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HRA Annual Financial Report 1990FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY ANNUAL FINANCIAL REPORT DECEMBER 31, 1990 TABLE OF CONTENTS Page Organization 1 Independent Auditor's Report 4 Combined Financial Statements Combined Balance Sheet - All Fund Types and Account Group 6 Combined Statement of Revenues, Expenditures and Fund Balance - All Governmental Fund Types 7 Notes to Financial Statements 8 Combining and Individual Fund Financial Statements Debt Service Fund Comparative Balance Sheet 18 Comparative Statement of Revenues, Expenditures and Fund Balance 19 Capital Project Funds Combining Balance Sheet 22 Combining Statement of Revenues, Expenditures and Fund Balance 24 Comparative Statement of General Long -Term Debt 29 FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY a component unit of the CITY OF FRIDLEY, MINNESOTA Organization DECEMBER 31, 1990 Commissioners Larry Commers, Chairman Walter Rasmussen John Meyer Virginia Schnabel Duane Prairie __ 1 VOTO, TAUTGES, REDPATH & CO., LTD. CERTIFIED PUBLIC ACCOUNTANTS V lrlq�*4w Birch Lake Professional Building • 1310 E. Hwy. 96 • White Bear Lake, MN 55110 • Fax (612) 426-5004 • Phone(612)426-3263 ROBERT I. VOTO, CPA ROBERT G. TAUTGES. CPA TAMES S. REDPATH. CPA INDEPENDENT AUDITOR'S REPORT D. KENNETH GEORGE. CPA DAVID I. MOL, CPA To the Honorable Mayor and Members of the City Council City of Fridley, Minnesota Honorable Chairperson and Members of the Commission Fridley Housing and Redevelopment Authority We have audited the combined financial statements of the Fridley Housing and Redevelopment Authority, a component unit of the City of Fridley, Minnesota as of and for the year ended December 31, 1990 as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the component unit financial statements referred to above present fairly, in all material respects, the financial position of the Fridley Housing and Redevelopment Authority, a component unit of the City of Fridley, Minnesota, as of December 31, 1990, and the results of its operations for the year then ended in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the component unit financial statements taken as a whole. The combining, individual fund, and account group financial statements, listed in the table of contents is presented for purposes of additional analysis and is not a required part of the component unit financial statements of the Fridley Housing and Redevelopment Authority, a component unit of the City of Fridley, Minnesota. Such information has been subjected to the auditing procedures applied in the audit of the component unit financial statements and, in our opinion, is fairly stated in all material respects in relation to the general purpose financial statements taken as a whole. May 14, 1991 b�bz VOTO, TAUTGES, REDPATH & CO., LTD. Certified Public Accountants MEMBERS OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS • PRIVATE COMPANIES PRACTICE SECTION MINNESOTA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS MUNICIPAL FINANCE OFFICERS ASSOCIATION • MINNESOTA ASSOCIATION OF SCHOOL BUSINESS OFFICIALS 4 FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY a component unit of the CITY OF FRIDLEY, MINNESOTA COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT GROUP December 31, 1990 Account Group Governmental Fund'rypes General Totals Debt Capital Long Term Memorandum Only Assets Service Projects Debt 1990 1989 Cash and cash equivalents $ Deposits with trustee Investments Receivables Accounts Taxes - Unremitted Delinquent Interest Mortgage Current Delinquent Deferred Due from other governments Amount available in debt service fund Amount to be provided for retirement of general long term debt _ Total assets Liabilities and Fund Balance Liabilities: Account payable Contracts payable Deferred revenue Due to other governments Bonds payable Total liabilities Fund Balance (deficit): Reserved for construction Reserved for debt service Total Fund Balance Total liabilities and fund balance $1,185,085 $ $1,185,085 $1,890,107 9,218,200 510,354 4,026,014 4,536,368 5,754,077 11,275 11,275 203,152 8,765 8,765 20,174 326,462 326,462 635,912 95,915 95,915 197,903 4,000 4,000 7,960 7,960 982,000 982,000 990,000 220 220 510,354 510,354 11,336,950 12, 024, 646 12,024,646 12,213,050 $510,354 $6,647,696 $12,535,000 $19,693,050 $42,256,373 3,748 3,748 9,171 20,768 1,320,423 1,320,423 1,625,912 147,177 147,177 203,152 12,535,000 12,535,000 23,550,000 0 1,471,348 12,535,000 14,006,348 25,409,023 5,176,348 5,176,348 5,510,400 510,354_ 510,354 11,336,950 510,354 5,176,348 0 5,686,702 16,847,350 $510,354 $6,647,696 $12,535,000 $19,693,050 $42,256,373 See Accompanying Notes to Financial Statement E FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY a component unit of the CITY OF FRIDLEY, MINNESOTA COMBINED STATEMENT OF REVENUES EXPENDITURES AND FUND BALANCE ALL GOVERNMENTAL FUND TYPES Year Ended December 31, 1990 Governmental Fund Types Totais Debt Capital Memorandum Only Service Projects 1990 1989 Revenues: Tax increment $ $2,510,294 $2,510,294 $2,342,665 State credits 15,200 Interest on investments 37,596 333,616 371,212 642,761 Rental 66,147 66,147 29,050 Miscellaneous 2,785 2,785 4,827 Total revenues 37,596 2,912,842 2,950,438 3,034,503 Expenditures: Professional services 224,674 224,674 86,895 Land purchase 271,917 271,917 311,152 Site improvement 11,622 11,622 1,088,858 Buildings 999,142 999,142 498,495 Principal payment 11,440,000 11,440,000 1,055,000 Interest expense 728,039 728,039 1,035,568 Refunding bond issuance costs 83,655 83,655 Agent fees 21,726 21,726 27,844 Refunds to school districts 272,578 272,578 196,617 Miscellaneous 194,242 194,242 194,002 Total expenditures 12,273,420 1,974,175 14,247,595 4,494,431 Excess (deficiency) of revenues over expenditures (12,235,824) 938,667 (11,297,157) (1,459,928) Other financing sources (uses): Proceeds of refunding bonds 9,394,489 9,394,489 Operating transfer in 10,490,919 2,047,311 12,538,230 3,873,272 Operating transfers out (9,218,200) (3,320,030) (12,538,230) (3,873,272) Payment to refunded bond escrow agent (9,257,980) (9,257,980) Total other financing sources (uses) 1,409,228 (1,272,719) 136,509 0 Deficiency of revenues and other financing sources over expenditures and other financing uses (10,826,596) (334,052) (11,160,648) (1,459,928) Fund Balance January 1 11,336,950 5,510,400 16,847,350 18,307,278 Fund Balance December 31 $510,354 $5,176,348 $5,686,702 $16,847,350 See Accompanying Notes to Financial Statement 7 FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY a component unit of the CITY OF FRIDLEY. MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1990 1. Summary of Significant Accounting Policies The Fridley Housing and Redevelopment Authority (HRA), Fridley, Minnesota was established in 1980 by the City Council of Fridley, Minnesota under the Statutes of the State of Minnesota to complement and account for any public redevelopment and housing projects undertaken within the City which would fall under the statutory authority of the HRA. The Housing and Redevelopment Authority is a component unit of the City of Fridley and an integral part of the City. The accounting policies of the HRA conform to generally accepted accounting principles. The following is a summary of the more significant policies: A. Fund Accounting The accounts of the HRA are organized on the basis of funds and account group, each of which is considered a separate accounting entity. The operations of each tund are accounted for with a separate set of self -balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures. Resources are allocated to and accounted for in individual funds basedupon the purposes for which they are to be spent and the means by which spending activities are controlled. The various funds are grouped, in the financial statements in this report, into two generic fund types as follows: GOVERNMENTAL FUNDS Debt Service Fund - The Debt Service Fund is used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest and related costs. Capital Projects Funds - The Capital Projects Funds are used to account for the acquisition of property or construction of improvements set forth by the Housing and Redevelopment Authority. B. Fixed Assets and Long -Term Liabilities The accounting and reporting treatment applied to the fixed assets and long-term liabilities associated with a fund are determined by its measurement focus. All governmental funds are accounted for on a spending or 'financial flow' measurement focus. This means that only current assets and current liabilities are generally included on their balance sheets; accordingly, their reported fund balance is considered a measure of *available spendable resources.' Governmental fund operating statements present increases and decreases in net current assets. Accordingly, they are said to present a summary of sources and uses of "available spendable resources' during a period. Land was acquired by the HRA and later sold at a loss. This is considered a cost of the program. Therefore, the HRA has no fixed assets. C. Basis of Accounting Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied. All funds of the HRA are accounted for using the modified accrual basis of accounting. Their revenues are recognized when they become measurable and available as net current assets. 