4.1 DO NOT PRINT - Financial Report
Annual Comprehensive Financial Report
For the Year Ended December 31, 2023
School Knoll Park Improvements Project (Completed in 2023)
City of Otsego, Minnesota
Annual Comprehensive Financial Report
For the Year Ended
December 31, 2023
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 7
Organizational Chart 8
Certificate of Achievement 9
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 33
Statement of Revenues, Expenditures and Changes in Fund Balances 34
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 City's Proportionate Share of Net Pension Liability 73
Schedule of City's Contributions 74
Notes to Required Supplementary Information 75
Combining and Individual Fund Statements and Schedules
Governmental Funds
Nonmajor Governmental Funds
Combining Balance Sheet 80
Combining Statement of Revenues, Expenditures and Changes in Fund Balances 81
Nonmajor Special Revenue Funds
Combining Balance Sheet 84
Combining Statement of Revenues, Expenditures and Changes in Fund Balances 86
Schedule of Revenues, Expenditures and Changes in Fund Balances: Budget-to-Actual
Tax Increment District No. 1 Fund 88
Tax Increment District No. 3 Fund 89
Tax Increment District No. 4 Fund 90
Nonmajor Capital Projects Funds
Combining Balance Sheet 92
Combining Statement of Revenues, Expenditures and Changes in Fund Balances 94
Schedule of Revenues, Expenditures and Changes in Fund Balances: Budget-to-Actual
General Fund 96
CITY OF OTSEGO, MINNESOTA
TABLE OF CONTENTS
Debt Service Fund by Account
Combining Balance Sheet 102
Combining Schedule of Revenues, Expenditures and Changes in Fund Balances 103
Schedule of Revenues, Expenditures and Changes in Fund Balances: Budget-to-Actual
Series 2018A 104
Series 2020A 105
STATISTICAL SECTION (UNAUDITED)
Financial Trends
Net Position by Component 108
Changes in Net Position 110
Governmental Activities Tax Revenue by Source 117
Fund Balances of Governmental Funds 118
Changes in Fund Balances of Governmental Funds 120
Revenue Capacity
Estimated Actual Value, Taxable Market Value and Tax Capacity of Taxable Property 122
Tax Capacity of Real Estate & Personal Property 124
Property Tax Rates - Direct and Overlapping Governments 125
Principal Property Taxpayers 126
Property Tax Levies and Collections 127
Debt Capacity
Ratios of Outstanding Debt by Type 128
Ratios of General Bonded Debt Outstanding 129
Computation of Direct and Overlapping Governmental Activities Debt 131
Legal Debt Margin Information 132
Pledged Revenue Coverage 134
Demographic and Economic Information
Demographic and Economic Statistics 135
Principal Employment Sectors 136
Operating Information
Full-Time City Government Positions by Function 137
Operating Indicators by Function 138
Capital Asset Statistics by Function 140
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City of Otsego│13400 90th Street NE, Otsego, MN 55330│Tel. (763) 441-4414 Fax (763) 441-9163
June 6, 2024
To the Honorable Mayor, Members of the City Council, and Citizens of the City of
Otsego.
Transmitted herewith is the Annual Comprehensive Financial Report of the City of
Otsego for the fiscal year ended December 31, 2023.
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 several 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 independent auditors.
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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 serve its
residents more fully 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
22,705, compared with 19,966 from the 2020 US Census. Otsego is both the largest and
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 50 hours of service every day. Fire suppression and
emergency response services are provided through agreements with the neighboring cities
of Albertville, Elk River, and Rogers, with each agreement having geographical
boundaries based upon response times.
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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 the 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 2023 and 2024.
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 need authorization of
the City Administrator. The legal level of budgetary control is at the fund level, so any
appropriation transfers between funds need 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 benefiting 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 221 new residential construction
permits issued during 2023. The average number of new residential construction permits
over the past five years is 335. The latest estimates developed by the City show total
households at 7,916 or a growth of 51 percent over the past ten years.
The City is expecting for this trend in residential housing growth to continue into the
future as well. There have been several builders continuing to develop properties and go
through the final platting process.
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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 $657 million (22.27
percent) to a total of $3,608,349,843 for taxes payable 2024. According to Wright
County, for taxes payable 2024, there was approximately $176 million of value added for
new residential, commercial, and 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 for eleven consecutive years. The City’s tax rate for payable 2024 is
23.109, a decrease of 21.86% compared to the previous year.
As the City has continued to grow over the years, commercial development has paced
well behind residential and industrial sectors. The City is seeing this trend change course
during 2023 and 2024. The City had a busy 2023 with completed projects including Due
North Car Wash, ALDI, Michael’s, Smile Orthodontics, New Century Service, Blu Dot,
Dakota Supply Group and Satellite Shelters. A few projects started in 2023 are nearing
completion and should be open for service early in 2024 including Starbuck’s, Kennedy
Vision, and the Little Gym. The City approved a number of projects in 2023 that have not
broken ground, but are expected to begin construction in 2024 including O2B Kids
Daycare, Christian Brothers Automotive, R&L Carriers, and a retail center with spaces
for three future tenants.
The City has recently received development applications which have not been approved
by the City Council, but include the expansion of the Coborn’s Grocery Store, a new
retail building including tenants of a hardware store and a pet store, and most recently an
application from Costco for a new store and gas station to be constructed at the northwest
corner of Maciver Avenue and 60th Street. Given the economic importance of this type
of development, the City is navigating planning efforts to supply the infrastructure
necessary to accommodate such development.
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
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City of Otsego│13400 90th Street NE, Otsego, MN 55330│Tel. (763) 441-4414 Fax (763) 441-9163
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 2023 or set as goals in
2024.
Positioning for Growth.
o Continued Construction of the West Wastewater Facility Expansion Project
o Established the Fire & Emergency Services Department
o Completed facility designs for future City Hall & Public Works
o Authorized a space needs study for the Fire & Emergency Services Building
Empowering the Organization.
o Conducted an Employee Survey to gauge employee engagement
o Continued Administrator & Department group discussions
o Established an annual all-employee team building and training session
Engaging Stakeholders.
o Conducted Neighborhood and Community Surveys for Park Plans
o Budgeted for a Communications Specialist staff position
o Obtained County and Federal grant funding for multiple projects
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.
The 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.
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City of Otsego│13400 90th Street NE, Otsego, MN 55330│Tel. (763) 441-4414 Fax (763) 441-9163
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 Annual Comprehensive Financial Report for the fiscal year ended
December 31, 2022. This was the 11th consecutive year that the City has achieved this
prestigious award.
In order to be awarded a Certificate of Achievement, the City had to publish an easily
readable and efficiently organized annual comprehensive financial report that satisfied
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
2023 Annual Comprehensive Financial Report continues to meet the Certificate of
Achievement program requirements and it will be submitted to the GFOA to determine
the eligibility for another Certificate.
ACKNOWLEDGEMENTS
The preparation of this report would not have been possible without the skill, effort, 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 is acknowledged and appreciated.
Respectfully submitted,
Adam Flaherty
City Administrator & Finance Director
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CITY OF OTSEGO, MINNESOTA
ELECTED OFFICIALS AND ADMINISTRATION
ELECTED OFFICIALS
Name Position Term Expires
Jessica Stockamp Mayor December 31, 2024
Jeff Dahl Council Member December 31, 2024
Brittany Moores Council Member December 31, 2024
Tina Goede Council Member December 31, 2026
Ryan Dunlap Council Member December 31, 2026
ADMINISTRATION
Name Position
Audra Etzel City Clerk
Adam Flaherty City Administrator & Finance Director
Sabrina Hille Assistant City Administrator & Human Resources
Kevin Lamson Street Operations Manager
Nick Jacobs Parks & Recreation Director
Kurt Neidermeier Public Utilities Manager
David Kendall City Attorney
Daniel Licht City Planner
Ron Wagner City Engineer
7
CusTitl
e
of Sm
art
CITY COUNCIL
ADVISORY
COMMISSIONS
Planning
Parks & Recreation
Public Safety
Heritage
Preservation
CITY ATTORNEY CITY
ADMINISTRATOR
CITY CLERK
Communications
Elections
Records Retention
FINANCE DIRECTOR
Accounting, Budget
& Reporting
Utility Billing
Information
Technology
ASSISTANT CITY
ADMINISTRATOR
Human Resources
Customer Service
Communications
EMERGENCY
SERVICES DIRECTOR
Emergency
Management
Fire Protection
PARKS &
RECREATION
DIRECTOR
Recreation
Programming
Parks Maintenance
Prairie Center
STREET
OPERATIONS
MANAGER
Streets
Maintenance
Fleet Maintenance
Storm Water Utility
UTILITY
OPERATIONS
MANAGER
Water Utility
Sanitary Sewer
Utility
PROFESSIONAL
SERVICES
Planning & Zoning
Engineering
Building Safety8
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Otsego
Minnesota
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
December 31, 2022
Executive Director/CEO
9
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Independent Auditor’s Report
Honorable Mayor and Members
of the City Council
City of Otsego
Otsego, Minnesota
Report on the Audit of the Financial Statements
Opinions
We have audited the 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, 2023, and the related notes to financial
statements, which collectively comprise the City’s basic financial statements as listed in the Table of
Contents.
In our opinion, the accompanying financial statements 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, 2023, and the respective changes in financial position and,
where applicable, cash flows thereof and the respective budgetary comparison for the General Fund
for the year then ended in accordance with accounting principles generally accepted in the United
States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America (GAAS) and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Statements section of our report. We are required to be independent of the City of Otsego
and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements
relating to our audit. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinions.
Responsibilities of Management for the Financial Statements
The City of Otsego’s management is responsible for the preparation and fair presentation of the
financial statements in accordance with accounting principles generally accepted in the United
States of America, and for the design, implementation, and maintenance of internal control relevant
to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are
conditions or events, considered in the aggregate, that raise substantial doubt about the City of
Otsego’s ability to continue as a going concern for twelve months beyond the financial statement
date, including any currently known information that may raise substantial doubt shortly thereafter.
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2
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute
assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and
Government Auditing Standards will always detect a material misstatement when it exists. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control. Misstatements are considered material if there is a substantial likelihood
that, individually or in the aggregate, they would influence the judgment made by a reasonable user
based on the financial statements.
In performing an audit in accordance with GAAS and Government Auditing Standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, and design and perform audit procedures responsive to those risks. Such
procedures include examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the City of Otsego’s internal control. Accordingly, no such
opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of
the financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the
aggregate, that raise substantial doubt about the City of Otsego’s ability to continue as a
going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit, significant audit findings, and certain internal
control–related matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
Management’s Discussion and Analysis, which follows this report letter, and Required Supplementary
Information as listed in the Table of Contents be presented to supplement the basic financial
statements. Such information is the responsibility of management and, although not a part of the
basic financial statements, is required by the Governmental Accounting Standards Board (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.
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3
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City of Otsego’s basic financial statements. The accompanying combining
and individual fund statements and schedules identified in the Table of Contents are presented for
purposes of additional analysis and are not a required part of the basic financial statements.
Such information is the responsibility of management and was derived from and relates directly to
the underlying accounting and other records used to prepare the basic financial statements. The
information has been subjected to the auditing procedures applied in the audit of the basic financial
statements and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the basic financial
statements or to the basic financial statements themselves, and other additional procedures in
accordance with auditing standards generally accepted in the United States of America. In our
opinion, the accompanying combining and individual fund statements and schedules are fairly stated,
in all material respects, in relation to the basic financial statements as a whole.
Other Information
Management is responsible for the other information included in the Annual Comprehensive Financial
Report. The other information comprises the introductory and statistical sections but does not
include the basic financial statements and our auditor’s report thereon. Our opinions on the basic
financial statements do not cover the other information, and we do not express an opinion or any
form of assurance thereon.
In connection with our audit of the basic financial statements, our responsibility is to read the other
information and consider whether a material inconsistency exists between the other information and
the basic financial statements, or the other information otherwise appears to be materially
misstated. If, based on the work performed, we conclude that an uncorrected material misstatement
of the other information exists, we are required to describe it in our report.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated June 6,
2024, 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
June 6, 2024
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CITY OF OTSEGO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2023
As management of the City of Otsego, Minnesota, (the City), we offer readers of the City's financial statements this narrative overview and
analysis of the financial activities of the City for the fiscal year ended December 31, 2023. 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 report.
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 $165,489,299 (net position). Of this amount, $60,391,810 (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 $16,041,130 (10.73%) from the previous year. The net position of the governmental
activities increased $6,316,457 (9.14%). 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 $9,724,673 (12.11%) 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 $30,700,012,
which is an increase of $3,044,532 (11.01%) from the previous year. Of the total fund balance, the unassigned portion is $2,069,035,
which is free from any internal or external constraints upon its use.
• The General fund has a fund balance of $4,981,515 at the close of the current fiscal year. During 2023, the fund balance increased
$30,072 (0.61%) from the previous year. The increase in fund balance was net of a transfer of $710,829, made in
accordance with the City's fund balance policy, the transfer was made to the Capital Improvements fund. The 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 $338,076 (6.79%) of fund balance that is nonspendable, which is a combination of prepaid items and land held for resale. The
remaining fund balance is either restricted, $465,819 (9.35%), assigned, $342,861 (6.88%) or is unassigned, $3,834,759 (76.98%).
• The City issued $34,045,359 of General Obligation Sewer Revenue Notes to finance the construction of the West Wastewater Treatment
Facility Expansion. The City paid off $26,215,000 of General Obligation Temporary Sewer Revenue Bonds in conjunction with the
issuance of the 2023A Note. The City's total outstanding bonded debt decreased by $9,754,880 (16.65%) during the year.
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CITY OF OTSEGO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2023
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 report also contains other supplementary information in addition to the basic financial statements
themselves.
Government-Wide Financial Statements: The government-wide financial statements are designed to provide readers with a
broad overview of the City'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 report.
Fund Financial Statements: A fund is a grouping of related accounts that is used to maintain control over resources that have
been segregated for specific activities or objectives. The City, 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, 2023
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 19 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 Pavement Management fund, the Capital Improvements 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 report.
The City adopts an annual appropriated budget for the General Fund, the Debt Service Fund, Tax Increment District No. 1, Tax Increment
District No. 3, and Tax Increment District No. 4 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 report.
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 report.
Notes to the Financial Statements: The notes provide additional information that is essential to a full understanding of the data
provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages
41 through 71 of this report.
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 and related notes can be found on
pages 73 through 78 of this report.
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 80 through 105 of this report.
16
CITY OF OTSEGO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2023
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 $165,489,299 at the close of
the most recent fiscal year.
The largest portion of the City's net position ($95,159,856 or 57.50%) reflects its investment in capital assets, which includes: land,
infrastructure, buildings, and machinery & equipment, less any related debt used to acquire those assets that is still outstanding.
The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending.
Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to
repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.
2023 2022 2023 2022 2023 2022
Current Assets 40,027,059$ 39,253,266$ 40,231,550$ 57,606,553$ 80,258,609$ 96,859,819$
Capital Assets 47,738,125 44,955,325 100,194,097 81,430,682 147,932,222 126,386,007
Total Assets 87,765,184 84,208,591 140,425,647 139,037,235 228,190,831 223,245,826
Deferred Outflows of Resources 365,540 569,758 123,770 203,274 489,310 773,032
Long-term Liabilities 4,125,336 5,031,666 43,370,123 53,104,742 47,495,459 58,136,408
Other Liabilities 7,078,343 8,574,870 6,534,668 5,164,266 13,613,011 13,739,136
Total Liabilities 11,203,679 13,606,536 49,904,791 58,269,008 61,108,470 71,875,544
Deferred Inflows of Resources 1,496,823 2,058,048 585,549 637,097 2,082,372 2,695,145
Net Investment in Capital Assets 44,222,133 40,938,214 50,937,723 47,080,808 95,159,856 88,019,022
Restricted 9,937,633 8,427,066 - - 9,937,633 8,427,066
Unrestricted 21,270,456 19,748,485 39,121,354 33,253,596 60,391,810 53,002,081
Total Net Position 75,430,222$ 69,113,765$ 90,059,077$ 80,334,404$ 165,489,299$ 149,448,169$
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 (6.01%) represents resources that are subject to external restrictions on how they may be used.
The unrestricted portion (36.49%) may be used to meet the City's ongoing obligations to citizens and creditors.
The governmental activities experienced increases in both current and capital assets, with the increase of current assets being nominal. The
increase in capital assets can be illustrated with street renewal projects, park improvements, vehicles and equipment, facility planning, and
developer infrastructure contributions. The decrease in liabilities is primarily contributed to the decrease in Development & Builder Fund
deposits payable, and with long-term liabilities decreasing as a result of continued debt service payments.
The current assets of the business-type activities decreased primarily due to the defeasance of the temporary bond financing for the sanitary
sewer expansion project with some offset as a result from continued growth in development, which generates revenues such as water and
sewer access fees. The capital asset increases were attributable to ongoing investment in the utility systems infrastructure and the construction
of projects such as the West Wastewater Treatment Facility, East-West Watermain Connection, and Well No. 10. The long-term liabilities
decreased with the defeasance of the 2022A Sewer Revenue bonds, but offset with the issuance of the 2023A PFA Revenue Note.
CITY OF OTSEGO - SUMMARY OF NET POSITION
Governmental Activities Business-type Activities Total
17
CITY OF OTSEGO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2023
2023 2022 2023 2022 2023 2022
Program Revenues
Charges for Services 2,237,454$ 3,372,368$ 7,952,180$ 6,701,241$ 10,189,634$ 10,073,609$
Operating Grants and Contributions 924,558 399,743 - - 924,558 399,743
Capital Grants and Contributions 3,133,926 4,631,372 6,264,410 9,754,695 9,398,336 14,386,067
General Revenues
Property Taxes 9,177,125 8,583,996 38,000 36,000 9,215,125 8,619,996
Tax Increment 491,535 436,817 - - 491,535 436,817
Franchise Taxes 1,026,846 345,108 - - 1,026,846 345,108
Grants and Contributions not
Restricted to Specific Programs 111,798 152,452 - - 111,798 152,452
Unrestricted Investment Earnings 1,242,417 (870,574) 2,704,796 (1,232,893) 3,947,213 (2,103,467)
Other General Revenues 822 11,956 537 - 1,359 11,956
Total Revenues 18,346,481 17,063,238 16,959,923 15,259,043 35,306,404 32,322,281
Expenses
General Government 1,838,849 1,849,685 - - 1,838,849 1,849,685
Public Safety 3,378,313 3,101,633 - - 3,378,313 3,101,633
Public Works 4,761,125 4,559,629 - - 4,761,125 4,559,629
Culture and Recreation 1,541,099 1,396,260 - - 1,541,099 1,396,260
Economic Development 429,054 499,481 - - 429,054 499,481
Interest on Long-term Debt 67,854 92,945 - - 67,854 92,945
Water Utility - - 2,434,158 2,311,989 2,434,158 2,311,989
Sanitary Sewer Utility - - 4,590,454 4,084,200 4,590,454 4,084,200
Storm Water Utility - - 224,368 218,612 224,368 218,612
Total Expenses 12,016,294 11,499,633 7,248,980 6,614,801 19,265,274 18,114,434
Increase Before Transfers 6,330,187 5,563,605 9,710,943 8,644,242 16,041,130 14,207,847
Transfers 322,750 293,500 (322,750) (293,500) - -
Transfers - Capital Assets (336,480) (61,500) 336,480 61,500 - -
Change in Net Position 6,316,457 5,795,605 9,724,673 8,412,242 16,041,130 14,207,847
Net Position - January 1 69,113,765 63,318,160 80,334,404 71,922,162 149,448,169 135,240,322
Net Position - December 31 75,430,222$ 69,113,765$ 90,059,077$ 80,334,404$ 165,489,299$ 149,448,169$
CITY OF OTSEGO - CHANGES IN NET POSITION
Governmental Activities Business-type Activities Total
18
CITY OF OTSEGO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2023
Governmental Activities
Governmental activities resulted in an increase of the City's net position by $6,316,457. Key elements of this change is as follows:
• Revenues increased $1,283,243 due to a full-year implementation of franchise taxes on natural gas and electricity utilities and from
operating grants and contributions, the result of new state-aid revenues for affordable housing and public safety. Revenues from
investment earnings wer also a significant positive change from the prior year. Notable decreases of revenues in charges for services
and capital grants and contributions were the result of decreased pace of new housing construction with higher interest rates and market
pricing conditions of existing residential homes.
