HRA 11/18/1982 a
4 HOUSING & REDEVELOPMENT AUTHORITY
MEETING
THURSDAY, NOVEMBER 18, 1982
7:30 P.M.
t
i
i
s
City of Fridley
AGENDA
HOUSING AND REDEVELOPMENT COMMISSION MEETING THURSDAY, NOVEMBER 18, 1982 7:30 P.M.
Location: Community Room I (upper level)
CALL TO ORDER:
ROLL CALL:
CONTINUED: APPROVAL OF HOUSING & REDEVELOPMENT AUTHORITY MINUTES OF JULY 21 , 1982
APPROVE HOUSING & REDEVELOPMENT AUTHORITY MINUTES: OCTOBER 19, 1982
I. OLD BUSINESS AND CONTINUED ITEMS
A. Proposal from Gerald W. Paschke (Tabled (10-19-82)
B. NAHRO Requests for funds (Tabled 10-19-82)
1. Letter from Virgil Herrick
C. MEMO: SID INMAN (Tabled 10-19-82)
1. Virgil Herrick & Sid Inman will be available for this item)
II. CENTER CITY
A. Report & Claim -Relocation of Lennies Laundromat (at meeting)
B. MEMO - RE: Bond Bid Opening
C. Lease of Hardware Building for proposed Retail/Liquidation operation
D. Memo from Richard Larson - RE: Standard Oil Station
III. FORE LAKE DISTRICT
A. Moore Lake Condominium Project (Information available at meeting)
IV. FINANCIAL
A. Check Register - at meeting
B. Financial Statement - at meeting
V. OTHER BUSINESS:
A. Minneapolis Star Tribune Article (Info only)
B. Correspondence on Eisenhower Square Monument
ADJOURNMENT:
CITY OF FRIDLEY
HOUSING & REDEVELOPMENT AUTHORITY
MEETING
OCTOBER 19, 1982
CALL TO ORDER:
Chairperson Commers called the October 19, 1982, Housing & Redevelopment
Authority meeting to order at 8:35 p.m.
ROLL CALL:
Members Present: Larry Commers, Elmars Prieditis, Carolyn Svendsen,
Duane Prairie (arr. 8:58 p.m.)
Members Absent: Walter Rasmussen
Others Present: Jerrold Boardman, City Planner
Kurt Schrupp, 6716 Jefferson St. N.E.- representing the Fridley
-Jaycees
CONTINUED: APPROVAL OF HOUSING & REDEVELOPMENT AUTHORITY MINUTES OF, JULY 21, 1982:
The approval of the July 21 , 1982, Housing & Redevelopment Authority minutes
were again continued until Mr. Prairie and Mr. Rasmussen are present.
APPROVAL OF SEPTEMBER 16, 1982, HOUSING & REDEVELOPMENT AUTHORITY MINUTES:
MOTION BY MR. PRIEDITIS, SECONDED BY MS. SVENDSEN, TO APPROVE THE SEPT. 16, 1982,
HOUSING & REDEVELOPMENT AUTHORITY MINUTES AS WRITTEN.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION
CARRIED UNANIMOUSLY.
I. CENTER CITY PROJECT
A. Kurt Schrupp, Fridley-Jaycees - Request to use Hardware Building
for Halloween (See Executive Director's Memo #82-74)
Mr. Boardman stated Mr.'Schrupp was representing the Fridley Jaycees
who are requesting the use of the hardware building for Halloween. He
- stated that at this time, they do not have any tenant or lease for that
building, and since the building is sitting empty, it may be in the
HRA's best public interest to let the Jaycees utilize the building for
a haunted house. The HRA would not be paying for any electricity and
the Jaycees have their own insurance coverage.
Mr. Schrupp stated they have contacted NSP to hook up electricity,
and that will be billed to the Fridley Jaycees. Through the Minnesota
Jaycees, they have adequate liability insurance for all members in the
HOUSING & REDEVELOPMENT AUTHORITY MEETING, OCTOBER 19, 1982 PAGE 2
state as far as any project they are running. The only additional
thing they will have to purchase is the dram shop liability, but there
will be no liquor; it is strictly a fundraiser. The Fridley Jaycees
are going to be donating the funds to cerebral palsy and Aid to Retarded
Citizens, so they feel it is a very worthwhile project.
Mr. Schrupp stated that since he cannot remember anyone in Fridley
having anything like this, he thought it would be a nice thing to have
for the families in the Fridley area. The people in charge of this
project are basically the Columbia Heights Jaycees. The reason the
Columbia Heights Jaycees approached the Fridley Jaycees to co-sponsor
this project is because they lost the building they were using in
Columbia Heights. They came to Fridley to see if anything was available
in Fridley and if the Fridley Jaycees would work with them on the project.
The Fridley Jaycees accepted the co-sponsorship of the project, and
that is why he is approaching the HRA with this request. He stated they
think the location of the hardware building is excellent because it is
accessible, and there is plenty of parking.
Mr. Commers asked if they would be putting up any partitions inside
the building.
Mr. Schrupp stated they will be putting up temporary partitions; however,
they will guarantee that the building will be cleaned up and returned to
its original condition.
Mr. Commers stated his one concern was to make sure the insurance policy
had adequate coverage for any kind of accident. He asked if the Jaycees
would provide the HRA with a copy of that policy and make sure the policy
is adequate.
Mr. Schrupp stated they would be happy to do that. Also, to alleviate
any responsibility from the City, they would be willing to have the City
draw up an informal lease of some kind where the Jaycees would pay $1 for
the rent, basically, and the Jaycees would be totally liable.
Mr. Boardman stated he would check with Mr. Herrick, City Attorney, to
see what was the best way to handle it.
MOTION BY MR. PRIEDITIS, SECONDED BY MS. SVENDSEN, TO APPROVE THE
REQUEST BY THE FRIDLEY JAYCEES FOR THE USE OF THE HARDWARE BUILDING
' DURING HALLOWEEN WEEK, CONTINGENT UPON PROPER INSURANCE COVERAGE
APPROVED BY THE CITY ATTORNEY.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE
MOTION CARRIED UNANIMOUSLY.
HOUSING & REDEVELOPMENT AUTHORITY MEETING, OCTOBER 19, 1982 PAGE 3
B. Phase III - Discussion (Executive Director Memo #82-75)
Mr. Boardman stated this memo was to update the HRA members. In the
memo he stated that since the HRA formally withdrew the offical right
of development from Barthel Construction, Mr. Paul Klaverkamp, attorney
• representing Fred Levy, has met with Mr. Herrick and himself to discuss
the affects the redevelopment district is having on his client's ability
to lease space and maintain existing leases in the centers he owns.
Mr. Boardman stated he was under the impression that Mr. Klaverkamp was
going to be at this meeting to discuss what happened on Phase III, but
in talking to Mr. Klaverkamp that evening, Mr. Klaverkamp had made the
determination it would not be in his client's best interest to be at
this meeting.
Mr. Boardman stated Mr. Klaverkamp felt his client had a claim against
the HRA because of actions the HRA had taken in the establishment of a
redevelopment district. It was Mr. Herrick's position at this time that
they really have no legal claim against the HRA for the establishment of
the redevelopment district, and Mr. Herrick felt very confident that
Mr. Klaverkamp would find it very difficult to show that a hardship does
exist. In the meeting, he and Mr. Herrick told Mr. Klaverkamp they will
do everything in their power to notify the tenants when things are and
are not happening, but they didn't feel he had a legal basis by which he
wanted the HRA to remove them from the district.
Mr. Boardman stated he has met with representatives from Frank's Nursery,
and Frank's Nursery is very interested in doing a center and becoming
the anchor tenant of the center. At this time, he had no further
information.
C. Parking Lot Property Lease from City Council - Discussion
(Memo on City Council/HRA Meeting of Sept. 27, 1982; Executive Director
Memo #82-76)
Mr. Commers stated he had not been able to attend that meeting and asked
the other HRA members what they felt came out of that meeting and what
the HRA's position should be with regard to the parking lot lease.
Mr. Prieditis stated no definite decision was made. The basic question
was whether this should be an outright purchase by the HRA.
Ms. Svendsen stated she had the impression the City Council felt very
strongly that any kind of •terms for purchasing the parking lot would
have to be the same type of terms they would get anywhere else and that
the City Council did not want to subsidize in any way the HRA's purchas-
ing of the parking lot.
ROUSING & REDEVELOPMENT AUTHORITY MEETING, OCTOBER 19, 1982 PAGE 4
Mr. Commers stated when the HRA and the City Council talked about the
2% over prime, the HRA was talking about leasing or paying the same
interest rate they would be getting from Mr. Haggerty's group. He
asked if that had been discussed at this meeting on Sept. 27.
Mr. Boardman stated it was discussed with the City Manager, Mr. Qureshi ,
and Mr. Qureshi did not and would not promote that type of project. The
City Manager's position and his position to the City Council is that
the HRA ha the money, and the HRA should make a direct payment on the
property. The only condition the City Manager looked at and thought
was feasible was one that would be a normal type of feasibility,and that
was what was presented to the City Council . The City Council said they
wouldn't mind going on a contract on the land, but they want a contract
that isn't going to put them in any position for criticism for subsi-
dizing the Center City project with tax dollars.
Mr. Coroners stated that in terms of the overall concept, it is probably
not that critical whether the HRA has a contract or makes an outright
cash purchase. The other side of it is that when you make a cash pur-
chase, you usually get a discount. He stated that in order to resolve
the problem, maybe they should just purchase the land.
Ms. Svendsen stated that this situation does give the HRA an indication
of how the City Council feels about these kinds of things.
Mr. Commers agreed. He stated that if the City has that feeling a little
bit about some of the development projects that are being undertaken and
their inability to give the HRA any real meaningful assistance, maybe the
HRA is going to have to relook at some of these things. It happened with
the plaza, and here is another example where it is happening.
(Mr. Prairie arrived at 8:58 p.m.)
Mr. Prieditis stated the idea of a discount on the purchase price was
intriguing.
Mr. Commers stated maybe the City Council should use the money for a
contribution to the plaza project.
Mr. Boardman stated it was something that could be proposed to the City
. Council . He stated if the HRA wanted to make a proposal or counter pro-
prosal to the City Council , they could do it at the Oct. 25th City
Council meeting.
•
Mr. Commers stated it was probably better to make the outright cash
purchase, but he thought the City Council should be forewarned that the
HRA is not just going to be footing totally themselves a several hundred
thousand dollar deal for whatever reasons the City Council feel they
HOUSING & REDEVELOPMENT AUTHORITY MEETING, OCTOBER 19, 1982 PAGE 5
cannot contribute. He stated if the City Council wants to make a
commitment to the City of Fridley like the HRA has, they are going to
have to do so, and if it involves their being afraid of political
problems, they are going to have to face that. It comes down to what
kind of commitment the City Council wants to make to the City. The
HRA recognizes its responsibility and does carry the big share of the
burden, but the City Council has to make some contribution of some •
significance. The HRA has had meeings with the City Council over the
plaza, and the City Council has always said "no".
Mr. Prairie stated the HRA is bending to meet the City Council 's require-
ments this time, but that is not always going to be the case. They have
to draw the line somewhere.
Mr. Commers stated he would like it recorded in the minutes that the HRA
has discussed this and is looking towards some kind of significant contri-
bution from the City in the future in the development of the Center City
project, and, specifically, the plaza.
Mr. Commers stated the HRA unanimously agreed to acquire the parking lot
property frOm the City directly for the $71 ,624 purchase price.
II. NORTH AREA DISTRICT
A. Receive Letter from Jerry Paschke (Executive Director Memo #82-77)
Mr. Boardman stated Mr. Paschke is requesting assistance on soil
correction in the development of his property at 79th & Ranchers Road.
He stated Mr. Paschke had intended to be at the meeting, but since he
was not present, he would recommend this item be continued.
MOTION BY MS. SVENDSEN, SECONDED BY MR. PRAIRIE, TO CONTINUE THIS
ITEM UNTIL THE NEXT MEETING.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE
MOTION CARRIED UNANIMOUSLY.
III. MOORE LAKE PROJECT
A. Condominium Project (Executive Director Memo #82-78)
Mr. Coroners stated that part of the purpose of the meeting with the
City Council on Sept. 27 was. also to discuss the manner in which this
project should be undertaken.
•
Mr. Prieditis stated the City Council expressed a concern at that meeting
on the reaction of the public, particularly the residents near this
property.
HOUSING & REDEVELOPMENT AUTHORITY MEETING, OCTOBER 19, 1982 PAGE 6
Mr. Prairie stated some of the councilpersons also expressed concern
about any condemnation.
Ms. Svendsen stated it was her understanding that one of the first steps
would be to contact the property owners of the property involved.
Mr. Boardman stated they will be contacting the involved property
owners and they will be notifying out into the neighborhood. How far
has not yet been determined, and the HRA should discuss this at their
Nov. 18 meeting. He stated they will be laying out some of the informa-
tion to be shown at the public hearing, and they want to get input back
from the HRA at their meeting.
B ' concensus, the HRA members adopted the timetable outlined in Memo #82-78
with the exception that the materials to the property owners be approved
at..the..HRA's .Nov: 18 meeting and then mailed- out as soon as possible after
"that, to be mailed no later than Nov. 20.
IV. FINANCIAL
A. Check Register
MOTION BY MR. PRIEDITIS, SECONDED BY MR. PRAIRIE, TO APPROVE THE CHECK
REGISTER DATED OCT. 18, 1982, AS PRESENTED.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE
MOTION CARRIED UNANIMOUSLY.
B. HRA Financial Report
The HRA members received and reviewed the financial report. They
requested a memo from Sid Inman regarding the grants to the City for
the North Area and the Moore Lake area.
The HRA members also questioned the breakdown of the categories under
each of the programs listed--Personal Services, Supplies, and Land &
Capital Improvement. They felt it would be helpful to have some kind
of breakdown of categories to describe them more fully.
V. OTHER BUSINESS:
A. Approval of G. M. Hanson Co. for HRA Auditor
Mr. Coroners stated the G. M. Hanson Co. has been the HRA's auditor in
the past. He stated he felt the fee of $1 ,100 seemed reasonable.
MOTION BY MR. PRIEDITIS, SECONDED BY MS. SVENDSEN, TO APPROVE THE
G. M. HANSON CO. AS THE HRA AUDITOR FOR THE COMING YEAR.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE
MOTION CARRIED UNANIMOUSLY.
HOUSING & REDEVELOPMENT AUTHORITY MEETING, OCTOBER 19, 1982 PAGE 7
B. Request for Funds from NAHRO (National Association of HRA Officials)
for Legislative Assistance (Executive Director Memo #82-79)
Mr. Commers stated the Minnesota NAHRO is requesting a pledge of $250
from the HRA to carry on their legislative lobbying efforts. He
questioned whether the HRA, as a tax exempt body, could contribute to
lobbying.
Mr. Boardman stated he would check with Mr. Herrick on whether the
HRA could contribute to lobbying.
Mr. Commers stated this item would be continued, and they could discuss
it further when they had received a report from Mr. Boardman.
C. Certificate of Completion - HUD - Large Family Project
The HRA received the letter addressed to Mr. Boardman from HUD regarding
the Community Development Block Grant and a copy of the fully executed
Certificate of Completion showing that $119,999.59 was received and
paid out for the Large Family Project.
D. Memo #82-73 on Mortgage Bond Meeting
Mr. Boardman stated he attended a meeting in Coon Rapids on the Housing
Mortgage Revenue Bonds. They are looking at the possibility of selling
revenue bonds within the County. The City Bank has been an interested
party in this and is willing to sell in a minimum of $20 million packages.
He stated it is very difficult for one city to put together a package for
$20 million worth of housing construction loans at one time; therefore,
they are looking at the possibility of doing some kind of combination
with other , Pities of the County of Anoka. He stated there will be
another meeting on Fri ., Oct. 22, and he would keep the HRA informed.
E. Memo from Sid Inman - HRA Financial Reporting
Mr. Commers stated Rick Pribyl 's memo which was also included in the
agenda raised a question regarding the separation of powers between
the City and the HRA. The reason the auditor's fee of $1 ,1000 is so
reasonable is because apparently the City Staff is going to be more
involved in the HRA's accounting. He was not sure what that was going
to mean in terms of time and dollars. He thought the HRA should find
that out and should get an estimate or a purchase order from the City
in order for the HRA to determine what it is going to cost them. They
may find out it may be more feasible for the HRA to have their own
accountant.
Mr. Boardman suggested this item be continued until Mr. Inman and
Mr. Herrick could be at the meeting to discuss this. He stated he would
put it on the next agenda.
HOUSING& REDEVELOPMENT AUTHORITY MEETING, OCTOBER 19, 1982 PAGE 8
Mr. Commers stated he would like to have Mr. Inman and Mr. Herrick
prepared to give an opinion on the "oversight responsibility" (referred
to in Mr. Pribyl 's memo), division of responsibility, and the estimates
for implementing this in terms of cost.
