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City of Otsego CAFR 2019 (PDF Version)        Comprehensive Annual Financial Report  For the Year Ended December 31, 2019      Norin Landing – Opened 2019   This page has been left blank intentionally. City of Otsego, Minnesota Comprehensive Annual Financial Report For the Year Ended December 31, 2019 Adam Flaherty City Administrator Prepared by: Finance Department Member of the: Government Finance Officers’ Association of the United States and Canada CITY OF OTSEGO, MINNESOTA TABLE OF CONTENTS Page No. INTRODUCTORY SECTION Letter of Transmittal 1 Elected Officials and Administration 8 Organizational Chart 9 Certificate of Achievement 10 FINANCIAL SECTION Independent Auditor's Report 11 Management's Discussion and Analysis 14 Basic Financial Statements Government-Wide Financial Statements Statement of Net Position 28 Statement of Activities 29 Fund Financial Statements Governmental Funds Balance Sheet 30 Reconciliation of the Balance Sheet of the Governmental Funds to the Statement of Net Position 32 Statement of Revenues, Expenditures and Changes in Fund Balances34 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of the Governmental Funds to the Statement of Activities 36 Statement of Revenues, Expenditures and Changes in Fund Balances: Budget-to-Actual General Fund 37 Proprietary Funds Statement of Net Position 38 Statement of Revenues, Expenses and Changes in Net Position 39 Statement of Cash Flows 40 Notes to the Financial Statements 41 Required Supplementary Information Schedule of Employer's Proportionate Share of Net Pension Liability 71 Schedule of Employer's Contributions 72 Notes to Required Supplementary Information 73 Combining and Individual Fund Statements and Schedules Governmental Funds Nonmajor Governmental Funds Combining Balance Sheet 76 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 77 Nonmajor Special Revenue Funds Combining Balance Sheet 80 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 81 Schedule of Revenues, Expenditures and Changes in Fund Balances: Budget-to-Actual Revolving Loans Fund 82 Tax Increment District No. 1 Fund 83 Nonmajor Capital Projects Funds Combining Balance Sheet 86 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 90 Schedule of Revenues, Expenditures and Changes in Fund Balances: Budget-to-Actual General Fund 93 CITY OF OTSEGO, MINNESOTA TABLE OF CONTENTS Debt Service Fund by Account Combining Balance Sheet 98 Combining Schedule of Revenues, Expenditures and Changes in Fund Balances 100 Schedule of Revenues, Expenditures and Changes in Fund Balances: Budget-to-Actual Series 2012A 102 Series 2018A 103 Series 2010D & 2011A 104 Series 2010B 105 Series 2007B 106 Series 2010A 107 STATISTICAL SECTION (UNAUDITED) Financial Trends Net Position by Component 110 Changes in Net Position 112 Governmental Activities Tax Revenue by Source 118 Fund Balances of Governmental Funds 120 Changes in Fund Balances of Governmental Funds 122 Revenue Capacity Estimated Actual Value, Taxable Market Value and Tax Capacity of Taxable Property 124 Tax Capacity of Real Estate & Personal Property 126 Property Tax Rates - Direct and Overlapping Governments 127 Principal Property Taxpayers 128 Property Tax Levies and Collections 129 Debt Capacity Ratios of Outstanding Debt by Type 130 Ratios of General Bonded Debt Outstanding 131 Computation of Direct and Overlapping Governmental Activities Debt 132 Legal Debt Margin Information 134 Pledged Revenue Coverage 136 Demographic and Economic Information Demographic and Economic Statistics 137 Principal Employment Sectors 138 Operating Information Full-Time City Government Positions by Function 139 Operating Indicators by Function 140 Capital Asset Statistics by Function 141 This page has been left blank intentionally. City of Otsego│13400 90th Street NE, Otsego, MN 55330│Tel. (763) 441-4414 Fax (763) 441-9163 May 20, 2020 Honorable Mayor and Members of the City Council City of Otsego Transmitted herewith is the Comprehensive Annual Financial Report of the City of Otsego for the fiscal year ended December 31, 2019. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the management of the City following the policies and procedures specified by the City’s system of internal control. Because the cost of internal controls 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. To the best of our knowledge and belief, the enclosed data is accurate, in all material respects, and is reported in a manner designed to present fairly the financial position and results of operations of the various funds of the City. All disclosures deemed necessary to enable the reader to gain an understanding of the City’s financial activities have been included. Minnesota Statutes require that the financial statements of the City be audited annually by the State Auditor or a Certified Public Accountant selected by the City Council. These financial statements have been audited by BerganKDV (the Auditors). The Auditors expressed an unmodified opinion on the financial statements, and their opinion letter is included as the first component within the financial section of this report. The Auditors have also issued a number of other reports on compliance with Government Auditing Standards and Minnesota Legal Compliance. These reports have been issued under separate cover. Accounting principles generally accepted in the United States of America require that management provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of a Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City’s MD&A can be found immediately following the report of the auditors. 1 City of Otsego│13400 90th Street NE, Otsego, MN 55330│Tel. (763) 441-4414 Fax (763) 441-9163 PROFILE OF THE CITY The first town site in Otsego was originally platted in 1857 in what was once known as the Big Woods, heavily laden with deciduous trees, and interspersed with rivers, ponds, and prairies. The first settlers to the area were of European descent settling the area in 1852. On April 5, 1858, Otsego Township was established. The area remained a township until 1990 when it was incorporated into the City of Otsego to more fully serve its residents and to manage growth. Otsego is located at the confluence of the Mississippi and Crow Rivers approximately thirty miles northwest of Minneapolis. The Mississippi River runs along the northern and eastern borders of the City and the Crow River runs along the southern border in the far eastern part of the City until it enters the Mississippi River. The City is located in the northeast corner of Wright County and covers an area of about 30.5 square miles. The State Demographer’s most recent population estimate was 17,323, compared with 6,389 from the 2000 US Census. Otsego is the fastest growing City in Wright County and outpaces growth in neighboring cities outside Wright County. The City operates under the “Optional Plan A” form of government as defined in Minnesota Statutes. Under this plan, the government of the City is directed by a City Council consisting of an elected mayor and four elected councilmembers at large. The City Council exercises legislative authority and determines all matters of policy. The City Council appoints personnel responsible for the proper administration of all affairs relating to the City. The mayor and councilmembers serve four year terms with two councilmembers elected to four year terms every two years. The mayor is also elected to a four year term. The City provides its residents and businesses a full range of municipal services consisting of the construction & maintenance of highways, streets, and other infrastructure, park facilities, recreational opportunities, and general administrative services. The City services also provide public utilities including water, sanitary sewer and storm water services accounted for in enterprise funds. Police protection has been provided for more than 25 years through an agreement with the Wright County Sheriff’s department which provides 48 hours of service each and every day. Fire suppression and emergency response services are provided through agreements with the neighboring cities of Albertville, Elk River and Rogers. Each agreement has geographical boundaries based upon response times, however; all three of the departments have great relationships and provide for mutual aid whenever the instance warrants. 2 City of Otsego│13400 90th Street NE, Otsego, MN 55330│Tel. (763) 441-4414 Fax (763) 441-9163 Financial planning and control for the City of Otsego are based on the annual Operating Budget and the multi-year Capital Improvement Plan. Under Minnesota Statutes, a preliminary property tax levy must be adopted by the City Council no later than September 30th of each year for the ensuing year’s collection. This establishes a maximum levy that may subsequently be lowered but may not be increased at time of final adoption. A ceiling on the increase of the annual property tax levy is established from time to time by the Minnesota Legislature. Such a limit was not in place for taxes payable 2019 and 2020. Effective establishment of this levy means that a preliminary operating budget must be prepared. The City Administrator, with the assistance of the Finance Director and management staff, prepares such a budget each year and presents it along with the preliminary levy for City Council review. The City Council is required to adopt a final tax levy and annual budget each December for the subsequent year, which begins on January 1. Departments may make transfers of appropriations within their department. However, transfers of budget appropriations between departments needs authorization of the City Administrator. The legal level of budgetary control is at the fund level, so any appropriation transfers between funds needs the approval of the City Council. In addition, a Capital Improvement Plan covering a ten year period is reviewed and revised during the annual budget process. This includes projects for which the City may issue debt and/or assess portions of the cost to adjacent or benefitting property owners. Because there are limited funds available each year and the City does not wish to issue excessive amounts of debt, these projects are reviewed and reprioritized each year. ECONOMIC CONDITION Otsego continues to experience strong residential and commercial growth due to its ideal location. The City is 30 miles from downtown Minneapolis, the center of the Twin Cities metropolitan area and has excellent transportation access with Interstate 94 and State Highway 101. The City maintains a Comprehensive Plan document for land use and development to manage and encourage growth. The residential growth can be expressed with the 300 new residential construction permits issued during 2019. The average number of new residential construction permits through the past five years is 247. The latest estimates from the State Demographer’s office show total households at 5,975 or a growth of 26 percent since 2010. The City is expecting for this trend in residential housing growth to continue into the future as well. There have been a number of builders continuing to develop properties and go through the final platting process. 3 City of Otsego│13400 90th Street NE, Otsego, MN 55330│Tel. (763) 441-4414 Fax (763) 441-9163 The taxable market value of property within the City increased $196 million (11.57 percent) to a total of $1,892,088,300 for taxes payable 2020. According to Wright County, for taxes payable 2020, there was approximately $98 million of value added for new residential and commercial / industrial development. The remaining portion of the growth would be due to market driven factors. The increased taxable value translates into increased tax capacity and has allowed the City to maintain or slightly decrease the property tax rate in seven consecutive years. The City’s tax rate for payable 2020 is 35.099. Wright County is currently working on the 2020 Assessment, for taxes payable 2021 and has informed the City that it was the first City within Wright County to obtain an estimated market value in excess of $2 billion. During 2019, the City approved multiple commercial developments within the Great River Centre district. The first commercial project was for the construction of an office building for a well-known realty company, which opened for business in early 2020. The second commercial project was for the construction of a childcare center that will be licensed for approximately 190 children, with operations expected by fall 2020. Aligned with the City’s Strategic Plan of having diverse housing options, and currently under construction, River Edge Apartments will provide a new housing choice for residents looking to call Otsego home. The first phase of this complex includes 96 market rate apartment units, with one, two- and three-bedroom options, with leasing expected to begin in the summer of 2020. This project also included the construction of commercial mini-storage as an adjacent project. In 2019, Independent School District No. 728 received approval through a voter referendum to construct the first middle school within the City. The new middle school will help serve the educational needs of the rapid residential growth occurring within the City. The City is working closely with School District officials on planning efforts for the school, with construction expected to begin in the fall of 2020. Additional projects that have received City Council approval and are expected to begin construction during 2020 include two multiple family apartment buildings, with 260 units after phased construction and a commercial grocery store, which will include a coffee shop, liquor store and convenience gasoline pumps. The City is committed to efforts in growing the commercial, retail and industrial sectors within the City to provide employment, services and tax base within the community. 4 City of Otsego│13400 90th Street NE, Otsego, MN 55330│Tel. (763) 441-4414 Fax (763) 441-9163 LONG-TERM FINANCIAL PLANNING The City has adopted and annually updates a ten-year Capital Improvement Plan (CIP) to facilitate the growth and maintenance of public infrastructure, community facilities and capital equipment. Projects in the CIP demonstrate the importance of developing long range financial planning strategies to facilitate the growth and prosperity of the City. The process assists with both short and long range financial planning needs by:  Prioritizing capital projects and equipment acquisitions  Estimating resource needs and related cash flows  Identifying adequate and sustainable funding sources MAJOR INITIATIVES With all of the growth that has been experienced in Otsego, the City has identified the need to expand our future planning, and has illustrated this by developing a Strategic Plan. Within this Plan, the City has developed a practical vision of what Otsego should be in three to five years. The following list outlines the City’s strategic directions with certain examples of initiatives that have been accomplished in 2019 or set as goals in 2020.  Positioning for Growth. o Completed Master Plans for Water Utilities and Parks & Recreation o Initiated construction of East Wastewater Facility Biosolids Project o Determine Scope of Services for Comprehensive Plan Update  Empowering the Organization. o Commitment to an annual Strategic Planning process o Establish an Employee Survey to gauge employee engagement o Develop Comprehensive Employee Review Process  Engaging Stakeholders. o Began Marketing of City Owned Property for Development o Initiated Business Outreach Program o Expand Joint Powers Agreement with School District RELEVANT FINANCIAL POLICIES The City Council has approved a fund balance policy that established the minimum fund balance requirements of the General Fund at forty-five percent of the subsequent year’s expenditures. The policy also includes the annual review of the fund balance reserves of all other funds and the criteria for the use of reserves. Reserve balances are reviewed annually as part of the budget/financial planning process and at the time the Capital Improvement Plan is approved by the City Council. 5 City of Otsego│13400 90th Street NE, Otsego, MN 55330│Tel. (763) 441-4414 Fax (763) 441-9163 Financial management staff of the City of Otsego have developed and implemented internal controls designed to protect the City’s assets from loss, abuse, theft or other misappropriation. These controls provide reasonable assurance of the safety of the City’s assets while recognizing that management estimates and judgements as to the cost of such controls are also important to deriving maximum benefit from these controls. Policies relating to investment of City funds, billing and collection of public utility charges, management of long term debt, purchasing, fund balances and general accounting procedures have been developed. In addition, goals and objectives have been established for internal and external financial reporting and for long-term financial planning strategies. FINANCIAL REPORTING AWARD 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 Otsego for its 2018 Comprehensive Annual Financial Report (CAFR). The City first applied for this award in 2012, and has received the award every year since. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. The report must satisfy both accounting principles generally accepted in the United States and applicable federal, state and local legal requirements. A Certificate of Achievement is valid for a period of one year. It is expected that the 2019 report conforms to the Certificate of Achievement program requirements. It will be submitted to the GFOA to determine the City’s eligibility for another Certificate. ACKNOWLEDGEMENTS The preparation of this report would not have been possible without the expertise and dedication of the City’s staff. Further, the City Council’s support to promote and sustain the highest standards of professionalism in the financial management of the City of Otsego are acknowledged and appreciated. Respectfully submitted, Adam Flaherty City Administrator & Finance Director 6 This page has been left blank intentionally. 7 CITY OF OTSEGO, MINNESOTA ELECTED OFFICIALS AND ADMINISTRATION ELECTED OFFICIALS Name Position Term Expires Jessica Stockamp Mayor December 31, 2020 Jason Warehime Council Member December 31, 2020 Corey Tanner Council Member December 31, 2020 Tina Goede Council Member December 31, 2022 Tom Darkenwald Council Member December 31, 2022 ADMINISTRATION Name Position Tami Loff City Clerk Adam Flaherty City Administrator & Finance Director Kevin Lamson Street Operations Manager Ross Demant Parks & Recreation Director Kurt Neidermeier Public Utilities Manager Andrew MacArthur City Attorney Daniel Licht City Planner Ron Wagner City Engineer 8   Organizational Chart  Otsego Residents  City Council  City Administrator  Advisory Commissions    Planning  Parks and Recreation  Public Safety  Heritage Preservation  Public Safety     Police  Fire  Building Inspections  Professional Services     Planning  Engineering  Legal  Administrative Services     Finance  Utility Billing  Information Technology  Customer Service  City Clerk     Elections  Human Resources  Payroll  Public Works     Streets  Vehicle Fleet  City Buildings  Public Utilities    Water  Sanitary Sewer  Storm Water  Parks & Recreation     Parks & Trails  Recreation  Prairie Center  9 10 Independent Auditor's Report Honorable Mayor and Members of the City Council City of Otsego Otsego, Minnesota Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business- type activities, each major fund, and the aggregate remaining fund information of the City of Otsego, Minnesota, as of and for the year ended December 31, 2019, and the related notes to financial statements, which collectively comprise the City's basic financial statements as listed in the Table of Contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 11 Opinions In our opinion, the financial statements referred to in the first paragraph present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Otsego, Minnesota, as of December 31, 2019, and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgeting comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Implementation of GASB 84 As discussed in Note 6 to the financial statements, the City has adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 84, Fiduciary Activities. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, which follows this report letter, and Required Supplementary Information as listed in the Table of Contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by 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. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The introductory section, combining and individual fund financial statements and schedules and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. 12 Other Matters (Continued) Other Information (Continued) The supplementary information contains prior year comparative information taken from the City's 2018 financial statements. We also have previously audited, in accordance with auditing standards generally accepted in the United States of America, the City's basic financial statements for the year ended December 31, 2018, which are not presented with the accompanying financial statements. In our report dated May 29, 2019, we expressed unmodified opinions on the respective financial statements of governmental activities, business type activities, each major fund, and the aggregate remaining fund information. In our opinion, the 2018 supplementary information is fairly stated in all material respects in relation to the basic financial statements for the year ended December 31, 2018, taken as a whole. The introductory section and statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated May 20, 2020, on our consideration of the City of Otsego'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 Otsego's internal control over financial reporting and compliance. St. Cloud, Minnesota May 20, 2020 13 CITY OF OTSEGO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2019 As management of the City of Otsego, Minnesota, (the City), we offer readers of the City's Comprehensive Annual Financial Report (CAFR), this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2019. 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 1-6 of this CAFR. Financial Highlights • The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $100,653,978 (net position). Of this amount, $30,277,331 (unrestricted net position) may be used to meet the City's ongoing obligations to citizens and creditors. • The City's total net position increased by $11,777,766 (13.25%) from the previous year. The net position of the governmental activities increased $4,503,103 (9.81%). The increase is primarily attributable to the investment in public assets and infrastructure by the City and housing developers in the community. This infrastructure consists of streets, trail systems and park additions. The business type activities increased $7,274,663 (16.92%) due to a combination of connection fees to the City's public utility system, and similar to the governmental activities, the investment in public assets and infrastructure. • As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $17,013,766, which is a decrease of $453,329 (2.60%) from the previous year. The single largest change in fund balance occurred within the MSA Construction fund, which decreased $3,205,406 as a result of expenditures for the 85th Street and Maciver Avenue extension project. The Park Development fund had the single largest increase in fund balance, $2,411,410, which will be used for future expansion of the City's park system. Of the total fund balance, the unassigned portion is a deficit of $690,586, which is free from any internal or external constraints upon its use. • The General fund has a fund balance of $4,319,810 at the close of the current fiscal year. During 2019, the fund balance increased $206,143 (5.01%) from the previous year. The primary reason for the increase is that licenses and permits revenue exceeded budgeted expectations by $717,478. In accordance with the City's fund balance policy, a transfer of $971,726 was made to the Capital Improvements fund. That policy indicates that any fund balance exceeding 45% of the subsequent years budget will be transferred, and set aside for future capital expenditures. There is $323,124 (7.48%) of fund balance that is nonspendable, which is a combination of prepaid items and land held for resale. The remaining fund balance is either assigned, $223,740 (5.18%) or is unassigned, $3,772,946 (87.34%). • The City issued $3,525,000 of General Obligation Revenue Refunding bonded debt during the year to refund the 2009A bond issue to take advantage of lower interest rates, resulting in a decrease of future debt service payments. The City's total outstanding bonded debt decreased by $6,240,000 (20.81%) during the current fiscal year. 14 CITY OF OTSEGO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2019 Overview of the Financial Statements The discussion and analysis are intended to serve as an introduction to the City’s basic financial statements. The City's basic financial statements include three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This CAFR 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's finances, in a manner similar to a private-sector business. The statement of net position presents information on all of the City’s assets, liabilities and deferred inflows/outflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the City's overall financial position is stable, improving or deteriorating. The statement of activities presents information showing 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 the 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, special assessments and earned but unused personal time off). Both of the government-wide financial statements distinguish functions of the City 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 include: general government, public safety, public works, culture & recreation, economic development, and interest on long-term debt. The business- type activities of the City include: water utility, sanitary sewer utility and storm water utility. The government-wide financial statements can be found on pages 28 through 29 of this CAFR. 