HomeMy WebLinkAbout2012 CAFR
CA
OMPREHENSIVENNUAL
F R
INANCIALEPORT
City of Cottage Grove, Minnesota
Year Ended December 31, 2012
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COMPREHENSIVE ANNUAL FINANCIAL REPORT
OF THE
CITY OF COTTAGE GROVE
STATE OF MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2012
Prepared By:
Finance Department
CITY OF COTTAGE GROVE, MINNESOTA
TABLE OF CONTENTS
ReferencePage Number
I. INTRODUCTORY SECTION
Letter of Transmittal3
Certificate of Achievement for Excellence in Financial Reporting11
Principal City Officials13
Organization Chart14
II. FINANCIAL SECTION
Independent Auditors' Report17
Management's Discussion and Analysis21
Basic Financial Statements:
Government-Wide Financial Statements:
Statement of Net PositionStatement 135
Statement of ActivitiesStatement 237
Fund Financial Statements:
Balance Sheet - Governmental FundsStatement 338
Statement of Revenues, Expenditures, and Changes in Fund Balance -
Governmental FundsStatement 440
Reconciliation of the Statement of Revenues, Expenditures, and Changes in
Fund Balances of Governmental Funds to the Statement of ActivitiesStatement 542
Statement of Net Position - Proprietary FundsStatement 643
Statement of Revenues, Expenses, and Changes in Fund Net Position -
Proprietary FundsStatement 744
Statement of Cash Flows - Proprietary FundsStatement 848
Notes to Financial Statements53
Required Supplementary Information:
Budgetary Comparison Schedule - General FundStatement 988
Budgetary Comparison Schedule - Note to RSI94
Funding Progress Schedule - Other Post Employment Health Care Benefits95
CITY OF COTTAGE GROVE, MINNESOTA
TABLE OF CONTENTS
ReferencePage Number
Combining and Individual Fund Statements and Schedules:
Combining Balance Sheet - Nonmajor Governmental FundsStatement 10101
Combining Statement of Revenues, Expenditures and Changes in Fund Balance -
Nonmajor Governmental FundsStatement 11102
Subcombining Balance Sheet - Nonmajor Special Revenue FundsStatement 12104
Subcombining Statement of Revenues, Expenditures and Changes in
Fund Balance - Nonmajor Special Revenue FundsStatement 13106
Subcombining Balance Sheet - Nonmajor Debt Service FundsStatement 14109
Subcombining Statement of Revenues, Expenditures and Changes in
Fund Balance - Nonmajor Debt Service FundsStatement 15110
Subcombining Balance Sheet - Nonmajor Capital Project FundsStatement 16112
Subcombining Statement of Revenues, Expenditures and Changes in
Fund Balance - Nonmajor Capital Project FundsStatement 17114
Special Revenue Funds:
Schedules of Revenues, Expenditures and Changes in
Fund Balance - Budget and Actual:
RecyclingStatement 18116
Storm WaterStatement 19117
Forfeiture/SeizureStatement 20118
Ice ArenaStatement 21119
Charitable GamblingStatement 22120
Internal Service Funds:
Combining Statement of Net PositionStatement 23122
Combining Statement of Revenue, Expenses and Changes in Fund Net PositionStatement 24123
Combining Statement of Cash FlowsStatement 25124
Component Unit:
Economic Development Authority:
Combining Balance Sheet - All Governmental Fund TypesStatement 26126
Combining Statement of Revenues, Expenditures and Changes
in Fund Balance - All Governmental Fund TypesStatement 27127
CITY OF COTTAGE GROVE, MINNESOTA
TABLE OF CONTENTS
ReferencePage Number
Supplementary Financial Information:
Construction/Acquisition Costs:
Capital Projects FundsExhibit 1130
Combined Schedule of Bonded IndebtednessExhibit 2134
Debt Service Payments to MaturityExhibit 3136
Deferred Tax LeviesExhibit 4138
Subcombining Balance Sheet - Pavement Management Debt Service ScheduleExhibit 5140
Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balance-
Pavement Management Debt Service ScheduleExhibit 6141
Subcombining Balance Sheet - Construction Revolving Capital Project ScheduleExhibit 7142
Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balance-
Construction Revolving Capital Project ScheduleExhibit 8143
Subcombining Balance Sheet - Tax Increment Construction Revolving ScheduleExhibit 9144
Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balance-
Tax Increment Construction Revolving ScheduleExhibit 10145
Subcombining Balance Sheet - TIF Debt Service Revolving ScheduleExhibit 11146
Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balance-
TIF Debt Service Revolving ScheduleExhibit 12147
Schedule of Sources and Uses of Public Funds:
Oakwood Heights District Number 1-1Exhibit 13148
Up North Plastics District Number 1-3Exhibit 14149
Cottages of Cottage Grove District Number 1-8Exhibit 15150
Tax Increment District Number 1-10Exhibit 16151
Tax Increment District Number 1-12Exhibit 17152
Tax Increment District Number 1-13Exhibit 18153
Tax Increment District Number 1-14Exhibit 19154
CITY OF COTTAGE GROVE, MINNESOTA
TABLE OF CONTENTS
ReferencePage Number
III. STATISTICAL SECTION
Net Position by ComponentTable 1157
Changes in Net PositionTable 2158
Fund Balances of Governmental FundsTable 3160
Changes in Fund Balances of Governmental FundsTable 4161
Assessed and Estimated Actual Value of Taxable PropertyTable 5162
Property Tax Rates - Direct and Overlapping GovernmentsTable 6163
Principal Property TaxpayersTable 7164
Property Tax Levies and Collections Table 8165
Ratios of Outstanding Debt by TypeTable 9166
Ratios of General Bonded Debt OutstandingTable 10167
Direct and Overlapping Governmental Activities DebtTable 11168
Legal Debt Margin InformationTable 12169
Demographic and Economic StatisticsTable 13170
Principal EmployersTable 14171
Full-time Equivalent City Government Employees by FunctionTable 15172
Operating Indicators by Function/ProgramTable 16173
Capital Asset Statistics by Function/ProgramTable 17174
I. INTRODUCTORY SECTION
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May 7, 2013
To the Honorable Mayor, Members of the city Council and Citizens of the City of Cottage
Grove:
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, 2012.
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, 2012. 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 City Council is responsible for passing ordinances, adopting the budget and appointing
members of the various citizens’ advisory boards. In addition, the Mayor and Council appoint a
full-time City Administrator, who is responsible for overall supervision of City operations.
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Letter of Transmittal
May 7, 2013
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.
he Economic Development Authority (EDA) of the City of Cottage Grove is a separate legal
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entity organized pursuant to Minnesota Statute 469. There are seven members of the EDAwho
are appointed by the City Council; two appointees are Council members and the five others are
appointed from the community. The EDAis includedin this financial reportas a discretely
presented component unit, due to the EDA’srelationship of financial benefit or burden tothe
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
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preliminary tax levy, which must be adopted by September 15each year.The preliminary levy
may be lowered after it is adopted, but cannot be increased. An information session is heldfor
taxpayers at the first City Council meeting in December in advance of adoption of the final levy
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and budget. The Council is required to adopt a final budget by no later than December 28of
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 withinwhich 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.
The sluggish recovery from the 2008 recession appears to be abating, with modest improvements
in existing home sales and renewed interest in new residential development.Currently the
national unemployment rate is 7.6% and the Twin Cities metro rate is 5.4%. It appears that a
recovery to pre-recession employment levels has been achieved locally, ahead of national
estimates.
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. Thirteen new businesses located in
Cottage Grove in 2012 including AJacks Automotive, Cherry Berry and Yo-Joes, Diversified
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Letter of Transmittal
May 7, 2013
Manufacturing (DMC), Lindgren Dental Care, Modern Automotive Performance, Sport Clips,
Manufacturing Solutions, and Dollar Tree. Business expansions included 3M, American Motor
Sports Bar & Grill, Acorn Mini Storage, Snap Fitness and the Hope Glen Farm event facility.
Future development
The population of Cottage Grove has increased from 833 in 1950 to 30,582 according to the
2000 census and 34,589per the 2010 census. Most of the population of the City concentrates in
two age groups 0 - 19 years, 32.5% and 30 - 50 years, 38.1%. According to the 2010 census, the
average ageis 35years and the median family income is $80,830.This median family income is
141% 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. Residential development slowed over the last five years,
averaging 60new building permits per year. In the ten years prior, (1999-2007)an averageof
213new building permits per yearwere issued. At the end of 2012, less than 75vacant single
family lots (with infrastructure) remain for construction in the City. One plat for residential
development was submitted and approved in 2012, adding 27 lots.
The East Ravine, an area which encompasses over 9,000 acreswas master planned for
development prior to the 2008 recession. Development of the first one thousand acres of low
density residential housing with park and open space amenities and nodes of commercial and
retail useswas anticipatedby 2015.Although the recession stalled any development in the East
Ravine for the last five years, renewed interest appears to have taken hold in late 2012. As of
April 2013, two residential plats have alreadybeensubmitted totaling 226 lots, with other
residential developers pursuing acreage for development in the master plan area.
The following are othermajor initiatives for 2013.
Construction of the 178,700 square foot Wal-Mart redevelopment and other development
at the Shoppes of Cottage View retail node.
Redevelopment of the former Home Depot site.
Initiate operations of BusinessEnterprise Center providing affordable workspace and
support services to increase entrepreneur’s chance of success.
Redevelopment of the Norris Marketplace area.
Expansion of the Business Park by attracting new businesses.
Financial performance
In 2012, the City’s General Fund revenues were over budget by $359,051. Expenditures were
over budget by $175,470 due toa shift in public safety operations.The final budget anticipated
an increase of $153,034 in fund balance where final operations showed a $336,615 increase.
Overall City fund balances declined by $9,032,513 due to a combination of planned expenditures
and funding shifts. The construction costs of the Public Safety City Hall project resulted in $11.6
million of the fund balance decline. The total project cost was budgeted at $15.7 million and
when completed in October of 2012, the actual cost of the project was $1 million under budget.
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Letter of Transmittal
May 7, 2013
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 (2013and beyond) will be dedicated to
replenish the City’s cash reserves.
Recovery of costs from other governmental units and the issuance of $1.87 million in bonds to
reimburse previous year expenses increased the city fund balances by $2.6 million in offset to the
Public Safety City Hall project expenditures. The City’s outstanding debt at year end is 4%
below 2011 levels or $220debt per capita.
Long-term financial planning
The City places a high priority on planning for future growth. Staff usesdifferentlong range
revenue and expenditure models during the annual preparation of a biennialbudget 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 yearCapital 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 ofspecial assessments and general obligation debt is used for most
street construction and reconstruction projects. For example, during the 2013 to 2017 period over
$19millionintotalPavement Managementprojects 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.
Relevant Financial Policies
The City uses a variety of financial policies to guide its fiscal actions and ensure fiscal stability.
In 2003, the Cityhad adopted a Fund Balance policy which identifiedthe required designated
amounts in the Fund Balance of the General Fund at fiscalyear endand 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 andreducing the reliance upon debtissuance and the resulting levies to fund
City projects.
For the year endedDecember 31, 2011and subsequent years,the City 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. In 2012, this policy allocated
$255,361 to future debt reduction and capital projects funding.
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Letter of Transmittal
May 7, 2013
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 policyidentifies 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 2012, therate
of return on the City’s cash and investments was 0.65%.When the year- end fair market value
adjustment is included, the City’sreturn on investment was slightly higher at 0.68% 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 a ‘realized’ gain or loss; the City policy is to holdall 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
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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 taxespaid by each
property owner.
The State Property Classification System (Class Rates) determines the Tax Capacity value of
each property as follows:
Class Rate
Residential Homestead
Valueto $500,0001.00%
Over $500,0001.25%
Tax Capacity of:
$125,000 Home1,250
$200,000 Home 2,000
Commercial
Value to $150,0001.50%
Value above $150,0002.00%
Tax Capacity of:
$750,000 Building14,250
$1,000,000 Building19,250
$2,500,000 Building49,250
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Letter of Transmittal
May 7, 2013
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 2012data in the
chart, due to the timing of property valuation system in the state of Minnesota.
For 2012,the total market value decreased 8.70%, or $231million. Of this change, a decline of
9.7% wasthe devaluation ofexisting propertiesand the impact of the Market Value Exemption
whilean increase of 1%($16million) is attributed to new construction. The following table
shows the changes in valuations over the past several years:
EstimatedNet
YearMarketPercentTaxPercent
PayableValueChangeCapacityChange
20031,717,460,50017.26%21,118,26217.90%
20041,941,381,70013.04%22,561,4736.83%
20052,278,319,60017.36%26,315,73616.64%
20062,588,151,80013.60%29,344,34411.51%
20072,848,502,60010.06%32,824,28811.86%
20082,986,391,7004.84%34,606,3975.43%
20093,058,237,5002.41%35,932,4713.83%
20102,924,191,800(4.38%)34,558,053(3.83%)
20112,695,641,900(7.81%)32,545,440(5.82%)
20122,464,372,900(8.70%)30,066,486(7.61%)
The delinquency rate for property taxes remains low. Current tax collections were 98.9% of the
property tax levy during 2012. Total collections have consistently been above 95% since 1990.
The allocation of property tax levy by purpose (urban property only) for the years payable 2005
to 2012 are:
Tax Extension Rates
Purpose20052006200720082009201020112012
General Fund34.298 33.316 32.022 31.548 30.825 31.78034.50039.066
Debt Service 4.872 4.609 3.791 3.641 3.807 3.6353.7552.380
Total Tax Rate39.17037.92535.81335.18934.63235.41538.25541.446
The decrease in the tax extension rate from 2005 through 2009 wasreflective 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 anincrease 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.
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CITY OF COTTAGE GROVE, MINNESOTA
PRINCIPAL CITY OFFICIALS
December 31, 2012
Elected Officials
Term Expires
Mayor:
Myron Bailey December 31, 2016
Council Members:
Derrick Lehrke December 31, 2014
Justin Olsen December 31, 2016
Jen Peterson December 31, 2016
Dave Thiede December 31, 2014
Appointed Personnel
City Administrator Ryan Schroeder
Finance Director Robin Roland
City Clerk Caron Stransky
City Engineer and Community Development Director Jennifer Levitt
Economic Development Director Danette Parr
Public SafetyDirector Craig Woolery
Public WorksDirector Les Burshten
Parks and Recreation Director Zac Dockter
Cottage Grove
Citizens
Advisory
City Council
Commissions
City
City Administrator
Attorney
Economic
Community Parks and
DevelopmentAdministrationFinancePublic SafetyPublic Works
DevelopmentRecreation
City Clerk/
Planning Accounting Patrol Parks Streets
Elections
Building/Code Human Enterprise Fleet/Building
Investigations Recreation
InspectionsResourcesBillingMaintenance
Community
Historic Public Safety
Programs/ PayrollIce Arena Utilities
PreservationPrograms
Communications
River Oaks Golf Animal & Code
Engineering MISForestry
CourseEnforcement
Fire &
Emergency
Management
EMS/Medical
Services
Fire
Inspections
Updated 4/2013
II. FINANCIAL SECTION
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INDEPENDENT AUDITORS' REPORT
Honorable Mayor and
Members of the City Council
City of Cottage Grove, Minnesota
Report on the Financial Statements
We have audited the accompanying financial statements 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 (the City), as of and for the year ended December 31,
2012, and the related notes to the financial statements, which collectively comprise the entity’s basic
financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditors’ Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States of
America 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 plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditors’ judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
An independent member of Nexia International
(1)
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Honorable Mayor and
Members of the City Council
City of Cottage Grove
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective 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 as of December 31, 2012, and the respective changes in financial position and,
where applicable, cash flows thereof for the year then ended in accordance with accounting principles
generally accepted in the United States of America.
Report on Summarized Comparative Information
We have previously audited the City of Cottage Grove's 2011 financial statements of the governmental
activities, the business-type activities, the discretely presented component unit, each major fund, and
the aggregate remaining fund information, and we expressed an unmodified audit opinion on those
audited financial statements in our report dated May 24, 2012. In our opinion, the summarized
comparative information presented herein as of and for the year ended December 31, 2011 is
consistent, in all material respects, with the audited financial statements from which it has been
derived.
Other Matters
Required Supplementary Information
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 information, although not a part of the basic financial statements, is required by the Governmental
Accounting Standards Board who considers it to be an essential part of financial reporting for placing
the basic financial statements in an appropriate operational, economic, or historical context. We have
applied certain limited procedures to the required supplementary information in accordance with
auditing standards generally accepted in the United States of America, which consisted of inquiries of
management about the methods of preparing the information and comparing the information for
consistency with management’s responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audit of the basic financial statements. We do not express an
opinion or provide any assurance on the information because the limited procedures do not provide us
with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City of Cottage Grove’s basic financial statements. The other supplementary
information, combining and individual financial statements and schedules, as listed on the table of
contents, are presented for purposes of additional analysis and are not a required part of the basic
financial statements.
(2)
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Honorable Mayor and
Members of the City Council
City of Cottage Grove
Other Matters (Continued)
Other Information (Continued)
The other supplementary information, combining and individual financial statements and schedules are
the responsibility of management and was derived from and relates directly to the underlying
accounting and other records used to prepare the basic financial statements. Such information has
been subjected to the auditing procedures applied in the audit of the basic financial statements and
certain additional procedures, including comparing and reconciling such information directly to the
underlying accounting and other records used to prepare the basic financial statements or to the basic
financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America. In our opinion, the other supplementary
information, combining and individual financial statements and schedules are fairly stated, in all
material respects, in relation to the basic financial statements as a whole.
The introductory section and statistical section, as listed in the table of contents, 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 on it.
Other Reporting Required by
Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated May 7,
2013, on our consideration of the City of Cottage Grove'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 financial reporting and compliance and the result of that testing, and not to provide an opinion on
internal control over financial reporting or on compliance. That report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering City of Cottage Grove’s
internal control over financial reporting and compliance.
CliftonLarsonAllen LLP
Minneapolis, Minnesota
May 7, 2013
(3)
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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, 2012. 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 $217,519,170 (net position). Of this amount, $39,669,937
(unrestricted net position) 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 position increased by $1,688,638 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 $23,427,265a decreaseof $9,032,513
compared to the previous year. Approximately 64% or $15,000,845is 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
$7,449,565 (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 $18,668,274, an increase of $16,474 or less than 1% comparedto the
previous year.
Overview of the Financial Statements
Thisdiscussion and analysis isintended 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 positionpresents information on all of the City of Cottage Grove’s assets
and liabilities, with the difference between the two reported as net position. Over time, increases
or decreases in net position may serve as a useful indicator of whether the financial position of the
City of Cottage Grove is improving or deteriorating.
Management’s Discussion and Analysis
(continued)
The statement of activities presents information on how the City’s net position changed during the
most recent fiscal year. All changes in net position 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, economicdevelopment, 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 statementsinclude not only the City of Cottage Grove itself
(known as the primary government), but also a legally separate EDA component unit for which
the City of Cottage Grove is financially accountable. Financial information for this component
unitis 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 financialstatements
: 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 legalrequirements. 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 infund balance for the
City’s seven individual major governmental funds. They are as follows:
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 providedfor 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 three 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. TheCity of Cottage Grove uses internal service funds to
account for its self insurance, fleet maintenance, and information servicesactivity. Because 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 provideseparate
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, the 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 financial 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 fundsand internal service fundsare presented immediately following the required
Management’s Discussion and Analysis
(continued)
supplementary information.Combining and individual fund statements and schedules start on
page 101 of this report.
Government-wide Financial Analysis
As noted earlier, net position 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 $217,519,170 at
the close of the most recent fiscal year.
The largest portion of the City ofCottage Grove’s net position ($173,638,320 or 80%) reflectsits
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 Position
Governmental ActivitiesBusiness-Type ActivitiesTotal Primary Government
201220112012201120122011
Current and other assets$32,472,994 $43,033,787 $16,074,042 $15,114,687$48,547,036 $58,148,474
Capital assets136,095,120 125,115,783 54,404,725 55,120,228 190,499,845 180,236,011
Total assets168,568,114 168,149,570 70,478,767 70,234,915 239,046,881 238,384,485
Long-term liabilities outstanding14,740,350 14,094,151 1,848,839 1,963,647 16,589,189 16,057,798
Other liabilities4,179,529 5,451,188 758,993 1,044,967 4,938,522 6,496,155
Total liabilities18,919,879 19,545,339 2,607,832 3,008,614 21,527,711 22,553,953
Net position:
Net investment in capital
assets120,412,875 109,696,916 53,225,445 53,664,161 173,638,320 163,361,077
Restricted4,210,913 4,282,305 - 325,460 4,210,913 4,607,765
Unrestricted25,024,447 34,625,010 14,645,490 13,236,680 39,669,937 47,861,690
Total net position$149,648,235$148,604,231$67,870,935 $67,226,301$217,519,170 $215,830,532
An additional portion of the City’s net position ($4,210,913or 2%)represents resources that are
subject to external restrictions on how they may be used. The balance of unrestricted net position,
$39,669,937 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 allthree categories of net position; 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.