F. City Council Resolution #82-1982
Mr. Boardman stated this was a resolution approved by the City Council
on Sept. 27 "waiving all application fees pertaining to the city •
approval process directly applied for by the Fridley HRA' . He stated
it was for the HRA's information.
G. Von Klug & Associates
Mr. Commers stated that in a letter from William Von Klug, Relocation
Consultant, he is recommending the City hire Patchin Appraisers to make
fixture appraisals in the Center City project.
It was the concensus of the HRA members that Staff be authorized to
move ahead and retain Patchin Appraisals, Inc. , for a fee of $3,700.
H. Letter Sent to Vassar & Barthel for Ron Schoneman
At the last HRA meeting, Mr. Boardman was asked to write a letter to
Mr. Vassar supporting Mr. Ron Schoneman's position in trying to get
his deposit money back. Mr. Boardman stated he had written that letter,
but there had been no response.
I. Letter to Don Pollard of Cub Foods
Mr. Boardman stated this was a letter to Cub Foods from Kent Hill ,
Economic Development Assistant, regarding the soil conditions of the
area at 81st & University. According to the City engineers, the soil
is not all that bad and could be corrected with some assistance from
the HRA.
J. Letter from VFW
Mr. Boardman stated they have been working with the VFW regarding the
removal and relocation of the monument in Eisenhower Park. The VFW
membership voted to move it to Moore Lake Park by the flagpole. He
stated he needed the authorization to go ahead and get bids on moving
the monument. He stated it will probably need to be done within the
next couple of weeks.
It was the concensus of the HRA members to authorize the Executive
Director to get 2-3 bids on the removal and relocation of the monument
in Eisenhower Park and to take the lowest bid.
HOUSING & REDEVELOPMENT AUTHORITY MEETING, OCTOBER 19, 1982 PAGE 9
ADJOURNMENT:
Chairperson Commers declared the October 19, 1982, Housing & Redevelopment
Authority meeting adjourned at 10:36 p.m.
Respectfully subm'tted,
4D-f-Y-7Y,t Saba
f Recording Secretary
OLD BUSINESS AND CONTINUED ITEMS
TME CITY OF 1 __�_
—7-7) HOUSING1 .
::
and ::
REDEVELOPMENT MEMORANDUM ..
AUTHORITY E
FRIDLEY ...� .. : : ..
FROM EXECUTIVE DIRECTOR MEMO NO.82-77
DATE October 12, 1982 TO ACTION INFO.
SUBJECT Housing & Redevelopment Authority X
Letter From Jerry Paschke,
- Paschke Properties
I have received a letter from Mr. Paschke requesting assistance on soil
correction in the development of his property on 79th & Ranchers Road.
I have indicated that we have the willingness to assist him in the de-
velopment of his buildings, however, will need further information on
the amount of assistance that he requires. I hope to have additional
information for the meeting on October 19, 1982, however, I have ex-
pressed to Mr. Paschke that final determination cannot be given by the
HRA until we have all the information necessary to make a sound judge-
ment.
We will start working on the proposal and hopefully be able to establish
a reasonable timetable that will be satisfactory to Mr. Paschke.
JLB/jh
V W P G. W. PASCHKE PROPERTIES
■ 7260 UNIVERSITY AVENUE NORTHEAST, SUITE 545, FRIDLEY, MN. 55432
TELEPHONE 612-571-6468
October 5, 1982
Mr. Lawrence Commers
Housing and Redevelopment Authority
City of Fridley
6431 University Avenue N.E.
Fridley, Minnesota 55432
Gentlemen:
I am writing this letter to request aid in the development of
part of the property in the University Industrial Park in the
City of Fridley, Minnesota.
As you know, the tax increment was created in this area approx-
imately one year ago. I have been unable to get any assistance
from the City. If we are to continue development, we must have
some relief from the excessive costs. We have had bad ground,
high taxes, high special assessments, high permit fees, etc.
I would like to be present to speak on this matter at the next
meeting on the Meth of October 1982. Please advise if this is
feasible. 191-h
Thank you.
Sin• iely,
Gerasch e i
PASCHKE PROPERTIES
GWP/rp
c: Jerry Boardman
HERRICK & NEWMAN, P.A.
VIRGIL C.HERRICK ATTORNEYS AT LAW 6279 UNIVERSITY AVENUE N.E.
DAVID P.NEWMAN FRIDLEY.MINNESOTA 55432
571-3850
October 28 , 1982 -
Mr . Jerrold L. Boardman
Executive Director
Fridley Housing and Redevelopment
Authority
Fridley City Hall
6431 University Avenue Northeast
Fridley, Minnesota 55432
RE: NAHRO
Dear Mr . Boardman:
I have examined the letter of September 2, 1982 , from
Mr . Dean Otterson, President of NAHRO .
You have asked me my opinion as to whether the Fridley
Housing and Redevelopment Auhority may pledge money to the
Minnesota NAHRO for the purpose of providing legislative
assistance during the 1983 Minnesota Legislative Session.
I am of the opinion that this would be a valid expenditure
of funds .
I do not believe that this type of expenditure would jeopardize
the Fridley Housing and Redevelopment Authority' s tax status .
However, I do suggest that you call Mr . Otterson or
Mr . Stan Kehl of the Law Firm of HOLMES AND GRAVEN to check
on this point .
Sincerely,
VCH:JJH Virgil C. Herrick
=
c1:4 t3Am ceNni r NRA I m 0;00 5t►lgs4eA 4s Gee//as ,VoiC,'' .gertroEs,
thotrietrsim, 401 Lel;$14." eteMO,:ailfer re f/ ar► erfat/ce/:es, of __ fovX $416,5
died s e,, /At 101e/"1 Ci+;is. Tide ersfinX ! fiat OA* /2/0090 %a A A lieO
94$ Ar orga•,%tSiorl 7 44 'o w cbiA of M/1& ctCsf:a:/,es am/ :s
a09c41 Ably Arglivauat //*!J. A/4/1E :s eonse,/l ey k99sIoJ;ue assrs/'e•.ctc
sm„„. /. , ,Cory;,,, erf et, es 0,14( o i%.9 ,✓,,,.P•19L f 0,74..414.40..s c..✓ .3 r..? "mei,
9zr5.
THIE CITY OF I
-7:7) HOUSING ••
•
•
I ""�_
SVAIIIIV and -: ••
(\. REDEVELOPMENT MEMORANDUM
AUTHORITY OOP
•••� •
^;
FRIDLEY ••
FROM EXECUTIVE DIRECTOR MEMO NO. 82-79
DATE October 13, 1982 TO ACTION INFO.
SUBJECT Housing & Redevelopment Authority X
Request From Minnesota Chapter of
the National Association of Housing
& Redevelopment Authority Officials
for Support Funds for Legislative
Lobby and Promotion of Important
NAHRO Bills.
We have received a request from Minnesota NAHRO for support from its member
agencies in order to maintain the type of legislative technical assistance .
necessary to keep track and propose legislation important to housing and
community development actions. They are requesting a pledge of $250 to
support its efforts.
Last year was the first year NAHRO was active in legislative promotion and
was very successful in its lobbying effort. I am a member of the NAHRO
Legislative Committee and have been impressed by the ability of Stan Kehl
to get the job done. We are presently working on our 1983 calander for
legislation and need the ability of a person such as Stan Kehl if we are
to work and get the job done for the good of the• NAHRO membership.
JLB/jh
111113
‘.?e wing Minnesota's Housing a
Community Development floods
September 2, 1982
Mr. Jerry Boardman
Fridley HRA
. 6431 University Ave. N.E.
Fridley, MN 55432
Dear Mr. Boardman:
The New Federalism, steep reductions in federal housing subsidies, and the
State's takeover of the Small Cities Community Development Program indicate a
greater state influence than ever before on the ability of Minnesota NAHRO
members to meet their housing and community development goals. What happens at
the State Legislature has never been more important to us.
In recognition of this trend, Minnesota NAHRO hired Stan Kehl of the law firm
of Holmes and Graven to provide technical assistance with drafting and amending
legislation for the first time for the 1982 Legislative Session . He drafted
two bills and one amendment for NAHRO. All were enacted by the Legislature.
In addition to drafting and amending legislation, Stan was able to keep track
of other significant developments during the Session, so that important housing
and community development actions didn't take place without our knowledge.
Minnesota NAHRO members will need this kind of legislative assistance again
this year. Although it is expensive, it is far more economical than having
separate legislative assistance for every NAHRO member agency in the State .
This letter has two purposes. The first is to ask for a pledge from your
agency to help cover the costs of NAHRO legislative assistance during the 1983
Minnesota legislative session . A pledge in the amount of $250 is being
requested from agencies of your size and budget. If it's not possible for you
to contribute this full amount, a smaller contribution will certainly be
accepted. The second purpose is to invite you to participate in the NAHRO
Legislative Committee, which screens legislative proposals and recommends
priorities to the NAHRO Board. This is your chance to gain NAHRO's support for
your legislative idea, or just to gather a lot of useful information about
what's likely to be considered during the 1983 session . The Committee meets
approximately every 2 weeks during the fall of each year, up to the beginning
of the Legislative Session . The first meeting this "season" will be Thursday,
September 23, at 1:30 p.m. at the Metropolitan Council Offices, Room E, 300
Metro Square Building, St. Paul, MN 55101.
Thank you for your consideration of this pledge request. Please return the
enclosed pledge card as soon as possible and no later than November 1, 1982, so
that we can plan the extent of our Legislative activity for 1983.
Sincerely,
---.3)044k O1t
Dean Otterson
President
HOLMES& GRAVEN
•
CHARTERED
STANLEY E. KEHL 470 Pillsbury Center.Minneapolis.Minnesota 53402
Attorney at Law Telephone 612/33E-1177
MINNESOTA NAHRO ANNUAL CONFERENCE
A MINNESOTA LEGISLATURE UPDATE
• By
Stanley E. Kehl
Holmes & Graven, Chartered
The Legislature responded well to the legislative bills which NAHRO proposed, and
passed both the Commercial Rehabilitation bill and the Interest Reduction Program
bill. The Legislature also passed the proposed amendments, to Minnesota Statutes
Chapter 462C, the tax exempt bonding law, which were supported by NAHRO,
including an allocation of a portion of the state housing mortgage bond ceiling to
cities. In addition to these bills, many other laws affecting Housing and
Redevelopment Authorities were passed. The first three laws are summarized in
detail below. The others are summarized generally.
1. Chapter 590, H.F. 1365 (Sections 5 to 10) and Chapter 577, S.F. 2000
• (Section 6) -Interest Reduction Program.
Sections 5 to 10 of Chapter 590 and Section 6 Chapter 577 authorize housing and
redevelopment authorities to establish interest reduction programs. In establishing
the program the authority must promulgate regulations for the program. An
interest reduction program is considered a project for the purposes of Minnesota
Statutes Chapter 462, the HRA Law. Therefore, any revenues of the HRA which
could be used to finance any HRA project may be used to finance an interest
reduction program. The major provisions of the Acts are summarized below.
Section 5. This Section amends the definition of project contained in Chapter 462,
the HRA law, to include the interest reduction program in the definition of project.
Section 6. This Section grants to HRAs the power to carry out an interest
reduction program to assist the financing of the construction, rehabilitation and
purchase of housing units which are primarily for low and moderate income
individuals and related and subordinate facilities. An authority may pay:
a) in periodic or lump sum payments interest on loans made purusant to the tax
exempt housing bond law or the HRA rehabilitation loan laws,
b) any or all of the interest on bonds issued pursuant to the tax exempt bond
law or the HRA law for rehabilitation,
c) in periodic or lump sum payments all or any of interest due private lenders
by purchasers of housing units,
d) any or all interest due private lenders on construction of rehabilitation loans
by developers of housing units,
e) in periodic or lump sum payments loan interest due from a developer for
construction, rehabilitation and purchase of commercial facilities related to
the construction, rehabilitation or purchase of housing units receiving
interest reduction assistance,
f) any or all interest on bonds issued pursuant to Chapter 474, when issued for
a project related and subordiante to the construction, rehabilitation or
purchase of housing units receiving interest reduction assistance,
�) interest on commercial rehabilitation loans made pursuant to the
commercial rehabilitation sections of this bill, and
h) any or all interest on bonds issued for commercial rehabilitation loans
pursuant to the commercial rehabilitation sections.
Section 7. This Section provides that to develop the interest reduction program,
the authority must consider: availability and affordability of other governmental
programs; private market financing; and need for additional affordable mortgage
credit. The authority shall promulgate regulations for the program. Interest
reduction assistance can not be provided if the applicant can obtain affordable
assistance from private lenders.
Interest reduction assistance for rental housing must be allocated as follows for
housing units which are not in targeted areas:
1. 20 percent for Section 8 eligible units.
2. 55 percent for moderate income units as defined by the state housing
finance agency.
For owner-occupied units, 80 percent of the funds appropriated each year by an
authority for interest reduction assistance must be provided for families and
individuals with income, below 110 percent of the median family income.
Section 6, Chapter 577. This Section provides that the provisions of Section 7
which impose income limits on rental projects receiving interest reduction
assistance do not apply to projects in target areas, as that term is defined in
Section 462C.02.
Section 8. This Section requires the authority and the developer to enter into an
agreement whereby upon sale of the housing units which were constructed or
purchased using interest reduction assistant* the developer will share a portion of
the appreciation of the property with the authority.
Section 9. This Section provides a sunset provision which is effective January 1,
1986. New interest reduction programs may not be implemented after this date.
Section 10. This Section amends the section of the HRA law relating to project
costs. It makes it clear that in financing any project, including an interest
reduction program, the costs which the authority can finance pursuant to the HRA
law are the total project cost minus the proceeds from the sale or lease of property
in a project, if any.
2
Section 11. The Act is effective the day following final enactment.
2. Chapter 590, H.F. 1365 (Section 1 to 4) Commercial Rehabilitation
Program for Small and Medium Sized Buildings.
Section 1 to 4 of Chapter 590 authorizes cities to carry out programs for the
rehabilitation of small and medium sized commercial buildings. The city must
adopt a program ordinance which provides for the adoption of program regulations,
including a definition of small and medium sized commercial buildings. Loans
under the program may be for amounts up to $200,000 and the program may be
financed by the sale of revenue bonds. The major provisions of the Act are
summarized below.
Section 1, Subdivision 1. This subdivision states the need for a program to preserve
and rehabilitate small and medium sized commercial buildings and to provide
affordable financing for the rehabilitation.
Subdivision 2. This subdivision authorizes a city to establish a program for the
preservation and rehabilitation of small and medium sized buildings after making
the following findings:
1. commercial buildings in the city are deteriorating, under used, etc.
and in need of rehabilitation to meet building codes,
2. there is a need for the program,
3. affordable loans are not available, and
4. protection of health, saftey and welfare of residents of city is
dependent upon the preservation of small and medium sized
commercial buildings.
Grants may not be provided as a part of the program. In approving loan
applications the city must consider: •
1. the availability and affordability of private mortgage credit and of
other governmental programs,
2. whether the building is required to be repaired etc. pursuant to court
order, statute or ordinance, and
3. code compliance and effect on aesthetic quality of commercial area.
Subdivision 3. This subdivision establishes limitations on the program. Terms of
loans must be fixed so that all repayments and other contributions are estimated to
be equal or greater than the total estimated costs of the program. The term of a
loan cannot exceed 20 years. A loan cannot exceed 80 percent of market value of
property upon completion of rehabilitation, less prior mortgages. No loan can be in
excess of $200,000.
Subdivision 4. This subdivision authorizes the administration of the program by the
municipality or by contract with any qualified public or private non-profit agency
3
or enterprise. The city must adopt a program ordinance which defines "small and
medium sized commercial buildings" and which establishes criteria for eligibility
and priority.
Section 2. This section allows a city by ordinance to authorize its HRA or a county
HRA to exercise any or all or powers conferred by this act.
Section 3, Subdivision 1. This subdivision authorizes a city to issue and sell revenue
bonds or obligations payable solely from revenues or from other contributions to
the program. Bonds can be secured by a pledge or mortgage on the property. The
bonds shall not be payable from funds other than properties pledged or mortgaged
to their payment and a holder of a bond cannot force the exercise of the city's
taxing power to pay the bonds.
Subdivision 2. This subdivision authorizes the use of bond proceeds to make
program loans, establish a loan fund, establish a reserve fund for payment of bonds
and interest, pay interest due on bonds until the repayment money is sufficient for
that purpose, and pay issuance costs.
Subdivision 3. This subdivision allows a city to provide security for the bond
holders from mortgages on rehabilitated property and to contract with a trustee
for the repayment of the bonds.
Subdivision 4. This subdivision prevents a city from changing program regulations
to the detriment of the bond holders.
Section 4. This section states that the power granted by this act is in addition to
any other powers a city may have.
