HomeMy WebLinkAbout5.a. Presentation and Acceptance of 2205 Comprehensive Annual Financial Report (CAFR)AGENDA ITEM: Presentation and Acceptance of 2005
Comprehensive Annual Financial Report
(CAFR)
AGENDA SECTION:
Department Heads Report
PREPARED BY: Jeff May, Finance Director
AGENDA NO. 5a
ATTACHMENTS: Resolution and 2005 CAFR
APPROVED BY:
RECOMMENDED ACTION: Motion to adopt A Resolution Accepting the 2005
Comprehensive Annual Financial Report.
9 ROSEMOUNT
CITY COUNCIL
City Council Meeting Date June 20, 2006
EXECUTIVE SUMMARY
ISSUE
Review and accept the 2005 CAFR.
BACKGROUND
A representative from our audit firm, Vixchow Krause Company, will be here on Tuesday evening, June
20` to review the City of Rosemount's 2005 CAFR The representative will give a brief presentauon,
highlighting items that may be worthy of your attention and also be available to answer any questions that
you may have. After you have reviewed your CAFR, if you have no further use for it, please return it to
me so I can use it as an extra copy for people or organizations that may request them. Thank yowl
SUMMARY
Recommend the above motion to accept the 2005 CAFR.
A RESOLUTION ACCEPTING THE 2005 COMPREHENSIVE ANNUAL
FINANCIAL REPORT
WHEREAS, the City of Rosemount has been presented its 2005 Comprehensive
Annual Financial Report, prepared by the audit firm of Virchow, Krause Company.
NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of
Rosemount, accepts its 2005 Comprehensive Annual Financial Report, prepared by the
audit firm of Virchow, Krause Company.
ADOPTED this 20 day of June, 2006.
ATTEST:
Amy Domeier, City Clerk
CITY OF ROSEMOUNT
DAKOTA COUNTY, MINNESOTA
RESOLUTION 2006-
William H. Droste, Mayor
Motion by: Seconded by:
Voted in Favor:
Voted Against:
Members Absent:
CITY OF ROSEMOUNT
REPORT ON INTERNAL CONTROL
(Including Memorandum on Internal
Accounting Controls, Other Matters, and
Communication to Audit Committee)
December 31, 2005
To the City Council
City of Rosemount
Rosemount, Minnesota
VirchowKrause
company
In planning and performing our audit of the basic financial statements of the City of Rosemount,
Minnesota for the year ended December 31, 2005, we considered the City's internal control to determine
our auditing procedures for the purpose of expressing our opinion on the financial statements and not to
provide assurance on the internal control
However, during our audit, we became aware of some areas where there are opportunities for
strengthening internal controls and operating efficiencies The following suggestions are related to
procedural matters which can be implemented by City staff As always, you should consider the costs of
making such improvements compared to the expected benefits We have also identified some changes in
accounting standards that may affect the City in future years This letter does not affect our report dated
March 17, 2006 on the financial statements of the City of Rosemount.
We will review the status of these comments during our next audit engagement We have already
discussed some of these comments and suggestions with City personnel We will be happy to assist in
any additional study of these matters or in the implementation of them
The report is intended solely for the information and use of the City of Rosemount's management and city
council, and is not intended to be, and should not be, used by anyone other than the specified parties
We welcome the opportunity to discuss the information included in this letter and any other matters.
Thank you for allowing us to serve you.
Minneapolis, Minnesota
March 17, 2006
Virchow, Krause Company, LLP
Certified Public Accountants Consultants An Independent Member of Baker Tilly International
INTERNAL ACCOUNTING CONTROLS
Internal accounting controls are the plan of the organization and the procedures and records concerned
with safeguarding assets and the reliability of financial records They are designed to provide reasonable
assurance that:
a. Transactions are executed in accordance with management's general or specific
authorization.
b. Transactions are recorded as necessary (1) to permit preparation of financial statements and
(2) to maintain accountability for assets
c. Access to assets is permitted only in accordance with management's authorization.
d. The recorded accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences
In practice, these controls are designed in many different ways For example, paying all bills with a check
and reviewing the supporting invoice is a control procedure that safeguards physical cash.
Throughout the country, there is now an increased emphasis on safeguarding assets and proper financial
reporting Many organizations are evaluating their controls over financial assets and accounting functions
The role of the governing body is also evolving, with more focus on the special duty elected officials have
to the public to ensure that your resources are properly managed This includes periodically assessing
your risk areas and determining the appropriate level of internal controls and procedures Costs of
staffing and segregation of duties need to be weighed with perceived benefits of increased accountability
and safeguarding of assets
Under ideal conditions, there are many procedures and controls designed to limit the access of any one
individual to your assets Because of your size, you do not have a large administrative staff or complex
controls. This is not unusual for cities of your size, but we are required to inform you that this condition
exists.
Upon our review of your internal control procedures, we have the following suggestions:
1 A responsible official should review and approve all non recurring manual journal entries.
3. Procedures should be put in place to generate disbursements for Port Authority expenses in
a more timely manner
4 Procedures should be reviewed to ensure that employees with more than one pay rate are
paid at the appropriate rate
5. Accounting policies and procedures should be in writing and updated regularly.
6. Accounting personnel should be required to take vacations while other employees perform
their duties
Page 2
OTHER MATTERS
NEW AUDITING STANDARD STATEMENT ON AUDITING STANDARDS (SAS) NO. 103
As part of our audit of your financial statements for the year ended December 31, 2006, we will be required to
follow a significant new auditing standard, or rule.
The new standard establishes standards and provides guidance to an auditor on audit documentation Audit
documentation is an essential element of audit quality Although audit documentation alone does not guarantee
audit quality, the process of preparing sufficient and appropriate audit documentation contributes to the quality of
an audit
Among other things, the SAS:
Requires the auditor to prepare audit documentation in connection with each engagement in sufficient
detail to provide an experienced auditor with no previous connection to the audit a clear understanding
of the work performed (including the nature, timing, extent, and results of audit procedures
performed), the audit evidence obtained and its source, and the conclusions reached.
Provides enhanced guidance on matters that should be documented, including guidance on
documentation that should be retained
States that verbal explanations on their own do not represent sufficient support for the work the
auditor performed or conclusions the audit reached, but may be used by the auditor to clarify or
explain information contained in the audit documentation
Requires the auditor to document audit evidence that is identified as being contradictory or
inconsistent with the final conclusions, and how the auditor addressed the contradiction or
inconsistency
Requires that the auditor assemble the audit documentation to form the final audit engagement file
within 60 days following the report release date After this date, the SAS requires the auditor not to
delete or discard existing audit documentation, and to appropriately document any subsequent
additions
How does this impact your organization? As auditors, we still have the same responsibility as we did in the past.
Now we are required to document our efforts in new ways For example, the new rule requires that we date our
audit opinion when we are ready to release the final reports. In the past, we were required to date the opinion as of
the last day we did fieldwork at your office This change is significant because we are also required to do many of
our audit procedures through the date of our opinion The new rule will require us to perform a number of inquiries
and do procedures for several weeks to several months past the old date This, of course, will require more time to
do the audit, and may cause some timing problems with issuing the final audited documents We will be working
with your staff to minimize any concerns
The new standard is supposed to benefit you and the public with financial statements that have less risk of
unidentified significant events occurring after year end, but not being disclosed in the statements. In addition, there
are eight new standards being developed which will likely be issued in 2006 These new standards will make a
significant change in how auditors do a variety of procedures and are expected to add 5 to 10% to the amount of
time an audit will take These new standards are expected to be effective for your year ending December 31,
2007, so there is nothing imminent for you to be concerned about.
Page 3
OTHER MATTERS (cont
NEW AUDITING STANDARD— ECONOMIC CONDITION REPORTING: THE STATISTICAL SECTION
Governmental Accounting Standard Board (GASB) Statement No 44 makes significant changes to the statistical
section of a financial statement These changes are mandatory even if you do not produce a Comprehensive
Annual Financial Report (CAFR), as long as you choose to present a statistical section.
Effective with your fiscal year ending December 31, 2006, you will need to follow the new requirements. The old
rules were developed many years ago, and in some ways are no longer relevant For example, the tables focused
on information available prior to GASB No. 34 Also, the tables were developed for a general purpose government,
and did not address the needs of special districts, school distncts, etc.
The new information is intended to be more useful for the reader to understand and assess a government's
economic condition However, to accomplish that result, some of the information in the tables is more difficult to
develop than in the past If you are planning to present a statistical section in your next financial statement, we
urge you to start developing the tables as soon as possible to allow enough time to gather the necessary
information GASB No. 44 has detailed examples of the new tables, as well as explanatory notes There is also an
implementation guide available which further clarifies many issues Please contact us if you need any further
information or assistance
NEW AUDITING STANDARD ACCOUNTING AND FINANCIAL REPORTING FOR
POSTEMPLOYMENT BENEFITS
In addition to pensions, many state and local governmental employers provide other post employment
benefits (OPEB) as part of the total compensation offered to attract and retain the services of qualified
employees OPEB includes post employment healthcare, as well as other forms of post employment
benefits (for example, life insurance) when provided separately from a pension plan Governmental
Accounting Standards Board (GASB) Statement No 45 establishes standards for the measurement,
recognition, and display of OPEB expense /expenditures and related liabilities (assets), note disclosures,
and if applicable, required supplementary information (RSI) in the financial reports of state and local
governmental employers The new standard applies to all governments which provide health insurance to
employees, as OPEB includes a calculation for even short continuations, such as is legally required by
COBRA and for governments which allow retired employees to continue insurance coverage under the
government's plan even when the retirees pay the premium
Of the total benefits offered by employers to attract and retain qualified employees, some benefits,
including salaries and active- employee healthcare, are taken while the employees are in active service
(i e still working), whereas other benefits, including post employment healthcare and other OPEB, are
taken after the employees' services have ended Nevertheless, both types of benefits constitute
compensation for employee services.
From an accrual accounting perspective, the cost of OPEB, like the cost of pension benefits, generally
should be associated with the periods in which the service occurs, rather than with the periods (often
many years later) when benefits are paid or provided However, in current practice, most OPEB plans are
financed on a pay -as- you -go basis, and financial statements generally do not report the financial effects
of OPEB until the benefits are paid As a result, current financial reporting generally fails to
Recognize the cost of benefits in periods when the related services are received by the
employer
Page 4
OTHER MATTERS (cont
NEW AUDITING STANDARD ACCOUNTING AND FINANCIAL REPORTING FOR
POSTEMPLOYMENT BENEFITS (cont
Provide information about the actuarial accrued liabilities for promised benefits associated
with past services and whether and to what extent those benefits have been funded
Provide information useful in assessing potential demands on the employer's future cash
flows
GASB No. 45 improves the relevance and usefulness of financial reporting by requiring systematic,
accrual -basis measurement and recognition of OPEB cost (expense) over a period that approximates
employees' years of service, and providing information about actuarial accrued liabilities associated with
OPEB and whether and to what extent progress is being made in funding the plan
What does this all mean? It means that the true annual cost and year end liability for OPEB will need to
be measured. GASB No. 45 requires the use of an outside actuary to make these measurements for 100
or more current or former employees eligible to receive benefits (For plans with fewer than 100
participants, there is a simplified approach.) Once all of the information is available from the actuary, the
true annual cost of such benefits will be reported as an expense, for both current and retired employees
Since an actuary will be developing an accurate picture of OPEB costs, such information is useful in
determining employee wage and benefit packages.
The actual details of these calculations and the financial reporting requirements are quite complex
Fortunately, there is time to plan ahead for this effort The effective date to have this information is for the
fiscal year beginning after December 15, 2007.
This topic has been discussed with the Finance Director and it does not appear, at this time, that the
standard will affect the City
NEW AUDITING STANDARD PROPOSED GUIDANCE ON INTERNAL CONTROLS
As part of our audit of your financial statements for the year ended December 31, 2006, we will most likely
be required to follow a significant new auditing standard, or rule
The new standard will provide guidance to an auditor on communicating internal control matters to the
governing body
Among other things, the new standard:
Describes situations in which the auditor would most likely determine that a "material
weakness" exists It is likely that many more governments will now have material weaknesses
than in the past
Changes the current terminology of "reportable condition" to "significant deficiency"
How does this affect your organization? The new rule will review many factors to determine if a material
weakness exists within your organization There are two factors in particular which may cause a material
weakness that affects many governments
The auditor finds material journal entries not detected by the client, and/or
The auditor prepares the annual financial statements and footnotes for the client.
Page 5
OTHER MATTERS (cont
NEW AUDITING STANDARD PROPOSED GUIDANCE ON INTERNAL CONTROLS (cont.)
Under the present reporting rules, these two factors are not usually reported as material weaknesses. The
new rules are likely going to change that.
What are the impacts of a material weakness?
Federal and state granting agencies may require additional audit procedures, in effect,
changing the scope of the audit.
The public's perception of your government may decline.
What should you do?
To avoid the condition of material journal entries, you would need to present the books and records in
such a condition that the audit finds no material changes If you wish to achieve that goal, our audit team
may need to meet with you to develop a plan
To avoid the condition regarding auditor prepared statements, you would need to demonstrate the skills to
prepare the entire financial statement document internally. Whether your staff has that ability is a matter
of judgment which needs to be discussed with the auditor in charge of your engagement
Conversely, you could continue with business as usual, except that the internal control report may be
changed as described above
FRAUD HOTLINE
Occupational fraud (fraud in the workplace) is a widespread problem that affects practically every
organization Much of the information that follows is from the 2004 Report to the Nation on Occupational Fraud
and Abuse, published by the Association of Certified Fraud Examiners. That report reviewed 508 occupational
fraud cases. Interestingly, almost half of the cases in the study took place in organizations with fewer than 100
employees
There are three major categories of occupational fraud to consider
Asset misappropriations. Schemes involve the theft or misuse of an organization's assets by
such means as skimming revenues, stealing inventory or committing payroll fraud.
Corruption. People wrongfully use their influence in business transactions to procure some
benefit for themselves or another person One of the most common is accepting kickbacks or
engaging in conflicts of interest
Fraudulent financial statements. This generally involves falsification of an organization's
financial statements by overstating revenues or understating liabilities or expenses.
Most fraud includes some form of cash misappropriation that falls into one of three categories:
Fraudulent disbursements. A perpetrator causes the organization to disburse funds through
some trick or device, such as submitting false invoices or forging checks.
Skimming. Cash is stolen before it is recorded on the organization's books and records.
Cash larceny. Cash is stolen after it has been recorded on the organization's books and records.
Page 6
OTHER MATTERS (cont
FRAUD HOTLINE (cont
As noted in the 2004 study, the most common means of initial detection of occupational fraud, by a wide
margin, was through tips
Detection Method Percentage of Cases
Tip 39 6%
Internal audit 23 8%
By accident 21 3%
Internal controls 18 4%
External audit 10 9%
Notified by police 0 9%
Although audits (both internal and external) are an excellent means of prevention, they are not the most
effective way of detecting fraud Hotlines and other reporting mechanisms are a vital part of an organization's
prevention efforts Occupational fraud cannot be eliminated, but organizations that use hotlines can greatly
reduce these costly crimes
The majority of tips came from employees. Organizations that did not have reporting mechanisms suffered
median losses that were more than twice as high as organizations with them Given these statistics, it appears
that anonymous hotlines provide real benefits Also, the effectiveness of these reporting mechanisms is higher
when they are made available to customers, vendors, and other third parties, not just employees.
Based on the report referred to above, and given the climate of accountability that exists in the business world
today, the City should consider whether it would be worthwhile to set up a fraud hotline There are vendors
who can act as the "host or you can administer it yourself. We can help if you decide to pursue such a
hotline
COMMUNICATION TO AUDIT COMMITTEE OR ITS EQUIVALENT
The following information is to inform the City Council about significant matters related to the annual audit
so that it can appropriately discharge its oversight responsibility of the financial reporting process.
Our Responsibility Under U.S. Generally Accepted Auditing Standards
As stated in our engagement letter dated December 9, 2005, our responsibility, as described by
professional standards, is to plan and perform our audit to obtain reasonable, but not absolute, assurance
that the financial statements are free of material misstatement and are fairly presented in accordance with
U.S. generally accepted accounting principles Because an audit is designed to provide reasonable, but
not absolute assurance and because we did not perform a detailed examination of all transactions there is
a risk that material misstatements may exist and not be detected by us
As part of our audit, we considered the internal control of the City of Rosemount, Such considerations
were solely for the purpose of determining our audit procedures and not to provide any assurance
concerning such internal control.
Page 7
COMMUNICATION TO AUDIT COMMITTEE OR ITS EQUIVALENT
Other Information in Documents Containing Audited Financial Statements
Our responsibility for information in the City's Comprehensive Annual Financial Report (CAFR) does not
extend beyond the financial information identified in our Independent Auditors' Report Under the terms
of our engagement, we do not have an obligation to perform any procedures to corroborate other
information contained in the CAFR Our procedures were limited to reading the other information and
making limited inquires of management Nothing came to our attention that caused us to believe that
such information, or its manner of presentation, is materially inconsistent with the information, or manner
of its presentation, appearing in the financial statements
Significant Accounting Policies
Management has the responsibility for selection and use of appropriate accounting policies. In
accordance with the terms of our engagement letter, we will advise management about the
appropriateness of accounting policies and their application The significant accounting policies used by
the City of Rosemount are discussed in Note 1 to the financial statements No new accounting policies
were adopted and the application of existing policies was not changed during 2005 We noted no
transactions entered into by the City of Rosemount during the year that were both significant and unusual,
and of which, under professional standards, we are required to inform you, or transactions for which there
is a lack of authoritative guidance or consensus.
Accounting Estimates
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 estimates are particularly sensitive because of their significance to the
financial statements and because of the possibility that future events affecting them may differ
significantly from those expected, The most sensitive estimates affecting the financial statements relate
to the capitalization assumptions and depreciation estimates used for infrastructure assets.
We evaluated the key factors and assumptions used to develop the estimated cost of donated
infrastructure and right of way in determining that they are reasonable in relation to the financial
statements taken as a whole.
Audit Adjustments
For purposes of this letter, professional standards define an audit adjustment as a proposed correction of
the basic financial statements that, in our judgment, may not have been detected except through our
auditing procedures. An audit adjustment may or may not indicate matters that could have a significant
effect on the City's financial reporting process (that is, cause future financial statements to be materially
misstated) In our judgment, none of the adjustments we proposed, whether recorded or unrecorded by
the City, either individually or in the aggregate, indicate matters that could have a significant effect on the
City's financial reporting process
Certain audit and bookkeeping adjustments we prepared were included in your financial statements.
Copies of these adjustments are available from management
In addition, management has determined that the effect of the passed adjusting journal entries on the
attached summary is immaterial to the financial statements taken as a whole.
Page 8
COMMUNICATION TO AUDIT COMMITTEE OR ITS EQUIVALENT (cont
CONCLUSION
Disagreements with Management
For purposes of this letter, professional auditing standards define a disagreement with management as a
matter concerning a financial accounting, reporting, or auditing matter that could be significant to the
financial statements or the auditor's report We are pleased to report that no such disagreements arose
during our audit.
Consultations with Other 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 governmental unit's financial statements or a determination of the type of
auditors' 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
Issues Discussed Prior to This Year's Audit
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.
Difficulties Encountered in Performing the Audit
We encountered no difficulties in dealing with management in performing our audit.
