Hennepin County Regional Railroad Authority by tyw17027

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									                                   Disclaimer
This Comprehensive Annual Financial Report (CAFR) of the Hennepin County
Regional Railroad Authority (HCRRA) contained on the County's web pages is
historical information as of December 31, 2008. The information in the CAFR has not
been updated for developments subsequent to the date of the independent auditor’s
report.

The County has taken reasonable security measures to protect the integrity of its
website and information posted thereon. However, no web site can fully ensure against
infiltration. Absent any unauthorized act that deletes, edits, or somehow manipulates
the words or data, this publication represents the presentation of the HCRRA’s CAFR
dated December 31, 2008.




        This online document has been formatted for two-sided printing.
HENNEPIN COUNTY REGIONAL RAILROAD AUTHORITY
   A Component Unit of Hennepin County, Minnesota

        Comprehensive Annual Financial Report

           Year Ended December 31, 2008
Introductory Section
Hennepin County Regional Railroad Authority
                           Hennepin County Regional Railroad Authority
                         A Component Unit of Hennepin County, Minnesota
                          2008 Comprehensive Annual Financial Report
                                      Table of Contents




INTRODUCTORY SECTION                                                                                                  Page
Letter of Transmittal ............................................................................................     1
Principal Officials .................................................................................................  8

FINANCIAL SECTION
Independent Auditors’ Report ..............................................................................         11
Management's Discussion and Analysis .............................................................                  13

Basic Financial Statements
   Governmental Fund Balance Sheets and Statement of Net Assets ..............                                      18
   Statements of Governmental Fund Revenues, Expenditures, and
      Changes in Fund Balances and Statement of Activities ...........................                              19
   Notes to the Basic Financial Statements .......................................................                  21

Required Supplementary Information
  Schedule of Revenues, Expenditures, and
      Changes in Fund Balance - Budget to Actual - General Fund .................                                   28
  Notes to Required Supplementary Information ..............................................                        29

Supplementary Information
  Balance Sheet - General Fund ......................................................................               30
  Balance Sheet - Debt Service Fund ..............................................................                  31
  Schedule of Revenues, Expenditures, and
      Changes in Fund Balance - Budget to Actual - Debt Service Fund ..........                                     32

STATISTICAL SECTION ....................................................................................            33
Hennepin County Regional Railroad Authority
                                     HENNEPIN COUNTY REGIONAL RAILROAD AUTHORITY
                            417 North Fifth Street, Suite 320, Minneapolis, MN 55401-1362 (612) 348-9260
                                                                                     FAX: (612) 348-9710




August 4, 2009

The Honorable Members of the Hennepin County Regional Railroad Authority Board:

Minnesota Statutes require all governmental agencies to issue an annual report on its financial
position and activity prepared in conformity with accounting principles generally accepted in the
United States of America (GAAP) and audited in accordance with generally accepted auditing
standards by a firm of licensed certified public accountants or the state auditor. Pursuant to that
requirement, we hereby issue the comprehensive annual financial report of the Hennepin
County Regional Railroad Authority (HCRRA) for the fiscal year ended December 31, 2008.

Management assumes full responsibility for the completeness and reliability of the information
contained in this report, based upon a comprehensive framework of internal control established
for this purpose. Because the cost of internal control should not exceed anticipated benefits, the
objective is to provide reasonable, rather than absolute, assurance that the financial statements
are free of any material misstatements.

McGladrey & Pullen, LLP, Certified Public Accountants, has issued an unqualified (“clean”)
opinion on HCRRA financial statements for the year ended December 31, 2008. The
independent auditor’s report is located at the front of the financial section of this report.

Management’s discussion and analysis (MD&A) immediately follows the independent auditor’s
report and provides a narrative introduction, overview, and analysis of the basic financial
statements. MD&A complements this letter of transmittal and should be read in conjunction with
the letter.

Profile of the Government

The HCRRA was established in 1980 as a political subdivision and local government unit of
Minnesota. It was established for the purpose of preservation, improvement, and
implementation of local rail service in accordance with the powers and authorities granted in
Laws of Minnesota Chapter 616. The HCRRA advises and participates with the Metropolitan
Council Metro Transit Division and the Minnesota Department of Transportation (MnDOT) in the
development of rail transit in Hennepin County. In the course of rail transit development, the
HCRRA has purchased abandoned rail corridors, park and ride sites, and maintenance facilities.

In April 2008 Hennepin County joined Anoka, Dakota, Ramsey, and Washington counties in the
establishment of the Counties Transit Improvement Board (CTIB). The Minnesota Legislature
authorized this joint powers board to impose a one-quarter percent sales and use tax, and an
excise tax of $20 on sales of motor vehicles. The taxes began on July 1, 2008 and will be used

_________________________                                    _________BOARD OF COMMISSIONERS
   Peter McLaughlin   Gail Dorfman    Mark Stenglein   Jan Callison   Mike Opat   Randy Johnson   Jeff Johnson
         Chair         Vice Chair       Secretary       Treasurer




                                                         1
Profile of the Government – Continued

to provide grants to fund improvements to the transit system. CTIB is committed to the
development of a system of transitways to better serve the residents and businesses of the
Twin Cities Metropolitan Area and to efficiently move people and goods throughout the region,
which is consistent with the mission of the HCRRA.

Although a legally separate entity, the HCRRA is in substance part of the operations of
Hennepin County. Therefore, the HCRRA’s activity is combined with financial information of
Hennepin County and reported as a special revenue fund within the County’s Comprehensive
Annual Financial Report.

The HCRRA Board, which includes the seven members of the Hennepin County Board of
Commissioners, is responsible, among other things, for adopting the annual budget. Budgets
are adopted on a basis consistent with GAAP. Beginning in approximately August of each year
a budget is prepared and includes information on the past year, current year estimates, and
requested appropriations. The Board legally enacts the budget by passage of a resolution no
later than December 31. A budget to actual comparison for the general fund is presented in the
Required Supplementary Information section of this report.



                         Existing Hiawatha Light Rail Transit Corridor


                                                                      The Hiawatha line, which
                                                                      runs 11.6 miles between the
                                                                      Mall    of     America       in
                                                                      Bloomington and downtown
                                                                      Minneapolis, currently has
                                                                      17 stations. Construction of
                                                                      an additional light rail transit
                                                                      (LRT) station at American
                                                                      Boulevard and 34th Avenue
                                                                      in Bloomington is to begin in
                                                                      2009 and is expected to be
operational by 2010. The line is served by four park an ride lots providing 2,680 parking spaces
to commuters. Ridership in 2008 totaled 10.2 million, which was 12.3 percent higher than in
2007. This is the first time annual rail ridership has topped 10 million. With 244 train trips daily
and 34 connecting bus routes south of downtown, the route has an average of 30,500 riders per
weekday. Ridership on the line has exceeded the pre-construction estimates for the year 2020
of 24,800 riders per weekday. In October, 2008, the Metropolitan Council accepted a grant from
CTIB to fund 50 percent of the 2009 Hiawatha Light Rail Transit operating costs previously
funded through Hennepin County property taxes.




                                                  2
                              Northstar Commuter Rail Project

                                                         The Northstar Commuter Rail project is
                                                         designed to save commuters significant
                                                         travel time, reduce demands on
                                                         highway infrastructure, and offer riders
                                                         an on-time and reliable commuting
                                                         option. A Northstar rider’s commute
                                                         from Elk River to Minneapolis is
expected to be approximately 45 minutes. In contrast, the typical car commute is nearly 70
minutes. Northstar is expected to have the capacity to carry 7,000 riders per day – the
equivalent of approximately one lane of highway traffic at peak travel times. In 2010, it is
expected that this line will have approximately 4,110 riders per weekday.

Phase One of Northstar, expected to be complete in late 2009, is commuter rail service on the
40-mile segment of existing Burlington Northern Santa Fe (BNSF) railroad tracks along
Highways 10 and 47 from Big Lake to downtown Minneapolis. Service will end within feet of the
new Twins ballpark. Trains will make the 40-mile trip at speeds of up to 80 miles per hour and
will have a direct connection to the Hiawatha line at the planned Minneapolis Transit Hub, for a
seamless connection between the two modes of transit. Four trains will make five trips morning
and night, with a reverse direction commute trip in each rush period. Three round trips will be
provided each weekend day. There will be stations in Big Lake, Elk River, Anoka, Coon Rapids,
Fridley and Minneapolis.

Funding for Northstar was provided by the State of Minnesota, the regional rail authorities for
Anoka, Hennepin, and Sherburne counties, the Metropolitan Council, the Minnesota Twins, and
federal matching funds. Additionally, in October 2008, CTIB approved the funding to build the
Fridley Station ($9.9 million) and 50 percent of the 2009 project start-up operating costs ($3.8
million). The HCRRA stated commitment to the project is not to exceed $8,265,000.




                                               3
                          Central Corridor Light Rail Transit Project


The Central Corridor project includes 11 miles of exclusive right of way between downtown St.
Paul and downtown Minneapolis. The line will have a total of 15 new stations, plus five shared
stations with the Hiawatha line. It links five major centers of activity in the Twin Cities region –
downtown Minneapolis, the University of Minnesota, the Midway area, the State Capitol
complex and downtown St. Paul. It will connect to the existing Hiawatha Line at the Metrodome
Station, and it will terminate at a planned Minneapolis Transit Hub that will also serve the new
Northstar Line. It is expected that following final design, the line will be built in 2010-2013 and
open in 2014. Weekday ridership on the Central Corridor Line is projected to be 41,000 by
2030.




                             A section of the planned Central Corridor


The Metropolitan Council is managing the Central Corridor project with funding from the
HCRRA, Ramsey County RRA, CTIB, the State of Minnesota, and the Federal Transit
Administration. The Central Corridor Management Committee, which is made up of policy-
makers representing Hennepin County, Ramsey County, Minneapolis, St. Paul and the
University of Minnesota along with the Minnesota Department of Transportation and the
Metropolitan Council, provides policy direction for the project. The Metropolitan Council is
responsible for the design, construction and operations of LRT in the Central Corridor.

In 2008, the scope of the project was approved, clearing the way for the project to complete
preliminary engineering on all components of the line. Costs for the Central Corridor project will
be shared by federal, state, and local government agencies. Additionally, in October 2008, CTIB
approved a grant to provide $26 million for preliminary engineering, final design, property
acquisition and utility relocation. The Central Corridor Project has an estimated total cost of
approximately $900 million, with the HCRRA share at $27,000,000 or 3% of the cost.




                                                 4
                                       Additional Projects

The HCRRA also participates in the planning and design of other rail projects, including:
   •   Southwest Transit Corridor
       The HCRRA has been acquiring property for the Southwest Transit Corridor running
       between Minneapolis and Eden Prairie since 1984. In 2008, the HCRRA approved $2.5
       million to fund an environmental-impact statement of three proposed Southwest corridor
       routes and another $400,000 to fund the Southwest Station master plan. The results of
       the study will be used to seek federal funding.