• Expenses increased $516,661 compared to the previous year, with a concentration in public safety, public works and culture and recreation
functions of the City. Drivers for increases in expenses from the previous year would include contracted public safety costs for
law enforcement, fire protection and building safety. Personnel costs would be a second driver with increased wages and new hires.
Below are specific graphs which provide comparisons of the governmental activities revenues and expenses:
12.20%; Charges for
Services
5.04%; Operating Grants17.08%; Capital Grants
50.02%; Property Taxes 2.68%; Tax Increment
5.60%; Franchise Taxes
0.61%; Unrestricted
Grants & Contributions
6.77%; Investment
Earnings
0.00%; Sales of Capital
Assets
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
4,500,000
5,000,000
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, 2023
Business-type Activities
Business-type activities resulted in an increase of net position by $9,724,673. Key elements of this change are as follows:
• Revenues increased $1,700,880 when compared to the previous year. Factors of this increase include investment earnings, which
were positively impacted by the general stability of interest rates during the year. Charges for services was a positive change as the
utility customer base continues to grow, rate adjustments, and additional usage from drier than normal weather conditions. The decrease
in capital grants and contributions was the result of fewer new home permits being issued and the respective utility availability and
connection fees. This decrease was offset some with an intergovernmental capital grant for the construction of the sewer expansion.
• Expenses increased $634,179 with increases amongst each utility function. The largest increase occurred in the sanitary sewer utility
which had increases in personnel, supplies, utilities, and depreciation expenses.
• Revenues exceeding expenses is attributable to the new development within the City. Charges for services are adequately covering
the expenses, with capital grants and contributions resulting in the increase and will provide for future debt service and capital projects.
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
9,000,000
Water Utility Sanitary Sewer Utility Storm Water Utility
Function Expenses vs. Program Revenues
Expense Program Revenue
Charges for Services
46.89%
36.94%; Capital Grants Sales of Capital Assets
0.00%
Property Taxes
0.22%
Investment Earnings
15.95%
Revenues by Source
20
CITY OF OTSEGO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2023
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 $30,700,012, which
is an increase of $3,044,532 (11.01%) from the previous year. The unassigned fund balance, which is not subject to internal or
external constraints upon its use, $2,069,035 (6.74% of total).
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 $4,981,515, an
increase of $30,072 (0.61%). The increase in fund balance was net of a transfer of $710,829, made in accordance with the
City's fund balance policy, with the transfer going to the Capital Improvements fund to be set aside for future capital projects. Revenues
exceeded the budget by $500,292, and exceeded actual expenditures by $418,942. There were decreases in assets and liabilities of the fund
as cash balance and unearned revenue for ARPA grant funding were reclassified from the General fund to the Fire Reserve fund. As a
measure 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 $3,834,759, represents 49.56% of the current year General fund expenditures. Total General fund balance
represents 64.38% of those same expenditures
The Debt Service fund has a total fund balance of $1,147,451 at the end of the year, a decrease of $38,922 (3.28%) from the previous
year. There were no new bond issuances in the fund during the year, and there were $685,000 of principal payments.
The Pavement Management fund has a fund balance of $5,692,164 at the end of the year, an increase of $140,540 (2.53%) from the
previous year. Expenditures for the year totaled $2,498,180, which were for the annual street renewal project and annual pavement
preservation projects including mill and overlay, crack filling, fog sealing, seal coating and micro-surfacing.
The Capital Improvements fund has a fund balance of $7,558,150 at the end of year, an increase of $1,236,003 (19.55%) from the previous
year. An interfund transfer in the amount of $710,829 and property taxes were the primary reason for the increase in fund balance, which
is assigned for future City buildings and infrastructure improvement projects. Expenditures for the year were $1,247,398 which the City
invested into design services for a future City Hall, expansion of public works facility, and construction of a cold storage building.
The Development & Builder Escrows fund has no fund balance at the end of the current fiscal year. The fund has assets in the amount
of $4,097,295, all of which are cash and investment balances that offset the accounts and deposits payable within the 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 $90,059,077, an increase of $9,724,673 (12.11%). There are two
components to net position in the enterprise funds, unrestricted ($39,121,354 or 43.44%) and net investment in capital assets
($50,937,723 or 56.56%). As a measure of liquidity, the unrestricted net position amounts to 641.23% 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, 2023
Below is a graph with comparative amounts for each fund balance component for fiscal years 2021, 2022 and 2023:
The City's Unassigned fund balance is currently $2,069,035, and represents 6.74% of total governmental fund balance. The
City also has four other components of fund balance, including Nonspendable (1.10%), Restricted (29.78%), Committed (1.13%) and
Assigned (61.25%).
• 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, affordable housing programs, lawful gambling, public safety, and tax increments. This component of fund
balance has been on an increasing trend as the result of fees collected on new development for park dedication. New components of this
fund balance in 2023 is the result of state-aid funding for affordable housing programs and public safety, with the funds being limited
to uses outlined in Minnesota Statutes.
• The committed fund balances are within the City's special revenue funds for Street Lighting and Revolving Loans. This fund balance
component has remained 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
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
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
18,000,000
20,000,000
Nonspendable Restricted Committed Assigned Unassigned
Governmental Fund Balance Components
2021 2022 2023
22
CITY OF OTSEGO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2023
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 $30,072 (0.61%). The key elements of this change
are as follows:
• Actual revenues exceeded the budget by $500,292 (6.53%). The largest revenue variance was provided by intergovernmental sources,
which were over budget by $483,221. This variance was the result of additional public safety state-aid grants approved by the Minnesota
Legislature during the 2023 session, and amounts to $465,819 of restricted fund balance at year-end. The next most significant variance
was for investment earnings, which exceeded the budget by $219,571 as the result of market conditions for interest rates which provided
an increase in the fair market value of the City's investment portfolio compared with the prior year. Other notable variances were from
licenses and permits, which was under budget by $150,754, and from property taxes, which was under budget by $100,893. The revenue
for licenses and permits was less than budget due to new residential permits being less than forecasted in the budget. The variance for
property taxes was the result of several prior year tax court settlements from the State of Minnesota.
• Actual expenditures were less than budget by $239,250 (3.00%). The largest variance was within the general government function
which was under budget by $85,134, and is primarily the result of an unused contingency budget within the City Council department. The
next largest variance, in the public safety function, which was under budget by $85,037. Mostly within the Building Inspections
department, this variance was the result of fewer new residential home permits which resulted in fewer hours of contracted services.
Other functions under budget included Public Works, Economic Development, and Capital Outlay. The only function over budget, Culture
and Recreation was over budget by $13,740, as a result of contracted services in the Parks Maintenance department exceeding
the budget.
• Transfers in were as budgeted, and represent annual contributions from the Water and Sanitary Sewer utility funds that help
manage the property tax levy.
• Transfers out were not budgeted for during 2023. The actual transfer out of $710,829 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 ($3,834,759) represents 40.71% of the adopted 2024 budget.
23
CITY OF OTSEGO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2023
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 $147,932,222 (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 $21,561,802 (17.06%) 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 City maintains a ten-year capital
improvement plan budget which schedules equipment and vehicle replacements and additions.
• The 2023 street renewal project was completed during the year. This project improved the condition of street infrastructure within the
Vasseur's Oak Grove Estates, Otsego Acres, Hidden Valley, and Deer Field Acres residential subdvisions.
• 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 continued construction of the West Wastewater Treatment Facility Expansion which will increase the treatment capacity of
the west sewer system. The project will also bring the treatment processes to the most current technologies available in order to
meet current and future regulatory requirements. An additional component of the project will be the construction of an Administration
building that will provide staff workspaces, vehicle storage, and customer service accessibility.
• The City initiated several drinking water system projects, that include the East-West Watermain Connection, Well No. 11, and Water
Treatment Improvements at Wellhouse 4. These projects increase capacity, system redundancy, and quality for the drinking water system.
• The City completed design phases for construction of future City Buildings including a standalone City Hall facility, the expansion of the
warm storage functions of the Public Works facility, and for a new cold storage facility for public works and park maintenance. The
initiation of construction phases for these projects is currently unknown and is subject to additional review by the City Council.
• The City completed improvements to the City's first neighborhood park, School Knoll Park, which included an updated play structure,
improvements to the basketball court, additional landscaping, and other site improvements. The City also completed design phases for
projects scheduled for construction in the next year, including construction of Ashwood Park and improvements to Carrick's Landing.
2023 2022 2023 2022 2023 2022
Land 4,278,161$ 4,278,161$ 759,721$ 741,333$ 5,037,882$ 5,019,494$
Construction in Progress 1,092,466 50,128 25,365,280 5,994,416 26,457,746 6,044,544
Buildings and Improvements 3,955,436 3,996,488 15,787,127 16,210,154 19,742,563 20,206,642
Land Improvements 3,945,895 3,515,353 146,334 - 4,092,229 3,515,353
Machinery and Equipment 2,043,789 1,899,269 1,399,036 1,233,464 3,442,825 3,132,733
Infrastructure 32,422,378 31,215,926 56,736,599 57,251,852 89,158,977 88,467,778
47,738,125$ 44,955,325$ 100,194,097$ 81,431,219$ 147,932,222$ 126,386,544$
Additional information on the City’s capital assets can be found in Note 3 (C) on pages 54 through 55 of this report.
CITY OF OTSEGO - CAPITAL ASSETS
(net of depreciation)
Governmental Activities Business-type Activities Total
24
CITY OF OTSEGO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2023
Long-Term Debt: At the end of the current year, the City had outstanding long-term bonded debt of $48,836,609.
2023 2022 2023 2022 2023 2022
General Obligation Bonds 3,055,000$ 3,740,000$ -$ -$ 3,055,000$ 3,740,000$
Notes from Direct Borrowings - - 35,586,609 15,696,489 35,586,609 15,696,489
General Obligation Revenue Bonds - - 10,195,000 39,155,000 10,195,000 39,155,000
Unamortized Premiums 234,506 277,111 954,563 1,215,203 1,189,069 1,492,314
Compensated Absences 136,799 125,130 44,506 36,765 181,305 161,895
Total 3,426,305$ 4,142,241$ 46,780,678$ 56,103,457$ 50,206,983$ 60,245,698$
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 2023, the City issued $34,045,359 of General Obligation PFA Revenue Note, Series 2023 for the purpose of financing the eligible
project costs of the Clean Water State Revolving Fund project to improve treatment and for expansion of the West Wastewater Treatment
Facility. This note provided the permanent financing for this project and provided the City the ability to defease the Series 2022A bond in the
amount of $26,215,000, which was an interim financing solution until the Minnesota Public Facilities Authority had the necessary funds in the
Clean Water State Revolving Fund to provide long-term financing of the project.
The City made scheduled principal payments of $4,290,278 during the year with the outstanding debt of the City decreasing by 16.65%.
The City maintained it's long term bond rating of AA+, with a stable outlook, and was assigned a short term rating of SP-1+ 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 $88,533,510, with $1,357,659 in debt outstanding that is applicable to the limit.
Additional information on the City’s long-term debt can be found in Note 3 (F) on pages 58 through 61 of this report.
CITY OF OTSEGO - OUTSTANDING DEBT
Governmental Activities Business-type Activities Total
25
CITY OF OTSEGO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2023
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 2024 operating budgets and capital improvement plans.
• The Taxable Market Value of real estate and personal property within the City increased 22.27% for taxes payable 2024. 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 2023, the City issued 221 building permits for new
residential construction, which brings the five year average to 388. The City also continues to see builders final platting new developments
for future years construction.
• Development of commercial and industrial properties was strong during 2023 with a total of eight completed development projects. The
City has approved several additional commercial and industrial developments that have will intiate construction in 2024.
• The City continued construction of the City's West 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 treatment processing within
sanitary sewer operations. Construction of this facility will continue through the spring of 2025.
• The City has continued planning efforts for development of the Fire & Emergency Services Department that is expected to initiate
operations in January 2027. The City has entered contracts for the purchase of four apparatus that will be used in the operations of the
department and have significant build lead times. The City has entered into design phases to complete a Facility Space Needs Analysis
for the Fire & Emergency Services Building. Design is expected to be complete in the fall of 2024 with competitive bids to follow, and
ground breaking of the facility in the spring of 2025.
• The City continues to expand upon and make improvements to the Capital Improvement Plan (CIP). The adopted CIP for 2024
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.
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27
CITY OF OTSEGO, MINNESOTA
STATEMENT OF NET POSITION
DECEMBER 31, 2023
Governmental Business-Type
Activities Activities Total
ASSETS
Cash and Investments 37,495,014$ 33,402,729$ 70,897,743$
Receivables
Interest 288,371 - 288,371
Accounts 231,775 927,164 1,158,939
Taxes 125,652 - 125,652
Special Assessments 1,529,172 1,719,067 3,248,239
Leases - 230,862 230,862
Due from Other Governments 18,999 3,863,390 3,882,389
Land Held for Resale 202,200 - 202,200
Prepaid Items 135,876 88,338 224,214
Capital Assets
Nondepreciable 5,370,627 26,125,001 31,495,628
Depreciable, Net of Accumulated Depreciation 42,367,498 74,069,096 116,436,594
Total Assets 87,765,184 140,425,647 228,190,831
DEFERRED OUTFLOWS OF RESOURCES
General Employees Retirement Plan Pension Resources 365,540 123,770 489,310
LIABILITIES
Accounts Payable 427,111 2,475,944 2,903,055
Deposits Payable 4,068,169 - 4,068,169
Due to Other Governments 13,792 31,425 45,217
Accrued Salaries Payable 58,042 19,675 77,717
Accrued Interest Payable 44,440 195,364 239,804
Unearned Revenue 1,979,429 - 1,979,429
Compensated Absences Payable
Due Within One Year 27,360 8,901 36,261
Due in More than One Year 109,439 35,605 145,044
Bonds Payable
Due Within One Year 460,000 2,335,000 2,795,000
Due in More than One Year 2,829,506 8,814,563 11,644,069
Notes from Direct Borrowings
Due Within One Year - 1,468,359 1,468,359
Due in More than One Year - 34,118,250 34,118,250
General Employees Retirement Plan Net Pension Payable
Due in More than One Year 1,186,391 401,705 1,588,096
Total Liabilities 11,203,679 49,904,791 61,108,470
DEFERRED INFLOWS OF RESOURCES
Grants for Subsequent Years 1,148,198 - 1,148,198
General Employees Retirement Plan Pension Resources 348,625 118,042 466,667
Antenna Rental Leases - 230,862 230,862
Deferred Gain on Refunding - 236,645 236,645
Total Deferred Inflows of Resources 1,496,823 585,549 2,082,372
NET POSITION
Net Investment in Capital Assets 44,222,133 50,937,723 95,159,856
Restricted
Debt Service 1,931,847 - 1,931,847
Lawful Gambling Programs 138,020 - 138,020
Affordable Housing 52,757 - 52,757
Tax Increment Financing 375,370 - 375,370
Park Development 6,508,026 - 6,508,026
Public Safety 931,613 - 931,613
Unrestricted 21,270,456 39,121,354 60,391,810
Total Net Position 75,430,222$ 90,059,077$ 165,489,299$
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, 2023
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 1,838,849$ 477,051$ -$ -$ (1,361,798)$ -$ (1,361,798)$
Public Safety 3,378,313 1,579,278 563,201 465,794 (770,040) - (770,040)
Public Works 4,761,125 68,259 296,100 2,260,343 (2,136,423) - (2,136,423)
Culture and Recreation 1,541,099 112,866 12,500 407,789 (1,007,944) - (1,007,944)
Economic Development 429,054 - 52,757 - (376,297) - (376,297)
Interest on Long-Term Debt 67,854 - - - (67,854) - (67,854)
Total Government Activities 12,016,294 2,237,454 924,558 3,133,926 (5,720,356) - (5,720,356)
Business-Type Activities
Water Utility 2,434,158 3,643,209 - 1,427,810 - 2,636,861 2,636,861
Sanitary Sewer Utility 4,590,454 4,165,010 - 4,277,544 - 3,852,100 3,852,100
Storm Water Utility 224,368 143,961 - 559,056 - 478,649 478,649
Total Business-Type Activities 7,248,980 7,952,180 - 6,264,410 - 6,967,610 6,967,610
Total 19,265,274$ 10,189,634$ 924,558$ 9,398,336$ (5,720,356) 6,967,610 1,247,254
General Revenues
Property Taxes 9,177,125 38,000 9,215,125
Tax Increments 491,535 - 491,535
Franchise Taxes 1,026,846 - 1,026,846
Grants and Contributions Not
Restricted to Specific Programs 111,798 - 111,798
Unrestricted Investment Earnings 1,242,417 2,704,796 3,947,213
Gain on Disposal of Capital Assets 822 537 1,359
Transfers 322,750 (322,750) -
Transfers - Capital Assets (336,480) 336,480 -
Total General Revenues and Transfers 12,036,813 2,757,063 14,793,876
Change in Net Position 6,316,457 9,724,673 16,041,130
Net Position - January 1 69,113,765 80,334,404 149,448,169
Net Position - December 31 75,430,222$ 90,059,077$ 165,489,299$
The notes to the financial statements are an integral part of this statement.
