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2016 06-06 CCP Joint Work Session with Financial Commission
AGENDA CITY COUNCIL/FINANCIAL COMMISSION JOINT WORK SESSION JUNE 6, 2016 6:30 p.m. Council Chambers City Hall 1. Call to Order 2, Approval of Agenda 3.Presentation of Audit Report and Management Letter 4.Council/Commission Questions 5.Staff Overview of Comprehensive Annual Financial Report 6.Council/Commission Questions 7.Miscellaneous 8.Adjourn MEMORANDUM C]ITY COUNCL/HNANC1[AL COMMSS]ION ]JO]INT WORK SEION DATE: June 6, 2016 TO: Curt Boganey, City Manager FROM: Nathan Reinhardt, Finance Director M- SUBJECT: Joint Work Session for Review of the City of Brooklyn Center's 2015 Comprehensive Annual Financial Report (CAFR) Recommendation: No action will be requested. Each year the City prepares a Comprehensive Annual Financial Report (CAFR) in accordance with City charter and State statutory regulations. As required by those regulations, the City is annually audited by an independent auditing firm. This session will be held to provide an overview of the 2015 Comprehensive Annual Financial Report (CAFR) and Management Report to the City Council and the Financial Commission. James Eichten, from Malloy, Montague, Karnowski & Radosevich (MMKR) will present this information and will be available to respond to questions. Background: Enclosed please find the 2015 CAFR, Management Report and Special Purpose Report. The CAFR sets forth the City's financial position, results of operations, cash flows and all disclosures necessary to enable maximum understanding of the City's financial affairs. Responsibility for both the accuracy and completeness of the presented data and the fairness of the presentation, including all disclosures, rests with the City. A copy of the 2015 CAFR will also be available on the Fiscal & Support Services page of the City's website. I would like to point out several items that you might find particularly interesting: 1.Pages 1-8: Letter of Transmittal, which provides a profile of the City and information of the City's long-tern financial planning, major initiatives and financial policies. 2.Page 11: The Certificate of Achievement for Excellence in Financial Reporting for the 2014 CAFR, 3.Pages 17-28: The Management Discussion and Analysis, which is the Executive Summary of the City's financial statements. 4.Pages 32-33: Balance Sheet shows the General Fund balance at year-end was $11,092,058. Unassigned/Assigned General Fund balance represents 56.1% of 2016 General fund budgeted expenses. 5. Page 36-37: The Statement of Revenues, Expenditures, & Changes in Fund Balances provides the net change in fund balances of the governmental funds. The General Fund had excess revenues over expenditures of $1,125,465 (prior to transfers). The General Fund transferred $908,761 to the Capital Improvements Fund in 2015 to provide funding for future capital improvements. iiiission: Ensuring an attractive, clean, safe, inclusive coinmunitj' that enhances the quality of life for all people and preserves the public trust 0120re-I'DEXTONI IlBJh'A iJ V I'IiIt1IJSi I Fi hYi[iJ I 6.Pages 46-47: The Statement of Cash Flows shows the changes in cash balances of all the enterprise and utility funds. 7.Management Report (Issued under a separate cover): Includes summarized and comparison information of the City's funds and financial information. 8. Special Purpose Audit Reports (Issued under a separate cover): Includes results of the audit of federal awards, internal controls and legal compliance. MMKR audited the City's financial statements and issued an unmodified opinion, which is commonly referred to as a "clean audit opinion". This means that, in the auditor's opinion, the financial statements conform with applicable accounting standards. In addition to formulating an opinion on the City's financial statements, the auditors reviewed the City's internal controls, legal compliance and financial management practices. Those results were included in the Special Purpose Audit Reports which did not contain any legal compliance findings. Budget Issues: The 2015 CAFR conveys the fiscal condition of the City as of December 31, 2015 and lays the groundwork for understanding the financial resources available to the City when planning for the future. 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Boganey City Manager Prepared By: FINANCE DIVISION DEPARTMENT OF FISCAL & SUPPORT SERVICES Nathan Reinhardt Finance Director Andrew Splinter Assistant Finance Director FOR THE YEAR ENDED DECEMBER 31, 2015 Member of Government Finance Officers Association of the United States and Canada This page has been left blank intentionally. CITY OF BROOKLYN CENTER, MINNESOTA TABLE OF CONTENTS Page No. INTRODUCTORY SECTION Letter of Transmittal 1 Principal Officials 9 Organizational Chart 10 Certificate of Achievement 11 FINANCIAL SECTION Independent Auditor's Report 13 Management's Discussion and Analysis17 Basic Financial Statements Government-wide Financial Statements Statement of Net Position 29 Statement of Activities30 Fund Financial Statements Governmental Funds Balance Sheet 32 Reconciliation of the Balance Sheet of the Governmental Funds to the Statement of Net Position 35 Statement of Revenues, Expenditures and Changes in Fund Balances 36 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of the Governmental Funds to the Statement of Activities 38 Statement of Revenues, Expenditures and Changes in Fund Balance: Budget and Actual General Fund 39 Tax Increment District No. 3 Special Revenue Fund 40 Tax Increment District No. 5 Special Revenue Fund 41 Proprietary Funds Statement of Net Position 42 Statement of Revenues, Expenses and Changes in Net Position 44 Statement of Cash Flows46 Notes to the Financial Statements49 Required Supplementary Information Schedule of Funding Progress - Other Postemployment Benefits 91 Schedule of City Contributions - Public Employees General Employees Retirement Fund 92 Schedule of City's Proportionate Share of Net Pension Liability - Public Employees General Employees Retirement Fund 93 Schedule of City Contributions - Public Employees Police and Fire Fund 94 Schedule of City's Proportionate Share of Net Pension Liability - Public Employees Police and Fire Fund95 Schedule of Changes in Net Pension Asset and Related Ratio - Fire Relief Association 96 Schedule of City Contributions - Fire Relief Association 97 Schedule of City Contributions - International Union of Operating Engineers Central Pension Fund 98 Combining and Individual Fund Statements and Schedules Governmental Funds 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 Projects Funds Combining Balance Sheet 108 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 109 Schedule of Revenues, Expenditures and Changes in Fund Balance: Budget and Actual General Fund 110 Special Revenue Funds Housing and Redevelopment Authority 115 CITY OF BROOKLYN CENTER, MINNESOTA TABLE OF CONTENTS Economic Development Authority 116 Community Development Block Grant 117 Police Forfeitures118 Tax Increment District No. 2119 Tax Increment District No. 3120 Tax Increment District No. 4121 Tax Increment District No. 5122 City Initiatives Grant123 Centennial Amphitheater 124 Debt Service Fund 125 Capital Projects Funds Capital Improvements126 Municipal State-Aid for Construction127 Capital Reserve Emergency 128 Infrastructure Construction129 Street Reconstruction 130 Technology 131 Debt Service Fund by Account Combining Balance Sheet 132 Combining Schedule of Revenues, Expenditures and Changes in Fund Balances 134 Schedule of Revenues, Expenditures and Changes in Fund Balance: Budget and Actual G.O. Improvement Bonds, 2004C 136 G.O. Improvement Bonds, 2006A 137 G.O. Improvement Bonds, 2008B138 G.O. Improvement Bonds, 2013B139 G.O. Improvement Bonds, 2015A 140 G.O. Tax Increment Bonds, 2015B141 G.O. Tax Increment Bonds, 2013A142 G.O. Tax Increment Bonds, 2008A143 G.O. Tax Increment Bonds, 2004D144 Proprietary Funds Internal Service Funds Combining Statement of Net Position 146 Combining Statement of Revenues, Expenses and Changes in Net Position 147 Combining Statement of Cash Flows 148 STATISTICAL SECTION (UNAUDITED) Financial Trends Net Position by Component 150 Changes in Net Position 152 Governmental Activities Tax Revenue by Source 158 Fund Balances of Governmental Funds 160 Changes in Fund Balances of Governmental Funds 162 Revenue Capacity Assessed Tax Capacity and Estimated Actual Value of Taxable Property 164 Property Tax Rates - Direct and Overlapping Governments 166 Principal Property Taxpayers168 Property Tax Levies and Collections169 Debt Capacity Ratios of Outstanding Debt by Type 170 Ratios of General Bonded Debt Outstanding 171 Computation of Direct and Overlapping Debt 172 Legal Debt Margin Information 174 Pledged Revenue Coverage 176 Demographic and Economic Information Demographic and Economic Statistics 177 Principal Employers 178 Operating Information Full-Time City Government Positions by Function 179 Operating Indicators by Function180 Capital Asset Statistics by Function181 Introductory Section May 23, 2016 Honorable Mayor and Members of the City Council City of Brooklyn Center Transmitted herewith is the Comprehensive Annual Financial Report of the City of Brooklyn Center for the fiscal year ended December 31, 2015. Management of the City of Brooklyn Center assumes full responsibility for the completeness and reliability of the information contained in this report based on the current system of internal control. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. Minnesota Statutes and City Charter Section 7.12 require that the financial statements of the City of Brooklyn Center be audited annually by the State Auditor or a certified public accountant selected by the City Council. These financial statements have been audited by Malloy, Montague, Karnowski, Radosevich, & Co., P.A. (MMKR). Their opinion is included in the financial section of this report. In addition, MMKR is required to issue an opinion on the City’s management and accounting for grant funds from the federal government, often called the “Single Audit” report. That Single Audit report is required for 2015 because the City received more than $750,000 in total federal grants. It has been issued under separate cover. Management’s Discussion and Analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements. Management’s Discussion and Analysis complements this letter of transmittal and should be read in conjunction with it. Profile of the City of Brooklyn Center The City of Brooklyn Center was incorporated in 1911. It is a northern suburb of the Twin Cities metropolitan area, adjacent to the City of Minneapolis and located 10 miles from its downtown area. The City is wholly within Hennepin County and covers an area of about 8.5 square miles. The Mississippi River forms the City’s eastern boundary. The City has operated under the council-manager form of government since the adoption of the City Charter in 1966. The governing body is comprised of the Mayor and four Council Members elected at large. All members serve four-year terms with two of the Council Members standing for election during each national election year cycle. The Mayor and Council Members hire a City Manager who is responsible for the daily operations of the City. 1 The City provides a full range of municipal services to its citizens. These include police and fire protection and services, zoning and code enforcement, municipal planning, parks, recreation activities, construction and maintenance of streets, provision of water, wastewater collection and treatment, stormwater collection and treatment, and street lighting. Community and economic development are facilitated through a Housing and Redevelopment Authority and an Economic Development Authority. The Boards of those two organizations are comprised of the Mayor and members of the City Council. The City also has internal departments providing human resources, engineering, financial management and information technology support to these various functions. The City operates a conference and meeting facility at the Earle Brown Heritage Center, two municipal liquor stores, and Centerbrook, an executive nine-hole golf course. Financial planning and control for the City of Brooklyn Center is based on the Annual Operating Budget and the multi-year Capital Improvement Program. Under Minnesota Statutes, a preliminary property tax levy must be adopted no later than September 30 of each year for the ensuing year’s collection. This establishes a maximum levy that may subsequently be lowered but not raised. Effective establishment of this levy requires that a preliminary budget be prepared. The City Manager, with the assistance of staff, prepares such a budget each year and presents it to the City Council in August, prior to the consideration of the preliminary tax levy. In addition, the City Council reviews the recommended rates and charges for utility funds and other operations on an annual basis as part of the budget process. Citizens receive a notice of taxes proposed for their individual properties in November based on the preliminary levies established by all taxing districts. Following the receipt of this notice citizens are invited to public meetings in each taxing jurisdiction. The City’s meeting includes information about the budget, the property tax levy and the priorities of the City Council for the coming year as reflected by the budget allocations proposed. Public comment is received and considered at this meeting. The final property tax levy and the resulting operational budgets for the ensuing fiscal year are adopted at a subsequent meeting. In addition, a Capital Improvement Program is reviewed and revised during the budget process each year. This includes projects for which the City may issue debt and/or assess portions of the cost to adjacent or benefited property owners. Because there are limited funds available each year and the City does not wish to issue excessive amounts of debt, these projects are reviewed and reprioritized each year. For the past several years the City Council has remained focused on the achievement of strategic priorities. City financial planning, policies, spending and initiatives reflect these priorities. The City Council has adopted the six strategic priorities of Resident Economic Stability, Targeted Redevelopment, Enhanced Community Image, Inclusive Community Engagement, Strengthened and Empowered Youth, and Key Infrastructure Investments. Resident Economic Stability The economic stability of residents is essential to vibrant neighborhoods and to retail, restaurant, and business growth. We will lead by supporting collaborative efforts of education, business, and government sectors to improve income opportunities for residents. 2 Targeted Redevelopment Redeveloping properties to the highest value and best use will accomplish our goals regarding housing, job creation, and growth of the City’s tax base. We will appropriately prepare sites and provide the necessary supporting infrastructure investments to guide redevelopment of publicly- and privately-owned properties. Enhanced Community Image Our ability to attract and retain residents and businesses is influenced by the perception of the City. We will take specific actions to assure that Brooklyn Center is recognized by residents, businesses, stakeholders, and visitors as a high quality, attractive, and safe community. Inclusive Community Engagement In order to provide effective and appropriate services, we must clearly understand and respond to community needs. We will consistently seek input from a broad range of stakeholders from the general public, non-profit, and for-profit sectors. Efforts to engage the community will be transparent, responsive, deliberately inclusive, and culturally sensitive. Strengthened and Empowered Youth Youth are a valued resource with the ability to enhance the community with their enthusiasm, energy, and capacity to contribute. We are committed to a coordinated system of high-quality, accessible, and full resourced opportunities that lead to an increase in high school graduation and pathways to college or career and reductions in young people’s experience to violence. Key Infrastructure Investments Proactively maintaining an efficient and effective infrastructure will meet the high level of community expectations. We will plan for and invest in critical infrastructure improvements that enhance safety, improve life quality, and support opportunities for redevelopment, while sustaining the natural environment. Local Economy Brooklyn Center is a mature, fully developed first ring suburb of Minneapolis. With its affordable housing, excellent schools, beautiful parks, and convenient transportation access it has the attributes to continue as a vibrant community for many years to come. The City experienced its most rapid growth from 1950 to 1970 when the City’s population grew from 4,300 to its peak of 35,173. The 2015 population estimated from the Metropolitan Council estimates the population for Brooklyn Center at 29,889. The number of housing units has decreased from 11,704 in 1990 to an estimated 10,756. As in many mature, first-ring suburbs there is a trend toward conversion of single family homes to rental properties. The City’s taxable market value is $1,585,451,710 for taxes payable 2016, which is an increase of $95,903,634 or 6.4 percent from last year. The taxable market value increase is driven by large increase in residential (11.4%) and apartment (4.6%). The total tax capacity of the City is estimated at $21,599,516 compared to $20,703,061 in 2015, which is an increase of $896,455 (4.3%). 3 Residential housing makes up 48.7% of the 2016 tax capacity base which is an increase of 2.1% from the 2015 tax capacity base, while the commercial and industrial portion of the tax base decreased by 1.9%. According to the Hennepin County Assessor’s Office, for the valuation used to calculate the 2016 property tax payments, the median value home in Brooklyn Center is $142,100 compared to $131,400 in the previous valuation. Major transportation routes in and through the City, including Interstates 94 and 694, and State Highways 100 and 252, have provided a continued impetus for development of a strong commercial tax base in the City along these corridors. There are no large, undeveloped tracts of land in Brooklyn Center and no potential for annexation of additional undeveloped land. Therefore, the revitalization of Brooklyn Center is proceeding on three tracks: redevelopment and renewal of the commercial and industrial areas of the City; reconstruction and enhancement of its streets, utilities, and parks; and the revitalization of neighborhoods. The hospitality industry contributes a significant amount to Brooklyn Center’s economy. Lodging tax receipts for fiscal year 2015 totaled $1,075,425, which is an increase of $160,774 from 2014. City issued building permits in 2015 had a total permit value of $34,749,804. In the past three years building permit values have totaled over $150 million, showing a continued trend of significant investments being made in the community. Long Term Financial Planning The City maintains a comprehensive Capital Improvement Plan to facilitate the replacement of its aging infrastructure. When streets are reconstructed in this program, aging water, sanitary and storm sewer infrastructure is also repaired or replaced. These improvements are funded by a combination of general obligation improvement bonds supported with special assessments against benefited properties and cash from the capital projects funds and utility enterprise funds. About one twenty-fifth of the City’s streets and utilities are reconstructed each year. It is expected that this will be an ongoing process and the Plan is reviewed and amended as a part of each budget cycle. In addition, cash flows for all funds providing financing for the Plan are updated for cash flow projections during the 15 year timeframe of the Plan. The Capital Improvements Plan projects completion of the first citywide round of reconstruction of the streets and utilities throughout the entire community by 2021. An additional benefit of these neighborhood projects has been the increased investment by residents in their properties following reconstruction projects. The development of utility rate models and of non-utility cash flow projection models has improved the City’s ability to plan and generate cash for operations, scheduled maintenance and capital improvements. A plan for the maintenance and upgrading of the City’s buildings and facilities is being incorporated into spending plans for both operational repairs and for large capital expenditure type improvements. 4 Major Initiatives A new water treatment plant came online at the beginning of 2016. The (estimated) total cost of the water treatment plant is $19.66 million. Financing is being achieved through a low interest loan under the Drinking Water Revolving Loan Fund through the Minnesota Public Facility Authority (PFA) loan program. The loan will be repaid over twenty years at an interest rate of one percent. Water rates are being adjusted over a three year period to provide sufficient revenue for the annual loan repayments. Successful redevelopment continues to be the key to commercial and industrial tax base growth including: Shingle Creek Crossing, an 80-acre P.U.D. that includes the redevelopment of the former Brookdale Mall. In 2011, a significant portion of Brookdale Mall was removed and planned for redevelopment of a shopping center that included the existing Sears and Kohl’s department stores and the Applebee’s restaurant. The initial phase included the partial daylighting of Shingle Creek and the infrastructure improvements for an 183,000 square-foot Walmart store, 15 new building pads, and the renovation of 169,000 square-feet of the former Brookdale Mall. In 2012, the Walmart store was opened and construction began on a 38,000 square-foot building for LA Fitness and three retail buildings providing 29,134 square-feet of new commercial tenant space. In 2013, the 2nd phase of the site improvements was completed. The LA Fitness store was opened and several tenant improvements within the three retail buildings were completed and the buildings occupied. Site plans were approved for the Discount Tire Store, a fourth multi-tenant retail building, and replacement of the food court portion of the former mall with ten retail buildings to facilitate several junior box retailers. Development activity scheduled for 2014 include the demolition of the 169,000 square-foot food court building with the immediate construction of 92,000 square-feet of retail buildings, the construction of an 11,200 square-foot multi-tenant building, the construction of a 6,673 square-foot multi-tenant retail/restaurant building and site plan approvals for the remaining four lots within the former Food Court lot. Major tenants that occupied these new retail spaces in the spring of 2015, include Michaels, TJ Maxx, Jimmy John Restaurant and Aspen Dental. Other business activity in 2015 included the completion/opening of the Discount Tire Store, Kid’s Foot Locker, Rue 21, Villa, a lease with Caribou Coffee and Bruegger’s Bagel was signed, and a PUD amendment to the former Kohl’s site was approved to add an additional 9,400 square-foot retail building. The southern portion of the 80 acre Opportunity Site, comprises 46 acres planned for a mixed use commercial, office and residential P.U.D. A housing market study was completed by the McCombs Group and the architectural firm of ESG was retained to prepare a mixed use concept plan for this 46 acre site. On December 20, 2013, the EDA acquired the 23.2 acre Brookdale Square shopping center site which adjoins the EDA’s 8.4 acre former Brookdale Ford dealership property. 5 In 2014, the EDA acquired an additional 1.6 acre site and has discussed future redevelopment plans with the four remaining businesses and/or property owner along John Martin Drive (the northern portion of this redevelopment area). In 2015, the EDA adopted the necessary findings of blighted building conditions that would qualify this area as a future Tax Increment Redevelopment District or a Renewal and Renovation District. The demolition of the buildings was completed in the fall of 2015. Additionally in 2015, the EDA entered into a preliminary development agreement with Sand Development Company for the phased development of seven apartment buildings, providing 748 market rate apartment units with underground parking, and project amenities designed for today’s apartment life style within the Metro area. The initial phase of this development includes two apartment buildings with 300 units and the central park area with a recreational building, pool and patio areas. Luther Auto Group has completed a major portion of their redevelopment plans for the 39 acres located on the north side of the I-694 and Brooklyn Boulevard interchange. The 2010 major renovations to the Chevrolet and Buick & GMC dealerships. The 2012 completion of a 52,228 square-foot Honda dealership and a 53,830 square-foot Toyota dealership. The 2013 approvals for the construction of a 42,360 square-foot Volkswagen dealership and a 2.8 acre expansion of the Honda Dealership’s sales lot which will open up space for a 6th dealership along 694. In 2014, Luther demolished the old Honda dealership buildings and began construction of the new Volkswagen dealership and completed expansion of Honda sales lot. The Volkswagen dealership opened in 2015. Additionally, Luther’s master plans for this area include as additional dealership with frontage along 694. One of the two buildings that occupied this future dealership site, Atlantic Pool, was demolished in 2015. Redevelopment of industrial properties include: In 2014, the Minnesota Department of Agriculture and the Minnesota Pollution Control Agency approved a Soils Investigation and Remediation Action Plan for the former Howe Fertilizer Site and adjoining railroad property. The City received environmental cleanup funds from Hennepin County, DEED and the Met Council. The three grants funded a $1.5 million cleanup action and enabled the developer to proceed with the development of a 61,000 square building that was completed in 2015 In 2014, Sign Zone completed the acquisition and renovation of the 140,000 square-feet of office/industrial space at the former Palmer Lake Plaza office industrial buildings which enabled Sign Zone plans to consolidate their business operations and have their corporate headquarters in Brooklyn Center. Additional development activities in 2014/2015 include: The EDA acquired the former Chrysler Auto Dealership, also known as Cars with Heart, a 5 acre commercial site at 6121 Brooklyn Boulevard. The buildings have been demolished and the EDA has approved plans and entered into a development agreement for the construction of a 156 unit senior apartment building that provides affordable assisted care opportunities for senior citizens. 6 The Northport Elementary School completed the 5th phase of their building renovation plans, which included the expansion of their parking lot, a parent drop off zone, a separate bus unloading area that also provides 38 parking stalls for park use, and new playfields which complements the Northport Community Park. The Three River Park District provided funding for a realignment of Twin Lakes Regional Trail Corridor within the eastern portion of planned renovation of the Lake Pointe Apartments. Additionally, planning for the 2016-17 construction of an extension of this regional trail along 57th Avenue, east of State Highway 100, to connect to the Mississippi Regional Corridor has begun. The Brooklyn Boulevard bridge and trail improvements over State Highway 100 were completed and a cooperative grant application with Hennepin County has received favorable scoring for the Federal funding of the reconstruction of the southern portion of the Brooklyn Boulevard Corridor Study (southern border of the City to Co. Rd. 10/Bass Lake Road). Construction is planned for 2018. In 2015, construction of the New Millennium Academy, a 550 student Charter School commenced on the former Malmborg’s Nursery site and is scheduled to open in the fall of 2016. Relevant Financial Policies The City of Brooklyn Center includes in its Financial Policies a requirement that the General Fund balance at year end must be between 50.0% and 52.0% of the ensuing year’s General Fund operating budget. This provides both for cash flow needs and emergency expenditures in the short term. The City’s Capital Project Funding Policy provides recurring sources of funding for the City’s 15- year Capital Improvement Plan. The Policy specifically identifies three main funding sources as follows: 1. Audited year-end General Fund unassigned fund balance above 52% of the next year’s General Fund operating budget 2. Audited year-end Liquor Fund unrestricted cash balance that exceeds three and a half months of the next year’s operating budget and one year of budgeted capital equipment needs. 3. Local Governmental Aid (LGA) received in the amount of $650,000 or half of the amount received by the City (whichever is greater) Also included in the Financial Policies are internal control directives to protect the City’s assets from loss, theft or misuse. These controls provide reasonable assurance of the safety of the City’s assets while recognizing that management estimates and judgments as to the cost of such controls are also important to deriving maximum benefit from these controls. 7 Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Brooklyn Center for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended December 31, 2014. The City was first awarded this certificate in 1966. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized CAFR. The CAFR must satisfy both accounting principles generally accepted in the United States and applicable federal, state and local legal requirements. A Certificate of Achievement is valid for a period of one year. It is expected that the 2015 report conforms to Certificate of Achievement Program requirements. It will be submitted to the GFOA to determine its eligibility for another certificate. The preparation and publication of this report would not have been possible without the dedicated and efficient work of the Finance staff, most especially Andrew Splinter, the Assistant Finance Director. We would like to acknowledge all staff that contributed their efforts to the Finance operations in 2015. We would also like to thank the Mayor and City Council for their support in promoting and maintaining the highest standards of professionalism and management of the City of Brooklyn Center. Respectfully Submitted, 8 CITY OF BROOKLYN CENTER, MINNESOTA PRINCIPAL OFFICIALS December 31, 2015 NamePositionTerm of OfficeTerm Expires ELECTED OFFICIALS Tim Willson Mayor Four YearsDecember 31, 2018 April Graves Council Member Four YearsDecember 31, 2018 Kris Lawrence-AndersonCouncil Member Four YearsDecember 31, 2016 Dan Ryan Council Member Four YearsDecember 31, 2018 Lin Myszkowski Council Member Four YearsDecember 31, 2016 APPOINTED OFFICIALS Cornelius L. BoganeyCity Manager Appointed Troy Gilchrist City Attorney Contractual Appointee Sharon Knutson City Clerk Appointed Vickie SchleuningAssistant City Manager/Building and Community Standards DirectorAppointed Tim Gannon Police Chief Appointed Gary Eitel Business and Development Director Appointed Lee Gatlin Fire Chief Appointed James Glasoe Community Activities, Recreation and Services Director Appointed Steve Lillehaug Director of Public Works/City Engineer Appointed Nathan ReinhardtFinance Director Appointed 9 CITY OF BROOKLYN CENTER, MINNESOTA ORGANIZATIONAL CHART December 31, 2015 10 11 This page has been left blank intentionally. 12 Financial Section 13 INDEPENDENT AUDITOR’S REPORT To the City Council and Management City of Brooklyn Center, Minnesota REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Brooklyn Center, Minnesota (the City) as of and for the year ended December 31, 2015, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. AUDITOR’S RESPONSIBILITY Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. (continued) 14 OPINIONS In our opinion, the financial statements referred to on the previous page 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, 2015, and the respective changes in financial position and, where applicable, cash flows thereof, and the budgetary comparison for the General Fund and budgeted major special revenue funds for the year then ended, in accordance with accounting principles generally accepted in the United States of America. EMPHASIS OF MATTER As described in Note 1 of the notes to basic financial statements, the City has implemented Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions—an amendment of GASB Statement No. 27, and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date—an amendment of GASB Statement No. 68, during the year ended December 31, 2015. Our opinion is not modified with respect to this matter. OTHER MATTERS Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis and the required supplementary information (RSI), as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the GASB, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the RSI in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The introductory section, combining and individual fund statements and schedules, and statistical section, as listed in the table of contents, are presented for purposes of additional analysis and are not required parts of the basic financial statements. The combining and individual fund statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. (continued) 15 OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we have also issued our report dated May 23, 2016 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance. Minneapolis, Minnesota May 23, 2016 This page has been left blank intentionally. 16 CITY OF BROOKLYN CENTER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2015 As management of the City of Brooklyn Center (the City), we offer readers of the City's Comprehensive Annual Financial Report (CAFR), this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2015. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages 1-8 of this CAFR. Financial Highlights •The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $134,910,426 (net position). Of this amount, $2,956,794 (unrestricted net position) may be used to meet the City's ongoing obligations to citizens and creditors. •The City’s total net position increased by $5,799,641 (4.49%) from the previous year. The increase can be primarily attributed to capital grants for public works which includes funds spent on Municipal State Aid Street Improvements in 2015, new special assessment levies, and other funding related to construction of City infrastructure. •As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $48,418,988, which is an increase of $2,213,800 (4.79%) from the previous year. Of the total fund balance, $7,862,179 (16.24%) is unassigned, which is free from any internal or external constraints of its use. •The General fund has a fund balance of $11,170,917 at the close of the current fiscal year. During 2015, the fund balance increased $150,836 (1.37%) from the previous year. The unassigned fund balance at year end is $10,287,243, which represents 52% of the following years budget. The remaining portion of the fund balance is nonspendable or assigned (for the capital improvement funding plan). •The City’s total outstanding bonded debt increased by $26,220,158 during the current fiscal year, from $24,285,000 to $50,505,158. The City retired $3,180,352 in principal, refunded $8,260,000 in principal (including a crossover advanced refunding of $6,600,000), and issued $22,800,510 in combined new debt for the construction of a water treatment plant and infrastructure improvements. •The net position of the City was negatively impacted due to the required implementation of GASB Statement No. 68, which related to the accounting treatment of defined benefit pension plans, specifically the Public Employees Retirement Association of Minnesota (PERA) and the Brooklyn Center Fire Relief Association. This is a result of a change in an accounting principle and does not affect the City's obligation requirements as set by Minnesota statute. This is more fully described in the notes to the financial statements. While the accounting standard changed, the City will continue to fund the pension plan based on the required contribution rates as set by Minnesota statute. Overview of the Financial Statements The discussion and analysis are intended to serve as an introduction to the City’s basic financial statements. The City's basic financial statements include three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This CAFR also contains other supplementary information in addition to the basic financial statements themselves. Government-Wide Financial Statements: The government-wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private-sector business. The statement of net position presents information on all of the City’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. 17 CITY OF BROOKLYN CENTER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2015 The statement of activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in 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 (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include: general government, public safety, public works, community services, parks & recreation, economic development, and interest on long-term debt. The business- type activities of the City include: municipal liquor, golf course, Earle Brown Heritage Center, water utility, sanitary sewer utility, storm drainage utility, street light utility, and the recycling utility. The government-wide financial statements include not only the City itself (known as the primary government), but also a legally separate Housing and Redevelopment Authority and Economic Development Authority, for which the City is financially accountable. Although legally separate, these component units, function for all practical purposes as a department of the City, and therefore have been included as an integral part of the primary government. The government-wide financial statements can be found on pages 29 through 31 of this CAFR. Fund Financial Statements: A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into two categories: governmental funds and proprietary funds. Governmental Funds: Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financial requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City's near-term financial decisions. Both the governmental fund balance sheet and governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains 18 individual governmental funds. 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 following: General fund, Tax Increment District No. 3, Tax Increment District No. 5, Debt Service, Capital Improvements, Municipal State Aid for Construction, and the Infrastructure Construction fund, which are considered to be major funds. Data from the other 11 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements or schedules, elsewhere in this CAFR. 18 CITY OF BROOKLYN CENTER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2015 The City adopts an annual appropriated budget for nearly all funds presented in this CAFR. A budgetary comparison statement has been provided in the basic financial statements for the General fund, the Tax Increment District No. 3 fund and the Tax Increment District No. 5 fund. The budgetary comparison statements for any nonmajor funds are provided elsewhere in this CAFR. The basic governmental fund financial statements can be found on pages 32 through 41 of this CAFR. Proprietary Funds: Proprietary funds provide similar information to the government-wide financial statements, but in more detail. The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its: municipal liquor, golf course, Earle Brown Heritage Center, water utility, sanitary sewer utility, storm drainage utility, street light utility, and recycling utility. All of the City's enterprise funds are considered to be major funds, and separate information is provided for each of them in the basic financial statements. Internal service funds are an accounting device to accumulate and allocate costs internally among the City's various functions. The City uses internal service funds to account for its: central garage, employee retirement, pension - coordinated, pension - police and fire, and compensated absences accumulations. All internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual data for the internal service funds is provided in the form of combining statements elsewhere in this CAFR. Because all of these services predominately benefit governmental rather than business-type functions, they have been included as governmental activities in the government-wide financial statements. The basic proprietary fund financial statements can be found on pages 42 through 47 of this CAFR. Notes to the Financial Statements: The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 49 through 90 of this CAFR. Other Information: In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information, for other post-employment benefits (OPEB) and defined benefit pension plans. The schedules of funding progress, City contributions, City's proportionate share of net pension liability, and schedule of changes in Net Pension Asset can be found on pages 91 through 98 of this CAFR. The combining and budgetary comparison statements referred to earlier in connection with nonmajor governmental funds and internal service funds are presented immediately following the required supplementary information. Combining and budgetary comparison statements can be found on pages 102 through 148 of this CAFR. 19 CITY OF BROOKLYN CENTER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2015 Government-wide Financial Analysis As noted earlier, net position may serve over time as a useful indictor of a government's financial position. In the case of the City, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $134,910,426 at the close of the most recent fiscal year. The largest portion of the City's net position ($95,143,039 or 70.52%) reflects its investment in capital assets, which includes: land infrastructure, buildings, and machinery & equipment, less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. 