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City of Otsego - 2015 CAFR (PDF Version)
I� �r CITY F 0 C)t e MINNESOTA Comprehensive Annual Financial Report For the Year Ended December 31, 2015 0 CITY OF S+ 0 MINNESOTA. This page has been left blank intentionally. City of Otsego, Minnesota Comprehensive Annual Financial Report For the Year Ended December 31, 2015 Lori Johnson City Administrator Prepared by: Finance Department Member of the: Government Finance Officers' Association of the United States and Canada 0 CITY OF S+ 0 MINNESOTA. This page has been left blank intentionally. CITY OF OTSEGO, MINNESOTA TABLE OF CONTENTS Page No. INTRODUCTORY SECTION Letter of Transmittal 1 Elected Officials and Administration 8 Organizational Chart 9 Certificate of Achievement 10 FINANCIAL SECTION Independent Auditor's Report 11 Management's Discussion and Analysis 14 Basic Financial Statements Government -wide Financial Statements Statement of Net Position 28 Statement of Activities 29 Fund Financial Statements Governmental Funds Balance Sheet 30 Reconciliation of the Balance Sheet of the Governmental Funds to the Statement of Net Position 31 Statement of Revenues, Expenditures and Changes in Fund Balances 32 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of the Governmental Funds to the Statement of Activities 33 Statement of Revenues, Expenditures and Changes in Fund Balances: Budget -to -Actual General Fund 34 Proprietary Funds Statement of Net Position 36 Statement of Revenues, Expenses and Changes in Net Position 37 Statement of Cash Flows 38 Fiduciary Funds Statement of Net Position 40 Notes to the Financial Statements 41 Required Supplementary Information Schedule of Employer's Proportionate Share of Net Pension Liability 63 Schedule of Employer's Contributions 64 Combining and Individual Fund Statements and Schedules Governmental Funds Nonmajor Governmental Funds Combining Balance Sheet 66 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 67 Nonmajor Special Revenue Funds Combining Balance Sheet 70 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 71 Nonmajor Capital Projects Funds Combining Balance Sheet 74 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 78 Schedule of Revenues, Expenditures and Changes in Fund Balances: Budget -to -Actual General Fund 82 Debt Service Fund by Account Combining Balance Sheet 88 Combining Schedule of Revenues, Expenditures and Changes in Fund Balances 90 Fiduciary Funds Combining Statement of Changes in Agency Fund Assets & Liabilities 92 CITY OF OTSEGO, MINNESOTA TABLE OF CONTENTS STATISTICAL SECTION (UNAUDITED) Financial Trends Net Position by Component 94 Changes in Net Position 96 Governmental Activities Tax Revenue by Source 102 Fund Balances of Governmental Funds 104 Changes in Fund Balances of Governmental Funds 106 Revenue Capacity Estimated Actual Value, Taxable Market Value and Tax Capacity of Taxable Property 108 Tax Capacity of Real Estate & Personal Property 110 Property Tax Rates - Direct and Overlapping Governments III Principal Property Taxpayers 112 Property Tax Levies and Collections 113 Debt Capacity Ratios of Outstanding Debt by Type 114 Ratios of General Bonded Debt Outstanding 115 Computation of Direct and Overlapping Debt 116 Legal Debt Margin Information 118 Pledged Revenue Coverage 120 Demographic and Economic Information Demographic and Economic Statistics 121 Principal Employment Sectors 122 Operating Information Full -Time City Government Positions by Function 123 Operating Indicators by Function 124 Capital Asset Statistics by Function 125 CITY ®F Ot e 0 NIINNESOTA June 1, 2016 Honorable Mayor and Members of the City Council City of Otsego Transmitted herewith is the Comprehensive Annual Financial Report of the City of Otsego for the fiscal year ended December 31, 2015. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the management of the City following the policies and procedures specified by the City's system of internal control. Because the cost of internal controls should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. To the best of our knowledge and belief, the enclosed data is accurate, in all material respects, and is reported in a manner designed to present fairly the financial position and results of operations of the various funds of the City. All disclosures deemed necessary to enable the reader to gain an understanding of the City's financial activities have been included. Minnesota Statutes require that the financial statements of the City be audited annually by the State Auditor or a Certified Public Accountant selected by the City Council. These financial statements have been audited by BerganKDV (the Auditors). The Auditors expressed an unmodified opinion on the financial statements, and their opinion letter is included as the first component within the financial section of this report. The Auditors have also issued a number of other reports on compliance with Government Auditing Standards, Minnesota Legal Compliance, and a federally mandated Single Audit. These reports have been issued under separate cover. Accounting principles generally accepted in the United States of America require that management provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of a Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City's MD&A can be found immediately following the report of the auditors. City of Otsego 113400 90th Street NE, Otsego, N N 553301 Tel. (763) 441-4414 Fax (763) 441-8823 PROFILE OF THE CITY The first town site in Otsego was originally platted in 1857 in what was once known as the Big Woods, heavily laden with deciduous trees, and interspersed with rivers, ponds, and prairies. The first settlers to the area were of European descent settling the area in 1852. On April 5, 1858, Otsego Township was established. The area remained a township until 1990 when it was incorporated into the City of Otsego to more fully serve its residents and to manage growth. Otsego is located at the confluence of the Mississippi and Crow Rivers approximately thirty miles northwest of Minneapolis. The Mississippi River runs along the northern and eastern borders of the City and the Crow River runs along the southern border in the far eastern part of the City until it enters the Mississippi River. The City is located in the northeast corner of Wright County and covers an area of about 30.5 square miles. The State Demographer's most recent population estimate was 14,968, compared with 6,389 from the 2000 US Census. Otsego is the fastest growing City in Wright County and outpaces growth in neighboring cities outside Wright County. During 2015, 207 new residential housing units were constructed, the vast majority, 181 of them, being single-family homes. The City operates under the "Optional Plan A" form of government as defined in Minnesota Statutes. Under this plan, the government of the City is directed by a City Council consisting of an elected mayor and four elected councilmembers at large. The City Council exercises legislative authority and determines all matters of policy. The City Council appoints personnel responsible for the proper administration of all affairs relating to the City. The mayor and councilmembers serve four year terms with two councilmembers elected to four year terms every two years. The mayor is also elected to a four year term. The City provides its residents and businesses a full range of municipal services consisting of the construction & maintenance of highways, streets, and other infrastructure, park facilities, recreational opportunities, and general administrative services. The City services also provide public utilities including water, sanitary sewer and storm water services accounted for in enterprise funds. Police protection, fire suppression and emergency response services are provided through agreements with Wright County for police and the neighboring cities of Albertville, Elk River and Rogers for fire suppression and emergency response. In 2015, Albertville and Otsego ramped up discussion of the possibility of entering into a joint powers agreement for fire service in the area currently served by the Albertville Fire Department. The cities received a grant from the Minnesota State Fire Marshal's Office to study the benefits and challenges of entering into such agreement. The study will be complete in the summer of 2016. City of Otsego 113400 90t' Street NE, Otsego, MN 553301 Tel. (763) 441-4414 Fax (763) 441-8823 F Financial planning and control for the City of Otsego are based on the annual Operating Budget and the multi -year Capital Improvement Plan. Under Minnesota Statutes, a preliminary property tax levy must be adopted by the City Council no later than September 30th of each year for the ensuing year's collection. This establishes a maximum levy that may subsequently be lowered but may not be increased at time of final adoption. A ceiling on the increase of the annual property tax levy is established from time to time by the Minnesota Legislature. Such a limit was not in place for taxes payable 2015 and 2016. Effective establishment of this levy means that a preliminary operating budget must be prepared. The City Administrator, with the assistance of the Finance Director and management staff, prepares such a budget each year and presents it along with the preliminary levy for City Council review. The City Council is required to adopt a final tax levy and annual budget each December for the subsequent year, which begins on January 1. Departments may make transfers of appropriations within their department. However, transfers of budget appropriations between departments needs authorization of the City Administrator. The legal level of budgetary control is at the fund level, so any appropriation transfers between funds needs the approval of the City Council. In addition, a Capital Improvement Plan covering a five year period is reviewed and revised during the annual budget process. This includes projects for which the City may issue debt and/or assess portions of the cost to adjacent or benefitting property owners. Because there are limited funds available each year and the City does not wish to issue excessive amounts of debt, these projects are reviewed and reprioritized each year. ECONOMIC CONDITION Otsego continues to experience strong residential and commercial growth due to its ideal location. The City is 30 miles from downtown Minneapolis, the center of the Twin Cities metropolitan area and has excellent transportation access with Interstate 94 and State Highway 101. The City maintains a Comprehensive Plan document for land use and development to manage and encourage growth. The estimated actual value of property within the City increased more than $126 million from taxes payable 2014 to payable 2015. A significant portion of this growth in value comes from new residential and commercial/industrial growth. For taxes payable 2016, approximately $66 million of new property value was added from new construction alone, and based on preliminary data for 2017, that increase from new construction is even more ($72 million). The increased market value translates into increased tax capacity, and has allowed the City to decrease its tax rate in consecutive years. City of Otsego 113400 90t' Street NE, Otsego, MN 553301 Tel. (763) 441-4414 Fax (763) 441-8823 WJ During 2015, 207 new homes were constructed and based on year-to-date information, 2016 permits issued are ahead of 2015. This demand for housing has led to platting of several new residential developments including a 354-unit development. The lot inventory that was low in 2015 has been replenished providing two to three years of inventory based on current absorption rates. Commercial construction in 2015 included completion of the Room&Board and B1ueDot warehouses adding approximately 730,000 square feet of warehouse space. B1ueDot is already proposing an expansion to its facility, possibly in 2016. In addition, Wagner SprayTech's new 220,000 square foot warehouse is currently under construction completing development of the Gateway North industrial park. The developer of those buildings is contemplating developing another location in Otsego due to its success in filling the building sites within the Gateway North Park. A 32,400 square foot professional office building housing the Accurate Home Care's corporate headquarters was completed in 2015 and a second similarly sized building is proposed in the same development with construction anticipated in 2016. The City is working with a manufacturing company to construct a 54,000 square foot manufacturing facility on a formerly tax forfeit lot purchased by the City. The manufacturer would bring 40 jobs with an average pay of $60,000 to the City. The company received a Job Creation Fund grant from the State of Minnesota Department of Employment and Economic Development to add an additional 17 jobs. Otsego currently has one elementary school that is filled to capacity. One of the School Districts serving the City recently held a ground breaking on a new $40 million, 124,000 square foot school. The new school will serve early education to 8th grade, and is under construction in Otsego to house the City's growing student population. The school district anticipates the addition of another elementary school and a high school in Otsego in the near future. LONG-TERM FINANCIAL PLANNING The City has adopted and annually updates a five-year Capital Improvement Plan (CIP) to facilitate the growth and maintenance of public infrastructure, community facilities and capital equipment. Projects in the CIP demonstrate the importance of developing long range financial planning strategies to facilitate the growth and prosperity of the City. The process assists with both short and long range financial planning needs by: • Prioritizing capital projects and equipment acquisitions • Estimating resource needs and related cash flows • Identifying adequate and sustainable funding sources City of Otsego 113400 90' Street NE, Otsego, MN 553301 Tel. (763) 441-4414 Fax (763) 441-8823 F! MAJOR INITIATIVES In 2015, a project that has been in the development stages for years came to fruition: The 70th Street Project, a new east & west street extension that connects a major north south transportation corridor in eastern Otsego to major traffic routes in western Otsego, was constructed and opened to traffic. This transportation corridor opens new areas for development of all types and provides easy access between schools and retail areas. Two other projects fully entered development and design stages in 2015 with construction currently underway. First, construction of Northwood Park is beginning this spring. This $790,000 project will provide a new neighborhood park in the Wildflower Meadows residential development. The project includes amenities for the children in the neighborhood as well as for the townhome residents such as walking paths and community garden space. Development of this park is possible because of the substantial residential development that has occurred in the last few years and is expected to continue. Second, improvements at the one of the City's two wastewater treatment facilities moved from design in 2015 to bid award and construction in early 2016. This project will provide enhanced treatment and expansion space as the City continues to grow. There is currently adequate capacity at both of the City's treatment facilities to accommodate continued growth. Another initiative in 2015 was a comprehensive water system study. This study identifies future improvements needed to the water system and associated costs through 2032. The analysis of the water system revealed that the minor improvements needed can be funded by water system revenues and that these improvements will ensure safe and adequate water supply for the City for many years to come. RELEVANT FINANCIAL POLICIES The City Council has approved a fund balance policy that established the minimum fund balance requirements of the General Fund at forty-five percent of the subsequent year's expenditures. The policy also includes the annual review of the fund balance reserves of all other funds and the criteria for the use of reserves. Reserve balances are reviewed annually as part of the budget/financial planning process and at the time the Capital Improvement Plan is approved by the City Council. Financial management staff of the City of Otsego have developed and implemented internal controls designed to protect the City's assets from loss, abuse, theft or other misappropriation. These controls provide reasonable assurance of the safety of the City's assets while recognizing that management estimates and judgements as to the cost of such controls are also important to deriving maximum benefit from these controls. City of Otsego 113400 90' Street NE, Otsego, MN 553301 Tel. (763) 441-4414 Fax (763) 441-8823 N Policies relating to investment of City funds, billing and collection of public utility charges, management of long term debt, purchasing, fund balances and general accounting procedures have been developed. In addition, goals and objectives have been established for internal and external financial reporting and for long-term financial planning strategies. City Council adoption of these policies, goals and objectives is pending. FINANCIAL REPORTING AWARD The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Otsego for its 2014 Comprehensive Annual Financial Report (CAFR). The City first applied for this award in 2012, and has received the award every year since. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. The report must satisfy both accounting principles generally accepted in the United States and applicable federal, state and local legal requirements. A Certificate of Achievement is valid for a period of one year. It is expected that the 2015 report conforms to the Certificate of Achievement program requirements. It will be submitted to the GFOA to determine the City's eligibility for another Certificate. ACKNOWLEDGEMENTS The preparation of this report would not have been possible without the expertise and dedication of the City's Finance staff. Further, the City Council's support to promote and sustain the highest standards of professionalism in the financial management of the City of Otsego are acknowledged and appreciated. Respectfully submitted, Lori Johnson City Administrator Adam Flahert Finance Director City of Otsego 113400 90t' Street NE, Otsego, MN 55330 I Tel. (763) 441-4414 Fax (763) 441-8823 6 0 CITY OF S+ 0 MINNESOTA. This page has been left blank intentionally. CITY OF OTSEGO, MINNESOTA ELECTED OFFICIALS AND ADMINISTRATION ELECTED OFFICIALS Name Jessica Stockamp Jason Warehime Doug Schroeder Vern Heidner Tom Darkenwald ADMINISTRATION Name Position Mayor Council Member Council Member Council Member Council Member Position Lori Johnson City Administrator Andrew MacArthur City Attorney Daniel Licht City Planner Ron Wagner City Engineer Tami Loff City Clerk Adam Flaherty Finance Director Kevin Lamson Public Works Supervisor Ross Demant Parks & Recreation Supervisor Kurt Neidermeir Public Utilities Supervisor Term Expires December 31, 2016 December 31, 2016 December 31, 2016 December 31, 2018 December 31, 2018 8 0 CITY F 0 ot MINNES©TA Administrator Contracted Services ORGANIZATIONAL CHART DECEMBER 31, 2015 Commissions Planning Parks & Recreation Heritage Preservation Planning Commission Administrative Services Finance Utility Billing Professional Services Public Safety _ Parks & Recreation Information Technology Customer Service Planning Police Parks & Trails Legal Fire Recreation Engineering Building Inspections Prairie Center City Clerk Public Utilities Elections Human Resources Water Payroll Sanitary Sewer Storm Water Public Works Street Maintenance Fleet Maintenance 9 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Otsego Minnesota For its Comprehensive Annual Financial Report for the Fiscal Year Ended December 31, 2014 *11�oe AO 2 Executive Director/CEO 10 C:berganKov 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, 2015, and the related notes to financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. BerganKDV, Ltd. Cedar Falls 602 Main Street Suite 100 P.D. Box 489 Cedar Falls, IA 50613-0026 T 319.268.1715 F 319.268.1720 Cedar Rapids 27201st Avenue NE Suite 300 P.D. Box 10200 Cedar Rapids, IA 52402-0200 T 319.294.8000 F 319.294.9003 Coralville 2530 Corridor Way Suite 301 P.D. Box 5267 Coralville, IA 52241-0267 T 319.248.0367 F 319.248.0582 Des Moines 9207 Northpark Drive Johnston, ]A 50131-2933 T 515.727.5700 F 515.m.5800 Minneapolis 3800 American Blvd W Suite 1000 Bloomington, MN 55431-4420 T 952.563.6800 F 952.563.6801 St. Cloud 220 Park Avenue S P.O. Box 1304 St. Cloud, MN 56302-3713 T 320.251.7010 F 320.251.1784 Waterloo 100 East Park Avenue Suite 300 P.O. Box 2100 Waterloo, IA 50704-2100 T 319 234.6885 F 319.234.6287 bergankdv.com 11 C:berganKov 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, 2015, and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgeting comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Implementation of GASB 68 and GASB 71 As discussed in Note 6 to the financial statements, the City has adopted the provisions of the Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting, and Financial Reporting for Pensions and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, which follows this report letter, and Required Supplementary information as listed in the Table of Contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by GASB who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The introductory section, combining and individual fund financial statements and schedules and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. 12 C: berganKDV Other Information (Continued) The combining and individual fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The supplementary information contains prior year comparative information taken from the City's 2014 financial statements. We also have previously audited, in accordance with auditing standards generally accepted in the United States of America, the City's basic financial statements for the year ended December 31, 2014, which are not presented with the accompanying financial statements. In our report dated June 8, 2015, we expressed unmodified opinions on the respective financial statements of governmental activities, business type activities, each major fund, and the aggregate remaining fund information. In our opinion, the 2014 supplementary information is fairly stated in all material respects in relation to the basic financial statements for the year ended December 31, 2014, taken as a whole. The introductory section and statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated June 1, 2016, 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. St. Cloud, Minnesota June 1, 2016 13 CITY OF OTSEGO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2015 As management of the City of Otsego, Minnesota, (the City), we offer readers of the City's Comprehensive Annual Financial Report (CAER), this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2015. