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ITEM 5.2 CAFR
P CITY ateo MINNESOTA V DEPARTMENT INFORMATION Request for City Council Action ORIGINATING DEPARTMENT: REQUESTOR: MEETING DATE: Administration Lori Johnson, City Administrator June 22, 2015 PRESENTER(s): REVIEWED BY: ITEM #: Lori Johnson, City Administrator (clean) opinion on the statements. KDV completed the audit of the City's financial reports, and Michael 5.2 AGENDA ITEM DETAILS RECOMMENDATION: Following a presentation of the 2014 Comprehensive Annual Financial Report (CAFR), it is recommended that the City Council adopt Resolution 2015-32 a Resolution Adopting the Comprehensive Annual Financial Statement for the Fiscal Year Ended December 31, 2014. ARE YOU SEEKING APPROVAL OF A CONTRACT? IS A PUBLIC HEARING REQUIRED? No No BACKGROUND/JUSTIFICATION: The CAFR for the year ended December 31, 2014, is hereby submitted. The City received an unmodified (clean) opinion on the statements. KDV completed the audit of the City's financial reports, and Michael Bosl of KDV will be at Monday's meeting to report the results of the audit. SUPPORTING DOCUMENTS: X ❑ ATTACHED ❑ NONE • 2014 CAFR • 2014 Auditor's Reports on Compliance • 2014 Auditor's Communications Letter • Resolution 2015-32 Adopting the Comprehensive Annual Financial Statement for the Fiscal Year Ended December 31, 2014 POSSIBLE MOTION Please word motion as you would like it to appear in the minutes. Motion to adopt Resolution 2015-32 Adopting the Comprehensive Annual Financial Statement for the Fiscal Year Ended December 31, 2014. BUDGET INFORMATION FUNDING: BUDGETED: X ❑ YES N/A ❑ NO ACTION TAKEN ❑ APPROVEDAS REQUESTED ❑ DENIED ❑ TABLED ❑ OTHER (List changes) CITY OF OTSEGO COUNTY OF WRIGHT STATE OF MINNESOTA RESOLUTION NO: 2015-32 RESOLUTION ADOPTING THE COMPREHENSIVE ANNUAL FINANCIAL STATEMENT FOR THE FISCAL YEAR ENDED DECEMBER 31, 2014 WHEREAS, the City annually prepares finacial statements detailing the balance sheets, revenues and expenses, cash flows, debt positions, investment details and other statistical information conveying the financial condition of the City to users of these financial statements; and WHEREAS, the compilation of these statements and their narrative components are referred to as the Comprehensive Annual Financial Statement of the City; and WHEREAS, the CAFR has been subjected to the review and audit standards mandated by Minnesota State Statutes and Laws, GAAP, GAAFR standards the Certificate of Compliance criteria of the Government Finance Officers Association (GFOA); and WHEREAS, the audit of the CAFR has been completed by KDV Ltd., a certified public accounting firm from Saint Cloud, Minnesota with expertise in municipal audits, and the City's financial statement have been found to "present fairly, in all material respects, the respective financial position of governmental activities, the business type -funds, each major fund and the aggregate remaining fund information of the City of Otsego, Minnesota as of December 31, 2014" conveying an unmodified or clean opinion of the fair presentation of the CAFR; and WHEREAS, said CAFR and the documents summarizing the audit process and finding have been distributed to and discussed with the City Council of the City of Otsego on Monday, June 22, 2015. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF OTSEGO, WRIGHT COUNTY, MINNESOTA THAT: the Comprehensive Annual Financial Report of the City of Otsego, Minnesota for the year ended December 31, 2014 be and hereby is adopted as the official financial statement of the City of Otsego for said fiscal year. ADOPTED by the Otsego City Council this 22'd day of June, 2015. MOTION made by Council Member and SECONDED by Council Member IN FAVOR: OPPOSED: CITY OF OTSEGO Jessica Stockamp, Mayor ATTEST: Tami Loff, City Clerk r; u CITY F 0 Ot e MINNESOTA Comprehensive Annual Financial Report For the Year Ended December 31, 2014 CITY OF OTSEGO, MINNESOTA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 2014 LORI JOHNSON — CITY ADMINISTRATOR PREPARED BY DEPARTMENT OF FINANCE Member of the Government Finance Officers' Association Of the United States and Canada CITY OF OTSEGO TABLE OF CONTENTS Page INTRODUCTORY SECTION Letterof Transmittal.................................................................................................................... 1 OrganizationalChart.................................................................................................................... 7 Elected Officials and Administration........................................................................................... 9 Certificate of Achievement for Excellence in Financial Reporting ............................................. 10 FINANCIAL SECTION IndependentAuditor's Report .................................................................................... Management's Discussion and Analysis.................................................................... Basic Financial Statements: Government -Wide Financial Statements: Statement of Net Position.............................................................................. Statement of Activities................................................................................... Fund Financial Statements: Balance Sheet — Governmental Funds........................................................... Reconciliation of the Balance Sheet to the Statement of Net Position — GovernmentalFunds.................................................................................... Statement of Revenues, Expenditures and Changes in Fund Balances — GovernmentalFunds.................................................................................... Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities — Governmental Funds ........ Statement of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual — General Fund.............................................................. Statement of Net Position — Proprietary Funds .............................................. Statement of Revenues, Expenses and Changes in Fund Net Position Pro riet Funds ................. 13 ................. 17 ................. 33 ................. 34 ................. 36 ................. 37 ................. 38 ................. 39 p............................................................................................. Statement of Cash Flows — Proprietary Funds ................................................... Statement of Fiduciary Net Position.................................................................. Notes to the Financial Statements............................................................................ SUPPLEMENTARY INFORMATION Combining and Individual Fund Financial Statements and Schedules: Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget andActual — General Fund.............................................................................. Combining Balance Sheet — Nonmaj or Governmental Funds ........................... Combining Statement of Revenues, Expenditures and Changes in Fund Balances — Nonmaj or Governmental Funds .................................................... Combining Balance Sheet — Nonmaj or Special Revenue Funds ....................... Combining Statement of Revenues, Expenditures and Changes in Fund Balances — Nonmaj or Special Revenue Funds ................................................ 41 42 ......... 74 ......... 80 .......... 81 .......... 83 ....... 84 CITY OF OTSEGO TABLE OF CONTENTS Page FINANCIAL SECTION (CONTINUED) SUPPLEMENTARY INFORMATION (CONTINUED) Combining and Individual Fund Financial Statements and Schedules: (Continued) Combining Balance Sheet — Nonmajor Capital Projects Funds ............................. 86 Combining Statement of Revenues, Expenditures and Changes in Fund Balances — Nonmajor Capital Projects Funds ...................................................... 90 Combining Balance Sheet — Debt Service Funds ................................................... 94 Combining Schedule of Revenues, Expenditures and Changes in Fund Balances — Debt Service Funds............................................................................ 96 Statement of Changes in Agency Fund Assets and Liabilities ................................ 98 STATISTICAL SECTION (UNAUDITED) NetPosition by Component................................................................................................ 102 Changesin Net Position...................................................................................................... 104 Fund Balances of Governmental Funds.............................................................................. 108 Changes in Fund Balances of Governmental Funds........................................................... 110 Tax Capacity, Taxable Value and Estimated Market Value of Taxable Property .............. 112 Tax Capacity of Real and Personal Property by Classification ........................................... 114 Property Tax Capacity Rates — Direct and Overlapping Governments ............................... 115 PrincipalTaxpayers............................................................................................................. 116 Property Tax Levies and Collections.................................................................................. 117 Ratios of Outstanding Debt by Type................................................................................... 118 Ratios of General Bonded Debt Outstanding...................................................................... 119 Computation of Direct and Overlapping Debt.................................................................... 121 Legal Debt Margin Information.......................................................................................... 122 Pledged Revenue Coverage................................................................................................ 124 Demographic and Economic Statistics............................................................................... 126 PrincipalEmployers............................................................................................................ 127 Full -Time Equivalent City Government Employees by Function ....................................... 128 Operating Indicators by Function........................................................................................ 129 Capital Asset Statistics by Function.................................................................................... 130 BuildingPermits................................................................................................................. 131 INTRODUCTORY SECTION CITY OF OTSEGO OTSEGO, MINNESOTA FOR THE YEAR ENDED December 31, 2014 CITY OF S 0 MINNESOTA M ay 27, 2015 Honorable Mayor and Membersof the City Council aty of Otsego Ctsego, Minnesota 55330 Mayor and City Council Members: Transmitted herewith isthe Comprehensive Annual Financial Fbport of the City of Otsego for the fiscal year ended December 31, 2014. F;bsponsibility for both the accuracy of the data and the completeness and fairnessof the presentation, including all disclosures, restswith the staff of the City following the policies and procedures specified by the City's system of internal control. 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 resultsof operations of the variousfundsof the Oty. All disclosures deemed necessary to enable the reader to gain an understanding of the City's financial activities have been included. The financial statements have been audited by Kern, DeWenter, Viere, Ltd ([W, certified public accountants licensed to practice in Minnesota. The objective of the audit was to provide reasonable assurance that the financial statements of the City for the fiscal year ended December 31, 2014, are free of material misstatements. The independent audit process examined, on atest basis, evidence supporting the amounts received and spent and disdosuresof such activities in the financial statements. KDV reviewed the accounting principles used and significant estimates made by management, and assisted in the preparation of the overall financial statement presentation. The independent auditor expressed an unmodified opinion on the finandal statements forthe year ended December 31, 2014. This opinion confirms that the financial statements are fairly presented, in all material respects, inconformity with accounting principles generally accepted in the United Statesof America. The independent auditor's report is the first component of the financial section of this report. City of Otsego 113400 901h Street NE, Otsego, MN 55330 1 Tel. (763) 441-4414 Fax (763) 441-8823 Accounting principles generally accepted in the United States of America require that management provide a narrative introduction, overview and analysis to accompanythe basic financial statements in the form of a Management's Discussion and Analysis (M D&A). This letter of transmittal is designed to complement the M D&A and should be read in conjunction with it. The City's MD&A can be found immediately following the report of the auditors. PROR LE OF THE aTY The Oty of Otsego, M innesota, is part of what was once known as the Big Woods, heavily laden with deciduous trees and interspersed with rivers, pondsand prairies. The first settlersto the areawere of European descent settling the area in 1852. The area was a township in Wright County until 1990 when it was incorporated into the Oty of Otsego. The Oty iscelebrating its25t" Anniversary in 2015 with a community event in November. Otsego is located at the confluence of the Mississippi and Crow Fivers approximately thirty miles northwest of Minneapolis. The Oty is located in the northeast corner of Wright ODunty and covers an area of about 30.5 square miles. The Mississippi Rver runs along the northern and eastern borders of the Oty and the Crow Fiver runs along the southern border in the far eastern part of the Oty until it entersthe Mississippi Fiver. The Oty has experienced rapid growth with the population increasing from 6,389 in 2000 to 13,571 in 2010. The most recent population estimate for Otsego was 14,997 for December 2014. The City operates under the "Optional Plan A" form of government as defined in Minnesota Statutes. Under this plan, the government of the Oty is directed by a Oty Council consisting of an elected mayor and four elected councilmembersat large. The Oty ODuncil exercises legislative authority and determines all matters of policy. The Oty Council appoints personnel responsible for the proper administration of all affairs relating to the Oty. The mayor and councilmembers serve four year terms with two councilmemberselected to four year terms every two years. The mayor is also elected to a four year term. The Oty provides its residents and businesses a full range of municipal services consistingof publicsafety, publicworks, parksand general administrative services. Oty servicesalso includewater, sewer and storm water servicesaccounted for in enterprise funds. Police protection, fire suppression and emergency response services are provided through agreements with Wright County for police and the neighboring cities of Albertville, Elk Fiver and Fbgersfor fire suppression and emergency response. Financial planning and control for the Oty of Otsego are based on the annual Operating Budget and the multi-year Capital Improvement Program. Under Minnesota Statutes, a City of Otsego 113400 901h Street NE, Otsego, MN 55330 1 Tel. (763) 441-4414 Fax (763) 441-8823 2 preliminary property tax levy must be adopted by the Qty Council no later than September 30 of each year for the ensuing fiscal year. This establishes a maximum levy that may be lowered but may not be increased at time of final adoption. Aceiling on the increase of the annual property tax levy is established from time to time by the M i n nesota Legislature. Effective establishment of this levy means that a preliminary operating budget must also be prepared. The Oty Administrator, with the assistance of staff, prepares such a budget each year and presents it along with the preliminary levy for Oty Council review. The Oty CAuncil is required to adopt afinal 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, transfersof budget appropriations between departments or funds require the review and approval of the Oty CAuncil. The legal level of budgetary control isthe department level. In addition, a Capital Improvement Plan covering a five year period is reviewed and revised during the annual budget process. This includes projectsfor which the Oty may issue debt and/or assess portions of the cost to adjacent property owners. Because there are limited funds available each year and the Oty does not wish to issue excessive amounts of debt, these projects are reviewed and reprioritized each year. E©ONOM I C CONDI-n ON The Oty is located adjacent to the Minneapolis and a. Paul metropolitan area and is in one of the fastest growing corridors in the State. Accessto the Oty is provided by Interstate 94, State Highway 101 and Wright County Fbads 19, 37, 39 and 42. The Oty maintains a Comprehensive Plan document for land use and development. While a significant portion of the Oty is considered rural in character, significant urban development has occurred in the past ten years. The Oty hasexperienced substantial growth over the past ten yearswith the construction of 2,032 new residential housing units. For the past several years, the City's new housing construction has far outpaced that of its neighboring communities and interest continueswith the recent platting of several new housing developments. This increased lot inventory, spurred byfour national buildersand several local builders, will promote continued new residential construction in Otsego. In 2014 there were 188 new housing units constructed. The low lot inventory in early2014 resulted in two fewer new homes being built than in 2013. However, the recent plat approvals have created adequate lot inventory for 2015. New residential construction created new market value of $41,355,000 for taxes payable 2016. Industrial growth wasvery strong in 2014 with approximately 935,000 square feet of new industrial space built, nearing completion, or in the beginning stages of construction. Rian, Fbom & Board, and BluDot all located their warehouse facilities in City of Otsego 113400 901h Street NE, Otsego, MN 55330 1 Tel. (763) 441-4414 Fax (763) 441-8823 Otsego's Gateway North Business Park. One lot remains undeveloped in this business park. Accurate Home Care started construction on its 32,200 square foot corporate headquartersoff ice building in the Waterfront East development in early 2015. The last of the available retail space in Great Ewer Centre is now filled with The Igloo, an ice arena and sports restaurant and bar. The lack of vacant industrial, commercial, and retail space should help to spur new construction in the available shovel ready lots. R NANaAL PLANNI NG The City has adopted and annually updates a Capital Improvement Plan (a P) to facilitate the growth and maintenance of public infrastructure. The Plan includes provisionsfor streets, parks and recreational facilities, trails, buildings, vehicles and rolling stock, publicsafety assetsand utility infrastructure. Projects in the aPdemonstrate the importance of developing long range financial planning strategiesto facilitate the growth and prosperity of the City. The process assists with both short and long range financial planning needs by: • Prioritizing and scheduling capital projects and acquisitions over the next five years; • Estimating cash flow needs and timing; and • Identifying funding sources for capital projects and acquisitions. The City currently finances over eighty percent of its General Fund expenditure budget with general property tax levies. The only significant intergovernmental revenue received from the state of Minnesota is Local Government Aid (LGA), Municipal State Aid (M&\) for road maintenance, and police services aid. These makeup 7%of the General Fund Budget. Only a portion of the total LGA and M&\ are allocated to the General fund. The balance of the M&\ is used for road construction and the LGA is receipted in a reserve fund for one-time expenditures. The City Council has approved afund 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 includesthe annual review of the fund balance reserves of all other fundsand 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 CAuncil. MA DRINIl1Al1VES Saveral initiatives have contributed to the community's growth in 2014. The initiatives highlighted in the following paragraphs are in various stages of completion and are indicative of the work and priorities of the City Council. City of Otsego 113400 901h Street NE, Otsego, MN 55330 1 Tel. (763) 441-4414 Fax (763) 441-8823 0 70th Street Project: The contract for construction of the long awaited 70th Street expansion was awarded by the Oty Council in May 2015. The new street will be open to traffic by the fall of 2015 with completion scheduled for 2016. This cooperative effort between the Oty of Ctsego and Wright County will open anew transportation corridor linking east and west portions of the Oty to new opportunities for development, recreation and education. The new 70th Street will connect two major north south corridors on the east and west sides of the Oty. S000er Complex: The three field soder complex built by the Oty in partnership with Three Fivers SDccer Association opened in the summer of 2014. Tournaments, games, and practice are scheduled to be held at the complex in 2015. Neighborhood Park in Wildflower Meadows: The development of a park in the Wildflower Meadows neighborhood will be the first new park built in over five years. Thissubdivision hascontinued to build -out the planned phasesand the resulting park dedication fees make it feasible to complete the park in 2016. Park planning began in earnest in early 2015. Waste Water Treatment Plant Improvements: The Oty has two wastewater treatment plants, one on the east side of the city and one on the west. The west plant has experienced capacity issues thusthe Council approved an engineering study to rectify the issues and to allow for continued growth in the portion of the Oty served by this plant. The expansion will be