We would be pleased to discuss any of the matters noted in this document in further detail at your
convenience, or to perform additional study, or assist you in implementing any of the required or
suggested changes.
We thank you for allowing us to be of service to the City of Rosemount If you have any questions or
comments regarding this report or the financial statements, please contact us
Page 9
COMPREHENSIVE
ANNUAL
FINANCIAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 2005
CITY OF ROSEMOUNT, MINNESOTA
CITY OF ROSEMOUNT, MINNESOTA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 2005
PREPARED BY THE DEPARTMENTS OF
ADMINISTRATION AND FINANCE
JAMES D. VERBRUGGE, City Administrator
JEFFREY A. MAY, Finance Director
CITY OF ROSEMOUNT
COMPREHENSIVE ANNUAL FINANCIAL REPORT
December 31, 2005
TABLE OF CONTENTS
Page
INTRODUCTORY SECTION
Letter of Transmittal v
GFOA Certificate of Achievement xi
Organizational Chart xii
List of Elected and Appointed Officials xiii
FINANCIAL SECTION
Independent Auditors' Report 1
Management's Discussion and Analysis 2 10
Basic Financial Statements
Government -wide Financial Statements:
Statement of Net Assets 11
Statement of Activities 12
Fund Financial Statements:
Balance Sheet— Governmental Funds 13
Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds 14
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the Statement
of Activities 15
Statement of Net Assets Proprietary Funds 16
Statement of Revenues, Expenses, and Changes in Fund Net Assets
Proprietary Funds 17
Statement of Cash Flows Proprietary Funds 18 19
Statement of Net Assets Fiduciary Fund 20
Notes to the Financial Statements 21 55
Required Supplementary Information.
Schedule of Revenues Compared to Budget (Budgetary Basis) Budget and
Actual General Fund 56
Schedule of Expenditures and Other Uses (Budgetary Basis) Budget and
Actual General Fund 57
Notes to Required Supplementary Information 58
Supplementary Information.
Combining and Individual Fund Statements and Schedules:
Combining Balance Sheet Nonmajor Govemmental Funds 59 60
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances Nonmajor Governmental Funds 61 62
Schedules of Revenues, Expenditures and Changes in Fund Balances Budget and Actual:
Building CIP Special Revenue Fund 63
Street CIP Special Revenue Fund 64
Equipment CIP Special Revenue Fund 65
Schedule of Changes in Assets and Liabilities M.A.A.G. Agency Fund 66
CITY OF ROSEMOUNT
COMPREHENSIVE ANNUAL FINANCIAL REPORT
December 31, 2005
TABLE OF CONTENTS
STATISTICAL SECTION (Unaudited)
General Fund Expenditures and Other Financing Uses by Function 67
General Fund Revenues and Other Financing Sources by Source 68
Property Tax Levies and Collections 69
Assessed Value (or Tax Capacity) and Estimated Market Value of
All Taxable Property 70
Property Tax Rates -All Direct and Overlapping Governmental Units 71 72
Schedule of the Ten Largest Taxpayers 73
Special Assessment Receivables and Collections 74
Computation of Legal Debt Margin 75
Ratio of Net Bonded Debt to Assessed Value (or Tax Capacity) and
Market Value and Net Bonded Debt Per Capita 76
Ratio of Annual Debt Service Expenditures For General Bonded Debt
to Total General Fund Expenditures 77
Computation of Direct and Overlapping Bonded Debt General Obligation Bonds 78
Revenue Bond Coverage 79
Demographic Statistics 80
Property Value and Construction 81
Miscellaneous Statistics 82
ROSEMOUNT
March 17, 2006
To the Honorable Mayor, Council Members, and the Citizens of the City of Rosemount.
MINNESOTA
Minnesota statutes require that all cities issue an annual financial report on its financial position
and activity prepared in accordance with generally accepted accounting principals (GAAP), and
audited in accordance with generally accepted auditing standards by a firm of licensed certified
public accountants or the Office of the State Auditor Pursuant to that requirement, we hereby
issue the comprehensive annual financial report of the City of Rosemount (the City) for the
fiscal year ended December 31, 2005.
This report consists of management's representations concerning the finances of the City.
Consequently, management assumes full responsibility for the completeness and reliability of all
of the financial information presented in this report To provide a reasonable basis for making
these representations, management of the City has established a comprehensive internal control
framework that is designed to protect the government's assets from loss, theft, or misuse and to
compile sufficient reliable information for the preparation of the City's financial statements in
conformity with GAAP. Because the cost of internal controls should not outweigh their benefits,
the City's comprehensive framework of internal controls has been designed to provide
reasonable rather than absolute assurance that the financial statements will be free from
material misstatement As management, we assert that, to the best of our knowledge and belief,
this financial report is complete and reliable in all material respects.
The City of Rosemount's financial statements have been audited by Virchow, Krause
Company, LLP, a firm of licensed certified public accountants. The goal of the independent audit
was to provide reasonable assurance that the financial statements of the City for the fiscal year
ended December 31, 2005, are free of material misstatement The independent audit involved
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements; assessing the accounting principles used and significant estimates made by
management; and evaluating the overall financial statement presentation The independent
auditor concluded, based upon the audit, that there was a reasonable basis for rendering an
unqualified opinion that the City's financial statements for the fiscal year ended December 31,
2005, are fairly presented in conformity with GAAP The independent auditor's report is
presented as the first component of the financial section of this report
GAAP require that management provide a narrative introduction, overview, and analysis to
accompany the basic financial statement in the form of Management's Discussion and Analysis
(MD &A) This letter of transmittal is designed to complement MD &A and should be read in
conjunction with it The City of Rosemount's MD &A can be found immediately following the
report of the independent auditors
SPIRIT OF PRIDE AND PROGRESS
Rosemount City Hall 2875 145th Street West Rosemount, MN 55068 -4997
651- 423 -4411 TDD /TTY 651- 423 -6219 Fax 651- 423 -5203
www.ci.rosemount,mn us
Profile of the Government
The City was established as a municipal corporation in 1858, and became a statutory City in
1974 The City has a Mayor Council form of government, with the four Council members being
elected to overlapping four -year terms of office and the Mayor serving a four -year term
coinciding with the tern of two of the Council members This term for the Mayor was a change
instituted in 1996 Prior to that, the Mayor was elected every two years The City Council is
responsible, among other things, for passing ordinances, adopting the budget, appointing
committees and hiring the City's chief administrative officer The City's chief administrative
officer is the City Administrator, who is appointed by and serves at the discretion of the City
Council The City Administrator is responsible for carrying out the policies and ordinances of the
City Council, for overseeing the day -to -day operations of the City and for appointing the heads of
the City's various departments, with the City Council's final approval.
The City of Rosemount is a growing southern suburb in the Minneapolis /St. Paul metropolitan
area, located in Dakota County The City encompasses approximately 36 square miles The
City is one of the fastest growing communities in the seven county Minneapolis /St Paul
metropolitan area as demonstrated by the following population trend'
Population Percent
Population Increase Increase
2005 Estimate 20,837 6,218 43%
2000 Census 14,619 5,997 70%
1990 Census 8,622 3,539 70%
1980 Census 5,083 1,049 26%
1970 Census 4,034
Rosemount has an extensive system of State and County highways and 100 miles of city streets
that continue to contribute to the community's growth This extensive highway network and large
tracts of attractive, developable land have made the City an ideal location for residential
development and increasing commercial /industrial development There is over 500 acres of
industrial and commercially zoned property zoned and ready for development In addition, the
Council recently reguided property in the City's Comprehensive Land Use Plan and expanded
the Municipal Service Area (MUSA) to allow almost 1000 acres of additional commercial and
industrial development located in the central portion of the community, adjoining County Road
42, a principal arterial and surrounding the County Road 42 /State Highway 52 interchange Rail,
air, barge and freeway access provides Rosemount's economic community with an expedient
transportation system Four major highways link Rosemount to Minneapolis, St Paul and the
rest of the metropolitan area
The City provides a full range of services, including police and fire protection; the construction
and maintenance of highways, streets, and other infrastructure, water, sewer, and storm water
services, and recreational activities and cultural events Certain economic development services
are provided through the Rosemount Port Authority The Port Authority's financial data has
been presented in this financial report as a blended component unit.
The annual budget serves as the foundation for the City's financial planning and control All
departments of the City submit requests for appropriation to the City Administrator on or before
July 15 of each year. The City Administrator uses these requests as the starting point for
developing a proposed budget The City Administrator then presents this proposed budget to the
Council for review by September 15 The council is required to hold public hearings on the
proposed budget and to adopt a final budget by no later than December 20, the close of the
City's fiscal year.
vi
The appropriated budget is prepared by fund, department and function. The City's department
heads may make transfers of appropriations within a department, transfers of appropriation
between departments require approval of the City Council Budget -to- actual comparisons are
provided in this report for each individual governmental fund for which an appropriated annual
budget has been adopted For the general fund, this comparison is presented on pages 55 -57
as part of the Required Supplemental Information
Factors Affecting Financial Condition
The information presented in the financial statements is perhaps best understood when it is
considered from the broader perspective of the specific environment within which the City
operates.
Local economy Rosemount is unique in that a significant portion of the community is currently
undeveloped The eastern two thirds of the City is currently agricultural with the western one
third having urban development The rural areas were the subject of a year -long study that
resulted in expansion of the City's Urban Service Area With that change additional urban
growth is expected, continuing the development pattern experienced north of County Road 42,
up to State Highway 52 The fifteen largest taxpayers comprise a mix of residential, industrial,
commercial and utilities that represent approximately 15% of the City's tax base.
Labor market data is very impressive for the State, Minneapolis /St Paul metropolitan area and
Dakota County, in which Rosemount is located 2005 labor force numbers were 2,947,198,
1,850,820, and 232,301 respectively with unemployment rates of 4 0 3 8% and 3 5% to match.
These figures compare quite favorably with national figures.
Community leadership has preserved 356 beautiful acres of land for 24 parks. Residents can
enjoy a round of golf on a 27 -hole public course Bordered by the scenic Mississippi River,
Rosemount also contains 270 acres of the Spring Lake Regional Park Preserve. Rosemount's
Community Center, a part of the Army National Guard's regional headquarters, provides a variety
of indoor recreation opportunities and meeting spaces, including an ice arena, gymnasium,
auditorium and banquet facility.
Given the underlying strength of the economy in the seven county metropolitan area, the
diversification of tax and employment bases and Rosemount's desirable location, the future
outlook is very optimistic.
Long -term financial planning. Growth and development is guided by the City's adopted
Comprehensive Land Use Plan Recently, in July 2005, the Council approved a major
amendment bringing 2000 acres into the Municipal Urban Service Area (MUSA) and providing an
inventory of land for residential, commercial and industrial The update was in recognition of the
faster pace of residential growth experienced in the City over the last several years The
amendment continues to promote orderly development and growth which will perpetuate a sound
tax base.
Other factors. The City of Rosemount continues to experience residential growth faster than
previously projected New housing starts were slightly under the 2004 high, with 454 new
dwelling units brought on -line in 2005 Because of higher home valuations the new units created
$94,056,000 of additional building valuation Additionally, commercial, industrial and institutional
building was significantly higher in 2005 representing an increase in building valuation of
$29,317,000, a 35% increase over 2004
vii
In 2005 the Rosemount City Council continued to move forward on their goals of redeveloping
Downtown and diversifying the City tax base. The City's Port Authority, the development arm of
the City, has been working closely with Contractor Property Developers Company (CPDC) to
acquire property for the first phase of revitalizing Downtown The Core Block East, as
envisioned by the approved Development Framework, will house a mixed use project, expanding
housing, retail and office opportunities in the Downtown Financially, the Downtown and
Harmony mixed residential subdivision are linked through a tax increment finance (TIF) district
that will provide funds to assist with environmental clean -up on the Harmony site and redevelop
Downtown
The Council has provided additional opportunities to attract businesses into the community
through the expansion of the MUSA and reguiding property to business park, light industrial and
commercial Additional land has also been made available for residential development which
continues to have a strong demand To aid in a holistic approach to the residential development,
the City has initiated an Alternate Urban Areawide Review (AUAR)
Progress continues on the City owned parcel of land to the west of Meadows Park. The Bacardi
water tower, Well #14 and Fire Station #2 are all under construction Well #12 is operational,
with the well house nearing final completion The City also took ownership of County Road 38
between State Highway 3 and Blaine Avenue after the turnback from the County was completed
in August. Improvements to County Road 38 from State Highway 3 to County Road 73 will begin
in 2006.
Development projects that began in 2005 include the Meadows of Bloomfield 3 Addition,
Connemara Crossing, the Glendalough 5 and 6 Additions, GlenRose and the Harmony 2 and
3 Additions. Other projects include the Rosemount Crossing retail center at the northwest
corner of County Road 42 and State Highway 3, which opened for business in the fall, and the
completion of the Connemara Trail Overpass, which opened to traffic in August
The 2005 Pavement Management Program covered 4.1 miles of City streets Improvements
included complete reconstruction on 146 Street West, Dodd Court and a portion of Darling
Path; overlays on 130 Street West and Connemara Trail (between Diamond Path and Shannon
Parkway); rehabilitation throughout the Rahn Additions southeast of 145`" Street and
Chippendale Avenue In 2005, the City added 3 97 miles of public streets, 4 05 miles of sanitary
sewer, 4 45 miles of storm sewers, and 4 15 miles of water mains.
The Police Department continues to provide services and programs that are consistent with the
community oriented policing philosophy In 2005 these initiatives included
Patrol officers are assigned to specific geographic beats to patrol. This is done in an effort to
get the officers more familiar with the residents and issues within the area that they patrol on
a daily basis Officers should be more effective in identifying problem locations, problem
persons and issues within the beat. After becoming more familiar with area issues, it is
expected that officers will develop plans, often times with resident input, to address crime or
livability issues within their neighborhood
Drug Abuse Resistance and Education (D A R E An officer taught students at three
Rosemount schools Over 200 fifth grade students graduated from the program in 2005
National Night Out Police and fire officials, along with City Council members, visited
eighteen neighborhoods, including several town home associations and a new condominium
complex, on the first Tuesday of August as part of this nationwide event
Meeting with property managers of the community's multi housing complexes to review
problem addresses and come up with remedies to the problems
vul
In 1999 a Family Resource Center building in Rosemount began operations. The Community
Action Council (CAC) and other service providers utilize this building to work with families in
need in our community The City constructed the building with funding coming entirely from
grants and donations and leases the building to CAC to house their Rosemount operations.
Cash management policies and practices Cash temporarily idle during the year was invested
in certificates of deposit, obligations of the US Treasury, and government agencies. The
maturities of the investments ranged from 1 month to 15 years
Risk management The City is exposed to various risks of loss related to tort liability, theft of,
damage to, or destruction of assets, errors or omissions, injuries to employees, or natural
disasters The City has entered into a joint powers agreement with the League of Minnesota
Cities Insurance Trust (LMCIT) The LMCIT is a public entity risk pool currently operating as a
common risk management and insurance program for Minnesota cities The agreement for
formation of the LMCIT provides that the pool will be self sustaining through member premiums
and will reinsure through commercial companies for claims in excess of reserved amounts for
each insured event The pooling agreement allows for the pool to make additional assessments
to make the pool self sustaining The City has determined that it is not possible to estimate the
amount of such additional assessments in the unlikely event that they are necessary.
The City's workers compensation and employer's liability insurance policies provide statutory
coverage The City elects to participate in the regular premium option offered by LMCIT with a
$2,500 medical deductible per occurrence for workers compensation and a $500 deductible per
occurrence for liability insurance that offers substantial premium savings when the City has a
relatively small amount of claims An insurance fund has been established to account for the
savings when the City has a low claim year in either of the insurance policies to offset the
negative effects that the City may have if the City has a high claim year The City's plan is to
continue to build reserves in this fund in the hope of raising the deductibles and working closer
towards self insurance (although we realize that we will never be totally self insured)
The City has also contracted with a risk management consulting firm to assist in the planning
and administering of our insurance needs The City has been working with a firm since 1994 and
the positive impact on the City has been substantial Advice given to the City in working towards
self insurance has proven very beneficial Also, advice given to the City regarding areas that are
underinsured and areas that are over insured have resulted in many changes, all of them
benefiting the City, and ultimately, its citizens.
Awards and Acknowledgements
The Government Finance Officers Association of the United States and Canada (GFOA) awarded
a Certificate of Achievement for Excellence in Financial Reporting to the City of Rosemount for
its comprehensive annual financial report (CAFR) for the fiscal year ended December 31, 2004
This was the ninth consecutive year that the City has achieved this prestigious award In order
to be awarded a Certificate of Achievement, a government must publish an easily readable and
efficiently organized comprehensive annual financial report This report must satisfy both
generally accepted accounting principles and applicable legal requirements
A Certificate of Achievement is valid for a period of one year only We believe that our current
comprehensive annual financial report continues to meet the Certificate of Achievement
Program's requirements and we are submitting it to the GFOA to determine its eligibility for
another certificate
ix
The preparation of this report on a timely basis could not have been accomplished without the
efficient and dedicated services of the Finance and Administration Departments We would like
to express our appreciation to all members of City staff who assisted and contributed to the
preparation of this report We would also like to express our appreciation to the Mayor and the
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
Respectfully submitted,
JeffreyA May
Finance Director
James D 'rbrugg
x
City Administrator
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Rosemount,
Minnesota
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
December 31, 2004
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.
U
President
Executive Director
xi
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1!
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0
1
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1
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Y Y Y Y T
0
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ELECTED OFFICIALS
Mayor Bill Droste
Councilmember Mike Baxter
Councilmember Phillip Sterner
Councilmember Kim Shoe Corrigan
Councilmember Mark DeBettignies
APPOINTED OFFICIALS
City Administrator
Finance Director
Assistant City Administrator
City Engineer
Community Development Director
Police Chief
Fire Chief
Parks and Recreation Director
CONSULTANTS AND ADVISORS:
Legal
Auditing
Fiscal
Engineering
CITY OF ROSEMOUNT
CITY OFFICIALS
Year Ended December 31, 2005
Term of Office
Four Years
Four Years
Four Years
Four Years
Four Years
James D. Verbrugge
Jeffrey A. May
Dawn Weitzel
Andrew Brotzler
Kim Lindquist
Gary D Kalstabakken
Scott W. Aker
Dan Schultz
Term Expires
December 31, 2006
December 31, 2008
December 31, 2008
December 31, 2006
December 31, 2006
Kennedy Graven
Fluegel Moynihan, P.A.
Briggs Morgan
Virchow, Krause Company, LLP
Springsted, Inc
Ehlers Associates, Inc.
Bonestroo, Rosene, Anderlik Associates
Short- Elliot- Hendrickson, Inc.
WSB Associates
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 Rosemount, Minnesota, as
of and for the year ended December 31, 2005, which collectively comprise the City's basic financial statements as
listed in the table of contents. These financial statements are the responsibility of the City of Rosemount's
management Our responsibility is to express opinions on these financial statements based on our audit. The prior
year summarized comparative information has been derived from the City's 2004 financial statements and, in our
report dated March 18, 2005, we expressed unqualified opinions on the respective financial statements of the
1 1 governmental activities, the business -type activities, each major fund, and the aggregate remaining fund
information.
To The Honorable Mayor and Members of the City Council
City of Rosemount, Minnesota
IMMO
Ilia
Vi rchowK ause
&company
INDEPENDENT AUDITORS' REPORT
We conducted our audit in accordance with auditing standards generally accepted in the United States of America.
