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Home My WebLink AboutACFR-2023 ANNUAL FINANCIAL REPORT CITY OF BROOKLYN CENTER BROOKLYN CENTER, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2023 THIS PAGE IS LEFT BLANK INTENTIONALLY 2 City of Brooklyn Center, Minnesota Annual ComprehensiveFinancial Report Table of Contents For the Year Ended December 31, 2023 Page No. Introductory Section Principal City Officials 9 Financial Section 13 17 Basic Financial Statements Government-wide Financial Statements Statement of Net Position 33 Statement of Activities 34 Fund Financial Statements Governmental Funds Balance Sheet 38 Reconciliation of the Balance Sheet to the Statement of Net Position 39 Statement of Revenues, Expenditures and Changes in Fund Balances 40 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities 41 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - General Fund 42 Tax Increment District No. 3 43 Proprietary Funds Statement of Net Position 44 Statement of Revenues, Expenses and Changes in Net Position 46 Statement of Cash Flows 47 Notes to the Financial Statements 49 Required Supplementary Information - General Employees Retirement Fund 90 - General Employees Retirement Fund 90 Notes to the Required Supplementary Information - General Employees Retirement Fund 91 - Public Employees Police and Fire Fund 93 - Public Employees Police and Fire Fund 93 Notes to the Required Supplementary Information - Public Employees Police and Fire Fund 94 96 Notes to the Required Supplementary Information - Fire Relief Association 97 Schedule of Employers Fire Relief Association Contributions 98 Schedule of 98 Notes to the Required Supplementary Information - Total OPEB Liability and Related Ratios 99 3 THIS PAGE IS LEFT BLANK INTENTIONALLY 4 City of Brooklyn Center, Minnesota Annual ComprehensiveFinancial Report Table of Contents (Continued) For The Year Ended December 31, 2023 Page No. Combining and Individual Fund Financial Statements and Schedules Nonmajor Governmental Funds Combining Balance Sheet 102 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 103 Nonmajor Special Revenue Funds Combining Balance Sheet 104 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 106 Nonmajor Capital Project Funds Combining Balance Sheet 108 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 110 General Fund Comparative Balance Sheets 112 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 113 Debt Service Funds Combining Balance Sheet 118 Combining Schedule of Revenues, Expenditures and Changes in Fund Balances 120 Nonmajor Proprietary Funds Combining Statement of Net Position 122 Combining Statement of Revenues, Expenses and Changes in Net Position 123 Combining Statement of Cash Flows 124 Internal Service Funds Combining Statement of Net Position 125 Combining Statement of Revenues, Expenses and Changes in Net Position 126 Combining Statement of Cash Flows 127 Summary Financial Report Revenue and Expenditures for General Operations - Governmental Funds 128 Other Required Reports Independent Report on Minnesota Legal Compliance 131 Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 132 For Each Major Federal Program and Report on Internal Control Over Compliance Required By the Uniform Guidance 134 Schedule of Expenditures of Federal Awards 136 Notes to the Schedule of Expenditures of Federal Awards 137 Schedule of Findings, Responses and Questioned Costs 138 Corrective Action Plan 140 Schedule of Prior Year Findings 143 5 THIS PAGE IS LEFT BLANK INTENTIONALLY 6 INTRODUCTORY SECTION CITY OF BROOKLYN CENTER BROOKLYN CENTER, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2023 7 THIS PAGE IS LEFT BLANK INTENTIONALLY 8 City of Brooklyn Center, Minnesota Principal City Officials For the Year Ended December 31, 2023 Elected NameTitleTerm Expires April GravesMayor12/31/26 Marquita ButlerCouncil Member 12/31/24 Dan JerzakCouncil Member 12/31/26 Teneshia KragnesCouncil Member 12/31/26 Kris Lawrence-AndersonCouncil Member 12/31/24 Appointed Dr. Reginald EdwardsCity Manager Troy GilchristCity Attorney Barb SuciuCity Clerk Garrett FleslandPolice Chief Jesse AndersonCommunity Development Director Todd BergFire Chief Cordell WisemanRecreation Services Director Elizabeth HeymanPublic Works Director Angela HolmFinance Director 9 THIS PAGE IS LEFT BLANK INTENTIONALLY 10 FINANCIAL SECTION CITY OF BROOKLYN CENTER BROOKLYN CENTER, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2023 11 THIS PAGE IS LEFT BLANK INTENTIONALLY 12 INDEPENDENT AUDITOR'S REPORT Honorable Mayor and City Council City of Brooklyn Center, Minnesota Opinions 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 Brooklyn Center, Minnesota, (the City) as of and for the year ended December 31, 2023, and the related notes to the financial statements, which collectively comprise the statements as listed in the table of contents. 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 as of December 31, 2023, and the respective changes in financial position and cash flows, where applicable, thereof and the budgetary comparison for the General fund and Tax Increment District No. 3 for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of Audit of the Financial Statements section of our report. We are required to be independent of the Cityand to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. 13 In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we: Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about theCity We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. Other Matters Required Supplementary Information Analysis starting on page 17 , Related Ratios, the Schedule of Changes in the City's OPEB Liability and Related Ratios and the related note disclosures starting on page be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board 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 mana 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. 14 Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the combining and individual fund financial statements and schedules and schedule of expenditures of federal awardsas required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statement themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individualfund financial statements and schedulesand the schedule of expenditures of federal awards are fairly stated, in all material respects in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information in the report. The other information comprises the introductory opinions on the basic financial statement do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 10, 2024, on our provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solelyto describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Abdo Mankato, Minnesota October 10, 2024 15 THIS PAGE IS LEFT BLANK INTENTIONALLY 16 As management of the City of Brooklyn Center overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2023. Financial Highlights The assets and deferred outflows or resources of the City exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year as shown in the summary of net position on the following pages. The unrestricted amount of net position may be used to meet the Ci and creditors. increased as shown in the summary of changes in net assets table on the following pages. The increase this year was due to an increase in property taxes and changes in interest earnings. For the current fiscal year, the City's governmental funds fund balances are shown in the Financial Analysis of the City's Funds section of the MD&A. The total fund balance increased in comparison with the prior year. This increase was mainly due to an increase in special revenue related to initiative grants and street reconstruction revenue related to MSA funding. The total of assigned and unassigned as shown in the governmental fund balance table is available for spending at the The unassigned fund balance in the General fund as shown in the financial analysis of the C increased from prior year. fiscal year. The decrease was a result of schedule debt service payments as shown on the outstanding debt table. 17 Overview of the Financial Statements basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplemental information in addition to the basic financial statements themselves. The following chart shows how the various parts of this annual report are arranged and related to one another: The financial statements also include notes that explain some of the information in the financial statements and provide more detailed data. The statements are followed by a section of combining and individual fund financial statements and schedules that further explains and supports the information in the financial statements. Figure 1 shows how the required parts of this annual report are arranged and relate to one another. In addition to these required elements, we have included a section with combining and individual fund financial statements and schedules that provide details about nonmajor governmental funds, which are added together and presented in single columns in the basic financial statements. Internal service funds statements are also included, reflecting balances prior to their elimination from the government---type activities columns of said statements. Figure 1 Required Components of the 18 discussion and analysis explains the structure and contents of each of the statements. Figure 2 Major Features of the Government-wide and Fund Financial Statements Fund Financial Statements Government-wide Governmental Funds Proprietary Funds Statements Scope Entire City government The activities of the City Activities the City (except fiduciary funds) that are not proprietary or operates similar to private fiduciary, such as police, businesses, such as the units fire and parks water and sewer system Required financial Statement of Net Balance Sheet Statement of Net statements Position Position Statement of Statement of Activities Revenues, Statement of Expenditures, and Revenues, Expenses Changes in Fund and Changes in Net Balances Position Statement of Cash Flows Accounting basis and Accrual accounting and Modified accrual Accrual accounting and measurement focus economic resources focus accounting and current economic resources focus financial resources focus Type of asset/liability All assets and liabilities, Only assets expected to All assets and liabilities, information both financial and capital, be used up and liabilities both financial and capital, and short-term and long-that come due during the and short-term and long- term year or soon thereafter; no term capital assets included Type of deferred All deferred Only deferred outflows of All deferred outflows/inflows of outflows/inflows of resources expected to be outflows/inflows of resources information resources, regardless of used up and deferred resources, regardless of when cash is received or inflows of resources that when cash is received or paid. come due during the year paid or soon thereafter; no capital assets included Type of in flow/out flow All revenues and expenses Revenues for which cash All revenues and expenses information during year, regardless of is received during or soon during the year, regardless when cash is received or after the end of the year; of when cash is received paid expenditures when goods or paid or services have been received and payment is due during the year or soon thereafter Government-wide Financial Statements. The hpwfsonfou.xjef!gjobodjbm!tubufnfout are designed to provide readers with -sector business. The tubufnfou!pg!ofu!qptjujpo deferred outflows of resources and liabilities and deferred inflows of resources with the difference reported as ofu!qptjujpo. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. 19 The tubufnfou!pg!bdujwjujft 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, sfhbsemftt!pg!uif!ujnjoh!pg!sfmbufe!dbti!gmpxt. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (hpwfsonfoubm!bdujwjujft) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (cvtjoftt.uzqf!bdujwjujft). The governmental activities of the City include general government, public safety, public works, community services, parks and recreation and economic development. The business-type activities of the City include water, Heritage Center of Brooklyn Center, municipal liquor, sanitary sewer utility, storm drainage utility, street lighting utility and recycling utility. The government-wide financial statements include not only the City itself (known as the qsjnbsz!hpwfsonfou), but also the legally separate Economic Development Authority and Housing Redevelopment Authority for which the City is financially accountable. Financial information for these dpnqpofou!vojut are reported separately from the financial information presented for the primary government itself. The government-wide financial statements can be found starting on page 33 of this report. Fund Financial Statements. A gvoe 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 government, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into two categories: governmental funds and proprietary funds. Hpwfsonfoubm!Gvoet. Hpwfsonfoubm!gvoet are used to account for essentially the same functions reported as hpwfsonfoubm!bdujwjujft in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on ofbs.ufsn!jogmpxt!boe!pvugmpxt!pg!tqfoebcmf!sftpvsdft, as well as on cbmbodft!pg!tqfoebcmf!sftpvsdft available at the end of the fiscal year. Such information may be useful in -term financing 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 hpwfsonfoubm!gvoet with similar information presented for hpwfsonfoubm! bdujwjujft in the government-wide financial statements. By doing so, readers may better understand the long-term impact -term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between hpwfsonfoubm!gvoet and hpwfsonfoubm!bdujwjujft. The City maintains various individual governmental funds, several of which are Debt Service funds that are considered one fund for financial reporting. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the General fund, Debt Service fund and Tax Increment District No. 3, all of which are considered to be major funds. Data from the other 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 dpncjojoh!tubufnfout elsewhere in this report. The City adopts an annual appropriated budget for its General fund and Tax Increment District No. 3. Budgetary comparison statements have been provided for the General fund and Tax Increment District No. 3 fund to demonstrate compliance with these budgets. The basic governmental fund financial statements can be found starting on page 38 of this report. ! 20 Qspqsjfubsz!Gvoet. The City maintains two different types of proprietary funds. Foufsqsjtf!gvoet are used to report the same functions presented as cvtjoftt.uzqf!bdujwjujft in the government-wide financial statements. The City uses enterprise funds to account for its municipal liquor, Heritage Center of Brooklyn Center, water utility, sanitary sewer utility, storm drainage utility, street light utility and recycling utility operations. Joufsobm!tfswjdf!gvoet are an accounting The City uses internal service funds to account for its central garage operations, employee retirement benefit, employee compensation and pension activity for the GERP and PEPFP programs. Because these services predominately benefit governmental rather than cvtjoftt.uzqf!gvodujpot, they have been included within the hpwfsonfoubm!bdujwjujft in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for each of its operations that are considered to be major fund of the City. Internal service funds balances have been incorporated into the functions of the governmental activities that benefited from these services. Individual fund data for the internal services funds is provided in the form of combining statements elsewhere in this report. The basic proprietary fund financial statements can be found starting on page 44 of this report. Notes to the Financial Statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found starting on page 49 of this report. SupplementaryInformation. In addition to the basic financial statements and accompanying notes, this report also benefits and other post-employment benefits to its employees. Required supplementary information can be found on page 90 of this report. The combining statements and schedules referred to earlier in connection with nonmajor governmental funds are presented immediately following the notes to the financial statements. Combining and individual fund statements and schedules can be found starting on page 102 of this report. Government-wide Financial Analysis As noted earlier, net position of the City, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources at the close of the most recent fiscal year. net position reflects its investment in capital assets (e.g., land, buildings, infrastructure, machinery and equipment, etc.), less any related debt used to acquire those assets that are still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are opu ld 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. 21 City of Brooklyn CenterSummary of Net Position net position represents resources that are subject to external restrictions on how they may be used. The remaining balance of vosftusjdufe!ofu!qptjujpo citizens and creditors. 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 City as a whole, as well as for its separate governmental and business-type activities. 22 Governmental Activities. increase are as follows: City of Brooklyn CenterChanges in Net Position Governmental ActivitiesBusiness-type Activities IncreaseIncrease 20232022(Decrease)20232022(Decrease) Revenues Program Revenues Charges for services$ 2,536,548$ 2,217,407$ 319,141$ 23,632,778$ 22,665,610$ 967,168 Operating grants and contributions 4,356,884 6,128,777 (1,771,893) 253,788 227 253,561 Capital grants and contributions 1,201,521 2,888,721 (1,687,200) 196,344 72,999 123,345 General Revenues Property taxes 23,100,876 21,801,640 1,299,236 - - - Tax increments 1,050,058 475,474 574,584 - - - Lodging taxes 898,037 895,883 2,154 - - - Grants and contributions not restricted to specific programs 3,296,142 2,800,461 495,681 - - - Unrestricted investment earnings (loss) 1,788,433 (1,357,564) 3,145,997 528,438 (483,959) 1,012,397 Other 400,535 405,204 (4,669) - - - Gain on sale of capital assets 194,701 - 194,701 - - - Total Revenues 38,823,735 36,256,003 2,567,732 24,611,348 22,254,877 2,356,471 Expenses General government 6,530,570 5,199,377 1,331,193 - - - Public safety 15,349,585 13,560,562 1,789,023 - - - Public works 6,292,303 11,343,594 (5,051,291) - - - Community services 180,657 70,958 109,699 - - - Park and recreation 5,853,004 4,356,123 1,496,881 - - - Economic development 2,954,501 2,770,033 184,468 - - - Interest on long-term debt 395,747 467,590 (71,843) - - - Municipal liquor - - - 6,773,467 7,034,847 (261,380) Heritage Center of Brooklyn Center - - - 4,545,057 4,102,266 442,791 Water utility - - - 4,940,861 4,816,998 123,863 Sanitary sewer utility - - - 5,326,043 4,754,623 571,420 Storm drainage utility - - - 2,522,856 2,476,252 46,604 Street light utility - - - 653,176 541,422 111,754 Recycling utility - - - 537,993 394,755 143,238 Total Expenses 37,556,367 37,768,237 (211,870) 25,299,453 24,121,163 1,178,290 Increase (Decrease) in Net Position Before Contributions 1,267,368 (1,512,234) 2,779,602 (688,105) (1,866,286) 1,178,181 Capital Contributions - (25,827) 25,827 - 25,827 (25,827) Change in Net Position 1,267,368 (1,538,061) 2,805,429 (688,105) (1,840,459) 1,152,354 Net Position - January 1 109,213,481 110,751,542 (1,538,061) 55,828,914 57,669,373 (1,840,459) Net Position - December 31$ 110,480,849$ 109,213,481$ 1,267,368$ 55,140,809$ 55,828,914$ (688,105) Property taxes and tax increment revenues increased $1,299,236 and $574,584, respectively, mainly due to increased general fund levies and increased valuation of TIF properties. 23 Grants and contributions not restricted to specific programs increased $495,681. This is due primarily to the Investment earnings increased $3,145,997 due toanincrease in interest rates and changes in market value. The following graphs depict various governmental activities and show the revenue and expenses directly related to those activities. Expenses and Program Revenues -Governmental Activities $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $- GeneralPublic SafetyPublic WorksCommunityParks andEconomicInterest on Long- GovernmentServicesRecreationDevelopmentterm Debt ExpensesProgram Revenues Revenuesby Source -Governmental Activities Unrestricted Charges for Investment Other 1.5% Services6.5% Earnings Operating Grants 4.6% and Contributions 11.2% Capital Grants and Contributions3.1% Unrestricted Grants and Contributions8.5% Taxes/Tax Increments64.6% 24 Business-type Activities. Business- position table. Key elements of this decrease are as follows: Charges for services increased by $967,168due to an increase in usage and utility rates. Due to inflationary pressures, all business-relatedexpenses trended upward, resulting in an increase of $1,178,290from the prior year. Expenses and Program Revenues-Business-type Activities Revenuesby Source-Business-type Activities Operating Grants Capital Grants and Unrestricted and Contributions Investment Contributions 1.0%Earnings 0.8% 2.1% Charges for Services96.1%, 25 Financial Analysis of the City As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. available for spending at the end of the year. Hpwfsonfoubm!Gvoet hpwfsonfoubm!gvoet is to provide information on near-term inflows, outflows and balances of tqfoebcmf requirements. In particular, vobttjhofe!gvoe!cbmbodf available for spending at the end of the fiscal year. The table below outlines the governmental fund balances for the year ending December 31, 2023. 58 of this report. The Hfofsbm!gvoe is the chief operating fund of the City. At the end of the current year, the fund balance of the General fund balance to total fund expenditures. The total unassigned fund balance as a percent of total fund expenditures is shown in the chart below along with total fund balance as a percent of total expenditures. Current YearPrior YearIncrease Ending BalanceEnding Balance(Decrease) General Fund Fund Balances $ 76,485 $ 111,943 Nonspendable$ 188,428 12,961,734 445,657 Unassigned 13,407,391 Total$ 13,595,819$ 13,038,219$ 557,600 General Fund Expenditures$ 27,821,556 $ 25,156,253 Unassigned as a Percent of Expenditures48.2%51.5% Total Fund Balance as a Percent of Expenditures48.9%51.8% variances that occurred in the General fund from its budget are noted below in the General Fund Budgetary Highlights. 26 Other major governmental fund analysis is shown below: December 31,December 31,Increase 20232022(Decrease) Tax Increment District No. 3 fund$ 21,605,846$ 22,741,645$ (1,135,799) Uif!Uby!Jodsfnfou!Ejtusjdu!Op/!4!gvoe!efdsfbtf!jo!gvoe!cbmbodf!evsjoh!uif!zfbs!xbt!evf!up! uif!ejtusjdu!op!mpohfs!dpmmfdujoh!jodsfnfou!gpmmpxjoh!efdfsujgjdbujpo!jo!3132/ Debt Service fund$ 5,085,185$ 4,752,875$ 332,310 Uif!Efcu!Tfswjdf!gvoe!jodsfbtf!jo!gvoe!cbmbodf!evsjoh!uif!zfbs!xbt!evf!up!tdifevmfe qsjodjqbm!boe!joufsftu!qbznfout!nbef!po!cpoet!jo!fydftt!pg!dvssfou!zfbs!sftpvsdft/ Qspqsjfubsz!Gvoet/ proprietary funds provide the same type of information found in the government-wide EndingEnding Net PositionNet PositionIncrease 20232022(Decrease) Water Utility$ 13,162,998$ 13,144,143$ 18,855 Uif!jodsfbtf!jt!nbjomz!evf!up!dvssfou!zfbs!sfwfovf!gps!dpoofdujpo!gfft/ Sanitary Sewer Utility$ 16,730,996$ 16,409,637$ 321,359 Uif!jodsfbtf!jt!nbjomz!evf!up!dvssfou!zfbs!sfwfovf!gps!dpoofdujpo!gfft/ Stom Drainage Utility$ 20,751,865$ 20,796,568$ (44,703) Uif!efdsfbtf!qsjnbsjmz!jt!buusjcvufe!up!jodsfbtf!jo!pqfsbujoh!fyqfotft-!joufsftu!boe!puifs!dptut/ Municipal Liquor$ 2,457,957$ 2,500,628$ (42,671) Uif!efdsfbtf!qsjnbsjmz!jt!buusjcvufe!up!jodsfbtf!jo!pqfsbujoh!fyqfotft-!joufsftu!boe!puifs!dptut/ Heritage Center of Brooklyn Center$ 2,121,562$ 2,771,038$ (649,476) Uif!efdsfbtf!qsjnbsjmz!jt!buusjcvufe!up!jodsfbtf!jo!pqfsbujoh!fyqfotft!tvdi!bt!qfstpobm!boe!puifs!tfswjdft/ Street Light Utility$ 2,650,360$ 2,734,275$ (83,915) Uif!efdsfbtf!qsjnbsjmz!jt!buusjcvufe!up!jodsfbtf!jo!pqfsbujoh!fyqfotft!tvdi!bt!vujmjujft!boe!efqsfdjbujpo0bnpsuj{bujpo/ Recycling Utility$ 162,990$ 276,316$ (113,326) Uif!efdsfbtf!qsjnbsjmz!jt!buusjcvufe!up!jodsfbtf!jo!pqfsbujoh!fyqfotft!tvdi!bt!puifs!tfswjdft/ 27 General Fund Budgetary Highlights Revenues were under budget by $890,858, expenditures were under budget by $1,709,373 and the other financing sources (uses) were under budget by $260,915, causing fund balance to increase by $557,600 in 2023. The budget was balanced during the year. The major variances in the budget for the General fund were: Building permit revenue was under budget by $1,285,059 mainly due to deferred anticipated project activity on the opportunity site because of rising interest rates. Intergovernmental revenue was under budget by $517,368 mainly due to the less local grants received than budgeted related to initiative programs. Investment earnings were over by $404,041 due to an increase in interest rates and market value adjustments. Police expenditures were under budget by $523,023. This is due to personal services in the police department being under budget by $649,474 due to staffing shortages. 28 Capital Asset and Debt Administration Capital Assets. -type activities as of December 31, 2023, is shown below in capital asset table (net of accumulated depreciation). This investment in capital assets includes land, structures, improvements, machinery and equipment, vehicles, roads, highways and bridges. The total decrease -type activities is to the City having a planned one-year hiatus from major street reconstruction projects. Major reconstruction projects are slated to begin again in 2024. Major capital asset activity during the current fiscal year included the following rd Costs related to the 53 Avenue project totaled $275,125 th Costs related to the Knox, James, 54 Avenue project totaled $183,568 th Costs related to the 50 Avenue Improvement project totaled $286,124 st Costs related to the 51 Avenue Improvement project totaled $222,628 Trail and Parking Lot Improvements totaled $783,169 Orchard Lane East Street Reconstruction project costs totaled $306,045 Playground equipment replacements amounted to $580,498 assets can be found in Note 3C starting on page 64 of this report. City of Brooklyn CenterCapital Assets (Net of Depreciation) Governmental ActivitiesBusiness-type ActivitiesTotal IncreaseIncrease 20232022(Decrease)20232022(Decrease)20232022 Land$ 5,638,873$ 5,638,873$ -$ 2,698,879$ 2,698,879$ -$ 8,337,752$ 8,337,752 Easements 320,904 88,704 232,200 10,285 10,285 - 331,189 98,989 Construction in Progress 2,103,427 3,076,709 (973,282) 971,078 2,371,969 (1,400,891) 3,074,505 5,448,678 Land Improvements 10,205,874 9,988,261 217,613 151,371 180,447 (29,076) 10,357,245 10,168,708 Buildings and Improvements 6,814,998 7,710,556 (895,558) 21,419,591 22,635,302 (1,215,711) 28,234,589 30,345,858 Machinery and Equipment 5,965,420 5,983,583 (18,163) 272,989 287,651 - 6,238,409 6,271,234 Leased Equipment 66,433 84,148 (17,715) - 68,465 - 66,433 152,613 Street Infrastructure 44,365,501 44,181,325 184,176 - - - 44,365,501 44,181,325 Street light systems - - - 2,009,764 2,188,277 - 2,009,764 2,188,277 Mains and lines - - - 52,419,121 52,968,414 - 52,419,121 52,968,414 Total$ 75,481,430$ 76,752,159$ (1,270,729)$ 79,953,078$ 83,409,689$ (2,645,678)$ 155,434,508$ 160,161,848 Long-term Debt. At the end of the current fiscal year, the City had total bonded debt outstanding consisting of special assessment, tax increment bonds, bonds secured solely by specified revenue sources (i.e., revenue bonds) and leases payable. 