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HomeMy WebLinkAbout2017 05-08 CCP Regular SessionCITY COUNCIL MEETING City of Brooklyn Center May 8, 2017 AGENDA 1. Informal Open Forum with City Council – 6:45 p.m. –provides an opportunity for the public to address the Council on items which are not on the agenda. Open Forum will be limited to 15 minutes, it is not televised, and it may not be used to make personal attacks, to air personality grievances, to make political endorsements, or for political campaign purposes. Council Members will not enter into a dialogue with citizens. Questions from the Council will be for clarification only. Open Forum will not be used as a time for problem solving or reacting to the comments made but, rather, for hearing the citizen for informational purposes only. 2. Invocation – 7 p.m. 3. Call to Order Regular Business Meeting –The City Council requests that attendees turn off cell phones and pagers during the meeting. A copy of the full City Council packet is available to the public. The packet ring binder is located at the podium. 4. Roll Call 5. Pledge of Allegiance 6. Approval of Agenda and Consent Agenda –The following items are considered to be routine by the City Council and will be enacted by one motion. There will be no separate discussion of these items unless a Councilmember so requests, in which event the item will be removed from the consent agenda and considered at the end of Council Consideration Items. a. Approval of Minutes 1. April 17, 2017 – Board of Appeal and Equalization 2. April 24, 2017 – Study/Work Session 3. April 24, 2017 – Regular Session 4. April 24, 2017 – Work Session b. Licenses c. Resolution Establishing Improvement Project Nos. 2018-01, 02, 03 and 04, Firehouse Park Area Street and Utility Improvements d. Resolution Establishing Improvement Project No. 2018-06, 51st Avenue/Frontage Road Improvements CITY COUNCIL AGENDA -2- May 8, 2017 e. Resolution Approving Amendment to the Professional Services Agreement with SRF Consulting Group, Inc. for the Brooklyn Boulevard Corridor Project Phase 1 to Include the 51st Avenue/Frontage Road Project, Improvement Project No. 2018-06 f. Resolution Authorizing Proposed Use of Auto Theft Prevention Grant g. Meeting Schedule for 2018-2019 Budget 7. Presentations/Proclamations/Recognitions/Donations a. Resolution Recognizing May 14 Through May 20, 2017, as Police Week and May 15, 2017, as Police Officers Memorial Day Requested Council Action: –Motion to adopt resolution 8. Public Hearings –None. 9. Planning Commission Items –None. 10. Council Consideration Items a. Resolution Awarding the Sale of $8,360,000 General Obligation Improvement and Utility Revenue Bonds, Series 2017A, Fixing Their Form and Specifications; Directing Their Execution and Delivery; and Providing for Their Payment Requested Council Action: –Motion to adopt resolution 11. Council Report 12. Adjournment Property Address Dwelling Type Renewal or Initial Owner Property Code Violations License Type Police CFS * Final License Type ** Previous License Type *** Unpaid Utilities Unpaid Taxes 4708 Twin Lake Ave Two Family (1)Initial Michael Mohs 2 II N/A II OK OK 4225 66th Ave N Single Family Initial Sesan Ogunniran 6 III N/A III OK OK 7101 France Ave N Single Family Initial Becky Kienzle 2 II N/A II OK OK 5240 Drew Ave N 1 Bldg 10 Units Renewal Bradley J. Schumacher 9 (.9/Unit)II 1 (.1/Unit)II IV OK OK 4013 65th Ave N Single Family Renewal Sam Yen Liew/Local Agent 2 II 0 II IV OK OK 2833 67th Ln N Single Family Renewal Konrad Wagner c/o Phil Beaumia 0 I 0 I IV OK OK 6116 Aldrich Ave N Single Family Renewal Marc Silverstein 4 II 0 II III OK OK 5111 Drew Ave N Single Family Renewal Kin Chew (Missing 2 ARM meetings)8 III 0 III III OK OK 5547 Humboldt Ave N Single Family Renewal Steven Sapourn (Missing cpted follow-up)4 II 0 III III OK OK 5636 Humboldt Ave N Single Family Renewal Sam Yen Liew/Local Agent 3 II 0 II IV OK OK 5713 Humboldt Ave N Single Family Renewal Janice Biorn 4 II 0 II III OK OK 5442 James Ave N Single Family Renewal Gerard Stigsell 2 II 0 II II OK OK 5819 Knox Ave N Single Family Renewal Crystal Brummer 5 III 0 III II OK OK 7225 Major Ave N Single Family Renewal Kin Chew (Missing 2 ARM meetings)8 III 0 III III OK OK 7019 Morgan Ave N Single Family Renewal Candlewood Home Buyers, Inc.6 III 0 III II OK OK 3613 Violet Ave Single Family Renewal Sam Yen Liew/Local Agent 1 I 0 I II OK OK 807 Woodbine La Single Family Renewal Jonathan Green 2 II 0 II III OK OK * CFS = Calls For Service for Renewal Licenses Only (Initial Licenses are not applicable to calls for service and will be listed N/A.) ** License Type Being Issued Type I = 3 Year Type II = 2 Year Type III = 1 Year *** Initial licenses will not show a previous license type All properties are current on City utilities and property taxes Rental Licenses for Council Approval on May 8, 2017 ____________________________ * Preliminary; subject to change. Th e i n f o r m a t i o n c o n t a i n e d i n t h i s P r e l i m i n a r y O f f i c i a l S t a t e m e n t i s d e e m e d b y t h e Ci t y to b e f i n a l a s o f t h e d a t e h e r e o f ; h o w e v e r , t h e p r i c i n g a n d u n d e r w r i t i n g i n f o r m a t i o n i s s u b j e c t t o c o m p l e t i o n o r a m e n d m e n t . Un d e r n o c i r c u m s t a n c e s s h a l l t h i s P r e l i m i n a r y O f f i c i a l S t a t e m e n t c o n s t i t u t e a n o f f e r t o s e l l o r t h e s o l i c i t a t i o n o f a n o f f e r to b u y, n o r s h a l l t h e r e b e a n y s a l e o f t h e s e s e c u r i t i e s i n a n y j u r i s d i c t i o n i n w h i c h s u c h o f f e r , so l i c i t a t i o n o r s a l e w o u l d b e u n l a w f u l p r i o r t o r e g i s t r a t i o n o r q u a l i f i c a t i o n u n d e r t h e s e c u r i t i e s l a w s o f a n y s u c h j u r i s d i c t io n . PRELIMINARY OFFICIAL STATEMENT DATED APRIL 18, 2017 NEW ISSUE S&P Rating: Requested BANK QUALIFIED In the opinion of Kennedy & Graven, Chartered, Bond Counsel for the Bonds, based on present federal and Minnesota laws, regulations, rulings and decisions (which excludes any pending legislation which may have a retroactive effect), and assuming compliance with certain covenants, interest to be paid on the Bonds is excluded from gross income for federal income tax purposes and, to the same extent, from taxable net income of individuals, estates and trusts for Minnesota income purposes, and is not a preference item for purposes of computing the federal alternative minimum tax or the Minnesota alternative minimum tax imposed on individuals, trusts, and estates. Such interest is taken into account in determining adjusted current earnings for the purpose of computing the federal alternative minimum tax imposed on certain corporations and is subject to Minnesota franchise taxes on corporations (including financial institutions) measured by income. No opinion will be expressed by Kennedy & Graven regarding other state or federal tax consequences caused by the receipt or accrual of interest on the Bonds or arising with respect to ownership of the Bonds. The Bonds will be designated as "qualified tax-exempt obligations" for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended, relating to the ability of financial institutions to deduct from income for federal income tax purposes, interest expense that is allocable to carrying and acquiring tax-exempt Bonds. See "TAX EXEMPTION" and "OTHER FEDERAL AND STATE TAX CONSIDERATIONS" herein. $8,830,000* City of Brooklyn Center, Minnesota General Obligation Improvement and Utility Revenue Bonds, Series 2017A (the “Bonds”) (Book Entry Only) Dated Date: Date of Delivery Interest Due: Each February 1 and August 1, commencing February 1, 2018 The Bonds will mature February 1 in the years and amounts* as follows: 2019 $840,000 2020 $835,000 2021 $845,000 2022 $860,000 2023 $875,000 2024 $885,000 2025 $900,000 2026 $915,000 2027 $930,000 2028 $945,000 Proposals for the Bonds may contain a maturity schedule providing for a combination of serial bonds and term bonds. All term bonds shall be subject to mandatory sinking fund redemption at a price of par plus accrued interest to the date of redemption scheduled to conform to the maturity schedule set forth above. The City may elect on February 1, 2026, and on any day thereafter, to redeem Bonds due on or after February 1, 2027 at a price of par plus accrued interest. The Bonds are general obligations of the City for which the City pledges its full faith and credit and power to levy direct general ad valorem taxes. In addition, the City will pledge special assessments against benefited properties and net revenues of the City’s water, storm drainage, and sanitary sewer utility funds for repayment of the Bonds. The proceeds of the Bonds will be used to finance street and utility improvements within the City. See “SECURITY AND FINANCING” herein for additional discussion regarding repayment sources for the