29
CITY OF OTSEGO, MINNESOTA
BALANCE SHEET
GOVERNMENTAL FUNDS
DECEMBER 31, 2023
Debt
General Service
ASSETS
Cash and Investments 4,469,925$ 1,148,139$
Receivables
Interest 288,371 -
Accounts 3,916 -
Taxes
Current 22,341 -
Delinquent 101,821 -
Special Assessments
Current - -
Deferred 6,000 827,797
Delinquent 2,100 1,039
Due from Other Governments 1,785 -
Due from Other Funds - -
Land Held for Resale 202,200 -
Prepaid Items 135,876 -
Total Assets 5,234,335 1,976,975
LIABILITIES
Accounts Payable 74,461 688
Accrued Salaries Payable 58,042 -
Deposits Payable - -
Due to Other Governments 10,396 -
Due to Other Funds - -
Unearned Revenue - -
Total Liabilities 142,899 688
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - Property Taxes 101,821 -
Unavailable Revenue - Special Assessments 8,100 828,836
Grants for Subsequent Years - -
Total Deferred Inflows of Resources 109,921 828,836
FUND BALANCES
Nonspendable 338,076 -
Restricted 465,819 1,147,451
Committed - -
Assigned 342,861 -
Unassigned 3,834,759 -
Total Fund Balances 4,981,515 1,147,451
Total Liabilities, Deferred Inflows of
Resources and Fund Balances 5,234,335$ 1,976,975$
The notes to the financial statements are an integral part of this statement.
30
Development Other
Pavement Capital & Builder Nonmajor Total
Management Improvements Escrows Governmental Governmental
5,573,912$ 7,105,100$ 4,097,295$ 15,100,643$ 37,495,014$
- - - - 288,371
210,522 - - 17,337 231,775
- - - - 22,341
- - - 1,490 103,311
177 - - - 177
428,738 223,414 - 39,198 1,525,147
709 - - - 3,848
17,214 - - - 18,999
- 617,526 - - 617,526
- - - - 202,200
- - - - 135,876
6,231,272 7,946,040 4,097,295 15,158,668 40,644,585
109,661 164,476 29,126 48,699 427,111
- - - - 58,042
- - 4,068,169 - 4,068,169
- - - 3,396 13,792
- - - 617,526 617,526
- - - 1,979,429 1,979,429
109,661 164,476 4,097,295 2,649,050 7,164,069
- - - 1,490 103,311
429,447 223,414 - 39,198 1,528,995
- - - 1,148,198 1,148,198
429,447 223,414 - 1,188,886 2,780,504
- - - - 338,076
- - - 7,528,837 9,142,107
- - - 347,330 347,330
5,692,164 7,558,150 - 5,210,289 18,803,464
- - - (1,765,724) 2,069,035
5,692,164 7,558,150 - 11,320,732 30,700,012
6,231,272$ 7,946,040$ 4,097,295$ 15,158,668$ 40,644,585$
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32
CITY OF OTSEGO, MINNESOTA
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE
STATEMENT OF NET POSITION
DECEMBER 31, 2023
Fund Balances - Governmental Funds 30,700,012$
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 69,459,990
Accumulated Depreciation (21,721,865)
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 (3,055,000)
Unamortized Premium on Bonds Payable (234,506)
Accrued Interest Payable (44,440)
Compensated Absences Payable (136,799)
General Employees Retirement Plan Net Pension Payable (1,186,391)
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 103,311
Special Assessments Receivable 1,528,995
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 365,540
GERF Pension Deferred Inflows of Resources (348,625)
Total Net Position - Governmental Activities 75,430,222$
The notes to the financial statements are an integral part of this statement.
33
CITY OF OTSEGO, MINNESOTA
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2023
Debt
General Service
REVENUES
Property Taxes 5,253,657$ 544,416$
Tax Increments - -
Franchise Taxes 126,594 -
Licenses and Permits 1,544,769 -
Intergovernmental 575,521 -
Charges for Services 272,290 -
Special Assessments 10,389 222,746
Fines and Forfeitures 32,109 -
Investment Earnings (net)295,571 -
Miscellaneous 45,441 -
Total Revenues 8,156,341 767,162
EXPENDITURES
Current
General Government 1,663,191 -
Public Safety 3,318,255 -
Public Works 1,688,881 -
Culture and Recreation 942,485 -
Economic Development 91,788 -
Capital Outlay
General Government 15,216 -
Public Safety 4,953 -
Public Works 5,715 -
Culture and Recreation 6,915 -
Debt Service
Principal - 685,000
Interest - 119,406
Fiscal Agent Fees - 1,678
Total Expenditures 7,737,399 806,084
Excess (Deficiency) of Revenues
Over (Under) Expenditures 418,942 (38,922)
OTHER FINANCING SOURCES (USES)
Transfers In 320,600 -
Sales of Capital Assets 1,359 -
Transfers Out (710,829) -
Total Other Financing Sources (Uses)(388,870) -
Net Change in Fund Balance 30,072 (38,922)
Fund Balance - January 1 4,951,443 1,186,373
Fund Balance - December 31 4,981,515$ 1,147,451$
The notes to the financial statements are an integral part of this statement.
34
Development Other
Pavement Capital & Builder Nonmajor Total
Management Improvements Escrows Governmental Governmental
1,100,000$ 1,424,282$ -$ 857,325$ 9,179,680$
- - - 490,045 490,045
900,252 - - - 1,026,846
- - - - 1,544,769
296,100 26,176 - 1,427,411 2,325,208
- - 370,534 550,713 1,193,537
107,985 27,144 - 8,861 377,125
- - - - 32,109
232,320 246,738 - 467,788 1,242,417
2,063 114,274 - 66,537 228,315
2,638,720 1,838,614 370,534 3,868,680 17,640,051
- - 104,035 - 1,767,226
- - - - 3,318,255
- - 266,499 - 1,955,380
- - - - 942,485
- - - 337,266 429,054
- 472,812 - 9,357 497,385
- - - 108,524 113,477
2,498,180 774,586 - 774,450 4,052,931
- - - 1,030,436 1,037,351
- - - - 685,000
- - - - 119,406
- - - - 1,678
2,498,180 1,247,398 370,534 2,260,033 14,919,628
140,540 591,216 - 1,608,647 2,720,423
- 710,829 - 68,192 1,099,621
- - - - 1,359
- (66,042) - - (776,871)
- 644,787 - 68,192 324,109
140,540 1,236,003 - 1,676,839 3,044,532
5,551,624 6,322,147 - 9,643,893 27,655,480
5,692,164$ 7,558,150$ -$ 11,320,732$ 30,700,012$
35
CITY OF OTSEGO, MINNESOTA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED DECEMBER 31, 2023
Total Net Change in Fund Balances - Governmental Funds 3,044,532$
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 4,341,703
Depreciation Expense (2,046,697)
Assets Contributed by Developers 824,811
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.(336,480)
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.(537)
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 685,000
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.53,230
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 (2,555)
Tax Increments 1,490
Special Assessments (118,138)
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 (11,670)
GERF Pension (118,232)
Change in Net Position - Governmental Activities 6,316,457$
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, 2023
Variance with
Original Final Budget -
and Final Actual Over
Budget Amounts (Under)
REVENUES
Property Taxes 5,354,550$ 5,253,657$ (100,893)$
Franchise Taxes 133,000 126,594 (6,406)
Licenses and Permits 1,695,523 1,544,769 (150,754)
Intergovernmental 92,300 575,521 483,221
Charges for Services 268,776 272,290 3,514
Special Assessments 4,400 10,389 5,989
Fines and Forfeitures 24,000 32,109 8,109
Investment Earnings (net)76,000 295,571 219,571
Miscellaneous 7,500 45,441 37,941
Total Revenues 7,656,049 8,156,341 500,292
EXPENDITURES
Current
General Government 1,748,325 1,663,191 (85,134)
Public Safety 3,403,292 3,318,255 (85,037)
Public Works 1,727,827 1,688,881 (38,946)
Culture and Recreation 928,745 942,485 13,740
Economic Development 113,360 91,788 (21,572)
Capital Outlay
General Government 35,100 15,216 (19,884)
Public Safety 3,000 4,953 1,953
Public Works 10,000 5,715 (4,285)
Culture and Recreation 7,000 6,915 (85)
Total Expenditures 7,976,649 7,737,399 (239,250)
Excess (Deficiency) of Revenues
Over (Under) Expenditures (320,600) 418,942 739,542
OTHER FINANCING SOURCES (USES)
Transfers In 320,600 320,600 -
Sales of Capital Assets - 1,359 1,359
Transfers Out - (710,829) (710,829)
Total Other Financing Sources (Uses)320,600 (388,870) (709,470)
Net Change in Fund Balance - 30,072 30,072
Fund Balance - January 1 4,951,443 4,951,443 -
Fund Balance - December 31 4,951,443$ 4,981,515$ 30,072$
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, 2023
Sanitary Storm
Water Sewer Water Total
Utility Utility Utility Enterprise
ASSETS
Current Assets
Cash and Cash Equivalents 10,192,118$ 22,419,754$ 790,857$ 33,402,729$
Receivables
Accounts 313,649 605,799 7,716 927,164
Special Assessments
Current 1,280 - 268 1,548
Delinquent 179 - 816 995
Due from Other Governments - 3,863,390 - 3,863,390
Prepaid Items 21,360 66,978 - 88,338
Total Current Assets 10,528,586 26,955,921 799,657 38,284,164
Noncurrent Assets
Receivables
Leases 230,862 - - 230,862
Special Assessments
Deferred 473,092 1,211,522 31,910 1,716,524
Capital Assets
Land 217,010 542,711 - 759,721
Buildings and Building Improvements 109,096 16,561,654 - 16,670,750
Land Improvements 151,380 - - 151,380
Machinery and Equipment 620,784 1,796,212 32,200 2,449,196
Infrastructure 32,842,744 40,657,804 8,209,738 81,710,286
Construction in Progress 4,458,694 20,788,390 118,196 25,365,280
Total Capital Assets 38,399,708 80,346,771 8,360,134 127,106,613
Less: Accumulated Depreciation (9,245,484) (16,781,404) (885,628) (26,912,516)
Net Capital Assets 29,154,224 63,565,367 7,474,506 100,194,097
Total Noncurrent Assets 29,858,178 64,776,889 7,506,416 102,141,483
Total Assets 40,386,764 91,732,810 8,306,073 140,425,647
DEFERRED OUTFLOWS OF RESOURCES
General Employees Retirement Plan Pension Resources 30,950 92,820 - 123,770
LIABILITIES
Current Liabilities
Accounts Payable 597,729 1,877,712 503 2,475,944
Due to Other Governments 31,425 - - 31,425
Accrued Salaries Payable 4,919 14,756 - 19,675
Accrued Interest Payable 43,417 151,947 - 195,364
Bonds Payable 1,000,600 1,334,400 - 2,335,000
Notes from Direct Borrowings - 1,468,359 - 1,468,359
Compensated Absences Payable 2,225 6,676 - 8,901
Total Current Liabilities 1,680,315 4,853,850 503 6,534,668
Noncurrent Liabilities
Bonds Payable (net)5,797,069 3,017,494 - 8,814,563
Notes from Direct Borrowings - 34,118,250 - 34,118,250
Compensated Absences Payable 8,901 26,704 - 35,605
General Employees Retirement Plan Net Pension Payable 100,451 301,254 - 401,705
Total Noncurrent Liabilities 5,906,421 37,463,702 - 43,370,123
Total Liabilities 7,586,736 42,317,552 503 49,904,791
DEFERRED INFLOWS OF RESOURCES
General Employees Retirement Plan Pension Resources 29,518 88,524 - 118,042
Antenna Rental Leases 230,862 - - 230,862
Deferred Gain on Refunding 85,192 151,453 - 236,645
Total Deferred Inflows of Resources 345,572 239,977 - 585,549
NET POSITION
Net Investment in Capital Assets 21,739,082 21,724,135 7,474,506 50,937,723
Unrestricted 10,746,324 27,543,966 831,064 39,121,354
Total Net Position 32,485,406$ 49,268,101$ 8,305,570$ 90,059,077$
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, 2023
Sanitary Storm
Water Sewer Water Total
Utility Utility Utility Enterprise
OPERATING REVENUES
Charges for Services 3,517,118$ 4,082,829$ 143,961$ 7,743,908$
OPERATING EXPENSES
Personal Services 267,474 638,885 8,778 915,137
Supplies 584,431 403,471 689 988,591
Insurance 20,857 65,974 - 86,831
Utilities 167,662 438,922 - 606,584
Services and Other Charges 418,218 411,537 20,125 849,880
Depreciation 882,583 1,576,558 194,776 2,653,917
Total Operating Expenses 2,341,225 3,535,347 224,368 6,100,940
Operating Income (Loss)1,175,893 547,482 (80,407) 1,642,968
NONOPERATING REVENUES (EXPENSES)
Antenna Rental 96,181 - - 96,181
Intergovernmental - 737,311 - 737,311
Property Taxes - - 38,000 38,000
Investment Earnings (net)447,460 2,230,779 26,557 2,704,796
Sales of Capital Assets - 537 - 537
Miscellaneous Revenue 29,910 82,181 - 112,091
Interest and Fiscal Agent Fees (92,933) (1,055,107) - (1,148,040)
Total Nonoperating Revenues (Expenses)480,618 1,995,701 64,557 2,540,876
Income (Loss) Before Capital Contributions and Transfers 1,656,511 2,543,183 (15,850) 4,183,844
Capital Contributions - Connection Fees 1,119,710 3,161,324 - 4,281,034
Capital Contributions - Developer Assets 308,100 378,909 559,056 1,246,065
Capital Contributions - Governmental Funds - - 336,480 336,480
Transfers Out (80,150) (242,600) - (322,750)
Change in Net Position 3,004,171 5,840,816 879,686 9,724,673
Net Position - January 1 29,481,235 43,427,285 7,425,884 80,334,404
Net Position - December 31 32,485,406$ 49,268,101$ 8,305,570$ 90,059,077$
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, 2023
Sanitary Storm
Water Sewer Water Total
Utility Utility Utility Enterprise
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from Customers and Users 3,360,930$ 3,939,573$ 144,653$ 7,445,156$
Other Operating Receipts 126,091 82,718 - 208,809
Payments to Suppliers (1,206,827) (1,532,428) (21,165) (2,760,420)
Payments to Employees (259,311) (614,500) (8,778) (882,589)
Net Cash Flows Provided by Operating Activities 2,020,883 1,875,363 114,710 4,010,956
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Property Taxes - - 38,000 38,000
Transfers Out (80,150) (242,600) - (322,750)
Net Cash Flows Provided (Used) by Noncapital Financing Activities (80,150) (242,600) 38,000 (284,750)
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Acquisition and Construction of Capital Assets (4,157,443) (14,254,230) - (18,411,673)
Principal Paid on Revenue Bonds (1,125,800) (27,834,200) - (28,960,000)
Interest Paid on Revenue Bonds (231,689) (1,159,514) - (1,391,203)
Note Proceeds from Direct Borrowings - 16,908,334 - 16,908,334
Principal Paid on Direct Borrowings - (860,278) - (860,278)
Interest Paid on Direct Borrowings - (181,230) - (181,230)
Intergovernmental Capital Grant - 737,311 - 737,311
Connection Fees 1,202,281 3,433,087 - 4,635,368
Net Cash Flows Provided (Used) by Capital and Related Financing Activities (4,312,651) (23,210,720) - (27,523,371)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest on Investments 447,460 2,230,779 26,557 2,704,796
Net Increase (Decrease) in Cash and Cash Equivalents (1,924,458) (19,347,178) 179,267 (21,092,369)
Cash and Cash Equivalents - January 1 12,116,576 41,766,932 611,590 54,495,098
Cash and Cash Equivalents - December 31 10,192,118$ 22,419,754$ 790,857$ 33,402,729$
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
Operating Income (Loss) 1,175,893$ 547,482$ (80,407)$ 1,642,968$
Adjustments to Reconcile Operating Income (Loss)
to Net Cash Flows Provided by Operating Activities:
Depreciation 882,583 1,576,558 194,776 2,653,917
GERF Pension Activity 5,257 15,667 - 20,924
Other Income Related to Operations 126,091 82,718 - 208,809
(Increase) Decrease in Assets & Deferred Outflows of Resources:
Accounts Receivable (120,893) (141,212) (1,140) (263,245)
Special Assessments (35,295) 2,087 1,832 (31,376)
Due from Other Governments - (4,131) - (4,131)
Prepaid Items (3,359) (10,543) - (13,902)
Increase (Decrease) in Liabilities & Deferred Inflows of Resources
Accounts Payable (24,509) (201,981) (351) (226,841)
Due to Other Governments 12,209 - - 12,209
Accrued Salaries Payable 971 2,912 - 3,883
Compensated Absences Payable 1,935 5,806 - 7,741
Net Cash Flows Provided by Operating Activities 2,020,883$ 1,875,363$ 114,710$ 4,010,956$
NONCASH FINANCING ACTIVITIES
Amortization of Premium on Bonds Payable 132,273$ 207,250$ -$ 339,523$
Acquisition of Capital Assets on Account 532,281$ 1,751,276$ -$ 2,283,557$
Contribution of Capital Assets - Developer 308,100$ 378,909$ 559,056$ 1,246,065$
Contribution of Capital Assets - Governmental Funds -$ -$ 336,480$ 336,480$
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, 2023
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 City of Otsego EDA is a legal entity separate
from the City. Although legally separate, the City of Otsego 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 City of Otsego 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 City of Otesgo EDA.
Separate financial statements would not be prepared for the City of Otsego EDA, even if there was financial activity.
41
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
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 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, 2023
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.
Pavement Management Fund - 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.
Capital Improvements Fund - This fund was established to accumulate resources that may be used to internally
finance future City 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, 2023
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. Amounts invested in the 4M Plus must be deposited for a minimum
of 14 days. Withdrawals made prior to the 14-day requirement will be subject to a penalty equal to 7 days interest on the
amount withdrawn. Term Series investments are designed to be held to maturity. If an investment made in a Term Series is
withdrawn prior to the maturity date of that Series, seven days notice of redemption is required, and a penalty will likely be
assessed.
44
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
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.
Leases
The City is a lessor for several noncancellable leases. The City recognizes a lease receivable and a deferred inflow of
resources in the government-wide and proprietary fund financial statements.
At the commencement of a lease, the City measures the lease receivable at the present value of payments expected to be
received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments
receive. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease
payments received at or before the lease commencement date. Subsquently, the deferred inflow of resources is recognized
as revenue over the life of the lease term in a systematic and rational manner.
Key estimates and judgements include how the City determines: 1) the discount rate, 2) the lease term, 3) lease receipts,
and 4) the amortization. The City determines the discount rate for leases based on the applicable State and Local Government
Securities (SLGS) rate. The lease term includes the noncancellable period of the lease. Lease receipts included in the
measurement of the lease receivable is composed of fixed payments from the lessee.
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.
45
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
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, 2023 are planned to be eliminated in 2024. 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, 2023, management has reviewed the reported values of the assets.
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.
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
46
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
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 assets
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.
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.
47
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
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. SUBSCRIPTION BASED INFORMATION TECHNOLOGY ARRANGEMENTS
In May 2020, the Governmental Accounting Standards Board (GASB) issued Statement No. 96, Subscription Based Information
Technology Arrangements (SBITA). The primary objective of this Statement was to improve accounting and financial reporting
of SBITA's by providing uniform guidance that will result in greater consistency in practice. The City has no SBITA's that would
result in an intangible asset and corresponding subscription liability.