completed before capacity isexceeded hence growth and development should not be affected. RELEVANT R NANCIAL POLJ CIES Financial management staff of the Oty of Otsego have developed and implemented internal controls designed to protect the City's assets from loss, abuse, theft or other misappropriation. Policies relating to investment of Otyfunds, billing and collection of water and sewer utility charges, management of long term debt, purchasing, fund balancesand 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. Oty CAuncil adoption of these policies, goals and objectives is pending. R NANCIAL REPORTI NG AWARD The Government Finance Off icersAssociation of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Oty of Otsego for its 2013 Comprehensive Annual Financial Report. It wasthe second consecutive year the Oty received the award. In order to be awarded a Certificate of City of Otsego 113400 901h Street NE, Otsego, MN 55330 1 Tel. (763) 441-4414 Fax (763) 441-8823 5 Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. The report must satisfy both accounting principles generally accepted in the United States and applicable federal, state and local legal requirements. A Certificate of Achievement is valid for a period of one year. It is expected that the 2014 report conformsto the Certificate of Achievement program requirements. It will be submitted to the GFOA to determine the City's eligibility for another Certificate. ACKNOWLEDGBVI BUTS The preparation of this report would not have been possible without the dedication and assistance of the Finance Department staff and IDV, Ltd. The Mayor and Councilmembers' efforts and desiresto promote and support the highest standardsof professionalism in the financial management of the Oty of Otsego are recognized and appreciated. Respectfully submitted, 4:7 Lori bhnson Oty Administrator City of Otsego 113400 901h Street NE, Otsego, MN 55330 1 Tel. (763) 441-4414 Fax (763) 441-8823 on IV Ot CCITOF P V i� O atizensofaxgo MINNESOTA g QtyAttorney (Sty Council OtyAdministrator Administrative EeMces Util ity Sstems Qty Qerk FinanceWater Distribution Sections Payroll Water Production and Treatment Licensing & FBrmits Information Technology Sanitary ,ver Collection Util ity BII ing Sanitary ,ver Treatment J ORGANIZATIONAL CHART BY RJNCTION Advisory Boards& Commissions fo�QxYL�i .7osPP si6W&P Planning I I Engineering I I FLblic Ssfety: Fbliceand Fre Building H3fetyand Inspections FLbl is Works I I Parks& Recreation Sreet Maintenance Recreation Programs Fleet Maintenance Parks& Trail Maintenance Emergency Management Prairie Center Operations General Building Maintenance Show and Ice Control (THIS PAGE LEFT BLANK INTENTIONALLY) City of Otsego ELECTED OFFICIALS AND ADNIINISTRATION December 31, 2014 Elected Officials Position Term Expires Jessica Stockamp Mayor December 31, 2016 Tom Darkenwald Council Member December 31, 2014 Vern Heidner Council Member December 31, 2014 Jason Warehime Council Member December 31, 2016 Doug Schroeder Council Member December 31, 2016 Administration Lori Johnson City Administrator Daniel Jordet Administrative Services Director Tami Loff City Clerk D Ckwemmen(." inance Offictm Association Certificate of Achievement for Excellence in Financial Reporting PNsellwj to City of Otsego Minnesota For its Comprehunsi v a Maim). Hnuiwial Report fur the Ylisc-a[ Yew Fndod December 31, 2013 rN(Y.;ILtiw DirectoFXEO 10 FINANCIAL SECTION CITY OF OTSEGO OTSEGO, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2014 11 (THIS PAGE LEFT BLANK INTENTIONALLY) 12 IDV Expert advice. When you need it.s' INDEPENDENT AUDITOR'S REPORT Honorable Mayor and Members of the City Council City of Otsego Otsego, Minnesota Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund and the aggregate remaining fund information of the City of Otsego, Minnesota, as of and for the year ended December 31, 2014, and the related Notes to the Financial Statements, which collectively comprise the City's basic financial statements as listed in the Table of Contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 13 IDV Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund and the aggregate remaining fund information of the City of Otsego, Minnesota, as of December 31, 2014, and the respective changes in financial position and, where applicable, cash flows thereof and the budgetary comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, which follows this report letter be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board (GASB) who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Otsego's basic financial statements. The introductory section, supplementary information and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The supplementary 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. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them. 14 IDV Report on Summarized Comparative Information The financial statements include partial prior year comparative information. Such information does not include all of the information required to constitute a presentation in accordance with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the City's basic financial statements for the year ended December 31, 2013, from which such partial information was derived. We have previously audited the City's 2013 financial statements and our report, dated June 26, 2014, expressed unmodified opinions on the respective financial statements of the governmental activities, the business- type activities, each major fund and the aggregate remaining fund information. In our opinion, the summarized comparative information presented herein as of and for the year ended December 31, 2013 is consistent, in all material respects, with the audited financial statements from which it has been derived. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated June 8, 2015 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 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 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. B KERN, DEWENTER, VIERE, LTD. St. Cloud, Minnesota June 8, 2015 15 (THIS PAGE LEFT BLANK INTENTIONALLY) 16 CITY OF OTSEGO MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2014 As management of the City of Otsego, Minnesota, (the City), we offer readers of the City's Comprehensive Annual Financial Report (CAFR) this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2014. We encourage readers to consider the information presented here in conjunction with the additional information we have furnished in our Letter of Transmittal, found at the beginning of this report. Financial Highlights • The assets of the City exceeded liabilities by $ 56,654,476 (Net Position) at the close of the 2014 fiscal year. Of this amount, $ 23,089,085 represents the unrestricted net position which may be used at the discretion of the governing body to meet the government's ongoing obligations to its citizens and creditors. • Net position increased by $ 1,899,016 for business -type activities while the governmental activities net position increased by $ 2,642,950. • At the close of the fiscal year, the City's governmental funds reported combined fund balances of $ 11,564,836, a decrease of $ 4,005,792 or 25.7%. This is attributable primarily to the crossover refunding of the G.O. Improvement Bonds, Series 2005B, and the G.O. Improvement Bonds, Series 2006B. • The General Fund held an unassigned balance of $ 3,211,382 at the end of the 2014 fiscal year, an increase of $ 1,413,979 or 78.7%. • The City's outstanding debt decreased by $ 7,036,748 to $ 39,596,577, largely due to the crossover refunding of the 2005B and 2006B bonds. Included in the outstanding debt amount is $ 105,164 of compensated absences, $ 1,016,413 in unamortized bond premiums and $ 38,475,000 of outstanding bonded debt instruments. Overview of the Financial Statements The discussion and analysis is intended to serve as an introduction to the City's basic financial statements. These consist of 1) government -wide financial statements, 2) fund financial statements, and 3) the notes to the financial statements. The CAFR also includes 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 consolidated financial statement. 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 improving, stable or deteriorating. 17 CITY OF OTSEGO MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2014 The statement of activities presents information showing how the City's net position changed during the reporting year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported for some items that will only result in cash flows in future fiscal periods, such as uncollected taxes or earned but unused personal time off. The government -wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from those 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, parks and recreation, economic development, and interest on long- term debt. The business -type activities of the City include water treatment and distribution, wastewater collection and treatment and storm water management. The government -wide financial statements may be found on pages 33-34. 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. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of a 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 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 government's near-term financial decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. CITY OF OTSEGO MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2014 The City maintains twenty-five individual governmental funds, seven of which are debt service 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 General Fund and Debt Service Fund (combined for reporting), which are considered to be major funds. Data from the remaining funds is combined into a single aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements or schedules elsewhere in this CAFR. The basic governmental funds financial statements can be found on pages 36-41 of this CAFR. Proprietary Funds. The City maintains one type of proprietary fund. Enterprise funds are used to report the same functions reported in the 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. Proprietary funds provide the same type of information as the government -wide financial statements but in more detail. The proprietary funds financial statements provide separate information for each of the enterprise funds. The basic proprietary funds financial statements may be found on pages 42-47 of this CAFR. Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government -wide financial statements because the resources of those funds are not available to support the City's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The fiduciary funds statement can be found on page 49 of this CAFR. Notes to the Financial Statements. The notes provide additional information that is essential to a full understanding of the data presented in the government -wide and fund financial statements. The notes to the financial statements may be found on pages 51-71 of this CAFR. Other Information. The combining statements referred to earlier in connection with nonmajor governmental funds are presented following the notes to the financial statements. Combining and individual fund statements and schedules begin on page 74 of this CAFR. 19 CITY OF OTSEGO MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2014 Government -wide Overall 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 exceeded liabilities by $ 56,654,476 at the close of the fiscal year. The City's net position at the end of the fiscal year, summarized in the table below, reflects an investment of 49.7% of the net position in capital assets (e.g. land, buildings, machinery and equipment, vehicles and infrastructure), less any related debt used to acquire those assets that is still outstanding. These capital assets are used to provide a variety of services to the citizens of the City. Consequently, these assets are not available for future spending. It should be noted that the resources used to repay outstanding debt for capital assets must be paid from other sources as the assets themselves cannot be used to liquidate these obligations. City of Otsego's Summary of Net Position Assets Current and Other assets Capital assets Total assets Liabilities Noncurrent liabilities outstanding Other liabilities Total liabilities Net position Net Investment in Capital Assets Restricted Unrestricted Total net position Governmental Activities Business -type Activities Increase Increase 2014 2013 (Decrease) 2014 2013 (Decrease) $ 15,715,994 $ 19,729,769 $ (4,013,775) $ 13,635,090 $ 10,655,746 $ 2,979,344 26,400,121 26,449,024 (48,903) 41,225,888 42,379,982 (1,154,094) 42,116,115 46,178,793 (4,062,678) 54,860,978 53,035,728 1,825,250 9,787,005 10,928,709 (1,141,704) 28,609,463 28,685,465 (76,002) 1,781,170 7,345,094 (5,563,924) 144,979 109,455 35,524 11,568,175 18,273,803 (6,705,628) 15,515,291 14,709,024 806,267 5,430,795 5,882,912 (452,117) 9,601,854 7,313,054 2,288,800 $ 30,547,940 $ 27,904,990 $ 2,642,950 28,754,442 28,794,920 (40,478) 12,619,305 13,694,517 (1,075,212) 13,487,231 10,546,291 2,940,940 $ 26,106,536 $ 24,240,808 $ 1,865,728 20 CITY OF OTSEGO MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2014 An additional 9.6% of the City's net position is subject to external restrictions on how it may be used. The largest portion of this restricted net position is committed to repayment of outstanding debt obligations. The remaining portion of net position, 40.7% at the end of the fiscal year, may be used to meet the City's ongoing obligations to citizens and creditors. Portions of that net position are designated for various purposes, such as working capital, economic development, parks and trails and other capital projects. State law and City policies govern these designations. At the end of the 2014 fiscal year, the City is able to report positive balances in all reported categories of net position for both governmental and business -type activities. City of Otsego Net Position by Designation December 31, 2013 and 2014 Governmental Activities. The key activities in 2014 affecting the increase of $ 2,642,950 (9.5%) in the City's net position in governmental funds were: • Increase in charges for service revenues from $ 956,286 to $ 2,046,445, largely due to increased building activity and corresponding increases in permit and development fees • Increase in capital grants and contributions from $ 485,533 to $ 1,619,209, attributable to municipal state aid received for roads and special assessments prepayments collected in 2014 • Increase in general government expenses from $ 906,102 to $ 1,230,335 due to an increase in the General Fund budget 21 CITY OF OTSEGO MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2014 • Decrease in public works expenses from $ 2,760,130 to $ 2,383,890 due to a decrease in non -capitalized public works costs (crack sealing, surface restoration) • Increase in parks and recreation expenses from $ 573,581 to $ 792,525, resulting from increased labor allocations to park maintenance and the reclassification of the Prairie Center as a recreational use (senior center) City of Otsego's Changes in Net Position Expenses General government Governmental Activities Business -type Activities 324233 Increase Public safety 1,499,538 Increase 51,651 2014 2013 (Decrease) 2014 2013 (Decrease) Revenues Parks and recreation 792,525 573,581 Program Revenues Economic development 45,024 75,303 Charges for service $ 2,046,445 $ 956,286 $ 1,090,159 $ 2,537,817 $ 2,488296 $ 49,521 Operating grants & contributions 233,606 220,790 12,816 - - - Capital Grants & Contributions 1,619209 485,533 1,133,676 2,560,270 1267,189 1,293,081 General revenues 2,052,493 2,123,381 - Storm water - Property Taxes 4,476,810 4,333,972 142,838 24,824 57,739 (32,915) Franchise fees 120,964 83,681 37283 - - Grants & contributions Increase (Decrease) in not restricted to specific programs 132,104 10,954 121,150 - (189,117) - Unrestricted investment earnings 157,640 (17,852) 175,492 168,320 (34,717) 203,037 Other general revenue 32,355 44,343 (11,988) 28,440 18,733 9,707 Total revenues 8,819,133 6,117,707 2,701,426 5,319,671 3,797,240 1,522,431 Expenses General government 1230,335 906,102 324233 Public safety 1,499,538 1,447,887 51,651 Public works 2,383,890 2,760,130 (376240) Parks and recreation 792,525 573,581 218,944 Economic development 45,024 75,303 (30279) Interest on long-term debt 347,503 543,821 (196,318) - - Water - 1,187,553 1,241,343 (53,790) Sewer 2,052,493 2,123,381 (70,888) Storm water - - 57,977 72,944 (14,967) Total expenses 6,298,815 6,306,824 (81009) 3298,023 3,437,668 (139,645) Increase (Decrease) in Net Position before transfers 2,520,318 (189,117) 2,709,435 2,021,648 359,572 1,662,076 Transfers 122,632 122,632 (122,632) - (122,632) Change in net position 2,642,950 (189,117) 2,832,067 1,899,016 359,572 1,539,444 Net positon January 1 (as restated) 27,904,990 28,094,107 (189,117) 24207,520 23,847,948 359,572 Net position December 31 30,547,940 27,904,990 2,642,950 26,106,536 24,207,520 1,899,016 22 CITY OF OTSEGO MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2014 Expenses and Program Revenues — Governmental Activities 2,5()(),000 2.()00,000 I 1,500,000 1,0()0,000 500,000 General Public Safety Public Works Parks and Economic Interest on Government Recreation Development Long -Term Debt Revenues by Source — Governmental Activities i n4 d Amt Iq J' 1,;E h jaynA�d Amt r mfdttj d6ot 1_1 h &n4m§n4 si sfj J1,3 Ll uAnJUi nt§r64 r o.c1�Lp d6�? crujxradw I' �Psssf Expenses Revenues 23 CITY OF OTSEGO MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2014 Business -type activities. Business -type activities increased the City's net position by $ 1,899,016 in 2014. Contributing factors were: • Collection of connection fees and special assessments for water and sewer capital increased $ 1,293,081 or 102.0%. • Unrestricted investment earnings increased $ 203,037. • The City took over operation and management of its own utility services from a contract for service provider in 2013. • Operating expenses for water, sewer, and storm water decreased $ 139,645 or 4.1 %. Expenses and Program Revenues — Business -type Activities 3,500,000 3,000,000 2,500,000 2,000,000 in Expenses ■ Revenues 1,500,000 1,000,000 500,000 Water Fund Sewer Fund 3orm Water Fund Revenues by Source — Business -type Activities Other revenue 42% Chargesfor service Capital grants and 47.7% contributions 48.1% 24 CITY OF OTSEGO MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2014 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 a useful measure of a government's net resources available at the end of a fiscal year. At December 31, 2014, the City's governmental funds reported combined fund balances of $ 11,564,836, a decrease of $ 4,005,792 or 25.7% under the prior fiscal year. Unassigned fund balance comprises $ 3,200,798 which is available for spending at the government's discretion. The remainder of the combined fund balance is either nonspendable (i.e. committed to prepaid items), legally required to be maintained intact (i.e. by action of the governing body), restricted for specific purposes (e.g. for repayment of debt principal and interest), or assigned for a particular purpose (e.g. an economic development loan fund). Comparative amounts between fiscal year 2013 and 2014 in these combined governmental fund balance classifications are shown in the graph below. Components of Fund Balance — 2013 and 2014 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 Nonspendable Fbstricted Committed Assigned Unassigned ■ 2013 ■ 2014 25 CITY OF OTSEGO MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2014 Restricted balances decreased $ 6,228,825 or 70.7% due to the crossover refunding of the G.O. Improvement Bonds, Series 2005B, and the G.O. Improvement Bonds, Series 2006B in 2014. Committed balances decreased $ 208,158 due to the consolidation of the Community Development and Building Safety special revenue fund into the General Fund in 2014. Assigned balances increased $ 949,423 or 21.7% with $ 356,657 of that increase occurring in the Park Development fund and resulting from increased park dedication fees. Other funds with increases included the Street Construction fund due to development related fees, and the Capital Equipment fund due to property taxes and transfers in exceeding capital outlays. Unassigned balances increased $ 1,412,950 or 79.0% on the strength of increased building permits and excess revenues over expenditures in the general fund. Proprietary funds. The City's proprietary funds provide the same type of information found in the government -wide financial statements, but in more detail. The unrestricted portion of combined proprietary fund balances increased $ 2,940,940 or 27.9%. Growth in the utility systems use and implementation of utility rate increases as recommended by a prior rate study are increasing the generation of cash so that payments on infrastructure funding bonds may be ensured. General Fund Budgetary Highlights Actual revenues exceeded budgeted revenues by $ 889,016 or 20.1%. The primary contributors to the excess were collection of building and other permits, which were $ 681,523 over budget. Investment income was $ 62,573 under budget. Actual expenditures were $ 50,665 or 1.2% less than budgeted. Public safety, public works, and parks and recreation expenditures were under budget by $29,934, $3,231, and $21,362, respectively. General government expenditures were $ 33,970 over budget. Transfers from other funds included $ 303,236 from the Community Development and Building Safety fund, which was consolidated into the General Fund in 2014. General Fund revenues and transfers in exceeded expenditures and transfers out by $ 1,481,563 during 2014. Overall, the General fund balance increased from $ 1,912,075 at December 31, 2013 to $ 3,393,638 at December 31, 2014. 