2015201420152014 2015 2014 Current and other assets 67,456,601$ 60,464,701$ 13,392,970$ 11,047,209$ 80,849,571$ 71,511,910$ Capital Assets 56,533,048 49,392,577 66,570,149 48,537,132 123,103,197 97,929,709 Total assets 123,989,649 109,857,278 79,963,119 59,584,341 203,952,768 169,441,619 Deferred outflows of resources 2,436,688 - - - 2,436,688 - Long-term liabilities outstanding 33,435,695 21,243,878 19,944,910 1,660,000 53,380,605 22,903,878 Other liabilities 11,930,069 5,246,650 4,364,340 2,567,444 16,294,409 7,814,094 Total liabilities 45,365,764 26,490,528 24,309,250 4,227,444 69,675,014 30,717,972 Deferred inflows of resources 1,804,016 - - - 1,804,016 - Net investment in capital assets 47,941,800 42,947,577 47,201,239 48,537,132 95,143,039 91,484,709 Restricted 36,810,593 28,061,977 - - 36,810,593 28,061,977 Unrestricted (5,495,836) 12,357,196 8,452,630 6,819,765 2,956,794 19,176,961 Total Net Position 79,256,557$ 83,366,750$ 55,653,869$ 55,356,897$ 134,910,426$ 138,723,647$ At the end of the current fiscal year, the City is able to report positive balances in all three categories of net position, both for the government as a whole, as well as for its separate governmental and business-type activities with the exception of unrestricted net position in the governmental activities. A portion of the City’s net position (27.29%) represents resources that are subject to external restrictions on how they may be used. The remaining portion (2.19%) may be used to meet the City's ongoing obligations. The governmental activities have a significant increase in current assets from the previous year. The largest factor in this increase is with the cash with fiscal agents. At the end of 2015, the City had $6,782,081 in escrow as part of a crossover advanced refunding. The business-type activities had large increases in capital assets and long-term liabilities. These increases are primarily due to the City's construction of a water treatment plant, which is being funded with debt proceeds from the Minnesota Public Facilities Authority (PFA) loan program. The governmental activities, also had a significant increase in the amount of deferred outflows of resources, long-term liabilities, and deferred inflows of resources from the previous year. The primary reason for the increase was the implementation of GASB Statement No. 68 in which the City is required to report its proportionate share of the Minnesota Public Employees Retirement Association (PERA) net pension liabilities. Recording the liability does not change the City's future contibution requirements or obligations under the plans, which are determined by Minnesota statutes. CITY OF BROOKLYN CENTER - SUMMARY OF NET POSITION Governmental ActivitiesBusiness-Type Activities Total 20 CITY OF BROOKLYN CENTER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2015 Governmental Activities Governmental activities resulted in an increase of the City's net position by $3,931,036 (67.78%), accounting for the majority of the City's increase in net position. Key elements of the changes are as follows: Revenues:*20152014*20152014 *2015 2014 Program revenues Charges for services 2,218,123$ 2,607,035$ 20,070,217$ 19,383,056$ 22,288,340$ 21,990,091$ Operating grants and contributions 2,605,477 1,746,637 30,522 63,547 2,635,999 1,810,184 Capital grants and contributions 5,184,381 1,671,830 - - 5,184,381 1,671,830 General revenues Property taxes 15,320,998 14,988,007 - - 15,320,998 14,988,007 Other taxes 4,880,792 4,705,014 - - 4,880,792 4,705,014 Grants and contributions not restricted to specific programs 1,670,928 1,499,015 - - 1,670,928 1,499,015 Unrestricted investment earnings 254,366 236,936 127,686 108,650 382,052 345,586 Gain on disposal of assets 27,800 27,100 - - 27,800 27,100 Total revenues 32,162,865 27,481,574 20,228,425 19,555,253 52,391,290 47,036,827 Expenses: General government 3,527,323 3,736,487 - - 3,527,323 3,736,487 Public safety 10,707,602 10,186,645 - - 10,707,602 10,186,645 Public works 3,867,406 3,688,238 - - 3,867,406 3,688,238 Community services 135,604 145,503 - - 135,604 145,503 Parks and recreation 3,053,328 2,977,707 - - 3,053,328 2,977,707 Economic development 5,419,304 3,234,623 - - 5,419,304 3,234,623 Interest on long-term debt 723,000 887,190 - - 723,000 887,190 Municipal liquor - - 5,816,363 5,690,792 5,816,363 5,690,792 Golf course - - 270,307 271,698 270,307 271,698 Earle Brown Heritage Center - - 4,739,543 5,137,712 4,739,543 5,137,712 Water utility - - 2,179,892 1,900,518 2,179,892 1,900,518 Sanitary sewer utility - - 3,694,880 3,514,687 3,694,880 3,514,687 Storm drainage utility - - 1,883,154 1,784,907 1,883,154 1,784,907 Street light utility - - 281,661 245,426 281,661 245,426 Recycling utility - - 292,282 291,239 292,282 291,239 Total expenses 27,433,567 24,856,393 19,158,082 18,836,979 46,591,649 43,693,372 Change in net position before transfers 4,729,298 2,625,181 1,070,343 718,274 5,799,641 3,343,455 Transfers 236,312 675,257 (236,312) (675,257) - - Transfers - capital assets (1,034,574) (639,266) 1,034,574 639,266 - - Change in net position 3,931,036 2,661,172 1,868,605 682,283 5,799,641 3,343,455 Net Position - January 1 83,366,750 80,705,578 55,356,897 54,674,614 138,723,647 135,380,192 Change in accounting principle (8,041,229) - (1,571,633) - (9,612,862) - Net Position - January 1, restated 75,325,521 80,705,578 53,785,264 54,674,614 129,110,785 135,380,192 Net Position - December 31 79,256,557$ 83,366,750$ 55,653,869$ 55,356,897$ 134,910,426$ 138,723,647$ * GASB Statement No. 68 was implemented for the year ended December 31, 2015 and required a $9,612,862 restatement of beginning net position. Prior year amounts were not restated causing a variance in ending net position at December 31, 2014 and beginning net position on January 1, 2015. CITY OF BROOKLYN CENTER - CHANGES IN NET POSITION Governmental ActivitiesBusiness-Type Activities Total 21 CITY OF BROOKLYN CENTER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2015 Governmental activities accounted for 67.78% of the increase in the City's net position. The change in net position from the previous year can be attributed to favorable budget variances in General Fund expenditures, new special assessment levies totalling $1.6 million and the spending of $2.6 million on Municipal State Aid street construction which was offset by capital grants for street contruction projects. A significant change from the previous year is shown in capital grants, mostly due to a municipal state aid receivable recognized as revenue in the government-wide statements. The City had completed a significant street infrastructure improvement project in 2015, which was funded from special assessments to the respective property owners and municipal state-aid construction grant funds. Governmental activities also report a large increase in operating grants from the previous year. During 2015, the City received economic development grants of $829,850, primarily environmental grants for clean-up of a property that is being developed as commercial/industrial property. Below are specific graphs which provide comparisons of the governmental activities revenues and expenses: Charges for services 6.9% Operating grants 8.1% Capital grants 16.1% Property taxes 47.6% Other taxes 15.2% Other general revenues 5.3%Investment earnings 0.8% Revenues by Source - 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 General government Public safetyPublic worksCommunity services Parks and recreation Economic development Interest on long-term debt Function Expenses vs. Program Revenues Expense Program Revenue 22 CITY OF BROOKLYN CENTER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2015 Business-type Activities Business-type activities increased net position by $1,868,605, which accounts for only 32.22% of the total growth in the City's net position. The factors contributing to this change are illustrated below: The net position of the business-type activities increased, but operations of the Centerbrook Golf Course and Earle Brown Heritage Center provided for decreases in net position individually. The Earle Brown Heritage Center had a positive cash flow in 2015, but a decrease in net position as a result of a large depreciation expense. Municipal liquor 30.4% Golf course 1.4% Earle Brown Heritage Center 24.7% Water utility 11.4% Sanitary sewer utility 19.3% Storm drainage utility 9.8% Street Light Utility 1.5% Recycling utility 1.5% Business-type Activities -Function Expenses - 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 Municipal liquor Golf courseEarle Brown Heritage Center Water utilitySanitary sewer utility Storm drainage utility Street light utility Recycling utility Function Expenses vs. Program Revenues Expense Program Revenue 23 CITY OF BROOKLYN CENTER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2015 Financial Analysis of the Government's Funds Governmental Funds: The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unassigned fund balance may serve as useful measure of a government's net resources available at the end of the fiscal year. At the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $48,418,988, which is an increase of $2,213,800 (4.79%) from the previous year. The unassigned fund balance, which is not subject to internal or external constraints upon its use, is $7,862,179, or 16.24% of total fund balance. A small portion of the fund balance, $80,359 (0.17%) is in nonspendable form. The remaining fund balance has either internal or external constraints upon its use, and can be broken down into the following components: $30,365,411 (62.71%) of restricted fund balance; $9,306,224 (19.22%) of committed fund balance; and $804,815 (1.66%) of assigned fund balance. A more detailed breakdown of fund balance components can be found in the basic financial statements. The General fund is the primary operating fund of the City. At the end of the current fiscal year, total fund balance is $11,170,917. As a measure of the General fund's liquidity, it may be useful to compare both unassigned and total fund balance, to total fund expenditures. Unassigned balance, which is $10,287,243, represents 57.00% of the current year General fund expenditures. Total General fund balance represents 61.90% of those same expenditures. The fund balance of the City’s general fund increased by $150,836 (1.37%) from the previous year. The City had budgeted for a break-even year in 2015, however the City Council approved a transfer to the Capital Improvements Fund of $908,761 of available fund balance. Prior to the transfer the City had a significant increase in fund balance, which was attributed to a positive variance expenditures. The most significant expenditure budget variance was in the public safety, due to vacancies in personnel and lower fuel costs. The Tax Increment District No. 3 fund has a total fund balance of $17,196,759 at the end of the year. The decrease in fund balance was $701,990 (3.92%) from the previous year. The fund received $2,953,728 in tax increment revenues, expended $1,483,476 on Economic Development and transferred $2,395,982 for Debt Service. As of December 31, 2015 the fund has total assets held for resale of $15,578,075. The Tax Increment District No. 5 fund has a total fund balance deficit of $2,241,466 at the end of the year. The decrease in fund balance was $941,607 (72.44%) from the previous year. The fund received tax increment revenues of $353,417 and made a pay as you go payment on a tax increment note of $466,912. As of December 31, 2015 the fund had notes outstanding of $279,400 and an advance from Tax Increment District No. 2 outstanding of $2,463,683. The Debt Service fund has a total fund balance of $8,747,914 at the end of the year. The increase in fund balance was $6,838,473 (358.14%) from the previous year. The increase in fund balance is primarily the result of a crossover advanced refunding of $6,600,000. The Capital Improvements fund has a total fund balance of $4,408,879, a decrease of $2,100,351 (32.27%) from the previous year. The decrease was a result of the approved spending of fund balance for the City Hall and Community Center remodel. The Municipal State Aid Construction fund has a fund balance of $223,531 at the end of the year. The decrease in fund balance was $1,606,569 (87.79%) from the previous year. As of December 31, 2015 the fund had a receivable balance in the amount of $3,583,557 in Municipal State Aid Construction funds. 24 CITY OF BROOKLYN CENTER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2015 The Infrastructure Construction fund has an ending deficit fund balance of $183,145 a increase of $280,048 (60.46%) from the previous year. The fund incurred $1,455,128 of capital expenditures during the year for the Freeway Park Area and 63rd Avenue neighborhood re-construction projects. Proprietary Funds: The City's proprietary funds provide the same type of information presented as business-type activities found in the government-wide financial statements, but in more detail. The enterprise funds have a combined ending net position of $57,640,210, of which $10,438,971 (18.11%) is unrestricted and can be used to meet the operations. As a measure of the liquidity of the enterprise funds, it may be useful to compare the unrestricted net position to the operating expenses. For the current year, unrestricted net position is 83.92% of the current year operating expenses. Other factors concerning the finances of these funds have already been addressed in the discussion of the City's business-type activities. General Fund Budgetary Highlights During the year, there were no amendments to the General Fund budget. Actual revenues and other financing sources were under the adopted budget by $27,654. The major contributor to this decrease was in delinquent property tax collections, the City had a negative $48,672 as a result of tax refunds and was under budget for excess tax revenues by $141,320. Actual expenditures and other financing uses were lower than the final budget for the year by $178,490. This was the result of a non-budgeted transfer of $908,761 to the Capital Improvement Fund in accordance with City policy to transfer unassigned fund balance of the General Fund that exceeds 52% of General Fund budgeted expenditures following the completion of the annual audit. The reduction in fund balance from the transfer was offset by savings from several staff positions being left unfilled during a portion of 2015, in the Police and Public Works departments. 25 CITY OF BROOKLYN CENTER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2015 Capital Asset and Debt Administration Capital Assets: The City's investment in capital assets for its governmental and business-type activities at the end of the current year, amounts to $123,103,197 (net of accumulated depreciation). This investment in capital assets includes: land, buildings, infrastructure, machinery and equipment and construction in progress. The City's investment in capital assets increased $25,173,488 (25.71%) from the previous year. Major capital asset events during the current year included the following: •The Freeway Park Area Neighborhood infrastructure reconstruction project is near completion, with $8,791,044 of additions to construction in progress. This amount includes work on streets, as well as water, sewer and storm utilities. •The 63rd Avenue Neighborhood infrastructure reconstruction project is near completion, with $4,676,392 of additions to construction in progress. This amount includes work on streets, as well as water, sewer and storm utilities. •The City continued construction of a water treatment plant. At the end of 2015, the City had completed $19,371,703 of the $19,662,352 project. The project is being funded through a low interest loan (1%) with the Minnesota Public Facilities Authority. The water treatment plant became operational in January 2016. •The construction of a Community Amphitheater is near completion, with $632,925 of additions to construction in progress. The Amphitheater was primarily funded through donations. •The City is near completion with a City Hall/Community Center remodel, with $3,519,011 of additions to construction in progress. The project included roof replacement and mechanical and electrical upgrades. •The Central Garage replaced 17 pieces of machinery & equipment during the year. The total outlay for machinery and equipment during the year was $1,039,530. The additions include, but are not limited to: mowers, police vehicles, a public works truck and a street sweeper. 2015201420152014 2015 2014 Land 3,537,473$ 3,537,473$ 3,194,983$ 3,194,983$ 6,732,456$ 6,732,456$ Easements 90,594 95,132 11,976 16,039 102,570 111,171 Construction in progress 9,011,138 3,276,213 25,636,604 8,425,511 34,647,742 11,701,724 Land improvements - - 179,944 196,571 179,944 196,571 Other park improvements 5,728,496 5,955,889 - - 5,728,496 5,955,889 Buildings and structures 7,626,681 7,718,930 2,723,125 3,307,370 10,349,806 11,026,300 Machinery and equipment 3,963,168 3,763,003 273,538 297,976 4,236,706 4,060,979 Streets 26,575,498 25,045,938 - - 26,575,498 25,045,938 Street light systems - - 634,678 630,342 634,678 630,342 Mains and lines - - 33,915,301 32,468,340 33,915,301 32,468,340 Total 56,533,048$ 49,392,578$ 66,570,149$ 48,537,132$ 123,103,197$ 97,929,710$ Additional information on the City’s capital assets can be found in Note 3 (C) on pages 64 through 65 of this CAFR. Governmental ActivitiesBusiness-type Activities Total CITY OF BROOKLYN CENTER - CAPITAL ASSETS (net of depreciation) 26 CITY OF BROOKLYN CENTER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2015 Long-Term Debt: At the end of the current year, the City had outstanding long-term bonded debt of $50,505,158. 2015201420152014 2015 2014 General obligation tax increment bonds20,885,000$ 16,040,000$ -$ -$ 20,885,000$ 16,040,000$ General obligation improvement bonds8,591,248 6,445,000 - - 8,591,248 6,445,000 General obligation revenue bonds - - 3,483,752 1,800,000 3,483,752 1,800,000 General obligation revenue notes - - 17,545,158 - 17,545,158 - Compensated absences 1,254,851 1,282,093 - - 1,254,851 1,282,093 Net pension liability 11,509,476 - - - 11,509,476 - Net OPEB obligation 710,605 629,994 - - 710,605 629,994 Total 42,951,180$ 24,397,087$ 21,028,910$ 1,800,000$ 63,980,090$ 26,197,087$ The City’s total bonded debt increased $26,220,158 (107.97%) from the previous year. The City retired $3,180,352 in principal, refunded $8,260,000 in principal (including a crossover advanced refunding of $6,600,000), and issued $22,800,510 in combined new debt for the construction of a water treatment plant and infrastructure improvements. The City’s bond rating is AA from Standard & Poor’s Ratings Services. State statutes limit the amount of general obligation debt a Minnesota city may issue to 3% of total Estimated Market Value. The current debt limitation for the City is $44,686,442. The City does not currently have any debt outstanding that is applicable to the limit. Additional information on the City’s long-term debt can be found in Note 3 (F) on pages 69 through 72 of this CAFR. Economic Factors and Next Year's Budget and Rates All of these factors were considered in the preparation of the City’s budget for the 2016 fiscal year. •The unemployment rate for the City is 4.00% at the end of the 2015 fiscal year, which is a increase from the rate of 3.60% a year ago. This compares to the State’s average unemployment rate of 3.70% and the national average of 4.80%. •An increase in estimated taxable market value of 6.4 percent from taxes payable 2015 to 2016. The taxable market value increase was driven by significant increases in residential property values (11.4%). •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. •Development activity continues at the Shingle Creek Crossing site, the business activity in 2015 included the completion of the Discount Tire Store, Kid's Foot Locker, Rue 21, Villa, a lease with Caribou Coffee and Brueggers Bagel and a PUD amendment to the former Kohl's site was approved to add an additional 9,400 square foot retail building. •In December 2013 the EDA purchased a 23.2 acre property formerly known as the Brookdale Square shopping center which adjoins the EDA's 8.4 acre former Brookdale Ford dealership site. The EDA has entered into a preliminary development agreement with Sand Development Company for the phased development of seven apartment buildings, providing 748 market rate apartment units with underground parking, and project amenities designed for today's apartment life style within the Metro area. The initial phase of this development includes two apartment buildings with 300 units and a central park area with a recreational building, pool and patio areas. Governmental ActivitiesBusiness-type Activities Total CITY OF BROOKLYN CENTER - OUTSTANDING DEBT 27 CITY OF BROOKLYN CENTER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2015 •Hennepin County, Minnesota Department of Employment and Economic Development (DEED), and the Metropolitan Council approved three grant applications totaling $1.5 million to complete a soils investigation and remediation action plan for the former Howe Fertilizer Site. This enabled a developer to proceed with the development of a 61,000 square foot building that was completed and leased in 2015. •The EDA acquired the former Chrysler Auto Dealership, also known as Cars with Heart, a five acre commercial site at 6121 Brooklyn Boulevard. The buildings have been demolished and the EDA has approved plans and entered into a development agreement for the construction of a 156 unit senior apartment building that provides affordable assisted care opportunities for senior citizens. •The Three Rivers Park District provided funding for a realignment of the Twin Lakes Regional Trail Corridor within the eastern portion of the planned renovation of the Lake Pointe Apartments. Planning for the 2016-17 construction of an extension of this regional trail along 57th Avenue east of Highway 100, to connect the Mississippi Regional Corridor is underway. •The Brooklyn Boulevard bridge and trail improvements over State Highway 100 were completed and a cooperative grant application with Hennepin County has received favorable scoring for Federal funding of the reconstruction of the southern portion of the Brooklyn Boulevard Corridor Study (southern border of the City to County Road 10/Bass Lake Road). Construction is planned for 2018. •In 2015, construction of the New Millennium Academy, a 550 student charter school commenced on the former Malmborg's Nursery site and is scheduled to open in the fall of 2016. •The City's water treatment plant is fully operational beginning in January 2016, which reduced the level of manganese from our water supply. The estimated total cost for the water treatment plant is $19.66 million. Financing is being provided through a low interest loan under the Drinking Water Revolving Fund through the Minnesota Public Facilities (PFA) loan program. The loan will be repaid over twenty years at an interest rate of one percent. •Utility rates have been projected into a rolling 15 year model to allow for funding of system maintenance, technology changes and capital repair and replacements while moderating annual rate adjustments. On January 1, 2016 the sanitary sewer utility quarterly base charge increased from $78.45 to $80.02. The water utility rates increased for both base and consumption charges. The quarterly base charge of $10.00 per residential and commercial irrigation meter increased to $12.20 per meter. The consumption charge of $1.66 per 1,000 gallons (up to 30,000 gallons per quarter), increased by $0.37 per 1,000 gallons. Multi-family, commercial and industrial properties pay a quarterly base charge depending on the size of the meters and a consumption rate per 1,000 gallons. The consumption rate increased $0.56 to $2.53 per 1,000 gallons. The City’s policy is to maintain a General fund unassigned fund balance of 50% - 52% of the ensuing year’s budgeted General fund operations. Additionally the City's capital project funding policy that transfers the amount of fund balance exceeding 52% to the Capital Improvements fund following the completed audit of the City's CAFR. The City transferred $908,761 for Capital Improvements from the General Fund. The City has assigned $804,815 (the amount exceeding 52%) for capital improvements within the General Fund. Total unassigned and assigned fund balance at the end of 2015 was $11,092,058 (56.07%) of the adopted 2016 budgeted expenditures. Requests for Information This financial report is designed to provide a general overview of the City of Brooklyn Center's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Finance Director, 6301 Shingle Creek Parkway, Brooklyn Center, MN 55430. 28 Basic Financial Statements CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF NET POSITION December 31, 2015 GovernmentalBusiness-Type ActivitiesActivitiesTotal ASSETS Cash and investments 30,887,591$ 12,432,850$ 43,320,441$ Cash with fiscal agents6,782,081 - 6,782,081 Receivables: Accounts - net 407,762 2,390,962 2,798,724 Taxes572,470 - 572,470 Special assessments4,502,639 475,127 4,977,766 Internal balances2,923,811 (2,923,811) - Due from other governments 3,796,202 - 3,796,202 Prepaid items36,315 232,675 268,990 Inventories 60,839 785,167 846,006 Notes receivable279,400 - 279,400 Assets held for resale16,115,075 - 16,115,075 Capital assets: Nondepreciable12,637,315 28,841,872 41,479,187 Depreciable43,895,733 37,728,277 81,624,010 Net pension asset1,092,416 - 1,092,416 Total assets123,989,649 79,963,119 203,952,768 DEFERRED OUTFLOWS OF RESOURCES Deferred pension resources2,436,688 - 2,436,688 LIABILITIES Accounts payable1,197,543 1,321,209 2,518,752 Contracts payable238,378 1,118,724 1,357,102 Accrued salaries and wages164,408 33,531 197,939 Accrued interest payable448,419 92,878 541,297 Due to other governments 112,097 82,489 194,586 Deposits payable252,639 413,546 666,185 Unearned revenue 1,100 217,963 219,063 Compensated absences payable: Due within one year 125,485 - 125,485 Due in more than one year 1,129,366 - 1,129,366 Net OPEB obligation: Due in more than one year 710,605 - 710,605 Bonds and net pension liability payable: Due within one year 9,390,000 1,084,000 10,474,000 Due in more than one year 31,595,724 19,944,910 51,540,634 Total liabilities 45,365,764 24,309,250 69,675,014 DEFERRED INFLOWS OF RESOURCES Deferred pension resources 1,804,016 - 1,804,016 NET POSITION Net investment in capital assets 47,941,800 47,201,239 95,143,039 Restricted for: Statutory housing obligations 556,470 - 556,470 Tax increment financing19,328,012 - 19,328,012 Economic development1,522,267 - 1,522,267 Law enforcement enhancements83,686 - 83,686 Debt service11,218,383 - 11,218,383 Pension benefits1,178,922 - 1,178,922 State-aid street systems2,922,853 - 2,922,853 Unrestricted(5,495,836) 8,452,630 2,956,794 Total net position79,256,557$ 55,653,869$ 134,910,426$ The notes to the financial statements are an integral part of this statement. 29 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF ACTIVITIES For the Year Ended December 31, 2015 Charges For FUNCTIONS/PROGRAMS Expenses Services Government activities: General government 3,527,323$ 653,535$ Public safety10,707,602 548,669 Public works3,867,406 226,645 Community services 135,604 - Parks and recreation3,053,328 564,217 Economic development 5,419,304 225,057 Interest on long-term debt 723,000 - Total government activities27,433,567 2,218,123 Business-type activities: Municipal liquor 5,816,363 6,061,680 Golf course270,307 208,346 Earle Brown Heritage Center 4,739,543 4,649,162 Water utility 2,179,892 2,640,665 Sanitary sewer utility 3,694,880 4,095,017 Storm drainage utility 1,883,154 1,635,655 Street light utility 281,661 464,258 Recycling utility 292,282 315,434 Total business-type activities19,158,082 20,070,217 Total46,591,649$ 22,288,340$ The notes to the financial statements are an integral part of this statement. 30 Program Revenues Net (Expense) Revenue and Changes in Net Position Operating Capital Grants andGrants andGovernmentalBusiness-Type ContributionsContributionsActivities Activities Total -$ -$ (2,873,788)$ -$ (2,873,788)$ 1,198,544 - (8,960,389) - (8,960,389) 110,000 5,151,306 1,620,545 - 1,620,545 - - (135,604) - (135,604) 98,694 33,075 (2,357,342) - (2,357,342) 1,198,239 - (3,996,008) - (3,996,008) - - (723,000) - (723,000) 2,605,477 5,184,381 (17,425,586) - (17,425,586) - - - 245,317 245,317 6,746 - - (55,215) (55,215) - - - (90,381) (90,381) 17,832 - - 478,605 478,605 5,944 - - 406,081 406,081 - - - (247,499) (247,499) - - - 182,597 182,597 - - - 23,152 23,152 30,522 - - 942,657 942,657 2,635,999$ 5,184,381$ (17,425,586) 942,657 (16,482,929) General revenues: Property taxes 15,320,998 - 15,320,998 Tax increments3,805,367 - 3,805,367 Lodging taxes1,075,425 - 1,075,425 Grants and contributions not restricted to specific programs 1,670,928 - 1,670,928 Unrestricted investment earnings 254,366 127,686 382,052 Gain on disposal of capital asset 27,800 - 27,800 Transfers 236,312 (236,312) - Transfers - capital assets (1,034,574) 1,034,574 - Total general revenues and transfers21,356,622 925,948 22,282,570 Change in net position 3,931,036 1,868,605 5,799,641 Net position - January 183,366,750 55,356,897 138,723,647 Change in Accounting Principle - Pension(8,041,229) (1,571,633) (9,612,862) Net position - January 1, restated75,325,521 53,785,264 129,110,785 Net position - December 31 79,256,557$ 55,653,869$ 134,910,426$ 31 CITY OF BROOKLYN CENTER, MINNESOTA BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2015 TaxTax IncrementIncrementDebt GeneralDistrict No. 3District No. 5Service ASSETS Cash and investments11,457,254$ 1,667,200$ 104,859$ 2,048,021$ Cash with fiscal agents- - - 6,782,081 Receivables: Accounts - net116,398 19,807 - - Current taxes67,772 16,275 - 1,643 Delinquent taxes268,586 89,806 110,493 - Special assessments137,582 - - 2,921,887 Due from other funds144,982 - - - Due from other governments40,080 - - - Notes receivable- - 279,400 - Inventories44,044 - - - Prepaid items34,815 - - - Advances to other funds- - - - Assets held for resale- 15,578,075 - - Total assets12,311,513 17,371,163 494,752 11,753,632 LIABILITIES Accounts payable343,678 84,598 102,642 1,300 Contracts payable- - - - Accrued salaries and wages155,001 - - - Due to other funds- - - - Due to other governments26,026 - - 85,530 Deposits payable 216,846 - - - Unearned revenue 1,100 - - - Advances from other funds - - 2,463,683 - Total liabilities 742,651 84,598 2,566,325 86,830 DEFERRED INFLOWS OF RESOURCES Unavailable revenue - property taxes 268,586 - - - Unavailable revenue - tax increments - 89,806 110,493 - Unavailable revenue - special assessments 129,359 - - 2,918,888 Unavailable revenue - notes receivable - - 59,400 - Unavailable revenue - intergovernmental - - - - Total deferred inflows of resources 397,945 89,806 169,893 2,918,888 FUND BALANCES (DEFICITS) Nonspendable 78,859 - - - Restricted - 17,196,759 - 8,747,914 Committed - - - - Assigned 804,815 - - - Unassigned 10,287,243 - (2,241,466) - Total fund balances (deficits)11,170,917 17,196,759 (2,241,466) 8,747,914 Total liabilities, deferred inflows of resources and fund balances (deficits)12,311,513$ 17,371,163$ 494,752$ 11,753,632$ The notes to the financial statements are an integral part of this statement. 32 Municipal CapitalState AidInfrastructureOther ImprovementsforConstructionNonmajorTotal FundConstructionFundGovernmentalGovernmental 3,210,679$ -$ -$ 6,168,923$ 24,656,936$ - - - - 6,782,081 - - 71,308 164,692 372,205 617 - - 1,173 87,480 9,442 - - 6,663 484,990 2,036 - 1,441,134 - 4,502,639 706,834 - - - 851,816 - 3,583,557 - 153,295 3,776,932 - - - - 279,400 - - - - 44,044 - - - 1,500 36,315 792,488 - - 2,463,683 3,256,171 - - - 537,000 16,115,075 4,722,096 3,583,557 1,512,442 9,496,929 61,246,084 121,201 5,000 151,393 353,568 1,163,380 180,538 - 57,840 - 238,378 - - - 5,269 160,270 - 655,248 51,586 - 706,834 - 456 - 37 112,049 - - - 35,793 252,639 - - - - 1,100 - - - - 2,463,683 301,739 660,704 260,819 394,667 5,098,333 9,442 - - 6,663 284,691 - - - - 200,299 2,036 - 1,434,768 - 4,485,051 - - - - 59,400 - 2,699,322 - - 2,699,322 11,478 2,699,322 1,434,768 6,663 7,728,763 - - - 1,500 80,359 - 223,531 - 4,197,207 30,365,411 4,408,879 - - 4,897,345 9,306,224 - - - - 804,815 - - (183,145) (453) 7,862,179 4,408,879 223,531 (183,145) 9,095,599 48,418,988 4,722,096$ 3,583,557$ 1,512,442$ 9,496,929$ 61,246,084$ 33 This page has been left blank intentionally. 34 CITY OF BROOKLYN CENTER, MINNESOTA RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION December 31, 2015 Fund balances - governmental funds 48,418,988$ Amounts reported for the governmental activities within the statement of net position are different because: Capital assets used in governmental activities are not financial resources, and therefore, are not reported as assets in governmental funds. Cost of capital assets 88,432,872 Accumulated depreciation (35,791,354) Long-term liabilities, including bonds payable, are not due and payable in the current period, and therefore, are not reported as liabilities in governmental funds. Bonds payable (29,476,248) Accrued interest payable (448,419) Some receivables are not available soon enough to pay for the current period's expenditures, and therefore, are unavailable in governmental funds. Delinquent property taxes receivable 284,691 Delinquent tax increments receivable 200,299 Special assessments receivable 4,485,051 Interest on notes receivable 59,400 Intergovernmental receivable 2,699,322 The Plan Fiduciary Net Position of the City's Fire Relief Association Pension Fund currently exceeds the actuarially determined total pension liability creating a net pension asset1,092,416 Deferred outflows related to the City's Fire Relief Association Pension Fund Net difference between projected and actual investment earnings81,506 Contributions to the plan subsequent to the measurement date148,061 Deferred inflows related to City's Fire Relief Association Pension Fund Grant funding of contributions to the plan subsequent to the measurement date(143,061) Internal service funds are used by management to charge the cost of certain activities to individual funds. The assets and liabilities are included in the governmental statement of net position.(786,967) Total net position - governmental activities79,256,557$ The notes to the financial statements are an integral part of this statement. 35 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended December 31, 2015 TaxTax IncrementIncrementDebt GeneralDistrict No. 3District No. 5Service REVENUES Property taxes 14,456,614$ -$ -$ 389,705$ Tax increments - 2,953,728 353,417 - Franchise fees - - - - Lodging taxes 1,075,425 - - - Licenses and permits 859,534 - - - Intergovernmental 1,410,695 - - - Charges for services 749,569 177,213 - - Special assessments 148,234 - - 1,120,946 Fines and forfeits 268,116 - - - Investment earnings (net of market value adjustment)62,276 19,833 458 8,203 Miscellaneous 142,800 21,874 - - Total revenues 19,173,263 3,172,648 353,875 1,518,854 EXPENDITURES Current: General government2,760,756 - - - Public safety9,785,487 - - - Public works1,876,899 - - - Community services135,604 - - - Parks and recreation2,488,990 - - - Economic development510,827 1,483,476 1,295,482 - Nondepartmental450,129 - - - Capital outlay: General government8,253 - - - Public safety23,690 - - - Public works3,893 - - - Parks and recreation3,270 - - - Debt service: Principal- - - 3,025,000 Interest- - - 826,053 Fiscal agent fees- - - 9,838 Bond issuance costs- - - 71,102 Total expenditures18,047,798 1,483,476 1,295,482 3,931,993 Excess (deficiency) of revenues over (under) expenditures 1,125,465 1,689,172 (941,607) (2,413,139) OTHER FINANCING SOURCES (USES) Transfers in 201,684 - - 2,395,982 Issuance of debt - - - 6,600,000 Premium on issuance of debt - - - 255,630 Sale of capital assets - 4,820 - - Transfers out (1,176,313) (2,395,982) - - Total other financing sources (uses)(974,629) (2,391,162) - 9,251,612 Net change in fund balance 150,836 (701,990) (941,607) 6,838,473 Fund balances (deficits) - January 1 11,020,081 17,898,749 (1,299,859) 1,909,441 Fund balances (deficits) - December 31 11,170,917$ 17,196,759$ (2,241,466)$ 8,747,914$ The notes to the financial statements are an integral part of this statement. 36 Municipal CapitalState AidInfrastructureOther ImprovementsforConstructionNonmajorTotal FundConstructionFundGovernmentalGovernmental (5,206)$ -$ -$ 274,058$ 15,115,171$ - - - 362,053 3,669,198 - - - 653,648 653,648 - - - - 1,075,425 - - - - 859,534 747,076 1,072,031 - 1,518,674 4,748,476 188 - 33,785 6,952 967,707 157 - 445,822 - 1,715,159 - - - 23,566 291,682 43,389 15,230 - 53,783 203,172 116,500 - 76,172 72,229 429,575 902,104 1,087,261 555,779 2,964,963 29,728,747 161,315 - - 16,365 2,938,436 - - - 218,988 10,004,475 - 109,981 44,933 - 2,031,813 - - - - 135,604 161,315 - - 140,319 2,790,624 - - - 1,979,840 5,269,625 - - - - 450,129 699,384 - - 27,723 735,360 - - - 19,010 42,700 - 2,583,849 1,455,128 2,241,978 6,284,848 2,841,338 - - 568,254 3,412,862 - - - - 3,025,000 - - - - 826,053 - - - - 9,838 - - 17,769 28,509 117,380 3,863,352 2,693,830 1,517,830 5,240,986 38,074,747 (2,961,248) (1,606,569) (962,051) (2,276,023) (8,346,000) 1,125,216 - - 818,702 4,541,584 - - 1,222,708 2,193,540 10,016,248 - - 19,391 34,788 309,809 - - - - 4,820 (264,319) - - (476,047) (4,312,661) 860,897 - 1,242,099 2,570,983 10,559,800 (2,100,351) (1,606,569) 280,048 294,960 2,213,800 6,509,230 1,830,100 (463,193) 8,800,639 46,205,188 4,408,879$ 223,531$ (183,145)$ 9,095,599$ 48,418,988$ 37 CITY OF BROOKLYN CENTER, MINNESOTA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended December 31, 2015 Total net change in fund balances - governmental funds2,213,800$ Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives as depreciation. Capital outlays 10,465,952 Depreciation expense (2,489,587) Contributions of capital assets to the proprietary funds decrease net position in the statement of activities, but do not appear in the governmental funds because they are not financial resources.(1,034,574) 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. Long-term debt issued (10,016,248) Principal repayments 3,025,000 Interest on long-term debt in the statement of activities differs from the amount reported in the governmental funds because interest is recognized as an expenditure in the funds when it is due, and thus requires the use of current financial resources. In the statement of activities, however, interest expense is recognized as the interest accrues, regardless of when it is due.(79,541) Contributions to the Fire Relief Association Pension are reported as expenses in the fund financial statements. In the statement of activities, however, all facets of the pension plan are taken into account and when considering things such as investment return, changes in assumptions, and plan performance differing from expectations, pension expense related to this retirement plan for the year was reported at the following amount.100,660 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 205,827 Tax increments 136,169 Special assessments 346,883 Interest on notes receivable (forgiven)(150,600) Intergovernmental 1,621,818 Internal service funds are used by management to charge the cost of certain activities to individual funds. This amount is net revenue attributable to governmental activities.(414,523) Change in net position - governmental activities 3,931,036$ The notes to the financial statements are an integral part of this statement. 38 CITY OF BROOKLYN CENTER, MINNESOTA GENERAL FUND - STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Variance with Final Budget - Budgeted AmountsActualPositive OriginalFinalAmounts(Negative) REVENUES Property taxes 14,871,533$ 14,871,533$ 14,456,614$ (414,919)$ Lodging taxes 880,000 880,000 1,075,425 195,425 Licenses and permits 728,115 728,115 859,534 131,419 Intergovernmental 1,362,941 1,362,941 1,410,695 47,754 Charges for services 855,000 855,000 749,569 (105,431) Special assessments 85,000 85,000 148,234 63,234 Fines and forfeits 316,500 316,500 268,116 (48,384) Investment earnings (net of market value adjustment)46,787 46,787 62,276 15,489 Miscellaneous 106,725 106,725 142,800 36,075 Total revenues 19,252,601 19,252,601 19,173,263 (79,338) EXPENDITURES Current: General government3,028,435 3,028,435 2,760,756 267,679 Public safety10,329,293 10,329,293 9,785,487 543,806 Public works2,092,330 2,092,330 1,876,899 215,431 Community services161,000 161,000 135,604 25,396 Parks and recreation2,625,401 2,625,401 2,488,990 136,411 Economic development418,000 418,000 510,827 (92,827) Nondepartmental404,253 404,253 450,129 (45,876) Capital outlay: General government22,500 22,500 8,253 14,247 Public safety107,000 107,000 23,690 83,310 Public works4,000 4,000 3,893 107 Parks and recreation23,000 23,000 3,270 19,730 Total expenditures19,215,212 19,215,212 18,047,798 1,167,414 Excess (deficiency) of revenues over (under) expenditures 37,389 37,389 1,125,465 1,088,076 OTHER FINANCING SOURCES (USES) Transfers in 150,000 150,000 201,684 51,684 Transfers out (187,389) (187,389) (1,176,313) (988,924) Total other financing sources (uses)(37,389) (37,389) (974,629) (937,240) Net change in fund balance - - 150,836 150,836 Fund balance - January 1 11,020,081 11,020,081 11,020,081 - Fund balance - December 31 11,020,081$ 11,020,081$ 11,170,917$ 150,836$ The notes to the financial statements are an integral part of this statement. 39 CITY OF BROOKLYN CENTER, MINNESOTA TAX INCREMENT DISTRICT NO. 3 - STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Variance with Final Budget - Budgeted AmountsActualPositive OriginalFinalAmounts(Negative) REVENUES Tax increments2,976,947$ 2,976,947$ 2,953,728$ (23,219)$ Charges for services- - 177,213 177,213 Investment earnings (net of market value adjustment)9,939 9,939 19,833 9,894 Miscellaneous- - 21,874 21,874 Total revenues2,986,886 2,986,886 3,172,648 185,762 EXPENDITURES Current: Economic development8,000 8,000 1,483,476 (1,475,476) Excess of revenues over expenditures2,978,886 2,978,886 1,689,172 (1,289,714) OTHER FINANCING SOURCES (USES) Sale of capital assets- - 4,820 4,820 Transfers out(2,497,331) (2,497,331) (2,395,982) 101,349 Total other financing sources (uses)(2,497,331) (2,497,331) (2,391,162) 106,169 Net change in fund balance481,555 481,555 (701,990) (1,183,545) Fund balance - January 1 17,898,749 17,898,749 17,898,749 - Fund balance - December 3118,380,304$ 18,380,304$ 17,196,759$ (1,183,545)$ The notes to the financial statements are an integral part of this statement. 40 CITY OF BROOKLYN CENTER, MINNESOTA TAX INCREMENT DISTRICT NO. 5 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Variance with Final Budget - Budgeted AmountsActualPositive OriginalFinalAmounts(Negative) REVENUES Tax increments435,437$ 435,437$ 353,417$ (82,020)$ Investment earnings (net of market value adjustment)816 816 458 (358) Total revenues436,253 436,253 353,875 (82,378) EXPENDITURES Current: Economic development: Services and other charges400,469 400,469 1,295,482 (895,013) Excess (deficiency) of revenues over (under) expenditures35,784 35,784 (941,607) (977,391) OTHER FINANCING SOURCES (USES) Transfers out(34,968) (34,968) - 34,968 Net change in fund balance816 816 (941,607) (942,423) Fund balance - January 1(1,299,859) (1,299,859) (1,299,859) - Fund balance - December 31(1,299,043)$ (1,299,043)$ (2,241,466)$ (942,423)$ The notes to the financial statements are an integral part of this statement. 