6 FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY a component unit of the CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1990 1. Summary of Significant Accounting Policies (Continued) C. Basis of Accounting (Continued) Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred. Exceptions to this general rule are principal and interest on general long-term debt which is recognized when due. D. Total Columns on Combined Statements Total columns on the combined statements are captioned 'Memorandum Only' to indicate that they are presented only to facilitate financial analysis: Data in these columns do not present financial position or results of operations, in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of the data. E. Assets, Liabilities and Fund Equity 1) Cash and Cash Equivalents and Investments Cash balances from all funds are combined and invested to the extent available in certificates of deposit, U.S. government securities and other securities authorized by State Statute. Earnings from such investments are allocated to the respective funds on the basis of applicable cash balance participation by each fund. Investments are stated at cost which approximates market. The HRA considers cash equivalents to be those investments with original maturities of three months or less. 2) Annual Leave There is no accrued liability for vacation pay and other employee benefits as the HRA contracts with the City to provide professional services. The HRA funds have no liability for employee benefits at December 31, 1990. F. Revenues and Expenditures Tax Increment (Property Taxes) - Revenue is recognized in the year of collection, with amounts due from the County and received early in the following year set up as receivable (unremitted receivables). Uncollected (delinquent) taxes receivable are fully offset by deferred revenue as they are not available to finance current expenditures. Interest on Investments - Interest is recorded as revenue in the year earned. 9 FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY a component unit of the CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1990 2. Fund Deficits The following funds had deficit fund balances at December 31, 1990: Capital Projects Funds Center City $ 1,167 North Area/University industrial Park 23 Lake Pointe 1,766' Area Wide 147,373 3. Deposits and Investments A. Deposits In accordance with applicable Minnesota Statutes, the Housing and Redevelopment Authority maintains deposits at depository banks authorized by the Housing and Redevelopment Authority Commission. All such depositories are members of the Federal Reserve System. Minnesota Statutes require that all deposits be protected by insurance, surety bond or collateral. If collateral is pledged as protection for the deposits, the market value of the collateral must, at a minimum, be 110% of the deposits not covered by insurance or bonds (140% in the case of mortgage backed collateral). Repurchase agreements are intentionally overcollateralized at 105% to insure that the safety of investment principal is attained and losses do not occur from rapid overnight deterioration. Balances at December 31, 1990 are as follows: Bank Carrying Balances Amount 1) Insured or collateralized by securities held $14,862 $5,226 by the City or its agent in the City's name 2) Collateralized with securities held by the pledging institution trust department in the City's name 3) Uncoilateralized or collateralized with securities not in the City's name Totals lfi,226 Categories 2 and 3 are not procedures that are authorized by Minnesota statutes. 10 FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY a component unit of the CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS (CONTINUEDI DECEMBER 31, 1990 3. Deposits and Investments (Continued) B. investments The City is authorized by Minnesota Statutes to invest in the following: (a) Direct obligations or obligations guaranteed by the United States or its agencies. (b) Shares of investment companies registered under the Federal Investment Company Act of 1940 and whose only investments are in securities described in (a) above. (c) General obligations of the State of Minnesota or any of its municipalities. (d) Bankers acceptance of United States banks eligible for purchase by the Federal Reserve System. (e) Commercial paper issued by United States Corporations or their Canadian subsidiaries, of the highest quality, and maturing in 270 days or less. (f) Repurchase or reserve repurchase agreements with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000 