school. Councilmember Trude stated she believes Andover Elementary is somewhat stricter compared to some of the other elementary schools. It's rather complicated to get 1500 children out of school and most get on a bus, etc. Kids are channeled out certain doors depending on what their program is. Parents are frustrated they need to park, take other children out of car seats, go into the school and wait to pickup their children. It's rather a unique situation. Councilmember Trude asked if Crooked Lake has picking up behind the school. Ms. Tonya Hoppe, 14681 Grouse Street stated she has a daycare. She picks up the children in her care approximately 5 times this year. The parking lot for in- school pickup is generally full. She has called the bus company to see if she could pay them to pick up her kids. She feels better dropping the kids off near the path and picking them up at the path. Cars use her neighborhood as a cut - through. She only occasionally picks up her children. She has sometimes spent 25 minutes trying to get across Hanson Boulevard. Councilmember Trude asked how she felt about the congestion on the street. Ms. Hoppe stated there hasn't been a time she couldn't get through. She believes most try to be respectful and not park at the end of a driveway. She suggested there be a compromise so everyone is happy. Councilmember Knight asked how she felt about parking on one side of the street. Ms. Hoppe stated traffic would only be going one way down the street and parking on one side would be better. She does not believe there are many that pick up every single day. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Regular Andover City Council Meeting Minutes —April 19, 2011 Page 6 Mr. William Lane, 1734 148`" Lane NW, questioned the busing area vs. walkers. He stated it is a mess and a change would not increase safety. Mr. Lane stated he thought a referendum was passed where everyone in the neighborhood would get free busing. Councilmember Bukkila stated children living more than one mile are bused. He suggested the Council visit the neighborhood and see what actually is going on. Mr. Lane works nights and there is much commotion while he is trying to sleep. Children are riding bikes, running and it is a safety issue. He does not have children any longer attending Andover Elementary. He suggested there be more patrols, the only time they see patrols is when someone calls. Councilmember Bukkila stated it is a peak time of the day and there are only so many law enforcement officers on a given shift. It is more helpful for people to call if someone is needed. Mr. Lane stated it is a bad situation, the Council has been made aware of it and the police are not patrolling. Councilmember Trude stated the Council hasn't heard anything until this was brought back up. Law enforcement said they have driven through the area and have not seen the type of problems you are talking about because parents are pulling up to the curb, children hop into the car and they pull away. She stated that is not parking. If they are parked on the side of the street where parking is allowed that is acceptable. Councilmember Trude stated it is a whole new world, people are very concerned about their children. Mr. Lane suggested Council come and look at the situation. He believes Andover Elementary has provided a safe method for children why would you want to have people stopping in the middle of the street. Councilmember Bukkila stated they cannot be ticketed unless they are impeding traffic. Mr. Lane stated Andover Elementary has provided an escort to a safe pick -up spot. Tickets can only be given to cars stopped in the middle of the street when they are blocking other traffic. Councilmember Trude would like to research the current Andover Elementary School Policy and talk to the school. She does not believe a decision needs to be made tonight on this. Ms. Tami Matti, 14630 Grouse Street, stated you need to sign up for parent pickup, go into the cafeteria and wait for your children to come out. She does not go to pick up her children, they ride with a neighbor. They do not have a choice; their children have to walk. She asked the Council to allow parking on one side of the street. Parents need to sign up for parent pickup. They try to make it better by carpooling. Councilmember Bukkila stated when Alice Shea the Andover Elementary principal was at another school things were done differently. She suggested the school be contacted regarding their policies to see if something can be worked out. She does not know if their program is becoming the new norm. Mayor Gamache stated one issue is there are no sidewalks so children need to walk on the street. There are trails along Hanson Boulevard, but that would be a longer walk. Mayor Gamache again reviewed the Council has two options. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Regular Andover City Council Meeting Minutes —April 19, 2011 Page 7 Councilmember Jacobson stated he does not have children attending the school. He suggested the school provide a guard at the end of the walkway. Enforcing the no parking ban is nearly impossible because of the number of deputies and the time we have. If no parking on two sides of the street continues it will just move the cars to Grouse or Jay Streets. We cannot do anything about the airport circling. Motion by Jacobson, Seconded by Trude, to remove the no parking ban on the south side of 148th Lane NW, and at the same time request through the school for a guard or responsible parent to help with safety for children leaving the path. Councilmember Knight stated another factor is that parents do not want their children out of their eyesight. He would like to see the school Principal involved in the issue and be made aware of the depth of the concerns. Councilmember Trude stated she agrees with Councilmember Knight's comments. The issue is getting the cars stationery which would be safer. It would almost make it a one -way street at that time of day and would be safer. She agrees the Principal should be involved. Councilmember Jacobson stated Mr. Dickinson suggested Council direct staff to create a resolution that would be considered at the next meeting. Mr. Dickinson stated if Council wanted to act on this now they could repeal the standing resolution and pass another resolution allowing parking on the south side of the street. Councilmember Jacobson suggested Council act on it this evening. Councilmember Bukkila stated she is not in disagreement but suggested it be looked at in two steps. First would be to have Staff approach the school and see if there is some type of arrangement where the older children be made crossing guards to help the younger children on the corners. She suggested the school be approached on such an arrangement before we open up the traffic. Councilmember Jacobson stated he does not think any child would be sufficiently on guard. It would need to be an adult. Mayor Gamache stated there most likely won't be any more snowy days. There used to be crossing guards and there were no adults even doing that. He stated most of the time parents would be picking up their children is in the winter. He would like to see it remain as is for the remainder of the year. Mayor Gamache asked if the signs would be removed immediately if the resolution is passed and Mr. Berkowitz stated they could be removed in a couple days. Councilmember Trude suggested it would be nice to have a designated place for the children to cross the street. It would be nice if the no parking would be the four houses near the path. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Regular Andover City Council Meeting Minutes —April 19, 2011 Page 8 Motion by Jacobson, Seconded by Trude, to repeal the standing resolution and approve a new resolution allowing parking on the south side of 148"' Lane NW and contact the school Principal to work out a solution. Councilmember Trude stated she would prefer all parents use the designated pick -up areas provided by the school. Mayor Gamache suggested a small stop sign be put at the end of the trail. Councilmember Knight stated this could be a temporary test through the end of the school year. Councilmember Bukkila stated it would not be temporary once the signs came down they would be done. Motion carried 3 ayes, 2 nays ( Bukkila and Knight). (See Resolution R034 -11) PUBLIC HEARINGIFENCE ORDINANCE /CITY CODE 12 -7 -2 Mr. Berkowitz reviewed the City Council is requested to hold a public hearing for the City's Fence Ordinance /City Code 12 -7 -2. He noted private fences placed in critical easement locations (underground utilities, drainage areas, ponds, wetlands and access locations) can cause problems with utilities, storm water drainage systems and wetlands. To ensure the drainage systems and ponds function how they were designed it is critical to regulate the location of a private fence. Access to these types of facilities is important from a maintenance standpoint because if the storm water system is not maintained they may not perform as designed which can cause flooding and other damage to occur. Mr. Berkowitz stated it is also important to protect wetlands from encroachment so that water quality is maintained and that wildlife can flourish. The proposed Ordinance /City Code changes clarifies allowable locations for fences and also allows some flexibility for larger parcels in regard to where fences can be placed. Mr. Berkowitz reviewed the proposed changes to the City Code. Councilmember Jacobson noted on #5 and suggested to change the words "not be enclosed" to "not enclose ". Councilmember Knight asked for a description of a clear view triangle. Mr. Berkowitz drew a diagram. Councilmember Jacobson asked if the rewording satisfies the problems with the R -4 lots. Mr. Berkowitz stated it is clear. Previously there was some problem with the wording. This also 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Regular Andover City Council Meeting Minutes —April 19, 2011 Page 9 provides some flexibility on larger lots. Councilmember Trude stated if people are in an area with an excessive easement taken can it be looked at and Mr. Berkowitz stated it would be looked at. Motion by Jacobson, Seconded by Bukkila, to open the public hearing. Motion carried unanimously. Motion by Knight, Seconded by Bukkila, to close the public hearing. Motion carried unanimously. Motion by Jacobson, Seconded by Bukkila, for approval of the City Code changes for Fence Ordinance /City Code 12 -7 -2 and approve Summary Ordinance for publication. Councilmember Knight noted there are no provisions for gates. Councilmember Trude asked if fences would be prohibited if a gate was installed that would allow access. Councilmember Bukkila stated there needs to be a minimum access. She does not want to say access needs to be in a certain location. Access needs to be provided. Councilmember Trude referred to Item 4 and stated that applies to 2 '/z acre lots. She does not know if Item 3 provides the least restriction on property owners that we need to. Mr. Berkowitz stated for R -4 lots if they need to get access they would most likely remove a gate and the entire length of fence back to the access point. If it's an R -I lot there is more space and more access points. The City needs to be stricter on what can be allowed for R -4 lots. Councilmember Trude asked if fences were allowed on lots that have a pond. Mr. Berkowitz stated in #3 it is spelled out. The access is defined in the lot description. Most ponds have two accesses. The pond is up to the 100 year flood elevation. Mayor Gamache asked how many requests were made for fences they wanted to put in an easement and Mr. Berkowitz stated there were approximately five. In most cases they moved the fence. Councilmember Bukkila stated she is fine with the revisions. Councilmember Trude stated she feels this is too restrictive. Mr. Berkowitz stated the City's development process does not take excessive easements. Councilmember Trude asked if there was an appeal process. Councilmember Trude stated anyone can appeal an administrative decision to the City Council. Motion carried 4 ayes, 1 nay ( Trude). (See Ordinance 405) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Regular Andover City Council Meeting Minutes —April 19, 2011 Page 10 PUBLIC HEARING /SIGN ORDINANCE /CITY CODE 12-15 Mr. Bednarz explained this item is a public hearing to discuss changes to the City's sign regulations. At the last Council meeting the Council identified the following areas of the sign regulations for further discussion: 1. City Code 12 -15 -4: Exemptions 2. City Code 12 -15 -5: Signs Prohibited in All Districts 3. City Code 12- 15 -7C: Size and Placement Standards 4. City Code 12- 1540: Temporary and Promotional Signs Mr. Bednarz reviewed the wording changes. Councilmember Jacobson suggested 12 -15 -4: under A. be revised to read: "Election Signs: Election signs are permitted on any private property. Such signs may be displayed 90 days prior until 10 days after any election". Mr. Bednarz stated this wording is similar to what other communities require. City Attorney Baumgartner quoted the State Code regarding election signs which is very vague. Councilmember Trude stated this year the State Code superseded the City Code. Mr. Baumgartner suggested a specific date not be included. The State Statute shows 46 days before the election. Councilmember Jacobson suggested it remain at 90 days. Councilmember Trude noted under 12 -15 -4 in the third line should read City Code 12 -15 -5. Mr. Bednarz continued reviewing the changes to the Code. Councilmember Knight referred to 12 -15 -5 Item B. and noted that doesn't deal with highways and large signs that distract drivers. Councilmember Knight asked about billboards. Mr. Bednarz stated they are not allowed. Councilmember Jacobson stated we do not have any highways. Councilmember Jacobson referred to 12 -15 -5 Item C. and asked if he had a tree on his property he could not put a sign on it. Mr. Bednarz stated that is the ordinance. Councilmember Jacobson stated is it worth having an ordinance you cannot enforce. Councilmember Trude referred to placement standards. There may be other places where signs would need to be placed. She asked if this would come up in the future for business signs. Mr. Bednarz stated he does not believe it would come up. Those businesses would most likely put their sign directly on their building. Councilmember Jacobson asked about the signs for College Pro, stump removal, sprinkler blow outs and those types of signs stuck in the ground. Mr. Bednarz stated they are not permitted 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Regular Andover City Council Meeting Minutes —April 19, 2011 Page 11 along the right -of -way and some are removed for mowing. Mr. Bednarz provided a comparison chart by the City for temporary signs. Currently Andover allows 40 days and the City charges one fee for the calendar year. They submit the dates when requesting the permit. Councilmember Jacobson asked if there have been complaints. Mr. Bednarz stated there have been requests for more time especially for retail businesses. Councilmember Trude suggested the Code be changed to 60 days for temporary signs A. 4. Under temporary signs change 30 days to 60 days. Councilmember Bukkila asked if this sign ordinance has any effect on holiday decorations. Mr. Bednarz stated they do not consider holiday decorations as signs. Motion by Jacobson, Seconded by Knight, to open the public hearing. Motion carried unanimously. Motion by Knight, Seconded by Jacobson, to close the public hearing. Motion carried unanimously. Motion by Trude, Seconded by Knight, for approval of the Ordinance Amendment Sign Ordinance /City Code 12 -15 as amended and approve the Ordinance Summary for publication. Motion carried unanimously. (See Ordinance 406) DISCUSSICONSIDER APPRO VAL OF CONNECTIVITY SER VICES A GREEMENT WITH COMMUNITY ANCHOR INSTITUTION(S) FOR BROADBAND SERVICE AT CO- LOCATION SERVICE SITE(S) Mr. Dickinson reviewed Connect Anoka County is a county -led effort to increase the amount of fiber optic cable in Anoka County. The Connect Anoka County project has resulted in a partnership between Zayo Bandwidth, LLC and Anoka County. Through the partnership, Zayo Bandwidth applied for and received a National Telecommunications Information Administration (NTIA) grant paying 70 percent of the fiber construction cost and initial equipment. The grant project will construct an approximately 286 mile fiber network throughout Anoka County linking 145 governmental institutions. The City's right -of -way ordinance is in place and the appropriate fees will be charged. The language of the agreement has been revised. Sixteen cities within Anoka County have approved the agreement, 1 township, 3 schools, Ramsey County and two more schools will consider it. Mr. Dickinson noted Attachment I will be reordered in the packet. Mayor Gamache asked about which schools have agreed and Mr. Dickinson stated Fridley, Columbia Heights and PAC Charter School have approved. Anoka Hennepin already has quite a 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Regular Andover City Council Meeting Minutes —April 19, 2011 Page 12 bit of line connecting their facilities. Councilmember Jacobson asked if this is approved does this grant Zayo access to the building and does not include the fees. Mr. Dickinson stated the only fees anticipated would be $75 per month. Mr. Baumgartner stated the City can have the equipment installed, but not connect and no fees would be charged until the City connected. Mr. Dickinson stated the plan is for four of the six co- location sites to be connected. Mr. Dickinson stated the City still has to have their own Internet Service Provided (ISP). The point to point lines for the fire stations could be eliminated which are very costly. Motion by Knight, Seconded by Trude, to approve the Connectivity Services Agreement as revised with moving Attachment I to the bottom of the list. Councilmember Trude stated in 2005 the schools were connecting to a fiber optic cable. The City was asked if they would like to connect for $375,000. She is pleased we can get it now without paying that much. This will also be an economic development tool as it will be offered to businesses within the City. This will also help us with some collaboration efforts. Mr. Dickinson stated this will open many opportunities for connectivity. Councilmember Trude noted this was part of a stimulus package and there will be jobs created within the County. Councilmember Bukkila stated this is a nationally- driven program sent out to the States. She fears it has been rushed through and granted stimulus funds without the time taken to research it fully. Now there are so many cities taking advantage of the program, that if Andover didn't do it there would be a cost disadvantage. Based on the fundamentals she is not in favor. Councilmember Jacobson stated the document is not as clear as it should be. He is afraid of the competition with the other providers we have. If Zayo starts providing services in competition the other commercial provider will ask why are they paying the 5% fee which Zayo will not have to pay. Mr. Baumgartner stated he participated in many meetings and this agreement is under Minnesota Statue Chapter 237 dealing with telecom. At some point everything may be under Chapter 237. Motion carried 4 ayes, 1 nay ( Bukkila). APPROVE RESOLUTION /SUPPORT FOR BUNKER LAKE BOULEVARD NW FEDERAL FUNDING APPLICATION Councilmember Trude reviewed the Anoka County Highway department has identified Bunker Lake Boulevard from Jefferson Street in Ham Lake to Crane Street in Andover as a good candidate for federal funding. The County is seeking support from the City of Andover to pursue such funding through the Regional Funding Solicitation. She noted there are numerous issues on this road such as the railroad tracks, intersections, wetlands, County Park entrance, etc. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Regular Andover City Council Meeting Minutes —April 19, 2011 Page 13 Councilmember Trude suggested if there was more time perhaps a better solution could be found. The south entrance to the County Park is a dangerous intersection. She is concerned they do not have enough information. She asked if this is approved is the City locked into the drawings they saw. The County only spent 10 minutes with Council explaining their plan. Mr. Berkowitz stated Wintergreen and Butternut Streets would be conditional, Goldenrod Street would be a full movement intersection, they would look at signal warrants. Prairie Road would stay the same, Sycamore Street would be a full movement intersection. There would be a pullover lane for buses at the railroad tracks along with a pedestrian crossing. Wintergreen Street would be restricted and Crane Street would be a full movement intersection. They would also look at a trail underpass and more trail connections to Bunker Lake Regional Park. Councilmember Trude stated the worst intersection is the County park entrance. Mr. Berkowitz stated the County is trying to provide one full movement intersection for each housing development area. Councilmember Trude stated this is a very sensitive project. Councilmember Bukkila asked if the Fire Chief had an issue with one of the intersections. Mr. Berkowitz stated that was with the Butternut Street intersection. He spoke with the Fire Chief and a 4 inch curb is able to be driven over by emergency vehicles. With Goldenrod Street being a full movement intersection the Fire Chief is ok with that. Councilmember Bukkila asked about an overpass over the railroad tracks. Mr. Berkowitz stated this application would not include an overpass. There may be other grant money available for an overpass. Councilmember Bukkila asked if the City would be able to contribute to the cost of an overpass. Mr. Dickinson stated if there was an overpass over the railroad the City could consider that a safety improvement or quality of life improvement they may want to pursue. If a Federal grant was available on that road, it would put doing an overpass within reach. Mr. Berkowitz stated the funding is not available until 2015 — 2016. This funding would be applied for and more applications would be made for additional funding for a potential overpass. There is competition for this funding and this is just an application. Motion by Bukkila, Seconded by Jacobson, to approve the resolution and attached letter in support for Bunker Lake Boulevard NW Federal Funding Application. Mayor Gamache stated this project would finish Bunker Lake Blvd. When completed there would be four lanes. Councilmember Trude stated she hopes the County considers her concerns on this sensitive proj ect. Mr. Berkowitz stated the design process is started two years in advance. Staff will continue to bring updates back to the Council. The Council will need to agree to a Joint Powers Agreement 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Regular Andover City Council Meeting Minutes —April 19, 2011 Page 14 for this project. Motion carried 4 ayes, 1 nay (Trade). (See Resolution R029 -11) APPOINT OPEN SPACE COMMISSIONER Mr. Bednarz reviewed a new Open Space Commissioner is needed to complete the term of outgoing Commissioner Jody Keppers who will attend his last meeting in May. Staff asked residents serving on other Commissions if they would be interested in serving on the Open Space Advisory Commission. Planning & Zoning Commissioner Val Holthus indicated that she would be interested in serving on both the Planning & Zoning and Open Space Advisory Commissions. Staff views this as an opportunity to add an experienced Commissioner to the group. This appointment could also create a liaison between the two commissions similar to organizational structures used by other cities. Motion by Knight, Seconded by Bukkila, to appoint Valerie Holthus to the Open Space Advisory Commission to complete the term of Jody Keppers from June 2011— January 2012. Motion carried unanimously. SCHEDULE JOINT MEETING WITH CITY OFRAMSEY Mr. Dickinson reviewed the Council is requested to schedule a Joint Meeting with the City of Ramsey City Council. Motion by Jacobson, Seconded by Trude, to schedule a Joint Meeting with the City of Ramsey on Monday, May 2, 2011 at 6 :30 p.m. Ramsey City Hall. Motion carried unanimously. SCHEDULE MAY WORKSHOP MEETING Mr. Dickinson reviewed the Council is requested to schedule a Council Workshop for the month of May for a number of miscellaneous business items. Motion by Jacobson, Seconded by Bukkila, to schedule a May Council Workshop for May 24, 2011 at 6:00 p.m. Motion carried unanimously. ADMINISTRATOR REPORT City Staff updated the Council on the administration and city department activities, Legislative topics, update on development/CIP projects and meeting reminders. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Regular Andover City Council Meeting Minutes —April 19, 2011 Page 15 MA YORICO UNCIL INPUT (DOG PARK) — Councilmember Jacobson stated during the meeting with Coon Rapids there was a discussion about an Anoka County Dog Park. Staff was requested to investigate further. The dog park would be on County land. Mr. Dickinson will follow up on, but he thought the City of Andover should support in spirit. (ANOKA COUNTYBOARD MEETING) — Councilmember Trude attended the Anoka County Board Meeting held at Andover City Hall. They brought a lot of staff and the parking lot was full. There was good attendance. The County Board did a good job of explaining what they were acting on. Councilmember Trude thought it would be nice if the City of Andover could do more awards and recognize residents. Motion by Jacobson, Seconded by Bukkila, to adjourn. Motion carried unanimously. The meeting adjourned at 10:00 p.m. Respectfully submitted, Debbie Wolfe, Recording Secretary Regular Andover City Council Meeting Minutes —April 19, 2011 Page 16 REGULAR ANDOVER CITY COUNCIL MEETING MINUTES APRIL 19, 2011 TABLE OF CONTENTS PLEDGE OF ALLEGIANCE .......................................................................... ............................... 1 RESIDENTFORUM ....................................................................................... ............................... 1 AGENDAAPPROVAL ................................................................................... ............................... 1 APPROVALOF MINUTES ............................................................................ ............................... 1 CONSENTITEMS .......................................................................................... ............................... 2 Item 2 Approve Payment of Claims .......................................................... ............................... 2 Item 4 Approve Resolution Accepting Donation/ABA/Andover Station North Park/Scoreboards for Ball Fields /11 -23 (See Resolution R030- 11) .... ............................... 2 Item 5 Approve Plans & Specs /Order Quotes /11- 12/2011 Parking Lot Maintenance (See ResolutionR031- 11) ............................................................................ ............................... 2 Item 6 Approve Plans & Specs /Order Advertisement for Bids /10 -30 /Crosstown Drive NW Reconstruction (See Resolution R032- 11) ........................................... ............................... 2 Item 7 Approve On -Sale Intoxicating Liquor & Sunday Licenses /Andover Lanes ................ 2 Item 8 Approve Resolution Calling for a Public Hearing on the Proposed Adoption of a Modification to the Development Program for Development District No. 1 and the Proposed Adoption of the Modifications to the Tax Increment Financing Plans for Tax Increment District Nos. 1 -1 and 1 -2, Both Redevelopment Districts (See Resolution R033 -11) .............................................................................................. ............................... 2 Item 9 Accept Resignation/Appoint New Board Member /Youth First .... ............................... 2 ANOKA COUNTY SHERIFF'S OFFICE MONTHLY REPORT ................. ............................... 2 DISCUSS NO PARKING /148TH LANE NW BETWEEN JAY ST. NW & GROUSE ST. NW (See Resolution R034- 11) ........................................................................... ............................... 3 PUBLIC HEARING/FENCE ORDINANCE /CITY CODE 12 -7 -2 (See Ordinance 405) ............. 8 PUBLIC HEARING /SIGN ORDINANCE /CITY CODE 12 -15 (See Ordinance 406) ................ 10 DISCUSS /CONSIDER APPROVAL OF CONNECTIVITY SERVICES AGREEMENT WITH COMMUNITY ANCHOR INSTITUTION(S) FOR BROADBAND SERVICE AT CO- LOCATION SERVICE SITE( S) ............................................................... ............................... 11 APPROVE RESOLUTION /SUPPORT FOR BUNKER LAKE BOULEVARD NW FEDERAL FUNDING APPLICATION (See Resolution R029 -11) ........................... ............................... 12 APPOINT OPEN SPACE COMMISSIONER .............................................. ............................... 14 SCHEDULE JOINT MEETING WITH CITY OF RAMSEY ...................... ............................... 14 SCHEDULE MAY WORKSHOP MEETING .............................................. ............................... 14 ADMINISTRATORREPORT ...................................................................... ............................... 14 MAYOR/COUNCIL INPUT ......................................................................... ............................... 15 (DOG PARK) ............................................................................................. ............................... 15 ( ANOKA COUNTY BOARD MEETING) .............................................. ............................... 15 C I T Y O F �a ND 4VE 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 Direci FROM: Lee Brezinka, Assistant Finance Director SUBJECT: Payment of Claims DATE: May 3, 2011 INTRODUCTION Attached are disbursement edit lists for claims related to the on going business of the City of Andover. DISCUSSION Claims totaling $133,998.61 on disbursement edit list 91- 3 from 04/20/11 — 04/28/11 have been issued and released. Claims totaling $91,815.24 on disbursement edit list #4 dated 05103111 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 REQUESTED The Andover City Council is requested to approve total claims in the amount of $225,813.85. Please note that Council Meeting minutes will be used as documented approval. 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O ti O C � � O � h d' U � � O Uo 0 N W N 0 M M C 7 b eq Ir 7 t N U N nQ �w a V Pr .0 U m U T "'_ b O N O z w U d N N U � C/I U .r O O U o 0 N 00 N 0 O O O O O O N N b w u m 4i N O � N e�1 U U aa33 N GC N 0 0 b ra M N d' 7 N �w F 0 U w° z F H a M N 00 0 N 00 N O_ .a O O a x w as 0 N m WL �'t...i N� V _ ti ~ O c, O p„ U UL \l V N 0 N b � � o y i-1 L L z U d' d w ea Q w C a� CC a c 7 O C O d U d .1 0 z v FBI �o U V C �o N O p� O coo ON x� o U� 0 N M O h 0 N N 00 00 .r .r a rn r 0 N O AA y � p F F � U F O N ,d N O % M N '. ao -�7 �U x o .r P U w °Z FF w N O 0 N N O 0 0 W x U o. 0 (OZ) C I T Y O F ND G T E 1685 CROSSTOWN BOULEVARD N.W. • ANDOVER, MINNESOTA 55304 • (763) 755 -5100 FAX (763) 755 -8923 • WWW.ANDOVERMN.GOV TO: Mayor and Council Members CC: Jim Dickinson, City Administrator FROM: David D. Berkowitz, Director of Publics rks / City Engineer SUBJECT: Approve Resolution and Letter of Support/Transportation Enhancement Funding/11 -17/ Bunker Lake Boulevard Regional Trail Connection - Engineering DATE: May 3, 2011 INTRODUCTION The City Council is requested to approve the Resolution and Letter of Support for Transportation Enhancement Funding, Bunker Lake Boulevard Regional Trail Connection from Round Lake Boulevard NW to east of 38th Avenue NW. DISCUSSION Anoka County Parks is submitting an application for federal funding to complete a trail connection on Bunker Lake Boulevard NW between Round Lake Boulevard NW and 38th Avenue NW. This trail connection would fill in a gap on Bunker Lake Boulevard NW that will exist once the 2012 Bunker Lake Boulevard NW reconstruction project is complete. The 2012 Bunker lake Boulevard reconstruction project includes a trail from 7th Avenue NW to a few hundred feet east of 38th Avenue NW. That leaves a gap from where that project leaves off to Round Lake Boulevard NW. The trail system on Bunker Lake Boulevard NW east of Round Lake Boulevard NW exists along the corridor east of Hanson Boulevard NW and provides a connection to the Bunker Hills Regional Park by a railroad underpass in Coon Rapids. This is an important link not only for Andover but also for Anoka County. ACTION REQUIRED The City Council is requested to approve the Resolution and Letter of Support for Transportation Enhancement Funding, Bunker Lake Boulevard Regional Trail Connection. Respectfully submitted, David D. Berkowitz Attachments: Resolution & Letter of Support CITY OF ANDOVER COUNTY OF ANOKA STATE OF MINNESOTA RES. NO. SUPPORTING ANOKA COUNTY FEDERAL FUNDING APPLICATION FOR REGIONAL TRAIL CONNECTION ON BUNKER LAKE BOULEVARD WHEREAS, Anoka County and the City of Andover has identified this corridor as a Regional Trail System, and, WHEREAS, Anoka County and the City of Andover have worked together in the past to make regional trail improvements to serve long -term growth and development along the Bunker Lake Boulevard corridor, and, WHEREAS, Anoka County would like to submit an application to the Transportation Advisory Board to the Metropolitan Council for 2015 and 2016 to receive federal funds to make this regional trail connection along Bunker Lake Boulevard. NOW THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ANDOVER, MINNESOTA: That the City of Andover supports Anoka County in preparing and submitting an application for funding for the regional trail system along Bunker Lake Boulevard. Adopted by the Andover City Council this 3 t day of May, 2011. CITY OF ANDOVER ATTEST: Michael R. Gamache - Mayor Michelle Hartner— Deputy City Clerk 1685 CROSSTOWN BOULEVARD N.W.. ANDOVER, MINNESOTA 55304 • (763) 755 -5100 FAX (763) 755 -8923 • WWW.ANDOVERMN.GOV May 3, 2011 Karen Blaska Parks Planner Anoka County Parks Department 550 Bunker lake Blvd NW Andover, MN 5304 RE: Transportation Enhancement Funding Dear Ms. Blaska, The City of Andover is writing this letter in regards to this year's Transportation Enhancement Funding. We understand that Anoka County Parks would like to submit an application for a trail connection from Round Lake Boulevard to just east of 38"' Avenue NW. This letter is in support of the project and for Anoka County to pursue federal funding. The City of Andover and Anoka County continue to coordinate their efforts in improving the area's transportation issues. We feel this project is extremely important to fill in a missing part of the regional trail system. This segment will fill in a gap that will allow a full east/west connecting trail that extends across Andover and ties the Anoka County Bunker Hills Regional Park all the way to the Anoka County Library in Anoka. If you have any further questions in regard to the project on the city's end, please feel free to contact us. Sincerely, City of Andover Mayor C I T Y O F NDOVE 1685 CROSSTOWN BOULEVARD N.W.. ANDOVER, MINNESOTA 55304 • (763) 755 -5100 FAX (763) 755 -8923 • WWW.AN DOVE RMN.GOV TO: Mayor and Council Members CC: Jim Dickinson, City Administrator David D. Berkowitz, Director of Pub ' o s /City EngineerUb FROM: Jason J. Law, Assistant City Engineer SUBJECT: Order Improvement/Order Plans & Specs /11 -11 /Andover Station North Ball Field Parking Lot Expansion - Engineering DATE: May 3, 2011 INTRODUCTION The City Council is requested to order the improvement and direct preparation of plans and specifications for Andover Station North Ball Field Parking Lot Expansion, Project 11 -11. DISCUSSION The Andover EDA has requested construction of a driveway access to serve Lot 1, Block 1 of Andover Station North. This would allow access to this parcel from 139 h Lane NW to the parcel. The hope is the proposed driveway will make this parcel more marketable. With the driveway access, a gravel parking lot will be constructed on Lot 1, Block 1 for overflow parking for the Andover Station North ball fields. This parking lot could also serve a potential dog park that was being proposed north of the easterly Andover Station North ball field. There would be approximately 30 parking spots. The parking area would remain gravel, while the driveway access would be paved with concrete curb and gutter. BUDGETIMPACT The project would be funded 100% by the existing TIF district in this area. ACTION REQUIRED The City Council is requested to approve the resolution ordering the improvement and directing preparation of plans and specifications for Project 11 -11, Andover Station North Ball Field Parking Lot Expansion. R spectfull submitted, Jason J. Law Attachments: Resolution & Location Map'/ CITY OF ANDOVER COUNTY OF ANOKA STATE OF MINNESOTA RES. NO. MOTION by Councilmember to adopt the following: A RESOLUTION ORDERING IMPROVEMENT AND DIRECTING PREPARATION OF PLANS AND SPECIFICATIONS FOR THE IMPROVEMENT OF PROJECT NO. 11 -11 FOR ANDOVER STATION NORTH BALL FIELD PARKING LOT EXPANSION . WHEREAS, the City Council is cognizant of the need for the improvements; and NOW, THEREFORE BE IT RESOLVED by the City Council to order the improvement of Andover Station North Ball Field Parking Lot Expansion , Project 11 -11; and BE IT FURTHER RESOLVED by the City Council to hereby direct the Director of Public Works /City Engineer to prepare the plans and specifications for such improvement project. MOTION seconded by Councilmember, and adopted by the City Council at a regular meeting this 3`d day of _May , 2011 , with Councilmembers in favor of the resolution, and Councilmembers voting voting against, whereupon said resolution was declared passed. ATTEST: Michelle Hartner — Deputy City Clerk CITY OF ANDOVER Michael R. Gamache - Mayor i O O V z CL Y U ° Ic O I U 0 6 ad OZ O J W / \\ •\ 1 i / \\ — °- I ° / " / W ' ^ W / wcc Q 2 ! as = co / oo - 1 ac p / Q / X W I Z us � III I � / � �'I ❑ z I ()�Lr ° S � Z i O W 1 f HQ zl �i0� I 1 I oa 1 CL I ' 1 nrn- ^i- 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 CC: Jim Dickinson, City Administrator David D. Berkowitz, Director of Pu lic Wo s /City Engineer�� FROM: Todd J. Haas, Assistant Public Works Director SUBJECT: Accept Petition/Order Amended Assessment Roll/Adopt Amended Assessment RoW11- 26/13562 Crooked Lake Blvd. NW/WM - Engineering DATE: May 3, 2011 0 INTRODUCTION The City Council is requested to accept the petition, ordered amended assessment rolls and adopt the amended assessment rolls for Project 11 -26, water main at 13562 Crooked Lake Boulevard NW. DISCUSSION Attached are the following: • Petition from property owner requesting hookup to municipal water. • Proposed assessment roll for 13562 Crooked Lake Blvd NW. • Site map. Note: The improvement of water main was installed as part of the street reconstruction of Crooked Lake Blvd NW (Project 95 -14). The City Council as part of Resolution 282 -97 approved that the water main assessment would not be levied until such time the connection is requested by the property owner. It was also approved as part of the same resolution that interest will not be accrued until property owner requests connection. BUDGET IMPACT The $5,350.00 will be assessed to 13562 Crooked Lake Boulevard NW. The property owner has indicated in the petition that they will pay for the assessment up front so that it would not be assessed over a 10 year period. ACTION REQUIRED The City Council is requested to approve the two (2) resolutions accepting the petition and ordering amended assessment rolls and adopting the amended assessment rolls for Project 11 -26, water main at 13562 Crooked Lake Boulevard NW. Respectfully submitted, MJ� ��� T as ./ / Attachments: Two (2) Resolutions,, Proposed assessment roll, Location map, Petition/waiver cc: Arthur & Deborah Steinberg, 13562 Crooked 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 AMENDED ASSESSMENT ROLL FOR WATER MAIN , FOR PROJECT NO. 11-26, IN THE AREA OF 13562 CROOKED LAKE BOULEVARD NW. WHEREAS, the City Council has received a petition, dated April 18, 2011 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 City Engineer and he is instructed to provide the City Council with a feasibility report. MOTION seconded by Councilmember City Council at a regular meeting this 3`d Councilmembers favor of the resolution, and Councilmembers and adopted by the day of May , 2011, with voting in voting against, whereupon said resolution was declared passed. ATTEST: Michelle Hartner — Deputy City Clerk CITY OF ANDOVER Michael R. Gamache - Mayor CITY OF ANDOVER COUNTY OF ANOKA STATE OF MINNESOTA RES. NO. 0 -11 MOTION by Councilmember to adopt the following: A RESOLUTION ADOPTING THE AMENDED ASSESSMENT ROLL FOR THE IMPROVEMENT OF WATER MAIN IN THE FOLLOWING AREA OF 13562 CROOKED LAKE BOULEVARD NW, PROJECT 11 -26. WHEREAS, the property owner has waived their right to a public hearing. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF ANDOVER, MINNESOTA: 1. Such proposed assessment, a copy of which is attached hereto and made part hereof, is hereby accepted and shall constitute the special assessment against the lands named therein, and each tract of land therein included is hereby found to be benefited by the proposed improvement in the amount of the assessment levied against it. 2. Such assessment shall be payable in equal annual installments, extending over a period of 10 years, the first of the installments to be payable on or before the 1 st Monday in January, 2011 and shall bear interest at a rate of 4.5 percent per annum from the date of the adoption of this assessment resolution. 3. The owner of any property so assessed may, at any time prior to certification of the assessment or the first installment thereof to the county auditor, pay the whole of the assessment on such property, with interest accrued to the date of payment, to the municipal treasurer, except that no interest shall be charged if the entire assessment is paid within 30 days from the adoption thereof; and, except as hereinafter provided, the owner may at any time prior to November 15 of any year, prepay to the treasurer of the municipality having levied said assessments, the whole assessment remaining due with interest accrued to December 31 of the year in which said prepayment is made. MOTION seconded by Councilmember and adopted by the City Council at a regular meeting this 3rd day of May , 2011 , with Councilmembers voting in favor of the resolution, and Councilmembers against, whereupon said resolution was declared passed. CITY OF ANDOVER ATTEST: Michael R. Gamache - Mayor Michelle Hartner — Deputy City Clerk voting O LU W C 0E 0 y Z a a O r r V U y r N N r t1 10 } N r r F.. U Q 0 w CL z m d Y R n J 4 Y r G M L r U N tN0 M M e"7 r M a0U y JO J � 0] Q O 0 U O c N C N C O U t» O O N O Q M (R O O � O N ro0 m J M FA c N M H La W V r � C K aim m m a `a � o � — e �Q E m z a o� � r p fR b4 N �o N eD N � � fR f9 00 m N (DO r o CO (O N fA (A eD - W N C6 (O r O1 a0 r o (() m N W r Co (O W (O CD N N Or (9 Ifl IQ N n N M co N r FA EA N OMi 7 (o o_ (o (o V3 69 W N I rn n (o (n (n 7 coO r O to N Q N to ER U9 � � r V N (n0 N fA f9 Cl) N - (O O O 7 N CO N fH EA w 3 O O a`- (J3 co O V iA M Cfl m N ffl N U) co co O N N R N m N N M r V c7 FR 0 N W (`7 Vi (O of C N W 64 m C 10 tv m CL 'v c a O M Z N O a C Q G1 O Z 13445 'i• ,ga3 W 13683 1paC J "' rn N N Ll 13423 13694 N rn m 131 13635 13654 13365 13418 LL 13682 2721 2705 2657 13642 � N N N 136 13624 F 13355 2815 13630 m 134TH AVE 13611 13610 1360 _ 6,,0 `nNg 2744 �O 1 2706 13340 13563 13562 U) 13339 2814 0 N a 1363 13565 13558 13550 CO c`QV 6 °J 2739 13551 2707 2659 (J 13327 13928 13329 N N J 13320 h a � � rn r 2837 13540 W 13319 N 1� ro 2813 2766 2746 2790 2714 13563 N 13307 2661 — 286 2858 2844 2828 13526 N � 13611 13525 a w s J w 13503 35T M 13523 2636 2816 W 135E i 13493 N r N a 13473 m v m Q 13453 N W 2735 N Y 2868 2860 O Q ry m m 2820 0 t: 13453 0� w O 1341H L 269 13445 'i• ,ga3 n 2732 N o 1paC 13437 13423 0 o a U) 13365 13418 2737 2721 2705 2657 ro � N N N 13409 13355 2815 134TH AVE 134 _ CA `nNg 2744 v 2722 2706 13340 13337 13338 U) 13339 2814 N a Q _ LL.1 CO c`QV 13330 °J 2739 2723 2707 2659 (J 13327 13928 13329 N N J 13320 1 33RD LN 13317 13316 W 13319 N ro 2813 2766 2746 2790 2714 2660 N 13307 2661 — 2841 Limit I Map and Data SOUM City of Andover SOUTH 112 SECTION: 33 TOWNSHIP: 32 RANGE: 24 Map Date: Oct 17, 2005 Engineering Planning Public Works GIs p"2' /� r ountq Csrsc> n�'e 1a'abes Pmixt Lac =�io�: tidG,Sc tT4.;OREU ?9!�GT_ W * Crooked Lake Boulevard NW City Project #95 -14 Date '» -o I Andover City Engineer 1685 Crosstown Boulevard NW Andover, MN 55304 Re: Municipal Improvements Dear City Engineer: RECEIVED APR 18 2011 CITY OF ANDOVER it -A We do hereby petition for improvements of(watermain 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 he may be waived. We would like to be assessed over a 10 year period or pay the assessment up front (Circle One). Sincerely, O 4 Property Owner Address City, State, Zip Phone (Home) (Work) ArtLw D i 3 56 z( roz;, J-Q�Q Laks- f3 i vci NW Qvlc(over, MN• 55.30 q 7(a3 -15!