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Home My WebLink About2022 ACFRM here Pride and Cottage Grove Pvosperity Meet ANNUAL COMPREHENSIVE FINANCIAL REPORT City of Cottage Grove, Minnesota Year Ended December 31, 2022 Annual Comprehensive Financial Report of the CITY OF COTTAGE GROVE, MINNESOTA For the Year Ended December 31, 2022 Prepared by City's Finance Department City of Cottage Grove 12800 Ravine Parkway South Cottage Grove, MN 55016 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 8 Organization Chart 9 Financial Section Independent Auditor's Report 13 Management's Discussion and Analysis 17 Basic Financial Statements Government -Wide Financial Statements Statement of Net Position 31 Statement of Activities 32 Fund Financial Statements Balance Sheet — Governmental Funds 34 Reconciliation of the Balance Sheet to the Statement of Net Position — Governmental Funds 37 Statement of Revenues, Expenditures, and Changes in Fund Balances — Governmental Funds 38 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities — Governmental Funds 40 Statement of Net Position — Proprietary Funds 41 Statement of Revenues, Expenses, and Changes in Fund Net Position — Proprietary Funds 42 Statement of Cash Flows — Proprietary Funds 44 Notes to Basic Financial Statements 45 Required Supplementary Information Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual — General Fund 90 Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual — Ice Arena Special Revenue Fund 92 Schedule of Changes in Total OPEB Liability and Related Ratios 93 Schedule of City's Proportionate Share of Net Pension Liability — General Employees Retirement Fund 94 Schedule of City's Proportionate Share of Net Pension Liability — Police and Fire Retirement Fund 94 Schedule of City Contributions — General Employees Retirement Fund 95 Schedule of City Contributions — Police and Fire Retirement Fund 95 Schedule of Changes in Net Pension Liability and Related Ratios — Fire Relief Association 96 Schedule of City and Non -Employer Contributing — Fire Relief Association 98 Notes to Required Supplementary Information 100 City of Cottage Grove Table of Contents Financial Section (Continued) Combining and Individual Fund Statements and Schedules Nonmajor Governmental Funds 111 Combining Balance Sheet — Nonmajor Governmental Funds 113 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Nonmajor Governmental Funds 114 Nonmajor Special Revenue Funds 115 Subcombining Balance Sheet — Nonmajor Special Revenue Funds 116 Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balances — Nonmajor Special Revenue Funds 118 Nonmajor Debt Service Funds 121 Subcombining Balance Sheet — Nonmaj or Debt Service Funds 122 Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balances — Nonmajor Debt Service Funds 124 Nonmajor Capital Projects Fund? 127 Subcombining Balance Sheet—Nonmajor Capital Projects Funds 128 Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balances — Nonmajor Capital Projects Funds 132 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 136 Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual — Storm Water Maintenance Special Revenue Fund 137 Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual — Forfeiture/Seizure Special Revenue Fund 138 Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual — Golf Course Special Revenue Fund 139 Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual — Equipment Replacement Capital Projects Fund 140 Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual — Street Sealcoating Capital Projects Fund 141 Internal Service Funds 142 Combining Statement of Net Position — Internal Service Funds 143 Combining Statement of Revenues, Expenses, and Changes in Net Position — Internal Service Funds 144 Combining Statement of Cash Flows — Internal Service Funds 145 Economic Development Authority Component Unit 146 Combining Balance Sheet — All Governmental Fund Types — Economic Development Authority Component Unit 147 City of Cottage Grove Table of Contents Financial Section (Continued) Combining and Individual Fund Statements and Schedules (Continued) Page Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — All Governmental Fund Types — Economic Development Authority Component Unit 148 Supplementary Financial Information Combined Schedule of Bonded Indebtedness 150 Debt Service payments to Maturity 152 Deferred Tax Levies 155 Subcombining Balance Sheet — Pavement Management Debt Service Schedule 156 Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balance — Pavement Management Debt Service Schedule 158 Subcombining Balance Sheet — Tax Increment Construction Revolving Schedule 160 Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balance —Tax Increment Construction Revolving Schedule 162 Subcombining Balance Sheet — TIF Debt Service Revolving Schedule 164 Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balances — TIF Debt Service Revolving Schedule 165 Statistical Section Section Page Net Position by Component 1 170 Changes in Net Position 2 172 Fund Balances of Governmental Funds 3 176 Changes in Fund Balances of Governmental Funds 4 178 Assessed and Estimated Actual Value of Taxable Property 5 180 Property Tax Rates Direct and Overlapping Governments 6 182 Principal Property Taxpayers 7 183 Property Tax Levies and Collections 8 184 Ratios of Outstanding Debt by Type 9 186 Ratios of General Bonded Debt Outstanding 10 188 Direct and Overlapping Governmental Activities Debt 11 189 Legal Debt Margin Information 12 190 Demographic and Economic Statistics 13 192 Principal Employers 14 193 Full -Time Equivalent City Government Employees by Function 15 194 Operating Indicators by Function/Program 16 196 Capital Asset Statistics by Function/Program 17 198 INTRODUCTORY SECTION Cottage Grove ,,,,,, ,ity Meet MNCottage Grove %ere Pride and Prosperity Meet June 6, 2023 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 Annual Comprehensive Financial Report of the City of Cottage Grove for the year ended December 31, 2022. 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, 2022. 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. It 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 2021 Census established the City population at 39,605: recent data estimates 2022 population at 41,027. 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. 3 CITY OF COTTAGE GROVE • 12800 Ravine Parkway • Cottage Grove, Minnesota 55016 www.cottage-grove.org • 651-458-2800 • Fax 651-458-2897 9 Equal Opportunity Employer Letter of Transmittal June 6, 2023 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 28t' of each year. The legal level of budgetary control is at the department level. Local economy Cottage Grove benefits from a significant amount of developable land and a location within the economically prosperous Minneapolis/St. Paul seven county metropolitan area. The City's tax base is 80% residential and 20% commercial/industrial property. Total taxable market value in 2022 was $4.2 billion. This was an increase of 5.87% over 2021, due to new construction and increases in property values of existing building stock. The business park is home to Up North Plastics, NorthPoint, Green Thumb, American Logistics, Modern Automotive Performance, Renewal by Andersen, North Star Sheets, and Van Meter. Other major employers in the City include 3M Company, Target, Menard's, Walmart, and Aggregate Industries. In 2021 the companies were doing so well that many began actively expanding their operations including North Star Sheets, Renewal by Andersen, and Leafline Labs. The City's commercial areas include four community shopping centers which are home to many prominent retailers including Hy-Vee, PetSmart, Target, TJ-Maxx, Walgreens, Kohl's, Chipotle, Aldi, Cub Foods, and Walmart. In 2022 and into 2023, the city was actively purchasing and selling land in the City's business park. Numerous deals were struck with companies eager to locate in the city's business park including Ryan Companies, Enclave, Hohenstein's and NorthPoint. These developments, along with others, will add more than 4M square feet of warehousing, logistics and manufacturing in the next several years and grow our workforce by more than 3,000 jobs. 0 Letter of Transmittal June 6, 2023 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. In addition, a Ten -Year Financial Management Plan was developed in 2022 and finalized in 2023 to determine the impacts of future operating costs, staffing needs, future growth, capital projects and the impact on the property tax levies. The Plan will be incorporated into the budget. 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 2040 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 full road reconstruction projects or a reclamation process to extend roadway life. Project funding for Pavement Management is covered by a 45% / 55% cost split: special assessments against benefiting properties with the balance of the costs covered by general obligation debt to be repaid by annual tax levies. 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 • Long-term financial management 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 providing adequate working capital for current operations without short term borrowing. The City's fund balance policy as of the end of 2022, identified 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 38,839 per the 2020 census. Most of the population of the City concentrates in two age groups: 0 - 14 years (22.8%) and 25 - 54 years (41.8%). According to the 2020 census, the average age is 38.1 years, and the median family income is $102,600. This median family income is 39.8% higher than Minnesota's median family income. 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, Cottage Grove saw a residential development boom, with several years of building permits for single family homes exceeding 300 per year. 5 Letter of Transmittal June 6, 2023 Major Initiatives (Continued) During the Great Recession of 2007, residential development slowed significantly for the Cottage Grove community. The real estate slowdown affected more than five years of new home construction in the community. However, from 2015 through 2021, the City saw a consistent year over year increase in construction of single family and multifamily homes. In 2022, 350 permits were issued for new construction of residential housing (detached and attached) units. Over 630 platted lots with completed infrastructure awaited construction at the end of 2022. The "East Ravine Master Plan" was completed in 2006. After the delay, development of the 4,000 acres of low -density residential housing with park and open space amenities and nodes of commercial use began in earnest in 2013. In the eight years since then, more than 1,000 acres of land has been developed into a variety of residential housing. Ravine Parkway which serves as the transportation backbone and connects these developments is now in Phase 3 of construction. The City strategy of positioning for growth can be seen in the residential and industrial growth. The growth has provided Cottage Grove more homes and jobs opportunities, which in return has led to additional interest in commercial/retail users and demands for community services. 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 Annual Comprehensive Financial Report for the year ended December 31, 2021. This was the thirty-second consecutive year the City has achieved this prestigious award. To receive a Certificate of Achievement, a government must publish an easily readable and efficiently organized Annual Comprehensive Financial Report. This report must satisfy both 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 Annual Comprehensive 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. This report was compiled and completed by the dedicated staff of the Finance Department to whom I give my heartiest thanks. Lastly, thank you to the Mayor and City Council members for their support in maintaining a fiscally sound and stable organization in the service of our residents and business owners. Respectfully Submitted, CITY OF COTTAGE GROVE, MINNESOTA Jennifer Levitt City Administrator G City of Cottage Grove Certificate of Achievement for Excellence in Financial Reporting Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Cottage Grove Minnesota For its Annual Comprehensive Financial Report For the Fiscal Year Ended December 31, 2021 Executive Director/CEO 7 City of Cottage Grove Elected Officials and Administration December 31, 2022 Elected Officials Position Myron Bailey Steve Dennis Justin Olsen Tony Khambata Dave Thiede Appointed Personnel Jennifer Levitt Brenda Malinowski Tammy Anderson Emily Schmitz Ryan Burfeind Peter Koerner Zac Dockter Gretchen Larson Mayor Council Member Council Member Council Member Council Member City Administrator Finance Director City Clerk Community Development Director Public Works Director Director of Public Safety Parks and Recreation Director Economic Development Director Term Expires December 31, 2024 December 31, 2026 December 31, 2024 December 31, 2024 December 31, 2026 Administration Comrnun' Developm Human nin Resource City Clerkf I auiIding/Code Elections Enforcement Economic Development Communications Cottage Grove Citizens LCity Council City FAdministrator Parks and Recreation Advisory Commissions City Atha rn ey Public Safety I Public Works Erik I Investigations or 'Rol I Recreation Patrol11 legit an Facilities Emergency River Oaks Management Ice Arena I Fire Emergency Medical Services I Center Utilities Cottage Grove ,,,,,, ,ity Meet 10 FINANCIAL SECTION 11 Cottage Grove ,,,,,, ,ity Meet 12 ,= berganKDv Independent Auditor's Report Honorable Mayor and Members of the City Council City of Cottage Grove Cottage Grove, Minnesota Report on the Audit of the Financial Statements Opinions We have audited the 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, as of and for the year ended December 31, 2022, and the related notes to the basic financial statements, which collectively comprise the City's basic financial statements as listed in the Table of Contents. In our opinion, the accompanying financial statements present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Cottage Grove, as of December 31, 2022, 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. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City of Cottage Grove and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Emphasis of Matter — Implementation of GASB 87 The City has adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 87, Leases. Our opinion is not modified with respect to this matter. Responsibilities of Management for the Financial Statements The City of Cottage Grove's management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for 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. BERGANKDV, LTD. I BERGANKDV.COM I DO MORE. 13 Responsibilities of Management for the Financial Statements (Continued) In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Cottage Grove's ability to continue as a going concern for one year beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS and Government Auditing Standards, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit 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 of Cottage Grove's internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Cottage Grove's ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control —related matters that we identified during the audit. BERGANKDV, LTD. I BERGANKDV.COM I DO MORE. 14 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 is the responsibility of management and, although not a part of the basic financial statements, is required by the 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. Supplementary 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 accompanying supplementary information identified in the Table of Contents is presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The 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 accompanying supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the Annual Comprehensive Financial Report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditor's report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report BERGANKDV, LTD. I BERGANKDV.COM I DO MORE. 15 Other Reporting Required by Government Auditing Standards (Continued) In accordance with Government Auditing Standards, we have also issued our report dated June 6, 2023, 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 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. 1;��,-o V 2Z4 Minneapolis, Minnesota June 6, 2023 BERGANKDV, LTD. I BERGANKDV.COM I DO MORE. 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, 2022. 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 6 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 $387,349,836 (net position). Of this amount, $46,339,730 (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 $41,134,261 as a result of current year operations. • As of the close of the current fiscal year, the City of Cottage Grove's governmental funds reported combined ending fund balances of $40,754,875 a decrease of $5,670,250 compared to the previous year. Approximately 82% or $33,809,235 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 $12,696,178 (55%) of the total subsequent year General fund expenditures. • At the end of the current fiscal year, the City of Cottage Grove had total long-term debt outstanding of $39,743,447, a decrease of $6,740,564 compared to the previous year due to the repayment of debt during the current fiscal year. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City of Cottage Grove's basic financial statements. The City's basic financial statements comprise three components: 1) government - wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government -wide financial statements: The government -wide financial statements are designed to provide readers with a broad overview of the City of Cottage Grove's finances, in a manner similar to a private -sector business. The statement of net 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) 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 31 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. Ilm City of Cottage Grove Management's Discussion and Analysis Overview of the Financial Statements (Continued Governmental funds: Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balance for the City's seven individual major governmental funds. They are as follows: • General Fund • Closed Debt Fund —Debt service fund • Ice Arena Fund —Special revenue fund • Future Economic Development Fund — Capital project fund • MSA Construction Capital Project Fund Capital project fund • Future Projects Fund - Capital project fund • 3M Settlement-MPCA Fund — Capital project fund Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non -major governmental funds is provided in the form of combining statements elsewhere in the report. The City of Cottage Grove adopts an annual appropriated budget for its general and special revenue funds. A budgetary comparison statement has been provided for those funds to demonstrate compliance with this budget. The basic governmental fund financial statements start on page 34 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 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 41 of this report. Notes to the basic 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 45 of this report. 19 City of Cottage Grove Management's Discussion and Analysis Overview of the Financial Statements (Continued) 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 107 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 $387,349,836 at the close of the most recent fiscal year. The largest portion of the City of Cottage Grove's net position ($334,611,498 or 86.4%) 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. Current and other assets Capital assets Total assets Deferred outflows of resources City of Cottage Grove Net Position Governmental Activities Business -Type Activities Total Primary Government 2022 2021 2022 2021 2022 2021 $ 71,455,167 $ 64,375,699 $ 16,703,246 $ 17,772,396 $ 88,158,413 $ 110,745,685 268,696,454 245,625,799 104,180,227 87,203,382 372,876,681 304,231,591 340,151,621 310,001,498 120,883,473 104,975,778 461,035,094 414,977,276 16,727,066 9,759,024 2,514,596 1,517,475 19,241,662 11,276,499 Long-trem liabilities outstanding 32,051,064 39,126,686 Pension liability 26,392,110 7,198,406 Other liabilities 20,555,962 17,836,151 Total liabilities 78,999,136 64,161,243 Deferred inflows of resources Net Position Net investment in capital arse Restricted Unrestricted Total net position 9,253,764 12,118,020 1 23 0,431,271 204,395,412 6,398,608 8,691,283 31,795,908 30,394,564 $ 268,625,787 $ 243,481,259 67,752 102,827 4,018,567 1,083,940 541,879 748,662 4,628,198 1,935,429 45,822 1,823,508 104,180,227 14,543,822 87,203,382 15,530,934 $ 118,724,049 $102,734,316 32,118,816 39,229,513 30,410,677 8,282,346 21,097,841 18,5 84,813 83,627,334 66,096,672 9,299,586 13,941,528 334,611,498 291,598,794 6,398,608 8,691,283 46,339,730 45,925,498 $ 387,349,836 $ 346,215,575 An additional portion of the City's net position ($6,398,608 or 1.6%) represents resources that are subject to external restrictions on how they may be used. The remaining portion of net position, $46,339,730, may be used to meet the City's ongoing obligations to citizens and creditors. 20 City of Cottage Grove Management's Discussion and Analysis Government -wide Financial Analysis (Continued) 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. The following is a summary of the City's change in net position: Revenues Program Revenues Charges for services Operating Grants and Contributions Capital grants and contributions General revenues Property taxes Other taxes Grants and contributions not Unrestricted investment earnings Gain on sale of assets Total revenues Expenses General government Community development Economic development Public safety Public works Culture and recreation Interest on long-term debt Street lights Cottage Grove EMS Water operating Sewer operating Total expenses Increase (decrease)in net position before Transfers Increase (decrease)in net position Net position - beginning City of Cottage Grove's Changes in Net Position Governmental Activities Business -Type Activities Total Primary Government 2022 2021 2022 2022 2022 2021 $ 13,601,266 $ 11,286,119 $ 9,704,695 $ 10,641,942 $ 23,305,961 $ 21,928,061 2,278,343 4,648,424 41,788 147,694 2,320,131 4,796,118 37,949,025 23,828,108 12,272,831 6,359,047 50,221,856 30,187,155 18,804,948 17,494,963 - - 18,804,948 17,494,963 2,426,427 2,066,026 2,426,427 2,066,026 229,638 83,568 229,638 83,568 (2,043,372) (258,924) (484,598) (40,919) (2,527,970) (299,843) 29,658 31,111 - 29,658 31,111 73,275,933 59,179,395 21,534,716 17,107,764 94,810,649 76,287,159 3,502,222 2,936,133 3,502,222 2,936,133 2,676,975 2,305,822 2,676,975 2,305,822 864,161 823,036 864,161 823,036 13,851,700 11,098,534 13,851,700 11,098,534 10,788,045 15,567,240 10,788,045 15,567,240 9,447,768 6,365,540 9,447,768 6,365,540 931,466 1,236,037 931,466 1,236,037 1,099,054 1,262, 557 1,099,054 1,262,5 57 2,302,408 2,091,317 2,302,408 2,091,317 4,053,526 3,428,669 4,053,526 3,428,669 4,159,063 3,532,908 4,159,063 3,532,908 42,062,337 40,332,342 11,614,051 10,315,451 53,676,388 50,647,793 31,213,596 18,847,053 9,920,665 6,792,313 41,134,261 25,639,366 (6,069,068) (6,836,521) 6,069,068 6,836,521 - - 25,144,528 12,010,532 15,989,733 13,628,834 41,134,261 243,481,259 231,470,727 102,734,316 89,105,482 346,215,575 25,639,366 320,576,209 Net Position - Ending $ 268,625,787 $ 243,481,259 $ 118,724,049 $ 102,734,316 $ 387,349,836 $ 346,215,575 Net position increased by $25,144,528 or 10.3% in governmental activities as a result of strong current year operations due to development activities. Overall, revenues from governmental activities increased by $14,096,538 or 23.82%. Charges for services increased due to increased building and development activity in the current year. Capital grants and contributions increased by $14,120,917 or 59.26% during the current year, due to the receipt of Municipal State Aid for street construction and settlement funding received from the MPCA/3M settlement for water treatment. Infrastructure related to water treatment was constructed with the use of these settlement funds. There was a large decline in the unrestricted investment earnings due to the unprecedented interest rate increases that occurred during the year causing a large mark to market adjustment for financial statement presentation purposes. The adjustment will be reversed as the investments mature. 21 City of Cottage Grove Management's Discussion and Analysis Government -wide Financial Analysis (Continued) Governmental activities expenses increased overall by only 4.29% despite high inflationary increases that were realized during the year, especially in fuel and utilities costs. This was due to strong budget management practices. Net position in business -type activities increased $15,989,733 primarily due to the transfers from the governmental activities. In addition, capital contributions increased from the prior year due infrastructure contributions from developers related to water and sewer infrastructure in new developments throughout the city. Governmental Activities The following chart illustrates the City's expenses and corresponding program revenues for its governmental activities. $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 General Community Economic Public Safety Public works Culture and Interest on Debt Government Development Development Recreation ■ Revenue ■ Expense Significant captial grant revenue was received in the current year in public works, due to the receipt of Municipal State Aid for street construction and funding received from the MPCA/3M settlement. 22 City of Cottage Grove Management's Discussion and Analysis Business -Type Activities Net position in business -type activities increased by $15,989,733. Below are graphs showing the business -type activities revenue and expense comparisons. Operating Grants and Contribution- 0% Charges for Services 44% $10,000,000 $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 Revenues - Business -Type Activities Street Lights Cottage Grove EMS Water Operating ■ Revenues ■ Expenses Capital Grants and Contributions 56% Sewer Operating In business type activities, changes in net position were positive for all four business -type activity funds with the exception of Cottage Grove EMS. The Cottage Grove EMS fund experienced a one-year write down of receivables. The fund has performed well in the past and is anticipated to perform well in the future. 