HomeMy WebLinkAbout2013-04-24 CC Packet A 21ITY OF CENTERVILLE COUNCIL MEETING, WORK SESSION &
teryiCCe CLOSED EXECUTIVE SESSION AGENDA
Wednesday, April 24, 2013
6:30 p.m. or shortly thereafter
OPEN FORUM 6:30 p.m.: An opportunity for members of the public to address the City Council on items not on the current agenda. Items
requiring Council action may be deferred to staff or Boards and Commissions for research and future Council Agendas if appropriate. You
will be limited to two (2) minutes and we ask that you conduct yourself in a professional, courteous manner, and refrain from the use of
profanity. Failure to abide by this policy may result in the loss of your privilege to speak. Persons wishing to speak will be required to
complete a sign -up sheet and give it to the Mayor or a Staff person prior to 6:15 p.m.
COUNCIL MEETING
I. CALL TO ORDER
1. Roll Call
II. PUBLIC HEARINGS
III. APPROVAL OF AGENDA
IV. APPROVAL OF MINUTES
1. April 10, 2013 City Council Meeting Minutes (Pages 1 -5)
V. CONSENT AGENDA
1. City of Centerville April 11, 2013 through April 24, 2013 Claims (Check #27920 - 27936)
w /Check #27919 Voided (Page 6)
2. Centennial Lakes Police Department Claims through April 11, 2013 (Check #9403 -9427)
(Pages 7 -8)
3. Centennial Fire District Claims through Apri15, 2013 (Check #5749 -5770) w /Check #5760
Voided (Pages 9 -10)
4. Encroachment Agreement — Fence, 7122 Brian Drive (Page 11)
VI. AWARDS /PRESENTATIONS /APPEARANCES
1. Mr. Steve McDonald, Abdo, Eick & Meyers — Annual Audit Presentation, 2012
2. Mr. George Eilertson, Northland Securities (Pages 12 -18)
VII. OLD BUSINESS
1. 7261 Main Street Property — (Update)
VIII. NEW BUSINESS
1. 2012 Annual Audit (Pages 19 -109 & 110 -128)
2. Res. #13 -OXX — Providing for the Issuance & Sale of $1,510,000 G.O. Improvement Bonds,
Series 2013A, (2013 Street Improvement Project) (Pages 129 -134)
3. Financial Advisor Agreement (City/Northland Securities) (Pages 135 -137)
IX. ANNOUNCEMENTS/UPDATES
1. Administrator Larson
WORK SESSION
I. CALL TO ORDER
1. Roll Call
IL APPEARANCES
1. Mr. Bill Beard, Beard Group — Downtown Redevelopment
III. CONVENE TO CLOSED EXECUTIVE SESSION
CLOSED EXECUTIVE SESSION (Unless Otherwise Noted)
L CALL TO ORDER
II. ITEMS OF DISCUSSION
1. Performance Review of City Administrator Larson
III. RECONVENE TO REGULARLY SCHEDULED MEETING
COUNCIL MEETING
X. Performance Review of City Administrator Larson
XI. ADJOURNMENT
"REMINDERS"
Planning & Zoning Commission Meeting — May 7, 2013, 6:30 p.m. Council Chambers (P.H. Code Amendment
— Recycling & Waste Processing — Entirely Within Building)
Parks & Recreation Committee Meeting — May 1, 2013, 6:30 p.m. Council Chambers
City Council Meeting — May 8, 2013, 6:30 p.m. Council Chambers (Ken Tolzman) & Centerville Lions — Fete
des Lacs Permits
City Council Meeting — May 22, 2013, 6:30 p.m. Council Chambers
April 20, 2013 — Earth Day
CITY OF CENTERVILLE
CITY COUNCIL MEETING
April 10, 2013
6:30 p.m.
Pursuant to due call and notice thereof, the City of Centerville held their regularly
scheduled meeting of April 10, 2013, at City Hall, 1880 Main Street.
PRESENT: Mayor Tom Wilharber
Council Member Ben Fehrenbacher �
Council Member Steve King � @W@o
Council Member Jeff Paar
ABSENT: Council Member D. Love
STAFF: City Administrator Dallas Larson
City Engineer Mark Statz
Legal Counsel Kurt Glaser
I. CALL TO ORDER
Mayor Wilharber called the meeting to order at 6:30 p.m.
II. PUBLIC HEARING(S)
1. None.
III. APPROVAL OF AGENDA
Mayor Wilharber added Centerville Claims (Check #27913 - 27918) to the Consent
Agenda. Mayor Wilharber also added under Old Business, Mound Trail Watermain
Extension, a. Order Improvement — Staff Recommendation; b. Joint Powers Agreement
w /Lino Lakes; c. Connection Agreement w/Wiederkehr; and d. Connection Agreement
w/Drilling. Administrator Larson Stated that Mr. Bill Beard would not be appearing
before Council this evening so there would not be a Work Session for this item of
business.
Motion by Council Member Paar, seconded by Council Member Fehrenbacher to
approve the Set Ap-enda as presented with the above stated amendment. All in
favor. Motion passed unanimously.
IV. APPROVAL OF MINUTES
1. March 27, 2013 City Council Meeting Minutes
1
City of Centerville
Council Meeting Minutes
April 10, 2013
The Mayor provided Council Members with an opportunity to amend the presented
minutes.
Motion by Council Member Fehrenbacher, seconded by Council Member King to
approve the minutes of the March 27, 2013 City Council Meeting Minutes as
presented. All in favor. Motion passed unanimously.
V. CONSENT AGENDA
1. City of Centerville March 27, 2013 through April 10, 2013 Claims (Check
#27896 - 27912) & (Check #27913- 27918)
2. Centennial Police Department Claims through March 28, 2013 (Check #9383-
9402)
3. Church of St. Genevieve Council of Catholic Women — Quilt Raffle & Special
Event Private Property
Motion by Council Member Paar, seconded by Council Member Fehrenbacher to
approve the Consent Agenda as presented. All in favor. Motion passed
unanimously.
VI. AWARDS /PRESENTATIONS /APPEARANCES
1. None
VII. OLD BUSINESS
1. Mound Trail Watermain Extension
Administrator Larson reported that since Council's last meeting, Staff discussions with
Anoka County have been favorable and an agreement for connection of the Wiederkehr
residence at a cost of $14,025 and the County's Visitor Center being accessed a
residential connection with two (2) sewer availability charges units (SAC) at a cost of
$12,700. Administrator Larson stated that he had spoken with both of the Lino Lakes
residents and one (1) has already submitted their connection fee of $6,350. Administrator
Larson also stated that with the funds that have been recovered from these three (3)
sources, it is felt that the remainder of the costs associated with the project would be
recovered through connection fees on the remaining benefiting properties'.
Discussion also ensued regarding the size of the watermain and potential for servicing the
campground, the municipalities size versus water tower capacity, inability to require the
two (2) Lino Lakes residents to connect to services within the City of Centerville's codes,
the assumption that the City of Lino Lake would not service these residents in the future.
Page 2 of 5
2
City of Centerville
Council Meeting Minutes
April 10, 2013
Engineer Statz stated that the proposed size of the water service line would have the
ability to service the campground for potable water, however, if a hydrant was located
near the campground some fireflow would be available but not the recommended
amount.
a. Order Improvement — Staff Recommendation
b. Joint Powers Agreement w /Lino Lakes
C. Connection Agreement w/Wiederkehr
d. Connection Agreement w /Drilling
Motion by Council Member Fehrenbacher, seconded by Council Member King to
Order the Improvement per Staff Recommendation, Approve the Presented Joint
Powers Agreement with the City of Lino Lakes, and Approve the Connection
Agreements with Wiederkehr and Drilling as presented.
Council Member King questioned whether the City notified all residents along Mound
Trail regarding the proposed project. Administrator Larson stated that this project had
been driven by Anoka County and that it is not similar to the 2013 Street Improvement
Project, the City would not be assessing the abutting property owners, rather property
owners would pay a connection fee when they request hook up.. Administrator Larson
stated that they would be receiving notification along with all others regarding the
potential for connection.
All in favor. Motion carried unanimously.
2. 7261 Main Street Property — Request for Proposal — (Update)
Administrator Larson stated that Council had instructed Staff to continue negotiations
with Mr. Jeffrey Magdik from Home Detail, Inc. regarding his submitted proposal to
purchase the property for $30,000 which was well under the appraised value.
Administrator Larson reported that he had met with Mr. Magdik and he has proposed to
pay $10,000 upfront and pay an additional $55,000 upon sale of the home to be built or
within one (1) year.
Lengthy discussion was had regarding Legal Counsels drafting of an agreement,
additional negotiation, protection of the City's interest, ownership during construction,
interest, shortening the timeframe for construction deadline, responsibility for
expenditures related to construction, timing of variances, public hearing, etc.
Council consensus was that the proposed financial terms would be acceptable, and that
Staff continue negotiations with Mr. Magdik and return to Council with an agreement.
VIII. NEW BUSINESS
Page 3 of 5
3
City of Centerville
Council Meeting Minutes
April 10, 2013
1. Utility Rate — Define Senior Discount — What Age?
Administrator Larson stated that Staff is unable to locate anything in writing for a policy
that has been in place for numerous years which grants a $3 credit on sewer services for
those that are seniors. Staff would like a definition of a senior. Administrator Larson
stated that with the new rate structure being based upon consumption, most seniors are
experiencing a $10 reduction in their sewer bill.
Consensus of Council was that the $3 credit per quarter on the sewer rate would be
applied to those that are of age 62 or older.
IX. ANNOUNCEMENTS/UPDATES
Administrator Larson stated that Staff had attended an open house and visited with
affected neighbors of the CSAH21 project and that the largest complaint from property
owners was that construction would not commence until next year. Administrator Larson
stated that an additional meeting would be taking place with Rice Creek Watershed
District regarding securing permits. Several property owners have concerns for future
municipal services.
Consensus of Council was that additional research was needed with costs being taken
into consideration for municipal services to these parcels and Staff would supply Council
with figures when available.
Administrator Larson stated that his Annual Performance Review had been scheduled for
this evening, however, if Council desired due to Council Member Love absence, it could
be rescheduled for the next meeting.
Consensus of Council was to table the Administrator Performance Review until April 24,
2013 meeting.
Council Member King reported that the Parks & Recreation Committee desired to have a
handicapped port-a -potty installed at Laurie LaMotte Park for the season.
Council Member King also reported that the North Metro Telecommunication
Commission adopted a rate order against Comcast and that they had thirty (30) days to
comply. Council Member King stated that the same order had been filed with the FCC
along with three (3) other commissions rejecting their rates. Council Member King also
stated that Comcast has agreed to participate in mediation regarding the issue and a
resolution will be forthcoming to allow this meeting. Council Member King informed
Council that Comcast has required new equipment for those customers that have Basic 1
service of Public /Education/Government (PEG) channels will need to obtain a Digital
Page 4of5
4
City of Centerville
Council Meeting Minutes
April 10, 2013
Television Adapter (DTA) for free by calling the North Metro Telecommunications
Commission at (763) 231 -2801 and the Commission will be happy to facilitate this.
Council Member King stated that he would desire for this information to be placed on the
City web site.
Council Member Paar reported that Fire Chief Streich, Mayor Bartholemay, Circle Pines
and he all attended a recent Fire Marshal Conference where open discussion took place
regarding structures of departments and operations. Council Member Paar stated that the
conference lasted approximately two (2) hours and that that it was very worthwhile.
Mayor Wilharber stated that the Centennial Fire District was presently participating in
their annual audit. Mayor Wilharber stated that the City of Centerville's auditors, Abdo,
Eick & Meyers would be attending Council's next meeting to report on the annual audit
of the City's financials.
Administrator Larson stated that the Planning & Zoning Commission would like to move
forward the allowing the keeping of chickens on residential property, however, due to the
Centennial Lakes Police Departments enforcement of City Codes, the cities of Circle
Pines and Lexington would be meeting to determine whether they also desired to
participate in allowing their residents the opportunity to house chickens. Administrator
Larson felt that a Code Amendment would be forwarded to Council for their
consideration sometime in May.
Administrator Larson reported that he request from Council
Members /Committee /Commission members a more concise listing of goals which he has
provided to Council this evening. Administration Larson stated that taxes and spending
are of high priority along with park maintenance, streets, quality of life, community
heritage, citizen feedback and safety. Administrator Larson reported that on the reverse
side of the goals he had added surrounding communities tax rates for comparison and
measurement. Council Member Paar stated that it is very difficult to compare what
services are being offered by what communities and that it may be too difficult to equate
these rankings to Centerville's or to each other.
Consensus of the Council was that the abbreviated goals were simple and concise. They
will be added to a work session agenda for further consideration.
X. ADJOURNMENT
Motion by Council Member Paar, seconded by Council Member Fehrenbacher to
adiourn the regularly schedule Council Meetine of April 10, 2013 at 7:14 p m All in
favor. Motion carried unanimously.
Transcribed by City Staff Member Teresa Bender, City Clerk
Page 5 of 5
5
vsI 1 vi vim. *.A -I%V1... " U4i 1Z:49NM
Check Detail - April 24, 2013 Page 1
Date Check # Vender Name Comments amount
4/15/2013 000426E MINNESOTA DEPT OF REVENUE USE TAX ON -LINE PURCHASE $1
4/15/2013 000426E MINNESOTA DEPT OF REVENUE USE TAX ON -LINE PURCHASE $1
4/15/2013 000426E MINNESOTA DEPT OF REVENUE USE TAX ON -LINE PURCHASE $5,
4/15/2013 000426E MINNESOTA DEPT OF REVENUE USE TAX ON -LINE PURCHASE $63.00
4/15/2013 000426E MINNESOTA DEPT OF REVENUE USETAX ON PRE- STAMPED ENVELOPES $5.00
4/15/2013 000426E MINNESOTA DEPT OF REVENUE 1st QTR UTILITY BILLING - SALES TAX $160.00
Check Nbr 000426E MINNESOTA DEPT OF REVENUE $271.00
4/24/2013 027920 ANOKA COUNTY PROPERTY RECORDS PROPERTY TAXES - 24- 31 -22 -33 -0002 $69.14
4/24/2013 027920 ANOKA COUNTY PROPERTY RECORDS PROPERTY TAXES - 23- 31 -22 -13 -0015 $69.14
Check Nbr 027920 ANOKA COUNTY PROPERTY RECORDS $138.28
4/24/2013 027921 CITY OF ST. PAUL ASPHALT MIX $343.58
Check Nbr 027921 CITY OF ST. PAUL $343.58
4/24/2013 027922 COMCAST HIGH SPEED INTERNET - CITY HALL $24.40
Check Nbr 027922 COMCAST $24.40
4/24/2013 027923 DELTA DENTAL MAY 2013 COBRA #PF99867701 - $91.50
4/24/2013 027923 DELTA DENTAL MAY 2013 DENTAL INS. #PF99867701 $380.00
Check Nbr 027923 DELTA DENTAL $288.50
4/24/2013 027924 DEPT. OF EMPLOYMENT & ECONOMIC K. BOMBECK - UNEMPLOYMENT BENEFITS $32.96
Check Nbr 027924 DEPT. OF EMPLOYMENT & ECONOMIC $32.96
4/24/2013 027925 HD SUPPLY WATERWORKS LTD METERS & PARTS - IPERL $1,571.90
4/24/2013 027925 HD SUPPLY WATERWORKS LTD COPPERHORNS - METER END CONNECTIONS W/ NUTS $474.31
Check Nbr 027925 HD SUPPLY WATERWORKS LTD $2,046.21
4/24/2013 027926 HEALTH PARTNERS MAY 2013 HEALTH INSURANCE $5,183.81
Check Nbr 027926 HEALTH PARTNERS $5,183.81
4/24/2013 027927 INSTRUMENTAL RESEARCH INC MARCH 2013 - WATER TEST $38.00
Check Nbr 027927 INSTRUMENTAL RESEARCH INC $38.00
4/24/2013 027928 LEAGUE OF MN CITIES INS TRUST PARK MAINTENANCE - LIABILITY INS. $6,771.00
4/24/2013 027928 LEAGUE OF MN CITIES INS TRUST WATER - LIABILITY INS. $2,983.17
4/24/2013 027928 LEAGUE OF MN CITIES INS TRUST SEWER - LIABILITY INS. $2,442.17
4/24/2013 027928 LEAGUE OF MN CITIES INS TRUST BUILDING INSP - LIABILITY INS. $177
4/24/2013 027928 LEAGUE OF MN CITIES INS TRUST ADMINISTRATION - LIABILITY INS. $13,12
4/24/2013 027928 LEAGUE OF MN CITIES INS TRUST PUBLIC WORKS - LIABILITY INS. $7,84b.
4/24/2013 027928 LEAGUE OF MN CITIES INS TRUST STREETS - LIABILITY INS. $847.00
Check Nbr 027928 LEAGUE OF MN CITIES INS TRUST $34 192 00
4/24/2013 027929 LEXISNEXIS OCC. HEALTH SOLUTIO ANNUAL ENROLLMENT CHARGES $96.00
Check Nbr 027929 LEXISNEXIS OCC. HEALTH SOLUTIO $96.00
4/24/2013 027930 MET. COUNCIL ENV. SERV. (SDS) MAY 2013 WASTEWATER CHARGES $16,137.31
Check Nbr 027930 MET. COUNCIL ENV. SERV. (SDS) $16,137.31
4/24/2013 027931 METRO SALES INCORPORATED ANNUAL MAINT AGREEMENT - 4 -1 -13 THRU 4 -1 -14 $470.25
Check Nbr 027931 METRO SALES INCORPORATED $470.25
4/24/2013 027932 NATIONWIDE RETIREMENT SOLUTION DEF COMP W/H - PAY PERIOD 9 $398.93
"heck Nbr 027932 NATIONWIDE RETIREMENT SOLUTION $398.93
4/24/2013 027933 PALZER, PAUL MILEAGE REIMBURSMENT & PARKING $64.76
heck Nbr 027933 PALZER. PAUL $64.76
4/24/2013 027934 RICCAR REFUND - OVER PD PERMIT M13 -19 - 1339 MOUND TRAIL $30.00
heck Nbr 027934 RICCAR $30.00
4/24/2013 027935 XCEL ENERGY 1600 LAMOTTE DR - WARMING HOUSE - SERV THRU 4 -7 -13 $20.41
4/24/2013 027935 XCEL ENERGY STREETS - SERV THRU 47 -13 $2,603.45
4/24/2013 027935 XCEL ENERGY 7098 CENTERVILLE RD - SERV THRU 4 -7 -13 $11.22
4/24/2013 027935 XCEL ENERGY 6970 LAMOTTE DR - SERV THRU 4 -7 -13 $292.23
4/24/2013 027935 XCEL ENERGY 1745 MAINST - SERV THRU 4 -7 -13 $81.44
4/24/2013 027935 XCEL ENERGY 1682 MAIN ST - SERV THRU 4 -7 -13 $81.44
4/24/2013 027935 XCEL ENERGY 1601 LAMOTTE DR - SERV THRU 4 -7 -13 $30.20
4/24/2013 027935 XCEL ENERGY 1880 MAIN ST - CITY HALL /FIRE STATION - SERV THRU 4 -7- $182.66
4/24/2013 027935 XCEL ENERGY 1875 FOX RUN -PUMP - SERV THRU 4 -7 -13 $207.79
4/24/2013 027935 XCEL ENERGY 7300 CENTER STR - SERV THRU 4 -7 -13 $159.76
4/24/2013 027935 XCEL ENERGY 1889 CENTER ST - SEWER LIFT - SERV THRU 4 -7 -13 $20.47
4/24/2013 027935 XCEL ENERGY 1600 LAMOTTE DR- BALLFIELD LIGHTS - SERV THRU 4 -7 -13 $11.19
4/24/2013 027935 XCEL ENERGY 7285 MAIN ST - SERV THRU 4 -7 -13 $62.03
4/24/2013 027935 XCEL ENERGY 1880 MAIN STREET - SERV THRU 4 -7 -13 $642
;heck Nbr 027935 XCEL ENERGY $4,407
4/24/2013 027936 ANOKA COUNTY HIGHWAY DEPT PRO]. #02- 090 -01 $52,460.Ou
;heck Nbr 027936 ANOKA COUNTY HIGHWAY DEPT $52,460.06
;HECK #27919 VOID TOTAL CHECKS $116,623.30
6
CENTENNIAL LAKES POLICE DEPT Check Register - Police GL without invoice numbers Page: 1
Check Issue Dates: 4/6/2013 - 4111/2013 Apr 11, 2 0 2: 24 P M
Report Criteria:
Report type: Summary
GL Check Ck No Description Check
Period Issue Date Payee Amount
04/13 04/11/2013 9403 ABRAMS & SCHMIDT LLC LEGAL FEES 1,551.50
04/13 04/11/2013 9404 AMSAN , INC CLEANING SUPPLIES/TOWELS 471.65
04/13 04/11/2013 9405 ANOKA COUNTY 800 MHZ RADIO ANNUAL SERV CONT 1,724.79
04/13 04/11/2013 9406 ANOKA COUNTY ATTORNEY FORFEITURE DISTRIBUTION 294.40
04/13 04/11/2013 9407 ASPEN MILLS, INC UNFORMS 17.10
04/13 04/11/2013 9408 BCA CJTE LEADERS /MGMT CONF RN 440.00
04/13 04/11/2013 9409 BCA/MNJIS SECTION 1ST QTR COMMUTER ACCESS 390.00
04/13 04/11/2013 9410 CENTENNIAL UTILITIES MARCH UTILITIES 830.12
04/13 04/11/2013 9411 CENTURY LINK COMMUNICATIONS 170.70
04/13 04/11/2013 9412 COVERALL OF THE TWIN CITIES APRIL CLEANING SERVICE 796.22
04/13 04/11/2013 9413 DELTA DENTAL MAY DENTAL INS ADD JZ 1,446.90
04/13 04/11/2013 9414 FRATTALLONES HARDWARE, INC. EVIDENCE BAGS /PHOTO BATTERIES 91.50
04/13 04/11/2013 9415 HEALTH PARTNERS MAY HEALTH INS 9,010.60
04/13 04/11/2013 9416 HOLIDAY FLEET MARCH FUEL 4,808.63
04/13 04/11/2013 9417 HOLIDAY INN & SUITES LODGING CONFERENCE 447.00
04/13 04/11/2013 9418 KNOWLAN'S SUPER MARKETS MISC SUPPLIES 12.65
04/13 04/11/2013 9419 MN DEPT OF FINANCE FORFEITURE DISTRIBUTION 147.20
04/13 04/11/2013 9420 NEAL A. NOREN BLDG MTC HOURS 180.00
04/13 04/11/2013 9421 O'REILLY AUTOMOTIVE, INC VEH SUPPLIES 20.28
04/13 04/11/2013 9422 PITNEY BOWES, INC POSTAGE METER INK 50.07
04/13 04/11/2013 9423 POSTNET POSTAGE 57.20
04/13 04/11/2013 9424 QUILL CORPORATION OFFICE SUPPLIES 543.35
04/13 04/11/2013 9425 SHRED -N -GO, INC SHREDDING SERVICE 34.00
04/13 04/11/2013 9426 TASER INTERNATIONAL TASER CARTRIDGES 531.96
04/13 04/11/2013 9427 TELECIDE PRODUCTIONS, INC COMPUTER MTC /SUPPORT 1,226.77
Grand Totals: 25,294.59
M = Manual Check, V = Void Check
7
CENTENNIAL LAKES POLICE DEPT Check Register - Police GL without invoice numbers Page: 1
Check Issue Dates: 3/29/2013 - 4/5/2013 Apr 11, 2013 02:23PM
Report Criteria:
Report type: Summary
GL Check Ck No Description Check
Period Issue Date Payee Amount
04/13 04/05/2013 201302 WELLS FARGO QTRLY HSA PMT - DIRECT PAY 14,050.00
Grand Totals: 14,050.00
M = Manual Check, V = Void Check
CENTENNIAL FIRE DISTRICT Check Register - FIRE GL Page: 1
Check Issue Dates: 4/3/2013 - 4/5/201 Apr 08, 2013 10:57AM
3eport Criteria:
Report type: Summary
Vendor.Vendor number = {IS NOT NULL}
GL Check Check Vendor Description Check
Period Issue Date Number Number Payee Amount
04/13 04/05/2013 5749 10305 ALLIED GENERATORS STATION 2 GENERATOR MTC 387.50
04/13 04/05/2013 5750 20370 BOUND TREE MEDICAL LLC MEDICAL TRAINING SUPPLIES 345.43
04/13 04/05/2013 5751 30040 CDW GOVERNMENT, INC OFFICE SUPPLIES 35.69
04/13 04/05/2013 5752 30490 CENTERPOINT ENERGY STATION 2 GAS 475.20
04/13 04/05/2013 5753 30500 CENTURY LINK CENTERVILLE PHONE 56.54
04/13 04/0512013 5754 30575 CITY OF CIRCLE PINES 1ST QTR ACCOUNTING SERVIC 1,575.00
04/13 04/05/2013 5755 30650 CLAREY'S SAFETY EQUIPMENT EXTRICATION TOOLS 63,275.35
04/13 04/05/2013 5756 31008 COMCAST INTERNET CENTERVILLE STATI 203.00
04/13 04/05/2013 5757 60050 FISDAP EMT TESTING 140.00
04/13 04/05/2013 5758 60115 FAIRVIEW PHARMACY SERVIC MEDICAL SUPPLIES 1,050.00
04/13 04/05/2013 5759 60650 FRATTALLONE'S HARDWARE S REPAIR FAN 190.36
04/13 04/05/2013 5761 60655 FRIDLEY FIRE DEPARTMENT FEMA GRANT - PHYSICALS 3,950.00
04/13 04/05/2013 5762 80400 HEWLETT - PACKARD COMPAN TWO COMPUTERS 1,675.28
04/13 04/05/2013 5763 120450 CITY OF LINO LAKES FEB REIMB -FUEL 29,203.25
04/13 04/05/2013 5764 130320 MASTER TECHNOLOGY GROU INSTALL DATA RUNS STATION 687.00
04/13 04/05/2013 5765 131500 MY ALARM CENTER, LLC STATION 1 MONITORING 108.48
04/13 04/05/2013 5766 160150 PEARSON EDUCATION, INC EMR CLASS WORKBOOKS 889.84
04/13 04/05/2013 5767 180600 CITY OF ROSEVILLE APRIL PHONE SERV 1,279.33
04/13 04/05/2013 5768 190050 SBM FIRE DEPARTMENT FEMA GRANT- PHYSICALS 1,500.00
04/13 04/0512013 5769 200390 TWIN CITY GARAGE DOOR CO, STATION 3 DOOR MTC 126.03
04/13 04/05/2013 5770 220200 VERIZON WIRELESS COMMUNICATIONS 78.06
Grand Totals: Ck #5760 - VOID 107,231.34
M = Manual Check, V = Void Check
9
CENTENNIAL FIRE DISTRICT Check Register- FIRE GL Page: 1
Check Issue Dates: 3/16/2013 - 4/2/2013 Apr 02, 2 0 4:1 8 P M
Report Criteria:
Report type: Summary
GL Check Check Vendor Description Check
Period Issue Date Number Number Payee Amount
04/13 04/02/2013 2013002 210300 US BANK VISA -BLDG MTC 19.73
Grand Totals: 19.73
M = Manual Check, V = Void Check
10
MI e - M 0 6 1 f,
TO: Honorable Mayor and Council Members
FROM: Staff
SUBJECT: Encroachment Agreement — 7122 Brian Drive — Fence
DATE: April 18, 2013
Property owners have submitted the appropriate permit application, sketch plan,
agreements, signatures and fees for the permit and agreement. The Building Official has
signed off on the permit and the location of the item.