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages 1-6 of this CAFR. Financial Hiuhlkhts • The assets of the City exceeded its liabilities at the close of the most recent fiscal year by $56,506,946 (net position). Of this amount, $25,102,324 (unrestricted net position) may be used to meet the City's ongoing obligations to citizens and creditors. • The City's total net position increased by $852,790 (1.53%) from the previous year. The net position of the business -type activities increased $1,113,781 (4.30%). For 2015, this increase is attributable to fees received for new connections to the public Water and Sanitary Sewer Utility systems. The respective connection fees are used to repay debt service issued for the construction of infrastructure used in the public utility system. The net position of the Governmental activities decreased by $260,991 (0.88%). • As of the close of the current fiscal year, the City's governmental funds reported combined ending fund balances of $12,377,427, which is an increase of $812,591 (7.03%) from the previous year. The funds that experienced fund balance increases in 2015 were of the capital project variety, where the City is accumulating resources in anticipation of future capital expenditures. Of the total fund balance, $2,630,260 (21.25%) is unassigned, which is free from any internal or external constraints upon its use. • The General fund has a fund balance of $2,890,523 at the close of the current fiscal year. During 2015, the fund balance decreased $503,115 (14.83%) from the previous year. The primary reason for the decrease in the current year is that a transfer of $1,289,914 was made to the Capital Improvements fund in accordance with the City's Fund Balance Policy. That policy indicates that any fund balance exceeding 45% of the subsequent year's budget will be transferred, and set aside for future capital expenditures. There is $105,547 (3.65%) of fund balance that is nonspendable given that it is in the form of prepaid items, and the outlay for those assets has already occurred. The remaining fund balance is either assigned for insurance deductibles, $128,646 (4.45%) or is unassigned, $2,656,330 (91.90%). • The City's total outstanding bonded debt decreased by $1,130,000 (2.94%) during the current fiscal year, to an ending amount of $37,345,000. The decrease was the result of scheduled debt service payments. Overview of the Financial Statements The discussion and analysis are intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements include three components: 1) government -wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This CAFR also contains other supplementary information in addition to the basic financial statements themselves. Government -Wide Financial Statements: The government -wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private -sector business. The statement of net position presents information on all of the City's assets, liabilities and deferred inflows/outflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the City's overall financial position is stable, improving or deteriorating. 14 CITY OF OTSEGO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2015 The statement of activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in fixture fiscal periods (e.g. uncollected taxes, special assessments and earned but unused personal time off). Both of the government -wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City include: general government, public safety, public works, culture & recreation, economic development, and interest on long-term debt. The business- type activities of the City include: water utility, sanitary sewer utility and storm water utility. The government -wide financial statements can be found on pages 28 through 29 of this CAFR. Fund Financial Statements: A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. The funds of the City can be divided into 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 the fiscal year. Such information may be useful in evaluating a government's near -term financial requirements. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impact of the City's near -term financial decisions. Both the governmental funds balance sheet and governmental funds statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains 20 individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the following: General fund, Debt Service Fund, and the Municipal State Aid (MSA) for Construction, which are considered to be major funds. Data from the remaining governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements or schedules, elsewhere in this CAFR. 15 CITY OF OTSEGO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2015 The City adopts an annual appropriated budget for the General Fund. A budgetary comparison statement has been provided in the basic financial statements for the General fund. The basic governmental fund financial statements can be found on pages 30 through 34 of this CAFR. Proprietary Funds: Proprietary funds provide similar information to the government -wide financial statements, but in more detail. The City maintains one type of proprietary fund. Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statements. The City uses enterprise funds to account for its water, sanitary sewer and storm water utilities. All of the City's enterprise funds are considered to be major funds, and separate information is provided for each of them in the basic financial statements. The basic proprietary fund financial statements can be found on pages 36 through 38 of this CAFR Fiduciary Funds: Fiduciary funds are used to account for resources held for the benefit of parties outside the City. 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 fund financial statements can be found on page 40 of this CAFR. Notes to the Financial Statements: The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. The notes to the financial statements can be found on pages 41 through 61 of this CAFR. Other Information: In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information in relation to the City's net pension liability. The schedules can be found on pages 63 through 64 of this CAFR. The combining statements referred to earlier in connection with nonmajor governmental funds and agency funds are presented immediately following the required supplementary information. Combining statements can be found on pages 66 through 92 of this CAFR. 16 CITY OF OTSEGO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2015 Government -wide Financial Analysis As noted earlier, net position may serve over time as a useful indictor of a government's financial position. In the case of the City, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $56,506,946 at the close of the most recent fiscal year. The largest portion of the City's net position ($26,857,295 or 47.53%) reflects its investment in capital assets, which includes: land infrastructure, buildings, and machinery & equipment, less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. CITY OF OTSEGO - SUMMARY OF NET POSITION Governmental Activities Business -type Activities Increase Increase 2015 2014 (Decrease) 2015 2014 (Decrease) Current Assets $ 15,918,007 $ 15,715,994 $ 202,013 $ 15,941,662 $ 13,635,090 $ 2,306,572 Capital Assets 25,031,455 26,400,121 (1,368,666) 40,081,570 41,225,888 (1,144,318) Total Assets 40,949,462 42,116,115 (1,166,653) 56,023,232 54,860,978 1,162,254 Deferred Outflows of Resources 110,776 - 110,776 26,328 - 26,328 Long-term Liabilities 9,398,214 9,787,005 (388,791) 26,727,932 28,609,463 (1,881,531) Other Liabilities 2,065,284 1,781,170 284,114 2,265,347 144,979 2,120,368 Total Liabilities 11,463,498 11,568,175 (104,677) 28,993,279 28,754,442 238,837 Deferred Inflows of Resources 118,025 - 118,025 28,050 - 28,050 Net Investment in Capital Assets 15,303,426 15,515,291 (211,865) 11,553,869 12,619,305 (1,065,436) Restricted 4,547,327 5,430,795 (883,468) - - - Unrestricted 9,627,962 8,793,620 834,342 15,474,362 13,295,145 2,179,217 Total Net Position $ 29,478,715 $ 29,739,706 $ (260,991) $ 27,028,231 $ 25,914,450 $ 1,113,781 At the end of the current fiscal year, the City is able to report positive balances in all three categories of net position, both for the government as a whole, as well as for its separate governmental and business -type activities. A portion of the City's net position (8.05%) represents resources that are subject to external restrictions on how they may be used. The remaining portion (44.42%) may be used to meet the City's ongoing obligations to citizens and creditors. The governmental activities capital assets decreased significantly from the prior year. A majority ($743,163 or 54.30%) was the result of the County assuming ownership and responsibility for a portion of street infrastructure. The remainder of the decrease in capital assets was the result of depreciation expense exceeding any new asset additions for the year. The business -type activities had large fluctuations between long-term and current liabilities. In previous years, all of the debt outstanding was considered long-term, where in the current year there is now $2,000,000 classified as current due to scheduled principal payments in 2016. There was also a significant increase in current assets, being the result of increased cash balances from the collection of fees for new connections to the public utility system. Finally, the large decrease in capital assets was caused by depreciation on existing assets exceeding the addition of new capital assets. 17 CITY OF OTSEGO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2015 CITY OF OTSEGO - CHANGES IN NET POSITION Governmental Activities Business -type Activities Increase Increase 2015 2014 (Decrease) 2015 2014 (Decrease) Program Revenues Charges for Services $ 1,526,704 $ 2,046,445 $ (519,741) $ 2,817,217 $ 2,537,817 $ 279,400 Operating Grants and Contributions 244,497 233,606 10,891 - - - Capital Grants and Contributions 3,154,662 1,619,209 1,535,453 2,020,299 2,560,270 (539,971) General Revenues Property Taxes 4,602,153 4,476,810 125,343 25,000 24,824 176 Franchise Taxes 128,722 120,964 7,758 - - - Grants and Contributions not Restricted to Specific Programs 242,970 132,104 110,866 - - - Unrestricted Investment Earnings 55,909 157,640 (101,731) 85,259 168,320 (83,061) Other General Revenues 35,600 32,355 3,245 - 28,440 (28,440) Total Revenues 9,991,217 8,819,133 1,172,084 4,947,775 5,319,671 (371,896) Expenses General Government 1,174,510 1,230,335 (55,825) - - - Public Safety 1,670,627 1,499,538 171,089 - - - Public Works 6,521,708 2,383,890 4,137,818 - - - Culture and Recreation 792,936 792,525 411 - - - Economic Development 145,771 45,024 100,747 - - - Interest on Long-term Debt 231,242 347,503 (116,261) - - - Water Utility - - - 1,246,064 1,187,553 58,511 Sanitary Sewer Utility - - - 2,207,811 2,052,493 155,318 Storm Water Utility - - - 95,533 57,977 37,556 Total Expenses 10,536,794 6,298,815 4,237,979 3,549,408 3,298,023 251,385 Increase (Decrease) Before Transfers (545,577) 2,520,318 (3,065,895) 1,398,367 2,021,648 (623,281) Transfers 284,586 122,632 161,954 (284,586) (122,632) (161,954) Change in Net Position (260,991) 2,642,950 (2,903,941) 1,113,781 1,899,016 (785,235) Net Position - January 1 29,739,706 27,904,990 1,834,716 25,914,450 24,207,520 1,706,930 Prior Period Restatement [Note 6] - (808,234) 808,234 - (192,086) 192,086 Net Position - December 31 $ 29,478,715 $ 29,739,706 $ (260,991) $ 27,028,231 $ 25,914,450 $ 1,113,781 18 CITY OF OTSEGO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2015 Governmental Activities Governmental activities resulted in a decrease of the City's net position by $260,991. Key elements of this change is as follows: • Capital grants and contributions increased $1,535,453 (94.83%), which is the result of the funding received by the City on the 70th Street & CSAH 37 Improvement Project. For this project, the City received $901,682 of Federal grants, collected $1,081,004 of MSA Construction funds, and received $1,210,506 of cost sharing funds from Wright County. • Expenses in the public works function increased $4,137,818 (173.57%). This increase of expenses was largely driven by the 70th Street & CSAH 37 Improvement Project, which had expenses of $3,280,346 during 2015. The City also had significant public works expenses for the overlay project on Packard Avenue as well as the pro -active street maintenance. Below are specific graphs which provide comparisons of the governmental activities revenues and expenses: 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 r, Function Expenses vs. Program Revenues General Public Safety Public Works Culture & Economic Interest on Long - Government Recreation Development Term Debt ■ Expense ■ Program Revenue Revenues by Source Unrestricted Grants & Taxes Contributions 1.ise Property Taxes 2.43% 10Franchise 46.06% Investment Earnings \ 0.56% Sales of Capital Assets 0.36% Operating Grants 2.45% 19 CITY OF OTSEGO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2015 Business -type Activities Business -type activities resulted in an increase of net position by $1,113,781. Key elements of this change are as follows: • Overall, the operations of the business -type funds remained relatively consistent with the prior year. Increases were noted in charges for services and expenses, while a decrease was noted in capital grants and contributions. • The City collects fees every time a new connection is made to the public utility system. These fees constitute the majority of the capital grants and contributions line item. These connection fees go towards paying the debt service principal and interest for the bonds issued during the construction of the respective utility systems. During 2015, the amount of new connection fees exceeded the debt service expenses. Below are specific graphs which provide comparisons of the business -type activities revenues and expenses: 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 Function Expenses vs. Program Revenues Water Utility Sanitary Sewer Utility Storm Water Utility ■ Expense ■ Program Revenue Property Taxes 0.51% nent Earnings 1.72% 20 CITY OF OTSEGO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2015 Financial Analysis of the Government's Funds Governmental Funds: The focus of the City's governmental funds is to provide information on near -term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unassigned fund balance may serve as useful measure of a government's net resources available at the end of the fiscal year. At the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $12,377,427, which is an increase of $812,591 (7.03%) from the previous year. The unassigned fund balance, which is not subject to internal or external constraints upon its use, is $2,630,260 (21.25% of total). Major Funds The General fund is the primary operating fund of the City. At the end of the current fiscal year, total fund balance is $2,890,523, a decrease of $503,115 (14.83%). The primary driver in the fund balance decrease was a transfer of $1,289,914 made to the Revolving Capital Improvements fund in accordance with the City's fund balance policy. As a measure of the General fund's liquidity, it may be useful to compare both unassigned and total fund balance, to total fund expenditures. The unassigned balance, which is $2,656,330, represents 60.03% of the current year General fund expenditures. Total General fund balance represents 65.33% of those same expenditures. The Debt Service fund has a total fund balance of $2,239,970 at the end of the year, a decrease of $336,759 (13.07%) from the previous year. The City retired $1,130,000 of principal on the outstanding bonded debt during 2015. The Municipal State Aid Construction fund has a total fund balance of $41,084 at the end of the year. The decrease in fund balance was $86,835 (67.88%) from the previous year. This fund incurred $3,280,346 of capital expenditures during the year for the 70th Street & CSAH 37 Improvement Project. Proprietary Funds: The City's proprietary funds provide the same type of information presented as business -type activities found in the government -wide financial statements, but in more detail. The enterprise funds have a combined ending net position of $27,028,231, an increase of $1,113,781 (4.30%). There are two components to net position in the enterprise funds, unrestricted ($15,474,362 or 57.25%) and net investment in capital assets ($11,553,869 or 42.75%). As a measure of liquidity, the unrestricted net position amounts to 590.71% of the current year operating expenses. Other factors concerning the finances of these funds have already been addressed in the discussion of the City's business -type activities. 21 CITY OF OTSEGO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2015 Below is a graph with comparative amounts for each fund balance component for fiscal years 2013, 2014 and 2015: Governmental Fund Balance Components 10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 Nonspendable Restricted Committed Assigned Unassigned ■ 2013 ■ 2014 ■ 2015 The City also has four other components of fund balance at the end of the fiscal year including Nonspendable (0.87%), Restricted (18.41%), Committed (3.29%) and Assigned (56.18%). • Nonspendable fund balance represents the amount of assets the City has invested in prepaid items. The balance of this fund balance component largely fluctuates with the timing of certain payments (e.g. insurance premiums). • The City's restricted fund balance is the result of external constraints placed upon it. The sources of those constraints include debt service and state -aid street systems. This component stayed consistent with that of the prior year. The large decrease from 2013 to 2014 was the result of a crossover refunding transaction. • The committed fund balances are within the City's special revenue funds for Street Lighting and Revolving Loans. This fund balance component has stayed consistent over the past three years. • Assigned fund balances are primarily associated with the City's capital project funds. The fund balance in this component has been increasing each of the past three years, and is the result of the City accumulating resources for future capital improvement projects and capital equipment purchases. A more detailed breakdown of the fund balance components can be found in the basic financial statements and accompanying financial statement footnotes. 22 CITY OF OTSEGO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2015 General Fund Budeetary Hiehliehts During the year, there were no amendments to the General fund budget. The budgeted revenues and expenditures resulted in an increase of fund balance by $200,217 (5.90%). Actual results for the fiscal year were a decrease of $503,115 (14.83%). The key elements of this change are as follows: • Actual revenues exceeded the budget by $588,520 (13.08%). The largest revenue variance was provided by licenses and permits, which were over budget by $587,136. This variance was caused by the number of building permits issued for new construction (207 permits) exceeding the number used during the budget process. Charges for services also provided a positive variance of $124,178, again related to more building related activity. Some of the negative variances included intergovernmental ($127,759), investment earnings ($79,985) and property taxes ($18,547). • Actual expenditures were less than budget by $23,833 (0.54%). Individual departments with significant favorable variances include: City Council, Administration and Streets Maintenance. Departments with significant unfavorable variances include: Legal, Building Inspections, Engineering, Recreation and Planning. • Transfers in were under budget by $25,771 due to a budgeted transfer from the Capital Project funds for administration of ongoing projects, was chosen to not be made. • Transfers out were not budgeted; however, an actual transfer of $1,289,914 was made to the Revolving Capital Improvements fund. This transfer was made in accordance with the City's fund balance policy. That policy outlines that any General fund balance in excess of 45% of the subsequent year's budget will be transferred, and assigned for future capital items. The ending fund balance of the General fund ($2,890,523) represents 59.23% of the adopted 2016 budget. 