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2010 Annual Financial Report COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF CHANHASSEN, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2010 Finance Department Greg Sticha, Finance Director Member of Government Finance Officers Association of United States and Canada - This page intentionally left blank - CITY OF CHANHASSEN, MINNESOTA TABLE OF CONTENTS Page ReferenceNo. I. INTRODUCTORY SECTION Letter of Transmittal3 Certificate of Achievement7 Organization9 Organization Chart10 II. FINANCIAL SECTION Independent Auditor's Report13 Management's Discussion and Analysis15 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net AssetsStatement 131 Statement of ActivitiesStatement 232 Fund Financial Statements: Balance Sheet - Governmental FundsStatement 334 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental FundsStatement 436 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds Statement 538 Statement of Net Assets - Proprietary FundsStatement 639 Statement of Revenues, Expenses and Changes in Fund Net Assets - Proprietary FundsStatement 740 Statement of Cash Flows - Proprietary FundsStatement 841 Statement of Net Assets - Fiduciary FundsStatement 942 Notes to Financial Statements43 Required Supplementary Information: Budgetary Comparison Schedule - General FundStatement 1082 Schedule of Funding Progress - Retiree Health Plan88 CITY OF CHANHASSEN, MINNESOTA TABLE OF CONTENTS Page ReferenceNo. Combining and Individual Fund Statements and Schedules: Combining Balance Sheet - Nonmajor Governmental FundsStatement 1194 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental FundsStatement 1295 Subcombining Balance Sheet - Nonmajor Special Revenue FundsStatement 1398 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Special Revenue FundsStatement 1499 Subcombining Balance Sheet - Nonmajor Debt Service FundsStatement 15103 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Debt Service FundsStatement 16104 Subcombining Balance Sheet - Nonmajor Capital Project FundsStatement 17108 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Capital Project FundsStatement 18110 Special Revenue Funds: Schedules of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual: Contribution FundStatement 19112 CATVStatement 20113 Combining Statement of Net Assets - Agency FundsStatement 21116 Combining Statement of Changes in Assets and Liabilities - Agency FundsStatement 22117 Other Information: Combined Schedule of IndebtednessExhibit 1120 Debt Service Payments to Maturity: General Obligation BondsExhibit 2122 General Obligation Improvement BondsExhibit 3123 Revenue BondsExhibit 4124 Taxable Valuations, Tax Levies and Tax RatesExhibit 5125 Schedule of Deferred Tax LeviesExhibit 6126 CITY OF CHANHASSEN, MINNESOTA TABLE OF CONTENTS Page ReferenceNo. III. STATISTICAL SECTION (UNAUDITED) Financial Trends: Net Assets by ComponentTable 1130 Changes in Net AssetsTable 2132 Fund Balances - Governmental FundsTable 3136 Changes in Fund Balances - Governmental FundsTable 4138 Revenue Capacity: Tax Capacity and Estimated Market Value of Taxable PropertyTable 5140 Direct and Overlapping Property Tax RatesTable 6142 Principal Property TaxpayersTable 7143 Property Tax Levies and CollectionsTable 8145 Debt Capacity: Ratios of Outstanding Debt by TypeTable 9146 Direct and Overlapping Governmental Activities DebtTable 10148 Legal Debt Margin InformationTable 11149 Pledged Revenue CoverageTable 12150 Demographic and Economic: Demographic and Economic StatisticsTable 13151 Principal EmployersTable 14153 Operating Information: Full-Time Equivalent City Government Employees by Function/ProgramTable 15154 Operating Indicators by Function/ProgramTable 16156 Capital Asset Statistics by Function/ProgramTable 17158 - This page intentionally left blank - I. INTRODUCTORY SECTION 1 - This page intentionally left blank - 2 Relevant Financial Policies The City has a policy regarding General Fund reserve balances. The City has a designated fund balance in the General Fund equivalent to 50% of the ensuing year’s budgeted tax levy to provide working capital between serve- owned property tax settlements. The city will be reviewing the policy as it prepares for the implementation for GASB 54. The primary financial goal of the City’s investment policy is to ensure the safety and principal invested by the City. Cash temporarily idle during the year is invested in certificates of deposit and obligations of the U.S. Treasury and government agencies. The City only invests in instruments authorized under Minnesota Statute 118A. Cash balances from all City funds are pooled into an investment fund and investment income is distributed on a pro-rata basis at the end of the year, based on average monthly cash balances. At December 31, 2010, the maturities of the investments range from 26 days to 5.8 years, with an average maturity of 2.23 years. Maturities are not to exceed 5 years unless for a dedicated purpose such as a future bond payment. The average yield to maturity on the portfolio at December 31, 2010 was 2.44%. It is the City’s practice to hold all instruments to maturity. Economic Condition and Outlook The City of Chanhassen, Minnesota, located southwest of the Twin Cities metropolitan area, is situated primarily in Carver County with a small portion in Hennepin County. The City encompasses an area of 23.78 square miles. U.S. Highways 169 and 212, as well as State Highways 5, 7, 41 and 101, provide access for commuters coming into the City from the Twin Cities metropolitan area as well as for residents traveling to work outside the City. Based on the 2010 US Census the City’s population was 22,952. Chanhassen’s residential permits were greater in 2010 than 2009. In 2010, there were 101 residential permits as compared to 78 in 2009. The total value of all building permits and plan checks in 2010 was $58,429,700. The City has approximately 375 acres of commercial and office industrial land with utilities available. The City anticipates a one percent growth rate in residential permits and a slightly lower rate for commercial and office industrial development. In 2010, the City refinanced the 2002A GO Library Bonds (2010A) and issued $1.5 million in GO Street Reconstruction Bonds (2010B) . As part of that process, the City underwent a financial review by Standard & Poors (the City’s bond rating agency). Both reviews reaffirmed the City’s rating of AAA, the highest rating offered by Standard & Poors. They cited the City’s conservative financial management practices and strong financial reserves, along with management’s practice of continuing long term financial planning as reasons for their reaffirmation. There are currently only thirteen communities in the entire state of Minnesota that have an AAA bond rating. Accounting System and Budgetary Control The City's accounting records are maintained on the accrual, or modified accrual basis, as appropriate. Budgetary control is maintained through the City's accounting and reporting system whereby monthly detail reports of budget versus actual are provided to all departments with summaries being provided to the City Council. Approval listings and documentation are provided for the City Council at each semi-monthly meeting for all checks issued by the City. In the City's accounting system, careful consideration is given to the adequacy of internal controls. These controls are designed to provide reasonable, but not necessarily absolute, assurance regarding: (1) the safeguarding of assets against loss from unauthorized use or disposition and (2) the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that: (1) the cost of control should not exceed the benefits likely to be derived and (2) the evaluation of costs and benefits requires estimates and judgments by management. All internal control evaluation occurs within the above framework. We believe the City's internal controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. 4 Capital financings for major municipal improvements are provided through (1) improvement bonds, (2) general obligation bonds, (3) tax increment bonds, or (4) revenue bonds. Internal financing of improvement projects is usually minimal and only for short periods of time. Long Term Financial Planning In 2002 the City undertook an extensive long term financial planning process called “Key Financial Strategies”. As a part of this process the City developed a long term (5 years) general fund budgeting model. In addition the City developed annual strategies and measurement tools, both financial and non-financial, to compare our results from year to year and with other like communities in our area. These strategies and the long term general fund budget are updated on an annual basis as part of our goal setting strategies at the beginning of each year. In addition, the City has a 5 year capital improvement plan in place for infrastructure and equipment, as well as a pavement management plan in place for streets. The city also undertakes an annual rate study of its Water, Sanitary Sewer, and Storm Water rates. As part of this process the city projects fund balances and capital improvements to each of the systems for the next twenty years, and the projected user and connection rates needed for each fund for that same time period. Certificate of Achievement The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Chanhassen for its comprehensive annual financial report (CAFR) for the fiscal year ended December 31, 2009. The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports. In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized comprehensive annual financial report, whose contents conform to program standards. The CAFR must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. The City of Chanhassen has received a Certificate of Achievement for the last seventeen consecutive years (fiscal years ended 1992 – 2009). We believe our current report continues to conform to the Certificate of Achievement program requirements and we are submitting it to GFOA to determine its eligibility for another certificate. Independent Audit State law provides that the City may arrange for examination of its books, records, accounts and affairs, or any part thereof, by the State Auditor, or by Certified Public Accountants. It has been a long-standing policy of the City to provide for a complete annual audit of City records by Certified Public Accountants. The auditors' opinion has been included in this report. Acknowledgments We wish to express our appreciation to the members of the City Council for their support in improving the financial condition of the City. We also want to thank the Finance Department staff and department directors for their assistance in compiling the information necessary for this report. Finally, we wish to acknowledge HLB Tautges Redpath, Ltd. for their assistance in preparing this report. Respectfully submitted, Greg Sticha, Finance Director 5 - This page intentionally left blank - 6 7 - This page intentionally left blank - 8 CITY OF CHANHASSEN, MINNESOTA ORGANIZATION December 31, 2010 Term Expires Mayor: Tom Furlong12/31/14 Council Members: Bethany Tjornhom12/31/12 Vicki Erns12/31/14 t Jerry McDonald12/31/12 Bryan Litse12/31/10 y City Manager: Todd GerhardtAppointed Finance Director: Greg StichaAppointed Community Development Director: Kathryn AanensoAppointed n Public Works Director/City Engineer: Paul OehmeAppointed Parks and Recreation Director: Todd HoffmanAppointed 9 CityofChanhassen,Minnesota CityofChanhassen,Minnesota Organization Chart Citizens EnvironmentalSenior CommissionCommission PlanningPark & RecreationPark & Recreation Mayor -Council CommissionCommission Economic Development Development Authority Administration Law EnforcementPublicCommunityParks and Finance & FireWorksDevelopmentRecreation Administration Administration 10 II. FINANCIAL SECTION 11 - This page intentionally left blank - 12 MANAGEMENT’S DISCUSSION AND ANALYSIS As management of the City of Chanhassen, Minnesota, we offer readers of the City of Chanhassen, Minnesota’s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2010. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found in the introductory section of this report. Financial Highlights The assets of the City of Chanhassen, Minnesota exceeded its liabilities at the close of the most recent fiscal year by $161,468,237 (net assets). Of this amount, $21,256,884 (unrestricted net assets) may be used to meet the City’s ongoing obligations to citizens and creditors in accordance with the City's fund designations and fiscal policies. The City’s total net assets increased by $12,392. As of the close of the current fiscal year, the City of Chanhassen, Minnesota’s governmental funds reported combined ending fund balances of $20,052,289. The amount designated or reserved through legal restrictions and City Council authorization is $19,021,316. At the end of the current fiscal year, the General Fund balance of $5,269,618, included $55,826 reserved, $3,754,000 designated and $1,459,792 undesignated. The City’s total debt increased by $2,171,295 during the current fiscal year, from $33,536,343 to $35,707,638. The increase is primarily attributed to $1,540,000 in street reconstruction bonds that were issued in 2010. Overview of the Financial Statements The management’s discussion and analysis is intended to serve as an introduction to the City of Chanhassen, Minnesota’s basic financial statements. The City’s basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements . The government-wide financial statements are designed to provide readers with a broad overview of the City of Chanhassen, Minnesota’s finances, in a manner similar to a private-sector business. 15 Managements Discussion and Analysis ’ The statement of net assets presents information on all of the City of Chanhassen, Minnesota’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City of Chanhassen, Minnesota is improving or deteriorating. The statement of activities presents information showing how the City’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes, and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the City of Chanhassen, Minnesota that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City of Chanhassen, Minnesota include general government, public safety, public works, parks and recreation, and community development. The business-type activities of the City of Chanhassen, Minnesota include water, sewer, and surface water management. The government-wide financial statements can be found on Statements 1 and 2 of this report. Fund Financial statements . A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Chanhassen, Minnesota, 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 of Chanhassen, Minnesota can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds . Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of 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 financial requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City's near term financial decisions. Both the governmental fund balance sheet and governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. 16 Managements Discussion and Analysis ’ The City of Chanhassen, Minnesota maintains four individual major governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the following major funds: General Fund 2009A G.O. Refunding Bonds Transit Station Assessment Fund Revolving Assessment Fund Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The City of Chanhassen, Minnesota adopts an annual appropriated budget for the General Fund and for the Contribution and CATV special revenue funds. A budgetary comparison statement has been provided for those funds to demonstrate compliance with this budget. The basic governmental fund financial statements can be found on Statements 3 through 5 of this report. Proprietary funds . The City of Chanhassen, Minnesota maintains three enterprise funds as a part of its proprietary fund type. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the following funds: Water Sewer Surface Water Management The basic proprietary fund financial statements can be found on Statements 6 through 8 of this report. Fiduciary funds . Fiduciary funds are used to account for resources held for benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City of Chanhassen, Minnesota’s own program. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statement can be found on Statement 9 of this report. 17 Managements Discussion and Analysis ’ Notes to the financial statements . The notes provide additional information that is essential to a full understanding of the data provided in the government–wide and fund financial statements. The notes to the financial statements can be found following Statement 9 of this report. Other information. The combining statements referred to earlier in connection with non- major governmental funds are presented immediately following the required supplementary information on budgetary comparisons. Combining and individual fund statements and schedules can be found on Statement 11 through 22 of this report. Government-Wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the City of Chanhassen, Minnesota, assets exceeded liabilities by $161,468,237 at the close of the most recent fiscal year. The largest portion of the City of Chanhassen, Minnesota’s net assets ($130,300,790 or 81%) reflects its investment in capital assets (e.g. land, buildings, machinery, and equipment) net of any related debt used to acquire those assets that is still outstanding. The City of Chanhassen, Minnesota uses these capital assets to provide services to citizens; consequently, these asseths are not available for future spending. Although the City of Chanhassen, Minnesota’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 CHANHASSEN, MINNESOTA'S NET ASSETS Governmental ActivitiesBusiness-Type ActivitiesTotals 201020092010200920102009 Assets: Current and other assets$27,939,661$26,773,873$10,681,796$12,680,187$38,621,457$39,454,060 Capital assets92,216,20392,111,19968,023,02067,191,919160,239,223159,303,118 Total assets$120,155,864$118,885,072$78,704,816$79,872,106$198,860,680$198,757,178 Liabilities: Long-term liabilities outstanding$24,634,855$21,732,346$11,072,783$11,803,997$35,707,638$33,536,343 Other liabilities1,340,9483,322,849343,857442,1411,684,8053,764,990 Total liabilities$25,975,803$25,055,195$11,416,640$12,246,138$37,392,443$37,301,333 Net assets: Invested in capital assets, net of related debt$73,272,450$72,106,198$57,028,340$55,496,919$130,300,790$127,603,117 Restricted9,910,5637,302,637 - - 9,910,5637,302,637 Unrestricted10,997,04814,421,04210,259,83612,129,04921,256,88426,550,091 Total net assets$94,180,061$93,829,877$67,288,176$67,625,968$161,468,237$161,455,845 18 Managements Discussion and Analysis ’ A portion of the City of Chanhassen, Minnesota’s net assets represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets ($21,256,884) may be used to meet the City's ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City of Chanhassen, Minnesota is able to report positive balances in all three categories of net assets, both for the City as a whole, as well as for its separate governmental and business-type activities. Governmental Activities Total net assets of the City’s governmental activities increased $350,184, or 0.4%. The components of net assets increased or decreased as follows: Net assets invested in capital assets, net of related debt, increased $1,166,252 due primarily to the creation of special assessments related to the street reconstruction projects in 2010. These special assessment receivables totaled approximately $1 million. Net assets restricted for debt service increased $2,755,474. The increase is attributed to the refinancing of the 2002A G.O. Library Bonds into the street reconstruction bonds issued in 2010. Net assets restricted for tax increment purposes decreased $147,548. Unrestricted net assets decreased $3,423,994. Liabilities increased $920,608, or 3.7%, in 2010. This was primarily due to the same reason indicated above; the refinancing of the 2002A G.O. Library Bonds into the street reconstruction bonds issued in 2010. 19 Managements Discussion and Analysis ’ Business-Type Activities The net assets of the City’s business-type activities decreased by $337,792, or 0.5%. Amounts invested in capital assets, net of related debt increased $1,531,421 and unrestricted net assets decreased $1,869,213, due to amounts expended for various infrastructure projects. City of Chanhassen, Minnesota's Changes in Net Assets Governmental ActivitiesBusiness-Type ActivitiesTotals 201020092010200920102009 Revenues: Program revenues: Charges for services$2,644,543$2,272,423$5,328,680$5,580,042$7,973,223$7,852,465 Operating grants and contributions414,654363,5402,9845,332417,638368,872 Capital grants and contributions4,175,6551,265,2871,593,2891,684,9825,768,9442,950,269 General revenues: Property taxes10,014,6849,921,598 - - 10,014,6849,921,598 Tax increment collections539,523473,674 - - 539,523473,674 Grants and contributions not restricted to specific programs45,76727,612 - - 45,76727,612 Unrestricted investment earnings222,719357,953114,349141,070337,068499,023 Miscellaneous - - 33,64410,54933,64410,549 Gain on sale of capital assets20,7274,524 - - 20,7274,524 Total revenues18,078,27214,686,6117,072,9467,421,97525,151,21822,108,586 Expenses: General government2,898,6082,597,147 - - 2,898,6082,597,147 Public safety3,227,3963,158,465 - - 3,227,3963,158,465 Public works6,308,0239,123,165 - - 6,308,0239,123,165 Parks and recreation3,046,7183,663,124 - - 3,046,7183,663,124 Community development879,048628,339 - - 879,048628,339 Interest on long-term debt880,3841,031,567 - - 880,3841,031,567 Water - - 3,443,5833,311,1293,443,5833,311,129 Sewer - - 3,252,5103,276,0423,252,5103,276,042 Surface water management - - 1,202,5561,093,1651,202,5561,093,165 Total expenses 17,240,17720,201,8077,898,6497,680,33625,138,82627,882,143 Increase in net assets before transfers838,095(5,515,196)(825,703)(258,361)12,392(5,773,557) Transfers(487,911)774,746487,911(774,746) - - Change in net assets350,184(4,740,450)(337,792)(1,033,107)12,392(5,773,557) Net assets - beginning93,829,87798,570,32767,625,96868,659,075161,455,845167,229,402 Net assets - ending$94,180,061$93,829,877$67,288,176$67,625,968$161,468,237$161,455,845 20 Managements Discussion and Analysis ’ Governmental Activities Revenues Revenues for the City’s governmental activities increased by $3,391,661, or 23%. Capital grants and contributions increased by approximately $2.9 million. The increase was caused by new special assessment rolls created in 2010, in the amount of approximately $1.4 million. The remaining increase was from larger developer contributions for infrastructure projects than recorded the previous year. Expenses Expenses for the City’s governmental activities decreased by $2,961,630, or 14.7%. The increase in the previous year which had been attributed to expenses related to the construction of the public works facility, was reversed in the current year because those same expenses did not occur due to the completion of the building. Below are specific graphs which provide comparisons of the governmental activities revenues and expenses: Grants and contributions not Governmental Activities -Revenues restricted to specific programs Tax increment collections 3.0% 0.3% Gain on sale of capital assets 0.1% Unrestricted investment earnings 1.2% Charges for services 14.6% Property taxes 55.4% Operating grants and contributions 2.3% Capital grants and contributions 23.1% 21 Managements Discussion and Analysis ’ Interest on long-term debt Governmental Activities -ExpensesGovernmental Activities -Expenses 5.1% Community development General government 5.1% 16.8% Publicsafety 18.7% Parks and recreation 17.7% Public works 36.6% Business-Type Activities Revenues Revenues for the City’s business-type activities decreased by $349,029, or 4.7%. This decrease was primarily due to lower water consumption and related water billings from a wetter summer as compared to 2009. In addition to the decrease in revenues mentioned above, transfers to business-type activities on the statement of activities went from $(774,746) in 2009 to $487,911 in 2010. This net increase in transfers was attributed to additional contributed capital assets from governmental funds in 2010. Expenses The City’s expenses for business-type activities increased by $218,313, or 2.8%. There are no specific significant items that can be attributed to the increases in expenses during 2010. 