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2012-06-06 PACKET 02.A.
REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA MEETING ITEM # DATE 6 -6 -12 • • PREPARED BY Finance Robin Roland ORIGINATING DEPARTMENT STAFF AUTHOR COUNCIL ACTION REQUEST Representatives from Clifton LarsonAllen will give a presentation on the 2011 Comprehensive Annual Financial Report. STAFF RECOMMENDATION Motion to accept the 2011 Comprehensive Annual Financial Report. BUDGET IMPLICATION BUDGETED AMOUNT ADVISORY COMMISSION ACTION ❑ PLANNING ❑ PUBLIC SAFETY ❑ PUBLIC WORKS ❑ PARKS AND RECREATION ❑ HUMAN SERVICES /RIGHTS ❑ ECONOMIC DEV. AUTHORITY SUPPORTING DOCUMENTS ® MEMO /LETTER: ❑ RESOLUTION: ❑ ORDINANCE: DATE REVIEWED El El El El El El ❑ ENGINEERING RECOMMENDATION: ❑ LEGAL RECOMMENDATION El OTHER: ACTUAL AMOUNT APPROVED DENIED ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ADMINISTRATORS COMMENTS C or Date COUNCIL ACTION TAKEN: ❑ APPROVED ❑ DENIED ❑ OTHER r 71M City of • .• Grove Finance Department TO: Honorable Mayor and City Council Ryan Schroeder, City Administrator FROM: Robin Roland, Finance and Community Development Directo DATE: May 31, 2012 RE: Presentation of Comprehensive Annual Financial Report for 2011 Introduction Rachel Flanders and Heidi Tatro with the City's auditing firm, Clifton LarsonAllen LLP will be at the meeting to present the 2011 Financial Statements. A copy of the 2011 Comprehensive Annual Financial Report and the auditor's required communications are included herein for your review. The Letter of Transmittal in the Financial Statements (page 3) and the Management Discussion and Analysis (page 21) summarize important data and give a good overview of the City's financial situation. In addition, the statistical section (page 159) includes supplemental detailed information and financial trends. Action Requested Following the presentation a motion to receive and accept the Comprehensive Annual Financial Report is appropriate. Cover photo is of Highlands Park and is a winning entry from the 2011 City of Cottage Grove Photo Contest. The photographer is Hank Drabczak. COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF COTTAGE GROVE STATE OF MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2011 Prepared By: Finance Department CITY OF COTTAGE GROVE, IVBNNESOTA TABLE OF CONTENTS Reference Page Number I. INTRODUCTORY SECTION Letter of Transmittal 3 Certificate of Achievement for Excellence in Financial Reporting 11 Principal City Officials 13 Organization Chart 14 II. FINANCIAL SECTION Independent Auditors' Report 17 Management's Discussion and Analysis 21 Basic Financial Statements: Government -Wide Financial Statements: Statement of Net Assets Statement 1 35 Statement of Activities Statement 2 37 Fund Financial Statements: Balance Sheet - Governmental Funds Statement 3 38 Statement of Revenues, Expenditures, and Changes in Fund Balance - Governmental Funds Statement 4 40 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Statement 5 42 Statement of Net Assets - Proprietary Funds Statement 6 43 Statement of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary Funds Statement 7 44 Statement of Cash Flows - Proprietary Funds Statement 8 48 Notes to Financial Statements 53 Required Supplementary Information: Budgetary Comparison Schedule - General Fund Statement 9 90 Budgetary Comparison Schedule - Note to RSI 96 Funding Progress Schedule - Other Post Employment Health Care Benefits 97 CITY OF COTTAGE GROVE, MINNESOTA TABLE OF CONTENTS Reference Page Number Combining and Individual Fund Statements and Schedules: Combining Balance Sheet- Nonmajor Governmental Funds Statement 10 103 Combining Statement of Revenues, Expenditures and Changes in Fund Balance - Nonmajor Governmental Funds Statement 11 104 Subcombining Balance Sheet - Nonmajor Special Revenue Funds Statement 12 106 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balance - Nonmajor Special Revenue Funds Statement 13 108 Subcombining Balance Sheet- Nonmajor Debt Service Funds Statement 14 111 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balance - Nonmajor Debt Service Funds Statement 15 112 Subcombining Balance Sheet - Nonmajor Capital Project Funds Statement 16 114 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balance - Nonmajor Capital Project Funds Statement 17 116 Special Revenue Funds: Schedules of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual: Recycling Statement 18 118 Storm Water Statement 19 119 Forfeiture /Seizure Statement 20 120 Ice Arena Statement 21 121 Public Safety Grants Statement 22 122 Charitable Gambling Statement 23 123 Internal Service Funds: Combining Statement of Net Assets Statement 24 126 Combining Statement of Revenue, Expenses and Changes in Fund Net Assets Statement 25 127 Combining Statement of Cash Flows Statement 26 128 Component Unit: Economic Development Authority: Combining Balance Sheet - All Governmental Fund Types Statement 27 130 Combining Statement of Revenues, Expenditures and Changes in Fund Balance - All Governmental Fund Types Statement 28 131 CITY OF COTTAGE GROVE, MINNESOTA TABLE OF CONTENTS Reference Page Number Supplementary Financial Information: Construction/Acquisition Costs: Capital Projects Funds Exhibit 1 134 Combined Schedule of Bonded Indebtedness Exhibit 2 138 Debt Service Payments to Maturity Exhibit 3 140 Deferred Tax Levies Exhibit 4 142 Subcombining Balance Sheet -Pavement Management Debt Service Schedule Exhibit 5 144 Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balance- Pavement Management Debt Service Schedule Exhibit 6 145 Subcombining Balance Sheet - Construction Revolving Capital Project Schedule Exhibit 7 146 Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balance - Construction Revolving Capital Project Schedule Exhibit 8 147 Subcombining Balance Sheet - Tax Increment Construction Revolving Schedule Exhibit 9 148 Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balance- Tax Increment Construction Revolving Schedule Exhibit 10 149 Subcombining Balance Sheet - TIF Debt Service Revolving Schedule Exhibit 11 150 Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balance- TIF Debt Service Revolving Schedule Exhibit 12 151 Schedule of Sources and Uses of Public Funds: Oakwood Heights District Number 1 -1 Exhibit 13 152 Up North Plastics District Number 1 -3 Exhibit 14 153 Cottages of Cottage Grove District Number 1 -8 Exhibit 15 154 Tax Increment District Number 1 -10 Exhibit 16 155 Tax Increment District Number 1 -12 Exhibit 17 156 Tax Increment District Number 1 -13 Exhibit 18 157 Tax Increment District Number 1 -14 Exhibit 19 158 CITY OF COTTAGE GROVE, MINNESOTA TABLE OF CONTENTS Reference Page Number III. STATISTICAL SECTION Net Assets by Component Table 1 161 Changes in Net Assets Table 2 162 Fund Balances of Governmental Funds Table 3 164 Changes in Fund Balances of Governmental Funds Table 4 165 Assessed and Estimated Actual Value of Taxable Property Table 5 166 Property Tax Rates - Direct and Overlapping Governments Table 6 167 Principal Property Taxpayers Table 7 168 Property Tax Levies and Collections Table 8 169 Ratios of Outstanding Debt by Type Table 9 170 Ratios of General Bonded Debt Outstanding Table 10 171 Direct and Overlapping Governmental Activities Debt Table 11 172 Legal Debt Margin Information Table 12 173 Demographic and Economic Statistics Table 13 174 Principal Employers Table 14 175 Full -time Equivalent City Government Employees by Function Table 15 176 Operating Indicators by Function/Program Table 16 177 Capital Asset Statistics by Function/Program Table 17 178 L INTRODUCTORY SECTION City of Cotta Grove J Minnesota 7516 80th Street South / Cottage Grove, Minnesota 55016 -3195 www.cottage - grove.org May 24, 2012 Honorable Mayor City Council members City of Cottage Grove Minnesota 651 - 458 -2800 Fax 651 - 458 -2897 TDD 651- 458 -2880 Minnesota statutes require all cities to submit an annual audited financial statement to the Office of the State Auditor. Pursuant to that requirement, we hereby issue the Comprehensive Annual Financial Report of the City of Cottage Grove for the year ended December 31, 2011. Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal control standards that it has 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. CliftonLarsonAllen LLP, independent certified public accountants have issued an unqualified ( "clean ") opinion on the City of Cottage Grove's financial statements for the year ended December 31, 2011. The independent auditors' report is located at the front of the financial section of this report. Management's discussion and analysis (MD &A) immediately follows the independent auditors' report and provides a narrative introduction, overview, and analysis of the basic financial statements. This letter of transmittal is designed to complement the MD &A and should be read in conjunction with it. Profile of the City of Cottage Grove Cottage Grove was organized as a village on July 13, 1965 and was incorporated as a city on January 1, 1974. Cottage Grove is a suburban community located on the southern border of Washington County, sixteen miles southeast of Downtown St. Paul. The City currently occupies 34.3 square miles of land. The 2010 Census established the City population at 34,589. Cottage Grove operates as a Statutory Plan A City under Minnesota law. The governing body, consisting of the Mayor and four council members, is elected at large and on a non - partisan basis. Terms of office are staggered four year terms, with elections held in each even - numbered year. The Mayor and Council appoint a full -time City Administrator, who is responsible for overall supervision of City operations. The City is structured into three major functional areas - Public Safety, Public Works, and Administration. The Council also appoints members of the various citizens' advisory boards. EQUAL OPPORTUNITY EMPLOYER Letter of Transmittal May 24, 2012 The City provides a full range of municipal services. These services include police and fire protection, ambulance services, parks and park facilities, a golf course, recreational programming, an ice arena, street construction and maintenance, water, sewer and storm water utilities, economic development, planning and zoning, and general administrative functions. The Economic Development Authority (EDA) of the City of Cottage Grove is a separate legal entity organized pursuant to Minnesota Statute 469. There are seven members of the EDA who are appointed by the City Council; two appointees are Council members and the five others are appointed from the community. The EDA is included in this financial report as a discretely presented component unit, due to the EDA's relationship of financial benefit or burden to the City. The annual budget serves as the foundation for the City of Cottage Grove's financial planning and control. The budget incorporates the City's financial policies, financial operations, debt management, reserves and investments. The process by which the biennial budget document is prepared begins with the submission of department appropriation requests in June. The requests, along with projected revenues and stated City Council strategic goals, provide the starting point for budget development. Collaborative meetings are held with City Staff and workshops are held with the City Council to refine the budget document in advance of the submission of the preliminary tax levy, which must be adopted by September 15 each year. The preliminary levy may be lowered after it is adopted, but cannot be increased. An information session is held for taxpayers at the first City Council meeting in December in advance of adoption of the final levy and budget. The Council is required to adopt a final budget by no later than December 28 of each year. Factors Affecting 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 City of Cottage Grove operates. Local economy Cottage Grove is part of the Minneapolis /St. Paul seven county metropolitan area, an economically diverse environment with an equally diverse labor force. The City's major employers include School District 833, 3M Company, Up North Plastics, Renewal by Andersen, Target, Allied Systems, Cub Foods, Werner Electric, Menard's, Rainbow Foods, and Aggregate Industries. The City's commercial areas include four community shopping centers and several restaurants. Although the Twin City area did not escape the effects of the 2008 recession, the rate of unemployment did not rise to the level of the national scale. Currently the national unemployment rate is 8.2 % and the Twin Cities metro rate is 6.5 %. The Cottage Grove local rate at 6.2% is lower than both. Recovery to pre- recession employment levels is forecast by the first quarter of 2013, well ahead of the national projection. The Economic Development function within the City works on the expansion and attraction of business to Cottage Grove. In addition, Economic Development maintains an available property list and a commercial and industrial development guide. A significant Economic Development 61 Letter of Transmittal May 24, 2012 initiative of 2011 was the EDA consideration of the reuse of the current City Hall building as a Business Incubator. Construction of the Public Safety /City Hall project began in the fall of 2011 and completion is slated for fall 2012. Once the new building is occupied, the current City Hall facility will be available for reuse /redevelopment. The EDA will take possession of the building and with assistance from a management firm, will provide space for new, expanding or start up businesses at below market rental rates and with supportive services, in order that those businesses may have a better chance of success. The long term vision is for the businesses located in the incubator to grow and expand, and with that expansion, relocate to the City's business park or to other market rate space within the City. Future development The population of Cottage Grove has increased from 833 in 1950 to 30,582 according to the 2000 census and 34,589 per the 2010 census. Most of the population of the City concentrates in two age groups 0 - 19 years, 35.5% and 25 - 44 years, 34.4 %. According to the 2010 census, the average age is 34 years and the median family income is $80,830. This median family income is 124% higher than the Twin Cities Metro Area Cottage Grove has evolved from a 1970's bedroom community to a steadily growing suburb with an expanding commercial, retail and industrial base. The 1990's and early 2000's saw a residential development boom, with several years of building permits for single family homes numbering over 300 per year. Although residential development slowed over the last five years, averaging 71 new building permits per year, the five years prior (2002 to 2006) averaged 268 new building permits per year. At the end of 2011, less than 100 vacant single family lots (with infrastructure) remain for construction in the City. Only three plats for residential development were submitted for approval in 2011 — adding only 36 lots. The next area of the City to be opened for urban development is known as the East Ravine. In 2005, prior to the collapse of the housing market, a master plan of the area was completed. The plan encompassed over 9,000 acres for development into primarily low density residential housing with park and open space amenities and nodes of commercial and retail uses. According to the City's Comprehensive Plan, the first one thousand acres of this master plan should be developed by 2015. The challenge for 2012 will be to find the right combination of incentives to entice residential developers to begin the platting process for these acres. The following are other major initiatives for 2012. • Complete construction and occupation of the new Public Safety /City Hall facility in the East Ravine. • Facilitate private development and redevelopment of the Cottage View Drive -In and former Home Depot sites. • Initiate operations of Business Incubator (Accelerator) Facility. • Continue efforts in the redevelopment of the Norris Marketplace area • Continue to expand the Business Park by attracting new businesses. 11 Letter of Transmittal May 24, 2012 Financial performance In 2011, the City's General Fund revenues were under budget by $50,460 due to lower than expected building permit and fine revenues. Expenditures were under budget by $211,408 due to conservative spending. The final budget anticipated use of $494,471 in fund balance, however, only $325,223 in fund balance was used, and the majority of that was a budgeted transfer to the Equipment replacement fund. Overall City fund balances declined by $11,001,788 due to a combination of planned expenditures and funding shifts. Early in the year, the City Council called two series of Improvement bonds and paid them off with cash on hand. This payoff was responsible for $6.7 million of the fund balance decline and was done in anticipation of the issuance of debt for the construction of the Public Safety /City Hall project. The City's outstanding debt at year end is 29% below 2010 levels or $231 debt per capita The construction costs of the Public Safety City Hall project resulted in $3 million of the fund balance decline. The total project cost is budgeted at $15.7 million; the balance of the construction expense will come in 2012. At the end of 2011, the City Council determined to finance the cost of the project with cash on hand rather than issuance of debt. Future tax levies (2012 and beyond) will be dedicated to replenish the City's cash reserves. Long -term Financial planning The City places a high priority on planning for future growth. Staff uses different long range revenue and expenditure models during the annual preparation of a biennial budget plan for the General Fund, Special Revenue and Enterprise Funds. The biennial budget process allows for the assurance that any change to revenues or expenditures is sustainable in the successive year. Furthermore, Council and staff compile a five year Capital Improvement Plan (CIP) which addresses the future building and infrastructure projects necessary to address the new residential and commercial property outlined in the City's 2030 Comprehensive Plan. As part of the CIP, each capital project is analyzed to determine if sufficient funding exists for the project and the longer term impact of each of the projects on the individual capital fund balances. A combination of special assessments and general obligation debt is used for most street construction and reconstruction projects. For example, during the 2012 to 2016 period over $16 million in total Pavement Management projects are anticipated. Pavement Management is not a full road reconstruction but rather a mill and overlay process or reclamation process to extend roadway life. Project funding for Pavement Management is covered by a 45% / 55% cost split: special assessments against benefiting properties with the balance of the costs covered by general obligation debt to be repaid by annual tax levies. Annual levies for debt repayment are balanced so that no more than 10% of any property tax levy is for the repayment of debt. N Letter of Transmittal May 24, 2012 Relevant Financial Policies The City uses a variety of financial policies to guide its fiscal actions and ensure fiscal stability. In 2003, the City had adopted a Fund Balance policy which identified the required designated amounts in the Fund Balance of the General Fund at fiscal year end and directed the transfer of any excess revenues to other funds for specific purposes. This policy was responsible for the transfer of over $4.6 million in designated funds, assuring the continued financial stability of the City's operations and reducing the reliance upon debt issuance and the resulting levies to fund City projects. For the year ended December 31, 2011, the City has amended its Fund Balance policy to conform to the requirements of GASB 54. Much of the City's existing policy was already in conformance with the new statement, resulting only in reclassification of terminology according to the hierarchy of usable fund balance resources. Cash management policies and practices The City's policy is to invest all available monies at competitive interest rates in accordance with the City's investment policy. This policy identifies which investment vehicles City staff will use to maintain the safety of principal while maximizing the return on the pooled cash in the City's possession. The policy seeks to minimize credit and market risk by limiting the period of time any one investment may be held and/or by limiting the quantity and variety of investments in accordance with those allowed by state statute. Maturities of investments range from 30 days to 10 years, but no more than 25% of the total investments may have a maturity of greater than 5 years but less than 10 years. In 2011, the rate of return on the City's cash and investments was 0.8 %. However when the year-end fair market value adjustment is included, the City's return on investment was fully 1.77% of the total portfolio valuation. It should be noted that any increase of fair market value year over year does not necessarily represent a trend which will continue. The market adjustment (positive or negative) is not necessarily a `realized' gain or loss; the City policy is to hold all investments to maturity in order to capture the stated yield at the time of purchase. Property taxes "Net tax capacity" is the value used to calculate the tax rate. Simply put, the property tax levy for the year divided by the city -wide Total Net Tax Capacity equals the Tax Extension Rate. This Tax Extension Rate is the tax rate used to determine the property taxes paid by each property owner. The table below shows a reduction in net tax capacity for 2002 with a return to growth thereafter. This one year decrease resulted from significant changes in the State Property Classification System (Class Rates) that took effect in 2002. The impact of this change is shown on the following table: a Letter of Transmittal May 24, 2012 Overall property market values grew consistently from 1998 to 2008. However the 2008 recession and resulting decline in property values is reflected in the 2009 to 2011 data in the chart, due to the timing of property valuation system in the state of Minnesota. For 2011, the total market value decreased 7.81 %, or $228 million. Of this change, a decline of 8.81% was the devaluation of existing properties while an increase of 1% ($23 million) is attributed to new construction. The following table shows the changes in valuations over the past several years: 2000 & 2001 2002 -2010 Net Class Rate Class Rate Residential Homestead Percent Tax Portion of Value of $75,000 1.00% 1.00% $76,000 to 500,000 1.65% 1.00% Over $500,000 1.65% 1.25% Tax Capacity of: (20.67 %) 2003 $125,000 Home 1,575 1,250 $200,000 Home 2,813 2,000 Commercial 22,561,473 6.83% Value to $150,000 2.40% 1.50% Value above $150,000 3.40% 2.00% Tax Capacity of: 13.60% 29,344,344 $750,000 Building 24,000 14,250 $1,000,000 Building 32,500 19,250 $2,500,000 Building 83,500 49,250 Overall property market values grew consistently from 1998 to 2008. However the 2008 recession and resulting decline in property values is reflected in the 2009 to 2011 data in the chart, due to the timing of property valuation system in the state of Minnesota. For 2011, the total market value decreased 7.81 %, or $228 million. Of this change, a decline of 8.81% was the devaluation of existing properties while an increase of 1% ($23 million) is attributed to new construction. The following table shows the changes in valuations over the past several years: The delinquency rate for property taxes remains low. Current tax collections were 98.7% of the property tax levy during 2011. Total collections have consistently been above 95% since 1990. Estimated Net Year Market Percent Tax Percent Payable Value Change Capacity Change 2002 1,464,647,000 9.84% 17,911,660 (20.67 %) 2003 1,717,460,500 17.26% 21,118,262 17.90% 2004 1,941,381,700 13.04% 22,561,473 6.83% 2005 2,278,319,600 17.36% 26,315,736 16.64% 2006 2,588,151,800 13.60% 29,344,344 11.51% 2007 2,848,502,600 10.06% 32,824,288 11.86% 2008 2,986,391,700 4.84% 34,606,397 5.43% 2009 3,058,237,500 2.41% 35,932,471 3.83% 2010 2,924,191,800 (4.38 %) 34,558,053 (3.83 %) 2011 2,695,641,900 (7.81 %) 32,545,440 (5.82 %) The delinquency rate for property taxes remains low. Current tax collections were 98.7% of the property tax levy during 2011. Total collections have consistently been above 95% since 1990. Letter of Transmittal May 24, 2012 The allocation of property tax levy by purpose (urban property only) for the years payable 2004 to 2011 are: Tax Extension Rates Purpose 2004 2005 2006 2007 2008 2009 2010 2011 General Fund 38.002 34.298 33.316 32.022 31.548 30.825 31.780 34.500 Debt Service 5.655 4.872 4.609 3.791 3.641 3.807 3.635 3.755 Total Tax Rate 43.657 39.170 37.925 35.813 35.189 34.632 35.415 38.255 The decrease in the tax extension rate from 2004 through 2009 was reflective of the strong appreciation of market values of existing properties in addition to new construction. The increase in the rate subsequent to 2009 was not due to the increase in the levy amount (as it remained flat) but rather to the sharp decline in valuations. Only when valuations stabilize and return to a growth pattern will a declining tax extension rate strategy be possible again. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Cottage Grove for its Comprehensive Annual Financial Report for the y ear ended December 31, 2010. This was the nineteenth consecutive year that the Cit has achieved this presti award. In order to receive a Certificate of Achievement, a government must publish an easily readable and efficientl or Comprehensive Annual Financial Report. This report must satisf both g enerall y accepted accounting principles and applicable le requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current Comprehensive Annual Financial Report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to GFOA to determine its eligibility for another certificate. I would like to express my appreciation to all finance department personnel for their dedication and contributions to the audit and reporting process. Special recognition goes to Brenda Peper, Assistant Finance Director and Cathy Mohr, Accountant, for their development and preparation of the report, including the statistical section. Further recognition goes to the Mayor, City Council members and City Administrator for their leadership and support of responsible financial policy which guides our operation. Respectfully Submitted, 10 Cit of Cottage Grove For its Comprehensive Annual Financial Report for the Fiscal Year Ended Executive Director is im CITY OF COTTAGE GROVE, MINNESOTA PRINCIPAL CITY OFFICIALS December 31, 2011 Elected Officials Mayor: Myron Bailey Term Expires Council Members: Derrick Lehrke Justin Olsen Jen Peterson Dave Thiede Appointed Personnel City Administrator Director of Finance and Community Development City Clerk Economic Development Director Director of Public Safety Director of Public Works December 31, 2012 December 31, 2014 December 31, 2012 December 31, 2012 December 31, 2014 Ryan Schroeder Robin Roland Caron Stransky Danette Parr Craig Woolery Les Burshten 13 Ed City of Cottage Grove Organization Chart Updated 2011 14 City Council Advisory Commissions Cottage Grove Citizens IL FINANCIAL SECTION 15 i[.1 Honorable Mayor and Members of the City Council City of Cottage Grove, Minnesota Clifton LaroonAllenLLP We have audited the accompanying fioaookd statements of the governmental activities, the business-type octhvi1oa the discretely presented component unit, each major fund, and the aggregate fund iofbrnzubom of the City of Cottage Grove, Minnesota as of and for the year ended December 3I, 20II, which collectively comprise the Ckv`m basic financial statements as listed in the table of contents. Theme financial statements are the responsibility of the City's management. Our responsibility in to express opinions on these financial statements based on our audit The prior year summarized comparative information has been derived from the City's 20 10 financial statements and, in our report dated May 19, 2011 we expressed unqualified opinions on the respective financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund and the aggregate remaining fund information. We conducted our audit in accordance with U.S. onncru|v accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we o)ao and perform the audit to obtain reasonable oyaoronco about whether the financial statements are free of material misstatement. An umdk includes examining, on a test basis, evidence supporting the onzouoto and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant eatizom1os made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides areumonoblc basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Cottage Grove, Minnesota as of December 3 1 , 2011 , and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with U.S. generally accepted accounting principles. As discussed in the notes to the basic Dnunubd statcnoerda, the City adopted the provisions of Government Accounting Standards Board Statement No. 54 Fund Balance Reporting and Governmental Fund Typo Definitions, as of and for the year ended December 31, 20II. The statement nzsobs in the City reporting nonspendable, restricted, committed, assigned, and unassigned fund balances in its governmental funds. In accordance with Government Auditing Standards, we have also issued our report dated May 24, 2012, on our consideration of the City of Cottage Grove, Minnesota's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over fiu000ia| reporting and compliance and the results mf that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part ofao audit performed in accordance with Government Auditing Standards and should be considered io assessing the results of our audit. mm 18 Honorable Mayor and Members ofthe City Council City of Cottage Grove Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, budgetary comparison information, and schedule of funding progress as listed on the table of contents be presented to supplement the basic financial statements. Such hzfhcmutkou, although not opart of the basic fioaocia1statements, ia required bv the Governmental Accounting Standards Board, who considers it to be on essential part of fiomucim| reporting for placing the basic financial stotecoccda in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing utuodocda generally accepted in the United 8tm1os of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with zu000gemnent`u responses to our inquiries, the basic fioaooioJ statements, and other knowledge we obtained during our audit of the basic financial mtutennumds. