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Home My WebLink About2009 AML CITY OF COLUMBIA HEIGHTS, MINNESOTA AUDIT MANAGEMENT LETTER December 31, 2009 City of Columbia Heights, Minnesota Audit Management Letter Report Summary RS EPORTUMMARY Several reports are issued in conjunction with the audit. A very brief summary is as follows: Report Name Elements of Report Overview Required Reports Comprehensive Annual Financial Financial statements Unqualified (“clean”) Report (CAFR) opinion on the Basic Footnotes Financial Statements Supplemental information Report on Internal Control over Results of testing Two deficiencies in internal Financial Reporting and on Internal controls over financial control Compliance and Other Matters reporting Compliance with laws, regulations, contracts and grants State Legal Compliance Report Results of testing certain No reported findings provisions of Minnesota Statutes 2 City of Columbia Heights, Minnesota Audit Management Letter Executive Summary ES XECUTIVEUMMARY A summary of our recommendations contained in this report is as follows: The City continues to experience a good property tax collection rate – 96.98% Page 5 for 2009. The General Fund balance increased $1,040,194 during 2009. The fund balance at December 31, 2009 was sufficient to fulfill the reserve requirement for Pages 13 working capital. The available fund balance exceeded the reserve requirement and 15 by $170,783. The Library Fund balance at December 31, 2009 was not sufficient to fulfill the reserve requirement for working capital. The shortfall was $47,526. Page 17 We have issued a separate management report addressed to the EDA. Page 18 The City’s Comprehensive Annual Financial Report received the Certificate of Achievement for Excellence in Financial Reporting. Page 43 We have a summary of the status of prior year internal control findings. Page 48 3 City of Columbia Heights, Minnesota Audit Management Letter Government-Wide Financial Statements ABA CCOUNTALANCENALYSIS OF THE G-WFS OVERNMENTIDEINANCIALTATEMENTS The basic financial statements of the City of Columbia Heights are presented in Statements 1 through Statement 9 of the 2009 Comprehensive Annual Financial Report. The following comments relate to these Financial Statements. Summary of Financial Activity A summary of financial activity for 2009 is as follows: Revenue ExpendituresInterfundIncrease inFund Balance/Cash FundCAFRand Otherand OtherTransfersFund Balance/Net AssetsBalance FundNo.pg no.SourcesUses(Net)Net Assets12/31/0912/31/09 10136$9,434,651$8,575,363$180,906$1,040,194$4,796,151$5,033,008 General Special Revenue: Community Development Fund20197257,932465,535323,186115,583162,367134,141 Cable Television22597171,65148,086(68,204)55,361274,538232,279 Police Forfeiture265975383,519 - (2,981)1,31011,591 Library24097723,823634,070(16,386)73,367103,254115,799 Police Community Programs270972,71817,1589,000(5,440)44,49044,719 Special Projects2269786,59665,051 - 21,545179,389211,585 C.H.A.S.E25097 - - - - - - After-School Programs2619763,43144,879 - 18,552122,932119,550 Police Grants - Other 2729727,52027,520 - - - - Recreation Contributed Projects8819719,90014,475 - 5,42588,20387,903 Contributed Projects8839759,71953,186 - 6,533272,798272,173 Anoka County CDBG2029728,3754,668 - 23,70729,7551,640 Flex Benefit88797 - - - - - - Housing and Redevelopment Authority: Parkview Villa North203121613,373499,819 - 113,554861,692951,824 Parkview Villa South213121308,189238,577 - 69,612480,707537,855 Rental Housing235121 - - - - - - EDA: Economic Development Authority Admin204117340,38120,277(347,573)(27,469)148,639108,853 Business Revolving Loan Fund299117 - - - - - - EDA Housing Maintenance Fund4081383,50095,000 - (91,500)140,002139,302 Debt Service: Tax Increment Refunding Bonds of 2004A35012956154,126(16,875)(170,945) - - G.O. Improvement 1999A3871294,90090,03213,602(71,530)273,096272,096 G.O. Improvement/Revenue 2003A388129 - 125,39677,199(48,197)(24,055) - G.O. Improvement/Revenue 2006A3401296,600474,146405,748(61,798)701,454700,154 G.O. Street Rehabilitation Bonds 2007341129163,984106,100 - 57,884137,109135,379 G.O. Housing Improvement Area Bonds 2008A31536106,093125,115 - (19,022)225,066224,466 G.O. Public Safety Center Bonds 2008B343129281,714434,933 - (153,219)166,065163,155 G.O. Public Facilities Bonds 2009A344129700 - 148,278148,978148,978148,878 EDA: Sheffield TIF Redevelopment37712987,55513,282 - 74,273(143,147)42,783 Tax Increment Bonds376129699,955436,17316,875280,657786,740517,489 Multi-Use Redevelopment Plan38512935,90619,861 - 16,04528,82966,744 TIF District #2386129 - - - - - - TIF Scattered Site370/3791294,939220,194 - (215,255) - 4,939 TIF Transition Block38912953,35849,290 - 4,06837,37760,772 TIF 4747 Central Avenue371129808,55045,879 - 762,6711,238,610828,550 EDA TIF Revenue 20073731294,100162,113112,100(45,913)258,872258,072 TIF Huset Park Area Fund372129315,59581,425(112,100)122,07088,244110,486 4 City of Columbia Heights, Minnesota Audit Management Letter Government-Wide Financial Statements Capital Project: MSA State Aid Street 212361,232,863728,282(859,476)(354,895)416,23518,161 Community Center Capital Building Fund4183626,2001,648,865 - (1,622,665)749,718745,924 Capital Improvements General Government Buildings411361,055,876439,52216,886633,2401,522,4921,514,892 Capital Equipment Replacement General Government43136106,905332,78763,767(162,115)4,804,1154,789,515 Capital Improvements PIR Fund415361,445,463384,827(481,660)578,9761,754,9201,717,667 Public Safety Center Capital Building417362,130,0008,904,846(50,227)(6,825,073)477,272904,760 Capital Improvement401138205140 - 6580,49082,856 Downtown Parking Maintenance4051382,90013,747 - (10,847)147,974147,374 Capital Sheffield Redevelopment4101385,800 - - 5,800729,232377,639 Capital Improvement Parks4121384,600137,93354,041(79,292)166,669167,592 Capital Improvement PVVS414138600 - - 60030,45530,355 Capital Improvement