22 Managements Discussion and Analysis ’ Below are specific graphs showing the business-type activities revenue and expense comparisons: Unrestricted investment Miscellaneous 0.6% earnings 1.6% Business-TypeActivities -Revenue Capital grants and contributions 22.5% Operating grants and contributions 0.0% Charges for services 75.3% Business-Type Activities -Expenses Surface Water 15.2% Water 43.6% Sewer 41.2% 23 Managements Discussion and Analysis ’ Financial Analysis of the Government's Funds Governmental Funds . The focus of the City of Chanhassen, Minnesota’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 Chanhassen, Minnesota’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. At the end of the current fiscal year, the City of Chanhassen, Minnesota’s governmental funds reported combined ending fund balances of $20,052,289. Approximately 66.5% of this total amount ($13,324,127) constitutes unreserved, but designated, fund balance. The reserved portion of the fund balance ($5,697,189) has already been committed 1) to provide for prepaid items ($63,035), 2) for future programs ($42,238), and 3) to pay debt service ($5,591,916). The General Fund increased by $395,759 in 2010. The increase was the outcome of permit revenue in excess of anticipated collections of approximately $200,000 and reduced spending across all departments of approximately $188,000. The 2009A G.O. Refunding Bonds debt service fund increased by $194,438, which was due to additional special assessment receivables and reallocation of property tax collections from the closed fund (364, 2005A G.O. Improvement Bonds) now accounted for in this fund. The Transit Station Assessment Fund decreased by $729,921, which was due to an interfund loan payable to the Water fund. The Revolving Assessment Fund decreased by $3,910,664. The decrease was related to the significant increase in transfers out for costs associated with construction projects accounted for in other funds. In addition, there were considerable capital outlay expenditures for street reconstruction projects in 2010 which were larger than previous years street reconstruction projects. The nonmajor special revenue funds increased by $1,419,918 in 2010. The increase was due to the creation of the Economic Development Authority fund in 2010. This fund was created to finance street reconstruction improvements to Audubon Road. The nonmajor debt service funds increased by $2,498,360 in 2010. This was attributed to the refinancing of the 2002A G.O. Library Bonds into the street reconstruction bonds issued in 2010. The nonmajor capital project funds increased by $1,931,530. The increase was significantly due to the reclassification of major funds within this fund type. 24 Managements Discussion and Analysis ’ Proprietary funds . The City of Chanhassen, Minnesota’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The unrestricted net assets in the respective proprietary funds are water $4,989,430, sewer $3,996,393 and surface water management $1,274,013. The water fund had an increase in net assets in 2010 of $165,638 while the sewer and surface water management funds had decreases in net assets of $80,522 and $422,908, respectively. Budgetary Highlights General Fund There were no budget amendments to the General Fund in 2010. Budgetary Variances – Revenues The positive general fund revenue variance of $207,365 was mostly due to building permit revenues in excess of anticipated collections. Budgetary Variances – Expenses The City’s expenses for the general fund had a positive variance of $188,394, which was 2.0% of the City’s total budget. There was not one department that significantly or solely attributed to this decrease, rather it was a joint effort across all departments. 25 Managements Discussion and Analysis ’ Capital Asset and Debt Administration Capital assets . The City of Chanhassen, Minnesota’s, investment in capital assets for its governmental and business type activities as of December 31, 2010, amounts to $160,239,223 (net of accumulated depreciation). This investment in capital assets includes land, buildings, infrastructure, machinery, and equipment. City of Chanhassen, Minnesota’s Capital Assets (Net of Depreciation ) BeginningEnding Primary Government BalanceIncreaseDecreaseBalance Governmental activities: Capital assets not being depreciated: Land$17,024,758$1,685,054$ - $18,709,812 Construction in progress7,976,1072,015,093(7,734,260)2,256,940 Permanent easements - 358,501 - 358,501 Total capital assets not being depreciated25,000,8654,058,648(7,734,260)21,325,253 Capital assets being depreciated: Buildings and structures15,472,4168,009,309 - 23,481,725 Machinery and equipment7,139,997233,142(223,819)7,149,320 Other improvements 5,209,068264,400(12,446)5,461,022 Infrastructure107,074,228499,902 - 107,574,130 Total capital assets being depreciated134,895,7099,006,753(236,265)143,666,197 Less accumulated depreciation for: Buildings and structures4,461,169381,301 - 4,842,470 Machinery and equipment4,556,414437,650(213,871)4,780,193 Other improvements 1,761,782223,108(12,446)1,972,444 Infrastructure57,006,0104,174,130 - 61,180,140 Total accumulated depreciation67,785,3755,216,189(226,317)72,775,247 Governmental activities capital assets - net$92,111,199$7,849,212($7,744,208)$92,216,203 BeginningEnding Primary Government BalanceIncreaseDecreaseBalance Business-type activities: Capital assets not being depreciated: Land$1,984,044$13,391$ - $1,997,435 Construction in progress1,165,6311,678,873(812,775)2,031,729 Permanent easements - 107,225 - 107,225 Total capital assets not being depreciated3,149,6751,799,489(812,775)4,136,389 Capital assets being depreciated: Buildings and structures12,445,429 - - 12,445,429 Machinery and equipment2,362,35546,447 - 2,408,802 Other improvements 94,447,2393,005,981(4,598)97,448,622 Total capital assets being depreciated109,255,0233,052,428(4,598)112,302,853 Less accumulated depreciation for: Buildings and structures498,500248,909 - 747,409 Machinery and equipment1,176,653160,635 - 1,337,288 Other improvements 43,537,6262,798,497(4,598)46,331,525 Total accumulated depreciation45,212,7793,208,041(4,598)48,416,222 Business-type activities capital assets - net67,191,9191,643,876(812,775)68,023,020 Total capital assets - net$159,303,118$9,493,088($8,556,983)$160,239,223 Additional information on the City of Chanhassen, Minnesota’s capital assets can be found in Note 4. 26 Managements Discussion and Analysis ’ Governmental Activities Capital Assets. There was not a significant increase or decrease in the ending balance of governmental activity capital assets. The one significant change from the previous year was a reclassification of the Public Works Building from a construction in progress asset to a fully capitalized asset. Business-Type Activities Capital Assets. In 2010, there was approximately a $1 million net increase in capital assets in Business-Type Activities. The increase is attributed to an increase in construction in progress assets contributed from Governmental Activities as compared to the previous year, mostly due to street reconstruction projects which occurred in 2010. Long-term debt . At the end of the current fiscal year, the City of Chanhassen, Minnesota had total bonds payable outstanding of $34,750,000, an increase of $2,090,000 from 2009. The increase is attributed to the refinancing of the 2002A G.O. Library Bonds into the street reconstruction bonds issued in 2010. The balance of the bonds payable outstanding is comprised of: $15,550,000 in general obligation bonds, $7,115,000 for special assessment debt which is supported in part by special assessments, $10,955,000 of revenue bonds which financed capital investments for the water, sewer, and surface water management operations and $900,000 in tax increment bonds. Additional long-term debt in the amount of $948,046 for compensated absences was also outstanding at the end of 2010. City of Chanhassen, Minnesota’s Outstanding Debt Governmental ActivitiesBusiness-Type ActivitiesTotals 201020092010200920102009 General obligation bonds$15,550,000$13,045,000$ - $ - $15,550,000$13,045,000 Revenue bonds230,000335,00010,955,00011,695,00011,185,00012,030,000 Tax increment bonds900,000960,000 - - 900,000960,000 General improvement bonds 7,115,0006,625,000 - - 7,115,0006,625,000 Compensated absences830,263760,414117,783108,997948,046869,411 Total$24,625,263$21,725,414$11,072,783$11,803,997$35,698,046$33,529,411 The City’s bond rating was reaffirmed in 2010 by Standard & Poor’s when the City issued the street reconstruction bonds. The City of Chanhassen is one of only 13 communities in the State of Minnesota to have a AAA bond rating from either Standard & Poor’s or Moody’s. State statutes limit the amount of general obligation debt a Minnesota city may issue to 3% of the total estimated market value. The current debt limitation for the City of Chanhassen, Minnesota is $104,755,254. Of the City's outstanding debt, $14,521,831 is counted within the statutory limitation. Additional information on the City of Chanhassen, Minnesota’s long-term debt can be found in Note 5. Managements Discussion and Analysis ’ Requests for information. This financial report is designed to provide a general overview of the City of Chanhassen, Minnesota’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Director of Finance, 7700 Market Boulevard, P.O. Box 147, Chanhassen, Minnesota 55317. 28 BASIC FINANCIAL STATEMENTS 29 - This page intentionally left blank - 30 CITY OF CHANHASSEN, MINNESOTA STATEMENT OF NET ASSETS Statement 1 December 31, 2010 With Comparative Totals For December 31, 2009 Primary Government GovernmentalBusiness-TypeTotals Assets:ActivitiesActivities20102009 Cash and investments$17,273,683$8,626,127$25,899,810$31,747,987 Cash with escrow agent3,879,306 - 3,879,306 - Accrued interest receivable80,50044,666125,166244,784 Due from other governmental units146,9412,984149,92556,795 Accounts receivable - net120,944993,3661,114,3101,214,127 Property taxes receivable376,257 - 376,257661,875 Special assessments receivable6,728,248244,6236,972,8715,451,912 Prepaid items63,03513,55176,58656,367 Internal balances(729,253)729,253 - - Inventories - at cost - 27,22627,22620,213 Capital assets (net of accumulated depreciation): Nondepreciable21,325,2534,136,38925,461,64228,150,540 Depreciable70,890,95063,886,631134,777,581131,152,578 Total assets120,155,86478,704,816198,860,680198,757,178 Liabilities: Accounts payable234,59054,103288,693482,685 Due to other governmental units110,27042,574152,8441,801,742 Salaries payable100,29618,378118,674222,266 Contracts payable388,99343,087432,080644,933 Accrued interest payable356,342185,715542,057573,257 Unearned revenue150,457 - 150,45740,107 Compensated absences payable: Due within one year42,5386,03448,57250,911 Due in more than one year787,725111,749899,474818,500 Other post employment benefits payable: Due in more than one year9,592 - 9,5926,932 Bonds payable: Due within one year1,025,000700,0001,725,0002,620,000 Due in more than one year22,770,00010,255,00033,025,00030,040,000 Total liabilities25,975,80311,416,64037,392,44337,301,333 Net assets: Invested in capital assets, net of related debt73,272,45057,028,340130,300,790127,603,117 Restricted for: Debt service9,217,254 - 9,217,2546,461,780 Tax increment purposes693,309 - 693,309840,857 Unrestricted10,997,04810,259,83621,256,88426,550,091 Total net assets$94,180,061$67,288,176$161,468,237$161,455,845 The accompanying notes are an integral part of these financial statements. 31 CITY OF CHANHASSEN, MINNESOTA STATEMENT OF ACTIVITIES For The Year Ended December 31, 2010 With Comparative Totals For The Year Ended December 31, 2009 Charges For Functions/ProgramsExpensesServices Primary government: Governmental activities: General government$2,898,608$572,434 Public safety3,227,3961,158,060 Public works6,308,023183,185 Parks and recreation3,046,718713,721 Community development879,04817,143 Interest and fees on long-term debt880,384 - Total governmental activities17,240,1772,644,543 Business-type activities: Water3,443,5832,424,634 Sewer3,252,5102,365,358 Surface water management1,202,556538,688 Total business-type activities7,898,6495,328,680 Total primary government$25,138,826$7,973,223 The accompanying notes are an integral part of these financial statements. 32 Statement 2 Net (Expense) Revenue and Program RevenuesChanges in Net Assets Primary Government OperatingCapital Totals Grants andGrants andGovernmentalBusiness-Type ContributionsContributionsActivitiesActivities20102009 $10,600$ - ($2,315,574)$ - ($2,315,574)($2,057,216) 282,269 - (1,787,067) - (1,787,067)(1,764,006) 100,0004,175,655(1,849,183) - (1,849,183)(7,585,909) 21,785 - (2,311,212) - (2,311,212)(3,252,694) - -(861,905) - (861,905)(609,165) - -(880,384) - (880,384)(1,031,567) 414,6544,175,655(10,005,325)0(10,005,325)(16,300,557) -867,655 - (151,294)(151,294)402,298 -410,958 - (476,194)(476,194)(402,836) 2,984314,676 - (346,208)(346,208)(409,442) 2,9841,593,2890(973,696)(973,696)(409,980) $417,638$5,768,944(10,005,325)(973,696)(10,979,021)(16,710,537) General revenues: General property taxes10,014,684 - 10,014,6849,921,598 Tax increment collections539,523 - 539,523473,674 Grants and contributions not restricted to specific programs45,767 -45,76727,612 Unrestricted investment earnings222,719114,349337,068499,023 Gain on sale of capital assets20,727 -20,7274,524 Miscellaneous -33,64433,64410,549 Transfers(487,911)487,911 - - Total general revenues and transfers10,355,509635,90410,991,41310,936,980 Change in net assets350,184(337,792)12,392(5,773,557) Net assets - beginning93,829,87767,625,968161,455,845167,229,402 Net assets - ending$94,180,061$67,288,176$161,468,237$161,455,845 The accompanying notes are an integral part of these financial statements. 33 CITY OF CHANHASSEN, MINNESOTA BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2010 With Comparative Totals For December 31, 2009 368 2009A G.O. 413 Transit Station Refunding BondsAssessment Fund General Fund Assets: Cash and investments$5,318,022$535,580$ - Cash with escrow agent - - - Accrued interest receivable19,0151,477 - Due from other governmental units40,123856 - Accounts receivable - net43,297 - - Due from other funds - - - Property taxes receivable340,1813,254 - Special assessments receivable2,0143,541,632769,362 Prepaid items55,826 - - Total assets$5,818,478$4,082,799$769,362 Liabilities and Fund Balances Liabilities: Accounts payable$119,503$ - $ - Due to other governmental units110,126 - - Due to other funds - - 668 Salaries payable98,728 - - Contracts payable - - - Interfund loan payable - - 729,253 Deferred revenue220,5033,537,763769,362 Total liabilities548,8603,537,7631,499,283 Fund balances: Reserved for: Prepaid items55,826 - - Future programs - - - Debt service -545,036 - Unreserved reported in: Designated: General Fund3,754,000 - - Special Revenue Funds - - - Capital Project Funds - - - Undesignated reported in: General Fund1,459,792 - - Debt Service Funds - - - Capital Project Funds - - (729,921) Total fund balances5,269,618545,036(729,921) Total liabilities and fund balances$5,818,478$4,082,799$769,362 Fund balance reported above Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources, and therefore, are not reported in the funds. Other long-term assets are not available to pay for current- period expenditures and, therefore, are deferred in the funds. Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds. et assets of governmental activities N The accompanying notes are an integral part of these financial statements. 34 Statement 3 601 Revolving Other Governmental Intra Activity Assessment FundFundsElimination Totals Governmental Funds 20102009 $333,238$11,086,843$ -$17,273,683$20,854,264 -3,879,306 -3,879,306 - 14,55545,453 -80,500163,027 -105,962 -146,94152,525 -77,647 -120,94479,575 -39,030(39,030) - - 2,44730,375 -376,257661,875 2,175,638239,602 -6,728,2485,265,905 -7,209 -63,03547,071 $2,525,878$15,511,427($39,030)$28,668,914$27,124,242 $24,625$90,462$ -$234,590$389,471 -144 -110,2701,745,298 -38,362(39,030) -350,369 -1,568 -100,296188,433 384,6654,328 -388,993584,348 - - -729,253 - 2,172,876352,719 -7,053,2235,613,454 2,582,166487,583(39,030)8,616,6258,871,373 -7,209 -63,03547,071 -42,238 -42,23836,332 -5,046,880 -5,591,9162,913,631 - - -3,754,0003,690,000 -2,082,929 -2,082,929668,992 -7,487,198 -7,487,19811,418,006 - - -1,459,7921,137,109 -357,390 -357,390342,877 (56,288) - -(786,209)(2,001,149) (56,288)15,023,844020,052,28918,252,869 $2,525,878$15,511,427($39,030)$28,668,914$27,124,242 $20,052,289$18,252,869 92,216,20392,111,199 6,902,7665,573,497 (24,991,197)(22,107,688) $94,180,061$93,829,877 The accompanying notes are an integral part of these financial statements. 35 CITY OF CHANHASSEN, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For The Year Ended December 31, 2010 With Comparative Totals For The Year Ended December 31, 2009 413 Transit 368 2009A G.O. Station General FundRefunding BondsAssessment Fund Revenues: General property taxes$7,307,978$337,500$ - Tax increment collections - - - Licenses and permits1,066,552 - - Intergovernmental277,51316,269 - Special assessments - 262,591 - Charges for services596,953 - - Fines and forfeits123,609 - - Investment income37,587 - - Contributions and donations35,285 - - Refunds and reimbursements107,416 - - Other211,872 - - Total revenues9,764,765 616,360 0 Expenditures: Current: General government1,881,184 - 303,373 Public safety2,972,998 - - Public works2,186,107 - - Parks and recreation1,854,348 - - Community development424,369 - - Capital outlay: General government - - 426,548 Public safety - - - Public works - - - Parks and recreation - - - Debt service: Principal - 215,000 - Interest and paying agent fees - 206,922 - Bond issuance costs - - - Developer assistance - - - Total expenditures9,319,006 421,922 729,921 Revenues over (under) expenditures445,759 194,438 (729,921) Other financing sources (uses): Bond premium - - - Bonds issued - - - Refunding bonds issued - - - Redemption of refunded bonds - - - Transfers in - - - Transfers out(50,000) - - Sale of capital assets - - - Total other financing sources (uses)(50,000)0 0 Net change in fund balance395,759 194,438 (729,921) Fund balance - January 14,873,859350,598 - Fund balance - December 31$5,269,618$545,036($729,921) The accompanying notes are an integral part of these financial statements. 36 Statement 4 601 Revolving Other Governmental Intra Activity Assessment FundFundsEliminations Totals Governmental Funds 20102009 $253,795$2,241,895$ -$10,141,168$9,834,389 -539,523 -539,523473,674 -264,822 -1,331,3741,085,754 -107,768 -401,550397,438 453,49574,340 -790,426540,151 -326,597 -923,550950,760 - - -123,609122,496 32,144152,988 -222,719357,953 -22,731 -58,01647,206 -25,200 -132,61661,707 -1,400 -213,272170,688 739,434 3,757,264 0 14,877,823 14,042,216 -340,769 -2,525,3262,070,698 -104,040 -3,077,0382,979,044 309,893243,704 -2,739,7045,710,804 -47,216 -1,901,5642,487,985 -274,449 -698,818527,919 -47,205 -473,753143,663 -65,667 -65,66755,152 3,498,355497,089 -3,995,4448,179,324 -490,737 -490,737235,292 230,0001,925,000 -2,370,0002,553,002 6,417675,504 -888,843920,529 6,85039,655 -46,50573,182 -176,643 -176,64390,354 4,051,515 4,927,678 0 19,450,042 26,026,948 (3,312,081)(1,170,414)0 (4,572,219)(11,984,732) -35,964 -35,964226,991 1,540,000 - -1,540,000 - -3,660,000 -3,660,0006,020,000 - - - -(8,387,123) 286,4174,538,660(3,720,077)1,105,0001,324,015 (2,425,000)(1,245,077)3,720,077 - - -30,675 -30,67516,274 (598,583)7,020,222 0 6,371,639 (799,843) (3,910,664)5,849,808 0 1,799,420 (12,784,575) 3,854,3769,174,036 -18,252,86931,037,444 ($56,288)$15,023,844$0$20,052,289$18,252,869 The accompanying notes are an integral part of these financial statements. 37 CITY OF CHANHASSEN, MINNESOTA RECONCILIATION OF THE STATEMENT OF REVENUES,Statement 5 EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For The Year Ended December 31, 2010 With Comparative Totals For The Year Ended December 31, 2009 20102009 Amounts reported for governmental activities in the statement of activities (Statement 2) are different because: Net changes in fund balances - total governmental funds (Statement 4)$1,799,420($12,784,575) Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays differ from depreciation in the current period.(190,588)3,529,917 The net effect of various miscellaneous transactions involving capital assets is to increase (decrease) net assets.295,592(135,925) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds.1,329,26940,463 The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. This amount is the net effect of these differences in the treatment of long-term debt and related items.(2,830,000)4,920,125 Other post employment benefits in the statement of activities does not require the use of current financial resources and, therefore, is not reported as expenditures in governmental funds.(2,660)(3,129) 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.(50,849)(307,326) Change in net assets of governmental activities (Statement 2)$350,184($4,740,450) The accompanying notes are an integral part of these financial statements. 38 CITY OF CHANHASSEN, MINNESOTA Statement 6 STATEMENT OF NET ASSETS PROPRIETARY FUNDS December 31, 2010 With Comparative Totals For December 31, 2009 Surface Water WaterSewerManagementTotals Assets:20102009 Current assets: Cash and cash equivalents$3,880,421$3,553,393$1,192,313$8,626,127$10,893,723 Accrued interest receivable19,66915,9379,06044,66681,757 Due from other governmental units - - 2,9842,9844,270 Accounts receivable - net441,511456,39195,464993,3661,134,552 Due from other funds - - - - 350,369 Interfund loan receivable729,253 - - 729,253 - Special assessments receivable34,26015,392 - 49,65266,899 Connection charges receivable136,43858,533 - 194,971119,108 Prepaid items5,9654,5613,02513,5519,296 Water meter inventory27,226 - - 27,22620,213 Total current assets5,274,743 4,104,207 1,302,846 10,681,796 12,680,187 Noncurrent assets: Capital assets: Land1,370,974145,550480,9111,997,4351,984,044 Easements35,74935,73835,738107,225 - Buildings and structures12,445,429 - - 12,445,42912,445,429 Machinery and equipment1,915,567475,25217,9832,408,8022,362,355 Other improvements41,903,84132,121,32423,423,45797,448,62294,447,239 Construction in progress574,497368,0931,089,1392,031,7291,165,631 Total capital assets58,246,057 33,145,957 25,047,228 116,439,242 112,404,698 Less: Allowance for depreciation(20,616,638)(17,574,333)(10,225,251)(48,416,222)(45,212,779) Net capital assets37,629,41915,571,62414,821,97768,023,02067,191,919 Total assets42,904,16219,675,83116,124,82378,704,81679,872,106 Liabilities: Current liabilities: Accounts payable38,68610,3475,07054,10393,214 Due to other governmental units4,17438,400 - 42,57456,444 Salaries payable8,9745,6803,72418,37833,833 Contracts payable18,0493,40821,63043,08760,585 Accrued interest payable183,1402,575 - 185,715197,915 Unearned revenue - - - - 150 Compensated absences payable - due within one year2,5782,4291,0276,0346,382 Bonds payable - due within one year635,00065,000 - 700,000740,000 Total current liabilities890,601 127,839 31,451 1,049,891 1,188,523 Noncurrent liabilities: Compensated absences payable - due in more than one year 47,76244,97519,012111,749102,615 Bonds payable - due in more than one year10,185,00070,000 - 10,255,00010,955,000 Total noncurrent liabilities10,232,762 114,975 19,012 10,366,749 11,057,615 Total liabilities11,123,363242,81450,46311,416,64012,246,138 Net assets: Invested in capital assets, net of related debt26,791,36915,436,62414,800,34757,028,34055,496,919 Unrestricted4,989,4303,996,3931,274,01310,259,83612,129,049 Total net assets$31,780,799$19,433,017$16,074,360$67,288,176$67,625,968 The accompanying notes are an integral part of these financial statements. 