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 assets that applies to future
periods and so will not be recognized as an inflow of resources (revenue) until that time. The City has four 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 statement
of net position and 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. The third item presented by the City on the government-wide statement of net position and on the proprietary
funds statement of net position are deferred inflows of resources related to a deferred gain on a refunding bond issuance
which will be amortized over the remaining life of the debt issuance. The fourth item, Antenna Rental Leases, is reported in
both the government-wide and proprietary funds statements of net position.
48
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
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.
49
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
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 Series 2018A and Series 2020A Debt Service funds, Tax Increment District No. 1,
Tax Increment District No. 3, and Tax Increment District No. 4 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 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, 2023 in the following fund:
Non-Major Governmental Funds:
Capital Project Funds
MSA Construction 1,765,724$
The deficit is being funded through internal borrowing. The MSA Construction fund deficit will be repaid with State-Aid
funding from 2024 through 2025, which has been advanced to the City for the 85th Street and Maciver Avenue street extension
project.
50
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
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 fair 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 $782,006, and a bank balance of $1,512,796.
Custodial credit risk for the City's deposits would arise in the event of a bank failure, where the City's deposits may not be
returned to it. As of year-end, the City's bank balance was not exposed to custodial credit risk because it was insured and fully
collateralized with securities held by the pledging financial institution's trust department or agent in the City's name.
As of December 31, 2023 the City had the following investments:
Fair Value < 1 1 - 3 3 - 5
Negotiable Certificates of Deposit 24,841,078$ 6,743,086$ 10,737,777$ 7,360,215$
U.S. Government Agency Securities 20,816,042 5,748,074 6,956,872 8,111,096
Municipal Bonds 7,945,658 1,362,463 3,689,187 2,894,008
External Investment Pool 16,477,630 16,477,630 - -
Brokered Money Market Accounts 34,729 34,729 - -
Total 70,115,137$ 30,365,982$ 21,383,836$ 18,365,319$
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
51
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
As of December 31, 2023, 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+ 4,878,994$ 6.96%
Federal Home Loan Bank (FHLB)Aaa AA+ 10,610,258 15.13%
Federal Home Loan Mortgage Corporation (FHLMC) Aaa AA+ 1,621,182 2.31%
Federal National Mortgage Association (FNMA)Aaa AA+3,705,608 5.29%
Total 20,816,042$ 29.69%
Municipal Bonds
City of Minneapolis, Minnesota Aa1 AAA 869,048 1.24%
Shakopee School District, MN Aa1 NR 691,785 0.99%
City of New York NY Aa2 AA 914,780 1.30%
State of Oregon Aa1 AA+493,415 0.70%
Lake of the Woods School District, MN NR AAA 626,777 0.89%
State of Mississippi Aa2 AA 1,398,885 2.00%
State of California Aa2 AA-473,520 0.68%
Canutillo School District, TX Aaa NR 521,411 0.74%
Multnomah County School District, TX Aa2 AA 675,653 0.96%
Sunnyvale School District, CA NR AAA 335,689 0.48%
City of Salem, OR Aa2 NR 495,870 0.71%
Town of Wilmington, MA NR AA+448,825 0.64%
Total 7,945,658$ 11.33%
The following is a summary of total deposits and investments as of December 31, 2023 and presented in the basic financial
statements in the Statement of Net Position:
Deposits 782,006$
Investments 70,115,137
Petty Cash and Change Funds 600
Total 70,897,743$
Investment Type
52
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
Interest Rate Risk – This is the risk that the fair 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.
More than 5 percent of the City's investments are in Federal Farm Credit Bank (FFCB), Federal Home Loan Bank (FHLB),
and Federal National Mortgage Assocation (FNMA). These investments are 6.96 percent, 15.13 percent, 5.29 percent
respectively, of the City's total investments.
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.
B. LEASE RECEIVABLE
The City has implemented GASB 87 effective December 31, 2022 and has recognized a Lease Receivable and respective
Deferred Inflow of Resources in the amount of $230,862. Leases included in the lease receivable are the leased space above
Water Towers No. 1 and No. 3 to several communication companies. Lease terms are as follows:
2023 Lease 2023 Lease
Revenue Receivable
T-Mobile 37,346$ 62,546$ n/a
Nextera Wireless 18,980 69,864 Three Terms of 5-Years
Verizon Wireless 39,855 98,452 n/a
Adjustment Factor
Annual Lease
Options
Renewal
Lessee
4%
5%
4%
53
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
C. CAPITAL ASSETS
Capital asset activity for the year ended December 31, 2023 was as follows:
Beginning Ending
Balance Increases Decreases Balance
Governmental Activities:
Capital Assets, not Being Depreciated:
Land 4,278,161$ -$ -$ 4,278,161$
Construction in Progress 50,128 2,612,383 (1,570,045) 1,092,466
Total Capital Assets, not Being Depreciated 4,328,289 2,612,383 (1,570,045) 5,370,627
Capital Assets, Being Depreciated:
Buildings and Building Improvements 6,562,050 118,751 - 6,680,801
Land Improvements 7,213,383 707,930 (94,610) 7,826,703
Machinery and Equipment 4,762,154 492,929 (24,594) 5,230,489
Infrastructure 41,883,284 2,468,086 - 44,351,370
Total Capital Assets, Being Depreciated 60,420,871 3,787,696 (119,204) 64,089,363
Less Accumulated Depreciation for:
Buildings and Building Improvements 2,565,562 159,803 - 2,725,365
Land Improvements 3,698,030 277,388 (94,610) 3,880,808
Machinery and Equipment 2,862,885 347,872 (24,057) 3,186,700
Infrastructure 10,667,358 1,261,634 - 11,928,992
Total Accumulated Depreciation 19,793,835 2,046,697 (118,667) 21,721,865
Total Capital Assets Being Depreciated - Net 40,627,036 1,740,999 (537) 42,367,498
Governmental Activities Capital Assets - Net 44,955,325$ 4,353,382$ (1,570,582)$ 47,738,125$
Depreciation expense was charged to the functions of the City as follows:
Governmental Activities:
General Government 30,409$
Public Safety 12,729
Public Works 1,580,903
Culture and Recreation 422,656
Total Depreciation Expense - Governmental Activities 2,046,697$
54
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
Beginning Ending
Balance Increases Decreases Balance
Business-type Activities:
Capital Assets, not Being Depreciated:
Land 741,333$ 18,388$ -$ 759,721$
Construction in progress 5,994,416 19,522,244 (151,380) 25,365,280
Total Capital Assets, not Being Depreciated 6,735,749 19,540,632 (151,380) 26,125,001
Capital Assets, Being Depreciated:
Buildings and Building Improvements 16,670,750 - - 16,670,750
Land Improvements - 151,380 - 151,380
Machinery and Equipment 2,098,882 350,314 - 2,449,196
Infrastructure 80,184,437 1,525,849 - 81,710,286
Total Capital Assets, Being Depreciated 98,954,069 2,027,543 - 100,981,612
Less Accumulated Depreciation for:
Buildings and Building Improvements 460,596 423,027 - 883,623
Land Improvements - 5,046 - 5,046
Machinery and Equipment 865,418 184,742 - 1,050,160
Infrastructure 22,932,585 2,041,102 - 24,973,687
Total Accumulated Depreciation 24,258,599 2,653,917 - 26,912,516
Total Capital Assets Being Depreciated - Net 74,695,470 (626,374) - 74,069,096
Business-type Activities Capital Assets - Net 81,431,219$ 18,914,258$ (151,380)$ 100,194,097$
Depreciation expense was charged to the functions of the City as follows:
Business-type Activities:
Water Utility 882,583$
Sanitary Sewer Utility 1,576,558
Storm Water Utility 194,776
Total Depreciation Expense - Business-type Activities 2,653,917$
55
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
D. CONSTRUCTION COMMITMENTS
At December 31, 2023 the City had construction project contracts in progress. The commitments related to remaining contract
balances are summarized as follows:
Contract Remaining
Amount Commitment
Water Utility
Well #11 388,346$ 209,991$
Sanitary Sewer Utility
West Wastewater Treatment Facility Expansion 34,228,113 17,010,223
Total 34,616,459$ 17,220,214$
E. INTERFUND BALANCES AND TRANSFERS
At December 31, 2023, 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:
Capital Improvements 617,526$ -$
Nonmajor Governmental Funds:
MSA Construction - 617,526
Total 617,526$ 617,526$
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 Municipal State-Aid for Construction fund will be repaid with State-Aid funding for the
85th Street and Maciver Avenue extension projects.
Fund
Fund & Project
56
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
Transfers between funds made during the year ended December 31, 2023 were as follows:
Transfer In Transfer Out
Major Governmental Funds:
General 320,600$ 710,829$
Capital Improvements 710,829 66,042
Nonmajor Governmental Funds:
Parks Capital Equipment 66,042 -
Revolving Capital Equipment 2,150 -
Total Governmental Funds 1,099,621 776,871
Major Proprietary Funds:
Water Utility - 80,150
Sanitary Sewer Utility - 242,600
Total Proprietary Funds - 322,750
Total All Funds 1,099,621$ 1,099,621$
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 2023, the following
transfers were made between funds:
• The General fund transferred $710,829 to the Capital Improvements fund. This transfer was 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 Capital Improvements fund transferred $66,042 to the Parks Capital Equipment fund to cover projects costs in
excess of the estimated budget costs for the Kittredge Park Shelter Repair project.
• The Water Utility and Sanitary Sewer Utility funds transferred $80,150 and $240,450 respectively to the General
fund as an annual contribution to help manage the property tax levy.
• The Sanitary Sewer Utility fund transferred $2,150 to the Revolving Capital Equipment fund as payment for the purchase
of a mower for the West Wastewater Treatment Facility.
Fund
57
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
F. 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 $1,976,975 of assets accumulated in the debt service funds for future debt service. Included within those
accumulated assets, there are $1,039 of delinquent special assessments receivable, of which collection is uncertain.
Final
Interest Issue Maturity Original Payable
Rates Date Date Issue 12/31/23
General Obligation Bonds:
Improvement Bonds, Series 2018A 3.00 - 3.13% 7/11/2018 2/1/2034 2,305,000$ 1,580,000$
Refunding Bonds 2020A 1.03 - 1.11% 11/17/2020 2/1/2028 2,950,000 1,475,000
Total - Bonded Indebtedness 5,255,000$ 3,055,000
Other Liabilities:
Unamortized Premium on Issuance of Bonds 234,506
Compensated Absences Payable 136,799
Total Governmental Activities 3,426,305$
Annual debt service requirements to maturity for governmental activities long-term indebtedness are as follows:
Principal Interest
460,000$ 98,406$
480,000 81,556
495,000 64,081
525,000 45,756
540,000 26,606
485,000 35,841
70,000 1,094
3,055,000$ 353,340$
2029 - 2033
General Obligation Bonds
2026
2027
2028
Year Ending
December 31
2024
2025
Governmental Activities
2034
Total
58
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
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 $6,004,409, which
accounts for a debt-service coverage ratio of 19.13%.
Final
Interest Maturity Original Payable
Rates Date Date Issue 12/31/23
General Obligation Bonds:
Revenue Bonds, Series 2019A 4.00 - 4.00%12/19/2019 12/1/2026 3,525,000$ 3,525,000$
Revenue Bonds, Series 2021A 1.00 - 3.00% 9/23/2021 2/1/2037 4,345,000 4,130,000
Revenue Bonds, Series 2021B 5.00 - 5.00%9/23/2021 12/1/2026 7,390,000 2,540,000
Note from Direct Borrowing:
G.O. PFA Revenue Note, 2020 1.16% 4/27/2020 8/20/2040 17,199,866 14,850,000
G.O. PFA Revenue Note, 2023 2.84% 11/9/2023 8/20/2043 34,045,359 20,736,609
Sub-Total 66,505,225$ 45,781,609
Other Liabilities:
Unamortized Premium on Issuance of Bonds 954,563
Compensated Absences Payable 44,506
Total Business-type Activities 46,780,678$
59
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
Annual debt service requirements to maturity for business-type activities long-term indebtedness are as follows:
Principal Interest Principal Interest
2,335,000$ 349,155$ 1,468,359$ 501,497$
2,210,000 243,355 2,153,000 1,111,945
2,295,000 152,280 2,201,000 1,064,258
275,000 57,530 2,250,000 1,015,375
285,000 49,130 2,300,000 965,250
1,510,000 442,414 12,296,000 4,029,069
1,285,000 50,769 13,755,000 2,571,376
- - 12,472,000 951,465
10,195,000$ 1,344,633$ 48,895,359$ 12,210,235$
In November 2023, the City issued $34,045,359 of General Obligation PFA Revenue Note, Series 2023 for the purpose of
financing the eligible projects costs of the Clean Water State Revolving Fund project to improve treatment and for expansion
of the West Wastewater Treatment Facility. The aggregate principal amount of the loan disbursed and outstanding will bear
interest at the rate of 2.843 percent per annum accruing from and after the date of the Note, which is November 9, 2023,
through the date on which no principal of the loan remains unpaid and all accrued interest and servicing fees have been paid.
The annual debt service requirements to maturity presented are based on the final projected costs and debt authorized by
the Minnesota Public Facilities Authority. The balance of the debt represents costs incurred through December 31, 2023.
2029 - 2033
2039 - 2043
Business-type Activities
General Obligation Bonds
Total
Business-type Activities
2025
2026
2027
2028
Year Ending Note from Direct Borrowing
December 31
2024
2034 - 2038
60
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
Changes in Long-Term Liabilities
Long-term liability activity for the year ended December 31, 2023 was as follows:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental Activities:
General Obligation Bonds 3,740,000$ -$ (685,000)$ 3,055,000$ 460,000$
Unamortized Bond Premium 277,111 - (42,605) 234,506 -
Compensated Absences 125,130 194,084 (182,415) 136,799 27,360
Total - Governmental 4,142,241 194,084 (910,020) 3,426,305 487,360
Business-type Activities:
General Obligation Bonds 39,155,000 - (28,960,000) 10,195,000 2,335,000
Notes from Direct Borrowings 15,696,489 20,750,398 (860,278) 35,586,609 1,468,359
Unamortized Bond Premium 1,215,203 - (260,640) 954,563 -
Compensated Absences 36,765 69,678 (61,937) 44,506 8,901
Total - Business-type 56,103,457 20,820,076 (30,142,855) 46,780,678 3,812,260
Total Long-Term Liabilities 60,245,698$ 21,014,160$ (31,052,875)$ 50,206,983$ 4,299,620$
The General fund is typically used to liquidate the compensated absences payable for governmental activities.
61
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
G. 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, 2023, the City's conduit debt consisted of the following:
Guardian Angels Senior Services
Revenue Bonds, Series 2017 27,985,000$
Guardian Angels Senior Services
Revenue Refunding Bonds, Series 2017A 8,635,000
Revenue Refunding Bonds, Series 2017B 4,360,000
Kaleidoscope Charter School
Revenue Bonds, Series 2014A 13,715,000
H. 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, 2023, the City has entered into two types of agreements.
Property Tax Abatements
For the year ended December 31, 2023, the City abated property taxes totaling $74,668. Details of each agreement and
the abatement for the current year are as follows:
• The City has entered into a tax abatement agreement with Wright County in order to finance the cost of Parkview
Avenue and 88th Street improvements which facilitated the Parkview Retail development. The agreement outlines
that the City will use tax abatement financing in an amount not to exceed $950,000 to reimburse the costs of the public
improvements. Wright County will use tax abatement financing in an amount not to exceed $400,000 to reimburse the
City for a portion of the costs of the public improvements. This abatement began with taxes payable 2022. For the current
year, Wright County provided an abatement in the amount of $74,037. At the end of the current year, the total abatement
from Wright County totals $109,875.
62
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
Tax Increment Financing
For the year ended December 31, 2023, the Tax Increment Financing Districts within the City generated increment in the
amount of $490,045 and payments to the developers in the amount of $330,287. 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 2023, this tax increment
financing district generated increment in the amount of $85,412 and payments to the developer in the amount
of $42,285.
• 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. For 2023, this tax increment
financing district generated increment in the amount of $205,957 and payments to the developer in the amount
of $170,581.
• 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. For 2023, this tax
increment financing district generated increment in the amount of $198,676 and payments to the developer in the
amount of $117,421.
63
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
H. FUND EQUITY
Net position reported in the government-wide statement of net position at December 31, 2023 include the following:
Governmental Activities
Net Investment in Capital Assets:
Cost of Capital Assets 69,459,990$
Less: Accumulated Depreciation (21,721,865)
Less: Related Long-Term Debt Outstanding (3,289,506)
Less: Acquisition of Capital Assets on Account (226,486)
Total Net Investment in Capital Assets 44,222,133
Restricted for Debt Service
Fund Balance - Governmental Fund Financial Statements 1,147,451
Add: Unavailable Revenue - Special Assessments 828,836
Less: Accrued Interest Payable (44,440)
Total Restricted for Debt Service 1,931,847
Restricted for Lawful Gambling Programs 138,020
Restricted for Affordable Housing Programs 52,757
Restricted for Tax Increment Financing
Fund Balance - Governmental Fund Financial Statements 373,880
Add: Unavailable Revenue - Special Assessments 1,490
Total Restricted for Tax Increment Financing 375,370
Restricted for Park Development
Fund Balance - Governmental Fund Financial Statements 6,498,386
Add: Unavailable Revenue - Special Assessments 9,640
Total Restricted for Park Development 6,508,026
Restricted for Public Safety 931,613
Unrestricted 21,270,456
Total Governmental Activities Net Position 75,430,222$
64
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
Business-type Activities
Net Investment in Capital Assets:
Cost of Capital Assets 127,106,613$
Less: Accumulated Depreciation (26,912,516)
Less: Related Long-Term Debt Outstanding (46,736,172)
Less: Acquisition of Capital Assets on Account (2,283,557)
Less: Deferred Gain on Refunding (236,645)
Total Net Investment in Capital Assets 50,937,723
Unrestricted 39,121,354
Total Business-type Activities Net Position 90,059,077$
Aggregated funds balances reported in the governmental funds balance sheet at December 31, 2023 include the following:
Governmental Funds
Nonspendable Restricted Committed Assigned
General Fund
Prepaid Items 135,876$ -$ -$ -$
Assets Held for Resale 202,200 - - -
Public Safety - 465,819 - -
Insurance Deductibles - - - 277,297
Educational Programs - - - 65,564
Debt Service
Debt Service - 1,147,451 - -
Pavement Management
City Buildings & Infrastructure - - - 5,692,164
Capital Improvements
City Buildings & Infrastructure - - - 7,558,150
Nonmajor Governmental Funds
Lawful Gambling Programs - 138,020 - -
Tax Increment Financing - 373,880 - -
Affordable Housing - 52,757 - -
Street Light Replacement - - 63,398 -
Business Development Loans - - 283,932 -
Park Development - 6,498,386 - -
Public Safety - 465,794 - -
City Buildings & Infrastructure - - - 4,466,602
City Vehicles & Equipment - - - 446,083
City Parks & Trails - - - 297,604
Total Fund Balances 338,076$ 9,142,107$ 347,330$ 18,803,464$
65
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
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.