Development42013874,13859,875 - 14,2631,337,640825,354 Infrastructure Replacement4301381,500117,211889,920774,209800,668800,368 Capital Equipment Fire4391383,500 - - 3,500189,240188,540 Capital Equipment Cable TV4401381,700 - - 1,70086,75186,451 Capital Building Library450138 - - - - 200,000200,000 Enterprise: Water601422,484,3571,891,959(96,499)495,8993,723,843594,392 Sewer 602421,517,3971,699,640(120,722)(302,965)4,740,8572,084,584 Refuse 603421,443,9841,249,207(118,133)76,644731,130473,947 Storm Sewer60442374,890378,083(1,000)(4,193)958,08186,394 Liquor609427,962,9557,664,870(187,636)110,4493,032,284558,504 Internal Service: Central Garage701164580,960508,806(61,250)10,9041,549,076408,941 Information Systems72016413,400254,884240,000(1,484)749,998706,178 Insurance884164548,747487,023(13,767)47,957751,822696,988 Compensated Absences890164 - - - - 87,733828,213 Total$35,735,242$40,247,755$0($5,552,707)$41,448,160$30,571,774 Property Taxes Receivable Delinquent taxes receivable related to the general property tax levy increased from $287,340 at December 31, 2008 to $403,795 at December 31, 2009. Tax collections were 96.98% of the 2009 levy. A history of tax collections is presented in Table 8 of the Comprehensive Annual Financial Report. 5 City of Columbia Heights, Minnesota Audit Management Letter Government-Wide Financial Statements Tax Levies, Tax Rates and Tax Capacity A comparison of values for taxes payable 2007 through 2010 is as follows: 2007200820092010 Market value$1,387,050,100$1,454,932,200$1,416,581,900$1,303,072,900 (1) Tax capacity values: Real estate$14,721,372$15,714,527$15,556,739$14,300,369 Personal property106,885101,38299,33498,125 Subtotal14,828,25715,815,90915,656,07314,398,494 Fiscal disparity contribution(443,665)(485,657)(551,683)(624,231) Fiscal disparity distribution2,473,1402,877,4323,175,7123,579,416 Total$16,857,732$18,207,684$18,280,102$17,353,679 Tax capacity rates: Operating41.511 42.290 44.580 50.620 Debt service0.000 0.786 2.850 6.258 Total41.511 43.076 47.430 56.878 Tax levy: Operating$6,500,613$6,916,895$7,214,117$8,052,142 Debt service - 128,475488,2461,023,283 Total$6,500,613$7,045,370$7,702,363$9,075,425 (1) Amounts presented before reduction for tax increment districts 6 City of Columbia Heights, Minnesota Audit Management Letter Government-Wide Financial Statements Special Assessments Receivable Special assessments receivable consisted of the following amounts at December 31, 2009 and 2008: December 31,Increase Description20082009(Decrease) Delinquent$48,793$122,960$74,167 Deferred3,631,3023,351,640(279,662) Unremitted139,81614,268(125,548) Totals $3,819,911$3,488,868($331,043) Delinquent special assessments receivable consist of amounts which have been spread for collection in 2009 and prior years but have not been collected at December 31, 2009. The City collected approximately 92% of the current assessments due in 2009. Deferred assessments receivable consist of the remaining balance of council adopted assessment rolls. These assessments are collectible at various terms and interest rates. Balance at January 1, 2009$3,631,302 Less 2009 principal levy(496,928) Plus new assessment rolls508,794 Less prepayments(282,868) Adjustments(8,660) Balance at December 31, 2009$3,351,640 7 City of Columbia Heights, Minnesota Audit Management Letter Government-Wide Financial Statements Interfund Receivables A schedule of activity of long term interfund loans is as follows: BalanceNewBalancePayments Fund with Payable12/31/08LoansPrincipalInterest12/31/09 Sheffield TIF - 652$258,426$ - $71,778$12,059$186,648 EDA - 390 - - - - - EDA - 420400,000 - - - 400,000 Capital Improvements General Government Buildings - 411930,227 - 930,227 - - Huset Park TIF - 37245,309 - 45,3091,693 - TIF Multi-use Redevelopment Plan - 38548,497 - 23,08083225,417 Totals$1,682,459$0$1,070,394$14,584$612,065 The Sheffield TIF loan is authorized by Resolution 2003-5. The EDA loan is authorized by Resolution 2004-60. The Capital Improvements General Government Buildings loan is authorized by Resolution 2009-01. The Huset Park TIF loan was authorized in a contract for private redevelopment dated August 1, 2007. The TIF Multi-Use Redevelopment Plan loans were authorized by Resolution 2002-05. 8 City of Columbia Heights, Minnesota Audit Management Letter General Fund GF ENERALUND The General Fund of the City is maintained to account for the current operating and capital outlay expenditures common to all cities. These basic services include (but are not limited to) public safety, public works, culture and recreation, and general government. State aids and property taxes account for approximately 90% of the total revenue of the General Fund. A history of General Fund revenue is as follows: General Fund - Sources of Revenue State AidProperty TaxesAll OtherTotal YearAmountPercentAmountPercentAmountPercentAmountPercent 1996$3,153,29949%$2,403,01737%$924,75614%$6,481,072100% 19973,333,615 49%2,505,456 37%1,006,133 14%6,845,204 100% 19983,382,187 47%2,662,288 37%1,123,767 16%7,168,242 100% 19993,448,758 48%2,658,598 37%1,026,541 15%7,133,897 100% 20003,509,577 47%2,737,854 37%1,167,656 16%7,415,087 100% 20013,577,318 47%2,954,511 38%1,148,842 15%7,680,671 100% 20023,362,902 41%3,534,854 44%1,225,889 15%8,123,645 100% 20032,811,870 38%3,646,155 49%967,382 13%7,425,407 100% 20042,413,850 30%4,336,802 53%1,398,786 17%8,149,438 100% 20051,808,144 23%4,960,668 62%1,175,628 15%7,944,440 100% 20061,737,869 22%5,202,826 66%944,379 12%7,885,074 100% 20071,988,013 23%5,483,751 64%1,056,223 13%8,527,987 100% 20081,663,650 20%5,808,662 69%922,938 11%8,395,250 100% 20091,913,614 20%6,590,306 70%930,731 10%9,434,651 100% 9 City of Columbia Heights, Minnesota Audit Management Letter General Fund State aids for the General Fund have consisted of the following amounts for the last two years: Increase Description20082009(Decrease) Local government aid$771,218$999,434$228,216 MVHC451,574452,9481,374 