a primary reporting dealer in U.S. 9 government securities to the Federal Reserve Bank of New York, or certain Minnesota II securities broker dealers. y (g) Future contracts sold under authority of Minnesota Statutes 471.56, subd.5. The City's investments are categorized below to give an indication of the level of risk assumed at year end. The level of risk is defined by the following criteria set out by the Governmental Accounting Standards Board within Statement No. 3. Category 1 includes investments that are insured or registered for which the securities are held by the City or its agent in the City's name. Category 2 includes uninsured and unregistered investments for which the securities are held by the counterparty, or dealers trust department or agent in the City's name. Category 3 includes uninsured and unregistered investments for which the securities are held by the counterparty or dealer, or its trust department or agent but not in the City's name. l r I k 11 FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY a component unit of the CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1990 4. Long -Term Debt (Continued) The difference between the cash flows required to service the $10,045,000 (old) debt and the cash flows required to service the $9,485,000 (new) debt and complete the refunding and the economic gain or loss resulting from the transaction are below: Cash Flow Difference: Old debt service cash flows New debt service cash flows Less accrued interest included in payment 4/10/90 Cash flow difference Economic Gain (Loss): Present value of old debt service cash flows Present value of new debt service cash flows Economic loss 13,529,490 19,782,141 (48,685) 19,733,456 (6,203,966) 9,127,696 9,310,834 (183,138) Annual requirements to amortize long-term debt outstanding at December 31, 1990 including principal and interest payments of $23,869,503 are as follows: Year Ended December 31 1991 $1,137,514 1992 1,138,695 1993 1,137,714 1994 1,134,470 1995 1,133,740 1996-2000 5,167,000 2001-2005 7,295,190 2006-2009 5,725,180 $23,869,503 There are a number of limitations and restrictions contained in the various bond indentures. The Housing and Redevelopment Authority is in compliance with all significant limitations and restrictions. 14 FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY a component unit of the CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1990 S. Tax Increment Districts The Fridley Housing and Redevelopment Authority is the administrating authority for the following Tax Increment Financing Districts: Retained Year Tax Capacity Values Fiscal By Established District Original Current Captured Dis ari Authori 1979 1 257,692 929,460 671,768 0 671,768 1981 2 72,646 229,019 156,373 0 156,373 1982 3 254,067 1,303,700 1,049,633 191,264 858,369 1984 4 108,967 463,463 354,496 0 354,496 1984 5 24,041 42,454 18,413 0 18,413 1985 6 142,172 309,840 167,668 0 167,668 1986 7 10,960 126,192 115,232 0 115,232 1986 8 26,449 38,674 12,225 0 12,225 1989 9 1,045,007 1,059,180 14,173 0 14,173 1990 10 - - - - - 1,942,001 4,501,982 2,559,981 191,264 2,368,717 All debt issued is pooled debt. Total bonds issued is $38,575,000. Total amount of bonds redeemed is $26,040,000. Outstanding bonds at December 31, 1990, is $12,535,000. All taxable value is currently retained by the Housing and Redevelopment Authority. - 15 FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY a component unit of the CITY OF FRIDLEY, MINNESOTA DEBT SERVICE FUND COMPARATIVE BALANCE SHEET December 31, 1990 and 1989 Assets Cash Deposits with trustee Investments Total assets liabilities and Fund Balance Liabilities: Accounts Payable Due to other governments Total liabilities Fund Balance: Reserved for debt service Total liabilities and fund balance 18 1990 1989 9,218,200 510,354 2,120,365 $510,354 $11,338,565 0 510,354 $510,354 1,615 11,336,950 $11,338,565 FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY a component unit of the CITY OF FRIDLEY, MINNESOTA DEBT SERVICE FUND COMPARATIVE STATEMENT OF REVENUES EXPENDITURES AND FUND BALANCE December 31. 