66
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
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 for each of the first ten years of service and 1.7 percent for each additional year.
Under Method 2, the accrual rate for Coordinated members is 1.7 percent for all years of service. For members hired prior
to July 1, 1989, a full annuity is available when age plus years of service equal 90 and normal retirement age is 65. For
members hired on or after July 1, 1989, normal retirement age is the age for unreduced Social Security benefits capped
at 66.
Benefit increases are provided to benefit recipients each January. The postretirement increase is 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. 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 or prorated
increase. In 2023, legislation repealed the statute delaying increases for members retiring before full retirement age.
67
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
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 fiscal year 2023, 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, 2023, 2022 and 2021 were $189,626, $161,169, and $142,796. 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, 2023, the City reported a liability of $1,588,096 for its proportionate share of the General Employees
Fund's net pension liability. The City's net pension liability reflected a reduction due to the State of Minnesota's contribution
of $16 million. The State of Minnesota is considered a non-employer contributing entity and the State's contribution meets
the definition of a special funding situation. The State of Minnesota's proportionate share of the net pension liability
associated with the City totaled $43,804.
The net pension liability was measured as of June 30, 2023, and the total pension liability used to calculate the net pension
was determined by an actuarial valuation as of that date. The City's proportionate share of the net pension liability was
based on the City's contributions received by PERA during the measurement period for employer payroll paid dates from
July 1, 2022 through June 30, 2023, relative to the total employer contributions received from all of PERA's participating
employers. The City's proportionate share was 0.0284 percent at the end of the measurement period and 0.0274 percent
for the beginning of the period.
City's proportionate share of the net pension liability 1,588,096$
State of Minnesota's proportionate of the net pension liability
associated with the City 43,804
Total 1,631,900$
For the year ended December 31, 2023, the City recognized pension expense of $328,979 for its proportionate share of the
General Employees Plan's pension expense. Included in the amount, the City recognized $197 as pension expense
(and grant revenue) for its proportionate share of the State of Minnesota's contribution of $16 million to the General
Employees Fund.
68
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
At December 31, 2023, the City reported its proportionate share of the General Employees Plan's deferred outflows of
resources and deferred inflows of resources, related to pensions from the following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Differences Between Expected and Actual Economic Experience 51,712$ 9,707$
Changes in Actuarial Assumptions 228,917 435,284
Net Difference Between Projected and Actual Investment Earnings - 21,676
Changes in Proportion 113,868 -
Contributions Paid Subsequent to the Measurement Date 94,813 -
Totals 489,310$ 466,667$
Deferred outflows totaling $94,813 related to pensions resulting from the City's contributions subsequent to the
measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2024.
Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in
pension expense as follows:
Year Pension
Ended Expense
December 31,Amount
2024 82,578$
2025 (170,014)
2026 49,717
2027 (34,451)
2028 -
Thereafter -
Total (72,170)$
E. LONG-TERM EXPECTED RETURN ON INVESTMENT
The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonableness on a
regular basis of the long-term expected rate of return using a building-block method in which best-estimate ranges of expected
future rates of return are developed for each major asset class. These ranges are combined to produce an expected long-term
rate of return by weighting the expected future rates of return by the target asset allocation percentages. The target allocation
and best estimates of geometric real rates of return for each major asset class are summarized in the following table:
Target
Allocation Long-Term
Domestic Equity 33.50% 5.10%
International Equity 16.50% 5.30%
Fixed Income 25.00% 0.75%
Private Markets 25.00% 5.90%
Total 100.00%
Description
Asset Class
69
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
F. ACTUARIAL ASSUMPTIONS
The total pension liability in the June 30, 2023, actuarial valuation was determined using an individual entry age normal
actuarial cost method. The long-term rate of return on pension plan investments used in the determination of the total liability
is 7 percent. This assumption is based on a review of inflation and investment return assumptions from a number of national
investment consulting firms. The review provided a range of return investment return rates deemed to be reasonable by the
actuary. An investment return of 7 percent was deemed to be within that range of reasonableness for financial reporting
purposes.
Inflation is assumed to be 2.25 percent and benefit increases after retirement are assumed to be 1.25 percent.
Salary growth assumptions range in annual increments from 10.25 percent after one year of service to 3.0 percent after 27
years of service.
Mortality rates are based on the Pub-2010 General Employee Mortality Table, adjusted slightly to fit PERA's experience.
Actuarial assumptions are reviewed every four years. The most recent four-year experience study was completed in 2022. The
assumption changes were adopted by the Board and became effective with the July 1, 2023 actuarial valuation.
The following changes in actuarial assumptions and plan provisions occurred in 2023:
Changes in Actuarial Assumptions:
• The investment return assumption and single discount rate were changed from 6.5 percent to 7 percent.
Changes in Plan Provisions:
• An additional one-time direct state aid contribution of $170.1 million will be contributed to the Plan on October 1, 2023.
• The vesting period of those hired after June 30, 2010, was changed from five years of allowable service to three years
of allowable service.
• The benefit increase delay for early retirements on or after January 1, 2024, was eliminated.
• A one-time, non-compounding benefit increase of 2.5 percent minus the actual 2024 adjustment will be payable in a lump
sum for calendar year 2024 by March 31, 2024.
70
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
G. DISCOUNT RATE
The discount rate used to measure the total pension liability in 2023 was 7 percent. The projection of cash flows used to
determine the discount rate assumed that contributions from Plan members and employers will be made at rates set in
Minnesota Statutes. Based on these assumptions, the fiduciary net positions of the General Employees Fund was projected to
be available to make all projected future benefit payments of current Plan members. Therefore, the long-term expected rate of
return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension
liability.
H. PENSION LIABILITY SENSITIVITY
The following presents the City's proportionate share of the net pension liability for all plans it participates in, calculated using
the discount rate disclosed in the preceding paragraph, as well as what the City's proportionate share of the net pension liability
would be if it were calculated using a discount rate 1 percentage point lower or 1 percentage point higher than the current rate.
6.00% 7.00% 8.00%
One Point Current One Point
Decrease Rate Increase
General Employees Fund 2,809,470$ 1,588,096$ 583,470$
I. PENSION PLAN FIDUCIARY NET POSITION
Detailed information about each pension plan's fiduciary net position is available in a separately issued PERA financial report
that includes financial statements and required supplementary information. That report may be obtained at www.mnpera.org.
City's Proportionate Share
of the Net Pension Liability
71
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72
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 ($) Share of the Net Share of the Net Pension Liability Net Position
Fiscal Share of Share of Pension Liability Pension Liability City's Compared With as a Percentage
Year Net Pension Net Pension Associated With Associated With Covered Covered of the Total
Ending Liability Liability the City the City Payroll Payroll Pension Liability
June 30, 2023 0.0284% 1,588,096$ 43,804$ 1,631,900$ 2,261,121$ 70.23%83.10%
June 30, 2022 0.0274% 2,170,089 63,613 2,233,702 2,051,891 105.76%76.70%
June 30, 2021 0.0252% 1,076,153 32,902 1,109,055 1,813,749 59.33%87.00%
June 30, 2020 0.0247% 1,480,878 45,554 1,526,432 1,745,138 84.86%79.10%
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.
73
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, 2023 189,626$ 189,626$ -$ 2,528,348$ 7.50%
December 31, 2022 161,169 161,169 - 2,148,921 7.50%
December 31, 2021 142,796 142,796 - 1,903,947 7.50%
December 31, 2020 133,158 133,158 - 1,775,440 7.50%
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.
74
CITY OF OTSEGO, MINNESOTA
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 2023
NOTE 1 GENERAL EMPLOYEES FUND
CHANGES FOR 2023
Changes in Actuarial Assumptions
• The investment return assumption and single discount rate were changed from 6.5 percent to 7.0 percent.
Changes in Plan Provisions
• An additional one-time direct state aid contribution of $170.1 million was contributed to the Plan on October 1, 2023.
• The vesting period of those hired after June 30, 2010, was changed from five years of allowable service to three
years of allowable service.
• The benefit increase delay for early retirements on or after January 1, 2024, was eliminated.
• A one-time, non-compounding benefit increase of 2.5 percent minus the actual 2024 adjustment will be payable
in a lump sum for calendar year 2024 by March 31, 2024.
CHANGES FOR 2022
Changes in Actuarial Assumptions
• The mortality improvement scale was changed from scale MP-2020 to scale MP-2021.
Changes in Plan Provisions
• There have been no changes since the previous valuation.
CHANGES FOR 2021
Changes in Actuarial Assumptions
• The investment return and single discount rates were changed from 7.5 percent to 6.5 percent for financial reporting.
• The mortality improvement scale was changed from scale MP-2019 to scale MP-2020.
Changes in Plan Provisions
• There have been no changes since the previous valuation.
CHANGES FOR 2020
Changes in Actuarial Assumptions
• The prince inflation assumption was decreased from 2.5 percent to 2.25 percent.
• The payroll growth assumption was decreased from 3.25 percent to 3.0 percent.
• Assumed salary increase rates were changed as recommended in the June 30, 2019, experience study. The net
effect is assumed rates that average 0.25 percent less than previous rates.
• Assumed rates of retirement were changed as recommended in the June 30, 2019, experience study. The changes
result in more unreduced (normal) retirements and slightly fewer Rule of 90 and early retirements.
75
CITY OF OTSEGO, MINNESOTA
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 2023
• Assumed rates of termination were changes as recommended in the June 30, 2019, experience study. The new rates
are based on service and are generally lower than previous rates for years 2-5 and slightly higher thereafter.
• Assumed rates of disability were changed as recommended in the June 30, 2019, experience study. The change results
in fewer predicted disability retirements for males and females.
• The base mortality table for healthy annuitants and employees was changed from the RP-2014 table to the Pub-2010
General Mortality table, with adjustments. The base mortality table for disabled annuitants was changed from the
RP-2014 disabled annuitant mortality table to the Pub-2010 General/Teacher disabled annuitant mortality table, with
adjustments.
• The mortality improvement scale was changed from Scale MP-2018 to Scale MP-2019.
• The assumed spouse age difference was changed from two years older for females to one year older.
• The assumed number of married male new retirees electing the 100% Joint and Survivor option changed from 35
percent to 45 percent. The assumed number of married female new retirees electing the 100% Joint and Survivor
option changed from 15 percent to 30 percent. The corresponding number of married new retirees electing the Life
annuity option was adjusted accordingly.
Changes in Plan Provisions
• Augmentation for current privatized members was reduced to 2.0 percent for the period July 1, 2020 through
December 31, 2023, and 0.0 percent thereafter. Augmentation was eliminated for privatizations occurring after
June 30, 2020.
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.
76
CITY OF OTSEGO, MINNESOTA
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 2023
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.
• Annual 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.
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 annual 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.
77
CITY OF OTSEGO, MINNESOTA
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 2023
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 in Plan Provisions
• There have been no changes since the prior valuation.
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 $6.0 million, which meets the
special funding situation definition, was due September 2015.
78
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79
CITY OF OTSEGO, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
DECEMBER 31, 2023
Total
Special Capital Nonmajor
Revenue Project Governmental
ASSETS
Cash and Investments 897,019$ 14,203,624$ 15,100,643$
Receivables
Accounts 17,337 - 17,337
Taxes
Delinquent 1,490 - 1,490
Special Assessments
Deferred 18,516 20,682 39,198
Total Assets 934,362 14,224,306 15,158,668
LIABILITIES
Accounts Payable 2,369 46,330 48,699
Due to Other Governments - 3,396 3,396
Due to Other Funds - 617,526 617,526
Unearned Revenue - 1,979,429 1,979,429
Total Liabilities 2,369 2,646,681 2,649,050
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - Property Taxes 1,490 - 1,490
Unavailable Revenue - Special Assessments 18,516 20,682 39,198
Grants for Subsequent Years - 1,148,198 1,148,198
Total Deferred Inflows of Resources 20,006 1,168,880 1,188,886
FUND BALANCES
Restricted
Lawful Gambling Programs 138,020 - 138,020
Tax Increment Financing 373,880 - 373,880
Affordable Housing 52,757 - 52,757
Park Development - 6,498,386 6,498,386
Public Safety - 465,794 465,794
Committed
Street Light Replacement 63,398 - 63,398
Business Development Loans 283,932 - 283,932
Assigned
City Buildings & Infrastructure - 4,466,602 4,466,602
City Vehicles & Equipment - 446,083 446,083
City Parks & Trails - 297,604 297,604
Unassigned - (1,765,724) (1,765,724)
Total Fund Balances 911,987 10,408,745 11,320,732
Total Liabilities, Deferred Inflows of
Resources and Fund Balances 934,362$ 14,224,306$ 15,158,668$
80
CITY OF OTSEGO, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2023
Total
Special Capital Nonmajor
Revenue Project Governmental
REVENUES
Property Taxes -$ 857,325$ 857,325$
Tax Increments 490,045 - 490,045
Intergovernmental 52,757 1,374,654 1,427,411
Charges for Services 5,300 545,413 550,713
Special Assessments 3,690 5,171 8,861
Investment Earnings (net)17,932 449,856 467,788
Miscellaneous 54,037 12,500 66,537
Total Revenues 623,761 3,244,919 3,868,680
EXPENDITURES
Current
Economic Development 337,266 - 337,266
Capital Outlay
General Government - 9,357 9,357
Public Safety 57,944 50,580 108,524
Public Works 10,600 763,850 774,450
Culture and Recreation - 1,030,436 1,030,436
Total Expenditures 405,810 1,854,223 2,260,033
Excess of Revenues
Over Expenditures 217,951 1,390,696 1,608,647
OTHER FINANCING SOURCES
Transfers In - 68,192 68,192
Net Change in Fund Balance 217,951 1,458,888 1,676,839
Fund Balance - January 1 694,036 8,949,857 9,643,893
Fund Balance - December 31 911,987$ 10,408,745$ 11,320,732$
81
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82
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.
Lawful Gambling
This fund was established to account for contributions from not-for-profit organizations who are conducting
licensed lawful gambling activities within the City. The contributions, which are based on 10% of net profits, are
restricted expenditures only for purposes outlined in Minnesota Statute.
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 accomodate approximately 15,000 square feet of future commercial development.
83
CITY OF OTSEGO, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR SPECIAL REVENUE FUNDS
DECEMBER 31, 2023
Lawful Street Revolving
Gambling Lighting Loans
ASSETS
Cash and Investments 123,052$ 63,398$ 336,689$
Receivables
Accounts 17,337 - -
Taxes
Delinquent - - -
Special Assessments
Deferred - 18,516 -
Total Assets 140,389 81,914 336,689
LIABILITIES
Accounts Payable 2,369 - -
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - Property Taxes - - -
Unavailable Revenue - Special Assessments - 18,516 -
Total Deferred Inflows of Resources - 18,516 -
FUND BALANCES
Restricted
Lawful Gambling Programs 138,020 - -
Tax Increment Financing - - -
Affordable Housing - - 52,757
Committed
Street Light Replacement - 63,398 -
Business Development Loans - - 283,932
Total Fund Balances 138,020 63,398 336,689
Total Liabilities, Deferred Inflows of
Resources and Fund Balances 140,389$ 81,914$ 336,689$
84
Total
Nonmajor
Tax Increment Tax Increment Tax Increment Special
District No. 1 District No. 3 District No. 4 Revenue
105,143$ 155,263$ 113,474$ 897,019$
- - - 17,337
- - 1,490 1,490
- - - 18,516
105,143 155,263 114,964 934,362
- - - 2,369
- - 1,490 1,490
- - - 18,516
- - 1,490 20,006
- - - 138,020
105,143 155,263 113,474 373,880
- - - 52,757
- - - 63,398
- - - 283,932
105,143 155,263 113,474 911,987
105,143$ 155,263$ 113,474$ 934,362$
85
CITY OF OTSEGO, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES
NONMAJOR SPECIAL REVENUE FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2023
Lawful Street Revolving
Gambling Lighting Loans
REVENUES
Tax Increments -$ -$ -$
Intergovernmental - - 52,757
Charges for Services - 5,300 -
Special Assessments - 3,690 -
Investment Earnings (net)4,931 2,373 10,628
Miscellaneous 54,037 - -
Total Revenues 58,968 11,363 63,385
EXPENDITURES
Current
Economic Development - - -
Capital Outlay
Public Safety 57,944 - -
Public Works - 10,600 -
Total Expenditures 57,944 10,600 -
Net Change in Fund Balance 1,024 763 63,385
Fund Balance - January 1 136,996 62,635 273,304
Fund Balance - December 31 138,020$ 63,398$ 336,689$
86
Total
Nonmajor
Tax Increment Tax Increment Tax Increment Special
District No. 1 District No. 3 District No. 4 Revenue
85,412$ 205,957$ 198,676$ 490,045$
- - - 52,757
- - - 5,300
- - - 3,690
- - - 17,932
- - - 54,037
85,412 205,957 198,676 623,761
44,303 172,908 120,055 337,266
- - - 57,944
- - - 10,600
44,303 172,908 120,055 405,810
41,109 33,049 78,621 217,951
64,034 122,214 34,853 694,036
105,143$ 155,263$ 113,474$ 911,987$
87
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, 2023
Variance with
Original Final Budget -
and Final Actual Over
Budget Amounts (Under)
REVENUES
Tax Increments 85,079$ 85,412$ 333$
EXPENDITURES
Current
Economic Development
Personal Services 500 802 302
Services and Other Charges 79,071 43,501 (35,570)
Total Expenditures 79,571 44,303 (35,268)
Net Change in Fund Balance 5,508 41,109 35,601
Fund Balance - January 1 64,034 64,034 -
Fund Balance - December 31 69,542$ 105,143$ 35,601$
88
CITY OF OTSEGO, MINNESOTA
NONMAJOR SPECIAL REVENUE FUNDS
TAX INCREMENT DISTRICT NO. 3 - SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED DECEMBER 31, 2023
Variance with
Original Final Budget -
and Final Actual Over
Budget Amounts (Under)
REVENUES
Tax Increments 205,153$ 205,957$ 804$
EXPENDITURES
Current
Economic Development
Personal Services 500 1,111 611
Services and Other Charges 187,137 171,797 (15,340)
Total Expenditures 187,637 172,908 (14,729)
Net Change in Fund Balance 17,516 33,049 15,533
Fund Balance - January 1 122,214 122,214 -
Fund Balance - December 31 139,730$ 155,263$ 15,533$
89
CITY OF OTSEGO, MINNESOTA
NONMAJOR SPECIAL REVENUE FUNDS
TAX INCREMENT DISTRICT NO. 4 - SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED DECEMBER 31, 2023
Variance with
Original Final Budget -
and Final Actual Over
Budget Amounts (Under)
REVENUES
Tax Increments 198,966$ 198,676$ (290)$
EXPENDITURES
Current
Economic Development
Personal Services 500 1,417 917
Services and Other Charges 191,518 118,638 (72,880)
Total Expenditures 192,018 120,055 (71,963)
Net Change in Fund Balance 6,948 78,621 71,673
Fund Balance - January 1 34,853 34,853 -
Fund Balance - December 31 41,801$ 113,474$ 71,673$
90
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.