Police aid228,702212,531(16,171) Fire aid76,33366,674(9,659) All other135,823182,02746,204 Totals$1,663,650$1,913,614$249,964 A graph of General Fund revenue by source is as follows: $7,000,000 General Fund $6,000,000 Revenue By Source $5,000,000 $4,000,000 State Aid Property Taxes All Other $3,000,000 $2,000,000 $1,000,000 $0 2000200120022003200420052006200720082009 10 City of Columbia Heights, Minnesota Audit Management Letter General Fund A chart of 2009 revenue by source is as follows: General Fund 2009 Revenue by Source Intergovernmental 20% All Other 10% General Property Taxes 70% A chart of 2009 expenditures by function is as follows: General Fund 2009 Expenditures by Function Transfers Culture and Recreation General Government 2.3% 15.1%18.0% Public Works 15.1% Public Safety 49.5% 11 City of Columbia Heights, Minnesota Audit Management Letter General Fund The fund balance of the General Fund at December 31, 2009 was $4,796,151. During 2009, the fund balance of the General Fund increased by $1,040,194 as follows: Favorable Budget(Unfavorable) (3) Amendments OriginalFinalActualVarianceNotes Revenues and transfers in: Property taxes$6,560,902($452,948)$6,107,954$6,590,306$482,3521 Licenses and permits134,250 - 134,250179,58645,336 Intergovernmental1,756,700466,2752,222,9751,913,614(309,361)2 Charges for services551,20032,329583,529530,461(53,068) Fines and forfeitures133,000 - 133,000125,595(7,405) Investment income75,000 - 75,00087,94612,946 Other11,000 - 11,0007,143(3,857) Transfers in362,741 - 362,741371,2418,500 Sale of capital assets4,000 - 4,000 - (4,000) Total9,588,79345,6569,634,4499,805,892171,443 Expenditures and transfers out: General government1,804,770(108,333)1,696,4371,579,694116,743 Public safety4,704,227(304,749)4,399,4784,332,88766,591 Public works1,508,027(143,026)1,365,0011,326,26038,741 Parks and recreation1,541,320(144,774)1,396,5461,326,65769,889 Contingencies50,000(24,044)25,9569,86516,091 Transfers out185,0005,335190,335190,335 - Total 9,793,344(719,591)9,073,7538,765,698308,055 Net change in fund balance($204,551)$765,247$560,696$1,040,194$479,498 Notes: 1.The City received excess TIF totaling $481,937. 2.The City’s LGA unallotment for 2009 was $302,379. 3.The City passed resolution 2009-24 reducing the City’s budgeted expenditures. This reduction of expenditures was intended to increase fund balance to offset possible future aid reductions. 12 City of Columbia Heights, Minnesota Audit Management Letter General Fund The City's General Fund balance has been as follows for the past several years: Year EndedIncrease December 31,Fund Balance(Decrease) 1993$3,181,939$256,073 19943,444,408262,469 19953,591,224146,816 19963,839,350248,126 19974,060,594221,244 19984,744,231683,637 19995,015,965271,734 20004,801,418(214,547) 20013,897,376(904,042) 20023,515,606(381,770) 20033,423,232(92,374) 20044,140,110716,878 20053,350,128(789,982) 20063,595,848245,720 20073,979,146383,298 20083,755,957(223,189) 20094,796,1511,040,194 13 City of Columbia Heights, Minnesota Audit Management Letter General Fund $5,500,000 City received excess General Fund Balance TIF totaling $482,000 $5,000,000 Transferred to Capital Improvement Development Transfers to Capital $4,500,000 ($700,000) and General Gov. Improvement Development ($180,000) and Sheffield Dev. Bldg. Cap. Imp ($1,400,000) Fund ($700,000) $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 199519961997199819992000200120022003200420052006200720082009 For 2009 the City budgeted for an increase in fund balance to address risk of future aid cuts. 14 City of Columbia Heights, Minnesota Audit Management Letter General Fund Property taxes and state aids account for approximately 90% of the revenue of the General Fund. Property taxes and state aids are not received until July and December of each year (i.e., the second half of the year). As a result, the City is required to have sufficient reserves at the beginning of the year to fund operations of the first half of the year. As such, the City adopted resolution 95-40 establishing a General Fund cash flow reserve. This reserve is an amount equal to forty-five percent of the ensuing year’s budgeted expenditures. A summary of General Fund designations is as follows: Fund Balance Component20082009 Reserved for prepayments$12,159$71,898 Designated for working capital3,743,7984,553,470 Undesignated - 170,783 Total fund balance - December 31$3,755,957$4,796,151 The amount of General Fund balance at December 31, 2009 was sufficient to fulfill the City’s reserve goal. The reserve requirement is calculated as follows: 2010 budgeted expenditures$10,118,823 Reserve requirement percentagex 45% Reserve requirement4,553,470 Balance available4,724,253 Amount of fund balance (over) under reserve requirement($170,783) 15 City of Columbia Heights, Minnesota Audit Management Letter Special Revenue Funds SRF PECIALEVENUEUNDS The financial statements of the Special Revenue Funds are presented in Statements 14 through 37 of the 2009 Comprehensive Annual Financial Report. Special Revenue Funds are a classification of funds to account for revenues (and expenditures related thereto) segregated by City policy or Federal or State statutes for specific purposes. The City maintained the following Special Revenue Funds during 2009 and 2008: Revenue ExpendituresInterfundIncrease inFund Balance/Cash FundCAFRand Otherand OtherTransfersFund Balance/Net AssetsBalance FundNo.pg no.SourcesUses(Net)Net Assets12/31/0912/31/09 Special Revenue: Community Development Fund20197$257,932$465,535$323,186$115,583$162,367$134,141 Cable Television22597171,65148,086(68,204)55,361274,538232,279 Library24097723,823634,070(16,386)73,367103,254115,799 Police Community Programs270972,71817,1589,000(5,440)44,49044,719 Special Projects2269786,59665,051 - 21,545179,389211,585 C.H.A.S.E25097 - - - - - - After-School Programs2619763,43144,879 - 18,552122,932119,550 Police Forfeiture265975383,519 - (2,981)1,31011,591 