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 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 Rosemount, Minnesota, as of December 31, 2005, 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.
The management's discussion and analysis on pages 2 through 10 and the budgetary comparison schedules on
pages 57 through 59 are not required parts of the basic financial statements, but are supplementary information
required by the Governmental Accounting Standards Board We have applied certain limited procedures, which
consisted principally of inquiries of management regarding the methods of measurement and presentation of the
required supplementary information However, we did not audit the information and express no opinion on it
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise
the City of Rosemount's basic financial statements The introductory section, combining and individual fund
statements and schedules, and statistical tables, as listed in the table of contents, are presented for purposes of
additional analysis and are not a required part of the basic financial statements The combining and individual fund
statements and schedules have been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial
statements taken as a whole The introductory section and statistical tables have not been subjected to the
auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion
on them
Minneapolis, Minnesota
March 17, 2006
Virchow, Krause Company, LLP
Certified Public Accountants Consultants An Independent Member of Baker Tilly International
Page 1
Financial Highlights
Management's Discussion and Analysis
As management of the City of Rosemount (the City), we offer readers of the City's financial statements this
narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31,
2005 We encourage readers to consider the information presented here in conjunction with the City's
financial statements following this section
The assets of the City exceeded it's liabilities at the close of the most recent fiscal year by
$151,621,814 (net assets) Of this amount, $35,685,683 (unrestricted net assets) may be used to meet
1
the government's ongoing obligations to citizens and creditors
The City's total net assets increased by $18,329,754. Approximately 65 percent of this increase is
attributable to cash contributions from developers
At year end, unreserved fund balance for the general fund, net of $666,303 designated for compensated
z absences, was $4,511,547, or 53 percent of the total general fund expenditures budgeted for the
upcoming year Comparison of this balance to prior years' balances is illustrated on the table on page 8.
r7 The City's total debt increased by $4,500,000 (17 percent) during the current year The reason for this
J1 increase was that there were four new debt issuances, offset by scheduled payments on existing debt.
ti
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the City's basic financial statements The
City's basic financial statements comprise three components. 1) government -wide financial statements, 2) fund
financial statements, and 3) notes to the financial statements This report also contains other supplementary
information in addition to the basic financial statements themselves.
Government -wide financial statements The government -wide financial statements are designed to provide
readers with a broad overview of the City's finances, in a manner similar to a private- sector business
J
The statement of net assets presents information on all of the City's assets and liabilities, with the difference
between the two reported as net assets Over time, increases or decreases in net assets may serve as a useful
indicator of whether the financial position of the City is improving or deteriorating.
The statement of activities presents information showing how the government'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 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, pubic works, recreation, and
community development The business -type activities of the City include water, sewer, storm water and an ice
arena
The government -wide financial statements include not only the City itself, but also a legally separate port
authority, which functions as the economic development arm of the City, and therefore has been blended in with
the primary government.
The government -wide financial statements can be found on pages 11 -12 of this report.
Page 2
I
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 the near -term inflows and outflows of
spendable resources, as well as on balances of spendable resources available at the end of the fiscal year.
Such information may be useful in evaluating a government's near -term financing 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 statements By doing so, readers may better
understand the long -term impact of the government's near -term financing decisions Both the governmental fund
balance sheet and governmental fund statement of revenues, expenditures, and changes in fund balances
provide a reconciliation to facilitate this comparison between governmental funds and governmental activities
The City maintains thirteen individual governmental funds Information is presented separately in the
governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and
changes in fund balances for the general fund, debt service fund and capital project fund, all of which are
considered major funds. Data from the ten other governmental funds are combined into a single, aggregated
presentation Individual fund data for each of these nonmajor governmental funds is provided in the form of
combining statements elsewhere in this report
3
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
The City adopts an annual appropriated budget for its general fund. A budgetary comparison statement has
1
been provided for the general fund to demonstrate compliance with this budget.
The basic governmental fund financial statements can be found on pages 13 -15 of this report.
Proprietary funds The City maintains two different types of proprietary funds Enterprise funds are used to
report the same functions presented as business -type activities in the government -wide financial statements
The City uses enterprise funds to account for its public utilities and ice arena operations The internal service
fund is an accounting device to accumulate and allocate costs internally among the City's various functions The
City uses its internal service fund to account for insurance premiums and deductibles and to accumulate
resources for the risk of uninsured loss Because this service predominantly benefits governmental rather than
business -type functions, it has been included within governmental activities in the government -wide financial
statements
Proprietary funds provide the same type of information as the government -wide financial statements, only in
more detail The proprietary fund financial statements provide separate information for each of the public
utilities, which are considered to be major funds of the City, and information on the ice arena fund, which is
considered a non -major fund. The internal service fund is also presented separately in the proprietary fund
financial statements.
The basic proprietary fund financial statements can be found on pages 16 -19 of this report.
Fiduciary funds Fiduciary funds are used to account for resources held for the benefit of parties outside the
government Fiduciary funds are not reflected in the government -wide financial statement because the
resources of those funds are not available to support the City's own programs
The City had one fiduciary fund for the year ended December 31, 2005
Page 3
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 21 -55 of this report
Other information The combining statements referred to earlier in connection with nonmajor governmental
funds are presented following the basic financial statements Combining and Individual fund statements and
schedules can be found on pages 59 -66 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 $151,621,814 at the close of the most recent fiscal year
The largest portion of the City's net assets (64 percent) reflects its investment in capital assets (e g land,
buildings, machinery and equipment, Infrastructure), less any related debt used to acquire those assets that is
still outstanding The City uses these capital assets to provide services to citizens, consequently, these assets
are not for future spending Although the City's investment in 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
Current and other assets
Capital assets
Total assets
Long -term liabilities outstanding
Other liabilities
Total liabilities
Net assets
Invested in capital assets,
net of related debt
Restricted
Unrestricted
Total net assets
City of Rosemount's Net Assets
Governmental Business -type 2005 Governmental Business -type 2004
Activities Activities Total Activities Activities Total
32,544,993 24,937,020 57,482,013 28,872,124 20,263,037 49,135,161
47,438 537 81,093,226 128,531,763 38,264,100 76,243,156 114,507,256
79,983,530 106,030,246 186,013,776 67,136,224 96,506,193 163,642,417
23,367,256 8,784,811 32,152,067 21,795,003 6,534,166 28,299,169
1,848,196 391,429 2,239,625 1,822,470 198,718 2,021,188
25,215,452 9,176,240 34,391,692 23,617,473 6,732,884 30,350,357
24,737,314 72,422,792 97,160,106 17,030,985 69,812,374 86,843,359
9,632,707 9,143,318 18,776,025 9,508,673 6,910,541 16,419,214
20,397,787 15,287,896 35,685,683 16,979,093 13,050,394 30,029,487
54,767,808 96,854,006 151,621,814 43 518,751 89,773,309 133,292,060
An additional portion of the City's net assets (12 percent) represents resources that are subject to external
restrictions on how they may be used The remaining balance of unrestricted net assets ($35,685,683) may be
used to meet the government'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 government as a whole, as well as for its separate governmental and business -type
activities
Page 4
Governmental activities Governmental activities increased the City's net assets
accounting for 61 percent of the total growth in net assets of the City
Business -type activities Business -type activities increased the City's net assets b
for 39 percent of the total growth in the government's net assets
Elements of these Increases are as follows.
City's Changes in Net Assets
Governmental Business -type 2005 Governmental Business -type
Revenues:
Program revenues
Charges for services
Operating grants and contributions
Capital grants and contributions
General revenues
Property taxes
Other taxes
Investment income
Other
Total revenues
Expenses
General government
Public safety
Public works
Recreation
Community development
Interest on long -term debt
Water
Sewer
Storm water
Arena
Total expenses
Increase in net assets
before transfers
Transfers
Increase in net assets
Net assets Beginning of Year
Net assets End of Year
Activities Activities
3,990,126
653,403
18,117,285
8,280,011
173,719
567,112
71,371
31,853,027
2,739,933
2,730,428
8,344,837
1,250, 743
2,297
1,067,478
16,135,716
15,717,311
(4,468,254)
11,249,057
43,518,751
54,767,808
6,840,286
132,608
572,317
7,545,211
1,671,775
1,975,164
842,701
443,128
4,932,768
2,612,443
4,468,254
7,080,697
89,773,309
96,854,006
Total Activities Activities
10,830,412
653,403
18,249,893
4,190,263
2,028,372
8,672,316
8,280,011 7,969,316
173,719 141,642
1,139,429 376,200
71,371 29,244
39,398,238 23,407,353
2,739,933 2,068,246
2,730,428 2,468,826
8,344,837 5,893,405
1,250, 743 1,154, 709
2,297 23,598
1,067,478 802,957
1,671,775
1,975,164
842,701
443,128
21,068,484 12,411,741
by $11,249,057, thereby
y $7,080,697, accounting
440,306
9,230,045
1,763,570
1,703,280
737,401
391,570
4,595,821
2004
Total
7,527,505 11,717,768
2,028,372
1,262,234 9,934,550
7,969,316
141,642
816,506
29,244
32 637,398
2,068,246
2,468,826
5,893,405
1,154,709
23,598
802,957
1,763,570
1,703,280
737,401
391,570
17,007,562
18,329,754 10,995,612 4,634,224 15,629,836
(5,087,288) 5,087,288
18,329,754 5,908,324 9,721,512 15,629,836
133,292,060 37,610,427 80,081,797 117,662,224
151 621,814 43,518,751 89,773,309 133,292,060
Page 5
Millions
Expenses and Program Revenues Governmental Activities
General Government Public Safety Public Works Recreebon Community Interest on long-term
Development debt
Investment income and
miscellaneous
49%
Revenues by Source Governmental Activities
Special assessments
5%
Expenses
Revenue
Fines and forfeitures
0%
Taxes,
30%
Intergovernmental
r
Public charges for
services
10%
Licenses and permits
4%
Page 6
i�
A
J
25
2
Millions 15
1
Expenses and Program Revenues Business -type Activities
Water
Revenues by Source Business -type Activities
Surcharges and penalties
Investmentincome 3%
9%
Special assessments
Connection fees
43°
Server
Storm water
Miscellaneous
9%
Water meters
2%
Charges for services
"41%
Ice Arena
Expenses
Revenue
Financial Analysis of the Government's Funds
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance related
legal requirements.
Governmental funds The focus of the City's governmental funds is to provide information on near -term
inflows, outflows. and balances of spendable resources Such information is useful in assessing the City's
financing requirements In particular, unreserved fund balance may serve as a useful measure of a
government's net resources available for spending at the end of the fiscal year
Page 7
As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances
of $26,531,072, an increase of $4,176,182 in comparison with the prior year Approximately 56 percent of this
total amount ($14,947,862) constitutes unreserved fund balance, which is available for spending at the
government's discretion The remainder of the fund balance is reserved to indicate that it is not available for
new spending because it has already been committed to 1) liquidate contracts and purchase orders of the prior
year ($1,767,989), 2) pay debt service ($9,784,931), and 3) prepaid items $30,290
The general fund is the chief operating fund of the City At the end of the current fiscal year, unreserved fund
balance of the general fund was $5,177,850, while total fund balance reached $5,807,738 The following table
shows year -end general fund balances as compared to the adopted expenditure budget of the following year
Fund Balance
Year Budget Amount Percent of Next Budget
1996 4,531,935 1,583,375 35%
1997 4,578,300 1,928,980 41%
1998 4,715,600 2,438,384 50%
1999 4,855,900 3,054,533 58%
2000 5,258,318 3,716,529 66%
2001 5,663,200 3,765,603 58%
2002 6,501,600 5,126,656 70%
2003 7,338,100 4,061,256 55%
2004 7,409,400 4,383,289 55%
2005 7,996,100 4,511,547 53%
2006 8,516,300
`This amount represents the unreserved general fund balance net of amount designated for compensated absences
During the current fiscal year, unreserved fund balance in the general fund increased by $232,674 The
increase was intentional as the City has determined, through the adoption of a formal Fund Balance Policy, it
would like to maintain a maximum unreserved fund balance of 55 percent of the next general fund operating
expenditure budget Forty to fifty percent normally provides adequate working capital to finance general fund
operations until property taxes and state aids are received The desired unreserved fund balance level also
provides a certain amount of comfort that unforeseen emergencies can be addressed without causing an
immediate financial crisis.
As of December 31, 2005, 87 percent of the unreserved fund balance of the general fund has been designated
to meet working capital needs and 13 percent has been designated to cover the compensated absences liability
The debt service fund balance increased by $276,258 due to debt proceeds, tax revenue, special assessments
and a transfer offsetting debt payments The capital projects fund balance increased by $3,682,992 due to
developer contributions (totaling $11,733,067, reported as miscellaneous revenue), debt proceeds and transfers
from various funds offsetting capital outlay expenses
Proprietary funds The City's proprietary funds provide the same type of information found in the government-
wide statements, but in more detail
Unrestricted net assets of the public utilities funds at the end of the year amounted to $15,320,279 while the
arena fund had a net deficit of $32,383 The growth in total net assets for the public utilities funds was
$7,206,801 and the decrease in total net assets for the arena fund was 5126,104
General Fund Budgetary Highlights
There were no significant variances between final budgeted revenues and actual amounts. In the area of
licenses and permits the City experienced a surplus despite a slowdown in growth. Other revenue areas
experienced small surpluses that led to the final surplus amount. The City lost 5350,000 in aid from the State
and that loss was absorbed by the overall revenue surplus
Page 8
I
Actual expenditures were less than budgeted for public works and recreation. General government expenditures
exceeded budgeted amounts by less than 3% due to the unanticipated use of the councils' reserve for the
purchase of land for a library. Public safety expenditures exceeded the budget by about 1% due to
unanticipated salary expenses
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, 2005, amounts to $128,531,763 (net of accumulated depreciation) This investment in capital
assets includes land, buildings and structures, machinery and equipment, water, sewer, and storm water
systems, infrastructure and construction in progress
Major capital assets events during the current fiscal year included the following:
Of the capital asset additions totaling over $27,450,000 for the year, developers paid for approximately
$11,733,000 of them.
Land
Land improvements
Buildings
Machinery and equipment
Mains and lines
Infrastructure
Construction in progress
Total capital assets
City of Rosemount's Capital Assets
(net of depreciation)
Governmental
Activities
6,024,544
469,058
10,173, 226
3,177,351
24,001,069
3,593,289
47,438,537
Business -type
Activities
1,827,979
4,881,415
914,873
66,899,925
6,569,034
81,093,226
Total
7,852,523
469,058
15,054,641
4,092,224
66,899,925
24,001,069
10,162, 323
128,531,763
Additional information on the City's capital assets can be found in Note IV C on pages 39 -41 of this report.
Long -term debt At the end of the current fiscal year, the City had total bonded debt outstanding of
$29,835,000 (including debt recorded in the Port Authority) Of this amount, $9,025,000 was for general
obligation improvement debt which has financed special assessment construction as part the continuing
development within the City An additional $6,570,000 was general obligation debt issued by the Port Authority
which financed the City's economic development and redevelopment programs Another $8,730,000 was
general obligation revenue bond debt issued to add to and improve the water and storm water utility systems
within the City The remaining $5,510,000 was general obligation and general obligation refunding debt. In
addition, the City had $1,535,000 of equipment certificates outstanding at December 31, 2005
The City's total debt increased by $4,500,000 (17 percent) during the current fiscal year. The net increase was
due to the scheduled retirement of bonded debt and new debt being issued for the construction of a new fire
station, a new water tower and equipment certificates for the purchase of additional equipment for the City
Cities in Minnesota may issue general obligation debt up to a maximum of 2 percent of the total estimated
market value of property within the city, per state statutes The current debt limit for the City is $32,856,728 Of
the City's $29,835,000 in outstanding general obligation debt at the current fiscal year end, $5,541,986 is
subject to the restrictions placed by state statute.
The City's bond rating remains at Al in 2005 This excellent rating has had a positive effect on the sale of the
City's bonds.
Additional information on the City's long -term debt can be found in Note IV.E. on pages 44 -46 of this report
Page 9
1 Economic Factors
Dakota County's unemployment rate ended the year at 3.5 percent, which compares favorably with the
state unemployment rate of 4 0 percent, and the national unemployment rate of 5 1 percent
City building permits were slightly lower in both quantity and value in 2005, as compared to 2004 A total
of 1,057 permits with a total valuation of $123,374,042 were issued in 2005
Requests for Information
This financial report is designed to provide a general overview of the City's finances for all those with an interest
in the government's finances Questions concerning any of the information provided in this report or requests for
additional information should be addressed to the Finance Director, City of Rosemount, 2875 145 Street West,
Rosemount, Minnesota 55068 -4997.
Page 10
1
1
ASSETS
Cash and investments
Receivables (net of allowance for uncollectibles)
Taxes
Delinquent taxes
Accounts
Loans
Special assessments
Due from other governmental units
Internal balances
Prepaid items
Capital assets
Land
Construction in progress
Land improvements
Buildings
Machinery and equipment
Infrastructure
Less accumulated depreciation
Total Assets
LIABILITIES
Accounts payable
Accrued payroll and payroll taxes
Other accrued liabilities and deposits
Noncurrent liabilities:
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
Unrestricted
Total Net Assets
CITY OF ROSEMOUNT
STATEMENT OF NET ASSETS
December 31, 2005
(With Summarized Information for December 31, 2004)
Governmental
Activities
28,841,911
428,061
108,908
82,314
537,085
3,142,125
9,618
(718,988)
113,959
6,024,544
3,593,289
964,540
12,498,130
7,209,117
30,012,524
(12,863,607)
79,983,530
24,737,314
9,632,707
20,397,787
Business
Type
Activities
22,901,120
776,842
396,719
67,929
718,988
75,422
1,827,979
6,569,034
6,157,989
1,891,265
98,034,884
(33,387,925)
106,030,246
1,286,997 240,536 1,527,533 1,484,023
153,821 153,821 141,392
407,378 150,893 558,271 395,773
4,596,048 619,901 5,215,949 4,238,914
18,771,478 8,164,910 26,936,388 24,090,255
25,215,722 9,176,240 34,391,962 30,350,357
72,422,792
9,143,318
15,287,896
54,767,808 96,854,006 151,621,814 133,292,060
See accompanying notes to financial statements.
2005 2004
51,743,031
428,061
108,908
859,156
537,085
3,538,844
77,547
189,381
7,852,523
10,162,323
964,540
18,656,119
9,100,382
128,047,408
(46,251,532)
186,013,776
97,160,106
18,776,025
35 685,683
Totals
42,702,048
481,833
112,042
846,157
578,597
4,082,197
180,703
151,584
6,001,691
11,138,297
959,852
16,083,294
8,424,516
115,993,843
(44,094,237)
163,642,417
86,843,359
16,419,214
30 029,487
Page 11
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CITY OF ROSEMOUNT
BALANCE SHEET GOVERNMENTAL FUNDS
December 31, 2005
Other Total
Governmental Governmental
General Debt Service Capital Projects Funds Funds
ASSETS
Cash and investments 5,784,663 9,753,900 7,278,437 5,314,580 28,131,580
Receivables from
Taxes 536,969 536,969
Accounts 70,053 12,261 82,314
Other funds 60,383 60,383
Loans 537,085 537,085
Special assessments 72,470 2,591,488 366,956 3,030,914
Delinquent special assessments 1,064 92,957 17,190 111,211
Due from other governmental units 9,618 9,618
Prepaid items 29,926 364 30,290
Total assets 6,565,146 12,438,345 7,278,437 6,248,436 32,530,364
LIABILITIES AND FUND BALANCES
Liabilities
Accounts payable 329,162 353,362 72,130 754,654
Accrued payroll and payroll taxes 153,821 153,821
Deposits payable 31,750 31,750
Contracts payable 529,213 529,213
Deferred revenue 242,675 2,653,414 914,777 3,810,866
Advances from other funds 718,988 718,988
Total liabilities 757,408 2,653,414 882,575 1,705,895 5,999,292
Fund balances
Reserved for
Debt service 9,784,931 9,784,931
Encumbrances 599,962 1,168,027 1,767,989
Prepaid items 29,926 364 30,290
Unreserved and designated, reported in.
