Loading...
2011 Annual Financial Report City of Chanhassen, Minnesota Photo Courtesy of Terri Kelly Comprehensive Annual Financial Report For the Fiscal Year Ended December 31, 2011 COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF CHANHASSEN, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2011 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 1084 Schedule of Funding Progress - Retiree Health Plan90 CITY OF CHANHASSEN, MINNESOTA TABLE OF CONTENTS Page ReferenceNo. Combining and Individual Nonmajor 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 18111 Special Revenue Funds: Schedules of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual: Contribution FundStatement 19114 CATVStatement 20115 Combining Statement of Net Assets - Agency FundsStatement 21118 Combining Statement of Changes in Assets and Liabilities - Agency FundsStatement 22119 III. STATISTICAL SECTION (UNAUDITED) Financial Trends: Net Assets by ComponentTable 1124 Changes in Net AssetsTable 2126 Fund Balances - Governmental FundsTable 3130 Changes in Fund Balances - Governmental FundsTable 4132 Revenue Capacity: Tax Capacity and Estimated Market Value of Taxable PropertyTable 5134 Direct and Overlapping Property Tax Capacity RatesTable 6136 tocTable 7137 Property Tax Levies and CollectionsTable 8139 CITY OF CHANHASSEN, MINNESOTA TABLE OF CONTENTS Page ReferenceNo. Debt Capacity: Ratios of Outstanding Debt by TypeTable 9140 Direct and Overlapping Governmental Activities DebtTable 10142 Legal Debt Margin InformationTable 11143 Pledged Revenue CoverageTable 12144 Demographic and Economic: Demographic and Economic StatisticsTable 13145 Principal EmployersTable 14147 Operating Information: Full-Time Equivalent City Government Employees by Function/ProgramTable 15148 Operating Indicators by Function/ProgramTable 16150 Capital Asset Statistics by Function/ProgramTable 17152 IV. OTHER INFORMATION (UNAUDITED) Combined Schedule of IndebtednessExhibit 1156 Debt Service Payments to Maturity: General Obligation BondsExhibit 2158 General Obligation Improvement BondsExhibit 3159 Revenue BondsExhibit 4160 Taxable Valuations, Tax Levies and Tax RatesExhibit 5161 Schedule of Deferred Tax LeviesExhibit 6162 - This page intentionally left blank - I. INTRODUCTORY SECTION 1 - This page intentionally left blank - 2 June 15, 2012 To the Honorable Mayor and City Council City of Chanhassen Chanhassen, Minnesota The Comprehensive Annual Financial Report of the City of Chanhassen, Minnesota (the City) for the fiscal year ended December 31, 2011 is hereby submitted. This report was prepared by the Chanhassen Finance Department and responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, supporting schedules and statistical tables rests with the City. We believe the data, as presented, is accurate in all material respects; that it is presented in a manner designed to fairly set forth the financial position and results of operations of the City as measured by the financial activity of its various funds; and that all disclosures necessary to enable the reader to gain the maximum understanding of the City's financial affairs have been included. The organization, form and contents of this report were prepared in accordance with the standards prescribed by the Governmental Accounting Standards Board, the Government Finance Officers Association of the United States and Canada (GFOA), the American Institute of Certified Public Accountants, Minnesota’s Office of the State Auditor and City policies. This transmittal letter is designed to complement the Management’s Discussion and Analysis (MD&A) and should be read in conjunction with it. The MD&A can be found immediately following the report of the independent auditors. Reporting Entity and Its Services This report includes all funds, account groups, and departments of the City (the primary government) and its component unit. The City provides a full range of services to its residents and businesses including general government, public safety (police and fire protection), public works (engineering, streets, and equipment maintenance), parks and recreational activities, planning and economic development. In addition to general municipal services, the City provides water and sanitary sewer service and oversight (through licensing) of the refuse and recycling services. In accordance with the reporting entity definition of the Governmental Accounting Standards Board, the City has included the Chanhassen Economic Development Authority (EDA) in these financial statements as a blended component unit. The EDA is governed by five commissioners appointed by the City Council with the City Manager as executive director. The Chanhassen Fire Relief Association has been excluded from this report because it is governed by a board elected by its members and it is not fiscally dependent upon the City.The Western Area Fire Training Association (WAFTA) is governed by an eleven- person board comprised of one member appointed by each jurisdiction who is a party to the joint powers agreement. Although the City is jointly responsible for the maintenance and cleanup costs of the training site in rural Carver County, we do not exercise substantial control of the association. The school districts that serve residents of the City, like all school districts in Minnesota, are governed independently by their own elected board members. They levy their own taxes and prepare their own financial reports. Accordingly, they are excluded from this report. 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 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, 2011, the maturities of the investments range from 9 days to 6.9 years, with an average maturity of 1.87 years. Maturities are not to exceed 7 years unless for a dedicated purpose such as a future bond payment. The average yield to maturity on the portfolio at December 31, 2011 was 1.69%. 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 2011 US Census, the City’s population was 23,179. Chanhassen’s residential permits were greater in 2011 than 2010. In 2011, there were 162 residential permits as compared to 101 in 2010. The total value of all building permits and plan checks in 2011 was $82,991,029. The City has approximately 375 acres of commercial and office industrial land with utilities available. The City anticipates a two percent growth rate in residential permits and a slightly lower rate for commercial and office industrial development. In 2011, the City refinanced all of the 2005B GO Water Revenue Bonds and issued $2.4 million for the construction of an elevated storage tank with the issuance of the 2011A General Obligation Bonds. The City also refinanced a portion of the 2004B GO Water Revenue Bonds with the issuance of the 2011B GO Water Revenue Refunding Bonds. As part of that process, the City underwent a financial review by Standard & Poors (the City’s bond rating agency). This review 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 approximately fifteen 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. 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, 2010. 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 nineteen consecutive years (fiscal years ended 1992 – 2010). 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, 2011 Term Expires Mayor: Tom Furlong12/31/14 Council Members: Bethany Tjornhom12/31/12 Vicki Erns12/31/14 t Jerry McDonald12/31/12 Denny Laufenburge12/31/14 r 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, 2011. 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 $157,876,770 (net assets). Of this amount, $18,308,927 (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 decreased by $3,591,467. As of the close of the current fiscal year, the City of Chanhassen, Minnesota’s governmental funds reported combined ending fund balances of $21,565,936. Of this amount, $10,426,585 is restricted by external constraints established by creditors, grantors, contributors, or by state statutory provisions. At the end of the current fiscal year, the General Fund had a fund balance of $5,295,398. Of that amount, $17,280 was in a nonspendable form and the remaining $5,278,118 was unassigned. The City’s total debt increased by $8,097,339 during the current fiscal year, from $34,750,000 to $42,847,339. The City issued debt of $9.6 million in 2011, of which $2.4 million was for the construction of an elevated storage tank. The remaining amount was for advanced refundings of the 2005B GO Water Revenue Bonds and a portion of the 2004B GO Water Revenue Bonds. In addition, the City paid off principal of $1.7 million. 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 Management’s 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 Management’s 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 Management’s 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 $157,876,770 at the close of the most recent fiscal year. The largest portion of the City of Chanhassen, Minnesota’s net assets ($126,296,846 or 80%) 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 assets 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 201120102011201020112010 Assets: Current and other assets$29,101,811$27,939,661$19,318,149$10,681,796$48,419,960$38,621,457 Capital assets88,888,16592,216,20366,133,29268,023,020155,021,457160,239,223 Total assets$117,989,976$120,155,864$85,451,441$78,704,816$203,441,417$198,860,680 Liabilities: Long-term liabilities outstanding$23,570,963$24,634,855$20,201,764$343,857$43,772,727$24,978,712 Other liabilities1,457,3281,340,948334,59211,072,7831,791,92012,413,731 Total liabilities$25,028,291$25,975,803$20,536,356$11,416,640$45,564,647$37,392,443 Net assets: Invested in capital assets, net of related debt$70,866,708$73,272,450$55,430,138$57,028,340$126,296,846$130,300,790 Restricted13,270,9979,910,563 - - 13,270,9979,910,563 Unrestricted8,823,98010,997,0489,484,94710,259,83618,308,92721,256,884 Total net assets$92,961,685$94,180,061$64,915,085$67,288,176$157,876,770$161,468,237 18 Management’s Discussion and Analysis $13,270,997 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 ($18,308,927) 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 decreased $1,218,376, or 1.3%. The components of net assets increased or decreased as follows: Net assets invested in capital assets, net of related debt, decreased $2,405,742 due to the reduction in depreciable assets (fewer new assets than the previous year with depreciation remaining constant from the previous year. The addition of the Public Works building in 2010 makes up a large portion of the variance.) Restricted net assets increased $712,354. The largest portion of this increase was an increase of $427,781 in net assets restricted for park improvements. Unrestricted net assets increased $475,012. 19 Management’s Discussion and Analysis Business-Type Activities The net assets of the City’s business-type activities decreased by $2,373,091, or 3.5%. Amounts invested in capital assets, net of related debt decreased $1,598,202 because depreciation expense exceeded capital asset additions. Unrestricted net assets decreased $774,889, due to amounts expended for various infrastructure projects. City of Chanhassen, Minnesota's Changes in Net Assets Governmental ActivitiesBusiness-Type ActivitiesTotals 201120102011201020112010 Revenues: Program revenues: Charges for services$2,555,623$2,644,543$5,443,477$5,328,680$7,999,100$7,973,223 Operating grants and contributions692,428414,65412,5892,984705,017417,638 Capital grants and contributions1,646,5734,175,6551,086,6551,593,2892,733,2285,768,944 General revenues: Property taxes9,849,88210,014,684 - - 9,849,88210,014,684 Tax increment collections566,045539,523 - - 566,045539,523 Grants and contributions not restricted to specific programs28,30445,767 - - 28,30445,767 Unrestricted investment earnings505,541222,719211,707114,349717,248337,068 Miscellaneous - - 6,64333,6446,64333,644 Gain on sale of capital assets44,00020,727 - - 44,00020,727 Total revenues15,888,39618,078,2726,761,0717,072,94622,649,46725,151,218 Expenses: General government2,565,4862,898,608 - - 2,565,4862,898,608 Public safety3,061,1223,227,396 - - 3,061,1223,227,396 Public works8,607,5346,308,023 - - 8,607,5346,308,023 Parks and recreation2,921,5933,046,718 - - 2,921,5933,046,718 Community development799,379879,048 - - 799,379879,048 Interest on long-term debt838,421880,384 - - 838,421880,384 Water - - 3,581,9553,443,5833,581,9553,443,583 Sewer - - 3,317,3293,252,5103,317,3293,252,510 Surface water management - - 1,173,1151,202,5561,173,1151,202,556 Total expenses 18,793,53517,240,1778,072,3997,898,64926,865,93425,138,826 Increase (decrease) in net assets before transfers(2,905,139)838,095(1,311,328)(825,703)(4,216,467)12,392 Transfers1,061,763(487,911)(1,061,763)487,911 - - Change in net assets(1,843,376)350,184(2,373,091)(337,792)(4,216,467)12,392 Net assets - beginning, as previously reported94,180,06193,829,87767,288,17667,625,968161,468,237161,455,845 Prior period adjustment625,000 - - - 625,000 - Net assets - beginning, as restated94,805,06193,829,87767,288,17667,625,968162,093,237161,455,845 Net assets - ending$92,961,685$94,180,061$64,915,085$67,288,176$157,876,770$161,468,237 20 Management’s Discussion and Analysis Governmental Activities Revenues Revenues for the City’s governmental activities decreased by $2,189,876, or 12%. Capital grants and contributions decreased by approximately $2.5 million from 2010, compared to a $2.9 million increase from 2009 to 2010. Large amounts of capital contributions were recorded in 2010 due to a $1.4 million new special assessment roll and high amounts of developer contributions. Expenses Expenses for the City’s governmental activities increased by $1,553,358, or 9%. The increase is largely due to an increase in public works expenses related to amounts expended for construction projects that were not capitalized. Below are specific graphs which provide comparisons of the governmental activities revenues and expenses: Grants and contributions not Tax increment collections 3.6% restricted to specific programs 0.2% Gain on sale of capital assets 0.2% Governmental Activities -Revenues Unrestricted investment earnings 3.1% Charges for services 16.1% Operating grants and contributions 4.4% Property taxes 62.0% Capital grants and contributions 10.4% 21 Management’s Discussion and Analysis Interest on long-term debt Governmental Activities -ExpensesGovernmental Activities -Expenses 4.4% Community development General government 4.3% 13.7% Parks and recreation Publicsafety 16.3% 15.5% Public works 45.8% Business-Type Activities Revenues Revenues for the City’s business-type activities decreased by $311,875, or 4.4%. The largest contributor to this variance is the reduction in developer contributed assets in 2011 from 2010. Expenses The City’s expenses for business-type activities increased by $173,750, or 2.2%. The majority of the increase ($134,000) was due to an increase in amounts paid to the waste water treatment provider for the City as compared to the previous year. In addition to the increase in expenses mentioned above, transfers to business-type activities on the statement of activities went from $487,911 in 2010 to ($1,061,763) in 2011. This net increase in transfers was attributed to the completion of construction projects accounted for in other funds requiring payment for the utilities constructed related to the projects. 