Management’s Discussion and Analysis
(continued)
Governmental Activities:
Governmental activities increased the City of Cottage Grove’s net
position by $1,044,004accounting for 62% of the total growth in net position.The primary
reason for this positive change is an increase in the amount of property taxes collected despite no
change in the property tax levy. The City had increased its property tax levyin prior yearsto
provide a stable revenue flow despite a portion of the levy withheld by the State of Minnesota to
balance their budget. In 2012, legislation eliminated that withholding and the City was able to
collect the property taxes levied, without any State reduction.
City of Cottage Grove's Changes in Net Position
Governmental ActivitiesBusiness-Type ActivitiesTotal Primary Government
201220112012201120122011
Revenues:
Program revenues:
Charges for services$ 3,219,908 $ 3,078,230 $8,616,787 $7,503,977 $11,836,695 $10,582,207
Operating grants and contributions1,075,529 1,084,928 --1,075,529 1,084,928
Capital grants and contributions3,064,292 5,118,546 -267,465 3,064,292 5,386,011
General revenues:
Property taxes12,330,135 11,494,758 --12,330,135 11,494,758
Other taxes1,456,300 1,507,922 --1,456,300 1,507,922
Grants and contributions not
restricted to specific programs 29,742 26,146 --29,742 26,146
Unrestricted investment earnings 368,821 624,785 118,396 162,296 487,217 787,081
Gain on sale of capital assets 10,546 12,342 - - 10,546 12,342
Total revenues21,555,27322,947,6578,735,183 7,933,73830,290,45630,881,395
Expenses:
General government2,997,825 2,985,571 --2,997,825 2,985,571
Economic development 362,009 1,110,214 --362,009 1,110,214
Public safety7,069,301 6,252,530 - -7,069,301 6,252,530
Public works:
Regular operations4,074,995 3,805,839 --4,074,995 3,805,839
Construction2,534,116 2,882,276 --2,534,116 2,882,276
Culture and recreation3,059,273 2,948,075 --3,059,273 2,948,075
Interest on long-term debt 827,645 846,258 --827,645 846,258
Golf course - -1,614,321 1,504,006 1,614,321 1,504,006
Street lights --659,869 625,312 659,869 625,312
Cottage Grove EMS --1,109,809 1,038,972 1,109,809 1,038,972
Water operating --2,049,877 1,901,985 2,049,877 1,901,985
Sewer operating --2,242,778 2,223,749 2,242,778 2,223,749
Total expenses 20,925,164 20,830,763 7,676,654 7,294,024 28,601,818 28,124,787
Increase in net positionbefore transfers 630,109 2,116,894 1,058,529 639,714 1,688,638 2,756,608
Transfers 413,895438,800(413,895)(438,800) --
Increase in net position1,044,004 2,555,694 644,634 200,914 1,688,638 2,756,608
Net position-January 1148,604,231 146,048,537 67,226,301 67,025,387 215,830,532 213,073,924
Net position-December 31$149,648,235$148,604,231$67,870,935$67,226,301$217,519,170$215,830,532
Management’s Discussion and Analysis
(continued)
Revenues by Source - Government Activities
Capital Grants &
Operating Grants &
Other taxes & tax
Contributions
Contributions
Unrestricted
increment
14.22%
4.99%
investment earnings
6.76%
1.71%
Charges for services
14.94%
Other
0.19%
Property Taxes
57.20%
The following chart illustrates the City’s expenses and corresponding program revenues for its
governmental activities.
$8,000,000
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
Revenue
$2,000,000
Expense
$1,000,000
$-
Management’s Discussion and Analysis
(continued)
Business-Type Activities.
Business-type activities increased net position by $644,634.Below
are graphs showing the business-type activities revenue and expense comparisons.
Revenues - Business type Activities
Unrestricted
investment
earnings
1%
Charges for
services
99%
Expenses and Program Revenues -
Business-Type Activities
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$-
ExpensesProgram revenues
In business type activities, changes in net position werepositive for the EMS Fund and the Water
fund: the Golf course,Street lightsand Sewer fundshad decreases of ($104,719), (440,218) and
($15,775) respectively.
Management’s Discussion and Analysis
(continued)
Financial Analysis 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, unassignedfund 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 $23,427,265,a decrease of $9,032,513.Committed, assigned
and unassigned fund balance which is available for spending at the government’s discretion has a
balance of $15,000,845at 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 ($1,417,608) 2) for loans outstanding ($5,155,000) 3) for assets held for resale
($267,498) 4) to pay for capital improvements ($1,555,296) and 5) for future expenditures
($31,018).
The General fund is the chief operating fund of the City of Cottage Grove. At the end of the
current fiscal year, unassigned fund balanceof the General fund was $7,449,565while total fund
balance was $9,150,532. 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 balancerepresents 55% of totalsubsequent year General fund expenditures,
while total fund balance represents 68% of the same amount.
The General fund balance increased by $336,615.This increaseis primarily due to an increase in
general property tax collections compared to 2011 even though the actual property tax levy
remained unchanged. Revenues exceeded budget by $359,051due to higher than expected
building permit revenues and excess TIF revenuesreturned to the City. Expenditures also
exceeded budget by $175,470 due to implementation of a different public safety model (resulting
in increased personnel costs) and increased public works expenses due to the lack of a Pavement
Management project in 2012.
The Municipal Building Fund decreased $10,164,275due to the construction expenditures for the
Public Safety/City Hall project.The Public Safety/City Hall total project was completed and
occupied in October 2012; on time and nearly $1,000,000 under the budget of $15.7 million.
The MSA Construction Fund increased by $404,516due to collection of County and State
th
reimbursements for the completed construction of Ravine Parkway and 85Street adjacent to the
new Public Safety/City Hall building site.
The Closed Debt Fund increasedby $292,078 due tointerfund loan interest, special assessment
revenues and transfers into the fund resulting from the City’s fund balance policy.
The Pavement Management Debt Service Fund decreased by $162,232because of the use of fund
balance for thefinal payoff on the 2002C Improvement bonds.
Management’s Discussion and Analysis
(continued)
The Pavement Management Capital Project Fund increasedby $1,728,669 due to the issuance of
$1,865,000 in municipal bonds which funded the 2010/2011Pavement Management projects.
There remains a deficit balance of $193,007 which is due to current expenditures on the future
(2013) Pavement Management project. Bonding and special assessments will cover this deficit in
2013.
The Construction Revolving Fund, acapital project fund,increased by $54,823because of the
receipt of special assessments received for previous construction activity in new developments.
The fund has recovered to a positive fund balance at year end.
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 positionof the Golf Course, Street light utility, EMS
(Ambulance), Water and Sewer Utility funds totaled $14,405,773. Total net position increased by
$613,010, primarily due to rents received by the Water utility for cell phone antennas on the water
towers. Decreases to the net position of the other enterprise funds were offset by the increase to
the net position of the Water fund.
Budgetary Highlights
General Fund.
The General Fund original budget was revised to reflect the following significant changes:
The intergovernmental revenue and fire departmentbudgets were decreased by $11,000
due to a State grant for a fuel tank replacement which took place in 2010.
The intergovernmental revenue and public workscontracted services budgets were
increasedby $17,700to account for costs of 800 MHz radios purchasedwitha grant from
Washington County.
The charges for service and Mayor/Council expense budgets were both decreasedby
$60,000to reflect the suspension of the 3M air monitoring program during 2012.
The special assessmentand building inspections budget were increased by $9,000for
property abatements and the corresponding fees recovered.
The charges for service and forestry budget were decreased by $18,550 due to the
reduction in tree sales to homeowners.
Transfers were amended to recognize transfers in the amount of $255,361 occurring as
part of the City’s fund balance policy and to recognize a $30,000 set aside for landscaping
of the Gateway Pond area.
The actual results were significantly different than the final budget amounts because of the
following:
Current and delinquent General Property Taxes were $186,857 more than budgeted due to
the City’s portion of returned TIF revenues.
Licenses and Permits categories were $162,237 more than budgeted due to increased
commercial/institutional building permitting in 2012.
Management’s Discussion and Analysis
(continued)
Fines revenues were $36,468 less than budgeted due to reduced revenues passed through
to the City from the state and county.
Investment income was $18,960 lessthan budgeted due tothe collection of lessinterest
than had been budgeted at historically low interest rates.
Public safety expenditureswere $131,419 greaterthan the final budgeted amountsdue to a
mid-year change to operational staffing.
Public works expenditures were $123,427 greater than final budget due to personnel costs
which could not be allocated to anticipated construction projects which did not occur in
2012.
Capital 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, 2012, amounts to $190,499,845 (net of accumulated
depreciation). This investment in capital assets includes land, buildings, infrastructure, machinery
and equipment.
City of Cottage Grove's Capital Assets
(Net of Depreciation)
Governmental ActivitiesBusiness-type ActivitiesTotals Primary Government
201220112012201120122011
Land and land improvements$ 16,529,494$16,478,173 $ 1,744,531$1,745,327 $ 18,274,025$ 18,223,500
Easements1,133,490 493,239- -1,133,490 493,239
Construction in progress1,475,5178,886,732 - 480,599 1,475,5179,367,331
Buildings and improvements22,376,5969,164,082 2,058,8192,174,216 24,435,41511,338,298
Equipment and furniture 497,405 395,062 - - 497,405 395,062
Machinery and equipment3,845,1373,564,719 1,051,021 815,224 4,896,1584,379,943
Other improvements2,062,1431,404,463 4,309,1294,481,431 6,371,2725,885,894
Infrastructure:
Streets64,201,96961,543,032 -- 64,201,96961,543,032
Storm sewers19,070,73019,501,519 - - 19,070,73019,501,519
Sidewalks/trails4,902,6393,684,762 - - 4,902,6393,684,762
Water and sewer lines - -45,241,22545,423,431 45,241,22545,423,431
Ending balance$136,095,120$125,115,783$54,404,725$55,120,228$190,499,845$180,236,011
The largest addition to capital assets in 2012 was the new Public Safety/City Hall project which
was completed and capitalized in 2012.
Additional information on the City of Cottage Grove’s capital assets can be found in Note 5.
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 $18,668,274, an increase of $16,474. $2,079,085 of the debt
outstanding is due within one year. $5,175,000 of bonds payable is for pavement
management debt being repaid by a combination of special assessments and property tax
levies.
City of Cottage Grove's Outstanding Debt
20122011
Governmental activities:
Bonds payable, net$ 10,067,245 $ 9,553,867
Capital lease payable 5,615,000 5,865,000
Other postemployment benefits41,281 39,636
Compensated absences752,309 725,863
Total governmental activities 16,475,835 16,184,366
Business-type activities:
Bonds payable, net 1,036,584 1,456,067
Loan payable to component unit900,000 900,000
Capital lease payable142,696 -
Other postemployment benefits9,893 9,441
Compensated absences103,266 101,926
Total business-type activities 2,192,439 2,467,434
Total primary government$ 18,668,274 $ 18,651,800
The City of Cottage Grove holds a general obligation debt rating of Aa1from Moody’s (2010
Global Ratings Scale) and of AA+/Stablefrom Standard and Poor’s. According to S&P, Cottage
Grove has “a strong financialprofile, anchored by a very strong general fund balance; and good
managementpractices 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
$73,931,187.Of that limit, $5,615,000of the City's outstanding debt is counted within the
statutory limitation becauseall 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,12800 Ravine Parkway St, Cottage
Grove, Minnesota 55016.
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BASIC FINANCIAL STATEMENTS
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CITY OF COTTAGE GROVE, MINNESOTA
Statement 1
STATEMENT OF NET POSITION
December 31, 2012
With Comparative Data as of December 31, 2011
Component Unit
Primary GovernmentTotalEconomicTotals
GovernmentalBusiness-TypePrimaryDevelopmentReporting Entity
ActivitiesActivitiesGovernmentAuthority20122011
Assets:
Cash and investments$31,127,252$9,020,064$40,147,316$785,379$40,932,695$51,264,469
Accrued interest receivable155,118-155,118182,523337,641346,403
Due from other governmental units - net2,195,8216,4652,202,286-2,202,2861,181,427
Loan receivable from primary government---900,000900,000900,000
Accounts receivable - net421,4391,411,8161,833,255-1,833,2551,514,523
Prepaid items133,769139,693273,4621,080274,542262,451
Delinquent property taxes receivable274,452-274,4522,310276,762314,957
Due from county88,855-88,855-88,85575,449
Special assessments receivable3,049,923-3,049,923-3,049,9233,757,113
Inventories - at cost73,48345,263118,746-118,746160,559
Internal balances(5,439,717)5,439,717----
Deferred charges125,10111,024136,12552,125188,250174,522
Lease receivable---5,615,0005,615,0005,865,000
Properties held for resale267,498-267,498311,718579,216579,216
Capital assets not being depreciated:
Land and land improvements 16,529,4941,712,29018,241,784-18,241,78418,190,463
Easements1,133,490-1,133,490-1,133,490493,239
Construction in progress 1,475,517-1,475,517-1,475,5179,367,331
Capital assets (net of accumulated depreciation):
Land improvements -32,24132,241-32,24133,037
Buildings and improvements22,376,5962,058,81924,435,415-24,435,41511,338,298
Equipment and furniture497,405-497,405-497,405395,062
Machinery and equipment3,845,1371,051,0214,896,158-4,896,1584,379,943
Other improvements2,062,1434,309,1296,371,272-6,371,2725,885,894
Infrastructure88,175,33845,241,225133,416,563-133,416,563130,152,744
Total assets168,568,11470,478,767239,046,8817,850,135246,897,016246,632,100
Liabilities:
Accounts payable511,889127,466639,3558,370647,725600,238
Claims payable188,137-188,137-188,137317,168
Salaries payable359,47545,919405,3947,128412,522358,555
Contracts payable914,000-914,000-914,0001,724,848
Due to other governmental units35,01738,76473,781-73,78146,875
Deposits payable 190,66514,200204,865-204,865418,398
Accrued interest payable215,361189,044404,40562,523466,928442,812
Unearned revenue29,500-29,500-29,50065,110
Compensated absences payable:
Due within one year525,48579,647605,1329,873615,005589,203
Due in more than one year226,82423,619250,4435,698256,141243,999
Other postemployment benefits:
Due in more than one year41,2819,89351,17441151,58549,150
Loan payable to component unit:
Due in more than one year-900,000900,000-900,000900,000
Capital lease payable:
Due within one year260,00033,953293,953-293,953250,000
Due in more than one year5,355,000108,7435,463,743-5,463,7435,615,000
Bonds payable (net of unamortized premiums and discounts):
Due within one year950,000230,0001,180,000260,0001,440,0002,005,000
Due in more than one year9,117,245806,5849,923,8295,278,56015,202,38914,788,814
Total liabilities18,919,8792,607,83221,527,7115,632,56327,160,27428,415,170
Net position:
Net investment in capital assets120,412,87553,225,445173,638,320-173,638,320163,361,077
Restricted for:
Forfeiture and seizure17,692-17,692-17,69250,968
Charitable gambling6,624-6,624-6,6241,920
Debt retirement2,858,411-2,858,411495,2143,353,6253,556,798
Tax increment purposes1,254,672-1,254,672-1,254,672834,984
Park trust activities73,514-73,514-73,514637,498
Capital improvements-----15,000
Unrestricted25,024,44714,645,49039,669,9371,722,35841,392,29549,758,685
Total net position$149,648,235$67,870,935$217,519,170$2,217,572$219,736,742$218,216,930
The accompanying notes are an integral part of these basic financial statements.
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CITY OF COTTAGE GROVE, MINNESOTA
BALANCE SHEET
GOVERNMENTAL FUNDS
December 31, 2012
With Comparative Data as of December 31, 2011
MunicipalMSA
BuildingConstruction
GeneralCapital ProjectCapital ProjectClosed Debt
Assets:FundFundFundFund
Cash and investments$9,407,959$1,614,032$950,754$1,445,525
Accrued interest receivable102,118---
Interfund receivable----
Interfund loan receivable---2,000,000
Due from other governmental units - net68,106101,325955,991-
Accounts receivable - net39,2631,645--
Prepaid items5,764---
Delinquent property taxes receivable225,8745,558-10,724
Due from county88,855---
Special assessments receivable:
Deferred31,964-683,130530,874
Delinquent5,815-4,00627,254
Special deferred-12,928112,6338,438
Property held for resale--267,498-
Total assets$9,975,718$1,735,488$2,974,012$4,022,815
Liabilities:
Accounts payable$172,773$24,706$12,317$-
Salaries payable321,521---
Interfund payable----
Contracts payable-659,347166,578-
Due to other governmental units29,73945--
Deposits payable8,000---
Interfund loan payable-9,900,000--
Deferred revenue293,15318,4861,755,760577,290
Total liabilities825,18610,602,5841,934,655577,290
Fund balances (deficit):
Nonspendable:
Prepaid items5,764---
Assets for resale--267,498-
Long-term interfund loan receivable---2,000,000
Restricted for:
Forfeiture and seizure----
Charitable gambling----
Debt retirement----
Tax increment purposes----
Park trust activities----
Committed----
Assigned1,695,203-771,8591,445,525
Unassigned:
General Fund7,449,565---
Capital Project Funds-(8,867,096)--
Total fund balances (deficit)9,150,532(8,867,096)1,039,3573,445,525
Total liabilities and fund balances$9,975,718$1,735,488$2,974,012$4,022,815
The accompanying notes are an integral part of these basic financial statements.
Statement 3
PavementPavementConstruction
ManagementManagementRevolvingOtherTotals
Debt ServiceCapital ProjectCapital ProjectGovernmentalGovernmental Funds
FundFundFundFunds20122011
$808,774$-$54,365$14,079,583$28,360,992$39,502,856
---53,000155,118179,380
122,137--461,804583,9411,133,264
---3,155,0005,155,0006,100,000
---1,070,3992,195,8211,175,262
---380,341421,249386,445
---9386,70225,320
6,921--25,375274,452312,295
----88,85575,449
1,413,451-26,703163,3242,849,4463,561,996
10,969--3,46251,50648,363
14,972---148,971146,754
----267,498267,498
$2,377,224$-$81,068$19,393,226$40,559,551$52,914,882
$-$50,870$17,645$122,922$401,233$370,359
---21,979343,500296,429
-122,137-461,804583,9411,133,264
-20,000-68,075914,0001,702,578
---4,29734,08113,763
---182,665190,665226,629
---455,00010,355,00011,550,000
1,446,313-26,703192,1614,309,8665,162,082
1,446,313193,00744,3481,508,90317,132,28620,455,104
---9386,70225,320
----267,498267,498
---3,155,0005,155,0006,100,000
---17,69217,69250,968
---6,6246,6241,920
930,911--486,6971,417,6081,569,776
---1,481,7821,481,7821,184,983
---73,51473,514637,498
---560,321560,321833,500
--36,72012,563,55916,512,86616,784,506
----7,449,5657,178,108
-(193,007)-(461,804)(9,521,907)(2,174,299)
930,911(193,007)36,72017,884,32323,427,26532,459,778
$2,377,224$-$81,068$19,393,226$40,559,551$52,914,882
Fund balance reported above$23,427,265$32,459,778
Amounts reported for governmental activities in the statement of net position are different because:
Capital assets used in governmental activities are not financial resources, and therefore,
are not reported in the funds135,063,624124,119,665
Other long-term assets are not available to pay for current-period expenditures, and therefore,
are deferred in the funds4,280,3665,096,972
Long-term liabilities, including bonds payable, are not due and
payable in the current period and therefore are not reported in the funds.(16,708,146)(16,575,083)
Internal service funds are used by management to charge the cost of insurance to individual funds.
The assets and liabilities are included in the governmental statement of net position3,585,1263,502,899
Net position of governmental activities$149,648,235$148,604,231
The accompanying notes are an integral part of these basic financial statements.
CITY OF COTTAGE GROVE, MINNESOTA
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE
GOVERNMENTAL FUNDS
For The Year Ended December 31, 2012
With Comparative Data for the Year Ended December 31, 2011
MunicipalMSA
BuildingConstruction
GeneralCapital ProjectCapital ProjectClosed
Revenues:FundFundFundDebt Fund
General property taxes$11,153,957$495,692$-$8,041
Franchise taxes----
Aggregate taxes----
Tax increment collections----
Special assessments28,664-198,964182,848
Licenses and permits831,687---
Direct charges to developers----
Intergovernmental633,631100,974829,960-
Charges for services830,159---
Fines and forfeits164,532---
Investment earnings41,04044,7173,5825,896
Interest on interfund loan---33,315
Connection charges----
Park dedication fees----
Donations11,460---
Miscellaneous35,271172,904--
Total revenues13,730,401814,2871,032,506230,100
Expenditures:
Current:
General government2,581,53593,928-2,361
Economic development----
Public safety6,117,895---
Public works2,276,183-42,366-
Culture and recreation1,614,864---
Capital outlay:
General government-11,654,189--
Economic development----
Public safety116,269---
Public works9,779-783,103-
Culture and recreation----
Debt service:
Principal retirement----
Capital lease payment----
Interest and fiscal charges-105,509--
Total expenditures12,716,52511,853,626825,4692,361
Revenues over (under) expenditures1,013,876(11,039,339)207,037227,739
Other financing sources (uses):
Transfers in4,800875,064284,479105,149
Transfers out(682,061)-(87,000)(40,810)
Bonds issued----
Discount on debt issued----
Proceeds from the sale of capital assets----
Total other financing sources (uses)(677,261)875,064197,47964,339
Net increase (decrease) in fund balance336,615(10,164,275)404,516292,078
Fund balance - January 18,813,9171,297,179634,8413,153,447
Fund balance - December 31$9,150,532$(8,867,096)$1,039,357$3,445,525
The accompanying notes are an integral part of these basic financial statements.