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.
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.
Municipal State-Aid for Construction
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.
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.
City 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.
91
CITY OF OTSEGO, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR CAPITAL PROJECT FUNDS
DECEMBER 31, 2023
Parks Revolving
Trails Park Capital Capital
Management Development Equipment Equipment
ASSETS
Cash and Investments 201,006$ 6,505,399$ 113,334$ 449,479$
Receivables
Special Assessments
Deferred - 9,640 - -
Total Assets 201,006 6,515,039 113,334 449,479
LIABILITIES
Accounts Payable - 7,013 16,736 -
Due to Other Governments - - - 3,396
Due to Other Funds - - - -
Unearned Revenue - - - -
Total Liabilities - 7,013 16,736 3,396
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - Special Assessments - 9,640 - -
Grants for Subsequent Years - - - -
Total Deferred Inflows of Resources - 9,640 - -
FUND BALANCES (DEFICITS)
Restricted
Park Development - 6,498,386 - -
Public Safety - - - -
Assigned
City Buildings & Infrastructure - - - -
City Vehicles & Equipment - - - 446,083
City Parks & Trails 201,006 - 96,598 -
Unassigned - - - -
Total Fund Balances (Deficits)201,006 6,498,386 96,598 446,083
Total Liabilities, Deferred Inflows of
Resources and Fund Balances (Deficits)201,006$ 6,515,039$ 113,334$ 449,479$
92
Total
City Buildings Nonmajor
Fire MSA Watershed & Property Capital
Reserve Construction Districts Maintenance Projects
4,802,434$ -$ 2,013,808$ 118,164$ 14,203,624$
- - 11,042 - 20,682
4,802,434 - 2,024,850 118,164 14,224,306
413 - 22,168 - 46,330
- - - - 3,396
- 617,526 - - 617,526
1,979,429 - - - 1,979,429
1,979,842 617,526 22,168 - 2,646,681
- - 11,042 - 20,682
- 1,148,198 - - 1,148,198
- 1,148,198 11,042 - 1,168,880
- - - - 6,498,386
465,794 - - - 465,794
2,356,798 - 1,991,640 118,164 4,466,602
- - - - 446,083
- - - - 297,604
- (1,765,724) - - (1,765,724)
2,822,592 (1,765,724) 1,991,640 118,164 10,408,745
4,802,434$ -$ 2,024,850$ 118,164$ 14,224,306$
93
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, 2023
Parks Revolving
Trails Park Capital Capital
Management Development Equipment Equipment
REVENUES
Property Taxes 65,000$ -$ 70,000$ 477,325$
Intergovernmental - 20,561 - -
Charges for Services - 384,818 - -
Special Assessments - 2,410 - -
Investment Earnings (net)9,217 234,791 16,814 11,881
Miscellaneous - - 12,500 -
Total Revenues 74,217 642,580 99,314 489,206
EXPENDITURES
Capital Outlay
General Government - - - -
Public Safety - - - 29,267
Public Works - - - 302,670
Culture and Recreation 134,450 63,419 735,234 97,333
Total Expenditures 134,450 63,419 735,234 429,270
Excess (Deficiency) of Revenues
Over (Under) Expenditures (60,233) 579,161 (635,920) 59,936
OTHER FINANCING SOURCES
Transfers In - - 66,042 2,150
Net Change in Fund Balance (60,233) 579,161 (569,878) 62,086
Fund Balance (Deficit) - January 1 261,239 5,919,225 666,476 383,997
Fund Balance (Deficit) - December 31 201,006$ 6,498,386$ 96,598$ 446,083$
94
Total
City Buildings Nonmajor
Fire MSA Watershed & Property Capital
Reserve Construction Districts Maintenance Projects
210,000$ -$ -$ 35,000$ 857,325$
465,794 888,299 - - 1,374,654
- - 160,595 - 545,413
- - 2,761 - 5,171
84,232 - 88,997 3,924 449,856
- - - - 12,500
760,026 888,299 252,353 38,924 3,244,919
- - - 9,357 9,357
21,313 - - - 50,580
- - 461,180 - 763,850
- - - - 1,030,436
21,313 - 461,180 9,357 1,854,223
738,713 888,299 (208,827) 29,567 1,390,696
- - - - 68,192
738,713 888,299 (208,827) 29,567 1,458,888
2,083,879 (2,654,023) 2,200,467 88,597 8,949,857
2,822,592$ (1,765,724)$ 1,991,640$ 118,164$ 10,408,745$
95
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, 2023
(With Comparative Actual Amounts for the Year Ended December 31, 2022)
2022
Variance with
Original Final Budget -
and Final Actual Over Actual
Budget Amounts (Under) Amounts
REVENUES
Property Taxes
Current 5,312,550$ 5,286,560$ (25,990)$ 4,945,354$
Delinquent 40,000 (35,425) (75,425) 76,119
Penalties and interest 2,000 2,522 522 1,758
Total Property Taxes 5,354,550 5,253,657 (100,893) 5,023,231
Franchise Taxes 133,000 126,594 (6,406) 133,218
Licenses and Permits
Business Licenses 41,200 38,095 (3,105) 41,989
Rental Licenses 40,000 38,770 (1,230) 38,115
Other Licenses 2,000 4,345 2,345 3,310
Right of Way Permits 60,000 54,375 (5,625) 71,818
Building Permits 1,536,523 1,396,183 (140,340) 1,953,478
Other Permits 15,800 13,001 (2,799) 15,100
Total Licenses and Permits 1,695,523 1,544,769 (150,754) 2,123,810
Intergovernmental
State
Police Aid 83,000 92,918 9,918 83,738
Other Aid & Grants 9,300 479,608 470,308 20,494
Local
Other Aid & Grants - 2,995 2,995 3,500
Total Intergovernmental 92,300 575,521 483,221 107,732
Charges for Services
General Government 91,305 96,128 4,823 206,210
Public Works 94,650 63,296 (31,354) 156,047
Culture and Recreation 82,821 112,866 30,045 114,375
Total Charges for Services 268,776 272,290 3,514 476,632
Special Assessments 4,400 10,389 5,989 3,963
Fines and Forfeitures 24,000 32,109 8,109 31,812
Investment Earnings (net)76,000 295,571 219,571 (149,701)
Miscellaneous
Refunds and Reimbursements 5,000 35,577 30,577 35,506
Contributions and Donations - 686 686 41,472
Other 2,500 9,178 6,678 4,582
Total Miscellaneous 7,500 45,441 37,941 81,560
Total Revenues 7,656,049 8,156,341 500,292 7,832,257
2023
96
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, 2023
(With Comparative Actual Amounts for the Year Ended December 31, 2022)
2022
Variance with
Original Final Budget -
and Final Actual Over Actual
Budget Amounts (Under) Amounts
EXPENDITURES
General Government
City Council
Personal Services 36,672 34,622 (2,050) 31,519
Supplies 375 91 (284) 142
Services and Other Charges 108,959 53,959 (55,000) 49,973
Total 146,006 88,672 (57,334) 81,634
City Administrator
Personal Services 210,057 209,328 (729) 193,011
Supplies 200 256 56 50
Services and Other Charges 9,524 3,008 (6,516) 1,931
Total 219,781 212,592 (7,189) 194,992
Administration
Personal Services 270,944 273,319 2,375 252,222
Supplies 9,150 5,902 (3,248) 5,391
Services and Other Charges 73,913 66,881 (7,032) 61,206
Total 354,007 346,102 (7,905) 318,819
Elections
Personal Services - - - 35,959
Supplies 500 409 (91) 5,778
Services and Other Charges 2,200 4,800 2,600 2,347
Total 2,700 5,209 2,509 44,084
Assessing
Services and Other Charges 166,875 161,020 (5,855) 151,608
Finance
Personal Services 268,466 275,530 7,064 237,073
Supplies 1,650 912 (738) 1,387
Services and Other Charges 69,346 58,195 (11,151) 66,209
Total 339,462 334,637 (4,825) 304,669
Information Technology
Supplies 5,500 4,302 (1,198) 2,136
Services and Other Charges 125,046 111,806 (13,240) 102,803
Total 130,546 116,108 (14,438) 104,939
Legal
Services and Other Charges 61,200 32,899 (28,301) 25,942
Human Resources
Personal Services 116,062 121,310 5,248 109,864
Supplies 200 200 - 95
Services and Other Charges 34,096 49,268 15,172 13,579
Total 150,358 170,778 20,420 123,538
2023
97
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, 2023
(With Comparative Actual Amounts for the Year Ended December 31, 2022)
2022
Variance with
Original Final Budget -
and Final Actual Over Actual
Budget Amounts (Under) Amounts
EXPENDITURES (CONTINUED)
General Government (Continued)
Prairie Center
Supplies 6,800 6,112 (688) 3,481
Services and Other Charges 42,207 42,335 128 47,734
Total 49,007 48,447 (560) 51,215
City Hall & Public Works Garage
Supplies 9,300 9,388 88 8,729
Services and Other Charges 115,783 133,129 17,346 133,299
Total 125,083 142,517 17,434 142,028
Old Town Hall
Services and Other Charges 3,300 4,210 910 3,739
Total General Government 1,748,325 1,663,191 (85,134) 1,547,207
Public Safety
Police Services
Services and Other Charges 1,607,188 1,612,222 5,034 1,500,296
Public Safety Commission
Personal Services 960 680 (280) 600
Supplies 500 42 (458) -
Total 1,460 722 (738) 600
Fire Protection
Personal Services 103,149 87,575 (15,574) -
Supplies - 7,511 7,511 -
Services and Other Charges 1,053,115 1,056,217 3,102 941,074
Total 1,156,264 1,151,303 (4,961) 941,074
Building Inspections
Personal Services 166,916 169,030 2,114 157,692
Supplies 5,600 5,144 (456) 7,236
Services and Other Charges 439,639 358,024 (81,615) 444,718
Total 612,155 532,198 (79,957) 609,646
Emergency Management
Supplies 2,000 216 (1,784) 1,989
Services and Other Charges 4,825 761 (4,064) 4,582
Total 6,825 977 (5,848) 6,571
Animal Control
Services and Other Charges 19,400 20,833 1,433 22,195
Total Public Safety 3,403,292 3,318,255 (85,037) 3,080,382
2023
98
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, 2023
(With Comparative Actual Amounts for the Year Ended December 31, 2022)
2022
Variance with
Original Final Budget -
and Final Actual Over Actual
Budget Amounts (Under) Amounts
EXPENDITURES (CONTINUED)
Public Works
Streets Maintenance
Personal Services 795,691 770,336 (25,355) 707,394
Supplies 195,746 246,050 50,304 180,756
Services and Other Charges 118,686 102,161 (16,525) 71,504
Total 1,110,123 1,118,547 8,424 959,654
Engineering
Services and Other Charges 72,000 62,918 (9,082) 60,635
Street Lighting
Services and Other Charges 177,280 173,395 (3,885) 167,245
Fleet Management
Personal Services 118,348 110,334 (8,014) 75,623
Supplies 218,345 191,895 (26,450) 173,350
Services and Other Charges 31,731 31,792 61 55,142
Total 368,424 334,021 (34,403) 304,115
Total Public Works 1,727,827 1,688,881 (38,946) 1,491,649
Culture and Recreation
Parks Maintenance
Personal Services 410,168 410,139 (29) 303,315
Supplies 98,200 93,191 (5,009) 96,492
Services and Other Charges 131,052 148,102 17,050 158,865
Total 639,420 651,432 12,012 558,672
Recreation
Personal Services 187,174 203,574 16,400 203,177
Supplies 15,250 9,891 (5,359) 13,940
Services and Other Charges 83,601 75,845 (7,756) 74,182
Total 286,025 289,310 3,285 291,299
Parks and Recreation Commission
Personal Services 960 550 (410) 690
Supplies 500 205 (295) 82
Services and Other Charges - 60 60 -
Total 1,460 815 (645) 772
Heritage Preservation Commission
Personal Services 840 300 (540) 350
Supplies 500 21 (479) -
Services and Other Charges 500 607 107 264
Total 1,840 928 (912) 614
Total Culture and Recreation 928,745 942,485 13,740 851,357
2023
99
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, 2023
(With Comparative Actual Amounts for the Year Ended December 31, 2022)
2022
Variance with
Original Final Budget -
and Final Actual Over Actual
Budget Amounts (Under) Amounts
EXPENDITURES (CONTINUED)
Economic Development
Planning Commission
Personal Services 2,000 1,440 (560) 1,500
Supplies 500 11 (489) 3
Total 2,500 1,451 (1,049) 1,503
Planning
Services and Other Charges 95,550 85,743 (9,807) 86,678
Economic Development
Supplies 100 - (100) -
Services and Other Charges 15,210 4,594 (10,616) 3,548
Total 15,310 4,594 (10,716) 3,548
Total Economic Development 113,360 91,788 (21,572) 91,729
Capital Outlay
General Government 35,100 15,216 (19,884) 26,884
Public Safety 3,000 4,953 1,953 -
Public Works 10,000 5,715 (4,285) 12,222
Culture and Recreation 7,000 6,915 (85) 6,495
Total 55,100 32,799 (22,301) 45,601
Total Expenditures 7,976,649 7,737,399 (239,250) 7,107,925
Excess (Deficiency) of Revenues
Over (Under) Expenditures (320,600) 418,942 739,542 724,332
OTHER FINANCING SOURCES (USES)
Transfers In 320,600 320,600 - 293,500
Sales of Capital Assets - 1,359 1,359 -
Transfers Out - (710,829) (710,829) (1,266,290)
Total Other Financing Sources (Uses)320,600 (388,870) (709,470) (972,790)
Net Change in Fund Balance - 30,072 30,072 (248,458)
Fund Balance - January 1 4,951,443 4,951,443 - 5,199,901
Fund Balance - December 31 4,951,443$ 4,981,515$ 30,072$ 4,951,443$
2023
100
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101
CITY OF OTSEGO, MINNESOTA
COMBINING BALANCE SHEET
DEBT SERVICE FUND BY ACCOUNT
DECEMBER 31, 2023
Total
Series Series Debt
2018A 2020A Service
ASSETS
Cash and Investments 427,743$ 720,396$ 1,148,139$
Receivables
Special Assessments
Deferred 683,603 144,194 827,797
Delinquent 1,039 - 1,039
Total Assets 1,112,385 864,590 1,976,975
LIABILITIES
Accounts Payable 344 344 688
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - Special Assessments 684,642 144,194 828,836
FUND BALANCES
Restricted 427,399 720,052 1,147,451
Total Liabilities, Deferred Inflows of
Resources and Fund Balances 1,112,385$ 864,590$ 1,976,975$
102
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, 2023
Total
Series Series Debt
2018A 2020A Service
REVENUES
Property Taxes 94,416$ 450,000$ 544,416$
Special Assessments 133,969 88,777 222,746
Total Revenues 228,385 538,777 767,162
EXPENDITURES
Debt Service
Principal 190,000 495,000 685,000
Interest 50,506 68,900 119,406
Fiscal Agent Fees 839 839 1,678
Total Expenditures 241,345 564,739 806,084
Net Change in Fund Balance (12,960) (25,962) (38,922)
Fund Balance - January 1 440,359 746,014 1,186,373
Fund Balance - December 31 427,399$ 720,052$ 1,147,451$
103
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, 2023
Variance with
Original Final Budget -
and Final Actual Over
Budget Amounts (Under)
REVENUES
Property Taxes 94,416$ 94,416$ -$
Special Assessments 129,762 133,969 4,207
Total Revenues 224,178 228,385 4,207
EXPENDITURES
Debt Service
Principal 190,000 190,000 -
Interest 50,506 50,506 -
Fiscal Agent Fees 500 839 339
Total Expenditures 241,006 241,345 339
Net Change in Fund Balance (16,828) (12,960) 3,868
Fund Balance - January 1 440,359 440,359 -
Fund Balance - December 31 423,531$ 427,399$ 3,868$
104
CITY OF OTSEGO, MINNESOTA
DEBT SERVICE FUND - SERIES 2020A
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED DECEMBER 31, 2023
Variance with
Original Final Budget -
and Final Actual Over
Budget Amounts (Under)
REVENUES
Property Taxes 450,000$ 450,000$ -$
Special Assessments 56,476 88,777 32,301
Total Revenues 506,476 538,777 32,301
EXPENDITURES
Debt Service
Principal 495,000 495,000 -
Interest 68,900 68,900 -
Fiscal Agent Fees 500 839 339
Total Expenditures 564,400 564,739 339
Net Change in Fund Balance (57,924) (25,962) 31,962
Fund Balance - January 1 746,014 746,014 -
Fund Balance - December 31 688,090$ 720,052$ 31,962$
105
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106
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
This part of the City of Otsego's comprehensive annual financial report 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 108
These tables contain trend information to help the reader understand how the City's
financial performance and well-being have changed over time.
Revenue Capacity 122
These tables contain information to help the reader assess the City's most significant
local revenue source, the property tax.
Debt Capacity 128
These tables present information to help the reader assess the affordability of the City's
current level of outstanding debt and the City's ability to issue debt in the future.
Demographic and Economic Information 135
These tables offer demographic and economic indicators to help the reader understand
the environment within which the City's financial activities take place.
Operating Information 137
These tables contain service and infrastructure data to help the reader understand how
the information in the City's financial report relates to services the City provides and the
activities it performs.
Sources: Unless otherwise noted, the information in these tables is derived from the report for each respective year.
107
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
NET POSITION BY COMPONENT
Last Ten Fiscal Years
(accrual basis of accounting)
2014 2015 2016 2017
Governmental Activities
Net Investment in Capital Assets 15,515,291$ 15,303,426$ 19,103,702$ 21,496,582$
Restricted 5,430,795 4,547,327 4,292,589 4,973,536
Unrestricted 9,601,854 9,627,962 10,745,858 13,338,398
Total Governmental Activities Net Position 30,547,940$ 29,478,715$ 34,142,149$ 39,808,516$
Business-type activities
Net Investment in Capital Assets 12,619,305$ 11,553,869$ 15,889,294$ 20,504,751$
Unrestricted 13,487,231 15,474,362 15,248,794 15,679,356
Total Business-type Activities Net Position 26,106,536$ 27,028,231$ 31,138,088$ 36,184,107$
Primary Government
Net Investment in Capital Assets 28,134,596$ 26,857,295$ 34,992,996$ 42,001,333$
Restricted 5,430,795 4,547,327 4,292,589 4,973,536
Unrestricted 23,089,085 25,102,324 25,994,652 29,017,754
Total Primary Government Net Position 56,654,476$ 56,506,946$ 65,280,237$ 75,992,623$
Sources: The data for this table has been extracted from the respective years report.