3. Chapter 624, H.F. 1894 - Tax Exempt Housing Bond Amendments.
This act generally amends Chapter 462C to conform the provisions of state law
with permitted activities under the Federal Mortgage Subsidy Bond Tax Act of
1980 (the Ullman Act). The Act also includes many technical and clarifying
amendments to Chapter 462C. In addition, the Act specifically allocates to cities
a portion of the state's housing mortgage bond ceiling.
In general, highlights of the bill include:
1. "Ullman" Act language relating to definitions and bonding limits is
substituted for the existing law, e.g. the definition of single family is
changed to include one to four unit buildings, cooperatives are
specifically included in the Chapter, and target areas are redefined
to include target areas under the Ullman Act.
2. Distinctions between single and multifamily housing project
requirements are clarified.
3. Required amounts for rehabilitation projects are reduced to $1,000
and rehabilitation is defined.
4
4. The bonding limitation for cities is repealed. The federal limitations
on amount of mortgage revenue bonds are, of course, still in effect.
5. A portion of the state ceiling for housing mortgage revenue bonds is
now made available to all Minnesota titles that may wish to do
housing programs if they comply with the provisions in section 14. A
city must submit a program to the State Housing Agency by May 30,
1982 to receive an allocation for the first round in 1982. An
additional allocation may be made on September 1. For 1983,
programs must be submitted by January 1, 1983, for the first round
allocations. An additional allocation may be made on September 1,
1983. Approximately$27.5 million will be available for distribution
each year. A city may submit programs totalling $10 million each
year.
6. Numerous technical changes are made which include the following:
a. the elements of a single family housing program and
multifamily housing program are more specifically identified,
and
b. a public hearing with 15 days published notice is required
before the adoption of a housing program.
4. Chapter 380, S.F. 2174 - Housing Development Fund for Section 8 Housing
Projects.
The act appropriates $200,000 to the housing development fund for the purpose of
financing developments which are totally or partially eligible for Section 8
subsidies. The money may be used for the purchase or making of long term
mortgage loans to sponsors of residential housing for occupancy by low or moderate
income families or directly to low and moderate income families pursuant to
Section 462A.05 Subdivision 3. The money can also be used for a reserve or sinking
fund pursuant to the issuance of bonds or notes by the Agency.
5. Chapter 471, S.F. 1691 - Conflict of Interest Disclosure by HRA
Commissioners and Employees; Special Law HRAs; Duluth HRA.
The act provides that not disclosure is not necessary if the effect on the
organization with which the commissioner is affiliated will be insubstantial. It
further specifies that a conflict is present if the commissioner or employee knows,
or has reason to know, that the organization with which he is affiliated is or is
likely to participate in a project or development which is the subject of the action
or decision. Also, the new law states that a commissioner who has a conflict shall
not attempt to influence an employee in any matter relating to the action in
question. The limitation relating to a commissioner who has a conflict counting
towards a quorom, is limited only to that portion of the meeting with which he has
a conflict. Finally, violation of the "effect of disclosure" subdivision is made a
gross misdemeanor.
The act also adds a provision to Section 462.445 which provides that all HRAs
created pursuant to special law have all the powers granted to HRAs created
pursuant to the Housing and Redevelopment Act.
5
Lastly, subject to approval by the Duluth city council, the act increases the number
of Duluth HRA commissioners from 5 to 7.
6. Chapter 489, S.F. 1566 - Civil Court Filing Fee Surcharge.
The act adds a ten dollar surcharge to all civil court filing fees, and a one dollar
surcharge on all conciliation court filing fees for the establishment of a fund to be
used for grants to legal aid services and alternative dispute resolutiuon programs.
All governmental units or agencies are exempt from the surcharge on civil court
.filing fees in county courts and Hennepin and Ramsey Municipal Courts. The
surcharges are to be transferred to the Supreme Court. Eighty-five percent of the
money will be used to give financial aid to legal service programs providing legal
aid to persons of low income, and 15 percent will be allocated to programs which
try to resolve disputes between people without resorting to the legal system. An
eleven member advisory committee will be appointed by the Supreme Court to aid
in the allocation of funds and review of applications for the funds. The Supreme
Court must make a report to the legislature analyzing the effectiveness of the
surcharge as a means of funding legal services.
7. Chapter 490, S.F. 1677 - Zoning Exclusions of Manufactured Homes.
This law provides that zoning codes cannot exclude manufactured homes which
comply with all other applicable zoning regulations.
8. Chapter 523, HF1872 - Omnibus Tax Bill.
Article III - Bond Interest. Provides that the maximum rate of interest on
government obligations will be determined monthly by the commissioner of finance
according to the published yield of the Bond Buyer's Index of 20 Municipals, plus
one percent, rounded up to the next full percent. The maximum private sale
amount is increased from $200,000 to $300,000.
Article W - Enterprise Zones. Provides for the designation of certain economically
depressed areas as enterprise zones, and provides a property tax reduction for
industrial employment property located in the zones. Effective July 1, 1983.
Article VIII - Renter Credit. Eliminates property tax refund or "renter credit"
payments to the elderly or disabled who lived in tax-exempt nursing homes.
Article IX - Research and Development Credit. Amends the provisons of the
research and development credit that was previously enacted. The credit is
reduced from a flat 10 percent to 12.5 percent of the first $2 million and 6.25
percent of the remainder. The credit is made available for contributions to an
organization such as Minnesota Wellspring to be used to provide seed capital for
new, technologically innovative enterprises.
Article X - Residential Energy Credit. Extends the termination date of the
residential energy credit from 1983 to 1986.
Article XV - Lease Purchase Agreements. Authorizes cities, counties, and school
districts to acquire personal property under lease purchase agreements and
provides that that property will be exempt from sales, license, and motor vehicle
excise taxes as if the government unit owned it outright.
6
•
Article XXXVI - Leasehold Cooperatives. Extends homestead treatment to
dwelling units occupied by members of a cooperative association which owns the
property or which is a partner in a limited partnership that operates the building
under certain conditions.
Article XXXVII - Municipal Industrial Development. Section 1 authorizes issuance
of bonds for tourism projects by cities in the metropolitan area.
Section 2 allows a city or redevelopment agency to exempt a nonresidential
building in a project from taxation for up to five years until it is sold or rented.
Article XXXVIII -Tax Increment Financing.
Section 1. This section amends the definition of a redevelopment district so that
70% instead of 50% of the parcels in a district must be occupied by buildings,
streets, utilities and other improvements for the district to qualify as a
redevelopment district based on the blighted buildings or blighting influences tests.
The result of this amendment is that 35% of the parcels, instead of 25%, must now
contain substandard improvements.
This section also amends the subsection relating to blighted vacant land so that for
vacant land to qualify as a redevelopment project, the land must be subject to
unusual terrain or soil deficiencies requiring substantial filling, grading or other
physical preparation for use. The costs of correcting these problems which can be
included to qualify the district as a redevelopment district cannot include costs for
trunk highways, county state-aid highways, municipal state-aid streets, county
highways and town roads or costs for most projects which could be financed
through special assessments. If this clause is used to qualify as a redevelopment
project the amendment now requires that 50% of the acreage must be subject to a
redevelopment contract.
This section also amends the definition of redevelopment district to allow property
which consists of vacant, unused underused, in appropriately used or infrequently
used railyards, rail storage facilities or excessive or vacated railroad rights-of-way
to qualify as a redevelopment district.
Sections 2 and 8. These sections amend the definition of administrative expenses
to include amounts paid for services provided by bond counsel, fiscal consultants,
and planning or economic development consultants, and increase the amount
permitted for administrative expenses to 10% of the tax increment expenditures.
Section 3. This section changes the term "district" to "project" in the tax
increment financing plan requirements. This change is also made in several other
sections of the bill. The result of this change is to allow an authority to use tax
increment generated within a tax increment district outside the district but within
the project within which the district was established. This section also expands
some of the items which must be included in the tax increment financing plan.
Section 4. This section allows the county board thirty days to review a tax
increment proposal.
7
Section 5. This section requires that when a municipality approves a tax increment
financing plan it must set forth in writing the reasons and supporting facts for each
of the determinations which it is required to make. The finding that the
development "would not occur solely through private -investment" is changed to a
finding that the development would not reasonably be expected to occur through
private investment.
•
Section 6. This section expands the type of changes which require the use of the
plan approval process prior to adoption to include reduction or enlargement of the
geographic area of the project and a change in the amount of capitalized interest.
This section also provides that if the type of district is changed the original
assessed value must be recertified.
Section 7. This section clarifies the authorization for an authority to return excess
increment to other taxing jurisdictions.
Section 9. This section prohibits the use of tax incrmeent for municipally owned
building used primarily and regularly for conducting the business of a municipality.
Section 10. This section makes it clear that acquisition of property may occur
outside of the tax increment district, if inside the project, and that the limitation
on the amount of land which can be acquired without development contracts is
applied to all land to be acquired, even if outside the district but with the project.
Section 11. This section reduces from five to four years the period of time in
which some action must be taken with respect to' each parcel in the district. A
parcel is defined as the tract or plat of land established prior to certification of
the district as a single unit for assessment purposes.
Section 12. This section was apparently intended to limit for 20 years the
subsequent inclusion in tax increment districts of parcels that were previously
included in economic development districts.
Section 13. This section requires that an inflation adjustment be made in the
original assessed value of economic development districts, based upon the increase
in assessed value of property in the district over the five years preceding
certification of the district.
Section 14. This section eliminates the county option of not including prior planned •
improvements in the original assessed value. Instead all prior planned
improvements for which building permits were issued between three and 12 months
prior to approval of the tax increment plan must be included in the original
assessed value of a district.
Section 15. This section specifically authorizes the sale of temporary bonds for
financing tax increment districts. The temporary bonds may be either revenue or
general obligation bonds. This section also authorizes a municipality to purchase
its temporary bonds.
Section 16. The above amendments, except the portion of Section 6 relating to the
change of district type, are effective August 1, 1982, for districts for which
certification is requested after June 30, 1982. The limitations on changes in
8
district types are effective for districts changed after the effective date of the
Act.
9. Chapter 545, H.F. 930 -Data Practises Act Amendments.
This Act amends various sections of the Minnesota Government Data Practises
Act, some of which are applicable to housing and redevelopment authorities. The
definition of Individual is amended to include parents or guardians of an individual
adjudged mentally incompetent. Temporary classifications are now effective for
.24 months instead of 18. Personnel Data which is public now includes honors and
awards received, and data which accounts for the individual's work time. An
agency may now release Investigative Data which is classified as protected non-
public data or confidential data when it will aid the law enforcement process,
provide public health or safety or dispel widespread rumor or arrest. Finally, a new
category called Appraisal Data is created and under certain circumstances such
data is classified as confidential. These amendments are effective the day
following final enactment.
10. Chapter 473, H.P. 534 -State Archives and Government Records.
This Act requires all school districts, municipal subdivisions or corporations, other
public authorities or political entities to keep all records of official activities and
set standards and requirements for preserving and copying government records. It
provides for the administration of the state archives, classifies data and provides
for public access to local government and archives records with certain
restrictions. A penalty for anyone who destroys, removes, or alters government
records is also included. The Act is effective July 1, 1982.
11. Chapter 577, S.F. 2000 (Section 5) - Use of Tax Increment Funds for
Security for Housing and Industrial Revenue Bond.
Section 5 of this bill expands the use of tax increment to allow for the
establishment of reserve funds and the securing of various security devices for
industrial revenue bonds issued pursuant to Minnesota Statutes, Chapter 474 and
housing revenue bonds issued pursuant to Minnesota Statutes, Chapter 462C. This
amendment is effective the day following final enactment and applies to all tax
increment districts covered by Section 273.71, et seq.
12. Chapter 601, H.F. 560 -Costs in Certain Condemnation Cases.
This act allows a condemnee to recover costs, expenses and attorneys' fees if the
condemnation proceeding is dismissed based on a challenge made under the
Minnesota Environmental Rights Act. If the dismissed condemnation was part of a
project which received an environmental review pursuant to the Minnesota
Environmental Policy Act, the reviewing agency will have to pay the assessed
costs, expenses and attorneys' fees.
13. Chapter 632, S.F. 1994 -Shared Appreciation Mortgages; Bank Investment in
Community Welfare Projects.
Previously, the provisions relating to shared appreciation mortgages only allowed
the lender to get his portion of the appreciation upon the sale of the mortgaged
9
property by the borrower. This law adds a provision allowing the lender to get his
share, when the loan matures, if the loan is made in connection with a housing
program undertaken by a governmental unit. The law further provides that the
shared appreciation mortgages can be declared due upon the sale of the mortgaged
property.
The aet also allows a bank or trust company to invest in community welfare
projects. An investment in any single project cannot exceed 2 percent of the
institutions capital and surplus, and the aggregate of all such investments cannot
exceed 5 percent of the institutions capital or surplus.
14. The governor vetoed S.F. 1988 which would have governed the use of
Community Development Block Grant Funds by small cities.
I
10
GM H C o GEORGE M. HANSEN COMPANY. P.A.
A Professional Corporation of Certified Pahl', A,,ounrann
November 1, 1982
Mr. Sid Inman
Director of Central Services
City of Fridley
.6431 University Avenue N.E.
Fridley, Minnesota 55432
Dear Mr. Inman:
In reply to your question of the City's "entity" for financial reporting purposes,
I wish to offer the following comments.
In December of 1981 the National Council on Governmental Accounting issued
• Statement 3 "Defining the Governmental Reporting Entity".
Statement 3 defines the entity "... to include all governmental activities, organiza-
tions and functions necessary to achieve the desired objectives of comparability,
comprehensiveness and responsibility and control".
Two of the criteria set forth in Statement 3 as to whether or not an organization is
part of the entity for reporting purposes are:
1. Selection of governing authority. Appointment of governing board of
the organization by elected officials; and,
2. Ability to significantly influence operations. Approval of elected
officials of projects through control of financing.
We believe both of these criteria are applicable to the Fridley Housing and
Redevelopment Authority.
The authority's commissioners are appointed by Council and council authority is
necessarf to issue bonds to finance Authority projects; therefore the Authority
should be included with the City as part of its "entity".
The inclusion of the Authority in the City's General Purpose Financial Statements
would in no way affect the operations or administration of the Authority.
It is encouraged, but not mandatory, to include organizations such as the HRA in
the financial statements for 1982. 'These organizations must be included in the
1983 financial statements.
If such an organization is not included in the 1983 and subsequent financial statements,
our opinion would have to state that all organizations of the City are not included.
Such an exclusion could be basis for the National Council on Governmental Accounting
to deny a certificate of conformance.
Very truly yours,
JGM:ap - J. Gregory Murphy
g y � y
175 SOUTH PLAZA BUILDING WAYZATA BOULEVARD AT HIGHWAY 100 MINNEAPOLIS.MINNESOTA 55415 612/546-2566
•
CITY OF FRIDLEY
MEMORANDUM .
TO: NASIM M. QURESHI, CITY MANAGER
FROM: SID INMAN, DIRECTOR OF CENTRAL SERVICES
SUBJECT: HRA FINANCIAL REPORTING
DATE: OCTOBER 7, 1982
Attached is a memorandum from Rick Pribyl describing the change in
the financial reporting requirements for the HRA activity. In summary,
this will have two effects on the City of Fridley.
First of all, the additional staff requirements that he has fully
described in his letter. This will probably have its greatest effect
on the time-lines involved in processing the annual report and should
substantially increase the amount of time charged to the HRA due to the
fact that our staff will be preparing the entire report this year. As
you are aware in years past, the auditing firm has prepared the
schedules.
There will be additional staff time involved on the day to day ongoing
HRA accounting. Since we will be preparing the annual reports, it will
require greater detail of attention during the year for HRA accounting
activities.
The second major area of potential impact is in the current separation
between the management function of HRA and that of the City of Fridley.
While the City of Fridley currently maintains the position that HRA
and City business are separate, our annual report will disclose them as
a single entity. Therefore, the financial community will perceive us as
one single organization. Since decisions that the HRA makes will have a
direct effect on our financial reporting requirements, I feel it is
important that you and the City Council be aware of this change.
Again, we will ensure that the financial reporting for the City and HRA
follows NCGA standards and is in compliance with generally accepted
accounting principles.
If you have further questions on this matter, please feel free to let me
know.
SCI:sh
cc: John Flora, Public Works Director
Jerry Boardman, HRA Director
•
MT Q PRBI
■ ENOlA • DOW •
•
'm: SID DIIAN, DIRBCRIt OF CENTRAL SERVICES
FRM: RICK PRIM, FINANCE OFFICER •
SUBJECT: FINANCIAL STATEMENT
DATE: OCIOBEtt 6, 1962
•
This letter is necessary to make you aware of the Amounting changes that are
necessary as a result of Statement No. 3 as set out by the NCGA. The subject
of Statement No. 3 is the defining of the Governmental Entity. The National
Council on Governmental Accounting develops, promulgates, and interprets
principals of Accounting, Financial Reporting and related financial management
activities for governments in the United States and Canada. It is necessary
that we keep abreast of the changing accounting principals as they set out so
that we may maintain the certification that we presently have.
