|
Summary:Elk River Economic Development Authority, Minnesota Elk River; General Obligation
<br /> County unemployment averaged 5.4%,as of October 2012,above the state's rate of 5.2%but below the national level
<br /> of 7.5%. Income levels are 130%of the nation's median household effective buying income,which we consider strong.
<br /> Taxable market value increased by an 8.1%annual average between fiscals 2007 and 2009;however,from fiscals 2010
<br /> to 2012,taxable market values declined by a 5.9%average to$1.79 billion.Indicated market value,a better
<br /> representation of area market prices,was$1.86 billion or$80,633 per capita,which we consider very strong.
<br /> Residential properties account for 50%of the property tax base while commercial and industrial properties account for
<br /> 34%.The tax base is diverse,with the 10 leading taxpayers accounting for 16%of net tax capacity.Management has
<br /> stated that the city is 45%developed and given its proximity to Interstate 94,which provides quick access to the St.
<br /> Cloud and Twin Cities metropolitan area,management believes it is well positioned to draw industrial and commercial
<br /> businesses in to the city.
<br /> The city's good financial management practices have contributed to a strong financial profile,including consistently
<br /> high reserves. During the past three years,general fund reserves have ranged between 45%and 53%of expenditures,
<br /> which adheres to the city's policy of maintaining an unreserved general fund balance of at least 40%of expenditures.
<br /> For the fiscal year ended Dec. 31, 2012,the city's budget called for a use of$367,000 in reserves for capital and general
<br /> operating purposes.However,management stated that the year will end with a small surplus,as they received better
<br /> fuel prices than budgeted,more building permit revenue,as well as lower salary expenses.Similarly,for fiscal 2011,
<br /> management budgeted for a$271,000 use of reserves,but city closed the year with a$292,000 surplus after transfers
<br /> into the general fund of$300,000 from its electric fund and$270,000 from the liquor fund.The total unassigned fund
<br /> balance was$6.1 million or 53%of expenditures,which we consider very strong. Management stated that the city has
<br /> not received local government aid(LGA)since 2009. For fiscal 2013,management is budgeting a$200,000 use of
<br /> reserves due to higher personnel expenses.
<br /> The city has additional reserves in its liquor fund,providing about$1.8 million of cash assets(compared to$4.1 million
<br /> the prior year),available for the general fund. Officials used cash to retire all of the liquor store's debt in early 2012.
<br /> Officials annually transfer about$270,000 into,the general fund from the liquor fund;they made a$300,000 transfer in
<br /> 2012.The city also annually transfers between$300,000 and$500,000 from its electric fund,which it made in 2012
<br /> and plans to continue.Property taxes (83%)are the city's leading revenue stream,while charges and services(5.2%)
<br /> account for most of the remainder.
<br /> The city's financial management practices are considered"strong"under Standard&Poor's financial management
<br /> assessment(FMA),indicating that practices management policies are strong,well embedded,and likely sustainable.
<br /> Highlights of these policies include monthly reports to the city council on budgeted numbers compared to actual
<br /> performance;the council can amend the budget,as necessary. Management maintains a long-term financial and
<br /> capital plan and a debt management policy.The city-adopted reserve policy requires it to maintain a general fund
<br /> unreserved balance of at least 40%of expenditures for cash flow purposes.
<br /> In our opinion,the city's overall debt burden,excluding self-supporting utility debt,is a moderate$3,882 per capita or
<br /> 4.8%of market value. Carrying charges were an elevated 19%of total governmental expenditures less capital outlay in
<br /> 2011. Debt amortization is rapid with officials planning to retire 63%of principal in 10 years.At this time,management
<br /> has stated that it does not have any additional debt plans. Management has designated stable revenue sources to fund
<br /> WWW.STANDARDANDPOORS.COM/RATINGSDIRECT JANUARY 14,2013 3
<br /> 1062136 300126075
<br />
|