23 City of Cottage Grove Management's Discussion and Analysis 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 $40,754,875, a decrease of $5,670,250. A portion of the decrease or $3,875,000 was due to bonds that were refunded in the prior year but paid in the current year to realize interest savings. An additional $3,400,000 of the decrease was for the South District Storm Sewer Project that was constructed in the current year. The costs of the project were funded with prior and future development charges. The project was necessary for current and future development in that area of the city. Committed, assigned and unassigned fund balance which is available for spending at the government's discretion has a balance of $33,809,235 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. General Fund 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 $12,696,178 while total fund balance was $13,314,103. As a measure of the general fund's liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 55% of total subsequent year General fund expenditures, while total fund balance represents 58% of the same amount. The General fund balance increased by $209,724. The increase primarily occurred in permit revenue and charges for services due to increased construction and development activity that occurred during the current year. Other Major Governmental Funds The Closed Debt Fund increased by $101,602 due to property taxes received during the year. The Ice Arena Fund decreased slightly by $12,660 due to inflationary utility and fuel costs realized during the current year. The Future Economic Development Fund increased by $1,173,331 due to land sales brokered by the city for future development in the business park. The MSA Construction Fund increased by $2,047,304. Current year receipts of Municipal State Aid for the 80t' street construction project that was constructed in prior years resulted in the increase in the fund. The Future Projects Fund decreased slightly by $187,982 due to escrow funds being released to developers for amounts remaining in the escrows after completion of developments. The 3M Settlement MPCA Fund decreased slightly by $110,188 due to timing differences between revenues received from the MPCA/3M settlement and use of those revenues for water treatment activities. 24 City of Cottage Grove Management's Discussion and Analysis Other Major Governmental Funds (Continued) 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 $16,180,792 in 2022 due to increased utility rates, and capital contributions from completed infrastructure projects in new developments. Budgetary Highlights General Fund. The General Fund actual results were different than the final budget amounts due to the following: Licenses and Permits were $784,320 more than the final budget due to more building permit activity that occurred than anticipated in the current year. This offset the investment earnings that were $686,954 less than the final budget due to the unprecedented interest rate increases that were experienced in the current fiscal year. Charges for services were $311,899 more than budgeted due to engineering fees resulting from increased construction and development activity. Public safety expenditures were $209,878 more than budgeted amounts due to inflationary utility costs and high worker's compensation premiums realized during the current year. 25 City of Cottage Grove Management's Discussion and Analysis Capital Assets The City of Cottage Grove's investment in capital assets for its governmental and business -type activities as of December 31, 2022, amounts to $372,876,681 (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 Leased equipment Machinery and equipment Other improvements Infrastructure Streets Storm sewers Sidewalks/trails Water and sewer lines Ending balance Governmental Activities NPI City of Cottage Grove's Capital Assets (Net of Depreciation) Business -Type Activities Total Primary Government $ 18,060,944 $ 18,060,944 $ 2,899,289 $ 2,900,083 $ 20,960,233 $ 20,961,027 1,157,202 1,157,202 - - 1,157,202 1,157,202 15,555,260 6,504,447 - - 15,555,260 6,504,447 45,132,955 46,305,075 3,885,930 4,176,157 49,018,885 50,481,232 233,782 344,774 - - 233,782 344,774 26,341 - - - 26,341 - 6,047,850 6,522,016 879,912 963,214 6,927,762 7,485,230 9,266,786 7,258,914 7,215,068 6,772,193 16,481,854 14,031,107 127,307,817 119,389,415 - - 127,307,817 119,389,415 39,912,949 34,001,465 39,912,949 34,001,465 5,994,568 6,081,547 - - 5,994,568 6,081,547 - - 89,300,028 72,391,735 89,300,028 72,391,735 $ 268,696,454 $ 245,625,799 $ 104,180,227 $ 87,203,382 $ 372,876,681 $ 332,829,181 Infrastructure capital assets in new developments and water treatment assets related to the MPCA/3M settlement were the largest additions to capital assets during the current year. Additional information on the City of Cottage Grove's capital assets can be found in Note 3. Lon; -term debt At the end of the current fiscal year, the City of Cottage Grove had total long-term debt outstanding of $39,743,448 a decrease of $6,740,563. $4,563,124 of the debt outstanding is due within one year. No debt was issued during the current year. $3,875,000 of debt was paid in the current year for debt that was refunded in the prior year to realize interest savings. $21,180,000 of the outstanding bonds payable is for pavement management debt being repaid by a combination of special assessments and property tax levies. Governmental activities Bonds payable, net Lease liability Compensated absences Total governmental activities Business -Type activities Compensated absences Total business -type activities Total primary government City of Cottage Grove's Outstanding Debt Imp Imi $ 38,238,518 $ 45,184,230 26,665 - 1,289,416 1,134,893 39,554,599 46,319,123 IFRENU�MAERR 12S 25, Z54V 104, 25 25 25 $ 39,743,448 $ 46,484,011 26 City of Cottage Grove Management's Discussion and Analysis Long-term debt The City of Cottage Grove currently holds a general obligation debt rating of AAA/Stable from Standard and Poor's and Aal from Moody's. According to S&P, Cottage Grove received an upgrade due to "improving economic metrics and its relative growth prospects within the Twin Cities metropolitan statistical area demonstrated by the availability of developable land, coupled with a history of strong financial performance and a favorable debt profile." 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 $126,788,205. Of that limit, $13,585,000 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 Cottage Grove ,,,,,, ,ity Meet BASIC FINANCIAL STATEMENTS 29 Cottage Grove ,,,,,, ,ity Meet 30 City of Cottage Grove Statement of Net Position December 31, 2022 With Comparative Totals for December 31, 2021 Component Unit Primary Government Economic Totals Governmental Business -Type Total Primary Development Reporting Entitiy Activities Activities Government Authority 2022 2021 Assets Cash and investments (including cash equivalents) $ 49,852,647 $ 10,349,133 $ 60,201,780 $ 4,672 $ 60,206,452 $ 67,595,825 Interest receivable 460,039 - 460,039 - 460,039 215,933 Due from other governments 3,705,267 60,096 3,765,363 - 3,765,363 1,540,700 Accounts receivable 1,352,775 3,174,471 4,527,246 17,041 4,544,287 5,292,763 Lease receivable 8,537,307 - 8,537,307 - 8,537,307 - Prepaid items 600,058 224,100 824,158 6,410 830,568 329,371 Property tax receivable 112,396 - 112,396 844 113,240 104,469 Loan receivable - - - 14,758 14,758 44,175 Special assessments receivable 7,959,561 - 7,959,561 - 7,959,561 4,390,225 Inventories 278,068 - 278,068 - 278,068 230,734 Internal balances (2,895,446) 2,895,446 - - - - Property held for resale 213,400 - 213,400 129,300 342,700 845,698 Fire relief pension asset 1,279,095 - 1,279,095 - 1,279,095 1,741,271 Capital assets not being depreciated Land 18,060,944 2,874,997 20,935,941 - 20,935,941 20,935,941 Easements 1,157,202 - 1,157,202 - 1,157,202 1,157,202 Construction in progress 15,555,260 - 15,555,260 - 15,555,260 6,504,447 Capital assets net of accumulated depreciation/amortization Land improvements - 24,292 24,292 - 24,292 25,086 Buildings and improvements 45,132,955 3,885,930 49,018,885 - 49,018,885 50,481,232 Equipment and furniture 233,782 - 233,782 - 233,782 344,774 Leased equipment 26,341 - 26,341 - 26,341 - Machinery and equipment 6,047,850 879,912 6,927,762 - 6,927,762 7,485,230 Other improvements 9,266,786 7,215,068 16,481,854 - 16,481,854 14,031,107 Infrastructure 173,215,334 89,300,028 262,515,362 262,515,362 231,864,162 Total assets 340,151,621 120,883,473 461,035,094 173,025 461,208,119 415,160,345 Deferred Outflows of Resources Deferred outflows of resources related to OPEB 204,597 29,767 234,364 2,897 237261 268,831 Deferred outflows of resources related to pensions 16,522,469 2,484,829 19,007,298 64,543 19,071,841 11,069,290 Total deferred outflows of resources 16,727,066 2,514,596 19,241,662 67,440 19,309,102 11,338,121 Total assets and deferred outflows of resources $ 356,878,687 $ 123,398,069 $ 480,276,756 $ 240,465 $ 480,517,221 $ 426,498,466 Liabilities Accounts payable $ 4,537,177 $ 184,431 $ 4,721,608 $ 6,744 $ 4,728,352 $ 3,698,615 Salaries and benefits payable 607,555 111,412 718,967 9,070 728,037 906,983 Contracts payable 712,295 - 712,295 - 712,295 528,799 Due to other governments 128,443 78,524 206,967 84,076 291,043 707,456 Deposits payable 6,154,373 - 6,154,373 518,590 6,672,963 4,883,771 Unearned revenue 68,111 - 68,111 - 68,111 61,241 Interest payable 412,396 - 412,396 - 412,396 482,064 Bonds payable, net of unamortized premium Due within one year 6,825,000 - 6,825,000 - 6,825,000 6,825,000 Due in more than one year 31,413,518 - 31,413,518 - 31,413,518 38,359,230 Leases payable Due within one year 11,828 - 11,828 - 11,828 - Due in more than one year 14,837 - 14,837 - 14,837 - Compensated absences payable Due within one year 1,098,784 167,512 1,266,296 18,649 1,284,945 1,047,051 Due in more than one year 190,631 21,337 211,968 - 211,968 262,949 Net pension liability Due in more than one year 26,392,110 4,018,567 30,410,677 178,450 30,589,127 8,359,148 Total OPEB liability Due in more than one year 432,078 46,415 478,493 5,916 484,409 613,642 Total liabilities 78,999,136 4,628,198 83,627,334 821,495 84,448,829 66,735,949 Deferred Inflows of Resources Deferred inflows of resources related to pensions 710,997 30,414 741,411 2,359 743,770 13,994,764 Deferred inflows of resources related to lease receivable 8,436,870 - 8,436,870 - 8,436,870 - Deferred inflows of resources related to OPEB 105,897 15,408 121,305 1,500 122,805 20,670 Total deferred inflows of resources 9253,764 45,822 9299,586 3,859 9,303,445 14,015,434 Net Position Net Investment in capital assets 230,431,271 104,180,227 334,611,498 - 334,611,498 291,598,794 Restricted for Forfeiture and seizure 71,032 - 71,032 - 71,032 72,712 Debt retirement 3,673,413 - 3,673,413 - 3,673,413 6,956,447 Tax increment purposes 2,654,163 - 2,654,163 - 2,654,163 1,662,124 Unrestricted 31,795,908 14,543,822 46,339,730 (584,889) 45,754,841 45,457,006 Total net position 268,625,787 118,724,049 387,349,836 (584,889) 386,764,947 345,747,083 Total liabilities, deferred inflows of resources, and net position $ 356,878,687 $ 123,398,069 $ 480,276,756 $ 240,465 $ 480,517,221 $ 426,498,466 See notes to basic financial statements. 31 City of Cottage Grove Statement of Activities For the Year Ended December 31, 2022 With Comparative Totals for the Year Ended December 31, 2021 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 debt Total governmental activities Business -type activities Street lights Cottage Grove EMS Water operating Sewer operating Total business -type activities Total primary government Component unit Economic Development Authority Program Revenues Operating Capital Grants Charges for Grants and and Expenses Services Contributions Contributions $ 3,500,705 $ 89,818 $ 124,634 $ - 2,676,975 4,316,442 - - 13,853,217 1,391,825 546,005 76,051 864,161 1,694,792 150,250 - 10,788,045 1,854,776 767,814 36,728,610 9,447,768 4,253,613 689,640 1,144,364 931,466 - - - 42,062,337 13,601,266 2,278,343 37,949,025 1,099,054 1,038,210 - 637,390 2,302,408 1,378,154 7,250 - 4,053,526 3,624,478 34,538 5,981,390 4,159,063 3,663,853 - 5,654,051 11,614,051 9,704,695 41,788 12,272,831 $ 53,676,388 $ 23,305,961 $ 2,320,131 $ 50,221,856 $ 528,350 $ 287,118 $ - $ - General revenues Property taxes Franchise taxes Aggregate taxes Tax increment collections Grants and contributions not restricted to specific programs Unrestricted investment earnings Gain on sale of asset Transfers Total general revenues and transfers Change in net position Net position - beginning Net position - ending See notes to basic financial statements. 32 Component Net (Expense) Revenues and Changes in Net Position Unit Primary Government Economic Governmental Business -Type Development Activities Activities 2022 2021 Authority $ (3,286,253) $ - $ (3,286,253) $ (2,809,954) $ - 1,639,467 - 1,639,467 1,133,340 - (11,839,336) - (11,839,336) (8,792,878) - 980,881 - 980,881 (672,826) - 28,563,155 - 28,563,155 11,560,099 - (3,360,151) - (3,360,151) 248,565 - (931,466) - (931,466) (1,236,037) - 11,766,297 - 11,766,297 (569,691) - - 576,546 576,546 200,222 - - (917,004) (917,004) 546,656 - - 5,586,880 5,586,880 4,226,135 - - 5,158,841 5,158,841 1,860,219 - - 10,405,263 10,405,263 6,833,232 - 11,766,297 10,405,263 22,171,560 6,263,541 - - - - - (241,232) 18,804,948 - 18,804,948 17,494,963 124,835 642,584 - 642,584 615,326 - 33,044 - 33,044 23,467 - 1,750,799 - 1,750,799 1,427,233 - 229,638 - 229,638 83,568 - (2,043,372) (484,598) (2,527,970) (299,843) - 29,658 - 29,658 31,111 - (6,069,068) 6,069,068 - - - 13,378,231 5,584,470 18,962,701 19,375, 825 124,835 25,144,528 15,989,733 41,134,261 25,639,366 (116,397) 243,481,259 102,734,316 346,215,575 320,576,209 (468,492) $ 268,625,787 $ 118,724,049 $ 387,349,836 $ 346,215,575 $ (584,889) 33 City of Cottage Grove Balance Sheet - Governmental Funds December 31, 2022 With Comparative Totals for December 31, 2021 Assets Cash and investments Interest receivable Due from other funds Interfund loan receivable Due from other governments Accounts receivable Lease receivable Prepaid items Inventories Taxes receivable - delinquent Special assessments receivable Deferred Delinquent Special deferred Property held for resale Total assets Liabilities Accounts payable Salaries and benefits payable Due to other funds Contracts payable Due to other governments Deposits payable Unearned revenue Interfund loan payable Total liabilities Deferred Inflows of Resources Unavailable revenue - lease receivable Unavailable revenue - property taxes Unavailable revenue - special assessments Unavailable revenue - intergovernmental Total deferred inflows of resources Fund Balances Nonspendable Restricted Committed Assigned Unassigned Total fund balances Total liabilities, deferred inflows of resources, and fund balances Capital Debt Service Special Revenue Projects Future Economic General Fund Closed Debt Development (100) Fund (300) Ice Arena (250) (286) $ 13,703,958 $ 2,329,641 $ - $ 4,888,724 323,396 - 30,951 - - - - 756,435 148,826 - 33,908 - 36,077 - 183,698 (2) - - 2,870,277 - 25,906 - 3,233 - 96,807 1,217 - - 1,930 128,385 - - 351 3,081 - - - 5,960 - 4,033,083 - - - 213,400 $ 14,337,251 $ 2,468,284 $ 3,122,067 $ 9,891,640 $ 258,070 $ 11,505 $ 49,661 $ 314 507,579 - 20,432 - - - 783,921 - 109,961 - 5,473 - 500 - - - 47,950 1 - - 924,060 11,506 859,487 314 - - 2,852,532 - 96,807 1,217 - - 2,281 137,426 - 4,033,083 25,906 - - - 592,019 2,318,135 - 5,858,243 12,696,178 - (589,952) - 13,314,103 2,318,135 (589,952) 5,858,243 $ 14,337,251 $ 2,468,284 $ 3,122,067 $ 9,891,640 See notes to basic financial statements. 34 Capital Projects Totals MSA Nonmajor Construction Future Projects 3M Settlement - Governmental (520) (510, 810) MPCA (455) Funds 2022 2021 $ - $ 6,580,703 $ - $ 21,898,461 $ 49,401,487 $ 55,079,930 - - - 105,692 460,039 215,933 - 255,467 - 1,401,237 1,656,704 1,933,054 - - - - 756,435 601,063 1,195,043 25,072 2,067,273 226,372 3,696,494 1,469,880 - 187,100 - 937,189 1,344,062 1,735,044 - - - 5,667,030 8,537,307 - - - - 2,857 31,996 50,971 - - - 105,873 105,873 84,153 - - - 14,372 112,396 103,637 27,854 - - 2,225,297 2,383,466 2,989,643 - 108 - 3,989 7,529 23,142 30,000 739,207 - 760,316 5,568,566 1,377,440 - - - - 213,400 716,398 $ 1,252,897 $ 7,787,657 $ 2,067,273 $ 33,348,685 $ 74,275,754 $ 66,380,288 $ 196,905 $ 276,144 $ 1,410,386 $ 2,015,994 $ 4,218,979 $ 3,392,256 - - - 37,670 565,681 481,126 255,467 - 617,316 - 1,656,704 1,933,054 - - 160,880 551,415 712,295 528,799 - 2,522 64 8,510 126,530 54,598 - 5,641,676 - 512,197 6,154,373 4,702,746 - - 20,160 68,111 61,241 - - - 3,196,435 3,196,435 3,251,063 452,372 5,920,342 2,188,646 6,342,381 16,699,108 14,404,883 - - - 5,584,338 8,436,870 - - - - 553,934 651,958 708,832 57,854 739,316 - 2,451,741 7,421,701 3,785,030 311,242 - - - 311,242 1,056,418 369,096 739,316 - 8,590,013 16,821,771 5,550,280 - - - 108,730 134,636 135,124 - - - 6,811,004 6,811,004 9,649,776 - - - 2,155,025 2,155,025 2,531,015 431,429 1,127,999 - 11,846,419 22,174,244 27,600,260 - - (121,373) (2,504,887) 9,479,966 6,508,950 431,429 1,127,999 (121,373) 18,416,291 40,754,875 46,425,125 $ 1,252,897 $ 7,787,657 $ 2,067,273 $ 33,348,685 $ 74,275,754 $ 66,380,288 35 Cottage Grove ,,,,,, ,ity Meet 36 City of Cottage Grove Reconciliation of the Balance Sheet to the Statement of Net Position - Governmental Funds December 31, 2022 With Comparative Totals for December 31, 2021 2022 2021 Total Fund Balances - Governmental Funds $ 40,754,875 $ 46,425,125 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 355,906,965 325,308,502 Less accumulated depreciation (88,095,154) (80,598,217) 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 (37,190,000) (44,015,000) Unamortized bond premium (1,048,518) (1,169,230) Net pension liability (25,438,777) (6,714,207) Lease Payable (26,665) - Compensated absences payable (1,198,412) (1,049,891) Total OPEB liability (408,310) (487,041) Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. Property taxes 651,958 104,269 Special assessments 7,421,701 4,389,593 Deferred intergovernmental grants receivable 311,242 1,056,417 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 (500,456) (456,906) Deferred inflows of resources related to city pensions (197,937) (11,197,243) Deferred outflows of resources related to fire relief pensions 693,509 24,133 Deferred inflows of resources related to OPEB (98,007) (14,338) Deferred outflows of resources related to city pensions 15,484,153 9,114,355 Deferred outflows of resources related to OPEB 189,354 215,435 The Fire Relief Association net pension asset created through contributions to a defined benefit pension plan which is not recognized in the governmental funds. 1,279,095 1,741,271 Governmental funds do not report a liability for accrued interest due and payable. (412,396) (482,064) 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 activities Statement of Net Position 547,567 1,286,296 Total net position - governmental activities $ 268,625,787 $ 243,481,259 See notes to basic financial statements. 37 Revenue General property taxes Franchise taxes Aggregate taxes Tax increment collections Special assessments Licenses and permits Direct charges to developers Intergovernmental Charges for services Rent Fines and forfeitures Investment earnings Interest on interfund loan Connection charges Park dedication fees Refunds and reimbursements Donations Miscellaneous Total revenues Expenditures Current General government Community development Public safety Public works Culture and recreation Economic development Capital outlay General government Public safety Public works Culture and recreation Debt service Principal retirement Interest and other charges Total expenditures Excess of revenues over (under) expenditures Other Financing Sources (Uses) Proceeds from sale of capital asset Bond issuance Bond premium Proceeds from Leases Payments to refunded bond escrow agent Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Fund Balances Beginning of year End of year City of Cottage Grove Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds For the Year Ended December 31, 2022 With Comparative Totals for the Year Ended December 31, 2021 Capital Debt Service Special Revenue Projects Future Economic General Fund Closed Debt Development (100) Fund (300) Ice Arena (250) (286) $ 15,210,645 $ 223,430 $ - $ 5,621 99,978 4,386,820 - 987,947 57,000 1,566,099 1,323,938 142,770 (486,954) (96,471) (175,758) 16,533 46,893 - 150,000 65,730 - 23,328 1,688,444 21,925,571 226,937 1,404,266 1,679,219 2,960,866 42,972 2,581,927 - 10,154,110 3,183,663 - 2,687,177 1,216,926 - - - 505,888 38,240 307,438 3,430 11,575 891 21,929,317 42,972 1,216,926 505,888 (3,746) 183,965 187,340 1,173,331 38,240 575,230 (400,000) (82,363) (200,000) 213,470 (82,363) (200,000) 209,724 101,602 (12,660) 1,173,331 13,104,379 2,216,533 (577,292) 4,684,912 $ 13,314,103 $ 2,318,135 $ (589,952) $ 5,858,243 See notes to basic financial statements. 38 Totals MSA Nonmajor Construction Future Projects 3M Settlement - Governmental (520) (510, 810) MPCA (455) Funds 2022 2021 $ $ 9 $ - $ 2,823,175 $ 18,257,259 $ 17,514,744 - 642,584 642,584 615,326 33,044 33,044 23,467 - 1,750,799 1,750,799 1,427,233 70,881 115,964 571,660 864,104 8,420,102 - - - 4,386,820 3,181,740 - - 26,081 26,081 627,540 1,884,787 76,051 9,224,361 2,717,089 14,947,235 10,662,269 - - - 4,436,824 7,326,861 6,969,681 710,881 710,881 494,880 - 35,679 178,449 192,036 692 (58,673) (1,193,572) (2,010,736) (269,070) - - 16,533 19,395 4,110,942 4,110,942 5,293,099 1,144,364 1,144,364 2,014,802 806 806 - - 196,893 253,054 80,855 1,858,357 771,294 1,956,360 133,351 9,224,361 17,891,211 54,441,276 58,211,592 - - - 29,311 3,033,149 2,504,935 - 2,581,927 2,329,259 - - - 774,087 10,928,197 10,257,201 9,650 91,276 1,249,750 1,968,946 6,503,285 6,910,688 - 92,933 - 2,912,279 6,909,315 5,968,879 - 358,273 864,161 823,036 - 38,240 172,732 - - - 197,162 504,600 193,386 991,132 136,452 8,084,799 9,170,129 18,382,512 14,919,373 - 672 - 3,652,805 3,656,907 2,501,072 - 2,950,000 2,961,575 3,785,000 1,120,955 1,121,846 1,344,234 1,000,782 321,333 9,334,549 23,133,947 57,485,714 51,709,795 955,578 (187,982) (110,188) (5,242,736) (3,044,438) 6,501,797 - 9,687 9,687 3,267 - - 7,795,000 - 235,748 38,240 - - (3,875,000) (3,875,000) - 1,837,342 1,427,979 3,840,551 2,897,844 (745,616) (1,211,311) (2,639,290) (2,265,181) 1,091,726 (3,648,645) (2,625,812) 8,666,678 2,047,304 (187,982) (110,188) (8,891,381) (5,670,250) 15,168,475 (1,615,875) 1,315,981 (11,185) 27,307,672 46,425,125 31,256,650 $ 431,429 $ 1,127,999 $ (121,373) $ 18,416,291 $ 40,754,875 $ 46,425,125 39 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, 2022 With Comparative Totals for the Year Ended December 31, 2021 2022 2021 Total net change in fund balances - governmental funds $ (5,670,250) $ 15,168,475 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 22,263,860 14,293,017 Developer contributed assets 15,704,910 6,560,657 Depreciation expense (7,596,917) (7,059,184) Loss on disposal - (136,416) Assets contributed to business -type activities (7,270,329) (7,469,184) Compensated absences are recognized as paid in the governmental funds but recognized as the expense is incurred in the Statement of Activities. (148,521) (50,329) OPEB expenses are recognized as paid in the governmental funds but recognized as the expense is incurred in the Statement of Activities. (31,019) 3,871 Principal payments on long-term debt are recognized as expenditures in the governmental funds but as an increase in the net position in the Statement of Activities. 6,836,575 3,785,000 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 69,668 5,314 Amortization of bond discounts and premiums 120,712 102,883 Proceeds from long-term debt are recognized as an other financing source in the governmental funds but as a decrease in net position in the Statement of Activities. (38,240) (7,795,000) The governmental funds report the effect of premiums, discounts and similar items when debt is fast issued, whereas these amounts are deferred and amortized in the Statement of Activities. Bond discounts and premiums - (235,748) Governmental funds recognized pension contributions as expenditures at the time of payment whereas the Statement of Activities factors in items related to pensions (1,191,816) 1,127,857 on a full accrual perspective. Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. Property taxes 547,689 (19,781) Special assessments 3,032,108 (3,910,933) Loans and grants receivable (745,175) (1,739,345) Internal service funds are used by management to charge the cost of insurance to individual funds. This amount is net revenue (loss) attributable to governmental funds. (738,727) (620,622) Change in net position - governmental activities $ 25,144,528 $ 12,010,532 See notes to basic financial statements. 40 City of Cottage Grove Statement of Net Position -Proprietary Funds December 31, 2022 Business -Type Activities - Enterprise Funds Governmental Cottage Grove Activities - Street Light EMS Fund Water Sewer Internal Fund (630) (660) Operating (610) Operating (620) Total Service Funds Assets Current assets Cash and investments $ 326,465 $ - $ 7,194,342 $ 2,828,326 $ 10,349,133 451,160 Accounts receivable 184,389 1,917,421 522,951 549,710 3,174,471 8,713 Due from other funds - - 1,306,429 - 1,306,429 - Due from other governments 41,133 18,963 60,096 8,773 Inventories - - - - - 172,195 Prepaid items - 910 2,555 220,635 224,100 568,062 Total current assets 510,854 1,918,331 9,067,410 3,617,634 15,114,229 1,208,903 Noncurrent assets Interfund loan receivable - 2,440,000 2,440,000 - Capital assets Land and land improvements 2,760,015 154,785 2,914,800 424,665 Buildings and improvements 7,616,850 - 7,616,850 928,870 Equipment and furniture - - - - - 70,127 Machinery and equipment 109,567 992,265 1,222,515 372,008 2,696,355 514,525 Other improvements 10,856,465 - - - 10,856,465 - Water and sewer lines - 69,082,066 47,967,091 117,049,157 - Total capital assets 10,966,032 992,265 80,681,446 48,493,884 141,133,627 1,938,187 Accumulated depreciation (3,760,671) (503,820) (21,865,123) (10,823,786) (36,953,400) (1,053,544) Net capital assets 7,205,361 488,445 58,816,323 37,670,098 104,180,227 884,643 Total noncurrent assets 7,205,361 488,445 58,816,323 40,110,098 106,620,227 884,643 Total assets 7,716,215 2,406,776 67,883,733 43,727,732 121,734,456 2,093,546 Deferred Outflows of Resources Deferred ouflows of resources related to pensions 43,035 2,127,664 235,434 78,696 2,484,829 344,807 Deferred outflows of resources related to OPEB 1,909 14,419 9,690 3,749 29,767 15,243 Total deferred outflows of resources 44,944 2,142,083 245,124 82,445 2,514,596 360,050 Total assets and deferred outflows ofresources $ 7.761.159 $ 4,548,859 $ 68,128,857 $ 43.810.177 $ 124,249,052 $ 2,453,596 Liabilities Current liabilities Accounts payable $ 45,227 $ 12,425 $ 97,371 $ 29,408 $ 184,431 $ 318,198 Salaries payable 4,651 72,647 26,142 7,972 111,412 41,874 Due to other funds - 457,632 - - 457,632 848,797 Due to other governments (370) 9,146 62,343 7,405 78,524 1,913 Compensated absences payable 6,959 71,552 66,289 22,712 167,512 73,075 Total current liabilities 56,467 623,402 252,145 67,497 999,511 1,283,857 Noncurrent liabilities Compensated absences payable - 14,117 5,415 1,805 21,337 17,928 Net pension liability 118,985 3,031,067 650,935 217,580 4,018,567 953,333 Total OPEB liability 2,976 22,483 15,110 5,846 46,415 23,768 Total noncurrent liabilities 121,961 3,067,667 671,460 225,231 4,086,319 995,029 Total liabilities 178,428 3,691,069 923,605 292,728 5,085,830 2,278,886 Deferred Inflows of Resources Deferred inflows of resources related to pensions 1,573 17,358 8,606 2,877 30,414 12,604 Deferred inflows of resources related to OPEB 988 7,463 5,016 1,941 15,408 7,890 Total deferred inflows of resources 2,561 24,821 13,622 4,818 45,822 20,494 Net Position Net investment in capital assets 7,205,361 488,445 58,816,323 37,670,098 104,180,227 884,643 Unrestricted 374,809 344,524 8,375,307 5,842,533 14,937,173 (730,427) Total net position 7,580,170 832,969 67,191,630 43,512,631 119,117,400 154,216 Total liabilities, deferred inflows of resources, and net position $ 7,761,159 $ 4,548,859 $ 68,128,857 $ 43.810.177 $ 124,249,052 $ 2,453,596 Net position proprietary funds 119,117,400 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. (393,351) Net position business -type activities $ 118,724,049 See notes to basic financial statements. 