Statement No. 3 defining a governmental reporting entity is a major change in
the Accounting structure as the City of Fridley has reported in the past. The
NC)GA believes that the definition criteria should be broad enough to include
all governmental activities, organizations and functions necessary to achieve
the desired objectives of comparability, comprehensiveness and responsibility
and control. It goes on to state that all functions of government must be
accountable at different levels whether it be Federal, State or Local and
should be reported at its lowest level of Legislative authority that is
consistent with the criteria as set out by this statement. The controlling
criteria for dealing with inclusion in a entity's financial statement seems to
boil dawn to whether there is exercise of oversight responsibility by the
goverinental units elected officials. Oversight responsibility is derived
from the governmental units power and includes but is not limited to financial
interdependency, selection of governing authority, designation of management,
ability to significantly influence operations and ability for financial
matters. Oversight responsibility implies that a governmental unit is
dependent-on another and the dependent unit should be reported as part of the
other. I emphasize the last sentence in that this seems to be a controlling
factor in whether we should be including the Fridley HRA in our Financial
Statement.
With the review of Statement No. 3, it appears imperative that in 1983, we
:oust include the Fridley ARA as an integral part of our Financial Statement.
The inplementation date as stated in Statement No. 3 is December 31, 1983 but
earlier inplanentation is suggested. This implies that we must, based on our
prior experience, implement this change in our 1982 Financial Statement.
By Implementing the stove suggested changes, it drastically changes the work
lcad necessary to prepare the City of Fridley's Financial Statement. The
first change that must take place is that the Accounting Staff is now
responsible for the full preparation of the HRA Financial Report. To include
Ibis report in the City's Financial Statement, we must pick up memorandum
totals that are on the combined level in the BRA Reports and dm/ these totals
as a Special Revenue Fund in the City's Financial Statement. To do this, we
must first of all close out the Fridley BRA Books and prepare their Financial
Statement and then bring these totals into the City of Fridley's Financial
Se bort. In doing this additional work, this will severely hamper the time
. line that we had set up for the 1982 Financial Report. As you know last year,
Greg Murphy from George M. Hanson & Co. commented on the simplicity of the
audit for Year Faded 1981 because of the 1ociledge that the Staff had gained
over the last few years in dealing with the Comprehensive Financial Report.
Because this year we are burdened with an additional task, this will set back
our time line anywhere from 3 to 4 weeks. So, we are again looking at June
30, 1982, possibly as a completion date whereas we could be looking at May 30,
1982, as a completion date if not for the Fridley HRA. There will be many
problems that I am not aware of, as of this point in time, in dealing with the
completion of the Fridley BRA Report that I will keep you abreast of as I
learn of them. This memo is designed basically to inform you of a new
statement that we have been handed down and also, to initiate any conversation
between you and I in implementing the above noted changes.
Thank you!
RP/bd
26/10
1 •
Rail �-, R-ck
I ,,7
. ,..1 . DEFINING THE
..!?
..,:A
GOVEll1Vi.
ENTAL
. .
. ,,
.,It REpoRTitli-F EnTiTy
•
..1
_..., .
..i . . .
1981 NCGA meeting—at which the NCGA
The authors
• . approved the issuance of Statement no. 3—
1 state that the American Institute of CPAs state
recommend and local government accounting committee
revisions in NCGA advised the NCGA that more specific imple-
mentation guidance should be provided in the
., Statement no. 3 and statement. The minutes also state that the
NCGA executive committee had discussed
" this point but, "while in agreement that quid-
offer suggestions
•
Y ance on implementation is necessary . . . de-
cided it should be provided in . . . another
.4 for implementation. Statement through another technical agenda
project."'In February 1982, the chairman of
. by Robert J. Freeman the AICPA committee wrote to state CPA so-
=T3 and Craig Douglas Shoulders cieties' presidents and executive directors,
r. .i
.4p ! noting that the AICPA committee expected
a..^i Under what circumstances should one state or many implementation questions on Statement
local government be treated as part of another no. 3, that it was studying various implemen-
:�.4 • and included in its financial statements? The tation concerns and that it was soliciting input
.�w} •• correct answer to this question is essential to from the state societies on Statement no. 3
` improving governmental financial reporting. implementation questions and concerns.'
As an American Accounting Association Statement no. 3 is effective for fiscal veigs
`. committee on the entity concept noted, "The endivafte
e r December 31_ t 9R? ..� t
entity concept is indispensable to accounting. soon be applied by all state and local envPr>7_
`f The role of the entity concept in accounting is __Tents. However, it doesn't provide an ade-
'" . to provide;uidance in determining what in- qua and appropriate basis for defining the
' formation is relevant and what information is governmental reporting entity.
' "`: i not.'"
Recognizing this, the National Council on
Governmental Accounting (NCGA) ad- 'NCGA, "Summary of the 24th Meeting of the National
.�'�_ Council on Governmental Accounting." December 7-9,
>,- dressed the problem of defining the govern- 1981.
`-,r• mental entity for general purpose financial re- 'Edward M. Klasny to state CPA societies' presidents and
• ".. •� porting. The NCGA efforts culminated in executive directors, February 18, 1982.
''' ; NCGA Statement no. 3,Defining the Govern-
: : menta!Reporting Entity, which was issued in
' December 1981.2 ROBERT J.FREEMAN,CPA. Ph.D., is distinguished pro-
' fessor of accounting at Texas Tech University.Lubbock.Tex-
, However, the adequacy of Statement no. 3
'? 9 Yas.A charter member of the National Council on Governmen-
- ` was questioned before and as it was issued. tat Accounting(NCGA), on which he served from 1974 to
.ft-` For example, the minutes of the December 19�• Freeman is an American Accounting Association
r, adviser to the NCGA.He also is a memlxrr of the Association
'- ;� of Government Accountants,the Municipal Finance Officers
' (American Accounting Association Concepts and Standards Association and the Arm-lain Institute of CPAs. CRAIG
Committee, •'The Entity Concept:* Accounting Review, DOUGLAS SHOULDERS,CPA.D.B.A.,is an assistant pro-
-* April 1965.p.358 fessor of accounting at Virginia Polytechnic Institute and State
v�: 'National Blacksburg.Virginia.Dr.Shoulders is a member
National Council on Governmental Accounting Statement of the Virginia Society of CPAs,the AAA and the National
-`` J •
no.3,Defining the Governmental Reporting Entity(Chicago, Association of Accountants.
4"` 111.:NCGA. 1981).
50 Journal of Accountancy.October 1982
This article analyzes Statement no. 3, not-
ing --�.
its deficiencies; sets forth the underlying
concepts and definition that we believe are
'Witmil:14:1\
proper for determining the governmental re-
porting entity;recommends revisions in State- - \,'';,II
ment no. 3; and offers several practical sug- A14.-,' f . - 1
gestions to practitioners who must implement •
Statement no. 3,as written, in the near future. '%,,i,
The Governmental
I r -^ 1-.
Reporting Entity Issue .'� -``
- Properly identifying the governmental finan- 3 ..
.
cial reporting entity presents problems pri- ._ ' o -�
madly because units of general government— y "
such as cities, counties and states—often L� _ �� �
have various degrees of authority over and �� .
responsibility for other legally separate gov- `'�'::_ A, �� •)
ernmental or quasi-governmental organiza- L
tions, such as school districts, housing au-
thorities, building authorities, fire districts,
water districts and transit authorities. This is
illustrated in exhibit 1, page 52. The problem
is to determine which, if any, of the legally the federal, state or local level . and
separate, but associated, organizations in ex- should be reported at the lowest level of legis- +
hibit I should be reported on as if they are City lative authority that is consistent with the en.-
of Lubburg departments or agencies. feria of [the] statement.':1
If an associated organization is included in The NCGA concluded that the basic crit-
the City of Lubburg reporting entity, its as- don for identifying other governmental orga•
sets, liabilities, equities, revenues, expendi- nizations that should be included in a govera-
tures and expenses will be reported as if they ment's reporting entity is "the exercise of
are city assets, liabilities, etc. The associated oversight responsibility over such agencies by
organization's financial statements also may the governmental unit's elected officials.'"It
be separately issued. noted that oversight res
ity is derived'
Excluding an associated organization from from one government's powerl over another-
a governmental reporting entity doesn't pre- and includes, but isn't limited to, these
chide the government from reporting its trans- "manifestations"of oversight responsibility:
_
actions with, receivables from or obligations ; ❑ Financial interdependency.
with respect to the associated organization. : 0 Selection of governing authority.
For example, the fact that the City of Lubburg 0 Designation of management.
guarantees the debt of the Lubburg indepen- 0 Ability to significantly influence oper-
dent school'district can be disclosed appropri- ations.
ately in the city financial statements or notes, 0 Accountability for fiscal matters.
whether or not the school district is included The NCGA also stated that dependency of
IN
in the city financial reporting entity. the associated organization is what it intended
In sum, the governmental reporting entity oversight responsibility to mean: "Oversight
issue is the following: When are associated responsibility implies that a governmental
organizations, in substance, part of another
governmental unit for general purpose finan- 5NCGA statement no. 3.pars. 7-8.
cial reporting purposes? When are they not? slbid.. par. 9.
NCGA Statement no. 3
NCGA Statement no. 3 is based on two prem-
ises:
I ". . . a broad definition is necessary.
2 ". . .all functions of government are corn
sidered to be responsible to elected officials at
t Journal of Accountancy.October 1982 51
L
Exhibit 1
fi;
The governmental reporting entity Issue
A City of Lubburg
C Lubburg building authority
i Governing authority is appointed by the
mayor.
2 Authority was established to finance
I • construction of civic center, which is
l 0 I
leased to the city.
i
1
l ,;
n
j! _ . -
•
B Lubburg independent D Lubburg transit authority
school district
1 Governing authority is appointed by the
i ! 1 Governing authority is elected by citi-
zens mayor, on city council approval, for stag
-
III of Lubburg.
gered five terms.
2 Boundaries of city and school district are 2 The transit authority serves primarily the
Lubburg arca.
coterminous.
3 The city often guarantees school district 3 The city doesn't approve the transit au-
debt issues. thority budget and isn't responsible for its
•• 4 The school district establishes its own deficits or its debts.but sometimes provides
budget and tax levy. operating subsidies. -
I --
'l� The issue:Should the City of Lubburgl
and D? Some other combination of A, B nCaand D?ing entity be only A?A and B?A and C?A
]
unit is dependent on another and the depen-r include .[l] responsibility for financing deli-
• `.. dent unit should be reported as part of the cits, 12] entitlements to surpluses and [31.
is - other. Further, the NCGA stated that the guarantees of or `moral responsibility' .for
t most significant manifestation of oversight re. debt."'
sponsibility is financial interdependency.. The NCGA also concluded that in some
• This term isn't defined in Statement no. 3,but situations in which the basic exercise of over-
the NCGA observed that sight responsibility criterion isn't met, other
To the extent that a separate agency pre- factors in the relationship between an associ-
duces a financial benefit [to] or imposes-4i
, poses�e ated organization and the governmental unit
financial burden on a unit of government, us- may be so significant that excluding it from
1 ers of financial statements need to know the the government's reporting entity would make
aj
{ magnitude of such activity and its present and its financial statements misleading. These
prospective impact on the reporting entity. other factors include
Manifestations of financial interdependency pe y L1 Scope of public service—whether the ac-
livity is for the benefit of the reporting entity
Ibid.,par. 9. and its residents and whether the activity is
.. conducted within the geographic boundaries
of the governmental unit and is generally
available to its citizens.
•
Abid..par. 10.
52 Journal of Accountancy,Octobcr 1982
it
El Special financing relationships—whick propriately including associated organiza-
aren't defined in Statement no. 3 but are in. tions, since Statement no. 3 seems biased to-
tended to include situations such as the Mu- ward including other units in a government's
nicipal Assistance Corporation("big MAC") reporting entity. Indeed, strict application of
of New York City and building authorities the Statement no. 3 criteria often would re-
similar to the one described in exhibit 1? quire-a government's reporting entity to in-
Finally, Statement no. 3 requires that the elude associated organizations for which it '
notes to the governmental unit's financial has little oversight responsibility. _
statements disclose(1)the criteria used in de- The second premise also is a faulty basis for l
termining its reporting entity, including how defining the governmental financial reporting
specific elements of the criteria were consid- • entity. One can hardly argue whether all funs-
- ' ered and applied, and (2) any agency that, tions of government are responsible to elected
despite a "positive response" to the State- officials at some level of government. But the
ment no. 3 criteria(assumedly the agency met crucial reporting entity consideration is
one or more criteria), was excluded and why. whether the nature and degree of that Criticisms of Statement no. 3 respon-
sibility makes the function in substance part of
the governmental unit of which those officials
The NCGA is to be commended for setting are a part.
forth governmental reporting entity definition Next are the problems with the exercise of
criteria in Statement no. 3. There were none the oversight responsibility criterion. First, ,+•
before the statement was issued, and the the ability to exercise oversight responsibility
NCGA attempted to fill that void on a timely would be a more logical and appropriate crite-
basis. Unfortunately, Statement no. 3 doesn't cion than the exercise of oversight responsi- ,
provide a satisfactory solution to the govern- bility. For example, assume that two cities
mental reporting entity issue. Its major weak- have independent school districts and each
ness is that there is no logical, cohesive, un- has the ability to exercise oversight responsi-
denying concept for the entity criteria set bility over the associated school district. The
forth. No logical underlying interrelationships first city and its school district haven't had
are apparent among its exercise of oversight major conflicts for many years, and that city
responsibility, special financing relationships doesn't exercise its oversight responsibility.
and scope of public service criteria. The second city has had major disagreements
In addition,the two basic premises of State- with its school district in recent years, so it
ment no. 3 don't appear sound. The NCGA exercises its oversight responsibility often.
gives passing recognition to the fact that im- Should the second school district be included
properly including an associated organization in the second city's reporting entity and the
in a governmental financial reporting entity first school district be excluded from the first
c[n be as misleading as excluding an organi- city's reporting entity?Surely not.The impor-
zation that should be included. Statement no. tant factor is that each city can exercise over-
3 says, "Criteria for defining the reporting sight responsibility, not whether it is exercis-
entity would help the users of financial reports ing it. Further, if the exercise of oversight
by reducing the possibility of arbitrary exclu- responsibility rather than the ability to exer-
sions or inclusions of various organiza- cise overight responsibility is the determin-
tions.".10 ing facts=:, a government might need to in-
The NCGA states later, however, that a elude some associated organizations one year
broad entity definition is necessary to provide because it exercised oversight responsibility
users with all necessary information.The per- and exclude them the next year because it
ceived need for a broad entity definition ap- hadn't.
parently outweighed the need to prevent inap- Another major problem with this criterion `
is that Statement no. 3 doesn't indicate the
'Ibid., par. ll. degree or extent of oversight responsibility
10lbid.,par. 5B. that must be exercised to warrant including
associated agencies in a government's finan-
cial reporting entity. Several manifestations
of such responsibility are listed and discussed
in Statement no. 3, but it doesn't indicate at
what point either(1)the individual manifesta-
tions of the exercise of oversight responsibil-
54 Journal of Accountancy,October 1982
•• ity subcriteria or(2)the overall exercise of the treating B as if it were part of A in A's finan-
oversight responsibility criterion are met. cial statements?Is it logical to view the assets,
Financial interdependency—indicated by a liabilities, equities, revenues, expenditures
government's responsibility for financing and expenses of B as if they were A's in A's
deficits, entitlement to surpluses and guaran- financial statements?Surely not. Finally, the
tees of or moral responsibility for debt of an scope of public service criterion isn't a discri-
associated organization—is singled out by the minating criterion. Most associated organiza-
NCGA as the most significant manifestation tions—except joint ventures—would meet
of the exercise of oversight responsibility. this criterion. Thus, the scope of public ser-
The emphasis on such financial relationships vice criterion isn't sound.
between governmental units and associated Statement no. 3 also inch:des, but doesn't
tt• define or explain, a special financing relation-
. . defining the governmental reporting ships criterion to be considered when there is
no oversight. While this criterion is illustrated
entity based on the ability-to-control in the appendix to Statement no. 3, and ap
concept . . . is consistent with the pears to be sound, it should have been defined
and explained in the body of the statement.