39 CITY OF CHANHASSEN, MINNESOTA STATEMENT OF REVENUES, EXPENSES AND Statement 7 CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS For The Year Ended December 31, 2010 With Comparative Totals For The Year Ended December 31, 2009 Surface Water WaterSewerManagement Totals 20102009 Operating revenues: Charges for services$2,332,767$2,308,928$526,660$5,168,355$5,401,343 Penalties and other91,86756,43012,028160,325178,699 Total operating revenues2,424,634 2,365,358 538,688 5,328,680 5,580,042 Operating expenses: Personal services522,654343,400226,0501,092,1041,087,883 Materials and supplies269,37343,68431,092344,149286,067 Contractual services: MCES - 1,386,052 - 1,386,0521,311,819 Other384,349379,372191,215954,936945,268 Repairs and maintenance332,326129,071 - 461,397565,550 Depreciation1,492,476963,849741,2313,197,5562,983,748 Total operating expenses3,001,178 3,245,428 1,189,588 7,436,194 7,180,335 Operating income (loss)(576,544)(880,070)(650,900)(2,107,514)(1,600,293) Nonoperating revenues (expenses): Investment income49,75242,60221,995114,349141,070 Intergovernmental - - 2,9842,9849,156 Special assessment revenue103,53837,901 - 141,43959,434 Interest and fiscal charges(442,405)(7,082) - (449,487)(478,686) Gain (loss) on disposal of capital assets - - - - (21,315) Miscellaneous 19,8016,2227,62133,6446,725 Reassignment of capital assets to govtl activities - - (12,968)(12,968) - Total nonoperating revenues (expenses)(269,314)79,643 19,632 (170,039)(283,616) Income before contributions and transfers(845,858)(800,427)(631,268)(2,277,553)(1,883,909) Transfer out (250,000)(50,000)(805,000)(1,105,000)(1,324,015) Capital contributions: Contributions of capital assets612,076525,685901,5862,039,3471,017,053 Connection charges649,420244,220111,7741,005,4141,157,764 Total contributions and transfers1,011,496719,905208,3601,939,761850,802 Change in net assets165,638 (80,522)(422,908)(337,792)(1,033,107) Net assets - January 131,615,16119,513,53916,497,26867,625,96868,659,075 et assets - December 31$31,780,799$19,433,017$16,074,360$67,288,176$67,625,968 N CapitalTransfers - ContributionsNet Amounts reported above$3,044,761($1,105,000) Amounts reported for business-type activities in the statement of activities are different because: Transfer in of capital assets from governmental activities(1,592,911)1,592,911 Amounts reported on the statement of activities$1,451,850$487,911 The accompanying notes are an integral part of these financial statements. 40 CITY OF CHANHASSEN, MINNESOTA Statement 8 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For The Year Ended December 31, 2010 With Comparative Totals For The Year Ended December 31, 2009 Surface Water WaterSewerManagementTotals 20102009 Cash flows from operating activities: Receipts from customers and users$2,516,918$2,410,366$543,718$5,471,002$5,471,156 Payment to suppliers(1,019,938)(1,952,582)(238,263)(3,210,783)(3,244,139) Payment to employees(526,167)(345,930)(226,676)(1,098,773)(1,092,055) Operating grant - - 2,9842,9849,156 Miscellaneous revenue19,8016,2227,62133,6446,725 Net cash flows provided by operating activities990,614118,07689,3841,198,0741,150,843 Cash flows from noncapital financing activities: Transfers out(250,000)(50,000)(805,000)(1,105,000)(1,324,015) Decrease in due from other funds350,369 - - 350,369(350,369) (Increase) in interfund receivable(729,253) - - (729,253) - Net cash flows provided by (used in) noncapital financing activities(628,884)(50,000)(805,000)(1,483,884)(1,674,384) Cash flows from capital and related financing activities: Acquisition of capital assets(1,790,799)(16,592)(212,385)(2,019,776)(1,270,302) Proceeds from sale of capital asset - - - - 3,999 Connection charges594,404223,373111,774929,5511,237,242 Special assessment revenue118,12140,565 - 158,68657,056 Principal paid on bonds(610,000)(130,000) - (740,000)(720,000) Interest and fiscal charges(452,249)(9,438) - (461,687)(490,482) Net cash flows provided by (used in) capital and related financing activities(2,140,523)107,908(100,611)(2,133,226)(1,182,487) Cash flows from investing activities: Investment income66,69054,03430,716151,440207,762 Net (decrease) in cash and cash equivalents(1,712,103)230,018(785,511)(2,267,596)(1,498,266) Cash and cash equivalents - January 15,592,5243,323,3751,977,82410,893,72312,391,989 Cash and cash equivalents - December 31$3,880,421 $3,553,393 $1,192,313 $8,626,127 $10,893,723 Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) ($576,544)($880,070)($650,900)($2,107,514)($1,600,293) Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Miscellaneous revenue (expense)19,8016,2227,62133,6446,725 Operating grant - - 2,9842,9849,156 Depreciation1,492,476963,849741,2313,197,5562,983,748 Changes in assets and liabilities: Decrease (increase) in receivables92,28445,0085,180142,472(100,455) (Increase) in prepaid items(1,976)(1,432)(847)(4,255)(6,956) Decrease (increase) in inventory(7,013) - - (7,013)6,227 Increase (decrease) in payables(28,414)(15,501)(15,885)(59,800)(147,309) Total adjustments1,567,158 998,146 740,284 3,305,588 2,751,136 Net cash provided by operating activities$990,614$118,076$89,384$1,198,074$1,150,843 Noncash investing, capital and financing activities: Capital assets in the amount of $612,076 and $131,700 were contributed to the Water Fund in 2010 and 2009, respectively. Capital assets in the amount of $525,685 and $247,275 were contributed to the Sewer Fund in 2010 and 2009, respectively. Capital assets in the amount of $888,618 and $638,078 were contributed to the Surface Water Fund in 2010 and 2009, respectively. The accompanying notes are an integral part of these financial statements. 41 CITY OF CHANHASSEN, MINNESOTA STATEMENT OF NET ASSETS Statement 9 FIDUCIARY FUNDS December 31, 2010 With Comparative Totals For December 31, 2009 Agency Funds 20102009 Assets: Cash and investments$827,135$694,817 Liabilities: Escrow deposits payable$827,135$694,817 The accompanying notes are an integral part of these financial statements. 42 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Chanhassen, Minnesota (the City) was incorporated in 1967 and operates under the State of Minnesota Statutory Plan B form of government. The governing body consists of a five member City council elected by voters of the City. The financial statements of the City have been prepared in conformity with accounting principles generally accepted in the United States of America as applied to governmental units by the Governmental Accounting Standards Board (GASB). The following is a summary of the significant accounting policies. A.FINANCIAL REPORTING ENTITY In accordance with GASB pronouncements and accounting principles generally accepted in the United States of America, the financial statements of the reporting entity should include those of the City (the City) (the primary government) and its component units. The component unit discussed below is included in the City’s reporting entity because of the significance of its operational or financial relationships with the City. COMPONENT UNITS In conformity with accounting principles generally accepted in the United States of America, the financial statements of the component unit have been included in the financial report as a blended component unit. Pursuant to the authorization of Minnesota Statutes Section 469.094, on April 28, 1997 the City transferred to the Economic Development Authority of the City all activities, programs, operations, and authority of the existing City Housing and Redevelopment Authority (HRA). The Economic Development Authority (EDA), an entity legally separate from the City, is governed by a board which is substantially the same as the City Council. The City is in a relationship of financial benefit or burden with the EDA. Separate financial statements for the EDA are not prepared. JOINTLY GOVERNED ORGANIZATIONS Southwest Area Transit Commission. The City, in conjunction with the Cities of Eden Prairie and Chaska, has agreed to establish the Southwest Area Transit Commission (the Commission). The purpose of the Commission is to provide alternative methods of public transit service to the three cities. The Commission’s board is composed of two commissioners from each of the cities. . The City is a member of a joint powers Western Area Fire Training Association (WAFTA) group along with ten other communities. WAFTA operates a fire training facility in western Carver County. The site has been identified by the Minnesota Pollution Control Agency (MPCA) as contaminated, potentially requiring clean-up. At this time, there is not an estimated dollar amount of the cost to remediate the site nor has a claim been asserted against WAFTA or the City. 43 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS The government-wide financial statements (i.e., the statement of net assets and the statement of changes in net assets) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or business-type activity, are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or business-type activity. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or business-type activity and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or business-type activity. Taxes and other items not included among program revenues are reported instead of general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C.MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. The City’s only fiduciary funds are agency funds. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers all revenues, except reimbursement grants, to be available if they are collected within 60 days of the end of the current fiscal period. Reimbursement grants are considered available if they are collected within one year of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. 44 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Property taxes, special assessments, intergovernmental revenues, charges for services and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City. The City reports the following major governmental funds: General Fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. 2009A General Obligation Improvement Bond Fund (368) accounts for the accumulation of resources for payment of the general obligation bonds issued to finance utility improvements. Transit Station Assessment Fund (413) accounts for the interfund loan from the water fund to fund costs associated with the redevelopment of the Dinner Theater Transit Station in TIF#10, and for the repayment of the special assessment from Bloomberg Companies to repay those costs. Revolving Assessment Fund (601) accounts for the City’s annual street re-construction program. The individual property owner will pay a portion of the cost of the annual project with assessments and the City will fund their portion with the reserves created in this fund and an annual tax levy in future years. The City reports the following major proprietary funds: The W ater Fund accounts for the water service charges which are used to finance the water system operating expenses. The S ewer Fund accounts for the sewer service charges which are used to finance the sanitary sewer system operating expenses. The S urface Water Management Fund accounts for the surface water charges which are used to finance the surface water system operating expenses. Additionally, the City reports the following fund type: Agency funds account for the assets of various escrow deposits and the Moon Valley Restoration Funds held by the City in a trustee capacity or as an agent. Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private- sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The City has elected not to follow subsequent private-sector guidance. 45 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are transactions that would be treated as revenues, expenditures or expenses if they involved external organizations, such as buying goods and services or payments in lieu of taxes, are similarly treated when they involve other funds of the City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary Funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the water, sewer, and surface water management enterprise funds are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for an allowable use, it is the City’s policy to use restricted resources first, then unrestricted resources as they are needed. D.BUDGETS Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. Annual appropriated budgets are adopted for the General Fund and for the Contribution and CATV Special Revenue Funds. Budgeted amounts are reported as originally adopted, or as amended by the City Council. There were no budget amendments during 2010. Budgeted expenditure appropriations lapse at year end. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the appropriation, is not employed by the City because it is at present not considered necessary to assure effective budgetary control or to facilitate effective cash management. E.LEGAL COMPLIANCE - BUDGETS The City follows these procedures in establishing the budgetary data reflected in the financial statements: 1. The City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following January 1. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted to obtain taxpayer comments. 46 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 3. The budget is legally enacted through passage of a resolution. 4. Management may authorize transfer of budgeted amounts between departments within any fund. All budget amendments between funds must be approved by the City Council. The legal level of budgetary control is at the fund level. Budgetary monitoring, by departments or divisions and by category, is required by the City policy. 5. Formal budgetary integration is employed as a management control device during the year for the General Fund and Special Revenue Funds. Formal budgetary integration is not employed for Debt Service Funds because effective budgetary control is alternatively achieved through general obligation bond indenture provisions. Budgetary control for Capital Projects Funds is accomplished through the use of project controls. During 2010, the CATV Special Revenue Fund had expenditures of $138,674, which exceeded budgeted expenditures of $93,700 by $44,974. F.CASH AND INVESTMENTS Cash and investment balances from all funds are pooled and invested to the extent available in authorized investments. Investment income is allocated to individual funds on the basis of the fund's equity in the cash and investment pool. The City provides temporary advances to funds that have insufficient cash balances by means of an advance from another fund shown as interfund receivable in the advancing fund, and an interfund payable in the fund with the deficit, until adequate resources are received. Investments are stated at fair value, based upon quoted market prices, except for investments in 2a7- like external investment pools, which are stated at amortized cost. Investment income is accrued at the balance sheet date. For purposes of the statement of cash flows, the Proprietary Funds consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. All of the cash and investments allocated to the Proprietary Fund types have original maturities of 90 days or less. Therefore the entire balance in such fund types is considered cash equivalents. G.RECEIVABLES Property taxes and special assessment receivables have been reported net of estimated uncollectible accounts (See Note 1 H and I). Because utility bills are considered liens on property, no estimated uncollectible amounts are established. Uncollectible amounts are not material for other receivables and have not been reported. 47 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 H.PROPERTY TAX REVENUE RECOGNITION The City Council annually adopts a tax levy and certifies it to the County in December (levy/assessment date) of each year for collection in the following year. The County is responsible for billing and collecting all property taxes for itself, the City, the local School District and other taxing authorities. Such taxes become a lien on January 1 and are recorded as receivables by the City at that date. Real property taxes are payable (by property owners) on May 15 and October 15 of each calendar year. Personal property taxes are payable by taxpayers on February 28 and June 30 of each year. These taxes are collected by the County and remitted to the City on or before July 15 and December 15 of the same year. Delinquent collections for November and December are received the following January. The City has no ability to enforce payment of property taxes by property owners. The County possesses this authority. GOVERNMENT-WIDE FINANCIAL STATEMENTS The City recognizes property tax revenue in the period for which taxes were levied. Uncollectible property taxes are not material and have not been reported. GOVERNMENT FUND FINANCIAL STATEMENTS The City recognizes property tax revenue when it becomes both measurable and available to finance expenditures of the current period. In practice, current and delinquent taxes and State credits received by the City in July, December and January are recognized as revenue for the current year. Taxes collected by the County by December 31 (remitted to the City the following January) and taxes and credits not received at year end are classified as delinquent and due from County taxes receivable. The portion of delinquent taxes not collected by the City in January are fully offset by deferred revenue because they are not available to finance current expenditures. The City's property tax revenue includes payments from the Metropolitan Revenue Distribution (Fiscal Disparities Formula) per State Statute 473F. This statute provides a means of spreading a portion of the taxable valuation of commercial/industrial real property to various taxing authorities within the defined metropolitan area. The valuation "shared" is a portion of commercial/industrial property valuation growth since 1971. I.SPECIAL ASSESSMENT REVENUE RECOGNITION Special assessments are levied against benefited properties for the cost or a portion of the cost of special assessment improvement projects in accordance with State Statutes. These assessments are collectible by the City over a term of years usually consistent with the term of the related bond issue. Collection of annual installments (including interest) is handled by the County Auditor in the same manner as property taxes. Property owners are allowed to (and often do) prepay future installments without interest or prepayment penalties. Once a special assessment roll is adopted, the amount attributed to each parcel is a lien upon that property until full payment is made or the amount is determined to be excessive by the City Council or court action. If special assessments are allowed to go delinquent, the property is subject to tax forfeit sale and the first proceeds of that sale (after costs, penalties and expenses of sale) are remitted to the City in payment of delinquent special assessments. Generally, the City will collect the full amount of its special assessments not adjusted by City Council or court action. Pursuant to State Statutes, a 48 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 property shall be subject to a tax forfeit sale after three years unless it is homesteaded, agricultural or seasonal recreational land in which event the property is subject to such sale after five years. GOVERNMENT-WIDE FINANCIAL STATEMENTS The City recognizes special assessment revenue in the period that the assessment roll was adopted by the City Council. Uncollectible special assessments are not material and have not been reported. GOVERNMENT FUND FINANCIAL STATEMENTS Revenue from special assessments is recognized by the City when it becomes measurable and available to finance expenditures of the current fiscal period. In practice, current and delinquent special assessments received by the City are recognized as revenue for the current year. Special assessments are collected by the County and remitted by December 31 (remitted to the City the following January) and are also recognized as revenue for the current year. All remaining delinquent, deferred and special deferred assessments receivable in governmental funds are completely offset by deferred revenues. J.INVENTORIES GOVERNMENTAL FUNDS The original cost of materials and supplies has been recorded as expenditures at the time of purchase. These funds do not maintain material amounts of inventories. PROPRIETARY FUNDS Inventories of the Proprietary Funds are stated at cost, which approximates market, using the first-in, first-out (FIFO) method. K.PREPAID ITEMS Certain prepayments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. Prepaid items are reported using the consumption method and recorded as expenditures/expenses at the time of consumption. L.CAPITAL ASSETS Capital assets, which include property, plant, equipment, infrastructure assets (e.g., roads, trails, sidewalks, and similar items), and intangible assets such as easements and computer software, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of more than $5,000 (except for easements which is $10,000) and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. 49 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 In the case of the initial capitalization of general infrastructure assets, the City chose to include all such items regardless of their acquisition date amount. These assets are reported at historical or estimated historical cost, using the 1987 base highway construction price trend, when historical costs were unavailable. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed.For the year ended December 31, 2010, no interest was capitalized in connection with construction in progress. Property, plant and equipment of the City is depreciated/amortized using the straight line method over the following estimated useful lives: Buildings and structures 20 – 50 years Machinery and equipment (including software) 3 – 30 years Drainage systems 30 years Water and sewer lines 30 years Streets 25 – 50 years Trails 15 years Sidewalks 25 years Other improvements 7 – 40 years Temporary easements 2 years The City implemented GASB 51, Accounting and Financial Reporting for Intangible Assets effective January 1, 2010, which required the City to capitalize and amortize intangible assets. Pursuant to GASB Statement No. 51, the retroactive reporting of permanent easements is not required and therefore, the City has elected not to report permanent easements acquired in years prior to 2010. The City had already accounted for computer software at historical cost and therefore retroactive reporting was not necessary. M.COMPENSATED ABSENCES The City compensates all employees upon termination for unused vacation and unused sick time up to a maximum based upon length of service. The City compensates nonexempt employees for unused comp time. All vacation pay and comp time is accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. In accordance with the provisions of Statement of Government Accounting Standards No. 16, Accounting for Compensated Absences, no liability is recorded for nonvesting accumulating rights to receive sick pay benefits. However, a liability is recognized for that portion of accumulating sick leave benefits that is vested as severance pay. 50 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 The City’s liability for compensated absences at December 31, 2010 is scheduled below: Vacation$496,945 Severance367,066 Comp time84,035 Total compensated absences$948,046 N. LONG-TERM OBLIGATIONS In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are immaterial and are expensed in the year of bond issuance. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. O.FUND EQUITY In the fund financial statements, governmental funds report reservations of fund balance for amounts not appropriable for expenditure or legally segregated for a specific future use. Designated fund balances represent tentative plans for future use of financial resources. P.INTERFUND TRANSACTIONS During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. Interfund services provided and used are accounted for as revenues, expenditures or expenses. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund, are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the fund that is reimbursed. Short-term interfund loans are classified as “due to/from other funds.” All short-term “due to/from other funds” at December 31, 2010 are planned to be eliminated in 2011. Long-term interfund loans are classified as “interfund loan receivable/payable.” Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.” All other interfund transactions are reported as transfers. 