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2010 Comp. Annual Financial ReportCITY OFSHOREWOOD SHOREWOOD, MINNESOTA COMPREHENSIVE ANNUAL FINANCIAL REPORT FORTHEYEAR ENDED DECEMBER 31, 2010 BRIAN HECK, CITY ADMINISTRATOR/CLERK REPORTPREPARED BY BRUCE DEJONG, FINANCEDIRECTOR/TREASURER MEMBER OFGOVERNMENT FINANCE OFFICERS ASSOCIATION OF THEUNITED STATESAND CANADA THIS PAGE ISLEFT BLANK INTENTIONALLY CITYOFSHOREWOOD, MINNESOTA TABLE OFCONTENTS DECEMBER31, 2010 Exhibit PageNo. INTRODUCTORY SECTION Elected and AppointedOfficials 5 Organization Chart 6 Letter of Transmittal 7 Certificationof AchievementforExcellence in Financial Reporting 12 FINANCIAL SECTION IndependentAuditor’s Report 15 Management’s Discussion and Analysis 19 Basic Financial Statements Government-wide FinancialStatements Statementof Net Assets 1 33 Statement ofActivities 2 34 Fund FinancialStatements Governmental Funds Balance Sheet 3 38 Reconciliation of the BalanceSheet to theStatementof Net Assets 4 41 Statement of Revenues, Expenditures andChanges inFund Balances 5 42 Reconciliationof the Statement of Revenues, Expenditures and ChangesinFund Balancesto the Statement of Activities 6 44 General Fund Statementof Revenues, Expenditures andChanges in FundBalances - Budget and Actual 7 45 Proprietary Fund Statementsof Net Assets 8 46 Statementsof Revenues, Expensesand Changes inFundNet Assets 9 48 Statementsof Cash Flows10 50 Fiduciary Fund Statement of Net Assets11 54 Notes to the Financial Statements 55 Combining and Individual Fund FinancialStatements and Schedules Nonmajor Governmental Funds Combining Balance Sheet A-1 82 Combining Statement of Revenues, Expenditures andChanges inFund Balances (Deficits) A-2 83 NonmajorCapital ProjectsFunds Combining Balance Sheet B-1 86 Combining Statementof Revenues, Expenditures and Changes inFund Balances(Deficits) B-2 88 Nonmajor ProprietaryFunds Combining Statementsof Net Assets C-1 92 Combining Statements of Revenues, Expensesand Changes inFund Net Assets C-2 94 CombiningStatements of Cash Flows C-3 96 General Fund ScheduleofRevenues, Expenditures andChanges in Fund Balances - Budget and Actual D-1 99 Debt Service Funds Combining Balance Sheet E-1 104 Combining Scheduleof Revenues, Expenditures and Changes inFund Balances E-2 106 1- CITY OFSHOREWOOD, MINNESOTA TABLEOF CONTENTS - CONTINUED DECEMBER31, 2010 Exhibit PageNo. FINANCIAL SECTION - CONTINUED Combining andIndividual FundStatements andSchedules AgencyFund Combining Schedule of Changes in Assets and Liabilities F-1 108 Supplementary Information(Unaudited) Summary Financial Report Revenues and Expenditures forGeneral Operations - GovernmentalFunds G-1 111 Table STATISTICAL SECTION (UNAUDITED) NetAssets by Component 1 116 Changes inNet Assets 2 118 Fund Balances of Governmental Funds 3 122 Changes in FundBalancesofGovernmental Funds 4 124 TaxCapacity, Market Valueand Estimated ActualValue ofTaxable Property 5 126 PropertyTax Capacity Rates - Direct and OverlappingGovernments 6 128 Principal Taxpayers 7 130 Property Tax Leviesand Collections 8 132 Ratio ofNetBonded Debtto Assessed Value andNetBondedDebt Per Capita 9 133 Ratios of General Bonded Debt Outstanding10 134 Computation of Direct and Overlapping Debt11 135 Legal Debt Margin Information12 136 Pledged-Revenue Coverage13 138 Demographic and Economic Statistics14 139 Principal Employers15 140 Full-TimeEquivalent City Government Employees by Function16 142 Operating Indicators by Function17 143 Capital Asset Statistics by Function18 144 2- INTRODUCTORY SECTION CITY OFSHOREWOOD SHOREWOOD, MINNESOTA FORTHEYEAR ENDED DECEMBER 31, 2010 3- THIS PAGE ISLEFT BLANK INTENTIONALLY 4- CITYOFSHOREWOOD, MINNESOTA ELECTED AND APPOINTEDOFFICIALS DECEMBER 31, 2010 NameTitleTerm Expires Christine LizéeMayor12/31/12 Jeffery BaileyCouncil Member12/31/10 Laura TurgeonCouncil Member12/31/10 Richard WoodruffCouncil Member12/31/12 Scott ZerbyCouncil Member12/31/12 APPOINTED NameTitle Brian HeckCity Administrator Bruce DeJongFinance Director/Treasurer 5- 6- 8- 9- 10- 11- 12- FINANCIAL SECTION CITY OFSHOREWOOD SHOREWOOD, MINNESOTA FORTHEYEAR ENDED DECEMBER 31, 2010 13- THIS PAGE ISLEFT BLANK INTENTIONALLY 14- INDEPENDENTAUDITOR’SREPORT Honorable Mayor andCouncil City ofShorewood, Minnesota Wehave auditedthe accompanying financialstatements ofthe governmental activities, thebusiness-type activities, eachmajor fund, andthe aggregate remaining fund informationofthe City ofShorewood, Minnesota(the City), asof and forthe year ended December 31, 2010, which collectivelycomprise the City’sbasic financial statements aslisted inthetable of contents.These financialstatements arethe responsibilityoftheCity’smanagement.Our responsibility isto expressopinions on these financial statements basedon ouraudit.Theprior year’scomparative information hasbeenderived fromtheCity’s2009financial statementsand, inour reportdatedMay 25, 2010, weexpressed unqualifiedopinions on therespective proprietary fundfinancial statements. Weconductedouraudit in accordancewith auditing standards generally accepted in theUnited States ofAmerica.Those standardsrequirethat we planand perform the audit to obtainreasonable assurance about whether thefinancial statementsare free ofmaterial misstatement.An auditincludesexamining, onatestbasis, evidencesupportingtheamounts anddisclosures in thefinancial statements. An auditalso includes assessing the accountingprinciples used and significant estimates made by management, as wellasevaluating the overall financialstatement presentation.Webelievethatour audit providesareasonable basisforour opinions. Inour opinion, the financial statementsreferred to above present fairly, in all material respects, therespective financial position of the governmental activities,thebusiness-typeactivities, each major fund, andthe aggregateremaining fund information ofthe CityasofDecember 31, 2010, and the respectivechanges in financial positionand cashflows, where applicable, thereof and the budgetarycomparison for theGeneral fundfortheyear then endedin conformitywith accounting principles generally acceptedin the United States of America. Accountingprinciples generally accepted in theUnited Statesof America requirethat theManagement’s Discussionand Analysis onpages19through 29bepresented to supplement the basic financial statements.Such information, althoughnot apartof the basicfinancial statements, is required by the Governmental AccountingStandards Board, who considers it to be an essential part offinancialreportingfor placingthebasic financialstatementsin anappropriate operational, economic, or historicalcontext.We haveapplied certainlimited procedures tothe required supplementaryinformation in accordance withauditing standards generallyacceptedin theUnited States of America, which consistedof inquiriesof management about the methodsof preparing theinformation and comparing theinformation forconsistencywith management’s responses to our inquiries, thebasic financial statements, andotherknowledge weobtained during ouraudit ofthe basicfinancial statements.We do notexpress an opinionor provide anyassurance onthe information becausethelimited procedures do notprovideus with sufficient evidenceto expressan opinion orprovide anyassurance. 15- THIS PAGE ISLEFT BLANK INTENTIONALLY 16- Ourauditwasconducted for thepurpose offorming opinions onthe financialstatements thatcollectively comprisetheCity’s basic financial statementsasawhole. The introductory section, combining and individual fund financial statements and schedules,supplementaryinformation, and statistical sectionare presented for purposes ofadditional analysisand are not a required part ofthe financialstatements.Thecombining and individual fund financialstatements and schedulesarethe responsibility ofmanagement andwerederived fromandrelatedirectlytotheunderlying accounting andotherrecords usedto prepare the financialstatements.The information hasbeen subjected to theauditing procedures applied inthe auditof thebasic financial statements andcertain additionalprocedures, including comparingandreconcilingsuchinformationdirectlytothe underlying accountingand other records usedto prepare the financial statements or tothe financial statementsthemselves, and otheradditional procedures inaccordancewith auditing standards generallyaccepted inthe United Statesof America.In our opinion, the information isfairlystated inallmaterial respects inrelation to thefinancialstatements asawhole.Theintroductory section, supplementaryinformation, andstatistical sectionshave notbeen subjectedto theauditing procedures appliedin theaudit ofthebasic financialstatements and, accordingly, wedo notexpress anopinion orprovideanyassurance on them. July 25, 2011ABDO, EICK & MEYERS, LLP Certified Public AccountantsMinneapolis, Minnesota 17- THIS PAGE ISLEFT BLANK INTENTIONALLY 18- July 25, 2011 Management’s Discussion andAnalysis As management oftheCity ofShorewood, Minnesota, (theCity), weofferreaders oftheCity’sfinancial statements thisnarrative overviewand analysis ofthe financial activities ofthe Cityfor thefiscal yearendedDecember 31, 2010. Financial Highlights Theassets ofthe City exceeded itsliabilitiesat the closeof the mostrecent fiscalyear by $32,939,633(net assets). Of thisamount, $16,918,646(unrestricted net assets) maybe usedto meetthe City’s ongoingobligations to residentsand creditors. TheCity’s totalnet assetsdecreased $381,294, solelyfrombusiness-type activities. As oftheclose ofthe currentfiscal year, the City’sgovernmental fundsreported combined ending fundbalances of 8,126,233, a decrease of $1,616,989incomparison withthe prioryear. This decrease isprimarily theresult of 1,900,000 of refundedbonds. Approximately98percent of thistotal amount, $7,980,840, is availablefor spending at theCity’s discretion. Attheendofthe currentfiscalyear, unreserved fundbalance fortheGeneral fund was $3,477,932, or66percent of total 2011budgetedexpenditures. Whilethese funds arenotlegally reserved, theyaredesignated for cashflowpurposes. TheCity’s totaldebt decreased $2,750,000, or 17percentduringthe current fiscalyear. The keyfactorin thisdecrease waslease revenuebonds thatwere refunded in theamountof $1,900,000andannualdebtservicepayments. Overview ofthe Financial Statements Thisdiscussion andanalysisisintendedtoserveasanintroductiontotheCity’sbasicfinancialstatements. TheCity’sbasic financial statements comprisethree components: 1) government-wide financial statements, 2) fundfinancial statements, and 3) notesto the financial statements. Thisreport alsocontains othersupplemental information in addition to the basicfinancial statements themselves. 19- Thefinancial statements alsoincludenotesthat explain someof theinformation in thefinancial statements andprovidemore detaileddata. The statements are followed by a section of combining and individual fund financial statements and schedules that furtherexplainsandsupports theinformation in thefinancial statements. Figure1 showshow the requiredpartsof thisannual reportare arranged and relateto one another. In addition to these requiredelements, wehave included a section withcombining andindividual fundfinancial statements and schedules thatprovidedetailsabout nonmajor governmentalfunds, whichareadded together and presented in singlecolumns inthebasic financial statements. Figure 1 RequiredComponents ofthe City’sAnnualFinancial Report 20- Figure2summarizes themajor features oftheCity’sfinancialstatements, includingtheportion oftheCitygovernmentthey cover andthetypesofinformation theycontain. The remainder ofthisoverview section ofmanagement’s discussion andanalysis explains the structureand contents ofeachof the statements. Figure 2 Major featuresof theGovernment-wide and Fund FinancialStatements Fund FinancialStatements Government-wide Governmental FundsProprietaryFunds Statements ScopeEntire City governmentThe activitiesof the Citythat Activities the Cityoperates except fiduciary funds)and arenot proprietaryorsimilarto private businesses, the City’scomponent unitsfiduciary, suchaspolice, fire such asthe water andsewer and parkssystem Required financial Statement of NetAssetsBalanceSheetStatements of NetAssets statements Statement ofActivitiesStatement of Revenues, Statementsof Revenues, Expenditures, and Expenses andChanges in ChangesinFund FundNetAssets Balances StatementsofCash Flows Accounting Basisand Accrual accountingand Modified accrualaccounting Accrual accountingand measurement focuseconomic resources focusand current financial economic resources focus resources focus Typeof asset/liability All assetsand liabilities, both Onlyassetsexpected to be All assetsand liabilities, both informationfinancial and capital, and used upand liabilities that financial and capital, and short-termandlong-termcome dueduringthe year or short-termandlong-term soon thereafter; no capital assets included Type ofinflow/outflow All revenues and expenses Revenues forwhich cashis All revenues andexpenses informationduringyear, regardless of receivedduring orsoonafter during the year, regardless of when cash isreceivedor paidtheend ofthe year; when cashis received orpaid expenditures whengoodsor services havebeen received andpayment isdue during the year or soon thereafter Government-wide FinancialStatements government-wide financial statementsTheare designed toprovide readerswith abroad overview of the City’s finances, ina manner similar to aprivate-sectorbusiness. statement of net assetsThepresentsinformation onall of the City’sassets andliabilities, withthe differencebetween the two net assetsreportedas . Overtime, increases ordecreases innetassets may serveasauseful indicator ofwhether thefinancial position of theCity is improving or deteriorating. statement of activitiesThepresents informationshowinghow theCity’snetassets changed during themostrecentfiscalyear. All regardlessofthetiming ofchangesinnetassetsarereportedassoonastheunderlyingeventgivingrisetothechangeoccurs, relatedcash flowsThus, revenues andexpenses arereported inthisstatement forsomeitems thatwillonlyresultincashflows in future fiscal periods (e.g., uncollected taxes and earned butunusedvacationleave). Bothof thegovernment-wide financialstatements distinguish functions oftheCitythat areprincipallysupported bytaxesand governmental activitiesintergovernmentalrevenue () fromotherfunctions that areintended torecoverall orasignificant portion business-type activitiesoftheircoststhroughuserfeesandcharges (). Thegovernmental activitiesof the Cityincludegeneral government, publicsafety, publicworks, cultureandrecreation, andintereston long-termdebt. Thebusiness-type activities of theCityinclude water, sewer, recycling, stormwater management utilityandliquoroperations.Liquor operations actually ceased in 2007, andthisfund consistedofthe remainingassets fromthesaleof theoperations. 21- primary governmentThegovernment-widefinancial statements include notonly the City itself (known asthe ), butalso alegally separate Economic Development Authority (EDA) forwhichthe Cityisfinanciallyaccountable. TheEDA, althoughlegally separate, functions for all practical purposesas a departmentof the City, andtherefore has beenincluded as an integral part of the primary government. Thegovernment-widefinancial statementsstarton page33of thisreport. Fund FinancialStatements fundAisagroupingofrelated accounts that is usedtomaintain control overresources that havebeen segregatedfor specific activities orobjectives. The City, likeotherstate andlocalgovernments, uses fundaccounting toensure anddemonstrate compliancewith finance-related legalrequirements. All of thefunds ofthe Citycan be divided intothree categories: governmental funds, proprietaryfunds andfiduciary funds. Governmental fundsGovernmental fundsgovernmentalareusedtoaccountforessentiallythesamefunctionsreportedas activitiesinthe government-widefinancialstatements. However, unlike the government-wide financialstatements, governmental near-term inflows and outflows ofspendable resourcesbalancesof spendablefundfinancialstatementsfocuson , as wellas on resourcesavailableattheendof thefiscal year. Such informationmay be useful inevaluating a government’s near-term financing requirements. Becausethefocus of governmental funds isnarrower thanthatofthe government-wide financial statements, it is useful to governmental fundsgovernmental activitiescomparetheinformationpresentedforwithsimilarinformationpresentedforin the government-widefinancial statements. By doingso, readers may betterunderstand the long-term impactby the government’s near-termfinancing decisions. Boththegovernmental fundbalance sheetandthegovernmental fundstatementofrevenues, governmental fundsexpendituresandchangesinfundbalancesprovideareconciliationtofacilitatethiscomparisonbetweenand governmental activities TheCitymaintains 12individual governmental funds. Informationispresented separately inthegovernmental fundbalance sheetand in thegovernmental fund statement ofrevenues, expendituresand changes in fund balances (deficits) fortheGeneral, Debt Service, Street Reconstructionand CommunityInfrastructure funds, which are considered to be majorfunds. Datafromthe other8governmental funds arecombined intoasingle, aggregatedpresentation. Individual funddata foreachofthese nonmajor combining statements orschedulesgovernmentalfundsisprovidedintheformofelsewhere inthis report. TheCity adopts an annual appropriated budget for its General fund. A budgetary comparison statement has been provided for the Generalfund todemonstrate compliance with thisbudget. Thebasic governmental fund financialstatements starton page38of thisreport. Proprietaryfunds. Enterprise fundsTheCitymaintainsonetypeofproprietaryfundareusedto report the samefunctions business-type activitiespresentedasinthe government-widefinancial statements. The Cityuses enterprise funds toaccount for its water, sewer, recycling, stormwatermanagement utility andliquor operations. Proprietary fundsprovidethe sametypeof information asthegovernment-wide financial statements, onlyin more detail. The proprietaryfund financial statements provide separateinformation for each ofthe enterprise funds whichare considered to be major fundsof the City. Thebasic proprietary fundfinancial statementsstartonpage 46of this report. Fiduciaryfunds Fiduciary funds areused toaccount forresources heldfor thebenefit ofparties outside theCity. Fiduciary notfundsarereflected inthegovernment-wide financial statements becausethe resources of thosefundsare not available to support theCity’sownprograms. Theaccounting usedforfiduciary fundsismuchlikethat usedforproprietary funds. Thebasic fiduciaryfundfinancialstatements canbefound on page54of this report. Notes totheFinancial Statements Thenotes provide additional information thatis essential toa full understanding ofthe dataprovided inthe government-wideand fundfinancialstatements. The notestothe financialstatementsstarton page55of thisreport. 