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HomeMy WebLinkAbout2018 CAFRJ 3 ,¢ y p\ .��, E• i .fir � (., � '�,.�.� , - _• _ rY j�, \ � -�. � fie t " 't t le� ` I 'r/'• _ .lam \ 1 ys! �•. ! 1 M` 1 'RYA' , t _ (THIS PAGE LEFT BLANK INTENTIONALLY) Comprehensive Annual Financial Report of the CITY OF COTTAGE GROVE, MINNESOTA For the Year Ended December 31, 2018 Prepared by City's Finance Department City of Cottage Grove 12800 Ravine Parkway South Cottage Grove, MN 55016 (THIS PAGE LEFT BLANK INTENTIONALLY) City of Cottage Grove Table of Contents Introductory Section Page Letter of Transmittal 3 Certificate of Achievement for Excellence in Financial Reporting 7 Elected Officials and Administration 9 Organization Chart 10 Financial Section Independent Auditor's Report 13 Management's Discussion and Analysis 17 Basic Financial Statements Government -Wide Financial Statements Statement of Net Position 29 Statement of Activities 30 Fund Financial Statements Balance Sheet — Governmental Funds 32 Reconciliation of the Balance Sheet to the Statement of Net Position — Governmental Funds 35 Statement of Revenues, Expenditures, and Changes in Fund Balances — Governmental Funds 36 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities — Governmental Funds 38 Statement of Net Position — Proprietary Funds 39 Statement of Revenues, Expenses, and Changes in Fund Net Position — Proprietary Funds 40 Statement of Cash Flows — Proprietary Funds 41 Notes to Financial Statements 43 Required Supplementary Information Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual — General Fund 87 Schedule of Changes in Total OPEB Liability and Related Ratios 89 Schedule of City's Proportionate Share of Net Pension Liability — General Employees Retirement Fund 90 Schedule of City's Proportionate Share of Net Pension Liability — Police and Fire Retirement Fund 90 Schedule of City Contributions — General Employees Retirement Fund 91 Schedule of City Contributions — Police and Fire Retirement Fund 91 Schedule of Changes in Net Pension Liability and Related Ratios — Fire Relief Association 92 Schedule of City and Non -Employer Contributing — Fire Relief Association 93 Notes to Required Supplementary Information 94 Combining and Individual Fund Statements and Schedules Nonmajor Governmental Funds 100 Combining Balance Sheet — Nonmajor Governmental Funds 101 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Nonmajor Governmental Funds 102 City of Cottage Grove Table of Contents Financial Section (Continued) Page Combining and Individual Fund Statements and Schedules (Continued) Nonmajor Special Revenue Funds 103 Subcombining Balance Sheet — Nonmajor Special Revenue Funds 104 Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balances — Nonmajor Special Revenue Funds 106 Nonmajor Debt Service Funds 108 Subcombining Balance Sheet — Nonmajor Debt Service Funds 109 Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balances — Nonmajor Debt Service Funds 110 Nonmajor Capital Projects Funds 111 Subcombining Balance Sheet — Nonmajor Capital Projects Funds 112 Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balances — Nonmajor Capital Projects Funds 114 Schedules of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual — Recycling Special Revenue Fund 116 Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual — Storm Water Maintenance Special Revenue Fund 117 Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual — Forfeiture/Seizure Special Revenue Fund 118 Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual — Ice Arena Special Revenue Fund 119 Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual — Golf Course Special Revenue Fund 120 Internal Service Funds 121 Combining Statement of Net Position — Internal Service Funds 122 Combining Statement of Revenues, Expenses, and Changes in Net Position — Internal Service Funds 123 Combining Statement of Cash Flows — Internal Service Funds 124 Economic Development Authority Component Unit 125 Combining Balance Sheet — All Governmental Fund Types — Economic Development Authority Component Unit 126 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — All Governmental Fund Types — Economic Development Authority Component Unit 127 Supplementary Financial Information Combined Schedule of Bonded Indebtedness 130 Debt Service payments to Maturity 132 City of Cottage Grove Table of Contents Supplementary Financial Information (Continued) Page Deferred Tax Levies 133 Subcombining Balance Sheet — Pavement Management Debt Service Schedule 134 Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balance — Pavement Management Debt Service Schedule 136 Subcombining Balance Sheet — Tax Increment Construction Revolving Schedule 138 Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balance — Tax Increment Construction Revolving Schedule 140 Subcombining Balance Sheet — TIF Debt Service Revolving Schedule 142 Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balances — TIF Debt Service Revolving Schedule 143 Statistical Section Net Position by Component 1 149 Changes in Net Position 2 150 Fund Balances of Governmental Funds 3 152 Changes in Fund Balances of Governmental Funds 4 153 Assessed and Estimated Actual Value of Taxable Property 5 154 Property Tax Rates Direct and Overlapping Governments 6 155 Principal Property Taxpayers 7 156 Property Tax Levies and Collections 8 157 Ratios of Outstanding Debt by Type 9 158 Ratios of General Bonded Debt Outstanding 10 159 Direct and Overlapping Governmental Activities Debt 11 160 Legal Debt Margin Information 12 161 Demographic and Economic Statistics 14 162 Principal Employers 15 163 Full -Time Equivalent City Government Employees by Function 16 164 Operating Indicators by Function/Program 17 165 Capital Asset Statistics by Function/Program 18 166 (THIS PAGE LEFT BLANK INTENTIONALLY) INTRODUCTORY SECTION (THIS PAGE LEFT BLANK INTENTIONALLY) MmCottage Grove here Pride 3P6 prosperity Meet May 30, 2019 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, 2018. 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. BerganKDV, Ltd., independent certified public accountants have issued an unmodified ("clean") opinion on the City of Cottage Grove's financial statements for the year ended December 31, 2018. 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 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; recent data estimates 2018 population at 37,341. Cottage Grove operates as a Statutory Plan A City under Minnesota law. Policy making and legislative authority are vested in a City Council, consisting of the Mayor and four other members, 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. 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, planning and zoning, and general administrative functions. CITY OF COTTAGE GROVE • 12800 Ravine Parkway • Cottage Grove, Minnesota 55016 3 www.cottage-grove.org • 651-458-2800 • Fax 651-458-2897 • Equal Opportunity Employer Profile of the City (Continued) The Economic Development Authority (EDA) of the City of Cottage Grove is a separate legal entity organized pursuant to Minnesota Statute 469. There are seven members of the EDA who are appointed by the City Council; two appointees are Council members and the five others are appointed from the community. The EDA is included in this financial report as a discretely presented component unit, due to the EDA's relationship of financial benefit or burden to the City. The annual budget serves as the foundation for the City of Cottage Grove's financial planning and control. The budget incorporates the City's financial policies, financial operations, debt management, reserves and investments. The process by which the biennial budget document is prepared begins with the submission of department appropriation requests in June. The requests, along with projected revenues and stated City Council strategic goals, provide the starting point for budget development. Collaborative meetings are held with City Staff and workshops are held with the City Council to refine the budget document in advance of the submission of the preliminary tax levy in September each year. The preliminary levy may be reduced after it is adopted, but cannot be increased. An information session is held for taxpayers at the first City Council meeting in December in advance of adoption of the final levy and budget. The Council is required to adopt a final budget by no later than December 28th of each year. 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. 2018 continued with steady employment growth in the region and the Washington County unemployment rate at 2.0%, compared to the national rate of 3.9%. Wage growth and inflation continued at a moderate pace. The City's tax base is 80% residential and 20% commercial/industrial property. Total taxable market value in 2018 was $3.1 billion. Growth in taxable value for 2019 is expected at 9% due to new construction and increases in property values of existing building stock. The City's 600-acre business park is home to 1,150,000 square feet of industrial and manufacturing businesses, including Up North Plastics, Leafline Labs, American Logistics, Modern Automotive Performance, Renewal by Andersen, North Star Sheets and Werner Electric. Other major employers in the City include 3M Company, Target, Menard's, Walmart, and Aggregate Industries. The City's commercial areas include four community shopping centers and several restaurants. Completion of the renovation of the former Home Depot property into TJ Maxx and HomeGoods along with Planet Fitness and other retail tenant spaces occurred in November 2018. Adjacent to the HyVee grocery store in the City's Gateway North development, this completion ends a ten-year struggle with retail vacancy on this site. 2018 also saw development of the final phases of Norris Square Independent Senior Living and skilled care facilities and construction of Park Place Storage — a condominium storage facility and Triple Angels Care Center facilities along West Point Douglas Road. The City of Woodbury and the City of Cottage Grove were awarded a $9.5 million grant from the State of Minnesota for construction of the HERO Center on a 9-acre parcel of land adjacent to City Hall. This $19 million integrated public safety training facility was conceived in 2011 and had previously received a $1.46 million grant for planning and architectural design. Full construction of the project will be complete in 2019, opening to police, fire and EMS regional users by January 1, 2020. C! Long -Term Financial Planning The City places a high priority on planning for future growth. Staff uses different long range revenue and expenditure models during the annual preparation of a biennial budget plan for the General Fund, Special Revenue and Enterprise Funds. The biennial budget process allows for the assurance that any change to revenues or expenditures is sustainable in the successive year. Furthermore, Council and staff compile a five year Capital Improvement Plan (CIP) which addresses the future building and infrastructure projects necessary to address the new residential and commercial property outlined in the City's 2030 Comprehensive Plan. As part of the CIP, each capital project is analyzed to determine if sufficient funding exists for the project and the longer term impact of each of the projects on the individual capital fund balances. Pavement Management projects are not full road reconstruction projects but rather a reclamation or mill and overlay 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. Two pavement projects of a significant nature are planned for 2020 and 2022 along 80th Street which will require over $6 million in financing. Relevant Financial Policies The City has financial policies and plans which establish the principles that guide staff and Council members to make consistent and informed financial decisions. These policies and plans include: • Fund balance policy • Cash and investment management policy • Debt management policy • Capital improvements plan • Infrastructure Maintenance Task Force (IMTF) policy It is important for the financial stability of the City to maintain reserve funds for unanticipated expenditures or unforeseen emergencies as well as to provide adequate working capital for current operations without short term borrowing. The City's fund balance policy identifies that the unassigned fund balance in the General Fund shall be no less than 55% of annual budgeted expenditures. Major Initiatives The population of Cottage Grove has increased from 833 in 1950 to 34,589 per 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 age is 35 years 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 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. 5 Major Initiatives (Continued) Residential development slowed significantly subsequent to the Great Recession of 2007. The real estate slowdown affected over five years of new home construction in the community. However, since 2015, the City has seen a consistent year over year increase in construction of single family and multifamily homes. In 2018, 185 permits were issued for new construction of residential housing units. We anticipate a similar level of growth in 2019. Master planning of the 4,000 acre "East Ravine" development occurred in 2003-2006. Development of the first one thousand acres of low density residential housing with park and open space amenities and nodes of commercial use was anticipated by 2015. In reality, development of this area began in earnest in 2013 with the approval of two residential plats totaling 226 lots on 100 acres. Residential developers continue to pursue acreage for development in the master plan area. Construction of the Ravine Parkway which connects these developments will be completed in 2019. The City strategy of growth in the residential and commercial/industrial areas, providing more homes and jobs, has begun to draw the additional retail storefronts and services the community demands. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Cottage Grove for its Comprehensive Annual Financial Report for the year ended December 31, 2017. This was the twenty- eighth consecutive year that the City has achieved this prestigious award. In order to receive a Certificate of Achievement, a government must publish an easily readable and efficiently organized Comprehensive Annual Financial Report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current Comprehensive Annual Financial Report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to GFOA to determine its eligibility for another certificate. Preparation of this report would not have been possible without the dedication of the Finance Department staff to whom I express my appreciation, especially Cathy Mohr and Lauren Reichstadt- Nacar. Appreciation is also due to the Mayor, City Council members and City Administrator for their support in maintaining a fiscally sound and stable organization in the service of its residents and business owners. Respectfully Submitted, CITY OF COTTAGE GROVE, MINNESOTA Robin Roland Finance Director n E lk Government Finance officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Cottage Grove Minnesota For its Comprehensive Annual Financial Report for the Fiscal Year Ended December 1, 2017 Executive Director/CEO 7 (THIS PAGE LEFT BLANK INTENTIONALLY) City of Cottage Grove Elected Officials and Administration December 31, 2018 Elected Officials Position Term Expires Myron Bailey Mayor December 31, 2020 Steve Dennis Council Member December 31, 2018 Wayne Johnson Council Member December 31, 2020 La Rae Mills Council Member December 31, 2020 Dave Thiede Council Member December 31, 2018 Appointed Personnel Jennifer Levitt City Administrator Robin Roland Finance Director Joe Fischbach City Clerk Christine Costello Community and Economic Development Director (Interim) Ryan Burfeind City Engineer (Interim) Peter Koerner Director of Public Safety Les Burshten Public Works Director Zac Dockter Parks and Recreation Director E City of Cottage Grove ' Organization Chart Community Development Economic Development Planning @uildinglCo& Inspections Historic Preservation Engineering Administration City Clerw Elections Human Resources Community Programsl Communications River Oaks Golf Course Cottage Grove Citizens City Adml niStrator Finance Accoun" Enterprise Billing MIS City Council Advisory i oninYssiOns Cw Attorney Parksand PublicWety Recrastion Patrd Parks Investigations Recreation Pulali c Safety Programs :nlmal R Code Enforcement Fire R Emergency Management EMSAuledical Services Fire Inspections Ice Arena Forestryl Horticulhire Pubic Works Strom FIeetBuldinr Maintenance UtiliS--s 10 FINANCIAL SECTION 11 (THIS PAGE LEFT BLANK INTENTIONALLY) 12 ,berganKov Independent Auditor's Report Honorable Mayor and Members of the City Council City of Cottage Grove 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, Minnesota, as of and for the year ended December 31, 2018, and the related notes to financial statements, which collectively comprise the City'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. Auditor's 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 auditor's 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 City'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 City'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. BERGANKDV, LTD. I BERGANKDV.COM I DO MORE. 13 Opinions In our opinion, the financial statements referred to in the first paragraph 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, Minnesota, as of December 31, 2018, 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. Implementation of GASB 75 As discussed in Note 15 to the financial statements, the City has adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, which follows this report letter, and Required Supplementary Information as listed in 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 GASB, 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 introductory section, combining and individual fund statements and schedules, supplementary financial information, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. BERGANKDV, LTD. I BERGANKDV.COM I DO MORE. 14 Other Matters (Continued) Other Information (Continued) The combining and individual fund statements and schedules and supplementary financial information are the responsibility of management and were derived from and relate 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 combining and individual fund statements and schedules and supplementary financial information are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have 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 them. Report on Summarized Comparative Information The financial statements include partial prior year comparative information. Such information does not include all of the information required to constitute a presentation in accordance with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the City's basic financial statements for the year ended December 31, 2017, from which such partial information was derived. We have previously audited the City's 2017 financial statements and our report, dated May 30, 2018, expressed unmodified opinions on the respective financial statements of the governmental activities, the business -type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information. In our opinion, the summarized comparative information presented herein as of and for the year ended December 31, 2017, is consistent, in all material respects, with the audited financial statements from which it has been derived. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated May 30, 2019, 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 solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's 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 the City of Cottage Grove's internal control over financial reporting and compliance. Minneapolis, Minnesota May 30, 2019 BERGANKDV, LTD. I BERGANKDV.COM I DO MORE. 15 (THIS PAGE LEFT BLANK INTENTIONALLY) 16 City of Cottage Grove 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, 2018. 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 7 of this report. FINANCIAL HIGHLIGHTS • The assets and deferred outflows of resources of the City of Cottage Grove and the EDA Component Unit exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $255,530,604 (net position). Of this amount, $32,960,512 (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 $19,857,856. The increase is due to reimbursements and bonding for construction projects in the City. • As of the close of the current fiscal year, the City of Cottage Grove's governmental funds reported combined ending fund balances of $29,826,872 a decrease of $1,080,955 compared to the previous year. Approximately 88% or $26,222,854 is available for spending according to the City's policies and constraints. • At the end of the current fiscal year, unassigned fund balance for the General Fund was $9,814,949 (56%) 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 bonded debt outstanding of $38,919,104, an increase of $4,033,400 or 11.6% compared to the previous year. In 2018, the City issued $7,620,000 in General Obligation Improvement bonds and called $1,480,000 in General Obligation Improvement bonds from 2009. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City of Cottage Grove's basic financial statements. The City's basic financial statements comprise three components: 1) government - wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government -Wide Financial Statements The government -wide financial statements are designed to provide readers with a broad overview of the City of Cottage Grove's finances, in a manner similar to a private -sector business. The statement of net position presents information on all of the City of Cottage Grove's assets and deferred outflows of resources and liabilities and deferred inflows of resources, 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. 17 City of Cottage Grove Management's Discussion and Analysis OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED) Government -Wide Financial Statements (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, community development, economic development, public safety, public works, and culture and recreation. The business -type activities of the City of Cottage Grove include street lighting, water and sewer, and an ambulance service. The government -wide financial statements include not only the City of Cottage Grove itself (known as the primary government), but also a legally separate EDA component unit for which the City of Cottage Grove is financially accountable. Financial information for this component unit is reported separately from the financial information presented for the primary government itself. The government -wide financial statements start on page 29 of this report. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Cottage Grove, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. All of the funds of the City of Cottage Grove can be divided into two categories: governmental funds and proprietary funds. Governmental Funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near -term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near -term financial requirements. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statement. By doing so, readers may better understand the long-term impact of the City's near term financial decisions. Both the governmental fund balance sheet and governmental fund statement of revenues, expenditures, and change in fund balance provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. City of Cottage Grove Management's Discussion and Analysis OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED) Governmental Funds (Continued) Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balance for the City's eight individual major governmental funds. They are as follows: • General Fund • Municipal Building Capital Project Fund — Capital project fund • MSA Construction Capital Project Fund — Capital project fund • Closed Debt Fund — Debt service fund • Future Projects Fund — Capital project fund • Pavement Management Debt Service Fund — Debt service fund • Pavement Management Capital Project Fund — Capital project fund • 2016 Improvement Projects — Capital project fund Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non -major governmental funds is provided in the form of combining statements elsewhere in the report. The City of Cottage Grove adopts an annual appropriated budget for its general and special revenue funds. A budgetary comparison statement has been provided for those funds to demonstrate compliance with this budget. The basic governmental fund financial statements start on page 32 of this report. Proprietary Funds The City of Cottage Grove maintains four 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 street light operations, ambulance service, water operations, and sewer operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City of Cottage Grove's various functions. The City of Cottage Grove uses internal service funds to account for self-insurance, fleet maintenance, and information technology services activity. 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 provide separate information for 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 39 of this report. 19 City of Cottage Grove Management's Discussion and Analysis OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED) 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 43 of this report. Other Information The combining statements referred to earlier in connection with non -major governmental funds and internal service funds are presented immediately following the required 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 $255,216,602 at the close of the most recent fiscal year. The largest portion of the City of Cottage Grove's net position ($216,078,941 or 85%) reflects its investment in capital assets (e.g. land, buildings, machinery, and equipment) less any related debt used to acquire those assets that is still outstanding. The City of Cottage Grove uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City of Cottage Grove's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. City of Cottage Grove Net Position Governmental Activities Business -Type Activities Total Primary Government 2018 2017 2018 2017 2018 2017 Current and other assets $ 46,297,128 $ 46,982,826 $ 13,650,907 $ 13,467,170 $ 59,948,035 $ 60,449,996 Capital assets 191,175,338 175,184,535 63,822,257 56,060,163 254,997,595 231,244,698 Total assets 237,472,466 222,167,361 77,473,164 69,527,333 314,945,630 291,694,694 Deferred outflows of resources 7,155,481 8,988,315 939,200 1,099,325 8,094,681 10,087,640 Long-term liabilities outstanding 37,007,491 33,111,556 58,723 33,053 37,066,214 33,144,609 Pension liability 8,756,790 10,196,059 1,168,520 1,270,593 9,925,310 11,466,652 Other liabilities 99,008,367 9,619,825 398,881 485,089 10,307,248 10,104,914 Total liabilities 55,672,648 52,927,440 1,626,124 1,788,735 57,298,772 54,716,175 Deferred inflows of resources 9,268,674 10,228,115 1,256,263 1,248,919 10,524,937 11,477,034 Net position Net investment in capital assets 152,256,234 140,298,832 63,822,257 56,060,163 216,078,491 196,358,995 Restricted 6,177,599 2,855,507 - - 6,177,599 2,855,507 Unrestricted 21,252,792 24,845,782 11,707,720 11,528,841 32,960,512 36,374,623 Total net position $ 179,686,625 $ 168,000,121 $ 75,529,977 $ 67,589,004 $ 255,216,602 $ 235,589,125 20 City of Cottage Grove Management's Discussion and Analysis GOVERNMENT -WIDE FINANCIAL ANALYSIS (CONTINUED) An additional portion of the City's net position ($6,177,599 or 2%) represents resources that are subject to external restrictions on how they may be used. The balance of unrestricted net position, $32,960,512 may be used to meet the City's ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City of Cottage Grove is able to report positive balances in all three categories of net 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. Governmental Activities Governmental activities increased the City's net position by $11,887,660 in 2018. • Program revenue increased overall by $5,648,859. This is primarily related to increased capital grants and contributions from the state and county for road construction projects. • Investment income increased by $188,772 due to the unrealized gain in the value of investments which are annually adjusted in accordance with accounting standards. N_ Revenues by Source - Government Activities Capital Grants & Other taxes & tax Cnntrihnti nn c increment services Property Taxes 22% 34% tricted tment ings Yo Other 0% 21 City of Cottage Grove Management's Discussion and Analysis GOVERNMENT -WIDE FINANCIAL ANALYSIS (CONTINUED) City of Cottage Grove's Changes in Net Position Governmental Activities Business -Type Activities Total Primary Government 2018 2017 2018 2017 2018 2017 Revenues Program revenues Charges for services $ 9,747,795 $ 6,495,208 $ 7,658,327 $ 6,154,667 $ 17,406,122 $ 12,649,875 Operating grants and contributions 3,710,686 1,408,099 2,350 - 3,713,036 1,408,099 Capital grants and contributions 13,899,381 13,805,696 4,488,437 441,738 18,387,818 14,247,434 General revenues Property taxes 15,171,020 14,483,061 - - 15,171,020 14,483,061 Othertaxes 1,358,141 1,590,980 - 1,358,141 1,590,980 Grants and contributions not restricted to specific programs - 126,670 - 17,161 - 143,831 Unrestricted inveestment earnings 519,675 330,903 152,466 119,735 672,141 450,638 Gain (loss) on sale of capital assets 71,631 - - - 71,631 - Total revenues 44,478,329 38,240,617 12,301,580 6,733,301 56,779,909 44,973,918 Expenses General government 2,573,693 2,398,669 - - 2,573,693 2,398,669 Community development 1,626,960 1,527,549 1,626,960 1,527,549 Economic development 275,927 740,668 275,927 740,668 Public safety 9,353,309 9,308,430 9,353,309 9,308,430 Public works 8,559,929 8,413,073 8,559,929 8,413,073 Culture and recreation 5,035,903 5,137,951 5,035,903 5,137,951 Interest on long-term debt 1,037,986 962,772 - - 1,037,986 962,772 Street lights - - 991,041 882,660 991,041 882,660 Cottage Grove EMS 1,605,779 1,571,044 1,605,779 1,571,044 Water operating 2,980,080 2,789,792 2,980,080 2,789,792 Sewer operating - - 2,881,446 2,879,119 2,881,446 2,879,119 Total expenses 28,463,707 28,489,112 8,458,346 8,122,615 36,922,053 36,611,727 Increase (decrease) in net position before transfers and special items 16,014,622 9,751,505 3,843,234 (1,389,514) 19,857,856 8,362,191 Transfers (4,126,962) (1,286,832) 4,126,962 1,286,832 Increase (decrease) in net position 11,887,660 8,464,673 7,970,196 (102,482) 19,857,856 8,362,191 Net position - beginning, previously stated 168,000,121 159,535,448 67,589,004 67,691,486 235,589,125 227,226,934 Change in accounting principle (201,156) - (29,223) - (230,379) - Net position - beginning 167,798,965 159,535,448 67,559,781 67,691,486 235,358,746 227,226,934 Netposition- ending $ 179,686,625 $ 168,000,121 $ 75,529,977 $ 67,589,004 $ 255,216,602 $ 235,589,125 22 City of Cottage Grove Management's Discussion and Analysis GOVERNMENT -WIDE FINANCIAL ANALYSIS (CONTINUED) The following chart illustrates the City's expenses and corresponding program revenues for its governmental activities. $20,000,000 $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 general community economic public safety public works culture & interest on government development development recreation debt ■ revenue ■ expense Business -Type Activities Business -type activities increased net position by $7,970,196. Below are graphs showing the business - type activities revenue and expense comparisons. Revenues - Business -Type Activities Capital grants &--, contribution; 37% Unrestricted investment mings 1% Charges for services 62% 23 City of Cottage Grove Management's Discussion and Analysis GOVERNMENT -WIDE FINANCIAL ANALYSIS (CONTINUED) Business -Type Activities (Continued) $5,000,000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 Street Lights Cottage Grove EMS Water operating Sewer operating ■ revenues ■ expenses In business -type activities, changes in net position were positive for all funds. 