26 CITY OF OTSEGO MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2014 Capital Assets and Debt Administration The City's combined investments in capital assets for governmental activities and business -type activities at December 31, 2014 are $ 67,626,009 (net of accumulated depreciation). This includes land, buildings, equipment, improvement such as parks and trails, street and utility infrastructure and construction that is underway but has not been completed. At the end of 2014, an extension of 70th Street was considered in process. The significant changes in capital assets during 2014 included: • Completion of Prairie Center renovations • Completion of Labeaux Avenue project • Completion of Jalger Avenue project • Acquisition of 70th Street easements • Acceptance of Prospect Pointe development City of Otsego's Capital Assets (net of accumulated depreciation) Land Construction -in -progress Buildings Machinery and equipment Infrastructure Governmental Activities Increase 2014 2013 (Decrease) $ 2,440,396 $ 1,959,823 $ 480,573 262,590 664,022 (401,432) 5,129,736 4,763,402 366,334 1,531,648 1,729,836 (198,188) 17,035,751 17,331,941 (296,190) Businesss-type Activities Increase 2014 2013 (Decrease) $ 550,080 $ 550,080 $ - - 112,625 (112,625) 181,601 158,992 22,609 40,494,207 41,558,285 (1,064,078) Total Capital Assets $ 26,400,121 $ 26,449,024 $ (48,903) $ 41,225,888 $ 42,379,982 $ (1,154,094) Additional information on the City's capital assets can be found in Note 5 on pages 63-64 of this CAFR. Long-term Debt The City's outstanding debt decreased by $ 7,036,748 to $ 39,596,577, largely due to the crossover refunding in 2014 of the G.O. Improvement Bonds, Series 2005B, and the G.O. Improvement Bonds, Series 2006B bonds. Included in the outstanding debt amount is $ 105,164 of compensated absences, $ 1,016,413 in unamortized bond premiums and $ 38,475,000 of outstanding bonded debt instruments. Revenue streams for payment of these liabilities include assessment levies due from property owners, water and sewer access revenue charges, property tax levies and cash reserves from 27 CITY OF OTSEGO MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2014 refunding issues. Should any of these sources prove inadequate, all outstanding bonds are backed by the full faith and credit of the City of Otsego. City of Otsego's Outstanding Debt Governmental Activities 2013 $ 6,975,000 10,540,000 265,000 86,634 81,226 Increase (Decrease) $ (6,770,000) (150,000) (45,000) Businesss-type Activities Increase 2014 2013 (Decrease) - 27,660,000 27,660,000 - (16,804) 946,583 1,025,465 (78,882) 15,300 8,638 - 8,638 Total Outstanding Debt $ 10,981,356 $ 17,947,860 $ (6,966,504) $ 28,615,221 $ 28,685,465 $ (70,244) The City issued no new debt in 2014. The legal debt margin for the City is calculated under State law as 3% of the taxable market value of properties within the City. This limit of approximately $ 27.7 million is applied to debt issued that is payable solely from ad valorem taxes. At December 31, 2014, the City has $ 3,350,000 of debt outstanding that is subject to this limitation ($ 220,000 of G.O. Equipment Certificates, Series 2010A, and $ 3,130,000 of G.O. Improvement Refunding Bonds, Series 2010B). Additional information about the City's debt can be found in Notes 6 and 7 on pages 65-67 of this CAFR. Economic Factors and Next Year's Budgets and Rates The following economic factors are known to the City, will impact the City's financial future and were taken into consideration during preparation of the City's 2015 budgets and 2015 — 2019 Capital Improvement Plan: • The City's market value will increase substantially due to new industrial development of 935,000 square feet in 2014 and 2015. Partial value will be in place for taxes payable 2016 and full value will be in place for taxes payable 2017. • The Wright County Assessor's data states that the City's market value increased 13.84% in 2015. • New single-family housing remains strong with 60 permits issued to date in 2015 and 188 issued in 2014. New plats will accommodate and attract additional new housing in future years. • Construction of a new E-8 school is slated to begin in 2015 with an opening in fall 2017. 2014 G.O. Improvement Bonds $ 205,000 G.O. Refunding Bonds 10,390,000 G.O. Equipment Certificates 220,000 G.O. Revenue Bonds - Unamortized Premiums 69,830 Compensated Absences 96,526 2013 $ 6,975,000 10,540,000 265,000 86,634 81,226 Increase (Decrease) $ (6,770,000) (150,000) (45,000) Businesss-type Activities Increase 2014 2013 (Decrease) - 27,660,000 27,660,000 - (16,804) 946,583 1,025,465 (78,882) 15,300 8,638 - 8,638 Total Outstanding Debt $ 10,981,356 $ 17,947,860 $ (6,966,504) $ 28,615,221 $ 28,685,465 $ (70,244) The City issued no new debt in 2014. The legal debt margin for the City is calculated under State law as 3% of the taxable market value of properties within the City. This limit of approximately $ 27.7 million is applied to debt issued that is payable solely from ad valorem taxes. At December 31, 2014, the City has $ 3,350,000 of debt outstanding that is subject to this limitation ($ 220,000 of G.O. Equipment Certificates, Series 2010A, and $ 3,130,000 of G.O. Improvement Refunding Bonds, Series 2010B). Additional information about the City's debt can be found in Notes 6 and 7 on pages 65-67 of this CAFR. Economic Factors and Next Year's Budgets and Rates The following economic factors are known to the City, will impact the City's financial future and were taken into consideration during preparation of the City's 2015 budgets and 2015 — 2019 Capital Improvement Plan: • The City's market value will increase substantially due to new industrial development of 935,000 square feet in 2014 and 2015. Partial value will be in place for taxes payable 2016 and full value will be in place for taxes payable 2017. • The Wright County Assessor's data states that the City's market value increased 13.84% in 2015. • New single-family housing remains strong with 60 permits issued to date in 2015 and 188 issued in 2014. New plats will accommodate and attract additional new housing in future years. • Construction of a new E-8 school is slated to begin in 2015 with an opening in fall 2017. CITY OF OTSEGO MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2014 An engineering study to address capacity issues at the west wastewater treatment plant was approved by the Council in May 2015 with an expectation of construction in 2016. This improvement will ensure capacity for continued development in the west sewer area. Construction on the 70th Street expansion will begin in June 2015, which will open up this corridor for future development. 701h Street will connect two major north south highways on the east and west sides of the City, State Highway 101 and County Road 19. 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 about the City should be addressed to the Finance Director, City of Otsego, 13400 90th Street NW, Otsego, Minnesota 55330. 29 (THIS PAGE LEFT BLANK INTENTIONALLY) 30 GOVERNMENT-WIDE FINANCIAL STATEMENTS CITY OF OTSEGO OTSEGO, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2014 31 (THIS PAGE LEFT BLANK INTENTIONALLY) 32 CITY OF OTSEGO STATEMENT OF NET POSITION December 31, 2014 ASSETS Cash and Investments Receivables: Taxes Receivable Accounts Receivable Interest Receivable Due from Other Governments Special Assessments Receivable: Delinquent Deferred Prepaid Items Capital Assets not being Depreciated: Land Construction in Progress Capital Assets, Net of Accumulated Depreciation: Buildings Machinery and Equipment Infrastructure Total Assets LIABILITIES AND NET POSITION Liabilities Accounts Payable Salaries and Benefits Payable Interest Payable Bonds Payable (Net): Due Within One Year Due in More than One Year Compensated Absences Payable: Payable Within One Year Payable After One Year Total Liabilities Net Position Net Investment In Capital Assets Restricted for: Debt Service Unrestricted Total Net Position Total Liabilities and Net Position Governmental Business -Type $ 534,467 Activities Activities Total $ 11,887,672 $ 12,951,378 $ 24,839,050 107,463 527 107,990 5,343 251,209 256,552 41,994 - 41,994 172,435 354 172,789 202,720 21,112 223,832 3,217,944 389,082 3,607,026 80,423 21,428 101,851 2,440,396 550,080 2,990,476 262,590 - 262,590 5,129,736 - 5,129,736 1,531,649 181,600 1,713,249 17,035,750 40,494,208 57,529,958 $ 42,116,115 $ 54,860,978 $ 96,977,093 $ 485,963 $ 48,504 $ 534,467 32,156 7,797 39,953 68,700 82,920 151,620 1,130,000 - 1,130,000 9,754,830 28,606,583 38,361,413 64,351 5,758 70,109 32,175 2,880 35,055 11,568,175 28,754,442 40,322,617 15,515,291 12,619,305 28,134,596 5,430,795 - 5,430,795 9,601,854 13,487,231 23,089,085 30,547,940 26,106,536 56,654,476 $ 42,116,115 $ 54,860,978 $ 96,977,093 The Notes to the Financial Statements are an integral part of this statement. 33 CITY OF OTSEGO STATEMENT OF ACTIVITIES For the Year Ended December 31, 2014 Business -Type Activities Water 1,187,553 1,167,066 793,091 772,604 Net (Expense) Revenue Sewer 2,052,493 1,325,181 1,723,594 Program Revenue 996,282 and Changes in Net Position 57,977 45,570 43,585 31,178 Operating Capital Grants 3,298,023 2,537,817 - 2,560,270 1,800,064 Charges for Grants and and Governmental Business -Type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Governmental Activities General Revenues General Government $ 1,230,335 $ 119,757 $ 17,931 $ 7,136 $ (1,085,511) $ $ (1,085,511) Public Safety 1,499,538 1,159,073 52,669 - (287,796) - (287,796) Public Works 2,383,890 724,009 163,006 1,273,242 (223,633) (223,633) Parks and Recreation 792,525 43,606 - 338,831 (410,088) - (410,088) Economic Development 45,024 - Transfers - (45,024) - (45,024) Interest on Long -Term Debt 347,503 - - - (347,503) - (347,503) Total Governmental Activities 6,298,815 2,046,445 233,606 1,619,209 (2,399,555) - (2,399,555) Business -Type Activities Water 1,187,553 1,167,066 793,091 772,604 772,604 Sewer 2,052,493 1,325,181 1,723,594 996,282 996,282 Storm Water 57,977 45,570 43,585 31,178 31,178 Total Business -Type Activities 3,298,023 2,537,817 - 2,560,270 1,800,064 1,800,064 Total Governmental and Business -Type Activities $ 9,596,838 $ 4,584,262 $ 233,606 $ 4,179,479 (2,399,555) 1,800,064 (599,491) General Revenues Property Taxes 4,476,810 24,824 4,501,634 Franchise Fees 120,964 - 120,964 Unrestricted State Aids 132,104 - 132,104 Unrestricted Investment Earnings 157,640 168,320 325,960 Other General Revenue 32,355 28,440 60,795 Transfers 122,632 (122,632) - Total General Revenues 5,042,505 98,952 5,141,457 Change in Net Position 2,642,950 1,899,016 4,541,966 Net Position - Beginning, as Previously Stated 27,904,990 24,240,808 52,145,798 Prior Period Adjustment (Note 11) - (33,288) (33,288) Net Position - Beginning, as Restated 27,904,990 24,207,520 52,112,510 Net Position - Ending ' The Notes to the Financial Statements are an integral part of this statement. $ 30,547,940 $ 26,106,536 $ 56,654,476 FUND FINANCIAL STATEMENTS CITY OF OTSEGO OTSEGO, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2014 35 CITY OF OTSEGO BALANCE SHEET - GOVERNMENTAL FUNDS December 31, 2014 ASSETS Cash and Investments Taxes Receivable - Delinquent Special Assessments Receivable: Delinquent Deferred Accounts Receivable Interest Receivable Due from Other Funds Due from Other Governments Prepaid Items Total Assets LIABILITIES Accounts Payable Due to Other Funds Salaries and Benefits Payable Total Liabilities DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Property Taxes Unavailable Revenue - Special Assessments Unavailable Revenue - Intergovernmental Total Deferred Inflows of Resources FUND BALANCES Nonspendable Restricted Committed Assigned Unassigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources and Fund Balances The Notes to the Financial Statements are an integral part of this statement. 36 (350, 365, 375, Nonmajor Total General Fund 380, 385, 395, Governmental Governmental (101,204) 399) Funds Funds $ 3,399,720 $ 2,960,319 $ 5,527,633 $ 11,887,672 85,397 11,356 10,710 107,463 1,544 195,074 6,102 202,720 4,563 2,716,336 497,045 3,217,944 - - 5,343 5,343 41,994 - - 41,994 - - 400,744 400,744 51,192 7,855 113,388 172,435 80,423 - - 80,423 $ 3,664,833 $ 5,890,940 $ 6,560,965 $ 16,116,738 $ 147,535 $ 1,285 $ 337,143 $ 485,963 - 390,160 10,584 400,744 32,156 - - 32,156 179,691 391,445 347,727 918,863 85,397 11,356 10,710 107,463 6,107 2,911,410 503,147 3,420,664 - - 104,912 104,912 91,504 2,922,766 618,769 3,633,039 80,423 - - 80,423 - 2,576,729 - 2,576,729 - - 387,033 387,033 101,833 - 5,218,020 5,319,853 3,211,382 - (10,584) 3,200,798 3,393,638 2,576,729 5,594,469 11,564,836 $ 3,664,833 $ 5,890,940 $ 6,560,965 $ 16,116,738 The Notes to the Financial Statements are an integral part of this statement. 36 CITY OF OTSEGO RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET POSITION - GOVERNMENTAL FUNDS December 31, 2014 Total Fund Balances - Governmental Funds $ 11,564,836 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not current financial resources and, therefore, are not reported as assets in governmental funds. Cost of Capital Assets 35,122,922 Less Accumulated Depreciation (8,722,801) Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported as liabilities in the funds. Long-term liabilities at year-end consist of- Bond £Bond Principal Payable (10,815,000) Unamortized Bond Premium (69,830) Compensated Absences Payable (96,526) Delinquent receivables will be collected in subsequent years, but are not available soon enough to pay for the current period's expenditures and, therefore, are unavailable in the funds. Property Taxes 107,463 Special Assessments 202,720 Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. Deferred Special Assessments 3,217,944 Intergovernmental 104,912 Governmental funds do not report a liability for accrued interest until due and payable. (68,700) Total Net Position - Governmental Activities $ 30,547,940 The Notes to the Financial Statements are an integral part of this statement. 37 CITY OF OTSEGO STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS For the Year Ended December 31, 2014 REVENUES Taxes Franchise Fees Special Assessments Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Miscellaneous: Investment Income Contributions and Donations Other Total Revenues EXPENDITURES Current General Government Public Safety Public Works Parks and Recreation Economic Development Debt Service Principal Interest and Other Charges Capital Outlay General Government Public Safety Public Works Parks and Recreation Total Expenditures Excess of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources (Uses) Net Change in Fund Balances FUND BALANCES Beginning of Year End of Year Special 1,169,697 1,495,008 1,014,009 461,240 4,095 - 1,169,697 1,495,008 9,684 1,023,693 3,600 464,840 - 40,929 45,024 6,965,000 - 6,965,000 454,566 - 454,566 19,105 Revenue Debt Service 31,736 50,841 1,104 Community Debt Service - 1,104 928 Development (350, 365, 375, Nomnajor Total General Fund and Building 380, 385, 395, Governmental Governmental (101, 204) Safety (250) 399) Funds Funds $ 3,321,316 $ $ 478,868 $ 723,908 $ 4,524,092 120,964 - - - 120,964 7,136 - 663,464 234,841 905,441 1,238,823 - - - 1,238,823 337,779 (303,236) - 696,773 1,034,552 192,168 (303,236) - 950,285 1,142,453 4,000 303,236 - - 4,000 37,427 $ - 48,409 71,804 157,640 4,500 - 2,500 7,000 43,179 - 107 43,286 5,307,292 1,190,741 2,680,218 9,178,251 1,169,697 1,495,008 1,014,009 461,240 4,095 - 1,169,697 1,495,008 9,684 1,023,693 3,600 464,840 - 40,929 45,024 6,965,000 - 6,965,000 454,566 - 454,566 19,105 - 31,736 50,841 1,104 - - 1,104 928 1,453,152 1,454,080 - - 182,822 182,822 4,165,186 7,419,566 1,721,923 13,306,675 1,142,106 - (6,228,825) 958,295 (4,128,424) 425,868 - - 186,565 612,433 (86,411) (303,236) - (100,154) (489,801) 339,457 (303,236) - 86,411 122,632 1,481,563 (303,236) (6,228,825) 1,044,706 (4,005,792) 1,912,075 303,236 8,805,554 4,549,763 15,570,628 $ 3,393,638 $ - $ 2,576,729 $ 5,594,469 $ 11,564,836 The Notes to the Financial Statements are an integral part of this statement. 38 CITY OF OTSEGO RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES - GOVERNMENTAL FUNDS For the Year Ended December 31, 2014 Net Change in Fund Balances - Governmental Funds $ (4,005,792) 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 and reported as depreciation expense. This is the amount of capital outlays and depreciation expense in the current period. Capital Outlays 988,775 Depreciation Expense (1,159,089) Developer Capital Contributions 121,411 Compensated absences are recognized as paid in the governmental funds but recognized as the expense is incurred in the Statement of Activities. (15,300) Principal payments on long-term debt are recognized as expenditures in the governmental funds but have no effect on net position in the Statement of Activities. 6,965,000 Governmental funds report effects of bond premiums when debt is first issued, whereas these amounts are deferred and amortized in the Statement of Activities. 16,804 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 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. 90,259 Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. Delinquent Property Taxes (47,282) Deferred and Delinquent Special Assessments (416,748) Intergovernmental 104,912 Change in Net Position - Governmental Activities $ 2,642,950 The Notes to the Financial Statements are an integral part of this statement. 39 (THIS PAGE LEFT BLANK INTENTIONALLY) m CITY OF OTSEGO STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL FUND For the Year Ended December 31, 2014 REVENUES Taxes Franchise Fees Special Assessments Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Investment Income Contributions and Donations Other Total Revenues EXPENDITURES Current General Government Public Safety Public Works Parks and Recreation Economic Development Capital Outlay General Government Public Safety Public Works Total Expenditures Excess of Revenues Over (Under) Expenditures Budgeted Amounts 1,135,727 Variance with 33,970 1,524,942 Actual Final Budget - Original Final Amounts Over (Under) $ 3,273,715 $ 3,273,715 $ 3,321,316 $ 47,601 105,000 105,000 120,964 15,964 - - 7,136 7,136 557,300 557,300 1,238,823 681,523 316,611 316,611 337,779 21,168 65,650 65,650 192,168 126,518 - - 4,000 4,000 100,000 100,000 37,427 (62,573) - - 4,500 4,500 - - 43,179 43,179 4,418,276 4,418,276 5,307,292 889,016 1,133,969 1,135,727 1,169,697 33,970 1,524,942 1,524,942 1,495,008 (29,934) 1,015,740 1,017,240 1,014,009 (3,231) 482,602 482,602 461,240 (21,362) 11,790 13,790 4,095 (9,695) 25,550 25,550 19,105 (6,445) 16,000 16,000 1,104 (14,896) - - 928 928 4,210,593 4,215,851 4,165,186 (50,665) 207,683 202,425 1,142,106 939,681 OTHER FINANCING SOURCES (USES) Transfers In 143,736 143,736 425,868 282,132 Transfers Out (65,911) (65,911) (86,411) (20,500) Total Other Financing Sources (Uses) 77,825 77,825 339,457 261,632 Net Change in Fund Balances $ 285,508 $ 280,250 1,481,563 $ 1,201,313 FUND BALANCES Beginning of Year 1,912,075 End of Year $ 3,393,638 The Notes to the Financial Statements are an integral part of this statement. 41 CITY OF OTSEGO STATEMENT OF NET POSITION - PROPRIETARY FUNDS December 31, 2014 (With Comparative Totals for December 31, 2013) Water (360, 60 1) 2014 2013 ASSETS Current Assets Cash and Cash Equivalents $ 6,205,033 $ 4,562,869 Taxes Receivable - Delinquent - - Special Assessments Receivable: Delinquent 18,411 17,406 Accounts Receivable 85,913 197,276 Interest Receivable - 19,064 Due from Other Governments - 486 Prepaid Items 4,787 - Total Current Assets 6,314,144 4,797,101 Noncurrent Assets Special Assessments Receivable: Deferred 206,543 686,067 Capital Assets: Land 57,392 57,392 Infrastructure 18,084,839 18,042,309 Machinery and Equipment 192,036 173,981 Construction in Progress - - Total Capital Assets 18,334,267 18,273,682 Less Accumulated Depreciation (3,711,110) (3,238,349) Net Capital Assets 14,623,157 15,035,333 Total Noncurrent Assets 14,829,700 15,721,400 Total Assets $ 21,143,844 $ 20,518,501 LIABILITIES AND NET POSITION Current Liabilities Accounts Payable $ 17,531 $ 4,889 Salaries and Benefits Payable 1,170 3,766 Interest Payable 29,851 30,183 Compensated Absences - Current 863 - Total Current Liabilities 49,415 38,838 Noncurrent Liabilities Compensated Absences 432 - Bonds Payable, Net of Premium 10,298,370 10,326,767 Total Noncurrent Liabilities 10,298,802 10,326,767 Total Liabilities 10,348,217 10,365,605 NET POSITION Net Investment In Capital Assets 4,324,787 4,708,566 Unrestricted 6,470,840 5,444,330 Total Net Position 10,795,627 10,152,896 Total Liabilities and Net Position $ 21,143,844 $ 20,518,501 The Notes to the Financial Statements are an integral part of this statement. 42 Nomnajor Sewer (361, 602) Storm Water (222, 220) Totals 2014 2013 $ 6,685,904 $ 5,070,648 $ 60,441 $ 17,866 $ 12,951,378 $ 9,651,383 - - 527 938 527 938 - - 2,701 3,570 21,112 20,976 162,209 16,711 3,087 188 251,209 214,175 - 18,976 - - - 38,040 - 10,577 354 811 354 11,874 16,641 - - - 21,428 - 6,864,754 5,116,912 67,110 23,373 13,246,008 9,937,386 135,793 - 46,746 32,293 389,082 718,360 492,688 492,688 - - 550,080 550,080 32,261,739 32,223,044 856,654 710,330 51,203,232 50,975,683 156,979 130,386 - - 349,015 304,367 - - - 112,625 - 112,625 32,911,406 32,846,118 856,654 822,955 52,102,327 51,942,755 (7,070,595) (6,247,473) (94,734) (76,951) (10,876,439) (9,562,773) 25,840,811 26,598,645 761,920 746,004 41,225,888 42,379,982 25,976,604 26,598,645 808,666 778,297 41,614,970 43,098,342 $ 32,841,358 $ 31,715,557 $ 875,776 $ 801,670 $ 54,860,978 $ 53,035,728 $ 22,801 $ 7,245 $ 8,172 $ 5,947 $ 48,504 $ 18,081 6,627 3,766 - - 7,797 7,532 53,069 53,659 - - 82,920 83,842 4,895 - - - 5,758 - 87,392 64,670 8,172 5,947 144,979 109,455 2,448 - - - 2,880 - 18,308,213 18,358,698 - - 28,606,583 28,685,465 18,310,661 18,358,698 - - 28,609,463 28,685,465 18,398,053 18,423,368 8,172 5,947 28,754,442 28,794,920 7,532,598 8,239,947 761,920 746,004 12,619,305 13,694,517 6,910,707 5,052,242 105,684 49,719 13,487,231 10,546,291 14,443,305 13,292,189 867,604 795,723 26,106,536 24,240,808 $ 32,841,358 $ 31,715,557 $ 875,776 $ 801,670 $ 54,860,978 $ 53,035,728 43 CITY OF OTSEGO STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION - PROPRIETARY FUNDS For the Year Ended December 31, 2014 (With Comparative Totals for the Year Ended December 31, 2013) Water (360, 601) 2014 2013 OPERATING REVENUES Charges for Services $ 1,114,528 $ 1,194,976 OPERATING EXPENSES Wages and Salaries 29,799 82,103 Employee Benefits 8,244 16,833 Materials and Supplies 138,484 131,272 Repairs and Maintenance 571 4,755 Professional Services 42,550 2,382 Insurance 8,046 - Utilities 72,200 56,370 Depreciation 472,761 475,224 Contracted Services 51,213 117,551 Miscellaneous 29,683 20,695 Total Operating Expenses 853,551 907,185 Operating Income (Loss) 260,977 287,791 NONOPERATING REVENUES (EXPENSES) Rent 52,538 64,050 Investment Income 86,824 (17,399) Property Taxes - - Other Income 28,410 17,913 Interest Expense (334,002) (334,158) Total Nonoperating Revenues (Expenses) (166,230) (269,594) Income before Capital Contributions and Transfers 94,747 18,197 Connection Fees and Special Assessments 750,561 488,349 Capital Contributions 42,530 - Transfers Out (52,889) - Change in Net Position 834,949 506,546 NET POSITION Beginning of Year, as Previously Stated 10,152,896 9,646,350 Prior Period Adjustment (192,218) - Beginning of Year, as Restated 9,960,678 9,646,350 End of Year $ 10,795,627 $ 10,152,896 The Notes to the Financial Statements are an integral part of this statement. 