23 CITY OF OTSEGO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2015 Capital Asset and Debt Administration Capital Assets: The City's investment in capital assets for its governmental and business -type activities at the end of the current year, amounts to $65,113,025 (net of accumulated depreciation). This investment in capital assets includes: land, buildings, street and utility infrastructure, parks equipment, trails, machinery and equipment and construction in progress. The City's investment in capital assets decreased $2,512,984 (3.72%) from the previous year. Major capital asset events during the current year included the following: The City updated its machinery & equipment fleet with four new pieces of equipment, all of which were replacements of previous assets. These additions include: 1) a heavy duty snow plow & dump body truck; 2) a light duty dump body truck; 3) a utility vehicle; and 4) a snow blower attachment for the City's backhoe. The City replaced its computer servers, bringing the information technology equipment up to current standards. The City installed a new section of trails along 90th Street, near Prairie Park located within the City Campus. The City installed fencing at multiple locations, most notably for the creation of a dog park located within Prairie Park, as well as to create additional secure storage space at the Public Works garage. The City has begun work on the addition of Northwood Park. Construction of the park will primarily occur in 2016, with the potential opening of the park occurring in the Fall. Northwood Park will be located on the East side of Trunk Highway 101 and North of County Road 37. Improvements were made to the pumps and control panels at Sanitary Sewer Lift Station No. 3. These improvements will allow the lift station to keep up with the ever-increasing flow to the City's treatment facilities. • The expansion of the bio solids processing digester at the West Sanitary Sewer Treatment facility is in the design stages as of year end. Construction of the expansion will begin in 2016, and will be operational by the end of the year. Land Construction in Progress Buildings and Improvements Land Improvements Machinery and Equipment Infrastructure CITY OF OTSEGO - CAPITAL ASSETS (net of depreciation) Governmental Activities Increase Business -type Activities Increase 2015 2014 (Decrease) 2015 2014 (Decrease) $ 1,959,823 $ 2,440,396 $ (480,573) 140,373 262,590 (122,217) 4,974,124 5,129,736 (155,612) 2,909,130 3,078,926 (169,796) 1,441,980 1,275,196 166,784 13,606,025 14,213,278 (607,253) $ 25,031,455 $ 26,400,122 $ (1,368,667) 550,079 $ 550,079 $ - 78,389 - 78,389 255,844 181,600 74,244 39,197,258 40,494,208 (1,296,950) $ 40,081,570 $ 41,225,887 $ (1,144,317) Additional information on the City's capital assets can be found in Note 3 (B) on pages 50 through 51 of this CAFR. 24 CITY OF OTSEGO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2015 Long -Term Debt: At the end of the current year, the City had outstanding long-term bonded debt of $37,345,000. CITY OF OTSEGO - OUTSTANDING DEBT Governmental Activities Business -type Activities Increase Increase 2015 2014 (Decrease) 2015 2014 (Decrease) General Obligation Bonds $ 9,510,000 $ 10,595,000 $ (1,085,000) $ - $ - $ - Equipment Certificates 175,000 220,000 (45,000) - - - General Obligation Revenue Bonds - - - 27,660,000 27,660,000 - Unamortized Premiums 43,029 69,830 (26,801) 867,701 946,583 (78,882) Compensated Absences 79,566 96,526 (16,960) 7,714 8,638 (924) GERF Pension Payable 816,532 - 816,532 194,060 - 194,060 Total $ 10,624,127 $ 10,981,356 $ (357,229) $ 28,729,475 $ 28,615,221 $ 114,254 Revenue streams for the repayment of the outstanding debt liabilities include: special assessments upon benefitting properties, fees from new connections to the water and sanitary sewer utility systems, and property tax levies. Should any of these sources of revenues prove inadequate, all outstanding bonds are backed by the full faith and credit of the City. The City did not issue any bonds during 2015, and made principal payments in the amount of $1,130,000, which reduced the total outstanding long-term debt by 2.94% from the previous year. The City's bond rating is AA, with a stable outlook from Standard & Poor's Ratings Services. State statutes limit the amount of general obligation debt a Minnesota city may issue to 3% of total Estimated Market Value. The current debt limitation for the City is $31,635,954, with $4,986,187 in debt outstanding that is applicable to the limit. Additional information on the City's long-term debt can be found in Note 3 (E) on pages 53 through 55 of this CAFR. 25 CITY OF OTSEGO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2015 Economic Factors and Next Year's Budget and Rates The following economic factors were identified by the City as potentially having an impact on the financial future of the City, and were considered in preparation of the 2016 operating budgets and capital improvement plans. • The Estimated Market Value of real estate and personal property within the City of Otsego increased 13.8% from taxes payable 2015 to 2016. This increase is driven by both new construction within the City as well as market driven valuation increases. • New construction in the residential sector continues within the City. There were 207 permits issued for new residential construction during 2015. A number of final plats were also approved during 2015 which will continue to provide opportunity for growth. • The City has experienced sizable industrial developments within the past few years, the majority of which is occurring in the Gateway North industrial park along Trunk Highway 101. The last of the remaining building sites within the park has been acquired, and it is expected that construction of a new facility for Wagner Spraytech will commence in the spring of 2016. • During 2015, the City acquired a parcel through tax forfeiture within the Great River Centre planned unit development district. The City has subsequently replatted the parcel into multiple building sites, and is currently in negotiations to sell one of those parcels for the development of a 54,000 square foot manufacturing facility. • The results of an engineering study have determined that an expansion is necessary for the bio-solids processing at the City's West Wastewater Treatment Facility. This expansion will match the capacity of bio-solids with the existing capacity of liquid treatment. It is expected that construction will be complete by the end of 2016, and will facilitate continued development on the City's west side. • Given all the residential growth, the City has plans to expand its park facilities to meet the growing demand. The addition of Northwood Park is planned for construction during the summer of 2016. The park will include athletic fields, a playground, park shelter, community gardens and other amenities. The park will be located on the east side of town, roughly near County Road 37 & Highway 101. • The City has continued its long range planning efforts to assure the City has accumulated the resources necessary, or have identified funding sources to provide for the ongoing maintenance and future replacement of the City's equipment and infrastructure. Requests for Information This financial report is designed to provide a general overview of the City of Otsego's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the: Finance Director, 13400 90th Street NE, Otsego, MN 55330. 26 0 CITY OF S+ 0 MINNESOTA. This page has been left blank intentionally. 27 CITY OF OTSEGO, MINNESOTA STATEMENT OF NET POSITION DECEMBER 31, 2015 Governmental Business -Type Activities Activities Total ASSETS Cash and Investments $ 12,417,978 $ 15,023,958 $ 27,441,936 Receivables Interest 46,824 - 46,824 Accounts 15,091 328,607 343,698 Taxes 82,107 - 82,107 Special Assessments 2,714,218 541,234 3,255,452 Due from Other Governments 533,567 12,973 546,540 Prepaid Items 108,222 34,890 143,112 Capital Assets Nondepreciable 2,100,196 628,468 2,728,664 Depreciable 22,931,259 39,453,102 62,384,361 Total Assets 40,949,462 56,023,232 96,972,694 DEFERRED OUTFLOWS OF RESOURCES GERF Pension Resources 110,776 26,328 137,104 Total Deferred Outflows of Resources 110,776 26,328 137,104 LIABILITIES Accounts Payable 658,159 162,039 820,198 Due to Other Governments 76,624 9,644 86,268 Accrued Salaries Payable 36,972 8,279 45,251 Accrued Interest Payable 67,616 83,842 151,458 Compensated Absences Payable Due Within One Year 15,913 1,543 17,456 Due in More than One Year 63,653 6,171 69,824 Bonds Payable Due Within One Year 1,210,000 2,000,000 3,210,000 Due in More than One Year 8,518,029 26,527,701 35,045,730 GERF Pension Payable Due in More than One Year 816,532 194,060 1,010,592 Total Liabilities 11,463,498 28,993,279 40,456,777 DEFERRED INFLOWS OF RESOURCES GERF Pension Resources 118,025 28,050 146,075 Total Deferred Inflows of Resources 118,025 28,050 146,075 NET POSITION Net Investment in Capital Assets 15,303,426 11,553,869 26,857,295 Restricted Debt Service 4,506,243 - 4,506,243 State -Aid Street Systems 41,084 - 41,084 Unrestricted 9,627,962 15,474,362 25,102,324 Total Net Position $ 29,478,715 $ 27,028,231 $ 56,506,946 The notes to the financial statements are an integral part of this statement. 28 CITY OF OTSEGO, MINNESOTA STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31.2015 Program Revenues Net (Expense) Revenue and Changes in Net Position Operating Capital Charges For Grants and Grants and Governmental Business -Type [JNCTIONS/PROGRAMS Expenses Services Contributions Contributions Activities Activities Total Government Activities General Government $ 1,174,510 $ 36,235 $ - $ $ (1,138,275) $ $ (1,138,275) Public Safety 1,670,627 1,191,134 60,132 (419,361) (419,361) Public Works 6,521,708 247,260 182,075 2,931,032 (3,161,341) (3,161,341) Culture and Recreation 792,936 52,075 2,290 223,630 (514,941) (514,941) Economic Development 145,771 - - - (145,771) (145,771) Interest on Long -Term Debt 231,242 - - (231,242) (231,242) Total Government Activities 10,536,794 1,526,704 244,497 3,154,662 (5,610,931) (5,610,931) Business -Type Activitie: Water Utility 1,246,064 1,261,303 - 527,316 542,555 542,555 Sanitary Sewer Utility 2,207,811 1,479,703 1,492,983 764,875 764,875 Storm Water Utility 95,533 76,211 - (19,322) (19,322) Total Business -Type Activities 3,549,408 2,817,217 - 2,020,299 1,288,108 1,288,108 Total $ 14,086,202 $ 4,343,921 $ 244,497 $ 5,174,961 (5,610,931) 1,288,108 (4,322,823) General Revenues Property Taxes 4,602,153 25,000 4,627,153 Franchise Taxes 128,722 - 128,722 Grants and Contributions Not Restricted to Specific Programs 242,970 - 242,970 Unrestricted Investment Earnings 55,909 85,259 141,168 Gain on Disposal of Capital Assets 35,600 - 35,600 Transfers 284,586 (284,586) - Total General Revenues and Transfers 5,349,940 (174,327) 5,175,613 Change in Net Position (260,991) 1,113,781 852,790 Net Position - January I [Restated: See Note 6] 29,739,706 25,914,450 55,654,156 Net Position - December 31 $ 29,478,715 $ 27,028,231 $ 56,506,946 The notes to the financial statements are an integral part of this statement. PWZ CITY OF OTSEGO, MINNESOTA BALANCESHEET GOVERNMENTALFUNDS DECEMBER 31, 2015 Other Debt MSA Nonmajor Total General Service Construction Governmental Governmental ASSETS Cash and Investments $ 2,919,985 $ 2,567,234 $ 10,331 $ 6,920,428 $ 12,417,978 Receivables Interest 46,824 - - - 46,824 Accounts 6,400 - - 8,691 15,091 Taxes Current 23,944 - - - 23,944 Delinquent 58,163 - - - 58,163 Special Assessments Current 543 384 - 2,630 3,557 Deferred 3,921 2,327,474 - 369,493 2,700,888 Delinquent 247 6,414 - 3,112 9,773 Due from Other Governments 1,249 - 532,318 - 533,567 Due from Other Funds - - - 333,760 333,760 Prepaid Items 105,547 2,675 - - 108,222 Total Assets 3,166,823 4,904,181 542,649 7,638,114 16,251,767 LIABILITIES Accounts Payable 100,373 1,987 501,565 54,234 658,159 Accrued Salaries Payable 36,972 - - - 36,972 Due to Other Governments 76,624 - - - 76,624 Due to Other Funds - 328,335 - 5,425 333,760 Total Liabilities 213,969 330,322 501,565 59,659 1,105,515 DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Property Taxes 58,163 - - - 58,163 Unavailable Revenue - Special Assessments 4,168 2,333,889 - 372,605 2,710,662 Total Deferred Inflows of Resources 62,331 2,333,889 - 372,605 2,768,825 FUND BALANCES Nonspendable 105,547 2,675 - - 108,222 Restricted - 2,237,295 41,084 - 2,278,379 Committed - - - 406,683 406,683 Assigned 128,646 - - 6,825,237 6,953,883 Unassigned (Deficits) 2,656,330 - - (26,070) 2,630,260 Total Fund Balances 2,890,523 2,239,970 41,084 7,205,850 12,377,427 Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 3,166,823 $ 4,904,181 $ 542,649 $ 7,638,114 $ 16,251,767 The notes to the financial statements are an integral part of this statement. 30 CITY OF OTSEGO, MINNESOTA RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION DECEMBER 31, 2015 Fund Balances - Governmental Funds $ 12,377,427 Amounts reported for the governmental activities within the statement of net position are different because: Capital assets used in governmental activities are not financial resources, and therefore, are not reported as assets in governmental funds. Cost of Capital Assets 34,669,858 Accumulated Depreciation (9,638,403) Long-term liabilities, including bonds payable, are not due and payable in the current period, and therefore, are not reported as liabilities in governmental funds. Bonds Payable (9,685,000) Unamortized Premium on Bonds Payable (43,029) Accrued Interest Payable (67,616) Compensated Absences Payable (79,566) GERF Pension Payable (816,532) Some receivables are not available soon enough to pay for the current period's expenditures, and therefore, are unavailable in governmental funds. Delinquent Property Taxes Receivable 58,163 Special Assessments Receivable 2,710,662 Deferred resources from pensions reported in governmental activities are not financial resources and are not payable in the current period, therefore are not reported in governmental funds. GERF Pension Deferred Outflows of Resources 110,776 GERF Pension Deferred Inflows of Resources (118,025) Total Net Position - Governmental Activities $ 29,478,715 The notes to the financial statements are an integral part of this statement. 31 CITY OF OTSEGO, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTALFUNDS FOR THE YEAR ENDED DECEMBER 31, 2015 REVENUES Property Taxes Franchise Taxes Licenses and Permits Intergovernmental Charges for Services Special Assessments Fines and Forfeitures Investment Earnings (net) Miscellaneous Total Revenues EXPENDITURES Current General Government Public Safety Public Works Culture and Recreation Economic Development Capital Outlay General Government Public Safety Public Works Culture and Recreation Debt Service Principal Interest Fiscal Agent Fees Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfers In Sales of Capital Assets Transfers Out Total Other Financing Sources (Uses) Net Change in Fund Balance Fund Balance - January 1 Fund Balance - December 31 Other Debt MSA Nonmajor Total General Service Construction Governmental Governmental $ 3,315,453 $ 610,000 $ - $ 726,000 $ 4,651,453 128,722 - - - 128,722 1,179,136 - - - 1,179,136 195,363 - 3,193,192 182,075 3,570,630 174,878 - - 380,782 555,660 3,540 288,368 - 268,840 560,748 11,998 - - - 11,998 15,015 - 319 40,575 55,909 65,237 - - 40,336 105,573 5,089,342 898,368 3,193,511 1,638,608 10,819,829 1,141,113 - - - 1,141,113 1,664,031 - - - 1,664,031 1,034,524 - - 9,500 1,044,024 466,205 - - - 466,205 96,211 - - 49,560 145,771 9,017 - - 60,862 69,879 2,478 - - - 2,478 - - 3,280,346 947,297 4,227,643 11,240 - - 165,913 177,153 - 1,130,000 - - 1,130,000 - 256,148 - 256,148 - 2,979 - - 2,979 4,424,819 1,389,127 3,280,346 1,233,132 10,327,424 664,523 (490,759) (86,835) 405,476 492,405 122,276 154,000 - 1,298,224 1,574,500 - - - 35,600 35,600 (1,289,914) - - - (1,289,914) (1,167,638) 154,000 1,333,824 320,186 (503,115) (336,759) (86,835) 1,739,300 812,591 3,393,638 2,576,729 127,919 5,466,550 11,564,836 $ 2,890,523 $ 2,239,970 $ 41,084 $ 7,205,850 $ 12,377,427 The notes to the financial statements are an integral part of this statement. 32 CITY OF OTSEGO, MINNESOTA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2015 Total Net Change in Fund Balances - Governmental Funds $ 812,591 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives as depreciation. Capital Outlays 578,254 Depreciation Expense (1,203,758) Assets Assumed by Wright County (743,163) The repayment of principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Principal Repayments 1,130,000 Interest on long -tern debt in the statement of activities differs from the amount reported in the governmental funds because interest is recognized as an expenditure in the funds when it is due, and thus requires the use of current financial resources. In the statement of activities; however, interest expense is recognized as the interest accrues, regardless of when it is due. 27,885 Certain revenues are recognized as soon as they are earned. Under the modified accrual basis of accounting, certain revenues cannot be recognized until they are available to liquidate liabilities of the current period. Property Taxes (49,300) Special Assessments (710,000) Intergovernmental (104,912) In the statement of activities, personnel expenses are recognized as they are accrued, however these expenses do not consume current financial resources, and under the modified accrual basis of accounting, are not reported in the governmental funds until they are due. Compensated Absences 16,959 GERF Pension (15,547) Change in Net Position - Governmental Activities $ (260,991) The notes to the financial statements are an integral part of this statement. 33 CITY OF OTSEGO, MINNESOTA GENERAL FUND - STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2015 REVENUES Property Taxes Franchise Taxes Licenses and Permits Intergovernmental Charges for Services Special Assessments Fines and Forfeitures Investment Earnings (net) Miscellaneous Total Revenues EXPENDITURES Current General Government Public Safety Public Works Culture and Recreation Economic Development Capital Outlay General Government Public Safety Culture and Recreation Total Expenditures Excess of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Budgeted Amounts Original Final Actual Amounts Variance with Final Budget - Over (Under) $ 3,334,000 $ 3,334,000 $ 3,315,453 $ (18,547) 105,000 105,000 128,722 23,722 592,000 592,000 1,179,136 587,136 323,122 323,122 195,363 (127,759) 50,700 50,700 174,878 124,178 - - 3,540 3,540 - - 11,998 11,998 95,000 95,000 15,015 (79,985) 1,000 1,000 65,237 64,237 4,500,822 4,500,822 5,089,342 588,520 1,181,723 1,181,723 1,141,113 (40,610) 1,642,083 1,642,083 1,664,031 21,948 1,067,483 1,067,483 1,034,524 (32,959) 458,893 458,893 466,205 7,312 81,350 81,350 96,211 14,861 - - 9,017 9,017 4,000 4,000 2,478 (1,522) 13,120 13,120 11,240 (1,880) 4,448,652 4,448,652 4,424,819 (23,833) 52,170 52,170 664,523 612,353 148,047 148,047 122,276 (25,771) (1,289,914) (1,289,914) Total Other Financing Sources (Uses) 148,047 148,047 (1,167,638) (1,315,685) Net Change in Fund Balance 200,217 200,217 (503,115) (703,332) Fund Balance - January 1 3,393,638 3,393,638 3,393,638 - Fund Balance - December 31 $ 3,593,855 $ 3,593,855 $ 2,890,523 $ (703,332) The notes to the financial statements are an integral part of this statement. 34 0 CITY OF S+ 0 MINNESOTA. This page has been left blank intentionally. 35 CITY OF OTSEGO, MINNESOTA STATEMENT OF NET POSITION PROPRIETARY FUNDS DECEMBER 31, 2015 ASSETS Current Assets Cash and Cash Equivalents Receivables Accounts Special Assessments Current Delinquent Due from Other Governments Prepaid Items Total Current Assets Noncurrent Assets Special Assessments Deferred Capital Assets Land Machinery and Equipment Infrastructure Construction in Progress Total Capital Assets Less: Accumulated Depreciation Net Capital Assets Total Noncurrent Assets Total Assets DEFERRED OUTFLOWS OF RESOURCES GERF Pension Resources LIABILITIES Current Liabilities Accounts Payable Due to Other Governments Accrued Salaries Payable Accrued Interest Payable Bonds Payable Compensated Absences Payable Total Current Liabilities Noncurrent Liabilities Bonds Payable (net) Compensated Absences Payable GERF Pension Payable Total Noncurrent Liabilities Total Liabilities DEFERRED INFLOWS OF RESOURCES GERF Pension Resources NET POSITION Net Investment in Capital Assets Unrestricted Total Net Position The notes to the financial statements are an integral part of this statement. Sanitary Storm Water Sewer Water Total Utility Utility Utility Enterprise $ 7,131,661 $ 7,821,147 $ 71,150 $ 15,023,958 113,189 211,644 3,774 328,607 159 - 63 222 7,970 - 689 8,659 - 12,973 - 12,973 8,562 26,328 - 34,890 7,261,541 8,072,092 75,676 15,409,309 187,280 292,201 52,872 532,353 57,392 492,687 - 550,079 165,501 213,053 - 378,554 18,084,839 32,261,740 856,654 51,203,233 - 78,389 - 78,389 18,307,732 33,045,869 856,654 52,210,255 (4,145,712) (7,866,822) (116,151) (12,128,685) 14,162,020 25,179,047 740,503 40,081,570 14,349,300 25,471,248 793,375 40,613,923 21,610,841 33,543,340 869,051 56,023,232 6,582 19,746 - 26,328 17,261 140,478 4,300 162,039 6,143 3,501 - 9,644 2,070 6,209 - 8,279 30,183 53,659 - 83,842 720,000 1,280,000 - 2,000,000 386 1,157 - 1,543 776,043 1,485,004 4,300 2,265,347 9,549,972 16,977,729 - 26,527,701 1,543 4,628 - 6,171 48,515 145,545 - 194,060 9,600,030 17,127,902 - 26,727,932 10,376,073 18,612,906 4,300 28,993,279 7,013 21,037 - 28,050 3,892,048 6,921,318 740,503 11,553,869 7,342,289 8,007,825 124,248 15,474,362 $ 11,234,337 $ 14,929,143 $ 864,751 $ 27,028,231 36 CITY OF OTSEGO, MINNESOTA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31, 2015 OPERATING REVENUES Charges for Services OPERATING EXPENSES Personal Services Supplies Insurance Utilities Services and Other Charges Depreciation Total Operating Expenses Operating Income (Loss) NONOPERATING REVENUES (EXPENSES) Antenna Rental Property Taxes Special Assessments Investment Earnings (net) Miscellaneous Revenue Interest and Fiscal Agent Fees Total Nonoperating Revenues (Expenses) Income (Loss) Before Capital Contributions and Transfers Connection Fees Transfers Out Change in Net Position Net Position - January 1 [Restated: See Note 6] Net Position - December 31 The notes to the financial statements are an integral part of this statement. Sanitary Storm Water Sewer Water Total Utility Utility Utility Enterprise $ 1,163,963 $ 1,477,603 $ 45,066 $ 2,686,632 69,361 202,802 - 271,163 159,027 109,689 4,767 273,483 7,037 22,829 - 29,866 65,683 171,175 - 236,858 137,456 281,898 69,350 488,704 473,679 824,437 21,416 1,319,532 911,243 1,612,830 95,533 2,619,606 252,720 (135,227) (50,467) 67,026 63,196 - 63,196 - 25,000 25,000 32,374 - 31,145 63,519 39,924 44,866 469 85,259 1,770 2,100 - 3,870 (334,821) (594,981) - (929,802) (197,557) (548,015) 56,614 (688,958) 55,163 (683,242) 6,147 (621,932) 527,316 1,492,983 - 2,020,299 (95,748) (179,838) (9,000) (284,586) 486,731 629,903 (2,853) 1,113,781 10,747,606 14,299,240 867,604 25,914,450 $ 11,234,337 $ 14,929,143 $ 864,751 $ 27,028,231 37 CITY OF OTSEGO, MINNESOTA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31, 2015 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from Customers and Users Other Operating Receipts Payments to Suppliers Payments to Employees Net Cash Flows Provided (Used) by Operating Activities Sanitary Storm Water Sewer Water Total Utility Utility Utility Enterprise $ 1,136,687 $ 1,415,195 $ 44,733 $ 2,596,615 145,820 2,100 26,968 174,888 (367,105) (589,002) (77,989) (1,034,096) (65,902) (202,006) - (267,908) 849,500 626,287 (6,288) 1,469,499 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Property Taxes - 25,527 25,527 Interest Paid on Revenue Bonds (362,887) (644,875) - (1,007,762) Transfers Out (95,748) (179,838) (9,000) (284,586) Net Cash Flows Provided (Used) by Noncapital Financing Activities (458,635) (824,713) 16,527 (1,266,821) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and Construction of Capital Assets (12,542) (47,771) - (60,313) Connection Fees 508,381 1,336,575 - 1,844,956 Net Cash Flows Provided by Capital and Related Financing Activities 495,839 1,288,804 1,784,643 CASH FLOWS FROM INVESTING ACTIVITIES Interest on Investments Net Increase in Cash and Cash Equivalents Cash and Cash Equivalents - January 1 Cash and Cash Equivalents - December 31 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES Operating Income (Loss) Adjustments to Reconcile Operating Income (Loss) to Net Cash Flows Provided (Used) by Operating Activities: Depreciation GERF Pension Activity Other Income Related to Operations (Increase) Decrease in Assets & Deferred Outflows of Resources: Accounts Receivable Special Assessments Due from Other Governments Prepaid Items Increase (Decrease) in Liabilities & Deferred Inflows of Resources Accounts Payable Due to Other Governments Accrued Salaries Payable Compensated Absences Payable Net Cash Flows Provided (Used) by Operating Activities NONCASH FINANCING ACTIVITIES Amortization of Premium on Bonds Payable Acquisition of Capital Assets on Account Prior Period Adjustment for GERF Pension Liability The notes to the financial statements are an integral part of this statement. 39,924 44,866 469 85,259 926,628 1,135,244 10,708 2,072,580 6,205,033 6,685,903 60,442 12,951,378 $ 7,131,661 $ 7,821,147 $ 71,150 $ 15,023,958 $ 252,720 $ (135,227) $ (50,467) $ 67,026 473,679 824,437 21,416 1,319,532 925 2,771 - 3,696 97,340 2,100 31,145 130,585 (27,276) (49,435) (687) (77,398) 48,480 (4,177) 44,303 - (12,973) 354 (12,619) (3,775) (9,687) - (13,462) 5,496 2,775 (3,872) 4,399 377 3,501 - 3,878 901 (417) - 484 633 (1,558) - (925) $ 849,500 $ 626,287 $ (6,288) $ 1,469,499 $ 28,398 $ 50,484 $ $ 78,882 $ - $ 114,902 $ - $ 114,902 $ (48,021) $ (144,065) $ - $ (192,086) 38 0 CITY OF S+ 0 MINNESOTA. This page has been left blank intentionally. 