   •   Bottineau Corridor
       The Bottineau Corridor is a transitway corridor extending from downtown Minneapolis
       through North Minneapolis, the developed communities of Robbinsdale, Crystal, Osseo,
       Brooklyn Park and Maple Grove, and potentially to the rapidly growing communities of
       Dayton, Rogers and Hassan Township. HCRRA funding for an Alternatives Analysis
       study was approved in March 2008, beginning the process of identifying the best
       alignment and mode for the corridor and is expected to be complete in late 2009.

   •   Red Rock Corridor
       The Red Rock Corridor transit proposals focus on a 30-mile corridor from Hastings
       through St. Paul, and then Minneapolis. In 2007, the Red Rock Corridor Commission
       completed the Red Rock Corridor Alternatives Analysis (AA). The results of the AA study
       indicate that expanding the bus service, increasing bus frequency and providing
       additional park and ride facilities, are the first steps toward building a strong transit base
       in the corridor. This stronger base is a key component in the phasing of corridor
       improvements prior to the construction of commuter rail.

   •   Northern Lights Express (Minneapolis to Duluth/Superior Passenger Rail)
       The HCRRA, in partnership with the St. Louis and Lake County Regional Railroad
       Authority, Anoka County Regional Railroad Authority, Isanti County Regional Railroad
       Authority, Pine County Regional Railroad Authority, the Mille Lacs Band of Ojibwe, and
       the City of Duluth, contracted for the completion of a comprehensive feasibility study and
       business plan for intercity passenger rail service between Minneapolis and the Twin
       Ports. The study projects that the line would attract as many as 3,000 riders per day.
       Modeling efforts with BNSF Railway and the necessary environmental study are in
       progress.



                   Interim Use of Properties Acquired for Future Projects


The HCRRA currently owns 55 miles of rail corridor; 11 sites suitable for future park and ride
lots or stations; and 2 railroad depots; for a total of 83 acres. Although acquired for future
transportation needs, recreational trails have been constructed on these corridors as an interim
use. With the construction of additional bike trails in 2008, all 55 miles of corridor are devoted to
permanent or interim use.




                                                 5
Economic and Financial Condition

The information presented in the financial statements is perhaps best understood when it is
considered from the broader perspective of the specific environment within which the HCRRA
operates.

       Local economy. Hennepin County, the geographic area in which the HCRRA is
       established, has longstanding characteristics of strength and diversity in comparison to
       outstate, regional and even the national economy as shown in measurements of income
       and employment. Healthcare, medical device manufacturing, retail sales, financial
       services and insurance, high tech, and food processing are significant economic sectors
       providing a strong employment and wage base in the County. Many large international
       companies maintain their headquarters in Hennepin County. At year-end 2008,
       employment in Hennepin County shows some slowed growth. The December 2008
       unemployment rate at 4.9 percent was higher than the previous month’s rate of 3.8
       percent. However, the year-end 2008 rate remained lower than the State rate of 5.4
       percent and the national rate of 5.8 percent.

       Long-term financial planning. In 2008, the HCRRA was responsible for Hiawatha Light
       Rail Transit Corridor operating costs of $7,950,000. These costs were paid through the
       use of HCRRA reserves or taxes levied by the HCRRA. Beginning in 2009, the operating
       costs will the responsibility of CTIB.

       Cash management policies and practices. With the exception of a small percentage
       of escrowed funds (held in trust in US Treasuries or money market funds), cash held by
       the County for the HCRRA is invested in AAA-rated obligations of U.S. government-
       sponsored enterprises and repurchase agreements with primary dealers. The County
       manages its exposure to fair value losses arising from market conditions by limiting its
       effective duration to six years or less, and by ensuring that it could hold investments to
       maturity if necessary. On December 31, 2008, the County’s investment portfolio had an
       effective duration of 1.02 years and a 12-month cash yield of 3.99 percent. To manage
       credit risk, the County’s general investment policy is to apply the prudent-investor rule:
       investments are made as a prudent investor would be expected to act.

       Debt management. The HCRRA has $43,895,000 of outstanding limited tax levy
       supported debt. This debt is currently rated Aaa by Moody’s Investor Service, AAA by
       Standard & Poor’s Corporation and AAA from Fitch IBCA. The State of Minnesota
       Statute 398A.04 limits taxing authority for this debt to .04835 percent of the taxable
       market value within Hennepin County. This taxing authority could generate
       approximately $70.0 million per year at the current estimated market value of taxable
       properties. In 2008, the HCRRA levied slightly over $15.5 million in taxes and anticipates
       a tax levy of $7 million in 2009. This taxing authority is deemed to be adequate for
       repaying the bondholders.

       Risk management. The HCRRA has a comprehensive risk management program,
       which includes risk retention, transfer, and control techniques. Purchased insurance
       primarily covers certain property loss exposures. Tort liability claims are self-financed.
       Additional information is available in note 6 to the basic financial statements.

The preparation of this report could not have been accomplished without the efficient and
dedicated services of the entire financial staff of Hennepin County. We would like to express our


                                               6
appreciation to all staff who assisted and contributed to the preparation of this report. Credit also
must be given to the HCRRA Board for their support for maintaining the highest standards of
professionalism in the management of HCRRA finances.


Respectfully submitted,




Richard P. Johnson
Executive Director




                                                 7
  Hennepin County Regional Railroad Authority
A Component Unit of Hennepin County, Minnesota
           Principal Officials 2008




          Board of Commissioners:
             Peter McLaughlin, Chair
            Linda Koblick, Vice Chair
            Mark Stenglein, Secretary
             Gail Dorfman, Treasurer
                   Mike Opat
                 Randy Johnson
                  Penny Steele




             Executive Director:
              Richard P. Johnson




                      8
Financial Section




        9
Hennepin County Regional Railroad Authority




                   10
Independent Auditor’s Report

Hennepin County Regional Railroad Authority
Hennepin County, Minnesota

We have audited the accompanying financial statements of the governmental activities and the major funds of Hennepin
County Regional Railroad Authority (HCRRA), a component unit of Hennepin County, Minnesota, as of and for the year
ended December 31, 2008, as listed in the table of contents. These financial statements are the responsibility of the
HCRRA’s management. Our responsibility is to express opinions on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinions.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial
positions of the governmental activities and the major funds of the HCRRA as of December 31, 2008, and the respective
changes in their financial positions for the year then ended in conformity with accounting principles generally accepted in
the United States of America.

The Management’s Discussion and Analysis and budgetary comparison information are not required parts of the basic
financial statements but are supplementary information required by accounting principles generally accepted in the United
States of America. We have applied certain limited procedures, which consisted principally of inquiries of management
regarding the methods of measurement and presentation of the required supplementary information. However, we did not
audit the information and express no opinion on it.

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise
HCRRA’s basic financial statements. The introductory section, supplementary information, and the statistical section are
presented for purposes of additional analysis and are not required parts of the basic financial statements. The 2008
supplementary information has been subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements for the
year ended December 31, 2008, taken as a whole. We have also previously audited, in accordance with auditing
standards generally accepted in the United States of America, the HCRRA’s basic financial statements for the year ended
December 31, 2007, which are not presented with the accompanying financial statements. In our report dated June 19,
2008, we expressed unqualified opinions on the respective financial statements of the governmental activities and the
major funds. In our opinion, the 2007 supplementary information is fairly stated in all material respects in relation to the
basic financial statements for the year ended December 31, 2007, taken as a whole.

The introductory section and statistical section as listed in the accompanying table of contents have not been subjected to
the auditing procedures applied in the audit of the basic financial statements, and accordingly, we express no opinion on
them.



Minneapolis, Minnesota
August 4, 2009




McGladrey & Pullen, LLP is a member firm of RSM International –   11
an affiliation of separate and independent legal entities.
Hennepin County Regional Railroad Authority




                   12
                        Hennepin County Regional Railroad Authority
                      A Component Unit of Hennepin County, Minnesota
                         Management’s Discussion and Analysis

This discussion and analysis is intended to provide financial statement readers with a financial overview
and narrative analysis of the financial position and activities of the Hennepin County Regional Railroad
Authority (HCRRA), a component unit of Hennepin County for the year ended December 31, 2008. This
information should be considered in conjunction with the information contained in the financial
statements, which follow this section.


                                       FINANCIAL HIGHLIGHTS


Government-Wide

    •   At December 31, 2008, the assets of the HCRRA exceeded its liabilities by $23,676,376. Of the
        total net assets, $37,437,812 was invested in capital assets and $224,465 was restricted for debt
        service. The remainder consisted of negative unrestricted net assets of $13,985,901. Negative
        unrestricted assets exist because the HCRRA has $43.8 million of debt outstanding relating to
        bond proceeds that were contributed to the Metropolitan Council in 2002 for the Hiawatha Avenue
        Light Rail Transit project. Future property tax revenues are expected to be sufficient to offset
        long-term liabilities as they come due.

    •   The HCRRA total net assets, as reported in the Statement of Activities, increased by $3,355,612
        during 2008. This increase was largely due to increased property tax receipts.

Fund Level

    •   At the end of the fiscal year, the HCRRA’s governmental funds reported total ending fund
        balances of $30,081,551, an increase of $2,522,284 from the prior year balance of $27,559,267.
        The increase in fund balance primarily relates to increased revenue from property taxes and
        intergovernmental payments. Decreased capital outlay was offset by higher outlays for
        contractual services.

    •   Unreserved fund balance for the General Fund was $29,529,109, which is more than twice the
        total general fund expenditures for the year ended December 31, 2008.

Long-Term Debt

    •   The HCRRA’s total long term debt decreased $1,005,000 due to scheduled repayments in 2008.


                            OVERVIEW OF THE FINANCIAL STATEMENTS


Management’s discussion and analysis is intended to serve as an introduction to the HCRRA basic
financial statements, which are comprised of two components: 1) combined government-wide and fund
financial statements, and 2) notes to the basic financial statements.

Government-wide financial statements

The government-wide financial statements are designed to provide readers with a broad overview of
HCRRA finances, in a manner similar to a private-sector business. The government-wide financial
statements (i.e., the statement of net assets and the statement of activities) report information about the
HCRRA as a whole using the economic resources measurement focus and the accrual basis of
accounting. The economic resources measurement focus results in the reporting of all inflows, outflows,


                                                    13
             OVERVIEW OF THE FINANCIAL STATEMENTS – CONTINUED

and balances affecting or reflecting HCRRA net assets. Under the accrual basis of accounting, revenues
are recorded when earned and expenses are recorded when a liability is incurred, regardless of the
timing of related cash flows. There are two government-wide statements.

    •   The Statement of Net Assets presents information on all HCRRA assets and liabilities, with the
        difference between the two reported as net assets. Over time, increases or decreases in net
        assets may serve as an indicator of whether the financial position of the HCRRA is improving or
        deteriorating.

    •   The Statement of Activities presents information showing how the HCRRA net assets changed
        during the year. All changes in net assets are reported as soon as the underlying event giving rise
        to the change occurs, regardless of the timing of related cash flows.

In both statements, HCRRA activities are reported as governmental activities, which are defined as
functions that are principally supported by taxes and intergovernmental revenues.