44 Nonmaj or Sewer (361, 602) Storm Water (222, 220) Totals 2014 2013 $ 1,325,181 $ 1,186,523 $ 45,570 $ 41,831 $ 2,485,279 $ 2,423,330 168,876 79,422 - 19,849 198,675 181,374 45,825 17,379 - 1,238 54,069 35,450 105,575 70,900 623 1,485 244,682 203,657 573 73,488 - - 11144 78,243 5,963 6,849 23,683 14,133 72,196 23,364 26,454 4,064 - - 34,500 4,064 153,945 156,537 2,188 340 228,333 213,247 823,122 824,492 17,783 17,758 1,313,666 1,317,474 116,776 258,155 13,700 16,166 181,689 391,872 11,605 38,035 - 1,975 41,288 60,705 1,458,714 1,529,321 57,977 72,944 2,370,242 2,509,450 (133,533) (342,798) (12,407) (31,113) 115,037 (86,120) - - - - 52,538 64,050 80,061 (17,318) 1,435 - 168,320 (34,717) - - 24,824 57,739 24,824 57,739 30 - - 820 28,440 18,733 (593,779) (594,060) - - (927,781) (928,218) (513,688) (611,378) 26,259 58,559 (653,659) (822,413) (647,221) (954,176) 13,852 27,446 (538,622) (908,533) 1,684,899 745,791 24,361 33,965 2,459,821 1,268,105 38,695 - 19,224 - 100,449 - (57,517) - (12,226) - (122,632) - 1,018,856 (208,385) 45,211 61,411 1,899,016 359,572 13,292,189 13,500,574 795,723 703,258 24,240,808 23,850,182 132,260 - 26,670 31,054 (33,288) 31,054 13,424,449 13,500,574 822,393 734,312 24,207,520 23,881,236 $ 14,443,305 $ 13,292,189 $ 867,604 $ 795,723 $ 26,106,536 $ 24,240,808 45 CITY OF OTSEGO STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS For the Year Ended December 31, 2014 (With Comparative Totals for the Year Ended December 31, 2013) CASH AND CASH EQUIVALENTS January 1 Water (360, 601) 4,562,869 2014 2013 CASH FLOWS - OPERATING ACTIVITIES $ 6,205,033 Receipts from Customers and Users $ 1,118,165 $ 1,176,295 Payments to Suppliers (334,892) (339,416) Payments to Employees (39,344) (95,649) Other Income Related to Operating Activities 80,948 81,963 Net Cash Flows - Operating Activities 824,877 823,193 CASH FLOWS - NONCAPITAL FINANCING 288,707 Adjustments to Reconcile Operating Income (Loss) ACTIVITIES Taxes - - Transfer to Other Funds (52,889) Net Cash Flows - Noncapital Financing Activities (52,889) - CASH FLOWS - CAPITAL AND RELATED 81,963 Depreciation Expense FINANCING ACTIVITIES 472,761 Connection Fees Received 685,776 365,555 Special Assessments Received 459,298 185,719 Interest Paid on Bonds (362,731) (362,556) Acquisition of Capital Assets (18,055) (24,519) Net Cash Flows - Capital and Related (4,787) Financing Activities 764,288 164,199 CASH FLOWS - INVESTING ACTIVITIES (6,391) Interest and Dividends Received 105,888 (36,463) Net Change in Cash and Cash Equivalents 1,642,164 950,929 CASH AND CASH EQUIVALENTS January 1 4,562,869 3,611,940 December 31 $ 6,205,033 $ 4,562,869 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FLOWS - OPERATING ACTIVITIES Operating Income (Loss) $ 260,977 $ 288,707 Adjustments to Reconcile Operating Income (Loss) to Net Cash Flows - Operating Activities: Miscellaneous Revenue 80,948 81,963 Depreciation Expense 472,761 475,224 Accounts Receivable 3,151 (19,111) Due from Other Governments 486 (486) Prepaid Items (4,787) - Accounts Payable 12,642 (6,391) Salaries Payable (2,596) 3,287 Compensated Absences Payable 1,295 - Total Adjustments 563,900 534,486 Net Cash Flows - Operating Activities $ 824,877 $ 823,193 NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES Amortization of Bond Premium $ 28,397 $ 28,398 Capital Assets Contributed by Other Funds and Developers 42,530 - The Notes to the Financial Statements are an integral part of this statement. 46 Nonmaj or Sewer (361, 602) Storm Water (222, 220) Totals $ 1,322,520 $ 1,170,582 $ 43,128 $ 40,832 $ 2,483,813 $ 2,387,709 (421,976) (635,516) (37,969) (29,936) (794,837) (1,004,868) (204,497) (93,514) - (21,087) (243,841) (210,250) 30 - - 820 80,978 82,783 696,077 441,552 5,159 (9,371) 1,526,113 1,255,374 - - 25,235 56,801 25,235 56,801 (57,517) - (12,226) - (122,632) - (57,517) - 13,009 56,801 (97,397) 56,801 1,549,106 745,791 - - 2,234,882 1,111,346 - - 37,447 37,347 496,745 223,066 (644,854) (644,544) - - (1,007,585) (1,007,100) (26,593) - (14,475) (112,625) (59,123) (137,144) 877,659 101,247 22,972 (75,278) 1,664,919 190,168 99,037 (36,294) 1,435 - 206,360 (72,757) 1,615,256 506,505 42,575 (27,848) 3,299,995 1,429,586 5,070,648 4,564,143 17,866 45,714 9,651,383 8,221,797 $ 6,685,904 $ 5,070,648 $ 60,441 $ 17,866 $ 12,951,378 $ 9,651,383 $ (133,533) $ (342,798) $ (12,407) $ (31,113) $ 115,037 $ (85,204) 30 - - 820 80,978 82,783 823,122 824,492 17,783 17,758 1,313,666 1,317,474 (13,238) (16,711) (2,899) (188) (12,986) (36,010) 10,577 770 457 (811) 11,520 (527) (16,641) - - - (21,428) - 15,556 (27,488) 2,225 4,163 30,423 (29,716) 2,861 3,287 - - 265 6,574 7,343 - - 8,638 - 829,610 784,350 17,566 21,742 1,411,076 1,340,578 $ 696,077 $ 441,552 $ 5,159$ (9,371) $ 1,526,113 $ 1,255,374 $ 50,485 $ 50,484 $ - $ $ 78,882 $ 78,882 38,695 - 19,224 100,449 - 47 (THIS PAGE LEFT BLANK INTENTIONALLY) CITY OF OTSEGO STATEMENT OF FIDUCIARY NET POSITION December 31, 2014 Agency Funds (701, 702) ASSETS Cash and Investments $ 797,867 LIABILITIES Accounts Payable $ 673,137 Escrow Deposit 124,730 Total Liabilities $ 797,867 The Notes to the Financial Statements are an integral part of this statement. 49 (THIS PAGE LEFT BLANK INTENTIONALLY 50 CITY OF OTSEGO NOTES TO THE FINANCIAL STATEMENTS December 31, 2014 NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The City of Otsego operates under the "Optional Plan A" form of government as defined in Minnesota Statutes. The City Council, composed of an elected mayor and four elected trustees or council members, exercises legislative authority and determines all matters of policy. The accounting policies of the City conform to accounting principles generally accepted in the United States of America as applicable to governmental units. The financial statements present the City and its component units. The City includes all funds, organizations, institutions, agencies, departments and offices that are not legally separate from such. 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 it 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. As a result of applying the component unit definition criteria above, certain organizations have been defined and are presented in this report as follows: Blended Component Units — Reported as if they were part of the City. For each of the categories above, the specific entities are identified as follows: 1. Blended Component Unit The Otsego Economic Development Authority (EDA) is a legal entity separate from the City. Although legally separate, the Otsego EDA is reported as if it were part of the primary government because it provides services exclusively for the City and the five -member board consists of the Mayor and the four city council members. Separate financial statements are not prepared for the Otsego EDA. There currently is no EDA financial activity. B. Government -Wide and Fund Financial Statements The government -wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the nonfiduciary activities of the City. The fiduciary funds are only reported in the Statement of Fiduciary Net Position and the Statement of Changes in Agency Fund Assets and Liabilities at the fund financial statement level. 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. 51 CITY OF OTSEGO NOTES TO THE FINANCIAL STATEMENTS December 31, 2014 NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES B. Government -Wide and Fund Financial Statements (Continued) The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Interest on general long-term debt is considered an indirect expense and is reported separately in the Statement of Activities. 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 segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Internally dedicated revenues are reported as general revenues rather than program revenues. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. The Agency Funds are presented in the fiduciary fund financial statements. Since, by definition, these assets are being held for the benefit of a third party (other local governments, private parties, etc.) and cannot be used to address activities or obligations of the City, these Funds are not incorporated into the government -wide 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 and fiduciary 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 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 period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. 52 CITY OF OTSEGO NOTES TO THE FINANCIAL STATEMENTS December 31, 2014 NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued) Property taxes, franchise taxes, licenses and interest associated with the current period are all considered to be susceptible to accrual and so have been recognized as revenues of the current period. Only the portion of special assessments receivable due within the current period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City. Description of Funds: Major Governmental Funds: General Fund — This Fund is the City's primary operating fund. It accounts for all financial resources of the general City, except those required to be accounted for in another fund. Debt Service Fund — This Fund accounts for the resources accumulated and payments made for principal and interest on the City's governmental activity bonds. Proprietary Funds: Water Fund — This Fund accounts for the operations of the City's water utility. Sewer Fund — This Fund accounts for the operations of the City's sanitary sewer utility. Storm Water Fund — This Fund accounts for the activities of the City's storm water operations. Fiduciary Fund: Agency Fund — The Agency Fund is custodial in nature and does not present results of operations or have a measurement focus. Agency funds are accounted for using the accrual basis of accounting. These funds are used to account for assets from residents, builders and developers that are deposited with the City as part of specific projects going on within the City. As a general rule, the effect of interfund activity has been eliminated from the government -wide financial statements. Exceptions to this general rule are charges between the City's utility functions and various other functions of the City. 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 nonoperating 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 Water Enterprise Fund, Sewer Enterprise Fund and the Storm Water Enterprise Fund 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 revenues and expenses. When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, then unrestricted resources as they are needed. 53 CITY OF OTSEGO NOTES TO THE FINANCIAL STATEMENTS December 31, 2014 NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES D. Assets, Liabilities and Net Position or Fund Balance 1. Deposits and Investments The City's cash and cash equivalents are considered to be cash on hand, demand deposits and short- term investments with original maturities of three months or less from the date of acquisition. Minnesota Statutes authorizes the City to invest in obligations of the U.S. Treasury, agencies and instrumentalities, shares of investment companies whose only investments are in the aforementioned securities, obligations of the State of Minnesota or its municipalities, bankers' acceptances, future contracts, repurchase and reverse repurchase agreements and commercial paper of the highest quality with a maturity of no longer than 270 days and in the Minnesota Municipal Investment Pool. Investments are stated at fair value. At December 31, 2014, cash and investments were comprised of deposits, money market accounts, certificates of deposit, U.S. Government Agency Securities and Municipal Bonds held by brokers. Investments for the City are reported at fair value. Custodial Credit Risk — Deposits: In the case of deposits, this is the risk that in the event of a bank failure, the City deposits may not be returned to it. The City's investment policy does not specifically address custodial credit risk related to deposits. Minnesota Statues require that all City deposits be protected by insurance, surety bond or collateral. Interest Rate Risk: This is the risk that market values of securities in a portfolio would decrease due to changes in market interest rates. The City's investment policy's second and third objectives are liquidity and return on investment. Liquidity will be considered for all investments and criteria will be established to determine the amount of public monies which may be invested for short-term periods of less than one year and public monies which may be invested for a term longer than one year. The investment portfolio is designed with the objective of attaining a market rate of return through the budgetary and economic cycles taking into account the constraints on risk and cash flow characteristic of the investment policy. Credit Risk: This is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Minnesota Statutes 118A.04 and 118A.05 limits investments to those that are in the top two ratings issued by nationally recognized statistical rating organizations. The City policy limits investments to some of those referenced in these Statutes. Concentration of Credit Risk: This is the risk of loss attributed to the magnitude of an investment in a single issuer. Investments should be diversified to avoid incurring unreasonable risks inherent in over investing in specific instruments, individual financial institutions or maturities. The City's investment policy's first objective is safety. To obtain this objective, diversification is to be considered in the type of investment, maturity, and the investment institution where the investment is located. 54 CITY OF OTSEGO NOTES TO THE FINANCIAL STATEMENTS December 31, 2014 NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES D. Assets, Liabilities and Net Position or Fund Balance (Continued) 1. Deposits and Investments (Continued) Custodial Credit Risk — Investments: For an investment, this is the risk that in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. In accordance with the City's investment policy, the investment officer shall structure all investments, deposits, and repurchase agreements so that the custodial risk is categorized as either insured or registered, or securities held by the City or its agent in the City's name or uninsured and unregistered, with securities held by the counterparty's trust department or agent in the City's name. All investments are placed in safekeeping at financial institutions. 2. Receivables and Payables All trade and property tax receivables are shown at a gross amount since both are assessable to the property taxes and are collectible upon the sale of the property. The City levies its property tax for the subsequent year during the month of December. December 28 is the last day the City can certify a tax levy to the County Auditor for collection the following year. Such taxes become a lien on January 1 and are recorded as receivables by the City at that date. The property tax is recorded as revenue when it becomes measurable and available. Wright County is the collecting agency for the levy and remits the collections to the City three times a year. The tax levy notice is mailed in March with the first half of the payment due on May 15 and the second half due on October 15. Taxes not collected as of December 31 each year are shown as delinquent taxes receivable. The County Auditor prepares the tax list for all taxable property in the City, applying the applicable tax rate to the tax capacity of individual properties, to arrive at the actual tax for each property. The County Auditor also collects all special assessments, except for certain prepayments paid directly to the City. The County Auditor submits the list of taxes and special assessments to be collected on each parcel of property to the County Treasurer in January of each year. Delinquent taxes receivable include the past six years' uncollected taxes. Delinquent taxes have been offset a deferred inflow of resources for delinquent taxes not received within 60 days after year end in the governmental financial statements. 3. Accounts Receivable Accounts receivable include amounts billed for services provided before year end. Unbilled utility enterprise fund receivables are also included for services provided in 2014. The City annually certifies delinquent water and sewer accounts to the County for collection in the following year, when necessary. Therefore, there has been no allowance for doubtful accounts established. 55 CITY OF OTSEGO NOTES TO THE FINANCIAL STATEMENTS December 31, 2014 NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES D. Assets, Liabilities and Net Position or Fund Balance (Continued) 4. 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 special assessments not received within 60 days after year end in the governmental fund financial statements. 5. Interfund receivables and payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the year are referred to as either "due to/from other funds" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds." Residual balances, if any, outstanding between the governmental activities and business -type activities are reported in the government -wide financial statements as "internal balances." 6. 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 recorded as expenditures when consumed rather than when purchased. 7. Capital Assets Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewalks and similar items) are reported in the applicable governmental or business -type activities columns in the government -wide financial statements. Capital assets are defined by the City as assets with an initial value as defined in the table below and with an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. For financial statement purposes only, a capitalization threshold is established for each capital asset category as follows: Assets Threshold Land/Land Improvements $ 10,000 Other Improvements 25,000 Buildings and Improvements 25,000 Machinery and Equipment 5,000 Infrastructure 100,000 Other Assets 5,000 56 CITY OF OTSEGO NOTES TO THE FINANCIAL STATEMENTS December 31, 2014 NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES D. Assets, Liabilities and Net Position or Fund Balance (Continued) 7. Capital Assets (Continued) 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. Interest incurred during the construction phase of capital assets of business -type activities is included as part of the capitalized value of the assets constructed. Property, plant and equipment of the City are depreciated using the straight-line method over the following useful lives: Assets Years Buildings and Improvements 15 to 40 Other Improvements 15 to 30 Machinery and Equipment 3 to 15 Infrastructure 20 to 60 8. Compensated Absences It is the City's policy to permit employees to accumulate earned but unused vacation pay benefits. All vacation pay is accrued when incurred in the government -wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. The General fund is typically used to liquidate governmental compensated absences payable. 9. Post -Employment Benefits Other Than Pensions In August 2004, the Governmental Accounting Standards Board (GASB) issued Statement No. 45, Accounting and Financial Reporting by Employers for Post -Employment Benefits Other Than Pensions, effective for the City's year-end 2009. Statement No. 45 requires accrual -based measurement, recognition and disclosure of other postemployment benefits (OPEB) expense, such as retiree medical and dental costs, over the employees' years of service, along with the related liability, net of any plan assets. 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. 10. 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. 57 CITY OF OTSEGO NOTES TO THE FINANCIAL STATEMENTS December 31, 2014 NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES D. Assets, Liabilities and Net Position or Fund Balance (Continued) 10. Long -Term Obligations (Continued) In the fund financial statements, governmental fund types recognized 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. 11. Deferred Inflows of Resources In addition to liabilities, the statement of financial position and fund financial statements will sometimes report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City has only one type of item, which arises only under a modified accrual basis of accounting, that qualifies as needing to be reported in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from three sources: taxes, special assessments, and intergovernmental. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. 