29 City of Brooklyn CenterOutstanding Debt Governmental ActivitiesBusiness-type Activities Total IncreaseIncrease 20232022(Decrease)20232022(Decrease)20232022 General Obligation Lease Revenue Bonds$ -$ -$ -$ 2,145,000$ 2,285,000$ (140,000)$ 2,145,000$ 2,285,000 General Obligation Improvement Bonds 15,387,688 17,438,225 (2,050,537) 567,312 751,775 (184,463) 15,955,000 18,190,000 General Obligation Tax Increment Bonds 2,075,000 2,380,000 (305,000) - - - 2,075,000 2,380,000 General Obligation Revenue Bonds - - - 20,220,000 22,625,000 (2,405,000) 20,220,000 22,625,000 General Obligation Revenue Notes - - - 11,785,445 12,797,445 (1,012,000) 11,785,445 12,797,445 Leases Payable 67,689 84,727 (17,038) - 69,236 (69,236) 67,689 153,963 Total$ 17,530,377$ 19,902,952$ (2,372,575)$ 34,717,757$ 38,528,456$ (3,810,699)$ 52,248,134$ 58,431,408 .6 2023 issues. The City had no new bond issues in 2023. Minnesota statutes limit the amount of net general obligation debt a City may issue to three percent of the market value of taxable property within the City. Net debt is debt payable solely from ad valorem taxes. The current debt limitation for the City is $91,797,996 Additional -term debt can be found in Note 3E starting on page 78 of this report. Continuing redevelopment throughout the City will yield net growth in tax base and stability in tax base along with providing job growth in the City. Since 2008, the EDA has acquired approximately 49 acres of land including the former Brookdale Square shopping center site, the former Target site, the former Brookdale Ford dealership property and other parcels within the existing street boundaries of the area. The EDA entered into a Preliminary Development Agreement with Alatus, LLC as the master developer of this site. In May 2018, the site was federally designated as an Opportunity Zone. The preliminary development concept proposed involves the construction of a mixed-use apartment/hotel/commercial/single-family development together with related improvements including a centralized park area, new roads and storm water ponding improvements. - General fund operations. Additionally, the City's capital project funding policy transfers the amount of fund balance exceeding 52.0% to the Capital Improvements fund following the completed audit of the City. Total unassigned fund balance at the end of 2023 was $13,407,391, or 47.9% of the adopted 2024 budgeted expenditures. Requests for Information information should be addressed to the Finance Director, City of Brooklyn Center, 6301 Shingle Creek Parkway, Brooklyn Center, Minnesota 55430. 30 GOVERNMENT-WIDE FINANCIAL STATEMENTS CITY OF BROOKLYN CENTER BROOKLYN CENTER, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2023 31 THIS PAGE IS LEFT BLANK INTENTIONALLY 32 City of Brooklyn Center, Minnesota Statement of Net Position December 31, 2023 GovernmentalBusiness-type ActivitiesActivitiesTotal Assets Cash and investments$ 46,646,017$ 10,843,592$ 57,489,609 Receivables Interest 12,425 248,350 260,775 Taxes 173,011 - 173,011 Accounts, net of allowances 442,033 3,699,427 4,141,460 Notes 96,241 - 96,241 Leases 457,382 4,411,293 4,868,675 Special assessments 4,427,680 702,003 5,129,683 Intergovernmental 267,818 78,962 346,780 Internal balances 2,897,919 (2,897,919) - Inventories 111,747 1,183,205 1,294,952 Prepaid items 126,682 297,769 424,451 Assets held for resale 20,127,822 - 20,127,822 Capital assets Nondepreciable 8,063,204 3,680,242 11,743,446 Depreciable 67,418,226 76,272,836 143,691,062 Net pension asset 443,775 - 443,775 Total Assets 151,711,982 98,519,760 250,231,742 Deferred Outflows of Resources Deferred pension resources 12,036,991 - 12,036,991 Deferred other postemployment benefit resources 1,104,339 - 1,104,339 Total Deferred Outflows of Resources 13,141,330 - 13,141,330 Liabilities Accounts payable 1,562,572 734,773 2,297,345 Contracts payable 89,654 219,506 309, 160 Due to other governments 137,856 94,796 232,652 Accrued interest payable 240,278 364,450 604,728 Accrued salaries and wages 717,856 126,771 844,627 Deposits payable 597,605 513,221 1,110,826 Unearned revenue 2,042,149 89,141 2,131,290 Noncurrent liabilities Due within one year Long-term liabilities 2,778,532 4,068,204 6,846,736 Due in more than one year Long-term liabilities 17,511,032 32,657,330 50,168,362 Net pension liability 12,846,496 - 12,846,496 Total other postemployment benefits liability 2,668,769 - 2,668,769 Total Liabilities 41,192,799 38,868,192 80,060,991 Deferred Inflows of Resources Deferred pension resources 11,878,599 - 11,878,599 Deferred other postemployment benefit resources 883,928 - 883,928 Deferred lease resources 417,137 4,510,759 4,927,896 Total Deferred Inflows of Resources 13,179,664 4,510,759 17,690,423 Net Position Net investment in capital assets 58,550,019 43,008,038 101,558,057 Restricted Tax increment financing 24,515,898 - 24,515,898 Economic development 1,751,082 - 1,751,082 Debt service 5,739,995 - 5,739,995 Law enforcement enhancements 104,772 - 104,772 Opioids 77,689 - 77,689 Community prevention, health and safety 1,974,310 - 1,974,310 State-aid street systems 3,941,993 - 3,941,993 Fire relief pension 443,775 - 443,775 Unrestricted 13,381,316 12,132,771 25,514,087 Total Net Position$ 110,480,849 $ 55,140,809$ 165,621, 658 The notes to the financial statements are an integral part of this statement. 33 City of Brooklyn Center, Minnesota Statement of Activities For the Year Ended December 31, 2023 Program Revenues Operating Capital Charges forGrants andGrants and Functions/ProgramsExpensesServicesContributionsContributions Governmental Activities General government$ 6,530,570$ 545,409$ 136,312$ - Public safety 15,349,585 1,148,811 2,085,011 - Public works 6,292,303 24,038 2,012,635 1,201,521 Community services 180,657 - - - Parks and recreation 5,853,004 809,730 122,926 - Economic development 2,954,501 8,560 - - Interest on long-term debt 395,747 - - - Total Governmental Activities 37,556,367 2,536,548 4,356,884 1,201,521 Business-type Activities Municipal liquor 6,773,467 6,642,682 - - Heritage Center of Brooklyn Center 4,545,057 3,792,108 - - Water utility 4,940,861 4,918,576 - - Sanitary sewer utility 5,326,043 5,293,565 - 196,344 Storm drainage utility 2,522,856 2,021,084 253,788 - Street light utility 653,176 544,850 - - Recycling utility 537,993 419,913 - - Total Business-type Activities 25,299,453 23,632,778 253,788 196,344 Total $ 62,855,820$ 26,169,326$ 4,610,672$ 1,397,865 General Revenues Property taxes, levied for general purposes Property taxes, levied for debt service Tax increments Lodging taxes Grants and contributions not restricted to specific programs Unrestricted investment earnings Other Gain on sale of capital assets Total General Revenues Change in Net Position Net Position, January 1 Net Position, December 31 The notes to the financial statements are an integral part of this statement. 34 Net (Expense) Revenue and Changes in Net Position GovernmentalBusiness-type ActivitiesActivitiesTotal $ (5,848,849)$ -$ (5,848,849) (12,115,763) - (12,115,763) (3,054,109) - (3,054,109) (180,657) - (180,657) (4,920,348) - (4,920,348) (2,945,941) - (2,945,941) (395,747) - (395,747) (29,461,414) - (29,461,414) - (130,785) (130,785) - (752,949) (752,949) - (22,285) (22,285) - 163,866 163,866 - (247,984) (247,984) - (108,326) (108,326) - (118,080) (118,080) - (1,216,543) (1,216,543) (29,461,414) (1,216,543) (30,677,957) 21,286,032 - 21,286,032 1,814,844 - 1,814,844 1,050,058 - 1,050,058 898,037 - 898,037 3,296,142 - 3,296,142 1,788,433 528,438 2,316,871 400,535 - 400,535 194,701 - 194,701 30,728,782 528,438 31,257,220 1,267,368 (688,105) 579,263 109,213,48155,828,914165,042,395 $ 110,480,849$ 55,140,809$ 165,621,658 The notes to the financial statements are an integral part of this statement. 35 THIS PAGE IS LEFT BLANK INTENTIONALLY 36 FUND FINANCIAL STATEMENTS CITY OF BROOKLYN CENTER BROOKLYN CENTER, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2023 37 City of Brooklyn Center, Minnesota Balance Sheet Governmental Funds December 31, 2023 TaxOther Increment DebtNonmajor GeneralDistrict No. 3ServiceGovernmentalTotal Assets Cash and investments 14,090,7691,920,493$ 5,069,502 $ 20,375,710$ 41,456,474 Receivables Interest 1,523 - - 10,902 12,425 Current taxes 67,247 - 5,802 1,612 74,661 Delinquent taxes 69,142 - - 29,208 98,350 Accounts, net of allowances 235,254 - - 156,967 392,221 Notes - - - 96,241 96,241 Leases 23,455 - - 433,927 457,382 Special assessments 232,681 - 2,985,462 1,209,537 4,427,680 Intergovernmental 10,445 - - 257,373 267,818 Due from other funds 671,122 - - 4,522 675,644 Inventories 68,944 - - 2,591 71,535 Prepaid items 119,484 - - 2,516 122,000 Advance to other funds - - - 62,334 62,334 Assets held for resale - 19,692,844 - 434,978 20,127,822 Total Assets$ 15,590,066$ 21,613,337$ 8, 060,766$ 23,078,418$ 68,342,587 Liabilities Accounts payable$ 270,182 5,635$ -$ 1,175,029$ 1,450,846 Contracts payable - - - 89,654 89,654 Due to other funds - - - 261,246 261,246 Due to other governments 130,352 - 5,493 2,011 137,856 Accrued salaries and wages 692,922 - - 9,455 702,377 Deposits payable 579,616 1,856 - 16,133 597,605 Unearned revenue - - - 2,042,149 2,042,149 Advance from other funds - - - 62,334 62,334 Total Liabilities 1,673,072 7,491 5,493 3,658,011 5,344,067 Deferred Inflows of Resources Unavailable revenue Taxes 69,142 - - 29,208 98,350 Special assessments 229,046 - 2,970,088 1,201,725 4,400,859 Deferred lease resources 22,987 - - 394,150 417,137 Total Deferred Inflows of Resources 321,175 - 2,970,088 1,625,083 4,916,346 Fund Balances Nonspendable 188,428 - - 5,107 193,535 Restricted - 21,605,846 5,085,185 10,730,690 37,421,721 Committed - - - 8,669,542 8,669,542 Unassigned 13,407,391 - - (1,610,015) 11,797,376 Total Fund Balances 13,595,819 21,605,846 5,085,185 17,795,324 58,082,174 Total Liabilities, Deferred Inflows of Resources and Fund Balances$ 15,590,066$ 21,613,337$ 8, 060,766$ 23,078,418$ 68,342,587 The notes to the financial statements are an integral part of this statement. 38 City of Brooklyn Center, Minnesota Reconciliation of the Balance Sheet to the Statement of Net Position Governmental Funds December 31, 2023 Amounts reported for governmental activities within the statement of net position are different because Fund Balances - Governmental Funds$ 58,082,174 Net capital assets used in governmental activities are not financial resources and therefore are not reported as assets in the funds.70,244,229 Noncurrent liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Noncurrent liabilities at year-end consist of Bonds payable (17,462,688) Unamortized premium (1,386,380) Leases payable (67,689) Some receivables are not available soon enough to pay current-period's expenditure, and therefore are unavailable in governmental funds. Delinquent taxes receivable 98,350 Special assessments receivable 4,400,859 Governmental funds do not report long-term amounts related to the City's Fire Relief Association Pension Fund Net pension asset 443,775 Deferred outflows of pension resources 660,947 Deferred inflows of pension resources (54,800) Governmental funds do not report a liability for accrued interest until due and payable. (240,278) Internal service funds are used by management to charge the costs of various services to individual funds. The assets and liabilities of certain internal service funds are included in governmental activities in the statement of net position. (4,237,650) Total Net Position - Governmental Activities$ 110,480,849 The notes to the financial statements are an integral part of this statement. 39 City of Brooklyn Center, Minnesota Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended December 31, 2023 TaxOther Increment DebtNonmajor GeneralDistrict No. 3ServiceGovernmentalTotal Revenues Taxes$ 21,887,077$ 58 $ 1, 814,844$ 1,540,653$ 25,242,632 Franchise fees - - - 561,179 56 1,179 Special assessments 40,774 - 929,060 66 2,994 1,632,828 Licenses and permits 1,080,983 - - - 1,080,983 Intergovernmental 1,974,117 - - 5,642,539 7,616,656 Charges for services 656,095 7,197 - 333,220 99 6,512 Fines and forfeits 333,467 - - 14,578 34 8,045 Investment earnings (loss) 510,641 89,556 174,879 54 8,747 1,323,823 Miscellaneous 304,285 - - 106,142 41 0,427 Total Revenues 26,787,439 96,811 2,918,783 9,410,052 39,213,085 Expenditures Current General government 5,227,996 - - 1,936,548 7,164,544 Public safety 14,189,305 - - 145,740 14,335,045 Public works 2,912,920 - - 286,365 3,199,285 Community services 180,657 - - - 180,657 Parks and recreation 3,998,649 - - 1,295,649 5,294,298 Economic development 709,363 1,232,610 - 972,710 2,914,683 Nondepartmental 559,725 - - - 559,725 Capital outlay Public safety - - - 82,425 82,425 Public works 581 - - 2,861,270 2,861,851 Parks and recreation 35,535 - - 682,785 71 8,320 Economic development 6,825 - - - 6,825 Debt service Principal - - 2,355,537 - 2,355,537 Interest and other - - 589,269 - 589,269 Total Expenditures 27,821,556 1,232,610 2,944,806 8,263,492 40,262,464 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,034,117) (1,135,799) (26,023) 1,146,560 (1,049,379) Other Financing Sources (Uses) Transfers in - - 358,333 88 5,502 1,243,835 Administrative services reimbursement 1,771,717 - - - 1,771,717 Transfers out (180,000) - - (1,063,835) (1,243,835) Total Other Financing Sources (Uses) 1,591,717 - 358,333 (178,333) 1,771,717 Net Change in Fund Balances 557,600 (1,135,799) 332,310 96 8,227 72 2,338 Fund Balances, January 1 13,038,219 22,741,645 4,752,875 16,827,097 57,359,836 Fund Balances, December 31$ 13,595,819$ 21,605,846$ 5, 085,185$ 17,795,324$ 58,082,174 The notes to the financial statements are an integral part of this statement. 40 City of Brooklyn Center, Minnesota Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities Governmental Funds For the Year Ended December 31, 2023 Amounts reported for governmental activities in the statement of activities are different because Net Change in Fund Balances - Governmental Funds$ 722,338 Governmental funds report capital outlay as expenditures. However, in the statement of activities the cost of those assets is allocated over the estimated useful lives and reported as depreciation expense. Capital outlay 3,337,489 Depreciation/amortization expense (4,440,195) The issuance of long-term debt provides current financial resources to governmental funds, while 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. Also, governmental funds report the effect of premiums, discounts and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. Principal repayments 2,355,537 Lease amortization 17,038 Amortization of bond premiums 198,354 Interest on long-term debt in the statement of activities differs from the amount reported in the governmental fund 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. (4,832) Long-term pension activity related to the City's Fire Relief Association Pension Fund is not reported in governmental funds. 191,004 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 (211,241) Tax increments 17,580 Special assessments (692,486) Internal service funds are used by management to charge the costs of various services to individual funds. The net revenues of certain activities of internal service funds is reported with governmental activities. (223,218) Change in Net Position - Governmental Activities$ 1,267,368 The notes to the financial statements are an integral part of this statement. 41 City of Brooklyn Center, Minnesota Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Fund For the Year Ended December 31, 2023 Budgeted Amounts ActualVariance with OriginalFinalAmountsFinal Budget Revenues Taxes$ 21,986,995 $ 21,986,995 $ 21,887,077$ (99,918) Special assessments 40,000 40,000 40,774 774 Licenses and permits 2,168,475 2,168,475 1,080,983 (1,087,492) Intergovernmental 2,491,485 2,491,485 1,974,117 (517,368) Charges for services 530,500 530,500 656,095 125,595 Fines and forfeits 161,000 161,000 333,467 172,467 Investment earnings (loss) 106,600 106,600 510,641 404,041 Miscellaneous 193,242 193,242 304,285 111,043 Total Revenues 27,678,297 27,678,297 26,787,439 (890,858) Expenditures Current General government 5,668,124 5,668,124 5,227,996 440,128 Public safety 15,596,892 15,596,892 14,189,305 1,407,587 Public works 3,031,130 3,031,130 2,912,920 118,210 Community services 187,000 187,000 180,657 6,343 Parks and recreation 4,169,760 4,169,760 3,998,649 171,111 Community development 810,107 810,107 709,363 100,744 Nondepartmental 10,916 10,916 559,725 (548,809) Capital outlay General government 25,000 25,000 - 25,000 Public works 32,000 32,000 581 31,419 Parks and recreation - - 35,535 (35,535) Economic development - - 6,825 (6,825) Total Expenditures 29,530,929 29,530,929 27,821,556 1,709,373 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,852,632) (1,852,632) (1,034,117) 818,515 Other Financing Sources (Uses) Administrative services reimbursement 2,032,632 2,032,632 1,771,717 (260,915) Transfers out (180,000) (180,000) (180,000) - Total Other Financing Sources (Uses) 1,852,632 1,852,632 1,591,717 (260,915) Net Change in Fund Balances - - 557,600 557,600 Fund Balances, January 1 13,038,219 13,038,219 13,038,219 - Fund Balances, December 31$ 13,038,219 $ 13,038,219 $ 13,595,819$ 557,600 The notes to the financial statements are an integral part of this statement. 42 City of Brooklyn Center, Minnesota Tax Increment District No. 3 Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual For the Year Ended December 31, 2023 Budgeted Amounts ActualVariance with OriginalFinalAmountsFinal Budget Revenues Taxes Tax increments$ -$ -$ 58$ 58 Charges for services - - 7,197 7,197 Investment earnings (loss) 67,000 67,000 89,556 22,556 Total Revenues 67,000 67,000 96,811 29,811 Expenditures Current Economic development Other services and charges 706,300 706,300 1,232,610 (526,310) Net Change in Fund Balances (639,300) (639,300) (1,135,799) (496,499) Fund Balances, January 1 22,741,645 22,741,645 22,741,645 - Fund Balances, December 31$ 22,102,345$ 22,102,345$ 21,605,846$ (496,499) The notes to the financial statements are an integral part of this statement. 43 City of Brooklyn Center, Minnesota Statement of Net Position Proprietary Funds December 31, 2023 Business-type Activities - Enterprise Funds Governmental 411 l 601602651 OtherActivities - WaterSanitary SewerStorm DrainageEnterpriseInternal Service UtilityUtilityUtilityFundsTotalFunds Assets Current Assets Cash and investments $ 176,178$ 4,191,553$ 4,977,736$ 1,498,125$ 10,843,592$ 5,189,543 Receivables Interest 248,350 - - - 248,350 - Accounts, net of allowances 1,378,932 1,395,307 581,376 343,812 3,699,427 49,812 Special assessments 700,075 1,928 - - 702,003 - Leases 4,411,293 - - - 4,411,293 - Intergovernmental 5,963 72,999 - - 78,962 - Inventories 169,905 - - 1,013,300 1,183,205 40,212 Prepaid items 2,772 260,555 4,559 29,883 297,769 4,682 Total Current Assets 7,093,468 5,922,342 5,563,671 2,885,120 21,464,601 5,284,249 Noncurrent Assets Capital assets Land 20,734 3,389 587,158 2,087,598 2,698,879 - Easements - - 10,285 - 10,285 - Land improvements - - - 570,769 570,769 - Building and improvements 27,090,198 2,991,669 - 16,010,018 46,091,885 166,108 Machinery and equipment 228,110 179,130 147,162 847,728 1,402,130 13,262,340 Street light systems - - - 2,980,836 2,980,836 - Mains and lines 35,925,381 35,808,471 43,632,322 - 115,366,174 - Construction in progress 517,700 45,819 407,559 - 971,078 110,000 Total capital assets 63,782,123 39,028,478 44,784,486 22,496,949 170,092,036 13,538,448 Less: accumulated depreciation (29,715,906) (21,547,606) (24,258,886) (14,616,560) (90,138,958) (8,301,247) Net capital assets 34,066,217 17,480,872 20,525,600 7,880,389 79,953,078 5,237,201 Total Assets 41,159,685 23,403,214 26,089,271 10,765,509 101,417,679 10,521,450 Deferred Outflows of Resources Deferred pension resources - - - - - 11,376,044 Deferred other postemployment benefit resources - - - - - 1,104,339 Total Deferred Outflows of Resources - - - - - 12,480,383 The notes to the financial statements are an integral part of this statement. 44 City of Brooklyn Center, Minnesota Statement of Net Position (Continued) Proprietary Funds December 31, 2023 Business-type Activities - Enterprise Funds Governmental 411 l 601602651 OtherActivities - WaterSanitary SewerStorm DrainageEnterpriseInternal Service UtilityUtilityUtilityFundsTotalFunds Liabilities Current Liabilities Accounts payable$ 208,001$ 77,133$ 231,180$ 218,459$ 734,773$ 111,726 Contracts payable 17,985 2,291 19,005 180,225 219,506 - Accrued salaries and wages payable 24,383 8,695 12,015 81,678 126,771 15,479 Accrued interest payable 188,883 78,109 68,042 29,416 364,450 - Due to other funds - - - - - 414,398 Due to other governments 7,516 - - 87,280 94,796 - Deposits payable 7,521 132,104 - 373,596 513,221 - Unearned revenue - - - 89,141 89,141 - Notes payable 1,022,000 - - - 1,022,000 - Bonds payable 1,411,250 919,954 570,000 145,000 3,046,204 - Compensated absences payable - - - - - 137,281 Total Current Liabilities 2,887,539 1,218,286 900,242 1,204,795 6,210,862 678,884 Noncurrent Liabilities Notes payable 10,763,445 - - - 10,763,445 - Bonds payable 9,834,944 5,453,932 4,437,164 2,167,845 21,893,885 - Compensated absences payable - - - - - 1,235,526 Total other postemployment benefits liability - - - - - 2,668,769 Net pension liability - - - - - 12,846,496 Total Noncurrent Liabilities 20,598,389 5,453,932 4,437,164 2,167,845 32,657,330 16,750,791 Total Liabilities 23,485,928 6,672,218 5,337,406 3,372,640 38,868,192 17,429,675 Deferred Inflows of Resources Deferred pension resources - - - - - 11,823,799 Deferred other postemployment benefit resources - - - - - 883,928 Deferred lease resources 4,510,759 - - - 4,510,759 - Total Deferred Inflows of Resources 4,510,759 - - - 4,510,759 12,707,727 Net Position Net investment in capital assets 11,016,593 11,104,695 15,499,431 5,387,319 43,008,038 5,237,201 Unrestricted 2,146,405 5,626,301 5,252,434 2,005,550 15,030,690 (12,372,770) Total Net Position $ 13,162,998$ 16,730,996$ 20,751,865$ 7,392,869$ (7,135,569) $ 58,038,728 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds. (2,897,919) Net position of business-type activities$ 55,140,809 The notes to the financial statements are an integral part of this statement. 45 City of Brooklyn Center, Minnesota Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds For the Year Ended December 31, 2023 Business-type Activities - Enterprise Funds Governmental 411 l 601602651 OtherActivities - WaterSanitary SewerStorm DrainageEnterpriseInternal Service UtilityUtilityUtilityFundsTotalFunds Operating Revenues Sales and user fees$ 4,916,296 $ 5,293,565$ 2,021,084 $ 10,333,686 $ 22,564,631 $ 4,551,053 Cost of sales - - - (6,586,680) (6,586,680) - Gross Profit 4,916,296 5,293,565 2,021,084 3,747,006 15,977,951 4,551,053 Charges for services - - - 899,422 899,422 - Other operating revenue Total Operating Revenues 4,916,296 5,293,565 2,021,084 4,646,428 16,877,373 4,551,053 Operating Expenses Personal services 724,628 294,860 362,871 2,271,875 3,654,234 3,523,173 Supplies 534,630 24,009 25,121 259,126 842,886 526,795 Other services 1,032,007 3,729,517 547,838 1,878,364 7,187,726 289,623 Insurance 105,084 42,442 5,498 101,022 254,046 71,798 Utilities 296,149 33,725 2,465 500,415 832,754 709 Rent - - - 147,520 147,520 - Depreciation/amortization 1,980,486 1,094,978 1,507,679 538,840 5,121,983 953,198 Total Operating Expenses 4,672,984 5,219,531 2,451,472 5,697,162 18,041,149 5,365,296 Operating Income (Loss) 243,312 74,034 (430,388) (1,050,734) (1,163,776) (814,243) Nonoperating Revenues (Expenses) Intergovernmental - - 253,788 - 253,788 57,135 Interest earnings 20,735 174,239 206,033 127,431 528,438 205,913 Gain (loss) on sale/disposal of capital assets - - - - (69,236) 194,701 Gain on lease write off - - - - 69,236 - Other revenue 124,861 - - 92,601 217,462 39,048 Interest and other costs (370,053) (123,258) (74,136) (58,686) (626,133) - Total Nonoperating Revenues (Expenses) (224,457) 50,981 385,685 161,346 373,555 496,797 Income (Loss) Before Contributions 18,855 125,015 (44,703) (889,388) (790,221) (317,446) Capital Contributions From (To) Others - 196,344 - - 196,344 - Change in Net Position 18,855 321,359 (44,703) (889,388) (593,877) (317,446) Net Position, January 1 13,144,143 16,409,637 20,796,568 8,282,257 58,632,605 (6,818,123) Net Position, December 31$ 13,162,998$ 16,730,996$ 20,751,865$ 7,392,869$ 58,038,728$ (7,135,569) Change in net position as shown above$ (593,877) Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds. (94,228) Change in net position of business-type activities.$ (688,105) The notes to the financial statements are an integral part of this statement. 