NCGA's basic accounting and financial Finally, Statement no. 3 permits too much
reporting objectives . " flexibility in its application. Such flexibility
isn't surprising since(1)the three major cr
ria set forth in Statement no. 3 have no clear,
organizations is misplaced. We agree that, as logical, underlying relationship and(2) State-
the NCGA states, "to the extent that a sepa- ment no. 3 provides no bench mark for judg-
rate agency produces a financial benefit[to]or ing when its primary criterion—exercise of
imposes a financial burden on a unit of gov- oversight responsibility—is met. This flexi-
ernment, users of financial statements need to bility is most evident in paragraph 15, which
know the magnitude of such activity and its states, "In any instance where there is a posi-
present and prospective impact on the report- five response to the criteria set forth tin State-
ing entity."However,as noted earlier, such ment no. 3],the specific reasons for excluding
financial benefits and burdens can be dis- such agencies from the entity shall be dis-
closed appropriately in the government's fi- closed."12 What constitutes a positive re-
nancial statements and notes without includ- sponse isn't clarified. Further, in effect this
ing the separate agency in the government's says—or may be construed as saying—that
reporting entity. even when the criteria for including an associ-
Statement no. 3 also includes scope of pub- ated organization arc met, a government may
Iic service as a basis for including an associat- exclude it if the reasons for doing so are set
eti organization in a governmental reporting forth in the notes to the financial statements.
entity when only partial oversight exists. Par- Such an all-encompassing loophole isn't ap-
tial oversight implies that there is some degree propriate in a standards document,
of oversight responsibility that isn't sufficient
to'warrant including an associated organiza- A Conceptual Foundation for
tion in a government's financial reporting en- Defining the Reporting Entity
tity. But the lesser degree of oversight neces- The governmental reporting entity question
sary isn't clear. Further, the logic for the has been recognized as a challenging one, and
scope of public service criterion isn't appar- several groups and individuals recently have
ent. The scope of public service criterion pro- made significantly different recommencla-
vides that an associated organization should tions with respect to it.Before Statement no. 3
be included in a government's reporting entity was issued, different sets of criteria for defin-
if its activities arc (1) for the benefit of the
reporting entity and its residents or (2) con- 121bid., par. 15.
ducted within the geographic boundaries of
the reporting entity and generally available to
its citizens. Does the fact that organizations A
and B serve the same people or area warrant
"Ibid.. par. 10.
56 Journal of Accountancy.October 1982
•
ing the governmental reporting entity were vate businesses. We don't believe that the
proposed or used by governmental reporting entity issue differs to
0 The AICPA state and local government such an extent that a different conceptual
accounting committee in Accounting and Fi- foundation is necessary.
nancial Reporting by State and Local Govern- Using the ability to control associated orga-
ments:An Experiment." nizations as the conceptual foundation for de-
0 The Council of State Governments in its fining the.governmental reporting entity also
1982 exposure draft of a research report,Pre- is consistent with the overall goal of account-
ferred Accounting Practices for State Gov- ing and financial reporting for governmental
ernments.'4 units set forth in NCGA Concepts Statement
❑ A 1978 Coopers & Lybrand study by no. 1,Objectives of Accounting and Financial
lames A. Hogan and Anthony.1. Mottola,Fi- Reporting for Governmental Units: "To pro-
nancial Disclosure Practices of the American vide(I) financial information useful for mak-
Cities I!:Closing the Co,nnulications Gap.'s ing economic, political and social decisions,
❑ A 1980 NCGA research report by William and demonstrating accountability and stew-
W. Holder, A Study of Selected Concepts for ardship, and (2) information useful for evalu-
- Government Financial Accounting and Re- ating managerial and organizational perfor-
porting." mance.''''
Careful analysis of these four sets of pro- Performance evaluation and responsibility
posed criteria indicates a basic commonality accounting are based on the ability-to-control
. among them—the notion that all associated concept. Thus, defining the governmental re-
organizations which a government can control porting entity in a manner that is useful for
should be included in its reporting entity, performance evaluation and responsibility ac-
Only Statement no. 3 requires exercise of sig- counting is conducive to achieving the overall
nificant influence or control rather than the goal of governmental accounting and finan-
ability to do so. cial reporting. Further, defining the govern-
mental reporting entity based on the ability- --- --
Ability to control to-control concept also is consistent with /
We believe that the ability to control is the ... the NCGA's basic accounting and finan- /' t. ,I
appropriate conceptual foundation for defin-. cial reporting objectives derived from this f
ing the governmental reporting entity. The overall goal. ; '+ -
importance of control in each of the proposed _ •
governmental reporting entity criteria indi- Responsibility, accountability -
cates that this foundation already has signifi- and the reporting entity decision
cant academic and practitioner acceptance. The basic problem in the governmental re- 'd°,
Further, the ability to control is already the porting entity decision is identifying the ap-
accepted basis for identifying the reporting propriate degree of governmental unit respon-
entity forvoluntary health and welfare organi- sibility and accountability for each associated
zations,other nonprofit organizations and pri- organization. The treatment of associated or-
ganizations should be consistent with the de-
""State and Local Government Accounting Committee,Ac- gree of the government's accountability for
counting and Fipancial Reporting by State and Local Govern- the associated organizations. In turn, a goy-
/twits:An Experiment(Ncw York: AICPA. 19811. $
'State Government Accottntin g Project Ex eminent's degree of accountabilityfor an as-
1 Exposure Draft of a
Research Report, Preferred Accounting Practices for Stabs soCiated organization shouldn't be greater
Governments (Lexington, Ky.: Council of State Govern- than its degree of responsibility for that orga-
. mcnts, 1982). nization.
"James A.Hogan and Anthony 1.Mottola.Financial Disclo-
sure Practices of the Americom Cities II:Closing the Comma- For associated organizations whose prima-
. sure
Gap(New York:Coopers& Lybrand, 1978). ry purpose is financing a government's capital
"William W. Holder,A Study of Selected Concepts for Got_ acquisitions or operations (associated financ-
ern,nc•nt Financial Accounting and Reporting(Chicago, In.: ing organizations), a degree of governmental
NCGA, 1980). responsibility and accountability commensur-
ate with including the organizations in the
government's reporting entity is inherent in
"NCGA Concepts Statement no. I.Objectives of Accounting
•
and Financial Reporting for Governmental Units(Chicago,
111.:NCGA. 1982).par. 8.
,
Journal of Accountancy.o.tober 1982 57
1 �..
•
nature the and purpose
of the associated among ability to control(authority),responsi-
1-1j . organizations. For other associated organi- bility and accountability. A ke ues
' -•- ``-'~-�. zations(associated service orf n associated
ganizations), must be addressed in deciding y q soon that
~- the appropriate degree of responsibility and organization should be included i n a govern
accountability depends on the authority the ment's reporting entity is whether reporting
government has over the organizations. the organization as if it is ago
v
ern
A basic principle of performance evalua- partment or agency would appropriately ental de-
re-
tion is that one's degree of responsibility and flect the government's authority ver and re-
accountability for an activity should be corn- sponsibility for the associated organization.
mensurate with the degree of authority or con- The following section sets forth a basis for
trol he or she has over the activity. Similarly, • defining the governmental reporting entity
• a government's responsibility and account- that is founded on the concepts of ability to
ability for an associated service organization control (authority), responsibility and ac-
should reflect its degree of authority or control countability.
over that service organization. A government
has a degree of responsibility and accountabil- Defining the Governmental
ity sufficient to justify including an associated Reporting Entity
service organization in its reporting entity A government's annual financial statements
only when the government can control the should appropriately reflect the degree of re-
• major aspects of that organization's pro- sponsibility and accountability it has with re-
grams,projects and use of resources either(1) spect to each associated organization. Ac-
directly through its management authority or cordingly, the governmental unit financial
(2) indirectly through its authority over the reporting entity should include all associated
management of the other organization. organizations for which the government has a
For example, assume that the primary degree of responsibility and accountability
source of revenue for a school district is a city commensurate with treating the associated or-
tax levied for school district purposes. The ganizations as if they are governmental de-
only relationship between the city and the partments or agencies. The governmental re-
school district is that the city determines the porting entity, therefore, should be defined as
total amount of taxes to levy and remit for follows:
school purposes—it can't designate specific A government's financial reporting entity
amounts for specific purposes. Performance should include(I)all associated financing°r-
evaluation principles dictate that the city is ganizations whose primary purpose is(inane-
responsible if the school district can't perform ing its capital acquisitions or operations and
its functions adequately and effectively be- (2) all associated service organizations over
cause of too little funding. However, if the which the government has the ability to im-
problem is the improper, inefficient or inef- pose its will with respect to (a) which major
fective use of the resources available for programs,activities and projects the organiza-.
school district purposes, the school district— lion can undertake and(b)the portion of asso-
not the city--should be held responsible. Fur- elated organization resources which can be
ther, to report the school district as if it is part devoted to each major program, activity or
of the city would indicate a higher degree of projects"
authority, responsibility and accountability The application of this definition to associ-
than the state has given the city for the school ated service organizations can be illustrated
district. Reporting the amount of tax revenues by picturing an associated organization's re-
• provided to the school district and referring sources as a pie (pool of resources). If, as in
financial statement readers to the school dis- the school district example, a city can deter-
trict finanL ial statements would more appro- mine the amount of resources an associated
priately reflect city authority, responsibility organization receives but can't impose its will
and accountability. as to how the resources will be used, it can
One principal shortcoming of the various affect only the size of the pie—not the way it
proposed criteria mentioned earlier is that is divided or for what purposes..the pieces arc
they don't incorporate the relationships used. The city, therefore, should be held ac-
"Adapted from Craig D.Shoulders.''Criteria for Identifying
the Municipal Organizational Reporting Entity"
diss..Texas Tech University. 1982).p.134.
S8 Journal of Accountancy.October 1982
countable only for whether the pie was an has given a city only certain specified powers,
appropriate size. The associated service orga- however, the limitations of city authority are
nization--not the city—should be held ac- substantive. The city would have to convince
countable for whether portions of the pie were the state to grant it additional powers to re-
wasted or whether too large or too small a move such limitations; it can't attain such ad-
portion was used for some purpose. The city ditional powers unilaterally.
should report how large a pie it provided the Self-imposed restrictions of a govern-
organization, but the organization's financial ment's authority over associated organiza-
statements should disclose how the pie was tions should be ignored in defining its report-
divided(or used). However, if the city has the ing entity. If a government has the power to
authority to decide how the pie will be divided delegate authority, it also has the power to
- and for what major purposes the various exercise it. Only externally imposed restric-
pieces will be used, the city should be held tions of a government's authority should be
accountable for how the pie was used. In such considered substantive.
a case, the city should include the organiza-
tion in its reporting entity and report how the Focus on control relationships
pie was used as well as its size. Whether the Our reporting entity definition requires basing
city has the authority to determine how the pie the entity decision for associated service orga-
is to be divided is the deciding factor—not nizations on the government's ability to exer-
whether the city actually does so. cise control over an organization rather than
In sum,the governmental unit reporting en- on financial or scope of public service rela-
tity, and its financial statements, should ap- tionships.
propriately reflect its responsibilities and at- When a government has current or contin-
countabilities for associated organizations; gent financial responsibilities with respect to
and a governmental unit shouldn't be held an associated organization, it is apt also to
accountable for associated service organize- have some ability to exercise control. The
tions it can't control. The accountability-ori- control aspects of the relationship, not the fi-
ented approach to defining the governmental nancial ones, determine whether the govern-
reporting entity is summarized in exhibit 2, ment has the ability to impose its will on the
page 60. The key elements of our governmen- organization. The financial relationships
tal reporting entity definition, as applied to alone provide no authority for the government
associated service organizations, are dis- to impose its will with respect to(1)which
cussed further in the following sections. major programs, activities or projects
the organization will perform or(2) the • il ,
Abilityto Impose will
P portion of its resources to be devoted to
An important element of our definition is that each. Likewise,scope of public service
the government needn't be currently imposing relationships don't give a government :.j. ,;•1
its will on an associated service organization the ability to impose its will on an orga-
for it to be; included in the government's re- nization.
porting entity. If the government has the abil- Determining whether a governmental unit
ity to impose its will on an associated organi- has the authority to impose its will on an asso-
zation,the organization should be included in ciated service organization requires evaluat-
the government's reporting entity. ing control relationships between the govern-
' mental unit and each organization. For
Self-imposed v. externally example, if a city can abolish a service-orient-
Imposed authority restrictions • ed associated organization by simply usurping
To determine the degree of authority a gov- its functions,the city clearly has the necessary
ernment has over an associated service orga- degree of ability to control. If,however,a city
nization, it is necessary to distinguish be- must go through a lengthy process to abolish
tween self-imposed and externally imposed the organization or isn't authorized to perform
restrictions. If a state has given a city fairly
unlimited powers over an organization, and
the city delegates some or all of its powers to
the organization, it has restricted its own au-
thority.Since the city(typically)can unilater-
ally remove such limitations on its authority,
they are not substantive limitations. If a state
Journal of Accountancy,October 1982 59
IP
1
. i
3
s Exhibit 2
Flowchart of the accountability-oriented
basis for defining the governmental reporting entity
Start -
•
What
• is the
purpose of the Financing governmental
associated unit capitai
organization? . acquisitions or operations.
Include the associated •
organization in the
Providing services
governmental reporting entity.
_
Does Exclude the associated organization from the
the government governmental reporting entity—only financial or
have control No scope of public service relationships exist.
relationships with a. Disclose the relationships in an entity footnote
the associated and report financial relationships appropriately in
organization? the statements and the notes thereto.
.i % Yes
Does .
the :1
government Exclude the associated organization from
have the ability No the governmental reporting entity. Disclose
to impose its will ill the relationships in an entity footnote and
on the associated report financial relationships appropriately
- organization?' in the statements and notes thereto.
x
2
Yes .
Include the associated
organization in the .
governmental reporting entity.
•
• 'Stated in its entirety, the question is: Does the government have the ability to
impose its will over the associated organization with respect to(1) which major
programs,activities and projects the organization can undertake to fulfill its pur-
poses and (2)the portion of the associated organization's resources that can be
•
devoted to each major program, activity or project?
i 60 Journal of Accountancy_Actn.M.ros+
the functions the organization performs, the appear to have sufficient control over it to
ability to control doesn't appear to exist. warrant including the organization in the gov-
Similarly, if the governing body of an organi- ernment's reporting entity.
zation is appointed by a mayor or city council
and members can be replaced by the mayor or The Revisions Needed
at the council's discretion, the city has the Statement no. 3 should be revised or amended
ability to impose its will on the organization. as soon as possible to provide a logical frame-
If appointments to the governing body are for work for defining the governmental reporting
five-year terms which can't be terminated ex- entity. As a minimum,three major changes in
cept for proven negligence,however,the abil- the statement are necessary. First, the princi-
ity of the city to impose its will doesn't appear pal criterion must be changed from exercise of
to exist as a result of its power to appoint the oversight responsibility to the ability to exer-
• •governing body. cise oversight responsibility. Second, a con-
In sum,determining whether a governmen- ceptual bench mark must be established—
tal unit can impose its will on an associated such as a government's authority(and ability)
service organization requires focusing on con- to impose its will over associated service or-
trol relationships between the two entities. ganizations with respect to which major pro-
The requisite authority may be attained via grams,activities and projects the organization
one or more control relationships. The key can undertake and the general magnitude of
determination to be made is whether the gov- the resources which can be devoted to each. A
ernment's authority(ability to control), in the . conceptual bench mark doesn't require a
aggregate, gives it the ability to impose its weighting of criteria, which the NCGA quite
will on the organization. reasonably avoided. But such a bench mark is
essential to provide a basis for judging when
Control of programs, the oversight responsibility criterion is met.
activities and projects Third, the scope of public service criterion
Another important point in our governmental should be eliminated.
reporting entity definition is that the control The revised statement shouldn't be built on
required is control over the major functions, the premises of Statement no. 3 that (1) a
activities or projects which associated service broad definition is necessary and (2) all asso-
organizations can undertake and the portion of ciated organizations with appointed govern-
; their resources which can be devoted to each. ing bodies must be reported at the lowest level
+ It isn't necessary for a government to be able of government with an elected legislative
to control expenditures by line item (e.g., body. The focus should be on a government's
! supplies, building materials, etc.) for the or- responsibility and accountability for associat-
ganization to be included in its reporting enti- ed organizations,not the dependence of those
ty--.only for the government to be able to ex- organizations on the government. Further, fr-
ercise entrol over the major tasks an nancial interdependency should be eliminated
organization performs and the general magni- a as a factor--since an organization's financial
rude of the resources it devotes to each major dependency on another doesn't make the or-
i task or program. ganization in substance part of the other.