12. Fund Balance In the fund financial statements, fund balance is divided into five classifications based primarily on the extent to which the City is bound to observe constraints imposed upon the use of resources reported in the governmental funds. These classifications are defined as follows: Nonspendable Amounts that cannot be spent because they are not in spendable form, such as prepaid items. Restricted Amounts related to externally imposed constraints established by creditors, grantors or contributors; or constraints imposed by state statutory provisions. Committed Amounts constrained for specific purposes that are internally imposed by formal action (resolution) of the City Council, which is the City's highest level of decision- making authority. Committed amounts cannot be used for any other purpose unless the City Council modifies or rescinds the commitment by resolution. Assigned Amounts constrained for specific purposes that are internally imposed for intended uses established by the City Council itself or by an official to which the governing body delegates the authority. The City Council through the City's fund balance policy, has delegated the authority to assign available fund balance to city staff. CITY OF OTSEGO NOTES TO THE FINANCIAL STATEMENTS December 31, 2014 NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES D. Assets, Liabilities and Net Position or Fund Balance (Continued) 12. Fund Balance (Continued) Unassigned The residual classification for the General Fund and also negative residual amounts in other funds. The City considers restricted amounts to be spent first when both restricted and unrestricted fund balance is available. Additionally, the City would first use committed, then assigned, and lastly unassigned amounts of unrestricted fund balance when expenditures are made. The City has formally adopted a fund balance policy for the General Fund. The City's policy is to maintain a minimum fund balance of 45% of the subsequent years' budgeted operating expenditures for cash-flow timing needs. 13. Net Position Net Position represents the difference between assets and liabilities and deferred inflows of resources in the government -wide financial statements. Net investment in capital assets consists of capital assets, net of accumulated depreciation, reduced by the outstanding balance of any long-term debt used to build or acquire the capital assets. Net Position is reported as restricted in the government - wide financial statement when there are limitations on use through external restrictions imposed by creditors, grantors or laws or regulations of other governments. 14. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenue and expenditures/expense during the reporting period. Actual results could differ from those estimates. 15. Comparative Data/Reclassifications Summarized comparative data for the prior year has been presented only for certain sections of the accompanying financial statements in order to provide an understanding of the changes in the City's financial position and operations. Also, certain amounts presented in the prior year data have been reclassified in order to be consistent with this year's presentation. 59 CITY OF OTSEGO NOTES TO THE FINANCIAL STATEMENTS December 31, 2014 NOTE 2 — STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Budgetary Information An annual budget is adopted on a basis consistent with accounting principles generally accepted in the United States of America for the General Fund. All annual appropriations lapse at year-end. The City does not use encumbrance accounting. In June of each year, all departments of the City submit requests for appropriations to the City Administrator so that a budget may be prepared. Before September 15, the proposed budget is presented to the City Council for review. The City Council holds public hearings and a final budget is prepared and adopted in early December. The appropriated budget is prepared by fund, function and department. The City's department heads may make transfers of appropriations within a department. Transfers of appropriations between departments require the approval of the City Administrator. The legal level of budgetary control is the fund level. There were budget amendments made to the 2014 budget. B. Deficit Fund Balances The following Funds had deficit fund balances at December 31, 2014: Nonmajor Governmental Funds: 1998 Odean Project Capital Projects Fund $ 5,425 Wellhead Protection Project Capital Projects Fund 5,159 The above deficits will be eliminated with future taxes, assessments and transfers from other funds and other revenue collections. NOTE 3 — DEPOSITS AND INVESTMENTS Cash balances of the City's funds are combined (pooled) and invested to the extent available in various investments authorized by Minnesota Statutes. Each fund's portion of this pool (or pools) is displayed in the financial statements as "cash and investments". For purposes of identifying risk of investing public funds, the balances and related restrictions are summarized below and on the following page: A. Deposits In accordance with applicable Minnesota Statutes, the City maintains deposits at depository banks authorized by the City Council. Minnesota Statutes requires all deposits with financial institutions be protected by federal deposit insurance, corporate surety bonds or collateral. The market value of collateral pledged must equal 110% of the deposits not covered by FDIC insurance or corporate surety bonds. CITY OF OTSEGO NOTES TO THE FINANCIAL STATEMENTS December 31, 2014 NOTE 3 — DEPOSITS AND INVESTMENTS A. Deposits (Continued) Custodial Credit Risk — Deposits: This is the risk that in the event of a bank failure, the City's deposits may not be returned to it. As of December 31, 2014, 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 and in the City's name. As of December 31, 2014, the City had deposited as follows: Deposits B. Investments As of December 31, 2014, the City had the following investments: Moody's or S & P Fair Investment Type Rating Value $ 9,766,235 Investment Maturities Less than Greater than One Year 1-5 Years 6-10 Years 10 Years Negotiable Certificates of Deposit N/A $ 5,606,151 $ 1,195,686 $ 3,555,438 $ 609,579 $ 245,448 Municipal Bonds A+ to AAA 2,175,635 1,119,040 841,389 215,206 - U.S. Government Agency Securites A + to AAA 2,014,126 - 908,557 909,923 195,646 Brokered Money Market Accounts N/A 6,074,430 6,074,430 - - - Total $ 15,870,342 $ 8,389,156 $ 5,305,384 $ 1,734,708 $ 441,094 Custodial Credit Risk — Investments: Some City securities held by the City's broker-dealers are not registered to the City, but are held in an insured account. The account is insured up to $ 500,000 SIPC insurance and the broker-dealers provide an additional aggregate insurance policy for all of it customers as a group not individually. It is unknown what portion of this policy is applicable to the City's portfolio. The following is a summary of total deposits and investments as of December 31, 2014: Petty Cash Deposits (Note 3.A.) Investments Total $ 340 9,766,235 15,870,342 $ 25,636,917 61 CITY OF OTSEGO NOTES TO THE FINANCIAL STATEMENTS December 31, 2014 NOTE 3 — DEPOSITS AND INVESTMENTS B. Investments (Continued) Deposits and investments are presented in the December 31, 2014 basic financial statements as follows: Statement of Net Positon: Cash and Investments $ 24,839,050 Statement of Fiduciary Net Position: Cash and Investments 797,867 Total Deposits and Investments $ 25,636,917 NOTE 4 — INTERFUND ACTIVITY A. Due to/from Other Funds At December 31, 2014, due from/to other funds for the City were as follows: Due from Due to Fund Type and Fund Other Funds Other Funds Nonmajor Governmental Funds $ 400,744 $ 10,584 Debt Service Fund - 390,160 Total $ 400,744 $ 400,744 The purpose of these balances is to provide cash flows. B. Transfers Transfers during the year ended December 31, 2014 were as follows: Transfers Out Transfers In Nonmajor Governmental Funds Nonmajor Governmental Funds Capital Projects Funding Public Utilities General Fund Operations Funding General Fund Nonmajor Governmental Funds Capital Environment and Park Development Community Development & Building Safety General Fund Close Fund Total 122,632 86,411 303,236 $ 612,433 62 CITY OF OTSEGO NOTES TO THE FINANCIAL STATEMENTS December 31, 2014 NOTE 5 — CAPITAL ASSETS Capital asset activity for the year ended December 31, 2014 was as follows: Beginning Ending Governmental Activities: Capital Assets not being Depreciated: Land $ 1,959,823 $ 480,573 $ - $ 2,440,396 Construction in Progress 664,022 321,332 722,764 262,590 Total Capital Assets not being Depreciated 2,623,845 801,905 722,764 2,702,986 Capital Assets being Depreciated: Buildings 5,961,961 509,249 - 6,471,210 Machinery and Equipment 3,702,079 64,255 - 3,766,334 Infrastructure 21,724,851 457,541 - 22,182,392 Total Capital Assets not being Depreciated 31,388,891 1,031,045 - 32,419,936 Less Accumulated Depreciation for: Buildings 1,198,559 142,915 - 1,341,474 Machinery and Equipment 1,972,243 262,442 - 2,234,685 Infrastructure 4,392,910 753,732 - 5,146,642 Total Accumulated Depreciation 7,563,712 1,159,089 - 8,722,801 Total Capital Assets being Depreciated, Net 23,825,179 (128,044) - 23,697,135 Governmental Activities Capital Assets, Net $ 26,449,024 $ 673,861 $ 722,764 $ 26,400,121 63 CITY OF OTSEGO NOTES TO THE FINANCIAL STATEMENTS December 31, 2014 NOTE 5 — CAPITAL ASSETS Governmental Activities: General Government Public Safety Public Works Park and Recreation Total Depreciation Expense - Governmental Activities Business -Type Activities: Water Sanitary Sewer Storm Water Total Depreciation Expense - Business -Type Activities $ 14,219 3,985 874,550 266,335 $ 1,159,089 $ 472,761 823,122 17,783 $ 1,313,666 Beginning Ending Balance Increases Decreases Balance Business -Type Activities: Capital Assets not being Depreciated: Land $ 550,080 $ - $ - $ 550,080 Construction in Progress 112,625 14,475 127,100 - Total Capital Assets not being Depreciated 662,705 14,475 127,100 550,080 Capital Assets being Depreciated: Machinery and Equipment 304,367 44,648 - 349,015 Infrastructure 50,975,683 227,549 - 51,203,232 Total Capital Assets being Depreciated 51,280,050 272,197 - 51,552,247 Less Accumulated Depreciation for: Machinery and Equipment 145,375 22,040 - 167,415 Infrastructure 9,417,398 1,291,626 - 10,709,024 Total Accumulated Depreciation 9,562,773 1,313,666 - 10,876,439 Total Capital Assets being depreciated, net 41,717,277 (1,041,469) - 40,675,808 Business -Type Activities Capital Assets, Net $ 42,379,982 $ (1,026,994) $ 127,100 $ 41,225,888 Depreciation expense was charged to functions/programs of the City as follows: Governmental Activities: General Government Public Safety Public Works Park and Recreation Total Depreciation Expense - Governmental Activities Business -Type Activities: Water Sanitary Sewer Storm Water Total Depreciation Expense - Business -Type Activities $ 14,219 3,985 874,550 266,335 $ 1,159,089 $ 472,761 823,122 17,783 $ 1,313,666 CITY OF OTSEGO NOTES TO THE FINANCIAL STATEMENTS December 31, 2014 NOTE 6 — LONG-TERM DEBT A. General Obligation Bonds The City issues general obligation (G.O.) bonds to provide funds for the acquisition and construction of major capital facilities. G.O. bonds have been issued for both governmental and business -type activities. These bonds are reported in the proprietary funds if they are expected to be repaid from proprietary fund revenues. In addition, general obligation bonds have been issued to refund special assessments related bonds. G.O. bonds are direct obligations and pledge the full faith and credit of the City. The following bonds were issued to finance various improvements and will be repaid primarily from special assessments levied on the properties benefiting from the improvements. Some issues, however, are partly financed by ad valorem tax levies. Each year the combined assessment and tax levy equals 105% of the amount required for debt service. The excess of 5% is to cover any delinquencies in tax or assessment payments. B. Components of Long -Term Liabilities Long -Term Liabilities: Governmental Activities: G.O. Bonds, Including Refunding Bonds: G.O. Improvement Bonds, Series 2007B G.O. Improvement Refunding Bonds, Series 2010B G.O. Improvement Refunding Bonds, Series 2010D G.O. Improvement Crossover Refunding Bonds, Series 2011A G.O. Improvement Crossover Refunding Bonds, Series 2012A G.O. Equipment Certificate of 2010A Unamortized Bond Premium Compensated Absences Total Governmental Activities Issue Date Interest Rates Original Issue Final Principal Due Within Maturity Outstanding One Year 11/1/2007 4.00% 680,000 12/1/2016 11/30/2010 2.0-3.0% 3,705,000 12/1/2021 11/30/2010 2.0-3.6% 1,220,000 2/1/2028 12/1/2011 2.0-3.2% 4,640,000 2/1/2028 3/12/2012 2.00% 1,400,000 12/1/2021 1/28/2010 2.0-3.25% 385,000 7/15/2019 Business -Type Activities: G.O. Bonds, Including Refunding Bonds: G.O. Water and Sewer Refunding Bonds, Series 2009A 12/1/2009 4.0-4.13% 6,360,000 12/1/2027 G.O. Water and Sewer Refunding Bonds, Series 2010C 11/30/2010 2.0-3.4% 21,300,000 12/1/2026 Unamortized Bond Premium Compensated Absences Total Business -Type Activities Total all Long -Term Liabilities $ 205,000 3,130,000 1,220,000 4,640,000 1,400,000 220,000 69,830 96,526 10,981,356 6,360,000 21,300,000 946,583 8,638 $ 105,000 420,000 360,000 200,000 45,000 64,351 1,194,351 5,758 28,615,221 5,758 $ 39.596.577 $ 1.200,109 Long-term bonded indebtedness listed above were issued to finance acquisition and construction of capital facilities or to refinance (refund) previous bond issues. 65 CITY OF OTSEGO NOTES TO THE FINANCIAL STATEMENTS December 31, 2014 NOTE 6 — LONG-TERM DEBT C. Changes in Long -Term Liabilities Long-term liability activity for the year ended December 31, 2014 was as follows: Governmental Activities: Bonds Payable: G.O. Improvement Bonds G.O. Equipment Certificates Bonds Unamortized Bond Premium Compensated Absences Total Governmental Activities Long -Term Liabilities Business -Type Activities: Bonds Payable: G.O. Revenue Bonds Unamortized Bond Premium Compensated Absences Total Business -Type Activities Long -Term Liabilities Total Long -Term Liabilities Beginning Ending Balance Additions Reductions Balance $ 17,515,000 $ - $ 6,920,000 $ 10,595,000 265,000 - 45,000 220,000 86,634 - 16,804 69,830 81,226 102,840 87,540 96,526 17,947,860 102,840 7,069,344 10,981,356 27,660,000 - - 27,660,000 1,025,465 - 78,882 946,583 - 14,009 5,371 8,638 28,685,465 14,009 84,253 28,615,221 $ 46,633,325 $ 116,849 $ 7,153,597 $ 39,596,577 The General Fund typically liquidates the liability related to governmental activities compensated absences. On December 21, 2011, the City issued G.O. Capital Improvement Crossover Refunding Bonds, Series 2011A in the amount of $ 4,640,000 to refund the G.O. Improvement Bonds, Series 2006B. The Series 2006B Bonds were refunded on the crossover date of February 1, 2014. As a result of the refunding issue, the City's debt service requirements will decrease $ 211,065, which results in an economic gain (the present value of the difference between the old and the new debt service) of $ 222,184. On March 1, 2012, the City issued G.O. Capital Improvement Crossover Refunding Bonds, Series 2012A in the amount of $ 1,400,000 to refund the G.O. Improvements Bonds, Series 2005B. The Series 2005B Bonds were refunded on the crossover date of December 1, 2014. As a result of the refunding issue, the City's debt service requirements will decrease $ 141,700, which will result in an economic gain (the present value of the difference between the old and the new debt service) of $ 141,700. CITY OF OTSEGO NOTES TO THE FINANCIAL STATEMENTS December 31, 2014 NOTE 6 — LONG-TERM DEBT D. Minimum Debt Payments Minimum annual principal and interest payments required to retire long-term debt are as follows: NOTE 7 — CONDUIT DEBT OBLIGATIONS Conduit debt obligations are certain limited -obligation revenue bonds or similar debt 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 312014, the City's conduit debt consisted of the following: Evans Park Inc: Revenue Bonds, Series 2013 $ 10,000,000 Kaleidoscope Charter School Revenue Bonds, Series 2014A Revenue Bonds, Series 2014B 15,615,000 385,000 67 Governmental Activities Year Ended G.O. Improvement Bonds G.O. Equipment Certificates December 31, Principal Interest Total Principal Interest Total 2015 $ 1,085,000 $ 252,798 $ 1,337,798 $ 45,000 $ 6,700 $ 51,700 2016 1,165,000 228,148 1,393,148 45,000 5,350 50,350 2017 1,080,000 202,748 1,282,748 45,000 4,000 49,000 2018 1,115,000 180,225 1,295,225 45,000 2,650 47,650 2019 1,145,000 155,655 1,300,655 40,000 1,300 40,000 2020-2024 3,690,000 403,190 4,093,190 - - - 2025-2028 1,315,000 86,518 1,401,518 - - - Total $10,595,000 $ 1,509,282 $12,104,282 $ 220,000 $ 20,000 $ 240,000 Business -Type Activities Year Ended G.O. Revenue Bonds December 31, Principal Interest Total 2015 $ - $ 1,006,110 $ 1,006,110 2016 2,000,000 1,006,110 3,006,110 2017 2,035,000 966,110 3,001,110 2018 2,130,000 884,710 3,014,710 2019 2,220,000 799,510 3,019,510 2020-2024 12,250,000 2,672,825 14,922,825 2025-2027 7,025,000 567,888 7,592,888 Total $27,660,000 $ 7,903,263 $35,563,263 NOTE 7 — CONDUIT DEBT OBLIGATIONS Conduit debt obligations are certain limited -obligation revenue bonds or similar debt 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 312014, the City's conduit debt consisted of the following: Evans Park Inc: Revenue Bonds, Series 2013 $ 10,000,000 Kaleidoscope Charter School Revenue Bonds, Series 2014A Revenue Bonds, Series 2014B 15,615,000 385,000 67 CITY OF OTSEGO NOTES TO THE FINANCIAL STATEMENTS December 31, 2014 NOTE 8 — FUND BALANCES/NET POSITION A. Fund Balance Classifications Fund balances are classified as shown below to reflect the limitations and restrictions of the respective funds. B. Net Position Restricted net position is comprised of the total restricted fund balance in the governmental funds plus the effects of the conversion to the government -wide net position. NOTE 9 — RISK MANAGEMENT The City purchases commercial insurance coverage through the League of Minnesota Cities Insurance Trust (LMCIT) with other cities in the state which is 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 commercial companies for excess claims. The City is covered through the pool for any claims incurred but unreported, however, retains risk for the deductible portion of its insurance policies. The amount of these deductibles is considered immaterial to the financial statements. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three years. Nonmaj or General Debt Governmental Fund Service Funds Total Nonspendable: Prepaid Items $ 80,423 $ - $ - $ 80,423 Restricted: Debt Service - 2,576,729 - 2,576,729 Committed: Street Lighting - - 101,232 101,232 Development Loans - - 285,801 285,801 Total - - 387,033 387,033 Assigned: Insurance Funding 101,833 - - 101,833 Capital Improvements - - 4,489,509 4,489,509 Park Development - - 728,511 728,511 Total 101,833 - 5,218,020 5,319,853 Unassigned 3,211,382 - (10,584) 3,200,798 Total Fund Balance $ 3,393,638 $ 2,576,729 $ 5,594,469 $ 11,564,836 B. Net Position Restricted net position is comprised of the total restricted fund balance in the governmental funds plus the effects of the conversion to the government -wide net position. NOTE 9 — RISK MANAGEMENT The City purchases commercial insurance coverage through the League of Minnesota Cities Insurance Trust (LMCIT) with other cities in the state which is 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 commercial companies for excess claims. The City is covered through the pool for any claims incurred but unreported, however, retains risk for the deductible portion of its insurance policies. The amount of these deductibles is considered immaterial to the financial statements. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three years. CITY OF OTSEGO NOTES TO THE FINANCIAL STATEMENTS December 31, 2014 NOTE 9 — RISK MANAGEMENT The City's workers' compensation insurance policy is retrospectively rated. With this type of policy, final premiums are determined after loss experience is known. The amount of premium adjustment for 2014 was estimated to be immaterial based on workers' compensation rates and salaries for the year. At December 31, 2014, there were no other claims liabilities reported in the fund based on the requirements of GASB Statement No. 10, which requires a liability for claims be reported if information prior to the issuance of the financial statements indicates it is probable a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. NOTE 10 — PENSION PLANS Public Employees' Retirement Association A. Plan Description All full-time and certain part-time employees of the City are covered by defined benefit plans administered by the Public Employees' Retirement Association of Minnesota (PERA). PERA administers the General Employees' Retirement Fund (GERF), which is a cost-sharing, multiple - employer retirement plan. This Plan is established and administered in accordance with Minnesota Statutes Chapters 353 and 356. GERF members belong to either the Coordinated or Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. All new members must participate in the Coordinated Plan. PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by state statute and vest after five years of credited service. The defined retirement benefits are based on a member's highest average salary for any five successive years of allowable service, age and years of credit at termination of service. Two methods are used to compute benefits for PERA's Coordinated and Basic Plan members. The retiring member receives the higher of a step -rate benefit accrual formula (Method 1) or a level accrual formula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2% of average salary for each of the first 10 years of service and 2.7% for each remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2% of average salary for each of the first 10 years and 1.7% for each remaining year. Under Method 2, the annuity accrual rate is 2.7% of average salary for Basic Plan members and 1.7% for Coordinated Plan members for each year of service. For all GERF members hired prior to July 1, 1989, whose annuity is calculated using Method 1, a full annuity is available when age plus years of service equal 90. Normal retirement age is 65 for Basic and Coordinated Plan members hired prior to July 1, 1989. Normal retirement age is the age for unreduced Social Security benefits capped at 66 for Coordinated Plan members hired on or after July 1, 1989. A reduced retirement annuity is also available to eligible members seeking early retirement. CITY OF OTSEGO NOTES TO THE FINANCIAL STATEMENTS December 31, 2014 NOTE 10 — PENSION PLANS Public Employees' Retirement Association (Continued) A. Plan Description (Continued) There are different types of annuities available to members upon retirement. A single -life annuity is a lifetime annuity that ceases upon the death of the retiree — no survivor annuity is payable. There are also various types of joint and survivor annuity options available which will be payable over joint lives. Members may also leave their contributions in the Fund upon termination of public service in order to qualify for a deferred annuity at retirement age. Refunds of contributions are available at any time to members who leave public service, but before retirement benefits begin. The benefit provisions stated in the previous paragraphs of this section are current provisions and apply to active Plan participants. Vested, terminated employees who are entitled to benefits but are not yet receiving them are bound by the provisions in effect at the time they last terminated their public service. PERA issues a publicly available financial report that includes financial statements and required supplementary information for GERF. That report may be obtained on the Internet at www.mnpera.org, by writing to PERA at 60 Empire Drive, #200, St. Paul, Minnesota 55103-2088 or by calling (651) 296-7460 or (800) 652-9026. B. Funding Policy Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. These Statutes are established and amended by the State Legislature. The City makes annual contributions to the pension plans equal to the amount required by state statutes. GERF Basic Plan members and Coordinated Plan members were required to contribute 9.1% and 6.25%, respectively, of their annual covered salary in 2014. In 2014, the City was required to contribute the following percentages of annual covered payroll: 11.78% for Basic Plan members and 7.25% for Coordinated Plan members. The City's contributions to the Public Employees' Retirement Fund for the years ending December 31, 2014, 2013 and 2012 were $ 74,357, $ 66,268 and $ 58,792, respectively. The City's contributions were equal to the contractually required contributions for each year as set by state statue. NOTE 11— PRIOR PERIOD ADJUSTMENT For the year ended December 31, 2014, prior period adjustments were required to adjust beginning net position in the enterprise funds to accurately recognize revenue for special assessments and utility billing in 2013. This affected the beginning net position in the Water Fund, Sewer Fund, and Storm Water Fund in the Proprietary Funds and in Business -Type Activities on the Statement of Activities in the net amount of $ 33,288. 