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, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The funds of the City can be divided into two categories: governmental funds and proprietary funds. 15 CITY OF OTSEGO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2019 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 statements. By doing so, readers may better understand the long-term impact of the City's near-term financial decisions. Both the governmental funds balance sheet and governmental funds statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains 23 individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the following: General fund, the Debt Service Fund, the MSA Construction Fund, and the Development & Builder Escrows Fund, which are considered to be major funds. Data from the remaining governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements or schedules, elsewhere in this CAFR. The City adopts an annual appropriated budget for the General Fund, the Debt Service Fund, the Revolving Loan and Tax Increment District No. 1 special revenue funds. A budgetary comparison statement has been provided in the basic financial statements for the General fund. The basic governmental fund financial statements can be found on pages 30 through 37 of this CAFR. Proprietary Funds: Proprietary funds provide similar information to the government-wide financial statements, but in more detail. The City maintains one type of proprietary fund. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its water, sanitary sewer and storm water utilities. All of the City's enterprise funds are considered to be major funds, and separate information is provided for each of them in the basic financial statements. The basic proprietary fund financial statements can be found on pages 38 through 40 of this CAFR. Notes to the Financial Statements: The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 41 through 70 of this CAFR. Other Information: In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information in relation to the City's net pension liability. The schedules can be found on pages 71 through 74 of this CAFR. The combining statements referred to earlier in connection with nonmajor governmental funds are presented immediately following the required supplementary information. Combining statements can be found on pages 76 through 107 of this CAFR. 16 CITY OF OTSEGO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2019 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, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $100,653,978 at the close of the most recent fiscal year. The largest portion of the City's net position ($62,718,978 or 62.31%) reflects its investment in capital assets, which includes: land, infrastructure, buildings, and machinery & equipment, less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Increase Increase 2019 2018 (Decrease) 2019 2018 (Decrease) Current Assets 27,290,747$ 24,502,771$ 2,787,976$ 19,540,834$ 18,726,845$ 813,989$ Capital Assets 38,752,165 33,905,496 4,846,669 48,860,266 46,827,944 2,032,322 Total Assets 66,042,912 58,408,267 7,634,645 68,401,100 65,554,789 2,846,311 Deferred Outflows of Resources 115,522 209,301 (93,779) 29,860 55,334 (25,474) Long-term Liabilities 7,079,876 8,403,225 (1,323,349) 15,442,116 20,170,179 (4,728,063) Other Liabilities 5,245,641 2,219,154 3,026,487 2,679,487 2,387,442 292,045 Total Liabilities 12,325,517 10,622,379 1,703,138 18,121,603 22,557,621 (4,436,018) Deferred Inflows of Resources 3,443,301 2,108,676 1,334,625 44,995 62,803 (17,808) Net Investment in Capital Assets 31,373,524 25,330,507 6,043,017 31,344,999 24,701,888 6,643,111 Restricted 7,658,124 6,929,688 728,436 - - - Unrestricted 11,357,968 13,626,318 (2,268,350) 18,919,363 18,287,811 631,552 Total Net Position 50,389,616$ 45,886,513$ 4,503,103$ 50,264,362$ 42,989,699$ 7,274,663$ At the end of the current fiscal year, the City is able to report positive balances in all three categories of net position, both for the government as a whole, as well as for its separate governmental and business-type activities. A portion of the City’s net position (7.61%) represents resources that are subject to external restrictions on how they may be used. The unrestricted portion (30.08%) may be used to meet the City's ongoing obligations to citizens and creditors. The governmental activities experienced significant increases in both current and capital assets. The increase of current assets is due to increased cash and investment balances. A portion of this increase is the result of accumulating resources for future projects; however a significant portion is the result of the implementation of GASB 84, Fiduciary Activities.This standard change results in an additional $3,070,621 in governmental activities current assets. The increase in capital assets can be explained most notably by the 85th Street and Maciver Avenue Improvement project. The increase in liabilities also relates to the implementation of GASB 84, Fiduciary Activities. This standard change results in an additional $3,070,621 in governmental activities other liabilities compared to the previous year. The business-type activities had a large fluctuation in long-term liabilities and both current and capital assets. During 2019, the City made principal payments in the amount of $8,580,000, which is offset with the issuance of $3,525,000 in bonded debt. The City saw continued growth in residential development , which generates revenues such as water and sewer access fees which are currently in cash assets to be used for future debt service or infrastructure costs. CITY OF OTSEGO - SUMMARY OF NET POSITION Governmental Activities Business-type Activities 17 CITY OF OTSEGO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2019 Increase Increase 2019 2018 (Decrease) 2019 2018 (Decrease) Program Revenues Charges for Services 2,564,173$ 2,838,830$ (274,657)$ 4,098,150$ 3,792,748$ 305,402$ Operating Grants and Contributions 319,332 328,410 (9,078) - - - Capital Grants and Contributions 3,361,497 5,800,583 (2,439,086) 6,543,224 5,500,794 1,042,430 General Revenues Property Taxes 6,681,989 6,078,341 603,648 30,000 26,000 4,000 Tax Increment 97,419 96,938 481 Franchise Taxes 137,510 139,161 (1,651) - - - Grants and Contributions not Restricted to Specific Programs 162,120 191,570 (29,450) - - - Unrestricted Investment Earnings 754,079 263,784 490,295 748,799 260,833 487,966 Other General Revenues 47,362 37,563 9,799 - 7,884 (7,884) Total Revenues 14,125,481 15,775,180 (1,649,699) 11,420,173 9,588,259 1,831,914 Expenses General Government 1,383,291 1,228,607 154,684 - - - Public Safety 2,411,751 2,207,699 204,052 - - - Public Works 3,387,481 3,348,200 39,281 - - - Culture and Recreation 1,177,721 1,095,151 82,570 - - - Economic Development 741,705 223,175 518,530 - - - Interest on Long-term Debt 212,402 276,423 (64,021) - - - Water Utility - - - 1,729,938 1,468,485 261,453 Sanitary Sewer Utility - - - 2,600,436 2,561,070 39,366 Storm Water Utility - - - 123,163 71,040 52,123 Total Expenses 9,314,351 8,379,255 935,096 4,453,537 4,100,595 352,942 Increase (Decrease) Before Transfers 4,811,130 7,395,925 (2,584,795) 6,966,636 5,487,664 1,478,972 Transfers 212,869 207,840 5,029 (212,869) (207,840) (5,029) Transfers - Capital Assets (520,896) (1,525,768) 1,004,872 520,896 1,525,768 (1,004,872) Change in Net Position 4,503,103 6,077,997 (1,574,894) 7,274,663 6,805,592 469,071 Net Position - January 1 45,886,513 39,808,516 6,077,997 42,989,699 36,184,107 6,805,592 Net Position - December 31 50,389,616$ 45,886,513$ 4,503,103$ 50,264,362$ 42,989,699$ 7,274,663$ CITY OF OTSEGO - CHANGES IN NET POSITION Governmental Activities Business-type Activities 18 CITY OF OTSEGO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2019 Governmental Activities Governmental activities resulted in an increase of the City's net position by $4,503,103. Key elements of this change is as follows: • Revenues decreased $1,649,699 (10.46%) from the previous year; with the most notable decrease within capital grants and contributions which are the result of intergovernmental revenues, specifcally MSA construction funding decreasing. Notable increases occurred within property taxes and investment earnings. • Expenses increased $935,096 (11.16%) from the previous year. The most notable increase was within the economic development function which in part was due to an incentive payment for development within Waterfront East. The other notable change occurred within the public safety function, and represents increased costs for police and fire protection. Below are specific graphs which provide comparisons of the governmental activities revenues and expenses: Charges for Services 18.15% Operating Grants 2.26% Capital Grants 23.80% Property Taxes 47.30% Tax Increment 0.69% Franchise Taxes 0.97% Unrestricted Grants &  Contributions 1.15% Investment Earnings 5.34% Sales of Capital Assets 0.34% Revenues by Source - 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 General Government Public Safety Public Works Culture & Recreation Economic Development Interest on Long- Term Debt Function Expenses vs. Program Revenues Expense Program Revenue 19 CITY OF OTSEGO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2019 Business-type Activities Business-type activities resulted in an increase of net position by $7,274,663. Key elements of this change are as follows: • Increases were noted in both revenues, $1,831,914 (19.11%) and expenses, $352,942 (8.61%) from the prior year. • Capital Grants and Contributions totaled $6,543,224 and represents a combination of utility system connection fees and capital asset contributions from developers. • Revenues exceeded expenses by $6,966,636 primarily the result of the continued residential growth within the City. This housing growth generates connection fees to the public utility system, which is used to retire debt service and for future capital costs. Below are specific graphs which provide comparisons of the business-type activities revenues and expenses: - 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 Water Utility Sanitary Sewer Utility Storm Water Utility Function Expenses vs. Program Revenues Expense Program Revenue Charges for Services 35.89% Capital Grants 57.29% Property Taxes 0.26% Investment Earnings 6.56% Revenues by Source 20 CITY OF OTSEGO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2019 Financial Analysis of the Government's Funds Governmental Funds: The focus of the City'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's financing requirements. In particular, unassigned fund balance may serve as useful measure of a government's net resources available at the end of the fiscal year. At the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $17,013,766, which is a decrease of $453,329 (2.60%) from the previous year. The unassigned fund balance, which is not subject to internal or external constraints upon its use, currently has a deficit balance of $690,586. Major Funds The General fund is the primary operating fund of the City. At the end of the current fiscal year, total fund balance is $4,319,810, an increase of $206,143 (5.01%). The increase in fund balance was largely the result of revenues exceeding expenditures by $1,005,969, made possible with favorable budget variances in both revenues and expenditures. In accordance with the City's fund balance policy, a transfer out of $971,726 was made to the Capital Improvements fund for future capital needs. As a meausre of the General fund's liquidity, it may be useful to compare both unassigned and total fund balance, to total fund expenditures. The unassigned fund balance, which is $3,772,946, represents 66.34% of the current year General fund expenditures. Total General fund balance represents 75.96% of those same expenditures. The Debt Service fund has a total fund balance of $1,547,850 at the end of the year, a decrease of $175,557 (10.19%) from the previous year. The City retired $1,185,000 of principal on the outstanding bonded debt during 2019. The MSA Construction fund has a deficit fund balance of $4,305,681 and is the result of ongoing capital expenditures for the 85th Street and Maciver Avenue street extension project, which totaled $3,928,747 during the year. The fund balance deficit will be reduced over the next five years, as municipal-state-aid for construction revenue will reimburse the City for the project costs. The Development & Builder Escrows fund has no fund balance at the end of the current fiscal year. In previous years, this fund had been reported as a Fiduciary fund; however, with the implementation of GASB 84 Fiduciary Activities this fund is now reported as a governmental fund. The revenues and expenditures in this fund correlate with the level of development activity within the City. Proprietary Funds: The City's proprietary funds provide the same type of information presented as business-type activities found in the government-wide financial statements, but in more detail. The enterprise funds have a combined ending net position of $50,264,362, an increase of $7,274,663 (16.92%). There are two components to net position in the enterprise funds, unrestricted ($18,919,363 or 37.64%) and net investment in capital assets ($31,344,999 or 62.36%). As a measure of liquidity, the unrestricted net position amounts to 515.81% of the current year operating expenses. Other factors concerning the finances of these funds have already been addressed in the discussion of the City's business-type activities. 21 CITY OF OTSEGO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2019 Below is a graph with comparative amounts for each fund balance component for fiscal years 2017, 2018 and 2019: The City's Unassigned fund balance is currently a deficit of $690,586, and represents negative 4.06% of total governmental fund balance. Th City also has four other components of fund balance, including Nonspendable (1.90%), Restricted (30.72%), Committed (2.58%) and Assigned (68.86%). • Nonspendable fund balance represents the amount of assets the City has invested in prepaid items and land assets held for resale. This fund balance component can largely fluctuate with the timing of certain payments (e.g. insurance premiums) and the net realizable value of the land assets being held by the City for future resale. • The City's restricted fund balance is the result of external constraints placed upon it. The source of that constraint includes debt service park development, and tax increments. The debt service component has decreased slightly over the past three years as the bonds payable balance has declined, while the park dedication component has increased due to revenues exceeding expenditures. • The committed fund balances are within the City's special revenue funds for Street Lighting and Revolving Loans. This fund balance component has stayed consistent over the past three years. • Assigned fund balances are primarily associated with the City's capital project funds. The fund balance in this component has been increasing each of the past three years, and is the result of the City accumulating resources for future capital improvement projects and capital equipment purchases. A more detailed breakdown of the fund balance components can be found in the basic financial statements and accompanying financial statement footnotes. (2,000,000) - 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 Nonspendable Restricted Committed Assigned Unassigned Governmental Fund Balance Components 2017 2018 2019 22 CITY OF OTSEGO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2019 General Fund Budgetary Highlights During the year, there were no amendments to the General fund budget. The budgeted revenues and expenditures resulted in no change in fund balance. Actual results for the fiscal year were an increase of $206,143 (5.01%). The key elements of this change are as follows: • Actual revenues exceeded the budget by $1,052,303 (18.66%). The largest revenue variance was provided by licenses and permits, which were over budget by $717,478. The City projected 175 new residential construction permits when preparing the budget with actuals results being 300 new residential construction permits. Another signicant variance was within charges for services, which exceeded the budget by $148,051, again being driven by conservative development budgets. • Actual expenditures were less than budget by $125,566 (2.16%). The largest variance was within the general government function and is mostly the result of an unused contingency budget within the City Council department. The Streets Maintenance department was the only other significant variance, which was under budget in personal services and charges for services. • Transfers in resulted in no variance from the budget. These transfers are from the Water and Sanitary Sewer utility funds, and are annual contributions to help manage the property tax levy. • Transfers out were not budgeted for during 2019. The actual transfer out of $971,726 is in accordance with the City's fund balance policy. That policy outlines that any General fund balance exceeding 45% of the subsequent year's expenditure budget will be transferred, and assigned for future capital items. The ending unassigned fund balance of the General fund ($3,772,946) represents 59.77% of the adopted 2020 budget. 23 CITY OF OTSEGO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2019 Capital Asset and Debt Administration Capital Assets: The City's investment in capital assets for its governmental and business-type activities at the end of the current year, amounts to $87,612,431 (net of accumulated depreciation). This investment in capital assets includes: land, buildings, street and utility infrastructure, parks equipment, trails, machinery and equipment and construction in progress. The City's investment in capital assets increased $6,878,991 (8.52%) from the previous year. Major capital asset events during the current year included the following: • The City updated its machinery & equipment fleet with several new pieces of equipment. The majority of these acquisitions were replacements of existing assets, with one new asset being a roll-off hot box used for asphalt patching projects throughout the City. • The City purchased property for a future fire station in accordance with the Response Time Improvement & Fire Service Model. • The City received contributed infrastructure from housing developers. These assets include: streets, trail systems, and public utility infrastructure. These assets are paid for and installed by the developer, are inspected by the City Engineer to City standards, and are later accepted by the City, who is responsible for future maintenance and replacement. • The City initiated the East Wastewater Treatment Facility Biosolids project that removes the long-term liquid storage from the facility by further processing the material into a dry matter, which can be removed from the site to landfills or distributed as fertilizer. • The 85th Street and Maciver Avenue road extensions project was nearly completed during the year. The new road extensions created approximately two miles of new roadway and pedestrian trails. This project provided an important east-west travel route. • The City initiated construction of Lift Station No. 7, which is located just east of County Road 137 and Maciver Avenue. This lift station is the permanent replacement of a temporary lift station nearby. The new lift station will serve existing development, the newly platted Magnolia Landing development, and hundreds of acres of future development in the area. • The City completed construction of Norin Landing, which is a community feature located on the shores of the Mississippi River. The City received a grant from the Minnesota DNR to assist with construction of a boat landing, gazebo, natural trails and landscaping. Increase Increase 2019 2018 (Decrease) 2019 2018 (Decrease) Land 3,840,461$ 2,694,199$ 1,146,262$ 631,739$ 631,739$ -$ Construction in Progress 6,038,505 3,125,257 2,913,248 3,771,825 1,830,806 1,941,019 Buildings and Improvements 4,479,102 4,578,217 (99,115) 161,431 172,129 (10,698) Land Improvements 3,778,467 3,403,746 374,721 - - - Machinery and Equipment 1,964,075 1,718,933 245,142 1,051,475 1,054,905 (3,430) Infrastructure 18,651,555 18,385,144 266,411 43,243,796 43,138,365 105,431 38,752,165$ 33,905,496$ 4,846,669$ 48,860,266$ 46,827,944$ 2,032,322$ Additional information on the City’s capital assets can be found in Note 3 (B) on pages 53 through 54 of this CAFR. CITY OF OTSEGO - CAPITAL ASSETS (net of depreciation) Governmental Activities Business-type Activities 24 CITY OF OTSEGO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2019 Long-Term Debt: At the end of the current year, the City had outstanding long-term bonded debt of $23,750,000. Increase Increase 2019 2018 (Decrease) 2019 2018 (Decrease) General Obligation Bonds 7,310,000$ 8,455,000$ (1,145,000)$ -$ -$ -$ Equipment Certificates - 40,000 (40,000) - - - General Obligation Revenue Bonds - - - 16,440,000 21,495,000 (5,055,000) Unamortized Premiums 68,641 79,989 (11,348) 1,075,267 631,056 444,211 Compensated Absences 91,889 87,373 4,516 17,875 18,412 (537) Total 7,470,530$ 8,662,362$ (1,191,832)$ 17,533,142$ 22,144,468$ (4,611,326)$ Revenue streams for the repayment of the outstanding debt liabilities include: special assessments upon benefitting properties, fees from new connections to the water and sanitary sewer utility systems, and property tax levies. Should any of these sources of revenues prove inadequate, all outstanding bonds are backed by the full faith and credit of the City. During 2019, the City issued $3,525,000 of General Obligation Revenue Refunding Bonds to achieve interest savings from lower interest rates. The refunding resulted in a decrease of future debt service payments in the amount of $573,108, with a net present value cash flow savings in the amount of $525,022. The City made scheduled principal payments of $9,765,000, which provided a net reduction of $6,240,000 (20.81%) in the total outstanding long-term debt. The City's bond rating is AA+, with a stable outlook from Standard & Poor's Rating Services. 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 is $50,876,523, with $3,399,451 in debt outstanding that is applicable to the limit. Additional information on the City’s long-term debt can be found in Note 3 (E) on pages 57 through 59 of this CAFR. CITY OF OTSEGO - OUTSTANDING DEBT Governmental Activities Business-type Activities 25 CITY OF OTSEGO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2019 Economic Factors and Next Year's Budget and Rates The following economic factors were identified by the City as potentially having an impact on the financial future of the City, and were considered in preparation of the 2020 operating budgets and capital improvement plans. • The Taxable Market Value of real estate and personal property within the City increased 11.57% for taxes payable 2020. This increase is driven by both new construction within the City as well as market driven valuation increases. • New construction in the residential sector continues within the City. During 2019, the City issued 300 building permits for new residential construction. The City also continues to see builders final platting new developments for future years construction. • The City is initiating a project at the City's East Wastewater Treatment Facility. The project, first identified in the City's Master Sewer Plan, will provide for not only expansion of the facility, but will change the way the City completes the biosolids processing within sanitary sewer operations. Construction of this facility will begin in the spring of 2020, with estimated completion in the spring of 2021. • In 2019, Independent School District No. 728 received approval through a voter referendum to construct the first middle-school within the City of Otsego. The new middle-school will help serve the rapid residential growth within the City. The City is working with School District officials on planning efforts for the school, with construction expected to begin in the fall of 2020. • In 2019, the City worked closely with Wright County on planning efforts for two significant road infrastructure projects, expected to begin in the spring of 2020. CSAH 38 and CSAH 19 improvements are a joint effort between the City, Wright County and the City of Albertville. CSAH 39 improvements are a joint effort between the City and the County. Both improvement projects will address safety issues, rising traffic counts, public and private utility improvements, and the addition of pedestrian trail facilities. • The City is expecting an increase in multi-family and commercial development within the City for the spring of 2020. The City Council has approved, or is in the process of approving two multi-family residential apartment buildings and three commercial developments. • The City continues to expand upon and make improvements to the Capital Improvement Plan (CIP). The adopted CIP for 2020 plans for capital purchasing ten years into the future. These long range planning efforts assure that the City is always looking into the future and that the City is adequately planning from a financial resources standpoint. Requests for Information This financial report is designed to provide a general overview of the City of Otsego'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 the: Finance Director, 13400 90th Street NE, Otsego, MN 55330. 