22 Management’s Discussion and Analysis Below are specific graphs showing the business-type activities revenue and expense comparisons: Unrestricted investment Miscellaneous 0.1% earnings 3.1% Business-TypeActivities -Revenue Capital grants and contributions 16.1% Operating grants and contributions 0.2% Charges for services 80.5% Business-Type Activities -Expenses Surface Water 15.5% Water 43.4% Sewer 41.1% 23 Management’s 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 $21,565,936. Approximately 48% of this total amount ($10,426,585) constitutes fund balance restricted by external constraints established by creditors, grantors, contributors, or by state statutory provisions. $29,942 of fund balance is not in a spendable form, $6,561,411 has been assigned, and $4,547,998 is unassigned. The General Fund increased by $25,780 in 2011. The increase in fund balance was attributable to permit revenues in excess of budget. The 2009A G.O. Refunding Bonds debt service fund increased by $970,057. The majority of the increase ($523,000) was from leftover construction proceeds transferred in after the closing of the capital project fund. In addition, special assessment collections exceeded 2010 collections by approximately $195,000. The Transit Station Assessment Fund balance did not change, and remained in a deficit of $729,921. The Revolving Assessment Fund increased by $672,662. The increase was from transfers in from other funds for portions of street reconstruction project costs related to activities from other fund types. The nonmajor special revenue funds increased by $577,751in 2011. This increase was entirely attributable to a reimbursement for an accounting error in previous years from the City’s cable TV provider. The nonmajor debt service funds increased by $554,151 in 2011. The majority of this increase ($340,000) was from leftover construction proceeds transferred in after the closing of the Public Works building capital project fund. The remaining increase was from reduced debt service obligations. The nonmajor capital project funds decreased by $1,286,754. There was a transfer of $885,000 out of a nonmajor capital project fund to a major capital project fund to account for the related construction costs in the proper fund. Also, there was a transfer ($523,000, noted above) for leftover construction proceeds resulting from the closing of the capital project fund to the related debt service fund. 24 Management’s 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 $4,875,548, sewer $3,859,259 and surface water management $750,140. The water, sewer and surface water management funds each had a decrease in net assets in 2011 of $395,593, $871,450 and $1,106,048, respectively. Budgetary Highlights General Fund There were no budget amendments to the General Fund in 2011. Budgetary Variances – Revenues The positive general fund revenue variance of $105,652 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 $315,887. The majority ($156,000) of the variance was attributed to a decrease in the police services contract with Carver County. In addition, the required contribution for the volunteer fire fighter pension was less than budgeted. 25 Management’s 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, 2011, amounts to $155,021,457 (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 GovernmentBalanceIncreaseDecreaseBalance Governmental activities: Capital assets not being depreciated: Land$18,709,812$276,315$ - $18,986,127 Construction in progress2,256,9401,023,746(1,604,124)1,676,562 Permanent easements358,501192,199 - 550,700 Total capital assets not being depreciated21,325,2531,492,260(1,604,124)21,213,389 Capital assets being depreciated: Buildings and structures23,481,7252,999(46,782)23,437,942 Machinery and equipment7,149,320508,127(186,283)7,471,164 Other improvements 5,461,022133,066 - 5,594,088 Infrastructure107,574,1301,662,811(503,650)108,733,291 Total capital assets being depreciated143,666,1972,307,003(736,715)145,236,485 Less accumulated depreciation for: Buildings and structures4,842,470574,486 - 5,416,956 Machinery and equipment4,780,193466,366(145,144)5,101,415 Other improvements 1,972,444229,667 - 2,202,111 Infrastructure61,180,1404,023,770(362,683)64,841,227 Total accumulated depreciation72,775,2475,294,289(507,827)77,561,709 Governmental activities capital assets - net$92,216,203($1,495,026)($1,833,012)$88,888,165 BeginningEnding Primary GovernmentBalanceIncreaseDecreaseBalance Business-type activities: Capital assets not being depreciated: Land$1,997,435$ - $ - $1,997,435 Construction in progress2,031,729867,023(896,627)2,002,125 Permanent easements107,225140,067 - 247,292 Total capital assets not being depreciated4,136,3891,007,090(896,627)4,246,852 Capital assets being depreciated: Buildings and structures12,445,429 - - 12,445,429 Machinery and equipment2,408,802154,845(60,744)2,502,903 Other improvements 97,448,6221,094,994(44,548)98,499,068 Total capital assets being depreciated112,302,8531,249,839(105,292)113,447,400 Less accumulated depreciation for: Buildings and structures747,409248,918 - 996,327 Machinery and equipment1,337,288137,448(60,743)1,413,993 Other improvements 46,331,5252,845,848(26,733)49,150,640 Total accumulated depreciation48,416,2223,232,214(87,476)51,560,960 Business-type activities capital assets - net68,023,020(975,285)(914,443)66,133,292 Total capital assets - net$160,239,223($2,470,311)($2,747,455)$155,021,457 Additional information on the City of Chanhassen, Minnesota’s capital assets can be found in Note 4. 26 Management’s Discussion and Analysis Governmental Activities Capital Assets. There was a decrease in capital assets due to a reduction in depreciable assets (fewer new assets than previous year with depreciation remaining constant from previous year. The addition of the Public Works building in 2010 makes up the entire amount of the variance.) Business-Type Activities Capital Assets. In 2011, there was a decrease in business-type activity capital assets due to a reduction in depreciable assets (fewer new assets than previous year with depreciation remaining constant from previous year.) Long-term debt . At the end of the current fiscal year, the City of Chanhassen, Minnesota had total bonds payable outstanding of $42,665,000, an increase of $7,915,000 from 2010. The increase is attributed to the issuance of $9.6 million of debt, of which $2.4 million was for the construction of an elevated storage tank. The remaining amount was for advanced refundings of the 2005B GO Water Revenue Bonds and a portion of the 2004B GO Water Revenue Bonds. The balance of the bonds payable outstanding is comprised of: $15,025,000 in general obligation bonds, $6,785,000 for special assessment debt which is supported in part by special assessments, $20,015,000 of revenue bonds which financed capital investments for the water, sewer, and surface water management operations and $840,000 in tax increment bonds. Additional long-term debt in the amount of $913,720 for compensated absences and $182,339 relating to an unamortized bond premium was also outstanding at the end of 2011. City of Chanhassen, Minnesota’s Outstanding Debt Governmental ActivitiesBusiness-Type ActivitiesTotals 201120102011201020112010 General obligation bonds$15,025,000$15,550,000$ - $ - $15,025,000$15,550,000 Revenue bonds120,000230,00019,895,00010,955,00020,015,00011,185,000 Tax increment bonds840,000900,000 - - 840,000900,000 General improvement bonds 6,785,0007,115,000 - - 6,785,0007,115,000 Bond premium - - 182,339 - 182,339 - Compensated absences789,295830,263124,425117,783913,720948,046 Total$23,559,295$24,625,263$20,201,764$11,072,783$43,761,059$35,698,046 The City’s bond rating was reaffirmed in 2011 by Standard & Poor’s when the City refunded GO Water Revenue bonds. The City of Chanhassen is one of approximately 15 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 $100,504,254. Of the City's outstanding debt, $13,585,258 is counted within the statutory limitation. 27 Management’s Discussion and Analysis Additional information on the City of Chanhassen, Minnesota’s long-term debt can be found in Note 5. 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 1 STATEMENT OF NET ASSETS December 31, 2011 With Comparative Totals For December 31, 2010 Primary Government GovernmentalBusiness-TypeTotals Assets:ActivitiesActivities20112010 Cash and investments$18,391,179$7,639,800$26,030,979$25,899,810 Cash with escrow agent3,829,8327,223,67411,053,5063,879,306 Restricted cash - 2,224,1852,224,185 - Accrued interest receivable70,15334,503104,656125,166 Due from other governmental units296,1083,753299,861149,925 Accounts receivable - net707,2491,127,7131,834,9621,114,310 Property taxes receivable353,821 - 353,821376,257 Prepaid items29,9421,95931,90176,586 Inventories - at cost - 25,68525,68527,226 Internal balances(729,253)729,253 - - Special assessments receivable6,152,780161,6166,314,3966,972,871 Deferred charges - 146,008146,008 - Capital assets (net of accumulated depreciation): Nondepreciable21,213,3894,246,85225,460,24125,461,642 Depreciable67,674,77661,886,440129,561,216134,777,581 Total assets117,989,97685,451,441203,441,417198,860,680 Liabilities: Accounts payable715,17049,456764,626288,693 Due to other governmental units29,54544,31373,858152,844 Salaries payable98,80117,868116,669118,674 Contracts payable228,3116,567234,878432,080 Accrued interest payable341,611216,388557,999542,057 Unearned revenue43,890 - 43,890150,457 Compensated absences payable: Due within one year42,9976,77849,77548,572 Due in more than one year746,298117,647863,945899,474 Other post employment benefits payable: Due in more than one year11,668 - 11,6689,592 Bonds payable: Due within one year5,100,000744,0265,844,0261,725,000 Due in more than one year17,670,00019,333,31337,003,31333,025,000 Total liabilities25,028,29120,536,35645,564,64737,392,443 Net assets: Invested in capital assets, net of related debt70,866,70855,430,138126,296,846130,300,790 Restricted for: Debt service9,774,727 - 9,774,7279,655,951 Park improvements2,516,027 - 2,516,0272,088,246 Tax increment purposes812,096 - 812,096693,309 Other purposes168,147 - 168,147121,137 Unrestricted8,823,9809,484,94718,308,92718,608,804 Total net assets$92,961,685$64,915,085$157,876,770$161,468,237 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, 2011 With Comparative Totals For The Year Ended December 31, 2010 Charges For Functions/ProgramsExpensesServices Primary government: Governmental activities: General government$2,565,486$541,686 Public safety3,061,1221,444,632 Public works8,607,534128,341 Parks and recreation2,921,593428,488 Community development799,37912,476 Interest and fees on long-term debt838,421 - Total governmental activities18,793,5352,555,623 Business-type activities: Water3,581,9552,611,327 Sewer3,317,3292,297,677 Surface water management1,173,115534,473 Total business-type activities8,072,3995,443,477 Total primary government$26,865,934$7,999,100 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 ContributionsContributionsActivitiesActivities20112010 $600$ - ($2,023,200)$ - ($2,023,200)($2,315,574) 297,219 - (1,319,271) - (1,319,271)(1,787,067) 362,3341,646,573(6,470,286) - (6,470,286)(1,849,183) 32,275 - (2,460,830) - (2,460,830)(2,311,212) - -(786,903) - (786,903)(861,905) - -(838,421) - (838,421)(880,384) 692,4281,646,573(13,898,911)0(13,898,911)(10,005,325) 9,393783,899 - (177,336)(177,336)(151,294) -290,442 - (729,210)(729,210)(476,194) 3,19612,314 - (623,132)(623,132)(346,208) 12,5891,086,6550(1,529,678)(1,529,678)(973,696) $705,017$2,733,228(13,898,911)(1,529,678)(15,428,589)(10,979,021) General revenues: General property taxes9,849,882 - 9,849,88210,014,684 Tax increment collections566,045 - 566,045539,523 Grants and contributions not restricted to specific programs28,304 -28,30445,767 Unrestricted investment earnings505,541211,707717,248337,068 Gain on sale of capital assets44,000 -44,00020,727 Miscellaneous -6,6436,64333,644 Transfers1,061,763(1,061,763) - - Total general revenues and transfers12,055,535(843,413)11,212,12210,991,413 Change in net assets(1,843,376)(2,373,091)(4,216,467)12,392 Net assets - beginning as previously reported94,180,06167,288,176161,468,237161,455,845 Prior period adjustment625,000 - 625,000 - Net assets - beginning as restated94,805,06167,288,176162,093,237161,455,845 Net assets - ending$92,961,685$64,915,085$157,876,770$161,468,237 The accompanying notes are an integral part of these financial statements. 33 CITY OF CHANHASSEN, MINNESOTA BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2011 With Comparative Totals For December 31, 2010 368 2009A G.O. 413 Transit Station Refunding BondsAssessment Fund General Fund Assets: Cash and investments$5,349,768$1,508,434$ - Cash with escrow agent - - - Accrued interest receivable19,0274,535 - Due from other governmental units143,198 - - Accounts receivable - net17,227 - - Due from other funds - - - Property taxes receivable331,0532,124 - Special assessments receivable3,1753,129,450815,524 Prepaid items17,280 - - Total assets$5,880,728$4,644,543$815,524 Liabilities and Fund Balances Liabilities: Accounts payable$148,460$ - $ - Due to other governmental units19,879 - - Due to other funds - - 668 Salaries payable97,215 - - Contracts payable - - - Interfund loan payable - - 729,253 Deferred revenue319,7763,129,450815,524 Total liabilities585,3303,129,4501,545,445 Fund balances: Nonspendable17,280 - - Restricted - 1,515,093 - Assigned - - - Unassigned5,278,118 -(729,921) Total fund balances5,295,3981,515,093(729,921) Total liabilities and fund balances$5,880,728$4,644,543$815,524 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 20112010 $644,372$10,888,605$ -$18,391,179$17,273,683 -3,829,832 -3,829,8323,879,306 4,03942,552 -70,15380,500 -152,910 -296,108146,941 -690,022 -707,249120,944 152,910867(153,777) - - 1,61819,026 -353,821376,257 2,093,037111,594 -6,152,7806,728,248 -12,662 -29,94263,035 $2,895,976$15,748,070($153,777)$29,831,064$28,668,914 $37,869$528,841$ -$715,170$234,590 -9,666 -29,545110,270 -153,109(153,777) - - -1,586 -98,801100,296 154,02974,282 -228,311388,993 - - -729,253729,253 2,087,704111,594 -6,464,0487,053,223 2,279,602879,078(153,777)8,265,1288,616,625 -12,662 -29,94263,035 -8,911,492 -10,426,5859,290,313 616,3745,945,037 -6,561,4116,307,094 -(199) -4,547,9984,391,847 616,37414,868,992021,565,93620,052,289 $2,895,976$15,748,070($153,777)$29,831,064$28,668,914 $21,565,936$20,052,289 88,888,16592,216,203 6,420,1586,902,766 (23,912,574)(24,991,197) $92,961,685$94,180,061 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, 2011 With Comparative Totals For The Year Ended December 31, 2010 413 Transit 368 2009A G.O. Station General FundRefunding BondsAssessment Fund Revenues: General property taxes$7,000,862$336,800$ - Tax increment collections - - - Licenses and permits1,360,939 - - Intergovernmental298,735856 - Special assessments -456,912 - Charges for services513,027 - - Fines and forfeits126,571 - - Investment income122,36414,592 - Contributions and donations25,675 - - Refunds and reimbursements56,559 - - Other218,520 - - Total revenues9,723,252809,1600 Expenditures: Current: General government1,874,130 - - Public safety2,853,830 - - Public works2,261,882 - - Parks and recreation1,871,194 - - Community development434,282 - - Capital outlay: General government - - - Public safety - - - Public works5,000 - - Parks and recreation1,395 - - Debt service: Principal -190,000 - Interest and paying agent fees -171,750 - Bond issuance costs - - - Developer assistance - - - Total expenditures9,301,713361,7500 Revenues over (under) expenditures421,539447,4100 Other financing sources (uses): Bond premium - - - Bonds issued - - - Refunding bonds issued - - - Transfers in -522,647 - Transfers out(395,759) - - Sale of capital assets - - - Total other financing sources (uses)(395,759)522,6470 Net change in fund balance25,780970,0570 Fund balance - January 15,269,618545,036(729,921) Fund balance - December 31$5,295,398$1,515,093($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 20112010 $256,570$2,165,820$ -$9,760,052$10,141,168 -566,045 -566,045539,523 -20,387 -1,381,3261,331,374 -1,125,934 -1,425,525401,550 651,601133,527 -1,242,040790,426 -282,589 -795,616923,550 - - -126,571123,609 15,454353,131 -505,541222,719 -25,010 -50,68558,016 -60,882 -117,441132,616 -628,003 -846,523213,272 923,625 5,361,328 0 16,817,365 14,877,823 -288,349 -2,162,4792,525,326 -42,814 -2,896,6443,077,038 1,477,1001,040,085 -4,779,0672,739,704 -35,295 -1,906,4891,901,564 -68,634 -502,916698,818 -129,535 -129,535473,753 -52,645 -52,64565,667 1,462,007655,634 -2,122,6413,995,444 -308,129 -309,524490,737 140,000695,000 -1,025,0002,370,000 14,433666,969 -853,152888,843 - - - -46,505 -298,216 -298,216176,643 3,093,540 4,281,305 0 17,038,308 19,450,042 (2,169,915)1,080,023 0 (220,943)(4,572,219) - - - -35,964 - - - -1,540,000 - - - -3,660,000 3,489,5771,148,742(3,426,376)1,734,5901,105,000 (647,000)(2,383,617)3,426,376 - - - - - -30,675 2,842,577 (1,234,875)0 1,734,590 6,371,639 672,662 (154,852)0 1,513,647 1,799,420 (56,288)15,023,844 -20,052,28918,252,869 $616,374$14,868,992$0$21,565,936$20,052,289 The accompanying notes are an integral part of these financial statements. 