Statement 4
PavementPavementConstruction
ManagementManagementRevolvingOtherTotals
Debt ServiceCapital ProjectCapital ProjectGovernmentalGovernmental Funds
FundFundFundFunds20122011
$468,334$-$-$241,954$12,367,978$11,539,640
---537,682537,682535,188
---26,18026,18026,131
---892,438892,438946,603
342,063-53,566346,9141,153,0191,875,486
----831,687593,272
---16,55516,555101,913
---1,119,4752,684,0403,879,411
---1,637,0282,467,1872,494,018
---33,490198,022246,753
2,9922,7871,30494,561196,879448,782
---121,986155,301144,500
---282,265282,265322,009
---41,99041,99062,198
---362,296373,756383,826
---19,324227,499211,392
813,3892,78754,8705,774,13822,452,47823,811,122
3,532--7,8002,689,1562,942,106
---491,040491,040793,046
---33,7826,151,6775,827,572
-79113,3811,726,8614,059,5823,774,559
---772,7912,387,6552,326,733
---6,19911,660,3883,221,252
---111,913111,913-
---499,957616,226169,609
-144,34816,8311,353,6472,307,7086,939,101
---724,573724,573547,966
880,000--455,0001,335,0007,135,000
---250,000250,000245,000
132,89989,75512,000508,883849,046906,910
1,016,431234,89442,2126,942,44633,633,96434,828,854
(203,042)(232,107)12,658(1,168,308)(11,181,486)(11,017,732)
40,810111,62891,569657,6502,171,1493,052,403
--(49,404)(1,022,595)(1,881,870)(3,048,803)
-1,865,000--1,865,000-
-(15,852)--(15,852)-
---10,54610,54612,344
40,8101,960,77642,165(354,399)2,148,97315,944
54,823(1,522,707)(9,032,513)(11,001,788)
(162,232)1,728,669
1,093,143(1,921,676)(18,103)19,407,03032,459,77843,461,566
$930,911$(193,007)$36,720$17,884,323$23,427,265$32,459,778
The accompanying notes are an integral part of these basic financial statements.
CITY OF COTTAGE GROVE, MINNESOTA
Statement 5
RECONCILIATION OF THE STATEMENT OF REVENUES,
EXPENDITURES, AND CHANGES IN FUND BALANCES OF
GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
For The Year Ended December 31, 2012
With Comparative Data for the Year Ended December 31, 2011
20122011
Amounts reported for governmental activities in the
statement of activities (page 37) are different because:
Net changes in fund balances - total governmental funds (page 41)$ (9,032,513)$ (11,001,788)
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. This is the amount by which capital outlays
exceeded depreciation in the current period. 10,574,891 6,708,184
The effect of various miscellaneous transactions involving capital assets is to decrease net position
(i.e. sales, and trade-ins). (2,508) 84,064
Donations of capital assets increase net position in the statement of activities, but do not
appear in the governmental funds because they are not financial resources. 371,576 780,524
Revenues in the statement of activities that do not provide current financial resources (816,606) (1,227,689)
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 position. This amount is the net effect of these differences in the treatment
of long-term debt and related items. (244,882) 7,327,646
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. 82,227 107,745
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. 111,819 (222,992)
Change in net position of governmental activities (page 37)$ 1,044,004$ 2,555,694
The accompanying notes are an integral part of these basic financial statements.
CITY OF COTTAGE GROVE, MINNESOTA
Statement 6
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
December 31, 2012
Business-Type Activities - Enterprise FundsGovernmental
TotalActivities -
Golf CourseStreet LightCottage GroveWaterSewerEnterpriseInternal
FundFundEMS FundOperatingOperatingFundsService Funds
Assets:
Current assets:
Cash and investments$ 14,731$ 2,415,907$ 654,119$ 3,611,235$ 2,324,072$ 9,020,064
$ 2,766,260
Interfund loan receivable---3,200,0003,200,0006,400,000-
Due from other governmental units-net--6,465--6,465-
Accounts receivable:
Customers-88,181445,003282,503367,2581,182,945-
Certified to County---98,66699,863198,529-
Other1,6709,030-19,642-30,342190
Prepaid items7,459-5,3401,705125,189139,693127,067
Inventories - at cost26,18919,074---45,26373,483
17,023,3012,967,000
Total current assets50,0492,532,1921,110,9277,213,7516,116,382
Noncurrent assets:
Deferred charges---11,024-11,024-
Capital assets:
Land and land improvements1,387,290--364,803-1,752,093424,665
Buildings and improvements---4,101,713-4,101,713928,870
Equipment and furniture------74,232
Machinery and equipment918,119139,222709,9601,012,909323,6733,103,883158,929
Other improvements2,760,8255,347,706---8,108,531-
Water and sewer lines---34,877,98924,461,87059,339,859-
Total capital assets5,066,2345,486,928709,96040,357,41424,785,54376,406,0791,586,696
Less: Accumulated depreciation (2,357,198) (2,033,598)(406,773) (11,649,997)(5,553,788)(22,001,354)(555,200)
Net capital assets2,709,0363,453,330303,18728,707,41719,231,75554,404,7251,031,496
2,709,0363,453,330303,18728,718,44119,231,75554,415,7491,031,496
Total noncurrent assets
Total assets2,759,0855,985,5221,414,11435,932,19225,348,13771,439,0503,998,496
Liabilities:
Current liabilities:
Accounts payable8,44338,62411,59253,07015,737127,466110,656
Salaries payable16,9142,41610,14613,6192,82445,91915,975
Due to other governmental units2,966-8,05527,7271638,764936
Deposits payable10,200--4,000-14,200-
Accrued interest payable173,000--16,044-189,044-
Compensated absences payable 28,6286,44714,19521,0389,33979,64716,311
Capital lease payable - current portion33,953----33,953-
Bonds payable - current portion---230,000-230,000-
Total current liabilities274,10447,48743,988365,49827,916758,993143,878
Noncurrent liabilities:
Compensated absences payable 7,290-7,7085,5113,11023,61928,463
Other postemployment benefits3,5233073,3562,0296789,8931,312
Capital lease payable - noncurrent portion108,743----108,743-
Interfund loan payable 1,200,000----1,200,000-
Loan payable to component unit900,000----900,000-
Bonds payable (net of unamortized
premiums and discounts)---806,584-806,584-
Total noncurrent liabilities2,219,55630711,064814,1243,7883,048,83929,775
Total liabilities2,493,66047,79455,0521,179,62231,7043,807,832173,653
Net position:
Net investment in capital assets2,566,3403,453,330303,18727,670,83319,231,75553,225,4451,031,496
Unrestricted (2,300,915)2,484,3981,055,8757,081,7376,084,67814,405,7732,793,347
Total net position$ 265,425$ 5,937,728 $ 34,752,570$ 25,316,43367,631,218
$1,359,062$3,824,843
Some amounts reported for business-type activities in the statement of net position are different
because certain internal service fund assets and liabilities are included with business-type activities.239,717
$ 67,870,935
The accompanying notes are an integral part of these basic financial statements.
43
CITY OF COTTAGE GROVE, MINNESOTA
STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN FUND NET POSITION
PROPRIETARY FUNDS
For The Year Ended December 31, 2012
Business-Type Activities - Enterprise Funds
Golf CourseStreet LightCottage Grove
FundFundEMS Fund
Operating revenues:
Charges for services - user fees$1,561,025$489,011$1,511,660
Water meter/ street light material sales---
Insurance refunds and reimbursements---
Total operating revenues1,561,025489,0111,511,660
Operating expenses:
Operating and maintenance:
Personal services543,15575,597826,837
Commodities139,19959,79789,272
Commodities - items for resale234,64011,859-
Contractual services170,360386,145133,862
Disposal:
Contractual services - MCES---
Administrative and general:
Personal services189,252--
Commodities6,143--
Contractual services121,998--
Other charges- administrative charge50,70043,80054,100
Depreciation172,540127,18366,030
Total operating expenses1,627,987704,3811,170,101
Operating income (loss)(66,962)(215,370)341,559
The accompanying notes are an integral part of these basic financial statements.
Statement 7
Page 1 of 2
Governmental
TotalActivities -
WaterSewerEnterpriseInternal
OperatingOperatingFundsService Funds
$2,231,541$2,204,000$7,997,237$2,641,852
19,939-19,939-
---123,741
2,251,4802,204,0008,017,1762,765,593
397,15489,5671,932,310413,365
141,53911,615441,422632,439
--246,499-
547,290161,6671,399,324179,698
-1,413,3891,413,389-
36,45226,561252,265984,093
107996,349-
136,374126,683385,055389,772
156,560175,040480,200-
759,723422,0851,547,56138,854
2,175,1992,426,7068,104,3742,638,221
76,281(222,706)(87,198)127,372
The accompanying notes are an integral part of these basic financial statements.
CITY OF COTTAGE GROVE, MINNESOTA
STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN FUND NET POSITION
PROPRIETARY FUNDS
For The Year Ended December 31, 2012
Business-Type Activities - Enterprise Funds
Golf CourseStreet LightCottage Grove
FundFundEMS Fund
Nonoperating revenues (expenses):
State grant$-$-$-
Investment earnings-16,9463,346
Interest on interfund debt---
Rent---
Miscellaneous5,01051,68517,096
Debt service:
Interest(42,767)--
Bond issuance costs---
Total nonoperating revenues (expenses)(37,757)68,63120,442
Income (loss) before
contributions and transfers(104,719)(146,739)362,001
Capital contributions---
Transfer from Enterprise Fund---
Transfer from Internal Service Fund---
Transfer to General Fund--(4,800)
Transfer to Capital Project Fund-(284,479)-
Transfer to Enterprise Funds-(9,000)-
Total transfers-(293,479)(4,800)
Change in net position(104,719)(440,218)357,201
Net position - January 1370,1446,377,9461,001,861
Net position - December 31$265,425$5,937,728$1,359,062
Change in net position reported above
Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds
Change in net position of business-type activities (page 37)
The accompanying notes are an integral part of these basic financial statements.
Statement 7
Page 2 of 2
Governmental
TotalActivities -
WaterSewerEnterpriseInternal
OperatingOperatingFundsService Funds
$4,288$-$4,288$-
16,70213,194$50,18816,641
34,10434,10468,208-
454,879-454,879-
63,2903,363140,444838
(39,761)-(82,528)-
(1,576)-(1,576)-
531,92650,661633,90317,479
608,207(172,045)546,705144,851
139,114185,470324,584-
38,200-38,200-
31,000-31,000-
--(4,800)-
--(284,479)-
-(29,200)(38,200)(31,000)
69,200(29,200)(258,279)(31,000)
816,521(15,775)613,010113,851
33,936,04925,332,20867,018,2083,710,992
$34,752,570$25,316,433$67,631,218$3,824,843
$613,010
31,624
$644,634
The accompanying notes are an integral part of these basic financial statements.
CITY OF COTTAGE GROVE, MINNESOTA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
For The Year Ended December 31, 2012
Business-Type Activities - Enterprise Funds
Golf CourseStreet LightCottage Grove
FundFundEMS Fund
Cash flows from operating activities:
Receipts from customers and users$1,557,993$478,911$1,283,631
Receipts from interfund services provided---
Receipts from insurance refunds and reimbursements---
Payment to suppliers(723,148)(459,443)(266,867)
Payment to employees(724,255)(75,463)(831,139)
Miscellaneous revenue 5,01051,68517,096
Net cash flows from operating activities115,600(4,310)202,721
Cash flows from noncapital financing activities:
Proceeds of interfund loan250,000--
Transfers in---
Transfers out-(293,479)(4,800)
Net cash flows from
noncapital financing activities250,000(293,479)(4,800)
Cash flows from capital and related
financing activities:
Acquisition of capital assets(153,276)(152,531)-
Rent---
Interest paid on debt(10,318)--
Principal paid on debt(195,000)--
Net cash flows from capital
and related financing activities(358,594)(152,531)-
Cash flows from investing activities:
Investment earnings-16,9463,346
Net cash flows from investing activities-16,9463,346
Net increase (decrease) in cash and cash equivalents7,006(433,374)201,267
Cash and cash equivalents - January 17,7252,849,281452,852
Cash and cash equivalents - December 31$14,731$2,415,907$654,119
The accompanying notes are an integral part of these basic financial statements.
48
Statement 8
Page 1 of 2
Governmental
TotalActivities -
WaterSewerEnterpriseInternal
OperatingOperatingFundsService Funds
$2,056,661$2,179,491$7,556,687$-
---2,641,852
---123,741
(981,354)(1,893,893)(4,324,705)(1,236,336)
(436,154)(115,985)(2,182,996)(1,389,966)
63,2903,363140,444838
702,443172,9761,189,430140,129
--250,000-
69,200-69,200-
-(29,200)(327,479)(31,000)
69,200(29,200)(8,279)(31,000)
(58,971)-(364,778)(74,232)
454,879-454,879-
(42,942)-(53,260)-
(225,000)-(420,000)-
127,966-(383,159)(74,232)
50,80647,298118,39616,641
50,80647,298118,39616,641
950,415191,074916,38851,538
2,660,8202,132,9988,103,6762,714,722
$3,611,235$2,324,072$9,020,064$2,766,260
The accompanying notes are an integral part of these basic financial statements.
49
CITY OF COTTAGE GROVE, MINNESOTA
STATEMENT OF CASH FLOWS (CONTINUED)
PROPRIETARY FUNDS
For The Year Ended December 31, 2012
Business-Type Activities - Enterprise Funds
Golf CourseStreet LightCottage Grove
FundFundEMS Fund
Reconciliation of operating income/(loss) to net cash
from operating activities:
Operating income (loss) $(66,962)$(215,370)$341,559
Adjustments to reconcile operating income (loss)
to net cash flows from operating activities:
Depreciation172,540127,18366,030
Miscellaneous revenue5,01051,68517,096
Changes in assets and liabilities:
Decrease (increase) in receivables1,072(10,100)(228,029)
Decrease (increase) in prepaid items(2,325)--
Decrease (increase) in inventory(4,127)38,148-
(Decrease) increase in payables10,3924,1446,065
Total adjustments182,562211,060(138,838)
Net cash flows from operating activities$115,600$(4,310)$202,721
Noncash investing, capital and financing activities:
Capital asset contributions from governmental activities$11,886$-$25,153
Borrowing under capital lease176,039--
The accompanying notes are an integral part of these basic financial statements.
50
Statement 8
Page 2 of 2
Governmental
TotalActivities -
WaterSewerEnterpriseInternal
OperatingOperatingFundsService Funds
$76,281$(222,706)$(87,198)$127,372
759,723422,0851,547,56138,854
63,2903,363140,444838
(21,354)(24,509)(282,920)1,880
-(7,407)(9,732)(21,477)
--34,0217,792
(175,497)2,150(152,746)(15,130)
626,162395,6821,276,62812,757
$702,443$172,976$1,189,430$140,129
$139,114$185,470$361,623$-
----
The accompanying notes are an integral part of these basic financial statements.
51
-This Page Intentionally Left Blank-
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
Note 1SUMMARY 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
relationshipwith 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 benefitsor
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 positionand the statement of activities) 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 bytaxes 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 position, 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 andreceivables as well as long-term debt and obligations. The City’s net
position isreported in three parts: (1) net investment in capital assets; (2) restricted net position; and (3) unrestricted
net position. 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 expensesare those that are clearly identifiable with a specific
function or business-type activity. Program revenuesinclude 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.
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
C.MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT
PRESENTATION
The government-wide financial statements are reported using the economic resources measurement focusand the
accrual basis of accounting, as are the proprietary fund statements. Revenues are recorded when earned and
expenses are recorded when aliability 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 bythe provider have been met.
Governmental fund financial statements are reported using the current financial resources measurement focusand
the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and
available. Revenues are considered to be availablewhen 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 Fundaccounts for the accumulation of resources and construction or
remodeling costs of municipal buildings and facilities.
The MSA Construction Capital Project Fundaccounts 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 Fundaccounts 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 Fundaccounts for pavement management construction projects.
The Construction Revolving Capital Project Fundaccounts for new development construction projects that are
financed by developers.
The government reports the following major proprietary funds:
The Golf Course Fundaccounts for theCity's eighteen hole golf course and banquet facility.
The Street Light Fundaccounts for customer street light and service charges which are used to finance street
light operating expenses.
The Cottage Grove EMS Fundaccounts for the operation of theCottage Grove ambulance service that serves
the cities of Cottage Grove, Newport, Saint Paul Park, and Grey Cloud Island.
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
The Water Operating fundaccounts for customer water service charges which are used to finance water
operating expenses.
The SewerOperating fundaccounts for customer sewer service charges which are used to finance sewer
operating expenses.
Additionally, the government reports the following fund type:
Internal service funds account for the City’s self-insurance,fleet maintenance, and informationservices
provided to other departments of the government on a cost reimbursement basis.
As a general rule, the effect of interfund activity has been eliminated from the government-wide financial
statements. Exceptions to this general rule are transactions that would be treated as revenues, expenditures or
expenses if they involved external organizations, such as buying 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 charges would
distort the direct costs and program revenues reported for the various functions concerned.
Amounts reported as program revenuesinclude 1) charges to customers 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 revenuesrather than as program revenues.
Likewise, general revenues include all taxes.
Proprietary funds distinguish operating revenues and expenses from non-operatingitems. Operating revenues and
expenses generally result from providing services and producing and delivering goods in connection with a
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 sales and services. The ambulance fund
operating revenues are net of write off’s 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 assets. All revenues and expenses not meeting this definition are reported as non-
operating revenues and expenses.
When both restricted and unrestricted resources are available for an allowable use, it is the government’s policy to
use restricted resources first, then unrestricted resourcesas they are needed.
D.BUDGETS
Budgets are adopted on a basis consistent with U.S. generally accepted accounting principles. Annual appropriated
budgets are adopted for the General and Special Revenue Funds.
Budgeted amounts are reported as originally adopted, and as amended by the City Council. Individual amendments
were not material in relation to the original appropriations which were adjusted. Budgeted expenditure
appropriations can be carried forward to the next budget year subject to City Council approval.
E.LEGAL COMPLIANCE - BUDGETS
The City follows these procedures in establishing the budgetary data reflected in the financial statements:
1.The City Administrator submits to the City Council a proposed operating budget for the fiscal year commencing
the following January 1. The operating budget includes proposed expenditures and the means of financing
them.
2.The City Council reviews the proposed budget and makes appropriate changes.
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
3.Per Statute, public meetingsare heldtoreceive taxpayer comments.
4.The budget is legally enacted through passage of a resolution 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.
Additional interdepartmental or interfund appropriations and deletions are authorized by the City Council with
expenditure reductions, fund (contingency) reserves or additional revenues.
6.Formal budgetary integration is employed as a 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 in the financial statements.
8.A capital improvement program is 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 in the financial statements.
9.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.
10.The City Council may authorize transfers of budgeted amounts between City funds.
The following is a listing of expenditure categories that exceed budget appropriations for non-major funds:
Final BudgetActualOver Budget
Nonmajor Funds:
Special Revenue Funds:
Recycling:
Public works:
Contractual services$11,900$22,810$10,910
Storm Water Maintenance Fund:
Public works:
Contractual services370,480482,763112,283
Forfeiture/Seizurefund:
Public safety:
Commodities3,30011,1157,815
Contractual services15,80022,6676,867
Capital outlay-15,19815,198
Ice Arena Fund:
Culture and recreation:
Personal services336,600338,6252,025
Contractual services258,560294,90836,348
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
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 areconsidered cash equivalents.
G.RECEIVABLES AND PAYABLES
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, 2012 are planned to be eliminated in 2013.Long-term interfund
loans are classified as “interfund loan receivable/payable.” Any residual balances outstanding between the
governmental activities and business-type activities are reported in the government-widefinancial 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 1 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. Suchtaxes become a lien on January 1 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 taxesreceived by the City in July, December and January are
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
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.
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 applicableto future accounting periods and are recorded as prepaid items
in both government-wide and fund financial statements.
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
L.ALLOWANCE FOR UNCOLLECTIBLE
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, 2012 were $297,000.
M.PROPERTIES HELD FOR RESALE
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 year. Such assets are recorded at historical cost or estimated
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, 2012, no interest was capitalized in connection with
construction in progress.
Capital assets not being depreciated include land, easementsand 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:
AssetsYears
Buildings and improvements20-50
Equipment and furniture3-10
Machinery and equipments5-20
Other improvements5-20
Streets50
Storm sewers50
Sidewalks50
Trails20
Street lights50
Water and sewer lines50
Capital assets of the water andsewer 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.
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
O. 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, Accounting 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.
P. LONG-TERM OBLIGATIONS
In the government-wide financial statements andproprietary 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-
type activities, or proprietary fund type statement of net position.Bond premiums and discountsare deferred and
amortized over the life of the bonds.Bond issuance costs are reported as deferred charges and amortized over the
term of the related debt.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond
issuance costs, during the current period. The face amount of debt issued is reported as other financing sources.
Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are
reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are
reported as debt service expenditures.