46 City of Brooklyn Center, Minnesota Statement of Cash Flows Proprietary Funds For the Year Ended December 31, 2023 Business-type Activities - Enterprise Funds Governmental 411 l 601602651 OtherActivities - WaterSanitary SewerStorm DrainageEnterpriseInternal Service UtilityUtilityUtilityFundsTotalFunds Cash Flows from Operating Activities Receipts from customers and users$ 4,890,193$ 5,222,756$ 1,893,453$ 11,292,970$ 23,299,372$ 4,645,384 Payments to suppliers (1,954,517) (3,841,971) (575,393) (9,535,744) (15,907,625) (954,614) Payments to employees (722,581) (295,574) (361,956) (2,258,349) (3,638,460) (2,608,180) Other operating receipts 130,824 - - 92,601 223,425 39,048 Net Cash Provided (Used) by Operating Activities 2,343,919 1,085,211 956,104 (408,522) 3,976,712 1,121,638 Cash Flows from Noncapital Financing Activities Intergovernmental grants - - 253,788 - 253,788 10,739 Increase (decrease) in due to other funds - - - - - 194,456 Net Cash Provided (Used) by Noncapital Financing Activities - - 253,788 - 253,788 205,195 Cash Flows from Capital and Related Financing Activities Acquisition of capital assets (558,680) (441,466) (178,618) - (1,178,764) (675,175) Proceeds from sale of capital assets - - - - - 194,701 Principal paid on long-term debt (2,253,250) (833,213) (515,000) (140,000) (3,741,463) - Interest paid on long-term debt (477,779) (191,021) (169,962) (74,851) (913,613) - Net Cash Provided (Used) by Capital and Related Financing Activities (3,289,709) (1,465,700) (863,580) (214,851) (5,833,840) (480,474) Cash Flows from Investing Activities Interest received (paid) on cash and investments (101,846) 174,239 206,033 127,431 405,857 205,913 Net Increase (Decrease) in Cash and Cash Equivalents (1,047,636) (206,250) 552,345 (495,942) (1,197,483) 1,052,272 Cash and Cash Equivalents, January 1 1,223,814 4,397,803 4,425,391 1,994 ,067 12,041,075 4,137,271 Cash and Cash Equivalents, December 31$ 176,178$ 4,191,553$ 4,977,736$ 1,498,125$ 10,843,592$ 5,189,543 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating income (loss)$ 243,312$ 74,034 $ (430,388) $ (1,050,734)$ (1,163,776)$ (814,243) Adjustments to reconcile operating income to net cash provided (used) by operating activities Depreciation 1,980,486 1,094,978 1,507,679 538,840 5,121,983 953,198 Other income (expense) related to operations 124,861 - - 92,601 217,462 85,444 (Increase) decrease in assets Accounts receivable 30,403 (199,607) (127,631) (33,189) (330,024) 22,301 Intergovernmental (5,963) - - 18,467 12,504 2,972 Special assessments 117,474 (1,416) - - 116,058 - Prepaid items (1,513) (18,487) (3,300) (1,737) (25,037) (4,682) Inventories (76,620) - - (51,148) (127,768) 731 Leases 227,453 - - 227,453 (Increase) decrease in deferred outflows of resources Deferred pension resources - - - - - 2,620,151 Deferred other postemployment benefit resources - - - - - 219,489 Increase (decrease) in liabilities (56,388) Accounts payable 70,727 3,918 (436) (19,973) 54,236 Contracts payable 17,985 2,291 9,265 39,554 69,095 - Due to other governments 2,774 - - (29,313) (26,539) (5,350) Net pension liability - - - - - (11,975,199) Accrued salaries and wages 2,047 (714) 915 13,526 15,774 (689) Deposits payable 3,625 130,214 - 8,091 141,930 - Unearned revenue - - - 66,493 66,493 - Compensated absences payable - - - - - (707) Other postemployment benefits liability - - - - - (506,704) Increase (decrease) in deferred inflows of resources Deferred pension resources - - - - - 10,152,300 Deferred other postemployment benefit resources - - - - - 429,014 Deferred lease resources (393,132) - - - (393,132) - Net cash flows provided (used) by operating activities$ 2,343,919$ 1,085,211$ 956,104$ (408,522)$ 3,976,712$ 1,121,638 Schedule of Noncash Investing Capital and Financing Activities Capital assets contributed by (to) others$ - $ 196,344$ - $ -$ 196,344$ - Book value of disposed/traded of capital assets$ - $ - $ - $ 69, 236$ 69, 236$ - Capital assets acquired on account$ 77,606 $ 52,953 $ 228,941$ -$ 359,500$ 110,000 Amortization of bond premiums$ 111,980$ 67,649 $ 91, 503$ 13, 987$ 285,119$ - Gain on lease write off$ - $ - $ - $ 69, 236$ 69, 236$ - The notes to the financial statements are an integral part of this statement. 47 THIS PAGE IS LEFT BLANK INTENTIONALLY 48 City of Brooklyn Center, Minnesota Notes to the Financial Statements December31, 2023 Note 1: Summary of Significant Accounting Policies A.Reporting Entity The City of Brooklyn Center (the City) was incorporated in 1911. The City operates under a Home Rule Charter as defined by Minnesota Statutes which provides for a Mayor Council form of government. The governing body consists of a Mayor and four City Council members. The Council exercises legislative authority and determines all matters of policy. The Council appoints the city administrator who is responsible for the proper administration of all affairs relating to the City. The City has considered all potential units for which it is financially accountable, and other organizations for which the statements to be misleading or incomplete. The Governmental Accounting Standards Board (GASB) has set forth criteria to be considered in determining financial accountability. These criteria include appointing a voting majority of an the ability of the primary government to impose its will on that organization or (2) the potential for the organization to provide specific benefits to, or impose specific financial burdens on the primary government. As required by accounting principles generally accepted in the United States of America, these financial statements present the City and its component units, entities for which the City is considered to be financially accountable. Component units for which the City has been determined to be financially accountable can be blended with the primary government or be included as a discrete presentation. Each discretely presented component unit is reported in a separate column in the government-ng entity, based upon the application of these criteria, are the following blended component units. Housing and Redevelopment Authority (HRA) The HRA was created by the City to carry out certain redevelopment and low rent assistance programs pursuant to state law. The HRA is primarily responsible for residential development and redevelopment. The City Council serves as the Board of Directors for the HRA, with the power to levy taxes and enter into contracts. The Council reviews and approves the tax levy and all expenditures for the HRA which is reported as a special revenue fund. The HRA does not issue separate financial statements. Financial inf Economic Development Authority (EDA) The EDA was created pursuant to Minnesota statutes 469.090 through 469.108 to carry out economic and industrial development and redevelopment within the City in accordance with policies established by the City Council. The governing board for the EDA is the City Council, with the power to issue bonds and enter into contracts. The council reviews and approves major community development improvement activities. City general obligation tax increment financing bonds are issued to finance EDA activities which is reported as a special revenue fund. The EDA does not issue B.Government-wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the activities of the 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. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Amounts reported as program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. 49 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 1: Summary of Significant Accounting Policies (Continued) Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C.Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary funds. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences, other postemployment benefits, and claims and judgments, are recorded only when payment is due. Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City. Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded on the accrual basis when the exchange takes place. On a modified accrual basis, revenue is recorded in the year in which the resources are measurable and become available. Non-exchange transactions, in which the City receives value without directly giving equal value in return, include property taxes, grants, entitlement and donations. On an accrual basis, revenue from property taxes is recognized in the year for which the tax is levied. Revenue from grants, entitlements and donations is recognized in the year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resources are required to be used or the year when use is first permitted, matching requirements, in which the City must provide local resources to be used for a specified purpose, and expenditure requirements, in which the resources are provided to the City on a reimbursement basis. On a modified accrual basis, revenue from non-exchange transactions must also be available before it can be recognized. Unearned revenue arises when assets are recognized before revenue recognition criteria have been satisfied. Grants and entitlements received before eligibility requirements are met are also recorded as unearned revenue. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. 50 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 1: Summary of Significant Accounting Policies (Continued) The City reports the following major governmental funds: The General fund financial resources of the general government, except those required to be accounted for in another fund. The Tax Increment District No. 3 special revenue fund accounts the collection of tax increment generated revenues for parcels within the District. These funds are used to finance the various redevelopment activities throughout the City. This fund also provides the resources to repay the debt service on bonds issued to finance these redevelopment activities. The Debt Service fund accounts for resources accumulated and payments made for principal and interest on long- term general obligation debt of governmental funds. The City reports the following major proprietary funds: The Water fund accounts for the water service charges which are used to finance the pumping, treatment and distribution of water to customers. Administration, wells, water treatment, water storage and distribution are included. The Sanitary Sewer fund accounts for the wastewater service charges which are used to finance the collection and pumping of sanitary sewage through a system of sewer lines and lift stations. Sewage is treated by the Metropolitan Council Environmental Services whose fees represent about 60 percent of the The Storm Drainage Utility fund accounts for collection and treatment of surface runoff water that does not require sanitary wastewater treatment. It incorporates not only the storm sewer collection system, but also structures such as holding ponds and facilities to improve water quality. Fees are based upon the quantity of water running off a property and vary with both size and absorption characteristics of the parcel. Additionally, the City reports the following fund types: Internal Service funds are used to account for central garage services, health care insurance benefits for retired employees, compensated absences and pension activity provided to other departments of the City on a cost reimbursement basis. As a general rule the effect of interfund activity has been eliminated from 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 payment in lieu of taxes, are similarly treated when they involve other funds of the City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary internal service funds are charges to customers for sales and services. The City also recognizes as operating revenue the portion of tap fees intended to recover the cost of connecting new customers to the system. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. 51 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 1: Summary of Significant Accounting Policies (Continued) D.Assets, Deferred Outflows of Resources Liabilities, Deferred Inflows of Resources and Net Position/Fund Balance Deposits and Investments cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. government-wide cash and temporary investments pool is considered to be cash and cash equivalents for purposes of the statements of cash flows. 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. The City may invest idle funds as authorized by Minnesota statutes, as follows: 1.Direct obligations or obligations guaranteed by the United States or its agencies. 2.Shares of investment companies registered under the Federal Investment Company Act of 1940 and received the highest credit rating, rated in one of the two highest rating categories by a statistical rating agency, and have a final maturity of thirteen months or less. 3. 4. 5.Obligation of a school district with an original maturity not exceeding 13 months and (i) rated in the highest category by a national bond rating service or (ii) enrolled in the credit enhancement program pursuant to statute section 126C.55. 6. 7.Commercial paper issued by United States banks corporations or their Canadian subsidiaries, of highest quality category by at least two nationally recognized rating agencies, and maturing in 270 days or less. 8.Repurchase or reverse repurchase agreements and securities lending agreements with financial institutions with capitalization exceeding $10,000,000, a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York, or certain Minnesota securities broker-dealers. 9.Guaranteed investment contracts (GIC's) issued or guaranteed by a United States commercial bank, a domestic branch of a foreign bank, a United States insurance company, or its Canadian subsidiary, whose similar debt obligations were rated in one of the top two rating categories by a nationally recognized rating agency. Broker money market funds operate in accordance with appropriate state laws and regulations. The reported value of the pool is the same as the fair value of the shares. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 6 and are valued using quoted market prices (Level 1 inputs). 52 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 1: Summary of Significant Accounting Policies (Continued) The City has the following recurring fair value measurements as of December 31, 2023: Negotiable certificates of deposits of $8,617,883, municipal bonds of $17,840,567, federal agency securities of $6,300,968 and U.S. treasury securities of $2,306,459 are valued using a matrix pricing model (Level 2 inputs) The Minnesota Municipal Money Market Fund is regulated by Minnesota statutes and the Board of Directors of the League of Minnesota Cities and is an external investment pool not registered with the Securities Exchange Commission this pool is valued at amortized cost, which approximates fair value. There are no restrictions or limitations on withdrawals from the 4M Liquid Asset Fund. Investments in the 4M Plus must be deposited for a minimum of 14 calendar days. Withdrawals prior to the 14-day restriction period will be subject to a penalty equal to seven days interest on the amount withdrawn. Seven days' notice of redemption is required for withdrawals of investments in the 4M Term Series withdrawn prior to the maturity date of that series. A penalty could be assessed as necessary to recoup the Series for any charges, losses, and other costs attributable to the early redemption. Financial statements of the 4M Fund can be obtained by contracting RBC Global Management at 100 South Fifth Street, Suite 2300, Minneapolis, MN 55402-1240. Investment Policy interest rate risks. Specific risk information for the City is as follows: Custodial Credit Risk - For investments, custodial credit risk is the risk that in the event of a failure of the counterparty, the government would not be able to recover the value of its investment or collateral securities that are in the possession of an outside party. As of December 31, 2023 all investments were insured or registered, or Credit Risk - Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. State law limits investments in commercial paper that is rated in the highest quality category by at least two nationally recognized rating a their investments. The policy also requires that any counterparty in investment transactions be pre-qualified and approved by the City Council and that the portfolio be diversified to limit potential losses on individual securities. Concentration Risk - requires that the investment portfolio be diversified to minimize potential losses on individual securities. As of the year end, the City had portfolio concentrations in excess of five percent (excluding external investment pools) in the following federal agencies: Federal Home Loan Bank (5.23 percent) Interest Rate Risk - The so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity; and by investing operating funds primarily in short-term securities. ted in securities with maturities of more than five years. The policy also states that the portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably expected. 53 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 1: Summary of Significant Accounting Policies (Continued) Property Taxes The City Council annually adopts a tax levy and certifies it to the County in December for collection the following year. The County is responsible for collecting all property taxes for the City. These taxes attach an enforceable lien on taxable property within the City on January 1 and are payable by the property owners in two installments. The taxes are collected by the County Treasurer and tax settlements are made to the City during January, June and November each year. Delinquent taxes receivable include the past six years' uncollected taxes. Delinquent taxes have been offset by deferred inflow of resources for delinquent taxes not received within 60 days after year end in the fund financial statements. Accounts Receivable Accounts receivable include amounts billed for services provided before year end. Delinquent utility charges are annually certified to the county for collection. As a result, there is no allowance for uncollectable amounts in the enterprise funds. 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 are recognized as revenue when they are annually certified to the County or received in cash or within 60 days after year end. All governmental special assessments receivable are offset by a deferred inflow of resources in the fund financial statements. Interfund Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported -type activities are reported in the government- Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. Inventories and Prepaid Items Inventories in the governmental funds are reported using the consumption method and valued at cost, using the first in/first out (FIFO) method. Inventories in the proprietary funds are valued at cost, using the weighted average method in the Municipal Liquor and Heritage Center of Brooklyn Center funds and the FIFO method in all other funds. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. The cost of prepaid items is recorded as expenditures/expense when consumed rather than when purchased. 54 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 1: Summary of Significant Accounting Policies (Continued) Lease Receivable lease term. A deferred inflow of resources is recorded for the lease. The deferred inflow of resources is recorded at the initiation of the lease in an amount equal to the initial recording of the lease receivable. The deferred inflow of resources is amortized on a straight-line basis over the term of the lease. Assets Held for Resale Assets held for resale represent various property purchases made by the City with the intent to sell in order to increase tax base or to attract new business. These assets are stated at the lower of cost or acquisition value. During the year ended December 31, 2023 management has reviewed the cost value reported for these assets and has indicated the properties are fairly presented for financial purposes. Capital Assets Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than the amounts in the table listed below and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. In the case of initial capitalization of general infrastructure assets (i.e., those reported by governmental activities) the City chose to include items dating back to June 30, 1980. The City had already accounted for its prior infrastructure at historical cost for the initial reporting of these assets. As the City constructs or acquires capital assets each period, including infrastructure assets, they are capitalized at historical cost. Donated capital assets are recorded at acquisition value at the date of donation. AssetsAmount Infrastructure$ 250,000 Buildings and Building Improvements 50,000 Land Improvements 25,000 Heavy Equipment 25,000 Furniture and Furnishings 10,000 Motorized Vehicles 10,000 Technology Equipment 10,000 Land Easements 10,000 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. 55 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 1: Summary of Significant Accounting Policies (Continued) Property, plant and equipment of the City, as well as the component units, are depreciated using the straight line method over the following estimated useful lives: Deferred Outflows of Resources In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has two items which qualify for reporting in this category. Accordingly, the items, deferred pension Resources and deferred other postemployment benefit resources, are reported only in the statement of net position. These items result from actuarial calculations and current year contributions made subsequent to the respective measurement dates. Compensated Absences It is the policy to permit employees to accumulate earned but unused vacation and sick pay benefits. All vacation and vested sick leave pay is accrued in the Public Employee Compensated Absences internal service fund. In accordance with the provisions of Statement of Governmental Accounting Standards No. 16, Accounting for Compensated Absences, a liability is recognized for that portion of accumulating sick leave benefits that is vested. The City pays out up to 230 hours of vacation upon separation and one third of accrued sick leave time. The Public Employee Compensated Absences internal service fund is typically used to liquidate the applicable liabilities. Postemployment Benefits Other Than Pensions Under Minnesota statute 471.61, subdivision 2b., public employers must allow retirees and their dependents to continue coverage indefinitely in an employer-sponsored health care plan, under the following conditions: 1) Retirees must be receiving (or eligible to receive) an annuity from a Minnesota public pension plan, 2) Coverage must continue in group plan until age 65, and retirees must pay no more than the group premium, and 3) Retirees may obtain dependent coverage immediately before retirement. All premiums are funded on a pay-as-you-go basis. The liability was actuarially determined, in accordance with GASB Statement 75, at January 1, 2023. The Public Employee Retirement internal service fund is typically used to liquidate the applicable liabilities. Pensions For purposes of measuring the net pension liability, deferred outflows/inflows of resources, and pension expense, information about the fiduciary net position of the Public Employees Retirement Association (PERA) and additions uciary net position have been determined on the same basis as they are reported by PERA paid dates and benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. The GERP and PEPFP Pension internal service funds are typically used to liquidate the applicable liabilities. 56 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 1: Summary of Significant Accounting Policies (Continued) The total pension expense for the GERP, PEPFP and DCP is as follows: Public Employees Retirement Association of Minnesota (PERA)Single Employer GERPPEPFPDCPFire ReliefTotal Pension Expense$ 1,068,342$ 1,444,603$ 1,633$ 32,173$ 2,546,751 Proportionate Share of State's Contribution 853 14,466 - - 15,319 Total$ 1,533,223$ 2,906,702$ 915$ 225,709$ 2,562,070 Long-term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts are amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are an expense in the period incurred. In the fund financial statements, governmental fund types recognized bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Deferred Inflows of Resources In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The government has one type of item, which arises only under a modified accrual basis of accounting that qualifies as needing to be reported in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from two sources: property taxes and special assessments. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. Furthermore, the City has additional items which qualify for reporting in this category on the statement of net position. Deferred pension resources and deferred other postemployment benefit resources are reported only in the statement of net position and results from actuarial calculations. Deferred lease resources are reported as deferred inflows resulting from lease amortization calculations. Additionally, imposed nonexchange revenue transactions, state aid, and capital funding received for subsequent years, is deferred and recognized as an inflow of resources in the period that the resources are required to be used. This item is reported both in the governmental fund balance sheet and the statement of net position as a deferred inflow of resources. 57 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 1: Summary of Significant Accounting Policies (Continued) Fund Balance In the fund financial statements, fund balance is divided into five classifications based primarily on the extent to which the City is bound to observe constraints imposed upon the use of resources reported in the governmental funds. These classifications are defined as follows: Nonspendable - Amounts that cannot be spent because they are not in spendable form, such as prepaid items. Restricted - Amounts related to externally imposed constraints established by creditors, grantors or contributors; or constraints imposed by state statutory provisions. Committed - Amounts constrained for specific purposes that are internally imposed by formal action (resolution) of -making authority. Committed amounts cannot be used for any other purpose unless the Council modifies or rescinds the commitment by resolution. Assigned - Amounts constrained for specific purposes that are internally imposed. In governmental funds other than the General fund, assigned fund balance represents all remaining amounts that are not classified as nonspendable and are neither restricted nor committed. In the General fund, assigned amounts represent intended uses established by the Council itself or by an official to which the governing body delegates the authority. The Council has adopted a fund balance policy which delegates the authority to assign amounts for specific purposes to the Finance Director. Unassigned - The residual classification for the General fund and also negative residual amounts in other funds. The City considers restricted amounts to be spent first when both restricted and unrestricted fund balance is available. Additionally, the City would first use committed, then assigned, and lastly unassigned amounts of unrestricted fund balance when expenditures are made. The City has formally adopted a fund balance policy for the General fund. The policy establishes a year-end target unassigned fund balance amount of 50.0 to 52.0 percent capital). At December 31, 2023 unassigned fund balance was 47.9 percent expenditures. Net Position Net position represents the difference between assets and deferred outflows of resources and liabilities and deferred inflows of resources. Net position is displayed in three components: a.Net investment in capital assets - Consists of capital assets, net of accumulated depreciation reduced by any outstanding debt attributable to acquiring capital assets. b.Restricted net position - Consists of net position balances restricted by limitations imposed on their use through external restrictions imposed by creditors, grantors, laws or regulations of other governments. c.Unrestricted net position - All other net position balances net investment in capital assets. first, then unrestricted resources as they are needed. 