26 This page has been left blank intentionally. 27 CITY OF OTSEGO, MINNESOTA STATEMENT OF NET POSITION DECEMBER 31, 2019 Governmental Business-Type Activities Activities Total ASSETS Cash and Investments 23,589,157$ 18,434,057$ 42,023,214$ Receivables Interest 123,014 - 123,014 Accounts 11,110 498,321 509,431 Taxes 108,852 - 108,852 Special Assessments 3,132,318 535,834 3,668,152 Due from Other Governments 3,172 28,997 32,169 Land Held for Resale 202,200 - 202,200 Prepaid Items 120,924 43,625 164,549 Capital Assets Nondepreciable 9,878,966 4,403,564 14,282,530 Depreciable, Net of Accumulated Depreciation 28,873,199 44,456,702 73,329,901 Total Assets 66,042,912 68,401,100 134,444,012 DEFERRED OUTFLOWS OF RESOURCES General Employees Retirement Plan Pension Resources 115,522 29,860 145,382 Total Deferred Outflows of Resources 115,522 29,860 145,382 LIABILITIES Accounts Payable 758,624 279,676 1,038,300 Deposits Payable 3,034,675 - 3,034,675 Due to Other Governments 22,515 9,797 32,312 Accrued Salaries Payable 8,277 3,356 11,633 Accrued Interest Payable 73,172 48,083 121,255 Compensated Absences Payable Due Within One Year 18,378 3,575 21,953 Due in More than One Year 73,511 14,300 87,811 Bonds Payable Due Within One Year 1,330,000 2,335,000 3,665,000 Due in More than One Year 6,048,641 15,180,267 21,228,908 General Employees Retirement Plan Net Pension Payable 957,724 247,549 1,205,273 Total Liabilities 12,325,517 18,121,603 30,447,120 DEFERRED INFLOWS OF RESOURCES Grants for Subsequent Years 3,269,225 - 3,269,225 General Employees Retirement Plan Pension Resources 174,076 44,995 219,071 Total Deferred Inflows of Resources 3,443,301 44,995 3,488,296 NET POSITION Net Investment in Capital Assets 31,373,524 31,344,999 62,718,523 Restricted Debt Service 3,979,190 - 3,979,190 Tax Increment Financing 42,166 - 42,166 Park Development 3,636,768 - 3,636,768 Unrestricted 11,357,968 18,919,363 30,277,331 Total Net Position 50,389,616$ 50,264,362$ 100,653,978$ The notes to the financial statements are an integral part of this statement. 28 CITY OF OTSEGO, MINNESOTA STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2019 Program Revenues Net (Expense) Revenue and Changes in Net Position Operating Capital Charges For Grants and Grants and Governmental Business-Type FUNCTIONS/PROGRAMS Expenses Services Contributions Contributions Activities Activities Total Government Activities General Government 1,383,291$ 639,077$ -$ -$ (744,214)$ -$ (744,214)$ Public Safety 2,411,751 1,726,367 76,197 - (609,187) - (609,187) Public Works 3,387,481 127,176 217,949 2,093,798 (948,558) - (948,558) Culture and Recreation 1,177,721 71,553 25,186 1,267,699 186,717 - 186,717 Economic Development 741,705 - - - (741,705) - (741,705) Interest on Long-Term Debt 212,402 - - - (212,402) - (212,402) Total Government Activities 9,314,351 2,564,173 319,332 3,361,497 (3,069,349) - (3,069,349) Business-Type Activities Water Utility 1,729,938 1,734,090 - 1,647,402 - 1,651,554 1,651,554 Sanitary Sewer Utility 2,600,436 2,254,688 - 4,425,411 - 4,079,663 4,079,663 Storm Water Utility 123,163 109,372 - 470,411 - 456,620 456,620 Total Business-Type Activities 4,453,537 4,098,150 - 6,543,224 - 6,187,837 6,187,837 Total 13,767,888$ 6,662,323$ 319,332$ 9,904,721$ (3,069,349) 6,187,837 3,118,488 General Revenues Property Taxes 6,681,989 30,000 6,711,989 Tax Increments 97,419 - 97,419 Franchise Taxes 137,510 - 137,510 Grants and Contributions Not Restricted to Specific Programs 162,120 - 162,120 Unrestricted Investment Earnings 754,079 748,799 1,502,878 Gain on Disposal of Capital Assets 47,362 - 47,362 Transfers 212,869 (212,869) - Transfers - Capital Assets (520,896) 520,896 - Total General Revenues and Transfers 7,572,452 1,086,826 8,659,278 Change in Net Position 4,503,103 7,274,663 11,777,766 Net Position - January 1 45,886,513 42,989,699 88,876,212 Net Position - December 31 50,389,616$ 50,264,362$ 100,653,978$ The notes to the financial statements are an integral part of this statement. 29 CITY OF OTSEGO, MINNESOTA BALANCE SHEET GOVERNMENTAL FUNDS DECEMBER 31, 2019 Debt General Service ASSETS Cash and Investments 3,933,569$ 1,548,060$ Receivables Interest 123,014 - Accounts 8,935 - Taxes Current 56,317 - Delinquent 52,535 - Special Assessments Current - 684 Deferred 4,100 2,503,867 Delinquent 1,444 645 Due from Other Governments 3,172 - Due from Other Funds 2,867 - Land Held for Resale 202,200 - Prepaid Items 120,924 - Total Assets 4,509,077 4,053,256 LIABILITIES Accounts Payable 100,396 894 Accrued Salaries Payable 8,277 - Deposits Payable - - Due to Other Governments 22,515 - Due to Other Funds - - Total Liabilities 131,188 894 DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Property Taxes 52,535 - Unavailable Revenue - Special Assessments 5,544 2,504,512 Grants for Subsequent Years - - Total Deferred Inflows of Resources 58,079 2,504,512 FUND BALANCES Nonspendable 323,124 - Restricted - 1,547,850 Committed - - Assigned 223,740 - Unassigned 3,772,946 - Total Fund Balances (Deficits) 4,319,810 1,547,850 Total Liabilities, Deferred Inflows of Resources and Fund Balances (Deficits) 4,509,077$ 4,053,256$ The notes to the financial statements are an integral part of this statement. 30 Development Other MSA & Builder Nonmajor Total Construction Escrows Governmental Governmental -$ 3,070,621$ 15,036,907$ 23,589,157$ - - - 123,014 - - 2,175 11,110 - - - 56,317 - - - 52,535 - - 504 1,188 - - 617,313 3,125,280 - - 3,761 5,850 - - - 3,172 - - 717,227 720,094 - - - 202,200 - - - 120,924 - 3,070,621 16,377,887 28,010,841 388,783 35,946 232,605 758,624 - - - 8,277 - 3,034,675 - 3,034,675 - - - 22,515 647,673 - 72,421 720,094 1,036,456 3,070,621 305,026 4,544,185 - - - 52,535 - - 621,074 3,131,130 3,269,225 - - 3,269,225 3,269,225 - 621,074 6,452,890 - - - 323,124 - - 3,678,934 5,226,784 - - 438,676 438,676 - - 11,492,028 11,715,768 (4,305,681) - (157,851) (690,586) (4,305,681) - 15,451,787 17,013,766 -$ 3,070,621$ 16,377,887$ 28,010,841$ 31 CITY OF OTSEGO, MINNESOTA RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION DECEMBER 31, 2019 Fund Balances - Governmental Funds 17,013,766$ Amounts reported for the governmental activities within the statement of net position are different because: Capital assets used in governmental activities are not financial resources, and therefore, are not reported as assets in governmental funds. Cost of Capital Assets 53,255,192 Accumulated Depreciation (14,503,027) Long-term liabilities, including bonds payable, are not due and payable in the current period, and therefore, are not reported as liabilities in governmental funds. Bonds Payable (7,310,000) Unamortized Premium on Bonds Payable (68,641) Accrued Interest Payable (73,172) Compensated Absences Payable (91,889) GERF Pension Payable (957,724) Some receivables are not available soon enough to pay for the current period's expenditures, and therefore, are unavailable in governmental funds. Delinquent Property Taxes Receivable 52,535 Special Assessments Receivable 3,131,130 Deferred resources from pensions reported in governmental activities are not financial resources and are not payable in the current period, therefore are not reported in governmental funds. GERF Pension Deferred Outflows of Resources 115,522 GERF Pension Deferred Inflows of Resources (174,076) Total Net Position - Governmental Activities 50,389,616$ The notes to the financial statements are an integral part of this statement. 32 This page has been left blank intentionally. 33 CITY OF OTSEGO, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (DEFICITS) GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2019 Debt General Service REVENUES Property Taxes 4,192,198$ 734,293$ Tax Increments - - Franchise Taxes 137,510 - Licenses and Permits 1,699,879 - Intergovernmental 88,328 - Charges for Services 310,871 - Special Assessments 5,703 467,086 Fines and Forfeitures 26,488 - Investment Earnings (net) 155,709 186 Miscellaneous 76,173 - Total Revenues 6,692,859 1,201,565 EXPENDITURES Current General Government 1,208,058 - Public Safety 2,379,440 - Public Works 1,240,227 - Culture and Recreation 710,406 - Economic Development 114,141 - Capital Outlay General Government 19,507 - Public Safety - - Public Works 10,491 - Culture and Recreation 4,620 - Economic Development - - Debt Service Principal - 1,185,000 Interest - 230,217 Fiscal Agent Fees - 2,874 Total Expenditures 5,686,890 1,418,091 Excess (Deficiency) of Revenues Over (Under) Expenditures 1,005,969 (216,526) OTHER FINANCING SOURCES (USES) Transfers In 171,900 40,969 Sales of Capital Assets - - Transfers Out (971,726) - Total Other Financing Sources (Uses) (799,826) 40,969 Net Change in Fund Balance 206,143 (175,557) Fund Balance (Deficit) - January 1 4,113,667 1,723,407 Fund Balance (Deficit) - December 31 4,319,810$ 1,547,850$ The notes to the financial statements are an integral part of this statement. 34 Development Other MSA & Builder Nonmajor Total Construction Escrows Governmental Governmental -$ -$ 1,735,816$ 6,662,307$ - - 97,419 97,419 - - - 137,510 - - - 1,699,879 653,845 - 1,059,241 1,801,414 - 517,051 1,302,620 2,130,542 - - 113,320 586,109 - - - 26,488 39,496 - 558,688 754,079 30,000 - 35,360 141,533 723,341 517,051 4,902,464 14,037,280 - 105,120 - 1,313,178 - - - 2,379,440 - 411,931 31,800 1,683,958 - - - 710,406 - - 151,357 265,498 - - 42,666 62,173 - - 1,100,640 1,100,640 3,928,747 - 1,184,248 5,123,486 - - 234,159 238,779 - - 476,207 476,207 - - - 1,185,000 - - - 230,217 - - - 2,874 3,928,747 517,051 3,221,077 14,771,856 (3,205,406) - 1,681,387 (734,576) - - 1,061,726 1,274,595 - - 68,378 68,378 - - (90,000) (1,061,726) - - 1,040,104 281,247 (3,205,406) - 2,721,491 (453,329) (1,100,275) - 12,730,296 17,467,095 (4,305,681)$ -$ 15,451,787$ 17,013,766$ 35 CITY OF OTSEGO, MINNESOTA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (DEFICITS) OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2019 Total Net Change in Fund Balances - Governmental Funds (453,329)$ Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives as depreciation. Capital Outlays 5,840,369 Depreciation Expense (1,539,349) Assets Contributed by Developers 1,087,561 Contributions of capital assets to the proprietary funds decrease net position in the statement of activities, but do not appear in the governmental funds because they are not financial resources.(520,896) In the statement of activities, only the gain on the sale of capital assets is reported. However, in the governmental funds, the proceeds from the sale increase financial resources. Thus the change in net position differs from the change in fund balance by the cost of the capital assets sold.(21,016) The repayment of principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Principal Repayments 1,185,000 Interest on long-term debt in the statement of activities differs from the amount reported in the governmental funds because interest is recognized as an expenditure in the funds when it is due, and thus requires the use of current financial resources. In the statement of activities; however, interest expense is recognized as the interest accrues, regardless of when it is due.20,689 Certain revenues are recognized as soon as they are earned. Under the modified accrual basis of accounting, certain revenues cannot be recognized until they are available to liquidate liabilities of the current period. Property Taxes 19,682 Special Assessments (437,982) Intergovernmental (628,422) In the statement of activities, personnel expenses are recognized as they are accrued, however these expenses do not consume current financial resources, and under the modified accrual basis of accounting, are not reported in the governmental funds until they are due. Compensated Absences (4,516) GERF Pension (44,688) Change in Net Position - Governmental Activities 4,503,103$ The notes to the financial statements are an integral part of this statement. 36 CITY OF OTSEGO, MINNESOTA GENERAL FUND - STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2019 Variance with Final Budget - Budgeted Amounts Actual Over Original Final Amounts (Under) REVENUES Property Taxes 4,190,235$ 4,190,235$ 4,192,198$ 1,963$ Franchise Taxes 140,000 140,000 137,510 (2,490) Licenses and Permits 982,401 982,401 1,699,879 717,478 Intergovernmental 70,800 70,800 88,328 17,528 Charges for Services 162,820 162,820 310,871 148,051 Special Assessments 5,300 5,300 5,703 403 Fines and Forfeitures 24,000 24,000 26,488 2,488 Investment Earnings (net) 65,000 65,000 155,709 90,709 Miscellaneous - - 76,173 76,173 Total Revenues 5,640,556 5,640,556 6,692,859 1,052,303 EXPENDITURES Current General Government 1,309,861 1,309,861 1,208,058 (101,803) Public Safety 2,374,426 2,374,426 2,379,440 5,014 Public Works 1,288,089 1,288,089 1,240,227 (47,862) Culture and Recreation 703,920 703,920 710,406 6,486 Economic Development 114,260 114,260 114,141 (119) Capital Outlay General Government 9,100 9,100 19,507 10,407 Public Works 9,800 9,800 10,491 691 Culture and Recreation 3,000 3,000 4,620 1,620 Total Expenditures 5,812,456 5,812,456 5,686,890 (125,566) Excess (Deficiency) of Revenues Over (Under) Expenditures (171,900) (171,900) 1,005,969 1,177,869 OTHER FINANCING SOURCES (USES) Transfers In 171,900 171,900 171,900 - Transfers Out - - (971,726) (971,726) Total Other Financing Sources (Uses)171,900 171,900 (799,826) (971,726) Net Change in Fund Balance - - 206,143 206,143 Fund Balance - January 1 4,113,667 4,113,667 4,113,667 - Fund Balance - December 31 4,113,667$ 4,113,667$ 4,319,810$ 206,143$ The notes to the financial statements are an integral part of this statement. 37 CITY OF OTSEGO, MINNESOTA STATEMENT OF NET POSITION PROPRIETARY FUNDS DECEMBER 31, 2019 Sanitary Storm Water Sewer Water Total Utility Utility Utility Enterprise ASSETS Current Assets Cash and Cash Equivalents 8,277,578$ 9,823,772$ 332,707$ 18,434,057$ Receivables Accounts 163,440 326,087 8,794 498,321 Special Assessments Current - - 249 249 Delinquent 2,402 - 490 2,892 Due from Other Governments 10,000 18,997 - 28,997 Prepaid Items 10,251 33,374 - 43,625 Total Current Assets 8,463,671 10,202,230 342,240 19,008,141 Noncurrent Assets Special Assessments Deferred 220,781 270,271 41,641 532,693 Capital Assets Land 98,222 533,517 - 631,739 Buildings and Building Improvements 109,096 68,508 - 177,604 Machinery and Equipment 430,948 1,060,322 - 1,491,270 Infrastructure 22,020,656 36,197,591 2,690,638 60,908,885 Construction in Progress 207,740 1,688,805 1,875,280 3,771,825 Total Capital Assets 22,866,662 39,548,743 4,565,918 66,981,323 Less: Accumulated Depreciation (6,271,756) (11,568,553) (280,748) (18,121,057) Net Capital Assets 16,594,906 27,980,190 4,285,170 48,860,266 Total Noncurrent Assets 16,815,687 28,250,461 4,326,811 49,392,959 Total Assets 25,279,358 38,452,691 4,669,051 68,401,100 DEFERRED OUTFLOWS OF RESOURCES General Employees Retirement Plan Pension Resources 7,465 22,395 - 29,860 LIABILITIES Current Liabilities Accounts Payable 12,304 267,318 54 279,676 Due to Other Governments 9,797 - - 9,797 Accrued Salaries Payable 839 2,517 - 3,356 Accrued Interest Payable 17,310 30,773 - 48,083 Bonds Payable 840,600 1,494,400 - 2,335,000 Compensated Absences Payable 894 2,681 - 3,575 Total Current Liabilities 881,744 1,797,689 54 2,679,487 Noncurrent Liabilities Bonds Payable (net)5,464,896 9,715,371 - 15,180,267 Compensated Absences Payable 3,575 10,725 - 14,300 General Employees Retirement Plan Net Pension Payable 61,887 185,662 - 247,549 Total Noncurrent Liabilities 5,530,358 9,911,758 - 15,442,116 Total Liabilities 6,412,102 11,709,447 54 18,121,603 DEFERRED INFLOWS OF RESOURCES General Employees Retirement Plan Pension Resources 11,249 33,746 - 44,995 NET POSITION Net Investment in Capital Assets 10,289,410 16,770,419 4,285,170 31,344,999 Unrestricted 8,574,062 9,961,474 383,827 18,919,363 Total Net Position 18,863,472$ 26,731,893$ 4,668,997$ 50,264,362$ The notes to the financial statements are an integral part of this statement. 38 CITY OF OTSEGO, MINNESOTA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31, 2019 Sanitary Storm Water Sewer Water Total Utility Utility Utility Enterprise OPERATING REVENUES Charges for Services 1,626,076$ 2,246,688$ 109,372$ 3,982,136$ OPERATING EXPENSES Personal Services 118,877 356,633 25,748 501,258 Supplies 278,790 190,388 16,512 485,690 Insurance 10,204 34,711 - 44,915 Utilities 85,252 225,323 - 310,575 Services and Other Charges 360,960 302,300 22,935 686,195 Depreciation 592,967 988,308 57,968 1,639,243 Total Operating Expenses 1,447,050 2,097,663 123,163 3,667,876 Operating Income (Loss) 179,026 149,025 (13,791) 314,260 NONOPERATING REVENUES (EXPENSES) Antenna Rental 79,076 - - 79,076 Property Taxes - - 30,000 30,000 Investment Earnings (net) 325,632 411,903 11,264 748,799 Miscellaneous Revenue 28,938 8,000 - 36,938 Interest and Fiscal Agent Fees (282,888) (502,773) - (785,661) Total Nonoperating Revenues (Expenses) 150,758 (82,870) 41,264 109,152 Income Before Capital Contributions and Transfers 329,784 66,155 27,473 423,412 Connection Fees 1,181,077 3,749,611 - 4,930,688 Capital Contributions - Developer Assets 466,325 675,800 470,411 1,612,536 Capital Contributions - Governmental Funds 3,582 11 517,303 520,896 Transfers Out (51,169) (161,700) - (212,869) Change in Net Position 1,929,599 4,329,877 1,015,187 7,274,663 Net Position - January 1 16,933,873 22,402,016 3,653,810 42,989,699 Net Position - December 31 18,863,472$ 26,731,893$ 4,668,997$ 50,264,362$ The notes to the financial statements are an integral part of this statement. 39 CITY OF OTSEGO, MINNESOTA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31, 2019 Sanitary Storm Water Sewer Water Total Utility Utility Utility Enterprise CASH FLOWS FROM OPERATING ACTIVITIES Receipts from Customers and Users 1,637,432$ 2,241,806$ 111,123$ 3,990,361$ Other Operating Receipts 98,014 8,000 - 106,014 Payments to Suppliers (734,046) (747,040) (41,493) (1,522,579) Payments to Employees (117,251) (351,754) (25,748) (494,753) Net Cash Flows Provided by Operating Activities 884,149 1,151,012 43,882 2,079,043 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Property Taxes - - 30,000 30,000 Principal Paid on Revenue Bonds (1,631,486) (2,900,420) - (4,531,906) Interest Paid on Revenue Bonds (317,961) (565,126) - (883,087) Transfers Out (51,169) (161,700) - (212,869) Net Cash Flows Provided (Used) by Noncapital Financing Activities (2,000,616) (3,627,246) 30,000 (5,597,862) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and Construction of Capital Assets (144,145) (1,205,108) - (1,349,253) Connection Fees 1,204,956 3,804,504 - 5,009,460 Net Cash Flows Provided by Capital and Related Financing Activities 1,060,811 2,599,396 - 3,660,207 CASH FLOWS FROM INVESTING ACTIVITIES Interest on Investments 325,632 411,903 11,264 748,799 Net Increase in Cash and Cash Equivalents 269,976 535,065 85,146 890,187 Cash and Cash Equivalents - January 1 8,007,602 9,288,707 247,561 17,543,870 Cash and Cash Equivalents - December 31 8,277,578$ 9,823,772$ 332,707$ 18,434,057$ RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES Operating Income (Loss) 179,026$ 149,025$ (13,791)$ 314,260$ Adjustments to Reconcile Operating Income (Loss) to Net Cash Flows Provided by Operating Activities: Depreciation 592,967 988,308 57,968 1,639,243 GERF Pension Activity 1,455 4,366 - 5,821 Other Income Related to Operations 108,014 8,000 - 116,014 (Increase) Decrease in Assets & Deferred Outflows of Resources: Accounts Receivable 10,939 (4,089) 8 6,858 Special Assessments 417 - 1,743 2,160 Due from Other Governments (10,000) (793) - (10,793) Prepaid Items (132) (667) - (799) Increase (Decrease) in Liabilities & Deferred Inflows of Resources Accounts Payable (7,250) 6,349 (2,046) (2,947) Due to Other Governments 8,542 - - 8,542 Accrued Salaries Payable 305 916 - 1,221 Compensated Absences Payable (134) (403) - (537) Net Cash Flows Provided by Operating Activities 884,149$ 1,151,012$ 43,882$ 2,079,043$ NONCASH FINANCING ACTIVITIES Amortization of Premium on Bonds Payable 28,398$ 50,485$ -$ 78,883$ Acquisition of Capital Assets on Account 1,443$ 221,626$ -$ 223,069$ Contribution of Capital Assets - Developer 466,325$ 675,800$ 470,411$ 1,612,536$ Contribution of Capital Assets - Governmental Funds 3,582$ 11$ 517,303$ 520,896$ The notes to the financial statements are an integral part of this statement. 40 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. REPORTING ENTITY The City of Otsego, Minnesota (the City) was incorporated in 1990 after being an established township since 1858. The City operates under the "Optional Plan A" form of government, as defined in Minnesota statutes. The governing body of the City (City Council) consists of an elected Mayor, and four elected Council members, all of which are elected at-large and serve four year staggered terms. The City Council exercises legislative authority and determines all matters of policy. The financial statements of the City have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), as applied to governmental units by the Governmental Accounting Standards Board (GASB). The City includes all funds, organizations, institutions, agencies, departments, boards, and offices that are not legally separate from the City. Component units are legally separate organizations for which the elected officials of the City are financially accountable and are included within the basic financial statements of the City because of the significance of their operational or financial relationships with the City. The City is considered financially accountable for a component unit if it appoints a voting majority of the organization's governing body and is able to impose its will on the organization by significantly influencing the programs, projects, activities, or level of services performed or provided by the organization, or there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the City. Blended component units, although legally separate, are, in substance, part of the government’s operations. A blended component unit is reported as if it were a fund of the City throughout the year. It is included at both the government-wide and fund financial reporting levels. A description of the City’s blended component unit follows: The City of Otsego Economic Development Authority (EDA) – The EDA is a legal entity separate from the City. Although legally separate, the EDA is reported as if it were part of the primary government because the Board of Commissioners is made up of the Mayor and four Council members and the City has operational responsibility over the EDA. It is this criterion that results in the EDA being reported as a blended component unit within the primary government, although there is currently no financial activity for the EDA. Separate financial statements would not be prepared for the EDA, even if there was financial activity. 41 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 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 non-fiduciary activities of the City and its component units. 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 segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or business-type activity and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or business-type activity. Taxes and other items not included among program revenues are reported instead as general revenues . Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. 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 financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes and special assessments are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting . Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, compensated absences, as well as expenditures related to claims and judgements, are recorded only when payment is due. Property taxes, special assessments, intergovernmental revenues, charges for services and interest associated with the current fiscal year are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal year. Only the portion of special assessments receivable due within the current fiscal year 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. 