Q. FUND BALANCE
In the fund financial statements, governmental funds report fund balances in classifications that disclose constraints
for which amounts in those funds can be spent. These classifications are as follows:
Nonspendable – Amounts that cannot be spent because they are not in spendable form, such as prepaid items, assets
for resale, and long-term interfund receivables.
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 or rescinds
the commitment by resolution.
Assigned – Amounts constrained for specific purposes that are internally imposed. The Council has adopted a fund
balance policy which delegates the authority to assign fund balances to theCity Administrator and/or Finance
Director.
Unassigned – The residual classification for the General fund and also negative residual amounts in other funds.
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 formally adopted a fund balance policy for the General Fund. The policy establishes an unassigned fund
balance range of no less than 55% of the subsequent year’s budgeted expendituresto provide sufficient working
capital and margin of safety to address local emergencies without borrowing.
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
R. INTERFUND TRANSACTIONS
Interfund services provided and used are accounted for as revenues, expenditures or expenses. Transactions that
constitute reimbursements to a fund 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. Interfund loans are reported as an interfund loan receivable or
payable which offsets the movement of cash between funds. All other interfund transactions are reported as
transfers.
S. USEOF 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.
T.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 inthe 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 positionor total net positionas previously reported.
Note 2RECONCILIATION 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 POSITION
The governmental fund balance sheet includes a reconciliation between fund balance – total governmental
funds andnet position – governmental activitiesas reported in the government-wide statement of net position.
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 $(16,708,146)
difference are as follows:
Bonds payable
$ (10,070,000)
Claimspayable (188,137)
Capital leases payable
(5,615,000)
Accrued interest payable
(215,361)
Compensated absences payable
(707,535)
Other post employment benefits
(39,969)
Unamortized bond issuance costs 125,101
Unamortized discount on bonds
36,004
Unamortized premium on bonds (33,249)
Net adjustment to reduce fund balance -total
governmental funds to arrive at net position-
governmental activities
$ (16,708,146)
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
B.EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND
STATEMENT OF REVENUES, EXPENDITURES, ANDCHANGES 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 fundsand changes in net positionof
governmental activitiesas 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 $10,574,891difference are as follows:
Capital outlay $ 14,299,356
Depreciation expense(3,724,465)
Net adjustment to increase net changes in fund
balances -total governmental funds to arrive at
changes in net positionof governmental activities$10,574,891
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 $(816,606) difference
are as follows:
General property taxes deferred revenue:
At December 31, 2011$ (312,295)
At December 31, 2012 274,452
Special assessmentsdeferred revenue:
AtDecember 31, 2011(3,757,113)
At December 31, 20123,049,923
Grant deferred revenue:
At December 31, 2011(1,027,564)
At December 31, 2012 955,991
Net adjustments to increase net changes in fund balances -
total governmental funds to arrive at changes in net
positionof governmental activities$ (816,606)
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
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 thelong-term debt consumes the
current financial resources of governmental funds.” Neither transaction, however, has any effect on net
position. The details of this $(244,882)difference are as follows:
Debt issued:
Issuance of general obligation bonds $ (1,865,000)
Less discounts 15,852
Less issuance costs32,755
Principal repayments:
General obligation debt$1,335,000
Capital lease 250,000
Amortization of deferred discounts,
premiums, and issuance costs(13,489)
Net adjustments to increase net changes in
fund balances -total governmental funds
to arrive at changes in net positionof
governmental activities$(244,882)
Anotherelement 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 $111,819 difference are as follows:
Compensated absences:
At December 31, 2011$ 689,749
At December 31, 2012(707,535)
Accrued interest:
At December 31, 2011 217,496
At December 31, 2012(215,361)
Other post employment benefits
At December 31, 2011 38,408
At December 31, 2012 (39,969)
Claimspayable at December 31, 2011
At December 31, 2011317,168
At December 31, 2012(188,137)
Net adjustment to increase net changes infund
balances -total governmental funds toarrive at
changes in net positionofgovernmental
activities$111,819
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
Note 3 DEPOSITS AND INVESTMENTS
DEPOSITS
A.
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 positionandbalance 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 forcustodial credit risk –deposits beyond the requirements
of state statutes. As of December 31, 2012, 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 authorizethe 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(A1,P1), and maturing in 270 days or less.
e)Repurchase agreements fromnational or state banks that are members of the Federal Reserve Systemwith
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 participatesin the Minnesota
MunicipalMoney 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.
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
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.
Total FairInvestment maturities in YearsCredit Risk
Investment typeMarket ValueLess than 11–5More than 5RatingAgency
U.S. Agencies
Federal Home Loan Bank-FHLB$6,025,055$503,355$4,028,695$1,493,005AA/AaaS&P/Moody’s
Fannie Mae–FNMA13,033,710-9,519,4003,514,310AA/AaaS&P/Moody’s
Freddie Mac-FHLMC3,518,6632,512,3351,006,328-AA/AaaS&P/Moody’s
Federal Farm Credit Bank2,009,910-2,009,910-AA/AaaS&P/Moody’s
Term Series Investment Pool2,000,0002,000,000--NRN/A
Municipal Obligations2,665,630150,2961,723,970791,364AA/AaS&P/Moody’s
Negotiable CD’s9,770,9906,865,1072,905,883-NRN/A
Total Investments$39,023,958$12,031,093$21,194,186$5,798,679
Money Markets1,268,741
Deposits628,350
Petty Cash and Change11,646
Total Cash and Investments$40,932,695
NR indicates “not rated”
N/A indicates “not applicable
Custodial Credit Risk – For an investment, custodial credit risk is the risk that, in the event of failure of the depository
financial institution, the City will not be able to recover the value of its investment or collateral securities that are in the
possession of an outside party. The City’sinvestment policy requires that insurance of all balancesbeheld with each
investment account. As of December 31, 2012, the investment balances were fully covered by insurance for each brokerage
firm.
Credit Risk –Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its
obligations. As indicated previously, Minnesota statute requires Commercial paper to be of the highest quality (A1,
P1) and municipal general obligations need an “A” rating or better.
Concentration of Credit Risk –
The City’s investment policy places no limit on the amount that may be invested in any one issuer. The following is
a list of investments by issuer which individually comprise more than 5 percent of the City’s total investments:
Credit
TypeAmountPercent
Federal Home Loan Bank -FHLB$ 6,025,055 15%
Fannie Mae -FNMA13,033,710 33%
Freddie Mac -FHLMC3,518,663 9%
Federal Farm Credit Bank2,009,910 5%
4M Fund Investments2,000,0005%
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
Note 4RECEIVABLES
Significant receivable balances not expected to be collected within one year of December 31, 2012 are as follows:
SpecialDelinquentCertified
AssessmentPropertyto
ReceivableTaxesCountyTotal
Primary government:
Major funds:
General Fund
$29,273$ 103,700 $-$132,973
Municipal Building Capital Project Fund
12,928 2,600 - 15,528
MSA Construction Capital Project Fund
787,385 - -787,385
Closed Debt Fund
526,8453,100 -529,945
Pavement Management DebtService Fund
1,412,7995,100 -1,417,899
Construction Revolving Capital Project Fund
22,521 - -22,521
Nonmajor funds
132,0072,800 -134,807
Major Business-Type funds:
Water Operating fund
- -52,905 52,905
Sewer Operating fund
- -54,126 54,126
Total primary government
2,923,758117,300107,0313,148,089
Component unit:
Economic Development Authority
-1,100 - 1,100
Total reporting entity
$2,923,758$ 118,400$ 107,031$ 3,149,189
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:
UnavailableUnearned
Property Special Miscellaneous
TaxesAssessmentsMSA fundingFeesTotal
Primary government:
Major funds:
General Fund$225,874$37,779$-$29,500$293,153
Municipal Building Capital Project Fund5,55812,928 --18,486
MSA Construction Capital Project Fund -799,769955,991 -1,755,760
Closed Debt Fund10,724566,566 - -577,290
Pavement Management Debt Service Fund6,9211,439,392 - -1,446,313
Construction Revolving Capital Project Fund -26,703 - -26,703
Nonmajor funds25,375166,786 --192,161
Total primary government274,4523,049,923955,991 29,5004,309,866
Component unit
Economic Development Authority2,310- - -2,310
Total reporting entity$276,762$3,049,923$955,991$29,500$4,312,176
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
Note 5CAPITAL ASSETS
Capital asset activity for the year ended December 31, 2012 was as follows:
Beginning Ending
BalanceIncreasesDecreasesBalance
Primary Government
Governmental activities:
Capital assets, not being depreciated:
Land$ 16,478,173 $ 51,321 $-$ 16,529,494
Permanent easements 493,239 640,251 - 1,133,490
Construction in progress 8,886,732 13,523,854(20,935,069) 1,475,517
Total capital assets, not being depreciated 25,858,144 14,215,426(20,935,069)19,138,501
Capital assets, being depreciated:
Buildings and improvements 19,572,164 13,932,247 -33,504,411
Equipment and furniture 1,318,691 252,577 (167,558) 1,403,710
Machinery and equipment 8,288,813 859,017 (176,643) 8,971,187
Other improvements 3,808,082 807,054 (3,085) 4,612,051
Infrastructure:
Streets 76,368,752 4,228,534 -80,597,286
Storm sewers 24,478,447 76,074 -24,554,521
Sidewalks/trails 4,309,019 1,309,881 - 5,618,900
Total capital assets being Depreciated138,143,968 21,465,384 (347,286)159,262,066
Less accumulated depreciation for:
Buildings and improvements 10,408,082 719,733 -11,127,815
Equipment and furniture 923,629 150,234 (167,558) 906,305
Machinery and equipment 4,724,094 578,599 (176,643) 5,126,050
Other improvements 2,403,619 146,289 - 2,549,908
Infrastructure:
Streets 14,825,720 1,569,597 -16,395,317
Storm sewers 4,976,928 506,863 - 5,483,791
Sidewalks/trails 624,257 92,004 - 716,261
Total accumulated depreciation 38,886,329 3,763,319 (344,201)42,305,447
Total capital assets, being depreciated, net 99,257,639 17,702,065 (3,085)116,956,619
Governmental activities capital assets, net$ 125,115,783 $ 31,917,491$ (20,938,154)$ 136,095,120
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
BeginningEnding
Primary GovernmentBalanceIncreasesDecreasesBalance
Business-type activities:
Capital assets, not being depreciated:
Land$ 1,712,290 $-$-$ 1,712,290
Construction in progress480,599 -(480,599) -
Total capital assets, not being depreciated2,192,889 -(480,599)1,712,290
Capital assets, being depreciated:
Land improvements39,803 --39,803
Buildings and improvements4,101,713 --4,101,713
Machinery and equipment2,944,622 459,115 (299,854)3,103,883
Other improvements8,039,497 69,034 -8,108,531
Water and sewer lines58,518,311 821,548 -59,339,859
Total capital assets, being depreciated73,643,946 1,349,697 (299,854)74,693,789
Less accumulated depreciation for:
Land improvements 6,766 796 - 7,562
Buildings and structures1,927,495 115,399 -2,042,894
Machinery and equipment2,129,401 223,315 (299,854)2,052,862
Other improvements3,558,065 241,337 -3,799,402
Water and sewer lines13,094,880 1,003,754 -14,098,634
Total accumulated depreciation20,716,607 1,584,601 (299,854)22,001,354
Total capital assets being depreciated -net52,927,339 (234,904)-52,692,435
Business-type activities capital assets -net$ 55,120,228 $ (234,904)$ (480,599)$ 54,404,725
Depreciation expense was charged to function/programs of the primary government as follows:
Governmental activities:
General government$135,011
Public safety 518,589
Public works2,437,361
Culture and recreation 672,358
Total depreciation expense governmental activities$ 3,763,319
Business-type activities:
Golf course$172,540
Street lights 127,183
Cottage Grove EMS 66,030
Water operating 759,723
Sewer operating 422,085
Total depreciation expense before transfer1,547,561
Plus: Accumulated depreciation on transferred assets37,040
Total depreciation expense -business-type activities$ 1,584,601
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
NOTE 6LONG-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 improvementsand 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, 2012, the governmental long-term debt of the financial
reporting entity consisted of the following:
Final
InterestIssueMaturity OriginalPayable
RateDateDateIssue12/31/2012
Primary government:
GOVERNMENTAL ACTIVITIES
General Obligation Tax Increment Bonds:
GO Tax Increment Bonds of 2004A
3.0-4.65%7/1/20042/1/2024$ 1,405,000 $ 1,145,000
GO Tax Increment Bonds of 2004B
4.5-5.75%7/1/20042/1/20211,775,000 1,590,000
Total General Obligation Tax Increment Bonds
3,180,000 2,735,000
Special Assessment Bonds with Government Commitment:
GO Improvement Bonds of 2008A
3.5-3.6%6/11/20082/1/20193,370,000 2,160,000
GO Improvement Bonds of 2009A
2.5-4.3%4/16/20092/1/20243,650,000 2,840,000
GO Improvement Refunding Bonds of 2009C
2.0-3.0%4/16/200912/1/2015625,000 470,000
GO Improvement Bondsof 2012A
.30-2.2%3/13/20122/1/20271,865,000 1,865,000
Total Special Assessment Bonds
9,510,000 7,335,000
Bond premium/discount (net)
-(2,755)
Total Governmental Activities Bonds
12,690,000 10,067,245
Capital lease payable -EDA component unit
6,500,000 5,615,000
Other postemployment benefits
-41,281
Compensated absences payable
-752,309
Total City indebtedness -governmental activities
19,190,000 16,475,835
BUSINESS TYPE ACTIVITIES
Revenue bonds:
GO Water/Sewer Revenue Bonds of 1997A
4.3-5.1%5/21/19972/1/20131,475,000 130,000
GO Water Revenue Refunding Bonds of 2009B
2.5-4%4/16/20092/1/20201,205,000 910,000
Bond premium/discount (net)
-(3,416)
Total Revenue Bonds2,680,000 1,036,584
Loan payable -EDA component unit
2.00%12/31/200412/31/2020500,000 500,000
Loan payable -EDA component unit
2.00%12/31/200712/31/2022400,000 400,000
Capital lease payable
176,039142,696
Other postemployment benefits
-9,893
Compensated absences payable
-103,266
Total City indebtedness -business type activities
3,756,039 2,192,439
Total City indebtedness -primary government$ 22,946,039$ 18,668,274
Component Unit: EDA:
Lease-Purchase Revenue Bonds of 2008B
4.0-4.90%6/11/20084/1/2028 $6,500,000 $ 5,615,000
Bond premium/discount (net)
-(76,440)
Other postemployment benefits
-411
Compensated absences payable
-15,571
Total indebtedness -component unit
$ 6,500,000 $ 5,554,542
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
Annual debt service requirements to maturity for general obligation bonds are as follows:
Tax Increment BondsSpecial Assessment Bonds
Year EndingGovernmental ActivitiesGovernmental Activities
December 31PrincipalInterestPrincipalInterest
2013
$ 135,000 $ 136,287 $ 815,000 $ 217,723
2014
150,000 129,182 965,000 185,263
2015
170,000 121,114 795,000 160,787
2016
190,000 111,847 600,000 137,912
2017
210,000 101,310 615,000 120,071
2018
235,000 89,358 630,000 101,235
2019
260,000 75,805 650,000 80,844
2020
285,000 60,727 370,000 64,527
2021
280,000 45,221 375,000 52,943
2022
255,000 31,872 380,000 40,805
2023
275,000 19,810 390,000 28,005
2024
290,000 6,743 395,000 14,553
2025
- - 140,000 6,200
2026
- - 145,000 3,135
2027
- - 70,000 770
Total
$ 2,735,000 $ 929,276 $ 7,335,000 $ 1,214,773
Revenue BondsRevenue Bonds
Year EndingBusiness-Type ActivitiesComponent Unit
December 31PrincipalInterestPrincipalInterest
2013
$ 230,000 $ 33,690 $ 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
- - 380,000 112,370
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
$ 1,040,000 $ 145,252 $ 5,615,000 $ 2,294,616
It is not practicable to determine the specific year for payment of long-term accrued compensated absences.
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
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:
PrimaryGovernment
Business-type Activities
Loan Payable
Year
EndingEDA Component Unit
December
31PrincipalInterest
2014$50,000 $ 18,000
2015 50,000 17,000
2016 50,000 16,000
2017 50,000 15,000
2018 50,000 14,000
2019 75,000 13,000
2020 150,000 11,500
2021 175,000 8,500
2022 185,000 5,000
2023 65,000 1,300
Total$ 900,000 $119,300
71
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
C.CHANGES IN LONG-TERM LIABLITIES
Long-term liability activity for the year ended December 31, 2012, was as follows:
BeginningEndingDue Within
BalanceAdditionsReductionsBalanceOne Year
Primary Government:
Governmental activities:
Bonds payable:
General obligation bonds$ 2,790,000 $ -$ (55,000)$ 2,735,000 $ 135,000
Special assessment bonds6,750,0001,865,000(1,280,000)7,335,000815,000
Bond premium/discount (net) 13,867(15,852)(770)(2,755)-
Total bonds payable9,553,8671,849,148(1,335,770)10,067,245950,000
Capital lease payable-EDA component unit 5,865,000 -(250,000)5,615,000 260,000
Other postemployment benefits 39,6361,645 -41,281-
Compensated absences payable 725,863623,535(597,089)752,309525,485
Total government activities16,184,3662,474,328(2,182,859)16,475,8351,735,485
Business-type activities:
Bonds payable:
Revenue bonds 1,460,000 -(420,000)1,040,000 230,000
Bond premium/discount (net) (3,933) - 517 (3,416)-
Total bonds payable 1,456,067 -(419,483)1,036,584230,000
Loans payable 900,000 - -900,000 -
Capital lease payable -176,039 (33,343)142,69633,953
Other postemployment benefits 9,441452 -9,893-
Compensated absences payable 101,926 88,776(87,436)103,26679,647
Total business-type activities 2,467,434 265,267(540,262)2,192,439343,600
Total primary government$ 18,651,800$ 2,739,595$(2,723,121)$18,668,274$ 2,079,085
Component Unit:
Bonds payable:
Revenue bonds$ 5,865,000$ -$ (250,000)$ 5,615,000 $ 260,000
Bond premium/discount (net) (81,120) -4,680 (76,440)-
Total bonds payable 5,783,880 -(245,320)5,538,560260,000
Other postemployment benefits73338-411-
Compensated absences payable 5,41313,208(3,050)15,5719,873
Total component unit$ 5,789,366$ 13,546$ (248,370)$ 5,554,542$ 269,873
For the governmental activities, capital leases, other postemployment benefitsand compensated absences are generally
liquidated by the general fund.
All long-term bonded indebtedness outstanding at December 31, 2012 is backed by the full faith and credit of the City,
including special assessment and revenue bond issues. Delinquent assessments receivable at December 31, 2012totaled
$51,506.
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
D.CAPITAL LEASES
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 $6,500,000 of revenue bonds and the proceeds wereused by the
City to finance the expansion. The lease qualifies as a capital lease for accounting purposes, and therefore, the
construction costs have been capitalized in the primary government.
In 2012, the City entered into a lease agreement for the purchase of 75 golf carts for the Golf Course Enterprise
Fund. This lease agreement qualifies as a capital lease for accounting purposes, and therefore, has been recorded at
the present value of the future minimum lease payments as of the inception date.
The assets acquired through capital leases areas follows:
Governmental Golf Course
Asset:ActivitiesEnterprise Fund
Building and improvements$ 6,943,038$ 176,039
Less: accumulated depreciation(1,028,093)(12,574)
$5,914,945$ 163,465
The following is a schedule of future minimum lease paymentsunder the capital lease:
Governmental Golf Course
ActivitiesEnterprise Fund
Ice Arena
YearMachinery
Expansion
2013$504,892 $38,201
2014504,29238,201
2015503,29238,201
2016501,89238,201
2017499,942-
2017-20212,477,817-
2022-20262,435,974-
2027-2028481,515-
Total minimum lease payments7,909,616 152,804
Less amount
representing interest2,294,616 10,108
Present value of minimum
lease payments$ 5,615,000 $142,696
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
Note 7 LEGAL DEBT MARGIN
The City is subject to a statutory limitation by the State of Minnesota for bonded indebtedness payable principally from
property taxes. The limitation was 3% of market value in 2011 and 2012.The City of Cottage Grove's legal debt margin for
2012 and 2011 is computed as follows:
December 31, 2012December 31, 2011
Market Value (after fiscal disparities)$ 2,464,372,900$2,695,641,900
Debt Limit73,931,18780,869,257
Amount of debt applicable to debt limit:
Total bonded debt$16,725,000$16,865,000
Less: Special assessment bonds(7,335,000)(6,750,000)
Proprietary bonds (1,040,000)(1,460,000)
Tax increment bonds (2,735,000)(2,790,000)
Total debt applicable to debt limit$5,615,000$5,865,000
Legal debt margin$ 68,316,187$ 75,004,257
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.
Areduced retirement annuity is available to eligible members seeking early retirement.
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
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 issuesa publicly available financial report that includes financial statements and requiredsupplementary
information for GERF and PEPFF. That report may be obtained on the Internet at www.mnpera.org,by writing to
PERA, at60 Empire Drive #200, St. Paul, Minnesota, 55103-2088 or by calling (651)296-7460 or 1-800-652-9026.