11
45 South 7,h Street
Suite 2000
NORTHLAND SECURITIES Minneapolis, AN 55402
(800) 851 -2920
(612) 851 -5906
Fax (612) 851 -5917
DATE: April 16, 2013
TO: Honorable Tom Wilharber, Mayor & Members of the City Council
Mr. Dallas Larson, Administrator
Mr. Michael Jeziorski, Finance Director
City of Centerville
FROM: George Eilertson, Sr. Vice President
Northland Securities
RE: 2013 Street Improvements — Project Financing
April 24, 2013 Council Meeting Agenda Items:
Thank you for the opportunity to work with the City on this bond issue. Regarding the 2013 street
improvements project financing, following are the items that I will present at the April 24 City
Council meeting:
1. Presentation of Finance Plan Summary — This document provides an overview of the Series
2013A Bond issue financing structure, terms and conditions.
2. Resolution providing for the Issuance and Sale of $1,510,000 General Obli ag tion
Improvement Bonds, Series 2013A
Approval of the Resolution will provide the following timeline for the sale of the bonds:
a. Type of Sale - Public Offering.
b. Financing Proposals Received Wednesday, May 22, 2013 @ 10:30 A.M.
c. Council Consideration of Proposals Wednesday, May 22, 2013 @ 6:30 P.M.
3. Financial Advisor Agreement between the City of Centerville and Northland Securities — the
agreement states Northland's pre -sale and post -sale duties as well as compensation.
Thank you.
12
FOR
CITY OF CENTERVILLE, MINNESOTA
$1,510,000
GENERAL OBLIGATION IMPROVEMENT BONDS,
SERIES 2013A
NORTHLAND SECURITIES
45 South 7" Street
Suite 2000
Minneapolis, MN 55402
612 - 851 -5900 800 - 851 -2920
April 24, 2013
13
City of Centerville, Minnesota
$1,510,000 General Obligation Improvement Bonds, Series 2013A
Financing Overview
The City anticipates issuing bonds for the following purposes:
1. $1,510,000 General Obligation Improvement Bonds. Pursuant to MN Statutes, Chapter
429, these bonds will finance various street improvements within the City. Final Maturity
will be on February 1, 2029.
Summary of Recommended Terms:
1. Type of Sale Public Offering.
2. Proposals Received Wednesday, May 22, 2013 @ 10:30 A.M.
3. Council Consideration Wednesday, May 22, 2013 @ 6:30 P.M.
4. Repayment Term The Bonds will mature annually each February 1,
2016 -2029. Interest will be payable February 1, 2014
and semiannually thereafter on February 1 and
August 1.
5. Security General Obligation pledge of the City, and special
assessments.
6. Prepayment Option February 1, 2020 and any date thereafter at a price of
par plus accrued interest.
7. Tax Status Bradley & Deike, P.A. - Minneapolis, MN
8. Credit Enhancement We believe a credit rating will be cost beneficial. The
City's general obligation debt is currently rated "AA"
by Standard & Poor's Corporation.
9. Paying Agent Northland Trust Services, Inc.
Page 2
NORTHLANDSECURITIES
14
Related Considerations:
• Bank Qualified - because total tax - exempt debt issued by the City in calendar year
2013 is not expected to be more than $10 million, the bonds will be designated as
"bank qualified" obligations pursuant to Federal Tax Law.
• Arbitrage Compliance -
o Project Construction Fund - All tax exempt issues are subject to
federal rebate requirements which require all arbitrage earned to be
rebated to the U.S. Treasury. A rebate exemption the City expects to
qualify for is the "small issuer exemption."
o Debt Service Fund - The City must maintain a bona fide debt service
fund for the bonds or be subject to yield restriction in the debt service
fund. A bona fide debt service fund involves an equal matching of
revenues to debt service expense with a balance forward permitted
equal to the greater of the investment earnings in the fund during that
year or 1/12 of the debt service of that year.
• Book Entry - The Bonds will be global book entry with Northland Trust Inc. designated as
the paying agent. As "paperless" bonds, you will avoid the costs of bond printing and
annual registrar charges. The Paying Agent will invoice you for the interest
semiannually and on an annual basis for the principal coming due.
• Continuing Disclosure - The Series 2013A Bonds are subject to the Securities and
Exchange Commission's continuing disclosure requirements.
Page 3
NORTHLAND SEC URIT]ES
15
EXHIBIT A — Estimated Sources and Uses of Funds
Sources & Uses
Dated 06/01/2013 1 Delivered 06101/2013
Sources Of Funds
Par Amount of Bonds $1,510,000.00
Total Sources $1,510,000.00
Uses Of Funds
Total Underwriter's Discount (1.200 %) 18,120.00
Costs of Issuance 27,300.00
Deposit to Project Construction Fund 1,467,215.00
Rounding Amount (2,635.00)
Total Uses $1
Page 4
\ORTHLAND SECURITIES
16
EXHIBIT B — Debt Service Schedule
Debt Service Schedule
Date Principal Coupon Interest Total P +I Fiscal Total
06/01/2013 _
02/01/2014 18,878.33 18,878.33 18,878.33
08/01/2014 14,158.75 14,158.75 -
02/01/2015 14,158.75 14,158.75 28,317.50
08/01/2015 - - 14,158.75 14,158.75
02/01/2016 10,000.00 1.250% 14,158.75 24,158.75 38,317.50
08/01/2016 - - 14,096.25 14,096.25 -
02/01/2017 10,000.00 1.250% 14,096.25 24,096.25 38,192.50
08/01/2017 - - 14,033.75 14,033.75 -
02/01/2018 10,000.00 1.250% 14,033.75 24,033.75 38,067.50
08/01/2018 - - 13,971.25 13,971.25 -
02/01/2019 10,000.00 1.250% 13,971.25 23,971.25 37,942.50
08/01/2019 - - 13,908.75 13,908.75 -
02/01/2020 10,000.00 1.250% 13,908.75 23,908.75 37,817.50
08/01/2020 - - 13,846.25 13,846.25
02/01/2021 150,000.00 1.400% 13,846.25 163,846.25 177,692.50
08/01/2021 - - 12,796.25 12,796.25 -
02/01/2022 155,000.00 1.550% 12,796.25 167,796.25 180,592.50
08/01/2022 - - 11,595.00 11,595.00 -
02/01/2023 155,000.00 1.700% 11,595.00 166,595.00 178,190.00
08/01/2023 - - 10,277.50 10,277.50 -
02/01/2024 160,000.00 1.800% 10,277.50 170,277.50 180,555.00
08/01/2024 - - 8,837.50 8,837.50 -
02/01/2025 160,000.00 1.900% 8,837.50 168,837.50 177,675.00
08/01/2025 - - 7,317.50 7,317.50 -
02/01/2026 165,000.00 2.000% 7,317.50 172,317.50 179,635.00
08/01/2026 - - 5,667.50 5,667.50 -
02/01/2027 170,000.00 2.100% 5,667.50 175,667.50 181,335.00
08/01/2027 - - 3,882.50 3,882.50 -
02/01/2028 170,000.00 2.200% 3,882.50 173,882.50 177,765.00
08/01/2028 - - 2,012.50 2,012.50 -
02/01/2029 175,000.00 2.300% 2,012.50 177,012.50 179,025.00
Total $1,510,000.00 - $339,998.33 $1,849,998.33 -
Date And Term Structure
Dated 6/01/2013
Delivery Date 6/01/2013
First Coupon Date 2/01/2014
First available call date 2/01/2020
Call Price 100.00
Yield Statistics
Bond Year Dollars $17,446.67
Average Life 11.554 Years
Average Coupon 1.9487868%
Net Interest Cost (NIC) 2.0526462%
True Interest Cost (TIC) 2.0593434%
All Inclusive Cost (AIC) 2.2397129%
Page 5
NORTHLAND SECURITIES
17
Preliminary
City of Centerville, Minnesota
$1,510,000 General Obligation Improvement Bonds, Series 2013A
(15 -year term)
Revenue vs. Debt Service
(a) (b) (c) (d) (e) (f) (g ) (h U) (k) (I)
�S
Less Area A Less Area B
Statutory Special Special Annual Cumulative
105% Debt Less Other Assessment Assessment Net City Share Surplus / Cash Year Year
Date Scheduled P l Service City Funds Revenue Revenue (Tax Levy) Deficit Balance Certified Collected Tax Levy
02/01/2013 - - 2011 2012
02/01/2014 19,878.33 19,822.25 19,822.25 - - - - 2012 2013
02/01/2015 28,317.50 29,733.38 16,381.70 14,79541 - 1,443.74 1,443.74 2013 2014 -
02/01/2016 38,317.50 40,233.38 16,381.70 14,795.41 9,056.27 43.74 1,487.47 2014 2015 9,100.00
02/01/2017 38,192.50 40,102.13 16,381 70 14,795.41 8,925.02 (25 01) 1,462.46 2015 2016 8,900.00
00 02/01/2018 38,067.50 39,970 88 16,381.70 14,795.41 8,79377 6.24 1,468.69 2016 2017 8,80000
02/01/2019 37,942.50 39,839.63 16,381.70 14,795.41 8,662.52 37.49 1,506.18 2017 2018 8,700.00
02/01/2020 37,817.50 39,708.38 16,38170 14,795.41 8,531.27 (31.26) 1,474.91 2018 2019 8,500.00
02/01/2021 177,692.50 186,577.13 16,381.70 14,795.41 155,400.02 (0.02) 1,474.89 2019 2020 155,400.00
02/01/2022 180,592.50 189,622.13 16,381.70 14,795.41 158,445.02 (45.02) 1,429.88 2020 2021 158,400.00
02/0112023 178,190.00 187,099.50 16,361.70 14,795.41 155,922.39 (22.39) 1,407.49 2021 2022 155,900.00
02/01/2024 180,555.00 189,582.75 16,38170 14,795.41 158,405.64 (5.64) 1,401.85 2022 2023 158,400.00
02101/2025 177,675.00 186,558.75 16,381.70 170,177.05 22.95 1,424.80 2023 2024 170,200.00
02/01/2026 179,635.00 188,616.75 16,381.70 172,235.05 (35.05) 1,369.75 2024 2025 172,200.00
02/01/2027 181,335.00 190,401.75 16,381.70 174.020.05 (20.05) 1,369.70 2025 2026 174,00000
0 02/01/2028 177,765.00 186,653.25 16,381.70 170,271.55 28.45 1,398.15 2026 2027 170,300.00
02/01/2029 179,025.00 187,976.25 16,381.70 - 171,594.55 5.45 1,403.60 2027 2028 171,600.00
Total $1,849,998.33 $1,942,498.25 $245,725.50 $147,954.10 $1,530,440.14 $1,403.60 $1,530,400.00
a
z
0 Revenue Footnotes:
( e) The special assessment revenue is based on $182,138 of assessments at a rate of 4.00% over a term of fifteen years requiring equal
annual installments
f) The special assessment revenue is based on $120,000 of assessments at a rate of 4.00% over a term of ten years requiring equal
annual installments
CITY OF CENTERVILLE
CENTERVILLE, MINNESOTA
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED
DECEMBER 31, 2012
19
THIS PAGE IS LEFT BLANK
INTENTIONALLY
20
CITY OF CENTERVILLE, MINNESOTA
ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
FOR THE YEAR ENDED DECEMBER 31, 2012
Page No.
INTRODUCTORY SECTION
Elected and Appointed Officials 5
FINANCIAL SECTION
Independent Auditor's Report 9
Management's Discussion and Analysis 13
Basic Financial Statements
Government -wide Financial Statements
Statement of Net Position 27
Statement of Activities 28
Fund Financial Statements
Governmental Funds
Balance Sheet 32
Reconciliation of the Balance Sheet to the Statement of Net Position 35
Statement of Revenues, Expenditures and Changes in Fund Balances 36
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances to the Statement of Activities 39
General Fund
Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 41
Proprietary Funds
Statements of Net Position 42
Statements of Revenues, Expenses and Changes in Net Position 44
Statements of Cash Flows 46
Notes to the Financial Statements 51
Combining and Individual Fund Financial Statements and Schedules
Nonmajor Governmental Funds
Combining Balance Sheet 72
Combining Statement of Revenues, Expenditures and Changes in Fund Balances 74
General Fund
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 77
Debt Service Funds
Combining Balance Sheet 82
Combining Schedule of Revenues, Expenditures and Changes in Fund Balances 84
Summary Financial Report
Revenues and Expenditures for General Operations - Governmental Funds 86
OTHER REQUIRED REPORTS
Auditor's Report on Legal Compliance 89
-1-
21
THIS PAGE IS LEFT BLANK
INTENTIONALLY
-2-
22
INTRODUCTORY SECTION
CITY OF CENTERVILLE
CENTERVILLE, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2012
-3-
23
THIS PAGE IS LEFT BLANK
INTENTIONALLY
-4-
24
CITY OF CENTERVILLE, MINNESOTA
ELECTED AND APPOINTED OFFICIALS
FOR THE YEAR ENDED DECEMBER 31, 2012
ELECTED
Name Title Term Expires
Thomas Wilharber Mayor 01101115
Steve King Council Member 01101115
Ben Fehrenbacher Council Member 01/01/17
Jeff Paar Council Member 01/01/17
D. Love Council Member 01/01/15
APPOINTED
Dallas Larson City Administrator
Teresa Bender City Clerk
Mike Jeziorski Finance Director
-5-
25
THIS PAGE IS LEFT BLANK
INTENTIONALLY
-6-
26
FINANCIAL SECTION
CITY OF CENTERVILLE
CENTERVILLE, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2012
-7-
27
THIS PAGE IS LEFT BLANK
INTENTIONALLY
-8-
28
MIMPAIABDO
w EICK &
® I Z IPI- to
ME J. E S LLP
Grt fied Public Accountants & Consultants
5201 Eden Avenue
Suite 250
Edina. MN 55436
INDEPENDENT AUDITOR'S REPORT
Honorable Mayor and City Council
City of Centerville, Minnesota
Report on Financial Statements
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 Centerville, Minnesota (the City), as of and for the year ended
December 31, 2012, and the related notes to the financial statements, which collectively comprise the City's basic financial statements
as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting
principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal
control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due
to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. The prior year comparative information has
been derived from the City's 2011 financial statements and, in our report dated March 28, 2012 we express unqualified opinions on
the respective proprietary fund financial statements. 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 involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
City's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we
express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
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 as of
December 31, 2012, and the respective changes in financial position and, where applicable, cash flows thereof and the respective
budgetary comparison for the General fund for the year then ended in conformity with accounting principles generally accepted in the
United States of America.
952.835.90% • Fax 952.835.3261 -9
www.aemepas.com
29
THIS PAGE IS LEFT BLANK
INTENTIONALLY
-10-
30
•
•�
Other Matters
Change in Accounting Standards
As described in the Note 6 to the basic financial statements, the City adopted the provisions of Governmental Accounting Standard
Board (GASB) Statement No. 63, Financial Reporting of Deferred Outf ows of Resources, Deferred Inflows of Resources, and Net
Position and Statement No. 65, Items Previously Reported as Assets and Liabilities, for the year ended December 31, 2012. Adoption
of the provisions of these statements results in significant change to the classifications of the components of the financial statements.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis
starting on page 13 be presented to supplement the basic financial statements. Such information, although not a part of the basic
financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial
reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied
certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the
United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing
the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we
obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information
because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Supplementary Information in Relation to the Financial Statements as a Whole
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's financial
statements as a whole. The introductory section and combining and individual fund financial statements and schedules are presented
for purposes of additional analysis and are not a required part of the financial statements. The combining and individual fund financial
statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting
and other records used to prepare the financial statements. Such information has been subjected to the auditing procedures applied in
the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly
to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and
other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion,
the information is fairly stated, in all material respects, in relation to the financial statements as a whole. The introductory section has
not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express
an opinion or provide any assurance on it.
OU& ! & A 4 �
March 20, 2013 ABDO, EICK & MEYERS, LLP
Minneapolis, Minnesota Certified Public Accountants
952.835.9090 • Fax 952.835.3261 -11-
www.aemcpas.com
31
THIS PAGE IS LEFT BLANK
INTENTIONALLY
-12-
32
Management's Discussion and Analysis
As management of the City of Centerville, Minnesota, (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, 2012,
Financial Highlights
• The assets of the City exceeded its liabilities at the close of the most recent fiscal year by $21,343,061 (net position). Of this
amount, $4,3 06,693 (unrestricted net position) may be used to meet the City's ongoing obligations to citizens and creditors.
• The City's total net position decreased by $154,451. A further breakdown of net position is chronicled under Government
wide financial statement analysis.
• At the end of the current fiscal year, unassigned fund balance for the General fund was $1,202,827. While these funds are
not legally reserved, they are designated for future cash flow purposes.
• The City's total debt decreased $37,449, during the current fiscal year. The decrease was mainly due to regularly scheduled
debt payments, which was offset by the issuance of the refunding 2012A bond issue.
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 analysis contains other supplemental information in addition to the basic financial statements themselves.
-13-
33
The financial statements also include notes that explain some of the information in the financial statements and provide more detailed
data. The statements are followed by a section of combining and individual fund financial statements and schedules that further
explains and supports the information in the financial statements. Figure 1 shows how the required parts of this annual report are
arranged and relate to one another. In addition to these required elements, we have included a section with combining and individual
fund financial statements and schedules that provide details about nonmajor governmental funds, which are added together and
presented in single columns in the basic financial statements.
Figure 1
Required Components of the
City's Annual Financial Report
............................................. ...............................
Management's Basic Required
Discussion and Financial Supplementary
Analysis Statements Information
......................................................... ...............................
Government- Fund Notes to the
wide Financial Financial Financial
Statements Statements Statements
Summary 0 0 Detail
-14-
34
Figure 2 summarizes the major features of the City's financial statements, including the portion of the City government they cover and
the types of information they contain. The remainder of this overview section of management's discussion and analysis explains the
structure and contents of each of the statements.