51 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Q.USE OF ESTIMATES The preparation of financial statements in accordance with generally accepted accounting principles (GAAP) requires management to make estimates that affect amounts reported in the financial statements during the reporting period. Actual results could differ from such estimates. R.RECLASSIFICATIONS Certain amounts in the prior year have been reclassified to conform with the current year presentation. S.COMPARATIVE TOTALS The basic financial statements and schedules, required supplementary information, and combining and individual fund financial statements include certain prior-year summarized comparative information in total but not at the level of detail required for a presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the government’s financial statements for the year ended December 31, 2009, from which the summarized information was derived. T.RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS 1. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND BALANCE SHEET AND THE GOVERNMENT-WIDE STATEMENT OF NET ASSETS The governmental fund balance sheet includes a reconciliation between fund balances – total governmental funds and net assets – governmental activities as reported in the government-wide statement of net assets. One element of that reconciliation explains that “long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds.” The details of this ($24,991,197) difference are as follows: Bonds payable($23,795,000) Accrued interest payable(356,342) Compensated absences(830,263) Other post employment benefit payable(9,592) Net adjustment to decrease fund balances - total governmental funds to arrive at net assets - governmental activities($24,991,197) 52 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 2.EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES AND THE GOVERNMENT-WIDE STATEMENT OF ACTIVITIES The government fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances – total governmental funds and changes in net assets of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation explains that “governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense.” The details of this ($190,588) difference are as follows: Capital outlay/construction$5,025,601 Depreciation expense(5,216,189) Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities($190,588) Another element of that reconciliation states that “the net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins and donations) is to increase (decrease) net assets.” The details of this $295,592 difference are as follows: Donation of capital assets increase net assets in the statement of activities, but do not appear in the governmental funds because they are not financial resources$1,850,453 Transfer of capital assets to Enterprise Funds.(1,592,911) Construction in progress adjustment47,998 The statement of activities reports losses arising from the trade-in or disposal of existing assets to acquire new capital assets. Conversely, governmental funds do not report any gain or loss on trade-in of capital assets(9,948) Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities$295,592 53 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Another element of that reconciliation states that “revenues on the statement of activities that do not provide current financial resources are not reported as revenues in the funds.” The details of this $1,329,269 difference are as follows: General property taxes deferred revenue: At December 31, 2009($309,594) At December 31, 2010183,110 Special assessments deferred revenue: At December 31, 2009(5,263,903) At December 31, 20106,718,800 Other 2010 revenue has been deferred because it was not collected within 60 days from year-end. At December 31, 2009 - At December 31, 2010856 Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities.$1,329,269 Another element of that reconciliation states that “the issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the long-term debt consumes the current financial resources of governmental funds.” Neither transaction, however, has any effect on net assets. The details of this ($2,830,000) difference are as follows: Debt issued: Bonds issued($5,200,000) Principal repayments: General obligation debt1,155,000 General obligation improvement bonds 1,050,000 General obligation tax increment bonds60,000 Public project revenue bonds105,000 Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities.($2,830,000) 54 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Another element of that reconciliation states that “some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds.” The details of this ($50,849) difference are as follows: Compensated absences($69,849) Accrued interest19,000 Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities.($50,849) Note 2 DEPOSITS AND INVESTMENTS A. DEPOSITS In accordance with Minnesota Statutes, the City maintains deposits at those depository banks authorized by the City Council, all of which are members of the Federal Reserve System. Custodial Credit Risk – Custodial credit risk is the risk that in the event of a bank failure, the City’s deposits may not be returned to it. Minnesota Statutes require that insurance, surety bonds or collateral protect all City deposits. The market value of collateral pledged must equal 110% of deposits not covered by insurance or bonds. The City has no additional deposit policies addressing custodial credit risk. As of December 31, 2010, the bank balance of the City’s deposits was covered by federal depository insurance or covered by collateral pledged and held in the City’s name. Minnesota Statutes require that securities pledged as collateral be held in safekeeping by the City Treasurer or in a financial institution other than that furnishing the collateral. Authorized collateral includes the following: a)United States government treasury bills, treasury notes, treasury bonds; b)Issues of United States government agencies and instrumentalities as quoted by a recognized industry quotation service available to the government entity; c)General obligation securities of any state or local government with taxing powers which is rated “A” or better by a national bond rating service, or revenue obligation securities of any state or local government with taxing powers which is rated “AA” or better by a national bond rating service; d)General obligation securities of a local government with taxing powers may be pledged as collateral against funds deposited by that same local government entity; e)Irrevocable standby letters of credit issued by Federal Home Loan Banks to a municipality accompanied by written evidence that the bank’s public debt is rated “AA” or better by Moody’s Investors Service, Inc. or Standard & Poor’s Corporation; and 55 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 f)Time deposits that are fully insured by any federal agency. At December 31, 2010, the carrying amount of the City’s deposits with financial institutions was $6,156,418. B. INVESTMENTS Minnesota Statutes authorize the City to invest in the following: a) Direct obligations or obligations guaranteed by the United States or its agencies, its instrumentalities, or organizations created by an act of congress, excluding mortgage-backed securities defined as high risk. b) Shares of investment companies registered under the Federal Investment Company Act of 1940 and whose only investments are in securities described in (a) above, general obligation tax-exempt securities, or repurchase or reverse repurchase agreements. c) Obligations of the State of Minnesota or any of its municipalities as follows: 1)any security which is a general obligation of any state or local government with taxing powers which is rated “A” or better by a national bond rating service; 2)any security which is a revenue obligation of any state or local government with taxing powers which is rated “AA” or better by a national bond rating service; and 3)a general obligation of the Minnesota Housing Finance Agency which is a moral obligation of the State of Minnesota and is rated “A” or better by a national bond rating agency. d) Bankers acceptance of United States banks. e) Commercial paper issued by United States corporations or their Canadian subsidiaries, of the highest quality, and maturing in 270 days or less. f) Repurchase or reverse repurchase agreements with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000; a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York; certain Minnesota securities broker-dealers; or, a bank qualified as a depositor. g) General obligation temporary bonds of the same governmental entity issued under section 429.091, subdivision 7; 469.178, subdivision 5; or 475.61, subdivision 6. 56 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 As of December 31, 2010, the City had the following investments and maturities: Investment Maturities (in Years) FairLess Investment TypeRatingValueThan 11-56-10 4M FundNR$24,766$24,766$ - $ - Money Market Mutual FundsNR78,98478,984 - - Brokered Certificates of DepositNR3,343,4581,188,364 2,155,094 - Municipal Bonds(1)4,795,190 4444444444444444444444444444444444A Federal Home Loan Bank NotesAaa6,626,9981,016,847 5,610,151 - Federal Home Loan Bank Discount NotesNR2,199,9202,199,920 - - Federal Farm Credit Bank NotesAaa1,516,854 1,516,854 - - Federal National Mortgage Assn. NotesNR3,003,107999,685 2,003,422 - Federal Home Loan Mortgage Corp. NotesNR1,549,921499,825 1,050,096 - City of Chanhassen G.O. BondsAAA1,310,000140,000 1,170,000 - Total$24,449,198$6,148,391$17,186,976$1,113,831 (1) $1,814,404 are rated AAA, $1,676,232 are rated Aa3 andTotal investments$24,449,198 $1,304,554 are rated Aa2.Deposits6,156,418 Petty cash635 NR - Not Rated Total cash and investments$30,606,251 Classifications above are by maturity date. Some investments listed above have call dates that occur in less than one year. These amounts are presented in the financial statements as follows: Cash and investments: Governmental and business-type (Statement 1)$25,899,810 Fiduciary (Statement 9)827,135 Cash with escrow agent (Statement 1)3,879,306 Total$30,606,251 C. INVESTMENT RISKS Custodial credit risk – investments – For investments in securities, custodial credit risk is the risk that in the event of failure of the counterparty to a transaction, the City will not be able to recover the value of its investment securities that are in the possession of an outside party. Investments in investment pools and money markets are not evidenced by securities that exist in physical or book entry form, and therefore are not subject to custodial credit risk disclosures. The City’s investment policy requires the City’s security broker/dealers to provide its audited financial statements, proof of NASD certification, proof of state registration, and certification of having read, understood and agreed to comply with the City’s investment policy. Investments in securities are held by the City’s broker-dealer of which $1,500,000 is insured through SIPC. Each broker-dealer has provided additional protection by providing additional insurance. This insurance is subject to aggregate limits applied to all of the broker-dealer’s accounts. 57 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Interest rate risk – Interest rate risk is the risk that changes in interest rates of debt investments could adversely affect the fair value of an investment. The City’s investment policy requires the City to diversify its investment portfolio to eliminate the risk of loss resulting from over concentration of assets in a specific maturity. The policy also states the City’s investment portfolio will remain sufficiently liquid to enable the City to meet all operating requirements which might be reasonable, i.e., not investing in maturities longer than five years. Credit Risk – Credit risk is the risk that an issuer or other counterparty to an investment will be unable to fulfill its obligation to the holder of the investment. State law limits investments to commercial paper to those rated in the highest quality category by at least two nationally recognized rating agencies; in any security of the State of Minnesota or any of its municipalities which is rated “A” or better by a national bond rating service for general obligation and rated “AA” or better for a revenue obligation; a general obligation of the Minnesota Housing Finance Agency to those rated “A” or better by a national bond rating agency; mutual funds or money market funds whose investments are restricted to securities described in MS 118A.04. The City’s investment policy does not place further restrictions on investment options. The City’s external investment pool investment is with the 4M fund which is regulated by Minnesota Statutes and the Board of Directors of the League of Minnesota Cities. The 4M fund is an unrated 2a7-like pool and the fair value of the position in the pool is the same as the value of pool shares. Concentration of credit risk – Concentration of credit risk is the risk of loss that may be attributed to the magnitude of a government’s investment in a single issuer. The City places no limit on the amount the City may invest in any one issuer. Investments in a single issuer exceeding 5% of the City’s overall cash and investment portfolio are in various holdings as follows: Federal Home Loan Bank29% Federal National Mortgage Association10% Federal Home Loan Mortgage Corporation5% 58 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 3 RECEIVABLES Significant receivable balances not expected to be collected within one year of December 31, 2010 are as follows: InterfundDelinquent Special LoanPropertyAssessment ReceivableTaxesReceivableTotal Major Funds: General$ - $46,925$165$47,090 2009A G.O. Refunding - - 3,273,6053,273,605 Transit Station Assessment Fund - - 769,362769,362 Revolving Assessment Fund - - 1,916,7581,916,758 Water729,253 - 115,306844,559 Sewer - - 50,51450,514 Nonmajor Funds - - 205,718205,718 $729,253$46,925$6,331,428$7,107,606 Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of deferred revenue and unearned revenue reported in the governmental funds were as follows: Major Funds 2009A G.O.Transit StationRevolving General RefundingAssessmentAssessment Nonmajor FundBondsFundFundFundsTotal Unavailable: Delinquent property taxes receivable$173,994$ - $ - $ - $9,116$183,110 Special assessments not yet due2,0143,536,907769,3622,172,876237,6416,718,800 Other unavailable revenue - 856 - - - 856 Total unavailable revenue176,0083,537,763769,3622,172,876246,7576,902,766 Unearned: Antenna rental fees received but not yet earned32,128 - - - - 32,128 Donations/ rentals received but not yet earned12,367 - - - - 12,367 Unexpended municipal state aid - - - - 105,962105,962 Total unearned revenue44,495000105,962150,457 Total deferred unavailable/unearned revenue for governmental funds$220,503$3,537,763$769,362$2,172,876$352,719$7,053,223 59 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 4 CAPITAL ASSETS Capital asset activity for the year ended December 31, 2010 was as follows: BeginningEnding Primary Government BalanceIncreaseDecreaseBalance Governmental activities: Capital assets not being depreciated: Land$17,024,758$1,685,054$ - $18,709,812 Construction in progress7,976,1072,015,093(7,734,260)2,256,940 Permanent easements - 358,501 - 358,501 Total capital assets not being depreciated25,000,8654,058,648(7,734,260)21,325,253 Capital assets being depreciated: Buildings and structures15,472,4168,009,309 - 23,481,725 Machinery and equipment7,139,997233,142(223,819)7,149,320 Other improvements 5,209,068264,400(12,446)5,461,022 Infrastructure107,074,228499,902 - 107,574,130 Total capital assets being depreciated134,895,7099,006,753(236,265)143,666,197 Less accumulated depreciation for: Buildings and structures4,461,169381,301 - 4,842,470 Machinery and equipment4,556,414437,650(213,871)4,780,193 Other improvements 1,761,782223,108(12,446)1,972,444 Infrastructure57,006,0104,174,130 - 61,180,140 Total accumulated depreciation67,785,3755,216,189(226,317)72,775,247 Governmental activities capital assets - net$92,111,199$7,849,212($7,744,208)$92,216,203 BeginningEnding Primary Government BalanceIncreaseDecreaseBalance Business-type activities: Capital assets not being depreciated: Land$1,984,044$13,391$ - $1,997,435 Construction in progress1,165,6311,678,873(812,775)2,031,729 Permanent easements - 107,225 - 107,225 Total capital assets not being depreciated3,149,6751,799,489(812,775)4,136,389 Capital assets being depreciated: Buildings and structures12,445,429 - - 12,445,429 Machinery and equipment2,362,35546,447 - 2,408,802 Other improvements 94,447,2393,005,981(4,598)97,448,622 Total capital assets being depreciated109,255,0233,052,428(4,598)112,302,853 Less accumulated depreciation for: Buildings and structures498,500248,909 - 747,409 Machinery and equipment1,176,653160,635 - 1,337,288 Other improvements 43,537,6262,798,497(4,598)46,331,525 Total accumulated depreciation45,212,7793,208,041(4,598)48,416,222 Business-type activities capital assets - net67,191,9191,643,876(812,775)68,023,020 Total capital assets - net$159,303,118$9,493,088($8,556,983)$160,239,223 60 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Depreciation expense was charged to functions/programs of the City as follows: Governmental activities: General government$366,100 Public safety146,048 Public works3,588,619 Parks and recreation1,115,422 Total depreciation expense - governmental activities$5,216,189 Business-type activities: Water$1,492,476 Sewer963,849 Surface water management741,231 Total depreciation expense - business-type activities$3,197,556 A reconciliation of increases in accumulated depreciation for business-type activities is as follows: Depreciation expense$3,197,556 Transfer of accumulated depreciation from governmental activities10,485 Total increases$3,208,041 61 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 5 CITY INDEBTEDNESS The City issues general obligation bonds, to provide funds for the acquisition and construction of major capital facilities. The reporting entity’s long-term debt is segregated between the amounts to be repaid from governmental activities and amounts to be repaid from business-type activities. GOVERNMENTAL ACTIVITIES As of December 31, 2010, the governmental activities long-term debt of the City consisted of the following: FinalAuthorized Issue Maturity Interest AndOutstanding DateDateRateIssued12/31/10 General Long-Term Debt: General obligation bonds: G.O. Library Bonds, Series 2002A 3/01/028/01/12 1.55% - 4.85%$6,095,000$4,340,000 G.O. Capital Improvement Plan Bonds, Series 2008A11/18/082/01/304.00% - 4.60%7,550,0007,550,000 G.O. Library Refunding Bonds, 2010A1/27/102/01/222.00% - 3.10%3,660,0003,660,000 Total general obligation bonds17,305,00015,550,000 Revenue Bonds: 2000 Public Project Revenue Bonds12/01/002/01/124.75% - 5.35%930,000230,000 Tax Increment Bonds: G.O. Tax Increment Refunding Bonds, Series 2004C8/10/042/01/213.00% - 6.00%1,170,000900,000 General Improvement Bonds: G.O. Improvement Refunding Bonds, Series 2009A6/03/092/01/173%6,020,0005,805,000 G.O. Street Reconstruction Bonds, Series 20107/22/106/15/13.65% - 1.2%1,540,0001,310,000 Total improvement bonds7,560,0007,115,000 Compensated absences payableN/AN/AN/AN/A830,263 Total City indebtedness - governmental activities$26,965,000$24,625,263 62 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 BUSINESS-TYPE ACTIVITIES As of December 31, 2010, the business-type activities long-term debt of the City consisted of the following: FinalAuthorized Issue Maturity Interest AndOutstanding DateDateRateIssued12/31/10 G.O. Revenue Bonds: Water and Sewer Revenue Bonds of 2001, Series A7/15/20012/1/20123.50% - 4.65%$1,645,000$135,000 Water Revenue Bonds of 2004, Series B8/10/20042/1/20254.00% - 4.50%7,930,0006,485,000 Water Revenue Bonds of 2005, Series B11/16/20052/1/20213.75% - 3.90%5,465,0004,335,000 Total G.O. revenue bonds15,040,00010,955,000 Compensated absences payableN/AN/AN/AN/A117,783 Total City indebtedness - business-type activities$15,040,000$11,072,783 GOVERNMENTAL ACTIVITIES Annual debt service requirements to maturity for the governmental activities long-term debt are as follows: G.O. Improvement BondsG.O. Tax Increment BondsPublic Project Revenue BondsAll Other G.O. Bonds Year EndingGovernmental ActivitiesGovernmental ActivitiesGovernmental ActivitiesGovernmental Activities December 31,PrincipalInterestPrincipalInterestPrincipalInterestPrincipalInterest 2011$330,000$185,733$60,000$47,725$110,000$9,308$525,000$607,724 2012595,000178,11565,00044,720120,0003,2104,320,000586,246 2013970,000164,22070,00041,345 - - 550,000392,123 20143,515,000103,87570,00037,775 - - 605,000375,173 2015550,00042,90075,00034,005 - - 625,000356,848 2016565,00026,17580,00029,895 - - 640,000337,110 2017590,0008,85085,00025,440 - - 670,000315,298 2018 - - 90,00020,580 - - 695,000291,648 2019 - - 95,00015,308 - - 725,000266,964 2020 - - 100,0009,600 - - 755,000241,053 2021 - - 110,0003,300 - - 780,000213,948 2022 - - - - - - 815,000185,370 2023 - - - - - - 405,000162,014 2024 - - - - - - 425,000144,270 2025 - - - - - - 445,000125,454 2026 - - - - - - 465,000105,545 2027 - - - - - - 490,00084,413 2028 - - - - - - 510,00062,035 2029 - - - - - - 540,00038,275 2030 - - - - - - 565,00012,995 Total$7,115,000$709,868$900,000$309,693$230,000$12,518$15,550,000$4,904,501 It is not practicable to determine the specific year for payment of long-term accrued compensated absences. 63 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 The revenue and street reconstruction bonds issued were sold by the City’s Economic Development Authority (EDA) to fund the construction of a municipal facility and street reconstruction costs. The City makes lease payments to the EDA to fund debt service on these issues. The EDA is a blended component unit of the City and the bond is reported in the governmental activities column on the Statement of Net Assets. The City has issued General Improvement Bonds to provide funds for various construction projects. The bonds have interest rates ranging from 0.65% to 3.00% and are payable over the next seven years. In case of a default by property owners, the City can place a lien on the property in order to recover the default. The balance payable at December 31, 2010 is $7,115,000. BUSINESS-TYPE ACTIVITIES Annual debt service requirements to maturity for the business-type long-term debt are as follows: G.O. Revenue Bonds Year EndingBusiness-Type Activities December 31,PrincipalInterest 2011$700,000$431,954 2012730,000403,783 2013690,000376,012 2014715,000348,799 2015750,000320,424 2016775,000290,887 2017805,000260,080 2018845,000227,391 2019880,000192,676 2020915,000156,323 2021960,000117,918 2022505,00086,935 2023535,00063,787 2024560,00039,150 2025590,00013,275 Total$10,955,000$3,329,394 It is not practicable to determine the specific year for payment of long-term accrued compensated absences. 64 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 CHANGE IN LONG-TERM LIABILITIES Long-term liability activity for the year ended December 31, 2010 was as follows: BeginningEnding Due Within BalanceAdditionsDeletionsBalanceOne Year Governmental activities: Bonds payable: General obligation$13,045,000$3,660,000$1,155,000$15,550,000$525,000 G.O. improvement bonds6,625,0001,540,0001,050,0007,115,000330,000 G.O. tax increment bonds960,000 - 60,000900,00060,000 Public project revenue bonds335,000 - 105,000230,000110,000 Total bonds payable20,965,0005,200,0002,370,00023,795,0001,025,000 Compensated absences760,414570,333500,484830,26342,538 Total governmental activity long-term liabilities$21,725,414$5,770,333$2,870,484$24,625,263$1,067,538 Business-type activities: G.O. revenue bonds $11,695,000$ - $740,000$10,955,000$700,000 Compensated absences108,997102,36993,583117,7836,034 Total business-type activity long-term liabilities$11,803,997$102,369$833,583$11,072,783$706,034 For the governmental activities, compensated absences are generally liquidated by the General and Special Revenue Funds. All long-term bonded indebtedness outstanding at December 31, 2010 is backed by the full faith and credit of the City, including special assessment, tax increment and water revenue bond issues. Delinquent assessments receivable at December 31, 2010 totaled $5,737. General Obligation Water Revenue Bonds are serviced by the Sewer and Water Enterprise Funds and are carried as debt of that fund. Other bonds are supported by various Debt Service Funds. All bonds are backed by the full faith, credit, and taxing power of the City. CROSSOVER REFUNDING On January 27, 2010, the City issued $3,660,000 in General Obligation Library Refunding Bonds, Series 2010A with an average interest rate of 2.74% to advance refund $4,600,000 of outstanding 2002A Series Bonds with an average interest rate of 4.69%. The net proceeds, along with $250,000 of additional funding, were used to purchase U.S. government securities in the amount of $3,906,309. Those securities were deposited in an irrevocable trust with an escrow agent to provide for the interest on the refunding bonds before the crossover date and called principal on the refunded bonds on August 1, 2012. The City advance refunded the 2002A General Obligation Library Bonds to reduce its total debt service payments over the next 12 years by $427,859 and to obtain an economic gain (difference between the present value of the debt service payments on the old and new debt) of $179,745. 