I. The revised NCGA statement should re-
1 Access to financial and operating data quire that associated organizations whose pri-
I Finally,if a government is to include an asso- mary purpose is financing a government's
ciated service organization in its financial re- capital acquisitions or operations be included
porting entity, it must have access to, or be in the government's reporting entity because
provided with,appropriate financial and oper- of the high degree of governmental responsi-
sting data for the organization—for example, bility and accountability inherent in the nature
financial statements prepared in conformity of such organizations. The treatment of other
with generally accepted accounting princi- associated organizations should depend on the
! pies-- on a timely basis. If the government government's ability to control them.
can't persuade the organization to provide In essence,Statement no. 3 must be revised
such information, the government wouldn't so that it centers on what it calls the "special
financing relationships" factor and on the
manifestations of oversight responsibility oth-
er than financial interdependency. The state-
i ment should explicitly recognize that these
:
Journal of Accountancy.October 1982 61
*_
. --- --
•
manifestations of oversight responsibility— ed organization ani '
Y g on that appears to meet the State-
selection of governing authority, designation ment no. 3 criteria is excluded from the gov-
• of management, ability to significantly influ- ernmental reporting entity, the disclosures re-
. ence operations and accountability for fiscal quired by paragraph 15 of Statement no. 3
matters—are elements of oversight authority should be made.
or control, not of oversight responsibility. In- , While the business accounting literature on
deed, all of these are covered, in essence, by the equity method and consolidations is writ-
the ability to significantly influence oper- ten in terms of ownership control, it provides
ations. additional guidance for defining the govern-
In sum, numerous substantive revisions of mental reporting entity if the ability to control
or amendments to Statement no. 3 are needed. is substituted for ownership and ownership
Therefore, the NCGA should consider defer- control. For example, the Accounting Princi-
ring its effective date unless such revisions or pies Board Opinion no. 18, The Equity Meth-
amendments can be provided by early 1983. . od of Accounting for Investments in Common
Suggestions to Practitioners Stock, criterion—"ability to exercise signifi-
cant influence over operating and financial
Pending revision or amendment of Statement policies"—is very close to our ability-to-
no. 3—or deferral of its effective date—gov- control criterion, and the examples cited re-
ernmental accounting and auditing practition- semble some of the manifestations of over-
ers must implement it "as written." Further, sight in NCGA Statement no. 3. As another
they can't wait until the 1983 year-end to do example, the first paragraph of Accounting
so—including one or more associated organi- Research Bulletin no. 51, Consolidated Fi-
xations in the governmental reporting entity nancial Statements,20might be paraphrased in
may involve considerable effort and time by the governmental environment as
all concerned—lest issuance of the 1983 state- The purpose of including associated organi-
ments be unduly delayed. zations in a government's financial statements
We suggest that Statement no. 3 be imple- is to present the results of operations and fi-
mented in view of our recommendations.This nancial position of the government and its in-
is possible because paragraph 15 of Statement eluded associated organizations essentially as
no. 3 permits flexibility in its implementation, if the group was a single governmental unit.
requiring only that the notes to a governmen- 3iven this purpose—and the purpose of
tal unit's financial statements include (I) a Statement no. 3—we believe the absolute
description of the criteria used in defining its minimum degree of control a government
reporting entity, (2) an explanation of how should have over an associated service organ-
those criteria were applied and (3) the rea- zation included in its reporting entity should
sons for excluding any associated organiza- be equivalent to that required under the equity
tions where there was a positive response to method. Further, we suggest that most, if not
- ' the Statement no. 3 criteria. all, should meet the equivalent of the consoli-
. Specifically, we recommend that an associ-' dation criteria. If in doubt, the service organi-
ated organization be excluded from the gov- zation should be excluded from the govern-
ernmental reporting entity unless it meets our ment's reporting entity, and the note
definition and criteria. We recommend this disclosures required by paragraph 15 of State-
because we believe (I)our governmental ref. ment no. 3 should be made.
porting entity definition and criteria are more.. Finally, while Statement no. 3 deals with
appropriate than those in Statement no. 3 and defining the governmental reporting entity, it
(2) there is more possibility of misleading 6- doesn't provide guidance on how included as-
nancial statement users by including an assn. sociated organizations should be reported in
ciated organization that should be excluded the government's financial statements. An
than by excluding an organization that should NCGA "discrete entities" task force is draft-
be included but is reported only in the notes to ing proposed guidance on this matter. Howev-
the financial statements.Again,if an associat- er,pending NCGA guidance, we recommend
that each included associate organization be
19Accounting Principles Board Orinion no. 18, The Equity
Method ofArrnun ting for lurrsunea.,in Caumon Sink(Kew
York: AICPA. 1971),par. 17.
Accounting Research Bulletin no.51.Consolidated Finan-
cial Statements(New York: AICPA. 1959).
62 Journal of Accountancy.October 1982
oiearly reported at least at the combining oj includes all associated financing organiza-
individual fund and account group level., tions but only those associated service organi-
Should an included associated organization nations that are in substance governmental de-
apply GAAP differently from that of the state partments or agencies. We also recommend
or local government—e.g., a city college or that practitioners implementing Statement no.
state university—we suggest that it be report- 3 not include an associated organization in a
ed as different fund types in the combined, government's reporting entity unless it meets
combining and individual fund statements our definition and criteria. Finally,we recom-
rather than its data being "blended" with that mend that Statement no. 3 be appropriately
of governmental funds with similar account- revised or amended by early 1983 or its effec-
ing measurements. five date be deferred.
. , Summary and Conclusion The NCGA intends to provide further guid-
ance on defining the governmental reporting
The governmental reporting entity issue is in- entity, and the AICPA state and local govern-
deed critical. Statement no. 3,the NCGA pro- ment accounting committee is monitoring
nouncement on the issue, has several major Statement no. 3 implementation issues and
deficiencies and doesn't resolve the issue ade- concerns. We urge governmental accounting
quately or appropriately. The NCGA dis- and auditing practitioners to share their State-
cusses numerous factors it believes tend to ment no. 3 implementation experiences and
indicate that associated organizations should concerns—and recommendations for revis-
• be included in a governmental reporting enti- ing, amending or supplementing Statement
ty. However, Statement no. 3 provides no no. 3—with the NCGA and the AICPA corn-
basis for determining when those factors are mince so that improved governmental report-
sufficient for inclusion and provides no logi- ing entity standards may be issued in the near
cal framework for the judgments required to future. ■
define a government's reporting entity.
We set forth an accountability-oriented
governmental reporting entity definition that
• Is current disclosure irrelevant?
A strong viewpoint
Few regulatory schemes have failed so miserably yet survived so
long as federal securities law. Nearly all of the disclosures required
by the federal securities acts are irrelevant to investors. Based on a
historical accounting system, the disclosures are inaccurate predic-
lions of future performance. Only recently and in very restricted
form has the [Securities and Exchange Commission) permitted the
disclosure of projections of financial performance in offering docu-
ments and annual reports. What mandatory disclosure is made to
investors is often old data. Alread),the market for investment infor-
mation has disseminated the important data. If anything, the re-
quired disclosures operate as verifiers of the accuracy of earlier
disclosures.
From "Securities Regulation in the 1980s"
by Thomas Bowers, associate professor
of business law, Indiana University
Indiana Business Review, August 1981
Journal of Accountancy,octobcr 1982 63
..
•
_ .. . , .
n
STATEMENT 4
ACCOUNTING
.... .
.......4.,_ . ��
ANDJUDGMENTS
ND F R . .
_. ._
OFE1RNPAOCNRTCINI G
•
•
� c.t�PRINCIPLESAIMS ..............„
:'s
.... A.4.* ..
• ,.. .
. 7LAND � a �
�.COMPENSATE - r tV ,..,.......„.........r.:. ..„.„.,,...,....
. : _ABSENCES
, , _ , . ,.... ---x:'','-r'*-:-....q•-----
4 r • a ..
_
G -t
•
or y _y
c r Fi.j'q
=i
7 r 't.- ' �•.�., ,,.jjam� rLY
_ t_ rt. a. .'A SL.., ''''41'.'"-. .
'" -� AL ACCOUN TING
.f. : �;T -THE NATIONAL COUNCIL 0IV GOviii fNT _ -e-
..`-72 T • '4_,- .:,, ,YErG� W
+8' K. 1i' y %,,,,7„.7---1" � �'
--,..-,..„„7,,,,-..,--7,-,--,
r: 7•r..�,. - —,...-;,42--..a_C '2�}s•.�• .
• -C
PREFACE 5)In determining the accounting and financial
• reporting treatment of claims and judgments and corn-
This statement by the National Council on Govern- pensated absences for state and local governments, con-
mental Accounting (NCGA) provides authoritative sideration must be given to the distinctions between the
Cguidance on accounting and financial reporting for claims governmental fund and proprietary fund models with re-
and judgments and compensated absences. The NCGA specs to: a)fund long-term liabilities and general long-
due process procedures were followed in developing this term liabilities; and b)current liabilities and noncurrent
statement. The NCGA issued an exposure draft on this liabilities. Accounting and financial reporting will differ
subject in December 1981. depending on whether the liability is accounted for in a
proprietary fund or a governmental fund.In addition,ac-
INTRODUCTION counting and financial reporting will differ within a
governmental fund depending on whether the liability is
1)Accounting and financial reporting for state and normally to be liquidated by using expendable available
local governments is guided by the principles set forth by financial resources.
the National Council on Governmental Accounting
(NCGA)in Statement 1, Governmental Accounting and 6)Statement 1 distinguishes between fund long-term
Financial Reporting Principles, issued in 1979.'Through liabilities and general long-term debt. It provides that
widespread acceptance, Statement 1 and subsequent "bonds, notes and other long-term liabilities (e.g., for
NCGA pronouncements are acknowledged as the primary capital leases, pensions, judgments and similar commit-
authoritative statements of generally accepted accounting ments) directly related to and expected to be paid from
principles applicable to state and local governments. propriaary funds, Special Assessment Funds, and Trust
Funds should be included in the accounts of such funds.
2) NCGA Statement 1 provides guidance for These are specific fund liabilities....All other unmatured
accounting and financial reporting for claims and long-term indebtedness of the government is general long-
judgments and compensated absences. The Financial term debt and should be accounted for in the General
Accounting Standards Board (FASB) has also issued Long-Term Debt Account Group"' (GLTDAG).
guidance in these areas in Statements of Financial Statement 1 distinguishes between current and
Accounting Standards (SFAS) 5, Accounting for Con-
tingencies,' and SFAS 43,Accounting for Compensated noncurrent liabilities. Further, it recognizes that general
Absences.'The NCGA has issued this statement to avoid long-term debt is not limited to liabilities arising from
confusion between the requirements of NCGA Statement debt issuances per se, but it may also include noncurrent
1 and SFAS 5 and 43,and to enhance uniformity and im- liabilities for other commitments that are not current lia-
bilitiesprove disclosure in governmental financial statements. properly recorded in governmental funds. State-
ment 1 notes that "just as general fixed assets do not
represent financial resources available for appropriation
BACKGROUND and expenditure,the unmatured principal of general long-
term debt does not require current appropriation and
3) NCGA Statement 1 requires that "contingent expenditure of governmental fund financial resources.To
liabilities not requiring accrual should be disclosed in the include it as a governmental fund liability would be mis-
notes to the financial statements."'The note reference in leading and dysfunctional to the current period manage-
this quotation reads: "See FASB Statement 5, 'Account- ment control (e.g., budgeting) and accountability func-
ing for Contingencies.' "'Statement 1 provides no addi- tions."' Therefore, in governmental funds, liabilities
tional guidan6e, however,as to how contingent liabilities usually are not considered current until they are normally
(claims and judgments)should be treated when accrual is expected to be liquidated with expendable available finan-
required. tial resources.
4)For accounting and financial reporting for corn- 8)The NCGA considered several different methods
pensated absences, Statement 1 adopted the position of of accounting and financial reporting for claims and
the American Institute of Certified Public Accountants judgments and compensated absences, taking into ac-
(AICPA) Statement of Position(SOP)75-3,Accrvpl of count the different measurement focuses of governmental
Revenues and Expenditures by State and Local Govern- and proprietary funds(see Appendix B).
mental Units.'SOP 75-3 states that for accumulated un-
used vacation and sick leave in governmental funds"...it• CLAIMS AND JUDGMENTS:
is appropriate to disclose the estimated amount of such DETAILED DISCUSSION
commitments in a footnote, if material, and not record
the costs as expenditures at the time leave is accumulated. 9)State and local governments are subject to many
If accumulated unused vacation and sick pay at the end of of claims.These include those arising out of:a)em-
a fiscal year does not exceed a normal year's accumula- types
tion, footnote disclosure is not required."' ployment, such as worker compensation and unemploy-
ment claims; b)contractual actions, such as claims for
delays or inadequate specifications;c)actions of govern-
ment personnel, such as claims for medical malpractice,
NCGA Statement 4.Accounting and Financial Reporting for points damage to privately owned vehicles by government-
end Judgments and Compensated Absences,August 1982.Copyright owned vehicles and improper police arrest; and
1982 by the National Council on Governmental Accounting,IRO North d)governmental properties,such as claims relating to per-
Michigan Avenue,Suite 800,Chicago..,Illinois 60601-1476.Printed in
the United States of America. sonal injuries and property damage.
NCGA STATEMENT 4 • PAGE 1
10)Claimsstate and local governments are perience to the outstanding claims or a combination of
characterized by conditions that could make estimation of these methods. Where historical experience is used, the
the ultimate liability extremely difficult: outstanding claims should be stratified by amount and
• Certain types of claims may be filed in amounts far type of claim,and the strata should be sufficiently refined
greater than those that can reasonably be expected to assure that the estimation is reasonable.
to be agreed on by the government and the claim3
-
ant or awarded by a court. 16)In governmental funds,the primary emphasis is
• The time permitted between the occurrence of an on the flow of financial resources, and expenditures are
event causing a claim and the actual filing of the recognized on the modified accrual basis.Accordingly,if
claim may be lengthy. all conditions of SFAS 5 are met, the amount of claims
•The time that may elapse between filing and ulti- recorded as expenditures in governmental funds shall be
mate settlement and payment of a claim may be ex- the amount accrued during the year that would normally
- • tremely lengthy. Similarly, the adjudicated loss be liquidated with expendable available financial
may be paid over a period of years after settlement. resources. The following information should appear on
the face of the financial statements or in the notes thereto:
11)On the other hand, state and local governments
may have substantial data regarding claim settlement ex- Expenditures:
perience, enabling reasonable estimation of ultimate Iia- Claims and judgments [SXXX(total amount
bilities by general types of claims, if not by individual determined for the year under SFAS 5)less
•
• claims. (plus)SXXX recorded as long-term obligations]
1 SXX,XXX
• 12)The claim cycle has various stages.These are,in
reverse order: when paid, when vouchered for payment. 17) Since governmental fund balance sheets reflect
when adjudicated or settled,when a loss is estimable and current liabilities,only the current portion of the liability
when a loss contingency occurs. The latter two stages, should be reported in the fund.The current portion is the
when a loss is estimable and when a loss contingency oc- amount left unpaid at the end of the reporting period that
curs,relate to incidents that occurred prior to the balance normally would be liquidated with expendable available -
sheet date. If a claim is asserted and the probable loss is financial resources.The remainder of the liability should
reasonably estimable,SFAS 5 requires that the liability be be reported in the GLTDAG.
recognized in the financial statements.There also may be
situations where incidents occurred before the balance 18) Proprietary funds should follow SFAS 5 without
sheet date, but claims are not asserted when the financial modification.
statements are prepared; nevertheless, if the loss can be3
reasonably estimated and it is probable that a claim will be 19) Depending on their purpose, trust funds are ac-
asserted, SFAS S requires the recognition of a liability, counted for on either the financial flow or capital
maintenance measurement focus. Expendable Trust
13) Because of the lapse between an incident creating Funds should follow the standards that apply to govern-
a claim and the claim's ultimate settlement, claims fre- mental funds (paragraphs 16 and 17). Nonexpendable
quently take on the nature of long-term liabilities. Pro- Trust and Pension Trust Funds should follow the stand-
prietary fund liabilities can be accounted for in the fund. ards that apply to proprietary funds(paragraph 18).
Governmental funds,however,reflect current operations
with general long-term liabilities accounted for in the 20) A governmental entity may create a separate In-
GLTDAG. Therefore, claims should be recognized as ternal Service(self-insurance)or other fund to pay claims
governmental fund liabilities when they normally would and judgments of all governmental funds. Since the full
be liquidated with expendable available financial faith and credit remains with the governmental unit, risk
resources; otherwise, they should be reported in the is not transferred to the separate insurer fund.Therefore,
GLTDAG. any payments to the insurer fund are accounted for as an
operating transfer and are not an expenditure of the in-
, . sured fund.The amount of this operating transfer shall be
CLAIMS AND JUDGMENTS: no greater than that actuarially determined. Any addi-
STATEMENT OF ACCOUNTING AND tional payment to the insurer fund shall be treated as a
FINANCIAL REPORTING residual equity transfer.
14)The council concludes,subject to the accounting 21)In the absence of a separate Internal Service(self-
and financial reporting distinctions of governmental insurance or other fund to pay claims and judgments, a
funds and Expendable Trust Funds, that the criteria of governmental unit may designate a portion of fund equity
SFAS S be the guidelines for recognizing a loss liability. as a reserve for loss contingencies. Such an amount shall
That is, when information available prior to issuance of be treated as a "designated"component of fund equity,
the financial statements indicates it is probable that an and the nature of the designation shall be clearly identi-
asset has been impaired or a liability has been incurred at fled. No costs or losses shall be charged to this reserve, l
the date of the financial statements and the amount of the and no part of this reserve shall be transferred to income. J
loss can be reasonably estimated. SFAS S becomes operable, however,when a loss contin-
gency occurs in self-insured situations, i.e.. provisions
15) Liabilities may be estimated through a case-by- must be made for asset impairment or other loss contin-
case review of all claims,the application of historical ex- genies when the event occurs giving rise to the loss.