Funding Policy
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 annualcovered salary in 2012. PEPFF members wererequired to
contribute 9.6% of their annual covered salary in 2012. The City of Cottage Grove is required to contribute the
following percentages of annual covered payroll: 11.78% for Basic Planmembers, 7.25%for Coordinated Plan
members, and 14.4% for PEPFF members. The City’s contributions to the Public Employees Retirement Fund for
the years ending December 31, 2012, 2011 and 2010were$335,345, $328,842, and$323,174, respectively. The
City’s contributionsto the Public Employees Police & Fire Fund for the years ending December 31, 2012, 2011 and
2010were $518,441,$496,804, and$474,280respectively. 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 2012 were:
AmountPercentage of Covered PayrollRequired
EmployeesEmployerEmployeesEmployerRates
PEDCP$1,139$1,1395.00%5.00%5.00%
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
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 Associationissues a publicly available financial report that includesfinancial statements and required
supplementary information. The report may be obtained by writing to Cottage Grove Volunteer Fire Relief
th
Street South, Cottage Grove, MN 55016.
Association, 8641 80
Funding Policy
Minnesota StatutesChapter 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$123,523
Contributions made:
City$4,388
State aid$123,523
Actuarial valuation date12/31/2012
Actuarial cost methodEntry age normal
Amortization methodLevel dollar Closed
Remaining amortization period:
Normal cost20 years
Prior service cost10 years
Asset valuation methodMarket
Actuarial assumptions:
Investment rate of return5%
Projected salary increasesN/A
Inflation rateN/A
Cost of living adjustmentsNone
Three-Year Trend Information
Percentage of APC Net Pension
Year EndingAnnual Pension CostcontributedObligation
12/31/2012$123,523100%$-
12/31/2011120,470100%-
12/31/2010119,098100%-
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
Schedule of Funding Progress
Actuarial Actuarial Actuarial (Unfunded) /
Valuation Value of Accrued Assets in Excess Funding
DateAssetsLiability (AAL)of AAL (UAAL)Ratio
12/31/2012$1,944,4331,678,259266,174115.86%
12/31/20111,780,2521,541,750238,502115.47%
12/31/20101,810,1821,570,994239,188115.23%
The amount received from the State of Minnesota in Fire Relief Aid, $123,523, and then contributed to the Cottage
Grove Fire Relief Association is included as a revenue and expenditure, respectively, in the General Fund.
Note 9INTERFUND LOANS AND TRANSFERS
The City uses interfund loans when possible to finance construction activities in order to avoid costs associated with issuing
bonds. These loans are for this purpose.The interfund loan receivable and payable balances at December 31, 2012 were:
FundReceivablePayable
Major Governmental Funds:
Municipal Building Capital Project Fund$ -$ 9,900,000
Closed Debt Fund2,000,000-
Nonmajor Governmental Funds3,155,000455,000
Major Business-Type Funds:
Water Operating Enterprise Fund3,200,000-
Sewer Operating Enterprise Fund3,200,000-
Golf Course Enterprise Fund-1,200,000
Total$ 11,555,000$ 11,555,000
Interfund receivable and payable balances are used for temporary cash deficits. Interfund receivable and payable balances at
December 31, 2012 are as follows:
FundReceivablePayable
Major Governmental Funds:
Pavement Management Debt Service Fund$122,137$ -
Pavement Management Capital Project Fund - 122,137
Nonmajor Governmental Funds461,804 461,804
Total$583,941$583,941
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
Interfund transfers:
Transfer out
Major Business Type Fund
MSA Construction Cottage
Construction Closed Revolving Nonmajor Street Grove Sewer Internal
General Capital Debt Capital Govern. Light EMS Operating Service
FundProject FundFundProject FundFundsFundFundFundFundTotal
Transfer in:
General Fund$-$-$-$-$-$-$ 4,800$-$-$4,800
Muncipal Building Capital
Project Fund45,064---830,000----875,064
MSA Construction Capital
Project Fund-----284,479---284,479
Closed Debt Fund105,149--------105,149
Pavement Management
Debt Service Fund--40,810------40,810
Pavement Management
Capital Project Fund30,042---81,586----111,628
Construction Revolving
Capital Project Fund----91,569----91,569
Nonmajor Govern. Funds501,80687,000-49,40419,440----657,650
Water Operating Fund----- 9,000 - 29,200 31,000 69,200
Total transfers$682,061$87,000$40,810$49,404$1,022,595$293,479$4,800 $29,200 $31,000 $2,240,349
Interfund transfers allow the City to allocate financial resources to the funds that receive benefit from services provided by
another fund. All transfers in 2012 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$50,700
Street Light Fund43,800
Cottage Grove EMS Fund54,100
Water Operating Fund156,560
Sewer Operating Fund175,040
Total$ 480,200
78
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
Note 10TAX INCREMENT DISTRICTS
The City of Cottage Grove is the administering authority for the following Tax Increment Financing Districts:
Up North Cottages of Gateway Industrial Industrial
Plastics Cottage Grove North District Park Park
#1-3#1-8#1-12#1-13#1-14
Econ. Econ.
Type of DistrictRedevelopHousingRedevelopDevelop.Develop.
Chapter472A469.174469.174469.174469.174
Established19851991200120052007
District Duration25 years25 years25 years9 years9 years
$
Current tax capacity$ 170,584 $ 34,360 $ 807,796$ 177,378131,250
Original tax capacity (62,250) (1,268) (239,127) (23,065)(5,226)
Captured tax capacity108,334 33,092 568,669 154,313 126,024
Fiscal disparity deduction---(54,530)(45,485)
Totaltax capacity retained by City$ 108,334 $ 33,092 $ 568,669$ 99,784$ 80,539
Debt issued$ 510,000 $ -$3,000,000 $ -$-
Amount redeemed (510,000) -(265,000) - -
Debt outstanding$-$ -$2,735,000 $ -$-
Note11DEFICIT FUND BALANCES/NET POSITION
The City has deficit fund balances/net positionat December 31, 2012 as follows:
FundAmountThe deficit fund balances will be resolved through
Major Governmental Funds:
Municipal Building Capital Project Fund$8,867,096Future tax levies
Pavement Management Capital Project Fund193,007Future bonding
Nonmajor Governmental Funds:
Sewer Connection and Area Fund461,804Future special assessments and developer charges
Note 12CONTINGENCIES
A.RISK MANAGEMENT
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
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 $10,000medical 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.
79
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
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 $59,122reported
in the Fund at December 31, 2012is based on the requirements of Governmental Accounting Standards Board
Statement Number 10, which requires that a liability for claims be reported if information prior to the issuance of the
financial statements indicates that it is probable that a liability has been incurred at the date of the financial
statements and the amount of the loss can be reasonably estimated.
Changes in the fund's claims liability amounts were as follows:
BeginningClaims andEnd
of YearChanges inClaimof Year
Year
LiabilityEstimatesPaymentsLiability
2012$ 51,095 $ 172,454$(164,427)$ 59,122
2011 47,349 136,703 (132,957) 51,095
2010 67,176 25,751 (45,578) 47,349
B.LITIGATION
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.
C.FEDERAL AND STATE FUNDS
The City 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 anyof the financial statements of the individual fund types
included herein or on the overall financial position of the City at December 31, 2012.
D.TAX INCREMENTS
The City’s tax increment districts are subject to review by the State of Minnesota Office ofthe State Auditor (OSA).
Any disallowed claims or misuse of tax increments could become a liability of the applicable fund. Management has
recorded claims payable in the government wide statements for anamountcurrently under review.
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
Note 13DEFERRED 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 notifiedand 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, 2012
and 2011.Future scheduled tax levies for all bonds outstanding at December 31, 2012 totaled $3,544,612.
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
Note 14FUND BALANCES
At December 31, 2012 the City hadvarious fund balances through legal restriction andCity Council authorization. Fund
balance appropriations at December 31, 2012 are shown on the various balance sheets as segregations of the fund balance.
The fund balanceclassifications for governmental fundsare as follows:
NonspendableRestrictedCommittedAssignedUnassignedTotal
General Fund:$-$-$-$-$7,449,565$7,449,565
Prepaid items5,764----5,764
Compensated absences---752,309-752,309
Park shelter/playground equipment---217,091-217,091
MVHC aid set aside---648,053-648,053
Emerald ash borer program---40,200-40,200
Public safety equipment---3,500-3,500
School bus safety---4,050-4,050
Gateway pond landscaping---30,000-30,000
Total General Fund5,764--1,695,2037,449,5659,150,532
Municipal Building Capital Project Fund:
Municipal building activities----(8,867,096)(8,867,096)
MSA Construction Capital Project Fund:
Assets for resale267,498----267,498
MSA construction activities---771,859-771,859
Closed Debt Fund:
Long-term interfund receivable2,000,000----2,000,000
Debt retirement---1,445,525-1,445,525
Pavement Management Debt Service Fund:
Debt retirement-930,911---930,911
Pavement Management Capital Project Fund----(193,007)(193,007)
Construction Revolving Capital Project Fund:
Construction activities---36,720-36,720
Total Other Major Funds2,267,498930,911-2,254,104(9,060,103)(3,607,590)
Nonmajor Governmental Funds:
Prepaid items938----938
Long-term interfund receivable3,155,000----3,155,000
Forfeiture and seizure-17,692---17,692
Charitable gambling-6,624---6,624
Debt retirement-486,697---486,697
Tax increment purposes-1,481,782---1,481,782
Park trust activities-73,514---73,514
Ice arena-305,741--305,741
Storm water activities--186,772--186,772
Recycling program--67,808--67,808
Equipment replacement---2,289,352-2,289,352
Street sealcoating---371,062-371,062
Economic development---2,520,131-2,520,131
Future pavement management---1,431,412-1,431,412
Tree mitigation---198,614-198,614
Future roads and trails---189,221-189,221
Capital improvements---5,563,767-5,563,767
Deficit Fund Balance----(461,804)(461,804)
Total Nonmajor Funds3,155,9382,066,309560,32112,563,559(461,804)17,884,323
Total Fund Balances Governmental Funds$5,429,200$2,997,220$ 560,321$ 16,512,866$(2,072,342)$23,427,265
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
Note 15OTHER POSTEMPLOYMENTBENEFIT 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, 2012 there were
approximately 108 active participants and no retiredparticipantsreceiving 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 2012, the City contributed $8,858to
the plan.
C.
ANNUAL OPEB COST AND NET OPEB OBLIGATION
The City’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required
contribution (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45.
The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year
and amortize any un-funded actuarial liabilities over a period not to exceed thirty years. The following table shows
the components of the City’s annual OPEB costs for the year, the amount actually paid from the plan, and changes
inthe City’s net OPEB obligation:
Annual required Contribution$ 12,290
Interest on Net OPEB Obligation 1,474
Adjustment to Annual RequiredContribution (2,471)
Annual OPEB Cost (Expense) 11,293
Contributions Made (8,858)
Increase in Net OPEB Obligation 2,435
Net OPEB Obligation-Beginning of Year 49,150
Net OPEB Obligation-End of Year$ 51,585
The City’s annual OPEB cost, the percentage of the annual OPEB cost contributed to the plan, and the net OPEB
obligation for 2012:
Percentage
FiscalAnnualof AnnualNet
YearOPEBOPEB CostOPEB
EndedCostContributedObligation
12/31/2012$ 11,293 78.4%$ 51,585
12/31/2011 11,391 57.5% 49,150
12/31/2010 19,796 33.9% 44,308
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
D.
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 by the plan in the
actuarial valuation was $8,887,000for 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 employer 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, 2011actuarial 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
fiveyears. The UAAL is being amortized as a level percentage of projected payrolls on an open basis. The
remaining amortization period at December 31, 2012 was 25 years.
Note 16OPERATING LEASES
The City leases land for the golf course under an operating lease. The lease expiredon 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 2012,
$12 was paid under this lease arrangement.
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
The City leases sixcopiers under an operating leaseand the EDA component unit leases one copier. Total 2012
paymentsfor these leases were $11,927for the primary government and $485 for component unit.Future minimum
annual lease payments at December 31, 2012 are as follows:
Primary GovernmentComponent Unit
Golf
Year EndedCourse
December 31LandCopiersCopier
2013$12$13,314$2,910
20141213,3142,425
20151213,314-
2016-11,422-
TheCity entered into two operating leases during 2007 for the leasing of ice time for the Ice Arena with
Independent School District 833 and the Cottage Grove Athletic Association. The lease payments began in 2008
when the new ice arena expansion project opened. The future minimum annual lease payments that the City will
receive are as follows:
IndependentCottage Grove
Year EndedSchool DistrictAthletic
December 31833Association
2013$ 104,250$ 400,000
2014104,250 400,000
2015104,250 400,000
2016104,250 400,000
2017104,250 400,000
2018-2022521,250 2,000,000
2023-2027521,250 2,000,000
2028-2029208,500719,000
Note 17COMMITTED CONTRACTS
At December 31, 2012,the City had commitments of $378,120for uncompleted construction contracts.
CITY OF COTTAGE GROVE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
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, 2012, a series of Industrial Revenue Bonds were outstanding.
Original Issue
BondIssue DateAmount12/31/12Balance*Maturity Date
Industrial Revenue Bonds-Allina Health Systems08/05/1998$4,100,000Not available08/05/2018
Industrial Revenue Bonds-Advance Corporation04/30/20013,500,0002,345,00004/01/2021
Commercial Development Revenue Note-HSI12/22/2004935,000646,26312/01/2024
Commercial Development Revenue Note-ESR, Inc.11/22/2005 76,50044,18711/22/2025
Commercial Development Revenue Note-ESR, Inc.05/19/2005853,000 645,63912/19/2025
Subordinate Senior Housing Revenue Bonds-PHS12/01/200621,105,00020,898,86812/01/2046
Subordinate Senior Housing Revenue Bonds-PHS12/01/20068,075,0007,996,13212/01/2046
Variable Rate Revenue Bonds-Allina Health System11/01/20096,100,0006,100,00011/15/2022
$44,744,500$38,676,089
*Per original conduit debt bond schedule
Note 19 PROPERTIES HELD FOR RESALE
The City purchased land in 2010 to be resold to a future industrial occupant in the City’s industrial park. The
occupant is not known at this time.
The EDA component unit purchasedland in 2011 to be resold for possible future development. The occupant is not
known at this time.
REQUIRED SUPPLEMENTARY INFORMATION
CITY OF COTTAGE GROVE, MINNESOTA
Statement 9
REQUIRED SUPPLEMENTARY INFORMATION
Page 1 of 6
BUDGETARY COMPARISON SCHEDULE - GENERAL FUND
For The Year Ended December 31, 2012
With Comparative Data for the Year Ended December 31, 2011
Variance with
2012Final Budget - 2011
Budgeted AmountsActualPositiveActual
OriginalFinalAmounts(Negative)Amounts
Revenue:
General property taxes:
Current and delinquent$ 10,967,100$10,967,100$11,153,957$ 186,857$ 10,332,994
Special Assessments 19,500 28,500 28,664 164 14,984
Licenses and permits:
General government 103,650 103,650 90,095 (13,555) 99,771
Community development 531,000 531,000 714,667 183,667 460,725
Public safety 34,800 34,800 25,275 (9,525) 31,216
Public works - - 1,650 1,650 1,560
Total licenses and permits 669,450 669,450 831,687 162,237 593,272
Intergovernmental:
Federal:
Firefighter assistance grant - public safety - - - - 29,520
Disaster assistance - public safety - - - - 15,447
Safe and sober - public safety 20,000 20,000 25,039 5,039 22,824
Ballistic vest grant - public safety - - 5,340 5,340 1,289
State:
Disaster assistance - public safety - - 515 515 4,634
Market value homestead credit - - 3,452 3,452 4,698
MSA maintenance - public works 42,000 42,000 43,905 1,905 43,905
PERA aid 21,450 21,450 21,448 (2) 21,448
Fire relief aid - public safety 120,000 120,000 123,523 3,523 121,470
Police relief aid - public safety 240,000 240,000 252,429 12,429 254,444
Forest protection grant - parks and recreation - - - - 6,206
Other - general government - - 4,842 4,842 -
Other - public safety 27,000 16,000 16,133 133 20,943
Local:
SRO program - public safety 75,000 75,000 75,000 - 75,000
Narcotics officer program - public safety 3,500 3,500 5,448 1,948 4,079
Other - public safety 15,000 15,000 22,394 7,394 7,304
Other - public works - 17,700 20,391 2,691 2,867
Other - culture and recreation 19,800 19,800 13,772 (6,028) 32,131
Total intergovernmental 583,750 590,450 633,631 43,181 668,209
Charges for services:
Administration charges - general government:
Enterprise funds510,500 510,500 510,500 - 495,600
Investment charge - general government 13,800 13,800 8,315 (5,485) 20,158
Other - general government 60,300 300 916 616 41,392
Other - community development 36,500 36,500 22,905 (13,595) 66,199
Other - public safety 56,300 56,300 115,154 58,854 76,196
Other - public works 46,000 46,000 46,285 285 44,414
Other - culture and recreation 178,350 159,800 126,084 (33,716) 135,252
Total charges for services 901,750 823,200 830,159 6,959 879,211
CITY OF COTTAGE GROVE, MINNESOTA
Statement 9
REQUIRED SUPPLEMENTARY INFORMATION
Page 2 of 6
BUDGETARY COMPARISON SCHEDULE - GENERAL FUND
For The Year Ended December 31, 2012
With Comparative Data for the Year Ended December 31, 2011
Variance with
2012Final Budget - 2011
Budgeted Amounts
ActualPositiveActual
OriginalFinalAmounts(Negative)Amounts
Fines and forfeits - public safety$ 201,000$ 201,000$ 164,532$ (36,468)$ 193,676
Investment earnings 60,000 60,000 41,040 (18,960) 84,706
Donations:
Donations - general government - - 2,500 2,500 3,027
Donations - public safety 1,000 1,000 4,610 3,610 7,313
Donations - culture and recreation 7,000 7,000 4,350 (2,650) 4,925
Total donations 8,000 8,000 11,460 3,460 15,265
Miscellaneous:
Other - general government 1,250 1,250 5,793 4,543 36,465
Other - public safety 12,000 12,000 10,697 (1,303) 10,796
Other - public works 10,000 10,000 12,791 2,791 -
Other - culture and recreation 400 400 5,990 5,590 9,013
Total miscellaneous 23,650 23,650 35,271 11,621 56,274
Total revenues 13,434,20013,371,35013,730,401 359,051 12,838,591
Expenditures:
Current:
General government:
Mayor and city council:
Personal services 40,050 40,050 38,942 1,108 38,942
Commodities 1,750 1,750 656 1,094 997
Contractual services 150,250 90,250 122,461 (32,211) 140,844
Total mayor and city council 192,050 132,050 162,059 (30,009) 180,783
Administrative:
Personal services 205,100 205,100 235,824 (30,724) 234,373
Commodities 800 800 989 (189) 1,319
Contractual services 9,720 9,720 12,637 (2,917) 860
Total administrative 215,620 215,620 249,450 (33,830) 236,552
Finance:
Personal services 420,300 420,300 432,600 (12,300) 406,894
Commodities 2,500 2,500 1,333 1,167 1,402
Contractual services 35,985 35,985 35,719 266 21,567
Total finance 458,785 458,785 469,652 (10,867) 429,863
Management information systems:
Personal services - - - - 91,027
Commodities - - - - 43,431
Contractual services - - - - 57,135
Capital outlay - - - - 13,922
Total management information systems - - - - 205,515
CITY OF COTTAGE GROVE, MINNESOTA
Statement 9
REQUIRED SUPPLEMENTARY INFORMATION