65 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 The City is responsible for the debt service of the refunded bonds through the crossover date (August 1, 2012) and the debt service of the refunding bonds after the crossover date. The debt service of the refunding bonds before the crossover date is payable from the escrow account. Assets held with the escrow agent total $3,879,306 at December 31, 2010. The financial statements present each bond issue and the escrow account assets pursuant to GASB No. 7. The effect on the financial statements is to report greater debt than, in substance, the City will be responsible for paying. The Refunding Bonds of 2010A are crossover refunding bonds whereby the City and the escrow agent are responsible for debt service payments as follows: Debt Service Commitment Year EndingRefundedRefundingEscrow December 31,Bonds TotalBonds TotalAccountCity 2011$467,251$99,805$99,805$467,251 20124,245,87399,8053,879,805465,873 2013 - 381,955 - 381,955 2014 - 420,805 - 420,805 2015 - 423,680 - 423,680 2016 - 420,543 - 420,543 2017 - 425,830 - 425,830 2018 - 424,880 - 424,880 2019 - 433,480 - 433,480 2020 - 431,630 - 431,630 2021 - 429,480 - 429,480 2022 - 436,665 - 436,665 Total$4,713,124$4,428,558$3,979,610$5,162,072 66 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 REVENUE PLEDGED Future revenue pledged for the payment of long-term debt is as follows: Revenue PledgedCurrent Year Percent ofDebt serviceRemainingPrincipalPledged Use ofTotalas a % ofTerm ofPrincipaland InterestRevenue Bond IssueProceedsTypeDebt Servicenet revenuesPledgeand InterestPaidReceived 2004A Improvement bondsInfrastructure improvementsSpecial assessments31%n/a2004 - 2015$ - $622,195$50,541 2004C TIF Refunding bondsDowntown Redevelopment ProjectTax increment100%n/a2004 - 2021$1,209,693$110,485$ - 2001A Sewer Revenue bondsUtility infrastructure improvementsSewer usage charges100%5.9%2001 - 2012$141,346$139,008$2,365,358 2004B Water Revenue bondsUtility infrastructure improvementsWater usage charges100%24.0%2004 - 2025$8,833,817$581,154$2,424,634 2005B Water Revenue bondsUtility infrastructure improvementsWater usage charges100%19.8%2005 - 2021$5,309,231$480,195$2,424,634 2009A Improvement bondsAdvance refund 2005A & 2006A bondsSpecial assessments68%n/a2009 -2017$6,483,225$421,472$262,591 2010A Library RefundingAdvance refund 2002AProperty taxes100%n/a2010 - 2022$4,428,558$51,011$ - 2010 Street ReconstructionStreet reconstructionProperty taxes100%52.1%2010 - 2013$1,341,643$236,417$453,495 Note 6 DEFERRED AD VALOREM TAX LEVIES - BONDED DEBT General obligation bond issues sold by the City are financed by ad valorem tax levies. Special assessment bond issues sold by the City are partially financed by ad valorem tax levies in addition to special assessments levied against the benefiting properties. When a bond issue to be financed partially or completely by ad valorem tax levies is sold, specific annual amounts of such tax levies are stated in the bond resolution and the County Auditor is notified and instructed to levy these taxes over the appropriate years. The future tax levies are subject to cancellation when and if the City has provided alternative sources of financing. The City Council is required to levy any additional taxes found necessary for full payment of principal and interest. These future scheduled tax levies are not shown as assets in the accompanying financial statements at December 31, 2010. Future scheduled tax levies for all bonds outstanding at December 31, 2010 totaled $20,159,912 67 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 7 PENSION PLANS A. PUBLIC EMPLOYEES RETIREMENT ASSOCIATION (PERA) PLAN DESCRIPTION All full-time and certain part-time employees of the City are covered by defined benefit plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the General Employees Retirement Fund (GERF) and the Public Employees Police and Fire Fund (PEPFF) which are cost-sharing, multiple-employer retirement plans. These plans are established and administered in accordance with Minnesota Statute, 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. All police officers, firefighters and peace officers who qualify for membership by statute are covered by the PEPFF. PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by State Statute, and vest after three years of credited service. The defined retirement benefits are based on a member’s highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. The benefit provisions stated in the previous paragraphs of this section are current provisions and apply to active plan participants. Vested, terminated employees who are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. PERA issues a publicly available financial report that includes financial statements and required supplementary information for GERF and PEPFF. That report may be obtained on the internet at www.mnpera.org, by writing to PERA, 60 Empire Drive #200, St. Paul, Minnesota, 55103-2088 or by calling (651)296-7460 or 1-800-652-9026. 68 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 B. FUNDING POLICY Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. These statutes are established and amended by the state legislature. The City makes annual contributions to the pension plans equal to the amount required by state statutes. GERF Basic Plan members and Coordinated Plan members were required to contribute 9.10% and 6.0%, respectively, of their annual covered salary in 2010. PEPFF members were required to contribute 9.4% of their annual covered salary in 2010. The City is required to contribute the following percentages of annual covered payroll in 2010: 11.78% for Basic Plan GERF members, 7.0% for Coordinated Plan GERF members, and 14.1% for PEPFF members. Employer contribution rates for the Coordinated Plan GERF members will increase to 7.25% and rates for the PEPFF members will increase to 14.4% effective January 1, 2011. The City’s contributions to the General Employees Retirement Fund for the years ending December 31, 2010, 2009 and 2008 were $314,239, $297,106 and $278,047, respectively. The City’s contributions to the Public Employees Police and Fire Fund for the years ending December 31, 2010, 2009 and 2008 were $18,168, $17,384 and $15,567, respectively. The City’s contributions were equal to the contractually required contributions for each year as set by state statute. C. CHANHASSEN FIRE RELIEF ASSOCIATION PLAN DESCRIPTION The volunteer firefighters of the City are members of the Chanhassen Fire Department Relief Association. The Chanhassen Fire Department Relief Association is the administrator of a single employer defined benefit Public Employee Retirement System (PERS) established to provide benefits for members of the Chanhassen Fire Department. Plan provisions are established and may be amended by the Relief Association’s Board of Trustees within the guidelines of the State of Minnesota statutes. The Relief Association provides retirement and disability benefits to members, and benefits to survivors upon death of eligible members. All benefit provisions and the obligation to make contributions are established and administered in accordance with Minnesota Statutes. The Relief Association issues a publicly available financial report that includes financial statements and required supplementary information. 69 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 FUNDING POLICY Minnesota StatutesChapter 69.772 specifies minimum support rates required on an annual basis. The minimum support rates from the municipality and from State aid are determined as the amount required to meet the normal cost plus amortizing any existing prior service costs over a ten-year period. The significant actuarial assumptions used to compute the municipal support are the same as those used to compute the accrued pension liability. The Relief Association is comprised of volunteers; therefore, members have no contribution requirements. During the year, the City recognized as revenue and as an expenditure an on-behalf payment of $104,474 made by the State of Minnesota for the Relief Association. The City’s annual pension cost for the current year and related information for the plan is as follows: Annual pension cost$198,506 Contributions made: City94,032 State aid104,474 Actuarial valuation date12/31/10 Actuarial cost methodEntry age normal Amortization methodLevel dollar open Remaining amortization period: Normal cost20 years Prior service cost10 years Asset valuation methodMarket Actuarial assumptions: Investment rate of return5% Projected salary increasesN/A Includes inflation atN/A Cost of living adjustmentsNone THREE YEAR TREND INFORMATION Three-Year Trend Information AnnualPercentageNet YearPensionof APCPension EndingCost (APC)ContributedObligation 12/31/2008$115,928100%$ - 12/31/2009167,720100% - 12/31/2010198,506100% - 70 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 REQUIRED SUPPLEMENTARY INFORMATION Assets in Excess of/Pension ActuarialActuarialActuarial(Unfunded)Benefit ValuationValue ofAccruedAccruedFundedPer Year DateAssetsLiabilityLiabilityRatioof Service 12/31/2008$1,885,691$2,874,758($989,067)65.6%$5,050 12/31/20092,087,9942,679,000(591,006)77.9%5,050 12/31/2010***** *2010 information was not yet available. The Association is comprised of volunteers; therefore, there are no payroll expenditures (i.e., there are no covered payroll amounts or percentage calculations). Note 8 OTHER POST-EMPLOYMENT BENEFITS In 2008, the City prospectively implemented the requirement of a new accounting pronouncement, GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions. A.PLAN DESCRIPTION In addition to providing the pension benefits described in Note 7, the City provides post-employment health care benefits (as defined in paragraph B) for retired employees through a single-employer defined benefit plan. The City’s OPEB plan is administered by the City. The authority to provide these benefits is established in Minnesota Statutes Sections 471.61 Subd. 2a, and 299A.465. The benefits, benefit levels, employee contributions and employer contributions are governed by the City and can be amended by the City through its personnel manual and collective bargaining agreements with employee groups. The Plan is not accounted for as a trust fund, as an irrevocable trust has not been established to account for the plan. The Plan does not issue a separate report. B. BENEFITS PROVIDED Retirees The City is required by State Statute to allow retirees to continue participation in the City’s group health insurance plan if the individual terminates service with the City through service retirement or disability retirement. Employees who satisfy the rule of 80 or attain age 55 and have completed 10 years of service at termination can immediately commence medical benefits. Retirees may obtain dependent coverage while the participating retiree is under age 65. Covered spouses may continue coverage after the retiree’s death. The surviving spouse of an active employee may continue coverage in the group health insurance plan after the employee’s death. 71 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 All health care coverage is provided through the City’s group health insurance plans. The retiree is required to pay 100% of their premium cost for the City-sponsored group health insurance plan in which they participate. The premium is a blended rate determined on the entire active and retiree population. Since the projected claims costs for retirees exceed the blended premium paid by retirees, the retirees are receiving an implicit rate subsidy (benefit). The coverage levels are the same as those afforded to active employees. Upon a retiree reaching age 65 years of age, Medicare becomes the primary insurer and the City’s plan becomes secondary. C. PARTICIPANTS As of the actuarial valuation dated March 2008, participants consisted of: Retirees and beneficiaries currently purchasing health insurance through the City2 Active employees68 Total70 Participating employers1 D. FUNDING POLICY The additional cost of using a blended rate for actives and retirees is currently funded on a pay-as-you- go basis. The City Council may change the funding policy at any time. 72 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 E. ANNUAL OPEB COSTS AND NET OPEB OBLIGATION The City’s annual other post employment benefit (OPEB) cost is calculated based on the annual required contribution (ARC) of the employer, an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. The net OPEB obligation as of December 31, 2010, was calculated as follows: Annual required contribution (ARC)$5,832 Interest on net OPEB obligation227 Adjustment to ARC(339) Annual OPEB cost5,720 Contributions made during the year(3,060) Increase (decrease) in net OPEB obligation2,660 Net OPEB obligation - beginning of year6,932 Net OPEB obligation - end of year$9,592 For governmental activities, the net OPEB obligation is generally liquidated by the General Fund. The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB obligation for the previous three years was as follows: Percentage of Fiscal YearAnnual OPEBEmployer Annual OPEB CostNet OPEB EndedCostContributionsContributedObligation December 31, 2008$5,832$2,02934.8%$3,803 December 31, 20095,9842,85547.7%6,932 December 31, 20105,7203,06053.5%9,592 73 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 F. FUNDED STATUS AND FUNDING PROGRESS The City currently has no assets that have been irrevocably deposited in a trust for future health benefits, therefore, the actuarial value of assets is zero. The funded status of the plan was as follows: Unfunded ActuarialActuarialUAAL as a ActuarialActuarialAccruedAccruedFundedCoveredPercentage of ValuationValue of AssetsLiability (AAL)*Liability (UAAL)RatioPayrollCovered Payroll Date(a)(b)(b-a)(a/b)(c) ( (b-a) / c) January 1, 2008$0$52,268$52,2680.0%$4,180,2351.3% *Using the entry age normal actuarial pay cost method. Note, the first OPEB actuarial valuation was conducted as of January 1, 2008. There is no data available prior to the first valuation. G. ACTUARIAL METHODS AND ASSUMPTIONS Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality and the health care cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions (ARC) of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to financial statements, presents multi-year trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effect of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the January 1, 2008 actuarial valuation, the entry-age normal actuarial pay cost method was used. The actuarial assumptions included a 4.0% investment rate of return (net of administrative expenses) and an initial annual health care cost trend rate of 9% reduced by 1% each year to arrive at an ultimate health care cost trend rate of 5.0%. The actuarial value of assets was $0. The plan’s unfunded actuarial accrued liability is being amortized using the level percentage of projected payroll method over 30 years on a closed basis. The remaining amortization period at December 31, 2010 was 27 years. 74 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 9 DUE TO/FROM OTHER FUNDS, INTERFUND LOAN RECEIVABLE/PAYABLE AND TRANSFERS Amounts reported as due to/from other funds at December 31, 2010 are as follows: FundReceivablePayable Transit Station Assessment Fund$ - $668 Other governmental funds39,03038,362 Total$39,030$39,030 Due to/from other funds are representative of lending/borrowing arrangements to cover deficit cash balances at the end of the fiscal year. The funds will be repaid as special assessments are received. Amounts reported as interfund receivable/payable at December 31, 2010 are as follows: FundReceivablePayable Transit Station Assessment Fund$ - $729,253 Water Fund729,253 - Total$729,253$729,253 During 2010, the City adopted resolution 2010-16A authorizing an interfund loan for advance of certain costs in connection with the Transit Station Public Improvement Project. The Transit Station Assessment Fund borrowed $729,253 from the Water Fund. Repayments, including interest, will be made as funds become available. No repayments are expected to occur in 2011. 75 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Interfund transfers: TransfersTransfers InOut General Fund$ - $50,000 Revolving Assessment Fund286,4172,425,000 Nonmajor Government funds4,538,6601,245,077 Water Fund - 250,000 Sewer Fund - 50,000 Surface Water Management Fund - 805,000 Total$4,825,077$4,825,077 Interfund transfers allow the City to allocate financial resources to the funds that receive benefit from services provided by another fund. All of the City’s interfund transfers fall under that category. All of the 2010 transfers are considered routine and consistent with previous practices. Note 10 CONDUIT DEBT From time to time, the City has issued conduit debt to provide financial assistance to private-sector entities for the acquisition and construction of facilities deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private-sector entity served by the bond issuance. Neither the City, the State, nor any political subdivision thereof is obligated in any manner for the repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of December 31, 2010, the outstanding conduit debt is as follows: BondsOriginal12/31/10Maturity Project NameIssuedPrincipalPrincipalDate Chapel Hill Academy, Series 2005A12/051,337,700$952,5762019 St. Hubert Catholic Community, Series 200710/075,942,1404,831,9472027 As of December 31, 2010, there were an additional four conduit debt issues outstanding. The aggregate principal amount for the additional four series issued prior to July 1, 1995 could not be determined; however, their original issue amounts totaled $10,180,000. 76 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 11 DEFICIT FUND BALANCES The City has a deficit fund balance in the following funds at December 31, 2010: Debt Service Funds: 2004A G.O. Bonds($35,736) Capital Project Funds: Transit Station Assessment Fund(729,921) Revolving Assessment Fund(56,288) Total($821,945) The deficits will be eliminated through special assessment collections. Note 12 COMMITMENTS AND CONTINGENCIES A. RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City continues to carry commercial insurance for risks of loss, including workers compensation, property and general liability and employee health and accident insurance. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three fiscal years. B. LITIGATION The City attorney has indicated that any existing and pending lawsuits, claims and other actions in which the City is a defendant are either covered by insurance; of an immaterial amount; or, in the judgment of the City attorney, remotely recoverable by plaintiffs. C. FEDERAL AND STATE FUNDS The City receives financial assistance from federal and state governmental agencies in the form of grants. The disbursement of funds received under these programs generally requires compliance with the terms and conditions specified in the grant agreements and is subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the applicable fund. However, in the opinion of management, any such disallowed claims will not have a material effect on any of the financial statements of the individual fund types included herein or on the overall financial position of the City at December 31, 2010. 77 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 D. TAX INCREMENT DISTRICTS The City’s tax increment districts are subject to review by the State of Minnesota Office of the State Auditor (OSA). Any disallowed claims or misuse of tax increments could become a liability of the applicable fund. Management has indicated that they are not aware of any instances of noncompliance which would have a material effect on the financial statements. The City has issued several tax increment pay-as-you-go revenue notes. These notes are not a general obligation of the City and are payable solely from tax increments. Accordingly, these notes are not reflected in the financial statements of the City. Details of the pay-as-you-go revenue notes are as follows: Taxable Tax Increment Revenue Note, Series 2006A (Gateway Place) – issued in 2006 in the principal sum of $300,000 with an interest rate of 0% per annum. Semi-annual principal payments shall be paid commencing August 1, 2009 and continuing through February 1, 2016. Payments are payable solely from available tax increment, which term means 90% of the tax increment that is received by the City in the six month period immediately before each payment date through February 1, 2014 and 65% from August 1, 2015 through February 1, 2016. The City shall have no obligation to pay unpaid balance that may remain after the final payment on February 1, 2016. At December 31, 2010 the principal amount outstanding on the note was $288,928. Taxable Tax Increment Revenue Note, Series 2003A (Presbyterian Homes) – issued in 2003 in the principal sum of $1,060,000 with an interest rate of 0% per annum. Semi-annual principal payments shall be paid commencing August 1, 2006 and continuing through February 1, 2014. Payments are payable solely from available tax increment, which term means 90% of the tax increment that is received by the City in the six month period immediately before each payment date through February 1, 2012 and 50% from August 1, 2012 through February 1, 2014. The City shall have no obligation to pay unpaid balance that may remain after the final payment on February 1, 2014. At December 31, 2010 the principal amount outstanding on the note was $391,325. – issued in 1999 in the principal sum of $400,000, Limited Revenue Tax Increment Note (North Bay) plus interest on the unpaid principal at the rate of 9% per annum. Payments are payable solely from available tax increment, which term means any tax increment generated by the minimum improvements in the years 1999 through 2013, and received during the six month period preceding a payment date, after first deducting there from. $37,200 is to be retained by the City on each payment date from August 1, 1999 through February 1, 2008 for special assessments. If there is insufficient tax increment to meet the obligation regarding the special assessments, such deficiency shall be deferred and shall be paid, with interest at the rate of 9% per annum, until such deficiency is eliminated. The City shall have no obligation to pay unpaid balance of principal or accrued interest that may remain after the final payment on February 1, 2014. At December 31, 2010 the principal amount outstanding on the note was $228,755. E. COMMITTED CONTRACTS At December 31, 2010, the City had commitments of $1,156,722 for uncompleted construction contracts. 78 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 13 DESIGNATIONS AND RESERVATIONS OF FUND EQUITY At December 31, 2010 the City had designated and reserved portions of its various fund equities through legal restriction and City Council authorization. Major fund equity appropriations at December 31, 2010 are shown on the various balance sheets as segregations of the fund equity. A summary of such designations is as follows: General Fund: Designated for cash flow$3,754,000 Reserved for prepaid items55,826 Total General Fund3,809,826 2009A G.O. Refunding Bonds: Reserved for debt service545,036 Other governmental funds: Reserved for prepaid items7,209 Reserved for future programs42,238 Reserved for debt service5,046,880 Designated for cable equipment772,929 Designated for economic development1,310,000 Designated for capital improvements7,487,198 Total other governmental funds14,666,454 Total reservations and designations of fund balance$19,021,316 Note 14 PRIOR PERIOD ADJUSTMENT During 2010, the City determined $147,500 of expenditures previously reported in the TIF #10 Dowtown Transit Station Fund should have been reported in the TIF #4 Entertainment Fund. A prior period adjustment was recorded to restate the January 1, 2010 fund balance of each fund. Because both funds are nonmajor capital project funds, the prior period adjustment only affects the Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Capital Project Funds (Statement 18). 