42 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 The City reports the following major governmental funds: General Fund - This is the City's primary operating fund, and accounts for all of the general financial resources of the City, except those required to be accounted for in another fund. Most of the current day-to-day operations of the City are financed from this fund. Debt Service Fund - This fund is used to account for the collection of property taxes, special assessments and other resources which are used to repay the principal and interest on debt issued for various improvements in the City. Municipal State-Aid for Construction Fund - This fund was established to account for the State allotment of construction aid. The source of the State funding is provided for through collection of gasoline taxes. The funds accumulated are used on transportation related construction projects. Development and Builder Escrows Fund - This fund was established to receipt funds and to account for the expenditure of such funds, for costs associated within residential, commercial and industrial developments in the City. The City reports the following major enterprise funds: Water Utility Fund - This fund accounts for the operations of the public water utility system. The resources accumulated are primarily from system user charges and system connection fees. The accumulated funds are then used to pay for the operational costs of pumping and distributing water to the system customers. The fund also accumulates resources to finance certain capital improvements and to pay the debt service associated with the water utility. Sanitary Sewer Utility Fund - This fund accounts for the operations of the public sewer utility system. The resources accumulated are primarily from system user charges and system connection fees. The accumulated funds are then used to pay for the operational costs of collection and treatment of sewage from the system. The fund also accumulates resources to finance certain capital improvements and to pay the debt service associated with the sewer utility. Storm Water Utility Fund - This fund accounts for the operations of the storm water collection system. The resources accumulated are primarily from system user charges and property taxes. The accumulated funds are then used to pay for the operational costs of collection and treatment of surface water runoff that does not require treatment. 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. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. 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 revenues of the enterprise funds are charges to customers for sales and services. 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 revenue and expenses. 43 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 D. DEPOSITS AND INVESTMENTS The City's cash and cash equivalents are considered to be cash on hand, demand deposits and investments with a maturity of three months or less when from the date of acquisition. All of the deposits and investments allocated to the proprietary funds are considered to meet this criteria. Cash balances from all funds are pooled and invested, to the extent available, in certificates of deposit and other authorized investments. Earnings from such investments are allocated on the basis of applicable participation by each of the funds. Minnesota statute §118A.04 governs the investment of public funds and outlines the allowable investment types. The City's investment policy is more restrictive than statute, and authorizes the City to invest in the following: a] Securities which are direct obligations or are guaranteed or insured issues of the United States, its agencies, its instrumentalities, or organizations created by an act of Congress. b] Shares of investment companies registered under the Federal Securities Act of 1940, and received the highest credit rating and is rated in one of the two highest categories by at least one nationally recognized statistical rating agency. c] Obligations of any state or local government with taxing powers rated "A" for general obligations or with a rating of "AA" or better for revenue backed obligations, with the ratings being provided by a national bond rating service. d] Commercial paper issued by a United States corporation or their Canadian subsidiaries that is rated in the highest quality by at least two nationally recognized rating agencies. e] Time deposits that are fully insured by the Federal Deposit Insurance Corporation. Certain investments for the City are reported at fair value as disclosed in Note 3 (A). The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. In accordance with Governmental Accounting Standards Board (GASB) Statement No. 79, the Minnesota Municipal Investment Pool (4M) securities are valued at amortized cost, which approximates fair value. There are no restrictions or limitations on withdrawals from the 4M Liquid Asset Fund. 44 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 E. RECEIVABLES AND PAYABLES Accounts Receivable Receivables include amounts billed for services provided by the City before year-end. Receivables within the enterprise funds do include unbilled charges for services provided from the middle of December to the end of the year, as the City bills for those services mid-month. The City currently has not established an allowance for doubtful accounts for either trade or utility charge receivables. The City annually certifies unpaid trade and utility charge receivable to Wright County for collection in the following year, and is the primary factor in reporting the receivables at a gross amount, rather than net of allowance. Property Taxes The City Council annually adopts a property tax levy and certifies it to Wright County in December. The County allocates this levy across taxable properties in the City based on valuations assessed in the prior year. These taxes become an enforceable lien against the property on January 1st, and are recorded as receivables by the City as of that date. Tax statements are generated and mailed by the County to the respective taxpayers, with half of the total due on May 15th and the second half due on October 15th. The County is also the collecting agency, and remits the amounts collected to the City with primary settlements in June and December, and a minor settlement in January. Property taxes that are unpaid as of December 31st, are then classified as delinquent. Delinquent taxes receivable include the past six years of uncollected taxes and are fully offset by a deferred inflow of resources for those collections not received within 60 days of year-end in the governmental fund financial statements. Special Assessments Special assessments represent the financing for public improvements paid for by benefiting property owners. These assessments are recorded as receivables upon certification to the County. Special assessments have been offset by a deferred inflow of resources for those collections not received within 60 days after year end in the governmental fund financial statements. Interfund Receivables and Payables During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. Short-term interfund loans are classified as “due to/from other funds.” All short-term interfund receivables and payables at December 31, 2019 are planned to be eliminated in 2020. Long-term interfund loans are classified as “advances to/from other funds.” Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances". F. 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. Prepaid items are reported using the consumption method and recorded as expenditures/expenses at the time of consumption rather than when purchased. G. ASSETS HELD FOR RESALE Assets held for resale represent various parcels of land that are currently owned by the City with the intent to sell in the future to create economic development activity within the City. The assets are reported at their net realizable value in the General fund. During the year ended December 31, 2019, management has reviewed the reported values of the assets. 45 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 H. CAPITAL ASSETS Capital assets, which include property, plant, equipment, infrastructure assets (e.g., roads, bridges, sidewalks, and similar items) and intangible assets such as easements and computer software, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements and the proprietary fund financial statements. Capital assets are defined by the City as assets with an initial, individual cost in excess of the amounts in the table below and with an estimated useful life in excess of three years. All land assets are recorded by the City with no assigned cost threshold. 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. Infrastructure $ 100,000 Buildings and Building Improvements 50,000 Land Improvements 25,000 Machinery and Equipment 5,000 The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed . For the year ended December 31, 2019 no interest was capitalized in connection with construction in progress. Capital assets of the City, are depreciated using the straight line method over the following estimated useful lives: Infrastructure 25 - 40 years Buildings and Building Improvements 10 - 40 years Land Improvements 5 - 20 years Machinery and Equipment 3 - 15 years I. DEFERRED OUTFLOWS OF RESOURCES In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City presents deferred outflows of resources on the Statement of Net Position for deferred outflows of resources related to pensions for various estimate differences that will be amortized and recognized over future years. J. COMPENSATED ABSENCES It is the City's policy to permit employees to accumulate earned but unused personal time-off (PTO) benefits. All PTO pay is accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental fund financial statements only if they have matured, for example, as a result of an employee retirement or resignation. The General fund is typically used to liquidate the compensated absences payable for governmental activities. 46 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 K. 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 and discounts are amortized over the life of the bonds using the straight line method. Bonds payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. L. PENSIONS For purposes of measuring the net pension liability, deferred outflows of resources, deferred inflows of resources, and pension expense, information about the fiduciary net position of the Public Employees Retirement Association (PERA) and additions to or 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. The General fund is typically used to liquidate the net pension liability for governmental activities. The Water Utility and Sanitary Sewer Utility funds would be used to liquidate the net pension liability for business-type activities. M. POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS In June 2015, the Governmental Accounting Standards Board (GASB) issued Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. The primary objective of this Statement was to improve accounting and financial reporting for postemployment benefits other than pensions (OPEB). The City has no plans that would result in an OPEB liability and, therefore, the City anticipates it will not incur any future explicit or implicit OPEB costs for its employees, and therefore, no liability will be recorded. N. DEFERRED INFLOWS OF RESOURCES In addition to liabilities, statements of financial position or balance sheets will sometimes report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of net position that applies to future periods and so will not be recognized as an inflow of resources (revenue) until that time. The City has two types of items which qualify for reporting in this category. One item, unavailable revenue, which arises only under a modified accrual basis of accounting, therefore, is reported only in the governmental funds Balance Sheet. The governmental funds report unavailable revenue from sources such as: property taxes and special assessments not collected within 60 days of year-end. The governmental funds also report deferred inflows of grants for subsequent years due to timing requirements not being met at year-end. These amounts are deferred and recognized as an inflow of resources in the period the amounts become available. The second item presented by the City are deferred inflows of resources on the Statement of Net Position for deferred inflows of resources related to pensions for various estimate differences that will be amortized and recognized over future years. 47 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 O. FUND EQUITY Fund equity in the fund financial statements is classified as fund balance for governmental funds and net position for proprietary funds. Fund equity in the government-wide financial statements is classified as net position for both governmental and business-type activities. Fund Balance – In the fund financial statements, governmental funds report fund balance in classifications that disclose restraints for which amounts in those funds can be spent. These classifications are as follows: Nonspendable – consists of amounts that are not in spendable form or are required to be maintained intact. Restricted – consists of amounts related to externally imposed constraints established by creditors, grantors or contributors; or constraints imposed by state statutory provisions. Committed – consists of internally imposed constraints. These constraints are imposed by formal action (resolution) of the City Council, which is the highest level of decision making authority. Assigned – consists of internally imposed constraints. These constraints reflect the specific purpose for which it is the City’s intended use. These constraints are established by the City Council or, pursuant to council resolution, the City Administrator or the Finance Director. Unassigned – is the residual classification for the General fund and also reflects negative residual amounts in other funds. When committed, assigned, or unassigned resources are available for an allowable use, it is the City’s policy to use resources in the following order; 1) committed, 2) assigned, and 3) unassigned. The City has formally adopted a fund balance policy for the General Fund. The policy establishes a year-end target fund balance amount of 45% of the next year’s operating budget for cash flow needs. Net Position – Net position represents the difference between assets, deferred outflows of resources, liabilities and deferred inflows of resources. Net position can be displayed in the three following classifications: Net Investment in Capital Assets – consists of capital assets, net of accumulated depreciation, and further reduced by the outstanding balance of any long-term debt used to build or acquire the respective capital assets. Restricted – reported when there are limitations of use through external restrictions imposed by creditors, grantors, or laws and regulations of other governments. Unrestricted – all remaining net position is reported in this classification. When both restricted and unrestricted net position are available for an allowable use, it is the government’s policy to use restricted resources first, then unrestricted resources as they are needed. 48 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 P. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP), requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ from such estimates. Q. BUDGETARY INFORMATION An annual budget is adopted on a basis consistent with accounting principles generally accepted in the United States of America (GAAP) for the General fund, the Debt Service fund, and the Revolving Loan and Tax Increment District No. 1 special revenue funds. All annual appropriations lapse at year-end. The City does not use encumbrance accounting. In June of each year, General fund departments submit requests for appropriations to the City Administrator so that a budget may be prepared. The requested budget appropriations are presented and reviewed with the City Council. The proposed General fund budget and preliminary property tax levy must be certified to Wright County prior to September 30. The City Council holds public hearings and a final budget is adopted in early December, with the final property tax levy required to be certified to Wright County prior to the end of December. The appropriated budget is prepared by fund and department. The City's department heads are authorized to make transfers of budgeted appropriations within a department. Any transfers of appropriations between a department needs authorization of the City Administrator. The legal level of budgetary control is at the fund level, so any appropriations transfers between funds needs needs the approval of the City Council. There were no transfers of budgeted appropriations or budget amendments during the year. NOTE 2 STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. DEFICIT FUND EQUITY Deficit fund equity exists at December 31, 2019 in the following funds: Major Governmental Funds: Capital Project Funds MSA Construction 4,305,681$ Nonmajor Governmental Funds: Special Revenue Funds Tax Increment District No. 3 1,634 Tax Increment District No. 4 1,233 Capital Project Funds Kadler Avenue Improvements 154,984 The deficits are being funded through internal borrowing. The MSA Construction fund deficit will be repaid with State-Aid funding from 2020 through 2024, which has been advanced to the City for the 85th Street and Maciver Avenue street extension project. The Kadler Avenue Improvements fund deficit will be repaid with project funding sources such as grant monies and reimbursements from an industrial developer. The Tax Increment District No. 3 fund deficit will be repaid with future collections of tax increment, which is expected to begin generating in 2020. The Tax Increment District No. 4 fund deficit will be repaid with future collections of tax increment, which is expected to begin generating in 2021. 49 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 NOTE 3 DETAILED NOTES ON ALL FUNDS A. DEPOSITS AND INVESTMENTS In accordance with Minnesota Statutes, the City maintains deposits at only those depository banks authorized by the City Council. All such depositories are members of the Federal Reserve System. Minnesota Statutes require that all City deposits with financial institutions be protected by federal deposit insurance, corporate surety bonds or collateral. The market value of collateral pledged must equal 110% of the deposits not covered by insurance or bonds. Minnesota Statutes require that all securities pledged as collateral be placed in safekeeping in a restricted account at the Federal Reserve Bank, or in an account at a trust department of a commercial bank or other financial institution that is not owned or controlled by the financial institution furnishing the collateral. At year-end, the City's carrying amount of deposits was $456,208, and a bank balance of $1,287,294. Custodial credit risk for the City's deposits would arise in the event of a bank failure, where the City's deposits may not be returned to it. As of year-end, the City's bank balance was not exposed to custodial credit risk because it was insured and fully collateralized with securities held by the pledging financial institution's trust department or agent in the City's name. As of December 31, 2019 the City had the following investments: Fair Value < 1 1 - 3 3 - 5 Negotiable Certificates of Deposit 18,906,088$ 3,719,805$ 7,993,070$ 7,193,213$ U.S. Government Agency Securities 10,493,213 3,156,518 4,426,937 2,909,758 Municipal Bonds 5,209,848 1,681,770 3,217,386 310,692 External Investment Pool 5,855,201 5,855,201 - - Brokered Money Market Accounts 1,102,056 1,102,056 - - Total 41,566,406$ 15,515,350$ 15,637,393$ 10,413,663$ The external investment pool and brokered money market investments are valued at amortized cost. All of the remaining City investments have recurring fair value measurements using a matrix pricing model (level 2 inputs). Investment Maturities (In Years) Investment Type 50 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 As of December 31, 2019, the City's investments in U.S. Government Agency Securities and Municipal Bonds carried the following ratings as well as their respective concentration percentage when compared to the total investment portfolio. An indication of "NR" in the ratings below mean that the respective rating organization has not provided a rating on the respective investment. Moody's S & P Fair Portfolio Rating Rating Value Concentration % U.S. Government Agency Securities Federal Farm Credit Bank (FFCB) Aaa AA+ 3,043,166$ 7.32% Federal Home Loan Bank (FHLB) Aaa AA+ 4,378,491 10.53% Federal Home Loan Mortgage Corporation (FHLMC) Aaa AA+ 1,252,454 3.01% Federal National Mortgage Association (FNMA) Aaa AA+ 1,819,102 4.38% Total 10,493,213$ 25.24% None of the U.S. Government Agency Securities investments are individually over 5% of the total investment portfolio. Municipal Bonds Lake County School District, Illinois Aa2 AA+ 680,000$ 1.64% Lincoln Consolidated School District, Michigan NR AA 500,630 1.20% City of Portsmouth, Virginia Aa2 AA 501,140 1.21% Swift County, Minnesota NR AA- 325,315 0.78% City of Oklahoma City, Oklahoma Aaa AAA 507,410 1.22% State of California Aa3 AA- 498,515 1.20% Pinckney School District, Michigan NR AA 175,438 0.42% Milan School District, Michigan NR AA 506,591 1.22% State of Connecticut A1 A 497,335 1.20% City of Kaukauna, Wisconsin NR AA- 203,472 0.49% Milwaukee County, Wisconsin Aa2 AA 503,310 1.21% City of Bloomington, Minnesota NR AAA 159,253 0.38% City of Minneapolis, Minnesota NR AAA 151,439 0.36% Total 5,209,848$ 12.53% The following is a summary of total deposits and investments as of December 31, 2019 and presented in the basic financial statements in the Statement of Net Position: Deposits 456,208$ Investments 41,566,406 Petty Cash and Change Funds 600 Total 42,023,214$ Investment Type 51 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 Interest Rate Risk – This is the risk that the market values of the securities in the City's investment portfolio would decrease due to changes in market interest rates. The City identifies interest rate risk within the second and fourth objectives of the City's investment policy, which are liquidity and return on investment. The City attempts to limit its exposure to interest rate risk by keeping the investment portfolio sufficiently liquid to meet cash flow requirements, while still attempting to obtain a reasonable return on investment. The City also addresses interest rate risk by attempting to create proportions in the maturities of the City's investment portfolio which places longer term investments higher on the yield curve than those shorter term investments. Credit Risk – This is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Minnesota Statutes limits allowable investments to those that are in the top two ratings issued by nationally recognized statistical rating organizations. The City's investment policy also addresses credit risk by further limiting investments to the list provided within Note 1-D. Concentration of Credit Risk – This is the risk of loss attributed to the magnitude of the City's investment in any single issuer. The first objective of the City's investment policy is safety. To obtain this objective, diversification is to be considered in the type of investment, maturity and the issuer of the respective investments. Each of the City's certificates of deposit are purchased in amounts not exceeding federal deposit insurance. The tables above outline the concentrations of the City's other investment types, including U.S. Government Agency Securities and Municipal Bonds. Custodial Credit Risk – This is the risk that in the event of the failure of a counterparty to an investment, the City will not be able to recover the value of an investment or collateral securities that are in possession of an outside party. In accordance with the City's investment policy, all investment securities shall be held by a single safekeeping agent in the name of the City. 52 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 B. CAPITAL ASSETS Capital asset activity for the year ended December 31, 2019 was as follows: Beginning Ending Balance Increases Decreases Balance Governmental Activities: Capital Assets, not Being Depreciated: Land 2,694,199$ 1,146,262$ -$ 3,840,461$ Construction in Progress 3,125,257 3,602,080 (688,832) 6,038,505 Total Capital Assets, not Being Depreciated 5,819,456 4,748,342 (688,832) 9,878,966 Capital Assets, Being Depreciated: Buildings and Building Improvements 6,500,501 61,549 - 6,562,050 Land Improvements 6,034,245 627,282 - 6,661,527 Machinery and Equipment 3,664,570 571,132 (193,101) 4,042,601 Infrastructure 25,022,487 1,087,561 - 26,110,048 Total Capital Assets, Being Depreciated 41,221,803 2,347,524 (193,101) 43,376,226 Less Accumulated Depreciation for: Buildings and Building Improvements 1,922,284 160,664 - 2,082,948 Land Improvements 2,630,499 252,561 - 2,883,060 Machinery and Equipment 1,945,637 304,974 (172,085) 2,078,526 Infrastructure 6,637,343 821,150 - 7,458,493 Total Accumulated Depreciation 13,135,763 1,539,349 (172,085) 14,503,027 Total Capital Assets Being Depreciated - Net 28,086,040 808,175 (21,016) 28,873,199 Governmental Activities Capital Assets - Net 33,905,496$ 5,556,517$ (709,848)$ 38,752,165$ Depreciation expense was charged to the functions of the City as follows: Governmental Activities: General Government 26,156$ Public Safety 3,985 Public Works 1,127,744 Culture and Recreation 381,464 Total Depreciation Expense - Governmental Activities 1,539,349$ 53 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 Beginning Ending Balance Increases Decreases Balance Business-type Activities: Capital Assets, not Being Depreciated: Land 631,739$ -$ -$ 631,739$ Construction in progress 1,830,806 2,016,275 (75,256) 3,771,825 Total Capital Assets, not Being Depreciated 2,462,545 2,016,275 (75,256) 4,403,564 Capital Assets, Being Depreciated: Buildings and Building Improvements 177,604 - - 177,604 Machinery and Equipment 1,373,260 118,010 - 1,491,270 Infrastructure 59,296,349 1,612,536 - 60,908,885 Total Capital Assets, Being Depreciated 60,847,213 1,730,546 - 62,577,759 Less Accumulated Depreciation for: Buildings and Building Improvements 5,475 10,698 - 16,173 Machinery and Equipment 318,355 121,440 - 439,795 Infrastructure 16,157,984 1,507,105 - 17,665,089 Total Accumulated Depreciation 16,481,814 1,639,243 - 18,121,057 Total Capital Assets Being Depreciated - Net 44,365,399 91,303 - 44,456,702 Business-type Activities