108
Table 1
2018 2019 2020 2021 2022 2023
25,330,507$ 31,373,524$ 34,622,760$ 39,104,289$ 40,938,214$ 44,222,133$
6,929,688 7,658,124 7,445,422 7,661,049 8,427,066 9,937,633
13,626,318 11,357,968 13,214,418 16,552,822 19,748,485 21,270,456
45,886,513$ 50,389,616$ 55,282,600$ 63,318,160$ 69,113,765$ 75,430,222$
24,701,888$ 31,344,999$ 36,563,803$ 43,581,750$ 47,080,808$ 50,937,723$
18,287,811 18,919,363 24,166,085 28,340,412 33,253,596 39,121,354
42,989,699$ 50,264,362$ 60,729,888$ 71,922,162$ 80,334,404$ 90,059,077$
50,032,395$ 62,718,523$ 71,186,563$ 82,686,039$ 88,019,022$ 95,159,856$
6,929,688 7,658,124 7,445,422 7,661,049 8,427,066 9,937,633
31,914,129 30,277,331 37,380,503 44,893,234 53,002,081 60,391,810
88,876,212$ 100,653,978$ 116,012,488$ 135,240,322$ 149,448,169$ 165,489,299$
109
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
CHANGES IN NET POSITION - CONTINUED ON THE FOLLOWING PAGES
Last Ten Fiscal Years
(accrual basis of accounting)
2014 2015 2016 2017
GOVERNMENTAL ACTIVITIES
Expenses
General Government 1,230,335$ 1,174,510$ 1,376,793$ 1,085,554$
Public Safety 1,499,538 1,670,627 1,846,459 1,906,843
Public Works 2,383,890 6,521,708 3,389,909 2,618,584
Culture and Recreation 792,525 792,936 847,553 1,013,252
Economic Development 45,024 145,771 302,296 365,768
Interest on Long-term Debt 347,503 231,242 223,938 197,282
Total Expenses 6,298,815 10,536,794 7,986,948 7,187,283
Program Revenues
Charges for Services
General Government 119,757 36,235 81,876 100,125
Public Safety 1,159,073 1,191,134 1,677,788 1,384,626
Public Works 724,009 247,260 656,570 805,248
Culture and Recreation 43,606 52,075 59,236 67,112
Operating Grants and Contributions 233,606 244,497 248,910 261,814
Capital Grants and Contributions 1,619,209 3,154,662 4,437,611 3,957,672
Total Program Revenues 3,899,260 4,925,863 7,161,991 6,576,597
Net (Expense) / Revenue (2,399,555) (5,610,931) (824,957) (610,686)
General Revenues and Transfers
Taxes
Property 4,476,810 4,602,153 4,963,787 5,572,250
Tax Increments - - - -
Franchise Taxes 120,964 128,722 131,229 135,652
Unrestricted Grants and Contributions 132,104 242,970 255,951 231,683
Investment Earnings (net)157,640 55,909 82,385 124,052
Gain on Disposal of Capital Assets 32,355 35,600 31,160 38,373
Transfers 122,632 284,586 186,755 195,686
Transfers - Capital Assets - - (162,876) (20,643)
Total General Revenues and Transfers 5,042,505 5,349,940 5,488,391 6,277,053
Change in Net Position 2,642,950$ (260,991)$ 4,663,434$ 5,666,367$
110
Table 2
Page 1 of 3
2018 2019 2020 2021 2022 2023
1,228,607$ 1,383,291$ 1,616,634$ 1,509,107$ 1,849,685$ 1,838,849$
2,207,699 2,411,751 2,683,103 2,889,365 3,101,633 3,378,313
3,348,200 3,387,481 4,967,363 4,101,313 4,559,629 4,761,125
1,095,151 1,177,721 1,151,569 1,240,142 1,396,260 1,541,099
223,175 741,705 889,173 503,411 499,481 429,054
276,423 212,402 247,702 125,168 92,945 67,854
8,379,255 9,314,351 11,555,544 10,368,506 11,499,633 12,016,294
118,219 639,077 651,770 889,736 937,238 477,051
1,698,522 1,726,367 2,552,748 2,557,049 2,156,222 1,579,278
942,042 127,176 174,321 308,739 164,533 68,259
80,047 71,553 22,852 81,610 114,375 112,866
328,410 319,332 366,461 415,173 399,743 924,558
5,800,583 3,361,497 3,212,230 5,838,257 4,631,372 3,133,926
8,967,823 6,245,002 6,980,382 10,090,564 8,403,483 6,295,938
588,568 (3,069,349) (4,575,162) (277,942) (3,096,150) (5,720,356)
6,078,341 6,681,989 7,170,868 7,718,135 8,583,996 9,177,125
96,938 97,419 275,445 311,971 436,817 491,535
139,161 137,510 132,137 129,467 345,108 1,026,846
191,570 162,120 1,411,685 64,729 152,452 111,798
263,784 754,079 625,964 (191,523) (870,574) 1,242,417
37,563 47,362 - 40,000 11,956 822
207,840 212,869 262,369 243,100 293,500 322,750
(1,525,768) (520,896) (410,322) (2,377) (61,500) (336,480)
5,489,429 7,572,452 9,468,146 8,313,502 8,891,755 12,036,813
6,077,997$ 4,503,103$ 4,892,984$ 8,035,560$ 5,795,605$ 6,316,457$
111
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
CHANGES IN NET POSITION - CONTINUED
Last Ten Fiscal Years
(accrual basis of accounting)
2014 2015 2016 2017
BUSINESS-TYPE ACTIVITIES
Expenses
Water Utility 1,187,553$ 1,246,064$ 1,276,338$ 1,377,537$
Sanitary Sewer Utility 2,052,493 2,207,811 2,480,519 2,477,995
Storm Water Utility 57,977 95,533 42,342 62,172
Total Expenses 3,298,023 3,549,408 3,799,199 3,917,704
Program Revenues
Charges for Services
Water Utility 1,167,066 1,261,303 1,334,442 1,529,127
Sanitary Sewer Utility 1,325,181 1,479,703 1,601,172 1,744,067
Storm Water Utility 45,570 76,211 75,932 94,919
Operating Grants and Contributions - - - -
Capital Grants and Contributions 2,560,270 2,020,299 4,766,947 5,591,332
Total Program Revenues 5,098,087 4,837,516 7,778,493 8,959,445
Net (Expense) / Revenue 1,800,064 1,288,108 3,979,294 5,041,741
General Revenues and Transfers
Property Taxes 24,824 25,000 25,000 25,000
Investment Earnings (net)168,320 85,259 129,442 154,321
Gain on Disposal of Capital Assets 28,440 - - -
Transfers (122,632) (284,586) (186,755) (195,686)
Transfers - Capital Assets - - 162,876 20,643
Total General Revenues and Transfers 98,952 (174,327) 130,563 4,278
Change in Net Position 1,899,016$ 1,113,781$ 4,109,857$ 5,046,019$
112
Table 2
Page 2 of 3
2018 2019 2020 2021 2022 2023
1,468,485$ 1,729,938$ 1,443,522$ 2,150,216$ 2,311,989$ 2,434,158$
2,561,070 2,600,436 2,739,519 3,257,261 4,084,200 4,590,454
71,040 123,163 138,985 188,245 218,612 224,368
4,100,595 4,453,537 4,322,026 5,595,722 6,614,801 7,248,980
1,754,947 1,734,090 2,108,577 2,982,786 3,020,259 3,643,209
1,932,885 2,254,688 2,473,673 3,048,707 3,543,804 4,165,010
104,916 109,372 120,579 122,200 137,178 143,961
- - 2,157 - - -
5,500,794 6,543,224 9,214,377 11,066,329 9,754,695 6,264,410
9,293,542 10,641,374 13,919,363 17,220,022 16,455,936 14,216,590
5,192,947 6,187,837 9,597,337 11,624,300 9,841,135 6,967,610
26,000 30,000 32,000 34,000 36,000 38,000
260,833 748,799 688,236 (225,303) (1,232,893) 2,704,796
7,884 - - - - 537
(207,840) (212,869) (262,369) (243,100) (293,500) (322,750)
1,525,768 520,896 410,322 2,377 61,500 336,480
1,612,645 1,086,826 868,189 (432,026) (1,428,893) 2,757,063
6,805,592$ 7,274,663$ 10,465,526$ 11,192,274$ 8,412,242$ 9,724,673$
113
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
CHANGES IN NET POSITION - CONTINUED
Last Ten Fiscal Years
(accrual basis of accounting)
2014 2015 2016 2017
TOTAL PRIMARY GOVERNMENT
Expenses
Governmental Activities 6,298,815$ 10,536,794$ 7,986,948$ 7,187,283$
Business-type Activities 3,298,023 3,549,408 3,799,199 3,917,704
Total Expenses 9,596,838 14,086,202 11,786,147 11,104,987
Program Revenues
Governmental Activities 3,899,260 4,925,863 7,161,991 6,576,597
Business-type Activities 5,098,087 4,837,516 7,778,493 8,959,445
Total Program Revenues 8,997,347 9,763,379 14,940,484 15,536,042
Net (Expense) / Revenue (599,491) (4,322,823) 3,154,337 4,431,055
General Revenues and Transfers
Governmental Activities 5,042,505 5,349,940 5,488,391 6,277,053
Business-type Activities 98,952 (174,327) 130,563 4,278
Total General Revenues and Transfers 5,141,457 5,175,613 5,618,954 6,281,331
Change in Net Position 4,541,966$ 852,790$ 8,773,291$ 10,712,386$
Sources: The data for this table has been extracted from the respective years report.
114
Table 2
Page 3 of 3
2018 2019 2020 2021 2022 2023
8,379,255$ 9,314,351$ 11,555,544$ 10,368,506$ 11,499,633$ 12,016,294$
4,100,595 4,453,537 4,322,026 5,595,722 6,614,801 7,248,980
12,479,850 13,767,888 15,877,570 15,964,228 18,114,434 19,265,274
8,967,823 6,245,002 6,980,382 10,090,564 8,403,483 6,295,938
9,293,542 10,641,374 13,919,363 17,220,022 16,455,936 14,216,590
18,261,365 16,886,376 20,899,745 27,310,586 24,859,419 20,512,528
5,781,515 3,118,488 5,022,175 11,346,358 6,744,985 1,247,254
5,489,429 7,572,452 9,468,146 8,313,502 8,891,755 12,036,813
1,612,645 1,086,826 868,189 (432,026) (1,428,893) 2,757,063
7,102,074 8,659,278 10,336,335 7,881,476 7,462,862 14,793,876
12,883,589$ 11,777,766$ 15,358,510$ 19,227,834$ 14,207,847$ 16,041,130$
115
This page has been left blank intentionally.
116
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
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
2020 7,170,868 275,445 132,137 7,578,450
2021 7,718,135 311,971 129,467 8,159,573
2022 8,583,996 436,817 345,108 9,365,921
2023 9,177,125 491,535 1,026,846 10,695,506
Sources: The data for this table has been extracted from the respective years report.
117
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
FUND BALANCES - GOVERNMENTAL FUNDS
Last Ten Fiscal Years
(modified accrual basis of accounting)
2014 2015 2016 2017
General Fund
Nonspendable 80,423$ 105,547$ 110,973$ 317,197$
Restricted - - - -
Assigned 101,833 128,646 192,408 205,257
Unassigned 3,211,382 2,656,330 3,342,821 3,368,191
Total General Fund 3,393,638$ 2,890,523$ 3,646,202$ 3,890,645$
All Other Governmental Funds
Nonspendable -$ 2,675$ 2,000$ 1,325$
Restricted 2,576,729 2,278,379 1,931,757 3,290,750
Committed 387,033 406,683 419,829 474,863
Assigned 5,218,020 6,825,237 7,221,257 9,098,697
Unassigned (10,584) (26,070) (281,273) (355,150)
Total All Other Governmental Funds 8,171,198$ 9,486,904$ 9,293,570$ 12,510,485$
Sources: The data for this table has been extracted from the respective years report.
118
Table 4
2018 2019 2020 2021 2022 2023
320,887$ 323,124$ 334,946$ 354,473$ 323,790$ 338,076$
- - - - - 465,819
205,449 223,740 242,785 272,801 327,332 342,861
3,587,331 3,772,946 5,410,002 4,572,627 4,300,321 3,834,759
4,113,667$ 4,319,810$ 5,987,733$ 5,199,901$ 4,951,443$ 4,981,515$
650$ -$ -$ -$ -$ -$
4,167,765 5,226,784 5,472,554 6,469,893 7,463,695 8,676,288
448,699 438,676 484,582 347,417 335,939 347,330
10,526,550 11,492,028 11,401,232 14,913,054 17,558,426 18,460,603
(1,790,236) (4,463,532) (4,235,228) (3,523,065) (2,654,023) (1,765,724)
13,353,428$ 12,693,956$ 13,123,140$ 18,207,299$ 22,704,037$ 25,718,497$
119
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS
Last Ten Fiscal Years
(modified accrual basis of accounting)
2014 2015 2016 2017
Revenues
Property Taxes 4,524,092$ 4,651,453$ 4,960,518$ 5,595,120$
Tax Increments - - - -
Franchise Taxes 120,964 128,722 131,229 135,652
Licenses and Permits 1,238,823 1,179,136 1,661,565 1,363,384
Intergovernmental 1,034,552 3,570,630 2,111,727 1,093,154
Charges for Services 1,142,453 555,660 1,274,578 2,129,514
Special Assessments 905,441 560,748 575,155 734,522
Fines and Forfeitures 4,000 11,998 16,223 21,092
Investment Earnings (net)157,640 55,909 82,385 124,052
Miscellaneous 50,286 105,573 119,732 294,909
Total Revenues 9,178,251 10,819,829 10,933,112 11,491,399
Expenditures
General Government 1,169,697 1,141,113 1,233,680 1,072,195
Public Safety 1,495,008 1,664,031 1,807,985 1,886,661
Public Works 1,023,693 1,044,024 1,019,946 1,066,349
Culture and Recreation 464,840 466,205 534,122 587,739
Economic Development 45,024 145,771 196,534 195,716
Capital Outlay 1,688,847 4,477,153 4,349,555 2,160,857
Debt Service
Principal 860,000 1,130,000 1,210,000 1,125,000
Interest 454,566 256,148 233,498 206,748
Bond Issuance & Fiscal Agent Fee's - 2,979 3,362 3,267
Total Expenditures 7,201,675 10,327,424 10,588,682 8,304,532
Excess (Deficiency) of Revenues
Over (Under) Expenditures 1,976,576 492,405 344,430 3,186,867
Other Financing Sources (Uses)
Transfers In 612,433 1,574,500 648,087 1,278,609
Issuance of Debt - - - -
Premium on Issuance of Debt - - - -
Sales of Capital Assets - 35,600 31,160 78,805
Payment to Refunded Bond Escrow Agent (6,105,000) - - -
Transfers Out (489,801) (1,289,914) (461,332) (1,082,923)
Total Other Financing Sources (Uses)(5,982,368) 320,186 217,915 274,491
Net Change in Fund Balances (4,005,792)$ 812,591$ 562,345$ 3,461,358$
Debt Service as a Percentage of
Noncapital Expenditures 21.16%14.22%18.40%19.32%
Sources: The data for this table has been extracted from the respective years report.
120
Table 5
2018 2019 2020 2021 2022 2023
6,084,051$ 6,662,307$ 7,141,972$ 7,715,949$ 8,563,236$ 9,179,680$
96,938 97,419 275,445 311,971 436,817 490,045
139,161 137,510 132,137 129,467 345,108 1,026,846
1,672,906 1,699,879 2,532,789 2,529,588 2,123,810 1,544,769
2,339,286 1,801,414 2,541,072 1,073,889 1,284,581 2,325,208
2,328,991 2,130,542 1,994,941 2,717,128 2,788,497 1,193,537
508,865 586,109 457,606 927,749 376,755 377,125
25,616 26,488 19,959 27,461 31,812 32,109
263,784 754,079 625,964 (191,523) (870,574) 1,242,417
233,946 141,533 149,472 221,998 197,499 228,315
13,693,544 14,037,280 15,871,357 15,463,677 15,277,541 17,640,051
1,182,959 1,313,178 1,479,856 1,465,403 1,679,038 1,767,226
2,168,187 2,379,440 2,667,435 2,874,479 3,080,382 3,318,255
1,205,464 1,683,958 1,640,892 1,934,040 2,086,883 1,955,380
654,786 710,406 695,747 779,820 851,357 942,485
223,175 265,498 889,173 503,411 499,481 429,054
8,422,796 7,001,285 5,137,983 2,379,157 2,331,797 5,701,144
1,160,000 1,185,000 1,330,000 1,360,000 660,000 685,000
182,875 230,217 222,250 153,062 144,431 119,406
74,512 2,874 65,483 1,078 1,348 1,678
15,274,754 14,771,856 14,128,819 11,450,450 11,334,717 14,919,628
(1,581,210) (734,576) 1,742,538 4,013,227 3,942,824 2,720,423
1,397,210 1,274,595 2,465,348 2,677,946 1,646,807 1,099,621
2,305,000 - 2,950,000 - - -
58,475 - 312,200 - - -
75,860 68,378 - 40,000 11,956 1,359
- - (3,170,000) - - -
(1,189,370) (1,061,726) (2,202,979) (2,434,846) (1,353,307) (776,871)
2,647,175 281,247 354,569 283,100 305,456 324,109
1,065,965$ (453,329)$ 2,097,107$ 4,296,327$ 4,248,280$ 3,044,532$
16.69%15.85%13.82%15.17%7.97%7.60%
121
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
ESTIMATED ACTUAL VALUE, TAXABLE MARKET VALUE AND TAX CAPACITY OF TAXABLE PROPERTY
Last Ten Fiscal Years
2014 2015 2016 2017
Estimated Actual Value 1,051,543,200$ 1,177,857,500$ 1,340,579,000$ 1,473,986,500$
Taxable Market Value
Real Estate 908,532,000$ 1,039,579,100$ 1,195,720,700$ 1,327,925,100$
Personal Property 14,513,300 14,952,700 16,476,000 20,388,300
Total Taxable Market Value 923,045,300$ 1,054,531,800$ 1,212,196,700$ 1,348,313,400$
Taxable Market Value as a Percentage
of Estimated Actual Value 87.78%89.53%90.42%91.47%
Tax Capacity
Real Estate 9,805,499$ 11,060,135$ 12,909,476$ 14,465,922$
Personal Property 290,266 298,480 328,948 407,194
Net Tax Capacity for Direct Rate 10,095,765$ 11,358,615$ 13,238,424$ 14,873,116$
Net Tax Capacity as a Percentage
of Estimated Actual Value 0.96%0.96%0.99%1.01%
Property Tax Levies
General Revenues 4,024,715$ 4,070,000$ 4,380,206$ 4,974,745$
Debt Service 475,285 610,000 640,000 655,000
Total Property Taxes Levied 4,500,000$ 4,680,000$ 5,020,206$ 5,629,745$
Tax Rates
General Revenues 39.865 35.832 33.087 33.448
Debt Service 4.708 5.370 4.834 4.404
Total Direct Tax Rate 44.573 41.202 37.921 37.852
Sources: The data for this table has been provided by the Wright County Auditor / Treasurer's Office.