37 CITY OF CHANHASSEN, MINNESOTA Statement 5 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For The Year Ended December 31, 2011 With Comparative Totals For The Year Ended December 31, 2010 20112010 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)$1,513,647$1,799,420 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.(2,679,944)(190,588) The net effect of various miscellaneous transactions involving capital assets is to increase (decrease) net assets.(648,094)295,592 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds.(1,107,608)1,329,269 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.1,025,000(2,830,000) Other post employment benefits in the statement of activities do not require the use of current financial resources and, therefore, is not reported as expenditures in governmental funds.(2,076)(2,660) 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.55,699(50,849) Change in net assets of governmental activities (Statement 2)($1,843,376)$350,184 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, 2011 With Comparative Totals For December 31, 2010 Surface Water WaterSewerManagementTotals Assets:20112010 Current assets: Cash and cash equivalents$3,547,676$3,430,700$661,424$7,639,800$8,626,127 Cash with escrow agent7,223,674 - - 7,223,674 - Restricted cash2,224,185 - - 2,224,185 - Accrued interest receivable15,49715,5663,44034,50344,666 Due from other governmental units557 - 3,1963,7532,984 Accounts receivable - net540,632472,509114,5721,127,713993,366 Interfund loan receivable729,253 - - 729,253729,253 Special assessments receivable19,97711,688 - 31,66549,652 Connection charges receivable90,36539,586 - 129,951194,971 Prepaid items1,250651581,95913,551 Water meter inventory25,685 - - 25,68527,226 Total current assets14,418,751 3,970,700 782,690 19,172,141 10,681,796 Noncurrent assets: Deferred charges146,008 - - 146,008 - Capital assets: Land1,370,974145,550480,9111,997,4351,997,435 Easements175,81635,73835,738247,292107,225 Buildings and structures12,445,429 - - 12,445,42912,445,429 Machinery and equipment1,947,495537,42517,9832,502,9032,408,802 Other improvements42,054,95432,138,86424,305,25098,499,06897,448,622 Construction in progress1,243,189421,878337,0582,002,1252,031,729 Total capital assets59,237,857 33,279,455 25,176,940 117,694,252 116,439,242 Less: Allowance for depreciation(22,095,045)(18,507,147)(10,958,768)(51,560,960)(48,416,222) Net capital assets37,142,81214,772,30814,218,17266,133,29268,023,020 Total assets51,707,57118,743,00815,000,86285,451,44178,704,816 Liabilities: Current liabilities: Accounts payable27,64713,7238,08649,45654,103 Due to other governmental units4,17340,140 - 44,31342,574 Salaries payable8,2755,9933,60017,86818,378 Contracts payable6,567 - - 6,56743,087 Accrued interest payable215,0321,356 - 216,388185,715 Compensated absences payable - due within one year2,9052,7361,1376,7786,034 Bonds payable - due within one year674,02670,000 - 744,026700,000 Total current liabilities938,625 133,948 12,823 1,085,396 1,049,891 Noncurrent liabilities: Compensated absences payable - due in more than one year 50,42747,49319,727117,647111,749 Bonds payable - due in more than one year19,333,313 - - 19,333,31310,255,000 Total noncurrent liabilities19,383,740 47,493 19,727 19,450,960 10,366,749 Total liabilities20,322,365181,44132,55020,536,35611,416,640 Net assets: Invested in capital assets, net of related debt26,509,65814,702,30814,218,17255,430,13857,028,340 Unrestricted4,875,5483,859,259750,1409,484,94710,259,836 Total net assets$31,385,206$18,561,567$14,968,312$64,915,085$67,288,176 The accompanying notes are an integral part of these financial statements. 39 CITY OF CHANHASSEN, MINNESOTA Statement 7 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS For The Year Ended December 31, 2011 With Comparative Totals For The Year Ended December 31, 2010 Surface Water WaterSewerManagement Totals 20112010 Operating revenues: Charges for services$2,497,737$2,247,765$524,812$5,270,314$5,168,355 Penalties and other113,59049,9129,661173,163160,325 Total operating revenues2,611,327 2,297,677 534,473 5,443,477 5,328,680 Operating expenses: Personal services564,264347,976221,3191,133,5591,092,104 Materials and supplies259,48651,57724,157335,220344,149 Contractual services: MCES - 1,519,879 - 1,519,8791,386,052 Other417,669325,255147,684890,608954,936 Repairs and maintenance356,607120,649184477,440461,397 Depreciation1,523,901948,063760,2503,232,2143,197,556 Total operating expenses3,121,927 3,313,399 1,153,594 7,588,920 7,436,194 Operating income (loss)(510,600)(1,015,722)(619,121)(2,145,443)(2,107,514) Nonoperating revenues (expenses): Investment income95,47899,73016,499211,707114,349 Intergovernmental9,393 - 3,19612,5892,984 Interest and fiscal charges(460,028)(3,930) - (463,958)(449,487) Gain (loss) on disposal of capital assets - - (17,815)(17,815) - Miscellaneous254 - 6,3896,64333,644 Reassignment of capital assets to govtl activities - - (1,706)(1,706)(12,968) Total nonoperating revenues (expenses)(354,903)95,800 6,563 (252,540)(311,478) Income before contributions and transfers(865,503)(919,922)(612,558)(2,397,983)(2,418,992) Transfer out (792,166)(313,010)(629,414)(1,734,590)(1,105,000) Capital contributions: Contributions of capital assets489,83682,700125,315697,8512,039,347 Special assessments36,34211,772 - 48,114141,439 Connection charges735,898267,01010,6091,013,5171,005,414 Total contributions and transfers469,91048,472(493,490)24,8922,081,200 Change in net assets(395,593)(871,450)(1,106,048)(2,373,091)(337,792) Net assets - January 131,780,79919,433,01716,074,36067,288,17667,625,968 et assets - December 31$31,385,206$18,561,567$14,968,312$64,915,085$67,288,176 N CapitalTransfers - ContributionsNet Amounts reported above$1,759,482($1,734,590) Amounts reported for business-type activities in the statement of activities are different because: Transfer in of capital assets from governmental activities(672,827)672,827 Amounts reported on the statement of activities$1,086,655($1,061,763) 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, 2011 With Comparative Totals For The Year Ended December 31, 2010 Surface Water WaterSewerManagementTotals 20112010 Cash flows from operating activities: Receipts from customers and users$2,511,649$2,281,559$515,153$5,308,361$5,471,002 Payment to suppliers(1,038,546)(2,008,334)(166,042)(3,212,922)(3,210,783) Payment to employees(561,971)(344,838)(220,618)(1,127,427)(1,098,773) Miscellaneous revenue9,647 - 9,58519,23236,628 Net cash flows provided by operating activities920,779(71,613)138,078987,2441,198,074 Cash flows from noncapital financing activities: Transfers out(792,166)(313,010)(629,414)(1,734,590)(1,105,000) Decrease in due from other funds - - - - 350,369 (Increase) in interfund receivable - - - - (729,253) Net cash flows provided by (used in) noncapital financing activities(792,166)(313,010)(629,414)(1,734,590)(1,483,884) Cash flows from capital and related financing activities: Acquisition of capital assets(558,940)(69,455)(72,281)(700,676)(2,019,776) Connection charges781,971285,95710,6091,078,537929,551 Special assessment revenue50,62515,476 - 66,101158,686 Proceeds from debt9,822,339 - - 9,822,339 - Principal paid on bonds(635,000)(65,000) - (700,000)(740,000) Interest and fiscal charges(574,144)(5,149) - (579,293)(461,687) Net cash flows provided by (used in) capital and related financing activities8,886,851161,829(61,672)8,987,008(2,133,226) Cash flows from investing activities: Investment income99,650100,10122,119221,870151,440 Net (decrease) in cash and cash equivalents9,115,114(122,693)(530,889)8,461,532(2,267,596) Cash and cash equivalents - January 13,880,4213,553,3931,192,3138,626,12710,893,723 Cash and cash equivalents - December 31$12,995,535 $3,430,700 $661,424 $17,087,659 $8,626,127 Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) ($510,600)($1,015,722)($619,121)($2,145,443)($2,107,514) Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Miscellaneous revenue (expense)9,647 - 9,58519,23236,628 Depreciation1,523,901948,063760,2503,232,2143,197,556 Changes in assets and liabilities: Decrease (increase) in receivables(99,678)(16,118)(19,320)(135,116)142,472 Decrease in prepaid items4,7153,9102,96711,592(4,255) Decrease (increase) in inventory1,541 - - 1,541(7,013) Increase (decrease) in accounts payable(8,747)8,2543,7173,224(59,800) Total adjustments1,431,379 944,109 757,199 3,132,687 3,305,588 Net cash provided by operating activities$920,779($71,613)$138,078$987,244$1,198,074 Noncash investing, capital and financing activities: Capital assets in the amount of $489,836 and $612,076 were contributed to the Water Fund in 2011and 2010, respectively. Capital assets in the amount of $82,700 and $525,685 were contributed to the Sewer Fund in 2011 and 2010, respectively. Capital assets in the amount of $123,609 and $888,618 were contributed to the Surface Water Fund in 2011 and 2010, respectively. The accompanying notes are an integral part of these financial statements. 41 CITY OF CHANHASSEN, MINNESOTA Statement 9 STATEMENT OF NET ASSETS FIDUCIARY FUNDS December 31, 2011 With Comparative Totals For December 31, 2010 Agency Funds 20112010 Assets: Cash and investments$895,645$827,135 Liabilities: Escrow deposits payable$895,645$827,135 The accompanying notes are an integral part of these financial statements. 42 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 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. 43 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 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. 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, 2011 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, 2011 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 2011. 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, 2011 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 2011, the CATV Special Revenue Fund had expenditures of $172,233, which exceeded budgeted expenditures of $92,700 by $79,533. 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.RESTRICTED CASH Certain funds of the City are classified as restricted cash on the statement of net assets because the restriction is either imposed by law through constitutional provisions or enabling legislation or imposed externally by creditors, grantors, contributors, or laws or regulations of other governments. Therefore, their use is limited by applicable laws and regulations. At December 31, 2011, $2,224,185 of restricted cash is held in the Water Fund to be used for construction of an elevated storage tank. 47 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 H.RECEIVABLES Property taxes and special assessment receivables have been reported net of estimated uncollectible accounts (See Note 1 I and J). 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. I.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. J.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. 48 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 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 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. K.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. L.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. 49 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 M.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. 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, 2011, no interest was capitalized in connection with construction in progress. Capital assets of the City are 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 N.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, 2011 The City’s liability for compensated absences at December 31, 2011 is scheduled below: Vacation$471,469 Severance402,721 Comp time39,530 Total compensated absences$913,720 O.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, if material, are amortized over the life of the related debt. 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. P.FUND BALANCE CLASSIFICATIONS In the fund financial statements, governmental funds report fund balance in classifications that disclose constraints for which amounts in those funds can be spent. These classifications are as follows: Nonspendable - consists of amounts that are not in spendable form, such as prepaid items. Restricted - consists of amounts related to externally imposed constraints established by creditors, grantors or contributors; or constraints imposed by state statutory provisions. Committed - consists of internally imposed constraints. These constraints are established by Resolution of City Council, and committed amounts cannot be used for any other purpose unless the City Council removes or changes the specified use by resolution. Assigned – consistsof internally imposed constraints for the specific purpose of the City’s intended use. Pursuant to the City’s Fund Balance Policy, the City Manager or Finance Director are authorized to assign fund balance that reflects the City’s intended use of those funds. Unassigned – is the residual classification for the general fund and also reflects negative residual amounts in other funds. When both restricted and unrestricted resources are available for use, it is the City’s policy to first use restricted resources, and then use unrestricted resources as they are needed. 51 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 When committed, assigned or unassigned resources are available for use, it is the City’s policy to use resources in the following order; 1) committed 2) assigned and 3) unassigned. The exception to this is the Park Dedication Fund (410), where it is the City’s policy to use resources in the following order; 1) assigned, 2) committed, and 3) restricted. Q.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, 2011 are planned to be eliminated in 2012. 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. R.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. S.RECLASSIFICATIONS Certain amounts in the prior year have been reclassified to conform with the current year presentation. T.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, 2010, from which the summarized information was derived. 52 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 U.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 ($23,912,574) difference are as follows: Bonds payable($22,770,000) Accrued interest payable(341,611) Compensated absences(789,295) Other post employment benefit payable(11,668) Net adjustment to decrease fund balances - total governmental funds to arrive at net assets - governmental activities($23,912,574) 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 ($2,679,944) difference are as follows: Capital outlay/construction$2,614,345 Depreciation expense(5,294,289) Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities($2,679,944) 53 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 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 ($648,094) 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$181,421 Transfer of capital assets to Enterprise Funds(672,827) 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(156,688) Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities($648,094) 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 ($1,107,608) difference are as follows: General property taxes deferred revenue: At December 31, 2010($183,110) At December 31, 2011272,940 Special assessments deferred revenue: At December 31, 2010(6,718,800) At December 31, 20116,147,218 Other 2010 revenue has been deferred because it was not collected within 60 days from year-end. At December 31, 2010(625,856) At December 31, 2011 - Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities($1,107,608) 54 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 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 $1,025,000 difference are as follows: Debt issued: Bonds issued$ - Principal repayments: General obligation debt525,000 General obligation improvement bonds 330,000 General obligation tax increment bonds60,000 Public project revenue bonds110,000 Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities$1,025,000 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 $55,699 difference are as follows: Compensated absences$40,968 Accrued interest14,731 Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities$55,699 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 is the risk that in the event of a bank failure, the City’s Custodial Credit Risk 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, 2011, 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. 