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide om with sufficient evidence to express an opinion ozprovide any assurance. Our audit was conducted for the purpose of forming opinions no the finaoukd statements that collectively comprise the City's basic financial statements. The other supplementary information and combining' and individual Onuouinl statements and schedules, as listed on the table of contents, are presented for purposes of additional unab'mia and are not o required pad of the basic financial statements. The other supplementary information, combining and individual financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the mmdh of the basic financial sto1ozunota and oudojo additional procedures, including cmonpurioQ and reconciling such information directly to the underlying accounting and other records used to prepare the financial mta1ecocuto or to the financial statements thonuae}veo and other additional procedures in accordance with auditing standards generally 0000ptcd in the United States of America. In our opinion, the information is fairly stated in all material respects in relation tothe basic financial statements taken as ovvho|u. The introductory section and statistical ycudon us listed hn the table of contents, are also presented for purposes o[ additional analysis and are not a required part of the basic financial statements of the City. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance onit. Minnesota May 24, 2012 19 20 MANAGEMENT'S DISCUSSION AND ANALYSIS As management of the City of Cottage Grove, we offer readers of the City of Cottage Grove's financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2011. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages 3 through 11 of this report. Financial Highlights • The assets of the City of Cottage Grove exceeded its liabilities at the close of the most recent fiscal year by $215,830,532 (net assets). Of this amount, $47,861,690 (unrestricted net assets) may be used to meet the government's ongoing obligations to citizens and creditors in accordance with the City's fund designations and fiscal policies. • The City's total net assets increased by $2,756,608 over the previous year. • As of the close of the current fiscal year, the City of Cottage Grove's governmental funds reported combined ending fund balances of $32,459,778, a decrease of $11,001,788 compared to the previous year. Approximately 67% or $22,621,815 is available for spending according to the City's policies and constraints. • At the end of the current fiscal year, unassigned fund balance for the General fund was $7,178,108 ( 55% ) of the total subsequent year General fund expenditures. • At the end of the current fiscal year, the City of Cottage Grove had total long -term debt outstanding of $18,651,800, a decrease of $7,686,665 (29.2 %) compared to the previous year. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City of Cottage Grove's basic financial statements. The City's basic financial statements comprise three components: 1) government -wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government -wide financial statements. The government -wide financial statements are designed to provide readers with a broad overview of the City of Cottage Grove's finances, in a manner similar to a private- sector business. The statement of net assets presents information on all of the City of Cottage Grove's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City of Cottage Grove is improving or deteriorating. 21 Management's Discussion and Analysis (continued) The statement of activities presents information on how the City's net assets changed during the most recent fiscal 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. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused personal leave time). Both of the government -wide financial statements distinguish functions of the City of Cottage Grove that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City of Cottage Grove include general government, economic development, public safety, public works, and culture and recreation. The business -type activities of the City of Cottage Grove include a golf course, street lighting, water and sewer, and an ambulance service. The government -wide financial statements include not only the City of Cottage Grove itself (known as the primary government), but also a legally separate FDA component unit for which the City of Cottage Grove is financially accountable. Financial information for this component unit is reported separately from the financial information presented for the primary government itself. The government -wide financial statements start on page 35 of this report. Fund fmancial statements: 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. The City of Cottage Grove, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance - related legal requirements. All of the funds of the City of Cottage Grove can be divided into two categories: governmental funds and proprietary funds. Governmental funds: 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, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near -term financial requirements. 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 statement. By doing so, readers may better understand the long -term impact of the City's near term financial decisions. Both the governmental fund balance sheet and governmental fund statement of revenues, expenditures, and change in fund balance provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balance for the City's seven individual major governmental funds. They are as follows: PON Management's Discussion and Analysis (continued) • General Fund • Municipal Building Capital Project Fund — Capital project fund • MSA Construction Capital Project Fund Capital project fund • Closed Debt Fund Debt service fund • Pavement Management Debt Service Fund Debt service fund • Pavement Management Capital Project Fund - Capital project fund • Construction Revolving Capital Project Fund — Capital project fund Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non -major governmental funds is provided in the form of combining statements elsewhere in the report. The City of Cottage Grove adopts an annual appropriated budget for its general and special revenue funds. A budgetary comparison statement has been provided for those funds to demonstrate compliance with this budget. The basic governmental fund financial statements start on page 38 of this report. Proprietary funds: The City of Cottage Grove maintains five enterprise funds and two internal service funds as a part of its proprietary fund type. Enterprise funds are used to report the same functions presented as business -type activities in the governmental -wide financial statements. The City of Cottage Grove uses enterprise funds to account for its golf course operations, street light operations, ambulance service, water operations, and sewer operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City of Cottage Grove's various functions. The City of Cottage Grove uses internal service funds to account for its self insurance and fleet maintenance activity. Because both of these services predominantly benefit governmental rather than business -type functions, they have been included within governmental activities in the government -wide financial statements. Proprietary funds provide the same type of information as the government -wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for its golf course operations, street light operations, ambulance service, water operations, and sewer operations, all of which are considered to be major funds of the City of Cottage Grove. Conversely, both internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. The basic proprietary fund financial statements start on page 43 of this report. Notes to the fmancial statements: The notes provide additional information that is essential to a full understanding of the data provided in the government wide and fund financial statements. The notes to the financial statements start on page 53 of this report. Other information: The combining statements referred to earlier in connection with non -major governmental funds and internal service funds are presented immediately following the required PAI Management's Discussion and Analysis (continued) supplementary information. Combining and individual fund statements and schedules start on page 103 of this report. Government -wide Financial Analvsis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the City of Cottage Grove, assets exceeded liabilities by $215,830,532 at the close of the most recent fiscal year. The largest portion of the City of Cottage Grove's net assets ($163,361,077 or 76 %) reflects its investment in capital assets (e.g. land, buildings, machinery, and equipment) less any related debt used to acquire those assets that is still outstanding. The City of Cottage Grove uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City of Cottage Grove's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. City of Cottage Grove Net Assets Governmental Activities Business -Type Activities Total Primary Government 2011 2010 2011 2010 2011 2010 Current and other assets Capital assets Total assets Long -tern liabilities outstanding Other liabilities Total liabilities $43,033,787 $53,718,567 $15,114,687 $14,774,664 $58,148,474 $68,493,231 125,115,783 117,566,728 55,120,228 55,684,219 180,236,011 173,250,947 168,149,570 171,285,295 70,234,915 70,458,883 238,384,485 241,744,178 14,094,151 15,657,023 1,963,647 2,384,356 16,057,798 18,041,379 5,451,188 9,579,735 1,044,967 1,049,120 6,496,155 10,628,855 19,545,339 25,236,758 3,008,614 3,433,476 22,553,953 28,670,234 Net assets: Invested in capital assets, net of related debt 109,696,916 94,794,079 53,664,161 53,870,041 163,361,077 148,664,120 Restricted 4,282,305 8,196,697 325,460 325,685 4,607,765 8,522,382 Unrestricted 34,625,010 43,057,761 13,236,680 12,829,661 47,861,690 55,887,422 Total net assets $148,604,231 $146,048,537 $67,226,301 $67,025,387 715,830,532 $213,073,924 An additional portion of the City's net assets ($4,607,765 or 2 %) represents resources that are subject to external restrictions on how they may be used. The balance of unrestricted net assets, $47,861,690 may be used to meet the City's ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City of Cottage Grove is able to report positive balances in all three categories of net assets; for the government as a whole, as well as for its separate governmental and business -type activities. The same situation held true for the prior fiscal year. 24 Management's Discussion and Analysis (continued) Governmental Activities: Governmental activities increased the City of Cottage Grove's net assets by $2,555,694 accounting for 93% of the total growth in net assets. Key elements of this increase are as follows: City of Cottage Grove's Changes in Net Assets Revenues: Program revenues: Charges for services Operating grants and contributions Capital grants and contributions General revenues: Property taxes other taxes Grants and contributions not restricted to specific programs Unrestricted investment earnings Gain on sale of capital assets Total revenues Expenses: General government Regular operations Economic development Public safety Public works: Regular operations Construction Culture and recreation Interest on long -term debt Golf course Street lights Cottage Grove EMS Water operating Sewer operating Total expenses Governmental Activities Business -Type Activities Total Primary Government 2011 2010 2011 2010 2011 2010 $ 3,078,230 $ 3,455,202 $ 7,503,977 $ 7,509,302 $ 10,582,207 $ 10,964,504 1,084,928 1,210,249 - - 1,084,928 1,210,249 5,118,546 2,464,782 267,465 165,266 5,386,011 2,630,048 11,494,758 11,427,029 1,507,922 1,801,359 11,494,758 11,427,029 1,507,922 1,801,359 26,146 27,050 - - 26,146 27,050 624,785 502,721 162,296 119,772 787,081 622,493 12,342 23,872 - - 12,342 23,872 22,947,657 20,912,264 7,933,738 7,794,340 30,881,395 28,706,604 2,985,571 3,205,890 - - 2,985,571 3,205,890 1,110,214 59,973 - - 1,110,214 59,973 6,252,530 5,888,224 - - 6,252,530 5,888,224 3,805,839 3,364,115 - - 3,805,839 3,364,115 2,882,276 2,547,078 - - 2,882,276 2,547,078 2,948,075 2,992,620 - - 2,948,075 2,992,620 846,258 1,056,110 - - 846,258 1,056,110 - - 1,504,006 1,447,849 1,504,006 1,447,849 - - 625,312 534,206 625,312 534,206 - - 1,038,972 975,560 1,038,972 975,560 - - 1,901,985 1,891,752 1,901,985 1,891,752 - - 2,223,749 2,150,795 2,223,749 2,150,795 20,830,763 19,114,010 7,294,024 7,000,162 28,124,787 26,114,172 Increase in net assets before transfers 2,116,894 1,798,254 639,714 794,178 2,756,608 2,592,432 Transfers 438,800 428,270 (438,800) (428,270) - - Increase in net assets 2,555,694 2,226,524 200,914 365,908 2,756,608 2,592,432 Netassets - January 1 146,048,537 143,822,013 67,025,387 66,659,479 213,073,924 210,481,492 Net assets - December 31 $ 148,604,231 $ 146,048,537 $ 67,226,301 $ 67,025,387 $ 215,830,532 $ 213,073,924 Yb7 Management's Discussion and Analysis (continued) Revenues by Source - Government Activities Other taxes & tax Operating Grants & increment Contr 4. Unrestricted nings The following chart illustrates the City's expenses and corresponding program revenues for its goverrunental activities. $7,000,000. $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 ■ Revenue $1,000,000 ■ Expense $- 0 ae`o�eo xof v-0 � hoc ¢`�aa° oo 4- aoo We Q o'o o� k �e�7`' e 26 Management's Discussion and Analysis (continued) Business -Type Activities. Business -type activities increased net assets by $200,914. Below are graphs showing the business -type activities revenue and expense comparisons. Revenues - Business type Activities Unrestricted ea Capital GraiSt 1rnings 1YO contributions Charges far services Expenses and Program Revenues - Business -Type Activities $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 �� a ■Expenses ■Programrevenues Changes in net assets were positive for all segments of business -type activities except for Golf course and Street lights which had decreases of ($158,909) and ($87,667) respectively. 27 Management's Discussion and Analysis (continued) Financial Analvsis of the Government's Funds Governmental Funds. The focus of the City of Cottage Grove's governmental funds is to provide information on near -term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of Cottage Grove's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. At the end of the current fiscal year, the City of Cottage Grove's governmental funds reported combined ending fund balances of $32,459,778, a decrease of $11,001,788. Committed, assigned and unassigned fund balance which is available for spending at the government's discretion has a balance of $22,621,815 at year end. The remainder of the fund balance is non - spendable or restricted to indicate it is not available for new spending because it has already been obligated 1) to pay debt service ($1,569,776) 2) for loans outstanding ($6,100,000) 3) for assets held for resale ($267,498) 4) to pay for capital improvements ($1,822,481) and 5) for future expenditures ($78,208). The General fund is the chief operating fund of the City of Cottage Grove. At the end of the current fiscal year, unassigned fund balance of the General fund was $7,178,108 while total fund balance was $8,813,917. As a measure of the general fund's liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 55% of total subsequent year General fund expenditures, while total fund balance represents 67% of the same amount. The General fund balance decreased by $325,223 during the current fiscal year. This decrease is primarily due to transfers to the Equipment Replacement Capital project fund of $319,215. Revenues were under budget by $50,460 due to lower than expected building permit and fine revenues. Expenditures were under budget by $211,408 due to conservative spending. The Municipal Building Fund decreased $3,094,415 due to the initial construction expenditures for the Public Safety /City Hall project. The Public Safety /City Hall total project budget is $15.7 million and the project will be complete and ready for occupancy in late 2012. The MSA Construction Fund decreased by $1,068,694 due to construction of Ravine Parkway and 85 Street adjacent to the new Public Safety /City Hall building site. The Closed Debt Fund decreased by $2,223,230 due to a transfer to the Pavement Management Debt Service Fund to facilitate the call (payoff) of two series of Improvement bonds. The Pavement Management Debt Service Fund decreased by $3,226,290 because of the call (payoff) of two series of Improvement bonds. The Pavement Management Capital Project Fund decreased by $1,019,435 due to the 2011 Pavement Management project expenditures. Subsequent to the fiscal year end, municipal bonds were issued to finance the 2010 and 2011 Pavement management projects and eliminate this fund's deficit balance. rza Management's Discussion and Analysis (continued) The Construction Revolving Fund, a capital project fund, increased by $336,410 because of the receipt of special assessments received for previous construction activity in new developments. The City will continue to receive future special assessment payments in this fund to cover the negative fund balance. Proprietary funds: The City of Cottage Grove's proprietary funds provide the same type of information found in the government -wide financial statements, but in more detail. At the end of the year, unrestricted net assets of the Golf Course, Street light utility, EMS (Ambulance), Water and Sewer Utility funds totaled $13,028,587. Total net assets increased by $181,382, primarily due to rents received by the Water utility for cell phone antennas on the water towers. Decreases to the net assets of the other enterprise funds were offset by the increase to the net assets of the Water fund. Budeetary Hiehliehts General Fund. The General Fund original budget was revised to reflect the following significant changes: • The intergovernmental revenue and emergency management budgets were increased by $26,700 due to State and County disaster assistance and costs associated with the management of spring 2011 flooding. • The intergovernmental revenue and fire services capital outlay budgets were both increased by $29,520 to account for fire equipment purchased with Assistance to Firefighters Grant. • The intergovernmental revenue and parks budgets were increased by $15,000 to account for grants covering the costs for the 80 Street landscaping project and bike rack expenditures. • The charges for service and Community Development expense budgets were both increased by $20,000 to reflect a payment from Aggregate Industries for the City to coordinate an Environmental Impact Study on their behalf. • The charges for service and Community programs /Mayor & Council expense budgets were both increased by $40,800 to reflect the 3M Air Monitoring agreement. • The charges for service and building inspections budget were increased by $15,000 for property abatements and the corresponding fees recovered. • The charges for service and signs /striping budget were increased by $8,200 for services provided to other municipalities and the fees charged. • The charges for service and forestry budget were decreased by $18,000 due to the reduction in tree sales to homeowners. • The park maintenance budget for commodities and capital outlay was increased by a total of $224,120 for the use of previously assigned fund balance for the construction of Park shelters and improvements at Pine Coulee Park and Highlands Park r *1 Management's Discussion and Analysis (continued) The actual results were significantly different than the final budget amounts because of the following: • Licenses and Permits categories were $67,828 less than budgeted due to the continued lack of residential housing activity within the City in 2011. • Fines revenues were $32,324 less than budgeted due to reduced revenues passed through to the City from the state and county. • Investment income was $17,206 more than budgeted due to the collection of more interest than had been budgeted at historically low interest rates. • Total expenditures were approximately $211,408 less than the final budgeted amounts in all divisions. All departments realized additional budget savings due to conservative operational spending. Asset and Debt Administration Capital assets: The City of Cottage Grove's investment in capital assets for its governmental and business -type activities as of December 31, 2011, amounts to $180,236,011 (net of accumulated depreciation). This investment in capital assets includes land, buildings, infrastructure, machinery and equipment. City of Cottage Grove's Capital Assets (Net of Depreciation) Governmental Activities Business -type Activities Land and land improvements Easements Construction in progress Buildings and improvements Equipment and furniture Machinery and equipment Other improvements Infrastructure: Streets Storm sewers Sidewalks /trails Water and sewer lines Ending balance 2011 16,478,173 493,239 8,886,732 9,164,082 395,062 3,564,719 1,404,463 61,543,032 19,501,519 3,684,762 2010 2011 2010 16,399,447 $ 1,745,327 $ 1,746,123 1,358,079 480,599 202,856 9,533,153 2,174,216 2,146,131 461,892 - - 3,833,905 815,224 857,126 1,361,816 4,481,431 4,601,949 61,016,169 19,864,862 3,737,405 $ 125,115,783 $ 117,566,728 Totals Prim 2011 $ 18,223,500 493,239 9,367,331 11,338,298 395,062 4,379,943 5,885,894 Government 2010 $ 18,145,570 1,560,935 11,679,284 461,892 4,691,031 5,963,765 61,543,032 61,016,169 19,501,519 19,864,862 - - 3,684,762 3,737,405 45,423,431 46,130,034 45,423,431 46,130,034 $ 55,120,228 $ 55,684,219 $ 180,236,011 $ 173,250,947 The construction of the new Public Safety /City Hall project results in the increase in Construction in progress line item. This project will be completed in 2012 and will be fully capitalized at that time. Additional information on the City of Cottage Grove's capital assets can be found in Note 5. 19111 Management's Discussion and Analysis (continued) Long -term debt: At the end of the current fiscal year, the City of Cottage Grove had total long term debt outstanding of $18,651,800, a decrease of $7,686,665 (29.2 %). $2,594,002 of the debt outstanding is due within one year. $4,190,000 of bonds payable is for pavement management debt being repaid by a combination of special assessments and property tax levies. City of Cottage Grove's Outstanding Debt 2011 2010 Governmental activitites: Bonds payable, net $ 9,553,867 $ 16,662,649 Capital lease payable 5,865,000 6,110,000 Other postemployment benefits 39,636 35,764 Compensated absences 725,863 706,097 Total governmental activities 16,184,366 23,514,510 Business -type activities: Bonds payable, net 1,456,067 1,814,178 Loan payable to component unit 900,000 900,000 Other postemployment benefits 9,441 8,544 Compensated absences 101,926 101,233 Total business-type activities 2,467,434 2,823,955 Total primary government $ 18,651,800 $ 26,338,465 The City of Cottage Grove holds a general obligation debt rating of Aal from Moody's (2010 Global Ratings Scale) and of AA+ /Stable from Standard and Poor's. According to S &P, Cottage Grove has "a strong financial profile, anchored by a very strong general fund balance; and good management practices that have contributed to the city's ongoing financial health." State statutes limit the amount of general obligation debt a Minnesota city may issue to 3% of total Estimated Market Value. The current debt limitation for the City of Cottage Grove is $80,869,257. Of that limit, $5,865,000 of the City's outstanding debt is counted within the statutory limitation because all other debt is either wholly or partially repaid by revenues other than general property tax levies. Additional information on the City of Cottage Grove's long -term debt can be found in Note 6. Requests for information: This financial report is designed to provide a general overview of the City of Cottage Grove's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to Finance Director, 7516 South 80 Street, Cottage Grove, Minnesota 55016. 31 Kea BASIC FINANCIAL STATEMENTS 33 34 CITY OF COTTAGE GROVE, MINNESOTA STATEMENT OF NET ASSETS December 31, 2011 With Comparative Data as of December 31, 2010 Statement 1 Component Unit Primary Government Total Economic Totals Governmental Business -Type Primary Development Reporting Entity Assets: Activities Activities Government Authority 2011 2010 Cash and investments $ 42,217,578 $ 8,103,676 $ 50,321,254 $ 943,215 $ 51,264,469 $ 60,039,392 Accrued interest receivable 179,380 - 179,380 167,023 346,403 334,940 Due from other governmental units - net 1,175,262 6,165 1,181,427 - 1,181,427 1,262,107 Loan receivable from primary government - - - 900,000 900,000 900,000 Accounts receivable - net 388,515 1,124,908 1,513,423 1,100 1,514,523 1,785,757 Prepaid items 130,910 129,961 260,871 1,580 262,451 282,106 Delinquent property taxes receivable 312,295 - 312,295 2,662 314,957 360,247 Due from county 75,449 - 75,449 - 75,449 67,219 Special assessments receivable 3,757,113 - 3,757,113 - 3,757,113 4,775,341 Inventories - at cost 81,275 79,284 160,559 - 160,559 142,428 Internal balances (5,658,093) 5,658,093 - - - - Deferred charges 106,605 12,600 119,205 55,317 174,522 207,187 Lease receivable - - - 5,865,000 5,865,000 6,110,000 Properties held for resale 267,498 - 267,498 311,718 579,216 688,796 Capital assets not being depreciated: Land and land improvements 16,478,173 1,712,290 18,190,463 - 18,190,463 18,111,737 Easements 493,239 - 493,239 - 493,239 - Construction in progress 8,886,732 480,599 9,367,331 - 9,367,331 1,560,935 Capital assets (net ofaccumulated depreciation): Land improvements - 33,037 33,037 - 33,037 33,833 Buildings and improvements 9,164,082 2,174,216 11,338,298 - 11,338,298 11,679,284 Equipment and furniture 395,062 - 395,062 - 395,062 461,892 Machinery and equipment 3,564,719 815,224 4,379,943 - 4,379,943 4,691,031 Other improvements 1,404,463 4,481,431 5,885,894 - 5,885,894 5,963,765 Infrastructure 84,729,313 45,423,431 130,152,744 130,152,744 130,748,470 Total assets 168,149,570 70,234,915 238,384,485 8,247,615 246 632,100 250,206,467 Liabilities: Accounts payable 511,808 87,673 599,481 757 600,238 780,481 Claims payable 317,168 - 317,168 - 317,168 - Salaries payable 306,415 46,132 352,547 6,008 358,555 357,258 Contracts payable 1,702,578 22,270 1,724,848 - 1,724,848 203,715 Due to other governmental units 13,769 33,043 46,812 63 46,875 80,469 Deposits payable 226,629 191,769 418,398 - 418,398 383,971 Accrued interest payable 217,496 160,293 377,789 65,023 442,812 533,205 Unearned revenue 65,110 - 65,110 - 65,110 62,514 Compensated absences payable: Due within one year 505,215 83,787 589,002 201 589,203 575,259 Due in more th an one year 220,648 18,139 238,787 5,212 243,999 232,071 Other postemployment benefits: Due in more th an one year 39,636 9,441 49,077 73 49,150 44,308 Loan payable to component unit: Due in more th an one year - 900,000 900,000 - 900,000 900,000 Capital lease payable: Due within one year 250,000 - 250,000 - 250,000 245,000 Due in more th an one year 5,615,000 - 5,615,000 - 5,615,000 5,865,000 Bonds payable (net ofunamortized premiums and discounts): Due within one year 1,335,000 420,000 1,755,000 250,000 2,005,000 7,654,200 Due in more th an one year 8,218,867 1,036,067 9,254,934 5,533,880 14,788,814 16,846,827 Total liabilities 19,545,339 3,008,614 22 553 953 5,861,217 28 415 170 34,764,278 Net assets: Invested in capital assets, net ofrelated debt 109,696,916 53,664,161 163,361,077 - 163,361,077 148,664,120 Restricted for Forfeiture and seizure 50,968 - 50,968 - 50,968 44,354 Charitable gambling 1,920 - 1,920 - 1,920 3,052 Debt retirement 2,756,935 310,460 3,067,395 489,403 3,556,798 7,863,999 Tax increment purposes 834,984 - 834,984 - 834,984 1,191,170 Park trust activities 637,498 - 637,498 - 637,498 749,828 Capital improvements - 15,000 15,000 - 15,000 15,000 Unrestricted 34,625,010 13,236,680 47,861,690 1,896,995 49,758,685 56,910,666 Total net assets $ 148,604,231 $ 67,226,301 $ 215,830,532 $ 2,386,398 $ 218,216,930 $ 215,442,189 The accompanying notes are an integral part ofthese basic financial statements. 35 a-I ) ) §� s :) \[ \\ \\�} /�\ \) \ \) ti {�!() )\ �)) _!]) /) \ \\ \ \ \]{ \ \\ \ \ \]\ )ib\) }{{ {{ : {o \ '); ) j())!! " j)` CITY OF COTTAGE GROVE, MINNESOTA BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2011 With Comparative Data as of December 31, 2010 Assets Cash and investments Accrued interest receivable Interfund receivable Interfund loan receivable Due from other govemmental units - net Accounts receivable - net Prepaid items Delinquent property taxes receivable Due from county Special assessments receivable: Deferred Delinquent Special deferred Property held for resale Total assets Liabilities and Fund Balances Liabilities: Accounts payable Salaries payable Interfund payable Contracts payable Due to other governmental units Deposits payable Interfund loan payable Deferred revenue Total liabilities Fund balances (deficit): Nonspendable: Prepaid items Assets for resale Long -term interfund loan receivable Restricted for Forfeiture and seizure Charitable gambling Debt retirement Tax increment purposes Park trust activates Commatted Assigned Unassigned: General Fund Capital Project Funds Total fund balances (deficit) Total liabilities and fund balances General Fund $ 9,002,231 145,380 79,225 21,262 24,382 249,228 75,449 34,064 3,829 Muncipal Building Capital Project Fund $ 12,653,641 8,437 400 1,542 MSA Construction Capital Project Fund $ 651,339 Closed Debt Fund 12,928 $ 139,937 $ 24,624 282,095 - - 1,411,864 9,950 - 66,430 - - 9,900,000 1,029,370 $ 953,447 2,200,000 13,786 678,249 663,883 3,596 27,260 106,741 8,078 267,498 - $ 2,736,793 $ 3,866,454 $ 75,317 $ - 210,486 322,721 43,281 1,816,149 713,007 821,133 11,379,769 2,101,952 713,007 24,382 - - - 267,498 - - - - 2,200,000 1,611,427 1,297,179 367,343 953,447 7,178,108 - - - 8,813,917 1,297,179 634,841 3,153,447 $ 9,635,050 $ 12,676,948 $ 2,736,793 $ 3,866,454 The accompanying notes are an integral part ofthese basic financial statements. 