58 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 2: Stewardship, Compliance and Accountability A. Budgetary Information The City Manager submits to the City Council a proposed operating budget for the fiscal year commencing on January 1 of the following year. At least one special City Council meeting is conducted to obtain public comments as required by the State Truth in Taxation Law. The City Council annually adopts budgets prior to January 1 on a basis consistent with accounting principles generally accepted in the United States of America for the General and special revenue funds; however, the City did not budget for the Community Development Block Grant, Tax Increment District No. 8, Opioid Settlement and American Rescue Plan Act funds, which are not legally obligated to complete budgets. All annual appropriations lapse at fiscal year-end. The City does not use encumbrance accounting. In August of each year, all departments of the City submit requests for appropriations to the City Manager so that a budget may be prepared. Before September 30th, the proposed budget is presented to the Council for review and the proposed levy is adopted. The Council holds public hearings and a final budget and a final tax levy are prepared and adopted in early December. t the fund level for funds other than the General fund. The legal level of budgetary control for the General fund is at the department level. appropriations within a department with the approval of the City Manager. Transfers of appropriations between departments require the approval of the City Manager. Transfers of appropriations between funds require the approval of the Council. Budgeted amounts are as originally adopted, or as amended by the Council. There were no budget amendments made during the year. B. Excess of Expenditures Over Appropriations For the year ended December 31, 2023, expenditures exceeded appropriations in the following fund: These over expenditures were funded by revenues in excess of budget and available fund balances. 59 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 2: Stewardship, Compliance and Accountability (Continued) C. Deficit Fund Equity The following funds had fund equity deficits at December 31, 2023: These deficits will be funded through future charges for services, tax increments, levies, assessments and interfund transfers. Internal service fund deficits will be funded through future interfund charges, grant revenues and employee withholdings. 60 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 3: Detailed Notes on all Funds A.Deposits and Investments Deposits investments may not be returned or the City will not be able to recover collateral securities in the possession of an outside party. In accordance with Minnesota statutes and as authorized by the Council, the City maintains deposits at those depository banks, all of which are members of the Federal Reserve System. Minnesota statutes require that all City deposits be protected by insurance, surety bond or collateral. The fair value of collateral pledged must equal 110 percent of the deposits not covered by insurance or bonds, with the exception of irrevocable standby letters of credit issued by Federal Home Loan Banks as this type of collateral only requires collateral pledged equal to 100 percent of the deposits not covered by insurance or bonds. Authorized collateral in lieu of a corporate surety bond includes: United States government Treasury bills, Treasury notes, Treasury bonds; Issues of United States government agencies and instrumentalities as quoted by a recognized industry quotation service available to the government entity; General obligation securities of any state or local government with taxing powers which is rated national bond rating service, or revenue obligation securities of any state or local government with taxing powers etter by a national bond rating service; General obligation securities of a local government with taxing powers may be pledged as collateral against funds deposited by that same local government entity; Irrevocable standby letters of credit issued by Federal Home Loan Banks to a municipality accompanied by Investors Service, Inc., or Standard Time deposits that are fully insured by any federal agency. Minnesota statutes require that all collateral shall be placed in safekeeping in a restricted account at a 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. The selection should be approved by the government entity. a deficit of $44,805 while the bank balance was $0. 61 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 3: Detailed Notes on all Funds (Continued) Investments As of December 31, 2023, the City had the following investments that are insured or registered, or securities held by the Cash on Hand Cash in the possession of the City, consisting of petty cash and change funds, totals $16,405. A reconciliation of cash and investments as shown on the statement of net position for the City is as follows: Primary Government Deposits - City Pooled Account$ (44,805) Investments - City Pooled Account 57,518,009 Cash on Hand 16,405 Total Cash and Investments$ 57,489,609 Notes Receivable The Revolving Loan Fund disbursed a loan to Phu Bia in the amount of $70,000 on February 15, 2022. It will be repaid in 85 monthly payments of $871 with an interest rate of 1.25 percent. This loan is secured by the borrower. The balance as of December 31, 2023 is $70,000. The Revolving Loan Fund disbursed a loan to Taste of Africa in the amount of $30,000 on February 15, 2022. It will be repaid in 84 monthly payments of $871 with an interest rate of 1.25 percent. This loan is secured by the borrower. The balance as of December 31, 2023 is $26,241. 62 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 3: Detailed Notes on all Funds (Continued) Lease Receivable The City leases various tower sites to companies. These agreements contain various renewal and extension options. The latest maturity date is projected to be in in 2039, however, the City anticipates new or revised leasing arrangements to occur in the future. Additionally, the City has leased a portion of their building for a Logis Hot Site effective January 1, 2022 for 48 months until December 31, 2025. Furthermore, the EDA has leased a building the Phu Bia Grocery effective February 15, 2022 for monthly lease payments 120 months until January 15, 2032. Long-term lease activity for the year ended December 31, 2023 was as follows: 63 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 3: Detailed Notes on all Funds (Continued) C. Capital Assets Capital asset activity for the City for the year ended December 31, 2023 was as follows: 64 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 3: Detailed Notes on all Funds (Continued) Restated BeginningEnding BalanceIncreasesDecreasesBalance Business-type Activities Capital Assets not Being Depreciated/Amortized Land 2,698,879$ -$ -$ 2,698,879 Perpetual easements 10,285 - -10,285 Construction in progress 2,371,969 971,078 (2,371,969) 971,078 Total Capital Assets not Being Depreciated/Amortized 5,081,133 971,078 (2,371,969) 3,680,242 Capital Assets Being Depreciated/Amortized Land improvements 570,769 - - 570,769 Buildings and improvements 46,013,441 78,444 - 46,091,885 Machinery and equipment 1,361,988 40,142 - 1,402,130 Leased equipment (intangible right to use asset) 159,751 - (159,751) - Street light systems 2,963,653 17,183 - 2,980,836 Mains and lines 112,366,444 2,999,730 - 115,366,174 Total Capital Assets Being Depreciated/Amortized 163,436,046 3,135,499 (159,751) 166,411,794 Less Accumulated Depreciation/Amortization for Land improvements (390,322) (29,076) - (419,398) Buildings and improvements (23,378,139) (1,294,155) - (24,672,294) Machinery and equipment (1,074,337) (54,804) - (1,129,141) Leased equipment (intangible right to use asset) (91,286) 771 90,515 - Street light systems (775,376) (195,696) - (971,072) Mains and lines (59,398,030) (3,549,023) - (62,947,053) Total Accumulated Depreciation/Amortization (85,107,490) (5,121,983) 90,515 (90,138,958) Total Capital Assets Being Depreciated/Amortized, Net 78,328,556 (1,986,484) (69,236) 76,272,836 Governmental Activities Capital Assets, Net$ 83,409,689 $ (1,015,406)$ (69,236) $ 79,953,078 65 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 3: Detailed Notes on all Funds (Continued) Depreciation expense was charged to functions/programs of the City as follows: Construction Commitments The City has active construction projects as of December 31, 2023. The projects include street construction and various public facilities Contract Remaining Project AmountCommitment 2023 Trail Project$ 434,915 $ 94,423 2023 Parking Lot Improvements 175,970 111,707 2023 Street and Utility Projects 1,798,252 1,288,836 Total$ 2,409,137$ 1,494,966 D.Interfund Receivables, Payables and Transfers Due to/from other funds The General fund has a due from other funds $256,724 and $414,398 to the nonmajor and internal service funds, respectively, which represents lending/borrowing arrangements to cover temporary deficit cash balances at the end of the fiscal year. Balances will be paid with future tax increments, interoperating revenues and/or interfund transfers. Furthermore, internal borrowings related to tax increment financing totaled $4,522 from the EDA fund to nonmajor tax increment districts. 66 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 3: Detailed Notes on all Funds (Continued) Advances to/from Other Funds The Tax Increment District No. 2 fund made an advance to the Tax Increment District No. 5 fund for specific funding for a development project within the City. The financing plan for the Tax Increment District projects payments of approximately $110,000 in 2019 through 2024. The balance at year end December 31, 2023 was $62,334. Interfund Transfers During the year ended December 31, 2023 the City made the following transfers: From the General fund to nonmajor governmental funds for current and future technology needs ($100,000) and cash flow purposes for the Centerbrook Golf Course ($80,000). From the nonmajor HRA fund to the nonmajor EDA fund ($508,959) as an annual cash inflow. From the nonmajor Tax Increment District No. 5 fund to the Debt Service for annual debt service cash flows. E.General Long-term Debt General Obligation Tax Increment Bonds The following bonds were issued for redevelopment projects. The additional tax increments resulting from increased tax capacity of redevelopment properties will be used to retire the related debt. Balance Interest AuthorizedIssueMaturityat DescriptionRate and IssuedDateDateYear End Governmental G.O. Tax Increment Bonds of 2016B$ 2,075,000 2.00 - 2.50%12/08/1602/01/29$ 2,075,000 67 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 3: Detailed Notes on all Funds (Continued) The annual debt service requirements to maturity for general obligation tax increment bonds are as follows: G.O. Special Assessment (Improvement) Bonds The following bonds were issued to finance various improvements and will be repaid primarily from special assessments levied on the properties benefiting from the improvements. Some issues, however, are partly financed by ad valorem tax levies. All special assessment debt is backed by the full faith and credit of the City. Each year the combined assessment and tax levy equals 105 percent of the amount required for debt service. The excess of 5 percent is to cover any delinquencies in tax or assessment payments. Balance Interest AuthorizedIssueMaturityat DescriptionRate and IssuedDateDateYear End Governmental 2.00 - 2.507/9/20152/1/2026 G.O. Improvement Bonds of 2015A$ 3,416,248%$ 1,062,688 0.95 - 1.8510/13/20162/1/2027 G.O. Improvement Bonds of 2016A 1,820,000 775,000 2.375 - 3.006/8/20172/1/2028 G.O. Improvement Bonds of 2017A 3,735,000 1,945,000 3.00 - 5.006/11/20182/1/2029 G.O. Improvement Bonds of 2018A 3,835,000 2,415,000 4.00 - 5.009/12/20192/1/2030 G.O. Improvement Bonds of 2019A 3,355,000 2,620,000 1.00 - 2.0011/24/20202/1/2031 G.O. Improvement Bonds of 2020A 1,955,000 1,720,000 2.00 - 4.009/22/20212/1/2032 G.O. Improvement Bonds of 2021A 3,005,000 2,755,000 4.00 - 5.0012/15/20222/1/2033 G.O. Improvement Bonds of 2022A 2,095,000 2,095,000 Total G.O. Special Assessments Bonds - Governmental 15,387,688 Business-type 2.00 - 2.507/9/20152/1/2026 G.O. Improvement Bonds of 2015A 1,823,752 567,312 Total$ 15,955,000 68 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 3: Detailed Notes on all Funds (Continued) The annual debt service requirements to maturity for general obligation special assessments bonds are as follows: G.O. Special Assessment Bonds Business-type Activities Year Ending December 31PrincipalInterestTotal 2024$ 186,204$ 11,623$ 197,827 2025 189,684 7,157 196,841 2026 191,424 2,392 193,816 Total$ 567,312$ 21,172$ 588,484 G.O. Revenue Bonds The following bonds were issued to finance capital improvements in the enterprise funds. They will be retired from net revenues of the enterprise funds. Balance Interest AuthorizedIssueMaturityat DescriptionRate and IssuedDateDateYear End Business-type 2.00 - 2.507/9/20152/1/2026 Revenue Refunding Bonds of 2015B$ 1,660,000%$ 345,000 0.95 - 1.8510/13/20162/1/2027 Revenue Bonds of 2016A 3,605,000 1,535,000 2.375 - 3.006/8/20172/1/2028 Revenue Bonds of 2017A 4,625,000 2,490,000 3.00 - 5.006/11/20182/1/2029 Revenue Bonds of 2018A 4,350,000 2,845,000 4.00 - 5.009/12/20192/1/2030 Revenue Bonds of 2019A 4,790,000 3,820,000 1.00 - 2.0011/24/20202/1/2031 Revenue Bonds of 2020A 2,830,000 2,315,000 2.00 - 4.009/22/20212/1/2032 Revenue Bonds of 2021A 5,005,000 4,630,000 4.00 - 5.0012/15/20222/1/2033 Revenue Bonds of 2022A 2,240,000 2,240,000 Total$ 20,220,000 69 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 3: Detailed Notes on all Funds (Continued) The annual debt service requirements to maturity for general obligation revenue bonds are as follows: G.O. Lease Revenue Bonds These notes were issued to fund the construction of a City-owned municipal liquor store. The annual debt service requirements to maturity for notes payable are as follows: General Obligation Lease Revenue Bonds Business-type Activities Year Ending December 31PrincipalInterestTotal 2024$ 145,000$ 67,700$ 212,700 2025 155,000 61,700 216,700 2026 160,000 55,400 215,400 2027 165,000 48,900 213,900 2028 170,000 43,050 213,050 2029 - 2033 935,000 134,325 1,069,325 2034 - 2035 415,000 12,525 427,525 Total$ 2,145,000$ 423,600$ 2,568,600 70 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 3: Detailed Notes on all Funds (Continued) General Obligation Revenue Note The General Obligation Revenue Note was financed by the MN Public Facilities Authority Drinking Water State Revolving Fund for the construction of a new water treatment plant. The annual debt service requirements to maturity for notes payable are as follows: Annual revenues from charges for services, principal and interest payments, and percentage of revenue required to cover principal and interest payments are as follows: SanitaryStorm Municipal WaterSewerDrainageLiquor Revenue$ 4,916,296$ 5,293,565$ 2,021,084$ 1,945,528 Principal and Interest 2,731,0291,024,234684,962214,851 Percent of Revenue55.6%19.3%33.9%11.0% Leases Payable The City leases golf carts for use at the Centerbrook Golf Course. Lease payments amount to $18,900 annually and will mature on September 11, 2027 at a discount rate of 2.42 percent. 71 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 3: Detailed Notes on all Funds (Continued) Changes in Long-term Liabilities Long-term liability activity for the year ended December 31, 2023, was as follows: BeginningEndingDue Within BalanceIncreasesDecreasesBalanceOne Year Governmental Activities Bonds Payable General obligation tax increment bonds$ 2,380,000$ -$ (305,000)$ 2,075,000$ 330,000 General obligation special assessment bonds 17,438,225 - (2,050,537) 15,387,688 2,293,796 Bond premium 1,584,734 - (198,354) 1,386,380 - Total Bonds Payable 21,402,959 - (2,553,891) 18,849,068 2,623,796 Leases Payable 84,727 - (17,038) 67,689 17,455 Compensated Absences Payable 1,373,514 206,722 (207,429) 1,372,807 137,281 Governmental Activity Long-term Liabilities$ 22,861,200$ 206,722$ (2,778,358)$ 20,289,564$ 2,778,532 BeginningEndingDue Within BalanceIncreasesDecreasesBalanceOne Year Business-type Activities Bonds Payable General obligation improvement bonds$ 751,775$ -$ (184,463)$ 567,312$ 186,204 General obligation revenue bonds 22,625,000 - (2,405,000) 20,220,000 2,715,000 General obligation lease revenue bonds 2,285,000 - (140,000) 2,145,000 145,000 Bond premium 2,292,896 - (285,119) 2,007,777 - Total Bonds Payable 27,954,671 - (3,014,582) 24,940,089 3,046,204 Leases Payable 69,236 - (69,236) - - Notes Payable General obligation revenue notes 12,797,445 - (1,012,000) 11,785,445 1,022,000 Business-type Activity Long-term Liabilities$ 40,821,352$ -$ (4,095,818)$ 36,725,534$ 4,068,204 72 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 3: Detailed Notes on all Funds (Continued) Conduit Debt Obligations with Limited Commitments From time to time, the City has issued Housing Revenue Bonds, Health Care Facilities Revenue Bonds and School Facilities Revenue Bonds to provide financial assistance to private-sector entities for the acquisition and construction of rental housing, educational or health care facilities deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private-sector entity served by the bond issuance. Neither the City, the State, nor any political subdivision thereof is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of December 31, 2023, there were two series of fixed rate Multifamily Housing Revenue Refunding bonds, one Housing Revenue Development Refinancing Note, two Healthcare Revenue Notes, four Senior Housing Development Revenue Notes, three Multifamily Housing Revenue bonds, One Multifamily Housing Note and four Charter School Lease Revenue bonds outstanding. The aggregate amount of the conduit debt as of December 31, 2023 is $91,360,864. F.Components of Fund Balance At December 31, 2023 form (nonspendable), legal restrictions (restricted), City Council action (committed) and policy and/or intent (assigned). The following is a summary of the components of fund balance: Other Tax Increment DebtGovernmental GeneralDistrict No. 3ServiceFundsTotal Nonspendable Inventories $ 68,944$ -$ -$ 2,591$ 71,535 Prepaid items 119,484 - - 2,516 122,000 Total $ 188,428$ -$ -$ 5,107$ 193,535 Restricted Debt service $ -$ -$ 5,085,185$ -$ 5,085,185 Tax increment financing - 21,605,846 - 2,880,844 24,486,690 Statutory housing obligation - - - - - Economic development - - - 1,751,082 1,751,082 Law enforcement enhancements - - - 104,772 104,772 Opiods - - - 77,689 77,689 Community prevention, health and safety - - - 1,974,310 1,974,310 Municipal street projects - - - 3,941,993 3,941,993 Total $ -$ 21,605,846$ 5,085,185$ 10,730,690$ 37,421,721 Committed Cable communications$ - $ - $ - $ 170,907 $ 170,907 Community recreation - - - 146,149 146,149 Technology improvements - - - 341,388 341,388 Capital projects - - - 8,011,098 8,011,098 Total$ - $ - $ - $ 8,669,542 $ 8,669,542 Unassigned $ 13,407,391$ -$ -$ (1,610,015) $ 11,797,376 73 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 4:Defined Benefit Pension Plans - Statewide A. Plan Description The City participates in the following cost-sharing multiple-employer defined benefit pension plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA’s defined benefit pension plans are established and administered in accordance with Minnesota statutes, chapters 353 and 356. PERA’s defined benefit pension plans are tax qualified plans under Section 401(a) of the Internal Revenue Code. General Employees Retirement Plan All full-time and certain part-time employees of the City are covered by the General Employees Plan. General Employees Plan members belong to the Coordinated Plan. Coordinated Plan members are covered by Social Security. Public Employees Police and Fire Plan The Police and Fire Plan, originally established for police officers and firefighters not covered by a local relief association, now covers all police officers and firefighters hired since 1980. Effective July 1, 1999, the Police and Fire Plan also covers police officers and firefighters belonging to a local relief association that elected to merge with and transfer assets and administration to PERA. B. Benefits Provided PERA provides retirement, disability and death benefits. Benefit provisions are established by state statute and can only be modified by the state Legislature. Vested, terminated employees who are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. General Employee Plan Benefits General Employees Plan benefits are based on a member’s highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. Two methods are used to compute benefits for PERA's Coordinated Plan members. Members hired prior to July 1, 1989, receive the higher of Method 1 or Method 2 formulas. Only Method 2 is used for members hired after June 30, 1989. Under Method 1, the accrual rate for Coordinated members is 1.2 percent of average salary for each of the first 10 years of service and 1.7 percent of average salary for each additional year. Under Method 2, the accrual rate for Coordinated members is 1.7 percent for average salary for all years of service. For members hired prior to July 1, 1989 a full annuity is available when age plus years of service equal 90 and normal retirement age is 65. For members hired on or after July 1, 1989 normal retirement age is the age for unreduced Social Security benefits capped at 66. Benefit increases are provided to benefit recipients each January. The postretirement increase is equal to 50 percent of the cost-of-living adjustment (COLA) announced by the SSA, with a minimum increase of at least 1 percent and a maximum of 1.5 percent. Recipients that have been receiving the annuity or benefit for at least a full year as of the June 30 before the effective date of the increase will receive the full increase. Recipients receiving the annuity or benefit for at least one month but less than a full year as of the June 30 before the effective date of the increase will receive a reduced prorated increase. In 2023, legislation repealed the statute delaying increases for members retiring before full retirement age. Police and Fire Plan Benefits after five years up to 100 percent after ten years of credited service. Benefits for Police and Fire Plan members first hired after June 30, 2014 is available when age plus years of service equal at least 90. Benefit increases are provided to benefit recipients each January. The postretirement increase is fixed at 1 percent. Recipients that have been receiving the annuity or benefit for at least 36 months as of the June 30 before the effective date of the increase will receive the full increase. Recipients receiving the annuity or benefit for at least 25 months but less than 36 months as of the June 30 before the effective date of the increase will receive a reduced prorated increase. 74 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 4:Defined Benefit Pension Plans - Statewide (Continued) C. Contributions Minnesota statutes, chapter 353 sets the rates for employer and employee contributions. Contribution rates can only be modified by the state Legislature. General Employees Fund Contributions Coordinated Plan members were required to contribute 6.50 percent of their annual covered salary in fiscal year 2023 and the City was required to contribute 7.50 percent for Coordinated Plan members. The City’s contributions to the General Employees Fund for the years ending December 31, 2023, 2022 and 2021 were $758,282, $727,505 and $673,181, respectively. The City’s contributions were equal to the required contributions for each year as set by state statute. Police and Fire Fund Contributions Police and Fire Plan members were required to contribute 11.80 percent of their annual covered salary in fiscal year 2023 and the City was required to contribute 17.70 percent for Police and Fire Plan members. The City’s contributions to the Police and Fire Fund for the years ending December 31, 2023, 2022 and 2021 were $869,104, $734,786 and $832,803, respectively. The City’s contributions were equal to the required contributions for each year as set by state statute. D. Pension Costs General Employees Fund Pension Costs At December 31, 2023, the City reported a liability of $6,883,614 for its proportionate share of the General Employees Fund’s net pension liability. The City’s net pension liability reflected a reduction due to the State of Minnesota’s contribution of $16 million. The State of Minnesota is considered a non-employer contributing entity and the state’s contribution meets the definition of a special funding situation. The State of Minnesota’s proportionate share of the net pension liability associated with the City totaled $189,767. The net pension liability was measured as of June 30, 2023, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City’s proportionate share of the net pension liability was based on the City’s contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2022 through June 30, 2023 relative to the total employer contributions received from all of PERA’s participating employers. The City’s proportionate share was 0.1231 percent at the end of the measurement period and 0.125 percent for the beginning of the period. City Proportionate Share of the Net Pension Liability$ 6,883,614 State of Minnesota's Proportionate Share of the Net Pension Liability Associated with the City 189,767 $ 7,073,381 Total For the year ended December 31, 2023, the City recognized pension expense of $1,068,342 for its proportionate share of the General Employees Plan’s pension expense. In addition, the City recognized $853 as pension expense (and grant revenue) for its proportionate share of the State of Minnesota’s contribution of $16 million to the General Employees Fund. At December 31, 2023, the City reported its proportionate share of the General Employees Plan’s deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: DeferredDeferred OutflowsInflows of Resourcesof Resources Differences Between Expected and Actual Economic Experience$ 226,899 $ 46,457 Changes in Actuarial Assumptions 1,093,317 1,886,740 Net Difference Between Projected and Actual Investment Earnings- 164,857 Changes in Proportion 46,975 75,240 Contributions Paid to PERA Subsequent to the Measurement Date 388,708 - Total$ 1,755,899 $ 2,173,294 75 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 4:Defined Benefit Pension Plans - Statewide (Continued) The $388,708 reported as deferred outflows of resources related to pensions resulting from the City’s contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2024. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: 2024 $ 198,615 2025 (1,029,714) 2026 174,325 2027 (149,329) Police and Fire Fund Pension Costs At December 31, 2023, the City reported a liability of $5,962,882 for its proportionate share of the Police and Fire Fund’s net pension liability. The net pension liability was measured as of June 30, 2023, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City’s proportionate share of the net pension liability was based on the City’s contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2022 through June 30, 2023, relative to the total employer contributions received from all of PERA’s participating employers. The City’s proportionate share was 0.3453 percent at the end of the measurement period and 0.3429 percent for the beginning of the period. The State of Minnesota contributed $18 million to the Police and Fire Fund in the plan fiscal year ended June 30, 2023. The contribution consisted of $9 million in direct state aid that does meet the definition of a special funding situation and $9 million in supplemental state aid that does not meet the definition of a special funding situation. The $9 million direct state was paid on October 1, 2022. Thereafter, by October 1 of each year, the state will pay $9 million to the Police and Fire Fund until full funding is reached or July 1, 2048, whichever is earlier. The $9 million in supplemental state aid will continue until the fund is 90 percent funded, or until the State Patrol Plan (administered by the Minnesota State Retirement System) is 90 percent funded, whichever occurs later. The State of Minnesota's proportionate share of the net pension liability associated with the City totaled $240,183. City Proportionate Share of the Net Pension Liability$ 5,962,882 State of Minnesota's Proportionate Share of the Net Pension Liability Associated with the 240,183 $ 6,203,065 Total The State of Minnesota is included as a non-employer contributing entity in the Police and Fire Retirement Plan Schedule of Employer Allocations and Schedule of Pension Amounts by Employer, Current Reporting Period Only (pension allocation schedules) for the $9 million in direct state aid. Police and Fire Plan employers need to recognize their proportionate share of the State of Minnesota’s pension expense (and grant revenue) under GASB 68 special funding situation accounting and financial reporting requirements. For the year ended December 31, 2023, the City recognized pension expense of $1,444,603 for its proportionate share of the Police and Fire Plan’s pension expense. In addition, the City recognized an additional $14,466 as pension expense (grant revenue) for its proportionate share of the State of Minnesota’s contribution of $9 million to the Police and Fire Fund. The State of Minnesota is not included as a non-employer contributing entity in the Police and Fire Pension Plan pension allocation schedules for the $9 million in supplemental state aid. The City recognized $31,077 for the year ended December 31, 2023 as revenue and an offsetting reduction of net pension liability for its proportionate share of the State of Minnesota’s on-behalf contributions to the Police and Fire Fund. At December 31, 2023, the City reported its proportionate share of the Police and Fire Plan’s deferred outflows of resources and deferred inflows of resources from the following sources: DeferredDeferred OutflowsInflows of Resourcesof Resources Differences Between Expected and Actual Economic Experience$ 1,698,872 $ - Changes in Actuarial Assumptions 7,369,612 8,395,165 Net Difference Between Projected and Actual Investment Earnings - 821,524 Changes in Proportion 112,908 433,816 Contributions Paid to PERA Subsequent to the Measurement Date 438,753 - Total$ 9,620,145 $ 9,650,505 76 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 4:Defined Benefit Pension Plans - Statewide (Continued) The $438,753 reported as deferred outflows of resources related to pensions resulting from the City’s contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2024. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: 2024 $ 79,247 2025 (211,425) 2026 1,532,134 2027 (389,641) 2028 (1,479,428) E. Long-term Expected Return on Investment The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonableness on a regular basis of the long-term expected rate of return using a building-block method in which best-estimate ranges of expected future rates of return are developed for each major asset class. These ranges are combined to produce an expected long-term rate of return by weighting the expected future rates of return by the target asset allocation percentages. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: Long-term TargetExpected Real Asset ClassAllocationRate of Return Domestic Equity 33.5 % 5.10 % International Equity 16.5 5.30 Fixed Income 25.0 0.75 Private Markets 25.0 5.90 Total 100.0 % F. Actuarial Assumptions The total pension liability in the June 30, 2023, actuarial valuation was determined using an individual entry-age normal actuarial cost method. The long-term rate of return on pension plan investments used in the determination of the total liability is 7.0 percent. This assumption is based on a review of inflation and investments return assumptions from a number of national investment consulting firms. The review provided a range of return investment return rates deemed to be reasonable by the actuary. An investment return of 7.0 percent was deemed to be within that range of reasonableness for financial reporting purposes. Inflation is assumed to be 2.25 percent for the General Employees Plan and 2.25 percent for the Police and Fire Plan. Benefit increases after retirement are assumed to be 1.25 percent for the General Employees Plan and 1.00 percent for the the Police and Fire Plan. Salary growth assumptions in the General Employees Plan range in annual increments from 10.25 percent after one year of service to 3.0 percent after 27 years of service. In the Police and Fire Plan, salary growth assumptions range from 11.75 percent after one year of service to 3.0 percent after 24 years of service. Mortality rates for the General Employees Plan are based on the Pub-2010 General Employee Mortality Table. Mortality rates for the Police and Fire Plan is based on the Pub-2010 Public Safety Employee Mortality tables. The tables are adjusted slightly to fit PERA’s experience. Actuarial assumptions for the General Employees Plan are reviewed every four years. The most recent four-year experience study for the General Employees Plan was completed in 2022. The assumption changes were adopted by the Board and became effective with the July 1, 2023 actuarial valuation. The most recent four-year experience study for the Police and Fire Plan was adopted by the Board and became effective with the July 1, 2021 actuarial valuation. 77 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 4:Defined Benefit Pension Plans - Statewide (Continued) The following changes in actuarial assumptions and plan provisions occurred in 2023: General Employees Fund Changes in Actuarial Assumptions - The investment return assumption and single discount rate were changed from 6.5 percent to 7.0 percent. Changes in Plan Provisions - An additional one-time direct state aid contribution of $170.1 million will be contributed to the Plan on October 1, 2023. - The vesting period of those hired after June 30, 2010, was changed from five years of allowable service to three years of allowable service. - The benefit increase delay for early retirements on or after January 1, 2024, was eliminated. - A one-time, non-compounding benefit increase of 2.5 percent minus the actual 2024 adjustment will be payable in a lump sum for calendar year 2024 by March 31, 2024. Police and Fire Fund Changes in Actuarial Assumptions - The investment return assumption was changed from 6.5 percent to 7.0 percent. - The single discount rate changed from 5.4 percent to 7.0 percent. Changes in Plan Provisions - An additional one-time direct state aid contribution of $19.4 million will be contributed to the Plan on October 1, 2023. - The vesting requirement for new hires after June 30, 2014 was changed from a graded 20-year vesting schedule to a graded 10-year vesting schedule, with 50 percent vesting after five years increasing incrementally to 100 percent after 10 years. - A one-time, non-compounding benefit increase of 3.0 percent will be payable in a lump sum for calendar year 2024 by March 31, 2024. - Psychological treatment is required effective July 1, 2023 prior to approval for a duty disability benefit for a psychological condition relating to the member’s occupation. - The total and permanent duty disability benefit was increased, effective July 1, 2023. G. Discount Rate The discount rate used to measure the total pension liability in 2023 was 7.0 percent. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and employers will be made at rates set in Minnesota statutes. Based on these assumptions, the fiduciary net position of the General Employees and Police and Fire Funds were projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. 78 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 4:Defined Benefit Pension Plans - Statewide (Continued) H. Pension Liability Sensitivity The following presents the City’s proportionate share of the net pension liability for all plans it participates in, calculated using the discount rate disclosed in the preceding paragraph, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate one percentage point lower or one percentage point higher than the current discount rate: 1 Percent1 Percent Decrease (6.0%)Current (7.0%)Increase (8.0%) General Employees Fund$ 12,177,666$ 6,883,614$ 2,529,055 Police and Fire Fund 11,831,069 5,962,882 1,138,447 I. Pension Plan Fiduciary Net Position Detailed information about each pension plan’s fiduciary net position is available in a separately-issued PERA financial report that includes financial statements and required supplementary information. That report may be obtained on the Internet at www.mnpera.org. 79 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 5: Other Pension Plans The City has City Council members that are covered by the Defined Contribution Plan (DCP), a multiple-employer deferred compensation plan administered by PERA. The DCP is a tax qualified plan under Section 401(a) of the Internal Revenue Code and all contributions by or on behalf of employees are tax deferred until time of withdrawal. Plan benefits depend solely on amounts contributed to the plan plus investment earnings, less administrative expenses, therefore, there is no future liability to the employer. Minnesota statutes, chapter 353d.03, specifies plan provisions, including the employee and employer contribution rates for those qualified personnel who elect to participate. An eligible elected official who decides to participate contributes 5 percent of salary which is matched by the elected official's employer. Employees who are paid for their services may elect to make member contributions in an amount not to exceed the employer share. Employer and employee contributions are combined and used to purchase shares in one or more of the seven accounts of the Minnesota Supplemental Investment Fund. For administering the plan, PERA receives 2.0 percent of employer contributions and twenty-five hundredths of 1.0 percent (0.25 percent) of the assets in each member's account annually. Total contributions made by the City during the fiscal year 2023 were: Additional City employees belonging to International Union of Operating Engineers (IUOE) are participants in a multiple- employer defined benefit pension plan Central Pension Fund of the International Union of Operating Engineers and Participating Employers (CPF) administered by the Board of Trustees of the Central Pension Fund. The plan is a cost- sharing pension multi-employer plan that is not a state or local governmental pension plan. The plan issues a publicly available financial report located on their website at www.cpfiuoe.org. The City has 26 employees who are covered by this pension plan. The plan provides benefits such as monthly retirement income, special and early retirement benefits, post- retirement surviving spouse benefits, pre-retirement surviving spouse benefits, and disability benefits. The plan is a supplemental pension fund authorized by Minnesota Statutes, 356.24, subdivision 1(9). The City's contributions to the plan are pursuant to a collective bargaining agreement. Total employer contributions for the year ended December 31, 2023 were $10,710. 80 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 6: Defined Benefit Pension Plans - Fire Relief Association A.Plan Description Sample Fire Department Relief Association (the Association). As of December 31, 2023, the plan covered 31 active firefighters, 14 inactive members, five retired/disabled firefighters and eight surviving spouses/beneficiaries. The plan is a single employer retirement plan and is established and administered in accordance with Minnesota statute, chapter 69. The City levies property taxes at the direction of and for the benefit of the plan and passes through state aids allocated to the plan, all in accordance with enabling state statutes. The minimum tax levy obligation is the financial contribution requirement for the year less anticipated state aids. B.Benefits Provided Basic Service Pension for Retired Members Upon retirement each individual will receive a lump sum distribution of $10,000 per year of service. This benefit level was placed into effect on June 28, 2021. Prior to 1998, a monthly benefit level of $26.50 was available for retirees. The monthly benefit is no longer an option for retiring members. Vested, terminated members, who are entitled to benefits but are not yet receiving them, are bound by the provisions in effect at the time of termination from membership. A firefighter who completes at least 20 years as an active member of the Department is entitled, after age 50, to a full service pension upon retirement. Basic Service Pension for Deferred Pensioner The bylaws of the Association also provide for an early vested service pension for a retiring member who has completed fewer than 20 years of service. The reduced pension, available to members with 10 years of service, shall be equal to 60 percent of the pension as prescribed by the bylaws. This percentage increases 4 percent per year so that at 20 years of service, the full amount prescribed is paid. Members who retire with less than 20 years of service and have reached the age of 50 years and have completed at least 10 years of active membership are entitled to a reduced service pension not to exceed the amount calculated by multiplying the member's service pension for the completed years of service times the applicable non-forfeitable percentage of pension. C.Contributions Minnesota statutes, chapters 424 and 424A authorize pension benefits for volunteer fire relief associations. The plan is funded by fire state aid, investment earnings and, if necessary, employer contributions as specified in Minnesota statutes and voluntary City contributions (if applicable). The State of Minnesota contributed $205,560 in fire state aid to the plan on behalf of the Department for the year ended December 31, 2023, which was recorded as a revenue. Required employer contributions are calculated annually based on statutory provisions. The City made no voluntary contributions to the plan. The firefighter has no obligation to contribute to the plan. 81 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 6: Defined Benefit Pension Plans - Fire Relief Association (Continued) D.Pension Costs At December 31, 2023, the City reported a net pension asset of $(443,775) for the Association. The net pension liability (asset) was measured as of December 31, 2022. The total pension liability used to calculate the net pension liability (asset) in accordance with GASB 68 was determined by specialist applying an actuarial formula to specific census data certified by the Department. The following table presents the changes in net pension liability (asset) during the year: For the year ended December 31, 2023, the City recognized pension expense of $32,173. At December 31, 2023, the City reported its deferred outflows of resources and deferred inflows of resources to the plan from the following sources: DeferredDeferred OutflowsInflows of Resourcesof Resources Changes in Actuarial Assumptions$ 50,210 $ - Liability Experience (Gains) and Losses 38,050 54,800 Net Difference Between Projected and Actual Earnings on Plan Investments 349,510 - Contributions Paid to Plan Subsequent to the Measurement Date 223,177 - Total$ 660,947 $ 54,800 82 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 6: Defined Benefit Pension Plans - Fire Relief Association (Continued) Deferred outflows of resources totaling $223,177 subsequent to the measurement date will be recognized as a reduction of the net pension liability (asset) in the year ended December 31, 2024. Amounts reported as deferred outflows of resources related to the plan will be recognized in pension expense as follows: E.Actuarial Assumptions The total pension liability at December 31, 2023 was determined using the entry age normal actuarial cost method and the following actuarial assumptions: Since the prior measurement date, the following assumptions changed: The expected investment return and discount rate decreased from 5.25 percent to 4.75 percent to reflect updated capital market assumptions. The disability, mortality and withdrawal assumptions were updated from the rates used in the July 1, 2020 Minnesota PERA Police and Fire Plan actuarial valuation to the rates used in the July 1, 2022 Minnesota PERA Police and Fire Plan actuarial valuation. The inflation assumption increased from 2.25 percent and 2.50 percent. F.Discount Rate The discount rate used to measure the total pension liability was 4.75 percent. The projection of cash flows used to determine the discount rate assumed that City contributions will be made at the actual statutory contribution rate. Based on those assumptions, the Association's fiduciary net position was projected to be available to make all projected future benefit payments of the current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. 83 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 6: Defined Benefit Pension Plans - Fire Relief Association (Continued) G.Asset Allocation The long- allocation along with long-term return expectations by asset class. All economic assumptions were based on input from various published sources and projected future financial data available. 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 TargetExpected Real AllocationRate of Return Asset Class Domestic Equity 45.0 % 4.10 % International Equity 15.0 4.64 Fixed Income 35.0 1.05 Cash 5.0 (0.45) Total 100.00 % H.Pension Liability Sensitivity discount rate one percent lower or one percent higher than the current discount rate: I.Pension Plan Fiduciary Net Position The Association issues a financial report that includes financial statements and required supplementary information for the Brooklyn Center Fire Department Relief Association. That report is available at the City of Brooklyn Center City offices. 84 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 7: Postemployment Benefits Other Than Pensions A.Plan Description The City administers a single- lifetime healthcare covers both active and retired members. Benefit provisions are established through negotiations between the City and the union representing employees and are renegotiated each three-year bargaining period. The component unit is included in B.Funding Policy Contribution requirements also are negotiated between the City and union representatives. The City does not contribute to the cost of current-year premiums for eligible retired plan members and their spouses. For the year ended December 31, 202321.5 percent of covered-employee payroll. For the year 2023, the City while implicit contributions totaled $51,265. C.Actuarial Methods and Assumptions The $2,668,769 was measured as of January 1, 2023, and the total OPEB liability used to calculate the total OPEB liability was determined by an actuarial valuation as of January 1, 2023. The total OPEB liability in the January 1, 2023 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified: The discount rate used to measure the total OPEB liability was 4.05 percent. Assets were projected using expected benefit payments and expected asset returns. Expected benefit payments by year were discounted using the expected asset return assumption for years in which the assets were sufficient to pay all benefit payments. Any remaining benefit payments after the trust fund is exhausted are discounted at the 20-year municipal bond rate. The equivalent single rate is the discount rate. The mortality tables were updated from the RP-2014 Mortality Tables (Blue Collar for Public Safety, White Collar for Others) with MP-2018 Generational Improvement Scale to the Pub-2010 Public Retirement Plans Headcount-Weighted Mortality Tables (General, Safety) with MP-2020 Generational Improvement Scale. Economic assumptions are based on input from a variety of published sources of historical and projected future financial data. Each assumption was reviewed for reasonableness with the source information as well as for consistency with the other economic assumptions. 85 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 7: Postemployment Benefits Other Than Pensions (Continued) D.Changes in the Total OPEB Liability Since the prior measurement date, the following assumptions changed: The discount rate was changed from 2.12 percent to 4.05 percent. E.Sensitivity of the Total OPEB Liability ere calculated using a discount rate that is one percentage point lower or one percentage point higher than the current discount rate: ere calculated using a Healthcare Cost Trend Rates that is one percentage point lower or one percentage-point higher than the current cost trend rate: Healthcare Cost 1 Percent DecreaseTrend Rates1 Percent Increase (4.9% Decreasing(5.9% Decreasing(6.9% Decreasing to 2.9%)to 3.9%)to 4.9%) City of Brooklyn Center$ 2,373,005$ 2,668,769$ 3,018,529 86 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 7: Postemployment Benefits Other Than Pensions (Continued) F.OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended December 31, 2023, the City recognized OPEB expense of $141,798. At December 31, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred outflows of resources totaling $51,265 subsequent to the measurement date will be recognized as a reduction of the OPEB liability in the year ended December 31, 2024. Other amounts reported as deferred outflows and inflows of resources related to OPEB will be recognized in OPEB expense as follows: Note 8: Other Information A. 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; injuries to employees; and natural disasters for which the City carries insurance. The City obtains insurance through participation in the League of Minnesota Cities Insurance Trust (LMCIT) which is a risk sharing pool with approximately 800 other governmental units. The City pays an annual premium to LMCIT for its workers compensation and property and casualty insurance. The LMCIT is self-sustaining through member premiums and will reinsure for claims of the past three fiscal years. Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably management is not aware of any incurred but not reported claims. B. Contingent Liabilities Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the City expects such amounts, if any, to be immaterial. 87 City of Brooklyn Center, Minnesota Notes to the Financial Statements December 31, 2023 Note 8: Other Information (Continued) C. Legal Debt Margin In accordance with Minnesota statutes, the City may not incur or be subject to net debt in excess of three percent of the market value of taxable property within the City. Net debt is payable solely from ad valorem taxes and therefore, excludes debt financed partially or entirely by special assessments, enterprise fund revenues or tax increments. As of December 31, 2023, the City is under the legal debt margin. D. Tax Increment Districts disallowed claims or misuse of tax increments could become a liability of the applicable fund. Management has indicated that they arenot aware of any instances of noncompliance which would have a material effect on the financial statements. E. Arbitrage Rebate The Tax Reform Act of 1986 requires governmental entities to pay to the federal government income earned on the proceeds from the issuance of debt in excess of interest costs, pending the expenditures of the borrowed funds. This rebate of interest income (known as arbitrage) applies to governmental debt issued after August 31, 1986. The City issued greater than $5 million of bonds in subsequent years and thereafter is required to rebate excess investment income relating to these issues to the federal govern remaining bond issues is not determined at this time. However, in the opinion of management any such liability would be immaterial. Note 9: Jointly Governed Organizations The City has several agreements with other entities that provide reduced costs, better service, and additional benefits to the participants. The programs in which the City participates are listed below and amounts recorded within the current Local Government Information Systems Association (LOGIS) This consortium of approximately 30 government entities provides computerized data processing and support services to its members. LOGIS is legally separate; the City does not appoint a voting majority of its board, and the Consortium is fiscally independent of the City. The total amount recorded within the 2023 financial statements of the City is $804,578 for general services and application upgrades provided. Costs were allocated to the various funds based on applications and/or use of services. Complete financial statements for LOGIS may be obtained at the LOGIS offices located at 5750 Duluth Street, Golden Valley, Minnesota 55422. LOGIS Insurance Group This group provides cooperative purchasing of health and life insurance benefits for approximately 45 governmental entities. The total of 2023 health and life insurance costs paid by the City was $1,872,634. Complete financial statements may be obtained from Gallagher Benefit Services, Inc. located at 3600 American Blvd West, Bloomington, MN 55431. Note 10: Subsequent Event On June 13, 2024, the City issued G.O. Improvement and Utility Revenue Bonds, Series 2024A in the amount of $12,020,000 at a AA S&P bond rating. 88 REQUIRED SUPPLEMENTARY INFORMATION CITY OF BROOKLYN CENTER BROOKLYN CENTER, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2023 89 City of Brooklyn Center, Minnesota Required Supplementary Information For the Year Ended December 31, 2023 Schedule of of PERA Net Pension Liability - General Employees Fund City's Proportionate State's Share of the Proportionate Net Pension City'sShare of Liability as aPlan Fiduciary Proportionatethe Net Pension City'sPercentage ofNet Position Share ofLiabilityCity's Proportion ofCoveredas a Percentage Fiscalthe Net PensionAssociated withCovered the Net PensionPayrollof the Total YearLiabilitythe CityTotalPayroll Liability(a/c)Pension Liability Ending(a)(b)(a+b)(c) 06/30/230.1231 %6,883,614$ $ 189,767$ 7,073,381 $ 10,176,093 67.6 % %83.1 06/30/220.1250 9,900,041 290,319 10,190,360 7,042,154 140.6 76.7 06/30/210.1206 5,150,160 157,297 5,307,457 8,685,747 59.3 87.0 06/30/200.1240 7,434,368 229,207 7,663,575 8,843,395 84.1 79.1 06/30/190.1189 6,573,715 204,324 6,778,039 8,411,938 78.1 80.2 06/30/180.1194 6,623,822 217,244 6,841,066 7,892,915 83.9 79.5 06/30/170.1201 7,667,105 96,388 7,763,493 7,735,587 99.1 75.9 06/30/160.1172 9,516,060 124,251 9,640,311 7,269,667 130.9 68.9 06/30/150.1243 6,441,872 - 6,441,872 7,303,595 88.2 78.2 Note: Schedule is intended to show 10-year trend. Additional years will be reported as they become available. There are no assets accumulated in a GASB - compliant trust. Schedule of PERA Contributions - General Employees Fund Contributions in Relation to the Contributions as StatutorilyStatutorilyContributionCity's a Percentage of RequiredRequiredDeficiencyCovered Covered Payroll YearContributionContribution(Excess)Payroll (b/c) Ending(a)(b)(a-b)(c) 12/31/23$ 758,282 $ 758,282 $ - 10,110,427$ %7.50 12/31/22 727,505 727,505 9,700,067- 7.50 12/31/21 673,181 673,181 8,977,525- 7.50 12/31/20 649,561 649,561 8,660,814- 7.50 12/31/19 651,633 651,633 8,688,397- 7.50 12/31/18 612,983 612,983 8,173,316- 7.50 12/31/17 572,442 572,442 7,634,297- 7.50 12/31/16 550,846 550,846 7,344,613- 7.50 12/31/15564,168564,168 7,522,240- 7.50 Note: Schedule is intended to show 10-year trend. Additional years will be reported as they become available. 