22- OtherInformation Thecombining statementsreferredto earlier in connection with nonmajorgovernmental funds arepresented following the notes tofinancialstatements. Combining and individual fund financialstatements and schedules starts onpage 82of thisreport. Government-wideFinancial Analysis Asnoted earlier, net assetsmayserve overtimeas a useful indicatorof a government’s financialposition. In thecaseofthe City, assets exceeded liabilitiesby $32,939,633at thecloseof themost recent fiscal year. Ofthe City’s netassets (49percent) reflects itsinvestment in capitalassets (e.g., land, buildings, machinery andequipment), less any relateddebt usedto acquirethose assets thatisstill outstanding. The Cityuses these capital assets to provideservicesto citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported netofrelated debt, itshould benotedthat theresources neededtorepay thisdebtmustbe provided from othersources, sincethe capitalassets themselves cannot beused to liquidate theseliabilities. Summary of NetAssets Governmental ActivitiesBusiness-typeActivities IncreaseIncrease 20102009(Decrease)20102009(Decrease) Assets Cashand temporaryinvestments$8,125,269$8,324,911$(199,642)$8,123,977$8,632,487$(508,510) Cashwithfiscalagent7,3751,909,864(1,902,489)113,008114,058(1,050) Receivables9,965,08010,530,707(565,627)656,693738,500(81,807) Internal balances-(60,000)60,000-60,000(60,000) Prepaids49,0602,83746,223-13,041(13,041) Deferredcharges166,883178,568(11,685)61,86770,132(8,265) Capitalassets10,765,99110,765,3146779,409,9969,647,297(237,301) Totalassets29,079,65831,652,201(2,572,543)18,365,54119,275,515(909,974) Liabilities Noncurrentliabilities 10,984,87813,488,733(2,503,855)2,915,0003,165,000(250,000) Otherliabilities316,292774,048(457,756)289,396179,008110,388 Totalliabilities11,301,17014,262,781(2,961,611)3,204,3963,344,008(139,612) Netassets Investedincapitalassets, netofrelateddebt9,525,9919,480,31445,6776,494,9966,482,29712,699 Unrestricted8,252,4977,909,106343,3918,666,1499,449,210(783,061) Totalnetassets$17,778,488$17,389,420$389,068$15,161,145$15,931,507$(770,362) unrestricted net assetsThebalanceofis $16,918,646. This may beused to meettheCity’s ongoingobligationsto citizens and creditors. 23- Governmental activitiesGovernmental activities increased the City’s netassetsby $389,068. Keyelements ofthisincrease are as follows: Changes inNet Assets Governmental ActivitiesBusiness-typeActivities IncreaseIncrease 20102009(Decrease)20102009(Decrease) Revenues Programrevenues Chargesforservices$736,372$710,928$25,444$1,858,314$1,842,839$15,475 Operatinggrants andcontributions99,11490,6818,43328,76228,488274 Capitalgrants andcontributions114,33043114,287--- Generalrevenues Property taxes4,744,3484,743,1741,174--- Grantsandcontributions notrestricted to specificprograms4,4874,940(453)--- Unrestricted investment earnings132,359333,626(201,267)85,080102,833(17,753) Gainonsaleofcapitalassets31,130-31,130--- Totalrevenues5,862,1405,883,392(21,252)1,972,1561,974,160(2,004) Expenses Generalgovernment1,235,0981,486,281(251,183)--- Publicsafety1,893,4131,904,966(11,553)--- Publicworks2,231,4731,941,272290,201--- Cultureandrecreation452,437394,11058,327--- Interest onlong-termdebt474,082638,768(164,686)--- Water---643,886659,113(15,227) Sewer---980,173955,95624,217 Recycling---173,89699,28674,610 Stormwatermanagement utility---131,107106,84724,260 Liquor---25129(104) Totalexpenses6,286,5036,365,397(78,894)1,929,0871,821,331107,756 Increase (decrease) innetassets beforetransfers(424,363)(482,005)57,64243,069152,829(109,760) Transfers813,4311,040,000(226,569)(813,431)(1,040,000)226,569 Change innetassets 389,068557,995(168,927)(770,362)(887,171)116,809 Netassets, January117,389,42016,831,425557,99515,931,50716,818,678(887,171) Netassets, December31$17,778,488$17,389,420$389,068$15,161,145$15,931,507$(770,362) 24- The following graph depictsvariousgovernmental activities and showstherevenue andexpenses directly relatedtothose activities. Expenses andProgram Revenues - Governmental Activities 2,500,000 2,000,000 1,500,000 1,000,000 500,000 General governmentPublic safetyPublicworksCulture and Interest onlong-term recreationdebt ExpensesProgram revenues Revenues bySource - Governmental Activities Charges forservices Operating grantsandUnrestrictedinvestment12.6% contributionsearnings1.7% 2.3% Capital grants and contributionsGrantsand 2.0% contributions not restricted to specific programs 0.1% Property taxes 81.3% For themostpart, increases inexpenses closelyparalleled inflationand growthinthedemand forservices. 25- Business-type activitiesBusiness-typeactivities decreased theCity’s net assets by $770,362.The decrease is theresult of the City transferringthe remainingproceeds oftheliquorstore saletothegovernmental activities. Expenses and Program Revenues - Business-typeActivities 1,200,000 1,000,000 800,000 600,000 400,000 200,000 WaterSewerRecyclingStormwater Liquor management utility ExpensesProgram revenues Revenues bySource - Business-typeActivities Charges forservices 94.2% Operating grants and contributions 1.5% Unrestricted investment earnings 4.3% 26- Financial Analysisofthe Government’sFunds Asnoted earlier, theCity uses fundaccounting toensureanddemonstrate compliancewith finance-related legalrequirements. Governmental fundsgovernmental fundsThefocusoftheCity’s istoprovideinformation on near-term inflows, outflows and spendablebalancesofresources. Such information is useful in assessing the City’s financing requirements. In particular, unreserved fund balancemay serve asauseful measure ofagovernment’snetresourcesavailablefor spending attheend ofthe fiscalyear. Asof theendof thecurrent fiscal year, theCity’s governmental funds reported combinedending fundbalances of $8,126,233, a decrease of $1,616,989incomparisonwith the prioryear. Approximately 98percent of thistotal amount $7,980,840constitutes unreserved fund balancewhichis availableforspending attheCity’sdiscretion.The remainder offundbalance is reserved to indicate thatit is notavailable for newspendingbecause it hasalready beencommittedtopay debtservice andfor prepaid items inthe amountof $96,333and $49,060,respectively. TheGeneral fund is the chief operatingfund of the City. At the endof the current year, the fund balanceof the General fund was 3,526,992. Asameasureofthe Generalfund’sliquidity, itmaybeuseful tocompareboth unreserved fund balance andtotal fundbalance to total fundexpenditures. Totalfund balance represents84percentof same yearfund expenditures. Thefund balance ofthe City’sGeneral fund decreased $28,732during thecurrentfiscalyear. TheDebtServicefundhas atotal fundbalance of $96,333, all ofwhich isreserved for thepayment ofdebt service. Thedecrease in fund balancewasin linewith the City’sdebt service financing plan. TheStreetReconstruction fund hasa fund balance of $1,311,707. Thefund balance decreased $307,936during the currentfiscal year due to capitaloutlay expenditures in excessofrevenues and transfers in. TheCommunity Infrastructurefundhas a fund balance of $1,867,783. The fundbalance increased $867,783during the current fiscalyear dueto transfers in. Proprietary fundsTheCity’s proprietary funds providethe same typeofinformation found inthe government-wide financial statements, butinmore detail. Unrestricted netassetsofthe enterprisefundsat theend oftheyear amounted to $8,666,149. The totaldecreasein netassets forthefunds was $770,362. Other factors concerning the financesof thisfund have already been addressed in thediscussion ofthe City’s business-type activities. General Fund BudgetaryHighlights TheCity’sGeneral fund budget wasnotamended during theyear. Thebudget called fortheplanned useof General Fund reservesin theamount of $155,000, inaccordance with theCity’srecently adoptedfund balancepolicy. Prior to theuse of generalfundbalancereserves, revenues were underbudget by $50,520andexpenditures wereunder budgetby $181,535. The actual amountswere different from the final budgetamounts becauseof thefollowing: The largestnegativevariance inrevenue wasrelated tointerest oninvestmentswhichwere underbudgetby $48,233. The largestpositivevariancerelated toexpenditures wasinthefinancedepartment whichwasunderbudgetby $31,419. There were six categoriesof expenditures that were over budget. Thelargest negative expenditure variancewas related to cityclerk/electionswhichwas $33,153 over budget. 27- Capital Asset andDebt Administration CapitalAssets TheCity’sinvestmentin capitalassets for itsgovernmental andbusiness type activities asof December31,2010, amounts to $20,175,987(netofaccumulated depreciation). Thisinvestment incapital assets includes land, structures, improvements, machineryand equipment, parkfacilities, androads. Majorcapital assetevents duringthe current fiscalyear included the following: A new parkshelter and accessibleplay structure wereconstructed in ManorPark. Two lift stationswerereconstructed on Enchanted Island. Additionalinformationon theCity’scapital assetscanbe foundin Note 3Cstarts on page67ofthis report. Capital Assets Netof Depreciation Governmental ActivitiesBusiness-typeActivities IncreaseIncrease 20102009(Decrease)20102009(Decrease) Land$741,826$741,826$-$404,392$404,392$- Construction inprogress541,597399,551142,046280,713-280,713 Buildings2,508,2392,531,842(23,603)--- Improvementsotherthanbuildings290,714172,797117,917--- Machineryandequipment480,090367,099112,99115,92224,653(8,731) Infrastructure6,203,5256,552,199(348,674)8,708,9699,218,252(509,283) Total$10,765,991$10,765,314$677$9,409,996$9,647,297$(237,301) Long-term debtAtthe endofthecurrent fiscal year, the City hadtotal bonded debt outstandingof $13,710,000. Of this amount, $10,795,000is lease revenuebonds and $2,915,000is general obligationrevenue bonds. While allof the City’sbonds havededicatedrevenue streamspledgedtorepayment, the generalobligationrevenue bondsareall backed by the fullfaithand credit of theCity. Outstanding Debt GovernmentalActivitiesBusiness-typeActivities IncreaseIncrease 20102009(Decrease)20102009(Decrease) Generalobligation revenuebonds$-$-$-$2,915,000$3,165,000$(250,000) Lease revenuebonds10,795,00013,295,000(2,500,000)--- Compensated absences payable189,878193,733(3,855)--- Total$10,984,878$13,488,733$(2,503,855)$2,915,000$3,165,000$(250,000) TheCity’s totaldebt decreased $2,750,000 (17percent) duringthe currentfiscal year. Thisis primarilydue totherefunding of 1,900,000ofLease Revenue bonds. The City’s bond rating wasupgraded to “Aa2” from “Aa3” in July, 2008 byMoody’sInvestors Services withthe issuance ofthe 2008 bonds. Atthattime, Moody’salso upgradedthe Shorewood Economic Development Authority (EDA) bond rating to “Aa3” from “A1”. Minnesota statutes limittheamount ofnetgeneralobligationdebt aCitymayissueto3percent ofthemarketvalueoftaxable propertywithinthe City. Netdebt is debt payablesolely fromad valorem taxes. Additionalinformation ontheCity’s long-term debtcanbe foundin Note3E startson page71of thisreport. 28- Economic Factors andNext Year’sBudgets andRates Property valuations within the City decreased, but less than other communities in the Twin Cities metropolitan area. Unemployment trends inthe regioncompare favorably tonational indices. TheCity takes a responsible long term perspectivewith financial planning andmanagement. Decisions are made to ensure ongoingcapacityto providequalityservices toresidents, atareasonable price. The 2011budget wasdeveloped to insulate the Cityfrom revenue changes atthe Statelevel. Actions bytheState should have minimal impact onCity activities. Allof these factorswere consideredin preparing theCity’s budget for the2011fiscal year. During the current fiscal year, fund balancein the Generalfund decreased $28,732. Thisamount was lessthan the planneduse of 155,000duringthe2010budgetcycle. Thisplanned useofgeneralfundbalance reserveswasinaccordance withtheFund Balance Policyadoptedby the CityCouncil. Other possibleuses ofavailablefund balanceinclude specialone-time projectsand transferstocapital projectfunds asdetermined bytheCityCouncil. Requests forInformation Thisfinancial report isdesigned toprovidea general overview oftheCity’s finances forallthose with aninterestintheCity’s finances. Questions concerning any of the information provided in this reportor requests for additional financial information shouldbe addressedtotheCity ofShorewood, 5755Country ClubRoad, Shorewood, Minnesota 55331. 29- THIS PAGE ISLEFT BLANK INTENTIONALLY 30- GOVERNMENT-WIDE FINANCIAL STATEMENTS CITY OFSHOREWOOD SHOREWOOD, MINNESOTA FORTHEYEAR ENDED DECEMBER 31, 2010 31- THIS PAGE ISLEFT BLANK INTENTIONALLY 32- Exhibit 1CITYOFSHOREWOOD, MINNESOTA STATEMENT OF NETASSETS DECEMBER 31, 2010 GovernmentalBusiness-type ActivitiesActivitiesTotal ASSETS Cash and temporaryinvestments$8,125,269$8,123,977$16,249,246 Cash with fiscal agent7,375113,008120,383 Receivables Accrued interest181,5058,066189,571 Delinquent taxes178,631-178,631 Accounts45,975400,365446,340 Special assessments223248,262248,485 Lease9,555,000-9,555,000 Due from other governments3,746-3,746 Prepaid items49,060-49,060 Deferred charges166,88361,867228,750 Capital assets Nondepreciable assets1,283,423685,1051,968,528 Depreciable capital assets, net9,482,5688,724,89118,207,459 TOTAL ASSETS29,079,65818,365,54147,445,199 LIABILITIES Accounts and contracts payable92,021184,409276,430 Accrued salaries payable54,6023,78058,382 Due to other governments220765985 Accrued interest payable169,44957,136226,585 Unearned revenue-43,30643,306 Noncurrent liabilities Due withinone year Compensated absences payable189,878-189,878 865,000Bondspayable625,000240,000 Due in morethan oneyear Bonds payable10,170,0002,675,00012,845,000 TOTAL LIABILITIES11,301,1703,204,39614,505,566 NETASSETS Invested in capital assets, net of related debt9,525,9916,494,99616,020,987 Unrestricted 8,252,4978,666,14916,918,646 TOTAL NET ASSETS$17,778,488$15,161,145$32,939,633 Thenotes to the financial statements are an integral part of this statement. 33- CITY OFSHOREWOOD, MINNESOTA STATEMENT OFACTIVITIES FOR THEYEAR ENDED DECEMBER 31, 2010 Program Revenues OperatingCapital Grants Charges forGrants andand Functions/Programs ExpensesServicesContributionsContributions Governmental activities General government$1,235,098$53,381$-$- Public safety1,893,413624,330-- Public works2,231,473-64,647130 Culture and recreation452,43758,66134,467114,200 Interest on long-term debt474,082--- Total governmental activities6,286,503736,37299,114114,330 Business-type activities Water643,886668,676-- Sewer980,173845,043-- Recycling173,896146,00223,560- Stormwater management utility131,107198,5935,202- Liquor25--- Total business-type activities1,929,0871,858,31428,762- Total$8,215,590$2,594,686$127,876$114,330 Generalrevenues Taxes Property taxes, leviedforgeneral purposes Grants and contributions notrestricted to specificprograms Unrestricted investment earnings Gain on saleof capital assets Transfers Total general revenues and transfers Change in netassets Net assets, January1 Net assets, December 31 Thenotes to the financial statements are an integral part of this statement. 34- Exhibit 2 Net (Expense) Revenue and Changes inNet Assets GovernmentalBusiness-type ActivitiesActivitiesTotal 1,181,717)$-$(1,181,717) 1,269,083)-(1,269,083) 2,166,696)-(2,166,696) 245,109)-(245,109) 474,082)-(474,082) 5,336,687)-(5,336,687) 24,79024,790 135,130)(135,130) 4,334)(4,334) 72,68872,688 25)(25) 42,011)(42,011) 5,336,687)(42,011)(5,378,698) 4,744,348-4,744,348 4,487-4,487 132,35985,080217,439 31,130-31,130 813,431(813,431)- 5,725,755(728,351)4,997,404 389,068(770,362)(381,294) 17,389,42015,931,50733,320,927 17,778,488$15,161,145$32,939,633 35- THIS PAGE ISLEFT BLANK INTENTIONALLY 36- FUND FINANCIAL STATEMENTS CITY OFSHOREWOOD SHOREWOOD, MINNESOTA FORTHEYEAR ENDED DECEMBER 31, 2010 37- CITY OFSHOREWOOD, MINNESOTA BALANCE SHEET GOVERNMENTAL FUNDS DECEMBER 31, 2010 DebtStreet GeneralServiceReconstruction ASSETS Cash and temporaryinvestments$3,501,991$88,958$1,328,355 Cash withfiscal agent-7,375- Receivables Accrued interest9,146-1,012 Delinquent taxes178,631-- Accounts45,975-- Special assessments223-- Lease-9,555,000- Due from other governments3,746-- Due from other funds2,935-- Prepaid items49,060-- TOTAL ASSETS$3,791,707$9,651,333$1,329,367 LIABILITIES AND FUND BALANCES LIABILITIES Accounts and contracts payable$56,331$-$17,660 Accrued salaries payable54,409-- Due to other governments220-- Due toother funds--- Deferred revenue153,7559,555,000- TOTAL LIABILITIES264,7159,555,00017,660 FUND BALANCES Reserved for Debtservice-96,333- Prepaid items49,060-- Unreserved Designated for Working capital3,477,932 Capitaloutlay--1,311,707 Undesignated, reportedin Special revenue funds--- TOTAL FUND BALANCES3,526,99296,3331,311,707 TOTAL LIABILITIES AND FUND BALANCES$3,791,707$9,651,333$1,329,367 Thenotes to the financial statements are an integral part of this statement. 38- Exhibit 3 OtherTotal CommunityGovernmentalGovernmental InfrastructureFundsFunds 1,866,570$1,339,395$8,125,269 7,375 1,2135,18116,552 178,631 45,975 223 9,555,000 3,746 2,935 49,060 1,867,783$1,344,576$17,984,766 18,030$92,021 19354,602 220 2,9352,935 9,708,755 21,1589,858,533 96,333 49,060 3,477,932 1,867,7831,341,0684,520,558 17,650)(17,650) 1,867,7831,323,4188,126,233 1,867,783$1,344,576$17,984,766 39- THIS PAGE ISLEFT BLANK INTENTIONALLY 40- Exhibit 4CITYOFSHOREWOOD, MINNESOTA RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NETASSETS GOVERNMENTAL FUNDS DECEMBER 31, 2010 Total fundbalances - governmental$8,126,233 Amounts reported forthegovernmental activitiesin thestatement of net assetsaredifferentbecause: Capital assets usedingovernmentalactivities arenot financial resources andthereforearenot reported asassets ingovernmental funds. Cost of capital assets35,071,863 Less: accumulateddepreciation(24,305,872) Long-term liabilities, including bonds payable, are notdue and payable in the current period andtherefore are notreported asliabilities inthefunds. Long-term liabilities at year-endconsist of: Bonds payable(10,795,000) Less: unamortized deferred charges166,883 Compensated absences(189,878) Some receivables are notavailablesoon enough topayfor thecurrent period'sexpenditures, and therefore aredeferred inthe funds. Interest on lease receivable164,953 Delinquent taxes153,532 Special assessments223 Leases9,555,000 Governmental funds donotreport aliability foraccrued interest until dueand payable.(169,449) Total netasset - governmental activities$17,778,488 Thenotes to the financial statements are an integral part of this statement. 