70 CITY OF OTSEGO NOTES TO THE FINANCIAL STATEMENTS December 31, 2014 NOTE 12 — NEW STANDARDS ISSUED BUT NOT YET IMPLEMENTED GASB Statement No. 68 replaces the requirements of Statement No. 27, Accounting for Pensions by State and Local Governmental Employers and Statement No. 50, Pension Disclosures, as they relate to governments that provide pensions through pension plans administered as trusts or similar arrangements that meet certain criteria. Statement No. 68 requires governments providing defined benefit pensions to recognize their long-term obligation for pension benefits as a liability for the first time, and to more comprehensively and comparably measure the annual costs of pension benefits. GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date, an amendment of GASB Statement No. 68, requires that, at transition, a government recognize a beginning deferred outflow of resources for its pension contributions, if any, made subsequent to the measurement date of the beginning new pension liability. The provisions of this Statement should be applied simultaneously with the provisions of Statement 68 which is effective for periods beginning after June 15, 2014. 71 (THIS PAGE LEFT BLANK INTENTIONALLY) 72 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF OTSEGO OTSEGO, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2014 73 CITY OF OTSEGO SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL FUND For the Year Ended December 31, 2014 (With Comparative Actual Amounts for the Year Ended December 31, 2013) REVENUES Taxes Property taxes Franchise taxes Total Taxes Special Assessments Licenses and Permits Building and other permits Business and other licenses Total Licenses and Permits Intergovernmental Revenue Local Government Aid Homestead Credit MSA Maintenance Police Aid Other Grants and Aids Total Intergovernmental Revenue Charges for Services General Government Public Works Parks and Recreation Total Charges for Services Fines and Forfeitures Miscellaneous Revenues: Investment Income Contributions and Donations Other Total Miscellaneous Revenues Total Revenues EXPENDITURES General Government Mayor and Council Personal Services Other Services and Charges Total Administration Personal Services Supplies Other Services and Charges Total Election Judges Personal Services Supplies Other Services and Charges Total Assessor Other Services and Charges 2014 Budgeted Amounts Original Final Actual 2013 Variance with Final Budget - Over (Under) Actual $ 3,273,715 $ 3,273,715 $ 3,321,316 $ 47,601 $ 3,366,010 105,000 105,000 120,964 15,964 83,681 3,378,715 3,378,715 3,442,280 63,565 3,449,691 - - 7,136 7,136 5,632 517,200 517,200 1,176,248 659,048 24,055 40,100 40,100 62,575 22,475 12,400 557,300 557,300 1,238,823 681,523 36,455 112,711 112,711 112,712 1 - - - 6,825 6,825 - 155,000 155,000 163,006 8,006 156,087 47,000 47,000 52,669 5,669 50,589 1,900 1,900 2,567 667 10,954 316,611 316,611 337,779 21,168 217,630 13,150 13,150 148,058 134,908 9,057 - - 504 504 664 52,500 52,500 43,606 (8,894) 28,600 65,650 65,650 192,168 126,518 38,321 4,000 4,000 100,000 100,000 37,427 (62,573) (5,403) - - 4,500 4,500 1,000 - 43,179 43,179 36,482 100,000 100,000 85,106 (14,894) 32,079 4,418,276 4,418,276 5,307,292 889,016 3,779,808 32,397 32,397 36,628 4,231 32,257 42,150 42,150 16,225 (25,925) 11,958 74,547 74,547 52,853 (21,694) 44,215 277,522 278,380 261,323 (17,057) 270,690 11,050 11,050 12,893 1,843 12,705 83,580 83,580 111,908 28,328 91,069 372,152 373,010 386,124 13,114 374,464 10,500 10,400 11,756 1,356 - 13,500 13,500 11,946 (1,554) 1,442 2,200 2,200 1,970 (230) 43 26,200 26,100 25,672 (428) 1,485 70,300 70,300 72,517 2,217 67,463 74 EXPENDITURES (CONTINUED) General Government (Continued) Finance Personal Services Supplies Other Services and Charges Total Information Technology Supplies Other Services and Charges Total Legal Other Services and Charges Planning Personal Services Other Services and Charges Total City Hall/Public Works Building Personal Services Supplies Other Services and Charges Total Old Town Hall Other Services and Charges Total General Government Public Safety Police Other Services and Charges Police Commission Personal Services Supplies Total Fire Protection Other Services and Charges Building Inspections Personal Services Supplies Other Services and Charges Total Emergency Management Supplies Other Services and Charges Total Animal Control Other Services and Charges Total Public Safety CITY OF OTSEGO SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL FUND For the Year Ended December 31, 2014 (With Comparative Actual Amounts for the Year Ended December 31, 2013) 2014 2013 Variance with Budgeted Amounts Final Budget - Original Final Actual Over (Under) Actual $ 270,822 $ 270,822 $ 272,380 $ 1,558 $ 190,930 3,280 3,280 961 (2,319) 5,205 47,085 47,085 44,872 (2,213) 46,246 321,187 321,187 318,213 (2,974) 242,381 4,628 5,628 3,094 (2,534) 2,764 42,000 42,000 37,832 (4,168) 19,996 46,628 47,628 40,926 (6,702) 22,760 75,000 75,000 101,013 26,013 78,996 1,700 1,700 710 (990) 1,010 65,000 65,000 88,375 23,375 69,006 66,700 66,700 89,085 22,385 70,016 - - - - 10,249 11,380 11,380 7,720 (3,660) 4,780 67,875 67,875 74,547 6,672 54,963 79,255 79,255 82,267 3,012 69,992 2,000 2,000 1,027 (973) 1,279 1,133,969 1,135,727 1,169,697 33,970 973,051 912,500 912,500 912,365 (135) 882,601 750 750 510 (240) 640 600 600 95 (505) 759 1,350 1,350 605 (745) 1,399 375,850 375,850 377,926 2,076 365,873 64,037 64,037 68,293 4,256 - 6,700 6,700 1,269 (5,431) 144,955 144,955 119,631 (25,324) 215,692 215,692 189,193 (26,499) - 1,000 1,000 - (1,000) 895 7,550 7,550 309 (7,241) 2,055 8,550 8,550 309 (8,241) 2,950 11,000 11,000 14,610 3,610 11,058 1,524,942 1,524,942 1,495,008 (29,934) 1,263,881 (Continued) 75 CITY OF OTSEGO SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL FUND For the Year Ended December 31, 2014 (With Comparative Actual Amounts for the Year Ended December 31, 2013) EXPENDITURES (CONTINUED) Public Works Streets and Highways Personal Services Supplies Other Services and Charges Total Fleet Management Personal Services Supplies Other Services and Charges Total Engineer Other Services and Charges Street Lighting Other Services and Charges Total Public Works Parks and Recreation Park Maintenance Personal Services Supplies Other Services and Charges Total Recreation Personal Services Supplies Other Services and Charges Total Prairie Center Personal Services Supplies Other Services and Charges Total Heritage Preservation Personal Services Supplies Other Services and Charges Total Total Parks and Recreation Economic Development Development Activities Supplies Other Services and Charges Total Economic Development Total Current Expenditures 2014 Budgeted Amounts Original Final Actual (Continued) 2013 Variance with Final Budget - Over (Under) Actual $ 433,405 $ 433,405 $ 423,479 $ (9,926) $ 517,008 142,265 142,265 126,122 (16,143) 142,097 53,440 54,940 69,954 15,014 32,105 629,110 630,610 619,555 (11,055) 691,210 79,100 79,100 71,259 (7,841) 35,246 106,830 106,830 110,070 3,240 106,398 5,700 5,700 8,784 3,084 6,486 191,630 191,630 190,113 (1,517) 148,130 85,000 85,000 92,876 7,876 160,942 110,000 110,000 111,465 1,465 109,667 1,015,740 1,017,240 1,014,009 (3,231) 1,109,949 145,500 145,500 137,752 (7,748) 61,630 44,605 44,605 43,533 (1,072) 42,098 104,775 104,775 111,927 7,152 66,911 294,880 294,880 293,212 (1,668) 170,639 65,550 65,550 78,460 12,910 68,077 4,875 4,875 3,674 (1,201) 1,245 82,430 82,430 56,886 (25,544) 43,007 152,855 152,855 139,020 (13,835) 112,329 - - - - 2,650 7,097 7,097 6,634 (463) 2,694 26,550 26,550 20,334 (6,216) 14,876 33,647 33,647 26,968 (6,679) 20,220 450 450 590 140 670 470 470 145 (325) 466 300 300 1,305 1,005 - 1,220 1,220 2,040 820 1,136 482,602 482,602 461,240 (21,362) 304,324 140 140 - (140) - 11,650 13,650 4,095 (9,555) 3,286 11,790 13,790 4,095 (9,695) 3,286 4,169,043 4,174,301 4,144,049 (30,252) 3,654,491 76 CITY OF OTSEGO SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL FUND For the Year Ended December 31, 2014 (With Comparative Actual Amounts for the Year Ended December 31, 2013) EXPENDITURES (CONTINUED) Capital Outlay General Government Public Safety Public Works Total Capital Outlay Total Expenditures Excess of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Insurance Recovery Transfers In Transfers Out Total Other Financing Sources (Uses) Net Change in Fund Balances FUND BALANCES Beginning of Year End of Year 2014 Budgeted Amounts Original Final Actual 2013 Variance with Final Budget - Over (Under) Actual $ 25,550 $ 25,550 $ 19,105 $ (6,445) $ 16,000 16,000 1,104 (14,896) - - 928 928 41,550 41,550 21,137 (20,413) 4,210,593 4,215,851 4,165,186 (50,665) 3,654,491 207,683 202,425 1,142,106 939,681 125,317 - - - - 22,167 143,736 143,736 425,868 282,132 - (65,911) (65,911) (86,411) (20,500) - 77,825 77,825 339,457 261,632 22,167 $ 285,508 $ 280,250 1,481,563 $ 1,201,313 147,484 1,912,075 1,764,591 $ 3,393,638 $ 1,912,075 77 (THIS PAGE LEFT BLANK INTENTIONALLY) NONMAJOR GOVERNMENTAL FUNDS CITY OF OTSEGO OTSEGO, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2014 79 CITY OF OTSEGO COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS December 31, 2014 ASSETS Cash and Investments Taxes Receivable - Delinquent Special Assessments Receivable: Delinquent Deferred Accounts Receivable Due from Other Funds Due from Other Governments Total Assets LIABILITIES Accounts Payable Due to Other Funds Total Liabilities DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Property Taxes Unavailable Revenue - Special Assessments Unavailable Revenue - Intergovernmental Total Deferred Inflows of Resources FUND BALANCES Committed Assigned Unassigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources and Fund Balances :1 Special Revenue Capital Projects Total $ 381,504 $ 5,146,129 $ 5,527,633 307 10,403 10,710 - 6,102 6,102 - 497,045 497,045 5,343 - 5,343 - 400,744 400,744 186 113,202 113,388 $ 387,340 $ 6,173,625 $ 6,560,965 $ - $ 337,143 $ 337,143 - 10,584 10,584 - 347,727 347,727 307 10,403 10,710 - 503,147 503,147 104,912 104,912 307 618,462 618,769 387,033 - 387,033 - 5,218,020 5,218,020 - (10,584) (10,584) 387,033 5,207,436 5,594,469 $ 387,340 $ 6,173,625 $ 6,560,965 :1 CITY OF OTSEGO COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS For the Year Ended December 31, 2014 REVENUES Taxes Special Assessments Intergovernmental Charges for Services Miscellaneous: Investment Income Contributions and Donations Other Total Revenues EXPENDITURES Current Public Works Parks and Recreation Economic Development Capital Outlay General Government Public Works Parks and Recreation Total Expenditures Excess of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources (Uses) Net Change in Fund Balances FUND BALANCES Beginning of Year End of Year Special Revenue Capital Projects $ 22,911 $ 700,997 117,476 4,953 234,841 696,773 832,809 66,851 2,500 107 Total $ 723,908 234,841 696,773 950,285 71,804 2,500 107 145,340 2,534,878 2,680,218 9,684 - 9,684 - 3,600 3,600 40,929 - 40,929 - 31,736 31,736 - 1,453,152 1,453,152 - 182,822 182,822 50,613 1,671,310 1,721,923 94,727 863,568 958,295 - 186,565 186,565 - (100,154) (100,154) - 86,411 86,411 94,727 949,979 1,044,706 292,306 4,257,457 4,549,763 $ 387,033 $ 5,207,436 $ 5,594,469 81 CITY OF OTSEGO NONMAJOR SPECIAL REVENUE FUNDS Special revenue funds are used to account for revenue derived from specific taxes or other earmarked revenue sources. They are usually required by Minnesota statute or local ordinances to finance particular functions or other activities of government. Street Lighting — used to account for the special utility billing for street lighting operations, maintenance and capital replacement in designated commercial and industrial development areas. Development Loan — used to account for economic development revolving loans to be provided to business entities in the City through the City's Economic Development Authority. CITY OF OTSEGO COMBINING BALANCE SHEET - NONMAJOR SPECIAL REVENUE FUNDS December 31, 2014 Special Revenue FUND BALANCES Committed Total Deferred Inflows of Resources and Fund Balances 101,232 285,801 387,033 $ 101,232 $ 286,108 $ 387,340 83 Street Lighting Development (225) Loan (255) Total ASSETS Cash and Investments $ 95,889 $ 285,615 $ 381,504 Taxes Receivable - Delinquent - 307 307 Accounts Receivable 5,343 - 5,343 Due from Other Governments - 186 186 Total Assets $ 101,232 $ 286,108 $ 387,340 DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Property Taxes $ - $ 307 $ 307 FUND BALANCES Committed Total Deferred Inflows of Resources and Fund Balances 101,232 285,801 387,033 $ 101,232 $ 286,108 $ 387,340 83 CITY OF OTSEGO COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NONMAJOR SPECIAL REVENUE FUNDS For the Year Ended December 31, 2014 REVENUES Taxes Charges for Services Miscellaneous: Investment Income Total Revenues EXPENDITURES Current Public Works Economic Development Total Expenditures Excess of Revenues Over Expenditures FUND BALANCES Beginning of Year End of Year Special Revenue Street Lighting Development (225) Loan (255) Total $ - $ 22,911 $ 22,911 34,476 83,000 117,476 1,223 3,730 4,953 35,699 109,641 145,340 9,684 - 9,684 - 40,929 40,929 9,684 40,929 50,613 26,015 68,712 94,727 75,217 217,089 292,306 $ 101,232 $ 285,801 $ 387,033 CITY OF OTSEGO NONMAJOR CAPITAL PROJECTS FUNDS Capital projects funds are used to account for the acquisition and construction of major capital facilities other than those financed by enterprise funds. Collector Streets — used to finance the cost of future collector street projects. Watershed Districts — used to finance the cost of storm water improvements financed with storm water impact fees paid at the time of development. 1998 Odean Proiect — used to account for the collection of special assessments against properties benefitting from the improvements to Odean Avenue. Revolving Capital Improvements — used to account for a variety of internally financed projects including smaller improvement projects, major maintenance projects and other capital project activities that require financing. Slab Town Improvements — used to account for the collection of special assessments against properties benefitting from the improvements to the area. Otsego Municipal Building — used for city hall/public works building improvements remaining to be completed in or around the building. Fire Capital Reserve — used to finance the cost of future fire protection buildings and capital equipment needs. Street Pavement Management — used to account for the annual and future costs of street maintenance projects including sealcoating, crack filling, and striping. Trail Pavement Management — used to account for the annual and future costs of park trail maintenance projects including sealcoating and crack filling. Park Development — used to account for the construction of new park facilities and acquisition of new park and playground equipment within the City. Park Equipment — used to finance the cost of major maintenance and replacement of park equipment in City parks. Capital Equipment — used to account for the replacement or acquisition of additional parks and public works maintenance equipment. Community Facilities — used to account for the improvement, construction or acquisition of major facilities for the City. Street Reconstruction — used to finance the City's share of major street (other than collector streets) maintenance or improvement projects. Wellhead Protection Fund — tracks the costs of the application progress for a federal grant to protect water wells in the City from unauthorized access. CITY OF OTSEGO COMBINING BALANCE SHEET - NONMAJOR CAPITAL PROJECTS FUNDS December 31, 2014 ASSETS Cash and Investments Taxes Receivable - Delinquent Special Assessments Receivable: Delinquent Deferred Due from Other Funds Due from Other Governments Total Assets LIABILITIES Accounts Payable Due to Other Funds Total Liabilities DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Property Taxes Unavailable Revenue - Special Assessments Unavailable Revenue - Intergovernmental Total Deferred Inflows of Resources FUND BALANCES Assigned Unassigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources and Fund Balances Capital Projects Watershed Districts (405, Collector 406, 407, 408, 1998 Odean Streets (403) 409, 410) Project (413) $ 206,346 $ 356,939 $ - - - 17,500 104,912 - - $ 311,258 $ 356,939 $ 17,500 $ 78,427- - - 5,425 78,427 - 5,425 - - 17,500 104,912 - - 104,912 - 17,500 127,919 356,939 - - - (5,425) 127,919 356,939 (5,425) $ 311,258 $ 356,939 $ 17,500 86 Capital Projects Revolving 7,417 37,325 1,738,093 299,503 Capital Slab Town Otsego Street Pavement Improvements Improvements Municipal Fire Capital Management (414) (431) Building (441) Reserve (214) (201) $ 333,757 $ 7,417 $ 37,325 $ 1,734,625 $ 548,107 - - - 2,094 4,579 2,439 - - 3,663 - 423,146 17,054 - - - 145 - - 3,468 2,676 $ 759,487 $ 24,471 $ 37,325 $ 1,743,850 $ 555,362 $ 7,436 $ - $ - $ - $ 251,280 7,436 - - - 251,280 - - - 2,094 4,579 425,585 17,054 - 31663 - 425,585 17,054 - 5,757 4,579 326,466 7,417 37,325 1,738,093 299,503 7,417 37,325 299,503 326,466 1,738,093 $ 759,487 $ 24,471 $ 37,325 $ 1,743,850 $ 555,362 (Continued) 87 CITY OF OTSEGO (Continued) COMBINING BALANCE SHEET - NONMAJOR CAPITAL PROJECTS FUNDS December 31, 2014 Capital Projects Trail Pavement Park Management Development Park Equipment (202) (203) (205) ASSETS Cash and Investments $ 2,782 $ 728,511 $ 126,714 Taxes Receivable - Delinquent 366 - 644 Special Assessments Receivable: Delinquent - - - Deferred - - - Due from Other Funds - - - Due from Other Governments 212 - 406 Total Assets $ 3,360 $ 728,511 $ 127,764 LIABILITIES Accounts Payable $ - $ - $ - Due to Other Funds - - - Total Liabilities - - - DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Property Taxes 366 - 644 Unavailable Revenue - Special Assessments - - - Unavailable Revenue - Intergovernmental - - - Total Deferred Inflows of Resources 366 - 644 FUND BALANCES Assigned 2,994 728,511 127,120 Unassigned - - - Total Fund Balances 2,994 728,511 127,120 Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 3,360 $ 728,511 $ 127,764 Capital Projects Capital Street Wellhead Equipment Community Reconstruction Protection (206) Facilities (208) (209) Project (499) Total $ 148,771 $ 471,628 $ 443,207 $ - $ 5,146,129 2,720 - - - 10,403 - - - - 6,102 - - 39,345 - 497,045 400,744 - - - 400,744 1,383 - - - 113,202 $ 553,618 $ 471,628 $ 482,552 $ - $ 6,173,625 $ - $ - $ - $ - $ 337,143 - - - 5,159 10,584 - - - 5,159 347,727 2,720 - - - 10,403 - - 39,345 - 503,147 - - - - 104,912 2,720 - 39,345 - 618,462 550,898 471,628 443,207 - 5,218,020 - - - (5,159) (10,584) 550,898 471,628 443,207 (5,159) 5,207,436 $ 553,618 $ 471,628 $ 482,552 $ - $ 6,173,625 89 CITY OF OTSEGO COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NONMAJOR CAPITAL PROJECTS FUNDS For the Year Ended December 31, 2014 REVENUES Taxes Special Assessments Intergovernmental Charges for Services Miscellaneous: Investment Income Contributions and Donations Other Total Revenues EXPENDITURES Current Parks and Recreation Capital Outlay General Government Public Works Parks and Recreation Total Expenditures Excess of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources (Uses) Net Change in Fund Balances FUND BALANCES Beginning of Year End of Year Capital Projects 527,551 668,580 668,580 (141,029) 195,000 (80) 17 - 17 - 194,983 (80) (39,254) (60,900) - (39,254) (60,900) - (180,283) 134,083 (80) 308,202 222,856 (5,345) $ 127,919 $ 356,939 $ (5,425) Watershed Districts (405, Collector Streets 406, 407, 408, 1998 Odean (403) 409, 410) Project (413) 521,362 - - - 191,258 - 6,189 3,742 (80) 527,551 668,580 668,580 (141,029) 195,000 (80) 17 - 17 - 194,983 (80) (39,254) (60,900) - (39,254) (60,900) - (180,283) 134,083 (80) 308,202 222,856 (5,345) $ 127,919 $ 356,939 $ (5,425) Capital Projects Revolving Capital Slab Town Otsego Street Pavement Improvements Improvements Municipal Fire Capital Management (414) (431) Building (441) Reserve (214) (201) $ - $ - $ - $ 144,554 $ 319,038 210,600 3,076 - 3,621 - - - - - 165,411 6,308 65 550 24,060 5,117 216,908 29,369 251,034 121,795 402,198 (185,290) 12,500 12,500 3,141 550 172,235 489,566 - - - 476,683 - - - 476,683 3,141 550 172,235 12,883 (172,790) 3,141 550 172,235 12,883 499,256 4,276 36,775 1,565,858 286,620 $ 326,466 $ 7,417 $ 37,325 $ 1,738,093 $ 299,503 (Continued) 91 CITY OF OTSEGO (Continued) COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NONMAJOR CAPITAL PROJECTS FUNDS For the Year Ended December 31, 2014 REVENUES Taxes Special Assessments Intergovernmental Charges for Services Miscellaneous: Investment Income Contributions and Donations Other Total Revenues EXPENDITURES Current Parks and Recreation Capital Outlay General Government Public Works Parks and Recreation Total Expenditures Excess of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources (Uses) Net Change in Fund Balances FUND BALANCES Beginning of Year End of Year Capital Projects Trail Pavement Park Management Development Park Equipment (202) (203) (205) $ 24,973 $ - $ 52,642 - 338,831 - 168 8,843 1,493 - 2,500 - 107 - - 25,248 350,174 54,135 3,600 25,309 1,517 16,400 25,309 1,517 20,000 (61) 348,657 34,135 - 8,000 - - 8,000 (61) 356,657 34,135 3,055 371,854 92,985 $ 2,994 $ 728,511 $ 127,120 Capital Projects 350,206 473,139 Street Wellhead 4,257,457 Capital Community Reconstruction Protection $ 550,898 Equipment (206) Facilities (208) (209) Project (499) Total $ 159,790 $ - $ - $ - 700,997 - - 17,544 - 234,841 - 10,000 - - 696,773 - - 302,720 - 832,809 5,883 6,942 (2,356) (73) 66,851 - - - - 2,500 - - - - 107 165,673 16,942 317,908 (73) 2,534,878 - - - - 3,600 - 2,367 - - 31,736 29,177 - 26,785 876 1,453,152 1,715 16,086 - - 182,822 30,892 18,453 26,785 876 1,671,310 134,781 (1,511) 291,123 (949) 863,568 65,911 - 100,154 - 186,565 - - - - (100,154) 65,911 - 100,154 - 86,411 200,692 (1,511) 391,277 (949) 949,979 350,206 473,139 51,930 (4,210) 4,257,457 $ 550,898 $ 471,628 $ 443,207 $ (5,159) $ 5,207,436 93 CITY OF OTSEGO COMBINING BALANCE SHEET - DEBT SERVICE FUND December 31, 2014 ASSETS Cash and Investments Taxes Receivable - Delinquent Special Assessments Receivable: Delinquent Deferred Due from Other Governments Total Assets LIABILITIES Accounts Payable Due to Other Funds Total Liabilities DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Property Taxes Unavailable Revenue - Special Assessments Total Deferred Inflows of Resources FUND BALANCES Restricted Total Liabilities, Deferred Inflows of Resources and Fund Balances Debt Service 94 Waterfront East Waterfront West Quaday 2004 and Mississippi (350) Bond (365) Shores (375) $ - $ - $ 683,880 2,913 1,096 - 8,019 - - 5,924 159,019 871,707 2,171 1,548 - $ 19,027 $ 161,663 $ 1,555,587 364 5,663 159,223 - 5,663 159,223 36T- 2,913 1,096 - 13,943 159,019 871,706 16,856 160,115 871,706 (3,492) (157,675) 683,517 $ 19,027 $ 161,663 $ 1,555,587 94 Debt Service G.O. G.O. Capital $ 8 $ 71 Improvement Improvement - 122,684 Bonds of Plan Refunding Quantrelle and G.O. Equipment 200613, 20101), Bonds, 2010B 88th Street Certificate 2011A (380) (385) Bonds (395) 2010A (399) Total $ 1,874,860 $ 401,579 $ - $ - $ 2,960,319 3,361 3,986 - - 11,356 187,055 - - - 195,074 1,364,178 - 315,508 - 2,716,336 1,744 2,392 - - 7,855 $ 3,431,198 $ 407,957 $ 315,508 $ - $ 5,890,940 $ 462 $ 380 $ 8 $ 71 $ 1,285 - - 122,684 102,590 390,160 462 380 122,692 102,661 391,445 3,361 3,986 - - 11,356 1,551,234 - 315,508 - 2,911,410 1,554,595 3,986 315,508 - 2,922,766 1,876,141 403,591 (122,692) (102,661) 2,576,729 $ 3,431,198 $ 407,957 $ 315,508 $ - $ 5,890,940 95 CITY OF OTSEGO COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - DEBT SERVICE FUND For the Year Ended December 31, 2014 REVENUES Taxes Special Assessments Miscellaneous: Investment Income Total Revenues EXPENDITURES Debt Service Principal Interest and Other Charges Total Expenditures Excess of Revenues (Under) Expenditures FUND BALANCES Beginning of Year End of Year Debt Service Waterfront East Waterfront Quaday 2004 and Mississippi West (350) Bond (365) Shores (375) $ 101,024 $ 74,808 $ - 10,052 3,861 496,063 (1,141) (329) 13,023 109,935 78,340 509,086 190,000 200,000 1,880,000 3,197 7,711 108,113 193,197 207,711 1,988,113 (83,262) (129,371) (1,479,027) 79,770 (28,304) 2,162,544 $ (3,492) $ (157,675) $ 683,517 001 Debt Service G.O. G.O. Capital 100,000 Improvement Improvement G.O. Bonds of Plan Refunding Quantrelle and Equipment 2006B, 2010D, Bonds, 2010B 88th Street Certificate 2011A (380) (385) Bonds (395) 2010A (399) Total $ 101,894 $ 201,142 $ - $ - $ 478,868 90,386 - 63,102 - 663,464 32,624 6,500 (1,096) (1,172) 48,409 224,904 207,642 62,006 (1,172) 1,190,741 4,400,000 150,000 100,000 45,000 6,965,000 236,083 79,813 12,318 7,331 454,566 4,636,083 229,813 112,318 52,331 7,419,566 (4,411,179) (22,171) (50,312) (53,503) (6,228,825) 6,287,320 425,762 (72,380) (49,158) 8,805,554 $ 1,876,141 $ 403,591 $ (122,692) $ (102,661) $ 2,576,729 97 CITY OF OTSEGO STATEMENT OF CHANGES IN AGENCY FUND ASSETS AND LIABILITIES For the Year Ended December 31, 2014 ASSETS Cash and Investments $ Development Escrows Fund (701) $ 123,500 01/01/14 Additions Deductions 12/31/14 ASSETS LIABILITIES Cash and Investments $ 1,141,042 $ 613,551 $ (1,081,456) $ 673,137 LIABILITIES Escrow Deposit $ Accounts Payable $ 1,141,042 $ 613,551 $ (1,081,456) $ 673,137 (110,500) $ Builders Escrow (702) 01/01/14 Additions Deductions 12/31/14 ASSETS Cash and Investments $ 111,730 $ 123,500 $ (110,500) $ 124,730 LIABILITIES Escrow Deposit $ 111,730 $ 123,500 $ (110,500) $ 124,730 Totals 01/01/14 Additions Deductions 12/31/14 ASSETS Cash and Investments $ 1,252,772 $ 737,051 $ (1,191,956) $ 797,867 LIABILITIES Accounts Payable $ 1,141,042 $ 613,551 $ (1,081,456) $ 673,137 Escrow Deposit 111,730 123,500 (110,500) 124,730 Total Liabilities $ 1,252,772 $ 737,051 $ (1,191,956) $ 797,867 98 STATISTICAL SECTION (UNAUDITED) CITY OF OTSEGO OTSEGO, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2014 (THIS PAGE LEFT BLANK INTENTIONALLY) 100 CITY OF OTSEGO 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 information in the financial statements, note disclosures, and required supplementary information says about the government's overall financial health. Financial Trends These schedules contain trend information to help the reader of the financial statements understand how the City's financial performance and financial position have changed over time. Revenue Capacity These schedules contain information to help the reader of the financial statements assess the City's most significant revenue source, general property tax revenue. Debt Capacity These schedules present information to help the reader of the financial statements assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment where the City's financial activities take place. Operating Information These schedules contain service and infrastructure data to assist the reader's understanding of how the information in the City's financial report relates to the services it provides. Sources: Unless otherwise noted, the information in these schedules is derived from the annual financial reports for the relevant year. 101 CITY OF OTSEGO STATISTICAL SECTION (UNAUDITED) NET POSITION BY COMPONENT Last Ten Fiscal Years (accrual basis of accounting) Governmental activities Net investment in capital assets Restricted Unrestricted Total governmental activities net position Business -type activities Net investment in capital assets Restricted Unrestricted Total business -type activities net position Total primary Government Net investment in capital assets Restricted Unrestricted Total primary government Fiscal Year 2005 2006 $ 2,443,891 $ 10,215,280 $ 9,199,610 2,856,076 5,878,653 9,278,966 12,338,657 6,290,098 8,287,671 $ 17,638,624 $ 22,384,031 $ 26,766,247 $ 9,946,569 $ 9,591,855 $ 16,344,652 6,576,276 8,065,782 7,620,664 2,823,392 4,607,943 1,728,153 $ 19,346,237 $ 22,265,580 $ 25,693,469 $ 12,390,460 $ 19,807,135 $ 25,544,262 9,432,3 52 13,944,435 16,899, 630 15,162,049 10,898,041 10,015,824 $ 36,984,861 $ 44,649,611 $ 52,459,716 102 Table 1 Fiscal Year 2008 2009 2010 2011 2012 2013 2014 $ 10,402,950 $ 12,113,710 $ 12,600,418 $ 13,039,318 $ 13,673,424 $ 14,709,024 $ 15,515,291 8,576,073 8,604,122 7,506,642 6,547,412 6,570,533 5,882,912 5,430,795 8,335,206 8,085,402 8,568,988 8,490,450 7,850,150 7,313,054 9,601,854 $ 27,314,229 $ 28,803,234 $ 28,676,048 $ 28,077,180 $ 28,094,107 $ 27,904,990 $ 30,547,940 $ 18,721,350 $ 19,658,076 $ 17,255,564 $ 16,017,362 $ 14,795,965 $ 13,694,517 $ 12,619,305 6,302,993 6,462,497 - - - - 313,037 1,519,450 9,661,840 8,220,490 9,054,217 10,546,291 13,487,231 $ 25,337,380 $ 27,640,023 $ 26,917,404 $ 24,237,852 $ 23,850,182 $ 24,240,808 $ 26,106,536 $ 29,124,300 $ 31,771,786 $ 29,855,982 $ 29,056,680 $ 28,469,389 $ 28,403,541 $ 28,134,596 14,879,066 15,066,619 7,506,642 6,547,412 6,570,533 5,882,912 5,430,795 8,648,243 9,604,852 18,230,828 16,710,940 16,904,367 17,859,345 23,089,085 $ 52,651,609 $ 56,443,257 $ 55,593,452 $ 52,315,032 $ 51,944,289 $ 52,145,798 $ 56,654,476 103 CITY OF OTSEGO STATISTICAL SECTION (UNAUDITED) CHANGES IN NET POSITION Last Ten Fiscal Years (accrual basis of accounting) Expenses Governmental activities General government Public safety Public works Sanitation Culture and recreation Economic development Interest on long-term debt Total governmental activities expenses Business -type activities Water utility Sewer utility Storm Water utility Total business -type activities expenses Total expenses Program revenues Governmental activities Charges for services General government Public safety Public works Culture and recreation Economic development Operating grants and contributions Capital grants and contributions Total governmental activities program revenues Business -type activities Charges for services Water utility Sewer utility Storm Water utility Capital grants and contributions Total business -type activities program revenues Total program revenues Fiscal Year llnnc I)nnc ')nn7 $ 748,433 $ 578,719 $ 796,258 1,233,519 1,774,038 1,651,417 1,149,598 1,072,101 1,198,973 8,570 9,665 8,186 232,642 272,001 298,088 - 9,096 71,875 235,885 292,854 520,352 6,475,715 6,034,312 7,907,886 3,608,647 4,008,474 4,545,149 634,324 1,282,216 878,915 1,326, 828 1,048, 748 1,896, 741 1,961,152 2,330,964 2,775,656 $ 5,569,799 $ 6,339,438 $ 7,320,805 $ 178,078 $ 86,981 $ 106,390 1,582,327 1,286,843 910,074 84,586 32,719 - 390 - - - 210 740 126,423 143,333 151,198 4,503,911 4,484,226 6,739,484 6,475,715 6,034,312 7,907,886 535,186 635,924 798,009 315,413 366,495 649,847 6,827,114 3,435,794 1,554,833 7,677,713 4,438,213 3,002,689 $ 14,153,428 $ 10,472,525 $ 10,910,575 104 Table 2 Fiscal Year 2008 2009 2010 2011 2012 2013 2014 $ 892,100 $ 916,692 $ 910,830 $ 956,651 $ 1,002,690 $ 906,102 $ 1,230,335 1,781,953 1,786,889 1,615,763 1,647,285 1,445,397 1,447,887 1,499,538 1,660,742 2,043,980 2,029,922 2,114,975 2,486,553 2,760,130 2,383,890 10,095 - - - - - 43,606 570,456 374,019 401,563 569,431 575,592 573,581 792,525 7,268 58,293 17,096 12,353 103,884 75,303 45,024 721,924 611,384 919,907 661,447 631,129 543,821 347,503 2,557,475 3,676,334 1,779,209 1,475,354 1,527,533 1,662,609 3,899,260 5,644,538 5,791,257 5,895,081 5,962,142 6,245,245 6,306,824 6,298,815 962,806 968,217 1,314,133 1,530,108 1,301,990 1,241,343 1,187,553 2,101,478 2,395,561 2,307,213 2,778,657 2,326,550 2,123,381 2,052,493 - 41,196 68,903 61,024 69,834 72,944 57,977 3,064,284 3,404,974 3,690,249 4,369,789 3,698,374 3,437,668 3,298,023 $ 8,708,822 $ 9,196,231 $ 9,585,330 $ 10,331,931 $ 9,943,619 $ 9,744,492 $ 9,596,838 $ 45,222 $ 117,955 $ 109,349 $ 109,686 $ 54,674 $ 36,735 $ 119,757 592,768 474,185 889,878 819,537 588,894 784,038 1,159,073 7,939 58,430 24,082 111,873 50,906 106,913 724,009 - 250 360 3,101 8,840 28,600 43,606 330 - - - - - 5,098,087 196,232 182,205 191,850 197,325 203,645 220,790 233,606 1,714,984 2,843,309 563,690 233,832 620,574 485,533 1,619,209 2,557,475 3,676,334 1,779,209 1,475,354 1,527,533 1,662,609 3,899,260 745,635 739,062 745,395 736,448 1,049,531 1,259,942 1,167,066 786,885 873,480 989,847 1,067,088 1,055,557 1,186,523 1,325,181 - 33,861 72,081 98,873 69,608 41,831 45,570 605,104 3,465,839 990,041 333,151 1,032,687 1,267,189 2,560,270 2,137,624 5,112,242 2,797,364 2,235,560 3,207,383 3,755,485 5,098,087 $ 4,695,099 $ 8,788,576 $ 4,576,573 $ 3,710,914 $ 4,734,916 $ 5,418,094 $ 8,997,347 (Continued) 105 CITY OF OTSEGO STATISTICAL SECTION (UNAUDITED) CHANGES IN NET POSITION - CONTINUED Last Ten Fiscal Years (accrual basis of accounting) Net revenues (expenses) Governmental activities Business -type activities Total primary government revenues (expenses) General Revenues and Other Changes in Net Position General Revenues Governmental activities Taxes Property taxes, levied for general purpose Franchise taxes Grants and contributions not restricted to specific programs Unrestricted investment earnings Gain on sale of capital assets Transfers - capital assets Transfers Total governmental activities general revenues Business -type activities Grants and contributions not restricted to specific programs Property Taxes Unrestricted investment earnings Gain on sale of capital assets Transfers - capital assets Transfers Total business -type activities general revenues Total primary government Change in Net Position Governmental activities Business -type activities Total primary government (Continued) Fiscal Year 2005 2006 2007 $ 2,867,068 $ 2,025,838 $ 3,362,737 5,716,561 2,107,249 227,033 $ 8,583,629 $ 4,133,087 $ 3,589,770 $ 1,754,972 $ 2,192,155 $ 2,781,744 44,695 55,075 69,473 361,171 205,526 241,467 304,764 659,549 561,230 31,211 - 4,000 - - (2,576,514) 902,439 (392,736) (61,921) 3,399,252 2,719,569 1,019,479 256,828 419,358 562,421 12,500 - - - - 2,576,514 (902,439) 392,736 61,921 (633,111) 812,094 3,200,856 $ 2,766,141 $ 3,531,663 $ 4,220,335 $ 6,266,320 $ 4,745,407 $ 4,382,216 5,083,450 2,919,343 3,427,889 $ 11,349,770 $ 7,664,750 $ 7,810,105 106 2008 2009 Fiscal Year 2010 2011 2012 Table 2 2013 2014 $ (3,087,063) $ (2,114,923) $ (4,115,872) $ (4,486,788) $ (4,717,712) $ (4,644,215) $ (2,399,555) (926,660) 1,707,268 (892,885) (2,134,229) (490,991) 317,817 1,800,064 $ (4,013,723) $ (407,655) $ (5,008,757) $ (6,621,017) $ (5,208,703) $ (4,326,398) $ (599,491) $ 3,270,875 $ 3,505,575 $ 3,587,177 $ 3,719,778 $ 4,271,751 $ 4,333,972 $ 4,476,810 82,420 87,807 97,228 100,176 106,547 83,681 120,964 106,320 141,892 29,797 26,051 54,601 10,954 132,104 430,239 293,497 227,484 290,962 212,731 (17,852) 157,640 - - 37,000 16,500 40,009 44,343 32,355 (249,113) (424,843) - - - - (5,696) - 10,000 44,000 49,000 - 122,632 3,635,045 3,603,928 3,988,686 4,197,467 4,734,639 4,455,098 5,042,505 - - - - - 57,739 24,824 315,762 170,532 180,266 235,166 152,321 (34,717) 168,320 - - - - - 18,733 28,440 249,113 424,843 - - - - 5,696 - (10,000) (44,000) (49,000) - (122,632) 570,571 595,375 170,266 191,166 103,321 41,755 98,952 $ 4,205,616 $ 4,199,303 $ 4,158,952 $ 4,388,633 $ 4,837,960 $ 4,496,853 $ 5,141,457 $ 547,982 $ 1,489,005 $ (127,186) $ (289,321) $ 16,927 $ (189,117) $ 2,642,950 (356,089) 2,302,643 (722,619) (1,943,063) (387,670) 359,572 1,899,016 $ 191,893 $ 3,791,648 $ (849,805) $ (2,232,384) $ (370,743) $ 170,455 $ 4,541,966 107 CITY OF OTSEGO STATISTICAL SECTION (UNAUDITED) FUND BALANCES OF GOVERNMENTAL FUNDS Last Ten Fiscal Years General fund Reserved Unreserved Nonspendable Assigned Unassigned Total general fund All other governmental funds Reserved Unreserved, reported in: Debt service funds Special revenue funds Capital project funds Nonspendable Restricted Committed Assigned Unassigned Total all other governmental funds Note: The requirements of GASB 54 were implemented in 2011. Fiscal Year 2005 2006 2007 1,027,382 $ 1,500 999,697 $ 4,894 1,095,854 $ 1,027,382 $ 1,001,197 $ 1,100,748 $ 946,148 $ 1,287,902 $ 1,791,933 4,434,933 3,040,878 3,207,643 6,281,540 1,555,255 3,240,578 $ 11,662,621 $ 5,884,035 $ 8,240,154 108 Table 3 Fiscal Year 2008 2009 2010 2011 2012 2013 2014 $ 6,069 $ - $ - $ - $ - $ - 1,538,650 1,685,623 1,713,440 - - - - - - - 11,254 11,254 80,423 - - - 81,168 87,971 103,418 101,833 - - - 1,622,430 1,665,366 1,797,403 3,211,382 $ 1,544,719 $ 1,685,623 $ 1,713,440 $ 1,703,598 $ 1,764,591 $ 1,912,075 $ 3,393,638 $ 1,880,582 $ 1,974,413 $ 1,197,967 $ - $ - $ - 3,356,320 2,684,192 2,811,289 - - - 2,277,217 1,960,421 2,157,424 - - - - - - - 4,601 351 - - - 5,985,647 7,898,825 8,805,554 2,576,729 - - - 39,142 52,360 595,191 387,033 - - - 6,517,609 5,605,265 4,267,012 5,218,020 - - - (700,854) (341,194) (9,555) (10,584) $ 7,514,119 $ 6,619,026 $ 6,166,680 $ 11,841,544 $ 13,219,857 $ 13,658,553 $ 8,171,198 109 CITY OF OTSEGO STATISTICAL SECTION (UNAUDITED) CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS Last Ten Fiscal Years 110 Fiscal Year 2005 2006 2007 Revenues Taxes $ 1,785,748 $ 2,185,882 $ 2,707,808 Franchise Fees - - - Licenses and permits 1,583,318 1,296,282 914,988 Intergovernmental 441,912 773,794 863,219 Charges for services 232,253 99,807 252,838 Fines and forfeitures - - - Special assessments 977,071 922,988 1,547,416 Interest on investments 304,764 659,549 561,230 Miscellaneous 3,966,691 479,856 1,148,659 Total revenues 9,291,757 6,418,158 7,996,158 Expenditures General government 701,098 691,398 735,144 Public safety 1,205,742 1,554,638 1,610,773 Public works 575,327 868,296 943,083 Sanitation 8,570 9,665 8,186 Culture and recreation 129,779 265,426 167,305 Economic development - 9,096 11,875 Capital Outlay 7,130,310 13,672,955 4,321,879 Debt service Principal 976,085 1,009,001 1,295,067 Interest and other charges 210,796 284,735 595,262 Bond issuance costs 74,999 87,660 77,683 Total expenditures 11,012,706 18,452,870 9,766,257 Excess (deficiency) of revenues over (under) expenditures (1,720,949) (12,034,712) (1,770,099) Other financing sources (uses) Transfers in 4,829,089 2,032,530 1,618,105 Proceeds from sale of bonds 3,020,000 5,985,000 4,275,000 Payment to refunded bond escrow agent - - - Premiums on bonds sold - - - Sale of capital assets 31,211 - 4,000 Insurance Recovery - - - Transfers out (3,926,650) (1,787,589) (1,671,336) Total other financing sources (uses) 3,953,650 6,229,941 4,225,769 Net change in fund balances $ 2,232,701 $ (5,804,771) $ 2,455,670 Debt service as a percentage of noncapital expenditures 32.5% 28.9% 36.1% 110 Table 4 Fiscal Year 2008 2009 2010 2011 2012 2013 2014 $ 3,368,516 $ 3,472,849 $ 3,574,092 $ 3,786,743 $ 4,237,868 $ 4,480,387 $ 4,524,092 - 87,807.00 97,228.00 100,176.00 106,547 83,681.00 120,964 604,818 433,080 339,568 303,059 553,577 819,493 1,238,823 915,934 336,937 191,784 375,703 621,447 241,996 1,034,552 36,400 81,106 126,453 200,256 86,655 170,194 1,142,453 - - - 1,000 2,000 - 4,000 1,563,034 1,292,139 1,511,510 2,055,623 875,822 1,987,647 905,441 430,239 293,497 227,484 290,962 209,984 (17,852) 157,640 119,515 152,416 33,153 25,302 56,625 78,457 50,286 7,038,456 6,149,831 6,101,272 7,138,824 6,750,525 7,844,003 9,178,251 834,755 872,067 802,632 887,847 918,055 923,255 1,169,697 1,744,043 1,759,415 1,604,062 1,586,504 1,440,908 1,447,182 1,495,008 860,594 1,255,099 962,329 974,557 1,009,827 1,121,981 1,023,693 10,095 - - - - - - 379,246 240,047 201,080 246,075 277,605 313,023 464,840 7,268 58,293 17,096 12,353 103,884 75,303 45,024 1,611,896 521,780 1,533,354 1,178,526 1,707,346 1,984,531 1,688,847 1,225,000 1,590,000 1,345,000 745,000 810,000 840,000 6,965,000 647,623 607,319 989,718 489,184 554,245 574,715 454,566 - - 125,275 86,285 42,900 - - 7,320,520 6,904,020 7,580,546 6,206,331 6,864,770 7,279,990 13,306,675 (282,064) (754,189) (1,479,274) 932,493 (114,245) 564,013 (4,128,424) 1,434,702 1,465,475 931,682 2,069,009 997,325 - 612,433 - - 5,310,000 4,640,000 1,400,000 - - - - (4,325,000) - - - - - - - 48,529 64,542 - - - - 56,000 - 40,009 - - - - - - - 22,167 - (1,434,702) (1,465,475) (917,937) (2,025,009) (948,325) - (489,801) - - 1,054,745 4,732,529 1,553,551 22,167 122,632 $ (282,064) $ (754,189) $ (424,529) $ 5,665,022 $ 1,439,306 $ 586,180 $ (4,005,792) 32.8% 34.4% 40.7% 26.3% 27.3% 26.7% 63.9% 111 CITY OF OTSEGO STATISTICAL SECTION (UNAUDITED) TAX CAPACITY, MARKET VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY (Shown by year of tax collectability) 2005 2006 2007 Taxable market value Personal property Real estate Total taxable market value Estimated actual value Taxable market value as a percentage of estimated actual value Tax capacity Personal property Real estate Net tax capacity Tax levies General Debt service Total Tax capacity rate General Debt service Total 2008 $ 6,465,000 $ 7,615,800 $ 9,990,000 $ 113,259,000 664,330,900 798,113,200 1,031,745,900 1,192,244,800 $ 670,795,900 $ 805,729,000 $ 1,041,735,900 $ 1,305,503,800 $ 1,019,164,543 $ 1,184,773,912 $ 1,209,694,535 $ 1,333,105,057 65.82% % 68.01% % 86.12% % 97.93% % $ 129,300 $ 152,316 $ 199,369 $ 226,018 6,865,962 8,301,731 10,928,056 12,698,297 $ 6,995,262 $ 8,454,047 $ 11,127,425 $ 12,924,315 $ 1,575,620 $ 1,863,490 $ 2,482,980 $ 2,967,000 351,953 472,100 485,020 458,000 $ 1,927,573 $ 2,335,590 $ 2,968,000 $ 3,425,000 Source: Wright County Auditor/Treasurer Department Note: Property in the county is reassessed annually. 