Figure 2
Major features of the Government -wide and Fund Financial Statements
Fund Financial Statements
Government -wide Governmental Funds Proprietary Funds
Statements
Scope Entire City government The activities of the City that Activities the City operates
(except fiduciary funds) and are not proprietary or similar to private businesses,
the City's component units fiduciary, such as police, fire such as the water and sewer
and parks system
Required financial . Statement of Net • Balance Sheet . Statements of Net
statements Position . Statement of Revenues, Position
• Statement of Activities Expenditures, and • Statements of Revenues,
Changes in Fund Expenses and Changes in
Balances Fund Net Position
• Statements of Cash
Flows
Accounting Basis and Accrual accounting and Modified accrual accounting Accrual accounting and
measurement focus economic resources focus and current financial economic resources focus
resources focus
Type of asset/liability All assets and liabilities, both Only assets expected to be All assets and liabilities, both
information financial and capital, and used up and liabilities that financial and capital, and
short-term and long -term come due during the year or short-term and long -term
soon thereafter; no capital
assets included
Type of deferred All deferred inflows of Only deferred inflows of All deferred inflows of
Inflows of resources resources, regardless of resources that come due resources, regardless of
Information when cash is received or paid during the year or soon when cash is received or paid
thereafter; no capital assets
included
Type of inflow /out flow All revenues and expenses Revenues for which cash is All revenues and expenses
information during year, regardless of received during or soon after during the year, regardless of
when cash is received or paid the end of the year; when cash is received or paid
expenditures when goods or
services have been received
and payment is due during
the year or soon thereafter
Government -wide financial statements. The government -wide financial statements are designed to provide readers with a broad
overview of the City's finances, in a manner similar to a private- sector business.
The statement of net position presents information on all of the City's assets and liabilities, with the difference between the two
reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial
position of the City is improving or deteriorating.
The statement of activities presents information showing how the City's net position changed during the most recent fiscal year. All
changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of
related cashflows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in
future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).
Both of the government -wide financial statements distinguish functions of the City that are principally supported by taxes and
intergovernmental revenue (governmental activities) from other functions that are intended to recover all or a significant portion of
their costs through user fees and charges (business -type activities). The governmental activities of the City include general
government, public safety, public works, economic development, culture and recreation, and interest on long -term debt. The business -
type activities of the City include water, sewer, and storm water.
The government -wide financial statements start on page 27 of this report.
-15-
35
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 two categories:
governmental funds and proprietary funds.
Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities
in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund
financial statements focus on near -term inflows and outflows of 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 by the government's near -term financing
decisions. Both the governmental fund balance sheet and the 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 10 individual governmental funds, four of which are Debt Service 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, Debt Service, and Park funds. Data from the other four non -major governmental funds are combined into a single,
aggregated presentation. Individual fund data for each of these non -major governmental funds is provided in the form of combining
statements or schedules elsewhere in this report.
The City adopts an annual appropriated budget for its General fund. A budgetary comparison statement has been provided for the
General fund to demonstrate compliance with this budget.
The basic governmental fund financial statements start on page 32 of this report.
Proprietary fund. The City maintains one type of proprietary fund. 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 water, sewer
and storm water.
The proprietary fund provides 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 enterprise funds.
The basic proprietary fund financial statements start on page 42 of this report.
Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data
provided in the government -wide and fund financial statements. The notes to the financial statements start on page 51 of this report.
Other information. The combining statements referred to earlier in connection with non -major governmental funds are presented
following the notes to the financial statements. Combining and individual fund statements and schedules start on page 72 of this
report.
-16-
36
Government -wide Financial Analysis
As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the City,
assets exceeded liabilities by $21,343,061 at the close of the most recent fiscal year.
By far, the largest portion of the City's net position ( 66 percent) reflects its investment in capital assets (e.g., land, buildings,
machinery and equipment); less any related debt used to acquire those assets that are still outstanding. The City uses these capital
assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment
in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from
other sources, since the capital assets themselves cannot be used to liquidate these liabilities.
City of Centerville's Summary of Net position
Governmental Activities Business -type Activities
Restated Increase Increase
2012 2011 (Decrease) 2012 2011 (Decrease)
Assets
Current and other assets $ 4,169,758 $ 3,624,326 $ 545,432 $ 4,175,666 $ 3,707,148 $ 468,518
Capital assets 15,905,997 17,012,545 (1,106,548) 6,872,677 6,913,746 (41,069)
Total assets 20,075,755 20,636,871 (561,116) 11,048,343 10,620,894 427,449
Liabilities
Noncurrent liabilities outstanding 9,327,285 9,363,568 (36,283) 13,102 14,268 (1,166)
Other liabilities 374,124 357,096 17,028 66,526 25,321 41,205
Total liabilities 9,701,409 9,720,664 (19,255) 79,628 39,589 40,039
Net position
Net investment in
capital assets 7,126,016 7,686,960 (560,944) 6,872,677 6,913,746 (41,069)
Restricted for
Future expansion - - - 71,631 71,631 -
Debt service 2,945,918 2,925,802 20,116 - - -
Cable TV 20,126 25,453 (5,327) - - -
Unrestricted 282,286 277,992 4,294 4,024,407 3,595,928 428,479
Total net position $10,374,346 $10,916,207 $ (541,861) $10,968,715 $10,581,305 $ 387,410
An additional portion of the City's net position ( 14.1 percent) represents resources that are subject to external restrictions on how
they may be used. The remaining balance of unrestricted net position ($4,306,693) may be used to meet the City's ongoing
obligations to citizens and creditors.
At the end of the current fiscal year, the City is able to report positive balances in all three categories of net position, both for the City
as a whole, as well as for its separate governmental and business -type activities. The same situation held true for the prior year.
-17-
37
Governmental activities. Governmental activities decreased the City's net position by $541,861. Key elements of this decrease are
as follows:
City of Centerville's Changes in Net position
Governmental Activities Business -type Activities
Increase Increase
2012 2011 (Decrease) 2012 2011 (Decrease)
Revenues
Program revenues
Charges for services $ 441,643 $ - $ - 785,561 $ 691,020 $ 94,541
Operating grants and contributions 76,108 305,362 (229,254) - 2,971 (2,971)
Capital grants and contributions 176,630 835,568 (658,938) 156,356 96,421 59,935
General revenues
Taxes
Property taxes /tax increments 1,734,546 1,675,130 59,416 - _ -
Property taxes, levied for debt service 528,257 520,278 7,979 - - -
Othertaxes 1,157 2,708 (1,551) - _ _
Grants and contributions
not restricted to specific programs 17,673 18,544 (871) - - -
Unrestricted investment earnings 30,478 29,025 1,453 35,738 29,970 5,768
Miscellaneous 420 380 40 - _ -
Total revenues 3,006,912 3,386,995 (380,083) 977,655 820,382 157,273
Expenses
General government 491,268 536,926 (45,658) - _ _
Public safety 1,011,265 1,024,690 (13,425) - -
Public works 1,272,361 443,229 829,132 - _ _
Culture and recreation 178,192 712,987 (534,795) - _ -
Economic development 2,400 15,074 (12,674) - _ _
Interest on long -term debt 310,937 42,859 268,078 - _ _
Water - - - 349,521 373.184 (23,663)
Sewer - - 433,792 438,610 (4,818)
Storm Water - - - 89,282 85,167 4,115
Total expenses 3,266,423 2,775,765 490,658 872,595 896,961 (24,366)
Increase (decrease) in
net position before transfers (259,511) 611,230 (870,741) 105,060 (76,579) 181,639
Capital contributions to other funds (271,886) - (271,886) 271,886 - 271,886
Transfers (10,464) 99,500 (109,964) 10,464 (99,500) 109,964
Change in net position (541,861) 710,730 (1,252,591) 387,410 (176,079) 563,489
Net position, January 1 10,916,207 10,205,477 710,730 10,581,305 10,757,384 (176,079)
Net position, December 31 $10,374,346 $10,916,207 $ (541,861) $10,968,715 $10,581,305 $ 387,410
• Capital and operating grants and contributions decreased due to grants received in the prior year for the irrigation project.
• Expenses increased $490,658 from the prior year, mostly due to public works expenditures which was due to an increase in
depreciation expense of roughly $350,000 due to projects capitalized at the end of 2011 and increased expenses related to the
salt brine system grant, some of which were reimbursed to the City from the other cities involved. The decrease in culture
and recreation is due to the trail extension project being finished in 2012.
-18-
38
The following graph depicts various governmental activities and shows the program revenues and expenses directly related to those
activities.
Expenses and Program Revenues - Governmental Activities
$1,400,000 - - -- — — — --
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$-
General Public safety Public works Culture and Economic Interest on long -
government recreation development term debt
Program revenues ■ Expenses
Revenues by Source - Governmental Activities
Capital grants and
contributions
Operating grants and 7.2%
contributions Taxes
70.0%
3.1%
Charges for services
17.8%
Unrestricted investment
earnings
1.2% Grants and contributions
not restricted
0.7%
-19-
39
Business -type activities. Business -type activities increased the City's net position by $387,410. Key elements of this
increase is as follows:
Expenses and Program Revenues - Business -type Activities
$500,000 -- -- ___ --
$450,000
$400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
Water Sewer Storm water
N Program revenues ■ Expenses
Revenues by Source - Business -type Activities
,Investment earnings
Capital grants and 3.6%
contributions
16.0%
Charges for services
80.4%
A further breakdown of expenses is shown below:
Governmental Activities Business -type Activities
Increase Increase
2012 2011 (Decrease) 2012 2011 (Decrease)
Personnel costs $ 582,993 $ 670,891 $ (87,898) $ 211,814 $ 238,177 $ (26,363)
Supplies 41,904 57,970 (16,066) 19,871 18,375 1,496
Other charges for services 1,373,891 1,266,055 107,836 639,260 640,409 (1,149)
Capital outlay 114,019 396,920 (282,901) - _ _
Total $ 2,112,807 $ 2,391,836 $ (279,029) $ 870,945 $ 896,961 $ (26,016)
-20-
40
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, unassigned
fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year.
Activity in the City's major governmental funds is discussed below:
Fund Balance December 31, Increase
Major Funds 2012 2011 (Decrease)
General $ 1,205,820 $ 1,142,321 $ 63,499
The General fund balance has increased from 2011 and is strong
moving into 2013.
Debt Service $ 1,866,410 $ 1,282,492 $ 583,918
The Debt Service fund increased $583,918. The City manages cash flow in all
Debt Service funds and ensures adequate resources exist to fund future obligations.
Park $ ( 1,070,527) $ (1,071,023) $ 496
The Park fund balance increased about $500 from the previous year.
As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $2,206,916, an
increase of $734,756 in comparison with the prior year. Approximately 5.0 percent of this total amount or $110,782 constitutes
unassigned fund balance, which is available for spending at the City's discretion. The remainder of fund balance ($2,096,134) is not
available for spending because it is either: 1) nonspendable ($30,461), 2) restricted ($1,859,068), 3) committed ($18,755), 4) or
assigned ($187,850) for the purposes described in the fund balance section of each balance sheet.
Proprietary funds. The City's proprietary funds provide the same type of information found in the government -wide financial
statements, but in more detail.
Unrestricted net position of the enterprise funds at the end of the year amounted to $4,024,407. The total increase in net position for
the funds was $387,410. Other factors concerning the finances of this fund have already been addressed in the discussion of the City's
business -type activities.
-21-
41
General Fund Budgetary Highlights
The City's General fund budget was not amended during the year. Revenues had a positive budget variance and expenditures had
negative budget variance, and overall the General fund had a net positive budget variance of $95,499.
Some of the significant variances can be briefly summarized as follows:
• Total revenue had a positive budget variance of $212,488. Most of this increase is due to nonbusiness licenses and permits
and miscellaneous refunds and reimbursements. The variance in miscellaneous refunds and reimbursements is due to monies
received from other cities related to the salt brine agreement, in which the City paid for the costs and then was reimbursed by
the other cities involved.
• Total expenditures had a negative budget variance of $116,989. Total public works expenditures were over budget by
$124,861. This was due to the costs associated with the salt brine agreement, which were reimbursed back to the City.
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, 2012,
amounts to $22,778,674 (net of accumulated depreciation). This investment in capital assets includes land, structures, improvements,
machinery and equipment, park facilities, roads, highways and bridges.
Major capital asset events during the current fiscal year included the following:
• The trail extension project was completed
• The storm water treatment and irrigation at LaMotte Park was completed
• Land purchase at 7261 Main Street
Additional information on the City's capital assets can be found in Note 3B start on page 61 of this report.
City of Centerville's Capital Assets
(net of depreciation)
Governmental Activities Business -type Activities
Increase Increase
2012 2011 (Decrease) 2012 2011 (Decrease)
Land $ 3,337,023 $ 3,308,023 $ 29,000 $ 196,255 $ 196,255 $ -
Construction in progress - 1,391,196 (1,391,196) - -
Buildings 934,982 972,272 (37,290) 373,290 381,570 (8,280)
Infrastructure 11,329,577 11,010,900 318,677 6,175,919 6,204,183 (28,264)
Machinery and equipment 304,415 330,154 (25,739) 127,213 131,738 (4,525)
Total $15,905,997 $17,012,545 $ (1,106,548) $ 6,872,677 $ 6,913,746 $ (41,069)
-22-
42
Long -term debt. At the end of the current fiscal year, the City had total bonded debt outstanding of $9,294,981. While all of the
City's bonds have revenue streams, they are all backed by the full faith and credit of the City. The City will have 51 percent of its
principal debt retired within five years.
City of Centerville's Outstanding Debt
Governmental Activities Business -type Activities
Increase Increase
2012 2011 (Decrease) 2012 2011 (Decrease)
General obligation bonds $ 9,294,981 $ 9,325,585 $ (30,604) $ - $ - $ -
Compensated absences payable 32,304 37,983 (5,679) 13,102 14,268 (1,166)
Total $ 9,327,285 $ 9,363,568 $ (36,283) $ 13,102 $ 14,268 $ (1,166)
Minnesota statutes limit the amount of net general obligation debt a City may issue to 3 percent of the market value of taxable
property within the City. Net debt is debt payable solely from ad valorem taxes. The taxable market value totals $312,695,800 which
calculates to a debt margin of $9,380,874. Debt financed partially or entirely by special assessments is not applied against the City's
debt limit, nor is debt financed by proprietary fund revenues. Currently the City has $1,024,980 of general obligation debt outstanding
leaving a debt margin of $8,355,894.
Additional information on the City's long -term debt can be found in Note 3C starting on page 63 of this report.
Economic Factors and Next Year's Budgets and Rates
• Residential building activity is expected to show slight improvement as the overall housing market improves.
• The discontinued Market Value Homestead Credit program will shift property tax burdens to higher valued parcels, but will
allow the City to receive all dollars levied.
All of these factors were considered in preparing the City's budget for the 2012 fiscal year.
Requests for Information
This financial report is designed to provide a general overview of the City's finances for all parties interested. Questions concerning
any of the information provided in this report or requests for additional financial information should be addressed to the City
Administrator, City of Centerville, 1880 Main Street, Centerville, Minnesota, 55038.
-23-
43
THIS PAGE IS LEFT BLANK
INTENTIONALLY
-24-
44
GOVERNMENT -WIDE FINANCIAL STATEMENTS
CITY OF CENTERVILLE
CENTERVILLE, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2012
-25-
45
THIS PAGE IS LEFT BLANK
INTENTIONALLY
-26-
46
CITY OF CENTERVILLE, MINNESOTA
STATEMENT OF NET POSITION
DECEMBER 31, 2012
Governmental Business -type
Activities Activities Total
ASSETS
Cash and temporary investments $ 3,328,386 $ 2,324,570 $ 5,652,956
Cash with fiscal agent 509,210 - 509,210
Receivables
Accrued interest 13,213 - 13,213
Delinquent taxes 70,238 - 70,238
Accounts 4,098 206,741 210,839
Special assessments 1,645,570 127,388 1,772,958
Due from other governments 59,452 - 59,452
Internal balances (1,490,870) 1,490,870 -
Inventories - 9,960 9,960
Prepaid items 30,461 16,137 46,598
Capital assets not being depreciated 3,337,023 196,255 3,533,278
Capital assets net of accumulated depreciation 12,568,974 6,676,422 19,245,396
TOTAL ASSETS 20,075,755 11,048,343 31,124,098
LIABILITIES
Accounts payable 98,720 5,134 103,854
Accrued salaries payable 18,709 7,021 25,730
Contracts payable 70,690 - 70,690
Due to other governments 10,115 54,371 64,486
Accrued interest payable 114,783 - 114,783
Deposits payable 61,107 - 61,107
Noncurrent liabilities
Due within one year 1,260,581 13,102 1,273,683
Due in more than one year 8,066,704 - 8,066,704
TOTAL LIABILITIES 9,701,409 79,628 9,781,037
NET POSITION
Net investment in capital assets 7,126,016 6,872,677 13,998,693
Restricted for
Future expansion - 71,631 71,631
Debt service 2,945,918 - 2,945,918
Cable TV 20,126 - 20,126
Unrestricted 282,286 4,024,407 4,306,693
TOTAL NET POSITION $ 10,374,346 $ 10,968,715 $ 21,343,061
The notes to the financial statements are an integral part of this statement.
-27-
47
CITY OF CENTERVILLE, MINNESOTA
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED DECEMBER 31, 2012
Program Revenues
Operating Capital Grants
Charges for Grants and and
Functions/Programs Expenses Services Contributions Contributions
Governmental activities
General government $ 491,268 $ 66,464 $ - $ _
Public safety 1,011,265 202,220 76,108 -
Public works 1,272,361 151,977 - 176,630
Culture and recreation 178,192 17,642 - -
Economic development 2,400 3,340 -
Interest on long -term debt 310,937 - - _
Total governmental activities 3,266,423 441,643 76,108 176,630
Business -type activities
Water 349,521 321,058 - 62,294
Sewer 433,792 375,103 - 94,062
Storm water 89,282 89,400 - -
Total business -type activities 872,595 785,561 - 156,356
Total $ 4,139,018 $ 1,227,204 $ 76,108 $ 332,986
General revenues
Taxes
Property taxes, levied for general purposes
Property taxes, levied for debt service
Gambling taxes
Grants and contributions not restricted to specific programs
Unrestricted investment earnings
Miscellaneous
Transfers - internal activities
Transfers - capital assets
Total general revenues and transfers
Change in net position
Net position (restated), January 1
Net position, December 31
The notes to the financial statements are an integral part of this statement.
-28-
48
Net (Expenses) Revenues
and Changes in Net Position
Governmental Business -type
Activities Activities Total
$ (424,804) $ - $ (424,804)
(732,937) - (732,937)
(943,754) - (943,754)
(160,550) - (160,550)
940 - 940
(310,937) - (310,937)
(2,572,042) - (2,572,042)
- 33,831 33,831
- 35,373 35,373
- 118 118
- 69,322 69,322
(2,572,042) 69,322 (2,502,720)
1,734,546 - 1,734,546
528,257 - 528,257
1,157 - 1,157
17,673 - 17,673
30,478 35,738 66,216
420 - 420
(10,464) 10,464 -
(271,886) 271,886 -
2,030,181 318,088 2,348,269
(541,861) 387,410 (154,451)
10,916,207 10,581,305 21,497,512
$ 10,374,346 $ 10,968,715 $ 21,343,061
-29-
49
THIS PAGE IS LEFT BLANK
INTENTIONALLY
-30-
50
FUND FINANCIAL STATEMENTS
CITY OF CENTERVILLE
CENTERVILLE, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2012
-31-
51
CITY OF CENTERVILLE, MINNESOTA
BALANCE SHEET
GOVERNMENTAL FUNDS
DECEMBER 31, 2012
101 300's 402
Debt
General Service Park
ASSETS
Cash and temporary investments $ 1,285,706 $ 1,706,467 $ 37,785
Cash with fiscal agent - 509,210 -
Receivables
Accrued interest 13,213 - -
Delinquent taxes 68,261 1,977 -
Accounts 4,098 - -
Special assessments 82,186 1,563,384 -
Due from other governments 49,868 - -
Prepaid items 2,993 27,468 -
TOTAL ASSETS $ 1,506,325 $ 3,808,506 $ 37,785
LIABILITIES
Accounts payable $ 128,181 $ - $ -
Accrued salaries payable 18,246 - -
Contracts payable _
Due to other governments 10,115 - -
Advances from other funds - 382,558 1,108,312
TOTAL LIABILITIES 156,542 382,558 1,108,312
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - property taxes 61,781 - -
Unavailable revenue - special assessments 82,182 1,559,538 -
TOTAL DEFERRED INFLOWS OF RESOURCES 143,963 1,559,538 -
FUND BALANCES
Nonspendable 2,993 27,468 -
Restricted - 1,838,942 -
Committed 18,755 - -
Assigned _
Unassigned 1,184,072 - (1,070,527)
TOTAL FUND BALANCES 1,205,820 1,866,410 (1,070,527)
TOTAL LIABILITIES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCE $ 1,506,325 $ 3,808,506 $ 37,785
The notes to the financial statements are an integral part of this statement.
-32-
52
Other Total
Governmental Governmental
Funds Funds
$ 298,428 $ 3,328,386
- 509,210
- 13,213
- 70,238
- 4,098
9,584 1,655,154
- 49,868
- 30,461
$ 308,012 $ 5,660,628
$ 31,646 $ 159,827
463 18,709
70,690 70,690
- 10,115
- 1,490,870
102,799 1,750,211
- 61,781
- 1,641,720
- 1,703,501
- 30,461
20,126 1,859,068
- 18,755
187,850 187,850
(2,763) 110,782
205,213 2,206,916
$ 308,012 $ 5,660,628
-33-
53
THIS PAGE IS LEFT BLANK
INTENTIONALLY
-34-
54
CITY OF CENTERVILLE, MINNESOTA
RECONCILIATION OF THE BALANCE SHEET
TO THE STATEMENT OF NET POSITION
GOVERNMENTAL FUNDS
DECEMBER 31, 2012
Total fund balances - governmental $ 2,206,916
Amounts reported for the governmental activities in the statement
of net position are different because
Capital assets used in governmental activities are not financial
resources and therefore are not reported as assets in governmental funds.
Cost of capital assets 21,352,587
Less accumulated depreciation (5,446,590)
Long -term liabilities, including bonds payable, are not due and payable in the
current period and therefore are not reported as liabilities in the funds.
Long -term liabilities at year end consist of
Bond principal payable (9,294,981)
Compensated absences payable (32,304)
Some receivables are not available soon enough to pay for the current period's expenditures,
and therefore are unavailable in the funds
Special assessments 1,641,720
Delinquent taxes 61,781
Governmental funds do not report a liability for accrued interest until due and payable (114,783)
Total net position - governmental activities $ 10,374,346
The notes to the financial statements are an integral part of this statement.