41- CITYOFSHOREWOOD, MINNESOTA STATEMENT OFREVENUES, EXPENDITURESAND CHANGESINFUNDBALANCES GOVERNMENTAL FUNDS FORTHEYEARENDEDDECEMBER 31, 2010 DebtStreet GeneralServiceReconstruction REVENUES Taxes$ 4,717,204$ -$ - Licensesandpermits154,113-- Intergovernmental 69,134-- Chargesforservices42,882-- Finesandforfeitures55,806-- Specialassessments333-- Interest oninvestments46,76738,62613,981 Miscellaneous39,803982,037- TOTALREVENUES5,126,0421,020,66313,981 EXPENDITURES Current Generalgovernment1,147,198-- Publicsafety1,392,923-- Public works859,069-- Cultureandrecreation263,928-- Capitaloutlay Generalgovernment18,557-- Publicsafety500,697-- Publicworks538-1,034,052 Cultureandrecreation--- Debtservice Principal-600,000- Interestandservicecharges2,959513,208- 1,034,052TOTALEXPENDITURES4,185,8691,113,208 EXCESS (DEFICIENCY) OFREVENUES OVER (UNDER) EXPENDITURES940,173(92,545)(1,020,071) OTHERFINANCING SOURCES (USES) Transfersin33,464168,722712,135 Saleofcapitalassets--- Bondsrefunded-(1,900,000)- Transfersout(1,002,369)(12,135)- TOTALOTHERFINANCINGSOURCES (USES)(968,905)(1,743,413)712,135 NETCHANGEINFUNDBALANCES(28,732)(1,835,958)(307,936) FUNDBALANCES, JANUARY13,555,7241,932,2911,619,643 FUNDBALANCES, DECEMBER31$ 3,526,992$ 96,333$ 1,311,707 Thenotestothefinancialstatementsareanintegralpartofthisstatement. 42- Exhibit5 OtherTotal CommunityGovernmentalGovernmental InfrastructureFundsFunds 4,717,204 154,113 104,200173,334 58,017100,899 55,806 333 13,20619,779132,359 15,6821,037,522 13,206197,6786,371,570 1,147,198 1,392,923 859,069 78,726342,654 8,94927,506 2500,699 250,3211,284,911 13261,980261,993 600,000 516,167 13599,9786,933,120 13,193(402,300)(561,550) 854,590173,6391,942,550 31,13031,130 1,900,000) 114,615)(1,129,119) 854,59090,154(1,055,439) 867,783(312,146)(1,616,989) 1,000,0001,635,5649,743,222 1,867,783$ 1,323,418$ 8,126,233 43- Exhibit6CITYOFSHOREWOOD, MINNESOTA RECONCILIATION OFTHE STATEMENT OFREVENUES, EXPENDITURES AND CHANGES IN FUNDBALANCES TOTHE STATEMENT OF ACTIVITIES GOVERNMENTAL FUNDS FOR THEYEARENDEDDECEMBER 31, 2010 Total netchangeinfundbalances - governmental funds$(1,616,989) Amounts reportedforgovernmental activities in the statement of activities aredifferentbecause: Capitaloutlaysarereported ingovernmental funds asexpenditures. However, in thestatement of activities, thecostofthose assets is allocated overtheestimated useful lives asdepreciation expense. Capital outlays1,075,066 Depreciation expense(1,065,569) Loss ondisposal of capitalassets(8,820) Theissuance oflong-term debt providescurrent financialresourcestogovernmental funds, while therepayment ofprincipal oflong-termdebt consumes thecurrentfinancialresources ofgovernmental funds. Neithertransaction, however, hasany effect on netassets. Also, governmental fundsreport theeffectof issuance costs, premiums, discounts and similaritemswhendebtis first issued, whereas these amounts aredeferred and amortizedin thestatement of activities. Principal repayments600,000 Bonds refunded1,900,000 Interestonlong-term debtinthe statement ofactivities differs fromthe amountreported inthe governmental funds because interestisrecognized asanexpenditure in thefundswhen itis due, andthus requires theuseofcurrent financialresources. In thestatement ofactivities, however interest expense is recognized as the interest accrues, regardlessof when it is due.42,085 Certainrevenues arerecognized assoon asit isearned. Underthemodified accrual basis of accounting certain revenues cannot be recognizeduntil they areavailable to liquidate liabilities ofthe currentperiod. Delinquent taxes27,144 Special assessments (78) Leases(567,626) Some expenses reported inthe statementof activitiesdo notrequire the useof current financialresources and, therefore, arenotreported as expendituresin governmental funds. Compensated absences3,855 Change innet assets - governmental activities$389,068 Thenotes tothe financialstatements areanintegral part ofthis statement. 44- Exhibit 7CITYOFSHOREWOOD, MINNESOTA STATEMENT OFREVENUES, EXPENDITURES AND CHANGES IN FUNDBALANCES - BUDGET AND ACTUAL GENERAL FUND FOR THEYEAR ENDED DECEMBER 31, 2010 Budgeted Amounts Actual Variance with OriginalFinalAmountsFinal Budget REVENUES Taxes$4,743,568$4,743,568$4,717,204$(26,364) Licenses and permits106,270106,270154,11347,843 Intergovernmental97,72497,72469,134(28,590) Charges for services37,00037,00042,8825,882 Fines and forfeitures55,00055,00055,806806 Special assessments--333333 Interest on investments95,00095,00046,767(48,233) Miscellaneous 42,00042,00039,803(2,197) TOTAL REVENUES5,176,5625,176,5625,126,042(50,520) EXPENDITURES Current General government1,267,8581,267,8581,147,198120,660 Public safety1,391,0011,391,0011,392,923(1,922) Public works899,140899,140859,06940,071 Culture and recreation269,381269,381263,9285,453 Capital outlay General government25,60025,60018,5577,043 Public safety509,624509,624500,6978,927 4,8005384,262Publicworks4,800 Debtservice Interest andservicecharges--2,959(2,959) TOTAL EXPENDITURES4,367,4044,367,4044,185,869181,535 EXCESS OF REVENUES OVER EXPENDITURES809,158809,158940,173131,015 OTHER FINANCING SOURCES (USES) Transfers in43,84243,84233,464(10,378) Transfers out(1,008,000)(1,008,000)(1,002,369)5,631 TOTAL OTHER FINANCING SOURCES (USES)(964,158)(964,158)(968,905)(4,747) NET CHANGE IN FUND BALANCES(155,000)(155,000)(28,732)126,268 FUND BALANCES, JANUARY 13,555,7243,555,7243,555,724- FUND BALANCES, DECEMBER 31$3,400,724$3,400,724$3,526,992$126,268 Thenotes to the financial statements are an integral part of this statement. 45- CITYOFSHOREWOOD, MINNESOTA STATEMENTSOFNETASSETS PROPRIETARYFUNDS DECEMBER31, 2010AND2009 Business-typeActivities - EnterpriseFunds WaterSewer 2010200920102009 ASSETS CURRENT ASSETS Cashandtemporaryinvestments$ 3,638,748$ 3,443,647$ 3,776,321$ 3,666,489 Cashwithfiscalagent 113,008 114,058 - - Receivables Accrued interest 3,265 10,311 3,931 10,992 Accounts 91,158 95,729 216,980 200,182 Specialassessments 5,395 15,104 5,858 6,015 Duefromotherfunds - - - 60,000 Prepaiditems - 7,816 - 5,225 TOTALCURRENTASSETS 3,851,574 3,686,665 4,003,090 3,948,903 NONCURRENTASSETS Specialassessmentsreceivable 198,791 298,873 25,608 24,269 Deferredcharges 61,867 70,132 - - Capitalassets Land - - - - Constructioninprogress - - 280,713 - Machineryandequipment 39,869 69,158 43,385 80,046 Infrastructure 9,944,664 9,944,664 8,463,336 8,463,336 Lessaccumulated depreciation (3,433,254) (3,182,844) (6,946,044) (6,764,223) NETCAPITAL ASSETS 6,551,279 6,830,978 1,841,3901,779,159 TOTALNONCURRENTASSETS 6,811,937 7,199,983 1,866,998 1,803,428 TOTALASSETS 10,663,511 10,886,648 5,870,088 5,752,331 LIABILITIES CURRENT LIABILITIES Accounts andcontractspayable 17,724 50,224 163,695 9,005 Accruedsalaries payable 1,625 1,476 1,286 1,529 Duetoothergovernments 765 2,446 - - Accruedinterest payable 57,136 61,077 - - Unearned revenue 43,306 35,262 - - Currentportionofbondspayable 240,000 250,000 - - TOTALCURRENTLIABILITIES 360,556 400,485 164,981 10,534 NONCURRENT LIABILITIES Bondspayablelesscurrentportionabove 2,675,000 2,915,000 - - TOTALLIABILITIES 3,035,556 3,315,485 164,981 10,534 NETASSETS Investedincapitalassets, netofrelated debt 3,636,279 3,665,978 1,841,390 1,779,159 Unrestricted 3,991,676 3,905,185 3,863,717 3,962,638 TOTALNETASSETS$ 7,627,955$ 7,571,163$ 5,705,107$ 5,741,797 Thenotestothefinancialstatementsareanintegralpartofthisstatement. 46- Exhibit8 Business-typeActivities - EnterpriseFunds - Continued NonmajorEnterpriseTotals 2010200920102009 708,908$ 1,522,351$ 8,123,977$ 8,632,487 113,008 114,058 870 4,790 8,066 26,093 92,227 61,283 400,365 357,194 2,067 2,366 13,320 23,485 60,000 13,041 804,072 1,590,790 8,658,736 9,226,358 10,543 8,586 234,942 331,728 61,867 70,132 404,392 404,392 404,392 404,392 280,713 - 83,254 149,204 793,312 793,312 19,201,312 19,201,312 180,377) (160,544)(10,559,675)(10,107,611) 1,017,327 1,037,160 9,409,996 9,647,297 1,027,870 1,045,746 9,706,805 10,049,157 1,831,942 2,636,536 18,365,541 19,275,515 2,990 17,604 184,409 76,833 385 3,780 3,390869 765 2,446 57,136 61,077 43,306 35,262 240,000 250,000 3,859 17,989 529,396 429,008 2,675,000 2,915,000 3,859 17,989 3,204,396 3,344,008 1,017,327 1,037,160 6,494,996 6,482,297 810,756 1,581,387 8,666,149 9,449,210 1,828,083$ 2,618,547$ 15,161,145$ 15,931,507 47- CITYOFSHOREWOOD, MINNESOTA STATEMENTS OFREVENUES, EXPENSESAND CHANGES INFUNDNETASSETS PROPRIETARYFUNDS FORTHEYEARSENDEDDECEMBER31, 2010AND2009 Business-typeActivities - EnterpriseFunds WaterSewer 2010200920102009 OPERATING REVENUES Chargesforservices$468,889$577,565$840,413$801,552 OPERATINGEXPENSES Personal services84,59889,79169,72967,758 Supplies8,94512,5292,3114,406 Repairsandmaintenance4,7864,67940,2832,526 Depreciation279,699274,066218,483218,481 Professionalservices4,3202,2506,8842,523 Contracted services13,98814,32931,82531,351 Insurance7,81610,1255,2256,427 Waterpurchases33,08432,509-- Utilities67,58471,1009,7259,382 Disposalcharges--594,273607,022 Other13,65913,6831,4356,080 TOTALOPERATING EXPENSES518,479525,061980,173955,956 OPERATINGINCOME (LOSS)(49,590)52,504(139,760)(154,404) NONOPERATING REVENUES (EXPENSES) Specialassessments21,74440,214-- Permitsandconnectionfees29,13428,8854,050700 Interestoninvestments32,00237,46038,44050,144 Otherincome148,909137,654580- Interestexpense(125,407)(134,052)-- TOTALNONOPERATINGREVENUES (EXPENSES)106,382110,16143,07050,844 INCOME (LOSS) BEFORETRANSFERS56,792162,665(96,690)(103,560) TRANSFERSIN--60,000- TRANSFERSOUT---(1,000,000) CHANGEINNETASSETS56,792162,665(36,690)(1,103,560) NETASSETS, JANUARY 17,571,1637,408,4985,741,7976,845,357 NETASSETS, DECEMBER31$7,627,955$7,571,163$5,705,107$5,741,797 Thenotestothefinancialstatements areanintegralpartofthisstatement. 48- Exhibit9 Business-typeActivities - EnterpriseFunds - Continued NonmajorEnterpriseTotals 2010200920102009 344,472$256,024$1,653,774$1,635,141 28,57360,126182,900217,675 4,0642,51015,32019,445 33,475-78,5447,205 19,83319,833518,015512,380 9,8483,16321,0527,936 207,320119,039253,133164,719 13,04116,552 33,08432,509 77,30980,482 594,273607,022 1,9151,59117,00921,354 305,028206,2621,803,6801,687,279 39,44449,762(149,906)(52,138) 21,74440,214 33,18429,585 14,63815,22985,080102,833 28,88528,733178,374166,387 125,407)(134,052) 43,52343,962192,975204,967 82,96793,72443,069152,829 60,000- 873,431)(40,000)(873,431)(1,040,000) 790,464)53,724(770,362)(887,171) 2,618,5472,564,82315,931,50716,818,678 1,828,083$2,618,547$15,161,145$15,931,507 49- CITYOFSHOREWOOD, MINNESOTA STATEMENTSOFCASHFLOWS - CONTINUED ONTHEFOLLOWING PAGES PROPRIETARYFUNDS FORTHEYEARSENDEDDECEMBER31, 2010AND2009 Business-typeActivities - EnterpriseFunds WaterSewer 2010200920102009 CASH FLOWSFROMOPERATINGACTIVITIES Receiptsfromcustomersandusers$473,460$595,914$822,433$826,274 Otherreceiptsandpayments, net156,953139,305580- Payments tosuppliers, contractors andothergovernments(145,359)(170,671)(689,281)(681,975) Paymentstoemployees(84,449)(89,859)(69,972)(69,507) NETCASH PROVIDED BYOPERATINGACTIVITIES400,605474,68963,76074,792 CASHFLOWSFROM NONCAPITALFINANCINGACTIVITIES Decreaseinduefromotherfunds--60,00050,000 Transfers in--60,000- Transfersout---(1,000,000) NETCASHPROVIDED (USED) BYNONCAPITALFINANCINGACTIVITIES--120,000(950,000) CASH FLOWS FROMCAPITAL ANDRELATEDFINANCING ACTIVITIES Permitsandconnectionfeesreceived29,13428,8854,050700 Principalpaidonrevenue bonds(250,000)(250,000)-- Interestpaidonrevenuebonds(121,083)(129,521)-- Acquisition ofcapitalassets(35,188)(515,046)(123,479)- Specialassessments collected131,535126,496-- NETCASHPROVIDED (USED) BYCAPITAL ANDRELATEDFINANCING ACTIVITIES(245,602)(739,186)(119,429)700 CASH FLOWSFROMINVESTINGACTIVITIES Interest receivedoninvestments39,04847,60545,50164,198 NETINCREASE (DECREASE) IN CASHANDCASHEQUIVALENTS194,051(216,892)109,832(810,310) CASHANDCASHEQUIVALENTS, JANUARY13,557,7053,774,5973,666,4894,476,799 CASHANDCASHEQUIVALENTS, DECEMBER31$3,751,756$3,557,705$3,776,321$3,666,489 RECONCILIATION OFCASHANDCASHEQUIVALENTS TOTHESTATEMENTOFNETASSETS Cashandtemporaryinvestments$3,638,748$3,443,647$3,776,321$3,666,489 Cashwithfiscalagent113,008114,058-- TOTALCASHANDCASHEQUIVALENTS$3,751,756$3,557,705$3,776,321$3,666,489 Thenotestothefinancialstatements areanintegralpartofthisstatement. 50- Exhibit10 Business-typeActivities - EnterpriseFunds - Continued Nonmmajor EnterpriseTotals 2010200920102009 311,870$262,094$1,607,763$1,684,282 28,88528,733186,418168,038 271,236)(123,979)(1,105,876)(976,625) 28,089)(60,612)(182,510)(219,978) 41,430106,236505,795655,717 60,00050,000 60,000- 873,431)(40,000)(873,431)(1,040,000) 873,431)(40,000)(753,431)(990,000) 33,18429,585 250,000)(250,000) 121,083)(129,521) 158,667)(515,046) 131,535126,496 365,031)(738,486) 18,55818,474103,107130,277 813,443)84,710(509,560)(942,492) 1,522,3511,437,6418,746,5459,689,037 708,908$1,522,351$8,236,985$8,746,545 708,908$1,522,351$8,123,977$8,632,487 113,008114,058 708,908$1,522,351$8,236,985$8,746,545 51- CITYOFSHOREWOOD, MINNESOTA STATEMENTSOFCASHFLOWS - CONTINUED PROPRIETARYFUNDS FORTHEYEARSENDEDDECEMBER31, 2010AND2009 Business-typeActivities - EnterpriseFunds WaterSewer 2010200920102009 RECONCILIATION OFOPERATING INCOME (LOSS) TONETCASH PROVIDED BYOPERATING ACTIVITIES Operatingincome (loss)$(49,590)$52,504$(139,760)$(154,404) Adjustments toreconcile operatingincome (loss) tonetcashprovidedbyoperatingactivities Otherincomerelatedtooperations156,953139,305580- Depreciation279,699274,066218,483218,481 Increase) decreaseinassets: Accountsreceivable4,57118,349(16,798)28,846 Specialassessmentsreceivable--(1,182)(4,124) Prepaid items7,816(125)5,225(712) Increase (decrease) inliabilities: Accounts payable2,688(9,207)(2,545)1,229 Duetoothergovernments(1,681)(135)-(12,775) Accruedsalariespayable149(68)(243)(1,749) NETCASHPROVIDED BYOPERATING ACTIVITIES$400,605$474,689$63,760$74,792 NONCASH CAPITAL AND RELATEDFINANCINGACTIVITIES Amortizationofdeferredcharges$8,265$8,084$-$- Capitalassetspurchasedonaccount$-$35,188$157,235$- Thenotestothefinancialstatements areanintegralpartofthisstatement. 52- Exhibit10 Business-typeActivities - EnterpriseFunds - Continued Nonmmajor EnterpriseTotals 2010200920102009 39,444$49,762$(149,906)$(52,138) 28,88528,733186,418168,038 19,83319,833518,015512,380 30,944)6,041(43,171)53,236 1,658)29(2,840)(4,095) 13,041(837) 14,614)2,324(14,471)(5,654) 1,681)(12,910) 484(486)390(2,303) 41,430$106,236$505,795$655,717 8,265$8,084 157,235$35,188 53- Exhibit 11CITYOFSHOREWOOD, MINNESOTA STATEMENT OF NETASSETS FIDUCIARY FUND DECEMBER 31, 2010 Agency ASSETS Cash and temporaryinvestments$120,598 LIABILITIES Escrow deposits payable$120,598 Thenotes to the financial statements are an integral part of this statement. 54- CITY OFSHOREWOOD, MINNESOTA NOTES TOTHEFINANCIAL STATEMENTS DECEMBER31, 2010 Note1:SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A.Reportingentity The CityofShorewood, Minnesota (the City),operates under the “OptionalPlanA” form of government asdefined intheState ofMinnesotastatutes.Under this plan, thegovernment ofthe City is directedby aCouncil composed of anelectedMayorand fourelected Councilmembers.The Councilexercises legislativeauthority anddetermines all mattersofpolicy.The Councilappointspersonnelresponsibleforthe properadministration ofallaffairsrelatingto theCity.TheCity has considered all potential units for which it is financially accountable, and other organizations forwhich the nature and significance of their relationship with the City are such that exclusion would cause the City’sfinancial statements tobemisleading orincomplete.The Governmental Accounting Standards Board (GASB) has setforthcriteria tobe considered indetermining financialaccountability.These criteria includeappointing a votingmajority ofan organization’sgoverning body, and (1) theabilityof theCityto impose itswill onthat organization or (2) thepotential forthe organizationtoprovide specificbenefits to, orimpose specificfinancial burdensontheCity.Blended component units, although legally separate entitiesare, in substance, part ofthe City’s operations andsodata fromthese unitsare combined withdata of the City.The City hasthefollowing component unit: Blendedcomponentunit The EconomicDevelopment Authority (EDA) oftheCity wascreated pursuanttoMinnesota statutes 469.090 through 469.108to carryouteconomic andindustrialdevelopment andredevelopment consistent withpolicies established by theCouncil.It iscomprised ofthe members ofthe Council and hasaDecember 31year end. The EDAactivities are blended and reported in theDebt Serviceandcapitalprojects funds.Separatefinancial statements are not issued forthis component unit. B.Government-wideand fundfinancial statements Thegovernment-widefinancialstatements (i.e., the statement ofnet assetsand the statement ofactivities) report Governmentalactivities, informationonall ofthenonfiduciary activitiesofthe Cityanditscomponent unit.which business-typenormallyaresupportedbytaxesandintergovernmentalrevenues, are reported separatelyfrom activities, whichrely toa significant extent on fees andcharges for support. Thestatementofactivities demonstrates thedegree to whichthe directexpenses ofa given function or segmentis Direct expensesoffsetbyprogramrevenues.are those thatare clearly identifiable withaspecificfunction or Program revenuessegment.include 1) charges to customersor applicants whopurchase, use, ordirectly benefit from goods, services, orprivileges provided byagivenfunction orsegmentand2) grants andcontributionsthatare restricted tomeeting the operational orcapitalrequirements ofa particularfunction orsegment.Taxes and other generalrevenues. items not properlyincludedamong program revenuesare reportedinstead as Separate financialstatements are provided forgovernmental funds, proprietary fundsand fiduciaryfunds.Major individualgovernmental funds and major individualenterprise fundsare reported as separatecolumns in the fund financial statements. 