39 CITY OF OTSEGO, MINNESOTA STATEMENT OF FIDUCIARY NET POSITION AGENCYFUNDS DECEMBER 31, 2015 ASSETS Current Assets Cash and Cash Equivalents LIABILITIES Current Liabilities Accounts Payable Escrow Deposits Total Liabilities The notes to the financial statements are an integral part of this statement. Agency Funds $ 1,167,502 27,642 1,139,860 $ 1,167,502 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. REPORTING ENTITY The City of Otsego, Minnesota (the City) was incorporated in 1990 after being an established township since 1858. The City operates under the "Optional Plan A" form of government, as defined in Minnesota statutes. The governing body of the City (City Council) consists of an elected Mayor, and four elected Council members, all of which are elected at -large and serve four year staggered terms. The City Council exercises legislative authority and determines all matters of policy. The financial statements of the City have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), as applied to governmental units by the Governmental Accounting Standards Board (GASB). The City includes all funds, organizations, institutions, agencies, departments, boards, and offices that are not legally separate from the City. Component units are legally separate organizations for which the elected officials of the City are financially accountable and are included within the basic financial statements of the City because of the significance of their operational or financial relationships with the City. The City is considered financially accountable for a component unit if it appoints a voting majority of the organization's governing body and is able to impose its will on the organization by significantly influencing the programs, projects, activities, or level of services performed or provided by the organization, or there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the City. Blended component units, although legally separate, are, in substance, part of the government's operations. A blended component unit is reported as if it were a fund of the City throughout the year. It is included at both the government -wide and fund financial reporting levels. A description of the City's blended component units follows: The City of Otsego Economic Development Authority (EDA) — The EDA is a legal entity separate from the City. Although legally separate, the EDA is reported as if it were part of the primary government because the Board of Commissioners is made up of the Mayor and four Council members and the City has operational responsibility over the EDA. It is this criterion that results in the EDA being reported as a blended component unit within the primary government, although there is currently no financial activity for the EDA. Separate financial statements would not be prepared for the EDA, even if there was financial activity. B. GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS The government -wide financial statements (i.e., the statement of net position and the statement of activities) report information on all non -fiduciary activities of the City and its component units. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or business -type activity and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or business -type activity. Taxes and other items not included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. 41 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 The Agency funds are presented in the fiduciary fund financial statements, including the Statement of Fiduciary Net Position. Since by definition, these assets are being held for the benefit of a third party, 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 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 and special assessments are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, compensated absences, as well as expenditures related to claims and judgements, are recorded only when payment is due. Property taxes, special assessments, intergovernmental revenues, charges for services and interest associated with the current fiscal year are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal year. Only the portion of special assessments receivable due within the current fiscal year is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City. The City reports the following major governmental funds: General Fund - This is the City's primary operating fund, and accounts for all of the general financial resources of the City, except those required to be accounted for in another fund. Most of the current day-to-day operations of the City are financed from this fund. Debt Service Fund - This fund is used to account for the collection of property taxes, special assessments and other resources which are used to repay the principal and interest on debt issued for various improvements in the City. Municipal State Aid for Construction Capital Project Fund - This fund was established to account for the State allotment of construction aid. The source of the State funding is provided for through collection of gasoline taxes. The funds accumulated are used on transportation related construction projects. The City reports the following major enterprise funds: Water Utility Fund - This fund accounts for the operations of the public water utility system. The resources accumulated are primarily from system user charges and system connection fees. The accumulated funds are then used to pay for the operational costs of pumping and distributing water to the system customers. The fund also accumulates resources to finance certain capital improvements and to pay the debt service associated with the water utility. Sanitary Sewer Utility Fund - This fund accounts for the operations of the public sewer utility system. The resources accumulated are primarily from system user charges and system connection fees. The accumulated funds are then used to pay for the operational costs of collection and treatment of sewage from the system. The fund also accumulates resources to finance certain capital improvements and to pay the debt service associated with the sewer utility. Storm Water Utility Fund - This fund accounts for the operations of the storm water collection system. The resources accumulated are primarily from system user charges and property taxes. The accumulated funds are then used to pay for the operational costs of collection and treatment of surface water runoff that does not require treatment. 42 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 The City reports the following fiduciary funds: Agency Funds - These funds are custodial in nature and do 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. As a general rule, the effect of interfund activity has been eliminated from the government -wide financial statements. Exceptions to this general rule are transactions that would be treated as revenues, expenditures or expenses if they involved external organizations, such as buying goods and services or payments in lieu of taxes. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Proprietary funds distinguish operating revenues and expenses from non -operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the enterprise funds are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenue and expenses. D. DEPOSITS AND INVESTMENTS The City's cash and cash equivalents are considered to be cash on hand, demand deposits and investments with a maturity of three months or less when from the date of acquisition. All of the deposits and investments allocated to the proprietary funds are considered to meet this criteria. Cash balances from all funds are pooled and invested, to the extent available, in certificates of deposit and other authorized investments. Earnings from such investments are allocated on the basis of applicable participation by each of the funds. Minnesota statute § 118A.04 governs the investment of public funds and outlines the allowable investment types. The City's investment policy is more restrictive than statute, and authorizes the City to invest in the following: a] Securities which are direct obligations or are guaranteed or insured issues of the United States, its agencies, its instrumentalities, or organizations created by an act of Congress. b] Shares of investment companies registered under the Federal Securities Act of 1940, and received the highest credit rating and is rated in one of the two highest categories by at least one nationally recognized statistical rating agency. c] Obligations of any state or local government with taxing powers rated "A" for general obligations or with a rating of "AA" or better for revenue backed obligations, with the ratings being provided by a national bond rating service. d] Commercial paper issued by a United States corporation or their Canadian subsidiaries that is rated in the highest quality by at least two nationally recognized rating agencies. e] Time deposits that are fully insured by the Federal Deposit Insurance Corporation. Investments for the City are reported at fair value. E. RECEIVABLES AND PAYABLES Accounts Receivable Receivables include amounts billed for services provided by the City before year-end. Receivables within the enterprise funds do include unbilled charges for services provided from the middle of December to the end of the year, as the City bills for those services mid -month. The City currently has not established an allowance for doubtful accounts for either trade or utility charge receivables. The City annually certifies unpaid trade and utility charge receivable to Wright County for collection in the following year, and is the primary factor in reporting the receivables at a gross amount, rather than net of allowance. 43 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 Property Taxes The City Council annually adopts a property tax levy and certifies it to Wright County in December. The County allocates this levy across taxable properties in the City based on valuations assessed in the prior year. These taxes become an enforceable lien against the property on January 1 st, and are recorded as receivables by the City as of that date. Tax statements are generated and mailed by the County to the respective taxpayers, with half of the total due on May 15th and the second half due on October 15th. The County is also the collecting agency, and remits the amounts collected to the City with primary settlements in June and December, and a minor settlement in January. Property taxes that are unpaid as of December 31 st, are then classified as delinquent. Delinquent taxes receivable include the past six years of uncollected taxes and are fully offset by a deferred inflow of resources for those collections not received within 60 days of year-end in the governmental fund financial statements. Special Assessments Special assessments represent the financing for public improvements paid for by benefiting property owners. These assessments are recorded as receivables upon certification to the County. Special assessments have been offset by a deferred inflow of resources for those collections not received within 60 days after year end in the governmental fund financial statements. Interfund Receivables and Payables During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. Short-term interfund loans are classified as "due to/from other funds." All short-term interfund receivables and payables at December 31, 2015 are planned to be eliminated in 2016. Long-term interfund loans are classified as "advances to/from other funds." Any residual balances outstanding between the governmental activities and business -type activities are reported in the government -wide financial statements as "internal balances". F. PREPAID ITEMS Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government -wide and fund financial statements. Prepaid items are reported using the consumption method and recorded as expenditures/expenses at the time of consumption rather than when purchased. G. CAPITAL ASSETS Capital assets, which include property, plant, equipment, infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), and intangible assets such as easements and computer software, are reported in the applicable governmental or business -type activities columns in the government -wide financial statements and the proprietary fund financial statements. Capital assets are defined by the City as assets with an initial, individual cost in excess of the amounts in the table below and with an estimated useful life in excess of 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. Infrastructure $ 100,000 Buildings and Building Improvements 25,000 Land Improvements 10,000 Machinery and Equipment 5,000 The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business -type activities is included as part of the capitalized value of the assets constructed. For the year ended December 31, 2015 no interest was capitalized in connection with construction in progress. !Id CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 Capital assets of the City, are depreciated using the straight line method over the following estimated useful lives: Infrastructure 20 - 60 years Buildings and Building Improvements 15 - 40 years Land Improvements 15 - 30 years Machinery and Equipment 3 - 15 years H. DEFERRED OUTFLOWS OF RESOURCES In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has only one item that qualifies for reporting in the category, Deferred Pension Resources. This item is reported only in the statements of net position. This item results from two factors: 1) actuarial calculations for the difference between projected and actual investment earnings on plan investments; 2) GERF contributions paid subsequent to the measurement date. I. COMPENSATED ABSENCES It is the City's policy to permit employees to accumulate earned but unused personal time -off (PTO) benefits. All PTO pay is accrued when incurred in the government -wide and proprietary fund financial statements. A liability for these amounts is reported in governmental fund financial statements only if they have matured, for example, as a result of an employee retirement or resignation. The General fund is typically used to liquidate the compensated absences payable for governmental activities. J. LONGTERM OBLIGATIONS In the government -wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund type statement of net position. Bond premiums and discounts are amortized over the life of the bonds using the straight line method. Bonds payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. K. PENSIONS For purposes of measuring the net pension liability, deferred outflows of resources, deferred inflows of resources, and pension expense, information about the fiduciary net position of the Public Employees Retirement Association (PERA) and additions to or deductions from PERA's fiduciary net position have been determined on the same basis as they are reported by PERA except that PERA's fiscal year end is June 30. For this purpose, plan contributions are recognized as of employer payroll paid dates and benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. L. POSTEMPLOYMENT 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 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. !14y CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 M. DEFERRED INFLOWS OF RESOURCES In addition to liabilities, statements of financial position or balance sheets will sometimes report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of net position that applies to future periods and so will not be recognized as an inflow of resources (revenue) until that time. The City has two types of items which qualify for reporting in this category. One item, unavailable revenue, which arises only under a modified accrual basis of accounting, therefore, is reported only in the governmental funds Balance Sheet. The governmental funds report unavailable revenue from sources such as: property taxes and special assessments not collected within 60 days of year-end. These amounts are deferred and recognized as an inflow of resources in the period the amounts become available. The second item, deferred pension resources, is reported only in the statements of net position. This item results from two factors: 1) the net effect of actuarial calculations for the change in proportionate share of the GERF pension; and 2) actuarial calculations for the difference between expected and actual economic experience. N. FUND EQUITY Fund equity in the fund financial statements is classified as fund balance for governmental funds and net position for proprietary funds. Fund equity in the government -wide financial statements is classified as net position for both governmental and business -type activities. Fund Balance — In the fund financial statements, governmental funds report fund balance in classifications that disclose restraints for which amounts in those funds can be spent. These classifications are as follows: Nonspendable — consists of amounts that are not in spendable form or are required to be maintained intact Restricted — consists of amounts related to externally imposed constraints established by creditors, grantors or contributors; or constraints imposed by state statutory provisions. Committed — consists of internally imposed constraints. These constraints are imposed by formal action (resolution) of the City Council, which is the highest level of decision making authority. Assigned — consists of internally imposed constraints. These constraints reflect the specific purpose for which it is the City's intended use. These constraints are established by the City Council or, pursuant to council resolution, the City Administrator or the Finance Director. Unassigned — is the residual classification for the General fund and also reflects negative residual amounts in other funds. When committed, assigned, or unassigned resources are available for an allowable use, it is the City's policy to use resources in the following order; 1) committed, 2) assigned, and 3) unassigned. The City has formally adopted a fund balance policy for the General Fund. The policy establishes a year-end target fund balance amount of 45% of the next year's operating budget for cash flow needs. Net Position — Net position represents the difference between assets, deferred outflows of resources, liabilities and deferred inflows of resources. Net position can be displayed in the three following classifications: Net Investment in Capital Assets — consists of capital assets, net of accumulated depreciation, and further reduced by the outstanding balance of any long-term debt used to build or acquire the respective capital assets. Restricted — reported when there are limitations of use through external restrictions imposed by creditors, grantors, or laws and regulations of other governments. Unrestricted — all remaining net position is reported in this classification. When both restricted and unrestricted net position are available for an allowable use, it is the government's policy to use restricted resources first, then unrestricted resources as they are needed. :• CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 O. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP), requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ from such estimates. 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 (GAAP) for the General fund. All annual appropriations lapse at year-end. The City does not use encumbrance accounting. In June of each year, General fund departments submit requests for appropriations to the City Administrator so that a budget may be prepared. The requested budget appropriations are presented and reviewed with the City Council. The proposed General fund budget and preliminary property tax levy must be certified to Wright County prior to September 30. The City Council holds public hearings and a final budget is adopted in early December, with the final property tax levy required to be certified to Wright County prior to the end of December. The appropriated budget is prepared by fund and department. The City's department heads are authorized to make transfers of budgeted appropriations within a department. Any transfers of appropriations between a department needs authorization of the City Administrator. The legal level of budgetary control is at the fund level, so any appropriations transfers between funds needs the approval of the City Council. There were no transfers of budgeted appropriations or budget amendments during the year. B. DEFICIT FUND EQUITY Deficit fund equity exists at December 31, 2015 in the following funds: Nonmajor Governmental Funds: Capital Project Funds Odean Improvements $ 5,425 80th Street Improvements 20,645 The deficits are being funded through internal borrowing. The Odean Improvements fund deficit will be repaid with future collections of special assessments against the benefitting property owners. The 80th Street Improvement fund deficit will be repaid with reimbursements from Independent School District 728 as the project was initiated by their school construction. NOTE 3 DETAILED NOTES ON ALL FUNDS A. DEPOSITS AND INVESTMENTS In accordance with Minnesota Statutes, the City maintains deposits at only those depository banks authorized by the City Council. All such depositories are members of the Federal Reserve System. Minnesota Statutes require that all City deposits with financial institutions be protected by federal deposit insurance, corporate surety bonds or collateral. The market value of collateral pledged must equal 110% of the deposits not covered by insurance or bonds. Minnesota Statutes require that all securities pledged as collateral be placed in safekeeping in a restricted account at the Federal Reserve Bank, or in an account at a trust department of a commercial bank or other financial institution that is not owned or controlled by the financial institution furnishing the collateral. At year-end, the City's carrying amount of deposits was $7,852,214, and a bank balance of $7,981,972. Custodial credit risk for the City's deposits would arise in the event of a bank failure, where the City's deposits may not be returned to it. As of year-end, the City's bank balance was not exposed to custodial credit risk because it was insured and fully MA CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 collateralized with securities held by the pledging financial institution's trust department or agent in the City's name. As of December 31, 2015 the City had the following investments: Investment Maturities (In Years) Investment Type Fair Value < 1 1-3 3 - 5 > 5 Negotiable Certificates of Deposit $12,143,006 $ 5,108,816 $ 6,111,830 $ 536,782 $ 385,578 U.S. Government Agency Securities 5,953,384 1,614,150 3,470,253 292,490 576,491 Municipal Bonds 2,368,603 177,960 1,978,245 - 212,398 Brokered Money Market Accounts 291,631 291,631 - - - Total $20,756,624 $ 7,192,557 $ 11,560,328 $ 829,272 $ 1,174,467 As of December 31, 2015, the City's investments in U.S. Government Agency Securities and Municipal Bonds carried the following ratings as well as their respective concentration percentage when compared to the total investment portfolio. Investment Tvne U.S. Government Agency Securities Federal Farm Credit Bank (FFCB) Federal Home Loan Bank (FHLB) Federal Home Loan