38 Statement Pavement Management Debt Service Fund $ 194,399 898,744 13,376 Pavement Management Capital Project Fund Construction Revolving Capital Project Fund $ 191,664 Other Govemmental Funds $ 15,856,135 34,000 234,520 3,900,000 58,230 364,783 938 34,363 Totals Governmental Funds 2011 2010 $ 39,502,856 $ 42,871,442 179,380 183,467 1,133,264 - 6,100,000 2,875,000 1,175,262 1,261,811 386,445 523,470 25,320 35,178 312,295 357,179 75,449 67,219 1,046,310 588,207 74,580 476,703 3,561,996 4,571,076 10,699 533 - 2,446 48,363 67,889 2,646 16,361 - - 146,754 136,376 267,498 267,498 $ 2,166,174 $ 605,101 $ 266,244 $ 20,962,118 $ 52,914,882 $ 53,217,605 $ - $ 25,068 $ 1,318 $ 104,095 $ 370,359 $ 549,201 - - - 14,334 296,429 306,619 - 898,744 - 234,520 1,133,264 - - 47,864 8,449 23,915 1,702,578 108,564 - - - 3,813 13,763 47,981 - - - 160,199 226,629 181,499 - 950,000 200,000 500,000 11,550,000 2,175,000 1,073,031 605,101 74,580 514,212 5,162,082 6,387,175 1,073,031 2,526,777 284,347 1,555,088 20,455,104 9,756,039 - - - 938 25,320 35,178 - - - - 267,498 267,498 - - - 3,900,000 6,100,000 2,875,000 - - - 50,968 50,968 44,354 - - - 1,920 1,920 3,052 1,093,143 - - 476,633 1,569,776 4,650,393 - - - 1,184,983 1,184,983 1,191,170 - - - 637,498 637,498 749,828 - - - 833,500 833,500 931,129 - - - 12,555,110 16,784,506 26,466,189 - - - - 7,178,108 7,504,529 (1,921,676) (18,103) (234,520) (2,174,299) (1,256,754) 1,093,143 (1,921,676) (18,103) 19,407,030 32,459,778 43,461,566 $ 2,166,174 $ 605,101 $ 266,244 $ 20,962,118 $ 52,914,882 $ 53,217,605 Fund balance reported above $ 32,459,778 $ 43,461,566 Amounts reported for govemmental activities in the statement of net assets are different because: Capital assets used in govemmental activities are not financial resources, and therefore, are not reported in the funds 124,119,665 116,546,893 Other long -tens assets are not available to pay for current -period expenditures, and therefore, are deferred in the funds 5,096,972 6,324,661 Long -term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds. (16,575,083) (23,679,737) Internal service funds are used by manag ement to charge the cost of insurance to individual funds. The assets and liabilities are included in the governmental statement of net assets 3,502,899 3,395,154 Net assets of govemmental activities $ 148,604,231 $ 146,048,537 The accompanying notes are an integral part ofthese basic financial statements. 39 CITY OF COTTAGE GROVE, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS For The Year Ended December 31, 2011 With Comparative Data for the Year Ended December 31, 2010 The accompanying notes are an integral part ofthese basic financial statements. 40 Municipal MSA Building Construction General Capital Project Capital Project Closed Revenues: Fund Fund Fund Debt Fund General property taxes $ 10,332,994 $ 1,800 $ - $ 342,698 Franchise taxes - - - - Aggregate taxes - - - - Tax increment collections - - - - Special assessments 14,984 - 129,881 39,898 Licenses and permits 593,272 - - - Direct charges to developers - - - - Intergovernmental 668,209 51,016 2,893,665 - Charges for services 879,211 - - - Fines and forfeits 193,676 - - - Investment eamings 84,706 57,597 18,894 56,687 Interest on interfund loan - - - 39,000 Connection charges - - - - Park dedication fees - - - - Donations 15,265 - - - Miscellaneous 56,274 153,211 - - Total revenues 12,838,591 263,624 3,042,440 478,283 Expenditures: Current: General government 2,752,469 173,932 - 1,625 Economic development - - - - Public safety 5,805,924 - - Public works 2,156,168 - 71,199 - Cultureandrecreation 1,666,794 - - - Capital outlay: General government 13,922 3,184,107 - - Public safety 134,880 - - - Public works 58,500 - 4,039,935 - Cultureandrecreation 264,242 - - - Debt service: Principal retirement - - - - Capital lease payment - - - - Interest and fiscal charges - - - - Total expenditures 12,852,899 3,358,039 4,111,134 1,625 Revenues over (under) expenditures (14,308) (3,094,415) (1,068,694) 476,658 Other financing sources (uses): Transfers in 8,300 - - - Transfers out (319,215) - - (2,699,888) Proceeds from the sale of capital assets - - - - Total other financing sources (uses) (310,915) - - (2,699,888) Net increase (decrease) in fund balance (325,223) (3,094,415) (1,068,694) (2,223,230) Fund balance - January 1 9,139,140 4,391,594 1,703,535 5,376,677 Fund balance - December 31 $ 8,813,917 $ 1,297,179 $ 634,841 $ 3,153,447 The accompanying notes are an integral part ofthese basic financial statements. 40 Statement 4 Pavement Pavement Construction Management Management Revolving Other Debt Service Capital Project Capital Project Governmental Fund Fund Fund Funds $ 621,212 $ - 418,491 304,067 7,084 1,046,787 304,067 6,520 51,373 1,215,129 6,695,000 - 271,445 57,000 6,972,965 1,323,502 (5,926178) (1,019,435) 2,699,888 - 2,699,888 (3,226,290) (1,019,435) 4,319,433 (902241) $ 1,093,143 $ (1,921676) Totals Govemmental Funds 2011 2010 $ 11,539,640 $ 11,456,224 535,188 517,391 26,131 30,554 946,603 1,253,414 1,875,486 2,899,954 593,272 753,468 101,913 50,047 3,879,411 1,166,785 2,494,018 2,668,428 246,753 201,559 448,782 350,673 144,500 130,000 322,009 439,238 62,198 145,640 383,826 402,138 The accompanying notes are an integral part ofthese basic financial statements. 41 - 1,907 211,392 207,671 384,119 5,453,211 23,811,122 22,673,184 - 7,560 2,942,106 3,203,842 - 793,046 793,046 299,614 - 21,648 5,827,572 5,493,307 3,721 1,492,098 3,774,559 3,337,054 - 659,939 2,326,733 2,330,909 - 23,223 3,221,252 101,117 - 34,729 169,609 130,081 4,988 1,620,549 6,939,101 2,667,956 - 283,724 547,966 484,189 - 440,000 7,135,000 1,625,000 - 245,000 245,000 239,189 39,000 539,465 906,910 1,101,145 47,709 6,160,981 34,828,854 21,013,403 336,410 (707,770) (11,017,732) 1,659,781 - 344,215 3,052,403 1,233,938 - (29,700) (3,048,803) (1,246,180) - 12,344 12,344 71,506 - 326,859 15,944 59,264 336,410 (380,911) (11,001,788) 1,719,045 (354513) 19 787,941 43,461,566 41,742,521 $ (18,103) $ 19407 030 $ 32459 778 $ 43,461,566 379,231 4,888 $ 240,936 535,188 26,131 946,603 588,934 101,913 266,521 1,614,807 53,077 218,926 105,500 322,009 62,198 368,561 CITY OF COTTAGE GROVE, MINNESOTA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For The Year Ended December 31, 2011 With Comparative Data for the Year Ended December 31, 2010 Amounts reported for governmental activities in the statement of activities (page 37) are different because: Net changes in fund balances - total governmental funds (page 41) Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful fives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. The effect of various miscellaneous transactions involving capital assets is to decrease net assets (i.e. sales and trade -ins). Donations of capital assets increase net assets in the statement of activities, but do not appear in the governmental funds because they are not financial resources. Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. The issuance of long -term debt (e.g., bonds, leases) provides current financial resources to governmental funds while the repayment of the principal of long -term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. This amount is the net effect of these differences in the treatment of long -term debt and related items. Internal service funds are used by management to charge the cost of insurance to individual funds. This amount is net revenue attributable to governmental activities. Transfer out of governmental capital assets contributed to Enterprise Funds. Transfer in of governmental capital assets contributed by Enterprise Funds. Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Change in net assets of governmental activities (page 37) Statement 5 2011 2010 $ (11,001,788) $ 1,719,045 6,708,184 (78,678) 84,064 (3755) 780,524 298,830 (1,227,689) (1,646,944) 7,327,646 1,850,016 107,745 64,958 (20,366) 25,678 (222,992) 17,740 $ 2,555,694 $ 2,226,524 The accompanying notes are an integral part ofthese basic financial statements. 42 CITY OF COTTAGE GROVE, MINNESOTA STATEMENT OF NET ASSETS PROPRIETARY FUNDS December 31, 2011 Statement6 Liabilities: Current liabilities Accounts payable 4,237 Business -Type Activities - Enterprise Funds 5,329 Governmental 6,869 87,673 141,449 Salaries payable 13,216 2,244 Total Activities - 2,133 Golf Course Street Light Cottage Grove Water Sewer Enterprise Internal - Fund Fund EMS Fund Operating Operating Funds Service Funds Assets: 33,043 6 Deposits payable 14,302 - - 177,467 Current assets: 191,769 - Accmedinterestpayable 140,551 - - 19,742 Cash and investments $ 7,725 $ 2,849,281 $ 452,852 $ 2,660,820 $ 2,132,998 $ 8,103,676 $ 2,714,722 Interlard loan receivable - - - 3,200,000 3,200,000 6,400,000 - Duefromothergovernmentalunits -net - - 3,952 2,213 - 6,165 539,870 Accounts receivable 1,044,967 161 304 Noncurrent liabilities: Customers - 84,994 215,022 253,781 339,280 893,077 - CertifiedtoCounty - - - 100,938 103,332 204,270 - Other 2,740 2,117 4,465 18,239 - 27,561 2,070 Prepaid items 5,134 - 5,340 1,705 117,782 129,961 105,590 Inventories - at cost 22,062 57,222 Bonds payable (net ofunamortized 79,284 81,275 Total current assets 37,661 2,993,614 681 631 6,237,696 5,893,392 15 843 994 2,903,657 Noncurrent assets: 1,036,067 Total noncurrent liabilities 1,858,049 293 7,285 1,043,430 Deferred charges - - - 12 600 - 12,600 - Capital assets: 3,958,614 188 783 Net assets: Land and land n quovements 1,387,290 - - 364,803 - 1,752,093 424,665 Buildings and improvements - - - 4,101,713 - 4,101,713 928,870 Machinery and equipment 864,751 55,725 684,807 1,015,666 323,673 2,944,622 158,929 Other improvements 2,760,825 5,278,672 - - - 8,039,497 - Waterandsewerlines - - - 34,241,911 24,276,400 58,518,311 - Construction in progress 13,028,587 2,714,874 Total net assets 480,599 $ 6,377,946 480,599 $ 33,936,049 Total capital assets 5,012,866 5,334,397 684,807 40,204,692 24,600,073 75,836,835 1,512,464 Less: Accumulated depreciation (2,427,260) (1,906,415) (315,590) (10,935,639) (5,131,703) (20,716,607) (516,346) Net capital assets 2,585,606 3,427,982 369 217 29,269,053 19,468,370 55,120,228 996,118 Total noncurrent assets 2,585,606 3,427,982 369,217 29,281,653 19,468,370 55,132,828 996,118 Total assets 2,623,267 6,421,596 1,050,848 35,519,349 25,361,762 70,976,822 3,899,775 Liabilities: Current liabilities Accounts payable 4,237 33,845 5,329 37,393 6,869 87,673 141,449 Salaries payable 13,216 2,244 13,748 14,791 2,133 46,132 9,986 Contracts payable - - - 22,270 - 22,270 - Duetoothergovemmentalunits 830 769 3,951 20,616 6,877 33,043 6 Deposits payable 14,302 - - 177,467 - 191,769 - Accmedinterestpayable 140,551 - - 19,742 - 160,293 - Compensated absences payable 26,938 6,499 18,674 22,591 9,085 83,787 9,863 Bonds payable - current portion 195,000 225,000 420,000 Total current liabilities 395,074 43,357 41,702 539,870 24,964 1,044,967 161 304 Noncurrent liabilities: Compensated absences payable 4,683 - 4,102 5,420 3,934 18,139 26,251 Other postemployment benefits 3,366 293 3,183 1,943 656 9,441 1,228 Interlard loan payable 950,000 - - - - 950,000 - Loanpayabletocomponentunit 900,000 - - - - 900,000 - Bonds payable (net ofunamortized premiums and discounts) 1,036,067 1,036,067 Total noncurrent liabilities 1,858,049 293 7,285 1,043,430 4 590 2,913,647 27 479 Total liabilities 2,253,123 43 650 48,987 1,583,300 29 554 3,958,614 188 783 Net assets: Invested in capital assets, net ofrelated debt 2,390,606 3,427,982 369,217 28,007,986 19,468,370 53,664,161 996,118 Restricted: Debt service 310,460 - - - - 310,460 - Capital improvements 15,000 - - - - 15,000 - Unrestricted (2,345,922) 2,949,964 632 644 5,928,063 5 863 838 13,028,587 2,714,874 Total net assets $ 370,144 $ 6,377,946 $ 1,001,861 $ 33,936,049 $ 25,332,208 67,018,208 $ 3,710,992 Some amounts reported for business -type activities in the statement ofnet assets are different because certain internal service fund assets and liabilities are included with business -type activities. 208,093 $ 67,226,301 The accompanying notes are an integral part ofthese basic financial statements. 43 CITY OF COTTAGE GROVE, MINNESOTA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS For The Year Ended December 31, 2011 Business -Type Activities - Enterprise Funds Golf Course Street Light Cottage Grove Fund Fund EMS Fund Operating revenues: Charges for services - user fees Water meter/ street light material sales Insurance refunds and reimbursements Total operating revenues Operating expenses: Operating and maintenance: Personal services Commodities Commodities - items for resale Contractual services Disposal: Contractual services - MCES Administrative and general: Personal services Commodities Contractual services Other charges- administrative charge Depreciation Total operating expenses Operating income (loss) $ 1,393,108 $ 486,670 $ 1,109,632 1,393,108 486,670 1,109,632 522,222 136,150 213,622 143,451 171,751 4,179 105,313 49,200 165,302 1,511,190 65,798 31,047 19,792 387,487 42,500 122,776 669,400 759,068 78,299 123,373 52,500 57,312 1,070,552 (118,082) (182,730) 39,080 The accompanying notes are an integral part ofthese basic financial statements. 44 Statement 7 Page 1 of 2 408,385 90,359 1,845,832 Governmental 130,455 17,431 Total Activities - Water Sewer Enterprise Internal Operating Operating Funds Service Funds - 1,498,653 1,498,653 $ 1,827,167 $ 2,206,105 $ 7,022,682 $ 2,361,221 17,248 - 17,248 - - - - 68,706 1,844,415 2,206,105 7,039,930 2,429,927 408,385 90,359 1,845,832 295,990 130,455 17,431 393,382 566,676 - - 233,414 - 434,593 82,401 1,171,305 74,096 - 1,498,653 1,498,653 - 37,173 28,114 237,038 942,411 101 63 4,343 - 93,631 88,302 287,246 398,015 152,000 170,000 466,200 - 753,823 420,362 1,519,575 32,018 2,010,161 2,395,685 7,656,988 2,309,206 (165,746) (189,580) (617,058) 120,721 The accompanying notes are an integral part ofthese basic financial statements. 45 CITY OF COTTAGE GROVE, MINNESOTA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS (CONTINUED) PROPRIETARY FUNDS For The Year Ended December 31, 2011 Business -Type Activities - Enterprise Funds Golf Course Street Light Cottage Grove Fund Fund EMS Fund Nonoperating revenues (expenses): State grant Investment earnings Loss on capital asset Rent Miscellaneous Debt service: Interest Bond issuance costs Total nonoperating revenues (expenses) Income (loss) before contributions and transfers 34,439 5,905 - (25,855) 6,096 45,937 4,594 (45,163) - - (1,760) (40,827) 80,376 (15,356) (158,909) (102,354) 23,724 Capital contributions Transfer from Enterprise Fund Transfer from Internal Service Fund Transfer to General Fund Transfer to Enterprise Funds Total transfers Change in net assets Net assets - January 1 Net assets - December 31 23,687 (3,600) (9,000) (9,000) (3,600) (158,909) (87,667) 20,124 529,053 6,465,613 981,737 $ 370,144 $ 6,377,946 $ 1,001,861 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Change in net assets of business -type activities (page 37) The accompanying notes are an integral part ofthese basic financial statements. 46 Statement 7 Page 2 of 2 19,532 $ 200,914 The accompanying notes are an integral part ofthese basic financial statements. 47 Governmental Total Activities - Water Sewer Enterprise Internal Operating Operating Funds Service Funds $ 2,212 $ - $ 2,212 $ 62,636 59,316 162,296 31,503 - - (25,855) - 360,747 - 360,747 - 42,552 1,909 101,088 6,053 (48,414) - (93,577) - (1,576) (3,336) - 418,157 61,225 503,575 37,556 252,411 (128,355) (113,483) 158,277 125,162 118,616 267,465 - 38,200 - 38,200 - 31,000 31,000 - - (3,600) - - (29,200) (38,200) (31,000) 69,200 (29,200) 27,400 (31,000) 446,773 (38,939) 181,382 127,277 33,489,276 25,371,147 3,583,715 $ 33,936,049 $ 25,332,208 $ 3,710,992 19,532 $ 200,914 The accompanying notes are an integral part ofthese basic financial statements. 47 CITY OF COTTAGE GROVE, MINNESOTA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For The Year Ended December 31, 2011 Business -Type Activities - Enterprise Funds Cash flows from operating activities: Receipts from customers and users Receipts from interfund services provided Receipts from insurance refunds and reimbursements Payment to suppliers Payment to employees Miscellaneous revenue Net cash flows from operating activities Golf Course Street Light Cottage Grove Fund Fund EMS Fund $ 1,393,625 $ 485,619 $ 1,202,089 (680,281) (472,750) (266,122) (691,291) (64,422) (756,829) 6,096 45,937 4,594 28,149 (5,616) 183,732 Cash flows from noncapital financing activities: Proceeds ofinterfund loan Transfers in Transfers out Net cash flows from noncapital financing activities Cash flows from capital and related financing activities: Acquisition of capital assets Rent Interest paid on debt Principal paid on debt Net cash flows from capital and related financing activities Cash flows from investing activities: Investment earnings Interfund loan to other fund Net cash flows from investing activities 250,000 (9,000) (3,600) 250,000 (9,000) (3,600) (116,910) (16,145) (190,000) (323,055) (98,852) (98,852) 34,439 5,905 34,439 5,905 Net increase (decrease) in cash and cash equivalents (44,906) Cash and cash equivalents - January 1 Cash and cash equivalents - December 31 19,823 87,185 52,631 2,829,458 365,667 $ 7,725 $ 2,849,281 $ 452,852 The accompanying notes are an integral part ofthese basic financial statements. 48 Statement 8 Page 1 of 2 - 250,000 69,200 69,200 - (29,200) (41,800) (31,000) 69,200 (29,200) 277,400 (31,000) (502,398) 360,747 (50,480) (170,000) (718,160) 360,747 (66625) (360,000) (8,301) (362,131) (784,038) (8,301) 62,636 59,316 162,296 (3,200,000) (3,200,000) (6,400,000) (3,137,364) (3,140,684) (6,237,704) 31,503 31 (2,817,317) (2,937,516) (5,692,731) 159,700 5,478,137 5,070,514 13,796,407 2,555,022 $ 2,660,820 $ 2,132,998 $ 8,103,676 $ 2,714,722 The accompanying notes are an integral part ofthese basic financial statements. 49 Governmental Total Activities - Water Sewer Enterprise Internal Operating Operating Funds Service Funds $ 1,837,685 $ 2,240,963 $ 7,159,981 $ - - - 2,361,221 68,706 (820,694) (1,892,208) (4,132,055) (1,043,936) (446,565) (118,296) (2,077,403) (1,224,546) 42,552 1,909 101,088 6,053 612,978 232,368 1,051,611 167,498 - 250,000 69,200 69,200 - (29,200) (41,800) (31,000) 69,200 (29,200) 277,400 (31,000) (502,398) 360,747 (50,480) (170,000) (718,160) 360,747 (66625) (360,000) (8,301) (362,131) (784,038) (8,301) 62,636 59,316 162,296 (3,200,000) (3,200,000) (6,400,000) (3,137,364) (3,140,684) (6,237,704) 31,503 31 (2,817,317) (2,937,516) (5,692,731) 159,700 5,478,137 5,070,514 13,796,407 2,555,022 $ 2,660,820 $ 2,132,998 $ 8,103,676 $ 2,714,722 The accompanying notes are an integral part ofthese basic financial statements. 49 CITY OF COTTAGE GROVE, MINNESOTA STATEMENT OF CASH FLOWS (CONTINUED) PROPRIETARY FUNDS For The Year Ended December 31, 2011 Reconciliation of operating income /(loss) to net cash provided by operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Depreciation Miscellaneous revenue Changes in assets and liabilities: Decrease (increase) in receivables Decrease (increase) in prepaid items Decrease (increase) in inventory Decrease in payables Total adjustments Net cash flows from operating activities Noncash investing, capital and financing activities: Capital asset contributions from developers Business -Type Activities - Enterprise Funds Golf Course Street Light Cottage Grove Fund Fund EMS Fund $ (118,082) $ (182,730) $ 39,080 165,302 6,096 (2,585) 5,978 (1,918) (26642) 146,231 $ 28,149 122,776 57,312 45,937 4,594 (1,051) 92,457 360 (5,340) 9,092 (4 371) 177,114 144,652 $ (5,616) $ 183,732 $ 23,687 $ - The accompanying notes are an integral part ofthese basic financial statements. 50 Statement 8 Page 2 of 2 $ (165,746) $ (189,580) $ (617,058) $ 120,721 753,823 Governmental Total Activities - Water Sewer Enterprise Internal Operating Operating Funds Service Funds $ (165,746) $ (189,580) $ (617,058) $ 120,721 753,823 420,362 1,519,575 32,018 42,552 1,909 101,088 6,053 7,075 34,858 130,754 5,084 1,439 8,546 10,983 (1,046) - - (1,918) (16,213) (26,165) (43,727) (91,813) 20,881 778,724 421,948 1,668,669 46,777 $ 612,978 $ 232,368 $ 1,051,611 $ 167,498 $ 125,162 $ 118,616 $ 267,465 $ - The accompanying notes are an integral part ofthese basic financial statements. 51 Ida CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- The City of Cottage Grove was incorporated in 1974 and operates under the State of Minnesota Statutory Plan A form of government. The governing body consists of a five member City Council elected by voters of the City. The financial statements of the City of Cottage Grove have been prepared in conformity with U.S. generally accepted accounting principles as applied to governmental units by the Governmental Accounting Standards Board (GASB). The following is a summary of the significant accounting policies. A. FINANCIAL REPORTING ENTITY As required by generally accepted accounting principles, the financial statements of the reporting entity include those of the City of Cottage Grove (the primary government) and its component unit. The component unit discussed below is included in the City's reporting entity because of the significance of its operational and financial relationship with the City. COMPONENT UNIT The Economic Development Authority (EDA) is considered a component unit of the City because the Council appoints the members of the governing authority and because the EDA is in a relationship of financial benefits or burden to the City. It is governed by a board which is made up of two City council members and five other members. The EDA provides services to the City and to potential future business owners within the City. The financial position and results of operations of the EDA component unit is discretely presented in the primary government's basic financial statements. The EDA is reported in a separate column to emphasize that it is legally separate from the City. The component unit activity is reported on the modified accrual basis of accounting. Separate financial statements are not prepared for the EDA. B. GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS The government -wide financial statements (i.e., the statement of net assets and the statement of changes in net assets) report information on all of the activities of the primary government and its component unit. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. In the government -wide statement of net assets, both the governmental and business -type activities columns: (a) are presented on a consolidated basis by column; and (b) are reported on a full accrual, economic resource basis, which recognizes all long -term assets and receivables as well as long -term debt and obligations. The City's net assets are reported in three parts: (1) invested in capital assets, net of related debt; (2) restricted net assets; and (3) unrestricted net assets. The City first utilizes restricted resources to finance qualifying activities. The statement of activities demonstrates the degree to which the direct expenses of a given function or business -type activity are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or business -type activity. 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 or business -type activity and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or business -type activity. Taxes and other items not included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. 53 CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund statements. 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. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers all revenues, except reimbursement grants, to be available if they are collected within 60 days of the end of the current fiscal period. Reimbursement grants are considered available if they are collected within one year of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences, and claims and judgments, are recorded only when payment is due. Property taxes, special assessments, intergovernmental revenues, charges for services and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the government. The government reports the following major governmental funds: The General Fund is the government'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 Municipal Building Capital Project Fund accounts for the accumulation of resources and construction or remodeling costs of municipal buildings and facilities. The MSA Construction Capital Project Fund accounts for projects related to Municipal State Aids. The Closed Debt Fund accounts for the accumulation of residual resources from debt funds that have been closed as the associated debt has been satisfied. The Pavement Management Debt Service Fund accounts for debt service payments used to finance the City's various pavement management projects. Revenue is accumulated from both special assessments and property taxes. The Pavement Management Capital Project Fund accounts for pavement management construction projects. The Construction Revolving Capital Project Fund accounts for new development construction projects that are financed by developers. The government reports the following major proprietary funds: The Golf Course Fund accounts for the City's eighteen hole golf course and banquet facility. The Street Light Fund accounts for customer street light and service charges which are used to finance street light operating expenses. The Cottage Grove EMS Fund accounts for the operation of the Cottage Grove ambulance service that serves the cities of Cottage Grove, Newport, Saint Paul Park, and Grey Cloud Island. 54 CITY OF COTTAGE GROVE, MINNESOTA NOTES TOFINANCIAL STATEMENTS December 3| The Water Operatingfund accounts for customer water service charges which are used to finance water operating expenses. The Sewer Operatingfund accounts for customer sewer service charges which are used Nfivanc sewer operating ezpcuoom. AddbkooaUy, the government reports the following fund type: Internal service funds account for the City's self-insurance and fleet maintenance services provided to other departments of the government ouo cost reimbursement basis. Private-sector standards of accounting and financial reporting issued prior to December Ll989,generally are followed io both the and financial statements to the extent that those standards do not conflict with or contradict guidance ofthe Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector gub]unoo for their business-type activities and enterprise funds, subject to this munzc |hnbutino. The government has elected not to follow subsequent private-sector guidance. As u general rule the effect of bnerOuud activity has been eliminated from the government-wide fiuuuoiu| atateznco±y. Exceptions to this general rule are transactions that would be treated as revenues, expenditures or expenses if they involved external organizations, such ambuying goods and services or payments in lieu of taxes, are similarly treated when they involve other funds of the City of Cottage Grove. Elimination of these obmr8ea would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include l) charges to comtonoeca or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general ruvanom, rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and ezpnuaee generally noaub from providing services and producing and delivering goods in connection with n proprietary fund's principal ongoing operations. The principal operating revenues of the water, sewer, ambulance, golf course, and street light enterprise funds are charges to customers for mu)em and services. The mndbu\aucc fund operating revenues are net of write off mandated by various government agencies (including Medicare and Medicaid). Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital uaaotm. All revenues and czpeueem not meeting this definition are reported as non- operating revenues and expenses. When both restricted and unrestricted resources are available for un allowable use, it is the government's policy to use restricted resources firat,then unrestricted resources um they are needed. Budgets are adopted on a basis consistent with U.S. generally accepted accounting principles. Annual appropriated budgets are adopted footbeGeoern and Special Revenue Funds. Budgeted amounts are reported am originally adopted, and uy amended by the City Council. Individual amendments were not material io relation to the original appropriations which were adjusted. Budgeted expenditure appropriations can hc carried forward to the next budget year subject to City Council approval. W CITY OF COTTAGE GROVE, MINNESOTA NOTES TOFINANCIAL STATEMENTS December 3l,2011 E. LEGAL COMPLIANCE -BUDGETS The City follows these procedures inestablishing the budgetary data reflected in the financial statements: l. The City Administrator submits to the City Council u proposed operating budget for the fiscal year commencing the following January l. The operating budget includes proposed expenditures and the means offinancing them. 2. The City Council reviews the proposed budget and makes appropriate changes. 3. Public hearings are conducted to obtain taxpayer comments. 4. The budget ialegally enacted through passage ofuresolution on a departmental basis and can be expended by each department based upon detailed budget estimates for individual expenditure accounts. 5. The City Administrator is authorized to transfer appropriations within any department budget up to $ 1,000. /\ddhioon1 interdepartmental or buerfaod appropriations and deletions are authorized bythe City Council with expenditure reductions, fund (contingency) reserves or additional revenues. 