22.524 % 5.031 27.555 % 22.043 % 5.584 27.627 % 22.314 % 4.359 26.673 % 22.957 % 3.543 26.500 % 112 Table 5 24.663 % 2.309 26.972 % 24.992 % 4.350 29.342 % 30.017 % 3.996 34.013 % 37.320 % 4.134 41.454 % 41.741 % 4.488 46.229 % 39.867 % 4.708 44.575 % 113 2009 2010 2011 2012 2013 2014 $ 12,488,100 $ 13,099,300 $ 14,203,900 $ 14,003,900 $ 14,305,700 $ 14,513,300 1,254,432,100 1,163,465,900 1,045,413,800 913,874,900 839,428,800 908,532,000 $ 1,266,920,200 $ 1,176,565,200 $ 1,059,617,700 $ 927,878,800 $ 853,734,500 $ 923,045,300 $ 1,359,891,000 $ 1,136,135,883 $ 1,049,267,068 $ 908,206,346 $ 989,365,300 $ 1,051,543,200 93.16% % 103.56% % 100.99%% 102.17% % 86.29% % 87.78% % $ 249,252 $ 261,328 $ 283,499 $ 279,502 $ 285,540 $ 290,266 13,545,272 12,750,856 11,376,627 9,999,046 9,184,748 9,805,499 $ 13,794,524 $ 13,012,184 $ 11,660,126 $ 10,278,548 $ 9,470,288 $ 10,095,765 $ 3,402,090 $ 3,252,000 $ 3,500,000 $ 3,836,000 $ 3,952,910 $ 4,024,715 318,600 566,000 466,000 425,000 425,000 475,285 $ 3,720,690 $ 3,818,000 $ 3,966,000 $ 4,261,000 $ 4,377,910 $ 4,500,000 24.663 % 2.309 26.972 % 24.992 % 4.350 29.342 % 30.017 % 3.996 34.013 % 37.320 % 4.134 41.454 % 41.741 % 4.488 46.229 % 39.867 % 4.708 44.575 % 113 Source: Wright County Auditor/Treasurer Department 114 CITY OF OTSEGO Table 6 STATISTICAL SECTION (UNAUDITED) TAX CAPACITY OF REAL AND PERSONAL PROPERTY BY CLASSIFICATION Last Ten Fiscal Years Commercial & Residential Fiscal Residential Industrial Non- Personal Agricultural Year Property Property Homestead Property Property Other Total 2005 $ 5,360,137 $ 585,765 $ 384,627 $ 129,300 $ 509,971 $ 25,462 $ 6,995,262 2006 6,224,911 726,899 760,179 152,316 566,883 22,859 8,454,047 2007 7,618,707 1,151,084 1,361,479 199,369 725,849 70,937 11,127,425 2008 8,390,152 1,435,171 1,998,030 226,018 800,803 74,141 12,924,315 2009 8,666,112 1,878,314 2,120,456 249,252 805,387 75,003 13,794,524 2010 8,126,189 2,164,323 1,661,573 261,328 719,579 79,192 13,012,184 2011 7,547,244 1,893,120 1,251,967 283,499 606,587 77,709 11,660,126 2012 6,460,276 1,821,302 1,097,107 279,502 543,596 76,765 10,278,548 2013 5,906,265 1,788,872 903,006 285,540 533,264 53,341 9,470,288 2014 6,607,296 1,664,605 918,439 290,266 536,842 78,317 10,095,765 Percentage of Total Net Tax Capacity 2005 76.63% 8.37% 5.50% 1.85% 7.29% 0.36% 100.00% 2006 73.63% 8.60% 8.99% 1.80% 6.71% 0.27% 100.00% 2007 68.47% 10.34% 12.24% 1.79% 6.52% 0.64% 100.00% 2008 64.92% 11.10% 15.46% 1.75% 6.20% 0.57% 100.00% 2009 62.82% 13.62% 15.37% 1.81% 5.84% 0.54% 100.00% 2010 62.45% 16.63% 12.77% 2.01% 5.53% 0.61% 100.00% 2011 64.73% 16.24% 10.74% 2.43% 5.20% 0.67% 100.00% 2012 62.85% 17.72% 10.67% 2.72% 5.29% 0.75% 100.00% 2013 62.37% 18.89% 9.54% 3.01% 5.63% 0.56% 100.00% 2014 65.45% 16.49% 9.10% 2.88% 5.32% 0.78% 100.00% Source: Wright County Auditor/Treasurer Department 114 CITY OF OTSEGO STATISTICAL SECTION (UNAUDITED) PROPERTY TAX CAPACITY RATES - DIRECT AND OVERLAPPING GOVERNMENTS (PER $1,000 OF TAX CAPACITY) Overlapping Rates Table 7 Year School School School Taxes District District District Special Payable City County 728 882 885 Districts 2005 27.555 % 34.414 % 2006 27.627 32.567 2007 26.673 30.714 2008 26.500 31.648 2009 26.972 32.567 2010 29.342 35.819 2011 34.013 39.306 2012 41.454 43.452 2013 46.229 44.288 2014 44.575 43.450 32.848 % 26.379 % 32.964 % 2.667 % 35.950 24.372 42.874 2.330 33.208 23.146 45.259 2.951 32.344 25.254 46.192 2.520 36.136 26.083 46.714 2.067 39.967 24.948 52.062 1.754 43.489 27.029 51.369 1.501 45.548 28.262 52.646 1.240 50.058 26.229 57.213 0.608 51.286 28.269 51.570 - Source: Wright County Auditor/Treasurer Department Overlapping rates are those of local and county governments that apply to property owners within the City. Not all overlapping rates apply to all City property owners (e.g. the rates for school districts apply only to the proportion of the government's property owners whose property is located within the geographic boundaries of the school districts). 115 CITY OF OTSEGO STATISTICAL SECTION (UNAUDITED) PRINCIPAL TAXPAYERS December 31, 2014 2014 Geneva Exchange Fund XXII, LLC Commercial Totals $ 1,048,209 Source: Wright County Auditor/Treasurer Department Table 8 2005 Percent Tax Taxpayer Classification Capacity Duke Realty LTD Partnership Industrial $ 214,880 Target Corporation Commercial 207,272 Minnegasco Utility 151,884 Elk Inn Partners, LP Commercial 99,250 Wright -Hennepin Co-op Electric Utility 87,875 Apex Business Center, LLC Industrial 74,578 21st Century Bank Commercial 62,502 GCI Capital Commercial 61,316 Minnwest Bank Central Commercial 46,250 TCO Otsego Property Co. LLc Commercial 42,402 CenterPoint Energy Utility 6 Tier One, LLC Commercial 0.74 5 Heirs Marketplace West, LLC Commercial 1.02 RPHR Investments, LLC Commercial - Trudell Trailers Industrial 8 Pattern Station, Inc. Commercial Individual Industrial 0.46 Geneva Exchange Fund XXII, LLC Commercial Totals $ 1,048,209 Source: Wright County Auditor/Treasurer Department Table 8 2005 Percent Percent of Total Tax of Total Rank Tax Capacity Capacity Rank Tax Capacity 1 2.13 % $ - - % 2 2.05 - - 3 1.50 - - 4 0.98 - - 5 0.87 38,840 6 0.56 6 0.74 71,110 1 1.02 7 0.62 - - 8 0.61 - - 9 0.46 - - 10 0.42 - - 67,398 2 0.96 59,658 3 0.85 55,196 4 0.79 40,402 5 0.58 36,940 7 0.53 35,360 8 0.51 24,828 9 0.35 23,600 10 0.34 10.38 % $ 453,332 6.48 % Source: Wright County Auditor/Treasurer Department (1) Includes state paid property tax credits. CITY OF OTSEGO STATISTICAL SECTION (UNAUDITED) PROPERTY TAX LEVIES AND COLLECTIONS Last Ten Fiscal Years Percentage Collections (1) of Levy in subsequent Collection Fiscal Total Within Fiscal Year Levy Year of Levy 97.12 % $ 54,353 2005 $ 1,927,573 $ 1,872,115 2006 2,335,590 2,236,871 2007 2,968,000 2,750,126 2008 3,425,000 3,241,928 2009 3,720,690 3,498,865 2010 3,818,000 3,610,870 2011 3,966,000 3,820,747 2012 4,261,000 4,111,857 2013 4,377,910 4,306,802 2014 4,500,000 4,444,153 Source: Wright County Auditor/Treasurer Department (1) Includes state paid property tax credits. CITY OF OTSEGO STATISTICAL SECTION (UNAUDITED) PROPERTY TAX LEVIES AND COLLECTIONS Last Ten Fiscal Years Percentage Collections 1,848 of Levy in subsequent Total Collected years Collections 0.07% 2,689 0.07% 97.12 % $ 54,353 $ 1,926,468 95.77 96,871 2,333,742 92.66 216,503 2,966,629 94.65 182,005 3,423,933 94.04 219,139 3,718,004 94.57 204,441 3,815,311 96.34 131,694 3,952,441 96.50 128,667 4,240,524 98.38 34,239 4,341,041 98.76 - 4,444,153 Percent of Total Collections to Levy 99.94 % $ 99.92 99.95 99.97 99.93 99.93 99.66 99.52 99.16 98.76 Table 9 Total Uncollected Amount Percent 1,105 0.06% 1,848 0.08% 1,371 0.05% 1,067 0.03% 2,686 0.07% 2,689 0.07% 13,559 0.34% 20,476 0.48% 36,869 0.84% 55,847 1.24% CITY OF OTSEGO STATISTICAL SECTION (UNAUDITED) RATIOS OF OUTSTANDING DEBT BY TYPE Last Ten Fiscal Years Business -type Governmental Activities Activities General General Total Fiscal Obligation Certificates of Lease Capital Obligation Primary Year Bonds Indebtedness Revenue Leases Revenue Bonds Government 2005 $ 9,215,000 $ - $ - $ 139,069 $ 20,865,000 $ 30,219,069 2006 14,260,000 - - 70,067 28,940,000 43,270,067 2007 13,785,000 - 3,525,000 - 27,920,000 45,230,000 2008 12,655,000 - 3,430,000 - 26,765,000 42,850,000 2009 11,265,000 - 3,230,000 - 27,740,000 42,235,000 2010 13,750,000 385,000 - - 50,302,111 64,437,111 2011 17,728,529 350,000 - - 35,503,229 53,581,758 2012 18,413,438 310,000 - - 28,764,347 47,487,785 2013 17,601,634 265,000 - - 28,685,465 46,552,099 2014 10,664,830 220,000 - - 28,606,583 39,491,413 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. See the Demographic and Economic Statistics Table on page 126 for personal income and population data. * Information not available at time of publication Table 10 Percentage of Per Personal Income Capita 9.30 % $ 2,855 11.75 3,711 10.84 3,619 9.32 3,217 9.26 3,114 13.83 4,748 10.52 3,894 8.74 3,353 8.26 3,220 * 2,633 CITY OF OTSEGO STATISTICAL SECTION (UNAUDITED) RATIOS OF GENERAL BONDED DEBT OUTSTANDING Last Ten Fiscal Years Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. Net Bonded Debt $ 8,268,852 12,972,098 12,006,440 10,790,931 10,172,213 7,172,970 11,482,588 12,049,467 11,897,088 5,384,205 See the Demographic and Economic Statistics Table on page 126 for personal income and population data. See the Schedule of Tax Capacity, Market Value and Estimated Actual Value of Taxable Property for property value data. Table 11 Percentage of Estimated Actual Less Per Taxable Property Capita Amounts 0.81 % General 1.09 Total General Available in Fiscal Obligation Certificates of Bonded Debt Debt Service Year Bonds Indebtedness Outstanding Funds 851 1.20 823 0.51 2005 $ 9,215,000 $ - $ 9,215,000 $ 946,148 2006 14,260,000 - 14,260,000 1,287,902 2007 13,785,000 - 13,785,000 1,778,560 2008 12,655,000 - 12,655,000 1,864,069 2009 11,265,000 - 11,265,000 1,092,787 2010 13,750,000 385,000 14,135,000 6,962,030 2011 17,680,000 350,000 18,030,000 6,547,412 2012 18,310,000 310,000 18,620,000 6,570,533 2013 17,515,000 265,000 17,780,000 5,882,912 2014 10,595,000 220,000 10,815,000 5,430,795 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. Net Bonded Debt $ 8,268,852 12,972,098 12,006,440 10,790,931 10,172,213 7,172,970 11,482,588 12,049,467 11,897,088 5,384,205 See the Demographic and Economic Statistics Table on page 126 for personal income and population data. See the Schedule of Tax Capacity, Market Value and Estimated Actual Value of Taxable Property for property value data. Table 11 Percentage of Estimated Actual Value of Per Taxable Property Capita 0.81 % $ 781 1.09 1,113 0.99 961 0.81 810 0.75 750 0.63 529 1.09 834 1.33 851 1.20 823 0.51 359 (THIS PAGE LEFT BLANK INTENTIONALLY) 120 CITY OF OTSEGO STATISTICAL SECTION (UNAUDITED) COMPUTATION OF DIRECT AND OVERLAPPING DEBT December 31, 2014 Direct Debt City of Otsego School District #882 School District #885 School District #728 Wright County Total Overlapping Debt Total Direct and Overlapping Debt Table 12 Gross Amount Bonded of Debt Used Percentage Net Debt For Net Debt Applicable to Applicable Calculation City to City $ 11,104,830 100.00 % $ 11,104,830 6,980,000 3.54 % 247,092 174,235,000 4.35 7,579,223 154,350,000 14.31 22,087,485 47,455,000 8.68 4,119,094 $ 383,020,000 8.43 % $ 34,032,894 $ 394,124,830 11.45 % $ 45,137,724 Source : Most recent Continuing Disclosure Document prepared by Northland Securities, Inc. for the reporting date of December 31, 2014. Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City. This process recognized that, when considering the government'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. * The percentage of overlapping debt applicable is estimated using taxable market property values. Applicable percentages were estimated by determining the portion of the entity's taxable market value that is within the City's boundaries and dividing it by the entity's total taxable market value. 121 Debt limit (1) Total net debt applicable to limit Total net debt available Total net debt applicable to the limit as a percentage of debt limit CITY OF OTSEGO STATISTICAL SECTION (UNAUDITED) LEGAL DEBT MARGIN INFORMATION Last Ten Fiscal Years 2005 Fiscal Year 2006 2007 2008 $ 13,415,918 $ 16,114,580 $ 20,834,718 $ 39,165,114 $ 11,182,496 $ 13,415,918 $ 16,114,580 $ 20,834,718 0.00% 0.00% 0.00% 0.00% (1) The debt limit for years 2004-2007 is 2 percent and for the years 2008-2014 is 3 percent (2) None of the City's general obligation debt outstanding is not subject to the limit. Note: Under state law, the City's outstanding general obligation debt should not exceed 3 percent of the market value of taxable property. Prior to 2008, state law provided that general obligation debt should not exceed 2 percent. By law, the general obligation debt subject to the limitation may be offset by amounts set aside for the extinguishment of those obligations. The City's current outstanding debt includes improvement bonds, capital improvement plan bonds and certificates of indebtedness. As stated above, none of this general obligation debt is subject to the City's debt limit. 122 Table 13 Fiscal Year 2009 2010 2011 2012 2013 2014 $ 38,007,606 $ 35,296,956 $ 31,788,531 $ 27,836,364 $ 25,612,035 $ 27,691,359 $ 39,165,114 $ 38,007,606 $ 35,296,956 $ 31,788,531 $ 27,836,364 $ 25,612,035 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Legal Debt Margin Calculation for Fiscal Year 2014 Taxable market value Debt limit (3% of market value) Debt applicable to limit General obligation bonds (2) Less: amount available in debt service funds Total net debt applicable to limit Legal debt margin $ 923,045,300 $ 27,691,359 $ 25,612,035 123 Ci1NW&GIMM11#11 STATISTICAL SECTION (UNAUDITED) PLEDGED -REVENUE COVERAGE Last Ten Fiscal Years Table 14 (1) Includes charges for services, investment earnings and miscellaneous revenues (2) Excluding depreciation and interest on bonds * Excludes principal and interest paid on refunding bonds from escrow N General Obligation Revenue Bonds Net Fiscal (1) Hookup Gross (2) Revenue Debt Service Year Revenues Charges Revenue Expenses Available Principal Interest Coverage 2005 $ 1,002,393 $ 5,957,023 $ 6,959,416 $ 715,659 $ 6,243,757 $ 960,000 $ 617,739 3.96 2006 1,308,657 2,351,837 3,660,494 881,485 2,779,009 800,000 768,787 1.77 2007 1,861,821 1,662,772 3,524,593 910,831 2,613,762 1,020,000 1,203,646 1.18 2008 1,819,479 501,798 2,321,277 1,015,506 1,305,771 1,155,000 1,083,466 0.58 2009 1,783,074 498,326 2,281,400 1,039,988 1,241,412 1,190,000 1,264,930 0.51 2010 1,915,508 990,041 2,905,549 1,109,346 1,796,203 - 1,214,508 1.48 2011 2,038,433 333,151 2,371,584 1,228,236 1,143,348 - * 1,343,403 * 0.85 2012 2,256,616 1,032,687 3,289,303 1,148,605 2,140,698 - * 1,006,961 * 2.13 2013 2,429,661 1,233,224 3,662,885 1,136,790 2,526,095 - * 1,007,100 * 2.51 2014 2,687,572 2,435,460 5,123,032 1,016,382 4,106,650 - * 1,007,585 * 4.08 (1) Includes charges for services, investment earnings and miscellaneous revenues (2) Excluding depreciation and interest on bonds * Excludes principal and interest paid on refunding bonds from escrow N Fiscal Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 N v, 235,763 337,200 Table 14 Lease Revenue Bonds Debt Service Principal Interest Coverage 70,000 107,541 1.00 95,000 140,763 1.00 200,000 137,200 1.00 CITY OF OTSEGO STATISTICAL SECTION (UNAUDITED) PLEDGED -REVENUE COVERAGE - CONTINUED Last Ten Fiscal Years Capital Leases Revenue from Revenue from Property Debt Service Property Taxes Principal Interest Coverage Taxes $ 37,133 $ 31,663 $ 5,470 1.00 $ - 63,202 58,502 4,700 1.00 - 61,924 59,567 2,357 1.00 177,541 235,763 337,200 Table 14 Lease Revenue Bonds Debt Service Principal Interest Coverage 70,000 107,541 1.00 95,000 140,763 1.00 200,000 137,200 1.00 CITY OF OTSEGO STATISTICAL SECTION (UNAUDITED) DEMOGRAPHIC AND ECONOMIC STATISTICS Last Ten Fiscal Years Table 15 Data Sources: (1) Minnesota Office of the State Demographer (2001-2010); Estimated (2011 - 2014) (2) Minnesota Office of the State Demographer (2001-2010); Estimated (2011 - 2014) (3) US Bureau of Economic Analysis for Wright County (4) There are three school districts that serve Otsego students. ISD 728 is the largest district that serves a portion of the City of Otsego. The City is also served by St. Michael -Albertville and Monticello school districts. (5) United States Department of Labor - Bureau of Labor Statistics - Not seasonally adjusted The unemployment rate is for Wright County, the County of which the City is located. Unemployment data was not available for the City. * Information not available at time of publication Wright County Wright City of Otsego Total Personal ISD 728 County Fiscal Number of Persons per Personal Income School Unemployment Year Population (1) Households (2) Household (2) Income (3) Per Capita (3) Enrollment (4) Rate (5) 2005 10,584 3,519 3.01 $ 324,865,296 $ 30,694 12,361 4.4 % 2006 11,660 3,953 2.95 368,397,700 31,595 12,942 4.4 2007 12,499 4,262 2.93 417,329,111 33,389 13,510 5.1 2008 13,319 4,553 2.93 459,612,052 34,508 14,015 6.1 2009 13,562 4,660 2.91 455,886,630 33,615 14,113 9.2 2010 13,571 4,736 2.87 465,770,291 34,321 14,284 8.2 2011 13,761 4,811 2.86 509,487,264 37,024 14,570 7.0 2012 14,161 4,951 2.86 543,102,672 38,352 14,380 6.3 2013 14,457 5,035 2.87 563,823,000 39,000 12,566 6.1 2014 14,997 5,223 2.87 * * 12,822 4.8 Data Sources: (1) Minnesota Office of the State Demographer (2001-2010); Estimated (2011 - 2014) (2) Minnesota Office of the State Demographer (2001-2010); Estimated (2011 - 2014) (3) US Bureau of Economic Analysis for Wright County (4) There are three school districts that serve Otsego students. ISD 728 is the largest district that serves a portion of the City of Otsego. The City is also served by St. Michael -Albertville and Monticello school districts. (5) United States Department of Labor - Bureau of Labor Statistics - Not seasonally adjusted The unemployment rate is for Wright County, the County of which the City is located. Unemployment data was not available for the City. * Information not available at time of publication Employer Target Holiday Inn ISD 728 - Otsego Elementary Rockwood's Kaleidoscope Riverwood TO Plastics Long Haul Trucking Denny's Apex business Center Total Employer Blackwood's Restaurant Riverwood Conference Center ISD 728 - Otsego Elementary Godfather's Riverview Bank Long Haul Trucking Embers Apex Business Center LLC American Institutional Supoply Nathe's 101 Market Total CITY OF OTSEGO STATISTICAL SECTION (UNAUDITED) PRINCIPAL EMPLOYERS Current Year and Nine Years Ago 2014 Table 16 511 Source: Northland Securities most recent Continuing Disclosure Statement for December 31, 2014 Source: Northland Securities bond official statement dated November 3, 2005 10.65 % 127 Percentage of Total City Employees Rank Employment 289 1 3.96 % 127 2 1.74 75 3 1.03 68 4 0.93 60 5 0.82 47 6 0.64 40 7 0.55 35 8 0.48 32 9 0.44 30 10 0.41 803 11.00 % 2005 Percentage of Total City Employees Rank Employment 120 1 2.50 % 100 2 2.08 75 3 1.56 40 4 0.83 38 5 0.79 35 6 0.73 33 7 0.69 30 8 0.63 20 9 0.42 20 10 0.42 511 Source: Northland Securities most recent Continuing Disclosure Statement for December 31, 2014 Source: Northland Securities bond official statement dated November 3, 2005 10.65 % 127 Function General government CITY OF OTSEGO STATISTICAL SECTION (UNAUDITED) FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION Last Ten Fiscal Years (does not include temporary or seasonal employees) 2005 2006 2007 2008 2009 2010 2011 Administration 4.0 5.0 5.0 4.0 3.0 3.0 3.0 Finance 2.0 3.0 3.5 3.7 3.8 3.9 3.9 Public safety Police ** ** ** ** ** ** ** Fire ** ** ** ** ** ** ** Table 17 2012 2013 2014 3.0 3.0 3.0 3.9 3.7 3.9 ** ** ** ** ** ** Building safety Building official and inspectors 4.0 4.0 4.0 2.5 1.0 Building permit technicians 2.0 2.0 1.5 1.5 1.6 1.6 1.0 1.0 1.0 1.0 Public Works Street and Stormwater Maintenance 3.0 5.0 5.5 6.9 6.9 7.9 7.9 5.9 5.8 5.8 Fleet Maintenance - - - - - - - 1.0 1.0 1.0 Parks and Recreation Park Maintenance - - - - - - - 1.4 1.4 1.4 2 Recreation - - - - - - - 0.6 1.1 1.1 2 Utilities Water ** ** ** ** ** ** ** ** 2.0 2.0 1 Sewer ** ** ** ** ** ** ** ** 2.0 2.0 1 Total 15.0 19.0 19.5 18.6 16.3 16.4 15.8 16.8 21.0 21.2 Source: City of Otsego 1 Water and sewer services were contracted through PeopleService, Inc. through May 2013- The City assumed direct operations of utility services in June 2013 2 Public Works and Parks and Recreation were split into two separate operations units in 2012. The 2012 staffing numbers have been restated to show this split ** The City of Otsego contracts for the following services: Police services are contracted through the Wright County Sheriffs Department Fire services are contracted through three adjacent cities Beginning in 2010, the Building Official and inspection services were contracted Recreation activities were contracted from 2005 through 2011 N 0C CITY OF OTSEGO Table 18 STATISTICAL SECTION (UNAUDITED) OPERATING INDICATORS BY FUNCTION Last Seven Fiscal Years Function 2008 2009 2010 2011 2012 2013 2014 Fire Fire calls 59 65 52 65 71 Inspections - - - 42 - 51 5 Public works Street sweeping (hours) * 191 199 215 246 286 246 Snowplowing (hours) 1,842 1,869 2,928 942 1,730 2,260 3,340 Equipment repair (hours) * 1,355 1,765 1,803 1,805 1,540 2,023 Water Residential/Commercial customers 2,131 2,222 2,321 2,379 2,517 2,737 2,829 New connections 102 91 99 58 138 220 92 Water main breaks - - - - - - Average daily consumption (thousands of gallons) 972,200 984,784 991,496 967,647 1,181,808 1,106,115 1,031 Sewer New connections 102 91 99 58 138 220 92 Average daily treatment flow (thousands of gallons) 404,389 416,389 474,090 512,299 484,795 543,214 539,359 Sources: City of Otsego Note: The City is served by three separate municipal fire departments. Note: Indicators are not available for the general government function. Note: The new connections are those connected to the municipal water system. Note: There are areas of the City not served by municipal water and sewer services. Note: Information not available prior to 2008. This table will be updated on a go -forward basis. * Information not available at present. N 10 CITY OF OTSEGO Table 19 STATISTICAL SECTION (UNAUDITED) CAPITAL ASSET STATISTICS BY FUNCTION Last Ten Fiscal Years Function 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Public Safety Fire stations Stations - - - - - - - - - - Number of area cities providing contracted fire service 4 4 4 4 4 4 4 4 4 3 Public Works Highways and streets Streets paved (miles) 83 90 93 97 97 97 97 97 97 99 Streets gravel (miles) 21 18 17 16 16 16 16 16 16 16 Street lights - City owned 41 58 58 58 98 98 105 105 105 105 (1) Traffic signals - - - - - - - - - - Culture and recreation Parks division Parks 3 3 3 3 6 6 7 7 7 7 Parks acreage 52 52 74 74 89 89 96 96 100 100 Park/picnic shelters 3 3 6 6 6 6 7 7 7 7 Baseball diamonds 4 5 5 5 5 5 6 6 6 6 Basketball courts 3 3 5 5 5 5 6 6 6 6 Bike trails (miles) 14 15 17 17 17 17 17 18 18 18 Soccer Fields - - - - - - - - 3 3 Tennis courts 6 6 7 7 7 7 Volleyball courts 1 1 1 1 1 1 I 1 1 1 Splash pad - - - 1 1 1 Unimproved park land 3 3 3 3 3 3 Unimproved park acreage - - - - 15 15 15 15 15 15 Utilities Water Miles of water main 49 56 59 63 63 63 63 63 63 63 Consumers * 1,818 2,029 2,131 2,222 2,321 2,379 2,517 2,758 2,829 Maximum daily capacity (gallons) 4,600,000 6,800,000 6,800,000 6,800,000 8,200,000 8,200,000 8,200,000 8,200,000 8,200,000 8,200,000 Sewer Miles of sanitary sewer 30 38 44 47 48 48 48 48 48 48 Miles of force main 10 11 16 20 20 20 20 20 20 20 Lift stations 3 4 7 8 9 9 9 9 9 9 Maximum daily treatment capacity (gallons) 1,000,000 1,000,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 Storm sewer Miles of storm sewer * * * * 58 58 58 58 58 58 Source: City of Otsego (1) There are nine state and county operated traffic signals in the City in 2014. Note: No capital asset indicators are available for the general government function. * Information not available. w 0 Year CITY OF OTSEGO STATISTICAL SECTION (UNAUDITED) BUILDING PERMITS Last Ten Fiscal Years All Permits Commercial/ Industrial Total Table 20 New Total Residential Permit Construction Valuation 2005 57 1,430 520 $ 89,458,169 2006 63 2,519 410 64,378,289 2007 42 740 279 52,006,045 2008 68 2,480 80 32,155,233 2009 37 839 94 18,301,311 2010 16 615 73 15,224,625 2011 15 572 58 11,851,961 2012 49 644 140 27,039,816 2013 31 700 190 43,056,966 2014 55 693 188 95,966,928 131