Fund Financial Statements

The fund financial statements provide detailed information about the HCRRA major funds. A fund is a
grouping of related accounts that is used to maintain control over resources that have been segregated
for specific activities or objectives. HCRRA activity is reported in two major governmental funds, the
General Fund and the Debt Service Fund. Governmental funds are used to account for essentially the
same functions reported as governmental activities in the government-wide financial statements.
However, unlike the government-wide financial statements, governmental fund financial statements focus
on near-term inflows and outflows of spendable resources. This approach is known as using the flow of
current financial resources measurement focus and the modified accrual basis of accounting. The fund
statements provide a detailed short-term view of HCRRA finances that assists in determining whether
there will be adequate financial resources available to meet current needs.

Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By doing
so, readers may better understand the long-term impact of the HCRRA’s near-term financing decisions.
Both the governmental funds balance sheet and the governmental funds statement of revenues,
expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between
governmental funds and governmental activities. The reconciliations are presented in the adjustments
column in each of the basic financial statements.

Notes to the Financial Statements

The notes provide additional information that is essential to a full understanding of the data provided in
the basic financial statements.


                             GOVERNMENT-WIDE FINANCIAL ANALYSIS


As noted earlier, net assets may serve over time as an indicator of a government's financial position. In
the case of the HCRRA, assets exceeded liabilities by $23,676,376 at December 31, 2008. The
Statement of Net Assets presents all of the HCRRA’s assets and liabilities, with the difference between
the two reported as “net assets”.




                                                    14
                      GOVERNMENT-WIDE FINANCIAL ANALYSIS – CONTINUED


                                          Summary of Net Assets
                                                      2008                            2007
               Current and other assets            $    31,278,598           $       28,484,299
               Capital assets                           37,437,812                   37,609,630
               Total assets                             68,716,410                   66,356,984
               Long-term liabilities outstanding        42,706,246                   43,744,973
               Other liabilities                            2,333,788                 2,291,246
               Total liabilities                        45,040,034                   46,036,219
               Total net assets                    $    23,676,376           $       20,320,765
               Invested in capital assets
                net of related debt                $     37,437,812          $     37,609,630
               Restricted                                   224,465                   156,353
               Unrestricted                            (13,985,901)              (17,445,218)
               Total net assets                    $    23,676,376           $       20,320,765

The largest portion of HCRRA net assets, $37,437,812, reflects its investment in capital assets (e.g.,
land, and buildings), less any related debt used to acquire those assets that is still outstanding. (No such
related debt exists.) The HCRRA uses these capital assets to provide services to citizens; consequently,
these assets are not available for future spending. An additional portion of the HCRRA’s net assets,
$224,465, represents resources that are subject to external restrictions on how they may be used. The
remainder consisted of negative unrestricted net assets of $13,985,901. Negative unrestricted assets
exist because the HCRRA has $43.8 million of debt outstanding relating to bond proceeds that were
contributed to the Metropolitan Council in 2002 for the Hiawatha Avenue Light Rail Transit project. Future
property tax revenues are expected to be sufficient to offset long-term liabilities as they come due.

HCRRA net assets increased by $3,355,612 during 2008. This increase was largely due to increased
property tax receipts and to unrealized investment earnings.
                                            Changes in Net Assets
                                                                  Governmental Activities
                                                                 2008                   2007
           Revenues:
            General revenues:
             Property taxes                                 $   15,084,946       $       12,057,831
             Other taxes                                             8,678                    6,653
             Investment earnings                                 1,628,111                1,334,042
             Intergovernmental and other                         1,247,387                2,342,836
                Total revenues                                  17,969,122               15,741,362
           Expenses:
            HCRRA                                               12,491,547               11,414,301
            Interest on long-term debt                           2,121,963                2,156,064
                Total expenses                                  14,613,510               13,570,365
           Change in net assets                                  3,355,612                2,170,997
           Net assets – beginning                               20,320,765               18,149,768
           Net assets – ending                              $   23,676,376       $       20,320,765



                                                       15
                                     FUND FINANCIAL ANALYSIS


Changes in Fund Balance

The focus of the governmental funds is to provide information on near-term inflows, outflows, and
balances of spendable resources. Such information is useful in assessing HCRRA financing
requirements. In particular, unreserved fund balance may serve as a useful measure of net resources
available for spending at the end of the fiscal year.

At the end of the fiscal year, the HCRRA’s governmental funds reported total ending fund balances of
$30,081,551, an increase of $2,522,284 from the prior year. The increase in fund balance primarily
relates to increased revenue from property taxes and intergovernmental payments. Decreased capital
outlay was offset by higher outlays for contractual services. Nearly all of ending fund balance, or
$29,529,109, constitutes General Fund unreserved fund balance, which may be used to meet the
HCRRA’s ongoing obligations in accordance with contractual agreements, fund designations, and fiscal
policies. The remainder of fund balance is committed for the payment of debt service.

Budgetary Highlights

At year-end, actual General Fund expenditures of $12,323,007 were significantly lower than the final
$33,667,533 budget. Additionally, General Fund revenues were $10,548,120 lower than budgeted. The
2008 revenue and expenditure budgets had allowed for intergovernmental revenue and construction
costs for projects that were not yet fully funded by Federal Transit Administration grant agreements.
However Federal funding was approved, eliminating the need for HCRRA contributions to those portions
of the Northstar and Central Corridor projects.


                           CAPITAL ASSET AND DEBT ADMINISTRATION


Capital Assets

HCRRA investment in capital assets as of December 31, 2008, amounts to $37,437,812 (net of
accumulated depreciation). This investment in capital assets consists of land (including rail corridor) and
buildings. Due to depreciation, the HCRRA’s investment in capital assets decreased $171,818 from the
prior year’s balance. Additional information on HCRRA capital assets can be found in note 4 on page 28
of this report.


Debt administration

At the end of the current fiscal year, the HCRRA had total long-term levy supported bonds outstanding of
$43,751,246 (including unamortized discount). HCRRA total long-term debt decreased by $1,005,000
(approximately 2.0 percent) during the current fiscal year due to principal repayment.

HCRRA outstanding bonds are rated as follows:

                        Moody’s Investors Service, Inc.          Aaa
                        Standard and Poor’s Corporation          AAA
                        Fitch IBCA, Inc.                         AAA

Additional information on HCRRA long-term debt can be found in note 5 on page 28 of this report.




                                                    16
                 ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES


The 2009 General Fund budget is $17,611,902 lower than the 2008 budget. The decrease primarily
relates to completion of Northstar project commitments. Additionally, Hiawatha Avenue Light Rail Transit
operating costs that Minnesota Statutes previously required the HCRRA to support will instead be
supported by sales tax revenues collected for the Counties Transit Improvement Board beginning in
2009.


                                   REQUESTS FOR INFORMATION


This financial report is designed to provide an overview for those interested in the HCRRA’s finances.
Questions concerning any of the information provided in this report or requests for additional financial
information should be addressed to the Hennepin County Regional Railroad Authority, A-2301
Government Center, Minneapolis, MN 55487-0231.




                                                  17
                                     Hennepin County Regional Railroad Authority
                                   A Component Unit of Hennepin County, Minnesota
                            Governmental Fund Balance Sheets and Statement of Net Assets
                                                 December 31, 2008


                                                       General       Debt Service                    Adjustments        Statement of
                                                        Fund            Fund          Total            (Note 1)          Net Assets
ASSETS
Current assets:
Interest in Hennepin County investment pool       $ 30,388,827 $        408,488 $ 30,797,315 $               -      $    30,797,315
Taxes receivable (net)                                 237,209              -        237,209                 -              237,209
Other receivables                                      162,386              -        162,386                 -              162,386
         Total current assets                       30,788,422          408,488   31,196,910                 -           31,196,910

Noncurrent assets:
Deferred issuance costs                                      -               -             -             81,688              81,688
Capital assets:
   Land and rail corridor                                    -               -             -         36,197,290          36,197,290
   Buildings                                                 -               -             -          2,371,256           2,371,256
                                                             -               -             -         38,568,546          38,568,546
   Less accumulated depreciation                             -               -             -         (1,130,734)         (1,130,734)
   Net capital assets                                        -               -             -         37,437,812          37,437,812
       Total noncurrent assets                               -               -             -         37,519,500          37,519,500

   Total assets                                   $ 30,788,422 $        408,488 $ 31,196,910 $       37,519,500 $        68,716,410

LIABILITIES
Current liabilities:
Accounts and contracts payable                    $    1,096,483 $       10,594 $    1,107,077 $             -   $        1,107,077
Accrued liabilities                                        4,545            -            4,545           173,429            177,974
Unearned revenue                                           3,737            -            3,737               -                3,737
Current portion of long-term debt                            -              -              -           1,045,000          1,045,000
        Total current liabilities                      1,104,765         10,594      1,115,359         1,218,429          2,333,788

Noncurrent liabilities:
Noncurrent portion of long-term debt                         -               -             -         42,706,246          42,706,246

   Total liabilities                                   1,104,765         10,594      1,115,359       43,924,675          45,040,034

FUND BALANCES/NET ASSETS
Fund balances:
Reserved for encumbrances                               154,548              -        154,548           (154,548)               -
Unreserved:
   Designated for:
       Subsequent years' expenditures                  5,743,276            -        5,743,276        (5,743,276)               -
       Special purposes                                  100,000            -          100,000          (100,000)               -
       Unrealized gain on investments                    425,981            -          425,981          (425,981)               -
   Undesignated                                       23,259,852        397,894     23,657,746       (23,657,746)               -

   Total fund balances                                29,683,657        397,894     30,081,551       (30,081,551)               -

   Total liabilities and fund balances            $ 30,788,422 $        408,488 $ 31,196,910

Net assets:
Invested in capital assets, net of related debt                                                       37,437,812         37,437,812
Restricted for debt service                                                                              224,465            224,465
Unrestricted                                                                                         (13,985,901)       (13,985,901)

   Total net assets                                                                              $   23,676,376 $        23,676,376




                        The notes to the financial statements are an integral part of these statements.