41 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF NET POSITION PROPRIETARY FUNDS December 31, 2015 MunicipalGolfEarle BrownWater LiquorCourseHeritage CenterUtility ASSETS Current assets: Cash and cash equivalents1,916,501$ -$ 2,405,680$ 1,265,194$ Receivables: Accounts - net9,280 - 247,236 679,158 Special assessments- - - 475,127 Due from other governments- - - - Prepaid items28,386 - 17,102 1,834 Inventories706,220 1,930 32,275 44,742 Total current assets2,660,387 1,930 2,702,293 2,466,055 Noncurrent assets: Capital assets: Land- 1,390,402 1,493,300 20,734 Easements- - - - Land improvements- 65,637 377,254 - Buildings and improvements192,771 664,322 12,502,163 3,033,212 Machinery and equipment261,786 11,160 386,309 128,668 Street light systems- - - - Mains and lines- - - 22,395,083 Construction in progress- - - 21,555,709 Total capital assets454,557 2,131,521 14,759,026 47,133,406 Less: accumulated depreciation(324,890) (455,365) (11,340,828) (16,029,730) Net capital assets129,667 1,676,156 3,418,198 31,103,676 Total noncurrent assets129,667 1,676,156 3,418,198 31,103,676 Total assets 2,790,054 1,678,086 6,120,491 33,569,731 DEFERRED OUTFLOWS OF RESOURCES Deferred pension resources- - - - LIABILITIES Current liabilities: Accounts payable149,413 700 66,691 918,859 Contracts payable- - 161,202 915,626 Accrued salaries and wages8,037 1,115 12,811 6,151 Accrued interest payable- - - 70,048 Due to other funds- 144,982 - - Due to other governments55,021 - 22,740 4,023 Deposits payable- - 407,921 5,625 Unearned revenue3,472 - 1,600 212,891 Notes payable- - - 944,000 Bonds payable- - - 105,000 Compensated absences payable- - - - Total current liabilities215,943 146,797 672,965 3,182,223 Noncurrent liabilities: Notes payable- - - 16,601,158 Bonds payable- - - 1,140,000 Advances from other funds- 792,488 - - Compensated absences payable- - - - Net OPEB obligation- - - - Net pension liability - - - - Total noncurrent liabilities - 792,488 - 17,741,158 Total liabilities 215,943 939,285 672,965 20,923,381 DEFERRED INFLOWS OF RESOURCES Deferred pension resources - - - - NET POSITION Net investment in capital assets 129,667 1,676,156 3,418,198 13,558,518 Unrestricted 2,444,444 (937,355) 2,029,328 (912,168) Total net position 2,574,111$ 738,801$ 5,447,526$ 12,646,350$ Net position from this Statement Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Net position of business-type activities The notes to the financial statements are an integral part of this statement. Business-Type Activities 42 Governmental Activities- Sanitary SewerStorm DrainageStreet LightRecyclingTotalInternal UtilityUtilityUtilityUtilityEnterpriseService 3,061,120$ 3,337,832$ 405,103$ 41,420$ 12,432,850$ 6,230,655$ 943,513 349,633 100,526 61,616 2,390,962 35,557 - - - - 475,127 - - - - - - 19,270 185,353 - - - 232,675 - - - - - 785,167 16,795 4,189,986 3,687,465 505,629 103,036 16,316,781 6,302,277 3,389 287,158 - - 3,194,983 - 20,335 10,285 - - 30,620 - - - - - 442,891 166,108 2,571,416 - - - 18,963,884 - 179,130 24,587 - - 991,640 9,181,885 - - 832,789 - 832,789 - 21,543,362 27,860,191 - - 71,798,636 - 1,664,651 2,383,107 33,137 - 25,636,604 - 25,982,283 30,565,328 865,926 - 121,892,047 9,347,993 (13,761,932) (13,211,042) (198,111) - (55,321,898) (5,456,463) 12,220,351 17,354,286 667,815 - 66,570,149 3,891,530 12,220,351 17,354,286 667,815 - 66,570,149 3,891,530 16,410,337 21,041,751 1,173,444 103,036 82,886,930 10,193,807 - - - - - 2,207,122 17,980 142,998 24,267 301 1,321,209 34,163 18,312 23,584 - - 1,118,724 - 2,290 3,127 - - 33,531 4,138 22,830 - - - 92,878 - - - - - 144,982 - 705 - - - 82,489 48 - - - - 413,546 - - - - - 217,963 - - - - - 944,000 - 35,000 - - - 140,000 - - - - - - 125,485 97,117 169,709 24,267 301 4,509,322 163,834 - - - - 16,601,158 - 2,203,752 - - - 3,343,752 - - - - - 792,488 - - - - - - 1,129,366 - - - - - 710,605 - - - - - 11,509,476 2,203,752 - - - 20,737,398 13,349,447 2,300,869 169,709 24,267 301 25,246,720 13,513,281 - - - - - 1,660,956 10,396,599 17,354,286 667,815 - 47,201,239 3,891,530 3,712,869 3,517,756 481,362 102,735 10,438,971 (6,664,838) 14,109,468$ 20,872,042$ 1,149,177$ 102,735$ 57,640,210$ (2,773,308)$ 57,640,210$ (1,986,341) 55,653,869$ Business-Type Activities 43 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION PROPRIETARY FUNDS For the Year Ended December 31, 2015 MunicipalGolfEarle BrownWater LiquorCourseHeritage CenterUtility OPERATING REVENUES Sales and user fees 6,056,668$ 208,225$ 4,487,260$ 2,573,493$ Cost of sales 4,431,501 - 2,033,464 - Total operating revenues 1,625,167 208,225 2,453,796 2,573,493 OPERATING EXPENSES Personal services 653,553 137,679 1,025,875 521,394 Supplies 52,247 24,051 123,072 161,757 Other services 270,606 66,691 697,269 449,361 Insurance 15,741 4,135 37,852 26,392 Utilities 46,384 16,334 185,406 145,496 Rent 311,553 - - - Depreciation 16,966 18,737 620,249 703,933 Total operating expenses 1,367,050 267,627 2,689,723 2,008,333 Operating income (loss)258,117 (59,402) (235,927) 565,160 NONOPERATING REVENUES (EXPENSES) Intergovernmental - 6,746 - 17,832 Investment earnings (net of market value adjustment)15,006 - 16,829 30,423 Special assessments - - - 39,887 Gain on sale of capital assets - - - - Loss on disposal of capital assets - - - - Other revenue (expense)5,012 121 161,902 27,285 Interest and fiscal agent fees - - - (154,702) Total nonoperating revenues (expenses)20,018 6,867 178,731 (39,275) Income (loss) before transfers 278,135 (52,535) (57,196) 525,885 Capital contributions from other funds - - - - Transfers in - 40,000 - - Transfers out (216,455) - (14,857) - Change in net position 61,680 (12,535) (72,053) 525,885 Net position - January 1 2,512,431 751,336 5,519,579 12,120,465 Change in Accounting Principle - Pension - - - - Net position - January 1, restated 2,512,431 751,336 5,519,579 12,120,465 Net position - December 31 2,574,111$ 738,801$ 5,447,526$ 12,646,350$ Change in net position from this Statement Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Change in net position of business-type activities The notes to the financial statements are an integral part of this statement. Business-Type Activities 44 Governmental Activities- Sanitary SewerStorm DrainageStreet LightRecyclingTotalInternal UtilityUtilityUtilityUtilityEnterpriseService 4,093,725$ 1,635,555$ 455,358$ 315,434$ 19,825,718$ 3,022,951$ - - - - 6,464,965 - 4,093,725 1,635,555 455,358 315,434 13,360,753 3,022,951 203,365 193,795 - - 2,735,661 2,279,251 53,260 45,005 2,439 25 461,856 405,086 2,547,147 527,506 57,143 291,102 4,906,825 160,554 32,896 3,242 1,363 1,155 122,776 56,693 36,826 - 167,149 - 597,595 895 - - - - 311,553 - 783,500 1,106,276 53,567 - 3,303,228 761,629 3,656,994 1,875,824 281,661 292,282 12,439,494 3,664,108 436,731 (240,269) 173,697 23,152 921,259 (641,157) 5,944 - - - 30,522 48,746 26,688 35,849 2,586 305 127,686 51,194 - - - - 39,887 - - - - - - 27,800 - - - - - (18,175) 1,292 100 8,900 - 204,612 40,121 (29,362) - - - (184,064) - 4,562 35,949 11,486 305 218,643 149,686 441,293 (204,320) 185,183 23,457 1,139,902 (491,471) - 1,034,574 - - 1,034,574 - - - - - 40,000 7,389 - (45,000) - - (276,312) - 441,293 785,254 185,183 23,457 1,938,164 (484,082) 13,668,175 20,086,788 963,994 79,278 55,702,046 8,401,896 - - - - - (10,691,122) 13,668,175 20,086,788 963,994 79,278 55,702,046 (2,289,226) 14,109,468$ 20,872,042$ 1,149,177$ 102,735$ 57,640,210$ (2,773,308)$ 1,938,164$ (69,559) 1,868,605$ Business-Type Activities 45 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2015 MunicipalGolfEarle BrownWater LiquorCourseHeritage CenterUtility CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users6,055,858$ 208,225$ 4,458,710$ 2,411,064$ Receipts from interfund services provided- - - - Other operating receipts5,012 5,681 161,902 27,285 Payments to suppliers(5,116,858) (111,695) (3,001,858) (653,848) Payments to employees(674,043) (140,129) (1,055,639) (536,876) Net cash flows provided (used) by operating activities269,969 (37,918) 563,115 1,247,625 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in (operating)- 40,000 - - Interfund payable (operating)- (8,828) - - Special assessments- - - 50,565 Intergovernmental grants- 6,746 - - Transfers out(216,455) - (14,857) - Net cash flows provided (used) by noncapital financing activities(216,455) 37,918 (14,857) 50,565 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets(10,050) - (111,083) (16,375,990) Intergovernmental grants- - - 17,832 Interfund payable (capital)- - - (3,542,769) Transfers in (capital)- - - - Principal paid on revenue bonds- - - (1,350,000) Principal paid on revenue notes- - - (15,352) Interest paid on capital debt- - - (108,377) Proceeds from g.o. revenue notes - - - 17,560,510 Proceeds from g.o. revenue bonds (net)- - - - Proceeds from refunding bonds issued (net)- - - 1,245,000 Proceeds from sale of assets - - - - Net cash flows provided (used) by capital and related financing activities(10,050) - (111,083) (2,569,146) CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments 15,006 - 16,829 30,423 Net increase (decrease) in cash and cash equivalents 58,470 - 454,004 (1,240,533) Cash and cash equivalents - January 1 1,858,031 - 1,951,676 2,505,727 Cash and cash equivalents - December 31 1,916,501$ -$ 2,405,680$ 1,265,194$ RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES Operating income (loss) 258,117$ (59,402)$ (235,927)$ 565,160$ Adjustments to reconcile operating income (loss) to net cash flows provided (used) by operating activities: Depreciation 16,966 18,737 620,249 703,933 Other income (expense) related to operations 5,012 121 161,902 27,285 (Increase) decrease in assets: Accounts receivable (1,500) - (28,550) (151,646) Due from other governments - 5,560 - - Prepaid items (729) - (8,285) (1,834) Inventories (31,153) (341) (1,082) (9,400) (Increase) decrease in deferred outflows of resources: Deferred outflows for pension - - - - Increase (decrease) in liabilities Accounts payable 43,056 (143) 84,572 140,392 Net pension liability - - - - Accrued salaries and wages (20,490) (2,450) (29,764) (15,482) Unearned revenue 690 - - (10,783) (Increase) decrease in deferred inflows of resources: Deferred pension resources - - - - Net cash flows provided (used) by operating activities 269,969$ (37,918)$ 563,115$ 1,247,625$ NONCASH FINANCING ACTIVITIES Acquisitions of capital assets on account-$ -$ -$ 1,659,503$ Capital assets contributed from other funds-$ -$ -$ -$ Capital asset trade-ins-$ -$ -$ -$ Grants deposited with pension plan-$ -$ -$ -$ Change in Accounting Principle for pensions-$ -$ -$ -$ The notes to the financial statements are an integral part of this statement. Business-Type Activities 46 Governmental Activities- Sanitary SewerStorm DrainageStreet LightRecyclingTotalInternal UtilityUtilityUtilityUtilityEnterpriseService 4,063,240$ 1,637,838$ 456,600$ 318,513$ 19,610,048$ -$ - - - - - 2,986,442 1,292 100 8,900 - 210,172 40,121 (2,717,233) (482,240) (206,066) (292,585) (12,582,383) (538,525) (205,119) (199,308) - - (2,811,114) (1,923,169) 1,142,180 956,390 259,434 25,928 4,426,723 564,869 - - - - 40,000 - - - - - (8,828) - - - - - 50,565 - - - - - 6,746 8,606 - (45,000) - - (276,312) - - (45,000) - - (187,829) 8,606 (1,643,462) (1,596,810) (33,138) - (19,770,533) (1,082,843) 5,944 - - - 23,776 - - - - - (3,542,769) - - - - - - 7,389 (450,000) - - - (1,800,000) - - - - - (15,352) - (49,717) - - - (158,094) - - - - - 17,560,510 - 1,852,676 - - - 1,852,676 - 421,353 - - - 1,666,353 - - - - - - 33,978 136,794 (1,596,810) (33,138) - (4,183,433) (1,041,476) 26,688 35,849 2,586 305 127,686 51,194 1,305,662 (649,571) 228,882 26,233 183,147 (416,807) 1,755,458 3,987,403 176,221 15,187 12,249,703 6,647,462 3,061,120$ 3,337,832$ 405,103$ 41,420$ 12,432,850$ 6,230,655$ 436,731$ (240,269)$ 173,697$ 23,152$ 921,259$ (641,157)$ 783,500 1,106,276 53,567 - 3,303,228 761,629 1,292 100 8,900 - 204,612 80,261 (30,485) 2,283 1,242 3,079 (205,577) (36,509) - - - - 5,560 (10,046) - - - (20,894) - - - - - (41,976) 6,742 - - - - - (2,207,122) (37,058) 93,513 22,028 (303) 346,057 77,961 - - - - - 818,354 (1,754) (5,513) - - (75,453) 43,754 - - - - (10,093) - - - - - - 1,660,956 1,142,180$ 956,390$ 259,434$ 25,928$ 4,426,723$ 564,869$ 18,364$ 23,584$ -$ -$ 1,701,451$ 38,670$ -$ 1,034,574$ -$ -$ 1,034,574$ -$ -$ -$ -$ -$ -$ (24,353)$ -$ -$ -$ -$ -$ 40,140$ -$ -$ -$ -$ -$ (10,691,122)$ Business-Type Activities 47 This page has been left blank intentionally. 48 Notes to Financial Statements CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 The City of Brooklyn Center was incorporated in 1911 and has operated under a Council/Manager form of government since the adoption of the City charter in 1966. The governing body consists of a Mayor and four City Council members. elected at-large to serve four-year staggered terms. The City provides a full range of municipal services to its citizens, including public safety (police and fire protection), highways and streets, parks and recreation, public improvements, planning and inspections, economic development, sanitary and storm sewer, water, and general administrative services. Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the City have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), as applied to governmental units by the Governmental Accounting Standards Board (GASB). The City’s significant accounting policies are described below. A. REPORTING ENTITY The City includes all funds, organizations, institutions, agencies, departments, boards, and offices that are not legally separate from the City. Component units are legally separate organizations for which the elected officials of the City are financially accountable and are included within the basic financial statements of the City because of the significance of their operational or financial relationships with the City. The City is considered financially accountable for a component unit if it appoints a voting majority of the organization’s governing body and is able to impose its will on the organization by significantly influencing the programs, projects, activities, or level of services performed or provided by the organization, or there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the City. Blended component units, although legally separate, are, in substance, part of the government’s operations. A blended component unit is reported as if it were a fund of the City throughout the year. It is included at both the government-wide and fund financial reporting levels. A description of the City’s blended component units follows: City of Brooklyn Center Housing and Redevelopment Authority (HRA) - 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. The HRA is reported as a Special Revenue fund. The HRA does not issue separate financial statements. Financial information may be obtained at the City’s offices. City of Brooklyn Center Economic Development Authority (EDA) – 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. The EDA is reported as a Special Revenue fund. The EDA does not issue separate financial statements. Financial information may be obtained at the City’s offices. 49 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all activities of the primary government and its component units. Governmental activities , which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities , which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or business-type activity and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or business-type activity. Taxes and other items not included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting , as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes and special assessments are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting . Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers all revenues, except reimbursement grants, to be available if they are collected within 60 days of the end of the current fiscal year. Reimbursement grants are considered available if they are collected within one year of the end of the current fiscal year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to claims and judgments, compensated absences, net pension liabilities, and OPEB are recorded only when payment is due. Property taxes, special assessments, intergovernmental revenues, charges for services and interest associated with the current fiscal year are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal year. Only the portion of special assessments receivable due within the current fiscal year is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the government. 50 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 The City reports the following major governmental funds: General Fund This is the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. Most of the current day-to-day operations of the governmental units are financed from this fund. Tax Increment District No. 3 Special Revenue Fund This fund was established to account for 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. Tax Increment District No. 5 Special Revenue Fund This fund was established to account for the collection of tax increment generated revenues for parcels within the District. These funds are used to finance the various redevelopment activities within the District, which consisted of the redevelopment of the former Brookdale mall site, which is now called Shingle Creek Crossing. Debt Service Fund This fund is used to account for the collection of property taxes, special assessments and other resources which are used to repay the principal and interest on debt issued for various improvements in the City. Municipal State-Aid for Construction Capital Project Fund This fund was established to account for the state allotment of construction and maintenance aid. The source of the State funding is provided for through the collection of gasoline taxes. The funds accumulated must be used on transportation related construction and maintenance projects. Capital Improvements Capital Project Fund This fund was established to provide funds and to account for the expenditure of such funds, for major capital outlays. The accumulation of funds to provide for such outlays is an attempt to reduce future debt issuance. The financing sources of the fund primarily consist of transfers from other funds. Infrastructure Construction Capital Project Fund This fund was established to account for the resources and expenditures required for the acquisition and construction of capital facilities or improvements financed wholly or in part by special assessments levied against benefited properties. 51 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 The government reports the following major enterprise funds: Municipal Liquor Fund The fund accounts for the operations of the City’s municipal off-sale liquor stores. Golf Course Fund The fund accounts for operations of Centerbrook Golf Course, a 9 hole executive golf course owned by the City. Earle Brown Heritage Center Fund The Earle Brown Heritage Center is a pioneer farmstead that has been historically preserved and restored as a modern multipurpose facility. Its convention center can host conferences, trade shows and concerts. Water Utility Fund The fund accounts for pumping, treatment and distribution of water to customers. Administration, wells, water storage, and distribution are included. Sanitary Sewer Utility Fund The fund accounts for 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% of this fund’s operating expenses. Storm Drainage Utility Fund The fund accounts for the 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. Street Light Utility Fund The fund accounts for the electrical service, maintenance, repair and replacement of lights owned by the City as well as those lights owned by Xcel Energy. Recycling Utility Fund The fund accounts for the contracted services to provide a City wide recycling program. Additionally, the City reports the following fund type: Internal Service Funds Account for compensated absences, health care insurance benefits for retired employees, pension liabilities, and central garage services 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 the government-wide financial statements. Exceptions to this general rule are transactions that would be treated as revenues, expenditures or expenses if they involved external organizations, such as buying goods and services or payments in lieu of taxes. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. 52 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the enterprise funds and internal service funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. D. CASH AND INVESTMENTS The City considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. All of the cash and investments allocated to the proprietary funds have original maturities of 90 days or less. 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’s investment policy authorizes the City to invest in the following: a) Securities which are direct obligations or are guaranteed or insured issues of the United States, its agencies, its instrumentalities, or organizations created by an act of Congress, including governmental bonds, notes, bills, mortgages (excluding high-risk mortgage-backed securities), and other securities. b)Commercial paper issued by U.S. corporations or their Canadian subsidiaries that is rated in the highest quality by at least two nationally recognized rating agencies and matures in 270 days or less. c)Time deposits that are fully insured by the Federal Deposit Insurance Corporation or bankers acceptances of U.S. banks. d)Repurchase agreements and reverse repurchase agreements with financial institutions identified by Minnesota Statutes Chapter 118A. e)Securities lending agreements may be entered into with financial institutions identified by Minnesota Statutes Chapter 118A. f)Minnesota joint powers investment trusts may be entered into with trusts identified by Minnesota Statutes Chapter 118A. g)Money market mutual funds regulated by the Securities and Exchange Commission and whose portfolios consist only of short term securities permitted by Minnesota Statutes 118A. h)Bonds of the City of Brooklyn Center issued in prior years, may be redeemed at current market price, which may include a premium, prior to maturing using surplus funds of the debt service fund set up for that issue. Certain proceeds of the City's 2015B Tax Increment Refunding Bonds, are classified as cash with fiscal agent on the balance sheet because they are maintained in separate bank accounts and their use is limited by applicable bond covenants. 53 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 Investments are reported at fair value, based on quoted market prices as of the balance sheet date, except for investments in 2a7-like external investment pools, which are stated at amortized cost. Adjustments necessary to record investments at fair value are recorded in the operating statement as increases or decreases in investment earnings. Investment income on commingled funds is allocated monthly, based on month-end balances. E. RECEIVABLES AND PAYABLES During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. Short-term interfund loans are classified as “due to/from other funds.” All short-term interfund receivables and payables at December 31, 2015 are planned to be eliminated in 2016. Long-term interfund loans are classified as “advances to/from other funds.” Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances". Advances between funds, as reported in the fund financial statements, are offset by restricted or committed fund balance in applicable governmental funds. This classification is based on the restraint that will be placed on the advanced funds when they are returned to the lending fund. All miscellaneous accounts receivable and trade receivables, other than utilities, are presented net of an allowance for doubtful accounts. All utility trade receivables are reported at gross because it is the City’s policy to certify delinquent account balances as special assessments. The City expects to make full collection of all property tax and special assessment receivables, so no allowance is considered necessary. Property tax levies are submitted to the County in December each year. The County allocates these levies across taxable properties in the City based on valuations certified in the prior year. The County collects these levies and distributes the City’s proceeds in June and December of the fiscal year. These taxes are reported as general revenues in the government-wide financial statements in the year levied. Unpaid taxes at December 31 become liens on the respective property and are classified as delinquent receivables and are fully offset by a deferred inflow of resources in the fund financial statements. Delinquent taxes receivable includes the past six years of uncollected taxes. 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. Governmental special assessments have been offset by a deferred inflow of resources for collections not received within 60 days after year end in the fund financial statements. 54 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 F. 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 Earle Brown Heritage 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. Prepaid items are reported using the consumption method and recorded as expenditures/expenses at the time of consumption. G. 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 businesses. These assets are stated at the lower of cost or net realizable value. During the year ended December 31, 2015 management has reviewed the cost value reported for these assets and has indicated the properties are fairly presented for financial reporting purposes. H. CAPITAL ASSETS Capital assets, which include property, plant, equipment, infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), and intangible assets such as easements and computer software, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost in excess of the amounts in the table 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. Donated capital assets are recorded at estimated fair market value at the date of donation. 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 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. 55 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed . For the year ended December 31, 2015 no interest was capitalized in connection with construction in progress. Capital assets of the City, as well as the component units, are depreciated using the straight line method over the following estimated useful lives: Easements - temporary5years Land improvements25years Buildings and structures25years Water and sewer mains and lines, wells and storage tanks, sewer lift stations25years Infrastructure25years Street light systems15years Machinery and equipment3 - 15years I. DEFERRED OUTFLOWS OF RESOURCES In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has only one item that qualifies for reporting in the category. Accordingly, the item, deferred pension resources, is reported only in the statements of net position. This item results from actuarial calculations and current year pension contributions made subsequent to the measurement date. J. PENSIONS For purposes of measuring the net pension liability/asset, deferred outflows of resources, deferred inflows of resources, and pension expense, information about the fiduciary net position of the applicable pension and additions to or deductions from the pension plan's fiduciary net position have been determined on the same basis as they are reported by the plan except that PERA's fiscal year end is June 30. For this purpose, plan contributions are recognized as of employer payroll paid dates and benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. K. DEFERRED INFLOWS OF RESOURCES In addition to liabilities, statements of financial position or balance sheets will sometimes report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of net position that applies to future periods and so will not be recognized as an inflow of resources (revenue) until that time. The City has two types of items, which arise under a modified accrual basis of accounting, which qualify for reporting in this category. One item, unavailable revenue, is reported only in the governmental funds Balance Sheet. The governmental funds report unavailable revenue from sources such as: property taxes, tax increments, special assessments and other receivables not collected within 60 days of year-end. These amounts are deferred and recognized as an inflow of resources in the period the amounts become available. The other item results from actuarial calculations related to the City's pension obligations. 56 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 L. COMPENSATED ABSENCES It is the City's 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 Employees Compensated Absences internal service fund. In accordance with the provisions of Statement of Government Accounting Standards No. 16, Accounting for Compensated Absences, a liability is recognized for that portion of accumulating sick leave benefits that is vested. M. POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS Under Minnesota Statute 471.61, subdivision 2(b), 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 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 45, at January 1, 2014. The liability is accrued in the Public Employees Retirement internal service fund. N. 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, as well as issuance costs, are immaterial and are expensed in the year of bond issuance. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. O. FUND EQUITY Fund equity in the fund financial statements is classified as fund balance for governmental funds and net position for proprietary funds. Fund equity in the government-wide financial statements is classified as net position for both governmental and business-type activities. Fund Balance – In the fund financial statements, governmental funds report fund balance in classifications that disclose restraints for which amounts in those funds can be spent. These classifications are as follows: Nonspendable – consists of amounts that are not in spendable form or are required to be maintained intact. Restricted – consists of amounts related to externally imposed constraints established by creditors, grantors or contributors; or constraints imposed by state statutory provisions. Committed – consists of internally imposed constraints. These constraints are imposed by formal action (resolution) of the City Council, which is the highest level of decision making authority. Assigned – consists of internally imposed constraints. These constraints reflect the specific purpose for which it is the City’s intended use. These constraints are established by the City Council or, pursuant to council resolution, the City Manager or the Director of Finance. 57 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 Unassigned – is the residual classification for the general fund and also reflects negative residual amounts in other funds. When both restricted and unrestricted fund balances are available for an allowable use, it is the City’s policy to use restricted resources first, then unrestricted resources as they are needed. When committed, assigned, or unassigned resources are available for an allowable use, it is the City’s policy to use resources in the following order; 1) committed, 2) assigned, and 3) unassigned. The City has formally adopted a fund balance policy for the General Fund. The policy establishes a year-end target unassigned fund balance amount of 50-52% of the next year’s operating budget for cash flow needs (working capital). At December 31, 2015 the unassigned fund balance of the General fund was 52% of the subsequent year’s budgeted expenditures. Net Position – Net position represents the difference between assets, deferred outflows of resources, deferred inflows of resources, and liabilities. Net position, net investment in capital assets, consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any bonds used for the acquisition, construction, or improvement of those assets. Net position is reported as restricted when there are limitations imposed on their use either through constitutional provisions or enabling legislation, or through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. All remaining net position is reported as unrestricted. When both restricted and unrestricted net position are available for an allowable use, it is the government’s policy to use restricted resources first, then unrestricted resources as they are needed. P. INTERFUND TRANSACTIONS Interfund services provided and used are accounted for as revenues and expenditures or expenses. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund, are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the fund that is reimbursed. All other interfund transactions are reported as transfers. Q. USE OF ESTIMATES The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ from such estimates. R. NEW ACCOUNTING PRONOUNCEMENTS The Governmental Accounting Standards Board recently approved the following statements which were not implemented in these financial statements. The effect these standards may have on future financial statements has not been determined at this time. Statement No. 72, Fair Value Measurement and Application . The primary objective of this statement is to enhance the comparability of financial statements among governments by requiring measurement of certain assets and liabilities at fair value using a more detailed definition of fair value and accepted valuation techniques. The provisions of this statement are effective for periods beginning after June 15, 2015. 58 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 S. CHANGE IN ACCOUNTING PRINCIPLES During fiscal year 2015, the City implemented several new accounting pronouncements issued by the Government Accounting Standards Board (GASB), including Statement No. 68, Accounting and Financial Reporting for Pensions - an Amendment of GASB Statement No. 27 and Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date - an Amendment of GASB Statement No. 68, for the year ended December 31, 2015. These standards required a retroactive implementation which resulted in the restatement of beginning balances in the December 31, 2014 financial statements. Changes related to these standards are reflected in the financial statements and schedules and related disclosures are included in Note 4 and 5. As a result of the restatement of beginning balances, the following schedule reconciles the previously reported December 31, 2014 balances to the December 31, 2015 financial statements: GovernmentalBusiness-typeInternal ActivitiesActivitiesService Funds Net Position - beginning, as previously reported83,366,750$ 55,356,897$ 8,401,896$ Change in accounting principle Net Pension Asset1,058,462 - - Deferred outflows related to pensions656,663 66,166 564,286 Deferred inflows related to pensions(138,745) - - Net pension liability(9,617,609) (1,637,799) (11,255,408) Total(8,041,229) (1,571,633) (10,691,122) Net Position - beginning, restated 75,325,521$ 53,785,264$ (2,289,226)$ Note 2 STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. BUDGETARY INFORMATION Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States for all governmental funds. All annual appropriations lapse at fiscal year end. In September, the City Manager submits to the City Council proposed operating budgets for the fiscal year commencing the following January. The proposed general fund budget and preliminary tax levy must be certified to the County prior to September 30. The Council holds public hearings on the certified budget and levy and must submit a final levy to the County prior to the end of December. 59 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 The appropriated budget is prepared by fund and department. The City Council must authorize any transfer of budgeted amounts between departments or funds. Transfers of budgeted amounts within departments in the General Fund must be authorized by the City Manager. The legal level of budgetary control is the department level for the General Fund and the fund level for all other governmental funds. There were no supplemental budgetary appropriations or amendments during the year. For the year ended December 31, 2015 expenditures and transfers out exceeded appropriations in the following General Fund departments and other governmental funds: FinalExcess of BudgetActualAppropriations Major Funds: General Fund: Mayor and council122,010$ 123,085$ (1,075)$ Assessing201,100 202,443 (1,343) Park and recreation administration219,626 221,922 (2,296) Convention bureau418,000 510,827 (92,827) Nondepartmental404,253 450,129 (45,876) Transfers out187,389 1,176,313 (988,924) Major Funds: Special Revenue Funds: Tax Increment District No. 32,505,331 3,879,458 (1,374,127) Tax Increment District No. 5435,437 1,295,482 (860,045) Debt Service Fund 3,861,553 3,931,993 (70,440) Capital Project Funds: Capital Improvements956,000 4,127,671 (3,171,671) Municipal State Aid for Construction2,670,000 2,693,830 (23,830) Infrastructure Construction1,371,595 1,517,830 (146,235) Nonmajor Funds: Special Revenue Funds: Economic Development Authority 436,983 1,137,307 (700,324) Community Development Block Grant 150,000 368,841 (218,841) Tax Increment District No. 2 - 21,655 (21,655) Tax Increment District No. 4 464,683 640,137 (175,454) Centennial Amphitheater 588,500 632,925 (44,425) Capital Project Funds: Street Reconstruction 2,150,000 2,270,487 (120,487) 60 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 B. DEFICIT FUND EQUITY Deficit fund equity exists at December 31, 2015 in the following funds: Unassigned deficit fund balance Major Funds: Tax Increment District No. 52,241,466$ Infrastructure Construction183,145 Nonmajor Funds: Community Development Block Grant453 Unrestricted deficit net position Major Funds: Golf Course937,355 Water Utility912,168 Internal Service Funds: EE Retirement Benefit144,875 Pension - GERF6,382,118 Pension - PEPFF4,581,192 The deficits are being funded through internal borrowing and will be repaid from future collections of tax increment, future collections of special assessments, internal transfers, and future bond issuance. The Internal service deficits will be funded through future interfund charges, state grant revenues, and employee witholdings. Note 3 DETAILED NOTES ON ALL FUNDS A. DEPOSITS AND INVESTMENTS In accordance with Minnesota Statutes, the City maintains deposits at only those depository banks authorized by the City Council. All such depositories are members of the Federal Reserve System. Minnesota Statutes require that all City deposits be protected by insurance, surety bond, or collateral. The market value of collateral pledged must equal 110% of the deposits not covered by insurance or bonds. Authorized collateral includes the legal investments described in Note 1.D., as well as certain first mortgage notes, and certain other state or local government obligations. Minnesota Statutes require that securities pledged as collateral be placed in safekeeping in a restricted account at the Federal Reserve bank, or in an account at a trust department of a commercial bank or other financial institution that is not owned or controlled by the financial institution furnishing the collateral. At year-end, the City’s carrying value amount of deposits was $6,782,081 composed of bank balances of $6,782,081. As of December 31, 2015 the City had the following investments and maturities: Investment Type Fair ValueNo maturity< 1 1 - 3 3 - 5 Negotiable certificates of deposit 13,046,427$ -$ 2,939,930$ 5,222,800$ 4,883,697$ Federal agency notes 14,056,277 - 1,004,954 11,031,875 2,019,448 External investment pool - 4M Fund 14,134,816 14,134,816 - - - Money market 2,069,116 2,069,116 - - - Total Investments 43,306,636$ 16,203,932$ 3,944,884$ 16,254,675$ 6,903,145$ Investment Maturities (in years) 61 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 As of December 31, 2015, the City had the following summary of investments related to the credit risk, par values and fair values of securities: % of total Investment TypeCredit Risk (*)ParFair ValuePortfolio Negotiable certificates of depositn/a13,067,000$ 13,046,427$ 30.13% Federal agency notesAA14,018,115 14,056,277 32.46% External investment pool - 4M Fundn/a14,057,174 14,134,816 32.64% Money marketAAA2,441,867 2,069,116 4.77% Total Investments43,584,156$ 43,306,636$ 100.00% (*) The credit risk for the Federal Agency Notes and Money Market ratings are provided by S&P. Cash and investments at year-end consist of the following: Investments43,306,636$ Deposits6,782,081 Petty cash and change funds13,805 Total cash, cash equivalents, and investments50,102,522$ The deposits and investments of the City are presented in the financial statements as follows: Statement of Net Position Cash and investments43,320,441$ Cash with fiscal agents6,782,081 Total50,102,522$ Interest rate risk – The City’s investment policy requires interest earnings remain stable and predictable through at least the next budget cycle and that at least 50% of the investment portfolio remain for two or more years with known interest rates. The policy also states that the portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably expected. Credit risk – The City’s investment policy restricts investment instruments to those authorized by Minnesota Statutes §118A as listed in Note 1.D. 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. As of December 31, 2015 the City’s investment in FHLMC, FNMA, FHLB and FFCB federal agency notes were rated AA by Standard & Poors (S&P). The City’s external investment pool is with the Minnesota Municipal Money Market Fund which is regulated by Minnesota Statutes and the Board of Directors of the League of Minnesota Cities. The 4M fund is a 2a7-like pool and is based on an amortized cost method that approximates fair value. 62 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 Concentration of credit risk – The City’s investment policy requires that the investment portfolio be diversified to minimize potential losses on individual securities. As of year end, the City had portfolio concentrations in excess of five percent (excluding external investment pools) in the following federal agencies: Federal Home Loan Mortgage Corporation (10.4%), Federal National Mortgage Association (13.9%) Federal Farm Credit Bank (4.7%) and Federal Home Loan Bank (3.5%). Custodial credit risk – The City’s investment policy requires that securities purchased from any bank or dealer be placed with an independent third party for custodial safekeeping. Investments in investment pools and money markets are not evidenced by securities that exist in physical or book entry form, and therefore are not subject to custodial credit risk disclosures. All of the City’s remaining investments were held in an institutional trust under contract with the City for safekeeping services. B. RECEIVABLES Significant receivable balances not expected to be collected within one year of December 31, 2015 are as follows: DelinquentDelinquent PropertyTaxSpecialMunicipalNotes TaxesIncrementsAssessmentsState-AidReceivable Major Funds: General268,586$ -$ 129,359$ -$ -$ Tax Increment District No. 3- 89,806 - - - Tax Increment District No. 5- 110,493 - - 279,400 Debt Service- - 2,918,888 - - Capital Improvements9,442 - 2,036 - - Municipal State Aid for Construction- - - 2,699,322 - Infrastructure Construction- - 1,434,768 - - Nonmajor Funds Housing and Redevelopment Authority6,663 - - - - Total284,691$ 200,299$ 4,485,051$ 2,699,322$ 279,400$ The Economic Development Authority (EDA) offers a down payment and closing cost assistance program to home buyers purchasing foreclosed or vacant properties as their principal residence. The program offers up to a $10,000, no-interest deferred loan that is forgivable if the borrower resides in the property for five consecutive years. As of December 31, 2015, the balance of these loans is $513,750. There has been an allowance for doubtful accounts recorded for the same amount, as it is fully expected that these loans will be forgiven. 63 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 C. CAPITAL ASSETS Capital asset activity for the year ended December 31, 2015 was as follows: BeginningEnding BalanceIncreasesDecreasesBalance Governmental activities: Capital assets, not being depreciated: Land3,537,473$ -$ -$ 3,537,473$ Easements - perpetual88,704 - - 88,704 Construction in progress3,276,213 8,829,037 (3,094,112) 9,011,138 Total capital assets, not being depreciated 6,902,390 8,829,037 (3,094,112) 12,637,315 Capital assets, being depreciated: Easements - temporary22,715 - - 22,715 Buildings and improvements19,566,900 632,925 (280,291) 19,919,534 Park improvements10,500,244 - - 10,500,244 Machinery and equipment9,246,814 1,066,068 (658,634) 9,654,248 Street infrastructure42,009,818 3,036,991 - 45,046,809 Total capital assets, being depreciated81,346,491 4,735,984 (938,925) 85,143,550 Less accumulated depreciation for: Easements - temporary16,287 4,538 - 20,825 Buildings and improvements11,847,970 725,174 (280,291) 12,292,853 Park improvements4,544,355 227,393 - 4,771,748 Machinery and equipment5,483,811 786,681 (579,412) 5,691,080 Street infrastructure16,963,881 1,507,430 - 18,471,311 Total accumulated depreciation38,856,304 3,251,216 (859,703) 41,247,817 Total capital assets being depreciated - net42,490,187 1,484,768 (79,222) 43,895,733 Governmental activities capital assets - net 49,392,577$ 10,313,805$ (3,173,334)$ 56,533,048$ Depreciation expense was charged to functions/programs of the City as follows: Governmental activities: General government71,389$ Public safety 397,011 Public works 1,779,286 Parks and recreation241,901 Capital assets held by the City's internal service funds are charged to the various functions based on their usage of the assets761,629 Total depreciation expense - governmental activities3,251,216$ 64 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 BeginningEnding BalanceIncreasesDecreasesBalance Business-type activities: Capital assets, not being depreciated: Land 3,194,983$ -$ -$ 3,194,983$ Easements - perpetual10,285 - - 10,285 Construction in progress8,425,511 20,908,830 (3,697,737) 25,636,604 Total capital assets, not being depreciated 11,630,779 20,908,830 (3,697,737) 28,841,872 Capital assets, being depreciated: Easements - temporary 20,335 - - 20,335 Land improvements442,891 - - 442,891 Buildings and improvements18,862,853 101,031 - 18,963,884 Machinery and equipment 959,669 31,971 - 991,640 Street light systems 774,886 57,903 - 832,789 Mains and lines 67,864,389 3,934,247 - 71,798,636 Total capital assets, being depreciated 88,925,023 4,125,152 - 93,050,175 Less accumulated depreciation for: Easements - temporary 14,581 4,063 - 18,644 Land improvements246,320 16,627 - 262,947 Buildings and improvements15,555,483 738,872 (53,596) 16,240,759 Machinery and equipment661,693 56,409 - 718,102 Street light systems144,544 53,567 - 198,111 Mains and lines35,396,049 2,433,690 53,596 37,883,335 Total accumulated depreciation52,018,670 3,303,228 - 55,321,898 Total capital assets being depreciated - net36,906,353 821,924 - 37,728,277 Business-type activities capital assets - net 48,537,132$ 21,730,754$ (3,697,737)$ 66,570,149$ Depreciation expense was charged to functions/programs of the City as follows: Business-type activities: Municipal liquor 16,966$ Golf course 18,737 Earle Brown Heritage Center620,249 Water utility 703,933 Sanitary sewer utility783,500 Storm drainage utility1,106,276 Street light utility 53,567 Total depreciation expense - business-type activities3,303,228$ 65 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 CONSTRUCTION COMMITMENTS At December 31, 2015 the City had construction project contracts in progress. The commitments related to remaining contract balances are summarized as follows: ContractRemaining AmountCommitment Freeway Park Area Improvements6,768,387$ 478,149$ 63rd Avenue Reconstruction Project4,310,875 209,131 2014 Capital Maintenance Building Program Project3,702,259 91,500 Water Treatment Plant18,066,121 247,439 Total 32,847,642$ 1,026,219$ D. INTERFUND BALANCES AND TRANSFERS The composition of due to/from other fund balances at December 31, 2015 are as follows: Due fromDue to Other FundsOther Funds Major Funds: General144,982$ -$ Capital Improvements706,834 - Municipal State Aid for Construction- 655,248 Infrastructure Construction- 51,586 Golf Course- 144,982 Total851,816$ 851,816$ Interfund due to/from balances are representative of lending/borrowing arrangements to cover deficit cash balances at the end of the fiscal year. Balances will be paid with future operating revenues and/or interfund transfers, collections of special assessments on benefiting property owners, and receipt of Municipal State Aid funds. Individual fund advances to and advances from other funds at December 31, 2015 are as follows: Advances to Advances From Other FundsOther Funds Major Funds: Tax Increment District No. 5-$ 2,463,683$ Capital Improvements792,488 - Golf Course- 792,488 Nonmajor Funds: Tax Increment District No. 22,463,683 - 3,256,171$ 3,256,171$ Project Fund Fund 66 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 The $2,463,683 advance between the Tax Increment District No. 2 and the Tax Increment District No. 5 funds was made to provide funding for a specific development project within the City. The financing plan adopted for the Tax Increment District No. 5 has the repayment of principal scheduled to begin in 2024, however current cash flow projections imply a more immediate repayment plan, beginning in 2022. The $792,488 advance between the Golf Course and Capital Improvements fund was made for improvements to the golf course. A repayment schedule for this advance has not yet been adopted. The composition of interfund transfers as of December 31, 2015 are as follows: Transfer InTransfer Out Governmental Funds: Major Funds: General201,684$ 1,176,313$ Tax Increment District No. 3- 2,395,982 Debt Service2,395,982 - Capital Improvements1,125,216 264,319 Nonmajor Funds: Housing and Redevelopment Authority- 274,363 Economic Development Authority274,363 - City Initiatives Grant Fund- 13,584 Centennial Amphitheater309,319 - Community Development Block Grant- 188,100 Technology 235,020 - Total governmental funds 4,541,584 4,312,661 Proprietary Funds: Major Funds: Municipal Liquor - 216,455 Golf Course 40,000 - Earle Brown Heritage Center - 14,857 Storm Drainage Utility - 45,000 Governmental activities: Internal Service 7,389 - Total proprietary funds 47,389 276,312 Total all funds 4,588,973$ 4,588,973$ Interfund transfers allow the City to allocate financial resources to the funds that receive benefit from services provided by another fund or to provide additional capital and infrastructure funding. In addition, interfund transfers are occasionally authorized to allow redistribution of resources between funds for the most efficient use of funds. In 2015, the following non-routine transfers were made between funds: •The General fund transferred $908,761, and the Municipal Liquor fund transferred $216,455 to the Capital Improvements fund in accordance with the City's Capital Project Funding policy. 