Page 3 of 6
BUDGETARY COMPARISON SCHEDULE - GENERAL FUND
For The Year Ended December 31, 2012
With Comparative Data for the Year Ended December 31, 2011
Variance with
2012Final Budget - 2011
Budgeted Amounts
ActualPositiveActual
OriginalFinalAmounts(Negative)Amounts
Expenditures: (continued)
General government: (continued)
Personnel:
Personal services$ 103,300$ 103,300$ 89,707$ 13,593$ 78,722
Commodities 200 200 66 134 159
Contractual services 8,530 8,530 6,486 2,044 12,251
Total personnel 112,030 112,030 96,259 15,771 91,132
Assessing service:
Contractual services 150,900 150,900 145,032 5,868 141,860
City clerk/elections:
Personal services 174,000 174,000 196,136 (22,136) 134,659
Commodities 1,800 1,800 1,634 166 1,777
Contractual services 16,675 16,675 15,041 1,634 9,625
Total City clerk/elections 192,475 192,475 212,811 (20,336) 146,061
Legal:
Contractual services 177,700 177,700 180,222 (2,522) 181,485
Community and employee programs:
Personal services 4,000 4,000 4,000 - 3,675
467 -
Commodities 500 500 33
Contractual services 47,700 47,700 42,581 5,119 56,937
Total community and employee programs 52,200 52,200 46,614 5,586 60,612
Government buildings:
Personal services 6,700 6,700 9,037 (2,337) 8,481
Commodities 12,300 12,300 11,649 651 9,631
Contractual services 211,450 211,450 171,743 39,707 182,868
Total government buildings 230,450 230,450 192,429 38,021 200,980
Historic preservation:
Personal services 10,000 10,000 5,019 4,981 4,421
Commodities - - 41 (41) 298
Contractual services 3,500 3,500 - 3,500 225
Total historic preservation 13,500 13,500 5,060 8,440 4,944
Planning and zoning:
Personal services 369,250 369,250 271,170 98,080 378,196
Commodities 1,700 1,700 1,298 402 1,694
Contractual services 43,880 43,880 44,289 (409) 57,914
Total planning and zoning 414,830 414,830 316,757 98,073 437,804
Building inspections:
Personal services 386,900 386,900 397,005 (10,105) 392,613
Commodities 8,580 8,580 6,482 2,098 7,380
Contractual services 43,750 52,750 101,703 (48,953) 48,807
Total building inspections 439,230 448,230 505,190 (56,960) 448,800
Total general government 2,649,770 2,598,770 2,581,535 17,235 2,766,391
CITY OF COTTAGE GROVE, MINNESOTA
Statement 9
REQUIRED SUPPLEMENTARY INFORMATION
Page 4 of 6
BUDGETARY COMPARISON SCHEDULE - GENERAL FUND
For The Year Ended December 31, 2012
With Comparative Data for the Year Ended December 31, 2011
Variance with
2012Final Budget - 2011
Budgeted Amounts
ActualPositiveActual
OriginalFinalAmounts(Negative)Amounts
Expenditures: (continued)
Public safety:
Police protection:
Personal services$ 4,367,900$ 4,367,900$ 4,463,710$ (95,810)$ 4,328,904
Commodities 289,200 285,700 282,270 3,430 246,426
Contractual services 352,700 352,700 354,711 (2,011) 261,694
Capital outlay 90,000 113,000 116,269 (3,269) 101,660
Total police protection 5,099,800 5,119,300 5,216,960 (97,660) 4,938,684
Fire protection:
Personal services 435,000 435,000 539,828 (104,828) 455,581
Commodities 83,000 83,000 61,944 21,056 70,030
Contractual services 205,175 205,175 206,765 (1,590) 187,785
Capital outlay 11,000 - - - 33,220
Total fire protection 734,175 723,175 808,537 (85,362) 746,616
Fire relief:
Contractual services 123,000 123,000 127,911 (4,911) 125,671
Civil defense:
Personal services 27,700 27,700 10,286 17,414 33,104
Commodities 100 100 629 (529) 14,861
Contractual services 29,520 29,520 11,820 17,700 19,368
Total civil defense 57,320 57,320 22,735 34,585 67,333
Animal control:
Personal services 11,600 11,600 10,511 1,089 11,743
Commodities 4,100 4,100 1,954 2,146 2,548
Contractual services 64,250 64,250 45,556 18,694 48,209
Total animal control 79,950 79,950 58,021 21,929 62,500
Total public safety 6,094,245 6,102,745 6,234,164 (131,419) 5,940,804
Public works:
Public works administration:
Personal services 181,000 181,000 211,434 (30,434) 244,856
Commodities 20,350 38,050 33,048 5,002 19,675
Contractual services 151,545 151,545 155,601 (4,056) 121,453
Total public works administration 352,895 370,595 400,083 (29,488) 385,984
Engineering:
Personal services 102,900 102,900 128,922 (26,022) 97,473
Commodities 1,000 1,000 579 421 338
Contractual services 31,500 31,500 59,606 (28,106) 40,371
Total engineering 135,400 135,400 189,107 (53,707) 138,182
CITY OF COTTAGE GROVE, MINNESOTA
Statement 9
REQUIRED SUPPLEMENTARY INFORMATION
Page 5 of 6
BUDGETARY COMPARISON SCHEDULE - GENERAL FUND
For The Year Ended December 31, 2012
With Comparative Data for the Year Ended December 31, 2011
Variance with
2012Final Budget - 2011
Budgeted Amounts
ActualPositiveActual
OriginalFinalAmounts(Negative)Amounts
Expenditures: (continued)
Public works:
Streets:
Personal services$ 500,900$ 500,900$ 545,586$ (44,686)$ 508,845
Commodities 185,500 185,500 212,318 (26,818) 169,064
Contractual services 265,920 265,920 339,831 (73,911) 314,237
Capital outlay - - - - 58,500
Total streets 952,320 952,320 1,097,735 (145,415) 1,050,646
Snow and ice control:
Personal services 169,200 169,200 118,813 50,387 154,157
Commodities 213,000 213,000 190,520 22,480 202,341
Contractual services 115,800 115,800 102,980 12,820 113,732
Capital outlay 17,000 17,000 - 17,000 -
Total snow and ice control 515,000 515,000 412,313 102,687 470,230
Street signs/striping:
Personal services 109,200 109,200 88,280 20,920 88,487
29,917
Commodities 25,700 25,700 24,122 1,578
Contractual services 42,320 42,320 64,543 (22,223) 51,222
Capital outlay 12,000 12,000 9,779 2,221 -
Total street signs/striping 189,220 189,220 186,724 2,496 169,626
Total public works 2,144,835 2,162,535 2,285,962 (123,427) 2,214,668
Culture and recreation:
Forestry:
Personal services 62,800 62,800 84,210 (21,410) 94,477
Commodities 13,375 13,375 9,661 3,714 15,728
Contractual services263,295 244,745 160,203 84,542 198,478
Total forestry 339,470 320,920 254,074 66,846 308,683
Recreation programs:
Personal services 247,000 247,000 225,007 21,993 225,823
Commodities 10,875 10,875 7,036 3,839 9,320
Contractual services 74,305 74,305 72,238 2,067 64,095
Total recreation programs 332,180 332,180 304,281 27,899 299,238
CITY OF COTTAGE GROVE, MINNESOTA
Statement 9
REQUIRED SUPPLEMENTARY INFORMATION
Page 6 of 6
BUDGETARY COMPARISON SCHEDULE - GENERAL FUND
For The Year Ended December 31, 2012
With Comparative Data for the Year Ended December 31, 2011
Variance with
2012Final Budget - 2011
Budgeted Amounts
ActualPositiveActual
OriginalFinalAmounts(Negative)Amounts
Expenditures: (continued)
Culture and recreation: (continued)
Parks maintenance:
Personal services$ 572,000$ 572,000$ 600,255$ (28,255)$ 555,470
Commodities 163,200 163,200 151,811 11,389 171,654
Contractual services 288,705 288,705 304,443 (15,738) 331,749
Capital outlay - - - - 264,242
Total parks maintenance 1,023,905 1,023,905 1,056,509 (32,604) 1,323,115
Total culture and recreation 1,695,555 1,677,005 1,614,864 62,141 1,931,036
Total expenditures12,584,40512,541,05512,716,525 (175,470) 12,852,899
Revenues over (under) expenditures 849,795 830,295 1,013,876 183,581 (14,308)
Other financing sources (uses):
Transfer from Enterprise Fund 4,800 4,800 4,800 - 3,600
Transfer from Special Revenue Fund - - - - 4,700
Transfer to Debt Service Fund - (105,149) (105,149) - -
Transfer to Capital Project Fund (456,700) (576,912) (576,912) - (319,215)
Total other financing sources (uses): (451,900) (677,261) (677,261) - (310,915)
Net increase (decrease) in fund balance$ 397,895$ 153,034 336,615$ 183,581 (325,223)
Fund balance - January 1 8,813,917 9,139,140
Fund balance - December 31$ 9,150,532$ 8,813,917
CITY OF COTTAGE GROVE, MINNESOTA
REQUIRED SUPPLEMENTARY INFORMATION
BUDGETARY COMPARISONSCHEDULE
NOTE TO RSI
December 31, 2012
Note ALEGAL COMPLIANCE – BUDGETS
The General Fund islegally 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 listing of expendituresthat exceeded
budget appropriations.
Final BudgetActualOver Budget
General Fund
General government:
Mayor and city council:
Contractual services$ 90,250$ 122,461 $ 32,211
Administrative:
Personal services205,100235,82430,724
Commodities800 989189
Contractual services9,720 12,6372,917
Finance:
Personalservices420,300432,60012,300
City clerk/elections:
Personal services174,000196,13622,136
Legal:
Contractual services177,700180,2222,522
Government buildings:
Personal services6,7009,0372,337
Historical preservation:
Commodities-4141
Planning and zoning:
Contractual services43,88044,289409
Building inspections:
Personal services386,900397,00510,105
Contractual services52,750101,70348,953
Public safety:
Police protection:
Personal services4,367,9004,463,71095,810
Contractual services352,700354,7112,011
Capital outlay113,000116,2693,269
Fire protection:
Personal services435,000539,828104,828
Contractual services205,175206,7651,590
Fire relief:
Contractual services123,000127,9114,911
Civil defense:
Commodities100629529
Public works:
Public works administration:
Personal services181,000211,43430,434
Contractual services151,545155,6014,056
Engineering:
Personal services102,900128,92226,022
Contractual services31,50059,60628,106
Streets:
Personal services500,900545,58644,686
Commodities185,500212,31826,818
Contractual services265,920339,83173,911
Street signs/striping:
Contractual services42,32064,54322,223
Culture and recreation:
Forestry:
Personal services62,80084,21021,410
Parks maintenance:
Personal services572,000600,25528,255
Contractual services288,705304,44315,738
CITY OF COTTAGE GROVE, MINNESOTA
REQUIRED SUPPLEMENTARY INFORMATION
FUNDING PROGRESSSCHEDULE
OTHER POST EMPLOYMENT HEALTH CAREBENEFITS
December 31, 2012
ActuarialUAAL as a
ActuarialAccrued Percentage
ActuarialValue ofLiabilityUnfunded FundedCoveredof Covered
ValuationAssets(AAL)AAL RatioPayrollPayroll
Date(a)(b)(b-a) (a/b)(c )((b-a)/c)
1/1/2008$ -$ 146,597 $ 146,597 -$ 8,750,900 1.7%
1/1/2011-108,298108,298-8,887,0001.2%
-This Page Intentionally Left Blank-
COMBINING AND INDIVIDUAL FUND STATEMENTSAND
SCHEDULES
-This Page Intentionally Left Blank-
NONMAJOR GOVERNMENTAL FUNDS
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).
CITY OF COTTAGE GROVE, MINNESOTA
Statement 10
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
December 31, 2012
With Comparative Data as of December 31, 2011
Totals
Nonmajor
SpecialDebtCapitalGovernmental Funds
RevenueServiceProject20122011
Assets:
Cash and investments$353,761$1,569,207$12,156,615$14,079,583$15,856,135
Accrued interest receivable--53,00053,00034,000
Interfund receivable--461,804461,804234,520
Interfund loan receivable--3,155,0003,155,0003,900,000
Due from other governmental units - net69,068-1,001,3311,070,39958,230
Accounts receivable - net239,407-140,934380,341364,783
Prepaid items938--938938
Delinquent property taxes receivable5,083-20,29225,37534,363
Special assessments receivable:
Deferred-89,14674,178163,324476,703
Delinquent--3,4623,4622,446
Total assets$668,257$1,658,353$17,066,616$19,393,226$20,962,118
Liabilities:
Accounts payable$45,591$1,316$76,015$122,922$104,095
Salaries payable21,979--21,97914,334
Interfund payable--461,804461,804234,520
Contracts payable5,732-62,34368,07523,915
Due to other governmental units4,297--4,2973,813
Deposits payable--182,665182,665160,199
Interfund loan payable--455,000455,000500,000
Deferred revenue5,08389,14697,932192,161514,212
Total liabilities82,68290,4621,335,7591,508,9031,555,088
Fund balance:
Nonspendable:
Prepaid items938--938938
Long-term interfund loan receivable--3,155,0003,155,0003,900,000
Restricted for:
Forfeiture and seizure17,692--17,69250,968
Charitable gambling6,624--6,6241,920
Debt retirement-486,697-486,697476,633
Tax increment purposes-1,081,194400,5881,481,7821,184,983
Park trust activities--73,51473,514637,498
Committed560,321--560,321833,500
Assigned--12,563,55912,563,55912,555,110
Unassigned--(461,804)(461,804)(234,520)
Total fund balance585,5751,567,89115,730,85717,884,32319,407,030
Total liabilities and fund balance$668,257$1,658,353$17,066,616$19,393,226$20,962,118
CITY OF COTTAGE GROVE, MINNESOTA
Statement 11
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE
NONMAJOR GOVERNMENTAL FUNDS
For The Year Ended December 31, 2012
With Comparative Data for the Year Ended December 31, 2011
Totals
Nonmajor
Special DebtCapitalGovernmental Funds
Revenues:RevenueServiceProject20122011
General property taxes$240,651$-$1,303$241,954$240,936
Franchise taxes--537,682537,682535,188
Aggregate taxes--26,18026,18026,131
Tax increment collections-450,667441,771892,438946,603
Special assessments-203,688143,226346,914588,934
Direct charges to developers--16,55516,555101,913
Intergovernmental157,605-961,8701,119,475266,521
Charges for services 1,465,287-171,7411,637,0281,614,807
Fines and forfeits33,490--33,49053,077
Investment earnings4,9076,90582,74994,561218,926
Interest on interfund loan--121,986121,986105,500
Connection charges --282,265282,265322,009
Park dedication fees --41,99041,99062,198
Donations 4,682-357,614362,296368,561
Miscellaneous3,996-15,32819,3241,907
Total revenues1,910,618661,2603,202,2605,774,1385,453,211
Expenditures:
Current:
General government-7,3144867,8007,560
Economic development--491,040491,040793,046
Public safety33,782--33,78221,648
Public works806,351-920,5101,726,8611,492,098
Culture and recreation663,823-108,968772,791659,939
Capital outlay:
General government--6,1996,19923,223
Economic development--111,913111,913-
Public safety15,198-484,759499,95734,729
Public works--1,353,6471,353,6471,620,549
Culture and recreation87,096-637,477724,573283,724
Debt service:
Principal retirement-235,000220,000455,000440,000
Capital lease payment250,000--250,000245,000
Interest and fiscal charges255,093156,47597,315508,883539,465
Total expenditures2,111,343398,7894,432,3146,942,4466,160,981
Revenues over (under) expenditures(200,725)262,471(1,230,054)(1,168,308)(707,770)
Other financing sources (uses):
Transfers in--657,650657,650344,215
Transfers out(101,026)-(921,569)(1,022,595)(29,700)
Proceeds from the sale of capital assets--10,54610,54612,344
Total other financing sources (uses)(101,026)-(253,373)(354,399)326,859
Net increase (decrease) in fund balance(301,751)262,471(1,483,427)(1,522,707)(380,911)
Fund balance - January 1887,3261,305,42017,214,28419,407,03019,787,941
Fund balance - December 31$585,575$1,567,891$15,730,857$17,884,323$19,407,030
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:
Recycling - 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.
Charitable Gambling – Established to account for the 3% tax on charitable
gambling operations.
CITY OF COTTAGE GROVE, MINNESOTA
SUBCOMBINING BALANCE SHEET
NONMAJOR SPECIAL REVENUE FUNDS
December 31, 2012
With Comparative Data as of December 31, 2011
Storm
WaterForfeiture/
RecyclingMaintenanceSeizure
Assets:
Cash and investments$71,168$55,283$26,474
Due from other governmental units - net-46,040-
Accounts receivable - net-110,979-
Prepaid items---
Delinquent property taxes receivable---
Total assets$71,168$212,302$26,474
Liabilities:
Accounts payable$1,489$11,636$8,782
Salaries payable-8,162-
Contracts payable-5,732-
Due to other governmental units1,871--
Deferred revenue---
Total liabilities3,36025,5308,782
Fund balance:
Nonspendable:
Prepaid items---
Restricted for:
Forfeiture and seizure--17,692
Charitable gambling---
Committed for:
Ice arena---
Storm water activities-186,772-
Recycling program67,808--
Total fund balance67,808186,77217,692
Total liabilities and fund balance$71,168$212,302$26,474
Statement 12
Totals
Nonmajor
IceCharitableSpecial Revenue Funds
ArenaGambling20122011
$194,212$6,624$353,761$678,253
23,028-69,06840,911
128,428-239,407227,659
938-938938
5,083-5,0835,727
$351,689$6,624$668,257$953,488
$23,684$-$45,591$41,588
13,817-21,97914,334
--5,732-
2,426-4,2973,813
5,083-5,0836,427
45,010-82,68266,162
938-938938
--17,69250,968
-6,6246,6241,920
305,741-305,741442,604
--186,772311,596
--67,80879,300
306,6796,624585,575887,326
$351,689$6,624$668,257$953,488
CITY OF COTTAGE GROVE, MINNESOTA
SUBCOMBINING STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCE
NONMAJOR SPECIAL REVENUE FUNDS
For The Year Ended December 31, 2012
With Comparative Data for the Year Ended December 31, 2011
Storm
WaterForfeiture/
RecyclingMaintenanceSeizure
Revenues:
General property taxes$-$-$-
Intergovernmental:
Federal:
Byrne JAG grant ---
Local:
Washington county 53,150-1,415
School district ---
Other -46,040-
Charges for services-647,056-
Fines and forfeits--33,490
Investment earnings3771,498239
Donations---
Miscellaneous3,500--
Total revenues57,027694,59435,144
Expenditures:
Current:
General government---
Public safety--33,782
Public works68,519737,832-
Culture and recreation---
Capital outlay:
Public safety--15,198
Culture and recreation---
Debt service:
Capital lease payment---
Interest and fiscal charges---
Total expenditures68,519737,83248,980
Revenues over (under) expenditures(11,492)(43,238)(13,836)
Other financing sources (uses):
Transfer to General Fund---
Transfer to Capital Project Fund-(81,586)(19,440)
Total other financing sources (uses)-(81,586)(19,440)
Net increase (decrease) in fund balance(11,492)(124,824)(33,276)
Fund balance - January 179,300311,59650,968
Fund balance - December 31$67,808$186,772$17,692
Statement 13
Totals
Nonmajor
IceCharitableSpecial Revenue Funds
ArenaGambling20122011
$240,651$-$240,651$238,253
---5,866
--54,56554,395
57,000-57,00057,000
--46,040149,260
818,231-1,465,2871,468,109
--33,49053,077
2,771224,90712,746
-4,6824,6823,840
496-3,9961,250
1,119,1494,7041,910,6182,043,796
---5,000
--33,78220,774
--806,351855,431
663,823-663,823645,058
--15,19810,000
87,096-87,09660,322
250,000-250,000245,000
255,093-255,093264,993
1,256,012-2,111,3432,106,578
(136,863)4,704(200,725)(62,782)
---(4,700)
--(101,026)(25,000)
--(101,026)(29,700)
(136,863)4,704(301,751)(92,482)
443,5421,920887,326979,808
$306,679$6,624$585,575$887,326
NONMAJOR DEBT SERVICE FUNDS
The Debt Service Funds areused 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
Delveloper 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.
CITY OF COTTAGE GROVE, MINNESOTA
Statement 14
SUBCOMBINING BALANCE SHEET
NONMAJOR DEBT SERVICE FUNDS
December 31, 2012
With Comparative Data as of December 31, 2011
Totals
DeveloperNonmajor
Financed Tax IncrementDebt Service Funds
Revolving FundsFunds20122011
Assets:
Cash and investments$486,697$1,082,510$1,569,207$1,305,420
Special assessments receivable:
Deferred89,146-89,146272,390
Total assets$575,843$1,082,510$1,658,353$1,577,810
Liabilities:
Accounts payable$-$1,316$1,316$-
Deferred revenue89,146-89,146272,390
Total liabilities89,1461,31690,462272,390
Fund balance:
Restricted for:
Debt retirement486,697-486,697476,633
Tax increment purposes-1,081,1941,081,194828,787
Total fund balance486,6971,081,1941,567,8911,305,420
Total liabilities and fund balance$575,843$1,082,510$1,658,353$1,577,810
CITY OF COTTAGE GROVE, MINNESOTA
Statement 15
SUBCOMBINING STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCE
NONMAJOR DEBT SERVICE FUNDS
For The Year Ended December 31, 2012
With Comparative Data for the Year Ended December 31, 2011
Totals
Nonmajor
DeveloperTax
Debt Service Funds
Financed Increment
Revolving FundsFunds20122011
Revenues:
Tax increment collections$ -$ 450,667$ 450,667$ 141,726
Special assessments:
Current 163,731-163,731233,710
Prepayments on deferred39,620-39,620113,909
Penalties 337-3371,851
Investment earnings2,2514,6546,90512,702
Total revenues205,939455,321661,260503,898
Expenditures:
Current:
General government:
Contractual services3007,0147,314634
Debt service:
Principal retirement180,00055,000235,000225,000
Interest and fiscal charges15,575140,900156,475165,045
Total expenditures195,875202,914398,789390,679
Revenues over (under) expenditures10,064252,407262,471113,219
Fund balance - January 1476,633828,7871,305,4201,192,201
Fund balance - December 31$ 486,697$ 1,081,194$ 1,567,891$ 1,305,420
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.
Gateway District Improvements – to account for improvements in the Gateway District that
are non-TIF.