                                                                   18
                                        Hennepin County Regional Railroad Authority
                                      A Component Unit of Hennepin County, Minnesota
                                Statements of Governmental Fund Revenues, Expenditures,
                                 and Changes in Fund Balances and Statement of Activities
                                          For the Year ended December 31, 2008

                                                                        Debt Service                      Adjustments        Statement
                                                    General Fund           Fund             Total          (Note 1)          of Activities
REVENUES/GENERAL REVENUES
  Property taxes                                $    11,897,976 $         3,186,970 $ 15,084,946 $                 -     $    15,084,946
  Other taxes                                             6,845               1,833        8,678                   -               8,678
  Intergovernmental                                     384,178                 -        384,178                   -             384,178
  Investment earnings                                 1,628,111                 -      1,628,111                   -           1,628,111
  Other                                                 863,209                 -        863,209                   -             863,209
     Total revenues                                  14,780,319           3,188,803   17,969,122                   -          17,969,122

EXPENDITURES/PROGRAM EXPENSES
 Regional Railroad Authority:
 Current:
  Commodities                                            18,807                  -           18,807               -               18,807
  Contractual services                               11,507,279                  -       11,507,279               -           11,507,279
  Depreciation                                              -                    -              -             171,818            171,818
  Other                                                 796,921                  -          796,921            (3,278)           793,643
 Debt service:
  Principal retirement                                      -             1,005,000       1,005,000        (1,005,000)               -
  Interest and fiscal charges                               -             2,118,831       2,118,831             3,132          2,121,963
     Total expenditures/expenses                     12,323,007          3,123,831       15,446,838          (833,328)        14,613,510

         Excess of revenues over expenditures         2,457,312              64,972       2,522,284           833,328                  -

         Net change in fund balances                  2,457,312              64,972       2,522,284        (2,522,284)                 -

         Change in net assets                               -                    -              -            3,355,612         3,355,612

FUND BALANCES/NET ASSETS
Beginning                                            27,226,345             332,922      27,559,267        (7,238,502)        20,320,765

Ending                                          $    29,683,657    $        397,894    $ 30,081,551   $    (6,405,175) $      23,676,376




                            The notes to the financial statements are an integral part of these statements




                                                                   19
Hennepin County Regional Railroad Authority




                   20
                             Hennepin County Regional Railroad Authority
                           A Component Unit of Hennepin County, Minnesota
                                Notes to the Basic Financial Statements
                                           December 31, 2008


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


  The Financial Reporting Entity

  The Hennepin County Regional Railroad Authority (HCRRA) was established in 1980 for the purpose of
  the preservation, improvement, and implementation of local rail service in accordance with the powers
  and authorities granted in Laws of Minnesota Chapter 616. In the course of light rail transit development,
  the HCRRA purchases rail corridors, park/ride sites, and maintenance facilities.

  The HCRRA is a blended component unit of Hennepin County, Minnesota. A blended component unit,
  although a legally separate entity, is in substance part of the County’s operations and so data from this
  unit is combined with financial information of the primary government and reported as a special revenue
  fund in Hennepin County’s Comprehensive Annual Financial Report, which can be obtained from the
  County. Hennepin County was established in 1852 as an organized county having powers, duties, and
  privileges granted counties by Minnesota Statutes. The County is governed by a seven-member board of
  commissioners elected from districts within the County. The County Commissioners comprise the entire
  HCRRA board and exercise financial accountability. Employees of Hennepin County staff the projects of
  the HCRRA. The HCRRA has no employees.

  The financial statements of the HCRRA are prepared in accordance with accounting principles generally
  accepted in the United States of America as established for governmental entities.

  Measurement Focus, Basis of Accounting and Basis of Presentation

  The annual financial report includes two separate sets of statements, the government-wide financial
  statements and the fund financial statements. The measurement focus, basis of accounting and basis of
  presentation differs between the government-wide financial statements and the fund financial statements.
  These differences, along with an explanation of the differing purposes and information provided by these
  separate financial statements, are described in the sections below.

  As a special-purpose government engaged in a single governmental program, the government-wide
  statements and the fund financial statements have been combined in one statement. An adjustments
  column reflects the following differences between the two types of statements:

  •   Governmental funds report capital outlays as expenditures. However, in the Statement of Activities
      the cost of those assets is allocated over their estimated useful lives and reported as depreciation
      expense.

  •   The adjustments column represents the recording of long-term liabilities and the related effect of
      these transactions on the Statement of Activities. Long-term liabilities, including bonds payable, are
      not due and payable in the current period and, therefore, are not reported in the fund financial
      statements.




                                                     21
                             Hennepin County Regional Railroad Authority
                           A Component Unit of Hennepin County, Minnesota
                                Notes to the Basic Financial Statements
                                           December 31, 2008


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED


  Government-wide Financial Statements

  The government-wide financial statements report information on all of the nonfiduciary activities of the
  government entity using the economic resources measurement focus and the accrual basis of
  accounting. The economic resources measurement focus results in the reporting of all inflows, outflows,
  and balances affecting or reflecting the HCRRA’s net assets. Under the accrual basis of accounting,
  revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of
  the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are
  levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed
  by the provider have been met. The structure of the two government-wide financial statements (the
  statement of net assets and the statement of activities) is described in the following two paragraphs.

  Statement of Net Assets – This statement is designed to display the financial position of the HCRRA. The
  HCRRA reports all capital assets and long-term liabilities, such as long-term debt. The net assets of the
  HCRRA are broken down into three categories: 1) invested in capital assets, net of related debt; 2)
  restricted; and 3) unrestricted. Restrictions shown are those imposed by parties outside the HCRRA, such
  as creditors, grantors, contributors, laws and regulations of other governments. When both restricted and
  unrestricted resources are available for use, it is the government’s policy to use restricted resources first,
  and then unrestricted resources as they are needed.

  Statement of Activities – This statement demonstrates the degree to which expenses of a given function
  are offset by program revenues. Program revenues include 1) charges to customers or applicants who
  purchase, use, or directly benefit from goods, services, or privileges provided by a given function and 2)
  grants and contributions that are restricted to meeting the operational or capital requirements of a
  particular function. During 2008, the HCRRA received no program revenues. Taxes and other items not
  properly included among program revenues are reported as general revenues. Just as the statement of
  net assets includes all capital assets, the Statement of Activities includes depreciation expenses.

  Fund Financial Statements

  The accounts of the HCRRA are organized on the basis of funds. A fund is an independent fiscal and
  accounting entity with a self-balancing set of accounts. Fund accounting segregates funds according to
  their intended purpose and is used to aid management in demonstrating compliance with finance-related
  legal and contractual provisions. The minimum number of funds is maintained consistent with legal and
  managerial requirements. All individual funds are considered major and are reported as separate columns
  in the fund financial statements.

  Governmental Funds are used to account for the HCRRA’s activities. Governmental fund types use the
  financial resources measurement focus and the modified accrual basis of accounting. Under the modified
  accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they are
  “measurable and available”). “Measurable” means the amount of the transaction can be determined.
  Intergovernmental revenues are considered measurable when applicable eligibility requirements have
  been met. “Available” means collectible within the current period or soon enough thereafter to pay
  liabilities of the current period. The HCRRA considers revenues to be available if they are collected within
  60 days after year-end. Changes in the fair value of investments are recognized in interest revenues at
  the end of each year. Expenditures are recorded when the related fund liability is incurred, except for
  unmatured interest on general long-term debt which is recognized when due.




                                                       22
                             Hennepin County Regional Railroad Authority
                           A Component Unit of Hennepin County, Minnesota
                                Notes to the Basic Financial Statements
                                           December 31, 2008


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED


  The HCRRA reports the following major governmental funds:

  •   The general fund is the HCRRA’s primary operating fund. It accounts for all financial resources of the
      general government except those required to be accounted for in another fund.

  •   The debt service fund accounts for the servicing of general long-term debt.

  Cash and Investments

  The HCRRA’s cash is deposited in pooled accounts of the Hennepin County Investment Pool (the Pool),
  an internal investment pool. Cash surpluses in these accounts are invested by the County, and
  investment earnings, including gains and losses on sales of securities, are allocated to the HCRRA on
  the basis of average monthly cash balances.

   Investments are stated at fair value. The fair value of investments is determined annually and is based
   on current market prices received from broker dealers. State law authorizes the County to invest in the
   following instruments:

      •   United States Treasury obligations
      •   Federal agency issues
      •   Repurchase agreements
      •   Reverse repurchase agreements
      •   Certificates of deposit
      •   General obligations of state, local, and housing finance agencies that are rated "A" or better by a
          national bond rating service
      •   Revenue obligations of any state or local government that are rated "AA" or better by a national
          bond rating service
      •   Bankers acceptances
      •   Commercial paper
      •   Futures contracts
      •   Guaranteed investment contracts
      •   Options
      •   Shares of certain investment companies

  Capital Assets

  Capital assets are reported in the government-wide financial statements. Such assets are recorded at
  cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at their
  estimated fair value at the date of donation. The cost of normal maintenance and repairs that do not add
  to the value of the asset or materially extend assets’ lives are not capitalized. Buildings of the HCRRA are
  depreciated using the straight-line method. Estimated life assigned to buildings is 20-50 years.




                                                      23
                              Hennepin County Regional Railroad Authority
                            A Component Unit of Hennepin County, Minnesota
                                 Notes to the Basic Financial Statements
                                            December 31, 2008


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED


  Long-Term Obligations

  In the government-wide financial statements, long-term debt is reported as a liability. Bonds payable are
  reported net of the applicable bond premium or discount. Bond premiums and discounts are deferred and
  amortized over the life of the bonds using the effective interest method. Bond issuance costs are reported
  as deferred charges and amortized over the term of the related debt.

   Governmental funds recognize bond premiums and discounts, as well as bond issuance costs, in the
   period issued. The face amount of debt issued is reported as other financing sources. Premiums received
   on debt issuances are reported as other financing sources and discounts on debt issuances are reported
   as other financing uses. Issuance costs, even if withheld from the actual net proceeds received, are
   reported as expenditures. Bond principal payments and interest are reported as expenditures in the
   period in which the related payments are made.

  Fund Balance and Net Assets

  In the fund financial statements, governmental funds report reservations of fund balance for amounts that
  are not available for appropriation or are legally restricted by outside parties for use for a special purpose.
  Designations of fund balance represent tentative management plans that are subject to change.

  On the statement of net assets, the portion of net assets that is invested in capital assets net of related
  debt is reported separately. Restricted net assets are reported for amounts that are legally restricted by
  outside parties to be used for a specific purpose.

  Comparative Data/Reclassifications

  Comparative totals data for the prior year have been presented in the selected sections of the
  accompanying financial statements and footnotes in order to provide an understanding of the changes in
  the HCRRA’s financial position and operations. Also, certain amounts presented in the prior year data
  may have been reclassified in order to be consistent with the current year’s presentation.

  Use of Estimates

  The preparation of financial statements in conformity with accounting principles generally accepted in the
  United States of America requires management to make estimates and assumptions that affect the
  reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
  the financial statements and the reported amounts of revenues and expenditures/expenses during the
  reporting period. Actual results could differ from these estimates.




                                                        24
                                Hennepin County Regional Railroad Authority
                              A Component Unit of Hennepin County, Minnesota
                                   Notes to the Basic Financial Statements
                                              December 31, 2008


2. INTEREST IN HENNEPIN COUNTY INVESTMENT POOL


  The County’s Office of Budget and Finance is responsible for the treasury function of all of the County’s
  deposits and investments held by its funds and blended component units. Cash from all funds is pooled
  for deposit and investment purposes. At December 31, the HCRRA comprised $30,797,315 or 5.6
  percent of the County’s total cash and investments. As of December 31, 2008, the County had 97 percent
  of investments invested in U.S. government agency securities, 2 percent invested in money market funds
  and 1 percent invested in mutual funds. Detailed information about the County’s deposits with financial
  institutions, repurchase agreements, interest rate risk, credit risk, concentration of credit risk, and
  custodial credit risk can be obtained directly from the County’s 2008 financial statements. Investment
  earnings are allocated based on average monthly cash balances. The realized and unrealized
  components of the 2008 HCRRA investment earnings are presented below.