90 City of Brooklyn Center, Minnesota Required Supplementary Information (Continued) For the Year Ended December 31, 2023 Notes to the Required Supplementary Information - General Employee Retirement Fund Changes in Actuarial Assumptions 2023 - The investment return assumption and single discount rate were changed from 6.5 percent to 7.0 percent. 2022- The mortality improvement scale was changed from Scale MP-2020 to Scale MP-2021. 2021- The investment return and single discount rates were changed from 7.50 percent to 6.50 percent for financial reporting purposes. The mortality improvement scale was changed from Scale MP-2019 to Scale MP-2020. 2020 - The price inflation assumption was decreased from 2.50% to 2.25%. The payroll growth assumption was decreased from 3.25% to 3.00%. Assumed salary increase rates were changed as recommended in the June 30, 2019 experience study. The net effect is assumed rates that average 0.25% less than previous rates. Assumed rates of retirement were changed as recommended in the June 30, 2019 experience study. The changes result in more unreduced (normal) retirements and slightly fewer Rule of 90 and early retirements. Assumed rates of termination were changed as recommended in the June 30, 2019 experience study. The new rates are based on service and are generally lower than the previous rates for years 2-5 and slightly higher thereafter. Assumed rates of disability were changed as recommended in the June 30, 2019 experience study. The change results in fewer predicted disability retirements for males and females. The base mortality table for healthy annuitants and employees was changed from the RP-2014 table to the Pub-2010 General Mortality table, with adjustments. The base mortality table for disabled annuitants was changed from the RP- 2014 disabled annuitant mortality table to the PUB-2010 General/Teacher disabled annuitant mortality table, with adjustments. The mortality improvement scale was changed from Scale MP-2018 to Scale MP-2019. The assumed spouse age difference was changed from two years older for females to one year older. The assumed number of married male new retirees electing the 100% Joint & Survivor option changed from 35% to 45%. The assumed number of married female new retirees electing the 100% Joint & Survivor option changed from 15% to 30%. The corresponding number of married new retirees electing the Life annuity option was adjusted accordingly. 2019 - The mortality projection scale was changed from MP-2017 to MP-2018. 2018 - The mortality projection scale was changed from MP-2015 to MP-2017. The assumed benefit increase was changed from 1.00 percent per year through 2044 and 2.50 percent per year thereafter to 1.25 percent per year. 2017 - The Combined Service Annuity (CSA) loads were changed from 0.8 percent for active members and 60 percent for vested and non-vested deferred members. The revised CSA loads are now 0.0 percent for active member liability, 15.0 percent for vested deferred member liability and 3.0 percent for non-vested deferred member liability. The assumed post-retirement benefit increase rate was changed from 1.0 percent per year for all years to 1.0 percent per year through 2044 and 2.5 percent per year thereafter. 2016 - The assumed post-retirement benefit increase rate was changed from 1.0 percent per year through 2035 and 2.5 percent per year thereafter to 1.0 percent per year for all future years. The assumed investment return was changed from 7.9 percent to 7.5 percent. The single discount rate was changed from 7.9 percent to 7.5 percent. Other assumptions were changed pursuant to the experience study dated June 30, 2015. The assumed future salary increases, payroll growth and inflation were decreased by 0.25 percent to 3.25 percent for payroll growth and 2.50 percent for inflation. 2015 - The assumed post-retirement benefit increase rate was changed from 1.0 percent per year through 2030 and 2.5 percent per year thereafter to 1.0 percent per year through 2035 and 2.5 percent per year thereafter. 91 City of Brooklyn Center, Minnesota Required Supplementary Information (Continued) For the Year Ended December 31, 2023 Notes to the Required Supplementary Information - General Employee Retirement Fund (Continued) Changes in Plan Provisions 2023 - An additional one-time direct state aid contribution of $170.1 million will be contributed to the Plan on October 1, 2023. The vesting period of those hired after June 30, 2010, was changed from five years of allowable service to three years of allowable service. The benefit increase delay for early retirements on or after January 1, 2024, was eliminated. A one-time, non-compounding benefit increase of 2.5 percent minus the actual 2024 adjustment will be payable in a lump sum for calendar year 2024 by March 31, 2024. 2022- There were no changes in plan provisions since the previous valuation. 2021 - There were no changes in plan provisions since the previous valuation. 2020 - Augmentation for current privatized members was reduced to 2.0% for the period July 1, 2020 through December 31, 2023 and 0.0% after. Augmentation was eliminated for privatizations occurring after June 30, 2020. 2019 - The employer supplemental contribution was changed prospectively, decreasing from $31.0 million to $21.0 through 2031. 2018 - The augmentation adjustment in early retirement factors is eliminated over a five-year period starting July 1, 2019, resulting in actuarial equivalence after June 30, 2024. Interest credited on member contributions decreased from 4.00 percent to 3.00 percent, beginning July 1, 2018. Deferred augmentation was changed to 0.00 percent, effective January 1, 2019. Augmentation that has already accrued for deferred members will still apply. Contribution stabilizer provisions were repealed. Postretirement benefit increases were changed from 1.00 percent per year with a provision to increase to 2.50 percent upon attainment of 90.00 percent funding ratio to 50.00 percent of the Social Security Cost of Living Adjustment, not less than 1.00 percent and not more than 1.50 percent, beginning January 1, 2019. For retirements on or after January 1, 2024, the first benefit increase is delayed until the retiree reaches normal retirement age; does not apply to Rule of 90 retirees, disability benefit recipients, or survivors. Actuarial equivalent factors were updated to reflect revised mortality and interest assumptions. 2017 - and $6,000,000 thereafter. The Employer Supplemental Contribution for the Minneapolis Employees Retirement Fund changed from $21,000,000 to $ $16,000,000 to $6,000,000 in calendar years 2019 to 2031. 2016 - There were no changes in plan provisions since the previous valuation. 2015 - On January 1, 2015, the Minneapolis Employees Retirement Fund was merged into the General Employees Fund, which increased the total pension liability by $1.1 billion and increased the fiduciary plan net position by $892 million. Upon consolidation, state and employer contributions were revised. 92 City of Brooklyn Center, Minnesota Required Supplementary Information (Continued) For the Year Ended December 31, 2023 Schedule of of PERA Net Pension Liability - Police and Fire Fund Note: Schedule is intended to show 10-year trend. Additional years will be reported as they become available. There are no assets accumulated in a GASB - compliant trust Schedule of PERA Contributions - Police and Fire Fund Contributions in Relation to the Contributions as StatutorilyStatutorilyContributionCity's a Percentage of RequiredRequiredDeficiencyCovered Covered Payroll YearContributionContribution(Excess)Payroll (b/c) Ending(a)(b)(a-b)(c) 12/31/23$ 869,104 $ 869,104 $ - 4,910,192$ %17.70 12/31/22 734,786 734,786 4,151,333- 17.70 12/31/21 832,803 832,803 4,705,104- 17.70 12/31/20 887,315 887,315 5,013,084- 17.70 12/31/19 818,676 818,676 4,829,945- 16.95 12/31/18 761,952 761,952 4,703,405- 16.20 12/31/17 720,865 720,865 4,449,784- 16.20 12/31/16 689,601 689,601 4,256,796- 16.20 12/31/15687,935687,935 4,246,511- 16.20 Note: Schedule is intended to show 10-year trend. Additional years will be reported as they become available. 93 City of Brooklyn Center, Minnesota Required Supplementary Information (Continued) For the Year Ended December 31, 2023 Notes to the Required Supplementary Information - Police and Fire Fund Changes in Actuarial Assumptions 2023 - The investment return assumption was changed from 6.5 percent to 7.0 percent. The single discount rate changed from 5.4 percent to 7.0 percent. 2022- The mortality improvement scale was changed from Scale MP-2020 to Scale MP-2021. 2021 - The investment return and single discount rates were changed from 7.50 percent to 6.50 percent, for financial reporting purposes. The inflation assumption was changed from 2.50 percent to 2.25 percent. The payroll growth assumption was changed from 3.25 percent to 3.00 percent. The base mortality table for healthy annuitants and employees was changed from the RP-2014 table to the Pub-2010 Public Safety Mortality table. The mortality improvement scale was changed from MP-2019 to MN-2020. The base mortality table for disabled annuitants was changed from the RP-2014 healthy annuitant mortality table (with future mortality improvement according to Scale MP-2019) to the Pub- 2010 Public Safety disabled annuitant mortality table (with future mortality improvement according to Scale MP-2020). Assumed rates of salary increase were modified as recommended in the July 14, 2020 experience study. The overall impact is a decrease in gross salary increase rates. Assumed rates of retirement were changed as recommended in the July 14, 2020 experience study. The changes result in slightly more unreduced retirements and fewer assumed early retirements. Assumed rates of withdrawal were changed from select and ultimate rates to service-based rates. The changes result in more assumed terminations. Assumed rates of disability were increased for ages 25-44 and decreased for ages over 49. Overall, proposed rates result in more projected disabilities. Assumed percent married for active female members was changed from 60 percent to 70 percent. Minor changes to form of payment assumptions were applied. 2020 - The mortality projection scale was changed from MP-2018 to MP-2019. 2019 - The mortality projection scale was changed from MP-2017 to MP-2018. 2018 - The mortality projection scale was changed from MP-2016 to MP-2017. 2017 - Assumed salary increases were changed as recommended in the June 30, 2016 experience study. The net effect is proposed rates that average 0.34 percent lower than the previous rates. Assumed rates of retirement were changed, resulting in fewer retirements. The Combined Service Annuity (CSA) load was 30 percent for vested and non-vested deferred members. The CSA has been changed to 33 percent for vested members and 2 percent for non-vested members. The base mortality table for healthy annuitants was changed from the RP-2000 fully generational table to the RP-2014 fully generational table (with a base year of 2006), with male rates adjusted by a factor of 0.96. The mortality improvement scale was changed from Scale AA to Scale MP-2016. The base mortality table for disabled annuitants was changed from the RP-2000 disabled mortality table to the mortality tables assumed for healthy retirees. Assumed termination rates were decreased to 3.0 percent for the first three years of service. Rates beyond the select period of three years were adjusted, resulting in more expected terminations overall. Assumed percentage of married female members was decreased from 65 percent to 60 percent. Assumed age difference was changed from separate assumptions for male members (wives assumed to be three years younger) and female members (husbands assumed to be four years older) to the assumption that males are two years older than females. The assumed percentage of female members electing joint and survivor annuities was increased. The assumed post-retirement benefit increase rate was changed from 1.00 percent for all years to 1.00 percent per year through 2064 and 2.50 percent thereafter. The single discount rate was changed from 5.6 percent to 7.5 percent. 2016 - The assumed post-retirement benefit increase rate was changed from 1.0 percent per year through 2037 and 2.5 percent per year thereafter to 1.0 percent per year for all future years. The assumed investment return was changed from 7.9 percent to 7.5 percent. The single discount rate was changed from 7.9 percent to 5.6 percent. The assumed future salary increases, payroll growth and inflation were decreased by 0.25 percent to 3.25 percent for payroll growth and 2.50 percent for inflation. 2015 - The assumed post-retirement benefit increase rate was changed from 1.0 percent per year through 2030 and 2.5 percent per year thereafter to 1.0 percent per year through 2037 and 2.5 percent per year thereafter. 94 City of Brooklyn Center, Minnesota Required Supplementary Information (Continued) For the Year Ended December 31, 2023 Notes to the Required Supplementary Information - Police and Fire Fund (Continued) Changes in Plan Provisions 2023 - Additional one-time direct state aid contribution of 19.4 million will be contributed to the Plan on October 1, 2023. Vesting requirement for new hires after June 30, 2014, was changed from a graded 20-year vesting schedule to a graded 10-year vesting schedule, with 50 percent vesting after five years, increasing incrementally to 100% after 10 years. A one- time, non-compounding benefit increase of 3.0 percent will be payable in a lump sum for calendar year 2024 by March 31, 2024. Psychological treatment is required effective July 1, 2023, prior to approval for a duty disability benefit for increased, effective July 1, 2023. 2022- There were no changes in plan provisions since the previous valuation. 2021 - There were no changes in plan provisions since the previous valuation. 2020 - There were no changes in plan provisions since the previous valuation. 2019 - There were no changes in plan provisions since the previous valuation. 2018 - As set by statute, the assumed post-retirement benefit increase was changed from 1.0 percent per year through 2064 and 2.5 percent per year, thereafter, to 1.0 percent for all years, with no trigger. An end date of July 1, 2048 was added to the existing $9.0 million state contribution. New annual state aid will equal $4.5 million in fiscal years 2019 and 2020, and $9.0 million thereafter until the plan reaches 100 percent funding, or July 1, 2048, if earlier. Member contributions were changed from 10.80 percent to 11.30 percent of pay, effective January 1, 2019 and 11.80 percent of pay, effective January 1, 2020. Employer contributions were changed from 16.20 percent to 16.95 percent of pay, effective January 1, 2019 and 17.70 percent of pay, effective January 1, 2020. Interest credited on member contributions decreased from 4.00 percent to 3.00 percent, beginning July 1, 2018. Deferred augmentation was changed to 0.00 percent, effective January 1, 2019. Augmentation that has already accrued for deferred members will still apply. Actuarial equivalent factors were updated to reflect revised mortality and interest assumptions. 2017- Assumed salary increases were changed as recommended in the June 30, 2016 experience study. The net effect is proposed rates that average 0.34 percent lower than the previous rates. Assumed rates of retirement were changed, resulting in fewer retirements. The combined service annuity (CSA) load was 30.00 percent for vested and non-vested, deferred members. The CSA has been changed to 33.00 percent for vested members and 2.00 percent for non-vested members. The base mortality table for healthy annuitants was changed from the RP-2000 fully generational table to the RP-2014 fully generational table (with a base year of 2006), with male rates adjusted by a factor of 0.96. The mortality improvement scale was changed from Scale AA to Scale MP-2016. The base mortality table for disabled annuitants was changed from the RP-2000 disabled mortality table to the mortality tables assumed for healthy retirees. Assumed termination rates were decreased to 3.00 percent for the first three years of service. Rates beyond the select period of three years were adjusted, resulting in more expected terminations overall. Assumed percentage of married female members was decreased from 65.00 percent to 60.00 percent. Assumed age difference was changed from separate assumptions for male members (wives assumed to be three years younger) and female members (husbands assumed to be four years older) to the assumption that males are two years older than females. The assumed percentage of female members electing joint and survivor annuities was increased. The assumed postretirement benefit increase rate was changed from 1.00 percent for all years to 1.00 percent per year through 2064 and 2.50 percent thereafter. The single discount rate was changed from 5.60 percent per annum to 7.50 percent per annum. 2016 - There were no changes in plan provisions since the previous valuation. 2015 - The post-retirement benefit increase to be paid after attainment of the 90 percent funding threshold was changed, from inflation up to 2.5 percent, to a fixed rate of 2.5 percent. 95 City of Brooklyn Center, Minnesota Required Supplementary Information (Continued) For the Year Ended December 31, 2023 202320222021202020192018201720162015 (Fire Relief Report(Fire Relief Report(Fire Relief Report(Fire Relief Report(Fire Relief Report(Fire Relief Report(Fire Relief Report(Fire Relief Report(Fire Relief Report Date 2022)Date 2021)Date 2020)Date 2019)Date 2018)Date 2017)Date 2016)Date 2015)Date 2014) Total Pension Liability Service cost$ 137,340$ 114,281$ 112,974$ 99,907$ 107,405$ 98,240$ 120,802$ 88,266$ 85,904 Interest 135,288 124,570 136,948 137,983 171,057 191,790 174,191 173,219 178,242 Changes in benefit terms 15,086 242,775 - 164,525 18,251 - 26,709 - - Changes in assumptions 34,989 - 5,863 - 52,746 44,974 (50,396) 358,422 - Differences between expected and actual experience 44,119 - (17,492) - (141,409) - (75,613) - - Benefit payments (170,479) (430,577) (520,165) (350,222) (744,211) (131,608) (136,168) (59,016) (617,541) Net Changes 196,343 51,049 (281,872) 52,193 (536,161) 203,396 59,525 560,891 (353,395) Total Pension Liability - January 1 2,524,815 2,473,766 2,755,638 2,703,445 3,239,606 3,036,210 2,976,685 2,415,794 2,769,189 Total Pension Liability - December 31 (a)$ 2,721,158$ 2,524,815$ 2,473,766$ 2,755,638$ 2,703,445$ 3,239,606$ 3,036,210$ 2,976,685$ 2,415,794 Plan Fiduciary Net Position Contributions - state and local$ 205,560$ 186,797$ 180,079$ 165,652$ 164,147$ 154,366$ 147,002$ 143,061$ 158,545 Investment income (loss) (438,162) 308,374 199,905 503,214 (236,910) 557,117 275,625 (181,185) 149,635 Benefit payments (170,479) (430,577) (520,165) (350,222) (744,211) (131,608) (136,168) (59,016) (617,541) Administrative expense (18,497) (24,003) (17,060) (21,126) (15,708) (15,024) (9,495) (14,560) (10,080) Net Changes (421,578) 40,591 (157,241) 297,518 (832,682) 564,851 276,964 (111,700) (319,441) Total Plan Fiduciary Net Position - January 1 3,586,511 3,545,920 3,703,161 3,405,643 4,238,325 3,673,474 3,396,510 3,508,210 3,827,651 Total Plan Fiduciary Net Position - December 31 (b)$ 3,164,933$ 3,586,511$ 3,545,920$ 3,703,161$ 3,405,643$ 4,238,325$ 3,673,474$ 3,396,510$ 3,508,210 Total Net Pension Liability (Asset) - December 31 (a-b)$ (443,775) $ (1,061,696) $ (1,072,154) $ (947,523) $ (702,198) $ (998,719) $ (637,264) $ (419,825) $ (1,092,416) Plan Fiduciary Net Position as a Percentage of the Total Pension Liability (b/a)116.3%142.1%143.3%134.4%126.0%130.8%121.0%114.1%145.2% Covered PayrollN/AN/AN/AN/AN/AN/AN/AN/AN/A City's Net Pension Liability (Asset) as a Percentage of Covered PayrollN/AN/AN/AN/AN/AN/AN/AN/AN/A Note: Schedule is intended to show 10-year trend. Additional years will be reported as they become available. 96 City of Brooklyn Center, Minnesota Required Supplementary Information (Continued) For the Year Ended December 31, 2023 Notes to the Required Supplementary Information - Fire Relief Association Changes in Actuarial Assumptions 2023 - The expected investment return and discount rate decreased from 5.25 percent to 4.75 percent to reflect updated capital market assumptions. The disability, mortality and withdrawal assumptions were updated from the rates used in the July 1, 2020 Minnesota PERA Police and Fire Plan actuarial valuation to the rates used in the July 1, 2022 Minnesota PERA Police and Fire Plan actuarial valuation. The inflation assumption increased from 2.25 percent and 2.50 percent. 2022 - There were no changes in actuarial assumptions since the previous valuation. 2021 - The mortality and withdrawal assumptions were updated from the rates used in the July 1, 2018 Minnesota PERA Police and Fire Plan actuarial valuation to the rates used in the July 1, 2020 Minnesota PERA Police and Fire Plan actuarial valuation. The inflation assumption was changed from 2.50 percent to 2.25 percent based on an updated historical analysis of inflation rates and forward-looking market expectations. 2020 - There were no changes in actuarial assumptions since the previous valuation. 2019 - The mortality and withdrawal assumptions were updated from the rates used in the July 1, 2016 Minnesota PERA Police and Fire Plan actuarial valuation to the rates used in the July 1, 2018 Minnesota PERA Police and Fire Plan actuarial valuation. The inflation assumption was changed from 2.75 percent to 2.50 percent. 2018 - The discount rate was changed from 6.25 percent to 5.75 percent to reflect updated capital market assumptions. 2017 - The discount rate was changed from 5.75 percent to 6.25 percent to reflect updated capital market assumptions. 2016 - The discount rate was changed from 7.00 percent to 5.75 percent to reflect updated capital market assumptions. Changes in Benefit Terms 2023 - There were no changes in benefit terms since the previous valuation. 2022 - The lump sum distribution upon retirement per year of service was changed from $8,500 to $10,000. 2021 - There were no changes in benefit terms since the previous valuation. 2020 - The lump sum distribution upon retirement per year of service was changed from $7,700 to $8,500. 2019 - The lump sum distribution upon retirement per year of service was changed from $7,600 to $7,700. 2018 - There were no changes in benefit terms since the previous valuation. 2017 - The lump sum distribution upon retirement per year of service was changed from $7,500 to $7,600. 2016 - There were no changes in benefit terms since the previous valuation. 97 City of Brooklyn Center, Minnesota Required Supplementary Information (Continued) For the Year Ended December 31, 2023 Note: Schedule is intended to show 10-year trend. Additional years will be reported as they become available. There are no assets accumulated in a GASB-compliant trust. 98 City of Brooklyn Center, Minnesota Required Supplementary Information (Continued) For the Year Ended December 31, 2023 Notes to the Required Supplementary Information - Total OPEB Liability and Related Ratios Changes in Actuarial Assumptions 2023 - The discount rate was changed from 2.12 percent to 4.05 percent. 2022- The medical trend rate was updated based on recently published trend model and trend surveys to better reflect future anticipated experience. Medical per capita claims tables were updated based on recent experience and demographics. The discount rate was updated from 2.12 percent to 2.06 percent based on recent municipal bond index rates. Withdrawal, retirement, mortality, disability and salary scale assumptions were updated to those included in the recently published PERA actuarial valuations. Future retiree participation rates were updated from 65% to 50% based on analysis of past plan experience. Future retiree spouse participation rates were updated from 40% for PERA Coordinated and 60% for PERA Police and Fire to 40% based on analysis of past plan experience. Future retiree medical plan blending was updated based on an analysis of medical plan election rates as of the valuation date. 2021 - The discount rate was changed from 2.74 percent to 2.12 percent. 2020- The discount rate was changed from 4.09 percent to 2.74 percent. The healthcare trend rates, mortality tables, and payroll growth rates were updated for changes in recent studies and inflationary adjustments. 2019 - The discount rate was changed from 3.44 percent to 4.09 percent. 2018 - The discount rate was changed from 4.50 percent to 3.44 percent. The health care trend rates were changed to better anticipate short-term and long-term medical increases. The mortality table was updated from RP-2014 adjusted to 2006 to the RP-2014 White Collar Mortality Tables with MP-2016 Generational Improvement Scale. The actuarial cost method was changed from entry age, level dollar to entry age, level percent of pay as prescribed by GASB 75. Changes in Benefit Terms 2022 - No changes noted. 2021 - No changes noted. 2020 - No changes noted. 2019 - No changes noted. 2018 - No changes noted. 