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CITY OF ROSEVILLE, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS For Year Ended December 31, 2015 FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS Component Unit The City incorporates the Roseville Housing and Redevelopment Authority (HRA) as a component unit into its financial statements. The HRA accounts for the City's housing-related programs. In 2015, the HRA's net position increased by $544,104 reflecting strong program income. Governmental Funds The focus of the City of Roseville's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of Roseville's financing requirements. In particular, unrestricted fund balance may serve as useful measure of a government's net resources available for spending at the end of the fiscal year. At the end of the current fiscal year, the City of Roseville's governmental funds reported combined ending fund balances of $44,812,366. Approximately 50.3% of this total amount $22,543,629; constitutes unrestricted fund balance. The remainder of the fund balance is restricted to indicate that it is not available for new spending because it is legally restricted for; 1) various operating purposes -$3,262,323, 2) for tax increment financing activities -$12,259,273, 3) bond funded capital improvements -$4,083,564, and 4) debt service - $2,635,521. The fund balances of governmental funds declined by $446,829 in 2015. The decline is due to the increases in capital improvements and a budgeted reduction of the General Fund balance. The Economic Increments Construction Fund accounts for the activities in the City's Tax Increment Financing (TIF) Districts. The Fund's balance increased by $4,388,734 resulting from the continued collection of tax increment to repay TIF-related infrastructure investments made in prior years and the proceeds from a tax increment revenue bonds issuance in 2015. The entire fund balance of $12,259,273 is restricted for TIF-related activities. The Debt Service Fund decreased by $90,644 largely due to an issuance cost for the 2015 tax increment revenue bonds. The decrease was mitigated by the collections of special assessments and tax levies in advance of making debt payments. The Revolving Improvements Fund decreased $3,697,759 due to capital spending of previously issued bond proceeds. Proprietary Funds The City of Roseville's proprietary funds provide the same type of information found in the government- wide financial statements, but in more detail. The unrestricted net position in the respective proprietary funds is Sewer -$664,991; Water —$558,214; Golf -$114,091; Recycling -$163,407 and Storm -$967,253. Overall net position increased $2,050,140 reflecting positive cash flow from utility rate increases which were designated for future capital replacements. General Fund Budgetary Highlights The General Fund balance decreased by $313,918 in 2015 which was $105,582 less than the budgeted reduction, largely due to revenues and expenditures being generally as expected. 22