1. 1 CITY OF ST. CHARLES Financial Summary - 2006

2. 2 Audit l Audit Opinion Provides reasonable, but not absolute, assurance that financials are free of material misstatement Unqualified “Clean” opinion in 2006 l Financial Statements Smith Schafer reviewed the results of the audit and the financial statements with the Mayor, Deputy Clerk and the Accountant on April 13 Management’s Discussion and Analysis (MD&A) was prepared by the City l Minnesota Legal Compliance No Exceptions l Single Audit None required in 2006 l Management Letter Limited personnel – Limit City’s ability to segregate accounting duties

3. 3 Revenues Governmental Funds

4. 4 General Property Tax Levy l General tax levy revenues represented 27% of total governmental revenues in 2006 l Tax collections $504,402 Market value credit 81,084 Total 2006 $585,486 $585,486 $543,826 $512,450

5. 5 Tax Increment Revenues l Total TIF collections in 2006 were $141,491 l TIF debt service payments and advance repayment requirements are approximately $90,000 annually l TIF collections are impacted by County valuations and the commercial property tax rates set by the State

6. 6 LGA and HACA Revenues l Local government aid (LGA) & Homestead Aid Credit (HACA) are based on State formulas l LGA represented 29% of governmental revenues in 2006 l LGA increased by $73,587 (13%) from 2005 to 2006 l HACA was eliminated in 2002

7. 7 Governmental Fund Revenues

8. 8 Property Taxes and State Aid 41% 44% 43% 40% 42% 41% 34% 41%

9. 9 Expenditures Governmental Funds

10. 10 General Governmental Expenditures l Includes mayor and council, city hall, accounting, assessor, elections, advertising, building inspections and celebration costs l Increase of $48,691 in 2006 was due to a lack of full time staff in 2005. l Higher costs of building inspections beginning 2001

11. 11 Public Safety Expenditures l Includes police department, fire protection, ambulance and the emergency management services fund l Totaled $701,179 in 2006, including $210,915 in capital outlay l Increase in 2006 due to purchase of Volk property and ambulance

12. 12 Public Safety Expenditures l Police protection expenditures increased by $37,240 in 2006 l Ambulance expenditures include $49,748 of capital outlay in 2006 related to the purchase of an ambulance l Fire expenditures of $71,562 in 2006 were supported by township contracts of $36,174 and other revenues of $20,055 (City transfer in of $46,559 – not included in chart)

13. 13 Public Works l Salaries/benefits, repairs and maintenance, supplies, fuel, and insurance l Expenditures increased by $43,571 in 2006 due to the addition of one full time employee and full time administrative staff

14. 14 Parks and Recreation l Recreation programs, parks, swimming pool, forestry and the senior center (including capital project fund expenditures) l Expenditures totaled $346,074 in 2006 an increase of $27,261 from 2005 due to an increase in salaries and repairs to the swimming pool boiler

15. 15 Park and Recreation Expenditures l Park and recreation expenditures in excess of program revenues are supported by the City’s general revenues including property taxes and local government aid

16. 16 Library Expenditures l Salaries and benefits, books, supplies, insurance, utilities, printing, etc… (including capital project fund expenditures) l Totaled $133,585 in 2006 l Received library aid during 2006 from Winona County and Olmsted County totaling $26,950 and a grant from the state of $63,600 l Excludes capital outlay related to the addition to the library in 2003-2005 totaling $676,333

17. 17 Economic Development Expenditures l Economic development expenditures in 2006 included $29,000 in revolving loans and professional services of $20,519 l 2002 included the $126,000 loan to HBC (mortgage on old City Hall building)

18. 18 Governmental Fund Expenditures

19. 19 Reserves

20. 20 General Fund - Reserves l Unreserved General Fund balance as a % of expenditures 200630% 200568% 200460% 200362% 200265% 200162% 200069% 199971% 199880% l Decrease in fund balance due to transfer for: Library $136,813 EMS 32,000 TIF 63,431 Parkland Dedication 55,250

21. 21 Economic Development Fund - Fund Balance l Provides economic development loans to local businesses l Outstanding principal receivable on economic development loans at 12/31/06 $242,920 l Borrowed $126,000 from the Electric Fund for Loan to HBC in 2002

22. 22 Library Fund - Fund Balance l Deficit fund balance in 2004 and 2005 resulting from construction was eliminated in 2006 with transfers from the General Fund of $136,813 and Capital Improvement Fund of $240,000 l Pledges receivable totaled $4,168 at 12/31/06

23. 23 Volunteer Fire Fund - Fund Balance l Funds received in 2006: City$46,559 Townships 36,174 Fire calls 6,461 Interest 4,797 Donations 8,797 l Builds fund balance in anticipation of equipment needs l Transferred $64,000 to the EMS fund for the purchase of a building

24. 24 Advertising Fund - Fund Balance l Funds used for City promotion/Fireworks l Levied $8,000 in the Advertising fund and transferred in $12,850 from the Library Fund in 2006

25. 25 Celebration Fund - Fund Balance l Funds used for annual flowerfest celebration l Revenues exceeded expenditures by $1,542 during 2006 l Levied $3,000 in the Celebration fund l Levied $15,000 in the Celebration fund in 2007