8. Formal budgetary integration is employed umu management control device during the year for the General Fund, Special Revenue Funds, certain Capital Project Funds, Enterprise Funds and the Internal Service Fund. The General Fund and Special Revenue Funds are the only funds with legally adopted annual budgets. 7. Legal debt obligation indentures determine the appropriation level and debt service tax levies for the Debt Service Funds. Supplementary budgets are adopted for the Proprietary Funds to determine and calculate user charges. These debt service and budget amounts represent general obligation bond indenture provisions and net income for operation and capital maintenance and are not reflected iuthe financial statements. 8. /\ capital improvement program ia reviewed annually by the City Council for the Capital Project Funds. However, appropriations for major projects are not adopted until the actual bid award of the improvement. The appropriations are not reflected io the financial statements. V. Expenditures may not legally exceed budgeted appropriations at the total fund level. The legal level of budgetary control is at the expenditure category level (i.e., personal services, commodities, contractual services and capital outlay) within each activity. All amounts over budget have been approved by the City Council through the disbursement approval process. lO. The City Council may authorize transfers of budgeted amounts between City funds. 4-1 CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 The following is a listing of expenditure categories that exceed budget appropriations for non -major funds: F. CASH AND INVESTMENTS Cash and investment balances from all funds are pooled and invested to the extent available in authorized investments. Earnings from investments are allocated to individual funds on the basis of the fund's equity in the cash and investment pool. The City provides temporary advances to funds that have insufficient cash balances by means of an advance from another fund shown as interfund receivables in the advancing fund, and an interfund payable in the fund with the deficit, until adequate resources are received. Investments are stated at fair value, based upon quoted market prices as of the balance sheet date. For purposes of the statement of cash flows for the proprietary funds, cash equivalents are considered to be all highly liquid investments with a maturity of three months or less when purchased. All of the cash and investments allocated to the proprietary funds have original maturities of 90 days or less. Therefore, the entire balances in such funds are considered cash equivalents. During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. Short-term interfund loans are classified as "interfund receivables /payables." All short-term interfund receivables and payables at December 31, 2011 are planned to be eliminated in 2012. Long -term interfund loans are classified as "interfund loan receivable /payable." Any residual balances outstanding between the 57 Final Budget Actual Over Budget Nonmajor Funds: Special Revenue Funds: Recycling: Public works: Contractual services $11,190 $12,971 $1 Storm Water Maintenance Fund: Public works: Personal services 212,400 222,244 9,844 Contractual services 352,445 521,894 169,449 Forfeiture /Seizure fund: Public safety: Commodities 500 1,499 999 Ice Arena Fund: Culture and recreation: Personal services 293,000 313001 20,101 Contractual services 241,300 302,048 60,748 Capital outlay 16,000 60,322 44,322 Public Safety Grants Fund: Public safety: Personal services - 7,476 7,476 Capital Project Funds: Equipment Replacement: Public safety: Contractual services - 874 874 Future Economic Development: General government: Contractual services 30,000 3706 7,686 F. CASH AND INVESTMENTS Cash and investment balances from all funds are pooled and invested to the extent available in authorized investments. Earnings from investments are allocated to individual funds on the basis of the fund's equity in the cash and investment pool. The City provides temporary advances to funds that have insufficient cash balances by means of an advance from another fund shown as interfund receivables in the advancing fund, and an interfund payable in the fund with the deficit, until adequate resources are received. Investments are stated at fair value, based upon quoted market prices as of the balance sheet date. For purposes of the statement of cash flows for the proprietary funds, cash equivalents are considered to be all highly liquid investments with a maturity of three months or less when purchased. All of the cash and investments allocated to the proprietary funds have original maturities of 90 days or less. Therefore, the entire balances in such funds are considered cash equivalents. During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. Short-term interfund loans are classified as "interfund receivables /payables." All short-term interfund receivables and payables at December 31, 2011 are planned to be eliminated in 2012. Long -term interfund loans are classified as "interfund loan receivable /payable." Any residual balances outstanding between the 57 CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances." Interfund loan receivables, as reported in the fund financial statements, are offset by a fund balance nonspendable account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. Property taxes, special assessments, and ambulance receivables have been reported net of estimated uncollectible accounts. (see Note I H, I and L) Because utility bills are considered liens on property, no estimated uncollectible amounts are established. Uncollectible amounts are not material for other receivables and have not been reported. H. PROPERTY TAX REVENUE RECOGNITION The City Council annually adopts a tax levy and certifies it to the County in December (levy/assessment date) of each year for collection in the following year. The County is responsible for billing and collecting all property taxes for itself, the City, the local school district and other taxing authorities. Such taxes become a lien on January I and are recorded as receivables by the City at that date. Real property taxes are payable (by property owners) on May 15 and October 15 of each calendar year. Personal property taxes are payable by taxpayers on February 28 and June 30 of each year. These taxes are collected by the County and remitted to the City on or before July 7 and December 2 of the same year. Delinquent collections for November and December are received the following January. The City has no ability to enforce payment of property taxes by property owners. The County possesses this authority. GOVERNMENT-WIDE FINANCIAL STATEMENTS The City recognizes property tax revenue in the period for which the taxes were levied. Uncollectible property taxes are not material and have not been reported. GOVERNMENTAL FUND FINANCIAL STATEMENTS The City recognizes property tax revenue when it becomes both measurable and available to finance expenditures of the current period. In practice, current and delinquent taxes and State credits received by the City in July, December and January are recognized as revenue for the current year. Taxes collected by the County by December 31 (remitted to the City the following January) and taxes and credits not received at year-end are classified as delinquent and due from County taxes receivable. The portion of delinquent taxes not collected by the City in January is fully offset by deferred revenue because they are not available to finance current expenditures. I. SPECIAL ASSESSMENT REVENUE RECOGNITION Special assessments are levied against benefited properties for the cost or a portion of the cost of special assessment improvement projects in accordance with State Statutes. These assessments are collectible by the City over a term of years usually consistent with the term of the related bond issue. Collection of annual installments (including interest) is handled by the County Auditor in the same manner as property taxes. Property owners are allowed to (and often do) prepay future installments without interest or prepayment penalties. Once a special assessment roll is adopted, the amount attributed to each parcel is a lien upon that property until full payment is made or the amount is determined to be excessive by the City Council or court action. If special assessments are allowed to go delinquent, the property is subject to tax forfeit sale. Proceeds of sales from tax forfeited properties are allocated first to the County's costs of administering all tax forfeit properties. Pursuant to State Statutes, a property shall be subject to a tax forfeit sale after three years unless it is homesteaded, agricultural or seasonal recreational land in which event the property is subject to such sale after five years. 58 CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 GOVERNMENT-WIDE FINANCIAL STATEMENTS The City recognizes special assessment revenue in the period that the assessment roll was adopted by the City Council. Uncollectible special assessments are not material and have not been reported. GOVERNMENTAL FUND FINANCIAL STATEMENTS Revenue from special assessments is recognized by the City when it becomes measurable and available to finance expenditures of the current fiscal period. In practice, current and delinquent special assessments received by the City are recognized as revenue for the current year. Special assessments that are collected by the County by December 31 (remitted to the City the following January) are also recognized as revenue for the current year. All remaining delinquent, deferred and special deferred assessments receivable in governmental funds are completely offset by deferred revenues. J. INVENTORIES GOVERNMENTAL FUNDS The original cost of materials and supplies has been recorded as expenditures at the time of purchase. These funds do not maintain material amounts of inventories. PROPRIETARY FUNDS Inventories of the proprietary funds are stated at cost, which approximates market, using the first-in, first-out (FIFO) method. K. PREPAID ITEMS Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. The City directly bills individuals for ambulance services. The City reserves an amount as uncollectible based on historical collection rates. The amounts of the estimated uncollectible ambulance billings to individuals as of December 31, 2011 were $297,000. Property is acquired by the City for redevelopment purposes and subsequent resale. Properties held for resale is reported as an asset at the lower of cost or estimated fair value. Fair value estimates have been based on estimated realizable sales proceeds net of selling expenses. N. CAPITAL ASSETS Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government -wide financial statements. Infrastructure assets have been capitalized retroactively to 1980. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 (amount not rounded) and an estimated useful life in excess of one y ear. Such assets are recorded at historical cost or estimated 59 CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 201 historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. For the year ended December 31, 201 no interest was capitalized in connection with construction in progress. Capital assets not being depreciated include land, easements and construction in progress. Property, plant and equipment of the primary government, as well as the component units, is depreciated using the straight-line method over the following estimated useful lives: Assets Years Buildings and improvements 20-50 Equipment and furniture 3-10 Machinery and equipments 5-20 Other improvements 5-20 Streets 50 Storm sewers 50 Sidewalks 50 Trails 20 Street lights 50 Water and sewer lines 50 Capital assets of the water and sewer utility operations include the water distribution system and sewage collection system. These systems have been wholly (or substantially) financed by non-operating funds (special assessments, general taxes, federal and state grants, and other sources) and contributed to the sewer and water operating funds. City policy is to finance these assets by the sources indicated rather than by user charges. Accordingly, the water and sewer user rates are not established at levels sufficient to cover depreciation on these assets. O. MARKET VALUE HOMESTEAD CREDIT (MVHQ Property taxes on homestead property (as defined by State Statutes) are partially reduced by MVHC. This credit is paid to the City by the State in lieu of taxes levied against homestead property. The State remits this credit through installments each year. The credit is recognized as revenue by the City at the time of collection. P. COMPENSATED ABSENCES It is the City's policy to permit employees to accumulate earned but unused vacation and sick pay benefits. All vacation pay is accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. In accordance with the provisions of GASB 16, Accountin for Compensated Absences, no liability is recorded for non-vesting accumulating rights to receive sick pay benefits. However, a liability is recognized for that portion of accumulating sick leave benefits that is vested as severance pay. 511 � � � � � � � � � � � , � � � � � I � 1 � � I SIX "I'll I I In the government -wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business- t activities, or proprietary fund type statement of net assets. Bond premiums and discounts are deferred and 60 CITY OF COTTAGE GROVE, MINNESOTA NOTES 7U FINANCIAL STATEMENTS December 3l amortized over the life of the bonds. Bond issuance costs are reported as deferred charges and amortized over the term o[ the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond iosumuou costs, during the current period. The face amount of debt issued ia reported nu other financing sources. Premiums received oo debt issuances are reported no other financing sources while discounts no debt issuances are reported nx other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported us debt service expenditures. R. FUND BALANCE At December City adopted GASB Statement No. 54 Balance Reporting and Governmental Fund Type Definitions. December 3l comparative fund balance data has been restated to be presented in accordance with GAS13 Statement No. 54. Io the fund financial statements, governmental funds report fund balances ioc|emaifiontiooa that disclose constraints for which amounts in those funds can be spent. Tbuac classifications are as follows: Nom4nemuab/e— Amounts that cannot bc spent because they are not iu spendable form, such us prepaid items. Restricted —Amounts related to externally imposed constraints established by creditors, grantors or contributors; or constraints imposed by state statutory provisions. Committed — Amounts constrained for specific purposes that are internally imposed by formal action (resolution) of the City Council. Committed amounts cannot be used for any other purpose unless the Council modifies orrescinds the commitment byresolution. Assigned — Amounts constrained for specific purposes that are internally imposed. The Council has adopted afuzd balance policy which delegates the authority to assign fund balances tothe City Administrator and/or Finance [)bnotoc Dnuxxigned — Theresiduu classification for the General fund and also negative residual amounts in other ftinds. The City considers restricted amounts to be spent first when both restricted and unrestricted fund balance is available. Additionally, the City would first use committed, then assigned, and lastly unassigned amounts of unrestricted fund balance when expenditures are made. The City fbonulh/ adopted u fund balance policy for the General Food. The policy emtob]iyboa an unassigned fund balance range of no lcma than 5596 of the subsequent year's budgeted expenditures to provide sufficient working capital and margin of safety to address local emergencies without borrowing. Tntezfuod services provided and used are accounted for ms revenues, expenditures or expenses. Transactions that constitute reimbursements to ufuod for expenditures/expenses initially made from it are properly applicable to another fund, are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the fund that is reimbursed. Tuter{uud loans are reported ux an io±ecfbod loan receivable or payable which offsets the movement of cash between funds. All other interOund transactions are reported as transfers. #m CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 T. USE OF ESTIMATES The preparation of financial statements in accordance with U.S. generally accepted accounting principles (GAAP) requires management to make estimates that affect the amounts reported in the financial statements during the reporting period. Actual results could differ from such estimates. U. COMPARATIVE DATA Summarized comparative data for the prior year has been presented only for certain sections of the accompanying financial statements in order to provide an understanding of the changes in the City's financial position and operations. Certain reclassifications have been made to prior year data to conform to the current year presentation. The reclassifications had no effect on the change in net assets or total net assets as previously reported. Note 2 RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS A. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND BALANCE SHEET AND THE GOVERNMENT -WIDE STATEMENT OF NET ASSETS The governmental fund balance sheet includes a reconciliation between fund balance — total governmental funds and net assets — governmental activities as reported in the government -wide statement of net assets. One element of that reconciliation explains that "long -term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds." The details of this $(16,575,083) difference are as follows: Bonds payable $ (9,540,000) Claims payable (317,168) Capital leases payable (5,865,000) Accrued interest payable (217,496) Compensated absences payable (689,749) Other post employment benefits (38,408) Unamortized bond issuance costs 10605 Unamortized discount on bonds 23,532 Unamortized premium on bonds (37,399) Net adjustment to reduce fund balance - total governmental funds to arrive at net assets - governmental activities $ (16,575,083) % CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 B. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES AND THE GOVERNMENT -WIDE STATEMENT OF ACTIVITIES The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances — total governmental funds and changes in net assets of governmental activities as reported in the government -wide statement of activities. One element of that reconciliation explains that "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 details of this $0 6 ,708,184 difference are as follows: Capital outlay $ 10,165,980 Depreciation expense (3,457,796) Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities $ 6,708,184 Another element of that reconciliation states that "revenues on the statement of activities that do not provide current financial resources are not reported as revenues in the funds." The details of this $(1,227,689) difference are as follows: General property taxes deferred revenue: At December 31, 2010 At December 31, 2011 Special assesments deferred revenue: At December 31, 2010 At December 31, 2011 Grant deferred revenue: At December 31, 2010 At December 31, 2011 Net adjustments to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities $ (357,179) 312,295 (4,775,340) 3,757,113 (1,192,141) 1,027,563 $ (1,227,689) 63 CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Another element of that reconciliation states that "the issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the long-term debt consumes the current financial resources of governmental funds." Neither transaction, however, has any effect on net assets. The details of this $7,327,646 difference are as follows: Principal repayments: General obligation debt 7,135,000 Capital lease 245,000 Amortization of deferred discounts, premiums, and issuance costs (52,354) Net adjustments to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities $ 7,327,646 Another element of that reconciliation states that "some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds." The details of this $(222,992) difference are as follows: Compensated absences: At December 31, 2010 At December 31, 2011 Accrued interest: At December 31, 20 10 At December 31, 2011 Other post emplo benefits At December 31, 2010 At December 31, 2011 Accounts payable at December 31, 2011 Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities $ 674,674 (689,749) 330,502 (217,496) 34,653 (38,408) (317,168) $ (222,992) 64 CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Note 3 DEPOSITS AND INVESTMENTS A. DEPOSITS The City maintains a cash and investment pool that is available for use by all funds. Each fund type's portion of this pool is displayed on the statement of net assets and balance sheets as "Cash and Investments." Custodial Credit Risk — Custodial credit risk for deposits is the risk that in the event of a bank failure, the City will not be able to recover its deposits. Neither the City nor the Cottage Grove Economic Development Authority, a discretely presented component unit, has a deposit policy for custodial credit risk — deposits beyond the requirements of state statutes. As of December 31, 2011, all of the deposits were insured or collateralized by securities held by the City or its agent in the City's name. In accordance with Minnesota Statutes, the City maintains deposits at financial institutions which are authorized by the City Council. Minnesota Statutes require that all deposits be protected by insurance, surety bond, or collateral. The market value of collateral pledged must equal 110% of the deposits not covered by insurance or corporate surety bonds. Authorized collateral include: U.S. government treasury bills, notes, or bonds; issues of a U.S. government agency; general obligations of a state or local government rated "A" or better; revenue obligations of a state or local government rated "AA" or better; irrevocable standby letter of credit issued by a Federal Home Loan Bank; and time deposits insured by a federal agency. Minnesota statutes require securities pledged as collateral be held in safekeeping in a restricted account at the Federal Reserve Bank or at an account at a trust departments of a commercial bank or other financial institution not owned or controlled by the depository. B. INVESTMENTS Minnesota Statutes and the City's investment policy authorize the City to invest in the following: a) Direct obligations or obligations guaranteed by the United States or its agencies, its instrumentalities or organizations created by an act of congress, excluding mortgage- backed securities defined as high risk. b) General Obligations of the State of Minnesota or any of its municipalities as follow: 1) general obligation of any state or local government with taxing powers which is rated "A" or better by a national bond rating service; 2) revenue obligation of any state or local government with taxing powers which is rated "AA" or better by a national bond rating service; and 3) general obligation of the Minnesota Housing Finance Agency rated "A" or better by a national bond rating agency. c) Bankers acceptance of United States banks eligible for purchase by the Federal Reserve System. d) Commercial paper of the highest quality (A 1, P 1), and maturing in 270 days or less. e) Repurchase agreements from national or state banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000; a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York. f) Certificates of Deposit collateralized by FDIC or FSLIC insurance. Deposits exceeding $250,000 insurance shall be covered by a surety bond or collateralized with U.S. Treasury or agency securities computed at market value which shall be at least 10% more than the amount of each deposit in excess of the insured portions. All collateral shall be assigned to the City from the depository. g) Shares of mutual funds holdings pursuant to M.S. 118A.04. The City participates in the Minnesota Municipal Money Market Fund (4M Fund) whereby, the fair market value of the position in the pool is the same as the value of the pool shares owned. �1 CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Interest rate risk - Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The City's formal investment policy limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. The policy also states that no more than 25% of total investments should extend beyond five years and in no circumstance should any extend beyond ten years. Money Markets 6,284,379 Deposits 730,870 Petty Cash and Change 13,861 Total Cash and Investments $51,264,469 NR indicates "not rated" N/A indicates "not applicable Investment maturities in Years Total Fair Investment type Market Value U.S. Agencies Rating Federal Home Loan Bank -FHLB $7,049,681 Fannie Mae —FNMA 6,506,144 Freddie Mac -FHLMC 10,521,705 Federal Farm Credit Bank 4,016,159 Term Series Investment Pool 2,500,000 Municipal Obligations 469,823 Negotiable CD's 13,171,847 Total Investments $44,235,359 Money Markets 6,284,379 Deposits 730,870 Petty Cash and Change 13,861 Total Cash and Investments $51,264,469 NR indicates "not rated" N/A indicates "not applicable Investment maturities in Years Credit Risk Less than 1 1-5 More than 5 Rating Agency $2,002,196 $3,027,745 $2,019,740 AA/Aaa S &P /Moody's - 5,001,560 1,504,584 AA/Aaa S &P/Moody's - 5,508,965 5,012,740 AA/Aaa S &P/Moody's - 4,016,159 - AA/Aaa S &P/Moody's 2,500,000 - - NR NIA 315,813 154,010 - AA/Aa S &P/Moody's 9,996,835 3,175,012 - NR N/A $14,8 14,844 $20,88 $ 8,537,064 Custodial Credit Risk — For an investment, custodial credit risk is the risk that, in the event of failure of the depository financial institution, the City will not be able to recover the value of its investment or collateral securities that are in the possession of an outside party. The City's investment policy requires that insurance of all balances be held with each investment account. As of December 31, 2011, the investment balances were fully covered by insurance for each brokerage firm. Credit Risk — Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. As indicated previously, Minnesota statute requires Commercial paper to be of the highest quality (Al, P 1) and municipal general obligations need an "A" rating or better. Concentration of Credit Risk — The City's investment policy places no limit on the amount that may be invested in any one issuer. The following is a list of investments by issuer which individually comprise more than 5 percent of the City's total investments: Type Federal Home Loan Bank - FHLB Fannie Mae - FNMA Freddie Mac - FHLMC Federal Farm Credit Bank Amount Percent $ 7,049,681 16% 6,506,144 15% 10 24% 4,016,159 9% CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Note 4 RECEIVABLES Significant receivable balances not expected to be collected within one year of December 31, 2011 are as follows: Special Delinquent Certified Assessment Property to Receivable Taxes County Total Primary government: Major funds: General Fund Municipal Building Capital Project Fund MSA Construction Capital Project Fund Closed Debt Fund Pavement Management Debt Service Fund Pavement Management Capital Project Fund Construction Revolving Capital Project Fund Nonmajor funds Major Business -Type funds: Water Operating fund Sewer Operating fund Total primary government Component unit: Economic Development Authority Total reporting entity $ 37,893 $ 110,700 $ - $ 148,593 12,928 700 - 13,628 788,586 - - 788,586 699,221 6,100 - 705,321 1,059,655 5,900 - 1,065,555 605,101 - - 605,101 74,580 - - 74,580 175,073 3,500 - 178,573 - - 56,624 56,624 - - 54,676 54,676 3,453,037 126,900 111,300 3,691,237 74,580 34,363 479,149 - - 1,200 - 1,200 $ 3,453,037 $ 128,100 $ 111,300 $ 3,692,437 Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of deferred revenue and unearned revenue reported in the governmental funds were as follows: Unavailable Unearned Primary government: Major funds: General Fund Muncipal Building Capital Project Fund MSA Construction Capital Project Fund Closed Debt Fund Pavement Management Debt Service Fund Pavement Management Capital Project Fund Construction Revolving Capital Project Fund Nonmajor funds Total primary government Component unit Economic Development Authority Total reporting entity Property Special Miscellaneous Taxes Assessments MSA funding Fees Total $ 249,228 $ 37,893 $ - $ 35,600 $ 322,721 1,542 12,928 - 28,810 43,280 - 788,586 1,027,563 - 1,816,149 13,786 699,221 - - 713,007 13,376 1,059,655 - - 1,073,031 - 605,101 - - 605,101 - 74,580 - - 74,580 34,363 479,149 - 700 514,212 312,295 3,757,113 1,027,563 65,110 5,162,081 2,662 - - - 2,662 $ 314,957 $ 3,757,113 $ 1,027,563 $ 65,110 $ 5,164,743 YA CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Note 5 CAPITAL ASSETS Capital asset activity for the year ended December 31, 2011 was as follows: 68 Beginning Ending Balance Increases Decreases Balance Primary Government Governmental activities: Capital assets, not being depreciated: Land 16,399,447 78,726 $ 16,478,173 Permanent easements - 493,239 493,239 Construction in progress 1,358,079 9,510,108 (1,981,455) 8,886,732 Total capital assets, not being depreciated 17,757,526 10,082,073 (1,981,455) 25,858,144 Capital assets, being depreciated: Buildings and improvements 19,397,570 174,594 19,572,164 Equipment and furniture 1,243,828 112,645 (37,782) 1,318,691 Machinery and equipment 8,086,851 301,798 (99,836) 8,288,813 Other improvements 3,638,425 169,657 - 3,808,082 Infrastructure: Streets 74,334,853 2,033,899 - 76,368,752 Storm sewers 24,354,218 124,229 - 24,478,447 Sidewalks/trails 4,268,137 40,882 - 4,309,019 Total capital assets being depreciated 135,323,882 2,957,704 (137,618) 138,143,968 Less accumulated depreciation for: Buildings and improvements 9,864,417 543,665 10,408,082 Equipment and furniture 781,936 160,022 (18,329) 923,629 Machinery and equipment 4,252,946 570,984 (99,836) 4,724,094 Other improvements 2,276,609 127,010 - 2,403,619 Infrastructure: Streets 13,318,684 1,507,036 - 14,825,720 Storm sewers 4,489,356 487,572 - 4,976,928 Sidewalks/trails 530,732 93,525 - 624,257 Total accumulated depreciation 35,514,680 3,489,814 (118,165) 38,886,329 Total capital assets, being depreciated, net 99,809,202 (532,110) — (19,453) 99,257,639 Governmental activities capital assets, net 117,566,728 9,549,963 (2,000,908) $ 125,115,783 68 CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Primary Government Business -type activities: Capital assets, not being depreciated: Land Construction in progress Total capital assets, not being depreciated Capital assets, being depreciated: Land improvements Buildings and improvements Machinery and equipment Other improvements Water and sewer lines Total capital assets, being depreciated Less accumulated depreciation for: Land improvements Buildings and structures Machinery and equipment Other improvements Water and sewer lines Total accumulated depreciation Total capital assets being depreciated - net Business -type activities capital assets - net Beginning $ 46,360 Community development Ending Balance Increases Decreases Balance Culture and recreation 644,369 Total depreciation expense governmental activities $ 1,712,290 $ - $ - $ 1,712,290 202,856 555,394 (277,651) 480,599 1,915,146 555,394 (277,651) 2,192,889 39,803 - - 39,803 3,960,580 141,133 - 4,101,713 2,917,249 162,766 (135,393) 2,944,622 7,921,483 118,014 - 8,039,497 58,232,341 285,970 - 58,518,311 73,071,456 707,883 (135,393) 73,643,946 5,970 796 - 6,766 1,814,449 113,046 - 1,927,495 2,060,123 174,629 (105,351) 2,129,401 3,319,534 238,531 - 3,558,065 12,102,307 992,573 - 13,094,880 19,302,383 1,519,575 (105,351) 20,716,607 53,769,073 (811,692) (30,042) 52,927,339 $ 55,684,219 $ (256,298) $ (307,693) $ 55,120,228 Depreciation expense was charged to function/programs of the primary government as follows: Governmental activities: General government $ 46,360 Community development 10,043 Public safety 416,952 Public works 2,372,090 Culture and recreation 644,369 Total depreciation expense governmental activities $ 3,489,814 Business -type activities: Golf course $ 165,302 Street lights 122,776 Cottage Grove EMS 57,312 Water operating 753,823 Sewer operating 420,362 Total depreciation expense - business -type activities $ 1,519,575 69 CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 NOTE 6 LONG -TERM DEBT A. GENERAL OBLIGATION DEBT The City issues general obligation bonds to provide funds for the acquisition and construction of major capital improvements. The City issues special assessment bonds to finance various improvements and will be repaid primarily from special assessments levied on the properties benefiting from the improvements. The reporting entity's long -term debt is segregated between the amounts to be repaid from governmental activities and amounts to be repaid from business -type activities. As of December 31, 2011, the governmental long -term debt of the financial reporting entity consisted of the following: Final Interest Issue Maturity Original Rate Date Date Iss Payable 12/31/2011 Primary government: GOVERNMENTAL ACTIVITIES General Obligation Tax Increment Bonds: GO Tax Increment Bonds of 2004A 3.0 -4.65% 7/1/2004 2/1/2024 $ 1,405,000 $ 1,160,000 GO Tax Increment Bonds of 2004B 4.5 -5.75% 7/1/2004 2/1/2021 1,775,000 1,630,000 Total General Obligation Tax Increment Bonds 3,180,000 2,790,000 Special Assessment Bonds with Government Commitment: GO Improvement Refunding Bonds of 2002C GO Improvement Bonds of 2008A GO Improvement Bonds of 2009A GO Improvement Refunding Bonds of 2009C Total Special Assessment Bonds Bond premium /discount (net) Total Governmental Activities Bonds Capital lease payable - EDA component unit Other postemployment benefits Compensated absences payable Total City indebtedness - governmental activities 2.5 -3.3% 10/2/2002 2/1/2012 3,625,000 600,000 15 -3.6% 6/11/2008 2/1/2019 3,370,000 2,560,000 2.5 -4.3% 4/16/2009 2/1/2024 3,650,000 3,065,000 2.0 -3.0% 4/16/2009 12/1/2015 625,000 525,000 400,000 - 11,270,000 6,750,000 - 101,926 - 13,867 14,450,000 9,553,867 BUSINESS TYPE ACTIVITIES Revenue bonds: GO Water /Sewer Revenue Bonds of 1997A 4.3 -5.1% 5/21/1997 Golf Course Revenue Bonds of 1999F 5.0 -5.6% 12/1/1999 GO Water Revenue Refunding Bonds of 2009B 2.54% 4/16/2009 Bond premium /discount (net) Total Revenue Bonds Loan payable - EDA component unit Loan payable - EDA component unit Other postemployment benefits Compensated absences payable Total City indebtedness - business type activities Total City indebtedness - primary government Component Unit: EDA: Lease- Purchase Revenue Bonds of 2008B Bond premium /discount (net) Other postemployment benefits Compensated absences payable Total indebtedness - component unit 70 2.00% 12/31/2004 12 2.00% 12/31/2007 12 6,500,000 5,865,000 - 39,636 725,863 20,950,000 16,184,366 2/1/2013 1,475,000 255,000 2/1/2012 1,100,000 195,000 2/l/2020 1,205,000 1,010,000 - (3,933) 3,780,000 1,456,067 /3112020 500,000 500,000 /31/2022 400,000 400,000 - 9,441 - 101,926 4,680,000 2,467,434 $ 25,630,000 $ 18,651,800 4.0 -4.90% 6/11/2008 4/1/2028 $ 6,500,000 $ 5,865,000 - (81,120) 73 - 5,413 $ 6 $ 5,789,366 CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Annual debt service requirements to maturity for general obligation bonds are as follows: Total $ 1,460,000 $ 193,655 $ - 5,865,000 $ 2,549,708 It is not practicable to determine the specific year for payment of long -term accrued compensated absences. W Tax Increment Bonds Special Assessment Bonds Year Ending Governmental Activities Governmental Activities December 31 Principal Interest Principal Interest 2012 $ 55,000 $ 140,899 $ 1,280,000 $ 215,789 2013 135,000 136,287 695,000 184,152 2014 150,000 129,182 845,000 161,466 2015 170,000 121,114 675,000 137,529 2016 190,000 111,847 480,000 115,316 2017 210,000 101,310 495,000 98,253 2018 235,000 89,358 510,000 80,377 2019 260,000 75,805 525,000 61,245 2020 285,000 60,727 240,000 46,525 2021 280,000 45,221 245,000 36,825 2022 255,000 31,872 250,000 26,800 2023 275,000 19,810 255,000 16,320 2024 290,000 6,743 255,000 5,483 Total $ 2,790,000 $ 1,070,175 $ 6,750,000 $ 1,186,080 Revenue Bonds Revenue Bonds Year Ending Business -Type Activities Component Unit December 31 Principal Interest Principal Interest 2012 $ 420,000 $ 48,402 $ 250,000 $ 255,092 2013 230,000 33,691 260,000 244,892 2014 105,000 27,300 270,000 234,292 2015 105,000 24,150 280,000 223,292 2016 110,000 20,650 290,000 211,892 2017 115,000 16,712 300,000 199,942 2018 120,000 12,450 310,000 187,360 2019 125,000 7,700 320,000 174,288 2020 130,000 2,600 335,000 160,697 2021 - - 350,000 145,871 2022 - - 365,000 129,601 2023 - - 38000 112,370 2024 - - 395,000 94,252 2025 - - 410,000 75,233 2026 - - 430,000 55,176 2027 - - 450,000 33,943 2028 - - 470,000 11,515 Total $ 1,460,000 $ 193,655 $ - 5,865,000 $ 2,549,708 It is not practicable to determine the specific year for payment of long -term accrued compensated absences. W CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 B. LOANS PAYABLE The City (primary government) has also entered into a loan agreement with the EDA (component unit) for financing operations for the Golf Course. The original amount of the loan issued in 2004 was $500,000 at 5.5% interest. An additional loan was issued in 2007 for $400,000 at 6.0% interest. The EDA elected to reduce the interest rate on both loans to 2% retroactive to the dates of the initial loans. This adjustment was made effective with 2010 operations. Annual debt service requirements to maturity for loans payable are as follows: Primary Government Business -type Activities Loan Payable Year Ending EDA Component Unit December 31 Principal Interest 2013 $ 50,000 $ 18,000 2014 50,000 17,000 2015 50,000 16,000 2016 50,000 15,000 2017 50,000 14,000 2018 75,000 13,000 2019 150,000 11,500 2020 175,000 8,500 2021 185,000 5,000 2022 65,000 1,300 Total $ 900,000 $ 119,300 to CITY OF COTTAGE GROVE, MINNESOTA NOTES T0FINANCIAL STATEMENTS December 3I C. CHANGES IN LIABLDT0ES Long-term liability activity for the year ended December 3l,2O}l,was as follows: Beginning Ending Due Within Balance Additions _Reductions_ Balance Primary Government: Governmental activities: Bonds payable: General obligation bonds 2,830 $ (40'000) 2.790 55,000 8;en/v/ assessment bonds 13 - (7,095,000) 6,750 /.zoo,noo Bond premium/discount (uo0 --___-26,218_ 13,867_ - Total bonds payable 16.662,6*9 ' (7.108,782) 9.553.867 1,335.000 Capital lease puyuble-soA component unit 6,110,000 ' (245.000) 5 250.000 Other nowtemninyuembenefits 35.76* 3.872 - 39,636 - Compensated absences payable 706097 59579e {57n6,033)_ 725,863 _ 505 , 215 Total government activities 23514 599671 _--{7/ � �18w,366 �- � 2 Business-type activities: Bonds payable: Revenue bonds 1 - (360.000) 1,460,000 420,000 Bond premium/discount (uc0 - z ,nov (3,933)_ - Total bonds payable 1,814,178 ' (358,111) 1,456,067 420,000 Loans payable 900,000 ' - 900,000 - Capital lease payable - - - - - Other postemployment benefits 8,544 897 - 9,441 - Comncnu��du�o�uncanx�uh� |ozass /»z4�) --__{!��7�� 6 _Va��(i os 7u7 ioe Total business-type activities z8��9»� �»ss»n \ {4� 4* 4s4 ��} — 503 , 787 Total primary government Component Unit: Bonds payable: Revenue bonds 6,110,000 $ - (245,000) $ 5,865,000 250,000 Bond premium/discount (nv0 - 4,680_ (81,}2 - Total bonds payable 6,024,200 - (240,320) 5,783,880 250,000 Other pomumpluymcmbenefits - 73 - 73 - Compensated absences payable - 5 �_ 5,413_ zo| Total component unit For the governmental activities capital leases other poyteuqzkynent benefits and compensated absences are generally liquidated by the general fund All long-term bonded indebtedness outstanding at December 31,2011 is backed by the full faith and credit of the City, including special assessment and revenue bond issues. Delinquent assessments receivable at December 3l, 20ll totaled $4Q,3h3. 73 CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 On November 3, 2010 City Council authorized calling the remaining outstanding balances of the GO Improvements Bonds 2002B and 2003B in advance of their original maturities. The bonds were called and paid in full on February 1, 2011. D. CAPITAL LEASES The City entered into an installment contract with the EDA (a component unit) to advance refund the $2,600,000 Public Project Revenue Bonds of 1990 whereb the City reimburses the debt service requirements to the EDA on the $2,330,000 Golf Course Revenue Refunding of 1994 through the -installment contract. The City has eliminated the asset and liability resulting from this capital lease arrangement in the EDA's financial statements to avoid double counting of assets and liabilities. In 2008, the City entered into a lease-purchase agreement with the EDA (a component unit) to finance the expansion of the ice arena. Per the agreement, the EDA issued $6,500,000 of revenue bonds and the proceeds were used by the Cit to finance the expansion. The lease qualifies as a capital lease for accounting purposes, and therefore, the construction costs have been capitalized in the primary government. The assets acquired through capital leases are as follows: Asset: Building and improvements Less: accumulated depreciation Governmental Activities $ 6,943,038 (796,135) $ 6,146,903 The following is a schedule of future minimum lease payments under the capital lease: 74 Governmental Activities Year Ice Arena Expansion 2012 $ 505,092 2013 504,892 2014 504,292 2015 503,292 2016 501,892 2017-2021 2,483,158 2022-2026 2,446,632 2027-2028 965,458 Total minimum lease payments 8,414,708 Less amount representing interest 2,549,708 Present value of minimum lease payments 505P0 74 CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Note 7 LEGAL DEBT MARGIN The City is subject to a statutory limitation by the State of Minnesota for bonded indebtedness payable principally from property taxes. The limitation was 3 % of market value in 2010 and 2011. The City of Cottage Grove's legal debt margin for 2011 and 2010 is computed as follows: December 31, December 31, 2011 2010 Market Value (after fiscal disparities) $2,695,641,900 $2,924,191,800 Debt Limit 80,869,257 87,725,754 Amount of debt applicable to debt limit: Total bonded debt $ 16,865,000 $ 24,605,000 Less: Special assessment bonds (6,750,000) (13,845,000) Proprietary bonds (1,460,000) (1,820,000) Tax increment bonds (2,790,000) (2,830,000) Total debt applicable to debt limit $ 5,865,000 $ 6,110,000 Legal debt margin $ 75,004,257 $ 81,615,754 Note 8 PENSION PLANS A. PUBLIC EMPLOYEES RETIREMENT ASSOCIATION (PERA) - DEFINED BENEFIT Plan Description All full -time and certain part -time employees of the City are covered by defined benefit plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the General Employees Retirement Fund (GERF) and the Public Employees Police and Fire Fund (PEPFF) which are cost - sharing, multiple - employer retirement plans. These plans are established and administered in accordance with Minnesota Statutes, Chapters 353 and 356. GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. All new members must participate in the Coordinated Plan. All police officers, firefighters and peace officers who qualify for membership by statute are covered by the PEPFF. PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by state statute, and vest after three years of credited service. The defined retirement benefits are based on a member's highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. Two methods are used to compute benefits for PERA's Coordinated and Basic Plan members. The retiring member receives the higher of a step -rate benefit accrual formula (Method 1) or a level accrual formula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2 percent of average salary for each of the first 10 years of service and 2.7 percent for each remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2 percent of average salary for each of the first 10 years and 1.7 percent for each remaining year. Under Method 2, the annuity accrual rate is 2.7 percent of average salary for Basic Plan members and 1.7 percent for Coordinated Plan members for each year of service. For PEPFF members, the annuity accrual rate is 3.0 percent for each year of service. For all GERF members and PEPFF members hired prior to July 1, 1989, whose annuity is calculated using Method 1, a full annuity is available when age plus years of service equals 90. Normal retirement age is 55 for PEPFF members and 65 for Basic and Coordinated members hired prior to July 1, 1989. Normal retirement age is the age for unreduced Social Security benefits capped at 66 for Coordinated members hired on or after July 1, 1989. A reduced. retirement annuity is available to eligible members seeking early retirement. W, CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 There are different types of annuities available to members upon retirement. A single -life annuity is a lifetime annuity that ceases upon the death of the retiree- no survivor annuity is payable. There are also various types of joint and survivor annuity options available which will be payable over joint lives. Members may also leave their contributions in the fund upon termination of public service, in order to qualify for a deferred annuity at retirement age. Refunds of contributions are available at any time to members who leave public service, but before retirement benefits begin. The benefit provisions stated in the previous paragraphs of this section are current provisions and apply to active plan participants. Vested, terminated employees who are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. PERA issues a publicly available financial report that includes financial statements and required supplementary information for GERF and PEPFF. That report may be obtained on the Internet at www.mnpera.org by writing to PERA, at 60 Empire Drive #200, St. Paul, Minnesota, 55103 -2088 or by calling (651)296 -7460 or 1- 800 - 652 -9026. Fundin P� olicy Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. These statutes are established and amended by the state legislature. The City makes annual contributions to the pension plans equal to the amount required by state statutes. GERF Basic Plan members and Coordinated Plan members were required to contribute 9.1% and 6.25 %, respectively, of their annual covered salary in 2011. PEPFF members were required to contribute 9.6% of their annual covered salary in 2011. The City of Cottage Grove is required to contribute the following percentages of annual covered payroll: 11.78% for Basic Plan GERF members, 7.25% for Coordinated Plan GERF members, and 14.4% for PEPFF members. The City's contributions to the Public Employees Retirement Fund for the years ending December 31, 2011, 2010 and 2009 were $328,842, $323,174, and $315,436, respectively. The City's contributions to the Public Employees Police & Fire Fund for the years ending December 31, 2011, 2010 and 2009 were $496,804, $474,280, and $474,141 respectively. The City's contributions were equal to the contractually required contributions for each year as set by state statute. B. PUBLIC EMPLOYEES RETIREMENT ASSOCIATION (PERA) - DEFINED CONTRIBUTION Plan Description Five council members of the City of Cottage Grove are covered by the defined contribution pension plan ( PEDCP), a multiple - employer deferred compensation plan administered by the Public Employees Retirement Association of Minnesota (PERA). The PEDCP is a tax qualified plan under Section 401(a) of the Internal Revenue Code and all contributions by or on behalf of employees are tax deferred until time of withdrawal. Plan benefits depend solely on amounts contributed to the plan plus investment earnings, less administrative expenses. Minnesota Statutes, Chapter 353D.03, specifies the employee and employer contribution rates for those qualified personnel who elect to participate. An eligible elected official who decides to participate contributes 5 percent of salary which is matched by the elected official's employer. Employer and employee contributions are combined and used to purchase shares in one or more of the seven accounts of the Minnesota Supplemental Investment Fund. For administering the plan, PERA receives 2 percent of employer contributions and twenty -five hundredths of one percent of the assets in each member's account annually. Total contributions made by the City during fiscal year 2011 were: Amount Percentage of Covered Payroll Required Employ Employer Employees Employer Rates PEDCP $1,139 $1,139 5.00% 5.00% 5.00% NQ CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 C. COTTAGE GROVE FIRE RELIEF ASSOCIATION Plan Description The Volunteer Firefighters of the City of Cottage Grove are members of the Cottage Grove Volunteer Fire Relief Association. The Cottage Grove Volunteer Fire Relief Association is the administrator of a single employer defined benefit pension plan established to provide benefits for members of the Cottage Grove Fire Department. The plan is established and administered in accordance with Minnesota Statute, Chapter 69. The Relief Association provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established in accordance with State Statute, and vest after ten years of credited service. The defined retirement benefits are based on a member's years of service. Benefit provisions can be amended by the Relief Association within the parameters provided by State Statutes. The Relief Association issues a publicly available financial report that include financial statements and required supplementary information. The report may be obtained by writing to Cottage Grove Volunteer Fire Relief Association, 80641 80th Street South, Cottage Grove, MN 55016. Funding Polky Minnesota Statutes Chapter 69.772 sets the minimum contribution requirement for the City of Cottage Grove and State Aid on an annual basis. These statutes are established and amended by the state legislature. The Association is comprised of volunteers; therefore, members have no contribution requirements. The City's annual pension cost for the current year and related information for the plan is as follows: Annual pension cost $120,470 Contributions made: 20 years City $4,200 State aid $120,470 Actuarial valuation date 12/31/2011 Actuarial cost method Entry age normal Amortization method Level dollar Closed Remaining amortization period: Normal cost 20 years Prior service cost 10 years Asset valuation method Market Actuarial assumptions: Investment rate of return 5% Projected salary increases N/A Inflation rate N/A Cost of living adjustments None Three-Year Trend Information Percentage of APC Net Pension Year Ending Annual Pension Cost contributed Obligation 12/31/2009 $115,330 100% $ - 12/31/2010 119,098 100% - 12/31 /2011 120,470 100% - WA CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Schedule of Funding Progress Actuarial Actuarial Actuarial (Unfunded) / Valuation Value of Accrued Assets in Excess Funding Date Assets Liability (AAL) of AAL (UAAL) Ratio 12/31/2009 $1,572,743 $1,455,674 $117,069 108.04% 12/31/2010 1,810,182 1,570,994 239,188 115.23% 12/31/2011 1,780,252 1,541,750 238,502 115.47% The amount received from the State of Minnesota in Fire Relief Aid, $120,470, and then contributed to the Cottage Grove Fire Relief Association is included as a revenue and expenditure, respectively, in the General Fund. Note 9 INTERFUND LOANS AND TRANSFERS The City uses interfund loans when possible to finance construction activities in order to avoid costs associated with issuing bonds. These loans are for this purpose. The mterfund loan receivable and payable balances at December 311, 201111 were: Fund Major Governmental Funds: Municpal Building Capital Project Fund Closed Debt Fund Pavement Management Capital Project Fund Construction Revolving Capital Project Fund Nonmajor Governmental Funds Major Business-Type Funds: Water Operating Enterprise Fund Sewer Operating Enterprise Fund Golf Course Enterprise Fund Total Receivable Payable $ - $ 9,900,000 2,200,000 - - 950,000 - 200,000 3,900,000 500,000 3,200,000 3,200,000 - 950,000 $12,500,000 $ 12,500,000 Interfund receivable and payable balances are used for temporary cash deficits. Interfund receivable and payable balances at December 31, 2011 are as follows: Fund Major Governmental Funds: Pavement Management Debt Service Fund Pavement Management Capital Project Fund Nonmajor Governmental Funds Total $ 1J33,264 $ 1,133,264 78 CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Interfund transfers: Transfer out Transfer in: General Fund Pavement Management Debt Service Fund Nonmajor Govern. Funds Water Operating Fund Total transfers General Fund Nonmajor Closed Debt Govern. Fund Funds Major Business Type Fund Street Cottage Grove Sewer Internal Light EMS Operating Service Fund Fund Fund Fund Total - $ 4,700 $ - $ 3,600 $ - $ - $ 8,300 - 2,699,888 - - - - - 2,699,888 319,215 - 25,000 - - - - 344,215 - - - 9,000 - 29,200 31,000 69,200 $ 319,215 $ 2,699,888 $ 29,700 $ 9,000 $ 3,600 $ 29,200 $ 31,000 $ 3,121,603 Interfund transfers allow the City to allocate financial resources to the funds that receive benefit from services provided by another fund. All transfers in 2011 were considered to be routine in nature. Additionally, administrative fees paid by the Golf Course, Street Light, Cottage Grove EMS, Water Operating, and Sewer Operating Funds to the General Fund have been reclassified as transfers on the government -wide statement of activities as follows: Transfers In: General Fund Transfers out: Golf Course Fund $ 49,200 Street Light Fund 42,500 Cottage Grove EMS Fund 52,500 Water Operating Fund 152,000 Sewer Operating Fund 170,000 Total 466.200 79 CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Note 10 TAX INCREMENT DISTRICTS $ 23,420 $ 108,334 $ 33,092 $ 762,563 The City of Cottage Grove is the administering authority for the following Tax Increment Financing Districts: Cottages of jurisdictions - Oakwood Up North Plastics Cottage Grove Gateway North Industrial Park Industrial Park 23,420 Heights #1 -1 # 1-3 #1 -8 District # 1- 12 #1-13 #1-14 Type of District Housing Redevelop Housing Redevelop Econ. Develop. Econ. Develop. Chapter 472A 472A 469.174 469.174 469.174 469.174 Established 1985 1985 1991 2001 2005 2007 District Duration 25 years 25 years 25 years 25 years 9 years 9 years Current tax capacity $ 23,496 $ 170,584 $ 34,360 $ 1,001,529 $ 177,062 $ 131,250 Original tax capacity (76) (62,250) (1,268) (238,966) (23,310) (5,226) Captured tax capacity $ 23,420 $ 108,334 33,092 $ 762,563 153,752 126,024 Tax capacity retained by City $ 23,420 $ 108,334 $ 33,092 $ 762,563 $ 153,752 $ 126,024 Tax capacity shared with other jurisdictions - - - - 55,558 46,343 Total $ 23,420 $ 108,334 $ 33,092 $ 762,563 $ 98,194 $ 79,681 Debt issued $ 525,000 $ 510,000 $ - $ 3,000,000 $ - $ - Amount redeemed (525,000) (510,000) - (210,000) - Debt outstanding $ - $ - $ - $ 2,790,000 $ - $ Note II DEFICIT FUND BALANCES/NET ASSETS The City has deficit fund balances/net assets at December 31, 2011 as follows: Fund Amount The deficit fund balances will be resolved through Major Governmental Funds: Pavement Management Capital Project Fund Construction Revolving Capital Project Fund Nonmajor Governmental Funds: Sewer Commection and Area Fund Note 12 CONTINGENCIES A. RISK MANAGEMENT $ 1,921,676 Future bonding 18,103 Future special assessments and developer charges 234,520 Future special assessments and developer charges The City is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets; errors and omissions and natural disasters for which the City carries commercial insurance policies. The City retains risk for the deductible portions of the insurance policies. The amount of these deductibles is considered immaterial to the financial statements. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three fiscal years. Workers compensation coverage is provided through a pooled self-insurance program through the League of Minnesota Cities Insurance Trust (LMCIT). The City pays an annual premium to LMCIT. The City is subject to 80 CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 201 supplemental assessments as deemed necessary by the LMCIT. The LMCIT reinsures through Worker's Compensation Reinsurance Association (WCRA) as required by law. For workers compensation, the City is subject to a $10,000 medical expense deductible. The City's premiums are determined after loss experience is known. The amount of premium adjustment, if any, is considered immaterial and not recorded until received or paid. Property and casualty insurance coverage is provided through a pooled self-insurance program through LMCIT. The City pays an annual premium to the LMCIT. The City is subject to supplemental assessments as deemed necessary by the LMCIT. The City established a Self Insurance Fund in 1986 to account for and finance its uninsured risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. Under this program, the Self Insurance Fund provides coverage for losses up to $50,000 for each claim (annual aggregate is $100,000). The City purchases commercial insurance for claims in excess of coverage provided by the Fund and for any risk of loss not covered. Settled claims have not exceeded the commercial coverage in any of the past three fiscal years. This fund is presented as an internal service fund type. All funds of the City participate in the program and make payments to the Self Insurance Fund based on historical cost information. The claims liability of $47,349 reported in the Fund at December 31, 2011 is based on the requirements of Governmental Accounting Standards Board Statement Number 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Changes in the fund's claims liability amounts were as follows: Beginning Claims and End of Year Changes in Claim of Year Year Liability Estimates Payments Liability 2011 7 47,349 $ 136,703 (132,957) $ 51,095 2010 67,176 25,751 (45,578) 47,349 2009 59,995 52,372 (45,191) 67,176 lnvnjnrvuf-�� The City attorney has indicated that existing and pending lawsuits, claims and other actions in which the City is a defendant are either covered by insurance; of an immaterial amount; or, in the judgment of the City attorney, remotely recoverable by plaintiffs. The Cit receives financial assistance from federal and state governmental agencies in the form of grants. The disbursement of funds received under these programs generally requires compliance with the terms and conditions specified in the grant agreements and are subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the applicable fund. However, in the opinion of management, any such disallowed claims will not have a material effect on any of the financial statements of the individual fund types included herein or on the overall financial position of the City at December 31, 201 The City's tax increment districts are subject to review b the State of Minnesota Office of the State Auditor (OSA). Any disallowed claims or misuse of tax increments could become a liability of the applicable fund. Management has recorded claims pa in the government wide statements for its estimated amounts owed. 81 CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Note 13 DEFERRED AD VALOREM TAX LEVIES - BONDED DEBT General Obligation bond issues sold by the City are financed by ad valorem tax levies and special assessment bond issues sold by the City are partially financed by ad valorem tax levies in addition to special assessments levied against the benefiting properties. When a bond issue to be financed partially or completely by ad valorem tax levies is sold, specific annual amounts of such tax levies are stated in the bond resolution and the County Auditor is notified and instructed to levy these taxes over the appropriate years. The future tax levies are subject to cancellation when and if the City has provided alternative sources of financing. The City Council is required to levy any additional taxes found necessary for full payment of principal and interest. These future scheduled tax levies are not shown as assets in the accompanying financial statements at December 31, 2011 and 2010. Future scheduled tax levies for all bonds outstanding at December 31, 2011 totaled $5,277,918. 