67 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 E. OPERATING LEASES The City has leased a portion of the police second floor expansion area to the Local Government Information Systems Association (LOGIS) as a backup computer facility. The lease has a term of five years, commencing on August 1, 2011 and calls for monthly lease payments based on square-footage. Lease revenue for the year ended December 31, 2015 was $13,200. Future minimum lease revenues under the current agreement is as follows: YearTotal EndingMinimum Rents 20167,700$ The City leases space for its municipal liquor stores. The leases are ten-year leases and began in 2010 and 2013. The leases provide for a minimum monthly base rent payment, plus a pro-rata share of common area expenses. Additional lease payments are required if agreed-upon revenue thresholds are attained. These leases may be cancelled at the City’s option if the City ceases liquor operations. Total rental expense under the lease agreements for the year ended December 31, 2015 was $311,553. Future minimum base rent payments under the current agreements are as follows: YearTotal EndingMinimum Rents 2016234,888$ 2017234,888 2018234,888 2019234,888 2020164,124 2021 - 2023280,080 1,383,756$ The City is the lessor in an operating lease for a building being used for a sit-down restaurant. The lease was originally signed in 2011 with a ten year term with an option to extend for an additional five years. For the year ended 2015, the City received $177,213 in rental revenue. Future minimum base rent revenues under the current agreement are as follows: YearTotal EndingMinimum Rents 201667,838$ 201784,378 201892,816 2019102,942 2020112,048 202196,190 556,212$ 68 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 F. LONG-TERM DEBT GOVERNMENTAL ACTIVITIES The City issued general obligation improvement bonds to provide funds for the construction of major capital facilities and construction of infrastructure. These bonds are reported in the governmental activities of the City. The City issued general obligation tax increment bonds to finance various redevelopment projects and redevelopment property acquisitions within the City. These bonds are reported in the governmental activities of the City. Final InterestMaturityOriginalPayable RatesDateDateIssue12-31-15 G.O. Tax Increment Bonds: Taxable Tax Increment Bonds of 2004D4.75 - 5.13%12/01/200402/01/202017,245,000$ 8,120,000$ Taxable Tax Increment Bonds of 2008A3.00 - 5.30%05/01/200802/01/20184,335,000 375,000 Taxable Tax Increment Bonds of 2013A2.00 - 3.25%12/19/201302/01/20226,040,000 5,790,000 Taxable Tax Increment Refunding Bonds of 2015B3.00%07/09/201502/01/20206,600,000 6,600,000 Total G.O. Tax Increment Bonds34,220,000 20,885,000 G.O. Improvement Bonds: Improvement Bonds, 2006A3.55 - 3.80%12/15/200602/01/20171,460,000 195,000 Improvement Bonds, 2008B3.25 - 4.25%12/15/200802/01/20192,390,000 865,000 Improvement Bonds, 2013B3.00%12/19/201302/01/20244,920,000 4,115,000 Improvement Bonds, 2015A2.00 - 2.50%07/09/201502/01/20263,416,248 3,416,248 Total G.O. Improvement Bonds12,186,248 8,591,248 Total - bonded indebtedness46,406,248$ 29,476,248 Other Liabilities: Compensated absences payable 1,254,851 Net pension liability 11,509,476 Net OPEB obligation 710,605 Total governmental activities 42,951,180$ 69 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 All long-term bonded indebtedness outstanding at December 31, 2015 is backed by the full faith and credit of the City, including improvement and tax increment bond issues. Bonds in the governmental activities will be retired by future property tax levies, tax increments or special assessments accumulated in the specific debt services funds. In the event that a deficiency exists because of unpaid or delinquent taxes or special assessments at the time a debt service payment is due, the City must provide resources to cover the deficiency until other resources are available. At the end of the current year, there are $11,753,632 of assets accumulated in the debt service funds for future debt service. Included within those accumulated assets, there was $6,782,081 held by a fiscal agent and there was a combined $2,923,530 of delinquent property taxes and special assessments receivable. Annual debt service requirements to maturity for governmental activities long-term debt are as follows: G.O. Tax Increment BondsG.O. Improvement Bonds PrincipalInterestPrincipalInterest 8,505,000$ 601,388$ 885,000$ 228,423$ 1,960,000 350,475 1,152,497 191,921 2,005,000 289,450 1,075,978 159,029 2,015,000 227,713 1,022,497 128,522 2,065,000 166,513 870,757 102,464 4,335,000 139,106 3,225,943 213,923 - - 358,576 4,482 20,885,000$ 1,774,645$ 8,591,248$ 1,028,764$ BUSINESS-TYPE ACTIVITIES The City issued general obligation revenue bonds to finance the metering of all City connected water and sewer utility services in 2010 which were refunded in 2015. The City also issued general obligation revenue bonds in 2015 for utility portions of infrastructure improvement projects and a Revenue Note financed by the MN Public Facilities Authority Drinking Water State Revolving Fund for the construction of a new water treatment plant authorized in the amount of $19,662,352. As of December 31, 2015, only $17,560,510 of the Revenue Note has been drawn down. These bonds are reported in the business-type activities of the City. Final InterestMaturityOriginalPayable RatesDateDateIssue12/31/2015 General Obligation Taxable Utility Revenue Bonds: Revenue Bonds of 2015A2.00 - 2.50%07/09/201502/01/20261,823,752$ 1,823,752$ Revenue Refunding Bonds of 2015A2.00 - 2.50%07/09/201502/01/20261,660,000 1,660,000 Total General Obligation Taxable Utility Revenue Bonds3,483,752 3,483,752 General Obligation Taxable Utility Revenue Notes: PFA Revenue Note of 2015 1.00%01/20/201508/20/203417,560,510 17,545,158 Total business-type activities21,044,262$ 21,028,910$ 2021 - 2025 Governmental Activities 2026 Year Ending December 31 2016 2017 2018 2019 2020 Total 70 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 Annual debt service requirements to maturity for business-type activities long-term debt are as follows: Year EndingG.O. Revenue Bonds December 31PrincipalInterestPrincipalInterest 2016140,000$ 76,415$ 944,000$ 173,351$ 2017342,503 67,109 954,000 187,030 2018339,022 60,293 963,000 177,490 2019342,503 53,478 973,000 167,860 2020344,243 46,611 982,000 158,130 2021 - 20251,784,057 125,002 5,061,000 641,350 2026 - 2030191,424 2,393 5,320,000 383,160 2031 - 2034- - 2,348,158 111,800 Total3,483,752$ 431,301$ 17,545,158$ 2,000,171$ The utility revenue bonds and notes are backed by the full faith and credit of the City. Bonds and Notes in the business-type activities will be retired with the net revenues of the Water Utility and Sanitary Sewer Utility systems. (Net revenues of each system are defined as the excess of gross revenues and earnings over the normal, reasonable, and current costs of operating and maintaining the system.) In the event that a deficiency exists because of inadequate net revenues at the time a debt service payment is due, the City must provide resources to cover the deficiency until other resources are available. For the year ended December 31, 2015, the water and sewer utility funds provided net revenues (excluding bond refunding) of $1,001,891, which accounts for a debt-service coverage ratio of 254.45%. CHANGE IN LONG-TERM LIABILITIES Long-term liability activity for the year ended December 31, 2015 was as follows: BeginningEndingDue Within BalanceAdditionsReductionsBalanceOne Year Governmental activities: Bonds payable: G.O. tax increment bonds16,040,000$ 6,600,000$ (1,755,000)$ 20,885,000$ 8,505,000$ G.O. improvement bonds6,445,000 3,416,248 (1,270,000) 8,591,248 885,000 Total bonds payable22,485,000 10,016,248 (3,025,000) 29,476,248 9,390,000 Compensated absences1,282,093 146,530 (173,772) 1,254,851 125,485 Pension liability: GERF*- 6,562,764 (120,892) 6,441,872 - PEPFF*- 5,259,040 (191,436) 5,067,604 - Net OPEB obligation629,994 229,237 (148,626) 710,605 - Total government activity long-term liabilities24,397,087$ 22,213,819$ (3,659,726)$ 42,951,180$ 9,515,485$ Business-type activities: Bonds payable: G.O. revenue bonds1,800,000$ 3,483,752$ (1,800,000)$ 3,483,752$ 140,000$ G.O. revenue notes- 17,560,510 (15,352) 17,545,158 944,000 Total business-type activity long-term liabilities1,800,000$ 21,044,262$ (1,815,352)$ 21,028,910$ 1,084,000$ *Includes January 1, 2015 pension liability balance related to GASB Statement No. 68 implementation. Compensated absences are liquidated by the Public Employees Compensated Absences internal service fund and the net OPEB obligation by the Public Employees Retirement internal service fund. Net pension liabilities will be liquidated by the Pension - GERF and Pension - PEPFF internal service funds. Business-Type Activities G.O. Revenue Notes 71 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 CURRENT REFUNDING On July 9, 2015, the City issued $1,660,000 of General Obligation Revenue Refunding Bonds, Series 2015A, bearing an average coupon rate of 2.14 percent, to provide current refunding of $1,660,000 in principal on the City's Taxable General Obligation Utility Revenue Bonds, Series 2010A relating to the 2016 to 2025 maturities. As a result of the refunding, the City will achieve an economic gain of $70,450 (the present value of the difference between the old and the new debt service). CROSSOVER REFUNDING On July 9, 2015, the City issued $6,600,000 of General Obligation Tax Increment Refunding Bonds, Series 2015B, bearing an average coupon rate of 3.00 percent, to provide advance crossover refunding on February 1, 2016, of the 2017 through 2020 maturities of the City's General Obligation Tax Increment Bonds, Series 2004D totalling $6,670,000 in principal. The proceeds of the crossover bond were placed into an escrow account pending the call date. The escrow account bears interest rates that will provide sufficient funds to refund the old bonds on February 1, 2016. The old bonds are not considered defeased until the crossover date, and therefore will not be removed as a liability until then. As a result of the refunding, the City will achieve an economic gain of $424,059 (the present value of the difference between the old and the new debt service). CONDUIT DEBT OBLIGATIONS From time to time, the City has issued Housing Revenue Bonds and Industrial Revenue Bonds or Notes to provide assistance to qualified private sector entities for the acquisition and construction of housing, industrial, or commercial facilities deemed to be in the public interest. The bonds or notes are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. The City has no obligation of its assets or of its general tax base for the repayment of any of these bonds or notes. Accordingly, the bonds or notes are not reported as liabilities in the accompanying financial statements. Upon final redemption of the bonds or notes, ownership of the property transfers to the private sector entity served by the bond or note issue. As of December 31, 2015 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, and two Charter School Lease Revenue bonds outstanding. The aggregate amount of conduit debt as of December 31, 2015 is $21,365,908. G. FUND EQUITY Net position reported in the government-wide statement of net position at December 31, 2015 include the following: Governmental activities Net investment in capital assets: Cost of capital assets97,780,865$ Less: accumulated depreciation(41,247,817) Less: related long-term debt outstanding(8,591,248) Total net investment in capital assets47,941,800 Restricted: Statutory housing obligations556,470 Tax increment financing19,328,012 Economic development1,522,267 Law enforcement enhancements83,686 Debt service11,218,383 Pension benefits1,178,922 State-Aid street systems2,922,853 Total restricted 36,810,593 Unrestricted (5,495,836) Total governmental activities net position79,256,557$ Related debt for governmental activities capital assets includes $8,591,248 in G.O. Improvement Bonds which was the amount issued to finance the street portion of construction projects. 72 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 Business-type activities Net investment in capital assets: Cost of capital assets 121,892,047$ Less: accumulated depreciation (55,321,898) Less: related long-term debt outstanding (19,368,910) Total net investment in capital assets 47,201,239 Unrestricted 8,452,630 Total business-type activities net position55,653,869$ Aggregated funds balances reported in the governmental funds balance sheet at December 31, 2015 include the following: Governmental funds NonspendableRestrictedCommittedAssigned General Inventories44,044$ -$ -$ -$ Prepaid Items34,815 - - - Capital Improvements- - - 804,815 Tax Increment District No. 3 Statutory Housing Obligation- 556,470 - - Tax Increment Financing- 16,640,289 - - Debt Service Debt Service- 8,747,914 - - Capital Improvements Capital Improvements- - 4,408,879 - Municipal State-Aid for Construction State-Aid Street Systems- 223,531 - - Nonmajor Funds Tax Increment Financing- 2,597,917 - - Economic Development1,500 1,515,604 - - Law Enforcement Enhancements- 83,686 - - Public Safety- - 86,891 - Cable Communications- - 281,821 - Community Recreation- - 55,501 - Emergency Capital Improvements- - 1,074,622 - Street Improvements- - 3,183,754 - Technology Improvements- - 214,756 - Total fund balances80,359$ 30,365,411$ 9,306,224$ 804,815$ 73 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 Note 4 DEFINED BENEFIT PENSION PLAN - CITY EMPLOYEES 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. 1. GENERAL EMPLOYEES RETIREMENT FUND (GERF) All full-time and certain part-time employees of the City are covered by the GERF. GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. The Basic Plan was closed to new members in 1967. All new members must participate in the Coordinated Plan. 2. PUBLIC EMPLOYEES POLICE AND FIRE FUND (PEPFF) The PEPFF, 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 PEPFF also covers police officers and firefighters belonging to a local fire 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. Benefit increases are provided to benefit recipients each January. Increases are related to the funding ratio of the plan. Members in plans that are at least 90 percent funded for two consecutive years are given 2.5 percent increases. Members in plans that have not exceeded 90 percent funded, or have fallen below 80 percent, are given 1 percent increases. The benefit provisions stated in the following paragraphs of this section are current provisions and apply to active plan participants. Vested, terminated employees who are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. 1. GERF BENEFITS Benefits are based on a member's highest average salary for any five successive years of allowable service, age, and years of credit at termination or service. Two methods are used to compute benefits for PERA's Coordinated and Basic Plan members. The retiring member receives the higher of a step-rate benefit accrual formula (Method 1) or level accrual formula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2 percent of average salary for each of the first ten years of service, and 2.7 percent for each remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2 percent of average salary for each of the first ten years and 1.7 percent for each remaining year. Under Method 2, the annuity accrual rate is 2.7 percent of average salary for Basic Plan members and 1.7 percent for Coordinated Plan members for each year of service. For members hired prior to July 1, 1989, a full annuity is available when age plus years of service equal 90 and normal retirement age is 65. For members hired on or after July 1, 1989, normal retirement age is the age for unreduced Social Security benefits capped at 66. Disability benefits are available for vested members and are based upon years of service and average high-five salary. 74 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 2. PEPFF BENEFITS Benefits for the PEPFF members first hired after June 30, 2010, but before July 1, 2014, vest on a prorated basis from 50 percent after five years up to 100 percent after ten years of credited service. Benefits for PEPFF members first hired after June 30, 2014, vest on a prorated basis from 50 percent after ten years of service up to 100 percent after twenty years of credited service. The annuity accrual rate is 3 percent of average salary for each year of service. For PEPFF who were first hired prior to July 1, 1989, a full annuity is available when age plus years of service equal at least 90. C. CONTRIBUTIONS Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. Contribution rates can only be modified by the state legislature. 1. GERF CONTRIBUTIONS Basic Plan members and Coordinated Plan members were required to contribute 9.1 percent and 6.5 percent, respectively, of their annual covered salary in calendar year 2015. The City was required to contribute 11.78 percent of pay for Basic Plan members and 7.5 percent for Coordinated Plan members in calendar year 2015. The City's contributions to the GERF for years ended December 31, 2015, 2014 and 2013 were $564,168, $531,385, and $521,512. The City's contributions were equal to the required contributions as set by state statute. 2. PEPFF CONTRIBUTIONS Plan members were required to contribute 10.8 percent of their annual covered salary in calendar year 2015. The City was required to contribute 16.2 percent of pay for PEPFF members in calendar year 2015. The City contributions to the PEPFF for the year ended December 31, 2015, 2014 and 2013 were $687,935, $600,402, and $560,053 respectively. The City's contributions were equal to the required contributions as set by state statute. D. PENSION COSTS 1. GERF PENSION COSTS At December 31, 2015, the City reported a liability of $6,441,872 for its proportionate share of the GERF's net pension liability. The net pension liability was measured as of June 30, 2015, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City's proportion of the net pension liability was based on the City's contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2014 through June 30, 2015, relative to the total employer contributions received from all of PERA's participating employers. At June 30, 2015, the City's proportion was 0.1243 percent which was a decrease of 0.0146 percent from its proportion measured as of June 30, 2014. For the year ended December 31, 2015, the City recognized pension expense of $685,060 for its proportionate share of the GERF's pension expense. 75 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 At December 31, 2015, the City reported its proportionate share of the GERF's deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: DeferredDeferred Outflows ofInflows of ResourcesResources Differences between expected and actual economic experience-$ 324,780$ Changes in actuarial assumptions- - Differences between projected and actual investment earnings609,822 - Changes in proportion- 514,376 GERF contributions paid subsequent to the measurement date289,088 - Totals898,910$ 839,156$ $289,088 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2016. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: YearPension EndedExpense December 31,Amount 2016(127,263)$ 2017(127,263) 2018(127,263) 2019152,455 Total(229,334)$ 2. PEPFF PENSION COSTS At December 31, 2015, the City reported a liability of $5,067,604 for its proportionate share of the PEPFF's net pension liability. The net pension liability was measured as of June 30, 2015, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City's proportion of the net pension liability was based on the City's contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2014 through June 30, 2015, relative to the total employer contributions received from all of PERA's participating employers. At June 30, 2015, the City's proportion was 0.446 percent which was an increase of 0.008 percent from its proportion measured as of June 30, 2014. For the year ended December 31, 2015, the City recognized pension expense of $887,890 for its proportionate share of the PEPFF's pension expense. The City also recognized $40,140 for the year ended December 31, 2015, as pension expense (and grant revenue) for its proportionate share of the State of Minnesota's on-behalf contributions to the PEPFF. Legislation passed in 2013 required the State of Minnesota to begin contributing $9 million to the PEPFF each year, starting in fiscal year 2014. 76 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 At December 31, 2015, the City reported its proportionate share of the PEPFF's deferred outflows of resources and deferred inflows of resources related to pension from the following sources: DeferredDeferred Outflows ofInflows of ResourcesResources Differences between expected and actual economic experience-$ 821,799$ Changes in actuarial assumptions- - Differences between projected and actual investment earnings882,945 - Changes in proportion72,003 - PEPFF contributions paid subsequent to the measurement date353,263 - Totals1,308,211$ 821,799$ $353,263 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2016. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: YearPension EndedExpense December 31,Amount 201670,777$ 201770,777 201870,777 201970,777 2020(149,959) Total133,149$ E. ACTUARIAL ASSUMPTIONS The total pension liability in the June 30, 2015, actuarial valuation was determined using the following actuarial assumptions: Inflation2.75% per year Active Member Payroll Growth3.50% per year Investment Rate of Return7.90% Salary increases were based on a service-related table. Mortality rates for active members, retirees, survivors and disabilitants were based on the RP-2000 tables for males or females, as appropriate, with slight adjustments. Cost of living benefit increases for retirees are assumed to be: 1 percent effective January 1st until 2034, then 2.5 percent thereafter. Actuarial assumptions used in the June 30, 2015, valuation were based on the results of actuarial experience studies. The experience study in the GERF was for the period July 1, 2004, through June 30, 2008, with an update of economic assumptions in 2014. The experience study for PEPFF was for the period July 1, 2004, through June 30, 2009. There were no changes in actuarial assumptions in 2015. 77 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 The long-term expected rate of return on pension plan investments is 7.9 percent. The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonableness of the long-term expected rate of return on a regular basis using a building-block method in which best-estimate ranges of expected future rates of return are developed for each major asset class. These ranges are combined to produce an expected long-term rate of return by weighting the expected future rates of return by the target asset allocation percentages. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Long-Term TargetExpected Real AllocationRate of Return Domestic Stocks45.00%5.50% International Stocks15.00%6.00% Bonds18.00%1.45% Alternative Assets20.00%6.40% Cash2.00%0.50% F. DISCOUNT RATE The discount rate used to measure the total pension liability was 7.9 percent. The projection of cash flows used to determine the discount rate assumed that employee and employer contributions will be made at the rate specified in statute. Based on that assumption, each of the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. G. PENSION LIABILITY SENSITIVITY The following presents the City's proportionate share of the net pension liability for all plans it participates in, calculated using the discount rate disclosed in the preceding paragraph, as well as what the City's proportionate share of the net pension liability would be if it were calculated using a discount rate 1 percentage point lower or 1 percentage point higher than the current discount rate: 6.90%7.90%8.90% One PointCurrentOne Point DecreaseRateIncrease GERF 10,128,911$ 6,441,872$ 3,396,942$ PEPFF 9,876,813 5,067,604 1,094,359 Total 20,005,724$ 11,509,476$ 4,491,301$ Asset Class City's Proportionate Share of the Net Pension Liability 78 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 H. PENSION PLAN FIDUCIARY NET POSITION Detailed information about each pension plan's fiduciary net position is available in a separately issued PERA financial report that includes financial statements and required supplementary information. That report may be obtained by: Internet:www.mnpera.org Phone:(651) 296-7460 Mail:60 Empire Drive, #200 St. Paul, MN 55103-2088 Note 5 DEFINED BENEFIT PENSION PLAN - SINGLE EMPLOYER - FIRE RELIEF ASSOCIATION A. PLAN DESCRIPTION The City contributes to the Brooklyn Center Fire Department Relief Association (the Association) which is the administrator of a single employer, public employee defined benefit retirement system to provide a retirement plan (the Plan) to volunteer firefighters of the City who are members of the Association. The Association is organized and operates under the provisions of Minnesota State Statutes 424A, and provides benefits in accordance with those statutes. At December 31, 2014, the membership of the Association consisted of: Retirees and beneficiaries currently receiving benefits21 Terminated employees entitled to benefits but not yet receiving them6 Active plan participants - vested16 Active plan participants - non-vested18 Total 61 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. B. BENEFITS PROVIDED Basic Service Pension for Retired Members -Upon retirement each individual will receive a lump sum distribution of $7,500 per year of service. This benefit level was placed into effect on January 1, 2006. 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. 79 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 Basic Service Pension for Deferred Pensioner - A member who is otherwise qualified for a service pension but who has not reached the age of 50 years may retire from the Fire Department without forfeiting the member's right to such pension. Upon approval of an application therefore, the deferred pensioner shall receive a pension based on the benefit level at that time multiplied by such person's years of active service with the Fire Department and further multiplied by the decimal equivalent of the applicable percentage determined from the following table: Years of Service Applicable Percentage 10 60% 11 64 12 68 13 72 14 76 15 80 16 84 17 88 18 92 19 96 20 and beyond 100 C. FUNDING POLICY 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. D. CONTRIBUTIONS Authority for contributions to the pension plan is established by Minn. Stat. § 69.77 and may be amended only by the Minnesota State Legislature. See 2013 Minn. Laws, ch. 111, art. 5, §§ 31 to 42 and 80. There are no employee contributions. The City provided statutory contributions in 2015. The actuary compares the actual statutory contribution rate to a "required" contribution rate. The required contribution rate consists of: (a) normal costs based on entry age normal cost methods, (b) a supplemental contribution for amortizing any unfunded actuarial accrued liability, and (c) an allowance for administrative expenses. E. PENSION COSTS At December 31, 2015, the City reported an asset of $1,092,416 for the difference between the Fire Relief Plan Fiduciary net position and the total pension liability. The net pension asset was measured as of December 31, 2014, and the total pension liability used to calculate the net pension asset was determined by an actuarial valuation as of that date. 80 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 Changes in Net Pension Asset Total PensionPlan FiduciaryNet Pension LiabilityNet Position Liability (Asset) Balance at 12/31/142,769,189$ 3,827,651$ (1,058,462)$ Changes for the Year Service Cost85,904 - 85,904 Interest178,242 - 178,242 Contributions - state and local- 158,545 (158,545) Net Investment income- 149,635 (149,635) Benefit Payments(617,541) (617,541) - Administrative Expenses- (10,080) 10,080 Net Changes(353,395) (319,441) (33,954) Balance at 12/31/152,415,794$ 3,508,210$ (1,092,416)$ At December 31, 2015, the City reported deferred outflows of resources, and deferred inflows of resources, its contributions subsequent to the measurement date, related to pensions from the following sources: DeferredDeferred Outflows ofInflows of ResourcesResources Differences between projected and actual investment earnings81,506$ -$ Contributions paid subsequent to the measurement date148,061 143,061 Totals229,567$ 143,061$ $148,061 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2016. Deferred inflows of resources totalling $143,061 related to state aid received subsequent to the measurement date will be recognized for its impact on the net pension liability in the year ended December 31, 2016. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: YearPension EndedExpense December 31,Amount 201620,377$ 201720,377 201820,377 201920,375 Total81,506$ Increase (Decrease) 81 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 F. ACTUARIAL ASSUMPTIONS The Association is funded with contributions from the City of Brooklyn Center. The actuarially determined contributions in the Schedule of Contributions are calculated as of the beginning of the fiscal year in which contributions were reported. The following methods and assumptions were used to calculate the actuarially determined contributions reported in the most recent fiscal year end. • The most recent actuarial valuation date is January 1, 2015. • Actuarial cost is determined using the Entry Age Normal Cost Method. • The actuarial value of assets is market value. • The unfunded accrued liability is amortized using a 20-year rolling end date. • Investment rate of return is 7.00 percent. • The inflation rate assumption is 2.75 percent. • Mortality assumptions for pre-retirement, post-retirement, and post-disability are: Pre-retirement:RP 2000 Non-annuitant Table with white collar adjustment, generationally projected using Scale AA, and set back two years for males and females. Post-retirement:RP 2000 Annuitant Mortality Table with white collar adjustment, generationally projected using Scale AA for males and females. Post-disability:RP 2000 Annuitant Mortality Table with white collar adjustment, set forward eight years for males and females. There were no changes in actuarial assumptions in 2015. The best estimate range for the long-term expected rate of return is determined by adding expected inflation to expected long-term real returns and reflecting expected volatility and correlation. The capital market assumptions are per the actuary's investment consulting practice as of January 1, 2015 Long-Term TargetExpected Real AllocationRate of Return Domestic and International Equities50.00%5.00% Fixed Income45.00%1.75% Cash and equivalents5.00%0.25% G. DISCOUNT RATE The discount rate used to measure the total pension liability was 7.00 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. Asset Class 82 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 H. PENSION LIABILITY (ASSET) SENSITIVITY The following presents the net pension asset calculated using the discount rate of 7.00 percent, as well as what the net pension (asset)/liability would be if it were calculated using a discount rate that is one-percentage-point lower (6.00 percent) or one percentage- point higher (8.00 percent) than the current rate: 6.00%7.00%8.00% One PointCurrentOne Point DecreaseRateIncrease Net Pension (Asset)/Liability (974,770)$ (1,092,416)$ (1,195,484)$ Note 6 MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLAN 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 plan that is not a state or local governmental pension plan, is used to provide defined benefit pensions both to employers that are not state or local governmental employers, and has no predominant state or local government employer. The Plan issues a publicly available financial report located on their website at www.cpfiuoe.org. The City has 22 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 CPF is a supplemental Pension Fund authorized by Minnesota Statutes, 356.24, subdivision 1(9). The CPF Plan of Benefits and the Agreement and Declaration of Trust will serve as the governing documents. The City's contributions to the plan are pursuant to a collective bargaining agreement with the IUOE which expires December 31, 2016. The required contribution rate is $0.96 per hour, which is applied to all compensated hours, and capped at $5,000 per year. Total employer contributions for the year ended December 31, 2015 were $51,699. With regard to withdrawal from the pension plan, the parties agree that the amount that would otherwise be paid in salary or wages will be contributed instead to the CPF as pre-tax employer contributions. Note 7 DEFINED CONTRIBUTION PLAN There are five City Council members of the City are covered by the Public Employees Defined Contribution Plan (PEDCP), a multiple-employer deferred compensation plan administered by PERA. The PEDCP is a tax qualified plan under Section 401(a) of the Internal Revenue Code and all contributions by or on behalf of employees are tax deferred until time of withdrawal. Plan benefits depend solely on amounts contributed to the plan plus investment earnings, less administrative expenses. Minnesota Statutes, Chapter 353(D.03), specifies plan provisions, including the employee and employer contribution rates for those qualified personnel who elect to participate. An eligible elected official who decides to participate contributes 5 percent of salary which is matched by the elected official's employer. Employer and employee contributions are combined and used to purchase shares in one or more of the seven accounts of the Minnesota Supplemental Investment Fund. For administering the plan, PERA receives 2 percent of employer contributions and twenty-five hundredths of 1 percent (.0025%) of the assets in each member's account annually. City's Proportionate Share of the Net Pension Liability 83 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 Total contributions made by the City for the last three fiscal years were: EmployeeEmployerEmployeeEmployerEmployeeEmployer 907$ 907$ 5.0%5.0%5.0%5.0% 907 907 5.0%5.0%5.0%5.0% 880 880 5.0%5.0%5.0%5.0% Note 8 OTHER POST-EMPLOYMENT BENEFITS A. PLAN DESCRIPTION In addition to providing the pension benefits described in Note 4.B., the City provides postemployment health care benefits for retired employees and police disabled in the line of duty, through a single-employer defined benefit plan administered by the City. The authority to provide these benefits is established in Minnesota Statutes Sections 471.61 subd. 2a. and 299A.465. The benefits, benefit levels, employee contributions and employer contributions are governed by the City and can be amended by the City through its personnel manual and collective bargaining agreements with employee groups. The Plan is not accounted for as a trust fund, as an irrevocable trust has not been established to account for the Plan. The Plan does not issue a separate report. B. BENEFITS PROVIDED Retirees The City is required by State Statute to allow retirees to continue participation in the City’s group health insurance plan if the individual terminates service with the City through service retirement or disability retirement. Former employees who are receiving, or who have met age and service requirements to receive, an annuity from a Minnesota public pension plan and those receiving a disability benefit from such a plan are immediately eligible to participate in this Plan. Retirees may obtain dependent coverage if the employee received dependent coverage immediately before leaving employment. Covered spouses may continue coverage after the death of a retiree. In addition, the surviving spouse of an active employee may continue coverage in the group health insurance plan after the employee’s death. All health care coverage is provided through the City’s group health insurance plans. The retiree is required to pay the premium as described below: Employees hired before January 1, 1992 with continuous full-time employment Employees who, on the date of their retirement, meet eligibility requirement for a full retirement annuity under PERA or PERA Police without reduction of benefits because of age, disability, or any other reason for reduction shall be eligible for the City to pay 100% of the single-person premium until such time as the retiree is eligible for Medicare or at age 65, whichever is sooner. If the retiree desires to continue coverage in excess of single coverage, the additional cost for the coverage shall be paid to the City by the retiree on a monthly basis. For the Year Ended: Required Rate for Employees & Employers Percentage of Covered Payroll December 31, 2014 December 31, 2013 Contribution Amount December 31, 2015 84 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 Employees hired after January 1, 1992 The retiree is required to pay 100% of their premium cost for the City-sponsored group health insurance plan in which they participate. The premium is a blended rate determined on the entire active and retiree population. Since the projected claims costs for retirees exceed the blended premium paid by retirees, they are receiving an implicit rate subsidy (benefit). The coverage levels are the same as those afforded to active employees. Disabled police and firefighter The City is required to continue to pay the employer’s contribution toward health coverage for police or firefighters disabled in the line of duty per Minnesota Statute 299A.465, until age 65. Dependent coverage is included, if the dependents were covered at the time of the disability. PARTICIPANTS As of the actuarial valuation dated January 1, 2014, participants consisted of: Retirees for which the City is paying the single premium14 Retirees and beneficiaries currently purchasing health insurance through the City1 Disabled police officers2 Active employees151 Total168 C. FUNDING POLICY The additional cost of using a blended rate for actives and retirees is currently funded on a pay-as-you-go basis. The City Council may change the funding policy at any time. D. ANNUAL OPEB COSTS AND NET OPEB OBLIGATION The City’s annual other post-employment benefit (OPEB) cost is calculated based on the annual required contribution (ARC) of the employer, an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and amortize any unfunded actuarial obligation (or funding excess) over a period not to exceed 30 years. The net OPEB obligation as of December 31, 2015 was calculated as follows: Annual required contribution226,469$ Interest on net OPEB obligation28,350 Adjustment to ARC(25,582) Annual OPEB cost229,237 Employer Contributions Direct123,416 Indirect Implicit Rate Subsidy25,210 Increase (decrease) in net OPEB obligation80,611 Net OPEB obligation, beginning of year 629,994 Net OPEB obligation, end of year 710,605$ 85 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 The City had an actuarial valuation performed for the plan as of January 1, 2014 to determine the funded status of the plan as of that date as well as the employer’s ARC for the fiscal year ended December 31, 2015. The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the past three years were as follows: Percentage of FiscalAnnualAnnual Net YearOPEBEmployerOPEB CostOPEB EndedCostContributionsContributedObligation 12/31/2013238,744$ 140,071$ 58.67%586,026$ 12/31/2014226,724 182,756 80.61%629,994 12/31/2015229,237 148,626 64.84%710,605 86 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 E. FUNDED STATUS AND FUNDING PROGRESS The City currently has no assets that have been irrevocably deposited into a trust for future benefits; therefore, the actuarial value of assets is zero. Instead of depositing funds into an irrevocable trust, the City has chosen to accumulate funding into an internal service fund. The cash and investment balance of the internal service fund is $565,856 for the year ended December 31, 2015. The funded status of the plan was as follows: Unfunded ActuarialActuarialUAAL as a ActuarialAccruedAccruedPercentage Value ofLiabilityLiability FundedCoveredof Covered Assets (AAL)(UAAL)RatioPayroll Payroll -$ 3,012,383$ 3,012,383$ 0.00%9,143,276$ 32.95% - 2,620,367 2,620,367 0.00%9,472,237 27.66% - 2,574,529 2,574,529 0.00%9,934,960 25.91% F. ACTUARIAL METHODS AND ASSUMPTIONS Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the health care cost trend. Amounts determined regarding the funding status of the plan and the annual required contribution of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information that shows whether the actuarial value of the plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effect of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. 1/1/2010 1/1/2012 1/1/2014 Actuarial Valuation Date 87 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 In the January 1, 2014 actuarial valuation, the Projected Unit Credit actuarial cost was used. The actuarial assumptions included a 4.5% investment rate of return (net of administrative expenses) and an initial annual health care cost trend rate of 9.0% reduced by 0.33% each year to arrive at an ultimate health care cost trend rate of 5.0%. Both rates include a 3.0% inflation assumption. The actuarial value of assets is $0, however the City does have $565,856 of funds accumulated in an internal service fund. The plans' unfunded actuarial accrued liability is being amortized as of the valuation date with a payroll growth rate of 3.75% over 30 years on an open basis. Note 9 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 and natural disasters. Property and casualty insurance is provided through the League of Minnesota Cities Insurance Trust (LMCIT), a public entity risk pool currently operating as a common risk management and insurance program for Minnesota cities: general liability, property, automobile, mobile property and marine, crime, employee dishonesty, boiler, and open meeting law. The City pays an annual insurance premium to the LMCIT for its insurance coverage. The City is subject to supplemental assessments if deemed necessary by the LMCIT. Currently, the LMCIT is self-sustaining through member premiums and reinsures through commercial companies for claims in excess of various amounts. The City retains risk for the deductible portions of the insurance policies. The amount of these deductibles is considered immaterial to the financial statements. Workers’ compensation coverage is provided through a pooled self-insurance program through the LMCIT. The City pays an annual premium to the LMCIT. The City is subject to supplemental assessments if deemed necessary by the LMCIT. The LMCIT reinsures through Workers’ Compensation Reinsurance Association (WCRA) as required by law. For workers’ compensation, the City is not subject to a deductible. The City’s workers’ compensation is retroactively rated. With this type of coverage, final premiums are determined after loss experience is known. The amount of premium adjustment, if any, is considered immaterial and not recorded until received or paid. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three years. B. 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 expenditure 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 $5 million of bonds in 2004 and therefore is required to rebate excess investment income relating to these issues to the federal government. The extent of the City’s liability for arbitrage rebates on the remaining bond issues is not determinable at this time. However, in the opinion of management, any such liability would be immaterial. 88 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 C. LITIGATION The City is subject to certain legal claims in the normal course of business. Management does not expect the resolution of these claims will have a material impact on the City’s financial condition or results of operations. D. CONTINGENT LIABILITIES Tax Increment Notes In May 2002, the City entered into two limited tax increment notes with developers whereby the City will pay the developers a percentage of the available tax increment. Whether payments will occur and the amount of the payments is unpredictable since all payments are dependent on the City receiving tax increment revenues from the developer’s project. As such, this liability has not been recorded in the financial statements. Any potential liability ends with the decertification of the tax increment district. In December 2012, the City entered into a tax increment revenue note with a developer whereby the City will pay the developer the available tax increments as defined in the Tax Increment Development Agreement. Whether payments will occur and the amount of the payments is unpredictable since all payments are dependent on the City receiving tax increment revenues from the developer’s project. As such, this liability has not been recorded in the financial statements. Any potential liability ends with the decertification of the tax increment district. A schedule of the notes outstanding at December 31, 2015 is as follows: Amended or Original12/31/2015InterestMaturity PrincipalBalanceRateDate Twin Lakes Business Park2,424,199$ 351,274$ 8.00%01/31/2021 Shingle Creek Crossing Project2,300,000 2,184,912 6.00%02/01/2028 E. JOINT VENTURES AND 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 year’s financial statements are disclosed. 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 2015 financial statements of the City is $549,151 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 2015 health and life insurance costs paid by the City was $1,400,941. Complete financial statements may be obtained from Gallagher Benefit services, Inc. located at 3600 American Blvd West, Bloomington, MN 55431. Note 89 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2015 The Brooklyn Center Fire Department Relief Association (the Association) The Association is organized as a nonprofit organization, legally separate from the City, by its members to provide pension and other benefits to members in accordance with Minnesota Statutes. Its board of directors is elected by the membership of the Association and not by the City Council. The Association issues its own set of financial statements. All funding is conducted in accordance with applicable Minnesota Statutes, whereby state aids flow to the Association, tax levies are determined by the Association and are only reviewed by the City. The Association pays benefits directly to its members. The Association may certify tax levies to Hennepin County directly if the City does not carry out this function. Because the Association is fiscally independent of the City, the financial information of the Association has not been included within the City’s financial statements. (See Note 5 for disclosures relating to the pension plan operated by the Association.) Complete financial statements for the Association may be obtained at the City offices located at 6301 Shingle Creek Parkway, Brooklyn Center, Minnesota 55430. 