41 City of Cottage Grove Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary Funds For the Year Ended December 31, 2022 Business -Type Activities - Enterprise Funds Cottage Grove Street Light EMS Fund Water Sewer Fund (630) (660) Operating (610) Operating (620) Operating Revenue Charges for services - user fees $ 871,602 $ 1,308,012 $ 3,447,474 $ 3,567,096 Water meter/street light material sales 114,510 - 157,003 - Insurance refunds and reimbursements - - - - Total operating revenues 986,112 1,308,012 3,604,477 3,567,096 Operating Expenses Personal services 134,620 1,790,345 932,941 307,818 Commodities 114,366 93,779 164,467 21,915 Commodities - items for resale 117,421 - - - Contractual services 509,558 260,587 1,338,786 598,170 Disposal - contractual services - MCES - - - 2,403,451 Claims - - - - Depreciation 204,392 91,071 1,555,359 783,946 Total operating expenses 1,080,357 2,235,782 3,991,553 4,115,300 Operating loss (94,245) (927,770) (387,076) (548,204) Nonoperating Revenues (Expenses) Investment earnings (22,309) (72) (346,706) (140,961) Interest on interfund debt - - - 25,450 Intergovernmental grants - 6,750 34,538 - Rent - - 2,710 - Miscellaneous 52,098 70,642 17,291 96,757 Total nonoperating revenues (expenses) 29,789 77,320 (292,167) (18,754) Income (loss) before capital contributions and transfers (64,456) (850,450) (679,243) (566,958) Capital contributions 637,390 - 9,024,667 9,881,103 Transfers out (217,960) (97,850) (467,138) (418,313) Change in net position 354,974 (948,300) 7,878,286 8,895,832 Net Position Beginning of year 7,225,196 1,781,269 59,313,344 34,616,799 End of year $ 7,580,170 $ 832,969 $ 67,191,630 $ 43,512,631 Change in net position reported above Adjustment to reflect the consolidation of internal service fund activity related to enterprise funds Change in net position of business -type activities See notes to basic financial statements. 42 Governmental Activities - Internal Total Service Funds $ 9,194,184 $ 5,390,489 271,513 - - 106,021 9,465,697 5,496,510 3,165,724 3,840,914 394,527 934,950 117,421 - 2,707,101 1,583,365 2,403,451 - - 186,169 2,634,768 41,167 11,422,992 6,586,565 (1,957,295) (1,090,055) (510,048) (49,169) 25,450 - 41,288 8,773 2,710 - 236,788 200,664 (203,812) 160,268 (2,161,107) (929,787) 19,543,160 (1,201,261) 16,180,792 (929,787) 102,936,608 1,084,003 $ 119,117,400 $ 154,216 $ 16,180,792 (191,059) $ 15,989,733 43 City of Cottage Grove Statement of Cash Flows - Proprietary Funds For the Year Ended December 31, 2022 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 Fund Cash Flows - Operating Activities Receipts from customers and users $ 951,613 $ 1,712,734 $ 3,514,121 $ 3,470,161 $ 9,648,629 $ 5,478,133 Receipts from insurance refunds and reimbursements - - - - - 106,021 Payments to suppliers (758,145) (353,182) (1,475,157) (3,358,851) (5,945,335) (3,096,923) Payments to employees (152,215) (1,704,977) (869,745) (310,873) (3,037,810) (3,754,764) Miscellaneous revenue 52,098 70,642 20,001 96,757 239,498 209,437 Net cash flows - operating activities 93,351 (274,783) 1,189,220 (102,806) 904,982 (1,058,096) Cash Flows - Noncapital Financing Activities Advances to/from Other Funds Intergovernmental revenue Transfer from Other Funds Transfer to other funds Net cash flows - noncapital financing activities Cash Flows - Capital Related Financing Activities Acquisition of capital assets Net cash flows - capital related financing activities Cash Flows - Investing Activities Interest and dividends received Interest on interfund loan Temporary loan made to other fund Net cash flows - investing activities Net change in cash and cash equivalents Cash and Cash Equivalents January 1 December 31 Reconciliation of Operating Loss to Net Cash Flows - Operating Activities Operating loss Adjustments to reconcile operating loss to income (loss) to net cash net cash flows - operating activities Depreciation expense Miscellaneous revenue Pension expense Receivables Prepaid items Inventory Accounts payable Due to other governmental units Salaries payable Compensated absences payable OPEB expense Total adjustments Net cash flows - operating activities Noncash Investing, Capital, and Noncash Investing, Capital, and Financing Activities Financing Activities Capital asset contributions from governmental activities Total Noncash Activities 400,371 - 210,000 610,371 848,797 6,750 34,538 - 41,288 - (217,960) (97,850) (467,138) (418,313) (1,201,261) (217,960) 309,271 (432,600) (208,313) (549,602) 848,797 (34,416) (34,036) (68,452) (10,296) (34,416) (34,036) (68,452) (10,296) (22,309) (72) (346,706) (140,961) (510,048) (49,169) - 25,450 25,450 (1,249,168) (1,249,168) (22,309) (72) (1,595,874) (115,511) (1,733,766) (49,169) (146,918) - (873,290) (426,630) (1,446,838) (268,764) 473,383 - 8,067,632 3,254,956 11,795,971 719,924 $ 226,465 $ $ 7, 994,342 $ 2, 228,326 $ 10, 449,133 $ 551,160 $ (94,245) $ (927,770) $ (387,076) $ (548,204) $ (1,957,295) $ (1,090,055) 204,392 91,071 1,555,359 783,946 2,634,768 41,167 52,098 70,642 20,001 96,757 239,498 210,550 (14,146) 97,340 62,808 (4,896) 141,106 75,924 (34,499) 404,722 (90,356) (96,935) 182,932 86,531 1,427 (75) (220,635) (219,283) (294,959) - - (25,614) (16,002) (5,129) 29,856 (33,520) (24,795) (5,407) (798) 4,886 (1,685) (81,160) (78,757) (66,459) (682) (19,364) (3,512) 1,377 (22,181) 11,427 (961) 14,754 7,526 2,642 23,961 6,001 (1,806) (7,362) (3,626) (2,178) (14,972) (7,202) 187,596 652,987 1,576,296 445,398 2,862,277 31,959 $ 93,351 $ (274,783) $ 1,189,220 $ (102,806) $ 904,982 $ (1,058,096) $ 637,390 $ - $ 9,024,667 $ 9,881,103 $ 19,543,160 $ $ 637,390 $ - $ 9,024,667 $ 9,881,103 $ 19,543,160 $ See notes to basic financial statements. 44 City of Cottage Grove Notes to Basic 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. 45 City of Cottage Grove Notes to Basic 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. Descriptions of Funds: The government reports the following major governmental funds: General Fund — This 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. Closed Debt Fund — This fund accounts for the accumulation of residual resources from debt funds that have been closed as the associated debt has been satisfied. Future Economic Development Capital Project Fund — This fund accounts for the receipt and use of monies for economic development purposes. M City of Cottage Grove Notes to Basic Financial Statements NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) Descriptions of Funds: (Continued) Major Governmental Funds: (Continued) Ice Arena Special Revenue Fund - this fund accounts for the operations of the City's ice arena. MSA Construction Capital Project Fund — This fund accounts for projects related to Municipal State Aids. Future Projects Fund— This 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. 3M Settlement— MPCA Capital Projects Fund— This fund accounts for funds and expenditures related to this agreement. The government reports the following major proprietary funds: Street Light Fund — This fund accounts for customer street light and service charges which are used to finance street light operating expenses. Cottage Grove EMS Fund — This 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 — This fund accounts for customer water service charges which are used to finance water operating expenses. Sewer Operating Fund — This 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. 47 City of Cottage Grove Notes to Basic 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. 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. 48 City of Cottage Grove Notes to Basic Financial Statements NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. Legal Compliance — Budgets (Continued) 6. Legal debt obligation indentures determine the appropriation level and debt service tax levies for the Debt Service Funds. Supplementary budgets are adopted for the Proprietary Funds to determine and calculate user charges. These 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: Nonmajor Funds Storm Water Maintenance Fines/Seizures Golf Course Equipment Replacement Street Sealcoating F. Deposits and Investments Final Budget Actual Over Budget $ 736,880 $ 1,065,379 $ 328,499 30,100 60,924 30,824 2,321,370 2,794,829 473,459 400,000 409,687 9,687 626,000 1,463,397 837,397 Cash and investments include balances from all funds and 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 2. 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 I 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. 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. City of Cottage Grove Notes to Basic Financial Statements NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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, 2022, are planned to be eliminated in 2023. 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. 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. 50 City of Cottage Grove Notes to Basic Financial Statements NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) I. Special Assessment Revenue Recognition (Continued) 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. 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, 2022, were $2,200,000. 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. 51 City of Cottage Grove Notes to Basic Financial Statements NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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, 2022, 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 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. 52 City of Cottage Grove Notes to Basic Financial Statements NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 assets 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. Deferred inflows of resources related to lease receivable is reported in both the government -wide Statement of Net Position and Governmental Funds Balance Sheet. 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 assets 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 and OPEB. 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. 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. 53 City of Cottage Grove Notes to Basic Financial Statements NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. 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. 54 City of Cottage Grove Notes to Basic Financial Statements NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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, 2022, all of the deposits were insured or collateralized by securities held by the City or its agent in the City's name. In accordance with Minnesota Statutes, the City maintains deposits at financial institutions which are authorized by the City Council. Minnesota Statutes require that all deposits be protected by insurance, surety bond, or collateral. The market value of collateral pledged must equal 110% of the deposits not covered by insurance or corporate surety bonds. Authorized collateral 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. 55 City of Cottage Grove Notes to Basic Financial Statements NOTE 2 — DEPOSITS AND INVESTMENTS (CONTINUED) B. Investments (Continued) b) General Obligations of the State of Minnesota or any of its municipalities as follow: 1) General obligation of any state or local government with taxing powers which is rated "A" or better by a national bond rating service; 2) Revenue obligation of any state or local government with taxing powers which is rated "AA" or better by a national bond rating service; and 3) General obligation of the Minnesota Housing Finance Agency rated "A" or better by a national bond rating agency. c) Bankers' acceptance of United States banks eligible for purchase by the Federal Reserve System. d) Commercial paper of the highest quality (A1, P1), and maturing in 270 days or less. e) Repurchase agreements 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 Minnesota Statute 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 — The 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. 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 $ 9,219,794 $ - $ 9,219,794 $ AA+/Aaa S&P/Moody's Freddie Mac - FHLMC 5,733,913 975,980 4,757,933 AA+/Aaa S&P/Moody's Federal Farm Credit Bank 3,552,666 2,376,311 1,176,355 AA+/Aaa S&P/Moody's Federal National Mortgage Association - FNMA 3,348,740 1,946,805 1,401,935 AA+/Aaa S&P/Moody's US Treasury 4,568,403 1,966,455 2,601,948 AA+/Aaa S&P/Moody's Municipal Obligations 17,120,696 3,150,252 13,683,474 286,970 AA+/Aaa S&P/Moody's Money Market Mutual Funds 1,944,060 1,944,060 - - NR N/A Commercial Paper Sweep Account 3,180,696 3,180,696 - NR N/A Negotiable CD's 11,472,732 1,924,162 9,548,570 NR N/A Total Pooled Investments 60,141,700 $ 17,464,721 $ 42,390,009 $ 286,970 Deposits 49,771 Petty Cash and Change 14,981 Total Cash and Investments $ 60,206,452 56 City of Cottage Grove Notes to Basic Financial Statements NOTE 2 — DEPOSITS AND INVESTMENTS (CONTINUED) B. Investments (Continued) Custodial Credit Risk — 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 (A1, P1) and municipal general obligations need an "A" rating or better. Concentration of Credit Risk — The City's investment policy places no limit on the amount that may be invested in any one issuer. The following is a list of investments by issuer which individually comprise more than 5% of the City's total investments: Type Federal Home Loan Bank - FHLB Freddie Mac - FHLMC Federal Farm Credit Bank Federal National Mortgage Association - FNMA Fair Value Percent $ 9,219,794 15% 5,733,913 10% 3,552,666 6% 3,348,740 6% The City has the following recurring fair value measurements as of December 31, 2022: • $4,568,403 of US Treasuries are valued using quoted market prices (Level 1 inputs). • $50,448,541 of FNMA, FFCB, FHLB, FHMC and negotiable CDs are valued using a matrix pricing model (Level 2 inputs). 57 City of Cottage Grove Notes to Basic Financial Statements NOTE 3 — CAPITAL ASSETS Capital asset activity for the year ended December 31, 2022, was as follows: Primary Government Governmental activities Capital assets not being depreciated Land Permanent easements Construction in progress Total capital assets not being depreciated Other capital assets being depreciated Buildings and improvements Equipment and furniture Machinery and equipment Other improvements Infrastructure Streets Storm sewers Sidewalks/trails Leased equipment Total capital assets being depreciated Less accumulated depreciation for Buildings and improvements Equipment and furniture Machinery and equipment Other improvements Infrastructure Streets Storm sewers Sidewalks/trails Less accumulated amortization for Leased equipment Total accumulated depreciation and amortization Total other capital assets being depreciated, net Governmental activities capital assets, net Beginning Balance (Reclassed) Increases Decreases Ending Balance $ 18,060,944 $ - $ - $ 18,060,944 1,157,202 - - 1,157,202 6,504,447 19,351,197 10,300,384 15,555,260 25,722,593 19,351,197 10,300,384 34,773,406 63,473,322 524,604 - 63,997,926 1,860,591 - - 1,860,591 14,763,832 445,697 48,213 15,161,316 12,235,407 2,530,162 53,984 14,711,585 155,832,242 11,147,261 - 166,979,503 45,386,505 6,886,283 - 52,272,788 7,961,901 87,897 - 8,049,798 - 38,239 - 38,239 301,513,800 21,660,143 102,197 323,071,746 17,168,247 1,696,724 - 18,864,971 1,515,817 110,992 - 1,626,809 8,241,816 919,863 48,213 9,113,466 4,976,493 522,290 53,984 5,444,799 36,442,827 3,228,859 - 39,671,686 11,385,040 974,799 - 12,359,839 1,880,354 174,876 - 2,055,230 - 11,898 - 11,898 81,610,594 7,640,301 102,197 89,148,698 219,903,206 14,019,842 - 233,923,048 $ 245,625,799 $ 33,371,039 $ 10,300,384 $ 268,696,454 in City of Cottage Grove Notes to Basic Financial Statements NOTE 3 — CAPITAL ASSETS (CONTINUED) Beginning Ending Balance Increases Decreases Balance Primary Government Business -type activities Capital assets not being depreciated Land $ 2,874,997 $ - $ - $ 2,874,997 Capital assets being depreciated Land improvements 39,803 - - 39,803 Buildings and improvements 7,616,850 - - 7,616,850 Machinery and equipment 2,627,904 68,453 - 2,696,357 Other improvements 10,219,075 637,391 - 10,856,466 Water and sewer lines 98,143,386 18,905,769 - 117,049,155 Total capital assets being depreciated 118,647,018 19,611,613 - 138,258,631 Less accumulated depreciation for Land improvements 14,717 794 - 15,511 Buildings and improvements 3,440,693 290,227 - 3,730,920 Machinery and equipment 1,664,690 150,050 - 1,814,740 Other improvements 3,446,882 194,516 - 3,641,398 Water and sewer lines 25,751,651 1,999,181 - 27,750,832 Total accumulated depreciation 34,318,633 2,634,768 - 36,953,401 Total capital assets being depreciated, net 84,328,385 16,976,845 - 101,305,230 Business -type activities capital assets, net $ 87,203,382 $ 16,976,845 $ - $ 104,180,227 Depreciation and amortization expense was charged to functions/programs of the City as follows: Governmental activities General government Public safety Public works Culture and recreation Total depreciation and amortization expense - governmental activities Business -type activities Street lights Cottage Grove EMS Water operating Sewer operating Total depreciation expense - business -type activities $ 260,795 1,464,325 4,714,038 1,201,143 $ 7,640, 001 $ 204,392 91,071 1,555,359 783,946 $ 2,634,768 59 City of Cottage Grove Notes to Basic Financial Statements NOTE 4 —LEASE RECEIVABLE The City has a lease agreement with the Cottage Grove Athletic Association and Independent School District No. 833 relating to the Cottage Gove Ice Arena that is owned by the City. Both leases expire in 2029. The City pays all operating costs for the Arena, including maintenance and glass replacement costs. Total rent income earned from these leases was $504,250 for the year ended December 31, 2022. The City has multiple leasing agreements relating to space on and around the Cities Water Towers. Lessors include AT&T, Verizon Wireless, Zayo, T-Mobile, and Sprint and all leases expire sporadically between December 31, 2023, and December 31, 2048. Expiration dates noted include automatic 5-year renewals of leases that are only terminatable by the Lessee. Total rent income earned from Water Tower leases was $1,132,903 for the year ended December 31, 2022 The net present value of future lease payments has been recorded as a lease receivable and a deferred inflow of resources, discounted at a 3.58% discount rate. Lease receivable at December 31, 2022, was $8,537,308 and deferred inflow was $8,436,870. The revenue will be recognized in future years. NOTE 5 — 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. City of Cottage Grove Notes to Basic Financial Statements NOTE 5 — LONG-TERM DEBT (CONTINUED) A. General Obligation Debt (Continued) As of December 31, 2022, the governmental long-term debt of the financial reporting entity consisted of the following: Primary government: Governmental Activities General Obligation Tax Increment Bonds G.O. Tax Increment Bonds of 2004A General Obligation Capital Improvement Bonds G.O. CIP Bonds of 2017A G.O. CIP Bonds of 2019A Total General Obligation Capital Improvement Bonds G.O. Refunding Bonds of 2016A Equipment Certificate 2019B Special Assessment Bonds with Government Commitment G.O. Improvement Bonds of 2015A G.O. Improvement Bonds of 2016B G.O. Improvement Bonds of 2018A G.O. Improvement Bonds of 2021A G.O. Improvement Refunding Bonds of 2021B Total Special Assessment Bonds Bond premium Total Governmental Activities Bonds Lease Liability Compensated absences payable Total - governmental activities Business Type Activities Compensated absences payable Total - primary government Component Unit - EDA Compensated absences payable Total indebtedness - component unit Interest Issue Final Original Principal Rate Date Maturity Issue Outstanding 3.00-4.65% 7/1/2004 2/1/2024 $ 1,405,000 $ 565,000 2.50-3.25% 5/11/2017 2/1/2038 9,155,000 7,715,000 3.00-4.00% 2/14/2019 2/1/2040 4,090,000 3,795,000 13,245,000 11,510,000 2.00-3.00% 1/28/2016 2/1/2027 4,660,000 1,860,000 3.00% 2/14/2019 2/1/2029 2,845,000 2,075,000 2.50-3.00% 5/27/2015 2/1/2031 5,700,000 3,570,000 2.00-2.10% 11/16/2016 2/1/2033 4,275,000 3,025,000 3.00% 6/26/2018 2/1/2035 7,620,000 6,790,000 1.65%-2.00% 6/10/2021 2/1/2037 3,955,000 3,955,000 1.10%-2.00% 12/9/2021 2/1/2029 3,840,000 3,840,000 25,390,000 21,180,000 - 1,048,518 47,545,000 38,238,518 26,665 1,289,416 $ 47,545,000 39,554,599 188,849 $ 39,743,448 $ 18,649 61 City of Cottage Grove Notes to Basic Financial Statements NOTE 5 - LONG-TERM DEBT (CONTINUED) B. Minimum Debt Payments Annual debt service requirements to maturity for general obligation bonds are as follows: Tax Increment Bonds Year Ending Governmental Activities December 31, Principal Interest Total 2023 $ 275,000 $ 19,810 $ 294,810 2024 290,000 6,743 296,743 Total $ 565,000 $ 26,553 $ 591,553 Special Assessment Bonds Year Ending Governmental Activities December 31, Principal Interest Total 2023 $ 1,840,000 $ 475,668 $ 2,315,668 2024 1,880,000 430,243 2,310,243 2025 1,915,000 383,893 2,298,893 2026 1,955,000 337,568 2,292,568 2027 1,990,000 291,293 2,281,293 2028-2032 8,245,000 825,733 9,070,733 2033-2037 3,355,000 140,924 3,495,924 Total $ 21,180,000 $ 2,885,319 $ 24,065,319 G.O. Refunding Bonds Year Ending Governmental Activities December 31, Principal Interest Total 2023 $ 355,000 $ 39,075 $ 394,075 2024 365,000 28,275 393,275 2025 375,000 19,050 394,050 2026 380,000 11,500 391,500 2027 385,000 3,850 388,850 Total $ 1,860,000 $ 101,750 $ 1,961,750 62 City of Cottage Grove Notes to Basic Financial Statements NOTE 5 - LONG-TERM DEBT (CONTINUED) B. Minimum Debt Payments (Continued) G.O. CIP Bonds Year Ending Governmental Activities December 31, Principal Interest Total 2023 $ 545,000 $ 340,209 $ 885,209 2024 560,000 322,059 882,059 2025 580,000 303,309 883,309 2026 600,000 283,884 883,884 2027 615,000 264,971 879,971 2028-2032 3,360,000 1,056,169 4,416,169 2033-2037 3,865,000 531,252 4,396,252 2038-2040 1,385,000 50,115 1,435,115 Total Year Ending December 31, 2023 2024 2025 2026 2027 2028-2029 Total Year Ending December 31, $ 11,510,000 $ 3,151,968 $ 14,661,968 Equipment Certificates Governmental Activities Principal Interest Total $ 270,000 $ 58,200 $ 328,200 280,000 49,950 329,950 285,000 41,475 326,475 295,000 32,775 327,775 305,000 23,775 328,775 640,000 19,350 659,350 $ 2,075,000 $ 225,525 $ 2,300,525 Principal Lease Liability Governmental Activities Interest Total 2023 $ 11,828 $ 638 $ 12,466 2024 5,870 341 6,211 2025 3,911 216 4,127 2026 4,030 97 4,127 2027 1,026 5 1,031 Total $ 26,665 $ 1,297 $ 27,962 63 City of Cottage Grove Notes to Basic Financial Statements NOTE 5 — LONG-TERM DEBT (CONTINUED) C. Changes in Long -Term Liabilities Beginning Ending Due Within Balance Additions Retirements Balance One Year Primary Government Governmental activities Bonds payable General obligation bonds $ 15,065,000 $ - $ 1,130,000 $ 13,935,000 $ 1,685,000 Special assessment bonds 26,610,000 - 5,430,000 21,180,000 1,330,000 Equipment certificate 2,340,000 - 265,000 2,075,000 270,000 Bond premiums 1,169,230 - 120,712 1,048,518 - Total bonds payable 45,184,230 - 6,945,712 38,238,518 3,285,000 Lease Liability - 38,239 11,574 26,665 11,828 Compensated absences payable 1,134,893 1,388,154 1,233,632 1,289,415 1,098,784 Total governmental activities 46,319,123 1,426,393 8,190,918 39,554,598 4,395,612 Business -type activities Compensated absences payable 164,888 245,318 221,357 188,849 167,512 Total primary government $ 46,484,011 $ 1,671,711 $ 8,412,275 $ 39,743,447 $ 4,563,124 Component Unit Economic Development Authority Compensated absences payable $ 10,219 $ 20,733 $ 12,303 18,649 $ 14,320 For the governmental activities, compensated absences are generally liquidated by the General Fund. All long-term bonded indebtedness outstanding at December 31, 2022, is backed by the full faith and credit of the City, including special assessment and revenue bond issues. Delinquent assessments receivable at December 31, 2022, totaled $6,078. NOTE 6 — PENSION PLANS The City participates in various pension plans. Total pension expense for the year ended December 31, 2022, was $3,810,879. The components of pension expense are noted in the following plan summaries. The General Fund, Water Operating, Sewer Operating, Street Light, Cottage Grove EMS, and Internal Service Funds typically liquidate the liability related to pensions. Public Employees' Retirement Association A. Plan Description General Employees Retirement Plan The City 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. City of Cottage Grove Notes to Basic Financial Statements NOTE 6 — PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) A. Plan Description (Continued) General Employees Retirement Plan (Continued) 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 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. General Employees Plan Benefits General Employees Plan benefits are based on a member's highest average salary for any 5 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 10 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. Beginning in 2019, the postretirement increase is equal to 50% of the cost -of -living adjustment (COLA) announced by the SSA, with a minimum increase of at least 1% and a maximum of 1.5%. Recipients that have been receiving the annuity or benefit for at least a full year as of the June 30 before the effective date of the increase will receive the full increase. For recipients receiving the annuity or benefit for at least one month but less than a full year as of the June 30 before the effective date of the increase will receive a reduced prorated increase. For members retiring on January 1, 2024, or later, the increase will be delayed until normal retirement age (age 65 if hired prior to July 1, 1989, or age 66 for individuals hired on or after July 1, 1989). Members retiring under Rule of 90 are exempt from the delay to normal retirement. 