�; -413 14 763- -,2.2) - 103.3 C: \Users\deb%ppData \Local \Temp\PETITION SINGLE.DOC LNDOVE 1685 CROSSTOWN BOULEVARD N.W. • ANDOVER, MINNESOTA 55304 • (763) 755 -5100 FAX (763) 755 -8923 • WWW. CLAN DOVER. MN. US TO: Mayor and City Council CC: Jim Dickinson, City Administrat( FROM: Michelle Hartner, Deputy City C SUBJECT: Consider Approval Application for Exempt Permit/Ducks Unlimited Anoka DATE: May 3, 2011 INTRODUCTION Ducks Unlimited Anoka has submitted an application for a raffle at an event they are hosting on September 17, 2011 at the Courtyards of Andover. DISCUSSION Council can either a) approve the application with no waiting period; b) approve the application with a 30 day waiting period; or c) deny the application. ACTION REQUIRED The City Council is requested to consider approval of the application with no waiting period. Respectfully submitted, Michelle Hartner Deputy City Clerk Attach: Application Minnesota Lawful Gambling Page 1 of 2 3/11 LG220 Application for Exempt Permit Application fee If li a 'on o tmarked or received: less than 30 days are than 30 days An exempt permit may be issued to a nonprofit organization that: - conducts lawful gambling on five or fewer days, and before the event before the event - awards less than $50,D00 in prizes during a calendar year. $100 $50 ORGANIZATION INFORMATION Check # 6d 5',2 $_SQ_ Organization name Previous gambling permit number • .t t t ►� C� nl6 tC x — a3 315' Minnesota tax ID number, if any Federal employer ID number, if any Type of nonprofit organization. Check one. (��' Fraternal F Religious Veterans IX Other nonprofit organization Mailing address City State Zip Code County ifq 51 001 10 tit &J I A-M r, ti ,J 55.30 3 A t iQr< Na a of chief execu ive officer (CEO) Daytime phone number Email address (� O lE1e i (— (n) H 7 k !t- 6 M C a Attach a copy of ONE of the following for proof of nonprofit status. Do not attach a sales tax exempt status or federal employer ID number as they are not proof of nonprofit status. [:�onprofit Articles of Incorporation OR a current Certificate of Good Standing. Don't have a copy? This certificate must be obtained each year from: Secretary of State, Business Services Div., 180 State Office Building, St. Paul, MN 55155 Phone: 651- 296 -2803 IRS income tax exemption [501(c)] letter in your organization's name. Don't have a copy? To obtain a copy of your federal income tax exempt letter, have an organization officer contact the IRS at 877 -829 -5500. IRS - Affiliate of national, statewide, or international parent nonprofit organization (charter) If your organization falls under a parent organization, attach copies of both of the following: a. IRS letter showing your parent organization is a nonprofit 501(c) organization with a group ruling, and b. the charter or letter from your parent organization recognizing your organization as a subordinate. GAMBLING PREMISES INFORMATION Name of premises where gambling activity will be conducted. For raffles, list the site where the drawing will take place. t,i7�IC t•� 7 O ICL' Address (do Hot use PO box) City or township Zip Code County s k: Z I J 5--1 "Doll 0 6'S 304 fJO K Date(s) of activity (for raffles, indicate the date of the drawing) i1 Check the box or boxes that indicate the type of gambling activity your organization will conduct: Bingo* Raffles I,/ Paddlewheels* Pull -Tabs* Tipboards* * Gambling equipment for pull -tabs, bingo paper, tipboards, and paddlewheels must be obtained from a distributor licensed by the Gambling Control Board. EXCEPTION: Bingo hard cards and bingo number selection devices may be borrowed from another organization authorized to conduct bingo. To find a licensed distributor, go to www.gcb.state.mn.us and click on List of Licensed Distributors, or call 651- 639 -4000. ,let LG220 Aoolication for Exempt Permit Page 2 of 2 Siff LOCAL UNIT OF GOVERNMENT ACKNOWLEDGMENT If the gambling premises is within city limits, If the gambling premises is located in a township, a a city official must check the action that the city is county official must check the action that the county is taking on this application and sign the application. taking on this application and sign the application. attachments) will be used by the Gambling A township official is not required to sign the requires access to the information; Minnesota's application. The application is acknowledged with no waiting —The application is acknowledged with no waiting period. period. Commissioners of Administration, Minnesota application is acknowledged with a 30 day _The application is acknowledged with a 30 day ____:The waiting period, and allows the Board to issue a waiting period, and allows the Board to issue a permit after 30 days. permit after 30 days (60 days for a 1st class city). The application is denied. The application is denied. Print county name Print city name On behalf of the county, I acknowledge this application. order; other individuals and agencies specifically Signature of county personnel receiving application On behalf of the city, I acknowledge this application. authorized by state or federal law to have access Signature of city personnel receiving application issue a permit, all information to the information; individuals and agencies for and, as a consequence, may refuse to issue Title Date which law or legal order authorizes a new use or (Optionial) TOWNSHIP: On behalf of the township, I acknowledge that the organization is applying for exempted Title Date sharing of information after this notice was given; information requested, the Board will be gambling activity within the township limits. [A township has no and anyone with your written consent. statutory authority to approve or deny an application [Minnesota remain public. Statute 349.166)] application. Print township name Reset Form Signature of township official acknowledging application Title Date Print form and have CEO sign CHIEF EXECUTIVE OFFICER'S ATURE The information provided in this app' do ' o fete and accurate to the best of my knowledge. I acknowledge that the financial report will be co ple n rued to the Board within 30 days of the date of our gambling activity. Chief executive officer's signature Date ` i Complete a separate applicatl r e mbing activity: Financial report and recordkeeping • one day of gambling activity required A financial report form and instructions will • two or more consecutive days of ambling ac ivity be sent with your permit, or use the online • each day a raffle drawing is held fill -in form available at Send application with: www.gcb.state.mn.us. Within 30 days of the • a copy of your proof of nonprofit status, and activity date, complete and return the • application fee for each event financial report form to the Gambling Make check payable to "State of Minnesota." Control Board. Questions? To: Gambling Control Board Call the Licensing Section of the Gambling 1711 W est County Road B, Suite 300 South Control Board at 651- 639 -4000. Roseville, MN 55113 This form will be made available in alternative format (i.e. large print, tsrame) upon request. Data privacy notice: The information Your organization's name and Private data about your organization are available requested on this form (and any address will be public information to: Board members, Board staff whose work attachments) will be used by the Gambling when received by the Board. All requires access to the information; Minnesota's Control Board (Board) to determine your other information provided will be Department of Public Safety; Attorney General; organization's qualifications to be involved private data about your Commissioners of Administration, Minnesota in lawful gambling activities in Minnesota. organization until the Board Management & Budget, and Revenue; Legislative Your organization has the right to refuse to issues the permit. When the Auditor, national and international gambling supply the information; howeve r, if your Board issues the permit, all regulatory agencies; anyone pursuant to court organization refuses to supply this information provided will become order; other individuals and agencies specifically information, the Board may not be able to public. If the Board does not authorized by state or federal law to have access determine your organization's qualifications issue a permit, all information to the information; individuals and agencies for and, as a consequence, may refuse to issue provided remains private, with the which law or legal order authorizes a new use or a permit. If your organization supplies the exception of your organization's sharing of information after this notice was given; information requested, the Board will be name and address which will and anyone with your written consent. able to process your organization's remain public. application. Reset Form �i. I T Y O F [DOVE 1685 CROSSTOWN BOULEVARD N.W. • ANDOVER, MINNESOTA 55304 • (763) 755 -5100 FAX (763) 755 -8923 • WWW.ANDOVERMN.GOV TO: Mayor and Council Members CC: Jim Dickinson, City Administrator David D. Berkowitz, Director of Pu 1c rks /City Engineer -OU3 FROM: Jason J. Law, Assistant City Engineer SUBJECT: Accept Petition /Order Feasibility Report/11-24/Butternut St. NW, 173`d Ave. NW & Flintwood St. NW Street Improvements - Engineering DATE: May 3, 2011 INTRODUCTION The City Council is requested to accept the petition and order a feasibility report for Project 11- 24, Butternut St. NW, 173`d Ave. NW & Flintwood St. NW. Street Improvements. DISCUSSION The aforementioned streets are currently gravel, rural section roadways. These segments have been considered in the past for paving. With the recently revised policy on cost sharing for paving of gravel roadway sections approved March 1, 2011, a neighborhood petition has been submitted to consider paving these segments with a 50/50 cost share between the benefitting properties and the City. A neighborhood meeting was held with the affected residents on April 19, 2011 to discuss the petition, answer questions, and provide preliminary cost estimates. The project process and timeframe, should this project move forward, was also discussed. BUDGETIMPACT The project would be funded from the City's Road & Bridge Fund, with 50% (or higher percentage as determined by the City Council) of the total project costs assessed to the benefiting properties as identified in the City's Roadway Reconstruction Assessment Policy. ACTION REQUIRED The City Council is requested to approve the resolution accepting the petition and ordering a feasibility report for Project 11 -24, Butternut St. NW, 173`d Ave. NW & Flintwood St. NW. Street Improvements. R ectfu y} submitted, Jason J. Law Attachments: Resolution location Map ✓Neighborhood Petition, eighborhood Meeting Sign -In Sheetomment Forms,/ 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 IMPROVEMENTS OF STREET PAVING , PROJECT NO. 11 -24, BUTTERNUT ST. NW, 173 AVE. NW & FLINTWOOD ST. NW STREET IMPROVEMENTS. WHEREAS, the City Council has received a petition, dated March 26. 2011, requesting the construction of improvements; and WHEREAS, such petition has been validated to contain the signatures of 16 of the 17 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 as adequate. 2. The proposed improvement is hereby referred to Director of Public Works / City Engineer and they are instructed to provide the City Council with a feasibility report. MOTION seconded by Councilmember and adopted by the City Council at a regular meeting this 3`d day of May , 2011, with Councilmember voting in favor of the resolution, Councilmember voting against, whereupon said resolution was declared passed. CITY OF ANDOVER ATTEST: Michael R. Gamache - Mayor Michelle Hartner — Deputy City Clerk C I T Y O F NDOVE _ N Disclaimer: This information is being distributed as demonstration data only. You should not use the data for any other purposes at this time. This information is to be used for reference purposes only. w Copyright m 2011 City of Andover, All Rights Reserved -0 s H fi i i 11-2-V C NNDOI T a r 1685 CROSSTOWN BOULEVARD N.W. • ANDOVER, MINNESOTA 55304 . (763) 755 -5100 FAX (763) 755 -8923 . WWW.CI.AN DOVER. MN. US Date: 3—d6 _ � 1 11111161 Andover City Council Members: We, the undersigned, owners of real property in the following described area: Fronting along the gravel portion of Butternut Street, 1731d Avenue, and Flintwood Street Do hereby petition that said portion of said area be improved by construction of : Paving the gravel roadway as described above based upon the 50/50 cost sharing policy approved by the City Council.in the Assessment Manual Policies and Procedures Guide on March 1 2011 and that the cost of said improvement be assessed against the benefiting property, as authorized by Chapter 429, Laws of Minnesota and the City of Andover Assessment Manual Policies and Procedures Guide, SIGNATURE OF OWNER ADDRESS YES NO r 17L/73 rG /,�JTW0013 Sf. x J70 'rL l V im, AIr.J 14 K 1717013Aennt5+ �qf7 ��ZZ T i % r G ? � s.� (J 7d5 17/,33 This petition was circulated by: —D Address: I ? y 73 l`Z-2- 7-No00 ��° 7 U!ff241Nei5h 286 2p4` , 25 17 1 rr v 152 YY � li / 17218 t, W 1 T "5� i 17046 n v 1 T T 17170 1 1 � X153 i 17130 1 1 ` 17066 1 y� t, 17018 "1 c bill N �• .,. O Y 6 T ,`19 16962 V 1699 17539 41L Qs 1 17528 �, 1 A 1' 17476 17473 17480` ' ,17485 1 i 1'>446 _w 17425 i 17432 ... 17427 < i 1 .�.+ LO t .: 173x2 17379 clq o ' �1 � � 1 ,11340 M 1 �. � «x� ' 17'331 Ar% a M^J 1 �� 841 a *= i- � It - .- 1 286 2p4` , 25 17 1 rr v 152 YY � li / 17218 t, W 1 T "5� i 17046 n v 1 T T 17170 1 1 � X153 i 17130 1 1 ` 17066 1 y� t, 17018 "1 c bill N �• .,. O Y 6 T ,`19 16962 V 1699 c� J UJI C o � E o 0 � o LO &- a E M d Q C) U) M /�/�� Z2 y/ CD O W tm T wo ^_` W %++N z Q a 4) �. to v O O M T O rF- A� rf) LA LA in CD z LO wO d O o� rrN Q° i v m LLI LX � = LL¢. 0 m m , z O i U) U) N O U O a I-- LL J UJI N a 3 M r 4 °o m r� M S S /mom lJ o � V } � o Q-- �I "O op I to rF- A� rf) LA LA N rrN S � � ? 1 � to a I-- C ?� N a 3 M r 4 °o m r� M S S /mom lJ o � 3 � �I "O op I to rF- A� �h 1 N i S � N a 3 M r 4 °o m r� M S S /mom lJ � op to rF- d� N i S � � w J 7 4 C fit a i.-4 .-j C N c a� E C) o m > O U L �. E w Q,� M LO z 0 {/i 0 L O O� w O > �+ N z G1 'a 41 O O W� •L~ T ni Q N L ++ R rn cn wa O z� ++�0 �O p r i Q (D L LU X 4� O U- ffY`3 W m � z O F- L � U) O C) O 4. w J 7 4 C fit a i.-4 .-j C ND OVE: COMMENT SHEET Butternut Street / Flintwood Street / 173rd Avenue Street Improvements Name: Address: Informational Meeting Tuesday, April 19, 2011 Phone: 7A OA 2_ E -Mail: HA1EngineeringWity Projects \Open City Projects\I I -24 Buttemut St -173rd Ave - Flintwood St\Word DocumentslCorrespondance \COMMENT SHEET - Street Reconstruction.doc ANDOVE^ T Y O F a 1685 CROSSTOWN BOULEVARD N.W.. ANDOVER, MINNESOTA 55304 . (763) 755 -5100 FAX (763) 755 - 8923.x- uVWW.ANDOVERMN.GOV TO: CC: FROM: SUBJECT: DATE: Mayor and Council Members Jim Dickinson, City Administrator David D. Berkowitz, Director of Pi Jason J. Law, Asst. City Engineer / City Engineerba Order Feasibility Report/11- 02A/2011 Street Reconstruction - Flintwood St. NW- Engineering November 16, 2011 INTRODUCTION The City Council is requested to order the preparation of a revised feasibility report for Project 1I- 02A, 2011 Street Reconstruction - Flintwood St. NW. DISCUSSION The existing asphalt portion of Flintwood Street NW between 175' Avenue NW and 177' Avenue NW was originally considered for reconstruction with the 2011 Street Reconstruction program and was identified in the 2011 -2015 Capital Improvement Plan. At the public hearing for this project on January 18, 2011, the City Council decided to delay reconstruction of this segment until further discussions could be held regarding the potential paving of the gravel portions of roadway south of this segment on Flintwood Street NW, Butternut Street NW, and 173`d Avenue NW. Since the public hearing, the City Council has revised the policy on cost sharing for gravel road paving and a petition has been received from the neighborhood fronting the gravel roadway segments to pave them. Along with considering the gravel road paving, staff recommends reconstructing the bituminous section of Flintwood Street NW that was previously delayed at the same time. BUDGETIMPACT The street reconstruction project would be funded from the City's Road & Bridge Fund, with 25% of the total project costs assessed to the benefiting properties as identified in the City's Roadway Reconstruction Assessment Policy. ACTION REQUIRED The City Council is requested to approve the resolution ordering preparation of a revised feasibility report for Project 11 -02A, 2011 Street Reconstruction - Flintwood St. NW. pectfully submitted, ason J. Law Attachments: Resolution, Location Map✓ CITY OF ANDOVER COUNTY OF ANOKA STATE OF MINNESOTA RES. NO. MOTION by Councilmember to adopt the following: A RESOLUTION ORDERING PREPARATION OF A REVISED FEASIBILITY REPORT FOR THE IMPROVEMENT OF PROJECT 11 -02A, 2011 STREET RECONSTRUCTION - FLINTWOOD STREET NW. WHEREAS, the City Council of the City of Andover is cognizant of the need for the improvements, specifically Project 11 -02A; and WHEREAS, the City Council proposes to assess the benefiting properties for all or a portion of the costs of the improvements, pursuant to Minnesota Statutes 429. that: NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Andover 1. The City Council is cognizant of the need for improvements. 2. The proposed improvement is hereby referred to the Director of Public Works /City Engineer and he is instructed to provide the City Council with a revised feasibility report. MOTION seconded by Councilmember and adopted by the City Council at a regular meeting this 3`d day of May , 2011 , with Councilmembers in favor of the resolution, and Councilmembers voting voting against, whereupon said resolution was declared passed. ATTEST: Michelle Hartner — Deputy City Clerk CITY OF ANDOVER Michael R. Gamache - Mayor 13 \ � ! { k §, «a| {k% Ef k ) \ 2 (k &\ E£a SVAlr C I T Y O F ND OVE 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 (D SUBJECT: Consider Approval Application for Exempt Permit/Andover Lions Club DATE: May 3, 2011 INTRODUCTION Andover Lions Club has submitted an application for a raffle at the Andover Family Fun Fest on July 9, 2011 DISCUSSION Council can either a) approve the application with no waiting period; b) approve the application with a 30 day waiting period; or c) deny the application. ACTION REQUIRED The City Council is requested to consider approval of the application with no waiting period. Respectfully submitted, Michelle Harmer Deputy City Clerk Attach: Application Page 1 of 2 2110 nmrresvw r.awrur vanrurrrry Application fee for each event LG220 Application for Exempt Permit Ifapplication postmarked orreceived: less than 30 days before the event more than 30 days before the event An exempt permit may be issued to a nonprofit organization that: - conducts lawful gambling on five or fewer days, and $100 $50 - awards less than $50,000 in prizes during a calendar year. ORGANIZATION INFORMATION Check# $ Organization name Previous gambling permit number p p aiC 0 Q S Type of nonprofit organization. Check one. Fraternal 1:1 Religious Veterans D Other nonprofit organization Mailing address State Zip Code County lcity lP I O 5_ 0 1,1 c t11b N1 1`c irX"v-Li AA �3r3o %10 Name of chief execu ' officer (CEO) Daytime phone number Email address Attach a &opy of ONE of the foliovAng for proof of nonprofit status. Check one. Do not attach a sales tax exempt status or federal ID employer numbers as they are not proof of nonprofit status. ❑Nonprofit Articles of Incorporation OR a current Certificate of Good Standing. Don't have a copy? This certificate must be obtained each year from: Secretary of State, Business Services Div., 180 State Office Building, St, Paul, MN 55155 Phone: 651 - 296 -2803 F1IRS income tax exemption [501(c)] letter in your organization's name. Don't have a copy? To obtain a copy of your federal income tax exempt letter, have an organization officer contact the IRS at 877 -829 -5500. F1IRS - Affiliate of national, statewide, or international parent nonprofit organization (charter) If your organization falls under a parent organization, attach copies of both of the following: a. IRS letter showing your parent organization is a nonprofit 501(c) organization with a group ruling, and b. the charter or letter from your parent organization recognizing your organization as a subordinate. IRS - proof previously submitted to Gambling Control Board If you previously submitted proof of nonprofit status from the IRS, no attachment is required. GAMBLING PREMISES INFORMATION Name of premises where gambling activity will be conducted (for raffles, list the site where the drawing will take place) Address (do not use PO box) City Zip Code County W0 Date(s) of activity (for raffles, indicate the date of the drawing) _1 uk 4) "' -4o tt heck the box or boxes that indicate the type of gambling activity your organization will conduct: Bingo* Raffles 0Paddlewheele ❑Pull -Tabs` [] Tipboards* * Gambling equipment for pull -tabs, bingo paper, tipboards, and Also complete paddlewheels must be obtained from a distributor licensed by the Page 2 of this for Gambling Control Board. EXCEPTION; Bingo hard cards and bingo number selection devices may be borrowed from another organization authorized to conduct bingo. Print Form ; To find a licensed distributor, go to www.gcb.state.mn.us and click on List Reset Forrti of Licensed Distributors, or call 651 - 639 -4076. LG220 Application for Exempt Permit Page 2 of 2 1110 LOCAL UNIT OF GOVERNMENT ACKNOWLEDGMENT I a city official must check the action that the city is taking on this application and sign the application. _The application is acknowledged with no waiting period _The application is acknowledged with a 30 day waiting period, and allows the Board to issue a permit after 30 days (60 days for a 1 st class city). _The application is denied. Print city name On behalf of the city, I acknowledge this application. Signature of city official receiving application CHIEF EXECUTIVE OFFICER'S SIGNATURE the gambling prem county official must check the action thatthe county is taking on this application and sign the application. A township official is not required to sign the application. _The application is acknowledged with no waiting period, _The application is acknowledged with a 30 day waiting period, and allows the Board to issue a permit after 30 days. _The application is denied. Print county name On behalf of the county, I acknowledge this application. Signature of county official receiving application Title Date I 1 (optional) TOWNSHIP: On behalf of the township, I acknowledge that the organization is applying for exempted gambling activity within township limits. [A township has no statutory authority to approve or deny an application (Minnesota Statute 349,166)] Print township name Signature of township official acknowledging application The information provided in this application is complete and accurate to the best of my knowledge. 1 acknowledge that the financial report will be completed and returned to the Boa}d_within 30 days of the date of ourgambling activity. Chief executive officer's Complete a separate application for each gambing activity: - one day of gambling activity, two or more consecutive days of gambling activity, each day a raffle drawing is held Send application with: - a copy of your proof of nonprofit status, and - application fee for each event. Make check payable to "State of Minnesota" To: Gambling Control Board 1711 West County Road B, Suite 300 South Roseville, MN 55113 This form will be made available in alternative format (.e, large print, Braille) upon request. Data privacy notice:The information requested on this form (and any attachments) will be used by the Gambling Control Board (Board) to determine your organization's qualifications to be involved in lawful gambling activities in Minnesota. Your organization has the right to refuse to supply the information requested; however, if your organization refuses to supply this information, the Board may not be able to determine your organization's qualifications and, as a consequence, may refuse to issue a permit. If you supply the information requested, Date Financial report and record keeping required Afi nancial report form and instructions will be sent with your permit, or use the online fill-in form available at www.gcb.state.mn.us. Within 30 days of the activity date, complete and return the financial report form to the Gambling Control Board. Questions? Call the Licensing Section of the Gambling Control Board at 651- 639 -4076. Print Form I Reset Form the Board will be able to process your organization's application. Your organization's name and address will be public information when received by the Board. All other information provided will be private data until the Board issues the permit. When the Board issues the permit, all information provided will become public. If the Board does not issue a permit, all information provided remains private, with the exception of your organization's name and address which will remain public. Private data are available to: Board members, Board staff whose work requires access to the information; Minnesota's Departmentof Public Safety; Attorney General; Commissioners of Administration, Minnesota Management & Budget, and Revenue; Legislative Auditor, national and international gambling regulatory agencies; anyone pursuant to court order, other individuals and agencies specifically authorized by state or federal law to have access to the information; individuals and agencies for which law or legal order authorizes a new use or sharing of information after this Notice was given; and anyone with your written consent 61 k I T Y 0 F A 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 CC: Jim Dickinson, City Administrator FROM: David D. Berkowitz, Director of Pu 'c Wo ks/City Engineer SUBJECT: Approve Concrete Quotes /11 -22 /Andover YMCA/Community Center Shelter - Engineering DATE: May 3, 2011 INTRODUCTION The City Council is requested to approve concrete quotes for the Project 11 -22, Andover YMCA/Community Center Shelter. DISCUSSION Quotes received are as follows: Contractor _Quote Amount Elite Contractors, Inc. $8,372.00 Landmark Concrete, Inc. $10,598.28 North Country Concrete, Inc. $11,470.00 BUDGET IMPACT Funding for the concrete portion of this project will be from the YMCA project budget. ACTION REQUIRED The City Council is requested to approve quotes and award the quote to Elite Contractors, Inc. in the amount of $8,372.00 for Project 11 -22, Andover YMCA/Community Center Shelter. Respectfully submitted, David D. Berkowitz Attach: Site Drawing it a Rn pawl O; ZLLF -- ------------- ----------- : ------- -- -- ------ 1 `// -- ---------- lo C5 z z 0, --- ------- � w 00 ------- og -J, Ic U5 0 pp ,T1 10 ------------------------ --------------------- -- - IL Wo II w55 A k z Az mu - - - - - - - - - - - - - - - - - - - 8 PE 1 "'A 1�1- 36- Z-. ............... Z-19 Su ME OR 5", z --V z-, zn� 0 12 41 z . " g i 'off C Z.0 10 0 < A p2 Zm Om C I T Y O F ND OVE 1685 CROSSTOWN BOULEVARD N.W. • ANDOVER, MINNESOTA 55304 • (763) 755 -5100 FAX (763) 755 -8923 • WWW.CI.ANDOVER.MN.US TO: CC: FROM: SUBJECT: DATE: Mayor and City Council Jim Dickinson, City Administr< Michelle Hartner, Deputy City Approve Temporary 3.2% Malt Liquor License /Andover Lions /Fun Fest May 3, 2011 INTRODUCTION The Andover Lions have applied for a 3.2% malt liquor license for the Fun Fest. DISCUSSION Each year the Lions Club sells 3.2% malt liquor during the Fun Fest, which will be held on July 8, and 9, 2011. They will be selling on Friday, July 8ch from 6:00 p.m. until 11:00 p.m. and on Saturday, July 9`h from 10:00 a.m. until midnight. ACTION REQUIRED The City Council is requested to approve a temporary 3.2% malt liquor license for the Andover Lions Club for July 8 and 9, 2011. Respectfully submitted, l4 Michelle Harmer Deputy City Clerk Attach: Application . • _ .119a k 1685 CROSSTOWN BOULEVARD N.W. • ANDOVER, MINNESOTA 55304 • (763) 755 -5100 FAX (763) 755 -8923 • WWW.ANDOVERMN.GOV COMBINATION APPLICATION FOR RETAILERS (ON -SALE) (OFF -SALE) 3.2 % MALT LIQUOR LICENSE To the City,�f�_A� over, County of Anoka I, toQ r _r god P , of the City of 60 Pr -,County of hereby make application for the following license(s): (Off -Sale) (On -Sale) established pursuant to an Ordinance passed by the Andover City Council. For the past five years my_residence has been as follows: - I was born at ��(m nth, Tay, year) � ity, illage, or Town) l am the II regs'yr P r of 047zeres" 211011 -f (Title, Officer) (Name of Organization) located at the following address /G / #'T' Ile rG�� Tt WA olil�i� /i /�r, Sr?,0'V The date the organization was incorporated /2" M The name and address of the officers are as follows: r r n A 1 Name of Business: 401011 r- "Lt ex Business Address: Store Manager: Store Phone Number: :2 L 2 - a Ra — q 7 of �-Z I agree, as part of this application, to furnish a list of all other persons, firms, or corporations having an interest in the licensed organization. I will notify the City of Andover of any change in legal ownership or beneficial interest in such organization. I am am not—L engaged in the retail sale of intoxicating liquor. I have have not IL had an application for licenses rejected previously. I have have not-K. been convicted of a felony or of violating any national or state liquor law or local ordinance relating to the manufacture, sale or transportation of intoxicating liquor. Gambling or gambling devices will not be permitted on the licensed premises. I have no intention or agreement to transfer this license to another person. I agree to waive my constitutional rights against search and seizure and will freely permit peace officers to inspect my premises and agree to the forfeiture of my license if found to have violated the provisions of the ordinance providing for the granting of this license. I hereby solemnly swear that the foregoing statements are true and correct to the best of my knowledge. __A,�nw O�IIC24_1,1 ignature of Applicant Date e Fees: Temporary: $25.00 (3 day max.)— WA+V'e.d. Off -Sale 3.2% Malt Liquor: $75.00 On -Sale 3.2% Malt Liquor: $200.00 License # Action by City Council: Approved Denied Date: Y 0 F 0 j 1 .U. 1685 CROSSTOWN BOULEVARD N.W. • ANDOVER, MINNESOTA 55304 • (763) 755 -5100 FAX (763) 755 -8923 • WWW.CI.ANDOVER.MN.US TO: CC: FROM: SUBJECT: DATE: Mayor and Councilmembers Jim Dickinson, City Administrator/ Finance Lee Brezinka, Assistant Finance Director 2010 Audit Presentation — HLB Tautges Redpath May 3, 2011 •a. 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, 2010 and the corresponding Management Report. A December 31, 2010 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 2010 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 ". BUDGETIMPACT No budget impact; the presentation, financial report, corresponding management report, report on internal controls, independent auditor's report, report on legal compliance and a communication with those charged with governance are provided as informational. ACTION REQUIRED 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, 2010, the corresponding Management Report, report on internal controls, independent auditor's report, report on legal compliance and a communication with those charged with governance. Respectfully submitted, Lee Brezinka City of Andover, Minnesota 2010 Audit Review May 3, 2011 Presenter: Peggy A. Moeller, CPA Member of HLB Intemational Tautges Redpath Ltd. Reports Issued Member of HLB International Comprehensive Annual Financial Report ♦ City's financial statements ♦ Independent auditor reports on the fair presentation of the financial statements ♦ "Clean opinion" on the 2010 financial statements ♦ The City received the 2009 GFOA Certificate of Achievement for Excellence in Financial Reporting Program Member of HLB intemational 3 Report on Internal Control ♦ Consideration of internal control as a basis for designing audit procedures. No opinion on internal control. ♦ No findings for 2010. Member of HLB Intemational 4 u Tautges Redpath. Ltd. State Legal Compliance Report ♦ Required by Minnesota Statute §6.65 ♦ 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 Tautges Redpath, Ltd. Management Letter +General Fund: — Fund balance increased $782,493 during 2010. Revenue Budget Actual Variance $8,905,698 $9,158,616 $252,918 F.Venditures 9,158,128 8,573,053 585,075 Increase (decrease) before other financing sources (252,430) 585,563 837,993 Other financing sources: Transfers in from Water and Sewer Funds 196,930 196,930 - Increase (decrease) in General Fund balance ($55,500) $782,493 $837,993 Member of HLB Intemational i 6 Tautg ®s R®dpath, Ltd. Management Letter +General Fund: — Fund balance at December 31, 2010 was $5,110,905. — Working Capital Reserve: • Approximately 83% 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 Intemational 7 Tautges, Redpath, Ltd. Management Letter +General Fund: • For the City of Andover, the recommended working capital reserve is computed as follows: 2011 General Fund budgeted expenditures $9,1265255 Recommended working capital reserve (fifty percent of total) $4,563,128 • The current working capital reserve in the General Fund is 45 %. Member of HLB International 8 Tautges Redpath, Ltd. Management Letter + Bonded Debt — The City has the following bond issues outstanding at December 31, 2009 and 2010: December 31, 2009 2010 G.O. Lease Revenue Bonds $50,825,000 $49,965,000 G.O. Special Assessment Bonds 2,450,000 600,000 G.O. TaxIncrement Bonds 2,515,000 1,735,000 G.O. Certificates of Indebtedness 1,420,000 781,000 G.O. Permanent Improvement Revolving Bonds 2,635,000 1,480,000 G.O. Capital Improvement Bonds 2,775,000 2,495,000 G.O. State Aid Bonds 2,555,000 955,000 G.O. Referendum Bonds - 1,660,000 Subtotal 651175,000 59,671,000 Less refunded bonds paid by escrow Net (23,875,000) (22,945,000) $41,300,000 $36,726,000 — The City analyzes its debt position annually as part of the budget and CIP process. Member of HLB International Tautges Redpath, Ltd. 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 • Other information in Documents Containing Audited Financial Statements Member of HLB Intemational 10 Tautges Redpath, Ltd. Other Matters . Other Matters • 2010 property tax collection rate was 99.0% compared to 99.7% for 2009. • The City will be required to implement GASB Statement No. 54, Fund Balance Reporting and Fund Type Definition for the year ended December 31, 2011. Member of HLB Intemational 11 Tautges Redpath, Ltd. 1685 CROSSTOWN BOULEVARD N.W.. ANDOVER, MINNESOTA 55304 • (763) 755 -5100 FAX (763) 755 -8923 • WWW.CI.ANDOVER.MN.US TO: CC: FROM: SUBJECT: DATE: Mayor and City Council Jim Dickinson, City Administrate Michelle Hartner, Deputy City C Consider Approval/Extension of Liquor LicenseBeef O'Brady's May 3, 2011 INTRODUCTION Tony Zeece, of Beef O'Brady's, 15190 Bluebird Street has submitted a request for an extension of their liquor license. DISCUSSION Beef O'Brady's is planning to hold an outdoor event Saturday, June 25, 2011 and would like Council to approve an extension of their liquor license to include a portion of the parking lot in front of the patio area. Tom Roberts, Stonewood Properties, Inc. the owner of Clocktower Commons leasing to Beef O'Brady's has given approval for Beef O'Brady's to hold their outdoor event. The Sheriff's Office received no complaints during Beef O'Brady's 2010 event. Please note a one night event has been approved for August 13, 2011. No other requests are expected from this organization for 2011. ACTION REQUIRED D Council is requested to consider the extension of liquor license request submitted by Beef O'Brady's for June 25, 2011. Respectfully submitted, � f l -�Fity 1 1 L� Michelle Hartner Deputy City Clerk Attach: Outdoor Event Application Email from Tom Roberts, Stonewood Properties, Inc. L C I T Y 0 F �q A 1685 CROSSTOWN BOULEVARD N.W. • ANDOVER, MINNESOTA 55304 • (763) 755 -5100 FAX (763) 755 -8923 • WWW.ANDOVERMN.GOV OUTDOOR EVENTS ARE PERMITTED ON WEEKENDS (FRIDAYS AND SATURDAYS) IN JUNE, JULY AND AUGUST. ESTABLISHMENTS ARE ALLOWED ONE EVENT WEEKEND PER CALENDAR YEAR. EVENT MUST END AT MIDNIGHT. Commercial Outdoor Event Application 1. Name of Business Owner : / �'� Oe,e C e Mj fl i � Name of Business: e Address of Business: f'S/ l0 `��' f �� . 414) / i Phone Number of Business: 7Z 3 — 413 q- "Z 0 b 2. Date(s) of Outdoor Event: `/ u j l2 S 3. Time of 4. Location of Tent and/or Band: (Provide a sketch on the back of this form detailing where the tent, stage and/or band will be located on the property, indicating lot boundary lines and building locations.) 5. Extension of Liquor License: Yes " No 6. Please provide verification from your Insurance Company indicating your liability insurance provides coverage outside of the premise. Applicant of this application will comply with Andover City Code 5 -6, Noise Control. The business is required to provide security for the outdoor event. Dated: T. Owner's Signat re � Approved: Council Action: Denied: Approved City Clerk Denied Date: PROVIDE A SKETCH DETAILING WHERE THE TENT, STAGE AND /OR BAND WILL BE LOCATED ON THE PROPERTY, INDICATING LOT BOUNDARY LINES AND BUILDING LOCATIONS. N,,j . tiu ss f ge Michelle Hartner From: Matt Zeece Sent: Wednesday, April 27, 2011 9:45 AM To: Michelle Hartner Subject: Fw: Andover Football Tent Party Michelle, Here's the ok from Torn Roberts - - - -- Forwarded Message - - -- From: To: Matt Zeece ±> Sent: Wed, April 27, 20118:11:39 AM Subject: Re: Andover Football Tent Party go ahead Tom Roberts Stonewood Properties, Inc 6484 Pinnacle Dr. Eden Prairie, MN 55346 952- 934 -1423 office 952- 934 -4697 fax - - - -- Original Message - - - -- From: Matt Zeece __ To: Tom Roberts " Sent: Wed, 27 Apr 1U11 14:03:41 -0000 (UTC) Subject: Andover Football Tent Party Tom, The City needs your approval for the other tent party we're looking to have on June 25th. Are you ok with it? Thanks. Tony Zeece 1 ®r ,_. _. 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: Schedule May EDA meeting DATE: May 3, 2011 INTRODUCTION The Council is requested to schedule an Economic Development Authority (EDA) meeting at 6:00 pm before the May 17, 2011 City Council meeting. DISCUSSION Tentative agenda items for an EDA meeting have been identified as follows: 1. Approve Electronic Sign Quotes — City Hall Sign Replacement 2. Monument Entrance Committee Update 3. Purchase Agreement/Letter of Intent/Progress Review 4. TIF District & EDA Budget Update 5. Discuss Commercial Broker RFQs 6. Parkside at Andover Station Update 7. Other Business Other items may be added upon request, or the meeting will be cancelled if no new information comes forward on the identified agenda items. ACTION REQUIRED Schedule an EDA meeting at 6:00 pm before the May 17, 2011 City Council meeting. submitted, 1685 CROSSTOWN BOULEVARD N.W. • ANDOVER, MINNESOTA 55304 . (763) 755 -5100 FAX (763) 755 -8923 • WWW.CI.ANDOVER.MN.US TO: FROM: SUBJECT: DATE: Mayor and Council Members Jim Dickinson, City Administrator Schedule June Council Workshop May 3, 2011 INTRODUCTION The Council is requested to schedule a Council Workshop for the month of June for a number of miscellaneous business items. DISCUSSION Potential agenda items for a general June workshop have been identified as follows: 1. Joint Meeting with a City Commission 2. Anoka County Sheriff 2012 Budget Presentation 3. City Sewer & Water Utilities Presentation 4. 2011 Budget Implementation Progress Report 5. 2012 -2016 CIP Development Discussion/Update 6. 2012 Budget Development Discussion/Update 7. Discuss Livable Communities Program 8. Other Topics Other items may be added upon Council request or operational need. ACTION REQUIRED Schedule a June Council workshop, a suggested date is June 28a' at 6:00 p.m., or another date and time acceptable to the Council. I LC I T Y i r 1685 CROSSTOWN BOULEVARD N.W. • ANDOVER, MINNESOTA 55304 • (763) 755 -5100 FAX (763) 755 -8923 • WWW.CI.ANDOVER.MN.US TO: FROM: SUBJECT: DATE: Mayor and Councilmembers Jim Dickinson, City Administrator Administrator's Report May 3, 2011 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. Legislative Topics 3. Update on Development/CIP Projects 4. 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. y submitted, G: \STAFF \RHONDAA\AGENDA\CC LIST.doc I I CITY OF ANDOVER, MINNESOTA AUDIT MANAGEMENT LETTER ' December 31, 2010 1 1 1 1 i I� I� i A F F - This page intentionally left blank - c C A LJ 0 0 u u I 0 1 I 1 I 1 I 1 TAUTGEs REDPATH, LTD. Certified Public Accountants To the Honorable Mayor and Members of the City Council City of Andover, Minnesota We have completed the 2010 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. HLB TAUTGES REDPATH, LTD. White Bear Lake, Minnesota April 25, 2011 ' 4810 White Bear Parkway White Bear Lake, MN 55110 651.426.7000 651.426.5004 fax www.hlbtr.com Equal Opportunity Employer 100 - Percent Employee -Owned HLB Tautges Redpath, Ltd. is an independent member of HLB International, a world -wide organization of professional accounting firms. - This page intentionally left blank - C I� n c 4 r r W a c I 1 ' Audit Management Letter 1 I I 6 1 B J L I I Table of Contents Table of Contents ReportSummary .................................................... ............................... 2 Certificate of Achievement ..................................... ............................... 3 Government -Wide Financial Statements ................ ............................... 4 GeneralFund ......................................................... ............................... 10 GASB 54 — Fund Balance Reporting and Governmental Fund Type Definitions will be effective for 2011. 17 DebtService Funds ................................................ ............................... 18 Audit Management Letter C Report Summary a Report Summary Several reports are issued in conjunction with the audit. A summary is as follows: 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 rants State Legal Compliance Report • Results of testing certain • No compliance findings 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 C C G C C 1 I C v [1 1 1 Audit Management Letter Certificate of Achievement Certificate of Achievement for Excellence in Financial Reporting 1 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 1 Canada (GFOA). The City of Andover, Minnesota submitted their Comprehensive Annual Financial Report (CAFR) to the GFOA and received the award for 2002 through 2009. The City of Andover is one of 128 Minnesota entities receiving the award in 2009. We commend the City on this achievement. The City is submitting the 2010 CAFR to the Certificate Program. 1 1 1 1 1 1 L i 0 1 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 2010 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 2009 2010 (Decrease) General $3,586,725 $4,391,570 $804,845 Special Revenue 1,806,828 1,587,629 (219,199) Debt Service 1,987,075 1,097,338 (889,737) Capital Projects 14,580,675 15,280,324 699,649 Enterprise 4,542,444 4,188,237 (354,207) Internal Service 242,533 370,709 128,176 $26,746,280 $26,915,807 $169,527 I� L d A C, C C C t 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. Reporting investments at fair value results in greater "swings" in investment earnings because of market changes. Investment income of the City for and 2010 was as follows: Interest and dividends Market value change Total 2009 2010 $1,348,284 $1,428,159 58,116 4,088 $1,406,400 $1,432,247 nagement Government -Wide Financial Statements Property Taxes Receivable A schedule of property tax activity for the past three years is as follows: Delinquent taxes - January 1 Current levy Total collectible Collections Less adjustment to County Delinquent taxes - December 31 Total collections as a percent of current levy *Net of MVHC 2008 2009 2010 $217,766 $275,365 $282,741 9,761,417 * 10,190,844 * 10,366,069 9,979,183 10,466,209 10,648,810 9,689,439 * 10,162,699 * 10,259,758 * (14,379) (20,769) (36,861) $275,365 $282,741 $352,191 99.3% 99.7% 99.0% As presented above, the City is experiencing a consistently solid collection rate for property taxes. In addition to the $352,191 of delinquent taxes above, the City has $89,713 in delinquent tax increments receivable. See later discussion of tax increments (page 7). 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 I x I Class Rate = I Tax Capacity 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. Jul C L L2 i L �L C u C 11 C Audit Management Letter Government -Wide Financial Statements Tax Increments A schedule of tax increment revenues by district is as follows: 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. i i i i i i Delinquent 2010 Collection Balance TIF District Fund TIF District Current Delinquent 12/31/10 1 -1,1 -2 3505,3506,4501 TIF Refunding Bonds of 2003B and 2004B $1,842,172 $7,472 $78,396 1 -3 4510 Tax Increment Projects 145,782 - - 1 -4 4502 Tax Increment Projects 16,278 3,419 11,317 $2,004,232 $10,891 $89,713 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. i i i i i i Audit Management Letter Government -Wide Financial Statements Bonded Debt The City has the following bond issues outstanding at December 31, 2010 and 2009: G.O. Revenue Bonds G.O. Special Assessment Bonds G.O. Tax Increment Bonds G.O. Certificates /Capital Notes G.O. Permanent Improvement Revolving Bonds G.O. Capital Improvement Bonds G.O. State Aid Bonds G.O. Referendum Bonds Less amount to be paid by escrow: Public Facility Lease Revenue Bonds Water Revenue Bonds State Aid Street Bonds (crossover date 2/1/ 10) Net December 31, 2009 2010 $50,825,000 $49,965,000 2,450,000 600,000 2,515,000 1,735,000 1,420,000 781,000 2,635,000 1,480,000 2,775,000 2,495,000 2,555,000 955,000 - 1,660,000 65,175,000 59,671,000 (16,455,000) (16,455,000) (6,490,000) (6,490,000) (930,000) $41,300,000 $36,726,000 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 G ILI r1 I�I 7 I!, r— u C C A u lflfl rd u C I ' Audit Management Letter I I 1 I i 11 I F, LI F, I I I Government -Wide Financial Statements refunding bonds after the crossover date. The debt service of the refunding bonds before the crossover date is payable from the escrow account. The City issued the $6,570,000 G.O. Water Revenue Bonds, Series 2007B to advance refund $6,490,000 of outstanding 2002 Series Bonds. 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 payable from the escrow account. The financial statements present each bond issue and the escrow account assets pursuant to GASB Statement No. 7. The effect on the financial statements is to report greater debt than, of substance, the City will be responsible for paying. 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 2010 annual OPEB cost was $51,667 of which $14,937 was contributed resulting in an OPEB liability of $116,921 at December 31, 2010. 