CITY OF COTTAGE GROVE, MINNESOTA
SUBCOMBINING BALANCE SHEET
NONMAJOR CAPITAL PROJECT FUNDS
December 31, 2012
With Comparative Data as of December 31, 2011
Future
EquipmentStreetEconomicFutureCompleted
ReplacementSealcoatingDevelopmentProjectsConstruction
Assets:
Cash and investments$2,285,970$190,321$2,403,032$2,357,596$212,328
Accrued interest receivable--53,000--
Interfund receivable-----
Interfund loan receivable--1,655,000-1,500,000
Due from other governmental units - net-45,86165,000--
Accounts receivable - net6,054134,880---
Delinquent property taxes receivable---1,083-
Special assessments receivable:
Deferred--15,8423,71324,129
Delinquent----3,462
Total assets$2,292,024$371,062$4,191,874$2,362,392$1,739,919
Liabilities:
Accounts payable$2,672$-$901$18,499$10,450
Interfund payable-----
Contracts payable-----
Deposits payable---182,665-
Interfund loan payable-----
Deferred revenue--15,8424,79627,591
Total liabilities2,672-16,743205,96038,041
Fund balance:
Nonspendable:
Long-term interfund loan receivable --1,655,000-1,500,000
Restricted for:
Tax increment purposes-----
Park trust activities-----
Assigned for:
Equipment replacement2,289,352----
Street sealcoating-371,062---
Economic development--2,520,131--
Future pavement management---1,431,412-
Tree mitigation---198,614-
Future roads and trails---189,221-
Capital improvements---337,185201,878
Unassigned-----
Total fund balance2,289,352371,0624,175,1312,156,4321,701,878
Total liabilities and fund balance$2,292,024$371,062$4,191,874$2,362,392$1,739,919
Statement 16
Tax IncrementTotals
WaterSewerFutureConstructionGatewayNonmajor
ParkConnectionConnectionStorm SewerRevolvingDistrictCapital Project Funds
Trustand Areaand AreaImprovementsFundImprovements20122011
$97,064$2,192,387$-$1,317,176$855,588$245,153$12,156,615$13,872,462
------53,00034,000
-461,804----461,804234,520
------3,155,0003,900,000
---890,470--1,001,33117,319
------140,934137,124
----19,209-20,29228,636
-6,05510,4044,492-9,54374,178204,313
------3,4622,446
$97,064$2,660,246$10,404$2,212,138$874,797$254,696$17,066,616$18,430,820
$256$24,690$-$18,547$-$-$76,015$62,507
--461,804---461,804234,520
23,294--39,049--62,34323,915
------182,665160,199
----455,000-455,000500,000
-6,05510,4044,49219,2099,54397,932235,395
23,55030,745472,20862,088474,2099,5431,335,7591,216,536
------3,155,0003,900,000
----400,588-400,588356,196
73,514-----73,514637,498
------2,289,3523,276,491
------371,062386,001
------2,520,1312,398,244
------1,431,412481,412
------198,614198,614
------189,221183,331
-2,629,501-2,150,050-245,1535,563,7675,631,017
--(461,804)---(461,804)(234,520)
73,5142,629,501(461,804)2,150,050400,588245,15315,730,85717,214,284
$97,064$2,660,246$10,404$2,212,138$874,797$254,696$17,066,616$18,430,820
CITY OF COTTAGE GROVE, MINNESOTA
SUBCOMBINING STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCE
NONMAJOR CAPITAL PROJECT FUNDS
For The Year Ended December 31, 2012
With Comparative Data for the Year Ended December 31, 2011
Future
EquipmentStreetEconomicFuture Completed Park
ReplacementSealcoatingDevelopmentProjectsConstructionTrust
Revenues:
General property taxes$-$-$-$1,303$-$-
Franchise taxes-537,682----
Aggregate taxes-26,180----
Tax increment collections------
Special assessments:
Current--18,0604,23213,746-
Delinquent----144-
Prepayments on deferred----511-
Penalties----45-
Direct charges to developers-10,665-5,890--
Intergovernmental:
Federal--65,000---
Other -----4,000
Charges for services-171,741----
Investment earnings19,6902,06015,0636,8319602,334
Interest on interfund loan--49,00057,00015,986-
Connection charges------
Park dedication fees-----41,990
Donations--357,614---
Miscellaneous--210-1,23411,384
Total revenues19,690748,328504,94775,25632,62659,708
Expenditures:
Current:
General government---12456-
Economic development--66,14752,008--
Public safety------
Public works-763,267--29,679-
Culture and recreation---16,170-92,798
Capital outlay:
General government6,199-----
Economic development--111,913---
Public safety484,759-----
Public works111,080-----
Culture and recreation41,883----595,594
Debt service:
Principal retirement------
Interest and fiscal charges------
Total expenditures643,921763,267178,06068,19030,135688,392
Revenues over (under) expenditures(624,231)(14,939)326,8877,0662,491(628,684)
Other financing sources (uses):
Transfer from General Fund437,106----64,700
19,440-----
Transfer from Special Revenue Fund
Transfer from Capital Project Fund----49,404-
Transfer to Capital Project Fund(830,000)---(11,991)-
Proceeds from the sale of capital assets10,546-----
Total other financing sources (uses)(362,908)---37,41364,700
Net increase (decrease) in fund balance(987,139)(14,939)326,8877,06639,904(563,984)
Fund balance - January 13,276,491386,0013,848,2442,149,3661,661,974637,498
Fund balance - December 31$2,289,352$371,062$4,175,131$2,156,432$1,701,878$73,514
Statement 17
Tax IncrementTotals
WaterSewerFutureConstructionGatewayNonmajor
Capital Project Funds
ConnectionConnectionStorm SewerRevolvingDistrict
and Areaand AreaImprovementsFundImprovements20122011
$-$-$-$-$-$1,303$2,683
-----537,682535,188
-----26,18026,131
---441,771-441,771804,877
12,53820,00914,000-51,110133,695209,803
-----144778
2,6034,5921,636--9,34227,542
-----451,341
-----16,555101,913
-
-----65,000
--892,870--896,870-
-----171,741146,698
15,442-13,6445,5061,21982,749193,478
-----121,986105,500
118,01548,005116,245--282,265322,009
-----41,99062,198
-----357,614364,721
2,500----15,328657
151,09872,6061,038,395447,27752,3293,202,2602,905,517
----184861,926
---372,885-491,040793,046
----874
--
53,88111,61362,070--920,510636,667
-----108,96814,881
-----6,19923,223
-----111,913-
-----484,75924,729
-9621,241,605--1,353,6471,620,549
-----637,477223,402
-220,000---220,000215,000
-67,315-30,000-97,315109,427
53,881299,8901,303,675402,885184,432,3143,663,724
97,217(227,284)(265,280)44,39252,311(1,230,054)(758,207)
-----501,806319,215
-----19,44025,000
--87,000--136,404-
--(79,578)--(921,569)-
-----10,54612,344
--7,422--(253,373)356,559
97,217(227,284)(257,858)44,39252,311(1,483,427)(401,648)
2,532,284(234,520)2,407,908356,196192,84217,214,28417,615,932
$2,629,501$(461,804)$2,150,050$400,588$245,153$15,730,857$17,214,284
CITY OF COTTAGE GROVE, MINNESOTA
SPECIAL REVENUE FUND - RECYCLING Statement 18
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For The Year Ended December 31, 2012
With Comparative Data for the Year Ended December 31, 2011
Variance with
2012Final Budget-2011
Budgeted AmountsActualPositiveActual
OriginalFinalAmounts(Negative)Amounts
Revenues:
Intergovernmental:
Local:
Washington County recycling grant - public works
$ 52,400$ 5 2,400$ 5 3,150$ 750$ 5 3,150
Investment earnings
- - 3 77 3 77 1 ,180
Miscellaneous - public works
- - 3 ,500 3 ,500 1 ,000
Total revenues
52,400 5 2,400 5 7,027 4 ,627 5 5,330
Expenditures:
Public works:
Current:
Personal services
4 2,400 4 2,400 3 9,088 3 ,312 4 3,600
Commodities
17,000 1 7,000 6 ,621 1 0,379 2 ,694
Contractual services
1 1,900 1 1,900 2 2,810 ( 10,910) 1 2,971
Total expenditures
71,300 7 1,300 6 8,519 2 ,781 5 9,265
Revenues over (under) expenditures
$ (18,900)$ (18,900) ( 11,492)$ 7 ,408 ( 3,935)
Fund balance - January 1
7 9,300 8 3,235
Fund balance - December 31
$ 6 7,808$ 7 9,300
CITY OF COTTAGE GROVE, MINNESOTA
Statement 19
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, 2012
With Comparative Data for the Year Ended December 31, 2011
Variance with
2012Final Budget-2011
Budgeted AmountsActualPositiveActual
OriginalFinalAmounts(Negative)Amounts
Revenue:
Intergovernmental:
Local:
Other - public works$-$-$46,040$46,040$149,260
Charges for services 632,900632,900647,05614,156644,858
Investment earnings2,0002,0001,498(502)3,468
Miscellaneous----250
Total revenue634,900634,900694,59459,694797,836
Expenditures:
Public works:
Current:
Personal services224,500224,500202,17822,322222,244
Commodities54,45054,45022,59131,85922,628
Contractual services370,480370,480482,763(112,283)521,894
Other charges - administrative charge30,30030,30030,300-29,400
Total expenditures679,730679,730737,832(58,102)796,166
Revenue over (under) expenditures(44,830)(44,830)(43,238)1,5921,670
Other financing sources (uses):
Transfer to Capital Project Fund--(81,586)81,586-
Net increase (decrease) in fund balance$(44,830)$(44,830)(124,824)$83,1781,670
Fund balance - January 1311,596309,926
Fund balance - December 31$186,772$311,596
CITY OF COTTAGE GROVE, MINNESOTA
Statement 20
SPECIAL REVENUE FUND - FORFEITURE/SEIZURE
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For The Year Ended December 31, 2012
With Comparative Data for the Year Ended December 31, 2011
Variance with
2012Final Budget-2011
Budgeted AmountsActualPositiveActual
OriginalFinalAmounts(Negative)Amounts
Revenues:
Intergovernmental:
County $8,000$8,000$1,415$(6,585)$1,245
Forfeitures and seizures43,00043,00033,490(9,510)53,077
Investment earnings1,0001,000239(761)590
Total revenues52,00052,00035,144(16,856)54,912
Expenditures:
Public safety:
Current:
Commodities3,3003,30011,115(7,815)1,499
Contractual services15,80015,80022,667(6,867)11,799
Capital outlay--15,198(15,198)10,000
Total expenditures19,10019,10048,980(29,880)23,298
Revenues over (under) expenditures32,90032,900(13,836)(46,736)31,614
Other financing sources (uses):
Transfer to Capital Project Fund(19,440)(19,440)(19,440)-(25,000)
Net increase (decrease) in fund balance$13,460$13,460(33,276)$(46,736)6,614
Fund balance - January 150,96844,354
Fund balance - December 31$17,692$50,968
CITY OF COTTAGE GROVE, MINNESOTA
Statement 21
SPECIAL REVENUE FUND - ICE ARENA
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For The Year Ended December 31, 2012
With Comparative Data for the Year Ended December 31, 2011
Variance with
2012Final Budget-2011
Budgeted AmountsActualPositiveActual
OriginalFinalAmounts(Negative)Amounts
Revenues:
General property taxes:
Current and delinquent$240,000$240,000$240,651$651$238,253
Intergovernmental:
Local:
School district57,00057,00057,000-57,000
Charges for services 816,000816,000818,2312,231823,251
Investment earnings9,0009,0002,771(6,229)7,431
Miscellaneous--496496-
Total revenues1,119,149(2,851)1,125,935
1,122,000 1,122,000
Expenditures:
Culture and recreation:
Current:
Personal services336,600336,600338,625(2,025)313,101
Commodities36,00036,00030,2905,71029,909
Contractual services258,560258,560294,908(36,348)302,048
Capital outlay110,000110,00087,09622,90460,322
Debt Service:
Capital lease payment250,000250,000250,000-245,000
Interest and fiscal charges255,100255,100255,0937264,993
Total expenditures1,256,012(9,752)1,215,373
1,246,260 1,246,260
Revenues over (under) expenditures(136,863)$(12,603)(89,438)
$ ( 124,260)$ ( 124,260)
Fund balance - January 1443,542532,980
Fund balance - December 31$306,679$443,542
CITY OF COTTAGE GROVE, MINNESOTA
Statement 22
SPECIAL REVENUE FUND - CHARITABLE GAMBLING
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For The Year Ended December 31, 2012
With Comparative Data for the Year Ended December 31, 2011
Variance with
2012Final Budget-2011
Budgeted AmountsActualPositiveActual
OriginalFinalAmounts(Negative)Amounts
Revenues:
Investment earnings$-$-$22$22$28
Donations 1,5001,5004,6823,1823,840
Total revenues1,5001,5004,7043,2043,868
Expenditures:
General government:
Current:
Contractual----5,000
Total expenditures----5,000
Revenues over (under) expenditures$1,500$1,5004,704$3,204(1,132)
Fund balance - January 11,9203,052
Fund balance - December 31$6,624$1,920
INTERNAL SERVICE
Self Insurance Fund - Established to provide self insurance for the City and its
officers, employees and agents for claims in excess of standard deductibles and to
account for the City flexible spending program and purchase of insurance.
Fleet Maintenance Fund – Established to account for costs related to repair and
maintenance of City equipment and vehicles. Revenues received from
departments are based on level of service performed.
Information Services Fund – Established to account for costs related to accessing
information electronically and maintaining technology services including phone,
voicemail and internet services. Revenues received from departments are based
on usage of those technology services.
CITY OF COTTAGE GROVE, MINNESOTA
COMBINING STATEMENT OF NET POSITIONStatement 23
INTERNAL SERVICE FUNDS
December 31, 2012
With Comparative Data as of December 31, 2011
Totals
SelfFleetInformationInternal Service Funds
InsuranceMaintenanceServices20122011
Assets:
Current assets:
Cash and investments$ 2,452,373$ 308,945$ 4,942$ 2,766,260$ 2,714,722
Accounts receivable - 190 - 190 2,070
Prepaid items 108,319 596 18,152 127,067 105,590
Inventory - at cost - 73,483 - 73,483 81,275
Total current assets 2,560,692 383,214 23,094 2,967,000 2,903,657
Noncurrent assets:
Capital assets:
Land - 424,665 - 424,665 424,665
Buildings and improvements - 928,870 - 928,870 928,870
Equipment and furniture - - 74,232 74,232 -
Machinery and equipment - 158,929 - 158,929 158,929
Total capital assets - 1,512,464 74,232 1,586,696 1,512,464
Less: Accumulated depreciation - (547,777) (7,423) (555,200) (516,346)
Total noncurrent assets - 964,687 66,809 1,031,496 996,118
Total assets 2,560,692 1,347,901 89,903 3,998,496 3,899,775
Liabilities:
Current liabilities:
Accounts payable 13,691 15,146 1,546 30,383 61,962
Health care benefits payable 21,151 - - 21,151 28,392
Unpaid claims 59,122 - - 59,122 51,095
Salaries payable 493 11,619 3,863 15,975 9,986
Due to other governmental units - 907 29 936 6
Compensated absences payable - 13,301 3,010 16,311 9,863
Total current liabilities 94,457 40,973 8,448 143,878 161,304
Noncurrent liabilities:
Compensated absences payable - 25,666 2,797 28,463 26,251
Other post employment benefits - 1,290 22 1,312 1,228
Total noncurrent liabilities - 26,956 2,819 29,775 27,479
Total liabilities 94,457 67,929 11,267 173,653 188,783
Net position:
Net investment in capital assets - 964,687 66,809 1,031,496 996,118
Unrestricted 2,466,235 315,285 11,827 2,793,347 2,714,874
Total net position$ 2,466,235$ 1,279,972$ 78,636$ 3,824,843$ 3,710,992
CITY OF COTTAGE GROVE, MINNESOTA
INTERNAL SERVICE FUNDSStatement 24
COMBINING STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN NET POSITION
For The Year Ended December 31, 2012
With Comparative Data for the Year Ended December 31, 2011
Totals
SelfFleetInformationInternal Service Funds
InsuranceMaintenanceServices20122011
Operating revenues:
Charges for services:
User fees$ -$ 963,842$ 375,210$ 1,339,052$ 1,008,521
Employee benefits 1,075,100 - - 1,075,100 1,121,800
Property insurance 227,700 - - 227,700 230,900
Insurance refunds and reimbursements 123,741 - - 123,741 68,706
Total operating revenues 1,426,541 963,842 375,210 2,765,593 2,429,927
Operating expenses:
Operation and maintenance:
Personal services - 310,572 102,793 413,365 295,990
Commodities - 559,490 72,949 632,439 566,676
Contractual services - 66,045 113,653 179,698 74,096
Total operation and maintenance - 936,107 289,395 1,225,502 936,762
Administrative and general:
Personal insurance benefits 984,093 - - 984,093 942,411
Contractual services 217,318 - - 217,318 230,171
Claims 172,454 - - 172,454 167,844
Total administrative and general 1,373,865 - - 1,373,865 1,340,426
Depreciation - 31,431 7,423 38,854 32,018
Total operating expenses 1,373,865 967,538 296,818 2,638,221 2,309,206
Operating income (loss) 52,676 (3,696) 78,392 127,372 120,721
Nonoperating revenues:
Investment earnings 14,645 1,752 244 16,641 31,503
Miscellaneous - 838 - 838 6,053
Total nonoperating revenues 14,645 2,590 244 17,479 37,556
Income (loss) before transfers 67,321 (1,106) 78,636 144,851 158,277
Transfers:
Transfer to Enterprise Fund - (31,000) - (31,000) (31,000)
Change in net position 67,321 (32,106) 78,636 113,851 127,277
Net position - January 1 2,398,914 1,312,078 - 3,710,992 3,583,715
Net position - December 31 $ 2,466,235$ 1,279,972$ 78,636$ 3,824,843$ 3,710,992
CITY OF COTTAGE GROVE, MINNESOTA
Statement 25
COMBINING STATEMENT OF CASH FLOWS
INTERNAL SERVICE FUNDS
For The Year Ended December 31, 2012
With Comparative Data for the Year Ended December 31, 2011
Totals
SelfFleetInformationInternal Service Funds
InsuranceMaintenanceServices20122011
Cash flows from operating activities:
Receipts from interfund services provided$1,302,800$963,842$375,210$2,641,852$2,361,221
Receipts from insurance refunds and reimbursements123,741--123,74168,706
Payment to suppliers(391,690)(641,467)(203,179)(1,236,336)(1,043,936)
Payment to employees(991,363)(305,502)(93,101)(1,389,966)(1,224,546)
Miscellaneous revenue-838-8386,053
Net cash flows from operating activities43,48817,71178,930140,129167,498
Cash flows from noncapital financing activities:
Transfer to Enterprise Fund-(31,000)-(31,000)(31,000)
Cash flows from capital and related
financing activities:
Acquisition of capital assets--(74,232)(74,232)(8,301)
Cash flows from investing activities:
Investment income14,6451,75224416,64131,503
Net increase in cash and cash equivalents58,133(11,537)4,94251,538159,700
Cash and cash equivalents - January 12,394,240320,482-2,714,7222,555,022
Cash and cash equivalents - December 31$2,452,373$308,945$4,942$2,766,260$2,714,722
Reconciliation of operating income (loss) to net cash
provided (used) by operating activities:
Operating income (loss)$52,676$(3,696)$78,392$127,372$120,721
Adjustments to reconcile operating income
to net cash flows from operating activities:
Depreciation-31,4317,42338,85432,018
Miscellaneous revenue-838-8386,053
Changes in assets and liabilities:
Decrease (increase) in receivables1,421459-1,8805,084
Decrease (increase) in prepaid items(3,325)-(18,152)(21,477)(1,046)
Decrease (increase) in inventory-7,792-7,792(16,213)
Increase (decrease) in payables(7,284)(19,113)11,267(15,130)20,881
Total adjustments(9,188)21,40753812,75746,777
Net cash flows from operating activities$43,488$17,711$78,930$140,129$167,498
ECONOMIC DEVELOPMENT AUTHORITY
COMPONENT UNIT
Established to account for the receipt and use of monies for economic purposes.
CITY OF COTTAGE GROVE, MINNESOTA
COMBINING BALANCE SHEET - ALL GOVERNMENTAL FUND TYPESStatement 26
ECONOMIC DEVELOPMENT AUTHORITY COMPONENT UNIT
December 31, 2012
With Comparative Data as of December 31, 2011
Totals
Economic Development Authority
SpecialDebtComponent Unit
RevenueService20122011
Assets:
Cash and investments$227,642$557,737$785,379$943,215
Accounts Receivable---1,100
Accrued interest receivable120,000-120,000102,000
Loan receivable from primary government900,000-900,000900,000
Capital lease receivable from primary government-5,615,0005,615,0005,865,000
Prepaid items1,080-1,0801,580
Delinquent property taxes receivable2,310-2,3102,662
Property held for resale311,718-311,718311,718
Total assets$1,562,750$6,172,737$7,735,487$8,127,275
Liabilities:
Accounts payable$8,370$-$8,370$757
Salaries payable7,128-7,1286,008
Due to other governmental units---63
Deferred revenue2,310-2,3102,662
Total liabilities17,808-17,8089,490
Fund balance:
Nonspendable:
Prepaid items1,080-1,0801,580
Assets for resale311,718-311,718311,718
Long-term loan receivable900,000-900,000900,000
Long-term capital lease receivable-5,615,0005,615,0005,865,000
Restricted for:
Debt service reserve-557,737557,737554,426
Committed for EDA activities332,144-332,144485,061
Total fund balance1,544,9426,172,7377,717,6798,117,785
Total liabilities and fund balance$1,562,750$6,172,737$7,735,487$8,127,275
Fund balance reported above$7,717,679
Other long-term assets, including property taxes receivable, are not available to pay for current-period
expenditures, and therefore, are deferred in the funds.