55- CITY OFSHOREWOOD, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER31, 2010 Note1:SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED C.Measurement focus, basisofaccountingand financial statementpresentation current financial resources measurement focusGovernmentalfundfinancialstatementsarereportedusingtheand modifiedaccrual basis of accounting. the Revenues are recognized as soonas theyare both measurableand availableavailable.Revenues are considered tobe when theyare collectible within the current period or soon enoughthereafter topayliabilities ofthe currentperiod.Forthis purpose, theCityconsiders revenues to be available iftheyare collected within 60 daysofthe endofthe current fiscalperiod.Expenditures generallyare recordedwhen aliabilityis incurred, asunder accrualaccounting.However, debt service expenditures, aswell asexpenditures related tocompensated absences andclaims andjudgments, are recorded onlywhen payment isdue. Propertytaxes, licenses andinterest associated withthe current fiscalperiodare all considered to besusceptible to accrual andso havebeenrecognized asrevenues of thecurrent fiscal period.Onlythe portionof special assessments receivable due withinthe currentfiscal period isconsidered tobesusceptible toaccrual asrevenue ofthe current period.All other revenue items are considered tobe measurableandavailable onlywhen cashis receivedbythe City. Revenueresulting from exchangetransactions, inwhicheach party givesand receivesessentially equalvalue, is recordedontheaccrual basis whenthe exchange takes place.Ona modified accrualbasis, revenue is recordedin the yearin whichtheresources aremeasurable andbecome available. Non-exchangetransactions, inwhichthe Cityreceives value without directly giving equalvalue inreturn, include property taxes, grants, entitlement and donations.On an accrual basis, revenue fromproperty taxesisrecognized in theyearforwhich thetaxis levied.Revenue from grants, entitlements anddonations isrecognized inthe yearin whichall eligibility requirementshavebeensatisfied.Eligibility requirements includetiming requirements, which specify theyear when theresources arerequired tobeusedorthe yearwhen use isfirstpermitted, matching requirements, inwhichthe Citymustprovide local resources to beusedfora specified purpose, andexpenditure requirements, in whichtheresources areprovided tothe Cityon areimbursement basis.On amodified accrual basis, revenuefromnon-exchange transactionsmustalsobe available beforeit canberecognized. Deferredrevenue ariseswhenassetsare recognized before revenue recognitioncriteria havebeen satisfied.Grants andentitlements receivedbefore eligibility requirements aremet arealsorecorded asdeferred revenue.Onthe modified accrual basis, receivables thatwill notbecollected within theavailable period havealso beenreported as deferred revenue inthefund financial statements. The preparation offinancialstatements inconformity withaccounting principlesgenerallyacceptedintheUnited StatesofAmerica requiresmanagement tomake estimates andassumptions thataffectcertainreported amounts and disclosures. Accordingly, actual results coulddiffer fromthose estimates. 56- CITY OFSHOREWOOD, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER31, 2010 Note1:SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED TheCityreports the followingmajor governmental funds: GeneralfundTheis theCity’sprimaryoperating fund.It accounts forallfinancial resources ofthe general government, except those requiredto beaccounted for in anotherfund. DebtService fundTheaccounts for theresources accumulated andpayments made forprincipal andinterest on long-term general obligation debtof governmental funds. Street Reconstruction fundThewasestablished forthe purposeof funding theperiodic reconstruction ofCity streetsandroadways. Community Infrastructure fundThewas establishedfor the purposeof providing internal funding for the construction on infrastructurecapital improvements. TheCityreports thefollowing major proprietaryfunds: Water fundTheaccounts for the activitiesof the City’swater distributionsystem. Sewer fundTheaccounts for theactivities of theCity’s sewage collection system. Additionally, the Cityreports the followingfund types: Fiduciary fundsTheaccountforassets heldby theCityin a trustee capacity oras anagent onbehalf ofothers. Agency fundTheiscustodial innature anddoes notpresent results ofoperations orhave a measurement focus. Agencyfundsareaccountedforusingtheaccrualbasisofaccounting.Thisfund is used toaccount forassets thattheCityholds forcertain residents, developers, and otherparties thatare involved withescrow related projectswithin the City. Private-sectorstandards ofaccounting andfinancial reporting issuedprior toDecember 1, 1989, generallyare followed in boththe government-wide andproprietary fund financialstatements totheextentthat thosestandards do notconflictwith orcontradict guidance oftheGASB.Governments also havethe option offollowing subsequent private-sectorguidance fortheirbusiness-typeactivitiesandenterprise funds, subject tothis samelimitation.The governmenthas electednot to followsubsequent private-sector guidance. Asa general ruletheeffect of interfund activity hasbeen eliminated from government-wide financial statements. Exceptions tothis general rule arepayments-in-lieuoftaxes andother charges between theCity’swater andsewer function andvariousotherfunctions oftheCity.Elimination of thesecharges would distort the directcostsand program revenues reported for the variousfunctionsconcerned. program revenuesAmountsreportedasinclude 1) chargesto customers or applicants for goods, services, or privileges provided, 2) operatinggrantsand contribution, and 3) capital grantsand contributions, including special general revenuesassessments.Internallydedicated resources arereportedas rather than as program revenues. Likewise, general revenues include alltaxes. 57- CITY OFSHOREWOOD, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER31, 2010 Note1:SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED operating nonoperatingProprietaryfundsdistinguishrevenuesandexpensesfromitems.Operating revenues and expenses generally resultfromproviding services andproducing anddelivering goodsinconnection witha proprietaryfund’sprincipal ongoing operations.The principal operating revenues ofthe water, sewer, recycling, stormwatermanagementutility andliquorenterprise funds arecharges tocustomers forsales andservices. Operating expenses forenterprise fundsinclude thecostofsales andservices, administrative expenses, and depreciation on capitalassets.All revenues and expenses not meetingthis definitionare reported asnonoperating revenues and expenses. Whenboth restricted andunrestrictedresourcesare availableforuse, it isthe City’s policyto userestricted resources first, then unrestricted resources as theyare needed. D.Assets, liabilitiesand netassetsorequity Depositsandinvestments TheCity’scash and cashequivalents areconsidered tobe cashonhand, demand deposits, and short-term investments with originalmaturities ofthree monthsorless fromthedateof acquisition. Cashbalances from allfundsare pooledand invested, tothe extent available, in certificatesof depositand other authorized investments.Earnings fromsuch investments are allocatedonthebasis ofapplicable participationby eachof thefunds. TheCitymay investidle funds asauthorized byMinnesota statutes, asfollows: 1.Direct obligationsorobligationsguaranteedby theUnited Statesorits agencies. 2.Shares ofinvestmentcompanies registered under theFederal InvestmentCompany Actof 1940and received the highest credit rating, rated in one of thetwo highest rating categories by a statistical rating agency, and haveafinalmaturity of thirteenmonths orless. 3.General obligations of astateorlocal government with taxingpowers rated “A” orbetter; revenue obligations rated “AA” or better. 4.General obligationsof theMinnesota Housing Finance Agency rated “A” orbetter. 5.Bankers’ acceptances of United Statesbanks eligiblefor purchase by the FederalReserveSystem. 6.Commercial paperissued byUnitedStates bankscorporationsor theirCanadian subsidiaries, ofhighest quality categoryby atleasttwonationally recognized ratingagencies, andmaturingin270 daysorless. 7.Repurchase orreverse repurchaseagreementsandsecurities lendingagreementswithfinancialinstitutions qualified asa “depository” bythe government entity, with banks that aremembers of theFederal Reserve System withcapitalization exceeding $10,000,000, aprimary reporting dealerinU.S. government securities to theFederal Reserve Bankof NewYork, orcertainMinnesota securities broker-dealers. 8.Guaranteedinvestment contracts (GIC’s) issued orguaranteed by a UnitedStates commercial bank, a domestic branchof aforeignbank, a UnitedStatesinsurance company, oritsCanadian subsidiary, whose similar debtobligations wereratedinoneof thetoptworatingcategories byanationally recognizedrating agency. Investments fortheCity arereportedat fairvalue.Earnings oninvestments are allocatedtothe individualfunds basedupon theaverage cash andinvestment balances. 58- CITY OFSHOREWOOD, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER31, 2010 Note1:SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Propertytaxes The Council annuallyadopts ataxlevy inDecember andcertifies ittotheCounty forcollection inthe following year.TheCounty is responsiblefor collectingall property taxesfor theCity.These taxes attach an enforceablelien ontaxableproperty withintheCity on January1and arepayable bytheproperty owners intwo installments.The taxes arecollected bytheCounty Auditor andtax settlements are made totheCity duringJanuary, Julyand December each year. Taxes payable onhomestead property, asdefinedby Minnesotastatutes, werepartially reducedbyamarket value creditaid.The creditispaid totheCitybythe StateofMinnesota (theState) in lieuoftaxeslevied againstthe homestead property.However, in 2010the Cityreceivedanaid reduction whichdecreasedtheir market valuecredit aidto zero. Delinquenttaxesreceivableincludethe pastsixyears’ uncollected taxes.Delinquent taxes have beenoffset by a deferred revenueliabilityfor delinquent taxes not receivedwithin 60 daysafter year endin thefundfinancial statements. Accounts receivable Accounts receivable includeamounts billed for servicesprovided before year end.Unbilled utilityenterprisefund receivables are alsoincluded for servicesprovided in 2010.The Cityannually certifies delinquent water andsewer accounts tothe County for collectionin the following year.Therefore, therehas beennoallowance for doubtful accounts established. Specialassessments Specialassessments representthe financing for publicimprovements paidfor bybenefiting property owners.These assessments are recorded asreceivables upon certification to theCounty.Special assessments arerecognizedas revenuewhen theyarereceived incashor within 60daysafteryearend.Allgovernmentalassessments receivable areoffsetby a deferredrevenueliabilityin thefund financialstatements. Interfundreceivablesandpayables Transactionsbetween funds that are representativeof lending/borrowing arrangements outstanding at the end of the fiscalyear arereferred to aseither “interfundreceivables/payables” (i.e., thecurrent portion ofinterfund loans) or advances to/from otherfunds” (i.e., thenon-current portion of interfundloans).All otheroutstanding balances between funds arereported as “dueto/from otherfunds.”Any residual balances outstanding between the governmental activities andbusiness-typeactivitiesarereportedin thegovernment-wide financial statements as internalbalances.” Advances between funds, asreported inthe fundfinancial statements, are offsetbya fundbalance reserve account in applicablegovernmental fundstoindicate theyarenot available forappropriationandarenotexpendable available financialresources. Prepaiditems Certain paymentsto vendors reflectcosts applicabletofuture accounting periods andarerecorded asprepaiditems inboth government-wideand fundfinancial statements. Prepaiditems of theCity areaccounted forusing the consumption method. 59- CITY OFSHOREWOOD, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER31, 2010 Note1:SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Capital assets Capitalassets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewalks, andsimilar items), are reported inthe applicable governmental orbusiness-type activitiescolumns in the government-widefinancial statements.Capital assets aredefined by the Cityasassets withan estimated usefullife inexcess ofoneyear.Such assets arerecorded at historicalcostor estimatedhistoricalcost ifpurchased or constructed.Donated capitalassetsare recordedat estimated fairmarket value atthedate of donation.For financial statement purposes only, acapitalization thresholdisestablished foreach capital assetcategory as follows: AssetsThreshold Landand landimprovements$10,000 Other improvements25,000 Buildings25,000 Building improvements25,000 Machinery and equipment5,000 Vehicles5,000 Infrastructure100,000 Other assets5,000 Inthecaseofinitialcapitalization ofgeneralinfrastructureassets (i.e., thosereported bygovernmental activities) the Citychosetoinclude itemsdating backto June30, 1980.TheCitywas able toestimate the historical cost for the initialreporting ofthese assetsthroughbacktrending(i.e., estimating the current replacement cost ofthe infrastructuretobe capitalizedand usinganappropriate price-level indexto deflatethe costtothe acquisition year orestimated acquisition year).As theCityconstructs or acquirescapital assets each period, including infrastructure assets, they arecapitalized and reported athistorical cost.The reported value excludes normal maintenance and repairs whichareessentially amounts spentinrelation tocapital assets thatdonotincreasethecapacity orefficiency of the itemor extend its useful lifebeyondthe original estimate. Interestincurred during the construction phaseofcapital assetsof business-type activities isincluded aspart ofthe capitalized value ofthe assets constructed. Property, plantand equipmentof theCity, aredepreciated usingthestraight-line methodoverthe following estimated usefullives: UsefulLives Assetsin Years Land improvements15 - 20 Other improvements Buildings and improvements7 - 40 System improvements/infrastructure20 - 50 Machinery and equipment5 - 15 Vehicles5 - 15 Compensated absences Itisthe City’s policytopermit employeestoaccumulate a portionof earned but unusedvacation and sick pay benefits.Accumulatedvacation andsick payareaccruedwhen incurred inthegovernment-wide, proprietary, and fiduciary fund financial statements.A liabilityfor these amountsisreported ingovernmental funds onlyif theyhave matured, forexample, asaresult ofemployee resignations andretirements. Inthecaseof anemployee leaving, the General fundwould be responsible for liquidationof theliability. 60- CITY OFSHOREWOOD, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER31, 2010 Note1:SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Postemployment benefits otherthanpensions Under Minnesota statute471.61, subdivision 2b., public employers must allowretirees andtheirdependents to continue coverageindefinitely in an employer-sponsored health care plan, under the following conditions: 1) Retirees must bereceiving (oreligible toreceive) an annuityfrom aMinnesota public pension plan, 2) Coverage mustcontinue in group plan untilage 65, andretirees mustpay no morethan the grouppremium, and3) Retirees mayobtaindependent coverage immediately before retirement. Allpremiumsare fundedonapay-as-you-go basis. Itwas determined, inaccordance with GASBStatement 45, atDecember 31, 2010that the Cityhasa zero liability. Long-termobligations Inthegovernment-widefinancial statement and proprietary fundtypes inthefundfinancial statements, long-term debtand otherlong-termobligations arereportedas liabilitiesin theapplicable governmental activities, business- type activitiesor proprietary fund typestatement ofnetassets.Bond premiums and discounts, as well as issuance costs, are deferredandamortizedover the lifeof the bondsusing thestraight-linemethod. In thefundfinancialstatements, governmental fundtypesrecognize bond premiums anddiscounts, aswellasbond issuancecosts, during thecurrent period.Thefaceamount ofdebtissued is reportedas otherfinancing sources. Premiums received ondebt issuancesare reported as otherfinancing sourceswhile discounts ondebtissuances are reported asother financinguses.Issuance costs, whether or notwithheld fromthe actualdebt proceeds received, are reported asdebt service expenditures. Fundequity Inthe fund financial statements, governmental funds report reservations of fundbalance for amounts that are not availablefor appropriation or are legally restricted by outsideparties for use for a specific purpose.Designations of fund balance represent tentativemanagement plansthatare subjectto change. Netassets Netassetsrepresent thedifference between assetsand liabilities.Net assets aredisplayedin threecomponents: a.Invested incapital assets, netof relateddebt - Consistsof capital assets, netof accumulated depreciation reduced by anyoutstanding debtattributable to acquire capital assets. b.Restricted netassets - Consist of netassets restricted when thereare limitationsimposed ontheir use through external restrictions imposedbycreditors, grantors, lawsorregulations ofothergovernments. c.Unrestricted netassets -Allothernetassetsthat donotmeet thedefinition of “restricted” or “investedin capitalassets, netof relateddebt”. Comparative data/reclassifications Comparative total dataforthe prioryearhave been presented onlyfor individual enterprise funds inthe fund financial statementsin order to providean understanding of thechanges in thefinancial position and operations of these funds.Also, certainamounts presented inthe prioryeardata have been reclassified inorder tobe consistent withthe current year’s presentation. 61- CITY OFSHOREWOOD, MINNESOTA NOTES TOTHE FINANCIAL STATEMENTS DECEMBER31, 2010 Note2: STEWARDSHIP, COMPLIANCE ANDACCOUNTABILITY A.Budgetary information Annual budgets are adopted onabasis consistent with accountingprinciples generally accepted inthe UnitedStates of Americafor theGeneral fund.Allannual appropriations lapseatfiscalyear end.TheCity does notuse encumbrance accounting. In Augustofeachyear, alldepartments oftheCitysubmit requests forappropriations to theCityAdministrator so ththe proposed budget ispresented to theCouncil forreview. thata budgetmaybe prepared.Before September 15 In earlyDecember, theCouncil holds public hearings andafinalbudgetis preparedandadopted. The appropriated budget ispreparedbyfund,function and department.TheCity’s department heads, with the approvalof theCityAdministrator, may make transfers of appropriationswithinadepartment.Transfers of appropriationsbetween departments requiretheapproval oftheCouncil.The legal levelof budgetary control isthe departmentlevel.Budgeted amountsare asoriginally adopted. B.Deficitfundequity The followingfundhad adeficit fundbalance asof December 31, 2010: Fund Amount Nonmajor Southshore Community Center$17,650 TheCity plans to fundthis deficitwith future revenues and interfund transfers. 