26. 26 Ambulance Fund - Fund Balance l Ambulance revenues increased to $143,306 in 2006 from $123,746 in 2005 l New capital lease of ambulance vehicle in 2006 totaling $48,300 l Transferred $64,000 to the EMS fund for the purchase of a building

27. 27 Emergency Management Services Fund - Fund Balance l New fund established in 2006 to account for the purchase of the Volk property l The plan is to transfer $150,000 into this fund annually through 2012

28. 28 Debt Service

29. 29 General Obligation Bonds l GO Bonds Outstanding: Water Impr Bond of 1983 Street Impr Bond of 2005 l Supported by property taxes and fund balance reserve of $202,912

30. 30 Tax Increment Bonds l TIF Bonds are supported by increments on TIF property l First principal payment on TIF Refunding Bond of 2004 was made as due in 2006 l TIF Bonds of 1996 were paid in full in 2005 with proceeds of 2004 Refunding Bond proceeds

31. 31 General Obligation Revenue Bonds l Revenue Bonds are supported by Utility Fund ratepayers. l GO Water and Sewer Revenue Bonds of 2002 balance at 12/31/06 was $805,000 l GO Water and Sewer Revenue Bonds of 2004 balance at 12/31/06 was $1,005,000 l GO Electric Revenue Bonds of 1997 balance at 12/31/06 was $30,000 l GO Electric Revenue Bonds of 2004 balance at 12/31/06 was $3,435,000

32. 32 Other Long-Term Debt l Fire Truck Loan payments due through 2013 l New Ambulance Capital Lease in 2006

33. 33 5 Year Debt Service Requirements l Includes both principal and interest

34. 34 Capital Projects

35. 35 Capital Projects Funds - Expenditures l Major capital improvements in 2006 totaled $357,309 and consisted of: Skate park $30,000 St. Charles welcome sign $15,556 Street project $76,306 Disc golf course $6,019 Playground equipment $52,863 Park bridges $35,978 Bike trail $45,040 Police car $20,774

36. 36 Capital Improvement Fund - Fund Balance l Funded through property taxes, donations, and interest l Transferred $240,000 to the Library fund

37. 37 TIF Capital Improvement Fund - Fund Balance l TIF #5, borrowed from utilities and capital improvements funds for White Water Industrial Park infrastructure l TIF #3 (Whitewater Apts.) has a $178,829 deficit l Expected TIF #5 (Whitewater Park) increment collections increased to $26,460 in 2006 from $22,528 in 2005 l TIF #6 (Mike’s Food Center) established in 2005

38. 38 Operational Trends Utility Funds

39. 39 Electric Fund l Electric service is supported by ratepayers l Transfers out to the City General fund of $130,000 in 2006 l Purchase power decrease in 2005 is due in part to the elimination of the demand charge

40. 40 Electric Fund l Cash and investments totaled $244,377 at 12/31/06, while bonds outstanding totaled $3,465,000 l Issued bond in 2004 totaling $3,760,000 for the generation project and other electric system improvements l Advanced $126,000 to Economic Development for purchase of old City Hall Building in 2002

41. 41 Water Fund l Water service supported by ratepayers l Base rate increased from $9.00 to $9.45 per user l Revenues totaled $322,133 in 2006 l In lieu of tax payment to the City General fund of $20,000 in 2006

42. 42 Water Fund l Should develop cash reserves to be used for future capital replacement l In 2004 added $777,350 of the $1,205,000 GO Utility Revenue Bond of 2004 that was used for water tower improvements and water extensions l In 2002 added $349,800 of the $1,060,000 GO Utility Revenue Bonds of 2002 that was used for water construction costs

43. 43 Sewer Fund l Sewer service supported by ratepayers l Substantial expansion of the Dover Eyota Sanitary Sewer District is under consideration

44. 44 Sewer Fund l Should develop cash reserves to be used for future capital replacement l Issued $427,650 of the $1,205,000 GO Utility Revenue Bonds of 2004 that was used for sewer extensions and sewer system improvements l Issued $710,200 of the $1,060,000 GO Utility Revenue Bonds of 2002 that was used for sewer construction costs

45. 45 Storm Water Fund l Fund was established in 2004 l Storm water activities are supported by ratepayers

46. 46 Storm Water Fund l Fees generated in 2004 were expended on capital assets l No debt at 12/31/06 l Cash balance of $72 at 12/31/06 l Improvements of $66,000, $35,000 contributed capital and $31,000 spent on storm water management projects

47. 47 Waste Management Fund-Fund Balance l Collected refuse fees of $128,394 and paid out $149,640 for hauling and other costs in 2006 l Uses excess revenue from hauling services for City cleanup day and maintenance of City compost site l Reclassified from a special revenue fund to an enterprise fund in 2006 l Reduction is the result of a catchup billing from Waste Management

48. 48 Summary 4 General Fund reserves equal 30% of annual general fund expenditures 4 Ambulance and Fire Funds are building reserves to finance equipment needs and meet debt service requirements 4 Capital Improvement fund balance of $244,011 4 TIF #3 (Whitewater Apts.) owes TIF #2 (Central Business District) $178,829 4 TIF #5 (Whitewater Park) Capital Improvement is repaying $153,000 in advances with tax increment receipts 4 All debt service funds are being adequately funded and all outstanding bonds are being paid on a timely basis 4 Utility Fund revenues continue to keep pace with rising costs, however cash reserves are minimal and substantial debt has been added since 2002.