2,310
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
(5,502,417)
period and therefore are not reported in the funds.
Net position of component unit (page 35)$2,217,572
CITY OF COTTAGE GROVE, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND Statement 27
CHANGES IN FUND BALANCE - ALL GOVERNMENTAL FUND TYPES
ECONOMIC DEVELOPMENT AUTHORITY COMPONENT UNIT
For The Year Ended December 31, 2012
With Comparative Data for the Year Ended December 31, 2011
Totals
Economic Development Authority
Component Unit
SpecialDebt
RevenueService20122011
Revenues:
General property taxes:
Current and delinquent$106,365$-$106,365$105,384
Charges for service30,000-30,00030,000
Investment earnings1,7853,3115,0969,193
Interest on loan to primary government18,000255,093273,093282,993
Miscellaneous21,749-21,74929,540
Total revenues177,899258,404436,303457,110
Expenditures:
General government:
Current:
Personal services214,568-214,56881,451
Commodities2,474-2,4741,784
Contractual services114,274-114,27476,985
Debt service:
Principal retirement-250,000250,000245,000
Interest and fiscal charges-255,093255,093264,993
Total expenditures331,316505,093836,409670,213
Revenues over (under) expenditures(153,417)(246,689)(400,106)(213,103)
Fund balance - January 11,698,3596,419,4268,117,7858,330,888
Fund balance - December 31$1,544,942$6,172,737$7,717,679$8,117,785
Net decrease in fund balance reported above$(400,106)
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, 2011(2,662)
At December 31, 20122,310
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 position. 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(7,872)
Principal repayments250,000
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, 20115,413
At December 31, 2012(15,571)
Other post employment benefits:
At December 31, 201173
At December 31, 2012(411)
Change in net position of component unit (page 37)$(168,826)
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SUPPLEMENTARY FINANCIAL INFORMATION
CITY OF COTTAGE GROVE, MINNESOTA
CONSTRUCTION/ACQUISITION COSTS
CAPITAL PROJECT FUNDS
December 31, 2012
Construction/Acquisition Costs
FundLand
No.DescriptionsContractorEngineerAcquisition
286FUNDED BY FED FUNDING & FUTURE ECON DEVELOPMENT:
Belden Quiet Zone$80,611$31,302$-
Total Fund 28680,61131,302-
510FUNDED BY FUTURE DEVELOPMENT:
Jamaica/Military Realignment-97,885-
Total Fund 510-97,885-
520FUNDED BY MSA:
Ideal Avenue---
West Point Douglas at TH61931,350297,623-
Ravine Parkway, Phase 22,281,647645,565-
Total Fund 5203,212,997943,188-
525FUNDED BY MUNICIPAL BUILDING FUND:
Public Safety/City Hall Facility13,057,930798,217-
Total Fund 52513,057,930798,217-
FUNDED BY SPECIAL ASSESSMENT BONDS:
560Pavement Management:
2011 Pavement Management966,960183,195-
2013 Pavement Management-125,260-
Total Fund 560966,960308,455-
5662007 Improvements:
Southpoint Ridge651,343307,224-
VFW Utility22,0716,075-
The Preserve at CG554,908144,174-
The Preserve at CG additional costs-18,268-
Everwood117,05877,574-
Total Fund 5661,345,380553,315-
Exhibit 1
Page 1 of 2
Construction/Acquisition CostsExpended
Legal,ROW/Total Prior
FiscalEasementOtherCosts2012Years
$-$-$-$111,913*$111,913$-
---111,913111,913-
--7,008104,893-104,893
--7,008104,893-104,893
--105,743105,743105,743-
17,471661,77520,3131,928,532*414,4451,514,087
-120,02935,9203,083,161*262,9152,820,246
17,471781,804161,9765,117,436783,1034,334,333
--819,98614,676,133*11,415,9633,260,170
--819,98614,676,13311,415,9633,260,170
--23,9971,174,152*42,4361,131,716
--49,668174,928101,91273,016
--73,6651,349,080144,3481,204,732
--116,4741,075,041*-1,075,041
--1,19729,343*-29,343
--97,304796,386*-796,386
---18,26816,8311,437
--22,983217,615*-217,615
--237,9582,136,65316,8312,119,822
CITY OF COTTAGE GROVE, MINNESOTA
CAPITAL PROJECT FUNDS
CONSTRUCTION/ACQUISITION COSTS
December 31, 2011
Construction/Acquisition Costs
FundLand
No.DescriptionsContractorEngineerAcquisition
FUNDED BY PARK TRUST FUNDS:
570Hamlet Park North$-$27,741$-
Highlands Splash Pad465,88187,791-
Sunny Hill Park-5,245-
Trunk Fund Oversizing Capitalize8,346--
Total Fund 570474,227120,777-
FUNDED BY AREA FUNDS:
575Trunk Fund Oversizing Capitalize203,219--
Total Fund 575203,219--
580Trunk Fund Oversizing Capitalize299,114--
Easement---
Total Fund 580299,114--
585Gateway Storm Pond-85,879-
Hamlet Pond Phase 3154,726112,778-
Thompson Grove Storm Sewer Rehab.366,88633,696-
80th Street Box Culvert780,973183,849-
Belden crossing stormwater casing14,962--
Trunk Fund Oversizing Capitalize26,321--
Total Fund 5851,343,868416,202-
Totals$20,984,306$3,269,341$-
Less: Completed construction*
Work in progress - December 31, 2012
Exhibit 1
Page 2 of 2
Construction/Acquisition CostsExpended
Legal,ROW/Total Prior
FiscalEasementOtherCosts2012Years
$-$-$-$27,741$-$27,741
--24,986578,658*488,46690,192
-46,076-51,321*51,321-
---8,346*-8,346
-46,07624,986666,066539,787126,279
---203,219*-203,219
---203,219-203,219
---299,114*-299,114
-962-962*962-
-962-300,076962299,114
--179,454265,333*176,17589,158
--12,842280,346*(2,626)282,972
---400,582*9,150391,432
--79,1221,043,9441,043,944-
---14,962*14,962-
---26,321*-26,321
--271,4182,031,4881,241,605789,883
$17,471$828,842$1,596,997$26,696,957$14,254,512$12,442,445
25,221,440
$1,475,517
CITY OF COTTAGE GROVE, MINNESOTA
COMBINED SCHEDULE OF BONDED INDEBTEDNESS
December 31, 2012
InterestFinal
RateDatedPayment
Primary Government
General Obligation Bonds:
$1,405,000 Tax Increment Bonds of 2004A3.0-4.65%7/1/20042/1/2024
$1,775,000 Tax Increment Bonds of 2004B4.5-5.75%7/1/20042/1/2021
Total General Obligation Bonds
Special Assessment Debt:
Improvement Bonds of 2008A3.50-3.60%6/11/20082/1/2019
Improvement Bonds of 2009A2.50-4.30%4/16/20092/1/2024
Improvement Refunding Bonds of 2009C2.00-3.00%4/16/200912/1/2015
Improvement Bonds of 2012A0.30-2.20%3/13/20122/1/2027
Total Special Assessment Debt with Governmental Commitment
Proprietary Fund Bonds:
Sewer and Water Revenue Bonds 1997A4.3-5.1%5/21/19972/1/2013
Water Revenue Refunding Bonds of 2009B2.50-4.0%4/16/20092/1/2020
Total Proprietary Fund Bonds
Total Bonded Indebtedness - Primary Government
Component Unit - EDA
$6,500,000 Ice Arena Lease Rev Bonds of 2008B4.0%-4.90%6/11/20084/1/2028
Total Component Unit - EDA
Total Bonded Indebtedness - Reporting Entity
Exhibit 2
Authorized Principal Due Interest Due
And IssuedRetiredOutstandingIn 2013In 2013
$1,405,000$260,000$1,145,000$25,000$50,982
1,775,000185,0001,590,000110,00085,305
3,180,000445,0002,735,000135,000136,287
3,370,0001,210,0002,160,000410,00068,715
3,650,000810,0002,840,000225,000102,150
625,000155,000470,00060,00013,288
1,865,000-1,865,000120,00033,570
9,510,0002,175,0007,335,000815,000217,723
1,475,0001,345,000130,000130,0003,315
1,205,000295,000910,000100,00030,375
2,680,0001,640,0001,040,000230,00033,690
15,370,0004,260,00011,110,0001,180,000387,700
6,500,000885,0005,615,000260,000244,892
6,500,000885,0005,615,000260,000244,892
$21,870,000$5,145,000$16,725,000$1,440,000$632,592
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CITY OF COTTAGE GROVE, MINNESOTA
Exhibit 13
SCHEDULE OF SOURCES AND USES OF PUBLIC FUNDS
FOR A TAX INCREMENT FINANCING DISTRICT
OAKWOOD HEIGHTS - DISTRICT NUMBER 1-1
December 31, 2012
Accounted
CurrentFor inCurrent Amount
BudgetPrior YearsYearRemaining
Sources of funds:
Bond proceeds$1,375,000$518,876$-$856,124
Loan proceeds1,375,000--1,375,000
Refunding bond proceeds1,375,000--1,375,000
Current property taxes received-2,671-(2,671)
Tax increment received5,710,068562,897-5,147,171
Direct charges to developer401,501501,222-(99,721)
Transfers1,375,000--1,375,000
Interest on investments21,000215,6212,083(196,704)
Total sources of funds11,632,5691,801,2872,0839,829,199
Uses of funds:
Land acquisition1,594,000102,273-1,491,727
Construction costs2,290,887--2,290,887
Bond payments:
Principal1,375,000525,000-850,000
Interest 1,583,832349,250-1,234,582
Loan payments:
Principal1,375,000--1,375,000
Interest 500,000--500,000
Refunding bond payments:
Principal1,375,000--1,375,000
Administrative costs112,45026,79012185,539
Bond discount51,400--51,400
Transfer to other funds1,375,000423,886-951,114
Bonding costs-25,126-(25,126)
Total uses of funds11,632,5691,452,32512110,180,123
Funds remaining (or deficit)$-$348,962$1,962$(350,924)
CITY OF COTTAGE GROVE, MINNESOTA
Exhibit 14
SCHEDULE OF SOURCES AND USES OF PUBLIC FUNDS
FOR A TAX INCREMENT FINANCING DISTRICT
UP NORTH PLASTICS - DISTRICT NUMBER 1-3
December 31, 2012
Accounted
CurrentFor inCurrent Amount
BudgetPrior YearsYearRemaining
Sources of funds:
Bond proceeds$1,350,000$905,344$-$444,656
Loan proceeds1,350,000352,803-997,197
Refunding bond proceeds1,350,000--1,350,000
Tax increment received2,500,0001,646,150125,667728,183
Interest on investments300,00089,317-210,683
Interfund transfer1,350,000-1,9471,348,053
Total sources of funds8,200,0002,993,614127,6145,078,772
Uses of funds:
Land acquisition700,000304,413-395,587
Construction costs1,231,500--1,231,500
Bond payments:
Principal1,350,000610,000-740,000
Interest 364,000416,288-(52,288)
Loan payments:
Principal1,350,000352,803-997,197
Interest 286,000272,399-13,601
Refunding bond payments:
Principal1,350,000--1,350,000
Payment to refund bond escrow agent-337,425-(337,425)
Administrative costs210,00017,2736,469186,258
Bond discount7,600--7,600
Transfers1,350,000--1,350,000
Refund tax increment-372,804-(372,804)
Bonding costs-10,936-(10,936)
Total uses of funds8,199,1002,694,3416,4695,498,290
Funds remaining (or deficit)$900$299,273$121,145$(419,518)
Note: The property owner received a tax abatement for 2002 & 2007, resulting from a property valuation appeal.
CITY OF COTTAGE GROVE, MINNESOTA
Exhibit 15
SCHEDULE OF SOURCES AND USES OF PUBLIC FUNDS
FOR A TAX INCREMENT FINANCING DISTRICT
COTTAGES OF COTTAGE GROVE - DISTRICT NUMBER 1-8
December 31, 2012
Accounted
CurrentFor inCurrent Amount
BudgetPrior YearsYearRemaining
Sources of funds:
Tax increment received$825,000$661,860$36,573$126,567
Interest on investments-22,0391,603(23,642)
Total sources of funds825,000683,89938,176102,925
Uses of funds:
Construction costs750,000419,791-330,209
Administrative costs75,0003,65924171,100
Total uses of funds825,000423,450241401,309
Funds remaining (or deficit)$-$260,449$37,935$(298,384)
CITY OF COTTAGE GROVE, MINNESOTA
Exhibit 16
SCHEDULE OF SOURCES AND USES OF PUBLIC FUNDS
FOR A TAX INCREMENT FINANCING DISTRICT
DISTRICT NUMBER 1-10
December 31, 2012
Accounted
CurrentFor inCurrent Amount
BudgetPrior YearsYearRemaining
Sources of funds:
Bond proceeds$11,000,000$-$-$11,000,000
Loan proceeds11,000,000--11,000,000
Tax increment received7,632,1721,472,876-6,159,296
Market Value Credit -TIF-79-(79)
Real estate sales4,300,0001,306,791-2,993,209
Developer contribution-8,000-(8,000)
Interest on invested funds230,0001,557-228,443
Local contribution250,000--250,000
Grant250,000--250,000
Applicant fees-145,700-(145,700)
Transfer in from other funds11,000,000--11,000,000
Total sources of funds45,662,1722,935,003-42,727,169
Uses of funds:
Land/building acquisition6,200,0001,445,331-4,754,669
Construction costs3,943,0001,252,037-2,690,963
Bond payments:
Principal11,000,000--11,000,000
Interest 868,546--868,546
Loan payments:
Principal11,000,000--11,000,000
Interest 868,546--868,546
Administrative costs782,080104,011340677,729
Miscellaneous - refunds-140,700-(140,700)
Transfer out to other funds11,000,000--11,000,000
Total uses of funds45,662,1722,942,07934042,719,753
Funds remaining (or deficit)$-$(7,076)$(340)$7,416
CITY OF COTTAGE GROVE, MINNESOTA
Exhibit 17
SCHEDULE OF SOURCES AND USES OF PUBLIC FUNDS
FOR A TAX INCREMENT FINANCING DISTRICT
DISTRICT NUMBER 1-12
December 31, 2012
Accounted
CurrentFor inCurrent Amount
BudgetPrior YearsYearRemaining
Sources of funds:
Bond proceeds$23,400,000$3,000,000$-$20,400,000
Loan proceeds7,800,000--7,800,000
Tax increment received28,300,0003,512,919652,61224,134,469
Direct charges to developer-153,635-(153,635)
Land sale1,700,0001,604,000-96,000
Transfer in7,800,000455,719-7,344,281
Market value credit - TIF-106-(106)
Community development block grant400,000--400,000
Interest on invested funds500,000115,2493,930380,821
Other-23,020-(23,020)
Total sources of funds69,900,0008,864,648656,54260,378,810
Uses of funds:
Land/building acquisition5,000,0002,564,657-2,435,343
Construction costs9,000,0003,874,179165,9304,959,891
Bond payments:
Principal23,400,000210,00055,00023,135,000
Interest 13,748,000899,831140,90012,707,269
Loan payments:
Principal7,800,000--7,800,000
Interest -150,939-(150,939)
Administrative costs2,830,000225,74510,0592,594,196
Discount on debt issued-36,812-(36,812)
Transfer out to other funds7,800,000--7,800,000
Other322,000316,531-5,469
Total uses of funds69,900,0008,278,694371,88961,249,417
Funds remaining (or deficit)$-$585,954$284,653$(870,607)
CITY OF COTTAGE GROVE, MINNESOTA
Exhibit 18
SCHEDULE OF SOURCES AND USES OF PUBLIC FUNDS
FOR A TAX INCREMENT FINANCING DISTRICT
DISTRICT 1-13
December 31, 2012
Accounted
CurrentFor inCurrent Amount
BudgetPrior YearsYearRemaining
Sources of funds:
Tax increment received$7,100,000$417,519$-$6,682,481
Interest on investments1,000,0001,506482998,012
Land sales17,025,000918,746-16,106,254
Developer contribution-4,000-(4,000)
Bond proceeds20,000,000--20,000,000
Loan proceeds20,000,000--20,000,000
Transfers in20,000,000--20,000,000
Total sources of funds 85,125,0001,341,77148283,782,747
Uses of funds:
Land/building acquisition12,000,000619,999-11,380,001
Site Improvements/preparation1,000,00027,494-972,506
Public utilities3,400,000--3,400,000
Streets1,700,000454,396-1,245,604
Other public improvements6,000,000--6,000,000
Bond payments:
Principal20,000,000--20,000,000
Interest477,000--477,000
Loan payments:
Principal20,000,000--20,000,000
Interest477,000--477,000
Tax increment repaid to county--194,611(194,611)
Administrative costs71,00045,35240125,247
Transfers out20,000,000--20,000,000
Total uses of funds85,125,0001,147,241195,01283,782,747
Funds remaining (or deficit)$-$194,530$(194,530)$-
CITY OF COTTAGE GROVE, MINNESOTA
Exhibit 19
SCHEDULE OF SOURCES AND USES OF PUBLIC FUNDS
FOR A TAX INCREMENT FINANCING DISTRICT
DISTRICT 1-14
December 31, 2012
Accounted
CurrentFor inCurrent Amount
BudgetPrior YearsYearRemaining
Sources of funds:
Tax increment received$1,110,000$207,019$77,586$825,395
Interest on investments20,0001,16611518,719
Developer contribution-2,000-(2,000)
Bond proceeds1,115,000--1,115,000
Loan proceeds2,230,000575,000-1,655,000
Transfers in1,115,000--1,115,000
Total sources of funds 5,590,000785,18577,7014,727,114
Uses of funds:
Site Improvements/preparation130,000505,225-(375,225)
Public utilities525,00060,501-464,499
Bond payments:
Principal1,115,000--1,115,000
Interest182,500--182,500
Loan payments:
Principal2,230,00075,000-2,155,000
Interest182,500124,67330,00027,827
Administrative costs110,00016,8951,72791,378
Transfers out1,115,000--1,115,000
Total uses of funds5,590,000782,29431,7274,775,979
Funds remaining (or deficit)$-$2,891$45,974$(48,865)
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 Positionby Component
Table 2 – Changes in Net Position
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 Debtby Type
Table 10 – Ratios of General Bonded DebtOutstanding
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 – Prinicipal 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 EquivalentCity GovernmentEmployees 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.
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CITY OF COTTAGE GROVE, MINNESOTA
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBTTable 11
As of December 31, 2012
City of Cottage Grove
% of DebtShare of
Net DebtApplicableOverlapping
Outstandingto CityDebt
Overlapping:
Washington County $144,625,00010.9655%$15,858,854
School Districts
ISD No. 200 (Hastings)49,515,0001.6733%828,534
ISD No. 833 (South Wash. County)276,760,00032.0030%88,571,503
Metro Council226,580,0000.9735%2,205,756
Total Overlapping107,464,648
City of Cottage Grove Direct Debt$15,685,000100.00%15,685,000
Total Direct and Overlapping Debt:$713,165,000$123,149,648
Source: City of Cottage Grove Municipal Disclosure Reporting
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 borne 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 borne 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.
CITY OF COTTAGE GROVE, MINNESOTA
Table 13
DEMOGRAPHIC AND ECONOMIC STATISTICS
Last Ten Fiscal Years
Per
Capita
FiscalPersonalPersonalSchoolUnemployment
YearPopulation(1)Income (2)Income (2)Enrollment (3)Rate (4)
201234,984$1,797,326,58651,3755.5%
17,639
201134,8281,724,787,04449,5236.2%
17,389
201034,5891,626,824,43747,0336.9%
17,060
200934,2131,564,355,21245,7247.6%
16,795
200834,0171,633,122,15348,0094.9%
16,800
200733,7881,578,845,66446,7283.9%
16,805
200633,5291,502,803,30944,8213.5%
16,467
200533,1791,412,794,99942,5813.5%
16,400
200431,7741,343,849,55642,2944.0%
16,088
200331,4371,242,736,04739,5314.1%
15,744
Sources:
(1) Metropolitan Council-2002-2009. Census-2010. Cottage Grove Planning Department-2011.
(2) Washington County data from Bureau of Economic Analysis.
(3) Independent School District No. 833 including Valley Crossing School.
(4) Minnesota Department of Employment and Economic Development.
CITY OF COTTAGE GROVE, MINNESOTA
Table 14
PRINCIPAL EMPLOYERS
Current year and nine years ago
20122003
PercentagePercentage
of Total of Total
TaxpayerEmployeesRankEmploymentEmployeesRankEmployment
School District 833 1,315122% 1,128119%
3M Cottage Grove 750213% 675211%
Renewal by Andersen 33036% 39937%
Up North Plastics Inc 25044% 26044%
Cub Foods 20053% 14692%
Menard's 20063% 20053%
City of Cottage Grove 17473% 18163%
Werner Electric 17083% - - -
Target 13092% 150 83%
Rainbow Foods 99102% - - -
Allied Systems - - 16073%
Allina - - 138102%
Total 3,61860% 3,43758%
Sources:
City of Cottage Grove Annual Municipal Disclosure Reporting.
173
174