79 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 15 LEASE REVENUE The City receives revenue from agreements for the lease of space above its water towers and on City property to communication companies. The space is used for antennas and other equipment necessary to provide radio communications. For accounting purposes, the leases are considered operating leases. Lease revenue for the year ended December 31, 2010 totaled $195,623. Terms of each lease are as follows: LesseeTermsCurrent Term Sprint$19,800 per year with 3% annual increases8/1/06 - 7/31/11 Sprint$18,000 per year with 3% annual increases12/1/05 - 11/30/15 Verizon$1,587 per month through April 2012; $1,825 per month thereafter5/1/07 - 4/30/17 Nextel West Corp.$1,587 per month12/1/07 - 11/30/12 T-Mobile$1,650 per month with 3% annual increases11/1/05 - 10/31/15 T-Mobile$1,650 per month with 3% annual increases8/1/06 - 7/31/11 StoneBridge Wireless5% of gross revenues associated with equipment used on property4/1/06 - 12/31/14 Cingular/AT&T$1,650 per month with 3% annual increases8/1/07 - 7/31/12 Clearwire$1,650 per month with 3% annual increases3/1/10 - 4/10/11 Clearwire$1,650 per month with 3% annual increases3/1/10 - 4/10/11 Note 16 RECENTLY ISSUED ACCOUNTING STANDARDS The Governmental Accounting Standards Boards (GASB) recently approved the following statements which were not implemented for these financial statements, but may affect the City in future years: Statement No. 54 Fund Balance Reporting and Governmental Fund Type Definitions.The provisions of this Statement are effective for financial statements for periods beginning after June 15, 2010. Statement No. 57 OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans.The provisions of this Statement are effective for financial statements for periods beginning after June 15, 2011. Statement No. 60 Accounting and Financial Reporting for Service Concession Arrangements. The provisions of this Statement are effective for financial statements for periods beginning after June 15, 2011. Statement No. 61 The Financial Reporting Entity Omnibus – An Amendment of GASB No. 14 and No. 34. The provisions of this Statement are effective for financial statements for periods beginning after June 15, 2012. Statement No. 62 Codification of Accounting and Financial Reporting Guidance Contained in Pre- November 30, 1989 FASB and AICPA Pronouncements. The provisions of this Statement are effective for financial statements for periods beginning after June 15, 2011. The effect these standards may have on future financial statements is not determinable at this time. 80 REQUIRED SUPPLEMENTARY INFORMATION 81 CITY OF CHANHASSEN, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 1 of 6 For The Year Ended December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 2009 2010 ActualVariance withActual Budgeted Amounts OriginalFinalAmountsFinal BudgetAmounts Revenues: General property taxes: Current$7,110,000$7,110,000$7,097,455($12,545)$6,783,921 Delinquent100,000100,000210,523110,523149,403 Total general property taxes7,210,0007,210,0007,307,97897,9786,933,324 Special assessments: Penalities and interest - - - - 5 Licenses and permits: Licenses - general government5,0005,0004,200(800)2,700 Licenses - public safety121,300121,300119,141(2,159)136,702 Permits - public safety650,500650,500894,539244,039878,622 Permits - public works16,50016,50042,09725,59726,760 Permits - community development7,8007,8006,575(1,225)6,170 Total licenses and permits801,100801,1001,066,552265,4521,050,954 Intergovernmental: State: PERA - public safety20,00020,00020,87587520,124 State aid - fire - public safety140,000140,000104,474(35,526)99,504 Other - general government45,00045,00041,941(3,059)13,277 State aid - police - public safety80,00080,000110,22330,22394,363 Total intergovernmental285,000285,000277,513(7,487)227,268 Charges for services: General government78,30078,30077,122(1,178)78,249 Public safety4,1504,1507,6653,5157,533 Public works144,000144,00096,221(47,779)113,844 Park and recreation449,850449,850405,377(44,473)409,686 Community development31,50031,50010,568(20,932)13,004 Total charges for services707,800707,800596,953(110,847)622,316 Fines and forfeits: Public safety133,500133,500123,609(9,891)122,496 Refunds and reimbursements: General government6,4006,40027,78521,3855,837 Public safety19,60019,6009,999(9,601)14,310 Public works10,60010,60026,11015,5107,269 Park and recreation6,4006,40043,52237,1228,903 Total refunds and reimbursements43,00043,000107,41664,41636,319 Miscellaneous: Investment income200,000200,00037,587(162,413)53,522 Contributions and donations: General government - - 10,60010,600600 Public safety2,0002,0002,9009002,950 Park and recreation18,50018,50021,7853,28522,815 Total contributions and donations20,50020,50035,28514,78526,365 82 CITY OF CHANHASSEN, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 2 of 6 For The Year Ended December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 2009 2010 ActualVariance withActual Budgeted Amounts Revenues:OriginalFinalAmountsFinal BudgetAmounts Miscellaneous: (continued) Other: General government$150,500$150,500$208,765$58,265$153,872 Public safety6,0006,0003,107(2,893)4,016 Park and recreation - - - - 210 Total other156,500156,500211,87255,372158,098 Total miscellaneous377,000377,000284,744(92,256)237,985 Total revenues9,557,4009,557,4009,764,765207,3659,230,667 Expenditures: General government: Legislative: Current: Personal services32,30032,30030,9761,32431,809 Materials and supplies200200 - 200 - Contractual services76,80076,80068,7988,00263,739 Total legislative 109,300109,30099,7749,52695,548 Administrative office: Current: Personal services395,700395,700391,1674,533392,056 Materials and supplies50050028472180 Contractual services65,00065,00072,982(7,982)53,014 Total administrative office461,200461,200464,177(2,977)445,250 Finance: Current: Personal services226,800226,800227,553(753)228,631 Materials and supplies200200 - 200 - Contractual services50,10050,10042,4667,63439,906 Capital outlay200200 - 200 - Total finance277,300277,300270,0197,281268,537 Election: Current: Personal services21,50021,50027,890(6,390)10,338 Materials and supplies - - 462(462) - Contractual services6,4006,40013,945(7,545)4,395 Total election27,90027,90042,297(14,397)14,733 Legal: Current: Contractual services148,000148,000142,3335,667135,725 Property assessment: Current: Contractual services110,000110,000111,432(1,432)104,314 M.I.S.: Current: Personal services173,000173,000174,038(1,038)171,962 Materials and supplies2,4002,4001,6467541,419 Contractual services72,40072,40062,22310,17798,875 Total M.I.S.247,800247,800237,9079,893272,256 83 CITY OF CHANHASSEN, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 3 of 6 For The Year Ended December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 2009 2010 ActualVariance withActual Budgeted Amounts OriginalFinalAmountsFinal BudgetAmounts Expenditures: (continued) General government: (continued) City hall: Current: Personal services$69,900$69,900$73,105($3,205)$68,853 Materials and supplies48,30048,30043,4174,88339,372 Contractual services301,300301,300282,91718,383273,832 Total City hall419,500419,500399,43920,061382,057 Library: Current: Materials and supplies3,0003,0003,538(538)3,291 Contractual services134,200134,200110,26823,932110,643 Total library137,200137,200113,80623,394113,934 Total general government1,938,2001,938,2001,881,18457,0161,832,354 Public safety: Police: Current: Personal services78,20078,20078,232(32)77,590 Materials and supplies - - 3,565(3,565)4,639 Contractual services1,553,0001,553,0001,503,62849,3721,488,733 Total police1,631,2001,631,2001,585,42545,7751,570,962 Fire department: Current: Personal services485,000485,000578,402(93,402)519,826 Materials and supplies47,10047,10045,8381,26238,044 Contractual services116,000116,00091,81724,18383,780 Total fire department648,100648,100716,057(67,957)641,650 Code enforcement: Current: Personal services577,000577,000584,586(7,586)651,178 Materials and supplies6,1006,1003,3112,7893,014 Contractual services22,90022,90011,79611,10411,397 Total code enforcement606,000606,000599,6936,307665,589 Animal control: Current: Personal services56,00056,00056,482(482)51,559 Materials and supplies5,0005,0003,5851,4152,845 Contractual services13,70013,70011,7561,94410,490 Total animal control74,70074,70071,8232,87764,894 Total public safety2,960,0002,960,0002,972,998(12,998)2,943,095 84 CITY OF CHANHASSEN, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 4 of 6 For The Year Ended December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 2009 2010 ActualVariance withActual Budgeted Amounts Expenditures: (continued)OriginalFinalAmountsFinal BudgetAmounts Public works: Engineering: Current: Personal services$530,400$530,400$504,665$25,735$507,081 Materials and supplies1,3001,3004138871,583 Contractual services31,20031,20037,894(6,694)29,982 Capital outlay300300 - 300 - Total engineering563,200563,200542,97220,228538,646 Street maintenance: Current: Personal services641,200641,200641,077123644,157 Materials and supplies141,600141,600173,908(32,308)127,917 Contractual services34,40034,40036,584(2,184)26,965 Capital outlay1,3001,300 - 1,300 - Total street maintenance 818,500818,500851,569(33,069)799,039 Street lighting: Current: Materials and supplies5,0005,0001,5273,4731,331 Contractual services343,400343,400316,05127,349331,358 Total street lighting348,400348,400317,57830,822332,689 City garage: Current: Personal services259,400259,400257,9411,459257,340 Materials and supplies168,400168,400138,26930,131117,332 Contractual services96,40096,40077,77818,62244,981 Capital outlay3,0003,000 - 3,000 - Total City garage527,200527,200473,98853,212419,653 Total public works2,257,3002,257,3002,186,10771,1932,090,027 Parks and recreation: Parks and recreation commission: Current: Materials and supplies200200 - 200 - Contractual services2,0002,0002,526(526)2,578 Total parks and recreation commission2,2002,2002,526(326)2,578 Parks and recreation administration: Current: Personal services124,700124,700127,194(2,494)125,625 Materials and supplies1,0001,00084916333 Contractual services24,70024,7006,86217,8386,894 Total parks and recreation administration150,400150,400134,14016,260132,852 Recreation center: Current: Personal services219,700219,700199,16020,540215,799 Materials and supplies47,30047,30036,78710,51338,457 Contractual services79,30079,30072,6636,63778,736 Total recreation center346,300346,300308,61037,690332,992 85 CITY OF CHANHASSEN, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 5 of 6 For The Year Ended December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 2009 2010 ActualVariance withActual Budgeted Amounts OriginalFinalAmountsFinal BudgetAmounts Expenditures: (continued) Parks and recreation: (continued) Senior citizen center: Current: Personal services$44,000$44,000$44,246($246)$44,165 Materials and supplies4,5004,5003,1171,3833,347 Contractual services20,60020,60021,749(1,149)20,928 Total senior citizen center69,10069,10069,112(12)68,440 Recreation program: Current: Personal services169,800169,800162,6237,177162,402 Materials and supplies19,10019,10014,4104,69013,712 Contractual services94,60094,60097,300(2,700)87,333 Total recreation program283,500283,500274,3339,167263,447 Self-supporting programs: Current: Personal services28,70028,70031,349(2,649)31,161 Materials and supplies8,6008,6007,5011,0996,449 Contractual services46,00046,00023,01522,98536,445 Total self-supporting programs83,30083,30061,86521,43574,055 Lake Ann Park operations: Current: Personal services13,40013,4006,4176,9835,723 Materials and supplies9,5009,5008,0211,4796,124 Contractual services45,40045,40038,6636,73743,821 Total Lake Ann Park operations68,30068,30053,10115,19955,668 Park maintenance: Current: Personal services704,700704,700724,389(19,689)697,715 Materials and supplies81,30081,30085,072(3,772)69,570 Contractual services94,60094,600116,127(21,527)80,543 Capital outlay4,0004,000 - 4,000 - Total park maintenance884,600884,600925,588(40,988)847,828 Downtown maintenance: Current: Contractual services - - 3,294(3,294)3,953 Recreation sports: Current: Personal services9,5009,50013,110(3,610)3,146 Materials and supplies8,9008,9007,7271,1736,229 Contractual services - - 942(942)4,947 Total recreation sports18,40018,40021,779(3,379)14,322 Total parks and recreation1,906,1001,906,1001,854,34851,7521,796,135 86 CITY OF CHANHASSEN, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 6 of 6 For The Year Ended December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 20102009 Budgeted AmountsActualVariance withActual OriginalFinalAmountsFinal BudgetAmounts Expenditures: (continued) Community development: Planning commission: Current: Materials and supplies$200$200$ - $200$ - Contractual services4,0004,0002,9291,0714,066 Total planning commission4,2004,2002,9291,2714,066 Planning administration: Current: Personal services394,100394,100385,2698,831385,721 Materials and supplies700700104596380 Contractual services14,10014,1005,2268,8746,134 Total planning administration408,900408,900390,59918,301392,235 Senior facility commission: Current: Personal services22,00022,00022,200(200)22,032 Contractual services10,70010,7008,6412,0598,583 Total senior facility commission32,70032,70030,8411,85930,615 Total community development445,800445,800424,36921,431426,916 Total expenditures9,507,4009,507,4009,319,006188,3949,088,527 Revenues over expenditures50,00050,000445,759395,759142,140 Other financing sources (uses): Transfers out(50,000)(50,000)(50,000) - (150,000) Net change in fund balance$0$0395,759$395,759(7,860) Fund balance - January 14,873,8594,881,719 Fund balance - December 31$5,269,618$4,873,859 Note A BUDGETARY INFORMATION The General Fund budget is legally adopted on a basis consistent with accounting principles generally accepted in the United States of America. The legal level of budgetary control is at the department level for the General Fund. 87 CITY OF CHANHASSEN, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF FUNDING PROGRESS - RETIREE HEALTH PLAN For The Year Ended December 31, 2010 Unfunded ActuarialActuarialActuarialUAAL as a ActuarialValue ofAccruedAccruedFundedCoveredPercentage of ValuationAssetsLiability (AAL)*Liability (UAAL)RatioPayrollCovered Payroll Date(a)(b)(b-a)(a/b)(c)((b-a)/c) Date(a)(b)(b-a)(a/b)(c)((b-a)/c) January 1, 2008$0$52,268$52,2680.0%$4,180,2351.3% *Using the entry age normal actuarial pay cost method. Note: the first (and most recent) OPEB actuarial valuation was conducted as of January 1, 2008. There is no data available prior to or since the first valuation. 88 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES 89 - This page intentionally left blank - 90 NONMAJOR GOVERNMENTAL FUNDS 91 - This page intentionally left blank - 92 SPECIAL REVENUE FUNDS The Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. DEBT SERVICE FUNDS The Debt Service Funds are used to account for the accumulation of resources for, and payment of, interest, principal and related costs on general long-term debt. CAPITAL PROJECT FUNDS The Capital Project Funds account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by Proprietary Funds). 93 CITY OF CHANHASSEN, MINNESOTA COMBINING BALANCE SHEET Statement 11 NONMAJOR GOVERNMENTAL FUNDS December 31, 2010 With Comparative Totals For December 31, 2009 Totals Nonmajor SpecialDebtCapital Governmental Funds RevenueServiceProject20102009 Assets: Cash and investments$2,064,655$1,508,616$7,513,572$11,086,843$11,733,551 Cash with escrow agent - 3,879,306 - 3,879,306 - Accrued interest receivable3,4785,84036,13545,45394,352 Due from other governmental units - - 105,962105,962 - Accounts receivable - net61,716 - 15,93177,64762,978 Due from other funds - 38,36266839,030 - Property taxes receivable - 11,46818,90730,37567,440 Special assessments receivable - 239,232370239,602253,462 Prepaid items396 - 6,8137,209321 Total assets$2,130,245$5,682,824$7,698,358$15,511,427$12,212,104 Liabilities and Fund Balance Liabilities: Accounts payable$3,114$2,665$84,683$90,462$260,514 Due to other governmental units - - 1441441,593,334 -, -,, Duetootherfunds-38362-38362350369 Duetootherfunds3836238362350369 Salaries payable1,568 - - 1,5683,384 Contracts payable - - 4,3284,328574,650 Deferred revenue - 237,527115,192352,719255,817 Total liabilities4,682278,554204,347487,5833,038,068 Fund balance: Reserved for: Prepaid items396 - 6,8137,209321 Future programs42,238 - - 42,23836,332 Debt service - 5,046,880 - 5,046,8802,563,033 Unreserved: Designated2,082,929 - 7,487,1989,570,1278,232,622 Undesignated - 357,390 - 357,390(1,658,272) Total fund balance2,125,5635,404,2707,494,01115,023,8449,174,036 Total liabilities and fund balance$2,130,245$5,682,824$7,698,358$15,511,427$12,212,104 94 CITY OF CHANHASSEN, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND Statement 12 CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For The Year Ended December 31, 2010 With Comparative Totals For The Year Ended December 31, 2009 Totals Nonmajor Special DebtCapitalGovernmental Funds RevenueServiceProject20102009 Revenues: General property taxes$ - $1,217,895$1,024,000$2,241,895$2,753,317 Tax increment collections - - 539,523539,523473,674 Licenses and permits - - 264,822264,82234,800 Intergovernmental - - 107,768107,768170,170 Special assessments - 52,19122,14974,340130,541 Charges for services231,72979,87814,990326,597328,444 Investment income18,04933,976100,963152,988236,175 Contributions and donations22,731 - - 22,73120,841 Refunds and reimbursements - - 25,20025,20025,388 Other - - 1,4001,40012,590 Total revenues272,509 1,383,940 2,100,815 3,757,264 4,185,940 Expenditures: Current: General government138,67452,420149,675340,769238,344 Public safety17,500 - 86,540104,04035,949 Public works - - 243,704243,7042,400,328 Parks and recreation - - 47,21647,216691,850 Community development - - 274 ,449274,449101,003 Communitydevelopment274,449274,449101,003 Capital outlay: General government - - 47,20547,205143,663 Public safety - - 65,66765,66755,152 Public works - - 497,089497,0897,622,117 Parks and recreation - - 490,737490,737235,292 Debt service: Principal - 1,925,000 - 1,925,0002,553,002 Interest and paying agent fees - 675,504 - 675,504920,529 Bond issuance costs - 39,655 - 39,65573,182 Developer assistance - - 176,643176,64390,354 Total expenditures156,174 2,692,579 2,078,925 4,927,678 15,160,765 Revenues over (under) expenditures116,335 (1,308,639)21,890 (1,170,414)(10,974,825) Other financing sources (uses): Bond premium - 35,964 - 35,964226,991 Refunding bonds issued - 3,660,000 - 3,660,0006,020,000 Redemption of refunded bonds - - - - (8,387,123) Loans issued - - - - - Transfers in1,540,000361,6602,637,0004,538,6601,557,639 Transfers out(236,417)(250,625)(758,035)(1,245,077)(554,653) Sale of capital assets - - 30,67530,67516,274 Total other financing sources (uses)1,303,583 3,806,999 1,909,640 7,020,222 (1,120,872) Net change in fund balance1,419,918 2,498,360 1,931,530 5,849,808 (12,095,697) Fund balance - January 1705,6452,905,9105,562,4819,174,03621,269,733 Fund balance - December 31$2,125,563$5,404,270$7,494,011$15,023,844$9,174,036 95 - This page intentionally left blank - 96 NONMAJOR SPECIAL REVENUE FUNDS Special Revenue Funds are established to account for taxes and other revenues set aside for a particular purpose. Revenues are recognized in the accounting period in which they become available and measurable. Expenditures are recognized in the accounting period in which the related liability is incurred. Contribution Fund – This fund accounts for the proceeds that the City receives from charitable gambling. The City collects 10% of the net proceeds from a pull-tab operation in the City. By state statute, the fund may only be used for public safety equipment and training or programs which benefit youth. CATV Fund – Under the terms of the franchise agreement with Triax Cablevision, the City is to receive 5% of the revenues derived from cable television sales within the City. These monies are dedicated solely to improving public broadcasting capabilities, studio improvements, and other capital expenditures improving the overall cable system. Economic Development Authority – This fund is used to account for all activities of the Chanhassen Economic Development Authority. 