PAGE 2 • NCGA STATEMENT 4
•
COMPENSATED ABSENCES: AMENDMENT OF NCGA STATEMENT 1
DETAILED DISCUSSION
29)All NCGA Statement 1 provisions concerning
22)The FASB issued SFAS 43 requiring employers claims and judgments and compensated absences that
cto accrue a liability for future vacation, sick and other conflict with this statement are hereby superseded.
leave benefits that meet the following conditions:
a)The employer's obligation relating to employees' EFFECTIVE DATE AND TRANSITION
rights to receive compensation for future absences
Is attributable to employees' services already 30)This statement shall be effective for fiscal years
rendered. beginning after December 31, 1982. Earlier application is
b) The obligation relates to rights that vest or ac- encouraged.
cumulate.
c) Payment of the compensation is probable. 31)Adjustments resulting from a change to comply
with these principles should be treated as an adjustment of
d) The amount can be reasonably estimated. prior periods, and financial statements presented for the
COMPENSATED ABSENCES: periods affected should be restated. In the year in which
STATEMENT OF ACCOUNTING AND this statement is fust applied, the financial statements
should disclose the nature of any restatement and their ef-
FINANCIAL REPORTING fects. If restatement of financial statements for prior
• periods presented is not practicable,the cumulative effect
23)The council concludes,subject to the accounting of applying these principles should be reported as a
and financial reporting distinctions of governmental restatement of the beginning fund balance,or as retained
funds and Expendable Trust Funds, that the criteria of earnings (as appropriate) for the earliest period restated.
SFAS 43 be the guidelines for recognizing a liability for Also, the reason for not restating all prior periods
compensated absences. presented should be explained.
24) Liabilities for compensated absences should be
inventoried at the end of each accounting period and ad-
justed to current salary costs. The provisions of this statement need
not be applied to immaterial items.
25) In governmental funds,the primary emphasis is
on the flow of financial resources, and expenditures are
recognized on the modified accrual basis.Accordingly,if
all conditions of SFAS 43 are met,the amount of compen- This statement was adopted on May 27, 1982,by the affir-
sated absences recorded as expenditures in governmental mative vote of members Anderson, Connie, Farrell-
funds shall be the amount accrued during the year that Donaldson,Greathouse, Grossman, Harmer, Hay, Ives,
would normally be liquidated with expendable available Mulloy, Murphy, O'Connor, Orne, Points, Raftery,
financial resources. Rogan, Schirman, Schianger, Wallison and Williams.
26) Since governmental fund balance sheets reflect
current liabilities,only the current portion of the liability
FOOTNOTES
should be reported in the fund.The current portion is the
amount left unpaid at the end of the reporting period that 'Statement 1,Governmental Accounting and Financial Reporting Prin-
normally would be liquidated with expendable available eiples(Chicago:National Council on Governmental Accounting,1979).
financial resources.The remainder of the liability should 'Statement of Financial Accounting Standards 5.Accounting for Con-
be reported in the GLTDAG. tingencies(Stamford:Financial Accounting Standards Board, 1975).
'Statement of Financial Accounting Standards 43,Accounting forCom-
27)Proprietary funds should follow SFAS 43 perisated Absences(Stamford:Financial Accounting Standards Board,
without modification. 19110).
• 'Statement 1,p.9
•
28) Depending on their purpose, trust funds are ac- 'Statement 1,footnote 11.
counted for on either the financial flow or capital 'Statement of Position 7S-3,Accrual of Revenues and Expenditures by
• maintenance measurement focus. Expendable Trust State and Local Governmental Units(New York:Accounting Standards
Funds should follow the standards that apply to govern- Division,American Institute of Certified Public Accountants, 1975).
mental funds (paragraphs 25 and 26). Nonexpendal;le 'Statement of Position 75-3,p.4.
Trust and Pension Trust Funds should follow the stand- Statement I.P.9
ards that apply to proprietary funds(paragraph 27). 'tbid.
•
.,f./,t CTser.ar.n I - esar•
•
APPENDIX A: • deals almost exclusively with current assets and current
GOVERNMENTAL AND PROPRIETARY liabilities, and only expendable available financial
FUND MODELS resources and related current liabilities are accounted for
in these funds.
32)NCGA Statement 1 developed two accounting
models for state and local government accounting and 36)The concept of governmental funds and Expend-
financial reporting.The parameters of these models must able Trust Funds measurement focus being on the deter-
be considered in determining appropriate accounting and mination of and changes in financial position is consistent
financial reporting for claims and judgments and com- with the definition of a current liability in Accounting
pensated absences. Research Bulletin(ARB)43,Restatement and Revision of
Amounting Research Bulletins:"The term current liabili-
••
33)The two models, oriented toward governmental fi is used principally to designate obligations whose liqui-
fupds and proprietary funds, differ in measurement ob- dation is reasonably expected to require the use of existing
-jectives. In governmental funds,the primary emphasis is resources properly classifiable as current assets, or the
on financial flow data;in proprietary funds,the emphasis creation of other current liabilities." ARB 43 also says
is on net income determination and capital maintenance. that current liabilities,as a balance sheet category,are in-
Fiduciary funds are accounted for following the govern- tended to include:obligations for items that have entered
mental fund or proprietary fund model,depending on the into, and for debts that have arisen from, the operating
funds'measurement objectives.Therefore,the method of cycle;and other liabilities whose liquidation is expected to
accounting and financial reporting for claims and judg- occur within a relatively short period,usually 12 months.
ments and compensated absences depends on the
measurement focus of the fund in which they are 37) It may be argued that, since ARB 43 says a cur-
reported. rent liability normally is due to be paid within a year,the
"current"portion shown in governmental funds'balance
34) Proprietary funds and Nonexpendable Trust and sheets should be those estimated to be paid within a year.
Pension Trust Funds measurement focus is on the deter- ARB 43 also states, however, that current liabilities are
urination of net income and capital maintenance.All fund expected to be liquidated with current resources.
assets and liabilities, current and noncurrent, are ac- Therefore, if the 12-month concept is applied to the
counted for in the fund;revenues and expenses are recog- operations reporting of a governmental fund, it would
nized on the accrual basis of accounting. mean that the entire amount charged to operations would
be the amount anticipated to be paid in the following
35)Governmental funds and Expendable Trust year. This 12-month current liability concept was
Funds measurement focus is on the determination of and developed for balance sheet classification purposes. The 3
changes in financial position.This concept emphasizes the concept might be inconsistent with the measurement focus
acquisition, use and balance of governmental fund for recognizing revenues and expenditures in govern-
expendable available financial resources and related cur- mental funds,where the primary emphasis is on the flow
rent liabilities. Revenues and expenditures are recognized of financial resources during the year.
on a modified accrual basis of accounting. This model
•
PAGE 4 • NCGA STATEMENT 4
APPENDIX B: second alternative uses the 12-month concept of ARB 43
ALTERNATE CONSIDERATIONS in distinguishing between current and long-term liabilities
for balance sheet purposes. But in governmental funds
38)The NCGA considered several different methods where the emphasis is on the flow of financial resources
of accounting and financial reporting for chime and during the year,this concept may not be appropriate when
judgments and compensated absences. The council con- liabilities to be paid in the next 12 months are expected to
sidered the different measurement focuses of governmen- be liquidated with future resources. For this reason, the
tal and proprietary funds. Since proprietary and Non- third alternative was chosen.
expendable Trust and Pension Trust Funds use an 41)The third alternative distinguishes between aocournting model essentially the same as similar private- rent and noncurrent amounts by what normally would be
cur-
sector businesses, SFAS S and 43 can be applied without expected to be liquidated with expendable available finan-
cial these funds. The method of applying SFAS S
and 43, however, must be modified for governmental resources. Under this method, liabilities due on
. fads.Three alternatives were considered. demand—such as from adjudicated or settled claims—
should be recorded as an expenditure in the governmental
39)One alternative was to record the entire liability fund.The amount recorded in the GLTDAG would be the
when incurred as an expenditure of the fund;then,at year amount estimable under SFAS S as a contingent liability,
end, to transfer the long-term portion of the liability to or where the established liability has a fixed due date other
the GLTDAG.lust as general long-term debt does not m than the balance sheet date—for instance, a portion of a
quire the current appropriation and expenditure of furan- judgment is payable from future resources.
tial resources, however, neither does the long-term per- 42) In the case of compensated absences,the amount
tion of claims or compensated absences. Therefore, that would be reported as an expenditure in the govern-
• recording the long-term portion as an expenditure in the mental fund would be the total amounts earned by em-
governmental fund would be misleading and not the in- ployees less than which—based on experience—will not
tent of the governmental fund model. be claimed until future periods, plus amounts from prior
40)The second and third alternatives were to record periods paid during the current period. The amount
only the current amounts as an expenditure of the fund recorded in the GLTDAG would be the amount deter-
and all long-term amounts in the GLTDAG until it mined under SFAS 43 as compensated absences payable
becomes current.The difference in these two alternatives from future resources.
was the distinction between current and long-term. The
.
C. -
NCGA STATEMENT 4 • PAGE 5
• THE NATIONAL COUNCIL counting Standards Board and the American Institute of
ON GOVERNMENTAL ACCOUNTING Certified Public Accountants.
The NCGA consists of 21 members who are local,
state and federal governmental accountants,auditors and
The National Council on Governmental Accounting
(NCGA)develops, promulgates and interprets principles managers; practicing certified public accountants;
of accounting, financial reporting and related financial governmental accounting/financial management edu3
-
management activities for governments in the United caters; and members at large. Within the appropriate
States and Canada. While accounting and reporting for membership classifications, council members are elected
governmental operations that are similar to business by vote of the council to serve four-year terms.The coun-
enterprises closely parallel commercial accounting and cil
and its Executive Committee are assisted by the NCGA
reporting, there are environmental considerations which committee of Advisors, comprised of representatives of
may require modification of commercial accounting prac- accounting, public interest and governmental organiza-
tices and professional pronouncements as they apply to tions.The work of the council is facilitated by project area
proprietary funds of governments. NCGA's responsibil- task forces(which include council members,advisors and
ities are directed to state and provincial governments and others who possess an expertise or viewpoint relative to
to all classes and units of local governments and quasi- the project) that research issues and draft recommends-
governmental units. tions for.council consideration.
The genesis of the National Council on Governmen- The NCGA Rules of Procedure provide for several
tal Accounting dates to the 1934 formation of the Na- ty of council issuances:
tional Committee on Municipal Accounting,which began I. Statements reflect the conclusion of at least a ma-
the work of formalizing accounting,auditing,and finan- jority plus one of the council as to governing prin-
cial reporting standards for governmental units under the ciples and explain and illustrate their application,
sponsorship of the Municipal Finance Officers Associa- including alternative applications where such
tion (MFOA). The name change in 1949 to the National alternatives are deemed appropriate.
Committee on Governmental Accounting emphasized 2. Interpretations are issued by a majority plus one
that the authoritative pronouncements apply to states and of the council to clarify, elaborate upon, or ex-
all types of local governments. The National Council is plain a council statement, a principle or illustra-
the successor to the National Committee. tion or related matters.
The NCGA was established in 1974 through the spon- 3. Exposure drafts, proposed statements, back-
sorship of the MFOA as a continuing body.To assure that ground papers, working drafts and discussion
principles and procedures for government are in conform- memoranda may be issued by the council as neces-
ity with generally accepted accounting principles, the nary to solicit comments and assist in resolving
NCGA maintains close liaison with the Financial Ac- issues.
•1
•
J
PAGE 6 • NCGA STATEMENT 4
NCGA MEMBERS Governmental Accounting/
Financial Management Educators
State Finance Officers
Leon E. Hay, distinguished professor of accounting,
Frank L. Greathouse, chairman, comptroller of the College of Business Administration, University of
treasury, Department of Audit, Division of State ,Arkansas, Fayetteville
Audit, State of Tennessee, Nashville Carl G. Orne, professor of accounting, Department of
John F. Rogan, state finance director, Department of Accounting,California State University, Hayward
Administration, State of Wisconsin,Madison
Edgar A.Vaughn Jr..state auditor,State of South Caro- Canadian Finance Officer
lina,Columbia
J. E. Mulloy, acting general manager, Management
- Local Government Finance Officers Studies Systems and Budget,City of Edmonton.Al-
berta
•Joel M. Schlanger, vice-chairman, director of finance,
City of Roanoke, Virginia U.S.Federal Financial Executives
Roy E. Anderson, assistant director/controller, Illinois
Municipal Retirement Fund,Chicago Gerald Murphy, deputy fiscal assistant secretary of the
Marie D. Farrell-Donaldson, auditor general, City of Treasury, U.S. Department of the Treasury, Wash-
Detroit, Michigan ington, D.C.
•W. Gary Harmer, administrator/educational resources •Ronald J. Points, associate director, U.S. General
and clerk-treasurer, Salt Lake City School District, Accounting Office, Washington, D.C.
Salt Lake City, Utah
•Martin H. Ives, first deputy comptroller, City of New City_Chief Executive
York, New York
Paula C. O'Connor. assistant finance director, City of Orville W. Powell,city manager, Gainesville, Florida
Tacoma, Washington
Beverley R. Schirman, accounting manager, City of At-Large
Everett, Washington
•Hyman C.Grossman,vice-president/municipal ratings,
Practicing Certified Public Accountants Municipal Bonds Department, Standard & Poor's
Corporation, New York, New York
C •Donald H. Cormie, partner, Alexander Grant& Com- Frieda K,Wallison,partner,Rogers&Wells,Attorneys,
pany, San Antonio,Texas Washington, D.C.
William J. Raftery,partner,Main Hurdman,New York
New York •Executive Committee member
James L. Williams, partner, Deloitte Haskins & Sells,
Houston,Texas James S. Remis, director
t
NCGA STATEMENT 4 • PAGE 7
CENTER CITY PROJECT
CENTER CITY ITEM 1 (at meeting)
TME CITY OF j
--E5;iiiiiir HOUSING
l •itif and •••
REDEVELOPMENT MEMORANDUM
AUTHORITY �• '' ••
•
FRIDLEY """ "'
FROM EXECUTIVE DIRECTOR MEMO NO.82-81
DATE November 12, 1982 TO ACTION INFO.
SUBJECT Housing & Redevelopment Authority X
Bond Bid Sale
The T.I.F. bond bids were officially opened on November 8, 1982 at Ehler's office
for the $600,000 HRA bonds related to the Fridley Plaza Office Building. I am
attaching the copy of those bids for your information. The bonds were sold for
a 9.2605% interest rate based on the City's Aa-1 rating, and were approved by the
City Council that night at their regular meeting.
JLB/de
EHLERS AND ASSOCIATES, INC.
FINANCIAL SPECIALISTS
FIRST NATIONAL-SOO LINE CONCOURSE 507 MARQUETTE AVE. MINNEAPOLIS.MINNESOTA 55402 339-8291 (AREA CODE 612)
November 1, 1982
•
NOTICE
RE: $600,000 G.O. TAX INCREMENT REDEVELOPMENT BONDS OF 1982,
SERIES II
CITY OF FRIDLEY, MINNESOTA
SALE: MONDAY, NOVEMBER 8, 1982
Moody's Investors Service, Inc. has confirmed the City of Fridley's
"Aa-1" rating for the above bonds.
Ehlers and Associates, Inc.
Financial Specialists
1A!;PI
x
t
BID TABULATION k.ALr
$600,000 G.O. Tax Increment Redevelopment Bonds of 1982, Series II
City of Fridley, Minnesota
SALE: Monday, November 8,. 1982
AWARD: DAIN BOSWORTH, INC.
MOODY"S RATING "Aa-1"
COUPON NET INTEREST COST
NAME OF BIDDER RATE YEAR & RATE PRICE
DAIN BOSWORTH, INC. 6.50% 1985 $680,651.87 $589,800.00
Minneapolis, Minnesota 6.75% 1986
Cr&ig-Hallum, Inc. 7.00% 1987 9.2605%
7.25% 1988
7.50% 1989
7.70% 1990
7.90% 1991
8.10% 1992
8.40% 1993
8.70% 1994
9.00% 1995
9.20% 1996
9.40% 1997
9.60% 1998
9.75% 1999
JURAN &MOODY, INC. 6.50% 1985 $682,601.89 $590,100.00
Minneapolis, Minnesota 6.75% 1986
First National Bank of Minneapolis 7.00% 1987 9.2871%
The First National Bank of Saint Paul 7.25% 1988
The Fridley State Bank 7.50% 1989
7.75% 1990
8.00% 1991
8.25% 1992
8.50% 1993
8.75% 1994
9.00% 1995
9.20% 1996
9.40% 1997
9.60% 1998
9.80% , 1999
. . . . Continued on reverse side . . . .