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, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. At the end of the current fiscal year, the City of Cottage Grove's governmental funds reported combined ending fund balances of $29,826,872 a decrease of $1,080,955. Committed, assigned and unassigned fund balance which is available for spending at the government's discretion has a balance of $26,222,854 at year end. The remainder of the fund balance is non -spendable or restricted to indicate it is not available for new spending because it has already been obligated 1) to pay debt service ($3,370,032), 2) for prepaid items ($58,421), 3) for inventory ($30,297), 4) for future expenditures ($145,268). The General Fund is the chief operating fund of the City of Cottage Grove. At the end of the current fiscal year, unassigned fund balance of the General Fund was $9,814,949 while total fund balance was $11,245,546. As a measure of the general fund's liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 56% of total subsequent year General Fund expenditures, while total fund balance represents 64% of the same amount. 24 City of Cottage Grove Management's Discussion and Analysis FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS (CONTINUED) Governmental Funds (Continued) The General Fund increased by $414,554. This increase is primarily due to an increase in charges for services resulting from development activity in the City. Revenues exceeded budget by $945,195 due to higher than expected building permit revenues and charges for engineering services from development and infrastructure projects. Expenditures were $479,616 over budget due to costs of implementing a new building permit software package, retirement payouts in the police department and unanticipated vehicle repairs in the fire department. The Closed Debt Fund decreased by $1,011,038 due to the call of the Improvement bonds of 2009A in February 2018. Future special assessments for these retired bonds were assigned to the Closed Debt Fund. The Pavement Management Debt Service Fund decreased by $557,947 due to special assessment revenues collected less than debt service requirements. The Municipal Building Fund decreased $2,002,973 due to construction costs related to the Central Fire Station. The MSA Construction Fund increased by $2,878,015 due to bonding and MSA reimbursements on construction project costs related to the Ravine Parkway and 70th Street projects. The Future Projects Fund decreased by $3,119,818 due to 1) construction of the HERO public safety training center which is a collaboration by the State of Minnesota, City of Cottage Grove and City of Woodbury and 2) the transfer of accumulated funding towards the Ravine Parkway construction project. The Pavement Management Capital Project Fund increased by $43,113 due to funding support from the Sealcoating special revenue fund for the 2018 Trail construction project. The 2016 Improvement Projects Fund decreased by $1,317,220 due to construction of Summers Landing phase two. Special Assessments were levied and will be collected over the next three years to reimburse these costs. 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. Business -type activities increased the City's net position by $7,970,196 in 2018 due to increased charges for services resulting from increased water and sewer rates and capital contributions from completed infrastructure projects in new residential developments. 25 City of Cottage Grove Management's Discussion and Analysis BUDGETARY HIGHLIGHTS General Fund The General Fund actual results were different than the final budget amounts due to the following: • Licenses and Permits categories were $110,528 more than budgeted due to increased commercial/institutional building permitting in 2018. • Intergovernmental revenues were $63,434 more than budget due to unanticipated Federal and State grant revenues and public safety aids. • Charges for services were $648,693 more than budgeted due to increased engineering fees resulting from increased construction and development activity. • Donations and miscellaneous revenues were $96,136 more than budgeted due to increased revenues from the sale of public works equipment. • General government expenditures were $14,464 more than budgeted amounts due to additional salary costs resulting from the replacement of the city administrator. • Community development expenditures were $145,704 more than budgeted amounts due to planned use of fund balance towards purchase of new building permit software. • Public safety expenditures were $284,866 more than budgeted amounts due to personnel and schedule changes combined with additional repair and maintenance costs on police and fire vehicles. • Public works expenditures were $61,773 greater than budget due to personnel costs, supplies and contractual services related to the effects of an unusually challenging snow and ice removal season. • Culture and recreation expenditures were $27,191 less than final budget due to reduced operational costs in Park Maintenance. CAPITAL ASSET AND DEBT ADMIINISTRATION Capital Assets The City of Cottage Grove's investment in capital assets for its governmental and business -type activities as of December 31, 2018, amounts to $254,997,595 (net of accumulated depreciation). This investment in capital assets includes land, buildings, infrastructure, machinery and equipment. Land and land improvements Easements Construction in progress Buildings and improvements Equipment and furniture Machinery and equipment Other improvements Infrastructure Streets Storm sewers Sidewalks/trails Water and sewer lines Ending balance City of Cottage Grove's Capital Assets (Net of Depreciation) Governmental Activities Business -Type Activities Total Primary Government 2018 2017 2018 2017 2018 2017 $ 18,105,944 $ 18,105,944 $ 507,254 $ 508,047 $ 18,613,198 $ 18,613,993 1,157,202 1,157,202 - - 1,157,202 1,157,202 13,473,244 14,172,178 - 66,211 13,473,244 14,238,389 27,187,661 19,306,988 1,366,155 1,480,643 28,553,816 20,787,631 191,418 208,905 - - 191,418 208,905 4,976,273 4,809,233 975,910 829,676 5,952,183 5,638,909 4,798,661 5,038,786 5,516,922 4,913,716 10,315,583 9,952,502 91,863,264 86,224,136 - - 91,863,264 86,224,136 24,138,580 21,758,669 24,138,580 21,758,669 5,283,091 4,402,484 - - 5,283,091 4,402,484 - - 55,456,010 48,261,810 55,456,016 48,261,869 $ 191,175,338 $ 175,184,535 $ 63,822,257 $ 56,060,163 $ 254,997,595 $ 231,244,698 26 City of Cottage Grove Management's Discussion and Analysis CAPITAL ASSET AND DEBT ADMIINISTRATION (CONTINUED) Capital Assets (Continued) The largest addition to capital assets in 2018 were the streets and other infrastructure added due to the 65th and Geneva and Hadley North of 65th road projects, Grayson Meadows, Eastbrooke, Kingston fields, Calarosa I", Mississippi Dunes 5th and Summers Landing 2nd residential housing developments. Additional information on the City of Cottage Grove's capital assets can be found in Note 3. Long -Term Debt At the end of the current fiscal year, the City of Cottage Grove had total long-term debt outstanding of $39,933,890 an increase of $4,024,331. $3,154,534 of the debt outstanding is due within one year. $23,660,000 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 2018 2017 Governmental activities Bonds payable, net $ 38,919,104 $ 34,885,704 Compensated absences 922,085 935,212 Total governmental activities 39,841,189 35,820,916 Business -type activities Compensated absences 92,701 88,643 Total business -type activities 92,701 88,643 Total primary government $ 39,933,890 $ 35,909,559 The City of Cottage Grove holds a general obligation debt rating of Aal from Moody's (2010 Global Ratings Scale) and of AA+/Stable from Standard and Poor's. According to S&P, Cottage Grove has "a strong financial profile, anchored by a very strong general fund balance; and good management practices that have contributed to the City's ongoing financial health." State statutes limit the amount of general obligation debt a Minnesota city may issue to 3% of total Estimated Market Value. The current debt limitation for the City of Cottage Grove is $108,634,434. Of that limit, $12,645,000 of the City's outstanding debt is counted within the statutory limitation because all other debt is either wholly or partially repaid by revenues other than general property tax levies. Additional information on the City of Cottage Grove's long-term debt can be found in Note 4. 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. 27 (THIS PAGE LEFT BLANK INTENTIONALLY) W. BASIC FINANCIAL STATEMENTS (THIS PAGE LEFT BLANK INTENTIONALLY) City of Cottage Grove Statement of Net Position December 31, 2018 With Comparative Totals for December 31, 2011 Component Unit Primary Government Economic Totals Governmental Business -Type Total Primary Development Reporting Entitiy Activities Activities Government Authority 2018 2017 Assets Cash and investments (including cash equivalents) $ 39,215,472 $ 8,229,249 $ 47,444,721 $ 185,531 $ 47,630,252 $ 46,880,341 Interest receivable 173,384 - 173,384 - 173,384 164,513 Due from other governments 890,461 17,507 907,968 - 907,968 3,353,169 Accounts receivable 762,533 1,826,496 2,589,029 2,569 2,591,598 1,992,106 Prepaid items 340,934 165,891 506,825 625 507,450 360,383 Property tax receivable 152,921 - 152,921 1,288 154,209 149,550 Loan receivable - - 130,679 130,679 358,943 Special assessments receivable 6,936,460 6,936,460 - 6,936,460 6,212,014 Inventories 146,261 - 146,261 146,261 127,655 Internal balances (3,411,764) 3,411,764 - - - - Property held for resale 267,498 - 267,498 308,718 576,216 579,216 Fire relief pension asset 822,968 - 822,968 - 822,968 947,562 Capital assets not being depreciated Land 18,105,944 479,785 18,585,729 18,585,729 18,585,728 Easements 1,157,202 - 1,157,202 1,157,202 1,157,202 Construction in progress 13,473,244 - 13,473,244 13,473,244 14,238,389 Capital assets net of accumulated depreciation Land improvements - 27,469 27,469 27,469 28,263 Buildings and improvements 27,187,661 1,366,155 28,553,816 28,553,816 20,787,631 Equipment and furniture 191,418 - 191,418 191,418 208,915 Machinery and equipment 4,976,273 975,910 5,952,183 5,952,183 5,638,909 Other improvements 4,798,661 5,516,922 10,315,583 10,315,583 9,952,502 Infrastructure 121,284,935 55,456,016 176,740,951 176,740,951 160,647,159 Total assets 237,472,466 77,473,164 314,945,630 629,410 315,575,040 292,370,150 Deferred Outflows of Resources Deferred outflows of resources related to pensions 7,155,481 939,200 8,094,681 24,689 8,119,370 10,120,352 Total assets and deferred outflows ofresources $ 244,627,947 $ 78,412,364 $ 323,040,311 $ 654,099 $ 323,694,410 $ 302,490,502 Liabilities Accounts payable $ 3,307,226 $ 160,499 $ 3,467,725 $ 20,042 $ 3,487,767 $ 2,880,309 Salaries and benefits payable 771,765 88,716 860,481 10,518 870,999 772,222 Contracts payable 569,015 - 569,015 - 569,015 468,314 Due to other governments 51,666 74,225 125,891 156,039 281,930 1,323,445 Deposits payable 1,573,325 - 1,573,325 - 1,573,325 1,972,663 Unearned revenue 47,913 47,913 47,913 47,368 Interest payable 468,364 468,364 468,364 450,696 Bonds payable, net of unamortized premium - Due within one year 2,420,000 2,420,000 2,420,000 2,115,000 Due in more than one year 36,499,104 - 36,499,104 36,499,104 32,770,703 Compensated absences payable - Due within one year 659,093 75,441 734,534 5,513 740,047 758,826 Due in more than one year 262,992 17,260 280,252 - 280,252 270,618 Net pension liability 8,756,790 1,168,520 9,925,310 115,484 10,040,794 11,595,222 Total OPEB liability 285,395 41,463 326,858 3,719 330,577 104,525 Total liabilities 55,672,648 1,626,124 57,298,772 311,315 57,610,087 55,529,911 Deferred Inflows of Resources Deferred inflows of resources related to pensions 9,257,467 1,254,634 10,512,101 28,636 10,540,737 11,502,189 Deferred inflows of resources related to OPEB 11,207 1,629 12,836 146 12,982 Total deferred inflows of resources 9,268,674 1,256,263 10,524,937 28,782 10,553,719 11,502,189 Net Position Net Investment in capital assets 152,256,234 63,822,257 216,078,491 - 216,078,491 196,358,995 Restricted for Forfeiture and seizure 36,443 - 36,443 36,443 24,722 Debt retirement 6,032,331 6,032,331 6,032,331 2,828,174 Tax increment purposes 108,825 108,825 108,825 2,611 Economic development - - - 314,002 314,002 - Umestricted 21,252,792 11,707,720 32,960,512 32,960,512 36,243,900 Total net position 179,686,625 75,529,977 255,216,602 314,002 255,530,604 235,458,402 Total liabilities, deferred inflows of resources, and net position $ 244,627,947 $ 78,412,364 $ 323,040,311 $ 654,099 $ 323,694,410 $ 302,490,502 The notes to financial statements are an integral part of this statement. 29 City of Cottage Grove Statement of Activities For the Year Ended December 31, 2018 With Comparative Totals for the Year Ended December 31, 2017 Functions/Programs Primary Government Governmental activities General government Community development Public safety Economic Development Public works Culture and recreation Interest and fiscal charges on long-term deb Total governmental activitie: Business type activities Street lights Cottage Grove EMS Water operating Sewer operating Total business -type activities Total primary govennneni Component Unit Economic Development Authority Expenses Program Revenue, Operating Grants Capital Grants Charges for and and Services Contributions Contributions $ 2,573,693 $ 319,999 $ 206,385 $ - 1,626,960 1,758,096 - - 9,353,309 360,609 456,804 1,769,041 275,927 210 332,921 10,752 8,559,929 3,932,082 2,408,303 11,230,050 5,035,903 3,376,799 306,273 889,538 1,037,986 - - - 28,463,707 9,747,795 3,710,686 13,899,381 991,041 821,512 - 346,242 1,605,779 2,006,555 2,350 - 2,980,080 2,144,652 - 2,185,209 2,881,446 2,685,608 - 1,956,986 8,458,346 7,658,327 2,350 4,488,437 $ 36,922,053 $ 17,406,122 $ 3,713,036 $ 18,387,818 $ 1,139,586 $ 1,454,739 $ - $ - General revenues Property taxes Franchise taxes Aggregate taxes Tax increment collections Grants and contributions not restricted to specific program; Unrestricted investment earnings Gain on sale of assel Transfers Total general revenues and transfer; Change in net position Net position - beginning, as previously statec Change in accounting principle (See Note 15] Net position - beginning, as restat& Net position - ending The Notes to the Financial Statements are an integral part of this statement 30 Component Net (Expense) Revenues and Changes in Net Position Unit Primary Government Economic Governmental Business -Type Development Activities Activities 2018 2017 Authority $ (2,047,309) $ - $ (2,047,309) $ (2,116,727) $ - 131,136 - 131,136 713,079 - (6,766,855) - (6,766,855) (8,254,344) - 67,956 - 67,956 (47,702) - 9,010,506 - 9,010,506 5,040,025 - (463,293) - (463,293) (1,151,668) - (1,037,986) - (1,037,986) (962,772) - (1,105,845) - (1,105,845) (6,780,109) - - 176,713 176,713 (159,844) - - 403,126 403,126 (60,943) - - 1,349,781 1,349,781 (902,543) - - 1,761,148 1,761,148 (402,880) - - 3,690,768 3,690,768 (1,526,210) - (1,105,845) 3,690,768 2,584,923 (8,306,319) - 315,153 15,171,020 - 15,171,020 14,483,061 125,040 567,875 - 567,875 560,492 - 20,791 - 20,791 28,442 - 769,475 - 769,475 1,002,046 - - 143,831 - 519,675 152,466 672,141 450,638 7,193 71,631 - 71,631 - - (4,126,962) 4,126,962 - - - 12,993,505 4,279,428 17,272,933 16,668,510 132,233 11,887,660 7,970,196 19,857,856 8,362,191 447,386 168,000,121 67,589,004 235,589,125 227,226,934 (130,723) (201,156) (29,223) (230,379) - (2,661) 167,798,965 67,559,781 235,358,746 227,226,934 (133,384) $ 179,686,625 $ 75,529,977 $ 255,216,602 $ 235,589,125 $ 314,002 31 City of Cottage Grove Balance Sheet - Governmental Funds December 31, 2018 With Comparative Totals for December 31, 2017 Debt Service Capital Projects Pavement Management Debt Municipal General Fund Closed Debt Service (488, 490, Building Fund (100) Fund (300) 491, 492, 493) (525) Assets Cash and investments $ 11,654,293 $ 292,819 $ 2,528,973 $ 538,828 Interest receivable 173,384 - - - Interfundreceivable - 1,470,121 - - Interfund loan receivable - - - - Due from other governments 139,632 - - - Accounts receivable 166,203 - - 190 Prepaid items 47,532 - - - Inventories - - - - Taxes receivable - delinquent 135,391 1,684 5,604 4,012 Special assessments receivable Deferred 3,714 310,596 3,039,809 - Delinquent 746 6,370 8,613 - Special deferred - 5,249 19,112 - Property held for resale - - - - Total assets $ 12,320,895 $ 2,086,839 $ 5,602,111 $ 543,030 Liabilities Accounts payable $ 215,766 $ - $ - $ 19,353 Salaries and benefits payable 631,790 - - - Interfund payable - - - - Contracts payable - - - 26,316 Due to other governments 41,042 - - - Deposits payable 500 - - 2,000 Unearned revenue 46,400 - - - Interf ind loan payable - - - 3,280,000 Total liabilities 935,498 - - 3,327,669 Deferred Inflows of Resources Unavailable revenue - tax increment - - - - Unavailable revenue - property taxes 135,391 1,684 5,604 4,012 Unavailable revenue - special assessments 4,460 322,215 3,067,534 - Unavailable revenue - intergovernmental - - - - Unavailable revenue - other - - - 1,513 Total deferred inflows of resources 139,851 323,899 3,073,138 5,525 Fund Balances Nonspendable 47,532 - - - Restricted - - 2,528,973 - Committed - - - - Assigned 1,383,065 1,762,940 - - Unassigned 9,814,949 - - (2,790,164) Total fund balances 11,245,546 1,762,940 2,528,973 (2,790,164) Total liabilities, deferred inflows of resources and fund balances $ 12,320,895 $ 2,086,839 $ 5,602,111 $ 543,030 The notes to the financial statements are an integral part of this statement. 32 ects Totals Pavement MSA Management 2016 Nonmajor Construction Future Projects Capital Project Improvement Governmental (520) (510,810) (560) Projects(568) Funds 2018 2017 $ - $ 2,752,582 $ 1,654,305 $ - $ 17,679,897 $ 37,101,697 36,190,587 - - - - - 173,384 164,513 - 265,675 - - 475,622 2,211,418 4,276,885 - - - - 837,232 837,232 1,118,467 176,174 373,533 - - 201,122 890,461 3,327,971 18,397 - - - 577,743 762,533 599,270 - - - - 10,889 58,421 11,577 - - - - 30,297 30,297 30,625 - 65 - - 6,165 152,921 148,269 627,176 - 443,082 2,029,417 328,377 6,782,171 6,120,092 3,973 - - 1,699 - 21,401 29,322 35,568 68,098 4,861 - - 132,888 62,600 267,498 - - - - 267,498 267,498 $ 1,128,786 $ 3,459,953 $ 2,102,248 $ 2,031,116 $ 20,147,344 $ 49,422,322 $ 52,347,676 $ 300,807 $ 2,152,903 $ 65,384 $ 24,166 $ 280,073 $ 3,058,452 $ 2,293,664 - - - - 69,677 701,467 654,182 265,675 - - 1,470,121 475,622 2,211,418 4,276,885 337,170 114,968 - 90,561 - 569,015 463,322 2,103 - - - 7,928 51,073 636,650 - 1,551,241 - 3,455 16,129 1,573,325 1,970,662 - - - - - 46,400 45,900 - - - - 837,232 4,117,232 4,608,467 905,755 3,819,112 65,384 1,588,303 1,686,661 12,328,382 14,949,732 - - - - 519 519 - - 65 - - 5,646 152,402 148,269 666,717 68,098 447,943 2,031,116 328,377 6,936,460 6,212,014 176,174 - - - - 176,174 128,366 - - - - - 1,513 1,468 842,891 68,163 447,943 2,031,116 334,542 7,267,068 6,490,117 - - - - 41,186 88,718 42,202 - - - - 986,327 3,515,300 3,306,203 - - - - 1,383,402 1,383,402 947,486 - - 1,588,921 - 16,093,633 20,828,559 22,890,731 (619,860) (427,322) - (1,588,303) (378,407) 4,010,893 3,721,205 (619,860) (427,322) 1,588,921 (1,588,303) 18,126,141 29,826,872 30,907,827 $ 1,128,786 $ 3,459,953 $ 2,102,248 $ 2,031,116 $ 20,147,344 $ 49,422,322 $ 52,347,676 33 (THIS PAGE LEFT BLANK INTENTIONALLY) 34 City of Cottage Grove Reconciliation of the Balance Sheet to the Statement of Net Position - Governmental Funds December 31, 2018 With Comparative Totals for December 31, 2017 2018 Total Fund Balances - Governmental Funds $ 29,826,872 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not current financial resources and, therefore, are not reported as assets in governmental funds. Cost of capital assets Less accumulated depreciation Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported as liabilities in the funds. Long-term liabilities at year-end consist of - Bond principal payable Unamortized bond premium Net pension liability Compensated absences payable Total OPEB liability Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. Property taxes Special assessments Deferred intergovernmental grants receivable Deferred outflows of resources and deferred inflows of resources are created as a result of various differences related to pensions that are not recognized in the governmental funds. Deferred inflows of resources related to fire relief pensions Deferred inflows of resources related to city pensions Deferred outflows of resources related to fire relief pensions Deferred outflows of resources related to city pensions Deferred inflows of resources related to OPEB The Fire Relief Association net pension asset created through contributions to a defined benefit pension plan which is not recognized in the governmental funds. Governmental funds do not report a liability for accrued interest due and payable. 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 Position Total net position - governmental activities 256,738,675 (66,646,519) (37,925,000) (994,104) (8,412,847) (877,715) (273,624) 152,921 6,936,460 176,174 (10,290) (9,161,890) 227,890 6,854,061 (10,745) 822,968 (468,364) 2017 $ 30,907,827 237,854,862 (63,733,659) (33,900,000) (985,703) (9,813,170) (882,680) (86,517) 148,269 6,212,014 128,366 (139,706) (10,013,497) 115,207 8,775,691 947,562 (450,696) 2,731,702 2,915,951 $179,686,625 $ 168,000,121 The notes to financial statements are an integral part of this statement. 35 City of Cottage Grove Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds For the Year Ended December 31, 2018 With Comparative Totals for the Year Ended December 31, 2017 Debt Service Capital Projects Pavement Management Debt Municipal MSA General Fund Closed Debt Service (488, 490, Building Fund Construction (100) Fund (300) 491, 492, 493) (525) (520) Revenue General property taxes $ 13,382,247 $ 2,340 $ 743,165 $ 251,476 $ Franchise taxes - - - - Aggregate taxes Tax increment collections - - - Special assessments 5,005 38,911 763,887 288,979 Licenses and permits 1,773,543 - - - Direct charges to developers - - Intergovernmental 710,084 2,196,921 Charges for services 1,346,153 - Rent - 52,557 Fines and forfeitures 146,250 - - - - Investment earnings 87,402 20,039 24,069 12,782 33,829 Interest on interfund loan - - - - - Connection Charges Park dedication fees - Donations 19,565 - - Miscellaneous 226,671 - 11,504 1,173,168 Total revenues 17,696,920 61,290 1,531,121 328,319 3,692,897 Expenditures Current General government 2,272,049 3,662 12,232 105,686 Community development 1,594,534 - - - Public safety 7,797,544 - Public works 2,921,283 57,218 Culture and recreation 2,086,427 - Economic development - Capital outlay General government - - Public safety 186,192 2,230,628 - Public works - - 9,047,117 Culture and recreation 5,812 - Debt service Principal retirement - 2,760,000 - - Interest and other charges 476,203 33,850 97,528 Total expenditures 16,863,841 3,662 3,248,435 2,370,164 9,201,863 Excess of revenues over (under) expenditures 833,079 57,628 (1,717,314) (2,041,845) (5,508,966) Other Financing Sources (Uses) Proceeds from sale of capital asset - - - Bond issuance 7,254,875 Bond premium 111,630 Transfers in 541,750 90,701 1,159,367 38,872 1,020,476 Transfers out (960,275) (1,159,367) - - Total other financing sources (uses) (418,525) (1,068,666) 1,159,367 38,872 8,386,981 Net change in fund balances 414,554 (1,011,038) (557,947) (2,002,973) 2,878,015 Fund Balances Beginning of year 10,830,992 2,773,978 3,086,920 (787,191) (3,497,875) End of year $ 11,245,546 $ 1,762,940 $ 2,528,973 $ (2,790,164) $ (619,860) The notes to financial statements are an integral part of this statement. 36 Capital Projects Totals Pavement Management 2016 Nonmajor Future Projects Capital Project Improvement Governmental (510, 810) (560) Projects (568) Funds 2018 2017 $ 64 $ $ $ 787,076 $ 15,166,368 $ 14,649,224 - 567,875 567,875 560,492 20,791 20,791 28,442 - - 769,475 769,475 813,541 35,879 73,026 1,082,193 194,986 2,482,866 2,715,466 - - - - 1,773,543 1,922,934 33,115 - 99,270 132,385 273,200 1,769,041 - 607,359 5,283,405 8,077,051 - - 3,557,158 4,903,311 4,140,390 - 433,713 486,270 435,688 - - - 62,494 208,744 184,942 24,281 17,331 - 241,123 460,856 310,579 - - - 26,474 26,474 52,206 - 2,776,937 2,776,937 2,050,958 - 853,659 853,659 526,936 - 356,833 376,398 556,914 - - - 237,251 1,648,594 1,425,424 1,862,380 90,357 1,082,193 11,592,474 37,937,951 38,724,387 - - - 60,357 2,453,986 2,200,031 - - - - 1,594,534 1,304,601 796,173 - - 66,556 8,660,273 7,798,262 32,819 1,633 220,959 832,697 4,066,609 3,900,347 16,813 - - 2,524,135 4,627,375 4,303,051 - 230,615 230,615 695,356 - - - 24,711 2,692,360 - - - 5,109,180 7,193,780 423,557 71,720 2,178,454 2,742,222 14,463,070 13,922,896 - 575,856 - 765,692 1,347,360 1,285,158 - 835,000 3,595,000 1,915,000 - - - 515,966 1,123,547 900,240 3,961,722 649,209 2,399,413 8,573,240 47,271,549 45,443,433 (2,099,342) (558,852) (1,317,220) 3,019,234 (9,333,598) (6,719,046) 20,563 20,563 19,485 365,125 7,620,000 9,155,000 - - 111,630 289,321 601,965 1,696,322 5,149,453 7,111,644 (1,020,476) - (1,508,885) (4,649,003) (6,135,532) (1,020,476) 601,965 573,125 8,252,643 10,439,918 (3,119,818) 43,113 (1,317,220) 3,592,359 (1,080,955) 3,720,872 2,692,496 1,545,808 (271,083) 14,533,782 30,907,827 27,186,955 $ (427,322) $ 1,588,921 $ (1,588,303) $ 18,126,141 $ 29,826,872 $ 30,907,827 37 City of Cottage Grove Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities - Governmental Funds For the Year Ended December 31, 2018 With Comparative Totals for the Year Ended December 31, 2017 2018 2017 Total net change in fund balances - governmental funds $ (1,080,955) $3,720,872 Amounts reported for governmental activities in the Statement of Activities are different because: Capital outlays are reported in governmental funds as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over the estimated useful lives as depreciation expense. Capital outlays 15,719,296 18,790,548 Developer contributed assets 5,705,740 916,555 Depreciation expense (5,144,639) (4,765,993) Loss on disposal (309,442) (56,361) Compensated absences are recognized as paid in the governmental funds but recognized as the expense is incurred in the Statement of Activities. 4,965 (61,766) OPEB expenses are recognized as paid in the governmental funds but recognized as the expense is incurred in the Statement of Activities. (4,993) (16,186) Principal payments on long-term debt are recognized as expenditures in the governmental funds but as an increase in the net assets in the Statement of Activities. 3,595,000 1,915,000 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. Accrued interest payable (17,668) (194,480) Amortization of bond discounts, premiums and issuance costs 103,229 79,742 Proceeds from long-term debt are recognized as an other financing source in the governmental funds but as a decrease in net assets in the Statement of Activities. (7,620,000) (9,155,000) The governmental funds report the effect of premiums, discounts and similar items when debt is first issued, whereas these amounts are deferred and amortized in the Statement of Activities. Bond discounts and premiums (111,630) (289,321) Governmental funds recognized pension contributions as expenditures at the time of payment whereas the Statement of Activities factors in items related to pensions on a full accrual perspective. 