1. CITY OF ST. CHARLES Financial Summary - 2007

2. Audit Audit Opinion Financial Statements Minnesota Legal Compliance
Provides reasonable, but not absolute, assurance that financials are free of material misstatement
Unqualified “Clean” opinion in 2007
Financial Statements
Smith Schafer reviewed the results of the audit and the financial statements with the Mayor, City Administrator, Council Member Getz and the Accountant on April 11, 2008
Management’s Discussion and Analysis (MD&A) was prepared by the City
Minnesota Legal Compliance
No Exceptions
Single Audit
None required in 2007
Management Letter
Small number of personnel – Limits City’s ability to segregate accounting duties
Fund balance policy – City should adopt policy for reserves
Information technology – City should evaluate effectiveness of access controls
Audit Committee Letter

3. Revenues
Governmental Funds

4. General Property Tax Levy
General tax levy revenues represented 23% of total governmental revenues in 2007
The general tax levy is reported net of the market value credit paid by the State

5. Tax Increment Revenues
Total TIF collections in 2007 were $144,493
TIF debt service payments and advance repayment requirements are approximately $90,000 annually
TIF collections are impacted by County valuations and the commercial property tax rates set by the State

6. LGA, HACA and Market Value Revenues
Local government aid (LGA) & Homestead Aid Credit (HACA) are based on State formulas
LGA represented 28% of governmental revenues in 2007
LGA increased by $57,850 (9%) from 2006 to 2007
Market value credit totaled $82,202 in 2007
HACA was eliminated in 2002 and replaced with Market Value Credit
$706,173

7. Governmental Fund Revenues

8. Property Taxes and State Aid
42%
42%
44%
43%
41%
35%
42%
42%
40%

9. Expenditures
Governmental Funds

10. General Governmental Expenditures
Includes mayor and council, city hall, accounting, assessor, elections, advertising, building inspections and celebration costs
Increase of $10,662 in 2007 was primarily due to higher legal costs
Higher costs of building inspections beginning in 2001

11. Public Safety Expenditures
Purchased Ambulance and Volk Property
Includes police department, fire protection, ambulance and the emergency management services fund
Totaled $553,367 in 2007, including $23,378 in capital outlay
In 2005, expenses decreased due to a police officer position that was vacant for the year

12. Public Safety Revenues and Expenditures
Police protection expenditures increased by $54,438 in 2007
Ambulance expenditures include $17,054 of capital outlay in 2007
Fire expenditures of $90,110 in 2007 were supported by township contracts of $24,687 and other revenues of $45,389 (City transfer in of $47,139 – not included in chart)

13. Public Works
Salaries/benefits, repairs and maintenance, supplies, fuel, and insurance
Expenditures increased by $47,289 in 2007 due to higher costs for street repairs and flood related costs

14. Parks and Recreation
Recreation programs, parks, swimming pool, forestry and the senior center (including capital project fund expenditures)
Expenditures totaled $355,772 in 2007 an increase of $10,698 from 2006 due to an increase in salaries for the swimming pool and parks and also for flood related costs

15. Park and Recreation Expenditures
Park and recreation expenditures in excess of program revenues are supported by the City’s general revenues including property taxes and local government aid
Swimming pool attendance increased to 20,607 in 2007 from 19,380 in 2006

16. Library Expenditures
Salaries and benefits, books, supplies, insurance, utilities, printing, etc… (including capital project fund expenditures)
Expenditures totaled $137,465 in 2007
Received library aid during 2007 from Winona County and Olmsted County totaling $29,083
Excludes capital outlay related to the addition to the library in totaling $676,333

17. Economic Development Expenditures
Economic development expenditures in 2007 professional services of $21,687
In 2007, includes costs for City of St Charles sign of $15,716
In 2002, included the $126,000 loan to HBC (mortgage on old City Hall building)

18. Governmental Fund Expenditures

19. Reserves

20. General Fund - Reserves
Unreserved General Fund balance as a % of expenditures % % % % % % % % %

21. Economic Development Fund - Fund Balance
Provides economic development loans to local businesses
Outstanding principal receivable on economic development loans at 12/31/07 $75,820
Borrowed $126,000 from the Electric Fund for Loan to HBC in 2002
HBC loan paid off in 2007

22. Library Fund - Fund Balance
Operated at a deficit of $25,410 in 2007
Deficit fund balance in 2004 and 2005 resulting from construction was eliminated in 2006 with transfers from the General Fund of $136,813 and Capital Improvement Fund of $240,000

23. Volunteer Fire Fund - Fund Balance
Funds received in 2007:
City $47,139
Townships 24,687
Fire calls ,229
Interest 5,524
FEMA grant 2,287
DNR grant ,930
Donations 23,419
Builds fund balance in anticipation of equipment needs
Saratoga Township owes $22,092 for services in 2007 and 2006
Transferred $50,000 to the EMS fund in 2007 and 2006

24. Advertising Fund - Fund Balance
Funds used for City promotion/Fireworks
Increased levy from $8,150 in 2006 to $16,843 in 2007

25. Celebration Fund - Fund Balance
Funds used for annual flowerfest celebration
Revenues exceeded expenditures by $7,208 during 2007
Levied $15,641 in the Celebration fund in 2007
Revenues decrease in 2007 due to the negative impact of the flood on attendance