55 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 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 f)Time deposits that are fully insured by any federal agency. At December 31, 2011, the carrying amount of the City’s deposits with financial institutions was $13,772,028. 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) State and local securities 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. 56 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 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. As of December 31, 2011, the City had the following investments and maturities: Investment Maturities (in Years) FairLess Investment TypeRatingValueThan 11-56-10 4M FundNR$17,571$17,571$ - $ - Money Market Mutual FundsNR2,295,1102,295,110 - - Brokered Certificates of DepositNR5,150,5713,409,750 1,740,821 - Municipal Bonds(1)9,217,6431,038,850 7,958,813219,980 Federal Home Loan Bank NotesAaa2,049,8011,012,216 1,037,585 - Federal Home Loan Bank Discount NotesNR1,047,904 1,047,904 - - Federal Farm Credit Bank NotesAaa973,420973,420 - - Federal National Mortgage Assn. NotesNR2,496,635 2,496,635 - - Federal Home Loan Mortgage Corp. NotesNR2,012,9971,008,022 - 1,004,975 City of Chanhassen G.O. BondsAAA1,170,000400,000 770,000 - Total$26,431,652$10,154,939$15,051,758$1,224,955 (1) $219,981 are rated Aaa, $1,977,534 are rated Aa3 andTotal investments$26,431,652 $7,020,128 are rated Aa2.Deposits13,772,028 Petty cash635 NR - Not Rated Total cash and investments$40,204,315 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)$26,030,979 Fiduciary (Statement 9)895,645 Cash with escrow agent (Statement 1)11,053,506 Restricted cash2,224,185 Total$40,204,315 57 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 C. INVESTMENT RISKS – For investments in securities, custodial credit risk is the risk that Custodial credit risk – investments 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. – Interest rate risk is the risk that changes in interest rates of debt investments could Interest rate risk 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 seven 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 is the risk of loss that may be attributed to Concentration of credit risk the magnitude of a government’s investment in a single issuer. The City’s investment policy states investments shall be diversified by limiting investments to avoid over concentration in securities from a specific issuer or business sector (excluding U.S. Treasury securities). Investments in a single issuer exceeding 5% of the City’s overall cash and investment portfolio (excluding cash with escrow agent) are in various holdings as follows: Federal Home Loan Bank notes11% Federal National Mortgage Association notes9% Federal Home Loan Mortgage Corporation notes7% 58 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Note 3 RECEIVABLES Significant receivable balances not expected to be collected within one year of December 31, 2011 are as follows: InterfundDelinquent Special LoanPropertyAssessments ReceivableTaxesReceivableTotal Major Funds: General$ - $91,564$307$91,871 2009A G.O. Refunding - - 3,022,1953,022,195 Transit Station Assessment Fund - - 736,106736,106 Revolving Assessment Fund - - 1,784,4151,784,415 Water646,856 - 79,500726,356 Sewer - - 35,98235,982 Nonmajor Funds - - 78,81278,812 $646,856$91,564$5,737,317$6,475,737 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$272,940$ - $ - $ - $ - $272,940 Special assessments not yet due2,9463,129,450815,5242,087,704111,5946,147,218 Total unavailable revenue275,8863,129,450815,5242,087,704111,5946,420,158 Unearned: Antenna rental fees received but not yet earned33,091 - - - - 33,091 Donations/rentals received but not yet earned10,799 - - - - 10,799 Total unearned revenue43,890000043,890 Total deferred unavailable/unearned revenue for governmental funds$319,776$3,129,450$815,524$2,087,704$111,594$6,464,048 59 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Note 4 CAPITAL ASSETS Capital asset activity for the year ended December 31, 2011 was as follows: BeginningEnding Primary Government BalanceIncreaseDecreaseBalance Governmental activities: Capital assets not being depreciated: Land$18,709,812$276,315$ - $18,986,127 Construction in progress2,256,9401,023,746(1,604,124)1,676,562 Permanent easements358,501192,199 - 550,700 Total capital assets not being depreciated21,325,2531,492,260(1,604,124)21,213,389 Capital assets being depreciated: Buildings and structures23,481,7252,999(46,782)23,437,942 Machinery and equipment7,149,320508,127(186,283)7,471,164 Other improvements 5,461,022133,066 - 5,594,088 Infrastructure107,574,1301,662,811(503,650)108,733,291 Total capital assets being depreciated143,666,1972,307,003(736,715)145,236,485 Less accumulated depreciation for: Buildings and structures4,842,470574,486 - 5,416,956 Machinery and equipment4,780,193466,366(145,144)5,101,415 Other improvements 1,972,444229,667 - 2,202,111 Infrastructure61,180,1404,023,770(362,683)64,841,227 Total accumulated depreciation72,775,2475,294,289(507,827)77,561,709 Governmental activities capital assets - net$92,216,203($1,495,026)($1,833,012)$88,888,165 BeginningEnding Primary Government BalanceIncreaseDecreaseBalance Business-type activities: Capital assets not being depreciated: Land$1,997,435$ - $ - $1,997,435 Construction in progress2,031,729867,023(896,627)2,002,125 Permanent easements107,225140,067 - 247,292 Total capital assets not being depreciated4,136,3891,007,090(896,627)4,246,852 Capital assets being depreciated: Buildings and structures12,445,429 - - 12,445,429 Machinery and equipment2,408,802154,845(60,744)2,502,903 Other improvements 97,448,6221,094,994(44,548)98,499,068 Total capital assets being depreciated112,302,8531,249,839(105,292)113,447,400 Less accumulated depreciation for: Buildings and structures747,409248,918 - 996,327 Machinery and equipment1,337,288137,448(60,743)1,413,993 Other improvements 46,331,5252,845,848(26,733)49,150,640 Total accumulated depreciation48,416,2223,232,214(87,476)51,560,960 Business-type activities capital assets - net68,023,020(975,285)(914,443)66,133,292 Total capital assets - net$160,239,223($2,470,311)($2,747,455)$155,021,457 60 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Depreciation expense was charged to functions/programs of the City as follows: Governmental activities: General government$401,635 Public safety152,437 Public works3,696,352 Parks and recreation1,043,865 Total depreciation expense - governmental activities$5,294,289 Business-type activities: Water$1,523,901 Sewer948,063 Surface water management760,250 Total depreciation expense - business-type activities$3,232,214 61 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 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, 2011, the governmental activities long-term debt of the City consisted of the following: FinalAuthorized Issue Maturity Interest AndOutstanding DateDateRateIssued12/31/11 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$4,065,000 G.O. Capital Improvement Plan Bonds, Series 2008A11/18/082/01/304.00% - 4.60%7,550,0007,300,000 G.O. Library Refunding Bonds, 2010A1/27/102/01/222.00% - 3.10%3,660,0003,660,000 Total general obligation bonds17,305,00015,025,000 Revenue Bonds: 2000 Public Project Revenue Bonds12/01/002/01/124.75% - 5.35%930,000120,000 Tax Increment Bonds: G.O. Tax Increment Refunding Bonds, Series 2004C8/10/042/01/213.00% - 6.00%1,170,000840,000 General Improvement Bonds: G.O. Improvement Refunding Bonds, Series 2009A6/03/092/01/173%6,020,0005,615,000 G.O. Street Reconstruction Bonds, Series 20107/22/106/15/13.65% - 1.2%1,540,0001,170,000 Total improvement bonds7,560,0006,785,000 Compensated absences payableN/A789,295 Total City indebtedness - governmental activities$26,965,000$23,559,295 62 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 BUSINESS-TYPE ACTIVITIES As of December 31, 2011, the business-type activities long-term debt of the City consisted of the following: FinalAuthorized Issue Maturity Interest AndOutstanding DateDateRateIssued12/31/11 G.O. Revenue Bonds: Water and Sewer Revenue Bonds, Series 2001A7/15/20012/1/20123.50% - 4.65%$1,645,000$70,000 Water Revenue Bonds, Series 2004B8/10/20042/1/20254.00% - 4.50%7,930,0006,170,000 Water Revenue Bonds, Series 2005B11/16/20052/1/20213.75% - 3.90%5,465,0004,015,000 Water Revenue Bonds, Series 2011A10/6/20112/1/20220.30% - 2.15%5,920,0005,920,000 Water Revenue Refunding Bonds, Series 2011B10/6/20112/1/20252.00% - 3.00%3,720,0003,720,000 Bond premiumN/A182,339 Total G.O. revenue bonds24,680,00020,077,339 Compensated absences payableN/A124,425 Total City indebtedness - business-type activities$24,680,000$20,201,764 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 2012$595,000$178,115$65,000$44,720$120,000$3,210$4,320,000$586,246 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 - - 640,000337,111 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$6,785,000$524,135$840,000$261,968$120,000$3,210$15,025,000$4,296,783 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, 2011 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. 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, 2011 is $6,785,000. 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 2012$730,000$550,300 20134,240,000491,134 20144,575,000405,704 20151,025,000230,763 20161,070,000210,941 20171,095,000188,000 20181,130,000162,133 20191,165,000138,163 20201,185,000114,358 20211,225,00086,063 2022790,00060,631 2023535,00041,925 2024555,00025,575 2025575,0008,625 Total$19,895,000$2,714,315 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, 2011 CHANGE IN LONG-TERM LIABILITIES Long-term liability activity for the year ended December 31, 2011 was as follows: BeginningEnding Due Within BalanceAdditionsDeletionsBalanceOne Year Governmental activities: Bonds payable: General obligation$15,550,000$ - $525,000$15,025,000$4,320,000 G.O. improvement bonds7,115,000 - 330,0006,785,000595,000 G.O. tax increment bonds900,000 - 60,000840,00065,000 Public project revenue bonds230,000 - 110,000120,000120,000 Total bonds payable23,795,000 - 1,025,00022,770,0005,100,000 Compensated absences830,263513,443554,411789,29542,997 Total governmental activity long-term liabilities$24,625,263$513,443$1,579,411$23,559,295$5,142,997 Business-type activities: G.O. revenue bonds $10,955,000$9,640,000$700,000$19,895,000$730,000 Bond premium - 182,339 - 182,33914,026 Compensated absences117,78399,74593,103124,4256,778 Total business-type activity long-term liabilities$11,072,783$9,922,084$793,103$20,201,764$750,804 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, 2011 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, 2011 totaled $18,982. 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 REFUNDINGS Series 2010A Bonds 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. 65 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 The City advance refunded the 2002A General Obligation Library Bonds to reduce its total debt service payments during the years 2011 through 2022 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. 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 $3,829,832 at December 31, 2011. 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 2012$4,245,873$99,805$3,879,805$465,873 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$4,245,873$4,328,753$3,879,805$4,694,821 Series 2011A Bonds On October 6, 2011, the City issued $5,920,000 in General Obligation Bonds, Series 2011A with an average interest rate of 1.48%. $3,430,000 of the proceeds will be used to advance refund $3,330,000 of outstanding 2005B Series Bonds with an average interest rate of 3.82%. The net proceeds were used to purchase U.S. government securities in the amount of $3,379,956. Those securities were deposited in an irrevocable trust with an escrow agent to provide for the interest on the refunding bonds through the crossover date and called principal on the refunded bonds on February 1, 2013. The City advance refunded the 2005B General Obligation Water Revenue Bonds to reduce its total debt service payments during the years 2012 through 2021 by $264,221 and to obtain an economic gain (difference between the present value of the debt service payments on the old and new debt) of $245,005. 66 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 The City is responsible for the debt service of the refunded bonds through the crossover date (February 1, 2013) 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 $3,379,956 at December 31, 2011. 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 portion of the 2011A bonds 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 2012$481,101$34,333$34,333$481,101 20133,749,91041,8983,350,949440,859 2014 - 446,088 - 446,088 2015 - 454,240 - 454,240 2016 - 451,439 - 451,439 2017 - 452,365 - 452,365 2018 - 457,153 - 457,153 2019 - 460,730 - 460,730 2020 - 458,205 - 458,205 2021 - 464,600 - 464,600 Total$4,231,011$3,721,051$3,385,282$4,566,780 Series 2011B Bonds On October 6, 2011, the City issued $3,720,000 in General Obligation Water Revenue Bonds, Series 2011B with an average interest rate of 2.90% to advance refund $3,575,000 of outstanding 2004B Series Bonds with an average interest rate of 4.22%. The net proceeds were used to purchase U.S. government securities in the amount of $3,843,718. Those securities were deposited in an irrevocable trust with an escrow agent to provide for the interest on the refunding bonds through the crossover date of August 1, 2014 and called principal on the refunded bonds (2019 through 2025 maturities) on August 1, 2014. The City advance refunded the 2019 through 2025 maturities of the 2004B General Obligation Water Revenue Bonds to reduce its total debt service payments during the years 2012 through 2025 by $259,863 and to obtain an economic gain (difference between the present value of the debt service payments on the old and new debt) of $223,262. The City is responsible for the debt service of the refunded bonds through February 1, 2018 and the debt service of the refunding bonds beginning February 1, 2015. The debt service of the refunding bonds due prior to February 1, 2015 is payable from the escrow account. Assets held with the escrow agent total $3,843,718 at December 31, 2011. 67 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 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 portion of the 2011B bonds 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 2012$581,054$86,861$86,861$581,054 2013582,754106,000106,000582,754 20144,158,854106,0003,681,000583,854 2015426,840106,000 - 532,840 2016426,740135,700 - 562,440 2017425,840135,100 - 560,940 2018428,820134,500 - 563,320 2019 - 569,500 - 569,500 2020 - 567,600 - 567,600 2021 - 572,900 - 572,900 2022 - 572,675 - 572,675 2023 - 576,925 - 576,925 2024 - 580,575 - 580,575 2025 - 583,625 - 583,625 Total$7,030,902$4,833,961$3,873,861$7,991,002 68 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 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 2008A CIP bondsPublic Works Facility constructionProperty taxes100%n/a2009 - 2029$10,747,151$566,118$594,000 2010A Library Refunding bondsLibrary constructionProperty taxes100%n/a2012 - 2021$4,328,753$99,805$ - - refunded the 2002A Library bonds 2004C TIF Refunding bondsDowntown Redevelopment ProjectTax increment100%n/a2004 - 2021$1,101,967$108,175$108,175 2009A Improvement Refunding bondsInfrastructure improvementsSpecial assessments68%n/a2009 -2017$6,121,925$361,750$793,712 - refunded the 2005A & 2006A bondsProperty taxes32% 2010 Street Reconstruction bondsStreet reconstructionProperty taxes100%n/a2010 - 2013$1,187,210$154,433$154,433 2001A Water & Sewer Revenue bondsWater & Sewer infrastructure improvementsSewer usage charges100%3.0%2001 - 2012$71,628$69,718$2,297,677 2011A Water Revenue bondsWater infrastructure improvementsWater usage charges100%0.0%2012 - 2021$6,441,811$ - $ - - refunded the 2005B bonds 2011B Water Revenue bondsWater infrastructure improvementsWater usage charges100%0.0%2012 - 2024$4,833,961$ - $ - - refunded the 2004B bonds 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, 2011. Future scheduled tax levies for all bonds outstanding at December 31, 2011 totaled $17,955,530. 69 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 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. 