90 Required Supplementary Information CITY OF BROOKLYN CENTER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF FUNDING PROGRESS - OTHER POSTEMPLOYMENT BENEFITS For the Year Ended December 31, 2015 Unfunded ActuarialActuarialActuarialActuarialUAAL as a ValuationValue ofAccruedAccruedFundedCoveredPercentage of DateAssetsLiability (AAL)Liability (UAAL)RatioPayrollCovered Payroll January 1, 2010-$ 3,012,383$ 3,012,383$ 0.00%9,143,276$ 32.95% January 1, 2012- 2,620,367 2,620,367 0.00%9,472,237 27.66% January 1, 2014- 2,574,529 2,574,529 0.00%9,934,960 25.91% 91 CITY OF BROOKLYN CENTER, MINNESOTA SCHEDULE OF CITY CONTRIBUTIONS PUBLIC EMPLOYEES GENERAL EMPLOYEES RETIREMENT FUND Required Supplementary Information (Last Ten Years*) StatutorilyContributions in RelationContributionContributions as a Required to the Statutorily RequiredDeficiencyCoveredPercentage of Fiscal Year EndingContributions (a)Contributions (b)(Excess) (a -b)Payroll** (d)Covered Payroll (b/d) December 31, 2015564,168$ 564,168$ -$ 7,522,206$ 7.50% * This schedule is presented prospectively beginning with the fiscal year ended December 31, 2015. ** For purposes of this schedule, covered payroll is defined as "pensionable wages". 92 CITY OF BROOKLYN CENTER, MINNESOTA SCHEDULE OF CITY'S PROPORTIONATE SHARE OF NET PENSION LIABILITY PUBLIC EMPLOYEES GENERAL EMPLOYEES RETIREMENT FUND Required Supplementary Information (Last Ten Years*) Employer's Proportionate Employer's ProportionEmployer's ProportionateShare of the Net PensionPlan Fiduciary Net (Percentage)Share (Amount) of theEmployer'sLiability (Asset) as aPosition as a of the Net PensionNet Pension LiabilityCovered Percentage of itsPercentage of the Fiscal Year EndingLiability (Asset)(Assets) (a)Payroll** (b)Covered Payroll (a/b)Total Pension Liability June 30, 2015 0.1243%6,441,872$ $7,303,595 88.20%78.20% * This schedule is presented prospectively beginning with the fiscal year ended December 31, 2015. ** For purposes of this schedule, covered payroll is defined as "pensionable wages". 93 CITY OF BROOKLYN CENTER, MINNESOTA SCHEDULE OF CITY CONTRIBUTIONS PUBLIC EMPLOYEES POLICE AND FIRE FUND Required Supplementary Information (Last Ten Years*) StatutorilyContributions in RelationContributionContributions as a Required to the Statutorily RequiredDeficiencyCoveredPercentage of Fiscal Year EndingContributions (a)Contributions (b)(Excess) (a -b)Payroll** (d)Covered Payroll (b/d) December 31, 2015687,935$ 687,935$ -$ 4,246,511$ 16.20% * This schedule is presented prospectively beginning with the fiscal year ended December 31, 2015. ** For purposes of this schedule, covered payroll is defined as "pensionable wages". 94 CITY OF BROOKLYN CENTER, MINNESOTA SCHEDULE OF CITY'S PROPORTIONATE SHARE OF NET PENSION LIABILITY PUBLIC EMPLOYEES POLICE & FIRE FUND Required Supplementary Information (Last Ten Years*) Employer's Proportionate Employer's ProportionEmployer's ProportionateShare of the Net PensionPlan Fiduciary Net (Percentage)Share (Amount) of theEmployer'sLiability (Asset) as aPosition as a of the Net PensionNet Pension LiabilityCovered Percentage of itsPercentage of the Fiscal Year EndingLiability (Asset)(Assets) (a)Payroll** (b)Covered Payroll (a/b)Total Pension Liability June 30, 2015 0.4460%5,067,604$ 4,031,138$ 125.71%86.60% * This schedule is presented prospectively beginning with the fiscal year ended December 31, 2015. ** For purposes of this schedule, covered payroll is defined as "pensionable wages". 95 CITY OF BROOKLYN CENTER, MINNESOTA SCHEDULE OF CHANGES IN NET PENSION ASSET AND RELATED RATIO FIRE RELIEF ASSOCIATION Required Supplementary Information (Last Ten Years*) 2015 Total pension Liability Service Cost85,904$ Interest178,242 Benefit Payments(617,541) Net Change in Total Pension Liability(353,395) Total Pension Liability - Beginning of Year2,769,189 Total Pension Liability - End of Year2,415,794 Plan Fiduciary Net Position Contributions - State and Local 158,545 Net Investment Income 149,635 Benefit Payments (617,541) Administrative Expenses (10,080) Net Change in Plan Fiduciary Net Position (319,441) Plan Fiduciary Net Position - Beginning of Year 3,827,651 Plan Fiduciary Net Position - End of Year 3,508,210 Net Pension Liability (Asset) - End of Year (1,092,416) Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 145.2% Covered Employee Payroll n/a Net Pension Liability as a Percentage of Covered Payroll n/a * This schedule is presented prospectively beginning with the fiscal year ended December 31, 2015 (using a December 31, 2014 measurement date). 96 CITY OF BROOKLYN CENTER, MINNESOTA SCHEDULE OF CITY CONTRIBUTIONS FIRE RELIEF ASSOCIATION Required Supplementary Information (Last Ten Years^) 20152014201320122011 Actuarially Determined Contribution*101,453$ 111,463$ 111,463$ 135,929$ Contributions in Relation of the Actuarially Determined Contribution148,061 158,545 134,340 151,503 101,119 Contribution Deficiency (Excess)*(57,092) (22,877) (40,040) 34,810 Covered - Employee Payroll n/an/an/an/an/a Contributions as a Percentage of Covered Employee Payroll n/an/an/an/an/a Notes to Schedule Valuation date: Actuarilly determined contribution rates are calculated as of June 30, two years prior to the end of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Actuarial cost method Entry age normal cost method Amortization method Level dollar amount amortized on a closed basis Remaining amortization period8 years Asset valuation method fair value Inflation Not applicable Salary increases Not applicable Investment rate of return 7.0% compounded annually Retirement age Members are assumed to retire at the later of age 52 or 20 years of service Mortality Based on RP-2000 Annuitant Mortality Table ^ This schedule is presented prospectively beginning with the fiscal year ended December 31, 2015. * Information unavailable at time of audit 97 CITY OF BROOKLYN CENTER, MINNESOTA SCHEDULE OF CITY CONTRIBUTIONS INTERNATIONAL UNION OF OPERATING ENGINEERS CENTRAL PENSION FUND Required Supplementary Information (Last Ten Years) Required Fiscal Year EndingContributions December 31, 201551,699$ December 31, 201451,868 December 31, 201352,046 December 31, 201251,636 December 31, 201150,603 December 31, 201052,004 December 31, 200950,566 December 31, 200847,822 December 31, 200749,632 December 31, 200648,882 98 Combining & Individual Fund Statements & Schedules CITY OF BROOKLYN CENTER, MINNESOTA NONMAJOR SPECIAL REVENUE FUNDS A special revenue fund is used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. Housing and Redevelopment Authority (HRA) This fund was established to account for housing and redevelopment projects within the City of Brooklyn Center. The HRA has the authority to levy an ad-valorem property tax levy, which is the primary funding source for the expenditures from this fund. Annually, the cash balance at the end of the year is transferred into the EDA fund. Economic Development Authority (EDA) This fund was established to account for the development related activities in the City of Brooklyn Center. The EDA generates the funding to accomplish the development projects from grants, excess funding from the HRA property tax levy, or from transfers from other funds of the City. Community Development Block Grant This fund was established to account for the collection of grant funding for related projects within the City. During the year, the City received grant funding through the Neighborhood Stabilization Program, which is for the acquisition of run-down properties, the improvement of said properties, and then marketing them to the public. Police Forfeitures This fund was established to account for the proceeds from property seized by Police Department personnel. Tax Increment District No. 2 This fund was established to account for the collection of tax increment generated revenues for parcels within the District. These funds are used to finance the various redevelopment activities within the District, which consisted of the redevelopment of the properties historically referred to as the Earle Brown Farm. Tax Increment District No. 4 This fund was established to account for the collection of tax increment generated revenues for parcels within the District. These funds are used to finance the various redevelopment activities within the District, which consisted of soil remediation projects within the France Avenue Business Park. City Initiative Grants Revenues and expenditures from grants received from outside entities are accounted for in the fund. The Police Department receive several federal, state and other local grants, which are accounted for here. Other activities include grant funding for local recreation programs and cable television. Centennial Amphitheater This fund was established to account for the accumulation of donations and other funding sources that will be used to build the Centennial Civic & Veterans Memorial Amphitheater. 99 CITY OF BROOKLYN CENTER, MINNESOTA DEBT SERVICE FUND Debt service funds are used to account for and report financial resources that are restricted, committed or assigned to expenditure for principal, interest and other charges related to long-term debt. General Obligation Improvement Bonds, 2004C This fund was established to accumulate collections of special assessments which were levied on the property owners who benefited from the improvements that were constructed with the proceeds of this bond. This bond has a final maturity date of February 1, 2015. General Obligation Improvement Bonds, 2006A This fund was established to accumulate collections of special assessments which were levied on the property owners who benefited from the improvements that were constructed with the proceeds of this bond. This bond has a final maturity date of February 1, 2017. General Obligation Improvement Bonds, 2008B This fund was established to accumulate collections of special assessments which were levied on the property owners who benefited from the improvements that were constructed with the proceeds of this bond. This bond has a final maturity date of February 1, 2019. General Obligation Improvement Bonds, 2013B This fund was established to accumulate collections of special assessments which were levied on the property owners who benefited from the improvements that were constructed with the proceeds of this bond. This bond has a final maturity date of February 1, 2024. General Obligation Improvement Bonds, 2015A This fund was established to accumulate collections of special assessments which were levied on the property owners who benefited from the improvements that were constructed with the proceeds of this bond. This bond has a final maturity date of February 1, 2026. Tax Increment Refunding Bonds, 2015B This fund was established to account for the collection of tax-increment generated revenues, which are annually transferred from Tax Increment District No. 3 fund. The bond was issued to refund the maturities of the Tax Increment Bonds, 2004D. This original bond was issued to finance various redevelopment projects within the City. This bond has a final maturity date of February 1, 2020. Tax Increment Bonds, 2013A This fund was established to account for the collection of tax-increment generated revenues, which are annually transferred from Tax Increment District No. 3 fund. This bond was issued to finance various redevelopment projects within the City. This bond has a final maturity date of February 1, 2022. Tax Increment Bonds, 2008A This fund was established to account for the collection of tax-increment generated revenues, which are annually transferred from Tax Increment District No. 3 fund. This bond was issued to finance various redevelopment projects within the City. This bond has a final maturity date of February 1, 2018. Tax Increment Bonds, 2004D This fund was established to account for the collection of tax-increment generated revenues, which are annually transferred from Tax Increment District No. 3 fund. This bond was issued to finance various redevelopment projects within the City. This bond has a final maturity date of February 1, 2020. 100 CITY OF BROOKLYN CENTER, MINNESOTA NONMAJOR CAPITAL PROJECTS FUNDS Capital projects funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. Capital Reserve Emergency This fund was established to account for monies held in reserve for catastrophic losses or unforeseen capital items. Street Reconstruction This fund was established to provide funds and to account for the expenditure of such funds, for major street infrastructure improvements. The accumulation of funds to provide for such improvements is an attempt to reduce future debt issuance. The primary financing source for such improvements are franchise fees. Technology This fund was established to provide funds and to account for the expenditure of such funds, for technological improvements/renovations. 101 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS December 31, 2015 Total SpecialCapitalNonmajor RevenueProjectGovernmental ASSETS Cash and investments1,848,387$ 4,320,536$ 6,168,923$ Receivables: Accounts - net- 164,692 164,692 Current taxes1,173 - 1,173 Delinquent taxes6,663 - 6,663 Due from other governments153,295 - 153,295 Prepaid items1,500 - 1,500 Advances to other funds2,463,683 - 2,463,683 Assets held for resale537,000 - 537,000 Total assets5,011,701 4,485,228 9,496,929 LIABILITIES Accounts payable 341,472 12,096 353,568 Accrued salaries and wages 5,269 - 5,269 Due to other governments 37 - 37 Deposits payable 35,793 - 35,793 Total liabilities 382,571 12,096 394,667 DEFERRED INFLOWS OF RESOURCES Unavailable revenue - property taxes 6,663 - 6,663 FUND BALANCES Nonspendable Prepaid items 1,500 - 1,500 Restricted Tax increment financing 2,597,917 - 2,597,917 Economic development 1,515,604 - 1,515,604 Law enforcement enhancements 83,686 - 83,686 Committed Public safety 86,891 - 86,891 Cable communications 281,821 - 281,821 Community recreation 55,501 - 55,501 Emergency capital improvements - 1,074,622 1,074,622 Street improvements - 3,183,754 3,183,754 Technology improvements - 214,756 214,756 Unassigned (453) - (453) Total fund balances 4,622,467 4,473,132 9,095,599 Total liabilities, deferred inflows of resources and fund balances 5,011,701$ 4,485,228$ 9,496,929$ 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, 2015 Total SpecialCapitalNonmajor RevenueProjectGovernmental REVENUES Property taxes274,058$ -$ 274,058$ Tax increments362,053 - 362,053 Franchise fees- 653,648 653,648 Intergovernmental1,518,674 - 1,518,674 Charges for services6,952 - 6,952 Fines and forfeits23,566 - 23,566 Investment earnings (net of market value adjustment)14,294 39,489 53,783 Miscellaneous72,229 - 72,229 Total revenues2,271,826 693,137 2,964,963 EXPENDITURES Current: General government- 16,365 16,365 Public safety218,988 - 218,988 Parks and recreation140,319 - 140,319 Economic development1,979,840 - 1,979,840 Capital outlay: General government- 27,723 27,723 Public safety19,010 - 19,010 Public Works- 2,241,978 2,241,978 Parks and recreation568,254 - 568,254 Debt service- 28,509 28,509 Total expenditures2,926,411 2,314,575 5,240,986 Excess (deficiency) of revenues over (under) expenditures(654,585) (1,621,438) (2,276,023) OTHER FINANCING SOURCES (USES) Transfers in583,682 235,020 818,702 Issuance of debt- 2,193,540 2,193,540 Premium on issuance of debt- 34,788 34,788 Transfers out (476,047) - (476,047) Total other financing sources (uses)107,635 2,463,348 2,570,983 Net change in fund balance (546,950) 841,910 294,960 Fund balances - January 1 5,169,417 3,631,222 8,800,639 Fund balances - December 31 4,622,467$ 4,473,132$ 9,095,599$ 103 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS December 31, 2015 Housing andEconomicCommunity RedevelopmentDevelopmentDevelopmentPolice AuthorityAuthorityBlock GrantForfeitures ASSETS Cash and investments-$ 1,001,989$ 43,305$ 104,479$ Receivables: Current taxes1,173 - - - Delinquent taxes6,663 - - - Due from other governments- - 82,726 - Prepaid items- 1,500 - - Advances to other funds- - - - Assets held for resale- 537,000 - - Total assets7,836 1,540,489 126,031 104,479 LIABILITIES Accounts payable - 5,919 126,484 - Accrued salaries and wages - 3,639 - - Due to other governments - - - - Deposits payable - 15,000 - 20,793 Total liabilities- 24,558 126,484 20,793 DEFERRED INFLOWS OF RESOURCES Unavailable revenue - property taxes 6,663 - - - FUND BALANCES Nonspendable Prepaid items - 1,500 - - Restricted Tax increment financing - - - - Economic development1,173 1,514,431 - - Law enforcement enhancements- - - 83,686 Committed Public safety - - - - Cable communications- - - - Community recreation- - - - Unassigned- - (453) - Total fund balances1,173 1,515,931 (453) 83,686 Total liabilities, deferred inflows of resources and fund balances7,836$ 1,540,489$ 126,031$ 104,479$ 104 Total TaxTaxCityNonmajor IncrementIncrementInitiativeCentennialSpecial District No. 2District No. 4GrantsAmphitheaterRevenue 87,587$ 251,781$ 357,296$ 1,950$ 1,848,387$ - - - - 1,173 - - - - 6,663 - - 70,569 - 153,295 - - - - 1,500 2,463,683 - - - 2,463,683 - - - - 537,000 2,551,270 251,781 427,865 1,950 5,011,701 - 205,134 1,985 1,950 341,472 - - 1,630 - 5,269 - - 37 - 37 - - - - 35,793 - 205,134 3,652 1,950 382,571 - - - - 6,663 - - - - 1,500 2,551,270 46,647 - - 2,597,917 - - - - 1,515,604 - - - - 83,686 - - 86,891 - 86,891 - - 281,821 - 281,821 - - 55,501 - 55,501 - - - - (453) 2,551,270 46,647 424,213 - 4,622,467 2,551,270$ 251,781$ 427,865$ 1,950$ 5,011,701$ 105 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS For the Year Ended December 31, 2015 Housing andEconomicCommunity RedevelopmentDevelopmentDevelopmentPolice AuthorityAuthorityBlock GrantForfeitures REVENUES Property taxes274,058$ -$ -$ -$ Tax increments- - - - Intergovernmental- 829,851 368,388 - Charges for services- - - - Fines and forfeits- - - 23,566 Investment earnings (net of market value adjustment)- 8,316 - 836 Miscellaneous- 4,965 - - Total revenues274,058 843,132 368,388 24,402 EXPENDITURES Current: Public safety- - - 36,513 Parks and recreation- - - - Economic development- 1,137,307 180,741 - Capital outlay: Public safety- - - 2,524 Parks and recreation- - - - Total expenditures- 1,137,307 180,741 39,037 Excess (deficiency) of revenues over (under) expenditures274,058 (294,175) 187,647 (14,635) OTHER FINANCING SOURCES (USES) Transfers in- 274,363 - - Transfers out(274,363) - (188,100) - Total other financing sources (uses)(274,363) 274,363 (188,100) - Net change in fund balance (305) (19,812) (453) (14,635) Fund balances - January 1 1,478 1,535,743 - 98,321 Fund balances - December 31 1,173$ 1,515,931$ (453)$ 83,686$ 106 Total TaxTaxCityNonmajor IncrementIncrementInitiativeCentennialSpecial District No. 2District No. 4GrantsAmphitheaterRevenue -$ -$ -$ -$ 274,058$ (58,754) 420,807 - - 362,053 25,400 - 295,035 - 1,518,674 - - 6,952 - 6,952 - - - - 23,566 783 558 2,818 983 14,294 21,007 - 33,182 13,075 72,229 (11,564) 421,365 337,987 14,058 2,271,826 - - 182,475 - 218,988 - - 75,648 64,671 140,319 21,655 640,137 - - 1,979,840 - - 16,486 - 19,010 - - - 568,254 568,254 21,655 640,137 274,609 632,925 2,926,411 (33,219) (218,772) 63,378 (618,867) (654,585) - - - 309,319 583,682 - - (13,584) - (476,047) - - (13,584) 309,319 107,635 (33,219) (218,772) 49,794 (309,548) (546,950) 2,584,489 265,419 374,419 309,548 5,169,417 2,551,270$ 46,647$ 424,213$ -$ 4,622,467$ 107 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING BALANCE SHEET NONMAJOR CAPITAL PROJECT FUNDS December 31, 2015 Total CapitalNonmajor ReserveStreetCapital EmergencyReconstructionTechnologyProjects ASSETS Cash and investments1,074,622$ 3,019,062$ 226,852$ 4,320,536$ Receivables: Accounts - net- 164,692 - 164,692 Total assets1,074,622 3,183,754 226,852 4,485,228 LIABILITIES Accounts payable- - 12,096 12,096 FUND BALANCES Committed Emergency capital improvements1,074,622 - - 1,074,622 Street improvements- 3,183,754 - 3,183,754 Technology improvements- - 214,756 214,756 Total fund balances1,074,622 3,183,754 214,756 4,473,132 Total liabilities and fund balances1,074,622$ 3,183,754$ 226,852$ 4,485,228$ 108 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR CAPITAL PROJECT FUNDS For the Year Ended December 31, 2015 Total CapitalNonmajor ReserveStreetCapital EmergencyReconstructionTechnologyProjects REVENUES Franchise fees-$ 653,648$ -$ 653,648$ Investment earnings (net of market value adjustment)8,406 30,877 206 39,489 Total revenues8,406 684,525 206 693,137 EXPENDITURES Current: General government- - 16,365 16,365 Capital outlay: General government- - 27,723 27,723 Public works- 2,241,978 - 2,241,978 Debt service: Bond issuance costs- 28,509 - 28,509 Total expenditures- 2,270,487 44,088 2,314,575 Excess (deficiency) of revenues over (under) expenditures8,406 (1,585,962) (43,882) (1,621,438) OTHER FINANCING SOURCES Transfers in- - 235,020 235,020 Issuance of debt- 2,193,540 - 2,193,540 Premium on issuance of debt- 34,788 - 34,788 Total other financing sources - 2,228,328 235,020 2,463,348 Net change in fund balance8,406 642,366 191,138 841,910 Fund balances - January 11,066,216 2,541,388 23,618 3,631,222 Fund balances - December 311,074,622$ 3,183,754$ 214,756$ 4,473,132$ 109 CITY OF BROOKLYN CENTER, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND Page 1 of 5 CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Variance with Final Budget - Budgeted AmountsActualPositive OriginalFinalAmounts(Negative) REVENUES Taxes: Property taxes14,842,823$ 14,842,823$ 14,451,515$ (391,308)$ Penalties and interest28,710 28,710 5,099 (23,611) Lodging tax880,000 880,000 1,075,425 195,425 Total taxes15,751,533 15,751,533 15,532,039 (219,494) Special assessments85,000 85,000 148,234 63,234 Licenses and permits: Liquor and beer licenses69,400 69,400 66,792 (2,608) Building permits275,000 275,000 329,882 54,882 Mechanical permits40,000 40,000 87,950 47,950 Sewer and water permits1,500 1,500 3,260 1,760 Plumbing permits30,000 30,000 53,104 23,104 Garbage licenses3,460 3,460 3,250 (210) Mechanical licenses9,000 9,000 9,320 320 Service station licenses2,500 2,500 2,190 (310) Vehicle dealer licenses1,250 1,250 1,500 250 Bowling licenses720 720 - (720) Cigarette licenses3,150 3,150 2,638 (512) Sign permits5,000 5,000 6,559 1,559 Rental dwelling licenses233,550 233,550 233,426 (124) Amusement licenses 725 725 605 (120) Electrical Permits 45,000 45,000 46,666 1,666 ROW permits 3,000 3,000 7,596 4,596 Miscellaneous licenses and permits 4,860 4,860 4,796 (64) Total licenses and permits 728,115 728,115 859,534 131,419 Intergovernmental: State: Local government aid 747,076 747,076 747,076 - Local performance aid 4,200 4,200 - (4,200) Police pension aid 340,000 340,000 360,232 20,232 PERA aid 34,365 34,365 34,365 - Fireperson pension aid 135,000 135,000 148,061 13,061 Police training 15,000 15,000 15,993 993 Other state grants 3,000 3,000 7,525 4,525 Local: Miscellaneous grants 84,300 84,300 97,443 13,143 Total intergovernmental 1,362,941 1,362,941 1,410,695 47,754 Charges for services: General government charges 158,050 158,050 180,198 22,148 Public safety charges 24,750 24,750 12,968 (11,782) Community development fees 8,000 8,000 1,240 (6,760) Recreation fees 257,700 257,700 232,707 (24,993) Community Center fees 406,500 406,500 322,456 (84,044) Total charges for services 855,000 855,000 749,569 (105,431) 110 CITY OF BROOKLYN CENTER, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND Page 2 of 5 CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Variance with Final Budget - Budgeted AmountsActualPositive OriginalFinalAmounts(Negative) Revenues (continued): Fines and forfeits316,500$ 316,500$ 268,116$ (48,384)$ Miscellaneous: Investment earnings (net of market value change)46,787 46,787 62,276 15,489 Other106,725 106,725 142,800 36,075 Total miscellaneous153,512 153,512 205,076 51,564 Total revenues19,252,601 19,252,601 19,173,263 (79,338) EXPENDITURES General government: Mayor and council: Current: Personal services53,260 53,260 49,638 3,622 Supplies350 350 860 (510) Services and other charges68,400 68,400 72,587 (4,187) Total mayor and council122,010 122,010 123,085 (1,075) Administrative (Manager, Clerk, HR) offices: Current: Personal services766,534 766,534 789,808 (23,274) Supplies3,150 3,150 4,311 (1,161) Services and other charges99,975 99,975 63,746 36,229 Total administrative office869,659 869,659 857,865 11,794 Elections and voter registration: Current: Personal services72,430 72,430 63,373 9,057 Supplies900 900 1,896 (996) Services and other charges16,700 16,700 10,440 6,260 Total elections and voter registration90,030 90,030 75,709 14,321 Finance: Current: Personal services 487,859 487,859 471,421 16,438 Supplies 4,700 4,700 3,335 1,365 Services and other charges 56,300 56,300 49,644 6,656 Total finance 548,859 548,859 524,400 24,459 Assessing Current: Supplies 300 300 43 257 Services and other charges 200,800 200,800 202,400 (1,600) Total assessing 201,100 201,100 202,443 (1,343) Legal: Current: Services and other charges 472,000 472,000 427,511 44,489 111 CITY OF BROOKLYN CENTER, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND Page 3 of 5 CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Variance with Final Budget - Budgeted AmountsActualPositive OriginalFinalAmounts(Negative) Expenditures (continued): General government (continued): Government buildings: Current: Personal services250,241$ 250,241$ 235,510$ 14,731$ Supplies66,550 66,550 47,066 19,484 Services and other charges518,667 518,667 418,759 99,908 Total current835,458 835,458 701,335 134,123 Capital outlay22,500 22,500 8,253 14,247 Total government buildings857,958 857,958 709,588 148,370 Information technology: Current: Personal services229,880 229,880 226,259 3,621 Supplies4,500 4,500 4,997 (497) Services and other charges254,263 254,263 216,475 37,788 Total information technology488,643 488,643 447,731 40,912 Total general government3,650,259 3,650,259 3,368,332 281,927 Public safety: Police protection: Current: Personal services6,596,957 6,596,957 6,267,711 329,246 Supplies119,905 119,905 152,548 (32,643) Services and other charges1,128,373 1,128,373 1,070,275 58,098 Total current7,845,235 7,845,235 7,490,534 354,701 Capital outlay42,000 42,000 9,774 32,226 Total police protection7,887,235 7,887,235 7,500,308 386,927 Fire protection: Current: Personal services 760,563 760,563 693,141 67,422 Supplies 75,300 75,300 74,799 501 Services and other charges 331,864 331,864 317,889 13,975 Total current 1,167,727 1,167,727 1,085,829 81,898 Capital outlay 15,000 15,000 13,916 1,084 Total fire protection 1,182,727 1,182,727 1,099,745 82,982 Protective inspection: Current: Personal services 967,117 967,117 929,220 37,897 Supplies 16,000 16,000 20,062 (4,062) Services and other charges 249,893 249,893 180,970 68,923 Total current 1,233,010 1,233,010 1,130,252 102,758 Capital outlay 50,000 50,000 - 50,000 Total protective inspection 1,283,010 1,283,010 1,130,252 152,758 Emergency preparedness: Current: Personal services 73,671 73,671 74,144 (473) Supplies 4,350 4,350 - 4,350 Services and other charges 5,300 5,300 4,728 572 Total emergency preparedness 83,321 83,321 78,872 4,449 Total public safety 10,436,293 10,436,293 9,809,177 627,116 112 CITY OF BROOKLYN CENTER, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND Page 4 of 5 CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Variance with Final Budget - Budgeted AmountsActualPositive OriginalFinalAmounts(Negative) Expenditures (continued): Public works: Engineering department: Current: Personal services774,653$ 774,653$ 684,065$ 90,588$ Supplies3,625 3,625 3,160 465 Services and other charges60,240 60,240 50,949 9,291 Total current838,518 838,518 738,174 100,344 Capital outlay4,000 4,000 3,893 107 Total engineering department842,518 842,518 742,067 100,451 Street department: Current: Personal services805,073 805,073 780,854 24,219 Supplies132,330 132,330 105,255 27,075 Services and other charges731,409 731,409 628,645 102,764 Total street department1,668,812 1,668,812 1,514,754 154,058 Total public works2,511,330 2,511,330 2,256,821 254,509 Community services: Social services: Current: Services and other charges161,000 161,000 135,604 25,396 Parks and recreation: Administration: Current: Personal services215,361 215,361 220,210 (4,849) Services and other charges4,265 4,265 1,712 2,553 Total administration219,626 219,626 221,922 (2,296) Recreation programs: Current: Personal services515,722 515,722 504,471 11,251 Supplies 42,020 42,020 35,408 6,612 Services and other charges 177,142 177,142 167,516 9,626 Total recreation programs 734,884 734,884 707,395 27,489 Community center: Current: Personal services 335,537 335,537 266,982 68,555 Supplies 25,750 25,750 80,152 (54,402) Services and other charges 200,700 200,700 187,357 13,343 Total current 561,987 561,987 534,491 27,496 Capital outlay 23,000 23,000 3,270 19,730 Total community center 584,987 584,987 537,761 47,226 113 CITY OF BROOKLYN CENTER, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND Page 5 of 5 CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Variance with Final Budget - Budgeted AmountsActualPositive OriginalFinalAmounts(Negative) Expenditures (continued): Parks and recreation (continued): Park maintenance: Current: Personal services632,448$ 632,448$ 610,619$ 21,829$ Supplies53,805 53,805 54,674 (869) Services and other charges422,651 422,651 359,889 62,762 Total park maintenance1,108,904 1,108,904 1,025,182 83,722 Total parks and recreation2,648,401 2,648,401 2,492,260 156,141 Economic development: Convention bureau: Current: Services and other charges418,000 418,000 510,827 (92,827) Nondepartmental: Expenditures not charged to departments: Current: Personal services(150,000) (150,000) - (150,000) Supplies21,500 21,500 19,175 2,325 Services and other charges532,753 532,753 430,954 101,799 Total current404,253 404,253 450,129 (45,876) Total expenditures20,229,536 20,229,536 19,023,150 1,206,386 Excess (deficiency) of revenues over (under) expenditures(976,935) (976,935) 150,113 1,127,048 OTHER FINANCING SOURCES (USES) Transfers in150,000 150,000 201,684 51,684 Transfers in - administrative services reimbursed1,014,324 1,014,324 975,352 (38,972) Transfers out(187,389) (187,389) (1,176,313) (988,924) Total other financing sources (uses)976,935 976,935 723 (976,212) Net change in fund balance- - 150,836 150,836 Fund balance - January 1 11,020,081 11,020,081 11,020,081 - Fund balance - December 31 11,020,081$ 11,020,081$ 11,170,917$ 150,836$ 114 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - HOUSING AND REDEVELOPMENT AUTHORITY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Actual OriginalFinalAmounts REVENUES Taxes: Property taxes280,460$ 280,460$ 274,058$ OTHER FINANCING SOURCES (USES) Transfers out(280,460) (280,460) (274,363) Net change in fund balance- - (305) Fund balance - January 11,478 1,478 1,478 Fund balance - December 311,478$ 1,478$ 1,173$ Budgeted Amounts 115 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - ECONOMIC DEVELOPMENT AUTHORITY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Actual OriginalFinalAmounts REVENUES Intergovernmental-$ -$ 829,851$ Investment earnings (net of market value adjustment)5,754 5,754 8,316 Miscellaneous- - 4,965 Total revenues5,754 5,754 843,132 EXPENDITURES Current: Economic development: Personal services289,891 289,891 277,278 Supplies850 850 585 Services and other charges146,242 146,242 859,444 Total expenditures436,983 436,983 1,137,307 Excess (deficiency) of revenues over (under) expenditures(431,229) (431,229) (294,175) OTHER FINANCING SOURCES Transfers in425,428 425,428 274,363 Net change in fund balance(5,801) (5,801) (19,812) Fund balance - January 11,535,743 1,535,743 1,535,743 Fund balance - December 311,529,942$ 1,529,942$ 1,515,931$ Budgeted Amounts 116 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - COMMUNITY DEVELOPMENT BLOCK GRANT SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Budgeted AmountsActual OriginalFinalAmounts REVENUES Intergovernmental150,000$ 150,000$ 368,388$ EXPENDITURES Current: Economic development: Services and other charges- - 180,741 Excess of revenues over expenditures150,000 150,000 187,647 OTHER FINANCING SOURCES (USES) Transfers out(150,000) (150,000) (188,100) Net change in fund balance- - (453) Fund balance - January 1- - - Fund balance - December 31-$ -$ (453)$ 117 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - POLICE FORFEITURES SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Budgeted AmountsActual OriginalFinalAmounts REVENUES Fines and forfeitures32,000$ 32,000$ 23,566$ Investment earnings (net of market value adjustment)267 267 836 Total revenues32,267 32,267 24,402 EXPENDITURES Current: Public safety: Supplies65,500 65,500 35,163 Services and other charges2,100 2,100 1,350 Capital outlay: Public safety:- - 2,524 Total expenditures67,600 67,600 39,037 Net change in fund balance(35,333) (35,333) (14,635) Fund balance - January 198,321 98,321 98,321 Fund balance - December 3162,988$ 62,988$ 83,686$ 118 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - TAX INCREMENT DISTRICT NO. 2 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Budgeted Amounts Actual Original Final Amounts REVENUES Tax increments -$ -$ (58,754)$ Intergovernmental - - 25,400 Investment earnings (net of market value adjustment)1,975 1,975 783 Miscellaneous 8,576 8,576 21,007 Total revenues 10,551 10,551 (11,564) EXPENDITURES Current: Economic development: Services and other charges - - 21,655 Net change in fund balance 10,551 10,551 (33,219) Fund balance - January 1 2,584,489 2,584,489 2,584,489 Fund balance - December 31 2,595,040$ 2,595,040$ 2,551,270$ 119 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - TAX INCREMENT DISTRICT NO. 3 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Budgeted AmountsActual OriginalFinalAmounts REVENUES Tax increments2,976,947$ 2,976,947$ 2,953,728$ Charges for services- - 177,213 Investment earnings (net of market value adjustment)9,939 9,939 19,833 Miscellaneous- - 21,874 Total revenues2,986,886 2,986,886 3,172,648 EXPENDITURES Current: Economic development: Services and other charges8,000 8,000 1,483,476 Excess of revenues over expenditures2,978,886 2,978,886 1,689,172 OTHER FINANCING SOURCES (USES) Sale of assets- - 4,820 Transfers out(2,497,331) (2,497,331) (2,395,982) Total other financing sources (uses)(2,497,331) (2,497,331) (2,391,162) Net change in fund balance481,555 481,555 (701,990) Fund balance - January 117,898,749 17,898,749 17,898,749 Fund balance - December 3118,380,304$ 18,380,304$ 17,196,759$ 120 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - TAX INCREMENT DISTRICT NO. 4 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Budgeted AmountsActual OriginalFinalAmounts REVENUES Tax increments466,341$ 466,341$ 420,807$ Investment earnings (net of market value adjustment)566 566 558 Total revenues466,907 466,907 421,365 EXPENDITURES Current: Economic development: Services and other charges454,683 454,683 640,137 Excess (deficiency) of revenues over (under) expenditures12,224 12,224 (218,772) OTHER FINANCING SOURCES (USES) Transfers out(10,000) (10,000) - Net change in fund balance2,224 2,224 (218,772) Fund balance - January 1265,419 265,419 265,419 Fund balance - December 31267,643$ 267,643$ 46,647$ 121 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - TAX INCREMENT DISTRICT NO. 5 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Budgeted AmountsActual OriginalFinalAmounts REVENUES Tax increments435,437$ 435,437$ 353,417$ Investment earnings (net of market value adjustment)816 816 458 Total revenues436,253 436,253 353,875 EXPENDITURES Current: Economic development: Services and other charges400,469 400,469 1,295,482 Excess (deficiency) of revenues over (under) expenditures35,784 35,784 (941,607) OTHER FINANCING SOURCES (USES) Transfers out(34,968) (34,968) - Net change in fund balance816 816 (941,607) Fund balance (deficit) - January 1(1,299,859) (1,299,859) (1,299,859) Fund balance (deficit) - December 31(1,299,043)$ (1,299,043)$ (2,241,466)$ 122 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - CITY INITIATIVES GRANT SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Budgeted AmountsActual OriginalFinalAmounts REVENUES Intergovernmental127,516$ 127,516$ 295,035$ Charges for services9,375 9,375 6,952 Investment earnings (net of market value adjustment)1,273 1,273 2,818 Miscellaneous11,625 11,625 33,182 Total revenues149,789 149,789 337,987 EXPENDITURES Current: Public safety: Personal services60,000 60,000 162,649 Supplies1,000 1,000 13,231 Services and other charges1,000 1,000 6,595 Parks and recreation: Personal services13,029 13,029 23,360 Supplies8,850 8,850 20,952 Services and other charges18,595 18,595 31,336 Capital outlay: Public safety - - 16,486 Parks and recreation200,000 200,000 - Total expenditures302,474 302,474 274,609 Excess (deficiency) of revenues over (under) expenditures(152,685) (152,685) 63,378 OTHER FINANCING SOURCES (USES) Transfers out- - (13,584) Net change in fund balance(152,685) (152,685) 49,794 Fund balance - January 1374,419 374,419 374,419 Fund balance - December 31221,734$ 221,734$ 424,213$ 123 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - CENTENNIAL AMPHITHEATER SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Budgeted Amounts Actual Original Final Amounts REVENUES Investment earnings (net of market value adjustment)602$ 602$ 983$ Miscellaneous - - 13,075 Total revenues602 602 14,058 EXPENDITURES Current: Parks and recreation: Supplies- - 8,384 Services and other charges- - 56,287 Capital outlay: Parks and recreation588,500 588,500 568,254 Total expenditures588,500 588,500 632,925 Excess (deficiency) of revenues over (under) expenditures(587,898) (587,898) (618,867) OTHER FINANCING SOURCES (USES) Transfers in 345,000 345,000 309,319 Net change in fund balance(242,898) (242,898) (309,548) Fund balance - January 1 309,548 309,548 309,548 Fund balance - December 3166,650$ 66,650$ -$ 124 CITY OF BROOKLYN CENTER, MINNESOTA DEBT SERVICE FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Budgeted AmountsActual OriginalFinalAmounts REVENUES Property taxes396,496$ 396,496$ 389,705$ Special assessments848,329 848,329 1,120,946 Investment earnings (net of market value adjustment)5,601 5,601 8,203 Total revenues1,250,426 1,250,426 1,518,854 EXPENDITURES Debt service: Principal3,025,000 3,025,000 3,025,000 Interest826,053 826,053 826,053 Fiscal agent fees10,500 10,500 9,838 Bond issuance costs- - 71,102 Total expenditures3,861,553 3,861,553 3,931,993 Excess (defiency) of revenues over (under) expenditures(2,611,127) (2,611,127) (2,413,139) OTHER FINANCING SOURCES Transfers in 2,398,332 2,398,332 2,395,982 Issuance of debt- - 6,600,000 Premium on issuance of debt- - 255,630 Total other financing sources2,398,332 2,398,332 9,251,612 Net change in fund balance(212,795) (212,795) 6,838,473 Fund balance - January 11,909,441 1,909,441 1,909,441 Fund balance - December 311,696,646$ 1,696,646$ 8,747,914$ 125 CITY OF BROOKLYN CENTER, MINNESOTA CAPITAL PROJECT FUND - CAPITAL IMPROVEMENTS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Actual OriginalFinalAmounts REVENUES Property taxes-$ -$ (5,206)$ Intergovernmental1,010,076 1,010,076 747,076 Charges for services- - 188 Special assessments- - 157 Investment earnings (net of market value adjustment)114 114 43,389 Miscellaneous- - 116,500 Total revenues1,010,190 1,010,190 902,104 EXPENDITURES Current: General government- - 161,315 Parks and recreation- - 161,315 Capital outlay: General government- - 699,384 Parks and recreation656,000 656,000 2,841,338 Total expenditures656,000 656,000 3,863,352 Excess (deficiency) of revenues over (under) expenditures354,190 354,190 (2,961,248) OTHER FINANCING SOURCES (USES) Transfers in450,000 450,000 1,125,216 Transfers out(300,000) (300,000) (264,319) Total other financing sources (uses)150,000 150,000 860,897 Net change in fund balance504,190 504,190 (2,100,351) Fund balance - January 16,509,230 6,509,230 6,509,230 Fund balance - December 317,013,420$ 7,013,420$ 4,408,879$ Budgeted Amounts 126 CITY OF BROOKLYN CENTER, MINNESOTA CAPITAL PROJECT FUND - MUNICIPAL STATE AID FOR CONSTRUCTION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Actual OriginalFinalAmounts REVENUES Intergovernmental887,992$ 887,992$ 1,072,031$ Investment earnings (net of market value adjustment)3,570 3,570 15,230 Total revenues891,562 891,562 1,087,261 EXPENDITURES Current: Public works: Supplies44,000 44,000 43,981 Services and other charges66,000 66,000 66,000 Capital outlay: Public works2,560,000 2,560,000 2,583,849 Total expenditures2,670,000 2,670,000 2,693,830 Net change in fund balance(1,778,438) (1,778,438) (1,606,569) Fund balance - January 11,830,100 1,830,100 1,830,100 Fund balance - December 3151,662$ 51,662$ 223,531$ Budgeted Amounts 127 CITY OF BROOKLYN CENTER, MINNESOTA CAPITAL PROJECT FUND - CAPITAL RESERVE EMERGENCY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Actual OriginalFinalAmounts REVENUES Investment earnings (net of market value adjustment)6,948$ 6,948$ 8,406$ Net change in fund balance6,948 6,948 8,406 Fund balance - January 11,066,216 1,066,216 1,066,216 Fund balance - December 311,073,164$ 1,073,164$ 1,074,622$ Budgeted Amounts 128 CITY OF BROOKLYN CENTER, MINNESOTA CAPITAL PROJECT FUND - INFRASTRUCTURE CONSTRUCTION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Actual OriginalFinalAmounts REVENUES Special assessments767,129$ 767,129$ 445,822$ Charges for services- - 33,785 Miscellaneous- - 76,172 Total revenues767,129 767,129 555,779 EXPENDITURES Current: Public works Supplies- - 142 Services and other charges1,595 1,595 44,791 Capital outlay: Public works1,370,000 1,370,000 1,455,128 Debt service: Bond issuance costs- - 17,769 Total expenditures1,371,595 1,371,595 1,517,830 Excess (deficiency) of revenues over (under) expenditures(604,466) (604,466) (962,051) OTHER FINANCING SOURCES Issuance of debt1,370,000 1,370,000 1,222,708 Premium on issuance of debt- - 19,391 Total other financing sources (uses)1,370,000 1,370,000 1,242,099 Net change in fund balance765,534 765,534 280,048 Fund balance (deficit) - January 1(463,193) (463,193) (463,193) Fund balance (deficit) - December 31302,341$ 302,341$ (183,145)$ Budgeted Amounts 129 CITY OF BROOKLYN CENTER, MINNESOTA CAPITAL PROJECT FUND - STREET RECONSTRUCTION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Actual OriginalFinalAmounts REVENUES Franchise fees650,000$ 650,000$ 653,648$ Investment earnings (net of market value adjustment)13,493 13,493 30,877 Total revenues663,493 663,493 684,525 EXPENDITURES Capital outlay: Public works2,150,000 2,150,000 2,241,978 Debt service: Bond issuance costs- - 28,509 Total expenditures2,150,000 2,150,000 2,270,487 Excess (deficiency) of revenues over (under) expenditures(1,486,507) (1,486,507) (1,585,962) OTHER FINANCING SOURCES Issuance of debt- - 2,193,540 Premium on issuance of debt 34,788 Total other financing sources- - 2,228,328 Net change in fund balance(1,486,507) (1,486,507) 642,366 Fund balance - January 12,541,388 2,541,388 2,541,388 Fund balance - December 311,054,881$ 1,054,881$ 3,183,754$ Budgeted Amounts 130 CITY OF BROOKLYN CENTER, MINNESOTA CAPITAL PROJECT FUND - TECHNOLOGY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Actual OriginalFinalAmounts REVENUES Investment earnings (net of market value adjustment)53$ 53$ 206$ EXPENDITURES Current: General government: Supplies48,675 48,675 16,365 Services and other charges20,000 20,000 - Capital outlay: General government59,000 59,000 27,723 Total expenditures127,675 127,675 44,088 Excess (deficiency) of revenues over (under) expenditures(127,622) (127,622) (43,882) OTHER FINANCING SOURCES Transfers in140,000 140,000 235,020 Net change in fund balance12,378 12,378 191,138 Fund balance - January 123,618 23,618 23,618 Fund balance - December 3135,996$ 35,996$ 214,756$ Budgeted Amounts 131 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING BALANCE SHEET DEBT SERVICE FUND BY ACCOUNT December 31, 2015 GeneralGeneralGeneralGeneral ObligationObligationObligationObligation ImprovementImprovementImprovementImprovement BondsBondsBondsBonds 2004C2006A2008B2013B ASSETS Cash and investments1,642$ 248,806$ 679,397$ 676,258$ Cash with fiscal agents- - - - Receivables: Current taxes- - - 1,643 Special assessments614 49,929 451,292 1,226,247 Total assets2,256 298,735 1,130,689 1,904,148 LIABILITIES Accounts payable - - 450 425 Due to other governments - - 85,530 - Total liabilities - - 85,980 425 DEFERRED INFLOWS OF RESOURCES Unavailable revenue - special assessments 614 48,584 451,292 1,224,593 FUND BALANCES (DEFICITS) Restricted for debt service 1,642 250,151 593,417 679,130 Unassigned - - - - Total fund balances (deficits)1,642 250,151 593,417 679,130 Total liabilities, deferred inflows of resources and fund balances (deficits)2,256$ 298,735$ 1,130,689$ 1,904,148$ 132 General Tax ObligationIncrement Tax Tax Tax ImprovementRefundingIncrementIncrementIncrementTotal Bonds Bonds Bonds Bonds Bonds Debt 2015A 2015B 2013A 2008A 2004D Service 439,471$ -$ -$ -$ 2,447$ 2,048,021$ - 111,100 - - 6,670,981 6,782,081 - - - - - 1,643 1,193,805 - - - - 2,921,887 1,633,276 111,100 - - 6,673,428 11,753,632 - - 425 - - 1,300 - - - - - 85,530 - - 425 - - 86,830 1,193,805 - - - - 2,918,888 439,471 111,100 - - 6,673,428 8,748,339 - - (425) - - (425) 439,471 111,100 (425) - 6,673,428 8,747,914 1,633,276$ 111,100$ -$ -$ 6,673,428$ 11,753,632$ 133 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES DEBT SERVICE FUND BY ACCOUNT For the Year Ended December 31, 2015 GeneralGeneralGeneralGeneral ObligationObligationObligationObligation ImprovementImprovementImprovementImprovement BondsBondsBondsBonds 2004C2006A2008B2013B REVENUES Property taxes -$ -$ -$ 389,705$ Special assessments 5,022 104,965 218,612 354,081 Investment earnings (net of market value adjustment)7 1,396 4,018 1,577 Total revenues 5,029 106,361 222,630 745,363 EXPENDITURES Debt service: Principal90,000 135,000 240,000 805,000 Interest1,643 9,908 40,145 135,525 Fiscal agent fees- 3,640 1,558 2,890 Bond issuance costs- - - - Total expenditures91,643 148,548 281,703 943,415 Excess (deficiency) of revenues over (under) expenditures(86,614) (42,187) (59,073) (198,052) OTHER FINANCING SOURCES (USES) Transfers in - - - - Issuance of debt - - - - Premium on issuance of debt - - - - Total other financing sources - - - - Net change in fund balances (86,614) (42,187) (59,073) (198,052) Fund balances (deficits) - January 1 88,256 292,338 652,490 877,182 Fund balances (deficits) - December 31 1,642$ 250,151$ 593,417$ 679,130$ 134 General Tax ObligationIncrement Tax Tax Tax ImprovementRefundingIncrementIncrementIncrementTotal Bonds Bonds Bonds Bonds Bonds Debt 2015A 2015B 2013A 2008A 2004D Service -$ -$ -$ -$ -$ 389,705$ 438,266 - - - - 1,120,946 1,205 - - - - 8,203 439,471 - - - - 1,518,854 - - 250,000 125,000 1,380,000 3,025,000 - - 176,438 22,844 439,550 826,053 - - 850 450 450 9,838 - - - - 71,102 71,102 - - 427,288 148,294 1,891,102 3,931,993 439,471 - (427,288) (148,294) (1,891,102) (2,413,139) - - 427,138 148,569 1,820,275 2,395,982 - 111,100 - - 6,488,900 6,600,000 - - - - 255,630 255,630 - 111,100 427,138 148,569 8,564,805 9,251,612 439,471 111,100 (150) 275 6,673,703 6,838,473 - - (275) (275) (275) 1,909,441 439,471$ 111,100$ (425)$ -$ 6,673,428$ 8,747,914$ 135 CITY OF BROOKLYN CENTER, MINNESOTA DEBT SERVICE FUND - G.O. IMPROVEMENT BONDS, 2004C SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Actual OriginalFinalAmounts REVENUES Special assessments103,995$ 103,995$ 5,022$ Investment earnings (net of market value adjustment)626 626 7 Total revenues104,621 104,621 5,029 EXPENDITURES Debt service: Principal90,000 90,000 90,000 Interest1,643 1,643 1,643 Fiscal agent fees1,500 1,500 - Total expenditures93,143 93,143 91,643 Net change in fund balance11,478 11,478 (86,614) Fund balance - January 188,256 88,256 88,256 Fund balance - December 3199,734$ 99,734$ 1,642$ Budgeted Amounts 136 CITY OF BROOKLYN CENTER, MINNESOTA DEBT SERVICE FUND - G.O. IMPROVEMENT BONDS, 2006A SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Actual OriginalFinalAmounts REVENUES Special assessments161,647$ 161,647$ 104,965$ Investment earnings (net of market value adjustment)1,334 1,334 1,396 Total revenues162,981 162,981 106,361 EXPENDITURES Debt service: Principal135,000 135,000 135,000 Interest9,908 9,908 9,908 Fiscal agent fees1,500 1,500 3,640 Total expenditures146,408 146,408 148,548 Net change in fund balance16,573 16,573 (42,187) Fund balance - January 1292,338 292,338 292,338 Fund balance - December 31308,911$ 308,911$ 250,151$ Budgeted Amounts 137 CITY OF BROOKLYN CENTER, MINNESOTA DEBT SERVICE FUND - G.O. IMPROVEMENT BONDS, 2008B SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Actual OriginalFinalAmounts REVENUES Special assessments308,810$ 308,810$ 218,612$ Investment earnings (net of market value adjustment)2,825 2,825 4,018 Total revenues311,635 311,635 222,630 EXPENDITURES Debt service: Principal240,000 240,000 240,000 Interest40,145 40,145 40,145 Fiscal agent fees1,500 1,500 1,558 Total expenditures281,645 281,645 281,703 Net change in fund balance29,990 29,990 (59,073) Fund balance - January 1652,490 652,490 652,490 Fund balance - December 31682,480$ 682,480$ 593,417$ Budgeted Amounts 138 CITY OF BROOKLYN CENTER, MINNESOTA DEBT SERVICE FUND - G.O. IMPROVEMENT BONDS, 2013B SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Actual OriginalFinalAmounts REVENUES Property taxes396,496$ 396,496$ 389,705$ Special assessments273,877 273,877 354,081 Investment earnings (net of market value adjustment)816 816 1,577 Total revenues671,189 671,189 745,363 EXPENDITURES Debt service: Principal805,000 805,000 805,000 Interest135,525 135,525 135,525 Fiscal agent fees1,500 1,500 2,890 Total expenditures942,025 942,025 943,415 Net change in fund balance(270,836) (270,836) (198,052) Fund balance - January 1877,182 877,182 877,182 Fund balance - December 31606,346$ 606,346$ 679,130$ Budgeted Amounts 139 CITY OF BROOKLYN CENTER, MINNESOTA DEBT SERVICE FUND - G.O. IMPROVEMENT BONDS, 2015A SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Actual OriginalFinalAmounts REVENUES Special assessments-$ -$ 438,266$ Investment earnings (net of market value adjustment)- - 1,205 Total revenues- - 439,471 Net change in fund balance - - 439,471 Fund balance - January 1 - - - Fund balance - December 31 -$ -$ 439,471$ Budgeted Amounts 140 CITY OF BROOKLYN CENTER, MINNESOTA DEBT SERVICE FUND - G.O. TAX INCREMENT REFUNDING BONDS, 2015B SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Actual OriginalFinalAmounts OTHER FINANCING SOURCES Issuance of debt-$ -$ 111,100$ Net change in fund balance- - 111,100 Fund balance - January 1- - - Fund balance - December 31-$ -$ 111,100$ Budgeted Amounts 141 CITY OF BROOKLYN CENTER, MINNESOTA DEBT SERVICE FUND - G.O. TAX INCREMENT BONDS, 2013A SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Actual OriginalFinalAmounts EXPENDITURES Debt service: Principal250,000$ 250,000$ 250,000$ Interest176,438 176,438 176,438 Fiscal agent fees1,500 1,500 850 Total expenditures427,938 427,938 427,288 OTHER FINANCING SOURCES Transfers in427,938 427,938 427,138 Net change in fund balance- - (150) Fund balance (deficit) - January 1(275) (275) (275) Fund balance (deficit) - December 31(275)$ (275)$ (425)$ Budgeted Amounts 142 CITY OF BROOKLYN CENTER, MINNESOTA DEBT SERVICE FUND - G.O. TAX INCREMENT BONDS, 2008A SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Actual OriginalFinalAmounts EXPENDITURES Debt service: Principal125,000$ 125,000$ 125,000$ Interest22,844 22,844 22,844 Fiscal agent fees1,500 1,500 450 Total expenditures149,344 149,344 148,294 OTHER FINANCING SOURCES Transfers in149,344 149,344 148,569 Net change in fund balance- - 275 Fund balance (deficit) - January 1(275) (275) (275) Fund balance (deficit) - December 31(275)$ (275)$ -$ Budgeted Amounts 143 CITY OF BROOKLYN CENTER, MINNESOTA DEBT SERVICE FUND - G.O. TAX INCREMENT BONDS, 2004D SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2015 Actual OriginalFinalAmounts EXPENDITURES Debt service: Principal1,380,000$ 1,380,000$ 1,380,000$ Interest439,550 439,550 439,550 Fiscal agent fees1,500 1,500 71,552 Total expenditures1,821,050 1,821,050 1,891,102 OTHER FINANCING SOURCES Transfers in1,821,050 1,821,050 1,820,275 Issuance of debt- - 6,488,900 Premium on issuance of debt- - 255,630 Total other financing sources1,821,050 1,821,050 8,564,805 Net change in fund balance- - 6,673,703 Fund balance (deficit) - January 1(275) (275) (275) Fund balance (deficit) - December 31(275)$ (275)$ 6,673,428$ Budgeted Amounts 144 CITY OF BROOKLYN CENTER, MINNESOTA INTERNAL SERVICE FUNDS Internal service funds are used to account for and report financial resources for the purchase of goods or services provided by one department to other departments of the City on a cost reimbursement basis. Central Garage This fund was established to account for the acquisition and maintenance of all City vehicles and rolling stock equipment. Vehicle and equipment maintenance and repair costs are charged to the departments as incurred. Replacement costs are charged to the departments over the estimated useful life of the vehicles and equipment. Employees (EE) Retirement Benefits This fund accounts for certain health care insurance benefits for City employees who retire before age 65. Substantially all of the City's full-time police and fire employees and all other full-time employeers hired before July 1, 1989 may be eligible for those benefits from the time they qualify for an unreduced PERA pension, until they reach age 65 or become eligible for Medicare. In the event that future costs would exceed earnings, other funds would be charged for the costs associated with their employees. Employees (EE) Compensated Absences This fund accounts for payment of unused vacation and vested sick leave benefits, and the allocation of such costs to the respective departments and funds of the City. Pension - GERF This fund was established to account for the net pension liability and related expense recorded with the adoption of GASB 68 related to the PERA Coordinated plan, and the allocation of such costs to the respective departments and funds of the City. Pension - PEPFF This fund was established to account for the net pension liability and related expense recorded with the adoption of GASB 68 related to the PERA Police and Fire plan, and the allocation of such costs to the repsective departments and funds of the City. 145 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS December 31, 2015 Total CentralEE RetirementEE CompPension -Pension - Internal GarageBenefitAbsencesGERFPEPFFService ASSETS Current assets: Cash and cash equivalents4,409,948$ 565,856$ 1,254,851$ -$ -$ 6,230,655$ Receivables: Accounts - net35,557 - - - - 35,557 Due from other governments19,270 - - - - 19,270 Inventories16,795 - - - - 16,795 Total current assets4,481,570 565,856 1,254,851 - - 6,302,277 Noncurrent assets: Capital assets: Land improvements166,108 - - - - 166,108 Machinery and equipment9,181,885 - - - - 9,181,885 Total capital assets9,347,993 - - - - 9,347,993 Less: accumulated depreciation(5,456,463) - - - - (5,456,463) Net capital assets3,891,530 - - - - 3,891,530 Total noncurrent assets3,891,530 - - - - 3,891,530 Total assets8,373,100 565,856 1,254,851 - - 10,193,807 DEFERRED OUTFLOWS OF RESOURCES Deferred pension resources- - - 898,910 1,308,212 2,207,122 LIABILITIES Current liabilities: Accounts payable 34,163 - - - - 34,163 Accrued salaries and wages 4,012 126 - - - 4,138 Due to other governments 48 - - - - 48 Compensated absences payable - - 125,485 - - 125,485 Total current liabilities 38,223 126 125,485 - - 163,834 Noncurrent liabilities: Compensated absences payable - - 1,129,366 - - 1,129,366 Net OPEB obligation - 710,605 - - - 710,605 Net pension liability - - - 6,441,872 5,067,604 11,509,476 Total noncurrent liabilities - 710,605 1,129,366 6,441,872 5,067,604 13,349,447 Total liabilities 38,223 710,731 1,254,851 6,441,872 5,067,604 13,513,281 DEFERRED INFLOWS OF RESOURCES Deferred pension resources - - - 839,156 821,800 1,660,956 NET POSITION Net investment in capital assets 3,891,530 - - - - 3,891,530 Unrestricted 4,443,347 (144,875) - (6,382,118) (4,581,192) (6,664,838) Total net position 8,334,877$ (144,875)$ -$ (6,382,118)$ (4,581,192)$ (2,773,308)$ 146 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS For the Year Ended December 31, 2015 Total CentralEE RetirementEE CompPension -Pension - Internal GarageBenefitAbsencesGERFPEPFFService OPERATING REVENUES Sales and user fees1,634,345$ -$ 136,503$ 564,168$ 687,935$ 3,022,951$ OPERATING EXPENSES Personal services364,264 204,026 146,530 685,060 879,371 2,279,251 Supplies405,086 - - - - 405,086 Other services160,554 - - - - 160,554 Insurance56,693 - - - - 56,693 Utilities895 - - - - 895 Depreciation761,629 - - - - 761,629 Total operating expenses1,749,121 204,026 146,530 685,060 879,371 3,664,108 Operating income (loss)(114,776) (204,026) (10,027) (120,892) (191,436) (641,157) NONOPERATING REVENUES (EXPENSES) Intergovernmental- 8,606 - - 40,140 48,746 Investment earnings (net of market value adjustment)36,407 4,760 10,027 - - 51,194 Gain on sale of capital assets27,800 - - - - 27,800 Loss on sale of capital assets(18,175) - - - - (18,175) Other revenue40,121 - - - - 40,121 Total nonoperating revenues86,153 13,366 10,027 - 40,140 149,686 Income (loss) before transfers(28,623) (190,660) - (120,892) (151,296) (491,471) Transfers in7,389 - - - - 7,389 Change in net position(21,234) (190,660) - (120,892) (151,296) (484,082) Net position - January 18,356,111 45,785 - - - 8,401,896 Change in Accounting Principle - pension- - - (6,261,226) (4,429,896) (10,691,122) Net position - January 1, restated8,356,111 45,785 - (6,261,226) (4,429,896) (2,289,226) Net position - December 318,334,877$ (144,875)$ -$ (6,382,118)$ (4,581,192)$ (2,773,308)$ 147 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the Year Ended December 31, 2015 Total CentralEE RetirementEE CompPension -Pension - Internal Garage BenefitAbsencesGERF PEPFF Service CASH FLOWS FROM OPERATING ACTIVITIES Receipts from interfund services provided 1,597,836$ -$ 136,503$ 564,168$ 687,935$ 2,986,442$ Other operating receipts 40,121 - - - - 40,121 Payments to suppliers (538,525) - - - - (538,525) Payments to employees (374,748) (122,546) (173,772) (564,168) (687,935) (1,923,169) Net cash flows provided (used) by operating activities 724,684 (122,546) (37,269) - - 564,869 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Intergovernmental - 8,606 - - - 8,606 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (1,082,843) - - - - (1,082,843) Transfers in 7,389 - - - - 7,389 Proceeds from sale of assets 33,978 - - - - 33,978 Net cash flows provided (used) by capital and related financing activities (1,041,476) - - - - (1,041,476) CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments 36,407 4,760 10,027 - - 51,194 Net increase (decrease) in cash and cash equivalents (280,385) (109,180) (27,242) - - (416,807) Cash and cash equivalents - January 1 4,690,333 675,036 1,282,093 - - 6,647,462 Cash and cash equivalents - December 31 4,409,948$ 565,856$ 1,254,851$ -$ -$ 6,230,655$ RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES Operating income (loss) (114,776)$ (204,026)$ (10,027)$ (120,892)$ (191,436)$ (641,157)$ Adjustments to reconcile operating income (loss) to net cash flows provided (used) by operating activities: Other income related to operations 40,121 - - - 40,140 80,261 Depreciation 761,629 - - - - 761,629 (Increase) decrease in assets: Accounts receivable (36,509) - - - - (36,509) Inventories 6,742 - - - - 6,742 (Increase) decrease in deferred outflows of resources: Deferred pension resources - - - (898,910) (1,308,212) (2,207,122) Increase (decrease) in liabilities: Accounts payable 77,961 - - - - 77,961 Net pension liability 180,646 637,708 818,354 Accrued salaries and wages (10,484) 81,480 (27,242) - - 43,754 (Increase) decrease in deferred inflows of resources: Deferred pension resources - - - 839,156 821,800 1,660,956 Net cash provided (used) by operating activities 724,684$ (122,546)$ (37,269)$ -$ -$ 564,869$ NONCASH FINANCING ACTIVITIES Acquisitions of capital assets on account 38,670$ -$ -$ -$ -$ 38,670$ Capital asset trade-ins (24,353)$ -$ -$ -$ -$ (24,353)$ Grants deposited with pension plan -$ -$ -$ -$ 40,140$ 40,140$ Change in accounting principle for pensions -$ -$ -$ (6,261,226)$ (4,429,896)$ (10,691,122)$ 148 Statistical Section STATISTICAL SECTION This part of the City of Brooklyn Center’s comprehensive annual financial report presents detailed information as a context for understanding the financial statements, note disclosures, and supplementary information. This section includes information for the primary government, including any blended component units. Contents Page Financial Trends 150 These tables contain trend information to help the reader understand the City’s financial performance by placing it in historical perspective. Revenue Capacity 164 These tables contain information to help the reader assess the City’s most significant “own-source” revenue, property taxes. Debt Capacity 170 These tables present information to help the reader assess the affordability of the government’s current levels of outstanding debt and the City’s ability to issue debt in the future. Demographic and Economic Information 177 These tables offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place. Operating Information 179 These tables contain service and infrastructure data to help the reader understand how the City’s financial report relates to the services the City provides and the activities it performs. Sources: unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 149 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) NET POSITION BY COMPONENT Last ten fiscal years (accrual basis of accounting) 2006 2007 2008 2009 Governmental activities Net investment in capital assets28,191,206$ 30,780,590$ 31,423,905$ 33,550,664$ Restricted27,637,465 21,738,515 31,850,784 29,027,991 Unrestricted4,055,312 8,061,157 690,424 4,082,990 Total governmental activities net position59,883,983$ 60,580,262$ 63,965,113$ 66,661,645$ Business-type activities Investment in capital assets38,248,496$ 40,466,892$ 42,572,360$ 42,297,110$ Unrestricted7,973,318 9,845,252 10,466,919 8,835,644 Total business-type activities net position46,221,814$ 50,312,144$ 53,039,279$ 51,132,754$ Primary government Net investment in capital assets66,439,702$ 71,247,482$ 73,996,265$ 75,847,774$ Restricted27,637,465 21,738,515 31,850,784 29,027,991 Unrestricted12,028,630 17,906,409 11,157,343 12,918,634 Total primary government net position106,105,797$ 110,892,406$ 117,004,392$ 117,794,399$ Sources: The data for this table has been extracted from the respective years CAFR document. Note: During 2011, the City implemented GASB Statement No. 54, Fund Balance and Governmental Fund Type Definitions. As part of this implementation, certain reclassifications occurred for funds that were reported as Governmental activities prior to 2011, that are now reported as business-type activities. Those balances prior to 2011 have not been restated in this statistical schedule. The City implemented GASB Statement No. 68 and GASB No. 71 in fiscal 2015. Years prior to 2015 have not been restated 150 Table 1 201020112012201320142015 40,978,165$ 45,761,042$ 45,261,629$ 42,281,203$ 42,947,577$ 47,941,800$ 22,067,726 24,847,507 24,259,292 27,219,086 28,061,977 36,810,593 6,985,972 4,376,334 5,875,289 11,205,289 12,357,196 (5,495,836) 70,031,863$ 74,984,883$ 75,396,210$ 80,705,578$ 83,366,750$ 79,256,557$ 42,800,624$ 45,051,128$ 42,406,210$ 42,466,488$ 48,537,132$ 47,201,239$ 8,673,168 8,300,659 11,856,924 12,208,126 6,819,765 8,452,630 51,473,792$ 53,351,787$ 54,263,134$ 54,674,614$ 55,356,897$ 55,653,869$ 83,778,789$ 90,812,170$ 87,667,839$ 84,747,691$ 91,484,709$ 95,143,039$ 22,067,726 24,847,507 24,259,292 27,219,086 28,061,977 36,810,593 15,659,140 12,676,993 17,732,213 23,413,415 19,176,961 2,956,794 121,505,655$ 128,336,670$ 129,659,344$ 135,380,192$ 138,723,647$ 134,910,426$ 151 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) CHANGES IN NET POSITION - CONTINUED ON THE FOLLOWING PAGES Last ten fiscal years (accrual basis of accounting) 2006200720082009 GOVERNMENTAL ACTIVITIES Expenses General government2,936,638$ 2,953,328$ 3,498,767$ 3,653,956$ Public safety8,039,356 8,051,836 8,760,880 9,036,176 Public works2,087,259 2,704,435 2,596,754 2,687,980 Community services123,172 74,389 72,893 71,519 Parks and recreation2,565,364 2,624,897 2,910,825 2,773,528 Economic development2,567,377 3,966,908 3,713,340 2,151,916 Interest on long-term debt1,184,017 1,127,276 1,125,712 1,143,546 Total expenses 19,503,183 21,503,069 22,679,171 21,518,621 Program Revenues Charges for services: General government289,203 902,734 1,115,038 1,102,360 Public safety800,408 847,307 780,080 1,234,678 Public works259,273 241,035 127,489 26,027 Parks and recreation665,332 692,781 754,079 740,782 Economic development164,531 49,498 24,435 445 Operating grants and contributions748,888 818,989 1,003,884 1,034,905 Capital grants and contributions2,208,751 2,646,320 2,706,056 1,566,224 Total program revenues 5,136,386 6,198,664 6,511,061 5,705,421 Net (expense) / revenue (14,366,797) (15,304,405) (16,168,110) (15,813,200) General Revenues and Transfers Taxes: Property12,276,896 12,200,575 12,458,724 12,899,250 Tax increments 2,682,874 2,677,630 2,912,773 3,616,157 Lodging taxes 738,776 706,930 619,962 591,291 Unrestricted grants and contributions 702,030 1,263,753 607,073 1,019,990 Investment earnings (net)1,928,462 1,852,117 903,939 309,715 Gain on disposal of capital asset 23,963 88,508 73,036 40,632 Transfers 303,286 (273,070) (1,693,225) 32,697 Transfers - capital assets - - - - Total general revenues and transfers 18,656,287 18,516,443 15,882,282 18,509,732 Restatements for: prior period adjustments or change in accounting principle (2,518,476) (2,515,759) 3,670,679 - Change in Net Position 1,771,014$ 696,279$ 3,384,851$ 2,696,532$ 152 Table 2 Page 1 of 3 201020112012201320142015 3,553,737$ 3,216,321$ 3,246,015$ 3,165,400$ 3,736,487$ 3,527,323$ 9,125,547 9,268,897 9,604,521 9,618,906 10,186,645 10,707,602 2,747,641 2,771,602 3,561,914 4,215,855 3,688,238 3,867,406 82,645 100,849 141,505 149,203 145,503 135,604 2,732,401 2,895,769 2,796,561 2,752,539 2,977,707 3,053,328 6,504,034 2,542,520 5,438,372 3,833,915 3,234,623 5,419,304 974,950 865,799 768,241 490,162 887,190 723,000 25,720,955 21,661,757 25,557,129 24,225,980 24,856,393 27,433,567 1,081,998 1,078,109 1,082,741 798,088 651,188 653,535 1,501,513 1,547,446 1,402,204 786,828 722,697 548,669 43,194 16,191 270,680 5,879 157,889 226,645 725,891 721,663 897,592 650,522 598,173 564,217 5,525 88,737 19,734 90,656 477,088 225,057 2,013,099 1,637,743 3,165,588 3,089,220 1,746,637 2,605,477 6,627,777 5,299,705 491,404 4,427,586 1,671,830 5,184,381 11,998,997 10,389,594 7,329,943 9,848,779 6,025,502 10,007,981 (13,721,958) (11,272,163) (18,227,186) (14,377,201) (18,830,891) (17,425,586) 12,949,069 13,336,056 14,307,993 14,943,008 14,988,007 15,320,998 3,127,373 2,525,057 2,751,249 3,098,620 3,790,363 3,805,367 696,746 852,302 882,620 881,252 914,651 1,075,425 411,378 549,649 496,679 590,916 1,499,015 1,670,928 33,885 191,510 85,560 (81,438) 236,936 254,366 - 111,530 113,976 54,211 27,100 27,800 (126,275) (749,308) 436 200,000 675,257 236,312 - - - - (639,266) (1,034,574) 17,092,176 16,816,796 18,638,513 19,686,569 21,492,063 21,356,622 - - - - - (8,041,229) 3,370,218$ 5,544,633$ 411,327$ 5,309,368$ 2,661,172$ (4,110,193)$ 153 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) CHANGES IN NET POSITION - CONTINUED Last ten fiscal years (accrual basis of accounting) 2006200720082009 BUSINESS-TYPE ACTIVITIES Expenses Municipal liquor970,260$ 1,037,427$ 1,125,517$ 1,249,946$ Golf course282,418 313,794 304,832 323,340 Earle Brown Heritage Center2,439,709 2,431,719 2,403,676 2,363,085 Water utility1,635,847 1,716,497 1,783,275 3,448,819 Sanitary sewer utility3,176,426 2,930,016 3,018,418 3,736,989 Storm drainage utility950,425 1,123,636 1,162,957 1,282,505 Recycling utility245,853 257,300 265,983 276,058 Street light utility161,219 191,659 182,402 220,020 Total expenses 9,862,157 10,002,048 10,247,060 12,900,762 Program Revenues Charges for services: Municipal liquor1,244,738 1,362,093 1,492,644 1,530,175 Earle Brown Heritage Center2,168,861 2,168,033 1,959,628 1,725,858 Water utility1,906,375 2,063,930 2,003,633 2,019,325 Sanitary sewer utility3,186,569 3,274,678 3,264,649 3,315,726 Storm drainage utility1,323,607 1,412,548 1,553,236 1,577,879 Other activities714,373 732,224 763,858 770,472 Operating grants and contributions- - - - Capital grants and contributions- - - - Total program revenues 10,544,523 11,013,506 11,037,648 10,939,435 Net (expense) / revenue 682,366 1,011,458 790,588 (1,961,327) General Revenues and Transfers Investment earnings (net)337,231 406,654 243,322 87,499 Transfers (303,286) 273,070 1,693,225 (32,697) Transfers - capital assets - - - - Total general revenues and transfers 33,945 679,724 1,936,547 54,802 Restatements for: prior period adjustments or change in accounting principle 429,206 2,399,148 - - Change in Net Position 1,145,517$ 4,090,330$ 2,727,135$ (1,906,525)$ 154 Table 2 Page 2 of 3 201020112012201320142015 1,262,076$ 1,218,399$ 1,274,375$ 5,674,937$ 5,690,792$ 5,816,363$ 317,539 284,673 273,023 263,425 271,698 270,307 2,345,920 2,602,074 2,768,719 4,835,131 5,137,712 4,739,543 1,792,628 1,825,558 1,855,345 2,025,496 1,900,518 2,179,892 3,282,472 3,277,874 3,317,427 3,382,810 3,514,687 3,694,880 1,348,974 1,407,712 1,501,652 1,552,327 1,784,907 1,883,154 278,381 284,440 285,853 257,079 245,426 281,661 213,752 232,716 222,835 289,043 291,239 292,282 10,841,742 11,133,446 11,499,229 18,280,248 18,836,979 19,158,082 1,538,403 1,620,315 1,656,125 6,072,334 5,861,066 6,061,680 1,879,902 2,026,063 2,293,386 4,294,723 4,578,433 4,649,162 1,959,684 1,990,664 2,321,539 2,318,176 2,235,332 2,640,665 3,321,373 3,474,588 3,592,530 3,675,936 3,942,534 4,095,017 1,575,679 1,621,104 1,660,849 1,622,012 1,638,575 1,635,655 760,757 778,584 853,585 882,995 1,127,116 988,038 - - - 52,775 63,547 30,522 - 80,186 - - - - 11,035,798 11,591,504 12,378,014 18,918,951 19,446,603 20,100,739 194,056 458,058 878,785 638,703 609,624 942,657 20,707 79,016 32,998 (27,223) 108,650 127,686 126,275 749,308 (436) (200,000) (675,257) (236,312) - - - - 639,266 1,034,574 146,982 828,324 32,562 (227,223) 72,659 925,948 - - - - - (1,571,633) 341,038$ 1,286,382$ 911,347$ 411,480$ 682,283$ 296,972$ 155 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) CHANGES IN NET POSITION - CONTINUED Last ten fiscal years (accrual basis of accounting) 2006200720082009 TOTAL PRIMARY GOVERNMENT Expenses Governmental activities19,503,183$ 21,503,069$ 22,679,171$ 21,518,621$ Business-type activities9,862,157 10,002,048 10,247,060 12,900,762 Total expenses 29,365,340 31,505,117 32,926,231 34,419,383 Program Revenues Governmental activities5,136,386 6,198,664 6,511,061 5,705,421 Business-type activities10,544,523 11,013,506 11,037,648 10,939,435 Total program revenues 15,680,909 17,212,170 17,548,709 16,644,856 Net (expense) / revenue (13,684,431) (14,292,947) (15,377,522) (17,774,527) General Revenues and Transfers Governmental activities18,656,287 18,516,443 15,882,282 18,509,732 Business-type activities33,945 679,724 1,936,547 54,802 Total general revenues and transfers 18,690,232 19,196,167 17,818,829 18,564,534 Restatements for: prior period adjustments or change in accounting principle Governmental activities(2,518,476) (2,515,759) 3,670,679 - Business-type activities429,206 2,399,148 - - Total restatements (2,089,270) (116,611) 3,670,679 - Change in Net Position 2,916,531$ 4,786,609$ 6,111,986$ 790,007$ Sources: The data for this table has been extracted from the respective years CAFR document. Note: During 2011, the City implemented GASB Statement No. 54, Fund Balance and Governmental Fund Type Definitions. As part of this implementation, certain reclassifications occurred for funds that were reported as Governmental activities prior to 2011, that are now reported as business-type activities. Those balances prior to 2011 have not been restated in this statistical schedule. The City implemented GASB Statement No. 68 and GASB No. 71 in fiscal 2015. Years prior to 2015 have not been restated 156 Table 2 Page 3 of 3 201020112012201320142015 25,720,955$ 21,661,757$ 25,557,129$ 24,225,980$ 24,856,393$ 27,433,567$ 10,841,742 11,133,446 11,499,229 18,280,248 18,836,979 19,158,082 36,562,697 32,795,203 37,056,358 42,506,228 43,693,372 46,591,649 11,998,997 10,389,594 7,329,943 9,848,779 6,025,502 10,007,981 11,035,798 11,591,504 12,378,014 18,918,951 19,446,603 20,100,739 23,034,795 21,981,098 19,707,957 28,767,730 25,472,105 30,108,720 (13,527,902) (10,814,105) (17,348,401) (13,738,498) (18,221,267) (16,482,929) 17,092,176 16,816,796 18,638,513 19,686,569 21,492,063 21,356,622 146,982 828,324 32,562 (227,223) 72,659 925,948 17,239,158 17,645,120 18,671,075 19,459,346 21,564,722 22,282,570 - - - - - (8,041,229) - - - - - (1,571,633) - - - - - (9,612,862) 3,711,256$ 6,831,015$ 1,322,674$ 5,720,848$ 3,343,455$ (3,813,221)$ 157 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) GOVERNMENTAL ACTIVITIES TAX REVENUE BY SOURCE Table 3 Last ten fiscal years (accrual basis of accounting) PropertyTaxLodging TaxesIncrementsTaxesTotal 200612,276,896$ 2,682,874$ 738,776$ 15,698,546$ 200712,200,575 2,677,630 706,930 15,585,135 200812,458,724 2,912,773 619,962 15,991,459 200912,899,250 3,616,157 591,291 17,106,698 201012,949,069 3,127,373 696,746 16,773,188 201113,336,056 2,525,057 852,302 16,713,415 201214,307,993 2,751,249 882,620 17,941,862 201314,943,008 3,098,620 881,252 18,922,880 201414,988,007 3,790,363 914,651 19,693,021 201515,320,998 3,805,367 1,075,425 20,201,790 Sources: The data for this table has been extracted from the respective years CAFR document. 158 This page has been left blank intentionally. 159 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) FUND BALANCES - GOVERNMENTAL FUNDS Last ten fiscal years (modified accrual basis of accounting) 2006200720082009 General Fund Reserved500$ 700$ 21,995$ 27,993$ Unreserved7,508,690 7,941,714 7,721,443 8,502,012 Nonspendable- - - - Restricted- - - - Committed- - - - Assigned- - - - Unassigned- - - - Total general fund7,509,190$ 7,942,414$ 7,743,438$ 8,530,005$ All other governmental funds Reserved5,176,808$ 11,288,685$ 9,997,668$ 8,696,324$ Unreserved, reported in: Special revenue funds22,862,211 11,738,460 10,523,743 9,399,556 Capital project funds4,164,400 3,466,029 4,282,881 3,609,961 Nonspendable- - - - Restricted- - - - Committed- - - - Assigned- - - - Unassigned- - - - Total all other governmental funds32,203,419$ 26,493,174$ 24,804,292$ 21,705,841$ Sources: The data for this table has been extracted from the respective years CAFR document. Note: During 2011, the City implemented GASB Statement No. 54, Fund Balance and Governmental Fund Type Definitions. As part of this implementation, certain reclassifications occurred for funds that were reported as Governmental activities prior to 2011, that are now reported as business-type activities. Those balances prior to 2011 have not been restated in this statistical schedule. Note: The 2013 fund balances have been restated to align the City's reporting using GASB No. 65. 160 Table 4 201020112012201320142015 26,405$ -$ -$ -$ -$ -$ 8,803,942 - - - - - - 32,308 88,952 26,139 21,967 78,859 - - - - - - - - - - - - - 2,614 - 2,754,124 908,761 804,815 - 9,695,913 10,597,944 9,602,450 10,089,353 10,287,243 8,830,347$ 9,730,835$ 10,686,896$ 12,382,713$ 11,020,081$ 11,170,917$ 7,388,488$ -$ -$ -$ -$ -$ 7,095,645 - - - - - 2,203,823 - - - - - - - - - - 1,500 - 13,331,705 12,912,357 26,350,322 26,434,113 30,365,411 - 3,021,318 3,651,995 7,579,688 10,514,871 9,306,224 - - - - - - (2,515,053) (3,425,001) (1,432,495) (1,763,877) (2,425,064) 16,687,956$ 13,837,970$ 13,139,351$ 32,497,515$ 35,185,107$ 37,248,071$ 161 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS Last ten fiscal years (modified accrual basis of accounting) 20062007200820092010 Revenues Property taxes11,525,040$ 12,094,359$ 12,403,914$ 12,897,002$ 13,012,317$ Tax increments 2,664,144 2,727,637 2,894,595 3,601,747 3,111,882 Franchise fees 658,410 658,620 643,934 656,772 647,796 Lodging taxes 738,776 706,930 619,962 591,291 696,746 Special assessments 1,214,571 1,364,413 1,289,148 1,352,908 1,491,194 Licenses and permits 722,633 673,156 643,736 616,135 1,063,945 Intergovernmental 2,375,697 3,171,745 2,211,560 2,789,007 6,859,817 Charges for services 722,218 705,736 761,404 1,120,341 1,001,019 Fines and forfeits 256,600 291,423 302,986 340,536 359,937 Investment earnings (net)1,601,731 1,519,503 733,877 247,260 24,212 Miscellaneous 477,296 404,420 449,061 370,508 285,425 Total revenues 22,957,116 24,317,942 22,954,177 24,583,507 28,554,290 Expenditures General government 2,409,788 2,508,945 3,127,917 3,427,024 3,280,340 Public safety 7,299,842 7,550,434 8,048,529 8,452,348 8,524,140 Public works 1,717,120 2,008,499 1,784,319 1,722,680 1,662,343 Community services 123,172 74,389 72,893 71,519 82,645 Parks and recreation 2,212,142 2,314,099 2,409,291 2,462,275 2,442,938 Economic development 1,386,558 5,659,331 7,666,319 2,531,062 3,105,007 Nondepartmental 363,967 354,848 301,396 313,723 300,549 Capital outlay 5,918,472 4,524,524 4,531,003 2,820,761 8,549,489 Debt service Principal 3,127,146 2,786,076 2,884,953 4,445,471 4,676,066 Interest 1,197,392 1,134,412 1,060,165 1,183,560 1,026,800 Other charges 53,671 12,896 101,809 15,170 14,104 Total expenditures 25,809,270 28,928,453 31,988,594 27,445,593 33,664,421 Excess (deficiency) of revenues over (under) expenditures (2,852,154) (4,610,511) (9,034,417) (2,862,086) (5,110,131) Other financing sources (uses) Transfers in 2,784,116 5,881,257 1,969,533 3,632,013 4,888,536 Issuance of debt 1,460,000 - 6,725,000 - - Premium on issuance of debt - - 1,384 - - Sale of capital assets - - - - - Refunded bonds redeemed - (529,138) - - - Transfers out (2,211,209) (6,018,629) (1,549,358) (3,081,811) (4,495,948) Total other financing sources (uses)2,032,907 (666,510) 7,146,559 550,202 392,588 Restatements for: prior period adjustments or change in accounting principle - - - - - Net change in fund balances (819,247)$ (5,277,021)$ (1,887,858)$ (2,311,884)$ (4,717,543)$ Debt service as a percentage of noncapital expenditures 18.90%15.85%14.38%22.86%22.71% Sources: The data for this table has been extracted from the respective years CAFR document. Note: During 2011, the City implemented GASB Statement No. 54, Fund Balance and Governmental Fund Type Definitions. As part of this implementation, certain reclassifications occurred for funds that were reported as Governmental activities prior to 2011, that are now reported as business-type activities. Those balances prior to 2011 have not been restated in this statistical schedule. Note: The 2013 fund balances have been restated to align the City's reporting using GASB No. 65. 162 Table 5 20112012201320142015 13,396,611$ 14,389,842$ 15,094,464$ 15,036,602$ 15,115,171$ 2,527,316 2,685,822 3,149,533 3,795,708 3,669,198 659,066 647,346 651,832 647,071 653,648 852,302 882,620 881,252 914,651 1,075,425 1,975,470 1,294,521 1,877,116 1,794,126 1,715,159 961,947 858,593 1,084,003 1,021,410 859,534 4,929,902 3,607,218 3,159,571 2,706,299 4,748,476 1,122,350 1,056,241 1,073,917 1,229,513 967,707 340,356 336,740 315,982 364,927 291,682 143,661 48,322 (71,059) 188,913 203,172 296,427 742,269 423,822 344,690 429,575 27,205,408 26,549,534 27,640,433 28,043,910 29,728,747 2,930,516 2,978,738 3,045,365 3,173,282 2,938,436 8,674,195 9,090,324 9,117,541 9,622,239 10,004,475 2,030,930 1,982,540 1,982,311 2,107,959 2,031,813 100,849 141,505 149,203 145,503 135,604 2,412,952 2,532,827 2,481,763 2,457,622 2,790,624 2,337,253 5,215,619 3,076,454 2,855,983 5,269,625 316,376 287,692 400,835 364,501 450,129 5,558,718 699,563 4,319,756 3,950,187 10,475,770 2,965,613 2,666,790 2,655,000 1,905,000 3,025,000 895,053 797,785 698,702 802,892 826,053 14,581 7,677 179,044 9,039 127,218 28,237,036 26,401,060 28,105,974 27,394,207 38,074,747 (1,031,628) 148,474 (465,541) 649,703 (8,346,000) 3,083,093 2,320,883 4,860,459 10,463,495 4,541,584 - - 10,960,000 - 10,016,248 - - 367,405 - 309,809 - 108,532 - - 4,820 - - - - - (3,409,350) (2,320,447) (4,660,459) (9,788,238) (4,312,661) (326,257) 108,968 11,527,405 675,257 10,559,800 - - 9,992,117 - - (1,357,885)$ 257,442$ 21,053,981$ 1,324,960$ 2,213,800$ 17.02%13.48%11.52%11.26%13.95% 163 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) ASSESSED TAX CAPACITY AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY Last ten fiscal years 2006200720082009 Estimated actual value: Real estate 2,182,205,700$ 2,079,719,700$ Personal property 14,862,000 14,386,500 Total estimated actual value2,035,666,100$ 2,140,133,600$ 2,197,067,700$ 2,094,106,200$ Tax Capacity Real estate23,418,557$ 25,009,973$ 25,898,336$ 25,158,441$ Personal property298,953 283,198 291,815 283,070 Contribution to fiscal disparities(2,341,856) (2,500,997) (2,470,328) (2,719,868) Receipt from fiscal disparities3,503,030 4,125,105 4,625,964 5,259,685 Tax increments(2,559,620) (2,463,631) (2,405,929) (2,739,457) Net tax capacity for direct rate 22,319,064$ 24,453,648$ 25,939,858$ 25,241,871$ Net Tax Capacity as a Percentage of Estimated Actual Market Value 1.10%1.14%1.18%1.21% Property Tax Levies General revenues 10,612,956$ 10,939,788$ 11,404,750$ 11,804,016$ Debt service 757,394 753,955 730,152 703,903 Housing and Redevelopment Authority 257,065 265,000 302,191 385,289 Total property taxes levied 11,627,415$ 11,958,743$ 12,437,093$ 12,893,208$ Tax Rates General revenues43.524 41.199 41.081 44.732 Debt service3.393 3.083 2.815 2.789 Housing and Redevelopment Authority1.152 1.084 1.185 1.617 Total Direct Tax Rate48.069 45.366 45.081 49.138 Sources: The data for this table has been provided by Hennepin County. Note: The breakdown of real estate vs. personal property for estimated actual value, was not available prior to 2008. This information will be updated on a go-forward basis. 164 Table 6 201020112012201320142015 1,882,823,900$ 1,682,317,900$ 1,633,327,900$ 1,506,661,400$ 1,497,679,200$ 1,648,833,600$ 14,219,700 15,487,000 16,139,200 18,257,700 18,319,800 18,829,900 1,897,043,600$ 1,697,804,900$ 1,649,467,100$ 1,524,919,100$ 1,515,999,000$ 1,667,663,500$ 23,099,333$ 20,759,133$ 18,351,627$ 17,129,016$ 17,358,722$ 18,953,288$ 278,984 304,150 316,491 358,867 360,506 370,476 (2,998,145) (2,774,593) (2,619,012) (2,335,813) (2,495,133) (2,690,138) 7,002,213 7,123,008 7,194,133 6,844,540 7,117,154 6,833,738 (2,420,044) (2,093,764) (1,922,253) (2,169,035) (2,675,416) (2,764,303) 24,962,341$ 23,317,934$ 21,320,986$ 19,827,575$ 19,665,833$ 20,703,061$ 1.32%1.37%1.29%1.30%1.30%1.24% 12,504,044$ 12,905,340$ 13,207,954$ 13,632,326$ 13,673,970$ 14,381,534$ 715,183 695,632 708,581 711,725 687,000 396,496 349,745 310,831 302,288 246,160 282,110 280,460 13,568,972$ 13,911,803$ 14,218,823$ 14,590,211$ 14,643,080$ 15,058,490$ 48.230 54.234 61.036 67.485 70.587 68.266 2.865 2.983 3.323 3.590 3.547 1.760 1.317 1.341 1.457 1.128 1.609 1.230 52.412 58.558 65.816 72.202 75.742 71.256 165 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS Last ten fiscal years Overlapping Rates SchoolSchoolSchoolSchoolMetro CityCountyDistrict 11District 279District 281District 286Districts (1) 200648.069 41.016 20.046 21.815 28.489 39.781 2.924 200745.366 39.110 19.353 23.758 28.750 36.154 2.671 2008 45.081 38.571 16.983 19.710 27.243 37.519 2.562 2009 49.138 40.413 18.263 21.033 27.214 43.163 2.579 2010 52.412 42.640 19.939 22.381 28.621 51.173 2.620 2011 58.558 45.840 23.999 24.217 34.387 47.697 2.949 2012 65.816 48.231 23.325 24.930 32.810 48.020 3.084 2013 72.202 49.461 26.801 27.973 32.347 56.031 3.242 2014 75.742 49.959 28.265 29.819 34.777 54.422 3.335 2015 71.256 46.398 22.482 27.156 33.226 52.984 3.006 Sources: The data for this table has been provided by Hennepin County. Note (1) - Metro Districts include: Mosquito Control, Metropolitan Council, and Metro Transit Note (2) - Other Districts include: Hennepin Parks, Park Museum, Regional Railroad Authority, and Hennepin HRA. Note (3) - The Watershed levy is applicable to all of School Districts 279 & 281, and portions of School Districts 11 & 286. 166 Table 7 Total Direct and Overlapping Rates OtherWatershedISD 11 &ISD 286 & Districts (2)Districts (3)ISD 11WatershedISD 279ISD 281ISD 286Watershed 4.074 0.073 116.129 116.202 117.971 124.645 135.864 135.937 4.639 - 111.139 111.139 115.544 120.536 127.940 127.940 4.835 0.265 108.032 108.297 111.024 118.557 128.568 128.833 4.575 0.047 114.968 115.015 117.785 123.966 139.868 139.915 5.518 0.081 123.129 123.210 125.652 131.892 154.363 154.444 6.223 0.568 137.569 138.137 138.355 148.525 161.267 161.835 6.439 0.001 146.895 146.896 148.501 156.381 171.590 171.591 6.847 0.101 158.553 158.654 159.826 164.200 187.783 187.884 7.226 - 164.527 164.527 166.081 171.039 190.684 190.684 8.009 - 151.151 151.151 155.825 161.895 181.653 181.653 167 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) PRINCIPAL PROPERTY TAXPAYERS Table 8 Current Year and Nine Years Ago 20152006 Percentage ofPercentage of Net TaxTotal TaxNet TaxTotal Tax TaxpayerClassificationCapacityRankCapacity ValueCapacityRankCapacity Value The Luther Company, LLPCommercial470,445$ 2.27% The Molasky GroupCommercial461,250 2.23% Wal-Mart Stores Inc.Commercial333,600 1.61% Ax Rer, LPIndustrial192,850 0.93% Medtronic, Inc.Industrial192,850 0.93%175,650$ 60.79% Brookdale Corner, LLCCommercial188,250 0.91%204,850 30.92% TLN Lanel, LTDApartment187,638 0.91% Lake Point, LLCApartment177,500 0.86% GB Homes, LLCApartment159,313 0.77% Brooklyn Hotel Partners, LLCCommercial150,190 0.73% Talisman Brookdale, LLCCommercial1,044,060 14.68% Regal Cinemas, Inc.Commercial234,350 21.05% BCC Associates LLCCommercial191,250 40.86% Twin Lakes NorthApartment184,613 50.83% The May Department Stores Co.Commercial166,450 70.75% B.C. Leased HousingApartment150,750 80.68% Sears Roebuck and Co.Commercial150,220 90.67% Wickes Furniture CompanyCommercial146,110 100.65% Totals2,513,886$ 12.15%2,648,303$ 11.88% Sources: The data for this table has been provided by Hennepin County. 168 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) PROPERTY TAX LEVIES AND COLLECTIONS Table 9 Last ten fiscal years Collected within the CertifiedFiscal Year of the LevyCollections inTotal Collections to Date PropertyPercentageSubsequentPercentage Tax LevyAmountof LevyYearsAmountto Date 200611,627,415$ 10,697,638$ 92.0%929,777$ 11,627,415$ 100.0% 200711,958,743 11,070,387 92.6%888,356 11,958,743 100.0% 200812,437,093 11,577,739 93.1%859,354 12,437,093 100.0% 200912,893,208 11,983,738 92.9%909,470 12,893,208 100.0% 201013,568,972 12,633,425 93.1%935,547 13,568,972 100.0% 201113,911,803 12,947,358 93.1%951,268 13,898,626 99.9% 201214,218,823 13,942,766 98.1%245,720 14,188,486 99.8% 201314,590,211 14,472,075 99.2%118,136 14,590,211 100.0% 201414,643,080 14,470,227 98.8%148,480 14,618,707 99.8% 201515,058,490 14,815,657 98.4%- 14,815,657 98.4% Sources: The data for this table has been provided by Hennepin County and from City financial documents. Note: The components of the Certified Property Tax Levy can be viewed in table 6 of the statistical section. 169 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) RATIOS OF OUTSTANDING DEBT BY TYPE Table 10 Last ten fiscal years Governmental Activities General Tax G.O.UtilityUtility Percentage ObligationIncrementImprovementRevenueRevenueTotalof PersonalPer Bonds Bonds BondsNotes (PFA)Bonds Debt IncomeCapita 20064,465,000$ 18,305,000$ 5,180,000$ -$ -$ 27,950,000$ 1.88%1,002$ 20073,875,000 17,255,000 4,280,000 - - 25,410,000 1.63%911 20083,275,000 20,560,000 5,690,000 - - 29,525,000 1.71%973 20092,665,000 17,795,000 4,925,000 - - 25,385,000 1.61%852 20102,025,000 15,010,000 4,005,000 - 2,350,000 23,390,000 1.42%777 20111,385,000 13,720,000 3,260,000 - 2,210,000 20,575,000 1.19%681 2012700,000 12,795,000 2,590,000 - 2,075,000 18,160,000 1.01%594 2013 - 17,470,000 6,920,000 - 1,940,000 26,330,000 1.43%865 2014 - 16,040,000 6,445,000 - 1,800,000 24,285,000 1.32%798 2015 - 20,885,000 8,591,248 17,545,158 3,483,752 50,505,158 2.64%1,690 Sources: The data for this table has been provided from City financial documents. Note: More detailed information for Population and Personal Income can be viewed in table 15 of the statistical section. Business-Type Activities 170 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) RATIOS OF GENERAL BONDED DEBT OUTSTANDING Table 11 Last ten fiscal years Percentage of GeneralLess: AmountsNet GeneralEstimated ObligationRestricted toObligationMarket ValuePer BondsDebt ServiceDebtof PropertyCapita 20064,465,000$ 1,083,063$ 3,381,937$ 0.17%121$ 20073,875,000 1,159,331 2,715,669 0.13%97 20083,275,000 1,202,802 2,072,198 0.09%68 20092,665,000 1,211,620 1,453,380 0.07%49 20102,025,000 1,201,263 823,737 0.04%27 20111,385,000 1,203,611 181,389 0.01%6 2012700,000 1,186,758 - 0.00%- 2013- - - 0.00%- 2014- - - 0.00%- 2015- - - 0.00%- Sources: The data for this table has been provided from City financial documents. Note: More detailed information for Population can be viewed in table 15 of the statistical section. Note: More detailed information for Estimated Property Values can be viewed in table 6 of the statistical section. 171 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) COMPUTATION OF DIRECT AND OVERLAPPING Table 12 GOVERNMENTAL ACTIVITIES DEBT December 31, 2015 EstimatedEstimated Share DebtPercentageof Overlapping Governmental UnitOutstandingApplicable 1 Debt Overlapping debt: School Districts: No. 11 Anoka61,840,000$ 6.80%4,205,120$ No. 279 Osseo124,150,000 4.40%5,462,600 No. 281 Robbinsdale148,980,000 5.10%7,597,980 No. 286 Brooklyn Center26,900,000 100.00%26,900,000 Metropolitan Council14,500,000 0.70%101,500 Metropolitan Transit247,215,000 0.90%2,224,935 Hennepin County772,785,000 1.40%10,818,990 Hennepin Regional RR Authority36,205,000 1.40%506,870 Three Rivers Park District54,835,000 1.90%1,041,865 Total overlapping debt1,487,410,000$ 58,859,860 City of Brooklyn Center direct debt 47,021,406 Total direct and overlapping debt 105,881,266$ Source: Official statement for bonds issued in 2015. Note: More detailed information for the City's outstanding debt can be viewed in table 10 of the statistical section. Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. The schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. Note: The percentage of overlapping debt applicable is estimated using tax capacity values. Applicable percentages were estimated by determining the the portion of each entity's tax capacity that is within the City's boundaries, and dividing it by the entity's total tax capacity. 172 This page has been left blank intentionally. 173 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) LEGAL DEBT MARGIN INFORMATION Last ten fiscal years 2006200720082009 Taxable Market Value1,960,952,700$ 2,112,997,900$ 2,189,212,600$ 2,087,517,800$ Debt Limit Percentage2.00%2.00%3.00%3.00% Debt Limit39,219,054 42,259,958 65,676,378 62,625,534 Total net debt applicable to limit3,381,937 2,715,669 2,072,198 1,453,380 Legal debt margin 35,837,117$ 39,544,289$ 63,604,180$ 61,172,154$ Total net debt applicable to the limit as a percentage of debt limit8.62%6.43%3.16%2.32% Sources: The data for this table has been provided by Hennepin County and from City financial documents. 