Capital Assets - Net 46,827,944$ 2,107,578$ (75,256)$ 48,860,266$ Depreciation expense was charged to the functions of the City as follows: Business-type Activities: Water Utility 592,967$ Sanitary Sewer Utility 988,308 Storm Water Utility 57,968 Total Depreciation Expense - Business-type Activities 1,639,243$ C. CONSTRUCTION COMMITMENTS At December 31, 2019 the City had construction project contracts in progress. The commitments related to remaining contract balances are summarized as follows: Contract Remaining Amount Commitment 85th Street and Maciver Avenue Extensions 5,520,437$ 116,209$ Kadler Avenue Improvements 1,364,062 16,235 Lift Station No. 7 223,115 113,433 Project 54 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 D. INTERFUND BALANCES AND TRANSFERS At December 31, 2019, the composition of balances for due to/from other funds of the City were as follows: Due from Due to Other Funds Other Funds Major Governmental Funds: General 2,867$ -$ MSA Construction - 647,673 Nonmajor Governmental Funds: Special Revenue Funds Tax Increment District No. 3 - 1,634 Tax Increment District No. 4 - 1,233 Capital Project Funds Capital Improvements 717,227 - Kadler Avenue Improvements - 69,554 Total 720,094$ 720,094$ Interfund due to/from balances are representative of lending/borrowing arrangements to cover deficit cash balances at the end of the fiscal year. The balance in the Tax Increment District No. 3 fund will be repaid with future collections of tax increment, which is expected to begin in 2020. The balance in the Tax Increment District No. 4 fund will be repaid with future collections of tax increment, which is expected to begin in 2021. The balance in the Municipal State-Aid for Construction fund will be repaid with State-Aid funding for the 85th Street and Maciver Avenue extension projects. The balance in the Kadler Avenue Improvements fund will be repaid with project funding sources such as grant monies and reimbursements from an industrial developer. Fund 55 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 Transfers between funds made during the year ended December 31, 2019 were as follows: Transfer In Transfer Out Major Governmental Funds: General 171,900$ 971,726$ Debt Service 40,969 - Nonmajor Governmental Funds: Building & Property Maintenance 90,000 - Capital Improvements 971,726 90,000 Total Governmental Funds 1,274,595 1,061,726 Major Proprietary Funds: Water Utility - 51,169 Sanitary Sewer Utility - 161,700 Total Proprietary Funds - 212,869 Total All Funds 1,274,595$ 1,274,595$ Interfund transfers allow the City to allocate financial resources to the funds that receive benefit from services provided by another fund or to provide additional capital and infrastructure funding. In addition, interfund transfers are occasionally authorized to allow redistribution of resources between funds for the most efficient use of funds. In 2019, the following transfers were made between funds: • The General fund transferred $971,726 to the Capital Improvements fund in accordance with the City's fund balance policy, where any balance exceeding the minimum fund balance is set aside for future capital items. • The Water and Sanitary Sewer funds transferred $42,975 and $128,925 respectively to the General fund as an annual contribution to help manage the property tax levy. • The Water and Sanitary Sewer funds transferred $8,194 and $32,775 to the Debt Service fund to contribute their portion of the debt service associated with the purchase of the Jet Vac truck. • The Capital Improvement Fund transferred $90,000 to the newly created Building and Property Maintenance fund which will accumulate resources that will provide for the costs associated with maintaining City buildings and property. Fund 56 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 E. LONG-TERM DEBT Governmental Activities The City issued general obligation bonds to provide funding for the acquisition and construction of major capital facilities and construction of infrastructure in the governmental activities. General obligation bonds have also been issued to refinance general obligation improvement bonds, which were originally intended to be fully repaid with collections of special assessments. All long-term indebtedness outstanding is backed by the full faith and credit of the City. Bonds in the governmental activities will be retired with future property tax levies and collections of special assessments. In the event that a deficiency exists because of unpaid or delinquent taxes or special assessments at the time a debt service payment is due, the City must provide resources to cover the deficiency until other resources are available. At the end of the current year, there are $4,053,256 of assets accumulated in the debt service funds for future debt service. Included within those accumulated assets, there are $645 of delinquent special assessments receivable, of which collection is uncertain. Final Interest Issue Maturity Original Payable Rates Date Date Issue 12/31/19 General Obligation Bonds: Refunding Bonds, Series 2010B 2.00 - 3.00% 11/30/2010 12/1/2021 3,705,000$ 950,000$ Refunding Bonds, Series 2010D 2.00 - 3.60% 11/30/2010 2/1/2028 1,220,000 890,000 Refunding Bonds, Series 2011A 2.00 - 3.20% 12/21/2011 2/1/2028 4,640,000 2,765,000 Refunding Bonds, Series 2012A 2.00% 3/14/2012 12/1/2021 1,400,000 400,000 Improvement Bonds, Series 2018A 3.00 - 3.13% 7/11/2018 2/1/2034 2,305,000 2,305,000 Total - Bonded Indebtedness 13,270,000$ 7,310,000 Other Liabilities: Unamortized Premium on Issuance of Bonds 68,641 Compensated Absences Payable 91,889 Total Governmental Activities 7,470,530$ Annual debt service requirements to maturity for governmental activities long-term indebtedness are as follows: Principal Interest 1,330,000$ 196,200$ 1,360,000 162,531 705,000 126,443 720,000 107,441 490,000 90,481 2,375,000 218,749 330,000 26,403 7,310,000$ 928,248$ 2025 - 2029 General Obligation Bonds 2022 2023 2024 Year Ending December 31 2020 2021 Governmental Activities 2030 - 2034 Total 57 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 Business-type Activities The City issued general obligation bonds to provide funding for the acquisition and construction of major capital facilities and construction of infrastructure in the business-type activities. All long-term indebtedness outstanding is backed by the full faith and credit of the City. Bonds in the business-type activities will be retired with the net revenues of the Water and Sanitary Sewer funds. (Net revenues are defined as the excess of gross revenues and earnings over the normal, reasonable and current costs of operating and maintenance). In the event that a deficiency exists because of inadequate net revenues at the time a debt service payment is due, the City must provide resources to cover the deficiency until other resources are available. At the end of the current year, the Water and Sanitary Sewer funds provided net revenues of $5,258,739, which accounts for a debt-service coverage ratio of 97.11%. Final Interest Maturity Original Payable Rates Date Date Issue 12/31/19 General Obligation Bonds: Revenue Bonds, Series 2010C 2.00 - 5.00% 11/30/2010 12/1/2026 21,300,000$ 12,915,000$ Revenue Bonds, Series 2019A 4.00 - 4.00% 12/19/2019 12/1/2026 3,525,000 3,525,000 Total - Bonded Indebtedness 24,825,000$ 16,440,000 Other Liabilities: Unamortized Premium on Issuance of Bonds 1,075,267 Compensated Absences Payable 17,875 Total Business-type Activities 17,533,142$ Annual debt service requirements to maturity for business-type activities long-term indebtedness are as follows: Principal Interest 2,335,000$ 584,050$ 2,410,000 521,050 2,550,000 400,550 2,650,000 322,775 2,165,000 239,300 4,330,000 248,243 16,440,000$ 2,315,968$ In December 2019, the City issued $3,525,000 of General Obligation Revenue Refunding Bond, Series 2019A for the current refunding of the General Obligation Revenue Refunding Bond, Series 2009A. The refunding was done to take advantage of lower interest rates. The refunding resulted in a decrease of future debt service payments of $573,108. The net present value cash flow savings from this transaction was $525,022. 2025 - 2026 Total Business-type Activities 2021 2022 2023 2024 Year Ending General Obligation Bonds December 31 2020 58 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 Changes in Long-Term Liabilities Long-term liability activity for the year ended December 31, 2019 was as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental Activities: Bonds Payable: General Obligation Bonds 8,455,000$ -$ (1,145,000)$ 7,310,000$ 1,330,000$ Equipment Certificates 40,000 - (40,000) - - Total Bonded Indebtedness 8,495,000 - (1,185,000) 7,310,000 1,330,000 Unamortized Bond Premium 79,989 - (11,348) 68,641 - Compensated Absences 87,373 131,845 (127,329) 91,889 18,378 Total - Governmental 8,662,362 131,845 (1,323,677) 7,470,530 1,348,378 Business-type Activities: Bonds Payable: General Obligation Bonds 21,495,000 3,525,000 (8,580,000) 16,440,000 2,335,000 Unamortized Bond Premium 631,056 523,094 (78,883) 1,075,267 - Compensated Absences 18,412 29,849 (30,386) 17,875 3,575 Total - Business-type 22,144,468 4,077,943 (8,689,269) 17,533,142 2,338,575 Grand Total Long-Term Liabilities 30,806,830$ 4,209,788$ (10,012,946)$ 25,003,672$ 3,686,953$ The General fund is typically used to liquidate the compensated absences payable for governmental activities. F. CONDUIT DEBT OBLIGATIONS Conduit debt obligations are certain limited-obligation revenue bonds or similar instruments issued for the express purpose of providing capital financing for a specific third party. The City has issued various revenue bonds to provide funding to private sector entities for projects deemed to be in the public interest. Although these bonds bear the name of the City, the City has no obligation for such debt. Accordingly, the bonds are not reported as liabilities in the financial statements of the City. As of December 31, 2019, the City's conduit debt consisted of the following: Guardian Angels Senior Services Revenue Bonds, Series 2017 29,320,000$ Guardian Angels Senior Services Revenue Refunding Bonds, Series 2017A 9,670,000 Revenue Refunding Bonds, Series 2017B 6,160,000 Kaleidoscope Charter School Revenue Bonds, Series 2014A 15,010,000 59 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 G. TAX ABATEMENTS The City has entered into certain agreements for economic development purposes to either attract new businesses or retain existing business operations within the City. The authority for the City to enter into such agreements comes from Minnesota Statute §469. The City further has an established Business Subsidy Policy that provides evaluation criteria for any business subsidy requests. As of December 31, 2019, the City has entered into two types of agreements. Property Tax Abatements For the year ended December 31, 2019, the City abated property taxes totaling $60,039. Details of each agreement and the abatement for the current year are as follows: • The City has entered into a tax abatement agreement with Duke Realty for land acquisition costs paid by the developer that ultimately allowed for the City to construct street infrastructure within the Gateway North industrial park. The agreement outlines that 50 percent of taxes payable in 2016-2022 will be abated by the City, to a maximum value of $340,000. The abatement amounted to $56,491 in the current year. • The City has entered into a tax abatement agreement with Family Speech & Therapy Services for costs to upgrade and provide rehabilitation of an existing commercial building within the City. The agreement outlines that 100 percent of taxes payable in 2014-2019 will be abated by the City, to a maximum value of $25,000. The abatement amounted to $3,548 in the current year. 60 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 Tax Increment Financing For the year ended December 31, 2019, the Tax Increment Financing Districts within the City generated increment in the amount of $97,419 and payments to the developers in the amount of $87,461. Details of each agreement are as follows: • Tax Increment Financing District No. 1 was established in 2015 for the purpose of promoting industrial development on a parcel owned by the City which had been obtained through the tax forfeiture process. The parcel would not have been developed but-for tax increment financing given the existing special assessments and the extraordinary amount of soil improvements. Under the agreement, up to $694,487 of costs incurred by the developer will be reimbursed through a tax increment revenue note, payable beginning in 2018 and concluding in 2027. Payments on the tax increment revenue note are only made to the extent of increment generated by the district. For 2019, this tax increment financing district generated increment in the amount of $97,419 and payments to the developer in the amount of $87,461. • Tax Increment Financing District No. 3 was established in 2017 for the purpose of facilitating the development of a 142 unit senior housing facility, consisting of independent living, assisted living and memory care. The tax increment district is a housing district, and is intended for occupancy, in part, by persons or families of low and moderate income. In order to qualify as a housing district, the senior housing facility is required to provide at least 20% of the residential units to persons whose incomes do not exceed 50% of the County median income. By providing the affordable housing, the City believes that such a project was in the best interests of the City and its residents and agreed to reimburse the developer the lesser of $2,389,400 or the costs of the site improvements actually incurred. The reimbursements will be made through a tax increment revenue note, payable beginning in 2020 and concluding in 2047. Payments of the tax increment revenue note are only made to the extent of increment generated by the district. • Tax Increment Financing District No. 4 was established in 2018 for the purpose of facilitating the redevelopment of an existing site including the decommissioning of a private wastewater treatment facility. The redevelopment of this site will facilitate the construction of 164 units of market-rate multifamily housing, a mini-storage facility, and will create shovel ready sites for approximately 15,000 square feet of future commercial retail development. The City determined this development will ultimately preserve and enhance the tax base, redevelop sub-standard areas and provide employment opportunities within the City that would not reasonably be expected to occur solely through private investment within the forseeable future. Under the agreement, up to $3,359,685 of costs incurred by the developer will be reimbursed through a tax increment revenue note, payable beginning in 2021 and concluding in 2046. Payments on the tax increment revenue note are only made to the extent of increment generated by the district. 61 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 H. FUND EQUITY Net position reported in the government-wide statement of net position at December 31, 2019 include the following: Governmental Activities Net Investment in Capital Assets: Cost of Capital Assets 53,255,192$ Less: Accumulated Depreciation (14,503,027) Less: Related Long-Term Debt Outstanding (7,378,641) Total Net Investment in Capital Assets 31,373,524 Restricted for Tax Increment Financing 42,166 Restricted for Debt Service Fund Balance - Governmental Fund Financial Statements 1,547,850 Add: Unavailable Revenue - Special Assessments 2,504,512 Less: Accrued Interest Payable (73,172) Total Restricted for Debt Service 3,979,190 Restricted for Park Development 3,636,768 Unrestricted 11,357,968 Total Governmental Activities Net position 50,389,616$ Business-type Activities Net Investment in Capital Assets: Cost of Capital Assets 66,981,323$ Less: Accumulated Depreciation (18,121,057) Less: Related Long-Term Debt Outstanding (17,515,267) Total Net Investment in Capital Assets 31,344,999 Unrestricted 18,919,363 Total Business-type Activities Net Position 50,264,362$ 62 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 Aggregated funds balances reported in the governmental funds balance sheet at December 31, 2019 include the following: Governmental Funds Nonspendable Restricted Committed Assigned General Fund Prepaid Items 120,924$ -$ -$ -$ Assets Held for Resale 202,200 - - - Insurance Deductibles - - - 195,708 Educational Programs - - - 28,032 Debt Service Debt Service - 1,547,850 - - Nonmajor Governmental Funds Park Development - 3,636,768 - - Street Light Replacement - 67,219 Business Development Loans - - 371,457 - Tax Increment Financing - 42,166 - - City Buildings & Infrastructure - - - 11,074,590 City Parks - - - 417,438 Total Fund Balances 323,124$ 5,226,784$ 438,676$ 11,715,768$ 63 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 NOTE 4 RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions and natural disasters. Property and casualty insurance is provided through the League of Minnesota Cities Insurance Trust (LMCIT), a public entity risk pool currently operating as a common risk management and insurance program. The City pays an annual premium to the LMCIT for its insurance coverage. The LMCIT is self-sustaining through member premiums and reinsures through commercial companies for excess claims. The City is covered through the pool for any claims incurred but unreported, however, retains risk for the deductible portions of the insurance policies. The amount of those deductibles is considered immaterial to the financial statements. Workers’ compensation coverage is provided through a pooled self-insurance program through the LMCIT. The respective insurance policy is retrospectively rated. With this type of coverage, final 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. This coverage is not subject to a deductible. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three years. The City is subject to certain legal claims in the normal course of business. Management does not expect the resolution of these claims will have a material impact on the City’s financial condition or results of operations. 64 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 NOTE 5 PENSION PLAN Public Employee's Retirement Association A. PLAN DESCRIPTION The City participates in the following cost-sharing multiple-employer defined benefit pension plan administered by the Public Employees Retirement Association of Minnesota (PERA). PERA's defined benefit pension plans are established and administered in accordance with Minnesota Statutes, Chapters 353 and 356. PERA's defined benefit pension plans are tax qualified plans under Section 401(a) of the Internal Revenue Code. General Employees Retirement Plan 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. 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 Benefits are based on a member's highest average salary for any five successive years of allowable service, age, and years of credit at termination or service. Two methods are used to compute benefits for PERA's Coordinated Plan members. The retiring member, if hired prior to July 1, 1989, receives the higher of a step-rate benefit accrual formula (Method 1) or level accrual formula (Method 2), which is used for members hired after June 30, 1989. Under Method 1, the accrual rate for a Coordinated Plan member is 1.2 percent of average salary for each of the first ten years of service and 1.7 percent of average salary for each additional year. Under Method 2, the accrual rate for Coordinated members is 1.7 percent of average salary 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. Annuities, disability benefits, and survivor benefits are increased effective every January 1. Beginning January 1, 2019 the postretirement increase will be equal to 50 percent of the cost-of-living adjustment (COLA) announced by the SSA, with a minimum increase of at least 1 percent and a maximum of 1.5 percent. 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 for the delay to normal retirement. 65 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 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 Fund Contributions Coordinated Plan members were required to contribute 6.5 percent of their annual covered salary in calendar year 2019 and the City was required to contribute 7.5 percent for Coordinated Plan members. The City's contributions to the General Employees Fund for years ended December 31, 2019, 2018 and 2017 were $120,583, $110,473, and $98,542. The City's contributions were equal to the required contributions as set by state statute. D. PENSION COSTS General Employees Fund Pension Costs At December 31, 2019, the City reported a liability of $1,205,273 for its proportionate share of the General Employees Fund's net pension liability. The City's net pension liability reflected a reduction due to the State of Minnesota's contribution of $16 million to the fund in 2019. 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 $37,332. The net pension liability was measured as of June 30, 2019, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City's proportionate share of the net pension liability was based on the City's contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2018 through June 30, 2019, relative to the total employer contributions received from all of PERA's participating employers. At June 30, 2019, the City's proportionate share was 0.0218 percent, which was an increase of 0.0003 percent from its proportionate share measured as of June 30, 2018. City's proportionate share of the net pension liability 1,205,273$ State of Minnesota's proportionate of the net pension liability associated with the City 37,332 Total 1,242,605$ For the year ended December 31, 2019, the City recognized pension expense of $173,888 for its proportionate share of the General Employees Plan's pension expense. Included in that amount, the City recognized $2,796 as pension expense (and grant revenue) for its proportionate share of the State of Minnesota's contribution of $16 million to the General Employees Fund. 66 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 At December 31, 2019, the City reported its proportionate share of the General Employees Plan's deferred outflows of resources and deferred inflows of resources, related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Differences Between Expected and Actual Economic Experience 33,178$ -$ Changes in Actuarial Assumptions - 93,703 Differences Between Projected and Actual Investment Earnings - 125,368 Changes in Proportion 46,991 - Contributions Paid Subsequent to the Measurement Date 65,213 - Totals 145,382$ 219,071$ Deferred outflows totaling $65,213 related to pensions resulting from the City's contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2020. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Pension Ended Expense December 31, Amount 2020 (29,716)$ 2021 (91,507) 2022 (19,621) 2023 1,942 2024 - Thereafter - Total (138,902)$ Description 67 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 E. ACTUARIAL ASSUMPTIONS The total pension liability in the June 30, 2019, actuarial valuation was determined using an individual entry age normal actuarial cost method and the following actuarial assumptions: Inflation 2.50% per year Active Member Payroll Growth 3.25% per year Investment Rate of Return 7.50% Salary increases were based on a service-related table. Mortality rates for active members, retirees, survivors, and disablitants for the plan were based on RP-2014 tables for males or females, as appropriate, with slight adjustments to fit PERA's experience. Cost of living benefit increases after retirement for retirees are assumed to be 1.25 percent per year. Actuarial assumptions used in the June 30, 2019 valuation were based on the results of actuarial experience studies. The most recent four-year experience study in the Plan was completed in 2019. Economic assumptions were updated in 2018 based on a review of inflation and investment return assumptions. The following changes in actuarial assumptions occurred in 2019: • The mortality projection scale was changed from MP-2017 to MP-2018. The following changes in plan provisions occurred in 2019: • 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. The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonableness of the long-term expected rate of return on a regular basis 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 following table: Long-Term Target Expected Real Allocation Rate of Return Domestic Equity 35.50%5.10% Private Markets 25.00%5.90% Fixed Income 20.00%0.75% International Equity 17.50%5.90% Cash Equivalents 2.00%0.00% Total 100.00% Asset Class 68 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 F. DISCOUNT RATE The discount rate used to measure the total pension liability in 2019 was 7.5 percent. 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 positions 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. G. 