1
1
City of Fridley, Minnesota
Sale: Monday, November 8, 1982
Page 2
COUPON NET INTEREST RATE
NAME OF BIDDER RATE YEAR & RATE PRICE
ALLISON-WILLIAMS COMPANY 7.00% 1985 , $689,209.38 $588,600.00
Minneapolis, Minnesota 7.25% 1986
7.50% 1987 9.3769%
7.75% 1988
7.90% 1989
8.00% 1990
8.20% 1991
8.40% 1992
8.60% 1993
8.80% 1994 '
9.00% 1995
9.25% 1996
9.50% 1997
9.70% 1998
9.75% 1999
PIPER, JAFFRAY & HOPWOOD, INC. 6.50% 1985 $703,984.38 $589,500.00
Minneapolis, Minnesota 7.00% 1986
M.H. Novick & Co. , Inc. 7.25% 1987 9.5780%
7.50% 1988
7.75% 1989
8.00% 1990
8.25% 1991
8.50% 1992
8.75% 1993
9.00% 1994
9.25% 1995
9.50% 1996
9.75% 1997
10.00% 1998-1999
EHLERS AND ASSOCIATES, INC.
507 Marquette Avenue
Minneapolis, Minnesota
lelephone: (512) 339-8291
CLOTHING LIQUIDATORS
November 1, 1982
s City of Fridley
6431 University N. E.
Fridley, Minnesota 55432
Attn: Jay Boardman
City Re-Development Authority
Dear Mr. Boardman;
This letter will serve to confirm our conversation of 10/26/82
concerning our interest in leasing the Building presently owned
by the City of Fridley (formerly the Fridley Hardware Building) .
We would be interested in leasing the building for a period of
18 months minimum, with the option of renting month to month after
that period of time. It is my understanding that the rent would
be $3.00 Sq. Ft. and that we would be responsible for all utilities.
We would provide adequate Insurance Coverage for ourselves as well
as the City. We would be interested in occupying as soon after the
Re-Development Meeting as possible.
We would be using the building for liquidation of new soft goods,
clothing etc. We would also be renting space to other liquidators
for the purpose of selling their merchandise.
The business would be open to the public and hopefully would gene-
rate a good flow of traffic, thereby helping to increase business in
the entire area.
Mr. Fred Levi has agreed to provide necessary parking for the business,
at an agreed upon fee.
We presently have a similar outlet in Cambridge, Minnesota on High-
way #95 and are planning to open an additional outlet in Bloomington,
MN yet this fall.
6957 West Highway 10 • Anoka, Minnesota 55303 • (612) 427-0077
-2-
City
2-City of Fridley November 1, 1982
Your consideration of our request will be greatly appreciated.
Sincerely,
4/0 (g041._
Richa d M. Carson,
President
RMC:dc
REFERANCES
Ron Anderson
Scottsman Newspaper
Highway #95, Cambridge, Minnesota
689-1981
• Norm Holm, President
H & S Asphalt
700 Industry Blvd. , Anoka, Minnesota 55303
427-4900
Mr. Ed Potter, President
Industrial Dredging & Engineering Corp.
650 Industry Ave. , N. W., Anoka, MN 55303
427-5300
Arthur S. Nelson
Attorney at Law
1400 Soo Line Building, Mpls. , MN 55402
332-4305
Peoples State Bank of Cambridge
Cambridge, Minnesota
689-1212
• Fred Stroebel, Pastor
First Congregational Church
1923 3 Ave. , Anoka, Minnesota 55303
421-3375
Betty Croteau, Executive Director
Anoka County Board of Realtors
1308 Coon Rapids, Blvd.
Suite 205, Coon Rapids, MN 55433 (757-7230)
FIRE DEPARTMENT
MEMORANDUM
DATE: October 14, 1982
MEMO TO: Jerry Boardman, Planning
FROM: Richard H. Larson, Deputy Chief
RE: Standard Station, Mississippi St. & University Ave.
Minnesota Uniform Fire Code states in Section 15.217d that any
underground tanks which have been abandoned for a period of one year
shall be removed from the ground and the hole properly filled. If
circumstances warrant, however, such tank may be abandoned in place
and safeguarded in a manner and with material approved by the Fire
Chief.
Please advise this office as to which manner you will handle this
situation.
RHL/el
MOORE LAKE PROJECT
Moore Lake A. Information at meeting
- FINANCIAL
OTHER BUSINESS
IL :-. : . .7'` • I "It!
F. t . ., .0 i -.4 --:,_; .7: . .r. - :-.-tI--2.: . .
; ' if. i
iiii--.
to
1
CLI , ' T _ � .s,- '
44 . e$ • > - t • 20
O a '•.. - f: •2 TO. 7: 4.a= s _ .: •.. . . t ;:: ' :; , ' gil ki !III
E '- 8 - gl r . ,,,e) EU 4 - - : -' • .- . - a
(': Iflj :�. a •� 8
O \ Willis— WO m03 .
) � zz zVa. .t - '
11.11 I
Iii .> L{ z 3�N - Z ` i •� AvIi
a) _; 'IS IIS 3 N i;:s
C1, iiiii I
i r.iS p 3.N - o
• 0 f-- E: a .i ..4'" ''. -: ,:. % •i* -- ' :- .-- .
4•0 N Imis -ill
le Is A
C , ••.a.a UJAgPON UOi8Uipn8 a
4; • JeApi1
i4 0 oar . z . _ (3) ilia! I
.; . s .
4) je^. i $dd!ssiss�ry Gllt 1
,1
41) ;nig it
U. limo 1 "a g;"2 :
CO mosi .
.C3
i 11-f311ifs •iit3 H if Hl . 1 : *mix I-
'
L
LI;!ffl
�. yB� Ifail83s � �s � a 11 R ' � spa o _ 448 ${E h •' IL i i C lq.� 1 < ` pis _ 1 • to i .. I
Ilia •� _ i'vzilt; /iI fa 1 0 dt:a i
gt ` D8gs3i 1 IA j•► a
0 1' x_21 oa$ J 8,- , i--
(A 1411 g
C . !FL ..... Pt 4R:glii- 41/1v12:ki. 4.13 r.14 a 1
... x a
ammo
. W V ,
fia.. .... ,V tilkfill51111g1;111:413i -11 - I - El
>41 (1)
(I) � i - Ig . ll 1 L1aiIi 'iolgliovis C . , . 11
Mal.II 0) II% 1 Ai 1111.111Aa M
111 le 49 1
1:1 (:) a ii ' ll 11111111 81
t 1 si!,111// 1 .11 :811 al iv I it/
i.. L. . s as , 1_1."ii� iz j •• i.. p ■,
r1 !liiIdI Ii Al 1 RIjI ii • xi iii
J ,1.r „ .• -:• . P r . y--rr' ta>,eoaw _
•
'sem•` �•..�, _. - tt+aOeYs 4 Oeolsemest are that tie
I. W• and Ad reader* love I0_-' ':At.' pbaea� hese/pa. to dosing dedeem should have b.ee
ales. Tf you've having ,,to i►• •..,• ' • • lilies • tie lase signs Mrvalldated beause a the ansa
• • .A.40..::•--pr-i.13.4-:.>•A_ .T--:- iiotr4 roman'MCI also might meeting law vfolatbaa
re the•action. -T�D y� i;11 �c t! • -.._.�,;, •
..h• Mite Gallagher. special assbtaat
Cost is low and result/1.0'4 .. _ .. Lwrca�oe Yeas, asaocfate Justice attorney general, said kb sake
)
• - ,r• :wr a.n' - "1. . J' : the iatoeaole Supreme Cowl. might joie the case to defeed the
. ►. +.w•=K' >a'tii: :' �,''1~jF ,. �'*'• .^:` =aced but week The fall ComtlAttlooality Of the saaet-
• '• ,••:R f,„-s!•-`-'`' j 'f` `%•.-.r' �sirt wig hear the Cam-AMor eyes' big law. e
t :t• ' .t,''Rf• .►t- •jam .11t1rC.- jilir beth Asa
predicted ad inking about•replaeing our•' ii'T„j, t , pert hearing won pie kr The Amocbnoe of Metropolitan
sr so you'llhave dependable'-'41-':4-; - -.E.'".'6''.'4. _ '1 br'la'a` :•''ten-• •. nod
of Districts, the Minnesota• District 271. Kloesota
Check the hundreds Of cars :`"••" ” _—~ '-- oak by � �t Board Association and the
1 each dry luting '•. . , Moberg and �► Robb �1O't the ' of Minneapolis will write
with •s.. „i J r- -' .' a ••-" District 201 School Board. dial- "Irked of the court" briefs on be-
. - s•, t• ,;.s.--.:-. ..-:er •:-- -.r. , lenges the board's decision to dose .)ralf of the District 231 school
I). - . ..C.....'•rv- ••-••t • Robbinsdale Riga School last board. Common Cause and the
• ':'�*7•-' P- • ' s '•seri ; '•.'. - apriag• Beseepla District Judge Minnesota Newspaper Association
- r ".••" ;:• • . �_.,;,.,� - - Robert Schlefeibda
r•r.• � - •• ruled to June wW argue on the parents' side,
• • • '',r r •- that the board acted leplly b dos• although each early will act hide-
►S • Classified advertlstng - s•'j • •.. T •' - kg the but fined each of pendently.
iw a crowd. took around-the hide-
. se.:;;X , ._ - - , lbe.sts board members who made .
the decision $100 for violating the Most of those groups have Indict-
ou have something to sell for . - " -• -,. ' apes meeting law during their Ae- ed they will focus entirely on
�� .: - liberalism. _ ..c;. ;. Dons related to the open meeting
a ._••-.• ,• , : law.All except the newspaper ago`
•• .• . - Phil Powell, an attorney for the dation already have received per-
• school board. said he expects to mission from the court to partici-
'hatever you have to buy, sell.: ._ , > co the Open meeting law to pate la the cane.
we can help. Our stall'of •'• '', .
speople can help you write a• -• -•- - Fridte a,
1'oduces results. .- .. •- - the city has been buying incl dear- The clinic will provide working
,� , Ing property belonging ID small space for about 21 doctors per say.
LAITYRun'a two- • - ' .• . "' ._ �°p' homeowners. Ac- first-poor facilities will Include a
• lane Want .:.+vi;, :;,z:..•.: • ' cording man,dry officials primary are area, an x-ray suite
• - •• :.. -•. •'•. have moved several businesses and an orthopedic surgery exami-
3 Metro Edition and you'll ..+. ,c • -.. ._• within the dty and are negotiating ration module. Second floor /ea-
of people first thing Saturday •'. •al.'-, .' ;,.. es ethos. ' , • tures will include facilities for
_" physical therapy; urology;opbthal-
ley have time to shop. '' t • -' •" • As p�of the redevelopment.Nth mology;ear,nose and throat suites;
• — •'- '-' ' :_l'• .r•• ' •` :' Av.will be narrowed and rerouted corporate offices and a lobby for
n. Friday -w -+-• ." b make way for co ctlon of a patleoto.
• - •, •'�,...- - . -' ?.- week plaza area west of the
• . - office
• . • _ : • - •t. •• • a ,: complex and south of Fridley's city The Columbia Park Medical Group
•nt Ad, Csll ag72.4242. _ • hall. Landscaping for the plaza also has the option to develop an
- :•r v.- and b scheduled b begin b the additional 23,000 square feet of
••' - spring algal. --- properly through IncIf It
-.,.. .•ti' -.,,••,-^-. A,.4-/= %•R •'i*' .Ae:-w._ .; . _,-:..._...r,. • chooses.
•.
' I. - 2s_ • ' . ;a '•. .:• • To the east of da
. ':.::.r - . • -a• ' • - .. • hail :ill be a
ant Ads :z. t`) ' ~'G`• :'- l66-stall parking lot, about three Boardman said the city hopes to
+ times the size of the s current attract investors for another office
.. .... isle; ',._.._fT .'.r- .. city.
happen here ever (� ' '• Io To,make way for the additional building and perhaps,a restaurant.
p .�. �• a! . 4•-= ' =f't�', sena, developers will utilize El- north of city hats in the near fu-
s. •y- ..' -4 . C'.7-.,--.0 -i-.. senbower Square,a grassy stripsaid development
e lc ment
.• ' •,- •• :y'•...,••:' -. - - f-:. ''.•:: )s of lure Re further
; { !land eat of the din's current part- probably wouldn't tae place for
c•.-'.I' ••..e- t.'''rm.... _ "Jt::._:= s .r•:: '' .•r -
Mid lot sevenl months,however.
3• .-
The Fridge*Plaza office building is "Right now. they're (other hives
D a p o .s. :.. ��.--.`, , :�- the second building to be coast:vet- tors) waiting to see what happens
���� 1 ed is the redevelopment area this with this one." Boardman said.
" �.._ � :. :=: p
• - - ----,....."........14 . •,,;,{. : .- -w. - year.U mid July.oorwlructtoo be- "They want to know what the mar-
I '�t_ .j+ : v ..�� =::•_ pn oo the two•story, edit squan� het is. 'lbey'll test it through this
qribune . :.. _ %.c:� ::.;'•-, r' . loci Columbia Park Medical Group butidtag"
,. •'- --" .e =s%.:'- :•':---': • Clink. The buliding, a cllnk.sd-. -
�/ENuE '--`-Pa*IEAPOIJS MN 55488 :` , kr.”--/-4-it"••11''" miobtrative Com
•••, wk•1- ptex.is'scheduled Ground-breaking for the Fridley
. •• ' - '- •.•A • b be completed by next July I. • Plaza office building scheduled
d' g is
.4: 1►•:`•r..s-•Z'+ l.e•- '•. -_. .'•yKt .-, _ _ dor
• ?_• '..1.1.;!... -{ if. •r•. _ ..:.-• • is-• c . a so as No so am amMBalll SUM
MI NS mint ism as ow mum am me ow me Mai
• •, • `� -• �,v,::. .. 1 c. `� :sem• _
bra.A_ .- . sj•••▪ •'1.. �.,=! :�-+- ,�... .-/1▪%.iyvw-:._,'•Y� ma uum ., -
: -► .• .7 , . r.!.7•• I' •1' •• ..9: . writes about the honor/ �'" aa.+..vr 1
• : stiari u I IT*0%1/44►tistNlitllliNJJJVFfJsss/!/7ittt •
, MM. ilill aSO aaYirrtraYiitune MO••
-
•
TOMB CITY OP
4i1 DIRECTORATE
73.113
9.0OF < 7\
MEMORANDUM
PUBLIC WORKS
FRIE Y •
•
•
DATE October 28, 1982
FROM Mark L. Burch- ADPW . TO i
ACTION , INFO
SUBJECT Eisenhower Square Monument ,John G. Flora, DPW
The stonework on the Eisenhower Monument collapsed today while Ernst Movers
were attempting to move it.
There is some damage to the masonry stonework and the large center stone on
the monument broke when it fell. The contractor moved the footing and base
to the new Moore Lake location, poured the new footing in place and back-
filled the footing. We are working with the contractor and the VFW to
ensure a quality, accurate rebuilding of the monument.
The contractor has assured us that he will work to get the monument rebuilt
as quickly as possible. There will be no expense to the city for the re-
building of the monument. Ernst Movers were low bidders on this project
with a bid of $2,450.
MLB/mc
TEy are ego&t•ed 67 :nzwra.r,cc
1.
TIM CITY OP
DIRECTORATE t_oo
OF «'<�y
MEMORANDUM
PUBLIC WORKS ' ��.e;.`
FRI ; Y �—
•
DATE : November 1Q, 1982
,
FROM Mark L. Burch, Asst. Dir. Pub. Wks. TO i ACTION INFO
SUBJECT Eisenhower Square Monument
lb- .-
We met with Les Orton, Commander of the VFW, and Ken Ernst, owner of Ernst
Movers, Inc. on Tuesday Nov. 9th to discuss the rebuilding of the Eisenhower
Monument. The conclusions reached from our discussion were:
1. To wait until spring to do the actual rebuilding. The major reasons for
waiting are that construction during cold weather is more difficult, costly
and of lower quality and because it will take 2 to 3 months to have new gra-
nite stones produced and shipped to Fridley.
2. Les Orton and two other VFW members who are masons and who also built the
monument originally will work with Ernst Movers to do the reconstruction.
3. The stones from the monument will be stored and protected by Ernst Movers
over the winter in their shop.
During our discussion Les stated that the VFW was very satisfied with the new
location and thought the monument would get more exposure there. He also said
that the VFW members liked the elevated setting.
MLB/mc
CC: Jerry Boardman, Executive Director, Fridley HRA
Les Orton, Commander, VFW Post No. 363
Ken Ernst, Ernst Movers, Inc
Dave Torkildson, Director, Anoka County Parks Department
Chuck Boudreau, Director, Fridley Parks & Recreation Department