                                                                                                    2008

                  Investment income and realized gains and losses                                  $ 1,303,479
                  Net increase (decrease) in the fair value of investments                             324,632

                     Total Investment Earnings                                                     $ 1,628,111



3. RECEIVABLES


  The HCRRA is a special taxing district with the authority to levy property taxes. Property taxes are a lien
  on property from the year in which the property is assessed. The lien attaches on the first Monday of the
  following year. Tax levies are certified to the county auditor five business days after December 20 of the
  year the property is assessed. The taxes levied are payable in the following year in two equal
  installments. The amounts and due dates for taxes on real property are half on or before May 15 and the
  balance on or before October 15. Personal property taxes are due in one installment on May 15. The
  amount of the allowance for uncollectible delinquent taxes is an estimate based on historical collection
  experience. Estimated uncollectible delinquent taxes total $122,030 at December 31, 2008. The portion of
  property taxes not included in the allowance and not collected within 60 days is offset by deferred
  revenue. Other miscellaneous receivables consist of building and land rental.


4. CHANGES IN PROPERTY AND EQUIPMENT


  Capital asset activity for the year ended December 31, 2008 was as follows:
                                                     Balance                                                    Balance
                                                  January 1, 2008       Additions           Deletions       December 31, 2008
    Capital assets not being depreciated:
    Land (including rail corridor)                  $ 36,197,290    $               -   $               -        $ 36,197,290
    Capital assets being depreciated:
    Buildings                                          2,371,256                -                       -           2,371,256
    Less accumulated depreciation                        958,916          171,818                       -           1,130,734
    Total capital assets being depreciated, net        1,412,340        (171,818)                       -           1,240,522
    Capital Assets, Net                             $ 37,609,630    $ (171,818)         $               -        $ 37,437,812




                                                            25
                             Hennepin County Regional Railroad Authority
                           A Component Unit of Hennepin County, Minnesota
                                Notes to the Basic Financial Statements
                                           December 31, 2008


5. LONG-TERM DEBT


  Limited Tax Levy Debt
  In 2001 the HCRRA issued $50,000,000 in limited tax levy supported debt with interest rates ranging from
  3.0% to 5.0% and due dates extending thru 2031.

                        Balance, January 1, 2008                           $44,900,000
                        Additions                                                     -
                        Reductions                                          (1,005,000)
                        Balance, December 31, 2008                          43,895,000
                        Less deferred amount for discount                     (143,754)
                        Less amount due within one year                     (1,045,000)
                                                                           $42,706,246

  Debt Service Requirements

                                                     Principal          Interest             Total

            2009                                $ 1,045,000        $ 2,081,144        $ 3,126,144
            2010                                  1,095,000          2,040,650          3,135,650
            2011                                  1,145,000          1,996,850          3,141,850
            2012                                  1,195,000          1,951,050          3,146,050
            2013                                  1,255,000          1,903,250          3,158,250
            2014-2018                             7,275,000          8,663,810         15,938,810
            2019-2023                             9,420,000          6,804,000         16,224,000
            2024-2028                            12,310,000          4,201,500         16,511,500
            2029-2031                             9,155,000            932,250         10,087,250

                                                $ 43,895,000       $ 30,574,504       $ 74,469,504

  Cash Available

  At December 31, 2008, there was cash available of $408,488 in the Debt Service Fund to service debt.
  There are no significant limitations and restrictions contained in the debt indentures.


6. RISK MANAGEMENT


  The HCRRA is exposed to various risks of loss related to general and professional liability torts; and theft
  of, damage to, and destruction of assets. The HCRRA has chosen to retain the risk of torts. Commercial
  property insurance is purchased by the County on behalf of the HCRRA to cover the HCRRA’s buildings,
  money, and securities, subject to deductible amounts. Settled claims from insured losses for the County
  and HCRRA have not exceeded commercial insurance coverage for the past three years. Because
  commercial liability insurance is not purchased to provide for funding any future claims, $100,000 has
  been designated for tort liability risk retention.




                                                      26
                             Hennepin County Regional Railroad Authority
                           A Component Unit of Hennepin County, Minnesota
                                Notes to the Basic Financial Statements
                                           December 31, 2008


7. RESTRICTED NET ASSETS


  The use of restricted net assets is subject to constraints that are externally imposed by creditors,
  grantors, contributors, laws, or regulations. Restrictions indicate that the net assets may only be used for
  a specific purpose that is narrower than the purpose of the reporting unit. Restricted net assets are
  reduced by liabilities related to those assets. Restricted net assets that are reported in the Statement of
  Net Assets differ from reserved fund balance shown in the Governmental Funds Balance Sheet. The
  restriction for debt service is shown at the government-wide level, but not at the fund level due to the
  different reporting perspective. Government-wide restricted net assets at December 31 total $224,465.



8. COMMITMENTS


  In 2007, the HCRRA Board resolved to expend up to $7,300,000 for preliminary engineering costs
  relating to the Central Corridor project between Minneapolis and St. Paul. Such engineering costs will be
  considered as a contribution to the County’s total financial obligation for the Central Corridor project. In
  2008, the scope of the project was approved, clearing the way for the project to complete preliminary
  engineering on all components of the line. The total HCRRA share of this project is currently estimated at
  $27,000,000 or 3 percent of the estimated total project cost of $900 million.


9. NEW ACCOUNTING PRONOUNCEMENTS


  Accounting Standards Adopted in the Current Year

  GASB Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations
  addresses accounting and financial reporting standards for pollution remediation obligations (including
  contamination), which are obligations to address the current or potential detrimental effects of existing
  pollution by participating in pollution remediation activities such as site assessments and cleanups. This
  standard was implemented in 2008. The HCRRA had no pollution remediation obligations that met the
  disclosure or reporting requirements.

  Accounting Standards Not Yet Adopted

  GASB Statement No. 51, Accounting and Financial Reporting for Intangible Assets, will be effective for
  the HCRRA beginning the year ending December 31, 2010. This statement requires that all intangible
  assets not specifically excluded by its scope provisions by classified as capital assets, and it provides
  related guidance. Management has not yet determined the effect this statement will have on the financial
  statements.

  GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, will be
  effective for the HCRRA beginning the year ending December 31, 2011. This statement provides clearer
  fund balance classifications and clarifies existing governmental fund type definitions. Management has
  not yet determined the effect this statement will have on the financial statements.




                                                      27
                                      Hennepin County Regional Railroad Authority
                                    A Component Unit of Hennepin County, Minnesota
                 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual
                                                     General Fund
                                         For the Year Ended December 31, 2008
                          With Comparative Actual Amounts for the Year Ended December 31, 2007



                                                                             2008
                                                                                                     Variance with
                                                  Budgeted Amounts                                   Final Budget
                                                                                                       Positive          2007
                                              Original           Final               Actual           (Negative)         Actual
REVENUES
Property taxes                           $   12,004,561 $      11,624,696 $ 11,897,976           $        273,280 $     8,908,997
Other taxes                                       4,700             4,700        6,845                      2,145           4,912
Intergovernmental                            12,450,000        12,829,865      384,178                (12,445,687)      1,639,436
Investment earnings                             500,000           500,000    1,628,111                  1,128,111       1,334,042
Other                                           369,178           369,178      863,209                    494,031         703,400
          Total revenues                     25,328,439        25,328,439       14,780,319            (10,548,120)     12,590,787
EXPENDITURES
Current:
  Commodities                                     7,700             7,700               18,807            (11,107)          5,660
  Contractual services                       12,983,243        12,983,243           11,507,279          1,475,964       7,725,550
  Other                                      18,625,340        18,625,340              796,921         17,828,419         344,134
Capital outlay                                2,051,250         2,051,250                  -            2,051,250       3,491,479
          Total expenditures                 33,667,533        33,667,533           12,323,007         21,344,526      11,566,823
          Deficiency of revenues
            over expenditures                 (8,339,094)      (8,339,094)           2,457,312         10,796,406       1,023,964

OTHER FINANCING SOURCES
Proceeds from sale of capital assets                 -                   -                 -                  -            24,925

          Net change in fund balances         (8,339,094)      (8,339,094)           2,457,312 $       10,796,406       1,048,889

Fund Balances - Beginning                    27,226,345        27,226,345           27,226,345                         26,177,456

Fund Balances - Ending                   $   18,887,251 $      18,887,251 $         29,683,657                       $ 27,226,345



                                        See notes to required supplementary information




                                                               28
                           Hennepin County Regional Railroad Authority
                         A Component Unit of Hennepin County, Minnesota
                            Notes to Required Supplementary Information
                                         December 31, 2008



Legal Compliance – Budgets
Budgets are adopted on a basis consistent with accounting principles generally accepted in the United
States of America. Annual appropriated budgets are adopted for the general and debt service funds
based on the modified accrual basis of accounting. All annual appropriations lapse at year-end to the
extent that they have not been expended or encumbered.

Encumbrances represent commitments related to unperformed contracts for goods or services.
Encumbrance accounting – under which purchase orders, contracts, and other commitments for the
expenditure of resources are recorded to reserve that portion of the applicable appropriation – is utilized
in the general fund. Encumbrances outstanding at year-end are reported as reservations of fund balances
and do not constitute expenditures or liabilities because the commitments will be honored during the
subsequent year. The encumbrances are reappropriated as part of the following year’s budget.

The HCRRA Board must adopt a proposed maximum property tax levy by September 15. The Board
holds public hearings, makes modifications to the budget, and legally enacts the budget by passage of a
resolution no later than December 31. Any changes in the budget must be within the revenues and
reserves estimated or the revenue estimates must be changed by a vote of the Board. Expenditures may
not legally exceed budgeted appropriations.