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 6.25%, respectively, of their annual covered salary in 2011. PEPFF members were required to contribute 9.6% of their annual covered salary in 2011. The City was required to contribute the following percentages of annual covered payroll in 2011: 11.78% for Basic Plan GERF members, 7.25% for Coordinated Plan members, and 14.4% for PEPFF members. The City’s contributions to the General Employees Retirement Fund for the years ending December 31, 2011, 2010 and 2009 were $318,398, $314,239 and $297,106, respectively. The City’s contributions to the Public Employees Police and Fire Fund for the years ending December 31, 2011, 2010 and 2009 were $18,058, $18,168 and $17,384, respectively. The City’s contributions were equal to the contractually required contributions for each year as set by state statute. 70 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 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. 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 $108,971 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$161,302 Contributions made: City52,331 State aid108,971 Actuarial valuation date12/31/11 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 71 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 THREE YEAR TREND INFORMATION Three-Year Trend Information AnnualPercentageNet YearPensionof APCPension EndingCost (APC)ContributedObligation 12/31/2009$167,720100%$ - 12/31/2010198,506100% - 12/31/2011161,302100% - REQUIRED SUPPLEMENTARY INFORMATION Assets in Excess of/Pension ActuarialActuarialActuarial(Unfunded)Benefit ValuationValue ofAccruedAccruedFundedPer Year DateAssetsLiabilityLiabilityRatioof Service 12/31/2009$2,087,994$2,679,000($591,006)77.9%$5,050 12/31/20102,500,1352,891,806(391,671)86.5%5,050 12/31/2011***** *2011 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. 72 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 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. 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 December 2011, participants consisted of: Retirees and beneficiaries currently purchasing health insurance through the City2 Active employees63 Total65 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. 73 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 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, 2011, was calculated as follows: Annual required contribution (ARC)$9,383 Interest on net OPEB obligation144 Adjustment to ARC(319) Annual OPEB cost9,208 Contributions made during the year(4,748) Actuarial adjustment to beginning net OPEB obligation(2,384) Increase (decrease) in net OPEB obligation2,076 Net OPEB obligation - beginning of year9,592 Net OPEB obligation - end of year$11,668 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, 2009$5,984$2,85547.7%$6,932 December 31, 20105,7203,06053.5%9,592 December 31, 20119,2084,74851.6%11,668 74 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 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, 2011$0$89,875$89,8750.0%$4,299,4662.1% *Using the projected unit credit actuarial pay cost method. 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, 2011 actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions included a 2.0% investment rate of return (net of administrative expenses) and an annual health care cost trend rate of 0% in 2011, 2.62% in 2012, 12% in 2013 and 5% in 2014 and beyond. The actuarial value of assets was $0. The plan’s unfunded actuarial accrued liability is being amortized using the level percentage of projected payroll method over 30 years on a closed basis. The remaining amortization period at December 31, 2011 was 26 years. 75 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Note 9 DUE TO/FROM OTHER FUNDS, INTERFUND LOAN RECEIVABLE/PAYABLE AND TRANSFERS Amounts reported as due to/from other funds at December 31, 2011 are as follows: FundReceivablePayable Transit Station Assessment Fund$ - $668 Revolving Assessment Fund152,910 - Other governmental funds867153,109 Total$153,777$153,777 Due to/from other funds are representative of lending/borrowing arrangements to cover deficit cash balances at the end of the fiscal year. The funds will be repaid as special assessments and project reimbursements from the State are received. Amounts reported as interfund receivable/payable at December 31, 2011 are as follows: FundReceivablePayable Transit Station Assessment Fund$ - $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. There were no repayments in 2011 and $82,397 is expected to be repaid in 2012. 76 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Interfund transfers: TransfersTransfers InOut General Fund$ - $395,759 2009A G.O. Refunding Bonds522,647 - Revolving Assessment Fund3,489,577647,000 Nonmajor government funds1,148,7422,383,617 Water Fund - 792,166 Sewer Fund - 313,010 Surface Water Management Fund - 629,414 Total$5,160,966$5,160,966 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 2011 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, 2011, the outstanding conduit debt is as follows: BondsOriginal12/31/11Maturity Project NameIssuedPrincipalPrincipalDate Chapel Hill Academy, Series 2005A12/05$1,337,700$859,9342019 St. Hubert Catholic Community, Series 200710/075,942,1404,361,8662027 77 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Note 11 DEFICIT FUND BALANCES The City has a deficit fund balance in the following funds at December 31, 2011: Debt Service Funds: 2004A G.O. Bonds($199) Capital Project Funds: Transit Station Assessment Fund(729,921) Total($730,120) 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 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’s management, are remotely recoverable by plaintiffs. C. WESTERN AREA FIRE TRAINING ACADEMY A potential claim may be asserted against the City arising out of its membership in the Western Area Fire Training Academy (WAFTA). WAFTA is a joint powers entity consisting of 11 member cities that was formed in 1974 to purchase property to be used and operated as a fire training facility. In the late 1980’s, WAFTA became aware that the site was contaminated. Since that time, WAFTA has been working with the Minnesota Pollution Control Agency (MPCA) and other responsible parties to address the contamination issues on the site. 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. D. 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 78 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 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, 2011. E. 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, 2011 the principal amount outstanding on the note was $267,209. 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, 2011 the principal amount outstanding on the note was $194,990. – 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 was 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, 2011 the principal amount outstanding on the note was $228,755. 79 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 F. COMMITTED CONTRACTS At December 31, 2011, the City had commitments of $2,030,912 for uncompleted construction contracts. Note 13 FUND BALANCE The City adopted the provisions of Governmental Accounting Standards Board Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions for the year ended December 31, 2011. This standard changed fund balance classifications for governmental fund statements. Definitions for the new classifications are included in Note 1P. A.CLASSIFICATIONS At December 31, 2011, a summary of the governmental fund balance classifications are as follows: 2009A G.O.TransitRevolvingOther GeneralRefundingStationAssessmentGovernmental FundBondsAssessmentFundFundsTotal Nonspendable: Prepaid items$17,280$ - $ - $ - $12,662$29,942 Restricted for: Debt service - 1,515,093 - - 5,415,2226,930,315 Park improvements - - - - 2,516,0272,516,027 Tax increment purposes - - - - 812,096812,096 CATV - public education - - - - 116,916116,916 Public safety - fire - - - - 51,23151,231 Total restricted01,515,093008,911,49210,426,585 Assigned for: Capital improvements - - - 616,3742,866,4773,482,851 Cable communications - - - - 1,365,1621,365,162 Economic development - - - - 1,170,0001,170,000 Debt service reserve - - - - 543,398543,398 Total assigned000616,3745,945,0376,561,411 Unassigned5,278,118 - (729,921) - (199)4,547,998 Total$5,295,398$1,515,093($729,921)$616,374$14,868,992$21,565,936 B.MINIMUM UNASSIGNED FUND BALANCE POLICY The City Council has formally adopted a policy regarding the minimum unassigned fund balance for the General Fund. The most significant revenue source of the General Fund is property taxes. This revenue source is received in two installments during the year – June and December. As such, it is the City’s goal to begin each fiscal year with sufficient working capital to fund operations between each semi-annual receipt of property taxes. 80 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 The City’s fund balance policy states the year end General Fund balance shall be sufficient to cover 50% of the property taxes budgeted to be received during the following year. At December 31, 2011, the fund balance of the General Fund exceeded this level. Note 14 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, 2011 totaled $201,279. Terms of each lease outstanding at year end are as follows: LesseeTermsCurrent Term Sprint$21,493 per year with 3% annual increases8/1/11 - 7/31/16 Sprint$22,954 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$1,970 per month with 3% annual increases11/1/05 - 10/31/15 T-Mobile$1,913 per month with 3% annual increases8/1/11 - 7/31/16 StoneBridge Wireless5% of gross revenues associated with equipment used on property4/1/06 - 12/31/14 Cingular/AT&T$1,857 per month with 3% annual increases8/1/07 - 7/31/12 Note 15 PRIOR PERIOD ADJUSTMENT During 2011, City staff discovered franchise fee revenue had been understated in prior years because the fees were withheld from the City. On the Statement of Activities, a $625,000 adjustment has been recorded to increase beginning net assets. 81 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 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. 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. Statement No. 63 Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position.The provisions of this Statement are effective for financial statements for periods beginning after December 15, 2011. Statement No. 65 Items Previously Reported as Assets and Liabilities.The provisions of this Statement are effective for financial statements for periods beginning after December 15, 2012. Statement No. 66 Technical Corrections – 2012. The provisions of this Statement are effective for financial statements for periods beginning after December 15, 2012. The effect these standards may have on future financial statements is not determinable at this time. 82 REQUIRED SUPPLEMENTARY INFORMATION 83 CITY OF CHANHASSEN, MINNESOTA Statement 10 REQUIRED SUPPLEMENTARY INFORMATION Page 1 of 6 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2011 With Comparative Actual Amounts For The Year Ended December 31, 2010 2010 2011 ActualVariance withActual Budgeted Amounts OriginalFinalAmountsFinal BudgetAmounts Revenues: General property taxes: Current$7,208,200$7,208,200$7,104,682($103,518)$7,097,455 Delinquent130,000130,000136,9116,911210,523 Abatement of property taxes - - (240,731)(240,731) - Total general property taxes7,338,2007,338,2007,000,862(337,338)7,307,978 Licenses and permits: Licenses - general government3,0003,0005,4002,4004,200 Licenses - public safety125,500125,500129,3333,833119,141 Permits - public safety721,800721,8001,175,064453,264894,539 Permits - public works26,50026,50046,11219,61242,097 Permits - community development7,9007,9005,030(2,870)6,575 Total licenses and permits884,700884,7001,360,939476,2391,066,552 Intergovernmental: State: PERA - public safety20,00020,00020,32632620,875 State aid - fire - public safety110,000110,000113,8603,860104,474 Other - general government45,00045,00044,774(226)41,941 State aid - police - public safety90,00090,000109,77519,775110,223 County grant - public works - - 10,00010,000 - Total intergovernmental265,000265,000298,73533,735277,513 Charges for services: General government76,60076,60077,05445477,122 Public safety7,0007,0005,861(1,139)7,665 Public works80,00080,00029,094(50,906)96,221 Park and recreation461,400461,400393,572(67,828)405,377 Community development18,00018,0007,446(10,554)10,568 Total charges for services643,000643,000513,027(129,973)596,953 Fines and forfeits: Public safety131,500131,500126,571(4,929)123,609 Refunds and reimbursements: General government9,0009,0002,442(6,558)27,785 Public safety9,8009,8003,361(6,439)9,999 Public works15,50015,50038,42722,92726,110 Park and recreation3,7003,70012,3298,62943,522 Total refunds and reimbursements38,00038,00056,55918,559107,416 Miscellaneous: Investment income100,000100,000122,36422,36437,587 Contributions and donations: General government3,0003,000600(2,400)10,600 Public safety3,0003,0002,800(200)2,900 Park and recreation19,20019,20022,2753,07521,785 Total contributions and donations25,20025,20025,67547535,285 84 CITY OF CHANHASSEN, MINNESOTA Statement 10 REQUIRED SUPPLEMENTARY INFORMATION Page 2 of 6 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2011 With Comparative Actual Amounts For The Year Ended December 31, 2010 20112010 Budgeted AmountsActualVariance withActual Revenues:OriginalFinalAmountsFinal BudgetAmounts Miscellaneous: (continued) Other: General government$186,000$186,000$213,078$27,078$208,765 Public safety6,0006,0005,442(558)3,107 Total other192,000192,000218,52026,520211,872 Total miscellaneous317,200317,200366,55949,359284,744 Total revenues9,617,6009,617,6009,723,252105,6529,764,765 Expenditures: General government: Legislative: Current: Personal services32,30032,30032,597(297)30,976 Contractual services76,00076,00065,04210,95868,798 Total legislative 108,300108,30097,63910,66199,774 Administrative office: Current: Personal services404,600404,600389,90214,698391,167 Materials and supplies500500 - 50028 Contractual services60,90060,90075,356(14,456)72,982 Total administrative office466,000466,000465,258742464,177 Finance: Current: Personal services233,100233,100229,1243,976227,553 Materials and supplies400400 - 400 - Contractual services48,10048,10044,7173,38342,466 Total finance281,600281,600273,8417,759270,019 Election: Current: Personal services21,50021,500221,49827,890 Materials and supplies2002004,242(4,042)462 Contractual services6,5006,500536,44713,945 Total election28,20028,2004,29723,90342,297 Legal: Current: Contractual services142,000142,000147,871(5,871)142,333 Property assessment: Current: Contractual services112,100112,100118,943(6,843)111,432 M.I.S.: Current: Personal services177,400177,400178,089(689)174,038 Materials and supplies2,4002,4002,2931071,646 Contractual services74,80074,80070,0374,76362,223 Total M.I.S.254,600254,600250,4194,181237,907 85 CITY OF CHANHASSEN, MINNESOTA Statement 10 REQUIRED SUPPLEMENTARY INFORMATION Page 3 of 6 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2011 With Comparative Actual Amounts For The Year Ended December 31, 2010 2010 2011 ActualVariance withActual Budgeted Amounts OriginalFinalAmountsFinal BudgetAmounts Expenditures: (continued) General government: (continued) City hall: Current: Personal services$71,500$71,500$71,822($322)$73,105 Materials and supplies42,900$42,90043,703(803)43,417 Contractual services294,000294,000285,3558,645282,917 Total City hall408,400408,400400,8807,520399,439 Library: Current: Materials and supplies3,0003,0002,6143863,538 Contractual services124,300124,300112,36811,932110,268 Total library127,300127,300114,98212,318113,806 Total general government1,928,5001,928,5001,874,13054,3701,881,184 Public safety: Police: Current: Personal services79,90079,90075,3394,56178,232 Materials and supplies5,0005,0002,7072,2933,565 Contractual services1,570,0001,570,0001,414,094155,9061,503,628 Total police1,654,9001,654,9001,492,140162,7601,585,425 Fire department: Current: Personal services598,200598,200533,89864,302578,402 Materials and supplies45,60045,60050,603(5,003)45,838 Contractual services102,000102,000109,729(7,729)91,817 Total fire department745,800745,800694,23051,570716,057 Code enforcement: Current: Personal services586,300586,300582,0014,299584,586 Materials and supplies5,1005,1005,007933,311 Contractual services16,90016,90011,5565,34411,796 