General fund 5,162,364 5,162,364
Capital projects 6,395,862 6,395,862
Special projects 3,706,078 3,706,078
Unreserved and undesignated (deficit), reported in:
General fund 15,486 15,486
Special revenue funds (331,928) (331,928)
Total fund balances 5,807,738 9,784,931 6,395,862 4,542,541 26,531,072
Total liabilities and fund balances 6,565,146 12,438,345 7,278,437 6,248,436
Amounts reported for govemmental activities in the statement of net assets are different because.
Capital assets used in govemmental funds are not financial resources and, therefore, are not reported in the funds 47,438,537
Some receivables that are not currently available are reported as deferred revenue in the fund financial
statements but are recognized as revenue when earned in the government -wide statements. 3,810,866
Internal service funds are reported in the statement of net assets as governmental activities 709,218
Some liabilities, including long -term debt, are not due and payable in the current period and, therefore, are not
reported in the funds See Note II A (23,721,885)
NET ASSETS OF GOVERNMENTAL ACTIVITIES 54,767,808
See accompanying notes to financial statements.
Page 13
REVENUES
Taxes
Tax increments
Intergovernmental
Public charges for services
Licenses and permits
Fines and forfeitures
Special assessments
Investment income and miscellaneous
Total Revenues
EXPENDITURES
Current
General government
Public safety
Public works
Parks and recreation
Capital Outlay
Debt Service:
Principal retirement
Interest and fiscal charges
Total Expenditures
Excess (deficiency) of revenues
over (under) expenditures
OTHER FINANCING SOURCES (USES)
Issuance of long -term debt
Sale of capital assets
Transfers in
Transfers out
Total Other Financing Sources
Net Change in Fund Balance
FUND BALANCES Beginning
FUND BALANCES ENDING
CITY OF ROSEMOUNT
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS
For the Year Ended December 31, 2005
General
5,029,971
291,734
1,536,175
1,194,106
87,888
14,165
190,645
8,344,684
2,363,025
2,463,782
2,176,035
1,034,193
8,037,035
Other
Governmental
Debt Service Capital Projects Funds
1,330,114
22 264
2,899
1,160,037
154,048
2,669,362
4,999
3,035,000
856,687
3,896,686
307,649 (1,227,324) (692,893) (154,214) (1,766,782)
1,197,582
21,638 306,000
(297)
21,341 1,503,582
328,990
5,478,748
276,258
9,508,673
1,816,380 8,176,465
22,264
327,903 619,637
1,171,956 2,708,131
1,194,106
90,787
208,337 1,382, 539
11,880,714 666,400 12,891,807
12,208,617 3,863,073 27,085,736
12,901,510
12,901,510
See accompanying notes to financial statements.
2,555,861 1,526,557
2,650
1,838,162 11,297
(18,138) (1,498,348)
4,375,885 42,156
3,682,992 (112,058)
2,712,870
Total
Govemmental
Funds
119,323 2,482,348
897 2,464,679
9,263 2,190,297
1,034,193
3,031,077 15,932,587
776,892 3,811,892
79,835 936,522
4,017,287 28,852,518
5,280,000
2,650
2,177,097
(1,516,783)
5,942,964
4,176,182
4,654,599 22,354,890
5,807,738 9,784,931 6,395,862 4,542,541 26,531,072
Page 14
1
CITY OF ROSEMOUNT
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
For the Year Ended December 31, 2005
Net change in fund balances total governmental funds 4,176,182
Amounts reported for governmental activities in the statement of activities
are different because
Governmental funds report capital outlays as expenditures However, in the
statement of net assets the cost of these assets is capitalized and they are
depreciated over their estimated useful lives with depreciation expense reported
in the statement of activities
Capital outlay is reported as an expenditure in the fund financial statements
but is capitalized in the government -wide financial statements 15,932,587
Less. Some items reported as capital outlay but not capitalized (6,268,235)
Add: Developer contributed assets 954,754
Depreciation is reported in the government -wide statements (1,288,986)
In the statement of activities, only the gain or loss ($153,035) on the disposal of
capital assets is reported. In the fund financial statements, proceeds from the sale
of capital assets ($2,650) are reported because the proceeds increase
financial resources. (155,685)
Internal service funds are reported in the statement of activities. 78,245
Receivables not currently available are reported as deferred revenue in the fund financial
statements but are recognized as revenue when earned in the government -wide
financial statements. (476,326)
Issuing debt provides current financial resources to governmental funds, but issuing
debt increases long -term liabilities in the statement of net assets.
This is the amount of debt Issued during the year
Repayment of debt principal is an expenditure in the governmental funds, but the
repayment reduces long -term liabilities in the statement of net assets. This is the amount
of principal payments paid.
Some expenses in the statement of activities do not require the use of
current financial resources and, therefore, are not reported as expenditures
in the governmental funds. This is the change in the following liabilities.
Compensated absences
Accrued interest on debt
CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES
See accompanying notes to financial statements
(5,258,731)
3,811,892
(104,416)
(152,224)
11,249,057
Page 15
Total Assets
TOTAL NET ASSETS
CITY OF ROSEMOUNT
STATEMENT OF NET ASSETS PROPRIETARY FUNDS
December 31, 2005
Business -Type Activities Enterprise Funds
Storm Non -major
Water Sewer Water Arena
Total
ASSETS
Current assets'
Cash and investments 9,858,866 6,544,653 6,497,601 22,901,120
Customer accounts receivable 327,521 290,559 158,762 776,842
Special assessments receivable 79,686 210,218 106,815 396,719
Due from other governments 67,929 67,929
Prepaid items 6,706 62,741 2,731 3,244 75,422
Total current assets 10,272,779 7,108,171 6,765,909 71,173 24,218 032
LIABILITIES
Current liabilities
Accounts payable 127,387 17,577 13,260 21,929 180,153
Due to other funds 60,383 60,383
Accrued liabilities 11,947 10,315 4,007 5,777 32,046
Accrued interest 48,993 69,854 118,847
Current portion of long term obligations 190,046 20,045 402,390 7,420 619,901
Total current liabilities 378,373 47,937 489,511 95,509 1,011,330
NET ASSETS
Invested in capital assets, net of related debt 20,818,461 25,926,396 23,771,480 1,906,455 72,422,792
Restricted for debt service 5,005,000 413,318 3,725,000 9,143,318
Unrestricted 4,943,762 7,438,131 2,938,386 (32,383) 15,287,896
See accompanying notes to financial statements
Governmental
Activities
Internal Service
Fund
649,948
62,400
712,348
Non current assets:
Advance to other funds 812,924 812,924
Property and equipment
Land 733,843 1,094,136 1,827,979
Construction in progress 2,950,396 1,382,242 2,236,396 6,569,034
Buildings 2,632,655 263,014 862,420 2,399,900 6,157,989
Mains and lines 10,513,033 7,816,030 14,462,584 32,791,647
Other improvements 15,709,459 36,983,749 12,550,029 65,243,237
Machinery and equipment 1,093,615 464,946 238,106 94,598 1,891,265
Less accumulated depreciation (7,845,486) (20,983,585) (3,970,811) (588,043) (33,387,925)
Net property and equipment 25,787,515 25,926,396 27,472,860 1,906,455 81,093,226
Total non current assets 25,787,515 26,739,320 27,472,860 1,906,455 81,906,150
36,060,294 33,847,491 34,238,769 1 977 628 106,124,182 712,348
Page 16
3,130
3,130
Noncurrent liabilities
Accrued compensated absences 21,708 21,709 8,012 8,047 59,476
General obligation debt 4,799,054 3,306,380 8,105,434
Advances from other funds 93,936 93,936
Total noncurrent liabilities 4,914,698 21,709 3,314,392 8,047 8,258,846
Total Liabilities 5,293,071 69,646 3,803,903 103,556 9,270,176 3,130
709,218
30,767.223 33,777,845 30,434,866 1,874,072 96,854,006 709,218
1
OPERATING REVENUES
Charges for services
Water meters
Miscellaneous
Total Operating Revenues
OPERATING EXPENSES
Personnel services
Supplies
Professional services and charges
Other services and charges
Metro sewer charges
Depreciation
Total Operating Expenses
Operating Loss
NONOPERATING REVENUES (EXPENSES)
Connection fees
Taxes
Special assessments
Investment income
Net decrease in fair value of investment
Loss from disposal of fixed assets
Surcharges and penalties
Interest expense and fiscal agent fees
Total Nonoperating Revenues
Income (loss) before contributions
and transfers
Capital contnbutions
Transfers in
Transfers out
Change in Net Assets
TOTAL NET ASSETS Beginning
TOTAL NET ASSETS ENDING
CITY OF ROSEMOUNT
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND
NET ASSETS PROPRIETARY FUNDS
For the Year Ended December 31, 2005
Storm
Water Sewer Water
984,333
121,369
100
1,105,802
Business -Type Activities Enterpnse Funds
Non major
Arena
1,168,305 643,124 331,205
1,168,305 643,124 331,205
343,228 342,264 138,068 189,002
179,998 18,823 2,635 11,115
372,798 22,741 52,310 33,145
149,795 250,305 66,329 155,539
597,249
503,473 705,893 405,050 54,327
1,549,292 1,937,275 664,392 443,128
(443,490) (768,970) (21 268) (111,923)
Total
3,126,967
121,369
100
3,248,436
1,012,562
212,571
480,994
621,968
597,249
1,668,743
4,594,087
1,221,253 768,760 1,350,468 3,340,481
44,989 87,619 132,608
229,452 257,850 165,571 319 653,192
(25,431) (37,624) (17,820) (80,875)
(18,306) (32,940) (51,246)
235,497 9,829 2,959 248,285
(104,177) (4,949) (175,224) (284,350)
1,583,277 1,048,545 1,325,954 319 3,958,095
1,139,787 279,575 1,304,686 (111,604) 2,612,444
1,403,472 1,359,073 2,366,022
94,264 58,000
(343,455) (185,980) (268,643)
2,294,068 1,452,668 3,460,065
5,128,567
152,264
(14,500) (812,578)
(126,104) 7,080,697
28,473,155 32,325,177 26,974,801 2,000,176 89,773,309
30,767,223 33,777,845 30,434,866
See accompanying notes to financial statements
Governmental
Activities
Internal Service
Funds
40,083
40,083
232
22,987
206,472
229,691
(1,345,651) (189,608)
255,000
12,853
267,853
78,245
78,245
630,973
1,874,072 96,854,006 709,218
Page 17
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ASSETS
Cash and investments
CITY OF ROSEMOUNT
STATEMENT OF NET ASSETS
FIDUCIARY FUNDS
December 31, 2005
LIABILITIES
Due to MAAG. 21,306
NET ASSETS
See accompanying notes to financial statements
M A.A.G.
Agency
Fund
21,306
Page 20
NOTE Page
I. Summary of Significant Accounting Policies 22
A Reporting Entity 22
B Government -Wide and Fund Financial Statements 23
C Measurement Focus, Basis of Accounting,
and Financial Statement Presentation 25
D. Assets, Liabilities, and Net Assets or Equity 28
1. Deposits and Investments 28
2. Receivables 28
3. Inventories and Prepaid Items 29
4. Capital Assets 30
5. Other Assets 31
6. Compensated Absences 31
7 Long -Term Obligations /Conduit Debt 32
8. Claims and Judgments 32
9. Equity Classifications 33
10. Prior Period Information 33
II. Reconciliation of Government -Wide and Fund Financial Statements 34
A, Explanation of Certain Differences Between the
Governmental Fund Balance Sheet and the Statement of Net Assets 34
III. Stewardship, Compliance, and Accountability 34
A. Budgetary Information 34
B Excess Expenditures Over Appropriations 35
C Deficit Balances 35
IV. Detailed Notes on All Funds 36
A. Deposits and Investments 36
B. Receivables 38
C. Capital Assets 39
D Interfund Receivables /Payables and Transfers 41
E. Long -Term Obligations 44
F. Lease Disclosures 47
G. Net Assets /Fund Balances 47
V. Other Information 50
A Employees' Retirement System 50
B Risk Management 54
C. Commitments and Contingencies 55
D. Subsequent Events 55
CITY OF ROSEMOUNT
INDEX TO NOTES TO FINANCIAL STATEMENTS
December 31, 2005
Page 21
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Rosemount, Minnesota (the "City was formed and operates pursuant to applicable
Minnesota laws and statutes The governing body consists of a five- member City Council
elected at large by voters of the City. City Council members serve four -year staggered terms
and the mayor serves a four -year term coinciding with the terms of two of the Council members.
Elections take place every two years.
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 more significant accounting policies of the City are described
below
A. REPORTING ENTITY
This report includes all of the funds of the City of Rosemount. The reporting entity for the City
consists of (a) the primary government, (b) organizations for which the primary government is
financially accountable and (c) other organizations for which the nature and significance of their
relationship with the primary government are such that their exclusion would cause the reporting
entity's financial statements to be misleading or incomplete. A legally separate organization
should be reported as a component unit if the elected officials of the primary government are
financially accountable to the organization The primary government is financially accountable if
it appoints a voting majority of the organization's governing body and (1) it is able to impose its
will on that organization or (2) there is a potential for the organization to provide specific
financial benefits to or burdens on the primary government. The primary government may be
financially accountable if an organization is fiscally dependent on the primary government
A legally separate, tax exempt organization should be reported as a component unit of a
reporting entity if all of the following criteria are met: (1) the economic resources received or
held by the separate organization are entirely or almost entirely for the direct benefit of the
primary government, its component units, or Its constituents; (2) the primary government is
entitled to, or has the ability to otherwise access, a majority of the economic resources received
or held by the separate organization; (3) the economic resources received or held by an
individual organization that the specific primary government, or its component units, is entitled
to, or has the ability to otherwise access, are significant to that primary government. Blended
component units, although legally separate entities, are, in substance, part of the government's
operations and are reported with similar funds of the primary government.
Blended Component Unit
Rosemount Port Authority
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
The Port Authority serves all the citizens of the government and is governed by a board
comprised of the government's elected council. The bond issuance authorizations are approved
by the government's council and the legal liability for the general obligation portion of the Port
Authority's debt remains with the government. The Port Authority is reported in the special
revenue fund and in the debt service fund Separate financial statements have not been
prepared for the Rosemount Port Authority.
Page 22
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
B. GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS
Government -Wide Financial Statements
The statement of net assets and statement of activities display information about the reporting
government as a whole. They include all funds of the reporting entity The statements
distinguish between governmental and business -type activities. Governmental activities
generally are financed through taxes, intergovernmental revenues, and other nonexchange
revenues. Business -type activities are financed in whole or in part by fees charged to external
parties for goods or services.
The statement of activities demonstrates the degree to which the direct expenses of a given
function, or segment, are offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment The City does not allocate indirect expenses to
functions in the statement of activities 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 segment, and 2) grants and contributions that are restricted to meeting the
operational or capital requirements of a particular function or segment. Taxes and other items
not included among program revenues are reported as general revenues. Internally dedicated
resources are reported as general revenues rather than as program revenues.
Fund Financial Statements
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
Financial statements of the reporting entity are organized into funds, each of which is
considered to be a separate accounting entity. Each fund is accounted for by providing a
separate set of self balancing accounts, which constitute its assets, liabilities, net assets /fund
equity, revenues, and expenditure /expenses.
Separate financial statements are provided for governmental funds and proprietary funds. Major
individual governmental funds and major individual enterprise funds are reported as separate
columns in the fund financial statements.
Funds are organized as major funds or non -major funds within the governmental and proprietary
statements Emphasis is placed on major funds within the governmental and proprietary
categories. A fund is considered major if it is the primary operating fund of the City or meets the
following criteria.
a. Total assets, liabilities, revenues, or expenditures /expenses of that individual
governmental or enterprise fund are at least 10 percent of the corresponding total for all
funds of that category or type, and
b. The same element of the individual governmental fund or enterprise fund that met the 10
percent test is at least 5 percent of the corresponding total for all governmental and
enterprise funds combined.
c. In addition, any other governmental or enterprise fund that the City believes is
particularly important to financial statement users may be reported as a major fund.
Page 23
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
B. GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS (COnt.)
Fund Financial Statements (cont.)
The City reports the following major governmental funds:
General Fund accounts for the City's primary operating activities. It is used to account
for all financial resources except those required to be accounted for in another fund.
Debt Service Fund accounts for resources accumulated and payments made for
principal and interest on long -term debt other than tax increment district or
enterprise fund debt
Capital Projects Fund accounts for proceeds from long -term borrowing and other
resources to be used for capital improvement projects.
The City reports the following major enterprise funds:
Water Utility accounts for operations of the water system
Sewer Utility accounts for operations of the sewer system
Storm Water Utility accounts for operations of the storm water drainage system
The City reports the following non -major governmental and enterprise funds:
Special Revenue Funds used to account for the proceeds of specific revenue
sources (other than major capital projects) that are legally restricted to expenditures
for specified purposes.
Building CIP Fund
Street CIP Fund
Equipment CIP Fund
Park Improvements Fund
Tree Disease Grant Program Fund
Great River Energy Project Fund
Crime Reduction Project Fund
Fire Safety Education Fund
GIS Fund
Port Authority TIF Fund
Port Authority General Fund
Enterprise Funds may be used to report any activity for which a fee is charged to
external uses for goods or services, and must be used for activities which meet certain
debt or cost recovery criteria
Arena Fund accounts for the activities of the City's ice arena operations.
Page 24
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont
B. GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS (cont.)
Fund Financial Statements (cont.)
In addition, the City reports the following fund types:
Internal service funds are used to account for the financing of goods and services
provided by one department or agency to other departments or agencies of the City on
a cost- reimbursement basis.
Insurance Fund accumulates resources to pay deductibles and uninsured claims, and
pays for a majority of the general liability insurance and workers compensation insurance
premiums for the City.
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.
M.A.A.G Fund funds are held on behalf of the Mutual Aid Assistance Group (M.A.A.G.)
which is a cooperative of various Dakota County police departments.
C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND FINANCIAL STATEMENT PRESENTATION
Government -Wide Financial Statements
The government -wide statement of net assets and statement of activities are reported using the
economic resources measurement focus and the accrual basis of accounting. Under the accrual
basis of accounting, revenues are recognized when earned and expenses are recorded when
the liability is Incurred or economic asset used. Revenues, expenses, gains, losses, assets, and
liabilities resulting from exchange and exchange -like transactions are recognized when the
exchange takes place. Property taxes are recognized as revenues in the year for which they are
levied Taxes receivable for the following year are recorded as receivables and deferred
revenue. Grants and similar items are recognized as revenue as soon as all eligibility
requirements imposed by the provider are met. Special assessments are recorded as revenue
when earned Unbilled receivables are recorded as revenues when services are provided
The business -type activities follow all pronouncements of the Governmental Accounting
Standards Board, and have elected not to follow Financial Accounting Standards Board
pronouncements Issued after November 30, 1989.