62- CITY OFSHOREWOOD, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER31, 2010 Note3: DETAILED NOTES ONALL FUNDS A.Deposits andinvestments Deposits Custodial creditriskfor deposits and investments isthe risk that inthe eventofa bankfailure, theCity’s deposits and investments maynotbe returned or theCitywill notbeable torecovercollateral securities inthepossession of anoutside party.In accordance withMinnesota statutes andasauthorizedbythe Council, theCitymaintains deposits at thosedepository banks, all ofwhich are membersofthe Federal Reserve System. Minnesota statutesrequire thatall Citydepositsbe protectedby insurance, surety bondorcollateral.Themarket value of collateral pledgedmust equal110 percentofthe deposits notcovered byinsurance orbonds. Authorized collateral inlieu ofa corporate surety bondincludes: United Statesgovernment Treasury bills, Treasury notes, Treasury bonds; Issues ofUnited States government agencies and instrumentalities asquoted byarecognized industry quotation service availableto thegovernment entity; Generalobligation securitiesof any stateor localgovernment with taxingpowers whichis rated “A” or better bya national bond rating service, or revenue obligation securities of anystateor localgovernment with taxing powers whichis rated “AA” orbetter byanational bond rating service; General obligation securities ofa localgovernmentwith taxingpowers maybe pledgedas collateral against fundsdeposited by thatsame localgovernment entity; Irrevocable standbylettersof creditissuedby Federal HomeLoanBanks toamunicipality accompanied by writtenevidence thatthebank’spublic debt is rated “AA” or better by Moody’sInvestors Service, Inc., orStandard & Poor’sCorporation; and Time depositsthatare fullyinsured byany federalagency. Minnesotastatutes require that all collateralshall be placed in safekeepingin a restricted account at a Federal Reserve Bank, or in an accountat a trust departmentof a commercialbankor other financial institution that is not owned or controlled by thefinancial institution furnishing thecollateral. Theselection shouldbeapproved by the government entity. Atyear end, the City’scarryingamount ofdeposits was $571,401andthebank balance was $696,146.Theentire bankbalance was coveredby federal depositoryinsuranceand by collateral heldby theCity’sagent in theCity’s name. 63- CITY OFSHOREWOOD, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER31, 2010 Note3:DETAILEDNOTESON ALLFUNDS - CONTINUED Areconciliation ofcash andtemporary investments as shownonthe financial statements for the Cityfollows: Carrying amount ofdeposits$571,401 Investments15,918,514 Cash on hand312 Total$16,490,227 As reported on thefinancial statements Statement ofnetassets$16,249,246 Cash with fiscal agent120,383 Fiduciary fund120,598 Total$16,490,227 Investments TheMinnesota Municipal Money Market Fund (the 4M Fund) is a customized cash management and investment program forMinnesotapublic funds.Sponsored andgoverned bytheLeagueofMinnesota Cities since1987,the 4M Fundisauniqueinvestment alternativedesignedtoaddressthedailyandlongterminvestment needsof Minnesotacitiesand other municipalentities. AllowableunderMinnesotastatutes,the 4M Fund iscomprised oftop quality, rated investments. The Minnesota Municipal MoneyMarket Fundandbroker moneymarketinvestment poolsoperate inaccordance withappropriate State lawsand regulations.The4M Fundis an externalinvestment poolnot registeredwiththe Securities andExchange Commission (SEC); however, itfollows the sameregulatory rulesoftheSEC underrule 2a7.Thereportedvalue ofthepoolis thesame as thefairvalue ofthe poolshare.Financial statementsof the4M Fund canbe obtainedby contracting VoyageurAsset Management at100 South Fifth Street, Suite 2300, Minneapolis, MN55402-1240. 64- CITY OFSHOREWOOD, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER31, 2010 Note3:DETAILEDNOTESON ALLFUNDS - CONTINUED Atyear end, theCity hadthefollowing investments thatareinsured orregistered, orsecurities held bytheCity’s agentinthe City’sname: 1.Ratings are provided by various creditratings agencies whereapplicable to indicate associatedcredit risk. 2.Interest rate riskis disclosedusing thesegmented time distribution method. N/AIndicatesnot applicable or available. The investments ofthe Cityaresubject tothefollowing risks: CreditRiskCredit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Ratings areprovided by variouscredit ratingagencies andwhere applicable, indicate associated credit risk. Minnesota Statutes andtheCity’sinvestment policylimittheCity’sinvestmentstothelistonpage 58of thenotes. Custodial CreditRiskThe custodial creditriskforinvestments istheriskthat, inthe event ofthefailureofthe counterparty to atransaction, agovernment willnotbe abletorecover thevalueof investment or collateral securitiesthat arein thepossessionof anoutsideparty. Inaccordance withtheCity’s investment policy, the investment officer shallstructureallinvestments, depositsandrepurchaseagreementssothatthecustodial risk iscategorizedaseither insuredorregistered, or securitiesheld bytheCity orits agentin theCity’sname or uninsured and unregistered, with securities heldby thecounterparty’strustdepartment oragent inthe City’s name.All investments are placed insafekeeping atfinancial institutions. ConcentrationofCredit Risk. Concentration ofcredit risk istherisk ofloss attributedtothe magnitude ofa government’sinvestmentin asingle issuer. Inaccordancewith theCity’s investment policy, theCity diversifies itsinvestment portfolioto eliminatetheriskof lossresultingfromover-concentration ofassets inaspecific maturity, a specificissuer ora specificclass of securities.The maturitiesselectedshallprovide forstability of income andreasonable liquidity. Interest raterisk. Interest rateriskistheriskthat changesininterestrateswilladversely affectthefairvalueof an investment. Inaccordance withits investment policyandalsodetailed in thedescription ofconcentrationof creditrisk, theCitymanages itsexposure todeclinesinfairvaluesby “laddering” theirinvestment maturitiesto ensurethata portionoftheportfolio is maturing monthly, or asneeded tomeet projected expenditures. The City alsopermits no morethan 30% of totalinvestments toextend beyond five (5) years and doesnot directly invest insecuritiesmaturing more than15 yearsfromthe date ofpurchase. 65- CITY OFSHOREWOOD, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER31, 2010 Note3:DETAILEDNOTESON ALLFUNDS - CONTINUED B.Deferredrevenue Governmental fundsreportdeferred revenue inconnection withreceivables forrevenues thatarenotconsidered to beavailable to liquidateliabilities of thecurrent period.Governmental funds deferrevenue recognition in connection withresources thathavebeen received, but notyet earned.At theend ofthe currentfiscalyear, the various componentsofdeferred revenue andunearned revenue reported inthegovernmental fundswereas follows: UnavailableUnearned Governmental activities General fund Deliqnuent taxes receivable$153,532$- Special assessments receivable223- DebtService Lease receivable9,555,000- Total $9,708,755$- 66- CITYOF SHOREWOOD, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER31, 2010 Note3:DETAILEDNOTESON ALLFUNDS - CONTINUED C.Capitalassets Capital assetactivity forthe yearendedDecember 31, 2010was asfollows: BeginningEnding BalanceIncreasesDecreasesBalance Governmental activities Capital assets not beingdepreciated Land$741,826$-$-$741,826 Construction in progress399,551620,251(478,205)541,597 Total capitalassets not being depreciated1,141,377620,251(478,205)1,283,423 Capital assets being depreciated Buildings3,313,26160,609-3,373,870 Improvements other than buildings747,079146,699-893,778 Infrastructure26,516,355478,206-26,994,561 Machinery and equipment2,494,563247,506(215,838)2,526,231 Total capitalassets being depreciated33,071,258933,020(215,838)33,788,440 Less accumulated depreciation Buildings(781,419)(84,212)-(865,631) Improvements other thanbuildings(574,282)(28,782)-(603,064) Infrastructure(19,964,156)(826,880)-(20,791,036) Machineryand equipment(2,127,464)(125,695)207,018(2,046,141) Total accumulated depreciation(23,447,321)(1,065,569)207,018(24,305,872) Total capitalassets being depreciated, net9,623,937(132,549)(8,820)9,482,568 Governmental activities capitalassets, net$10,765,314$487,702$(487,025)$10,765,991 67- CITY OFSHOREWOOD, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER31, 2010 Note3: DETAILEDNOTESON ALLFUNDS - CONTINUED BeginningEnding BalanceIncreasesDecreasesBalance Business-type activities Capital assets not beingdepreciated Land$404,392$-$-$404,392 Construction in progress-280,713-280,713 Total capitalassets not being depreciated404,392280,713-685,105 Capital assets being depreciated Infrastructure19,201,312--19,201,312 Machinery andequipment149,204-(65,950)83,254 Total capitalassets being depreciated19,350,516-(65,950)19,284,566 Less accumulated depreciation for Infrastructure(9,983,060)(509,283)-(10,492,343) Machineryand equipment(124,551)(8,732)65,951(67,332) Total accumulated depreciation(10,107,611)(518,015)65,951(10,559,675) Total capitalassets being depreciated, net9,242,905(518,015)18,724,891 Business-type activities capitalassets, net$9,647,297$(237,302)$1$9,409,996 Depreciation expense wascharged to functions/programs oftheCityas follows: Governmental activities General government$73,169 Public works937,008 Culture and recreation55,392 Total depreciation expense - governmental activities$1,065,569 Business-type activities Water$279,699 Sewer218,483 Stormwater management utility19,833 Total depreciation expense - business-typeactivities$518,015 68- CITY OFSHOREWOOD, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER31, 2010 Note3:DETAILEDNOTESON ALLFUNDS - CONTINUED Construction commitments TheCity has active construction projects asofDecember 31, 2010.Atyearend, thecommitmentwiththe contractors fortheseprojects isasfollows: SpentRemaining Project to dateCommitment Meadowview & Nelsine Improvements$350,752$45,813 Lift Station 17 Rehabilitation104,66811,653 Lift Station 15 Rehabilitation106,87011,219 Total$562,290$68,685 D.Interfund receivables, payablesandtransfers Thecompositionof interfund balances as ofDecember 31, 2010, is as follows: Receivable FundPayable Fund PurposeAmount GeneralNonmajor governmentalCash flow$2,935 Southshore Community Center 69- CITY OFSHOREWOOD, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER31, 2010 Note3:DETAILEDNOTESON ALLFUNDS - CONTINUED Interfund transfers Transfers in StreetCommunity Fund GeneralDebt ServiceReconstructionInfrastructure Transfers out General $-$100,369$700,000$- Debt service--12,135- Other governmental14,62368,353-- Nonmajor enterprise18,841--854,590 Total $33,464$168,722$712,135$854,590 Transfers in Other Fund GovernmentalSewerTotal Transfers out General $142,000$60,000$1,002,369 Debt service--12,135 Other governmental31,639-114,615 Nonmajor enterprise--873,431 Total $173,639$60,000$2,002,550 TheCityannually budgets transfersfor specific purposes. Annualtransfersaremade as partof capitalimprovement plansas well asannual budgets. Forthe yearendedDecember 31, 2010, the Citymade thefollowingone-time transfers: The Liquor fund wasclosed to theGeneral and Community Infrastructure funds. The Waterford III TIFDistrict fund wasclosed tothe Street Reconstruction fund. The City Hall Project fund was closedbytransferring moneyfromthe PublicFacilities fund. The EDAPublic SafetyFacilitiesProject was closedtothe 2007A, 2007B, and 2007C EDAPublicSafety Building Debt Service funds. 70- CITY OFSHOREWOOD, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER31, 2010 Note3:DETAILEDNOTESON ALLFUNDS - CONTINUED E.Long-termdebt General Obligation BondsTheCityissues general obligationbonds toprovide fundsfor theacquisition and construction of major capital facilities.Generalobligation bonds havebeenissued for bothgovernmentaland business-typeactivities.These bonds are reported in the proprietaryfunds iftheyare expected toberepaid from proprietary fundrevenues.In addition, general obligation bonds havebeen issuedto refund special assessments related bonds. General obligation bondsare directobligations and pledge thefullfaith and creditofthe City.The Cityhasthe following generalobligation debt: Generalobligation revenuebonds Thefollowingbonds wereissued tofinance capitalimprovements intheenterprise funds.Theywillbe retired from netrevenues oftheenterprise funds. Balance InterestAuthorizedIssueMaturityat DescriptionRateandIssuedDateDateYear End G.O. WaterRevenue Bonds of2005$1,525,0003.00 - 4.25%06/01/0501/01/251,225,000$ G.O. WaterRevenue Bonds of 1996860,0004.95 - 5.4011/01/9602/01/12115,000 G.O. Water Refunding Bonds of 2003815,0001.50 - 3.0008/01/0302/01/11125,000 G.O. WaterRevenue Bonds of 20061,450,0004.0011/29/0601/01/221,450,000 Total G.O. Revenue Bonds$2,915,000 Annual debt service requirements to maturityforgeneral obligation revenue bonds areas follows: G.O. RevenueBonds Business-type ActivitiesYearEnding December31,PrincipalInterest Total 2011$240,000$111,538$351,538 2012175,000103,398278,398 2013185,00096,103281,103 2014190,00088,940278,940 2015195,00081,555276,555 2016 - 20201,110,000283,0911,393,091 2021 - 2025820,00067,184887,184 Total$2,915,000$831,809$3,746,809 71- CITY OFSHOREWOOD, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER31, 2010 Note3:DETAILEDNOTESON ALLFUNDS - CONTINUED Leaserevenuebonds TheCityalso issuesbonds where theCitypledges income derivedfromthe acquired orconstructed assetstopay debt service.Revenue bondsoutstanding at year end areasfollows: Balance InterestAuthorizedIssueMaturityat DescriptionRateandIssuedDateDateYear End Public SafetyFire Facility, Refunding Series 2007A4,130,0003.75 - 5.0001/01/0702/01/233,960,000$ Public SafetyPolice Facility, Refunding Series 2007B4,285,0003.75 - 5.0001/01/0702/01/234,105,000 Public SafetyFire Facility, Refunding Series 2007C1,585,0003.75 - 5.0001/01/0702/01/221,490,000 Public Project LeaseRevenue Bonds, Series 2008A1,310,0002.85 - 4.8008/19/0812/01/281,240,000 TotalLease Revenue Bonds$10,795,000 The Public Safety Fire FacilityRefunding Series 2007A, 2007B and 2007C wereissued for construction ofthe public safetybuilding, which thereisalease receivablefrom theSouth Lake Minnetonka PoliceandExcelsior Fire District. Thisdebtisexcluded fromthecalculation ofnetassets investedincapitalassets, netofrelated debtasthe building isreported ontheSouth LakeMinnetonka Police andExcelsiorFireDistrictasacapitalasset. Refer to Note 5 Aand B forfurther information. Annual debt service requirements to maturity forrevenue bonds are as follows: Lease RevenueBonds Governmental ActivitiesYearEnding December31,PrincipalInterestTotal 2011$625,000$439,056$1,064,056 2012655,000413,9441,068,944 2013675,000385,9631,060,963 2014705,000356,2271,061,227 2015735,000325,0811,060,081 2016 - 20204,175,0001,120,8955,295,895 2021 - 20252,945,000276,8003,221,800 2026 - 2028280,00027,030307,030 Total$10,795,000$3,344,996$14,139,996 72- CITY OFSHOREWOOD, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER31, 2010 Note3:DETAILEDNOTESON ALLFUNDS - CONTINUED Changes in long-termliabilities Long-termliabilityactivityfor theyear endedDecember 31, 2010, was asfollows: BeginningEndingDue Within BalanceIncreasesDecreasesBalanceOne Year Governmental activities Lease revenuebonds$13,295,000$-$ (2,500,000)$10,795,000$625,000 Compensated absences 193,733203,791(207,646)189,878189,878 Total$13,488,733$203,791$ (2,707,646)$10,984,878$814,878 Business-type activities General obligation revenue bonds $3,165,000$-$(250,000)$2,915,000$240,000 Crossoverrefunding OnJanuary1, 2007 theEconomic Development Authority (theEDA) ofthe City issued $4,130,000of Public Safety FireFacility Lease Revenue Crossover Refunding Bonds, 2007A. The bondsissuedwillcrossover refundthe2002A and 2003A PublicSafetyFire FacilityLease RevenueBonds.The proceedsofthe bondswere deposited in an escrow account andwill beused topayissuance costs andtopurchase government obligations. Thegovernment obligations will bearinterestratesthatwillprovide sufficient funds torefund theold bonds. The 2002A seriesbonds were refundedon February1, 2009andthe 2003A series bonds wererefunded onFebruary1, 2010. The escrow account willalsoprovidedebt servicepayments onthe newbond untilthecrossover dates. The oldbonds are not considereddefeased until thecrossover dates, and therefore willnotbe removed as liabilities. As aresultof the crossover refundingissue, theEDAwill save $288,277indebt service payments and achieveaneconomic gain (the presentvalueof the difference betweenthe oldand the newdebt service) of $195,442. Crossoverrefunding On January 1, 2007 theEconomicDevelopment Authority (the EDA) of theCityissued $4,285,000 ofPublic Safety Police FacilityLeaseRevenue Crossover RefundingBonds, 2007B. The bonds issued willcrossover refund the 2002B and 2003B Public SafetyPolice FacilityLease RevenueBonds. The proceeds ofthe bonds weredeposited in an escrowaccount andwill beused topayissuance costsand topurchase government obligations. Thegovernment obligations willbear interestrates thatwillprovide sufficientfunds torefundtheold bonds. The2002B seriesbonds wererefunded onFebruary1, 2009 andthe2003Bseries bondswererefundedonFebruary1, 2010. Theescrow account will alsoprovide debt servicepayments onthenew bond until thecrossover dates. The oldbonds arenot considered defeased until thecrossover dates, andtherefore willnot beremoved asliabilities. Asaresult ofthe crossover refunding issue, theEDA will save $304,293 indebt servicepayments andachieve an economic gain(the present value ofthe difference between theold and the newdebtservice) of $204,501. 