174 Table 13 201020112012201320142015 1,891,591,400$ 1,692,594,600$ 1,468,159,885$ 1,338,405,415$ 1,329,268,428$ 1,489,548,076$ 3.00%3.00%3.00%3.00%3.00%3.00% 56,747,742 50,777,838 44,044,797 40,152,162 39,878,053 44,686,442 823,737 181,389 - - - - 55,924,005$ 50,596,449$ 44,044,797$ 40,152,162$ 39,878,053$ 44,686,442$ 1.45%0.36%0.00%0.00%0.00%0.00% 175 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) PLEDGED-REVENUE COVERAGE Table 14 Last ten fiscal years Special Assessment Bonds Special Assessment Debt Service Collections Principal Interest Coverage 2006 1,035,961$ 1,000,000$ 167,284$ 88.75% 2007 884,261 900,000 162,486 83.23% 2008 816,798 980,000 145,121 72.60% 2009 1,173,435 765,000 166,946 125.91% 2010 750,168 920,000 167,686 68.97% 2011 747,145 745,000 136,890 84.72% 2012 561,618 670,000 111,460 71.87% 2013 485,034 590,000 88,870 71.45% 2014 674,253 475,000 160,447 106.11% 2015 1,120,946 1,270,000 187,221 76.92% Tax Increment Bonds Tax Increment Debt Service Collections Principal Interest Coverage 2006 1,609,994$ 1,000,000$ 887,080$ 85.32% 2007 1,707,470 1,050,000 847,236 90.00% 2008 1,906,053 1,030,000 804,491 103.90% 2009 2,356,641 2,765,000 922,711 63.91% 2010 1,794,442 2,785,000 783,961 50.28% 2011 1,321,205 1,290,000 702,530 66.31% 2012 2,388,702 925,000 651,744 151.50% 2013 2,766,160 1,365,000 598,107 140.91% 2014 3,038,983 1,430,000 642,445 146.64% 2015 2,953,728 1,755,000 638,832 123.39% Utility Revenue Bonds Water and Sanitary SewerLess:Net Utility OperatingAvailable Debt Service Charges Expenses Revenue Principal Interest Coverage 2010 5,249,263$ 4,934,032$ 315,231$ -$ 68,081$ 463.02% 2011 5,421,679 5,011,775 409,904 140,000 83,438 183.45% 2012 5,889,769 5,084,012 805,757 135,000 81,562 372.07% 2013 5,951,703 5,335,477 616,226 135,000 80,188 286.37% 2014 6,151,426 5,334,905 816,521 140,000 76,902 376.45% 2015 6,667,218 5,665,327 1,001,891 1,815,352 238,401 48.78% Sources: The data for this table has been provided from City financial documents. Note: The Utility Revenue bonds were issued in 2010. Determined it was not necessary to show data prior to that year. 176 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) DEMOGRAPHIC AND ECONOMIC STATISTICS Table 15 Last ten fiscal years School Enrollments Per Capita No. 286 No. ofPersonalPersonalUnemploymentMedianNo. 11No. 279No. 281Brooklyn PopulationHouseholdsIncomeIncomeRateAgeAnokaOsseoRobbinsdaleCenter 200627,901 11,142 1,484,751,715$ 53,215$ 4.9%41,310 22,071 13,194 1,705 200727,907 11,207 1,554,866,412 55,716 5.6%34.3 40,656 21,859 12,891 1,763 200830,330 11,250 1,723,775,220 56,834 7.0%34.4 40,152 21,001 12,526 2,012 200929,810 11,175 1,572,835,220 52,762 8.9%33.6 39,822 20,903 11,947 2,250 201030,104 10,756 1,649,036,912 54,778 8.0%31.3 39,106 20,835 12,036 2,311 201130,204 10,791 1,734,223,068 57,417 7.2%32.8 38,686 20,686 12,062 2,109 201230,569 10,812 1,800,452,962 58,898 6.4%33.1 38,403 20,623 12,181 2,177 201330,426 10,862 1,843,846,026 60,601 5.1%33.3 38,183 20,689 12,266 2,182 201429,889 10,756 1,909,936,989 63,901 3.6%32.3 37,853 20,398 12,385 2,399 201529,889 10,756 1,909,936,989 63,901 4.0%32.3 37,853 20,398 12,385 2,399 Sources: Population & Households - Metropolitan Council Personal Income - Calculated by the City Per Capita Personal Income - US Department of Commerce; Bureau of Economic Analysis Unemployment Rate - Minnesota Department of Employment and Economic Development Median Age - US Department of Commerce, Bureau of the Census School Enrollment - Minnesota Department of Education Note: Median age was added in 2013. Information prior to 2007 was not available. This will be updated on a go-forward basis. Note: Some data was not yet available for 2015. In those instances, 2014 data was shown for the current year. 177 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) PRINCIPAL EMPLOYERS Table 16 Current Year and Nine Years Ago 20152006 Percentage ofPercentage of Total CityTotal City EmployerEmployeesRankEmploymentEmployeesRankEmployment Promeon Inc., A Division of Medtronic1,100 17.17%1,000 26.83% Independent School District #286375 22.44%300 42.05% Luther Auto Group320 32.08% Wal-Mart300 41.95% Presbyterian Homes, Marantha Care Center200 51.30% Caribou Coffee Headquarters200 61.30% University of Minnesota Physicians200 71.30% City of Brooklyn Center156 81.02%150 91.02% TCR Corporation160 91.04%137 100.94% Target125 100.81%250 51.71% Brookdale Center 1,850 112.64% Graco, Inc.800 35.47% Nations Care Link 233 61.59% Cub Foods 233 71.59% Best Buy 155 81.06% Totals3,136 20.43%5,108 34.90% Sources: The data for this table has been extracted from Official Statements for bonds issued in 2006 and 2015. 178 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) FULL TIME CITY GOVERNMENT POSITIONS BY FUNCTION Table 17 Last ten fiscal years 2006200720082009201020112012201320142015 General government Administrative3.0 3.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 Elections 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 City Clerk 1.0 1.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 Finance 6.0 6.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 Assessor 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.5 3.5 - Human Resources 2.0 2.0 2.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 Information technology 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 Building Maintenance 4.0 4.0 4.0 4.0 4.0 4.0 3.0 3.0 3.0 3.0 Total general government22.0 22.0 21.0 22.0 22.0 22.0 21.0 21.5 21.5 18.0 Public safety Police Administration 3.0 3.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 Investigation 7.0 8.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 Patrol 35.0 35.0 41.0 40.0 42.0 42.0 42.0 42.0 41.0 41.0 Support Services 12.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 Facility Maintenance 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 Fire 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 2.0 Emergency Preparedness1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 Planning & Zoning 2.0 2.0 2.0 2.0 2.0 1.5 1.5 1.5 1.5 1.5 Inspections 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 5.0 5.0 Code Enforcement - - 2.0 5.0 5.0 5.0 4.0 5.0 5.0 4.0 Total public safety 66.0 64.0 70.0 72.0 74.0 73.5 72.5 73.5 73.5 73.5 Public works Engineering & Admin 6.0 6.0 6.0 6.0 6.0 6.0 6.0 7.0 7.0 7.0 Street Maintenance 8.0 8.0 8.0 8.0 8.0 8.0 7.0 7.0 7.0 7.0 Traffic Control 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 Total public works 16.0 16.0 16.0 16.0 16.0 16.0 15.0 16.0 16.0 16.0 Parks and recreation Administration 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 Recreation Programs 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 Community Center 3.0 3.0 3.0 3.0 3.0 3.0 - - - - Parks Maintenance6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 Forestry 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 Total park and recreation 16.0 16.0 16.0 16.0 16.0 16.0 13.0 13.0 13.0 13.0 Economic Development 2.0 2.0 2.0 2.0 2.0 2.5 2.5 2.5 2.5 2.5 Municipal Liquor 3.0 4.0 4.0 4.0 5.0 4.0 4.0 5.0 5.0 5.0 Golf Course 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 Earle Brown Heritage Center11.0 11.0 11.0 11.0 11.0 11.0 11.0 11.0 12.0 12.0 Water 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 Sanitary Sewer 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 Storm Drainage 1.4 1.4 1.4 1.4 1.4 1.4 2.4 2.4 2.4 2.4 Central Garage 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 Total 151.0150.0155.0158.0161.0160.0155.0158.5159.5156.0 Sources: The data for this table has been extracted from the respective years budget document. 179 CI T Y O F B R O O K L Y N C E N T E R , M I N N E S O T A ST A T I S T I C A L S E C T I O N ( U N A U D I T E D ) OP E R A T I N G I N D I C A T O R S B Y F U N C T I O N Table 18 La s t t e n f i s c a l y e a r s Fu n c t i o n 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 Po l i c e Vi o l e n t C r i m e s 1 9 1 2 1 0 1 9 2 1 6 6 1 3 8 1 3 5 1 1 3 1 2 9 9 7 1 1 3 Pr o p e r t y C r i m e s 2 , 0 5 4 1 , 9 9 2 2 , 0 4 9 1 , 6 9 6 1 , 3 5 8 1 , 5 2 9 1 , 5 6 1 1 , 7 1 2 1 , 1 9 5 1 , 0 8 0 To t a l C a l l s f o r S e r v i c e 2 8 , 6 4 4 3 4 , 1 8 5 3 6 , 9 2 3 4 4 , 1 5 2 4 3 , 0 6 9 4 1 , 3 4 7 3 9 , 7 3 6 3 7 , 3 7 0 3 5 , 9 1 4 3 4 , 9 9 7 Fi r e Fi r e s / A l l o t h e r c a l l s 6 9 7 6 7 7 6 8 4 6 8 8 7 7 2 7 7 4 7 8 1 6 3 4 8 4 4 7 6 9 Me d i c a l c a l l s 3 2 6 3 8 6 4 1 9 5 3 8 9 8 0 1 , 1 3 5 1 , 2 0 9 1 , 2 0 9 1 , 2 6 3 1 , 2 1 2 Fi r e i n s p e c t i o n s p e r f o r m e d 0 0 1 0 6 1 0 5 2 4 5 1 4 1 2 9 5 2 7 0 1 9 7 9 St r e e t s To t a l m i l e s 1 0 5 . 7 8 1 0 5 . 7 8 1 0 5 . 7 8 1 0 5 . 7 8 1 0 5 . 7 3 1 0 5 . 7 3 1 0 5 . 7 3 1 0 5 . 7 3 1 0 5 . 7 3 1 0 5 . 7 3 Mi l e s o f s t r e e t s r e c o n s t r u c t e d 2 . 5 0 4 . 2 0 4 . 1 5 2 . 6 4 5 . 1 7 5 . 6 2 0 . 7 0 2 . 9 0 3 . 0 1 3 . 9 1 Pa r k s a n d r e c r e a t i o n Co m m u n i t y C e n t e r A d m i s s i o n s 6 1 , 6 8 0 6 1 , 0 2 2 6 0 , 3 2 3 6 1 , 2 7 2 5 9 , 3 1 0 5 7 , 8 7 4 5 9 , 5 5 0 6 2 , 4 3 4 5 6 , 1 4 2 3 1 , 8 8 2 Ac r e s o f p a r k m a i n t a i n e d 5 2 7 5 2 7 5 2 7 5 2 7 5 2 7 5 2 7 5 2 7 5 2 7 5 2 7 5 2 7 Mu n i c i p a l l i q u o r Nu m b e r o f s t o r e s 22 2 2 2 2 2 2 2 2 Sa l e s ( i n t h o u s a n d s ) $ 5 , 1 5 9 $ 5 , 4 7 5 $ 5 , 4 8 5 $ 5 , 6 1 0 $ 5 , 5 4 3 $ 5 , 7 8 9 $ 5 , 9 6 4 $ 6 , 0 6 3 $ 5 , 8 5 2 $ 6 , 0 5 7 Go l f c o u r s e Ro u n d s s o l d 2 1 , 1 0 0 1 5 , 6 8 0 1 5 , 8 0 2 1 4 , 0 4 0 1 3 , 5 2 4 1 2 , 1 6 9 1 2 , 8 7 5 1 1 , 7 2 4 1 1 , 0 2 3 1 2 , 3 5 9 Ea r l e B r o w n H e r i t a g e C e n t e r Bo o k i n g s 6 1 1 5 7 0 5 2 2 4 2 1 4 3 3 5 4 8 4 6 0 3 9 7 4 0 9 3 7 4 Fu n c t i o n s 1 , 8 7 0 1 , 7 2 0 1 , 4 1 2 1 , 1 7 8 1 , 1 1 9 1 , 0 5 5 1 , 0 5 3 1 , 0 8 2 1 , 0 1 4 9 3 5 Wa t e r Co n n e c t i o n s 8 , 9 0 4 8 , 9 9 7 8 , 9 8 6 8 , 9 9 0 8 , 9 6 0 8 , 8 8 7 8 , 8 9 4 8 , 8 9 6 8 , 9 0 9 8 , 9 2 7 Mi l e s o f w a t e r m a i n s 1 2 0 . 5 0 1 2 1 . 8 0 1 2 1 . 8 0 1 2 1 . 8 0 1 2 1 . 8 0 1 2 1 . 8 0 1 2 1 . 8 0 1 1 9 . 7 0 1 1 9 . 8 7 1 1 9 . 4 0 Av e r a g e d a i l y c o n s u m p t i o n 3 , 6 0 9 , 9 0 3 3 , 6 2 1 , 1 2 2 3 , 5 5 0 , 1 2 6 3 , 7 3 3 , 6 0 2 3 , 1 9 0 , 0 0 0 2 , 9 3 9 , 0 0 0 3 , 1 9 6 , 0 7 2 3 , 0 0 0 , 3 7 8 2 , 8 1 9 , 8 7 4 2 , 7 9 4 , 8 7 4 Sa n i t a r y s e w e r Co n n e c t i o n s 8 , 8 0 7 8 , 7 9 3 8 , 8 3 7 8 , 8 3 7 8 , 8 2 9 8 , 8 2 0 8 , 8 1 3 8 , 7 8 3 8 , 7 8 9 8 , 7 8 8 Mi l e s o f s a n i t a r y s e w e r 1 0 5 . 6 1 1 0 5 . 6 1 1 0 5 . 6 1 1 0 5 . 6 1 1 0 5 . 6 1 1 0 5 . 6 1 1 0 5 . 6 1 1 0 5 . 6 1 1 0 5 . 6 1 9 7 . 5 1 So u r c e s : T h e d a t a f o r t h i s t a b l e h a s b e e n p r o v i d e d b y e a c h r e s p e c t i v e C i t y d e p a r t m e n t . 18 0 CI T Y O F B R O O K L Y N C E N T E R , M I N N E S O T A ST A T I S T I C A L S E C T I O N ( U N A U D I T E D ) CA P I T A L A S S E T S T A T I S T I C S B Y F U N C T I O N Table 19 La s t t e n f i s c a l y e a r s Fu n c t i o n 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 Pu b l i c s a f e t y Po l i c e St a t i o n s 1 1 1 1 11 1 1 1 1 Pa t r o l u n i t s Ma r k e d s q u a d s 8 8 9 9 9 9 9 1 0 1 0 1 0 Ot h e r v e h i c l e s 1 6 1 6 1 4 1 8 1 8 1 8 1 6 1 8 1 8 1 8 Fi r e St a t i o n s 2 2 2 2 22 2 2 2 2 Fi r e t r u c k s 7 8 8 8 88 8 8 8 8 Ot h e r v e h i c l e s 2 2 2 3 33 3 3 3 5 Pu b l i c w o r k s St r e e t s ( m i l e s ) 1 0 5 . 7 8 1 0 5 . 7 8 1 0 5 . 7 8 1 0 5 . 7 8 1 0 5 . 7 3 1 0 5 . 7 3 1 0 5 . 7 3 1 0 5 . 7 3 1 0 5 . 7 3 1 0 5 . 7 3 Mo b i l e e q u i p m e n t 1 4 1 4 1 4 1 4 1 4 1 4 1 4 1 3 1 4 1 4 He a v y d u t y t r u c k s 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 2 1 3 1 3 Ot h e r v e h i c l e s 7 6 6 6 66 6 7 6 4 Pa r k s a n d r e c r e a t i o n Pa r k s a c r e a g e 5 2 7 52 7 5 2 7 5 2 7 5 2 7 5 2 7 5 2 7 5 2 7 5 2 7 5 2 7 Tr a i l s ( m i l e s ) 21 . 6 2 1 . 6 2 1 . 6 2 1 . 6 2 1 . 6 2 1 . 6 2 1 . 6 2 1 . 6 1 4 . 2 1 4 . 9 Co m m u n i t y c e n t e r s 1 1 1 1 11 1 1 1 1 Gr o u n d m a i n t e n a n c e e q u i p m e n t 13 1 3 1 5 1 5 1 5 1 5 1 5 1 4 1 2 1 1 Ot h e r v e h i c l e s 8 8 9 8 88 8 8 8 8 Wa t e r Wa t e r m a i n s ( m i l e s ) 12 0 . 5 0 1 2 1 . 8 0 1 2 1 . 8 0 1 2 1 . 8 0 1 2 1 . 8 0 1 2 1 . 8 0 1 2 1 . 8 0 1 1 9 . 7 0 1 1 9 . 8 7 1 1 9 . 4 0 We l l s 9 9 9 9 99 9 9 9 9 Se w e r Sa n i t a r y s e w e r s ( m i l e s ) 10 5 . 6 1 10 5 . 6 1 10 5 . 6 1 10 5 . 6 1 10 5 . 6 1 10 5 . 6 1 10 5 . 6 1 105.61 105.61 97.51 Li f t S t a t i o n s 10 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 St o r m s e w e r s ( m i l e s ) 74 . 2 0 74 . 2 0 74 . 2 0 74 . 2 0 74 . 2 0 74 . 2 0 7 4 . 2 0 8 3 . 0 1 8 4 . 5 5 8 6 . 2 8 So u r c e s : T h e d a t a f o r t h i s t a b l e h a s b e e n p r o v i d e d b y e a c h r e s p e c t i v e C i t y d e p a r t m e n t . 18 1 This page has been left blank intentionally. 182 Management Report for City of Brooklyn Center, Minnesota December 31, 2015 THIS PAGE INTENTIONALLY LEFT BLANK To the City Council and Management City of Brooklyn Center, Minnesota We have prepared this management report in conjunction with our audit of the City of Brooklyn Center, Minnesota’s (the City) financial statements for the year ended December 31, 2015. The purpose of this report is to provide comments resulting from our audit process and to communicate information relevant to city finances in Minnesota. We have organized this report into the following sections: Audit Summary Governmental Funds Overview Enterprise Funds Overview Government-Wide Financial Statements Legislative Updates Accounting and Auditing Updates We would be pleased to further discuss any of the information contained in this report or any other concerns that you would like us to address. We would also like to express our thanks for the courtesy and assistance extended to us during the course of our audit. The purpose of this report is solely to provide those charged with governance of the City, management, and those who have responsibility for oversight of the financial reporting process comments resulting from our audit process and information relevant to city finances in Minnesota. Accordingly, this report is not suitable for any other purpose. Minneapolis, Minnesota May 23, 2016 THIS PAGE INTENTIONALLY LEFT BLANK -1- AUDIT SUMMARY The following is a summary of our audit work, key conclusions, and other information that we consider important or that is required to be communicated to the City Council, administration, or those charged with governance of the City. OUR RESPONSIBILITY UNDER AUDITING STANDARDS GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA; GOVERNMENT AUDITING STANDARDS; AND TITLE 2 U.S. CODE OF FEDERAL REGULATIONS (CFR) PART 200, UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS (UNIFORM GUIDANCE) We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of and for the year ended December 31, 2015, and the related notes to the financial statements. Professional standards require that we provide you with information about our responsibilities under auditing standards generally accepted in the United States of America, Government Auditing Standards, and the Uniform Guidance, as well as certain information related to the planned scope and timing of our audit. We have communicated such information to you verbally and in our audit engagement letter. Professional standards also require that we communicate the following information related to our audit. PLANNED SCOPE AND TIMING OF THE AUDIT We performed the audit according to the planned scope and timing previously discussed and coordinated in order to obtain sufficient audit evidence and complete an effective audit. AUDIT OPINION AND FINDINGS Based on our audit of the City’s financial statements for the year ended December 31, 2015: We have issued an unmodified opinion on the City’s basic financial statements. Our report included a paragraph emphasizing that the City implemented Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions— an amendment of GASB Statement No. 27, and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date—an amendment of GASB Statement No. 68, during the year ended December 31, 2015. Our opinion was not modified with respect to this matter. We reported no deficiencies in the City’s internal control over financial reporting that we considered to be material weaknesses. The results of our testing disclosed no instances of noncompliance required to be reported under Government Auditing Standards. We reported that the Schedule of Expenditures of Federal Awards is fairly stated, in all material respects, in relation to the basic financial statements. The results of our tests indicate that the City has complied, in all material respects, with the types of compliance requirements that could have a direct and material effect on each of its major federal programs. We reported no deficiencies in the City’s internal controls over compliance that we considered to be material weaknesses with the types of compliance requirements that could have a direct and material effect on each of its major federal programs. We reported no findings based on our testing of the City’s compliance with Minnesota laws and regulations. -2- SIGNIFICANT ACCOUNTING POLICIES Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 of the notes to basic financial statements. The City implemented GASB Statement Nos. 68 and 71 during the year ended December 31, 2015. These statements provide new guidance on accounting and financial reporting for pensions accounted for in the financial statements of plan employers. Implementation of these standards resulted in an adjustment to the beginning equity reported in the City’s government-wide and proprietary fund financial statements, as described in Note 1 of the notes to basic financial statements. The application of remaining policies was not changed during the year ended December 31, 2015. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. ACCOUNTING ESTIMATES AND MANAGEMENT JUDGMENTS Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were: Net Other Post-Employment Benefit (OPEB) and Pension Liabilities – The City has recorded liabilities and activity for other post-employment benefits (OPEB) and pension benefits. These obligations are calculated using actuarial methodologies described in GASB Statement Nos. 45 and 68. These actuarial calculations include significant assumptions, including projected changes, healthcare insurance costs, investment returns, retirement ages, proportionate share, and employee turnover. Depreciation – Management’s estimates of depreciation expense are based on the estimated useful lives of the assets. Compensated Absences – Management’s estimate is based on current rates of pay and sick leave balances. Land Held for Resale – Management’s estimates of this asset are based on net realizable value (lower of cost or estimated sales price). We evaluated the key factors and assumptions used to develop these accounting estimates in determining that they are reasonable in relation to the basic financial statements taken as a whole. The financial statement disclosures are neutral, consistent, and clear. CORRECTED AND UNCORRECTED MISSTATEMENTS Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Where applicable, management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management, when applicable, were material, either individually or in the aggregate, to each opinion unit’s financial statements taken as a whole. -3- We proposed one uncorrected audit adjustment to the financial statements for the reporting of governmental activities and business-type activities unamortized premiums and discounts on bond proceeds totaling $492,981 and $51,609, respectively. The City recorded these amounts as revenue or expense in the period of issuance rather than amortizing over the payback period of the bonds. Management has determined that the effects of these items were immaterial, both individually and taken together, to each opinion unit’s financial statements taken as a whole. DIFFICULTIES ENCOUNTERED IN PERFORMING THE AUDIT We encountered no significant difficulties in dealing with management in performing and completing our audit. DISAGREEMENTS WITH MANAGEMENT For purposes of this report, professional standards define a disagreement with management as a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit. MANAGEMENT REPRESENTATIONS We have requested certain representations from management that are included in the management representation letter dated May 23, 2016. MANAGEMENT CONSULTATIONS WITH OTHER INDEPENDENT ACCOUNTANTS In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the City’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. OTHER AUDIT FINDINGS OR ISSUES We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. OTHER MATTERS We applied certain limited procedures to the Management’s Discussion and Analysis and the pension and OPEB-related required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. -4- We were engaged to report on the combining and individual fund statements and schedules accompanying the financial statements and the separately issued Schedule of Expenditures of Federal Awards which are not RSI. With respect to this information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the combining and individual fund statements and schedules and Schedule of Federal Expenditures of Awards to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. We were not engaged to report on the introductory section and statistical section which accompany the financial statements but are not RSI. We did not audit or perform other procedures on this other information and we do not express an opinion or provide any assurance on it. -5- GOVERNMENTAL FUNDS OVERVIEW This section of the report provides you with an overview of the financial trends and activities of the City’s governmental funds, which include the General, special revenue, debt service, and capital project funds. These funds are used to account for the basic services the City provides to all of its citizens, which are financed primarily with property taxes. The governmental fund information in the City’s financial statements focuses on budgetary compliance, and the sufficiency of each governmental fund’s current assets to finance its current liabilities. PROPERTY TAXES Minnesota cities rely heavily on local property tax levies to support their governmental fund activities. For the 2014 fiscal year, local ad valorem property tax levies provided 39.0 percent of the total governmental fund revenues for cities over 2,500 in population. Property tax levies certified by Minnesota cities for 2015 increased about 4.0 percent over 2014, compared to an increase of 1.6 percent the prior year. A one-year levy limit imposed on cities over 2,500 in population for the 2014 levy year was lifted for the 2015 levy year. The total market value of property in Minnesota cities increased about 8.5 percent for the 2015 levy year, following a modest increase of 1.1 percent for levy year 2014 and a four-year trend of declining market values for levy years 2010 through 2013. Market values showed increases across all property categories for 2015, with gains in the market values of residential homestead properties (10.0 percent) and non-homestead residential properties (9.7 percent) outpacing the market value gain of commercial/industrial properties (2.2 percent). Because the assessed valuation used for levying property taxes is based on values from the previous fiscal year (e.g., the market value for taxes payable in 2015 is based on estimated values as of January 1, 2014), market value improvement has lagged behind recent upturns in the housing market and the economy in general. The City’s taxable market value decreased 0.7 percent for taxes payable in 2014 and increased 12.1 percent for taxes payable in 2015. The following graph shows the City’s changes in taxable market value over the past 10 years: $– $500,000,000 $1,000,000,000 $1,500,000,000 $2,000,000,000 $2,500,000,000 2006200720082009201020112012201320142015 Taxable Market Value -6- Tax capacity is considered the actual base available for taxation. It is calculated by applying the state’s property classification system to each property’s market value. Each property classification, such as commercial or residential, has a different calculation and uses different rates. Consequently, a city’s total tax capacity will change at a different rate than its total market value, as tax capacity is affected by the proportion of the City’s tax base that is in each property classification from year-to-year, as well as legislative changes to tax rates. The City’s tax capacity decreased 0.8 percent for taxes payable in 2014 and increased 5.3 percent for taxes payable in 2015. The following graph shows the City’s change in tax capacities over the past 10 years: $– $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 2006200720082009201020112012201320142015 Tax Capacity The following table presents the average tax rates applied to city residents for each of the last two levy years, along with comparative state-wide and metro area rates. Rates expressed as a percentage of net tax capacity 2014201520142015 20142015 Average tax rate City48.8 46.9 46.0 43.4 74.1 70.0 County47.6 44.7 46.6 42.9 50.0 46.4 School28.9 27.1 30.9 28.3 39.8 36.9 Special taxing7.3 6.9 9.5 8.8 12.2 11.2 Total132.6 125.6133.0123.4 176.1 164.5 Brooklyn CenterMetro Area Seven-CountyAll Cities State-Wide City of Both the City’s portion and the total tax capacity rates for Brooklyn Center residents are significantly higher than the state-wide and metro area averages the last two years. These rates are higher than average due to a combination of factors, including lower than average property values, makeup of residential properties, and the use of tax increments within the City. -7- GOVERNMENTAL FUNDS REVENUE AND EXPENDITURES The following table presents the per capita revenue of the City’s governmental funds for the past three years, along with state-wide averages. We have included the most recent comparative state-wide averages available from the Office of the State Auditor to provide a benchmark for interpreting the City’s data. The amounts received from the typical major sources of governmental fund revenue will naturally vary between cities based on factors such as the City’s stage of development, location, size and density of its population, property values, services it provides, and other attributes. It will also differ from year-to-year due to the effect of inflation and changes in the City’s operation. Also, certain data on these tables may be classified differently than how they appear on the City’s financial statements in order to be more comparable to the state-wide information, particularly in separating capital expenditures from current expenditures. We have designed this section of our management report using per capita data in order to better identify unique or unusual trends and activities of your city. We intend for this type of comparative and trend information to complement, rather than duplicate, information in the Management’s Discussion and Analysis. An inherent difficulty in presenting per capita information is the accuracy of the population count, which for most years is based on estimates. Year 201320142015 Population2,500–10,00010,000–20,000 20,000–100,00030,42629,88929,889 Property taxes427$ 396$ 427$ 496$ 503$ 506$ Tax increments26 37 46 104 127 123 Franchise fees and other taxes32 42 37 50 52 58 Special assessments59 51 64 62 60 57 Licenses and permits28 27 41 36 34 29 Intergovernmental revenues298 264 166 104 91 159 Charges for services105 82 90 35 41 32 Other66 72 65 22 30 31 Total revenue1,041$ 971$ 936$ 909$ 938$ 995$ December 31, 2014 Governmental Funds Revenue per Capita With State-Wide Averages by Population Class State-Wide City of Brooklyn Center The City relies more on property tax revenue for its governmental funds revenue compared to the average Minnesota city. The City continues to generate significantly more tax increment revenue per capita than average, as it has made extensive use of this tool to finance commercial development. The City’s per capita governmental funds revenue for 2015 was $995, an increase of about 6.1 percent from the prior year. This was primarily due to an increase in intergovernmental revenues, which increased $68 per capita as a result of increased Municipal State Aid (MSA) revenue received in the current year. -8- The expenditures of governmental funds will also vary from state-wide averages and from year-to-year, based on the City’s circumstances. Expenditures are classified into three types as follows: Current – These are typically the general operating type expenditures occurring on an annual basis, and are primarily funded by general sources, such as taxes and intergovernmental revenues. Capital Outlay and Construction – These expenditures do not occur on a consistent basis, more typically fluctuating significantly from year-to-year. Many of these expenditures are project-oriented, and are often funded by specific sources that have benefited from the expenditure, such as special assessment improvement projects. Debt Service – Although the expenditures for debt service may be relatively consistent over the term of the respective debt, the funding source is the important factor. Some debt may be repaid through specific sources such as special assessments or redevelopment funding, while other debt may be repaid with general property taxes. The City’s expenditures per capita of its governmental funds for the past three years, together with state-wide averages, are presented in the following table: Year 201320142015 Population2,500–10,00010,000–20,000 20,000–100,00030,42629,88929,889 Current General government131$ 104$ 87$ 100$ 106$ 98$ Public safety 248 237 254 300 322 335 Street maintenance121 119 114 65 71 68 Parks and recreation 86 101 92 82 82 93 All other 69 89 98 119 113 196 655$ 650$ 645$ 666$ 694$ 790$ Capital outlay and construction357$ 278$ 276$ 284$ 132$ 350$ Debt service Principal180$ 163$ 115$ 87$ 64$ 101$ Interest and fiscal54 40 34 29 27 32 234$ 203$ 149$ 116$ 91$ 133$ Total expenditures1,246$ 1,131$ 1,070$ 1,066$ 917$ 1,273$ State-Wide December 31, 2014 Governmental Funds Expenditures per Capita With State-Wide Averages by Population Class City of Brooklyn Center The City’s governmental funds current per capita expenditures are higher than state-wide averages for cities in the same population class. The City’s current operating costs are higher than average due to above average public safety and all other costs. The City’s per capita current expenditures increased $96 per capita in 2015 mainly due to the $83 per capita increase in the all other category. This increase was due to increased tax increment financing activity and the write-off of a forgivable loan. Capital outlay costs per capita increased $218 as a result of the 63rd Avenue Street Improvement Project, Freeway Park Area Street Improvement Project, and the capital building maintenance program project in the current year. Debt service costs per capita increased $42 as a result of scheduled bond payments. -9- GOVERNMENTAL FUND BALANCES The following table summarizes the changes in the fund balances of the City’s governmental funds during the year ended December 31, 2015, presented both by fund balance classification and by fund: Increase 20152014(Decrease) Fund balances of governmental funds Total by classification Nonspendable80,359$ 21,967$ 58,392$ Restricted30,365,411 26,434,113 3,931,298 Committed9,306,224 10,514,871 (1,208,647) Assigned804,815 908,761 (103,946) Unassigned7,862,179 8,325,476 (463,297) Total – governmental funds 48,418,988$ 46,205,188$ 2,213,800$ Total by fund General11,170,917$ 11,020,081$ 150,836$ Tax Increment District No. 317,196,759 17,898,749 (701,990) Tax Increment District No. 5(2,241,466) (1,299,859) (941,607) Debt Service8,747,914 1,909,441 6,838,473 Capital Improvements4,408,879 6,509,230 (2,100,351) Municipal State Aid for Construction223,531 1,830,100 (1,606,569) Infrastructure Construction(183,145) (463,193) 280,048 Nonmajor funds9,095,599 8,800,639 294,960 Total – governmental funds 48,418,988$ 46,205,188$ 2,213,800$ Governmental Funds Change in Fund Balance Fund Balance as of December 31, In total, the fund balances of the City’s governmental funds increased by $2,213,800 during the year ended December 31, 2015. The majority of the increase was in restricted fund balances offset by a decrease in committed fund balances. Fund balances restricted for debt services increased $6,837,648 mainly due to the issuance of $6,600,000 of refunding bonds, which increased assets held in escrow in the Debt Service Fund. Committed fund balances decreased $1,208,647, mainly in the committed fund balance in the Capital Improvements Fund, as a result of capital building maintenance program improvements. -10- GENERAL FUND The City’s General Fund accounts for the financial activity of the basic services provided to the community. The primary services included within this fund are the administration of the municipal operation, police and fire protection, building inspection, streets and highway maintenance, and parks and recreation. The graph below illustrates the change in the General Fund financial position over the last 10 years. We have also included a line representing annual expenditures to reflect the change in the size of the General Fund operation over the same period. $– $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 $20,000,000 2006200720082009201020112012201320142015 General Fund Financial Position Year Ended December 31, Fund Balance Cash and Investments (Net of Interfund Borrowing) Expenditures The City’s General Fund cash and investments balance (net of interfund borrowing) at December 31, 2015 was $11,602,236, which decreased $152,541 from 2014. Total fund balance at December 31, 2015 was $11,170,917, an increase of $150,836 from the prior year. Having an appropriate fund balance is an important factor in assessing the City’s financial health because a government, like any organization, requires a certain amount of equity to operate. Generally, the amount of equity required typically increases as the size of the operation increases. A healthy financial position allows the City to avoid volatility in tax rates; helps minimize the impact of state funding changes; allows for the adequate and consistent funding of services, repairs, and unexpected costs; and can be a factor in determining the City’s bond rating and resulting interest costs. The City has an approved fund balance policy that states the General Fund will manage its cash flow by having a year-end target unassigned fund balance of between 50 percent and 52 percent of next year’s General Fund budgeted expenditures. At December 31, 2015, the City’s General Fund had an unassigned fund balance of 52 percent of the subsequent year’s budgeted expenditures. -11- The following graph reflects the City’s General Fund revenue sources for 2015 compared to budget: Other Charges for Services Intergovernmental Licenses and Permits Taxes General Fund Revenue Budget Actual Total General Fund revenues for 2015 were $19,173,263, which was $79,338 (0.4 percent) under the final budget. The majority of this variance was from taxes, licenses and permits, and charges for services. Tax revenue was $219,494 under budget mainly due to less than anticipated excess tax increment revenue and less than anticipated delinquent collections. Licenses and permits revenue was $131,419 over budget from more than anticipated building-related activities. Charges for services revenue was $105,431 under budget due to the closure of the Community Center for improvements. The following graph presents the City’s General Fund revenues by source for the last five years. The graph reflects the City’s reliance on property taxes and other local sources of revenue, and shows the virtual elimination of general state aid revenue in recent years. $– $1,500,000 $3,000,000 $4,500,000 $6,000,000 $7,500,000 $9,000,000 $10,500,000 $12,000,000 $13,500,000 $15,000,000 $16,500,000 TaxesIntergovernmentalOther General Fund Revenue by Source Year Ended December 31, 2011 2012 2013 2014 2015 Overall, General Fund revenues increased $307,641 (1.6 percent) from the previous year. Tax revenue increased $540,258, mainly due to the increased levy in the current year. This increase was offset by a decrease in other revenue of $241,865, mainly in licenses and permits. Licenses and permits revenue decreased as the prior year had several high dollar permits compared to the current year. -12- The following graph illustrates the components of General Fund spending for 2015 compared to budget: Other Parks and Recreation Public Works Public Safety General Government General Fund Expenditures Budget Actual Total General Fund expenditures for 2015 were $18,047,798, which was $1,167,414 (6.1 percent) less than budget. The largest areas under budgeted amounts were public safety expenditures ($627,116), general government expenditures ($281,926), and public works expenditures ($215,538). Public safety expenditures were under budget in the police protection department and protective inspection department due to open staff positions during the year. General government expenditures were under budget in the government buildings department mainly due to fewer repair and maintenance projects than anticipated and a budgeted software purchase that was delayed until 2016. Public works expenditures were under budget due to savings in fuel costs, central garage repair charges, and open staff positions in engineering during the year. The following graph presents the City’s General Fund expenditures by function for the last five years. $– $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000 General Government Public SafetyPublic WorksParks and Recreation Other General Fund Expenditures by Function Year Ended December 31, 2011 2012 2013 2014 2015 General Fund expenditures increased by $544,124, or 3.1 percent, from the prior year, mainly due to the $364,739 increase in the public safety function and $152,097 increase in the other function. Public safety expenditures increased mainly due to increased personal services, which included the addition of the Assistant Fire Chief position. The other function increased mainly due to increases in economic development expenditures and nondepartmental expenditures. -13- ENTERPRISE FUNDS OVERVIEW The City maintains several enterprise funds to account for services the City provides that are financed primarily through fees charged to those utilizing the service. This section of the report provides you with an overview of the financial trends and activities of the City’s enterprise funds, which includes the Municipal Liquor, Golf Course, Earle Brown Heritage Center, Water Utility, Sanitary Sewer Utility, Storm Drainage Utility, Street Light Utility, and Recycling Utility Funds. The utility funds comprise a considerable portion of the City’s activities. These funds significantly help to defray overhead and administrative costs and provide additional support to general government operations by way of annual transfers. We understand that the City is proactive in reviewing these activities on an ongoing basis and we want to reiterate the importance of continually monitoring these operations. Over the years, we have emphasized to our city clients the importance of these utility operations being self-sustaining, preventing additional burdens on general government funds. This would include the accumulation of net position for future capital improvements and to provide a cushion in the event of a negative trend in operations. ENTERPRISE FUNDS FINANCIAL POSITION The following table summarizes the changes in the financial position of the City’s enterprise funds during the year ended December 31, 2015, presented both by classification and by fund: Increase 20152014(Decrease) Net position of enterprise funds Total by classification Net investment in capital assets47,201,239$ 48,537,132$ (1,335,893)$ Unrestricted10,438,971 7,164,916 3,274,055 Total – enterprise funds 57,640,210$ 55,702,048$ 1,938,162$ Total by fund Municipal Liquor2,574,111$ 2,512,431$ 61,680$ Golf Course738,801 751,336 (12,535) Earle Brown Heritage Center5,447,526 5,519,579 (72,053) Water Utility12,646,350 12,120,465 525,885 Sanitary Sewer Utility14,109,468 13,668,175 441,293 Storm Drainage Utility20,872,042 20,086,788 785,254 Street Light Utility1,149,177 963,994 185,183 Recycling Utility102,735 79,278 23,457 Total – enterprise funds 57,640,210$ 55,702,046$ 1,938,164$ Enterprise Funds Change in Financial Position Net Position as of December 31, In total, the net position of the City’s enterprise funds increased by $1,938,164 during the year ended December 31, 2015. As noted above, all of the City’s enterprise funds had positive operating results with the exception of the Golf Course and Earle Brown Heritage Center Funds. -14- Water Fund The following graph presents 10 years of operating results for the Water Fund: $– $250,000 $500,000 $750,000 $1,000,000 $1,250,000 $1,500,000 $1,750,000 $2,000,000 $2,250,000 $2,500,000 $2,750,000 2006200720082009201020112012201320142015 Water Fund Year Ended December 31, Operating Revenue Operating Expenses Project Costs Operating Income (Loss), Excluding Project Costs The Water Fund ended 2015 with a net position of $12,646,350, an increase of $525,885 from the prior year. Of this, $13,558,518 represents the investment in utility distribution system capital assets, leaving a deficit of ($912,168) in unrestricted net position. Water Fund operating revenue was $2,573,493 for 2015, an increase of $367,182 (16.6 percent) from the prior year due to an increase in consumption and an increase in rates in the current year. Operating expenses of $2,008,333 were $169,492 (9.2 percent) more than last year due to additional staffing allocated to this fund as a result of the water treatment plant construction in the current year and an increase in depreciation expense. -15- Sanitary Sewer Fund The following graph presents 10 years of operating results for the Sanitary Sewer Fund: $(200,000)$– $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 $1,800,000 $2,000,000 $2,200,000 $2,400,000 $2,600,000 $2,800,000 $3,000,000 $3,200,000 $3,400,000 $3,600,000 $3,800,000 $4,000,000 $4,200,000 2006200720082009201020112012201320142015 Sanitary Sewer Fund Year Ended December 31, Operating Revenue Operating Expenses Project Costs Operating Income (Loss), Excluding Project Costs The Sanitary Sewer Fund ended 2015 with a net position of $14,109,468, an increase of $441,293 from the prior year. Of this, $10,396,599 represents the investment in the sanitary sewer capital assets, leaving $3,712,869 of unrestricted net position. Sanitary Sewer Fund operating revenues for 2015 were $4,093,725, which was an increase of $148,610 (3.8 percent) from the prior year, due to an approved rate increase offset by a decrease in consumption. Operating expenses for 2015 were $3,656,994, which was an increase of $160,930 (4.6 percent) from the prior year. The largest operating expense of this fund is to Metropolitan Council Environmental Services (MCES) for sewer service charges. MCES disposal charges in 2015 increased by $82,124 from the prior year. The remainder of the increase in operating costs is due to depreciation expense. -16- Storm Drainage Fund The following graph presents 10 years of operating results for the Storm Drainage Fund: $(400,000) $(200,000)$– $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 $1,800,000 $2,000,000 2006200720082009201020112012201320142015 Storm Drainage Fund Year Ended December 31, Operating Revenue Operating Expenses Operating Income (Loss) The Storm Drainage Fund ended 2015 with a net position of $20,872,042, an increase of $785,254 from the prior year. Of this, $17,354,286 represents the net investment in capital assets, leaving $3,517,756 of unrestricted net position. Storm Drainage Fund operating revenues for 2015 were $1,635,555, which was a slight decrease of $2,920 from the prior year. Operating expenses for 2015 were $1,875,824, which was $88,760 higher than the prior year due to increased depreciation expense in the current year. -17- OTHER ENTERPRISE FUNDS Liquor Fund The following graph presents 10 years of operating results for the Liquor Fund: $– $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000 $5,500,000 $6,000,000 $6,500,000 2006200720082009201020112012201320142015 Liquor Fund Year Ended December 31, Sales Cost of Sales Operating Expenses Operating Income (Loss) The Liquor Fund ended 2015 with a net position of $2,574,111, an increase of $61,680 from the prior year. Of the net position balance, $129,667 represents the investment in liquor capital assets, leaving $2,444,444 of unrestricted net position. Liquor sales for 2015 were $6,056,668, which is $204,203 (3.5 percent) more than the prior year. The Liquor Fund generated operating income of $258,117 in 2015, or about 4.3 percent of gross sales, which is an increase from the 3.5 percent of gross sales in fiscal 2014. In 2015, the Liquor Fund transferred $216,455 to the Capital Improvements Fund for future capital projects. The Liquor Fund gross profit margin was 26.83 in fiscal 2015, which is lower than the average gross profit margin of 27.64 seen over the previous five years. -18- Earle Brown Heritage Center Fund The following graph presents 10 years of operating results for the Earle Brown Heritage Center Fund: $(800,000) $(400,000) $– $400,000 $800,000 $1,200,000 $1,600,000 $2,000,000 $2,400,000 $2,800,000 $3,200,000 $3,600,000 $4,000,000 $4,400,000 $4,800,000 2006200720082009201020112012201320142015 Earle Brown Heritage Center Fund Year Ended December 31, Sales and User Fees Operating Expenses Cost of Sales Operating Income (Loss) The Earle