-35-
55
CITY OF CENTERVILLE, MINNESOTA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2012
101 300's 402
Debt
General Service Park
REVENUES
Taxes
General property $ 1,737,813 $ 528,257 $ -
Gambling 1,157 - -
Licenses and permits 129,424 - -
Intergovernmental 222,950 58,201 -
Charges for services 7,496 - -
Fines and forfeitures 44,836 -
Special assessments 27,543 330,326 -
Interest on investments 11,334 15,742 496
Miscellaneous 89,735 1,711 -
TOTAL REVENUES 2,272,288 934,237 496
EXPENDITURES
Current
General government 475,742 -
Public safety 1,009,200 - -
Public works 408,361 - -
Culture and recreation 88,253 -
Economic development 2,400 - -
Capital outlay
Public works - - _
Culture and recreation - - _
Economic development 29,000 - -
Debt service
Principal 6,833 545,604 -
Interest and other - 319,715 -
TOTAL EXPENDITURES 2,019,789 865,319 -
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 252,499 68,918 496
OTHER FINANCING SOURCES (USES)
Transfers in - _ _
Bonds issued - 515,000 -
Transfers out (189,000) - -
TOTAL OTHER FINANCING SOURCES (USES) (189,000) 515,000 -
NET CHANGE IN FUND BALANCES 63,499 583,918 496
FUND BALANCES, JANUARY 1 1,142,321 1,282,492 (1,071,023)
FUND BALANCES, DECEMBER 31 $ 1,205,820 $ 1,866,410 $ (1,070,527)
The notes to the financial statements are an integral part of this statement.
-36-
56
Other Total
Governmental Governmental
Funds Funds
$ - $ 2,266,070
- 1,157
- 129,424
- 281,151
- 7,496
- 44,836
- 357,869
2,906 30,478
18,948 110,394
21,854 3,228,875
- 475,742
- 1,009,200
2,202 410,563
12,953 101,206
- 2,400
85,019 85,019
13,373 13,373
- 29,000
552,437
- 319,715
113,547 2,998,655
(91,693) 230,220
189,000 189,000
- 515,000
(10,464) (199,464)
178,536 504,536
86,843 734,756
118,370 1,472,160
$ 205,213 $ 2,206,916
-37-
57
THIS PAGE IS LEFT BLANK
INTENTIONALLY
-38-
58
CITY OF CENTERVILLE, MINNESOTA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2012
Net change in fund balances - governmental funds $ 734,756
Amounts reported for governmental activities in the statement
of activities are different because
Capital outlays are reported in governmental funds as expenditures. However, in the statement of
activities, the cost of those assets is allocated over the estimated useful lives as depreciation expense.
Capital outlay 66,192
Depreciation expense (900,854)
The capital projects funds accounted for the construction of Water, Sewer and Storm water fund assets. These
costs of these assets are recorded as expense in the fund statements. When these assets
are complete, they are transferred from the governmental to the business -type activities. (271,886)
The issuance of long -term debt provides current financial resources to governmental funds, while
the repayment of principal of long -term debt consumes the current financial resources of governmental
funds. Neither transaction, however, has any effect on net position. Also, governmental funds report
the effect of issuance costs, premiums, discounts and similar items when debt is first issued,
whereas these amounts are delayed and amortized in the statement of activities.
Principal repayments 545,604
Debt issued or incurred (515,000)
Interest on long -term debt in the statement of activities differs from the amount reported in the
governmental fund because interest is recognized as an expenditure in the funds when it is due,
and thus requires the use of current financial resources. In the statement of activities, however
interest expense is recognized as the interest accrues, regardless of when it is due. 15,611
Certain revenues are recognized as soon as they are earned. Under the modified accrual
basis of accounting certain revenues cannot be recognized until they are available
to liquidate liabilities of the current period.
Special assessments (218,696)
Property taxes (3,267)
Some expenses reported in the statement of activities do not require the use of current
financial resources and, therefore, are not reported as expenditures in governmental funds.
Compensated absences payable 5,679
Change in net position - governmental activities $ (541,861)
The notes to the financial statements are an integral part of this statement.
-39-
59
THIS PAGE IS LEFT BLANK
INTENTIONALLY
-40-
60
CITY OF CENTERVILLE, MINNESOTA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED DECEMBER 31, 2012
Budgeted Amounts Actual Variance with
Original Final Amounts Final Budget
REVENUES
Taxes
General property $ 1,739,600 $ 1,739,600 $ 1,737,813 $ (1,787)
Gambling - - 1,157 1,157
Licenses and permits 91,800 91,800 129,424 37,624
Intergovernmental 154,800 154,800 222,950 68,150
Charges for services 3,600 3,600 7,496 3,896
Fines and forfeitures 33,500 33,500 44,836 11,336
Special assessments 14,000 14,000 27,543 13,543
Interest on investments 20,000 20,000 11,334 (8,666)
Miscellaneous 2,500 2,500 89,735 87,235
TOTAL REVENUES 2,059,800 2,059,800 2,272,288 212,488
EXPENDITURES
Current
General government 500,700 500,700 475,742 24,958
Public safety 1,018,600 1,018,600 1,009,200 9,400
Public works 283,500 283,500 408,361 (124,861)
Culture and recreation 90,500 90,500 88,253 2,247
Economic development - - 2,400 (2,400)
Capital outlay 2,500 2,500 29,000 (26,500)
Debt service 7,000 7,000 6,833 167
TOTAL EXPENDITURES 1,902,800 1,902,800 2,019,789 (116,989)
EXCESS OF REVENUES
OVER EXPENDITURES 157,000 157,000 252,499 95,499
OTHER FINANCING USES
Transfers out (189,000) (189,000) (189,000) -
NET CHANGE IN FUND BALANCES (32,000) (32,000) 63,499 95,499
FUND BALANCES, JANUARY 1 1,142,321 1,142,321 1,142,321 -
FUND BALANCES, DECEMBER 31 $ 1,110,321 $ 1,110,321 $ 1,205,820 $ 95,499
The notes to the financial statements are an integral part of this statement.
-41-
61
CITY OF CENTERVILLE, MINNESOTA
STATEMENTS OF NET POSITION
PROPRIETARY FUNDS
DECEMBER 31, 2012 AND 2011
Business -type Activities - Enterprise Funds
601 602
Water Sewer
2012 2011 2012 2011
ASSETS
CURRENT ASSETS
Cash and temporary investments $ 1,288,411 $ 1,074,848 $ 905,212 $ 222,280
Receivables
Accounts 72,549 72,906 109,385 99,407
Special assessments 10,385 9,212 1 63
Advances to other funds - - 1,579,520 2,050,776
Inventories 9,960 3,290 - -
Prepaid items - 1,301 16,137 16,609
TOTAL CURRENT ASSETS 1,381,305 1,161,557 2,610,255 2,389,135
NONCURRENT ASSETS
Special assessments receivable 62,839 72,565 54,163 52,408
Capital assets
Land 72,255 72,255 124,000 124,000
Buildings 138,000 138,000 276,000 276,000
Infrastructure 4,966,142 4,966,142 3,442,483 3,442,483
Machinery and equipment 269,367 243,626 96,742 96,742
Less accumulated depreciation (1,788,769) (1,602,132) (1,538,111) (1,419,374)
Net capital assets 3,656,995 3,817,891 2,401,114 2,519,851
TOTAL NONCURRENT ASSETS 3,719,834 3,890,456 2,455,277 2,572,259
TOTAL ASSETS 5,101,139 5,052,013 5,065,532 4,961,394
LIABILITIES
CURRENT LIABILITIES
Accounts payable 4,407 3,135 647 310
Contracts payable - _ _ _
Accrued salaries payable 2,848 2,881 2,848 2,881
Due to other governments 778 54,371 4,415
Compensated absences payable 5,458 5,796 5,458 5,796
TOTAL CURRENT LIABILITIES 12,713 12,590 63,324 13,402
NONCURRENT LIABILITIES
Advances from other funds _ _ _ _
TOTAL LIABILITIES 12,713 12,590 63,324 13,402
NET POSITION
Net investment in capital assets 3,656,995 3,817,891 2,401,114 2,519,851
Restricted for future expansion - - 71,631 71,631
Unrestricted 1,431,431 1,221,532 2,529,463 2,356,510
TOTAL NET POSITION $ 5,088,426 $ 5,039,423 $ 5,002,208 $ 4,947,992
The notes to the financial statements are an integral part of this statement.
-42-
62
Business -type Activities - Enterprise Funds
603
Storm Water Totals
2012 2011 2012 2011
$ 130,947 $ 120,592 $ 2,324,570 $ 1,417,720
24,807 20,891 206,741 193,204
- - 10,386 9,275
- 1,579,520 2,050,776
- 9,960 3,290
- - 16,137 17,910
155,754 141,483 4,147,314 3,692,175
- - 117,002 124,973
- - 196,255 196,255
- - 414,000 414,000
- - 8,408,625 8,408,625
968,992 697,106 1,335,101 1,037,474
(154,424) (121,102) (3,481,304) (3,142,608)
814,568 576,004 6,872,677 6,913,746
814,568 576,004 6,989,679 7,038,719
970,322 717,487 11,136,993 10,730,894
80 - 5,134 3,445
- 9,626 - 9,626
3,511 1,295 9,207 7,057
- - 54,371 5,193
- 2,676 10,916 14,268
3,591 13,597 79,628 39,589
88,650 110,000 88,650 110,000
92,241 123,597 168,278 149,589
814,568 576,004 6,872,677 6,913,746
- - 71,631 71,631
63,513 17,886 4,024,407 3,595,928
$ 878,081 $ 593,890 $ 10,968,715 $ 10,581,305
-43-
63
CITY OF CENTERVILLE, MINNESOTA
STATEMENTS OF REVENUES, EXPENSES
AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
Business -type Activities - Enterprise Funds
601 602
Water Sewer
2012 2011 2012 2011
OPERATING REVENUES
Charges for services $ 320,631 $ 277,217 $ 375,103 $ 337,785
OPERATING EXPENSES
Salaries and benefits 88,144 97,548 89,475 101,590
Supplies 17,606 16,462 1,611 1,222
Other services and charges 40,451 62,152 31,746 17,794
Utilities 16,683 15,144 2,985 3,197
MCES - disposal charges - - 189,237 195,880
Depreciation 186,637 181,878 118,738 118,927
TOTAL OPERATING EXPENSES 349,521 373,184 433,792 438,610
OPERATING INCOME (LOSS) (28,890) (95,967) (58,689) (100,825)
NONOPERATING REVENUES (EXPENSES)
Interest earnings 15,172 12,787 18,843 14,708
Intergovernmental - 2,971 - -
Miscellaneous revenue 427 299 -
Interest expense - _ - _
TOTAL NONOPERATING REVENUES 15,599 16,057 18,843 14,708
INCOME (LOSS) BEFORE TRANSFERS
AND CONTRIBUTIONS (13,291) (79,910) (39,846) (86,117)
CAPITAL CONTRIBUTIONS FROM OTHER FUNDS - - _ -
CAPITAL CONTRIBUTIONS 62,294 59,698 94,062 36,723
TRANSFERS IN - _ _ _
TRANSFERS OUT - _ - _
CHANGE IN NET POSITION 49,003 (20,212) 54,216 (49,394)
NET POSITION, JANUARY 1 5,039,423 5,059,635 4,947,992 4,997,386
NET POSITION, DECEMBER 31 $ 5,088,426 $ 5,039,423 $ 5,002,208 $ 4,947,992
The notes to the financial statements are an integral part of this statement.
-44-
64
Business -type Activities - Enterprise Funds
603
Storm Water Totals
2012 2011 2012 2011
$ 89,400 $ 75,719 $ 785,134 $ 690,721
34,195 39,039 211,814 238,177
654 691 19,871 18,375
19,461 17,553 91,658 97,499
- - 19,668 18,341
- - 189,237 195,880
33,322 27,884 338,697 328,689
87,632 85,167 870,945 896,961
1,768 (9,448) (85,811) (206,240)
1,723 2,475 35,738 29,970
- - - 2,971
427 299
(1,650) - (1,650) -
73 2,475 34,515 33,240
1,841 (6,973) (51,296) (173,000)
271,886 - 271,886 -
- - 156,356 96,421
10,464 - 10,464 -
- (99,500) - (99,500)
284,191 (106,473) 387,410 (176,079)
593,890 700,363 10,581,305 10,757,384
$ 878,081 $ 593,890 $ 10,968,715 $ 10,581,305
-45-
65
CITY OF CENTERVILLE, MINNESOTA
STATEMENTS OF CASH FLOWS - CONTINUED ON THE FOLLOWING PAGES
PROPRIETARY FUNDS
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
Business -type Activities - Enterprise Funds
601 602
Water Sewer
2012 2011 2012 2011
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers and users $ 321,415 $ 275,605 $ 365,125 $ 332,727
Payments to suppliers (79,615) (93,212) (174,814) (216,199)
Payments to employees (88,515) (98,599) (89,846) (102,641)
NET CASH PROVIDED
BY OPERATING ACTIVITIES 153,285 83,794 100,465 13,887
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Increase (decrease) in advances to other funds - - 471,256 (12,302)
Interest paid on advance from other funds - - _ _
Grant proceeds - 2,971
Transfers to other funds _ _ _
Transfers from other funds _ _ _ _
NET CASH PROVIDED (USED) BY
NONCAPITAL FINANCING ACTIVITIES - 2,971 471,256 (12,302)
CASH FLOWS FROM CAPITAL
AND RELATED FINANCING ACTIVITIES
Acquisition of capital assets (25,741) (56,427) - -
Hook up fees and unit charges received 28,370 23,530 74,487 18,156
Special assessments received 42,477 46,312 17,882 18,557
NET CASH PROVIDED BY CAPITAL
AND RELATED FINANCING ACTIVITIES 45,106 13,415 92,369 36,713
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received on investments 15,172 12,787 18,842 14,709
NET INCREASE (DECREASE)
IN CASH AND CASH EQUIVALENTS 213,563 112,967 682,932 53,007
CASH AND CASH EQUIVALENTS, JANUARY 1 1,074,848 961,881 222,280 169,273
CASH AND CASH EQUIVALENTS, DECEMBER 31 $ 1,288,411 $ 1,074,848 $ 905 $ 222,280
The notes to the financial statements are an integral part of this statement.
-46-
66
Business -type Activities - Enterprise Funds
603
Storm Water Totals
2012 2011 2012 2011
$ 85,484 $ 73,266 $ 772,024 $ 681,598
(29,661) (8,618) (284,090) (318,029)
(34,655) (36,801) (213,016) (238,041)
21,168 27,847 274,918 125,528
(21,350) - 449,906 (12,302)
(1,650) - (1,650) -
2,971
- (99,500) - (99,500)
10,464 - 10,464 -
(12,536) (99,500) 458,720 (108,831)
- (25,741) (56,427)
- 102,857 41,686
- 60,359 64,869
- - 137,475 50,128
1,723 2,475 35,737 29,971
10,355 (69,178) 906,850 96,796
120,592 189,770 1,417,720 1,320,924
$ 130,947 $ 120,592 $ 2,324,570 $ 1
-47-
67
CITY OF CENTERVILLE, MINNESOTA
STATEMENTS OF CASH FLOWS - CONTINUED
PROPRIETARY FUNDS
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
Business -type Activities - Enterprise Funds
601 602
Water Sewer
2012 2011 2012 2011
RECONCILIATION OF OPERATING (INCOME) LOSS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Operating income (loss) $ (28,890) $ (95,967) $ (58,689) $ (100,825)
Other income related to operations 427 299 - -
Adjustments to reconcile operating income (loss) to
net cash provided by operating activities
Depreciation 186,637 181,878 118,738 118,927
(Increase) decrease in assets
Accounts receivable 357 (1,911) (9,978) (5,058)
Inventories (6,670) 121 - -
Prepaid items 1,301 (1,301) 472 (286)
Increase (decrease) in liabilities
Accounts payable 1,272 1,907 337 (156)
Contracts payable _ _ - -
Accrued salaries payable (33) (499) (33) (499)
Compensated absences payable (338) (552) (338) (552)
Due to other governments (778) (181) 49,956 2,336
NET CASH PROVIDED
BY OPERATING ACTIVITIES $ 153,285 $ 83,794 $ 100,465 $ 13,887
NONCASH CAPITAL AND
RELATED FINANCING ACTIVITIES
Capital assets contributed by other funds $ - $ - $ _ $ _
The notes to the financial statements are an integral part of this statement.
-48-
68
Business -type Activities - Enterprise Funds
415
Storm water Totals
2012 2011 2012 2011
$ 1,768 $ (9,448) $ (85,811) $ (206,240)
- - 427 299
33,322 27,884 338,697 328,689
(3,916) (2,453) (13,537) (9,422)
(6,670) 121
1,773 (1,587)
80 - 1,689 1,751
(9,626) 9,626 (9,626) 9,626
2,216 763 2,150 (235)
(2,676) 1,475 (3,352) 371
- 49,178 2,155
$ 21,168 $ 27,847 $ 274,918 $ 125,528
$ 271,886 $ - $ 271,886 $ -
-49-
69
THIS PAGE IS LEFT BLANK
INTENTIONALLY
-50-
70
CITY OF CENTERVILLE, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting entity
The City of Centerville, Minnesota (the City), operates under the "Optional Plan A" form of government as defined in
the State of Minnesota statutes. Under this plan, the government of the City is directed by a City Council composed of an
elected Mayor and four elected City Council Members. The City Council exercises legislative authority and determines
all matters of policy. The City Council appoints personnel responsible for the proper administration of all affairs relating
to the City. The City has considered all potential units for which it is financially accountable, and other organizations for
which the nature and significance of their relationship with the City are such that exclusion would cause the City's
financial statements to be misleading or incomplete. The Governmental Accounting Standards Board (GASB) has set
forth criteria to be considered in determining financial accountability. These criteria include appointing a voting majority
of an organization's governing body, and (1) the ability of the primary government to impose its will on that organization
or (2) the potential for the organization to provide specific benefits to, or impose specific financial burdens on the
primary government. The City does not have any component units.
B. Government -wide and fund financial statements
The government -wide financial statements (statement of net position and the statement of activities) report information
on all of the nonfiduciary activities of the City. Governmental activities, which normally are supported by taxes and
intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on
fees and charges for support.
The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset
by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. 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 properly included
among program revenues are reported instead as general revenues.
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.
-51-
71
CITY OF CENTERVILLE, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
C. Measurement focus, basis of accounting and financial statement presentation
The government -wide financial statements are reported using the economic resources measurement focus and the
accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and
expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are
recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon
as all eligibility requirements imposed by the provider have been met.
Governmental fund financial statements are reported using the current financial resources measurement focus and the
modified accrual basis of accounting Revenues are recognized as soon as they are both measurable and available.
Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to
pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected
within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as
under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences
and claims and judgments, are recorded only when payment is due.
Property taxes, franchise taxes, licenses and interest associated with the current fiscal period are all considered to be
susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special
assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the
current period. All other revenue items are considered to be measurable and available only when cash is received by the
City.
Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is
recorded on the accrual basis when the exchange takes place. On a modified accrual basis, revenue is recorded in the
year in which the resources are measurable and become available.
Non - exchange transactions, in which the City receives value without directly giving equal value in return, include
property taxes, grants, entitlement and donations. On an accrual basis, revenue from property taxes is recognized in the
year for which the tax is levied. Revenue from grants, entitlements and donations is recognized in the year in which all
eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year
when the resources are required to be used or the year when use is first permitted, matching requirements, in which the
City must provide local resources to be used for a specified purpose, and expenditure requirements, in which the
resources are provided to the City on a reimbursement basis. On a modified accrual basis, revenue from non - exchange
transactions must also be available before it can be recognized.
Unearned revenue arises when assets are recognized before revenue recognition criteria have been satisfied. Grants and
entitlements received before eligibility requirements are met are also recorded as unearned revenue.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
-52-
72
CITY OF CENTERVILLE, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
The City reports the following major governmental funds:
The General fund is the City's primary operating fund. It accounts for all financial resources of the City, except
those required to be accounted for in another fund.
The Debt Service fund accounts for the resources accumulated and payments made for principal and interest on
long -term general obligation debt of governmental funds.
The Park fund captures all park capital items and receives all the City's park dedication fees.
The City reports the following major proprietary funds:
The Water fund accounts for the activities of the water distribution system the City maintains.
The Sewer fund accounts for the activities of the City's sewage collection operations.
The Storm Water fund accounts for the activities of the City's storm water collection operations.
As a general rule the effect of interfund activity has been eliminated from government -wide financial statements.
Exceptions to this general rule are charges between the City's water and sewer function and various other functions of
the City. Elimination of these charges would distort the direct costs and program revenues reported for the various
functions concerned.
Amounts reported as program revenues include 1) charges to customers or applicants for goods, services or privileges
provided, 2) operating grants and contribution, and 3) capital grants and contributions, including special assessments.
Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general
revenues include all taxes.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and
expenses generally result from providing services and producing and delivering goods in connection with a proprietary
fund's principal ongoing operations. The principal operating revenues of the City enterprise funds are charges to
customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services,
administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are
reported as nonoperating revenues and expenses.
When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources
first, then unrestricted resources as they are needed.
-53-
73
CITY OF CENTERVILLE, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
D. Assets, liabilities, deferred inflows of resources, and net position /fund balance
Deposits and investments
The City's cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments
with original maturities of three months or less from the date of acquisition.
Cash balances from all funds are pooled and invested, to the extent available, in certificates of deposit and other
authorized investments. Earnings from such investments are allocated on the basis of applicable participation by each of
the funds.
The City may also invest idle funds as authorized by Minnesota statutes, as follows:
1. Direct obligations or obligations guaranteed by the United States or its agencies.
2. Shares of investment companies registered under the Federal Investment Company Act of 1940 and received
the highest credit rating, rated in one of the two highest rating categories by a statistical rating agency, and have
a final maturity of thirteen months or less.
3. General obligations of a state or local government with taxing powers rated "A" or better; revenue obligations
rated "AA" or better.
4. General obligations of the Minnesota Housing Finance Agency rated "A" or better.
5. Bankers' acceptances of United States banks eligible for purchase by the Federal Reserve System.
6. Commercial paper issued by United States banks corporations or their Canadian subsidiaries, of highest quality
category by at least two nationally recognized rating agencies, and maturing in 270 days or less.
7. Repurchase or reverse repurchase agreements and securities lending agreements with financial institutions
qualified as a "depository" by the government entity, 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 securities broker- dealers.
8. Guaranteed Investment Contracts (GIC's) issued or guaranteed by a United States commercial bank, a domestic
branch of a foreign bank, a United States insurance company, or its Canadian subsidiary, whose similar debt
obligations were rated in one of the top two rating categories by a nationally recognized rating agency.
Accounts receivable
Accounts receivable include amounts billed for services provided before year end. Unbilled utility enterprise fund
receivables are also included for services provided in 2012. The City annually certifies delinquent water and sewer
accounts to the County for collection in the following year. Therefore, there has been no allowance for doubtful accounts
established.
Interfund receivables and payables
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal
year are referred to as either "due to /from other funds" (i.e., the current portion of interfund loans) or "advances to /from
other funds" (i.e., the non - current portion of interfund loans). All other outstanding balances between funds are reported
as "due to /from other funds." Any residual balances outstanding between the governmental activities and business -type
activities are reported in the government -wide financial statements as "internal balances."