                                                    29
                                    Hennepin County Regional Railroad Authority
                                  A Component Unit of Hennepin County, Minnesota
                                                Balance Sheet
                                                 General Fund
                                    December 31, 2008 and December 31, 2007




                                                                        2008             2007
ASSETS
Interest in Hennepin County investment pool                      $    30,388,827   $   28,058,746
Delinquent taxes receivable, net                                         237,209          165,414
Other receivables                                                        162,386           97,641

          Total assets                                           $    30,788,422   $   28,321,801


LIABILITIES AND FUND BALANCES
Liabilities:
   Accounts and contracts payable                                $     1,096,483   $    1,090,911
   Accrued liabilities                                                     4,545            4,545
   Deferred revenue                                                        3,737              -
             Total liabilities                                         1,104,765        1,095,456


Fund balances:
  Reserved for encumbrances                                              154,548          81,356
  Unreserved:
    Designated for:
       Subsequent years' expenditures                                  5,743,276        8,339,094
       Special purposes                                                  100,000          100,000
       Unrealized gain on investments                                    425,981          101,349
    Undesignated                                                      23,259,852       18,604,546
         Total fund balances                                          29,683,657       27,226,345

          Total liabilities and
            fund balances                                        $    30,788,422   $   28,321,801




                                                       30
                                Hennepin County Regional Railroad Authority
                              A Component Unit of Hennepin County, Minnesota
                                             Balance Sheet
                                           Debt Service Fund
                                 December 31, 2008 and December 31, 2007




                                                                       2008          2007
ASSETS
Interest in Hennepin County investment pool                      $     408,488   $   347,143


LIABILITIES AND FUND BALANCES
Liabilities:
 Accounts payable                                                $      10,594   $    14,221

Fund balances:
  Unreserved                                                           397,894       332,922

     Total liabilities and fund balances                         $     408,488   $   347,143




                                                        31
                                  Hennepin County Regional Railroad Authority
                               A Component Unit of Hennepin County, Minnesota
             Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual
                                               Debt Service Fund
                                     For the Year Ended December 31, 2008
                     With Comparative Actual Amounts for the Year Ended December 31, 2007


                                                                    2008                                        2007
                                                                                           Variance with
                                          Budgeted Amounts                                 Final Budget
                                                                                             Positive
                                      Original          Final               Actual          (Negative)          Actual
REVENUES
Property taxes                    $   3,123,831    $   3,123,831      $    3,186,970   $         63,139    $   3,148,834
Other taxes                                 -                -                 1,833              1,833            1,741
    Total revenues                    3,123,831        3,123,831           3,188,803             64,972        3,150,575

EXPENDITURES
Debt service:
  Principal retirement                1,005,000        1,005,000           1,005,000                -            965,000
  Interest and fiscal charges         2,118,831        2,118,831           2,118,831                -          2,152,606
     Total expenditures               3,123,831        3,123,831           3,123,831                -          3,117,606

     Net change in fund balance             -                   -            64,972    $         64,972          32,969

Fund Balance - Beginning               332,922          332,922             332,922                             299,953

Fund Balance - Ending             $    332,922     $    332,922       $     397,894                        $    332,922




                                                  32
Statistical Section




         33
Hennepin County Regional Railroad Authority




                   34
                           Hennepin County Regional Railroad Authority
                         A Component Unit of Hennepin County, Minnesota

                                        Statistical Section Contents


Table No.   Category and Title                                                                                                       Page

            Financial Trends – This section provides information that shows how the
            HCRRA’s financial position has changed over time.
    1       Government-wide Net Assets ...............................................................................                 36
    2       Government-wide Change in Net Assets..............................................................                         37
    3       Fund Balances - Governmental Funds .................................................................                       38
    4       Change in Fund Balances - Governmental Funds................................................                               40



            Revenue Capacity – This section provides information that shows factors
            affecting the HCRRA's ability to generate its own-source revenues.
    5       Property Estimated Market Value .........................................................................                  42
    6       Property Tax Rates - Direct and Overlapping Governments ................................                                   44
    7       Principal Taxpayers...............................................................................................         46
    8       Property Tax Levies and Collections ....................................................................                   47
    9       Net Tax Capacity and Estimated Market Value of Taxable Property ...................                                        48



            Debt Capacity – This section provides information regarding the HCRRA’s
            current level of outstanding debt and its ability to issue additional debt.

    10      Ratios of Outstanding Debt by Type………………………………………………..                                                                     50
    11      Direct and Overlapping General Obligation Debt .................................................                           51
    12      Legal Debt Margin Information..............................................................................                52
            Ratio of Debt Service Expenditures for General Obligation Debt to Total
    13      Expenditures .........................................................................................................     53



            Demographic and Economic Information – This section provides
            information regarding the HCRRA's socioeconomic environment and
            facilitates comparisons over time and among governments.

    14      Demographic and Economic Statistics .................................................................                      54
    15      Labor Force Size and Unemployment Rate..........................................................                           55
    16      Employment Information by Industry ....................................................................                    56
    17      Principal Employers…………………………………………………………………..                                                                             57




                                                               35
                                                                         Table 1
                     Hennepin County Regional Railroad Authority
                   A Component Unit of Hennepin County, Minnesota
                          Government-wide Net Assets
                                  Last Six Years


                              Governmental Activities Net Assets

            Invested in
           Capital Assets,
           Net of Related
                Debt           Restricted         Unrestricted        Total

2003   $      34,682,871          442,706           (17,466,654) $   17,658,923

2004   $      36,500,873          263,881           (18,660,134) $   18,104,620

2005   $      36,522,273          267,600           (18,948,172) $   17,841,701

2006   $      37,478,755          299,953           (19,628,940) $   18,149,768

2007   $      37,609,630           156,353          (17,445,218)     20,320,765

2008   $      37,437,812          224,465           (13,985,901)     23,676,376


                                     Unaudited




                                            36
                                                                             Table 2
                    Hennepin County Regional Railroad Authority
                  A Component Unit of Hennepin County, Minnesota
                     Government-wide Change in Net Assets
                                 Last Six Years


                                  Governmental Activities
           General
         Government    Debt Service           General                    Change in
          Expenses      Expenses              Revenue       Transfers    Net Assets

2003 $    2,232,349      2,267,242             7,581,117           879    3,082,405

2004 $    4,914,809       2,241,981            7,602,487             -      445,697

2005 $    6,919,198       2,215,768            8,872,047             -     (262,919)

2006 $    9,803,985       2,186,585           12,298,637             -      308,067

2007 $   11,414,301       2,156,064           15,741,362             -    2,170,997

2008 $   12,491,547       2,121,963           17,969,122             -    3,355,612


                                      Unaudited




                                         37
                                                                                Table 3
                       Hennepin County Regional Railroad Authority
                     A Component Unit of Hennepin County, Minnesota
                         Fund Balances - Governmental Funds
                                    Last Six Years



                              General Fund                            Debt Service Fund

Year       Reserved          Unreserved             Total                Unreserved

2003   $     159,471           30,848,722    $     31,008,193    $             442,706

2004   $   1,111,576           27,845,527    $     28,957,103    $             263,881

2005   $     603,424           27,177,768    $     27,781,192    $             267,600

2006   $         -             26,177,456          26,177,456    $             299,953

2007 $        81,356           27,144,989          27,226,345    $             332,922

2008 $       154,548           29,529,109          29,683,657    $             397,894



                                       Unaudited




                                             38
Hennepin County Regional Railroad Authority




                   39
                        Hennepin County Regional Railroad Authority
                      A Component Unit of Hennepin County, Minnesota
                      Change in Fund Balances - Governmental Funds
                                      Last Six Years

                                         2003           2004        2005          2006
Revenues
Property taxes                 $       4,421,245    6,071,219      7,204,933     7,251,381
Other taxes                                2,995        4,627          4,879         4,615
Intergovernmental                        605,437      203,155        497,408       351,834
Investment earnings                      646,340      503,423        420,052     1,099,693
Other                                    691,719      820,063        744,775     1,079,682

Total revenues                         6,367,736    7,602,487      8,872,047     9,787,205

Expenditures
General government                     2,225,932    4,806,715      6,721,067     7,656,942
Capital outlay                           993,846    2,092,793        216,253     3,100,247
Debt service:
 Principal                               840,000      865,000        895,000       930,000
 Interest                              2,263,069    2,237,869      2,211,919     2,182,831

Total expenditures                     6,322,847   10,002,377     10,044,239    13,870,020

Excess of revenues over
 (under) expenditures                    44,889     (2,399,890)   (1,172,192)   (4,082,815)

Other Financing
Sources (Uses)
Transfers in                                 879            -            -             -
Sale of capital assets                 2,354,357        169,975          -       2,511,432
Total other financing
 sources (uses)                        2,355,236        169,975          -       2,511,432

Net change in fund balances        $   2,400,125    (2,229,915)   (1,172,192)   (1,571,383)

Debt service as a
 percentage of noncapital
 expenditures                             58.2%           39.2%        31.6%         28.9%




                                                   Unaudited




                                                   40
               Table 4




  2007         2008

12,057,831   15,084,946
     6,653        8,678
 1,639,436      384,178
 1,334,042    1,628,111
   703,400      863,209

15,741,362   17,969,122



 8,075,344   12,323,007
 3,491,479          -

   965,000    1,005,000
 2,152,606    2,118,831

14,684,429   15,446,838


 1,056,933    2,522,284




      -               -
   24,925             -

   24,925             -

 1,081,858    2,522,284




     27.9%        20.2%




                          41
                                               Hennepin County Regional Railroad Authority
                                            A Component Unit of Hennepin County, Minnesota
                                                                                           1
                                            Property Estimated Market Value (000s omitted)
                                                            Last Ten Years

                                                                                                        Real Estate

                                   Residential                   Multiple             Commercial                             Public Utilities
                                    Property                     Dwelling             & Industrial         Agricultural     & Miscellaneous




1999                         $        41,705,509                   3,677,757             14,805,476           344,425                17,702
                                             58.3 %                       5.2                   20.7               0.5                   0.0

2000                         $        45,361,587                   4,060,545             16,119,394           357,652                19,160
                                             59.0 %                       5.3                   20.9               0.5                   0.0

2001                         $        60,571,223                   5,704,822             19,509,317           422,176                25,741
                                             62.3 %                       5.9                   20.1               0.4                   0.0

2002                         $        69,909,403                   6,499,918             20,264,754           454,497                34,007
                                             64.7 %                       6.0                   18.7               0.4                   0.0

2003                         $        78,678,876                   7,321,272             20,165,572           490,926                37,898
                                             66.8 %                       6.2                   17.1               0.4                   0.1

2004                         $        87,082,509                   7,805,970             20,541,660           554,861                26,443
                                             64.0 %                       5.7                   15.1               0.4                   0.1

2005                         $        96,564,547                   8,130,642             22,365,427           729,315                28,745
                                             65.3 %                       5.5                   15.1               0.5                   0.0

2006                         $       104,903,604                   8,236,029             25,052,910           839,554                33,214
                                             65.9 %                       5.2                   15.7               0.5                   0.0

2007                        $        109,251,869                   8,562,454             28,186,928           888,835                84,688
                                             65.4 %                       5.1                   16.9               0.5                   0.1

2008                        $        107,145,474                   8,628,267             29,764,516           864,041                68,962
                                             64.3 %                       5.2                   17.9               0.5                   0.0


1
    Property estimated market value is for the assessment year indicated. Applicable taxes are collectible in the subsequent year.

    Source: Hennepin County Property Information System.