65 City of Cottage Grove Notes to Basic Financial Statements NOTE 6 — PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) B. Benefits Provided (Continued) 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 10 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 10 years up to 100% after 20 years of credited service. The annuity accrual rate is 3% of average salary for each year of service. For Police and Fire Plan members 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. The postretirement increase is fixed at 1%. Recipients that have been receiving the annuity or benefit for at least 36 months as of the June 30 before the effective date of the increase will receive the full increase. Recipients receiving the annuity or benefit for at least 25 months but less than 36 months as of the June 30 before the effective date of the increase will receive a reduced prorated increase. 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 fiscal year 2022 and the City was required to contribute 7.5% for Coordinated Plan members. The City's contributions to the General Employees Fund for the year ended December 31, 2022, were $644,786. The City's contributions were equal to the required contributions as set by state statute. Police and Fire Fund Contributions Police and Fire Plan members were required to contribute 11.8% of their annual covered salary in fiscal year 2022 and the City was required to contribute 17.7% for Police and Fire Plan members. The City's contributions to the Police and Fire Fund for the year ended December 31, 2022, were $1,073,653. The City's contributions were equal to the required contributions as set by state statute. General Employees Fund Pension Costs At December 31, 2022, the City reported a liability of $9,092,198 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. 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 $266,634. City of Cottage Grove Notes to Basic Financial Statements NOTE 6 — PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) D. Pension Costs General Employees Fund Pension Costs (Continued) The net pension liability was measured as of June 30, 2022, 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, 2021, through June 30, 2022, relative to the total employer contributions received from all of PERA's participating employers. The City's proportionate share was 0.1148% at the end of the measurement period and 0.1061% for the beginning of the period. City's proportionate share of the net pension liability $ 9,092,198 State of Minnesota's proportionate share of the net pension liability associated with the City 266,634 Total $ 9,358,832 For the year ended December 31, 2022, the City recognized pension expense of $1,506,552 for its proportionate share of General Employees Plan's pension expense. Included in the amount, the City recognized $39,841 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. 67 City of Cottage Grove Notes to Basic Financial Statements NOTE 6 — PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) D. Pension Costs (Continued) General Employees Fund Pension Costs (Continued) At December 31, 2022, 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 Net collective 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 $ 75,945 1,906,496 366,580 617,103 322,393 $ 89,055 31,150 $ 3,288,517 $ 120,205 The $322,393 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, 2023. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Ending December 31, 2023 2024 2025 2026 Total Pension Expense Amount $ 1,079,615 1,053,157 (109,106) 822,253 $ 2,845,919 City of Cottage Grove Notes to Basic Financial Statements NOTE 6 — PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) D. Pension Costs (Continued) Police and Fire Fund Pension Costs At December 31, 2022, the City reported a liability of $21,496,929 for its proportionate share of the Police and Fire Fund's net pension liability. The net pension liability was measured as of June 30, 2022, 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 proportionate share 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, 2021, through June 30, 2022, relative to the total employer contributions received from all of PERA's participating employers. The City's proportionate share was 0.4940% at the end of the measurement period and 0.5018% for the beginning of the period. The State of Minnesota also contributed $18 million to the Police and Fire Fund in the plan fiscal year ended June 30, 2022. The contribution consisted of $9 million in direct state aid that does meet the definition of a special funding situation and $9 million in supplemental state aid that does not meet the definition of a special funding situation. The $9 million direct state aid was paid on October 1, 2021. Thereafter, by October 1 of each year, the State will pay $9 million to the Police and Fire Fund until full funding is reached or July 1, 2048, whichever is earlier. The $9 million in supplemental state aid will continue until the fund is 90% funded, or until the State Patrol Plan (administered by the Minnesota State Retirement System) is 90% funded, whichever occurs later. As a result, the State of Minnesota is included as a non -employer contributing entity in the Police and Fire Retirement Plan Schedule of Employer Allocations and Schedule of Pension Amounts by Employer (pension allocation schedules), for the $4.5 million in direct state aid. Police and Fire Plan employers need to recognize their proportionate share of the State of Minnesota's pension expense (and grant revenue) under GASB 68 special funding situation accounting and financial reporting requirements. For the year ended December 31, 2022, the City recognized pension expense of $2,080,141 for its proportionate share of the Police and Fire Plan's pension expense. Included in this amount, the City recognized $182,133 as pension expense (and grant revenue) for its proportionate share of the State of Minnesota's contribution of $9 million to the Police and Fire Fund. The State of Minnesota is not included as a non -employer contributing entity in the Police and Fire Pension Plan pension allocation schedules for the $9 million in supplemental state aid. The City also recognized $938,958 for the year ended December 31, 2022, 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. City of Cottage Grove Notes to Basic Financial Statements NOTE 6 — PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) E. Long -Term Expected Return on Investment 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. Asset Class Domestic equity International equity Fixed income Private markets Total F. Actuarial Methods and Assumptions Target Allocation 33.5 % 16.5 25.0 25.0 100.0 % Long -Term Expected Real Rate of Return 5.10 % 5.30 0.75 5.90 The total pension liability in the June 30, 2022, actuarial valuation was determined using an individual entry -age normal actuarial cost method. The long-term rate of return on pension plan investments used in the determination of the total liability is 6.5%. This assumption is based on a review of inflation and investments return assumptions from a number of national investment consulting firms. The review provided a range of return investment return rates deemed to be reasonable by the actuary. An investment return of 6.5% was deemed to be within that range of reasonableness for financial reporting purposes. Inflation is assumed to be 2.25% for the General Employees Plan and 2.25% for the Police and Fire Plan. Benefit increases after retirement are assumed to be 1.25% for the General Employees. The Police and Fire Plan benefit increase is fixed at 1% per year and that increase was used in the valuation. Salary growth assumptions in the General Employees Plan range in annual increments from 10.25% after one year of service to 3.0% after 27 years of service and 6.0% per year thereafter. In the Police and Fire Plan, salary growth assumptions range from 11.75% after one year of service to 3.0% after 24 years of service. Mortality rates for the General Employees Plan are based on the Pub-2010 General Employee Mortality Table. Mortality rates for the Police and Fire Plan are based on the Pub-2010 Public Safety Employee Mortality tables. The tables are adjusted slightly to fit PERA's experience. 71 City of Cottage Grove Notes to Basic Financial Statements NOTE 6 —PENSION PLANS (CONTINUED) F. Actuarial Methods and Assumptions (Continued) Public Employees' Retirement Association (Continued) Actuarial assumptions for the General Employees Plan are reviewed every four years. The most recent four-year experience study for the General Employees Plan was completed in 2019. The assumption changes were adopted by the Board and became effective with the July 1, 2020, actuarial valuation. The most recent four-year experience study for the Police and Fire Plan was completed in 2020 and was adopted by the Board and became effective with the July 1, 2021, actuarial valuation. The following changes in actuarial assumptions and plan provisions occurred in 2022: General Employees Fund Changes in Actuarial Assumptions • The mortality improvement scale was changed from scale MP-2020 to scale MP-2021. Changes in Plan Provisions • There have been no changes since the previous valuation. Police and Fire Fund Changes in Actuarial Assumptions • The mortality improvement scale was changed from scale MP-2020 to scale MP-2021. • The single discount rate was changed from 6.5% to 5.4%. Change in Plan Provisions • There have been no changes since the previous valuation. G. Discount Rate The discount rate for the General Employees Plan used to measure the total pension liability in 2022 was 6.5%. 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 these assumptions, the fiduciary net position of the General Employees 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. 72 City of Cottage Grove Notes to Basic Financial Statements NOTE 6 — PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) D. Pension Costs (Continued) Police and Fire Fund Pension Costs (Continued) At December 31, 2022, the City 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 following: Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual economic experience $ 1,314,769 $ - Changes in actuarial assumptions 12,725,041 123,109 Net collective difference between projected and actual investment earnings 174,138 - Change in proportion 339,040 - Contributions paid to PERA subsequent to the measurement date 536,827 - Total $ 15,089,815 $ 123,109 The $536,827 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, 2023. Other amounts reported as deferred outflows and inflows of resources related to pensions from the following sources: Pension Year Ending Expense December 31, Amount 2023 $ 2,830,194 2024 2,784,286 2025 2,492,347 2026 4,494,331 2027 1,828,721 Total $ 14,429,879 70 City of Cottage Grove Notes to Basic Financial Statements NOTE 6 — PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) G. Discount Rate (Continued) In the Police and Fire Fund, the fiduciary net position was projected to be available to make all projected future benefit payments of current plan members through June 30, 2060. Beginning in the fiscal year ended June 30, 2061, projected benefit payments exceed the fund's projected fiduciary net position. Benefit payments projected after were discounted at the municipal bond rate of 3.69% (based on the weekly rate closest to but not later than the measurement date of the Fidelity "20-Year Municipal GO AA Index"). The resulting equivalent single discount rate of 5.4% for the Police and Fire Fund was determined to give approximately the same present value of projected benefits when applied to all years of projected benefits as the present value of projected benefits using 6.5% applied to all years of projected benefits through the point of asset depletion and 3.69% thereafter. H. Pension Liability Sensitivity The following 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 Current 1% Increase in Discount Rate Discount Rate Discount Rate (5.5%) (6.5%) (7.5%) $ 14,361,603 1% Decrease in Discount Rate $ 9,092,198 Current Discount Rate $ 4,770,473 1% Increase in Discount Rate (4.4%) (5.4%) (6.4%) $ 32,532,844 $ 21,496,929 $ 12,575,052 I. 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. J. Public Employees Defined Contribution Plan (Defined Contribution Plan) 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. 73 City of Cottage Grove Notes to Basic Financial Statements NOTE 6 — PENSION PLANS (CONTINUED) J. Public Employees Defined Contribution Plan (Defined Contribution Plan) (Continued) 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 City. 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% (.25%) of the assets in each member's account annually. Pension expense for the year is equal to the contributions made. Total contributions made by the City during fiscal year 2021 were: Contribution Amount Employee Employer $ 1,360 $ 1,360 Percentage of Covered Payroll Required Employee Employer Rate 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, 2022, the plan covered 28 active firefighters and 28 vested terminated firefighters whose pension benefits are deferred. The plan is established and administered in accordance with Minnesota Statutes, Chapter 353G. 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% through 20 years at 100%. 74 City of Cottage Grove Notes to Basic Financial Statements NOTE 6 — PENSION PLANS (CONTINUED) Defined Benefit Pension Plan — Volunteer Fire Relief Association (Continued) 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 $260,668 in fire state aid to the fund for the year ended December 31, 2022. 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, 2022, were $0. D. Pension Costs At December 31, 2022, the City of Cottage Grove reported a net pension asset of $1,279,095 for the Volunteer Firefighter Fund. The net pension asset was measured as of December 31, 2022. 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 as of December 31, 2022. The following table presents the changes in net pension liability during the year. Balances at January 1, 2022 Changes for the year Service cost Interest cost Actuarial expenses (gains)/losses State contributions Net investment income Change in benefit levels Asset (gain)/loss Benefit payments Administrative expense Increase (Decrease) Net Pension Total Pension Plan Fiduciary Net Liability (Asset) Liability (a) Position (b) (a) - (b) $ 2,338,934 $ 4,080,205 $ (1,741,271) 110,582 144,923 (220,940) 86,900 (68,260) 260,668 (599,450) 110,582 144,923 (220,940) (260,668) 599,450 86,900 (68,260) - (1,929) 1,929 Net changes 53,205 (408,971) 462,176 Balances at December 31, 2022 $ 2,392,139 $ 3,671,234 $ (1,279,095) Benefits were increased to $9,100 per year of service during the reporting period. 75 City of Cottage Grove Notes to Basic Financial Statements NOTE 6 — PENSION PLANS (CONTINUED) Defined Benefit Pension Plan — Volunteer Fire Relief Association (Continued) D. Pension Costs (Continued) For the year ended December 31, 2022, the City of Cottage Grove recognized pension expense of a $224,186. At December 31, 2022, 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 $ 675,410 $ 250,251 Difference between projected and actual investment earnings 18,099 250,205 Total $ 693,509 $ 500,456 Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Ending December 31, 2023 2024 2025 2026 Total Pension Expense Amount $ (56,903) 20,560 104,729 124,667 $ 193,053 E. Actuarial Assumptions The total pension liability at December 31, 2022, 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% 76 City of Cottage Grove Notes to Basic Financial Statements NOTE 6 — PENSION PLANS (CONTINUED) Defined Benefit Pension Plan — Volunteer Fire Relief Association (Continued) 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. 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) $ (1,179,147) $ (1,279,095) $ (1,374,678) 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 1IA 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. L 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 on the following page: 77 City of Cottage Grove Notes to Basic Financial Statements NOTE 6 — PENSION PLANS (CONTINUED) Defined Benefit Pension Plan — Volunteer Fire Relief Association (Continued) I. Asset Allocation (Continued) Asset Class Target Allocation Cash 14 % Fixed income 40 Equities 44 Other 2 Total 100 % Long -Term Expected Real Rate of Return 0.84 % 2.27 5.65 4.44 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 2022 for the Volunteer Firefighter Fund. K. Pension Plan Fiduciary Net Position Detailed information about the Volunteer Firefighter Fund's fiduciary net position as of December 31, 2022, 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. City of Cottage Grove Notes to Basic Financial Statements NOTE 7 — 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, 2022, were: Fund Total Nonmajor Governmental Funds owed to Sewer Fund $ 2,440,000 Nonmajor Governmental Funds owed to Future Economic Development Funds 756,435 Total $ 3,196,435 Interfund receivable and payable balances are used for temporary cash deficits. Interfund receivable and payable balances at December 31, 2022, are as follows: Fund Ice Arena owed to Nonmajor Governmental Funds MSA Construction Fund owed to Future Projects 3M Settlement MPCA owed to Nonmajor Governmental Funds Internal Service Funds owed to Water Operating Fund Cottage Grove EMS Fund owed to Water Operating Fund Total Interfund transfers during the year ended December 31, 2022, were as follows: Transfers Out General Fund (100) Closed Debt Fund (300) Ice Arena (250) MSA Construction (520) Nonmajor Governmental Funds Street Light (630) Cottage Grove EMS (660) Water Operating (610) Sewer Operating (620) Total Transfers In MSA Nonmajor General Construction Governmental Fund (100) Fund (520) Funds Total $ 783,921 255,467 617,316 848,797 457,632 $ 2,963,133 Total 400,000 $ 400,000 - - 82,363 82,363 200,000 200,000 - - 745,616 745,616 43,800 1,167,511 - 1,211,311 50,000 167,960 - 217,960 97,850 - - 97,850 191,580 275,558 - 467,138 192,000 226,313 - 418,313 $ 575,230 $ 1,837,342 $1,427,979 $ 3,840,551 79 City of Cottage Grove Notes to Basic Financial Statements NOTE 7 — INTERFUND LOANS AND TRANSFERS (CONTINUED) Interfund transfers allow the City to allocate financial resources to the funds that receive benefit from services provided by another fund. All transfers in 2022 were considered to be routine in nature as they were related to services provided to another fund, fund balance policy transfers and funding construction projects. NOTE 8 — TAX INCREMENT FINANCING The City has entered into three Tax Increment Financing agreements 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 agreements, 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. During the year ended December 31, 2022, the City generated $1,750,799 in tax increment revenue and made $365,714 in payments to developers. TIF District 91-12 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, 2022, the district generated $335,887 of tax increment and $233,979 in payments on the pay as you go note were made. The balance due on the note at year end was $433,108. TIF District 1-17 was established in 2016 for the establishment of senior housing. An agreement with Cottage Grove Leased Housing I, LLLP called for up to $1.7 million to be reimbursed through tax increment over a fifteen -year period. During the year ended December 31, 2022, the district generated $242,431 of tax increment and $118,756 in payments on the pay as you go note were made. The balance due on the note at year-end was $1.542.136 TIF District 1-18 was established in 2018 for expansion of an existing manufacturing and warehousing facility. An agreement with 9800 Hemmingway LLC called for up to $117,000 to be reimbursed through tax increment over a nine-year period. During the year ending December 31, 2022, the district generated $20,460 of tax increment and $12,979 in payments on the pay as you go note were made. The balance due on the note at year-end was $99,783. City of Cottage Grove Notes to Basic Financial Statements NOTE 9 — DEFICIT FUND BALANCES The City has deficit fund balances at December 31, 2022, as follows: Fund Major Governmental Funds Amount The deficit fund balances will be resolved through 3M Settlement - MPCA $ 121,373 Ice Arena (250) 589,952 Nonmajor Governmental Funds Golf Course Fund (255) 55,785 HERO Center Operations (290) 55,828 Municipal Building Fund (525) 2,284,769 NOTE 10 — CONTINGENCIES A. Risk Management Future Settlement Proceeds Future excess revenues and transfers from other City resources Future excess revenues and transfers from other City resources Future excess revenues Future tax levies 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 $25,000 medical expense deductible. The City's premiums are determined after loss experience is known. The amount of premium adjustment, if any, is considered immaterial and not recorded until received or paid. Property and casualty insurance coverage is provided through a pooled self-insurance program through LMCIT. The City pays an annual premium to the LMCIT. The City is subject to supplemental assessments as deemed necessary by the LMCIT. The City established 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. City of Cottage Grove Notes to Basic Financial Statements NOTE 10 — CONTINGENCIES (CONTINUED) 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 $232,045 reported in the Fund at December 31, 2022, 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: Claims and Beginning of Changes in End of Year Year Year Liability Estimates Claim Payments Liability 2022 $ 222,469 $ 430,468 $ (420,892) $ 232,045 2021 325,646 145,777 (248,954) 222,469 2020 201,608 346,696 (222,658) 325,646 B. Litigation The City attorney has indicated that existing and pending lawsuits, claims and other actions in which the City is a defendant are either covered by insurance; of an immaterial amount; or, in the judgment of the City attorney, remotely recoverable by plaintiffs. C. Federal and State Funds The City receives financial assistance from federal and state governmental agencies in the form of grants. The disbursement of funds received under these programs generally requires compliance with the terms and conditions specified in the grant agreements and are subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the applicable fund. However, in the opinion of management, any such disallowed claims will not have a material effect on any of the financial statements of the individual fund types included herein or on the overall financial position of the City at December 31, 2022. 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. City of Cottage Grove Notes to Basic Financial Statements NOTE 11 — FUND BALANCES At December 31, 2022, the City had various fund balances through legal restriction and City Council authorization. Fund balance appropriations at December 31, 2022, 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 Future Closed Ice Economic MSA Future 3M Nonmajor General Debt Arena Development Construction Projects Settlement Governmental Fund (100) Fund (300) (250) (286) (520) (510, 810) MPCA (455) Funds Total Fund Balances Nonspendable Prepaid items $ 25,906 $ - $ - $ - $ - $ - $ - $ 2,857 $ 28,763 Inventory - - - - - - - 105,873 105,873 Restricted Debt retirement - - - - - - - 4,690,884 4,690,884 Forfeiture and seizure - - - - - - - 71,032 71,032 Tax increment purposes - - - - - - - 2,049,088 2,049,088 Committed Recycling program - - - - - - - 94,926 94,926 Storm water activities - - - - - - - 2,060,099 2,060,099 Assigned Compensated absences 431,419 - - - - - - - 431,419 Future budgets 155,000 - - - - - - - 155,000 School bus safety 5,600 - - - - - - - 5,600 Debt retirement - 2,318,135 - - - - - - 2,318,135 Future pavement management - - - - - 443,966 - - 443,966 Tree mitigation - - - - - 684,033 - - 684,033 Equipment replacement - - - - - - - 1,635,867 1,635,867 Streetsealcoating - - - - - - - 230,719 230,719 Economic decvelopment - - - 51858,243 - - - - 5,858,243 Capital improvements - - - - 431.429 - - 9,979,833 10,411,262 Unassigned 12,696,178 (589,952) (121,373) (2,504,887) 9,479,966 Total fund balances $13,314,103 $ 2.318,135 $ (589,952) $ 5,858,243 $ 431.429 $ 1.127,999 $ (121,373) $18,416,291 $40,754,875 NOTE 12 — POST EMPLOYMENT HEALTH CARE PLAN A. Plan Description The City provides health benefits for retirees as required by Minnesota Statute §471.61 subdivision 2b through a single -employer defined benefit OPEB plan. Pursuant to the provisions of the plan, retirees are required to pay the total premium cost. No assets are accumulated in a trust. 