73- CITY OFSHOREWOOD, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER31, 2010 Note4: DEFINEDBENEFITPENSION PLAN - STATEWIDE A.Plan description Allfull-timeand certainpart-time employees of theCityarecovered bydefined benefitplans administered by the PublicEmployees Retirement Association ofMinnesota (PERA). PERAadministers theGeneral Employees Retirement Fund (GERF), which is acost-sharing, multiple-employer retirement plan. This plan isestablishedand administered inaccordance with Minnesotastatutes, chapters 353and 356. GERF membersbelong toeithertheCoordinated Planorthe BasicPlan. Coordinated Planmembers arecovered by Social SecurityandBasicPlanmembersarenot. AllnewmembersmustparticipateintheCoordinatedPlan. PERA provides retirement benefitsaswell asdisability benefitstomembers, and benefitstosurvivors upondeath of eligible members. Benefits are established byMinnesotastatute, and vestafter threeyears ofcredited service. The defined retirement benefitsare basedona member’shighest averagesalaryfor anyfive successive years of allowable service, ageandyears of credit at terminationof service. Two methodsare usedtocompute benefits for PERA’sCoordinated andBasic Planmembers. Theretiring member receives thehigher of astep-ratebenefitaccrual formula (Method1) ora level accrual formula (Method 2). Under Method 1, theannuityaccrualratefora BasicPlanmemberis2.20percentof averagesalaryforeachofthefirst10 yearsofserviceand2.70percentforeachremainingyear. TheannuityaccrualrateforaCoordinatedPlanmember is1.20percentofaverage salaryforeachofthe first10yearsand1.70 percentforeachremaining year. Under Method 2, theannuityaccrualrateis2.70percentofaveragesalaryforBasic Planmembersand1.70percentfor Coordinated Planmembersfor eachyearof service. For all GERFmembershired priortoJuly1, 1989whose annuity iscalculatedusing Method1, afullannuity isavailable when ageplusyearsofservice equal90. Normal retirement ageis 65forBasicand Coordinatedmembers hiredprior toJuly1, 1989. Normal retirement ageisthe age forunreduced Social Securitybenefits capped at66for Coordinated members hiredonor afterJuly1, 1989. A reduced retirement annuity isalsoavailableto eligible members seeking earlyretirement. Therearedifferenttypes of annuities available tomembers upon retirement. A single-life annuityisa lifetime annuitythat ceases upon thedeathoftheretiree -- no survivor annuity ispayable. Thereare alsovarious typesof joint and survivorannuityoptionsavailablewhich will bepayableover joint lives. Members mayalso leave their contributions inthefunduponterminationofpublic serviceinordertoqualifyforadeferredannuityatretirement age. Refunds ofcontributions are available at anytime to memberswholeavepublic service, butbefore retirement benefits begin. The benefitprovisions statedintheprevious paragraphsofthissection arecurrent provisions andapplytoactive plan participants. Vested, terminated employees whoareentitledto benefits butarenotreceiving themyetare boundby the provisionsin effect atthetime they last terminated their publicservice. PERA issues a publicly availablefinancial reportthat includes financial statementsand requiredsupplementary information for GERF. That report may be obtained on theInternet at mnpera.org, by writing to PERA, 60 Empire Drive #200, St. Paul, Minnesota, 55103-2088 orby calling (651) 296-7460or 1-800-652-9026. B. Funding policy Minnesota statutes, chapter 353sets theratesfor employer and employee contributions. Thesestatutes are established andamended bytheStatelegislature. TheCitymakesannualcontributionstothepension plansequalto the amountrequired byMinnesota statutes. GERF BasicPlanmembers andCoordinated Planmembers were required tocontribute9.1percentand6.0percent, respectively, oftheirannualcovered salaryin2010. TheCityis required to contribute thefollowingpercentages ofannual covered payroll: 11.78percent forBasic Plan GERF membersand7.00 percentfor Coordinated Plan GERF members. Employer contribution ratesfor theCoordinated Plan willincreaseto7.25percent, effective January1, 2011. The City’s contributions to theGERF forthe years endingDecember 31,2010,2009and 2008were $89,850, $89,503and $92,053,respectively.TheCity’s contributionswereequal to thecontractuallyrequired contributionsforeach yearasset byMinnesotastatute. 74- CITY OFSHOREWOOD, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER31, 2010 Note5:JOINTVENTURES A.South LakeMinnetonka PoliceDepartment The Cityparticipates inajointpowers agreement withthecitiesof Excelsior, Greenwood andTonka Bay, which establishes the South Lake Minnetonka PoliceDepartment (Department) forthepurpose ofproviding police protection withinthe four communities.The agreement createsa coordinatingcommittee, comprised of the Mayors ofeachparticipating community, asthegoverning body, which meets quarterly.Each year, the coordinating committeeadopts anoperating budget, which isapprovedby allparticipating cities.Thecostofthe operatingbudget isdivided between the participating cities based upon a fixedpercentage of the total municipal revenue allocated to eachcity. Any budget shortfall ismade upfirstfrom department reserves, with anyexcess shortfall assessed toeach participating community according to theformula.Themostrecentyear ofaudited informationis December31,2010. Separate financialstatements canbeobtainedbywriting to theSouth LakeMinnetonka PoliceDepartment, 24150 Smithtown Road, Shorewood, Minnesota 55331.Thefollowingisa summary of theDepartment’sStatement of Net Assetsas ofDecember 31, 2010and 2009: SOUTH LAKEMINNETONKA POLICEDEPARTMENT SUMMARY OF STATEMENTSOF NET ASSETS DECEMBER31, 2010AND 2009 20102009 Assets$5,492,102$5,608,495 Liabilities$4,410,500$4,645,360 Net assets1,081,602963,135 Totalliabilities and net assets$5,492,102$5,608,495 Thefollowingisa summary of theDepartment’sstatement ofactivitiesfor theyears endedDecember 31, 2010 and2009: SOUTH LAKEMINNETONKA POLICEDEPARTMENT SUMMARY STATEMENTS OFACTIVITES YEARSENDED DECEMBER 31,2010AND 2009 20102009 Expenses$2,439,416$2,421,205 Revenues2,547,2622,505,559 Net expenses107,84684,354 General revenues10,62112,221 Change in net assets118,46796,575 Net assets, January 1963,135866,560 Net assets, December 31$1,081,602$963,135 75- CITY OFSHOREWOOD, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER31, 2010 Note5:JOINT VENTURES - CONTINUED B.Excelsior FireDistrict In Augustof2000, the citiesof Deephaven, Excelsior, Greenwood, Shorewood and Tonka Bayentered a joint powers agreement to provide fireprotection andmedical response serviceto theirresidents and createdanentity called theExcelsior Fire District (theDistrict).TheBoardof Directors is comprised of tenmembers and five alternatemembers.Each membercity appointstworepresentatives onthe BoardofDirectorsand onealternate.The Cityisbilled forservice basedon aformula thatdetermines its shareof thetotal expenditures. Separate financialstatements canbeobtainedbywriting totheExcelsiorFireDistrict, 24100Smithtown Road, Shorewood, Minnesota 55331.Thefollowingis asummary ofthe District’s StatementofNet Assetsas of December31, 2010and 2009: EXCELSIOR FIREDISTRICT SUMMARYOF STATEMENTS OF NETASSETS DECEMBER31, 2010AND 2009 20102009 Assets$8,119,655$8,422,859 Liabilities$5,851,278$6,312,024 Net assets2,268,3772,110,835 Totalliabilities and net assets$8,119,655$8,422,859 Thefollowingis asummary ofthe District’s statement ofactivities fortheyears endedDecember 31,2010and 2009: SOUTH LAKEMINNETONKA POLICEDEPARTMENT SUMMARY STATEMENTS OFACTIVITES YEARSENDED DECEMBER31, 2010AND 2009 20102009 Chargesforservices$1,499,627$1,503,047 Expenses1,354,0381,281,120 Net revenues145,589221,927 General revenues11,95349,387 Change in net assets157,542271,314 Net assets, January 12,110,8351,839,521 Net assets, December 31$2,268,377$2,110,835 76- CITY OFSHOREWOOD, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER31, 2010 Note6:OTHER INFORMATION A.Riskmanagement The Cityisexposed tovarious risksoflossrelated totorts; theftof, damage toanddestruction ofassets; errors and omissions; injuries to employees; andnaturaldisasters for whichtheCity carries insurance.TheCity obtains insurancethroughparticipation in theLeague ofMinnesotaCities InsuranceTrust (LMCIT) whichis a risksharing poolwith approximately 800other governmental units.The Citypaysan annual premiumto LMCIT forits workers compensation andproperty andcasualtyinsurance.The LMCIT isself sustaining throughmember premiums and willreinsureforclaims abovea prescribed dollaramount foreach insurance event.Settled claims havenot exceeded theCity’s coverage inany ofthe pastthree fiscalyears. Liabilities arereportedwhen it isprobable thata losshasoccurred and the amountof theloss can bereasonably estimated.Liabilities, if any, includeanamountfor claimsthathave been incurredbutnotreported (IBNRs).The City’s management isnot awareofany incurred butnot reportedclaims. B.Legaldebtmargin TheCity’sstatutory debtlimitis $49,143,552computedas threepercentofthe taxablemarket value ofproperty withinthe City.Long-term debt issued and financed partially orentirely byspecial assessments, tax increments or thenetrevenues of enterprise fundoperations isexcludedfromthe debtlimitcomputation.TheCity has nodebtthat issubject tothe statutory debtlimit. C.Southshore Community Center OnJuly1, 2009, theCity entered intoan agreement to take over operations of theSouthshore CommunityCenter. The Cityalso contracted withCommunity Recreation Resources (CRR) forthe operation, management, and programming of theSouthshore CommunityCenter.The contract withCRR is fortheperiod of July1, 2009 to July 1, 2012.Theagreement is fora threeyearperiod with anoptionto renewand/or renegotiate.TheCity paidCRR 10,000for theperiod of January1, 2010 to December31, 2010.During thistime, theCity shall pay a15percent commission on quarterlyrevenuesto CRR.Beginning on January 1, 2011, thefee will increase to $15,000 per year with a20percentcommission rateon revenues.Inaddition, theCity willfunda part-time contractor broughtin by CRR toassist andstaffthecenter at acostof $6,000 peryear, withabuilt-in increaseat eighteenmonthsnot to exceed $6,750 annually forthe following18months. 77- THIS PAGE ISLEFT BLANK INTENTIONALLY 78- COMBINING ANDINDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OFSHOREWOOD SHOREWOOD, MINNESOTA FOR THEYEAR ENDED DECEMBER 31, 2010 79- THIS PAGE ISLEFT BLANK INTENTIONALLY 80- NONMAJOR GOVERNMENTAL FUNDS NONMAJOR SPECIALREVENUE FUNDS Special revenue fundsare usedtoaccount forrevenue derived fromspecific taxesor otherearmarked revenue sources. Theyare usually required byMinnesota statuteorlocalordinances tofinanceparticular functionsorotheractivities ofgovernment. Southshore Community Center Thisfundwasestablished toaccount forthe resourcesaccumulated fromevents and activities held attheCity’scommunity center, and thepaymentofexpenditures related to operationsofthecommunity center. 81- Exhibit A-1CITYOFSHOREWOOD, MINNESOTA NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET DECEMBER 31, 2010 Special Revenue SouthshoreTotal CommunityCapitalNonmajor CenterProjectsFunds ASSETS Cash and temporaryinvestments$-$1,339,395$1,339,395 Receivables Accrued interest375,1445,181 TOTAL ASSETS$37$1,344,539$1,344,576 LIABILITIES ANDFUND BALANCES (DEFICITS) LIABILITIES Accounts and contracts payable$14,559$3,471$18,030 Due to other funds2,935-2,935 Accrued salaries payable193-193 TOTAL LIABILITIES17,6873,47121,158 FUND BALANCES (DEFICITS) Unreserved Designated for capital outlay-1,341,0681,341,068 Undesignated(17,650)-(17,650) TOTAL FUND BALANCES (DEFICITS)(17,650)1,341,0681,323,418 TOTAL LIABILITIES AND FUND BALANCES (DEFICITS)$37$1,344,539$1,344,576 82- Exhibit A-2CITYOFSHOREWOOD, MINNESOTA NONMAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGESINFUND BALANCES (DEFICITS) FOR THEYEAR ENDED DECEMBER 31, 2010 Special Revenue SouthshoreTotal CommunityCapitalNonmajor CenterProjectsFunds REVENUES Intergovernmental$-$104,200$104,200 Charges for services58,017-58,017 Interest on investments8819,69119,779 Miscellaneous Parkdedication fees-10,00010,000 Contributions and donations321-321 Other5,361-5,361 TOTAL REVENUES63,787133,891197,678 EXPENDITURES Current Culture and recreation78,726-78,726 Capital outlay General government-8,9498,949 Public safety-22 Publicworks -250,321250,321 Culture and recreation-261,980261,980 TOTAL EXPENDITURES78,726521,252599,978 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES(14,939)(387,361)(402,300) OTHER FINANCING SOURCES (USES) Transfers in-173,639173,639 Saleof capital assets-31,13031,130 Transfers out-(114,615)(114,615) TOTAL OTHER FINANCING SOURCES (USES)-90,15490,154 NET CHANGE IN FUND BALANCES(14,939)(297,207)(312,146) FUND BALANCES (DEFICITS), JANUARY 1(2,711)1,638,2751,635,564 FUND BALANCES (DEFICITS), DECEMBER 31$(17,650)$1,341,068$1,323,418 83- THIS PAGE ISLEFT BLANK INTENTIONALLY 84- NONMAJOR CAPITAL PROJECTS FUNDS Capitalprojects funds are used to account for the acquisition and construction of major capital facilities other than those financed by enterprise funds. Public Facilities Thisfundwas established to account for capital improvement projects formunicipal public facilities. Park Capital ImprovementThis fundaccounts forparklandacquisition andothercapitalimprovements intheCityparks. Equipment ReplacementThisfundwasestablishedfor thepurposeof funding the replacementofcapital equipment. MSAConstruction This fundwas established toaccount fortheaccumulation ofMunicipal StateAid (MSA) to fundthe periodic reconstructionofMSA designated roads. Technology This fund wasestablished forthereplacement ofoffice equipment, computers, andtechnology formunicipal operations atthe cityoffices. City Hall Construction Thisfund wasestablished forthepurpose ofaccountingfor construction andremodelingof CityHall. EDA Public Safety Facilities ProjectThisfundwasestablished forthe purposeof accounting for constructionofthe new public safety facility. 85- CITY OFSHOREWOOD, MINNESOTA NONMAJOR CAPITALPROJECTS FUNDS COMBININGBALANCE SHEET DECEMBER 31, 2010 Park PublicCapitalEquipmentMSA FacilitiesImprovementReplacementConstruction ASSETS Cash andtemporary investments$195,710$190,771$733,403$128,868 Receivables Accrued interest3705431,2392,881 TOTAL ASSETS$196,080$191,314$734,642$131,749 LIABILITIES AND FUND BALANCES LIABILITIES Accounts and contracts payable$-$934$2,537$- FUND BALANCES Unreserved Designated for capital outlay196,080190,380732,105131,749 TOTALLIABILITIES AND FUND BALANCES$196,080$191,314$734,642$131,749 86- Exhibit B-1 EDA Public Safety City HallFacilities TechnologyConstructionProjectTotal 90,643$-$-$1,339,395 111--5,144 90,754$-$-$1,344,539 3,471 90,754--1,341,068 90,754$-$-$1,344,539 87- CITYOFSHOREWOOD, MINNESOTA NONMAJOR CAPITALPROJECTSFUNDS COMBINING STATEMENTOFREVENUES, EXPENDITURES ANDCHANGESINFUNDBALANCES (DEFICITS) FORTHEYEARENDED DECEMBER31, 2010 Park PublicCapitalEquipmentMSA FacilitiesImprovementReplacementConstruction REVENUES Intergovernmental$-$104,200$-$- Interestoninvestments2,3332,7308,4954,093 Miscellaneous Parkdedicationfees-10,000-- Other---- TOTALREVENUES2,333116,9308,4954,093 EXPENDITURES Capitaloutlay Generalgovernment2,376--- Publicsafety---- Publicworks --250,30615 Cultureandrecreation-261,980-- TOTALEXPENDITURES2,376261,980250,30615 EXCESS (DEFICIENCY) OFREVENUES OVER (UNDER) EXPENDITURES(43)(145,050)(241,811)4,078 OTHERFINANCINGSOURCES (USES) Transfersin-42,000100,000- Saleofcapitalassets--31,130- Transfers out(31,639)--- TOTAL OTHERFINANCING SOURCES (USES)(31,639)42,000131,130 NETCHANGEINFUNDBALANCES(31,682)(103,050)(110,681)4,078 FUNDBALANCES (DEFICITS), JANUARY1227,762293,430842,786127,671 FUNDBALANCES, DECEMBER 31$196,080$190,380$732,105$131,749 88- ExhibitB-2 EDA Public Safety CityHallFacilities TechnologyConstructionProjectTotal 104,200 8541,186-19,691 10,000 8541,186-133,891 36,570-8,949 22 250,321 261,980 36,5702521,252 851(5,384)(2)(387,361) 31,639-173,639 31,130 14,622)-(68,354)(114,615) 14,622)31,639(68,354)90,154 13,771)26,255(68,356)(297,207) 104,525(26,255)68,3561,638,275 90,754$-$-$1,341,068 89- THIS PAGE ISLEFT BLANK INTENTIONALLY 90- NONMAJOR PROPRIETARYFUNDS NONMAJOR ENTERPRISEFUNDS Enterprise funds areused toaccount forfund activitiesof theCitythat operate inamanner similarto privatebusinesses. Recycling Thisfundaccounts fortheactivities of theCity’s recycling program. Stormwater ManagementUtility This fundaccounts forthe activities ofthe City’s stormwater management system. Liquor Thisfund isused toaccount forthe activities ofthe City’s off-saleliquoroperation. The operation consisted oftwo off- sale liquor storesites. TheCity discontinued operations ofthe liquorstore sitesduring 2007. 91- CITY OFSHOREWOOD, MINNESOTA NONMAJORPROPRIETARY FUNDS COMBINING STATEMENTSOF NETASSETS DECEMBER31, 2010 AND2009 Business-typeActivities - Enterprise Funds RecyclingStormwater ManagementUtility 2010200920102009 ASSETS CURRENT ASSETS Cash andtemporary investments$43,390$88,814$665,518$571,128 Receivables Accrued interest 2342666361,822 Accounts 40,75714,28751,47046,996 Special assessments5697481,4981,618 TOTAL CURRENT ASSETS84,950104,115719,122621,564 NONCURRENT ASSETS Special assessments receivable3,7092,1936,8346,393 Capitalassets Land--404,392404,392 Infrastructure--793,312793,312 Less accumulated depreciation--(180,377)(160,544) NET CAPITAL ASSETS--1,017,3271,037,160 TOTAL NONCURRENT ASSETS3,7092,1931,024,1611,043,553 TOTAL ASSETS88,659106,3081,743,2831,665,117 LIABILITIES CURRENT LIABILITIES Accounts and contracts payable39614,3672,5943,237 Accrued salaries payable--869385 TOTAL LIABILITIES39614,3673,4633,622 NET ASSETS Invested incapital assets--1,017,3271,037,160 Unrestricted88,26391,941722,493624,335 TOTAL NETASSETS$88,263$91,941$1,739,820$1,661,495 92- Exhibit C-1 Business-type Activities - Enterprise Funds - Continued LiquorTotals 2010200920102009 862,409$708,908$1,522,351 2,7028704,790 92,22761,283 2,0672,366 865,111804,0721,590,790 10,5438,586 404,392404,392 793,312793,312 180,377)(160,544) 1,017,3271,037,160 1,027,8701,045,746 865,1111,831,9422,636,536 2,99017,604 869385 3,85917,989 1,017,3271,037,160 865,111810,7561,581,387 865,111$1,828,083$2,618,547 93- CITYOFSHOREWOOD, MINNESOTA NONMAJORPROPRIETARYFUNDS COMBININGSTATEMENTS OFREVENUES, EXPENSESAND CHANGESINFUNDNETASSETS FORTHEYEARSENDED DECEMBER31, 2010AND2009 Business-typeActivities - EnterpriseFunds RecyclingStormwater Management Utility 2010200920102009 OPERATING REVENUES Chargesforservices$146,002$64,992$198,470$191,032 OPERATING EXPENSES Personalservices5,8364,29822,73755,828 Supplies1,4837162,5811,794 Repairsandmaintenance--33,475- Depreciation--19,83319,833 Professionalservices--9,8483,163 Contractedservices166,44994,10440,87124,935 Other1281681,7621,294 TOTALOPERATING EXPENSES173,89699,286131,107106,847 OPERATINGINCOME (LOSS)(27,894)(34,294)67,36384,185 NONOPERATING REVENUES Interestoninvestments6569865,6374,990 Otherincome23,56022,9505,3255,783 TOTALNONOPERATINGREVENUES24,21623,93610,96210,773 INCOME (LOSS) BEFORETRANSFERS(3,678)(10,358)78,32594,958 TRANSFERSOUT---- CHANGEINNETASSETS(3,678)(10,358)78,32594,958 NETASSETS, JANUARY191,941102,2991,661,4951,566,537 NETASSETS, DECEMBER31$88,263$91,941$1,739,820$1,661,495 94- ExhibitC-2 Business-typeActivities - EnterpriseFunds - Continued LiquorTotals 2010200920102009 344,472$256,024 28,57360,126 4,0642,510 33,475- 19,83319,833 9,8483,163 207,320119,039 251291,9151,591 25129305,028206,262 25)(129)39,44449,762 8,3459,25314,63815,229 28,88528,733 8,3459,25343,52343,962 8,3209,12482,96793,724 873,431)(40,000)(873,431)(40,000) 865,111)(30,876)(790,464)53,724 865,111895,9872,618,5472,564,823 865,111$1,828,083$2,618,547 95- CITYOFSHOREWOOD, MINNESOTA NONMAJORPROPRIETARYFUNDS COMBINING STATEMENTS OFCASHFLOWS FORTHEYEARSENDED DECEMBER31, 2010AND2009 Business-typeActivities - EnterpriseFunds RecyclingStormwater Management Utility 2010200920102009 CASHFLOWSFROMOPERATING ACTIVITIES Receiptsfromcustomersandusers$118,195$66,660$193,675$195,434 Otherreceipts23,56022,9505,3255,783 Payments tosuppliers, contractors andothergovernments(182,031)(94,601)(89,180)(29,249) Payments toemployees(5,836)(4,298)(22,253)(56,314) NETCASHPROVIDED (USED) BYOPERATING ACTIVITIES(46,112)(9,289)87,567115,654 CASHFLOWSFROM NONCAPITAL FINANCINGACTIVITIES Transfers out---- CASHFLOWSFROMINVESTING ACTIVITIES Interestreceivedoninvestments6881,2616,8235,682 NETINCREASE (DECREASE) IN CASHANDCASHEQUIVALENTS(45,424)(8,028)94,390121,336 CASHANDCASHEQUIVALENTS, JANUARY188,81496,842571,128449,792 