1990 and 1989 1990 1989 Revenues: Interest on investments $37,596 $121,846 Expenditures: Debt service - Principal payment 11,440,000 1,055,000 Interest expense 728,039 1,035,568 Refunding bond issuance costs 83,655 Agent fees 21,726 27,844 Total expenditures 12,273,420 2,118,412 Deficiency of revenues over expenditures (12,235,824) (1,996,566) Other financing sources (uses): Proceeds of refunding bonds 9,394,489 Operating transfers in 10,490,919 1,531,220 Operating transfer out (9,218,200) Payment to refunded bond escrow agent (9,257,980) Total other financing sources 1,409,228 1,531,220 Deficiency of revenues and other financing sources over expenditures (10,826,596) (465,346) Fund Balance January 1 11,336,950 11,802,296 Fund Balance December 31 $510,354 $11,336,950 f 19 Assets Cash and cash equivalents Investments Receivables Accounts Taxes - Unremitted Delinquent Interest Mortgage Current Delinquent Deferred Due from other governments Total assets Liabilities and fund balance Liabilities: Accounts payable Contracts payable Deferred revenue Due to other governments Total liabilities Fund balance (deficit): Reserved for construction Total fund balance Total liabilities and fund balance FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY a component unit of the CITY OF FRIDLEY, MINNESOTA CAPITAL PROJECTS FUNDS COMBINING BALANCE SHEET December 31, 1990 With Comparative Totals for December 31, 1989 North Area/ Center Moore Univ. Ind. Johnson Revolvina city Lake Area Park Skvwood Pachske $1,185,085 $ $ $ $ $ 4,026,014 10,703 498 8,765 326,462 95,915 4,000 7,960 32,000 100,000 850,000 196 $5,652,944 $44,458 $100,196 $850,000 $0 $0 795 23 326,463 43,960 100,000 850,000 870 326,463 45,625 100,000 850,023 0 0 5,326,481 (1,167) 196 (23) 5,326,481 (1,167) 196 (23) 0 0 $5,652,944 $44,458 $100,196 $850,000 $0 $0 22 Lake 57th Area Northco Pro Totals Pointe Place Onan Wide Phase 111 Engineering 1990 1989 $ $ $ $ $ $ $1,185,085 $1,890,107 4,026,014 3,633,712 74 11,275 8,765 20,174 326,462 635,912 95,915 197,903 4,000 7,960 982,000 990,000 24 99n $0 $0 $0 $98 $0 $0 $6,647,696 $7,367,808 1,752 1,178 3,748 7,556 0 20,788 1,320,423 1,625,912 14 146,293 147,177 203,152 1,766 0 0 147,471 0 0 1,471,348 1,857,408 (1,766) (147,373) 5,176,348 5,510,400 (1,766) 0 0 (147,373) 0 0 5,176,348 5,510,400 $0 $0 $0 $98 $0 $0 $6,647,696 $7,367,808 23 FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY a component unit of the CITY OF FRIDLEY, MINNESOTA CAPITAL PROJECTS FUNDS COMBINING STATEMENT OF REVENUES EXPENDITURES AND FUND BALANCE Year Ended December 31, 1990 With Comparative Totals for Year Ended December 31, 1989 Revenues: Tax increment State credits Interest on investments Rental Miscellaneous Total revenues Expenditures: Professional services Land purchase Site improvement Buildings Refunds to school districts Miscellaneous Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Operating transfer in Operating transfers out Total other financing sources (uses) Center Moore Revolving Citv Lake Area $2,510,294 $ $ North Area/ Univ. Ind. Johnson Park Skvwood Pachske 327,316 6,300 66,147 858 1,927 2,904,615 0 8,227 0 0 0 22,528 1,408 451 42,417 229,500 11,622 999,142 108,128 18,471 0 1,183,837 249,379 451 0 0 2,904,615 (1,183,837) (241,152) (451) 0 0 1,253,627 246,349 563 (3,320,030) (3,320,030) 1,253,627 246,349 563 0 0 Deficiency of revenues and other financing sources over expenditures and other financing uses (415,415) 69,790 5,197 112 0 0 Fund Balance (deficit) January 1 5,741,896 (70,957) (5,001) (135) 0 0 Fund Balance (deficit) December 31 $5,326,481 ($1,167) $196 ($23) $0 $0 24 Lake 57th Area Northco Pro Totals Pointe Place Onan Wide Phase 111 Engineering 1990 1989 $ $ $ $ $ $ $2,510,294 $2,342,665 0 15,200 333,616 520,915 66,147 29,050 2,785 4,827 0 0 0 0 0 2,912,842 2,912,657 10 11,324 2,694 181,217 3,477 1,575 1224,67-4- 86,895 `271,917 311,152 11,622 1,088,858 999,142 498,495 272,578 272,578 196,617 53,190 14,225 228 194,002 64,514 2,694 0 468,020 3,705 1,575 �.'-1�94y2--% T974,175 2,376,019 (64,514) (2,694) 0 (468,020) (3,705) (1,575) 938,667 536,638 72,415 2,694 0 466,383 3,705 1,575 2,047,311 2,342,052 (3,320,030) (3,873,272) 72,415 2,694 0 466,383 3,705 1,575 (1,272,719) (1,531,220) 7,901 0 0 (1,637) 0 0 (334,052) (994,582) (9,667) 0 0 (145,736) 0 0 5,510,400 6,504,982 ($1,766) $0 $0 ($147,373) $0 $0 $5,176,348 $5,510,400 25 r^ FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY a component unit of the CITY OF FRIDLEY, MINNESOTA COMPARATIVE STATEMENT OF GENERAL LONG-TERM DEBT December 31. 1990 and 1989 1990 1989 Amount available and to be provided for the payment of general long-term debt Amount available in Debt Service Fund $510,354 $11,336,950 Amount to be provided by future taxes 12,024,646 12,213,050 Total available and to be provided $12,535,000 $23,550,000 General long-term debt payable Variable rate general obligation tax increment bonds $10,845,000 General obligation tax increment refunding bonds 9,425,000 Tax increment revenue refunding bonds 3,050,000 3,280,000 General obligation tax increment refunding bonds of 1990 9,485,000 Total general long-term debt payable $12,535,000 $23,550,000 29 F