97 CITY OF CHANHASSEN, MINNESOTA SUBCOMBINING BALANCE SHEET Statement 13 NONMAJOR SPECIAL REVENUE FUNDS December 31, 2010 With Comparative Totals For December 31, 2009 201220 Economic Contribution210 CATV DevelopmentTotal Nonmajor Special FundFundAuthorityRevenue Funds 20102009 Assets: Cash and investments$38,764$715,891$1,310,000$2,064,655$644,639 Accrued interest receivable2093,269 - 3,4783,639 Accounts receivable - net3,26558,451 - 61,71660,446 Prepaid items - 396 - 396321 Total assets$42,238 $778,007 $1,310,000 $2,130,245 $709,045 Liabilities and Fund Balance Liabilities: Accounts payable$ - $3,114$ - $3,114$16 Salaries payable - 1,568 - 1,5683,384 Total liabilities04,68204,6823,400 Fund balance: Reserved for prepaid items - 396 - 396321 , - - ,, Reservedforyouthandpublicsafetyprograms42238--4223836332 Reservedforyouthandpublicsafetyprograms422384223836332 Unreserved: Designated for cable equipment - 772,929 - 772,929668,992 Designated for economic development - - 1,310,0001,310,000 - Total fund balance42,238773,3251,310,0002,125,563705,645 Total liabilities and fund balance$42,238 $778,007 $1,310,000 $2,130,245 $709,045 98 CITY OF CHANHASSEN, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES Statement 14 AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS For The Year Ended December 31, 2010 With Comparative Totals For The Year Ended December 31, 2009 201220 Economic Contribution210 CATV Development Total Nonmajor Special Revenue FundFundAuthorityFunds 20102009 Revenues: Franchise fees$ - $231,729$ - $231,729$228,874 Investment income67510,9576,41718,0498,667 Contributions and donations22,731 - - 22,73120,841 Total revenues23,406242,6866,417272,509258,382 Expenditures: Current: Personal services - 89,503 - 89,50389,480 Materials and supplies - 10,046 - 10,0461,167 Contractual services17,50039,125 - 56,62517,306 Total expenditures17,500138,6740156,174107,953 Revenues over (under) expenditures5,906104,0126,417116,335150,429 Other financing sources (uses): Transfers in - - 1,540,0001,540,000 - Transfers out - - (236,417)(236,417) - Total other financing sources (uses)001,303,5831,303,5830 Net change in fund balance5,906 104,012 1,310,000 1,419,918 150,429 Fund balance - January 136,332669,313 - 705,645555,216 Fund balance - December 31$42,238$773,325$1,310,000$2,125,563$705,645 99 - This page intentionally left blank - 100 NONMAJOR DEBT SERVICE FUNDS Debt Service Funds are maintained on the modified accrual basis of accounting for revenues from taxes and other sources set aside for the payment of the debt obligations of the City. Principal and interest on the general long-term debt is recognized when due. General Obligation Bonds – these funds are used to account for the accumulation of resources for payment of general obligation bonds or other general indebtedness and the interest thereon. Tax Increment Bonds – these funds are used to account for the accumulation of resources for payment of tax increment general obligation bonds and the interest thereon. General Improvement Bonds – these funds are used to account for the accumulation of resources for payment of principal and interest on general obligation improvement bonds. Revenue Bonds – these funds are used to account for the bonds issued by the EDA that are repaid through a lease-purchase agreement with the City. 101 - This page intentionally left blank - 102 CITY OF CHANHASSEN, MINNESOTA Statement 15 SUBCOMBINING BALANCE SHEET NONMAJOR DEBT SERVICE FUNDS December 31, 2010 With Comparative Totals For December 31, 2009 352 2000 357/369367 2008A 300Public2002A & G.O. Public PermanentProject2010A G.O. Works RevolvingRevenueLibrary360 2004A FacilityTotals Nonmajor Debt DebtBondsBondsG.O. BondsBondsService Funds 20102009 Assets: Cash and investments$355,027$125,420$588,927$ - $439,242$1,508,616$2,864,990 Cash with escrow agent - - 3,879,306 - - 3,879,306 - Accrued interest receivable2,4032771,7069205345,84013,773 Due from other funds38,362 - - - - 38,362 - Property taxes receivable - 1,1784,511 - 5,77911,46827,147 Special assessments receivable150,617 - - 88,615 - 239,232232,792 Total assets$546,409$126,875$4,474,450$89,535$445,555$5,682,824$3,138,702 Liabilities and Fund Balanceibiliiddl Liabilities: Accounts payable$2,665$ - $ - $ - $ - $2,665$ - Due to other funds - - - 38,362 - 38,362 - Deferred revenue150,618 - - 86,909 - 237,527232,792 Total liabilities153,28300125,2710278,554232,792 Fundbalance:unaance: Fdbl Reserved for debt retirement - 126,8754,474,450 - 445,5555,046,8802,563,033 Unreserved: Undesignated393,126 - - (35,736) - 357,390342,877 Total fund balance393,126126,8754,474,450(35,736)445,5555,404,2702,905,910 Total liabilities and fund balance$546,409$126,875$4,474,450$89,535$445,555$5,682,824$3,138,702 103 CITY OF CHANHASSEN, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR DEBT SERVICE FUNDS For The Year Ended December 31, 2010 With Comparative Totals For The Year Ended December 31, 2009 352 2000 Public 357/369 2002A 300 Permanent Project Revenue & 2010A G.O. Revolving DebtBondsLibrary Bonds Revenues: General property taxes$ - $122,195$496,400 Special assessments1,650 - - Chargesforservicesv79878, - - Chargesforserices79878 Investment income1,71184029,573 Total revenues83,239123,035525,973 Expenditures: Current: General government32,365 - - Debt service: Principal -105,000260,000 Interest and paying agent fees -15,330254,713 Bond issuance costs - -39,655 Total expenditures32,365120,330554,368 Revenues over (under) expenditures50,8742,705(28,395) Othfii()ternancng sources uses: Ohfii() Bond premium - -35,964 Refunding bonds issued - - 3,660,000 Redemption of refunding bonds - - - Transfer in - -250,000 Transfer out(625) - (250,000) Total other financing sources (uses)(625)03,695,964 Net change in fund balance50,2492,7053,667,569 Fund balance - January 1342,877124,170806,881 Fund balance - December 31$393,126$126,875$4,474,450 104 Statement 16 362 2004C 365 2005C G.O. 367 2008A G.O. 360 2004A G.O. Taxable G.O. Park Refunding Public Works BondsT.I. RefundBondsFacility BondsTotals Nonmajor Debt Service Funds 20102009 $ - $ - $ - $599,300$1,217,895$1,661,442 50,541 - - -52,191109,440 - - - -79878,99570, 7987899570 1,602 - -25033,97631,420 52,14300599,5501,383,9401,901,872 12,555 -4,0003,50052,420 - 605,00060,000895,000 - 1,925,0002,553,002 17,64551,03515,663321,118675,504920,529 - - - -39,65573,182 635,200111,035914,663324,6182,692,5793,546,713 (583,057)(111,035)(914,663)274,932(1,308,639)(1,644,841) - - - -35,964226,991 - - - - 3,660,0006,020,000 - - - - - (8,387,123) -111,035625 -361,660217,429 - - - -(250,625)(406,014) 0111,03562503,806,999(2,328,717) (583,057)0(914,038)274,9322,498,360(3,973,558) 547,321 -914,038170,6232,905,9106,879,468 ($35,736)$0$0$445,555$5,404,270$2,905,910 105 - This page intentionally left blank - 106 NONMAJOR CAPITAL PROJECT FUNDS Capital Project Funds are used to account for the construction and financing of large capital projects. Revenues and expenditures are recognized on the modified accrual basis. Revenues are recognized in the accounting period in which they become available and measurable. Expenditures are recognized in the accounting period in which they are incurred. Most capital projects are singular in purpose and their revenues/expenditures cannot be used for subsidizing any other operating fund. In each of these cases, bonds or other revenues received can only be used for these specific activities. The following Capital Project Funds differ in that several of the expenditure categories represent recurring types of costs, i.e., personal services, repair and maintenance of utilities, and/or recurring land improvements. 400 Capital Replacement Fund – accounts for monies collected from developers for inspection and administrative services for projects. – accounts for park dedication fees as required by the 410 Park Acquisition and Development City ordinance. These funds are then utilized to finance park and trail improvements identified in the park and recreation section of the City’s comprehensive plan. – accounts for sealcoating costs on local streets. 420 Street Pavement Management 421 Public Works Facility - accounts for the construction costs of the new public works facility. 461 Gateway Place TIF District, 462 Downtown Transit Station TIF #10, 491 TIF #4 Entertainment, 494 TIF #5 North Bay, and 498 TIF #8 Presbyterian Homes – account for financing improvements in tax increment financing districts. 600 Special Assessment Projects – accounts for the construction or projects financed by special assessments. 602 2006A Special Assessment Bonds – accounts for the construction costs related to the MUSA area improvements. 603 Lyman Blvd Improvements - accounts for the street and utility improvement of Lyman Blvd. 107 CITY OF CHANHASSEN, MINNESOTA SUBCOMBINING BALANCE SHEET NONMAJOR CAPITAL PROJECT FUNDS December 31, 2010 With Comparative Totals For December 31, 2009 462 410 Park Downtown 400 Capital Acquisition420 Street 421 Public 461 Gateway Transit ReplacementandPavementWorksPlace TIF Station TIF FundDevelopmentManagementFacilityDistrict#10 Assets: Cashandinvestmentsv$2140261,,$2079084,,$944142,$285720,$13043,$3252, Cashandinestments$2140261$2079084$944142$285720$13043$3252 Accrued interest receivable7,63914,3234,2602,79213247 Due from other governmental units - - 105,962 - - - Accounts receivable - net15,931 - - - - - Due from other funds668 - - - - - Property taxes receivable7,879 - 1,912 - - - Special assessments receivable - - - - - - Prepaid items5,063 - 1,750 - - - p,, Total assets$2,177,441$2,093,407$1,058,026$288,512$13,056$3,499 Liabilities and Fund Balance Liabilities: Accounts payable$45,060$1,073$34,946$ - $ - $2,414 DhliDue to other governmental units - - - - - - Due to other funds - - - - - - Contracts payable - 4,088 - 240 - - Deferred revenue - - 105,962 - - - Total liabilities45,0605,161140,90824002,414 Fund balance (deficit): Reservedforprepaiditems5063, --1750, - - - --- Reservedforprepaiditems50631750 Unreserved: Designated for capital improvements2,127,3182,088,246915,368288,27213,0561,085 Undesignated - - - - - - Total fund balance (deficit)2,132,3812,088,246917,118288,27213,0561,085 Total liabilities and fund balance$2,177,441$2,093,407$1,058,026$288,512$13,056$3,499 108 Statement 17 602 2006A 603 Lyman 498 TIF #8 600 Special SpecialBlvd 491 TIF #4 494 TIF #5 PresbyterianAssessmentAssessmentImprovementsTotals Nonmajor Capital Project EntertainmentNorth BayHomesProjectsBonds06-03Funds 20102009 $370810,$124382,$181151,$75705,$505015,$791007,$7513572,,$8223922,, $370810$124382$181151$75705$505015$791007$7513572$8223922 3,3743214642842,418 - 36,13576,940 - - - - - - 105,962 - - - - - - - 15,9312,532 - - - - - - 668 - 4,0405,076 - - - - 18,90740,293 - - - 370 - - 37020,670 - - - - - - 6,813 - , $378,224$129,779$181,615$76,359$507,433$791,007$7,698,358$8,364,357 $595$595$ - $ - $ - $ - $84,683$260,498 144144 - - - - - 1441441,593,3341593334 - - - - - - - 350,369 - - - - - - 4,328574,650 4,0405,076 - 114 - - 115,19223,025 4,7795,671011400204,3472,801,876 - - - - - - ------6813, -- 6813 373,445124,108181,61576,245507,433791,0077,487,1987,563,630 - - - - - - - (2,001,149) 373,445124,108181,61576,245507,433791,0077,494,0115,562,481 $378,224$129,779$181,615$76,359$507,433$791,007$7,698,358$8,364,357 109 CITY OF CHANHASSEN, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR CAPITAL PROJECT FUNDS For The Year Ended December 31, 2010 With Comparative Totals For The Year Ended December 31, 2009 462 410 Park Downtown 400 Capital Acquisition420 Street 421 Public 461 Gateway Transit ReplacementandPavementWorksPlace TIF Station TIF FundDevelopmentManagementFacilityDistrict#10 Revenues: General property taxes$824,000$ - $200,000$ - $ - $ - Tax increment collections - - - - 24,204 - Licenses and permits - 264,822 - - - - Intergovernmental - - 100,000 - - - Special assessments - - - - - - Charges for services - - - - - - Investment income23,99839,60514,209 - 471,085 Refunds and reimbursements22,833 - 2,367 - - - Other1,400 - - - - - Total revenues872,231304,427316,576024,2511,085 Expenditures: Current: General government149,675 - - - - - Public safety86,540 - - - - - Public works8,628 - 228,452517 - - Parks and recreation - 47,216 - - - - Community development - - - - 11,963 - Capital outlay: General government47,205 - - - - - Public safety65,667 - - - - - Public works85,099 - - 410,713 - - Parks and recreation23,921466,816 - - - - Developer assistance - - - - - - Total expenditures466,735514,032228,452411,23011,9630 Revenues over (under) expenditures405,496(209,605)88,124(411,230)12,2881,085 Other financing sources (uses): Transfer in - - - - - - Transfer out - (647,000) - - - - Sale of capital assets30,675 - - - - - Total other financing sources (uses)30,675(647,000)0000 Net change in fund balance436,171 (856,605)88,124 (411,230)12,288 1,085 Fund balance (deficit) - January 1 as previously stated1,696,2102,944,851828,994699,502768(147,550) Prior period adjustment - - - - - 147,550 Fund balance (deficit) - January 1 as restated1,696,2102,944,851828,994699,5027680 Fund balance (deficit) - December 31$2,132,381$2,088,246$917,118$288,272$13,056$1,085 110 Statement 18 602 2006A 603 Lyman 498 TIF #8 600 Special SpecialBlvd 491 TIF #4 494 TIF #5 PresbyterianAssessmentAssessmentImprovementsTotals Nonmajor Capital Project EntertainmentNorth BayHomesProjectsBonds06-03Funds 20102009 $ - $ - $ - $ - $ - $ - $1,024,000$1,091,875 230,86074,563209,896 - - - 539,523473,674 - - - - - - 264,82234,800 - 7,768 - - - - 107,768170,170 - - - 22,149 - - 22,14921,101 - - - - - 14,99014,990 - 10,8141,4081,4849917,322 - 100,963196,088 - - - - - - 25,20025,388 - - - - - - 1,40012,590 241,67483,739211,38023,1407,32214,9902,100,8152,025,686 - - - - - - 149,675144,881 - - - - - - 86,54021,459 - - - - - 6,107243,7042,400,328 - - - - - - 47,216691,850 255,2366,370880 - - - 274,449101,003 - - - - - - 47,205143,663 - - - - - - 65,66755,152 - - - - - 1,277497,0897,622,117 - - - - - - 490,737235,292 - - 176,643 - - - 176,64390,354 255,2366,370177,523007,3842,078,92511,506,099 (13,562)77,36933,85723,1407,3227,60621,890(9,480,413) - - - - - 2,637,0002,637,0001,340,210 (111,035) - - - - - (758,035)(148,639) - - - - - - 30,67516,274 (111,035)00002,637,0001,909,6401,207,845 (124,597)77,369 33,857 23,140 7,322 2,644,606 1,931,530 (8,272,568) 645,59246,739147,75853,105500,111(1,853,599)5,562,48113,835,049 (147,550) - - - - - - - 498,04246,739147,75853,105500,111(1,853,599)5,562,48113,835,049 $373,445$124,108$181,615$76,245$507,433$791,007$7,494,011$5,562,481 111 CITY OF CHANHASSEN, MINNESOTA SPECIAL REVENUE FUND - CONTRIBUTION FUND Statement 19 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 20102009 Budgeted AmountsActualVariance withActual OriginalFinalAmountsFinal BudgetAmounts Revenues: Investment income$1,500$1,500$675($825)$482 Contributions and donations12,00012,00022,73110,73120,841 Total revenues13,50013,50023,4069,90621,323 Expenditures: Current: Contractual services17,50017,50017,500 - 14,490 Revenues over (under) expenditures($4,000)($4,000)5,906$9,9066,833 Fund balance - January 136,33229,499 Fund balance - December 31$42,238$36,332 112 CITY OF CHANHASSEN, MINNESOTA SPECIAL REVENUE FUND - CATV Statement 20 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2010 With Comparative Actual Amounts For The Year Ended December 31, 2009 20102009 Budgeted AmountsActualVariance withActual OriginalFinalAmountsFinal BudgetAmounts Revenues: Franchise fees$185,000$185,000$231,729$46,729$228,874 Investment income15,00015,00010,957(4,043)8,185 Totalrevenuesvu200000,200000,242686,42686,237059, Totalreenes20000020000024268642686237059 Expenditures: Current: Personal services89,10089,10089,503(403)89,480 Materials and supplies50050010,046(9,546)1,167 Contractual services4,1004,10039,125(35,025)2,816 Total expenditures93,70093,700138,674(44,974)93,463 p,,,(,), Revenues over (under) expenditures$106,300$106,300104,012($2,288)143,596 Fund balance - January 1669,313525,717 Fund balance - December 31$773,325$669,313 113 - This page intentionally left blank - 114 FIDUCIARY FUNDS Fiduciary Funds have been established to account for cash or other assets held by the City as a trustee or agent for others. Revenues are recognized in the accounting period in which they become available and measurable. Expenditures are recognized in the accounting period in which the related liability is incurred. Fiduciary Funds are custodial in nature (assets equal liabilities) and do not involve measurement of the results of operations. Escrow Fund – this fund is used to account for various deposits required by the City. Moon Valley Restoration Fund – this is an escrow fund which will be used to finance restoration to a gravel pit when it ceases operation. 115 CITY OF CHANHASSEN, MINNESOTA COMBINING STATEMENT OF NET ASSETS Statement 21 AGENCY FUNDS December 31, 2010 With Comparative Totals For December 31, 2009 913 Moon Valley 815 Escrow Restoration FundFundTotals 20102009 Assets: Cash and investments$741,408$85,727$827,135$694,817 Liabilities: Escrow deposits payable$741,408$85,727$827,135$694,817 116 CITY OF CHANHASSEN, MINNESOTA COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES Statement 22 AGENCY FUNDS For The Year Ended December 31, 2010 BalanceBalance 01/01/10AdditionsDeletions12/31/10 Escrow Fund Assets: Cash and investments$609,658$1,079,868$948,118$741,408 Liabilities: Escrow deposits payable$609,658$1,079,868$948,118$741,408 Moon Valley Restoration Fund Assets: Cash and investments$85,159$568$ - $85,727 Liabilities: Escrow deposits payable$85,159$568$ - $85,727 Totals - All Agency Funds Assets: Cash and investments$694,817$1,080,436$948,118$827,135 Liabilities: Escrow deposits payable$694,817$1,080,436$948,118$827,135 117 - This page intentionally left blank - 118 OTHER INFORMATION 119 CITY OF CHANHASSEN, MINNESOTA COMBINED SCHEDULE OF INDEBTEDNESS December 31, 2010 Final InterestIssueMaturity Bonded indebtedness:RatesDateDate General obligation bonds: G.O. Library Bonds, Series 2002A1.55%-4.85%03/01/0208/01/12 G.O. Park Refunding Bonds, Series 2005C3.50%11/16/0502/01/10 G.O. Capital Improvement Plan Bonds, Series 2008A4.00%-4.60%11/18/0802/01/30 G.O. Library Refunding Bonds, Series 2010A2.00%-3.10%01/27/1002/01/22 Total general obligation bonds Revenue bonds: 2000 Public Project Revenue Bonds4.75%-5.35%12/01/0002/01/12 Tax increment bonds: G.O. Tax Increment Refunding Bonds, Series 2004C3.00%-6.00%08/10/0402/01/21 General improvement bonds: G.O. Improvement Bonds, Series 2004A2.50%-4.00%08/10/0402/01/15 G.O. Improvement Bonds, Series 2009A3%06/03/0902/01/17 G.O. Street Reconstruction, Series 20100.65%-1.20%07/22/1006/15/13 Total general improvement bonds EnterpriseFunddebt: EnterpriseFunddebt: G.O. Sewer and Water Revenue Bonds 2001, Series A3.50%-4.65%07/15/0102/01/12 G.O. Water Revenue Bonds of 2004, Series B4.00%-4.50%08/10/0402/01/25 G.O. Water Revenue Bonds of 2005, Series B3.75%-3.90%11/16/0502/01/21 Total Enterprise Fund debt Total bonded indebtedness Other debt: Compensated absences payable Total City indebtedness 120 Exhibit 1 Prior YearsPayable2010PayablePrincipal OriginalJanuary 1,December 31,Due in IssuePayments2010IssuedPayments20102011 $6,095,000$1,495,000$4,600,000$ - $260,000$4,340,000$275,000 2,590,0001,695,000895,000 - 895,000 - - 7,550,000 - 7,550,000 - - 7,550,000250,000 3,660,000 - - 3,660,000 - 3,660,000 - 19,895,0003,190,00013,045,0003,660,0001,155,00015,550,000525,000 930,000595,000335,000 - 105,000230,000110,000 1,170,000210,000960,000 - 60,000900,00060,000 2,070,0001,465,000605,000 - 605,000 - - 6,020,000 - 6,020,000 - 215,0005,805,000190,000 1,540,000 - - 1,540,000230,0001,310,000140,000 9,630,0001,465,0006,625,0001,540,0001,050,0007,115,000330,000 1,645,0001,380,000265,000 - 130,000135,00065,000 7,930,0001,145,0006,785,000 - 300,0006,485,000315,000 5,465,000820,0004,645,000 - 310,0004,335,000320,000 15,040,0003,345,00011,695,0000740,00010,955,000700,000 48,205,0008,805,00032,660,0006,740,0003,340,00036,060,0001,865,000 - - 869,411672,702594,067948,04648,572 $48,205,000$8,805,000$33,529,411$7,412,702$3,934,067$37,008,046$1,913,572 121 CITY OF CHANHASSEN, MINNESOTA DEBT SERVICE PAYMENTS TO MATURITY Exhibit 2 GENERAL OBLIGATION BONDS December 31, 2010 G.O. Tax 2000IncrementG.O. LibraryG.O. Capital Public ProjectG.O. LibraryRefundingRefundingImprovement RevenueBonds,Bonds,BondsPlan Bonds, BondSeries 2002ASeries 2004CSeries 2010ASeries 2008ATotal Bonds payable$230,000$4,340,000$900,000$3,660,000$7,550,000$16,680,000 Future interest payable12,518373,124309,693768,5583,762,8185,226,711 $242,518$4,713,124$1,209,693$4,428,558$11,312,818$21,906,711 Payments to maturity: 2011$119,308$467,251$107,725$99,805$565,667$1,359,756 2012123,2104,245,873109,72099,805560,5685,139,176 2013 - - 111,345381,955560,1671,053,467 2014 - - 107,775420,805559,3681,087,948 2015 - - 109,005423,680558,1671,090,852 2016 - - 109,895420,543556,5681,087,006 2017 - - 110,440425,830559,4671,095,737 2018 - - 110,580424,880561,7681,097,228 - - ,,,,, 2019--1103084334805584841102272 20191103084334805584841102272 2020 - - 109,600431,630564,4231,105,653 2021 - - 113,300429,480564,4671,107,247 2022 - - - 436,665563,7051,000,370 2023 - - - - 567,013567,013 2024 - - - - 569,270569,270 2025 - - - - 570,454570,454 2026 - - - - 570,545570,545 2027 - - - - 574,412574,412 2028 - - - - 572,035572,035 2029 - - - - 578,275578,275 2030 - - - - 577,995577,995 $242,5184,713,124$1,209,693$4,428,558$11,312,818$21,906,711 122 CITY OF CHANHASSEN, MINNESOTA DEBT SERVICE PAYMENTS TO MATURITY Exhibit 3 GENERAL OBLIGATION IMPROVEMENT BONDS December 31, 2010 G.O. G.O. StreetImprovement ReconstructionBonds, Series 2010Series 2009ATotal Bonds payable$1,310,000$5,805,000$7,115,000 Future interest payable31,643678,225709,868 $1,341,643$6,483,225$7,824,868 Payments to maturity: 2011$154,433$361,300$515,733 2012412,590360,525773,115 2013774,620359,6001,134,220 2014 -3,618,8753,618,875 2015 -592,900592,900 2016 -591,175591,175 2017 -598,850598,850 $1,341,643$6,483,225$7,824,868 123 CITY OF CHANHASSEN, MINNESOTA DEBT SERVICE PAYMENTS TO MATURITY Exhibit 4 REVENUE BONDS December 31, 2010 G.O. Sewer & WaterG.O. WaterG.O. Water RevenueRevenueRevenue BondsBonds of 2004,Bonds of 2005, Series 2001ASeries BSeries BTotal Bonds payable$135,000$6,485,000$4,335,000$10,955,000 Future interest payable6,3462,348,817974,2313,329,394 $141,346$8,833,817$5,309,231$14,284,394 Payments to maturity: 2011$69,718$583,854$478,382$1,131,954 201271,628581,054481,1011,133,783 2013 -582,754483,2581,066,012 2014 -583,854479,9451,063,799 2015 -584,354486,0701,070,424 2016 -584,254481,6331,065,887 2017 -583,354481,7261,065,080 2018 -586,334486,0571,072,391 2019 -588,164484,5121,072,676 2020 -589,039482,2841,071,323 2021 -593,655484,2631,077,918 2022 -591,935 -591,935 2023 -598,787 -598,787 2024 -599,150 -599,150 2025 -603,275 -603,275 $141,346$8,833,817$5,309,231$14,284,394 124 CITY OF CHANHASSEN, MINNESOTA TAXABLE VALUATIONS, TAX LEVIES AND TAX RATES Exhibit 5 December 31, 2010 Taxable Capacity Valuations: Tax Capacity Values Property Type2009/2010 Real estate and personal property: Hennepin County$1,448,022 Carver County39,730,942 Fiscal disparities:2,133,257 Distribution Contribution(3,994,619) Less: captured tax increment value(532,007) et tax capacity$38,785,595 N Tax Levy and Tax Rates: Payable 2010 Tax CertifiedCapacity LevyRate (1) Taxes levied: Revenue$7,380,00018.197 ,,. DebtService28331906986 DebtService28331906986 Totals$10,213,19025.183 (1) Urban rate 125 CITY OF CHANHASSEN, MINNESOTA SCHEDULE OF DEFERRED TAX LEVIES Exhibit 6 December 31, 2010 PublicG.O. ProjectLibraryG.O. CapitalTotalImprovementG.O. StreetTotalTotal Years ofRevenueBondsImprovementGeneralRefundingReconstructionGeneralDeferred Levy/Bondsof 2002A/Plan BondsBondedBondsBondsImprovementTax Collectionof 20002010Aof 2008ADebtof 2009Aof 2010BondsLevies 2010/2011$126,420$495,400$594,000$1,215,820$336,800$256,570$593,370$1,809,190 2011/2012 - 351,648593,800945,448335,900437,842773,7421,719,190 2012/2013 - 445,310593,2001,038,510550,000130,680680,6801,719,190 2013/2014 - 448,880592,1001,040,980233,800444,410678,2101,719,190 2014/2015 - 446,098590,6001,036,698232,300450,192682,4921,719,190 2015/2016 - 452,792594,0001,046,792240,700 - 240,7001,287,492 2016/2017 - 451,952596,7001,048,652 - - - 1,048,652 2017/2018 - 461,297593,6001,054,897 - - - 1,054,897 2018/2019 - 459,512600,3001,059,812 - - - 1,059,812 2019/2020 - 457,412600,8001,058,212 - - - 1,058,212 2020/2021 - 465,497600,4001,065,897 - - - 1,065,897 2021/2022 - - 604,500604,500 - - - 604,500 2022/2023 - - 607,400607,400 - - - 607,400 2023/2024 - - 609,200609,200 - - - 609,200 2024/2025 - - 609,900609,900 - - - 609,900 2025/2026 - - 614,600614,600 - - - 614,600 2026/2027 - - 612,700612,700 - - - 612,700 2027/2028 - - 620,100620,100 - - - 620,100 2028/2029 - - 620,600620,600 - - - 620,600 $126,420$4,935,798$11,448,500$16,510,718$1,929,500$1,719,694$3,649,194$20,159,912 126 III. STATISTICAL SECTION (UNAUDITED) 127 - This page intentionally left blank - 128 III. STATISTICAL SECTION (UNAUDITED) This part of the City of Chanhassen, Minnesota’s Comprehensive Annual Financial Report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City of Chanhassen, Minnesota’s overall financial health. Contents Pages Financial Trends These tables contain trend information to help the reader understand how the 130-137 City’s financial performance and well-being have changed over time. Revenue Capacity These tables contain information to help the reader assess the City’s most 138-145 significant local revenue source, the property tax. Debt Capacity These tables present information to help the reader assess the affordability of the 146-150 City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future. Demographic and Economic Information These tables offer demographic and economic indicators to help the reader 151-153 understand the environment within which the City’s financial activities take place. Operation Information These tables contain service and infrastructure data to help the reader understand 154-159 how the information in the City’s financial report relates to the services the City provides and the activities it performs. Sources: Unless otherwise noted, the information in these tables is derived from the comprehensive financial reports for the relevant year. 129 CITY OF CHANHASSEN, MINNESOTA NET ASSETS BY COMPONENT (1) Last Eight Fiscal Years (Accrual Basis of Accounting) 200320042005 Governmental activities: Invested in capital assets, net of related debt$76,644,369$77,583,392$72,418,684 Restricted: Debt service2,565,4865,762,41410,174,502 Tax increment purposes779,619630,5661,049,047 Unrestricted11,477,63810,632,18411,239,658 Total governmental activities net assets$91,467,112$94,608,556$94,881,891 Business-type activities: Invested in capital assets, net of related debt$46,050,122$38,888,555$37,479,967 Restricted: Debt service - - - Tax increment purposes - - - Unrestricted12,779,70121,908,22423,767,122 Total business-type activities net assets$58,829,823$60,796,779$61,247,089 Primary government: Invested in capital assets, net of related debt$122,694,491$116,471,947$109,898,651 Restricted: Debt service2,565,4865,762,41410,174,502 Tax increment purposes779,619630,5661,049,047 Unrestricted24,257,33932,540,40835,006,780 Total primary government net assets$150,296,935$155,405,335$156,128,980 (1) The City implemented GASB Statement No. 34 for the fiscal year ended December 31, 2003. Therefore, information for years prior to 2003 is not available. 