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: Year 1999 2000 2001 2002 2003 2004 2006 2007 2008 2009 2010 2011 State Aids Amount Percent $849,429 15% 948,259 15% 1,074,805 15% 1,005,219 16% 330,845 5% 372,550 5% 424,634 6% 478,795 6% 710,459 8% 555,758 6% 454,546 5% 428,572 5% Property Taxes Amount Percent $3,125,776 55% 3,571,186 55% 3,982,174 58% 3,782,334 58% 4,286,838 68% 4,541,227 65% 4,550,918 64% 5,324,649 70% 5,776,653 67% 6,249,011 73% 6,588,601 78% 7,191,602 78% All Other Revenue Amount Percent $1,725,890 30% 1,936,635 30% 1,867,945 27% 1,708,234 26% 1,665,554 27% 2,084,201 30% 2,163,539 30% 1,809,320 24% 2,089,632 25% 1,811,108 21% 1,451,722 17% 1,538,442 17% Total Revenue Amount $5,701,095 6,456,080 6,924,924 6,495,787 6,283,237 6,997,978 7,139,091 7,612,764 8,576,744 8,615,877 8,494,869 9,158,616 Local Government Aid (LGA) for the City was eliminated beginning in 2003. The second half of market value homestead credit was unallotted by the State in 2008. Market value homestead credit in the amounts of $350,938 and of $490,230 were unallotted by the State in 2009 and 2010, respectively. Percent 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% n C i L� H Imo, LEI CI LI LJ R u EJ n I ' Audit Management Letter I 1 I 1 I i I I $8,0( $7,5( $7,0( $6,5( $6,0( $5,5( $5,0( $4,5( $4,0( $3,5( $3,0( $2,5( $2,0( $1,5( $1,0c $5c $ General Fund A graph of the 2010 and 2009 revenue is as follows: 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 General property Licenses and Intergovernmental Charges for Fines ]nvestment income Miscellaneous taxes permits services m2010 $7,191,602 $329,907 $570,097 $755,184 $104,780 $70,368 $136,684 ■2009 $6,588,601 $291,903 $595,002 $701,289 $110,779 $76,772 $130,523 ' Detail of the 2010 revenue is presented in Statements 4 and 10 of the Comprehensive Annual Financial Report. 1 I I 1 1 �I Audit Management Letter General Fund A graph of 2010 and 2009 expenditures is as follows: i i $4,500,000 0 $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 ®2010 $2,224,867 $3,920,073 $1,466,216 $826,694 $109,034 $24,953 02009 $2,161,367 $4,005,406 $1,428,549 $835,636 $85,527 $19,540 a Detail of the 2010 expenditures is presented in Statements 4 and 10 of the Comprehensive Annual Financial Report. I I 0 r r Audit Management Letter General Fund The fund balance of the General Fund increased by $782,493 in 2010 as follows: 2010 Over Final (Under) Budget Actual Budget Revenues: General property taxes $7,308,495 $7,191,602 ($116,893) Licenses and permits 237,055 329,901 92,846 Intergovernmental 567,498 570,097 2,599 Charges for services 543,500 755,184 211,684 Fines 100,750 104,780 4,030 Investment income 65,000 70,368 5,368 Miscellaneous 83,400 136,684 53,284 Total revenues 8,905,698 9,158,616 252,918 Expenditures: Current: General government 2,440,991 2,224,867 (216,124) Public safety 4,041,792 3,920,073 (121,719) Public works 1,513,795 1,466,216 (47,579) Parks and recreation 872,633 826,694 (45,939) Recycling 118,838 109,034 (9,804) Unallocated 170,079 24,953 (145,126) Capital outlay - 1,216 1,216 Total expenditures 9,158,128 8,573,053 (585,075) Revenues over (under) expenditures (252,430) 585,563 837,993 Other financing sources: Transfers in 196,930 196,930 - Net change in fund balance ($55,500) $782,493 $837,993 0 Audit Management Letter General Fund The City's December 31, 2010 General Fund fund balance totaled $5,110,905. The - City's General Fund balance has been as follows for the past ten years: J $4,500,000 Q General Fund Balance $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 ®Fund Balance $2,682,786 $3,420,072 $2,814,972 $2,593,027 $3,302,565 $3,202,477 $3,392,813 $3,890,460 $4,175,0351$4,328.4121$5,110,905 a fl a 0 0 e e Audit Management Letter General Fund The fund balance at December 31, 2010 has been reserved or designated as follows. General Fund Fund Balance Desier, Designation Amount Reserved for inventory $113,916 Reserved for prepaid items 92,750 Total reserved 206,666 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 MVHC unallotment 490,186 Designated for working cash flow 4,134,053 Total designated for working capital 4,904,239 Total reservations and designations $5,110,905 The designations are planning for emergency expenditures so that the City can maintain a consistent tax rate. i �I i Audit Management Letter i General Fund a I Workins Capital Reserve As previously noted, approximately 83% of the General Fund's revenue sources are a I 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, the recommended working capital reserve is computed as follows: 2011 General Fund budgeted expenditures $9,126,255 Recommended working cash flow reserve Q (fifty percent of total) $4,563,128 a The current working capital reserve in the General Fund is 45 %. i A summary of the purposes of General Fund reserve balances is as follows: E 11-191 r m ce nriw� b .' aa.. r . +� F de eaw icy swwemei om me Cagt to 0c, wl Q 5M h- Wig AmssoveIb J n, �. Y]i 0 r iewgaut E ryMga SC�aI 9U 1 yecRE BLS —lai—sUladay U Lc 0611tl (� 1 P%mL5 Mg, x a' o.. I 1 1 1 1 1 1 1 1 1 i 1 1 1 1 1 1 1 General Fund GASB 54 — Fund Balance Reporting and Governmental Fund Tyne Definitions GASB Statement No. 54 is effective for the year ending December 31, 2011. This standard changes the reporting of fund balance from the current categories of reserved, designated and unreserved/undesignated to five categories based on the constraint imposed on the use of the resources. We recommend that the City prepare for implementation of this standard by reviewing the current fund balance policy to ensure that the following are addressed: • Minimum fund balance • Flow assumptions • Delegation of authority to assign • Fund balance commitment GASB Statement No. 54 also discusses which types of activities are to be reported in Special Revenue Funds. Each Special Revenue Fund must have a specific revenue source (excluding investment earnings and transfers in) that is restricted or committed for the specific purpose of the fund. Restrictions are outside the City's control. City Council action is required in order to commit a specific revenue source to a specific purpose. We recommend that the City review each Special Revenue Fund and reclassify funds that do not meet the GASB 54 requirements. Audit Management Letter Debt Service Funds DEBT SERVICE FUNDS The financial statements for the EDA Public Facility Lease Revenue Refunding Bonds III Fly A 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 Q Funds are presented in Statements 16 and 17 of the 2010 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. C C LJ I I ICI L_J I I I I �I I I Audit Management Letter Debt Service Funds Special Assessment Bonds: G.O. Improvement Bonds of 2005A Tax Increment Bonds: G.O. TIF Refunding Bonds of 2004B Certificates of Indebtedness: G.O. Equipment Certificate of 2007A G.O. Equipment Certificate of 2008A G.O. Equipment Certificate of 2009A Total certificates of indebtedness Permanent Improvement Revolving Bonds: G.O. PIR Refunding Bonds of 2010A 226,902 408,015 634,917 600,000 02/01/11 17,750 12,057 29,807 1,735,000 02/01/11 212,002 - 212,002 200,000 02/01/11 167,157 6,731 173,888 326,000 02/01/12 128,271 5,134 133,405 255,000 02/01/12 507,430 11,865 519,295 781,000 - 9,849 9,849 1,480,000 02/01/14 Capital Improvement Bonds: December 31 2010 Final Fund Fund Deferred State Aid Refunding Bonds 2009A Outstanding Maturity Description Balance Revenues Total Debt Date $18,443,082 $486,373 $18,929,455 $44,796,000 * Tax increment collections are subject to future valuations within the District. General Obligation Bonds: EDA Public Facility Lease Revenue Bonds of 2004 $595,701 $36,684 $632,385 $18,225,000 02/01/14 EDA Public Facility Lease Revenue Bonds of 2006 9,928,573 - 9,928,573 10,000,000 02/01/34 EDA Public Facility Lease Revenue Bonds of 2007 6,818,641 - 6,818,641 6,865,000 02/01/34 Total general obligation bonds 17,342,915 36,684 17,379,599 35,090,000 Special Assessment Bonds: G.O. Improvement Bonds of 2005A Tax Increment Bonds: G.O. TIF Refunding Bonds of 2004B Certificates of Indebtedness: G.O. Equipment Certificate of 2007A G.O. Equipment Certificate of 2008A G.O. Equipment Certificate of 2009A Total certificates of indebtedness Permanent Improvement Revolving Bonds: G.O. PIR Refunding Bonds of 2010A 226,902 408,015 634,917 600,000 02/01/11 17,750 12,057 29,807 1,735,000 02/01/11 212,002 - 212,002 200,000 02/01/11 167,157 6,731 173,888 326,000 02/01/12 128,271 5,134 133,405 255,000 02/01/12 507,430 11,865 519,295 781,000 - 9,849 9,849 1,480,000 02/01/14 Capital Improvement Bonds: G.O. Capital Improvement Bonds of 2004A 4,771 14,467 19,238 2,495,000 State Aid Refunding Bonds 2009A 261,092 - 261,092 955,000 Open Space Referendum Bonds 2010A 72,373 3,285 75,658 1,660,000 Totals -All Debt Service Funds $18,443,082 $486,373 $18,929,455 $44,796,000 * Tax increment collections are subject to future valuations within the District. 02/01/17 02/01/15 02/01/22 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. i • • • • - - • Audit Management Letter j Debt Service Funds The following decision chart prompts questions to further evaluate a fund's financial � position: Condition A Condition B Fund balance plus deferred revenue Fund balance plus deferred revenue meets or exceeds is less than bonds payable. bonds payable. i Questions , Cautions I. Are sufficient future assets 1. 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? 3. Are transfers or other funding rates earned on prepayments ade- sources available? quate to replace assessment interest? 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- a ments not scheduled for collection (green acres, tax forfeit, etc.)? 5. Is arbitrage or negative arbitrage an issue? e fund The debt service fund is Variables and possible outcomes are too diverse. Ldebt a tely clearly not adequately funded. Plan for altern- Prepare projections to ventual alive funding (taxes, analyze possible us. ransfers, other sources). scenarios and options. i Conclusion 1 Conclusion 2 Conclusion 3 i 1 A TAUTGES REDPATH, LTD. Certified Public Accountants REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GO VERNMENTA UDITING 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, 2010, which collectively comprise the City of Andover, Minnesota's basic financial statements, and have issued our report thereon, dated April 25, 2011. 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 opinions 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 deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant 4810 White Bear Parkway White Bear Lake, MN 55110 651.426.7000 651.426.5004 fax www.hlbtr.com Equal Opportunity Employer 100 - Percent Employee -Owned HLB Tautges Redpath, Ltd. is an independent member of HLB International, a world -wide organization of professional accounting firms. City of Andover, Minnesota Report on Internal Control over Financial Reporting and on Compliance and Other Matters Page 2 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. goys > 4, Ald HLB TAUTGES REDPATH, LTD. White Bear Lake, Minnesota April 25, 2011 TAUTGES REDPATH, LTD. Certified Public Accountants INDEPENDENT AUDITOR'S REPORT To the Honorable Mayor and Members of the City Council City of Andover, Minnesota We have audited the accompanying 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, 2010, which collectively comprise the City of Andover, Minnesota's basic financial statements as listed in 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. The prior year partial comparative information has been derived from the City of Andover, Minnesota's 2009 financial statements and, in our report dated May 7, 2010, we expressed unqualified opinions on the respective financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes 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 the significant estimates made by management, as well as evaluating the overall financial statement 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 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, 2010, and the respective changes in financial 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. In accordance with Government Auditing Standards, we have also issued our report dated April 25, 2011 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 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 performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. 14 4810 White Bear Parkway White Bear Lake, MN 55110 651.426.7000 651.426.5004 fax www.hlbtr.com Equal Opportunity Employer 100 - Percent Employee -Owned HLB Tautges Redpath, Ltd. is an independent member of HLB International, a world -wide organization of professional accounting firms. Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and budgetary comparison information on pages 16 through 25 and 80 through 84 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Andover, Minnesota's financial statements as a whole. The introductory section, combining and individual nonmajor fund financial statements and schedules, other financial information and statistical section are presented for purposes of additional analysis and are not a required part of the financial statements_ The combining and individual nonmajor fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory, other financial information and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. ,r✓�g 7 ,, a�• HLB TAUTGES REDPATH, LTD. White Bear Lake, Minnesota April 25, 2011 15 TAUTGES REDPATH, LTD. Certified Public Accountants REPORT ON COMPLIANCE WITH MINNESOTA LEGAL COMPLIANCE AUDIT GUIDE FOR POLITICAL SUBDIVISIONS 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, 2010, and have issued our report thereon dated April 25, 2011. 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 Political Subdivisions 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 Political Subdivisions 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. HLB TAUTGES REDPATH, LTD. White Bear Lake, Minnesota April 25, 2011 4810 White Bear Parkway White Bear Lake, MN 55110 651.426.7000 651.426.5004 fax www.hlbtr.com Equal Opportunity Employer 100 - Percent Employee -Owned HLB Tautges Redpath, Ltd. is an independent member of HLB International, a world -wide organization of professional accounting firms. TAUTGEs REDPATH, LTD. CertiFed Public Accountants COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE 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 (the City) for the year ended December 31, 2010. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and Government Auditing Standards, as well as certain information related to the planning scope and timing of our audit. We have communicated such information in our letter to you dated December 27, 2010. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Results Qualitative 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. As described in Note I.L. to the financial statements, the City implemented GASB Statement No. 51, Accounting and Financial Reporting for Intangible Assets in 2010. GASB No. 51 had no affect on the financial statements. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. 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 estimate affecting the financial statements was management's estimate of the net OPEB obligation which is based on the OPEB actuarial study. We evaluated the key factors and assumptions used to develop the estimate for the net OPEB obligation in determining that it is reasonable in relation to the financial statements taken as a whole. 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. 4810 White Bear Parkway White Bear Lake, MN 55110 651.426.7000 651.426.5004 fax www.hlbtr.com Equal Opportunity Employer 100 - Percent Employee -Owned HLB Tautges Bedpath, Ltd. is an independent member of HLB International, a world -wide organization of professional accounting firms. City of Andover, Minnesota Communication with Those Charged with Governance Page 2 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. There were no misstatements detected as a result of audit procedures that were corrected by management. 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. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated April 25, 2011. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the City's 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. City of Andover, Minnesota Communication with Those Charged with Governance Page 3 Other Information in Documents Containing Audited Financial Statements With respect to the supplementary information accompanying the financial statements, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. Closing This information is intended solely for use of the City of Andover, Minnesota's management and City Council, and is not intended to be, and should not be, used by anyone other than these specified parties. ,61,Y6 7 �.�. HLB TAUTGES REDPATH, LTD. White Bear Lake, Minnesota April 25, 2011 /\} }} / ƒ %0 22;!/47 7± a E «_ [ �)� } � \ \ /tn z / � }A ) ) g \ \ ) - \� §3 / \k § \0 0)§7\ _§ a ®t =N aE 6 & \ \ \\ ( ( \ \2 04 0 \ \D /§I 0 2 E ) § k ) § » 3 � ) < } ( } \ k ) a \ \ � \ / O / ] / \ { / ) ( � 3 \ / » P4 %) \ \,!» \} § - ƒJ _ \ \ \\ \§ /)aa }@ ,/ }& {/ \) }\ ( §� ( }\ /§2 E ) \ ) \ / 3 � q § ) ( ( } / B � A 3 ) \ ol ■ \ ( / \ j \ \ / 3 5) & 2 & (§�«» « @ ) \2)@ )6 a e ©)k kA%} \® /® )t ,/ {/ {) ;a \e 0 to __ §a )\ /§± COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2010 MINNESOTA - This page intentionally left blank - 1685 CROSSTOWN BOULEVARD N.W. • ANDOVER, MINNESOTA 55304 • (763) 755 -5100 FAX (763) 755 -8923 o WWW.CI.ANDOVER.MN.US Comprehensive Annual Financial Report of the City of Andover, Minnesota For the Year Ended December 31, 2010 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 18 101 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Capital Project Funds Statement 19 102 Special Revenue Funds: Schedules of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual: EDA General Statement 20 104 Community Development Block Grant Statement 21 105 Community Center Statement 22 106 Drainage and Mapping Statement 23 107 LRRWMO Statement 24 108 Forestry Statement 25 109 Trail and Transportation Statement 26 110 Right -of -Way Management /Utility Statement 27 111 Capital Equipment Reserve Statement 28 112 Charitable Gambling Statement 29 113 Construction Seal Coating Statement 30 114 Internal Service Funds: Combining Statement of Net Assets - Internal Service Funds Statement 31 116 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets - Internal Service Funds Statement 32 117 Combining Statement of Cash Flows - Internal Service Funds Statement 33 118 Agency Funds: Combining Statement of Net Assets - Fiduciary Funds Statement 34 120 Combining Statement of Changes in Assets and Liabilities - Fiduciary Funds Statement 35 121 Other Financial Information: Combined Schedule of Indebtedness Exhibit 1 124 Schedule of Tax Capacity Rates and Levies Exhibit 2 126 Schedule of Deferred Tax Levies - General Obligation Bonds Exhibit 3 127 Schedule of Fund Transfers Exhibit 4 128 CITY OF ANDOVER, MINNESOTA TABLE OF CONTENTS Page Reference No. III. STATISTICAL SECTION Net Assets by Component - Last Five Fiscal Years Table 1 132 Changes in Net Assets - Last Five Fiscal Years Table 2 133 Fund Balances - Governmental Funds - Last Five Fiscal Years Table 3 135 Changes in Fund Balances - Governmental Funds - Last Five Fiscal Years Table 4 136 Assessed and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years Table 5 137 Property Tax Rates - Per $1,000 of Assessed Tax Capacity Value - Years 2001 through 2010 Table 6 138 Property Tax Levies and Collections - Last Five Fiscal Years Table 7 139 Principal Taxpayers - Current Year and Ten Years Ago Table 8 140 Estimated Market Values and New Construction - Last Ten Fiscal Years Table 9 141 Special Assessment Levies and Collections - Last Ten Fiscal Years Table 10 142 Ratio of Net Bonded Debt to Assessed Value and Net Bonded Debt Per Capita - Last Ten Fiscal Years Table 11 143 Computation of Direct and Overlapping Debt Table 12 144 Computation of Legal Debt Margin - Last Five Fiscal Years Table 13 145 Pledged- Revenue Coverage - Last Five Fiscal Years Table 14 146 Outstanding Debt by Type - Last Five Fiscal Years Table 15 147 Demographic and Economic Statitistics - Last Five Years Table 16 148 Principal Employers - Current Year and Ten Years Ago Table 17 149 Full Time Equivalent Employees - City Government Employees by Function / Program - Last Five Fiscal Years Table 18 150 Operating Indicators by Function / Program - Last Five Years Table 19 151 Capital Asset Statistics by Function / Program - Last Five Years Table 20 152 I. INTRODUCTORY SECTION 1685 CROSSTOWN BOULEVARD N.W. • ANDOVER, MINNESOTA 55304 • (763) 755 -5100 FAX (763) 755 -8923 • WWW.CI.AN DOVER. MN.US April 25, 2011 To the Honorable Mayor and City Council City of Andover 1685 Crosstown Blvd. NW Andover, Minnesota 55304 Dear Honorable Mayor and Council Members: The Comprehensive Annual Financial Report is submitted in conformance with all applicable governing laws and regulations. The following has set the standards forth: *Andover City Policy and Code *The State Auditor, State of Minnesota *Government Finance Officers Association *Governmental Accounting Standards Board RESPONSIBILITY. Responsibility for both the accuracy of the presented data and the completeness of the financial statements including all disclosures rests with the City. We believe the data, as presented, is accurate in all material aspects. This report has been presented in a manner designed to fairly set forth the financial position and results of operations as measured by the financial activity of its various funds. FINANCIAL STATEMENT FORMAT. This Comprehensive Annual Financial Report is presented in three main sections: L Introductory II. Financial III. Statistical The Introduction includes a list of the City's principal officials as of December 31, 2010, the table of contents, the public officials, organizational 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 financial 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 and ratios. Generally Accepted Accounting Principles (GAAP) requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD &A). This letter of transmittal is designed to complement the MD &A and should be read in conjunction with it. The City of Andover's MD &A can be found immediately following the report of the independent auditors. REPORTING ENTITY. All City funds, departments, commissions, and other organizations for which the City of Andover is financially accountable are presented within the Comprehensive Annual Financial Report. The Andover Firefighters' Relief Association does not meet the established criteria for inclusion in the reporting entity, and accordingly 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 area we know today as Ham Lake. In fact, the area of Ham Lake was considered a part of Grow Township until 1871. In 1972, the Grow Township Board of Supervisors recognized that the town was growing at a very rapid rate. They felt a village form of government would provide better services to the community. Board supervisors then voted in favor of proceeding with the incorporation process. The board voted to submit a new name for the village. "Andover Village" was chosen because the name Andover had historical interest. The historical interest, we believe, came from the Andover train station. To the Honorable Mayor and City Council City of Andover, Minnesota You may have heard the popular "train myth" about how Andover received its name. The myth states that a train tipped over in a swamp, and an eyewitness, relaying the incident, said it "went over and over," thereby naming the city "Andover." However, 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. The article stated that the Eastern Minnesota line of the Great Northern Railway was in the process of constructing railroad tracks from the Coon Creek Cut -off to the North. The railway announced that new railroad stations with mathematical precision were to be located five miles apart from each other. The new stations (from Coon Creek to the North, along the new railroad line) were to be named Andover, Cedar, Bethel, Isanti, Cambridge, Stanchfield, Braham, Grasston, Cornell, and Brook Park. On July 4, 1899, the first train passed through the Andover Station. Where the railway came up with the name Andover still remains unknown. Andover Village was established in 1972 and then became the City of Andover, a city of the fourth class, in 1974. Today the City of Andover's population exceeds 20,000, classifying it as a second class city. The City of Andover as it exists today consists of 23,040 acres. Andover has a population estimated at 31,400. 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: General Government: Mayor and City council Financial administration Information systems Newsletter Elections Facility management City clerk Assessing Engineering Administration Legal Risk management Human resources Planning and zoning Public Safety: Police Protective inspection Animal control Fire protection Civil defense Public Works: Streets and highways Street signs Traffic signals Snow and ice removal Central equipment maintenance Water maintenance Street lighting Sanitation: Storm sewers Sanitary sewer maintenance Parks and Recreation Recycling GOVERNMENT STRUCTURE. Andover is a statutory city with the City Council appointing a City Administrator. The City Administrator has operating responsibilities for all City functions. A list of public officials and organizational chart can be found on page 10 and 11 respectively. IMPLEMENTATION OF GASB 34 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: 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 modified approach 5. A management discussion and analysis is included as required supplemental information 3 To the Honorable Mayor and City Council City of Andover, Minnesota ECONOMIC CONDITION AND OUTLOOK Moderate population growth is expected to continue in 2010 and 2011, with an estimated population of 3 2, 000 by 2011. The rate of residential growth as compared to the growth in the 90's has significantly declined as the availability of residentially zoned property decreased. The City has experienced a significant amount of commercial growth from 2000 through current 2010. 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 86% of the total in 2010. They are general property taxes at 78 %, and charges for services at 8 %. In prior years, intergovernmental revenue was the second largest category of revenue for the General Fund. Intergovernmental revenue includes state aids, such as local government aid (LGA), market value homestead credit (MVHC), highway maintenance aid, fire relief aid and police aid; and county grants, such as recycling and community development. During the past several years, the State of Minnesota has made numerous changes to laws pertaining to the distribution of LGA, Homestead and Agricultural Credit Aid (HACA) and MVHC resulting in a significant reduction in intergovernmental revenue. The City was able to make up this loss in aid through efficiencies and an increased tax levy, substantially increasing the local tax rate in 2002. The tax laws that resulted in this change also greatly reduced school district property tax levies, resulting in no net tax increase for most residential property owners. Sweeping changes approved in 2003 resulted in the loss of approximately $590,000 in aid to Andover, that loss in aid was originally intended to be for two years (2003 & 2004) but that loss was extended to include years 2005 and 2006. The state allowed cities the ability to levy up to 60% of the lost 2003 aid in 2004. Again, in 2008, 2009 and 2010, the State of Minnesota significantly reduced MVHC to help deal with the state budget deficit. LGA, HACA and MVHC for 1998 through 2010 are as follows: Y ear LGA HACA M VH C Total 1998 $ 122,651 $ 378,975 $ - $ 501,626 1999 11 1, 145 462,796 - 573,941 2000 119,752 490,237 - 609,989 2001 11 9, 75 8 489,991 - 609,749 2002 119, 827 - 563,754 683,581 2003 * - - 65,632 65,632 2004 * - - 57,934 57,934 2005 * - - 13J79 13J79 2006 - - 1,700 1,700 2007 - - 410,519 410,519 2008 * - - 198,214 198,214 2009 * - - 54,629 54,629 2010 - - 3,872 3,872 *Due to the State Legislative actions to deal with the state budget deficits, the City will not be receiving any LGA and significantly reduced MVHC. For 1998 through 2000, cities with populations over 2,500 were under levy limit restrictions imposed by the State. Levy limits severely curb the ability of cities to generate additional tax revenue needed to respond to an increasing demand for services. For 1999 and 2000, the levy limit formula was modified to allow for increases based on commercial and industrial growth. This was a favorable change for Andover, as the City experienced a surge in commercial growth during the past few years. Levy limits were lifted for 2001 but were reinstated for 2002 - 2004. The 2004 levy limits were so severe that the State did not allow cities the ability to capture residential and commercial market value growth. Levy limits were lifted from 2005 to 2008, but reinstated for 2009, 2010 and 2011. 4 To the Honorable Mayor and City Council City of Andover, Minnesota 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: Tax Capacity Taxable Market Value: Class Rate Residential Homestead: 1998 1999 2000 & 2001 2002& 2003 Residential Homestead: $ 100,000 $ 1,213 $ 1,175 $ 1,163 Value to $75,000 1.000/0 1.00% 1.00% 1.00% $76,OOOto $500,000 1.85% 1.70% 1.65% 1.00% Over $500,000 1.85% 1.70% 1.65% 1.25% Commercial / Industrial: 300,000 4,913 4,575 4,463 Value to $150,000 2.70% 2.45% 2.40% 1.50% Val ue abo ve $15 0, 00 0 4.00% 3.50% 3.40% 2.00% Tax Capacity Taxable Market Value: Residential Homestead: $ 100,000 $ 1,213 $ 1,175 $ 1,163 $ 1,000 150,000 2,138 2,025 088 1,500 200,000 3,063 2,875 2,813 2,000 250,000 3,988 3,725 3, 63 8 2,500 300,000 4,913 4,575 4,463 3,000 Commercial / In du stria l: $ 550,000 $ 20,050 $ 17,675 $ 17,200 $ 10,250 750,000 28,050 24,675 2400 14,250 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 below: Revenues Change 2001 $ 720,712 n/a 2002 588,965 $ (131,747) 2003 551,385 (37,5 80) 2004 67 4, 00 8 122,623 2005 724,436 50428 2006 598,094 (126,342) 2007 475,893 (122,201) 2008 525,339 49446 2009 291,903 (233,436) 2010 329,901 37,998 The $131,747 decrease in revenue for 2002 is due to reclassification of plan check fees ($263,535), which were previously 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 slowing economy and home building market. A slight increase in 2008 is primarily due to the commercial activity taking place but the decrease in 2009 is due to the continued downturn in the economy, especially the construction industry. In 2010, the home building market showed signs of improvement and accounted for the increase in permit revenue. 5 To the Honorable Mayor and City Council City of Andover, Minnesota The City's General Fund also receives a considerable amount of revenue from charges for services. The past ten years are shown below: Revenues Change 2001 $ 72200 n/a 2002 689,427 $ (33,263) 2003 647,813 (41,614) 2004 79 8, 79 5 150,982 2005 93 3, 36 5 134,570 2006 780,273 (153,092) 2007 1,121, 642 3 41, 3 69 2008 772,430 (349,212) 2009 701,289 (71,141) 2010 755,184 53,895 The City analyzes user fees every year as part of the budget process and makes adjustments where appropriate. Revenue from charges for services totaled $1,121,642 in 2007 and this increase can be linked to the number of public improvement projects being finalized and assessed in 2007. 2008 proved to be better than expected due to some residential plat activity taking place but the decrease in 2009 was expected due to the struggling economy. In 2010, the home building market showed signs of improvement and accounted for the increase in plan review revenue. F.MPI .nVMF.NT The City of Andover's largest employers are government entities. The Anoka - Hennepin School District has a significant presence in the community and Anoka County's Parks and Highway Departments and Sheriffs Office headquarters are located in Andover. The City of Andover is best classified as a bedroom community, since a majority of the residents commute outside of Andover for employment opportunities. The City does anticipate with the development of the Andover Station Commercial Park and other commercial developments that additional employment opportunities will be provided to residents in the near future. Major employers in Andover are as follows: Firm ISD No 11 Anoka- Hennepin Anoka County Parks and Highway Departments Kottkes' Bus Service, Inc. Target Meadow Creek Christian School Columbia Park Medical Group Farmstead at Andover City of Andover McD onald's MAJOR INITIATIVES Number of Type of Business / Product Employees Elementary and secondary education 550 County government and services 369 Bu s transp ortati on 200 Retail 167 Private education K-12 127 Medical clinic 116 Senior housing and assisted living facilities 94 Municipal government and services 84 Restaurant 75 FOR THE YEAR. The City has many accomplishments to report for 2010. The following list is a summary of some of the major initiatives completed throughout the year. 1) Ongoing implementation of a single- family rental housing license program to provide property owners /landlords with educational materials and checklists on how to inspect and maintain the exterior of the property, a list of potential ordinance violations that may occur with a rental property, and an exterior inspection of the building and grounds with city staff. This program was authorized by the Andover City Council in 2009 and there are 228 rental licenses issued as of November 2010. 2) Three street reconstruction projects were completed in 2010. The first was a Bunker Lake Boulevard frontage road reconstruction and realignment project using tax increment funds and special assessments. The second was a street 6 To the Honorable Mayor and City Council City of Andover, Minnesota reconstruction that took place in the south half of the Woodland Meadows development. The project was funded by tax levy and special assessments. The third project was a Community Development Block Grant (CDBG) project reconstructing 138th Avenue and installing a city water main. In the projects, the existing bituminous was reclaimed, concrete curb was added in the development, storm sewer structures were replaced or added, and a new bituminous surface was laid. 3) In 2010, the City welcomed the new Anoka County Law Enforcement Center and Tri- County Forensic Laboratory. This project located all non - correctional staffing from the Sheriff's department under one roof and is now providing forensic services to Anoka, Sherburne and Wright counties. 4) A Water Treatment Plant expansion consisting of plate settlers and a building expansion to house the equipment was completed and became fully operational in 2010. The plate settlers will improve the operations of the water treatment plant and make water more readily available for consumption during peak usage times. 5) The Sustainable Landscape Project consisted of beautifying main corridors through Andover continued in 2010. These roadway improvements have residential properties backing up to them with various types of fencing materials, colors and heights. With the help of city staff, Boy Scouts and residents, self - sustainable shrubs were planted along this corridor to provide a consistent backdrop as people traveled along this roadway through Andover. 6) The City of Andover was eligible for funding in 2009 under the Edward Byrne Memorial Justice Assistance Grant (JAG) Formula Program. Throughout 2010, the City utilized these funds to focus on "crime prevention" programs including expanding our Crime Watch program, acquiring administrative software to help with city code enforcement and for equipment to help with traffic control issues. 7) The City of Andover participated in the State of Minnesota Statewide Health Improvement Program (SHIP). Through this program, the City is making a commitment to support and encourage employees to be more physically active and to improve the overall health of the workforce. 8) In 2010, the City of Andover received The Most Prolific Recycling Program in 2009 award from the Anoka County Board of Commissioners. Andover residents had the highest recycling rate per person (250.25 pounds) for all materials of any Anoka County municipality. 9) As the City reaches the decertification dates of TIF District 1 -1 and 1 -2, City Administration continues to work with the Economic Development Authority (EDA) to assure that the decertification, district goals and final close out reports for the TIF Districts goes smoothly. Starting in 2009, a TIF Plan modification to address that fact that a number of years ago, in the late 1980s and throughout the 1990s, the budgets that were adopted for the TIF Districts were under the true "pooling" concept where the budget was not allocated by district but by project. Subsequent to the adoption of those budgets, the Office of the State Auditor (OSA) is requiring the allocation by district instead of by project. Since the new OSA requirement, there has been some confusion as to the most correct way to allocate the budgets. As a result, the City undertook a process for a formal adoption of a budget modification to allocate and confirm the budgets according to the new OSA requirement. Along with that and throughout 2010, Administration conducted a number of meetings with the EDA to layout projects that will help achieve the TIF District's goals. 10) The City Council has adopted a goal to make a concerted effort toward promoting the usage of solar and wind power, including the identification of appropriate sites and installations. An ordinance to allow wind turbines in the City was adopted in early 2010, and staff is currently working on solar installation options on City facilities. 11) The successful hosting of the City's Annual Business Appreciation Day to recognize and build awareness of the local business community and strengthen relationships with this important element of the Andover community. This event was coordinated through the Community Development Department. 12) The City Open Space Commission, appointed to assist in managing the successful $2,000,000 open space referendum ballot in 2006, updated a detailed natural amenity inventory, held informational meetings with residents and made recommendations to the City Council on land that should be purchased as permanent open space in the community. The first purchase took place in December 2009 and a second purchase in October 2010. 13) The City's Comprehensive Annual Financial Report (CAFR) for the year ended December 31, 2009 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 the eighth consecutive year receiving the award and it is anticipated that the City's CAFR for the year ended December 31, 2010 will also achieve this award. To the Honorable Mayor and City Council City of Andover, Minnesota 14) For the ninth year in a row, the City of Andover was awarded the Government Finance Officers Association Distinguished Budget Presentation Award for the City's 2010 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. 15) The City continues to make significant progress after the implementation of new hardware and software to start the process of digital imaging documents retained by the City. The imaging project has helped the City reduce staffing through data storage retrieval efficiencies and eliminated the need for City Hall office expansion. 16) The City continues to utilize updates to our financial management software to improve reporting and operating efficiencies. These updates continue to yield reduced personnel costs and more timely reports. Residential Development New residential development was limited to Woodland 5th Addition, a 12 single family lot project. It is important to note that the City continues to have a reasonable lot supply for a variety of housing options including single- family lots, townhomes and condominium units. Commercial Industrial Development New commercial construction did actually occur in Andover in 2010. The Kwik Trip convenience store /gas station and car wash was constructed in 2010 with a grand opening date scheduled for early January 2011. FOR THE FUTURE. The City continues to focus on quality of life improvements throughout the City. These efforts cover a broad array of areas including: protecting and improving the environment, revitalization of parks and public areas, expanding recreational opportunities, providing cost - effective city services, increased communication between city representatives and the public and added commercial /retail opportunities. The City utilizes many avenues to reach its residents, whether through community access television, the City newsletter or the City's webpage (www.ci.andover.mn.us). It is important to the City that our residents are informed and have the ability to participate in the activities of their City. The City did conduct a community survey in 2006, with the help of a polling firm, to secure opinions and suggestions from the public. RELEVANT FINANCIAL POLICIES The City has a policy regarding General Fund reserve balances. The City plans for a designated fund balance in the General Fund equivalent to 6- months of the current year's budgeted expenditures to provide working capital between semi - annual property tax settlements. Since the property tax settlements are received by the City in July and December, the City needs sufficient cash reserves to avoid short -term borrowing to finance operations. The City also reserves fund balances for prepaid items, inventories and other legal obligations. The City may also designate a portion of fund balance for special purposes. The primary goal of the City's investment policy is to ensure the safety of the principal invested. Cash temporarily idle during the year is invested in certificates of deposit, commercial paper, and obligations of the U.S. Treasury and government agencies. Cash balances from all City funds are pooled into an investment fund and investment income is distributed on a pro -rata basis at the end of each quarter. Extended maturities are utilized to take advantage of higher yields but staggered in a way to meet projected liquidity needs. Capital financing for major improvements is provided through improvement bonds, general obligation bonds, tax increment bonds, or revenue bonds. Depending on the project, special assessments may be levied upon properties to share in the cost of the improvement project. The special assessments are collected over a period of time and are used to help satisfy the improvement bond debt or reimburse the fund used to finance the project. The City Council has also adopted financial management policies in order to allow for the planning of adequate funding of services desired by the public, to manage City finances wisely, and to carefully account for public funds. These policies are reviewed each year when the annual budget is adopted. The financial management policies included: operating budget policies; revenue policies; accounting, auditing and financial reporting policies; investment policies; debt policies; capital improvement policies; and risk management policies. The City Council has adopted a comprehensive set of internal control procedures. The City's accounting system was developed and is continually evaluated to assure the adequacy of internal accounting controls. Internal accounting controls are designed to provide reasonable but not absolute assurance in the areas of. safeguarding assets against loss from unauthorized use or disposition, reliability of financial records, and convenience of access for preparing financial statements and maintaining To the Honorable Mayor and City Council City of Andover, Minnesota accountability for assets. The concept of reasonable assurance adopted by the City Council recognizes that the evaluation of cost and benefits requires estimates and judgments by management, and the cost of a control should not exceed the benefits likely to be derived. All internal controls are evaluated against the above criteria. It is our belief that the City's internal accounting controls adequately safeguard the City's assets and also provide reasonable assurance of properly recording financial transactions. OTHER INFORMATION AWARDS. The Government Finance Officers Association (GFOA) of the United States and Canada presented a Distinguished Budget Presentation Award to the City of Andover for its annual budget for the fiscal year beginning January 1, 2010. This is the ninth year in a row the City of Andover has received this award. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan and as a communications device. This award is valid for a period of one year only. We believe that the annual budget for the fiscal year beginning January 1, 2011 continues to conform to the program requirements and have submitted it to the GFOA to determine its eligibility for another award. The GFOA also presented the Certificate of Achievement for Excellence in Financial Reporting Award to the City of Andover for its 2009 Comprehensive Annual Financial Report. This is the eighth time the City of Andover has received this award. In order to receive this award, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report whose contents conform to program standards. Such reports must satisfy both generally accepted accounting principles and applicable legal requirements. This award is valid for a period of one year only. We believe this report for 2010 continues to conform to the Certificate of Achievement Program requirements and have submitted it to the GFOA to determine its eligibility for another award. INDEPENDENT AUDIT. State statutes require an annual audit by independent certified public accountants. HLB Tautges Redpath, Ltd. was engaged by the City to render an opinion on the City's financial statements. The auditor's report on the basic financial statements and combining and individual fund statements and schedules is included in the financial section of this report. ACKNOWLEDGMENTS. The preparation of this report could not have been accomplished without the efficient services and dedication of the Finance Department staff and the consultation of the City's auditing firm. Staff members: Lee Brezinka, Melissa Knutson and Brenda Fildes have my sincere appreciation for their contribution to the preparation of this report. I also want to express our appreciation to the Mayor and members of the City Council for their interest and support in planning and conducting the financial operations of the City in a responsible and progressive manner. Respectfull submitted, James Dickinson City Administrator CITY OF ANDOVER, MINNESOTA ORGANIZATION December 31, 2010 Office Name Mayor Michael Gamache Council Member Don Jacobson Council Member Michael Knight Council Member Sheri Bukkila Council Member Julie Trude City Administrator / City Clerk James Dickinson Community Development Director Will Neumeister Director of Public Works / City Engineer David Berkowitz Finance Manager Lee Brezinka Building Official Don Olson Fire Chief Dan Winkel Attorney Hawkins & Baumgartner, P.A. Fiscal Consultants Ehlers & Associates, Inc. 10 January 4, 2011 January 4, 2011 January 2, 2013 January 2, 2013 January 4, 2011 Appointed Appointed Appointed Appointed Appointed Appointed Appointed Appointed CITY OF ANDOVER Organizational Chart Certificate of Achievement for Excellence in Financial Reporting Presented to City of Andover Minnesota For its Comprehensive Annual Financial Report for the Fiscal Year Ended December 31, 2009 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. Executive Director 12 II. FINANCIAL SECTION TAUTGEs REDPATH, LTD. Certified Public Accountants INDEPENDENT AUDITOR'S REPORT To the Honorable Mayor and Members of the City Council City of Andover, Minnesota We have audited the accompanying 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, 2010, which collectively comprise the City of Andover, Minnesota's basic financial statements as listed in 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. The prior year partial comparative information has been derived from the City of Andover, Minnesota's 2009 financial statements and, in our report dated May 7, 2010, we expressed unqualified opinions, on the respective financial statements of the governmental activities, the business --type activities, each major fund, and the aggregate remaining fund information. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes 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 the significant estimates made by management, as well as evaluating the overall financial statement 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 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, 2010, and the respective changes in financial 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. In accordance with Government Auditing Standards, we have also issued our report dated April 25, 2011 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 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 performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. 4810 White Bear Parkway White Bear Lake, MN 55110 651.426.7000 651.426.5004 fax www.hlbtr.com Equal Opportunity Employer 100 - Percent Employee - 6'�vned HLB Tautges Redpath, Ltd. is an independent member of HLB International, a world -wide organization of professional accounting firms. Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and budgetary comparison information on pages 16 through 25 and 80 through 84 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Andover, Minnesota's financial statements as a whole. The introductory section, combining and individual nonmajor fund financial statements and schedules, other financial information and statistical section are presented for purposes of additional analysis and are not a required part of the financial statements_ The combining and individual nonmajor fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying .accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory, other financial information and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. 7a,, F, k4f-01-111 0>?V* HLB TAUTGES REDPATH, LTD. White Bear Lake, Minnesota April 25, 2011 15 CITY OF ANDOVER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2010 As management of the City of Andover, we offer readers of the City's financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2010. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages 2 through 9 of this report. Financial His!hlis!hts The assets of the City exceeded its liabilities at the close of the most recent fiscal year by $155,695,405 (Net assets). Of this amount, $25,984,034 (unrestricted net assets) may be used to meet the government's ongoing obligations to citizens and creditors in accordance with the City's fund designations and fiscal policies. The City's total net assets increased by $2,790,488, primarily due to the budget savings and the pay -down of additional debt. As of the close of the current fiscal year, the City's governmental funds reported combined ending fund balances of $40,219,454. Special General Revenue Reserved $ 20606 $ 73,830 Designated 4,904,239 1,554,981 Undesignated - (419,062) m c i i n nnc m i inn i n n Debt Capital - Service Projects Totals $ 18,44302 $ 741,578 $ 19,465,156 - 14,775,282 21,234,502 - (61,142) OP i o n n'I n WN m i s A Z Z P7 i o (480,204) m n n"1 i n A Z A The City's total long -term liabilities decreased by $5,424,981 during the current fiscal year, primarily due to the scheduled debt service payments made in 2010, the pay -down of additional debt and crossover refundings. Beginning Ending T 1 A 1 1•,• T 1 T 1 Governmental activities: - (455,000) 14,87500 12,830 Bonds payable $ 49,84500 $ 3,14000 $ (8,189,000) $ 44,79600 Other post employment benefits 67,361 43,917 (11,895) 99,383 Compensated absences 54106 323,461 (293,170) 571,897 Total governmental activities 50,453,967 3,507,378 (8,494,065) 45,467,280 Business -type activities: Bonds payable Other post employment benefits Compensated absences Total business -type activities Total City long -term liabilities Overview of the Financial Statements 15,33000 - (455,000) 14,87500 12,830 7,750 (3,042) 17,538 120,546 53,133 (41,135) 132,544 15,463,376 6003 (499,177) 15,02502 $ 65,917,343 $ 3,568,261 $ (8,993,242) $ 60,492,362 The discussion and analysis are intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements comprise three components: 1) government -wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government -wide financial statements. The government -wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private- sector business. The statement of net assets presents information on all of the City's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. 16 CITY OF ANDOVER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2010 The statement of activities presents information showing how the City's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave). Both of the government -wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City include general government, public safety, public works, sanitation, parks and recreation, recycling and economic development. The business -type activities of the City include water, sewer and storm sewer. The government -wide financial statements can be found on pages 29 through 31 of this report. Fund Financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near -term inflows and outflows of spend -able resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near -term financial requirements. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statement. By doing so, readers may better understand the long -term impact of the City's near -term financial decisions. Both the governmental fund balance sheet and governmental fund statement of revenues, expenditures, and change in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains eight individual major governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the following major funds: General Fund, 2006 Economic Development Authority (EDA) Public Facility Lease Revenue Refunding Bonds Debt Service Fund, 2007 EDA Public Facility Lease Revenue Refunding Bonds Debt Service Fund and the following capital projects funds (CPF): Water Trunk, Sewer Trunk, Road and Bridge, Tax Increment Projects and Permanent Improvement Revolving. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non- major governmental funds is provided in the form of combining statements elsewhere in this report. The City adopts an annual appropriated budget for its general and special revenue funds. A budgetary comparison statement has been provided for those funds to demonstrate compliance with this budget. The basic governmental fund financial statements can be found on pages 32 through 37 of this report. Proprietary funds. When the City charges customers for the services it provided — whether to outside customers or to other departments of the City — these services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the statement of net assets and the statement of revenues, expenses and changes in net assets. The enterprise funds are the same as the business -type activities reported in the government -wide statements but provide more detail and additional information, such as cash flows, for proprietary funds. The City uses enterprise funds to account for its water, sanitary sewer and storm sewer operations. Internal service funds are used to report activities that provide supplies and services for the City's other departments, such as the equipment maintenance and insurance funds. The internal service funds are reported with governmental activities in the government -wide financial statements. The basic proprietary fund financial statements can be found on pages 38 through 43 of this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the City. Fiduciary funds are not reflected in the government -wide financial statements because the resources of those funds are not available to support the City's own program. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statement can be found on page 44 of this report. 17 CITY OF ANDOVER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2010 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 78 of this report. Other information. The combining statements referred to earlier in connection with non -major governmental funds is presented immediately following the required supplementary information on budgetary comparisons, and on the modified approach for streets and trails infrastructure. Combining and individual fund statements and schedules can be found on pages 85 through 121 of this report. Government -wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the City, assets exceeded liabilities by $155,695,405 at the close of the most recent fiscal year. The largest portion of the City's net assets ($123,346,657 or 79 percent) reflects its investment in capital assets (e.g. land, buildings, machinery, and equipment) less any related debt used to acquire those assets that is still outstanding. It does not include any refunding debt that has not met the refunding date of the original issue. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. CITY OF ANDOVER'S NET ASSETS Governmental Activities 2010 2009 Business -Type Activities nnnn �nin Totals 2009 2010 Current and other assets $ 47,775,309 $ 46,331,209 $ 12,286,615 $ 11,971,246 $ 60,061,924 $ 58,302,455 Capital assets 115,419,872 115,13707 45,699,962 44,445,050 161,119,834 159,582,657 Total assets Long -term liabilities outstanding Other liabilities WrWsrArir sirWWW1 rc z s W IUzMKOKEff �z�•z zi��� 50,453,967 45,467,280 15,463,376 15,02502 65,917,343 60,492,362 1 /-- ci CAI i ICn 1An1 �71A�7 occ 110 1 A 11 Icn nno i /_-n�7 IAA Total liabilities 52,105,610 46,826,283 16,171,231 15,363,424 68,276,841 62,189,707 Net assets: Invested in capital assets, net of related debt 83,394,872 87,20607 36,939,962 36,140,050 120,334,834 123,346,657 Restricted 8,252,691 6,364,714 - - 8,252,691 6,364,714 Unrestricted 19,44208 21,071,212 4,875,384 4,912,822 24,317,392 25,984,034 Total net assets $ 11109,571 $ 114,642,533 $ 41,815,346 $ 41,052,872 $ 152,904,917 $ 155,695,405 A portion of the City's net assets represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets ($25,984,034) may be used to meet the City's ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City is able to report positive balances in all three categories of net assets, both for the City as a whole, as well as for its separate governmental and business -type activities. 18 CITY OF ANDOVER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2010 Government -wide Activities Governmental activities increased the City's net assets by $3,552,962 and business -type activities decreased net assets by $762,474. Key elements of the activities are as follows: City of Andover's Changes in Net Assets Governmental Activities Business -Type Activities Total 2009 2010 2009 2010 Revenues: Program revenues: Charges for services $ 2,92300 $ 2,955,592 $ 4,421,065 $ 4,380,245 $ 7,344,065 $ 7,335,837 Operating grants and contributions 966,635 1,214,066 - 9,380 966,635 1,223,446 Capital grants and contributions 1,631,929 1,461,834 793,589 - 2,425,518 1,461,834 General revenues: Property taxes 10,175,519 10,336,536 - - 10,175,519 10,336,536 Tax increment 1,93009 2,074,589 - - 1,93009 2,074,589 Grants and contributions not restricted to specific programs 13104 84,875 - - 131,084 84,875 Unrestricted investments earnings 1,032,507 1,114,451 373,893 317,796 1,406,400 1,432,247 Total revenues 18,791,343 19,241,943 5,588,547 4,707,421 43,621,833 29,537,911 Expenses: General government 2,413,916 2,39807 - - 2,413,916 2,39807 Public safety 4,237,401 4,157,050 - - 4,237,401 4,157,050 Public works 3,776,367 3,445,403 - - 3,776,367 3,445,403 Parks and recreation 200,595 3,447,730 - - 200,595 3,447,730 Recycling 86,949 108,785 - - 86,949 108,785 Economic development 481,632 654,961 - - 481,632 654,961 Interest on long -term debt 2,146,960 1,936,731 - - 2,146,960 1,936,731 Water - - 2,594,713 2,585,469 2,594,713 2,585,469 Sewer - - 1,831,505 1,915,072 1,831,505 1,915,072 Storm sewer - - 536,619 532,168 536,619 532,168 Total expenses 16,023,820 16,148,667 4,962,837 5,032,709 20,986,657 21,181,376 Increase (decrease) in net assets before gain on the sale of capital assets and transfers 2,767,523 3,093,276 625,710 (325,288) 3,393,233 2,767,988 Gain on the sale of capital assets 6,144 22,500 - - 6,144 22,500 Transfers 42107 437,186 (421,887) (437,186) - - Increase in net assets 3,195,554 3,552,962 203,823 (762,474) 3,399,377 2,790,488 Net assets - beginning 107,894,017 111,089,571 41,611,523 41,815,346 149,505,540 152,904,917 Net assets - ending $ 111,089,571 $ 114,642,533 $ 41,815,346 $ 41,052,872 $152,904,917 $ 155,695,405 19 CITY OF ANDOVER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2010 Governmental Activities Following are specific graphs that provide comparisons of the governmental activities revenues and expenses: Governmental Activities - Revenues Unrestricted investments Grants and contributions earnings Charges for services not restricted for specific 5.8% 15.3% programs 0.4% Gain (loss) on the sale of Tax increment capital assets 10.8% 0.1% Capital grants and contributions 7.6% Operating grants and contributions 6.3% Property taxes 53.7% Governmental Activities - Expenses Interest on long -term debt 12.0% Economic development 4.1% Parks and recreation 21.3% Public works 21.3% 20 General government 14.8% Recycling 0.7% Public safety 25.7% CITY OF ANDOVER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2010 Business -Type Activities Business -type activities decreased net assets by $762,474. Below are graphs showing the business -type activities revenue and expense comparisons: Business -Type Activities - Revenues Unrestricted investments earnings 6.8% Operating grants and contributions 0.2% Charges for services 93.0% IPA CITY OF ANDOVER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2010 Financial Analysis of the Government's Funds Governmental Funds. The focus of the City's governmental funds is to provide information on near -term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. At the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $40,219,454. Approximately 51 percent of this total amount ($20,754,298) constitutes unreserved fund balance. The remainder of the fund balance ($19,465,156) is reserved because it has already been committed 1) to provide for prepaid items ($101,000), 2) to provide for inventory ($121,870), 3) to provide for economic development ($6,783), 4) to pay debt service ($18,443,082) and 5) bond proceeds specified for a project ($792,421). Major Funds The general fund increased by $782,493 in 2010, which was a $223,582 change from the final budget. The final budget showed a decrease in fund balance of $55,500. The increase in fund balance is due to various departments under - spending and revenues exceeding budgets with an increase in the number of homes being built. 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 2010, the water trunk fund was reimbursed 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. The road and bridge capital projects fund increased by $659,590 primarily due to the collection of state aid construction dollars for prior year proj ects. The tax increment capital projects fund decreased by $1,482,918 due to operating transfers for debt service payments ($2,020,816), project reimbursement ($124,23 8), and the use of pre -1997 tax increment to payoff a special assessment.. Nonmaj or Funds The capital equipment reserve special revenue fund decreased by $165,133 due to the operating transfer of $242,000 to the water trunk capital projects fund for the reimbursement of the water tower refurbishing. The 2006B G.O. equipment certificates debt service fund decreased by $236,177 with the final payment being made. The 2001B G.O. state aid bonds debt service fund decreased by $209,451 with the final payment being made. The 2009A G.O. state aid refunding bonds debt service fund decreased by $688,323 due to the refunding of the 2001B state aid bonds on February 1, 2010. The 2005A G.O. improvement bonds debt service fund decreased by $681,707 due to its annual debt service obligations and the calling of additional debt. The fluctuation of fund balance for the equipment certificate capital projects funds depends on when the bonds are issued and when the purchases are actually made. The 2010A G.O. open space referendum bonds capital projects fund increased by $1,351,124 due the issuance of bonds in 2010. Proprietary funds. The City's proprietary funds provide the same type of information found in the government -wide financial statements, but in more detail. The unrestricted net assets in the respective proprietary funds are enterprise funds of $4,878,447 (water $1,853,694, sewer $2,799,476 and storm sewer $225,277) and internal service funds of $413,815. The enterprise funds had a net decrease in net assets in 2010 of $795,689 (water ($223,499), sewer ($383,923) and storm sewer ($188,267)). Internal service funds had a net increase in net assets of $130,480. Capital Asset and Debt Administration Capital assets. The City's investment in capital assets for its governmental and business type activities as of December 31, 2010, amounts to $159,582,657 (net of accumulated depreciation). This investment in capital assets includes land, buildings, infrastructure, machinery and equipment. 22 CITY OF ANDOVER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2010 The City has elected to use the modified approach as defined in GASB Statement No. 34 for infrastructure reporting for its Pavement Management Program, which includes streets and trails. Under GASB Statement No. 34, eligible infrastructure capital assets are not required to be depreciated under the following requirements: 1) The City manages the eligible infrastructure capital assets using an asset management system with characteristics of (a) an up -to- date inventory; (b) perform condition assessments and summarize the results using a measurement scale; and (c) estimate annual amount to maintain and preserve at the established condition assessment level. 2) The City documents that the eligible infrastructure capital assets are being preserved approximately at or above the established and disclosed condition assessment level. The City's policy is to achieve an average rating of good (56 — 70) for all streets and trails. In the fall of 2010, the City conducted a physical condition assessment of the streets and trails constructed since 1974. This assessment will be completed every three years. As of December 31, 2010, the City's street and trail system was rated at an Overall Condition Index (OCI) of 83, which is higher than the City's policy level. The City's streets and trails are constantly deteriorating resulting from the following factors: (1) traffic using the system; (2) the sun's ultra- violet rays drying out and breaking down the top layer of pavement; (3) utility company /private development trenching operations; (4) water damage from natural precipitation; and (5) frost heave. The City is continuously taking actions to prolong the life of the system through short -term maintenance activities such as pothole patching, crack sealing, seal coating and overlaying. The City expended $1,457,082 on street and trail maintenance for the year ending December 31, 2010. These expenditures delayed deterioration; however, the overall condition of the system increased slightly (81 OCI to an 83 OCI) through these maintenance expenditures. The City has estimated that the amount of annual expenditures required to maintain the City's street and trail system at the average OCI rating of good is approximately $1,15000. 23 Maintenance Actual OCI Year Estimate Expenditures Rating 2003 $ 95000 $ 95608 82 2004 1,000,000 1,847,066 82 2005 1,000,000 1,655,715 83 2006 1,15000 1,228,981 82 2007 1,15000 1,256,433 81 2008 1,15000 2,244,713 80 2009 1,15000 106,216 81 2010 1,15000 1,45702 83 23 CITY OF ANDOVER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2010 Primary Government Less accumulated depreciation for: Buildings and improvements Beginning 896,994 - Ending Furniture and equipment Balance Additions Deletions Balance Governmental activities: 4,832,203 412,871 (96,507) 5,148,567 Land and improvements $ 8,997,071 $ 3 22, 628 $ - 699 $ V19,699 Streets and trails 79,547,692 - - 79,547,692 Construction in progress - 5102 - 5102 Buildings and improvements 26,657,459 163,387 - 26,820,846 Furniture and equipment 411,116 - - 411,116 Machinery and equipment 6,763,730 450,554 (101,724) 7,112,560 Other park improvements 5,127,386 371,299 (29,482) 5,469,203 Total capital assets 127,504,454 1,358,870 (131,206) 128,732,118 Less accumulated depreciation for: Buildings and improvements 5,347,136 896,994 - 6,244,130 Furniture and equipment 203,508 53,999 - 257,507 Machinery and equipment 4,832,203 412,871 (96,507) 5,148,567 Other park improvements 1,701,735 268,779 (26,207) 1,944,307 Total accumulated depreciation 1204,582 1,632,643 (122,714) 13,594,511 Governmental activities capital assets - net 115,419,872 (273,773) (8,492) 115,13707 Business -type activities: Land and improvements 730,243 - - 730,243 Construction in progress 776,911 - (776,911) - Buildings and improvements 14,810,983 1,03502 - 15,846,865 Furniture and equipment 61,390 - - 61,390 Machinery and equipment 1,251,188 - - 1,251,188 Collection and distribution 49,276,189 101,153 - 49,377,342 Total capital assets being depreciated 66,906,904 1,137,035 (776,911) 67,267,028 Less accumulated depreciation for: Buildings and improvements 5,118,451 53802 - 5,657,113 Furniture and equipment 25,704 709 - 33,513 Machinery and equipment 912,318 74,539 - 986,857 Collection and distribution 15,150,469 994,026 - 16,144,495 Total accumulated depreciation 21,206,942 1,615,036 - 22,821,978 Business -type activities capital assets - net 45,699,962 (478,001) (776,911) 44,445,050 Total capital assets $ 161,119,834 $ (751,774) $ (785,403) $ 159,582,657 Additional information on the City's capital assets can be found in Note 5. Long -term debt. At the end of the current fiscal year, the City had total long -term debt outstanding of $60,375,441, a decrease of $5,461,711 from 2009. Revenue bonds ($35,090,000) were used to finance the construction of the community center and the refunding of portions of the community center bonds. General obligation revenue bonds ($14,875,000) were used to finance the construction of, and addition to, the water treatment plant and the refunding of portions of the water treatment plant bonds. Special assessment bonds ($600,000) financed improvement projects within the City and are assessed to the benefiting properties. Tax increment bonds ($1,735,000) financed the City's economic development plan within tax increment districts. Certificates of indebtedness ($781,000) financed capital equipment purchases. Capital improvement bonds ($2,495,000) financed the construction of Fire Station #3, the purchase of the Public Works building from the EDA and some improvements done at the Public Works building and City Hall. Permanent improvement revolving bonds 24 CITY OF ANDOVER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2010 ($1,480,000) financed improvement projects within the City and are assessed to the benefiting properties. State aid bonds ($955,000) were used to finance Municipal State Aid (MSA) eligible road projects and the refunding of portions of the state aid bonds and the referendum bonds ($1,660,000) were used to finance land acquisitions for the preservation of open space. Additional long -term debt in the amount of $704,441 is for compensated absences. City of Andover's Outstanding Debt The City maintains an AA+ rating with a stable outlook from Standard and Poor's. State statutes limit the amount of general obligation debt a Minnesota city may issue to 3% of total Estimated Taxable Market Value. The current debt limitation for the City is $81,315,444. Only $22,257,257 of the City's outstanding debt is counted within the statutory limitation. Additional information on the City's long -term debt can be found in Note 6 and 7. Requests for information. This financial report is designed to provide a general overview of the City of Andover's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City of Andover, Attn: Finance Manager, 1685 Crosstown Boulevard NW, Andover, Minnesota 55304 or by calling 763 - 755 -5100. 25 Governmental Business -Type Activities Activities Total Bonds payable: Revenue bonds $ 35,09000 $ - $ 35,09000 G.O. revenue bonds - 14,87500 14,87500 Special assessment bonds 60000 - 60000 Tax increment bonds 1,73500 - 1,73500 Certificates of indebtedness 78100 - 78100 Capital improvement bonds 2,49500 - 2,49500 Permanent improvement revolving bonds 1,48000 - 1,48000 State aid bonds 95500 - 95500 Referendum bonds 10000 - 1,66000 Total bonds payable 44,79600 14,87500 59,67100 Compensated absences 571,897 132,544 704,441 Total $ 45,367,897 $ 1507,544 $ 60,375,441 The City maintains an AA+ rating with a stable outlook from Standard and Poor's. State statutes limit the amount of general obligation debt a Minnesota city may issue to 3% of total Estimated Taxable Market Value. The current debt limitation for the City is $81,315,444. Only $22,257,257 of the City's outstanding debt is counted within the statutory limitation. Additional information on the City's long -term debt can be found in Note 6 and 7. Requests for information. This financial report is designed to provide a general overview of the City of Andover's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City of Andover, Attn: Finance Manager, 1685 Crosstown Boulevard NW, Andover, Minnesota 55304 or by calling 763 - 755 -5100. 25 - This page intentionally left blank - 26 BASIC FINANCIAL STATEMENTS 27 - This page intentionally left blank - 28 CITY OF ANDOVER, MINNESOTA STATEMENT OF NET ASSETS December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 Assets: Cash and investments Cash and investments with escrow agent Accrued interest Due from other governmental units Accounts receivable - net Prepaid items Property taxes receivable: Unremitted Delinquent Special assessments receivable: Unremitted Delinquent Deferred Notes receivable Inventories - at cost Capital assets - net Nondepreciable Depreciable Total assets Liabilities: Interfund payable Accounts payable Contracts payable Developer advances Deposits payable Due to other governmental units Salaries payable Unearned revenue Accrued interest payable Other post employment benefits: Due in more than one year Compensated absences: Due within one year Due in more than one year Bonds /notes payable: Due within one year Due in more than one year Total liabilities Net assets: Invested in capital assets, net of related debt Restricted for: Debt service Capital improvements Tax increment purposes Unrestricted Total net assets Primary Government Government Business -Type $ 22,727,570 17,238,196 376,725 36,345 218,301 102,750 107,367 441,904 $ 4,188,237 6,491,510 124,452 5,587 1,034,516 19,750 Statement 1 Totals 2010 2009 $ 26,91507 23,729,706 501,177 41,932 1,252,817 122,500 107,367 441,904 $ 26,746,280 24,629,839 499,026 41,071 1,225,888 135,304 139,326 312,988 29,759 1,778 31,537 4,228 146,271 72,589 218,860 202,999 3,187,639 - 3,187,639 4,393,638 1,515,512 - 1,515,512 1,525,773 202,870 32,827 235,697 205,564 88,918,393 730,243 89,648,636 90,051,917 26,219,214 43,71407 69,934,021 71,067,917 161,468,816 56,416,296 217,885,112 221,181,758 34,375 (34,375) - - 205,038 29,245 234,283 223,094 40,239 19,238 59,477 537,025 2000 - 2000 2000 55,739 2,234 57,973 53,935 28,555 24,119 52,674 129,313 153,462 27,287 180,749 166,594 22,581 - 22,581 59,227 799,014 270,594 1,06908 1,170,310 99,383 17,538 116,921 80,191 85,785 1902 10507 66,215 486,112 11202 598,774 595,937 4,100,000 47500 4,57500 7,164,000 40,69600 14,40000 55,09600 58,011,000 46,826,283 15,363,424 62,189,707 68,276,841 87,20607 36,140,050 123,346,657 120,334,834 1,265,441 - 1,265,441 2,078,837 792,421 - 792,421 427,017 4,306,852 - 4,306,852 5,746,837 21,071,212 4,912,822 25,984,034 24,317,392 $ 114,642,533 $ 41,052,872 $ 155,695,405 $ 152,904,917 The accompanying notes are an integral part of these financial statements. 29 CITY OF ANDOVER, MINNESOTA STATEMENT OF ACTIVITIES For The Year Ended December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 The accompanying notes are an integral part of these financial statements. 30 Program Revenues Charges Operating Capital For Grants and Grants and Expenses Services Contributions Contributions Functions /Programs Primary government: Government activities: General government $ 2,39807 $ 454,419 $ 9,439 $ - Public safety 4,157,050 479,516 311,944 - Public works 3,445,403 337,360 641,834 1,186,558 Parks and recreation 3,447,730 1,432,672 - 174,123 Recycling 108,785 40,504 57,536 - Economic development 654,961 211,121 145,561 101,153 Interest on long -term debt 1,936,731 - 47,752 - Total government activities 16,148,667 2,955,592 1,214,066 1,461,834 Business -type activities: Water 2,585,469 2,077,305 - - Sewer 1,915,072 1,964,117 - - Storm sewer 532,168 338,823 9,380 - Total business -type activities 5,032,709 4,380,245 9,380 - Total primary government $ 21,181,376 $ 7,335,837 $ 1,223,446 $ 1,461,834 The accompanying notes are an integral part of these financial statements. 30 General revenues: General property taxes Tax increment collections Grants and contributions not restricted to specific programs Unrestricted investment earnings Gain on sale of capital assets Transfers Total general revenues, gain on sale of capital assets and transfers Change in net assets Net assets - beginning Net assets - ending Statement 2 Net (Expense) Revenue and Changes in Net Assets Primary Government Governmental Business -Type Totals $ (1,934,149) $ - $ (1,934,149) $ (1,920,494) (3,365,590) - (3,365,590) (3,518,414) (1,279,651) - (1,279,651) (1,336,619) (1,840,935) - (1,840,935) (1,282,673) (10,745) - (10,745) (1,003) (197,126) - (197,126) (296,093) (1,888,979) - (108,979) (2,146,960) (10,517,175) - (10,517,17s) (10,502,256) - (508,164) - 49,045 - (183,965) - (643,084) !1 4 - -A , / A r ! ! A A 10,336,536 - 2,074,589 - 84,875 - 1,114,451 317,796 22,500 - 437,186 (437,186) 14,070,137 (11%390) 3,552,962 (762,474) 111,0 %571 41,815,346 $ 114,642,533 $ 41,052,872 CA (508,164) 49,045 (183,965) (643,084) 10,336,536 2,074,589 84,875 1,432,247 22,500 13,950,747 2,790,488 152,904,917 $ 155,695,405 (128,297) 417,293 (37,179) 251,817 10,175,519 1,930,669 131,084 1,406,400 6,144 13,649,816 3,399,377 149,505,540 $ 152,904,917 CITY OF ANDOVER, MINNESOTA BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 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. 32 2006 EDA Public 2007 EDA Public Facility Lease Facility Lease Revenue Revenue Road & Refunding Bonds Refunding Bonds Water Trunk Sewer Trunk Bridge General DSF DSF CPF CPF CPF Assets: Cash and investments $ 4,391,570 $ 413 $ 413 $ 2,872,670 $ 3,491,132 $ 3,850,678 Cash and investments with escrow agent - 9,759,059 6,704,233 - - - Accrued interest 13,225 176,331 121,225 11,204 14,287 13,276 Due from other governmental units 23,969 - - 12,376 - - Accounts receivable - net 73,133 - - - - - Interfund receivable 629,000 - - 62,000 - - Prepaid items 92,750 - - - - - Property taxes receivable: Unremitted 63,277 - - - - 8,006 Delinquent 242,461 - - - - 33,653 Special assessments receivable: Unremitted 417 - - 25,364 871 3,107 Delinquent 14,530 - - - - 8,921 Deferred - - - 455,587 67,805 1,037,350 Notes receivable - - - - - 30,761 Inventories - at cost 113,916 - - - - - Total assets 5,658,248 9,935,803 6,825,871 3,439,201 3,574,095 4,985,752 Liabilities and Fund Balances Liabilities: Interfund payable - 7,000 7,000 - - - Accounts payable 126,825 230 230 - - 1,777 Contracts payable 19,546 - - - - 14,253 Developer advances - - - - - - Deposits payable 12,835 - - 5,741 5,741 - Due to other governmental units 6,494 - - 300 300 4,285 Salaries payable 124,652 - - - - - Deferred revenue 256,991 - - 455,587 67,805 1,110,685 Total liabilities 547,343 7,230 7,230 461,628 73,846 1,131,000 Fund balances: Reserved for: Prepaid items 92,750 - - - - - Inventory 113,916 - - - - - Economic development - - - - - - Debt service - 9,928,573 6,818,641 - - - Proj ects - - - - - - Unreserved reported in: Designated: General fund 4,904,239 - - - - - Special revenue funds - - - - - - Capital projects funds - - - 2,977,573 3,500,249 3,854,752 Undesignated: Special revenue funds - - - - - - Capital projects funds - - - - - - Total fund balances 5,110,905 9,928,573 6,818,641 2,977,573 3,500,249 3,854,752 Total liabilities and fund balances $ 5,658,248 $ 9,935,803 $ 6,825,871 $ 3,439,201 $ 3,574,095 $ 4,985,752 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. 32 Tax Permanent Increment Improvement Other Intra Proj ects Revolving Governmental Activity Statement 3 Totals Governmental Funds 2010 2009 $ 2,807,459 $ 1,348,619 $ 3,593,907 $ - $ 22,356,861 $ 21,961,303 - - 774,904 - 17,238,196 18,137,575 8,109 5,189 12,415 - 375,261 372,956 - - - - 36,345 33,371 - - 145,168 - 218,301 235,237 - - - (691,000) - - - - 8,250 - 101,000 112,054 18,066 - 18,018 - 107,367 139,326 89,712 - 76,078 - 441,904 312,988 - - - - 29,759 1,026 - 39,073 83,747 - 146,271 132,568 - 1,290,572 336,325 - 3,187,639 4,393,638 1,415,500 - 69,251 - 1,515,512 1,525,773 - - 7,954 - 121,870 109,329 4,338,846 2,683,453 5,126,017 (691,000) 45,876,286 47,467,144 - - 677,000 (691,000) - - 3,677 - 44,917 - 177,656 159,962 - - 6,440 - 40,239 203,439 20,000 - - - 20,000 20,000 - - 31,422 - 55,739 51,701 8,317 - 3,376 - 23,072 100,294 - - 20,567 - 145,219 138,480 1,386,212 1,329,645 587,982 - 5,194,907 6,305,193 1,418,206 1,329,645 1,371,704 (691,000) 5,656,832 6,979,069 - - 8,250 - 101,000 112,054 - - 7,954 - 121,870 109,329 - - 6,783 - 6,783 9,828 - - 1,695,868 - 18,443,082 20,305,482 - - 792,421 - 792,421 427,017 - - - - 4,904,239 4,120,897 - - 1,554,981 - 1,554,981 1,691,625 2,920,640 1,353,808 168,260 - 14,775,282 14,839,789 - - (419,062) - (419,062) (458,423) - - (61,142) - (61,142) (669,523) 2,920,640 1,353,808 3,754,313 - 40,219,454 40,488,075 $ 4,338,846 $ 2,683,453 $ 5,126,017 $ (691,000) $ 45,876,286 $ 47,467,144 $ 40,219,454 $ 40,488,075 115,137,607 115,419,872 5,172,326 6,245,966 379,440 282,175 (46,266,294) (51,346,517) $ 114,642,533 $ 111,089,571 33 CITY OF ANDOVER, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS For The Year Ended December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 The accompanying notes are an integral part of these financial statements. 34 2006 EDA Public 2007 EDA Public Facility Lease Facility Lease Revenue Revenue Refunding Bonds Refunding Bonds Water Trunk Sewer Trunk General DSF DSF CPF CPF Revenues: General property taxes $ 7,191,602 $ - $ - $ - $ - Tax increment collections - - - - - Licenses and permits 329,901 - - - - Intergovernmental 570,097 - - 246,714 - Special assessments - - - 80,726 20,803 Charges for services 755,184 - - - - Fines 104,780 - - - - Investment income 70,368 423,075 290,817 50,892 74,872 Miscellaneous: Park dedication fees - - - - - Connection charges - - - 40,766 7,320 Rent - - - - - Other 136,684 - - - - Total revenues 9,158,616 423,075 290,817 419,098 102,995 Expenditures: Current: General government 2,224,867 - - - - Public safety 3,920,073 - - - - Public works 1,466,216 - - 166,781 7,191 Parks and recreation 826,694 - - - - Recycling 109,034 - - - - Economic development - - - - - Unallocated 24,953 - - - - Capital outlay: General government - - - - - Public safety - - - - - Public works - - - - - Parks and recreation 1,216 - - - - Debt service: Principal retirement - - - - - Interest - 424,228 291,982 - - Paying agent fees - 2,000 2,000 - - Professional services - 280 280 - - Construction/acquisition costs - - - 101,153 - Total expenditures 8,573,053 426,508 294,262 267,934 7,191 Revenues over (under) expenditures 585,563 (3,433) (3,445) 151,164 95,804 Other financing sources (uses): Transfers in 196,930 - - 242,000 400,000 Transfers out - - - (89,191) (130,439) Bonds issued - - - - - Refunding bonds issued - - - - - Redemption of refunded bonds - - - - - Bond premium - - - - - Proceeds from the sale of capital assets - - - - - Total other financing sources (uses) 196,930 - - 152,809 269,561 Net increase (decrease) in fund balance 782,493 (3,433) (3,445) 303,973 365,365 Fund balance - January 1 4,328,412 9,932,006 6,822,086 2,673,600 3,134,884 Fund balance - December 31 $ 5,110,905 $ 9,928,573 $ 6,818,641 $ 2,977,573 $ 3,500,249 The accompanying notes are an integral part of these financial statements. 34 Statement 4 35 Tax Permanent Road & Increment Improvement Other Intra Totals Bridge Projects Revolving Governmental Activity Governmental Funds CPF CPF CPF Funds Eliminations 2010 2009 $ 984,831 $ - $ - $ 2,090,652 $ - $ 10,267,085 $ 10,168,143 - 2,015,123 - - - 2,015,123 1,951,343 - - - - - 329,901 291,903 838,947 70,910 - 262,752 - 1,989,420 1,654,614 408,865 1,097 1,182,611 31,593 - 1,725,695 1,421,591 - - - 849,497 - 1,604,681 1,579,659 - - - - - 104,780 110,779 71,595 18,898 18,402 88,416 - 1,107,335 1,029,683 - - - 32,649 - 32,649 41,216 - - - - - 48,086 20,119 - - - 638,037 - 638,037 637,305 1,692 - - 288,410 (30,600) 396,186 381,548 2,305,930 2,106,028 1,201,013 4,282,006 (30,600) 20,258,978 19,287,903 - - - 30,926 - 2,255,793 2,242,662 - - - - - 3,920,073 4,015,410 1,402,900 - - 161,356 - 3,204,444 3,545,132 - - - 1,606,801 - 2,433,495 1,891,125 - - - - - 109,034 85,527 - 498,666 - 152,311 - 650,977 477,648 - - - - - 24,953 19,540 - - - 163!1387 - 163!1387 35!1640 - - - 43 5,103 - 43 5,103 299,319 - - - - - - 176,118 - - - 725,175 - 726,391 1,008,867 - - - 5,779,000 - 5,779,000 3,865,000 - - - 1,314,057 - 2,030,267 2,178,233 - - - 3,880 - 7,880 9,794 - - - 21,499 - 22,059 29,471 - - - - - 101,153 - 1,402,900 498,666 - 10,393,495 - 21,864,009 19,879,486 903,030 1,607,362 1,201,013 (6,111,489) (30,600) (1,605,031) (591,583) 254,677 - - 5,144,721 (5,610,798) 627,530 587,530 (498,117) (3,105,780) (1,190,450) (716,612) 5,641,398 (89,191) (165,643) - - - 1,660,000 - 1,660,000 385,000 - - - 1,480,000 - 1,480,000 955,000 - - - (2,416,834) - (2,416,834) - - - - 31,688 - 31,688 18,781 - 15,500 - 27,717 - 43,217 12,264 (243,440) (3,090,280) (1,190,450) 5,210,680 30,600 1,336,410 1,792,932 659,590 (1,482,918) 10,563 (900,809) - (268,621) 1,201,349 3,195,162 4,403,558 1,343,245 4,655,122 - 40,488,075 39,286,726 $ 3,854,752 $ 2,920,640 $ 1,353,808 $ 3,754,313 $ - $ 40,219,454 $ 40,488,075 35 - This page intentionally left blank - 36 CITY OF ANDOVER, MINNESOTA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS For The Year Ended December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 Amounts reported for governmental activities in the statement of activities (page 35) are different because: Net changes in fund balances - total governmental funds (page 35) Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. The net effect of various miscellaneous transactions involving capital assets is to increase (decrease) net assets (i.e., sales, trade -ins, and donations). Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. The issuance of long -term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long -term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. This amount is the net effect of these differences in the treatment of long -term debt and related items. 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 is the net effect of employee benefits earned and paid during the year. Transfer out of governmental capital assets contributed to Enterprise Funds. Some expenses reported in the statement of activities do not require use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Statement 5 $ (268,621) $ 1,201,349 (206,609) (101,524) 25,497 371,627 (1,073,640) (877,131) 5,04900 2,52500 (32,022) (31,265) (101,153) - 63,245 (5,440) Internal service funds are used by management to charge the cost of equipment maintenance and insurance to individual funds. This amount is the portion of net revenue attributable to governmental activities. 97,265 112,938 Change in net assets of governmental activities (page 31) $ 3,552,962 $ 3,195,554 The accompanying notes are an integral part of these financial statements. 37 CITY OF ANDOVER, MINNESOTA STATEMENT OF NET ASSETS PROPRIETARY FUNDS December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 Assets: Current assets: Cash and cash equivalents Restricted assets: Cash and cash equivalents Accrued interest Due from other governmental units Accounts receivable - net Prepaid items Special assessments receivable: Unremitted Delinquent Inventories - at cost Total current assets Noncurrent assets: Capital assets: Land Buildings and structures Machinery and equipment Distribution and collection system Construction in progress Total capital assets Less: Allowance for depreciation Total noncurrent assets Total assets Liabilities: Current liabilities: Accounts payable Contracts payable Deposits payable Interest payable Due to other governmental units Salaries payable Bonds payable - due within one year Compensated absences payable - due within one year Total current liabilities Noncurrent liabilities: Other post employment benefits - due in more than one year Bonds payable - due in more than one year Compensated absences payable - due in more than one year Total noncurrent liabilities Total liabilities Net assets: Invested in capital assets, net of related debt Unrestricted Total net assets Water Sewer Storm Sewer $ 1,815,413 $ 2,216,663 $ 156,161 6,491,510 - - 115,973 7,895 584 - 5,587 - 348,187 586,187 100,142 10,000 9,750 - 591 1,077 110 24,456 43,162 4,971 32,827 - - 8,838,957 2,870,321 261,968 730,243 - - 15,846,865 - - 322,939 517,798 471,841 15,707,302 23,734,262 9,935,778 (10,627,821) (8,751,257) (3,442,900) 21,979,528 15,500,803 6,964,719 30,818,485 18,371,124 7,226,687 25,924 1,638 1,683 11,509 3,242 4,487 2,234 - - 270,594 - - 17,254 6,865 - 13,666 10,177 3,444 475,000 - - 9,534 6,286 4,062 825,715 28,208 13,676 10,523 7,015 - 14,400,000 - - 54,025 35,622 23,015 14,464,548 42,637 23,015 15,290,263 70,845 36,691 13,674,528 15,500,803 6,964,719 1,853,694 2,799,476 225,277 $ 15,528,222 $ 18,300,279 $ 7,189,996 Net assets reported above Amounts reported for business -type activities in the statement of net assets are different because: Internal service funds are used by management to charge the cost of equipment maintenance and insurance to individual funds. This amount is the portion of net revenue attributable to business -type activities. Net assets of business -type activities The accompanying notes are an integral part of these financial statements. 38 Statement 6 Totals Governmental Activities - Totals Internal Service Funds 2010 2009 2010 2009 $ 4,188,237 $ 4,542,444 $ 370,709 $ 242,533 6,491,510 6,492,264 - - 124,452 125,253 1,464 817 5,587 7,700 - - 1,034,516 990,651 - - 19,750 21,500 1,750 1,750 1,778 3,202 - - 72,589 70,431 - - 32,827 33,170 81,000 63,065 11,971,246 12,286,615 454,923 308,165 730,243 730,243 - - 15,846,865 14,810,983 - - 1,312,578 1,312,578 - - 49,377,342 49,276,189 - - - 776,911 - - 67,267,028 66,906,904 - - (22,821,978) (21,206,942) - - 44,445,050 45,699,962 - - 56,416,296 57,986,577 454,923 308,165 29,245 47,466 27,382 15,666 19,238 333,586 - - 2,234 2,234 - - 270,594 277,760 - - 24,119 26,164 5,483 2,855 27,287 21,805 8,243 6,309 475,000 455,000 - - 19,882 12,054 - - 867,599 1,176,069 41,108 24,830 17,538 12,830 - - 14,400,000 14,875,000 - - 112,662 108,492 - - 14,530,200 14,996,322 - - 15,397,799 16,172,391 41,108 24,830 36,140,050 36,939,962 - - 4,878,447 4,874,224 413,815 283,335 $ 41,018,497 $ 41,814,186 $ 413,815 $ 283,335 $ 41,018,497 $ 41,814,186 34,375 1,160 $ 41,052,872 $ 41,815,346 39 CITY OF ANDOVER, MINNESOTA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS For The Year Ended December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 Net changes in net assets reported above Amounts reported for business -type activities in the statement of activities are different because: Internal service funds are used by management to charge the cost of equipment maintenance and insurance to individual funds. This amount is the portion of net revenue attributable to business -type activities. Change in net assets of business -type activities The accompanying notes are an intregral part of these financial statements. 