-54-
74
CITY OF CENTERVILLE, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Property taxes
The City Council annually adopts a tax levy in December and certifies it to the County for collection in the following
year. The County is responsible for collecting all property taxes for the City. These taxes attach an enforceable lien on
taxable property within the City on January 1 and are payable by the property owners in two installments. The taxes are
collected by the County Auditor and tax settlements are made to the City during January, July and December each year.
Delinquent taxes receivable include the past six years' uncollected taxes. Delinquent taxes have been offset by a deferred
inflow of resources liability for delinquent taxes not received within 60 days after year end in the fund financial
statements.
Special assessments
Special assessments represent the financing for public improvements paid for by benefiting property owners. These
assessments are recorded as receivables upon certification to the County. Special assessments are recognized as revenue
when they are received in cash or within 60 days after year end. All governmental fund special assessments receivable
are offset by a deferred inflow of resources liability in the fund financial statements.
Inventories and prepaid items
All inventories are valued at cost using the first -in /first -out (FIFO) method. Inventories of governmental funds are
recorded as expenditures when consumed rather than when purchased.
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.
-55-
75
CITY OF CENTERVILLE, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Capital assets
Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewalks, and
similar items) are, reported in the applicable governmental or business -type activities columns in the government -wide
financial statements. Capital assets are defined by the City as assets with an initial, individual cost of more than $5,000
(amount not rounded) and an estimated useful life in excess of three years. Such assets are recorded at historical cost or
estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at
the date of donation.
In the case of initial capitalization of general infrastructure assets (i.e., those reported by governmental activities) the
City chose to include items dating back to June 30, 1980. The City was able to estimate the historical cost for the initial
reporting of these assets through back trending (i.e., estimating the current replacement cost of the infrastructure to be
capitalized and using an appropriate price -level index to deflate the cost to the acquisition year or estimated acquisition
year). As the City constructs or acquires capital assets each period, including infrastructure assets, they are capitalized
and reported at historical cost. The reported value excludes normal maintenance and repairs which are essentially
amounts spent in relation to capital assets that do not increase the capacity or efficiency of the item or extend its useful
life beyond the original estimate. In the case of donations the City values these capital assets at the estimated fair value
of the item at the date of its donation. Interest incurred during the construction phase of capital assets of business -type
activities is included as part of the capitalized value of the assets constructed.
Property, plant and equipment of the City are depreciated using the straight -line method over the following estimated
useful lives:
Useful Lives
Assets in Years
Land improvements 4 to 25
Other improvements 10 to 20
Buildings and improvements 10 to 50
System improvements /infrastructure 20 to 50
Machinery and equipment 3 to 20
Vehicles 3 to 10
Other assets 3 to 15
Deferred inflows of resources
In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows
of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net
position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that
time. The government has only one type of item, which arises only under a modified accrual basis of accounting that
qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental
funds balance sheet. The governmental funds report unavailable revenues from two sources: property taxes and special
assessments. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become
available.
Compensated absences
It is the City's policy to permit employees to accumulate earned but unused paid time off benefits to a maximum of
208 hours. All paid time off pay is accrued when incurred in the government -wide and proprietary funds. 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. Union employees are allowed severance equal to their unused compensatory time. In
governmental fund types the cost of these benefits is recognized when payments are made to the employees. The General
fund is typically used to liquidate governmental compensated absences.
-56-
76
CITY OF CENTERVILLE, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Long -term obligations
In the government -wide financial statements, and proprietary fund types in the fund financial statements, long -term debt
and other long -term obligations are reported as liabilities in the applicable governmental activities, business -type
activities, or proprietary fund type statement of net position. The recognition of bond premiums and discounts are
delayed and amortized over the life of the bonds using the straight -line method. Bonds payable are reported net of the
applicable bond premium or discount. Bond issuance costs are reported as an expense in the period incurred.
In the fund financial statements, governmental fund types recognized bond premiums and discounts, as well as bond
issuance costs, during the current period. The face amount of debt issued is reported as other financing sources.
Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are
reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are
reported as debt service expenditures.
Fund balance
In the fund financial statements, fund balance is divided into five classifications based primarily on the extent to which
the City is bound to observe constraints imposed upon the use of resources reported in the governmental funds. These
classifications are defined as follows:
Nonspendable - Amounts that cannot be spent because they are not in spendable form, such as prepaid items.
Restricted - Amounts related to externally imposed constraints established by creditors, grantors or contributors; or
constraints imposed by state statutory provisions.
Committed - Amounts constrained for specific purposes that are internally imposed by formal action (resolution) of
the City Council, which is the City's highest level of decision - making authority. Committed amounts cannot be
used for any other purpose unless the City Council modifies or rescinds the commitment by resolution.
Assigned - Amounts constrained for specific purposes that are internally imposed. In governmental funds other than
the General fund, assigned fund balance represents all remaining amounts that are not classified as nonspendable
and are neither restricted nor committed. In the General fund, assigned amounts represent intended uses established
by the City Council itself or by an official to which the governing body delegates the authority. The City Council
has adopted a fund balance policy which delegates the authority to assign amounts for specific purposes to the
Finance Director.
Unassigned - The residual classification for the General fund and also negative residual amounts in other funds.
The City considers restricted amounts to be spent first when both restricted and unrestricted fund balance is available.
Additionally, the City would first use committed, then assigned, and lastly unassigned amounts of unrestricted fund
balance when expenditures are made.
The City has formally adopted a fund balance policy for the General fund. The City's policy is to maintain a minimum
unassigned fund balance of 40 -50 percent of budgeted operating expenditures for cash -flow timing needs.
-57-
77
CITY OF CENTERVILLE, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Net Position
Net position represents the difference between assets and liabilities. Net position is displayed in three components:
a. Net investment in capital assets - Consists of capital assets, net of accumulated depreciation reduced by any
outstanding debt attributable to acquire capital assets.
b. Restricted net position - Consist of net position balances restricted when there are limitations imposed on their
use through external restrictions imposed by creditors, grantors, laws or regulations of other governments.
c. Unrestricted net position - All other net position balances that do not meet the definition of "restricted" or "net
investment in capital assets ".
Comparative data/reclassifications
Comparative total data for the prior year have been presented only for the individual enterprise funds in the fund
financial statements in order to provide an understanding of the changes in the financial position and operations of these
funds. Also, certain amounts presented in the prior year have been reclassified in order to be consistent with the current
year's presentation.
Note 2: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. Budgetary information
Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of
America for the General fund. All annual appropriations lapse at fiscal year end. The City does not use encumbrance
accounting.
In May of each year, all departments of the City submit requests for appropriations to the City Administrator so that a
budget may be prepared. Before September 15th, the proposed budget is presented to the City Council for review. The
City Council holds public hearings and a final budget is prepared and adopted in early December.
The appropriated budget is prepared by fund, function and department. The City's department heads, with the approval
of the City Administrator, may make transfers of appropriations within a department. Transfers of appropriations
between departments require the approval of the City Council. The legal level of budgetary control is the department
level. There were no budget amendments made during 2012.
B. Excess of expenditures over appropriations
For the year ended December 31, 2012, expenditures exceeded appropriations in the following fund:
Excess of
Expenditures
Final Actual Over
Fund Budget Amounts Appropriations
General $ 1,902,800 $ 2,019,789 $ 11 6, 989
The excess was funded by either revenue in excess of budget.
-58-
78
CITY OF CENTERVILLE, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 2: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY - CONTINUED
C. Deficit fund equity
The following funds had a deficit fund balance as of December 31, 2012:
Fund Amount
Major
Parks $ (1,070,527)
Nonmajor
Pedestrian trail ways $ (2,763)
These deficits will be eliminated with transfers and revenue sources scheduled for receipt in 2013.
Note 3: DETAILED NOTES ON ALL FUNDS
A. Deposits and investments
Deposits
Custodial credit risk for deposits and investments is the risk that in the event of a bank failure, the City's deposits and
investments may not be returned or the City will not be able to recover collateral securities in the possession of an
outside party. In accordance with Minnesota statutes and as authorized by the City Council, the City maintains deposits
at those depository banks, all of which are members of the Federal Reserve System.
Minnesota statutes require that all City deposits be protected by insurance, surety bond, or collateral. The market value
of collateral pledged must equal 110 percent of the deposits not covered by insurance or bonds.
Authorized collateral in lieu of a corporate surety bond includes:
• United States government Treasury bills, Treasury notes, Treasury bonds;
• Issues of United States government agencies and instrumentalities as quoted by a recognized industry quotation
service available to the government entity;
• General obligation securities of any state or local government with taxing powers which is rated "A" or better
by a national bond rating service, or revenue obligation securities of any state or local government with taxing
powers which is rated "AA" or better by a national bond rating service;
• General obligation securities of a local government with taxing powers may be pledged as collateral against
funds deposited by that same local government entity;
• Irrevocable standby letters of credit issued by Federal Home Loan Banks to a municipality accompanied by
written evidence that the bank's public debt is rated "AA" or better by Moody's Investors Service, Inc., or
Standard & Poor's Corporation; and
• Time deposits that are fully insured by any federal agency.
Minnesota statutes require that all collateral shall be placed in safekeeping in a restricted account at a Federal Reserve
Bank, or in an account at a trust department of a commercial bank or other financial institution that is not owned or
controlled by the financial institution furnishing the collateral. The selection should be approved by the City.
At year end, the City's carrying amount of deposits was $5,149,888, and the bank balance was $5,187,239. Of the bank
balance, $262,785 was covered by federal depository insurance and $4,924,454 was covered by collateral held by the
City's agent in the City's name.
-59-
79
CITY OF CENTERVILLE, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
Investments
As of December 31, 2012, the City had the following investments that are insured or registered, or securities held by the
City or its agent in the City's name.
Fair Value
Credit Segmented Concentration and
Quality/ Time of Carrying
Investment Type Ratings (1) Distribution (2) Credit Risk Amount
Pooled investments
Broker money market N/A N/A N/A $ 2,124
Nonpooled investments
U.S. Government Agency Securities AAA 1 - 3 years N/A 500,745
Total investments $ 502,869
(1) Ratings are provided by various credit rating agencies where applicable to indicate associated credit risk.
(2) Interest rate risk is disclosed using the segmented time distribution method.
N/A Indicates not applicable or available.
The investments of the City are subject to the following risks:
• Credit Risk. The credit risk for investments is the risk that an issuer or other counterparty to an investment will
not fulfill its obligations. Ratings are provided by various credit rating agencies and where applicable, indicate
associated credit risk. Minnesota statutes limit the City's investments to the list on page 54 of the notes.
• Custodial Credit Risk. The custodial credit risk for investments is the risk that, in the event of the failure of the
counterparty to a transaction, a government will not be able to recover the value of investment or collateral
securities that are in the possession of an outside party. Generally, the City limits its securities purchases to
those insured and registered under the City's name.
• Concentration of Credit Risk. The concentration of credit risk for investments is the risk of loss attributed to the
magnitude of a government's investment in a single issuer. The City has 99 percent of its portfolio invested in
FHLB at year end.
• Interest Rate Risk. The interest rate risk for investments is the risk that changes in interest rates will adversely
affect the fair value of an investment.
The City does not currently have a formal investment policy that addresses the above mentioned risks.
A reconciliation of cash and temporary investments as shown on the statement of net position for the City follows:
Total
Carrying amount of deposits $ 5,149,888
Investments 502,869
Cash with fiscal agent 509,210
Petty cash 199
Total $ 6,162,166
-60-
80
CITY OF CENTERVILLE, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
B. Capital assets
Capital asset activity for the governmental activities for the year ended December 31, 2012 was as follows:
Beginning Ending
Balance Increases Decreases Balance
Governmental activities
Capital assets not being depreciated
Land $ 3,308,023 $ 29,000 $ - $ 3,337,023
Construction in progress 1,391,196 - (1,391,196) -
Total capital assets
not being depreciated 4,699,219 29,000 (1,391,196) 3,337,023
Capital assets being depreciated
Buildings 1,627,438 - - 1,627,438
Infrastructure 14,434,520 1,130,204 - 15,564,724
Machinery and equipment 797,104 26,298 - 823,402
Total capital assets
being depreciated 16,859,062 1,156,502 - 18,015,564
Less accumulated depreciation for
Buildings (655,166) (37,290) - (692,456)
Infrastructure (3,423,620) (811,527) - (4,235,147)
Machinery and equipment (466,950) (52,037) - (518,987)
Total accumulated depreciation (4,545,736) (900,854) - (5,446,590)
Total capital assets
being depreciated, net 12,313,326 255,648 - 12,568,974
Governmental activities
capital assets, net $ 17,012,545 $ 284,648 $ (1,391,196) $ 15,905,997
-61-
81
CITY OF CENTERVILLE, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
Capital asset activity for the business -type activities for the year ended December 31, 2012 was as follows:
Beginning Ending
Balance Increases Decreases Balance
Business -type activities
Capital assets not being depreciated
Land $ 196,255 $ - $ - $ 196,255
Capital assets being depreciated
Buildings 414,000 - - 414,000
Infrastructure 9,105,729 271,888 - 9,377,617
Machinery and equipment 340,368 25,740 - 366,108
Total capital assets
being depreciated 9,860,097 297,628 - 10,157,725
Less accumulated depreciation for
Buildings (32,430) (8,280) - (40,710)
Infrastructure (2,901,546) (300,152) - (3,201,698)
Machinery and equipment (208,630) (30,265) - (238,895)
Total accumulated depreciation (3,142,606) (338,697) - (3,481,303)
Total capital assets
being depreciated, net 6,717,491 (41,069) - 6,676,422
Business -type activities
capital assets, net $ 6,913,746 $ (41,069) $ - $ 6,872,677
Depreciation expense was charged to functions /programs of the City as follows:
Governmental activities
General government $ 14,601
Public safety 6,129
Public works 817,845
Culture and recreation 62,279
Total depreciation expense - governmental activities $ 900,854
Business -type activities
Water $ 186,637
Sewer 118,738
Storm water 33,322
Total depreciation expense - business -type activities $ 338,697
-62-
82
CITY OF CENTERVILLE, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
C. Long -term debt
General oblation bonds
The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities.
General obligation bonds have been issued for governmental activities.
General obligation bonds are direct obligations and pledge the full faith and credit of the City. General obligation bonds
currently outstanding are as follows:
General obligation improvement bonds
The following bonds were issued to finance various improvements and will be repaid primarily from special assessments
collections and tax levies.
Balance
Authorized Interest Issue Maturity at
Description and Issued Rate Date Date Year End
G.O. Improvement
Bonds of 2005A $ 827,750 4.00-4.30 % 04/27/05 01/01/21 $ 509,981
G.O. Improvement
Bonds of 2009A 3,715,000 2.65-5.60 08/19/09 08/01/25 3,585,000
G.O. Crossover
Bonds of 2009B 2,430,000 2.00-3.00 10/29/09 09/01/18 2,120,000
G.O. Improvement
Bonds of 2011A 2,760,000 .70-2.45 04/14/11 07/01/19 2,565,000
G.O. Improvement Refunding
Bonds of 2012A 515,000 1.00-1.70 06/14/12 02/01/21 515,000
Total General Obligation Improvement Bonds $ 9,294,981
Annual debt service requirements for general obligation improvement bonds are as follows:
General Obligation Improvement Bonds
Year Ending Governmental Activities
December 31, Principal Interest Total
2013 $ 1,229,980 $ 275,712 $ 1,505,692
2014 855,000 255,683 1,110,683
2015 880,000 239,058 1,119,058
2016 885,000 218,595 1,103,595
2017 910,000 194,689 1,104,689
2018 -2022 3,615,000 485,872 4,100,872
2023 -2025 920,001 76,850 996,851
Total $__9,294 $ 1,746,459 $ 11,041,440
-63-
83
CITY OF CENTERVILLE, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
Changes in long -term liabilities
During the year ended December 31, 2012, the following changes occurred in noncurrent liabilities:
Beginning Ending Due Within
Balance Increases Decreases Balance One Year
Governmental activities
Bonds payable $ 9,325,585 $ 515,000 $ (545,604) $ 9,294,981 $ 1,229,980
Compensated absences
payable 37,983 42,382 (48,061) 32,304 30,601
Governmental activities
long -term liabilities $ 9,363,568 $ 557,382 $ (593,665) $ 9,327,285 $ 1,260,581
Business -type activities
Compensated absences
payable $ 14,268 $ 17,112 $ (18,278) $ 13,102 $ 13,102
Crossover refunding
On June 14, 2012 the City issued $515,000 of General Obligation Improvement Crossover Refunding Bonds, Series
2012A. The bonds issued will crossover refund the 2005A General Obligation Improvement Bonds. The proceeds of the
bonds were deposited in an escrow account and will be used to pay issuance costs and to purchase government
obligations. The government obligations will bear interest rates that will provide sufficient funds to refund the old bonds.
The bonds will be refunded on February 1, 2013. The escrow account will also provide debt service payments on the new
bond until the crossover dates. The old bonds are not considered defeased until the crossover dates, and therefore will not
be removed as liabilities. As a result of the crossover refunding issue, the City will save $59,385 in debt service
payments and achieve an economic gain (the present value of the difference between the old and the new debt service) of
$54,261.
D. Interfund balances and transfers
The following is a schedule of interfund transfers as of December 31, 2012:
Transfer in
Storm Other
Fund Water Governmental Total
Transfer out
General $ - $ 189,000 $ 189,000
Other Governmental 10,464 - 10,464
Total $ 10,464 $ 189,000 $ 199,464
• A transfer of $189,000 from the General fund to other governmental funds for funding of future street projects
and maintenance.
• A transfer of $10,464 from other governmental funds to the Storm Water fund to close the other governmental
fund.
-64-
84
CITY OF CENTERVILLE, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
E. Advances from /to other funds
The following is a schedule of interfund advances:
Receivable Fund Payable Fund Amount
Enterprise
Sewer Park $ 1,108,312
Sewer Debt Service 382,558
Sewer Storm water 88,650
Total $ 1,579,520
All of the above interfund advances have associated amortization schedules, of which current payments are being made.
F. Fund equity
At December 31, 2012, portions of the City's fund balance are not available for appropriation due to not being in
spendable form ( Nonspendable), legal restrictions (Restricted), City Council action (Committed), policy and /or intent
(Assigned). The following is a summary of the components of fund balance:
Other
Debt Governmental
General Service Park Funds Total
Nonspendable
Prepaid items $ 2,993 $ 27,468 $ - $ - $ 30,461
Restricted for
Debt service - 1,838,942 - - 1,838,942
Cable TV - - - 20,126 20,126
Committed for
Park and recreation 18,755 - - - 18,755
Assigned for
Street maintenance - - - 187,850 187,850
Unassigned 1,184,072 - (1,070,527) (2,763) 110,782
Total $ 1,205,820 $ 1,866,410 $ (1,070,527) $ 205,213 $ 2,206,916
-65-
85
CITY OF CENTERVILLE, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 4: DEFINED BENEFIT PENSION PLANS - STATEWIDE
A. Plan description
All full -time and certain part-time employees of the City of Centerville are covered by defined benefit plans
administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the General
Employees Retirement Fund (GERF), which is a cost - sharing, multiple - employer retirement plan. The plan is established
and administered in accordance with Minnesota statutes, chapters 353 and 356.
GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by
Social Security and Basic Plan members are not. All new members must participate in the Coordinated Plan.
PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of
eligible members. Benefits are established by Minnesota statute, and vest after three years of credited service. The
defined retirement benefits are based on a member's highest average salary for any five successive years of allowable
service, age and years of credit at termination of service.
Two methods are used to compute benefits for PERA's Coordinated and Basic Plan members. The retiring member
receives the higher of a step -rate benefit accrual formula (Method 1) or a level accrual formula (Method 2). Under
Method 1, the annuity accrual rate for a Basic Plan member is 2.2 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 a 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 all GERF members hired prior to July 1, 1989 whose annuity is calculated using Method 1, a full annuity is available
when age plus years of service equal 90. Normal retirement age is 65 for Basic and Coordinated members hired prior to
July 1, 1989. Normal retirement age is the age for unreduced Social Security benefits capped at 66 for coordinated
members hired after July 1, 1989. A reduced retirement annuity is also available to eligible members seeking early
retirement.
There are different types of annuities available to members upon retirement. A 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 GERF. That report may be obtained on the Internet at www.mnpera.org, by writing to PERA at
60 Empire Drive, Suite 200, St. Paul, Minnesota 55103 -2088 or by calling (651) 296 -7460 or (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 Minnesota statutes. GERF Basis Plan members and Coordinated Plan members were required to contribute
9.10 percent and 6.25 percent, respectively, of their annual covered salary in 2012. In 2012, the City of Centerville was
required to contribute the following percentages of annual covered payroll: 11.78 percent for Basic Plan GERF members
and 7.25 percent for Coordinated Plan GERF members. The City's contributions to the GERF for the year ended
December 31, 2012, 2011 and 2010 were $38,899, $45,034, and $44,431, respectively. The City's contributions were
equal to the contractually required contributions for each year as set by Minnesota statute.
-66-
86
CITY OF CENTERVILLE, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 5: JOINT POWERS AGREEMENTS
A. Centennial Fire District
The Centennial Fire District (the District) was formed under the authority of Minnesota statutes 471.59 in 1985 by
agreement of the member cities of Centerville, Lino Lakes and Circle Pines. The district was created to provide fire
protection services to the residents of the member cities. The District is managed through a three tier system consisting
of a Fire Chief, a Steering Committee, and the City Councils of the member cities. The Fire Chief is an appointed
position. Each member city appoints two commissioners. One of these commissioners must be an elected official of the
City. Each member city contributes funds to cover the budgeted costs of operations as determined by the commissioners.
The amount of contributions required by each member is based on each city's population, number of fire calls, and
assessed valuations. Contributions made by member cities for 2011, the most recent data available, were as follows:
City of Centerville $ 100,039 13.50 %
City of Circle Pines 125,233 16.90
City of Lino Lakes 515,751 69.60
Total $ 741,023 100.00 %
Volunteer firefighters of the District are members of the Centennial Firefighter's Relief Association (the Association).
The Association is a single - employer pension plan (the Plan) that operates under the provisions of Minnesota
statutes 69 and 424, as amended. It is governed by a board of six officers and trustees elected by the members of the
Association for three -year terms. The ex- officio, non - voting members of the Board of trustees are two representatives
from the Centennial Fire Steering Committee and the Fire Chief of the District.
The Association issues a publicly available financial report that includes financial statements and required supplementary
information. The report may be obtained by writing to the Centennial Fire District 7741 Lake Drive, Lino Lakes, MN
55014.