Total code enforcement608,300608,300598,5649,736599,693 Animal control: Current: Personal services57,60057,60051,2606,34056,482 Materials and supplies4,2004,2005,209(1,009)3,585 Contractual services12,40012,40012,427(27)11,756 Total animal control74,20074,20068,8965,30471,823 Total public safety3,083,2003,083,2002,853,830229,3702,972,998 86 CITY OF CHANHASSEN, MINNESOTA Statement 10 REQUIRED SUPPLEMENTARY INFORMATION Page 4 of 6 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2011 With Comparative Actual Amounts For The Year Ended December 31, 2010 2010 2011 ActualVariance withActual Budgeted Amounts Expenditures: (continued)OriginalFinalAmountsFinal BudgetAmounts Public works: Engineering: Current: Personal services$541,100$541,100$511,981$29,119$504,665 Materials and supplies1,3001,3002441,056413 Contractual services30,60030,60027,0583,54237,894 Total engineering573,000573,000539,28333,717542,972 Street maintenance: Current: Personal services662,100662,100656,5865,514641,077 Materials and supplies129,600129,600123,9025,698173,908 Contractual services31,70031,70038,148(6,448)36,584 Total street maintenance 823,400823,400818,6364,764851,569 Street lighting: Current: Materials and supplies5,0005,0003,5281,4721,527 Contractual services340,400340,400358,218(17,818)316,051 Total street lighting345,400345,400361,746(16,346)317,578 City garage: Current: Personal services265,000265,000260,3424,658257,941 Materials and supplies145,700145,700196,513(50,813)138,269 Contractual services87,30087,30085,3621,93877,778 Capital outlay5,0005,0005,000 - - Total City garage503,000503,000547,217(44,217)473,988 Total public works2,244,8002,244,8002,266,882(22,082)2,186,107 Parks and recreation: Parks and recreation commission: Current: Materials and supplies100100 - 100 - Contractual services2,1002,1002,311(211)2,526 Total parks and recreation commission2,2002,2002,311(111)2,526 Parks and recreation administration: Current: Personal services128,300128,300128,856(556)127,194 Materials and supplies1,0001,0003,870(2,870)84 Contractual services8,0008,00018,457(10,457)6,862 Total parks and recreation administration137,300137,300151,183(13,883)134,140 Recreation center: Current: Personal services222,900222,900199,31223,588199,160 Materials and supplies46,20046,20040,6325,56836,787 Contractual services84,80084,80074,53510,26572,663 Total recreation center353,900353,900314,47939,421308,610 87 CITY OF CHANHASSEN, MINNESOTA Statement 10 REQUIRED SUPPLEMENTARY INFORMATION Page 5 of 6 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2011 With Comparative Actual Amounts For The Year Ended December 31, 2010 2010 2011 ActualVariance withActual Budgeted Amounts OriginalFinalAmountsFinal BudgetAmounts Expenditures: (continued) Parks and recreation: (continued) Senior citizen center: Current: Personal services$44,500$44,500$44,605($105)$44,246 Materials and supplies3,5003,5003,2852153,117 Contractual services21,00021,00014,7926,20821,749 Total senior citizen center69,00069,00062,6826,31869,112 Recreation program: Current: Personal services172,800172,800168,3264,474162,623 Materials and supplies19,10019,10020,441(1,341)14,410 Contractual services90,10090,10087,7292,37197,300 Total recreation program282,000282,000276,4965,504274,333 Self-supporting programs: Current: Personal services30,40030,40031,496(1,096)31,349 Materials and supplies8,6008,6006,4992,1017,501 Contractual services43,00043,00025,65317,34723,015 Total self-supporting programs82,00082,00063,64818,35261,865 Lake Ann Park operations: Current: Personal services8,7008,7006,2742,4266,417 Materials and supplies7,5007,5007,3081928,021 Contractual services45,90045,90038,5687,33238,663 Total Lake Ann Park operations62,10062,10052,1509,95053,101 Park maintenance: Current: Personal services723,200723,200743,130(19,930)724,389 Materials and supplies82,80082,80098,671(15,871)85,072 Contractual services92,30092,30086,8125,488116,127 Capital outlay - - 1,395(1,395) - Total park maintenance898,300898,300930,008(31,708)925,588 Downtown maintenance: Current: Contractual services - - 2,829(2,829)3,294 Recreation sports: Current: Personal services10,50010,5007,5572,94313,110 Materials and supplies7,9007,9008,834(934)7,727 Contractual services1,0001,000412588942 Total recreation sports19,40019,40016,8032,59721,779 Total parks and recreation1,906,2001,906,2001,872,58933,6111,854,348 88 CITY OF CHANHASSEN, MINNESOTA Statement 10 REQUIRED SUPPLEMENTARY INFORMATION Page 6 of 6 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2011 With Comparative Actual Amounts For The Year Ended December 31, 2010 20112010 Budgeted AmountsActualVariance withActual OriginalFinalAmountsFinal BudgetAmounts Expenditures: (continued) Community development: Planning commission: Current: Materials and supplies$200$200$ - $200$ - Contractual services4,0004,0003,2417592,929 Total planning commission4,2004,2003,2419592,929 Planning administration: Current: Personal services405,100405,100394,94210,158385,269 Materials and supplies70070083617104 Contractual services12,60012,6004,6517,9495,226 Total planning administration418,400418,400399,67618,724390,599 Senior facility commission: Current: Personal services22,60022,60022,685(85)22,200 Contractual services9,7009,7008,6801,0208,641 Total senior facility commission32,30032,30031,36593530,841 Total community development454,900454,900434,28220,618424,369 Total expenditures9,617,6009,617,6009,301,713315,8879,319,006 Revenues over expenditures00421,539421,539445,759 Other financing sources (uses): Transfers out - - (395,759)(395,759)(50,000) Net change in fund balance$0$025,780$25,780395,759 Fund balance - January 15,269,6184,873,859 Fund balance - December 31$5,295,398$5,269,618 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. 89 CITY OF CHANHASSEN, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF FUNDING PROGRESS - RETIREE HEALTH PLAN For The Year Ended December 31, 2011 Unfunded ActuarialActuarialActuarialUAAL as a ActuarialValue ofAccruedAccruedFundedCoveredPercentage of ValuationAssetsLiability (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% January 1, 2011$0$89,875$89,8750.0%$4,299,4662.1% *Using the projected unit credit actuarial pay cost method. Note: the first OPEB actuarial valuation was conducted as of January 1, 2008. There is no data available prior to or since the first valuation. 90 COMBINING AND INDIVIDUAL NONMAJOR FUND STATEMENTS AND SCHEDULES 91 NONMAJOR GOVERNMENTAL FUNDS 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 Statement 11 COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS December 31, 2011 With Comparative Totals For December 31, 2010 Totals Nonmajor SpecialDebtCapital Governmental Funds RevenueServiceProject20112010 Assets: Cash and investments$2,026,178$2,114,696$6,747,731$10,888,605$11,086,843 Cash with escrow agent - 3,829,832 - 3,829,8323,879,306 Accrued interest receivable3,8276,19032,53542,55245,453 Due from other governmental units - - 152,910152,910105,962 Accounts receivable - net685,688 - 4,334690,02277,647 Due from other funds - 19966886739,030 Property taxes receivable - 7,88711,13919,02630,375 Special assessments receivable - 111,594 - 111,594239,602 Prepaid items5 - 12,65712,6627,209 Total assets$2,715,698$6,070,398$6,961,974$15,748,070$15,511,427 Liabilities and Fund Balance Liabilities: Accounts payable$3,038$184$525,619$528,841$90,462 Due to other governmental units - - 9,6669,666144 Due to other funds - 199152,910153,10938,362 Salaries payable1,586 - - 1,5861,568 Contracts payable7,760 - 66,52274,2824,328 Deferred revenue - 111,594 - 111,594352,719 Total liabilities12,384111,977754,717879,078487,583 Fund balance: Nonspendable5 - 12,65712,6627,209 Restricted168,1475,415,2223,328,1238,911,4928,745,277 Assigned2,535,162543,3982,866,4775,945,0376,307,094 Unassigned - (199) - (199)(35,736) Total fund balance2,703,3145,958,4216,207,25714,868,99215,023,844 Total liabilities and fund balance$2,715,698$6,070,398$6,961,974$15,748,070$15,511,427 94 CITY OF CHANHASSEN, MINNESOTA Statement 12 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For The Year Ended December 31, 2011 With Comparative Totals For The Year Ended December 31, 2010 Totals Nonmajor Special DebtCapitalGovernmental Funds RevenueServiceProject20112010 Revenues: General property taxes$ - $1,215,820$950,000$2,165,820$2,241,895 Tax increment collections - - 566,045566,045539,523 Licenses and permits - - 20,38720,387264,822 Intergovernmental - - 1,125,9341,125,934107,768 Special assessments - 133,400127133,52774,340 Charges for services231,66139,07211,856282,589326,597 Investment income39,39180,567233,173353,131152,988 Contributions and donations25,010 - - 25,01022,731 Refunds and reimbursements - - 60,88260,88225,200 Other625,855 - 2,148628,0031,400 Total revenues921,917 1,468,859 2,970,552 5,361,328 3,757,264 Expenditures: Current: General government172,233100116,016288,349340,769 Public safety17,500 - 25,31442,814104,040 Public works - - 1,040,0851,040,085243,704 Parks and recreation - - 35,29535,29547,216 Community development - - 68,63468,634274,449 Capital outlay: General government - - 129,535129,53547,205 Public safety - - 52,64552,64565,667 Public works - - 655,634655,634497,089 Parks and recreation - - 308,129308,129490,737 Debt service: Principal - 695,000 - 695,0001,925,000 Interest and paying agent fees - 666,969 - 666,969675,504 Bond issuance costs - - - - 39,655 Developer assistance - - 298,216298,216176,643 Total expenditures189,733 1,362,069 2,729,503 4,281,305 4,927,678 Revenues over (under) expenditures732,184 106,790 241,049 1,080,023 (1,170,414) Other financing sources (uses): Bond premium - - - - 35,964 Refunding bonds issued - - - - 3,660,000 Transfers in - 447,361701,3811,148,7424,538,660 Transfers out(154,433) - (2,229,184)(2,383,617)(1,245,077) Sale of capital assets - - - - 30,675 Total other financing sources (uses)(154,433)447,361 (1,527,803)(1,234,875)7,020,222 Net change in fund balance577,751 554,151 (1,286,754)(154,852)5,849,808 Fund balance - January 12,125,5635,404,2707,494,01115,023,8449,174,036 Fund balance - December 31$2,703,314$5,958,421$6,207,257$14,868,992$15,023,844 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 equipment and training for the City’s fire department. 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 Statement 13 SUBCOMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS December 31, 2011 With Comparative Totals For December 31, 2010 201220 Economic Contribution210 CATV DevelopmentTotal Nonmajor Special FundFundAuthorityRevenue Funds 20112010 Assets: Cash and investments$45,240$810,938$1,170,000$2,026,178$2,064,655 Accrued interest receivable2283,599 - 3,8273,478 Accounts receivable - net5,763679,925 - 685,68861,716 Prepaid items -5 - 5396 Total assets$51,231 $1,494,467 $1,170,000 $2,715,698 $2,130,245 Liabilities and Fund Balance Liabilities: Accounts payable$ - $3,038$ - $3,038$3,114 Salaries payable - 1,586 - 1,5861,568 Contracts payable - 7,760 - 7,760 - Total liabilities012,384012,3844,682 Fund balance: Nonspendable -5 - 5396 Restricted51,231116,916 - 168,147121,137 Assigned - 1,365,1621,170,0002,535,1622,004,030 Total fund balance51,2311,482,0831,170,0002,703,3142,125,563 Total liabilities and fund balance$51,231 $1,494,467 $1,170,000 $2,715,698 $2,130,245 98 CITY OF CHANHASSEN, MINNESOTA Statement 14 SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS For The Year Ended December 31, 2011 With Comparative Totals For The Year Ended December 31, 2010 201220 Economic Contribution210 CATV Development Total Nonmajor Special Revenue FundFundAuthority Funds 20112010 Revenues: Franchise fees$ - $231,661$ - $231,661$231,729 Investment income1,48323,47514,43339,39118,049 Contributions and donations25,010 - - 25,01022,731 Other - 625,855 - 625,855 - Total revenues26,493880,99114,433921,917272,509 Expenditures: Current: Personal services - 86,093 - 86,09389,503 Materials and supplies - 40,382 - 40,38210,046 Contractual services17,50045,758 - 63,25856,625 Total expenditures17,500172,2330189,733156,174 Revenues over expenditures8,993708,75814,433732,184116,335 Other financing sources (uses): Transfers in - - - - 1,540,000 Transfers out - - (154,433)(154,433)(236,417) Total other financing sources (uses)00(154,433)(154,433)1,303,583 Net change in fund balance8,993 708,758 (140,000)577,751 1,419,918 Fund balance - January 142,238773,3251,310,0002,125,563705,645 Fund balance - December 31$51,231$1,482,083$1,170,000$2,703,314$2,125,563 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, 2011 With Comparative Totals For December 31, 2010 352 2000 357/369367 2008A 300Public2002A & G.O. Public PermanentProject2010A G.O. Works RevolvingRevenueLibrary360 2004A FacilityTotals Nonmajor Debt DebtBondsBondsG.O. BondsBondsService Funds 20112010 Assets: Cash and investments$540,944$134,011$627,712$ - $812,029$2,114,696$1,508,616 Cash with escrow agent - - 3,829,832 - - 3,829,8323,879,306 Accrued interest receivable2,2552381,610 - 2,0876,1905,840 Due from other funds199 - - - - 19938,362 Property taxes receivable - 7973,344 - 3,7467,88711,468 Special assessments receivable55,021 - - 56,573 - 111,594239,232 Total assets$598,419$135,046$4,462,498$56,573$817,862$6,070,398$5,682,824 Liabilities and Fund Balance Liabilities: Accounts payable$ - $ - $ - $ - $184$184$2,665 Due to other funds - - - 199 - 19938,362 Deferred revenue55,021 - - 56,573 - 111,594237,527 Total liabilities55,0210056,772184111,977278,554 Fund balance: Restricted - 135,0464,462,498 - 817,6785,415,2225,046,880 Assigned543,398 - - - - 543,398393,126 Unassigned - - - (199) - (199)(35,736) Total fund balance543,398135,0464,462,498(199)817,6785,958,4215,404,270 Total liabilities and fund balance$598,419$135,046$4,462,498$56,573$817,862$6,070,398$5,682,824 103 CITY OF CHANHASSEN, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR DEBT SERVICE FUNDS For The Year Ended December 31, 2011 With Comparative Totals For The Year Ended December 31, 2010 352 2000 Public 357/369 2002A 300 Permanent Project Revenue & 2010A G.O. Revolving DebtBondsLibrary Bonds Revenues: General property taxes$ - $126,420$495,400 Specialassessments97863, - - Specialassessments97863 Charges for services39,072 - - Investment income13,4371,49060,585 Total revenues150,372127,910555,985 Expenditures: Current: General government100 - - g Debt service: Principal -110,000275,000 Interest and paying agent fees -9,739292,937 Bond issuance costs - - - Total expenditures100119,739567,937 Revenues over (under) expenditures150,2728,171(11,952) Other financing sources (uses): Bond premium - - - Refunding bonds issued - - - Transfer in - - - Transfer out - - - Total other financing sources (uses)000 Net change in fund balance150,2728,171(11,952) Fund balance - January 1393,126126,8754,474,450 Fund balance - December 31$543,398$135,046$4,462,498 104 Statement 16 362 2004C Taxable 367 2008A G.O. 360 2004A G.O. G.O. T.I. Refunding Public Works Facility BondsBondsBondsTotals Nonmajor Debt Service Funds 20112010 $ -$ -$594,000$1,215,820$1,217,895 35537, - -133400,52191, 3553713340052191 - - -39,07279,878 - -5,05580,56733,976 35,5370599,0551,468,8591,383,940 - - -10052,420 , -60,000250,000695,0001,925,000 -48,175316,118666,969675,504 - - - -39,655 0108,175566,1181,362,0692,692,579 35,537(108,175)32,937106,790(1,308,639) - - - -35,964 - - - -3,660,000 -108,175339,186447,361361,660 - - - -(250,625) 0108,175339,186447,3613,806,999 35,5370372,123554,1512,498,360 (35,736) -445,5555,404,2702,905,910 ($199)$0$817,678$5,958,421$5,404,270 105 - 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 – Accounts 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. 604 TH101 Improvements – Lyman to Pioneer – Accounts for the street and utility improvements of TH101 from Lyman Blvd to Pioneer Trail. 