447,803 (1,063,880) Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. Property taxes 4,652 22,342 Special assessments 724,446 (1,403,519) Loans and grants receivable 47,808 (11,077) Internal service funds are used by management to charge to cost of insurance to individual funds. This amount is net revenue (loss) attributable to governmental funds. (175,952) 37,197 Change in net position - governmental activities $ 11,887,660 $ 8,464,673 The notes to financial statements are an integral part of this statement. 38 City of Cottage Grove Statement of Net Position - Proprietary Funds December 31, 2018 Business -Type Activities - Enterprise Funds Governmental Cottage Grove Water Sewer Activities - Street Light EMS Fund Operating Operating Internal Service Fund(630) (660) (610) (620) Total Funds Assets Current Assets Cash and investments $ 773,101 $ 695,113 $ 4,696,115 $ 2,064,920 $ 8,229,249 2,113,775 Accounts receivable 150,444 796,533 372,064 507,455 1,826,496 - Interfund loan receivable - - 447,500 - 447,500 Due from other governments 7,112 10,395 17,507 - Inventories - - - - 115,964 Prepaid items - 4,189 2,730 158,972 165,891 282,513 Total current assets 923,545 1,495,835 5,525,521 2,741,742 10,686,643 2,512,252 Noncurrent Assets Interfund loan receivable - 2,832,500 2,832,500 - Capital assets Land and land improvements 364,803 154,785 519,588 424,665 Buildings and improvements 4,089,713 - 4,089,713 928,870 Equipment and fumiture - - - 245,550 Machinery and equipment 109,567 1,026,264 1,074,005 269,175 2,479,011 378,922 Other improvements 8,411,857 - - - 8,411,857 - Water and sewer lines - - 45,664,858 30,873,790 76,538,648 Total capital assets 8,521,424 1,026,264 51,193,379 31,297,750 92,038,817 1,978,007 Accumulated depreciation (2,947,686) (400,291) (16,646,078) (8,222,505) (28,216,560) (894,825) Net capital assets 5,573,738 625,973 34,547,301 23,075,245 63,822,257 1,083,182 Total noncurrent assets 5,573,738 625,973 34,547,301 25,907,745 66,654,757 1,083,182 Total assets 6,497,283 2,121,808 40,072,822 28,649,487 77,341,400 3,595,434 Deferred Outflows of Resources Deferred outflows of resources related to pensions 9,760 818,427 86,851 24,162 939,200 73,530 Total assets and deferred outflows ofresources $ 6,507,043 $ 2,940,235 $40,159,673 $ 28,673,649 $ 78,280,600 $ 3,668,964 Liabilities Current Liabilities Accounts payable $ 54,670 $ 11,443 $ 60,800 $ 33,586 $ 160,499 $ 287,793 Salaries payable 4,248 44,822 30,747 8,899 88,716 31,279 Due to other governments - 5,624 18,901 49,700 74,225 593 Compensated absences payable - 30,511 33,629 11,301 75,441 30,599 Total current liabilities 58,918 92,400 144,077 103,486 398,881 350,264 Noncurrent Liabilities Compensated absences payable - 10,124 5,277 1,859 17,260 13,771 Net pension liability 45,655 603,596 406,252 113,017 1,168,520 343,943 Total OPEB liability 1,977 22,407 13,078 4,001 41,463 11,771 Total noncurrent liabilities 47,632 636,127 424,607 118,877 1,227,243 369,485 Total liabilities 106,550 728,527 568,684 222,363 1,626,124 719,749 Deferred Inflows of Resources Deferred inflows of resources related to pensions 11,321 1,114,550 100,738 28,025 1,254,634 85,287 Deferred inflows of resources related to OPEB 78 880 514 157 1,629 462 Total deferred inflows of resources 11,399 1,115,430 101,252 28,182 1,256,263 85,749 Net Position Net investment in capital assets 5,573,738 625,973 34,547,301 23,075,245 63,822,257 1,083,182 Unrestricted 815,356 470,305 4,942,436 5,347,859 11,575,956 1,780,284 Total net position 6,389,094 1,096,278 39,489,737 28,423,104 75,398,213 2,863,466 Total liabilities deferred inflows of resources, and net position $ 6,507,043 $ 2,940,235 $40,159,673 $ 28,673,649 $ 78,280,600 $ 3,668,964 Net Position Proprietary Funds 75,398,213 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. 131,764 Net position business -type activities $ 75,529,977 The notes to financial statements are an integral part of this statement. 39 Operating Revenue Charges for services - user fees Water meter/street light material sales Insurance refunds and reimbursements Total operating revenues Operating Expenses Personal services Commodities Commodities - items for resale Contractual services Disposal - contractual services - MCES Claims Depreciation Total operating expenses Operating income (loss) Nonoperating Revenues (Expenses) Investment earnings Interest on interfund debt Loss on disposal of property Miscellaneous Total nonoperating revenues (expenses) Income (loss) before capital contributions and transfers Capital contributions Transfers out Change in net position City of Cottage Grove Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary Funds For the Year Ended December 31, 2018 Business -Type Activities - Enterprise Funds Governmental Cottage Grove Activities - Street Light EMS Fund Water Sewer Internal Service Fund (630) (660) Operating (610) Operating (620) Total Funds $ 596,429 $ 2,006,555 $ 2,049,242 $ 2,632,931 $ 7,285,157 $ 3,706,816 155,800 - 79,502 - 235,302 - 128,806 752,229 2,006,555 2,128,744 2,632,931 7,520,459 3,835,622 62,488 1,240,701 704,491 214,373 2,222,053 2,350,813 65,458 80,624 503,432 17,573 667,087 780,533 154,522 - - - 154,522 - 524,172 181,313 796,510 316,588 1,818,583 702,485 - - - 1,814,217 1,814,217 - - - - - - 194,706 180,229 86,731 957,423 506,502 1,730,885 69,173 986,869 1,589,369 2,961,856 2,869,253 8,407,347 4,097,710 (234,640) 417,186 (833,112) (236,322) (886,888) (262,088) 12,384 12,931 64,890 28,411 118,616 30,645 - - 5,525 28,325 33,850 - - (2,032) - - (2,032) - 69,283 2,350 15,908 52,677 140,218 6,524 81,667 13,249 86,323 109,413 290,652 37,169 (152,973) 430,435 (746,789) (126,909) (596,236) (224,919) 607,571 - 5,590,684 2,917,594 9,115,849 (47,220) (94,430) (171,800) (187,000) (500,450) 407,378 336,005 4,672,095 2,603,685 8,019,163 (224,919) Net Position Beginning of year, as previously stated 5,983,109 776,066 34,826,859 25,822,239 67,408,273 3,096,682 Change in Accounting Principle (see Note 15) (1,393) (15,793) (9,217) (2,820) (29,223) (8,297) Beginning of year, as restated 5,981,716 760,273 34,817,642 25,819,419 67,379,050 3,088,385 End of year $ 6,389,094 $ 1,096,278 $ 39,489,737 $ 28,423,104 $ 75,398,213 $ 2,863,466 Change in net position reported above $ 8,019,163 Adjustment to reflect the consolidation of internal service fund activity related to enterprise funds (48,967) Change in net position of business -type activities 7,970,196 The notes to financial statements are an integral part of this statement. 40 City of Cottage Grove Statement of Cash Flows - Proprietary Funds For the Year Ended December 31, 2018 Business -Type Activities - Enterprise Funds Governmental Cottage Grove Water Sewer Activities - Street Light EMS Fund Operating Operating Internal Fund(630) (660) (610) (620) Total Service Fund Cash Flows - Operating Activities Receipts from customers and users $ 719,468 $ 1,676,885 $ 2,112,838 $ 2,582,279 $ 7,091,470 3,706,816 Receipts from insurance refunds and reimbursements - 128,806 Payments to suppliers (731,816) (263,533) (1,426,725) (2,136,668) (4,558,742) (1,782,415) Payments to employees (82,698) (1,201,729) (676,662) (186,284) (2,147,373) (2,351,519) Miscellaneous revenue 69,283 2,350 15,908 52,677 140,218 6,524 Net cash flows - operating activities (25,763) 213,973 25,359 312,004 525,573 (291,788) Cash Flows - Noncapital Financing Activities Transfer to other funds (47,220) (94,430) (171,800) (187,000) (500,450) Cash Flows - Capital Related Financing Activities Acquisition of capital assets (97,643) (281,519) (4,991) (384,153) (89,023) Cash Flows - Investing Activities Interest and dividends received 12,383 12,931 64,891 28,411 118,616 30,645 Interest on interfund loan - - 5,525 28,325 33,850 - Payment received on interfund loan - - 210,000 - 210,000 - Net cash flows - investing activities 12,383 12,931 280,416 56,736 362,466 30,645 Net change in cash and cash equivalents (158,243) (149,045) 128,984 181,740 3,436 (350,166) Cash and Cash Equivalents January 1 931,344 844,158 4,567,131 1,883,180 8,225,813 2,463,941 December31 $ 773,101 $ 995,113 $ 4,6 66,115 $ 2,0 44,920 $ 8, 229,249 $ 2, 113,775 Reconciliation of Operating Income (Loss) to Net Cash Flows - Operating Activities Operating income (loss) $ (234,640) $ 417,186 $ (833,112) $ (236,322) $ (886,888) (262,088) Adjustments to reconcile operating income (loss) to net cash flows - operating activities Depreciation expense 180,229 86,731 957,423 506,502 1,730,885 69,173 Miscellaneous revenue 69,283 2,350 15,908 52,677 140,218 6,524 Pension expense (16,419) 33,100 22,626 24,460 63,767 (4,685) Receivables (32,761) (329,670) (15,906) (50,652) (428,989) Prepaid items 248 (1,948) (793) (7,787) (10,280) (89,813) Inventory - - - (18,934) Accounts payable 13,082 3,494 (143,415) (8,062) (134,901) 4,345 Due to other governmental units (994) (3,142) 17,425 27,559 40,848 (289) Salaries payable 1,880 (1,351) 2,677 2,890 6,096 11,927 Compensated absences payable (5,708) 6,814 2,286 666 4,058 (8,162) OPEB expense 37 409 240 73 759 214 Total adjustments 208,877 (203,213) 858,471 548,326 1,412,461 (29,700) Net cash flows - operating activities $ (25,763) $ 213,973 $ 25,359 $ 312,004 $ 525,573 $ (291,788) Noncash Investing, Capital, and Financing Activities Capital asset contributions from governmental activities $ 261,329 $ $ 3,405,475 $ 960,608 $ 4,627,412 $ Capital asset contributions from developers 346,242 2,185,209 1,956,986 4,488,437 Loss on disposal of capital asset - (2,032) - - (2,032) The notes to financial statements are an integral part of this statement. 41 (THIS PAGE LEFT BLANK INTENTIONALLY) 42 City of Cottage Grove Notes to Financial Statements NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Cottage Grove was incorporated in 1974 and operates under the State of Minnesota Statutory Plan A form of government. The governing body consist 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 generally accepted accounting principles in the United States of America, as applied to governmental units by the Governmental Accounting Standards Board (GASB). The following is a summary of the significant accounting policies. A. Financial Reporting Entity As required by generally accepted accounting principles, the financial statements of the reporting entity include those of the City of Cottage Grove (the primary government) and its component unit. The component unit discussed below is included in the City's reporting entity because of the significance of its operational and financial relationship with the City. Component Unit The Economic Development Authority (EDA) is considered a component unit of the City because the Council appoints the members of the governing authority and because the EDA is in a relationship of financial benefits or burden to the City. It is governed by a board which is made up of two City council members and five other members. The EDA provides services to the City and to potential future business owners within the City. The financial position and results of operations of the EDA component unit is discretely presented in the primary government's basic financial statements. The EDA is reported in a separate column to emphasize that it is legally separate from the City. The component unit activity is reported on the modified accrual basis of accounting. Separate financial statements are not prepared for the EDA. B. Government -Wide and Fund Financial Statements The government -wide financial statements (i.e., the Statement of Net Position and 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 by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or business -type activity, are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or business -type activity. Program revenues include: 1) charges to customers or applicants who purchase, use or directly benefit from goods, service 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 in program revenues are reported instead as general revenues. 43 City of Cottage Grove Notes to Financial Statements NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Government -Wide and Fund Financial Statements (Continued) 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. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers all revenues, except reimbursement grants, to be available if they are collected within 60 days of the end of the current fiscal period. Reimbursement grants are considered available if they are collected within one year of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting except for debt service expenditures, as well as expenditures related to compensated absences, 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 City. The government reports the following major governmental funds: General Fund — is the City's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. Municipal Building Capital Project Fund — accounts for the accumulation of resources and construction or remodeling costs of municipal buildings and facilities. MSA Construction Capital Project Fund — accounts for projects related to Municipal State Aids. City of Cottage Grove Notes to Financial Statements NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) Closed Debt Fund — accounts for the accumulation of residual resources from debt funds that have been closed as the associated debt has been satisfied. Future Projects Fund — accounts for the preliminary expenditures of projects which do not have a source of funding or which have most of their funding from non -city sources. Pavement Management Debt Service Fund — accounts for debt service payments used to finance the City's various pavement management projects. Revenue is accumulated from both special assessments and property taxes. Pavement Management Capital Project Fund — accounts for pavement management construction projects. 2016 Improvement Projects — accounts for the 2016 improvement projects. The government reports the following major proprietary funds: Street Light Fund — accounts for customer street light and service charges which are used to finance street light operating expenses. Cottage Grove EMS Fund — accounts for the operation of the Cottage Grove ambulance service that serves the cities of Cottage Grove, Newport, Saint Paul Park, and Grey Cloud Island. Water Operating Fund — accounts for customer water service charges which are used to finance water operating expenses. Sewer Operating Fund — accounts 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 information services 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 similarity 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. 45 City of Cottage Grove Notes to Financial Statements NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) Amounts reported as program revenues include 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 revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from non -operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenue of the water, sewer, ambulance, and street light enterprise funds are charges to customers for sales and services. The ambulance fund operating revenues are net of write offs 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 nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, and then unrestricted resources as needed. D. Budgets Budgets are adopted on a basis consistent with U.S. generally accepted accounting principles. 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. Per statute, public meetings are held to receive taxpayer comments. 3. 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. 4. The City Administrator is authorized to transfer appropriations within any department budget up to $2,500. Additional interdepartmental or interfund appropriations and deletions are authorized by the City Council with expenditure reductions, fund (contingency) reserves or additional revenues. The City Council may authorize transfers of budgeted amounts between City funds. 46 City of Cottage Grove Notes to Financial Statements NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. Legal Compliance — Budgets (Continued) 5. 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. 6. Legal debt obligation indentures determine the appropriation level and debt service tax levies for the Debt Service Funds. Supplementary budget are adopted for the Proprietary Funds to determine and calculate user charges. These are not reflected in the financial statements. 7. 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 bud award of the improvement. The appropriations are not reflected in the financial statements. 8. 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. The following is a listing of expenditure categories that exceed budget appropriations for nonmajor funds: Final Budget Actual Over Budget Nonmajor Funds: Recycling $ 56,445 $ 69,410 $ 12,965 Forfeiture/Seizure 28,620 66,556 37,936 Ice Arena 1,035,505 1,234,603 199,098 Golf Course 1,745,410 1,749,640 4,230 F. Deposits and Investments Cash and investments include balances from all funds are pooled and invested to the extent available in authorized investments. Earnings from investments are allocated to the 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. Certain investments for the City are reported at fair value as disclosed in Note 3. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The Hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. 47 City of Cottage Grove Notes to Financial Statements NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) F. Deposits and Investments (Continued) For purposes of the statement of cash flows for the proprietary funds, cash equivalents are considered to be all highly liquid investments with a maturity of three months or less when purchased. All of the cash and investments allocated to the proprietary funds have original maturities of 90 days or less. Therefore, the entire balances in such funds are considered cash equivalents. G. Receivables and Payables During 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, 2018 are planned to be eliminated in 2018. Long- term interfund loans are classified as "interfund loans receivable/payable." Any residual balances outstanding between the governmental activities and business -type activities are reported in the government -wide financial statements as "internal balances." 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. Such taxes 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 taxes received by the City in July, December and January are recognized as revenue for the current year. Taxes collected by the County by December 31 (remitted to the City 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 inflows of resources because they are not available to finance current expenditures. City of Cottage Grove Notes to Financial Statements NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 cost of administering all tax forfeit properties. Pursuant to State Statues, 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 inflows of resources. J. Inventories Inventories are stated at cost, which approximates market, using the first -in, first -out (FIFO) method and consist of items for resale, expendable supplies, and vehicle repair parts. The cost of such inventories is recorded as expenditures/expenses when consumed rather than when purchased in both government - wide and fund financial statements. K. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government -wide and fund financial statements. The cost of prepaid items are recorded as expenditures/expenses when consumed rather than when purchased. City of Cottage Grove Notes to Financial Statements NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) L. Allowance for Uncollectible The City directly bills for 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, 2018 were $330,000. 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 government 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 more than one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation. The costs of normal maintenance and repair which 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, 2018, no interest was capitalized in connection with construction in progress. Capital assets not being depreciated include land, easements and construction in progress. Property, plant and equipment of the primary government, as well as the component units, is depreciated using the straight-line method over the following estimated useful lives: Assets Years Buildings and improvements 20-50 Equipment and furniture 3-10 Machinery and equipment 5-20 Other improvements 5-20 Streets 50 Storm sewers 50 Sidewalks 50 Trails 20 Street lights 50 Water and sewer lines 50 50 City of Cottage Grove Notes to Financial Statements NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) N. Capital Assets (Continued) Capital assets of the water and sewer utility operations include the water distribution system and sewage collection system. These systems have been wholly (or substantially) financed by non -operating funds (special assessments, general taxes, federal and state grants, and other sources) and contributed to the sewer and water operating funds. City policy is to finance these assets by the sources indicated rather than by user charges. Accordingly, the water and sewer user rates are not established at levels sufficient to cover depreciation on these assets. O. Deferred Outflows and Inflows of Resources In addition to liabilities, the statement of financial position and Fund Financial statements will sometimes report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City presents deferred inflows of resources on the Governmental Fund Balance Sheet as unavailable revenues. These amounts are deferred and recognized as an inflow of resources in the period that the amounts became available. The City presents deferred inflows of resources on the Statements of Net Position for amounts related to pensions and OPEB. In addition to assets, the statements of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of net position that applies to future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until that time. The City presents deferred outflows of resources on the Statements of Net Position for amounts related to pensions. P. Compensated Absences It is the City's policy to permit employees to accumulate earned but unused annual leave benefits Under the City's personnel policies and collective bargaining agreements, city employees are granted annual leave benefits in varying amounts based on length of service. Annual Leave accruals vary from 18 to 26 days per year. As benefits accrue to employees, the accumulated leave amounts are reported as an expense and liability in the 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 accumulated leave benefits. However, a liability is recognized for that portion of accumulating leave benefits that is vested as severance pay. Q. Long -Term Obligations In the government -wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund type Statement of Net Position. Bond premiums are deferred and amortized over the life of the bonds. 51 City of Cottage Grove Notes to Financial Statements NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) R. Pensions For purposes of measuring the net pension liability, deferred outflows/inflows of resources, and pension expense, information about the fiduciary net position of the Public Employees Retirement Association (PERA) and additions to/deductions from PERA's fiduciary net position have been determined on the same basis as they are reported by PERA except that PERA's fiscal year end is June 30. For this purpose, plan contributions are recognized as of employer payroll paid dates and benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. S. 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 and inventory. 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 internal 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 the City 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 expenditures to provide sufficient working capital and margin of safety to address local emergencies without borrowing. 52 City of Cottage Grove Notes to Financial Statements NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) T. Net Position Net position represents the difference between assets and deferred outflows of resources; and liabilities and deferred inflows of resources in the government -wide financial statements. Net investment in capital assets, consists of capital assets, net of accumulated depreciation, reduced by the outstanding balance of any long-term debt used to build or acquire the capital assets. Net position is reported as restricted in the government -wide financial statement when there are limitations on use through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. U. 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. V. Use of Estimates The preparation of financial statements in accordance with U.S. generally accepted accounting principles (GAAP) requires management to make estimates that affect the amounts reported in the financial statements during the reporting period. Actual results could differ from such estimates. W. Comparative Data Summarized comparative data for the previous year has been presented only for certain sections of the accompanying financial statements in order to provide an understanding of the changes in the City's financial position and operations. Certain reclassifications have been made to prior year data to conform to the current year presentation. The reclassifications had no effect on the change in net position or total net position as previously reported. NOTE 2 — DEPOSITS AND INVESTMENTS A. Deposits The City maintains a cash and investment pool that is available for use by all funds. Each fund type's portion of this pool is displayed on the statement of net position and balance sheets as "Cash and Investments." Custodial Credit Risk — Custodial credit risk for deposits is the risk that in the event of a bank failure, the City will not be able to recover its deposits. Neither the City nor the Cottage Grove Economic Development Authority, a discretely presented component unit, has a deposit policy for custodial credit risk — deposits beyond the requirements of state statutes. As of December 31, 2018, all of the deposits were insured or collateralized by securities held by the City or its agent in the City's name. 53 City of Cottage Grove Notes to Financial Statements NOTE 2 — DEPOSITS AND INVESTMENTS (CONTINUED) A. Deposits (Continued) 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 includes: 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 department of a commercial bank or other financial institution not owned or controlled by the depository. B. Investments Minnesota Statutes and the City's investment policy authorize the City to invest in the following: a) Direct obligations or obligations guaranteed by the United States or its agencies, its instrumentalities or organizations created by an act of congress, excluding mortgage -backed securities defined as high risk. b) General Obligations of the State of Minnesota or any of its municipalities as follow: 1) General obligation of any state or local government with taxing powers which is rated "A" or better by a national bond rating service; 2) Revenue obligation of any state or local government with taxing powers which is rated "AA" or better by a national bond rating service; and 3) General obligation of the Minnesota Housing Finance Agency rated "A" or better by a national bond rating agency. c) Bankers' acceptance of United States banks eligible for purchase by the Federal Reserve System. d) Commercial paper of the highest quality (A I, P1), and maturing in 270 days or less. e) Repurchase agreements from national or state banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000; a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York. f) Certificates of Deposit collateralized by FDIC or FSLIC insurance. Deposits exceeding $250,000 insurance shall be covered by a surety bond or collateralized with U.S. Treasury or agency securities computed at fair value which shall be at least 10% more than the amount of each deposit in excess of the insured portions. All collateral shall be assigned to the City from the depository. g) Shares of mutual funds holdings pursuant to M.S. 118A.04. The City participates in the Minnesota Municipal Money Market Fund (4M Fund) whereby, the fair value of the position in the pool is the same as the value of the pool shares owned. 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. 54 City of Cottage Grove Notes to Financial Statements NOTE 2 — DEPOSITS AND INVESTMENTS (CONTINUED) B. Investments (Continued) Investment Maturities Credit Risk Fair Less than Investment Type Value One Year 1-5 Years 6-10 Years Rating Agency U.S. Agencies Federal Home Loan Bank - FHLB $ 5,229,768 $ 1,488,010 $ 3,741,758 $ AA+/Aaa S&P/Moody's Fannie Mae - FNMA 3,425,820 1,989,860 1,435,960 AA+/Aaa S&P/Moody's Freddie Mac - FHLMC 6,184,394 1,742,080 3,959,984 482,330 AA+/Aaa S&P/Moody's Federal Farm Credit bank 1,963,890 - 1,963,890 - AA+/Aaa S&P/Moody's US Treasury 2,538,211 2,538,211 - NR/Aaa S&P/Moody's Municipal Obligations 5,124,784 2,258,201 2,866,583 AA+/Aaa S&P/Moody's Negotiable CD's 17,058,276 8,356,391 8,701,885 NR N/A Total Pooled Investments 41,525,143 $ 18,372,753 $ 22,670,060 $ 482,330 Money Markets 5,526,556 Deposits 561,012 Petty Cash and Change 17,541 Total Cash and Investments $ 47,630,252 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 has no custodial credit risk for its investments since all the City's investments held in safekeeping by U.S. Trust in the City's name are insured and registered. 