Brown Heritage Center Fund ended 2015 with a net position of $5,447,526, a decrease of $72,053 from the prior year. Of the net position balance, $3,418,198 represents investments in Earle Brown Heritage Center capital assets, leaving $2,029,328 of unrestricted net position. Earle Brown Heritage Center Fund sales and user fees for 2015 were $4,487,260, which is $30,971 (0.7 percent) less than last year. Operating expenses for 2015 were $2,689,723, a decrease of $359,040 from the prior year. The decrease in operating expenses is due to a decrease in repair and maintenance costs, decreased equipment rental, and budgeted capital improvements not completed in 2015. During fiscal 2015, this fund experienced depreciation expense totaling $620,249. -19- Golf Course Fund The following graph presents 10 years of operating results for the Golf Course Fund: $(150,000) $(100,000) $(50,000) $– $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 2006200720082009201020112012201320142015 Golf Course Fund Year Ended December 31, Operating Revenue Operating Expenses Operating Income (Loss) The Golf Course Fund ended 2015 with a net position of $738,801, a decrease of $12,535 from the prior year. Of this, $1,676,156 represents the investment in golf course land and capital assets, leaving a deficit of ($937,355) in unrestricted net position. Golf Course Fund operating revenues for 2015 were $208,225, which is $24,914 more than last year. Operating expenses for 2015 were $267,627, down $3,602 from the prior year. On an annual basis, this fund has had to borrow from other funds to fund cash flow needs. The interfund borrowing totals $937,470 (including $792,488 in initial funding of the golf course) at December 31, 2015. We recommend that the City continue to monitor the financial results in this fund. We also recommend that the City continue to update the long-range financial plan for this fund, including considering alternate plans for financing the payback of the interfund borrowing in this fund. -20- GOVERNMENT-WIDE FINANCIAL STATEMENTS In addition to fund-based information, the current reporting model for governmental entities also requires the inclusion of two government-wide financial statements designed to present a clear picture of the City as a single, unified entity. These government-wide financial statements provide information on the total cost of delivering services, including capital assets and long-term liabilities. STATEMENT OF NET POSITION The Statement of Net Position essentially tells you what your city owns and owes at a given point in time, the last day of the fiscal year. Theoretically, net position represents the resources the City has leftover to use for providing services after its debts are settled. However, those resources are not always in spendable form, or there may be restrictions on how some of those resources can be used. Therefore, the Statement of Net Position divides the net position into three components: Net Investment in Capital Assets – The portion of net position reflecting equity in capital assets (i.e., capital assets minus related debt). Restricted Net Position – The portion of net position equal to resources whose use is legally restricted minus any noncapital-related liabilities payable from those same resources. Unrestricted Net Position – The residual balance of net position after the elimination of net investment in capital assets and restricted net position. The following table presents the components of the City’s net position as of December 31, 2015 and 2014 for governmental activities and business-type activities: Increase 20152014 (Decrease) Net position Governmental activities Net investment in capital assets47,941,800$ 42,947,577$ 4,994,223$ Restricted36,810,593 28,061,977 8,748,616 Unrestricted(5,495,836) 12,357,196 (17,853,032) Total governmental activities79,256,557 83,366,750 (4,110,193) Business-type activities Investment in capital assets47,201,239 48,537,132 (1,335,893) Unrestricted8,452,630 6,819,765 1,632,865 Total business-type activities55,653,869 55,356,897 296,972 Total net position 134,910,426$ 138,723,647$ (3,813,221)$ As of December 31, The City’s total net position at December 31, 2015 was $3,813,221 less than the previous year-end, mainly due to the $4,110,193 decrease in the governmental activities. As discussed earlier, the City recorded a change in accounting principle for reporting its participation in the Public Employees Retirement Association and City of Brooklyn Center Firefighter’s Relief Association pension plans that reduced beginning unrestricted net position by $8,041,229 in the governmental activities and $1,571,633 in the business-type activities. -21- STATEMENT OF ACTIVITIES The Statement of Activities tracks the City’s yearly revenues and expenses, as well as any other transactions that increase or reduce total net position. These amounts represent the full cost of providing services. The Statement of Activities provides a more comprehensive measure than just the amount of cash that changed hands, as reflected in the fund-based financial statements. This statement includes the cost of supplies used, depreciation of long-lived capital assets, and other accrual-based expenses. The following table presents the change in the net position of the City for the years ended December 31, 2015 and 2014: 2014 Program ExpensesRevenues Net Change Net Change Governmental activities General government 3,527,323$ 653,535$ (2,873,788)$ (3,085,299)$ Public safety 10,707,602 1,747,213 (8,960,389) (8,317,463) Public works 3,867,406 5,487,951 1,620,545 (1,759,305) Community service 135,604 – (135,604) (145,503) Parks and recreation 3,053,328 695,986 (2,357,342) (2,300,461) Economic development 5,419,304 1,423,296 (3,996,008) (2,335,670) Interest on long-term debt 723,000 – (723,000) (887,190) Business-type activities Municipal liquor 5,816,363 6,061,680 245,317 170,274 Golf course 270,307 215,092 (55,215) 93,799 Earle Brown Heritage Center 4,739,543 4,649,162 (90,381) (559,279) Water utility 2,179,892 2,658,497 478,605 382,474 Sanitary sewer utility 3,694,880 4,100,961 406,081 443,734 Storm drainage utility 1,883,154 1,635,655 (247,499) (146,332) Recycling utility 292,282 315,434 23,152 15,422 Street light utility 281,661 464,258 182,597 209,532 Total net (expense) revenue 46,591,649$ 30,108,720$ (16,482,929) (18,221,267) General revenues Property taxes 15,320,998 14,988,007 Tax increments 3,805,367 3,790,363 Lodging taxes 1,075,425 914,651 Grants and contributions not restricted to specific programs 1,670,928 1,499,015 Unrestricted investment earnings 382,052 345,586 Gain on disposal of capital assets 27,800 27,100 Total general revenues22,282,570 21,564,722 Change in net position 5,799,641 3,343,455 Net position – beginning, as previously stated 138,723,647 135,380,192 Change in accounting principle (9,612,862) – Net position – beginning, restated 129,110,785 135,380,192 Net position – ending 134,910,426$ 138,723,647$ Net (expense) revenue 2015 One of the goals of this statement is to provide a side-by-side comparison to illustrate the difference in the way the City’s governmental and business-type operations are financed. The table clearly illustrates the dependence of the City’s governmental operations on general revenues, such as property taxes and unrestricted grants. It also shows that, for the most part, the City’s business-type activities are generating sufficient program revenues (service charges and program-specific grants) to cover expenses. This is critical given the current downward pressures on the general revenue sources. -22- LEGISLATIVE UPDATES Despite the 2015 legislative session beginning with a projected budget excess of $1.87 billion for the 2016–2017 biennium, the most favorable budget forecast in over a decade, little was accomplished during the regular legislative session due to partisan disagreement. The regular session adjourned without the Legislature bringing forth a number of significant funding bills, including the Omnibus Legacy Bill (funding for outdoor heritage, clean water, parks and trails, arts, and cultural heritage) and a bonding bill for capital projects. The Governor subsequently vetoed a number of other funding bills, including the Omnibus E–12 Education Bill due to the Legislature not addressing his demand for a universal preschool provision. Eventually, a one-day special session produced funding bills for E–12 education, jobs and energy, Legacy programs, environment and agriculture, and capital investment. The following is a summary of recent legislation affecting Minnesota cities in 2015 and into the future: Local Government Aid (LGA) – The Legislature completely overhauled the LGA formula for fiscal year 2014 and thereafter, creating a three-tiered formula that includes separate “need factor” calculations for cities with populations under 2,500, between 2,500 and 10,000, or over 10,000. The new formula simplified the LGA calculation, and reduced the volatility of the LGA distribution by limiting the amount it may decline in a given year. Beginning in 2015, any reduction to a city’s calculated LGA distribution will be limited to the lesser of $10 per capita, or 5 percent of their previous year net tax levy. For cities that gain under the new formula, the increases will be distributed proportionate to their unmet need, as determined by the new “need factor” calculations. The state-wide LGA appropriation was $516.9 million for fiscal 2015, and is $519.4 million for fiscal 2016 and thereafter. Sales Tax Exemption – Cities (both home-rule and statutory) were exempted from paying sales tax on qualifying purchases, effective for purchases made on or after January 1, 2014. Purchases of goods or services by an exempt local government for a publicly-provided liquor store, gas or electric utility, golf course, marina, campground, café, laundromat, solid waste hauling or recycling operation, or landfill will remain taxable. The 2014 Legislature extended the definition of tax exempt local government to include all special district; city, county, or township instrumentalities; economic development authorities; housing and redevelopment authorities; and all joint power boards or organizations. However, the effective date of this expanded exemption list was delayed until January 1, 2017 by the 2015 Legislature. Omnibus Bonding Bill – The Legislature approved a scaled-down Omnibus Bonding Bill during the special session, authorizing approximately $370 million in capital improvements. Included in the funding approved was $172.5 million for transportation infrastructure, $23.5 million for flood hazard mitigation, $10 million for Public Financing Agency (PFA) grants to municipalities for wastewater infrastructure, and $1.5 million to the Metropolitan Council for inflow and infiltration improvement grants to metro area cities. Legacy Funding – The Legacy bill included $9.25 million annually to finance grants for city water infrastructure improvements through the PFA. It also included $17.25 million annually to fund “SCORE” block grants to counties for recycling and waste reduction (a portion of which is passed through to cities) and $1 million of annual funding for a new grant program to establish or improve recycling programs in non-metro area cities. Broadband Initiative – The Omnibus Jobs and Energy Bill passed in the special session included $10.6 million to finance the Border-to-Border Broadband Grant Program, a one-time appropriation available until June 30, 2017. -23- Municipal State-Aid Streets – Included in the Omnibus Transportation Bill were annual funding allocations for municipal state-aid streets of $107.7 million for fiscal 2016 and $178.1 million for fiscal 2017, which represents an increase of approximately $41 million over the previous biennium. Small Cities Assistance Account – A one-time appropriation of $12.5 million was provided to create a new Small Cities Assistance Account to assist with construction and maintenance of roads located within eligible cities, defined as a statutory or home-rule charter city that does not receive municipal state aid street financing (generally those with a population under 5,000). The aid will be distributed to eligible cities biannually in each year funds are available based on the following formula: 5 percent equally to all eligible cities; 35 percent allocated proportionately on each city’s share of lane miles to the total for all eligible cities; 35 percent allocated proportionately on each city’s population to the total for all eligible cities; and 25 percent allocated proportionately on each city’s state-aid adjustment factor to the total for all eligible cities. Workforce Housing Grant Program – The Omnibus Jobs and Energy Bill included annual funding of $2 million for fiscal 2016 and 2017 for a new Workforce Housing Grant Program. Eligible cities can use the grants to develop “market rate residential rental property” to serve employees of businesses located in the eligible project areas. The maximum grant award may not exceed 25 percent of the rental housing development project cost; and awards must be matched by a local unit of government, business, or nonprofit organization with $1 for each $2 of grant funding. Automated License Plate Reader (ALPR) Policy – Law enforcement agencies that utilize ALPRs are required to establish policies governing their use that are consistent with statutory guidelines. The Legislature placed limitations on the type of data that can be collected using ALPRs, and clarified the circumstances under which that data is considered public or private. A limitation of 60 days was established for the retention of data collected by ALPR not related to an active criminal investigation. Standards were established for the sharing of ALPR data between law enforcement agencies. Elections – The Elections Omnibus Bill made numerous changes to elections administration laws, including requirements for filing fees for statutory cities, ballot formatting and marking, absentee ballots, and election recounts. Energy Conservation Measures – The Uniform Municipal Contracting Law was amended to add water metering devices that increase efficiency to the definition of energy conservation measures, enabling municipalities to enter into guaranteed energy savings contracts for the use of water metering devices. Responsible Contractor Requirement – The “responsible contractor” law enacted by the 2014 Legislature became effective on January 1, 2015. Contractors who bid on public contracts in excess of $50,000 are now required to certify that they are a “responsible bidder” in order to be awarded a contract as the lowest responsible bidder or best value alternative. The 2015 Legislature made several clarifications and modifications to the law, including: exempting design professionals and materials suppliers from the requirements; making motor carriers subject to the requirements and establishing a separate verification standard for them; excluding tax increment financing revenue from the value of a construction contract under the law; and allowing general contractors to submit bids without obtaining verification from all subcontractors that bid on the project (the successful prime contractor must submit a supplemental verification under oath prior to the execution of the contract). Appraisal Requirements for Eminent Domain – Effective July 1, 2015, the appraisal requirements for the acquisition of property by eminent domain are changed to require the acquiring entity to obtain at least one appraisal for the property proposed to be acquired only if the acquisition value is greater than $25,000. For acquisitions less than $25,000, the acquiring entity may obtain a minimum damage acquisition report in lieu of an appraisal. -24- Firefighter Employment Provisions and Volunteer Benefits – The Omnibus Public Safety Finance and Policy Bill made a number of changes related to firefighters, including: allowing relief association dues as a voluntarily payroll deduction, allowing volunteer firefighters to be paid less frequently than every 31 days, requiring the licensure of all full-time firefighters by the State Board of Firefighter Training and Education, and expanding “continued employer health insurance benefits” to include dependents of volunteer firefighters killed in the line of duty. Police and Firefighter Retirement Supplemental State Aid – The volunteer firefighter portion of the Police and Firefighter Retirement Supplemental State Aid Program was made permanent. The minimum obligation of municipalities to an associated relief association special fund is now reduced by the amount of both fire state aid and police and firefighter retirement supplemental state aid. Police and firefighter retirement supplemental state aid is also added to the calculation of the exception to municipal ratification requirement for lump-sum plans. Pensions – A number of changes to the pension plans administered by the Public Employees Retirement Association (PERA) were adopted, effective June 30, 2015, including: The future interest rate actuarial assumption for the PERA General Plan and PERA Police and Fire Plan are changed from 8.5 percent to 8.0 percent for actuarial valuations prepared after June 30, 2015. The refund repayment interest rate and prior service credit purchase payment determination rate for the PERA General Plan and PERA Police and Fire Plan are also changed from 8.5 percent to 8.0 percent. The CPI-based post-retirement adjustment mechanism for the PERA Police and Fire Plan is replaced with a flat 2.5 percent increase when the plan reaches a 90 percent funding level. The contribution stabilizer mechanisms applicable to the PERA General Plan are revised, broadening the factors the plan’s Board of Trustees may consider before recommending an increase in the plan contribution rates. Definitions of salary, termination of service, allowable service, retirement, and volunteer firefighter were revised for all applicable PERA plans. Changes in eligibility, service pension levels, ancillary benefits, and service time calculations were made to the PERA Statewide Volunteer Firefighter Plan, lump sum retirement division. A change was also made to create a “monthly benefit retirement division” within this plan to facilitate the transfer of individual volunteer firefighter association monthly benefit plans to the statewide plan. A number of administrative language changes were made to complete the merger of the Minneapolis Employees Retirement Fund into the PERA General Plan, which was effective January 1, 2015. -25- ACCOUNTING AND AUDITING UPDATES GASB STATEMENT NO. 72, FAIR VALUE MEASURE AND APPLICATION The primary objective of this statement is to address accounting and financial reporting issues related to fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This statement provides guidance for determining a fair value measurement for financial reporting purposes. It also provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements. This statement generally requires investments to be measured at fair value. An investment is defined as a security or other asset that (a) a government holds primarily for the purpose of income or profit and (b) has a present service capacity based solely on its ability to generate cash or to be sold to generate cash. This statement is effective for financial statements for fiscal years beginning after June 15, 2015. Earlier application is encouraged. GASB STATEMENT NO. 73, ACCOUNTING AND FINANCIAL REPORTING FOR PENSIONS AND RELATED ASSETS THAT ARE NOT WITHIN THE SCOPE OF GASB STATEMENT 68, AND AMENDMENTS TO CERTAIN PROVISIONS OF GASB STATEMENTS 67 AND 68 The objective of this statement is to improve the usefulness of information about pensions included in financial statements of state and local governments for making decisions and assessing accountability. This statement also clarifies the application of certain provisions of GASB Statement Nos. 67 and 68 regarding 10-year schedules of required supplementary information (RSI) and other recognition issues pertaining to employers and nonemployer contributing entities. These changes will improve financial reporting by establishing a single framework for the presentation of information about pensions, enhancing comparability for similar information reported by employers and nonemployer contributing entities. The requirements of this statement that address accounting and financial reporting by employers and governmental nonemployer contributing entities for pensions not within the scope of GASB Statement No. 68 are effective for financial statements for fiscal years beginning after June 15, 2016, and the requirements of this statement that address financial reporting for assets accumulated for purposes of providing those pensions are effective for fiscal years beginning after June 15, 2015. The requirements of this statement for pension plans that are within the scope of GASB Statement No. 67 or for pensions that are within the scope of GASB Statement No. 68 are effective for fiscal years beginning after June 15, 2015. Earlier application is encouraged. GASB STATEMENT NO. 74, FINANCIAL REPORTING FOR POSTEMPLOYMENT BENEFIT PLANS OTHER THAN PENSION PLANS The objective of this statement is to improve the usefulness of information about post-employment benefits other than pensions (other post-employment benefits [OPEB]). This statement replaces GASB Statement Nos. 43 and 57. It also includes requirements for defined contribution OPEB plans that replace the requirements for those OPEB plans in GASB Statement Nos. 25, 43, and 50. GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, establishes new accounting and financial reporting requirements for governments whose employees are provided with OPEB, as well as for certain nonemployer governments that have a legal obligation to provide financial support for OPEB provided to the employees of other entities. -26- This statement will improve financial reporting primarily through enhanced note disclosures and schedules of RSI that will be presented by OPEB plans administered through trusts meeting the specified criteria. The new information will enhance the decision-usefulness of the financial reports of those OPEB plans, their value for assessing accountability, and their transparency by providing information about measures of net OPEB liabilities and explanations of how and why those liabilities changed from year-to-year. The net OPEB liability information, including ratios, will offer an up-to-date indication of the extent to which the total OPEB liability is covered by the fiduciary net position of the OPEB plan. The comparability of the reported information for similar types of OPEB plans will be improved by the changes related to the attribution method used to determine the total OPEB liability. The contribution schedule will provide measures to evaluate decisions related to the assessment of contribution rates in comparison with actuarially determined rates, if such rates are determined. In addition, new information about rates of return on OPEB plan investments will inform financial report users about the effects of market conditions on the OPEB plan’s assets over time and provide information for users to assess the relative success of the OPEB plan’s investment strategy and the relative contribution that investment earnings provide to the OPEB plan’s ability to pay benefits to plan members when they come due. This statement is effective for financial statements for fiscal years beginning after June 15, 2016. Earlier application is encouraged. GASB STATEMENT NO. 75, ACCOUNTING AND FINANCIAL REPORTING FOR POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS The primary objective of this statement is to improve accounting and financial reporting by state and local governments for post-employment benefits other than pensions (OPEB). It also improves information provided by state and local governmental employers about financial support for OPEB that is provided by other entities. This statement replaces the requirements of GASB Statement Nos. 45 and 57. GASB Statement No. 74 establishes new accounting and financial reporting requirements for OPEB plans. This statement establishes standards for recognizing and measuring liabilities, deferred outflows of resources, deferred inflows of resources, and expense/expenditures. For defined benefit OPEB, this statement identifies the methods and assumptions that are required to be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. Note disclosure and RSI requirements about defined benefit OPEB also are addressed. This statement is effective for fiscal years beginning after June 15, 2017. Earlier application is encouraged. Similar to changes implemented for pensions, this statement requires the liability of employers and nonemployer contributing entities to employees for defined benefit OPEB (net OPEB liability) to be measured as the portion of the present value of projected benefit payments to be provided to current active and inactive employees that is attributed to those employees’ past periods of service (total OPEB liability), less the amount of the OPEB plan’s fiduciary net position. GASB STATEMENT NO. 77, TAX ABATEMENT DISCLOSURES This statement requires disclosure of tax abatement information about (1) a reporting government’s own tax abatement agreements, and (2) those that are entered into by other governments and that reduce the reporting government’s tax revenues. Tax abatements are widely used by state and local governments, particularly to encourage economic development. For financial reporting purposes, this statement defines a tax abatement as resulting from an agreement between a government and an individual or entity in which the government promises to forgo tax revenues and the individual or entity promises to subsequently take a specific action that contributes to economic development or otherwise benefits the government or its citizens. -27- The requirements of this statement improve financial reporting by giving users of financial statements essential information that is not consistently or comprehensively reported to the public at present. Disclosure of information about the nature and magnitude of tax abatements will make these transactions more transparent to financial statement users. As a result, users will be better equipped to understand (1) how tax abatements affect a government’s future ability to raise resources and meet its financial obligations, and (2) the impact those abatements have on a government’s financial position and economic condition. The requirements of this statement are effective for financial statements for periods beginning after December 15, 2015. Earlier application is encouraged. GASB STATEMENT NO. 78, PENSIONS PROVIDED THROUGH CERTAIN MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLANS The objective of this statement is to address a practice issue regarding the scope and applicability of GASB Statement No. 68, Accounting and Financial Reporting for Pensions—an amendment of GASB Statement No. 27. This issue is associated with pensions provided through certain multiple-employer defined benefit pension plans and to state or local governmental employers whose employees are provided with such pensions. Prior to the issuance of this statement, the requirements of GASB Statement No. 68 applied to the financial statements of all state and local governmental employers whose employees are provided with pensions through pension plans that are administered through trusts that meet the criteria in paragraph 4 of GASB Statement No. 68. This statement amends the scope and applicability of GASB Statement No. 68 to exclude pensions provided to employees of state or local governmental employers through a cost-sharing, multiple-employer defined benefit pension plan that (1) is not a state or local governmental pension plan, (2) is used to provide defined benefit pensions both to employees of state or local governmental employers and to employees of employers that are not state or local governmental employers, and (3) has no predominant state or local governmental employer (either individually or collectively with other state or local governmental employers that provide pensions through the pension plan). This statement establishes requirements for recognition and measurement of pension expense, expenditures, and liabilities; note disclosures; and RSI for pensions that have the characteristics described above. The requirements of this statement are effective for reporting periods beginning after December 15, 2015. Early application is encouraged. GASB STATEMENT NO. 79, CERTAIN EXTERNAL INVESTMENT POOLS AND POOL PARTICIPANTS This statement establishes criteria for an external investment pool to qualify for making the election to measure all of its investments at amortized cost for financial reporting purposes. An external investment pool qualifies for that reporting if it meets all of the applicable criteria established in this statement. The specific criteria address (1) how the external investment pool transacts with participants; (2) requirements for portfolio maturity, quality, diversification, and liquidity; and (3) calculation and requirements of a shadow price. Significant noncompliance prevents the external investment pool from measuring all of its investments at amortized cost for financial reporting purposes. If an external investment pool meets the criteria in this statement and measures all of its investments at amortized cost, the pool’s participants also should measure their investments in that external investment pool at amortized cost for financial reporting purposes. If an external investment pool does not meet the criteria in this statement, the pool’s participants should measure their investments in that pool at fair value. This statement establishes additional note disclosure requirements for qualifying external investment pools that measure all of their investments at amortized cost for financial reporting purposes and for governments that participate in those pools. Those disclosures for both the qualifying external investment pools and their participants include information about any limitations or restrictions on participant withdrawals. The requirements of this statement are effective for reporting periods beginning after June 15, 2015, except for certain provisions on portfolio quality, custodial credit risk, and shadow pricing. Those provisions are effective for reporting periods beginning after December 15, 2015. Earlier application is encouraged. -28- GASB STATEMENT NO. 80, BLENDING REQUIREMENTS FOR CERTAIN COMPONENT UNITS—AN AMENDMENT OF GASB STATEMENT NO. 14 The objective of this statement is to clarify the financial statement presentation requirements for certain component units. This statement amends the blending requirements for the financial statement presentation of component units of all state and local governments. The additional criterion requires blending of a component unit incorporated as a not-for-profit corporation in which the primary government is the sole corporate member. The additional criterion does not apply to component units included in the financial reporting entity pursuant to the provisions of GASB Statement No. 39, Determining Whether Certain Organizations Are Component Units—an amendment of GASB Statement No. 14. The requirements of this statement are effective for reporting periods beginning after June 15, 2016. Earlier application is encouraged. CHANGES TO REQUIREMENTS FOR FEDERAL GRANTS In December 2013, the U.S. Office of Management and Budget (OMB) Circular released final guidance on administrative requirements, cost principles, and audit requirements for federal awards. The final guidance, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”), supersedes and streamlines eight existing OMB Circulars into one document that includes OMB Circulars A-21, A-87, A-89, A-102, A-110, A-122, A-133, and the guidance in OMB Circular A-50 on Single Audit Act follow-up. The Uniform Guidance, which is located in Title 2 of the Code of Federal Regulations (CFR), consolidates previous guidance into a streamlined format that aims to improve both its clarity and accessibility, lessen administrative burdens for federal award recipients, and reduce the risk of waste, fraud, and abuse. The Following is a Summary of Significant Changes for Grant Recipients: Changes time and effort documentation requirements by providing possibilities for alternative methods of accounting for salaries and wages based on achievement of performance outcomes. Non-federal entities must have a financial management system that includes, but is not limited to: a comparison of expenditures with budget amounts for each federal award, written procedures to implement the requirements of cash management, and written procedures for determining the allowability of costs in accordance with Subpart E – Cost Principles. Governments must comply with the new general procurement standards which include, but are not limited to: written standards covering conflicts of interest of employees engaged in the selection, award, and administration of contracts and documented procurement procedures that include an analysis of lease versus purchase alternatives when appropriate. Governments will now be required to follow the five procurement methods which include, at times, more restrictive compliance requirements than Minnesota Statutes. For example: small purchases (over $3,000 prior to October 1, 2015 and over $3,500 after October 1, 2015) will require quotes. There are new requirements for governments with subrecipients (or those making subawards), which include, but are not limited to: a required written risk assessment of each subrecipient, which may require you to provide training and on-site reviews of their program operations. For governments with subrecipients or those that operate as a fiscal host of a federal grant award and thus provide subawards, payments must be made in advance to the subrecipients, unless certain requirements are not met, then the reimbursement method can be used. -29- Among Other Matters Specifically Applicable to Auditors, Changes to the Uniform Guidance Include: Raising both the threshold that triggers a Single Audit and the threshold for Type A/B program determination to $750,000. Changing the high-risk program criteria for Type A programs. Reducing the number of high-risk Type B programs that must be tested as major programs. Revising the Type B small program floor. Reducing the percentage of coverage requirement to 40 percent for normal auditees and 20 percent for low-risk auditees. Revising the criteria for low-risk auditee status. Increasing the threshold for reporting findings to $25,000 in questioned costs and requiring more detailed information to be reported. Effective Dates: Year beginning January 1, 2015 – All administrative requirements and cost principles will apply to new awards made after December 26, 2014. Governmental entities are required to comply with the Uniform Guidance once the new regulations are in effect at the Federal government level (December 26, 2014). Any funding drawdowns made after January 1, 2015 must comply with the Uniform Guidance. Must document whether the entity is in compliance with the old or new procurement standards listed in Subpart D, Sections 200.317–200.326. The federal government has provided a two-year grace period for implementing the new procurement standards. Year beginning January 1, 2016 – All administrative requirements and cost principles will apply to new awards made after December 26, 2014. Subpart F – Audit Requirements are applicable. Year beginning January 1, 2017 – Must have implemented the new procurement standards of the Uniform Guidance, if the government initially elected the two-year grace beginning January 1, 2015. At this point, all of the new Uniform Guidance at Title 2 CFR 200 is applicable. Recommended Action Items: We recommend that award recipients familiarize themselves with the new requirements contained in the Uniform Guidance and develop a plan to become compliant with the new regulations. Consider the following – Attend training on the new uniform administrative requirements. Identify needed policy and procedure changes, especially in the areas of: o Financial management o Payment o Procurement o Compensation o Travel costs Identify internal controls that might need to be established or modified. Determine who within your organization is responsible for each action item. Determine the timing of each action item. Determine when you will implement the new procurement standards and document in writing. THIS PAGE INTENTIONALLY LEFT BLANK CITY OF BROOKLYN CENTER HENNEPIN COUNTY, MINNESOTA Special Purpose Audit Reports on Single Audit, Internal Controls, and Compliance With Laws and Regulations Year Ended December 31, 2015 THIS PAGE INTENTIONALLY LEFT BLANK Page Schedule of Expenditures of Federal Awards1 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 2–3 Independent Auditor’s Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance4–6 Independent Auditor’s Report on Minnesota Legal Compliance7 Schedule of Findings and Questioned Costs8–9 Table of Contents CITY OF BROOKLYN CENTER HENNEPIN COUNTY, MINNESOTA THIS PAGE INTENTIONALLY LEFT BLANK Federal Federal CFDA No.Expenditures U.S. Environmental Protection Agency Passed through Minnesota Public Facilities Authority Capitalization Grants for Drinking Water State Revolving Funds 66.46814,608,787$ U.S. Department of Housing and Urban Development Passed through Hennepin County Community Development Block Grants – Entitlement Grants 14.218291,922 Community Development Block Grants – State’s Program and Non-Entitlement Grants in Hawaii14.22876,466 U.S. Department of Justice Direct program Bulletproof Vest Partnership Program 16.6078,776 Passed through Hennepin County Edward Byrne Memorial Justice Assistance Grant Program 16.73820,970 U.S. Department of Transportation Passed through the City of Brooklyn Park Minimum Penalties for Repeat Offenders for Driving While Intoxicated 20.6085,632 National Priority Safety Programs 20.6162,851 Total federal awards 15,015,405$ Note 1: Note 2: Note 3: TheScheduleofExpendituresofFederalAwardsispreparedontheaccrualbasisofaccounting.Theinformation inthisscheduleispresentedinaccordancewithbothOMBCircularA-133,AuditsofStates,LocalGovernments, andNonprofitOrganizations andtheOMB’s UniformAdministrativeRequirements,CostPrinciples,andAudit RequirementsforFederalAwards,whenapplicable.Therefore,someamountspresentedinthisschedulemay differ from the amounts presented in, or used in the preparation of, the City’s basic financial statements. All pass-through entities listed above use the same CFDA numbers as the federal grantors to identify these grants, and have not assigned any additional identifying numbers. The City did not elect to use the 10 percent de minimis indirect cost rate. CITY OF BROOKLYN CENTER Schedule of Expenditures of Federal Awards Year Ended December 31, 2015 Federal Grantor/Pass-Through Grantor/Program Title -1- THIS PAGE INTENTIONALLY LEFT BLANK -2- 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 To the City Council and Management City of Brooklyn Center, Minnesota We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, 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, 2015, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated May 23, 2016. 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) to determine the 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 effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s 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 combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the City’s financial statements will not be prevented, or detected 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. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. (continued) -3- 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 determination of financial statement amounts. 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 tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. 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 of that testing, and not to provide an opinion on the effectiveness of the City’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control and compliance. Accordingly, this report is not suitable for any other purpose. Minneapolis, Minnesota May 23, 2016 -4- INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE To the City Council and Management City of Brooklyn Center, Minnesota REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM We have audited the City of Brooklyn Center, Minnesota’s (the City) compliance with the types of compliance requirements described in the U.S. Office of Management and Budget Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the year ended December 31, 2015. The City’s major federal programs are identified in the summary of auditor’s results section of the accompanying Schedule of Findings and Questioned Costs. MANAGEMENT’S RESPONSIBILITY Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. AUDITOR’S RESPONSIBILITY Our responsibility is to express an opinion on compliance for each of the City’s major federal programs based on our audit of the types of compliance requirements referred to above. 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). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the City’s compliance. (continued) -5- OPINION ON EACH MAJOR FEDERAL PROGRAM In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to on the previous page that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2015. REPORT ON INTERNAL CONTROL OVER COMPLIANCE Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to on the previous page. In planning and performing our audit of compliance, we considered the City’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program 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 effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City’s 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 of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or 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. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. PURPOSE OF THIS REPORT 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. (continued) -6- REPORT ON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of and for the year ended December 31, 2015, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements. We issued our report thereon dated May 23, 2016, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by the Uniform Guidance and is 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 financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Schedule of Expenditures of Federal Awards is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Minneapolis, Minnesota May 23, 2016 THIS PAGE INTENTIONALLY LEFT BLANK -7- INDEPENDENT AUDITOR’S REPORT ON MINNESOTA LEGAL COMPLIANCE To the City Council and Management City of Brooklyn Center, Minnesota We have audited, in accordance with auditing standards generally accepted in the United States of America, and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, 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, 2015, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated May 23, 2016. MINNESOTA LEGAL COMPLIANCE The Minnesota Legal Compliance Audit Guide for Cities, promulgated by the Office of the State Auditor pursuant to Minnesota Statute § 6.65, contains seven categories of compliance to be tested: contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, miscellaneous provisions, and tax increment financing. Our audit considered all of the listed categories. 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 Minnesota Legal Compliance Audit Guide for Cities. However, our audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we performed additional procedures, other matters may have come to our attention regarding the City’s noncompliance with the above referenced provisions. PURPOSE OF THIS REPORT The purpose of this report is solely to describe the scope of our testing of compliance and the results of that testing, and not to provide an opinion on compliance. Accordingly, this report is not suitable for any other purpose. Minneapolis, Minnesota May 23, 2016 THIS PAGE INTENTIONALLY LEFT BLANK CITY OF BROOKLYN CENTER Schedule of Findings and Questioned Costs Year Ended December 31, 2015 -8- A. SUMMARY OF AUDIT RESULTS This summary is formatted to provide federal granting agencies and pass-through agencies answers to specific questions regarding the audit of federal awards. Financial Statements What type of auditor’s report is issued?X Unmodified Qualified Adverse Disclaimer Internal control over financial reporting: Material weakness(es) identified?Yes X No Significant deficiency(ies) identified?Yes X None reported Noncompliance material to the financial statements noted?Yes X No Federal Awards Internal controls over major federal award programs: Material weakness(es) identified?Yes X No Significant deficiency(ies) identified?Yes X None reported Type of auditor’s report issued on compliance for major programs?X Unmodified Qualified Adverse Disclaimer Any audit findings disclosed that are required to be reported in accordance with the Uniform Guidance?Yes X No Programs tested as major programs: Program or Cluster U.S. Environmental Protection Agency Capitalization Grants for Drinking Water State Revolving Funds66.468 Threshold for distinguishing between type A and B programs: Does the auditee qualify as a low-risk auditee?X YesNo CFDA No. 750,000$ CITY OF BROOKLYN CENTER Schedule of Findings and Questioned Costs (continued) Year Ended December 31, 2015 -9- B. FINDINGS – FINANCIAL STATEMENT AUDIT None. C. FINDINGS – MAJOR FEDERAL AWARD PROGRAMS AUDIT None. D. FINDINGS – MINNESOTA LEGAL COMPLIANCE AUDIT None. E. SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS – MAJOR FEDERAL AWARD PROGRAMS AUDIT None.