Mortgage Corporation (FHLMC) Federal National Mortgage Association (FNMA) Total Moody's S & P Fair Portfolio Rating Rating Value Concentration % Aaa AA+ $ 2,163,740 10.42% Aaa AA+ 1,380,254 6.65% Aaa AA+ 2,116,900 10.20% Aaa AA+ 292,490 1.41 % $ 5,953,384 28.68% None of the U.S. Government Agency Securities investments are individually over 5% of the total investment portfolio. Municipal Bonds Lake City School District #813, Minnesota n/a AA+ $ 100,156 0.48% LaCrosse County, Wisconsin Aal n/a 77,804 0.37% Scott County, Minnesota Aal n/a 91,190 0.44% City of Glencoe, Minnesota Al n/a 100,053 0.48% City of North Mankato, Minnesota n/a AA 56,047 0.27% Linn County, Iowa Aaa n/a 202,124 0.97% State of California Aa3 AA- 997,950 4.81% City of Elbow Lake, Minnesota n/a A 101,083 0.49% City of Ennis, Texas Aa3 n/a 429,798 2.07% City of Kaukauna, Wisconsin n/a AA- 212,398 1.02% Total $ 2,368,603 11.41% The following is a summary of total deposits and investments as of December 31, 2015: Deposits Investments Petty Cash and Change Funds Total $ 7,852,214 20,756,624 600 $ 28,609,438 The City's deposits and investments as of December 31, 2015 are presented in the basic financial statements as follows: Statement of Net Position Statement of Fiduciary Net Position Total $ 27,441,936 1,167,502 $ 28,609,438 ::] CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 Interest Rate Risk — This is the risk that the market values of the securities in the City's investment portfolio would decrease due to changes in market interest rates. The City identifies interest rate risk within the second and fourth objectives of the City's investment policy, which are liquidity and return on investment. The City attempts to limit its exposure to interest rate risk by keeping the investment portfolio sufficiently liquid to meet cash flow requirements, while still attempting to obtain a reasonable return on investment. The City also addresses interest rate risk by attempting to create proportions in the maturities of the City's investment portfolio which places longer term investments higher on the yield curve than those shorter term investments. Credit Risk — This is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Minnesota Statutes limits allowable investments to those that are in the top two ratings issued by nationally recognized statistical rating organizations. The City's investment policy also addresses credit risk by further limiting investments to the list provided within Note 1-D. Concentration of Credit Risk — This is the risk of loss attributed to the magnitude of the City's investment in any single issuer. The first objective of the City's investment policy is safety. To obtain this objective, diversification is to be considered in the type of investment, maturity and the issuer of the respective investments. Each of the City's certificates of deposit are purchased in amounts not exceeding federal deposit insurance. The tables above outline the concentrations of the City's other investment types, including U.S. Government Agency Securities and Municipal Bonds. Custodial Credit Risk — This is the risk that in the event of the failure of a counterparty to an investment, the City will not be able to recover the value of an investment or collateral securities that are in possession of an outside party. In accordance with the City's investment policy, all investment securities shall be held by a single safekeeping agent in the name of the City. PIT CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 B. CAPITAL ASSETS Capital asset activity for the year ended December 31, 2015 was as follows: Governmental Activities: Capital Assets, not Being Depreciated: Land Construction in Progress Total Capital Assets, not Being Depreciated Capital Assets, Being Depreciated: Buildings and Building Improvements Land Improvements Machinery and Equipment Infrastructure Total Capital Assets, Being Depreciated Less Accumulated Depreciation for: Buildings and Building Improvements Land Improvements Machinery and Equipment Infrastructure Total Accumulated Depreciation Total Capital Assets Being Depreciated - Net Governmental Activities Capital Assets - Net Beginning Ending Balance Increases Decreases Balance $ 2,440,396 $ - $ (480,573) $ 1,959,823 262,590 140,373 (262,590) 140,373 2,702,986 140,373 (743,163) 2,100,196 6,471,210 - - 6,471,210 4,857,641 27,400 - 4,885,041 2,962,280 410,481 (288,156) 3,084,605 18,128,806 - - 18,128,806 32,419,937 437,881 (288,156) 32,569,662 1,341,474 155,612 - 1,497,086 1,778,715 197,196 - 1,975,911 1,687,084 243,697 (288,156) 1,642,625 3,915,528 607,253 - 4,522,781 8,722,801 1,203,758 (288,156) 9,638,403 23,697,136 (765,877) - 22,931,259 $ 26,400,122 $ (625,504) $ (743,163) $ 25,031,455 Depreciation expense was charged to the functions of the City as follows: Governmental Activities: General Government Public Safety Public Works Culture and Recreation Total Depreciation Expense - Governmental Activities $ 15,049 3,986 904,765 279,958 $ 1,203,758 50 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 Beginning Ending Balance Increases Decreases Balance Business -type Activities: Capital Assets, not Being Depreciated: Land $ 550,079 $ - $ - $ 550,079 Construction in progress - 78,389 - 78,389 Total Capital Assets, not Being Depreciated Capital Assets, Being Depreciated: Machinery and Equipment Infrastructure Total Capital Assets, Being Depreciated Less Accumulated Depreciation for: Machinery and Equipment Infrastructure Total Accumulated Depreciation 550,079 78,389 - 628,468 349,015 96,826 (67,287) 378,554 51,203,233 - - 51,203,233 51,552,248 96,826 (67,287) 51,581,787 167,415 22,582 (67,287) 122,710 10,709,025 1,296,950 - 12,005,975 10,876,440 1,319,532 (67,287) 12,128,685 Total Capital Assets Being Depreciated - Net 40,675,808 (1,222,706) - 39,453,102 Business -type Activities Capital Assets - Net $ 41,225,887 $ (1,144,317) $ - $ 40,081,570 Depreciation expense was charged to the functions of the City as follows: Business -type Activities Water Utility $ 473,679 Sanitary Sewer Utility 824,437 Storm Water Utility 21,416 Total Depreciation Expense - Business -type Activities $ 1,319,532 C. CONSTRUCTION COMMITMENTS At December 31, 2015 the City had construction project contracts in progress. The commitments related to remaining contract balances are summarized as follows: Proj ect 70th Street & CSAH 37 Improvement Project Contract Remaining Amount Commitment $ 3,442,919 $ 472,656 51 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 D. INTERFUND BALANCES AND TRANSFERS At December 31, 2015, the composition of balances for due to/from other funds of the City were as follows: Fund Major Governmental Funds: Debt Service Nonmajor Governmental Funds: Capital Project Funds Capital Improvements Odean Improvements Total Due from Due to Other Funds Other Funds - $ 328,335 333,760 - - 5,425 $ 333,760 $ 333,760 Interfund due to/from balances are representative of lending/borrowing arrangements to cover deficit cash balances at the end of the fiscal year. Balances in both the Debt Service and Odean Improvements funds will be repaid with the future collection of special assessments on benefiting property owners. Transfers between funds made during the year ended December 31, 2015 were as follows: Fund Major Governmental Funds: General Debt Service Nonmajor Governmental Funds: Capital Improvements Wellhead Protection Total Governmental Funds Major Proprietary Funds: Water Utility Sanitary Sewer Utility Storm Water Utility Total Proprietary Funds Total All Funds Transfer In Transfer Out 122,276 $ 1,289,914 154,000 - 1,289,914 - 8,310 - 1,574,500 1,289,914 95,748 179,838 9,000 284,586 $ 1,574,500 $ 1,574,500 Interfund transfers allow the City to allocate financial resources to the funds that receive benefit from services provided by another fund or to provide additional capital and infrastructure funding. In addition, interfund transfers are occasionally authorized to allow redistribution of resources between funds for the most efficient use of funds. In 2015, the following transfers were made between funds: The General fund transferred $1,289,914 to the Capital Improvements fund in accordance with the City's fund balance policy, which allows for any balance exceeding the minimum fund balance to be set aside for future projects in the City The Water, Sanitary Sewer and Storm Water funds transferred $56,638, $56,638 and $9,000 respectively to the General fund to provide for the reimbursement of Personnel and Administrative Service costs. The Water and Sanitary Sewer funds transferred $30,800 and $123,200 to the Debt Service fund to contribute their portion of the debt service associated with the purchase of the Jet Vac truck. • The Water fund transferred $8,310 to the Wellhead Protection fund to close out the deficit fund balance. All future costs associated with the wellhead protection plan will be expensed directly into the Water fund. 52 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 E. LONG-TERM DEBT Governmental Activities The City issued general obligation bonds to provide funding for the acquisition and construction of major capital facilities and construction of infrastructure in the governmental activities. General obligation bonds have also been issued to refinance general obligation improvement bonds, which were originally intended to be fully repaid with collections of special assessments. All long-term indebtedness outstanding is backed by the full faith and credit of the City. Bonds in the governmental activities will be retired with future property tax levies and collections of special assessments. In the event that a deficiency exists because of unpaid or delinquent taxes or special assessments at the time a debt service payment is due, the City must provide resources to cover the deficiency until other resources are available. At the end of the current year, there are $5,096,751 of assets accumulated in the debt service funds for future debt service. Included within those accumulated assets, there are $6,414 of delinquent special assessments receivable, of which collection is uncertain. General Obligation Bonds: Improvement Bonds, Series 2007B Equipment Certificates, Series 2010A Refunding Bonds, Series 2010B Refunding Bonds, Series 2010D Refunding Bonds, Series 2011A Refunding Bonds, Series 2012A Total - Bonded Indebtedness Other Liabilities: Unamortized Bond Premium Compensated Absences Payable GERF Pension Payable Interest Rates Date Final Maturity Date Original Issue Payable 12/31/15 4.00% ll/l/2007 12/1/2016 $ 680,000 $ 100,000 2.00 - 3.25% 1/28/2010 7/15/2019 385,000 175,000 2.00 - 3.00% 11/30/2010 12/1/2021 3,705,000 2,710,000 2.00 - 3.60% 11/30/2010 2/1/2028 1,220,000 1,220,000 2.00 - 3.20% 12/21/2011 2/l/2028 4,640,000 4,280,000 2.00% 3/14/2012 12/1/2021 1,400,000 1,200,000 $ 12,030,000 9,685,000 43,029 79,566 816,532 Total Governmental Activities $ 10,624,127 Annual debt service requirements to maturity for governmental activities long-term indebtedness are as follows: Year Ending December 31 Governmental Activities General Obligation Bonds Equipment Certificates Principal Interest Principal Interest 2016 $ 1,165,000 $ 228,148 $ 45,000 $ 5,350 2017 1,080,000 202,748 45,000 4,000 2018 1,115,000 180,225 45,000 2,650 2019 1,145,000 155,655 40,000 1,300 2020 1,160,000 129,344 - - 2021- 2025 2,840,000 310,581 - - 2026 - 2028 1,005,000 49,783 - - Total $ 9,510,000 $ 1,256,484 $ 175,000 $ 13,300 53 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 Business -type Activities The City issued general obligation bonds to provide funding for the acquisition and construction of major capital facilities and construction of infrastructure in the business -type activities. All long-term indebtedness outstanding is backed by the full faith and credit of the City. Bonds in the business -type activities will be retired with the net revenues of the Water and Sanitary Sewer funds. (Net revenues are defined as the excess of gross revenues and earnings over the normal, reasonable and current costs of operating and maintenance). In the event that a deficiency exists because of inadequate net revenues at the time a debt service payment is due, the City must provide resources to cover the deficiency until other resources are available. At the end of the current year, the Water and Sanitary Sewer funds provided net revenues of $2,137,792, which accounts for a debt -service coverage ratio of 212.13%. Final Interest Maturity Original Payable Rates Date Date Issue 12/31/15 General Obligation Bonds: Revenue Bonds, Series 2009A 4.00 - 4.13% 12/1/2009 12/1/2027 $ 6,360,000 $ 6,360,000 Revenue Bonds, Series 2010C 2.00 - 5.00% 11/30/2010 12/1/2026 21,300,000 21,300,000 Total - Bonded Indebtedness $ 27,660,000 27,660,000 Other Liabilities: Unamortized Bond Premium 867,701 Compensated Absences Payable 7,714 GERF Pension Payable 194,060 Total Business -type Activities $ 28,729,475 Annual debt service requirements to maturity for business -type activities long-term indebtedness are as follows Business -type Activities Year Ending General Obligation Bonds December 31 Principal Interest 2016 $ 2,000,000 $ 1,006,110 2017 2,035,000 966,110 2018 2,130,000 884,710 2019 2,220,000 799,510 2020 2,335,000 710,710 2021 - 2025 12,185,000 2,240,488 2026 - 2027 4,755,000 289,515 Total $ 27,660,000 $ 6,897,153 &Fd CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 Changes in Long -Term Liabilities Long-term liability activity for the year ended December 31, 2015 was as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental Activities: Bonds Payable: General Obligation Bonds $10,595,000 $ - $ (1,085,000) $ 9,510,000 $ 1,165,000 Equipment Certificates 220,000 - (45,000) 175,000 45,000 Total Bonded Indebtedness 10,815,000 - (1,130,000) 9,685,000 1,210,000 Unamortized Bond Premium 69,830 - (26,801) 43,029 - Compensated Absences 96,526 90,855 (107,815) 79,566 15,913 GERF Pension Payable - 832,079 (15,547) 816,532 - Total - Governmental 10,981,356 922,934 (1,280,163) 10,624,127 1,225,913 Business -type Activities: Bonds Payable: General Obligation Bonds 27,660,000 - - 27,660,000 2,000,000 Unamortized Bond Premium 946,583 - (78,882) 867,701 - Compensated Absences 8,638 10,982 (11,906) 7,714 1,543 GERF Pension Payable - 197,756 (3,696) 194,060 - Total - Business -type 28,615,221 208,738 (94,484) 28,729,475 2,001,543 Grand Total Long -Term Liabilities $ 39,596,577 $ 1,131,672 $ (1,374,647) $ 39,353,602 $ 3,227,456 The General fund is typically used to liquidate the compensated absences payable for governmental activities. F. CONDUIT DEBT OBLIGATIONS Conduit debt obligations are certain limited -obligation revenue bonds or similar instruments issued for the express purpose of providing capital financing for a specific third party. The City has issued various revenue bonds to provide funding to private sector entities for projects deemed to be in the public interest. Although these bonds bear the name of the City, the City has no obligation for such debt. Accordingly, the bonds are not reported as liabilities in the financial statements of the City. As of December 31, 2015, the City's conduit debt consisted of the following: Guardian Angels Senior Services - Engel Haus Assisted Living Revenue Bonds, Series 2013 Kaleidoscope Charter School Revenue Bonds, Series 2014A Revenue Bonds, Series 2014B $ 10,000,000 15,615,000 385,000 6Xy CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 G. FUND EQUITY Net position reported in the government -wide statement of net position at December 31, 2015 include the following: Governmental Activities Net Investment in Capital Assets: Cost of Capital Assets $ 34,669,858 Less: Accumulated Depreciation (9,638,403) Less: Related Long -Term Debt Outstanding (9,728,029) Total Net Investment in Capital Assets 15,303,426 Restricted for Debt Service Fund Balance - Governmental Fund Financial Statements 2,239,970 Add: Unavailable Revenue - Special Assessments 2,333,889 Less: Accrued Interest Payable (67,616) Total Restricted for Debt Service 4,506,243 Restricted for State -Aid Street Systems 41,084 Unrestricted 9,627,962 Total Governmental Activities Net position $ 29,478,715 Business -type Activities Net Investment in Capital Assets: Cost of Capital Assets $ 52,210,255 Less: Accumulated Depreciation (12,128,685) Less: Related Long -Term Debt Outstanding (28,527,701) Total Net Investment in Capital Assets 11,553,869 Unrestricted 15,474,362 Total Business -type Activities Net Position $ 27,028,231 Aggregated funds balances reported in the governmental funds balance sheet at December 31, 2015 include the following: Governmental Funds General Fund Prepaid Items Insurance Deductibles Debt Service Prepaid Items Debt Service Municipal State -Aid for Construction State -Aid Street Systems Nonmajor Governmental Funds Street Light Replacement Business Development Loans City Buildings & Infrastructure City Parks Total Fund Balances Nonspendable Restricted Committed Assigned $ 105,547 $ - $ - $ - - - - 128,646 2,675 - - - - 2,237,295 - - - 41,084 - - - 119,361 - 287,322 - - 5,824,417 - - - 1,000,820 $ 108,222 $ 2,278,379 $ 406,683 $ 6,953,883 56 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 NOTE 4 RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions and natural disasters. Property and casualty insurance is provided through the League of Minnesota Cities Insurance Trust (LMCIT), a public entity risk pool currently operating as a common risk management and insurance program. The City pays an annual premium to the LMCIT for its insurance coverage. The LMCIT is self-sustaining through member premiums and reinsures through commercial companies for excess claims. The City is covered through the pool for any claims incurred but unreported, however, retains risk for the deductible portions of the insurance policies. The amount of those deductibles is considered immaterial to the financial statements. Workers' compensation coverage is provided through a pooled self-insurance program through the LMCIT. The respective insurance policy is retrospectively rated. With this type of coverage, final premiums are determined after loss experience is known. The amount of premium adjustment, if any, is considered immaterial and not recorded until received or paid. This coverage is not subject to a deductible. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three years. The City is subject to certain legal claims in the normal course of business. Management does not expect the resolution of these claims will have a material impact on the City's financial condition or results of operations. NOTE 5 DEFINED BENEFIT PENSION PLAN - STATEWIDE A. PLAN DESCRIPTION The City participates in the following cost -sharing multiple -employer defined benefit pension plan administered by the Public Employees Retirement Association of Minnesota (PERA). PERA's defined benefit pension plans are established and administered in accordance with Minnesota Statutes, Chapters 353 and 356. PERA's defined benefit pension plans are tax qualified plans under Section 401(a) of the Internal Revenue Code. General Employees Retirement Fund (GERF) All full-time and certain part-time employees of the City are covered by the GERF. GERF member belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. The Basic Plan was closed to new members in 1967. All new members must participate in the Coordinated Plan. B. BENEFITS PROVIDED PERA provides retirement, disability, and death benefits. Benefit provisions are established by state statute and can only be modified by the state legislature. Benefit increases are provided to benefit recipients each January. Increases are related to the funding ratio of the plan. Members in plans that are at least 90 percent funded for two consecutive years are given 2.5 percent increases. Members in plans that have not exceeded 90 percent funded, or have fallen below 80 percent, are given 1 percent increases. The benefit provisions stated in the following paragraphs of this section are current provisions and apply to active plan participants. Vested, terminated employees who are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. 61I CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 GERF Benefits Benefits are based on a member's highest average salary for any five successive years of allowable service, age, and years of credit at termination or service. Two methods are used to compute benefits for PERA's Coordinated and Basic Plan members. The retiring member receives the higher of a step -rate benefit accrual formula (Method 1) or level accrual formula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2 percent of average salary for each of the first ten years of service, and 2.7 percent for each remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2 percent of average salary for each of the first ten years and 1.7 percent for each remaining year. Under Method 2, the annuity accrual rate is 2.7 percent of average salary for Basic Plan members and 1.7 percent for Coordinated Plan members for each year of service. For members hired prior to July 1, 1989, a full annuity is available when age plus years of service equal 90 and normal retirement age is 65. For members hired on or after July 1, 1989, normal retirement age is the age for unreduced Social Security benefits capped at 66. Disability benefits are available for vested members and are based upon years of service and average high -five salary. C. CONTRIBUTIONS Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. Contribution rates can only be modified by the state legislature. GERF Contributions Basic Plan members and Coordinated Plan members were required to contribute 9.1 percent and 6.5 percent, respectively, of their annual covered salary in calendar year 2015. The City was required to contribute 11.78 percent of pay for Basic Plan members and 7.5 percent for Coordinated Plan members in calendar year 2015. The City's contributions to the GERF for years ended December 31, 2015, 2014 and 2013 were $83,256, $74,357, and $66,268. The City's contributions were equal to the required contributions as set by state statute. D. PENSION COSTS GERF Pension Costs At December 31, 2015, the City reported a liability of $1,010,592 for its proportionate share of the GERF's net pension liability. The net pension liability was measured as of June 30, 2015, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City's proportion of the net pension liability was based on the City's contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2014 through June 30, 2015, relative to the total employer contributions received from all of PERA's participating employers. At June 30, 2015, the City's proportion was 0.0195 percent which was a decrease from the City's proportion of 0.0222 percent from its proportion measured as of June 30, 2014. For the year ended December 31, 2015, the City recognized pension expense of $102,499 for its proportionate share of the GERF's pension expense. At December 31, 2015, the City reported its proportionate share of the GERF's deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Description Differences Between Expected and Actual Economic Experience Differences Between Projected and Actual Investment Earnings Changes in Proportion GERF Contributions Paid Subsequent to the Measurement Date Totals Deferred Deferred Outflows of Inflows of Resources Resources $ - $ 50,951 95,668 - - 95,124 41,436 - $ 137,104 $ 146,075 58 CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 Deferred outflows totaling $41,436 related to pensions resulting from the City's contributions to the GERF subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2016. Other amounts reported as deferred outflows and inflows of resources related to GERF pensions will be recognized in pension expense as follows: Year Pension Ended Expense December 31, Amount 2016 $ (24,775) 2017 (24,775) 2018 (24,774) 2019 23,917 Total $ (50,407) E. ACTUARIAL ASSUMPTIONS The total pension liability in the June 30, 2015, actuarial valuation was determined using the following actuarial assumptions: Inflation Active Member Payroll Growth Investment Rate of Return 2.75% per year 3.50% per year 7.90% Salary increases were based on a service -related table. Mortality rates for active members, retirees, survivors and disabilitants were based on the RP-2000 tables for males or females, as appropriate, with slight adjustments. Cost of living benefit increases for retirees are assumed to be: 1 percent effective January 1 st until 2034, then 2.5 percent thereafter. Actuarial assumptions used in the June 30, 2015, valuation were based on the results of actuarial experience studies. The experience study in the GERF was for the period July 1, 2004, through June 30, 2008, with an update of economic assumptions in 2014. The experience study for PEPFF was for the period July 1, 2004, through June 30, 2009. There were no changes in actuarial assumptions in 2015. The long-term expected rate of return on pension plan investments is 7.9 percent. The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonableness of the long-term expected rate of return on a regular basis using a building-block method in which best -estimate ranges of expected future rates of return are developed for each major asset class. These ranges are combined to produce an expected long-term rate of return by weighting the expected future rates of return by the target asset allocation percentages. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Long -Term Target Expected Real Asset Class Allocation Rate of Return Domestic Stocks 45.00% 5.50% International Stocks 15.00% 6.00% Bonds 18.00% 1.45% Alternative Assets 20.00% 6.40% Cash 2.00% 0.50% Total 100.00% WZ CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 F. DISCOUNT RATE The discount rate used to measure the total pension liability was 7.9 percent. The projection of cash flows used to determine the discount rate assumed that employee and employer contributions will be made at the rate specified in statute. Based on that assumption, each of the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. G. PENSION LIABILITY SENSITIVITY The following presents the City's proportionate share of the net pension liability for all plans it participates in, calculated using the discount rate disclosed in the preceding paragraph, as well as what the City's proportionate share of the net pension liability would be if it were calculated using a discount rate 1 percentage point lower or 1 percentage point higher than the current rate. City's Proportionate Share of the Net Pension Liabilit, GERF H. PENSION PLAN FIDUCIARY NET POSITION 6.90% 7.90% 8.90% One Point Current One Point Decrease Rate Increase $ 1,589,009 $ 1,010,592 $ 532,907 Detailed information about each pension plan's fiduciary net position is available in a separately issued PERA financial report that includes financial statements and required supplementary information. That report may be obtained in the following ways: Internet: www.mnpera.org Phone: (651)296-7460 Mail: 60 Empire Drive, #200 St. Paul, MN 55103-2088 • IJ CITY OF OTSEGO, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 NOTE 6 CHANGE IN ACCOUNTING PRINCIPLES During fiscal year 2015, the City implemented several new accounting pronouncements issued by the Government Accounting Standards Board (GASB), including Statement No. 68, Accounting and Financial Reporting for Pensions - an Amendment of GASB Statement No. 27 and Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date - an Amendment of GASB Statement No. 68, for the year ended December 31, 2015. These standards required a retroactive implementation which resulted in the restatement of beginning balances in the December 31, 2014 financial statements. Changes related to these standards are reflected in the financial statements and schedules and related disclosures are included in Note 5. As a result of the restatement of beginning balances, the following schedule reconciles the previously reported December 31, 2014 balances to the December 31, 2015 financial statements: Financial Statement Reporting Unit Governmental Activities Business -type Activities Proprietary Funds Water Sanitary Sewer Total Business -type Activities Net Position (1) as Previously Prior Period Net Position Reported Restatement as Restated $ 30,547,940 $ (808,234) $ 29,739,706 $ 10,795,627 $ (48,021) $ 10,747,606 14,443,305 (144,065) 14,299,240 $ 25,238,932 $ (192,086) $ 25,046,846 (1) - To record the beginning net pension liability and deferred outflows of resources at December 31, 2014. NOTE 7 NEW ACCOUNTING PRONOUNCEMENTS The Governmental Accounting Standards Board recently approved the following statements which were not implemented in these financial statements. The effect these standards may have on future financial statements has not been determined. Statement No. 72, Fair Value Measurement and Application . The primary objective of this statement is to enhance the comparability of financial statements among governments by requiring measurement of certain assets and liabilities at fair value using a more detailed definition of fair value and accepted valuation techniques. The provisions of this statement are effective for periods beginning after June 15, 2015. 61 0 CITY OF S+ 0 MINNESOTA. This page has been left blank intentionally. 62 CITY OF OTSEGO, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION (LAST TEN YEARS*) SCHEDULE OF EMPLOYER'S PROPORTIONATE SHARE OF NET PENSION LIABILITY PERA - GENERAL EMPLOYEE'S RETIREMENT FUND PLAN City's City's Proportionate (%) Proportionate ($) Fiscal Share of Share of City's Year Net Pension Net Pension Covered Ending Liability Liability Payroll June 30, 2015 0.0195% $ 1,010,592 $ 1,284,212 City's Proportionate (%) Share of Net Pension Liability Compared With Covered Payroll This supplementary information is provided prospectively beginning with the Year Ended December 31, 2015. 78.69% Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 78.20% 63 CITY OF OTSEGO, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION (LAST TEN YEARS*) SCHEDULE OF EMPLOYER'S CONTRIBUTIONS PERA - GENERAL EMPLOYEE'S RETIREMENT FUND PLAN Year Ending December 31, 2015 Statutorily Required Contributions Contributions in Relation to Statutorily Required Contributions 83,256 $ 83,256 Contributions Contribution City's as a Percentage (Excess) Covered of Covered Deficiency Payroll Payroll This supplementary information is provided prospectively beginning with the Year Ended December 31, 2015. 1,284,212 6.48% • 1d 0 CITY OF S+ 0 MINNESOTA. This page has been left blank intentionally. 65 CITY OF OTSEGO, MINNESOTA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS DECEMBER 31, 2015 ASSETS Cash and Investments Receivables Accounts Special Assessments Current Deferred Delinquent Due from Other Funds Total Assets LIABILITIES Accounts Payable Due to Other Funds Total Liabilities DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Special Assessments FUND BALANCES Committed Street Light Replacement Business Development Loans Assigned City Buildings & Infrastructure City Parks Unassigned (Deficits) Total Fund Balances Total Liabilities, Deferred Inflows of Resources and Fund Balances Total Special Capital Nonmajor Revenue Project Governmental $ 397,992 $ 6,522,436 $ 6,920,428 8,691 - 8,691 - 2,630 2,630 - 369,493 369,493 - 3,112 3,112 - 333,760 333,760 406,683 7,231,431 7,638,114 - 54,234 54,234 - 5,425 5,425 - 59,659 59,659 - 372,605 372,605 119,361 - 119,361 287,322 - 287,322 - 5,824,417 5,824,417 - 1,000,820 1,000,820 - (26,070) (26,070) 406,683 6,799,167 7,205,850 $ 406,683 $ 7,231,431 $ 7,638,114 •• CITY OF OTSEGO, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2015 Total Special Capital Nonmajor Revenue Project Governmental REVENUES Property Taxes $ 23,000 $ 703,000 $ 726,000 Intergovernmental - 182,075 182,075 Charges for Services 27,006 353,776 380,782 Special Assessments - 268,840 268,840 Investment Earnings (net) 2,333 38,242 40,575 Miscellaneous 26,371 13,965 40,336 Total Revenues 78,710 1,559,898 1,638,608 EXPENDITURES Current Public Works 9,500 - 9,500 Economic Development 49,560 - 49,560 Capital Outlay General Government - 60,862 60,862 Public Works - 947,297 947,297 Culture and Recreation - 165,913 165,913 Total Expenditures 59,060 1,174,072 1,233,132 Excess of Revenues Over Expenditures 19,650 385,826 405,476 OTHER FINANCING SOURCES Transfers In - 1,298,224 1,298,224 Sales of Capital Assets - 35,600 35,600 Total Other Financing Sources - 1,333,824 1,333,824 Net Change in Fund Balance 19,650 1,719,650 1,739,300 Fund Balance - January 1 387,033 5,079,517 5,466,550 Fund Balance - December 31 $ 406,683 $ 6,799,167 $ 7,205,850 67 0 CITY OF S+ 0 MINNESOTA. This page has been left blank intentionally. 68 CITY OF OTSEGO, MINNESOTA NONMAJOR SPECIAL REVENUE FUNDS A special revenue fund is used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. Street Lighting This fund accounts for the electrical service, maintenance, repair and replacement of street lights within the City's above standard street -lighting district for commercially developed areas. The primary funding source of the fund is generated through charges for services imposed upon the benefitting properties in the district. Revolving This fund was established to provide for economic development subsidies and loans to be provided to business entities in the City through the City's Economic Development Authority (EDA). .Z CITY OF OTSEGO, MINNESOTA COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS DECEMBER 31, 2015 ASSETS Cash and Investments Receivables Accounts Total Assets FUND BALANCES Committed Street Light Replacement Business Development Loans Total Fund Balances Total Nonmaj or Street Revolving Special Lighting Loans Revenue $ 110,670 $ 287,322 $ 397,992 8,691 - 8,691 119,361 287,322 406,683 119,361 - 119,361 - 287,322 287,322 $ 119,361 $ 287,322 $ 406,683 70 CITY OF OTSEGO, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS FOR THE YEAR ENDED DECEMBER 31, 2015 REVENUES Property Taxes Charges for Services Investment Earnings (net) Miscellaneous Total Revenues EXPENDITURES Current Public Works Economic Development Total Expenditures Net Change in Fund Balance Fund Balance - January 1 Fund Balance - December 31 Total Nonmaj or Street Revolving Special Lighting Loans Revenue $ - $ 23,000 $ 23,000 27,006 - 27,006 623 1,710 2,333 - 26,371 26,371 27,629 51,081 78,710 9,500 - 9,500 - 49,560 49,560 9,500 49,560 59,060 18,129 1,521 19,650 101,232 285,801 387,033 $ 119,361 $ 287,322 $ 406,683 71 CITY OF OTSEGO, MINNESOTA NONMAJOR CAPITAL PROJECTS FUNDS Capital projects funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. Pavement Management This fund was established to provide funds and to account for the expenditure of such funds, for costs associated with the City's street maintenance and replacement plan adopted annually within the Capital Improvement Plan. Annual projects may include: fog & seal coating, crack filling, paint striping, patching and asphalt overlays. Trails Management This fund was established to provide funds and to account for the expenditure of such funds, for costs associated with the City's trail maintenance plan adopted annually within the Capital Improvement Plan. Annual projects will typically include: crack filling, patching and seal coating. Park Development This fund was established to accumulate funds that will be used to provide for the acquisition and construction of new park sites, buildings and facilities throughout our growing City. Parks Capital Equipment This fund was established to accumulate funds for major maintenance and future replacement of equipment within the City's park system. Revolving Capital Equipment This fund was established to provide funds and to account for the expenditure of such funds, for costs associated with the replacement of capital equipment, most significantly the City's machinery and vehicle fleet. Community Facilities This fund was established to accumulate funds that will be used to provide for the costs associated with the improvements of existing City facilities and the acquisition and construction of additional City facilities. Collector Streets This fund was established to accumulate funds derived from ongoing residential and commercial development that will provide for the costs associated with the construction of future arterial collector street infrastructure. Fire Reserve This fund was established to accumulate funds that will be used to finance the costs associated with the future construction of a fire department building and the capital equipment that will be housed within. Watershed Districts This fund was established to provide funds and to account for the expenditure of such funds, for costs associated with the maintenance of major water drainage system ditches throughout the City. Odean Improvements This fund was established to track the expenditures incurred for major improvements made to Odean Avenue in 1998. The outstanding special assessments to the benefitting property owners provide the funding for the costs. 72 CITY OF OTSEGO, MINNESOTA NONMAJOR CAPITAL PROJECTS FUNDS (CONTINUED) Capital Improvements This fund was established to accumulate resources that may be used to internally finance future City projects. Slabtown Improvements This fund was established to track the expenditures incurred for infrastructure improvements to the Slabtown area. The outstanding special assessments to the benefitting property owners provide the funding for the costs. 80th Street Improvements This fund was established to track the expenditures incurred for infrastructure improvements currently ongoing on 80th Street, from Marlowe to MacIver. Independent School District 728 is constructing a school near this location and is the driver for the improvement to occur. The School District will be providing the funds necessary. Municipal Buildings This fund was established to accumulate funds that will be used to provide for the costs associated with the improvements of existing City buildings and the acquisition and construction of additional City buildings. Wellhead Protection This fund was established to track the expenditures incurred for the application process for a Federal grant to be used to develop a wellhead protection plan for the City's water supply. This fund was closed in 2015. 73 CITY OF OTSEGO, MINNESOTA COMBINING BALANCE SHEET NONMAJOR CAPITAL PROJECT FUNDS DECEMBER 31, 2015 ASSETS Cash and Investments Receivables Special Assessments Current Deferred Delinquent Due from Other Funds Total Assets LIABILITIES Accounts Payable Due to Other Funds Total Liabilities DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Special Assessments FUND BALANCES Assigned City Buildings & Infrastructure City Parks Unassigned Total Fund Balances (Deficits) Total Liabilities, Deferred Inflows of Resources and Fund Balances (Deficits) Parks Revolving Pavement Trails Park Capital Capital Management Management Development Equipment Equipment $ 340,814 $ 3,519 $ 838,034 $ 171,207 $ 302,318 58,182 - 398,996 3,519 838,034 171,207 302,318 24,888 280 8,421 24,888 280 8,421 58,182 - - 315,926 3,239 - - 302,318 - - 829,613 171,207 - 315,926 3,239 829,613 171,207 302,318 $ 398,996 $ 3,519 $ 838,034 $ 171,207 $ 302,318 Ld Community Collector Fire Watershed Odean Capital Slabtown Facilities Streets Reserve Districts Improvements Improvements Improvements $ 484,556 $ 553,694 $ 1,895,781 $ 392,705 $ $ 1,507,766 $ 10,493 - - 2,630 - - - 27,979 - 17,500 250,810 15,022 - 2,090 - 1,022 - - - - 333,760 484,556 581,673 1,900,501 392,705 17,500 2,093,358 25,515 5,425 - - 5,425 - - - 27,979 2,090 - 17,500 251,832 15,022 484,556 553,694 1,898,411 392,705 - 1,841,526 10,493 - - - - (5,425) - - 484,556 553,694 1,898,411 392,705 (5,425) 1,841,526 10,493 $ 484,556 $ 581,673 $ 1,900,501 $ 392,705 $ 17,500 $ 2,093,358 $ 25,515 01 CITY OF OTSEGO, MINNESOTA COMBINING BALANCE SHEET NONMAJOR CAPITAL PROJECT FUNDS DECEMBER 31, 2015 ASSETS Cash and Investments Receivables Special Assessments Current Deferred Delinquent Due from Other Funds Total Assets LIABILITIES Accounts Payable Due to Other Funds Total Liabilities DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Special Assessments FUND BALANCES Assigned City Buildings & Infrastructure City Parks Unassigned Total Fund Balances (Deficits) Total Liabilities, Deferred Inflows of Resources and Fund Balances (Deficits) (CONTINUED) Total Nonmajor 80th Street Municipal Wellhead Capital Improvements Buildings Protection Projects $ - $ 21,549 $ - $ 6,522,436 2,630 369,493 3,112 333,760 21,549 7,231,431 20,645 54,234 - 5,425 20,645 59,659 372,605 21,549 5,824,417 - 1,000,820 (20,645) - (26,070) (20,645) 21,549 6,799,167 $ - $ 21,549 $ $ 7,231,431 FM 0 CITY OF S+ 0 MINNESOTA. This page has been left blank intentionally. 77 CITY OF OTSEGO, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (DEFICITS) NONMAJOR CAPITAL PROJECT FUNDS FOR THE YEAR ENDED DECEMBER 31, 2015 Parks Revolving Pavement Trails Park Capital Capital Management Management Development Equipment Equipment REVENUES Property Taxes $ 320,000 $ 25,000 $ $ 53,000 $ 160,000 Intergovernmental 182,075 - - - Charges for Services - 223,630 Special Assessments 21,818 - - - - Investment Earnings (net) 1,773 18 4,983 858 2,643 Miscellaneous - - 216 2,074 - Total Revenues 525,666 25,018 228,829 55,932 162,643 EXPENDITURES Capital Outlay General Government Public Works Culture and Recreation Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES Transfers In Sales of Capital Assets Total Other Financing Sources Net Change in Fund Balance Fund Balance (Deficit) - January 1 Fund Balance (Deficit) - December 31 - 33,332 509,243 - - - 413,491 - 24,773 127,727 11,845 - 509,243 24,773 127,727 11,845 446,823 16,423 245 101,102 44,087 (284,180) 35,600 - - - - 35,600 16,423 245 101,102 44,087 (248,580) 299,503 2,994 728,511 127,120 550,898 $ 315,926 $ 3,239 $ 829,613 $ 171,207 $ 302,318 F Community Collector Fire Watershed Odean Capital Slabtown Facilities Streets Reserve Districts Improvements Improvements Improvements $ $ $ 145,000 $ $ $ $ - 94,380 - 35,766 - 13,570 4,456 - 225,920 3,076 2,821 3,237 10,862 10,823 - 11,675 - - - 14,496 111,187 160,318 35,766 - 236,743 3,076 - 700 1,568 - - 1,568 700 - 12,928 110,487 160,318 35,766 11,530 67 225,146 3,076 1,289,914 - 12,928 110,487 160,318 35,766 1,515,060 3,076 471,628 443,207 1,738,093 356,939 (5,425) 326,466 7,417 $ 484,556 $ 553,694 $ 1,898,411 $ 392,705 $ (5,425) $ 1,841,526 $ 10,493 T CITY OF OTSEGO, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (DEFICITS) NONMAJOR CAPITAL PROJECT FUNDS FOR THE YEAR ENDED DECEMBER 31, 2015 REVENUES Property Taxes Intergovernmental Charges for Services Special Assessments Investment Earnings (net) Miscellaneous Total Revenues EXPENDITURES Capital Outlay General Government Public Works Culture and Recreation Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES Transfers In Sales of Capital Assets Total Other Financing Sources Net Change in Fund Balance Fund Balance (Deficit) - January 1 Fund Balance (Deficit) - December 31 80th Street Municipal Improvements Buildings 224 (CONTINUED) Total Nonmajor Wellhead Capital Protection Projects $ $ 703,000 182,075 353,776 268,840 38,242 13,965 1,559,898 - 16,000 - 60,862 20,645 - 3,151 947,297 - - - 165,913 20,645 16,000 3,151 1,174,072 (20,645) (15,776) (3,151) 385,826 8,310 1,298,224 - 35,600 8,310 1,333,824 (20,645) (15,776) 5,159 1,719,650 37,325 (5,159) 5,079,517 $ (20,645) $ 21,549 $ - $ 6,799,167 :A 0 CITY OF S+ 0 MINNESOTA. This page has been left blank intentionally. 