99 THIS PAGE IS LEFT BLANK INTENTIONALLY 100 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF BROOKLYN CENTER BROOKLYN CENTER, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2023 101 City of Brooklyn Center, Minnesota Combining Balance Sheet Nonmajor Governmental Funds December 31, 2023 NonmajorNonmajor SpecialCapital RevenueProjectsTotal Assets Cash and investments$ 8,651,643 $ 11,724,067 $ 20,375,710 Receivables Interest 10,902 - 10,902 Current taxes 1,612 - 1,612 Delinquent taxes 29,208 - 29,208 Accounts, net of allowances 40,498 116,469 156,967 Notes 96,241 - 96,241 Leases 433,927 - 433,927 Special assessments - 1,209,537 1,209,537 Intergovernmental 63,164 194,209 257,373 Due from other funds 4,522 - 4,522 Inventories 2,591 - 2,591 Prepaid items - 2,516 2,516 Advances to other funds 62,334 - 62,334 Assets held for resale 434,978 - 434,978 Total Assets$ 9,831,620 $ 13,246,798 $ 23,078,418 Liabilities Accounts payable$ 173,572 $ 1,001,457$ 1,175,029 Contracts payable - 89,654 89,654 Due to other funds 261,246 - 261,246 Due to other governments - 2,011 2,011 Accrued salaries and wages 9,455 - 9,455 Deposits payable 16,133 - 16,133 Unearned revenue 2,042,149 - 2,042,149 Advance from other funds 62,334 - 62,334 Total Liabilities 2,564,889 1,093,122 3,658,011 Deferred Inflows of Resources Unavailable revenue Taxes 29,208 - 29,208 Special assessments - 1,201,725 1,201,725 Deferred lease resources 394,150 - 394,150 Total Deferred Inflows of Resources 423,358 1,201,725 1,625,083 Fund Balances Nonspendable 2,591 2,516 5,107 Restricted 6,788,697 3,941,993 10,730,690 Committed 317,056 8,352,486 8,669,542 Unassigned (264,971) (1,345,044) (1,610,015) Total Fund Balances 6,843,373 10,951,951 17,795,324 Total Liabilities, Deferred Inflows of Resources and Fund Balances$ 9,831,620 $ 13,246,798 $ 23,078,418 102 City of Brooklyn Center, Minnesota Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended December 31, 2023 SpecialCapital RevenueProjectsTotal Revenues Taxes Property taxes$ 508,233$ -$ 508,233 Tax increments 1,032,420 - 1,032,420 Franchise fees - 561,179 561,179 Special assessments - 662,994 662,994 Intergovernmental 2,379,719 3,262,820 5,642,539 Charges for services 333,220 - 333,220 Fines and forfeits 14,578 - 14,578 Investment earnings (loss) 282,940 265,807 548,747 Miscellaneous 106,142 - 106,142 Total Revenues 4,657,252 4,752,800 9,410,052 Expenditures Current General government 136,312 1,800,236 1,936,548 Public safety 145,740 - 145,740 - Public works 286,365 286,365 Parks and recreation 1,295,649 - 1,295,649 Economic development 972,710 - 972,710 Capital outlay Public safety - 82,425 82,425 Public works - 2,861,270 2,861,270 Parks and recreation - 682,785 682,785 Total Expenditures 2,550,411 5,713,081 8,263,492 Excess (Deficiency) of Revenues Over (Under) Expenditures 2,106,841 (960,281) 1,146,560 Other Financing Sources (Uses) Transfers in 688,959 196,543 885,502 Transfers out (1,021,490) (42,345) (1,063,835) Total Other Financing Sources (Uses) (332,531) 154,198 (178,333) Net Change in Fund Balances 1,774,310 (806,083) 968,227 Fund Balances, January 1 5,069,063 11,758,034 16,827,097 Fund Balances, December 31$ 6,843,373$ 10,951,951 $ 17,795,324 103 City of Brooklyn Center, Minnesota Nonmajor Special Revenue Funds Combining Balance Sheet December 31, 2023 202203204205206613277 Housing and EconomicCommunityTax RedevelopmentDevelopmentDevelopmentPoliceRevolvingCenterbrookIncrement AuthorityAuthorityBlock GrantForfeituresLoanGolf CourseDistrict No. 2 Assets Cash and investments $ -$ 1,478,203 $ 42,376$ 120,905 $ 46,164$ - $ 1,226,551 Receivables Interest -10,902 - - - - - Current taxes 1,612 - - - - - - Delinquent taxes - - - - - - - Accounts, net of allowances - 10,491 30,000 - - 7 - Notes - - - - 96,241 - - Leases -433,927 - - - - - Intergovernmental - - - - - - - Due from other funds - 4,522 - - - - - Inventories - - - - - 2,591 - Advances to other funds - - - - - - 62,334 Assets held for resale - 12,000 - - - - 422,978 Total Assets$ 1,612$ 1,950,045 $ 72,376$ 12 0,905$ 14 2,405$ 2,598$ 1, 711,863 Liabilities Accounts payable$ -$ 15,483$ -$ -$ -$ - $ - Due to other funds - - - - - 256,724 - Accrued wages payable - 5,723 - - - 3,732 - Deposits payable - - - 16,133 - - - Unearned revenue - - - - - - - Advances from other funds - - - - - - - Total Liabilities - 21,206 - 16,133 - 260,456 - Deferred Inflows of Resources Unavailable revenue Taxes - - - - - - - Deferred lease resources - 394,150 - - - - - Total Deferred Inflows of Resources - 394,150 - - - - - Fund Balances Nonspendable Inventories - - - - - 2,591 - Restricted Tax increment financing - - - - - - 1,711,863 Economic development 1,612 1,534,689 72,376 - 142,405 - Law enforcement enhancements - - - 104,772 - - - Opioids - - - - - - - Community prevention, health and safety - - - - - - - Committed Cable communications - - - - - - - Community recreation - - - - - - - Unassigned - - - - - (260,449) - Total Fund Balances 1,612 1,534,689 72,376 104,772 142,405 (257,858) 1,711,863 Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 1,612$ 1,950,045 $ 72,376$ 12 0,905$ 14 2,405$ 2,598$ 1, 711,863 104 280281282283284285286287292 TaxTaxTaxTaxTaxTaxCityOpioid American IncrementIncrementIncrementIncrementIncrementIncrementInitiativeSettlement Rescue District No. 5District No. 6District No. 7District No. 8District No. 9District No. 10GrantsFunds Plan ActTotal $ 615,227 $ 36,237$ 451,317 $ 128,534 $ - $ -$ 2,244,478$ 77,689 $ 2,183,962$ 8,651,643 - - - - - - - - - 10,902 - - - - - - - - - 1,612 - - 29,208 - - - - - - 29,208 - - - - - - - - - 40,498 - - - - - - - - - 96,241 - - - - - - - - - 433,927 - - - - - - 63,164 - - 63,164 - - - - - - - - - 4,522 - - - - - - - - - 2 ,591 - - - - - - - - - 62,334 - - - - - - - - - 434,978 $ 615,227 $ 36,237$ 480,525 $ 12 8,534$ - $ -$ 2,307,642$ 77 ,689$ 2,183,962$ 9, 831,620 $ -$ -$ -$ -$ - $ -$ 16,276 $ - $ 141,813$ 173,572 - - - - 2,089 2,433 - - - 261,246 - - - - - - - - - 9,455 - - - - - - - - - 16,133 - - - - - - - - 2,042,149 2,042,149 62,334 - - - - - - - - 62,334 62,334 - - - 2,089 2,433 16,276 - 2,183,962 2,564,889 - - 29,208 - - - - - - 29,208 - - - - - - - - - 394,150 - - 29,208 - - - - - - 423,358 - - - - - - - - - 2,591 552,893 36,237 451,317 128,534 - - - - - 2,880,844 - - - - - - - - - 1,751,082 - - - - - - - - - 104,772 - - - - - - - 77,689 - 77,689 - - - - - - 1,974,310 - - 1,974,310 - - - - - - 170,907 - - 170,907 - - - - - - 146,149 - - 146,149 - - - - (2,089) (2,433) - - - (264,971) 552,893 36,237 451,317 128,534 (2,089) (2,433) 2,291,366 77,689 - 6,843,373 $ 615,227 $ 36,237$ 480,525 $ 12 8,534$ - $ -$ 2,307,642$ 77 ,689$ 2,183,962$ 9, 831,620 105 City of Brooklyn Center, Minnesota Nonmajor Special Revenue Funds Combining Schedule of Revenues, Expenditures and Changes in Fund Balances (Continued on the Following Pages) For the Year Ended December 31, 2023 202203204205206613277 Housing and EconomicCommunityTax RedevelopmentDevelopmentDevelopmentPoliceRevolvingCenterbrookIncrement AuthorityAuthorityBlock GrantForfeituresLoanGolf CourseDistrict No. 2 Revenues Taxes Property taxes$ 508,233$ -$ -$ -$ -$ -$ - Tax increments - - - - - - - Intergovernmental - - - - - - - Charges for services - - - - - 315,465 - Fines and forfeits - - - 14,578 - - - Investment earnings (loss) - 62,882 - 2,704 973 - 46,727 Miscellaneous - - - - 160 1,670 1,203 Total Revenues 508,233 62,882 - 17,282 1,133 317,135 47,930 Expenditures Current General government - - - - - - - Public safety - - - - - - - Parks and recreation - - - - - 430,848 - Economic development - 619,261 - - - - 993 Total Expenditures - 619,261 - - - 430,848 993 Excess (Deficiency) of Revenues Over (Under) Expenditures 508,233 (556,379) - 17,282 1,133 (113,713) 46,937 Other Financing Sources (Uses) Transfers in - 508,959 - - 100,00080,000 - Transfers out (508,959) (100,000) - - - - - Total Other Financing Sources (Uses) (508,959) 408,959 - - 100,000 80,000 - Net Change in Fund Balances (726) (147,420) - 17,282 101,133 (33, 713) 46,937 Fund Balances, January 1 2,338 1,682,109 72,376 87,490 41,272 (224,145) 1,664,926 Fund Balances, December 31$ 1,612$ 1,534,689$ 72,376$ 104,772$ 142,405$ (257,858)$ 1,711,863 106 280281282283284285286287292 TaxTaxTaxTaxTaxTaxCityOpioid American IncrementIncrementIncrementIncrementIncrementIncrementInitiativeSettlement Rescue District No. 5District No. 6District No. 7District No. 8District No. 9District No. 10GrantsFundsPlan ActTotal $ -$ -$ -$ -$ -$ -$ -$ -$ -$ 508,233 498,472133,879 143,246 256,823 - - - - - 1,032,420 - - - - - - 1,587,838 - 791,881 2, 379,719 - - - - - - 17,755 - - 333,220 - - - - - - - - - 14,578 39,127 306 16,860 3,650 - - 63,322 1,060 45,329 282,940 - - - - - - 36,620 66,489 - 106,142 537,599 134,185 160,106 260,473 - - 1,705,535 67,549 837,210 4, 657,252 - - - - - - 136,312 - - 136,312 - - - - - - 145,740 - - 145,740 - - - - - - 52,591 - 812,210 1,295,649 5,759 152,910 13,285 175,980 2,089 2,433 - - - 972,710 5,759 152,910 13,285 175,980 2,089 2,433 334,643 - 812,210 2, 550,411 531,840 (18,725) 146,821 84,493 (2,089) (2,433) 1,370, 892 67,549 25,000 2, 106,841 - - - - - - - - - 688,959 (358,333) - - - - - (29,198) - (25,000) (1,021,490) (358,333) - - - - - (29,198) - (25,000) (332,531) 173,507 (18,725) 146,821 84,493 (2,089) (2,433) 1,341, 694 67,549 - 1,774,310 379,386 54,962 304,496 44,041 - - 949,672 10,140 - 5,069,063 $ 552,893$ 36,237$ 451,317$ 128,534$ (2, 089)$ (2, 433)$ 2,291,366$ 77,689 $ -$ 6,843,373 107 City of Brooklyn Center, Minnesota Nonmajor Capital Projects Funds Combining Balance Sheet December 31, 2023 401402406407 Municipal State AidCapitalSpecial CapitalforReserveAssessment ImprovementsConstructionEmergencyConstruction Assets Cash and investments $ 1,700,112$ 3,941,993$ (543,963)$ 96,432 Receivables Accounts, net of allowances - - - - Special assessments - - - 1,209,537 Intergovernmental 194,209 - - - Prepaid items - - - 2,516 Total Assets$ 1,894,321$ 3,941,993$ (543,963)$ 1,308,485 Liabilities Accounts payable $ 165,902$ -$ -$ 832,561 Contracts payable - - - 70,753 Due to other governments - - - 2,011 Total Liabilities 165,902 - - 905,325 Deferred Inflows of Resources Unavailable revenue Special assessments - - - 1,201,725 Fund Balances Nonspendable Prepaid items - - - 2,516 Restricted Municipal street projects - 3,941,993 - - Committed Capital projects 1,728,419 - - - Technology improvements - - - - Unassigned - - (543,963) (801,081) Total Fund Balances 1,728,419 3,941,993 (543,963) (798,565) Total Liabilities, Deferred Inflows of Resources and Fund Balances$ 1,894,321$ 3,941,993$ (543,963)$ 1,308,485 108 409410 Street ReconstructionTechnologyTotal $ 6,188,105$ 341,388$ 11,724,067 116,469 - 116,469 - - 1,209,537 - - 194,209 - - 2,516 $ 6,304,574$ 341,388$ 13,246,798 $ 2,994$ -$ 1,001,457 18,901 - 89,654 - - 2,011 21,895 - 1,093,122 - - 1,201,725 - - 2,516 - - 3,941,993 6,282,679 - 8,011,098 - 341,388 341,388 - - (1,345,044) 6,282,679 341,388 10,951,951 $ 6,304,574$ 341,388$ 13,246,798 109 City of Brooklyn Center, Minnesota Nonmajor Capital Projects Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances For the Year Ended December 31, 2023 401402406407 Municipal State AidCapitalSpecial CapitalforReserveAssessment ImprovementsConstructionEmergencyConstruction Revenues Franchise fees$ -$ -$ -$ - Special assessments - - - 403,768 Intergovernmental 1,742,697 1,520,123 - - Investment earnings 66,750 168,385 10,772 7,327 Total Revenues 1,809,447 1,688,508 10,772 411,095 Expenditures Current General government - - 1,743,891 - Public works - 286,365 - - Capital outlay Public safety 82,425 - - - Public works 779,773 - - 2,078,503 Parks and recreation 682,785 - - - Total Expenditures 1,544,983 286,365 1,743,891 2,078,503 Excess (Deficiency) of Revenues Over (Under) Expenditures 264,464 1,402,143 (1,733,119) (1,667,408) Other Financing Sources (Uses) Transfers in - - 96,543 - Transfers out - (42,345) - - Total Other Financing Sources (Uses) - (42,345) 96,543 - Net Change in Fund Balances 264,464 1,359,798 (1,636,576) (1,667,408) Fund Balances, January 1 1,463,955 2,582,195 1,092,613 868,843 Fund Balances, December 31$ 1,728,419$ 3,941,993$ (543,963)$ (798,565) 110 409410 Street ReconstructionTechnologyTotal $ 561,179$ -$ 561,179 259,226 - 662,994 - - 3,262,820 - 12,573 265,807 820,405 12,573 4,752,800 - 56,345 1,800,236 - - 286,365 - - 82,425 2,994 - 2,861,270 - - 682,785 2,994 56,345 5,713,081 817,411 (43,772) (960,281) - 100,000 196,543 - - (42,345) - 100,000 154,198 817,411 56,228 (806,083) 5,465,268 285,160 11,758,034 $ 6,282,679$ 341,388$ 10,951,951 111 City of Brooklyn Center, Minnesota General Fund Comparative Balance Sheets December 31, 2023 and 2022 20232022 Assets Cash and temporary investments$ 14,090,769$ 13,957,331 Receivables Interest 1,523 886 Current taxes 67,247 97,485 Delinquent taxes 69,142 280,383 Accounts, net of allowances 235,254 68,928 Leases 23,455 34,797 Special assessments 232,681 148,710 Intergovernmental 10,445 12,524 Due from other funds 671,122 509,182 Inventories 68,944 21,800 Prepaid items 119,484 54,685 Total Assets$ 15,590,066$ 15,186,711 Liabilities Accounts payable270,182419,905 Due to other governments130,352192,052 Accrued wages payable692,922667,890 Deposits payable579,616404,678 Total Liabilities 1,673,072 1,685,200 Deferred Inflows of Resources Unavailable revenue Property taxes69,142280,383 Special assessments229,046148,428 Deferred lease resources 22,987 34,481 Total Deferred Inflows of Resources 321,175 463,292 Fund Balances Nonspendable 188,428 76,485 Unassigned 13,407,391 12,961,734 Total Fund Balances 13,595,819 13,038,219 Total Liabilities, Deferred Inflow of Resources and Fund Balances$ 15,590,066$ 15,186,711 112 City of Brooklyn Center, Minnesota General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual (Continued on Following Pages) For the Year Ended December 31, 2023 With Comparative Actual Amounts for Year Ended December 31, 2022 2023 2022 Budgeted Amounts ActualVariance withActual OriginalFinalAmountsFinal BudgetAmounts Revenues Taxes Property taxes$ 20,874,995$ 20,874,995$ 20,938,324$ 63,329$ 19,400,899 Penalties and interest 12,000 12,000 50,716 38,716 8,200 Lodging tax 1,100,000 1,100,000 898,037 (201,963) 895,883 Total taxes 21,986,995 21,986,995 21,887,077 (99,918) 20,304,982 Special assessments 40,000 40,000 40,774 774 34,393 Licenses and permits Liquor and beer licenses 44,600 44,600 46,805 2,205 45,525 Building permits 1,700,000 1,700,000 414,941 (1,285,059) 270,259 Mechanical permits 45,000 45,000 134,493 89,493 79,843 Sewer and water permits 3,000 3,000 1,990 (1,010) 2,040 Plumbing permits 65,000 65,000 64,253 (747) 78,023 Garbage licenses 3,400 3,400 2,225 (1,175) 2,350 Mechanical licenses 10,000 10,000 9,730 (270) 8,300 Service station licenses 2,550 2,550 1,330 (1,220) 3,070 Vehicle dealer licenses 1,500 1,500 1,500 - 1,500 Cigarette licenses 3,000 3,000 2,325 (675) 3,840 Sign permits 2,000 2,000 2,101 101 1,385 Rental dwelling licenses 200,000 200,000 301,938 101,938 271,758 Amusement licenses - - 15 15 105 Electrical permits 70,000 70,000 85,652 15,652 81,328 ROW permits 10,000 10,000 7,550 (2,450) 18,850 Miscellaneous 8,425 8,425 4,135 (4,290) 4,280 Total licenses and permits 2,168,475 2,168,475 1,080,983 (1,087,492) 872,456 Intergovernmental Federal CARES - - - - 113,076 Other 48,300 48,300 - (48,300) - SHSP - - - - 150,000 State Local government aid 1,250,185 1,250,185 1,250,185 - 1,186,809 Police pension aid 440,000 440,000 366,611 (73,389) 397,319 Fireperson pension aid 190,000 190,000 223,177 33,177 206,560 Police training 48,000 48,000 - (48,000) 25,706 Other 15,000 15,000 130,253 115,253 12,048 Local Miscellaneous 500,000 500,000 3,891 (496,109) - Total intergovernmental 2,491,485 2,491,485 1,974,117 (517,368) 2,091,518 Charges for services General government 79,500 79,500 155,645 76,145 152,739 Public safety 9,000 9,000 22,572 13,572 13,883 Public works 500 500 4,500 4,000 5,600 Community development 4,500 4,500 24,038 19,538 17,459 Recreation 155,500 155,500 153,002 (2,498) 134,428 Community center 281,500 281,500 296,338 14,838 247,401 Total charges for services 530,500 530,500 656,095 125,595 571,510 Fines and forfeits 161,000 161,000 333,467 172,467 175,901 Investment earnings (loss) 106,600 106,600 510,641 404,041 (403,158) Miscellaneous Other 193,242 193,242 304,285 111,043 159,983 Total Revenues 27,678,297 27,678,297 26,787,439 (890,858) 23,807,585 113 City of Brooklyn Center, Minnesota General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual (Continued) For the Year Ended December 31, 2023 With Comparative Actual Amounts for Year Ended December 31, 2022 2023 2022 Budgeted Amounts ActualVariance withActual OriginalFinalAmountsFinal BudgetAmounts Expenditures Current General government Mayor and Council Personal services$ 59,623$ 59,623$ 58,323$ 1,300$ 60,696 Supplies 1,350 1,350 1,914 (564) 7,565 Other services and charges 122,840 122,840 128,042 (5,202) 66,582 Total Mayor and Council 183,813 183,813 188,279 (4,466) 134,843 Administrative (Manager, Clerk, HR) offices Personal services 894,441 894,441 873,699 20,742 818,764 Supplies 8,750 8,750 21,958 (13,208) 3,446 Other services and charges 242,840 242,840 219,576 23,264 151,876 Total administrative (Manager, Clerk, HR) offices 1,146,031 1,146,031 1,115,233 30,798 974,086 Elections and voter registration Personal services 102,910 102,910 75,950 26,960 134,954 Supplies 3,500 3,500 375 3,125 4,544 Other services and charges 17,475 17,475 12,381 5,094 24,937 Total elections and voter registration 123,885 123,885 88,706 35,179 164,435 Finance Personal services 682,210 682,210 576,039 106,171 613,645 Supplies 7,700 7,700 4,726 2,974 2,230 Other services and charges 63,375 63,375 93,621 (30,246) 12,223 Total finance 753,285 753,285 674,386 78,899 628,098 Assessing Other services and charges 275,500 275,500 268,916 6,584 263,704 Legal Other services and charges 470,000 470,000 604,933 (134,933) 475,825 Communications and engagements Personal services 401,661 401,661 246,665 154,996 270,164 Supplies 5,900 5,900 - 5,900 5,183 Other services and charges 219,720 219,720 170,437 49,283 197,000 Total communications and engagements 627,281 627,281 417,102 210,179 472,347 Government buildings Personal services 476,489 476,489 438,337 38,152 369,045 Supplies 87,800 87,800 82,600 5,200 83,632 Other services and charges 656,859 656,859 645,273 11,586 718,589 Total government buildings 1,221,148 1,221,148 1,166,210 54,938 1,171,266 Information technology Personal services 380,897 380,897 323,302 57,595 378,415 Supplies 16,700 16,700 15,872 828 48,662 Other services and charges 469,584 469,584 365,057 104,527 347,125 Total information technology 867,181 867,181 704,231 162,950 774,202 Total general government 5,668,124 5,668,124 5,227,996 440,128 5,058,806 114 City of Brooklyn Center, Minnesota General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual (Continued) For the Year Ended December 31, 2023 With Comparative Actual Amounts for Year Ended December 31, 2022 2023 2022 Budgeted Amounts ActualVariance withActual OriginalFinalAmountsFinal BudgetAmounts Expenditures (Continued) Current (Continued) Public safety Community prevention, health and safety Personal services$ 243,607$ 243,607$ 183,910$ 59,697$ 100,821 Supplies 7,300 7,300 2,280 5,020 2,125 Other services and charges 817,000 817,000 107,219 709,781 56,587 Total community prevention, health and safety 1,067,907 1,067,907 293,409 774,498 159,533 Police protection Personal services 8,644,977 8,644,977 7,995,503 649,474 6,798,190 Supplies 291,700 291,700 333,011 (41,311) 239,327 Other services and charges 1,844,214 1,844,214 1,920,354 (76,140) 1,632,061 Total police protection 10,780,891 10,780,891 10,248,868 532,023 8,669,578 Fire protection Personal services 1,189,695 1,189,695 1,202,377 (12,682) 1,134,162 Supplies 104,800 104,800 106,643 (1,843) 65,450 Other services and charges 800,044 800,044 784,093 15,951 656,200 Total fire protection 2,094,539 2,094,539 2,093,113 1,426 1,855,812 Protective inspection Personal services 287,729 287,729 243,212 44,517 240,342 Supplies - - 125 (125) 632 Other services and charges 12,700 12,700 40,065 (27,365) 23,753 Total protective inspection 300,429 300,429 283,402 17,027 264,727 Building and community standards Personal services 1,151,631 1,151,631 1,008,988 142,643 1,095,251 Supplies 9,150 9,150 6,002 3,148 6,662 Other services and charges 156,245 156,245 234,145 (77,900) 207,277 Total building and community standards 1,317,026 1,317,026 1,249,135 67,891 1,309,190 Emergency preparedness Supplies 19,600 19,600 11,420 8,180 303 Other services and charges 16,500 16,500 9,958 6,542 2,836 Total emergency preparedness 36,100 36,100 21,378 14,722 3,139 Total public safety 15,596,892 15,596,892 14,189,305 1,407,587 12,261,979 Public works Engineering department Personal services 1,109,988 1,109,988 844,988 265,000 724,935 Supplies 9,815 9,815 9,659 156 19,811 Other services and charges 75,885 75,885 74,572 1,313 115,756 Total engineering department 1,195,688 1,195,688 929,219 266,469 860,502 Street department Personal services 803,761 803,761 969,030 (165,269) 855,242 Supplies 171,950 171,950 162,464 9,486 204,409 Other services and charges 859,731 859,731 852,207 7,524 667,957 Total street department 1,835,442 1,835,442 1,983,701 (148,259) 1,727,608 Total public works 3,031,130 3,031,130 2,912,920 118,210 2,588,110 115 City of Brooklyn Center, Minnesota General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual (Continued) For the Year Ended December 31, 2023 With Comparative Actual Amounts for Year Ended December 31, 2022 2023 2022 Budgeted Amounts ActualVariance withActual OriginalFinalAmountsFinal BudgetAmounts Expenditures (Continued) Current (Continued) Community services Other services and charges$ 187,000$ 187,000$ 180,657$ 6,343$ 70,958 Parks and recreaction Recreaction programs Personal services 873,962 873,962 1,017,893 (143,931) 973,416 Supplies 48,500 48,500 62,242 (13,742) 54,223 Other services and charges 162,004 162,004 210,723 (48,719) 237,587 Total recreation programs 1,084,466 1,084,466 1,290,858 (206,392) 1,265,226 Community center Personal services 1,019,542 1,019,542 716,993 302,549 561,414 Supplies 81,800 81,800 75,384 6,416 60,801 Other services and charges 245,650 245,650 217,216 28,434 205,498 Total community center 1,346,992 1,346,992 1,009,593 337,399 827,713 Park maintenance Personal services 1,042,000 1,042,000 1,054,929 (12,929) 878,167 Supplies 118,950 118,950 86,079 32,871 110,169 Other services and charges 577,352 577,352 557,190 20,162 537,993 Total park maintenance 1,738,302 1,738,302 1,698,198 40,104 1,526,329 Total parks and recreation 4,169,760 4,169,760 3,998,649 171,111 3,761,762 Economic development Convention bureau Other services and charges 475,000 475,000 524,997 (49,997) 368,875 Community development administration Personal services 274,855 274,855 145,952 128,903 220,139 Supplies 5,300 5,300 1,618 3,682 4,452 Other services and charges 54,952 54,952 36,796 18,156 61,430 Total community development administration 335,107 335,107 184,366 150,741 286,021 Total economic development 810,107 810,107 709,363 100,744 654,896 Nondepartmental Unallocated Personal services (600,000) (600,000) - (600,000) 61,554 Supplies 13,000 13,000 14,435 (1,435) 9,905 Other services and charges 597,916 597,916 545,290 52,626 381,363 Total nondepartmental 10,916 10,916 559,725 (548,809) 452,822 Total Current 29,473,929 29,473,929 27,778,615 1,695,314 24,849,333 116 City of Brooklyn Center, Minnesota General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual (Continued) For the Year Ended December 31, 2023 With Comparative Actual Amounts for Year Ended December 31, 2022 2023 2022 Budgeted Amounts ActualVariance withActual OriginalFinalAmountsFinal BudgetAmounts Expenditures (Continued) Capital Outlay General government$ 25,000$ 25,000$ -$ 25,000$ 13,995 Public works 32,000 32,000 581 31,419 13,138 Parks and recreation - - 35,535 (35,535) - Economic development - - 6,825 (6,825) 159,815 Total Capital Outlay 57,000 57,000 42,941 14,059 306,920 Total Expenditures 29,530,929 29,530,929 27,821,556 1,709,373 25,156,253 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,852,632) (1,852,632) (1,034,117) (818,515) (1,348,668) Other Financing Sources (Uses) Transfers in Administrative services reimbursed 2,032,632 2,032,632 1,771,717 260,915 1,437,048 Transfers out (180,000) (180,000) (180,000) - (210,000) Total Other Financing Sources (Uses) 1,852,632 1,852,632 1,591,717 260,915 1,227,048 Net Change in Fund Balances - - 557,600 (557,600) (121,620) Fund Balances, January 1 13,038,219 13,038,219 13,038,219 - 13,159,839 Fund Balances, December 31$ 13,038,219$ 13,038,219$ 13,595,819$ (557,600)$ 13,038,219 117 City of Brooklyn Center, Minnesota Debt Service Funds Combining Balance Sheet (Continued on the Following Pages) December 31, 2023 316317318319320321 GeneralGeneralGeneralGeneralGeneralGeneral ObligationObligationObligationObligationObligationObligation ImprovementImprovementImprovementImprovementImprovementImprovement Bonds 2013BBonds 2015ABonds 2016ABonds 2017ABonds 2018ABonds 2019A Assets Cash and investments$ 99,797 $ 556,881$ 266,294$ 733,036$ 825,217$ 1,075,647 Receivables Current taxes - 820 687 908 791 612 Special assessments 4,628 154,316 - 249,359 579,022 836,261 Total Assets$ 104,425$ 712,017$ 266,981$ 983,303$ 1,405,030$ 1,912,520 Liabilities Due to other governments$ 533$ 790$ -$ 538$ 903$ 1,583 Deferred Inflows of Resources Unavailable revenue Special assessments 4,628 153,347 - 248,486 576,562 835,838 Fund Balances Restricted Debt service 99,264 557,880 266,981 734,279 827,565 1,075,099 Total Liabilities, Deferred Inflows of Resources and Fund Balances$ 104,425$ 712,017$ 266,981$ 983,303$ 1,405,030$ 1,912,520 118 322323324372373375 GeneralGeneralGeneral ObligationObligationObligationTaxTaxTax ImprovementImprovementImprovementIncrementIncrementIncrement Bonds 2020ABonds 2021ABonds 2022ABonds 2016CBonds 2016BBonds 2013ATotal $ 245,203$ 738,131$ 525,296$ 1,650$ 1,550$ 800$ 5,069,502 765 684 535 - - - 5,802 - 901,959 259,917 - - - 2,985,462 $ 245,968$ 1,640,774$ 785,748$ 1,650$ 1,550$ 800$ 8,060,766 $ 728$ -$ 418$ -$ -$ -$ 5,493 - 892,286 258,941 - - - 2,970,088 245,240 748,488 526,389 1,650 1,550 800 5,085,185 $ 245,968$ 1,640,774$ 785,748$ 1,650$ 1,550$ 800$ 8,060,766 119 City of Brooklyn Center, Minnesota Debt Service Funds Combining Schedule of Revenues, Expenditures and Changes in Fund Balances (Continued on the Following Pages) For the Year Ended December 31, 2023 316317318319320321 GeneralGeneralGeneralGeneralGeneralGeneral ObligationObligationObligationObligationObligationObligation ImprovementImprovementImprovementImprovementImprovementImprovement Bonds 2013BBonds 2015ABonds 2016ABonds 2017ABonds 2018ABonds 2019A Revenues Taxes Property taxes$ -$ 257,510$ 216,285$ 282,765$ 252,001$ 188,315 Special assessments 56,445 88,339 - 85,301 178,674 217,341 Investment earnings (loss) 7,596 18,781 8,269 26,119 28,985 40,289 Total Revenues 64,041 364,630 224,554 394,185 459,660 445,945 Expenditures Debt service Principal - 345,537 185,000 370,000 365,000 340,000 Interest - 29,151 17,350 58,438 104,975 131,550 Fiscal agent fees 534 990 700 1,238 1,503 2,183 Total Expenditures 534 375,678 203,050 429,676 471,478 473,733 Excess (Deficiency) of Revenues Over (Under) Expenditures 63,507 (11,048) 21,504 (35,491) (11,818) (27,788) Other Financing Sources (Uses) Transfers in - - - - - - Net Change in Fund Balances 63,507 (11,048) 21,504 (35,491) (11,818) (27,788) 769,770 8 39,383 1,102,887 Fund Balances, January 1 35,757 568,928 245,477 Fund Balances, December 31$ 99,264 $ 557,880$ 266,981$ 734,279$ 827,565$ 1,075,099 120 322323324372373375 GeneralGeneralGeneral ObligationObligationObligationTaxTaxTax ImprovementImprovementImprovementIncrementIncrementIncrement Bonds 2020ABonds 2021ABonds 2022ABonds 2016CBonds 2016BBonds 2013ATotal $ 240,598$ 209,950$ 167,420$ -$ -$ -$ 1,814,844 - 187,406 115,554 - - - 929,060 11,090 23,253 10,497 - - - 174,879 251,688 420,609 293,471 - - - 2,918,783 195,000 250,000 - 305,000 - - 2,355,537 30,550 92,850 62,778 3,508 46,825 - 577,975 1,328 600 818 700 700 - 11,294 226,878 343,450 63,596 309,208 47,525 - 2,944,806 24,810 77,159 229,875 (309,208) (47,525) - (26,023) - - - 310,008 48,325 - 358,333 24,810 77,159 229,875 800 800 - 332,310 850 750 800 4,752,875 220,430 671,329 296,514 $ 245,240$ 748,488$ 526,389$ 1,650$ 1,550$ 800$ 5,085,185 121 City of Brooklyn Center, Minnesota Statement of Net Position Nonmajor Proprietary Funds December 31, 2023 Business-type Activities - Enterprise Funds 609408 l 617652653 Municipal Heritage CenterStreet LightRecycling Liquor of Brooklyn CenterUtilityUtilityTotal Assets Current Assets Cash and investments $ 1,066,343$ (182,660) $ 535,916$ 78,526$ 1,498,125 Receivables Accounts, net of allowances 9,467 