107 CITY OF CHANHASSEN, MINNESOTA SUBCOMBINING BALANCE SHEET NONMAJOR CAPITAL PROJECT FUNDS December 31, 2011 With Comparative Totals For December 31, 2010 400 Capital 410 Park 420 Street 461 Gateway 462 Downtown ReplacementAcquisition and PavementPlace TIF Transit Station FundDevelopmentManagementDistrictTIF #10 Assets: Cash and investments$2,555,611$2,504,249$486,925$13,449$4,002 Adittiblccruenterest recevae10336,11778,772219,23 - Adiibl10336118221923 Due from other governmental units - - - - - Accounts receivable - net4,334 - - - - Due from other funds668 - - - - Property taxes receivable4,732 - 1,262 - - Special assessments receivable - - - - - Prepaid items12,657 - - - - Total assets$2,588,338$2,516,027$490,406$13,472$4,002 Liabilities and Fund Balance Liabilities: Accounts payable$329,985$ - $2,508$10,827$2,917 Due to other governmental units9,666 - - - - g Due to other funds - - - - - Contracts payable2,428 - 64,094 - - Deferred revenue - - - - - Total liabilities342,079066,60210,8272,917 Fund balance: Nonspendable12,657 - - - - Restrictedesrce -2516027,, -2645,1085, Rtitd251602726451085 Assigned2,233,602 - 423,804 - - Total fund balance2,246,2592,516,027423,8042,6451,085 Total liabilities and fund balance$2,588,338$2,516,027$490,406$13,472$4,002 108 Statement 17 603 Lyman 604 TH101 498 TIF #8 600 Special BlvdImprovements 491 TIF #4 494 TIF #5 PresbyterianAssessmentImprovements- Lyman to Totals Nonmajor Capital EntertainmentNorth BayHomesProjects06-03PioneerProject Funds 20112010 $472,088$216,337$213,444$78,384$203,242$ - $6,747,731$7,513,572 1979,768157457357574588,5 -32535,5536135,5 199681434883233613 - - - - - 152,910152,910105,962 - - - - - - 4,33415,931 - - - - - - 668668 - 5,145 - - - - 11,13918,907 - - - - - - - 370 - - - - - - 12,6576,813 $474,067$222,163$214,018$78,741$207,830$152,910$6,961,974$7,698,358 $ - $ - $101,882$ - $77,500$ - $525,619$84,683 - - - - - - 9,666144 - - - - - 152,910152,910 - - - - - - - 66,5224,328 - - - - - - - 115,192 00101,882077,500152,910754,717204,347 - - - - - - 12,6576,813 474067,222163,112136, - - - 3328123,,3577260,, 47406722216311213633281233577260 - - - 78,741130,330 - 2,866,4773,909,938 474,067222,163112,13678,741130,33006,207,2577,494,011 $474,067$222,163$214,018$78,741$207,830$152,910$6,961,974$7,698,358 109 - This page intentionally left blank - 110 CITY OF CHANHASSEN, MINNESOTA Statement 18 SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND Page 1 of 2 CHANGES IN FUND BALANCES NONMAJOR CAPITAL PROJECT FUNDS For The Year Ended December 31, 2011 With Comparative Totals For The Year Ended December 31, 2010 410 Park 400 Capital Acquisition420 Street ReplacementandPavement421 Public FundDevelopmentManagementWorks Facility Revenues: Generalpropertytaxes$750000,$ --$200000,$ -- Generalpropertytaxes$750000$$200000$ Tax increment collections - - - - Licenses and permits - 20,387 - - Intergovernmental - - 100,000 - Special assessments - - - - Charges for services - - - - Investment income69,16573,19212,2297,130 Refunds and reimbursements10,4482,2001,45246,782 ,,,, Other2,148 - - - Total revenues831,76195,779313,68153,912 Expenditures: Current: General government116,016 - - - Public safety25,314 - - - Publicworks49116, --369719, -- Publicworks49116369719 Parks and recreation21,86913,426 - - Community development - - - - Capital outlay: General government129,535 - - - Public safety52,645 - - - Public works316,831 - 171,8622,998 Parks and recreation6,557301,572 - - Developer assistance - - - - Total expenditures717,883314,998541,5812,998 Revenues over (under) expenditures113,878(219,219)(227,900)50,914 Other financing sources (uses): Transfer in - 647,00054,381 - Transferoutranser ou - - (319795),(339186), Tft(319795)(339186) Sale of capital assets - - - - Total other financing sources (uses)0647,000(265,414)(339,186) Net change in fund balance113,878 427,781 (493,314)(288,272) Fund balance - January 12,132,3812,088,246917,118288,272 Fund balance - December 31$2,246,259$2,516,027$423,804$0 111 CITY OF CHANHASSEN, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR CAPITAL PROJECT FUNDS For The Year Ended December 31, 2011 With Comparative Totals For The Year Ended December 31, 2010 461 Gateway 462 Downtown Place TIF Transit Station 491 TIF #4 494 TIF #5 DistrictTIF #10EntertainmentNorth Bay Revenues: Generalpropertytaxes$ --$ --$ --$ -- Generalpropertytaxes$$$$ Tax increment collections24,061 - 227,81087,771 Licenses and permits - - - - Intergovernmental - - - 7,979 Special assessments - - - - Charges for services - - - - Investment income162 - 11,3294,494 Refunds and reimbursements - - - - Other - - - - Total revenues24,2230239,139100,244 Expenditures: Current: General government - - - - Public safety - - - - Publicworks - - - - ---- Publicworks Parks and recreation - - - - Community development34,634 - 30,3422,189 Capital outlay: General government - - - - Public safety - - - - Public works - - - - Parks and recreation - - - - Developer assistance - - - - Total expenditures34,634030,3422,189 Revenues over (under) expenditures(10,411)0208,79798,055 Other financing sources (uses): Transfer in - - - - Transferoutranser ou - - (108175), - Tft(108175) Sale of capital assets - - - - Total other financing sources (uses)00(108,175)0 Net change in fund balance(10,411)0 100,622 98,055 Fund balance - January 113,0561,085373,445124,108 Fund balance - December 31$2,645$1,085$474,067$222,163 112 Statement 18 Page 2 of 2 602 2006A 604 TH101 498 TIF #8 600 Special Special603 Lyman Blvd Improvements - PresbyterianAssessmentAssessmentImprovementsLyman to Totals Nonmajor Capital Project HomesProjectsBonds06-03 PioneerFunds 20112010 $ --$ --$ --$ --$ --$950000,$1024000,, $$$$$$950000$1024000 226,403 - - - - 566,045539,523 - - - - - 20,387264,822 - - - 755,621262,3341,125,934107,768 - 127 - - - 12722,149 - - - 11,856 - 11,85614,990 3,8032,36915,21434,086 - 233,173100,963 - - - - - 60,88225,200 ,, - - - - - 2,1481,400 230,2062,49615,214801,563262,3342,970,5522,100,815 - - - - - 116,016149,675 - - - - - 25,31486,540 - - - ---413297,207953,1040085,,243704, 4132972079531040085243704 - - - - - 35,29547,216 1,469 - - - - 68,634274,449 - - - - - 129,53547,205 - - - - - 52,64565,667 - - - 163,943 - 655,634497,089 - - - - - 308,129490,737 298,216 - - - - 298,216176,643 299,68500577,240207,9532,729,5032,078,925 (69,479)2,49615,214224,32354,381241,04921,890 - - - - - 701,3812,637,000 - - (522647),(885000),(54381),(2229184),,(758035), (522647)(885000)(54381)(2229184)(758035) - - - - - - 30,675 00(522,647)(885,000)(54,381)(1,527,803)1,909,640 (69,479)2,496 (507,433)(660,677)0 (1,286,754)1,931,530 181,61576,245507,433791,007 - 7,494,0115,562,481 $112,136$78,741$0$130,330$0$6,207,257$7,494,011 113 CITY OF CHANHASSEN, MINNESOTA Statement 19 SPECIAL REVENUE FUND - CONTRIBUTION FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2011 With Comparative Actual Amounts For The Year Ended December 31, 2010 20112010 Budgeted AmountsActualVariance withActual OriginalFinalAmountsFinal BudgetAmounts Revenues: Investment income$500$500$1,483$983$675 Contributions and donations15,00015,00025,01010,01022,731 Total revenues15,50015,50026,49310,99323,406 Expenditures: Current: Contractual services17,50017,50017,500 - 17,500 Revenues over (under) expenditures($2,000)($2,000)8,993$10,9935,906 Fund balance - January 142,23836,332 Fund balance - December 31$51,231$42,238 114 CITY OF CHANHASSEN, MINNESOTA Statement 20 SPECIAL REVENUE FUND - CATV SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2011 With Comparative Actual Amounts For The Year Ended December 31, 2010 20112010 Budgeted AmountsActualVariance withActual OriginalFinalAmountsFinal BudgetAmounts Revenues: Franchise fees$200,000$200,000$231,661$31,661$231,729 Investment income8,0008,00023,47515,47510,957 Other - - 625,855625,855 - Total revenues208,000208,000880,991672,991242,686 Expenditures: Current: Personal services88,60088,60086,0932,50789,503 Materials and supplies50050040,382(39,882)10,046 Contractual services3,6003,60045,758(42,158)39,125 Total expenditures92,70092,700172,233(79,533)138,674 Revenues over expenditures$115,300$115,300708,758$593,458104,012 Fund balance - January 1773,325669,313 Fund balance - December 31$1,482,083$773,325 115 - This page intentionally left blank - 116 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. 117 CITY OF CHANHASSEN, MINNESOTA Statement 21 COMBINING STATEMENT OF NET ASSETS AGENCY FUNDS December 31, 2011 With Comparative Totals For December 31, 2010 913 Moon Valley 815 Escrow Restoration FundFundTotals 20112010 Assets: Cash and investments$809,539$86,106$895,645$827,135 Liabilities: Escrow deposits payable$809,539$86,106$895,645$827,135 118 CITY OF CHANHASSEN, MINNESOTA Statement 22 COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS For The Year Ended December 31, 2011 BalanceBalance 01/01/11AdditionsDeletions12/31/11 Escrow Fund Assets: Cash and investments$741,408$416,499$348,368$809,539 Liabilities: Escrow deposits payable$741,408$416,499$348,368$809,539 Moon Valley Restoration Fund Assets: Cash and investments$85,727$379$ - $86,106 Liabilities: Escrow deposits payable$85,727$379$ - $86,106 Totals - All Agency Funds Assets: Cash and investments$827,135$416,878$348,368$895,645 Liabilities: Escrow deposits payable$827,135$416,878$348,368$895,645 119 - This page intentionally left blank - 120 III. STATISTICAL SECTION (UNAUDITED) 121 - This page intentionally left blank - 122 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 124-132 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 134-139 significant local revenue source, the property tax. Debt Capacity These tables present information to help the reader assess the affordability of the 140-144 City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future. Demographic and Economic These tables offer demographic and economic indicators to help the reader 145-147 understand the environment within which the City’s financial activities take place. Operating Information These tables contain service and infrastructure data to help the reader understand 148-152 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. 123 CITY OF CHANHASSEN, MINNESOTA NET ASSETS BY COMPONENT (1) Last Nine 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 Park improvements - - - Tax increment purposes779,619630,5661,049,047 Other purposes - - - 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 Park improvements - - - Tax increment purposes779,619630,5661,049,047 Other purposes - - - 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. 124 Table 1 200620072008200920102011 $70,216,944$68,982,379$70,611,368$72,106,198$73,272,450$70,866,708 7,687,15511,047,06212,165,6536,461,7809,655,9519,774,727 - - - - 2,088,2462,516,027 1,063,589797,064621,915840,857693,309812,096 - - - - 121,137168,147 16,220,83414,631,16615,171,39114,421,0428,348,9688,823,980 $95,188,522$95,457,671$98,570,327$93,829,877$94,180,061$92,961,685 $47,807,323$52,502,257$55,541,752$55,496,919$57,028,340$55,430,138 - - - - - - - - - - - - 15,039,02117,292,10613,117,32312,129,04910,259,8369,484,947 $62,846,344$69,794,363$68,659,075$67,625,968$67,288,176$64,915,085 $118,024,267$121,484,636$126,153,120$127,603,117$130,300,790$126,296,846 7,687,15511,047,06212,165,6536,461,7809,655,9519,774,727 - - - - 2,088,2462,516,027 1,063,589797,064621,915840,857693,309812,096 - - - -121,137168,147 31,259,85531,923,27228,288,71426,550,09118,608,80418,308,927 $158,034,866$165,252,034$167,229,402$161,455,845$161,468,237$157,876,770 125 CITY OF CHANHASSEN, MINNESOTA CHANGES IN NET ASSETS (1) Last Nine 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$14,779,586 126 Table 2 Page 1 of 2 200620072008200920102011 $2,380,103$2,439,716$2,469,055$2,597,147$2,898,608$2,565,486 2,851,9263,098,0683,062,9413,158,4653,227,3963,061,122 7,722,4667,010,9816,220,8169,123,1656,308,0238,607,534 2,918,6453,023,0323,025,9873,663,1243,046,7182,921,593 868,7491,052,104704,979628,339879,048799,379 751,964835,059652,0151,031,567880,384838,421 17,493,85317,458,96016,135,79320,201,80717,240,17718,793,535 2,754,2013,112,5753,234,1393,311,1293,443,5833,581,955 3,069,0693,177,3663,072,5883,276,0423,252,5103,317,329 1,317,0891,238,9141,121,1971,093,1651,202,5561,173,115 7,140,3597,528,8557,427,9247,680,3367,898,6498,072,399 $24,634,212$24,987,815$23,563,717$27,882,143$25,138,826$26,865,934 $3,612,021$2,171,558$1,810,545$1,085,754$1,331,374$1,381,326 1,218,8161,132,4481,115,9031,064,1731,189,5601,047,726 162,946145,682124,633122,496123,609126,571 671,674452,798346,023363,540414,654692,428 2,506,8227,464,6973,221,6361,265,2874,175,6551,646,573 8,172,27911,367,1836,618,7403,901,2507,234,8524,894,624 2,111,2302,461,2052,408,3792,689,1702,424,6342,611,327 2,008,3562,186,6222,187,2092,378,1112,365,3582,297,677 424,702452,148479,318512,761538,688534,473 53945,17236,3505,3322,98412,589 2,501,5983,340,5981,527,6241,684,9821,593,2891,086,655 7,046,4258,485,7456,638,8807,270,3566,924,9536,542,721 $15,218,704$19,852,928$13,257,620$11,171,606$14,159,805$11,437,345 127 CITY OF CHANHASSEN, MINNESOTA CHANGES IN NET ASSETS (1) Last Nine 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 taxes8,330,5618,398,7909,451,141 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. 128 Table 2 Page 2 of 2 200620072008200920102011 ($9,321,574)($6,091,777)($9,517,053)($16,300,557)($10,005,325)($13,898,911) (93,934)956,890(789,044)(409,980)(973,696)(1,529,678) (9,415,508)(5,134,887)(10,306,097)(16,710,537)(10,979,021)(15,428,589) 9,165,2789,419,7639,651,7589,921,59810,014,6849,849,882 315,398420,526574,101473,674539,523566,045 28,592189,616108,03927,61245,76728,304 905,9301,397,7461,150,993357,953222,719505,541 34,644 - - - - - -10,80632,1954,52420,72744,000 (821,637)(5,077,531)1,112,623774,746(487,911)1,061,763 9,628,2056,360,92612,629,70911,560,10710,355,50912,055,535 768,600786,455797,079141,070114,349211,707 102,952127,14322,46410,54933,6446,643 821,6375,077,531(1,112,623)(774,746)487,911(1,061,763) 1,693,1895,991,129(293,080)(623,127)635,904(843,413) $11,321,394$12,352,055$12,336,629$10,936,980$10,991,413$11,212,122 $306,631$269,149$3,112,656($4,740,450)$350,184($1,843,376) 1,599,2556,948,019(1,082,124)(1,033,107)(337,792)(2,373,091) $1,905,886$7,217,168$2,030,532($5,773,557)$12,392($4,216,467) 129 CITY OF CHANHASSEN, MINNESOTA FUND BALANCES - GOVERNMENTAL FUNDS Last Nine Fiscal Years (Modified Accrual Basis of Accounting) 200320042005 General Fund: Reserved$17,056$21,003$20,239 Unreserved: Designated3,328,5303,125,9103,199,800 Undesignated2,571,9493,128,6303,731,023 Nonspendable - - - Unassigned - - - Total general fund$5,917,535$6,275,543$6,951,062 All other governmental funds: Reserved$4,126,973$6,942,810$6,597,316 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) Nonspendable - - - Restricted - - - Assigned - - - Unassigned - - - Total all other governmental funds$9,247,226$11,651,035$13,866,765 The City implemented GASB Statement No. 54 for the fiscal year ended December 31, 2011. Information for years prior to 2011 is presented in accordance with fund balance classifications in effect at that time. 130 Table 3 200620072008200920102011 $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 - - - - - - 17,280 - - - - - 5,278,118 $4,820,270$5,491,286$4,881,719$4,873,859$5,269,618$5,295,398 $5,300,782$7,335,225$6,671,271$2,950,284$5,642,029$ - 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) - - - - - - 12,662 - - - - - 10,426,585 - - - - - 6,561,411 - - - - - (730,120) $19,150,765$17,794,463$26,155,725$13,379,010$14,782,671$16,270,538 131 CITY OF CHANHASSEN, MINNESOTA CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS (1) Last Nine 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. 