CASHANDCASHEQUIVALENTS, DECEMBER31$43,390$88,814$665,518$571,128 RECONCILIATION OFOPERATING INCOME (LOSS) TONETCASHPROVIDED (USED) BYOPERATING ACTIVITIES Operatingincome (loss)$(27,894)$(34,294)$67,363$84,185 Adjustments toreconcileoperatingincome (loss) tonetcashprovided (used) byoperating activities Otherincomerelated tooperations23,56022,9505,3255,783 Depreciation--19,83319,833 Increase) decreaseinassets: Accountsreceivable(26,470)1,248(4,474)4,793 Specialassessments receivable(1,337)420(321)(391) Increase (decrease) inliabilities: Accountspayable(13,971)387(643)1,937 Accrued salariespayable--484(486) NETCASHPROVIDED (USED) BYOPERATING ACTIVITIES$(46,112)$(9,289)$87,567$115,654 96- ExhibitC-3 Business-typeActivities - EnterpriseFunds - Continued LiquorTotals 2010200920102009 311,870$262,094 28,88528,733 25)(129)(271,236)(123,979) 28,089)(60,612) 25)(129)41,430106,236 873,431)(40,000)(873,431)(40,000) 11,04711,53118,55818,474 862,409)(28,598)(813,443)84,710 862,409891,0071,522,3511,437,641 862,409$708,908$1,522,351 25)$(129)$39,444$49,762 28,88528,733 19,83319,833 30,944)6,041 1,658)29 14,614)2,324 484(486) 25)$(129)$41,430$106,236 97- THIS PAGE ISLEFT BLANK INTENTIONALLY 98- ExhibitD-1CITYOFSHOREWOOD, MINNESOTA GENERALFUND SCHEDULE OFREVENUES, EXPENDITURESAND CHANGESINFUNDBALANCES - CONTINUEDONTHEFOLLOWINGPAGES BUDGETANDACTUAL FORTHEYEARENDEDDECEMBER 31, 2010 WithcomparativeactualamountsfortheyearendedDecember31, 2009) 2010 2009 BudgetedAmounts ActualVariancewithActual OriginalFinalAmountsFinal BudgetAmounts REVENUES Taxes Generalproperty taxes$ 4,680,428$ 4,680,428$ 4,654,064$ (26,364)$ 4,579,510 Fiscaldisparities63,14063,14063,140-123,858 Total4,743,5684,743,5684,717,204(26,364)4,703,368 Licensesandpermits Business11,77011,7708,585(3,185)14,525 Nonbusiness94,50094,500145,52851,028113,358 Total106,270106,270154,11347,843127,883 Intergovernmental State Propertytaxcredits32,72432,724(265)(32,989)189 Other65,00065,00069,3994,39966,222 Total97,72497,72469,134(28,590)66,411 Charges forservices Generalgovernment6,0006,0008,4862,48614,254 Cultureandrecreation31,00031,00034,3963,39627,395 41,649Total37,00037,00042,8825,882 Fines andforfeitures55,00055,00055,80680652,968 Specialassessments--333333- Interestoninvestments95,00095,00046,767(48,233)58,627 Miscellaneousrevenue Refundsandreimbursements10,00010,00013,4233,42311,349 Contributionsanddonations----820 Other32,00032,00026,380(5,620)11,962 Total42,00042,00039,803(2,197)24,131 TOTALREVENUES5,176,5625,176,5625,126,042(50,520)5,075,037 99- ExhibitD-1CITYOFSHOREWOOD, MINNESOTA GENERALFUND SCHEDULE OFREVENUES, EXPENDITURES AND CHANGESINFUND BALANCES - CONTINUED BUDGETANDACTUAL FORTHEYEARENDEDDECEMBER 31, 2010 WithcomparativeactualamountsfortheyearendedDecember31, 2009) 2010 2009 BudgetedAmounts ActualVariancewithActual OriginalFinalAmountsFinal BudgetAmounts EXPENDITURES Current Generalgovernment MayorandCouncil Personalservices$ 16,794$ 16,794$ 16,794$ -$ 16,794 Supplies1,2001,2001,175253,064 Otherservicesandcharges46,20046,20045,77642446,158 Total64,19464,19463,74544966,016 Administrative Personalservices147,712147,712144,7432,969149,286 Supplies----40 Otherservicesandcharges4,1504,1503,1539977,909 Total 151,862151,862147,8963,966157,235 Cityclerk / elections Personal services212,328212,328254,550(42,222)220,596 Supplies24,92524,92518,1346,79119,884 Otherservicesandcharges35,00535,00532,7272,27831,532 272,012Total272,258272,258305,411(33,153) Finance Personalservices178,584178,584147,24331,341166,032 Supplies7,7007,7007,5761246,952 Otherservicesandcharges7,5007,5007,546(46)4,799 Total193,784193,784162,36531,419177,783 Professional services Otherservicesandcharges199,000199,000178,60420,396223,858 Planningandzoning Personal services193,605193,605175,55318,052195,474 Supplies6556551495062,138 Otherservicesandcharges4,7004,7006,882(2,182)8,990 Total198,960198,960182,58416,376206,602 100- ExhibitD-1CITYOFSHOREWOOD, MINNESOTA GENERALFUND SCHEDULE OFREVENUES, EXPENDITURES AND CHANGESINFUND BALANCES - CONTINUED BUDGETANDACTUAL FORTHEYEARENDEDDECEMBER 31, 2010 WithcomparativeactualamountsfortheyearendedDecember31, 2009) 2010 2009 BudgetedAmounts ActualVariancewithActual OriginalFinalAmountsFinal BudgetAmounts EXPENDITURES - CONTINUED Current - Continued Generalgovernment - Continued Municipal building Supplies$ 54,800$ 54,800$ 52,097$ 2,703$ 34,321 Otherservicesandcharges133,000133,00054,49678,504123,958 Total187,800187,800106,59381,207158,279 Totalgeneralgovernment1,267,8581,267,8581,147,198120,6601,261,785 Publicsafety Policeprotection Otherservicesandcharges950,000950,000950,704(704)943,989 Fireprotection Otherservicesandcharges315,858315,858322,535(6,677)323,180 Protective inspection Personalservices117,943117,943115,0812,862119,184 Supplies40040028372139 Otherservicesandcharges6,8006,8004,5752,2255,647 Total125,143125,143119,6845,459124,970 Totalpublicsafety1,391,0011,391,0011,392,923(1,922)1,392,139 Publicworks Generalmaintenance Personalservices295,372295,372289,8275,545279,601 Supplies71,12371,12362,0439,08058,800 Otherservices andcharges42,69042,69041,1071,58340,539 Total409,185409,185392,97716,208378,940 Streetsandhighways Personalservices$ 95,607$ 95,607$ 88,822$ 6,785$ 69,846 Supplies85,00085,00080,2534,74753,168 Otherservicesandcharges23,50023,50021,2742,22627,233 Total204,107204,107190,34913,758150,247 101- ExhibitD-1CITYOFSHOREWOOD, MINNESOTA GENERALFUND SCHEDULE OFREVENUES, EXPENDITURES AND CHANGESINFUND BALANCES - CONTINUED BUDGETANDACTUAL FORTHEYEARENDEDDECEMBER 31, 2010 WithcomparativeactualamountsfortheyearendedDecember31, 2009) 2010 2009 BudgetedAmounts ActualVariancewithActual OriginalFinalAmountsFinal BudgetAmounts EXPENDITURES - CONTINUED Current - Continued Publicworks - continued Snowandiceremoval Personalservices40,85740,85755,052(14,195)35,995 Supplies45,11745,11732,45312,66438,457 Total85,97485,97487,505(1,531)74,452 Trafficcontrol Supplies6,0006,0002,5283,4723,412 Otherservicesandcharges45,04945,04940,8934,15642,291 Total51,04951,04943,4217,62845,703 Sanitationandwasteremoval Personalservices--5,827(5,827)2,764 Supplies500500-50021 Otherservicesandcharges4,4004,4003,2101,190- Total4,9004,9009,037(4,137)2,785 Treemaintenance Personalservices17,27917,27920,626(3,347)7,513 Supplies2,7002,7001072,593437 Otherservices andcharges13,50013,50011,4612,0399,501 1,28517,451Total33,47933,47932,194 Cityengineer Personalservices94,87594,87594,497378114,547 Supplies425425152273741 Otherservicesandcharges15,14615,1468,9376,2097,639 Total110,446110,446103,5866,860122,927 Totalpublicworks899,140899,140859,06940,071792,505 102- ExhibitD-1CITYOFSHOREWOOD, MINNESOTA GENERALFUND SCHEDULE OFREVENUES, EXPENDITURES AND CHANGESINFUND BALANCES - CONTINUED BUDGETANDACTUAL FORTHEYEARENDEDDECEMBER 31, 2010 WithcomparativeactualamountsfortheyearendedDecember31, 2009) 2010 2009 BudgetedAmounts ActualVariancewithActual OriginalFinalAmountsFinal BudgetAmounts EXPENDITURES - CONTINUED Current - Continued Cultureandrecreation Personalservices$ 160,481$ 160,481$ 153,637$ 6,844$ 147,532 Supplies16,30016,30014,2362,06410,094 Otherservices andcharges92,60092,60096,055(3,455)109,781 Totalcultureandrecreation269,381269,381263,9285,453267,407 Totalcurrentexpenditures3,827,3803,827,3803,663,118164,2623,713,836 Capitaloutlay Generalgovernment25,60025,60018,5577,0439,023 Publicsafety509,624509,624500,6978,927511,508 Publicworks4,8004,8005384,2627,857 Totalcapitaloutlay540,024540,024519,79220,232528,388 Debtservice Interestandservicecharges--2,959(2,959)5,425 TOTALEXPENDITURES4,367,4044,367,4044,185,869181,5354,247,649 EXCESSOFREVENUES OVEREXPENDITURES809,158809,158940,173131,015827,388 OTHERFINANCING SOURCES (USES) Transfersin43,84243,84233,464(10,378)40,000 5,631(1,019,773) Transfersout(1,008,000)(1,008,000)(1,002,369) TOTALOTHERFINANCING SOURCES (USES)(964,158)(964,158)(968,905)(4,747)(979,773) NETCHANGEINFUNDBALANCES(155,000)(155,000)(28,732)126,268(152,385) FUNDBALANCES, JANUARY13,555,7243,555,7243,555,724-3,708,109 FUNDBALANCES, DECEMBER31$ 3,400,724$ 3,400,724$ 3,526,992$ 126,268$ 3,555,724 103- CITY OFSHOREWOOD, MINNESOTA DEBT SERVICEFUNDS COMBINING BALANCE SHEET DECEMBER 31, 2010 Waterford2007A2007B2007C III TaxPublic SafetyPublic SafetyPublic Safety IncrementBuildingBuildingBuilding ASSETS Cash and temporaryinvestments$-$45,276$29,061$11,413 Cash withfiscal agent-2,6453,5321,198 Receivables Lease-3,960,0004,105,0001,490,000 TOTAL ASSETS$-$4,007,921$4,137,593$1,502,611 LIABILITIES AND FUND BALANCES LIABILITIES Deferredrevenue$-$3,960,000$4,105,000$1,490,000 FUND BALANCES Reserved for Debtservice-47,92132,59312,611 TOTAL LIABILITIESAND FUND BALANCES$-$4,007,921$4,137,593$1,502,611 104- Exhibit E-1 2008 Lease Revenue BondTotal 3,208$88,958 7,375 9,555,000 3,208$9,651,333 9,555,000 3,20896,333 3,208$9,651,333 105- CITY OFSHOREWOOD, MINNESOTA DEBT SERVICEFUNDS COMBINING SCHEDULE OFREVENUES, EXPENDITURES AND CHANGES INFUND BALANCES FOR THEYEAR ENDED DECEMBER 31, 2010 Waterford2007A2007B2007C III TaxPublic SafetyPublic SafetyPublic Safety IncrementBuildingBuildingBuilding REVENUES Lease payments$-$982,037$-$- Interest on investments11438,4036525 TOTAL REVENUES1141,020,4406525 EXPENDITURES Debtservice Principal-280,000180,00095,000 Interest andservicecharges-219,746176,40361,691 TOTAL EXPENDITURES-499,746356,403156,691 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES114520,694(356,338)(156,666) OTHER FINANCING SOURCES (USES) Transfers in-27,97028,99611,388 Bonds refunded-(1,900,000)-- Transfer out(12,135)--- TOTAL OTHER FINANCING SOURCES (USES)(12,135)(1,872,030)28,99611,388 NET CHANGE IN FUND BALANCES(12,021)(1,351,336)(327,342)(145,278) FUND BALANCES, JANUARY 112,0211,399,257359,935157,889 FUND BALANCES, DECEMBER 31$-$47,921$32,593$12,611 106- Exhibit E-2 2008 Lease Revenue BondTotal 982,037 1938,626 191,020,663 45,000600,000 55,368513,208 100,3681,113,208 100,349)(92,545) 100,368168,722 1,900,000) 12,135) 100,368(1,743,413) 19(1,835,958) 3,1891,932,291 3,208$96,333 107- ExhibitF-1CITYOFSHOREWOOD, MINNESOTA AGENCY FUND COMBINING SCHEDULE OF CHANGES INASSETS ANDLIABILITIES FOR THEYEAR ENDED DECEMBER 31, 2010 BalanceBalance January 1AdditionsDeductionsDecember 31 Developer EscrowAccounts ASSETS Cash and temporaryinvestments$124,728$7,025$(11,155)$120,598 LIABILITIES Accounts payable$8,155$3,000$(11,155)$- Escrow deposits payable116,5737,025(3,000)120,598 TOTAL LIABILITIES$124,728$10,025$(14,155)$120,598 108- SUPPLEMENTARY INFORMATION UNAUDITED) CITY OFSHOREWOOD SHOREWOOD, MINNESOTA FORTHEYEAR ENDED DECEMBER 31, 2010 109- THIS PAGE ISLEFT BLANK INTENTIONALLY 110- Exhibit G-1CITYOFSHOREWOOD, MINNESOTA SUPPLEMENTARY INFORMATION SUMMARY FINANCIAL REPORT REVENUES ANDEXPENDITURES FOR GENERAL OPERATIONS GOVERNMENTAL FUNDS FORTHEYEARS ENDED DECEMBER 31, 2010AND2009 Percent TotalIncrease Decrease) 20102009 REVENUES Taxes$4,717,204$4,703,3680.29% Licenses and permits154,113127,88320.51 Intergovernmental173,33466,411161.00 Charges for services100,89941,649142.26 Fines and forfeits55,80652,9685.36 Special assessments333-n/a Interest on investments132,359333,626(60.33) Miscellaneous1,037,5221,059,914(2.11) TOTAL REVENUES$6,371,570$6,385,819(0.22)% PerCapita$872$8058.27 EXPENDITURES Current General government$1,147,198$1,386,614(17.27)% Public safety1,392,9231,392,1390.06 Public works859,069670,95428.04 Culture and recreation342,654326,5024.95 Capital outlay General government27,506671,978(95.91) Public safety500,699511,519(2.12) Public works1,284,911730,84975.81 Culture and recreation261,99339,410564.79 Debtservice Principal600,000520,00015.38 Interest and service charges516,167818,063(36.90) TOTAL EXPENDITURES$6,933,120$7,068,028(1.91)% PerCapita$949$8916.44 Total Long-term Indebtedness$10,795,000$13,295,000(18.80)% Per Capita1,4771,677(11.89) General FundBalance - December 31$3,526,992$3,555,724(0.81)% Per Capita4834487.64 Thepurpose ofthisreportistoprovide asummary offinancialinformationconcerningtheCityofShorewoodtointerested citizens. The complete financial statements may be examined at City Hall, 5755 Country Club Road. Questions about this report should bedirected toBruce DeJong, Finance Director at (952)474-3236. 111- THIS PAGE ISLEFT BLANK INTENTIONALLY 112- SECTION III STATISTICAL SECTION UNAUDITED) CITY OFSHOREWOOD SHOREWOOD, MINNESOTA FORTHEYEAR ENDED DECEMBER 31, 2010 113- THIS PAGE ISLEFT BLANK INTENTIONALLY 114- STATISTICAL SECTION ThispartoftheCity of Shorewood’scomprehensive annualfinancial report presentsdetailed information asacontext for understandingwhatthe information in the financial statements, note disclosures, and required supplementaryinformation says aboutthe government’soverall financial health. Financialtrends Theseschedules contain trendinformationto help thereaderunderstand howthegovernment’sfinancial performance and well-beinghave changedover time. Revenuecapacity These schedules contain information tohelpthe reader assess thegovernment’smost significant local revenue source, the property tax. Debtcapacity Theseschedulespresent information tohelp thereaderassess theaffordability of thegovernment’s current levels of outstanding debt and thegovernment’s ability toissue additional debt inthe future. Demographicandeconomic information These schedules offerdemographic andeconomic indicatorstohelpthereader understand theenvironment within which thegovernment’s financial activitiestakeplace. Operatinginformation These schedules contain serviceand infrastructure datato helpthereader understandhow the information inthe government’sfinancial report relocatestothe servicesthe government provides andthe activitiesit performs. 115- CITYOFSHOREWOOD, MINNESOTA STATISTICAL SECTION (UNAUDITED) NETASSETSBYCOMPONENT LASTSEVENFISCALYEARS accrualbasisofaccounting) FiscalYear 200420052006 Governmentalactivities Invested incapitalassets, netofrelateddebt$12,167,269$11,372,213$11,690,620 Restricted--24,632 Unrestricted6,669,0736,316,7075,716,027 Totalgovernmental activitiesnetassets$18,836,342$17,688,920$17,431,279 Business-typeactivities Invested incapitalassets, netofrelateddebt$6,427,358$6,172,309$5,668,683 Unrestricted7,470,2728,182,6129,829,761 Totalbusiness-typeactivities netassets$13,897,630$14,354,921$15,498,444 Totalprimary government Invested incapitalassets, netofrelateddebt$18,594,627$17,544,522$17,359,303 Restricted--24,632 Unrestricted14,139,34514,499,31915,545,788 Totalprimarygovernment$32,733,972$32,043,841$32,929,723 Note: Netassetsarenotavailableforyearspriorto2004 116- Table1 FiscalYear 2007200820092010 10,960,550$9,430,566$9,480,314$9,525,991 6,147,1857,400,8597,909,1068,252,497 17,107,735$16,831,425$17,389,420$17,778,488 6,066,229$6,631,854$6,482,297$6,494,996 10,422,39710,186,8249,449,2108,666,149 16,488,626$16,818,678$15,931,507$15,161,145 17,026,779$16,062,420$15,962,611$16,020,987 16,569,58217,587,68317,358,31616,918,646 33,596,361$33,650,103$33,320,927$32,939,633 117- CITYOFSHOREWOOD, MINNESOTA STATISTICALSECTION (UNAUDITED) CHANGES INNETASSETS - CONTINUEDONTHEFOLLOWINGPAGES LASTSEVENFISCAL YEARS accrualbasisofaccounting) FiscalYear 200420052006 Expenses Governmental activities Generalgovernment$1,074,028$1,222,510$1,357,714 Publicsafety2,972,0941,690,9031,806,915 Publicworks2,451,8255,019,9672,275,402 Cultureandrecreation254,081246,381233,881 Interest onlong-termdebt607,862606,189600,723 Totalgovernmental activitiesexpenses7,359,8908,785,9506,274,635 Business-typeactivities Water591,858567,854488,513 Sewer735,480740,174785,638 Recycling106,933105,823124,354 Stormwater managementutility106,75773,885171,190 Liquor2,152,4112,006,1072,017,217 Totalbusiness-typeactivitiesexpenses3,693,4393,493,8433,586,912 Totalexpenses$11,053,329$12,279,793$9,861,547 Program revenues Governmental activities Chargesforservices Generalgovernment$51,069$112,107$25,340 Publicsafety983,6841,055,7581,060,506 Publicworks--- Cultureandrecreation1,0801,5751,800 Operatinggrantsandcontributions119,594100,91031,730 Capitalgrantsandcontributions996,9672,404,367395,229 Totalgovernmental activities programrevenues2,152,3943,674,7171,514,605 Business-typeactivities Chargesforservices Water620,189649,7721,350,041 Sewer866,350833,939836,175 Recycling114,987116,517144,886 Stormwater managementutility85,978102,649129,708 Liquor2,199,1392,040,3141,984,344 Operatinggrantsandcontributions--- Totalbusiness-typeactivities programrevenues3,886,6433,743,1914,445,154 Totalprogram revenues$6,039,037$7,417,908$5,959,759 118- Table2 FiscalYear 2007200820092010 1,321,971$1,483,913$1,486,281$1,235,098 1,819,2501,906,8901,904,9661,893,413 1,971,5712,485,7521,941,2722,231,473 258,906273,054394,110452,437 1,000,2301,002,423638,768474,082 6,371,9287,152,0326,365,3976,286,503 636,506657,776659,113643,886 952,107921,238955,956980,173 91,15796,94599,286173,896 63,888106,143106,847131,107 1,885,53716,16712925 3,629,1951,798,2691,821,3311,929,087 10,001,123$8,950,301$8,186,728$8,215,590 41,475$32,528$34,064$53,381 896,731793,041634,742624,330 6,279- 1,96060535,84358,661 99,80090,49390,68199,114 132,912674,34343114,330 1,172,8781,591,010801,652949,816 782,549752,338784,318668,676 832,956829,117802,252845,043 89,93464,62965,112146,002 164,413204,618191,157198,593 1,788,835--- 27,95028,48828,762 3,658,6871,878,6521,871,3271,887,076 4,831,565$3,469,662$2,672,979$2,836,892 119- CITYOFSHOREWOOD, MINNESOTA STATISTICALSECTION (UNAUDITED) CHANGESINNETASSETS - CONTINUED LASTSEVENFISCAL YEARS accrualbasisofaccounting) FiscalYear 200420052006 Netrevenues (expenses) Governmentalactivities$(5,207,496)$(5,111,233)$(4,760,030) Business-typeactivities193,204249,348858,242 Totalprimarygovernment$(5,014,292)$(4,861,885)$(3,901,788) GeneralRevenuesandOtherChangesinNetAssets GeneralRevenues Governmental activities Taxes Property taxes, leviedforgeneral purpose$3,345,326$3,770,702$4,144,543 Grantsandcontributionsnotrestrictedtospecificprograms4,7234,7854,925 Unrestrictedinvestmentearnings127,853201,024327,921 Gainonsaleofcapitalassets-4,300- Transfers5,000(17,000)25,000 Totalgovernmental activitiesgeneralrevenues3,482,9023,963,8114,502,389 Business-typeactivities Unrestrictedinvestmentearnings144,163190,943310,281 Gainonsaleofcapitalassets--- Transfers(5,000)17,000(25,000) Totalbusiness-typeactivitiesgeneralrevenues139,163207,943285,281 Totalprimarygovernment$3,622,065$4,171,754$4,787,670 ChangeinNetAssets Governmentalactivities$(1,724,594)$(1,147,422)$(257,641) Business-typeactivities332,367457,2911,143,523 Totalprimarygovernment$(1,392,227)$(690,131)$885,882 Note: Changesinnetassetsarenotavailableforyearspriorto2004 120- Table2 FiscalYear 2007200820092010 5,199,050)$(5,561,022)$(5,563,745)$(5,336,687) 29,49280,38349,996(42,011) 5,169,558)$(5,480,639)$(5,513,749)$(5,378,698) 4,360,254$4,582,909$4,743,174$4,744,348 37,74619,9574,9404,487 621,234641,846333,626132,359 31,130 