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 2022, the City contributed $44,681 to the plan. City of Cottage Grove Notes to Basic Financial Statements NOTE 12 — POST EMPLOYMENT HEALTH CARE PLAN (CONTINUED) D. Members As of January 1, 2021, the following were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits Active employees Total 9 146 155 E. Actuarial Assumptions The total OPEB liability was determined by an actuarial valuation as of January 1, 2021, 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 3.72% Inflation 2.25% Healthcare cost trend increases 8.00% initially decreasing to an ultimate rate of 4.14% by 2040 Mortality assumption Pub-2010 Mortality Table adjusted for moratlity improvements using projecxtion scale MP-2020 by employee class The actuarial assumptions used in the January 1, 2021, valuation was based on the results of an actuarial experience study dated June 30, 2021, for PERA's General Employees Retirement Plan and dated July 14, 2021, for PERA's PEPFF Plan. The discount rate used to measure the total OPEB liability was 3.72 % based on the Bond Buyer 20- Bond Obligation Index. F. Total OPEB Liability The City's total OPEB liability of $484,409 was measured as of December 31, 2022, and was determined by an actuarial valuation as of January 1, 2021. City of Cottage Grove Notes to Basic Financial Statements NOTE 12 — POST EMPLOYMENT HEALTH CARE PLAN (CONTINUED) F. Total OPEB Liability (Continued) Changes in the total OPEB liability are as follows: Total OPEB Liability Balance at January 1, 2022 $ 613,642 Changes for the year Service cost 23,980 Interest 12,677 Change in assumption (59,493) Difference between expected and actual experience (61,716) Benefit payments (44,681) Net changes (129,233) Balance at December 31, 2022 $ 484,409 Changes of assumptions and other inputs reflect a change in the discount rate from 2.06% in 2021 to 3.72% in 2022 to reflect recent rate changes in the Bond Buyer 20-Bond General Obligation Index. The General Fund and Water Operating, Sewer Operating, Street Light, Cottage Grove EMS, and Internal Service Funds typically liquidate the liability related to OPEB. G. OPEB Liability Sensitivity The following presents the City's total OPEB liability calculated using the discount rate of 2.06% as well as the liability measured using 1% lower and 1% higher than the current discount rate. Total OPEB Liability 1 % decrease Current 1 % increase (2.72%) (3.72%) $ 519,277 $ 484,409 (4.72%) $ 452,429 85 City of Cottage Grove Notes to Basic Financial Statements NOTE 12 — POST EMPLOYMENT HEALTH CARE PLAN (CONTINUED) G. OPEB Liability Sensitivity (Continued) 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 $ 445,928 Total OPEB Liability Current $ 484,409 1% increase $ 529,027 H. OPEB Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Related to OPEB For the year ended December 31, 2022, the City recognized OPEB expense of $54,359. At December 31, 2022, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual economic experience $ 178,185 $ 63,531 Changes of assumptions and other inputs 59,076 59,274 Total $ 237,261 $ 122,805 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, 2023 2024 2025 2026 2027 Thereafter Total Total $ 17,702 17,702 17,702 18,080 19,372 23,898 $ 114,456 City of Cottage Grove Notes to Basic Financial Statements NOTE 13 — COMMITTED CONTRACTS At December 31, 2022, the City had commitments of $8,515,544 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, 2022, a series of Industrial Revenue Bonds were outstanding. Original Issue 12/31/2022 Bond Issue Date Amount Balance Commercial Development Revenue Note - ESR, Inc. Commercial Development Revenue Note - ESR, Inc. Variable Rate Revenue Bonds - Allina Health Syystem Multifamily Housing Note - Legends of Cottage Grove Multifamily Housing Note - Legends of Cottage Grove Total Maturity Date 11/22/05 $ 76,500 $ 14,993 11/22/25 05/19/05 853,000 183,051 12/19/25 11/01/09 6,100,000 6,100,000 11/15/35 10/07/16 18,422,000 17,536,151 05/01/34 10/07/16 6,328,000 5,294,252 05/01/34 NOTE 15 — CHANGE IN ACCOUNTING PRINCIPAL $ 31,779,500 $ 29,128,447 The City implemented GASB Statement No. 87 — Leases, which resulted in the recording of leased Assets and lease liability on January 1, 2022, in offsetting amounts of $38,239. Because there was no net effect on the beginning net position, a change in accounting principle is not reported on the Statement of Activities. NOTE 16 — NEW STANDARDS ISSUED BUT NOT YET IMPLEMENTED GASB Statement No. 96, Subscription -Based Information Technology Arrangements establishes that a Subscription -Based Information Technology Arrangement (SBITA) results in a right -to -use subscription asset and a corresponding liability. Under this statement, a governmental entity generally should recognize a right -to -use subscription asset — an intangible asset — and a corresponding subscription liability. This statement will be effective for the year ending December 31, 2023. Cottage Grove ,,,,,, ,ity Meet REQUIRED SUPPLEMENTARY INFORMATION City of Cottage Grove Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - General Fund For the Year Ended December 31, 2022 With Comparative Totals for the Year Ended December 31, 2021 2022 2021 Variance with Budgeted Amounts Actual Final Budget - Original Final Amounts Over (Under) Actual Revenues General property taxes $ 15,220,000 $ 15,220,000 $ 15,210,645 $ (9,355) $ 14,691,272 Special assessments 3,000 3,000 5,621 2,621 4,219 Licenses and permits General government 73,150 73,150 69,917 (3,233) 7,733 Community development 2,360,000 3,463,350 4,202,034 738,684 3,141,461 Engineering 36,000 36,000 100,336 64,336 20,798 Public safety 30,000 30,000 14,533 (15,467) 11,748 Total licenses and permits 2,499,150 3,602,500 4,386,820 784,320 3,181,740 Intergovernmental revenues Federal grants and aids 76,500 76,500 62,313 (14,187) 110,833 State grants and aids Market value homestead credit - - 4,440 4,440 9,085 MSA maintenance - public works 44,000 44,000 49,470 5,470 48,285 PERA Aid - - - - - Fire relief aid - public safety 200,000 258,700 258,668 (32) 233,524 Police relief aid - public safety 395,000 395,000 432,376 37,376 379,193 Other - public safety 24,000 24,000 64,422 40,422 71,154 Other - planning - - - - 3,500 Local SRO program - public safety 90,000 90,000 98,880 8,880 166,663 Other - public safety 12,500 12,500 14,749 2,249 41,435 Other - public works 2,500 2,500 2,629 129 2,096 Other - culture and recreation - - - - - Total intergovernmental 844,500 903,200 987,947 84,747 1,065,768 Charges for services Investment charge - general government 15,000 15,000 - (15,000) - Other - general government 200 200 4,107 3,907 100 Other - community development 140,000 140,000 95,171 (44,829) 297,391 Other - engineering 690,000 772,000 1,136,057 364,057 829,743 Other - public safety 59,200 59,200 61,974 2,774 418,438 Other - public works 27,500 27,500 20,338 (7,162) 20,998 Other - culture and recreation 240,300 240,300 248,452 8,152 191,400 Total charges for services 1,172,200 1,254,200 1,566,099 311,899 1,758,070 Fines and forfeitures - public safety 150,000 150,000 142,770 (7,230) 148,726 Investment earnings 100,000 100,000 (486,954) (586,954) (63,605) Donations General government - - 32,600 32,600 9,028 Public safety 500 500 8,900 Culture and recreation 13,793 13,793 43,626 Total donations - - 46,893 46,893 61,554 Miscellaneous General government 25,000 25,000 16,312 (8,688) 55,992 Public safety 20,000 20,000 26,763 6,763 29,537 Public works - - 22,390 22,390 33,852 Total miscellaneous 45,000 45,000 65,730 20,730 119,381 Total revenues 20,033,850 21,277,900 21,925,571 647,671 20,967,125 •11 City of Cottage Grove Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - General Fund For the Year Ended December 31, 2022 With Comparative Totals for the Year Ended December 31, 2021 2022 2021 Budgeted Amounts Variance with Actual Final Budget - Original Final Amounts Over (Under) Actual Expenditures General government Mayor and city council $ 95,690 $ 95,690 $ 104,208 $ 8,518 $ 91,498 Administrative 844,855 884,305 880,390 (3,915) 673,638 Finance 602,755 602,755 602,514 (241) 653,973 Assessing services 215,300 215,300 218,239 2,939 203,106 City clerk/elections 124,925 241,925 244,433 2,508 87,169 Legal 230,000 230,000 245,633 15,633 234,738 Community and employee programs 153,245 153,245 137,913 (15,332) 115,289 Government buildings 418,220 529,720 578,242 48,522 424,525 Total general government 2,684,990 2,952,940 3,011,572 58,632 2,483,936 Community development Planning and zoning 484,155 672,155 669,344 (2,811) 585,859 Building inspections 1,221,345 1,436,345 1,435,965 (380) 1,343,100 Engineering 395,455 477,455 476,618 (837) 401,800 Total community development 2,100,955 2,585,955 2,581,927 (4,028) 2,330,759 Public safety Police protection 8,247,005 8,492,410 8,600,414 108,004 8,169,857 Fire protection 1,471,515 1,628,215 1,719,685 91,470 1,501,433 Emergency preparedness 82,945 99,945 115,659 15,714 87,342 Animal control 31,100 31,100 25,790 (5,310) 23,886 Total public safety 9,832,565 10,251,670 10,461,548 209,878 9,782,518 Public works Public works administration 422,600 460,600 469,022 8,422 416,134 Streets 1,597,725 1,672,725 1,609,405 (63,320) 1,591,038 Snow and ice control 768,210 768,210 892,649 124,439 636,512 Street signs/striping 241,420 241,420 212,587 (28,833) 200,335 Total public works 3,029,955 3,142,955 3,183,663 40,708 2,844,019 Culture and recreation Forestry 372,530 372,530 341,445 (31,085) 377,672 Recreation programs 518,960 518,960 507,944 (11,016) 432,805 Parks maintenance 1,669,895 1,750,295 1,841,218 90,923 1,670,092 Total culture and recreation 2,561,385 2,641,785 2,690,607 48,822 2,480,569 Total expenditures 20,209,850 21,575,305 21,929,317 354,012 19,921,801 Excess of revenues over (under) expenditures (176,000) (297,405) (3,746) 293,659 1,045,324 Other Financing Sources (Uses) Proceeds from lease - - 38,240 38,240 - Transfers in 576,000 576,000 575,230 (770) 616,890 Transfers out (400,000) (400,000) (400,000) - (833,211) Total other financing sources (uses) 176,000 176,000 213,470 37,470 (216,321) Net change in fund balances $ $ (121,405) 209,724 $ 331,129 829,003 Fund Balances Beginning of year 13,104,379 12,275,376 End of year $ 13,314,103 $ 13,104,379 91 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, 2022 With Comparative Totals for the Year Ended December 31, 2021 2022 2021 Budgeted Amounts Variance with Actual Final Budget - Original Final Amounts Over (Under) Actual Revenues Intergovernmental $ 57,000 $ 57,000 $ 57,000 $ - $ 57,000 Charges for services 1,084,500 1,084,500 1,323,938 239,438 1,106,757 Investment earnings 6,000 6,000 - (6,000) - Contributions and donations - - 1,281 1,281 - Miscellaneous - - 22,047 22,047 24,582 Total revenues 1,147,500 1,147,500 1,404,266 256,766 1,188,339 Expenditures Current Culture and recreation 943,835 943,835 1,216,926 273,091 908,150 Capital outlay Culture and recreation 29,600 29,600 - (29,600) 43,373 Total expenditures 973,435 973,435 1,216,926 243,491 951,523 Excess of revenues over (under) expenditures 174,065 174,065 187,340 13,275 236,816 Other Financing Uses Transfers out (200,000) (200,000) (200,000) - (220,000) Net change in fund balances $ (25,935) $ (25,935) (12,660) $ 13,275 16,816 Fund Balance Beginning of year (577,292) (594,108) End of year $ (589,952) $ (577,292) 92 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 State's Net Pension City's City's City's Proportionate Liability and Proportionate Proportionate Proportionate Share the State's Share of the Plan Fiduciary Share Share (Amount) of Proportionate Net Pension Net Position (Percentage) (Amount) of the Net Share of the Liability as a of the Net the Net Pension Net Pension (Asset) as a Percentage of For Fiscal Pension Pension Liability Liability Percentage of the Total Year Ended Liability Liability Associated Associated City's Covered its Covered Pension June 30, (Asset) (Asset) with the City with the City Payroll Payroll Liability 2022 0.1148% $ 9,092,198 $ 266,634 $ 9,358,832 $ 8,601,787 105.7% 76.67% 2021 0.1061% 4,530,946 138,442 4,669,388 7,640,187 59.3% 87.00% 2020 0.0967% 5,797,607 178,810 5,976,417 6,898,173 84.0% 79.06% 2019 0.0926% 5,119,647 159,160 5,278,807 6,555,453 78.1% 80.23% 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 State's Net Pension City's Proportionate Liablility and Proportionate Share the State's Share of the Plan Fiduciary City's City's (Amount) of Proportionate Net Pension Net Position Proportion of Proportionate the Net Share of the Liability as a the Net Share of the Pension Net Pension (Asset) as a Percentage of For Fiscal Pension Net Pension Liability Liablility Percentage of the Total Year Ended Liability Liability Associated Associated City's Covered its Covered Pension June 30, (Asset) (Asset) with the City with the City Payroll Payroll Liability 2022 0.4940% $ 21,496,929 $ 938,958 $ 22,435,887 $ 6,000,446 358.26% 70.53% 2021 0.5018% 3,828,202 174,149 4,002,351 6,059,377 63.18% 93.66% 2020 0.4772% 6,247,059 148,169 6,395,228 5,385,172 116.00% 87.19% 2019 0.4716% 4,956,992 N/A 4,956,992 4,864,909 101.89% 89.26% 2018 0.4582% 4,842,702 N/A 4,842,702 4,829,432 100.27% 88.84% 2017 0.4380% 5,913,521 N/A 5,913,521 4,495,914 131.53% 85.43% 2016 0.4450% 17,818,574 N/A 17,818,574 3,867,466 460.73% 63.88% 2015 0.4340% 4,931,256 N/A 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. See notes to required supplementary information. 94 Fiscal Year Ending December 31, 2022 2021 2020 2019 2018 2017 2016 2015 Statutorily Required City of Cottage Grove Schedule of City Contributions - General Employees Retirement Fund Last Ten Years Contributions in Relation to the Statutorily Required 644,786 $ 595,200 539,417 508,963 482,521 458,971 424,202 403,964 644,786 595,200 539,417 508,963 482,521 458,971 424,202 403,964 Contributions Contribution as a Percentage Deficiency City's Covered of Covered (Excess) Payroll Payroll $ - $ 8,597,147 7.50% - 7,936,000 7.50% - 7,192,227 7.50% - 6,786,173 7.50% - 6,433,613 7.50% - 6,119,613 7.50% - 5,656,027 7.50% - 5,386,187 7.50% Note: Schedule is intended to show ten year trend. Additional years will be reported as they become available. Schedule of City Contributions - Public Employees Police and Fire Retirement Fund Last Ten Years Contributions in Relation to Contributions Fiscal Year Statutorily the Statutorily Contribution as a Percentage Ending Required Required Deficiency City's Covered of Covered December 31, Contribution Contributions (Excess) Payroll Payroll 2022 $ 1,073,653 $ 1,073,653 $ - $ 6,065,836 17.70% 2021 1,050,974 1,050,974 - 5,937,706 17.70% 2020 998,722 998,722 - 5,642,497 17.70% 2019 976,911 976,911 - 5,763,487 16.95% 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. See notes to required supplementary information. 95 Total OPEB Liability Service cost Interest Differences between expected and actual experience Changes of assumptions Benefit payments Net change in total OPEB liability Beginning of year End of year Covered -employee payroll Total OPEB liability as a percentage of covered payroll City of Cottage Grove Schedule of Changes in Total OPEB Liability and Related Ratios December 31, December 31, December 31, December 31, December 31, 2018 2019 2020 2021 2022 $ 14,560 $ 16,325 $ 17,939 $ 25,083 $ 23,980 11,794 15,807 10,179 13,939 12,677 - (7,934) (6,031) 227,397 (61,716) (14,652) 41,447 13,860 33,310 (59,493) (18,651) (27,782) (29,882) (60,592) (44,681) (6,949) 37,863 6,065 239,137 (129,233) 337,526 330,577 368,440 374,505 613,642 $ 330,577 $ 368,440 $ 374,505 $ 613,642 $ 484,409 $ 9,103,225 $ 10,569,669 $ 10,340,116 $ 11,729,994 $ 11,482,890 3.63% 3.49% 3.62% 5.23% 4.22% Note: Schedule is intended to show ten year trend. Additional years will be reported as they become available. See notes to required supplementary information. 93 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 Covered payroll Net pension liability as a percentage of covered payroll Measurement Date December 31, December 31, December 31, 2014 2015 2016 $ 77,691 $ 79,827 $ 109,062 85,148 88,550 85,750 - 77,611 (130,240) - 139,930 - (84,321) (140,973) (295,760) 78,518 244,945 (231,188) 1,274, 449 1,352,967 1,597,912 $ 1,352,967 $ 1,597,912 $ 1,366,724 $ 5,155 $ 5,329 $ 5,265 177,804 191,183 195,271 98,130 (117,497) 146,660 (84,321) (140,973) (295,760) (11,193) (15,165) (12,139) (23,403) - 210 162,172 (77,123) 39,507 2,242,564 2,404,736 2,327,613 $ 2,404,736 $ 2,327,613 $ 2,367,120 $ (1,051,769) $ (729,701) $ (1,000,396) 177.7% 145.7% 173.2% n/a 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. See notes to required supplementary information. 96 Measurement Date December 31, December 31, December 31, December 31, December 31, December 31, 2017 2018 2019 2020 2021 2022 $ 118,915 $ 102,569 $ 97,985 $ 108,515 $ 118,397 $ 110,582 100,267 117,070 115,532 111,351 103,853 144,923 329,484 (12,862) (45,681) (160,794) 30,166 (220,940) - - - - 580,945 86,900 - (133,560) (322,109) (174,000) (213,833) (68,260) 548,666 73,217 (154,273) (114,928) 619,528 53,205 1,366,724 1,915,390 1,988,607 1,988,607 1,834,334 2,453,862 $ 1,915,390 $ 1,988,607 $ 1,834,334 $ 1,873,679 $ 2,453,862 $ 2,507,067 $ 2,081 $ - $ - $ - $ - $ - 192,139 198,977 209,430 225,637 234,524 260,668 316,265 (113,085) 510,329 452,477 352,396 (599,450) - (133,560) (322,109) (174,000) (213,833) (68,260) (12,334) (3,709) (2,155) (2,018) (2,126) (1,929) (2,319) - 79 - - - 495,832 (51,377) 395,574 502,096 370,961 (408,971) 2,367,120 2,862,952 2,811,575 2,811,575 3,207,149 3,578,110 $ 2,862,952 $ 2,811,575 $ 3,207,149 $ 3,313,671 $ 3,578,110 $ 3,169,139 $ (947,562) $ (822,968) $ (1,372,815) $ (1,439,992) $ (1,124,248) $ (662,072) 149.5% 141.4% 174.8% 176.9% 145.8% 126.4% n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 97 City of Cottage Grove Schedule of City and Non -Employer Entity Contributions - Fire Relief Association December 31, December 31, December 31, December 31, 2014 2015 2016 2017 Employer 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 Covered payroll n/a n/a n/a n/a Contributions as a percentage of covered payroll 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. W. December 31, December 31, December 31, December 31, December 31, 2018 2019 2020 2021 2022 $ 198,977 $ 209,430 $ 225,637 $ 234,524 $ 260,668 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a •• City of Cottage Grove Notes to Required Supplementary Information General Employees Fund 2022 Changes Changes in Actuarial Assumptions • The mortality improvement scale was changed from scale MP-2020 to scale MP-2021. Changes in Plan Provisions • There have been no changes since the prior valuation. 2021 Changes Changes in Actuarial Assumptions • The investment return and single discount rates were changed from 7.5% to 6.5% for financial reporting purposes. • The mortality improvement scale was changed from scale MP-2019 to scale MP-2020. Changes in Plan Provisions • There have been no changes since the prior valuation. 2020 Changes Changes in Actuarial Assumptions • The price inflation assumption was decreased from 2.5% to 2.25%. • The payroll growth assumption was decreased from 3.25% to 3.0%. • Assumed salary increase rates were changed as recommended in the June 30, 2019, experience study. The net effect is assumed rates that average 0.25% less than previous rates. • Assumed rates of retirement were changed as recommended in the June 30, 2019, experience study. The changes result in more unreduced (normal) retirements and slightly fewer Rule of 90 and early retirements. • Assumed rates of termination were changed as recommended in the June 30, 2019, experience study. The new rates are based on service and are generally lower than the previous rates for years 2-5 and slightly higher thereafter. • Assumed rates of disability were changed as recommended in the June 30, 2019, experience study. The change results in fewer predicted disability retirements for males and females. • The base mortality table for healthy annuitants and employees was changed from the RP-2014 table to the Pub-2010 General Mortality table, with adjustments. The base mortality table for disabled annuitants was changed from the RP-2014 disabled annuitant mortality table to the Pub-2010 General/Teacher disabled annuitant mortality table, with adjustments. • The mortality improvement scale was changed from Scale MP-2018 to Scale MP-2019. • The assumed spouse age difference was changed from two years older for females to one year older. • The assumed number of married male new retirees electing the 100% Joint and Survivor option changed from 35% to 45%. The assumed number of married female new retires electing the 100% Joint and Survivor option changed from 15% to 30%. The corresponding number of married new retirees electing the Life annuity option was adjusted accordingly. 100 City of Cottage Grove Notes to Required Supplementary Information General Employees Fund (Continued) 2020 Changes (Continued) Changes in Plan Provisions • Augmentation for current privatized members was reduced to 2.0% for the period July 1, 2020 through December 31, 2023, and 0.0% thereafter. Augmentation was eliminated for privatizations occurring after June 30, 2020. 2019 Changes Changes in Actuarial Assumptions • The mortality projection scale was changed from MP-2017 to MP-2018. Changes in Plan Provisions • The employer supplemental contribution was changed prospectively, decreasing from $31.0 million to $21.0 million per year. The State's special funding contribution was changed prospectively, requiring $16.0 million due per year through 2031. 2018 Changes Changes in Actuarial Assumptions • The mortality projection scale was changed from MP-2015 to MP-2017. Changes in Actuarial Assumptions (Continued) • The assumed benefit increase was changed from 1.0% per year through 2044 and 2.5% per year thereafter to 1.25% per year. Changes in Plan Provisions • The augmentation adjustment in early retirement factors is eliminated over a five-year period starting July 1, 2019, resulting in actuarial equivalence after June 30, 2024. • Interest credited on member contributions decreased from 4.00% to 3.00%, beginning July 1, 2018. • Deferred augmentation was changed to 0.00%, effective January 1, 2019. Augmentation that has already accrued for deferred members will still apply. • Contribution stabilizer provisions were repealed. • Postretirement benefit increases were changed from 1.00% per year with a provision to increase to 2.50% upon attainment of 90.00% funding ratio to 50.00% of the Social Security Cost of Living Adjustment, not less than 1.00% and not more than 1.50%, beginning January 1, 2019. • For retirements on or after January 1, 2024, the first benefit increase is delayed until the retiree reaches normal retirement age; does not apply to Rule of 90 retirees, disability benefit recipients, or survivors. • Actuarial equivalent factors were updated to reflect revised mortality and interest assumptions. 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. 101 City of Cottage Grove Notes to Required Supplementary Information General Employees Fund (Continued) 2017 Changes (Continued) Changes in Actuarial Assumptions (Continued) • 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. Changes in Plan Provisions • The State's contribution for the Minneapolis Employees Retirement Fund equals $16,000,000 in 2017 and 2018, and $6,000,000 thereafter. • The Employer Supplemental Contribution for the Minneapolis Employees Retirement Fund changed from $21,000,000 to $31,000,000 in calendar years 2019 to 2031. The State's contribution changed from $16,000,000 to $6,000,000 in calendar years 2019 to 2031. 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 was decreased by 0.25% to 3.25% for payroll growth and 2.50% for inflation. Changes in Plan Provisions • There have been no changes since the prior valuation. 2015 Changes 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. 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; the State's contribution of $6.0 million, which meets the special funding situation definition, was due September 2015. 102 City of Cottage Grove Notes to Required Supplementary Information Police and Fire Fund 2022 Changes Changes in Actuarial Assumptions • The mortality improvement scale was changed from scale MP-2020 to scale MP-2021. • The single discount rate was changed from 6.5% to 5.4%. Changes in Plan Provisions There have been no changes since the prior valuation. 2021 Changes Changes in Actuarial Assumptions • The investment return and single discount rates were changed from 7.5% to 6.5% for financial reporting purposes. • The inflation assumption was changed from 2.5% to 2.25%. • The payroll growth assumption was changed from 3.25% to 3.0%. • The base mortality table for healthy annuitants and employees was changed from the RP-2014 table to the Pub-2010 Public Safety mortality table. The mortality improvement scale was changed from MP-2019 to MP-2020. • The base mortality table for disabled annuitants was changed from the RP-2014 healthy annuitant mortality table (with future mortality improvement according to scale MP-2019) to the Pub-2010 Public Safety disabled annuitant mortality table (with future mortality improvement according to scale MP-2020). • Assumed rates of salary increase were modified as recommended in the July 14, 2020, experience study. The overall impact is a decrease in gross salary increase rates. • Assumed rates of retirement were changed as recommended in the July 14, 2020, experience study. The changes resulted in slightly more unreduced retirements and fewer assumed early retirements. • Assumed rates of withdrawal were changed from select and ultimate rates to service -based rates. The changes resulted in more assumed terminations. • Assumed rates of disability were increased for ages 25-44 and decreased for ages over 49. Overall, proposed rates resulted in more projected disabilities. • Assumed percent married for active female members was changed from 60% to 70%. Minor changes to form of payment assumptions were applied. Changes in Plan Provisions • There have been no changes since the prior valuation. 2020 Changes Changes in Actuarial Assumptions • The mortality projection scale was changed from MP-2018 to MP-2019. Changes in Plan Provisions • There have been no changes since the prior valuation. 103 City of Cottage Grove Notes to Required Supplementary Information Police and Fire Fund (Continued) 2019 Changes Changes in Actuarial Assumptions • The mortality projection scale was changed from MP-2017 to MP-2018. Changes in Plan Provisions • There have been no changes since the prior valuation. 2018 Changes Changes in Actuarial Assumptions • The mortality projection scale was changed from MP-2016 to MP-2017. Changes in Plan Provisions • Postretirement benefit increases were changed to 1.00% for all years, with no trigger. • An end date of July 1, 2048, was added to the existing $9.0 million state contribution. • New annual state aid will equal $4.5 million in fiscal years 2019 and 2020, and $9.0 million thereafter until the plan reaches 100% funding, or July 1, 2048, if earlier. • Member contributions were changed from 10.80% to 11.30% of pay, effective January 1, 2019, and 11.80% of pay, effective January 1, 2020. • Employer contributions were changed from 16.20% to 16.95% of pay, effective January 1, 2019, and 17.70% of pay, effective January 1, 2020. • Interest credited on member contributions decreased from 4.00% to 3.00%, beginning July 1, 2018. • Deferred augmentation was changed to 0.00%, effective January 1, 2019. Augmentation that has already accrued for deferred members will still apply. • Actuarial equivalent factors were updated to reflect revised mortality and interest assumptions. 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. 