40 Water Sewer Storm Sewer Operating revenues: User charges $ 2,039,496 $ 1,953,178 $ 338,823 Meters 12,208 - - Permit fees 3,300 - - Penalties 7,229 6,707 - Other 15,072 4,232 9,380 Total operating revenues 2,077,305 1,964,117 348,203 Operating expenses: Personal services 412,891 293,059 196,377 Supplies 183,941 16,541 20,254 Other service charges 502,338 136,834 78,422 Disposal charges - 989,972 - Depreciation 869,242 50002 244,992 Total operating expenses 1,968,412 1,937,208 540,045 Operating income (loss) 108,893 26,909 (191,842) Nonoperating revenues (expenses): Investment income 278,373 35,848 3,575 Bond premium - - - Interest expense (650,859) - - Total nonoperating revenues (expenses) (372,486) 35,848 3,575 Income (loss) before contributions and transfers (263,593) 62,757 (188,267) Capital contributions 101,153 - - Transfers: Transfers in 89,191 - - Transfers out (150,250) (446,680) - Total transfers (61,059) (446,680) - Change in net assets (223,499) (383,923) (188,267) Net assets - January 1 15,751,721 1084,202 7,378,263 Net assets - December 31 $ 15,528,222 $ 18,300,279 $ 7,189,996 Net changes in net assets reported above Amounts reported for business -type activities in the statement of activities are different because: Internal service funds are used by management to charge the cost of equipment maintenance and insurance to individual funds. This amount is the portion of net revenue attributable to business -type activities. Change in net assets of business -type activities The accompanying notes are an intregral part of these financial statements. 40 Statement 7 Totals Intra Governmental Activities - Activity Totals Internal Service Funds Eliminations 2010 2009 2010 2009 $ - $ 4,331,497 $ 4,377,504 $ 1,004,447 $ 961,722 - 12,208 11,058 - - - 3,300 2,350 - - - 13,936 14,492 - - - 28,684 1501 33,527 34,933 - 4,389,625 4,421,065 1,037,974 996,655 - 902,327 927,437 361,439 325,777 - 220,736 217,036 24409 244,820 (30,600) 686,994 687,070 308,502 284,772 - 989,972 893,462 - - - 1,615,036 1,611,005 - - (30,600) 4,415,065 4,336,010 914,610 855,369 3000 (25,440) 85,055 123,364 141,286 - 317,796 373,893 7,116 2,824 - - 1,975 - - - (650,859) (659,974) - - - (333,063) (284,106) 7,116 2,824 3000 (358,503) (199,051) 130,480 144,110 - 101,153 793,589 - - - 89,191 165,643 - - (30,600) (627,530) (587,530) - - (30,600) (538,339) (421,887) - - - (795,689) 172,651 130,480 144,110 - 41,814,186 41,641,535 283,335 139,225 $ - $ 41,018,497 $ 41,814,186 $ 413,815 $ 283,335 $ (795,689) $ 172,651 33,215 31J72 $ (762,474) $ 203,823 41 CITY OF ANDOVER, MINNESOTA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For The Year Ended December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 Cash flows from operating activities: Receipts from customers and users Payment to suppliers Payment to employees Net cash flows from operating activities Cash flows from noncapital financing activities: Receipt of advances from other funds Payment of advances to other funds Transfers in Transfers out Net cash flows from noncapital financing activities Cash flows from capital and related financing activities: Acquisition of capital assets Interest paid on debt Receipt of bonds Receipt of bond premium Payment of bonds Net cash flows from capital and related financing activities Cash flows from investing activities: Investment income Net increase in cash and cash equivalents Cash and cash equivalents - January 1 Cash and cash equivalents - December 31 Reconciliation of operating income to net cash provided (used) by operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Depreciation Changes in assets and liabilities: Decrease (increase) in due from other governmental units Decrease (increase) in accounts receivable Decrease (increase) in prepaid items Decrease (increase) in special assessments Decrease (increase) in inventory Increase (decrease) in accounts payable Increase (decrease) in contracts payable Increase (decrease) in deposits payable Increase (decrease) in due to other governmental units Increase (decrease) in salaries payable Increase (decrease) in other post employment benefits Increase (decrease) in compensated absences Total adjustments Net cash provided (used) by operating activities Noncash investing, capital and financing activities: Assets contributed to the Enterprise Funds The accompanying notes are an integral part of these financial statements. 42 Water Sewer Storm Sewer $ 2,033,996 $ 1,968,591 $ 344,552 (1,016,170) (1,147,612) (97,041) (406,910) (286,163) (187,066) 610,916 534,816 60,445 89,191 - - (150,250) (446,680) - (61,059) (446,680) - (258,971) - - (658,025) - - (455,000) - - (1,371,996) - - 280,544 34,826 3,227 (541,595) 122,962 63,672 8,848,518 2,093,701 92,489 $ 8,306,923 $ 2,216,663 $ 156,161 $ 108,893 $ 26,909 $ (191,842) 869,242 500,802 244,992 - 2,113 - (41,800) 791 (2,856) - 1,750 - (1,509) 1,570 (795) 343 - - (14,974) (4,886) 1,639 (313,224) (1,120) (4) (2,036) (9) - 3,050 1,465 967 2,504 2,204 - 427 3,227 8,344 502,023 507,907 252,287 $ 610,916 $ 534,816 $ 60,445 $ 101,153 Statement 8 Totals Governmental Activities - Totals Internal Service Funds 2010 2009 2010 2009 $ 4,347,139 $ 4,448,850 $ 1,037,974 $ 996,655 (2,260,823) (1,482,554) (556,762) (531,046) (880,139) (906,688) (359,505) (325,606) 1,206,177 2,059,608 121,707 140,003 - - - (60,000) - - - 60,000 89,191 165,643 - - (596,930) (556,930) - - (507,739) (391,287) - - (258,971) (801,326) - - (658,025) (652,132) - - - 1,025,000 - - - 1,975 - - (455,000) (375,000) - - (1,371,996) (801,483) - - 318,597 374,920 6,469 3,120 (354,961) 1,241,758 128,176 143,123 11,034,708 9,792,950 242,533 99,410 $ 10,679,747 $ 11,034,708 $ 370,709 $ 242,533 $ (56,040) $ 54,455 $ 123,364 $ 141,286 1,615,036 1,611,005 - - 2,113 (94) - - (43,865) 36,917 - - 1,750 (1,500) - - (734) (9,038) - - 343 (4,526) (17,935) 2,385 (18,221) 30,226 11,716 (6,594) (314,348) 319,797 - - - (1,450) - - (2,045) 3,067 2,628 2,755 5,482 1,076 1,934 171 4,708 6,460 - - 11,998 13,213 - - 1,262,217 2,005,153 (1,657) (1,283) $ 1,206,177 $ 2,059,608 $ 121,707 $ 140,003 $ 101,153 $ 793,589 $ - $ - 43 CITY OF ANDOVER, MINNESOTA STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS Agency Funds December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 Assets: Cash and investments Liabilities: Accounts payable Due to other governments Deposits payable Total liabilities The accompanying notes are an integral part of these financial statements. 44 Statement 9 $ 295,204 $ 249,921 375 131 46 - 294,783 249,790 $ 295,204 $ 249,921 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Andover was incorporated in 1974 and operates under the State of Minnesota Statutory Plan A form of government. The governing body consists of a five- member City council elected by voters of the City. The financial statements of the City have been prepared in conformity with generally accepted accounting principles as applied to governmental units by the Governmental Accounting Standards Board (GASB). The following is a summary of the significant accounting policies. A. FINANCIAL REPORTING ENTITY As required by generally accepted accounting principles, the financial statements of the reporting entity include those of the City (the primary government) and its component units. The component units discussed below are included in the City's reporting entity because of the significance of their operational or financial relationships with the City. COMPONENT UNITS In conformity with generally accepted accounting principles, the financial statements of the component units have been included in the financial reporting entity as blended component units. The Andover Economic Development Authority (EDA) is an entity legally separate from the City. However, for financial reporting purposes, the EDA is reported as if it were part of the City's operations because the members of the City Council serve as EDA Board Members and its purpose is to promote development within the City. The activity of the EDA is reported in the EDA General Special Revenue Fund. Separate financial statements are not prepared for the EDA. B. GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS The government -wide financial statements (i.e., the statement of net assets and the statement of changes in net assets) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or business -type activity are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or business -type activity. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or business -type activity and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or business -type activity. Taxes and other items not included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government -wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the Proprietary Fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. The City's only fiduciary funds are agency funds. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers all revenues, except reimbursement grants, to be available if they are 45 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 collected within 60 days of the end of the current fiscal period. Reimbursement grants are considered available if they are collected within one year of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, special assessments, intergovernmental revenues, charges for services and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City. The City reports the following major governmental funds: The General Fund is the City's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. 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 DSF was 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 annual seal coating, crack sealing and overlays for roads. The Tax Increment Projects CPF is used to account for activities in TIF districts 1 -1, 1 -2, 1 -3, 1 -4 and all TIF land sales and expenditures to reach the goals of the TIF district plans. The Permanent Improvement Revolving CPF serves as a long -term funding source for large capital improvement expenditures. The City 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. 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 City reports the following fund types: Internal Service Funds (ISF) are used to provide equipment maintenance and insurance to other departments of the City on a cost reimbursement basis. The 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. It is used to account for the collection and distribution of funds 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 the government -wide and proprietary -fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following 46 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 subsequent private- sector guidance for their business -type activities and enterprise funds, subject to this same limitation. The City has elected not to follow subsequent private- sector guidance. As a general rule the effect of interfund activity has been eliminated from the government -wide financial statements. Exceptions to this general rule are transactions that would be treated as revenues, expenditures or expenses if they involved external organizations, such as buying goods and services or payments in lieu of taxes, are similarly treated when they involve other funds of the City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the water and sewer enterprise funds are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for an allowable use, it is the City's policy to use restricted resources first, and then unrestricted resources as they are needed. D. BUDGETS Budgets are legally adopted on a basis consistent with generally accepted accounting principles. Annual appropriated budgets are legally adopted for the General and Special Revenue Funds. Budgeted expenditure appropriations lapse at year -end. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the appropriation, is not employed by the City because it is at present not considered necessary to assure effective budgetary control or to facilitate effective cash management. E. LEGAL COMPLIANCE - BUDGETS The City follows these procedures in establishing the budgetary data reflected in the financial statements: 1. The City Administrator submits to the City Council a proposed operating budget for the fiscal year commencing the following January 1. The budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted to obtain taxpayer comments. 3. The budget is legally enacted through City Council action. 4. Expenditures may legally exceed budgeted appropriations at the fund level through City Council action. Also, the City Council may authorize transfers of budgeted amounts between departments within any fund. 5. Formal budgetary integration is employed as a management control device during the year for the General Fund and Special Revenue Funds. Budgetary control for Capital Projects Funds is accomplished through the use of project controls. 6. The legal level of budgetary control is at the department level for the General Fund and at the fund level for the Special Revenue Funds. Also inherent in this controlling function is the management philosophy that the existence of a particular item or appropriation in the approved budget does not automatically mean that it will be spent. The budget process has flexibility in that, where need has been properly demonstrated, an adjustment can be made within the department budget by the City Administrator or between departments by the City Council. 47 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 7. The City Council made supplemental budget appropriations throughout the year. Individual amendments were not material in relation to the original appropriations which were adjusted. The following is a listing of Special Revenue Funds whose expenditures exceed budget appropriations: F in al Over Budget Actual Budget Special Revenue Funds: LRRWMO $ 32,066 $ 3900 $ 6,934 The expenditures over budget were funded by greater than anticipated revenues and /or available fund balance. F. CASH AND INVESTMENTS Cash balances from all funds are combined and invested to the extent available in authorized investments. Earnings from such investments are allocated to the individual funds on the basis of applicable cash balance participation of each fund. The City provides temporary advances to funds that have insufficient cash balances by means of an advance from another fund shown as interfund receivables in the advancing fund, and an interfund payable in the fund with the deficit, until adequate resources are received. These interfund balances are eliminated on the government -wide financial statements. Investments are stated at fair value, based upon quoted market prices. Short -term investments, such as commercial paper and banker's acceptances, are reported as amortized cost. Investments in 2a7, like external investment pools, are also stated at amortized cost. For purposes of the Statement of Cash Flows of Proprietary Fund Types, cash equivalents are defined as short -term, highly liquid investments that are both: a. readily convertible to known amounts of cash, or b. so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. The City's policy considers cash equivalents to be those that meet the above criteria and have original maturities of three months or less. G. RECEIVABLES AND PAYABLES During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. Short -term interfund loans are classified as "interfund receivables /payables." All short -term interfund receivables and payables at December 31, 2010 are planned to be eliminated in 2011. Long -term interfund loans are classified as "interfund loan receivable /payable." Any residual balances outstanding between the governmental activities and business -type activities are reported in the government -wide financial statements as "internal balances." Interfund loan receivables, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. Property taxes and special assessments receivable have been reported net of estimated uncollectible accounts. (See Note 1 H and I). Because utility bills are considered liens on property, no estimated uncollectible amounts are established. Uncollectible amounts are not material for other receivables and have not been reported. H. PROPERTY TAX REVENUE RECOGNITION The City levies its property tax for the subsequent year during the month of December and it is certified to Anoka County. December 30th is the last day the City can certify a tax levy to the County Auditor for collection the following year. Such 48 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 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. The County Auditor prepares the tax list for all taxable property in the City, applying the applicable tax rate to the tax capacity of individual properties, to arrive at the actual tax for each property. The County Auditor also collects all special assessments, except for certain prepayments paid directly to the City. The County Auditor submits a list of taxes to be collected on each parcel of property to the County Treasurer in January of each year. The County Treasurer collects all taxes and is required to mail copies of all personal property tax statements by April 15, and copies of all real estate tax statements by April 15, of each year. Property owners are required to pay one -half of their real estate taxes due by May 15 and the balance by October 15. If taxes due May 15 are not paid on time, a penalty of 3% is assessed on homesteaded property and 7% on nonhomesteaded property. An additional 1% penalty is added each month the taxes remain unpaid, until October 15. If the taxes due May 15 are not paid by October 15, a 2% penalty per month is added to homesteaded property and 4% per month to nonhomesteaded property until January 1. If the taxes are not paid by January 1, further penalties are added. Penalties and interest apply to both taxes and special assessments. There are some exceptions to the above penalties, but they are not material. Within 30 days after the tax settlement date, the County Treasurer is required to pay 70% of the estimated collections of taxes and special assessments to the City Treasurer. The County Treasurer must pay the balance to the City Treasurer within 60 days after settlement, provided that after 45 days interest accrues at the rate of 8% per annum. GOVERNMENT -WIDE FINANCIAL STATEMENTS The City recognizes property tax revenue in the period for which the taxes were levied. Uncollectible property taxes are not material and have not been reported. GOVERNMENTAL FUND FINANCIAL STATEMENTS The City recognizes property tax revenue when it becomes both measurable and available to finance expenditures of the current period. In practice, current and delinquent taxes and State credits received by the City in July, December and January are recognized as revenue for the current year. Taxes collected by the County by December 31 (remitted to the City the following January) and taxes and credits not received at the year -end are classified as delinquent and due from County taxes receivable. The portion of delinquent taxes not collected by the City in January is fully offset by deferred revenue because they are not available to finance current expenditures. I. SPECIAL ASSESSMENT REVENUE RECOGNITION Special assessments are levied against benefited properties for the cost or a portion of the cost of special assessment improvement projects in accordance with State Statutes. These assessments are collectible by the City over a term of years usually consistent with the term of the related bond issue. Collection of annual installments (including interest) is handled by the County Auditor in the same manner as property taxes. Property owners are allowed to (and often do) prepay future installments without interest or prepayment penalties. Once a special assessment roll is adopted, the amount attributed to each parcel is a lien upon that property until full payment is made or the amount is determined to be excessive by the City Council or court action. If special assessments are allowed to go delinquent, the property is subject to tax forfeit sale. Proceeds of sales from tax forfeit properties are allocated first to the County's costs of administering all tax forfeit properties. Pursuant to State Statutes, a property shall be subject to a tax forfeit sale after three years unless it is homesteaded, agricultural or seasonal recreational land in which event the property is subject to such sale after five years. GOVERNMENT -WIDE FINANCIAL STATEMENTS The City recognizes special assessment revenue in the period that the assessment roll was adopted by the City Council. Uncollectible special assessments are not material and have not been reported. 49 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 GOVERNMENTAL FUND FINANCIAL STATEMENTS The City recognizes revenue from special assessments when it becomes measurable and available to finance expenditures of the current fiscal period. In practice, current and delinquent special assessments received by the City are recognized as revenue for the current year. Special assessments that are collected by the County by December 31 (remitted to the City the following January) and are also recognized as revenue for the current year. All remaining delinquent, deferred and special deferred assessments receivable in governmental funding are completely offset by deferred revenues. J. INVENTORIES Inventories of the Governmental Funds and the Proprietary Funds are stated at cost, which approximates market, using the first -in, first -out (FIFO) method. Inventories of Governmental Funds are recorded as expenditures when consumed rather than when purchased. K. PREPAID ITEMS Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government -wide and fund financial statements. Prepaid items are reported using the consumption method and recorded as expenditures /expenses at the time of consumption. L. CAPITAL ASSETS Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items) and intangible assets such as easements and computer software, are reported in the applicable governmental or business - type activities columns in the government -wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of more than $5,000 (except for easements which is $10,000) and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The City has chosen the modified approach for reporting street and trail system capital assets. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business -type activities is included as part of the capitalized value of the assets constructed. For the year ended December 31, 2010, no interest was capitalized in connection with construction in progress. The City implemented GASB Statement No. 51. Accounting and Financial Reporting for Intangible Assets effective January 1, 2010 which required the City to capitalize and amortize intangible assets. Intangible assets include easements and computer software. Pursuant to GASB Statement 51, in the case of initial capitalization of intangible assets, the City chose to capitalize intangible assets retroactively to 1980, except for permanent easements and internally generated software. The City has already accounted for computer software at historical cost and therefore retroactive reporting was not necessary. The City does not have any temporary easements to record that meet the threshold of $10,000. Property, plant and equipment of the primary government, as well as the component units, are depreciated /amortized using the straight line method over the following estimated useful lives: 50 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 A ss ets Li fe Buildings and improvements 10 - 30 years Furniture and equipment ( including software) 5 - 10 years Machinery and equipment 5 - 10 years Other park improvements 10 - 3 0 years Storm sewer 5 0 years Distribution and collection systems 50 years Temporary easements 5 - 15 years The City elected to use the modified approach as defined by GASB Statement No. 34 for infrastructure reporting of its streets and trails. The City conducted a physical assessment in the fall of 2010 of the condition of the streets and trails constructed since 1974. This condition assessment will be performed every 3 years. Each segment of City owned street or trail was assigned a physical condition based on potential defects. An Overall Condition Index (OCI) was assigned to each segment. The index is expressed in a continuous scale from 0 to 100, where 0 is assigned to the least acceptable physical condition and 100 is assigned to those segments that have the characteristic of a new street or trail. The following conditions were defined: Range Description 86- 100 Excellent 71 -85 Very good 56-70 Good 41 -55 Fair 26-40 Poor 11 -25 Very poor 0- 10 Substandard The City's policy relative to maintaining the street and trail assets is to achieve an average rating of "Good" for all segments. This acceptable rating allows minor cracking and patching of the pavement along with minor roughness that could be noticeable to the users of the system. 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 anniversary date of the individual's employment with the City, unless a specific authorization is granted to an employee. All vacation pay is accrued when incurred in the government -wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. Employees can also accrue an unlimited amount of unused sick leave. Employees with two or more years of service are entitled to receive severance pay equal to a percentage of unused sick pay ranging from 20 -50 percent based on years of service, up to a maximum of 400 hours. The liability for severance pay is accounted for the same as accrued vacation pay. N. LONG -TERM OBLIGATIONS In the government -wide financial statements and proprietary fund types in the fund financial statements, long -term debt and other long -term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are immaterial and are expensed in the year of bond issuance. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 51 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 O. FUND EQUITY In the fund financial statements, governmental 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. P. INTERFUND TRANSACTIONS Interfund services provided and used are accounted for as revenues, expenditures or expenses. Transactions that constitute reimbursements to a fund for expenditures /expenses initially made from it that are properly applicable to another fund, are recorded as expenditures /expenses in the reimbursing fund and as reductions of expenditures /expenses in the fund that is reimbursed. Interfund loans are reported as an interfund loan receivable or payable which offsets the movement of cash between funds. All other interfund transactions are reported as transfers. Q. RESTRICTED ASSETS Certain assets in the water fund are restricted for future debt service payments. 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. S. RECLASSIFICATIONS Certain amounts presented in prior year data have been reclassified in order to be consistent with the current year's presentation. T. COMPARATIVE TOTALS The basic financial statements and combining and individual fund financial statements and schedules include certain prior -year summarized comparative information in total but not at the level of detail required for a presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the government's financial statements for the year ended December 31, 2009, from which the summarized information was derived. U. RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS 1. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND BALANCE SHEET AND THE GOVERNMENT -WIDE STATEMENT OF NET ASSETS The governmental fund balance sheet includes a reconciliation between fund balance — total governmental funds and net assets — governmental activities as reported in the government -wide statement of net assets. One element of that reconciliation explains that "long -term liabilities, including bonds payable and other post employment benefits, are not due and payable in the current period and therefore are not reported in the funds." The details of this ($46,266,294) difference are as follows: 52 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 B and s payab le $ (44,7 96,0 00) Accrued interest payable (799,014) Other post employment benefits (99,3 83) Compensated absences (571,897) Net adjustment to reduce fund balance -total governmental funds to arrive at net assets - governmental activities $ (46,266,294) Another element of that reconciliation states that "internal service funds are used by management to charge the cost of equipment maintenance and insurance to individual funds. The assets and liabilities are included in the governmental statement of net assets along with a deduction of net revenue attributable to business -type activities." The details of this $379,440 difference are as follows: Internal Service Funds net assets $ 413,815 Net revenue attributable to business -type activities (34,375) Net adjustment to increase fund balance - total governmental funds to arrive at net assets - governmental activities $ 379440 2. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES AND THE GOVERNMENT -WIDE STATEMENT OF ACTIVITIES The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances — total governmental funds and changes in net assets of governmental activities as reported in the government -wide statement of activities. One element of that reconciliation explains that "Governmental Funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense." The details of this ($206,609) difference are as follows: Capital outlay $ 02401 Construction /acquisition costs 101,153 Depreciation expense (1,632,643) Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities $ (206,609) Another element of that reconciliation states that "The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade -ins, and donations) is to increase (decrease) net assets." The details of this $25,497 difference are as follows: In the statement of activities, only the gain on the sale of capital assets is reported. However, in the governmental funds, the proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balance by the cost of the capital assets sold. $ (8,492) Donations of capital assets increase net assets in the statement of activities, but do not appear in the governmental funds because they are not financial resources. 3 3, 989 Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities. $ 25,497 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 ($1,073,640) difference are as follows: 53 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 General property taxes deferred revenue: At December 31, 2009 $ (282,740) At D ecember 31, 2010 3 52, 191 Tax increment taxes deferred revenue: At December 31, 2009 (30,247) At D ecember 31, 2010 89,713 Special assessments deferred revenue: At December 31, 2009 (4,526,206) At D ecanb er 31, 2010 3,3 3 3,910 Notes receivable deferred revenue: At December 31, 2009 (1,406,773) At December 31, 2010 096,512 Net adjustments to decrease net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities $ (1,073,640) Another element of that reconciliation states "the issuance of long -term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the long -term debt consumes the current financial resources of governmental funds." Neither transaction, however, has any effect on net assets. The details of this $5,049,000 difference are as follows: Debt issued or incurred: Issuance of referendum bonds $ (1,660,000) Issuance of permanent improvement revolving refunding bonds (1,480,000) Principal repayments: Revenue bonds 405,000 Capital improvement bonds 280,000 Special assessment bonds 4,485,000 Tax increment bonds 780,000 Certificates of indebtedness 639,000 State aid bonds 1, 600,000 Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities $ 5, 049,000 Another element of that reconciliation states that "Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds." The details of this $63,245 difference are as follows: Compensated absences $ (30,291) Accrued interest 93,536 Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities $ 63,245 Another element of that reconciliation states that "internal service funds are used by management to charge the cost of equipment maintenance and insurance to individual funds. This amount is the portion of net revenue attributable to governmental activities." The details of this $97,265 difference are as follows: 54 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Internal S ervice Funds change in net assets $ 130480 Netrevenue attributable to business -type activities (33,215) Net adjustment to increase fund balance - total governmental funds to arrive at net assets - governmental activities $ 97,265 Note 2 DEPOSITS AND INVESTMENTS DEPOSITS In accordance with Minnesota Statutes, the City maintains deposits at those depository banks authorized by the City Council, all of which are members of the Federal Reserve System. Minnesota Statutes require that all City deposits be protected by insurance, surety bond, or collateral. The market value of collateral pledged must equal 110% of the deposits not covered by insurance or bonds. Minnesota Statutes require that securities pledged as collateral be held in safekeeping by the City Clerk/Treasurer or in a financial institution other than that furnishing the collateral. Authorized collateral includes the following: a) United States government treasury bills, treasury notes, treasury bonds; b) Issues of United States government agencies and instrumentalities as quoted by a recognized industry quotation service available to the government entity; c) General obligation securities of any state or local government with taxing powers which is rated "A" or better by a national bond rating service, or revenue obligation securities of any state or local government with taxing powers which is rated "AA" or better by a national bond rating service; d) Unrated general obligation securities of a local government with taxing powers may be pledged as collateral against funds deposited by that same local government entity; e) Irrevocable standby letters of credit issued by Federal Home Loan Banks to a municipality accompanied by written evidence that the bank's public debt is rated "AA" or better by Moody's Investors Service, Inc. or Standard & Poor's Corporation; and f) Time deposits that are fully insured by the Federal Deposits Insurance Corporation. Custodial Credit Risk — Deposits: Custodial credit risk is the risk that in the event of a bank failure, the City's deposits may not be returned to it. State statutes require that insurance, surety bonds or collateral protect all City deposits. The market value of collateral pledged must equal 110% of deposits not covered by insurance or bonds. As of December 31, 2010, the bank balance of the City's deposits was covered by federal depository insurance or covered by perfected collateral pledged and held in the City's name. The City has no additional deposit policies addressing custodial credit risk. TNVF CTIVTFNTC Minnesota Statutes authorize the City to invest in the following: a) Direct obligations or obligations guaranteed by the United States or its agencies, its instrumentalities or organizations created by an act of congress, excluding mortgage- backed securities defined as high risk. b) Shares of investment companies registered under the Federal Investment Company Act of 1940 and whose only investments are in securities described in (a) above, general obligation tax - exempt securities, or repurchase or reverse repurchase agreements. c) Obligations of the State of Minnesota or any of its municipalities as follows: 1) any security which is a general obligation of any state or local government with taxing powers which is rated "A" or better by a national bond rating service; 2) any security which is a revenue obligation of any state or local government with taxing powers which is rated "AA" or better by a national bond rating service; and 55 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 3) a general obligation of the Minnesota housing finance agency which is a moral obligation of the State of Minnesota and is rated "A" or better by a national bond rating agency. d) Bankers acceptance of United States banks eligible for purchase by the Federal Reserve System. e) Commercial paper issued by United States corporations or their Canadian subsidiaries, of the highest quality, and maturing in 270 days or less. f) Repurchase or reverse repurchase agreements with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000; a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York; certain Minnesota securities broker - dealers; or, a bank qualified as a depositor. g) General obligation temporary bonds of the same governmental entity issued under section 429.091, subdivision 7; 469.178, subdivision 5; or 475.61, subdivision 6. As of December 31, 2010, the City had the following investments and maturities: D epo sits 3,934,772 Total cash and investments $ 5 0, 94 0, 717 The following is a reconciliation of the City's total cash and investment balances at December 31, 2010: Government -wide statement of net assets: Cash and investments $ 26,91507 Cash and investments with escrow agent 23,729,706 Fiduciary funds statement of net assets 295,204 Total $ 50,940,717 The Minnesota Municipal Money Market Fund is regulated by Minnesota Statutes and the Board of Directors of the League of Minnesota Cities and is an external investment pool not registered with the Securities Exchange Commission (SEC) that follows the same regulatory rules of the SEC under rule 2a7. The fail value of the position in the pool is the same as the value of the pool shares. 56 Investment Maturities (in Years) Credit Fair Less Than More Than Investment Type Rating Value 1 1 - 5 6-10 10 Money market funds N/A $ 1,538,283 $ 1,538,283 $ - $ - $ - Minnesota Municipal Money Market Fund N/A 1,518,863 1,518,863 - - - Commercial paper N/A 2,499,525 2,499,525 - - - Certificates of deposit N/A 3, 544, 03 8 1,247,767 2,296,271 - - Local governments A/Al /A2 1, 03 5, 723 624, 35 8 41 1,36 5 - - AA 1 /AA2 /AA 3 5, 20 8, 910 1,64 6, 00 4 2,267,352 53 6, 36 8 759, 186 AAA 2,679,998 55 0, 24 8 1, 004, 027 604, 910 520,813 U.S. ag enc ies AAA 28,653, 13 2 2,507,462 23M9,220 1, 43 5, 241 761,209 FNMA REMIC N/A 139M4 044 - - 13 9, 044 - U.S. agencies N/A 188,429 - 20,444 62,448 105,537 Total investments 4 7, 00 5, 94 5 $12,13 2, 510 $29M8,679 $ 2,778,011 $ 2, 14 6,745 D epo sits 3,934,772 Total cash and investments $ 5 0, 94 0, 717 The following is a reconciliation of the City's total cash and investment balances at December 31, 2010: Government -wide statement of net assets: Cash and investments $ 26,91507 Cash and investments with escrow agent 23,729,706 Fiduciary funds statement of net assets 295,204 Total $ 50,940,717 The Minnesota Municipal Money Market Fund is regulated by Minnesota Statutes and the Board of Directors of the League of Minnesota Cities and is an external investment pool not registered with the Securities Exchange Commission (SEC) that follows the same regulatory rules of the SEC under rule 2a7. The fail value of the position in the pool is the same as the value of the pool shares. 56 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 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, 2010, $250,000 of the City's $47,005,945 investments was uninsured and unregistered, with securities held in the City's name. Interest rate risk - The City has a formal investment policy that states the City will minimize the risk that the market value of securities in the portfolio will fall due to the changes in general interest rates, by: 1) Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity. 2) Investing operating funds primarily in shorter -term securities, money market mutual funds or similar investment pools. FNMA REMIC — The City invests in REMIC's in accordance with State law and the City's investment policy. These securities are based on cash flows from payments on underlying mortgages. Therefore, they are sensitive to prepayments by mortgages, which may result from a decline in interest rates. Credit Risk - The City has a formal investment policy that states the City will minimize the credit risk, the risk of loss due to the failure of the security issuer or backer, by: 1) Limiting investments to the safest types of securities. 2) Pre - qualifying the financial institutions, broker /dealers, intermediaries and advisers with which the City will do business. A list will be maintained of financial institutions authorized to provide investment services. In addition, a list also will be maintained of approved security broker /dealers selected by creditworthiness. These may include "primary" dealers or regional dealers that qualify under Securities and Exchange Commission (SEC) Rule 150-1. All financial institutions and broker /dealers who desire to become qualified for investment transactions must supply: audited financial statements, proof of National Association of Securities Dealers (NASD) certification, proof of state registration, completed broker /dealer questionnaire, and certification of having read and understood and agreeing to comply with the City's investment policy. An annual review of the financial condition and registration of qualified financial institutions and broker /dealers will be conducted by the City Administrator. Concentration of Credit Risk - More than 61% of the City's investments are in various holdings with U.S. agencies; Federal Home Loan Bank (5.4 %), Federal Farm Credit Bank (0.9 %), Federal National Mortgage Association (2.5 %), Federal Home Loan Mortgage Corporation (3.6 %) and U.S. Treasury (49.3 %). The City's policy on concentration of investments is as follows: 1) Diversification - The investments shall be diversified by: a) investments to avoid over concentration in securities from a specific issuer or business sector (excluding U.S. Treasury securities), b) limiting investment in securities that have higher credit risks, c) investing in securities with varying maturities, and d) continuously investing a portion of the portfolio in readily available funds such as local government investment pools (LGIPs), money market funds or overnight repurchase agreements to ensure that appropriate liquidity is maintained in order to meet ongoing obligations. 2) Maximum Maturities - To the extent possible, the City shall attempt to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the City will not directly invest in securities maturing, or having average lifes, of more than five (5) years from the date of purchase or in accordance with state and local statutes and ordinances. Reserve funds and other funds with longer -term investment horizons may be invested in securities exceeding five (5) years if the maturity of such investments are made to coincide as nearly as practicable with the expected use of funds. The intent to invest in securities with longer maturitues shall be disclosed in writing to the legislative body. 57 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Because of inherent difficulties in accurately forecasting cash flow requirements, a portion of the portfolio should be continuously invested in readily available funds such as local government investment pools, money market funds, or overnight repurchase agreements to ensure that appropriate liquidity is maintained to meet ongoing obligations. Note 3 RECEIVABLES Significant receivables balances not expected to be collected within one year of December 31, 2010 are as follows: Delinquent Delinquent Special Property Tax Assessment Note Taxes Increment Receivable Receivable Total Major Funds: General Fund $ 109,107 $ - $ - $ - $ 109,107 Water Trunk CP F - - 42 3, 45 7 - 423457 Sewer Trunk CPF - - 5408 - 5408 Road and Bridge CPF 15,144 - 879,420 22,951 917,515 Tax Increment Projects CPF - 55,621 - 1,415,500 1,471,121 Permanent Improvement Revolving CPF - - 1,141, 40 5 - 1,141405 Nonmajor Funds 31,953 - 275,509 55,189 362,65l Total $ 156,204 $ 55,621 $ 2,773,799 $1,493,640 $4,479,264 Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of deferred revenue reported in the governmental funds were as follows: Unavailable Unearned Delinquent property taxes receivable: General Fund $ 242461 $ - Road & Bridge CPF 33,653 - Nonmaj or Funds 76,078 - Delinquent tax increment collections: Tax Increment Projects CPF 89,712 - Special assessments not yet due: General Fund 14,529 - Water Trunk CPF 455,587 - Sewer Trunk CPF 6705 - Road & Bridge CPF 1,04 6,271 - Permanent Improvement Revolving CPF 1,329,645 - Nonmaj or Funds 420,072 - Notes receivable not yet due: Road & Bridge CPF 30,761 - Tax Increment Projects CPF 1,296,500 - Nonmaj or Funds 69,251 - Unearned construction seal coat fees: Nonmaj or Funds - 22,581 Total $ 5,172,325 $ 22,581 58 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 4 LOANS RECEIVABLE As part of a development agreement entered into with a private developer in June 2006, the City received a promissory note for $50,000. The note is for intersection improvements on Hanson Blvd. The note bears an interest rate of 5.5% and calls for semi - annual payments to be made to the City through July 2014 and then was amended to July 1, 2016, the payoff date. As of December 31, 2010, the remaining balance due of $30,761 is offset by deferred revenue, as it is not available to finance current activities. As part of a development agreement entered into with a private developer in June 2005, the City received promissory notes for $1,624,000. The notes are for the purchase of land within Andover Station North. The notes beared an interest rate of 6% through December 31, 2008 and then was amended to 4.5% until December 31, 2012, the payoff date. As of December 31, 2010, the remaining balance due of $1,415,500 is offset by deferred revenue, as it is not available to finance current activities. As part of a rental rehabilitation revolving loan program, the City entered into a loan agreement with a property owner in October 2006. The loan is for the rehabilitation of a rental property located within the City. The loan bears an interest rate of 3.0 % and calls for 180 equal monthly payments to be made to the City through November 2021. As of December 31, 2010, the remaining balance due of $43,921 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, 2010, the remaining balance due of $2,929 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 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 monthly payments to be made to the City through September 2015. As of December 31, 2010, the remaining balance due of $13,972 is offset by deferred revenue, as it is not available to finance current activities. As part of a housing rehabilitation revolving loan program, the City entered into a loan agreement with a property owner in September 2010. The loan is for the rehabilitation of a property located within the City. The loan bears an interest rate of 3.0 % and calls for 60 equal monthly payments to be made to the City through September 2015. As of December 31, 2010, the remaining balance due of $8,459 is offset by deferred revenue, as it is not available to finance current activities. Note 5 CAPITAL ASSETS In accordance with GASB Statement No. 34, the City has reported all capital assets including infrastructure in the government -wide statement of net assets. The City elected to use the modified approach as defined by GASB Statement No. 34 for infrastructure reporting for its streets and trails. As a result, no accumulated depreciation or depreciation expense has been recorded for this system. A more detailed discussion of the modified approach is presented in the Required Supplementary Information section of this report. All other capital assets including other infrastructure systems were reported using the basic approach whereby accumulated depreciation and depreciation expense have been recorded. Capital asset activity for the year ended December 31, 2010 was as follows: 59 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 60 Beginning Ending Primary Government Balance Additions Deletions Balance Governmental activities: Capital assets not being depreciated: Land and improvements $ 8,997,071 $ 322,628 $ - $ 9,319,699 Streets and trails 79, 547, 692 - - 79,547,692 Construction in progress - 5 1, 002 - 51,002 Total capital assets not being depreciated 88,544,763 373,630 - 88,918,393 Capital assets being depreciated: Buildings and improvements 26,657,459 163,387 - 26,820,846 Furniture and equipment (including software) 41 1, 116 - - 411,116 Machinery and equipment 6,763,730 450,554 (101,724) 7,112,560 Other park improvements 5,127,386 371,299 (29,482) 5469,203 Total capital assets being depreciated 38,959,691 985,240 (131,206) 39,813,725 Less accumulated depreciation for: Buildings and improvements 5,347, 13 6 896, 994 - 6,244,130 Furniture and equipment 20 3, 50 8 5 3, 99 9 - 2 57,5 07 Machinery and equipment 4,832,203 412, 871 (96,5 07) 5J48,567 Other park improvements 1, 701, 73 5 268,779 (26,207) 1,944,3 07 Total accumulated depreciation 12, 084, 582 1,632,643 (122,714) 13,594,511 Total capital assets being depreciated - net 26,875,109 (647,403) (8,492) 26,219,214 Governmental activities capital assets - net $ 115, 419, 872 $ (273, 77 3) $ (8,492) $ 115,137,607 60 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Total depreciation /amortization expense - business -type activities $ 1,615,036 CONSTRUCTION COMMITMENTS At December 31, 2010, the City had no construction project contracts in progress. Note 6 LONG -TERM DEBT The City issues general obligation bonds and equipment certificates to provide funds for the acquisition and construction of major capital facilities. The reporting entity's long -term debt is segregated between the amounts to be repaid from governmental activities and amounts to be repaid from business -type activities. 