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 (A 1, P 1) and municipal general obligations need an "A" rating or better. Concentration of Credit Risk — The City's investment policy places no limit on the amount that may be invested in any one issuer. The following is a list of investments by issuer which individually comprise more than 5% of the City's total investments: Type Federal Home Loan Bank - FHLB Fannie Mae - FNMA Freddie Mac - FHLMC Fair Value Percent $ 5,229,768 13% 3,425,820 8% 6,184,394 15% 6% The City has the following recurring fair value measurements as of December 31, 2018: • $2,538,211 of $47,051,699 are valued using quoted market prices (Level 1 inputs). • $44,513,490 of $47,051,699 are valued using a matrix pricing model (Level 2 inputs). 55 City of Cottage Grove Notes to Financial Statements NOTE 3 — CAPITAL ASSETS Capital asset activity for the year ended December 31, 2018, was as follows: Primary Government Governmental activities Capital assets not being depreciated Land Permanent easements Construction in progress Total capital assets not being depreciated Capital assets being depreciated Buildings and improvements Equipment and furniture Machinery and equipment Other improvements Infrastructure Streets Storm sewers Sidewalks/trails Total capital assets being depreciated Less accumulated depreciation for Buildings and improvements Equipment and furniture Machinery and equipment Other improvements Infrastructure Streets Stone sewers Sidewalks/trails Total accumulated depreciation Total capital assets being depreciated, net Beginning Ending Balance Increases Decreases Balance $ 18,105,944 $ - $ - $ 18,105,944 1,157,202 - - 1,157,202 14,172,178 19,547,725 20,246,659 13,473,244 33,435,324 19,547,725 20,246,659 32,736,390 36,021,160 9,028,018 2,014,733 43,034,445 1,211,847 67,642 - 1,279,489 12,340,977 1,041,775 526,489 12,856,263 8,895,264 97,457 - 8,992,721 112,066,530 7,948,861 - 120,015,391 30,104,213 3,015,527 - 33,119,740 5,668,531 1,013,712 - 6,682,243 206,308,522 22,212,992 2,541,222 225,980,292 16,714,172 891,754 1,759,142 15,846,784 1,002,932 85,139 - 1,088,071 7,531,744 820,884 472,638 7,879,990 3,856,478 337,582 - 4,194,060 25,842,394 2,309,733 8,345,544 635,616 1,266,047 133,105 64,559,311 5,213,813 28,152,127 8,981,160 1,399,152 2,231,780 67,541,344 141,749,211 16,999,179 309,442 158,438,948 Governmental activities capital assets, net $ 175,184,535 $ 36,546,904 $ 20,556,101 $ 191,175,338 56 City of Cottage Grove Notes to Financial Statements NOTE 3 — CAPITAL ASSETS (CONTINUED) Primary Government Business -type activities Capital assets not being depreciated Land Construction in progress Total capital assets not being depreciated Capital assets being depreciated Land improvements Building and improvements Machinery and equipment Other improvements Water and sewer lines Total capital assets being depreciated Less accumulated depreciation for Land improvements Building and improvements Machinery and equipment Other improvements Water and sewer lines Total accumulated depreciation Total capital assets being depreciated, net Business -type activities capital assets, net Beginning Ending Balance Increases Decreases Balance $ 479,785 $ - $ - $ 479,785 66,211 - 66,211 - 545,996 - 66,211 479,785 39,803 - - 39,803 4,089,713 - - 4,089,713 2,317,397 281,519 119,905 2,479,011 7,640,432 771,425 - 8,411,857 68,030,370 8,508,278 - 76,538,648 82,117,715 9,561,222 119,905 91,559,032 11,539 795 - 12,334 2,609,070 114,488 - 2,723,558 1,487,721 133,253 117,873 1,503,101 2,726,716 168,219 - 2,894,935 19,768,502 1,314,130 - 21,082,632 26,603,548 1,730,885 117,873 28,216,560 55,514,167 7,830,337 2,032 63,342,472 $ 56,060,163 $ 7,830,337 $ 68,243 $ 63,822,257 Depreciation expense was charged to functions/programs of the City as follows: Governmental activities General government Economic development Public safety Public works Culture and recreation Total depreciation expense - governmental activities Business -type activities Street lights Cottage Grove EMS Water operating Sewer operating Total depreciation expense - business -type activities $ 151,053 45,312 768,428 3,443,024 805,996 $ 5,213,813 $ 180,229 86,731 957,423 506,502 $ 1,730,885 57 City of Cottage Grove Notes to Financial Statements NOTE 4 — LONG-TERM DEBT A. General Obligation Debt The City issues general obligation bonds to provide funds for the acquisition and construction of major capital improvements. The City issues special assessment bonds to finance various improvements and will be repaid primarily from special assessments levied on the properties benefiting from the improvements. The reporting entity's long-term debt is segregated between the amounts to be repaid from governmental activities and amounts to be repaid from business -type activities. As of December 31, 2018, the governmental long-term debt of the financial reporting entity consisted of the following: Interest Issue Final Original Principal Rate Date Maturity Issue Outstanding Primary government: Governmental Activities General Obligation Tax Increment Bonds G.O. Tax Increment Bonds of 2004A 3.00-4.65% 7/l/2004 2/l/2024 $ 1,405,000 $ 955,000 G.O. Tax Increment Refunding Bonds of 2014A 2.00-2.50% 5/29/2014 2/1/2021 1,405,000 665,000 Total General Obligation Tax Increment Bonds 2,810,000 1,620,000 G.O. CIP Bonds of 2017A 2.50-3.25% 5/11/2017 2/l/2038 9,155,000 9,155,000 G.O. Refunding Bonds of 2016A 2.00-3.00% 1/28/2016 2/l/2027 4,660,000 3,490,000 Special Assessment Bonds with Government Commitment G.O. Improvement Bonds of 2012A 0.30-2.20% 3/13/2012 2/l/2027 1,865,000 1,145,000 G.O. Improvement Bonds of 2013A 3.00-3.50% 9/26/2013 2/l/2029 7,345,000 5,755,000 G.O. Improvement Bonds of 2015A 2.50-3.00% 5/27/2015 2/l/2031 5,700,000 5,015,000 G.O. Improvement Bondsof2016B 2.00-2.10% 11/16/2016 2/l/2033 4,275,000 4,125,000 G.O. Improvement Bonds of20l8A 01/00/00 6/26/2018 2/l/2035 7,620,000 7,620,000 Total Special Assessment Bonds 26,805,000 23,660,000 Bond premium 994,104 Total Governmental Activities Bonds 43,430,000 38,919,104 Compensated absences payable 922,085 Total - governmental activities 43,430,000 39,841,189 Business Type Activities Compensated absences payable 92,701 Total - primary government $ 39,933,890 Component Unit - EDA Compensated absences payable Total indebtedness - component unit $ 5,513 City of Cottage Grove Notes to Financial Statements NOTE 4 - LONG-TERM DEBT (CONTINUED) B. Minimum Debt Payments Annual debt service requirements to maturity for general obligation bonds are as follows: Year Ending December 31, 2019 2020 2021 2022 2023 2024 Total Year Ending December 31, 2019 2020 2021 2022 2023 2024-2028 2029-2033 2034-2035 Total Year Ending December 31, 2019 2020 2021 2022 2023 2024-2027 Total Tax Increment Bonds Governmental Activities Principal Interest Total $ 260,000 $ 55,190 $ 315,190 275,000 48,820 323,820 265,000 41,540 306,540 255,000 31,872 286,872 275,000 19,810 294,810 290,000 6,743 296,743 $ 1,620,000 $ 203,975 $ 1,823,975 Special Assessment Bonds Governmental Activities Principal Interest Total $ 1,205,000 $ 661,219 $ 1,866,219 1,225,000 607,522 1,832,522 1,655,000 569,088 2,224,088 1,685,000 523,525 2,208,525 1,740,000 476,605 2,216,605 9,045,000 1,640,357 10,685,357 5,885,000 514,704 6,399,704 1,220,000 36,900 1,256,900 $ 23,660,000 $ 5,029,920 $ 28,689,920 G.O. Refunding Bonds Governmental Activities Principal Interest Total $ 610,000 $ 84,150 $ 694,150 330,000 70,050 400,050 340,000 60,000 400,000 350,000 49,650 399,650 355,000 39,075 394,075 1,505,000 62,675 1,567,675 $ 3,490,000 $ 365,600 $ 3,855,600 59 City of Cottage Grove Notes to Financial Statements NOTE 4 - LONG-TERM DEBT (CONTINUED) B. Minimum Debt Payments (Continued) Year Ending December 31, 2019 2020 2021 2022 2023 2024-2028 2029-2033 2034-2038 Total C. Changes in Long -Term Liabilities Primary Government Governmental activities Bonds payable General obligation bonds Special assessment bonds Bond premiums Total bonds payable Compensated absences payable Total governmental activities Business -type activities Compensated absences payable Total primary government Component Unit Economic Development Authority Compensated absences payable G.O. CIP Bonds Governmental Activities Principal Interest Total $ 345,000 $ 260,600 $ 605,600 355,000 250,100 605,100 365,000 239,299 604,299 375,000 228,200 603,200 390,000 216,725 606,725 2,120,000 903,513 3,023,513 2,420,000 600,101 3,020,101 2,785,000 220,462 3,005,462 $ 9,155,000 $ 2,919,000 $ 12,074,000 Beginning Ending Due Within Balance Additions Retirements Balance One Year $ 15,100,000 $ - $ 835,000 $ 14,265,000 $ 1,215,000 18,800,000 7,620,000 2,760,000 23,660,000 1,205,000 985,704 111,630 103,230 994,104 - 34,885,704 7,731,630 3,698,230 38,919,104 2,420,000 935,212 764,113 777,240 922,085 659,093 35,820,916 8,495,743 4,475,470 39,841,189 3,079,093 88,643 90,901 86,843 92,701 75,441 $ 35,909,559 $ 8,586,644 $ 4,562,313 $ 39,933,890 $ 3,154,534 $ 5,589 $ 9,607 $ 9,683 $ 5,513 $ 5,513 City of Cottage Grove Notes to Financial Statements NOTE 4 — LONG-TERM DEBT (CONTINUED) C. Changes in Long -Term Liabilities (Continued) For the governmental activities, compensated absences are generally liquidated by the General Fund. All long-term bonded indebtedness outstanding at December 31, 2018, is backed by the full faith and credit of the City, including special assessment and revenue bond issues. Delinquent assessments receivable at December 31, 2018, totaled $21,401. NOTE 5 — PENSION PLANS The city participates in various pension plans. Total pension expense for the year ended December 31, 2018 was $1,240,745. The components of pension expense are noted in the following plan summaries. Public Employees' Retirement Association A. Plan Description The City of Cottage Grove participates in the following cost -sharing multiple -employer defined benefit pension plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA's defined benefit pension plans are established and administered in accordance with Minnesota Statutes, Chapters 353 and 356. PERA's defined benefit pension plans are tax qualified plans under Section 401(a) of the Internal Revenue Code. General Employees Retirement Plan (General Employees Plan, accounted for in the General Employees Fund) All full-time and certain part-time employees of the City are covered by the General Employees Plan. General Employees Plan members belong to the Coordinated Plan. Coordinated Plan members are covered by Social Security. Public Employees Police and Fire Plan (Police and Fire Plan, accounted for in the Police and Fire Fund) The Police and Fire Plan, originally established for police officers and firefighters not covered by a local relief association, now covers all police officers and firefighters hired since 1980. Effective July 1, 1999, the Police and Fire Plan also covers police officers and firefighters belonging to a local relief association that elected to merge with and transfer assets and administration to PERA. B. Benefits Provided PERA provides retirement, disability, and death benefits. Benefit provisions are established by state statute and can only be modified by the state legislature. 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. 61 City of Cottage Grove Notes to Financial Statements NOTE 5 — PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) B. Benefits Provided (Continued) General Employees Plan Benefits General Employees Plan 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 Plan members. Members hired prior to July, 1 1989, receive the higher of Method 1 or Method 2 formulas. Only Method 2 is used for members hired after June 30, 1989. Under Method 1, the accrual rate for a Coordinated members is 1.2% for each of the first ten years of service and 1.7% for each additional year. Under Method 2, the accrual rate for Coordinated members is 1.7% for all years of service. For members hired prior to July 1, 1989, a full annuity is available when age plus years of service equal 90 and normal retirement age is 65. For members hired on or after July 1, 1989, normal retirement age is the age for unreduced Social Security benefits capped at 66. Benefit increases are provided to benefit recipients each January. Increases are related to the funding ratio of the plan. If the General Employees Plan is at least 90% funded for two consecutive years, benefit recipients are given a 2.5% increase. If the plan has not exceeded 90% funded, or have fallen below 80%, benefit recipients are given a one percent increase. A benefit recipient who has been receiving a benefit for at least 12 full months as of June 30, will receive a full increase. Members receiving benefits for at least one month but less than 12 full months as of June 30, will receive a pro rata increase. Police and Fire Plan Benefits Benefits for the Police and Fire Plan members first hired after June 30, 2010, but before July 1, 2014, vest on a prorated basis from 50% after five years up to 100% after ten years of credited service. Benefits for Police and Fire Plan members first hired after June 30, 2014, vest on a prorated basis from 50% after ten years up to 100% after twenty years of credited service. The annuity accrual rate is 3% of average salary for each year of service. For Police and Fire Plan who were first hired prior to July 1, 1989, a full annuity is available when age plus years of service equal at least 90. Benefit increases are provided to benefit recipients each January. Police and Fire Plan benefit recipients receive a future annual 1.0% increase. An annual adjustment will equal 2.5% any time the plan exceeds a 90% funded ratio for two consecutive years. If the adjustment is increased to 2.5% and the funded ratio falls below 80% for one year or 85% for two consecutive years, the post -retirement benefit increase will be lowered to one percent. A benefit recipient who has been receiving a benefit for at least 12 full months as of June 30 will receive a full increase. Members receiving benefits for at least one month but less than 12 full months as of June 30 will receive a pro rata increase. For retirements after May 31, 2014, the first increase will be delayed two years. 62 City of Cottage Grove Notes to Financial Statements NOTE 5 — PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) C. Contributions Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. Contribution rates can only be modified by the state legislature. General Employees Plan Contributions Coordinated Plan members were required to contribute 6.5%, of their annual covered salary in calendar year 2018. The City was required to contribute 7.5% for Coordinated Plan members in calendar year 2018. The City's contributions to the General Employees Fund for the year ended December 31, 2018, were $482,521. The City's contributions were equal to the required contributions as set by state statute. Police and Fire Fund Contributions Plan members were required to contribute 10.8% of their annual covered salary and the City was required to contribute 16.20% of pay for members in fiscal year 2018. The City's contributions to the Police and Fire Fund for the year ended December 31, 2018, were $803,145. The City's contributions were equal to the required contributions as set by state statute. D. Pension Costs General Employees Fund Pension Costs At December 31, 2018, the City reported a liability of $5,198,092 for its proportionate share of the General Employees Fund's net pension liability. The City's net pension liability reflected a reduction due to the State of Minnesota's contribution of $16 million to the fund in 2018. The State of Minnesota is considered a non -employer contributing entity and the State's contribution meets the definition of a special funding situation. The State of Minnesota's proportionate share of the net pension liability associated with the City totaled $170,553. The net pension liability was measured as of June 30, 2018, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City's proportion of the net pension liability was based on the City's contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2017, through June 30, 2018, relative to the total employer contributions received from all of PERA's participating employers. At June 30, 2018, the City's proportion share was 0.0937%, which was an increase of 0.0047% from its proportion measured as of June 30, 2017. 63 City of Cottage Grove Notes to Financial Statements NOTE 5 — PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) D. Pension Costs (Continued) General Employees Fund Pension Costs (Continued) City's proportionate share of the net pension liability State of Minnesota's proportionate share of the net pension liability associated with the City Total $ 5,198,092 170,553 $ 5,368,645 For the year ended December 31, 2018, the City recognized pension expense of $550,314 for its proportionate share of General Employees Plan's pension expense. Included in the amount, the City recognized $39,773 as pension expense (and grant revenue) for its proportionate share of the State of Minnesota's contribution of $16 million to the General Employees Fund. At December 31, 2018, the City reported its proportionate share of the General Employees Plan's deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Differences between expected and actual economic experience Changes in actuarial assumptions Difference between projected and actual investment earnings Changes in proportion Contributions paid to PERA subsequent to the measurement date Total Deferred Deferred Outflows of Inflows of Resources Resources $ 130,992 $ 142,060 465,281 564,009 - 529,770 273,751 53,121 241,261 $ 1,111,285 $ 1,288,960 $241,261 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2019. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as shown on the following page: City of Cottage Grove Notes to Financial Statements NOTE 5 — PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) D. Pension Costs (Continued) General Employees Fund Pension Costs (Continued) Year Ending December 31, 2019 2020 2021 2022 Total Police and Fire Fund Pension Costs Pension Expense Amount $ 203,204 (179,614) (334,034) (108,492) $ (418,936) At December 31, 2018, the City reported a liability of $4,842,702 for its proportionate share of the Police and Fire Fund's net pension liability. The net pension liability was measured as of June 30, 2018, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City's proportion of the net pension liability was based on the City's contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2017, through June 30, 2018, relative to the total employer contributions received from all of PERA's participating employers. At June 30, 2018, the City's proportion was 0.4582%, which was a decrease of 0.0202% from its proportion measured as of June 30, 2017. The City also recognized $41,238 for the year ended December 31, 2018, as revenue and an offsetting reduction of the net pension liability for its proportionate share of the State of Minnesota's on -behalf contributions to the Police and Fire Fund. Legislation passed in 2013 required the State of Minnesota to begin contributing $9 million to the Police and Fire Fund each year, starting in fiscal year 2014. For the year ended December 31, 2018, the City recognized pension expense of $582,986 for its proportionate share of the Police and Fire Fund pension expense At December 31, 2018, the City of Cottage Grove reported its proportionate share of the Police and Fire Plan's deferred outflows of resources and deferred inflows of resources related to pensions from the sources shown on the following page. 65 City of Cottage Grove Notes to Financial Statements NOTE 5 — PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) D. Pension Costs (Continued) Police and Fire Fund Pension Costs (Continued) Differences between expected and actual economic experience Changes in actuarial assumptions Difference between projected and actual investment earnings Change in proportion Contributions paid to PERA subsequent to the measurement date Total Deferred Deferred Outflows of Inflows of Resources Resources $ 191,831 $ 1,155,528 5,897,028 6,880,039 - 1,000,640 289,763 205,280 401,573 - $ 6,780,195 $ 9,241,487 $401,573 reported as deferred outflows of resources related to pensions resulting from City of Cottage Grove contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2019. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Year Ending December 31, 2019 2020 2021 2022 2023 Total Pension Expense Amount $ (78,643) (293,439) (640,649) (1,879,487) 29,353 $ (2,862,865) City of Cottage Grove Notes to Financial Statements NOTE 5 — PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) E. Actuarial Assumptions The total pension liability in the June 30, 2018, actuarial valuation was determined using the entry age normal actuarial cost method and the following actuarial assumptions: Inflation Active Member Payroll Growth Investment Rate of Return 2.50% per year 3.25% per year 7.50% Salary increases were based on a service -related table. Mortality rates for active members, retirees, survivors, and disabilitants for all plans were based on RP 2014 tables for males or females, as appropriate, with slight adjustments to fit PERA's experience. Cost of living benefit increases after retirement for retirees are assumed to be 1.25% per year for the General Employees Plan and 1.0% per year for the Police and Fire Plan. Actuarial assumptions used in the June 30, 2018, valuation were based on the results of actuarial experience studies. The most recent six -year experience study in the General Employees Plan was completed in 2015. The most recent four-year experience study for Police and Fire Plan was completed in 2016. Economic assumptions were updated in 2017 based on a review of inflation and investment return assumptions. The following changes in actuarial assumptions occurred in 2018: General Employees Fund • The mortality projection scale was changed from MP-2015 to MP-2017. • The assumed benefit increase was changed from 1.0% per year through 2044 and 2.5% per year thereafter to 1.25% per year. Police and Fire Fund • The mortality projection scale was changed from MP-2016 to MP-2017. • As set by statute, the assumed post -retirement benefit increase was changed from 1.0% per year through 2064 and 2.5% per year, thereafter, to 1.0% for all years, with no trigger. The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonableness on a regular basis of the long-term expected rate of return using a building-block method in which best -estimate ranges of expected future rates of return are developed for each major asset class. These ranges are combined to produce an expected long-term rate of return by weighting the expected future rates of return by the target asset allocation percentages. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the table on the following page. 67 City of Cottage Grove Notes to Financial Statements NOTE 5 — PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) E. Actuarial Assumptions (Continued) Asset Class Target Allocation Long -Term Expected Real Rate of Return Domestic stocks 36 % 5.10 % International stocks 17 5.30 Bonds 20 0.75 Alternative assets 25 5.90 Cash 2 0.00 Total 100 % F. Discount Rate The discount rate used to measure the total pension liability in 2018 was 7.5%. The projection of cash flows used to determine the discount rate assumed that contributions from Plan members and employers will be made at rates set in Minnesota Statutes. Based on those assumptions, the fiduciary net position of the General Employees Fund and the Police and Fire Fund was projected to be available to make all projected future benefit payments of current Plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. G. Pension Liability Sensitivity The following table presents the City's proportionate share of the net pension liability for all plans it participates in, calculated using the discount rate disclosed in the preceding paragraph, as well as what the City's proportionate share of the net pension liability would be if it were calculated using a discount rate 1 percentage point lower or 1 percentage point higher than the current discount rate: City's proportionate share of the General Employees Fund net pension liability City's proportionate share of the Police and Fire Fund net pension liability 1% Decrease in Discount Rate (6.5%) Discount Rate (7.5%) $ 8,447,565 $ 5,198,092 1 % Decrease in Discount Rate (6.5%) $ 10,430,236 Discount Rate (7.5%) $ 4,842,702 1 % Increase in Discount Rate (8.5%) $ 2,515,745 1 % Increase in Discount Rate (8.5%) $ 222,044 :: City of Cottage Grove Notes to Financial Statements NOTE 5 — PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) H. Pension Plan Fiduciary Net Position Detailed information about each pension plan's fiduciary net position is available in a separately -issued PERA financial report that includes financial statements and required supplementary information. That report may be obtained on the Internet at www.mnpera.org. Public Employees Defined Contribution Plan (Defined Contribution Plan) Five council members of the City of Cottage Grove are covered by the Defined Contribution Plan, a multiple -employer deferred compensation plan administered by PERA. The Defined Contribution Plan 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. The defined contribution plan consists of individual accounts paying a lump -sum benefit. Plan benefits depend solely on amounts contributed to the plan plus investment earnings, less administrative expenses; therefore, there is no future liability to the employer. Minnesota Statutes, Chapter 353D.03, specifies plan provisions, including the employee and employer contribution rates for those qualified personnel who elect to participate. An eligible elected official who decides to participate contributes 5% of salary which is matched by the elected official's employer. For ambulance service personnel, employer contributions are determined by the employer, and for salaried employees must be a fixed percentage of salary. Employer contributions for volunteer personnel may be a unit value for each call or period of alert duty. Employees who are paid for their services may elect to make member contributions in an amount not to exceed the employer share. 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% of employer contributions and twenty-five hundredths of 1% (.0025) of the assets in each member's account annually. Pension expense for the year is equal to contributions made. Total contributions made by the City during fiscal year 2018 were: Contribution Amount Percentage of Covered Payroll Required Employee Employer Employee Employer Rate $ 1,473 $ 1,473 5% 5% 5% Defined Benefit Pension Plan — Volunteer Fire Relief Association A. Plan Description The City of Cottage Grove participates in the Statewide Volunteer Firefighter Retirement Plan (Volunteer Firefighter Plan accounted for in the Volunteer Firefighter Fund), an agent multiple - employer lump -sum defined benefit pension plan administered by the Public Employees Retirement Association of Minnesota (PERA). The Volunteer Firefighter Plan covers volunteer firefighters of municipal fire departments that have elected to join the plan. As of December 31, 2018, the plan covered 44 active firefighters and 22 vested terminated firefighters whose pension benefits are deferred. The plan is established and administered in accordance with Minnesota Statutes, Chapter 353G. City of Cottage Grove Notes to Financial Statements NOTE 5 — PENSION PLANS (CONTINUED) Defined Benefit Pension Plan — Volunteer Fire Relief Association (Continued) B. Benefits Provided The Volunteer Firefighter Plan provides retirement, death, and supplemental benefits to covered firefighters and survivors. Benefits are paid based on the number of years of service multiplied by a benefit level approved by the City of Cottage Grove. Members are eligible for a lump -sum retirement benefit at 50 years of age with five years of service. Plan provisions include a pro -rated vesting schedule that increases from 5 years at 40 percent through 20 years at 100 percent. C. Contributions The Volunteer Firefighter Plan is funded by fire state aid, investment earnings and, if necessary, employer contributions as specified in Minnesota Statutes. The State of Minnesota contributed $198,977 in fire state aid to the fund for the year ended December 31, 2018. Required employer contributions are calculated annually based on statutory provisions. The City of Cottage Grove's statutorily -required contributions to the Volunteer Firefighter Fund for the year ended December 31, 2018, were $0. D. Pension Costs At December 31, 2018, the City of Cottage Grove reported a net pension asset of $822,968 for the Volunteer Firefighter Fund. The net pension asset was measured as of December 31, 2018. The total pension liability used to calculate the net pension asset in accordance with GASB 68 was determined by PERA applying an actuarial formula to specific census data certified by the fire department. The following table presents the changes in net pension liability during the year. Balances at January 1, 2018 Changes for the year Service cost Interest cost Actuarial expenses (gains)/losses State contributions Municipal contributions Projected investment return Asset (gain)/loss Benefit payments Administrative expense Other changes Net changes Balances at December 31, 2018 Increase (Decrease) Net Pension Total Pension Plan Fiduciary Net Liability (Asset) Liability (a) Position (b) (a) - (b) $ 1,915,390 $ 2,862,952 $ (947,562) 102,569 - 102,569 117,070 - 117,070 (12,862) - (12,862) - 198,977 (198,977) - 171,777 (171,777) - (284,862) 284,862 (133,560) (133,560) - - (3,709) 3,709 73,217 (51,377) 124,594 $ 1,988,607 $ 2,811,575 $ (822,968) 70 City of Cottage Grove Notes to Financial Statements NOTE 5 — PENSION PLANS (CONTINUED) Defined Benefit Pension Plan — Volunteer Fire Relief Association (Continued) D. Pension Costs (Continued) There were no benefit provision changes during the measurement period For the year ended December 31, 2017 the City of Cottage Grove recognized pension expense of $105,972. At December 31, 2018 the City of Cottage Grove reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Actuarial experience gain/loss $ - Difference between projected and actual investment earnings 227,890 Total $ 227,890 E. Actuarial Assumptions 10,290 10,290 The total pension liability at December 31, 2018, was determined using the entry age normal actuarial cost method and the following actuarial assumptions: Retirement eligibility at the later of age 50 or 20 years of service Investment rate of return of 6.0% • Inflation rate of 3.0% F. Discount Rate The discount rate used to measure the total pension liability was 6.0%. The projection of cash flows used to determine the discount rate assumed that contributions to the Volunteer Firefighter Fund will be made as specified in statute. Based on that assumption and considering the funding ratio of the plan, the fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. 