As a general rule, the effect of interfund activity has been eliminated from the government -wide
financial statements. Exceptions to this general rule are charges between the City's water and
sewer utility and various other functions of the government. Elimination of these charges would
distort the direct costs and program revenues reported for the various functions concerned.
Page 25
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont
C. MEASUREMENT Focus, BASIS OF ACCOUNTING AND FINANCIAL STATEMENT PRESENTATION
(cont.)
Fund Financial Statements
Governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting Revenues are recorded when
they are both measurable and available. Available means collectible within the current period or
soon enough thereafter to be used to pay liabilities of the current period. For this purpose, the
City considers revenues to be available if they are collected within 60 days of the end of the
current fiscal period. Expenditures are recorded when the related fund liability is incurred,
except for unmatured interest on long -term debt, claims, Judgments, compensated absences,
and pension expenditures, which are recorded as a fund liability when expected to be paid with
expendable available financial resources.
Property taxes are recorded in the year levied as receivables and deferred revenues. They are
recognized as revenues in the succeeding year when services financed by the levy are being
provided
Intergovernmental aids and grants are recognized as revenues in the period the City is entitled
the resources and the amounts are available. Amounts owed to the City which are not available
are recorded as receivables and deferred revenues Amounts received prior to the entitlement
period are also recorded as deferred revenues.
Special assessments are recorded as revenues when they become measurable and available as
current assets. Annual Installments due in future years are reflected as receivables and deferred
revenues.
Revenues susceptible to accrual include property taxes, miscellaneous taxes, public charges for
services, special assessments and interest. Other general revenues such as fines and
forfeitures, inspection fees, recreation fees, and miscellaneous revenues are recognized when
received in cash or when measurable and available under the criteria described above
The City reports deferred revenues on its governmental funds balance sheet. Deferred revenues
arise from taxes levied in the current year which are for subsequent year's operations For
governmental fund financial statements, deferred revenues arise when a potential revenue does
not meet both the "measurable" and "available" criteria for recognition in the current period.
Deferred revenues also arise when resources are received before the City has a legal claim to
them, as when grant monies are received prior to the incurrence of qualifying expenditures. In
subsequent periods, when both revenue recognition criteria are met, or when the City has a
legal claim to the resources, the liability for deferred revenue is removed from the balance sheet
and revenue is recognized.
Proprietary fund financial statements are reported using the economic resources measurement
focus and the accrual basis of accounting, as described previously in this note. Agency funds
follow the accrual basis of accounting, and do not have a measurement focus.
Page 26
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND FINANCIAL STATEMENT PRESENTATION
(cont.)
Fund Financial Statements (cont.)
The enterprise funds follow all pronouncements of the Governmental Accounting Standards
Board, and have elected not to follow Financial Accounting Standards Board pronouncements
issued after November 30, 1989. The 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, sewer, storm water,
and arena funds are charges to customers for sales and services. Special assessments are
recorded as receivables and contribution revenue when levied. Operating expenses for
proprietary 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.
All Financial Statements
The preparation of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenditures /expenses
during the reporting period. Actual results could differ from those estimates.
D. ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY
1. Deposits and investments
For purposes of the statement of cash flows, the City considers all highly liquid investments with
an initial maturity of three months or less when acquired to be cash equivalents.
Investment of City funds is restricted by state statutes Available investments are limited to:
1. Direct obligations or obligations guaranteed by the United States or its agencies,
commercial paper, 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 or certain Minnesota brokers /dealers
2. General obligations of the State of Minnesota or any of its municipalities.
3. Bankers acceptances of United States banks eligible for purchase by the Federal Reserve
System.
4. Shares of investment companies registered under the Federal Investment Company Act of
1940 and whose only investments are direct obligations guaranteed by the United States
or its agencies.
Page 27
See Note IV A for further information.
2. Receivables
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont
D. ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY (cont.)
1. Deposits and Investments (cont
The City has adopted an investment policy. The policy contains the following guidelines:
Credit Risk The policy follows state statutes for allowable investments except that
it does not permit the purchase of shares of investment companies registered under
the Federal Investment Company Act of 1940 whose only investments are direct
obligations guaranteed by the United States or its agencies
Concentration of Credit Risk The policy does not limit the amount the City may
invest in any one issuer.
Interest Rate Risk As a means of limiting its exposure to fair value losses arising
from rising interest rates, the City's investment policy limits the amount of
investments with maturities of more than five years to 35% of the City's total
investment portfolio (including certificates of deposit).
Investments that are Highly Sensitive to Interest Rate Changes The policy
does not address interest rate sensitivity.
Investments are stated at fair value, which is the amount at which an investment could be
exchanged in a current transaction between willing parties. Fair values are based on quoted
market prices. No investments are reported at amortized cost Adjustments necessary to record
investments at fair value are recorded in the operating statement as increases or decreases in
investment income. Investment purchases are charged and maturities are deposited to the
consolidated bank account The purpose of this consolidation is to reduce administrative costs
and to provide a single cash balance available for the maximization of investment earnings.
Each fund shares in the investment earnings according to its average cash and investment
balances Cash is transferred from those funds with available cash resources to cover any
negative cash balances in other funds at year -end.
Property tax levies are set by the City Council in the fall each year and are certified to Dakota
County for collection in the following year. In Minnesota, counties act as collection agents for all
property taxes.
The County spreads all levies over taxable property. Such taxes become a lien on January 1
and are recorded as receivables by the City at that date. Property taxes are accrued and
recognized as revenue in the year collectible, net of delinquencies.
Real property taxes may be paid by taxpayers in two equal installments on May 15 and October
15. Personal property taxes may be paid on February 29 and June 30. The County provides tax
settlements to the City five times per year, in January, April, June, July and December.
Page 28
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont
D. ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY (cont.)
2. Receivables (cont.)
Taxes which remain unpaid 60 days after year end are classified as delinquent taxes receivable
and are fully offset by deferred revenue because they are not known to be available to finance
current expenditures.
Special assessments are levied against the benefited properties for the assessable costs of
special assessments Improvement projects in accordance with state statutes The City usually
adopts the assessment rolls when the individual projects are complete. The assessments are
collectible over a term of years generally consistent with the term of years of the related bond
Issue Collection of annual Installments (including Interest) is handled by the County In the same
manner as property taxes. Property owners are allowed to prepay total future Installments
without interest or prepayment penalties.
Special assessments receivable includes the following components:
Current amount collected by Dakota County and not remitted to the City.
Delinquent amounts billed to property owners but not paid.
Deferred assessment installments, which will be billed to property owners in future
years.
Other assessments for which payment has been postponed based on council action.
Accounts receivable are considered to be 100% collectible.
During the course of operations, transactions occur between individual funds that may result in
amounts owed between funds. Short -term interfund loans are reported as "due to and from other
funds Long -term interfund loans (noncurrent portion) are reported as "advances from and to
other funds." Interfund receivables and payables between funds within governmental activities
are eliminated in the statement of net assets Any residual balances outstanding between the
governmental activities and business -type activities are reported in the government -wide
financial statements as "internal balances
In the governmental fund financial statements, advances to other funds are offset equally by a
fund balance reserve account which indicates that they do not constitute expendable available
financial resources and, therefore, are not available for appropriation.
3. Inventories and Prepaid Items
Governmental fund inventory items are charged to expenditure accounts when purchased. Year-
end Inventory was not significant. Proprietary fund inventories are generally used for
construction and for operation and maintenance work, They are not for resale. They are valued
at cost based on weighted average, and charged to construction or operation and maintenance
expense when used
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.
Page 29
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
D. ASSETS, LIABILITIES, AND NET A SSETS OR EQUITY (cont.)
4. Capital Assets
Government Wide Statements
In the government -wide financial statements, fixed assets are accounted for as capital assets.
Capital assets are defined by the government as assets with an initial cost of more than $5,000
for general capital assets and infrastructure assets, and an estimated useful life in excess of five
years All capital assets are valued at historical cost or estimated historical cost if actual
amounts are unavailable Donated capital assets are recorded at their estimated fair value at the
date of donation.
Prior to January 2003, infrastructure assets of governmental funds were not capitalized Upon
implementing GASB 34, governmental units are required to account for all capital assets,
including infrastructure, in the government -wide statements prospectively from the date of
implementation. Retroactive reporting of all major general infrastructure assets is encouraged
but not required until January 1, 2007, when GASB 34 requires the City to retroactively report all
major general infrastructure assets acquired since January 1, 1980. For the year ended
December 31, 2005, the City has retroactively reported the road, parking lot and bridge network
infrastructure acquired by its governmental fund types. Other governmental fund infrastructure
including bike trail and sidewalk networks have not yet been retroactively reported.
Additions to and replacements of capital assets of business -type activities are recorded at
original cost, which includes material, labor, overhead, and an allowance for the cost of funds
used during construction when significant. For tax exempt debt, the amount of interest
capitalized equals the interest expense incurred during construction netted against any interest
revenue from temporary investment of borrowed fund proceeds. During the year ended
December 31, 2005, $259,309 of interest expense was incurred, of which none was capitalized
The cost of renewals and betterments relating to retirement units is added to plant accounts.
The cost of property replaced, retired or otherwise disposed of, is deducted from plant accounts
and, generally, together with removal costs less salvage, is charged to accumulated
depreciation.
Page 30
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
D. ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY (cont.)
4. Capital Assets (cont.)
Government —Wide Statements (cont.)
Depreciation of all exhaustible capital assets is recorded as an allocated expense in the
statement of activities, with accumulated depreciation reflected in the statement of net assets.
Depreciation is provided over the assets' estimated useful lives using the straight -line method of
depreciation. The range of estimated useful lives by type of asset is as follows.
Buildings 30 -65 Years
Machinery and equipment 4 -20 Years
Other improvements 60 Years
Utility system 65 Years
Infrastructure 35 -50 Years
Fund Financial Statements
In the fund financial statements, capital assets used in governmental fund operations are
accounted for as capital outlay expenditures of the governmental fund upon acquisition Capital
assets used in proprietary fund operations are accounted for the same way as in the
government -wide statements
5. Other Assets
In governmental funds, debt issuance costs are recognized as expenditures in the current
period For the government -wide and the proprietary fund type financial statements, debt
issuance costs are deferred and amortized over the term of the debt issue.
6. Compensated Absences
Under terms of employment, employees are granted vacation, sick and comp time benefits in
varying amounts These benefits are based upon union contracts and City actions as applicable.
Amounts carried forward for vacation and comp time accruals are governed by these contracts
and actions Sick pay accruals may be carried forward indefinitely.
All vested vacation, sick leave and comp time 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, and are payable with expendable available resources.
Payments for vacation, sick and comp time leave will be made at rates in effect when the
benefits are used Accumulated vacation, sick and comp time leave liabilities at December 31,
2005 are determined on the basis of current salary rates and include salary related payments.
Page 31
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont
D. ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY (cont.)
7. Long -Term Obligations /Conduit Debt
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
All long -term obligations to be repaid from governmental and business -type resources are
reported as liabilities in the government -wide statements The long -term obligations consist
primarily of notes and bonds payable, and accrued compensated absences.
Long -term obligations for governmental funds are not reported as liabilities in the fund financial
statements. The face value of debts (plus any premiums) are reported as other financing
sources and payments of principal and interest are reported as expenditures. The accounting in
proprietary funds is the same as it is in the government -wide statements.
For the government -wide statements and proprietary fund statements, bond premiums and
discounts are deferred and amortized over the life of the issue using the straight -line method
Gains or losses on prior refundings are amortized over the remaining life of the old debt, or the
life of the new debt, whichever is shorter. The balance at year end for both premiums /discounts
and gains /losses, as applicable, is shown as an increase or decrease in the liability section of
the statement of net assets
The City has approved the issuance of industrial revenue bonds (IRB) for the benefit of private
business enterprises IRB's are secured by mortgages or revenue agreements on the associated
projects, and do not constitute indebtedness of the City. Accordingly, the bonds are not reported
as liabilities in the accompanying financial statements. At year end, the aggregate principal
amount for the five issues outstanding could not be determined; however, their original issue
amounts totaled $6,575,000
8. Claims and Judgments
Claims and judgments are recorded as liabilities if all the conditions of Governmental Accounting
Standards Board pronouncements are met. Claims and judgments that would normally be
liquidated with expendable available financial resources are recorded during the year as
expenditures in the governmental funds If they are not to be liquidated with expendable
available financial resources, no liability is recognized in the governmental fund statements. The
related expenditure is recognized when the liability is liquidated. Claims and judgments are
recorded in the government -wide statement and proprietary funds as expenses when the related
liabilities are incurred. There were no significant claims or judgments at year end.
Page 32
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
D. ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY (cont.)
9. Equity Classifications
Government —Wide Statements
Equity is classified as net assets and displayed in three components:
a. Invested in capital assets, net of related debt Consists of capital assets including
restricted capital assets, net of accumulated depreciation and reduced by the
outstanding balances of any bonds, mortgages, notes, or other borrowings that are
attributable to the acquisition, construction, or improvement of those assets less any
unspent debt proceeds.
b. Restricted net assets Consists of net assets with constraints placed on their use
either by 1) external groups such as creditors, grantors, contributors, or laws or
regulations of other governments or, 2) law through constitutional provisions or
enabling legislation
c. Unrestricted net assets All other net assets that do not meet the definition of
"restricted" or "invested in capital assets, net of related debt
When both restricted and unrestricted resources are available for use, it is the City's policy to
use restricted resources first, then unrestricted resources as they are needed.
Fund Statements
Governmental fund equity is classified as fund balance. Fund balance is further classified as
reserved and unreserved Unreserved fund balance includes funds set aside by management for
specific uses, which are labeled "designated'. The balance of unreserved fund balance is
labeled "undesignated which indicates it is available for appropriation. Proprietary fund equity
is classified the same as in the government -wide statements.
10. Prior Period Information
The basic financial statements 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, 2004, from which the
summarized information was derived.
Page 33
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
NOTE II RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS
A. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND BALANCE
SHEET AND THE 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 Some liabilities,
including long -term debt, are not due and payable in the current period and, therefore, are not
reported in the funds The details of this $23,721,885 difference are as follows:
Long -term liabilities applicable to the City's governmental activities are not due and payable in
the current period, and accordingly, are not reported as fund liabilities. Interest on long -term
debt is not accrued in governmental funds, but rather is recognized as an expenditure when due.
All liabilities both current and long -term are reported in the statement of net assets.
Bonds and notes payable
Capital leases payable
Compensated absences
Accrued interest
Unamortized debt discount and issuance costs
Combined Adjustment for Long -Term Liabilities
NOTE III STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
A. BUDGETARY INFORMATION
22,640,000
61,223
666,303
375,628
(21,269)
23,721,885
Budgetary information is derived from the annual operating budget and is presented using the
same basis of accounting for each fund as described in Note I. C. with departures from GAAP
for encumbrances.
Annual budgets have been adopted for the general fund and three special revenue funds,
Building CIP, Street CIP and Equipment CIP. The capital project funds adopt project length
budgets and therefore are not included in the annual budgeting process Formal budgetary
integration is not employed for debt service funds because effective budgetary control is
alternatively achieved through general obligation bond indenture provisions.
The budgeted amounts presented include any amendments made The appropriated budget is
prepared by fund, department and function. The legal level of budgetary control is at the
department level The City Council may authorize department heads to transfer budgeted
appropriations within departments The Council approved several supplemental budgetary
appropriations during the year, but they were not considered material.
Appropriations lapse at year end unless specifically carried over. Carryovers to the following
year were $1,014,389.
Page 34
1
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
NOTE III STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (cont.)
B. EXCESS EXPENDITURES OVER APPROPRIATIONS
Actual expenditures exceeded budgeted expenditures in the following special revenue fund:
Budget Actual Excess
Building CIP 550,500 1,462,485 911,985
The City controls expenditures at the department level Some individual departments
experienced expenditures which exceeded appropriations. The detail of those Items can be
found in the City's year -end budget to actual report.
C. DEFICIT BALANCES
Generally accepted accounting principles require disclosure of individual funds that have deficit
balances at year end.
As of December 31, 2005, the following individual special revenue fund held a deficit balance:
Port Authority TIF
Amount Reason
464,805 Inter -fund loan from Sewer fund
The City will finance this deficit through external or internal sources in future years.
Page 35
NOTE IV DETAILED NOTES ON ALL FUNDS
A. DEPOSITS AND 1NVES7MENTS
The City's cash and investments at year end were comprised of the following
Petty cash and cash on hand
Demand deposits
U.S. instrumentalities
Total Cash and Investments
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
Carrying
Value
2,400
39,678,129
12,023,425
Reconciliation to financial statements
Per statement of net assets
Unrestricted cash and Investments 51,682,648
Per statement of net assets Agency 21,306
Credit Risk
Credit risk is the
obligations.
As of December
obligations which
Investors Service,
Bank
Balance
2,428
40,149,280
12,023,425
51,703,954 52,175,133
Associated
Risks
N/A
Custodial credit
Credit, concentration
of credit, interest rate
Total Cash and Investments 51,703,954
The difference between the carrying amount and the bank balance represents outstanding
checks and deposits in transit.
Deposits in each local and area bank are insured by the FDIC in the amount of $100,000 for
interest bearing accounts and $100,000 for noninterest bearing accounts.
The City maintains collateral agreements with its banks. At December 31, 2005, the banks had
pledged various government securities in the amount of $52,079,902 to secure the City's
deposits. Therefore, the City has no custodial credit risk.
risk that an issuer or other counterparty to an investment will not fulfill its
31, 2005, all of the City of Rosemount's investments were U.S. agency
received AAA and /or Aaa ratings from Standard Poor's and /or Moody's
respectively.
Page 36
Interest Rate Risk
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
NOTE IV DETAILED NOTES ON ALL FUNDS (cont.)
A. DEPOSITS AND INVESTMENTS (cont.)
Concentration of Credit Risk
Concentration of credit risk is the risk of loss attributed to the magnitude of the City's investment
in a single issuer.
As of December 31, 2005, all of the City of Rosemount's investments were U.S. agency
obligations, as follows
Percentage
Issuer Fair Value of Total
Federal Home Loan Bank 6,333,100 53%
Federal Horne Mortgage Corporation 4,662,852 39%
Federal National Mortgage Association 1,027,473 8%
12,023,425
Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an
investment.
As of December 31, 2005, the City of Rosemount's investments were as follows
Investment Type
Investment Maturities (in years)
Total Fair Less More
Value than 1 1 -5 6 -10 than 10
U.S. Agency Obligations 12,023,425 1,195,768 3,064,297 6,699,490 1,063,870
Investments Highly Sensitive to Interest Rate Changes
Investments highly sensitive to interest rate changes are investments that vary in value more
than one would expect in normal circumstances.
At December 31, 2005, the City held $8,024,569 in U.S. Agency Obligations that are callable at
increasing stepped interest rates
See Note I.D.1 for further information on deposit and investment policies.
Page 37
NOTE IV DETAILED NOTES ON ALL FUNDS (cont.)