61 Beginning Ending Primary Government Balance Additions Deletions Balance Business -type activities: Capital assets not being depreciated: Land and improvements $ 73 0, 24 3 $ - $ - $ 73 0, 24 3 Construction in progress 776, 911 - (776, 911) - Total capital assets not being depreciated 1,507,154 - (776,911) 730,243 Capital assets being depreciated: Buildings and improvements 14,81 0, 983 1, 03 5, 882 - 15,846, 865 Furniture and equipment (including software) 61, 390 - - 61, 390 Machinery and equipment 1,25 1, 18 8 - - 1,251,18 8 Collection and distribution 49, 27 6, 18 9 10 1, 153 - 49,377, 342 Total capital assets being depreciated 65,399,750 1,137,035 - 66,536,785 Less accumulated depreciation for: Buildings and improvements 5,118, 451 53 8, 662 - 5,657,113 Furniture and equipment 25,704 7, 809 - 3 3, 513 Machinery and equipment 912,318 74,539 - 986,857 Collection and distribution 15,15 0, 46 9 994, 02 6 - 16J44,495 Total accumulated depreciation 21, 206, 942 1,615M6 - 22,821, 978 Total capital assets being depreciated - net 44,192, 808 (478, 00 1) - 43,714, 807 Business -type activities capital assets - net $ 45, 699, 962 $ (478, 00 1) $ (776, 911) $ 44,445, 050 Depreciation/amortization expense was charged to functions /programs of the primary government as follows: Governmental activities: General government $ 96402 Public safety 265425 Public works 263 ,799 Parks and recreation 1,003,033 Economic development 3,984 Total depreciation /amortization expense - governmental activities $ 1,632,643 Business -type activities: Water $ 869,242 Sewer 50002 Storm sewer 244,992 Total depreciation /amortization expense - business -type activities $ 1,615,036 CONSTRUCTION COMMITMENTS At December 31, 2010, the City had no construction project contracts in progress. Note 6 LONG -TERM DEBT The City issues general obligation bonds and equipment certificates to provide funds for the acquisition and construction of major capital facilities. The reporting entity's long -term debt is segregated between the amounts to be repaid from governmental activities and amounts to be repaid from business -type activities. 61 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Issue Maturity Interest Original Payable GOVERNMENTAL ACTIVITIES: 2.125- 5.400% Revenue Bonds: $18,225,000 2004 EDA Pub Fac Lease Rev Bonds 4/23/2004 2006 EDA Pub Fac Lease Rev Ref Bonds 12/1/2006 2007 EDA Pub Fac Lease Rev Ref Bonds 1 /l /2007 Total revenue bonds 6,86500 Special Assessment Bonds: 2005A G.O. Improvement Bonds 4/28/2005 Tax Increment Bonds: 2004B G.O. Tax Increment Refunding Bonds 3/16/2004 Certificates of Indebtedness: 60000 2007A G.O. Equipment Certificates 3/13/2007 2008A G.O. Equipment Certificates 9/23/2008 2009A G.O. Equipment Certificates 3/26/2009 Total certificates of indebtedness Capital Improvement Bonds: 4.00% 2004A G.O. Capital Improvement Bonds 3/16/2004 Permanent Improvement Revolving (PIR) Bonds: 3.50% 2010A G.O. PIR Refunding Bonds 2/18/2010 State Aid Bonds: 2.00 -2.25% 2009A G.O. State Aid Street Refunding Bonds 3/26/2009 Referendum Bonds: 2010A G.O. Open Space Referendum Bonds 2/18/2010 Total - bonded indebtedness Compensated absences payable Total governmental activities indebtedness BUSINESS -TYPE ACTIVITIES: General Obli gation Revenue Bonds: 2002 G.O. Water Revenue Bonds 5/9/2002 2007B G.O. Water Revenue Refunding Bonds 3/13/2007 2009A G.O. Water Revenue Bonds 3/26/2009 Total general obligation revenue bonds Compensated absences payable Total business -type activities indebtedness Total City indebtedness 62 2/1/2014 2.125- 5.400% $19, 580, 000 $18,225,000 2/l/2034 4.00 -4.5 0% 10, 000, 000 100000 2/l/2034 4.00 -4.50% 6, 865, 000 6,86500 36,44500 35,090,000 2/1/2011 2.95 -3.65% 3, 560, 000 60000 2/1/2011 2.00 -3.25% 4,26000 000 1,73 500 2/1/2011 4.00% 76000 20000 2/1/2012 3.50% 63 0, 000 32600 2/1/2012 2.00 -2.25% 385,000 255,000 1, 77 5, 00 0 781 NO 2/1/2017 2.00 -3.75% 3, 890, 000 249500 2/1/2014 2.00% l 48 0, 00 0 148000 2/1/2015 2.25 -2.80% 95 5, 000 95500 2/l/2022 2.00 - 3.125% 1, 660, 000 10000 54, 025, 000 44,79600 - 571,898 54, 025, 000 45,367,898 8/1/2012 2.30-5.00% 9,78000 000 7,34000 2/l/2023 4.00 -4.25% 6,57000 000 6,57000 2/l/2024 2.00 -4.25% 1,025,000 965,000 17, 375, 000 14,87500 - 132,544 17, 375, 000 1507,544 $ 71, 400, 000 $ 60,375,442 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Annual debt service requirements to maturity for general obligation bonds are as follows: Principal Interest Principal Interest Governmental Activities Interest 2011 $ 215, 00 0 Revenue Bonds Special Assessment Bonds Tax Increment Bonds $ 47500 Principal Interest Principal Interest Principal Interest 2011 $ 415, 000 $ 1,631,101 $ 600,000 $ 10,200 $ 1,73 5, 000 $ 26,762 2012 43500 1,613,666 - - - - 2 013 45000 1,594,744 - - - - 2 014 16, 92 5, 00 0 1,15 0, 58 3 - - - - 2015 56000 705, 010 - - - - 2016 -2020 3,165, 000 3,162, 579 - - - - 2 021 -202 5 3, 84 5, 00 0 2, 451, 965 - - - - 2 02 6 -2 03 0 4,725,000 1,550,451 - - - - 2031 -203 4 4, 570, 000 422,325 - - - - Total $ 3 5, 09 0, 00 0 $14,282,424 $ 6 00,0 00 $ M200 $ 1,73 5, 00 0 $ 2 6,76 2 Governmental Activities Permanent Improvement Certificates of Indebtedness Capital Improvement Bonds Revolving Bonds Principal Interest Principal Interest Principal Interest 2011 $ 48500 $ 16, 941 $ 2 95 M 00 $ 80,143 $ 35 5, 00 0 $ 2 6,05 0 2012 29600 4,368 315,000 70,993 36500 18,850 2013 - - 330,000 60,905 37500 11450 2014 - - 355,000 49,596 38500 3,850 2015 - - 380M00 3700 - - 2016 -2020 - - 820,000 30,925 - - Total $ 78 1, 00 0 $ 21,309 $ 2495,000 $ 329,562 $ 148000 $ 60,200 Governmental Activities Business -Type Activities State Aid Bonds Referendum Bonds G.O. Revenue Bonds It is not practical to determine the specific year for payment of long -term accrued compensated absences. 63 Principal Interest Principal Interest Principal Interest 2011 $ 215, 00 0 $ 21, 009 $ - $ 41,5 65 $ 47500 $ 64 0,03 6 2012 22000 16,115 135,000 40,215 6,98000 620,675 2013 23000 1 0, 765 135,000 37,515 54500 285,166 2014 23000 4, 78 5 MAO 34,7 65 56 5, 00 0 263 06 2015 6000 840 145,000 31,915 59000 241486 2016 -2020 - - 770,000 106,776 3,31500 836,013 2021 -2025 - - 335,000 10,526 240500 160,811 Total $ 95500 $ 5 3, 514 $ 1,6 60,0 00 $ 3 03 ,2 77 $ 14,87 5, 00 0 $ 3M47,993 It is not practical to determine the specific year for payment of long -term accrued compensated absences. 63 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 CHANGE IN LONG -TERM LIABILITIES Long -term liability activity for the year ended December 31, 2010, was as follows: Governmental activities: Bo nd s p ayab le: Revenue bonds Special assessment bonds Tax increment bonds Certificates of indebtedness Capital improvement bonds Permanent improvement revolving bonds State aid bonds Referendum bonds Total bonds p ayabl e Compensated absences Total governmental activities long-term liabilities Business -type activities: Bo nd s p ayab le: G. 0. revenue bonds Compensated absences Beginning Ending Due Within T - I - -- - - A 1 1 '. - -- -. T - 1 - A - -- - T - I - -- - - n -- - X T - - -- $ 3 5, 495,000 $ - $ (405,000) $ 35,090,000 $ 41500 2,45000 - (1,850,000) 600,000 60000 2, 515,000 - (780,000) 1,735,000 1,73 5,000 1,420,000 - (639,000) 781,000 48500 2,77500 - (280,000) 2495,000 29500 2,63500 1,48000 (2,635,000) 1480,000 35500 2,555,000 - (1,600,000) 955,000 21500 - 1, 66 0, 00 0 - 1,6 60,0 00 - 49,84500 3,140,000 (8,189,000) 44,796,000 4,10000 541,606 32 3, 46 1 (293,170) 5 71 ,8 97 85,785 $ 50,38606 $ 3,463,461 $ (8,482,170) $ 45,367,897 $ 4,185,785 $15, 33 0,000 $ - $ (455,000) $ 14,875,000 $ 47500 120,546 53,133 (41,135) 132,544 1902 Total b us iness -typ e act iv ities long -term liabilities $15,450,546 $ 53,133 $ (496,135) $ 15,007,544 $ 49402 For the governmental activities, bonds payable can be summarized in the following categories: The 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. 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 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 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 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 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. 64 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 The permanent improvement revolving 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 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 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. The referendum bonds were used to finance various land acquisitions for open space preservation within the City. The bonds are general obligations of the City for which it pledges its full faith, credit and taxing powers to the payment of principal and interest on the certificates. For the governmental activities, compensated absences are generally liquidated through the General Fund. For the business -type activities, the G.O. revenue bonds were used to finance the construction of a water treatment plant. The bonds are payable from net revenues of the water system and are general obligations of the City for which its full faith, credit and taxing powers are pledged. REVENUES PLEDGED 2004 EDA Public Facility Lease Revenue Bonds. The EDA has pledged future lease revenue, operating revenues (net of operating expenses) and, if necessary, a debt service tax levy to repay the $19,580,000 bonds issued in April 2004. Proceeds from the bonds provided financing for the construction of Andover YMCA Community Center. Lease revenues were projected to produce 100% of the debt service requirements over the life of the bonds. Total principal and interest remaining on the bonds is $21,350,254, payable through February 2014. For the current year, principal and interest paid and total net operating revenues, lease revenue and tax levy were $1,335,684 and $1,354,054, respectively. A portion of the Series 2004 Bonds were refunded by the 2006 Series Refunding Bonds of $10,000,000 and the 2007 Series Refunding Bonds of $6,865,000, both with a crossover date of February 1, 2014. At which time, future lease revenues, net operating revenues and, if necessary, debt service tax levy will be used to repay the Series 2006 and Series 2007 Refunding Bonds through 2034. 2005A G.O. Improvement Bonds. The City has pledged future special assessment revenue to repay the $3,560,000 bonds issued in April 2005. Proceeds from the bonds provided financing for the construction of Jay Street located in Andover Station North. Special assessments were projected to produce 100% of the debt service requirements over the life of the bonds. Total principal and interest remaining on the bonds is $610,200, payable through February 2011. For the current year, principal and interest paid and total special assessment revenues were $1,902,690 and $28,030, respectively. In 2010, the debt service fund had sufficient funds to make its debt service payments. 2004E G.O. Tax Increment Refunding Bonds. The City has pledged future tax increment revenue to repay the $4,260,000 bonds issued in March 2004. Proceeds from the bonds refunded the Series 1995D Bonds. Incremental property taxes were projected to produce 100% of the debt service requirements over the life of the bond issue. All tax increment revenues are receipted in the Tax Increment Projects CPF and transferred over as needed to make the debt service payments. Total principal and interest remaining on the bonds is $1,761,762, payable through February 2011. For the current year, principal and interest paid and monies transferred from the Tax Increment Projects CPF were $590,813 and $585,000, 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 finance the purchase of capital equipment. Property taxes were projected to produce 100% of the debt service requirements over the life of the bonds. Total principal and interest remaining on the bonds is $204,000, payable through February 2011. For the current year, principal and interest paid and total property tax revenues were $206,900 and $182,122, respectively. 2008A G.O. Equipment Certificates. The City has pledged future property tax revenue to repay the $630,000 bonds issued in September 2008. Proceeds from the bonds were used to finance the purchase of capital equipment. Property taxes were projected to produce 100% of the debt service requirements over the life of the bonds. Total principal and interest remaining on the bonds is $337,515, payable through February 2012. For the current year, principal and interest paid and total property tax revenues were $167,105 and $162,446, respectively. 65 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 2009A G.O. Equipment Certificates. The City has pledged future property tax revenue to repay the $385,000 bonds issued in March 2009. Proceeds from the bonds were used to finance the purchase of capital equipment. Property taxes were projected to produce 100% of the debt service requirements over the life of the bonds. Total principal and interest remaining on the bonds is $260,794, payable through February 2012. For the current year, principal and interest paid and total property tax revenues were $137,038 and $123,901, respectively. 2004A G.O. Capital Improvement Bonds. The City has pledged future property tax revenue to repay the $3,890,000 bonds issued in March 2004. Proceeds from the bonds were used to purchase the public works facility from the EDA and to finance the construction of a new fire station. Property taxes were projected to produce 100% of the debt service requirements over the life of the bonds. Total principal and interest remaining on the bonds is $2,824,561, payable through February 2017. For the current year, principal and interest paid and total property tax revenues were $368,417 and $364,152, respectively. 2010A Permanent Improvement Revolving Refunding Bonds. The City has pledged future special assessment revenue to repay the $1,660,000 bonds issued in February 2010. Proceeds from the bonds refunded the Series 2006A Bonds. Special assessments were projected to produce 100% of the debt service requirements over the life of the bonds. All revenues from the special assessments are paid into the Permanent Improvement Revolving CPF and used to pay debt service as needed. Total principal and interest remaining on the bonds is $1,540,200, payable through February 2014. For the current year, principal and interest paid and monies transferred from the Permanent Improvement Revolving CPF were $13,402 and $20,000, respectively. 2009A State Aid Sheet Refunding Bonds. The City has pledged future municipal state aid (MSA) allotments to repay the $955,000 bonds issued in March 2009. Proceeds of the bonds refunded the Series 2001B Bonds. The bonds are payable solely from MSA allotments through 2015. Total principal and interest remaining on the bonds is $1,008,514, payable through February 2015. For the current year, principal and interest paid and MSA revenues were $23,427 and $262,752, respectively. 2010A G.O. Open Space Referendum Bonds. The City has pledged future property tax revenue to repay the $1,660,000 bonds issued in February 2010. Proceeds from the bonds were used to finance various land acquisitions for open space preservation within the City. Property taxes were projected to produce 100% of the debt service requirements over the life of the bonds. Total principal and interest remaining on the bonds is $1,963,277, payable through February 2022. For the current year, principal and interest paid and total property tax revenues were $18,820 and $87,814, respectively. 2002 G.O. Water Revenue Bonds. The City has pledged future water customer revenues, net of operating expenses, to repay the $9,780,000 bonds issued in May 2002. Proceeds of the bonds provided financing for the construction of a water treatment plant. The bonds are payable from water customer net revenues and are payable through 2012. The total principal and interest remaining on the bonds is $8,006,947. The principal and interest paid for the current year and total customer net revenues were $754,221 and $917,076, respectively. A portion of the Series 2002 Bonds were refunded by the 2007 Series Refunding Bonds of $6,570,000 with a crossover date of August 1, 2012. At which time, future water customer revenues, net of operating expenses, will be used to repay the Series 2007 Refunding Bonds through 2023. 2009A G.O. Water Revenue Bonds. The City has pledged future water customer revenues, net of operating expenses, to repay the $1,025,000 bonds issued in March 2009. Proceeds of the bonds provided financing for the addition to the water treatment plant. The bonds are payable from water customer net revenues and are payable through 2024. The total principal and interest remaining on the bonds is $1,231,216. The principal and interest paid for the current year and total customer net revenues were $92,657 and $917,076, respectively. CURRENT REFUNDING On February 18, 2010, the City issued the $1,480,000 General Obligation Permanent Improvement Revolving (PIR) Refunding Bonds, Series 2010A with an average interest rate of 1.99% to advance refund the 2011 through 2014 maturities aggregating $1,480,000 in principal amount of the City's $2,450,000 General Obligation Permanent Improvement Revolving Fund Bonds, Series 2006A with an average interest rate of 3.87 %, dated May 10, 2006. Net proceeds of $1,486,833.75 were used to retire all outstanding principal of the refunded bonds on February 1, 2010. The City refunded the PIR bonds to reduce its total debt service payments over the four years by $70,713.19 and to obtain an economic gain (difference between the present value of the debt service payments on the old and new debt) of $67,991.32. ADVANCE CROSSOVER REFUNDING On December 1, 2006, the City issued $10,000,000 in Public Facility Lease Revenue Refunding Bonds, Series 2006 with an average interest rate of 4.29% to advance refund $9,755,000 of outstanding 2004 Series Bonds with an average interest rate of 66 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 5.17 %. The net proceeds of $9,782,338 were used to purchase U.S. Government Securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for the interest on the refunding bonds before the crossover date and called principal on the refunded bonds on February 1, 2014. The City advance refunded a portion of the 2004 Public Facilities Lease Revenue Bonds to reduce its total debt service payments over the last twenty years of the bond by $755,979 and to obtain an economic gain (difference between the present value of the debt service payments on the old and new debt) of $375,573. 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 $9,759,059 at December 31, 2010. On January 1, 2007, the City issued $6,865,000 in Public Facility Lease Revenue Refunding Bonds, Series 2007 with an average interest rate of 4.31% to advance refund $6,700,000 of outstanding 2004 Series Bonds with an average interest rate of 5.17 %. The net proceeds of $6,710,306 were used to purchase U.S. Government Securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for the interest on the refunding bonds before the crossover date and called principal on the refunded bonds on February 1, 2014. The City advance refunded a portion of the 2004 Public Facilities Lease Revenue Bonds to reduce its total debt service payments over the last twenty years of the bond by $517,163 and to obtain an economic gain (difference between the present value of the debt service payments on the old and new debt) of $250,417. The City is responsible for the debt service of the refunded bonds and the debt service of the refunding bonds after the crossover date. The debt service of the refunding bonds before the crossover date is payable from the escrow account. Assets held with the escrow agent total $6,704,233 at December 31, 2010. On March 13, 2007, the City issued $6,570,000 in General Obligation Water Revenue Refunding Bonds, Series 2007B with an average interest rate of 4.07% to advance refund $6,490,000 of outstanding 2002 Series Bonds with an average interest rate of 4.90 %. The net proceeds of $6,491,509 were used to purchase U.S. Government Securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for the interest on the refunding bonds before the crossover date and called principal on the refunded bonds on August 1, 2012. The City advance refunded the 2002 General Obligation Water Revenue Bonds to reduce its total debt service payments over the last ten years of the bond by $265,904 and to obtain an economic gain (difference between the present value of the debt service payments on the old and new debt) of $164,664. The City is responsible for the debt service of the refunded bonds and the debt service of the refunding bonds after the crossover date. The debt service of the refunding bonds before the crossover date is payable from the escrow account. Assets held with the escrow agent total $6,491,510 at December 31, 2010. 67 Refunded Debt Service Commitment P ayment Bonds Refunding Bonds Escrow Account Date Total Series 2006 Series 2007 Series 2006 Series 2007 City 2011 $ 029,891 $ 424,227 $ 2 91 ,9 83 $ 424,227 $ 291,983 $ 1,329,891 2012 032456 424,227 291,983 424,227 291,983 1,332456 2013 028,534 424,227 291,983 424,227 291,983 1,328,534 2014 17,359,373 424,227 2 91 ,9 83 9,967,114 6,845,992 1,262477 2015 - 752,527 512483 - - 1,265,010 2016 - 753,827 513,283 - - 1,267,110 2017 - 749,628 51303 - - 1,263,311 2018-2022 - 3,748,675 2,568,704 - - 6,317,379 2023-2027 - 3,729,195 2,563,655 - - 6,292,850 2028-2032 - 3,693,314 2,565,020 - - 6,258,334 2033 -2034 - 1474,126 1,019,212 - - 2493,338 $ 21,350,254 $ 16,598,200 $ 11,423,972 $ 11,239,795 $ 7,721,941 $ 3041000 On March 13, 2007, the City issued $6,570,000 in General Obligation Water Revenue Refunding Bonds, Series 2007B with an average interest rate of 4.07% to advance refund $6,490,000 of outstanding 2002 Series Bonds with an average interest rate of 4.90 %. The net proceeds of $6,491,509 were used to purchase U.S. Government Securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for the interest on the refunding bonds before the crossover date and called principal on the refunded bonds on August 1, 2012. The City advance refunded the 2002 General Obligation Water Revenue Bonds to reduce its total debt service payments over the last ten years of the bond by $265,904 and to obtain an economic gain (difference between the present value of the debt service payments on the old and new debt) of $164,664. The City is responsible for the debt service of the refunded bonds and the debt service of the refunding bonds after the crossover date. The debt service of the refunding bonds before the crossover date is payable from the escrow account. Assets held with the escrow agent total $6,491,510 at December 31, 2010. 67 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 7 LEGAL DEBT MARGIN The City is subject to a statutory limitation by the State of Minnesota for bonded indebtedness payable principally from property taxes. The City's legal debt margin for 2010 and 2009 is computed as follows: December 31, Estimated taxable market value $ 2, 710, 514, 800 $ 2,982,595, 600 Debt limit (3 % of market value) 81, 315, 444 89,477, 868 Amount of debt applicable to debt limit: Refunded Refunding Debt Service Commitment Payment Bonds Bonds Escrow Date Total Total Account City 2010 $ 754,221 $ 266,146 $ 266,146 $ 754,221 2011 757,507 266,146 266,146 757,507 2012 7,249440 266,146 6,756,146 759440 2013 - 741446 - 741446 2014 - 741,646 - 741,646 2015 - 741,046 - 741,046 2016 - 744,546 - 744,546 2017 - 742,146 - 742,146 2018-2022 - 3,701,299 - 3,701,299 2023 - 740406 - 740406 $ 8,761,168 $ 8,950,973 $ 7,288438 $ 10423,703 Note 7 LEGAL DEBT MARGIN The City is subject to a statutory limitation by the State of Minnesota for bonded indebtedness payable principally from property taxes. The City's legal debt margin for 2010 and 2009 is computed as follows: December 31, Estimated taxable market value $ 2, 710, 514, 800 $ 2,982,595, 600 Debt limit (3 % of market value) 81, 315, 444 89,477, 868 Amount of debt applicable to debt limit: Total bonded debt $ 59, 671, 000 $ 65J7500 Less: Non applicable debt G.O . water revenue bonds (14, 87 5, 00 0) (15 ,33 0, 00 0) Special assessment bonds (600, 00 0) (2,450, 00 0) Tax increment bonds (1,735,000) (2,515,000) Permanent improvement revolving bonds (1,480,000) (2,63 5, 000) State aid bonds (95 5, 00 0) (2,555,000) Less: Cash and investments in related debt service funds (17,768,743) (17,973,588) Total debt applicable to debt limit 22,257,257 21,716,412 Legal debt margin $ 59,058,187 $ 67,761,456 Note 8 DEFINED BENEFIT PENSION PLANS - STATEWIDE A. PLAN DESCRIPTION All full -time and certain part -time employees of the City are covered by defined benefit plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the General Employees Retirement Fund (GERF) and the Public Employees Police and Fire Fund (PEPFF), which are cost - sharing, multiple- employer retirement plans. These plans are established and administered in accordance with Minnesota Statutes, Chapters 353 and 356. 68 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. All new members must participate in the Coordinated Plan. All police officers, firefighters and peace officers who qualify for membership by statute are covered by the PEPFF. PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by State Statute, and vest after three years of credited service. The defined retirement benefits are based on a member's highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. Two methods are used to compute benefits for PERA's Coordinated and Basic Plan members. The retiring member receives the higher of a step -rate benefit accrual formula (Method 1) or a level accrual formula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2% of average salary for each of the first 10 years of service and 2.7% for each remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2% of average salary for each of the first 10 years and 1.7% for each remaining year. Under Method 2, the annuity accrual rate is 2.7% of average salary for Basic Plan members and 1.7% for Coordinated Plan members for each year of service. For PEPFF members, the annuity accrual rate is 3.0% for each year of service. For all PEPFF and GERF members hired prior to July 1, 1989 whose annuity is calculated using Method 1, a full annuity is available when age plus years of service equal 90. Normal retirement age is 55 for PEPFF members and 65 for Basic and Coordinated members hired prior to July 1, 1989. Normal retirement age is the age for unreduced Social Security benefits capped at 66 for Coordinated members hired on or after July 1, 1989. A reduced retirement annuity is also available to eligible members seeking early retirement. There are different types of annuities available to members upon retirement. A single -life annuity is a lifetime annuity that ceases upon the death of the retiree — no survivor annuity is payable. There are also various types of joint and survivor annuity options available which will be payable over joint lives. Members may also leave their contributions in the fund upon termination of public service in order to qualify for a deferred annuity at retirement age. Refunds of contributions are available at any time to members who leave public service, but before retirement benefits begin. The benefit provisions stated in the previous paragraphs of this section are current provisions and apply to active plan participants. Vested, terminated employees who are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. PERA issues a publicly available financial report that includes financial statements and required supplementary information for GERF and PEPFF. That report may be obtained on the internet at www.mnpera.org, by writing to PERA, 60 Empire Drive #200, St. Paul, Minnesota, 55103 -2088 or by calling (651) 296 -7460 or 1- 800 - 652 -9026. B. FUNDING POLICY Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. These statutes are established and amended by the state legislature. The City makes annual contributions to the pension plans equal to the amount required by state statutes. GERF Basic Plan members and Coordinated Plan members were required to contribute 9.10% and 6.00 %, respectively, of their annual covered salary in 2010. PEPFF members are required to contribute 9.40% of their annual covered salary in 2010. In 2010, the City is required to contribute the following percentages of annual covered payroll: 11.78% for Basic Plan members, 7.00% for Coordinated Plan members, and 14.1% for PEPFF members. Employee contributions for the Coordinated Plan PERF members will increase to 7.25% effective January 1, 2011. The City's contributions to the Public Employees Retirement Fund for the years ending December 31, 2010, 2009 and 2008 were $231,360, $231,302 and $225,073, respectively. The City's contributions to the Public Employees Police and Fire Fund for the years ending December 31, 2010, 2009 and 2008 were $24,152, $24,464 and $21,367, respectively. The City's contributions were equal to the contractually required contributions for each year as set by state statute. C. DEFINED CONTRIBUTION LUMP SUM SERVICE PENSION PLAN — VOLUNTEER FIREFIGHTERS RELIEF ASSOCIATION PLAN DESCRIPTION Members of the City's volunteer fire department are members of the Andover Firefighters' Relief Association. The Association is the administrator of a single- employer defined contribution plan available to firefighters that was established October 9, 1979 and operates under the provisions of Minnesota Statutes Section 424A. It is governed by a board of six 69 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 members elected by the members of the Association for three -year terms. The City's Mayor, Finance Manager and Fire Chief are ex- officio members of the Board of Trustees. The Association provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. 1. Twenty -Year Service Pension — In order to be entitled to a pension benefit, a firefighter must have completed a minimum of five years of service with the Department and five years membership in the Association and attain the age of 50 years. The firefighter will then be 40% vested. This percentage increases 4% per year until the twentieth year when 100% vesting will occur. Because this is a defined contribution plan, the amount of the retirement benefit is not predetermined, but rather is based on the individual member's allocable portion of contributions made during the participation period. 2. Deferred Pension — If the retired or terminated member has not attained age 50 and is otherwise eligible for the pension benefit, the balance of the member's account will be credited with earned interest at the rate permitted by Minnesota Statutes Section 424.A02, Subd.7. 3. Disability Benefit — If a member of the Association becomes totally and permanently disabled due to injury, disability, sickness or dismemberment as a result of performance of duty, a disability payment will be made after one hundred days of disability. 4. Death Benefit — In the event of death of an active member or deferred pensioner, the member's individual account balance will be paid to the surviving spouse, surviving children or the estate of the member after approval by the Board. The Association issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to Andover Firefighters' Relief Association, 13875 Crosstown Boulevard NW, Andover, Minnesota 55304. FUNDING POLICY The State of Minnesota contributes amortization aid, or two percent fire aid, in accordance with state statute requirements. Plan members are not required to contribute to the plan. The state legislature may amend contribution requirements of the City and State. The City is allowed to make voluntary contributions of other public funds pursuant to Minnesota Statutes Chapter 69. The City receives the State aid contribution and is required by state statutes to pass this through as payment to the Association. This transaction is recorded as revenue and expenditure in the City's financial statements. Contributions for the last three years are as follows: Year Ending City State Total 12/31/2008 $ 5000 $ 121,813 $ 171,813 12/31/2009 5000 103492 153,492 12/31/2010 5000 104,210 15 4, 210 Note 9 OTHER POST EMPLOYMENT BENEFITS (OPEB) 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 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 City's requirement by State Statute to provide retirees with access to health insurance. The OPEB plan is administered by the City. The authority to provide these benefits is established in Minnesota Statutes Sections 471.61 Subd. 2a, and 299A.465. The benefits, benefit levels, employee contributions and employer contributions are governed by the City and can be amended 70 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 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. B. BENEFITS PROVIDED Retirees The City is required by State Statute to allow retirees to continue participation in the City's group health insurance plan if the individual terminates service with the City through service retirement or disability retirement. Employees who satisfy the rule of 90 or attain age 55 and have completed 10 years of service at termination can immediately commence medical benefits. Retirees may obtain dependent coverage while the participating retiree is under age 65. Covered spouses may continue coverage after the retiree's death. The surviving spouse of an active employee may continue coverage in the group health insurance plan after the employee's death. All health care coverage is provided through the City's group health insurance plan. The retiree is required to pay 100% of their premium cost for the City- sponsored group health insurance plan. The premium is a blended rate determined by the entire active and retiree population. Since the projected claims costs for retirees exceed the blended premium paid by retirees, the retirees are receiving an implicit rate subsidy (benefit). The coverage levels are the same as those afforded to active employees. Upon a retiree reaching age 65 years of age, Medicare becomes the primary insurer and the City's plan becomes secondary. C. PARTICIPANTS As of the actuarial valuation dated January 2008, participants consisted of: Retirees and beneficiaries currently purchasing health insurance through the City Active employees 52 Total 55 Participating employers 1 D. FUNDING POLICY The additional cost of using a blended rate for actives and retirees is currently funded on a pay -as- you -go basis. The City Council may change the funding policy at any time. E. ANNUAL OPEB COSTS AND NET OPEB OBLIGATION The City's annual other post employment benefit (OPEB) cost is calculated based on the annual requirement contribution (ARC) of the employer, an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortized any unfunded actuarial liabilities (or funding excess) over period not to exceed 30 years. The net OPEB obligation as of December 31, 2010, was calculated as follows: 71 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Annual required contribution (ARC) $ 53,096 Amortization of net OPEB obligation (4,637) Interest on net OPEB obligation 3,208 Annual OPEB cost 51,667 Contributions made during the year (14,937) Increase (decrease) in net OPEB obligation 3 6,73 0 Net OPEB obligation - beginning of year 80,191 Net OPEB obligation - end of year $ 116,921 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 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, 2009 and 2010 are as follows: Percentage of Annual Employer Annual OPEB Net OPEB Fiscal Year Ended OPEB Cost Contributions Cost Contributed Obligation December 31, 2008 $ 53,096 $ 1030 20.0% $ 42,466 December 31, 2009 52,340 14,615 27.9% 80,191 December 31, 2010 5107 14,937 28.9% 116,921 For the governmental activities, other post employment benefits are generally liquidated through the General Fund. F. FUNDED STATUS AND FUNDING PROGRESS The City currently has no assets that have been irrevocably deposited in a trust for future health benefits; therefore, the actuarial value of assets is zero. The funded status of the plan was as follows: Unfunded Actuarial UAAL as a Actuarial Actuarial Accrued Percentage of Actuarial Value of Accrued Liability Fund Covered Covered January 1, 2008 $ - $ 324,387 $ 324,387 0.00% $ 5,40000 6.01% *using the Projected Unit Credit actuarial method Note, the first OPEB actuarial valuation was conducted as of January 1, 2008. There is no data available prior to this date. G. ACTUARIAL METHODS AND ASSUMPTIONS Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events for into the future. Examples include assumptions about future employment, mortality and the health care cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions (ARC) of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information 72 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 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 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. In the January 1, 2008 actuarial valuation, the Projected Unit Credit Actuarial cost method was used. The actuarial assumptions included a 4.0% investment rate of return (net of administrative expenses) and an initial annual 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 plan's unfunded actuarial accrued liability is being amortized as a level dollar amount over 30 years on a closed basis. The remaining amortization period at December 31, 2010 was 27 years. Note 10 INTERFUND RECEIVABLES /PAYABLES, LOANS AND TRANSFERS Individual fund interfund receivable and payable balances at December 31, 2010 are as follows: Fund Governmental Funds: Major Funds: General Fund 2006 EDA Public Facility Lease Revenue Refunding Bonds D SF 2007 EDA Public Facility Lease Revenue Refunding Bonds D SF Water Trunk CPF Nonmaj or Governmental Funds Total governmental funds Receivable Payable $ 629,000 $ - - 7,000 - 7,000 6200 - - 6 77,0 00 $ 691, 00 0 $ 6 91,0 00 Interfund receivables and payables are representative of lending /borrowing arrangements to cover deficit cash balances at the end of the fiscal year. Interfund transfers: Fund Governmental Funds: Major Funds: General Fund Water Trunk CPF Sewer Trunk CPF Road & Bridge CPF Tax Increment Projects CPF Permanent Improvement Revolving CPF Nonmaj or Funds Total governmental funds Trono47ni^ Tn 'Trcan of�Ar C) -I $ 196,930 $ 24200 0 89,191 40000 130439 25 4, 67 7 498J 17 - 3,105,780 - 1,190450 5,144,721 716,612 $ 6,238,328 $ 5,730,5 89 73 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Fund Transfer In Transfer Out Proprietary Funds: Enterprise Funds: Water $ 89,191 $ 150,250 Sewer - 44600 Total proprietary funds 89,191 596,930 Total $ 6,327, 519 $ 6,3 27,519 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 $960,726 to the Park Dedication CPF from the TIF Projects CPF for the payoff of special assessments relating to the Andover Station North Ball Field complex. Additionally, computer service fees paid by the Water, Sewer and Storm Sewer Enterprise Funds to the General Fund have been reclassified as transfers on the Government -Wide Statement of Activities as follows: Governmental Activities $ 3000 $ - Business -Type Activities - 3000 Total $ 3000 $ 3000 Note 11 TAX INCREMENT DISTRICTS The City is the administering authority for the following tax increment finance districts: 1. Name of District: Andover Redevelopment District 1 -1 Type of District: Redevelopment Authorizing Law: M.S. Section 472 Established: 1986 Duration of District: Through 2012 Original net tax capacity: $ 151, 924 Current net tax capacity: 20301 3, 001 Captured net tax capacity - retained by the City $ 1, 851, 077 Total District Bonds issued $ 19,25000 Amount redeemed (17, 515,000) Bonds outstanding December 31, 2010 $ 1, 73 5, 000 2. Name of District: Andover Redevelopment District 1 -2 Type of District: Redevelopment Authorizing Law: M.S. Section 472 Established: 1986 Duration of District: Through 2014 Original net tax capacity: $ 4, 542 Current net tax capacity: 25 6, 07 4 Captured net tax capacity - retained by the City $ 25 1, 53 2 74 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 3. Name of District: Tax Increment Financing District 1 -3 (Farmstead Project) Type of District: Redevelopment Authorizing Law: M.S. Section 469 Established: 1997 Duration of District: Through 2025 Original net tax capacity: $ 7, 314 Current net tax capacity: 161, 502 Captured net tax capacity - retained by the City $ 154,188 4. Name of District: Tax Increment Financing District 1 -4 Type of District: Redevelopment Authorizing Law: M.S. Section 469 Established: 2005 Duration of District: Through 2031 Original net tax capacity: $ 67,162 Current net tax capacity: 94, 831 Captured net tax capacity - retained by the City $ 27,669_ Note 12 DEFICIT FUND BALANCES The City has deficit fund balances at December 31, 2010 as follows: Fund Amount Special Revenue Funds: Community Center $ 352M15 Capital Projects Funds: Storm Sewer Project 61,142 Note 13 CONTINGENCIES A. RISK MANAGEMENT The City is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City participates in the League of Minnesota Cities Insurance Trust (LMCIT), a public entity risk pool for its general property and casualty, workers' compensation, and other miscellaneous insurance coverages. Workers compensation coverage is provided through a pooled self - insurance program through the LMCIT. The City pays an annual premium to LMCIT. The City is subject to supplemental assessments if deemed necessary by the LMCIT. The LMCIT reinsures through Workers Compensation Reinsurance Association (WCRA) as required by law. 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 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. 75 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 The City continues to carry commercial insurance for all other risks of loss, including employee health and disability insurance. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three fiscal years. B. LITIGATION The City attorney has indicated that existing and pending lawsuits, claims and other actions in which the City is a defendant are either covered by insurance; of an immaterial amount; or, in the judgment of the City attorney, remotely recoverable by plaintiffs. C. FEDERAL AND STATE FUNDS The City receives financial assistance from federal and state governmental agencies in the form of grants. The disbursement of funds received under these programs generally requires compliance with the terms and conditions specified in the grant agreements and are subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the applicable fund. However, in the opinion of management, any such disallowed claims will not have a material effect on any of the financial statements of the individual fund types included herein or on the overall financial position of the City at December 31, 2010. D. TAX INCREMENT DISTRICTS The City's tax increment districts are subject to review by the State of Minnesota Office of the State Auditor (OSA). Any disallowed claims or misuse of tax increments could become a liability of the applicable fund. Management has indicated that they are not aware of any instances of noncompliance that would have a material effect on the financial statements. E. PAY -AS- YOU -GO TAX INCREMENT The City has one tax increment pay -as- you -go agreement. The agreement is not a general obligation of the City and is payable solely from tax increments. Accordingly, this agreement is not reflected in the financial statements of the City. Details of the pay -as- you -go are as follows: TIF District # 1 -3, Farmstead Proj ect: The pay -as- you -go agreement for TIF District # 1 -3 provides for the payment of 90% of all tax increment received and will be completed February 1, 2015. Note 14 DEFERRED AD VALOREM TAX LEVIES - BONDED DEBT General Obligation bond issues sold by the City are financed by ad valorem tax levies and special assessment bond issues sold by the City are partially financed by ad valorem tax levies in addition to special assessments levied against the benefiting properties. When a bond issue to be financed partially or completely by ad valorem tax levies is sold, specific annual amounts of such tax levies are stated in the bond resolution and the County Auditor is notified and instructed to levy these taxes over the appropriate years. The future tax levies are subject to cancellation when and if the City has provided alternative sources of financing. The City Council is required to levy any additional taxes found necessary for full payment of principal and interest. These future scheduled tax levies are not shown as assets in the accompanying financial statements at December 31, 2010. Future scheduled tax levies for all bonds outstanding at December 31, 2010 totaled $22,713,165. Note 15 DESIGNATIONS AND RESERVATIONS OF FUND EQUITY Fund equities are classified as follows to reflect limitations and restrictions of the respective funds: 76 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Governmental Funds: Major Funds: General Fund Reserved for prepaid items Reserved for inventory Designated for snow emergency Designated for public safety Designated for facility management Des ignated fo r info rmatio n techno to gy Designated for market value homestead credit unallotment Designated for working cash flow 2006 EDA Public Facility Lease Revenue Refunding Bonds DSF Reserved for debt service 2007 EDA Public Facility Lease Revenue Refunding Bonds DSF Reserved for debt service Water Trunk CPF Designated for projects Sewer Trunk CPF Designated for projects Road & Bridge CPF Designated for projects Tax Increment Projects CPF Designated for projects Permanent Improvement Revolving CPF Designated for projects Nonmaj or Funds Reserved for prepaid items Reserved for inventory Reserved for economic development Reserved for debt service Reserved for projects Designated for working cash flow Designated for projects Designated for equipment Total Governmental Funds Note 16 CONDUIT DEBT OBLIGATION 92,750 113,916 70,000 70,000 70,000 70,000 490,186 4,134,053 9,928,573 6,818,641 2,977,573 3,500,249 3,854,752 2,920,640 1,353,808 103,804 103,711 65,000 65,000 65,000 65,000 3,860,897 9,932,006 6,822,086 2,673,600 3,134,884 3,195,162 4,403,558 1,343,245 8,250 8,250 7,954 5,618 6,783 9,828 1,695,868 3,551,390 792421 427,017 537,052 507,253 341450 538,840 844,739 734,872 $ 40,699,658 $ 41,616,021 Conduit debt obligations are certain limited - obligation revenue bonds or similar debt instruments issued for the express purpose of providing capital financing for a specific third party. The City has issued various revenue bonds to provide funding to private- sector entities for projects deemed to be in the public interest. Although these bonds bear the name of the City, the City has no obligation for such debt beyond the resources provided by related leases or loans. Accordingly, the bonds are not reported as liabilities in the financial statements of the City. As of December 31, 2010, the following revenue bonds were outstanding: 77 CITY OF ANDOVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Project Downtown Center Presbyterian Homes of Andover, Inc. Total Note 17 OPERATING LEASES D ate of Original Outstanding T_­ - T­ T)-4-:-- A 1 11 /2 1 /1111 111 7/15/1997 $ 5,64500 $ (4,925,000) $ 72000 11/1/2003 13,14500 (1,692,557) 11,452,443 $ 18,79000 $ (6,617,557) $12,172,443 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: Lo cati on Lessee 2010 Lease Annual Lease Expiration Renewal Amount Adj ustment Factor Date Options City Hall water tower Sprint Nextel $ 25479 Greater of CPI or 4% 12/31/2012 3 - 5 year terms City Hall water tower T- Mobile USA, Inc 20,780 Greater of CPI or 4% 12/31/2011 3 - 5 year terms City Hall water tower Clear Wireless LLC 400 3% annually 9/30/2014 5 - 5 year terms Emergency Siren Pole T -Mob ile USA, Inc 400 $1,000 annual increase 6/17/2013 3 - 5 year terms Andover YMCA Comm Ctr Greater Minneapolis YMCA 635,000 None 8/l/2035 N/A Rose Park water tower Clear Wireless LLC 5,845 3% annually 7/31/2014 5 - 5 year terms Future minimum lease payments are unavailable at this time due to changing variables: CPI and the completion of the capital campaign for the community center. Note 18 SUBSEQUENT EVENTS The City of Andover sold $265,000 of General Obligation Equipment Certificates, Series 2011 on April 1, 2011 to finance the purchase of public works equipment. The rates of the bonds per year are 2.00% with a true interest cost of 2.00 %. Principal payments are due in 2012 -2014. Note 19 RECENTLY ISSUED ACCOUNTING STANDARDS The Governmental Accounting Standards Boards (GASB) recently approved the following statements which were not implemented for these financial statements: Statement No. 54 Fund Balance and Government Fund Type Definitions. The provisions of this Statement are effective for financial statements for periods beginning after June 15, 2010. Statement No. 60 Accounting and Financial Reporting for Service Concession Arrangements. The provisions of this Statement are effective for financial statements for periods beginning after December 15, 2011. Statement No. 61 Financial Reporting Entity: Omnibus — an amendment of GASB Statements No. 14 and No. 34. The provisions of this Statement are effective for financial statements for periods beginning after June 15, 2012. Statement No. 62 Codification of Accounting and Financial Reporting Guidance Contained in Pre - November 30, 1989 FASB and AICPA Pronouncements. The provisions of this Statement are effective for financial statements for periods beginning after December 15, 2011. The effect these standards may have on future financial statements is not determinable at this time. 78 REQUIRED SUPPLEMENTARY INFORMATION 79 CITY OF ANDOVER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 Statement 10 Expenditures: 2,599,246 2,599,246 2,599,246 Variance with 2,545,642 Current: 1,063,959 1,070,385 967,716 Final Budget - 998,351 General government: Budgeted Amounts 330,709 Positive 2009 Mayor and City council Original Final Actual (Negative) Actual Revenues: 130,997 132,967 131,218 1,749 128,532 General property taxes $ 7,308,495 $ 7,308,495 $ 7,19102 $ (116,893) $ 6,588,601 Licenses and permits 237,055 237,055 329,901 92,846 291,903 Intergovernmental 567,498 567,498 570,097 2,599 59502 Charges for services 543,500 543,500 755,184 21104 701,289 Fines 100,750 100,750 104,780 4,030 110,779 Investment income 6500 6500 70,368 5,368 76,772 Miscellaneous 83,400 83,400 13604 53,284 130,523 Total revenues 8,905,698 8,905,698 9,158,616 252,918 8,494,869 Expenditures: 2,599,246 2,599,246 2,599,246 - 2,545,642 Current: 1,063,959 1,070,385 967,716 10209 998,351 General government: 339,931 346,282 330,709 15,573 435,102 Mayor and City council 104,251 104,251 100,710 3,541 105,319 Administration 130,997 132,967 131,218 1,749 128,532 Newsletter 2300 2300 17,094 5,906 22,405 Human resources 60,691 60,744 54,968 5,776 54,625 Legal 178,500 178,500 172,775 5,725 172,900 City clerk 95,824 96,828 95,166 1,662 96,621 Elections 4906 49,126 37,927 11,199 6,139 Financial administration 198,836 202,011 194,865 7,146 210,204 Assessing 152,500 152,500 144,760 7,740 120,113 Information systems 144,106 150,812 136,931 1301 122,614 Planning and zoning 319,556 328,449 327,566 883 32301 Engineering 38303 39007 389,037 1,050 388,285 Facility management 556,457 571,716 421,850 149,866 409,929 Total general government 2,39607 2,440,991 2,224,867 216,124 2,161,367 Public safety: Police 2,599,246 2,599,246 2,599,246 - 2,545,642 Fire protection 1,063,959 1,070,385 967,716 10209 998,351 Protective inspection 339,931 346,282 330,709 15,573 435,102 Civil defense 15,794 15,909 15,450 459 14,935 Animal control 9,970 9,970 6,952 3,018 11,376 Total public safety 4,028,900 4,041,792 3,920,073 121,719 405,406 Public works: Streets and highways 543,732 556,452 518,989 37,463 567,090 Snow and ice removal 475,573 489,381 537,948 (48,567) 462,849 Street signs 177,458 195,562 166,244 29,318 159,213 Traffic signals 3600 3600 25,830 1 0, 170 26,090 Street lighting 236,400 236,400 217,205 19,195 213,307 Total public works $ 1,469,163 $ 1,513,795 $ 1,466,216 $ 47,579 $ 1,428,549 (Continued) 80 CITY OF ANDOVER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 Statement 10 (Continued) Capital outlay: Parks and recreation - - 1,216 (1,216) 2,397 Total expenditures 9,102,628 9,158,128 8,573,053 585,075 8,538,422 Revenues over (under) expenditures (196,930) (252,430) 585,563 837,993 (43,553) Other financing sources (uses): Transfers in 196,930 196,930 196,930 - 196,930 Net increase (decrease) in fund balance $ - $ (55,500) $ 782,493 $ 837,993 $ 153,377 Fund balance - January 1 4,328,412 4,175,035 Fund balance - December 31 $ 5,110,905 $ 4,328,412 81 Variance with Final Budget - Budgeted Amounts Positive 2009 Original Final Actual (Negative) Actual Expenditures: Current: (continued) Parks and recreation $ 860,460 $ 872,633 $ 826,694 $ 45,939 $ 835,636 Recycling 117,298 118,838 109,034 904 85,527 Unallocated 23000 170,079 24,953 145,126 19,540 Total current 9,102,628 9,158,128 8,571,837 586,291 8,536,025 Capital outlay: Parks and recreation - - 1,216 (1,216) 2,397 Total expenditures 9,102,628 9,158,128 8,573,053 585,075 8,538,422 Revenues over (under) expenditures (196,930) (252,430) 585,563 837,993 (43,553) Other financing sources (uses): Transfers in 196,930 196,930 196,930 - 196,930 Net increase (decrease) in fund balance $ - $ (55,500) $ 782,493 $ 837,993 $ 153,377 Fund balance - January 1 4,328,412 4,175,035 Fund balance - December 31 $ 5,110,905 $ 4,328,412 81 CITY OF ANDOVER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF FUNDING PROGRESS - OTHER POST EMPLOYMENT BENEFITS PLAN For The Year Ended December 31, 2010 Statement 11 Unfunded Actuarial Actuarial Actuarial Accrued Actuarial Value of Accrued Liability Valuation Date Assets Liability (UAAL ) (a) (b) (b -a) January 1, 2008 $ - $ 324,387 $ 324,387 Statement 11 The City implemented GASB Statement No. 45 for the year ended December 31, 2008. Information for prior years is not available. 82 UAAL as a Percentage of Fund Covered Covered Ratio Payroll Payroll (a/b) (c) ((b -a) /c) 0.00% $ 5,40000 6.01% The City implemented GASB Statement No. 45 for the year ended December 31, 2008. Information for prior years is not available. 82 CITY OF ANDOVER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION NOTES TO REQUIRED SUPPLEMENTARY INFORMATION December 31, 2010 Note A BUDGETS The General Fund budget is legally adopted on a basis consistent with accounting principles generally accepted in the United States of America. The legal level of budgetary control is at the departmental level for the General Fund. The following is a listing of General Fund departments whose expenditures exceed budget appropriations. F in al Over Budget Actual Budget General Fund: Current: Public works: Snow and ice removal $ 489,381 $ 537,948 $ 48,567 Capital outlay: Parks and recreation 1,216 1,216 Note B MODIFIED APPROACH FOR CITY STREETS AND TRAILS INFRASTRUCTURE CAPITAL ASSETS In accordance with GASB Statement No. 34, the City is required to account for and report infrastructure capital assets. The City defines infrastructure as the basic physical assets including the street and trail system; water treatment and distribution system; wastewater collection system; park and recreation lands and improvement system; storm water conveyance system; and building combined with site amenities such as parking and landscape areas used by the City in the conduct of its business. Each major infrastructure can be divided into subsystems. For example, the street and trail system can be divided into pavement widths, curb type and sidewalk. City owned streets could further be classified as collector or local. Subsystem detail is not presented in these basic financial statements; however, the City maintains detailed information on these subsystems. The City has elected to use the modified approach as defined in GASB Statement No. 34 for infrastructure reporting for its Pavement Management Program. Under GASB Statement No. 34, eligible infrastructure capital assets are not required to be depreciated under the following requirements: 1) The City manages the eligible infrastructure capital assets using an asset management system with characteristics of (1) an up to -date inventory; (2) perform condition assessments and summarize the results using a measurement scale; and (3) estimate annual amount to maintain and preserve at the established condition assessment level. 2) The City documents that the eligible infrastructure capital assets are being preserved approximately at or above the established and disclosed condition assessment level. The City's policy relative to maintaining the street and trail assets is to achieve an average rating of "Good" for all segments. This acceptable rating allows minor cracking and patching of the pavement along with minor roughness that could be noticeable to the users of the system. In the fall of 2010, the City conducted a physical condition assessment of the streets and trails constructed since 1974. This assessment will be performed every three years. Each street and trail segment was assigned a physical condition based on potential defects. An Overall Condition Index (OCI) was assigned to each street and trail and expressed in a continuous scale from 0 to 100, where 0 is assigned to the least acceptable physical condition and 100 is assigned the physical characteristics of a new street or trail. The following conditions were defined: 83 CITY OF ANDOVER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION NOTES TO REQUIRED SUPPLEMENTARY INFORMATION December 31, 2010 Condition Rating Excellent 86-100 Very Good 71-85 Good 56-70 Fair 41 -55 Poor 26-40 Very Poor 11-25 Substandard 0-10 As of December 31, 2010, the City's street and trail system was rated at an OCI index of 83 on the average with detail condition as follows: % of Street Condition and Trails Excellentto Good 96.0% Fair 3.3% Poor to Substandard 0.7% The City's streets and trails are constantly deteriorating resulting from the following factors: (1) traffic using the system; (2) the sun's ultra - violet rays drying out and breaking down the top layer of pavement; (3) utility company /private development trenching operations; (4) water damage from natural precipitation; and (5) frost heave. The City is continuously taking actions to prolong the life of the system through short -term maintenance activities such as pothole patching, crack sealing, seal coating and overlaying. The City expended $1,457,082 on street and trail maintenance for the year ending December 31, 2010. These expenditures delayed deterioration; however, the overall condition of the system was not improved through these maintenance expenditures. The City has estimated that the amount of annual expenditures required to maintain the City's street and trail system at the average OCI rating of good is approximately $1,15000. The City has an on -going street and trail rehabilitation program funded in the Capital Improvement Program that is intended to improve the condition rating of the City streets and trails. The rehabilitation program is formulated based on the deficiencies identified as a part of its Pavement Management Program. 84 Maintenance Actual OCI Year Estimate Expenditures Ratin 2003 $ 950,000 $ 95608 82 2004 1,0 00,0 00 1,8 47,0 66 82 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 2009 1,150,000 1,666,216 81 2010 1,150,000 1,457,082 83 The City has an on -going street and trail rehabilitation program funded in the Capital Improvement Program that is intended to improve the condition rating of the City streets and trails. The rehabilitation program is formulated based on the deficiencies identified as a part of its Pavement Management Program. 84 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES 85 NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS A Special Revenue Fund is used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. Revenues for these funds can come from a variety of sources, such as taxes, fees, gifts and grants or contributions from other governmental entities. Expenditures from these funds are normally restricted by statute, local ordinance or grant agreements. The funds may be used for either operations or capital outlay as legal restrictions mandate. DEBT SERVICE FUNDS A Debt Service Fund accounts for the accumulation of resources for, and the payment of general long -term principal, interest and other related costs. CAPITAL PROJECTS FUNDS A Capital Projects Fund is used to account for acquisition or construction of major capital facilities financed mainly with governmental fund resources, general obligation debt, special assessments, special assessment debt, grants or other resources that are not part of Proprietary Funds or Trust Funds. 86 CITY OF ANDOVER, MINNESOTA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS December 31, 2010 With Comparative Totals For December 31, 2009 Statement 12 Liabilities and Fund Balance Liabilities: Interfund payable 47500 14000 6200 Totals 1,33600 Accounts payable Special Debt Capital Nonmaj or Governmental Funds 72,275 Revenue Service Projects 2010 2009 Assets: Deposits payable 31,422 - - 31,422 Cash and investments $ 1,587,629 $ 1,096,512 $ 909,766 $ 3,593,907 $ 4,290,037 Cash and investments with escrow agent 50,843 724,061 - 774,904 1,672,204 Accrued interest 6,847 1,153 4,415 12,415 15,510 Accounts receivable - net 145,168 - - 145,168 160,788 Prepaid items 8,250 - - 8,250 8,250 Property taxes receivable: Reserved 73,830 1,695,868 741,578 2,511,276 Unremitted 1,894 15,670 454 18,018 23,876 Delinquent 7,869 66,301 1,908 76,078 67,304 Special assessments receivable: Undesignated (419,062) - (61,142) (480,204) Delinquent - 83,747 - 83,747 32,988 Deferred - 336,325 - 336,325 393,935 Notes receivable 69,251 - - 69,251 64,012 Inventories - at cost 7,954 - - 7,954 5,618 Total assets 105,705 2,323,769 916,543 5,126,017 6,734,522 Liabilities and Fund Balance Liabilities: Interfund payable 47500 14000 6200 67700 1,33600 Accounts payable 45,890 1,528 (2,501) 44,917 72,275 Contracts payable - - 6,440 6,440 3,428 Deposits payable 31,422 - - 31,422 28,327 Due to other governmental units 3,376 - - 3,376 3,358 Salaries payable 20,567 - - 20,567 18,546 Deferred revenue 99,701 486,373 1,908 587,982 617,466 Total liabilities 675,956 627,901 67,847 1,371,704 2,079,400 Fund balance (deficit): Reserved 73,830 1,695,868 741,578 2,511,276 4,002,103 Unreserved: Designated 1,554,981 - 168,260 1,723,241 1,780,965 Undesignated (419,062) - (61,142) (480,204) (1,127,946) Total fund balance 1,209,749 1,695,868 848,696 3,754,313 4,655,122 Total liabilities and fund balance $ 105,705 $ 2,323,769 $ 916,543 $ 5,126,017 $ 6,734,522 87 CITY OF ANDOVER, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For The Year Ended December 31, 2010 With Comparative Totals For The Year Ended December 31, 2009 Statement 13 Expenditures: - 4,110,864 1,033,857 Totals 2,750,141 Current: Special Debt Capital Nonmaj or Governmental Funds (699,541) Revenue Service Projects 2010 2009 Revenues: Public safety - - - - General property taxes $ 229,044 $ 1,805,784 $ 55,824 $ 2,09052 $ 2,444,280 Intergovernmental - 262,752 - 262,752 252,145 Special assessments - 31,593 - 31,593 59,507 Charges for services 849,497 - - 849,497 878,370 Investment income 24,779 3401 28,956 88,416 72,094 Miscellaneous: Public safety 3 8, 812 - 396,291 43503 Park dedication fees - - 32,649 32,649 41,216 Rent 638,037 - - 638,037 637,305 Other 177,827 - 110,583 288,410 244,398 Total revenues 1,919,184 2,134,810 228,012 4,28206 4,629,315 Expenditures: - 4,110,864 1,033,857 5,144,721 2,750,141 Current: (643,481) (73,131) - (716,612) (699,541) General government 28,996 - 1,930 30,926 81,295 Public safety - - - - 1004 Public works 159,593 - 1,763 161,356 188,904 Parks and recreation 882,364 - 724,437 10601 1,055,489 Economic development 152,311 - - 152,311 122,361 Capital outlay: (615,764) 3,128,104 2,698,340 5,21000 3,421,645 General government 5500 - 108,387 163,387 35,640 Public safety 3 8, 812 - 396,291 43503 299,319 Public works - - - - 138,766 Parks and recreation 5809 - 666,366 725,175 1,006,470 Debt service: Principal retirement - 5,77900 - 5,77900 3,86500 Interest - 1,3 14,057 - 1,3 14,057 1,462,022 Paying agent fees - 300 - 300 5,794 Professional service - 21,499 - 21,499 29,471 Total expenditures 1,37505 7,118,436 1,899,174 10,393,495 8,300,535 Revenues over (under) expenditures 543,299 (4,983,626) (1,671,162) (6,111,489) (3,671,220) Other financing sources (uses): Transfers in - 4,110,864 1,033,857 5,144,721 2,750,141 Transfers out (643,481) (73,131) - (716,612) (699,541) Bonds issued - - 10000 10000 38500 Refunding bonds issued - 1,48000 - 1,48000 95500 Redemption of refunded bonds - (2,416,834) - (2,416,834) - Bond premium - 27,205 4,483 3108 18,781 Proceeds from sale of capital assets 27,717 - - 27,717 12,264 Total other financing sources (uses) (615,764) 3,128,104 2,698,340 5,21000 3,421,645 Net increase (decrease) in fund balance (72,465) (1,855,522) 1,027,178 (900,809) (249,575) Fund balance - January 1 1,282,214 3,551,390 (178,482) 4,655,122 4,904,697 Fund balance - December 31 $ 1,209,749 $ 1,695,868 $ 848,696 $ 3,754,313 $ 4,655,122 88 NONMAJOR SPECIAL REVENUE FUNDS The City of Andover had the following Special Revenue Funds during the year: EDA General - This fund was established to account for activities designed to promote quality economic development within the community. Community Development Block Grant - This fund accounts for the financial operations of a federal grant for rental housing rehabilitation. Community Center - This fund is used to account for the operations of the Andover YMCA / Community Center, particularly the ice arena, field house and concessions. The aquatic's portion of the Community Center is under the operations of the YMCA. Draina4e and Mapping - This fund accounts for resources necessary to maintain existing maps and developing new maps and mapping systems for the City. LRRWMO - This fund is used to account for the City's involvement with the Lower Rum River Watershed Management Organization (LRRWMO). Forest - 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. 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. Right -of -Way Management /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 capital expenditures it will be used for. Charitable Gamblin4 - This fund accounts for the 10% of net profits received from gambling activities by local non- profit organizations. According to state statute, all expenditures from this fund must be for public services and police, fire and other emergency or public safety- related services, equipment, and training, excluding pension obligations. Construction Seal Coatin4 - 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. 89 CITY OF ANDOVER, MINNESOTA SUBCOMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS December 31, 2010 With Comparative Totals For December 31, 2009 90 Community Drainage EDA Development Community and General Block Grant Center Mapping LRRWMO Assets: Cash and investments $ 458,203 $ 6,783 $ 23,069 $ 92,178 $ 13,376 Cash and investments with escrow agent - - 50,843 - - Accrued interest 1,963 - - 376 - Accounts receivable 13,981 - 125,269 - - Prepaid items - - 8,250 - - Property taxes receivable: Unremitted - - - - 302 Delinquent - - - - 1,178 Notes receivable - 69,251 - - - Inventories - at cost - - 7,954 - - Total assets 474,147 76,034 215,385 92,554 14,856 Liabilities and Fund Balance Liabilities: Interfund payable - - 475,000 - - Accounts payable 3,836 - 41,945 - 109 Contracts payable - - - - - Deposits payable - - 31,422 - - Due to other governmental units - - 3,376 - - Salaries payable 3,475 - 15,657 - 888 Deferred revenue - 69,251 - - 1,178 Total liabilities 7,311 69,251 567,400 - 2,175 Fund balance (deficit): Reserved for: Prepaid items - - 8,250 - - Inventory - - 7,954 - - Economic development - 6,783 - - - Projects - - 50,843 - - Unreserved: Designated for working capital 466,836 - - 10,500 12,681 Designated for projects - - - 82,054 - Designated for equipment - - - - - Undesignated - - (419,062) - - Total fund balance (deficit) 466,836 6,783 (352,015) 92,554 12,681 Total liabilities and fund balance $ 474,147 $ 76,034 $ 215,385 $ 92,554 $ 14,856 90 Right -of -Way Capital Trail and Management/ Equipment Forestry Transportation Utility Reserve Statement 14 Totals Charitable Construction Nonmajor Special Revenue Funds Gambling Seal Coating 2010 2009 $ 5,744 $ 71,268 $ 51,711 $ 839,144 $ 2,577 $ 23,576 $ 1,587,629 $ 1,806,828 - - - - - - 50,843 25,316 279 226 4,003 - - 6,847 6,479 - 5,918 - - - 145,168 160,788 - - - - 8,250 8,250 1,592 - - 1,894 2,056 6,691 - - 7,869 6,740 - - - 69,251 64,012 - - - - - - 7,954 5,618 5,744 71,547 57,855 851,430 2,577 23,576 1,885,705 2,086,087 - - - - - - 475,000 550,000 - - - - - - 45,890 70,235 - - - - - - - 3,428 - - - - - - 31,422 28,327 - - - - - - 3,376 3,358 - - 547 - - - 20,567 18,546 - - - 6,691 - 22,581 99,701 129,979 - - 547 6,691 - 22,581 675,956 803,873 - - - - - - 8,250 8,250 - - - - - - 7,954 5,618 - - - - - - 6,783 9,828 - - - - - - 50,843 25,316 5,744 - 38,714 - 2,577 - 537,052 507,253 - 71,547 18,594 - - 995 173,190 449,500 - - - 844,739 - - 844,739 734,872 - - - - - - (419,062) (458,423) 5,744 71,547 57,308 844,739 2,577 995 1,209,749 1,282,214 $ 5,744 $ 71,547 $ 57,855 $ 851,430 $ 2,577 $ 23,576 $ 1,885,705 $ 2,086,087 91 CITY OF ANDOVER, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS For The Year Ended December 31, 2010 With Comparative Totals For The Year Ended December 31, 2009 92 Community Drainage EDA Development Community and General Block Grant Center Mapping LRRWMO Revenues: General property taxes $ - $ - $ - $ - $ 33,244 Intergovernmental - - - - - Charges for services 199,403 - 571,801 8,770 - Investment income 9,300 91 (8,255) 1,891 125 Miscellaneous: Rent - - 638,037 - - Other 546 5,932 149,486 - - Total revenues 209,249 6,023 1,351,069 10,661 33,369 Expenditures: Current: General government - - - - - Public works - - - 5,653 39,000 Parks and recreation - - 882,364 - - Economic development 143,243 9,068 - - - Capital outlay: General government - - - - - Public safety - - - - - Parks and recreation - - - - - Total expenditures 143,243 9,068 882,364 5,653 39,000 Revenues over (under) expenditures 66,006 (3,045) 468,705 5,008 (5,631) Other financing sources (uses): Transfers out - - (401,481) - - Proceeds from sale of capital assets - - - - - Total financing sources (uses) - - (401,481) - - Net increase (decrease) in fund balance 66,006 (3,045) 67,224 5,008 (5,631) Fund balance (deficit) - January 1 400,830 9,828 (419,239) 87,546 18,312 Fund balance (deficit) - December 31 $ 466,836 $ 6,783 $ (352,015) $ 92,554 $ 12,681 92 Right -of -Way Capital Trail and Management/ Equipment Charitable Construction Forestry Transportation Utility Reserve Gambling Seal Coating Statement 15 Totals Nonmajor Special Revenue Funds $ - $ - $ - $ 195,800 $ - $ - $ 229,044 $ 232,053 - - - - - - - 3,194 - 4,016 19,131 - - 46,376 849,497 878,370 51 1,355 765 19,915 (79) (380) 24,779 25,676 - - - - - - 638,037 637,305 9,756 - - 2,668 9,439 - 177,827 215,803 9,807 5,371 19,896 218,383 9,360 45,996 1,919,184 1,992,401 - - - 16,612 12,384 - 28,996 59,112 9,893 - 50,865 - - 54,182 159,593 187,811 - - - - - - 882,364 924,104 - - - - - - 152,311 122,361 - - - 55,000 - - 55,000 - - - - 38,812 - - 38,812 - - - - 58,809 - - 58,809 24,236 9,893 - 50,865 169,233 12,384 54,182 1,375,885 1,317,624 (86) 5,371 (30,969) 49,150 (3,024) (8,186) 543,299 674,777 - - - (242,000) - - (643,481) (363,292) - - - 27,717 - - 27,717 12,264 - - - (214,283) - - (615,764) (351,028) (86) 5,371 (30,969) (165,133) (3,024) (8,186) (72,465) 323,749 5,830 66,176 88,277 1,009,872 5,601 9,181 1,282,214 958,465 $ 5,744 $ 71,547 $ 57,308 $ 844,739 $ 2,577 $ 995 $ 1,209,749 $ 1,282,214 93 - This page intentionally left blank - 94 NONMAJOR DEBT SERVICE FUNDS The City's Debt Service Funds account for eight types of bonded indebtedness: • Certificates of Indebtedness • Capital Improvement Bonds • Revenue Bonds • Tax Increment Bonds • Permanent Improvement Revolving Bonds • State Aid Bonds • Special Assessment Bonds • Referendum Bonds Certificates of Indebtedness - (G.O. Equipment Certificates - 2006B, 2007A, 2008A and 2009A) are repaid primarily from general property taxes. Capital Improvement Bonds - (G.O. Capital Improvement Bonds 2004A) are repaid primarily from general property taxes 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. 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, 2006A and G.O. PIR Refunding Bonds of 201OA) are used to finance assessable improvements within the City and are repaid primarily from special assessments levied against benefited properties. State Aid Bonds - (2001B State Aid Bonds and 2009A State Aid Refunding Bonds) are used to finance MSA eligible cost for road construction and improvements. These bonds are repaid from a portion of state aid allotments received by the City. Special Assessment Bonds - (G.O. Improvement Bonds 2005A) are used to finance assessable improvements within the City and are repaid primarily from special assessments levied against benefited properties. Referendum Bonds — (Open Space Referendum Bonds of 2010A) are used to finance the purchase of land to remain as open space. 95 CITY OF ANDOVER, MINNESOTA SUBCOMBINING BALANCE SHEET NONMAJOR DEBT SERVICE FUNDS December 31, 2010 With Comparative Totals For December 31, 2009 96 EDA Public G.O. G.O. G.O. G.O. Capital Facility Lease G.O. TIF Equipment Equipment Equipment Improvement Revenue Refunding Certificate Certificate Certificate Bonds Bonds Bonds 2007A 2008A 2009A 2004A 2004 2004B Assets: Cash and investments $ 210,508 $ 165,335 $ 126,954 $ 1,941 $ 4,126 $ 17,980 Cash and investments with escrow agent - - - - 724,061 - Accrued interest - 402 310 - - - Property taxes receivable: Unremitted 1,724 1,420 104 3,054 7,744 - Delinquent - 6,731 5,134 14,467 3604 - Special assessments receivable: Delinquent - - - - - - Deferred - - - - - 12,057 Total assets 212,232 17308 133,482 19,462 772,615 30,037 Liabilities and Fund Balance Liabilities: Interfund payable - - - - 14000 - Accounts payable 230 - 77 224 230 230 Deferred revenue - 6,731 5,134 14,467 3604 12,057 Total liabilities 230 6,731 5,211 14,691 176,914 12,287 Fund balance: Reserved for debt service 21202 167,157 128,271 4,771 595,701 17,750 Total liabilities and fund balance $ 212,232 $ 17308 $ 133,482 $ 19,462 $ 772,615 $ 30,037 96 G.O. State Aid G.O. Open Space PIR Fund Refunding Improvement Referendum Refunding Bonds Bonds Bonds Bonds Statement 16 Totals Nonmajor Debt Service Funds $ 9,964 $ 260,872 $ 227,132 $ 71,700 $ 1,096,512 $ 1,985,909 - - - - 724,061 1,64608 297 - 144 1,153 7,261 - - 644 15,670 21,332 - - 3,285 66,301 58,983 - 83,747 - 83,747 32,988 - 324,268 - 336,325 393,935 9,964 261,169 63 5, 147 75,773 2,323,769 4,147,296 - - - - 14000 11000 115 77 230 115 1,528 - - - 408,015 3,285 486,373 485,906 115 77 408,245 3,400 627,901 595,906 9,849 261,092 226,902 72,373 1,695,868 3,551,390 $ 9,964 $ 261,169 $ 635,147 $ 75,773 $ 2,323,769 $ 4,147,296 97 CITY OF ANDOVER, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR DEBT SERVICE FUNDS For The Year Ended December 31, 2010 With Comparative Totals For The Year Ended December 31, 2009 Expenditures: EDA Public Debt service: G.O. G.O. G.O. G.O. G.O. Capital Facility Lease G.O. TIF Principal retirement Equipment Equipment Equipment Equipment Improvement Revenue Refunding Interest Certificate Certificate Certificate Certificate Bonds Bonds Bonds Paying agent fees 2006B 2007A 2008A 2009A 2004A 2004 2003B Revenues: - 230 - 77 224 230 - General property taxes $ - $ 182,122 $ 162,446 $ 123,901 $ 364,152 $ 885,349 $ - Intergovernmental - - - - - - - Special assessments - - - - - - - Investment income (126) (795) 1,011 704 (4,601) 32,794 99 Total revenues (126) 181,327 163,457 124,605 359,551 918,143 99 Expenditures: Debt service: Principal retirement 160,000 195,000 154,000 130,000 280,000 405,000 250,000 Interest 2,920 11,900 14,105 7,038 88,417 930,684 7,500 Paying agent fees - 431 - 72 - 2,000 - Professional services - 230 - 77 224 230 - Total expenditures 162,920 207,561 168,105 137,187 368,641 1,337,914 257,500 Revenues over (under) expenditures (163,046) (26,234) (4,648) (12,582) (9,090) (419,771) (257,401) Other financing sources (uses): Transfers in - - - - - 401,481 244,770 Transfers out (73,131) - - - - - - Refunding bonds issued - - - - - - - Redemption of refunded bonds - - - - - - - Bond premium - - - - - - - Total other financing sources (uses) (73,131) - - - - 401,481 244,770 Net increase (decrease) in fund balance (236,177) (26,234) (4,648) (12,582) (9,090) (18,290) (12,631) Fund balance - January 1 236,177 238,236 171,805 140,853 13,861 613,991 12,631 Fund balance - December 31 $ - $ 212,002 $ 167,157 $ 128,271 $ 4,771 $ 595,701 $ - 98 Statement 17 99 G.O. G.O. TIF G.O. G.O. PIR Fund State G.O. Open Space Refunding PIR Fund PIR Fund Refunding State Aid Refunding Improvement Referendum Totals Bonds Bonds Bonds Bonds Aid Bonds Bonds Bonds Bonds Nonmajor Debt Service Funds 2004B 2003A 2006A 2010A 2001B 2009A 2005A 2010A 2010 2009 $ - $ - $ - $ - $ - $ - $ - $ 87,814 $ 1,805,784 $ 2,156,485 - - - - - 262,752 - - 262,752 239,185 3,563 - - - - - 28,030 - 31,593 59,507 15 - 82 2,966 43 2,599 2,539 (2,649) 34,681 38,989 3,578 - 82 2,966 43 265,351 30,569 85,165 2,134,810 2,494,166 530,000 820,000 335,000 - 670,000 - 1,850,000 - 5,779,000 3,865,000 60,813 10,660 34,070 13,402 37,611 23,427 52,690 18,820 1,314,057 1,462,022 805 - - - - 170 402 - 3,880 5,794 230 - - 20,086 - 77 230 115 21,499 29,471 591,848 830,660 369,070 33,488 707,611 23,674 1,903,322 18,935 7,118,436 5,362,287 (588,270) (830,660) (368,988) (30,522) (707,568) 241,677 (1,872,753) 66,230 (4,983,626) (2,868,121) 585,000 814,826 355,624 20,000 498,117 - 1,191,046 - 4,110,864 2,413,892 - - - - - - - - (73,131) (336,249) - - - 1,480,000 - - - - 1,480,000 955,000 - - - (1,486,834) - (930,000) - - (2,416,834) - - - - 27,205 - - - - 27,205 14,642 585,000 814,826 355,624 40,371 498,117 (930,000) 1,191,046 - 3,128,104 3,047,285 (3,270) (15,834) (13,364) 9,849 (209,451) (688,323) (681,707) 66,230 (1,855,522) 179,164 21,020 15,834 13,364 - 209,451 949,415 908,609 6,143 3,551,390 3,372,226 $ 17,750 $ - $ - $ 9,849 $ - $ 261,092 $ 226,902 $ 72,373 $ 1,695,868 $ 3,551,390 99 NONMAJOR CAPITAL PROJECT FUNDS The City of Andover had the following Capital Projects Funds during the year: Storm Sewer Project - This fund was established to account for storm sewer fees and improvements as part of development and ongoing maintenance. Park Dedication - This fund was established to account for contributions associated with land development to be 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. Equipment Certificates 2008A - This fund was established to account for the purchase of capital equipment that was financed through the issuance of capital notes. Equipment Certificates 2009A - This fund was established to account for the purchase of capital equipment that was financed through the issuance of capital notes. Open Space Referendum Bonds 2010A - This fund was established to account for the purchase of various land acquisitions for open space preservation within the City. 100 CITY OF ANDOVER, MINNESOTA SUBCOMBINING BALANCE SHEET NONMAJOR CAPITAL PROJECTS FUNDS December 31, 2010 Comparative Totals For December 31, 2009 Statement 18 Open Space Storm Referendum Totals Sewer Park Building Bonds Nonmajor Capital Projects Funds Project Dedication Fund 2010A 2010 2009 Assets: Cash and investments $ 858 $ 143,611 $ 26,895 $ 738,402 $ 909,766 $ 497,300 Accrued interest - 958 281 3,176 4,415 1,770 Property taxes receivable: Unremitted - 454 - - 454 488 Delinquent - 1,908 - - 1,908 1,581 Total assets 858 146,931 27,176 741,578 916,543 501,139 Liabilities and Fund Balance Liabilities: Interfund payables 62,000 - - - 62,000 676,000 Accounts payable - (2,538) 37 - (2,501) 2,040 Contracts payable - 6,059 381 - 6,440 - Deferred revenue - 1,908 - - 1,908 1,581 Total liabilities 62,000 5,429 418 - 67,847 679,621 Fund balance (deficit): Reserved for projects - - - 741,578 741,578 401,701 Unreserved: Designated for projects - 141,502 26,758 - 168,260 89,340 Undesignated (61,142) - - - (61,142) (669,523) Total fund balance (deficit) (61,142) 141,502 26,758 741,578 848,696 (178,482) Total liabilities and fund balance $ 858 $ 146,931 $ 27,176 $ 741,578 $ 916,543 $ 501,139 101 CITY OF ANDOVER, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR CAPITAL PROJECTS FUNDS For The Year Ended December 31, 2010 With Comparative Totals For The Year Ended December 31, 2009 102 Storm Equipment Sewer Park Building Certificates Proj ect Dedication Fund 2008 Revenues: General property taxes $ - $ 55,824 $ - $ - Intergovernmental - - - - Investment income (1,165) 7,785 (283) (176) Miscellaneous: Park dedication fees - 32,649 - - Other - 105,283 5,300 - Total revenues (1,165) 201,541 5,017 (176) Expenditures: Current: General government - - 1,930 - Public safety - - - - Public works - - 1,763 - Parks and recreation - 692,170 13,507 - Capital outlay: General government - - 108,387 - Public safety - - - 9,408 Public works - - - - Parks and recreation - 341,581 2,157 - Total expenditures - 1,033,751 127,744 9,408 Revenues over (under) expenditures (1,165) (832,210) (122,727) (9,584) Other financing sources (uses): Transfers in - 960,726 73,131 - Bonds issued - - - - Bond premium - - - - Total other financing sources (uses) - 960,726 73,131 - Net increase (decrease) in fund balance (1,165) 128,516 (49,596) (9,584) Fund balance (deficit) - January 1 (59,977) 12,986 76,354 9,584 Fund balance (deficit) - December 31 $ (61,142) $ 141,502 $ 26,758 $ - 102 Open Space Equipment Referendum Certificates Bonds Statement 19 Totals Nonmaj or Capital Projects Funds $ 5 5, 824 $ 55,742 - - 9,766 (5,234) 28,029 28,956 7,429 - 32,649 41,216 - 110,583 28,595 (5,234) 28,029 228,012 142,748 1,930 22,183 - 10, 004 1,763 1,093 18,760 724,437 131,385 - - 108,387 35,640 38603 - 396,291 299,319 - - - 138,766 - 322,628 666,366 982,234 38603 341,388 1,899,174 1,620,624 (392,117) (313,359) (1,671J62) (1,477,876) - - 1,033,857 336,249 - 1,66000 1,66000 38500 - 4,483 4,483 4,139 - 1,664,483 2,698,340 725,388 (392,117) L351 J24 1,027,178 (752,488) 3 92, 117 (609,546) (178,482) 57406 $ - $ 741,578 $ 848,696 $ (178,482) 103 CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - EDA GENERAL SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 Revenues: Charges for services Investment income Miscellaneous Total revenues Expenditures: Current: Economic development Net increase (decrease) in fund balance Fund balance (deficit) - January 1 Fund balance (deficit) - December 31 Statement 20 104 Variance with Final Budget - Budgeted Amounts Positive 2009 Original Final Actual (Negative) Actual $ 18000 $ 18000 $ 199,403 $ 19,403 $ 181,416 600 600 9,300 3,300 9,486 - - 546 546 2,487 18600 18600 209,249 23,249 193,389 171,075 173,135 143,243 29,892 122,211 $ 14,925 $ 12,865 6606 $ 53,141 71,178 400,830 329,652 $ 466,836 $ 400,830 104 CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - COMMUNITY DEVELOPMENT BLOCK GRANT SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 Revenues: Intergovernmental Investment income Miscellaneous Total revenues Expenditures: Current: Economic development Net increase (decrease) in fund balance Fund balance (deficit) - January 1 Fund balance (deficit) - December 31 Statement 21 Variance with Final Budget - Budgeted Amounts Positive 2009 Original Final Actual (Negative) Actual $ 2500 $ 2500 $ - $ (25,000) $ - 100 100 91 (9) 243 400 400 5,932 1,932 7,475 29,100 29,100 6,023 (23,077) 7,718 2500 2500 9,068 15,932 $ 400 $ 400 (3,045) $ (7,145) 105 9,828 $ 6,783 7,568 2,260 $ 9,828 CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - COMMUNITY CENTER SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 Revenues: Charges for services Investment income Miscellaneous: Rent Other Total revenues Expenditures: Current: Parks and recreation Revenue over (under) expenditures Other financing sources (uses) Transfers out Net increase (decrease) in fund balance Fund balance (deficit) - January 1 Fund balance (deficit) - December 31 Statement 22 Variance with Final Budget - Budgeted Amounts Positive 2009 Original Final Actual (Negative) Actual $ 609,500 $ 609,500 $ 57101 $ (37,699) $ 610,099 - - (8,255) (8,255) (11,595) 63500 63500 638,037 3,037 637,305 174,400 174,400 149,486 (24,914) 18605 1,418,900 1,418,900 1,351,069 (67,831) 1,422,614 988,032 992,400 882,364 110,036 903,446 430,868 426,500 468,705 42,205 519,168 (401,481) (401,481) (401,481) - (353,892) $ 29,387 $ 25,019 67,224 $ 42,205 165,276 106 (419,239) $ (352,015) (584,515) $ (419,239) CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - DRAINAGE AND MAPPING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 Statement 23 107 Variance with Final Budget - Budgeted Amounts Positive 2009 Original Final Actual (Negative) Actual Revenues: Charges for services $ 900 $ 9,000 $ 8,770 $ (230) $ 12,226 Investment income 100 100 1,891 291 2,102 Total Revenues 1000 1000 1061 61 14,328 Expenditures: Current: Public works 13,500 13,500 5,653 7,847 5,827 Net increase (decrease) in fund balance $ (2,900) $ (2,900) 508 $ 7,908 8,501 Fund balance (deficit) - January 1 87,546 79,045 Fund balance (deficit) - December 31 $ 92,554 $ 87,546 107 CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - LRRWMO SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 Statement 24 Variance with Final Budget - Budgeted Amounts Positive 2009 Original Final Actual (Negative) Actual Revenues: General property taxes $ 3500 $ 3500 $ 33,244 $ (1,756) $ 33,421 Intergovernmental - - - - 170 Investment income 300 300 125 (175) 395 Total revenues 35,300 35,300 33,369 (1,931) 33,986 Expenditures: Current: Public works 31,622 32,066 3900 (6,934) 33,627 Net increase (decrease) in fund balance $ 3,678 $ 3,234 (5,631) $ (8,865) 359 Fund balance (deficit) - January 1 18,312 17,953 Fund balance (deficit) - December 31 $ 1201 $ 18,312 108 CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - FORESTRY SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 Statement 25 Variance with Final Budget - Budgeted Amounts Positive 2009 Original Final Actual (Negative) Actual Revenues: Intergovernmental $ 12,500 $ 12,500 $ - $ (12,500) $ 200 Investment income 100 100 51 (49) 271 Miscellaneous - - 9,756 9,756 9,729 Total revenues 1200 1200 907 (2,793) 1200 Expenditures: Current: Public works 1400 1400 9,893 4,107 12,488 Net increase (decrease) in fund balance $ (1,400) $ (1,400) (86) $ 1,314 (488) Fund balance (deficit) - January 1 5,830 6,318 Fund balance (deficit) - December 31 $ 5,744 $ 5,830 109 CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - TRAIL AND TRANSPORTATION SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 110 Statement 26 2009 $ 9,514 1,798 11,312 54,864 $ 66,176 Variance with Final Budget - Budgeted Amounts Positive Original Final Actual (Negative) Revenues: Charges for services $ 16,775 $ 16,775 $ 4,016 $ (12,759) Investment income 1,250 1,250 1,355 105 Net increase (decrease) in fund balance $ 18,025 $ 18,025 5,371 $ (12,654) Fund balance (deficit) - January 1 66,176 Fund balance (deficit) - December 31 $ 71,547 110 Statement 26 2009 $ 9,514 1,798 11,312 54,864 $ 66,176 CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - RIGHT -OF -WAY MANAGEMENPUTILITY Statement 27 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 ME Variance with Final Budget - Budgeted Amounts Positive 2009 Original Final Actual (Negative) Actual Revenues: Charges for services $ 3000 $ 3000 $ 19,131 $ (10,869) $ 1078 Investment income 2,500 2,500 765 (1,735) 1,983 Total revenues 32,500 32,500 19,896 (12,604) 1201 Expenditures: Current: Public works 63,180 64,265 50,865 13,400 62,298 Revenue over (under) expenditures (30,680) (31,765) (30,969) 796 (49,637) Other financing sources (uses): Transfers out - - - - (9,400) Net increase (decrease) in fund balance $ (30,680) $ (31,765) (30,969) $ 796 (59,037) Fund balance (deficit) - January 1 88,277 147,314 Fund balance (deficit) - December 31 $ 57,308 $ 88,277 ME CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - CAPITAL EQUIPMENT RESERVE SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 Statement 28 112 Variance with Final Budget - Budgeted Amounts Positive 2009 Original Final Actual (Negative) Actual Revenues: General property taxes $ 21000 $ 21000 $ 19500 $ (14,200) $ 19032 Intergovernmental - - - - 1,024 Investment income 1500 1500 19,915 4,915 21,101 Miscellaneous - - 208 208 39 Total revenues 22500 22500 218,383 (6,617) 220,796 Expenditures: Current: General government 3300 3300 16,612 16,388 38,772 Public works - - - - 1051 Parks and recreation - - - - 20,658 Capital outlay: General government - 5500 5500 - - Public safety 22500 148,500 38,812 10908 - Parks and recreation 53,500 6500 5809 6,191 24,236 Total expenditures 311,500 301,500 169,233 132,267 94,317 Revenues over (under) expenditures (86,500) (76,500) 49,150 125,650 126,479 Other financing sources (uses): Transfers out (242,000) (242,000) (242,000) - - Proceeds from the sale of capital assets - - 27,717 27,717 12,267 Total other finance sources (uses) (242,000) (242,000) (214,283) 27,717 12,267 Net increase (decrease) in fund balance $ (328,500) $ (318,500) (165,133) $ 153,367 138,746 Fund balance (deficit) - January 1 1,009,872 871,129 Fund balance (deficit) - December 31 $ 844,739 $ 1,009,875 112 CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - CHARITABLE GAMBLING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 Revenues: Investment income Miscellaneous Total revenues Expenditures: Current: General government Net increase (decrease) in fund balance Fund balance (deficit) - January 1 Fund balance (deficit) - December 31 Statement 29 Variance with Final Budget - Budgeted Amounts Positive 2009 Original Final Actual (Negative) Actual $ 200 $ 200 $ (79) $ (279) $ 236 1000 1000 9,439 (561) 9,268 10,200 10,200 9,360 (840) 9,504 18,500 18,500 12,384 6,116 20,340 $ (8,300) $ (8,300) (3,024) $ 5,276 (10,836) 113 5,601 $ 2,577 16,437 $ 5,601 CITY OF ANDOVER, MINNESOTA SPECIAL REVENUE FUND - CONSTRUCTION SEAL COATING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 Statement 30 Variance with Final Budget - Budgeted Amounts Positive 2009 Original Final Actual (Negative) Actual Revenues: Charges for services $ 8600 $ 8600 $ 46,376 $ (39,624) $ 54,437 Investment income 500 500 (380) (880) (344) Total revenues 86,500 86,500 45,996 (40,504) 54,093 Expenditures: Current: Public works 8600 8600 54,182 31,818 62,920 Net increase (decrease) in fund balance $ 500 $ 500 (8,186) $ (8,686) (8,827) Fund balance (deficit) - January 1 9,181 1808 Fund balance (deficit) - December 31 $ 995 $ 9,181 114 INTERNAL SERVICE FUNDS Internal Service Funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the government and to other government units, on a cost reimbursement basis. The City of Andover had the following Internal Service Funds during the year: Central Equipment Maintenance — This fund accounts for the maintenance of the equipment for the City. Risk Mann eg ment — This fund accounts for the expenditures in payment of insurance deductibles, loss reduction, safety training and administrative expense. 