Police Grants2729727,52027,520 - - - - Recreation Contributed Projects8819719,90014,475 - 5,42588,20387,903 Contributed Projects8839759,71953,186 - 6,533272,798272,173 Anoka County CDBG2029728,3754,668 - 23,70729,7551,640 Flex Benefit88797 - - - - - - Housing and Redevelopment Authority: Parkview Villa North203121613,373499,819 - 113,554861,692951,824 Parkview Villa South213121308,189238,577 - 69,612480,709537,855 Rental Housing235121 - - - - - - EDA: Economic Development Authority Admin204117340,38120,277(347,573)(27,469)148,639108,853 Business Revolving Loan Fund299117 - - - - - - Total$2,704,146$2,136,820($99,977)$467,349$2,770,076$2,829,912 16 City of Columbia Heights, Minnesota Audit Management Letter Special Revenue Funds Library Fund (240) The primary revenue source of this fund is property taxes which are not received until the second-half of the year (July and December). Resolution 95-40 established a reserve for cash flow in an amount equal to forty-five percent of the ensuing year’s budgeted expenditures. A summary of fund balance is as follows: December 31, 20082009 Designated for working capital$26,682$100,208 Reserved for prepayments3,2053,046 Total$29,887$103,254 The fund balance at December 31, 2009 was not sufficient to fulfill the established reserve. A comparison of the required reserve and the fund balance available is as follows: $772,7432010 budgeted expenditures x 45%Reserve requirement percentage 347,734Reserve requirement 200,000Balance available in Capital Equipment Replacement Fund 100,208Balance available in Library Fund $47,526Amount of fund balance under reserve requirement Effective December 31, 2002, the City transferred $200,000 out of this fund to establish the Capital Equipment Replacement – Library Fund. 17 City of Columbia Heights, Minnesota Audit Management Letter Special Revenue Funds Community Development (201) This fund was established in 1996 to account for the financial activity related to building inspections and community development administration. A summary of the financial activity of this fund is as follows: 200720082009 Revenues and transfers in: Investment income$3,080$420$1,900 Licenses and permits307,046287,726256,032 Charges for services - - - Transfer from EDA Administration Fund317,228274,863347,573 Total627,354563,009605,505 Expenditures and transfers out: Expenditures517,841539,610465,535 Transfer to Capital Improvement Development201,867 - 24,387 Transfer to General Fund (administrative charge)21,70022,267 - Total741,408561,877489,922 Net change in fund balance(114,054)1,132115,583 Fund balance - January 1159,70645,65246,784 Fund balance - December 31$45,652$46,784$162,367 EDA Comments and analysis of the EDA Funds are presented in a separate report addressed to the EDA. 18 City of Columbia Heights, Minnesota Audit Management Letter Special Revenue Funds Parkview Villa North (PVVN) (203) The financial activity of this fund for 2007 through 2009 is as follows: 200720082009 Revenues: Federal grant: Operating subsidy$159,624$185,506$275,002 Capital grant185,28770,980 - Rents314,558316,990316,869 Investment income 31,87021,79012,600 Other8,93210,9198,902 Total revenues700,271606,185613,373 Expenditures: Personal services22,46323,03823,760 Supplies70,79721,86024,289 Other services and charges367,988389,980387,951 Capital outlay127,21672,67563,819 Total expenditures588,464507,553499,819 Revenues over expenditures111,80798,632113,554 Fund balance - January 1537,699649,506748,138 Fund balance - December 31$649,506 $748,138 $861,692 19 City of Columbia Heights, Minnesota Audit Management Letter Special Revenue Funds Parkview Villa South (PVVS) (213) The financial activity of this fund for 2007 through 2009 is as follows: 200720082009 Revenues: Rents$283,229$296,120$296,727 Investment income 11,9309,6007,500 Other4,5235,5623,962 Total revenues299,682311,282308,189 Expenditures: Personal services11,48012,23012,020 Supplies20,08810,7727,248 Other services and charges162,668178,013187,067 Capital outlay25,700 - 32,242 Total expenditures219,936201,015238,577 Revenues over expenditures79,746110,26769,612 Fund balance - January 1221,082300,828411,095 Fund balance - December 31$300,828 $411,095 $480,707 20 City of Columbia Heights, Minnesota Audit Management Letter Debt Service Funds DSF EBTERVICEUNDS Debt Service Funds are a type of governmental fund to account for the accumulation of resources for the payment of interest and principal on debt (other than Proprietary Fund debt). A summary of bonded debt at December 31, 2009 is as follows: FundDebt Balance atPayable atSource of Bond Issue12/31/0912/31/09Repayment Tax Increment Bonds: Tax Increment Revenue Bonds of 2007$258,872$2,881,000Tax increment Taxable Tax Increment Bonds of 2009B (371) - 580,000Tax increment Improvement Bonds: G.O. Improvement Bonds of 1999A (387)273,09665,000 G.O. Improvement Bonds of 2003A (388)(24,055)815,074Transfers from Capital Improvement PIR G.O. Improvement Bonds of 2006A (340)701,4542,154,414Transfers from Capital Improvement PIR Taxable G.O. Housing Improvement Area Series 2008A (343)225,066975,000Special assessments (receivable was $963,087 at 12/31/09) General Obligation Bonds: G.O. Street Rehabilitation Series 2007A (373)137,109935,000Property taxes G.O. Public Safety Center Bonds of 2008B (343)166,06510,000,000Property taxes G.O. Public Safety Center Bonds of 2009A (344)148,9783,610,000Property taxes Total$1,886,585$22,015,488 21 City of Columbia Heights, Minnesota Audit Management Letter Capital Project Funds CPF APITALROJECTUNDS The fund balances of the Capital Project Funds were as follows at December 31, 2009 and 2008: Revenue ExpendituresInterfundIncrease inFund Balance/Cash FundCAFRand Otherand OtherTransfersFund Balance/Net AssetsBalance FundNo.pg no.SourcesUses(Net)Net Assets12/31/0912/31/09 Capital Project: MSA State Aid Street 21236$1,232,863$728,282($859,476)($354,895)$416,235$18,161 Community Center Capital Building