143,728)40,0001,040,000813,431 4,875,5065,284,7126,121,7405,725,755 434,072289,669102,83385,080 382,890--- 143,728(40,000)(1,040,000)(813,431) 960,690249,669(937,167)(728,351) 5,836,196$5,534,381$5,184,573$4,997,404 323,544)$(276,310)$557,995$389,068 990,182330,052(887,171)(770,362) 666,638$53,742$(329,176)$(381,294) 121- CITY OFSHOREWOOD, MINNESOTA STATISTICALSECTION (UNAUDITED) FUND BALANCES OF GOVERNMENTAL FUNDS LAST TENFISCAL YEARS FiscalYear 2001200220032004 General fund Reserved$117,760$44,994$-$- Unreserved1,905,3092,112,9842,546,4722,941,223 Totalgeneral fund$2,023,069$2,157,978$2,546,472$2,941,223 All othergovernmental funds Reserved$231,421$246,283$205,350$191,410 Unreserved, reported in: Debt servicefunds-(37,482)-- Special revenue funds(8,342)--- Capital project funds2,560,34710,081,8184,562,4793,566,803 Total all other governmentalfunds$2,783,426$10,290,619$4,767,829$3,758,213 122- Table3 FiscalYear 200520062007200820092010 48,593$-$-$47,750$500$49,060 2,944,5883,383,9063,761,5093,660,3593,555,2243,477,932 2,993,181$3,383,906$3,761,509$3,708,109$3,555,724$3,526,992 238,873$262,438$10,040,556$10,033,342$1,934,628$96,333 17,650) 3,116,4372,197,3672,473,0973,743,9804,252,8704,520,558 3,355,310$2,459,805$12,513,653$13,777,322$6,187,498$4,599,241 123- CITYOFSHOREWOOD, MINNESOTA STATISTICAL SECTION (UNAUDITED) CHANGESINFUNDBALANCESOFGOVERNMENTAL FUNDS LASTTENFISCALYEARS FiscalYear 2001200220032004 Revenues Taxes$2,206,525$2,658,663$3,071,853$3,344,442 Licensesandpermits349,515229,234334,424310,055 Intergovernmental3,104,043171,7831,947,4841,014,410 Chargesforservices42,22246,07948,68944,169 Finesandforfeitures61,24389,63288,94981,841 Specialassessments52,4859,23510,21710,737 Interestoninvestments225,500283,024146,331127,853 Miscellaneous71,236375,510551,167740,030 Totalrevenues6,112,7693,863,1606,199,1145,673,537 Expenditures Generalgovernment989,5021,001,9211,038,9091,037,043 Publicsafety893,0701,008,792999,0491,028,689 Public works487,092428,530420,608477,596 Cultureandrecreation126,139160,115164,540168,278 CapitalOutlay2,164,1463,433,02210,571,5212,896,330 Debtservice Principal148,358139,83346,40248,069 Interest andservice charges27,01618,844460,759637,397 Bondissuancecosts---- Totalexpenditures4,835,3236,191,05713,701,7886,293,402 Excess (deficiency) ofrevenues over (under) expenditures1,277,446(2,327,897)(7,502,674)(619,865) Otherfinancingsources (uses) Transfers in554,000629,100391,107328,500 Saleofcapitalassets---- Proceedsfromsaleofbonds-9,950,0002,368,378- Bondsrefunded---- Discountonlong-termdebtissued---- Transfersout(539,000)(609,100)(391,107)(323,500) Totalotherfinancing sources (uses)15,0009,970,0002,368,3785,000 Netchangeinfundbalances$1,292,446$7,642,103$(5,134,296)$(614,865) Debtserviceasapercentageof Noncapitalexpenditures6.6%5.8%16.2%11.2% 124- Table4 FiscalYear 200520062007200820092010 3,750,633$4,141,539$4,332,741$4,582,602$4,703,368$4,717,204 334,720382,408256,472195,419127,883154,113 2,432,656365,732224,286753,60566,411173,334 50,75245,45050,81950,75341,649100,899 90,14979,04077,77753,36952,96855,806 6,928895418--333 201,024327,921621,234641,846333,626132,359 1,134,4291,110,8601,077,0121,053,9161,059,9141,037,522 8,001,2916,453,8456,640,7597,331,5106,385,8196,371,570 1,169,0961,264,5091,253,2231,443,5491,386,6141,147,198 1,124,6201,257,9981,263,9211,352,2541,392,1391,392,923 570,080626,048718,350760,287670,954859,069 326,502342,654167,519169,411190,931229,259 4,307,7212,571,2041,123,7962,164,3661,953,7562,075,109 384,842486,728534,594485,000520,000600,000 611,358607,727956,532977,957818,063516,167 58,569-- 8,335,2366,983,6256,041,3477,471,2417,068,0286,933,120 333,945)(529,780)599,412(139,731)(682,209)(561,550) 542,000635,000770,091933,3662,059,7731,942,550 31,130 10,000,0001,310,000(8,100,000)- 1,900,000) 24,233)--- 559,000)(610,000)(913,819)(893,366)(1,019,773)(1,129,119) 17,000)25,0009,832,0391,350,000(7,060,000)(1,055,439) 350,945)$(504,780)$10,431,451$1,210,269$(7,742,209)$(1,616,989) 12.7%20.1%26.3%23.1%22.4%19.1% 125- CITYOFSHOREWOOD, MINNESOTA STATISTICALSECTION (UNAUDITED) TAXCAPACITY, MARKETVALUE ANDESTIMATEDACTUALVALUE OFTAXABLE PROPERTY Shownbyyearoftaxcollectability) 2001200220032004 Taxablemarketvalue 3,962,200$3,831,300Personalproperty 914,769,8001,033,460,200Realestate 756,858,900$817,063,900$918,732,000$1,037,291,500Totaltaxablemarketvalue 795,637,300$914,769,800$1,066,523,800$1,415,129,000Estimatedactualvalueoftaxableproperty Taxablemarketvalueasapercentageof estimated actualvalue95.13%89.32%86.14%73.30% Taxcapacity 78,073$75,409Personalproperty 9,658,72810,980,358Realestate 11,344,9588,690,5529,736,80111,055,767Totaltaxcapacity 253,832)(171,024)(184,657)(200,062) Contributiontofiscaldisparitiespool 426,424314,412344,682396,666Receivablefromfiscaldisparitiespool 11,517,550$8,833,940$9,896,826$11,252,371Nettaxcapacity Taxlevies 2,208,574$2,763,367$2,851,847$2,907,997General 305,000512,232Debtservice 2,208,574$2,763,367$3,156,847$3,420,229Total Directtaxrate General19.208%31.923%28.816%25.843% Debtservice--3.0824.552 Total19.208%31.923%31.898%30.396% Source: HennepinCountyAssessor Note: Propertyinthecounty isreassessedannually. Thecountyassesses property atapproximately90percentof Note: Information notavailablepriorto2003fortheallocationoftaxablemarketvalueandtaxcapacity between personalpropertyandrealestate. 126- Table5 200520062007200820092010 4,130,300$4,361,600$4,591,200$4,336,600$4,764,900$4,629,900 1,173,029,0001,318,313,0001,475,529,2001,597,262,4001,651,054,7001,631,938,000 1,177,159,300$1,322,674,600$1,480,120,400$1,601,599,000$1,655,819,600$1,636,567,900 1,550,488,900$1,416,341,600$1,553,767,900$1,645,188,300$1,673,720,100$1,638,118,400 75.92%93.39%95.26%97.35%98.93%99.91% 81,333$85,635$89,872$84,780$91,548$88,848 12,590,29014,269,19516,130,09717,619,94318,305,11418,087,557 12,671,62314,354,83016,219,96917,704,72318,396,66218,176,405 213,988)(276,939)(308,590)(351,789)(396,336)(432,995) 379,072399,944407,687445,780513,259526,521 12,836,707$14,477,835$16,319,066$17,798,714$18,513,585$18,269,931 3,333,864$3,678,592$3,835,173$4,056,917$4,158,672$4,160,292 496,792511,803561,135555,078617,620616,000 3,830,656$4,190,395$4,396,308$4,611,995$4,776,292$4,776,292 25.971%25.408%23.501%22.793%22.463%22.771% 3.8703.5353.4393.1193.3363.372 29.841%28.944%26.940%25.912%25.799%26.143% 127- CITY OF SHOREWOOD, MINNESOTA STATISTICAL SECTION (UNAUDITED) PROPERTYTAXCAPACITYRATES - DIRECT ANDOVERLAPPING GOVERNMENTS PER $1,000OF TAXCAPACITY IN2001 - 2010) Overlapping Rates 1) Year School DistrictWatershed DistrictTaxes No. 3No. 4Misc. PayableCityCountyNo. 276No. 277 200119.208%37.624%47.155%40.246%1.363%0.946%7.916% 200231.92350.40920.86825.5042.4611.6087.386 200331.89850.60724.21520.7581.2361.6167.757 200430.39647.32423.12514.3540.7680.7327.488 200529.84144.17221.98916.2501.2761.3757.382 200628.94441.01622.95210.5221.0720.7876.998 200726.94039.11024.7939.9111.1210.7437.310 200825.91238.57117.9808.5211.4041.3027.397 200925.79940.41317.1868.2841.4891.2467.154 201026.14342.64018.6579.7721.5111.2798.138 Source: Hennepin County Assessor 1) Includes vocationalschool Overlapping ratesare those oflocaland county governmentsthat apply toproperty owners withinthe City. Not alloverlapping ratesapply toall City property owners (e.g. the ratesfor special districtsapply onlyto theproportionof thegovernment's propertyowners whose propertyis locatedwithin thegeographic boundaries of thespecial district). 128- Table 6 Totals School School DistrictNo. 276District No. 277 WatershedWatershedWatershed DistrictDistrictDistrict No. 3No. 4No. 3 12.966 12.549 06.057 12.355 12.367 17.856 15.738 11.308 07.471 09.125 09.089 00.35498.905 04.644 04.743 88.528 00.958 00.67399.22498.84684.342 91.26491.16281.805 92.04191.79883.139 97.08996.85788.204 129- CITY OFSHOREWOOD, MINNESOTA STATISTICALSECTION (UNAUDITED) PRINCIPAL TAXPAYERS DECEMBER 31, 2010 2010 Percent ofTotalTax Tax CapacityTaxpayerCapacityRank Big Box One, LLC$266,50711.46% Shorewood Village ShoppingCenter, Inc.217,18621.19 Two S Properties181,44630.99 South Lake Office Building LLC122,73640.67 Jack & Gretchen Norqual113,10850.62 Minnetonka Country Club95,36360.52 Niccum & Shorewood Yacht Club95,35570.52 Waterford Center LLP75,64180.41 Elaine & Gary Jarrett69,84690.38 Steven R. Litman Trustee63,719100.35 First StateBank Excelsior (BeaconBank)--- Thomas J. & Cynthia J. Redmond--- Xcel Energy (formerly Northern States Power Company)--- Second HalfLLC--- Lawrence Reid--- Totals$1,300,9077.12% Source: Hennepin CountyAssessor 130- Table7 2001 Percent ofTotalTax Tax CapacityCapacityRank 59,70050.52 127,79211.11 64,97040.56 78,40020.68 35,643100.31 66,50030.58 33,56760.29 28,76070.25 27,40080.24 24,98390.22 547,7154.76% 131- Table8CITYOFSHOREWOOD, MINNESOTA STATISTICAL SECTION (UNAUDITED) PROPERTYTAXLEVIESANDCOLLECTIONS LASTTENFISCALYEARS Percent1) Percentageof TotalCollectionCollection ofLevyCollectionsFiscalTotalofCurrentinsubsequentTotal CollectedtoLevyYearLevyYear'sLevyyearsCollections 2001$2,208,574$2,188,66599.10%$13,056$2,201,72199.69% 20022,763,3672,734,63298.9619,5942,754,22699.67 20033,156,8473,131,79899.2128,1933,159,991100.10 20043,420,2293,390,13799.1229,7543,419,89199.99 20053,830,6563,783,07498.7646,4583,829,53299.97 20064,190,3954,145,82998.9440,7804,186,60999.91 20074,396,3084,320,28998.2768,7424,389,03199.83 20084,611,9954,546,89998.5947,4384,594,33799.62 20094,776,2924,649,90497.3594,2714,744,17599.33 20104,776,2924,685,06098.09-4,685,06098.09 1) Includes statepaidpropertytaxcredits. 132- 133- Table 10CITYOFSHOREWOOD, MINNESOTA STATISTICALSECTION (UNAUDITED) RATIOS OFGENERALBONDED DEBT OUTSTANDING LAST TENFISCAL YEARS Less PercentageofAmounts Estimated ActualGeneralAvailableinNet ValueofFiscalObligationDebtServiceBondedPer Taxable PropertyYearBondsFundsDebtCapita 2001$155,000$221,837$(66,837)(0.01)%$(9) 200240,000116,688(76,688)(0.01)(10) 200320,000108,925(88,925)(0.01)(12) 2004----- 2005----- 2006----- 2007----- 2008----- 2009----- 2010----- Note: Details regardingthe City's outstandingdebt can be foundin the notesto the financial statements. See theDemographic andEconomicStatistics table onpage 139for populationdata. See theTaxCapacity, Market Value andEstimated ActualValue ofTaxable Propertytableon pages126 - 127forproperty value information. 134- Table 11CITYOFSHOREWOOD, MINNESOTA STATISTICALSECTION (UNAUDITED) COMPUTATION OFDIRECT ANDOVERLAPPING DEBT DECEMBER 31, 2010 GrossAmount Bondedof PercentageDebtUsedNetDebt Applicable toForNetDebtNetApplicable DistrictCalculationDebttoDistrict Direct Debt City ofShorewood$-$-100.00%$- Overlapping Debt School District #276$106,149,548$86,764,68219.78%$17,162,054 School District #2778,075,0007,817,6022.47193,095 Hennepin County690,350,000683,934,5001.238,412,394 Henn Suburban Park District78,780,00067,360,0651.661,118,177 Henn Regional RR Authority41,865,00039,570,7781.23486,721 Metropolitan Council245,200,000181,078,9030.561,014,042 Total OverlappingDebt$1,170,419,548$1,066,526,5302.66%$28,386,483 TotalDirect and Overlapping Debt$1,170,419,548$1,066,526,5302.66%$28,386,483 Sources : Market value data used to estimate applicable percentages provided by the County Board of Equalization and Assessment. Debtoutstanding data providedby the county. Note: Overlapping governments are thosethatcoincide, at leastin part, withthe geographic boundaries of theCity. This scheduleestimates the portionof the outstanding debtof those overlapping governments that is borneby the residents and businessesof theCity. This process recognized that, when considering the government's abilityto issue and repay long-term debt, theentiredebtburden borne bytheresidents andbusinesses shouldbetakenintoaccount. However, thisdoesnot implythat every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. Thepercentage ofoverlapping debt applicableisestimated usingtaxable marketproperty values. Applicable percentageswereestimatedby determining the portionof the county's taxable market valuethat is withinthe City's boundaries and dividingitbythe county'stotal taxablemarket value. 135- CITY OFSHOREWOOD, MINNESOTA STATISTICALSECTION (UNAUDITED) LEGAL DEBTMARGIN INFORMATION LAST TENFISCAL YEARS FiscalYear 2001200220032004 Debt limit$15,137,178$16,341,278$18,374,640$20,745,830 Total netdebt applicable to limit(66,837)(76,688)(88,925)- Legal debtmargin$15,204,015$16,417,966$18,463,565$20,745,830 Total net debtapplicable tothe limit asa percentage of debt limit(0.4%)(0.5%)(0.5%)- Note: Under state law, the City's outstanding general obligation debt should not exceed 3 percent of the market value of taxable property. The percentage was changed to 3 percent forfiscal year 2008, prior to that, the percentage was 2 percent. Bylaw, thegeneralobligationdebtsubjecttothelimitation maybeoffsetbyamounts setasidefortheextinguishment ofthose obligations. 136- Table 12 FiscalYear 200520062007200820092010 23,543,186$26,453,492$29,602,408$48,047,970$49,674,588$49,097,037 23,543,186$26,453,492$29,602,408$48,047,970$49,674,588$49,097,037 Legal Debt MarginCalculation for FiscalYear 2010 Taxable marketvalue$1,636,567,900 Debt limit (3% ofmarket value)$49,097,037 Debt applicable to limit General obligationbonds- Less: amountavailable in debt service funds- Total netdebt applicable to limit- Legal debtmargin$49,097,037 137- Table13CITYOFSHOREWOOD, MINNESOTA STATISTICALSECTION (UNAUDITED) PLEDGED-REVENUE COVERAGE LASTTENFISCALYEARS General ObligationRevenueBonds 1)Net DebtServiceFiscalGross(2)Revenue YearRevenueExpensesAvailablePrincipalInterestCoverage 2001$398,555$209,332$189,223$185,000$109,736 0 .642002287,465236,57550,890185,00099,739 0 .182003539,287192,689346,598185,00093,280 1 .252004676,287314,513361,774190,00086,907 1 .312005720,438300,858419,580950,00088,712 0 .4020061,264,892223,2431,041,649275,00079,456 2 .942007765,717259,056506,661255,00081,165 1 .512008857,890278,164579,726250,000172,050 1 .372009821,778250,995570,783250,000142,589 1 .452010700,678238,780461,898250,000125,407 1 .23 1)Includinginterest andotherincome 2)Excluding depreciation andinterestonbonds CapitalLeases Revenue from DebtServicePropertyFiscal YearTaxesPrincipalInterestCoverage 2001$37,544$23,358$14,186 1 .00200237,54424,83312,711 1 .00200337,54426,40211,142 1 .00200437,54428,0699,475 1 .00200537,54429,8427,702 1 .00200637,54431,7285,816 1 .00200773,40669,5943,812 1 .002008--- 2009---- 2010--- LeaseRevenueBonds Revenue from DebtServiceFiscalLease YearPaymentsPrincipalInterestCoverage 2001$-$-$- 2002--- 2003447,704-447,704 1 .002004620,596-624,650 0 .992005948,384355,000588,384 1 .01589,0561.0020061,040,693455,000 20071,034,751465,000941,2220.74 20081,037,241485,000970,065 0 .712009992,835495,000737,863 0 .812010982,037280,000219,746 1 .97 138- Table 14CITYOFSHOREWOOD, MINNESOTA DEMOGRAPHIC AND ECONOMIC STATISTICS LASTTEN FISCAL YEARS Percent of population which has aTotalPerCapita bachelor's orpostUnemploymentFiscalPersonalPersonalMedian graduate degree (4)Rate (5) YearPopulation (1)Income (2)Income (2)Age (3) 20017,540$328,389,620$43,55338.755.0%3.5% 20027,590333,254,13043,90738.74.4 20037,595344,387,68045,34438.74.7 20047,625366,343,12548,04538.74.3 20057,551374,272,86649,56638.73.8 20067,499371,695,43449,56638.73.3 20077,611377,246,82649,56638.74.7 20087,917430,882,72554,42539.07.3 20097,929431,535,82554,42539.07.4 20107,307429,651,60058,80039.15.1 Data Sources: 1) Metropolitan Council 2) Bureauof EconomicAnalysis 3) US Census Bureau 4) USCensus Bureau 2000 5) Minnesota Departmentof EmploymentandEconomic Development Note: Population, medianage, and education levelinformationare based on surveysconductedduringthe lastquarter ofthe calendaryear. Personal incomeinformation isa totalfor theyear. Unemployment rate information is anadjusted yearly average. School enrollment isbased onthecensus atthestart oftheschool year. 139- CITY OFSHOREWOOD, MINNESOTA PRINCIPAL EMPLOYERS CURRENT YEARAND NINE YEARSAGO (1) 2010 Percentage of Total City EmployerEmploymentEmployeesRank Minnewashta Elementary School1021N/A% Cub Foods982N/A Xcel Energy353N/A Beacon Bank344N/A Minnetonka County Club305N/A City of Shorewood29*6N/A Total328-% Source: MinnesotaDepartment ofEmployment andEconomic Development Includes part-time andtemporary seasonal employees. N/A - indicatesnot available 1) Information for 2001was notavailable. Thetable willbe updated forfuture years. 140- Table 15 2001 Percentage of Total City EmploymentEmployeesRank N/A% N/A N/A N/A N/A N/A 141- Table16CITYOFSHOREWOOD, MINNESOTA FULL-TIMEEQUIVALENTCITYGOVERNMENT EMPLOYEES BYFUNCTION LASTTENFISCALYEARS (1) Function 20062007200820092010 Generalgovernment1313131212 Publicworks Maintenance66666 Cultureandrecreation Parks135555 Water1.51.51.51.51.5 Sewer1.51.51.51.51.5 MunicipalLiquor32--- Total3829272626 Source: CityofShorewood 1) Information priorto2006wasnotmaintained bytheCity. Thetablewillbeupdatedonago-forwardbasis. 142- Table17CITYOFSHOREWOOD, MINNESOTA OPERATINGINDICATORSBYFUNCTION LASTTENFISCALYEARS (1) Function 20062007200820092010 Building/engineering Permitsissued 1,137 710 686 603 591 Publicworks Streetsweeping (hours) 1,000 1,614 1,500 1,550 1,400 Snowplowing (hours) 2,000 1,394 1,508 765 1,024 Equipmentrepair (hours) 2,080 2,080 2,080 2,080 1,280 Water Newconnections 24 22 13 11 1 Watermains breaks 3 7 3 3 5 Average dailyconsumption (thousandsofgallons) 482,000 482,000 482,000 467,600 467,600 Sewer Averagedailytreatmentflow (thousandsofgallons) 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 Source: CityofShorewood Note: Indicatorsarenotavailableforthegeneralgovernmentfunction. 1) Informationpriorto2006wasnotmaintained bytheCity. Thetablewillbeupdatedonago-forwardbasis. 143- Table18CITYOFSHOREWOOD, MINNESOTA CAPITAL ASSETSTATISTICS BYFUNCTION LASTTENFISCALYEARS (1) Function 20062007200820092010 PublicWorks Highways andstreets Streets (miles) 50 51 51 51 51 Streetlights 194 194 194 194 194 Trafficsignals 5 5 5 5 5 Cultureandrecreation Parksdivision Parks 7 7 7 7 7 Parksacreage 102 102 102 102 102 Baseballdiamonds 5 5 5 5 5 Basketballcourts 1 1 1 1 1 Biketrails (miles) 2.45 2.45 2.45 2.45 2.45 Hockeyrinks/outdoor 3 3 3 3 3 Softballdiamonds 3 3 3 3 3 Swimmingareas 1 1 1 1 1 Tenniscourts 5 5 5 5 5 Volleyballcourts 2 2 2 2 2 Utilities Water Milesofwatermain 27 28 28 28 28 Consumers 1,265 1,297 1,310 1,321 1,322 Maximum dailycapacity (gallons) 919,000 919,000 919,000 919,000 919,000 Sewer Milesofsanitary sewer 60 60 60 60 60 Liftstations 14 14 14 14 14 Maximum dailytreatmentcapacity (gallons) 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 Stormsewer Milesofstormsewer 12 12 12 12 12 Source: CityofShorewood Note: Nocapitalassetindicatorsareavailableforthegeneralgovernment function. 1) Informationpriorto2006wasnotmaintained bytheCity. Thetablewillbeupdatedonago-forwardbasis. 144-