115 CITY OF ANDOVER, MINNESOTA COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS December 31, 2010 With Comparative Totals for December 31, 2009 Central Equipment Risk Maintenance Management Statement 31 Totals 2010 2009 Assets: Current assets: Cash and cash equivalents $ 164,734 $ 205,975 $ 370,709 $ 242,533 Accrued interest 821 643 1,464 817 Prepaid items 1,750 - 1,750 1,750 Inventories - at cost 8100 - 8100 63,065 Total assets 248,305 206,618 454,923 308,165 Liabilities: Current liabilities: Accounts payable 26,677 705 27,382 1506 Due to other governmental units - 5,483 5,483 2,855 Salaries payable 7,768 475 8,243 6,309 Total liabilities 34,445 603 41,108 24,830 Net assets: Unrestricted $ 213,860 $ 199,955 $ 413,815 $ 283,335 116 CITY OF ANDOVER, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS INTERNAL SERVICE FUNDS For The Year Ended December 31, 2010 With Comparative Totals For The Year Ended December 31, 2009 Central Equipment Risk Maintenance Management Operating revenues: Statement 32 Totals 2010 2009 User charges $ 679,226 $ 325,221 $ 1,004,447 $ 961,722 Other 425 33,102 33,527 34,933 Total operating revenues 679,651 358,323 1,037,974 996,655 Operating expenses: Personal services 215,429 146,010 361,439 325,777 Supplies 242,894 1,775 24409 244,820 Other service charges 98,551 209,951 308,502 284,772 Total operating expenses 556,874 357,736 914,610 855,369 Operating income (loss) 122,777 587 123,364 141,286 Nonoperating revenues (expenses): Investment income 5,176 1,940 7,116 2,824 Change in net assets 127,953 2,527 130,480 144,110 Net assets - January 1 85,907 197,428 283,335 139,225 Net assets - December 31 $ 213,860 $ 199,955 $ 413,815 $ 283,335 117 CITY OF ANDOVER, MINNESOTA COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For The Year Ended December 31, 2010 With Comparative Totals For The Year Ended December 31, 2009 Cash flows from operating activities: Receipts from customers and users Payment to suppliers Payment to employees Net cash flows from operating activities Cash flows from noncapital financing activities: Receipt of advances from other funds Payment of advances to other funds Net cash flows from noncapital financing activities Cash flows from investing activities: Investment income Net increase in cash and cash equivalents Cash and cash equivalents - January 1 Cash and cash equivalents - December 31 Reconciliation of operating income to net cash provided (used) by operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Changes in assets and liabilities: Decrease (increase) in inventory Increase (decrease) in accounts payable Increase (decrease) in due to other governmental units Increase (decrease) in salaries payable Total adjustments Net cash provided by operating activities Statement 33 Central - (17,935) 2,385 Equipment Risk Totals Maintenance Management 2010 2009 2,755 $ 679,651 $ 358,323 $ 1,037,974 $ 996,655 (347,248) (209,514) (556,762) (531,046) (213,565) (145,940) (359,505) (325,606) 118,838 2,869 121,707 14003 - - - (60,000) - - - 6000 400 1,869 6,469 3,120 123,438 4,738 128,176 143,123 41,296 201,237 242,533 99,410 $ 164,734 $ 205,975 $ 370,709 $ 242,533 $ 122,777 $ 587 $ 123,364 $ 141,286 (17,935) - (17,935) 2,385 12,132 (416) 11,716 (6,594) - 2,628 2,628 2,755 1,864 70 1,934 171 (3,939) 2,282 (1,657) (1,283) $ 118,838 $ 2,869 $ 121,707 $ 14003 118 AGENCY FUND S 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. 119 CITY OF ANDOVER, MINNESOTA COMBINING STATEMENT OF NET ASSETS FIDUCIARY FUNDS December 31, 2010 Assets: Cash and investments Liabilities: Accounts payable Due to other governments Deposits payable Total liabilities General General Escrow Agency $ 9,013 $ 286,191 110 8,903 $ 9,013 120 265 46 285,880 $ 286,191 Statement 34 $ 295,204 375 46 294,783 $ 295,204 CITY OF ANDOVER, MINNESOTA COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FIDUCIARY FUNDS For The Year Ended December 31, 2010 Statement 35 General Agency Balance Balance January 1, Assets: December 31, 2010 Additions Deletions 2010 General Escrow Fund Cash and investments $ 233,423 $ Assets: $ (1,013,515) $ 286,191 Liabilities: Cash and investments $ 16,498 $ 3202 $ (40,167) $ 9,013 Liabilities: Accounts payable - Accounts payable 131 20,995 (21,016) 110 Deposits payable 16,367 1107 (19,151) 8,903 Total liabilities $ 16,498 $ 3202 $ (40,167) $ 9,013 General Agency Assets: Cash and investments $ 233,423 $ 1,066,283 $ (1,013,515) $ 286,191 Liabilities: Accounts payable - 450,450 (450,185) 265 Due to other governments - 46 - 46 Deposits payable 233,423 615,787 (563,330) 28500 Total liabilities $ 233,423 $ 1,066,283 $ (1,013,515) $ 286,191 Total Fiduciary Funds Assets: Cash and investments $ 249,921 $ 1,098,965 $ (1,053,682) $ 295,204 Liabilities: Accounts payable 131 471,445 (471,201) 375 Due to other governments - 46 - 46 Deposits payable 249,790 627,474 (582,481) 294,783 Total liabilities $ 249,921 $ 1,098,965 $ (1,053,682) $ 295,204 121 - This page intentionally left blank - 122 OTHER FINANCIAL INFORMATION 123 CITY OF ANDOVER, MINNESOTA COMBINED SCHEDULE OF INDEBTEDNESS December 31, 2010 124 Authorized Issue Maturity Interest and Date Date Rate Issue GOVERNMENTAL ACTIVITIES: Revenue Bonds: 2004 EDA Pub Fac Lease Revenue Bonds 4/23/2004 2/1/2014 2.215 - 5.400% $ 19,58000 2006 EDA Pub Fac Lease Revenue Refunding Bonds 12/1/2006 2/1/2034 4.00 -4.50% 100000 2007 EDA Pub Fac Lease Revenue Refunding Bonds 1/1/2007 2/1/2034 4.00 -4.50% 6,86500 Total revenue bonds 36,44500 Special Assessment Bonds: 2005A G.O. Improvement Bonds 4/28/2005 2/1/2011 2.95 -3.65% 3,56000 Tax Increment Bonds: 2003B G.O. Tax Increment Refunding Bonds 6/1/2003 8/1/2010 2.00 -3.00% 1,53000 2004B G.O. Tax Increment Refunding Bonds 3/16/2004 2/1/2011 2.00 -3.25% 4,26000 Total tax increment bonds 5,79000 Certificates of Indebtedness: 2006B G.O. Equipment Certificates 5/10/2006 2/1/2010 3.60 -3.65% 46000 2007A G.O. Equipment Certificates 3/13/2007 2/1/2011 4.00% 76000 2008A G.O. Equipment Certificates 9/23/2008 2/1/2012 3.50% 63000 2009A G.O. Equipment Certificates 3/26/2009 2/1/2012 2.00 -2.25% 38500 Total certificates of indebtedness 2,23500 Capital Improvement Bonds: 2004A G.O. Capital Improvement Bonds 3/16/2004 2/1/2017 2.00 -3.75% 3,89000 Permanent Improvement Revolving Bonds: 2003A Permanent Improvement Revolving Bonds 6/1/2003 2/1/2010 2.00 -2.60% 4,58000 2006A Permanent Improvement Revolving Bonds 5/10/2006 2/1/2014 3.60 -3.85% 2,45000 2010A Permanent Improvement Revolving Refunding Bonds 2/18/2010 2/1/2014 2.00% 1,48000 Total permanent improvement revolving bonds 8,51000 State Aid Bonds: 2001B State Aid Street Bonds 6/5/2001 2/1/2010 2.90 -5.00% 2,75500 2009A State Aid Street Refunding Bonds 3/26/2009 2/1/2015 2.25 -2.80% 95500 Total state aid bonds: 3,71000 Referendum Bonds: 2010A G.O. Open Space Referendum Bonds 2/18/2010 2/1/2022 2.00 - 3.125% 10000 Total bonded indebtedness 650000 Compensated absences payable - Total governmental activities indebtedness 650000 BUSINESS -TYPE ACTIVITIES: General Obligation Revenue Bonds: 2002 G.O. Water Revenue Bonds 5/9/2002 8/1/2012 2.30 -5.00% 9,78000 2007B G.O. Water Revenue Refunding Bonds 3/13/2007 2/1/2023 4.00 -4.25% 6,57000 2009A G.O. Water Revenue Bonds 3/26/2009 2/1/2024 2.00 -4.25% 1,02500 Total general obligation revenue bonds 17,37500 Compensated absences payable - Total business -type activities indebtedness 17,37500 Total City indebtedness $ 83,17500 124 Exhibit 1 Principal Payments Prior Current Outstanding 2011 Payment Years Year 12/31/10 Principal Interest Total $ 95000 $ 40500 $ 18,22500 $ 41500 $ 914,891 $ 1,329,891 - - 100000 - 424,227 424,227 K Qtic Ann 101 OQI 101 OQI 1,110,000 1,85000 600,000 60000 10,200 610,200 1,28000 25000 - - - - i nnc Ann cIA Ann i '71,Z nnn i '71,Z nnn IK 7tiI) 1 '7K 1 '7 K) 30000 16000 - - - - 36500 19500 20000 20000 400 20400 15000 15400 32600 16000 010 168,610 - 13000 25500 12500 4,331 129,331 81500 63900 781,000 48500 16,941 501,941 1,115,000 28000 2,49500 29500 80,142 375,142 3,76000 82000 - - - - 63500 1,81500 - - - - - - 1,48000 35500 26,050 381,050 4,39500 2,63500 1,48000 35500 26,050 381,050 1,15500 1,60000 - - - - - - 95500 21500 2109 23609 2,04500 39500 7,34000 41500 342,507 757,507 K can nnn IKK i AK IKK i AK - 132,544 - - - 2,04500 45500 1507,544 47500 640,035 1,115,035 $ 14,86000 $ 04400 $ 60,375,441 $ 4,57500 $ 2,49304 $ 7,06804 125 CITY OF ANDOVER, MINNESOTA SCHEDULE OF TAX CAPACITY RATES AND LEVIES Exhibit 2 126 Taxes Payable 2011 2010 Tax capacity values $ 26,225,722 $ 28,726,619 Captured tax increment value (2,059,476) (2,284,466) Fiscal disparities - contribution (1,229,714) (1,179,032) Local taxable value 22,936,532 25,263,121 Fiscal disparities - distribution 5,153,518 4,713,020 Adjusted tax capacity $ 28,090,050 $ 29,976,141 2011 2010 Certified Tax Capacity Certified Tax Capacity Levy Rate Levy Rate General Revenue Levy: General Fund $ 7,50002 $ 7,596,494 Capital Equipment/Projects 21000 21000 Parks Projects 61,500 5%410 Road and Bridge 1,064,959 1,003,056 Pedestrian Trail Maintenance 54,926 51,773 Total General Revenue Levy 8,892,187 31.914% 8,920,733 30.507% Debt Service Levy: 2004A G.O. Capital Improvement Bonds 412,320 368,418 2004 EDA Public Facility Revenue Bonds 960,858 934,203 2007A G.O. Equipment Certificate - 20800 2008A G.O. Equipment Certificate 188,972 171,410 2009A G.O. Equipment Certificate 142,783 130,738 2011 G.O. Equipment Certificate 8500 - Total Debt Service Levy 1,789,933 6.461% 1,812,769 5.977% Lower Rum River Watershed 3500 0.356% 3500 0.330% Total 10,717,120 38.731% 10,768,502 36.814% Voter - Approved Open Space Referendum - MV 139,179 0.00567% 87,797 0.00307% $ 10,856,299 $ 10,856,299 126 CITY OF ANDOVER, MINNESOTA SCHEDULE OF DEFERRED TAX LEVIES GENERAL OBLIGATION BONDS December 31, 2010 Exhibit 3 127 Tax Increment Taxes Bonds Certificates of Indebtedness Payable 2004B 2008A 2009A Total 2011 $ 1,761,762 $ 168,905 $ 131,463 $ 300,368 Capital EDA Public Facility Lease Open Space Improvement Revenue Refunding Refunding Referendum Total Taxes Bonds Bonds Bonds Bonds Bonds Deferred Tax Payable 2004A of 2004 of 2006 of 2007 Total 2010A Levies 2011 $ 375,143 $ 694,891 $ - $ - $ 694,891 $ 41,565 $ 3,173,729 2012 385,993 697,456 - - 697,456 175,215 $ 1,25804 2013 390,905 693,534 - - 693,534 172,515 $ 1,256,954 2014 404,596 269,373 212,114 145,991 627,478 174,765 $ 1,206,839 2015 41700 - 371,528 258,483 630,011 176,915 $ 1,223,926 2016 423,050 - 372,828 259,283 632,111 173,942 $ 1,229,103 2017 427,875 - 369,589 260,323 629,912 175,657 $ 1,233,444 2018 - - 369,064 259,773 628,837 176,841 $ 805,678 2019 - - 368,628 264,183 632,811 177,507 $ 810,318 2020 - - 372,525 258,214 630,739 172,827 $ 803,566 2021 - - 366,328 262,249 628,577 172,870 $ 801,447 2022 - - 369,921 256,145 626,066 172,656 $ 798,722 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 26109 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 62105 - $ 62105 2032 - - 362,592 258,641 621,233 - $ 621,233 2033 - - 362,313 26207 624,980 - $ 624,980 2034 - - 56300 391,111 954,771 287,567 $ 1,242,338 $ 2,824,562 $ 2,355,254 $ 7,736,359 $ 5,484,018 $15,575,631 $ 2,250,842 $ 22,713,165 127 CITY OF ANDOVER, MINNESOTA SCHEDULE OF FUND TRANSFERS December 31, 2010 General Fund Lsewer ht Total General Fund Special Revenue Funds (SRF) Community Center SRF 2004 EDA Public Facility Lease Revenue Bond DSF Capital Equipment Reserve SRF Water Trunk CPF Total Special Revenue Funds Debt Service Funds (DSF) 2001B State Aid Bonds DSF Road and Bridge CPF 2003A PIR Bonds DSF PIR CPF 2003B G.O. TIF Refunding Bonds DSF TIF Projects CPF 2004 EDA Public Facility Lease Revenue Bonds DSF Community Center SRF 2004B G.O. TIF Refunding Bonds DSF TIF Projects CPF 2005A G.O. Improvement Bonds DSF TIF Projects CPF 2006A PIR Bonds DSF PIR CPF 2006B G.O. Capital Note DSF Building CPF 2010A PIR Refunding Bonds DSF PIR CPF Total Debt Service Funds Capital Projects Funds (CPF) Water Trunk CPF Capital Equipment Reserve SRF Water EF Sewer Trunk CPF Sewer EF Road and Bridge CPF Transfer Transfer In Out $ 150,250 $ - 4600 - 196,930 - Exhibit 4 General Fund Admin Allocation General Fund Admin Allocation - 401,481 Debt Service Allocation - 24200 Water Tower Rehabilitation - 643,481 498,117 Debt Service Allocation 814,826 - Debt Service Allocation 244,770 - Debt Service Allocation 401,481 - Debt Service Allocation 58500 - Debt Service Allocation 1,191,046 - Debt Service Allocation 355,624 - Debt Service Allocation - 73,131 Close Debt Service Fund 2000 - Debt Service Allocation 491109864 739131 24200 - Water Tower Rehabilitation - 89,191 Debt Service Allocation 24200 89,191 40000 - Replacement Reserve - 130,439 Project Reimbursement $ 40000 $ 130,439 128 CITY OF ANDOVER, MINNESOTA SCHEDULE OF FUND TRANSFERS December 31, 2010 Capital Projects Funds (CPF) (continued) Road and Bridge CPF Sewer Trunk CPF TIF Projects CPF 2001B State Aid Bonds DSF Park Dedication CPF TIF Projects CPF Building CPF 2006B G.O. Capital Note DSF TIF Projects CPF 2003B G.O. TIF Refunding Bonds DSF 2004B G.O. TIF Refunding Bonds DSF 2005A G.O. Improvement Bonds DSF Road and Bridge CPF Park Dedication CPF PIR CPF 2003A PIR DSF 2006A PIR DSF 2010A PIR Refunding Bonds DSF Total Capital Projects Funds Enterprise Funds Water EF Water Trunk CPF General Fund Sewer EF General Fund Sewer Trunk CPF Total Enterprise Funds Total All Funds $ 130,439 $ 124,238 - - 498,117 254,677 498,117 960,726 - 73,131 - 244,770 585,000 1,191,046 124,238 960,726 3,105,780 814,826 355,624 2000 1,190,450 199309534 590139977 89,191 - - 150,250 89,191 150,250 - 46,680 400,000 - 446,680 899191 5969930 $ 693279519 $ 693279519 129 Exhibit 4 (Continued) Project Reimbursement Project Reimbursement Debt Service Allocation Special Assessment Payoff Close Debt Service Fund Debt Service Allocation Debt Service Allocation Debt Service Allocation Project Reimbursement Special Assessment Payoff Debt Service Allocation Debt Service Allocation Debt Service Allocation Debt Service Allocation General Fund Admin Allocation General Fund Admin Allocation Replacement Reserve - This page intentionally left blank - 130 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 Pie Financial Trends 132 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 137 These tables contain information to help the reader assess the City's most significant local revenue source, the property tax. Debt Capacity 143 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 148 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 150 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. 131 CITY OF ANDOVER, MINNESOTA NET ASSETS BY COMPONENT Last Five Fiscal Years (accrual basis of accounting) Table 1 Governmental Activities 113,278,061 115,866,535 117,250,821 120,334,834 123,346,657 Invested in capital assets, net of related debt $ 74,858,759 $ 77,285,905 $ 79,644,769 $ 83,394,872 $ 87,20607 Restricted 5,441,376 7,763,716 8,345,185 8,252,691 6,364,714 Unrestricted 18,461,454 21,294,876 19,904,063 19,44208 21,071,212 Total governmental activities net assets 98,761,589 106,344,497 107,894,017 111,089,571 114,642,533 Business -Type Activities Invested in capital assets, net of related debt 38,419,302 38,580,630 3706,052 36,939,962 36,140,050 Unrestricted 3,281,875 3,65907 405,471 4,875,384 4,912,822 Total business -type activities net assets 41,701,177 42,240,517 41,611,523 41,815,346 41,052,872 Primary Government Invested in capital assets, net of related debt 113,278,061 115,866,535 117,250,821 120,334,834 123,346,657 Restricted 5,441,376 7,763,716 8,345,185 8,252,691 6,364,714 Unrestricted 21,743,329 24,954,763 23,909,534 24,317,392 25,984,034 Total primary government net assets $ 140,462,766 $ 148,585,014 $ 149,505,540 $ 152,904,917 $ 155,695,405 Note: The City began to report accrual information when it implemented GASB 34 in 2002. 132 CITY OF ANDOVER, MINNESOTA CHANGES IN NET ASSETS Last Five Fiscal Years (accrual basis of accounting) Expenses Governmental activities: General government Public safety Public works Parks and recreation Recycling Economic development Interest on long -term debt Total governmental activities expenses Business -type activities: Water Sewer Storm sewer Total business -type activities expenses Total primary government expenses Program Revenues Governmental activities: Charges for services: General government Public safety Public works Parks and recreation Recycling Economic development Operating grants and contributions Capital grants and contributions Table 2 $ 2,637,584 $ 2,509,011 $ 2,505,105 $ 2,413,916 $ 2,39807 3,443,285 3,85106 4,03504 4,237,401 4,157,050 3,031,459 3,783,509 5,144,197 3,776,367 3,445,403 2,442,305 2,954,753 2,963,218 200,595 3,447,730 91,378 94,929 85,397 86,949 108,785 626,103 2,26505 540,285 481,632 654,961 108,444 2,303,567 2,219,130 2,146,960 1,936,731 13,940,558 17,762,460 17,493,216 16,023,820 16,148,667 - 9,380 Capital grants and contributions 2,761,282 158,113 2,232,144 2,587,847 2,563,781 2,594,713 2,585,469 1,585,548 1,631,224 1,794,891 1,831,505 1,915,072 40803 537,151 521,975 536,619 532,168 4,225,695 4,756,222 40047 4,962,837 5,032,709 18,166,253 22,51802 22,373,863 20,986,657 21,181,376 471,573 78500 64701 483,639 454,419 804,447 662,299 721,289 412,113 479,516 325,672 408,656 427,043 316,451 337,360 749,407 859,531 1,049,032 1,495,779 1,432,672 35,379 33,158 35,897 29,479 40,504 21805 182,535 199,840 185,539 211,121 959,286 1,129,099 917,618 966,635 1,214,066 4,920,694 8,794,164 1,069,607 1,631,929 1,461,834 Total governmental activities program revenue 8,485,063 12,855,042 5,067,407 5,521,564 5,631,492 Business -type activities: Charges for services: Water 1,768,388 2,025,452 1,987,432 2,127,676 2,077,305 Sewer 1,691,728 1,771,670 1,869,327 1,967,997 1,964,117 Storm sewer 287,397 288,372 297,125 325,392 338,823 Operating grants and contributions - - - - 9,380 Capital grants and contributions 2,761,282 158,113 142,133 793,589 - Total business -type activities program revenue 6,508,795 4,24307 4,296,017 5,214,654 4,389,625 Total primary government program revenues 14,993,858 17,09049 9,363,424 10,736,218 10,021,117 Net (Expense)/Revenue Governmental activities (5,455,495) (4,907,418) (12,425,809) (10,502,256) (10,517,175) Business -type activities 2,283,100 (512,615) (584,630) 251,817 (643,084) Total primary government net expense $ (3,172,395) $ (5,420,033) $ (13,010,439) $ (10,250,439) $ (11,160,259) 133 CITY OF ANDOVER, MINNESOTA CHANGES IN NET ASSETS Last Five Fiscal Years (accrual basis of accounting) General Revenues and Other Changes in Net Assets Governmental activities: Taxes: General property taxes Tax increment collections Unrestricted grants and contributions Unrestricted investment earnings Gain on sale of capital assets Transfers Total governmental activities Business -type activities: Unrestricted investment earnings Gain on sale of capital assets Transfers Total business -type activities Total primary government Change in Net Assets Governmental activities Business -type activities Total primary government Table 2 (Continued) $ 804,559 $ 8,897,755 $ 9,752,701 $ 10,175,519 $ 10,336,536 1,562,131 101,204 1,783,270 1,93009 2,074,589 77,642 486,626 274,402 13104 84,875 1,019,304 1,967,583 1,514,012 1,032,507 1,114,451 219,910 191,735 234,070 6,144 22,500 (704,042) (714,577) 416,874 42107 437,186 10,259,504 12,490,326 13,975,329 13,697,810 14,070,137 87,376 337,378 372,510 373,893 317,796 5,900 - - - - 704M42 714,577 (416,874) (421,887) (437,186) 797,318 1,051,955 (44,364) (47,994) (119,390) 11,056,822 13,542,281 13,930,965 13,649,816 13,950,747 40409 7,582,908 1,549,520 3,195,554 3,552,962 3,080,418 539,340 (628,994) 203,823 (762,474) $ 704,427 $ 8,122,248 $ 920,526 $ 3,399,377 $ 2,790,488 Note: The City began to report accrual information when it implemented GASB 34 in 2002. 134 CITY OF ANDOVER, MINNESOTA FUND BALANCES - GOVERNMENTAL FUNDS Last Five Fiscal Years (modified accrual basis of accounting) Table 3 135 2006 2007 2008 2009 2010 General Fund Reserved $ 144,496 $ 208,216 $ 193,805 $ 207,515 $ 206,666 Unreserved 3,248,317 3,682,244 3,981,230 4,120,897 4,904,239 Total general fund 3,392,813 3,890,460 4,175,035 4,328,412 5,110,905 All Other Governmental Funds Reserved for: Special revenue funds 46,849 12,457 17,206 23,696 22,987 Debt service funds 11,342,527 (1) 21,359,062 20,132,603 20,305,482 18,443,082 Capital project funds 633,078 735,141 604,494 427,017 792,421 Unreserved reported in: Designated: Special revenue funds 1,569,792 1,685,045 1,540,720 1,691,625 1,554,981 Capital project funds 14,433,934 12,011,083 13,483,426 14,839,789 14,775,282 Undesignated: Special revenue funds (323,404) (480,592) (599,461) (458,423) (419,062) Capital project funds (54,174) (55,945) (67,297) (669,523) (61,142) Total all other governmental funds 27,648,602 35,266,251 35,111,691 36,159,663 35,108,549 Total governmental funds $ 31,041,415 $ 39,156,711 $ 39,286,726 $ 40,488,075 $ 40,219,454 Note. (1) In 2006, the EDA issued $10,000,000 of Public Facility Lease Revenue Refunding Bonds to refund a portion of the 2004 EDA's $19,580,000 Public Facility Lease Revenue Bonds, Series 2004. (2) In 2007, the EDA issued $6,865,000 of Public Facility Lease Revenue Refunding Bonds to refund a portion of the 2004 EDA's $19,580,000 Public Facility Lease Revenue Bonds, Series 2004. 135 CITY OF ANDOVER, MINNESOTA CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS Last Five Fiscal Years (modified accrual basis of accounting) Table 4 2006 2007 2008 2009 2010 Revenues General property taxes $ 8,057,592 $ 8,833,249 $ 9,695,103 $ 10,168,143 $ 10,26705 Tax increment collections 1,546,394 1,659,222 1,762,119 1,951,343 2,015,123 Licenses and permits 598,094 475,893 525,339 291,903 329,901 Intergovernmental 201,726 1,644,914 1,175,205 1,654,614 1,989,420 Special assessments 1,289,590 3,342,039 1,63806 1,421,591 1,72505 Charges for services 1,770,156 2,035,735 1,724,052 1,579,659 10401 Fines 91,490 101,445 104,930 110,779 104,780 Investment income 1,01401 1,962,379 1,508,265 1,02903 1,107,335 Miscellaneous: Park dedication fees 626,567 113,013 133,585 41,216 32,649 Connection charges 372,133 829,624 254,903 20,119 4806 Other 395,789 621,798 800,857 1,018,853 1,034,223 Total revenues 18,424,332 21,619,311 19,322,364 19,287,903 20,258,978 Expenditures General government 2,343,332 2,399,297 2,366,574 2,24202 2,255,793 Public safety 3,268,236 3,580,240 3,796,965 4,015,410 3,920,073 Public works 2,817,475 3,491,353 4,843,288 3,545,132 3,204,444 Parks and recreation 1,59905 1,825,706 1,953,822 L891J25 2,433,495 Recycling 90,590 9409 86,631 85,527 109,034 Economic development 626,103 2,26505 538,293 477,648 650,977 Unallocated 8,454 6,915 17,999 19,540 24,953 Capital outlay 987,075 203,485 1,46002 1,519,944 1,32401 Debt service: Principal 5,25400 3,27500 3,46000 3,86500 5,77900 Interest 103,599 2,089,857 2,253,223 2,178,233 2,030,267 Other 253,134 167,187 15,645 39,265 29,939 Construction/acquisition costs 4,579,910 360,742 - - 101,153 Total expenditures 23,511,793 22,360,056 20,793,102 19,879,486 21,86409 Revenues over (under) expenditures (5,087,461) (740,745) (1,470,738) (591,583) (1,605,031) Other Financing Sources (Uses) Transfers in 52200 578,925 580,343 587,530 627,530 Transfers out (167,424) (57,671) (163,469) (165,643) (89,191) Bonds issued 2,910,000 76000 63000 38500 10000 Refunding bonds issued 100000 6,86500 - 95500 1,48000 Payment to refunded bonds escrow agent - - - - (2,416,834) Bond premium - 3,401 - 18,781 3108 Proceeds from the sale of capital assets 603,959 706,386 553,879 12,264 43,217 Total other financing sources (uses) 13,868,535 8,856,041 100,753 1,792,932 1,336,410 Net increase (decrease) in fund balances $ 8,781,074 $ 8,115,296 $ 130,015 $ 1,201,349 $ (268,621) Debt service as a percentage of noncapital expenditures 39.21% 28.19% 29.58% 32.99% 38.27% 136 CITY OF ANDOVER, MINNESOTA ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY Last Ten Fiscal Years Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Real Property Personal Property Taxable Net Tax Taxable Net Tax Taxable Market Value Capacity Market Value Capacity Market Value $ 1,354,146,000 $ 18,348,662 $ 18,285,500 $ 620,797 $ 1,372,431,50( 1,539,835,500 15,336,075 17,999,800 359,540 1,557,835,30( 1,699,227,100 17,549,064 20,202,300 402,840 1,719,429,40( 1,945,523,200 20,142,088 20,761,100 414,016 1,966,284,30( 2,222,567,900 23,027,376 21,718,900 433,669 2,244,286,80( 2,521,587,700 26,204,279 22,003,500 439,356 2,543,591,20( 2,778,464,100 28,897,916 21,998,500 439,246 2,800,462,60( 2,948,801,500 30,749,076 20,837,800 416,000 2,969,639,30( 2,961,410,400 31,023,349 21,185,200 422,931 2,982,595,60( 2,685,802,600 28,233,178 24,712,000 493,441 2,710,514,60( Source: Anoka County Property Tax Division 137 Total Net Tax Capacity $ 18,969,459 15,695,615 17,951,904 20,556,104 23,461,045 26,643,635 29,337,162 31,165,076 31,446,280 28,726,619 Total Direct 22.736% 33.511% 33.376% 31.584% 31.414% 31.556% 31.003% 31.276% 32.181% 36.484% Table 5 Net Tax Capacity as a Percentage 1.38% 1.01% 1.04% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.06% CITY OF ANDOVER, MINNESOTA PROPERTY TAX RATES - PER $1,000 OF ASSESSED TAX CAPACITY VALUE DIRECT AND OVERLAPPING GOVERNMENTS Years 2002 through 2011 Source: Anoka County Property Tax Division 138 Table 6 Overlapping Governments Direct City School General Debt Lower Total Taxes Oper Service Rum 104.302% Payable Levy Levy Watershed Total 21.218% 35.340% 3.482% 60.040% 2002 29.863% 3.263% 0.385% 33.511% 2003 28.899% 4.138% 0.339% 33.376% 2004 26.651% 4.547% 0.394% 31.592% 2005 24.182% 6.895% 0.338% 31.415% 2006 24.790% 6.757% 0.347% 31.894% 2007 24.948% 6.055% 0.324% 31.327% 2008 24.962% 6.333% 0.308% 31.603% 2009 25.755% 6.426% 0.303% 32.484% 2010 30.507% 5.977% 0.330% 36.814% 2011 31.914% 6.461% 0.356% 38.731% Source: Anoka County Property Tax Division 138 Table 6 Overlapping Governments School County Other Total Total 29.070% 37.976% 3.745% 70.791% 104.302% 27.802% 37.714% 3.755% 69.271% 102.647% 21.218% 35.340% 3.482% 60.040% 91.632% 21.492% 33.080% 4.021% 58.593% 90.008% 20.046% 32.096% 3.755% 55.897% 87.791% 19.337% 30.675% 3.671% 53.683% 85.010% 16.962% 31.041% 4.604% 52.607% 84.210% 18.247% 32.051% 3.251% 53.549% 86.033% 20.236% 35.273% 3.436% 58.945% 95.759% 24.023% 39.884% 4.872% 68.779% 107.510% CITY OF ANDOVER, MINNESOTA PROPERTY TAX LEVIES AND COLLECTIONS Last Five Fiscal Years Table 7 * Included in the total tax levy is approximately $400,000 of market value homestead credit (MVHC) that the City will not be receiving. Due to State legislative actions to deal with the State budget deficit, the MVHC program was significantly reduced for the City. Information for years prior to 2006 is not available. 139 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 2006 $ 8,550,919 $ 7,977,278 $ 1,700 * $ 7,978,978 93.31% $ 106,329 $ 8,085,307 94.55% 2007 9,316,427 8,738,606 410,519 9,149,125 98.20% 141,186 9,290,311 99.72% 2008 10,153,718 9,554,131 198,214 * 9,752,345 96.05% 158,525 9,910,870 97.61% 2009 10,593,520 9,992,240 54,629 * 10,046,869 94.84% 100,434 10,147,303 95.79% 2010 10,856,299 10,125,752 3,905 * 10,129,657 93.31% F Not Available * Included in the total tax levy is approximately $400,000 of market value homestead credit (MVHC) that the City will not be receiving. Due to State legislative actions to deal with the State budget deficit, the MVHC program was significantly reduced for the City. Information for years prior to 2006 is not available. 139 CITY OF ANDOVER, MINNESOTA PRINCIPAL TAXPAYERS Table 8 Current Year and Nine Years Ago 2010 2001 Net Percentage of Net Percentage of Tax Total City Tax Total City Taxpayers Capacity Rank Tax Capacity Capacity Rank Tax Capacity Connexus Energy $ 224,532 1 0.78% $ 324,769 1 1.71% Target Corporation 220,052 2 0.77% - Minnegasco, Inc. 171,910 3 0.60% 143,085 3 0.75% Andover Limited Partnership 169,046 4 0.59% 257,672 2 1.36% Presbyterian Homes of Andover 161,502 5 0.56% - Andover Station LLC 141,124 6 0.49% - Great River Energy 137,264 7 0.48% - Fairbanks Properties LLC 85,158 8 0.30% - Columbia Park Properties 78,388 9 0.27% 66,364 6 0.35% Rademacher Fam Ltd Partnership 77,362 10 0.27% - 116 LLC - 131,794 4 0.69% Individual - Commercial /Industrial - 87,673 5 0.46% Northern States Power - 51,473 7 0.27% Health Partners - 44,322 8 0.23% MN Interstate Pipeline - 40,052 9 0.21% Minnesota Pipeline Company - 38,998 10 0.21% Total $ 1,466,338 5.10% $ 1,186,202 6.25% Net Tax Capacity $ 28,726,619 $ 18,969,459 Source: Anoka County Property Tax Division 140 CITY OF ANDOVER, MINNESOTA ESTIMATED MARKET VALUES AND NEW CONSTRUCTION Last Ten Fiscal Years Estimated Market Values New Construction Commercial / Industrial Permits Commercial / 8 $ 21,086,481 Year Industrial (1) Residential Total 2001 $ 95,215,200 $ 1,277,216,300 $ 1,372,431,500 2002 107,671,600 1,450,163,700 1,557,835,300 2003 127,728,400 1,778,643,800 1,906,372,200 2004 144,629,100 1,936,079,400 2,080,708,500 2005 168,684,200 2,174,640,000 2,343,324,200 2006 191,931,800 2,433,776,200 2,625,708,000 2007 211,760,900 2,663,389,900 2,875,150,800 2008 233,801,700 2,813,037,200 3,046,838,900 2009 248,129,500 2,807,144,500 3,055,274,000 2010 229,977,800 2,526,288,900 2,756,266,700 New Construction Commercial / Industrial Permits Value 8 $ 21,086,481 19 10,616,851 13 4,764,046 16 19,926,817 20 6,571,671 8 1,791,896 9 2,403,831 11 16,878,603 11 767,430 11 1,247,106 Note: (1) Also includes agricultural, public utility, railroad operating property, and personal property. 141 Table 9 Residential Permits Value 285 $ 43,378,128 218 31,848,000 182 28,973,300 251 36,224,546 226 34,309,393 153 25,236,120 91 18,347,873 49 11,116,400 47 9,246,347 71 14,700,800 CITY OF ANDOVER, MINNESOTA SPECIAL ASSESSMENT LEVIES AND COLLECTIONS Last Ten Fiscal Years Note: (1) Only includes assessments certified to Anoka County. 142 Table 10 Current Current Percent of Delinquent Collections Assessments Assessments Assessments Assessment Year Due (1) Collected Collected Collections 2001 $ 432,207 $ 410,380 94.95% $ 5,933 2002 328,831 307,051 93.38% 5,694 2003 533,340 522,851 98.03% 5,917 2004 192,373 189,279 98.39% 7,921 2005 178,434 175,471 98.34% 402 2006 225,365 192,477 85.41% 4,790 2007 163,817 142,750 87.14% 12,460 2008 366,203 330,304 90.20% 1,479 2009 319,448 332,739 104.16% 36,693 2010 325,361 314,097 96.54% 61,247 Note: (1) Only includes assessments certified to Anoka County. 142 Table 10 Total Delinquent Collections Assessments Total as a Percent of Outstanding as a Percent of Assessment Current Delinquent Current Collections Assessments Due Assessments Assessments Due $ 416,313 96.32% $ 26,264 6.08% 312,745 95.11% 37,404 11.37% 528,768 99.14% 49,329 9.25% 197,200 102.51% 15,157 7.88% 179,473 100.58% 22,217 12.45% 197,267 87.53% 51,721 22.95% 155,210 94.75% 76,420 46.65% 331,783 90.60% 174,810 47.74% 369,432 115.65% 202,999 63.55% 375,344 115.36% 218,860 67.27% CITY OF ANDOVER, MINNESOTA RATIO OF NET BONDED DEBT TO ASSESSED VALUE AND NET BONDED DEBT PER CAPITA Last Ten Fiscal Years Fiscal 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Population (1) 27,446 28,664 28,939 29,262 30,080 30,222 30,263 31,023 31,298 31,400 Table 11 Percentage General Bonded Debt Outstanding (2) of Estimated Gross Less Debt Net Estimated Bonded Service Bonded Market Value Debt Fund Debt $ 1,372,43 1,500 $ 4,21000 $ (94,728) $ 4,1 15,272 1,557,835,300 30000 (112,848) 3,567,152 1,906,372,200 3,71000 (88,875) 3,621,125 2,080,708,500 24,23600 (815,322) 23,420,678 2,343,324,500 24,38900 (1,041J40) 23,347,860 2,625,70800 33,85000 (10,739,510) 23,110,490 2,875,15000 400000 (17,822,418) 23,057,582 3,046,838,900 40,56500 (17,939,959) 22,625,041 3,055,27400 39,69000 (17,973,588) 21,716,412 2,756,266,700 40,02600 (17,768,743) 22,257,257 Table 11 Percentage Net Bonded of Estimated Debt Market Value Per Capita 0.30% $ 149.94 0.23% 124.45 0.19% 125.13 1.13% 800.38 1.00% 776.19 0.88% 764.69 0.80% 761.91 0.74% 729.30 0.71% 693.86 0.81% 708.83 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. 143 CITY OF ANDOVER, MINNESOTA COMPUTATION OF DIRECT AND OVERLAPPING DEBT December 31, 2010 Table 12 Notes: (1) Only includes debt supported by tax levy. (2) Information obtained from Anoka County. 144 Gross General Obligation Percentage Net Amount Bonded Debt Applicable Applicable Outstanding to City to City Direct: City of Andover $ 40,02600 (1) 100.0000% $ 40,02600 Overlapping: Anoka County 161J2500 (2) 8.5787% 13,822,350 ISD No. 11 Anoka- Hennepin 135,011,165 (2) 12.4703% 16,836,352 ISD No. 15 St. Francis 44,58500 (2) 6.4674% 203,488 Metropolitan Council 1670000 (2) 0.8436% 1,413,839 Total Overlapping Debt 34,956,029 Total Overlapping and Direct Debt $ 74,982,029 Notes: (1) Only includes debt supported by tax levy. (2) Information obtained from Anoka County. 144 CITY OF ANDOVER, MINNESOTA COMPUTATION OF LEGAL DEBT MARGIN Table 13 Last Five Fiscal Years 2006 2007 2008 2009 2010 Estimated Taxable Market Value $ 2,543,591,200 $ 2,800,462,600 $ 2,969,639,300 $ 2,982,595,600 $ 2,710,514,800 Debt limitation: Debt limit percent 2% 2% 3% 3% 3% Debt limit in dollars 50,871,824 56,009,252 89,089,179 89,477,868 81,315,444 Debt applicable to limit: Total bonded debt 59,665,000 70,240,000 67,050,000 65,175,000 59,671,000 Less: Nonapplicable debt G.O. water revenue bonds (8,815,000) (15,040,000) (14,680,000) (15,330,000) (14,875,000) Special assessment bonds (3,560,000) (3,560,000) (3,015,000) (2,450,000) (600,000) Tax increment bonds (4,715,000) (4,010,000) (3,275,000) (2,515,000) (1,735,000) Permanent improvement revolving bonds (6,660,000) (4,835,000) (3,755,000) (2,635,000) (1,480,000) State aid bonds (2,065,000) (1,915,000) (1,760,000) (2,555,000) (955,000) Less: Cash and investments in related debt service funds (10,739,510) (17,822,418) (17,939,959) (17,973,588) (17,768,743) Total debt applicable to limitation 23,110,490 23,057,582 22,625,041 21,716,412 22,257,257 Legal debt margin $ 27,761,334 $ 32,951,670 $ 66,464,138 $ 67,761,456 $ 59,058,187 Total debt applicable to the limit as a percentage of debt limit 45.43% 41.17% 25.40% 24.27% 27.37% 145 CITY OF ANDOVER, MINNESOTA PLEDGED - REVENUE COVERAGE Last Five Fiscal Years Table 14 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 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 2009 2,127,676 1,264,398 165,643 1,028,921 375,000 393,828 1.34 2010 2,077,305 1,249,420 89,191 917,076 455,000 384,713 1.09 2004 EDA Public Facility Lease Revenue Bonds (3) 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 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 2009 1,422,614 903,446 519,168 940,640 390,000 944,806 1.09 2010 1,351,069 882,364 468,705 885,349 405,000 930,684 1.01 Special Assessment and Permanent Improvement Revolving Bonds Special Fiscal Assessment Debt Service Year Revenue Principal Interest Coverage 2006 $ 786,918 $ 1,765,000 $ 289,174 0.38 2007 2,966,380 1,825,000 314,152 1.39 2008 1,184,928 1,625,000 243,340 0.63 2009 993,703 1,685,000 198,232 0.53 2010 1,210,641 3,005,000 110,822 0.39 Tax Increment Financing Bonds, Tax Fiscal Increment Debt Service Year Revenue Principal (4) Interest Coverage 2006 $ 1,414,254 $ 2,350,000 $ 193,045 0.56 2007 1,474,219 705,000 120,545 1.79 2008 1,614,651 735,000 105,033 1.92 2009 1,790,279 760,000 87,620 2.11 2010 1,849,644 780,000 68,313 2.18 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. (1) Operating expenses includes transfers out because the administrative allocation and replacement reserve transfer is built into the user fees. Operating expenses does not include interest and depreciation. (2) The transfer in is included because a portion of the trunk connection charge associated with adding additional users to the water system is designated to compensate prior years capital investment in water utility infrastructure and the treatment plant. (3) Half of the facility financed by these bonds is leased to the Greater Minneapolis YMCA, their lease payments started in 2008. Future YMCA lease payments will significantly reduce the City's obligation on debt service payments. (4) Net of crossover refundings. 146 CITY OF ANDOVER, MINNESOTA OUTSTANDING DEBT BY TYPE Last Five Fiscal Years Table 15 2006 2007 2008 2009 2010 City of Andover's Outstanding Debt Governmental activities Revenue bonds $ 29,39500 $ 36,07500 $ 350500 $ 35,49500 $ 35,09000 Special assessment bonds 3,56000 3,56000 3,01500 2,45000 60000 Tax increment bonds 4,71500 4,010,000 3,27500 2,51500 1,73500 Certificates of indebtedness 58000 1,28000 1,52500 1,42000 781,000 Capital improvement bonds 3,87500 3,52500 3,15500 2,77500 2,49500 Permanent improvement revolving bonds 60000 4,83500 3,75500 2,63500 1,48000 State aid bonds 2,06500 1,91500 1,76000 2,55500 95500 Referendum bonds - - - - 10000 Compensated absences 459,299 509,851 504,893 54106 571,898 Total governmental activities 51,309,299 55,709,851 52,874,893 50,38606 45,367,898 Business -type activities G.O. revenue bonds 8,81500 15,040,000 140000 15,33000 14,87500 Compensated absences 74,675 90,228 107,333 120,546 132,544 Total business -type activities 80%675 15,130,228 14,787,333 15,450,546 1507,544 Total outstanding debt $ 60,198,974 $ 70,840,079 $ 6702,226 $ 65,837,152 $ 60,375,442 Total outstanding debt as a percentage of personal income 7.06% 8.05% 7.69% 7.18% 6.56% Total outstanding debt per capita $ 1,992 $ 2,341 $ 2,181 $ 2,104 $ 1,923 147 CITY OF ANDOVER, MINNESOTA DEMOGRAPHIC AND ECONOMIC STATISTICS Last Nine Years Table 16 Anoka County City of Andover Per Capita Unemployment Personal Year Population Income (2) 2002 2804 $ 714,994,816 2003 28,939 72607,229 2004 29,262 741,235,722 2005 3000 824,041,600 2006 30,222 852,774,174 2007 30,263 879,54903 2008 31,023 88029,441 2009 31,298 917,375,678 2010 31,400 (1) 920,930,600 Table 16 Anoka County 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 148 Personal Per Capita Unemployment Population (3) Income (2) Income (3) Percentage 306,723 $ 7,650,898,512 $ 24,944 4.5% 310,959 7,808,491,449 25,111 4.8% 316,778 8,024,303,518 25,331 4.5% 32003 8,788,398,185 27,395 3.8% 32705 9,227,100,085 28,217 4.0% 326,252 9,482,028,265 2%064 4.6% 327,090 9,278,562,030 28,367 5.5% 331,582 9,7190002 2%311 8.5% 335,308 9,834,248,332 2%329 7.1% 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 148 CITY OF ANDOVER, MINNESOTA PRINCIPAL EMPLOYERS Current Year and Nine Years Ago Taxpayer Anoka Hennepin I.S.D. No. 11 Bunker Hills Regional Park/Activity Center Kottkes' Bus Service, Inc. Target Anoka County Highway Department Meadow Creek Christian School Columbia Park Medical Group - Andover Farmstead at Andover City of Andover McDonald's Festival Foods Ace Solid Waste, Inc. POV's Sports Bar & Grill Larson Plumbing & Heathing Ed Fields & Sons, Inc. Riccar Heating & Air Conditioning Total 2010 2001 1,782 100.0% 1,308 Source: Minnesota Department of Employment and Economic Development (1) Number of employees as of March, 2006. (2) Number of district employees that work in school buildings located within the City. (3) Number of employees as of January, 2009. 149 1 10 3 4 5 7 6 2 8 10 9 4 8 Table 17 Percentage of Total City Employment 23.5% 3.1% 13.0% 7.6% 6.2% 5.0% 6.1% 13.8% 3.8% 3.1% 3.3% 7.6% 100.0% Percentage of Total City Employees Rank Employment Employees 550 (2) 1 30.9% 308 227 2 12.7% 40 200 (1) 3 11.2% 170 167 (3) 4 9.4% 142 5 8.0% 100 127 6 7.1% 81 116 7 6.5% 94 8 5.3% 84 9 4.7% 66 75 10 4.2% 80 - 180 - 50 - 40 - 43 - 100 1,782 100.0% 1,308 Source: Minnesota Department of Employment and Economic Development (1) Number of employees as of March, 2006. (2) Number of district employees that work in school buildings located within the City. (3) Number of employees as of January, 2009. 149 1 10 3 4 5 7 6 2 8 10 9 4 8 Table 17 Percentage of Total City Employment 23.5% 3.1% 13.0% 7.6% 6.2% 5.0% 6.1% 13.8% 3.8% 3.1% 3.3% 7.6% 100.0% CITY OF ANDOVER, MINNESOTA FULL TIME EQUIVALENT EMPLOYEES CITY GOVERNMENT EMPLOYEES BY FUNCTION /PROGRAM Last Five Fiscal Years Table 18 Function /Program 2006 2007 2008 2009 2010 Governmental: Administration 1.30 1.45 1.15 1.15 1.15 Human resources 0.07 0.02 0.01 0.02 0.02 City clerk 1.84 1.91 1.43 1.29 1.34 Elections 0.10 0.10 0.08 0.10 0.10 Financial administration 2.85 2.35 1.97 1.85 1.85 Information systems 0.91 0.91 0.91 0.91 0.91 Planning and zoning 4.75 4.75 4.25 3.70 3.70 Engineering 4.57 4.78 4.41 4.28 4.33 Facility Management - - - 0.33 0.20 EDA general 0.70 0.70 0.85 0.90 0.85 LRRWMO 0.21 0.21 0.21 0.20 0.20 Risk management 0.10 0.10 0.10 0.10 0.10 Public Safety: Fire 3.10 3.10 3.10 3.10 3.10 Protective inspection 6.03 6.08 5.78 3.93 3.93 Civil defense 0.05 0.05 0.05 0.05 0.05 Public Works: Streets and highways 6.12 6.20 6.00 5.05 5.10 Snow and ice 3.27 3.49 3.21 2.45 2.45 Street signs 1.35 1.44 1.41 1.31 1.41 Forestry 0.10 - - - - ROW management / utility 0.85 0.60 0.65 0.50 0.20 Water 5.57 4.78 4.84 4.63 4.63 Sewer 2.97 3.18 3.24 3.38 3.38 Storm sewer 2.01 1.95 2.20 2.55 2.55 Central equipment 2.92 2.96 2.96 2.87 2.90 Park & Recreation: Park and recreation 7.33 7.05 6.85 6.66 6.71 Community center 2.12 2.12 2.23 2.96 3.11 Recycling 0.93 0.88 0.86 1.23 1.23 62.12 61.16 58.75 55.50 55.50 Source: City Finance Department Note: Employees are allocated to various departments based on the functions that they perform. 150 CITY OF ANDOVER, MINNESOTA OPERATING INDICATORS BY FUNCTION/PROGRAM Last Five Years Table 19 Function/Program 2006 2007 2008 2009 2010 General government: Registered voters 16,813 n/a 17,830 n/a 18,713 Voters registering election day 2,200 n/a 2,727 n/a 1,020 Number of precincts 10 n/a 10 n/a 10 Public safety: Police: Number of calls for services 11,516 12,150 11,617 11,075 11,441 Number of traffic citations 1,673 1,710 2,475 2,848 1,926 Number of patrol hours 30,856 30,240 30,240 30,240 30,240 Fire: Fire responses 443 366 326 305 323 Emergency medical responses 645 736 797 754 722 Protective inspections: Inspections 8,128 5,456 5,020 3,716 2,860 Residential permits 153 91 49 42 71 Other permits 2,481 2,095 1,862 1,543 1,773 Public works: Streets and highways: Asphalt streets maintained (miles) 187 189 189 189 190 Gravel roads maintained (miles) 8 8 8 8 8 Cul -de -sacs and dead ends maintained 329 330 336 338 338 Parks and recreation: Number of City parks 63 65 66 66 47 Total acreage mowed 200 297 297 293 293 Ballfields maintained 24 27 28 28 28 Number of playgrounds 35 37 37 37 38 Soccer fields maintained 16 16 19 19 19 Trail maintained (miles) 23 35 35 35 35 Community center bookings (hrs): Fieldhouse 7,450 8,514 8,282 9,718 11,099 Ice arena 2,405 2,497 2,393 2,640 2,583 Water: New connections 197 63 33 145 56 Total customers 5,854 5,917 5,950 6,095 6,151 Annual consumption (thousands of gallons) 1,014,251 1,046,789 993,626 1,000,971 905,561 Sanitary Sewer: New connections 129 120 23 183 75 Total customers 6,657 6,777 6,800 6,983 7,058 Storm Sewer: Total customers 9,744 9,785 9,800 9,950 10,042 Storm sewer lines maintained (miles) 51 65 66 69 69 Source: Various City Departments 151 CITY OF ANDOVER, MINNESOTA CAPITAL ASSET STATISTICS BY FUNCTION /PROGRAM Last Five Years Table 20 Function /Program 2006 2007 2008 2009 2010 Public Safety: Fire: Stations 3 3 3 3 3 Fire vehicles 18 20 20 21 22 Protective inspections: Vehicles 3 3 3 3 3 Public Works: Streets and Highways: Streets (miles) 187 189 189 189 190 Street lights 1,187 1,204 1,212 1,215 1,218 Traffic signals 22 22 23 23 24 Parks and Recreation: Parks 63 65 66 66 47 Ball fields 24 27 28 28 28 Soccer fields 16 16 19 19 19 Playgrounds 35 37 37 37 38 Trails (miles) 23 35 35 35 35 Community centers 1 1 1 1 1 Water: Water treatment plants 1 1 1 1 1 Storage facilities 3 3 3 3 2 Water main (miles) 107 108 108 108 108 Connections 5,854 5,917 5,950 6,095 6,151 Sanitary sewer: Sewer main (miles) 90 91 91 91 93 Connections 6,657 6,777 600 6,983 7,058 Number of lift stations 9 9 9 9 9 Storm sewer: Storm sewer lines (miles) 51 65 66 69 69 152