82 CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Note 14 FUND BALANCES At December 31, 2011 the City had various fund balances through legal restriction and City Council authorization. Fund balance appropriations at December 31, 2011 are shown on the various balance sheets as segregations of the fund balance. The fund balance classifications for governmental funds are as follows: Nonspendable Restricted Committed Assigned Unassigned Total General Fund: $ - $ - $ - $ - $ 7,178,108 $ 7,178,108 Prepaid items 24,382 - - - - 24,382 Compensated absences Park shelter /playground equipment MVHC aid set aside Emerald ash borer program Public safety equipment School bus safety Total General Fund Municipal Building Capital Project Fund: Municipal building activities MSA Construction Capital Project Fund: Assets for resale MSA construction activities Closed Debt Fund: Long -term interfund receivable Debt retirement Pavement Management Debt Service Fund: Debt retirement Pavement Management Capital Project Fund Construction Revolving Capital Project Fund Total Other Major Funds Nonmajor Governmental Funds: Prepaid items Long -term interfund receivable Forfeiture and seizure Charitable gambling Debt retirement Tax increment purposes Park trust activities Ice arena Storm water activities Recycling program Equipment replacement Street sealcoating Economic development Future pavement management Tree mitigation Future roads and trails Capital improvements Deficit Fund Balance Total Nonmajor Funds Total Fund Balances Governmental Funds 24,382 267,498 2,200,000 - - 725,863 - 725,863 - - 217,091 - 217,091 - - 601,523 - 601,523 - - 40,200 - 40,200 - - 23,000 - 23,000 - - 3,750 - 3,750 - 1,611,427 7,178,108 8,813,917 - - 1,297,179 - 1,297,179 - - - - 267,498 - - 367,343 - 367,343 - - 2,200,000 953,447 - 953,447 1,093,143 - - - 1,093,143 - - - (1,921,676) (1,921,676) - (18,103) (18,103) 2,467,498 1,093,143 - 2,617,969 (1,939,779) 4,238,831 938 - - - - 938 3,900,000 - - - - 3,900,000 - 50,968 - - - 50,968 - 1,920 - - - 1,920 - 476,633 - - - 476,633 - 1,184,983 - - - 1,184,983 - 637,498 - - - 637,498 - 442,604 - - 442,604 - - 311,596 - - 311,596 - - 79,300 - - 79,300 - - 3,276,491 - 3,276,491 - - - 386,001 - 386,001 - - - 2,398,244 - 2,398,244 _ - - 481,412 - 481,412 - _ - 198,614 - 198,614 - - - 183,331 - 183,331 - - - 5,631,017 - 5,631,017 _ _ - - (234,520) (234,520) 3,900,938 2,352,002 833,500 12,555,110 (234,520) 19,407,030 $ 6,392,818 $ 3,445,145 $ 833,500 $ 16,784,506 $ 5,003,809 $ 32,459,778 83 CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Note 15 OTHER POSTEMPLOYMENT BENEFIT PLAN At December 31, 2008, the City adopted Governmental Accounting Standards Board (GASB) Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions. The City engaged an actuary to determine the City's liability for postemployment healthcare benefits other than pensions. A. PLAN DESCRIPTION The City provides benefits for retirees as required by Minnesota Statute §471.61 subdivision 2b. Active employees, who retire from the City when over age 50 and with 20 years of service, may continue coverage with respect to both themselves and their eligible dependent(s) under the City's health benefits program until age 65. Pursuant to the provisions of the plan, retirees are required to pay the total premium cost. As of December 31, 2011 there were approximately 116 active participants and 2 retired participants receiving benefits from the City's health plans. The Plan does not issue a separate report. B. FUNDING POLICY The City funds its OPEB obligation on a pay as you go basis. For fiscal year 2011, the City contributed $6,622 to the plan. C. ANNUAL OPEB COST AND NET OPEB OBLIGATION The City's annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution (ARC), an amount actuarially determined in accordance with the parameters of GAS13 Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any un-funded actuarial liabilities over a period not to exceed thirty years. The following table shows the components of the City's annual OPEB costs for the year, the amount actually paid from the plan, and changes in the City's net OPEB obligation: Annual required Contribution $ 12,290 Interest on Net OPEB Obli 1,329 Adjustment to Annual Required Contribution (2,228) Annual OPEB Cost (Expense) 11,391 Contributions Made (6,549) Increase in Net OPEB Obligation 4,842 Net OPEB Obligation- Beginning of Year 44,308 Net OPEB Obli End of Year $ 49,150 The City's annual OPEB cost, the percentage of the annual OPEB cost contributed to the plan, and the net OPEB obligation for 2011: 84 Percentage Fiscal Annual of Annual Net Year OPEB OPEB Cost OPEB Ended Cost Contributed Obligation 12/31/2011 11,391 57.5% $ 49,150 12/31/2010 19,796 33.9% 44,308 12/31/2009 20,016 17.3% 31,214 84 CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 A FUNDED STATUS AND FUNDED PROGRESS As of January 1, 2011, the most recent actuarial valuation date, the City's unfunded actuarial accrued liability (UAAL) was $108,298. The annual payroll for active employees covered b the plan in the actuarial valuation was $8,887,000 for a ratio of UAAL to covered payroll of 1.2%. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and healthcare cost trends. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. E. ACTUARIAL METHODS AND ASSUMPTIONS Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the emplo and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the January 1, 2011 actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions included a 3% investment rate of return (net of administrative expenses), which is a blended rate of the expected long-term investment returns on plan assets and on the employer's own investments calculated based on the funded level of the plan at the valuation date. The inflation assumption was 3%. The initial healthcare trend rate was 8%, reduced by decrements to an ultimate rate of 4% after five years. The UAAL is being amortized as a level percentage of projected pa on an open basis. The remaining amortization period at December 31, 2011 was 26 years. Note 16 OPERATING LEASES The City leases land for the golf course under an operating lease. The lease expired on April 30, 2010 with the option to extend the term for three additional terms of five years each. The lease was extended for an additional five years. The lease calls for monthly lease payments of $1,247 for the first five years and from that point payments will be based on fair market value per acre. This lease was amended during 1996 to require that the monthly lease payments remain at $1,247 for lease years 6 through 10 (1995 to 2000). The lease was amended again in 1999 to require that the monthly lease payments equal $1 per month for the remaining term of the lease agreement. In 2011, $12 was paid under this lease arrangement. 85 CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 The City leases six copiers under an operating lease. Total costs for these leases were $13,296 for the year ended December 31, 2011. Future minimum annual lease payments at December 31, 2011 are as follows: Golf Year Ended Course December 31 Land C opiers 2012 $ $8,742 The City entered into two operating leases during 2007 for the leasing of -ice time for the Ice Arena with Independent School District 833 and the Cottage Grove Athletic Association. The lease payments began in 2008 when the new ice arena expansion project opened. The future minimum annual lease payments that the City will receive are as follows: Independent Cottage Grove Year Ended School District Athletic December 31 833 Association 2012 7 — 112,125 400,000 2013 104,250 400,000 2014 104,250 400,000 2015 104,250 400,000 2016 104,250 400,000 2017-2021 521,250 2,000,000 2022-2026 521,250 2,000,000 2027-2029 312,750 1,119,000 Note 17 COMMITTED CONTRACTS At December 31, 2011, the Cit had commitments of $10,825,455 for uncompleted construction contracts. The City began construction on a new Public Safety/City Hall facility in 2011 with completion in 2012. 13-1 CITY OF COTTAGE GROVE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Note 18 CONDUIT DEBT OBLIGATIONS The City has issued Industrial Revenue Bonds to provide financial assistance to private sector entities for the acquisition and construction of industrial and commercial facilities which are deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private sector entity served by the bond issue. The City is not obligated in any manner for the repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of December 31, 2011, a series of Industrial Revenue Bonds were outstanding. Bond Environmental Control Revenue Bonds -3M Industrial Revenue Bonds - Allina Health Systems Industrial Revenue Bonds-Advance Corporation Commercial Development Revenue Note -HSI Commercial Development Revenue Nate -ESR, Inc. Commercial Development Revenue Nate -ESR, Inc. Subordinate Senior Housing Revenue Bonds -PHS Subordinate Senior Housing Revenue Bonds -PHS Variable Rate Revenue Bonds - Allina Health System *Per original conduit debt bond schedule Note 19 PROPERTIES HELD FOR RESALE The City purchased land in 2010 to be resold to a future industrial occupant in the City's industrial park. The occupant is not known at this time. The EDA component unit purchased land in 2011 to be resold for possible future development. The occupant is not known at this time. Note 20 SUBSEQUENT EVENT The City Council authorized the issuance and public sale of $1,865,000 General Obligation Improvement Bonds, Series 2012A on 1/1/2012. The bonds were issued and dated 3/13/2012. The bonds were used for 2010 and 2011 pavement management projects constructed in the Pavement Management Capital Project Fund. 87 Original Issue Issue Date Amount 12/31/11 Balance* Maturity Date 08/01/1982 $5,600,000 Not available 08/01/2012 08/05/1998 4,100,000 Not available 08/05/2018 04/30/2001 3,500 $2,495 04/01/2021 12/22/2004 935,000 687,480 12/01/2024 11/22/2005 76,500 47,912 11/22/2025 05/19/2005 853,000 680,431 12/19/2025 12/01/2006 21,105,000 21,105,000 12/01/2046 12/01/2006 8,075,000 8,075,000 12/01/2046 11/01/2009 6,100,000 6,100,000 11/15/2022 50,344,500 X39,190,823 *Per original conduit debt bond schedule Note 19 PROPERTIES HELD FOR RESALE The City purchased land in 2010 to be resold to a future industrial occupant in the City's industrial park. The occupant is not known at this time. The EDA component unit purchased land in 2011 to be resold for possible future development. The occupant is not known at this time. Note 20 SUBSEQUENT EVENT The City Council authorized the issuance and public sale of $1,865,000 General Obligation Improvement Bonds, Series 2012A on 1/1/2012. The bonds were issued and dated 3/13/2012. The bonds were used for 2010 and 2011 pavement management projects constructed in the Pavement Management Capital Project Fund. 87 88 REQUIRED SUPPLEMENTARY INFORMATION 0 CITY OF COTTAGE GROVE, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2011 With Comparative Data for the Year Ended December 31, 2010 Revenue: General property taxes: Current and delinquent Special Assessments Licenses and permits: General government Community development Public safety Public works Total licenses and permits Intergovernmental: Federal: Firefighter assistance grant - public safety Disaster assistance - public safety Safe and sober - public safety Ballistic vest grant - public safety Homeland security - public safety Misc grant - general government State: Disaster assistance - public safety Market value homestead credit MSA maintenance - public works PERA aid Fire relief aid - public safety Police relief aid - public safety Forest protection grant - parks and recreation Other - public safety Local: SRO program - public safety Narcotics officer program - public safety Other - public safety Other -public works Other - culture and recreation Total intergovernmental Charges for services: Administration charges - general government: Construction funds Enterprise funds Finance charges - construction - general government Investment charge - general government Engineering charges - construction - public works Other - general government Other - community development Other - public safety Other -public works Other - culture and recreation Total charges for services Statement 9 Page 1 of 6 100,800 100,800 Variance with (1,029) 114,435 2011 Final Budget- 2010 Budgeted Amounts Actual Positive Actual Original Final Amounts (Negative) Amounts $ 10,345,100 $ 10,345,100 $ 10,332,994 $ (12,106) $ 10,195,797 3,500 3,500 14,984 11,484 5,156 Revenue: General property taxes: Current and delinquent Special Assessments Licenses and permits: General government Community development Public safety Public works Total licenses and permits Intergovernmental: Federal: Firefighter assistance grant - public safety Disaster assistance - public safety Safe and sober - public safety Ballistic vest grant - public safety Homeland security - public safety Misc grant - general government State: Disaster assistance - public safety Market value homestead credit MSA maintenance - public works PERA aid Fire relief aid - public safety Police relief aid - public safety Forest protection grant - parks and recreation Other - public safety Local: SRO program - public safety Narcotics officer program - public safety Other - public safety Other -public works Other - culture and recreation Total intergovernmental Charges for services: Administration charges - general government: Construction funds Enterprise funds Finance charges - construction - general government Investment charge - general government Engineering charges - construction - public works Other - general government Other - community development Other - public safety Other -public works Other - culture and recreation Total charges for services Statement 9 Page 1 of 6 100,800 100,800 99,771 (1,029) 114,435 525,500 525,500 460,725 (64,775) 609,092 34,800 34,800 31,216 (3,584) 28,501 - - 1,560 1,560 1,440 661,100 661,100 593,272 (67,828) 753,468 23,000 29,520 29,520 15,447 15,447 23,000 22,824 - 1,289 (176) 20,239 1,289 5,996 - 5,353 130 42,000 21,450 120,000 262,000 18,500 72,700 3,500 19,800 582,950 495,600 15,500 150 30,000 55,000 28,000 191,600 815,850 4,634 4,634 - - - 4,698 4,698 5,602 42,000 43,905 1,905 42,609 21,450 21,448 (2) 21,448 120,000 121,470 1,470 126,005 262,000 254,444 (7,556) 254,806 - 6,206 6,206 68,794 18,500 20,943 2,443 18,444 72,700 75,000 2,300 75,000 3,500 4,079 579 6,606 6,700 7,304 604 5,087 - 2,867 2,867 1,911 34,800 32,131 (2,669) 17,003 654,251 668,209 13,958 675,033 - - - 7,260 495,600 495,600 - 495,600 - - - 10,889 15,500 20,158 4,658 15,558 - - - 14,810 40,950 41,392 442 36,601 65,000 66,199 1,199 335,186 55,000 76,196 21,196 73,375 36,200 44,414 8,214 32,983 173,600 135,252 (38,348) 136,596 881,850 879,211 (2,639) 1,158,858 ME CITY OF COTTAGE GROVE, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2011 With Comparative Data for the Year Ended December 31, 2010 Statement 9 Page 2 of 6 Fines and forfeits - public safety Investmentearnings Donations: Donations - general government Donations - public safety Donations - culture and recreation Total donations Miscellaneous: Other - general government Other - public safety Other - culture and recreation Total miscellaneous Total revenues Expenditures: Current General government Mayor and city council: Personal services Commodities Contractual services Total mayor and city council Administrative: Personal services Commodities Contractual services Total administrative Finance: Personal services Commodities Contractual services Total finance Management information systems: Personal services Commodities Contractual services Capital outlay Total management information systems 40,050 40,050 38,942 Variance with 39,281 2,050 2,050 2011 Final Budget- 2010 Budgeted Amounts Actual Positive Actual Original Final Amounts (Negative) Amounts $ 226,000 $ 226,000 $ 193,676 $ (32,324) $ 201,559 67,500 67,500 84,706 17,206 65,279 - - 3,027 3,027 5,850 3,000 3,000 7,313 4,313 10,056 7,000 7,000 4,925 (2,075) 7,540 10,000 10,000 15,265 5,265 23,446 16,750 16,750 36,465 19,715 3,799 12,600 12,600 10,796 (1,804) 11,846 10,400 10,400 9,013 (1,387) 7,240 39,750 39,750 56,274 16,524 22,885 12,751,750 12,889,051 12,838,591 (50,460) 13,101,481 40,050 40,050 38,942 1,108 39,281 2,050 2,050 997 1,053 601 76,050 116,850 140,844 (23,994) 96,946 118,150 158,950 180,783 (21,833) 136,828 217,300 217,300 234,373 (17,073) 261,805 800 800 1,319 (519) 311 1,840 1,840 860 980 1,536 219,940 219,940 236,552 (16,612) 263,652 413,520 413,520 406,894 6,626 403,276 2,500 2,500 1,402 1,098 1,956 28,365 28,365 21,567 6,798 16,665 444,385 444,385 429,863 14,522 421,897 92,200 92,200 91,027 1,173 87,622 37,650 37,650 43,431 (5,781) 41,393 61,075 67,675 57,135 10,540 38,548 19,500 19,500 13,922 5,578 40,693 210,425 217,025 205,515 11,510 208,256 91 CITY OF COTTAGE GROVE, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2011 With Comparative Data for the Year Ended December 31, 2010 Statement 9 Page 3 of 6 Expenditures: (continued) General government (continued) Personnel: Personal services Commodities Contractual services Total personnel Assessing service: Contractual services City clerk/elections: Personal services Commodities Contractual services Total City clerk/elections Legal: Contractual services Community and employee programs: Personal services Commodities Contractual services Total community and employee programs Government buildings: Personal services Commodities Contractual services Total government buildings Historic preservation: Personal services Commodities Contractual services Total historic preservation Planning and zoning: Personal services Commodities Contractual services Total planning and zoning Building inspections: Personal services Commodities Contractual services Total building inspections Total general government 92 Variance with 2011 Final Budget- 2010 Budgeted Amounts Actual Positive Actual Original Final Amounts (Negative) Amounts $ 103,600 $ 103,600 $ 78,722 $ 24,878 $ 85,884 400 400 159 241 11 7,100 7,100 12,251 (5,151) 8,074 111,100 111,100 91,132 19,968 93,969 152,000 152,000 141,860 10,140 137,105 157,600 157,600 134,659 22,941 157,828 2,400 2,400 1,777 623 1,412 14,825 14,825 9,625 5,200 10,597 174,825 174,825 146,061 28,764 169,837 175,200 175,200 181,485 (6,285) 173,431 4,300 4,300 3,675 625 2,225 500 500 - 500 309 72,800 72,800 56,937 15,863 45,110 77,600 77,600 60,612 16,988 47,644 15,500 15,500 8,481 7,019 6,163 11,800 11,800 9,631 2,169 8,928 198,046 198,046 182,868 15,178 182,296 225,346 225,346 200,980 24,366 197,387 10,100 10,100 4,421 5,679 3,846 - - 298 (298) - 1,000 1,000 225 775 - 11,100 11,100 4,944 6,156 3,846 420,400 420,400 378,196 42,204 396,939 2,500 2,500 1,694 806 884 19,000 44,000 57,914 (13,914) 307,844 441,900 466,900 437,804 29,096 705,667 384,800 384,800 392,613 (7,813) 377,678 8,500 8,500 7,380 1,120 6,355 21,500 36,500 48,807 (12,307) 42,427 414,800 429,800 448,800 (19,000) 426,460 2,776,771 2,864,171 2,766,391 97,780 2,985,979 92 CITY OF COTTAGE GROVE, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 4 of 6 For The Year Ended December 31, 2011 With Comparative Data for the Year Ended December 31, 2010 Variance with 2011 Final Budget- 2010 Budgeted Amounts Actual Positive Actual Original Final Amounts (Negative) Amounts Expenditures: (continued) Public safety: Police protection: Personal services $ 4,334,500 $ 4,334,500 $ 4,328,904 $ 5,596 $ 4,100,148 Commodities 261,200 258,200 246,426 11,774 236,813 Contractual services 284,100 284,100 261,694 22,406 252,007 Capital outlay 116,400 102,400 101,660 740 102,017 Total police protection 4,996,200 4,979,200 4,938,684 40,516 4,690,985 Fire protection: Personal services 439,415 439,415 455,581 (16,166) 380,221 Commodities 67,700 67,700 70,030 (2,330) 66,108 Contractual services 185,550 185,550 187,785 (2,235) 185,982 Capital outlay - 29,520 33,220 (3,700) - Total fire protection 692,665 722,185 746,616 (24,431) 632,311 Fire relief: Contractual services 123,000 123,000 125,671 (2,671) 130,351 Civil defense: Personal services 27,900 27,900 33,104 (5,204) 25,680 Commodities 100 20,181 14,861 5,320 4,398 Contractual services 11,170 17,870 19,368 (1,498) 9,990 Total civil defense 39,170 65,951 67,333 (1,382) 40,068 Animal control: Personal services 11,500 11,500 11,743 (243) 10,192 Commodities 4,700 4,700 2,548 2,152 2,676 Contractual services 64,050 64,050 48,209 15,841 57,181 Total animal control 80,250 80,250 62,500 17,750 70,049 Total public safety 5,931,285 5,970,586 5,940,804 29,782 5,563,764 Public works: Public works administration: Personal services 249,200 249,200 244,856 4,344 246,085 Commodities 19,500 19,500 19,675 (175) 16,540 Contractual services 119,100 119,100 121,453 (2,353) 123,364 Total public works administration 387,800 387,800 385,984 1,816 385,989 Engineering: Personal services 115,500 115,500 97,473 18,027 93,879 Commodities 1,600 1,600 338 1,262 755 Contractual services 28,700 28,700 40,371 (11,671) 16,266 Total engineering 145,800 145,800 138,182 7,618 110,900 93 CITY OF COTTAGE GROVE, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2011 With Comparative Data for the Year Ended December 31, 2010 Statement Page 5 of 6 Variance with 2011 Final Budget- 2010 Budgeted Amounts Actual Positive Actual Original Final Amounts (Negative) Amounts Expenditures: (continued) Public works: Streets: Personal services $ 516,200 $ 516,200 $ 508,845 $ 7,355 $ 500,621 Commodities 182,300 182,300 169,064 13,236 174,143 Contractual services 265,520 265,520 314,237 (48,717) 231,153 Capital outlay 60,000 60,000 58,500 1,500 7,332 Total streets 1,024,020 1,024,020 1,050,646 (26,626) 913,249 Snow and ice control: Personal services 172,600 172,600 154,157 18,443 211,709 Commodities 189,300 189,300 202,341 (13,041) 199,281 Contractual services 117,900 117,900 113,732 4,168 105,617 Capital outlay - - - - 7,331 Total snow and ice control 479,800 479,800 470,230 9,570 523,938 Street signs /striping: Personal services 111,500 111,500 88,487 23,013 89,380 Commodities 34,500 34,500 29,917 4,583 33,606 Contractual services 40,320 48,520 51,222 (2,702) 42,206 Total street signs /striping 186,320 194,520 169,626 24,894 165,192 Total public works 2,223,740 2,231,940 2,214,668 17,272 2,099,268 Culture and recreation: Forestry: Personal services 64,700 64,700 94,477 (29,777) 80,735 Commodities 12,750 12,750 15,728 (2,978) 127,980 Contractual services 270,570 252,570 198,478 54,092 181,142 Total forestry 348,020 330,020 308,683 21,337 389,857 Municipal pool: Commodities 9,200 9,200 7,077 2,123 7,983 Contractual services 55,500 55,500 55,358 142 61,499 Total municipal pool 64,700 64,700 62,435 2,265 69,482 Recreation programs: Personal services 246,900 246,900 225,823 21,077 228,945 Commodities 11,250 11,250 9,320 1,930 11,296 Contractual services 79,300 79,300 64,095 15,205 63,380 Total recreation programs 337,450 337,450 299,238 38,212 303,621 94 CITY OF COTTAGE GROVE, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2011 With Comparative Data for the Year Ended December 31, 2010 Statement 9 Page 6 of 6 Expenditures: (continued) Culture and recreation: (continued) Parks maintenance : Personal services Commodities Contractual services Capital outlay Total parks maintenance Total culture and recreation Total current expenditures Debt service : Capital lease payment Interest Total debt service 2,792 208 3,000 Total expenditures 12,673,286 13,064,307 Variance with 211,408 12,408,931 Revenues over (under) expenditures 2011 Final Budget- 2010 Budgeted Amounts Actual Positive Actual Original Final Amounts (Negative) Amounts - 3,600 3,600 2,758 Transfer from Special Revenue Fund $ 553,400 $ 553,400 $ 555,470 $ (2,070) $ 527,465 163,125 183,985 164,577 19,408 147,575 256,295 256,555 276,391 (19,836) 267,394 18,500 271,500 264,242 7,258 51,526 991,320 1,265,440 1,260,680 4,760 993,960 1,741,490 1,997,610 1,931,036 66,574 1,756,920 12,673,286 13,064,307 12,852,899 211,408 12,405,931 2,792 208 3,000 Total expenditures 12,673,286 13,064,307 12,852,899 211,408 12,408,931 Revenues over (under) expenditures 78,464 (175,256) (14,308) 160,948 692,550 Other financing sources (uses): Transfer from Enterprise Fund - - 3,600 3,600 2,758 Transfer from Special Revenue Fund - - 4,700 4,700 1,062 Transfer to Special Revenue Fund (319,215) (319,215) (319,215) - (493,195) Transfer to Debt Service Fund - - - - (103,670) Transfer to Capital Project Fund - - - - (91,950) Total other financing sources (uses): (319,215) (319,215) (310,915) 8,300 (684,995) Net increase (decrease) in fund balance $ (240,751) $ (494,471) (325,223) $ 169,248 7,555 Fund balance - January 1 9,139,140 9,131,585 Fund balance - December 31 $ 8,813,917 $ 9,139,140 95 CITY OF COTTAGE GROVE, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE NOTE TO RSI December 31, 2011 Note LEGAL COMPLIANCE- BUDGETS The General Fund is legally adopted on a basis consistent with accounting principles generally accepted in the United States of America. The legal level of budgetary control is at the department level for both budgets. The following is a fisting of expenditures that exceeded budget appropriations. PIA Final Budget Actual Over Budget General Fund General government: Mayor and city council: Contractual services $ 116,850 $ 140,844 $ 23,994 Administrative: Personal services 217,300 234,373 17,073 Commodities 800 1,319 519 Management information services: Commodities 37,650 43,431 5,781 Personnel: Contractual services 7,100 12,251 5,151 Legal: Contractual services 175,200 181,485 6,285 Historical preservation: Commodities - 298 298 Planning and zoning: Contractual services 44,000 57,914 13,914 Building inspections: Personal services 384,800 392,613 7,813 Contractual services 36,500 48,807 12,307 Public safety: Fire protection: Personal services 439,415 455,581 16,166 Commodities 67,700 70,030 2,330 Contractual services 185,550 187,785 2,235 Capital outlay 29,520 33,220 3,700 Fire relief. Contractual services 123,000 125,671 2,671 Civil defense: Personal services 27,900 33,104 5,204 Contractual services 17,870 19,368 1,498 Animal control: Personal services 11,500 11,743 243 Public works: Public works administration: Commodities 19,500 19,675 175 Contractual services 119,100 121,453 2,353 Engineering: Contractual services 28,700 40.371 11,671 Streets: Contractual services 265,520 314,237 48,717 Snow and ice control: Commodities 189,300 202,341 13,041 Street signs /striping: Contractual services 48,520 51,222 2,702 Culture and recreation: Forestry: Personal services 64,700 94,477 29,777 Commodities 12,750 15,728 2,978 Parks maintenance: Personal services 553,400 555,470 2,070 Contractual services 256,555 276,391 19,836 PIA CITY OF COTTAGE GROVE, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION FUNDING PROGRESS SCHEDULE OTHER POST EMPLOYMENT HEALTH CARE BENEFITS December 31, 2011 Covered Payroll (c) $ 8,750,900 8,887,000 UAAL as Percentage of Covered Payroll ((b -a) /c) 1.7% 1.2% PYA Actuarial Actuarial Accrued Actuarial Value of Liability Unfunded Funded Valuation Assets (AAL) AAL Ratio Date (a) (b) (b-a) (a/b) 1/1/2008 $ - $ 146,597 $ 146,597 - 1/1/2011 - 108,298 108,298 - Covered Payroll (c) $ 8,750,900 8,887,000 UAAL as Percentage of Covered Payroll ((b -a) /c) 1.7% 1.2% PYA 98 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES m 100 NONMAJOR GOVERNMENTAL FUNDS 101 SPECIAL REVENUE FUNDS A Special Revenue Fund is used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. DEBT SERVICE FUNDS The Debt Service Funds are used to account for the accumulation of resources for, and payment of, interest, principal and related costs on general long -term debt. CAPITAL PROJECT FUNDS The Capital Project Funds account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by Proprietary Funds). 