130 Table 1 20062007200820092010 $70,216,944$68,982,379$70,611,368$72,106,198$73,272,450 7,687,15511,047,06212,165,6536,461,7809,217,254 1,063,589797,064621,915840,857693,309 16,220,83414,631,16615,171,39114,421,04210,997,048 $95,188,522$95,457,671$98,570,327$93,829,877$94,180,061 $47,807,323$52,502,257$55,541,752$55,496,919$57,028,340 - - - - - - - - - - 15,039,02117,292,10613,117,32312,129,04910,259,836 $62,846,344$69,794,363$68,659,075$67,625,968$67,288,176 $118,024,267$121,484,636$126,153,120$127,603,117$130,300,790 7,687,15511,047,06212,165,6536,461,7809,217,254 1,063,589797,064621,915840,857693,309 31,259,85531,923,27228,288,71426,550,09121,256,884 $158,034,866$165,252,034$167,229,402$161,455,845$161,468,237 131 CITY OF CHANHASSEN, MINNESOTA CHANGES IN NET ASSETS (1) Last Eight Fiscal Years (Accrual Basis of Accounting) 200320042005 Expenses Governmental activities: General government$2,201,345$2,338,485$4,518,355 Public safety2,587,0192,618,3072,653,304 Public works5,140,0284,955,5984,915,435 Parks and recreation2,578,5852,674,9542,867,364 Community development891,2532,027,713595,878 Interest on long-term debt1,018,936822,047505,367 Total governmental activities expenses14,417,16615,437,10416,055,703 Business-type activities: Water1,973,9131,985,9082,656,381 Sewer2,774,2312,686,1462,719,156 Surface water management784,557957,0841,039,721 Total business-type activities expenses5,532,7015,629,1386,415,258 Total primary government expenses$19,949,867$21,066,242$22,470,961 Program revenues Governmental activities: Charges for services: Licenses and permits$1,996,169$1,892,579$2,166,022 Charges for services1,075,631997,1141,196,103 Fines and forfeits43,73261,801104,962 Operating grants and contributions267,126370,090361,093 Capital grants and contributions1,171,5892,633,9165,080,512 Total governmental activities program revenues4,554,2475,955,5008,908,692 Business-type activities: Charges for services: Water1,582,6321,656,9111,703,501 Sewer1,633,4401,748,9291,905,206 Surface water management258,132265,090299,445 Operating grants and contributions13,2216,3811,620 Capital grants and contributions1,694,9983,528,2701,961,122 Total business-type activities program revenues5,182,4237,205,5815,870,894 Total primary government program revenues$9,736,670$13,161,081$14,779,586 132 Table 2 Page 1 of 2 20062007200820092010 $2,380,103$2,439,716$2,469,055$2,597,147$2,898,608 2,851,9263,098,0683,062,9413,158,4653,227,396 7,722,4667,010,9816,220,8169,123,1656,308,023 2,918,6453,023,0323,025,9873,663,1243,046,718 868,7491,052,104704,979628,339879,048 751,964835,059652,0151,031,567880,384 17,493,85317,458,96016,135,79320,201,80717,240,177 2,754,2013,112,5753,234,1393,311,1293,443,583 3,069,0693,177,3663,072,5883,276,0423,252,510 1,317,0891,238,9141,121,1971,093,1651,202,556 7,140,3597,528,8557,427,9247,680,3367,898,649 $24,634,212$24,987,815$23,563,717$27,882,143$25,138,826 $3,612,021$2,171,558$1,810,545$1,085,754$1,331,374 1,218,8161,132,4481,115,9031,064,1731,189,560 162,946145,682124,633122,496123,609 671,674452,798346,023363,540414,654 2,506,8227,464,6973,221,6361,265,2874,175,655 8,172,27911,367,1836,618,7403,901,2507,234,852 2,111,2302,461,2052,408,3792,689,1702,424,634 2,008,3562,186,6222,187,2092,378,1112,365,358 424,702452,148479,318512,761538,688 53945,17236,3505,3322,984 2,501,5983,340,5981,527,6241,684,9821,593,289 7,046,4258,485,7456,638,8807,270,3566,924,953 $15,218,704$19,852,928$13,257,620$11,171,606$14,159,805 133 CITY OF CHANHASSEN, MINNESOTA CHANGES IN NET ASSETS (1) Last Eight Fiscal Years (Accrual Basis of Accounting) 200320042005 Net (expense) revenue: Governmental activities($9,862,919)($9,481,604)($7,147,011) Business-type activities(350,278)1,576,443(544,364) Total primary government net (expense) revenue(10,213,197)(7,905,161)(7,691,375) General revenues and other changes in net assets Governmental activities: Property taxes$8,330,561$8,398,790$9,451,141 Tax increment collections4,804,0194,623,927675,117 Grants and contributions not restricted to specific programs59,86755,87945,455 Unrestricted investment earnings240,859164,712387,370 Miscellaneous98,812222,64293,792 Gain on sale of capital assets582,333540,64623,795 Transfers(121,355)(96,195)(481,824) Total governmental activities13,995,09613,910,40110,194,846 Business-type activities: Unrestricted investment earnings90,738255,510466,750 Miscellaneous -255,27946,100 Transfers121,35596,195481,824 Total business-type activities212,093606,984994,674 Total primary government$14,207,189$14,517,385$11,189,520 Change in net assets: Governmental activities$4,132,177$4,428,797$3,047,835 Business-type activities(138,185)2,183,427450,310 Total primary government$3,993,992$6,612,224$3,498,145 (1) The City implemented GASB Statement No. 34 for the fiscal year ended December 31, 2003. Therefore, information for years prior to 2003 is not available. 134 Table 2 Page 2 of 2 20062007200820092010 ($9,321,574)($6,091,777)($9,517,053)($16,300,557)($10,005,325) (93,934)956,890(789,044)(409,980)(973,696) (9,415,508)(5,134,887)(10,306,097)(16,710,537)(10,979,021) $9,165,278$9,419,763$9,651,758$9,921,598$10,014,684 315,398420,526574,101473,674539,523 28,592189,616108,03927,61245,767 905,9301,397,7461,150,993357,953222,719 34,644 - - - - -10,80632,1954,52420,727 (821,637)(5,077,531)1,112,623774,746(487,911) 9,628,2056,360,92612,629,70911,560,10710,355,509 768,600786,455797,079141,070114,349 102,952127,14322,46410,54933,644 821,6375,077,531(1,112,623)(774,746)487,911 1,693,1895,991,129(293,080)(623,127)635,904 $11,321,394$12,352,055$12,336,629$10,936,980$10,991,413 $306,631$269,149$3,112,656($4,740,450)$350,184 1,599,2556,948,019(1,082,124)(1,033,107)(337,792) $1,905,886$7,217,168$2,030,532($5,773,557)$12,392 135 CITY OF CHANHASSEN, MINNESOTA FUND BALANCES - GOVERNMENTAL FUNDS (1) Last Eight Fiscal Years (Modified Accrual Basis of Accounting) 200320042005 General Fund: Reserved Prepaid items$17,056$21,003$20,239 Unreserved: Designated: General fund3,328,5303,125,9103,199,800 Undesignated: General fund2,571,9493,128,6303,731,023 Total general fund$5,917,535$6,275,543$6,951,062 All other governmental funds: Reserved: Prepaid items$4,804$523$523 Future programs11,85319,73535,909 Debt service4,110,3166,922,5526,560,884 Unreserved: Designated: Special revenue funds567,443533,276489,370 Capital project funds3,638,5923,978,8184,114,820 Undesignated: Special revenue funds5,948,5381,089,942 - Debt service funds(3,020,544) -3,403,769 Capital project funds(2,013,776)(893,811)(738,510) Total all other governmental funds$9,247,226$11,651,035$13,866,765 (1) The City implemented GASB Statement No. 34 for the fiscal year ended December 31, 2003. Therefore, information for years prior to 2003 is not available. 136 Table 3 20062007200820092010 $17,376$13,210$21,173$46,750$55,826 3,279,0503,416,9503,586,7503,690,0003,754,000 1,523,8442,061,1261,273,7961,137,1091,459,792 $4,820,270$5,491,286$4,881,719$4,873,859$5,269,618 $523$ -$25$321$7,209 37,72534,73329,49936,33242,238 5,262,5347,300,4926,641,7472,913,6315,592,582 431,665548,438525,692668,9922,082,929 13,458,6979,934,93618,732,62511,418,0067,487,198 25,020 - - - - 148,784215,298237,721342,877356,724 (214,183)(239,434)(11,584)(2,001,149)(786,209) $19,150,765$17,794,463$26,155,725$13,379,010$14,782,671 137 CITY OF CHANHASSEN, MINNESOTA CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS (1) Last Eight Fiscal Years Revenues:200320042005 General property taxes$8,292,083$8,443,464$9,417,527 Tax increment collections4,975,8604,917,923675,798 Licenses and permits1,996,1681,892,5792,166,022 Intergovernmental1,082,5491,013,7041,244,656 Special assessments1,963,4312,262,7311,113,922 Charges for services839,522943,744863,958 Fines and forfeits43,73261,801104,962 Investment income240,859164,712387,370 Contributions and donations9,67524,74971,198 Refunds and reimbursements Other364,151290,629430,171 Total revenues19,808,03020,016,03616,475,584 Expenditures: Current: General government2,072,0512,203,6072,722,171 Public safety2,424,1252,461,4102,547,676 Public works1,958,0921,773,6552,367,652 Parks and recreation1,629,8561,622,1991,658,200 Community development312,446326,134372,938 Capital outlay: General government - -311,250 Public safety -99,87210,265 Public works3,427,2361,787,7372,334,577 Parks and recreation2,362615,207462,794 Debt service: Principal 10,700,0007,752,0002,035,000 Interest and paying agent fees1,070,394687,299691,230 Bond issuance costs13,63529,317 - Developer assistance578,2911,660,088230,353 Other93,95411,046897,523 Total expenditures24,282,44221,029,57116,641,629 Revenues over (under) expenditures(4,474,412)(1,013,535)(166,045) Other financing sources (uses): Bond premium - - - Bonds issued630,0003,240,0002,590,000 Redemption of refunding bonds - - - Loans issued - -105,419 Transfers in(121,355)(54,242)338,080 Transfers out - - - Bond discount(3,937)(10,387) - Sale of capital assets702,596963,29023,795 Total other financing sources (uses)1,207,3044,138,6613,057,294 Net change in fund balance($3,267,108)$3,125,126$2,891,249 Debt service as a percentage of noncapital expenditures58.4%50.2%22.0% Debt service as percentage of total expenditures48.5%40.3%16.4% (1) The City implemented GASB Statement No. 34 for the fiscal year ended December 31, 2003. Therefore, information for years prior to 2003 is not available. 138 Table 4 20062007200820092010 $9,140,601$9,403,109$9,582,333$9,834,389$10,141,168 $315,398$420,526$574,101473,674539,523 3,727,2972,171,5581,810,5451,085,7541,331,374 2,171,5651,148,0342,147,970397,438401,550 1,922,9443,922,517623,893540,151790,426 899,015738,669841,209950,760923,550 162,946145,682124,633122,496123,609 905,9301,397,7461,150,993357,953222,719 43,94947,42843,41047,20658,016 51,24761,707132,616 279,549404,426238,030170,688213,272 19,569,194 19,799,695 17,188,364 14,042,216 14,877,823 2,090,5652,116,9282,102,5122,070,6982,525,326 2,656,9232,924,7512,885,2962,979,0443,077,038 4,425,2373,735,9502,786,3975,710,8042,739,704 1,877,1091,848,8801,933,3532,487,9851,901,564 451,092841,306468,819527,919698,818 98,3966,734233,600143,663473,753 38,593505,21554,28455,15265,667 6,431,5946,693,3874,677,1798,179,3243,995,444 377,3671,491,848642,508235,292490,737 1,375,0001,750,0002,689,5522,553,0022,370,000 591,614769,212874,848920,529888,843 36,987 -93,81173,18246,505 111,791206,753226,05590,354176,643 300,000 - - - - 20,862,268 22,890,964 19,668,214 26,026,948 19,450,042 (1,293,074)(3,091,269)(2,479,850)(11,984,732)(4,572,219) - - -226,99135,964 6,640,000 -7,550,0006,020,0005,200,000 (3,560,000) - -(8,387,123) - 708,0033,014,74424,839 - - 702,889537,5642,646,0111,324,0151,105,000 -(1,163,065) - - - (44,610) - - - - -16,74010,69516,27430,675 4,446,282 2,405,983 10,231,545 (799,843)6,371,639 $3,153,208($685,286)$7,751,695($12,784,575)$1,799,420 14.8%18.0%26.4%20.5%23.2% 9.6%11.0%18.6%13.6%17.0% 139 CITY OF CHANHASSEN, MINNESOTA TAX CAPACITY VALUE AND ESTIMATED MARKET VALUE OF TAXABLE PROPERTY Last Ten Fiscal Years Fiscal YearCommercial/Total EndedResidentialIndustrialAllTax December 31,PropertyAgriculturalPropertyOtherCapacity 2001$18,842,469$171,965$7,743,027$558,77527,316,236 200215,094,239162,6495,334,174349,27020,940,332 200317,032,236133,3005,866,524357,87223,389,932 200419,502,882141,9395,904,892377,53125,927,244 200522,438,051178,5986,054,042388,88529,059,576 200624,904,864229,6516,537,205408,07032,079,790 200727,853,083316,4618,114,703428,20336,712,450 200829,821,326208,7899,135,911435,60339,601,629 200930,741,292190,8449,665,269471,74941,069,154 201030,301,115170,85710,229,329477,66341,178,964 Sources: Carver County Auditor's Office and Hennepin County 140 Table 5 Captured Tax Capacity onFiscalAdjustedCityEstimatedTax Capacity Tax IncrementDisparityTax CapacityDirect TaxMarketas a Percent DistrictContributionValueRateValueof EMV ($5,920,832)$53,15421,448,55826.508001,593,928,1001.35% (3,309,835)3,36217,633,85937.823001,790,521,3000.98% (3,789,131)(19,916)19,580,88539.039002,010,114,7000.97% (3,958,013)17,05621,986,28732.922002,271,332,1000.97% (619,902)60,35428,500,02828.118002,552,120,2001.12% (309,211)(929,994)30,840,58526.638002,812,847,1001.10% (418,018)(955,204)35,339,22823.788003,175,746,5001.11% (479,494)(1,498,894)37,623,24123.713003,394,928,1001.11% (473,702)(1,627,749)38,967,70322.993003,501,886,8001.11% (532,007)(1,861,362)38,785,59525.183003,491,841,8001.11% 141 CITY OF CHANHASSEN, MINNESOTA DIRECT AND OVERLAPPING PROPERTY TAX CAPACITY RATES Table 6 Last Ten Fiscal Years CityOverlapping Rates FiscalDirectSchoolCarver (1) YearRateDistrict #112CountyOtherTotal Tax capacity rates (per $100 of adjusted tax capacity value) 200126.5080060.8050043.105004.49500134.91300 200237.8230029.8080053.336007.31100128.27800 200339.0390038.4380053.137007.40200138.01600 200432.9220037.5240048.443005.84500124.73400 200528.1180033.2990044.107005.56000111.08400 200626.6380032.8080040.836005.30500105.58700 200723.7880035.8310037.802005.13200102.55300 200823.7130035.9700037.563005.54700102.79300 200922.9930035.5050038.033005.45800101.98900 201025.1830035.8400039.509005.63900106.17100 Source: Carver County Auditor's Office (1) The City Direct Rate is the Urban based rate, not including Market Value levies. 142 CITY OF CHANHASSEN, MINNESOTA PRINCIPAL PROPERTY TAXPAYERS Table 7 Current Year and Nine Years Ago 20102001 Percentage Percentage Taxableof Total CityTaxableof Total City CapacityCapacityCapacityCapacity TaxpayerValueRankValueValueRankValue Northern States Power Co$533,58711.4%$322,30031.6% Rosemount Inc440,56221.1%603,82513.0% IRET Properties413,36431.1% - - - Istar Minnesota LLC377,69841.0% - - - LTF Real Estate VRDN I LLC235,98050.6% - - - DRF Chanhassen Medical Bldg235,66260.6% - - - Park Avenue Lofts LLC214,70470.5% - - - LTF Real Estate Company Inc206,50880.5% - - - Market Square Assoc Partnership204,62290.5%183,67160.9% qp,, Target Corporation T-0862204,062100.5% - - - Beddor Enterprises - - - 451,18422.2% McGlynn Bakeries Inc #366 - - - 320,00741.6% TF James - - - 310,171 5 1.5% Bloomberg Companies, Inc. - - - 177,67470.9% Dayton Hudson Corporation - - - 163,312 8 0.8% PRN Music Corporation - - - 160,29690.8% Century 2000 Partners LLP - - - 150,657100.7% Total$3,066,7497.8%$2,843,09713.9% Total All Property $39,198,935$20,406,169 Source: Carver County Auditor's Office 143 - This page intentionally left blank - 144 CITY OF CHANHASSEN, MINNESOTA PROPERTY TAX LEVIES AND COLLECTIONS Table 8 Last Ten Fiscal Years FiscalTaxesCollected Within TheCollections YearLeviedFiscal Year of the LevyinTotal Collections to Date EndedFor ThePercentageSubsequentPercentage December 31,Fiscal YearAmountof LevyYearsAmountof Levy 2001$5,679,054$5,646,32899.4%$32,726$5,679,054100.0% 20027,655,9167,557,37898.7%47,1007,604,47899.3% 20038,639,1678,206,00195.0%91,8448,297,84596.0% 20048,639,1678,323,05396.3%127,3698,450,42297.8% 20059,439,7549,124,03096.7%120,9369,244,96697.9% 20069,354,8909,066,59196.9%88,8839,155,47497.9% 20079,575,7789,447,69298.7%102,4539,550,14599.7% 20089,834,9659,555,48997.2%138,4969,693,98598.6% 200910,074,5659,668,71396.0%181,8159,850,52897.8% 201010,213,1909,918,52897.1% - 9,918,52897.1% Source: City Finance Department 145 CITY OF CHANHASSEN, MINNESOTA RATIOS OF OUTSTANDING DEBT BY TYPE Last Ten Fiscal Years Business-Type Activities Governmental Activities GeneralGeneral FiscalObligationRevenueTax IncrementImprovementOtherG.O. Revenue YearBondsBondsBondsBondsDebtBonds 2001$6,040,000$930,000$6,855,000$19,411,686$120,000$3,996,350 200211,355,000930,0004,915,00014,175,33180,0003,576,100 200311,475,000860,0003,075,0005,890,00040,0003,175,000 200410,710,000785,0001,170,0004,195,000 - 10,600,000 200512,215,000705,0001,170,0003,325,000105,41915,545,000 20068,170,000620,0001,120,0009,210,000813,42214,820,000 20077,315,000530,0001,070,0008,455,0003,828,16613,915,000 200813,905,000435,0001,015,0007,155,0003,375,12512,415,000 200913,045,000335,000960,0006,625,000 - 11,695,000 201015,550,000230,000900,0007,115,000 - 10,955,000 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. (1)The Bonded Debt and Bonded Debt Per Capita are Net of Debt Service Fund Balances. The Definition of "Net Bonded Debt" in the State of Minnesota would also exclude any Enterprise Fund Debt, Special Assessment Bonds, Tax Increment Bonds and Revenue Bonds. The "Net Bonded Debt" and "Net Bonded Debt Per Capita" as defined by the State of Minnesota can be found on Table 11. (2)Information pertaining to Chanhassen Personal Income is not available, information for Carver County was included instead. (a) Information not available 146 Table 9 Bonded Debt Per Total Less:PercentageCarver County Debt Serviceof TaxBonded DebtPersonal (1)(1)(2) Bonded DebtIncome Total DebtFund BalanceCapacityPer Capita $37,353,036$2,773,255$34,579,781161.22%$1,6041.1% 35,031,4313,255,09531,776,336180.20%1,4201.0% 24,515,0001,089,77223,425,228120.22%9960.7% 27,460,0006,795,40620,664,59481.94%8820.6% 33,065,4199,964,65323,100,76682.82%9680.6% 34,753,4225,411,31829,342,10496.30%1,2280.7% 35,113,1667,623,13827,490,02879.02%1,1300.6% 38,300,1256,972,63031,327,49583.57%1,2800.6% 32,660,0003,256,51029,403,49075.36%1,1900.6% 34,750,0005,949,30628,800,69473.47%1,255(a) 147 CITY OF CHANHASSEN, MINNESOTA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT Table 10 December 31, 2010 Estimated EstimatedShare of DebtPercentageOverlapping Governmental UnitOutstandingApplicable*Debt Direct debt: (1) City of Chanhassen $15,550,000100.00%$15,550,000 Overlapping debt: Eastern Carver County School District200,055,00039.19%78,401,555 Eden Prairie Independent School District69,846,6220.88%614,650 Minnetonka Independent School District141,879,5480.00% - Carver County28,230,00031.95%9,019,485 Hennepin County683,934,5000.06%410,361 Hennepin Suburban Park District67,630,0650.08%54,104 Hennepin Regulatory Railroad Authority39,570,7780.06%23,742 Metropolitan Council181,078,9030.03%54,324 Subtotal - overlapping debt1,412,225,41688,578,221 Total direct and overlapping debt$1,427,775,416$104,128,221 (1) Excludes general obligation improvement bonds and revenue bonded indebtedness Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. *For debt repaid with property taxes, the percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable percentages were estimated by determining the portion of another governmental unit's taxable assessed value that is within the City's boundaries and dividing it by each unit's total taxable assessed value. 148 CITY OF CHANHASSEN, MINNESOTA LEGAL DEBT MARGIN INFORMATION Table 11 Last Ten Fiscal Years Legal Debt Margin Calculation for Fiscal Year 2010 Market value$3,491,841,800 Applicable percentage3% Debt limit104,755,254 Debt applicable to limit: Total bonded debt34,750,000 Less: Special assessment bonds(7,115,000) Tax increment bonds(900,000) Revenue bonds(230,000) Enterprise Fund debt(10,955,000) Less: Cash and investments in G.O. Bond Debt Service Fund(1,028,169) 14,521,831 Legal debt margin$90,233,423 Legal Debt Margin Calculation for Fiscal Years 2001 Through 2010 Net DebtLegalAmount of DebtNet Bonded FiscalDebtApplicable toDebtApplicable toDebt Per YearPopulationLimitLimitMarginDebt LimitCapita 200121,561$31,878,562$5,629,811$26,248,75117.66%261 200222,37635,810,42610,679,36025,131,06629.82%477 200323,52440,202,29410,571,25229,631,04226.30%449 200423,43145,426,6429,385,23236,041,41020.66%401 200523,86451,042,4048,150,62642,891,77815.97%342 200623,88956,256,9426,950,30449,306,63812.35%291 200724,32163,514,9305,844,64857,670,2829.20%240 200824,481101,847,84311,924,43889,923,40511.71%487 200924,699105,056,60411,175,08693,881,51810.64%452 201022,952104,755,25414,521,83190,233,42313.86%633 149 CITY OF CHANHASSEN, MINNESOTA PLEDGED REVENUE COVERAGE Table 12 Last Ten Fiscal Years Improvement Bonds Special FiscalAssessmentDebt Service YearCollectionsPrincipalInterestCoverage 2001$2,514,363$3,506,350$720,4480.595 20023,159,7785,479,750522,0720.526 20031,963,4315,446,600324,3300.340 20042,262,7313,765,000110,1180.584 20051,113,922870,000139,0591.104 20061,922,944755,000103,8132.239 20073,922,517755,000360,8523.515 2008623,8911,300,000287,7270.393 2009540,1481,220,000142,9630.396 2010790,4221,050,000230,0840.617 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. 150 CITY OF CHANHASSEN, MINNESOTA DEMOGRAPHIC AND ECONOMIC STATISTICS Table 13 Last Ten Fiscal Years Carver CountyCarver County ChanhassenCarver CountyPersonalPer Capita FiscalChanhassenUnemploymentUnemploymentIncomePersonal (1)(2)(2)(3)(3) PopulationRateRate(Thousands)Income Year 200121,5612.8%3.3%$3,069,086$41,980 200222,3763.5%4.0%3,153,29441,663 200323,5243.3%4.1%3,286,00741,918 200423,4313.2%3.9%3,562,50243,971 200523,8642.6%3.4%3,878,76546,207 200623,8892.7%3.3%4,165,70948,153 200724,3213.1%4.0%4,583,40051,895 200824,4814.0%5.0%4,832,54453,598 200924,6996.0%7.4%4,752,76951,601 201022,9525.2%6.6%(a)(a) (1) Federal Census Data and Chanhassen Planning Department Sources: (2) State of Minnesota, Department of Employment and Economic Development (3) U.S. Department of Commerce, Bureau of Economic Analysis (a) Information not available Note: Information pertaining to Chanhassen Personal Income and Per Capita Personal Income is not available, information for Carver County was included instead. 151 - This page intentionally left blank - 152 CITY OF CHANHASSEN, MINNESOTA PRINCIPAL EMPLOYERS Table 14 (1) Current Year and Four Years Ago 20102006 Percentage Percentage of Total Cityof Total City Employment(2)(2) EmployerEmployeesRankEmployeesRankEmployment Rosemount, Inc.1,475127.2%1,200124.4% Instant Web Companies847215.6%548411.1% Lifetime Fitness815315.0% - - - Super Value Headquarters675412.4%900218.3% RR Donnelley34756.4%32466.6% Checkpoint Security Systems30065.5% - - - General Mills28875.3%600312.2% Chanhassen Dinner Theatres27585.1%30076.1% Minnesota Landscape Arboretum23094.2%24094.9% Control Products180103.3% - - - Entegris - -35057.1% Byerly's - -28085.7% ABC/Lyman Lumber - -175103.6% Total5,4324,917 Source: Survey by City Administration and Finance Departments. (1) Principal employer information prior to 2006 is not available. (2) The statistic for total City employment is not available, therefore the percentage represents the percentage of the top ten listed. 153 CITY OF CHANHASSEN, MINNESOTA FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM Last Ten Fiscal Years Full-Time Equivalent Employees as of December 31, Function/Program200120022003 General government111212 Public safety333 Public works242424 Parks and recreation111111 Community development181817 Total676867 Source: City Finance Department 154 Table 15 Full-Time Equivalent Employees as of December 31, 2004200520062007200820092010 12121213131313 3333333 24252626262626 11111111111111 18171716161615 68686969696968 155 CITY OF CHANHASSEN, MINNESOTA OPERATING INDICATORS BY FUNCTION/PROGRAM Last Ten Fiscal Years Fiscal Year Function/Program200120022003 Building: Permits issued3,1951,387914 Estimated value$86,644,500$85,811,450$85,879,250 Election: Registered voters11,66511,66513,723 Fire: Average number of employees444443 General government: Area of city - square miles23.7823.7823.78 Average number of permanent full-time employees (excluding fire department)676867 Police: Average number of employees2211 Number of major crimes145145311 Water: Number of customers6,2476,4056,608 Daily average consumption - gallons2,195,4582,195,4583,000,000 Plant capacity - gallons3,850,0003,850,0008,900,000 Source: Various City departments 156 Table 16 Fiscal Year 2004200520062007200820092010 9981,0081,1969541,046915970 $86,893,088$62,100,325$95,610,311$106,831,600$116,477,429$58,627,700$57,991,700 15,63215,63215,31915,31916,54416,54415,326 43434444454545 23.7823.7823.7823.7823.7823.7823.78 68686969696968 11131313141515 1,2881,0681,2971,2021,013702647 6,7106,8726,7526,8047,0397,4277,620 2,718,5992,571,8433,163,8643,031,4003,200,0003,642,4102,698,559 8,500,0008,650,0008,650,0008,650,0008,650,0008,650,0008,650,000 157 CITY OF CHANHASSEN, MINNESOTA CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM Last Ten Fiscal Years Fiscal Year Function/Program200120022003 Fire: Number of stations222 Parks and recreation: Acres of parks350350350 Acres of open space300300300 Number of shelter buildings222 Number of playgrounds222223 Number of swimming beaches334 Number of tennis courts776 Police: Number of stations111 Public works: Miles of streets84.792.694.3 Miles of sidewalks17.019.419.6 Miles of trails38.138.141.2 Sewer: Miles of storm sewers56.057.359.6 Miles of sanitary sewers108.8110.1113.0 Number of lift stations292930 Water: Miles of watermains112.1113.3116.7 Number of wells787 Source: Various City departments 158 Table 17 Fiscal Year 2004200520062007200820092010 2222222 375375375383383383396 300365365434434434434 3333344 25252526262626 4446665 17171717171717 1111111 95.7102.5103.8106.2107.0110.9111.9 21.024.725.526.928.431.131.9 42.042.043.047.253.053.653.6 61.062.764.266.267.169.571.0 115.1115.4116.9119.6120.8123.0123.6 30303131313131 120.1120.8123.4126.0129.6135.1136.8 781011121212 159 - This page intentionally left blank - 160