-67-
87
CITY OF CENTERVILLE, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 5: JOINT POWERS AGREEMENTS - CONTINUED
B. Centennial Lakes Police Department
The Centennial Lakes Police Department (the Department) was formed under the authority if Minnesota statutes 436.06
in 2005 by agreement of the member cities of Centerville, Circle Pines and Lexington. The Department was created to
provide police protection services to its member cities. The Department is managed through a three tier system
consisting of a Governing Board, an Operations committee, and a Chief of Police. The Governing Board consists of six
members, two elected officials appointed by each member city. The Operations Committee is made up of the City
administrators from each member city and the Chief of Police. The Chief of Police is appointed by mutual agreement of
the City Councils of all member cities. Annual contributions required by each member city are calculated based on
complaint history, population, and staffing formulas. Contributions made by member cities for 2011, the most recent
data available, were as follows:
City of Centerville $ 657,622 31.42 %
City of Circle Pines 844,527 40.35
City of Lexington 590,855 28.23
Total $ 2,093,004 100.00 %
C. Summary financial information of the joint powers agreements entities
The contribution to the joint fire district and the joint police commission are reflected as expenditures in the City's
General fund. The fire district and police commission's assets, liabilities, equity and operations are excluded from the
City's financial statements as further explained in note IA.
The following information is from the financial statements of the District and the Department as of December 31, 2011,
the most recent audited information available at the time of this report. The amounts reported for the District are those
presented in its government -wide financial statements. These financial statements are available for viewing at the
Centerville City hall.
Centennial
Centennial Lakes Police
Fire District Department
Total assets $ 1,524,637 $ 639,519
Total liabilities 109,146 277,433
Total net position 1,415,491 362,086
Total revenue 946,966 2,177,017
Total expenses 818,638 2,248,355
Volunteer firefighters of the District are members of the Centennial Firefighter's Relief Association (the Association).
The Association is a single - employer pension plan (the Plan) that operates under the provisions of Minnesota
statutes 69 and 424, as amended. It is governed by a board of six officers and trustees elected by the members of the
Association for three -year terms. The ex- officio, non - voting members of the Board of trustees are two representatives
from the Centennial Fire Steering Committee and the Fire Chief of the District.
The Association issues a publicly available financial report that includes financial statements and required supplementary
information. The report may be obtained by writing to the Centennial Fire District 7741 Lake Drive, Lino Lakes, MN
55014.
-68-
88
CITY OF CENTERVILLE, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 6: OTHER INFORMATION
A. Risk management
The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and
omissions; injuries to employees; and natural disasters for which the City carries insurance. The City obtains insurance
through participation in the League of Minnesota Cities Insurance Trust (LMCIT), which is a risk sharing pool with
approximately 800 other governmental units. The City pays an annual premium to LMCIT for its workers compensation
and property and casualty insurance. The LMCIT is self - sustaining through member premiums and will reinsure for
claims above a prescribed dollar amount for each insurance event. Settled claims have not exceeded the City's coverage
in any of the past three fiscal years.
Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably
estimated. Liabilities, if any, include an amount for claims that have been incurred but not reported (IBNRs). The City's
management is not aware of any incurred but not reported claims.
B. Legal debt margin
In accordance with Minnesota statutes, the City may not incur or be subject to net debt in excess of 3 percent of the
market value of taxable property within the City, Net debt is payable solely from ad valorem taxes and, therefore,
excludes debt financed partially or entirely by special assessments, Enterprise fund revenues or tax increments. The
market value of taxable property is $312,695,800 which leaves a debt margin of $9,380,874. Currently the City has
$1,024,980 of general obligation debt outstanding, leaving a debt margin of $8,355,894.
C. Tax increment districts
The City is the administering authority for tax increment financing district No. 1 -6. The district is a redevelopment
district established in 2005. The property in the district is tax exempt; therefore there is no tax capacity.
The City's tax increment districts are subject to review by the State of Minnesota Office of the State Auditor (OSA). Any
disallowed claims or misuse of tax increments could become a liability of the applicable fund. Management has indicated
that they are not aware of any instances of noncompliance which would have a material effect on the financial
statements.
-69-
89
CITY OF CENTERVILLE, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
Note 7: ACCOUNTING CHANGE
During fiscal year 2012, the City implemented several new accounting pronouncements issued by the Government
Accounting Standards Board (GASB), including Statement No. 63, "Financial Reporting of Deferred Outflows of Resources,
Deferred Inflows of Resources, and Net Position " and Statement No. 65, "Items Previously Reported as Assets and
Liabilities ". These standards required a retroactive implementation which resulted in the restatement of beginning balances
in the December 31, 2012 financial statements. Changes related to these standards are reflected in the financial statements
and schedules and related disclosures are included in Note 1.
As a result of the restatement of beginning balances, the following schedule reconciles the previously reported
December 31, 2010 balances to the December 31, 2012 financial statements:
Net Position
December 31, 2010 Net Position
as Previously January 1, 2011
Activities/Fund Reported (1) Restatement as Restated
Governmental activities $ 10,360,171 $ (154,694) $ 10,205,477
(1) Write -off ofunamortized bond issuance cost balances at December 31, 2010.
As a result of the restatement of beginning balances, the following schedule reconciles the previously reported
December 31, 2011 balances to the December 31, 2012 financial statements:
Net Position
December 31, 2011 Net Position
as Previously January 1, 2012
Activities/Fund Reported (1) Restatement as Restated
Governmental activities $ 11,094,384 $ (178,177) $ 10,916,207
(2) Write -off of unamortized bond issuance cost balances at December 31, 2011.
-70-
90
COMBINING AND INDIVIDUAL FUND
FINANCIAL STATEMENTS AND SCHEDULES
CITY OF CENTERVILLE
CENTERVILLE, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2012
-71-
91
CITY OF CENTERVILLE, MINNESOTA
NONMAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEET
DECEMBER 31, 2012
Special
Revenue Fund Capital Project Funds
614 401 414
Revolving
Street Pedestrian
Cable T.V. Fund Trail Ways
ASSETS
Cash and temporary investments $ 11,031 $ 212,995 $ 74,402
Due from other governments 9,584 - -
TOTAL ASSETS $ 20,615 $ 212,995 $ 74,402
LIABILITIES
Accounts payable $ 26 $ 25,145 $ 6,475
Accrued salaries payable 463 - -
Contracts payable - - 70,690
TOTAL LIABILITIES 489 25,145 77,165
FUND BALANCES
Restricted for
Cable TV 20,126 - -
Assigned for
Revolving street project - 187,850 -
Unassigned (2,763)
TOTAL FUND BALANCES 20,126 187,850 (2,763)
TOTAL LIABILITIES AND
FUND BALANCES $ 20,615 $ 212,995 $ 74,402
-72-
92
Capital Project Funds
453 Total
2007 Total Nonmajor
Downtown Capital Governmental
Redevelopment Projects Funds
$ - $ 287,397 $ 298,428
- 9,584
$ - $ 287,397 $ 308,012
$ - $ 31,620 $ 31,646
- 463
70,690 70,690
102,310 102,799
- 20,126
187,850 187,850
(2,763) (2,763)
185,087 205,213
$ - $ 287,397 $ 308,012
-73-
93
CITY OF CENTERVILLE, MINNESOTA
NONMAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED DECEMBER 31, 2012
Special
Revenue Fund Capital Project Funds
614 401 414
Revolving
Street Pedestrian
REVENUES Cable T.V. Fund Trail Ways
Interest on investments $ 231 $ 1,631 $ 995
Refunds and reimbursements 9,584 9,364
TOTAL REVENUES 9,815 10,995 995
EXPENDITURES
Current
Public works
Supplies _
Culture and recreation
Personal services 12,566
Supplies 323 - _
Other services and charges 64 _
Capital outlay
Public works - 38,245 -
Culture and recreation 2,189 - 11,184
TOTAL EXPENDITURES 15,142 38,245 11,184
DEFICIENCY OF REVENUES
UNDER EXPENDITURES (5,327) (27,250) (10,189)
OTHER FINANCING SOURCES (USES)
Transfers in - 189,000 -
Transfers out
TOTAL OTHER FINANCING SOURCES (USES) - 189,000 -
NET CHANGE IN FUND BALANCES (5,327) 161,750
(10,189)
FUND BALANCES, JANUARY 1 25,453 26,100 7,426
FUND BALANCES, DECEMBER 31 $ 20 $ 187,850 $ (2,763)
-74-
94
Capital Project Funds
453 Total
2007 Total Nonmajor
Downtown Capital Governmental
Redevelopment Projects Funds
$ 49 $ 2,675 $ 2,906
- 9,364 18,948
49 12,039 21,854
2,202 2,202 2,202
- - 12,566
323
- - 64
46,774 85,019 85,019
- 11,184 13,373
48,976 98,405 113,547
(48,927) (86,366) (91,693)
189,000 189,000
(10,464) (10,464) (10,464)
(10,464) 178,536 178,536
(59,391) 92,170 86,843
59,391 92,917 118,370
$ - $ 185,087 $ 205,213
-75-
95
THIS PAGE IS LEFT BLANK
INTENTIONALLY
-76-
96
CITY OF CENTERVILLE, MINNESOTA
GENERALFUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - CONTINUED ON THE FOLLOWING PAGES
FOR THE YEAR ENDED DECEMBER 31, 2012
(With Comparative Actual Amounts for the Year Ended December 31, 2011)
2012 2011
Budgeted Amounts Actual Variance with Actual
Original Final Amounts Final Budget Amounts
REVENUES
Taxes
General property $ 1,739,600 $ 1,739,600 $ 1,737,813 $ (1,787) $ 1,695,804
Gambling - - 1,157 1,157 2,708
Total 1,739,600 1,739,600 1,738,970 (630) 1,698,512
Licenses and permits
Business 22,800 22,800 24,010 1,210 33,565
Nonbusiness 69,000 69,000 105,414 36,414 78,277
Total 91,800 91,800 129,424 37,624 111,842
Intergovernmental
State
Property tax credits - - 298 298 616
State grants aid 1,300 1,300 1,333 33 8,286
Police aid 35,000 35,000 31,272
(3,728) 32,919
2% Fire relief aid 102,000 102,000 109,005 7,005 104,828
County - other 16,500 16,500 81,042 64,542 16,595
Total 154,800 154,800 222,950 68,150 163,244
Charges for services
General government 1,000 1,000 1,985 985 990
Culture and recreation 2,500 2,500 5,443 2,943 7,789
Other 100 100 68 (32) 31
Total 3,600 3,600 7,496 3,896 8,810
Fines and forfeitures 33,500 33,500 44,836 11,336 26,990
Special assessments 14,000 14,000 27,543 13,543 20,350
Interest on investments 20,000 20,000 11,334 (8,666) 17,483
Miscellaneous
Refunds and reimbursements 1,000 1,000 74,799 73,799 18,497
Other 1,500 1,500 14,936 13,436 15,815
Total 2,500 2,500 89,735 87,235 34,312
TOTAL REVENUES 2,059,800 2,059,800 2,272,288 212,488 2,081,543
-77-
97
CITY OF CENTERVILLE, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 2012
(With Comparative Actual Amounts for the Year Ended December 31, 2011)
2012 2011
Budgeted Amounts Actual Variance with Actual
Original Final Amounts Final Budget Amounts
EXPENDITURES
Current
General government
Mayor and Council
Personal services $ 30,000 $ 30,000 $ 30,097 $ (97) $ 30,035
Other services and charges 1,800 1,800 129 1,671 437
Total 31,800 31,800 30,226 1,574 30,472
Elections
Personal services 5,400 5,400 4,509 891 -
Supplies 650 650 619 31 -
Other services and charges 550 550 938 (388) -
Total 6,600 6,600 6,066 534 -
Planning and zoning
Other services and charges 2,400 2,400 2,231 169 1,647
Administration
Personal services 275,400 275,400 267,099 8,301 293,781
Supplies 3,500 3,500 1,964 1,536 1,072
Other services and charges 53,900 53,900 43,730 10,170 54,822
Total 332,800 332,800 312,793 20,007 349,675
Assessing
Other services and charges 16,000 16,000 15,622 378 15,453
Legal and auditing
Other services and charges 90,500 90,500 96,644 (6,144) 108,453
General government building
Personal services 4,400 4,400 1,431 2,969 1,699
Supplies 300 300 1,004 (704) 216
Other services and charges 15,900 15,900 9,725 6,175 14,181
Total 20,600 20,600 12,160 8,440 16,096
Total general government 500,700 500,700 475,742 24,958 521,796
-78-
98
CITY OF CENTERVILLE, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 2012
(With Comparative Actual Amounts for the Year Ended December 31, 2011)
2012 2011
Budgeted Amounts Actual Variance with Actual
Original Final Amounts Final Budget Amounts
EXPENDITURES - CONTINUED
Current - continued
Public safety
Police protection
Other services and charges $ 663,000 $ 663,000 $ 662,554 $ 446 $ 659,168
Fire protection
Remittance to relief association 102,000 102,000 109,005 (7,005) 104,828
Other services and charges 126,700 126,700 122,942 3,758 119,027
Total 228,700 228,700 231,947 (3,247) 223,855
Building inspection
Personal services 109,600 109,600 102,539 7,061 122,669
Supplies 2,100 2,100 1,893 207 1,577
Other services and charges 12,600 12,600 9,263 3,337 7,458
Total 124,300 124,300 113,695 10,605 131,704
Civil defense
Other services and charges 1,500 1,500 1,004 496 1,843
Animal control
Other services and charges 1,100 1,100 - 1,100 1,502
Total public safety 1,018,600 1,018,600 1,009,200 9,400 1,018,072
Public works
Streets
Personal services 146,800 146,800 123,993 22,807 169,248
Supplies 31,800 31,800 27,875 3,925 32,393
Other services and charges 85,900 85,900 234,393 (148,493) 94,630
Total 264,500 264,500 386,261 (121,761) 296,271
Recycling
Personal services 4,200 4,200 4,174 26 4,190
Supplies 100 100 39 61 1,212
Other services and charges 12,200 12,200 11,829 371 11,193
Total 16,500 16,500 16,042 458 16,595
-79-
99
CITY OF CENTERVILLE, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 2012
(With Comparative Actual Amounts for the Year Ended December 31, 2011)
2012 2011
Budgeted Amounts Actual Variance with Actual
Original Final Amounts Final Budget Amounts
EXPENDITURES - CONTINUED
Current - continued
Public works - continued
Engineering services
Other services and charges $ 2,500 $ 2,500 $ 6,058 $ (3,558) $ 9,176
Total public works 283,500 283,500 408,361 (124,861) 322,042
Culture and recreation
Parks and recreation
Personal services 36,500 36,500 36,585 (85) 39,076
Supplies 5,800 5,800 6,308 (508) 11,449
Other services and charges 42,700 42,700 39,791 2,909 39,409
Total 85,000 85,000 82,684 2,316 89,934
City Festival
Other services and charges 5,500 5,500 5,569 (69) 5,709
Total culture and recreation 90,500 90,500 88,253 2,247 95,643
Economic development
Supplies - - - - 10
Other services and charges - - 2,400 (2,400) 7,618
Total economic development - - 2,400 (2,400) 7,628
Total current expenditures 1,893,300 1,893,300 1,983,956 (90,656) 1,965,181
Capital outlay
General government - - - - 1,243
Public works - - - - 15,473
Culture and recreation 2,500 2,500 - 2,500 5,384
Economic development - - 29,000 (29,000) -
Total capital outlay 2,500 2,500 29,000 (26,500) 22,100
Debt service
Principal 7,000 7,000 6,833 167 6,732
TOTAL EXPENDITURES 1,902,800 1,902,800 2,019,789 (116,989) 1,994,013
EXCESS OF REVENUES
OVER EXPENDITURES 157,000 157,000 252,499 95,499 87,530
-80-
100
CITY OF CENTERVILLE, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 2012
(With Comparative Actual Amounts for the Year Ended December 31, 2011)
2012 2011
Budgeted Amounts Actual Variance with Actual
Original Final Amounts Final Budget Amounts
OTHER FINANCING SOURCES (USES)
Transfers in $ - $ - $ - $ - $ 12,480
Transfers out (189,000) (189,000) (189,000) - (26,100)
TOTAL OTHER FINANCING
SOURCES (USES) (189,000) (189,000) (189,000) - (13,620)
NET CHANGE IN FUND BALANCES (32,000) (32,000) 63,499 95,499 73,910
FUND BALANCES, JANUARY 1 1,142,321 1,142,321 1,142,321 - 1,068,411
FUND BALANCES, DECEMBER 31 $ 1,110,321 $ 1,110,321 $ 1,205,820 $ 95 $ 1,142,321
-81-
101
CITY OF CENTERVILLE, MINNESOTA
DEBT SERVICE FUNDS
COMBINING BALANCE SHEET
DECEMBER 31, 2012
309 348 349
Joint G.O. G.O.
Police Improvement Improvement
Station Bonds of Bonds of
2012A 2006A 2007A
ASSETS
Cash and temporary investments $ 52,162 $ 407,990 $ 473,815
Cash with fiscal agent 509,210 - -
Receivables
Delinquent taxes 262 - 912
Special assessments - 249,305 513,027
Prepaid items 6,142 - 21,326
TOTAL ASSETS $ 567,776 $ 657,295 $ 1,009,080
LIABILITIES
Advances to other funds $ - $ 382,558 $ -
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - special assessments - 249,305 513,027
FUND BALANCES
Restricted for debt service 567,776 25,432 496,053
TOTAL LIABILITIES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCES $ 567,776 $ 657,295 $ 1,009,080
-82-
102
351
G.O.
Improvement
Bonds of
2009A Total
$ 772,500 $ 1,706,467
- 509,210
803 1,977
801,052 1,563,384
27,468
$ 1,574,355 $ 3,808,506
$ - $ 382,558
797,206 1,559,538
777,149 1,866,410
$ 1,574,355 $ 3,808,506
-83-
103
CITY OF CENTERVILLE, MINNESOTA
DEBT SERVICE FUNDS
COMBINING SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED DECEMBER 31, 2012
309 348 349
Joint G.O. G.O.
Police Improvement Improvement
Station Bonds of Bonds of
2012A 2006A 2007A
REVENUES
Property taxes $ 69,902 $ - $ 243,657
Special assessments - 110,753 92,839
Intergovernmental - _ -
Interest on investments 458 4,516 3,777
Refunds and reimbursements - 1,711 -
TOTAL REVENUES 70,360 116,980 340,273
EXPENDITURES
Debt service
Principal 50,604 170,000 195,000
Interest and other 28,904 66,029 58,067
TOTAL EXPENDITURES 79,508 236,029 253,067
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (9,148) (119,049) 87,206
OTHER FINANCING SOURCES
Bonds issued 515,000 - -
NET CHANGE IN FUND BALANCES 505,852 (119,049) 87,206
FUND BALANCES, JANUARY 1 61,924 144,481 408,847
FUND BALANCES, DECEMBER 31 $ 567,776 $ 25,432 $ 496,053
-84-
104
351
G.O.
Improvement
Bonds of
2009A Total
$ 214,698 $ 528,257
126,734 330,326
58,201 58,201
6,991 15,742
- 1,711
406,624 934,237
130,000 545,604
166,715 319,715
296,715 865,319
109,909 68,918
- 515,000
109,909 583,918
667,240 1,282,492
$ 777,149 $ 1,866,410
-85-
105
CITY OF CENTERVILLE, MINNESOTA
SUMMARY FINANCIAL REPORT
REVENUES AND EXPENDITURES FOR GENERAL OPERATIONS
GOVERNMENTAL FUNDS
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
Percent
Total Increase
2012 2011 (Decrease)
REVENUES
Taxes $ 2,267,227 $ 2,226,236 1.84 %
Licenses and permits 129,424 111,842 15.72
Intergovernmental 281,151 510,884 (44.97)
Charges for services 7,496 8,810 (14.91)
Fines and forfeitures 44,836 26,990 66.12
Special assessments 357,869 393,564 (9.07)
Interest on investments 30,478 41,327 (26.25)
Miscellaneous 110,394 43,907 151.43
TOTAL REVENUES $ 3,228,875 $ 3,363,560 (4.00) %
Per Capita $ 849 $ 887 (4.31) %
EXPENDITURES
Current
General government $ 475,742 $ 521,796 (8.83) %
Public safety 1,009,200 1,018,072 (0.87)
Public works 410,563 338,528 21.28
Culture and recreation 101,206 107,891 (6.20)
Economic development 2,400 15,074 (84.08)
Capital outlay
General government - 1,243 (100.00)
Public works 85,019 390,293 (78.22)
Culture and recreation 13,373 543,151 (97.54)
Economic development 29,000 - 100.00
Debt service
Principal 552,437 4,250,586 (87.00)
Interest and other 319,715 401,830 (20.44)
TOTAL EXPENDITURES $ 2,998,655 $ 7,588,464 (60.48) %
Per Capita $ 788 $ 2,001 (60.61) %
Total Long -term Indebtedness $ 9,294,981 $ 9,325,585 (0.33) %
Per Capita 2,443 2,459 (0.64)
General Fund Balance - December 31 $ 1,205,820 $ 1,142,321 5.56 %
Per Capita 317 301 5.23
The purpose of this report is to provide a summary of financial information concerning the City of Centerville to interested
citizens. The complete financial statements may be examined at City Hall, 1880 Main Street, Centerville, MN 55038. Questions
about this report should be directed to City Hall at (651) 429 -3232.
-86-
106
OTHER REQUIRED REPORT
CITY OF CENTERVILLE
CENTERVILLE, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2012
-s7-
107
THIS PAGE IS LEFT BLANK
INTENTIONALLY
-88-
108
'ABDO
SICK &
Catif ed Public Acoountants & Comakaws
5201 Eden Avenue
Suite 250
Edina, MN 55436
AUDITOR'S REPORT ON LEGAL COMPLIANCE
Honorable Mayor and City Council
City of Centerville, Minnesota
We have audited the financial statements of the governmental activities, the business -type activities, each major fund and the
aggregate remaining fund information of the City of Centerville, Minnesota (the City), as of and for the year ended
December 31, 2012, which collectively comprise the City's basic financial statements and have issued our report thereon, dated
March 20, 2013.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the provisions
of the Minnesota Legal Compliance Audit Guide for Political Subdivisions, promulgated by the State Auditor pursuant to Minnesota
statute, section 6.65. Accordingly, the audit included such tests of the accounting records and such other auditing procedures, as we
considered necessary in the circumstances.
The Minnesota Legal Compliance Audit Guide for Political Subdivisions covers seven categories of compliance to be tested:
contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, tax increment
financing, and miscellaneous city provisions. Our study included all of the listed categories except that we did not test for compliance
in tax increment financing because the City has not established a tax increment financing district.
The results of our tests indicate that for the items tested, the City complied with the material terms and conditions of applicable legal
provisions.
The purpose of this report is solely to describe the scope of our testing of compliance with certain provisions of the Minnesota Legal
Compliance Audit Guide for Political Subdivisions, and the result of that testing, and not to provide an opinion on the City's
compliance with those provisions. Accordingly, this report is not suitable for any other purpose.