Fund4183626,2001,648,865 - (1,622,665)749,718745,924 Capital Improvements General Government Buildings411361,055,876439,52216,886633,2401,522,4921,514,892 Capital Equipment Replacement General Government43136106,905332,78763,767(162,115)4,804,1154,789,515 Capital Improvements PIR Fund401361,445,463384,827(481,660)578,9761,754,9201,717,667 Public Safety Center Capital Building417362,130,0008,904,846(50,227)(6,825,073)477,272904,760 Capital Improvement401138205140 - 6580,49082,856 Downtown Parking Maintenance4051382,90013,747 - (10,847)147,974147,374 Capital Sheffield Redevelopment4101385,800 - - 5,800729,232377,639 Capital Improvement Parks4121384,600137,93354,041(79,292)166,669167,592 Capital Improvement PVVS414138600 - - 60030,45530,355 Capital Improvement Development42013874,13859,875 - 14,2631,337,640825,354 Infrastructure Replacement4301381,500117,211889,920774,209800,668800,368 Capital Equipment Fire4391383,500 - - 3,500189,240188,540 Capital Equipment Cable TV4401381,700 - - 1,70086,75186,451 Capital Building Library450138 - - - - 200,000200,000 Total$6,092,250$12,768,035($366,749)($7,042,534)$13,493,871$12,597,448 22 City of Columbia Heights, Minnesota Audit Management Letter Capital Project Funds Municipal State Aid (212/402) This fund was established to account for MSA maintenance and construction allotments. For the past three years, the fund balance of this fund consisted of the following: December 31, Account200720082009 Maintenance$132,766$143,627$137,844 Construction(96,278)627,503278,391 Total$36,488$771,130$416,235 23 City of Columbia Heights, Minnesota Audit Management Letter Capital Project Funds A summary of 2009 activity is as follows: 212402 MaintenanceConstructionTotal Revenue: MSA$140,921$1,070,532$1,211,453 Federal grant - 21,41021,410 Transfer in: Fund 101 - 1,2941,294 Total revenue140,9211,093,2361,234,157 Expenditures: Personal services65,525 - 65,525 Supplies12,310 - 12,310 Other services and charges66,369 - 66,369 Projects: Pedestrian bridge - 358,066358,066 Zone 4 Street Rehab - 102,350102,350 Mill and Overlay - Jefferson, 5th - 123,662123,662 Transfers out: Fund 1012,500 - 2,500 Fund 340 - 2006A Bonds - 117,800117,800 Fund 430 - 740,470740,470 Total expenditures146,7041,442,3481,589,052 Net change in fund balance(5,783)(349,112)(354,895) Fund balance - January 1143,264627,866771,130 Fund balance - December 31$137,481$278,754$416,235 24 City of Columbia Heights, Minnesota Audit Management Letter Capital Project Funds Capital Improvement General Government Buildings (411) A summary of financial activity is as follows: 200720082009 Revenue: Investment income$49,170$26,849$38,300 Bonds issued - 2009A - - 955,000 Sale of capital assets - - 62,576 Transfers from: Fund 70188,83772,50036,250 Public Safety Center Capital Bldg - 600,000 - Total revenue138,007699,3491,092,126 Expenditures: Project costs: MSC building repairs73,404 - - Murzyn Hall renovation - 544,049355,846 Other - - 83,676 Transfers out: Bonds of 2009A (344) - - 19,364 Garage Fund (701) - 18,941 - Total expenditures73,404562,990458,886 Net change in fund balance64,603136,359633,240 Fund balance - January 1688,290752,893889,252 Fund balance - December 31$752,893$889,252$1,522,492 During 2001, the City adopted Resolution 2001-84 which authorized the transfer of $1,400,000 from the General Fund to this fund. Pursuant to the resolution, these funds are “dedicated to future improvements to general government buildings.” Also, the resolution requires a four-fifths vote to expend any unbudgeted, undesignated fund balance. 25 City of Columbia Heights, Minnesota Audit Management Letter Capital Project Funds Capital Improvement PVVS (414) This fund was established in 2001 by Resolution 2001-84 to account for monies dedicated for future improvement or replacement of the building. A summary of financial activity is as follows: 200720082009 Revenues: Investment income$1,710$1,110$600 Expenditures - - - Net change in fund balance1,7101,110600 Fund balance - January 127,03528,74529,855 Fund balance - December 31$28,745$29,855$30,455 The resolution establishing this fund requires a four-fifths vote to expend any unbudgeted, undesignated fund balance. The transfer was approved through Resolution 2004-82. 26 City of Columbia Heights, Minnesota Audit Management Letter Capital Project Funds Capital Improvements PIR (415) A summary of the activity of this fund is as follows: 200720082009 Financial sources: Special assessments$1,137,576$738,423$775,899 Charges for services146,90672,30335,971 Investment income67,27035,22426,893 Other revenues - - 1,700 Issuance of bonds - 2009A - - 605,000 Transfers from General Fund12,5991,267 - Transfers from Municipal State Aid Fund - 23,322 - Transfers from Infrastructure Replacement Fund185,130 - - Total financial sources1,549,481870,5391,445,463 Financial uses: Transfer to Water Fund - - 24,224 Transfer to Debt Service Fund743,812499,578457,436 Project expenditures:1,073,862334,708 - Street rehabiliation - - 248,500 Sealcoating - - 62,406 Other - - 73,921 Total financial uses1,817,674834,286866,487 Net change in fund balance(268,193)36,253578,976 Fund balance - January 11,407,8841,139,6911,175,944 Fund balance - December 31$1,139,691$1,175,944$1,754,920 27 City of Columbia Heights, Minnesota Audit Management Letter Capital Project Funds The projects accounted for in this fund are financed by the following sources: Capital Equipment Replacement Fund Water Capital Construction Fund Sewer Capital Construction Fund General Fund Special assessments The financing provided by other City funds is basically a cash transfer from those funds. The financing provided by special assessments is not an immediate repayment. Special assessments are extended out over a period of up to fifteen years. The Capital Improvement Projects Fund is therefore required to finance the special assessment receivables until they are collected. The amount of special assessments receivable at December 31, 2009 was $3,488,869. 