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 rate. 6.50% 7.50% 8.50% One Point Current One Point Decrease Rate Increase General Employees Fund 1,981,404$ 1,205,273$ 564,423$ H. PENSION PLAN FIDUCIARY NET POSITION Detailed information about each pension plan's fiduciary net position is available in a separately issued PERA financial report that includes financial statements and required supplementary information. That report may be obtained at www.mnpera.org. City's Proportionate Share of the Net Pension Liability 69 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 NOTE 6 CHANGE IN ACCOUNTING PRINCIPLE/PRIOR PERIOD ADJUSTMENT For the year ended December 31, 2019, the City implemented GASB Statement No. 84, Fiduciary Activities. As a result, the Development and Builder Escrows Fund was reclassified from a fiduciary fund to a governmental capital project fund. NOTE 7 NEW ACCOUNTING PRONOUNCEMENTS The Governmental Accounting Standards Board recently approved the following statements which were not implemented in these financial statements. The effect these standards may have on future financial statements has not been determined. • Statement No. 87, Leases This new standard establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and deferred inflow of resources, thereby enhancing the relevance and consistency about governments' leasing activities. This statement will be effective for the year ending December, 31, 2022. • Statement No. 89, Accounting for Interest Cost Incurred Before the End of Construction Period This new standard enhances the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period and simplifies accounting for interest cost incurred before the end of a construction period. This statement will be effective for the year ending December 31, 2021. NOTE 8 SUBSEQUENT EVENTS On March 11, 2020, the World Health Organization characterized the COVID-19 outbreak as a pandemic. In response, the President of the United States of America declared a national emergency on March 13, 2020; and furthermore, on the same date, the Governor of the State of Minnesota declared a peactime emergency. This pandemic has caused affects on the economy and financial markets. The extent of the impact on the City may be both direct and indirect and will vary based on the duration of the outbreak and various other factors. An estimate of the financial effect on the City's financial statements as of December 31, 2019 cannot be determined at this time. 70 CITY OF OTSEGO, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION (LAST TEN YEARS*) SCHEDULE OF CITY'S PROPORTIONATE SHARE OF NET PENSION LIABILITY GENERAL EMPLOYEE'S RETIREMENT FUND City's Proportionate ($) Share of the Net Pension Liability City's State's and the State's Proportionate (%) City's City's Proportionate (S) Proportionate ($)Share of Net Plan Fiduciary Proportionate (%) Proportionate ($) Share of the Net Share of the Net Pension Liability Net Position Fiscal Share of Share of Pension Liability Pension Liability City's Compared With as a Percentage Year Net Pension Net Pension Associated With Associated With Covered Covered of the Total Ending Liability Liability the City the City Payroll Payroll Pension Liability June 30, 2019 0.0218% 1,205,273$ 37,332$ 1,242,605$ 1,531,014$ 78.72%80.20% June 30, 2018 0.0215% 1,192,732 39,115 1,231,847 1,365,460 87.35%79.50% June 30, 2017 0.0215% 1,372,546 17,254 1,389,800 1,332,687 102.99%75.89% June 30, 2016 0.0198% 1,607,662 20,935 1,628,597 1,136,013 141.52%68.91% June 30, 2015 0.0195% 1,010,592 - 1,010,592 1,124,606 89.86%78.19% This supplementary information is provided prospectively beginning with the Year Ended December 31, 2015. 71 CITY OF OTSEGO, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION (LAST TEN YEARS*) SCHEDULE OF CITY'S CONTRIBUTIONS GENERAL EMPLOYEE'S RETIREMENT FUND Contributions in Relation to Contributions Statutorily Statutorily Contribution City's as a Percentage Year Required Required (Excess) Covered of Covered Ending Contributions Contributions Deficiency Payroll Payroll December 31, 2019 120,583$ 120,583$ -$ 1,607,772$ 7.50% December 31, 2018 110,473 110,473 - 1,472,972 7.50% December 31, 2017 98,542 98,542 - 1,313,896 7.50% December 31, 2016 96,567 96,567 - 1,287,564 7.50% December 31, 2015 83,256 83,256 - 1,110,085 7.50% This supplementary information is provided prospectively beginning with the Year Ended December 31, 2015. 72 CITY OF OTSEGO, MINNESOTA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2019 NOTE 1 GENERAL EMPLOYEES FUND CHANGES FOR 2019 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 per year through 2031. CHANGES FOR 2018 Changes in Actuarial Assumptions • The mortality projection scale was changed from MP-2015 to MP-2017. • The assumed post-retirement benefit increase rate was changed from 1.00 percent per year through 2044 and 2.50 percent per year thereafter to 1.25 percent 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 4.0 percent to 3.0 percent, beginning July 1, 2018. • Deferred augmentation was changed to 0.0 percent, 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 1.0 percent per year with a provision to increase to 2.5 percent upon attainment of 90.0 percent funding ratio to 50.0 percent of the Social Security Cost of Living Adjustment, not less than 1.0 percent and not more than 1.5 percent, 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. 73 CITY OF OTSEGO, MINNESOTA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2019 CHANGES FOR 2017 Changes in Actuarial Assumptions • The Combined Service Annuity (CSA) loads were changed from 0.80 percent for active members and 60 percent for both vested and non-vested deferred members. The revised CSA loads are now 0.00 percent for active member liability, 15 percent for vested deferred member liability, and 3.00 percent for non-vested deferred member liability. • The assumed post-retirement benefit increase rate was changed from 1.00 percent per year for all years to 1.00 percent per year through 2044, and 2.50% percent thereafter. Changes in Plan Provisions • The State's contribution for the Minneapolis Employees Retirement Fund equals $16.0 million in 2017 and 2018, and $6.0 million thereafter. • The Employer Supplemental Contribution for the Minneapolis Employees Retirement Fund changed from $21.0 million to $31.0 million in calendar years 2019 to 2031. The State's contribution changed from $16.0 million to $6.0 million in calendar years 2019 to 2031. CHANGES FOR 2016 Changes in Actuarial Assumptions • The assumed post-retirement benefit increase was changed from 1.00% per year through 2035 and 2.50% per year thereafter to 1.00% per year for all future years. • The assumed investment return was changed from 7.90% to 7.50%. The single discount rate was changed from 7.90% to 7.50%. • Other assumptions were changed pursuant to the experience study dated June 30, 2015. The assumed future salary increases and payroll growth were decreased by 0.25% to 3.25%. Inflation was decreased 0.25% to 2.50%. CHANGES FOR 2015 Changes in Actuarial Assumptions • The assumed post-retirement benefit increase rate was changed from 1.00% per year through 2030 and 2.50% per year thereafter to 1.00% per year through 2035 and 2.50% 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 $1.10 billion, and increased the fiduciary plan net position by $892 million. Upon consolidation, state and employer contributions were revised; the State's contribution of $6.0 million, which meets the special funding situation definition, was due September 2015. 74 This page has been left blank intentionally. 75 CITY OF OTSEGO, MINNESOTA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS DECEMBER 31, 2019 Total Special Capital Nonmajor Revenue Project Governmental ASSETS Cash and Investments 478,667$ 14,558,240$ 15,036,907$ Receivables Accounts 2,175 - 2,175 Special Assessments Current - 504 504 Deferred - 617,313 617,313 Delinquent - 3,761 3,761 Due from Other Funds - 717,227 717,227 Total Assets 480,842 15,897,045 16,377,887 LIABILITIES Accounts Payable - 232,605 232,605 Due to Other Funds 2,867 69,554 72,421 Total Liabilities 2,867 302,159 305,026 DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Special Assessments - 621,074 621,074 FUND BALANCES Restricted Tax Increment Financing 42,166 - 42,166 Park Development - 3,636,768 3,636,768 Committed Street Light Replacement 67,219 - 67,219 Business Development Loans 371,457 - 371,457 Assigned City Buildings & Infrastructure - 11,074,590 11,074,590 City Parks - 417,438 417,438 Unassigned (Deficits) (2,867) (154,984) (157,851) Total Fund Balances 477,975 14,973,812 15,451,787 Total Liabilities, Deferred Inflows of Resources and Fund Balances 480,842$ 15,897,045$ 16,377,887$ 76 CITY OF OTSEGO, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2019 Total Special Capital Nonmajor Revenue Project Governmental REVENUES Property Taxes 60,816$ 1,675,000$ 1,735,816$ Tax Increments 97,419 - 97,419 Intergovernmental - 1,059,241 1,059,241 Charges for Services 4,181 1,298,439 1,302,620 Special Assessments - 113,320 113,320 Investment Earnings (net) 16,819 541,869 558,688 Miscellaneous - 35,360 35,360 Total Revenues 179,235 4,723,229 4,902,464 EXPENDITURES Current Public Works 31,800 - 31,800 Economic Development 151,357 - 151,357 Capital Outlay General Government - 42,666 42,666 Public Safety - 1,100,640 1,100,640 Public Works - 1,184,248 1,184,248 Culture and Recreation - 234,159 234,159 Economic Development - 476,207 476,207 Total Expenditures 183,157 3,037,920 3,221,077 Excess of Revenues Over Expenditures (3,922) 1,685,309 1,681,387 OTHER FINANCING SOURCES (USES) Transfers In - 1,061,726 1,061,726 Sales of Capital Assets - 68,378 68,378 Transfers Out - (90,000) (90,000) Total Other Financing Sources (Uses) - 1,040,104 1,040,104 Net Change in Fund Balance (3,922) 2,725,413 2,721,491 Fund Balance - January 1 481,897 12,248,399 12,730,296 Fund Balance - December 31 477,975$ 14,973,812$ 15,451,787$ 77 This page has been left blank intentionally. 78 CITY OF OTSEGO, MINNESOTA NONMAJOR SPECIAL REVENUE FUNDS A special revenue fund is used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. Street Lighting This fund accounts for the electrical service, maintenance, repair and replacement of street lights within the City's above standard street-lighting district for commercially developed areas. The primary funding source of the fund is generated through charges for services imposed upon the benefitting properties in the district. Revolving Loans This fund was established to provide for economic development subsidies and loans to be provided to business entities in the City through the City's Economic Development Authority (EDA). Tax Increment District No. 1 - Great River Centre This fund was established to account for the collection of tax increment generated revenues for parcels within the District. The District encompasses two parcels in the Great River Centre commercial and industrial area. The increment generated is used for specific economic development incentives within the District. Tax Increment District No. 3 - Riverview Landing This fund was established to account for the collection of tax increment generated revenues for parcels within the District. The District is a housing district and is located in the Waterfront East development area. The increment generated is used to provide 20% of the residential units to persons or families of low and moderate income. Tax Increment District No. 4 - Riverbend North This fund was established to account for the collection of tax increment generated revenues for parcels within the District. The District is a redevelopment district and includes four parcels within the Riverbend North plat, located near CSAH 42 and Highway 101. The increment generated is used to redevelop the existing site, including the decommissioning of a private wasterwater facility, construciton of multifamily housing, a mini-storage facility and and site preparations to accomodature approximately 15,000 square feet of future commercial development. 79 CITY OF OTSEGO, MINNESOTA COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS DECEMBER 31, 2019 Total Nonmajor Street Revolving Tax Increment Tax Increment Tax Increment Special Lighting Loans District No. 1 District No. 3 District No. 4 Revenue ASSETS Cash and Investments 65,044$ 371,457$ 42,166$ -$ -$ 478,667$ Receivables Accounts 2,175 - - - - 2,175 Total Assets 67,219 371,457 42,166 - - 480,842 LIABILITIES Due to Other Funds - - - 1,634 1,233 2,867 FUND BALANCES Restricted Tax Increment Financing - - 42,166 - - 42,166 Committed Street Light Replacement 67,219 - - - - 67,219 Business Development Loans - 371,457 - - - 371,457 Unassigned - - - (1,634) (1,233) (2,867) Total Fund Balances (Deficits)67,219 371,457 42,166 (1,634) (1,233) 477,975 Total Liabilities and Fund Balances (Deficits)67,219$ 371,457$ 42,166$ -$ -$ 480,842$ 80 CITY OF OTSEGO, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (DEFICITS) NONMAJOR SPECIAL REVENUE FUNDS FOR THE YEAR ENDED DECEMBER 31, 2019 Total Nonmajor Street Revolving Tax Increment Tax Increment Tax Increment Special Lighting Loans District No. 1 District No. 3 District No. 4 Revenue REVENUES Property Taxes -$ 60,816$ -$ -$ -$ 60,816$ Tax Increments - - 97,419 - - 97,419 Charges for Services 4,181 - - - - 4,181 Investment Earnings (net) 3,150 13,669 - - - 16,819 Total Revenues 7,331 74,485 97,419 - - 179,235 EXPENDITURES Current Public Works 31,800 - - - - 31,800 Economic Development - 60,039 88,851 1,234 1,233 151,357 Total Expenditures 31,800 60,039 88,851 1,234 1,233 183,157 Net Change in Fund Balance (24,469) 14,446 8,568 (1,234) (1,233) (3,922) Fund Balance (Deficit) - January 1 91,688 357,011 33,598 (400) - 481,897 Fund Balance (Deficit) - December 31 67,219$ 371,457$ 42,166$ (1,634)$ (1,233)$ 477,975$ 81 CITY OF OTSEGO, MINNESOTA NONMAJOR SPECIAL REVENUE FUNDS REVOLVING LOANS FUND - SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2019 Variance with Final Budget - Budgeted Amounts Actual Over Original Final Amounts (Under) REVENUES Property Taxes 60,816$ 60,816$ 60,816$ -$ Investment Earnings (net) - - 13,669 13,669 Total Revenues 60,816 60,816 74,485 13,669 EXPENDITURES Current Economic Development Services and Other Charges 60,816 60,816 60,039 (777) Net Change in Fund Balance - - 14,446 14,446 Fund Balance - January 1 357,011 357,011 357,011 - Fund Balance - December 31 357,011$ 357,011$ 371,457$ 14,446$ 82 CITY OF OTSEGO, MINNESOTA NONMAJOR SPECIAL REVENUE FUNDS TAX INCREMENT DISTRICT NO. 1 - SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2019 Variance with Final Budget - Budgeted Amounts Actual Over Original Final Amounts (Under) REVENUES Tax Increments 96,938$ 96,938$ 97,419$ 481$ EXPENDITURES Current Economic Development Personal Services - - 482 482 Services and Other Charges 89,495 89,495 88,369 (1,126) Total Expenditures 89,495 89,495 88,851 (644) Net Change in Fund Balance 7,443 7,443 8,568 1,125 Fund Balance - January 1 33,598 33,598 33,598 - Fund Balance - December 31 41,041$ 41,041$ 42,166$ 1,125$ 83 CITY OF OTSEGO, MINNESOTA NONMAJOR CAPITAL PROJECTS FUNDS Capital projects funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. Pavement Management This fund was established to provide funds and to account for the expenditure of such funds, for costs associated with the City's street maintenance and replacement plan adopted annually within the Capital Improvement Plan. Annual projects may include: fog & seal coating, crack filling, paint striping, patching and asphalt overlays. Trails Management This fund was established to provide funds and to account for the expenditure of such funds, for costs associated with the City's trail maintenance plan adopted annually within the Capital Improvement Plan. Annual projects will typically include: crack filling, patching and seal coating. Park Development This fund was established to accumulate funds that will be used to provide for the acquisition and construction of new park sites, buildings and facilities throughout our growing City. Parks Capital Equipment This fund was established to accumulate funds for major maintenance and future replacement of equipment within the City's park system. Revolving Capital Equipment This fund was established to provide funds and to account for the expenditure of such funds, for costs associated with the replacement of capital equipment, most significantly the City's machinery and vehicle fleet. Community Facilities This fund was established to accumulate funds that will be used to provide for the costs associated with the improvements of existing City facilities and the acquisition and construction of additional City facilities. Collector Streets This fund was established to accumulate funds derived from ongoing residential and commercial development that will provide for the costs associated with the construction of future arterial collector street infrastructure. Fire Reserve This fund was established to accumulate funds that will be used to finance the costs associated with the future construction of a fire department building and the capital equipment that will be housed within. Watershed Districts This fund was established to provide funds and to account for the expenditure of such funds, for costs associated with the maintenance of major water drainage system ditches throughout the City. 84 CITY OF OTSEGO, MINNESOTA NONMAJOR CAPITAL PROJECTS FUNDS (CONTINUED) Odean Improvements This fund was established to track the expenditures incurred for major improvements made to Odean Avenue in 1998. The outstanding special assessments to the benefitting property owners provide the funding for the costs. Capital Improvements This fund was established to accumulate resources that may be used to internally finance future City projects. Slabtown Improvements This fund was established to track the expenditures incurred for infrastructure improvements to the Slabtown area. The outstanding special assessments to the benefitting property owners provide the funding for the costs. Kadler Avenue Improvements This fund was established to track the expenditures incurred for infrastructure improvements being planned for Kadler Avenue. The improvements will provide for an urban style street capable of handling the volumes and type of traffic associated with an industrial park, of which has received preliminary development approvals. Buildings & Property Maintenance This fund was established to provide funds and to account for the expenditure of such funds, for costs associated with the maintenance of and improvements to City buildings and properties. 85 CITY OF OTSEGO, MINNESOTA COMBINING BALANCE SHEET NONMAJOR CAPITAL PROJECT FUNDS DECEMBER 31, 2019 Parks Pavement Trails Park Capital Management Management Development Equipment ASSETS Cash and Investments 3,199,088$ 2,561$ 3,636,768$ 424,738$ Receivables Special Assessments Current - - - - Deferred 122,528 - - - Delinquent 447 - - - Due from Other Funds - - - - Total Assets 3,322,063 2,561 3,636,768 424,738 LIABILITIES Accounts Payable 945 425 - 7,300 Due to Other Funds - - - - Total Liabilities 945 425 - 7,300 DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Special Assessments 122,975 - - - FUND BALANCES Restricted Park Development - - 3,636,768 - Assigned City Buildings & Infrastructure 3,198,143 2,136 - - City Parks - - - 417,438 Unassigned - - - - Total Fund Balances (Deficits)3,198,143 2,136 3,636,768 417,438 Total Liabilities, Deferred Inflows of Resources and Fund Balances (Deficits)3,322,063$ 2,561$ 3,636,768$ 424,738$ 86 (CONTINUED) Revolving Capital Community Collector Fire Watershed Odean Capital Equipment Facilities Streets Reserve Districts Improvements Improvements 394,536$ 747$ 1,822,509$ 1,564,514$ 1,090,423$ 5,075$ 2,339,321$ - - - 504 - - - - - 163,593 - - 7,000 318,591 - - 2,871 443 - - - - - - - - - 717,227 394,536 747 1,988,973 1,565,461 1,090,423 12,075 3,375,139 99,252 - 540 - - - 38,713 - - - - - - - 99,252 - 540 - - - 38,713 - - 166,464 443 - 7,000 318,591 - - - - - - - 295,284 747 1,821,969 1,565,018 1,090,423 5,075 3,017,835 - - - - - - - - - - - - - - 295,284 747 1,821,969 1,565,018 1,090,423 5,075 3,017,835 394,536$ 747$ 1,988,973$ 1,565,461$ 1,090,423$ 12,075$ 3,375,139$ 87 CITY OF OTSEGO, MINNESOTA COMBINING BALANCE SHEET (CONTINUED) NONMAJOR CAPITAL PROJECT FUNDS DECEMBER 31, 2019 Total City Buildings Nonmajor Slabtown Kadler Avenue & Property Capital Improvements Improvements Maintenance Projects ASSETS Cash and Investments 22,794$ -$ 55,166$ 14,558,240$ Receivables Special Assessments Current - - - 504 Deferred 5,601 - - 617,313 Delinquent - - - 3,761 Due from Other Funds - - - 717,227 Total Assets 28,395 - 55,166 15,897,045 LIABILITIES Accounts Payable - 85,430 - 232,605 Due to Other Funds - 69,554 - 69,554 Total Liabilities - 154,984 - 302,159 DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Special Assessments 5,601 - - 621,074 FUND BALANCES Restricted Park Development - - - 3,636,768 Assigned City Buildings & Infrastructure 22,794 - 55,166 11,074,590 City Parks - - - 417,438 Unassigned - (154,984) - (154,984) Total Fund Balances (Deficits)22,794 (154,984) 55,166 14,973,812 Total Liabilities, Deferred Inflows of Resources and Fund Balances (Deficits)28,395$ -$ 55,166$ 15,897,045$ 88 This page has been left blank intentionally. 89 CITY OF OTSEGO, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (DEFICITS) NONMAJOR CAPITAL PROJECT FUNDS FOR THE YEAR ENDED DECEMBER 31, 2019 Parks Pavement Trails Park Capital Management Management Development Equipment REVENUES Property Taxes 800,000$ 32,000$ -$ 58,000$ Intergovernmental 280,819 - - - Charges for Services - - 1,117,699 - Special Assessments 29,396 - - - Investment Earnings (net)104,554 172 123,807 13,798 Miscellaneous - - - 24,341 Total Revenues 1,214,769 32,172 1,241,506 96,139 EXPENDITURES Capital Outlay General Government - - - - Public Safety - - - - Public Works 357,790 - - - Culture and Recreation - 31,776 16,148 7,300 Economic Development - - - - Total Expenditures 357,790 31,776 16,148 7,300 Excess (Deficiency) of Revenues Over (Under) Expenditures 856,979 396 1,225,358 88,839 OTHER FINANCING SOURCES (USES) Transfers In - - - - Sales of Capital Assets - - - - Transfers Out - - - - Total Other Financing Sources (Uses)- - - - Net Change in Fund Balance 856,979 396 1,225,358 88,839 Fund Balance (Deficit) - January 1 2,341,164 1,740 2,411,410 328,599 Fund Balance (Deficit) - December 31 3,198,143$ 2,136$ 3,636,768$ 417,438$ 90 (CONTINUED) Revolving Capital Community Collector Fire Watershed Odean Capital Equipment Facilities Streets Reserve Districts Improvements Improvements 260,000$ -$ -$ 170,000$ -$ -$ 355,000$ - 150,000 - - - - - - - - - 180,740 - - - - 9,556 772 - 7,000 63,521 16,179 - 70,053 71,955 51,413 - 89,142 - 10,000 - - - - - 276,179 160,000 79,609 242,727 232,153 7,000 507,663 - - - - - - 6,017 - - - 1,100,640 - - - 467,864 - 161,210 - - - 39,713 81,583 97,352 - - - - - - - - - - - 476,207 549,447 97,352 161,210 1,100,640 - - 521,937 (273,268) 62,648 (81,601) (857,913) 232,153 7,000 (14,274) - - - - - - 971,726 68,378 - - - - - - - - - - - - (90,000) 68,378 - - - - - 881,726 (204,890) 62,648 (81,601) (857,913) 232,153 7,000 867,452 500,174 (61,901) 1,903,570 2,422,931 858,270 (1,925) 2,150,383 295,284$ 747$ 1,821,969$ 1,565,018$ 1,090,423$ 5,075$ 3,017,835$ 91 CITY OF OTSEGO, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND (CONTINUED) CHANGES IN FUND BALANCES (DEFICITS) NONMAJOR CAPITAL PROJECT FUNDS FOR THE YEAR ENDED DECEMBER 31, 2019 Total City Buildings Nonmajor Slabtown Kadler Avenue & Property Capital Improvements Improvements Maintenance Projects REVENUES Property Taxes -$ -$ -$ 1,675,000$ Intergovernmental - 628,422 - 1,059,241 Charges for Services - - - 1,298,439 Special Assessments 3,075 - - 113,320 Investment Earnings (net)- - 796 541,869 Miscellaneous - - 1,019 35,360 Total Revenues 3,075 628,422 1,815 4,723,229 EXPENDITURES Capital Outlay General Government - - 36,649 42,666 Public Safety - - - 1,100,640 Public Works - 157,671 - 1,184,248 Culture and Recreation - - - 234,159 Economic Development - - - 476,207 Total Expenditures - 157,671 36,649 3,037,920 Excess (Deficiency) of Revenues Over (Under) Expenditures 3,075 470,751 (34,834) 1,685,309 OTHER FINANCING SOURCES (USES) Transfers In - - 90,000 1,061,726 Sales of Capital Assets - - - 68,378 Transfers Out - - - (90,000) Total Other Financing Sources (Uses)- - 90,000 1,040,104 Net Change in Fund Balance 3,075 470,751 55,166 2,725,413 Fund Balance (Deficit) - January 1 19,719 (625,735) - 12,248,399 Fund Balance (Deficit) - December 31 22,794$ (154,984)$ 55,166$ 14,973,812$ 92 CITY OF OTSEGO, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND Page 1 of 5 CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2019 (With Comparative Actual Amounts for the Year Ended December 31, 2018) 2018 Variance with Final Budget - Budgeted Amounts Actual Over Actual Original Final Amounts (Under) Amounts REVENUES Property Taxes Current 4,168,235$ 4,168,235$ 4,173,764$ 5,529$ 3,964,545$ Delinquent 20,000 20,000 16,292 (3,708) 25,362 Penalties and interest 2,000 2,000 2,142 142 2,842 Total Property Taxes 4,190,235 4,190,235 4,192,198 1,963 3,992,749 Franchise Taxes 140,000 140,000 137,510 (2,490) 139,161 Licenses and Permits Business Licenses 37,342 37,342 34,765 (2,577) 36,154 Rental Licenses 36,625 36,625 39,515 2,890 47,900 Other Licenses 2,000 2,000 6,323 4,323 3,865 Right of Way Permits 40,000 40,000 64,900 24,900 62,800 Building Permits 857,134 857,134 1,543,726 686,592 1,510,077 Other Permits 9,300 9,300 10,650 1,350 12,110 Total Licenses and Permits 982,401 982,401 1,699,879 717,478 1,672,906 Intergovernmental State Police Aid 59,000 59,000 75,425 16,425 65,843 Other Aid & Grants 11,800 11,800 12,503 703 12,594 Local Other Aid & Grants - - 400 400 - Total Intergovernmental 70,800 70,800 88,328 17,528 78,437 Charges for Services General Government 27,600 27,600 116,323 88,723 111,816 Public Works 66,250 66,250 122,995 56,745 123,836 Culture and Recreation 68,970 68,970 71,553 2,583 80,047 Total Charges for Services 162,820 162,820 310,871 148,051 315,699 Special Assessments 5,300 5,300 5,703 403 6,403 Fines and Forfeitures 24,000 24,000 26,488 2,488 25,616 Investment Earnings (net)65,000 65,000 155,709 90,709 48,761 Miscellaneous Refunds and Reimbursements - - 26,947 26,947 16,621 Contributions and