122
Table 6
2018 2019 2020 2021 2022 2023
1,644,926,700$ 1,837,875,900$ 2,043,966,400$ 2,237,499,800$ 2,467,755,200$ 3,083,366,800$
1,490,919,200$ 1,666,323,700$ 1,864,979,200$ 2,054,871,100$ 2,285,619,500$ 2,918,108,912$
23,397,400 29,560,400 27,109,100 32,555,900 29,522,200 33,008,100
1,514,316,600$ 1,695,884,100$ 1,892,088,300$ 2,087,427,000$ 2,315,141,700$ 2,951,117,012$
92.06%92.27%92.57%93.29%93.82%95.71%
16,228,630$ 18,029,678$ 19,955,742$ 21,940,788$ 24,263,079$ 30,890,994$
467,378 578,862 541,536 650,470 589,792 659,438
16,696,008$ 18,608,540$ 20,497,278$ 22,591,258$ 24,852,871$ 31,550,432$
1.02%1.01%1.00%1.01%1.01%1.02%
5,448,302$ 5,975,816$ 6,447,491$ 7,078,874$ 8,037,818$ 8,785,607$
655,000 734,293 746,758 749,551 547,187 544,416
6,103,302$ 6,710,109$ 7,194,249$ 7,828,425$ 8,585,005$ 9,330,023$
32.632 32.114 31.455 31.335 32.342 27.846
3.923 3.946 3.643 3.318 2.202 1.726
36.555 36.060 35.099 34.653 34.544 29.572
123
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
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%
2020 14,392,621 1,899,299 2,935,016 670,618 541,536 58,188 20,497,278
70.22%9.27% 14.32%3.27%2.64%0.28% 100.00%
2021 16,107,001 1,982,727 3,121,710 665,277 650,470 64,073 22,591,258
71.30%8.78% 13.82%2.94%2.88%0.28% 100.00%
2022 17,987,127 2,273,760 3,269,738 666,662 589,792 65,792 24,852,871
72.37%9.15% 13.16%2.68%2.37%0.26% 100.00%
2023 22,782,140 3,569,387 3,728,910 740,756 659,438 69,801 31,550,432
72.21% 11.31% 11.82%2.35%2.09%0.22% 100.00%
Sources: The data for this table has been provided by the Wright County Auditor / Treasurer's Office.
Residential
124
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS
Last Ten Fiscal Years Table 8
General Debt School School School School School School
Revenues Service Total District 728 District 882 District 885 County District 728 District 882 District 885
2014 39.865 4.708 44.573 51.286 28.269 51.570 43.450 139.309 116.292 139.593
2015 35.832 5.370 41.202 42.483 22.882 51.082 40.593 124.278 104.677 132.877
2016 33.087 4.834 37.921 39.266 20.857 49.102 39.970 117.157 98.748 126.993
2017 33.448 4.404 37.852 36.659 16.242 46.893 39.599 114.110 93.693 124.344
2018 32.632 3.923 36.555 36.137 15.621 47.950 39.946 112.638 92.122 124.451
2019 32.114 3.946 36.060 32.865 16.972 47.143 44.273 113.198 97.305 127.476
2020 31.455 3.643 35.099 34.371 15.865 45.280 44.421 113.891 95.385 124.800
2021 31.335 3.318 34.652 31.717 15.390 44.216 43.719 110.088 93.761 122.587
2022 32.342 2.202 34.543 30.889 15.459 42.438 43.751 109.183 93.753 120.732
2023 27.846 1.726 29.572 26.605 12.871 35.456 37.848 94.025 80.291 102.876
Sources: The data for this table has been provided by the Wright County Auditor / Treasurer's Office.
Overlapping Rates Total Direct & OverlappingDirect Rates
125
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
PRINCIPAL PROPERTY TAXPAYERS Table 9
Current Year and Nine Years Ago
2023 2014
Percentage of Percentage of
Net Tax Total Tax Net Tax Total Tax
Taxpayer Classification Capacity Rank Capacity Value Capacity Rank Capacity Value
Duke Realty LP Industrial 1,312,946$ 1 4.16%214,880$ 1 2.13%
Centerpoint Energy Utility 598,334 2 1.90%151,884 3 1.50%
Wagner Spray Tech Corporation Industrial 278,512 3 0.88%
Evans Park Inc Apartments 227,004 4 0.72%
Target Corporation Commercial 209,404 5 0.66%207,272 2 2.05%
Ahava Realty ADA Compliant LP Industrial 175,258 6 0.56%
R Schultz Exchange LLC Apartments 167,265 7 0.53%
Otsego Apartments LLC Apartments 163,449 8 0.52%
US Home LLC Residential 155,160 9 0.49%
Parkview Grand Apartments Apartments 142,110 10 0.45%
Elk Inn Partners LP Commercial 99,250 4 0.98%
Wright-Hennepin Co-Op Electric Utility 87,875 5 0.87%
Apex Business Center LLC Industrial 74,578 6 0.74%
21st Century Bank Commercial 62,502 7 0.62%
GCI Capital Commercial 61,316 8 0.61%
Minnwest Bank Central Commercial 46,250 9 0.46%
TCO Otsego Property Co.Commercial 42,402 10 0.42%
Totals 3,429,442$ 10.87%1,048,209$ 10.38%
Sources: The data for this table has been provided by the Wright County Auditor / Treasurer's Office.
126
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
2014 4,500,000$ 4,444,153$ 98.76%55,847$ 4,500,000$ 100.00%
2015 4,680,000 4,641,720 99.18%38,280 4,680,000 100.00%
2016 5,020,206 4,979,508 99.19%40,698 5,020,206 100.00%
2017 5,629,745 5,606,101 99.58%23,644 5,629,745 100.00%
2018 6,103,302 6,084,700 99.70%13,066 6,097,766 99.91%
2019 6,710,109 6,670,163 99.40%38,016 6,708,179 99.97%
2020 7,194,249 7,134,792 99.17%56,480 7,191,272 99.96%
2021 7,828,425 7,764,474 99.18%58,374 7,822,848 99.93%
2022 8,585,005 8,506,576 99.09%66,385 8,572,961 99.86%
2023 9,330,023 9,256,266 99.21%- 9,256,266 99.21%
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.
127
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
RATIOS OF OUTSTANDING DEBT BY TYPE Table 11
Last Ten Fiscal Years
General General Notes Percentage
Obligation Equipment Obligation from Direct Total of Personal Per
Bonds Certificates Revenue Bonds Borrowings Debt Income Capita
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 2.62% 1,373
2020 6,129,492 - 15,026,658 9,438,936 30,595,086 2.70% 1,532
2021 4,719,716 - 16,735,843 16,305,983 37,761,542 2.94% 1,774
2022 4,017,111 - 40,370,203 15,696,489 60,083,803 4.23% 2,646
2023 3,289,506 - 11,149,563 35,586,609 50,025,678 3.38%2,114
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 Business-Type Activites
128
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
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%188
2020 6,129,492 - 6,129,492 3,076,069 3,053,423 0.15%153
2021 4,719,716 - 4,719,716 2,362,735 2,356,981 0.11%111
2022 4,017,111 - 4,017,111 2,137,694 1,879,417 0.08%83
2023 3,289,506 - 3,289,506 1,931,847 1,357,659 0.04%57
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.
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130
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
COMPUTATION OF DIRECT AND OVERLAPPING Table 13
GOVERNMENTAL ACTIVITIES DEBT
DECEMBER 31, 2023
Estimated Estimated Share
Debt Percentage of Overlapping
Governmental Unit Outstanding Applicable Debt
Overlapping Debt:
School Districts:
No. 728 - Elk River 285,730,000$ 20.54%58,688,942$
No. 882 - Monticello 40,890,000 4.59%1,876,851
No. 885 - St. Michael-Albertville 126,030,000 5.35%6,742,605
Wright County 126,585,000 13.20%16,709,220
Total Overlapping Debt 579,235,000$ 84,017,618
City of Otsego Direct Debt 3,289,506
Total Direct and Overlapping Debt 87,307,124$
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.
131
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
LEGAL DEBT MARGIN INFORMATION
Last Ten Fiscal Years
2014 2015 2016 2017
Taxable Market Value 923,045,300$ 1,054,531,800$ 1,212,196,700$ 1,348,313,400$
Debt Limit Percentage 3.00%3.00%3.00%3.00%
Debt Limit 27,691,359 31,635,954 36,365,901 40,449,402
Total Net Debt Applicable to Limit 5,454,035 5,221,786 4,218,268 3,782,338
Legal Debt Margin 22,237,324$ 26,414,168$ 32,147,633$ 36,667,064$
Total Net Debt Applicable to the Limit
as a Percentage of Debt Limit 19.70%16.51%11.60%9.35%
Sources: The data for this table has been provided by Wright County and from City financial maintenance documents.
132
Table 14
2018 2019 2020 2021 2022 2023
1,514,316,600$ 1,695,884,100$ 1,892,088,300$ 2,087,427,000$ 2,315,141,700$ 2,951,117,012$
3.00%3.00%3.00%3.00%3.00%3.00%
45,429,498 50,876,523 56,762,649 62,622,810 69,454,251 88,533,510
4,090,309 3,399,451 3,053,423 2,356,981 1,879,417 1,357,659
41,339,189$ 47,477,072$ 53,709,226$ 60,265,829$ 67,574,834$ 87,175,851$
9.00%6.68%5.38%3.76%2.71%1.53%
133
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
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%
2020 4,482,841 7,428,178 3,704,373 8,206,646 2,335,000 603,612 279.27%
2021 5,902,263 6,380,178 4,639,776 7,642,665 2,469,779 791,745 234.33%
2022 6,443,632 7,131,721 5,615,835 7,959,518 3,128,000 1,045,956 190.69%
2023 7,599,947 4,281,034 5,876,572 6,004,409 29,820,278 1,572,433 19.13%
Sources: The data for this table has been provided from City financial maintenance documents.
Note: The debt service coverage ratio in 2023 varied significantly from prior years due to the repayment of $26,215,000 of Series 2022A bonds.
General Obligation Revenue Bonds
134
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
DEMOGRAPHIC AND ECONOMIC STATISTICS Table 16
Last Ten Fiscal Years
School Enrollments
Per Capita No. 885
No. of Personal Personal Unemployment Median No. 728 No. 882 St. Michael
Population Households Income Income Rate Age Elk River Monticello Albertville
2014 14,968 5,218 623,821,336$ 41,677$ 4.3%33.8 13,076 4,193 5,904
2015 15,472 5,394 682,361,616 44,103 3.8%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 3.6%34.3 13,461 4,168 6,335
2018 17,323 5,975 869,285,463 50,181 3.1%34.7 13,670 4,125 6,463
2019 18,130 6,254 949,341,190 52,363 3.3%34.3 13,921 4,201 6,557
2020 19,966 6,743 1,132,132,098 56,703 5.6%33.7 13,464 4,072 6,366
2021 21,289 7,190 1,285,685,288 60,392 3.4%34.7 13,847 4,166 6,653
2022 22,705 7,599 1,420,402,095 62,559 2.5%34.6 14,152 4,142 6,670
2023 23,669 7,916 1,480,698,962 62,559 2.9%34.6 14,352 4,138 6,696
Sources: Population - Minnesota State Demographer (2014-2019 and 2021-2022); U.S. Census Bureau (2020); Estimated by City (2023)
Households - Minnesota State Demographer (2014-2022); Estimated by City (2023)
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 2023. In those instances, 2022 data was shown for the current year.
135
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 1,371 1 32.86%210 4 10.94%
Trade, Transportation & Utilities 1,021 2 24.47%508 1 26.46%
Construction 494 3 11.84%246 3 12.81%
Leisure and Hospitality 444 4 10.64%444 2 23.13%
Professional & Business Services 406 5 9.73%186 5 9.69%
Other Services 111 6 2.66%101 6 5.26%
Financial Activities 70 7 1.68%32 7 1.67%
Public Administration 44 8 1.05%29 8 1.51%
Information 34 9 0.81%
Totals 3,995 95.76%1,756 91.46%
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.
2023 2014
136
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
FULL TIME CITY GOVERNMENT POSITIONS BY FUNCTION Table 18
Last Ten Fiscal Years
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
General Government
Administration 3.0 4.0 3.5 3.6 3.6 3.6 4.0 4.0 4.2 4.2
Finance 3.9 3.0 3.0 3.0 3.0 3.0 3.0 3.0 4.0 4.0
Total General Government 6.9 7.0 6.5 6.6 6.6 6.6 7.0 7.0 8.2 8.2
Public Safety
Fire & Emergency Services - - - - - - - - - 1.0
Building Inspections 1.0 1.0 1.5 1.5 1.8 2.0 2.0 2.0 2.0 2.0
Total Public Safety 1.0 1.0 1.5 1.5 1.8 2.0 2.0 2.0 2.0 3.0
Public Works
Street Maintenance 5.8 6.9 6.9 6.9 6.9 7.8 7.8 7.8 8.4 8.8
Mechanic 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 2.0
Total Public Works 6.8 7.9 7.9 7.9 7.9 8.8 8.8 8.8 9.4 10.8
Culture and Recreation
Parks Maintenance 1.4 3.5 3.5 3.5 3.9 4.4 4.4 4.4 4.5 5.2
Recreation 1.1 1.4 1.4 1.4 1.6 1.5 2.0 1.5 1.5 1.6
Total Culture and Recreation 2.5 4.9 4.9 4.9 5.5 5.9 6.4 5.9 6.0 6.8
Public Utilities
Water Utility 2.0 1.3 1.3 1.3 1.4 1.5 1.8 1.8 2.2 2.3
Sanitary Sewer Utility 2.0 3.7 3.7 3.7 4.1 4.5 5.4 5.4 6.5 6.9
Total Public Utilities 4.0 5.0 5.0 5.0 5.5 6.0 7.2 7.2 8.7 9.2
Total 21.2 25.8 25.8 25.9 27.3 29.3 31.4 30.9 34.3 38.0
Sources: The data for this table has been provided from City financial maintenance documents.
137
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
OPERATING INDICATORS BY FUNCTION
Last Ten Fiscal Years
Function 2014 2015 2016 2017
Administration
Rental Licenses Issued 372 372 387 351
Code Enforcement Citations 16 31 41 30
Registered Voters 7,329 9,324
Actual Votes Tallied 4,693 7,362
Police
Total Calls for Service 4,060 3,575 3,619 4,310
Fire
Calls - Albertville Department 82 76 93 129
Calls - Elk River Department 74 73 80 92
Calls - Rogers Department 15 12
Building Inspections
Number of Permits - All Types 692 893 968 722
New Homes Constructed 188 207 219 210
Public Works
Miles of Streets Constructed 2.30 1.66 2.59 3.93
Miles of Streets Reconstructed 0.35 1.80
Snow Plowing Events 22 16 16 22
Culture and Recreation
Parks Acres Maintained 184.3 184.3 190.3 160.0
Prairie Festival Attendance 5,100 6,200 5,000 4,000
Recreation Programs Offered 106 132 100 127
Recreation Programs Participants 14,958 12,662 12,662 17,341
Water Utility
Connections 2,829 3,023 3,155 3,278
Gallons Delivered 37,529,984 389,118,330 393,795,210 491,484,000
Sanitary Sewer Utility
Average Daily Gallons Treated 539,000 551,000 600,000 627,000
Sources: The data for this table has been provided by each respective City department.
Note: The City made significant changes to the indicators included in this table for 2015. Not all historical data
was able to be compiled, and this table will be updated on a go-forward basis.
138
Table 19
2018 2019 2020 2021 2022 2023
329 332 300 297 334 351
68 18 37 42 51 64
9,754 13,081 13,895
6,228 11,389 9,402
4,279 4,484 4,145 3,783 3,696 3,917
131 164 158 204 209 257
96 105 92 110 96 109
27 26 28 59 93 71
1,147 1,173 1,791 1,856 1,826 2,172
300 300 403 435 317 221
7.80 4.68 1.47 3.83 2.83 0.56
5.30 - 0.78 0.76 2.28 3.79
37 21 11 19 32 12
160.0 160.0 173.0 175.0 175.0 175.0
4,800 6,450 - 6,850 8,000 11,000
231 153 52 161 177 186
20,885 18,500 5,359 16,936 23,397 24,383
3,748 4,014 4,335 4,445 5,100 5,295
427,795,004 491,074,000 632,552,814 787,182,348 765,960,269 904,558,000
673,000 738,000 798,000 840,000 900,000 983,000
139
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
CAPITAL ASSET STATISTICS BY FUNCTION
Last Ten Fiscal Years
Function 2014 2015 2016 2017
Public Safety
Fire & Emergency Services Vehicles - - - -
Building Safety Vehicles 1 1 1 1
Public Works
Street Miles (MSA)116.93 118.59 120.88 124.81
Heavy Duty Trucks 8 8 8 8
Light Duty Vehicles 15 15 15 17
Tractors & Grading Equipment 8 8 8 8
Culture and Recreation
Trail Miles 19.68 19.96 21.13 25.11
Number of Parks 10 10 11 12
Playgrounds 7 7 8 9
Park Shelters 9 9 10 10
Ball Fields 5 5 6 6
Soccer Fields - 3 3 3
Basketball Courts 5 5 5 5
Tennis Courts 7 7 8 8
Pickleball Courts
Outdoor Ice Rinks 1 1 1 1
Mowing Equipment 5 5 6 6
Water Utility
Water Towers 3 3 3 3
Wells 8 8 8 8
Miles of Water Main 63 74 77 79
Hydrants 722 794 846 871
Water Valves 1,603 1,659 1,841 1,881
Sanitary Sewer Utility
Treatment Facilities 2 2 2 2
Lift Stations 9 9 10 10
Miles of Sanitary Sewer Lines - 74 76 80
Manholes 1,257 1,366 1,480 1,524
Miles of Sanitary Forcemain 20 20 20 20
Sources: The data for this table has been provided by each respective City department.
Note: The City made significant changes to the statistics included in this table for 2015. Not all historical data
was able to be compiled, and this table will be updated on a go-forward basis.
140
Table 20
2018 2019 2020 2021 2022 2023
- - - - - 1
1 1 2 2 2 3
131.00 131.00 134.41 138.31 142.00 142.26
9 9 9 10 11 11
17 16 19 16 17 20
7 7 6 7 6 8
25.60 27.95 38.31 42.00 43.40 43.51
14 14 14 14 14 14
10 10 14 14 14 14
12 13 13 16 16 16
6 6 7 7 7 7
3 3 3 3 3 3
6 6 7 6 6 5
8 8 8 7 7 6
4 4 4
1 1 2 2 3 3
6 6 7 6 6 6
3 3 3 3 4 4
8 7 9 9 10 10
83 87 90 94 93 96
923 975 1,014 1,066 1,197 1,222
1,983 2,106 2,360 2,287 2,673 2,726
2 2 2 2 2 2
10 10 10 10 10 10
82 86.1 96.9 103.7 104.8 104.8
1,594 1,730 1,774 1,814 2,071 2,092
21 21 21 27 27 27
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