104 City of Cottage Grove Notes to Required Supplementary Information Police And Fire Fund (Continued) 2017 Changes (Continued) Changes in Actuarial Assumptions (Continued) • 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. • The single discount rate was changed from 5.6% per annum to 7.5% per annum. Changes in Plan Provisions • There have been no changes since the prior valuation. 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 single discount rate changed from 7.90% to 5.60%. • The assumed future salary increases, payroll growth, and inflation was decreased by 0.25% to 3.25% for payroll growth and 2.50% for inflation. Changes in Plan Provisions • There have been no changes since the prior valuation. 2015 Changes 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. 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%. 105 City of Cottage Grove Notes to Required Supplementary Information Post Employment Health Care Plan 2022 Changes Changes in Actuarial Assumptions • The discount rate increased from 2.06% in 2021 to 3.72% in 2021. 2021 Changes Changes in Actuarial Assumptions • The discount rate decreased from 2.12% in 2020 to 2.06% in 2021 • The general inflation rate was changed to the 2.25% rate used in the June 30, 2021, GERP and June 30, 2021, PEPFF, material valuations (from 2.50%). 2020 Changes Changes in Actuarial Assumptions • The discount rate decreased from 2.74% in 2019 to 2.12% in 2020. • Per capita claims and costs were reset to reflect updated experience, plans, and premiums as of January 2021. • The mortality improvement projection scale was updated. • The general inflation rate was changed to the 2.50% rate used in the June 30, 2019, GERP and June 30, 2019, PEPFF, material valuations (from 2.75%). • 25.0% of GERP employees are assumed to elect coverage at retirement (changed from 20.0% based on recent experience). Changes in Plan Provisions Medical plans and premiums have been updated effective as of January 1, 2021. 2019 Changes Changes in Actuarial Assumptions • The Discount rate decreased from 4.11% in 2018 to 2.74% in 2019. The general inflation rate was changed to the 2.50% used in the June 30, 2019, GERP and June 30, 2019, PEPFF actuarial valuations. Changes of assumptions also reflect a change to 25.0% of GERP employees are assumed to elect coverage at retirement, an increase from 20.0% based on recent experience. 2018 Changes Changes in Actuarial Assumptions • The discount rate increased from 3.44% in 2017 to 4.11% in 2018. There are no assets accumulated in a trust 106 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES 107 Cottage Grove ,,city Meet m NONMAJOR GOVERNMENTAL FUNDS 109 Cottage Grove ,,,,,, ,ity Meet 110 City of Cottage Grove Nonmajor Governmental Funds SPECIAL REVENUE FUNDS A Special Revenue Fund is used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. DEBT SERVICE FUNDS The Debt Service Funds are used to account for the accumulation of resources for, and payment of, interest, principal, and related costs on general long-term debt. CAPITAL 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). 111 Cottage Grove ,,,,,, ,ity Meet 112 City of Cottage Grove Combining Balance Sheet - Nonmajor Governmental Funds December 31, 2022 With Comparative Totals for December 31, 2021 Totals Nonmajor Governmental Funds Special Revenue Debt Service Capital Projects 2022 2021 Assets Cash and investments $ 2,090,197 $ 4,712,915 $ 15,095,349 $ 21,898,461 $ 32,188,215 Interest Receivable - - 105,692 105,692 - Due from other funds - - 1,401,237 1,401,237 698,524 Due from other governments 206,092 - 20,280 226,372 460,139 Accounts receivable 226,053 - 711,136 937,189 1,128,987 Lease receivable - - 5,667,030 5,667,030 - Prepaid items 2,857 - - 2,857 4,803 Inventories 105,873 - - 105,873 84,153 Taxes receivable - delinquent - 12,442 1,930 14,372 12,075 Special assessments receivable Deferred - 2,221,151 4,146 2,225,297 2,696,456 Delinquent - 3,989 - 3,989 2,398 Special deferred - 760,316 - 760,316 533,276 Totalassets $ 2,631,072 $ 7,710,813 $ 23,006,800 $ 33,348,685 $ 37,809,026 Liabilities Liabilities Accounts payable $ 63,766 $ - $ 1,952,228 $ 2,015,994 $ 2,844,509 Salaries and benefits payable 37,670 - - 37,670 31,956 Due to other funds - - - - 2,654,341 Contracts payable 2,444 - 548,971 551,415 444,488 Due to other governments 8,249 - 261 8,510 4,479 Deposits payable 110,114 - 402,083 512,197 674,660 Unearned Revenue 20,160 - - 20,160 1,653 Interfund loan payable 274,000 22,032 2,900,403 3,196,435 601,063 Total liabilities 516,403 22,032 5,803,946 6,342,381 7,257,149 Deferred Inflows of Resources Unavailable revenue - lease receivable - - 5,584,338 5,584,338 - Unavailable revenue - property taxes - 553,934 - 553,934 615,174 Unavailable revenue - special assessments - 2,443,963 7,778 2,451,741 2,629,031 Total deferred inflows of resources - 2,997,897 5,592,116 8,590,013 3,244,205 Fund Balances Nonspendable 108,730 - - 108,730 88,956 Restricted 71,032 4,690,884 2,049,088 6,811,004 9,649,776 Committed 2,155,025 - - 2,155,025 2,531,015 Assigned - - 11,846,419 11,846,419 17,717,124 Unassigned (220,118) - (2,284,769) (2,504,887) (2,679,199) Total fund balances 2,114,669 4,690,884 11,610,738 18,416,291 27,307,672 Total liabilities, deferred inflows of resources, and fund balances $ 2,631,072 $ 7,710,813 $ 23,006,800 $ 33,348,685 $ 37,809,026 113 City of Cottage Grove Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds For the Year Ended December 31, 2022 With Compartive Totals for the Year Ended December 31, 2021 Totals Nonmajor Governmental Funds Special Revenue Debt Service Capital Projects 2022 2021 Revenue General property taxes $ $ 2,573,329 $ 249,846 $ 2,823,175 $ 2,823,206 Franchise taxes - 642,584 642,584 615,326 Aggregate taxes - 33,044 33,044 23,467 Tax increment collections 704,259 1,046,540 1,750,799 1,427,233 Special assessments 480,815 90,845 571,660 7,352,773 Direct charges to developers - 26,081 26,081 104,157 Intergovernmental 269,054 2,448,035 2,717,089 5,168,459 Charges for services 4,408,995 27,829 4,436,824 4,104,854 Rent - 710,881 710,881 494,880 Fines and forfeitures 35,679 - 35,679 43,310 Investment earnings (117,239) (125,110) (951,223) (1,193,572) (162,878) Connection charges 4,110,942 4,110,942 5,293,099 Park dedication fees - 1,144,364 1,144,364 2,014,802 Refunds and reimbursements 806 - 806 - Donations - - - 41,500 Miscellaneous 28,172 52,683 80,855 283,623 Total revenues 4.625A67 1631293 9.631451 IT891.211 29.62T811 Expenditures Current General government 15,992 13,319 29,311 18,284 Economic development - - 358,273 358,273 511,807 Public safety 772,570 1,517 - 774,087 668,069 Public works 874,217 - 1,094,729 1,968,946 3,960,417 Culture and recreation 2,417,261 495,018 2,912,279 2,498,831 Capital outlay General government - - - 172,732 Public safety 31,906 165,256 197,162 - Public works 244,426 8,925,703 9,170,129 11,746,363 Culture and recreation 377,568 3,275,237 3,652,805 2,421,299 Debt service Principal retirement - 2,950,000 - 2,950,000 3,785,000 Interest and other charges - 1,079,753 41,202 1,120,955 1,344,234 Total expenditures 4,717,948 4,047,262 14,368,737 23,133,947 27,127,036 Excess of revenues over (under) expenditures (92,481) (413,969) (4,736,286) (5,242,736) 2,500,775 Other Financing Sources (Uses) Proceeds from sale of capital asset 9,687 9,687 3,267 Bond issuance - - 7,795,000 Bond premium 235,748 Payments to refunded bond escrow agent (3,875,000) - (3,875,000) - Transfers in 1,027,979 400,000 1,427,979 2,172,573 Transfers out (394,046) (156,058) (661,207) (1,211,311) (322,975) Total other financing sources (uses) (394,046) (3,003,079) (251,520) (3,648,645) 9,883,613 Net change in fund balances (486,527) (3,417,048) (4,987,806) (8,891,381) 12,384,388 Fund Balances Beginning of year 2,601,196 8,107,932 16,598,544 27,307,672 14,923,284 End of year $ 2,114,669 $ 4,690,884 $ 11,610,738 $ 18,416,291 $ 27,307,672 114 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. Golf Course Fund — Established to account for the City's 18-hole golf course and banquet facility. HERO Center Operations Fund — Established to account for the HERO Center operations. Opioid Settlement — Established to account for opioid settlement receipts. 115 City of Cottage Grove Subcombining Balance Sheet - Nonmajor Special Revenue Funds December 31, 2022 With Comparative Totals For December 31, 2021 Storm Water Recycling Maintenance Forfeiture/ (215) (230) Seizure (240) Assets Cash and investments $ 96,693 $ 1,678,988 $ 75,156 Interest Receivable - - - Due from other funds - - - Due from other governments - 186,845 - Accounts receivable - 211,227 123 Lease receivable - - - Prepaid items - 149 - Inventories - - - Total assets $ 96,693 $ 2,077,209 $ 75,279 Liabilities Accounts payable $ 444 $ 6,066 $ 4,247 Salaries and benefits payable 1,323 7,735 - Interfund loan payable - - - Contracts payable - 2,444 - Due to other governments - 716 - Deposits payable - - - Deferred Revenue - - - Total liabilities 1,767 16,961 4,247 Deferred inflows of resources Unavailable revenue - lease receivable - - - Total deferred inflows of resources - - - Fund Balances Nonspendable - 149 - Restricted - - 71,032 Committed 94,926 2,060,099 - Unassigned - - - Total fund balances 94,926 2,060,248 71,032 Total liabilities and fund balances $ 96,693 $ 2,077,209 $ 75,279 116 Totals Nonmajor Special Revenue Funds HERO Center Opiod Golf Course Operations Settlement Fund(255) (290) (245) 2022 2021 $ 208,915 $ 10,209 $ 20,236 $ 2,090,197 $ 1,902,922 - - - - 694,183 - 19,247 - 206,092 267,939 8,875 5,828 - 226,053 217,653 2,368 340 - 2,857 4,803 52,572 53,301 - 105,873 84,153 $ 272,730 $ 88,925 $ 20,236 $ 2,631,072 $ 3,171,653 $ 31,499 $ 20,246 274,000 6,916 (4,146) 328,515 21,510 $ - $ 63,766 $ 245,436 8,366 - 37,670 31,956 - - 274,000 - - - 2,444 - 617 - 8,249 3,943 114,260 - 110,114 289,122 - 20,160 20,160 - 54,940 53,641 - 108,730 88,956 - - - 71,032 72,712 - - - 2,155,025 2,531,015 (110,725) (109,469) 76 (220,118) (91,487) (55,785) (55,828) 76 2,114,669 2,601,196 $ 272,730 $ 88,925 $ 20,236 $ 2,631,072 $ 3,171,653 117 City of Cottage Grove Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Special Revenue Funds For the Year Ended December 31, 2022 With Comparative Totals for the Year Ended December 31, 2021 Revenues Intergovernmental Charges for services Fines and forfeitures Investment earnings Refunds and reimbursements Donations Miscellaneous Total revenues Expenditures Current Public safety Public works Culture and recreation Capital outlay Public safety Public works Culture and recreation Total expenditures Excess of revenues over (under) expenditures Other Financing Sources (Uses) 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/ Golf Course (215) (230) Seizure(240) Fund(255) $ 56,210 $ 186,844 $ 26,000 $ - - 1,083,689 - 2,600,448 - - 35,679 - (2,244) (98,612) (3,241) (4,277) - - 806 - 21,000 - - 6,736 74,966 1,171,921 59,244 2,602,907 - - 29,018 - 53,264 820,953 - - - - - 2,417,261 - - 31,906 - - 244,426 - - - - - 377,568 53,264 1,065,379 60,924 2,794,829 21,702 106,542 (1,680) (191,922) - (394,046) - - - (394,046) - - 21,702 (287,504) (1,680) (191,922) 73,224 2,347,752 72,712 136,137 $ 94,926 $ 2,060,248 $ 71,032 $ (55,785) 118 HERO Center Opiod Operations Settlement (290) (245) Totals 2022 2021 $ - $ - $ 269,054 $ 260,129 724,858 - 4,408,995 4,074,088 - - 35,679 43,310 (8,941) 76 (117,239) (14,756) - - 806 - - - - 29,000 436 - 28,172 101,334 716,353 76 4,625,467 4,493,105 743,552 - 772,570 668,069 - - 874,217 811,324 - - 2,417,261 2,187,761 - - 31,906 - - - 244,426 33,181 - - 377,568 169,783 743,552 - 4,717,948 3,870,118 (27,199) 76 (92,481) 622,987 - - (394,046) (222,975) - - (394,046) (222,975) (27,199) 76 (486,527) 400,012 (28,629) - 2,601,196 2,201,184 $ (55,828) $ 76 $ 2,114,669 $ 2,601,196 119 Cottage Grove ,,,,,, ,ity Meet 120 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 121 City of Cottage Grove Subcombining Balance Sheet - Nonmajor Debt Service Funds December 31, 2022 With Comparative Totals for December 31, 2021 Assets Cash and investments Due from other funds Taxes receivable - delinquent Special assessments receivable Deferred Delinquent Special deferred Total assets Liabilities Liabilities Due to other funds Unearned revenue Interfund loan payable Total liabilities Deferred Inflows of Resources Unavailable revenue - property taxes Unavailable revenue - special assessments Total deferred inflows of resources Fund Balances Restricted Unassigned Total fund balances Total liabilities, deferred inflows of resources, and fund balances 2019B 2017A G.O. 2019A G.O. Equipment 2018A G.O. Capital CIP Bonds Certificate Improvement Improvement (315) (305) Bonds (310) Bonds (371) $ 211,035 $ 12,295 $ 1,900,455 $ 503,826 1,183 1,569 - 3,596 - - 9,430 - - - 1,451 - $ 212,218 $ 13,864 $ 2,649,798 $ 507,422 1,183 1,569 - 3,596 - - 749,342 - 1,183 1,569 749,342 3,596 211,035 12,295 1,900,456 503,826 $ 212,218 $ 13,864 $ 2,649,798 $ 507,422 122 Totals Nonmajor Debt Service Funds Pavement Management 2016A G.O. 2021A GO Debt Service Refunding Improvement (490, 491, 492, Tax Increment Bonds (369) Bond (330) 493) Funds 2022 2021 $ 52,614 $ 580,518 $ 825,065 $ 627,107 $ 4,712,915 $ 8,133,965 - - - - - 4,341 1,528 507 4,059 - 12,442 9,979 - 540,601 1,671,120 - 2,221,151 2,333,822 - 891 1,647 - 3,989 2,398 - - 21,854 - 760,316 527,952 $ 54,142 $ 1,122,517 $ 2,523,745 $ 627,107 $ 7,710,813 $ 11,012,457 - - - - - 4,341 - - - - - 1 - - - 22,032 22,032 26,032 - - - 22,032 22,032 30,374 1,528 541,999 4,059 - 553,934 615,174 - - 1,694,621 - 2,443,963 2,258,977 1,528 541,999 1,698,680 - 2,997,897 2,874,151 52,614 580,518 825,065 605,075 4,690,884 8,112,273 - - - - - (4,341) 52,614 580,518 825,065 605,075 4,690,884 8,107,932 $ 54,142 $ 1,122,517 $ 2,523,745 $ 627,107 $ 7,710,813 $ 11,012,457 123 City of Cottage Grove Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Debt Service Funds For the Year Ended December 31, 2022 With Comparative Totals for the Year Ended December 31, 2021 Revenues General property taxes Tax increment collections Special assessments Investment earnings Miscellaneous Total revenues Expenditures Current General government Principal retirement Interest and other charges Total expenditures Excess of revenues over (under) expenditures Other Financing Sources Bond issuance Bond Premium Payments of Refunded Bonds/Early Bond Payments Transfers in Transfers Out Total other financing sources Net change in fund balances Fund Balances Beginning of year End of year 2019B 2017A G.O. 2019A G.O. Equipment 2018A G.O. Capital CIP Bonds Certificate Improvement Improvement (315) (305) Bonds (310) Bonds (371) $ 249,214 $ 348,823 $ 348,722 $ 608,690 - - 6,563 - (2,804) - (46,576) (4,850) 487 487 517 5,487 150,000 265,000 420,000 375,000 (34,136) 16,636 (322,283) (5,322) - - 745,616 - - - (156,058) - - - 589,558 - (34,136) 16,636 267,275 (5,322) 245,171 (4,341) 1,633,181 509,148 $ 211,035 $ 12,295 $ 1,900,456 $ 503,826 124 Totals Nonmajor Debt Service Funds Pavement Management 2016A G.O. 2021A GO Debt Service Refunding Improvement (490, 491, 492, Tax Increment Bonds(369) Bond(330) 493) Funds 2022 2021 $ 219,726 $ 149,354 $ 648,800 $ - $ 2,573,329 $ 2,573,231 - - - 704,259 704,259 182,563 - 86,294 387,958 - 480,815 1,129,616 (207) (17,910) (46,331) (6,432) (125,110) (14,510) - - - - - 162,379 219,519 217,738 990,427 697,827 3,633,293 4,033,279 - 1,030 7,544 1,957 17,509 15,701 350,000 - 1,135,000 255,000 2,950,000 3,785,000 50,612 78,476 281,628 33,128 1,079,753 1,200,409 400,612 79,506 1,424,172 290,085 4,047,262 5,001,110 (181,093) 138,232 (433,745) 407,742 (413,969) (967,831) - - - - - 3,840,000 - - - - - 113,843 - - (3,875,000) - (3,875,000) - 200,000 - 82,363 - 1,027,979 1,024,225 - - - - (156,058) - 200,000 - (3,792,637) - (3,003,079) 4,978,068 18,907 138,232 (4,226,382) 407,742 (3,417,048) 4,010,237 33,707 442,286 5,051,447 197,333 8,107,932 4,097,695 $ 52,614 $ 580,518 $ 825,065 $ 605,075 $ 4,690,884 $ 8,107,932 125 Cottage Grove ,,,,,, ,ity Meet 126 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 Sealcoating — Established to account for the receipt of franchise fees to be used for sealcoating activities. Water Connection and Area — This fund accounts for the projects that are partially paid for with connection charges. 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. Developer Petitioned Projects - This fund accounts for costs of infrastructure projects petitioned by developers and special assessment revenue which repay the costs. Future Storm Sewer Improvements — to collect storm sewer area charges which are designated for future construction. Sewer Connection and Area — to account for sewer connection and area charges. Pavement Management Capital Project Fund— to account for pavement management construction proj ects. Tax Increment Construction Revolving Fund— to account for construction projects that are financed with tax increments. Municipal Building Fund This fund accounts for the accumulation of resources and construction or remodeling costs of municipal buildings and facilities. 127 City of Cottage Grove Subcombining Balance Sheet - Nonmajor Capital Projects Funds December 31, 2022 With Comparative Totals for December 31, 2021 Assets Cash and investments Interest Receivable Due from other funds Due from other governments Accounts receivable Taxes receivable - delinquent Lease receivable Special assessments receivable Deferred Special deferred Property held for resale Total assets Liabilities and Fund Balances Liabilities Accounts payable Contracts payable Due to other funds Deposits payable Deferred Revenue Interfund loan payable Total liabilities Deferred Inflows of Resources Unavailable revenue - lease receivable Unavailable revenue - special assessments Total deferred inflows of resources Fund Balances Restricted Assigned Unassigned Total fund balances Total liabilities, deferred inflows of resources, and fund balances Equipment Water Completed Replacement Street Connection and Construction (210) Sealcoating (235) Area (575) (500) $ 1,635,867 $ 102,480 $ 3,517,474 $ 301,524 - - 617,316 - - 20,125 63 - - 161,573 - - $ 1,635,867 $ 284,178 $ 4,134,853 $ 301,524 $ - $ 27,815 $ 129,138 $ 135,197 - 25,644 - - 1,635,867 230,719 4,005,715 166,327 1,635,867 230,719 4,005,715 166,327 $ 1,635,867 $ 284,178 $ 4,134,853 $ 301,524 128 Future Storm Pavement Park Capital Developer Sewer Sewer Management Improvement Petitioned Improvements Connection and Capital Project Park Trust (570) Fund (515) Projects (568) (585) Area (580) (560) $ 601,379 $ 395,774 $ 1,411,638 $ 1,941,693 $ 102,809 $ 2,450,501 - 74,131 - - - - - 783,921 - - - - - - - - 92 - 49,563 - - - 500,000 - - 4,691,345 - - - - - - 4,146 - - - $ 650,942 $ 5,945,171 $ 1,415,784 $ 1,941,693 $ 602,901 $ 2,450,501 $ 361,526 $ 20,308 $ 454,552 $ 749,944 $ 6,721 $ 66,361 141,758 - 214,745 192,468 - - - - 261 - - - - 156,625 219,814 - - - 503,284 176,933 889,372 942,412 6,721 66,361 - 4,609,972 - - - - - - 4,146 - - - - 4,609,972 4,146 - - - 147,658 1,158,266 522,266 999,281 596,180 2,384,140 147,658 1,158,266 522,266 999,281 596,180 2,384,140 $ 650,942 $ 5,945,171 $ 1,415,784 $ 1,941,693 $ 602,901 $ 2,450,501 129 %ere prlde 2110 Cottage Grove ,,a-5Perity Meet 130 City of Cottage Grove Subcombining Balance Sheet - Nonmajor Capital Projects Funds December 31, 2022 With Comparative Totals for December 31, 2021 Assets Cash and investments Interest Receivable Due from other funds Due from other governments Accounts receivable Taxes receivable - delinquent Lease receivable Special assessments receivable Deferred Special deferred Property held for resale Total assets Liabilities and Fund Balances Liabilities Accounts payable Contracts payable Due to other funds Deposits payable Deferred Revenue Interfund loan payable Total liabilities Deferred Inflows of Resources Unavailable revenue - lease receivable Unavailable revenue - special assessments Total deferred inflows of resources Fund Balances Restricted Assigned Unassigned Total fund balances Total liabilities, deferred inflows of resources, and fund balances Totals Nonmajor Capital Projects Funds Tax Increment Municipal Construction Building Fund Revolving Fund (525) 2022 2021 $ 2,509,491 $ 124,719 $ 15,095,349 $ 22,151,328 - 31,561 105,692 - - - 1,401,237 - - - 20,280 192,200 - - 711,136 911,334 - 1,930 1,930 2,096 - 975,685 5,667,030 - - - 4,146 347,577 - - - 20,381 $ 2,509,491 $ 1,133,895 $ 23,006,800 $ 23,624,916 $ - $ 666 $ 1,952,228 $ 2,599,073 - - 548,971 444,488 - - 261 536 - - 402,083 385,538 - - - 1,652 460,403 2,440,000 2,900,403 3,225,031 460,403 2,440,666 5,803,946 6,656,318 - 974,366 5,584,338 - - 3,632 7,778 370,054 977,998 5,592,116 370,054 2,049,088 - 2,049,088 1,464,791 - - 11,846,419 17,717,124 - (2,284,769) (2,284,769) (2,583,371) 2,049,088 (2,284,769) 11,610,738 16,598,544 $ 2,509,491 $ 1,133,895 $ 23,006,800 $ 23,624,916 131 City of Cottage Grove Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Capital Projects Funds For the Year Ended December 31, 2022 With Comparative Totals for the Year Ended December 31, 2021 Equipment Street Water Completed Replacement Sealcoating Connection and Construction (210) (235) Area (575) (500) Revenues Taxes $ $ - $ $ Franchise taxes 642,584 Aggregate taxes 33,044 Tax increment collections - Special assessments - Direct charges to developers 26,081 Intergovernmental - Charges for services 27,829 Rent - Investment earnings (60,787) (31,816) (166,902) (10,127) Interest on interfund loan - Connection charges 1,378,851 Park dedication fees - Donations Miscellaneous - Total revenues (60,787) 697,722 1,211,949 (10,127) Expenditures Current General government - 743 Economic development - - Public Safety - - 165,256 - Public works 1,548 304,354 - 20,311 Culture and recreation - - - Capital Outlay General government - - - Public works 55,027 1,159,043 595,032 Culture and recreation - - - Interest and other charges - Total expenditures 56,575 1,463,397 760,288 21,054 Excess of revenues over (under) expenditures (117,362) (765,675) 451,661 (31,181) Other Financing Sources (Uses) Proceeds from sale of capital assets 9,687 - Bond Issuance - Bond Premium - Transfers in 400,000 Transfers out - (102,330) Total other financing sources (uses) 409,687 (102,330) Net change in fund balances 292,325 (765,675) 349,331 (31,181) Fund Balances Beginning of year 1,343,542 996,394 3,656,384 197,508 End of year $ 1,635,867 $ 230,719 $ 4,005,715 $ 166,327 132 Future Storm Pavement Park Capital Developer Sewer Sewer Management Tax Increment Improvement Petitioned Improvements Connection and Capital Project Construction Park Trust (570) Fund (515) Projects (568) (585) Area (580) (560) Revolving Fund - - 1,046,540 90,815 30 - 461,900 1,986,135 618,847 (71,668) (67,918) (71,476) (222,394) (31,171) (123,494) (88,218) - 1,756,069 976,022 1,144,364 - - 52,683 - - - - - 1,587,279 550,929 19,339 1,533,675 2,930,986 (123,464) 958,322 358,273 - - 287,614 413,579 66,686 637 403,448 91,570 - - - - - - 426,472 4,523,235 2,064,391 102,503 2,541,356 596,534 - - - 137,347 (1,357,525) (137,175) (694,747) (3,403,139) 799,909 (363,951) 584,297 (319,059) (239,818) (319,059) (239,818) (1,357,525) (137,175) (694,747) (3,722,198) 560,091 (363,951) 584,297 14/,6-x 1,1llx,266 :)12,266 999,2x1 :)96,nu 2,3Z54,14U 2,U49,UZ5Z5 133 Cottage Grove ,,,,,, ,ity Meet 134 City of Cottage Grove Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Capital Projects Funds For the Year Ended December 31, 2022 With Comparative Totals for the Year Ended December 31, 2021 Totals Nonmajor Capital Projects Funds Municipal Building Fund (525) 2022 2021 Revenues Taxes $ 249,846 $ 249,846 $ 249,975 Franchise taxes - 642,584 615,326 Aggregate taxes 33,044 23,467 Tax increment collections 1,046,540 1,244,670 Special assessments 90,845 6,223,157 Direct charges to developers 26,081 104,157 Intergovernmental 2,448,035 4,908,330 Charges for services - 27,829 30,766 Rent 92,034 710,881 494,880 Investment earnings (5,252) (951,223) (133,612) Interest on interfund loan - - Connection charges 4,110,942 5,293,099 Park dedication fees 1,144,364 2,014,802 Donations - 12,500 Miscellaneous - 52,683 19,910 Total revenues 336,628 9,632,451 21,101,427 Expenditures Current General government 12,576 13,319 2,583 Economic development - 358,273 511,807 Public Safety 165,256 - Public works 1,094,729 3,149,093 Culture and recreation 495,018 311,070 General government - 172,732 Public works 8,925,703 11,713,182 Culture and recreation - 3,275,237 2,251,516 Interest and other charges 25,450 41,202 143,825 Total expenditures 38,026 14,368,737 18,255,808 Excess of revenues over (under) expenditures 298,602 (4,736,286) 2,845,619 Other Financing Sources (Uses) Proceeds from sale of capital assets - 9,687 3,267 Bond Issuance - 3,955,000 Bond Premium - 121,905 Transfers in 400,000 1,148,348 Transfers out (661,207) (100,000) Total other financing sources (uses) - (251,520) 5,128,520 Net change in fund balances 298,602 (4,987,806) 7,974,139 Fund Balances Beginning of year (2,583,371) 16,598,544 8,624,405 End of year $ (2,284,769) $ 11,610,738 $ 16,598,544 135 Revenues Intergovernmental Investment earnings Miscellaneous Total revenues Expenditures Current Public works Total expenditures Excess of revenues over (under) expenditures Fund Balances Beginning of year End of year 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, 2022 With Comparative Totals for the Year Ended December 31, 2021 2022 2021 Budgeted Amounts Variance with Actual Final Budget - Original Final Amounts Over (Under) Actual $ 55,000 $ 55,000 $ 56,210 $ 1,210 $ 55,734 1,050 1,050 (2,244) (3,294) (223) - - 21,000 21,000 - 56,050 56,050 74,966 18,916 55,511 56,050 56,050 53,264 (2,786) 56,131 56,050 56,050 53,264 (2,786) 56,131 21,702 $ 21,702 "' 11 A $ 94,926 (620) 71 O A A $ 73,224 136 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, 2022 With Comparative Totals for the Year Ended December 31, 2021 2022 2021 Budgeted Amounts Variance with Actual Final Budget - Original Final Amounts Over (Under) Actual Revenues Charges for services $ 1,004,000 $ 1,004,000 $ 1,083,689 $ 79,689 $ 1,020,513 Investment earnings 10,000 10,000 (98,612) (108,612) (12,076) Intergovernmental - - 186,844 186,844 204,395 Miscellaneous - - - - 95,000 Total revenues 1,014,000 1,014,000 1,171,921 157,921 1,307,832 Expenditures Current Public works 736,880 736,880 820,953 84,073 755,193 Capital outlay Public works - - 244,426 244,426 33,181 Total expenditures 736,880 736,880 1,065,379 328,499 788,374 Excess of revenues over (under) expenditures 277,120 277,120 106,542 (170,578) 519,458 Other Financing Uses Transfers out (43,800) (43,800) (394,046) (350,246) (221,475) Net change in fund balance $ 233,320 $ 233,320 (287,504) $ (520,824) 297,983 Fund Balances Beginning of year 2,347,752 2,049,769 End of year $ 2,060,248 $ 2,347,752 137 Revenues Fines and forfeitures Intergovernmental Investment income Refunds and reimbursements Total revenues Expenditures Current Public safety Capital outlay Public safety Total expenditures Excess of revenues over (under) expenditures Fund Balance Beginning of year End of year 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, 2022 With Comparative Totals for the Year Ended December 31, 2021 2022 Budgeted Amounts Variance with Actual Final Budget - Original Final Amounts Over (Under) $ 30,000 $ 30,000 $ 35,679 $ 5,679 $ - - 26,000 26,000 1,000 1,000 (3,241) (4,241) Actual 43,310 (450) 19,700 19,700 29,018 9,318 59,559 10,400 10,400 31,906 21,506 - $ 900 $ 900 (1,680) $ (2,580) 72,712 $ 71,032 (16,699) 89,411 $ 72,712 138 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, 2022 With Comparative Totals for the Year Ended December 31, 2021 2022 2021 Budgeted Amounts Variance with Actual Final Budget - Original Final Amounts Over (Under) Actual Revenues Charges for services $ 2,425,500 $ 2,425,500 $ 2,600,448 $ 174,948 $ 2,443,392 Investment earnings - - (4,277) (4,277) (1,310) Miscellaneous - - 6,736 6,736 5,138 Total revenues 2,425,500 2,425,500 2,602,907 177,407 2,447,220 Expenditures Current Culture and recreation 2,075,370 2,075,370 2,417,261 341,891 2,187,761 Capital outlay Culture and recreation 246,000 246,000 377,568 131,568 169,783 Total expenditures 2,321,370 2,321,370 2,794,829 473,459 2,357,544 Net change in fund balances $ 104,130 $ 104,130 (191,922) $ (296,052) 89,676 Fund Balance Beginning of year End of year $ (55,785) $ 136,137 139 City of Cottage Grove Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Equipment Replacement Capital Project Fund For the Year Ended December 31, 2022 With Comparative Totals for the Year Ended December 31, 2021 2022 2021 Budgeted Amounts Variance with Actual Final Budget - Original Final Amounts Over (Under) Actual Revenues Intergovernmental $ - $ - $ - $ - $ - Investment earnings 12,000 12,000 (60,787) (72,787) (8,453) Miscellaneous 60,000 60,000 - (60,000) - Total revenues 72,000 72,000 (60,787) (132,787) (8,453) Expenditures Current Public works - - 1,548 1,548 1,792 Capital outlay Public safety - - - - 614,105 Public works 470,000 470,000 55,027 (414,973) - Total expenditures 470,000 470,000 56,575 1,548 615,897 Excess of revenues under expenditures (398,000) (398,000) (117,362) (134,335) (624,350) Other Financing Sources (Uses) Sale of city property - - 9,687 9,687 3,267 Transfers in 400,000 400,000 400,000 - 647,415 Total other financing sources (uses) 400,000 400,000 409,687 9,687 650,682 Net change in fund balance $ 2,000 $ 2,000 292,325 $ (124,648) 26,332 Fund Balances Beginning of year 1,343,542 1,317,210 End of year $ 1,635,867 $ 1,343,542 140 City of Cottage Grove Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Street Sealcoating Capital Project Fund For the Year Ended December 31, 2022 With Comparative Totals for the Year Ended December 31, 2020 2022 2021 Budgeted Amounts Variance with Actual Final Budget - Original Final Amounts Over (Under) Actual Revenues Franchise Taxes $ 600,000 $ 600,000 $ 642,584 $ 42,584 $ 615,326 Aggregate Taxes 22,000 22,000 33,044 11,044 23,467 Charges for services - - 53,910 53,910 134,923 Investment earnings 10,000 10,000 (31,816) (41,816) (5,207) Total revenues 632,000 632,000 697,722 65,722 768,509 Expenditures Current Public works General government Public works Total expenditures Net change in fund balances Fund Balances Beginning of year End of year 626,000 626,000 304,354 (321,646) 287,775 - - 1,159,043 1,159,043 551,756 626,000 626,000 1,463,397 837,397 839,531 $ 6,000 $ 6,000 (765,675) $ (771,675) (71,022) $ 230,719 $ 996,394 141 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. 