71 City of Cottage Grove Notes to Financial Statements NOTE 5 — PENSION PLANS (CONTINUED) Defined Benefit Pension Plan — Volunteer Fire Relief Association (Continued) G. Pension Liability Sensitivity The following presents the net pension liability for the Volunteer Firefighter Fund, calculated using the assumed discount rate, as well as what the City of Cottage Grove's net pension asset would be if it were calculated using a discount rate 1 percentage point lower or 1 percentage point higher than the current discount rate: 1 % Decrease in Current 1 % Increase in Discount Rate Discount Rate Discount Rate (5.00%) (6.00%) (7.00%) City's net pension liability (asset) $ (743,247) $ (822,968) $ (898,774) H. Plan Investments Investment Policy The Minnesota State Board of Investment (SBI) is established by Article XI of the Minnesota Constitution to invest all state funds. Its membership as specified in the Constitution is comprised of the governor (who is designated as chair of the board), state auditor, secretary of state and state attorney general. All investments undertaken by the SBI are governed by the prudent person rule and other standards codified in Minnesota Statutes, Chapter I IA and Chapter 353G. Within the requirements defined by state law, the SBI, with assistance of the SBI staff and the Investment Advisory Council, establishes investment policy for all funds under its control. These investments policies are tailored to the specific needs of each fund and specify investment objectives, risk tolerance, asset allocation, investment management structure and specific performance standards. Studies guide the on -going management of the funds and are updated periodically. I. Asset Allocation To match the long-term nature of the pension obligations, the SBI maintains a strategic asset allocation for the Volunteer Firefighter Plan that includes allocations to domestic equity, international equity, bonds and cash equivalents. The long-term target asset allocation and long-term expected real rate of return is the following: Asset Class Domestic Stocks International Stocks Bonds Cash Total Target Allocation 35% 15% 45% 5% 100% Expected Real Rate of Return 5.10% 5.30% 0.75% 0.00% 72 City of Cottage Grove Notes to Financial Statements NOTE 5 — PENSION PLANS (CONTINUED) Defined Benefit Pension Plan — Volunteer Fire Relief Association (Continued) I. Asset Allocation (Continued) The 6% long-term expected rate of return on pension plan investments was determined using a building block method. Best estimates for expected future real rates of return (expected returns, net of inflation) were developed for each asset class using both long-term historical returns and long-term capital market expectations from several investment management and consulting organizations. The asset class estimates, and the target allocations were then combined to produce a geometric, long-term expected real rate of return for the portfolio. Inflation expectations were applied to derive the nominal rate of return for the portfolio. J. Description of significant investment policy changes during the year The SBI made no significant changes to their investment policy during fiscal year 2018 for the Volunteer Firefighter Fund. K. Pension Plan Fiduciary Net Position Detailed information about the Volunteer Firefighter Fund's fiduciary net position as of June 30, 2018, is available in a separately -issued PERA financial report that includes financial statements and required supplementary information. That report may be obtained at www.mnpera.org. NOTE 6 — INTERFUND LOANS AND TRANSFERS The City uses interfund loans when possible to finance construction activities to avoid costs associated with issuing bonds. These loans are for this purpose. The interfund loan receivable and payable balances at December 31, 2018 were: Fund Major Governmental Funds Municipal Building Capital Projects Fund Nonmajor Governmental Funds Major Business -Type Funds Water Operating Enterprise Fund Sewer Operating Enterprise Fund Total Receivable 837,232 447,500 2,832,500 Payable 3,280,000 837,232 $ 4,117,232 $ 4,117,232 73 City of Cottage Grove Notes to Financial Statements NOTE 6 — INTERFUND LOANS AND TRANSFERS (CONTINUED) Interfund receivable and payable balances are used for temporary cash deficits. Interfund receivable and payable balances at December 31, 2018 are as follows: Fund Major Government Funds Closed Debt Fund MSA Construction Capital Projects Fund Future Projects Fund 2016 Improvement Projects Nonmajor Governmental Funds Total Receivable Payable $ 1,470,121 265,675 265,675 - 1,470,121 475,622 475,622 $ 2,211,418 $ 2,211,418 Interfund transfers during the year ended December 31, 2018, were as follows: Transfers In Municipal MSA Pavement Pavement Nonmajor General Building Construction Closed Debt Management Debt Management Capital Governmental Fund (100) Fund (525) (520) Fund (300) Service Fund Project (560) Funds Total Transfers Out General Fund (100) $ $ 38,872 $ $ 90,701 $ - $ 25,915 $ 804,787 $ 960,275 Closed Debt Fund (300) _ - 1,159,367 - - 1,159,367 Future Projects Fund (510, 810) 1,020,476 - - - 1,020,476 Nonmajor Governmental Funds 41,300 - 576,050 891,535 1,508,885 Street Light (630) 47,220 _ _ 47,220 Cottage Grove EMS (660) 94,430 94,430 Water Operating (610) 171,800 171,800 Sewer Operating (620) 187,000 187,000 Total $ 541,750 $ 38.872 $ LQ20.470 90.701 8 I.159367 $ 601,965 $1,696322 $ 5.149.453 Interfund transfers allow the City to allocate financial resources to the funds that receive benefit from services provided by another fund. All transfers in 2018 were considered to be routine in nature. NOTE 7 — TAX INCREMENT FINANCING The City has entered into one Tax Increment Financing agreement which meets the criteria for disclosure under GASB Statement No. 77 — Tax Abatement Disclosures. The City's authority to enter into this agreement comes from Minnesota Statute 469. The City entered into this agreement for economic development. Under the agreement, the City and developer agree on an amount of development costs to be reimbursed to the developer by the City through tax revenues from the additional taxable value of the property generated by the development (tax increment). A "pay as you go" note is established for this amount, on which the City makes payments for a fixed period with available tax increment revenue after deducting certain administrative costs. 74 City of Cottage Grove Notes to Financial Statements NOTE 7 — TAX INCREMENT FINANCING (CONTINUED) During the year ended December 31, 2018 the City generated $769,475 in tax increment revenue and made $158,979 in payments to developers. TIF District #1-12 was established in 2001 for redevelopment of certain blighted properties into retail, commercial, and senior housing developments. An agreement with PHS/Cottage Grove Inc. called for up to $2.8 million to be reimbursed through tax increment over a ten-year period. During the year ended December 31, 2018 the district generated $655,246 of tax increment and $158,979 in payments on the pay as you go note were made. The balance due on the note at year end was $1,104,574. NOTE 8 — DEFICIT FUND BALANCES The City has deficit fund balances at December 31, 2018 as follows: Fund Amount Major Governmental Funds Municipal Building Fund (525) $ 2,790,164 MSA Construction (520) 619,860 Future Projects (510, 810) 427,322 2016 Improvement Projects 1,588,303 Nonmajor Governmental Funds Ice Arena (250) 166,828 Golf Course Fund (255) 18,905 2016A G.O. Refunding Bonds (369) 1,135 Tax Increment Funds 13,559 Ice Arena Construction (526) 136,794 NOTE 9 — CONTIGENCIES A. Risk Management The deficit fund balances will be resolved through Future tax levies Future MSA revenues Future special assessments Future special assessments Future excess revenues and transfers from other City resources Future excess revenues and transfers from other City resources Future tax levies Future tax increments Future bond proceeds 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 more than 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 $10,000 medical expense deductible. The City's premiums are determined after loss experience is known. The amount of premium adjustment, if any, is considered immaterial and not recorded until received or paid. 75 City of Cottage Grove Notes to Financial Statements NOTE 9 — CONTIGENCIES (CONTINUED) A. Risk Management (Continued) 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 the 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 more than 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 $170,124 reported in the Fund at December 31, 2018 is based on the requirements of GASB Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Changes in the fund's claims liability amounts were as follows: Beginning of Year Year Liability 2018 $ 171,752 2017 159,741 2016 143,708 Claims and End Changes in Claim of Year Estimates Payments Liability $ 231,966 $ (233,594) $ 170,124 74,026 (62,015) 171,752 165,035 (149,002) 159,741 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. 76 City of Cottage Grove Notes to Financial Statements NOTE 9 — CONTINGENCIES (CONTINUED) 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 any of the financial statements of the individual fund types included herein or on the overall financial position of the City at December 31, 2018. D. Tax Increments The City's tax increment districts are subject to review by the State of Minnesota Office of the State Auditor (OSA). Any disallowed claims or misuse of tax increments could become a liability of the applicable fund. NOTE 10 — FUND BALANCES At December 31, 2018, the City had various fund balances through legal restriction and City Council authorization. Fund balance appropriations at December 31, 2018, are shown on the various balance sheets as segregations of the fund balance. The fund balance classifications for governmental funds are as follows: Major Funds Pavement Pavement Municipal Closed Future Management Management 2016 Nonmajor General Building MSA Debt Projects Debt Capital Improvement Governmental Fund 000) Fund (525) Construction (520) Fund (300) (510, 810) Service Fund Project (560) Projects Funds Total Fund Balances Nonspendable Prepaid items $ 47,532 $ - $ - $ - $ - $ - $ - $ - $ 10,889 $ 58,421 Inventory - - - - - - - - 30,297 30,297 Restricted Debt retirement - - - - - 2,528,973 - - 841,059 3,370,032 Forfeiture and seizure - - - - - - - - 36,443 36,443 Tax increment purposes - - - - - - - - 108,825 108,825 Committed Recycling Program - - - - - - - - 65,069 65,069 Storm water activities - - - - - - - - 1,318,333 1,318,333 Assigned Compensated absences 877715 - - - - - - - - 877,715 Future budgets 500:000 - - - - - - - - 500,000 School bus safety 5,350 - - - - - - - - 5,350 Debt retirement - - - 1,762,940 - - - - - 1,762,940 Pavement Management construction activities - - - - - - 1,588,921 - - 1,588,921 Equipment replacement - - - - - - - - 1,893,498 1,893,498 Street sealcoating - - - - - - - - 1,068,342 1,068,342 Economic decvelopment - - - - - - - - 3,832,303 3,832,303 Capital improvements - - - - - - - - 9,299,490 9,299,490 Unassigned 9,814,949 (2,790,164) (619,860) (427,322) (1,588,303) (378,407) 4,010,893 Total fund balances S 11,245,546 $ (1790164) S (619,860) S 1,761940 S (427,322) $ 2,528,973 $ 1,588,921 $ (1,588,303) S 18,126,141 $ 29,826,872 NOTE 11— POST EMPLOYMENT HEALTH CARE PLAN A. Plan Description The City provides health benefits for retirees as required by Minnesota Statute §471.61 subdivision 2b. Pursuant to the provisions of the plan, retirees are required to pay the total premium cost. No assets are accumulated in a trust. 77 City of Cottage Grove Notes to Financial Statements NOTE 11— POST EMPLOYMENT HEALTH CARE PLAN (CONTINUED) B. Benefits Provided 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. C. Contributions Retirees contribute to the health care plan at the same rate as City employees. This results in the retirees receiving an implicit rate subsidy. Contribution requirements are established by the City, based on the contract terms with Medica. The required contributions are based on projected pay-as-you-go financing requirements. For the year 2018, the City contributed $18,651 to the plan. D. Members As of December 31, 2018, the following were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits 3 Inactive employees entitled to but not yet receiving benefit payments - Active employees 130 Total 133 E. Actuarial Assumptions The total OPEB liability was determined by an actuarial valuation as of January 1, 2017, using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified: Key Methods and Assumptions Used in Valuation of Total OPEB Liability Discount rate Inflation Healthcare cost trend increases Mortality assumption 4.11% 2.75% 7.0% initially decreasing to an ultimate rate of 4.0% RP 2014 employee mortality table, adjusted for white collar and mortality improvements The actuarial assumptions used in the January 1, 2017, valuation were based on the results of an actuarial experience study for the period January 1, 2018 — December 31, 2018. City of Cottage Grove Notes to Financial Statements NOTE 11— POST EMPLOYMENT HEALTH CARE PLAN (CONTINUED) E. Actuarial Assumptions (Continued) The discount rate used to measure the total OPEB liability was 4.11% based on the Bond Buyer 20- Bond Obligation Index. F. Total OPEB Liability The City's total OPEB liability of $330,577 was measured as of December 31, 2018, and was determined by an actuarial valuation as of that date. Changes in the total OPEB liability are as follows: Total OPEB Liability Balance at January 1, 2018 $ 337,526 Changes for the year Service cost 14,560 Interest 11,794 Change in assumption (14,652) Employer contributions Net investment income - Benefit payments (18,651) Administrative expense - Other charges - Net changes Balance at December 31, 2018 (6,949) $ 330,577 Changes of assumptions and other inputs reflect a change in the discount rate from 3.44% in 2017 to 4.11% in 2018. 79 City of Cottage Grove Notes to Financial Statements NOTE 11— POST EMPLOYMENT HEALTH CARE PLAN (CONTINUED) G. OPEB Liability Sensitivity The following presents the City's total OPEB liability calculated using the discount rate of 4.11% as well as the liability measured using 1 % lower and 1 % higher than the current discount rate. 1% decrease (3.11%) $ 352,758 Total OPEB Liability Current (4.11%) $ 330,577 1 % increase (5.11%) $ 309,968 The following presents the total OPEB liability of the City, as well as what the City's total OPEB liability would be if it were calculated using healthcare cost trend rates that are 1 % lower and 1 % higher than the current healthcare cost trend rates. 1 % decrease $ 304,475 Total OPEB Liability Current $ 330,577 1 % increase $ 360,683 H. OPEB Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Related to OPEB For the year ended December 31, 2018, the City recognized OPEB expense of $(6,949). At December 31, 2018, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Changes of assumptions Total Deferred Deferred Outflows of Inflows of Resources Resources - 12,982 $ - $ 12,982 City of Cottage Grove Notes to Financial Statements NOTE 11— POST EMPLOYMENT HEALTH CARE PLAN (CONTINUED) H. OPEB Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Related to OPEB (Continued) Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Year Ending December 31, Total 2019 $ (1,670) 2020 (1,670) 2021 (1,670) 2022 (1,670) 2023 (1,670) Thereafter (4,632) Total $ (12,982) NOTE 12 — OPERATING LEASES The City leases land for the golf course under an operating lease. The monthly lease payments equal $1 per month for the remaining term of the lease agreement. The lease was amended in 2015 to add a first extension option to 2020. In 2015, $60 was paid under this lease arrangement for the entire five-year extension. The City entered into two operating leases during 2007 for the leasing of ice time for the Ice Arena with Independent School District No. 833 and the Cottage Grove Athletic Association. The lease payments began in 2008 when the new ice arena expansion project opened. The future minimum annual lease payments that the City will receive are as follows: Independent Cottage Grove Year Ended School District Athletic December 31 No. 833 Association 2019 $ 104,250 $ 400,000 2020 104,250 400,000 2021 104,250 400,000 2022 104,250 400,000 2023 104,250 400,000 2024-2028 521,250 2,000,000 2029 104,250 400,000 Total $ 1,146,750 $ 4,400,000 City of Cottage Grove Notes to Financial Statements NOTE 13 — COMMITTED CONTRACTS At December 31, 2018, the City had commitments of $19,867,147 for uncompleted construction contracts. NOTE 14 — 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, 2018, a series of Industrial Revenue Bonds were outstanding. Original Issue 12/31/2018 Bond Issue Date Amount Balance Maturity Date Commercial Development Revenue Note - HSI 12/22/04 $ 935,000 $ 341,378 12/01/24 Commercial Development Revenue Note - ESR, Inc. 11/22/05 76,500 25,587 11/22/25 Commercial Development Revenue Note - ESR, Inc. 05/19/05 853,000 344,583 12/19/25 Variable Rate Revenue Bonds - Allina Health Syystem 11/01/09 6,100,000 6,100,000 11/15/22 Multifamily Housing Note - Legends of Cottage Grove 10/07/16 18,422,000 18,422,000 05/01/34 Multifamily Housing Note - Legends of Cottage Grove 10/07/16 6,118,000 6,118,000 05/01/34 Total $ 32,504,500 $ 31,351,548 NOTE 15 — CHANGE IN ACCOUNTING PRINCIPLE For the year ended December 31, 2018, the City implemented GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions. This resulted in an adjustment to the beginning net position on the Statement of Activities of $233,040 and the Statement of Revenues, Expenses, and Changes in Fund Net Position — Proprietary Funds of $37,520 to add the beginning total OPEB liability. NOTE 16 — SUBSEQUENT EVENTS On February 14, 2019, the City authorized the sale of General Obligation Capital Improvement Plan Bonds, Series 2019A for $4,090,000. The bonds will be used to construct the HERO Center/Public Safety Training Facility. On February 14, 2019, the City authorized the sale of General Obligation Equipment Certificates, Series 2019B for $2,845,000. The bonds will be used to replace the City's ice arena refrigeration equipment. City of Cottage Grove Notes to Financial Statements NOTE 17 — NEW STANDARDS ISSUED BUT NOT YET IMPLEMENTED GASB Statement No. 83, Certain Asset Retirement Obligations establishes criteria for determining the timing and pattern of recognition of a liability and a corresponding deferred outflow of resources for Asset Retirement Obligations (AROs). This statement requires that recognition occur when the liability is both incurred and reasonably estimable. The determination of when the liability is incurred should be based on the occurrence of external laws, regulations, contracts, or court judgments, together with the occurrence of an internal event that obligates a government to perform asset retirement activities. Laws and regulations may require governments to take specific actions to retire certain tangible capital assets at the end of the useful lives of those capital assets, such as decommissioning nuclear reactors and dismantling and removing sewage treatment plants. Other obligations to retire tangible capital assets may arise from contracts or court judgments. Internal obligating events include the occurrence of contamination, placing into operation a tangible capital asset that is required to be retired, abandoning a tangible capital asset before it is placed into operation, or acquiring a tangible capital asset that has an existing ARO. This statement will be effective for the year ending December 31, 2019. GASB Statement No. 84, Fiduciary Activities establishes criteria for identifying fiduciary activities of all state and local governments. The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and postemployment benefit arrangements that are fiduciary activities. This statement will be effective for the year ending December 31, 2019. GASB Statement No. 87, Leases establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this statement, a lessee is required to recognize a lease liability and an intangible right -to -use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments' leasing activities. This statement will be effective for the year ending December 31, 2020. GASB Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements improves the information that is disclosed in the notes to the financial statements. It also clarifies which liabilities governments should include when disclosing information related to debt. This statement will be effective for the year ending December 31, 2019. GASB Statement No. 89, Accounting for Interest Cost Incurred Before the End of a Construction Period enhances the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period and simplifies accounting for interest cost incurred before the end of a construction period. This statement will be effective for the year ending December 31, 2020. GASB Statement No. 90, Majority Equity Interests improves the consistency and comparability of reporting a government's majority equity interest in a legally separate organization and to improve the relevance of financial statement information for certain component units. This statement will be effective for the year ending December 31, 2019. (THIS PAGE LEFT BLANK INTENTIONALLY) WE REQUIRED SUPPLEMENTARY INFORMATION ROR (THIS PAGE LEFT BLANK INTENTIONALLY) E City of Cottage Grove Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual - General Fund For the Year Ended December 31, 2018 With Comparative Totals for the Year Ended December 31, 2015 2018 2017 Variance with Budgeted Amounts Final Budget - Original Final Actual Amounts Over (Under) Actual Revenues General property taxes $ 13,365,000 $ 13,365,000 $ 13,382,247 $ 17,247 $ 13,174,561 Special assessments 19,500 19,500 5,005 (14,495) 6,881 Licenses and permits General government 81,150 81,150 72,099 (9,051) 87,363 Community development 1,135,165 1,555,165 1,636,656 81,491 1,774,420 Engineering 5,700 5,700 41,073 35,373 38,805 Public safety 21,000 21,000 23,715 2,715 22,346 Total licenses and permits 1,243,015 1,663,015 1,773,543 110,528 1,922,934 Intergovernmental revenues Federal grants and aids 22,000 22,000 20,880 (1,120) 27,848 State grants and aids Local government aid 86,200 86,200 86,218 18 64,741 Market value homestead credit - - 5,425 5,425 5,397 MSA maintenance - public works 43,000 43,000 43,245 245 43,245 PERA Aid 21,450 21,450 21,448 (2) 56,532 Fire relief aid - public safety - - - - 4,000 Police relief aid - public safety 320,000 350,000 350,904 904 340,790 Other -public safety 24,000 24,000 52,899 28,899 26,806 Other - planning - - 19,500 19,500 5,269 Local SRO program - public safety 75,000 75,000 75,000 - 75,000 Other - public safety 11,000 11,000 17,191 6,191 9,835 Other - public works - - 2,188 2,188 2,629 Other - culture and recreation 14,000 14,000 15,186 1,186 14,135 Total intergovernmental 616,650 646,650 710,084 63,434 676,227 Charges for services Investment charge- generalgovemmeni 10,000 10,000 19,092 9,092 12,825 Other - general government 210 210 59 (151) 334 Other - community development 45,000 45,000 140,740 95,740 107,798 Other - engineering 385,000 385,000 914,324 529,324 355,882 Other - public safety 46,300 46,300 64,274 17,974 60,221 Other - public works 30,100 30,100 32,209 2,109 58,772 Other- culture and recreation 135,850 180,850 175,455 (5,395) 144,205 Total charges for services 652,460 697,460 1,346,153 648,693 740,037 Fines and forfeitures - public safety 200,000 150,000 146,250 (3,750) 170,994 Investment earnings 60,000 60,000 87,402 27,402 73,425 Donations General government - - 8,040 8,040 1,045 Public safety - - 1,350 1,350 5,100 Culture and recreation 5,100 5,100 10,175 5,075 13,965 Total donations 5,100 5,100 19,565 14,465 20,110 Miscellaneous General government 125,000 125,000 159,917 34,917 105,170 Public safety 20,000 20,000 26,315 6,315 25,500 Public works - - 40,439 40,439 23,576 Culture and recreation - - - - 1,340 Total miscellaneous 145,000 145,000 226,671 81,671 155,586 Total revenues 16,306,725 16,751,725 17,696,920 945,195 16,940,755 87 City of Cottage Grove Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual - General Fund For the Year Ended December 31, 2018 With Comparative Totals for the Year Ended December 31, 2015 2018 2017 Budgeted Amounts Variance with Final Budget - Original Final Actual Amounts Over (Under) Actual Expenditures General government Mayor and city council $ 97,880 $ 97,880 $ 92,701 $ (5,179) $ 108,535 Administrative 337,480 331,720 347,542 15,822 350,668 Finance 565,900 565,900 567,197 1,297 541,635 Personnel 175,260 175,260 176,712 1,452 132,240 Professional services 170,000 170,000 169,881 (119) 162,877 City clerk/elecfions 163,040 193,800 191,007 (2,793) 131,379 Legal 200,000 200,000 200,978 978 207,250 Community and employee programs 64,525 64,525 61,604 (2,921) 46,091 Government buildings 458,500 458,500 464,427 5,927 467,055 Total general government 2,232,585 2,257,585 2,272,049 14,464 2,147,730 Community development Planning and zoning 383,665 383,665 380,357 (3,308) 358,104 Building inspections 663,170 663,170 808,547 145,377 621,915 Engineering 360,995 401,995 405,630 3,635 324,582 Total community development 1,407,830 1,448,830 1,594,534 145,704 1,304,601 Public safety Police protection 6,465,595 6,465,595 6,690,070 224,475 6,376,422 Fire protection 1,140,785 1,140,785 1,218,316 77,531 1,136,631 Emergency preparedness 56,730 56,730 49,897 (6,833) 42,249 Animal control 35,760 35,760 25,453 (10,307) 23,175 Total public safety 7,698,870 7,698,870 7,983,736 284,866 7,578,477 Public works Public works administration 575,835 575,835 574,873 (962) 579,117 Streets 1,427,300 1,427,300 1,449,932 22,632 1,271,833 Snow and ice control 612,505 632,505 686,724 54,219 522,778 Street signs/striping 223,870 223,870 209,754 (14,116) 242,473 Total public works 2,839,510 2,859,510 2,921,283 61,773 2,616,201 Culture and recreation Forestry 347,790 347,790 384,070 36,280 374,429 Recreation programs 414,315 414,315 393,247 (21,068) 363,808 Parks maintenance 1,357,325 1,357,325 1,314,922 (42,403) 1,268,149 Total culture and recreation 2,119,430 2,119,430 2,092,239 (27,191) 2,006,386 Total expenditures 16,298,225 16,384,225 16,863,841 479,616 15,653,395 Excess of revenues over expenditures 8,500 367,500 833,079 465,579 1,287,360 Other Financing Sources (Uses) Transfers in 541,500 541,500 541,750 250 541,500 Transfers out (550,000) (740,000) (960,275) (220,275) (1,438,715) Total other financing sources (uses) (8,500) (198,500) (418,525) (220,025) (897,215) Net change in fund balances $ $ 169,000 414,554 $ 245,554 390,145 Fund Balances Beginning of year 10,830,992 10,440,847 End of year $ 11,245,546 $ 10,830,992 88 City of Cottage Grove Schedule of Changes in Total OPEB Liability and Related Ratios Total OPEB Liability Service cost Interest Differenced between expected and actual experience Changes of assumptions Changes of benefit terms Benefit payments Other changes Net change in total OPEB liability Beginning of year End of year Covered payroll Total OPEB liability as a percentage of covered payroll December 31, 2018 $ 14,560 11,794 (14,652) (18,651) (6,949) 337,526 $ 330,577 $ 9,103,225 3.63% Note: Schedule is intended to show ten year trend. Additional years will be reported as they become available. e, City of Cottage Grove Schedule of City's Proportionate Share of Net Pension Liability General Employees Retirement Fund Last Ten Years City's Proportionate Share of the Net Pension City's State's Liability and Proportionate City's City's Proportionate the State's Share of the Proportionate Proportionate Share Proportionate Net Pension Plan Fiduciary Share Share (Amount) of Share of the Liability Net Position as (Percentage) of (Amount) of the Net Pension Net Pension (Asset) as a a Percentage of the Net Pension the Net Pension Liability Liability Percentage of the Total For Fiscal Year Liability Liability Associated with Associated with City's Covered its Covered Pension Ended June 30, (Asset) (Asset) the City the City Payroll Payroll Liability 2018 0.0937% $ 5,198,092 $ 170,553 $ 5,368,645 $ 6,298,520 82.5% 79.53% 2017 0.0890% 5,681,701 71,469 5,753,170 5,887,025 96.5% 75.90% 2016 0.0878% 7,128,925 43,058 7,171,983 5,447,306 130.9% 68.91% 2015 0.0919% 4,762,735 - 4,762,735 5,401,220 88.2% 78.19% Note: Schedule is intended to show ten year trend. Additional years will be reported as they become available. Schedule of City's Proportionate Share of Net Pension Liability Public Employees Police and Fire Retirement Fund Last Ten Years City's Proportionate Share of the City's Net Pension Plan Fiduciary City's Proportionate Liability Net Position as Proportion of Share of the (Asset) as a a Percentage of the Net Pension Net Pension Percentage of the Total For Fiscal Year Liability Liability City's Covered its Covered Pension Ended June 30, (Asset) (Asset) Payroll Payroll Liability 2018 0.4582% $ 4,842,702 $ 4,829,432 100.27% 88.84% 2017 0.4380% 5,913,521 4,495,914 131.53% 85.43% 2016 0.4450% 17,818,574 3,867,466 460.73% 63.88% 2015 0.4340% 4,931,256 3,665,120 134.55% 86.61% Note: Schedule is intended to show ten year trend. Additional years will be reported as they become available. 