132 Table 4 200620072008200920102011 $9,140,601$9,403,109$9,582,333$9,834,389$10,141,168$9,760,052 $315,398$420,526$574,101473,674539,523566,045 3,727,2972,171,5581,810,5451,085,7541,331,3741,381,326 2,171,5651,148,0342,147,970397,438401,5501,425,525 1,922,9443,922,517623,893540,151790,4261,242,040 899,015738,669841,209950,760923,550795,616 162,946145,682124,633122,496123,609126,571 905,9301,397,7461,150,993357,953222,719505,541 43,94947,42843,41047,20658,01650,685 51,24761,707132,616117,441 279,549404,426238,030170,688213,272846,523 19,569,194 19,799,695 17,188,364 14,042,216 14,877,823 16,817,365 2,090,5652,116,9282,102,5122,070,6982,525,3262,162,479 2,656,9232,924,7512,885,2962,979,0443,077,0382,896,644 4,425,2373,735,9502,786,3975,710,8042,739,7044,779,067 1,877,1091,848,8801,933,3532,487,9851,901,5641,906,489 451,092841,306468,819527,919698,818502,916 98,3966,734233,600143,663473,753129,535 38,593505,21554,28455,15265,66752,645 6,431,5946,693,3874,677,1798,179,3243,995,4442,122,641 377,3671,491,848642,508235,292490,737309,524 1,375,0001,750,0002,689,5522,553,0022,370,0001,025,000 591,614769,212874,848920,529888,843853,152 36,987 - 93,81173,18246,505 - 111,791206,753226,05590,354176,643298,216 300,000 - - - - - 20,862,268 22,890,964 19,668,214 26,026,948 19,450,042 17,038,308 (1,293,074)(3,091,269)(2,479,850)(11,984,732)(4,572,219)(220,943) - - - 226,99135,964 - 6,640,000 - 7,550,0006,020,0005,200,000 - (3,560,000) - - (8,387,123) - - 708,0033,014,74424,839 - - - 702,889537,5642,646,0111,324,0151,105,0001,734,590 - (1,163,065) - - - - (44,610) - - - - - - 16,74010,69516,27430,675 - 4,446,282 2,405,983 10,231,545 (799,843)6,371,639 1,734,590 $3,153,208($685,286)$7,751,695($12,784,575)$1,799,420$1,513,647 14.8%18.0%26.4%20.5%23.2%13.3% 9.6%11.0%18.6%13.6%17.0%11.0% 133 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 2002$15,094,239$162,649$5,334,174$349,270$20,940,332 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 201128,951,885131,7519,778,491511,18539,373,312 Sources: Carver County Taxpayer Services and Hennepin County 134 Table 5 Captured Tax Capacity onFiscalAdjustedCityEstimatedTax Capacity Tax IncrementDisparityTax CapacityDirect TaxMarketas a Percent DistrictContributionValueRateValueof EMV ($3,309,835)$3,362$17,633,85937.82300$1,790,521,3000.98% (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% (509,863)(1,998,912)36,864,53726.602563,350,141,8001.10% 135 CITY OF CHANHASSEN, MINNESOTA Table 6 DIRECT AND OVERLAPPING PROPERTY TAX CAPACITY RATES Last Ten Fiscal Years CityOverlapping Rates FiscalDirectSchoolCarver (1) YearRateDistrict #112CountyOtherTotal Tax capacity rates (per $100 of adjusted tax capacity value) 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 201126.6025640.2355441.751636.02059114.61032 Source: Carver County Taxpayer Services. (1) The City Direct Rate is the Urban based rate, not including Market Value levies. 136 CITY OF CHANHASSEN, MINNESOTA Table 7 PRINCIPAL PROPERTY TAXPAYERS Current Year and Nine Years Ago 20112002 Percentage Percentage Taxableof Total CityTaxableof Total City CapacityCapacityCapacityCapacity TaxpayerValueRankValueValueRankValue Rosemount Inc$433,55211.2%$289,25411.8% IRET Properties372,87221.0% - - - Istar Minnesota LLC369,75031.0% - - - LTF Real Estate VRDN I LLC239,20240.6% - - - DRF Chanhassen Medical Bldg231,50250.6% - - - Northern States Power Co216,79260.6%203,47431.2% LTF Real Estate Company Inc207,82270.6% - - - Park Avenue Lofts LLC205,65680.5% - - - Target Corporation T-0862193,25090.5%139,04090.9% Kraus-Anderson Inc183,900100.5% - - - TF James - - - 246,404 2 1.5% Beddor Enterprises/E J Carlson - - - 186,13841.1% McGlynn Bakeries Inc #366 - - - 179,25051.1% Hoyt/DTLK LLC - - - 149,948 6 0.9% Emplast Inc - - - 146,83270.9% Beddor Enterprises - - - 140,00480.9% Bloomberg Companies, Inc. - - - 123,654100.8% Total$2,654,2987.1%$1,803,99811.1% Total All Property $37,501,865$16,309,043 Source: Carver County Taxpayer Services. 137 - This page intentionally left blank - 138 CITY OF CHANHASSEN, MINNESOTA Table 8 PROPERTY TAX LEVIES AND COLLECTIONS Last Ten Fiscal Years FiscalTaxesCollected Within TheCollections YearLeviedFiscal Year of the LevyinTotal Collections to Date EndedFor ThePercentageSubsequentPercentage December 31,Fiscal YearAmountof LevyYearsAmountof Levy 2002$7,655,916$7,557,37898.7%$47,100$7,604,47899.3% 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%89,8009,156,39197.9% 20079,575,7789,447,69298.7%112,2589,559,95099.8% 20089,834,9659,555,48997.2%153,4219,708,91098.7% 200910,074,5659,668,71396.0%164,3539,833,06697.6% 201010,213,1909,918,52897.1%(7,239)9,911,28997.0% 201110,267,3909,739,12594.9% - 9,739,12594.9% Source: City Finance Department 139 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 2002$11,355,000$930,000$4,915,000$14,175,331$80,000$3,576,100 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 201115,025,000120,000840,0006,785,000 - 19,895,000 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 140 Table 9 Bonded Debt Per Total Less:PercentageCarver County Debt Serviceof TaxBonded DebtPersonal (1)(1)(2) Bonded DebtIncome Total DebtFund BalanceCapacityPer Capita $35,031,431$3,255,095$31,776,336180.20%$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%1,2550.6% 42,665,0007,473,51435,191,48693.84%1,518(a) 141 CITY OF CHANHASSEN, MINNESOTA Table 10 DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT December 31, 2011 Estimated EstimatedShare of DebtPercentageOverlapping Governmental UnitOutstandingApplicable*Debt Direct debt: (1) City of Chanhassen $15,025,000100.00%$15,025,000 Overlapping debt: Eastern Carver County School District184,980,00039.70%73,437,060 Eden Prairie Independent School District69,846,6221.00%698,466 Minnetonka Independent School District141,634,5480.00% - Carver County25,465,00032.44%8,260,846 Hennepin County723,889,1010.07%506,722 Hennepin Suburban Park District64,252,8980.09%57,828 Hennepin Regulatory Railroad Authority40,128,1610.07%28,090 Metropolitan Council142,956,5250.03%42,887 Subtotal - overlapping debt1,393,152,85583,031,899 Total direct and overlapping debt$1,408,177,855$98,056,899 (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. 142 CITY OF CHANHASSEN, MINNESOTA Table 11 LEGAL DEBT MARGIN INFORMATION Last Ten Fiscal Years Legal Debt Margin Calculation for Fiscal Year 2011 Market value$3,350,141,800 Applicable percentage3% Debt limit100,504,254 Debt applicable to limit: Total bonded debt42,665,000 Less: Special assessment bonds(6,785,000) Tax increment bonds(840,000) Revenue bonds(120,000) Enterprise Fund debt(19,895,000) Less: Cash and investments in G.O. Bond Debt Service Fund(1,439,742) 13,585,258 Legal debt margin$86,918,996 Legal Debt Margin Calculation for Fiscal Years 2002 Through 2011 Net DebtLegalAmount of DebtNet Bonded FiscalDebtApplicable toDebtApplicable toDebt Per YearPopulationLimitLimitMarginDebt LimitCapita 200222,376$35,810,426$10,679,360$25,131,06629.82%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 201123,179100,504,25413,585,25886,918,99613.52%586 143 CITY OF CHANHASSEN, MINNESOTA Table 12 PLEDGED REVENUE COVERAGE Last Ten Fiscal Years Improvement Bonds Special FiscalAssessmentDebt Service YearCollectionsPrincipalInterestCoverage 2002$3,159,778$5,479,750$522,0720.526 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 20111,242,038330,000185,7332.408 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. 144 CITY OF CHANHASSEN, MINNESOTA Table 13 DEMOGRAPHIC AND ECONOMIC STATISTICS Last Ten Fiscal Years Carver CountyCarver County ChanhassenCarver CountyPersonalPer Capita FiscalChanhassenUnemploymentUnemploymentIncomePersonal (1)(2)(2)(3)(3) PopulationRateRate(Thousands)Income Year 200222,3763.5%4.0%$3,153,294$41,825 200323,5243.3%4.1%3,286,00742,126 200423,4313.2%3.9%3,562,50244,270 200523,8642.6%3.4%3,878,76546,587 200623,8892.7%3.3%4,165,70948,632 200724,3213.1%4.0%4,583,40052,520 200824,4814.0%5.0%4,884,46554,998 200924,6996.0%7.4%4,661,17451,652 201022,9525.2%6.6%4,945,00354,128 201123,1794.3%5.7%(a)(a) (1) Sources:Federal Census Data and Chanhassen Planning Department (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. 145 - This page intentionally left blank - 146 CITY OF CHANHASSEN, MINNESOTA Table 14 PRINCIPAL EMPLOYERS (1) Current Year and Five Years Ago 20112006 Percentage Percentage of Total Cityof Total City Employment(2)(2) EmployerEmployeesRankEmployeesRankEmployment Rosemount, Inc.1,594128.5%1,200124.4% Lifetime Fitness899216.1% - - - Instant Web Companies843315.1%548411.1% Super Value Headquarters650411.6%900218.3% RR Donnelley36456.5%32466.6% General Mills28865.2%600312.2% Checkpoint Security Systems26574.7% - - - Chanhassen Dinner Theatres25084.5%30076.1% Minnesota Landscape Arboretum24394.3%24094.9% Byerly's195103.5%28085.7% Entegris - -35057.1% ABC/Lyman Lumber - -175103.6% Total5,5914,917 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. 147 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/Program200220032004 General government121212 Public safety333 Public works242424 Parks and recreation111111 Community development181718 Total686768 Source: City Finance Department 148 Table 15 Full-Time Equivalent Employees as of December 31, 2005200620072008200920102011 12121313131313 3333333 25262626262626 11111111111111 17171616161515 68696969696868 149 CITY OF CHANHASSEN, MINNESOTA OPERATING INDICATORS BY FUNCTION/PROGRAM Last Ten Fiscal Years Fiscal Year Function/Program200220032004 Building: Total permits issued3,5642,7552,651 Total estimated value$91,369,535$99,521,697$97,333,708 Election: Registered voters11,66513,72315,632 Fire: Average number of employees444343 General government: Area of city - square miles23.7823.7823.78 Average number of permanent full-time employees (excluding fire department)686768 Police: Average number of employees21111 Number of major crimes1453111,288 Water: Number of customers6,4056,6086,710 Daily average consumption - gallons2,195,4583,000,0002,718,599 Plant capacity - gallons3,850,0008,900,0008,500,000 Source: Various City departments 150 Table 16 Fiscal Year 2005200620072008200920102011 2,8843,1653,0132,8382,6082,9103,397 $71,357,132$106,223,825$125,865,426$124,885,965$67,811,817$65,046,93382,991,029 15,63215,31915,31916,54416,54415,32615,326 43444445454545 23.7823.7823.7823.7823.7823.7823.78 68696969696868 13131314151515 1,0681,2971,2021,013702647757 6,8726,7526,8047,0397,4277,6207,655 2,571,8433,163,8643,031,4003,200,0003,642,4102,698,5592,257,542 8,650,0008,650,0008,650,0008,650,0008,650,0008,650,0008,650,000 151 CITY OF CHANHASSEN, MINNESOTA CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM Last Ten Fiscal Years Fiscal Year Function/Program200220032004 Fire: Number of stations222 Parks and recreation: Acres of parks350350375 Acres of open space300300300 Number of shelter buildings223 Number of playgrounds222325 Number of swimming beaches344 Number of tennis courts7617 Police: Number of stations111 Public works: Miles of streets92.694.395.7 Miles of sidewalks19.419.621.0 Miles of trails38.141.242.0 Sewer: Miles of storm sewers57.359.661.0 Miles of sanitary sewers110.1113.0115.1 Number of lift stations293030 Water: Miles of watermains113.3116.7120.1 Number of wells877 Source: Various City departments 152 Table 17 Fiscal Year 2005200620072008200920102011 2222222 375375383383383396396 365365434434434434489 3333444 25252626262626 4466655 17171717171715 1111111 102.5103.8106.2107.0110.9111.9112.0 24.725.526.928.431.131.931.9 42.043.047.253.053.653.656.1 62.764.266.267.169.571.074.5 115.4116.9119.6120.8123.0123.6123.7 30313131313131 120.8123.4126.0129.6135.1136.8137.8 8101112121212 153 - This page intentionally left blank - 154 IV. OTHER INFORMATION (UNAUDITED) 155 CITY OF CHANHASSEN, MINNESOTA COMBINED SCHEDULE OF INDEBTEDNESS December 31, 2011 Final InterestIssueMaturity Bonded indebtedness:RatesDateDate General obligation bonds: G.O. Library Bonds, Series 2002A1.55%-4.85%03/01/0208/01/12 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 2009A3%06/03/0902/01/17 G.O. Street Reconstruction, Series 20100.65%-1.20%07/22/1006/15/13 Total general improvement bonds Enterprise Fund debt: G.O. Sewer and Water Revenue Bonds 2001, Series A3.50%-4.65%07/15/0102/01/12 GOWaterRevenueBondsof2004,SeriesB..,400%.--450%.08/10/0402/01/25 GOWaterRevenueBondsof2004SeriesB400%450%08/10/0402/01/25 G.O. Water Revenue Bonds of 2005, Series B3.75%-3.90%11/16/0502/01/21 G.O. Water Revenue Bonds of 2011, Series A0.30%-2.15%10/06/1102/01/22 G.O. Water Revenue Refunding Bonds of 2011, Series B2.00%-3.00%10/06/1102/01/25 Total Enterprise Fund debt Total bonded indebtedness Other debt: Compensated absences payable Total City indebtedness 156 Exhibit 1 Prior YearsPayable2011PayablePrincipal OriginalJanuary 1,December 31,Due in IssuePayments2011IssuedPayments20112012 $6,095,000$1,755,000$4,340,000$ - $275,000$4,065,000$4,065,000 7,550,000 - 7,550,000 - 250,0007,300,000255,000 3,660,000 - 3,660,000 - - 3,660,000 - 17,305,0001,755,00015,550,0000525,00015,025,0004,320,000 930,000700,000230,000 - 110,000120,000120,000 1,170,000270,000900,000 - 60,000840,00065,000 6,020,000215,0005,805,000 - 190,0005,615,000195,000 1,540,000 - 1,310,000 - 140,0001,170,000400,000 7,560,000215,0007,115,0000330,0006,785,000595,000 1,645,0001,510,000135,000 - 65,00070,00070,000 7,930,000,,1,445,000,,6,485,000,, --315,000,6,170,000,,325,000, 7930000144500064850003150006170000325000 5,465,0001,130,0004,335,000 - 320,0004,015,000335,000 - (5,920,000) - 5,920,000 - 5,920,000 - - (3,720,000) - 3,720,000 - 3,720,000 - 15,040,000(5,555,000)10,955,0009,640,000700,00019,895,000730,000 43,545,000(2,615,000)36,060,0009,640,0001,865,00043,835,0006,230,000 - - 948,046613,188647,514913,720 - $43,545,000($2,615,000)$37,008,046$10,253,188$2,512,514$44,748,720$6,230,000 157 CITY OF CHANHASSEN, MINNESOTA Exhibit 2 DEBT SERVICE PAYMENTS TO MATURITY GENERAL OBLIGATION BONDS December 31, 2011 G.O. Tax 2000IncrementG.O. LibraryG.O. Capital Public ProjectG.O. LibraryRefundingRefundingImprovement RevenueBonds,Bonds,BondsPlan Bonds, BondSeries 2002ASeries 2004CSeries 2010ASeries 2008ATotal Bonds payable$120,000$4,065,000$840,000$3,660,000$7,300,000$15,985,000 Future interest payable3,210180,873261,968668,7533,447,1514,561,955 $123,210$4,245,873$1,101,968$4,328,753$10,747,151$20,546,955 Payments to maturity: 2012$123,210$4,245,873$109,720$99,805$560,568$5,139,176 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 - - 110,308433,480558,4841,102,272 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 $123,2104,245,873$1,101,968$4,328,753$10,747,151$20,546,955 158 CITY OF CHANHASSEN, MINNESOTA Exhibit 3 DEBT SERVICE PAYMENTS TO MATURITY GENERAL OBLIGATION IMPROVEMENT BONDS December 31, 2011 G.O. G.O. StreetImprovement ReconstructionBonds, Series 2010Series 2009ATotal Bonds payable$1,170,000$5,615,000$6,785,000 Future interest payable17,210506,925524,135 $1,187,210$6,121,925$7,309,135 Payments to maturity: 2012$412,590$360,525$773,115 2013774,620359,6001,134,220 2014 -3,618,8753,618,875 2015 -592,900592,900 2016 -591,175591,175 2017 -598,850598,850 $1,187,210$6,121,925$7,309,135 159 CITY OF CHANHASSEN, MINNESOTA Exhibit 4 DEBT SERVICE PAYMENTS TO MATURITY REVENUE BONDS December 31, 2011 G.O. Sewer & WaterG.O. WaterG.O. WaterG.O. WaterG.O. Water RevenueRevenueRevenueRevenueRevenue BondsBonds of 2004,Bonds of 2005,Bonds of 2011,Bonds of 2011, Series 2001ASeries BSeries BSeries ASeries BTotal Bonds payable$70,000$6,170,000$4,015,000$5,920,000$3,720,000$19,895,000 Future interest payable1,628860,902216,011521,8131,113,9612,714,315 $71,628$7,030,902$4,231,011$6,441,813$4,833,961$22,609,315 Payments to maturity: 2012$71,628$581,054$481,101$59,656$86,861$1,280,300 2013 - 582,7543,749,910292,470106,0004,731,134 2014 - 4,158,854 - 715,850106,0004,980,704 2015 - 426,840 - 722,923106,0001,255,763 2016 - 426,740 - 718,501135,7001,280,941 2017 - 425,840 - 722,060135,1001,283,000 2018 - 428,820 - 728,813134,5001,292,133 2019 - - - 733,663569,5001,303,163 - - - ,,,, 2020---7317585676001299358 20207317585676001299358 2021 - - - 738,163572,9001,311,063 2022 - - - 277,956572,675850,631 2023 - - - - 576,925576,925 2024 - - - - 580,575580,575 2025 - - - - 583,625583,625 $71,628$7,030,902$4,231,011$6,441,813$4,833,961$22,609,315 160 CITY OF CHANHASSEN, MINNESOTA Exhibit 5 TAXABLE VALUATIONS, TAX LEVIES AND TAX RATES December 31, 2011 Taxable Capacity Valuations: Tax Capacity Values Property Type2010/2011 Real estate and personal property: Hennepin County$1,361,584 Carver County38,011,728 Fiscal disparities: Distribution2,219,844 Contribution(4,218,756) Less: captured tax increment value(509,863) et tax capacity$36,864,537 N Tax Levy and Tax Rates: Payable 2011 Tax CertifiedCapacity LevyRate (1) Taxes levied: Revenue$7,508,20019.454 Debt Service2,759,1907.149 Totals$10,267,39026.603 (1) Urban rate 161 CITY OF CHANHASSEN, MINNESOTA Exhibit 6 SCHEDULE OF DEFERRED TAX LEVIES December 31, 2011 G.O. LibraryG.O. CapitalTotalImprovementG.O. StreetTotalTotal Years ofBondsImprovementGeneralRefundingReconstructionGeneralDeferred Levy/of 2002A/Plan BondsBondedBondsBondsImprovementTax Collection2010Aof 2008ADebtof 2009Aof 2010BondsLevies 2011/2012$351,648$593,800$945,448$335,900$437,842$773,742$1,719,190 2012/2013445,310593,2001,038,510550,000130,680680,6801,719,190 2013/2014448,880592,1001,040,980233,800444,410678,2101,719,190 2014/2015446,098590,6001,036,698232,30055,000287,3001,323,998 2015/2016452,792594,0001,046,792240,700 - 240,7001,287,492 2016/2017451,952596,7001,048,652 - - - 1,048,652 2017/2018461,297593,6001,054,897 - - - 1,054,897 2018/2019459,512600,3001,059,812 - - - 1,059,812 2019/2020457,412600,8001,058,212 - - - 1,058,212 2020/2021465,497600,4001,065,897 - - - 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 $4,440,398$10,854,500$15,294,898$1,592,700$1,067,932$2,660,632$17,955,530 162