Donations - - 26,829 26,829 4,756 Other - - 22,397 22,397 4,681 Total Miscellaneous - - 76,173 76,173 26,058 Total Revenues 5,640,556 5,640,556 6,692,859 1,052,303 6,305,790 2019 93 CITY OF OTSEGO, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND Page 2 of 5 CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2019 (With Comparative Actual Amounts for the Year Ended December 31, 2018) 2018 Variance with Final Budget - Budgeted Amounts Actual Over Actual Original Final Amounts (Under) Amounts EXPENDITURES General Government City Council Personal Services 36,669 36,669 31,749 (4,920) 32,904 Supplies 375 375 80 (295) 240 Services and Other Charges 103,645 103,645 45,172 (58,473) 53,201 Total 140,689 140,689 77,001 (63,688) 86,345 City Administrator Personal Services 162,321 162,321 158,652 (3,669) 151,124 Supplies 50 50 47 (3) 45 Services and Other Charges 5,148 5,148 2,897 (2,251) 3,194 Total 167,519 167,519 161,596 (5,923) 154,363 Administration Personal Services 262,351 262,351 241,285 (21,066) 239,311 Supplies 11,150 11,150 10,039 (1,111) 8,010 Services and Other Charges 56,031 56,031 59,062 3,031 55,241 Total 329,532 329,532 310,386 (19,146) 302,562 Elections Personal Services - - - - 10,527 Supplies - - 921 921 5,682 Services and Other Charges 1,650 1,650 1,626 (24) 2,192 Total 1,650 1,650 2,547 897 18,401 Assessing Services and Other Charges 112,680 112,680 112,976 296 101,911 Finance Personal Services 155,399 155,399 145,308 (10,091) 148,174 Supplies 2,600 2,600 1,791 (809) 948 Services and Other Charges 68,387 68,387 66,631 (1,756) 57,830 Total 226,386 226,386 213,730 (12,656) 206,952 Information Technology Supplies 5,000 5,000 1,586 (3,414) 1,310 Services and Other Charges 80,600 80,600 69,373 (11,227) 65,297 Total 85,600 85,600 70,959 (14,641) 66,607 Legal Services and Other Charges 91,000 91,000 95,478 4,478 86,249 Human Resources Personal Services - - 173 173 - Services and Other Charges - - 119 119 - Total - - 292 292 - 2019 94 CITY OF OTSEGO, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND Page 3 of 5 CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2019 (With Comparative Actual Amounts for the Year Ended December 31, 2018) 2018 Variance with Final Budget - Budgeted Amounts Actual Over Actual Original Final Amounts (Under) Amounts EXPENDITURES (CONTINUED) General Government (Continued) Prairie Center Supplies 8,900 8,900 7,613 (1,287) 7,728 Services and Other Charges 30,319 30,319 33,058 2,739 29,414 Total 39,219 39,219 40,671 1,452 37,142 City Hall & Public Works Garage Supplies 12,400 12,400 9,840 (2,560) 10,481 Services and Other Charges 99,886 99,886 109,666 9,780 108,432 Total 112,286 112,286 119,506 7,220 118,913 Old Town Hall Services and Other Charges 3,300 3,300 2,916 (384) 3,514 Total General Government 1,309,861 1,309,861 1,208,058 (101,803) 1,182,959 Public Safety Police Services Services and Other Charges 1,329,240 1,329,240 1,326,668 (2,572) 1,177,836 Public Safety Commission Personal Services 960 960 670 (290) 670 Supplies 600 600 - (600) 12 Services and Other Charges 1,500 1,500 - (1,500) - Total 3,060 3,060 670 (2,390) 682 Fire Protection Supplies 500 500 - (500) - Services and Other Charges 633,393 633,393 633,384 (9) 581,458 Total 633,893 633,893 633,384 (509) 581,458 Building Inspections Personal Services 128,878 128,878 131,188 2,310 112,451 Supplies 4,100 4,100 2,916 (1,184) 4,086 Services and Other Charges 257,355 257,355 265,828 8,473 275,731 Total 390,333 390,333 399,932 9,599 392,268 Emergency Management Supplies 500 500 1,944 1,444 29 Services and Other Charges 2,100 2,100 605 (1,495) 534 Total 2,600 2,600 2,549 (51) 563 Animal Control Services and Other Charges 15,300 15,300 16,237 937 15,380 Total Public Safety 2,374,426 2,374,426 2,379,440 5,014 2,168,187 2019 95 CITY OF OTSEGO, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND Page 4 of 5 CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2019 (With Comparative Actual Amounts for the Year Ended December 31, 2018) 2018 Variance with Final Budget - Budgeted Amounts Actual Over Actual Original Final Amounts (Under) Amounts EXPENDITURES (CONTINUED) Public Works Streets Maintenance Personal Services 587,483 587,483 545,903 (41,580) 503,063 Supplies 161,144 161,144 160,829 (315) 133,829 Services and Other Charges 87,282 87,282 64,664 (22,618) 81,968 Total 835,909 835,909 771,396 (64,513) 718,860 Engineering Services and Other Charges 81,400 81,400 90,784 9,384 91,493 Street Lighting Services and Other Charges 145,660 145,660 144,594 (1,066) 148,217 Fleet Management Personal Services 77,136 77,136 79,182 2,046 93,614 Supplies 137,324 137,324 135,067 (2,257) 109,702 Services and Other Charges 10,660 10,660 19,204 8,544 8,578 Total 225,120 225,120 233,453 8,333 211,894 Total Public Works 1,288,089 1,288,089 1,240,227 (47,862) 1,170,464 Culture and Recreation Parks Maintenance Personal Services 286,869 286,869 281,008 (5,861) 245,610 Supplies 76,810 76,810 77,589 779 72,762 Services and Other Charges 115,008 115,008 122,648 7,640 120,257 Total 478,687 478,687 481,245 2,558 438,629 Recreation Personal Services 145,267 145,267 160,132 14,865 143,112 Supplies 15,150 15,150 7,818 (7,332) 11,563 Services and Other Charges 62,336 62,336 60,931 (1,405) 60,585 Total 222,753 222,753 228,881 6,128 215,260 Heritage Preservation Commission Personal Services 480 480 280 (200) 380 Supplies 500 500 - (500) 5 Services and Other Charges 1,500 1,500 - (1,500) 512 Total 2,480 2,480 280 (2,200) 897 Total Culture and Recreation 703,920 703,920 710,406 6,486 654,786 2019 96 CITY OF OTSEGO, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND Page 5 of 5 CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2019 (With Comparative Actual Amounts for the Year Ended December 31, 2018) 2018 Variance with Final Budget - Budgeted Amounts Actual Over Actual Original Final Amounts (Under) Amounts EXPENDITURES (CONTINUED) Economic Development Planning Commission Personal Services 2,500 2,500 1,500 (1,000) 1,000 Services and Other Charges 1,500 1,500 - (1,500) - Total 4,000 4,000 1,500 (2,500) 1,012 Planning Services and Other Charges 96,000 96,000 107,637 11,637 99,962 Economic Development Supplies 100 100 66 (34) - Services and Other Charges 14,160 14,160 4,938 (9,222) 12,337 Total 14,260 14,260 5,004 (9,256) 12,337 Total Economic Development 114,260 114,260 114,141 (119) 113,311 Capital Outlay General Government 9,100 9,100 19,507 10,407 5,260 Public Works 9,800 9,800 10,491 691 - Culture and Recreation 3,000 3,000 4,620 1,620 - Total 21,900 21,900 34,618 12,718 5,260 Total Expenditures 5,812,456 5,812,456 5,686,890 (125,566) 5,294,967 Excess (Deficiency) of Revenues Over (Under) Expenditures (171,900) (171,900) 1,005,969 1,177,869 1,010,823 OTHER FINANCING SOURCES (USES) Transfers In 171,900 171,900 171,900 - 159,840 Sales of Capital Assets - - - - 435 Transfers Out - - (971,726) (971,726) (948,076) Total Other Financing Sources (Uses) 171,900 171,900 (799,826) (971,726) (787,801) Net Change in Fund Balance - - 206,143 206,143 223,022 Fund Balance - January 1 4,113,667 4,113,667 4,113,667 - 3,890,645 Fund Balance - December 31 4,113,667$ 4,113,667$ 4,319,810$ 206,143$ 4,113,667$ 2019 97 CITY OF OTSEGO, MINNESOTA COMBINING BALANCE SHEET DEBT SERVICE FUND BY ACCOUNT DECEMBER 31, 2019 Series Series Series 2010D 2012A 2018A & 2011A ASSETS Cash and Investments 347,936$ 380,989$ 732,230$ Receivables Special Assessments Current - 684 - Deferred 84,431 1,155,317 1,256,027 Delinquent - 645 - Total Assets 432,367 1,537,635 1,988,257 LIABILITIES Accounts Payable 179 179 357 DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Special Assessments 84,431 1,155,962 1,256,027 FUND BALANCES Restricted 347,757 381,494 731,873 Total Liabilities, Deferred Inflows of Resources and Fund Balances 432,367$ 1,537,635$ 1,988,257$ 98 Total Series Series Series Debt 2010B 2007B 2010A Service 74,420$ 12,485$ -$ 1,548,060$ - - - 684 - 8,092 - 2,503,867 - - - 645 74,420 20,577 - 4,053,256 179 - - 894 - 8,092 - 2,504,512 74,241 12,485 - 1,547,850 74,420$ 20,577$ -$ 4,053,256$ 99 CITY OF OTSEGO, MINNESOTA COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES DEBT SERVICE FUND BY ACCOUNT FOR THE YEAR ENDED DECEMBER 31, 2019 Series Series Series 2010D 2012A 2018A & 2011A REVENUES Property Taxes -$ 79,293$ 205,000$ Special Assessments 80,495 228,869 133,237 Investment Earnings (net) - 186 - Total Revenues 80,495 308,348 338,237 EXPENDITURES Debt Service Principal 210,000 - 480,000 Interest 12,200 73,262 104,065 Fiscal Agent Fees 674 674 852 Total Expenditures 222,874 73,936 584,917 Excess (Deficiency) of Revenues Over (Under) Expenditures (142,379) 234,412 (246,680) OTHER FINANCING SOURCES Transfers In - - - Net Change in Fund Balance (142,379) 234,412 (246,680) Fund Balance (Deficit) - January 1 490,136 147,082 978,553 Fund Balance - December 31 347,757$ 381,494$ 731,873$ 100 Total Series Series Series Debt 2010B 2007B 2010A Service 450,000$ -$ -$ 734,293$ - 24,485 - 467,086 - - - 186 450,000 24,485 - 1,201,565 455,000 - 40,000 1,185,000 39,390 - 1,300 230,217 674 - - 2,874 495,064 - 41,300 1,418,091 (45,064) 24,485 (41,300) (216,526) - - 40,969 40,969 (45,064) 24,485 (331) (175,557) 119,305 (12,000) 331 1,723,407 74,241$ 12,485$ -$ 1,547,850$ 101 CITY OF OTSEGO, MINNESOTA DEBT SERVICE FUND - SERIES 2012A SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2019 Variance with Final Budget - Budgeted Amounts Actual Over Original Final Amounts (Under) REVENUES Special Assessments 52,103$ 52,103$ 80,495$ 28,392$ EXPENDITURES Debt Service Principal 210,000 210,000 210,000 - Interest 12,200 12,200 12,200 - Fiscal Agent Fees 500 500 674 174 Total Expenditures 222,700 222,700 222,874 174 Net Change in Fund Balance (170,597) (170,597) (142,379) 28,218 Fund Balance - January 1 490,136 490,136 490,136 - Fund Balance - December 31 319,539$ 319,539$ 347,757$ 28,218$ 102 CITY OF OTSEGO, MINNESOTA DEBT SERVICE FUND - SERIES 2018A SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2019 Variance with Final Budget - Budgeted Amounts Actual Over Original Final Amounts (Under) REVENUES Property Taxes 79,293$ 79,293$ 79,293$ -$ Special Assessments 146,536 146,536 228,869 82,333 Investment Earnings (net) - - 186 186 Total Revenues 225,829 225,829 308,348 82,519 EXPENDITURES Debt Service Interest 73,262 73,262 73,262 - Fiscal Agent Fees 500 500 674 174 Total Expenditures 73,762 73,762 73,936 174 Net Change in Fund Balance 152,067 152,067 234,412 82,345 Fund Balance - January 1 147,082 147,082 147,082 - Fund Balance - December 31 299,149$ 299,149$ 381,494$ 82,345$ 103 CITY OF OTSEGO, MINNESOTA DEBT SERVICE FUND - SERIES 2010D & 2011A SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2019 Variance with Final Budget - Budgeted Amounts Actual Over Original Final Amounts (Under) REVENUES Property Taxes 205,000$ 205,000$ 205,000$ -$ Special Assessments 127,394 127,394 133,237 5,843 Total Revenues 332,394 332,394 338,237 5,843 EXPENDITURES Debt Service Principal 480,000 480,000 480,000 - Interest 104,066 104,066 104,065 (1) Fiscal Agent Fees 1,000 1,000 852 (148) Total Expenditures 585,066 585,066 584,917 (149) Net Change in Fund Balance (252,672) (252,672) (246,680) 5,992 Fund Balance - January 1 978,553 978,553 978,553 - Fund Balance - December 31 725,881$ 725,881$ 731,873$ 5,992$ 104 CITY OF OTSEGO, MINNESOTA DEBT SERVICE FUND - SERIES 2010B SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2019 Variance with Final Budget - Budgeted Amounts Actual Over Original Final Amounts (Under) REVENUES Property Taxes 450,000$ 450,000$ 450,000$ -$ EXPENDITURES Debt Service Principal 455,000 455,000 455,000 - Interest 39,390 39,390 39,390 - Fiscal Agent Fees 500 500 674 174 Total Expenditures 494,890 494,890 495,064 174 Net Change in Fund Balance (44,890) (44,890) (45,064) (174) Fund Balance - January 1 119,305 119,305 119,305 - Fund Balance - December 31 74,415$ 74,415$ 74,241$ (174)$ 105 CITY OF OTSEGO, MINNESOTA DEBT SERVICE FUND - SERIES 2007B SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2019 Variance with Final Budget - Budgeted Amounts Actual Over Original Final Amounts (Under) REVENUES Special Assessments 11,894$ 11,894$ 24,485$ 12,591$ Fund Balance (Deficit) - January 1 (12,000) (12,000) (12,000) - Fund Balance - December 31 (106)$ (106)$ 12,485$ 12,591$ 106 CITY OF OTSEGO, MINNESOTA DEBT SERVICE FUND - SERIES 2010A SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2019 Variance with Final Budget - Budgeted Amounts Actual Over Original Final Amounts (Under) EXPENDITURES Debt Service Principal 40,000$ 40,000$ 40,000$ -$ Interest 1,300 1,300 1,300 - Fiscal Agent Fees 500 500 - (500) Total Expenditures 41,800 41,800 41,300 (500) Excess (Deficiency) of Revenues Over (Under) Expenditures (41,800) (41,800) (41,300) 500 OTHER FINANCING SOURCES Transfers In 41,000 41,000 40,969 (31) Net Change in Fund Balance (800) (800) (331) 469 Fund Balance - January 1 331 331 331 - Fund Balance - December 31 (469)$ (469)$ -$ 469$ 107 This page has been left blank intentionally. 108 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) This part of the City of Otsego's comprehensive annual financial report (CAFR) presents detailed information as a context for understanding what the financial statements, note disclosures, and required supplementary information say about the City's overall financial health.Page No. Financial Trends 110 These tables contain trend information to help the readers of the CAFR understand the City's financial performance by comparing the current year with a historical perspective. Revenue Capacity 124 These tables contain information to help the readers of the CAFR assess the City's most significant revenue source, which is property taxes. Debt Capacity 130 These tables present information to help the readers of the CAFR assess the affordability of the City's current levels of outstanding debt and the City's ability to issue debt in the future. Demographic and Economic Information 137 These tables offer demographic and economic indicators to help the readers of the CAFR to understand the environment in which the City's financial activities take place. Operating Information 139 These tables contain service and infrastructure data to assist the readers of the CAFR to understand how the City's financial report relates to the services the City provides. Sources: Unless otherwise noted, the information in these tables is derived from the CAFR for each respective year. 109 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) NET POSITION BY COMPONENT Last Ten Fiscal Years (accrual basis of accounting) 2010 2011 2012 2013 Governmental Activities Net Investment in Capital Assets 12,600,418$ 13,039,318$ 13,673,424$ 14,709,024$ Restricted 7,506,642 6,547,412 6,570,533 5,882,912 Unrestricted 8,568,988 8,490,450 7,850,150 7,313,054 Total Governmental Activities Net Position 28,676,048$ 28,077,180$ 28,094,107$ 27,904,990$ Business-type activities Net Investment in Capital Assets 17,255,564$ 16,017,362$ 14,795,965$ 13,694,517$ Unrestricted 9,661,840 8,220,490 9,054,217 10,546,291 Total Business-type Activities Net Position 26,917,404$ 24,237,852$ 23,850,182$ 24,240,808$ Primary Government Net Investment in Capital Assets 29,855,982$ 29,056,680$ 28,469,389$ 28,403,541$ Restricted 7,506,642 6,547,412 6,570,533 5,882,912 Unrestricted 18,230,828 16,710,940 16,904,367 17,859,345 Total Primary Government Net Position 55,593,452$ 52,315,032$ 51,944,289$ 52,145,798$ Sources: The data for this table has been extracted from the respective years CAFR document. 110 Table 1 2014 2015 2016 2017 2018 2019 15,515,291$ 15,303,426$ 19,103,702$ 21,496,582$ 25,330,507$ 31,373,524$ 5,430,795 4,547,327 4,292,589 4,973,536 6,929,688 7,658,124 9,601,854 9,627,962 10,745,858 13,338,398 13,626,318 11,357,968 30,547,940$ 29,478,715$ 34,142,149$ 39,808,516$ 45,886,513$ 50,389,616$ 12,619,305$ 11,553,869$ 15,889,294$ 20,504,751$ 24,701,888$ 31,344,999$ 13,487,231 15,474,362 15,248,794 15,679,356 18,287,811 18,919,363 26,106,536$ 27,028,231$ 31,138,088$ 36,184,107$ 42,989,699$ 50,264,362$ 28,134,596$ 26,857,295$ 34,992,996$ 42,001,333$ 50,032,395$ 62,718,523$ 5,430,795 4,547,327 4,292,589 4,973,536 6,929,688 7,658,124 23,089,085 25,102,324 25,994,652 29,017,754 31,914,129 30,277,331 56,654,476$ 56,506,946$ 65,280,237$ 75,992,623$ 88,876,212$ 100,653,978$ 111 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) CHANGES IN NET POSITION - CONTINUED ON THE FOLLOWING PAGES Last Ten Fiscal Years (accrual basis of accounting) 2010 2011 2012 2013 GOVERNMENTAL ACTIVITIES Expenses General Government 910,830$ 956,651$ 1,002,690$ 906,102$ Public Safety 1,615,763 1,647,285 1,445,397 1,447,887 Public Works 2,029,922 2,114,975 2,486,553 2,760,130 Culture and Recreation 401,563 569,431 575,592 573,581 Economic Development 17,096 12,353 103,884 75,303 Interest on Long-term Debt 919,907 661,447 631,129 543,821 Total Expenses 5,895,081 5,962,142 6,245,245 6,306,824 Program Revenues Charges for Services General Government 109,349 109,686 54,674 36,735 Public Safety 889,878 819,537 588,894 784,038 Public Works 24,082 111,873 50,906 106,913 Culture and Recreation 360 3,101 8,840 28,600 Operating Grants and Contributions 191,850 197,325 203,645 220,790 Capital Grants and Contributions 563,690 233,832 620,574 485,533 Total Program Revenues 1,779,209 1,475,354 1,527,533 1,662,609 Net (Expense) / Revenue (4,115,872) (4,486,788) (4,717,712) (4,644,215) General Revenues and Transfers Taxes Property 3,587,177 3,719,778 4,271,751 4,333,972 Tax Increments - - - - Franchise Taxes 97,228 100,176 106,547 83,681 Unrestricted Grants and Contributions 29,797 26,051 54,601 10,954 Investment Earnings (net)227,484 290,962 212,731 (17,852) Gain on Disposal of Capital Assets 37,000 16,500 40,009 44,343 Transfers 10,000 44,000 49,000 - Transfers - Capital Assets - - - - Total General Revenues and Transfers 3,988,686 4,197,467 4,734,639 4,455,098 Change in Net Position (127,186)$ (289,321)$ 16,927$ (189,117)$ 112 Table 2 Page 1 of 3 2014 2015 2016 2017 2018 2019 1,230,335$ 1,174,510$ 1,376,793$ 1,085,554$ 1,228,607$ 1,383,291$ 1,499,538 1,670,627 1,846,459 1,906,843 2,207,699 2,411,751 2,383,890 6,521,708 3,389,909 2,618,584 3,348,200 3,387,481 792,525 792,936 847,553 1,013,252 1,095,151 1,177,721 45,024 145,771 302,296 365,768 223,175 741,705 347,503 231,242 223,938 197,282 276,423 212,402 6,298,815 10,536,794 7,986,948 7,187,283 8,379,255 9,314,351 119,757 36,235 81,876 100,125 118,219 639,077 1,159,073 1,191,134 1,677,788 1,384,626 1,698,522 1,726,367 724,009 247,260 656,570 805,248 942,042 127,176 43,606 52,075 59,236 67,112 80,047 71,553 233,606 244,497 248,910 261,814 328,410 319,332 1,619,209 3,154,662 4,437,611 3,957,672 5,800,583 3,361,497 3,899,260 4,925,863 7,161,991 6,576,597 8,967,823 6,245,002 (2,399,555) (5,610,931) (824,957) (610,686) 588,568 (3,069,349) 4,476,810 4,602,153 4,963,787 5,572,250 6,078,341 6,681,989 - - - - 96,938 97,419 120,964 128,722 131,229 135,652 139,161 137,510 132,104 242,970 255,951 231,683 191,570 162,120 157,640 55,909 82,385 124,052 263,784 754,079 32,355 35,600 31,160 38,373 37,563 47,362 122,632 284,586 186,755 195,686 207,840 212,869 - - (162,876) (20,643) (1,525,768) (520,896) 5,042,505 5,349,940 5,488,391 6,277,053 5,489,429 7,572,452 2,642,950$ (260,991)$ 4,663,434$ 5,666,367$ 6,077,997$ 4,503,103$ 113 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) CHANGES IN NET POSITION - CONTINUED Last Ten Fiscal Years (accrual basis of accounting) 2010 2011 2012 2013 BUSINESS-TYPE ACTIVITIES Expenses Water Utility 1,314,133$ 1,530,108$ 1,301,990$ 1,241,343$ Sanitary Sewer Utility 2,307,213 2,778,657 2,326,550 2,123,381 Storm Water Utility 68,903 61,024 69,834 72,944 Total Expenses 3,690,249 4,369,789 3,698,374 3,437,668 Program Revenues Charges for Services Water Utility 745,395 736,448 1,049,531 1,259,942 Sanitary Sewer Utility 989,847 1,067,088 1,055,557 1,186,523 Storm Water Utility 72,081 98,873 69,608 41,831 Capital Grants and Contributions 990,041 333,151 1,032,687 1,267,189 Total Program Revenues 2,797,364 2,235,560 3,207,383 3,755,485 Net (Expense) / Revenue (892,885) (2,134,229) (490,991) 317,817 General Revenues and Transfers Property Taxes - - - 57,739 Investment Earnings (net)180,266 235,166 152,321 (34,717) Gain on Disposal of Capital Assets - - - 18,733 Transfers (10,000) (44,000) (49,000) - Transfers - Capital Assets - - - - Total General Revenues and Transfers 170,266 191,166 103,321 41,755 Change in Net Position (722,619)$ (1,943,063)$ (387,670)$ 359,572$ 114 Table 2 Page 2 of 3 2014 2015 2016 2017 2018 2019 1,187,553$ 1,246,064$ 1,276,338$ 1,377,537$ 1,468,485$ 1,729,938$ 2,052,493 2,207,811 2,480,519 2,477,995 2,561,070 2,600,436 57,977 95,533 42,342 62,172 71,040 123,163 3,298,023 3,549,408 3,799,199 3,917,704 4,100,595 4,453,537 1,167,066 1,261,303 1,334,442 1,529,127 1,754,947 1,734,090 1,325,181 1,479,703 1,601,172 1,744,067 1,932,885 2,254,688 45,570 76,211 75,932 94,919 104,916 109,372 2,560,270 2,020,299 4,766,947 5,591,332 5,500,794 6,543,224 5,098,087 4,837,516 7,778,493 8,959,445 9,293,542 10,641,374 1,800,064 1,288,108 3,979,294 5,041,741 5,192,947 6,187,837 24,824 25,000 25,000 25,000 26,000 30,000 168,320 85,259 129,442 154,321 260,833 748,799 28,440 - - - 7,884 - (122,632) (284,586) (186,755) (195,686) (207,840) (212,869) - - 162,876 20,643 1,525,768 520,896 98,952 (174,327) 130,563 4,278 1,612,645 1,086,826 1,899,016$ 1,113,781$ 4,109,857$ 5,046,019$ 6,805,592$ 7,274,663$ 115 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) CHANGES IN NET POSITION - CONTINUED Last Ten Fiscal Years (accrual basis of accounting) 2010 2011 2012 2013 TOTAL PRIMARY GOVERNMENT Expenses Governmental Activities 5,895,081$ 5,962,142$ 6,245,245$ 6,306,824$ Business-type Activities 3,690,249 4,369,789 3,698,374 3,437,668 Total Expenses 9,585,330 10,331,931 9,943,619 9,744,492 Program Revenues Governmental Activities 1,779,209 1,475,354 1,527,533 1,662,609 Business-type Activities 2,797,364 2,235,560 3,207,383 3,755,485 Total Program Revenues 4,576,573 3,710,914 4,734,916 5,418,094 Net (Expense) / Revenue (5,008,757) (6,621,017) (5,208,703) (4,326,398) General Revenues and Transfers Governmental Activities 3,988,686 4,197,467 4,734,639 4,455,098 Business-type Activities 170,266 191,166 103,321 41,755 Total General Revenues and Transfers 4,158,952 4,388,633 4,837,960 4,496,853 Change in Net Position (849,805)$ (2,232,384)$ (370,743)$ 170,455$ Sources: The data for this table has been extracted from the respective years CAFR document. 116 Table 2 Page 3 of 3 2014 2015 2016 2017 2018 2019 6,298,815$ 10,536,794$ 7,986,948$ 7,187,283$ 8,379,255$ 9,314,351$ 3,298,023 3,549,408 3,799,199 3,917,704 4,100,595 4,453,537 9,596,838 14,086,202 11,786,147 11,104,987 12,479,850 13,767,888 3,899,260 4,925,863 7,161,991 6,576,597 8,967,823 6,245,002 5,098,087 4,837,516 7,778,493 8,959,445 9,293,542 10,641,374 8,997,347 9,763,379 14,940,484 15,536,042 18,261,365 16,886,376 (599,491) (4,322,823) 3,154,337 4,431,055 5,781,515 3,118,488 5,042,505 5,349,940 5,488,391 6,277,053 5,489,429 7,572,452 98,952 (174,327) 130,563 4,278 1,612,645 1,086,826 5,141,457 5,175,613 5,618,954 6,281,331 7,102,074 8,659,278 4,541,966$ 852,790$ 8,773,291$ 10,712,386$ 12,883,589$ 11,777,766$ 117 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) GOVERNMENTAL ACTIVITIES TAX REVENUE BY SOURCE Table 3 Last Ten Fiscal Years (accrual basis of accounting) Property Tax Franchise Taxes Increments Taxes Total 2010 3,587,177$ -$ 97,228$ 3,684,405$ 2011 3,719,778 - 100,176 3,819,954 2012 4,271,751 - 106,547 4,378,298 2013 4,333,972 - 83,681 4,417,653 2014 4,476,810 - 120,964 4,597,774 2015 4,602,153 - 128,722 4,730,875 2016 4,963,787 - 131,229 5,095,016 2017 5,572,250 - 135,652 5,707,902 2018 6,078,341 96,938 139,161 6,314,440 2019 6,681,989 97,419 137,510 6,916,918 Sources: The data for this table has been extracted from the respective years CAFR document. 118 This page has been left blank intentionally. 119 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) FUND BALANCES - GOVERNMENTAL FUNDS Last Ten Fiscal Years (modified accrual basis of accounting) 2010 2011 2012 2013 General Fund Unreserved 1,713,440$ -$ -$ -$ Nonspendable - - 11,254 11,254 Assigned - 81,168 87,971 103,418 Unassigned - 1,622,430 1,665,366 1,797,403 Total General Fund 1,713,440$ 1,703,598$ 1,764,591$ 1,912,075$ All Other Governmental Funds Reserved 1,197,967$ -$ -$ -$ Unreserved, Reported in: Special Revenue Funds 2,811,289 - - - Capital Project Funds 2,157,424 - - - Nonspendable - - 4,601 351 Restricted - 5,985,647 7,898,825 8,805,554 Committed - 39,142 52,360 595,191 Assigned - 6,517,609 5,605,265 4,267,012 Unassigned - (700,854) (341,194) (9,555) Total All Other Governmental Funds 6,166,680$ 11,841,544$ 13,219,857$ 13,658,553$ Sources: The data for this table has been extracted from the respective years CAFR document. Note: During 2011, the City implemented GASB Statement No. 54, Fund Balance and Governmental Fund Type Definitions. 