28 City of Columbia Heights, Minnesota Audit Management Letter Capital Project Funds Community Center Capital Building Fund (418) A summary of financial activity is as follows: Prior Years2009Total Revenue and other sources: Transfers in: Capital Improvements General Gov't Bldgs.$1,800,000$ - $1,800,000 Capital Improvements Parks500,000 - 500,000 Liquor500,000 - 500,000 Capital Improvement Four Cities Bonds90,000 - 90,000 Capital Equipment Cable TV250,000 - 250,000 Insurance Internal Service735,000 - 735,000 Flex Benefit25,000 - 25,000 Investment income542,15026,200568,350 Total revenue and other sources4,442,15026,2004,468,350 Expenditures2,069,7671,648,8653,718,632 Net change in fund balance$2,372,383($1,622,665) Fund balance - ending$749,718 The City has a joint powers agreement with Independent School District No. 13 to assist with the construction of the Community Center. Upon completion of this project, we recommend the City close this fund. 29 City of Columbia Heights, Minnesota Audit Management Letter Capital Project Funds Public Safety Center Capital Building Fund (417) A summary of the activity of this fund for 2009 and 2008 is as follows: 20082009Total Revenue and other sources: Bonds issued$10,000,000$2,050,000$12,050,000 Transfers in: EDA Housing Maintenance (408)600,000 - 600,000 Anoka County CDBG (202)365,583 - 365,583 Capital Improvement (390)581,963 - 581,963 Capital Improvement Development (420)23,878 - 23,878 Investment income135,91979,600215,519 Other1,0004001,400 Total revenue and other sources11,708,3432,130,00013,838,343 Expenditures and other uses: Project costs3,372,7838,874,20712,246,990 Bond issuance costs119,02130,639149,660 Transfers out: - 2008B Bonds Debt Service314,194 - 314,194 2009A Bonds Debt Service - 50,22750,227 Capital Improvement General Gov't Bldgs.600,000 - 600,000 Total expenditures and other uses4,405,9988,955,07313,361,071 Net change in fund balance7,302,345(6,825,073)477,272 Fund balance - January 1 - 7,302,3457,302,345 Fund balance - December 31$7,302,345$477,272$7,779,617 The City established this fund pursuant to Resolution 2008-67. Start-up funding was provided by the $600,000 transfer from EDA Housing Maintenance Fund. The Resolution also required these funds be ultimately transferred to the Capital Improvement General Government Buildings Fund (411) upon receipts of bond proceeds. 30 City of Columbia Heights, Minnesota Audit Management Letter Enterprise Funds EF NTERPRISEUNDS Water Fund Operating Account 601 A graph of the water operations is presented below: $2,500,000 $2,500,000 $2,400,000 $2,400,000 Water Utility Fund $2,300,000 $2,300,000 Revenue and Expenses $2,200,000 $2,200,000 $2,100,000 $2,100,000 $2,000,000 $2,000,000 $1,900,000 $1,900,000 $1,800,000 $1,800,000 $1,700,000 $1,700,000 $1,600,000 $1,600,000 $1,500,000 $1,500,000 $1,400,000 $1,400,000 Transfers Out $1,300,000 $1,300,000 Water Purchases $1,200,000 $1,200,000 Other Operating Expenses $1,100,000 $1,100,000 Operating Revenue $1,000,000 $1,000,000 $900,000 $900,000 $800,000 $800,000 $700,000 $700,000 $600,000 $600,000 $500,000 $500,000 $400,000 $400,000 $300,000 $300,000 $200,000 $200,000 $100,000 $100,000 $0$0 20052006200720082009 The City increased rates effective August 1, 2007. As part of the 2007 rate increase, the City built in annual rate adjustments. The increase in City water rates was intended to increase the Water Fund balance as detailed in the graph above. In 2010, the City passed a resolution to adjust water rates based on the information the City was provided from a rate study. 31 City of Columbia Heights, Minnesota Audit Management Letter Enterprise Funds Sewer Fund Operating Account 602 A graph of sewer operations is presented below. $2,000,000 $2,000,000 $1,900,000 $1,900,000 Sewer Utility Fund $1,800,000 $1,800,000 Revenue and Expenses $1,700,000 $1,700,000 $1,600,000 $1,600,000 $1,500,000 $1,500,000 $1,400,000 $1,400,000 $1,300,000 $1,300,000 $1,200,000 $1,200,000 Transfers Out $1,100,000 $1,100,000 MCES $1,000,000 $1,000,000 Other Operating Expenses $900,000 $900,000 Operating Revenue $800,000 $800,000 $700,000 $700,000 $600,000 $600,000 $500,000 $500,000 $400,000 $400,000 $300,000 $300,000 $200,000 $200,000 $100,000 $100,000 $0 $0 20052006200720082009 32 City of Columbia Heights, Minnesota Audit Management Letter Enterprise Funds Storm Sewer Fund 604 A graph of operations is presented below: $550,000 $550,000 $500,000 $500,000 Storm Sewer $450,000 $450,000 $400,000 $400,000 Transfers Out $350,000 $350,000 Operating Expenses $300,000 $300,000 Operating Revenue $250,000 $250,000 $200,000 $200,000 $150,000 $150,000 $100,000 $100,000 $50,000 $50,000 $0 $0 20052006200720082009 This fund is responsible for a portion of the debt service on the 1999B, 2003A and 2006A bond issues. The outstanding liability on the bonds was $496,297 at December 31, 2009. Additionally, the Storm Sewer Debt Service account (634) had a deficit of $347,976 at December 31, 2009. The Storm Sewer Fund has historically operated at a deficit. After the City’s most recent rate study, the Fund is planned to continue to operate at a deficit. 33 City of Columbia Heights, Minnesota Audit Management Letter Enterprise Funds Refuse Fund 603 A graph of refuse operations is presented below: $1,500,000 $1,500,000 $1,400,000 $1,400,000 $1,300,000 $1,300,000 Refuse Utility $1,200,000 $1,200,000 $1,100,000 $1,100,000 $1,000,000 $1,000,000 $900,000 $900,000 Operating Expenses / Transfers Out $800,000 $800,000 $700,000 $700,000 Operating Revenue $600,000 $600,000 $500,000 $500,000 $400,000 $400,000 $300,000 $300,000 $200,000 $200,000 $100,000 $100,000 $0 $0 20052006200720082009 34 City of Columbia Heights, Minnesota Audit Management Letter Enterprise Funds Municipal Liquor Fund 609 An analysis of 2009 activity is as follows: Top ValuTop Valu IIHeights Liquor2009 Total2008 Total AmountPercentAmountPercentAmountPercentAmountPercentAmountPercent Operating revenues$3,463,155100.00% $3,370,496100.00% $1,129,233100.00% $7,962,884100.00% $7,490,942100.00% Cost of goods sold2,622,51075.73% 2,581,47676.59% 881,56078.07% 6,085,54676.42% 5,783,54577.21% Gross margin840,64524.27% 789,02023.41% 247,67321.93% 1,877,33823.58% 1,707,39722.79% Other operating expenses607,62617.55% 538,38215.97% 169,63615.02% 1,315,64416.52% 1,399,93818.69% Net income from operations$233,0196.73% $250,6387.44% $78,0376.91% $561,6947.05% $307,4594.10% The following comments relate to the above table: Sales increased by approximately $472,000 or 6.3%. Gross margin percent increased from 22.79% to 23.58% however, overall gross margin increased by $170,000. Net income from operations increased approximately $254,000 from 2008 to 2009. 