142 City of Cottage Grove Combining Statement of Net Position - Internal Service Funds December 31, 2022 With Comparative Totals for December 31, 2021 Totals Fleet Self Insurance Maintenance Information (700) (710) Services (720) 2022 2021 Assets Current assets Cash and investments (Including cash equivalents) $ 451,160 $ $ $ 451,160 $ 719,924 Accounts receivable 8,713 8,713 96,357 Due from other funds - - 631,585 Due from Other Governments 8,773 8,773 - Inventories - 172,195 172,195 146,581 Prepaid items 425,766 383 141,913 568,062 273,103 Total current assets 894,412 172,578 141,913 1,208,903 1,867,550 Noncurrent assets Capital assets Land - 424,665 - 424,665 424,665 Buildings and improvements 928,870 - 928,870 928,870 Equipment and furniture - 70,127 70,127 70,127 Machinery and equipment 514,525 - 514,525 504,229 Total capital assets 1,868,060 70,127 1,938,187 1,927,891 Accumulated depreciation (989,042) (64,502) (1,053,544) (1,012,377) Total noncurrent assets 879,018 5,625 884,643 915,514 Total assets 894,412 1,051,596 147,538 2,093,546 2,783,064 Deferred Outflows of Resources Deferred outflows ofresources related to pensions - 239,422 105,385 344,807 387,323 Deferred outflows ofresources related to OPEB 10,533 4,710 15,243 17,778 Total deferred outflows of resources - 249,955 110,095 360,050 405,101 Total assets and deferred outflows ofresources $ 894,412 $ 1,301,551 $ 257,633 $ 2,453,596 $ 3,188,165 Liabilities Current liabilities Accounts payable $ 295,619 $ 17,582 $ 4,997 $ 318,198 $ 313,454 Salaries payable - 29,712 12,162 41,874 40,598 Due to other funds - 603,736 245,061 848,797 631,585 Due to other governments 306 1,607 - 1,913 59,599 Compensated absences payable - 42,200 30,875 73,075 65,995 Total current liabilities 295,925 694,837 293,095 1,283,857 1,111,231 Noncurrent liabilities Compensated absences payable - 17,081 847 17,928 19,007 Net pension liability 661,962 291,371 953,333 484,199 Total OPEB liability 16,423 7,345 23,768 40,192 Total noncurrent liabilities - 695,466 299,563 995,029 543,398 Total liabilities 295,925 1,390,303 592,658 2,278,886 1,654,629 Deferred Inflows of Resources Deferred inflows ofresources related to pensions - 8,752 3,852 12,604 448,350 Deferred inflows ofresources related to OPEB 5,452 2,438 7,890 1,183 Total deferred inflows of resources 14,204 6,290 20,494 449,533 Net Position Net investment in capital assets - 879,018 5,625 884,643 915,514 Unrestricted 598,487 (981,974) (346,940) (730,427) 168,489 Total net position 598,487 (102,956) (341,315) 154,216 1,084,003 Total liabilities, deferred inflows of resources, and net position $ 894,412 $ 1,301,551 $ 257,633 $ 2,453,596 $ 3,188,165 143 City of Cottage Grove Combining Statement of Revenues, Expenses, and Changes in Net Position - Internal Service Funds For the Year Ended December 31, 2022 With Comparative Totals for the Year Ended December 31, 2021 Totals Fleet Self Insurance Maintenance Information (700) (710) Services(720) 2022 2021 Operating Revenues Charges for services User fees $ - $ 1,702,443 $ 1,167,226 $ 2,869,669 $ 2,433,690 Employee benefits 2,520,820 - - 2,520,820 2,195,554 Insurance refunds and reimbursements 106,021 - - 106,021 124,260 Total operating revenues 2,626,841 1,702,443 1,167,226 5,496,510 4,753,504 Operating Expenses Operating and maintenance Personal services - 878,116 369,728 1,247,844 1,132,764 Contractual services - 356,021 815,302 1,171,323 842,195 Commodities - 790,744 144,206 934,950 701,381 Administrative and general Personal insurance benefits 2,593,070 - - 2,593,070 2,248,768 Contractual services 412,042 - - 412,042 329,083 Claims 186,169 - - 186,169 145,677 Depreciation - 37,757 3,410 41,167 53,260 Total operating expenses 3,191,281 2,062,638 1,332,646 6,586,565 5,453,128 Operating loss (564,440) (360,195) (165,420) (1,090,055) (699,624) Nonoperating Revenues Investment income (49,169) - - (49,169) (9,249) Loss on sale of asset - - - - (16,479) Intergovernmental grants 8,773 - - 8,773 - Miscellaneous 0 1,988 198,676 200,664 8,704 Total nonoperating revenues (40,396) 1,988 198,676 160,268 (17,024) Change in net position (604,836) (358,207) 33,256 (929,787) (716,648) Net Position Beginning of year 1,203,323 255,251 (374,571) 1,084,003 1,800,651 End of year $ 598,487 $ (102,956) $ (341,315) $ 154,216 $ 1,084,003 144 City of Cottage Grove Combining Statement of Cash Flows - Internal Service Funds For the Year Ended December 31, 2022 With Comparative Totals for the Year Ended December 31, 2021 Totals Fleet Self Insurance Maintenance Information (700) (710) Services (720) 2022 2021 Cash Flows - Operating Activities Receipts from interfand services provided $ 2,607,299 $ 1,702,495 $ 1,168,339 $ 5,478,133 $ 4,545,801 Receipts from insurance refunds and reimbursements 106,021 - - 106,021 124,260 Payments to suppliers (989,803) (1,194,536) (912,584) (3,096,923) (1,947,884) Payments to employees (2,583,470) (828,947) (342,347) (3,754,764) (3,318,930) Miscellaneous revenue 8,773 1,988 198,676 209,437 8,703 Net cash flows - operating activities (851,180) (319,000) 112,084 (1,058,096) (588,050) Cash Flows - Noncapital Financing Activities Advances to/from other funds 631,585 329,296 (112,084) 848,797 1 Cash Flows - Capital and Related Financing Activities Acquisition of capital assets - (10,296) (10,296) - Net cash flows - capital and related financing activities (10,296) (10,296) Cash Flows - Investing Activities Interest and dividends received (49,169) (49,169) (9,249) Net change in cash and cash equivalents (268,764) (268,764) (597,298) Cash and Cash Equivalents January 1 719,924 719,924 1,317,222 December 31 $ 451,160 $ $ $ 551,160 $ 119,924 Reconciliation of Operating Loss to Net Cash Flows - Operating Activities Operating loss $ (564,440) $ (360,195) $ (165,420) $ (1,090,055) $ (699,624) Adjustments to reconcile operating loss to net cash flows - operating activities Depreciation expense - 37,757 3,410 41,167 53,260 Miscellaneous revenue 8,773 1,988 199,789 210,550 7,590 Pension expense - 51,558 24,366 75,924 40,821 Receivables 86,479 52 - 86,531 (82,330) Prepaid items (357,033) (114) 62,188 (294,959) 149,010 Inventory - (25,614) - (25,614) (25,438) Accounts payable 21,759 (21,478) (15,264) (14,983) (1,778) Unpaid claims 9,576 - 9,576 (103,177) Due to other governmental units (65,894) (565) - (66,459) 51,835 Salaries payable (551) 1,135 692 1,276 9,065 Health care benefits payable 10,151 - - 10,151 (898) Compensated absences payable - 1,588 4,413 6,001 11,499 OPEB expense (5,112) (2,090) (7,202) 2,115 Total adjustments (286,740) 41,195 277,504 31,959 111,574 Net cash flows - operating activities $ (851,180) $ (319,000) $ 112,084 _L 58,096) $ (588,050) Noncash Investing, Capital, and Financing Activities Capital asset contributions $ $ - $ - $ $ 145 City of Cottage Grove ECONONHC DEVELOPMENT AUTHORITY COMPONENT UNIT Established to account for the receipt and use of monies for economic development purposes. 146 City of Cottage Grove Combining Balance Sheet - All Governmental Fund Types - Economic Development Authority Component Unit December 31, 2022 With Comparative Totals for December 31, 2021 Totals Economic Development Authority Economic Component Unit Development Authority (285) 2022 2021 Assets Cash and investments $ 4,672 $ 4,672 $ - Accounts receivable 17,041 17,041 8,282 Prepaid items 6,410 6,410 480 Taxes receivable - delinquent 844 844 832 Loan receivable 14,758 14,758 44,175 Property held for resale 129,300 129,300 129,300 Total assets $ 173,025 $ 173,025 $ 183,069 Liabilities Accounts payable 6,744 6,744 31,354 Salaries and benefits payable 9,070 9,070 3,991 Due to other governments 84,076 84,076 435,978 Deposits Payable 518,590 518,590 74,625 Total liabilities 618,480 618,480 545,948 Deferred inflows of resources Unavailable revenue - property taxes 844 844 832 Total deferred inflows of resources 844 844 832 Fund balances Nonspendable 6,410 6,410 480 Restricted (452,709) (452,709) (364,191) Total fund balances (446,299) (446,299) (363,711) Total liabilities, deferred inflows of resources, and fund balances $ 173,025 $ 173,025 $ 183,069 Fund balance reported above $ (446,299) 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. 844 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 (2,359) Deferred outflows of resources related to pensions 64,543 Deferred inflows of resources related to OPEB (1,500) Deferred outflows of resources related to OPEB 2,897 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. (203,015) Net position of component unit $ (584,889) 147 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, 2022 With Compartive Totals for the Year Ended December 31, 2021 Revenues General property taxes Intergovernmental Charges for services Investment earnings Interest on loan to primary government Miscellaneous Total revenues Expenditures Current General government Personal services Commodities Contractual services Total expenditures Excess of revenues under expenditures Fund Balances Beginning of year End of year Net decrease 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, 2021 At December 31, 2022 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 governmetnal funds: Compensated absences: At December 31, 2021 At December 31, 2022 Change in net position of component unit Totals Economic Development Authority (285) 2022 2021 $ 124,823 $ 124,823 $ 124,930 178,590 178,590 34,940 6290 6290 75,000 - - (2,471) 307 307 600 101,931 101,931 57,987 411,941 411,941 290,986 215,886 215,886 167,275 4,457 4,457 1,748 274,186 274,186 498,340 494,529 494,529 667,363 (82,588) (82,588) (376,377) (363,711) (363,711) 12,666 $ (446,299) $ (446,299) $ (363,711) $ (82,588) (832) 844 (29,784) 4,393 10,219 (18,649) $ (116,397) n SUPPLEMENTARY FINANCIAL INFORMATION 149 City of Cottage Grove Combined Schedule of Bonded Indebtedness December 31, 2022 Interest Rate Dated Final Payment Primary Government General Obligation Bonds $1,405,000 Tax Increment Bonds of 2004A 3.00%-4.65% 7/1/2004 2/1/2024 $4,660,000 G.O. Refunding Bonds of 2016A 2.00%-3.00% 1/28/2016 2/1/2027 $9,155,000 G.O. CIP Bonds of 2017A 2.50%-3.25% 5/11/2017 2/1/2038 $4,090,000 G.O. CIP Bonds of 2019A 3.00%-4.00% 2/14/2019 2/1/2040 Total General Obligation Bonds Equipment Certificate $2,845,000 Equipment Certificate of 2019B 3.00% 2/14/2019 2/1/2029 Special Assessment Debt Improvement Bonds of 2015A 2.50%-3.00% 5/27/2015 2/1/2031 Improvement Bonds of 2016B 2.00%-2.10% 11/16/2016 2/1/2033 Improvement Bonds of 2018A 3.00% 6/26/2018 2/1/2035 Improvement Bonds of 2021A 1.20%-2.00% 6/10/2021 2/1/2037 Improvement Refunding Bond of 2021B 1.05%-2.00% 12/9/2021 2/1/2029 Total Special Assessment Debt with Governmental Commitment Total Bonded Indebtedness - Primary Government Total Bonded Indebtedness - Reporting Entity 150 Authorized Principal due Interest due and Issued Retired Outstanding in 2023 in 2023 $ 1,405,000 $ 840,000 $ 565,000 $ 275,000 $ 19,810 4,660,000 2,800,000 1,860,000 355,000 39,075 9,155,000 1,440,000 7,715,000 390,000 216,725 4,090,000 295,000 3,795,000 155,000 123,484 5,700,000 2,130,000 3,570,000 380,000 93,335 4,275,000 1,250,000 3,025,000 285,000 58,070 7,620,000 830,000 6,790,000 435,000 197,175 3,955,000 - 3,955,000 230,000 66,022 3,840,000 - 3,840,000 510,000 61,066 25,390,000 4,210,000 21,180,000 1,840,000 475,668 47,545,000 10,355,000 37,190,000 3,285,000 932,962 $ 47,545,000 $ 10,355,000 $ 37,190,000 $ 3,285,000 $ 932,962 151 y O O O O O O O O O O O O O O I I I I I I O O N O 4-i O 00 00 O M llO O� N llO l- OO llO N 00 --i 69 69 69 69 � CD M M �O Ol 00 Ol � O W O M Ol M V1 V1 Ol �O M M ON yO.i O M --i 69 69 69 69 O un un O N � l l 00 un � 00 00 69 W U 69 69 69 69 O O O 00 00 00 al al M O� O 00 M --i O O l� l� 00 00 00 00 00 00 M Vl M Vl M 00 O � 00 00 nllc n O 00 00 Vl l 00 N N N N N N N N N N N N N N N N N N O � U P� ii-Sri O 69 69 69 69 O bq H 0 O O Ol Ol N N O 00 N Vl M O M l� Vl l� Vl Ol 00 Ol 00 00 M Ol (n l O U Vl O Vl �O N Vl M Vl M Vl N N N NC� Vl lu If) O O O O O O O O O O O O O al O al If) +"' 69 69 69 69 In InO O O I I I I I I I I I I I I O 0 o CC M 0 "� vi O �O Obi OMi Obi O� 0000 �O O y � A 00 l In N N In � 69 69 69 69 N C V) �c l� 00 01 00 Ol O N N N N N N N N N N N N N N N N N N y ct O � w Li N O v1 vl N O �O �O 00 O l� M 00 M N 00 V) 110 110 , M N O �O l� N N 00 Ol V) N N V) 'T O � N V) O _ _ O� N h h 00 N h M llO N O� l cn l� 00 llO llO O �--i �--i l_� N_ N V1 00 00� N M �--i O M M M V) V) 110 00 Ol N �. Ol Ol 00 O Ol l� 00 00 V) �--i �--i M O O l� l� l� l� l� 00 (� tw p �--� M Vl N N Ol 00 00 Vl V) --i Ol 00 00 �--i �--i 00 N N Vl OO 'ram 69 69 69 69 y O V1 V1 V1 V1 N 0 I I I I I I I I I I Vri � � � � � � O y O V1 V1 N N N N N M N M N V1 00 00 0 0� I I V1 p, r O Q, O CD al l If) � 75 N N N N N N N N N N N N N N N � 69 � � 69 69 69 y O O O V1 O O V1 O V1 O V1 O V1 V1 O O I I I I O If) If) � OM � 00 00 Cottage Grove ,,,,,, ,ity Meet 154 City of Cottage Grove Deferred Tax Levies December 31, 2022 Special Assessment Bonds $3,840,000 $1,865,000 Refunding $5,700,000 $4,275,000 $7,620,000 $3,955,000 Total Special Year of Tax Bonds of Bonds of Bonds of Bonds of Bonds of Bonds of Assessment Levy/Collection 2012A 2021B 2015A 2016B 2018A 2021A Bonds 2022/23 $ 88,266 $ 516,870 $ 316,853 $ 198,926 $ 385,646 $ 251,542 $ 1,758,103 2023/24 85,326 516,240 320,440 196,736 381,971 251,857 1,752,570 2024/25 87,489 515,400 323,712 194,545 383,231 252,067 1,756,444 2025/26 42,424 514,350 318,269 197,604 384,019 252,172 1,708,838 2026/27 - 513,090 318,076 195,308 384,334 252,171 1,662,979 2027/28 - 517,305 321,939 193,013 384,176 252,066 1,668,499 2028/29 - - 315,014 195,967 383,546 251,857 1,146,384 2029/30 - 328,911 198,816 382,444 251,542 1,161,713 2030/31 - - 196,310 380,868 253,390 830,568 2031/32 - 70,082 384,071 254,886 709,039 2032/33 - - 381,393 250,770 632,163 2033/34 - 383,493 251,757 635,250 2034/35 - - 252,518 252,518 2035/36 - - - - - 252,744 252,744 Totals $ 303,505 $ 3,093,255 $ 2,563,214 $ 1,837,307 $ 4,599,192 $ 3,531,339 $ 15,927,812 155 City of Cottage Grove Subcombining Balance Sheet - Pavement Management Debt Service Schedule December 31, 2022 With Comparative Totals for December 31, 2021 Assets Cash and investments Taxes receivable - delinquent Special assessments receivable Deferred Delinquent Special deferred Total assets Liabilities and Fund Balances Liabilities Deferred revenue Total liabilities 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. 2021B GO Improvement Improvement Improvement Bonds 2015A Bonds 2016B Refunding (492) (493) Bond (340) $ 607,796 $ 210,091 $ 7,178 1,230 969 1,860 541,409 652,326 477,385 881 128 638 6,132 14,982 740 $ 1,157,448 $ 878,496 $ 487,801 1,230 969 1,860 607,796 210,091 7,178 $ 1,157,448 $ 878,496 $ 487,801 156 Totals Pavement Management Debt Service Schedule 2022 2021 825,065 $ 5,051,448 4,059 3,713 1,671,120 1,713,309 1,647 1,766 21,854 15,923 $ 2,523,745 $ 6,786,159 4,059 3,713 1,694,621 1,730,998 1,698,680 1,734,711 825,065 5,051,447 $ 2,523,745 $ 6,786,159 157 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, 2022 With Comparative Totals for the Year Ended December 31, 2021 Revenues General property taxes Special assessments Miscellaneous: Investment earnings Miscellaneous Total revenues Expenditures Current General government Debt service Principal Interest and other charges Total expenditures Excess of revenues under expenditures Other Financing Sources Bond Issuance Bond Premium Payments to Refunded Bond Escrow Agent Transfers in Total other financing sources (uses) Net change in fund balances Fund Balances Beginning of year End of year G.O. G.O. G.O. 2021B GO Improvement Improvement Improvement Improvement Bonds 2013A Bonds 2015A Bonds 2016B Refunding (491) (492) (493) Bond(340) $ 249,795 $ 199,615 $ 199,390 $ - 62,679 117,016 158,263 50,000 (25,002) (18,981) (1,055) (1,293) 287,472 297,650 356,598 48,707 4,065 1,795 1,197 487 490,000 370,000 275,000 - 69,308 105,060 64,145 43,115 563,373 476,855 340,342 43,602 (275,901) (179,205) 16,256 5,105 (3,875,000) - - - 82,363 - - - (3,792,637) - - - (4,068,538) (179,205) 16,256 5,105 4,068,538 787,001 193,835 2,073 $ - $ 607,796 $ 210,091 $ 7,178 158 Totals Pavement Management Debt Service Schedule ul�vy�nv>fI $ 648,800 $ 649,465 387,958 369,547 (46,331) (4,026) yyv,4/-i i,vi4,yav 7,544 10,771 1,135,000 2,005,000 281,628 415,854 1 &M 17? 7 1111 F75 (433,745) (1,416,639) - 3,840,000 - 113,843 (3,875,000) - 82,363 635,243 (3,792,637) 4,589,086 (4,226,382) 3,172,447 5,051,447 1,879,000 $ 825,065 $ 5,051,447 159 City of Cottage Grove Subcombining Balance Sheet - Tax Increment Construction Revolving Schedule December 31, 2022 With Comparative Totals for December 31, 2021 TIF 1-12 (532, TIF 1-8 (533) 534) TIF 1-15 (529) TIF 1-16 (528) Assets Cash and investments $ 381,277 $ 1,919,587 $ 62,894 $ 1,690 Liabilities and Fund Balances Liabilities Accounts payable - - - - Interfund loan payable - - 224,750 145,787 Total liabilities - - 224,750 145,787 Fund Balances Restricted 381,277 1,919,587 - - Unassigned - - (161,856) (144,097) Total fund balances 381,277 1,919,587 (161,856) (144,097) Total liabilities, deferred inflows of resources, and fund balances $ 381,277 $ 1,919,587 $ 62,894 $ 1,690 160 Totals TIF Revolving Capital TIF 1-17 TIF 1-20 Reconciliation Project Schedule Dommium Northpoint to Nonmajor (540) TIF 1-18(542) (535) Fund 2022 2021 $ 115,475 $ 2,608 $ 25,960 $ - $ 2,509,491 $ 2,052,174 - - - - - 12,352 26,890 12,976 50,000 - 460,403 575,031 26,890 12,976 50,000 - 460,403 587,383 - - - (251,776) 2,049,088 1,464,791 88,585 (10,368) (24,040) 251,776 - - 88,585 (10,368) (24,040) - 2,049,088 1,464,791 $ 115,475 $ 2,608 $ 25,960 $ - $ 2,509,491 $ 2,052,174 161 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, 2022 With Comparative Totals for the Year Ended December 31, 2021 Revenues Tax increment collections Miscellaneous: Investment earnings Total revenues Expenditures Current Economic development Debt service Interest and other charges Total expenditures Net change in fund balances Fund Balances Beginning of year End of year TIF 1-12 (532, TIF 1-8 (533) 534) TIF 1-15 (529) TIF 1-16 (528) $ - $ 618,693 $ 123,644 $ 41,312 (17,446) (69,005) (1,488) (255) (17,446) 549,688 122,156 41,057 5,186 237,559 1,597 1,618 - - 8,903 5,424 5,186 237,559 10,500 7,042 (22,632) 312,129 111,656 34,015 403,909 1,607,458 (273,512) (178,112) $ 381,277 $ 1,919,587 $ (161,856) $ (144,097) 162 Totals TIF Revolving Capital Project Schedule TIF 1-17 TIF 1-20 Dominium Northpoint (540) TIF 1-18(542) (535) 2022 2021 $ 242,431 $ 20,460 $ - $ 1,046,540 $ 1,244,670 (10) (3) (11) (88,218) (7,499) 242,421 20,457 (11) 958,322 1,237,171 120,608 15,314 (23,609) 358,273 511,807 968 457 - 15,752 18,494 121,576 15,771 (23,609) 374,025 530,301 120,845 4,686 23,598 584,297 706,870 (32,260) (15,054) (47,638) 1,464,791 757,921 $ 88,585 $ (10,368) $ (24,040) $ 2,049,088 $ 1,464,791 163 Assets Cash and investments Liabilities Interfund loan payable 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, 2022 With Comparative Totals for December 31, 2021 Totals TIF Debt Service Revolving Schedule 2004A Taxable 2014A Taxable Tax Increment 2014A Exempt Tax Increment Refunding Increment Refunding Bonds TIF 1-19 Bonds TIF 1-12 Bonds TIF 1-12 (320) (338) (341) 2022 2021 $ 288,476 $ 302,588 $ 36,043 $ 627,107 $ 223,365 $ 22,032 $ - $ - $ 22,032 $ 26,032 266,444 302,588 36,043 605,075 197,333 266,444 302,588 36,043 605,075 197,333 $ 288,476 $ 302,588 $ 36,043 $ 627,107 $ 223,365 164 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, 2022 With Comparative Totals for the Year Ended December 31, 2021 Revenues Tax increment collections Miscellaneous: Investment earnings Total revenues Expenditures Current Economic development Debt service Principal retirement Interest and other charges Total expenditures Net Change in Fund Balances Fund Balances Beginning of year End of year Totals TIF Debt Service Revolving Schedule 2004A Taxable 2004A Tax 2014A Taxable Tax Increment Exempt Tax Increment Refunding Increment Refunding Bonds TIF 1-19 Bonds TIF 1-12 Bonds TIF 1-12 (320) (338) (341) 2022 2021 $ 224,259 $ 480,000 $ - $ 704,259 $ 182,563 (4,109) (680) (1,643) (6,432) (1,040) 220,150 479,320 (1,643) 697,827 181,523 1,577 - 380 1,957 1,456 - 255,000 - 255,000 265,000 781 32,347 - 33,128 42,441 2,358 287,347 380 290,085 308,897 217,792 191,973 (2,023) 407,742 (127,374) 48,652 110,615 38,066 197,333 324,707 $ 266,444 $ 302,588 $ 36,043 $ 605,075 $ 197,333 165 Cottage Grove ,,,,,, ,ity Meet 166 STATISTICAL SECTION (UNAUDITED) 167 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 I I — 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 1W. 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. 