6L&&k,4M U? Marc 2 111
March 0, 2013 ABDO, EICK & MEYERS, LLP
Minneapolis, Minnesota Certified Public Accountants
952.835.9090 • Fax 952.835.3261 _89
www.aemcpas.com
109
CITY OF CENTERVILLE
CENTERVILLE, MINNESOTA
MANAGEMENT LETTER
FOR THE YEAR ENDED
DECEMBER 31, 2012
ABDO
EICK &
MEYE'llo
C-ni#W Public Accountants & Consultants
110
CITY OF CENTERVILLE
CENTERVILLE, MINNESOTA
MANAGEMENT LETTER
FOR THE YEAR ENDED
111
M '.ABDO
IEICK &
0 A Z; A V;- O 1VlVL' 1 E' RS IILP
Certi wd Public Acoountonts & Consuhww March 20, 2013
5201 Eden Avenue
Suite 2.50
Edina, MN 55436
Management, Honorable Mayor and City Council
City of Centerville, Minnesota
We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund
and the aggregate remaining fund information of the City of Centerville, Minnesota (the City), for the year ended December 31, 2012.
Professional standards require that we provide you with information about our responsibilities under generally accepted auditing
standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such
information in our letter to you dated October 31, 2012. Professional standards also require that we communicate to you the following
information related to our audit.
Our Responsibility Under Auditing Standards Generally Accepted in the United States of America
As stated in our engagement letter, our responsibility, as described by professional standards, is to express opinions about whether the
financial statements prepared by management with your oversight are fairly presented, in all material respects, in conformity with
accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or
management of your responsibilities.
Our responsibility is to plan and perform the audit to obtain reasonable, but not absolute, assurance that the financial statements are
free of material misstatement. As part of our audit, we considered the internal control over financial reporting of the City. Such
considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such
internal control over financial reporting. We are responsible for communicating significant matters related to the audit that are, in our
professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to
design procedures specifically to identify such matters.
Significant Audit Findings
A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management
or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely
basis. A material weakness is a deficiency or combination of deficiencies in internal control, such that there is a reasonable possibility
that a material misstatement of the City's financial statements will not be prevented, or detected and corrected on a timely basis.
Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph and was not
designed to identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material
weaknesses and therefore, there can be no assurance that all such deficiencies have been identified. We did not identify any
deficiencies in internal control that we consider to be material weaknesses.
952.835.90% • Fax 952.835.3261
www.aemepas.com
112
City of Centerville
March 20, 2013
Page 2
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests
of compliance with certain provisions of Minnesota statutes. However, the objective of our tests was not to provide an opinion on
compliance with such provisions. While our audit provides a reasonable basis for our opinion, it does not provide a legal
determination on the City's compliance with those requirements. We noted no instances of noncompliance with Minnesota statues.
Planned Scope and Timing of the Audit
We performed the audit according to the planned scope and timing previously communicated to you.
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by
the City are described in Note 1 to the financial statements. The requirements of GASB statements No. 63 and 65 were adopted for
the year ended December 31, 2012. We noted no transaction entered into by the governmental unit during the year for which there is a
lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper
period.
Accounting estimates are an integral part of the financial statements prepared by management and are based on management's
knowledge and experience about past and current events and assumption about future events. Certain accounting estimates are
particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting
them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were capital asset
basis, and depreciation.
Management's estimate of depreciation is based on estimated useful lives of the assets. The estimate of historical cost is based on
engineers' estimates and deflated current value. We evaluated the key factors and assumptions used to develop these estimates in
determining that they are reasonable in relation to the financial statements taken as a whole.
The disclosures in the financial statements are neutral, consistent, and clear. Certain financial statement disclosures are particularly
sensitive because of their significance to financial statement users.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that
are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In
addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either
individually or in the aggregate, to each opinion unit's financial statements taken as a whole.
952.835.9090 • Fax 952.835.3261
www.aemepas.com
113
City of Centerville
March 20, 2013
Page 3
, IN 11
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or
auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor's report.
We are pleased to report that no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management representation letter dated
March 20, 2013.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining
a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the governmental unit's
financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional
standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our
knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management
each year prior to retention as the City's auditors. However, these discussions occurred in the normal course of our professional
relationship and our responses were not a condition to our retention.
952.835.9090 a Fax 952.835.3261
www.aemepas.com
114
r / City of Centerville
March 20, 2013
Page 4
ZU
Financial Position and Results of Operations
Our principal observations and recommendations are summarized on the following pages. These recommendations resulted from our
observations made in connection with our audit of the City's financial statements for the year ended December 31, 2012.
General Fund
The General fund is used to account for resources traditionally associated with government, which are not required legally or by
sound principal management to be accounted for in another fund. The General fund balance increased $63,499 from 2011. The
fund balance of $1,205,820 is 58 percent of the 2013 budgeted expenditures. The total General fund budget is $2,083,300 for
2013. We recommend the fund balance be maintained at a level sufficient to fund operations until the major revenue sources are
received in June. We feel a reserve of approximately 40 to 50 percent of planned expenditures and transfers out is adequate to
meet working capital and small emergency needs. At the current level, the fund balance is above the minimum but City Council
has acknowledged the amount. The City Council adopted a fund balance resolution and the City is in compliance with this
resolution.
The Office of the State Auditor (the OSA) has issued a Statement of Position relating to fund balance stating "a local government
should identify fund balance separately between reserved and unreserved fund balance. The local government may assign and
report some or all of the fund balance as designated and undesignated." We recommend local governments adopt a formal policy
on the level of unreserved fund balance that should be maintained in the General and special revenue funds. This helps address
citizen concerns as to the use of fund balance and tax levels.
The purposes and benefits of an adequate fund balance are as follows:
• Expenditures are incurred somewhat evenly throughout the year. However, property tax and state aid revenues are not
received until the second half of the year. An adequate fund balance will provide the cash flow required to finance the
governmental fund expenditures.
• The City is vulnerable to legislative actions at the State and Federal level. The State continually adjusts the local
government aid formulas. We also have seen the State mandate levy limits for cities over 2,500 in population. An
adequate fund balance will provide a temporary buffer against those aid adjustments and levy limits.
• Expenditures not anticipated at the time the annual budget was adopted may need immediate City Council action. These
would include capital outlay replacement, lawsuits and other items. An adequate fund balance will provide the financing
needed for such expenditures.
• A strong fund balance will assist the City in obtaining, maintaining or improving its bond rating. The result will be better
interest rates in future bond sales.
952.835.9090 • Fax 952.835.3261
W".aemepas.com
115
M City of Centerville
im March 20, 2013
1146 Page 5
A table summarizing the General fund balances in relation to budgeted expenditures and transfers out follows:
Percent
Total General of Fund
Fund Balance Budget Fund Balance to
Year December 31 Year Budget Budget
2008 $ 1,157,516 2009 $ 2,692,286 43 %
2009 1,231,326 2010 2,184,430 56
2010 1,068,411 2011 2,054,700 52
2011 1,142,321 2012 1,902,800 60
2012 1,205,820 2013 2,083,300 58
Fund Balances as a Percent of Next Year's Budget
$3,000,000
$2,692,2-86
$2,500,000
$2,184,430
$2,054,700 $2,083,300
$2,000,000 $1,902,800
$1,500,000
43% 56% 0 58%
52% 60 /o
$1,000,000
$500,000
2008 2009 2010 2011 2012 2013
—* Actual Fund Balance '*
We have compiled a peer group average derived from information available on the website of the Office of the State Auditor for
Cities of the 4th class which have populations of 2,500- 10,000. In 2010 and 2011, the average General fund balance as a
percentage of expenditures was 67 percent and 69, percent, respectively.
952.835.9090 • Fax 952.835.3261
www.aemepas.com
116
City of Centerville
March 20, 2013
Page 6
A summary of the 2012 operations is as follows:
Original Final
Budgeted Budgeted Actual Variance with
Amounts Amounts Amounts Final Budget
Revenues $ 2,059,800 $ 2,059,800 $ 2,272,288 $ 212,488
Expenditures 1,902,800 1,902,800 2,019,789 (116,989)
Excess of revenues over expenditures 157,000 157,000 252,499 95,499
Other financing uses
Transfers out (189,000) (189,000) (189,000) -
Net change in fund balances (32,000) (32,000) 63,499 95,499
Fund balances, January 1 1,142,321 1,142,321 1,142,321 -
Fund balances, December 31 $ 1,110,321 $ 1,110,321 $ 1,205,820 $ 95,499
• Total revenue had a positive budget variance of $212,488. Most of this increase is due to nonbusiness licenses and
permits and miscellaneous refunds and reimbursements. The variance in miscellaneous refunds and reimbursements is
due to monies received from other cities related to the salt brine agreement, in which the City paid for the costs and then
was reimbursed by the other cities involved
• Total expenditures had a negative budget variance of $116,989. Total public works expenditures were over budget by
$124,861. This was due to the costs associated with the salt brine agreement, which were reimbursed back to the City.
952.835,9090 • Fax 952.835.3261
www.aemepas.com
117
• City of Centerville
March 20, 2013
Page 7
A more detailed comparison of General fund revenues and transfers for the past three years is as follows:
Percent
of Per
Source 2010 2011 2012 Total Capita
Taxes $ 1,651,906 $ 1,698,512 $ 1,738,970 76.6 % $ 457
Licenses and permits 97,207 111,842 129,424 5.7 34
Intergovernmental 155,003 163,244 222,950 9.8 59
Charges for services 4,408 8,810 7,496 0.3 2
Fines and forfeitures 36,028 26,990 44,836 2.0 12
Special assessments 28,090 20,350 27,543 1.2 7
Interest on investments 13,677 17,483 11,334 0.5 3
Miscellaneous 21,325 34,312 89,735 3.9 24
Transfers in 26,490 12,480 - - -
Total revenues and transfers $ 2,034,134 $ 2,094,023 $ 2,272,288 100.0 % $ 598
The sources of General fund revenues are presented graphically as follows:
Revenues and Transfers In
$2,000,000
$1,800,000
$1,600,000
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
2010 2011 2012
—♦— Taxes -f- Licenses and permits --i-- Intergovernmental Other
952.835.9090 • Fax 952.835.3261
www.aemepas.com
118
P City of Centerville
March 20, 2013
tISIS Page 8
t 1-4
IN
A summary of the past three years General fund expenditures and transfers is as follows:
Percent Peer
of Per Group Per
Program 2010 2011 2012 Total Capita Capita
Current
General government $ 518,632 $ 521,796 $ 475,742 21.5 % $ 125 $ 123
Public safety 1,054,045 1,018,072 1,009,200 45.7 265 204
Public works 354,194 322,042 408,361 18.5 107 108
Culture and recreation 79,131 89,934 82,684 3.7 22 47
Economic development 399 7,628 2,400 0.1 1 4
Miscellaneous 5,830 5,709 5,569 0.3 1 15
Total current 2,012,231 1,965,181 1,983,956 89.8 521 501
Capital outlay 178,185 22,100 29,000 1.3 8 18
Debt service 6,633 6,732 6,833 0.3 2 -
Transfers out - 26,100 189,000 8.6 50 -
Total expenditures
and transfers $ 2,197,049 $ 2,020,113 $ 2 100.0 % $ 581 $ 519
The above chart compares the amount the City spends per capita, in comparison to a peer group. The peer group average is
derived from information available on the website of the Office of the State Auditor for Cities of the 4` class which have
populations between 2,500 and 10,000.
The function/program of the expenditures and transfers are presented graphically as follows:
Expenditures and Transfers Out
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$-
2010 2011 2012
t General government Public safety -yr- Public works -4( —Other
952.835.9090 • Fax 952.835.3261
www.aemcpas.com
119
City
March 20, Centerville
2013
Page 9
I IN
Special Revenue Funds
Special revenue funds are used to account for revenue derived from specific taxes or other earmarked revenue sources. They are
usually required by statute or local ordinance to finance particular functions or activities of government. A summary of year end
fund balances for all special revenue funds follows:
Fund Balances
December 31, Increase
Fund 2012 2011 (Decrease)
Nonmajor
Cable T.V. $ 20,126 $ 25,453 $ (5,327)
Capital Projects Funds
The capital projects funds are used to account for the acquisition and construction of major capital facilities other than those
financed by enterprise funds. A summary of year end fund balances (deficits) for all capital projects funds follows:
Fund Balances
December 31, Increase
Fund 2012 2011 (Decrease)
Major
Park $ (1,070,527) $ (1,071,023) $ 496
Nonmaj or
Street Maintenance 187,850 26,100 161,750
Pedestrian Trail Ways (2,763) 7,426 (10,189)
2007 Downtown Redevelopment - 59,391 (59,391)
Total $ (885,440) $ (978,106) $ 92,666
The City should continue to annually evaluate the status of each project to determine if the fund should be closed or if additional
funding sources will be needed for deficits. Each deficit indicates a funding shortfall and all will eventually need to be eliminated
either by future charges or by transfers from other funds. The deficit fund balance in the Park fund of $1,070,527 is due to a
transfer out of $825,000 in 2011 to the Pedestrian Trail Ways fund for the funding project plan and loan between funds. The
increase in the Street Maintenance fund is due to a transfer in from the General fund of $189,000. The 2007 Downtown
Redevelopment fund was closed in 2012.
952.835.9090 • Fax 952.835.3261
www.aemcpas.com
120
City of Centerville
March 20, 2013
Page 10
Debt Service Funds
Debt Service funds are a type of governmental fund to account for the accumulation of resources for the payment of interest and
principal on debt (other than enterprise fund debt).
Debt Service funds may have one or a combination of the following revenue sources pledged to retire debt as follows:
• PropeM taxes - Primarily for general City benefit projects such as parks and municipal buildings. Property taxes may
also be used to fund special assessment bonds which are not fully assessed.
• Tax increments - Pledged exclusively for tax increment /economic development districts.
• Capitalized interest portion of bond proceeds - After the sale of bonds, the project may not produce revenue (tax
increments or special assessments) for a period of one to two years. Bonds are issued with this timing difference
considered in the form of capitalized interest.
• Special assessments - Charges to benefited properties for various improvements.
In addition to the above pledged assets, other funding sources may be received by Debt Service funds as follows:
• Residual project proceeds from the related capital projects fund
• Investment earnings
• State or Federal grants
• Transfers from other funds
A comparison of the assets of each fund and the remaining bonds outstanding at year end are as follows:
Cash and
Temporary Total Bonds
Fund Investments Assets Outstanding Maturity
309 Joint Police Station 2005A $ 52,162 $ 567,776 $ 1,024,981 2021
348 G.O. Crossover Bonds of 2009B 407,990 657,295 2,120,000 2018
349 G.O. Improvement Bonds of 2011A 473,815 1,009,080 2,565,000 2019
351 G.O. Improvement Bonds of 2009A 772,500 1,574,355 3,585,000 2025
Total $ 1,706,467 $ 3,808,506 $ 9,294,981
952.835.9090 • Fax 952.835.3261
www.aemepas.com
121
City of Centerville
MI N March 20, 2013
i t Page 11
Enterprise Funds
Water Fund
The results of the operations and cash position of the Water fund for the past three years are as follows:
2010 2011 2012
Total Percent Total Percent Total Percent
Operating revenues $ 305,056 100.0 % $ 277,217 100.0 % $ 320,631 100.0 %
Operating expenses 345,071 113.1 373,184 134.6 349,521 109.0
Operating loss (40,015) (13.1) (95,967) (34.6) (28,890) (9.0)
Nonoperating revenues 175,709 57.6 16,057 5.8 15,599 4.9
Income (loss) before
contributions and transfers 135,694 44.5 (79,910) (28.8) (13,291) (4.1)
Capital contributions from
other funds /developers - - 59,698 21.5 62,294 19.4
Change in net position $ 135,694 44.5 % $ (20,212) (7.3) % $ 49,003 15.3 %
Cash and temporary
investments $ 961,881 $ 1,074,848 $ 1,288,411
Water Fund Operations
$1,400,000 — --
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$-
$(200,000)
2010 2011 2012
• Operating revenues ■ Operating expenses ■ Nonoperating revenues
• Change in net position ■ Cash and temporary investments
The Water fund operated at a loss in 2012, primarily due to depreciation expense. The cash balance, however, has increased over
the prior two years due to positive cash flows from operations. Rates are analyzed each year by staff. This is a good practice and
should be continued.
952. 8-35.9090 + Fax 952.835.3261
www.aemepas.com
122
MIJ City of Centerville
March 20, 2013
FAII
Page 12
Sewer Fund
The results of operations and cash position of the Sewer fund for the past three years are as follows:
2010 2011 2012
Total Percent Total Percent Total Percent
Operating revenues $ 319,947 100.0 % $ 337,785 100.0 % $ 375,103 100.0 %
Operating expenses 422,596 132.1 438,610 129.8 433,792 115.6
Operating loss (102,649) (32.1) (100,825) (29.8) (58,689) (15.6)
Nonoperating revenues 60,832 19.0 14,708 4.4 18,843 5.0
Loss before contributions
and transfers (41,817) (13.1) (86,117) (25.4) (39,846) (10.6)
Capital contributions from
other funds /developers - - 36,723 10.9 94,062 25.1
Change in net position $ (41,817) 13.1 % $ (49,394) 14.5 % $ 54,216 14.5 %
Cash and temporary
investments $ 169,273 $ 222,280 $ 905,212
Sewer Fund Operations
$1,000,000
$800,000
$600,000
$400,000
$200,000
$-
$(200,000)
2010 2011 2012
■ Operating revenues ■ Operating expenses ■ Nonoperating revenues
■ Change in net position ■ Cash and temporary investments
The Sewer fund operated at a loss in 2012 but cash flow was positive. The significant increase in cash from the prior year is due
to the repayment of the advances to other funds in prior years. The fund currently is owed $1,579,520 from other funds. A large
percentage of total expense in this fund comes from depreciation. The City needs to continue monitoring cash flow and review
rates annually to aim towards an operating income.
952.835,9090 • Fax 952.835.3261
www.aemepas.com
123
IN
City of Centerville
March 20, 2013
Page 13
Storm Water Fund
The results of operations and cash position of the Storm Water fund for the past three years are as follows:
2010 2011 2012
Total Percent Total Percent Total Percent
Operating revenues $ 62,392 100.0 % $ 75,719 100.0 % $ 89,400 100.0 %
Operating expenses 122,475 196.3 85,167 112.5 87,632 98.0
Operating loss (60,083) (96.3) (9,448) (12.5) 1,768 2.0
Nonoperating revenues 5,206 8.3 2,475 3.3 73 0.1
Loss before contributions
and transfers (54,877) (88.0) (6,973) (9.2) 1,841 2.1
Capital contributions from
other funds - - - - 271,886 304.1
Transfers out (209,500) - (99,500) - - -
Transfers in - - - - 10,464 11.9
Change in net position $ (264,377) (88.0) % $ (106,473) 9.21 $ 284,191 318.1 %
Cash and temporary
investments $ 189,770 $ 120,592 $ 130,947
Storm Water Fund Operations
$400,000
$300,000
$200,000
$100,000
$(100,000)
$(200,000)
$(300,000)
2010 2011 2012
■ Operating revenues ■ Operating expenses ■ Nonoperating revenues
■ Change in net position ■ Cash and temporary investments
The Storm Water fund showed operating income for the year. The increase in net assets is mainly due to the capital contribution
for the treatment and irrigation at LaMotte Park for $271,886. The City needs to continue monitoring cash flow and review rates
annually to aim towards an operating income in future years.
952.835.9090 • Fax 952.835.3261
www.aemepas.com
124
City of Centerville
March 20, 2013
Page 14
Ratio Analysis
The following captures a few ratios from the City's financial statements that give some additional information for trend and peer
group analysis. The peer group average is derived from information available on the website of the Office of the State Auditor.
Different peer group averages were used for Cities of the 4` class (population 2,500 — 10,000). The majority of these ratios facilitate
the use of economic resources focus and accrual basis of accounting at the government -wide level. A combination of liquidity (ability
to pay its most immediate obligations), solvency (ability to pay its long -term obligations), funding (comparison of financial amounts
and economic indicators to measure changes in financial capacity over time) and common -size (comparison of financial data with
other cities regardless of size) ratios are shown below.
Ratio Calculation Source 2009 2010 2011 2012
Debt to assets Total liabilities /total assets Government -wide 33% 28% 31% 31 %
34% 37% 33% , \',;1
Debt per capita Bonded debt/population Government -wide $ 2,947 $ 2.159 $ 2,459 $ 2,310
S 2,713 S 3,125 S2,826 A' , f
Taxes per capita Tax revenues /population Government -wide $ 518 $ 433 $ 442 $ 456
S 399 S 407 S 500 ,V,a
Current expenditures per capita Governmental fund current Governmental funds $ 545 $ 525 $ 528 $ 526
expenditures /population S 625 S 624 S 640 V,1
Capital expenditures per capita Governmental fund capital Governmental funds $ 826 $ 370 $ 246 $ 33
expenditures /population S 310 S 265 S 229 VA
Capital assets % left to Net capital assets/ Government -wide 82% 82% 79% 74%
depreciate - Governmental gross capital assets 68% 61% 64% 'Y 'A
Capital assets % left to Net capital assets/ Government -wide 75% 75% 69% 66%
depreciate - Business -type gross capital assets 6, 59% 65% ,1 ,4
Represents the City of Centerville
Represents Peer Group ,-1 i
952.835.9090 • Fax 952.835.3261
www.aemepar,.com
125
City of Centerville
March 20, 2013
� Page 15
io �
Debt -to- Assets Leverage Ratio (Solvency Ratio)
The debt -to- assets leverage ratio is a comparison of a city's total liabilities to its total assets or the percentage of total assets that are
provided by creditors. It indicates the degree to which the City's assets are financed through borrowings and other long -term
obligations (i.e. a ratio of 50 percent would indicate half of the assets are financed with outstanding debt).
Bonded Debt per Capita (Funding Ratio)
This dollar amount is arrived at by dividing the total bonded debt by the population of the city and represents the amount of bonded
debt obligation for each citizen of the city at the end of the year. The higher the amount, the more resources are needed in the future to
retire these obligations through taxes, assessments or user fees.
Taxes per Capita (Funding Ratio)
This dollar amount is arrived at by dividing the total tax revenues by the population of the city and represents the amount of taxes for
each citizen of the city for the year. The higher this amount is, the more reliant the city is on taxes to fund its operations.
Current Expenditures per Capita (Funding Ratio)
This dollar amount is arrived at by dividing the total current governmental expenditures by the population of the City and represents
the amount of governmental expenditure for each citizen of the City during the year. Since this is generally based on ongoing
expenditures, we would expect consistent annual per capita results.
Capital Expenditures per Capita (Funding Ratio)
This dollar amount is arrived at by dividing the total governmental capital outlay expenditures by the population of the City and
represents the amount of capital expenditure for each citizen of the City during the year. Since projects are not always recurring, the
per capita amount will fluctuate from year to year.