35 City of Columbia Heights, Minnesota Audit Management Letter Enterprise Funds Income from operations as a percent of total sales for the past twenty-one years is scheduled below: Net Income From Operations% of TopTopHeightsTotal YearValuValu IILiquorTotalSales 1989---------------Site Information----------------$228,8576.2% 1990----------------Not Available-----------------261,5096.2% 1991$297,378$ - $97,341394,7198.2% 1992246,739 - 100,907347,6467.2% 1993148,150(62,608)103,476189,0183.6% 1994146,3505,902101,483253,7354.6% 1995141,23537,749115,595294,5795.2% 1996124,47180,885150,649356,0055.9% 199768,00292,250151,023311,2755.1% 1998151,974123,436181,752457,1627.2% 1999146,576130,763226,116503,4557.5% 2000152,630105,749128,389386,7686.0% 2001183,202108,788167,587459,5776.7% 2002159,242161,358175,799496,3997.2% 200330,672165,891135,709332,2724.8% 2004168,475144,81286,440399,7275.7% 200514,52698,33487,211200,0713.0% 200662,10093,54046,512202,1523.1% 2007115,219104,44948,896268,5644.0% 20088,464193,345105,650307,4594.1% 2009233,019250,63878,037561,6947.0% As shown above, liquor operations have been an important revenue source for the City. 36 City of Columbia Heights, Minnesota Audit Management Letter Enterprise Funds Comparison With Other Municipal Liquor Stores The Office of the State Auditor (OSA) annually publishes “An Analysis of Minnesota Municipal Liquor Store Operations.” The most recent report available is for 2008. The following analysis compares Columbia Heights’ liquor operations with those reported in the OSA report. It should be noted that the following comparisons are strictly a comparison of amounts reported. There are a number of factors that affect operating results that are not included in this comparison. These factors include the mix of product sold and philosophy regarding sales techniques such as high volume/lower margin. There are seventeen cities in the metropolitan area that operate off-sale only operations. The following table shows the top 10 ranked cities in terms of gross sales for the most recent 5 years available: 20042005200620072008 1LakevilleLakevilleLakevilleLakevilleLakeville 2EdinaEdinaEdinaEdinaEdina 3RichfieldEden PrairieRichfieldRichfieldRichfield 4Eden PrairieRichfieldEden PrairieEden PrairieEden Prairie 5Columbia HeightsColumbia HeightsApple ValleyApple ValleyColumbia Heights 6Apple ValleyApple ValleyColumbia HeightsColumbia HeightsApple Valley 7SavageSavageElk RiverSt. AnthonySt. Anthony 8FridleySt. AnthonySavageSavageSavage 9Elk RiverFridleySt. AnthonyElk RiverElk River 10BemidjiElk RiverBrooklyn CenterBrooklyn CenterBrooklyn Center As shown above, the City’s ranking moved from sixth to fifth. 37 City of Columbia Heights, Minnesota Audit Management Letter Enterprise Funds Gross Margin Analysis Gross margin measures the sales less the direct cost of products sold. A comparison to state averages for Minnesota municipal off-sale operations is as follows: CostGross MarginState (1) Salesof SalesAmountPercentAverage 1996$6,011,907$4,774,908$1,236,99920.6% 23.1% 19976,135,1664,878,7121,256,45420.5% 22.7% 19986,367,6895,009,9231,357,76621.3% 23.2% 19996,669,3765,238,0231,431,35321.5% 23.6% 20006,425,0215,051,5751,373,44621.4% 23.8% 20016,796,3845,267,3981,528,98622.4% 24.0% 20026,857,3075,254,5981,602,70923.3% 24.4% 20036,934,5725,366,1371,568,43522.6% 23.9% 20046,946,0585,318,3311,627,72723.4% 24.1% 20056,713,9325,210,8611,503,07122.4% 24.6% 20066,546,4915,039,3181,507,17323.0% 24.4% 20076,722,3905,144,8821,577,50823.5% 25.1% 20087,490,9425,783,5451,707,39722.8% 24.8% 20097,962,8846,085,5461,877,33823.6% Not Available (1) Source: Minnesota Office of the State Auditor - Metropolitan Area Off-Sale Operations 38 City of Columbia Heights, Minnesota Audit Management Letter Enterprise Funds Operating Expenses Operating expenses for the past several years have been as follows: Percent of Sales YearAmountCityState Avg. 1994$788,42414.3% 16.0% 1995830,81714.6% 16.8% 1996880,99414.7% 16.3% 1997945,17915.4% 16.5% 1998900,60414.1% 16.1% 1999927,89813.9% 16.2% 2000986,67815.4% 16.5% 20011,069,40915.7% 16.6% 20021,106,31016.1% 16.2% 20031,236,16317.8% 17.8% 20041,256,93418.1% 17.9% 20051,303,00019.4% 17.0% 20061,305,02119.9% 17.9% 20071,308,94419.5% 17.9% 20081,399,93818.7% 17.9% 20091,315,64418.7% N/A 39 City of Columbia Heights, Minnesota Audit Management Letter Enterprise Funds Operating expenses for 2009, 2008 and 2007 were as follows: 2008 to 2009 Increase 200720082009(Decrease) Personnel costs$830,089$893,197$851,248($41,949) Rent201,95048,3743,692(44,682) Utilities64,75185,60377,364(8,239) Credit card fees71,94095,17694,902(274) Insurance19,89321,84229,2287,386 Depreciation22,404125,649145,21919,570 All other97,917130,097113,991(16,106) Total$1,308,944$1,399,938$1,315,644($84,294) 40 City of Columbia Heights, Minnesota Audit Management Letter Enterprise Funds Net Income from Operations Net income for the past several years is as follows: Percent of Sales CityState YearAmountCityAverage 1994$253,7354.6%7.2% 1995294,5795.2%6.8% 1996356,0055.9%7.5% 1997311,2755.1%6.9% 1998457,1627.2%7.5% 1999503,4557.5%7.5% 2000386,7686.0%7.2% 2001459,5776.7%7.3% 2002496,3997.2%8.1% 