8. RECEIVABLES
Receivables as of year end for the government's individual major funds and nonmajor and
internal service in the aggregate, Including the applicable allowances for uncollectible accounts,
are as follows:
Debt Nonmajor
Governmental Activities General Service Governmental Total
Receivables'
Taxes 536,969 536,969
Accounts 70,053 12,261 82,314
Loans 537,085 537,085
Special assessments 72,470 2,591,488 366,956 3,030,914
Delinquent special assessments 1,064 92,957 17,190 111,211
Due from other governments 9,618 9,618
Total Receivables 690,174 2,684,445 933,492 4,308,111
Amounts not expected to be collected
within one year 63,049 2,254,594 319,252 2,636,895
Business -Type Activities
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
Nonmajor
Water Sewer Storm Water Business -Type
Utility Utility Utility Activities
Total
Receivables
Accounts 327,521 290,559 158,762 776,842
Special assessments 79,686 210,218 106,815 396,719
Due from other governments 67,929 67,929
Total Receivables 407,207 500,777 265,577 67,929 1,241,490
Amounts not expected to be collected
within one year 69,327 182,890 92,929 345,146
Page 38
,J
Governmental Activities
Capital Assets Not Being Depreciated:
Land
Construction in progress
Total Capital Assets
Not Being Depreciated
Capital Assets Being Depreciated:
Improvements
Buildings
Machinery and equipment
Roads
Bridges
Parking lots
Total Capital Assets
Being Depreciated
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
NOTE IV DETAILED NOTES ON ALL FUNDS (cont
B. RECEIVABLES (cont.)
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 Property taxes
levied for the subsequent year are not earned and cannot be used 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 and unearned revenue reported in the governmental funds
were as follows
Unavailable Unearned Totals
Delinquent property taxes receivable 108,908
Delinquent special assessments 104,517
Special assessments not yet due 3,000,042
Donations for future projects 597,399
Total Deferred /Unearned Revenue
for Governmental Funds
C. CAPITAL ASSETS
Capital asset activity for the year ended December 31, 2005 was as follows:
3,810,866 3,810,866
Beginning
Balance
4,392,454
2,891,251
7,283,705
959,852
9,938,567
6,763,400
25,177,856
331,944
43,171,619
Additions Deletions
1,632,090
2,940,501
4,572,591
25,051
2,565,434
914,313
2,929,595
1,850,585
8,284,978
108,908
104,517
3,000,042
597,399
6,024,544
2,238,463 3,593,289
2,238,463 9,617,833
20,363
5,871
468,596
277,456
772,286
Ending
Balance
964,540
12,498,130
7,209,117
27,829,995
1,850,585
331,944
50,684,311
Page 39
NOTE IV DETAILED NOTES ON ALL FUNDS (cont
C. CAPITAL ASSETS (cont.)
Governmental Activities (cont.)
Less: Accumulated Depreciation for:
Improvements (460,335) (46,519) (11,372) (495,482)
Buildings (2,087,444) (240,973) (3,513) (2,324,904)
Machinery and equipment (3,959,033) (488,724) (415,991) (4,031,766)
Roads (5,538,266) (496,998) (185,727) (5,849,537)
Bridges (7,711) (7,711)
Parking lots (146,146) (8,061) (154,207)
Total Accumulated Depreciation (12,191,224) (1,288,986) (616,603) (12,863,607)
Net Capital Assets
Being Depreciated 30,980,395 6,995,972 155,686 $37,820,704
Total Governmental Activities
Capital Assets, Net of
Depreciation 38,264,100 $11,568,563 2,394,149 $47,438,537
Depreciation expense was charged to functions as follows:
Governmental Activities
General government
Public safety
Public works, which includes the depreciation of roads, bridges and parking lots
Leisure activities
Total Governmental Activities Depreciation Expense 1,288,986
Business -type Activities
Capital Assets Not Being Depreciated:
Land 1,592,179 235,800 1,827,979
Construction in progress 8,247,046 6,345,360 8,023,372 6,569,034
Total Capital Assets
Not Being Depreciated 9,839,225 6,581,160 8,023,372 8,397,013
Capital Assets Being Depreciated:
Buildings
Machinery and equipment
Mains and lines
Total Capital Assets
Being Depreciated
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
Beginning Ending
Balance Additions Deletions Balance
200,945
162,387
748,152
177,502
Beginning Ending
Balance Additions Deletions Balance
6,161,785 3,796 6,157,989
1,661,116 461,428 231,279 1,891,265
90,484,043 7,550,841 98,034,884
98,306,944 8,012,269 235,075 106,084,138
Page 40
C. CAPITAL ASSETS (cont.)
Business -type Activities (cont.)
Less Accumulated depreciation for:
Buildings
Machinery and equipment
Mains and lines
Total Accumulated Depreciation
Receivable Fund
Sewer
Sewer
Sewer
Subtotal Fund financial
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
NOTE IV DETAILED NOTES ON ALL FUNDS (cont
Beginning
Balance
(1,156,056)
(1,062,111)
(29,684,846)
(31,903,013)
Business -type Activities
Water
Sewer
Storm water
Arena
Total Business -type Activities Depreciation Expense
D. INTERFUND RECEIVABLES /PAYABLES AND TRANSFERS
Payable Fund
Port Authority TIF
Building CIP
Water
Additions
(123,520)
(95,110)
(1,450,113)
(1,668,743)
The following is a schedule of interfund advances as of December 31, 2005'
statements 812,924
Deletions
Amount Not
Due Within
Amount One Year
493,542
225,446 212,931
93,936 88,526
Less: Fund eliminations (93,936)
Total Government -Wide Statement of Net Assets 718,988 212,931
Ending
Balance
(3,002) (1,276,574)
(180,829) (976,392)
(31,134,959)
(183,831) (33,387,925)
Business -type Capital Assets,
Net of Depreciation 76,243,156 12,924,686 8,074,616 81,093,226
Depreciation expense was charged to functions as follows:
503,473
705,893
405,050
54,327
1,668,743
An interfund receivable /payable in the amount of $60,383 from the arena fund to the general
fund was recorded in the fund financial statements for an overdraft in the pooled cash account.
The amount will be repaid within one year.
301,457
(88,526)
Page 41
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
NOTE IV DETAILED NOTES ON ALL FUNDS (cont.)
D. INTERFUND RECEIVABLES /PAYABLES AND TRANSFERS (cont
The principal purpose of these interfund loans was to finance the public works building
expansion in 1999, and to purchase and renovate the Downtown Brockway Tax Increment
Financing District in 2005
For the statement of net assets, interfund balances which are owed within the governmental
activities or business -type activities are netted and eliminated.
The sewer fund advanced funds to the water fund and two special revenue funds. The sewer
fund is charging the other funds interest on the advance based on the average outstanding
advance balance during the year at a rate of 5 Following is a detailed repayment schedule:
Principal Interest Totals
2006 511,467 45,343 556,810
2007 16,939 15,073 34,012
2008 19,886 14,126 34,012
2009 20,880 13,132 34,012
2010 21,925 12,087 34,012
2011 2015 127,203 42,857 170,060
2016 2018 92,624 9,415 102,039
Total 812,924 152,033 964,957
Page 42
Non -major Special
Revenue
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
NOTE IV DETAILED NOTES ON ALL FUNDS (cont
D. 1NTERFUND RECEIVABLES /PAYABLES AND TRANSFERS (cont.)
The following is a schedule of interfund transfers:
Fund Transferred To Fund Transferred From Amount Principal Purpose
General Nonmajor enterprise 3,500 Building grounds maintenance
Capital project 18,138 To close construction funds
Debt Service Water 166,000 Water portion of debt payment
Storm water 140,000 Storm portion of debt payment
Capital Project Nonmajor special 431,323 Street CIP special assessment
revenue portion of project
Nonmajor special 1,007,525 Street CIP share of project
revenue
Nonmajor special 59,500 Park improvement share of
revenue project
Sewer 139,562 Sewer share of project
Water 119,455 Water share of project
Storm water 80,797 Storm share of project
General 297 To close special revenue fund
Nonmajor enterprise 11,000 Arena share of lease payment
Enterprise
Storm water Water 58,000 Water share of debt payment
Water Sewer 46,419 Sewer share of project
Storm water 47,845 Storm water share of project
2,329,361
Less Fund eliminations (1,669,048)
Less Contributed plant reclassified to a transfer
in the government -wide statements (5,128,567)
Total Transfers Government -Wide
Statement of Activities (4,468,254)
Page 43
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
NOTE IV DETAILED NOTES ON ALL FUNDS (cont.)
D. 1NTERFUND RECEIVABLES /PAYABLES AND TRANSFERS (cont.)
Generally, transfers are used to (1) move revenues
that the budget requires to expend them, (2) move
funds collecting the receipts to the debt service
collected in the general fund to finance various
accordance with budgetary authorizations
E. LONG -TERM OBLIGATIONS
Long -term obligations activity for the year ended December 31, 2005 was as follows:
GOVERNMENTAL ACTIVITIES
Bonds and Notes Payable
General obligation debt
Other Liabilities
Vested compensated absences
Capital leases
BUSINESS -TYPE ACTIVITIES
Bonds and Notes Payable
General obligation debt
Subtract Deferred Amounts For:
Discounts
Sub -total
Other Liabilities'
Vested compensated absences
Beginning
Balance
561,887
838,115
1,400, 002
Increases
from the fund that collects them to the fund
receipts restricted to debt service from the
fund, and (3) use unrestricted revenues
programs accounted for in other funds in
20,395,000 5,280,000 3,035,000 22,640,000 4,215,000
374,122
374,122
Total Governmental Activities
Long -Term Liabilities 21,795,002 5,654,122 4,081,598 23,367,526 4,596,048
6,475,000 2,990,000
44,218 23,920
6,430,782 2,966,080
103,384 60,617
Decreases
269,706
776,892
1,046,598
735,000 8,730,000 565,000
8,572 59,566
726,428
Ending
Balance
666,303
61,223
727,526
Amounts
Due Within
One Year
319,825
61,223
381,048
8,670,434 565,000
49,624 114,377 54,901
Total Business -type Activities
Long -Term Liabilities 6,534,166 3,026,697 776,052 8,784,811 619,901
Page 44
E. LONG -TERM OBLIGATIONS (COnt.)
General Obligation Debt
Governmental Activities
General Obligation Debt
Business -type Activities
General Obligation Debt
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
NOTE IV DETAILED NOTES ON ALL FUNDS (cont.)
All general obligation notes and bonds payable are backed by the full faith and credit of the City.
Notes and bonds in the governmental funds will be retired by future property tax levies or tax
Increments accumulated by the debt service fund Business -type activities debt is payable by
revenues from user fees of those funds or, if the revenues are not sufficient, by future tax levies
Date of Final Interest Original Balance
Issue Maturity Rates Indebtedness 12 -31 -05
Fire Station Bonds, Series 1996A 1996 1997 -2016 4.1% to 6 0% 1,780,000 1,165,000
Refunding Bonds, Series 2001E 2001 2004 -2013 3A% to 4 6% 725,000 600,000
Improvement Bonds, Series 1996A 1998 2000 -2009 3 9% to 4.7% 2,010,000 755,000
Improvement Bonds, Series 1999A 1999 2002 -2011 4 3% to 42% 3,715,000 1,515,000
Improvement Bonds, Series 19999 1999 2002 -2011 4 2% to 5 1% 4,395,000 1,940,000
Improvement Bonds, Series 2001A 2001 2003 -2012 3 0% to 4 4% 1,325,000 970,000
Improvement Bonds, Series 2002A 2002 2004 -2013 2 3% to 4 0% 3,395,000 2,110,000
Improvement Bonds, Series 2003A 2003 2005 -2014 2 0% to 3 3% 1,945,000 1,735,000
Municipal Bldg Refunding, Series 1998A 1998 2004 -2018 4 3% to 5 2% 2,405,000 2,145,000
Port Authority, Series 2000B 2000 2002 -2011 4 5% to 5 0% 1,750,000 1,170,000
Public Facilities Bonds, Series 2001C 2001 2003 -2022 4 0% to 5 0% 2,045,000 1,875,000
Port Authority, Series 2002C 2002 2004 -2013 2 3% to 4 0% 1,795,000 1,380,000
Fire Station CIP Bonds, Series 2005A 2005 2007 -2025 3 5% to 4 3% 2,630,000 2,630,000
Equipment Certificates, Series 20058 2005 2006 -2010 2 7% to 3 1% 1,535,000 1,535,000
Fire Station Refunding Bonds, Series 2005D 2005 2007 -2016 3 2% to 3 8% 1,115,000 1,115,000
Total Governmental Activities General Obligation Debt 22,640,000
Date of Final Interest Original Balance
Issue Maturity Rates Indebtedness 12 -31 -05
Storm Water Revenue Bonds, Series 1996B 1996 1998 -2012 4 3% to 5 8% 1,035,000 575,000
Storm Water Revenue Bonds, Series 1999C 1999 2002 -2015 4 7% to 5 4% 855,000 640,000
Water Revenue Bonds, Series 2000A 2000 2002 -2016 4 4% to 5 4% 1,160,000 950,000
Storm Water Revenue Bonds, Series 20018 2001 2003 -2017 4 0% to 4 9% 1,140,000 980,000
Storm Water Rev Refunding Bonds, Series
2001D 2001 2003 -2008 2 5% to 4 0% 805,000 425,000
Storm Water Revenue Bonds, Series 2002B 2002 2004 -2018 3 0% to 4 6% 1,195,000 1,105,000
Storm Water Bonds, Series 20038 2003 2005 -2014 1 2% to 3 4% 1,170,000 1,065,000
Water Revenue Bonds, Series 2005C 2005 2007 -2016 3 5% to 3 8% 2,990,000 2,990,000
Total Business -type Activities General Obligation Debt 8,730,000
Page 45
NOTE IV DETAILED NOTES ON ALL FUNDS (cont.)
E. LONG -TERM OBLIGATIONS (cont.)
General Obligation Debt (cont
Debt service requirements to maturity are as follows:
Years
2006
2007
2008
2009
2010
2011 2015
2016 2020
2021 2025
Other Debt Information
Defeasance of Debt
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
Governmental Activities
General Obligation Debt
Principal Interest
3,130,000
2,865,000
2,915,000
2,340,000
2,210,000
5,795,000
2,175,000
1,210,000
892,147
778,304
691,255
557,020
462,216
1,322,914
487,354
122,228
Business -type Activities
General Obligation Debt
Principal Interest
565,000
710,000
875,000
740,000
780,000
4,085,000
975,000
317,952
293,790
290,430
257,219
228,499
661,928
53,150
Totals 22,640,000 5,313,438 8,730,000 2,102,968
Estimated payments of compensated absences are not included in the debt service requirement
schedules. The compensated absences liability attributable to governmental activities will be
liquidated primarily by the general fund.
There are a number of limitations and restrictions contained in the various bond indentures and
loan agreements. The City believes it is in compliance with all significant limitations and
restrictions, including federal arbitrage regulations
In 2003, the City defeased certain outstanding bonds by placing surplus funds collected on
special assessments in an irrevocable trust to provide for all future debt service payments on
the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are
not included in the City's financial statements. At December 31, 2005, $1,885,000 of bonds
outstanding were considered defeased. The bonds are callable on February 1, 2006.
Page 46
NOTE IV DETAILED NOTES ON ALL FUNDS (cont.)
F. LEASE DISCLOSURES
Lessee Capital Leases
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
G. NET ASSETS /FUND BALANCES
CITY OF ROSEMOUNT
The City entered into a lease- purchase agreement to facilitate the acquisition of an aerial fire
truck. The gross amount of the asset under the capital lease is $476,445 and is included in
capital assets in the governmental activities The outstanding principal balance of $61,223, and
interest totaling $3,673, is due in 2006.
Net assets reported on the government -wide statement of net assets at December 31, 2005
include the following.
Governmental Activities
Invested in capital assets, net of related debt
Land 6,024,544
Construction in progress 3,593,289
Other capital assets, net of accumulated depreciation 37,820,704
Less. related long -term debt outstanding (excluding unspent
capital related debt proceeds) (22,701,223)
Total Invested in Capital Assets, Net of Related Debt 24,737,314
Restricted for debt service 9,632,707
Unrestricted 20,397,787
Total Governmental Activities Net Assets 54,767,808
Page 47
NOTE IV DETAILED NOTES ON ALL FUNDS (cont.)
G. NET ASSETS /FUND BALANCES (cont.)
Governmental Activities (cont.)
Governmental fund balances reported on the fund financial statements at December 31, 2005
Include the following:
Reserved
Major Funds
General Fund
Prepaid items 29,926
Encumbrances 599,962
Total 629,888
Debt Service Fund
Reserved for debt service
Total Major Funds Reserved
Non -Major Funds
Prepaid Items
Building CIP Fund
Reserved for encumbrances
Street CIP Fund
Reserved for encumbrances
Equipment CIP Fund
Reserved for encumbrances
Total Non -Major Funds Reserved
Unreserved, undesignated (deficit)
Major Funds
General fund
Non -Major Funds
Special Revenue Funds
Building CIP fund
Port Authority TIF Fund
Port Authority General Fund
Total
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
9,784,931
10,414,819
364
594,726
250,000
323,301
1,168,391
13,999
(53,417)
(464,805)
186,294
(331,928)
Page 48
G. NET ASSETS /FUND BALANCES (cont.)
Governmental Activities (cont
Unreserved, designated
Major Funds
General fund
Designated for working capital
Designated for compensated absences
Deduction to available funds
Total
General Capital Projects Fund
Designated for capital projects
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
NOTE IV DETAILED NOTES ON ALL FUNDS (cont.)
Total Major Funds Unreserved, designated
5,807,738
666,303
(1,109,458)
5,163,851
6,395,862
11,559,713
Non -Major Funds
Special Revenue Funds
Street CIP fund 1,291,105
Equipment fund 655,962
Park improvements fund 1,656,497
Tree disease grant program fund 149
Crime reduction project fund 1,473
Fire safety education fund 9,027
GIS fund 91,865
Total Non -Major Funds Unreserved, designated 3,706,078
Page 49
NOTE V OTHER INFORMATION
A. EMPLOYEES' RETIREMENT SYSTEM
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
City employees and firefighters participate in the pension plans administered by the Public
Employees Retirement Association of Minnesota (PERA) and the Rosemount Volunteer Fire
Relief Association In accordance with GASB Statement No. 27, the PERA plans are classified
as multiple employer, cost sharing plans, and the Association's plan is classified as a single
employer plan
1. Public Employees Retirement Association
a. Plan Description
All full -time and certain part-time employees of the City of Rosemount, Minnesota
are covered by defined benefit plans administered by the Public Employees
Retirement Association of Minnesota (PERA). PERA administers the Public
Employees Retirement Fund (PERF) and the Public Employees Police and Fire
Fund (PEPFF) which are cost sharing, multiple employer retirement plans. These
plans are established and administered in accordance with Minnesota Statues,
Chapters 353 and 356
PERF members belong to either the Coordinated Plan or the Basic Plan.
Coordinated Plan members are covered by Social Security and Basic Plan
members are not. All new members must participate in the Coordinated Plan All
police officers, firefighters and peace officers who qualify for membership by
statute are covered by the PEPFF.