                                                                                 Unaudited




                                                                            42
                                                                                         Table 5




                                           Total Taxable and       Total Taxable
                Total        Personal      Exempt Estimated          Estimated       Total Direct
Exempt        Real Estate    Property       Property Value         Property Value     Tax Rate




10,035,711     70,586,580     928,705 $          71,515,285    $        61,479,574       0.509 %
       14.0           98.7         1.3                 100.0 %

10,035,711     75,954,049     989,536 $          76,943,585    $        66,907,874       0.424 %
       13.0           98.7         1.3                 100.0 %

10,035,711     96,268,990     997,814 $          97,266,804    $        87,231,093       0.387 %
       10.3           99.0         1.0                 100.0 %

10,035,711    107,198,290    1,024,891 $       108,223,181    $         98,187,470       0.497 %
        9.3           99.1          0.9               100.0 %

10,035,711    116,730,255    1,064,528 $       117,794,783    $        107,759,072       0.475 %
        8.5           99.1          0.9               100.0 %

18,965,624    134,977,067    1,102,615 $       136,079,682    $        117,114,058       0.613 %
       13.9           99.2          0.8               100.0 %

18,965,624    146,784,300    1,165,961 $       147,950,261    $        128,984,637       0.636 %
       12.8           99.2          0.8               100.0 %

18,965,624    158,030,935    1,232,185 $       159,263,120    $        140,297,496       0.559 %
       11.9           99.2          0.8               100.0 %

18,965,624    165,940,398    1,217,773         167,158,171             148,192,547       0.871 %
       11.3           99.3          0.7               100.0 %

18,965,624    165,436,884    1,234,923         166,671,807    $        147,706,183       0.979 %
       11.4           99.3          0.7               100.0 %




                                                43
                            Hennepin County Regional Railroad Authority
                          A Component Unit of Hennepin County, Minnesota
               Property Tax Rates and Levies - Direct and Overlapping Governments1
                                          Last Ten Years




                                    HCRRA Direct Taxes                          Hennepin County Tax
      Payable
       Year                   Tax Rates             Tax Levies           Tax Rates                Tax Levies

        1999                        0.509             4,687,358                40.99            1,726,729,831
        2000                        0.424             4,685,461                39.66            1,801,845,323
        2001                        0.387             4,679,958                37.62            1,893,370,691
        2002                        0.497             4,682,436                50.41            1,694,901,516
        2003                        0.475             4,684,560                50.61            1,798,087,190
        2004                        0.613             6,407,281                47.32            1,839,119,679
        2005                        0.636             7,544,112                44.17            1,929,968,565
        2006                        0.559             7,534,073                41.02            2,073,863,790
        2007                        0.871            12,521,979                39.11            2,218,680,883
        2008                        0.979            15,529,575                38.57            2,353,094,925


1
    The Metropolitan Airport Commission, an overlapping government, receives all of its revenue from sources
    other than property taxes.




                                                     Unaudited




                                                          44
                                                                                 Table 6




    Metropolitan Transit                                        Metropolitan Mosquito
     Commission Tax              Metropolitan Council Tax        Control District Tax

Tax Rates         Tax Levies   Tax Rates        Tax Levies   Tax Rates        Tax Levies

 4.775           44,820,081      0.914           9,495,921    0.346           3,542,558
 4.819           46,554,942      0.869           9,492,721    0.351           3,808,411
 4.691           50,137,517      0.814           9,861,548    0.324           3,931,441
 1.541           13,510,666      1.490          13,618,250    0.506           4,692,153
 1.787           16,702,900      1.471          14,536,943    0.567           5,542,233
 1.724           17,701,477      1.212          13,224,582    0.057           6,058,295
 1.608           18,412,350      1.132          13,576,139    0.056           6,726,197
 1.542           19,691,307      0.873          11,929,206    0.509           6,852,845
 1.295           18,509,833      0.877          12,973,186    0.499           7,395,646
 1.264           19,283,519      0.812          13,092,025    0.486           7,801,856




                                           45
                                                                                                                               Table 7

                                               Hennepin County Regional Railroad Authority
                                             A Component Unit of Hennepin County, Minnesota
                                                         Principal Taxpayers1
                                                   Current Year and Nine Years Ago


                                                             2008                                               1999

                                                                         Percentage                                        Percentage
                                                                          of Total                                          of Total
               Taxpayer                    Tax Capacity        Rank     Tax Capacity          Tax Capacity     Rank       Tax Capacity

MOA Mall Holdings LLC                  $      11,999,250          1             0.74 % $       15,194,900          1              1.48 %
MB Minneapolis 8th St LLC                      4,679,250          2             0.29
Minneapolis 225 Holdings LLC                   4,309,250          3             0.27            6,546,925          3              0.64
NWC Limited Partnership                        4,147,250          4             0.26
First Minneapolis-Hines Co                     3,611,250          5             0.22
Wells REIT                                     3,453,250          6             0.21
Best Buy Co Inc                                3,064,310          7             0.19
Flanagan-AMEX                                  2,869,250          8             0.18
Ameriprise Financial Corp                      2,785,250          9             0.17
KAN AM Grund Kapitalanlage                     2,723,250         10             0.17
601 Second Ave Ltd Partnership                                                                  7,628,425          2              0.74
First National Bank of Mpls                                                                     6,053,425          4              0.59
Heitman/IDS                                                                                     5,696,425          5              0.56
City Center Associates                                                                          5,563,425          6              0.54
DB Holdings Inc.                                                                                3,340,925          7              0.33
Federal Reserve Bank/Mpls                                                                       3,340,925          8              0.33
Xcel Energy (NSP)                                                                               3,317,909          9              0.32
Ridgedale Joint Venture                                                                         3,228,155         10              0.32

    Total                              $      43,641,560                        2.71      $    59,911,439                         5.85


1
    Xcel Energy includes both real and personal property tax capacity. All others are based on the tax capacity of individual parcels.

Source: Hennepin County Property Information System.



                                                               Unaudited




                                                                      46
                                                                                                                           Table 8
                                           Hennepin County Regional Railroad Authority
                                         A Component Unit of Hennepin County, Minnesota
                                             Property Tax Levies and Collections
                                                       Last Ten Years


                                    Collected in the Year Levied                                      Total Collections to Date
                                                                           Subsequent Year
                                 Tax Collections       Percentage            Collections          Tax Collections     Percentage
                            1
    Year      Taxes Levied       Net of Refunds          of Levy            Net of Refunds        Net of Refunds        of Levy

1999              4,687,358           4,641,566          99.02                           -            4,641,566          99.02

2000              4,685,461           4,641,575          99.06                       18,961           4,660,536          99.47

2001              4,679,958           4,635,766          99.06                        8,405           4,644,171          99.24

2002              4,682,436           4,645,807          99.22                        5,760           4,651,567          99.34

2003              4,684,560           4,645,962          99.18                       17,264           4,663,226          99.54

2004              6,407,280           6,333,269          98.84                        8,608           6,341,877          98.98

2005              7,544,112           7,452,695          98.79                       31,755           7,484,450          99.21

2006              7,534,074           7,424,745          98.55                       51,488           7,476,233          99.23

2007             12,521,979          12,315,411          98.35                       71,083          12,386,494          98.92

2008             15,529,575          15,241,406          98.14                      146,465          15,387,871          99.09


1
    Including current year adjustments (i.e., abatements, cancellations, and increases to the current year levy).



                                                              Unaudited




                                                                   47
                        Hennepin County Regional Railroad Authority
                      A Component Unit of Hennepin County, Minnesota
             Net Tax Capacity and Estimated Market Value of Taxable Property
                                      Last Ten Years



                           Property Outside the
                             City of Minneapolis                        Minneapolis
                         Net               Estimated             Net            Estimated
Assessment               Tax                Market               Tax               Market
   Year                Capacity              Value             Capacity             Value

  1999           $    802,550,295    $    49,927,105,300   $ 281,161,210   $ 16,980,768,644

  2000                894,636,440         56,031,034,000     308,978,790       19,383,387,387

  2001                679,644,971         64,096,397,460     240,566,900       23,134,698,100

  2002                736,733,176         72,315,485,410     250,694,160       25,871,984,600

  2003                803,641,255         79,234,702,100     267,042,122       28,524,370,200

  2004                898,456,710         86,023,891,500     295,462,012       31,090,167,800

  2005                998,443,572         94,192,785,839     336,041,511       34,791,850,532

  2006               1,105,871,333       103,200,930,000     374,841,727       37,096,565,800

  2007               1,192,261,639       109,551,270,000     410,535,647       38,641,276,800

  2008               1,198,620,162       109,594,398,067     413,935,332       38,111,782,650




                                          Unaudited




                                              48
                                                                                 Table 9




                  Total                                            Percentage of Total
      Net                   Estimated      Net Tax Capacity     HCRRA Net Tax Capacity
      Tax                    Market          to Estimated        Outside
    Capacity                  Value         Market Value       Minneapolis   Minneapolis

$ 1,083,711,505    $      66,907,873,944               1.6 %         74.1 %         25.9 %

  1,203,615,230           75,414,421,387               1.6           74.3           25.7

    920,211,871           87,231,095,560               1.1           73.9           26.1

    987,427,336           98,187,470,010               1.0           74.6           25.4

  1,070,683,377        107,759,072,300                 1.0           75.1           24.9

  1,193,918,722        117,114,059,300                 1.0           75.3           24.7

  1,334,485,083        128,984,636,371                 1.0           74.8           25.2

  1,480,713,060        140,297,495,800                 1.1           74.7           25.3

  1,602,797,286        148,192,546,800                 1.1           74.4           25.6

  1,612,555,494        147,706,180,717                 1.1           74.3           25.7




                                                49
                                                                                                                          Table 10
                                          Hennepin County Regional Railroad Authority
                                        A Component Unit of Hennepin County, Minnesota
                                             Ratios of Outstanding Debt by Type
                                                        Last Ten Years



                                                                          Net Limited Tax         Net Limited Tax       Net Limited
                 Net Limited Tax General Obligation Debt1               General Obligation       General Obligation     Tax General
                              Less Amount                              Debt as a Percentage         Debt as a            Obligation
                               Available for                           of Property Estimated       Percentage of         Debt Per
    Year          Total       Debt Service          Net                    Market Value2          Personal Income3        Capita3

1999                   -                -                 -                               -                     -               -

2000                   -                -                 -                               -                     -               -

2001                   -                -                 -                               -                     -               -

2002           49,395,000          655,872       48,739,128                    0.05%                    0.10%                43.48

2003           48,555,000          442,706       48,112,294                    0.04%                    0.09%                42.92

2004           47,690,000          263,881       47,426,119                    0.04%                    0.08%                42.37

2005           46,795,000          267,600       46,527,400                    0.04%                    0.08%                41.46

2006           45,865,000          299,953       45,565,047                    0.03%                    0.07%                40.09

2007           44,900,000          347,143       44,552,857                    0.03%                    0.07%                39.05

2008           43,895,000          408,488       43,486,512                    0.03%                     N/A4                38.11

1
  HCRRA debt has historically consisted solely of limited tax general obligation bonds, which are by definition secured in whole or
  part by the authority to levy taxes on real estate. Per M.S. 475.51, the net limited tax general obligation debt is determined by
  deducting from the total limited tax general obligation debt the cash available for servicing the debt and debt intended to be
  financed primarily by means other than a real estate tax levy.
2
  See Table 5 for taxable estimated market value data.
3
  See Table 14 for personal income and population data.
4
  Data not available at the time of publication.