Capital Assets Percentage (Common -size Ratio)
This percentage represents the percent of governmental or business -type capital assets that are left to be depreciated. The lower this
percentage, the older the city's capital assets are and may need major repairs or replacements in the near future. A higher percentage
may indicate newer assets being constructed or purchased and may coincide with higher debt ratios or bonded debt per capita.
952.835.9090 • Fax 952.835.3261
www.aemepas.com
126
City of Centerville
March 20, 2013
Page 16
•
Future Accounting Standard Changes
The following Governmental Accounting Standards Board (GASB) Statements have been issued and may have an impact on
future City financial statements.
GASB Statement No. 66 - Technical Corrections - an Amendment of GASB Statements No. 10 and No. 62
Summary
The objective of this Statement is to improve accounting and financial reporting for a governmental financial reporting entity by
resolving conflicting guidance that resulted from the issuance of two pronouncements, Statements No. 54, Fund Balance
Reporting and Governmental Fund Type Definitions, and No. 62, Codification ofAccounting and Financial Reporting Guidance
Contained in Pre - November 30, 1989 FASB and AICPA Pronouncements.
The provisions of this Statement are effective for financial statements for periods beginning after December 15, 2012. Earlier
application is encouraged.
How the Changes in This Statement Will Improve Financial Reporting
The requirements of this Statement resolve conflicting accounting and financial reporting guidance that could diminish the
consistency of financial reporting and thereby enhance the usefulness of the financial reports.
GASB Statement No. 67 - The Financial Reporting for Pension Plans - an Amendment to GASB Statement No. 25
Summary
The objective of this Statement is to improve financial reporting by state and local governmental pension plans. This Statement
results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for pensions
with regard to providing decision - useful information, supporting assessments of accountability and interperiod equity, and
creating additional transparency.
This Statement replaces the requirements of Statements No. 25, Financial Reporting for Defined Benefit Pension Plans and Note
Disclosures for Defined Contribution Plans, and No. 50, Pension Disclosures, as they relate to pension plans that are
administered through trusts or equivalent arrangements (hereafter jointly referred to as trusts) that meet certain criteria.
The requirements of Statements No. 25 and No. 50 remain applicable to pension plans that are not administered through trusts
covered by the scope of this Statement and to defined contribution plans that provide postemployment benefits other than
pensions.
This Statement is effective for financial statements for fiscal years beginning after June 15, 2013. Earlier application is
encouraged.
How the Changes in This Statement Will Improve Financial Reporting
The requirements of this Statement will improve financial reporting primarily through enhanced note disclosures and schedules of
required supplementary information that will be presented by the pension plans that are within its scope. The new information
will enhance the decision - usefulness of the financial reports of these pension plans, their value for assessing accountability, and
their transparency by providing information about measures of net pension liabilities and explanations of how and why those
liabilities changed from year to year. The net pension liability information, including ratios, will offer an up -to -date indication of
the extent to which the total pension liability is covered by the fiduciary net position of the pension plan. The comparability of the
reported information for similar types of pension plans will be improved by the changes related to the attribution method used to
determine the total pension liability. The contribution schedule will provide measures to evaluate decisions related to the
assessment of contribution rates in comparison to actuarially determined rates, when such rates are determined. In that
circumstance, it also will provide information about whether employers and nonemployer contributing entities, if applicable, are
keeping pace with actuarially determined contribution measures. In addition, new information about rates of return on pension
plan investments will inform financial report users about the effects of market conditions on the pension plan's assets over time
and provide information for users to assess the relative success of the pension plan's investment strategy and the relative
contribution that investment earnings provide to the pension plan's ability to pay benefits to plan members when they come due.
952.835.9090 • Fax 952.835.3261
www.aemepas.com
127
Mel City of Centerville
tz 1140 March 20, 2013
Page 17
Future Accounting Standard Changes - Continued
GASB Statement No. 68 - The Accounting and Financial Reporting of Pensions - an Amendment of GASB Statement No. 27
The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for
pensions. It also improves information provided by state and local governmental employers about financial support for pensions
that is provided by other entities. This Statement results from a comprehensive review of the effectiveness of existing standards of
accounting and financial reporting for pensions with regard to providing decision - useful information, supporting assessments of
accountability and interperiod equity, and creating additional transparency.
This Statement replaces the requirements of Statement No. 27, Accounting for Pensions by State and Local Governmental
Employers, as well as the requirements of Statement No. 50, Pension Disclosures, as they relate to pensions that are provided
through pension plans administered as trusts or equivalent arrangements (hereafter jointly referred to as trusts) that meet certain
criteria. The requirements of Statements 27 and 50 remain applicable for pensions that are not covered by the scope of this
Statement.
This Statement is effective for fiscal years beginning after June 15, 2014. Earlier application is encouraged.
How the Changes in This Statement Will Improve Financial Reporting
The requirements of this Statement will improve the decision - usefulness of information in employer and governmental
nonemployer contributing entity financial reports and will enhance its value for assessing accountability and interperiod equity by
requiring recognition of the entire net pension liability and a more comprehensive measure of pension expense. Decision -
usefulness and accountability also will be enhanced through new note disclosures and required supplementary information.
GASB Statement No. 64 - Derivative Instruments: Application of Hedge Accounting Termination Provisions - an Amendment of
GASB Statement No. 53
Summary
The objective of this Statement is to clarify whether an effective hedging relationship continues after the replacement of swap
counterparty or a swap counterparty's credit support provider. This Statement sets forth criteria that establish when the effective
hedging relationship continues and hedge accounting should continue to be applied. The provisions of this Statement are effective
for financial statements for periods beginning after June 15, 2011. Earlier application is encouraged.
How the Changes in This Statement Will Improve Financial Reporting
The requirements of this Statement enhance comparability and improve financial reporting by clarifying the circumstances in
which hedge accounting should continue when a swap counterparty, or swap counterparty's credit support provider, is replaced
This communication is intended solely for the information and use of the City Council, management and the Minnesota Office of the
State Auditor and is not intended and should not be used by anyone other than those specified parties.
Our audit would not necessarily disclose all weaknesses in the system because it was based on selected tests of the accounting records
and related data. The comments and recommendations in the report are purely constructive in nature, and should be read in this
context.
If you have any questions or wish to discuss any of the items contained in this letter, please feel free to contact us at your convenience.
We wish to thank you for the continued opportunity to be of service and for the courtesy and cooperation extended to us by your staff.
OU& , 4 "1 ZL.4
March 20, 2013 ABDO, EICK & MEYERS, LLP
Minneapolis, Minnesota Certified Public Accountants
952.835.9090 • Fax 952.835.3261
www.aemepas.com
128
Resolution No.
Council Member introduced the following resolution and moved its
adoption:
Resolution Providing for the Sale of
General Obligation Improvement Bonds,
Series 2013A, in an Estimated Principal Amount of $1,510,000
A. WHEREAS, the City Council of the City of Centerville, Minnesota (the "City "), has
determined that it is necessary and expedient to issue the City's General Obligation
Improvement Bonds, Series 2013A (the "Bonds ") in an estimated principal amount of
$1,510,000, to finance certain public improvements in the City; and
B. WHEREAS, the City has retained Northland Securities, Inc., in Minneapolis, Minnesota
( "Northland "), as its independent financial advisor for the Bonds and is therefore authorized
to conduct a public sale of the Bonds in accordance with Minnesota Statutes, Section 475.60.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the city of Centerville,
Minnesota, as follows:
1. Authorization; Findings The City Council hereby authorizes Northland to solicit proposals
for the sale of the Bonds through a public sale process.
2. Meeting, Proposal Opening The City Council shall meet at 7:00 p.m. on May 22, 2013, for
the purpose of considering proposals for and awarding the sale of the Bonds.
3. Official Statement In connection with said sale, the officers or employees of the City are
hereby authorized to cooperate with Northland and participate in the preparation of an
official statement for the Bonds and to execute and deliver it on behalf of the City upon its
completion.
The motion for the adoption of the foregoing resolution was duly seconded by Council Member
and, after full discussion thereof and upon a vote being taken
thereon, the following Council Members voted in favor thereof
and the following voted against the same:
Whereupon said resolution was declared duly passed and adopted.
Dated this 24th day of April, 2013.
129
Attest
130
NOTICE OF SALE
$1,510,000*
GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2013A
CITY OF CENTERVILLE, MINNESOTA
(Book -Entry Only)
NOTICE IS HEREBY GIVEN that these Bonds will be offered for sale according to the following terms:
TIME AND PLACE:
Proposals will be opened by the City's Administrator, or designee, on Wednesday, May 22, 2013, at 10:30 AM
Central Time, at the offices of Northland Securities, Inc., 45 South 7th Street, Suite 2000, Minneapolis, Minnesota
55402. Consideration of the Proposals for award of the sale will be by the City Council at its meeting at the City
Offices beginning Wednesday, May 22, 2013 at 6:30 PM Central Time.
SUBMISSION OF PROPOSALS
Proposals may be:
a) submitted to the office of Northland Securities, Inc.;
b) faxed to Northland Securities, Inc. at 612 - 851 -5918;
c) for proposals submitted prior to the sale, the final price and coupon rates may be submitted to Northland
Securities, Inc. by telephone at 612 - 851 -5900 or 612 - 851 -5915; or
d) submitted electronically.
Notice is hereby given that electronic proposals will be received via PARITY or its successor, in the manner
described below, until 10:30 AM, Central Time, on Wednesday, May 22, 2013. Proposals may be submitted
electronically via PARITY or its successor, pursuant to this Notice until 10:30 AM, Central Time, but no
Proposal will be received after the time for receiving Proposals specified above. To the extent any instructions or
directions set forth in PARITY or its successor, conflict with this Notice, the terms of this Notice shall control.
For further information about PARITY T - ", or its successor, potential bidders may contact Northland Securities, Inc.
or i -Deal at 1359 Broadway, 2 "d floor, New York, NY 10018, telephone 212 - 849 -5021.
Neither the City nor Northland Securities, Inc. assumes any liability if there is a malfunction of PARITY or its
successor. All bidders are advised that each Proposal shall be deemed to constitute a contract between the bidder
and the City to purchase the Bonds regardless of the manner in which the Proposal is submitted.
BOOK -ENTRY SYSTEM
The Bonds will be issued by means of a book -entry system with no physical distribution of bond certificates made
to the public. The Bonds will be issued in fully registered form and one bond certificate, representing the
aggregate principal amount of the Bonds maturing in each year, will be registered in the name of Cede & Co. as
nominee of Depository Trust Company ( "DTC "), New York, New York, which will act as securities depository of
the Bonds.
Individual purchases of the Bonds may be made in the principal amount of $5,000 or any multiple thereof of a
single maturity through book entries made on the books and records of DTC and its participants. Principal and
interest are payable by the City through Northland Trust Services, Inc., Minneapolis, Minnesota (the "Paying
Agent/Registrar "), to DTC, or its nominee as registered owner of the Bonds. Transfer of principal and interest
payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to
* The City reserves the right to increase or decrease the principal amount of the Bonds. Any such increase or decrease will be made in
multiples of $5,000 and may be made in any maturity. If any maturity is adjusted, the purchase price will also be adjusted to maintain the
same gross spread.
131
beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial
owners. The successful bidder, as a condition of delivery of the Bonds, will be required to deposit the bond
certificates with DTC. The City will pay reasonable and customary charges for the services of the Paying
Agent/Registrar.
DATE OF ORIGINAL ISSUE OF BONDS
June 1, 2013
AUTHORITY/PURPOSE /SECURITY
The Bonds are being issued pursuant to Minnesota Statutes, Chapters 429 and 475, as amended. The proceeds of
the Bonds will be used, together with any other available funds of the City, to finance street improvements within
the City and pay the costs of issuing the Bonds. The Bonds are payable from special assessments levied against
benefited property and additionally secured by ad valorem property taxes on all taxable property within the City.
The full faith and credit of the City is pledged to their payment and the City has validly obligated itself to levy ad
valorem taxes in the event of any deficiency in the debt service account established for the Bonds.
INTEREST PAYMENTS
Interest is due semiannually on each February 1 and August 1, commencing February 1, 2014, to registered
owners of the Bonds appearing of record in the Bond Register as of the close of business on the fifteenth day
(whether or not a business day) of the calendar month preceding such interest payment date.
MATURITIES
Principal is due annually on February 1 in each of the years and amounts as follows:
Amoun
Year Amount Year Amount Year Amount Year Amount Year t
2016 $100,00 2019 $100,00 2022 $105,00 2025 $110,00 202 $120,0
0 0 0 0 8 00
2017 100,000 2020 105,000 2023 105,000 2026 115,000 202 120,00
9 0
2018 100,000 2021 105,000 2024 110,000 2027 115,000
Proposals for the Bonds may contain a maturity schedule providing for any combination of serial bonds and term
bonds, subject to mandatory redemption, so long as the amount of principal maturing or subject to mandatory
redemption in each year conforms to the maturity schedule set forth above.
INTEREST RATES
All rates must be in integral multiples of 1 /20th or 1 /8th of 1 %. Rates must be in level or ascending order. All
Bonds of the same maturity must bear a single uniform rate from date of issue to maturity.
ADJUSTMENTS TO PRINCIPAL AMOUNT AFTER PROPOSALS
The City reserves the right to increase or decrease the principal amount of the Bonds. Any such increase or
decrease will be made in multiples of $5,000 and may be made in any maturity. If any maturity is adjusted, the
purchase price will also be adjusted to maintain the same gross spread. Such adjustments shall be made promptly
after the sale and prior to the award of Proposals by the City and shall be at the sole discretion of the City. The
successful bidder may not withdraw or modify its Proposal once submitted to the City for any reason, including
post sale adjustment. Any adjustment shall be conclusive and shall be binding upon the successful bidder.
132
OPTIONAL REDEMPTION
Bonds maturing on February 1, 2021 and thereafter are subject to redemption and prepayment at the option of the
City on February 1, 2020 and on any date thereafter at a price of par plus accrued interest. Redemption may be in
whole or in part of the Bonds subject to prepayment. If redemption is in part, the maturities and principal amounts
within each maturity to be redeemed shall be determined by the City and if only part of the Bonds having a
common maturity date are called for prepayment, the specific Bonds to be prepaid shall be chosen by lot by the
Bond Registrar. Notice of redemption shall be given by registered mail to the registered owner of the Bonds not
less than 30 days prior to such redemption date.
CUSIP NUMBERS
If the Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Bonds, but neither the
failure to print such numbers on any Bond nor any error with respect thereto shall constitute cause for a failure or
refusal by the successful bidder thereof to accept delivery of and pay for the Bonds in accordance with terms of
the purchase contract. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers
shall be paid by the successful bidder.
DELIVERY
Delivery of the Bonds will be within thirty days after award, subject to an approving legal opinion by Bradley &
Deike, PA, Bond Counsel. The legal opinion will be paid by the City and delivery will be anywhere in the
continental United States without cost to the successful bidder at DTC.
TYPE OF PROPOSAL
Proposals of not less than $1,494,900 (99.00 %) and accrued interest on the principal sum of $1,510,000 must be
filed with the undersigned prior to the time of sale. Proposals must be unconditional except as to legality.
Proposals for the Bonds should be delivered to Northland Securities, Inc. and addressed to:
Dallas Larson, Administrator
Centerville City Hall
1880 Main St.
Centerville, Minnesota 55038 -9794
A good faith deposit (the "Deposit ") in the amount of $30,200 in the form of a federal wire transfer (payable to
the order of the City) is only required from the apparent winning bidder and must be received within two hours
after the time stated for the receipt of Proposals. The apparent winning bidder will receive notification of the wire
instructions from the Financial Advisor promptly after the sale. If the Deposit is not received from the apparent
winning bidder in the time allotted, the City may choose to reject their Proposal and then proceed to offer the
Bonds to the next lowest bidder based on the terms of their original proposal, so long as said bidder wires funds
for the Deposit amount within two hours of said offer.
The City will retain the Deposit of the successful bidder, the amount of which will be deducted at settlement and
no interest will accrue to the successful bidder. In the event the successful bidder fails to comply with the
accepted Proposal, said amount will be retained by the City. No Proposal can be withdrawn after the time set for
receiving Proposals unless the meeting of the City scheduled for award of the Bonds is adjourned, recessed, or
continued to another date without award of the Bonds having been made.
AWARD
The Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost (TIC)
basis. The City's computation of the interest rate of each Proposal, in accordance with customary practice, will be
controlling. In the event of a tie, the sale of the Bonds will be awarded by lot. The City will reserve the right to: (i)
waive non - substantive informalities of any Proposal or of matters relating to the receipt of Proposals and award of
the Bonds, (ii) reject all Proposals without cause, and (iii) reject any Proposal which the City determines to have
failed to comply with the terms herein.
133
INFORMATION FROM SUCCESSFUL BIDDER
The successful bidder will be required to provide, in a timely manner, certain information relating to the initial
offering price of the Bonds necessary to compute the yield on the Bonds pursuant to the provisions of the Internal
Revenue Code of 1986, as amended.
OFFICIAL STATEMENT
By awarding the Bonds to any underwriter or underwriting syndicate submitting a Proposal therefor, the City
agrees that, no more than seven business days after the date of such award, it shall provide to the senior managing
underwriter of the syndicate to which the Bonds are awarded, the Final Official Statement in an electronic format
as prescribed by the Municipal Securities Rulemaking Board (MSRB).
FULL CONTINUING DISCLOSURE UNDERTAKING
The City will covenant in the resolution awarding the sale of the Bonds and in a Continuing Disclosure
Undertaking to provide, or cause to be provided, annual financial information, including audited financial
statements of the City, and notices of certain material events, as required by SEC Rule 15c2 -12.
BANK QUALIFICATION
The City will designate the Bonds as qualified tax - exempt obligations for purposes of Section 265(b)(3) of the
Internal Revenue Code of 1986, as amended.
BOND INSURANCE AT UNDERWRITER'S OPTION
If the Bonds qualify for issuance of any policy of municipal bond insurance or commitment therefor at the option
of the successful bidder, the purchase of any such insurance policy or the issuance of any such commitment shall
be at the sole option and expense of the successful bidder of the Bonds. Any increase in the costs of issuance of
the Bonds resulting from such purchase of insurance shall be paid by the successful bidder, except that, if the City
has requested and received a rating on the Bonds from a rating agency, the City will pay that rating fee. Any other
rating agency fees shall be the responsibility of the successful bidder. Failure of the municipal bond insurer to
issue the policy after the Bonds have been awarded to the successful bidder shall not constitute cause for failure or
refusal by the successful bidder to accept delivery on the Bonds.
The City reserves the right to reject any and all Proposals, to waive informalities and to adjourn the sale.
Dated: April 24, 2013 BY ORDER OF THE CENTERVILLE CITY COUNCIL
!s! Dallas Larson
Administrator
Additional information may be obtained from:
Northland Securities, Inc.
45 South 7`� Street, Suite 2000
Minneapolis, Minnesota 55402
Telephone No.: 612 - 851 -5900
134
FINANCIAL ADVISORY SERVICE AGREEMENT
BY AND BETWEEN
THE CITY OF CENTERVILLE, MINNESOTA
AND
NORTHLAND SECURI'T'IES, INC.
This Agreement made and entered into by and between the City of Centerville, Minnesota (hereinafter "City ")
and Northland Securities, Inc., of Minneapolis, Minnesota (hereinafter "NSI ").
WITNESSETH
WHEREAS, the City desires to have NSI provide it with advice on the structure, terms, timing and other
matters related to the issuance of General Obligation Improvement Bonds, Series 2013A (the "Debt ") serving in
the role of financial advisor, and
WHEREAS, the City and NSI are entering into this Agreement to define the financial advisory relationship at
the earliest opportunity related to the Debt, and
WHEREAS, NSI desires to furnish services to the City as hereinafter described,
NOW, THEREFORE, it is agreed by and between the parties as follows:
SERVICES TO BE PROVIDED BY NSI
NSI shall provide all services necessary to analyze, structure, offer for sale and close the transaction. Examples
of the services include the following:
Planning and Development
1. Meet with City officials and others as directed to define the scope and the objectives
2. Assemble and analyze relevant statistical information.
3. Prepare a preliminary feasibility study or discuss with City officials possible funding options and the fiscal
implications of each.
4. Prepare details on the recommended options - information on the issue structure, method of issuance, term,
sale timing, call provisions, etc.
5. Prepare a schedule of events related to the issuance process.
6. Attend meetings of the City Council and other project and bond issue related meetings as needed and as
requested.
Bond Sales
1. Collect data and prepare preliminary official statement (POS).
2. Provide POS for review and approval by City.
3. Distribute the POS and bid form to prospective bidders.
4. Cause to be published the Official Notice of Sale if required by law.
5. Recommend whether the issue should secure a bond rating. If the issue is to be rated, prepare and furnish to
the rating agencies the information they require to evaluate the issue and provide their rating. Assist City to
prepare and conduct rating call or other presentation.
6. Directly contact underwriters most likely to serve as syndicate managers to assure that bidding interest is
established.
135
7. Assist the City in receiving the bids, compute the accuracy of the bids received, and recommend to the City
the most favorable bid for award.
8. Coordinate with bond counsel the preparation of required contracts and resolutions.
Post Sale Support
1. Prepare final official statement and provide to underwriter for posting on EMMA.
2. Coordinate the bond issue closing including making all arrangements for bond printing, registration, and
delivery.
3. Furnish to the City a complete transcript of the transaction, if not provided by bond counsel.
4. Assist, as requested by the City, with the investment of bond issue proceeds.
COMPENSATION
For providing these services with respect to the Debt, NSI shall be paid a lump sum of $13,200. The fee due to
NSI shall be payable by the City upon the closing of the Bonds.
NSI agrees to pay the following expenses from its fee:
• Out -of- pocket expenses such as travel, long distance phone, and copy costs.
• Production and distribution of material to rating agencies and/or bond insurance companies.
• Preparation of the bond transcript.
The City agrees to pay for all other expenses related to the processing of the bond issue(s) including, but not
limited to, the following:
• Engineering and/or architectural fees.
• Publication of legal notices.
• Bond counsel and local attorney fees.
• Fees for various debt certificates.
• The cost of printing Official Statements, if any.
• City staff expenses.
• Airfare and lodging expenses of one NSI official and City officials when and if traveling for rating agency
presentations.
• Rating agency fees, if any.
• Bond insurance fees, if any.
• Accounting and other related fees.
It is expressly understood that there is no obligation on the part of the City under the terms of this Agreement to
issue the Debt. If the Debt is not issued, NSI agrees to pay its own expenses and receive no fee for any services
it has rendered.
SUCCESSORS OR ASSIGNS
The terms and provisions of this Agreement are binding upon and inure to the benefit of the City and NSI and
their successors or assigns.
TERM OF THLS AGREEMENT
This Agreement may be terminated by thirty (30) days written notice by either the City or NSI and it shall
terminate sixty (60) days following the closing date related to the issuance of the Debt.
2
136
Dated this day of April, 2013.
Northland Securities, Inc.
By:
John R. Fifield, Jr. - Senior Vice President
City of Centerville, Minnesota
By:
Its:
3
137