136,374 113,507 84,464 343,812 Inventories 975,419 37,881 - - 1,013,300 Prepaid items 17,310 12,573 - - 29,883 Total Current Assets 2,068,539 4,168 649,423 162,990 2,885,120 Noncurrent Assets Capital assets Land 594,298 1,493,300 - - 2,087,598 Land improvements - 570,769 - - 570,769 Building and improvements 2,952,675 13,057,343 - - 16,010,018 Machinery and equipment 106,913 740,815 - - 847,728 Street light systems - - 2,980,836 - 2,980,836 Less accumulated depreciation/amortization (546,083) (13,099,405) (971,072) - (14,616,560) Total Capital Assets (Net of Accumulated Depreciation/Amortization) 3,107,803 2,762,822 2,009,764 - 7,880,389 Total Assets 5,176,342 2,766,990 2,659,187 162,990 10,765,509 Liabilities Current Liabilities 179,692 29,940 8,827 - 218,459 Accounts payable Contracts payable - 180,225 - - 180,225 Accrued salaries and wages payable 43,552 38,126 - - 81,678 Accrued interest payable 29,416 - - - 29,416 Due to other governments 63,739 23,541 - - 87,280 Deposits payable - 373,596 - - 373,596 Unearned revenue 89,141 - - - 89,141 Bonds payable 145,000 - - - 145,000 Total Current Liabilities 550,540 645,428 8,827 - 1,204,795 Noncurrent Liabilities Bonds payable 2,167,845 - - - 2,167,845 Total Liabilities 2,718,385 645,428 8,827 - 3,372,640 Net Position Net investment in capital assets 794,958 2,582,597 2,009,764 - 5,387,319 Unrestricted 1,662,999 (461,035) 640,596 162,990 2,005,550 Total Net Position $ 2,457,957$ 2,121,562$ 2,650,360$ 162,990$ 7,392,869 122 City of Brooklyn Center, Minnesota Statement of Revenues, Expenses and Changes in Net Position Nonmajor Proprietary Funds For the Year Ended December 31, 2023 Business-type Activities - Enterprise Funds 609408 l 617652653 Municipal Heritage CenterStreet LightRecycling Liquor of Brooklyn CenterUtilityUtilityTotal Operating Revenues Sales and user fees$ 6,565,245 $ 3,768,441 $ - $ - $ 10,333,686 Cost of sales (4,619,717) (1,966,963) - - (6,586,680) Gross Profit 1,945,528 1,801,478 - - 3,747,006 Charges for services - - 479,509 419,913 899,422 Total Operating Revenues 1,945,528 1,801,478 479,509 419,913 4,646,428 Operating Expenses Personal services 1,183,964 1,087,911 - - 2,271,875 Supplies 40,244 122,033 96,849 - 259,126 Other services 378,266 834,766 130,084 535,248 1,878,364 Insurance 42,561 53,491 2,225 2,745 101,022 Utilities 62,019 210,074 228,322 - 500,415 Rent 147,520 - - - 147,520 Depreciation/amortization 118,747 224,397 195,696 - 538,840 Total Operating Expenses 1,973,321 2,532,672 653,176 537,993 5,697,162 Operating Income (Loss) (27,793) (731,194) (1 73,667) (1 18,080) (1,050,734) Nonoperating Revenues (Expenses) Interest earnings 40,342 57,924 24,411 4,754 127,431 Gain (loss) on sale/disposal of capital assets (69,236) - - - (69,236) Gain on lease write off 69,236 - - - 69,236 Other revenue 3,466 23,794 65,341 - 92,601 Interest and other costs (58,686) - - - (58,686) Total Nonoperating Revenues (Expenses) (14,878) 81,718 89,752 4,754 161,346 Change in Net Position (42,671) (649,476) (83,915) (113,326) (889,388) Net Position, January 1 2,500,628 2,771,038 2,734,275 276,316 8,282,257 Net Position, December 31$ 2,457,957 $ 2,121,562 $ 2, 650,360$ 16 2,990$ 7, 392,869 123 City of Brooklyn Center, Minnesota Statement of Cash Flows Nonmajor Proprietary Funds For the Year Ended December 31, 2023 Business-type Activities 609408 l 617652653 Municipal Heritage CenterStreet LightRecycling Liquor of Brooklyn CenterUtilityUtilityTotal Cash Flows from Operating Activities Receipts from customers and users$ 6,630,408 $ 3,805,434 $ 443,055 $ 414,073 $ 11,292,970 Payments to suppliers and vendors (5,339,051) (3,166,701) (458,489) (571,503) (9,535,744) Payments to and on behalf of employees (1,177,417) (1,080,932) - - (2,258,349) Other receipts 3,466 23,794 65,341 - 92,601 Net Cash Provided (Used) by Operating Activities 117,406 (418,405) 49,907 (157,430) (408,522) Cash Flows from Capital and Related Financing Activities Principal paid on long-term debt (140,000) - - - (140,000) Interest paid on long-term debt (74,851) - - - (74,851) Net Cash Used by Capital and Related Financing Activities (214,851) - - - (214,851) Cash Flows from Investing Activities Interest received on cash and investments 40,342 57,924 24,411 4,754 127,431 Net Increase (Decrease) in Cash and Cash Equivalents (57,103) (360,481) 74,318 (152,676) (495,942) Cash and Cash Equivalents, January 1 1,123,446 177,821 461,598 231,202 1,994,067 Cash and Cash Equivalents, December 31$ 1,066,343 $ (182,660)$ 535,91 6$ 78,5 26$ 1,498,125 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating income (loss)$ (27,793)$ (731,194)$ (173,667)$ (118,080) (1,050,734) Adjustments to reconcile operating income to net cash provided (used) by operating activities Depreciation/amortization 118,747 224,397 195,696 - 538,840 Other income (expense) related to operations 3,466 23,794 65,341 - 92,601 (Increase) decrease in assets Accounts receivable (1,330) 10,435 (36,454) (5,840) (33,189) Intergovernmental - 18,467 - - 18,467 Prepaid items (5,162) 3,425 - - (1,737) Inventories (49,924) (1,224) - - (51,148) Increase (decrease) in liabilities Accounts payable 8,992 (27,956) (1,009) - (19,973) Contract payable - 39,554 - - 39,554 Due to other governments (2,630) 6,827 - (33,510) (29,313) Accrued salaries and wages 6,547 6,979 - - 13,526 Deposits payable - 8,091 - - 8,091 Unearned revenue 66,493 - - - 66,493 Increase (decrease) in deferred inflows of resources - - Deferred pension resources 117,406 (418,405) 49,907 Net Cash Provided (Used) by Operating Activities$ 117,406 $ (418,405)$ 49,907$ (157,430)$ (408,522) Schedule of Noncash Investing Capital and Financing Activities Book value of disposed/traded of capital assets$ 69,236$ -$ -$ -$ 69,236 Gain on lease write off$ 69,236$ -$ -$ -$ 69,236 Amortization of bond premiums$ 13,987$ -$ -$ -$ 13,987 124 City of Brooklyn Center, Minnesota Internal Service Funds Combining Statement of Net Position December 31, 2023 701703704905906 CentralEE RetirementEE CompPension -Pension - Garage Benefit Absences GERP PEPFP Total Assets Current Assets Cash and investments $ 3,816,736 $ -$ 1,372,807 $ -$ -$ 5,189,543 Receivables Accounts, net of allowances - 49,812 - - - 49,812 Inventories40,212 - - - - 40,212 Prepaid items 4,682 - - - - 4,682 Total Current Assets 3,861,630 49,812 1,372,807 - - 5,284,249 Noncurrent Assets Capital assets Building and improvements166,108 - - - - 166,108 Machinery and equipment13,262,340 - - - - 13,262,340 Construction in progress110,000 - - - - 110,000 Less accumulated depreciation (8,301,247) - - - - (8,301,247) Total Capital Assets (Net of Accumulated Depreciation) 5,237,201 - - - - 5,237,201 Total Assets 9,098,831 49,812 1,372,807 - - 10,521,450 Deferred Outflows of Resources Deferred pension resources - - - 1,755,8999,620,145 11,376,044 Deferred other postemployment benefit resources - 1,104,339 - - - 1,104,339 Total Deferred Outflows of Resources - 1,104,339 - 1,755,899 9,620,145 12,480,383 Liabilities Current Liabilities Accounts payable111,726 - - - - 111,726 Accrued salaries and wages payable15,479 - - - - 15,479 Due to other funds - 414,398 - - - 414,398 Compensated absences payable - - 137,281 - - 137,281 Total Current Liabilities 127,205 414,398 137,281 - - 678,884 Noncurrent Liabilities Compensated absences payable - - 1,235,526 - - 1,235,526 Total other postemployment benefits liability - 2,668,769 - - - 2,668,769 Net pension liability - - - 6,883,6145,962,882 12,846,496 Total Noncurrent Liabilities - 2,668,769 1,235,526 6,883,614 5,962,882 16,750,791 Total Liabilities 127,205 3,083,167 1,372,807 6,883,614 5,962,882 17,429,675 Deferred Inflows of Resources Deferred pension resources - - - 2,173,2949,650,505 11,823,799 Deferred other postemployment benefit resources - 883,928 - - - 883,928 Total Deferred Inflows of Resources - 883,928 - 2,173,294 9,650,505 12,707,727 Net Position Investment in capital assets 5,237,201 - - - - 5,237,201 Unrestricted 3,734,425 (2,812,944) - (7,301,009) (5,993,242) (12,372,770) Total Net Position $ 8,971,626 $ (2,812,944)$ -$ (7,301,009)$ (5,993,242)$ (7,135,569) 125 City of Brooklyn Center, Minnesota Internal Service Funds Combining Statement of Revenues, Expenses and Changes in Net Position For the Year Ended December 31, 2023 701703704905906 CentralEE RetirementEE CompPension -Pension - Garage Benefit Absences GERP PEPFP Total Operating Revenues Sales and user fees$ 2,771,967$ -$ 146,339$ 760,308$ 872,439$ 4,551,053 Operating Expenses Personal services515,723324,332206,7231,042,163 1,434,232 3,523,173 Supplies526,795 - - - - 526,795 Other services 289,623 - - - - 289,623 Insurance71,798 - - - - 71,798 Utilities709 - - - - 709 Depreciation953,198 - - - - 953,198 Total Operating Expenses 2,357,846 324,332 206,723 1,042,163 1,434,232 5,365,296 Operating Income (Loss) 414,121 (324,332) (60,384) (281,855) (561,793) (814,243) Nonoperating Revenues (Expenses) Intergovernmental - 10,739 - 853 45,543 57,135 Interest earnings (loss) 145,529 - 60,384 - - 205,913 Gain (loss) on sale/disposal of capital assets 194,701 - - - - 194,701 Other revenue 39,048 - - - - 39,048 Total Nonoperating Revenues (Expenses) 379,278 10,739 60,384 853 45,543 496,797 Change in Net Position 793,399 (313,593) - (281,002) (516,250) (317,446) Net Position, January 1 8,178,227 (2,499,351) - (7,020,007) (5,476,992) (6,818,123) Net Position, December 31$ 8,971,626$ (2,812,944)$ -$ (7,301,009)$ (5,993,242)$ (7,135,569) 126 City of Brooklyn Center, Minnesota Internal Service Funds Combining Statement of Cash Flows For the Year Ended December 31, 2023 701703704905906 CentralEE RetirementEE CompPension -Pension - Garage Benefit Absences GERF PEPFF Total Cash Flows from Operating Activities Receipts from interfund services provided$ 2,819,902$ -$ 146,339$ 761,161$ 917,982$ 4,645,384 Payments to suppliers and vendors (954,614) - - - - (954,614) Payments to and on behalf of employees (516,412) (205,195) (207,430) (761,161) (917,982) (2,608,180) Other receipts 39,048 - - - - 39,048 Net Cash Provided (Used) by Operating Activities 1,387,924 (205,195) (61,091) - - 1,121,638 Cash Flows from Noncapital Financing Activities Intergovernmental grants - 10,739 - - - 10,739 Increase (decrease) in due to other funds - 194,456 - - - 194,456 Net Cash Provided (Used) by Noncapital Financing Activities - 205,195 - - - 205,195 Cash Flows from Capital and Related Financing Activities Acquisition of capital assets (675,175) - - - - (675,175) Proceeds from sale of capital assets 194,701 - - - - 194,701 Net Cash Used by Capital and Related Financing Activities (480,474) - - - - (480,474) Cash Flows from Investing Activities Interest received on cash and investments 145,529 - 60,384 - - 205,913 Net Increase (Decrease) in Cash and Cash Equivalents 1,052,979 - (707) - - 1,052,272 Cash and Cash Equivalents, January 1 2,763,757 - 1,373,514 - - 4,137,271 Cash and Cash Equivalents, December 31$ 3,816,736$ -$ 1,372,807$ -$ -$ 5,189,543 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating income (loss)$ 414,121$ (324,332)$ (60,384)$ (281,855)$ (561,793)$ (814,243) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities Other income related to operations 39,048 - - 853 45,543 85,444 Depreciation 953,198 - - - - 953,198 (Increase) decrease in assets Accounts receivable 44,963 (22,662) - - - 22,301 Intergovernmental 2,972 - - - - 2,972 Prepaid items (4,682) - - - - (4,682) Inventories 731 - - - - 731 (Increase) decrease in deferred outflows of resources Deferred pension resources - - - 1,368,292 1,251,859 2,620,151 Deferred other postemployment benefit resources - 219,489 - - - 219,489 Increase (decrease) in liabilities Accounts payable (56,388) - - - - (56,388) Due to other governments (5,350) - - - - (5,350) Accrued wages payable (689) - - - - (689) Net pension liability - - - (3,016,427) (8,958,772) (11,975,199) Compensated absences payable - - (707) - - (707) Other postemployment benefits liability - (506,704) - - - (506,704) (Increase) decrease in deferred inflows of resources Deferred pension resources - - - 1,929,137 8,223,163 10,152,300 Deferred other postemployment benefit resources - 429,014 - - - 429,014 Net Cash Provided (Used) by Operating Activities$ 1,387,924$ (205,195)$ (61,091)$ -$ -$ 1,121,638 Schedule of Noncash Investing, Capital and Financing Activities Capital assets acquired on account$ 110,000$ -$ -$ -$ -$ 110,000 127 City of Brooklyn Center, Minnesota Summary Financial Report Revenues and Expenditures For General Operations Governmental Funds For the Years Ended December 31, 2023 and 2022 Percent TotalTotalIncrease 20232022(Decrease) Revenues Taxes$ 25,242,632$ 23,525,852 7.30 % Franchise fees 561,179 746,101 (24.79) Special assessments 1,632,828 1,821,454 (10.36) Licenses and permits 1,080,983 872,456 23.90 Intergovernmental 7,616,656 9,435,918 (19.28) Charges for services 996,512 907,826 9.77 Fines and forfeits 348,045 179,647 93.74 Investment earnings (loss) 1,323,823 (1,224,115) (208.15) Miscellaneous 410,427 1,049,048 (60.88) Total Revenues$ 39,213,085$ 37,314,187 5. 09% Per Capita$ 1,154 $ 1,111 3.86 % Expenditures Current General government$ 7,164,544$ 5,409,548 32.44% Public safety 14,335,045 12,810,400 11.90 Public works 3,199,285 2,887,189 10.81 Community services 180,657 70,958 154.60 Culture and recreation 5,294,298 4,208,099 25.81 Economic development 2,914,683 2,721,414 7.10 Nondepartmental 559,725 452,822 23.61 Capital outlay General government - 13,995 (100.00) Public safety 82,425 119,972 (31.30) Public works 2,861,851 9,141,819 (68.69) Culture and recreation 718,320 97,434 637.24 Economic development 6,825 159,815 (95.73) Debt service Principal 2,355,537 4,962,277 (52.53) Interest and other charges 589,269 638,467 (7.71) Bond issuance costs - 40,890 (100.00) Total Expenditures$ 40,262,464$ 43,735,099 (7.94)% Per Capita$ 1,185 $ 1,302 (9.02)% Total Long-term Indebtedness$ 17,530,377$ 19,902,952 (11.92)% Per Capita$ 516 $ 593 (12.95) General Fund Balance - December 31$ 13,595,819$ 13,038,219 4. 28% Per Capita$ 400 $ 388 3.06 The purpose of this report is to provide a summary of financial information concerning the City of Brooklyn Center to interested citizens. The complete financial statements may be examined at City Hall, Brooklyn Center, Minnesota. Questions about this report should be directed to the Finance Director at 763-569-3345. 128 OTHER REQUIRED REPORTS CITY OF BROOKLYN CENTER BROOKLYN CENTER, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2023 129 THIS PAGE IS LEFT BLANK INTENTIONALLY 130 INDEPENDENT REPORT ON MINNESOTA LEGAL COMPLIANCE Honorable Mayor and City Council City of Brooklyn Center, Minnesota We have audited, in accordance with auditing standards generally accepted in the United States of America, the financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the City of Brooklyn Center, Minnesota (the City) as of and for the year ended December 31, 2023, and the related notes to the financial statements, and have issued our report thereon dated October 10, 2024. In connection with our audit, nothing came to our attention that caused us to believe that the City failed to comply with the provisions of the contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, miscellaneous provisions, and tax increment financingsections of the Minnesota Legal Compliance Audit Guide for Cities, promulgated by the State Auditor pursuant to Minn. Stat. §6.65, insofar as they relate to accounting matters. However, our audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, noncompliance with the above referenced provisions, insofar as they relate to accounting matters. This report is intended solely for the information and use of those charged with governance and management of the City and the State Auditor and is not intended to be and should not be used by anyone other than these specified parties. Abdo Mankato, Minnesota October 10, 2024 131 CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIALSTATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable Mayor and City Council City of Brooklyn Center,Minnesota We have audited, in accordance with the 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, the financial statementsof the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Brooklyn Center, Minnesota (the City), as of and for the year ended December 31, 2023statements and have issued our report thereon dated October 10, 2024. Report on Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiencies described in the accompanying Schedule of Findings, Responses and Questioned Costs as items 2023-001 and 2023-002to be a significant deficiencies. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified However, as described in the accompanying Schedule of Findings, Responses and Questioned Costs, we identified a certain deficiency in internal control that we consider to be a material weakness and another deficiency that we consider to be a significant deficiency 132 Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our testsdisclosed noinstancesof noncompliance or other matters that are required to be reported under Government Auditing Standards. Responses to Findings sidentified in our audit are described in the accompanying Schedule of Findings, Responsesand Questioned Costsresponseswerenot subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion onthem. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results report isan integral part of an audit performed in accordance with Government Auditing Standards in considering the Abdo Mankato, Minnesota October 10, 2024 133 FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE Honorable Mayor and City Council City of Brooklyn Center, Minnesota Report on Compliance for Each Major Federal Program Opinion on Each Major Federal Program We have auditedthe City of Brooklyn Center, Minnesota (the City) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of December 31, 2023 identified in the Questioned Costs. In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2023. Basis for Opinion on Each Major Federal Program We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards Responsibilities for the Audit of Compliance section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a Responsibilities of Management for Compliance Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions o Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards, Government Auditing Standards,and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the compliance with the requirements of each major federal program as a whole. 134 In performing an audit in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance, we: Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. Report on Internal Control Over Compliance A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement ofa federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified. Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Abdo Mankato, Minnesota October 10, 2024 135 ---- Passed Through to $ $ Subrecipients 7,665 227,619835,399 Total 1,070,683 Federal Expenditures $ $ None Number 109-020-013109-020-014 Pass-Through G90ARPADIST Entity Identifying Listing 20.20516.738 Number 21.027C Assistance 136 Name For the Year Ended December 31, 2023 Program City of Brooklyn Center, Minnesota Schedule of Expenditures of Federal Awards Highway Planning and ConstructionEdward Byrne Memorial Justice Assistance Grant ProgramCOVID-19 - Coronavirus State and Local Fiscal Recovery Funds Administering Department/Entity of Transportationof RevenueTotal Federal Expenditures Minnesota DepartmentDirectMinnesota Department Federal Funding Source of Transportationof Justiceof Treasury U.S. DepartmentU.S. DepartmentU.S. Department City of Brooklyn Center, Minnesota Notes to the Schedule of Expenditures of Federal Awards For the Year Ended December 31, 2023 Note 1: Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the City of Brooklyn Center, Minnesota (the City) for the year ended December 31, 2023. The City's reporting entity is defined in Note 1A to the City's financial statements. The information in this schedule is presented in accordance with the requirement of the Uniform Guidance, Audits of States, Local Governments, and Non-Profit Organizations. All Federal awards received directly from Federal agencies as well as Federal awards passed through other government agencies are included on the schedule. Note 2: Summary of Significant Accounting Policies for Expenditures Expenditures reported on this schedule are reported on the modified accrual basis of accounting. Note 3: Pass-through Entity Identifying Numbers Pass-through entity identifying numbers, if any, are presented where available. Note 4: Subrecipients There were no pass through dollars provided to subrecipients. Note 5: Indirect Cost Rate During the year ended December 31, 2023, the City did not elect to use the 10% de minimis indirect cost rate. 137 City of Brooklyn Center, Minnesota Schedule of Findings, Responses and Questioned Costs For the Year Ended December 31, 2023 Section I - Summary of Auditor's Results Financial Statements Type of auditor's report issuedUnmodified Internal control over financial reporting Material weaknesses identified?No Significant deficiencies identified not considered to be material weaknesses?Yes Noncompliance material to financial statements noted?No Federal Awards Internal control over major programs Material weaknesses identified?No Significant deficiencies identified not considered to be material weaknesses?No Type of auditor's report issued on compliance for major programsUnmodified Any audit findings disclosed that are required to be reported in accordance with 2CFR section 200.516(a) of the Uniform Guidance.No Identification of Major Programs/Clusters ALN No. 21.027C Coronavirus State and Local Fiscal Recovery Funds Dollar threshold used to distinguish between Type A and Type B Programs$750,000 Auditee qualified as low-risk auditee?No Section II - Financial Statement Findings There were two significant deficiencies (2023-001 and 2023-002) but no material weaknesses or instances of noncompliance reported in the Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. Section III - Major Federal Award Findings and Questioned Costs There were no significant deficiencies, material weaknesses or instances of noncompliance including questioned costs that are required to be reported in accordance with the Uniform Section IV - Corrective Action Plans A Corrective Action Plan is attached as required to be reported under the Uniform Guidance. Section V - Schedule of Prior Year Audit Findings Prior year audit findings are attached. 138 City of Brooklyn Center, Minnesota Schedule of Findings, Responses and Questioned Costs (Continued) For the Year Ended December 31, 2023 Finding Description 2023-001 Internal Controls over Credit Cards Condition: During our audit, we discovered the City did not follow written procedures under their purchasing policy dated November 24, 2019. Criteria: vendor payment process authorized for credit card use. Cause: We noted several transactions purchased on City credit cards outside of the allowed exceptions as described in the purchasing policy. Effect: The City did not have proper controls in place to ensure the purchasing policy was being followed. Recommendation: The City should continuously review, on a recommended annual basis, their written policies and procedures to adhere to ongoing changes in the current environment. Management Response: The City will work to establish changes to ensure future policies and procedures are reviewed on a regular basis. 2023-002 Monthly Reports and Monitoring Condition: During our audit, we noted that City Council is not consistently receiving complete financial reports. Criteria: The City Council is ultimately responsible for overseeing financial reporting. Reviewing accounting reports, including budget to actual reports, for all funds is important in making all financial decisions. It is also important from a monitoring standpoint since there is limited segregation of duties. Cause: The budget reports did not appear to be included in the City Council packet each month. Effect: Without formal approval, the City Council appears to have not been provided with sufficient information throughout the year to analyze and monitor activity. Recommendation: We recommend that City Council formally receive and closely review reports monthly, quarterly at a minimum, including budget to actual as well as cash balances for each fund compared to the previous reporting period. Management Response: Management plans to implement the recommendation described above. 139 2023-001 Internal Controls over Credit Cards CORRECTIVE ACTION PLAN (CAP): 1.Explanation of Disagreement with Audit Findings: There is no disagreement with the audit finding. 2.Actions Planned in Response to Finding: The City will work to establish changes to ensure future policies and procedures are reviewed on a regular basis. 3.Official Response of Ensuring CAP: Dr. Reginald M. Edwards, City Manager, is the official responsible for ensuring correction of this significant deficiency. 4.Planned Completion Date for CAP: December 31, 2024 5.Plan to Monitor Completion of CAP The City Council will be monitoring this corrective action plan. Sincerely, Dr. Reginald M. Edwards City Manager 140 2023-002 Monthly Reports and Monitoring CORRECTIVE ACTION PLAN (CAP): 1.Explanation of Disagreement with Audit Findings: There is no disagreement with the audit finding. 2.Actions Planned in Response to Finding: The City will work to establish changes to procedures to ensure reports are reviewed on a regular basis. 3.Official Response of Ensuring CAP: Dr. Reginald M. Edwards, City Manager, is the official responsible for ensuring correction of this significant deficiency. 4.Planned Completion Date for CAP: December 31, 2024 5.Plan to Monitor Completion of CAP The City Council will be monitoring this corrective action plan. Sincerely, Dr. Reginald M. Edwards City Manager 141 THIS PAGE IS LEFT BLANK INTENTIONALLY 142 City of Brooklyn Center, Minnesota Schedule of Prior Year Findings For the Year Ended December 31, 2023 Finding Description 2022-001 Internal Controls over Federal Procurement Condition: During our audit, we discovered the City did not follow written procedures under their purchasing policy dated November 24, 2019. Criteria: If competitive quotations do not occur, the purchaser must document one of the following exceptions: the item is available only from a single source, an emergency will not allow a delay from competitive solicitation or the federal awarding agency authorizes noncompetitive proposals in writing. Cause: The City could not provide evidence of competitive quotations nor documentation for the aforementioned exceptions related to the Coronavirus State and Local Fiscal Recovery Funds (major program 21.027C). Effect: The City did not have proper controls in place to ensure the procurement policy was being followed. Recommendation: The City should continuously review, on a recommended annual basis, their written policies and procedures to adhere to ongoing changes in the current environment. Management Response: The City will work to establish changes to ensure future policies and procedures are reviewed on a regular basis. 143