90 Fiscal Year Ending December 31, Statutorily Required Contribution City of Cottage Grove Schedule of City Contributions - General Employees Retirement Fund Last Ten Years Contributions in Relation to the Statutorily Required Contributions Contributions as a Contribution Percentage of Deficiency City's Covered Covered (Excess) Payroll Payroll 2018 $ 482,521 $ 482,521 $ - $ 6,433,613 7.50% 2017 458,971 458,971 - 6,119,613 7.50% 2016 424,202 424,202 - 5,656,027 7.50% 2015 403,964 403,964 - 5,386,187 7.50% Note: Schedule is intended to show ten year trend. Additional years will be reported as they become available. Fiscal Year Ending December 31, Schedule of City Contributions - Public Employees Police and Fire Retirement Fund Last Ten Years Statutorily Required Contribution Contributions in Relation to the Statutorily Required Contributions Contributions as a Contribution Percentage of Deficiency City's Covered Covered (Excess) Payroll Payroll 2018 $ 803,145 $ 803,145 $ - $ 4,957,685 16.20% 2017 778,070 778,070 - 4,802,901 16.20% 2016 718,936 718,936 - 4,437,877 16.20% 2015 664,300 664,300 - 4,100,617 16.20% Note: Schedule is intended to show ten year trend. Additional years will be reported as they become available. 91 City of Cottage Grove Schedule of Changes in Net Pension Liability and Related Ratios - Fire Relief Association Total pension liability (TPL) Service cost Interest Differences between expected and actual experience Changes of assumptions Changes of benefit terms Benefit payments, including refunds or member contributions Net change in total pension liability Beginning of year End of year Plan fiduciary net pension (FNP) Contributions - employer State contributions Net investment income Benefit payments, including refunds of member contributions Administrative expense Other Net change in plan fiduciary net position Beginning of year End of year Net pension liability (NPL) Plan fiduciary net position as a percentage of the total pension liability Measurement Date December 31, December 31, December 31, December 31, December 31, 2014 2015 2016 2017 2018 $ 77,691 $ 79,827 $ 109,062 $ 118,915 $ 102,569 85,148 88,550 85,750 100,267 117,070 - - - 329,484 (12,862) 77,611 (130,240) - 139,930 (84,321) (140,973) (295,760) (133,560) 78,518 244,945 (231,188) 548,666 73,217 1,274,449 1,3 52,967 1,597,912 1,366,724 1,915,3 90 $ 1,352,967 $ 1,597,912 $ 1,366,724 $ 1,915,390 $ 1,988,607 $ 5,155 $ 5,329 $ 5,265 $ 2,081 $ - 177,804 191,183 195,271 192,139 198,977 98,130 (117,497) 146,660 316,265 (113,085) (84,321) (140,973) (295,760) - (133,560) (11,193) (15,165) (12,139) (12,334) (3,709) (23,403) 210 (2,319) 162,172 (77,123) 39,507 495,832 (51,377) 2,242,564 2,404,736 2,327,613 2,367,120 2,862,952 $ 2,404,736 $ 2,327,613 $ 2,367,120 $ 2,862,952 $ 2,811,575 $ (1,051,769) $ (729,701) $ (1,000,396) $ (947,562) $ (822,968) 177.7% 145.7% 173.2% 149.5% 141.4% Covered payroll n/a n/a n/a n/a n/a Net pension liability as a percentage of covered payroll n/a n/a n/a n/a n/a The City implemented the provisions of Governmental Accounting Standards Board Statement No. 68 for the year ended December 31, 2015. The schedules within the Required Supplementary Information section require a ten-year presentation, but does not require retroactive reporting. Information prior to 2014 is not available. Additional years will be reported as they become available. 92 City of Cottage Grove Schedule of City and Non -Employer Entity Contributions - Fire Relief Association December 31, December 31, December 31, December 31, December 31, 2014 2015 2016 2017 2018 Employer Statutorily determined contribution (SDC) $ - $ - $ - $ - $ - Contribution in relation to the SDC 5,155 5,329 5,265 2,081 - Contribution deficiency (excess) $ (5,155) $ (5,329) $ (5,265) $ (2,081) $ - Non -employer 2% state aid $ 177,804 $ 191,183 $ 195,271 $ 192,139 $ 198,977 Covered payroll n/a n/a n/a n/a n/a Contributions as a percentage of covered payroll n/a n/a n/a n/a n/a The City implemented the provisions of Governmental Accounting Standards Board Statement No. 68 for the year ended December 31, 2015. The schedules within the Required Supplementary Information section require a ten-year presentation, but does not require retroactive reporting. Information prior to 2014 is not available. Additional years will be reported as they become available. 93 City of Cottage Grove Notes to Required Supplementary Information GENERAL EMPLOYEES FUND 2018 Changes Changes in Actuarial Assumptions • The mortality projection scale was changed from MP-2015 to MP-2017. • The assumed benefit increase was changed from 1.0% per year through 2044 and 2.5% per year thereafter to 1.25% per year. 2017 Changes Changes in Actuarial Assumptions • The CSA loads were changed from 0.8% for active members and 60% for vested and non - vested deferred members. The revised CSA loads are now 0.0% for active member liability, 15% for vested deferred member liability and 3% for non -vested deferred member liability. • The assumed post -retirement benefit increase rate was changed from 1.0% per year for all years to 1.0% per year through 2044 and 2.5% per year thereafter. 2016 Changes Changes in Actuarial Assumptions • The assumed post -retirement benefit increase rate was changed from 1.0% per year through 2035 and 2.5% per year thereafter to 1.0% per year for all future years. • The assumed investment return was changed from 7.9% to 7.5%. The single discount rate was changed from 7.9% to 7.5%. • Other assumptions were changed pursuant to the experience study dated June 30, 2015. The assumed future salary increases, payroll growth, the inflation were decreased by 0.25% to 3.25% for payroll growth and 2.50% for inflation. 2015 Changes Changes in Plan Provisions • On January 1, 2015, the Minneapolis Employees Retirement Fund was merged into the General Employees Fund, which increased the total pension liability by $1.1 billion and increased the fiduciary plan net position by $892 million. Upon consolidation, state and employer contributions were revised. Changes in Actuarial Assumptions • The assumed post -retirement benefit increase rate was changed from 1.0% per year through 2030 and 2.5% per year thereafter to 1.0% per year through 2035 and 2.5% per year thereafter. City of Cottage Grove Notes to Required Supplementary Information POLICE AND FIRE FUND 2018 Changes Changes in Actuarial Assumptions • The mortality projection scale was changed from MP-2016 to MP-2017. • As set by statute, the assumed post -retirement benefit increase was changed from 1.0% per year through 2064 and 2.5% per year, thereafter, to 1.0% for all years, with no trigger 2017 Changes Changes in Actuarial Assumptions • Assumed salary increases were changed as recommended in the June 30, 2016 experience study. The net effect is proposed rates that average 0.34% lower than the previous rates. • Assumed rates of retirement were changed, resulting in fewer retirements. • The CSA load was 30% for vested and non -vested deferred members. The CSA has been changed to 33% for vested members and 2% for non -vested members. • The base mortality table for healthy annuitants was changed from the RP-2000 fully generational table to the RP-2014 fully generational table (with a base year of 2006), with male rates adjusted by a factor of 0.96. The mortality improvement scale was changed from Scale AA to Scale MP-2016. The base mortality table for disabled annuitants was changed from the RP-2000 disabled mortality table to the mortality tables assumed for healthy retirees. • Assumed termination rates were decreased to 3% for the first three years of service. Rates beyond the select period of three years were adjusted, resulting in more expected terminations overall. • Assumed percentage of married female members was decreased from 65% to 60%. • Assumed age difference was changed from separate assumptions for male members (wives assumed to be three years younger) and female members (husbands assumed to be four years older) to the assumption that males are two years older than females. • The assumed percentage of female members electing Joint and Survivor annuities was increased. • The assumed post -retirement benefit increase rate was changed from 1 % for all years to 1 % per year through 2064 and 2.5% thereafter. 2016 Changes Changes in Actuarial Assumptions • The assumed post -retirement benefit increase rate was changed from 1.0% per year through 2037 and 2.5% thereafter to 1.0% per year for all future years. • The assumed investment return was changed from 7.9% to 7.5%. The single discount rate changed from 7.9% to 5.6%. • The assumed future salary increases, payroll growth, and inflation were decreased by 0.25% to 3.25% for payroll growth and 2.50% for inflation. 95 City of Cottage Grove Notes to Required Supplementary Information POLICE AND FIRE FUND (CONTINUED) 2015 Changes Changes in Plan Provisions • The post -retirement benefit increase to be paid after attainment of the 90% funding threshold was changed, from inflation up to 2.5%, to a fixed rate of 2.5%. Changes in Actuarial Assumptions • The assumed post -retirement benefit increase rate was changed from 1.0% per year through 2030 and 2.5% per year thereafter to 1.0% per year through 2037 and 2.5% per year thereafter. OTHER POST EMPLOYMENT BENEFITS 2018 Changes • The Discount rate increased from 3.44% in 2017 to 4.11 % in 2018 There are no assets accumulated in a trust COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES 97 (THIS PAGE LEFT BLANK INTENTIONALLY) W. NONMAJOR GOVERNMENTAL FUNDS City of Cottage Grove 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 PROJECTS FUNDS The Capital Projects Funds account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by Proprietary Funds). 100 City of Cottage Grove Combining Balance Sheet - Nonmajor Governmental Funds December 31, 2018 With Comparative Totals for December 31, 2017 Totals Nonmajor Governmental Funds Special Capital Revenue Debt Service Projects 2018 2017 Assets Cash and investments $ 912,197 $ 852,575 $ 15,915,125 $ 17,679,897 $ 12,571,906 Interfund receivable 337,693 1,135 136,794 475,622 644,537 Interfund loan receivable - - 837,232 837,232 1,118,467 Due from other government: 185,237 - 15,885 201,122 2,111,804 Accounts receivable 433,018 - 144,725 577,743 526,657 Prepaid items 10,889 - - 10,889 2,827 Inventories 30,297 - - 30,297 30,625 Taxes receivable - delinquent - 5,646 519 6,165 2,854 Special assessments receivable Deferred - - 328,377 328,377 492,564 Total assets $ 1,909,331 $ 859,356 $ 17,378,657 $ 20,147,344 $ 17,502,241 Liabilities Accounts payable $ 254,343 $ 6,210 $ 19,520 $ 280,073 $ 621,719 Salaries and benefits payable 69,677 - - 69,677 60,560 Interfund payable 337,693 1,135 136,794 475,622 644,537 Due to other governments 7,928 - - 7,928 27,758 Deposits payable 5,578 - 10,551 16,129 - Interfund loan payable - 20,000 817,232 837,232 1,118,467 Total liabilities 675,219 27,345 984,097 1,686,661 2,473,041 Deferred Inflows of Resources Unavailable revenue - tax increment - - 519 519 - Unavailable revenue - property taxes - 5,646 - 5,646 2,854 Unavailable revenue - special assessments - - 328,377 328,377 492,564 Total deferred inflows of resources - 5,646 328,896 334,542 495,418 Fund Balances Nonspendable 41,186 - - 41,186 33,452 Restricted 36,443 841,059 108,825 986,327 219,283 Committed 1,383,402 - - 1,383,402 947,486 Assigned - - 16,093,633 16,093,633 14,289,280 Unassigned (226,919) (14,694) (136,794) (378,407) (955,719) Total fund balances 1,234,112 826,365 16,065,664 18,126,141 14,533,782 Total liabilities, deferred inflows of resources, and fund balances $ 1,909,331 $ 859,356 $ 17,378,657 $ 20,147,344 $ 17,502,241 101 City of Cottage Grove Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds For the Year Ended December 31, 2018 With Compartive Totals for the Year Ended December 31, 2017 Totals Nonmajor Governmental Funds Special Capital Revenue Debt Service Projects 2018 2017 Revenue General property taxes $ $ 787,076 $ - $ 787,076 $ 188,505 Franchise taxes - 567,875 567,875 560,492 Aggregate taxes - 20,791 20,791 28,442 Tax increment collections 305,000 464,475 769,475 813,541 Special assessments 6,169 188,817 194,986 216,925 Direct charges to developers - 99,270 99,270 36,965 Intergovernmental 248,751 358,608 607,359 2,285,265 Charges for services 3,539,198 17,960 3,557,158 3,400,353 Rent - 433,713 433,713 401,599 Fines and forfeitures 62,494 - - 62,494 13,948 Investment earnings 17,753 6,186 217,184 241,123 125,336 Interest on interfund loan - - 26,474 26,474 32,206 Connection charges 2,776,937 2,776,937 2,050,958 Park dedication fees 853,659 853,659 526,936 Donations 356,833 356,833 536,804 Miscellaneous 211,772 10,000 15,479 237,251 421,030 Total revenues 4,079,968 1,114,431 6,398,075 11,592,474 11,639,305 Expenditures Current General government 30,140 30,217 60,357 1,779 Economic development - - 230,615 230,615 695,356 Public safety 66,556 - 66,556 16,934 Public works 479,995 352,702 832,697 1,220,925 Culture and recreation 2,456,990 67,145 2,524,135 2,290,785 Capital outlay General government - - - 24,711 Public safety - - - 63,253 Public works 26,097 2,716,125 2,742,222 3,788,178 Culture and recreation 527,253 238,439 765,692 1,274,192 Debt service Principal retirement - 835,000 - 835,000 800,000 Interest and other charges - 489,492 26,474 515,966 203,951 Total expenditures 3,556,891 1,354,632 3,661,717 8,573,240 10,380,064 Excess of revenues over (under) expenditures 523,077 (240,201) 2,736,358 3,019,234 1,259,241 Other Financing Sources (Uses) Proceeds from sale of capital asset - - 20,563 20,563 19,485 Bond issuance - 365,125 - 365,125 191,950 Transfers in 190,000 506,880 999,442 1,696,322 1,626,061 Transfers out (261,300) - (1,247,585) (1,508,885) (2,615,398) Total other financing sources (uses) (71,300) 872,005 (227,580) 573,125 (777,902) Net change in fund balances 451,777 631,804 2,508,778 3,592,359 481,339 Fund Balances Beginning of year 782,335 194,561 13,556,886 14,533,782 14,052,443 End of year $ 1,234,112 $ 826,365 $ 16,065,664 $ 18,126,141 $ 14,533,782 102 City of Cottage Grove 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. Golf Course Fund — Established to account for the City's eighteen -hole golf course and banquet facility. 103 City of Cottage Grove Subcombining Balance Sheet - Nonmajor Special Revenue Funds December 31, 2018 With Comparative Totals For December 31, 2017 Assets Cash and investments Interfund receivable Due from other governments Accounts receivable Prepaid items Inventories Total assets Liabilities Accounts payable Salaries and benefits payable Interfund payable Due to other governments Deposits payable Total liabilities Fund Balances Nonspendable Restricted Committed Unassigned Total fund balances Total liabilities and fund balances Storm Water Recycling Maintenance Forfeiture/ (215) (230) Seizure (240) $ 91,605 $ 769,776 $ 29,212 - 337,693 - - 118,141 7,700 - 141,342 - $ 1,366,952 $ 36,912 $ 91,60T 26,536 38,460 469 - 9,534 - - 625 - 48,619 469 26,536 - - 36,443 65,069 1,318,333 - 65,069 36,443 1,318,333 $ 91,605 $ 1,366,952 $ 36,912 104 Ice Arena Golf Course (250) Fund (255) Totals Nonmajor Special Revenue Funds 2018 2017 $ 6,220 $ 15,384 $ 912,197 $ 430,556 - - 337,693 293,746 59,396 - 185,237 106,936 280,647 11,029 433,018 336,305 1,391 9,498 10,889 2,827 - 30,297 30,297 30,625 $ 347,654 $ 66,208 $ 1,909,331 $ 1,200,995 148,356 40,522 254,343 58,301 23,998 36,145 69,677 60,560 337,693 - 337,693 293,746 4,435 2,868 7,928 6,053 - 5,578 5,578 - 514,482 85,113 675,219 418,660 1,391 39,795 41,186 33,452 - - 36,443 24,722 - - 1,383,402 947,486 (168,219) (58,700) (226,919) (223,325) (166,828) (18,905) 1,234,112 782,335 $ 347,654 $ 66,208 $ 1,909,331 $ 1,200,995 105 City of Cottage Grove Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Special Revenue Funds For the Year Ended December 31, 2018 With Comparative Totals for the Year Ended December 31, 2017 Revenues Intergovernmental Charges for services Fines and forfeitures Investment earnings Miscellaneous Total revenues Expenditures Current Public safety Public works Culture and recreation Capital outlay Public works Culture and recreation Total expenditures Excess of revenues over (under) expenditures Other Financing Sources (Uses) Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Fund Balances Beginning of year End of year Storm Water Recycling Maintenance Forfeiture/ (215) (230) Seizure (240) $ 58,880 $ 118,141 $ 14,730 - 841,140 - - - 62,494 1,708 13,598 1,053 - 9,328 - 60,588 982,207 78,277 - - 66,556 69,410 410,585 - - 26,097 - 69,410 436,682 66,556 (8,822) 545,525 11,721 - (41,300) - - (41,300) - (8,822) 504,225 11,721 73,891 814,108 24,722 $ 65,069 $ 1,318,333 $ 36,443 106 Totals Golf Course Ice Arena (250) Fund (255) 2018 2017 $ 57,000 $ - $ 248,751 $ 205,265 969,213 1,728,845 3,539,198 3,227,696 - - 62,494 13,948 534 860 17,753 5,628 200,504 1,940 211,772 2,938 1,227,251 1,731,645 4,079,968 3,455,475 - - 66,556 16,934 - - 479,995 476,881 817,931 1,639,059 2,456,990 2,225,391 - - 26,097 - 416,672 110,581 527,253 155,637 1,234,603 1,749,640 3,556,891 2,874,843 (7,352) (17,995) 523,077 580,632 - 190,000 190,000 190,000 (220,000) - (261,300) (479,623) (220,000) 190,000 (71,300) (289,623) (227,352) 172,005 451,777 291,009 60,524 (190,910) 782,335 491,326 $ (166,828) $ (18,905) $ 1,234,112 $ 782,335 107 City of Cottage Grove NONMAJOR DEBT SERVICE FUNDS The Debt Service Funds are used to account for the accumulation of resources for, and payment of, interest, principal, and related costs on long-term debt. The City's Debt Service Funds account for three types of bonded indebtedness: • Improvement Bonds • Refunding Bonds • Tax Increment Bonds City of Cottage Grove Subcombining Balance Sheet - Nonmajor Debt Service Funds December 31, 2018 With Comparative Totals for December 31, 2017 Totals 2017A G.O. Nonmajor Debt Service Funds 2018A G.O. Capital 2016A G.O. Improvement Improvement Refunding Tax Increment Bonds (310) Bonds (371) Bonds (369) Funds 2018 2017 Assest Cash and investments $ 375,668 $ 464,256 $ - $ 12,651 $ 852,575 $ 194,561 Interfund receivable - 1,135 - - 1,135 - Taxes receivable - delinquent - 2,876 2,770 - 5,646 2,854 Total assets $ 375,668 $ 468,267 $ 2,770 $ 12,651 $ 859,356 $ 197,415 Liabilities Accounts payable $ $ - $ - $ 6,210 $ 6,210 $ - Interfundpayable 1,135 - 1,135 Interfund loan payable - 20,000 20,000 Total liabilities 1,135 26,210 27,345 Deferred Inflows of Resources Unavailable revenue - property taxes - 2,876 2,770 - 5,646 2,854 Fund Balances Restricted 375,668 465,391 - 841,059 194,561 Unassigned (1,135) (13,559) (14,694) - Total fund balances 375,668 465,391 (1,135) (13,559) 826,365 194,561 Total liabilities, deferred inflows of resources, and fund balances $ 375,668 $ 468,267 $ 2,770 $ 12,651 $ 859,356 $ 197,415 109 City of Cottage Grove Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Debt Service Funds For the Year Ended December 31, 2018 With Comparative Totals for the Year Ended December 31, 2017 Revenues General property taxes Tax increment collections Special assessments Investment earnings Miscellaneous Total revenues Expenditures Current General government Debt service Principal retirement Interest and other charges Total expenditures Excess of revenues over (under) expenditures Other Financing Sources Bond issuance Transfers in Total other financing sources Net change in fund balances Fund Balances Beginning of year End of year Totals 2017A G.O. Nonmajor Debt Service Funds 2018A G.O. Capital 2016A G.O. Tax Improvement Improvement Refunding Increment Bonds (310) Bonds (371) Bonds(369) Funds 2018 2017 $ $ 596,916 $ 190,160 $ $ 787,076 $ 188,505 - - 305,000 305,000 175,000 6,169 - - 6,169 - 4,374 1,812 - 6,186 2,471 - - - 10,000 10,000 - 10,543 598,728 190,160 315,000 1,114,431 365,976 $ $ $ $ 30,140 $ 30,140 $ 1,425 - 595,000 240,000 835,000 800,000 325,287 103,175 61,030 489,492 186,745 325,287 698,175 331,170 1,354,632 988,170 10,543 273,441 (508,015) (16,170) (240,201) (622,194) 365,125 - 365,125 191,950 - 506,880 506,880 507,027 365,125 - 506,880 872,005 698,977 375,668 273,441 (1,135) (16,170) 631,804 76,783 - 191,950 2,611 194,561 117,778 $ 375,668 $ 465,391 $ (1,135) $ (13,559) $ 826,365 $ 194,561 110 City of Cottage Grove NONMAJOR CAPITAL PROJECTS FUNDS Capital Projects Funds are used to account for the acquisition and construction of major capital facilities other than those financed by Proprietary Funds. Equipment Replacement Fund — Established to accumulate monies for the replacement of capital equipment. Street Sealcoatiag — 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. Completed Construction — to account for the various surpluses (deficits) of other Special Assessment Construction Funds. Park Trust— to account for capital projects in new municipal parks. Park Capital Improvements — to account for capital projects in existing municipal parks. Water Connection and Area — to account for water connection and area charges. Sewer Connection and Area — 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 F� — to account for construction projects that are financed with tax increments. Ice Arena Construction Fund — to account for construction projects related to the Ice Arena. III City of Cottage Grove Subcombining Balance Sheet - Nonmajor Capital Projects Funds December 31, 2018 With Comparative Totals for December 31, 2017 Future Equipment Street Economic Completed Replacement Sealcoating Development Construction Park Trust (210) (235) (286) (500) (570) Assets Cash and investments $ 1,893,498 $ 914,401 $ 2,995,071 $ 466,501 $ 1,092,263 Interfund receivable - - - - - Interfund loan receivable - 837,232 Due from other governments 12,716 - Accounts receivable 141,225 Taxes Receivable - Delinquent - - - Special assessments receivable Deferred - - 18,700 - 69,791 Total assets $ 1,893,498 $ 1,068,342 $ 3,851,003 $ 466,501 $ 1,162,054 Liabilites Accounts payable $ - $ - $ - $ - $ 65 Interfund payable - Due to other governments Deposits payable Interfund loan payable - Total liabilities 65 Deferred Inflows of Resources Unavailable revenue - tax increment - - Unavailable revenue - special assessment; 18,700 69,791 Total deferred inflows of resources 18,700 69,791 Fund Balances Restricted - - - - - Assigned 1,893,498 1,068,342 3,832,303 466,501 1,092,198 Unassigned - - - - - Total fund balances 1,893,498 1,068,342 3,832,303 466,501 1,092,198 Total liabilities, deferred inflows of resources, and fund balances $ 1,893,498 $ 1,068,342 $ 3,851,003 $ 466,501 $ 1,162,054 112 Future Storm Park Capital Water Sewer Sewer Tax Increment Ice Arena Improvement Connection Improvements Connection Construction Construction Fund (515) and Area (575) (585) and Area (580) Revolving Fund (526) Totals Nonmajor Capital Projects Funds 2018 2017 $ 668,037 $ 1,739,598 $ 5,107,243 $ 112,456 $ 926,057 $ $ 15,915,125 $ 11,946,789 136,794 - - - - 136,794 350,791 - - - 837,232 1,118,467 - 2,809 360 15,885 2,004,868 3,500 - - - 144,725 190,352 - 519 519 - - 73,141 122,954 43,791 328,377 492,564 $ 808,331 $ 1,815,548 $ 5,230,197 $ 156,607 $ 926,576 $ $ 17,378,657 $ 16,103,831 $ 9,089 $ 10,366 $ 10,551 19,640 10,366 $ $ - 19,520 $ 563,418 136,794 136,794 350,791 - - 21,705 10,551 - 817,232 - 817,232 1,118,467 817,232 136,794 984,097 2,054,381 - - - 519 519 - 73,141 122,954 43,791 328,377 492,564 73,141 122,954 43,791 519 328,896 492,564 - - - - 108,825 108,825 - 788,691 1,732,041 5,107,243 112,816 - 16,093,633 14,289,280 - (136,794) (136,794) (732,394) 788,691 1,732,041 5,107,243 112,816 108,825 (136,794) 16,065,664 13,556,886 $ 808,331 $ 1,815,548 $ 5,230,197 $ 156,607 $ 926,576 $ - $ 17,378,657 $ 16,103,831 113 City of Cottage Grove Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Capital Projects Funds For the Year Ended December 31, 2018 With Comparative Totals for the Year Ended December 31, 2017 Future Equipment Street Economic Completed Replacement Sealcoating Development Construction Park Trust (210) (235) (286) (500) (570) Revenues Franchise taxes $ $ 567,875 $ $ $ Aggregate taxes 20,791 Tax increment collections - Special sssessments - 10,752 40,130 Direct charges to developers 99,270 - Intergovernmental - - Charges for services 17,960 Rent - - - Investment earnings 25,799 20,198 40,607 6,542 13,986 Interest on interfund loan - - 26,474 - - Connection charges - - Park dedication fees - 853,659 Donations 332,921 - Miscellaneous - - 210 10,269 Total revenues 25,799 726,094 410,964 6,542 918,044 Expenditures Current General governrnenl - - - 30,217 - Economic development - 36,586 - Public works 227,325 - 3,401 - Culture and recreation - - 26,821 Capital outlay General governrnenl - Public safety - Public works 549,781 Culture and recreation - Debt service Interest and other charges - - - - - Total expenditures 549,781 227,325 36,586 33,618 26,821 Excess of revenues over (under) expenditures (523,982) 498,769 374,378 (27,076) 891,223 Other Financing Sources (Uses) Proceeds from sale of capital assel 20,563 - - - Transfers in 614,787 Transfers out - (576,050) (234,655) (150,000) Total other financing sources (uses) 635,350 (576,050) (234,655) (150,000) Net change in fund balances 111,368 (77,281) 139,723 (27,076) 741,223 Fund Balances Beginning of year 1,782,130 1,145,623 3,692,580 493,577 350,975 End of year $ 1,893,498 $ 1,068,342 $ 3,832,303 $ 466,501 $ 1,092,198 114 Totals Future Storm Tax Increment Nonmajor Capital Projects Funds Park Capital Water Sewer Sewer Ice Arena Improvement Connection and Improvements Connection and Construction Construction Fund (515) Area (575) (585) Area (580) Revolving Fund (526) 2018 2017 $ $ $ $ $ $ $ 567,875 $ 560,492 20,791 28,442 464,475 464,475 638,541 42,056 70,699 25,180 - 188,817 216,925 99,270 36,965 358,608 - - 358,608 2,080,000 - 17,960 172,657 433,713 - - - - 433,713 401,599 10,437 24,315 66,800 2,003 6,497 217,184 117,237 - - - - - 26,474 32,206 803,885 1,202,877 770,175 2,776,937 2,050,958 - - - - 853,659 526,936 23,912 - 356,833 536,804 5,000 15,479 418,092 468,062 1,228,864 1,340,376 797,358 475,972 6,398,075 7,817,854 - - - - - $ 30,217 354 - - - 194,029 230,615 695,356 - 29,092 46,317 46,567 - 352,702 744,043 40,324 - - - 67,145 65,395 24,711 - - - 63,253 - 2,053,506 112,838 - 2,716,125 3,788,178 101,645 - - 136,794 238,439 1,118,555 - - 26,474 - 26,474 17,206 141,969 2,082,598 159,155 46,567 220,503 136,794 3,661,717 6,517,051 326,093 (853,734) 1,181,221 750,791 255,469 (136,794) 2,736,358 1,300,803 - - - - 20,563 19,485 150,000 234,655 999,442 929,034 (286,880) - (1,247,585) (2,135,775) 150,000 - (286,880) 234,655 (227,580) (1,187,256) 476,093 (853,734) 1,181,221 463,911 490,124 (136,794) 2,508,778 113,547 312,598 2,585,775 3,926,022 (351,095) (381,299) 13,556,886 13,443,339 $ 788,691 $ 1,732,041 $ 5,107,243 $ 112,816 $ 108,825 $ (136,794) $ 16,065,664 $ 13,556,886 115 City of Cottage Grove Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Recycling Special Revenue Fund For the Year Ended December 31, 2018 With Comparative Totals for the Year Ended December 31, 2017 Revenues Intergovernmental Investment earnings Total revenues Expenditures Current Public works Excess of revenues over (under) expenditures Fund Balances Beginning of year End of year 2018 2017 Budgeted Amounts Variance with Actual Final Budget - Original Final Amounts Over (Under) Actual $ 57,140 $ 57,140 $ 58,880 $ 1,740 $ 58,880 - - 1,708 1,708 442 57,140 57,140 60,588 3,448 59,322 56,445 56,445 69,410 12,965 42,954 $ 695 $ 695 (8,822) $ (9,517) 16,368 73,891 $ 65,069 57,523 $ 73,891 116 City of Cottage Grove Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Storm Water Maintenance Special Revenue Fund For the Year Ended December 31, 2018 With Comparative Totals for the Year Ended December 31, 2017 2018 2017 Budgeted Amounts Variance with Final Budget - Original Final Actual Amounts Over (Under) Actual Revenues Charges for services $ 806,000 $ 806,000 $ 841,140 $ 35,140 $ 802,571 Investment earnings 1,000 1,000 13,598 12,598 4,643 Intergovernmental - - 118,141 118,141 85,175 Miscellaneous - - 9,328 9,328 - Total revenues 807,000 807,000 982,207 175,207 892,389 Current Current Public works Capital Outlay Public works Total expenditures Excess of revenues over (under) expenditures Other Financing Uses Transfers out Net change in fund balance Fund Balances Beginning of year End of year 490,270 490,270 410,585 (79,685) 433,927 - - 26,097 26,097 - 490,270 490,270 436,682 (53,588) 433,927 316,730 316,730 545,525 228,795 458,462 (41,300) (41,300) (41,300) - (258,371) $ 275,430 $ 275,430 504,225 $ 228,795 200,091 814,108 $ 1,318,333 614,017 $ 814,108 117 City of Cottage Grove Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Forfeiture/Seizure Special Revenue Fund For the Year Ended December 31, 2018 With Comparative Totals for the Year Ended December 31, 2017 2018 2017 Budgeted Amounts Variance with Final Budget - Original Final Actual Amounts Over (Under) Actual Revenues Fines and forfeitures $ 21,000 $ 21,000 $ 62,494 $ 41,494 $ 13,948 Intergovernmental 8,000 8,000 14,730 6,730 4,210 Investment income 200 200 1,053 853 190 Total revenues 29,200 29,200 78,277 49,077 18,348 Expenditures Current Public Safety Capital outlay Public safety Total expenditures Excess of revenues over (under) expenditures Fund Balance Beginning of year End of year 18,620 18,620 66,556 47,936 16,934 10,000 10,000 - (10,000) - 28,620 28,620 66,556 37,936 16,934 $ 580 $ 580 11,721 $ 11,141 24,722 $ 36,443 1,414 23,308 $ 24,722 118 City of Cottage Grove Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Ice Arena Special Revenue Fund For the Year Ended December 31, 2018 With Comparative Totals for the Year Ended December 31, 2017 Revenues Intergovernmental Charges for services Investment earnings Contributions and donations Miscellaneous Total revenues Expenditures Current Culture and recreation Capital Outlay Culture and recreation Total expenditures Excess of revenues over (under) expenditures Other Financing Uses Transfers Out Net Change in Fund Balances Fund Balance Beginning of year End of year 2018 2017 Budgeted Amounts Variance with Actual Final Budget - Original Final Amounts Over (Under) Actual $ 57,000 $ 57,000 $ 57,000 - $ 57,000 1,010,000 1,010,000 969,213 (40,787) 967,874 6,000 6,000 534 (5,466) 314 - - 200,000 200,000 - - - 504 504 1,122 1,073,000 1,073,000 1,227,251 154,251 1,026,310 933,505 933,505 817,931 (115,574) 769,580 102,000 102,000 416,672 314,672 35,109 1,035,505 1,035,505 1,234,603 199,098 804,689 37,495 37,495 (7,352) (44,847) 221,621 (220,000) (220,000) (220,000) - (221,252) $ (182,505) $ (182,505) (227,352) $ (44,847) 369 60,524 $ (166,828) 60,155 $ 60,524 119 Revenues Charges for Services Investment earnings Miscellaneous Total revenues Expenditures Current Culture and Recreation Capital Outlay Culture and Recreation Total expenditures Excess of revenues over (under) expenditures Other Financing Sources Transfers In Net change in fund balances Fund Balance Beginning of year End of year City of Cottage Grove Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Golf Course Special Revenue Fund For the Year Ended December 31, 2018 With Comparative Totals for the Year Ended December 31, 2017 2018 2017 Budgeted Amounts Variance with Actual Final Budget - Original Final Amounts Over (Under) Actual 1,623,200 1,623,200 1,728,845 105,645 1,457,251 - - 860 860 - - - 1,940 1,940 1,816 1,623,200 1,623,200 1,731,645 108,445 1,459,067 1,504,410 1,504,410 1,639,059 134,649 1,451,315 241,000 241,000 110,581 (130,419) 120,528 1,745,410 1,745,410 1,749,640 4,230 1,571,843 (122,210) (122,210) (17,995) 104,215 (112,776) - 190,000 190,000 - 190,000 $ (122,210) $ 67,790 172,005 $ 104,215 77,224 (190,910) $ (18,905) (268,134) $ (190,910) 120 City of Cottage Grove INTERNAL SERVICE FUNDS Internal Service Funds account for the financing of goods or services provided by one department or division to other departments or divisions of the city and to other governmental units, on a cost reimbursement basis. 