81 CITY OF OTSEGO, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2015 (With Comparative Actual Amounts for the Year Ended December 31, 2014) Page 1 of 5 2015 2014 Variance with Final Budget - Budgeted Amounts Actual Over Actual Original Final Amounts (Under) Amounts REVENUES Property Taxes Current $ 3,319,000 $ 3,319,000 $ 3,266,747 $ (52,253) $ 3,304,656 Delinquent - - 41,262 41,262 - Penalties and interest 15,000 15,000 7,444 (7,556) 16,660 Total Property Taxes 3,334,000 3,334,000 3,315,453 (18,547) 3,321,316 Franchise Taxes 105,000 105,000 128,722 23,722 120,964 Licenses and Permits Business Licenses 34,450 34,450 48,520 14,070 62,575 Rental Licenses 29,000 29,000 29,850 850 37,340 Other Licenses 1,000 1,000 1,700 700 7,070 Right of Way Permits 2,500 2,500 37,600 35,100 5,600 Building Permits 520,000 520,000 1,049,161 529,161 1,118,538 Other Permits 5,050 5,050 12,305 7,255 7,700 Total Licenses and Permits 592,000 592,000 1,179,136 587,136 1,238,823 Intergovernmental State Local Government Aid 123,947 123,947 123,947 - 112,712 MSA Maintenance 152,800 152,800 - (152,800) 163,006 Police Aid 46,375 46,375 55,676 9,301 52,669 Other Aid & Grants - - 13,240 13,240 9,392 Local Other aid & grants - - 2,500 2,500 - Total Intergovernmental 323,122 323,122 195,363 (127,759) 337,779 Charges for Services General Government 7,750 7,750 32,695 24,945 78,998 Public Works 7,800 7,800 90,108 82,308 69,564 Culture and Recreation 35,150 35,150 52,075 16,925 43,653 Total Charges for Services 50,700 50,700 174,878 124,178 192,215 Special Assessments - - 3,540 3,540 7,136 Fines and Forfeitures - - 11,998 11,998 4,000 Investment Earnings (net) 95,000 95,000 15,015 (79,985) 37,427 Miscellaneous Refunds and Reimbursements - - 30,194 30,194 33,858 Contributions and Donations 1,000 1,000 6,259 5,259 4,500 Other - - 28,784 28,784 8,434 Total Miscellaneous 1,000 1,000 65,237 64,237 46,792 Total Revenues 4,500,822 4,500,822 5,089,342 588,520 5,306,452 82 CITY OF OTSEGO, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2015 (With Comparative Actual Amounts for the Year Ended December 31, 2014) Page 2 of 5 2015 2014 Variance with Final Budget - Budgeted Amounts Actual Over Actual Original Final Amounts (Under) Amounts EXPENDITURES General Government City Council Personal Services 32,397 32,397 31,333 (1,064) 36,628 Supplies - - - 25 Services and Other Charges 49,920 49,920 25,908 (24,012) 16,200 Total 82,317 82,317 57,241 (25,076) 52,853 Administration Personal Services 318,292 318,292 296,339 (21,953) 261,323 Supplies 13,750 13,750 15,246 1,496 12,893 Services and Other Charges 83,231 83,231 68,298 (14,933) 111,908 Total 415,273 415,273 379,883 (35,390) 386,124 Elections Personal Services - - - - 11,756 Supplies 700 700 1,003 303 11,946 Services and Other Charges 45 45 (45) 1,970 Total 745 745 1,003 258 25,672 Assessing Services and Other Charges 74,700 74,700 70,537 (4,163) 72,517 Finance Personal Services 288,058 288,058 223,736 (64,322) 272,380 Supplies 5,200 5,200 2,248 (2,952) 961 Services and Other Charges 49,445 49,445 115,981 66,536 44,872 Total 342,703 342,703 341,965 (738) 318,213 Information Technology Supplies 6,000 6,000 3,707 (2,293) 3,094 Services and Other Charges 60,300 60,300 63,086 2,786 37,832 Total 66,300 66,300 66,793 493 40,926 Legal Services and Other Charges 82,000 82,000 123,239 41,239 101,013 83 CITY OF OTSEGO, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2015 (With Comparative Actual Amounts for the Year Ended December 31, 2014) Page 3 of 5 2015 2014 Variance with Final Budget - Budgeted Amounts Actual Over Actual Original Final Amounts (Under) Amounts EXPENDITURES (CONTINUED) General Government (Continued) Prairie Center Personal Services 4,356 4,356 - (4,356) Supplies 9,500 9,500 4,267 (5,233) 6,634 Services and Other Charges 21,766 21,766 17,712 (4,054) 20,334 Total 35,622 35,622 21,979 (13,643) 26,968 City Hall & Public Works Garage Supplies 9,900 9,900 9,659 (241) 7,720 Services and Other Charges 69,163 69,163 68,119 (1,044) 74,547 Total 79,063 79,063 77,778 (1,285) 82,267 Old Town Hall Supplies 1,000 1,000 - (1,000) - Services and Other Charges 2,000 2,000 695 (1,305) 1,027 Total 3,000 3,000 695 (2,305) 1,027 Total General Government 1,181,723 1,181,723 1,141,113 (40,610) 1,107,580 Public Safety Police Services Services and Other Charges 941,700 941,700 952,546 10,846 912,365 Public Safety Commission Personal Services 750 750 - (750) 510 Supplies 600 600 137 (463) 95 Total 1,350 1,350 137 (1,213) 605 Fire Protection Supplies - - 86 86 - Services and Other Charges 454,560 454,560 455,281 721 377,926 Total 454,560 454,560 455,367 807 377,926 Building Inspections Personal Services 67,146 67,146 70,885 3,739 68,293 Supplies 6,700 6,700 4,791 (1,909) 1,269 Services and Other Charges 151,877 151,877 168,445 16,568 119,631 Total 225,723 225,723 244,121 18,398 189,193 Emergency Management Supplies 2,500 2,500 - (2,500) - Services and Other Charges 4,950 4,950 400 (4,550) 309 Total 7,450 7,450 400 (7,050) 309 Animal Control Services and Other Charges 11,300 11,300 11,460 160 14,610 Total Public Safety 1,642,083 1,642,083 1,664,031 21,948 1,495,008 i 'd CITY OF OTSEGO, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2015 (With Comparative Actual Amounts for the Year Ended December 31, 2014) Page 4 of 5 2015 2014 Variance with Final Budget - Budgeted Amounts Actual Over Actual Original Final Amounts (Under) Amounts EXPENDITURES (CONTINUED) Public Works Streets Maintenance Personal Services 469,652 469,652 410,964 (58,688) 423,479 Supplies 146,450 146,450 153,501 7,051 125,905 Services and Other Charges 65,021 65,021 65,640 619 69,954 Total 681,123 681,123 630,105 (51,018) 619,338 Engineering Supplies - - - - 217 Services and Other Charges 85,000 85,000 122,074 37,074 92,876 Total 85,000 85,000 122,074 37,074 93,093 Street Lighting Services and Other Charges 114,100 114,100 108,987 (5,113) 111,465 Fleet Management Personal Services 72,846 72,846 76,873 4,027 71,259 Supplies 105,834 105,834 86,012 (19,822) 110,070 Services and Other Charges 8,580 8,580 10,473 1,893 8,784 Total 187,260 187,260 173,358 (13,902) 190,113 Total Public Works 1,067,483 1,067,483 1,034,524 (32,959) 1,014,009 Culture and Recreation Parks Maintenance Personal Services 159,245 159,245 145,663 (13,582) 137,752 Supplies 61,330 61,330 56,063 (5,267) 43,533 Services and Other Charges 110,156 110,156 113,885 3,729 111,927 Total 330,731 330,731 315,611 (15,120) 293,212 Recreation Personal Services 74,300 74,300 92,688 18,388 78,460 Supplies 11,330 11,330 12,967 1,637 3,674 Services and Other Charges 41,282 41,282 43,338 2,056 56,886 Total 126,912 126,912 148,993 22,081 139,020 Heritage Preservation Commission Personal Services 450 450 420 (30) 590 Supplies 500 500 170 (330) 145 Services and Other Charges 300 300 1,011 711 1,305 Total 1,250 1,250 1,601 351 2,040 Total Culture and Recreation 458,893 458,893 466,205 7,312 434,272 85 CITY OF OTSEGO, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2015 (With Comparative Actual Amounts for the Year Ended December 31, 2014) Page 5 of 5 2015 2014 Variance with Final Budget - Budgeted Amounts Actual Over Actual Original Final Amounts (Under) Amounts EXPENDITURES (CONTINUED) Economic Development Planning Commission Personal Services 1,500 1,500 1,500 - 710 Supplies - - 24 24 35 Services and Other Charges 750 750 200 (550) - Total 2,250 2,250 1,724 (526) 745 Planning Services and Other Charges 65,000 65,000 86,335 21,335 88,340 Economic Development Supplies 200 200 - (200) - Services and Other Charges 13,900 13,900 8,152 (5,748) 4,095 Total 14,100 14,100 8,152 (5,948) 4,095 Total Economic Development 81,350 81,350 96,211 14,861 93,180 Capital Outlay General Government - - 9,017 9,017 19,105 Public Safety 4,000 4,000 2,478 (1,522) 1,104 Public Works - - - 928 Culture and Recreation 13,120 13,120 11,240 (1,880) - Total 17,120 17,120 22,735 5,615 21,137 Total Expenditures 4,448,652 4,448,652 4,424,819 (23,833) 4,165,186 Excess of Revenues Over Expenditures 52,170 52,170 664,523 612,353 1,141,266 OTHER FINANCING SOURCES (USES) Transfers In 148,047 148,047 122,276 (25,771) 425,868 Sales of Capital Assets - - - 840 Transfers Out - - (1,289,914) (1,289,914) (86,411) Total Other Financing Sources (Uses) 148,047 148,047 (1,167,638) (1,315,685) 340,297 Net Change in Fund Balance 200,217 200,217 (503,115) (703,332) 1,481,563 Fund Balance - January 1 3,393,638 3,393,638 3,393,638 1,912,075 Fund Balance - December 31 $ 3,593,855 $ 3,593,855 $ 2,890,523 $ (703,332) $ 3,393,638 i• 0 CITY OF S+ 0 MINNESOTA. This page has been left blank intentionally. 87 CITY OF OTSEGO, MINNESOTA COMBINING BALANCE SHEET DEBT SERVICE FUND BY ACCOUNT DECEMBER 31, 2015 ASSETS Cash and Investments Receivables Special Assessments Current Deferred Delinquent Prepaid Items Total Assets LIABILITIES Accounts Payable Due to Other Funds Total Liabilities DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Special Assessments FUND BALANCES (DEFICITS) Nonspendable Restricted Total Fund Balances (Deficits) Total Liabilities, Deferred Inflows of Resources and Fund Balances (Deficits) Series $ 823 $ 384 4,052 6,414 Series Series - $ 619,743 155,192 750,570 11,673 155,192 1,370,313 - 331 153,291 - - 153,291 331 10,467 155,192 750,570 1,206 (153,291) 619,412 1,206 (153,291) 619,412 $ 11,673 $ 155,192 $ 1,370,313 88 Series Total 2010D Series Series Series Debt & 2011A 2010B 2007B 2010A Service $ 1,629,086 $ 317,268 $ - $ 314 $ 2,567,234 - - - - 384 1,147,225 - 270,435 - 2,327,474 - - - - 6,414 - - - 2,675 2,675 2,776,311 317,268 270,435 2,989 4,904,181 663 331 331 331 1,987 - - 175,044 - 328,335 663 331 175,375 331 330,322 1,147,225 - 270,435 - 2,333,889 - - - 2,675 2,675 1,628,423 316,937 (175,375) (17) 2,237,295 1,628,423 316,937 (175,375) 2,658 2,239,970 S 2,776,311 $ 317,268 $ 270,435 S 2,989 $ 4,904,181 89 CITY OF OTSEGO, MINNESOTA COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (DEFICITS) DEBT SERVICE FUND BY ACCOUNT FOR THE YEAR ENDED DECEMBER 31, 2015 REVENUES Property Taxes Special Assessments Total Revenues EXPENDITURES Debt Service Principal Interest Fiscal Agent Fees Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES Transfers In Net Change in Fund Balance Fund Balance (Deficit) - January 1 Fund Balance (Deficit) - December 31 Series Series Series 2003A 2004 2012A 4,698 4,384 164,722 4,698 4,384 164,722 200,000 - - 28,000 827 - - 228,827 4,698 4,384 (64,105) 4,698 4,384 (64,105) (3,492) (157,675) 683,517 $ 1,206 $ (153,291) $ 619,412 90 Series Total 2010D Series Series Series Debt & 2011A 2010B 2007B 2010A Service $ 200,000 $ 410,000 $ - $ - $ 610,000 53,716 - 60,848 - 288,368 253,716 410,000 60,848 - 898,368 360,000 420,000 105,000 45,000 1,130,000 140,275 76,323 8,200 3,350 256,148 1,159 331 331 331 2,979 501,434 496,654 113,531 48,681 1,389,127 (247,718) (86,654) (52,683) (48,681) (490,759) - - - 154,000 154,000 (247,718) (86,654) (52,683) 105,319 (336,759) 1,876,141 403,591 (122,692) (102,661) 2,576,729 $ 1,628,423 $ 316,937 $ (175,375) $ 2,658 $ 2,239,970 91 CITY OF OTSEGO, MINNESOTA STATEMENT OF CHANGES IN AGENCY FUND ASSETS AND LIABILITIES AGENCY FUNDS DECEMBER 31, 2015 Development Escrows Fund (701) 1/1/2015 Additions Deductions 12/31/2015 ASSETS Cash and Cash Equivalents $ 673,137 $ 622,380 $ (305,515) $ 990,002 LIABILITIES Accounts Payable $ 39,811 $ 290,500 $ (303,669) $ 26,642 Escrow Deposit 633,326 757,265 (427,231) 963,360 Total Liabilities $ 673,137 $ 1,047,765 $ (730,900) $ 990,002 Builders Escrow (702) 1/1/2015 Additions Deductions 12/31/2015 ASSETS Cash and Cash Equivalents $ 124,730 $ 219,000 $ (166,230) $ 177,500 LIABILITIES Accounts Payable $ - $ 152,000 $ (151,000) $ 1,000 Escrow Deposit 124,730 235,000 (183,230) 176,500 Total Liabilities $ 124,730 $ 387,000 $ (334,230) $ 177,500 Totals 1/1/2015 Additions Deductions 12/31/2015 ASSETS Cash and Cash Equivalents $ 797,867 $ 841,380 $ (471,745) $ 1,167,502 LIABILITIES Accounts Payable $ 39,811 $ 442,500 $ (454,669) $ 27,642 Escrow Deposit 758,056 992,265 (610,461) 1,139,860 Total Liabilities $ 797,867 $ 1,434,765 $ (1,065,130) $ 1,167,502 92 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) This part of the City of Otsego's comprehensive annual financial report (CAFR) presents detailed information as a context for understanding what the financial statements, note disclosures, and required supplementary information say about the City's overall financial health. Page No. Financial Trends 94 These tables contain trend information to help the readers of the CAFR understand the City's financial performance by comparing the current year with a historical perspective. Revenue Capacity 108 These tables contain information to help the readers of the CAFR assess the City's most significant revenue source, which is property taxes. Debt Capacity 114 These tables present information to help the readers of the CAFR assess the affordability of the City's current levels of outstanding debt and the City's ability to issue debt in the future. Demographic and Economic Information 121 These tables offer demographic and economic indicators to help the readers of the CAFR to understand the environment in which the City's financial activities take place. Operating Information 123 These tables contain service and infrastructure data to assist the readers of the CAFR to understand how the City's financial report relates to the services the City provides. Sources: Unless otherwise noted, the information in these tables is derived from the CAFR for each respective year. 93 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) NET POSITION BY COMPONENT Last Ten Fiscal Years (accrual basis of accounting) 2006 2007 2008 2009 Governmental Activities Net Investment in Capital Assets $ 10,215,280 $ 9,199,610 $ 10,402,950 $ 12,113,710 Restricted 5,878,653 9,278,966 8,576,073 8,604,122 Unrestricted 6,290,098 8,287,671 8,335,206 8,085,402 Total Governmental Activities Net Position $ 22,384,031 $ 26,766,247 $ 27,314,229 $ 28,803,234 Business -type activities Net Investment in Capital Assets $ 9,591,855 $ 16,344,652 $ 18,721,350 $ 19,658,076 Restricted 8,065,782 7,620,664 6,302,993 6,462,497 Unrestricted 4,607,943 1,728,153 313,037 1,519,450 Total Business -type Activities Net Position $ 22,265,580 $ 25,693,469 $ 25,337,380 $ 27,640,023 Primary Government Net Investment in Capital Assets $ 19,807,135 $ 25,544,262 $ 29,124,300 $ 31,771,786 Restricted 13,944,435 16,899,630 14,879,066 15,066,619 Unrestricted 10,898,041 10,015,824 8,648,243 9,604,852 Total Primary Government Net Position $ 44,649,611 $ 52,459,716 $ 52,651,609 $ 56,443,257 Sources: The data for this table has been extracted from the respective years CAFR document. 94 Table 1 2010 2011 2012 2013 2014 2015 $ 12,600,418 $ 13,039,318 $ 13,673,424 $ 14,709,024 $ 15,515,291 $ 15,303,426 7,506,642 6,547,412 6,570,533 5,882,912 5,430,795 4,547,327 8,568,988 8,490,450 7,850,150 7,313,054 9,601,854 9,627,962 $ 28,676,048 $ 28,077,180 $ 28,094,107 $ 27,904,990 $ 30,547,940 $ 29,478,715 $ 17,255,564 $ 16,017,362 $ 14,795,965 $ 13,694,517 $ 12,619,305 $ 11,553,869 9,661,840 8,220,490 9,054,217 10,546,291 13,487,231 15,474,362 $ 26,917,404 $ 24,237,852 $ 23,850,182 $ 24,240,808 $ 26,106,536 $ 27,028,231 $ 29,855,982 $ 29,056,680 $ 28,469,389 $ 28,403,541 $ 28,134,596 $ 26,857,295 7,506,642 6,547,412 6,570,533 5,882,912 5,430,795 4,547,327 18,230,828 16,710,940 16,904,367 17,859,345 23,089,085 25,102,324 $ 55,593,452 $ 52,315,032 $ 51,944,289 $ 52,145,798 $ 56,654,476 $ 56,506,946 95 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) CHANGES IN NET POSITION - CONTINUED ON THE FOLLOWING PAGES Last Ten Fiscal Years (accrual basis of accounting) GOVERNMENTAL ACTIVITIES Expenses General Government Public Safety Public Works Sanitation Culture and Recreation Economic Development Interest on Long-term Debt Total Expenses Program Revenues Charges for Services General Government Public Safety Public Works Culture and Recreation Operating Grants and Contributions Capital Grants and Contributions Total Program Revenues Net (Expense) / Revenue General Revenues and Transfers Taxes Property Franchise Taxes Unrestricted Grants and Contributions Investment Earnings (net) Gain on Disposal of Capital Assets Transfers Transfers - Capital Assets Total General Revenues and Transfers Change in Net Position 2006 2007 2008 2009 $ 578,719 $ 796,258 $ 892,100 $ 916,692 1,774,038 1,651,417 1,781,953 1,786,889 1,072,101 1,198,973 1,660,742 2,043,980 9,665 8,186 10,095 - 272,001 298,088 570,456 374,019 9,096 71,875 7,268 58,293 292,854 520,352 721,924 611,384 4,008,474 4,545,149 5,644,538 5,791,257 86,981 106,390 45,222 117,955 1,286,843 910,074 592,768 474,185 32,719 - 7,939 58,430 210 740 330 250 143,333 151,198 196,232 182205 4,484,226 6,739,484 1,714,984 2,843:309 6,034,312 7,907,886 2,557,475 3,676,334 2,025,838 3,362,737 (3,087,063) (2,114,923) 2,192,155 2,781,744 3,270,875 3,505,575 55,075 69,473 82,420 87,807 205,526 241,467 106,320 141,892 659,549 561,230 430,239 293,497 - 4,000 - - (392,736) (61,921) (5,696) - - (2,576,514) (249,113) (424,843) 2,719,569 1,019,479 3,635,045 3,603,928 $ 4,745,407 $ 4,382,216 $ 547,982 $ 1,489,005 Table 2 Page 1 of 3 2010 2011 2012 2013 2014 2015 $ 910,830 $ 956,651 $ 1,002,690 $ 906,102 $ 1,230,335 $ 1,174,510 1,615,763 1,647,285 1,445,397 1,447,887 1,499,538 1,670,627 2,029,922 2,114,975 2,486,553 2,760,130 2,383,890 6,521,708 401,563 569,431 575,592 573,581 792,525 792,936 17,096 12,353 103,884 75,303 45,024 145,771 919,907 661,447 631,129 543,821 347,503 231,242 5,895,081 5,962,142 6,245,245 6,306,824 6,298,815 10,536,794 109,349 109,686 54,674 36,735 119,757 36,235 889,878 819,537 588,894 784,038 1,159,073 1,191,134 24,082 111,873 50,906 106,913 724,009 247,260 360 3,101 8,840 28,600 43,606 52,075 191,850 197,325 203,645 220,790 233,606 244,497 563,690 233,832 620,574 485,533 1,619,209 3,154,662 1,779,209 1,475,354 1,527,533 1,662,609 3,899,260 4,925,863 (4,115,872) (4,486,788) (4,717,712) (4,644,215) (2,399,555) (5,610,931) 3,587,177 3,719,778 4,271,751 4,333,972 4,476,810 4,602,153 97,228 100,176 106,547 83,681 120,964 128,722 29,797 26,051 54,601 10,954 132,104 242,970 227,484 290,962 212,731 (17,852) 157,640 55,909 37,000 16,500 40,009 44,343 32,355 35,600 10,000 44,000 49,000 - 122,632 284,586 3,988,686 4,197,467 4,734,639 4,455,098 5,042,505 5,349,940 $ (127,186) $ (289,321) $ 16,927 $ (189,117) $ 2,642,950 $ (260,991) 97 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) CHANGES IN NET POSITION - CONTINUED Last Ten Fiscal Years (accrual basis of accounting) 2006 2007 2008 2009 BUSINESS -TYPE ACTIVITIES Expenses Water Utility $ 1,282,216 $ 878,915 $ 962,806 $ 968,217 Sanitary Sewer Utility 1,048,748 1,896,741 2,101,478 2,395,561 Storm Water Utility - - - 41,196 Total Expenses 2,330,964 2,775,656 3,064,284 3,404,974 Program Revenues Charges for Services Water Utility 635,924 798,009 745,635 739,062 Sanitary Sewer Utility 366,495 649,847 786,885 873,480 Storm Water Utility - - - 33,861 Operating Grants and Contributions - 604,355 - - Capital Grants and Contributions 3,435,794 950,478 605,104 3,465,839 Total Program Revenues 4,438,213 3,002,689 2,137,624 5,112,242 Net (Expense) / Revenue 2,107,249 227,033 (926,660) 1,707,268 General Revenues and Transfers Property Taxes - - - - Unrestricted Grants and Contributions - - - - Investment Earnings (net) 419,358 562,421 315,762 170,532 Gain on Disposal of Capital Assets - - - - Transfers 392,736 61,921 5,696 - Transfers - Capital Assets - 2,576,514 249,113 424,843 Total General Revenues and Transfers 812,094 3,200,856 570,571 595,375 Change in Net Position $ 2,919,343 $ 3,427,889 $ (356,089) $ 2,302,643 Table 2 Page 2 of 3 2010 2011 2012 2013 2014 2015 $ 1,314,133 $ 1,530,108 $ 1,301,990 $ 1,241,343 $ 1,187,553 $ 1,246,064 2,307,213 2,778,657 2,326,550 2,123,381 2,052,493 2,207,811 68,903 61,024 69,834 72,944 57,977 95,533 3,690,249 4,369,789 3,698,374 3,437,668 3,298,023 3,549,408 745,395 736,448 1,049,531 1,259,942 1,167,066 1,261,303 989,847 1,067,088 1,055,557 1,186,523 1,325,181 1,479,703 72,081 98,873 69,608 41,831 45,570 76,211 990,041 333,151 1,032,687 1,267,189 2,560,270 2,020,299 2,797,364 2,235,560 3,207,383 3,755,485 5,098,087 4,837,516 (892,885) (2,134,229) (490,991) 317,817 1,800,064 1,288,108 - - - 57,739 24,824 25,000 - 235,166 - - - - 180,266 - 152,321 (34,717) 168,320 85,259 - - - 18,733 28,440 - (10,000) (44,000) (49,000) - (122,632) (284,586) 170,266 191,166 103,321 41,755 98,952 (174,327) $ (722,619) $ (1,943,063) $ (387,670) $ 359,572 $ 1,899,016 $ 1,113,781 .Z CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) CHANGES IN NET POSITION - CONTINUED Last Ten Fiscal Years (accrual basis of accounting) TOTAL PRIMARY GOVERNMENT Expenses Governmental Activities Business -type Activities Total Expenses Program Revenues Governmental Activities Business -type Activities Total Program Revenues Net (Expense) / Revenue General Revenues and Transfers Governmental Activities Business -type Activities Total General Revenues and Transfers Change in Net Position 2006 2007 2008 2009 $ 4,008,474 $ 4,545,149 $ 5,644,538 $ 5,791,257 2,330,964 2,775,656 3,064,284 3,404,974 6,339,438 7,320,805 8,708,822 9,196,231 6,034,312 7,907,886 2,557,475 3,676,334 4,438,213 3,002,689 2,137,624 5,112,242 10,472,525 10,910,575 4,695,099 8,788,576 4,133,087 3,589,770 (4,013,723) (407,655) 2,719,569 1,019,479 3,635,045 3,603,928 812,094 3,200,856 570,571 595,375 3,531,663 4,220,335 4,205,616 4,199,303 $ 7,664,750 $ 7,810,105 $ 191,893 $ 3,791,648 Sources: The data for this table has been extracted from the respective years CAFR document. 100 Table 2 Page 3 of 3 2010 2011 2012 2013 2014 2015 $ 5,895,081 $ 5,962,142 $ 6,245,245 $ 6,306,824 $ 6,298,815 $ 10,536,794 3,690,249 4,369,789 3,698,374 3,437,668 3,298,023 3,549,408 9,585,330 10,331,931 9,943,619 9,744,492 9,596,838 14,086,202 1,779,209 1,475,354 1,527,533 1,662,609 3,899,260 4,925,863 2,797,364 2,235,560 3,207,383 3,755,485 5,098,087 4,837,516 4,576,573 3,710,914 4,734,916 5,418,094 8,997,347 9,763,379 (5,008,757) (6,621,017) (5,208,703) (4,326,398) (599,491) (4,322,823) 3,988,686 4,197,467 4,734,639 4,455,098 5,042,505 5,349,940 170,266 191,166 103,321 41,755 98,952 (174,327) 4,158,952 4,388,633 4,837,960 4,496,853 5,141,457 5,175,613 $ (849,805) $ (2,232,384) $ (370,743) $ 170,455 $ 4,541,966 $ 852,790 101 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) GOVERNMENTAL ACTIVITIES TAX REVENUE BY SOURCE Last Ten Fiscal Years (accrual basis of accounting) Table 3 Property Franchise Taxes Taxes Total 2006 $ 2,192,155 $ 55,075 $ 2,247,230 2007 2,781,744 69,473 2,851,217 2008 3,270,875 82,420 3,353,295 2009 3,505,575 87,807 3,593,382 2010 3,587,177 97,228 3,684,405 2011 3,719,778 100,176 3,819,954 2012 4,271,751 106,547 4,378,298 2013 4,333,972 83,681 4,417,653 2014 4,476,810 120,964 4,597,774 2015 4,602,153 128,722 4,730,875 Sources: The data for this table has been extracted from the respective years CAFR document. 102 0 CITY OF S+ 0 MINNESOTA. This page has been left blank intentionally. 103 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) FUND BALANCES - GOVERNMENTAL FUNDS Last Ten Fiscal Years (modified accrual basis of accounting) General Fund Reserved Unreserved Nonspendable Assigned Unassigned Total General Fund All Other Governmental Funds Reserved Unreserved, Reported in: Special Revenue Funds Capital Project Funds Nonspendable Restricted Committed Assigned Unassigned Total All Other Governmental Funds 2006 2007 2008 2009 $ 1,500 $ 4,894 $ 6,069 $ - 999,697 1,095,854 1,538,650 1,685,623 $ 1,001,197 $ 1,100,748 $ 1,544,719 $ 1,685,623 $ 9,031,529 $ 9,492,741 $ 8,120,203 $ 8,343,014 3,040,878 3,207,643 3,356,320 2,684,192 5,979,169 4,637,052 2,228,379 1,960,421 $ 18,051,576 $ 17,337,436 $ 13,704,902 $ 12,987,627 Sources: The data for this table has been extracted from the respective years CAFR document. Note: During 2011, the City implemented GASB Statement No. 54, Fund Balance and Governmental Fund Type Definitions. 104 Table 4 2010 2011 2012 2013 2014 2015 1,713,440 - - - - - - - 11,254 11,254 80,423 105,547 - 81,168 87,971 103,418 101,833 128,646 - 1,622,430 1,665,366 1,797,403 3,211,382 2,656,330 $ 1,713,440 $ 1,703,598 $ 1,764,591 $ 1,912,075 $ 3,393,638 $ 2,890,523 $ 1,197,967 $ - $ - $ - $ - $ - 2,811,289 - - - - - 2,157,424 - - - - - - - 4,601 351 - 2,675 - 5,985,647 7,898,825 8,805,554 2,576,729 2,278,379 - 39,142 52,360 595,191 387,033 406,683 - 6,517,609 5,605,265 4,267,012 5,218,020 6,825,237 - (700,854) (341,194) (9,555) (10,584) (26,070) $ 6,166,680 $ 11,841,544 $ 13,219,857 $ 13,658,553 $ 8,171,198 $ 9,486,904 105 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS Last Ten Fiscal Years (modified accrual basis of accounting) Revenues Property Taxes Franchise Taxes Licenses and Permits Intergovernmental Charges for Services Special Assessments Fines and Forfeitures Investment Earnings (net) Miscellaneous Total Revenues Expenditures General Government Public Safety Public Works Sanitation Culture and Recreation Economic Development Capital Outlay Debt Service Principal Interest Bond Issuance & Fiscal Agent Fee's Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses) Transfers In Issuance of Debt Premium on Issuance of Debt Sales of Capital Assets Refunded Bonds Redeemed Insurance Recovery Transfers Out Total Other Financing Sources (Uses) 2006 2007 2008 2009 $ 2,185,882 $ 2,707,808 $ 3,368,516 $ 3,560,656 1,296,282 914,988 604,818 433,080 773,794 863,219 915,934 336,937 2,743,426 1,939,484 533,967 561,860 923,960 1,559,651 1,567,265 1,309,711 1,068,273 1,091,564 727,395 447,109 479,856 1,148,659 119,515 152,416 9,471,473 10,225,373 7,837,410 6,801,769 691,398 735,144 834,755 872,067 1,554,638 1,610,773 1,744,043 1,759,415 868,296 943,083 860,594 1,255,099 9,665 8,186 10,095 - 265,426 167,305 379,246 240,047 9,096 11,875 7,268 58,293 20,816,274 7,450,938 3,357,334 561,037 1,809,001 2,315,067 2,380,000 2,780,000 1,053,522 1,798,908 1,731,089 1,872,249 220,125 77,683 - 233,028 27,297,441 15,118,962 11,304,424 9,631,235 (17,825,968) (4,893,589) (3,467,014) (2,829,466) 2,032,530 1,754,282 1,723,793 1,553,570 14,860,000 4,275,000 - 6,360,000 4,000 - - - - (4,195,000) (2,032,530) (1,754,282) (1,445,342) (1,465,475) 14,860,000 4,279,000 278,451 2,253,095 Net Change in Fund Balances $ (2,965,968) $ (614,589) $ (3,188,563) $ (576,371) Debt Service as a Percentage of Noncapital Expenditures 20.09% 37.70% 41.80% 50.98% Sources: The data for this table has been extracted from the respective years CAFR document. 