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 PERF's Coordinated and Basic
Plan members. The retiring member receives the higher of a step -rate benefit
accrual formula (Method 1) or a level accrual formula (Method 2) Under Method
1, the annuity accrual rate for a Basic Plan member is 2 2 percent of average
salary for each of the first 10 years of service and 2.7 percent for each remaining
year. The annuity accrual rate for Coordinated Plan member is 1 2 percent of
average salary for each of the first 10 years and 1.7 percent for each remaining
year Under Method 2, the annuity accrual rate is 2 7 percent of average salary
for Basic Plan members and 1.7 percent for Coordinated Plan members for each
year of service For PEPFF members, the annuity accrual rate is 3.0 percent for
each year of service. For all PEPFF members and for PERF members whose
annuity is calculated using Method 1, a full annuity is available when age plus
years of service equal 90. A reduced retirement annuity is also available to
eligible members seeking early retirement.
Page 50
P
NOTE V OTHER INFORMATION (cont.)
A. EMPLOYEES' RETIREMENT SYSTEM (cont.)
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
1. Public Employees Retirement Association (cont.)
a. Plan Description (cont.)
There are different types of annuities available to members upon retirement. A
normal 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 reduce the monthly normal annuity amount,
because the annuity is 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 PERF and PEPFF. That
report may be obtained by writing to PERA, 514 St. Peter Street #200, St Paul,
Minnesota, 55102 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. PERF Basic Plan members and Coordinated
Plan members are required to contribute 9.10% and 5A0 respectively, of their
annual covered salary PEPFF members are required to contribute 6.20% of their
annual covered salary. The City of Rosemount is required to contribute the
following percentages of annual covered payroll 11 78% for Basic Plan PERF
members, 5.53% for Coordinated Plan PERF members, and 9 30% for PEPFF
members The City's contributions to the Public Employees Retirement Fund for
the years ending December 31, 2005, 2004, and 2003 were $180,854, $167,711,
and $151,312, respectively The City's contributions to the Public Employees
Police Fire Fund for the years ending December 31, 2005, 2004, and 2003
were $126,999, $115,944, and $106,388, respectively The City's contributions
were equal to the contractually required contributions for each year as set by
state statute.
Page 51
NOTE V OTHER INFORMATION (cont.)
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
A. EMPLOYEES' RETIREMENT SYSTEM (cont.)
2. Rosemount Fire Department Relief Association- Defined Benefit Pension Plan
a. Plan Description
The City of Rosemount contributes to the Rosemount Fire Department Relief
Association Pension Plan; a single employer retirement system administered by
the Rosemount Fire Department Relief Association. The Rosemount Fire
Department Relief Association provides a lump -sum benefit to its members upon
retirement, total disability or death These benefit provisions are established and
can be amended by the Rosemount Fire Department Relief Association's Board
of Trustees with approval by the Rosemount City Council. The Rosemount Fire
Department Relief Association issues a publicly available financial report that
includes financial statements and required supplementary information for the
Rosemount Fire Department Relief Association Pension Plan That report may be
obtained by writing to City of Rosemount, 2875 145 Street West, Rosemount,
Minnesota 55068 -4997, or by calling (651) 423 -4411.
b. Funding Policy
The contribution requirements are established and may be amended by the
Minnesota State Legislature The Rosemount Fire Department Relief Association
is comprised of volunteers Therefore, there are not covered payroll amounts or
member contributions required. Individuals with at least 20 years of service who
have reached age 50 are entitled to a lump -sum payment of $4,800 per year of
service. In the event an otherwise qualified member has less than 20 years of
service, the member is eligible for a pension payment of 40 percent after 5 years
of service, increasing 4 percent for each year of service after 5 years to a
maximum of 100 percent. Members retiring before 50 do not receive distributions
until age 50, but interest at 5% per year is added to their retirement benefit until
paid.
c. Annual Pension Cost and Net Pension Obligations
Financial requirements of the Association are determined based on a formula
prescribed in Minnesota Statues 69.772. Those statutes prescribe a set amount
of funding, per $100 of lump -sum benefits payable per year of service. For
associations with assets exceeding the statutory pension liability, the financial
requirements shall be the increase in the statutory pension liability for the next
year over the current year, reduced by an amount equal to one -tenth of the
surplus For associations with a deficit of assets to fund the statutory pension
liability, the financial requirements shall be the increase in the statutory pension
liability for the next year over the current year, increased by an amount equal to
one -tenth the deficit The City's minimum obligation is the financial requirement
for the year less anticipated state aids and interest on investments calculated at
a rate of 5 percent The actuarial value of assets was determined using fair value.
Page 52
NOTE V OTHER INFORMATION (cont.)
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
A. EMPLOYEES' RETIREMENT SYSTEM (cont.)
2. Rosemount Fire Department Relief Association- Defined Benefit Pension Plan
(cont.)
c. Annual Pension Cost and Net Pension Obligations (cont.)
The following actuarial assumptions and methods were used:
Actuarial cost method
Inflation rate
Investment return
Projected salary increases
Postretirement benefit increases
Amortization method
Amortization period
Items are not available because no actuarial valuation was required by
Minnesota statutes.
The annual pension cost for the Rosemount Fire Department Relief Association
Pension Plan for the year ended December 31, 2005 were as follows:
State of Minnesota contribution
City of Rosemount contribution
The City recognizes the State of Minnesota's contributions to the Rosemount Fire
Department Relief Association Pension Plan as revenue and expense.
Three Year Trend Information
Fiscal Year Ending
CITY OF ROSEMOUNT
Annual Pension
Cost
(APC)
N/A
N /A*
N/A
N/A
N/A
N/A
N/A
Amount
107,561
139,050
246,611
Percentage of APC Net Pension
Contribution Obligation
2005 246,611 100.0 0
2004 241,192 100 0 0
2003 214,949 100.0 0
A formal actuarial valuation is not required by Minnesota Statutes because the
pension benefit is a lump -sum distribution. The formula used to compute pension
contributions requirements is substantially the same as that used to determine
the standardized measure of the net pension obligation. The computation of the
pension contribution requirements for 2005 was based on the same formula,
funding method and other factors that were used in previous years
Page 53
NOTE V— OTHER INFORMATION (cont.)
A. EMPLOYEES' RETIREMENT SYSTEM (cont.)
2. Rosemount Fire Department Relief Association Defined Benefit Pension Plan
(cant.)
d. Required Supplementary Information, Schedule of Funding Progress
Ten -year historical trend information is presented in the Rosemount Firefighters
Relief Association's Annual Financial Report for the year ended December 31,
2005 This information is useful in assessing the pension plan's accumulation of
sufficient assets to pay pension benefits as they become due.
The following historical trend information was obtained from the Association's
financial report for the year ended December 31, 2005
Assets as a Overfunded
Aggregate Percentage (Underfunded)
Valuation Valuation Accrued of Accrued Accrued
Date Assets Liabilities Liabilities Liabilities
12 -31 -05 2,057,229 2,055,229 101 2,000
12 -31 -04 1,690,170 1,718,437 99 (28,267)
12 -31 -03 1,495,875 1,440,686 104 55,189
Computations of the unfunded net pension obligation and employer contributions
as a percent of covered payroll are not applicable since the fire department is a
volunteer organization and no covered payroll exists
e. Related Party Transactions
B. RISK MANAGEMENT
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
As of December 31, 2005 and for the year then ended, the Association held no
securities issued by City or other related parties.
The City is exposed to various risks of loss related to torts; theft of, damage to, or destruction of
assets; errors and omissions; workers compensation; and health care of its employees. The City
purchases commercial insurance and participates in a public entity risk pool called the
Minnesota League of Cities Insurance Trust to provide coverage for these various risks of loss.
Settlements have not exceeded coverages in any of the past three years. There were no
significant reductions in coverage compared to the prior year
The City has established an internal service fund (Insurance Fund) to account for and finance
uninsured risks of loss related to torts, theft of, damage to and destruction of assets, including
deductibles. The majority of the City's general liability and workers compensation insurance
premiums are paid for by this fund. At December 31, 2005, there are no claims liabilities in the
Insurance Fund based on the requirements of Governmental Accounting Standards Board
Statement Number 10, which requires that a liability for claims be reported if information prior to
the issuance of the financial statements indicates that it is probable a liability has been incurred
at the date of the financial statements and the amount of loss can be reasonably estimated.
Page 54
NOTE V OTHER INFORMATION (cont.)
C. COMMITMENTS AND CONTINGENCIES
D. SUBSEQUENT EVENTS
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
From time to time, the City is party to various pending claims and legal proceedings. Although
the outcome of such matters cannot be forecasted with certainty, it is the opinion of
management that the likelihood is remote that any such claims or proceedings will have a
material adverse effect on the City's financial position or results of operations.
The City has received federal and state grants for specific purposes that are subject to review
and audit by the grantor agencies. Such audits could lead to requests for reimbursements to the
grantor agency for expenditures disallowed under terms of the grants. Management believes
such disallowances, if any, would be immaterial.
Funding for the operating budget of the City comes from many sources, including property taxes,
grants and aids from other units of government, user fees, fines and permits, and other
miscellaneous revenues. The State of Minnesota provides a variety of aid and grant programs
which benefit the City Those aid and grant programs are dependent on continued approval and
funding by the Minnesota governor and legislature, through their budget processes. The State of
Minnesota is currently experiencing budget problems, and is considering numerous alternatives
including reducing aid to local governments Any changes made by the State to funding or
eligibility of local aid programs could have a significant impact on the future operating results of
the City.
On February 1, 2006, the City defeased the Series 2000B Port Authority General Obligation
Bonds in the amount of $1,170,000 by depositing cash on hand into an escrow account.
Page 55
REQUIRED SUPPLEMENTARY INFORMATION
REVENUES
GENERAL FUND
SCHEDULE OF REVENUES COMPARED TO BUDGET (BUDGETARY BASIS) BUDGET AND ACTUAL
For the Year Ended December 31, 2005
TAXES
General property tax 4,419,886 4,079,556 4,051,838 (27,718)
Fiscal disparities 804,414 804,414 804,414
Other 140,000 130,000 173,719 43,719
Total Taxes 5,364,300 5,013,970 5,029,971 16,001
INTERGOVERNMENTAL REVENUES
Federal grants 60,000 60,000
State aid police 100,000 100,000 122,641 22,641
State aid general government 13,000 14,892 17,668 2,776
State aid highway 29,000 29,000 26,715 (2,285)
Other 61,000 61,000 64,710 3,710
Total Intergovernmental Revenues 203,000 204,892 291,734 86,842
PUBLIC CHARGES FOR SERVICES
General government 1,162,700 1,162,700 1,213,868 51,168
Public safety 42,200 42,200 32,294 (9,906)
Highways and streets 20,000 20,000 29,491 9,491
Parks and recreation 236,700 236,700 252,516 15,816
SAC 5,000 5,000 8,006 3,006
Total Charges for Services 1,466,600 1,466,600 1,536,175 69,575
LICENSES AND PERMITS
Business 23,500 23,500 39,943 16,443
Non business 726,700 1,077,030 1,154,163 77,133
Total Licenses and Permits 750,200 1,100,530 1,194,106 93,576
FINES AND FORFEITURES
County
SPECIAL ASSESSMENTS
CITY OF ROSEMOUNT
REQUIRED SUPPLEMENTARY INFORMATION
Budgeted Amounts Variance with
Original Final Actual Final Budget
90,000 90,000 87,888 (2,112)
10,000 10,000 14,165 4,165
INVESTMENT INCOME AND MISCELLANEOUS
Investment income 101,500 101,500 177,757 76,257
Net decrease in the fair value of investments (34,217) (34,217)
Miscellaneous general revenues 2,000 2,000 7,628 5,628
Donations 33,765 33,765
Rents 5,000 5,000 5.712 712
Total Investment income and miscellaneous 108,500 142,265 190,645 48,380
Total Revenues 7,992,600 8,028,257 8,344,684 316,427
OTHER FINANCING SOURCES
Transfers in 3,500 21,638 21,638
Total Revenues and Other Financing Sources 7,996,100 8,028,257 8,366,322 338,065
See accompanying notes to required supplementary information
Page 56
1
j
CURRENT EXPENDITURES
PUBLIC SAFETY
Police department
Fire department
CITY OF ROSEMOUNT
REQUIRED SUPPLEMENTARY INFORMATION
GENERAL FUND
SCHEDULE OF EXPENDITURES AND OTHER USES (BUDGETARY BASIS) BUDGET AND ACTUAL
For the Year Ended December 31, 2005
See accompanying notes to required supplementary information.
Budgeted Amounts Variance with
Onginal Final Actual Final Budget
GENERAL GOVERNMENT
Mayor and council 148,400 272,628 392,134 (119,506)
Executive 485,500 485,500 483,529 1,971
Elections 54,000 54,000 54,407 (407)
Finance 285,700 285,700 277,222 8,478
Community development 856,300 856,300 807,810 48,490
General government 331,800 331,800 334,793 (2,993)
TOTAL GENERAL GOVERNMENT 2,161,700 2,285,928 2,349,895 (63,967)
2,155,900 2,161,577 2,204,962 (43,385)
274,600 274,600 258,820 15,780
TOTAL PUBLIC SAFETY 2,430,500 2,436,177 2,463,782 (27,605)
PUBLIC WORKS
Government building maintenance 358,500 358,500 361,796 (3,296)
Fleet maintenance 410,000 410,000 411,281 (1,281)
Street maintenance 1,108,200 1,108,200 1,045,241 62,959
Park maintenance 512,500 512,500 467,286 45,214
TOTAL PUBLIC WORKS 2,389,200 2,389,200 2,285,604 103,596
PARKS AND RECREATION 1,014,700 1,039,615 1,034,193 5,422
OTHER FINANCING USES 297 (297)
TOTAL EXPENDITURES 7,996,100 8,150,920 8,133,771 17,149
Beginning of year budget basis encumbrances 503,524
End of year budget basis encumbrances (599,963)
GAAP basis expenditures and other financing uses 8,037,332
Page 57
CITY OF ROSEMOUNT
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
December 31, 2005
Budgetary Information
Budgetary information is derived from the annual operating budget and is presented using
generally accepted accounting principles and the modified accrual basis of accounting with
departures from GAAP for encumbrances
Page 58
SUPPLEMENTARY INFORMATION
CITY OF ROSEMOUNT
COMBINING BALANCE SHEET- NONMAJOR GOVERNMENTAL FUNDS
December 31, 2005
Special Revenue Funds
Building Street Equipment Park
CIP CIP CIP Improvements
ASSETS
Cash and investments 769,960 1,522,390 985,405 1,665,053
Receivables
Accounts 12,261
Loans
Special assessments 366,956
Delinquent special assessments 17,190
Prepaid items
Total assets 769,960 1,918,797 985,405 1,665,053
LIABILITIES
Accounts payable 3,205 6,142 8,556
Deferred revenue 377,692
Advances from other funds 225,446 Total liabilities 228,651 377,692 6,142 8,556
FUND BALANCES
Reserved for encumbrances 594,726 250,000 323,301
Reserved for prepaid items
Unreserved
Designated for subsequent years' expenditures 1,291,105 655,962 1,656,497
Undesignated (Deficit) (53,417)
Total fund balances (deficit) 541,309 1,541,105 979.263 1,656,497
Total liabilities and fund balances (deficit) 769,960 1,918,797 985,405 1,665,053
Page 59
1
Tree Disease Crime Fire
Grant Reduction Safety
Program Project Education
Special Revenue Funds
GIS
Total
Nonmajor
Port Authonty Port Authority Governmental
TIF General Funds
149 1,473 9,027 91,865 77,576 191,682 5,314,580
12,261
537,085 537,085
366,956
17,190
364 364
149 1,473 9,027 91,865 77,576 729,131 6,248,436
48,839 5,388 72,130
537,085 914,777
493,542 718,988
542,381 542,473 1,705,895
1,168,027
364 364
149 1,473 9,027 91,865 3,706,078
(464,805) 186,294 (331,928)
149 1,473 9,027 91,865 (464,805) 186,658 4,542,541
149 1,473 9,027 91,865 77,576 729,131 6,248,436
Page 60
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2005
REVENUES
Taxes 48,000 1,250,000
Public charges for services 263,362
Special assessments 208,337
Investment income and miscellaneous 517,714 24,961
Total Revenues 565,714 1,746,660
EXPENDITURES
Current:
General govemment 2,500 2,500 2,500
Public safety
Public works 1,000
Capital outlay 1,448,107 115,960 738,696 441,944
Debt Service:
Principal retirement 776,892
Interest and fiscal charges 11,878 50,172
Total Expenditures 1,462,485 119,460 1,568,260 441,944
Excess (deficiency) of revenues over
(under) expenditures
OTHER FINANCING SOURCES (USES)
Sale of capital assets
Debt issued
Transfers in.