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. 121 City of Cottage Grove Combining Statement of Net Position - Internal Service Funds December 31, 2018 With Comparative Totals for December 31, 2017 Totals Self Fleet Information Insurance Maintenance Services (700) (710) (720) 2018 2017 Assets Current assets Cash and investments (Including cash equivalents) $ 2,040,696 $ 13,132 $ 59,947 $ 2,113,775 $ 2,463,941 Inventories - 115,964 - 115,964 97,030 Prepaid items 261,274 21,239 282,513 192,700 Total current assets 2,301,970 129,096 81,186 2,512,252 2,753,671 Noncurrent assets Capital assets Land - 424,665 - 424,665 424,665 Buildings and improvements 928,870 - 928,870 928,870 Equipment and furniture - 245,550 245,550 245,550 Machinery and equipment 378,922 - 378,922 289,899 Total capital assets 1,732,457 245,550 1,978,007 1,888,984 Accumulated depreciation (750,889) (143,936) (894,825) (825,652) Total noncurrent assets 981,568 101,614 1,083,182 1,063,332 Total assets 2,301,970 1,110,664 182,800 3,595,434 3,817,003 Deferred Outflows of Resources Deferred outflows of resources related to pensions - 48,899 24,631 73,530 97,417 Total assets and deferred outflows of resources $ 2,301,970 $ 1,159,563 $ 207,431 $ 3,668,964 $ 3,914,420 Liabilities Current liabilities Accounts payable 9,737 58,858 10,055 78,650 72,677 Salaries payable 478 20,122 10,679 31,279 26,489 Health care benefits payable 39,019 - - 39,019 31,882 Unpaid claims 170,124 - 170,124 171,752 Due to other governments - 593 - 593 882 Compensated absences payable - 19,012 11,587 30,599 36,437 Total current liabilities 219,358 98,585 32,321 350,264 340,119 Noncurrent liabilities Compensated absences payable - 7,642 6,129 13,771 16,095 Net pension liability 228,728 115,215 343,943 382,889 Total OPEB liability 8,349 3,422 11,771 3,722 Total noncurrent liabilities - 244,719 124,766 369,485 402,706 Total liabilities 219,358 343,304 157,087 719,749 742,825 Deferred Inflows of Resources Deferred inflows of resources related to pensions - 56,717 28,570 85,287 74,913 Deferred inflows of resources related to OPEB 328 134 462 - Total deferred inflows of resources 57,045 28,704 85,749 74,913 Net Position Net investment in capital assets - 981,568 101,614 1,083,182 1,063,332 Unrestricted 2,082,612 (222,354) (79,974) 1,780,284 2,033,350 Total net position 2,082,612 759,214 21,640 2,863,466 3,096,682 Total liabilities, deferred inflows of $ 2,301,970 $ 1,159,563 $ 207,431 $ 3,668,964 $ 3,914,420 resources, and net position 122 City of Cottage Grove Combining Statement of Revenues, Expenses, and Changes in Net Position - Internal Service Funds For the Year Ended December 31, 2018 With Comparative Totals for the Year Ended December 31, 2017 Operating Revenues Charges for services User fees Employee benefits Property insurance Insurance refunds and reimbursements Total operating revenues Operating Expenses Operating and maintenance Personal services Contractual services Commodities Administrative and general Personal insurance benefits Contractual services Claims Depreciation Total operating expenses Operating income (loss) Nonoperating Revenues Investment income Miscellaneous Total nonoperating revenues Change in net position Net Position Beginning of year, as previously stated Change in accounting principle Beginning of year, as restated End of year Totals Self Fleet Information Insurance Maintenance Services (700) (710) (720) 2018 2017 $ - $ 1,041,401 $ 606,880 $ 1,648,281 $ 1,456,049 2,058,535 - - 2,058,535 1,843,222 - - - - 233,400 128,806 - - 128,806 69,946 2,187,341 1,041,401 606,880 3,835,622 3,602,617 - 365,446 188,104 553,550 537,508 - 102,409 323,298 425,707 346,213 - 635,028 145,505 780,533 563,999 1,797,263 - - 1,797,263 1,731,744 276,778 - - 276,778 232,485 194,706 - - 194,706 101,893 - 42,833 26,340 69,173 66,454 2,268,747 1,145,716 683,247 4,097,710 3,580,296 (81,406) (104,315) (76,367) (262,088) 22,321 29,124 1,352 169 30,645 20,324 6,504 20 - 6,524 4,327 35,628 1,372 169 37,169 24,651 (45,778) (102,943) (76,198) (224,919) 46,972 2,128,390 868,042 100,250 3,096,682 3,049,710 - (5,885) (2,412) (8,297) - 2,128,390 862,157 97,838 3,088,385 3,049,710 $ 2,082,612 $ 759,214 $ 21,640 $ 2,863,466 $ 3,096,682 123 City of Cottage Grove Combining Statement of Cash Flows - Internal Service Funds For the Year Ended December 31, 2018 With Comparative Totals for the Year Ended December 31, 2017 Cash Flows - Operating Activities Receipts from interfund services provided Receipts from insurance refunds and reimbursements Payments to suppliers Payments to employees Miscellaneous revenue Net cash flows - operating activities Cash Flows - Capital and Related Financing Activities Acquisition of capital assets Cash Flows - Investing Activities Interest and dividends received Net Change in Cash and Cash Equivalents Cash and Cash Equivalents January 1 December 31 Reconciliation of Operating Income (Loss) to Net Cash Flows - Operating Activities Operating income (loss) Adjustments to reconcile operating income (loss) to net cash flows - operating activities Depreciation expense Miscellaneous revenue Pension expense Receivables Prepaid items Inventory Accounts payable Unpaid claims Due to other governmental units Salaries payable Health care benefits payable Compensated absences payable OPEB expense Total adjustments Net cash flows - operating activities Totals Fleet Information Self Insurance Maintenance Services (700) (710) (720) 2018 2017 $ 2,058,535 $ 1,041,401 $ 606,880 $ 3,706,816 $ 3,532,671 128,806 - - 128,806 69,946 (572,136) (759,681) (450,598) (1,782,415) (1,257,312) (1,790,214) (381,918) (179,387) (2,351,519) (2,242,155) 6,504 20 6,524 4,327 (168,505) (100,178) (23,105) (291,788) 107,477 (89,023) (89,023) (95,249) 29,124 1,352 169 30,645 20,324 (139,381) (187,849) (22,936) (350,166) 32,552 2,180,077 200,981 82,883 2,463,941 2,431,389 $ 2,040,696 $ 13,132 $ 59,947 $ 2, 113,775 $ 2, 663,941 $ (81,406) $ (104,315) $ (76,367) $ (262,088) $ 22,321 - 42,833 26,340 69,173 66,454 6,504 20 - 6,524 4,327 - (8,935) 4,250 (4,685) 20,126 - 4,241 (105,966) 16,153 (89,813) (9,598) - (18,934) - (18,934) (5,727) 6,942 (3,021) 2,052 5,973 5,333 (1,628) - - (1,628) - - (289) - (289) (88) 2,740 2,138 4,790 7,137 - - 7,137 - (10,429) 2,267 (8,162) $ (168,505) $ (1OQ178) $ (23,105) $ (291,788) $ 107,477 124 City of Cottage Grove ECONOMIC DEVELOPMENT AUTHORITY COMPONENT UNIT Established to account for the receipt and use of monies for economic development purposes. 125 City of Cottage Grove Combining Balance Sheet - All Governmental Fund Types - Economic Development Authority Component Unit December 31, 2018 With Comparative Totals for December 31, 2017 Totals Economic Economic Development Development Authority Component Unit Authority (285, 368, 367) 2018 2017 Assets Cash and investments $ 185,531 $ 185,531 $ - Accounts receivable 2,569 2,569 3,019 Prepaid items 625 625 495 Taxes receivable - delinquent 1,288 1,288 1,281 Loan receivable 130,679 130,679 358,943 Property held for resale 308,718 308,718 311,718 Total assets $ 629,410 $ 629,410 $ 675,456 Liabilities, Deferred Inflows of Resources, and Fund Balances Liabilities Accounts payable 20,042 20,042 14,934 Salaries and benefits payable 10,518 10,518 8,931 Due to other governments 156,039 156,039 652,536 Deposits Payable - - 2,000 Total liabilities 186,599 186,599 678,401 Deferred inflows of resources Unavailable revenue - property taxes 1,288 1,288 1,281 Fund balances Nonspendable 625 625 311,718 Restricted 440,898 440,898 - Unassigned - - (315,944) Total fund balances 441,523 441,523 (4,226) Total liabilities, deferred inflows of resources, and fund balances $ 629,410 $ 629,410 $ 675,456 Fund balance reported above $ 441,523 Other long-term assets, including property taxes receivable, are not available to pay for current -period expenditures, and therefore, are deferred in the governmental funds. 1,288 Deferred outflows of resources and deferred inflows of resources are created as a result of various differences related to pensions that are not recognized in the governmetnal funds. Deferred inflows of resources related to pensions (28,636) Deferred outflows of resources related to pensions 24,689 Deferred inflows of resources related to OPEB (146) Long-term liabilties, including bonds payable, compenstated absences, net pension liability, and other post employment benefits, are not due and payable in the current period and therefore are not reported in the funds. (124,716) Net position of component unit $ 314,002 126 City of Cottage Grove Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - All Governmental Fund Types - Economic Development Authority Component Unit For the Year Ended December 31, 2018 With Compartive Totals for the Year Ended December 31, 2017 Revenues General property taxes Charges for services Investment earnings Interest on loan to primary government Miscellaneous Total revenues Expenditures Current General government Personal services Commodities Contractual services Capital outlay General government Total expenditures Excess of revenues over (under) expenditures Fund Balances Beginning of year End of year Net increase in fund balance reported above Revenues in the Statement of Activities that do not report current financial resources are not reported as revenues in the funds: General property taxes unavailable revenue: At December 31, 2017 At December 31, 2018 Governmental funds recognize pension contributions as expenditures at the time of payment whereas the Statement of Activities factors in items related to pensions on a full accrual perspective. Governmental funds recognize OPEB activity as expenditures at the time of payment whereas the Statement of Activties factors in items related to pensions on a full accrual perspective. 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 governrnetnal funds: Compensated absences: At December 31, 2017 At December 31, 2018 Change in net position of component unit Economic Development Authority (285, 368, 367) Totals 2018 2017 $ 125,033 $ 125,033 $ 110,710 1,452,293 1,452,293 30,000 7,193 7,193 158 1,460 1,460 1,582 986 986 18,625 1,586,965 1,586,965 161,075 194,012 194,012 184,031 214 214 452 237,876 237,876 204,294 709,074 709,074 - 1,141,176 1,141,176 388,777 445,789 445,789 (227,702) (4,266) (4,266) 223,476 $ 441,523 $ 441,523 $ (4,226) $ 445,789 (1,281) 1,288 1,582 (68) 5,589 (5,513) $ 447,386 127 (THIS PAGE LEFT BLANK INTENTIONALLY) 128 SUPPLEMENTARY FINANCIAL INFORMATION 129 City of Cottage Grove Combined Schedule of Bonded Indebtedness December 31, 2018 Authorized Interest Rate Dated Final Payment and Issued Primary Government General Obligation Bonds $1,405,000 Tax Increment Bonds of 2004A 3.00%-4.65% 7/l/2004 2/l/2024 $ 1,405,000 $1,405,000 Tax Increament Refunding Bonds of 2014A 2.00%-2.50% 5/29/2014 2/l/2021 1,405,000 $4,660,000 G.O. Refunding Bonds of 2016A 2.00%-3.00% 1/28/2016 2/l/2027 4,660,000 $9,155,000 G.O. CIP Bonds of 2017A 2.50%-3.25% 5/11/2017 2/l/2038 9,155,000 Total General Obligation Bonds 16,625,000 Special Assessment Debt Improvement Bonds of 2012A 0.30%-2.20% 3/13/2012 2/l/2027 1,865,000 Improvement Bonds of 2013A 3.00%-3.50% 9/26/2013 2/l/2029 7,345,000 Improvement Bonds of 2015A 2.50%-3.00% 5/27/2015 2/l/2031 5,700,000 Improvement Bonds of 2016B 2.00%-2.10% 11/16/2016 2/l/2033 4,275,000 Improvement Bonds of 2018A 3.00% 6/26/2018 2/l/2035 7,620,000 Total Special Assessment Debt with Governmental Commitment 26,805,000 Total Bonded Indebtedness - Primary Government 43,430,000 Total Bonded Indebtedness - Reporting Entity $ 43,430,000 130 Principal due Interest due Retired Outstanding in 2019 in 2019 $ 450,000 $ 955,000 $ 35,000 $ 42,780 740,000 665,000 225,000 12,410 1,170,000 3,490,000 610,000 84,150 - 9,155,000 345,000 260,600 2,360,000 14,265,000 1,215,000 399,940 720,000 1,145,000 125,000 19,599 1,590,000 5,755,000 450,000 173,565 685,000 5,015,000 355,000 137,060 150,000 4,125,000 275,000 80,170 - 7,620,000 - 250,825 3,145,000 23,660,000 1,205,000 661,219 5,505,000 37,925,000 2,420,000 1,061,159 $ 5,505,000 $ 37,925,000 $ 2,420,000 $ 1,061,159 131 City of Cottage Grove Debt Service Payments to Maturity December 31, 2018 Primary Government General Obligation Bonds Special Assessment Bonds Tax Increment Revenue Bonds Pavement Management $1,405,000 Tax $1,405,000 Tax Increment $4,660,000 $9,155,000 Increment Refunding Total Tax G.O. Refunding G.O. CIP Total General $1,865,000 $7,345,000 $5,700,000 $4,275,000 $7,620,000 Total Pavement Bonds of Bonds of Increment Bonds of Bonds of Total Revenue Obligation Bonds of Bonds of Bonds of Bonds of Bonds of Management 2004A 2014A Bonds 2016A 2017A Bonds Bonds 2012A 2013A 2015A 2016B 2018A Bonds Bonds payablc $ 955,000 $ 665,000 $ 1,620,000 $ 3,490,000 $ 9,155,000 $ 12,645,000 $ 14,265,000 $ 1,145,000 $ 5,755,000 $ 5,015,000 $ 4,125,000 $ 7,620,000 $ 23,660,000 Future interest payable Totals 181,485 $ 1,136,485 22,490 $ 687,490 203,975 $ 1,823,975 365,600 $ 3,155,610 2,919,000 $ 12,174,010 3,284,600 $ 15,929,600 3,488,575 $ 17,753,575 98,584 $ 1,243,584 1,074,651 $ 6,829,651 926,820 $ 5,941,820 610,540 $ 4,735,540 2,319,325 $ 9,939,325 5,029,920 $ 28,689,920 Payments to maturity 2019 77,780 237,410 315,190 694,150 605,600 1,299,750 1,614,940 144,599 623,565 492,060 355,170 250,825 1,866,219 2020 76,240 247,580 323,820 400,050 605,100 1,005,150 1,328,970 148,002 624,840 481,410 349,670 228,600 1,832,522 2021 104,040 202,500 306,540 400,000 604,299 1,004,299 1,310,839 146,118 620,740 480,610 344,170 632,450 2,224,088 2022 286,872 - 286,872 399,650 603,200 1,002,850 1,289,722 144,005 621,265 474,585 338,670 630,000 2,208,525 2023 294,810 - 294,810 394,075 606,725 1,000,800 1,295,610 146,685 621,340 473,335 343,070 632,175 2,216,605 2024 296,743 - 296,743 393,275 604,875 998,150 1,294,893 149,070 620,965 461,935 337,370 633,900 2,203,240 2025 - - - 394,050 602,725 996,775 996,775 146,200 620,140 460,385 331,670 630,250 2,188,645 2026 - - - 391,500 605,200 996,700 996,700 148,135 618,590 459,535 325,970 631,225 2,183,455 2027 - - - 388,850 603,388 992,238 992,238 70,770 620,944 449,535 325,220 631,750 2,098,219 2028 - - - - 607,325 607,325 607,325 - 616,587 443,966 319,420 631,825 2,011,798 2029 - - - - 605,950 605,950 605,950 - 620,675 442,691 313,620 631,450 2,008,436 2030 - - - - 603,738 603,738 603,738 - - 431,383 312,770 630,625 1,374,778 2031 - - - - 605,607 605,607 605,607 - - 390,390 311,820 629,350 1,331,560 2032 - - - - 602,131 602,131 602,131 - - - 305,670 627,625 933,295 2033 - - - - 602,675 602,675 602,675 - - - 121,260 630,375 751,635 2034 - - - - 602,151 602,151 602,151 - - - - 627,600 627,600 2035 - - - - 601,175 601,175 601,175 - - - - 629,300 629,300 2036 - - - - 599,750 599,750 599,750 - - - - - - 2037 - - - - 602,799 602,799 602,799 - - - - - - 2038 599,587 599,587 599,587 Totals $ 1,136,485 $ 687,490 $ 1,823,975 $ 3,855,600 $ 12,074,000 $ 15,929,600 $ 17,753,575 $ 1,243,584 $ 6,829,651 $ 5,941,820 $ 4,735,540 $ 9,939,325 $ 28,689,920 N City of Cottage Grove Deferred Tax Levies December 31, 2018 Special Assessment Bonds Pavement Management Total Special Year of Tax $1,865,000 $7,345,000 $5,700,000 $4,275,000 $7,620,000 Assessment Levy/Collection Bonds of 2012A Bonds of 2013A Bonds of 2015A Bonds of 2016B Bonds of 2018A Bonds 2018/19 $ 86,596 $ 414,511 $ 316,679 $ 196,559 $ - $ 1,014,345 2019/20 84,753 410,363 321,054 194,579 383,494 1,394,243 2020/21 82,638 411,150 319,863 192,598 381,079 1,387,328 2021/22 85,567 411,466 323,765 201,117 383,599 1,405,514 2022/23 88,266 411,308 316,853 198,926 385,646 1,400,999 2023/24 85,326 410,678 320,440 196,736 381,971 1,395,151 2024/25 87,489 409,576 323,712 194,545 383,231 1,398,553 2025/26 42,424 412,673 318,269 197,604 384,019 1,354,989 2026/27 - 409,271 318,076 195,308 384,334 1,306,989 2027/28 414,022 321,939 193,013 384,176 1,313,150 2028/29 - 315,014 195,967 383,546 894,527 2029/30 328,911 198,816 382,444 910,171 2030/31 - 196,310 380,868 577,178 2031/32 70,082 384,071 454,153 2032/33 - 381,393 381,393 2033/34 - - - - 383,493 383,493 Totals $ 643,059 $ 4,115,018 $ 3,844,575 $ 2,622,160 $ 5,747,364 $ 16,972,176 133 City of Cottage Grove Subcombining Balance Sheet - Pavement Management Debt Service Schedule December 31, 2018 With Comparative Totals for December 31, 2017 Assets Cash and investments Taxes receivable - delinquent Special assessments receivable Deferred Delinquent Special deferred Total assets Liabilities Accounts payable Deferred Inflows of Resources Unavailable revenue - property taxes Unavailable revenue - special assessments Total deferred inflows of resources Fund Balances Restricted Total liabilities, deferred inflows of resources and fund balances G.O. G.O. G.O. G.O. Improvement Improvement Improvement Improvement Bonds 2012A Bonds 2013A Bonds 2015A Bonds 2016B (490) (491) (492) (493) $ 312,791 $ 703,190 $ 1,001,766 $ 511,226 800 3,036 1,289 479 206,098 912,289 1,143,786 777,636 - 2,198 6,288 127 - 5,194 5,401 8,517 $ 519,689 $ 1,625,907 $ 2,158,530 $ 1,297,985 800 3,036 1,289 479 206,098 919,681 1,155,475 786,280 206,898 922,717 1,156,764 786,759 312,791 703,190 1,001,766 511,226 $ 519,689 $ 1,625,907 $ 2,158,530 $ 1,297,985 134 Totals Pavement Management Debt Service Schedule pill F T17U7 $ 2,528,973 $ 3,087,420 5,604 5,868 3,039,809 3,940,699 8,613 12,231 19,112 18,498 $ 5,602,111 $ 7,064,716 $ - $ 500 5,604 5,868 3,067,534 3,971,428 3,073,138 3,977,296 2,528,973 3,086,920 $ 5,602,111 $ 7,064,716 135 City of Cottage Grove Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balances - Pavement Management Debt Service Schedule For the Year Ended December 31, 2018 With Comparative Totals for the Year Ended December 31, 2017 Revenues General property taxes Special assessments Investment earnings Total revenues Expenditures Current General Government Debt service Principal Interest and other charges Total expenditures Excess of revenues over (under) expenditures Other Financing Sources Transfers in Net change in fund balances Fund Balances Beginning of year End of year G.O. G.O. G.O. G.O. Improvement Improvement Improvement Improvement Bonds2009A Bonds2012A Bonds2013A Bonds2015A (488) (490) (491) (492) $ - $ 70,096 $ 324,779 $ 248,804 114,475 63,885 180,092 260,547 131 3,274 5,616 9,780 114,606 137,255 510,487 519,131 3,600 744 5,758 1,241 1,710,000 120,000 435,000 345,000 34,675 21,308 187,315 148,010 1,748,275 142,052 628,073 494,251 (1,633,669) (4,797) (117,586) 24,880 1,159,367 - - - (474,302) (4,797) (117,586) 24,880 474,302 317,588 820,776 976,886 $ - $ 312,791 $ 703,190 $ 1,001,766 136 G.O. Improvement Bonds2016B (493) Totals Pavement Management Debt Service Schedule 2018 2017 $ 99,486 $ 743,165 $ 789,902 144,888 763,887 863,801 5,268 24,069 15,385 249,642 1,531,121 1,669,088 889 12,232 7,789 150,000 2,760,000 1,115,000 84,895 476,203 514,528 235,784 3,248,435 1,637,317 13,858 (1,717,314) 31,771 - 1,159,367 13,858 (557,947) 31,771 497,368 3,086,920 3,055,149 S 511,226 $ 2,528,973 $ 3,086,920 137 Assets Cash and investments Taxes receivable - delinquent Total assets Liabilities Accounts payable Interfund loan payable Total liabilities Deferred inflows of resources Unavailable revenue - tax increment Fund Balances Restricted Unassigned Total fund balances City of Cottage Grove Subcombining Balance Sheet - Tax Increment Construction Revolving Schedule December 31, 2018 With Comparative Totals for December 31, 2017 TIF 1-12 (532 TIF 1-8 (533) 534) TIF 1-15 (529) TIF 1-16 (528) $ 403,909 $ 505,491 $ 14,719 $ 655 - 519 - - $ 403,909 $ 506,010 $ 14,719 $ 655 482,461 274,887 482,461 274,887 - 519 - - 403,909 505,491 - - - - (467,742) (274,232) 403,909 505,491 (467,742) (274,232) Total liabilities, deferred inflows of resources, and fund balances $ 403,909 $ 506,010 $ 14,719 $ 655 138 Totals TIF 1-17 Reconciliation TIF Revolving Capital Project Schedule Dominium to Nonmajor (540) TIF 1- 18 (542) Fund 2018 2017 $ 1,283 $ - $ - $ 926,057 $ 765,271 - - - 519 - $ 1,283 $ - $ - $ 926,576 $ 765,271 - - - - 28,103 39,408 20,476 - 817,232 1,118,467 39,408 20,476 - 817,232 1,146,570 519 (800,575) 108,825 - (38,125) (20,476) 800,575 - (381,299) (38,125) (20,476) - 108,825 (381,299) $ 1,283 $ - $ - $ 926,576 $ 765,271 139 City of Cottage Grove Subcombining Schedule of Revenues, Expenditures, and Changes in Fund Balances - Tax Increment Construction Revolving Schedule For the Year Ended December 31, 2018 With Comparative Totals for the Year Ended December 31, 2017 TIF 1-12 TIF 1-8 (533) (532 534) TIF 1-14 (530) TIF 1-15 (529) Revenues Tax increment collections $ - $ 350,246 $ - $ 71,341 Investment earnings 5,721 540 Miscellaneous - - Total revenues - 355,967 71,881 Expenditures Current Economic development 20 167,911 280 Capital outlay Economic development - - - Debt service Interest and other charges - - 16,130 Total expenditures 20 167,911 16,410 Excess of revenues over (under) expenditures (20) 188,056 - 55,471 Other Financing Sources Transfers in - - 234,655 - Net change in fund balances (20) 188,056 234,655 55,471 Fund Balances Beginning of year 403,929 317,435 (234,655) (523,213) End of year $ 403,909 $ 505,491 $ - $ (467,742) 140 Totals TIF 1-17 TIF Revolving Capital Project Schedule TIF 1-16 (528) Dominium (540) TIF 1-18 (542) 2018 2017 $ 34,720 $ 8,168 $ - $ 464,475 $ 638,541 191 45 - 6,497 8,190 - - 5,000 5,000 356,071 34,911 8,213 5,000 475,972 1,002,802 259 83 25,476 194,029 664,125 - - - - 605,717 8,997 1,347 - 26,474 17,206 9,256 1,430 25,476 220,503 1,287,048 25,655 6,783 (20,476) 255,469 (284,246) 25,655 6,783 234,655 (20,476) 490,124 (284,246) (299,887) (44,908) (381,299) (97,053) $ (274,232) $ (38,125) $ (20,476) $ 108,825 $ (381,299) 141 Assets Cash and investments Liabilities Accounts payable Interfund loan payable Total liabilities Fund Balances Restricted Unassigned Total fund balances Total liabilities and fund balances City of Cottage Grove Subcombining Balance Sheet - TIF Debt Service Revolving Schedule December 31, 2018 With Comparative Totals for December 31, 2017 Totals TIF Debt Service Revolving Schedule 2014A Taxable 2014A Exempt Tax Increment Increment Bonds Refunding Reconciliation TIF 1-12 (338) Bonds TIF 1-12 to Nonmajor (341) Fund 2018 2017 $ 638 $ 12,013 $ $ 12,651 $ 2,611 $ - $ 6,210 $ $ 6,210 $ - 20,000 20,000 26,210 26,210 638 (638) 2,611 - (14,197) 638 (13,559) - 638 (14,197) (13,559) 2,611 $ 638 $ 12,013 $ $ 12,651 $ 2,611 142 City of Cottage Grove Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balances - TIF Debt Service Revolving Schedule For the Year Ended December 31, 2018 With Comparative Totals for the Year Ended December 31, 2017 Revenues Tax increment collections Investment earnings Miscellaneous: Total revenues Expenditures Current Economic development Debt service Principal retirement Interest and other charges Total expenditures Excess of revenues under expenditures Fund Balances Beginning of year End of year Totals TIF Debt Service Revolving Schedule 2004A Tax 2014A Taxable Exempt Tax Increment Increment Refunding Bonds TIF 1-12 Bonds TIF 1-12 (338) (341) 2018 2017 $ 80,000 $ 225,000 $ 305,000 $ 175,000 - - - 2,471 - 10,000 10,000 - 80,000 235,000 315,000 177,471 1,025 29,115 30,140 950 35,000 205,000 240,000 225,000 44,320 16,710 61,030 66,520 80,345 250,825 331,170 292,470 (345) 983 $ 638 (15,825) (16,170) (114,999) 1,628 2,611 117,610 $ (14,197) $ (13,559) $ 2,611 143 (THIS PAGE LEFT BLANK INTENTIONALLY) 144 STATISTICAL SECTION (UNAUDITED) 145 City of Cottage Grove Statistical Section (Unaudited) This part of the City of Cottage Grove' 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 Position by 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 level of outstanding debt and the government's ability to issue additional debt in the future. Table 9 — Ratios of Outstanding Debt by Type Table 10 — Ratios of General Bonded Debt Outstanding Table 11 — Direct and Overlapping Governmental Activities Debt Table 12 — Legal Debt Margin Information Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the government's financial activities take place. Table 13 — Demographic and Economic Statistics Table 14 — Principal Employers 146 City of Cottage Grove Statistical Section (Unaudited) (Continued) 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 activities itperforms. Table 15 — Full-time Equivalent City Government Employees by Function Table 16 — Operating Indicators by Function/Program Table 17 — Capital Asset 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. 