106 Table 5 2010 2011 2012 2013 2014 2015 $ 3,671,320 $ 3,886,919 $ 4,344,415 $ 4,564,068 $ 4,524,092 $ 4,651,453 - - - - 120,964 128,722 339,568 303,059 553,577 819,493 1,238,823 1,179,136 191,784 375,703 621,447 241,996 1,034,552 3,570,630 126,453 200,256 86,655 170,194 1,142,453 555,660 1,511,510 2,055,623 875,822 1,987,647 905,441 560,748 - 1,000 2,000 - 4,000 11,998 227,484 290,962 209,984 (17,852) 157,640 55,909 33,153 25,302 56,625 78,457 50,286 105,573 6,101,272 7,138,824 6,750,525 7,844,003 9,178,251 10,819,829 802,632 887,847 918,055 923,255 1,169,697 1,141,113 1,604,062 1,586,504 1,440,908 1,447,182 1,495,008 1,664,031 962,329 974,557 1,009,827 1,121,981 1,023,693 1,044,024 201,080 246,075 277,605 313,023 464,840 466,205 17,096 12,353 103,884 75,303 45,024 145,771 1,533,354 1,178,526 1,707,346 1,984,531 1,688,847 4,477,153 1,345,000 745,000 810,000 840,000 6,965,000 1,130,000 989,718 489,184 554,245 574,715 454,566 256,148 125,275 86,285 42,900 - - 2,979 7,580,546 6,206,331 6,864,770 7,279,990 13,306,675 10,327,424 (1,479,274) 932,493 (114,245) 564,013 (4,128,424) 492,405 931,682 2,069,009 997,325 - 612,433 1,574,500 5,310,000 4,640,000 1,400,000 - - - - 48,529 64,542 - - - 56,000 - 40,009 - - 35,600 (4,325,000) - - - - - - - - 22,167 (917,937) (2,025,009) (948,325) - (489,801) (1,289,914) 1,054,745 4,732,529 1,553,551 22,167 122,632 320,186 $ (424,529) $ 5,665,022 $ 1,439,306 $ 586,180 $ (4,005,792) $ 812,591 36.16% 22.68% 23.13% 23.32% 60.23% 14.22% 107 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) ESTIMATED ACTUAL VALUE, TAXABLE MARKET VALUE AND TAX CAPACITY OF TAXABLE PROPERTY Last Ten Fiscal Years 2006 2007 2008 2009 Estimated Actual Value $ 1,184,773,912 $ 1,209,694,535 $ 1,333,105,057 $ 1,359,891,000 Taxable Market Value Real Estate $ 798,113,200 $ 1,031,745,900 $ 1,192,244,800 $ 1,254,432,100 Personal Property 7,615,800 9,990,000 11,325,900 12,488,100 Total Taxable Market Value $ 805,729,000 $ 1,041,735,900 $ 1,203,570,700 $ 1,266,920,200 Taxable Market Value as a Percentage of Estimated Actual Value 68.01% 86.12% 90.28% 93.16% Tax Capacity Real Estate $ 8,301,731 $ 10,928,056 $ 12,698,297 $ 13,545,272 Personal Property 152,316 199,369 226,018 249,252 Net Tax Capacity for Direct Rate $ 8,454,047 $ 11,127,425 $ 12,924,315 $ 13,794,524 Net Tax Capacity as a Percentage of Estimated Actual Value 0.71% 0.92% 0.97% 1.01% Property Tax Levies General Revenues $ 1,863,490 $ 2,482,980 $ 2,967,000 $ 3,402,090 Debt Service 472,100 485,020 458,000 318,600 Total Property Taxes Levied $ 2,335,590 $ 2,968,000 $ 3,425,000 $ 3,720,690 Tax Rates General Revenues 22.043 22.314 22.957 24.663 Debt Service 5.584 4.359 3.544 2.310 Total Direct Tax Rate 27.627 26.673 26.500 26.972 Sources: The data for this table has been provided by the Wright County Auditor / Treasurer's Office. 108 Table 6 2010 2011 2012 2013 2014 2015 $ 1,297,319,800 $ 1,122,091,900 $ 1,070,068,000 $ 989,365,300 $ 1,051,543,200 $ 1,177,857,500 $ 1,163,465,900 $ 1,045,413,800 $ 913,874,900 $ 839,428,800 $ 908,532,000 $ 1,039,579,100 13,099,300 14,203,900 14,003,900 14,305,700 14,513,300 14,952,700 $ 1,176,565,200 $ 1,059,617,700 $ 927,878,800 $ 853,734,500 $ 923,045,300 $ 1,054,531,800 90.69% 94.43% 86.71% 86.29% 87.78% 89.53% $ 12,750,856 $ 11,376,627 $ 9,999,046 $ 9,184,748 $ 9,805,499 $ 11,060,135 261,328 283,499 279,502 285,540 290,266 298,480 $ 13,012,184 $ 11,660,126 $ 10,278,548 $ 9,470,288 $ 10,095,765 $ 11,358,615 1.00% 1.04% 0.96% 0.96% 0.96% 0.96% $ 3,252,000 $ 3,500,000 $ 3,836,000 $ 3,952,910 $ 4,024,715 $ 4,070,000 566,000 466,000 425,000 425,000 475,285 610,000 $ 3,818,000 $ 3,966,000 $ 4,261,000 $ 4,377,910 $ 4,500,000 $ 4,680,000 24.992 30.017 37.320 41.740 39.865 35.832 4.350 3.997 4.135 4.488 4.708 5.370 29.342 34.013 41.455 46.228 44.573 41.202 109 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) TAX CAPACITY OF REAL ESTATE & PERSONAL PROPERTY Last Ten Fiscal Years 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Residential Non Commercial Personal Homestead Homestead & Industrial Agricultural Property $ 6,224,911 $ 760,179 $ 726,899 $ 566,883 $ 152,316 $ 73.63% 8.99% 8.60% 6.71% 1.80% 7,618,707 1,361,479 1,151,084 725,849 199,369 68.47% 12.24% 10.34% 6.52% 1.79% 8,390,152 1,998,030 1,435,171 800,803 226,018 64.92% 15.46% 11.10% 6.20% 1.75% 8,666,112 2,120,456 1,878,314 805,387 249,252 62.82% 15.37% 13.62% 5.84% 1.81% 8,126,189 1,661,573 2,164,323 719,579 261,328 62.45% 12.77% 16.63% 5.53% 2.01% 7,547,244 1,251,967 1,893,120 606,587 283,499 64.73% 10.74% 16.24% 5.20% 2.43% 6,460,276 1,097,107 1,821,302 543,596 279,502 62.85% 10.67% 17.72% 5.29% 2.72% 5,906,265 903,006 1,788,872 533,264 285,540 62.37% 9.54% 18.89% 5.63% 3.02% 6,607,296 918,439 1,664,605 536,842 290,266 65.45% 9.10% 16.49% 5.32% 2.88% 7,732,867 1,057,409 1,633,988 582,530 298,480 68.08% 9.31% 14.39% 5.13% 2.63% Sources: The data for this table has been provided by the Wright County Auditor / Treasurer's Office. Table 7 Other Total 22,859 $ 8,454,047 0.27% 100.00% 70,937 11,127,425 0.64% 100.00% 74,141 12,924,315 0.57% 100.00% 75,003 13,794,524 0.54% 100.00% 79,192 13,012,184 0.61% 100.00% 77,709 11,660,126 0.67% 100.00% 76,765 10,278,548 0.75% 100.00% 53,341 9,470,288 0.56% 100.00% 78,317 10,095,765 0.78% 100.00% 53,341 11,358,615 0.47% 100.00% 110 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS Last Ten Fiscal Years Table 8 Overlapping Rates Total Direct & Overlapping School School School School School School City District 728 District 882 District 885 County District 728 District 882 District 885 2006 27.627 35.950 24.372 42.874 32.567 96.144 84.566 103.068 2007 26.673 33.208 23.146 45.259 30.714 90.595 80.533 102.646 2008 26.500 32.344 25.254 46.192 31.648 90.492 83.402 104.340 2009 26.972 36.136 26.083 46.714 32.567 95.675 85.622 106.253 2010 29.342 39.967 24.948 52.062 35.819 105.128 90.109 117.223 2011 34.013 43.489 27.029 51.369 39.306 116.808 100.348 124.688 2012 41.455 45.548 28.262 52.646 43.452 130.455 113.169 137.553 2013 46.228 50.058 26.229 57.213 44.288 140.574 116.745 147.729 2014 44.573 51.286 28.269 51.570 43.450 139.309 116.292 139.593 2015 41.202 42.483 22.882 51.082 40.593 124.278 104.677 132.877 Sources: The data for this table has been provided by the Wright County Auditor / Treasurer's Office. III CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) PRINCIPAL PROPERTY TAXPAYERS Current Year and Nine Years Ago 2015 2006 Table 9 Percentage of Percentage of Net Tax Total Tax Net Tax Total Tax Taxpayer Classification Capacity Rank Capacity Value Capacity Rank Capacity Value Duke Realty Industrial $ 217,098 1 1.91% Target Corporation Commercial 207,250 2 1.82% Minnegasco, Inc. Utility 157,042 3 1.38% $ 85,724 1 1.01% Elk Inn Partners, LP Commercial 99,250 4 0.87% Wright -Hennepin Electric Co -Op Utility 90,349 5 0.80% 43,236 7 0.51% Apex Business Center, LLC Industrial 74,578 6 0.66% 71,274 2 0.84% 21 st Century Bank Commercial 51,118 7 0.45% GCI Capital, Inc. Commercial 46,662 8 0.41% Minnwest Bank Central Commercial 45,450 9 0.40% Darkenwald's Riverbend Residential 40,734 10 0.36% Tier One, LLC Commercial 63,286 3 0.75% 5 Heirs Marketplace West, LLC Commercial 57,250 4 0.68% Martin Farms Development, LLC Residential 53,469 5 0.63% OHW, LLC Residential 44,526 6 0.53% RPHR Investments, LLC Commercial 41,834 8 0.49% Pattern Station, Inc. Commercial 37,166 9 0.44% ABP, LLC Commercial 28,450 10 0.34% Totals $ 1,029,531 9.06% $ 526,215 6.22% Sources: The data for this table has been provided by the Wright County Auditor / Treasurer's Office. 112 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) PROPERTY TAX LEVIES AND COLLECTIONS Last Ten Fiscal Years Collected within the Certified Fiscal Year of the Levy Collections in Property Percentage Subsequent Tax Levy Amount of Levy Years 2006 $ 2,335,590 $ 2,236,871 95.77% $ 98,719 2007 2,968,000 2,750,126 92.66% 217,874 2008 3,425,000 3,241,928 94.65% 183,072 2009 3,720,690 3,498,865 94.04% 221,825 2010 3,818,000 3,610,870 94.57% 200,343 2011 3,966,000 3,820,747 96.34% 144,132 2012 4,261,000 4,111,857 96.50% 146,678 2013 4,377,910 4,306,802 98.38% 67,283 2014 4,500,000 4,444,153 98.76% 50,161 2015 4,680,000 4,641,720 99.18% - Table 10 Total Collections to Date Amount Percentage to Date $ 2,335,590 100.00% 2,968,000 100.00% 3,425,000 100.00% 3,720,690 100.00% 3,811,213 99.82% 3,964,879 99.97% 4,258,535 99.94% 4,374,085 99.91% 4,494,314 99.87% 4,641,720 99.18% Sources: The data for this table has been provided by Wright County and from City financial maintenance documents. Note: The components of the Certified Property Tax Levy can be viewed in table 6 of the statistical section. 113 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) RATIOS OF OUTSTANDING DEBT BY TYPE Last Ten Fiscal Years Table 11 Business -Type Governmental Activities Activities General General Percentage Obligation Equipment Lease Capital Obligation Total of Personal Per Bonds Certificates Revenue Leases Revenue Bonds Debt Income Capita 2006 $ 14,260,000 $ $ - $ 70,067 $ 28,940,000 $ 43,270,067 11.75% $ 3,711 2007 13,785,000 3,525,000 - 27,920,000 45,230,000 10.84% 3,619 2008 12,655,000 3,430,000 26,765,000 42,850,000 9.32% 3,217 2009 11,265,000 3,230,000 27,740,000 42,235,000 9.26% 3,114 2010 13,750,000 385,000 - 27,660,000 41,795,000 8.97% 3,080 2011 17,680,000 350,000 - 27,660,000 45,690,000 8.93% 3,307 2012 18,310,000 310,000 - 27,660,000 46,280,000 8.60% 3,298 2013 17,515,000 265,000 - 27,660,000 45,440,000 8.06% 3,143 2014 10,595,000 220,000 - 27,660,000 38,475,000 6.17% 2,570 2015 9,510,000 175,000 - 27,660,000 37,345,000 5.71% 2,378 Sources: The data for this table has been provided from City financial maintenance documents. Note: More detailed information for Population and Personal Income can be viewed in table 16 of the statistical section. 114 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) RATIOS OF GENERAL BONDED DEBT OUTSTANDING Last Ten Fiscal Years General Obligation Equipment Bonds Certificates 2006 $ 14,260,000 $ 2007 13,785,000 2008 12,655,000 2009 11,265,000 2010 13,750,000 2011 17,680,000 2012 18,310,000 2013 17,515,000 2014 10,595,000 2015 9,510,000 Total General Less: Amounts Net General Bonded Debt Restricted to Obligation Outstanding Debt Service Debt - $ 14,260,000 $ 1,287,902 $ 12,972,098 - 13,785,000 1,778,560 12,006,440 - 12,655,000 1,864,069 10,790,931 11 265 000 1 092 787 10 172 213 385,000 14,135,000 6,962,030 7,172,970 350,000 18,030,000 6,547,412 11,482,588 310,000 18,620,000 6,5705533 12,049,467 265,000 17,780,000 5,882,912 11,897,088 220,000 10,815,000 5,430,795 5,384,205 175,000 9,685,000 4,506,243 55178,757 Table 12 Percentage of Estimated Actual Value Per of Property Capita 1.09% $ 1,113 0.99% 961 0.81% 810 0.75% 750 0.55% 529 1.02% 831 1.13% 859 1.20% 823 0.51 % 360 0.44% 330 Sources: The data for this table has been provided from City financial maintenance documents. Note: More detailed information for Population can be viewed in table 16 of the statistical section. Note: More detailed information for Estimated Property Values can be viewed in table 6 of the statistical section. 115 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) COMPUTATION OF DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT DECEMBER 31, 2015 Governmental Unit Overlapping Debt: School Districts: No. 728 - Elk River No. 882 - Monticello No. 885 - St. Michael -Albertville Wright County Total Overlapping Debt City of Otsego Direct Debt Total Direct and Overlapping Debt Estimated Debt Percentage Outstanding Applicable $ 287,380,000 2,270,000 262,470,000 55,945,000 $ 608,065,000 Table 13 Estimated Share of Overlapping Debt 14.86% $ 42,704,668 3.23% 73,321 4.16% 10,918,752 8.71% 4,872,810 Sources: The majority of the data for this table has been provided by Wright County Auditor / Treasurer's Office. Sources: The remaining data for this table was provided by School District No. 728. Note: More detailed information for the City's outstanding debt can be viewed in table 11 of the statistical section. 58,569,551 9,685,000 $ 68,254,551 Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. The schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. Note: The percentage of overlapping debt applicable is estimated using tax capacity values. Applicable percentages were estimated by determining the portion of each entity's tax capacity that is within the City's boundaries, and dividing it by the entity's total tax capacity. 116 0 CITY OF S+ 0 MINNESOTA. This page has been left blank intentionally. 117 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) LEGAL DEBT MARGIN INFORMATION Last Ten Fiscal Years Taxable Market Value Debt Limit Percentage Debt Limit Total Net Debt Applicable to Limit Legal Debt Margin Total Net Debt Applicable to the Limit as a Percentage of Debt Limit 2006 $ 805,729,000 2.00% 2007 $ 1,041,735,900 2.00% 2008 $ 1,203,570,700 3.00% 2009 $ 1,266,920,200 3.00% 16,114,580 20,834,718 36,107,121 38,007,606 12,972,098 12,006,440 10,790,931 10,172,213 $ 3,142,482 $ 8,828,278 $ 25,316,190 $ 27,835,393 80.50% 57.63% 29.89% 26.76% Sources: The data for this table has been provided by Wright County and from City financial maintenance documents. 118 Table 14 2010 2011 2012 2013 2014 2015 $ 1,176,565,200 $ 1,059,617,700 $ 927,878,800 $ 853,734,500 $ 923,045,300 $ 1,054,531,800 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 35,296,956 31,788,531 27,836,364 25,612,035 27,691,359 31,635,954 7,172,970 11,482,588 12,049,467 11,897,088 5,384,205 5,178,757 $ 28,123,986 $ 20,305,943 $ 15,786,897 $ 13,714,947 $ 22,307,154 $ 26,457,197 20.32% 36.12% 43.29% 46.45% 19.44% 16.37% 119 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) PLEDGED -REVENUE COVERAGE Last Ten Fiscal Years Table 15 General Obligation Revenue Bonds Water and Water and Sanitary Sewer Sanitary Sewer Less: Net Utility Connection Operating Available Debt Service Charges Charges Expenses Revenue Principal Interest Coverage 2006 $ 1,308,657 $ 2,351,837 $ 881,485 $ 2,779,009 $ 800,000 $ 768,787 177.14% 2007 1,861,821 1,662,772 910,831 2,613,762 1,020,000 1,203,646 117.54% 2008 1,819,479 501,798 1,015,506 1,305,771 1,155,000 1,083,466 58.33% 2009 1,783,074 498,326 1,039,988 1,241,412 1,190,000 1,264,930 50.57% 2010 1,915,508 990,041 1,109,346 1,796,203 - 1,214,508 147.90% 2011 2,038,433 333,151 1,228,236 1,143,348 - 1,343,403 85.11% 2012 2,256,616 1,032,687 1,148,605 2,140,698 - 1,006,961 212.59% 2013 2,429,661 1,233,224 1,136,790 2,526,095 - 1,007,100 250.83% 2014 2,687,572 2,435,460 1,016,382 4,106,650 - 1,007,585 407.57% 2015 2,641,566 2,020,299 2,524,073 2,137,792 - 1,007,762 212.13% Capital Leases Property Debt Service Taxes Principal Interest Coverage 2006 $ 63,202 $ 58,502 $ 4,700 100.00% 2007 61,924 59,567 2,357 100.00% 2008 - - - n/a 2009 n/a 2010 - n/a 2011 - - - n/a 2012 - - - n/a 2013 - - - n/a 2014 - - - n/a 2015 - - - n/a Lease Revenue Bonds Property Debt Service Taxes Principal Interest Coverage 2006 $ - $ - $ - n/a 2007 177,541 70,000 107,541 100.00% 2008 235,763 95,000 140,763 100.00% 2009 337,200 200,000 137,200 100.00% 2010 - - - n/a 2011 - - - n/a 2012 - - - n/a 2013 - - - n/a 2014 - - - n/a 2015 - - - n/a Sources: The data for this table has been provided from City financial maintenance documents. 120 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) DEMOGRAPHIC AND ECONOMIC STATISTICS Last Ten Fiscal Years 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Population No. of Households 11,660 3,953 12,499 4,262 13,319 4,553 13,562 4,660 13,571 4,736 13,816 4,826 14,034 4,894 14,457 5,035 14,968 5,218 15,705 5,425 Table 16 School Enrollments Per Capita No. 885 Personal Personal Unemployment Median No. 728 No. 882 St. Michael Income Income Rate Age Elk River Monticello Albertville $ 368,397,700 $ 31,595 4.3% 12,007 4,047 4,522 417,329,111 33,389 5.1% 12,438 4,012 4,688 459,612,052 34,508 6.1% 12,544 4,036 4,873 455,886,630 33,615 8.9% 33.8 12,702 4,057 5,094 465,770,291 34,321 8.0% 32.2 12,932 4,073 5,326 511,523,584 37,024 6.8% 32.4 12,801 4,110 5,497 538,231,968 38,352 5.8% 33.4 12,753 4,137 5,645 563,823,000 39,000 5.0% 33.4 13,123 4,137 5,747 623,821,336 41,677 4.1% 33.8 13,076 4,193 5,904 654,520,108 41,677 3.7% 33.8 13,136 4,096 6,096 Sources: Population & Households - Minnesota State Demographer [2015 Estimated by City] Personal Income - Calculated by the City Per Capita Personal Income - US Department of Commerce; Bureau of Economic Analysis Unemployment Rate - Minnesota Department of Employment and Economic Development Median Age - US Department of Commerce, Bureau of the Census School Enrollment - Minnesota Department of Education Note: Median age was added in 2015. Information prior to 2009 was not available. This will be updated on a go -forward basis. Note: Some data was not yet available for 2015. In those instances, 2014 data was shown for the current year. 121 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) PRINCIPAL EMPLOYMENT SECTORS Current Year and Nine Years Ago 2015 2006 Table 17 Percentage of Percentage of Total City Total City Employment Industry Employees Rank Employment Employees Rank Employment Education & Health Services 1,307 1 42.26% - 0.00% Trade, Transportation & Utilities 600 2 19.40% 94 5 7.81% Leisure & Hospitality 477 3 15.42% 418 1 34.72% Construction 279 4 9.02% 130 3 10.80% Professional & Business Services 229 5 7.40% 195 2 16.20% Other Services 80 6 2.59% 44 6 3.65% Public Administration 35 7 1.13% 20 7 1.66% Financial Activities 33 8 1.07% 99 4 8.22% Totals 3,040 98.29% 1,000 83.06% Sources: The data for this table has been provided from the Minnesota Department of Employment and Economic Development Note: Due to data privacy within the State, data for principal employers of the City is not available. Given this limitation, the City determined it was appropriate to provide data regarding employment industry data. The City felt that this data would still provide the user information to understand the degree to which the City's economy is or is not dependent on a certain employment sector. 122 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) FULL TIME CITY GOVERNMENT POSITIONS BY FUNCTION Last Ten Fiscal Years Table 18 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 General Government Administration 5.0 5.0 4.0 3.0 3.0 3.0 3.0 3.0 3.0 4.0 Finance 3.0 3.5 3.7 3.8 3.9 3.9 3.9 3.7 3.9 3.0 Total General Government 8.0 8.5 7.7 6.8 6.9 6.9 6.9 6.7 6.9 7.0 Public Safety Police - - - - - - - - - - Fire - - - - - - - - - - Building Inspections 6.0 5.5 4.0 2.6 1.6 1.0 1.0 1.0 1.0 1.0 Total Public Safety 6.0 5.5 4.0 2.6 1.6 1.0 1.0 1.0 1.0 1.0 Public Works Street Maintenance 4.0 4.5 5.9 5.9 6.9 6.9 5.9 5.8 5.8 6.9 Mechanic - - - - - - 1.0 1.0 1.0 1.0 Total Public Works 4.0 4.5 5.9 5.9 6.9 6.9 6.9 6.8 6.8 7.9 Culture and Recreation Parks Maintenance 1.0 1.0 1.0 1.0 1.0 1.0 1.4 1.4 1.4 3.5 Recreation - 0.6 1.1 1.1 1.4 Total Culture and Recreation 1.0 1.0 1.0 1.0 1.0 1.0 2.0 2.5 2.5 4.9 Public Utilities Water Utility - - - - - - - 2.0 2.0 1.3 Sanitary Sewer Utility - - - - - 2.0 2.0 3.8 Total Public Utilities - - - - - - - 4.0 4.0 5.0 Total 19.0 19.5 18.6 16.3 16.4 15.8 16.8 21.0 21.2 25.8 Sources: The data for this table has been provided from City financial maintenance documents. Note: Police and Fire services are contracted services with Wright County and neighboring Cities respectively, therefore no City employees Note: Public Utilities staffing were contracted with a service provider through 2012. In 2013, the City hired a staff and assumed operations. 123 CITY OF OTSEGO, MINNESOTA STATISTICAL SECTION (UNAUDITED) OPERATING INDICATORS BY FUNCTION Table 19 Last Ten Fiscal Years Function 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Administration Rental Licenses Issued 101 89 199 180 246 292 337 372 372 Code Enforcement Citations 11 60 89 20 16 31 Registered Voters 7,168 7,329 Actual Votes Tallied 4,134 6,688 4,737 7,126 4,693 Police Total Calls for Service 4,217 3,905 4,111 4,234 3,856 4,060 3,575 Fire Calls - Albertville Department 76 Calls - Elk River Department 74 73 Calls - Rogers Department 18 Building Inspections Number of Permits - All Types 2,519 740 2,480 839 617 570 645 699 692 893 New Homes Constructed 410 279 80 94 73 58 143 190 188 207 Public Works Miles of Streets Constructed 2.65 - 0.25 - - 0.45 1.33 2.30 1.66 Miles of Streets Reconstructed Snow Plowing Events 15 26 55 40 46 37 22 16 Culture and Recreation Parks Acres Maintained 142.0 142.0 158.7 158.7 161.5 167.8 167.8 184.3 184.3 184.3 Prairie Festival Attendance 4,900 5,100 6,200 Recreation Programs Offered 17 60 106 132 Recreation Programs Participants 550 9,875 14,958 12,662 Water Utility Connections 1,818 2,029 2,131 2,222 2,321 2,379 2,517 2,678 2,829 3,023 Gallons Delivered 271,400,000 352,955,656 339,394,000 348,947,070 348,498,610 353,515,900 429,293,500 409,492,730 375,299,840 389,118,330 Sanitary Sewer Utility Average Daily Gallons Treated 400,000 405,000 416,000 474,000 509,000 512,000 485,000 543,000 539,000 551,000 Sources: The data for this table has been provided by each respective City department. Note: The City made significant changes to the indicators included in this table for 2015. Not all historical data was able to be compiled, and this table will be updated on a go -forward basis. 124 CITY OF OTSEGO, NHNNESOTA STATISTICAL SECTION (UNAUDITED) CAPITAL ASSET STATISTICS BY FUNCTION Last Ten Fiscal Years Function 2006 2007 2008 2009 2010 2011 2012 Public Works Street Miles (MSA) 109.95 112.60 113.10 112.85 112.85 112.85 113.30 Heavy Duty Trucks 7 7 7 7 7 8 8 Light Duty Vehicles 9 9 9 10 10 10 11 Tractors & Grading Equipment 3 4 4 4 7 8 8 Culture and Recreation Trail Miles 13.86 16.90 17.90 19.68 19.68 19.68 19.68 Number of Parks 6 6 7 7 7 8 8 Playgrounds 6 6 6 6 6 7 7 Park Shelters 7 7 7 7 7 9 9 Ball Fields 4 4 4 4 4 5 5 Soccer Fields - - - - - - - Basketball Courts 4 4 4 4 4 5 5 Tennis Courts 6 6 6 6 6 7 7 Outdoor Ice Rinks - - - - - - - Mowing Equipment 1 1 2 2 3 4 5 Water Utility Water Towers 2 2 3 3 3 3 3 Wells 7 7 8 8 8 8 8 Miles of Water Main Hydrants Water Valves Sanitary Sewer Utility Treatment Facilities 2 2 2 2 2 2 2 Lift Stations 8 9 9 9 9 9 9 Miles of Sanitary Sewer Lines Manholes Miles of Sanitary Forcemain Sources: The data for this table has been provided by each respective City department. Note: The City made significant changes to the statistics included in this table for 2015. Not all historical data was able to be compiled, and this table will be updated on a go -forward basis 2013 2014 Table 20 2015 114.63 116.93 118.59 8 8 8 15 15 15 8 8 8 19.68 19.68 19.96 10 10 10 7 7 7 9 9 9 5 5 5 3 5 5 5 7 7 7 1 1 1 5 5 5 3 3 3 8 8 8 63 63 74 717 722 794 1,555 1,603 1,659 2 2 2 9 9 9 68.5 73.6 1,257 1,257 1,366 20 20 20 125 0 CITY OF S+ 0 MINNESOTA. This page has been left blank intentionally. 126