102 CITY OF COTTAGE GROVE, MINNESOTA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS December 31, 2011 With Comparative Data as of December 31, 2010 Statement 10 Liabilities and Fund Balance Totals Liabilities: Nonmajor Accounts payable Special Debt Capital Governmental Funds $ 158,635 Revenue Service Project 2011 2010 Assets Interfund payable - - 234,520 234,520 Cash and investments $ 678,253 $ 1,305,420 $ 13,872,462 $ 15,856,135 $ 17,962,929 Accrued interest receivable - - 34,000 34,000 20,000 Interfund receivable - - 234,520 234,520 - Interfundloan receivable - - 3,900,000 3,900,000 2,225,000 Due from other governmental units - net 40,911 - 17,319 58,230 20,461 Accounts receivable - net 227,659 - 137,124 364,783 470,412 Prepaid items 938 - - 938 1,273 Delinquent property taxes receivable 5,727 - 28,636 34,363 42,500 Special assessments receivable: Prepaid items 938 - - 938 Deferred - 272,390 204,313 476,703 993,302 Delinquent - - 2,446 2,446 2,058 Total assets $ 953,488 7 1,577,810 $ 18,430,820 $ 20,962,118 $ 21,737,935 Liabilities and Fund Balance Liabilities: Accounts payable $ 41,588 $ - $ 62,507 $ 104,095 $ 158,635 Salaries payable 14,334 - - 14,334 17,861 Interfund payable - - 234,520 234,520 - Contracts payable - - 23,915 23,915 54,261 Due to other governmental units 3,813 - - 3,813 3,165 Deposits payable - - 160,199 160,199 101,812 Interfund loan payable - - 500,000 500,000 575,000 Deferred revenue 6,427 272,390 235,395 514,212 1,039,260 Total liabilities 66,162 272,390 1,216,536 1,555,088 1,949,994 Fund balance: Nonspendable: Prepaid items 938 - - 938 1,273 Long -term interfund loan receivable - - 3,900,000 3,900,000 2,225,000 Restricted for Forfeiture and seizure 50,968 - - 50,968 44,354 Charitable gambling 1,920 - - 1,920 3,052 Debt retirement - 476,633 - 476,633 330,960 Tax increment purposes - 828,787 356,196 1,184,983 1,191,170 Park trust activites - - 637,498 637,498 749,828 Committed 833,500 - - 833,500 931,129 Assigned - - 12,555,110 12,555,110 14,311,175 Unassigned - - (234,520) (234,520) - Total fund balance 887,326 1,305,420 17,214,284 19,407,030 19,787,941 Total liabiliti es and fund balance $ 953,488 $ 1,577,810 $ 18,430,820 $ 20,962,118 $ 21,737,935 103 CITY OF COTTAGE GROVE, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE NONMAJOR GOVERNMENTAL FUNDS For The Year Ended December 31, 2011 With Comparative Data for the Year Ended December 31, 2010 Statement 11 Revenues over (under) expenditures (62,782) 113,219 (758,207) Totals 1,477,032 Other financing sources (uses): Nonmajor Transfers in Special Debt Capital Governmental Funds Revenues: Revenue Service Project 2011 2010 General property taxes $ 238,253 $ - $ 2,683 $ 240,936 $ 243,130 Franchise taxes - - 535,188 535,188 517,391 Aggregate taxes - - 26,131 26,131 30,554 Tax increment collections - 141,726 804,877 946,603 1,253,414 Special assessments - 349,470 239,464 588,934 911,972 Direct charges to developers - - 101,913 101,913 - Intergovernmental 266,521 - - 266,521 328,908 Charges for services 1,468,109 - 146,698 1,614,807 1,509,570 Fines and forfeits 53,077 - - 53,077 30,425 Investment earnings 12,746 12,702 193,478 218,926 151,717 Interest on interfund loan - - 105,500 105,500 74,500 Connection charges - - 322,009 322,009 439,238 Park dedication fees - - 62,198 62,198 145,640 Donations 3,840 - 364,721 368,561 378,692 Miscellaneous 1,250 - 657 1,907 6,782 Total revenues 2,043,796 503,898 2,905,517 5,453,211 6,021,933 Expenditures: Current: General government 5,000 634 1,926 7,560 100,702 Economic development - - 793,046 793,046 299,614 Public safety 20,774 - 874 21,648 31,560 Public works 855,431 - 636,667 1,492,098 1,111,268 Culture and recreation 645,058 - 14,881 659,939 625,515 Capital outlay: General government - - 23,223 23,223 41,714 Public safety 10,000 - 24,729 34,729 28,064 Public works - - 1,620,549 1,620,549 566,248 Culture and recreation 60,322 - 223,402 283,724 432,663 Debt service: Principal retirement - 225,000 215,000 440,000 505,000 Capital lease payment 245,000 - - 245,000 236,397 Interest and fiscal charges 264,993 165,045 109,427 539,465 566,156 Total expenditures 2,106,578 390,679 3,663,724 6,160,981 4,544,901 Revenues over (under) expenditures (62,782) 113,219 (758,207) (707,770) 1,477,032 Other financing sources (uses): Transfers in - - 344,215 344,215 886,726 Transfers out (29,700) - - (29,700) (183,977) Proceeds from the sale of capital assets - - 12,344 12,344 71,506 Total other financing sources (uses) (29,700) - 356,559 326,859 774,255 Net increase (decrease) in fund balance (92,482) 113,219 (401,648) (380,911) 2,251,287 Fund balance- January 1 979,808 1,192,201 17,615,932 19,787,941 17,536,654 Fund balance - December 31 $ 887,326 $ 1,305,420 $ 17,214,284 $ 19,407,030 $ 19,787,941 104 NONMAJOR SPECIAL REVENUE FUNDS Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for particular purposes. The City maintained the following Special Revenue Funds during the year: Recvcling - Established to account for recycling advertising, promotion, and capital expenditures. Storm Water Maintenance — Established to account for the receipt of storm water fees to be used for storm water maintenance activities. Forfeiture /Seizure - Established to account for Police Department proceeds from property seized under MS 609.53. Ice Arena Fund - Established to account for operating the City's ice arena. Public Safetv Grants — Established to account for revenues and expenditures of public safety grants. Charitable Gambling — Established to account for the 3% tax on charitable gambling operations. 105 CITY OF COTTAGE GROVE, MINNESOTA SUBCOMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS December 31, 2011 With Comparative Data as of December 31, 2010 Storm Water Forfeiture/ Recycling Maintenance Seizure Assets Cash and investments Due from other governmental units - net Accounts receivable - net Prepaid items Delinquent property taxes receivable Total assets Liabilities and Fund Balance Liabilities: Accounts payable Salaries payable Contracts payable Due to other governmental units Deposits payable Deferred revenue Total liabilities Fund balance: Nonspendable: Prepaid items Restricted for Forfeiture and seizure Charitable gambling Committed for Ice arena Public safety department Storm water activities Recycling program Total fund balance Total liabilities and fund balance $ 81,403 $ 217,895 $ 51,515 103,840 414 $ 81,403 $ 321,735 $ 51,929 $ 1,558 $ 7,401 $ 961 - 2,202 - 545 536 2,103 10,139 961 50,968 - 311,596 79,300 - - 79,300 311,596 50,968 $ 81,403 $ 321,735 $ 51,929 EKP Statement 12 938 938 1,273 - - 50,968 44,354 1,920 1,920 3,052 442,604 442,604 532,067 - - 6,261 311,596 309,566 - 79,300 83,235 443,542 1,920 887,326 979,808 $ 496,501 $ $ 1,920 $ 953,488 $ 1,128,714 107 Totals Nonmajor Ice Public Safety Charitable Special Revenue Funds Arena Grants Gambling 2011 2010 $ 325,520 $ - $ 1,920 $ 678,253 $ 780,435 40,911 - - 40,911 3,587 123,405 - - 227,659 337,085 938 - - 938 1,273 5,727 - - 5,727 6,334 $ 496,501 $ 7 1,920 $ 953,488 $ 1,128,714 $ 31,668 $ $ $ 41,588 $ 68,413 12,132 14,334 17,861 - - 48,233 2,732 3,813 3,165 - - 3,500 6,427 6,427 7,734 52,959 66,162 148,906 938 938 1,273 - - 50,968 44,354 1,920 1,920 3,052 442,604 442,604 532,067 - - 6,261 311,596 309,566 - 79,300 83,235 443,542 1,920 887,326 979,808 $ 496,501 $ $ 1,920 $ 953,488 $ 1,128,714 107 CITY OF COTTAGE GROVE, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE NONMAJOR SPECIAL REVENUE FUNDS For The Year Ended December 31, 2011 With Comparative Data for the Year Ended December 31, 2010 108 Storm Water Forfeiture/ Recycling Maintenance Seizure Revenues: General property taxes $ - $ - $ - Intergovernmental: Federal: Bryne JAG grant Local: Washington county 53,150 1,245 School district - - Other - 149,260 Charges for services - 644,858 - Fines and forfeits - - 53,077 Investment earnings 1,180 3,468 590 Donations - - - Miscellaneous 1,000 250 - Total revenues 55,330 797,836 54,912 Expenditures: Current: General government - - - Public safety - - 13,298 Public works 59,265 796,166 - Culture and recreation - - - Capital outlay: Public safety - - 10,000 Public works - - - Culture and recreation - - - Debt service: Capital lease payment - - - Interest and fiscal charges - - - Total expenditures 59,265 796,166 23,298 Revenues over (under) expenditures (3,935) 1,670 31,614 Other financing sources (uses): Transfer to General Fund - - Transfer to Special Revenue Fund - - - Transfer to Capital Project Fund - - (25,000) Total other financing sources (uses) - - (25,000) Net increase (decrease) in fund balance (3,935) 1,670 6,614 Fund balance - January 1 83,235 309,926 44,354 Fund balance - December 31 $ 79,300 $ 311,596 $ 50,968 108 Statement 13 Totals Ice Arena $ 238,253 Public Safety Grants Norm aj or Charitable Special Revenue Funds Gambling 2011 2010 $ - $ 238,253 $ 239,362 109 5,866 - 5,866 15,933 - - - 54,395 53,150 57,000 - - 57,000 179,200 - - - 149,260 80,625 823,251 - - 1,468,109 1,497,626 - - - 53,077 30,425 7,431 49 28 12,746 9,977 - - 3,840 3,840 3,679 - - - 1,250 5 1,125,935 5,915 3,868 2,043,796 2,109,982 - - 5,000 5,000 6,000 7,476 - 20,774 31,560 - - - 855,431 510,906 645,058 - 645,058 608,307 - - 10,000 - - - - - 30,737 60,322 - - 60,322 273,604 245,000 - - 245,000 236,397 264,993 - - 264,993 274,695 1,215,373 7,476 5,000 2,106,578 1,972,206 (89,438) (1,561) (1,132) (62,782) 137,776 (4,700) (4,700) - (25,000) (25,000) (114,527) (4,700) (29,700) (139,527) (89,438) (6,261) (1,132) (92,482) (1,751) 532,980 6,261 3,052 979,808 981,559 $ 443,542 $ $ 1,920 $ 887,326 $ 979,808 109 NONMAJOR DEBT SERVICE FUNDS The Debt Service Funds are used to account for the accumulation of resources for, and payment of, interest, principal and related costs on long -term debt. The City's Debt Service Funds account for two types of bonded indebtedness: • Improvement Bonds • Tax Increment Bonds Delveloner Financed Revolving — (2008A Improvements Bonds) are repaid from special assessments collected from new developments within the City. Tax Increment (1985 Tax Increment Bonds, 2004A Tax Increment Refunding Bonds(TIF 1 -3), 2004A Tax Exempt Increment Bonds(TIF 1 -12), and 2004B Taxable Increment Bonds) are repaid primarily from incremental taxes. 110 CITY OF COTTAGE GROVE, MINNESOTA SUBCOMBINING BALANCE SHEET Statement 14 NONMAJOR DEBT SERVICE FUNDS December 31, 2011 With Comparative Data as of December 31, 2010 Totals Developer Nonmajor Financed Tax Increment Debt Service Funds Revolving Funds Funds 2011 2010 Assets Cash and investments $ 476,633 $ 828,787 $ 1,305,420 $ 1,192,708 Special assessments receivable: Deferred 272,390 - 272,390 579,448 Total assets $749,023 $828,787 $1,577,810 $1,772,156 Liabilities and Fund Balance Liabilities: Accounts payable $ - $ - $ - $ 507 Deferred revenue 272,390 - 272,390 579,448 Total liabilities 272,390 - 272,390 579,955 Fund balance: Restricted for Debt retirement 476,633 - 476,633 330,960 Tax increment purposes - 828,787 828,787 861,241 Total fund balance 476,633 828,787 1,305,420 1,192,201 Total liabilities and fund balance $ 749,023 $ 828,787 $ 1,577,810 $ 1,772,156 111 CITY OF COTTAGE GROVE, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE NONMAJOR DEBT SERVICE FUNDS For The Year Ended December 31, 2011 With Comparative Data for the Year Ended December 31, 2010 Statement 15 Expenditures: Current: General government: Contractual services Debt service: Principal retirement Interest and fiscal charges Total expenditures Revenues over (under) expenditures Fund balance - January 1 Fund balance - December 31 117 517 634 Totals 185,000 40,000 Developer Tax Nonmaj or 143,083 165,045 Financed Increment Debt Service Funds 390,679 Revolving Funds Funds 2011 2010 Revenues: (32,454) 113,219 580,340 330,960 Tax increment collections $ - $ 141,726 $ 141,726 $ 472,518 Special assessments: $ 476,633 $ 828,787 $ 1,305,420 $ 1,192,201 Current 233,710 - 233,710 253,570 Delinquent - - - 287,383 Prepayments on deferred 113,909 - 113,909 14,858 Penalties 1,851 - 1,851 22,710 Investment earnings 3,282 9,420 12,702 6,233 Total revenues 352,752 151,146 503,898 1,057,272 Expenditures: Current: General government: Contractual services Debt service: Principal retirement Interest and fiscal charges Total expenditures Revenues over (under) expenditures Fund balance - January 1 Fund balance - December 31 117 517 634 7,336 185,000 40,000 225,000 295,000 21,962 143,083 165,045 174,596 207,079 183,600 390,679 476,932 145,673 (32,454) 113,219 580,340 330,960 861,241 1,192,201 611,861 $ 476,633 $ 828,787 $ 1,305,420 $ 1,192,201 112 NONMAJOR CAPITAL PROJECT FUNDS Capital Project Funds are used to account for the acquisition and construction of major capital facilities other than those financed by Proprietary Funds and Trust Funds. Equipment Replacement Fund - Established to accumulate monies for the replacement of capital equipment. Street Sealcoating — Established to account for the receipt of franchise fees to be used for sealcoating activities. Future Economic Development Fund — Established to account for the receipt and use of monies for economic development purposes. Future Projects - to account for the preliminary expenditures of projects which do not have a source of financing. Completed Construction - to account for the various surpluses (deficits) of other Special Assessment Construction Funds. Park Trust —to account for capital projects in the municipal parks. Water Connection and Area Charge - to account for water connection and area charges. Sewer Connection and Area Charge - to account for sewer connection and area charges. Future Storm Sewer Improvements - to collect storm sewer area charges which are designated for future construction. Tax Increment Construction Revolving Fund - to account for construction projects that are financed with tax increments. Gatewav District Improvements — to account for improvements in the Gateway District that are non -TIF. 113 CITY OF COTTAGE GROVE, MINNESOTA SUBCOMBINING BALANCE SHEET NONMAJOR CAPITAL PROJECT FUNDS December 31, 2011 With Comparative Data as of December 31, 2010 Assets Cash and investments Accrued interest receivable Interfund receivable Interfund loan receivable Due from other governmental units -net Accounts receivable - net Delinquent property taxes receivable Special assessments receivable: Deferred Delinquent Total assets Liabilities and Fund Balance Liabilities: Accounts payable Interfund payable Contracts payable Deposits payable Interfund loan payable Deferred revenue Total liabilities Fund balance: Nonspendable: Long -term interfund loan receivable Restricted for Tax increment purposes Park trust activities Assigned for: Equipment replacement Street sealcoating Economic development Future pavement management Tree mitigation Future roads and trails Capital improvements Unassigned Total fund balance Total liabilities and fund balance 160,199 3,276,491 - 31,685 9,659 Future 31,685 173,053 Equipment Street Economic Future Completed Replacement Sealcoating Development Projects Construction $ 3,272,729 $ 240,479 $ 2,364,244 $ 1,357,601 $ 162,638 - - 34,000 - - - - 1,450,000 950,000 1,500,000 - 17,319 - - - 3,762 128,203 - 5,159 - - - - 2,233 - - - 31,685 7,426 36,960 - - - 2,446 7 3,276,491 $ 386,001 $ 3,879,929 $ 2,322,419 $ 1,702,044 3,195 $ 664 160,199 3,276,491 - 31,685 9,659 39,406 31,685 173,053 40,070 - 1,450,000 950,000 1,500,000 - 386,001 - - - - - 2,398,244 - - - - - 481,412 - - - - 198,614 - - - - 183,331 - - - - 336,009 161,974 3,276,491 386,001 3,848,244 2,149,366 1,661,974 $ 3,276,491 $ 386,001 $ 3,879,929 $ 2,322,419 $ 1,702,044 114 Statement 16 $ 13,084 $ - $ - $ 5,243 $ 40,321 $ - $ 62,507 $ 89,715 Tax Increment - Totals 6,028 - - - 23,915 Water Sewer Future Construction Gateway Nonmajor 98,312 Park Connection Connection Storm sewer Revolving District Capital Project Funds 452,078 Trust and Area and Area Improvements Fund Improvements 2011 2010 $ 650,582 $ 2,297,764 $ - $ 2,437,066 $ 896,517 $ 192,842 $ 13,872,462 $ 15,989,786 - - - - - - 34,000 20,000 - 234,520 - - - - 234,520 - - - - - - - 3,900,000 2,225,000 - - - - - - 17,319 16,874 - - - - - - 137,124 133,327 - - - - 26,403 - 28,636 36,166 - 19,826 32,632 19,099 - 56,685 204,313 413,764 - - - - - - 2,446 2,058 $ 650,582 $ 2,552,110 $ 32,632 $ 2,456,165 $ 922,920 $ 249,527 $ 18,430,820 $ 18,836,975 $ 13,084 $ - $ - $ 5,243 $ 40,321 $ - $ 62,507 $ 89,715 - - 234,520 - - - 234,520 6,028 - - - 23,915 - - 23,915 6,028 - - - - - - 160,199 98,312 - - - - 500,000 - 500,000 575,000 - 19,826 32,632 19,099 26,403 56,685 235,395 452,078 13,084 19,826 267,152 48,257 566,724 56,685 1,216,536 1,227,161 - - - - - - 3,900,000 2,225,000 - - - - 356,196 - 356,196 329,929 637,498 - - - - - 637,498 749,828 - - - - - - 3,276,491 2,985,728 - - - - - - 386,001 251,834 - - - - - - 2,398,244 2,149,980 - - - - - - 481,412 481,412 - - - - - - 198,614 198,614 - - - - - - 183,331 - - 2,532,284 - 2,407,908 - 192,842 5,631,017 8,243,607 - - (234,520) - - - (234,520) - 637,498 2,532,284 (234,520) 2,407,908 356,196 192,842 17,214,284 17,615,932 $ 650,582 $ 2,552,110 $ 32,632 $ 2,456,165 $ 922,920 $ 249,527 $ 18,430,820 $ 18,843,093 115 CITY OF COTTAGE GROVE, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE NONMAJOR CAPITAL PROJECT FUNDS For The Year Ended December 31, 2011 With Comparative Data for the Year Ended December 31, 2010 Expenditures: Future Current: Equipment Street Economic Future Completed General government Replacement Sealcoating Development Projects Construction Revenues: - - 37,686 - - General property taxes $ 12 $ - $ - $ 2,606 $ 35 Franchise taxes - 535,188 - - - Aggregate taxes - 26,131 - - - Taxincrementcollections - - - - - Special assessments: 23,223 - - - - Current - - 19,170 4,493 14,933 Delinquent - - - - 164 Prepayments on deferred - - - - 770 Penalties - - - - 52 Direct charges to developers - - - 101,913 - Charges for services - 146,698 - - - Investment earnings 37,502 2,914 28,384 13,033 19,169 Interest on interfund loan - - 48,500 57,000 - Connection charges - - - - - Park dedication fees - - - - - Donations - - 364,721 - - Miscellaneous - 482 175 - - Total revenues 37,514 711,413 460,950 179,045 35,123 Expenditures: Current: General government - - - 20 1,888 Economic development - - 37,686 - - Public safety 874 - - - - Public works - 577,246 - - 14,552 Culture and recreation - - - - - Capital outlay: General government 23,223 - - - - Public safety 24,729 - - - - Public works - - - - 56,148 Culture and recreation 54,484 - - - - Debt service: Principal retirement - - - - - Interest and fiscal charges - - - - - Total expenditures 103,310 577,246 37,686 20 72,588 Revenues over (under) expenditures (65,796) 134,167 423,264 179,025 (37,465) Other financing sources (uses): Transfer from General Fund 319,215 - - - - Transfer from Special Revenue Fund 25,000 - - - - Transfer from Capital Project Fund - - - - - Transfer to Capital Project Fund - - - - - Transfer to Enterprise Fund - - - - - Proceeds from the sale of capital assets 12,344 - - - - Total other financing sources (uses) 356,559 - - - Net increase (decrease) in fund balance 290,763 134,167 423,264 179,025 (37,465) Fund balance - January 1 2,985,728 251,834 3,424,980 1,970,341 1,699,439 Fund balance - December 31 $ 3,276,491 $ 386,001 $ 3,848,244 $ 2,149,366 $ 1,661,974 116 Statement 17 117 Tax Increment Totals Water Sewer Future Construction Gateway Nonmajor Park Connection Connection Storm Sewer Revolving District Capital Project Funds Trust and Area and Area Improvements Fund Improvements 2011 2010 $ - $ - $ - $ 30 $ - $ - $ 2,683 $ 3,768 - - - - - - 535,188 517,391 - - - - - - 26,131 30,554 - - - - 804,877 - 804,877 780,896 - 27,954 34,975 53,869 - 54,409 209,803 239,136 - 138 78 398 - - 778 71,120 - 7,737 13,295 5,740 - - 27,542 16,802 - 303 324 662 - - 1,341 6,393 - - - - - - 101,913 - - - - - - - 146,698 11,944 9,271 30,616 7,068 32,438 11,250 1,833 193,478 135,500 - - - - - - 105,500 74,500 - 109,373 108,054 104,582 - - 322,009 439,238 62,198 - - - - - 62,198 145,640 - - - - - - 364,721 375,013 - - - - - - 657 4,905 71,469 176,121 163,794 197,719 816,127 56,242 2,905,517 2,852,800 - - - - - 18 1,926 85,494 - - - - 755,360 - 793,046 299,614 - - - - - - 874 - - - 44,630 239 - - 636,667 600,362 14,881 - - - - - 14,881 17,208 - - - - - - 23,223 41,714 - - - - - - 24,729 28,064 - 106,281 1,029,455 428,665 - - 1,620,549 535,511 168,918 - - - - - 223,402 159,059 - - 215,000 - - - 215,000 210,000 - - 74,927 - 34,500 - 109,427 116,865 183,799 106,281 1,364,012 428,904 789,860 18 3,663,724 2,093,891 (112,330) 69,840 (1,200,218) (231,185) 26,267 56,224 (758,207) 758,909 - - - - - - 319,215 522,815 - - - - - - 25,000 25,000 - - - - - - - 338,911 - - - - - - - (28,388) - - - - - - - (15,000) - - - - - - 12,344 71,506 - - - - - - 356,559 914,844 (112,330) 69,840 (1,200,218) (231,185) 26,267 56,224 (401,648) 1,673,753 749,828 2,462,444 965,698 2,639,093 329,929 136,618 17,615,932 15,942,179 $ 637,498 $ 2,532,284 $ (234,520) $ 2,407,908 $ 356,196 $ 192,842 $ 17,214,284 $ 17,615,932 117 CITY OF COTTAGE GROVE, MINNESOTA SPECIAL REVENUE FUND - RECYCLING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For The Year Ended December 31, 2011 With Comparative Data for the Year Ended December 31, 2010 Statement 18 Variance with 2011 Final Budget- 2010 Budgeted Amounts Actual Positive Actual Original Final Amounts (Negative) Amounts Revenues: Intergovernmental: Local: Washington County recycling grant - public works Investment earnings Miscellaneous - public works Total revenues Expenditures: Public works: Current: Personal services Commodities Contractual services Total expenditures Revenues over (under) expenditures Fund balance - January 1 Fund balance - December 31 $ 52,400 $ 52,400 $ 53,150 $ 750 $ 53,150 - - 1,180 1,180 818 - - 1,000 1,000 5 52,400 52,400 55,330 2,930 53,973 43,600 43,600 43,600 - 41,719 3,000 3,000 2,694 306 280 11,900 11,900 12,971 1,071 14,145 58,500 58,500 59,265 765 56,144 $ (6,100) $ (6,100) (3,935) $ 2,165 (2,171) 83,235 $ 79,300 85,406 $ 83,235 118 CITY OF COTTAGE GROVE, MINNESOTA SPECIAL REVENUE FUND - STORM WATER MAINTENANCE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For The Year Ended December 31, 2011 With Comparative Data for the Year Ended December 31, 2010 Statement 19 Variance with 2011 Final Budget- 2010 Budgeted Amounts Actual Positive Actual Original Final Amounts (Negative) Amounts Revenue: Intergovernmental: Local: Other - public works Charges for services Investment eamings Miscellaneous Total revenue Expenditures: Public works: Current: Personal services Commodities Contractual services Other charges - administrative charge Capital outlay Debt Service: Principal retirement Interest and fiscal charges Total expenditures Revenue over (under) expenditures $ - $ - $ 149,260 $ 149,260 $ 80,625 628,900 628,900 644,858 15,958 641,685 2,300 2,300 3,468 1,168 1,863 - - 250 250 - 631,200 631,200 797,836 166,636 724,173 212,400 212,400 222,244 (9,844) 207,141 52,900 52,900 22,628 30,272 27,984 352,445 352,445 521,894 (169,449) 190,237 29,400 29,400 29,400 - 29,400 10,700 10,700 - 10,700 30,737 - - - 1,397 - 103 657,845 657,845 796,166 (138,321) 486,999 (26,645) (26,645) 1,670 28,315 237,174 Other financing sources (uses): Transfer to Capital Project Fund Net increase (decrease) in fund balance $ (26,645) $ (26,645) Fund balance - January 1 Fund balance - December 31 - (114,527) 1,670 $ 28,315 122,647 309,926 187,279 $ 311,596 $ 309,926 119 CITY OF COTTAGE GROVE, NIINNESOTA SPECIAL REVENUE FUND - FORFEITURE /SEIZURE SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For The Year Ended December 31, 2011 With Comparative Data for the Year Ended December 31, 2010 Statement 20 Expenditures: Variance with Public safety: 2011 Final Budget- 2010 Current: Budgeted Amounts Actual Positive Actual Personal services Original Final Amounts (Negative) Amounts Revenues: 500 500 1,499 (999) 2,160 Intergovernmental: 19,800 19,800 11,799 8,001 13,109 County $ - $ - $ 1,245 $ 1,245 $ - Forfeitures and seizures 50,000 50,000 53,077 3,077 30,425 Investment earnings 1,000 1,000 590 (410) 567 Total revenues 51,000 51,000 54,912 3,912 30,992 Expenditures: Public safety: Current: Personal services 1,200 1,200 - 1,200 - Commodities 500 500 1,499 (999) 2,160 Contractual services 19,800 19,800 11,799 8,001 13,109 Capital outlay 10,000 10,000 10,000 - - Total expenditures 31,500 31,500 23,298 8,202 15,269 Revenues over (under) expenditures 19,500 19,500 31,614 12,114 15,723 Other financing sources (uses): Transfer to Capital Project Fund (25,000) (25,000) (25,000) - (25,000) Net increase (decrease) in fund balance $ (5,500) $ (5,500) 6,614 $ 12,114 (9,277) Fund balance - January 1 Fund balance - December 31 44,354 $ 50,968 53,631 $ 44,354 120 CITY OF COTTAGE GROVE, MINNESOTA SPECIAL REVENUE FUND - ICE ARENA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For The Year Ended December 31, 2011 With Comparative Data for the Year Ended December 31, 2010 Statement 21 Expenditures: Variance with Culture and recreation: 2011 Final Budget- 2010 Current: Budgeted Amounts Actual Positive Actual Personal services Original Final Amounts (Negative) Amounts Revenues: 34,600 34,600 29,909 4,691 50,348 General property taxes: 241,300 241,300 302,048 (60,748) 266,341 Current and delinquent $ 240,000 $ 240,000 $ 238,253 $ (1,747) $ 239,362 Intergovernmental: Local: 245,000 245,000 245,000 - 235,000 School - - - - 122,200 Recreation agreement - - 57,000 57,000 57,000 Charges for services 865,500 865,500 823,251 (42,249) 855,941 Investment earnings 9,000 9,000 7,431 (1,569) 6,678 Total revenues 1,114,500 1,114,500 1,125,935 11,435 1,281,181 Expenditures: Culture and recreation: Current: Personal services 293,000 293,000 313,101 (20,101) 291,618 Commodities 34,600 34,600 29,909 4,691 50,348 Contractual services 241,300 241,300 302,048 (60,748) 266,341 Capital outlay 16,000 16,000 60,322 (44,322) 273,604 Debt Service: Principal retirement 245,000 245,000 245,000 - 235,000 Interest and fiscal charges 265,000 265,000 264,993 7 274,592 Total expenditures 1,094,900 1,094,900 1,215,373 (120,473) 1,391,503 Revenues over (under) expenditures $ 19,600 $ 19,600 (89,438) $ (109,038) (110,322) Fund balance - January 1 Fund balance - December 31 532,980 $ 443,542 643,302 $ 532,980 121 CITY OF COTTAGE GROVE, MINNESOTA SPECIAL REVENUE FUND - PUBLIC SAFETY GRANTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For The Year Ended December 31, 2011 With Comparative Data for the Year Ended December 31, 2010 Statement 22 Variance with 2011 Final Budget- 2010 Budgeted Amounts Actual Positive Actual Original Final Amounts (Negative) Amounts Revenues: Intergovernmental: Federal: Byrne JAG Grant - public safety Investment earnings Total revenues Expenditures: Public safety: Current Personal services Total expenditures Revenues over (under) expenditures Other financing sources (uses): Transfer to General Fund Net increase (decrease) in fund balance Fund balance - January 1 Fund balance - December 31 $ 5,866 $ 5,866 $ 15,933 49 49 13 - - 5,915 5,915 15,946 - - 7,476 7,476 16,291 - - 7,476 7,476 16,291 - - 1,561 13,391 345 - - 4,700 4,700 - $ - $ - (6,261) $ 8,691 (345) 6,261 6,606 $ - $ 6,261 122 CITY OF COTTAGE GROVE, MINNESOTA SPECIAL REVENUE FUND - CHARITABLE GAMBLING Statement 23 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For The Year Ended December 31, 2011 With Comparative Data for the Year Ended December 31, 2010 123 Variance with 2011 Final Budget- 2010 Budgeted Amounts Actual Positive Actual Original Final Amounts (Negative) Amounts Revenues: Investment earnings $ - $ - $ 28 $ 28 $ 38 Donations 5,000 5,000 3,840 (1,160) 3,679 Total revenues 5,000 5,000 3,868 (1,132) 3,717 Expenditures: General government: Current: Contractual 5,000 5,000 5,000 6,000 Total expenditures 5,000 5,000 5,000 6,000 Revenues over (under) expenditures $ - $ - (1,132) $ (1,132) (2,283) Fund balance - January 1 3,052 5,335 Fund balance - December 31 $ 1,920 $ 3,052 123 124 INTERNAL SERVICE Self Insurance Fund - Established to provide self insurance for the City and its officers, employees and agents for claims in excess of standard deductibles and to account for the City flexible spending program and purchase of insurance. Fleet Maintenance Fund — Established to account for costs related to repair and maintenance of City equipment and vehicles. Revenues received from departments are based on level of service performed. 125 CITY OF COTTAGE GROVE, MINNESOTA COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS December 31, 2011 With Comparative Data as of December 31, 2010 Statement 24 Liabilities: Current liabilities Accounts payable 21,732 40,230 Totals 58,621 Health care benefits payable Self Fleet Internal Service Funds 20,947 Insurance Maintenance 2011 2010 Assets: Salaries payable 522 9,464 9,986 Current assets: Due to other governmental units - 6 6 Cash and investments $ 2,394,240 $ 320,482 $ 2,714,722 $ 2,555,022 Accounts receivable 1,421 649 2,070 7,154 Prepaid items 104,994 596 105,590 104,544 Inventory - atcost - 81,275 81,275 65,062 Total current assets 2,500,655 403,002 2,903,657 2,731,782 Noncurrent assets: Total noncurrent liabilities - 27,479 27,479 Capital assets: Total liabilities 101,741 87,042 188,783 Land - 424,665 424,665 424,665 Buildings and improvements - 928,870 928,870 928,870 Machinery and equipment - 158,929 158,929 150,628 Total capital assets - 1,512,464 1,512,464 1,504,163 Less: Accumulated depreciation - (516,346) (516,346) (484,328) Total noncurrent assets - 996,118 996,118 1,019,835 Total assets 2,500,655 1,399,120 3,899,775 3,751,617 Liabilities: Current liabilities Accounts payable 21,732 40,230 61,962 58,621 Health care benefits payable 28,392 - 28,392 20,947 Unpaid claims 51,095 - 51,095 47,349 Salaries payable 522 9,464 9,986 8,384 Due to other governmental units - 6 6 67 Compensated absences payable - 9,863 9,863 13,160 Total current liabilities 101,741 59,563 161,304 148,528 Noncurrent liabilities: Compensated absences payable - 26,251 26,251 18,263 Other post employment benefits - 1,228 1,228 1,111 Total noncurrent liabilities - 27,479 27,479 19,374 Total liabilities 101,741 87,042 188,783 167,902 Net assets: Invested in capital assets, net of related debt - 996,118 996,118 1,019,835 Unrestricted 2,398,914 315,960 2,714,874 2,563,880 Total net assets $ 2,398,914 $ 1,312,078 $ 3,710,992 $ 3,583,715 126 CITY OF COTTAGE GROVE, MINNESOTA INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS For The Year Ended December 31, 2011 With Comparative Data for the Year Ended December 31, 2010 Statement 25 Nonoperating revenues Investment earnings 27,916 3,587 Totals 22,048 Miscellaneous Self Fleet Internal Service Funds 7,474 Insurance Maintenance 2011 2010 Operating revenues: Income before transfers 108,896 49,381 158,277 Charges for services: Transfers: User fees $ - $ 1,008,521 $ 1,008,521 $ 845,351 Employee benefits 1,121,800 - 1,121,800 1,202,050 Property insurance 230,900 - 230,900 213,700 Insurance refunds and reimbursements 68,706 - 68,706 70,232 Total operating revenues 1,421,406 1,008,521 2,429,927 2,331,333 Operating expenses: Operation and maintenance: Personal services - 295,990 295,990 312,145 Commodities - 566,676 566,676 450,554 Contractual services - 74,096 74,096 67,149 Total operation and maintenance - 936,762 936,762 829,848 Administrative and general: Personal insurance benefits 942,411 - 942,411 1,142,682 Contractual services 230,171 - 230,171 196,021 Claims 167,844 - 167,844 48,278 Total administrative and general 1,340,426 - 1,340,426 1,386,981 Depreciation - 32,018 32,018 32,549 Total operating expenses 1,340,426 968,780 2,309,206 2,249,378 Operating income (loss) 80,980 39,741 120,721 81,955 Nonoperating revenues Investment earnings 27,916 3,587 31,503 22,048 Miscellaneous - 6,053 6,053 7,474 Total nonoperating revenues 27,916 9,640 37,556 29,522 Income before transfers 108,896 49,381 158,277 111,477 Transfers: Transfer to Enterprise Fund - (31,000) (31,000) (31,000) Change in net assets 108,896 18,381 127,277 80,477 Net assets - January 1 2,290,018 1,293,697 3,583,715 3,503,238 Net assets - December 31 $ 2,398,914 $ 1,312,078 $ 3,710,992 $ 3,583,715 127 CITY OF COTTAGE GROVE, MINNESOTA COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For The Year Ended December 31, 2011 With Comparative Data for the Year Ended December 31, 2010 Cash flows from operating activities: Receipts from interfund services provided Receipts from insurance refunds and reimbursements Payment to suppliers Payment to employees Miscellaneous revenue Net cash flows from operating activities Cash flows from noncapital financing activities: Transfer to Enterprise Fund Cash flows from capital and related financing activities: Acquisition of capital assets Cash flows from investing activities: Investment income Net increase in cash and cash equivalents Cash and cash equivalents - January 1 Cash and cash equivalents - December 31 Reconciliation of operating income to net cash provided (used) by operating activities: Operating income (loss) Adjustments to reconcile operating income to net cash flows from operating activities: Depreciation Miscellaneous revenue Changes in assets and liabilities: Decrease (increase) in receivables Decrease (increase) in prepaid items Decrease (increase) in inventory Increase (decrease) in payables Total adjustments Net cash flows from operating activities Statement 26 (31,000) (31,000) (31,000) - (8,301) (8,301) (5,288) 27,916 3,587 31,503 22,048 138,130 21,570 159,700 58,198 2,256,110 298,912 2,555,022 2,496,824 $ 2,394,240 $ 320,482 $ 2,714,722 $ 2,555,022 $ 80,980 $ 39,741 $ Totals $ 81,955 Self Fleet Internal Service Funds Insurance Maintenance 2011 2010 $ 1,352,700 $ 1,008,521 $ 2,361,221 $ 2,261,101 68,706 - 68,706 70,232 (376,226) (667,710) (1,043,936) (792,538) (934,966) (289,580) (1,224,546) (1,473,831) - 6,053 6,053 7,474 110,214 57,284 167,498 72,438 Cash flows from operating activities: Receipts from interfund services provided Receipts from insurance refunds and reimbursements Payment to suppliers Payment to employees Miscellaneous revenue Net cash flows from operating activities Cash flows from noncapital financing activities: Transfer to Enterprise Fund Cash flows from capital and related financing activities: Acquisition of capital assets Cash flows from investing activities: Investment income Net increase in cash and cash equivalents Cash and cash equivalents - January 1 Cash and cash equivalents - December 31 Reconciliation of operating income to net cash provided (used) by operating activities: Operating income (loss) Adjustments to reconcile operating income to net cash flows from operating activities: Depreciation Miscellaneous revenue Changes in assets and liabilities: Decrease (increase) in receivables Decrease (increase) in prepaid items Decrease (increase) in inventory Increase (decrease) in payables Total adjustments Net cash flows from operating activities Statement 26 (31,000) (31,000) (31,000) - (8,301) (8,301) (5,288) 27,916 3,587 31,503 22,048 138,130 21,570 159,700 58,198 2,256,110 298,912 2,555,022 2,496,824 $ 2,394,240 $ 320,482 $ 2,714,722 $ 2,555,022 $ 80,980 $ 39,741 $ 120,721 $ 81,955 - 32,018 32,018 32,549 - 6,053 6,053 7,474 3,835 1,249 5,084 (5,511) (1,100) 54 (1,046) 1,629 - (16,213) (16,213) (11,570) 26,499 (5,618) 20,881 (34,088) 29,234 17,543 46,777 (9,517) $ 110,214 $ 57,284 $ 167,498 $ 72,438 128 ECONOMIC DEVELOPMENT AUTHORITY COMPONENT UNIT Established to account for the receipt and use of monies for economic purposes. 