26. Ambulance Fund - Fund Balance
Ambulance revenues increased to $153,534 in 2007 from $143,306 in 2006
New capital lease of ambulance vehicle in 2006 totaling $48,300
Transferred $50,000 to EMS fund in 2007 and 2006
Base rate for run is $325 for 2007
Number of ambulance runs:

27. Emergency Management Services Fund - Fund Balance
New fund established in 2006 to account for the purchase of the Volk property
The plan is to transfer $150,000 into this fund annually through 2012

28. Debt Service

29. General Obligation Bonds
GO Bonds Outstanding:
Water Impr Bond of 1983
Street Impr Bond of 2005
Supported by property taxes and fund balance reserve of $228,652

30. Tax Increment Bonds
TIF Bonds are supported by increments on TIF property
First principal payment on TIF Refunding Bond of 2004 was made as due in 2006
TIF Bonds of 1996 were paid in full in 2005 with proceeds of 2004 Refunding Bond proceeds

31. General Obligation Revenue Bonds
Revenue Bonds are supported by Utility Fund ratepayers.
GO Water and Sewer Revenue Bonds of 2002 balance at 12/31/07 was $705,000
GO Water and Sewer Revenue Bonds of 2004 balance at 12/31/07 was $890,000
GO Electric Revenue Bonds of 2004 balance at 12/31/07 was $3,305,000
GO Electric Revenue Bonds of 1997 balance was paid off in 2007

32. Other Long-Term Debt Fire Truck Loan payments due through 2013
New Ambulance Capital Lease in 2006

33. 5 Year Debt Service Requirements
Includes both principal and interest

34. Capital Projects

35. Capital Projects Funds - Expenditures
Major capital improvements in 2007 totaled $302,505 and consisted of:
JD mower $13,313
Dump truck $137,457
Fencing at ballparks $24,689
Blacktop $72,993
City Hall alarm system and locks $25,331
Park bridges $4,760
Street shop siding $6,805

36. Capital Improvement Fund - Fund Balance
Funded through property taxes, donations, and interest
Transferred $50,000 to the EMS fund in 2007

37. TIF Capital Improvement Fund - Fund Balance
TIF #5, borrowed from utilities and capital improvements funds for White Water Industrial Park infrastructure
TIF #3 (Whitewater Apts.) received a transfer from TIF #2 of $179,187
Expected TIF #5 (Whitewater Park) increment collections increased to $30,442 in 2006 from $26,460 in 2006
TIF #6 (Mike’s Food Center) established in 2005

38. Operational Trends
Utility Funds

39. Electric Fund Electric service is supported by ratepayers
Transfers out to the City General fund of $110,000 in 2007
Purchase power increase in 2007 is due in part to an increase in purchase power rates

40. Electric Fund
Cash and investments totaled $403,688 at 12/31/07, while bonds outstanding totaled $3,305,000
Issued bond in 2004 totaling $3,760,000 for the generation project and other electric system improvements

41. Water Fund Water service supported by ratepayers
Base rate increased from $9.45 to $13.29 per user in 2007
Revenues totaled $436,807 in 2007
In lieu of tax payment to the City General fund of $30,000 in 2007
Sanitary District began direct billing North Star

42. Water Fund
Should develop cash reserves to be used for future capital replacement
In 2004 added $777,350 of the $1,205,000 GO Utility Revenue Bond of 2004 that was used for water tower improvements and water extensions
In 2002 added $349,800 of the $1,060,000 GO Utility Revenue Bonds of 2002 that was used for water construction costs

43. Sewer Fund Sewer service supported by ratepayers
Base rate increased from $8.25 to $10.63 per user
Net income before transfers was $90,165 in 2007

44. Sewer Fund
Should develop cash reserves to be used for future capital replacement
Issued $427,650 of the $1,205,000 GO Utility Revenue Bonds of 2004 that was used for sewer extensions and sewer system improvements
Issued $710,200 of the $1,060,000 GO Utility Revenue Bonds of 2002 that was used for sewer construction costs

45. Storm Water Fund Fund was established in 2004
Storm water activities are supported by ratepayers

46. Storm Water Fund
Fees generated in 2004 were expended on capital assets
No debt at 12/31/07
Cash balance of $24,372 at 12/31/07
Contributed capital of $174,300 in 2007

47. Waste Management Fund-Fund Balance
Collected refuse fees of $122,195 and paid out $159,683 for hauling and other costs in 2007
Uses excess revenue from hauling services for City cleanup day and maintenance of City compost site
Reclassified from a special revenue fund to an enterprise fund in 2006

48. Summary
General Fund reserves equal 32% of annual general fund expenditures
Ambulance, Fire and Capital Improvement Funds transferring funds annually to the EMS Fund for future capital needs
Capital Improvement fund balance of $182,386
TIF #5 (Whitewater Park) Capital Improvement is repaying $153,000 in advances with tax increment receipts, district may expire before advance is repaid
All debt service funds are being adequately funded and all outstanding bonds are being paid on a timely basis
Utility Fund revenues continue to keep pace with rising costs, however cash reserves are minimal and substantial debt has been added since 2002.
Expenditures related to the 2007 flood impacted many City departments