2003332,2724.8%6.1% 2004370,7935.3%6.6% 2005200,0713.0%7.8% 2006202,1523.1%7.0% 2007268,5644.0%8.5% 2008307,4594.1%7.1% 2009561,6947.0%Not Available 41 City of Columbia Heights, Minnesota Audit Management Letter Internal Service Funds ISF NTERNALERVICEUNDS Internal Service Funds are used to account for the financing on a cost reimbursement basis of goods or services provided by one department to another department within the City. During 2009, the City maintained the following Internal Service Funds: CentralInformationCompensatedTotals GarageSystemsInsuranceAbsences20092008 Assets: Cash$408,941$706,178$696,988$828,213$2,640,320$2,596,284 Other current assets38,1962,60058,240 - 99,036116,774 Capital assets1,166,46562,419 - - 1,228,8841,207,095 Total assets$1,613,602$771,197$755,228$828,213$3,968,240$3,920,153 Liabilities and Net Assets Liabilities: Current liabilities$42,535$11,905$3,406$37,246$95,092$107,534 Compensated absences payable21,9919,294 - 703,234734,519731,367 Total liabilities64,52621,1993,406740,480829,611838,901 Net assets1,549,076749,998751,82287,7333,138,6293,081,252 Total liabilities and net assets$1,613,602$771,197$755,228$828,213$3,968,240$3,920,153 42 City of Columbia Heights, Minnesota Audit Management Letter Certificate of Achievement CAF ERTIFICATE OF CHIEVEMENTOR EFR XCELLENCE IN INANCIALEPORTING The City submits the Comprehensive Annual Financial Report to the Government Finance Officers Association of the United States and Canada (GFOA) for a review. The program is a review of all facets of financial reporting for disclosure, clarity and consistency with national reporting standards. The City received the award for each year since 1990. We commend the City for this achievement. 43 City of Columbia Heights, Minnesota Audit Management Letter Accounting Standards AS CCOUNTINGTANDARDS Governmental Accounting Standards Board (GASB) statements that are required to be implemented in future years that may affect the City are as follows: City Implementation Upcoming GASB Statements Required By Statement No. 51 Accounting and Financial Reporting for Intangible Assets. The 2010 provisions of this Statement are effective for financial statements for periods beginning after June 15, 2009. Statement No. 53 Accounting and Financial Reporting for Derivative Instruments. 2010 The provisions of this Statement are effective for fiscal periods beginning after June 15, 2009. Statement No. 54 Fund Balance Reporting and Governmental Fund Type 2011 Definitions. The provisions of this statement are effective for periods beginning after June 15, 2010. 44 City of Columbia Heights, Minnesota Audit Management Letter Communication With Those Charged With Communication CWTCWG OMMUNICATIONITHHOSEHARGEDITHOVERNANCE We have audited the financial statements of the governmental activities, the business- type activities, each major fund, and the aggregate remaining fund information of the City of Columbia Heights, Minnesota (the City) for the year ended December 31, 2009, and have issued our report thereon dated June 21, 2010. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and Government Auditing Standards, as well as certain information related to the planning scope and timing of our audit. We have communicated such information in our letter to you dated January 7, 2010. Professional standards also require that we communicate to you the following information related to our audit. Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during 2009. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimate affecting the financial statements was management’s estimate of the net OPEB obligation which is based on the OPEB actuarial study. We evaluated the key 45 City of Columbia Heights, Minnesota Audit Management Letter Communication With Those Charged With Communication factors and assumptions used to develop the estimate for the net OPEB obligation in determining that it is reasonable in relation to the financial statements taken as a whole. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. There were no misstatements detected as a result of audit procedures. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated June 21, 2010. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the City’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those 46 City of Columbia Heights, Minnesota Audit Management Letter Communication With Those Charged With Communication statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. In September 2009, the Columbia Heights Housing and Redevelopment Authority (HRA) entered into a contract for work to be completed at Parkview Villa South Apartments. As a result of audit procedures performed, it was noted that there was a lack of documentation specifying the HRA Executive Director’s purchasing limit. Due to the lack of documentation, it is unclear if the contract entered into by the HRA is in compliance with the City and HRA’s bylaws. However, subsequent to the HRA entering into this contract, the HRA Board approved payment of the contract amount, and in effect, ratified the contract. We recommend the City and HRA clarify and document the HRA Executive Director’s purchasing limit to prevent potential noncompliance in future years. 47 City of Columbia Heights, Minnesota Audit Management Letter Other Matters OM THERATTERS During our audit for the year ended December 31, 2009, we noted the following matter: Status of Prior Year’s findings: The following is the status of internal control comments identified during the 2008 audit: Comment Status 2008-1 Recreational Revenue Documentation. The issue is not resolved. 2008-2 Adopting Special Assessment Rolls. The issue is not resolved. Closing This information is intended solely for the information and use of management, members of the City Council and others within the City of Columbia Heights, Minnesota and is not intended to be, and should not be, used by anyone other than these specified parties. 48