120 Table 4 2014 2015 2016 2017 2018 2019 -$ -$ -$ -$ -$ -$ 80,423 105,547 110,973 317,197 320,887 323,124 101,833 128,646 192,408 205,257 205,449 223,740 3,211,382 2,656,330 3,342,821 3,368,191 3,587,331 3,772,946 3,393,638$ 2,890,523$ 3,646,202$ 3,890,645$ 4,113,667$ 4,319,810$ -$ -$ -$ -$ -$ -$ - - - - - - - - - - - - - 2,675 2,000 1,325 650 - 2,576,729 2,278,379 1,931,757 3,290,750 4,167,765 5,226,784 387,033 406,683 419,829 474,863 448,699 438,676 5,218,020 6,825,237 7,221,257 9,098,697 10,526,550 11,492,028 (10,584) (26,070) (281,273) (355,150) (1,790,236) (4,463,532) 8,171,198$ 9,486,904$ 9,293,570$ 12,510,485$ 13,353,428$ 12,693,956$ 121 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS Last Ten Fiscal Years (modified accrual basis of accounting) 2010 2011 2012 2013 Revenues Property Taxes 3,671,320$ 3,886,919$ 4,344,415$ 4,564,068$ Tax Increments - - - - Franchise Taxes - - - - Licenses and Permits 339,568 303,059 553,577 819,493 Intergovernmental 191,784 375,703 621,447 241,996 Charges for Services 126,453 200,256 86,655 170,194 Special Assessments 1,511,510 2,055,623 875,822 1,987,647 Fines and Forfeitures - 1,000 2,000 - Investment Earnings (net) 227,484 290,962 209,984 (17,852) Miscellaneous 33,153 25,302 56,625 78,457 Total Revenues 6,101,272 7,138,824 6,750,525 7,844,003 Expenditures General Government 802,632 887,847 918,055 923,255 Public Safety 1,604,062 1,586,504 1,440,908 1,447,182 Public Works 962,329 974,557 1,009,827 1,121,981 Culture and Recreation 201,080 246,075 277,605 313,023 Economic Development 17,096 12,353 103,884 75,303 Capital Outlay 1,533,354 1,178,526 1,707,346 1,984,531 Debt Service Principal 1,345,000 745,000 810,000 840,000 Interest 989,718 489,184 554,245 574,715 Bond Issuance & Fiscal Agent Fee's 125,275 86,285 42,900 - Total Expenditures 7,580,546 6,206,331 6,864,770 7,279,990 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,479,274) 932,493 (114,245) 564,013 Other Financing Sources (Uses) Transfers In 931,682 2,069,009 997,325 - Issuance of Debt 5,310,000 4,640,000 1,400,000 - Premium on Issuance of Debt - 48,529 64,542 - Sales of Capital Assets 56,000 - 40,009 - Refunded Bonds Redeemed (4,325,000) - - - Insurance Recovery - - - 22,167 Transfers Out (917,937) (2,025,009) (948,325) - Total Other Financing Sources (Uses)1,054,745 4,732,529 1,553,551 22,167 Net Change in Fund Balances (424,529)$ 5,665,022$ 1,439,306$ 586,180$ Debt Service as a Percentage of Noncapital Expenditures 36.16%22.68%22.37%23.32% Sources: The data for this table has been extracted from the respective years CAFR document. 122 Table 5 2014 2015 2016 2017 2018 2019 4,524,092$ 4,651,453$ 4,960,518$ 5,595,120$ 6,084,051$ 6,662,307$ - - - - 96,938 97,419 120,964 128,722 131,229 135,652 139,161 137,510 1,238,823 1,179,136 1,661,565 1,363,384 1,672,906 1,699,879 1,034,552 3,570,630 2,111,727 1,093,154 2,339,286 1,801,414 1,142,453 555,660 1,274,578 2,129,514 2,328,991 2,130,542 905,441 560,748 575,155 734,522 508,865 586,109 4,000 11,998 16,223 21,092 25,616 26,488 157,640 55,909 82,385 124,052 263,784 754,079 50,286 105,573 119,732 294,909 233,946 141,533 9,178,251 10,819,829 10,933,112 11,491,399 13,693,544 14,037,280 1,169,697 1,141,113 1,233,680 1,072,195 1,182,959 1,313,178 1,495,008 1,664,031 1,807,985 1,886,661 2,168,187 2,379,440 1,023,693 1,044,024 1,019,946 1,066,349 1,205,464 1,683,958 464,840 466,205 534,122 587,739 654,786 710,406 45,024 145,771 196,534 195,716 223,175 265,498 1,688,847 4,477,153 4,349,555 2,160,857 8,422,796 7,001,285 6,965,000 1,130,000 1,210,000 1,125,000 1,160,000 1,185,000 454,566 256,148 233,498 206,748 182,875 230,217 - 2,979 3,362 3,267 74,512 2,874 13,306,675 10,327,424 10,588,682 8,304,532 15,274,754 14,771,856 (4,128,424) 492,405 344,430 3,186,867 (1,581,210) (734,576) 612,433 1,574,500 648,087 1,278,609 1,397,210 1,274,595 - - - - 2,305,000 - - - - - 58,475 - - 35,600 31,160 78,805 75,860 68,378 - - - - - - - - - - - - (489,801) (1,289,914) (461,332) (1,082,923) (1,189,370) (1,061,726) 122,632 320,186 217,915 274,491 2,647,175 281,247 (4,005,792)$ 812,591$ 562,345$ 3,461,358$ 1,065,965$ (453,329)$ 60.23%14.22%18.40%19.32%16.69%15.85% 123 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) ESTIMATED ACTUAL VALUE, TAXABLE MARKET VALUE AND TAX CAPACITY OF TAXABLE PROPERTY Last Ten Fiscal Years 2010 2011 2012 2013 Estimated Actual Value 1,297,319,800$ 1,122,091,900$ 1,070,068,000$ 989,365,300$ Taxable Market Value Real Estate 1,163,465,900$ 1,045,413,800$ 913,874,900$ 839,428,800$ Personal Property 13,099,300 14,203,900 14,003,900 14,305,700 Total Taxable Market Value 1,176,565,200$ 1,059,617,700$ 927,878,800$ 853,734,500$ Taxable Market Value as a Percentage of Estimated Actual Value 90.69%94.43%86.71%86.29% Tax Capacity Real Estate 12,750,856$ 11,376,627$ 9,999,046$ 9,184,748$ Personal Property 261,328 283,499 279,502 285,540 Net Tax Capacity for Direct Rate 13,012,184$ 11,660,126$ 10,278,548$ 9,470,288$ Net Tax Capacity as a Percentage of Estimated Actual Value 1.00%1.04%0.96%0.96% Property Tax Levies General Revenues 3,252,000$ 3,500,000$ 3,836,000$ 3,952,910$ Debt Service 566,000 466,000 425,000 425,000 Total Property Taxes Levied 3,818,000$ 3,966,000$ 4,261,000$ 4,377,910$ Tax Rates General Revenues 24.992 30.017 37.320 41.740 Debt Service 4.350 3.997 4.135 4.488 Total Direct Tax Rate 29.342 34.013 41.455 46.228 Sources: The data for this table has been provided by the Wright County Auditor / Treasurer's Office. 124 Table 6 2014 2015 2016 2017 2018 2019 1,051,543,200$ 1,177,857,500$ 1,340,579,000$ 1,473,986,500$ 1,644,926,700$ 1,837,875,900$ 908,532,000$ 1,039,579,100$ 1,195,720,700$ 1,327,925,100$ 1,490,919,200$ 1,666,323,700$ 14,513,300 14,952,700 16,476,000 20,388,300 23,397,400 29,560,400 923,045,300$ 1,054,531,800$ 1,212,196,700$ 1,348,313,400$ 1,514,316,600$ 1,695,884,100$ 87.78%89.53%90.42%91.47%92.06%92.27% 9,805,499$ 11,060,135$ 12,909,476$ 14,465,922$ 16,228,630$ 18,029,678$ 290,266 298,480 328,948 407,194 467,378 578,862 10,095,765$ 11,358,615$ 13,238,424$ 14,873,116$ 16,696,008$ 18,608,540$ 0.96%0.96%0.99%1.01%1.02%1.01% 4,024,715$ 4,070,000$ 4,380,206$ 4,974,745$ 5,448,302$ 5,975,816$ 475,285 610,000 640,000 655,000 655,000 734,293 4,500,000$ 4,680,000$ 5,020,206$ 5,629,745$ 6,103,302$ 6,710,109$ 39.865 35.832 33.087 33.448 32.632 32.114 4.708 5.370 4.834 4.404 3.923 3.946 44.573 41.202 37.921 37.852 36.555 36.060 125 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) TAX CAPACITY OF REAL ESTATE & PERSONAL PROPERTY Table 7 Last Ten Fiscal Years Non Commercial Personal Homestead Homestead & Industrial Agricultural Property Other Total 2010 8,126,189$ 1,661,573$ 2,164,323$ 719,579$ 261,328$ 79,192$ 13,012,184$ 62.45% 12.77% 16.63% 5.53% 2.01% 0.61% 100.00% 2011 7,547,244 1,251,967 1,893,120 606,587 283,499 77,709 11,660,126 64.73% 10.74% 16.24% 5.20% 2.43% 0.67% 100.00% 2012 6,460,276 1,097,107 1,821,302 543,596 279,502 76,765 10,278,548 62.85% 10.67% 17.72% 5.29% 2.72% 0.75% 100.00% 2013 5,906,265 903,006 1,788,872 533,264 285,540 53,341 9,470,288 62.37% 9.54% 18.89% 5.63% 3.02% 0.56% 100.00% 2014 6,607,296 918,439 1,664,605 536,842 290,266 78,317 10,095,765 65.45% 9.10% 16.49% 5.32% 2.88% 0.78% 100.00% 2015 7,732,867 1,057,409 1,633,988 582,530 298,480 53,341 11,358,615 68.08% 9.31% 14.39% 5.13% 2.63% 0.47% 100.00% 2016 8,878,089 1,183,843 2,166,341 627,666 328,948 53,537 13,238,424 67.06% 8.94% 16.36% 4.74% 2.48% 0.40% 100.00% 2017 9,942,548 1,232,700 2,627,164 597,483 407,194 66,027 14,873,116 66.85% 8.29% 17.66% 4.02% 2.74% 0.44% 100.00% 2018 11,298,428 1,276,749 2,981,199 612,928 467,378 59,326 16,696,008 67.67% 7.65% 17.86% 3.67% 2.80% 0.36% 100.00% 2019 12,807,798 1,481,672 3,017,858 667,248 578,862 55,102 18,608,540 68.83% 7.96% 16.22% 3.59% 3.11% 0.30% 100.00% Sources: The data for this table has been provided by the Wright County Auditor / Treasurer's Office. Residential 126 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS Last Ten Fiscal Years Table 8 School School School School School School City District 728 District 882 District 885 County District 728 District 882 District 885 2010 29.342 39.967 24.948 52.062 35.819 105.128 90.109 117.223 2011 34.013 43.489 27.029 51.369 39.306 116.808 100.348 124.688 2012 41.455 45.548 28.262 52.646 43.452 130.455 113.169 137.553 2013 46.228 50.058 26.229 57.213 44.288 140.574 116.745 147.729 2014 44.573 51.286 28.269 51.570 43.450 139.309 116.292 139.593 2015 41.202 42.483 22.882 51.082 40.593 124.278 104.677 132.877 2016 37.921 39.266 20.857 49.102 39.970 117.157 98.748 126.993 2017 37.852 36.659 16.242 46.893 39.599 114.110 93.693 124.344 2018 36.555 36.137 15.621 47.950 39.946 112.638 92.122 124.451 2019 36.060 32.865 16.972 47.143 44.273 113.198 97.305 127.476 Sources: The data for this table has been provided by the Wright County Auditor / Treasurer's Office. Overlapping Rates Total Direct & Overlapping 127 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) PRINCIPAL PROPERTY TAXPAYERS Table 9 Current Year and Nine Years Ago 2019 2010 Percentage of Percentage of Net Tax Total Tax Net Tax Total Tax Taxpayer Classification Capacity Rank Capacity Value Capacity Rank Capacity Value Duke Realty Industrial 1,228,448$ 1 6.60%294,468$ 1 2.26% Centerpoint Energy Utility 387,788 2 2.08%120,830 7 0.93% Target Corporation Commercial 199,450 3 1.07%280,440 2 2.16% Wagner Spray Tech Corporation Industrial 173,718 4 0.93% Wright-Hennepin Electric Co-Op Utility 123,497 5 0.66%97,657 9 0.75% Elk Inn Partners LP Commercial 99,250 6 0.53%99,250 8 0.76% P & F Properties Inc Industrial 87,662 7 0.47% Apex Business Center, LLC Industrial 73,924 8 0.40%74,578 10 0.57% Kwik Trip Inc Commercial 64,204 9 0.35% WFCIII LLC Commercial 59,250 10 0.32% Wells Fargo Bank NA Residential 127,079 5 0.98% Land Funding I LLC Commercial 125,210 6 0.96% OHW LLC Residential 141,869 4 1.09% Appello Group LLC Commercial 144,988 3 1.11% Totals 2,497,191$ 13.41%1,506,369$ 11.57% Sources: The data for this table has been provided by the Wright County Auditor / Treasurer's Office. 128 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) PROPERTY TAX LEVIES AND COLLECTIONS Table 10 Last Ten Fiscal Years Collected within the Certified Fiscal Year of the Levy Collections in Total Collections to Date Property Percentage Subsequent Percentage Tax Levy Amount of Levy Years Amount to Date 2010 3,818,000$ 3,610,870$ 94.57% 207,130$ 3,818,000$ 100.00% 2011 3,966,000 3,820,747 96.34% 145,253 3,966,000 100.00% 2012 4,261,000 4,111,857 96.50% 149,143 4,261,000 100.00% 2013 4,377,910 4,306,802 98.38%71,108 4,377,910 100.00% 2014 4,500,000 4,444,153 98.76%52,605 4,496,758 99.93% 2015 4,680,000 4,641,720 99.18%37,420 4,679,140 99.98% 2016 5,020,206 4,979,508 99.19%38,667 5,018,175 99.96% 2017 5,629,745 5,606,101 99.58%20,762 5,626,863 99.95% 2018 6,103,302 6,084,700 99.70%15,028 6,099,728 99.94% 2019 6,710,109 6,670,163 99.40%- 6,670,163 99.40% Sources: The data for this table has been provided by Wright County and from City financial maintenance documents. Note: The components of the Certified Property Tax Levy can be viewed in table 6 of the statistical section. 129 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) RATIOS OF OUTSTANDING DEBT BY TYPE Table 11 Last Ten Fiscal Years Business-Type Activities General General Percentage Obligation Equipment Obligation Total of Personal Per Bonds Certificates Revenue Bonds Debt Income Capita 2010 13,750,000$ 385,000$ 28,922,111$ 43,057,111$ 9.24% 3,173$ 2011 17,728,529 350,000 28,843,229 46,921,758 9.17% 3,396 2012 18,413,438 310,000 28,764,347 47,487,785 8.82% 3,384 2013 17,601,634 265,000 28,685,465 46,552,099 8.26% 3,220 2014 10,664,830 220,000 28,606,583 39,491,413 6.33% 2,638 2015 9,553,029 175,000 28,527,701 38,255,730 5.61% 2,473 2016 8,380,857 130,000 26,448,820 34,959,677 4.68% 2,182 2017 7,293,686 85,000 24,334,937 31,713,623 3.95% 1,910 2018 8,534,989 40,000 22,126,056 30,701,045 3.53% 1,772 2019 7,378,641 - 17,515,267 24,893,908 2.75% 1,382 Sources: The data for this table has been provided from City financial maintenance documents. Note: More detailed information for Population and Personal Income can be viewed in table 16 of the statistical section. Governmental Activities 130 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) RATIOS OF GENERAL BONDED DEBT OUTSTANDING Table 12 Last Ten Fiscal Years Total Percentage of General General Less: Amounts Net General Estimated Obligation Equipment Bonded Debt Restricted to Obligation Actual Value Per Bonds Certificates Outstanding Debt Service Debt of Property Capita 2010 13,750,000$ 385,000$ 14,135,000$ 6,962,030$ 7,172,970$ 0.55% 529$ 2011 17,728,529 350,000 18,078,529 6,547,412 11,531,117 1.03% 835 2012 18,413,438 310,000 18,723,438 6,570,533 12,152,905 1.14% 866 2013 17,601,634 265,000 17,866,634 5,882,912 11,983,722 1.21%829 2014 10,664,830 220,000 10,884,830 5,430,795 5,454,035 0.52%364 2015 9,553,029 175,000 9,728,029 4,506,243 5,221,786 0.44%337 2016 8,380,857 130,000 8,510,857 4,292,589 4,218,268 0.31%263 2017 7,293,686 85,000 7,378,686 3,596,348 3,782,338 0.26%228 2018 8,534,989 40,000 8,574,989 4,484,680 4,090,309 0.25%236 2019 7,378,641 - 7,378,641 3,979,190 3,399,451 0.18%189 Sources: The data for this table has been provided from City financial maintenance documents. Note: More detailed information for Population can be viewed in table 16 of the statistical section. Note: More detailed information for Estimated Property Values can be viewed in table 6 of the statistical section. 131 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) COMPUTATION OF DIRECT AND OVERLAPPING Table 13 GOVERNMENTAL ACTIVITIES DEBT DECEMBER 31, 2019 Estimated Estimated Share Debt Percentage of Overlapping Governmental Unit Outstanding Applicable Debt Overlapping Debt: School Districts: No. 728 - Elk River 207,155,000$ 20.58% 42,632,499$ No. 882 - Monticello 49,895,000 3.97% 1,980,832 No. 885 - St. Michael-Albertville 167,170,000 4.42% 7,388,914 Wright County 153,290,000 11.61% 17,796,969 Total Overlapping Debt 577,510,000$ 69,799,214 City of Otsego Direct Debt 7,378,641 Total Direct and Overlapping Debt 77,177,855$ Sources: The majority of the data for this table has been provided by Wright County Auditor / Treasurer's Office. Sources: The remaining data for this table was provided by School District No. 728. Note: More detailed information for the City's outstanding debt can be viewed in table 11 of the statistical section. Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. The schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. Note: The percentage of overlapping debt applicable is estimated using tax capacity values. Applicable percentages were estimated by determining the portion of each entity's tax capacity that is within the City's boundaries, and dividing it by the entity's total tax capacity. 132 This page has been left blank intentionally. 133 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) LEGAL DEBT MARGIN INFORMATION Last Ten Fiscal Years 2010 2011 2012 2013 Taxable Market Value 1,176,565,200$ 1,059,617,700$ 927,878,800$ 853,734,500$ Debt Limit Percentage 3.00% 3.00% 3.00% 3.00% Debt Limit 35,296,956 31,788,531 27,836,364 25,612,035 Total Net Debt Applicable to Limit 7,172,970 11,531,117 12,152,905 11,983,722 Legal Debt Margin 28,123,986$ 20,257,414$ 15,683,459$ 13,628,313$ Total Net Debt Applicable to the Limit as a Percentage of Debt Limit 20.32% 36.27% 43.66% 46.79% Sources: The data for this table has been provided by Wright County and from City financial maintenance documents. 134 Table 14 2014 2015 2016 2017 2018 2019 923,045,300$ 1,054,531,800$ 1,212,196,700$ 1,348,313,400$ 1,514,316,600$ 1,695,884,100$ 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 27,691,359 31,635,954 36,365,901 40,449,402 45,429,498 50,876,523 5,454,035 5,221,786 4,218,268 3,782,338 4,090,309 3,399,451 22,237,324$ 26,414,168$ 32,147,633$ 36,667,064$ 41,339,189$ 47,477,072$ 19.70%16.51%11.60%9.35%9.00%6.68% 135 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) PLEDGED-REVENUE COVERAGE Table 15 Last Ten Fiscal Years Water and Water and Sanitary Sewer Sanitary Sewer Less: Net Utility Connection Operating Available Debt Service Charges Charges Expenses Revenue Principal Interest Coverage 2010 1,915,508$ 990,041$ 1,109,346$ 1,796,203$ -$ 1,214,508$ 147.90% 2011 2,038,433 333,151 1,228,236 1,143,348 - 1,343,403 85.11% 2012 2,256,616 1,032,687 1,148,605 2,140,698 - 1,006,961 212.59% 2013 2,429,661 1,233,224 1,136,790 2,526,095 - 1,007,100 250.83% 2014 2,687,572 2,435,460 1,016,382 4,106,650 - 1,007,585 407.57% 2015 2,641,566 2,020,299 2,524,073 2,137,792 - 1,007,762 212.13% 2016 2,857,174 3,662,097 2,831,346 3,687,925 2,000,000 1,007,725 122.62% 2017 3,197,486 3,577,039 2,973,383 3,801,142 2,035,000 967,815 126.59% 2018 3,588,031 4,195,354 3,229,493 4,553,892 2,130,000 886,043 150.99% 2019 3,872,764 4,930,688 3,544,713 5,258,739 4,531,906 883,087 97.11% Sources: The data for this table has been provided from City financial maintenance documents. General Obligation Revenue Bonds 136 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) DEMOGRAPHIC AND ECONOMIC STATISTICS Table 16 Last Ten Fiscal Years School Enrollments Per Capita No. 885 No. of Personal Personal Unemployment Median No. 728 No. 882 St. Michael Population Households Income Income Rate Age Elk River Monticello Albertville 2010 13,571 4,736 465,770,291$ 34,321$ 8.0%32.2 12,932 4,073 5,326 2011 13,816 4,826 511,523,584 37,024 6.8%32.4 12,801 4,110 5,497 2012 14,034 4,894 538,231,968 38,352 5.9%33.4 12,753 4,137 5,645 2013 14,457 5,035 563,823,000 39,000 5.0%33.4 13,123 4,137 5,747 2014 14,968 5,218 623,821,336 41,677 4.2%33.8 13,076 4,193 5,904 2015 15,472 5,394 682,361,616 44,103 3.7%34.1 13,136 4,096 6,096 2016 16,019 5,580 746,373,267 46,593 3.9%33.2 13,219 4,094 6,286 2017 16,605 5,787 803,366,505 48,381 3.5%34.3 13,461 4,168 6,335 2018 17,323 5,975 869,285,463 50,181 3.0%34.7 13,670 4,125 6,463 2019 18,019 6,275 904,195,222 50,181 3.3%34.7 13,921 4,201 6,557 Sources: Population & Households - Minnesota State Demographer [2019 Estimated by City] Personal Income - Calculated by the City Per Capita Personal Income - US Department of Commerce; Bureau of Economic Analysis Unemployment Rate - Minnesota Department of Employment and Economic Development Median Age - US Department of Commerce, Bureau of the Census School Enrollment - Minnesota Department of Education Note: Some data was not yet available for 2019. In those instances, 2018 data was shown for the current year. 137 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) PRINCIPAL EMPLOYMENT SECTORS Table 17 Current Year and Nine Years Ago Percentage of Percentage of Total City Total City Employment Industry Employees Rank Employment Employees Rank Employment Education & Health Services 1,302 1 36.84%142 4 9.97% Trade, Transportation & Utilities 824 2 23.32% 455 1 31.95% Leisure & Hospitality 441 3 12.48% 324 2 22.75% Construction 345 4 9.76% 182 3 12.78% Professional & Business Services 246 5 6.96% 131 5 9.20% Other Services 99 6 2.80% 96 6 6.74% Public Administration 39 7 1.10% 18 7 1.26% Totals 3,296 93.27% 1,348 94.66% Sources: The data for this table has been provided from the Minnesota Department of Employment and Economic Development. Note: Due to data privacy within the State, data for principal employers of the City is not available. Given this limitation, the City determined it was appropriate to provide data regarding employment industry data. The City felt that this data would still provide the user information to understand the degree to which the City's economy is or is not dependent on a certain employment sector. 2019 2010 138 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) FULL TIME CITY GOVERNMENT POSITIONS BY FUNCTION Table 18 Last Ten Fiscal Years 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 General Government Administration 3.0 3.0 3.0 3.0 3.0 4.0 3.5 3.6 3.6 3.6 Finance 3.9 3.9 3.9 3.7 3.9 3.0 3.0 3.0 3.0 3.0 Total General Government 6.9 6.9 6.9 6.7 6.9 7.0 6.5 6.6 6.6 6.6 Public Safety Police - - - - - - - - - - Fire - - - - - - - - - - Building Inspections 1.6 1.0 1.0 1.0 1.0 1.0 1.5 1.5 1.8 2.0 Total Public Safety 1.6 1.0 1.0 1.0 1.0 1.0 1.5 1.5 1.8 2.0 Public Works Street Maintenance 6.9 6.9 5.9 5.8 5.8 6.9 6.9 6.9 6.8 7.8 Mechanic - - 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 Total Public Works 6.9 6.9 6.9 6.8 6.8 7.9 7.9 7.9 7.8 8.8 Culture and Recreation Parks Maintenance 1.0 1.0 1.4 1.4 1.4 3.5 3.5 3.5 3.9 4.4 Recreation - - 0.6 1.1 1.1 1.4 1.4 1.4 1.5 1.5 Total Culture and Recreation 1.0 1.0 2.0 2.5 2.5 4.9 4.9 4.9 5.4 5.9 Public Utilities Water Utility - - - 2.0 2.0 1.3 1.3 1.3 1.4 1.5 Sanitary Sewer Utility - - - 2.0 2.0 3.7 3.7 3.7 4.1 4.5 Total Public Utilities - - - 4.0 4.0 5.0 5.0 5.0 5.5 6.0 Total 16.4 15.8 16.8 21.0 21.2 25.8 25.8 25.9 27.1 29.3 Sources: The data for this table has been provided from City financial maintenance documents. Note: Police and Fire services are contracted services with Wright County and neighboring Cities respectively, therefore no City employees. Note: Public Utilities staffing were contracted with a service provider through 2012. In 2013, the City hired a staff and assumed operations. 139 CI T Y O F O T S E G O , M I N N E S O T A ST A T I S T I C A L S E C T I O N ( U N A U D I T E D ) OP E R A T I N G I N D I C A T O R S B Y F U N C T I O N Table 19 La s t T e n F i s c a l Y e a r s Fu n c t i o n 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9 Ad m i n i s t r a t i o n Re n t a l L i c e n s e s I s s u e d 1 8 0 2 4 6 2 9 2 3 3 7 3 7 2 3 7 2 3 8 7 3 5 1 3 2 9 3 3 2 Co d e E n f o r c e m e n t C i t a t i o n s 1 1 6 0 8 9 2 0 1 6 3 1 4 1 3 0 6 8 1 8 Re g i s t e r e d V o t e r s 7 , 1 6 8 7 , 3 2 9 9 , 3 2 4 9 , 7 5 4 Ac t u a l V o t e s T a l l i e d 4 , 7 3 7 7 , 1 2 6 4 , 6 9 3 7 , 3 6 2 6 , 2 2 8 Po l i c e To t a l C a l l s f o r S e r v i c e 3 , 9 0 5 4 , 1 1 1 4 , 2 3 4 3 , 8 5 6 4 , 0 6 0 3 , 5 7 5 3 , 6 1 9 4 , 3 1 0 4,279 4 , 4 8 4 Fi r e Ca l l s - A l b e r t v i l l e D e p a r t m e n t 82 7 6 9 3 1 2 9 1 3 1 1 6 4 Ca l l s - E l k R i v e r D e p a r t m e n t 74 7 3 8 0 9 2 9 6 1 0 5 Ca l l s - R o g e r s D e p a r t m e n t 18 1 5 1 2 2 7 2 6 Bu i l d i n g I n s p e c t i o n s Nu m b e r o f P e r m i t s - A l l T y p e s 6 1 7 5 7 0 6 4 5 6 9 9 6 9 2 8 9 3 9 6 8 7 2 2 1 , 1 4 7 1 , 1 7 3 Ne w H o m e s C o n s t r u c t e d 7 3 5 8 1 4 3 1 9 0 1 8 8 2 0 7 2 1 9 2 1 0 3 0 0 3 0 0 Pu b l i c W o r k s Mi l e s o f S t r e e t s C o n s t r u c t e d 0 . 4 5 1 . 3 3 2 . 3 0 1 . 6 6 2 . 5 9 3 . 9 3 7 . 8 0 4.68 Mi l e s o f S t r e e t s R e c o n s t r u c t e d 0. 3 5 1 . 8 0 5 . 3 0 - Sn o w P l o w i n g E v e n t s 5 5 4 0 46 37 22 16 16 22 37 21 Cu l t u r e a n d R e c r e a t i o n Pa r k s A c r e s M a i n t a i n e d 16 1 . 5 16 7 . 8 16 7 . 8 18 4 . 3 18 4 . 3 18 4 . 3 19 0 . 3 16 0 . 0 160.0 160.0 Pr a i r i e F e s t i v a l A t t e n d a n c e 4, 9 0 0 5, 1 0 0 6, 2 0 0 5, 0 0 0 4, 0 0 0 4,800 6,450 Re c r e a t i o n P r o g r a m s O f f e r e d 17 60 10 6 13 2 10 0 127 231 153 Re c r e a t i o n P r o g r a m s P a r t i c i p a n t s 55 0 9, 8 7 5 14 , 9 5 8 12 , 6 6 2 12 , 6 6 2 17 , 3 4 1 20,885 18,500 Wa t e r U t i l i t y Co n n e c t i o n s 2, 3 2 1 2, 3 7 9 2, 5 1 7 2, 6 7 8 2, 8 2 9 3, 0 2 3 3, 1 5 5 3, 2 7 8 3,748 4,014 Ga l l o n s D e l i v e r e d 34 8 , 4 9 8 , 6 1 0 35 3 , 5 1 5 , 8 0 0 42 9 , 2 9 3 , 5 0 0 40 9 , 4 9 2 , 7 3 0 37 5 , 2 9 9 , 8 4 0 38 9 , 1 1 8 , 3 3 0 39 3 , 7 9 5 , 2 1 0 49 1 , 4 8 4 , 0 0 0 527,795,004 491,047,000 Sa n i t a r y S e w e r U t i l i t y Av e r a g e D a i l y G a l l o n s T r e a t e d 50 9 , 0 0 0 51 2 , 0 0 0 48 5 , 0 0 0 54 3 , 0 0 0 53 9 , 0 0 0 55 1 , 0 0 0 60 0 , 0 0 0 62 7 , 0 0 0 673,000 738,000 So u r c e s : T h e d a t a f o r t h i s t a b l e h a s b e e n p r o v i d e d b y e a c h r e s p ec t i v e C i t y d e p a r t m e n t . No t e : T h e C i t y m a d e s i g n i f i c a n t c h a n g e s t o t h e i n d i c a t o r s i n c l u d e d i n t h i s t a b l e f o r 2 0 1 5 . N o t a l l h i s t o r i c a l d a t a w a s a b l e t o b e c o m p i l e d , a n d t h i s t a b l e w i l l b e u p d a t e d o n a g o - f o r w a r d b a s i s . 14 0 CI T Y O F O T S E G O , M I N N E S O T A ST A T I S T I C A L S E C T I O N ( U N A U D I T E D ) CA P I T A L A S S E T S T A T I S T I C S B Y F U N C T I O N Table 20 La s t T e n F i s c a l Y e a r s Fu n c t i o n 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9 Pu b l i c W o r k s St r e e t M i l e s ( M S A ) 1 1 2 . 8 5 1 1 2 . 8 5 1 1 3 . 3 0 1 1 4 . 6 3 1 1 6 . 9 3 1 1 8 . 5 9 1 2 0 . 8 8 1 2 4 . 8 1 1 3 1 . 0 0 131.00 He a v y D u t y T r u c k s 7 8 8 8 8 8 8 8 9 9 Li g h t D u t y V e h i c l e s 1 0 1 0 1 1 1 5 1 5 1 5 1 5 1 7 1 7 16 Tr a c t o r s & G r a d i n g E q u i p m e n t 7 8 8 8 8 8 8 8 7 7 Cu l t u r e a n d R e c r e a t i o n Tr a i l M i l e s 1 9 . 6 8 1 9 . 6 8 1 9 . 6 8 1 9 . 6 8 1 9 . 6 8 1 9 . 9 6 2 1 . 1 3 2 5 . 1 1 2 5 . 6 0 27.95 Nu m b e r o f P a r k s 7 8 8 1 0 1 0 1 0 1 1 1 2 1 4 14 Pl a y g r o u n d s 6 6 7 7 7 7 8 9 1 0 10 Pa r k S h e l t e r s 7 9 9 9 9 9 1 0 1 0 1 2 13 Ba l l F i e l d s 4 5 5 5 5 5 6 6 6 6 So c c e r F i e l d s - - - - - 3 3 3 3 3 Ba s k e t b a l l C o u r t s 4 5 5 5 5 5 5 5 6 6 Te n n i s C o u r t s 6 7 7 7 7 7 8 8 8 8 Ou t d o o r I c e R i n k s 1 1 1 1 1 1 1 Mo w i n g E q u i p m e n t 3 4 5 5 5 5 6 6 6 6 Wa t e r U t i l i t y Wa t e r T o w e r s 3 3 3 3 3 3 3 3 3 3 We l l s 8 8 8 8 8 8 8 8 8 7 Mi l e s o f W a t e r M a i n 63 63 74 77 79 83 87 Hy d r a n t s 71 7 72 2 79 4 84 6 871 923 975 Wa t e r V a l v e s 1, 5 5 5 1, 6 0 3 1, 6 5 9 1, 8 4 1 1, 8 8 1 1,983 2,106 Sa n i t a r y S e w e r U t i l i t y Tr e a t m e n t F a c i l i t i e s 2 2 2 2 2 2 2 2 2 2 Li f t S t a t i o n s 9 9 9 9 9 9 10 10 10 10 Mi l e s o f S a n i t a r y S e w e r L i n e s 69 - 74 75 . 8 79 . 5 81.8 86.1 Ma n h o l e s 1, 2 5 7 1, 2 5 7 1, 3 6 6 1, 4 8 0 1, 5 2 4 1,594 1,730 Mi l e s o f S a n i t a r y F o r c e m a i n 20 20 20 20 20 21 21 So u r c e s : T h e d a t a f o r t h i s t a b l e h a s b e e n p r o v i d e d b y e a c h r e s p e c t i v e C i t y d e p a r t m e n t . No t e : T h e C i t y m a d e s i g n i f i c a n t c h a n g e s t o t h e s t a t i s t i c s i n c l u d e d i n t h i s t a b l e f o r 2 0 1 5 . N o t a l l h i s t o r i c a l d a t a w a s a b l e t o b e c o m p i l e d , a n d t h i s t a b l e w i l l b e u p d a t e d o n a g o - f o r w a r d b a s i s . 14 1 This page has been left blank intentionally. 142