169 City of Cottage Grove Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year 2014 2015 2016 2017 Governmental activities Net investment in capital assets $ 127,260,042 $ 125,562,970 $ 132,834,867 $ 140,298,832 Restricted 6,971,432 8,766,706 7,609,138 2,855,507 Unrestricted 28,277,397 24,285,174 19,091,443 24,845,782 Total governmental activities net position $ 162,508,871 $ 158,614,850 $ 159,535,448 $ 168,000,121 Business -type activities Net investment in capital assets $ 54,432,059 $ 54,202,710 $ 54,063,470 $ 56,060,163 Restricted - - - - Unrestricted 15,896,363 13,980,970 13,628,016 11,528,841 Total business -type activities net position $ 70,328,422 $ 68,183,680 $ 67,691,486 $ 67,589,004 Primary Government Net investment in capital assets $ 181,692,101 $ 179,765,680 $ 186,898,337 $ 196,358,995 Restricted 6,971,432 8,766,706 7,609,138 2,855,507 Unrestricted 44,173,760 38,266,144 32,719,459 36,374,623 Total primary government net position $ 232,837,293 $ 226,798,530 $ 227,226,934 $ 235,589,125 170 Fiscal Year 2018 2019 2020 2021 2022 $ 152,256,234 $ 173,846,256 $ 198,383,059 $ 204,395,412 $ 230,431,271 6,177,599 5,199,682 7,959,917 8,691,283 6,398,608 21,252,792 24,697,514 25,127,751 30,394,564 31,795,908 $ 179,686,625 $ 203,743,452 $ 231,470,727 $ 243,481,259 $ 268,625,787 $ 63,822,257 $ 70,373,534 $ 75,408,885 $ 87,203,382 $ 104,180,227 11,707,720 12,742,735 13,696,597 15,530,934 14,543,822 $ 75,529,977 $ 83,116,269 $ 89,105,482 $ 102,734,316 $ 118,724,049 $ 216,078,491 $ 244,219,790 $ 273,791,944 $ 291,598,794 $ 334,611,498 6,177,599 5,199,682 7,959,917 8,691,283 6,398,608 32,960,512 37,440,249 38,824,348 45,925,498 46,339,730 $ 255,216,602 $ 286,859,721 $ 320,576,209 $ 346,215,575 $ 387,349,836 Table 1 171 City of Cottage Grove Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) Expenses Governmental activities General government Community development Economic development Public safety Public works Culture and recreation Interest on long-term debt Total governmental activities expenses Business -type activities: 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 Community development Economic development Public safety Public works Culture and recreation Operating grants and contributions Capital grants and contributions Total governmental activities program revenues Business -type activities Charges for services Street lights Cottage Grove EMS Water operating Sewer operating Operating grants and contributions Capital grants and contributions Total business -type activities program revenues Total primary government program revenues Fiscal Year 2013 2014 2015 2016 $ 2,270,332 $ 2,229,518 $ 2,346,805 $ 3,450,479 903,180 946,001 1,086,197 1,173,071 61,302 545,646 1,460,114 2,257,548 6,949,225 7,212,998 7,662,393 10,153,726 8,121,230 7,599,182 7,426,045 9,623,335 4,768,181 5,119,093 5,153,844 5,340,558 976,891 808,642 1,029,228 875,642 24,050,341 24,461,080 26,164,626 32,874,359 742,410 867,690 746,794 746,005 1,322,635 1,412, 855 1,507,766 1,688,041 2,341,555 2,216,819 2,438,166 2,370,466 2,278,958 2,428,944 2,448,283 2,727,188 6,685,558 6,926,308 7,141,009 7,531,700 $ 30,735,899 $ 31,387,388 $ 33,305,635 $ 40,406,059 $ 238,721 $ 138,768 $ 117,636 $ 665,193 1,115,203 989,140 1,527,836 1,660,365 7,626 1,771 3,467 5,210 353,130 325,368 394,574 431,862 797,432 1,010,695 971,599 975,532 2,413,744 2,448,968 3,091,072 2,725,288 1,211,506 1,545,268 1,237,805 1,676,805 10,370,972 9,401,775 5,861,631 10,284,047 16,508,334 15,861,753 13,205,620 18,424,302 580,837 658,810 549,005 530,905 1,569,017 1,626,320 1,431,007 1,766,236 2,369,570 1,868,942 1,840,088 1,817, 862 2,175,479 2,151,756 2,310,624 2,291,038 1,051,532 1,783,762 361,762 196,671 7.746.435 8.089.590 6.492.486 6.602.712 $ 24,254,769 $ 23,951,343 $ 19,698,106 $ 25,027,014 172 Fiscal Year 2017 201R 7019 2O?0 2021 2022 $ 2,398,669 $ 2,573,693 $ 2,704,159 $ 5,621,197 $ 2,936,133 $ 3,500,705 1,527,549 1,626,960 1,524,566 1,750,768 2,305,822 2,676,975 740,668 275,927 492,107 583,767 823,036 864,161 9,308,430 9,353,309 9,272,317 6,947,733 11,098,534 13,853,217 8,413,073 8,559,929 10,062,896 13,650,476 15,567,240 10,788,045 5,137,951 5,035,903 5,566,175 5,638,642 6,365,540 9,447,768 962,772 1,037,986 1,286,632 1,141,147 1,236,037 931,466 28,489,112 28,463,707 30,908,852 35,333,730 40,332,342 42,062,337 882,660 991,041 1,073,480 1,152,326 1,262,557 1,099,054 1,571,044 1,605,779 1,750,771 1,843,840 2,091,317 2,302,408 2,789,792 2,980,080 2,904,174 3,039,639 3,428,669 4,053,526 2,879,119 2,881,446 3,139,150 3,463,493 3,532,908 4,159,063 8,122,615 8,458,346 8,867,575 9,499,298 10,315,451 11,614,051 $ 36,611,727 $ 36,922,053 $ 39,776,427 $ 44,833,028 $ 50,647,793 $ 53,676,388 $ 108,808 $ 319,999 $ 196,283 $ 193,964 $ 54,220 $ 89,818 2,240,628 1,758,096 2,424,030 2,648,715 3,439,162 4,316,442 210 210 572,983 400,210 210 1,694,792 363,782 360,609 409,463 764,732 1,689,365 1,391,825 1,099,690 3,932,082 3,106,452 1,095,238 2,304,418 1,854,776 2,682,090 3,376,799 3,094,394 2,578,312 3,798,744 4,253,613 1,408,099 3,710,686 2,231,407 17,726,027 4,648,424 2,278,343 13,805,696 13,899,381 29,783,591 20,144,097 23,828,108 37,949,025 21,709,003 27,357,862 41,818,603 45,551,295 39,762,651 53,828,634 685,560 821,512 825,587 962,958 1,115,511 1,038,210 1,510,101 2,006,555 2,066,733 1,772,704 2,524,990 1,378,154 1,664,292 2,144,652 2,537,654 3,002,920 3,648,447 3,624,478 2,294,714 2,685,608 3,064,703 3,190,196 3,352,994 3,663,853 - 2,350 23,409 101,196 147,694 41,788 441,738 4,488,437 2,700,615 3,842,839 6,359,047 12,272,831 6,596,405 12,149,114 11,218,701 12,872,813 17,148,683 22,019,314 $ 28,305,408 $ 39,506,976 $ 53,037,304 $ 58,424,108 $ 56,911,334 $ 75,847,948 Table 2 173 City of Cottage Grove Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) Net (Expense)/Revenue Governmental activities Business -type activities Total primary government net expense General Revenues and Other Changes in Net Position Governmental activities Property taxes Franchise taxes Aggregate taxes Tax increment collections Grants and contributions not restricted to specific programs Unrestricted investment earnings (loss) Gain on sale of capital assets Transfers Special item -golf course loan forgiveness Total governmental activities Business -type activities Grants and contributions not restricted to specific programs Unrestricted investment earnings (loss) Gain on sale of capital assets Transfers Total business -type activities Total primary government Change in Net Position Governmental activities Business -type activities Total primary government Fiscal Year '1M 2 '1M A IM G '1M A $ (7,542,007) $ (8,599,327) $ (12,959,006) $ (14,450,057) 1,060,877 1,163,282 (648,523) (928,988) $ (6,481,130) $ (7,436,045) $ (13,607,529) $ (15,379,045) $ 12,096,046 $ 12,616,267 $ 13,394,585 $ 13,956,582 540,767 542,689 526,643 516,931 26,135 26,236 37,133 39,748 939,314 711,628 710,541 776,061 29,060 83,682 99,137 126,058 (149,614) 551,910 357,170 285,494 3,997 43,904 (15,157) - 375,266 (720,742) 613,878 (330,219) 1,020,000 - - - 14,880,971 13,855, 574 15,723,930 15,370,655 - - - 7,736 (45,902) 199,179 137,896 96,851 - - - 1,988 (375,266) 720,742 (613,878) 330,219 (421,168) 919,921 (475,982) 436,794 $ 14,459,803 $ 14,775,495 $ 15,247,948 $ 15,807,449 $ 7,338,964 $ 5,256,247 $ 2,764,924 $ 920,598 639,709 2,083,203 (1,124,505) (492,194) $ 7,978,673 $ 7,339,450 $ 1,640,419 $ 428,404 Notes: (1) Community Development is in General (2) Golf Course reclassified to a special revenue fund in 2013. 174 Fiscal Year 2017 2018 2019 2020 2021 2022 $ (6,780,109) $ (1,105,845) $ 10,909,751 $ 10,217,565 $ (569,691) $ 11,766,297 (1,526,210) 3,690,768 2,351,126 3,373,515 6,833,232 10,405,263 $ (8,306,319) $ 2,584,923 $ 13,260,877 $ 13,591,080 $ 6,263,541 $ 22,171,560 $ 14,483,061 $ 15,171,020 $ 15,608,602 $ 16,881,359 $ 17,494,963 $ 18,804,948 560,492 567,875 583,715 596,537 615,326 642,584 28,442 20,791 22,250 22,699 23,467 33,044 1,002,046 769,475 1,085,358 1,321,659 1,427,233 1,750,799 126,670 - 113,435 181,316 83,568 229,638 330,903 519,675 982,812 582,781 (258,924) (2,043,372) - 71,631 49,186 34,579 31,111 29,658 (1,286,832) (4,126,962) (4,973,641) (2,435,861) (6,836,521) (6,069,068) 15,244,782 12,993,505 13,471,717 17,185,069 12,580,223 13,378,231 17,161 - - - - - 119,735 152,466 261,525 179,837 (40,919) (484,598) 1,286,832 4,126,962 4,973,641 2,435,861 6,836,521 6,069,068 1,423,728 4,279,428 5,235,166 2,615,698 6,795,602 5,584,470 $ 16,668,510 $ 17,272,933 $ 18,706,883 $ 19,800,767 $ 19,375,825 $ 18,962,701 $ 8,464,673 $ 11,887,660 $ 24,381,468 $ 27,402,634 $ 12,010,532 $ 25,144,528 (102,482) 7,970,196 7,586,292 5,989,213 13,628,834 15,989,733 $ 8,362,191 $ 19,857,856 $ 31,967,760 $ 33,391,847 $ 25,639,366 $ 41,134,261 Continued Table 2 175 City of Cottage Grove Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) 2013 2014 2015 2016 General Fund Nonspendable Prepaid items $ 13,175 $ 18,019 $ 15,383 $ 11,222 Assigned 1,443,243 1,380,698 1,408,357 1,393,200 Unassigned 7,775,548 8,113,424 8,829,697 9,036,425 Total general fund $ 9,231,966 $ 9,512,141 $ 10,253,437 $ 10,440,847 All other Governmental Funds Nonspendable Prepaid items $ 10,229 $ 8,529 $ 7,343 $ 5,723 Inventory 31,617 24,434 20,696 28,750 Restricted 4,347,850 4,478,812 4,857,365 3,200,692 Committed 416,027 329,841 394,204 731,090 Assigned 22,936,733 25,591,181 26,322,717 23,020,349 Unassigned (10,379,965) (10,958,389) (9,122,473) (10,240,496) Total all other governmental funds $ 17,362,491 $ 19,474,408 $ 22,479,852 $ 16,746,108 Total all funds $ 26,594,457 $ 28,986,549 $ 32,733,289 $ 27,186,955 176 Fiscal Year 2017 2018 2019 2020 2021 2022 $ 8,750 $ 47,532 $ 33,719 $ 27,042 $ 43,228 $ 25,906 1,589,169 1,383,065 1,432,671 1,768,606 1,676,895 592,019 9,233,073 9,814,949 10,224,988 10,479,728 11,384,256 12,696,178 $ 10,830,992 $ 11,245,546 $ 11,691,378 $ 12,275,376 $ 13,104,379 $ 13,314,103 $ 2,827 $ 10,889 $ 14,933 $ 33,818 $ 7,743 $ 6,090 30,625 30,297 25,601 28,265 84,153 105,873 3,306,203 3,515,300 3,876,020 4,969,881 9,649,776 6,811,004 947,486 1,383,402 1,736,590 2,136,969 2,531,015 2,155,025 21,301,562 19,445,494 19,583,736 21,455,576 25,923,365 21,582,225 (5,511,868) (5,804,056) (7,464,138) (9,643,235) (4,875,306) (3,219,445) $ 20,076,835 $ 18,581,326 $ 17,772,742 $ 18,981,274 $ 33,320,746 $ 27,440,772 $ 30,907,827 $ 29,826,872 $ 29,464,120 $ 31,256,650 $ 46,425,125 $ 40,754,875 Table 3 177 City of Cottage Grove Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year 2013 2014 2015 2016 Revenues General property taxes $ 12,081,764 $ 12,687,917 $ 13,465,987 $ 13,957,128 Other taxes 1,513,749 1,292,229 1,274,317 1,332,740 Special assessments 1,575,736 1,326,017 1,499,796 2,004,196 Licenses and permits 860,954 904,400 1,305,442 1,323,680 Direct charges to developers 2,106,723 661,861 307,971 277,860 Intergovernmental 4,642,768 3,932,021 2,415,754 5,642,451 Charges for services 4,023,844 3,572,351 3,808,618 4,061,301 Rent - 435,975 450,428 464,078 Fines and forfeits 188,657 171,317 228,642 236,260 Investment earnings (loss) (173,267) 452,293 262,799 219,963 Interest on interfund loan 47,025 59,066 74,340 52,040 Connection charges 805,261 841,434 318,092 649,489 Park dedication fees 252,386 63,595 9,010 212,865 Miscellaneous 705,409 1,005,867 1,138,274 1,864,861 Total revenues 28,631,009 27,406,343 26,559,470 32,298,912 Expenditures Current General government 2,071,272 2,025,709 2,155,327 3,143,136 Community development 892,699 919,126 1,058,537 1,117,760 Economic development 151,562 541,838 1,456,306 2,236,464 Public safety 6,297,323 6,484,552 6,751,804 7,447,058 Public works 4,271,651 4,306,068 4,344,837 4,133,659 Culture and recreation 3,954,968 4,169,469 4,154,992 4,438,628 Capital outlay 12,274,561 5,028,422 7,036,802 17,201,219 Debt Service Principal retirement 950,000 2,470,000 1,320,000 6,570,000 Capital lease payment 293,953 305,076 316,235 327,432 Interest and fiscal charges 769,129 882,508 912,107 1,023,721 Total expenditures 31,927,118 27,132,768 29,506,947 47,639,077 Excess revenues over (under) expenditures (3,296,109) 273,575 (2,947,477) (15,340,165) Other Financing Sources (Uses) Transfers in 759,446 1,840,995 3,049,657 1,648,258 Transfers out (638,374) (1,213,059) (2,362,952) (1,162,564) Bonds issued 7,345,000 1,405,000 5,700,000 8,935,000 Proceeds from leases - - - - Payment to refunded bond escrow agent - - - - Premium on debt issued 211,507 18,461 254,245 357,684 Discount on debt Issued - - - - Proceeds from sale of capital assets 27,195 67,120 53,267 15,453 Total other financing sources (uses) 7,704,774 2,118,517 6,694,217 9,793,831 Net change in fund balances $ 4,408,665 $ 2,392,092 $ 3,746,740 $ (5,546,334) Debt service as a percentage of noncapital expenditures 10.2% 16.5% 11.3% 26.0% 178 Fiscal Year 2017 2018 2019 2020 2021 2022 $ 14,649,224 $ 15,166,368 $ 15,631,133 $ 16,887,233 $ 17,514,744 $ 18,257,259 1,402,475 1,358,141 1,691,323 1,940,895 2,066,026 2,426,427 2,715,466 2,482,866 4,282,185 6,085,906 8,420,102 864,104 1,922,934 1,773,543 2,277,642 2,480,933 3,181,740 4,386,820 273,200 132,385 299,683 444,907 627,540 26,081 8,077,051 5,283,405 17,716,725 20,635,136 10,662,269 14,947,235 4,140,390 4,903,311 4,988,080 5,062,505 6,969,681 7,326,861 435,688 486,270 474,994 492,206 494,880 710,881 184,942 208,744 220,024 141,380 192,036 178,449 310,579 460,856 924,396 527,309 (269,070) (2,010,736) 52,206 26,474 23,903 21,895 19,395 16,533 2,050,958 2,776,937 1,932,844 2,563,422 5,293,099 4,110,942 526,936 853,659 472,500 1,110,209 2,014,802 1,144,364 1,982,338 2,024,992 1,870,544 1,151,221 1,024,348 2,056,056 2,200,031 2,453,986 2,488,722 5,122,412 2,504,935 3,033,149 1,304,601 1,594,534 1,486,081 1,753,836 2,329,259 2,581,927 695,356 230,615 447,061 539,092 823,036 864,161 7,798,262 8,660,273 8,535,996 8,186,255 10,257,201 10,928,197 3,900,347 4,066,609 4,769,732 6,257,352 6,910,688 6,503,285 4,303,051 4,627,375 5,013,805 4,646,429 5,968,879 6,909,315 22,426,545 20,919,610 34,786,137 28,300,835 17,786,563 22,582,259 1,915,000 3,595,000 2,420,000 2,435,000 3,785,000 2,961,575 900,240 1,123,547 1,253,185 1,352,629 1,344,234 1,121,846 45,443,433 47,271,549 61,200,719 58,593,840 51,709,795 57,485,714 (6,719,046) (9,333,598) (8,394,743) 951,317 6,501,797 (3,044,438) 7,111,644 5,149,453 5,308,513 5,094,561 2,897,844 3,840,551 (6,135,532) (4,649,003) (4,486,763) (4,267,119) (2,265,181) (2,639,290) 9,155,000 7,620,000 6,935,000 7,795,000 - - - - - 38,240 - - - - (3,875,000) 289,321 111,630 239,309 235,748 19,485 20,563 35,932 13,771 3,267 9,687 10,439,918 8,252,643 8,031,991 841,213 8,666,678 (2,625,812) $ 3,720,872 $ (1,080,955) $ (362,752) $ 1,792,530 $ 15,168,475 $ (5,670,250) 12.2% 17.9% 13.9% 11.9% 13.7% 11.6% Table 4 179 City of Cottage Grove Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years Residential Payable Residential Commercial Agricultural Non -homestead Personal Year Property Property Property and Other Property 2022 $ 31,985,984 $ 8,416,020 $ 794,197 $ 4,980,953 $ 621,001 2021 30,539,286 7,416,715 777,431 4,462,625 826,222 2020 28,432,495 6,692,191 744,506 3,955,352 758,254 2019 26,295,544 6,402,547 764,841 3,320,374 775,659 2018 23,982,857 6,113,919 747,876 3,020,198 789,240 2017 22,141,063 5,623,028 785,628 2,740,566 716,347 2016 21,377,754 5,203,657 767,424 2,749,793 678,862 2015 20,730,170 5,093,035 776,575 2,609,305 633,787 2014 18,114,214 5,001,690 761,279 2,207,013 622,578 2013 17,241,606 5,076,716 700,036 1,920,395 612,076 Notes: Taxable property values include both urban and rural properties. (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. Source: Washington County Total Taxable Real and Personal Property Fiscal Disparity Total Adjusted Contribution (Net) Taxable and TIF Value Taxable Assessed Value as a Percentage of Taxable Value Estimated Actual Taxable Market Value Total Direct $ 46,798,155 $ 2,544,552 $ 49,342,707 1.17% $4,226,273,500 37.251 44,022,279 2,852,598 46,874,877 1.17% 3,991,958,100 37.351 40,582,798 2,746,520 43,329,318 1.17% 3,691,869,400 39.182 37,558,965 4,619,334 42,178,299 1.24% 3,407,440,600 38.959 34,654,090 4,094,931 38,749,021 1.24% 3,125,587,600 40.580 32,006,632 3,967,785 35,974,417 1.25% 2,889,152,300 43.010 30,777,490 3,557,397 34,334,887 1.23% 2,790,852,600 43.140 29,842,872 3,544,899 33,387,771 1.23% 2,705,975,400 41.591 26,706,774 2,264,989 28,971,763 1.21% 2,396,493,700 43.812 25,550,829 2,134,831 27,685,660 1.22% 2,277,900,700 45.046 Table 5 181 Year 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 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) Overlapping Rates Total Direct and Total City Washington School Total Overlapping General Debt Service Direct Rate County District (2) Other (4) Overlapping Tax Rate 31.571 5.680 37.251 27.532 33.739 2.196 63.467 100.718 31.895 5.456 37.351 27.435 34.181 2.304 63.920 101.271 33.645 5.537 39.182 28.944 33.904 2.382 65.230 104.412 35.025 3.933 38.958 29.682 34.926 3.994 68.602 107.560 36.509 4.075 40.583 29.983 33.303 4.175 67.461 108.044 40.156 2.856 43.012 30.448 34.309 4.345 69.101 112.113 40.422 2.717 43.139 30.564 36.812 4.568 71.944 115.083 38.886 2.705 41.591 30.186 35.675 4.182 70.043 111.634 40.976 2.836 43.812 32.811 39.169 5.401 77.381 121.193 42.665 2.381 45.046 34.225 41.285 5.637 81.147 126.193 Not all overlapping rates apply to all City of Cottage Grove property owners. City's property tax revenue base includes both urban and rural properties. Rural rate is 70% of urban rate plus debt. (2) Independent School District 833 (4) Includes Metropolitan Transit Commission, Metropolitan Council, and Regional Rail Authority. Source: Washington County 182 City of Cottage Grove Prinipcal Property Taxpayers Current year and nine years ago Net Tax Capacity Taxpayer Value 3M Company $ 714,991 Xcel Energy 587,582 Mars II Inc. 573,430 Renewal by Andersen LLC 359,824 ORP Hinton, LLC 434,182 PHS/Cottage Grove Inc 404,859 Wal-Mart Real Estate Business Trust 294,224 Renewal by Andersen Corporation 291,826 Grove -Rainbow LP 284,524 North Star Sheets LLC 284,524 Menard Inc. Dayton -Hudson Corporation Grove -Rainbow LP Wer Dis LLC Kohl's Illinois Inc and Kohl's Dept Stores Inc Total $ 4,229,966 Source: Washington County 2022 Percentage of Total City Tax Net Tax Capacity Capacity Rank Value Value 1 1.45% $ 600,807 2 1.19% 568,698 3 1.16% 169,544 4 0.73% - 5 0.88% - 6 0.82% 176,591 7 0.60% - 8 0.59% 175,510 9 0.58% - 10 0.58% - - 193,170 - 160,496 - 135,516 - 131,250 - 122,662 9.76% $ 2,434,244 2013 Rank 1 2 6 4 5 3 7 8 9 10 Table 7 Percentage of Total City Tax Capacity Value 2.17% 2.05% 0.61 % 0.00% 0.00% 0.64% 0.70% 0.58% 0.49% 0.47% 0.44% 7.48% 183 City of Cottage Grove Property Tax Levies and Collections Last Ten Fiscal Years Collected within the Taxes Levied for the Fiscal Year Fiscal Year of Levy Percentage Fiscal Net Operating Debt MVHC/ State Aid Total Net of Year Tax Levy (1) Tax Levy Ag Credit (1) Cut Tax Levy Amount Levy 2022 $15,526,411 $ 2,804,000 $ (5,826) $ - $18,324,585 $18,256,754 99.63% 2021 15,033,501 2,576,500 (6,226) - 17,603,775 17,548,413 99.69% 2020 14,557,824 2,397,500 (6,788) - 16,948,536 16,890,861 99.66% 2019 14,100,682 1,590,000 (7,213) - 15,683,469 15,631,548 99.67% 2018 13,700,988 1,535,000 (7,072) - 15,228,916 15,156,690 99.53% 2017 13,798,587 985,000 (8,890) - 14,774,697 14,694,114 99.45% 2016 13,174,084 890,000 (9,707) - 14,054,377 13,991,560 99.55% 2015 12,526,600 875,500 (8,722) - 13,393,378 13,326,911 99.50% 2014 11,873,130 826,000 (5,947) - 12,693,183 12,610,243 99.35% 2013 11,585,100 656,150 (5,354) - 12,235,896 12,114,166 99.01% Notes: (1) This reflects the Final Levy Certification after all adjustments have been made. Total Collections to Date Collections Percentage in Subsequent of Abatements Years Amount Levy $ (8,590) $ - $18,256,754 99.63% (20,718) - 17,588,952 99.92% (40,924) - 16,940,426 99.95% (4,318) - 15,680,137 99.98% 988 - 15,156,690 99.53% 10,688 - 14,694,114 99.45% (6,717) - 13,991,560 99.55% 3,737 - 13,326,911 99.50% 11,112 75,201 12,685,444 99.94% (21,952) 82,537 12,196,703 99.68% Table 8 185 City of Cottage Grove Ratios of Outstanding Debt by Type Last Ten Fiscal Years Governmental Activities General General Obligation Obligation General Special Other Fiscal Tax Increment Obligation Assessments Long -Term Year Bonds(1) Bonds(1) Bonds(1) Leases Debt 2022 $ 565,000 $ 11,825,549 $ 23,703,909 $ 26,665 $ 2,144,060 2021 820,000 14,701,649 27,242,322 - 2,420,259 2020 1,085,456 15,595,093 21,674,357 - 2,686,458 2019 1,363,191 16,323,536 22,941,943 - 2,947,657 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 - 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. I:• Business -Type Activities Other Total Revenue Capital Long -Term Primary Bonds(1) Lease Debt Government 38,265,183 - - - 45,184,230 - - - 41,041,364 - - - 43,576,327 - - - 38,919,104 - - - 34,885,704 - - - 27,436,125 609,856 - - 25,725,523 717,221 - - 21,533,521 824,586 - - 23,014,308 Percentage of Personal Per Income (2) Capita(2) 1.23% 942 1.58% 1,141 1.55% 1,064 1.74% 1,141 1.67% 1,042 1.58% 956 1.30% 761 1.28% 718 1.12% 605 1.25% 650 Table 9 187 � Sc 00 00 ol 00�'T m m l� Sc 00 Ol Ol 00 110 'T M M M_ N U N o 0 0 0 0 0 0 0 0 0 N l� 00 O, O OHO �O If)� ,r N U � Ctcl W O U 4r a M �O Ol N N N� O V1 00 N O 110 'T Ol M l� Ol V1 ct 00 M N O-7T O M M M M M M M N bA 69 ii .O CC Y V1 V1 l� 00 N --i O V1 00 Q F"r a N O 00 �O N 00 cz M 00 O --i 00 M M O Vl M 00 In y v� N y 00 -7T M M M-7T M N M ,7-� O CZ >tj N 69 U Ol Ol M Ol V) 00 Ol cz �+ +' M Oi O Vl 00 ;�? U cz Ol m M ct N 00 l ol�c 0 .fir z H cz Ol � � O O al M 00 r. 00 � Ol � O ,� +-' cz N O N 00 1,0 N 1,0 0, /�, V Y � W cUd N City of Cottage Grove Direct and Overlapping Governmental Activities Debt As of December 31, 2022 Table 11 Percent of Debt Net Debt Applicable Outstanding to City Overlapping City of Cottage Grove Share of Overlapping Debt Washington County $ 108,685,000 6.5868% $ 7,158,864 School Districts ISD No. 200 (Hastings) 68,547,524 12.0208% 8,239,989 ISD No. 833 (South Wash. County) 305,800,000 31.7406% 97,062,602 Metro Council 184,515,000 1.1606% 2,141,481 Total Overlapping 114,602,937 City of Cottage Grove Direct Debt 38,238,518 100.00% 38,238,518 Total Direct and Overlapping Debt: $ 705,786,042 $ 152,841,455 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 thi This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne b 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. Source: City of Cottage Grove Municipal Disclosure Reporting I:• City of Cottage Grove Legal Debt Margin Information Last Ten Fiscal Years Fiscal Year 2013 2014 2015 2016 2017 Debt limit $ 68,337,021 $ 71,894,811 $ 81,179,262 $ 83,725,578 $ 86,674,569 Total net debt applicable to limit 5,355,000 5,085,000 4,805,000 4,660,000 13,240,000 Legal debt margin $ 62,982,021 $ 66,809,811 $ 76,374,262 $ 79,065,578 $ 73,434,569 Total net debt applicable to the limit as a percentage of debt limit 7.84% 7.07% 5.92% 5.57% 15.28% 190 Fiscal Year 2018 2019 2020 2021 2022 $ 93,767,628 $ 102,223,218 $ 110,756,082 $ 119,758,743 $ 126,788,205 12,645,000 15,745,000 15,140,000 14,375,000 13, 585,000 $ 81,122,628 $ 86,478,218 $ 95,616,082 $ 105,383,743 $ 113,203,205 13.49% 15.40% 13.67% 12.00% 10.71% Legal Debt Margin Calculation for Fiscal Year 2022 Taxable Market Value $4,226,273,500 Debt limit (3% of assessed value) 126,788,205 Debt applicable to limit 13,585,000 Legal debt margin $ 113,203,205 Table 12 191 City of Cottage Grove Demographic and Economic Statistics Last Ten Fiscal Years Table 13 Per Capita Fiscal Personal Personal School Unemployment Year Population(1) Income (2) Income (2) Enrollment (3) Rate (4) 2022 41,027 $ 3,148,124,791 $ 76,733 18,558 2.3% 2021 39,605 2,862,372,165 72,273 18,502 3.4% 2020 38,555 2,641,981,375 68,525 18,753 5.7% 2019 38,175 2,500,210,040 65,493 18,554 2.8% 2018 37,341 2,329,396,164 63,035 18,519 2.6% 2017 36,492 2,213,900,353 60,669 18,165 3.2% 2016 36,062 2,105,690,772 58,392 17,794 3.4% 2015 35,814 2,012,741,903 56,200 17,893 3.3% 2014 35,619 1,926,643,820 54,090 17,685 3.8% 2013 35,403 1,843,080,180 52,060 17,671 4.8% Sources: (1) Census 2020 and Metropolitan Council 2013-2019 and 2021-2022 (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. 192 City of Cottage Grove Principal Employers Current year and nine years ago Taxpayer Employees School District 833 (1) 2,828 Renewal by Andersen 1,600 3M Cottage Grove 751 Hy-Vee 700 Up -North Plastics 500 City of Cottage Grove 280 Walmart 278 Van Meter (2) 189 Menards 164 Target 138 Cub Foods Rainbow Foods Total 7,428 2022 2013 Table 14 Percentage Percentage of Total of Total Rank Employment Employees Rank Employment 1 29% 1,245 1 19% 2 16% 330 3 5% 3 8% 750 2 12% 4 7% 0% 5 5% 250 4 4% 6 3% 174 7 3% 7 3% 0% 8 2% 170 8 3% 9 2% 200 6 3% 10 1% 130 9 2% 0% 200 5 3% 0% 99 10 2% 76% 3,548 55% Notes (1) Includes employees for entire district, including those outside the City limits. (2) Previously listed as Werner Electric. Sources: City of Cottage Grove Annual Municipal Disclosure Reporting and Cottage Grove Economic Development Department. 193 City of Cottage Grove Full -Time Equivalent City Government Employees by Function Last Ten Fiscal Years Fiscal Year 2013 2014 2015 2016 2017 2018 2019 General Government Total General Government 23.38 23.40 23.25 25.70 27.60 28.20 29.00 Public Safety Police/Cottage Grove EMS Officers 39.00 40.00 40.00 43.56 46.84 46.84 46.84 Civilians 8.09 8.26 7.56 7.56 7.56 7.56 7.56 Fire/Emergency Management 5.00 7.00 9.00 11.75 15.10 15.10 15.10 Total Public Safety 52.09 55.26 56.56 62.87 69.50 69.50 69.50 Public Works 21.68 23.68 24.08 22.12 23.73 23.49 24.09 Recreation 2.55 2.55 2.55 2.55 2.70 2.70 2.70 Ice Arena 3.65 3.65 3.65 3.55 2.60 2.60 2.60 Water/Sewer 8.18 8.18 8.28 9.28 10.08 10.08 10.08 Storm Sewer 3.54 3.54 3.54 3.54 3.50 3.50 3.50 Golf Course Fund 5.00 5.00 5.00 5.00 5.00 5.00 5.00 Street Light Fund 1.06 1.06 1.06 1.06 1.23 1.23 1.23 Fleet Maintenance 4.04 4.04 4.04 4.04 4.00 4.00 4.00 Total 125.17 130.36 132.01 139.71 149.94 150.30 151.70 Source: City of Cottage Grove Finance Office 194 Fiscal Year Budgeted Full -Time Equivalent Employees as of December 31, 2020 2021 2022 26.00 26.50 27.50 46.64 47.94 47.94 7.56 7.56 7.56 18.00 18.00 18.50 72.20 73.50 74.00 29.70 39.00 39.00 1.95 1.50 1.50 2.85 2.00 2.00 10.00 8.00 8.00 3.50 3.00 3.00 5.00 4.00 4.00 1.50 1.00 1.00 4.00 2.00 2.00 156.70 160.50 162.00 Table 15 195 City of Cottage Grove Operating Indicators by Function/Program Last Ten Years Function/Program 2013 2014 General Government Elections 2 Registered voters as of lam election day 20,780 Number of votes cast 11,166 Voter participation (registered) 53.73% Community Development Inspections Building Permits (New Dwelling Units) 56 77 Code Enforcement Inspections 2,826 1,482 Public Safety Police Crimes - Part I 783 774 Crimes - Part II 1,473 1,434 Total Calls for Service 18,151 18,448 Fire Medical 2,437 2,562 Avg Response Time (minutes) Medical* 6:15 6:19 Avg Response Time (minutes) Fire* 7:25 7:34 Avg Response Time (minutes) Both* 6:22 6:27 *Entire service area Public Works 2015 2016 2 21,594 19,799 84.50% 65 99 1,013 841 719 673 1,419 1,424 20,576 21,331 2,464 2,681 6:13 6:21 7:06 6:54 6:16 6:24 Sq. Yards of Streets Sealcoated 457,275 199,725 118,159 193,249 Miles of Streets New Construction 1.23 1.99 0.56 1.11 Miles of watermain added 2.42 1.84 1.06 1.20 Notes (1) 2006 is estimated amount. (1) Information not available is labeled n/a. Source: Various City of Cottage Grove Departments 2017 255 1,018 767 1,471 20,879 2,790 6:25 7:05 6:28 71,152 1.02 3.64 196 2018 2019 2020 2021 2022 4 1 3 1 2 22,076 22,689 24,444 25,006 25,621 17,369 2,559 22,932 8,352 17,602 75.00% 11.28% 93.81% 33.40% 68.70% 185 284 382 574 350 1,119 803 666 771 597 619 619 616 459 409 1,358 948 961 738 517 22,647 20,375 32,288 28,933 28,077 2,914 2,950 2,995 3,747 3,502 6:25 7:17 6:18 7:30 6:50 7:13 6:08 9:38 9:24 9:43 6:54 7:03 8:18 8:27 7:29 0 0 250,766 0 0 4.82 2.80 2.87 4.94 2.99 4.30 4.52 9.16 6.94 9.50 Table 16 197 City of Cottage Grove Capital Asset Statistics by Function/Program Last Ten Years Fiscal Year Function/Program 2013 2014 2015 2016 2017 2018 Public Works City -owned Lights 2,416 2,481 2,495 2,592 2,682 2,797 Xcel owned Lights 301 301 301 301 301 301 Streets (miles) 158.36 160.35 160.91 162.02 163.04 167.87 Sidewalks/trails (miles) 53.82 57.83 59.56 61.98 64.87 70.06 Parks (acreage) Community Parks 377 377 400 400 400 400 Neighborhood Parks 275 303 275 275 275 275 Recreation facilities 21 21 15 15 15 15 County Parks 571 571 569 569 569 569 State Scientific and Nature Area 238 238 238 238 238 238 Golf Course 219 219 219 219 219 219 Other Open Space 581 581 961 961 961 961 Water Number of Connections 10,573 10,640 10,706 10,789 10,891 11,160 Miles of Water Mains and Laterals 147.08 148.92 149.98 151.18 154.82 159.12 Sanitary Sewer Number of Connections 10,532 10,604 10,670 10,667 10,983 11,256 Miles of Sanitary Sewer Mains and Laterals 129.32 131.11 131.45 132.81 135.42 139.51 Storm Sewer Miles of storm sewers 85.41 87.81 89.52 93.94 98.75 106.39 Source: Various City Departments Fiscal Year 2019 2020 2021 2022 2,898 2,968 3,071 3,153 301 301 301 301 170.67 173.53 178.47 181.46 75.55 81.28 85.97 91.24 400 400 400 408 275 275 280 285 15 15 15 15 569 569 569 569 238 238 238 238 219 219 219 219 969.8 969.8 980 995 11,212 11,513 164.24 175.40 11,521 11,714 142.42 146.87 12,081 12,969 182.34 191.84 12,280 13,170 153.29 157.69 111.18 116.96 122.53 128.06 Table 17 199