129 CITY OF COTTAGE GROVE, MINNESOTA COMBINING BALANCE SHEET - ALL GOVERNMENTAL FUND TYPES ECONOMIC DEVELOPMENT AUTHORITY COMPONENT UNIT December 31, 2011 With Comparative Data as of December 31, 2010 Special Revenue Debt Service $ 388,789 $ 554,426 1,100 - 102,000 900,000 - - 5,865,000 1,580 - 2,662 311,718 $ 1,707,849 $ 6,419,426 Assets Cash and investments Accounts Receivable Accrued interest receivable Loan receivable from primary government Capital lease receivable from primary government Prepaid items Delinquent property taxes receivable Property held for resale Total assets Liabilities and Fund Balance Liabilities: Accounts payable Salaries payable Due to other governmental units Deferred revenue Total liabilities Fund balance: Nonspendable: Prepaid items Assets for resale Long -term loan receivable Long -term capital lease receivable Restricted for Debt service reserve Committed for EDA activities Total fund balance Total liabilities and fund balance Fund balance reported above $ 757 $ 6,008 63 2,662 _ 9,490 1,580 311,718 900,000 Statement 27 Totals Economic Development Authority Component Unit 2011 2010 $ 943,215 $ 816,521 1,100 - 102,000 84,000 900,000 900,000 5,865,000 6,110,000 1,580 1,440 2,662 3,068 311,718 421,298 $ 8,127,275 $ 8,336,327 $ 757 6,008 63 2,662 9,490 1,580 311,718 - 900,000 5,865,000 5,865,000 - 554,426 485,061 1,698,359 6,419,426 $ 1,707,849 $ 6,419,426 Other long -tern assets, including property taxes receivable, are not available to pay for current -period expenditures, and therefore, are debated in the funds. Long -term liabilities, including bonds payable, bond discounts and unamortized bond issuance costs, compensated absences and other post employment benefits, are not due and payable in the current period and therefore are not reported in the funds. Net assets of component unit (page 35) 554,426 485,061 8,117,785 $ 8,127,275 $ 8,117,785 2,662 (5,734,049) $ 2,386,398 $ 2,371 3,068 5,439 1,440 421,298 900,000 6,110,000 547,787 350,363 8,330,888 $ 8,336,327 130 CITY OF COTTAGE GROVE, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - ALL GOVERNMENTAL FUND TYPES ECONOMIC DEVELOPMENT AUTHORITY COMPONENT UNIT For The Year Ended December 31, 2011 With Comparative Data for the Year Ended December 31, 2010 Statement 28 Revenues: General property taxes: Current and delinquent Charges for service Investment earnings Interest on loan to primary government Miscellaneous Total revenues Expenditures: General government: Current: Personal services Commodities Contractual services Debt service : Principal retirement Interest and fiscal charges Total expenditures Revenues over (under) expenditures Fund balance - January 1 Fund balance - December 31 Net decrease in fund balance reported above Special Revenue $ 105,384 30,000 2,554 18,000 29,540 185,478 81,451 1,784 76,985 Totals Economic Development Authority Debt Component Unit Service 2011 2010 6,639 264,993 271,632 $ 105,384 $ 105,936 30,000 30,000 9,193 10,559 282,993 173,092 29,540 7,060 457,110 326,647 81,451 61,976 1,784 21,524 76,985 33,861 - 245,000 245,000 235,000 - 264,993 264,993 274,592 160,220 509,993 670,213 626,953 25,258 (238361) (213,103) (300306) 1,673,101 6,657,787 8,330,888 8,631,194 $ 1,698,359 $ 6,419,426 $ 8,117,785 $ 8,330,888 Revenues in the statement of activities that do not report current financial resources are not reported as revenues in the funds: General property taxes deferred revenue: At December 31, 2010 At December 31, 2011 The issuance of long -term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long -term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. This amount is the net effect of these differences in the treatment of long -term debt and related items: Amortization of deferred discounts and issuance costs Principal repayments Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds: Compensated absences: At December 31, 2010 At December 31, 2011 Other post employment benefits: At December 31, 2010 At December 31, 2011 $ (213,103) (3,068) 2,662 (7,872) 245,000 (5,413) (73) $ 18,133 131 iRX SUPPLEMENTARY FINANCIAL INFORMATION 133 CITY OF COTTAGE GROVE, MINNESOTA CONSTRUCTION /ACQUISITION COSTS CAPITAL PROJECT FUNDS December 31, 2011 Fund Land No. Descriptions $ 5,764,302 FUNDED BY USER FEES: 250/526 Ice Arena Expansion 5,836,029 Ice Arena Sign 56,148 Total Fund 250/526 500 FUNDED BY PAST DEVELOPER CHARGES: - Silverwood turnaround - Total Fund 510 510 FUNDED BY FUTURE DEVELOPMENT: Jamaica/Military Realignment Total Fund 510 520 FUNDED BY MSA: Jamaica Avenue Roundabout Easement Ravine Parkway, Phase 2 West Point Douglas at TH61 Ravine Parkway, Phase 2 Total Fund 520 525 FUNDED BY MUNICIPAL BUILDING FUND: Public Safety /City Hall Facility Total Fund 525 FUNDED BY SPECIAL ASSESSMENT BONDS: 560 Pavement Management: 2010 Pavement Management 2011 Pavement Management Future Pavement Management Total Fund 560 565 2006 Improvements Pinecliff 2nd additional costs Total Fund 566 566 2007 Improvements: Southpoint Ridge VFW Utility The Preserve at CG The Preserve at CG additional costs Everwood Total Fund 566 Construction/Acquisition Costs 882,632 2,055,959 5,595,927 25,908 280,935 582,430 1,726,658 2,588,853 Land Contractor Engineer Acquisition $ 5,764,302 $ 1,036,947 $ - 71,727 11,706 - 5,836,029 1,048,653 - 56,148 - - 56,148 - - 97,885 - - 97,885 - 2,657,336 837,385 - 882,632 2,055,959 5,595,927 25,908 280,935 582,430 1,726,658 2,588,853 644,277 2,588,853 644,277 872,325 262,601 949,196 158,523 - 51,141 1,821,521 472,265 1,502 1,502 651,343 22,071 554,908 117,058 1,345,380 2,049 2,049 307,224 6,075 144,174 1,437 77,574 536,484 134 Exbibit 1 Page 1 of 2 3,551 * 116,474 1,197 97,304 22,983 237,958 3,551 1,075,041 29,343 796,386 1,437 217,615 2,119,822 135 3,551 3,551 1,437 1,075,041 29,343 796,386 217,615 2,118,385 Construction/Acquisition Costs Expended Legal, ROW/ Total Prior Fiscal Easement Other Costs 2011 Years $ - $ - $ 116,242 $ 6,917,491 * $ 5,183 $ 6,912,308 - - - 83,433 * 30,927 52,506 - - 116,242 7,000,924 36,110 6,964,814 - - - 56,148 * 56,148 - - - - 56,148 56,148 - - - 7,008 104,893 - 104,893 - - 7,008 104,893 - 104,893 - - 67,323 3,562,044 * 12,264 3,549,780 - 128,371 - 128,371 * - 128,371 - - 835 26,743 - 26,743 7,467 328,300 14,753 1,514,087 1,388,012 126,075 - 120,029 35,085 2,793,503 2,639,659 153,844 7,467 576,700 117,996 8,024,748 4,039,935 3,984,813 - - 27,040 3,260,170 3,156,653 103,517 - - 27,040 3,260,170 3,156,653 103,517 - 25,539 22,401 1,182,866 * 10,397 1,172,469 - - 23,997 1,131,716 * 1,131,716 - - - 21,875 73,016 73,016 - - 25,539 68,273 2,387,598 1,215,129 1,172,469 3,551 * 116,474 1,197 97,304 22,983 237,958 3,551 1,075,041 29,343 796,386 1,437 217,615 2,119,822 135 3,551 3,551 1,437 1,075,041 29,343 796,386 217,615 2,118,385 CITY OF COTTAGE GROVE, MINNESOTA CAPITAL PROJECT FUNDS CONSTRUCTION /ACQUISITION COSTS December 31, 2011 136 Construction/Acquisition Costs Fund Land No. Descriptions Contractor Engineer Acquisition FUNDED BY PARK TRUST FUNDS: 570 Hamlet Park North $ - $ 27,741 $ - Highlands splash pad - 67,577 - Trunk Fund Oversizing 8,346 - - Total Fund 570 8,346 95,318 - FUNDED BY AREA FUNDS: 575 Trunk Fund Oversizing Capitalize 124,922 - - Trunk Fund Oversizing 106,281 - - Total Fund 575 231,203 - - 580 East Ravine Trunk Utilities - - - Trunk Fund Oversizing Capitalize 157,820 - - Trunk Fund Oversizing 141,294 - - Total Fund 580 299,114 - - 585 Gateway Storm Pond - 69,463 - Hamlet Pond Phase 3 8,967 28,463 - Hamlet Pond Phase 3 additional costs 151,787 80,913 - Thompson Grove Storm Sewer Rehab. 357,736 33,696 - Trunk Fund Oversizing Capitalize 25,207 - - Trunk Fund Oversizing 26,321 - - Total Fund 585 570,018 212,535 - Totals $ 18,354,041 $ 4,836,124 $ - Less: Completed construction* Work in progress - December 31, 2011 136 Exbibit 1 Page 2 of 2 Construction/Acquisition Costs Expended Legal, ROW/ Total Prior Fiscal Easement Other Costs 2011 Years $ - $ - $ - $ 27,741 $ - $ 27,741 - - 22,615 90,192 90,192 - - - - 8,346 * - 8,346 - - 22,615 126,279 90,192 36,087 - - - 124,922 * - 124,922 - - - 106,281 106,281 - - - - 231,203 106,281 124,922 - 888,161 - 888,161 * 888,161 - - - - 157,820 * - 157,820 - - - 141,294 141,294 - - 888,161 - 1,187,275 1,029,455 157,820 - - 19,695 89,158 7,306 81,852 - - 5,078 42,508 * - 42,508 - - 7,764 240,464 3,606 236,858 - - - 391,432 391,432 - - - - 25,207 * - 25,207 - - - 26,321 26,321 - - - 32,537 815,090 428,665 386,425 $ 7,467 $ 1,490,400 $ 629,669 $ 25,317,701 $ 10,163,556 $ 15,154,145 16,430,969 $ 8,886,732 137 CITY OF COTTAGE GROVE, MINNESOTA COMBINED SCHEDULE OF BONDED INDEBTEDNESS December 31. 2011 Total Bonded Indebtedness - Primary Government Component Unit - EDA $6,500,000 Ice Arena Lease Rev Bonds of 2008B 4.0 %- 4.90% 6/11/2008 4/1/2028 Total Component Unit - EDA Total Bonded Indebtedness - Reporting Entity 138 Interest Final Rate Dated Payment Primary Government General Obligation Bonds: $1,405,000 Tax Increment Bonds of 2004A 3.0- 4.65% 7/1/2004 2/1/2024 $1,775,000 Tax Increment Bonds of 2004B 4.5- 5.75% 7/1/2004 2/1/2021 Total General Obligation Bonds Special Assessment Debt: Improvement Refunding Bonds of 2002C 2.5 -3.3% 10/2/2002 2/1/2012 Improvement Bonds of 2008A 3.50- 3.60% 6/11/2008 2/1/2019 Improvement Bonds of 2009A 2.50- 4.30% 4/16/2009 2/1/2024 Improvement Refunding Bonds of 2009C 2.00- 3.00% 4/16/2009 12/1/2015 Total Special Assessment Debt with Governmental Commitment Proprietary Fund Bonds: Sewer and Water Revenue Bonds 1997A 4.3 -5.1% 5/21/1997 2/1/2013 Golf Course Revenue Bonds of 1999F 5.0 -5.6% 12/1/1999 2/1/2012 Water Revenue Refunding Bonds of 2009B 2.50 -4.0% 4/16/2009 2/1/2020 Total Proprietary Fund Bonds Total Bonded Indebtedness - Primary Government Component Unit - EDA $6,500,000 Ice Arena Lease Rev Bonds of 2008B 4.0 %- 4.90% 6/11/2008 4/1/2028 Total Component Unit - EDA Total Bonded Indebtedness - Reporting Entity 138 Exhibit 2 Authorized And Issued $ 1,405,000 1,775,000 3,180,000 3,625,000 3,370,000 3,650,000 625,000 11,270,000 1,475,000 1,100,000 1,205,000 3,780,000 18,230,000 6,500,000 6,500,000 $ 24,730,000 Retired $ 245,000 145,000 390,000 3,025,000 810,000 585,000 100,000 4,520,000 1,220,000 905,000 195,000 2,320,000 7,230,000 635,000 635,000 $ 7,865,000 Outstanding $ 1,160,000 1,630,000 2,790,000 600,000 2,560,000 3,065,000 525,000 6,750,000 255,000 195,000 1,010,000 1,460,000 11,000,000 5,865,000 5,865,000 $ 16,865,000 Principal Due In 2012 $ 15,000 40,000 55,000 600,000 400,000 225,000 55,000 1,280,000 125,000 195,000 100,000 420,000 1,755,000 250,000 250,000 $ 2,005,000 Interest Due In 2012 $ 51,708 89,193 140,901 9,900 82,890 108,338 14,662 215,790 9,817 5,460 33,125 48,402 405,093 255,092 255,092 $ 660,185 139 t�f N a ° K d W q Q� H O �y h W z� z� Q W F a F z ¢ w O U O V > M �i 0 h � F N F � N V Q Q N S N H � T N N � 6 N �i' N m V h b r m rn O ,ti N m V h b P m � fr fr N N N N N N N N N T N ................. 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Q F w F A (vOyi u " C '> U U vi i 4 > rx w UUQa rx w w 151 CITY OF COTTAGE GROVE, MINNESOTA SCHEDULE OF SOURCES AND USES OF PUBLIC FUNDS FOR A TAX INCREMENT FINANCING DISTRICT OAKWOOD HEIGHTS - DISTRICT NUMBER 1 -1 December 31. 2011 Exhibit 13 Uses of funds Land acquisition 1,594,000 Accounted - 1,491,727 Construction costs 2,290,887 Current For in Current Amount Budget Prior Years Year Remaining Sources of funds: Interest 1,583,832 349,250 - 1,234,582 Bond proceeds $ 1,375,000 $ 518,876 $ - $ 856,124 Loan proceeds 1,375,000 - - 1,375,000 Refunding bond proceeds 1,375,000 - - 1,375,000 Current property taxes received - 2,671 - (2,671) Tax increment received 5,710,068 537,704 25,193 5,147,171 Direct charges to developer 401,501 501,222 - (99,721) Transfers 1,375,000 - - 1,375,000 Interest on investments 21,000 211,661 3,960 (194,621) Total sources of funds 11,632,569 1,772,134 29,153 9,831,282 Uses of funds Land acquisition 1,594,000 102,273 - 1,491,727 Construction costs 2,290,887 - - 2,290,887 Bond payments: Principal 1,375,000 525,000 - 850,000 Interest 1,583,832 349,250 - 1,234,582 Loan payments: Principal 1,375,000 - - 1,375,000 Interest 500,000 - 500,000 Refunding bond payments: Principal 1,375,000 - - 1,375,000 Administrative costs 112,450 26,515 275 85,660 Bond discount 51,400 - - 51,400 Transfer to other funds 1,375,000 423,886 951,114 Bonding costs - 25,126 - (25,126) Total uses of funds 11,632,569 1,452,050 275 10,180,244 Funds remaining (or deficit) $ - $ 320,084 $ 28,878 _L _L48,962 152 CITY OF COTTAGE GROVE, MINNESOTA SCHEDULE OF SOURCES AND USES OF PUBLIC FUNDS FOR A TAX INCREMENT FINANCING DISTRICT UP NORTH PLASTICS - DISTRICT NUMBER 1 -3 December 31. 2011 Exhibit 14 Uses of funds: Accounted Land acquisition - Current For in Current Amount - Budget Prior Years Year Remaining Sources of funds: Principal 1,350,000 610,000 - 740,000 Bond proceeds $ 1,350,000 $ 905,344 $ $ 444,656 Loan proceeds 1,350,000 352,803 Principal 997,197 Refunding bond proceeds 1,350,000 - 286,000 1,350,000 Tax increment received 1,345,500 1,529,617 116,533 (300,650) Interest on investments 21,000 86,752 2,565 (68,317) Interfund transfer 1,350,000 - - 1,350,000 Total sources of funds 6,766,500 2,874,516 119,098 3,772,886 Uses of funds: Land acquisition - 304,413 - (304,413) Construction costs 588,000 - - 588,000 Bond payments: Principal 1,350,000 610,000 - 740,000 Interest 364,000 416,288 - (52,288) Loan payments: Principal 1,350,000 352,803 - 997,197 Interest 286,000 272,399 - 13,601 Refunding bond payments: Principal 1,350,000 - - 1,350,000 Payment to refund bond escrow agent - 337,425 - (337,425) Administrative costs 120,000 17,031 242 102,727 Bond discount 7,600 - - 7,600 Transfers 1,350,000 - - 1,350,000 Refund tax increment - 372,804 - (372,804) Bonding costs 10,936 - (10,936) Total uses of funds 6,765,600 2,694,099 242 4,071,259 Funds remaining (or deficit) $ 900 $ 180,417 $ 118,856 _L __(298,373L Note: The property owner received a tax abatement for 2002 & 2007, resulting from a property valuation appeal. 153 CITY OF COTTAGE GROVE, MINNESOTA SCHEDULE OF SOURCES AND USES OF PUBLIC FUNDS FOR A TAX INCREMENT FINANCING DISTRICT COTTAGES OF COTTAGE GROVE - DISTRICT NUMBER 1 -8 December 31, 2011 Exhibit 15 Uses of funds Construction costs 750,000 419,791 - 330,209 Administrative costs 75,000 3,417 242 71,341 Total uses of funds 825,000 423,208 242 401,550 Funds remaining (or deficit) $ - $ 222,285 $ 38,164 $ (260,449) 154 Accounted Current For in Current Amount Budget Prior Years Year Remaining Sources of funds: Tax increment received $ 825,000 $ 626,262 $ 35,598 $ 163,140 Interest on investments - 19,231 2,808 (22,039) Total sources of funds 825,000 645,493 38,406 141,101 Uses of funds Construction costs 750,000 419,791 - 330,209 Administrative costs 75,000 3,417 242 71,341 Total uses of funds 825,000 423,208 242 401,550 Funds remaining (or deficit) $ - $ 222,285 $ 38,164 $ (260,449) 154 CITY OF COTTAGE GROVE, MINNESOTA SCHEDULE OF SOURCES AND USES OF PUBLIC FUNDS FOR A TAX INCREMENT FINANCING DISTRICT DISTRICT NUMBER 1 -10 December 31. 2011 Accounted For in Prior Years Current Budget Sources of funds: Bond proceeds Loan proceeds Tax increment received Market Value Credit -TIF Real estate sales Developer contribution Interest on invested funds Local contribution Grant Applicant fees Transfer in from other funds Total sources of funds Uses of funds: Land/building acquisition Construction costs Bond payments: Principal Interest Loan payments: Principal Interest Administrative costs Miscellaneous - refunds Transfer out to other funds Total uses of funds Funds remaining (or deficit) Exhibit 16 Current Amount Year Remaining $ 11,000,000 $ $ $ 11,000,000 11,000,000 11,000,000 7,632,172 1,479,610 (6,734) 6,159,296 - 79 - (79) 4,300,000 1,306,791 - 2,993,209 - 8,000 - (8,000) 230,000 1,557 - 228,443 250,000 - - 250,000 250,000 - - 250,000 - 145,700 - (145,700) 11,000,000 - - 11,000,000 45,662,172 2,941,737 (6,734) 42,727,169 6,200,000 3,943,000 1,445,331 1,252,037 4,754,669 2,690,963 11,000,000 868,546 11,000,000 868,546 782,080 103,669 140,700 11,000,000 45,662,172 2,941,737 11,000,000 868,546 11,000,000 - 868,546 342 678,069 - (140,700) - 11,000,000 342 42,720,093 ® (7,076) $ 7,076 155 CITY OF COTTAGE GROVE, MINNESOTA SCHEDULE OF SOURCES AND USES OF PUBLIC FUNDS FOR A TAX INCREMENT FINANCING DISTRICT DISTRICT NUMBER 1 -12 December 31. 2011 Exhibit 17 156 Accounted Current For in Current Amount Budget Prior Years Year Remaining Sources of funds: Bond proceeds $ 23,400,000 $ 3,000,000 $ $ 20,400,000 Loan proceeds 7,800,000 - - 7,800,000 Tax increment received 28,300,000 2,909,868 603,051 24,787,081 Direct charges to developer - 153,635 - (153,635) Land sale 1,700,000 1,604,000 - 96,000 Transfer in 7,800,000 455,719 - 7,344,281 Market value credit - TIF - 106 - (106) Community development block grant 400,000 - - 400,000 Interest on invested funds 500,000 105,912 9,337 384,751 Other - 23,020 - (23,020) Total sources of funds 69,900,000 8,252,260 612,388 61,035,352 Uses of funds: Land/building acquisition 5,000,000 2,564,657 - 2,435,343 Construction costs 9,000,000 3,120,923 753,256 5,125,821 Bond payments: Principal 23,400,000 170,000 40,000 23,190,000 Interest 13,748,000 756,748 143,083 12,848,169 Loan payments: Principal 7,800,000 - - 7,800,000 Interest - 150,939 - (150,939) Administrative costs 2,830,000 225,023 722 2,604,255 Discount on debt issued - 36,812 - (36,812) Transfer out to other funds 7,800,000 - 7,800,000 Other 322,000 316,531 5,469 Total uses of funds 69,900,000 7,341,633 937,061 61,621,306 Funds remaining (or deficit) $ - $ 910,627 $ (324,673) $ (585,954) 156 CITY OF COTTAGE GROVE, MINNESOTA SCHEDULE OF SOURCES AND USES OF PUBLIC FUNDS FOR A TAX INCREMENT FINANCING DISTRICT DISTRICT 1 -13 December 31. 2011 Exhibit 18 Total sources of funds Uses of funds: Land/building acquisition Site Improvements /preparation Public utilities Streets Other public improvements Bond payments: Principal Interest Loan payments: Principal Interest Administrative costs Transfers out Total uses of funds Funds remaining (or deficit) 85,125,000 1,242,042 Accounted 83,783,229 Current For in Current Amount - Budget Prior Years Year Remaining Sources of funds: 3,400,000 - - 3,400,000 Tax increment received $ 7,100,000 $ 319,268 $ 98,251 $ 6,682,481 Interest on investments 1,000,000 28 1,478 998,494 Land sales 17,025,000 918,746 - 16,106,254 Developer contribution - 4,000 - (4,000) Bond proceeds 20,000,000 - - 20,000,000 Loan proceeds 20,000,000 25,648 - 20,000,000 Transfers in 20,000,000 85,125,000 - 20,000,000 Total sources of funds Uses of funds: Land/building acquisition Site Improvements /preparation Public utilities Streets Other public improvements Bond payments: Principal Interest Loan payments: Principal Interest Administrative costs Transfers out Total uses of funds Funds remaining (or deficit) 85,125,000 1,242,042 99,729 83,783,229 12,000,000 619,999 - 11,380,001 1,000,000 27,494 - 972,506 3,400,000 - - 3,400,000 1,700,000 454,396 - 1,245,604 6,000,000 - - 6,000,000 20,000,000 - - 20,000,000 477,000 - - 477,000 20,000,000 - - 20,000,000 477,000 - - 477,000 71,000 44,876 476 25,648 20,000,000 - - 20,000,000 85,125,000 1,146,765 476 83,977,759 $ - $ 95,277 ® 99,253 ® (194 530 157 CITY OF COTTAGE GROVE, MINNESOTA SCHEDULE OF SOURCES AND USES OF PUBLIC FUNDS FOR A TAX INCREMENT FINANCING DISTRICT DISTRICT 1 -14 December 31. 2011 Exhibit 19 Total sources of funds 5,590,000 Accounted 75,233 4,804,815 Current For in Current Amount Budget Prior Years Year Remaining Sources of funds: - (375,225) Public utilities Tax increment received $ 1,110,000 $ 132,308 $ 74,711 $ 902,981 Interest on investments 20,000 644 522 18,834 Developer contribution - 2,000 - (2,000) Bond proceeds 1,115,000 - - 1,115,000 Loan proceeds 2,230,000 575,000 - 1,655,000 Transfers in 1,115,000 - - 1,115,000 Total sources of funds 5,590,000 709,952 75,233 4,804,815 Uses of funds: Site Improvements/preparation 130,000 505,225 - (375,225) Public utilities 525,000 60,501 - 464,499 Bond payments: Principal 1,115,000 - - 1,115,000 Interest 182,500 - 182,500 Loan payments: Principal 2,230,000 - 75,000 2,155,000 Interest 182,500 90,173 34,500 57,827 Administrative costs 110,000 16,573 322 93,105 Transfers out 1,115,000 - - 1,115,000 Total uses of funds 5,590,000 672,472 109,822 4,807,706 Funds remaining (or deficit) $ - $ 37,480 $ (34,589) $ (2,891) 158 III. STATISTICAL SECTION (UNAUDITED) This part of the City of Cottage Grove's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. Financial Trends These schedules contain trend information to help the reader understand how the government's financial performance and well -being have changed over time. Table 1 —Net Assets by Component Table 2 — Changes in Net Assets Table 3 — Fund Balances of Governmental Funds Table 4 — Changes in Fund Balances of Governmental Funds Revenue Capacity These schedules contain information to help the reader assess the government's most significant local revenue source, property taxes. Table 5 — Assessed and Estimated Actual Value of Taxable Property Table 6 — Property Tax Rates Direct and Overlapping Governments Table 7 — Principal Property Taxpayers Table 8 — Property Tax Levies and Collections Debt Capacity These schedules present information to help the reader assess the affordability of the government's current levels of outstanding debt and the government's ability to issue additional debt in the future. Table 9 — Ratios of Outstanding Debt by Type Table 10 — Ratios of General Bonded Debt Outstanding Table 11 — Direct and Overlapping Governmental Activities Debt Table 12 — Legal Debt Margin Information Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the government's financial activities take place. Table 13 — Demographic and Economic Statistics Table 14 — Principal Employers Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the government's financial report relates to the services the government provides and activties it performs. Table 15 —Full -time Equivalent City Government Employees by Function Table 16 — Operating Indicators by Function/Program Table 17 — Capital Assets Statistics by Function/Program Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 159 1[11 ) \§ \\)\ \�\ ] \�\ \ \\ \ \�� ] \ \\ ) 161 {)) } ) \ ))!) \))) ) 161 � )§§! 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U T O U O U 0 168 169 . � T p O a W N O r Q Q N Q ti N O y U C N N N W m O .-r 0, N N V 0 6 6 v Q A 0 0 0 0 0 0 0 0 0 0 J O O 3 N O 9 O QS ✓� f� V h f� fr b 0, r 0 �V{ avryo�m E o y � v y U 3 e N..N o,me v as u o m v �o o v o N 0 N W o . w N v o o r w 6 O N O 9 O O O O O O O O O W 0 F B u O O 'w >' NNNNNNNNNN ���� FOB uaa z 169 170 R H � fr fr fr � U � O O O r b O -- N N N .ti .ti .ti .ti .ti .ti ` � O W 0 0 0 0 0 0 0 0 y 0 0 0 0 0 0 0 0 Fy y 0 0 0 0 0 0 0 0 O ra � NiO f� O V N N O fr 1� b b T T T T H 6. d U ra fr V W 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 . 0 0 0 0 0 0 0 0 0 0 O T b Ni r m N b N C Q fr fr fr fr O S _ � �y O N E E _ o .......... E QO o- .rnm�omaMmr a N N E � � W q 0 0 0 0 0 0 0 0 0 0 0 p 0 0 0 0 0 0 0 0 0 0 O E O = "✓' F" u. 0 0 0 0 0 0 0 0 0 � 0 0 0 0 0 0 0 0 N . N N N N N N N N N o m �xa z7. 170 O Y L R H N vi h co h V �O N co �O r. O\ vi O vi O h co N M a U N � F F H 0O z� �Q �Q w C � N cd H U O � U w O w O 0 � �y F F V � � F vi l� OA vi M O N M� co ti 0 0 0 0 0 0 0 0 0 0 h co m co o m �O co co p N 2 N L V N V V N O\ N M O\ �' .� O '• O\ h V N N N � O r. O 0 0 0 0 0 0 0 0 0 0 O O\ oO O h V vi of °� co m o co v V � ti 0 0 0 0 0 0 0 0 0 0 p O O O O O N oovio vio vi vioo N L V N V V N O\ N M O\ �' .� O '• O\ h V N ti 0 0 0 0 0 0 0 0 0 0 " o 0 0 0 0 0 0 0 0 0 0 F oovio vio vi vioo N L V N V V N O\ N M O\ O r. ✓' 0 0 0 0 0 0 0 0 0 0 w cd N C � ti m W U N � O � Y N 4. C S Q. 0 0 a. v w A � � m U F S p W U ti o¢o Y ti 'O W � � U N °O C ti � it N � � Q Ca YY y N N U N N Y � � 171 CITY OF COTTAGE GROVE, MINNESOTA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT As of December 31, 2011 % of Debt Net Debt Applicable Outstanding to City Overlapping: Washington County School Districts ISD No. 200 (Hastings) ISD No. 833 (South Wash. County) Metro Council Total Overlapping City of Cottage Grove Direct Debt Table 11 City of Cottage Grove Share of Overlapping Debt $ 150,225,000 12.0135% $ 18,047,281 55,350,000 2.0754% 1,148,734 330,275,000 32.7600% 108,197,975 213,645,000 0.9825% 2,099,062 129,493,052 $ 16,865,000 100.00% 16,865,000 Total Direct and Overlapping Debt: $ 766,360,000 $ 146,358,052 Source: Washington County. Percentage of debt applicable is calculated by dividing portion of tax capaciiy of the authority that lies in City of Cottage Grove divided by the total tax capacity that lies in Washington County. Notes: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is home by the residents and businesses of the City. This process recognizes that, when considering the City's ability to issue and repay long -term debt, the entire debt burden home by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. 172 o r ;) )\ \�\ (\\ Ili C� Ili Ili C� Ili \ )) }{ {4 \ \/ 173 CITY OF COTTAGE GROVE, MINNESOTA DEMOGRAPHIC AND ECONOMIC STATISTICS Table 13 Last Ten Fiscal Years Sources: (1) Metropolitan Council- 2002 -2009. Census -2010. Cottage Grove Planning Department -2011. (2) Washington County data from Bureau of Economic Analysis. (3) Indepdendent School District No. 833 including Valley Crossing School. 174 Per Capita Fiscal Personal Personal School Unemployment Year Population(1) Income (2) Income (2) Enrollment (3) Rate (2) 2002 30,984 1,191,768,576 38,464 15,652 3.7% 2003 31,437 1,251,538,407 39,811 15,744 4.1% 2004 31,774 1,356,146,094 42,681 16,088 4.0% 2005 33,179 1,428,654,561 43,059 16,400 3.5% 2006 33,529 1,522,786,593 45,417 16,467 3.5% 2007 33,788 1,602,362,112 47,424 16,805 3.9% 2008 34,017 1,636,830,006 48,118 16,800 4.9% 2009 34,213 1,580,914,304 46,208 16,795 7.7% 2010 34,589 1,614,268,630 46,670 17,060 6.9% 2011 34,734 1,652,900,177 47,588 17,389 6.2% Sources: (1) Metropolitan Council- 2002 -2009. Census -2010. Cottage Grove Planning Department -2011. (2) Washington County data from Bureau of Economic Analysis. (3) Indepdendent School District No. 833 including Valley Crossing School. 174 CITY OF COTTAGE GROVE, MINNESOTA PRINCIPAL EMPLOYERS Current year and nine years ago Table 14 2011 2002 Taxpayer School District 833 3M Cottage Grove Renewal by Andersen Up North Plastics Inc Allied Systems Cub Foods Menard's City of Cottage Grove Werner Electric Target Rainbow Foods Allina Total 3,870 61% 3,362 Sources: City of Cottage Grove Annual Muncipal Disclosure Reporting. Percentage Percentage of Total Rank Employment of Total 17% Employees Rank Employment Employees 1,315 1 21% 992 730 2 11% 750 450 3 7% 250 300 4 5% 280 200 5 3% 160 200 6 3% 187 200 7 3% 200 175 8 3% 181 170 9 3% - 130 10 2% - - - 200 3,870 61% 3,362 Sources: City of Cottage Grove Annual Muncipal Disclosure Reporting. 5 3% 9 3% 59% 175 Percentage of Total Rank Employment 1 17% 2 13% 4 4% 3 5% 10 3% 7 3% 5 3% 8 3% 5 3% 9 3% 59% 175 F 3 0 a k 0 0 8 C O C O 0 3 b �b C � O w v F . o � 1C ro v � ro v 3 � O U U � o � � o U � aw c o o n N co m c� F o N c o o n N co m c� N c o o n N co m c� N cn v a o o o� cn o o n ri o; cn m oN w 0 v cn o 0 0 0� o o a o o a a o o co ° o N o; o; a � N c� ri o m c� � o W C v N � w m o cn o cn � o o a o o a a F �N N W N z d W W N cn n N 40 F F p 9 � W W F ✓' � v O ti '� b O d 7�'O' O � > C7 L�' o • � a ,x p � � � � R p � 176 F 3 0 a k 0 0 8 C O C O 0 3 b �b C � O w v F . o � 1C ro v � ro v 3 � O U U � o � � o U � aw :\ { )); \ \! / / fƒ ((\ 177 d a F P W 0 O w' c F 0 O v Z z� ro >� ° x �Q �F F F, W O Q m O U �a W ro b wo wx d� 3 o h N ° g o .. o o U z' a u 0 0 � �� � N .. 178 cP n m ovi v o rn � cP n m o vi vi a rn � rn ci rn m rn a � ro b wo wx d� 3 o h N ° g o .. o o U z' a u 0 0 � �� � N .. 178