147 (THIS PAGE LEFT BLANK INTENTIONALLY) Governmental activities Net investment in capital assets Restricted Unrestricted Total governmental activities net position Business -type activities Net investment in capital assets Restricted Unrestricted Total business -type activities net position Primary government Net investment in capital assets Restricted Unrestricted Total primary government net position City of Cottage Grove Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year Table 1 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 $ 92,735,500 $ 94,794,079 $ 109,696,916 $ 120,412,875 $ 124,156,059 $ 127,260,042 $ 125,562,970 $ 132,834,867 $ 140,298,832 $ 152,256,234 8,158,356 5,841,563 4,282,305 4,210,913 7,187,948 6,971,432 8,766,706 7,609,138 2,855,507 6,177,599 42,928,157 45,412,895 34,625,010 25,024,447 25,908,617 28,277,397 24,285,174 19,091,443 24,845,782 21,252,792 $ 143,822,013 $ 146,048,537 $ 148,604,231 $ 149,648,235 $ 157,252,624 $ 162,508,871 $ 158,614,850 $ 159,535,448 $ 168,000,121 $ 179,686,625 $ 54,106,504 $ 53,870,041 $ 53,664,161 $ 53,225,445 $ 51,453,195 $ 54,432,059 $ 54,202,710 $ 54,063,470 $ 56,060,163 $ 63,822,257 269,195 325,685 325,460 - - - - - - - 12,283,780 12,829,661 13,236,680 14,645,490 16,792,024 15,896,363 13,980,970 13,628,016 11,528,841 11,707,720 $ 66,659,479 $ 67,025,387 $ 67,226,301 $ 67,870,935 $ 68,245,219 $ 70,328,422 $ 68,183,680 $ 67,691,486 $ 67,589,004 $ 75,529,977 $ 146,842,004 $ 148,664,120 $ 163,361,077 $ 173,638,320 $ 175,609,254 $ 181,692,101 $ 179,765,680 $ 186,898,337 $ 196,358,995 $ 216,078,491 8,427,551 6,167,248 4,607,765 4,210,913 7,187,948 6,971,432 8,766,706 7,609,138 2,855,507 6,177,599 55,211,937 58,242,556 47,861,690 39,669,937 42,700,641 44,173,760 38,266,144 32,719,459 36,374,623 32,960,512 $ 210,481,492 $ 213,073,924 $ 215,830,532 $ 217,519,170 $ 225,497,843 $ 232,837,293 $ 226,798,530 $ 227,226,934 $ 235,589,125 $ 255,216,602 Expenses Governmental activities General government Regular operations Community development Economic development Public safety Public works Culture and recreation Interest on long-term debt Total governmental activities expenses Business -type activities Golf course Street lights Cottage Grove EMS Water operating Sewer operating Total business -type activities Total primary government expenses Program Revenues Governmental activities Charges for services General government Regular operations Community development Economic development Public safety Public works Regular operations Construction Culture and recreation Operating grants and contributions Capital grants and contributions Total governmental activities program revenues City of Cottage Grove Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) Table 2 Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 $ 1,868,582 $ 2,125,407 $ 2,985,571 $ 2,997,825 $ 2,270,332 $ 2,229,518 $ 2,346,805 $ 3,450,479 $ 2,398,669 $ 2,573,693 (1) 1,106,256 1,140,456 - - 903,180 946,001 1,086,197 1,173,071 1,527,549 1,626,960 (1) - - 1,110,214 362,009 61,302 545,646 1,460,114 2,257,548 740,668 275,927 5,724,450 5,888,224 6,252,530 7,069,301 6,949,225 7,212,998 7,662,393 10,153,726 9,308,430 9,353,309 5,652,435 5,911,193 6,688,115 6,609,111 8,121,230 7,599,182 7,426,045 9,623,335 8,413,073 8,559,929 2,674,781 2,992,620 2,948,075 3,059,273 4,768,181 5,119,093 5,153,844 5,340,558 5,137,951 5,035,903 (2) 1,548,704 1,056,110 846,258 827,645 976,891 808,642 1,029,228 875,642 962,772 1,037,986 18,575,208 19,114,010 20,830,763 20,925,164 24,050,341 24,461,080 26,164,626 32,874,359 28,489,112 28,463,707 1,553,921 1,447,849 1,504,006 1,614,321 - - - - - - (2) 508,615 534,206 625,312 659,869 742,410 867,690 746,794 746,005 882,660 991,041 920,991 975,560 1,038,972 1,109,809 1,322,635 1,412,855 1,507,766 1,688,041 1,571,044 1,605,779 1,801,070 1,891,752 1,901,985 2,049,877 2,341,555 2,216,819 2,438,166 2,370,466 2,789,792 2,980,080 2,079,127 2,150,795 2,223,749 2,242,778 2,278,958 2,428,944 2,448,283 2,727,188 2,879,119 2,881,446 6,863,724 7,000,162 7,294,024 7,676,654 6,685,558 6,926,308 7,141,009 7,531,700 8,122,615 8,458,346 $ 25,438,932 $ 26,114,172 $ 28,124,787 $ 28,601,818 $30,735,899 $31,387,388 $ 33,305,635 $ 40,406,059 $36,611,727 $36,922,053 $ 246,027 $ 224,719 $ 764,185 $ 883,272 $ 238,721 $ 138,768 $ 117,636 $ 665,193 $ 108,808 $ 319,999 (1) 852,453 944,278 - - 1,115,203 989,140 1,527,836 1,660,365 2,240,628 1,758,096 (1) - - 175 210 7,626 1,771 3,467 5,210 210 210 391,593 396,887 444,039 429,646 353,130 325,368 394,574 431,862 363,782 360,609 720,397 710,341 845,315 880,095 797,432 1,010,695 971,599 975,532 1,099,690 3,932,082 17,273 - - - - - - - - - 980,003 1,178,977 1,024,516 1,026,685 2,413,744 2,448,968 3,091,072 2,725,288 2,682,090 3,376,799 (2) 1,192,559 1,210,249 1,084,928 1,075,529 1,211,506 1,545,268 1,237,805 1,676,805 1,408,099 3,710,686 2,941,206 2,464,782 5,118,546 3,064,292 10,370,972 9,401,775 5,861,631 10,284,047 13,805,696 13,899,381 7,341,511 7,130,233 9,281,704 7,359,729 16,508,334 15,861,753 13,205,620 18,424,302 21,709,003 27,357,862 Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Program Revenues (continued) Business -type activities: Charges for services: Golf course 1,563,399 1,583,098 1,399,204 1,566,035 - - - - - - (2) Streetlights 596,703 494,162 532,607 540,696 580,837 658,810 549,005 530,905 685,560 821,512 Cottage Grove EMS 1,130,948 1,068,953 1,114,226 1,528,756 1,569,017 1,626,320 1,431,007 1,766,236 1,510,101 2,006,555 Water operating 2,428,738 2,161,076 2,249,926 2,773,937 2,369,570 1,868,942 1,840,088 1,817,862 1,664,292 2,144,652 Sewer operating 1,939,912 2,202,013 2,208,014 2,207,363 2,175,479 2,151,756 2,310,624 2,291,038 2,294,714 2,685,608 Operating grants and contributions - - - - - - - - - 2,350 Capital grants and contributions 165,266 267,465 - 1,051,532 1,783,762 361,762 196,671 441,738 4,488,437 Total business -type activities program revenues 7,659,700 7,674,568 7,771,442 8,616,787 7,746,435 8,089,590 6,492,486 6,602,712 6,596,405 12,149,114 Total primary government program revenues $ 15,001,211 $ 14,804,801 $ 17,053,146 $ 15,976,516 $24,254,769 $23,951,343 $ 19,698,106 $ 25,027,014 $28,305,408 $39,506,976 Net (Expense)/Revenue Governmental activities $(11,233,697) $(11,983,777) $(11,549,059) $(13,565,435) $ (7,542,007) $ (8,599,327) $(12,959,006) $(14,450,057) $ (6,780,109) $ (1,105,845) Business -type activities 795,976 674,406 477,418 940,133 1,060,877 1,163,282 (648,523) (928,988) (1,526,210) 3,690,768 Total primary government net expense $(10,437,721) $(11,309,371) $(11,071,641) $(12,625,302) $ (6,481,130) $ (7,436,045) $(13,607,529) $(15,379,045) $ (8,306,319) $ 2,584,923 General Revenues and Other Changes in Net Position Governmental activities: Property taxes $ 11,808,510 $ 11,427,029 $ 11,494,758 $ 12,330,135 $12,096,046 $12,616,267 $ 13,394,585 $ 13,956,582 $14,483,061 $15,171,020 Franchise taxes 399,588 517,391 535,188 537,682 540,767 542,689 526,643 516,931 560,492 567,875 Aggregate taxes 24,234 30,554 26,131 26,180 26,135 26,236 37,133 39,748 28,442 20,791 Tax increment collections 1,123,774 1,253,414 946,603 892,438 939,314 711,628 710,541 776,061 1,002,046 769,475 Grants and contributions not restricted to specific programs 202,751 27,050 26,146 29,742 29,060 83,682 99,137 126,058 126,670 - Unrestricted investment earnings (loss) 998,846 502,721 624,785 368,821 (149,614) 551,910 357,170 285,494 330,903 519,675 Gain on sale of capital assets 4,227 23,872 12,342 10,546 3,997 43,904 (15,157) - - 71,631 Transfers (1,134,566) 428,270 438,800 413,895 375,266 (720,742) 613,878 (330,219) (1,286,832) (4,126,962) Special item -golf course loan forgiveness 1,020,000 - - - - Total governmental activities 13,427,364 14,210,301 14,104,753 14,609,439 14,880,971 13,855,574 15,723,930 15,370,655 15,244,782 12,993,505 Business -type activities: Grants and contributions not restricted to specific programs - - - - - - 7,736 17,161 - Unrestricted investment earnings (loss) 176,619 119,772 162,296 118,396 (45,902) 199,179 137,896 96,851 119,735 152,466 Gain on sale of capital assets - - - - - - 1,988 - - Transfers 1,134,566 (428,270) (438,800) (413,895) (375,266) 720,742 (613,878) 330,219 1,286,832 4,126,962 Total business -type activities 1,311,185 (308,498) (276,504) (295,499) (421,168) 919,921 (475,982) 436,794 1,423,728 4,279,428 Total primary government $ 14,738,549 $ 13,901,803 $ 13,828,249 $ 14,313,940 $14,459,803 $14,775,495 $ 15,247,948 $ 15,807,449 $16,668,510 $17,272,933 Change in Net Position Governmental activities $ 2,193,667 $ 2,226,524 $ 2,555,694 $ 1,044,004 $ 7,338,964 $ 5,256,247 $ 2,764,924 $ 920,598 $ 8,464,673 $11,887,660 Business -type activities 2,107,161 365,908 200,914 644,634 639,709 2,083,203 (1,124,505) (492,194) (102,482) 7,970,196 Total primary government $ 4,300,828 $ 2,592,432 $ 2,756,608 $ 1,688,638 $ 7,978,673 $ 7,339,450 $ 1,640,419 $ 428,404 $ 8,362,191 $19,857,856 Notes: (1) Community Development is in General Government in 2011 & 2012. (2) Golf Course reclassified to a special revenue fund in 2013. City of Cottage Grove Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Table 3 Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 General Fund Reserved $ 35,038 $ 33,905 $ - $ - $ - $ $ - $ - $ - $ - Unreserved 9,096,547 9,105,235 - - - - - - - Nonspendable Prepaid items - - 24,382 5,764 13,175 18,019 15,383 11,222 8,750 47,532 Assigned - - 1,611,427 1,695,203 1,443,243 1,380,698 1,408,357 1,393,200 1,589,169 1,383,065 Unassigned - - 7,178,108 7,449,565 7,775,548 8,113,424 8,829,697 9,036,425 9,233,073 9,814,949 Total General Fund $ 9,131,585 $ 9,139,140 $ 8,813,917 $ 9,150,532 $ 9,231,966 $ 9,512,141 $ 10,253,437 $ 10,440,847 $ 10,830,992 $ 11,245,546 All other governmental funds Reserved reported in Special revenue funds $ 1,076,850 $ 1,273 $ - $ - $ - $ - $ - $ - $ - $ - Debt service funds 6,076,380 8,716,563 - - - - - - - - Capital projects funds 500,000 267,498 - - - - - - - - Unreserved reported in Special revenue funds 6,058,259 6,366,077 - - - - - - - Debt service funds 4,071,740 4,726,677 - - - - - - - - Capital projects funds 14,827,707 14,244,338 - - - - - - - - Nonspendable Prepaid items - - 938 938 10,229 8,529 7,343 5,723 2,827 10,889 Inventory - - - - 31,617 24,434 20,696 28,750 30,625 30,297 Restricted - - 3,445,145 2,997,220 4,347,850 4,478,812 4,857,365 3,200,692 3,306,203 3,515,300 ( Committed - - 833,500 560,321 416,027 329,841 394,204 731,090 947,486 1,383,402 Assigned - - 21,540,577 20,240,161 22,936,733 25,591,181 26,322,717 23,020,349 21,301,562 19,445,494 Unassigned - - (2,174,299) (9,521,907) (10,379,965) (10,958,389) (9,122,473) (10,240,496) (5,511,868) (5,804,056) Total all other governmental funds $ 32,610,936 $ 34,322,426 $ 23,645,861 $ 14,276,733 $ 17,362,491 $ 19,474,408 $ 22,479,852 $ 16,746,108 $ 20,076,835 $ 18,581,326 Total all funds $ 41,742,521 $ 43,461,566 $ 32,459,778 $ 23,427,265 $ 26,594,457 $ 28,986,549 $ 32,733,289 $ 27,186,955 $ 30,907,827 $ 29,826,872 Notes: The implementation of Governmental Accounting Standards Board Statement No. 54 in 2011 resulted in a significant change in the City's fund balance classifications. 71 N Revenues General property taxes Othertaxes Special assessments Licenses and permits Direct charges to developers Intergovernmental Charges for services Rent Fines and forfeits Investment earnings (loss) Interest on interfund loan Connection charges Park dedication fees Miscellaneous Total revenues Expenditures Current General government Community development Economic development Public safety Public works Culture and recreation Capital outlay Debt Service Principal retirement Capital lease payment Interest and fiscal charges Total expenditures Excess revenues over (under) expenditures Other Financing Sources (Uses) Transfers in Transfers out Bonds issued Premium on debt issued Discount on debt issued Proceeds from sale of capital assets Total other financing sources (uses) Net change in fund balances City of Cottage Grove Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Table 4 Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 $ 11,745,148 $ 11,456,224 $ 11,539,640 $ 12,367,978 $ 12,081,764 $ 12,687,917 $ 13,465,987 $ 13,957,128 $ 14,649,224 $ 15,166,368 1,547,576 1,801,359 1,507,922 1,456,300 1,513,749 1,292,229 1,274,317 1,332,740 1,402,475 1,358,141 4,372,581 2,899,954 1,875,486 1,153,019 1,575,736 1,326,017 1,499,796 2,004,196 2,715,466 2,482,866 683,204 753,468 593,272 831,687 860,954 904,400 1,305,442 1,323,680 1,922,934 1,773,543 24,786 50,047 101,913 16,555 2,106,723 661,861 307,971 277,860 273,200 132,385 1,226,818 1,166,785 3,879,411 2,684,040 4,642,768 3,932,021 2,415,754 5,642,451 8,077,051 5,283,405 2,630,298 2,668,428 2,494,018 2,467,187 4,023,844 3,572,351 3,808,618 4,061,301 4,140,390 4,903,311 - - - - - 435,975 450,428 464,078 435,688 486,270 192,169 201,559 246,753 198,022 188,657 171,317 228,642 236,260 184,942 208,744 508,246 350,673 448,782 196,879 (173,267) 452,293 262,799 219,963 310,579 460,856 458,001 130,000 144,500 155,301 47,025 59,066 74,340 52,040 52,206 26,474 201,463 439,238 322,009 282,265 805,261 841,434 318,092 649,489 2,050,958 2,776,937 64,584 145,640 62,198 41,990 252,386 63,595 9,010 212,865 526,936 853,659 674,038 609,809 595,218 601,255 705,409 1,005,867 1,138,274 1,864,861 1,982,337 2,024,992 24,328,912 22,673,184 23,811,122 22,452,478 28,631,009 27,406,343 26,559,470 32,298,912 38,724,386 37,937,951 1,759,695 2,071,715 2,942,106 2,689,156 2,071,272 2,025,709 2,155,327 3,143,136 2,200,031 2,453,986 1,102,740 1,132,127 - - 892,699 919,126 1,058,537 1,117,760 1,304,601 1,594,534 (1) - 299,614 793,046 491,040 151,562 541,838 1,456,306 2,236,464 695,356 230,615 5,295,003 5,493,307 5,827,572 6,151,677 6,297,323 6,484,552 6,751,804 7,447,058 7,798,262 8,660,273 3,476,794 3,337,054 3,774,559 4,059,582 4,271,651 4,306,068 4,344,837 4,133,659 3,900,347 4,066,609 2,023,085 2,330,909 2,326,733 2,387,655 3,954,968 4,169,469 4,154,992 4,438,628 4,303,051 4,627,375 2,990,009 3,383,343 10,877,928 15,420,808 12,274,561 5,028,422 7,036,802 17,201,219 22,426,545 20,919,610 3,755,000 1,625,000 7,135,000 1,335,000 950,000 2,470,000 1,320,000 6,570,000 1,915,000 3,595,000 158,900 239,189 245,000 250,000 293,953 305,076 316,235 327,432 - - 1,640,143 1,101,145 906,910 849,046 769,129 882,508 912,107 1,023,721 900,240 1,123,547 22,201,369 21,013,403 34,828,854 33,633,964 31,927,118 27,132,768 29,506,947 47,639,077 45,443,433 47,271,549 2,127,543 1,659,781 (11,017,732) (11,181,486) (3,296,109) 273,575 (2,947,477) (15,340,165) (6,719,047) (9,333,598) 2,942,924 1,233,938 3,052,403 2,171,149 759,446 1,840,995 3,049,657 1,648,258 7,111,644 5,149,453 (2,942,924) (1,246,180) (3,048,803) (1,881,870) (638,374) (1,213,059) (2,362,952) (1,162,564) (6,135,532) (4,649,003) 3,685,000 1,865,000 7,345,000 1,405,000 5,700,000 8,935,000 9,155,000 7,620,000 22,705 - 211,507 18,461 254,245 357,684 289,321 111,630 (2,906) (15,852) - - - - - - 49,694 71,506 12,344 10,546 27,195 67,120 53,267 15,453 19,485 20,563 3,754,493 59,264 15,944 2,148,973 7,704,774 2,118,517 6,694,217 9,793,831 10,439,918 8,252,643 $ 5,882,036 $ 1,719,045 $ (11,001,788) $ (9,032,513) $ 4,408,665 $ 2,392,092 $ 3,746,740 $ (5,546,334) $ 3,720,871 $ (1,080,955) Debt service as a percentage of noncapital expenditures 28.9% 16.8% 34.6% 13.4% 10.2% 16.5% 11.3% 26.0% 10.6% 15.0% Note: (1) Community Development is in General Government in 2011 & 2012 City of Cottage Grove Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years Total Taxable Residential Real and Fiscal Disparity Payable Residential Commercial Agricultural Non -homestead Personal Personal Contribution (Net) Year Property Property Property and Other Property Property and TIF 2018 $ 23,982,857 $ 6,113,919 $ 747,876 $ 3,020,198 $ 789,240 $ 34,654,090 $ 4,094,931 2017 22,141,063 5,623,028 785,628 2,740,566 716,347 32,006,632 3,967,785 2016 21,377,754 5,203,657 767,424 2,749,793 678,862 30,777,490 3,557,397 2015 20,730,170 5,093,035 776,575 2,609,305 633,787 29,842,872 3,544,899 2014 18,114,214 5,001,690 761,279 2,207,013 622,578 26,706,774 2,264,989 2013 17,241,606 5,076,716 700,036 1,920,395 612,076 25,550,829 2,134,831 2012 19,042,270 5,094,236 724,887 2,010,313 568,078 27,439,784 2,626,702 2011 21,316,906 5,120,056 778,196 2,003,968 550,999 29,770,125 2,775,315 2010 23,326,829 5,557,410 672,344 2,231,128 502,282 32,289,993 2,268,060 2009 24,725,529 5,511,940 613,932 2,287,839 497,621 33,636,861 2,295,610 Source: Washington County Notes: (1) The tax capacity (assessed taxable value) of the property is calculated by applying a statutory formula to the estimated market value of the property. in A Total Adjusted Taxable Value Taxable Assessed Value as a Percentage of Taxable Value $ 38,749,021 1.24% 35,974,417 1.25% 34,334,887 1.23% 33,387,771 1.23% 28,971,763 1.21% 27,685,660 1.22% 30,066,486 1.22% 32,545,440 1.21% 34,558,053 1.18% 35,932,471 1.17% Estimated Actual Taxable Market $ 3,125,587,600 2,889,152,300 2,790,852,600 2,705,975,400 2,396,493,700 2,277,900,700 2,464,372,900 2,695,641,900 2,924,191,800 3,058,237,500 Table 5 Total Direct Tax Rate 40.580 43.010 43.140 41.591 43.812 45.046 41.446 38.255 35.415 34.632 City of Cottage Grove Property Tax Rates Direct and Overlapping Governments Last Ten Fiscal Years (rate per $1,000 of assessed value) Table 6 City Direct Rate(1) Ovcrlapping Rates Total Direct and Total City Washington School District Total Overlapping Year General Debt Service Direct Rate County (2) Other (4) Overlapping Tax Rate 2018 36.509 4.075 40.583 29.983 33.303 4.175 67.461 108.044 2017 40.156 2.856 43.012 30.448 34.309 4.345 69.101 112.113 2016 40.422 2.717 43.139 30.564 36.812 4.568 71.944 115.083 2015 38.886 2.705 41.591 30.186 35.675 4.182 70.043 111.634 2014 40.976 2.836 43.812 32.811 39.169 5.401 77.381 121.193 2013 42.665 2.381 45.046 34.225 41.285 5.637 81.147 126.193 2012 39.065 2.381 41.446 31.939 37.894 5.139 74.972 116.418 2011 34.500 3.755 38.255 29.772 35.216 4.715 69.703 107.958 2010 31.780 3.635 35.415 27.775 31.650 4.499 63.924 99.339 2009 30.825 3.807 34.632 26.371 30.708 4.268 61.347 95.979 Source: Washington County Overlapping rates are those of local and county governments that apply to property owners within the City of Cottage Grove. Not all overlapping rates apply to all City of Cottage Grove property owners. (1) The City Direct Rate is the Urban based rate. (2) Independent School District 833 (4) Includes Metropolitan Transit Commission, Metropolitan Council, and South Washington Watershed Taxpayer Xcel Energy/NSP 3M Company Hinton Heights -Minneapolis LLC Wal-Mart Real Estate Business Trust MN Pipeline Co Mars II Inc. Renewal by Andersen Corporation PHS/Cottage Grove Inc Menard Inc. Hy-Vee Inc Wag Farms Inc Dayton -Hudson Corporation Grove -Rainbow LP Home Depot USA, Inc South St Paul Agri -Properties Total Source: Washington County City of Cottage Grove Principal Property Taxpayers Current year and nine years ago 2018 Percentage of Total City Net Tax Tax Capacity Capacity Value Rank Value Table 7 2009 Percentage of Total City Net Tax Tax Capacity Capacity Value Rank Value $ 691,582 1 1.85% $ 467,938 2 1.54% 652,435 2 1.75% 643,702 1 2.11% 361,609 3 0.97% - - 261,480 4 0.70% - - 241,104 5 0.65% - - 239,550 6 0.64% 170,584 6 0.56% 237,526 7 0.64% 175,510 5 0.58% 283,666 8 0.76% - - 210,524 9 0.56% 193,170 3 0.63% 203,692 10 0.55% - - - - 192,120 4 0.63% - - 167,904 7 0.55% - - 143,268 8 0.47% - - 137,446 9 0.45% - - 130.800 10 0.43% Taxes Levied for the Fiscal Year Fiscal Gross Operating Debt MVHC/ Year Tax Levy Tax Levy Ag Credit (1) 2018 $ 13,700,988 $ 1,535,000 $ (7,072) $ 2017 13,798,587 985,000 (8,890) 2016 13,174,084 890,000 (9,707) 2015 12,526,600 875,500 (8,722) 2014 11,873,130 826,000 (5,947) 2013 11,585,100 656,150 (5,354) 2012 11,683,300 557,950 (4,762) 2011 11,035,100 1,206,150 (4,350) 2010 10,903,300 1,251,700 (4,637) 2009 10,784,900 1,661,600 (176,941) City of Cottage Grove Property Tax Levies and Collections Last Ten Fiscal Years Collected within the Fiscal Year of Levy Table 8 Total Collections to Date Percentage Collections Percentage ate Aid Total Net of in Subsequent of Cut Tax Levy Amount Levy Abatements Years Amount Levy $ 15,228,916 $ 15,156,690 99.53% $ 988 $ $ 15,156,690 99.53% 14,774,697 14,694,114 99.45% 10,688 14,694,114 99.45% 14,054,377 13,991,560 99.55% (6,717) 13,991,560 99.55% 13,393,378 13,326,911 99.50% 3,737 13,326,911 99.50% 12,693,183 12,610,243 99.35% 11,112 75,201 12,685,444 99.94% 12,235,896 12,114,166 99.01% (21,952) 82,537 12,196,703 99.68% 12,236,488 12,104,072 98.92% (23,267) 99,615 12,203,687 99.73% (690,152) 11,546,748 11,395,797 98.69% (25,901) 118,312 11,514,109 99.72% (629,015) 11,521,348 11,358,969 98.59% (33,547) 125,137 11,484,106 99.68% (412,323) 11,857,236 11,591,141 97.76% (97,610) (1) 164,752 11,755,893 99.15% Notes: (1) In 2009 a property tax classification appeal for one property owner resulted in a large abatement. in City of Cottage Grove Ratios of Outstanding Debt by Type Last Ten Fiscal Years Governmental Activities General Obligation General General Special Other Fiscal Obligation Tax Obligation Assessments Capital Long-Te Year IncrementBonds(1) Bonds(1) Bonds(1) Leases Debt 2018 $ 1,625,926 $ 13,103,649 $ 24,189,529 $ $ 2017 1,868,660 13,736,030 19,281,013 2016 2,096,395 4,660,000 20,679,730 2015 2,309,130 - 17,964,105 4,842,432 2014 2,516,865 13,140,768 5,158,667 2013 2,600,000 14,125,979 5,463,743 2012 2,735,000 7,332,245 5,615,000 2011 2,790,000 6,763,867 5,865,000 2010 2,830,000 13,832,649 6,110,000 2009 2,925,000 15,375,000 6,349,189 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. (1) Presented net of original issuance discounts and premiums. (2) See the Demographic and Economic Statistics schedule for personal income and population data. 00 Table 9 Business -Type Activities rm Other Total Percentage Revenue Capital Long -Term Primary of Personal Per Bonds(1) Lease Debt Government Income (2) Capita(2) $ $ $ $ 38,919,104 1.85% $ 1,093 34,885,704 1.66% 979 27,436,125 1.36% 770 609,856 25,725,523 1.34% 722 717,221 21,533,521 1.12% 605 824,586 - - 23,014,308 1.25% 650 1,036,584 142,696 900,000 17,761,525 0.97% 505 1,456,067 - 900,000 17,774,934 1.01% 510 1,814,178 - 900,000 25,486,827 1.56% 737 2,360,000 9,085 900,000 27,918,274 1.76% 816 General Fiscal Obligation Tax Year Increment Bonds(1) 2018 $ 1,625,926 2017 1,868,660 2016 2,096,395 2015 2,309,130 2014 2,516,865 2013 2,600,000 2012 2,735,000 2011 2,790,000 2010 2,830,000 2009 2,925,000 2008 3,215,000 City of Cottage Grove Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years Table 10 General Obligation Percentage of General Special Less: Amounts Estimated Obligation Assessments Available in Debt Actual Taxable Per Bonds(1) Bonds(1) Service Funds Total Market Value (2) Capita (3) $ 13,103,649 $ 24,189,529 $ 3,370,032 $ 35,549,072 1.14% $ 974 13,736,030 19,281,013 3,281,981 31,603,722 1.09% 876 4,660,000 20,679,729 4,098,850 23,337,274 0.84% 652 - 17,964,105 3,773,605 16,499,630 0.61% 463 - 13,140,768 2,833,208 12,824,425 0.54% 360 - 14,125,979 3,550,891 13,175,088 0.58% 372 - 7,332,245 2,377,981 7,689,264 0.31 % 219 - 6,763,867 1,499,819 8,054,048 0.30% 231 - 13,832,649 5,512,986 11,149,663 0.38% 322 - 15,375,000 5,031,380 13,268,620 0.43% 388 255,000 14,900,000 5,725,764 12,644,236 0.42% 372 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. (1) Presented net of original issuance discounts and premiums. (2) See the Assessed and Estimated Actual Value of Taxable Property for estimated actual taxable market value. (3) See the Demographic and Economic Statistics schedule for population data. It It City of Cottage Grove Direct and Overlapping Governmental Activities Debt As of December 31, 2018 Overlapping Washington County School Districts ISD No. 200 (Hastings) ISD No. 833 (South Wash. County) Metro Council Total overlapping City of Cottage Grove direct debt Total direct and overlapping debt Table 11 City of Cottage Grove % of Debt Share of Net Debt Applicable Overlapping Outstanding to City Debt $ 105,370,000 12.3930% $ 13,058,504 61,387,524 301,210,000 178,860,000 646,827,524 $ 38,919,104 $ 685,746,628 Source: City of Cottage Grove Municipal Disclosure Reporting 13.3268% 8,180,993 30.8847% 93,027,805 0.9367% 1,675,382 115,942,683 100.00% 38,919,104 $ 154,861,787 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 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. 160 City of Cottage Grove Legal Debt Margin Information Last Ten Fiscal Years Table 12 Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Debt limit $ 91,747,125 $ 87,725,754 $ 80,869,257 $ 73,931,187 $ 68,337,021 $ 71,894,811 $ 81,179,262 $ 93,740,412 $ 100,633,167 $ 108,634,434 Total net debt applicable to limit 6,345,000 6,110,000 5,865,000 5,615,000 5,355,000 5,085,000 4,805,000 4,660,000 13,240,000 12,645,000 Legal debt margin $ 85,402,125 $ 81,615,754 $ 75,004,257 $ 68,316,187 $ 62,982,021 $ 66,809,811 $ 76,374,262 $ 89,080,412 $ 87,393,167 $ 95,989,434 Total net debt applicable to the limit as a percentage of debt limit 6.92% 6.96% 7.25% 7.59% 7.84% 7.07% 5.92% 4.97% 13.16% 11.64% Legal Debt Margin Calculation for Fiscal Year 2016 Market Value (after fiscal disparities) Debt limit (3% of assessed value) Debt applicable to limit Legal debt margin 0 $3,621,147,800 108,634,434 12,645,000 $ 95,989,434 Fiscal Year 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 Population(1) 36,954 36,492 36,062 35,814 35,619 35,403 35,187 34,828 34,589 34,213 City of Cottage Grove Demographic and Economic Statistics Last Ten Fiscal Years Personal Income (2) $2,329,396,164 2,213,900,353 2,105,690,772 2,012,741,903 1,926,643,820 1,843,080,180 1,823,284,779 1,764,595,448 1,638,619,286 1,583,309,214 Per Capita Personal Income (2) $ 63,035 60,669 58,392 56,200 54,090 52,060 51,817 50,666 47,374 46,278 School Enrollment (3) 18,519 18,165 17,794 17,893 17,685 17,671 17,639 17,389 17,060 16,795 Table 13 Unemployment Bate (4) 2.5% 3.3% 3.4% 3.9% 3.9% 4.8% 5.5% 6.0% 6.9% 7.6% Sources: (1) Metropolitan Council-2002-2009 & 2012-2013. Census-2010. Cottage Grove Planning Department-2014-2016. (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. 162 City of Cottage Grove Principal Employers Current year and nine years ago Taxpayer Employees School District 833 2,653 3M Cottage Grove 760 Renewal by Andersen 719 Hy-Vee 340 Up -North Plastics 245 City of Cottage Grove 183 Werner Electric 180 AGCO 163 Walmart 140 Target 135 Cub Foods - Menard's - Allied Systems - Total 5,518 2018 Percentage of Total Rank Employment Employees 1 31% 1,081 2 9% 695 3 8% 250 4 4% - 5 3% 280 6 2% 175 7 2% 110 8 2% - 9 2% - 10 2% 212 - 208 - 200 64% 3,329 Table 14 2009 Percentage of Total Rank Employment 1 17% 2 11% 4 4% 3 4% 8 3% 10 - 5 3% 6 3% 7 3% 9 2% 53% Sources: City of Cottage Grove Annual Municipal Disclosure Reporting and Cottage Grove Economic Development Department. 163 General Government Total General Government Public Safety Police/Cottage Grove EMS Officers Civilians Fire/Emergency Management Total Public Safety Public Works Recreation Ice Arena Water/Sewer Storm Sewer Golf Course Fund Street Light Fund Fleet Maintenance Total City of Cottage Grove Full -Time Equivalent City Government Employees by Function Last Ten Fiscal Years Table 15 Budgeted Full -Time Equivalent Employees as of December 31, 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 21.76 21.76 21.76 22.06 23.38 23.40 23.25 25.70 27.60 28.20 39.00 39.00 39.00 39.00 39.00 40.00 40.00 43.56 46.84 46.84 7.25 7.25 7.25 8.46 8.09 8.26 7.56 7.56 7.56 7.56 4.00 4.00 4.00 4.00 5.00 7.00 9.00 11.75 15.10 15.10 50.25 50.25 50.25 51.46 52.09 55.26 56.56 62.87 69.50 69.50 21.56 21.56 21.56 20.83 21.68 23.68 24.08 22.12 23.73 23.49 2.50 2.50 2.50 2.50 2.55 2.55 2.55 2.55 2.70 2.70 2.60 2.60 2.60 3.20 3.65 3.65 3.65 3.55 2.60 2.60 8.36 8.36 8.36 8.23 8.18 8.18 8.28 9.28 10.08 10.08 3.40 3.40 3.40 3.54 3.54 3.54 3.54 3.54 3.50 3.50 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 1.04 1.04 1.04 1.06 1.06 1.06 1.06 1.06 1.23 1.23 3.84 3.84 3.84 4.04 4.04 4.04 4.04 4.04 4.00 4.00 120.31 120.31 120.31 121.92 125.17 130.36 132.01 139.71 149.94 150.30 Source: City of Cottage Grove Finance Office rn City of Cottage Grove Operating Indicators by Function/Program Last Ten Years Table 16 Fiscal Year Function/Program 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 General Government Elections 2 2 2 2 4 Registered voters as of 7 am election day 20,607 21,119 20,780 21,594 22,076 Number of votes cast 13,345 19,727 11,166 19,799 17,369 Voter participation (registered) 64.76% 93.41% 53.73% 84.50% 75.00% (elections are held every other year) Community Development Inspections Building permits (new dwelling units) 66 89 49 53 56 77 65 99 255 185 Code enforcement inspections 1,759 1,447 1,276 2,407 2,826 1,482 1,013 841 1,018 1,119 Public Safety Police Crimes - Part 1 743 674 694 756 783 774 719 673 767 619 Crimes - Part 11 2,478 2,055 2,117 1,614 1,473 1,434 1,419 1,424 1,471 1,358 Total calls for service 19,434 20,104 20,707 17,348 18,151 18,448 20,576 21,331 20,879 22,647 Fire Medical 1,765 1,968 2,000 2,347 2,437 2,562 2,464 2,681 2,790 2,914 Fire 556 643 456 295 280 301 290 279 280 307 Avg response time (minutes) medical* n/a n/a 8:38 6:51 6:15 6:19 6:13 6:21 6:25 6:25 Avg response time (minutes) fire* n/a n/a 8:24 8:04 7:25 7:34 7:06 6:54 7:05 7:13 Avg response time (minutes) both* 8:59 9:01 8:36 6:59 6:22 6:27 6:16 6:24 6:28 6:54 *Entire service area Public Works Sq. yards of streets sealcoated 352,953 349,349 382,374 488,210 457,275 199,725 118,159 193,249 71,152 0 Miles of streets new construction 0.00 0.26 1.12 0.30 1.23 1.99 0.56 1.11 1.02 4.82 Miles of watermain added 0.00 0.39 0.63 0.79 2.42 1.84 1.06 1.20 3.64 4.30 Source: Various City of Cottage Grove department< Notes: (1) Information not available is labeled n/a. City of Cottage Grove Capital Asset Statisitics by Function/Program Last Ten Years Table 17 Fiscal Year Function/Program 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Public Safety Police Stations 1 1 1 1 1 1 1 1 1 1 Patrol units 12 12 12 12 13 13 13 13 13 16 Fire Stations 4 4 4 4 4 4 4 4 4 3 Fire trucks 6 6 6 6 6 6 6 6 6 6 Public Works City -owned lights 2,273 2,279 2,320 2,345 2,416 2,481 2,495 2,592 2,682 2,797 Xcel owned lights 301 301 301 301 301 301 301 301 301 301 Streets (miles) 155.45 155.71 156.83 157.13 158.36 160.35 160.91 162.02 163.04 167.87 Sidewalks/trails (miles) 44.27 46.40 48.25 48.61 53.82 57.83 59.56 61.98 64.87 70.06 Parks (acreage) Community parks 377 377 377 377 377 377 400 400 400 400 Neighborhood parks 201 201 201 244 275 303 275 275 275 275 Recreation facilities 21 21 21 21 21 21 15 15 15 15 County parks 571 571 571 571 571 571 569 569 569 569 State scientific and nature area 238 238 238 238 238 238 238 238 238 238 Golf course 219 219 219 219 219 219 219 219 219 219 Other open space 453 453 453 453 581 581 961 961 961 961 Water Number of connections 10,381 10,423 10,474 10,538 10,573 10,640 10,706 10,789 10,891 11,160 Miles of water mains and laterals 142.85 143.24 143.87 144.66 147.08 148.92 149.98 151.18 154.82 159.12 Sanitary Sewer Number of connections 10,330 10,382 10,433 10,486 10,532 10,604 10,670 10,667 10,983 11,256 Miles of sanitary sewer mains and laterals 126.72 127.02 127.58 127.99 129.32 131.11 131.45 132.81 135.42 139.51 Storm Sewer Miles of storm sewers 77.41 78.07 79.50 80.39 85.41 87.81 89.52 93.94 98.75 106.39 Source: Various City departments rn rn