                                                              Unaudited




                                                                  50
                                                                                                                                            Table 11
                                                Hennepin County Regional Railroad Authority
                                             A Component Unit of Hennepin County, Minnesota
                                             Direct and Overlapping General Obligation Debt
                                                           December 31, 2008


                                                                                                                   Percent                 Amount
                                                                                  Debt1                           Applicable             Applicable
Governmental Unit                                                      Total                    Net              To HCRRA 2              to HCRRA

Direct -
 Hennepin County Regional Railroad                          $        43,895,000 $            43,497,106             100.00 % $           43,497,106
    Total Direct Debt                                                43,895,000              43,497,106                                  43,497,106

Overlapping:
 Hennepin County                                                   555,425,000             516,846,087              100.00        $     516,846,087
 Metropolitan Council 3                                          1,116,379,876             137,904,653               44.91               61,932,980
 Metropolitan Airport Commission                                 1,790,917,000                     -                  -                         -
   Total Overlapping Debt                                        3,462,721,876             654,750,740                                  578,779,067

     Total                                                  $    3,506,616,876 $           698,247,846                            $     622,276,173



1
  Debt that is secured in whole or part by the authority to levy taxes on real estate. Per M.S. 475.51, net general obligation debt is determined by
   deducting from the total general obligation debt the cash available for servicing the debt and debt that is intended to be financed primarily by
   means other than a real estate tax levy.
2
  The percentages reflect the portion of the general obligation debt which is secured by taxable real estate located within the County.
3
  Includes Metropolitan Council Transit Operations debt.




                                                                      Unaudited




                                                                            51
                                                                                                   Table 12
                                 Hennepin County Regional Railroad Authority
                               A Component Unit of Hennepin County, Minnesota
                                      Legal Debt Margin Information
                                              Last Ten Years


The HCRRA is subject to the legal debt limit of Hennepin County as a whole, which is described below:


                                      Total Net Debt                           Net Debt Applicable to
                                       Applicable to         Legal Debt       Limit as a Percentage of
                  Debt Limit               Limit               Margin                Debt Limit

1999            1,338,157,480           161,383,354         1,176,774,126             12.06%
2000            1,508,288,420           215,453,858         1,292,834,562             14.28%
2001            1,744,621,900           321,783,649         1,422,838,251             18.44%
2002            1,963,749,400           368,778,915         1,594,970,485             18.78%
2003            2,155,181,446           388,099,737         1,767,081,709             18.01%
2004            2,342,281,186           396,929,687         1,945,351,499             16.95%
2005            2,579,692,727           417,123,804         2,162,568,923             16.17%
2006            2,805,949,916           439,724,175         2,366,225,741             15.67%
2007            2,963,850,936           470,344,086         2,493,506,850             15.87%
2008            2,954,123,614           560,343,193         2,393,780,421             18.97%



            Computation of 2008 Legal Debt Margin

            2008 property estimated market value                              $ 147,706,180,717

            Debt limit, 2% of market value                                    $   2,954,123,614
            Amount of levy supported debt                   $ 565,735,000
            Less amount available for debt service              5,391,807           560,343,193
            Legal Debt Margin                                                 $   2,393,780,421




                                                 Unaudited




                                                       52
                                                                                          Table 13
                           Hennepin County Regional Railroad Authority
                         A Component Unit of Hennepin County, Minnesota
       Ratio of Debt Service Expenditures for General Bonded Debt to Total Expenditures
                                        Last Ten Years



                                                                                     Debt Service
                       Debt Service Expenditures                                     Expenditures
                             Interest and                             Total            to Total
Year         Principal      Fiscal Charges           Total         Expenditures      Expenditures

1998     $         -     $          -       $            -     $      2,649,425             -     %

1999               -                -                    -            2,608,187             -

2000               -                -                    -           13,438,077             -

2001               -                -                    -           17,914,140             -

2002          605,000        2,281,219             2,886,219         52,409,776            5.51

2003          840,000        2,263,069             3,103,069          6,322,847           49.08

2004          865,000        2,237,869             3,102,869         10,002,377           31.02

2005          895,000        2,211,919             3,106,919         10,044,239           30.93

2006          930,000        2,182,831             3,112,831         10,757,189           28.94

2007          965,000        2,152,606             3,117,606         11,566,823           26.95

2008         1,005,000       2,118,831             3,123,831         12,323,007           25.35


                                            Unaudited




                                                   53
                                                                                                                                              Table 14
                                                         Hennepin County Regional Railroad Authority
                                                       A Component Unit of Hennepin County, Minnesota
                                                           Demographic and Economic Statistics
                                                                     Last Ten Years


                                                                                                       Persons 25 years
                                             Per                                                        and older who       K - 12
                                           Capita                 Total                   Median        are high school     School       Unemploy-
Year               Population 1           Income 2               Income                    Age 3          graduates 3     Enrollment 4   ment Rate 2

1999                  1,089,024       $     40,078         $   43,645,903,872              32.7             88.2 %          157,217         2.2        %

2000                  1,116,200             43,075             48,080,315,000             34.9             91.5             158,380         2.6

2001                  1,114,977             43,452             48,447,980,604             34.9             91.5             158,566         3.2

2002                  1,122,259             43,732             49,078,630,588             34.9             91.5             157,823         4.0

2003                  1,121,035             45,141             50,604,640,935             36.2             93.1             155,018         4.7

2004                  1,120,897             48,041             53,849,012,777             36.7             93.3             152,809         4.5

2005                  1,119,364             50,412             56,429,377,968             36.9             92.0             153,558         3.7

2006                  1,122,093             52,905             59,364,330,165             37.2             92.0             153,449         3.5

2007                  1,136,599             56,280             63,967,791,720             37.2             91.8             154,624         4.0
                                                       5                             5             5              5
2008                  1,140,988                N/A                         N/A              N/A             N/A             155,754         4.9


Sources:
1
 Office of the State Demographer and U.S. Census Bureau
2
    U.S. Department of Commerce, Bureau of Economic Analysis, Regional Economic Accounts Annual Average (per April 2009 release)
3
    U.S. Census Bureau ,U.S. Community Survey 2006
4
    Fall registration for public schools - Minnesota State Department of Education
5
    Information not available at time of publication




                                                                          Unaudited




                                                                                     54
                                                                                                                                          Table 15


                                                   Hennepin County Regional Railroad Authority
                                                 A Component Unit of Hennepin County, Minnesota
                                                   Labor Force Size and Unemployment Rate2
                                                                Last Ten Years



                Hennepin County                  Metropolitan Area1                        State                            National
             Labor    Unemployment            Labor       Unemployment            Labor       Unemployment           Labor        Unemployment
             Force         Rate               Force            Rate               Force           Rate               Force            Rate
1999        647,311         2.2             1,695,614           2.2            2,703,016           2.8            139,368,000         4.2
2000        655,599         2.6             1,718,349           2.6            2,738,685           3.3            140,863,000         4.0
2001        676,037         3.2             1,771,220           3.3            2,814,357           3.7            141,774,000         4.8
2002        687,258         4.0             1,880,469           4.0            2,851,012           4.1            142,508,500         5.8
2003        693,591         4.7             1,833,763           4.8            2,923,083           5.0            146,510,000         6.0
2004        675,296         4.5             1,832,449           4.5            2,951,682           4.7            147,401,000         5.6
2005        674,764         3.7             1,850,864           3.8            2,947,198           4.0            149,320,000         5.1
2006        664,469         3.5             1,844,971           3.7            2,939,304           4.0            151,428,000         4.6
2007        669,389         4.0             1,848,796           4.3            2,930,553           4.6            153,124,000         4.6
2008        660,319         4.9             1,837,000           5.2            2,933,000           5.4            154,287,000         5.8



Source: Minnesota Department of Jobs and Training
1
    Labor statistics for the metropolitan area include Anoka, Carver, Chisago, Dakota, Hennepin, Isanti, Ramsey, Scott, St. Croix, Washington
    and Wright counties.
2
    Annual averages


                                                                     Unaudited




                                                                          55
                                                                                                                  Table 16
                          Hennepin County Regional Railroad Authority
                        A Component Unit of Hennepin County, Minnesota
                            Employment Information by Industry
                                      Last Seven Years


                                                                           Hennepin County Industry Ranking
Industry                                                2001        2002      2003     2004      2005      2006      2007

Health care and social assistance                          5          1          1        1        1         1          1
Professional and technical services                        4          5          4        4        3         3          2
Government and government enterprises                      2          2          2        2        2         2          3
Retail trade                                               3          3          3        3        4         4          4
Manufacturing                                              1          4          5        5        5         5          5
Finance and insurance                                      6          6          6        6        6         6          6
Administrative and waste services                          7          7          7        7        7         7          7
Accomodation and food services                             9          8          8        8        8         8          8
Other services, except public administration              10         10         10       10       10        10          9
Wholesale trade                                            8          9          9        9        9         9         10
Real estate                                               14         14         14       12       12        11         11
Construction                                              12         11         11       11       11        12         12
Management of companies and enterprises                   13         13         13       13       14        13         13
Transportation and warehousing                            11         12         12       14       13        14         14
Arts, entertainment, and recreation                       16         16         16       16       16        15         15
Information                                               15         15         15       15       15        16         16
Educational services                                      17         17         17       17       17        17         17
Utilities                                                 18         18         18       18       18        18         18
Forestry, fishing, mining, other                          20         20         20       20       19        19         19
Farm                                                      19         19         19       19       20        20         20


Note: 2008 information is not yet available.
Source: United States Department of Commerce, Bureau of Economic Analysis




                                                          Unaudited




                                                               56
                                                                                                                    Table 17
                                           Hennepin County Regional Railroad Authority
                                         A Component Unit of Hennepin County, Minnesota
                                                     Principal Employers
                                               Current Year and Three Years Ago



                                                          2005 1                                       2008
                                          Employees                   Percentage of    Employees              Percentage of
                                          (rounded to                 Total County     (rounded to            Total County
Employer                                 nearest 1,000)   Rank         Employment     nearest 1,000)   Rank    Employment

University of Minnesota                        25,000      1             3.70%              25,000      1        3.73%
Thayer/Hidden Creek                                                                         11,000      2                 0
Abbott Northwestern Hospital                    5,000      7             0.74%              10,000      3                 0
Hennepin County Offices                        12,000      2             1.78%               8,000      4                 0
Fairview University Medical Center              8,000      3             1.19%               8,000      5                 0
Ameriprise Financial                                                                         7,000      6                 0
Methodist Hospital                               7,000     4             1.04%               7,000      7                 0
Park Nicollet Health Services                    6,000     5             0.89%               6,000      8                 0
United Parcel Service of America, Inc.           5,400     6             0.80%
Fairview Southdale Hospital                      5,000     9             0.74%                5,000      9                0
North Memorial Medical                                                                        5,000     10                0
Regions Hospital
Cardiac Rhythm Management                        5,000      8            0.74%
Medtronic Tachyarrhythmia Management             4,500     10            0.67%

                                               82,900                   12.29%              92,000              13.74%


Sources: ACINET.ORG and Hennepin County Office of Budget and Finance

1
    Data not available prior to 2005.


                                                           Unaudited




                                                                 57
Hennepin County Regional Railroad Authority




                   58

								
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