General fund
Arena fund
Transfers out:
Capita( projects fund
Total Other Financing Sources (Uses)
Net change in fund balance
FUND BALANCES (DEFICIT) Beginning
of Year
CITY OF ROSEMOUNT
Special Revenue Funds
Building Street Equipment Park
CIP CIP CIP Improvements
433,600
20,754
454,354
(896,771) 1,627,200 (1,113,906) 476,077
(1,438,848)
(896,771) 188,352
2,650
1,526, 557
11,000
884,841
33,180
918,021
(59,500)
(1,438,848) 1,540,207 (59,500)
426,301 416,577
1,438,080 1,352,753 552,962 1,239,920
FUND BALANCES (DEFICIT)
END OF YEAR 541,309 1,541,105 979,263 1,656,497
Page 61
1
Tree Disease Great River Crime Fire
Grant Energy Reduction Safety
Program Project Project Education
24,780 60,000 1,816,380
23,753 1,171,956
208,337
1 10 325 1,483 1,374 66,598 666,400
1 10 325 25,236 26,154 126,598 3,863,073
1
148
297
Special Revenue Funds
GIS
Nonmator
Port Authority Port Authority Governmental
TIF General Funds
56,880 54,943 119,323
897 897
8,263 9,263
219,370 67,000 3,031,077
776,892
17,785 79,835
897 8,263 294,035 121,943 4,017,287
1 (887) 325 16,973 (267,881) 4,655 (154,214)
2,650
1,526,557
297
11,000
(1,498,348)
297 42,156
297 (887) 325 16,973 (267,881) 4,655 (112,058)
(297) 2,360 8,702 74,892 (196,924) 182,003 4,654,599
149 -0- 1,473 9,027 91,865 (464,805) 186,658 4,542,541
Page 62
Total Revenues
FUND BALANCE ENDING
CITY OF ROSEMOUNT
BUILDING CIP SPECIAL REVENUE FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE BUDGET AND ACTUAL
For the Year Ended December 31, 2005
Budgeted Amounts Variance with
REVENUES Original Final Actual Final Budget
Taxes 48,000 48,000 48,000
Contributions and donations 500,000 500,000
Investment income 2,500 2,500 17,714 15,214
FUND BALANCE Beginning 1,438,080
50,500 550,500
565,714 15,214
EXPENDITURES
Current:
General government 2,500 2,500 2,500
Capital Outlay 36,150 536,150 1,448,107 (911,957)
Debt Service:
Interest on lease 11,850 11,850 11,878 (28)
Total Expenditures 50,500 550,500 1,462,485 (911,985)
Net Change in Fund Balance (896,771) (896,771)
1,438,080 1,438,080
1,438,080 1,438,080 541,309 (896,771)
Page 63
REVENUES
Taxes
Charges for services
Special assessments
Investment income
Total Revenues
EXPENDITURES
Current:
General government
Public Works
Capital Outlay
STREET CIP SPECIAL REVENUE FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE BUDGET AND ACTUAL
For the Year Ended December 31, 2005
Total Expenditures
Excess of revenues over expenditures
OTHER FINANCING USES
Transfers out
Total Other Financing Uses
FUND BALANCE Beginning
FUND BALANCE ENDING
CITY OF ROSEMOUNT
Original and
Final Budgeted
Amounts
1,250,000
200,000
20,200
1,470,200
Actual
1,250,000
263,362
208,337
24,961
1,746,660
Variance with
Final Budget
63,362
208,337
4,761
276,460
2,500 2,500
1,000 (1,000)
1,450,000 115,960 1,334,040
1,452,500 119,460 1,333,040
17,700 1,627,200 1,609,500
Net Change in Fund Balance 17,700 188,352
1,352,753 1,352,753
(1,438,848) (1,438,848)
(1,438,848) (1,438,848)
170,652
1,370,453 1,541,105 170,652
Page 64
Budgeted Amounts Vanance with
REVENUES Original Final Actual Final Budget
Taxes 433,600 433,600 433,600
Investment income 4,900 4,900 20,754 15,854
Total Revenues
EXPENDITURES
Current
General government 2,500 2,500 2,500
Capital Outlay 202,500 1,075,257 738,696
Debt Service:
Print pai retirement 188,100 818,600 776,892
Interest and fiscal charges 43,000 66,300 50,172
Total Expenditures
Excess (deficiency) of revenues over (under)
expenditures
OTHER FINANCING SOURCES
Debt Issued
Sale of capital assets
Transfers in
Total Other Financing Sources
Net Change in Fund Balance
FUND BALANCE Beginning
FUND BALANCE ENDING
CITY OF ROSEMOUNT
EQUIPMENT CIP SPECIAL REVENUE FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE BUDGET AND ACTUAL
For the Year Ended December 31, 2005
438,500 438,500
436,100 1,962,657
454,354 15,854
336,561
41,708
16,128
1,568,260 394,397
2,400 (1,524,157) (1,113,906) 410,251
1,526,557 1,526,557
2,650 2,650
11,000 11,000
1,526,557 1,540,207 13,650
2,400 2,400 426,301 423,901
552,962 552,962 552,962
555,362 555,362 979,263 423,901
Page 65
CITY OF ROSEMOUNT
SCHEDULE OF CHANGES IN ASSETS AND LIABILITIES
M A.A.G. AGENCY FUND
For the Year Ended December 31, 2005
Balance Balance
1/1/2005 Receipts Disbursements 12/31/2005
ASSETS
Cash and investments 14,566 22,121 15,381 21,306
LIABILITIES
Due to M.A.A.G. 14,566 22,121 15,381 21,306
Page 66
CITY OF ROSEMOUNT
GENERAL FUND EXPENDITURES AND OTHER FINANCING USES BY FUNCTION
YEARS 1996 THROUGH 2005
(UNAUDITED)
General Public Public Park and
Year Government Safety Works Recreation Transfers Total
TABLE 1
1996 1,041,383 1,292,439 1,495,630 549,173 117,950 4,496,575
1997 1,000,732 1,395,627 1,406,359 572,489 130,400 4,505,607
1998 1,227,524 1,442,652 1,450,156 601,450 4,721,782
1999 1,132,331 1,496,445 1,638,278 628,145 4,895,199
2000 1,142,410 1,579,038 1,887,570 691,126 192,000 5,492,144
2001 1,363,241 1,710,016 1,696,322 751,673 897,834 6,419,086
2002 1,526,727 1,884,975 1,801,461 785,226 5,998,389
2003 1,597,819 2,085,001 1,987,960 907,100 1,422,836 8,000,716
2004 1,880,941 2,233,232 2,037,603 980,841 590,000 7,722,617
2005 2,363,025 2,463,782 2,176,035 1,034,193 297 8,037,332
Page 67
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CITY OF ROSEMOUNT
ASSESSED VALUE (OR TAX CAPACITY) AND ESTIMATED MARKET VALUE OF ALL TAXABLE PROPERTY
YEARS 1996 THROUGH 2005
(UNAUDITED)
TABLE 4
Total
Tax
Capacity
Real Property Personal Property Total as of
Local Tax Estimated Local Tax Estimated Local Tax Estimated Estimated State Tax
Assessment Net Tax Market Net Tax Market Net Tax Market Market Net Tax
Year Capacity (1) Value Capacity (1) Value Capacity (1) Value Value Capacity (1)
1996 11,306 222 550,367,500 807,629 18,240,600 12,113,851 568,608,100 2 13%
1997 11,080,577 600,557,700 705,144 18,248,900 11,785,721 618,806,600 190
1998 10,774,036 638,681,700 645,047 19,097,400 11,419,083 657,779,100 1 74%
1999 11,859,976 707,783,400 717,210 21,717,800 12,577,186 729,501,200 1 72%
2000 13,891,830 825,291,700 702,059 21,180,000 14,593,889 846,471,700 1 72%
2001 11,205,876 954,693,600 427,790 22,047,100 11,633,666 976,740,700 1 19% 3,480,279
2002 13,098,497 1,131,403,300 426,870 22,150,000 13,525,367 1,153,553,300 1 17% 3,859,896
2003 15,324,087 1,343,848,700 435,343 22,497,500 15,759,430 1,366,346,200 1 15% 4,025,191
2004 17,813,205 1,582,376,400 468,371 24,240,300 18,281,576 1,606,616,700 1 14% 4,224,695
2005 21,137,682 1,895,644,700 466,457 24,291,000 21,604,139 1,919,935,700 1 13% 4,611,764
(1) For 1997 and 1998, the State Legislature changed the class rates of many types of property This did not
have an impact on the estimated market values but it did have the effect of lowering the overall net tax capacity rates
Beginning with 2001, payable 2002, the State made massive changes to the class rates of almost all properties This resulted in large
decreases in the overall net tax capacity rates To offset part of this change, the State added a new "State Tax" on commercial and
industrial properties that helped make up part of the losses
Page 70
Year
Collectible
n/a Not Applicable
CITY OF ROSEMOUNT
PROPERTY TAX RATES ALL DIRECT AND OVERLAPPING GOVERNMENTAL UNITS
YEARS 1996 THROUGH 2005
(UNAUDITED)
ISD 196
Market
Referendum
Rates (1)
ISO 199
Market
Referendum
Rates (1)
City Market School School School
Referendum District District District
City Rates (1) No. 196 No. 199 No. 200
1996 36 055 0 02968 60.830 0 12239 47.629 0.26626 58 675
1997 35 627 0.02706 58 189 0 10868 55.643 0 20928 55 510
1998 40 428 0 02532 58 462 0 09567 53.715 0 23024 47.023
1999 41.710 0 02342 56.311 0 08074 55.610 0.24830 69 188
2000 39 335 0 02142 53.231 0 11986 43.385 0 20757 54 881
2001 36 553 0.01808 53 249 0.10648 44.570 0 19575 51.024
2002 59 546 0.01616 28.883 0.17859 16.824 0.10037 22.943
2003 57 123 0.01382 27.638 0.16120 14 565 0 19527 22.906
2004 52 368 0 01138 26 074 0.13978 10.032 0 17096 22.050
2005 46.041 0 00972 26 251 0.10862 7.793 0 15316 22.126
(1) Beginning with property taxes payable in 1996, levies for voter approved referendums were based on market
value Therefore, a separate rate for these market valued levies will be included for the applicable entity for the
life of the levies Since these rates are calculated separately, they are not included in the total tax rates for
for the three school districts.
Page 71
ISD 200 Dakota Totals
Market County School School School
Referendum Dakota Referendum Special District District District
Rates (1) County Rates (1) Districts (1) No. 196 No. 199 No. 200
n/a 26.626 n/a
n/a 25 721 n/a
0 10070 27 349 n/a
0 00618 28.322 n/a
0.06479 27 247 n/a
0.11424 25 320 n/a
0.01366 33 102 n/a
0 01575 32 463 0.00935
0 19486 30.300 0 00754
0 09646 28.267 0 00666
5.108 128 619
4 995 124 532
5 797 132 036
6702 133045
6 455 126 268
6 378 121 500
5.021 126 552
5 563 122.787
5.128 113.870
5.216 105.775
115.418
121.986
127.289
132.344
116.422
112.821
114.493
109 714
97.828
87.317
TABLE 5
126.464
121.853
120.597
145 922
127 918
119 275
120.612
118 055
109 846
101 650
Page 72
CITY OF ROSEMOUNT
SCHEDULE OF THE LARGEST TAXPAYERS
DECEMBER 31, 2005
(UNAUDITED)
Percentage
Local of Total
Tax Local Tax
Taxpayer Type of Business Capacity (1) Capacity
1 Great Northern Oil Co Oil Refinery 1,266,910 5 86%
2 Koch Refining Co. Oil Refinery 667,483 3 09%
3. Northern States Power Co Utility 292,021 1 35%
4 Clarel Corporation (Cub Foods) Retail 194,366 0 90%
5 Webb Properties LLC Manufacturing 89,864 0 42%
6 Bigos RosemountLLC(CannonEquipment) Manufacturing 86,770 0 40%
7 CF Industries, Inc (Cenex) Fertilizer 81,510 038%
8 Limerick Way LLC Townhouses 78,752 0 36%
9 Continental Nitrogen Resources (CNR) Fertilizer 78,718 0 36%
10 Hidden Valley Spe LLC (Rosemount Woods) Manufactured Housing 71,937 0 33%
11 Flint Hills Resources LP Oil Refinery 59,183 0 27%
12 Lundgren Brothers Construction Inc Townhouses 56,298 0 26%
13 Progress Land Company Townhouses 55,845 0 26%
14 Centex Homes Townhouses 51,640 0 24%
15 D R Horton Inc Minnesota Townhouses 45,192 0 21%
3,176,489 1470%
Total City "Local" Tax Capacity 21,604,139
(1) These figures do not include the dollars collected but the tax capacity rate for each entity
TABLE 6
Page 73
Year
1996 1,588,061 881,589 1,373,623 1,096,027
1997 1,096,027 1,031,533 1,029,037 1,098,523
1998 1,098,523 5,131,889 2,614,057 3,616,355
1999 3,616,355 5,659,779 3,679,095 5,597,039
2000 5,597,039 5,389,660 7,464,735 3,521,964
2001 3,521,964 17,678 1,635,841 1,903, 801
2002 1,903,801 3,546,435 993,382 4,456,854
2003 4,456,854 1,984,112 1,533,648 4,907,318
2004 4,907,318 277,320 1,590,026 3,594,612
2005 3,594,612 930,052 1,382,539 3,142,125
(1) Includes prepayments and foreclosures
CITY OP ROSEMOUNT
SPECIAL ASSESSMENTS RECEIVABLE AND COLLECTIONS
YEARS 1996 THROUGH 2005
(UNAUDITED)
Total Assessments
Uncollected
Beginning Additional
of Year Assessments
Collections (1)
TABLE 7
Total Assessments
Uncollected
End
of Year
Page 74
Estimated Market Value 1,919,935,700
Legal Debt Margin:
Debt Limitation 2% of Estimated Market Value
Debt Applicable to Limitation.
Total Bonded Debt
Less Special Assessment Bonds
Tax Increment Bonds
Revenue Bonds
Port Authority Bonds
State Aid Street Bonds
Amount Available for Repayment of
General Obligation Bonds
Total Debt Applicable to Limitation
Legal Debt Margin
CITY OF ROSEMOUNT
COMPUTATION OF LEGAL DEBT MARGIN
DECEMBER 31, 2005
(UNAUDITED)
9,025,000
8,730,000
6,570,000
31,370,000
1,503,014 25,828,014
TABLE 8
38,398,714
5,541,986
32,856,728
Page 75
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CITY OF ROSEMOUNT
RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR
GENERAL BONDED DEBT (1) TO TOTAL GENERAL FUND EXPENDITURES
YEARS 1996 THROUGH 2005
(UNAUDITED)
1996 190,000 95,130 285,130 4,496,577
1997 240,000 188,159 428,159 4,505,607
1998 210,000 171,170 381,170 4,721,782
1999 220,000 162,125 382,125 4,895,199
2000 230,000 152,253 382,253 5,492,144
2001 240,000 141,540 381,540 6,419,086
2002 245,000 149,420 394,420 5,998,389
2003 120,000 149,980 269,980 8,000,716
2004 135,000 99,888 234,888 7,722,617
2005 140,000 94,163 234,163 8,037,332
(1) Includes only general obligation bonds supported solely by taxes.
(2) Figures taken from Table 1.
(3) 1995 includes call payment on a refunding bond.
1997 includes first principal and interest payments on Fire Station Bonds, Series 1996A.
TABLE 10
Ratio of
Total Debt Service
Total General to
Debt Fund General Fund
Year Principal (1) Interest (1) Service (1) Expenditures (2) Expenditures (3)
Page 77
6.3%
9 5%
8.1%
7.8%
7.0%
5 9%
6.6%
34%
3.0%
2.9%
1
CITY OF ROSEMOUNT
COMPUTATION OF DIRECT AND OVERLAPPING BONDED DEBT
GENERAL OBLIGATION BONDS
DECEMBER 31, 2005
(UNAUDITED)
TABLE 11
Net General
1 Obligation Percentage Amount
Bonded Debt Applicable Applicable
Governmental Units Outstanding (2) to City (6) to City
1 Direct Debt
City of Rosemount 5,541,986 (3) 100.00% 5,541,986
Overlapping Debt (1):
School Districts.
I.S.D. 196 Rosemount
I S D 199 Inver Grove Heights
I.S.D 200 Hastings
Dakota County
Regional:
Metropolitan Council
Metropolitan Transit District
Total Overlapping Debt
Total Direct Overlapping Debt
157,159,669 (4)
40,255,000
44,890,000
100,595,000
12.10% 19,016,320
4.50% 1,811,475
010% 44,890
4.80% 4,828,560
35,750,000 (5) 0.70% 250,250
179,020,000 0.80% 1,432,160
557,669,669 27,383,655
563,211,655 32,925,641
(1) Only those units with debt outstanding are shown here.
(2) Overlapping debt figures exclude debt supported by revenues and tax
and aid anticipation debt
(3) Net general obligation bonded debt of the city supported by property taxes (see table 9).
(4) Includes $16,090,000 of annual appropriation lease revenue debt.
(5) Does not include outstanding general obligation debt supported by sewer revenues, 911 user fees or
housing rental payments. Includes $13,530,000 of annual appropriation certificates of participation
(6) Percent of governmental unit within the City of Rosemount's boundaries calculated
by the citys fiscal consultants, Spnngsted Inc.
Page 78
CITY OF ROSEMOUNT
REVENUE BOND COVERAGE
YEARS 1996 THROUGH 2005
(UNAUDITED)
TABLE 12
Net Revenue Debt Service
Available Requirements
Gross For Debt
Year Revenue Expenses (1) Service Principal (2) Interest Total Coverage
1996 $1,571,350 $1,078,097 493,253 215,000 204,663 419,663 117 54%
1997 1,601,842 1,200,803 401,039 1,105,000 277,370 1,382,370 29 01%
1998 1,837,331 1,282,660 554,671 320,000 193,193 513,193 108.08%
1999 2,058,292 1,274,656 783,636 330,000 179,213 509,213 153 89%
2000 2,418,849 1,323,393 1,095,456 350,000 199,265 549,265 199 44%
2001 2,413,096 1,527,253 885,843 395,000 241,294 636,294 139.22%
2002 2,597,820 1,770,676 827,144 1,245,000 291,881 1,536,881 53.82%
2003 3,082,235 1,892,152 1,190,083 615,000 237,038 852,038 139 67%
2004 2,916,501 2,390,070 526,431 600,000 286,546 886,546 59.38%
2005 2,917,231 2,536,543 380,688 735,000 257,063 992,063 38 37%
(1) Figure does not include depreciation expense
(2) 1997 includes call payment on 1989A Revenue Bonds 2002 includes call payment on 1992B Revenue Bonds.
Page 79
r]
1
n/a Data not available
CITY OF ROSEMOUNT
DEMOGRAPHIC STATISTICS
YEARS 1996 THROUGH 2005
(UNAUDITED)
Per Capita School Unemployment Median
Year Population (1) Income (2) Enrollment (3) Rate (4) Age (5)
1996 12,272 27,488 5,000 2.6% 30.2
1997 12,763 29,864 4,188 2 0% 30 2
1998 13,146 31,775 4,084 1.8% 30.2
1999 13,544 33,193 5,651 1.9% 30.2
2000 14,619 35,448 3,190 2.2% <354
2001 15,270 36,788 3,638 2 8% <35 4
2002 16,110 37,354 4,262 37% <35.4
2003 16,794 38,272 3,849 4.2% <35.4
2004 19,907 n/a 4,111 4 1% <35.4
2005 20,837 n/a 4,474 3 5% <35 4
(1) 2000 is a regular decennial census figure. All other years prior to 2005 are best available
estimates provided by the Minnesota State Demographic Center (as of 4/1 of each year) and 2005 is the City staff's
best estimate.
(2) These figures are provided by the Minnesota State Demographic Center and are for Dakota County.
These figures usually have a 2 to 3 -year lag time so that is why the two most current years have "n /a
(3) School enrollment is the total number of students who reside within the Rosemount High School boundaries and go to
Independent School District No 196 schools located in Rosemount The significant drop in 1997 is because of the
opening of a fourth high school in the district which caused a shifting of the Rosemount High School's population
Beginning in 2000, the total school enrollment will show the total number of students with homes in
the Cdy of Rosemount.
(4) Unemployment rates were compiled by the Minnesota Local Area Unemployment Statistics (LAUS) -for Dakota County
and are an annual average for the year.
(5) These figures are provided by the Census Bureau and are for Dakota County.
Figures prior to 2000 will be reflective of the 1990 census and figures from
2000 forward will be reflective of the 2000 census.
Page 80
TABLE 13
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CITY OF ROSEMOUNT
MISCELLANEOUS STATISTICS
DECEMBER 31, 2005
(UNAUDITED)
Date of Incorporation 1858
Form of Government (Statutory) Council/City Administrator
Number of Employees
Regular Full -time 79
Part-time or Temporary 182
Area in Square Miles 36
City of Rosemount Facilities and Services.
Miles of Streets 100
Number of Street Lights 1,271
Culture and Recreation
Community Centers 1
Parks 23
Park Acreage 356 72
Tennis Courts 4
Fire Protection
Number of Stations 1
Number of Fire Personnel and Officers 41
Number of Calls Answered 619
Number of Vehicles 11 and 1 Trailer
Police Protection
Number of Stations 1
Number of Police Personnel and Officers
Sworn Officers 19
Other Police Personnel 4
Number of Calls for Service 14,330
Number of Patrol Miles 218,079
Number of Patrol Vehicles
Marked 8
Unmarked 4
Sewer System:
Miles of Sanitary Sewers 81
Miles of Storm Sewers 69
Number of Service Connections 5,869
Water System
Miles of Water Mans
Municipal Rural 111
Number of Service Connections 5,989
Number of Wells
Municipal 5
Rural 2
Number of Water Towers 3
Number of Fire Hydrants 976
Daily Average Consumption in Gallons 2,115,603
Maximum Daly Pumping Capacity in Gallons 9,648,000
Public Education Facilities
Number of Elementary Schools 2
Number of Secondary Schools 2
Number of Special Education Schools 1 (Dakota County Technical College)
TABLE 15
Page 82