Bonds. Proposals shall be for not less than $8,759,360 plus accrued interest, if any, on the total principal amount of the Bonds. Proposals shall specify rates in integral multiples of 1/100 or 1/8 of 1%. The initial price to the public for each maturity must be 98.0% or greater. Following receipt of proposals, a good faith deposit will be required to be delivered to the City by the lowest bidder as described in the “Terms of Proposal” herein. Award of the Bonds will be made on the basis of True Interest Cost (TIC). The City will designate the Bonds as “qualified tax-exempt obligations” pursuant to Section 265(b)(3) of the Internal Revenue Code of 1986, as amended, and the Bonds will not be subject to the alternative minimum tax for individuals. The Bonds will be issued as fully registered bonds without coupons and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”). DTC will act as securities depository for the Bonds. Individual purchases may be made in book entry form only, in the principal amount of $5,000 and integral multiples thereof. Investors will not receive physical certificates representing their interest in the Bonds purchased. (See “Book Entry System” herein.) U.S. Bank National Association, St. Paul, Minnesota will serve as registrar (the “Registrar”) for the Bonds. The Bonds will be available for delivery at DTC on or about June 8, 2016. PROPOSALS RECEIVED: May 8, 2017 (Monday) until 10:30 A.M., Central Time AWARD: May 8, 2017 (Monday) at 7:00 P.M., Central Time Further information may be obtained from SPRINGSTED Incorporated, Municipal Advisor to the City, 380 Jackson Street, Suite 300, Saint Paul, Minnesota 55101-2887 (651) 223-3000. CITY OF BROOKLYN CENTER, MINNESOTA CITY COUNCIL Tim Willson Mayor Marquita Butler Council Member April Graves Council Member Kris Lawrence-Anderson Council Member Dan Ryan Council Member CITY MANAGER Cornelius L. Boganey FINANCE DIRECTOR Nathan Reinhardt MUNICIPAL ADVISOR Springsted Incorporated St. Paul, Minnesota BOND COUNSEL Kennedy & Graven, Chartered Minneapolis, Minnesota For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission, this document, as the same may be supplemented or corrected by the City from time to time, may be treated as a Preliminary Official Statement with respect to the Bonds described herein that is deemed final as of the date hereof (or of any such supplement or correction) by the City. By awarding the Bonds to any underwriter or underwriting syndicate submitting a Proposal therefor, the City agrees that, no more than seven business days after the date of such award, it shall provide without cost to the senior managing underwriter of the syndicate to which the Bonds are awarded copies of the Final Official Statement in the amount specified in the Terms of Proposal. No dealer, broker, salesman or other person has been authorized by the City to give any information or to make any representations with respect to the Bonds, other than as contained in the Preliminary Official Statement or the Final Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by the City. Certain information contained in the Preliminary Official Statement or the Final Official Statement may have been obtained from sources other than records of the City and, while believed to be reliable, is not guaranteed as to completeness or accuracy. THE INFORMATION AND EXPRESSIONS OF OPINION IN THE PRELIMINARY OFFICIAL STATEMENT AND THE FINAL OFFICIAL STATEMENT ARE SUBJECT TO CHANGE, AND NEITHER THE DELIVERY OF THE PRELIMINARY OFFICIAL STATEMENT NOR THE FINAL OFFICIAL STATEMENT NOR ANY SALE MADE UNDER EITHER SUCH DOCUMENT SHALL CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CITY SINCE THE RESPECTIVE DATE THEREOF. References herein to laws, rules, regulations, resolutions, agreements, reports and other documents do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document, the full text of which may contain qualifications of and exceptions to statements made herein. Where full texts have not been included as appendices to the Preliminary Official Statement or the Final Official Statement, they will be furnished upon request. Any CUSIP numbers for the Bonds included in the Final Official Statement are provided for convenience of the owners and prospective investors. The CUSIP numbers for the Bonds are assigned by an organization unaffiliated with the City. The City is not responsible for the selection of the CUSIP numbers and makes no representation as to the accuracy thereof as printed on the Bonds or as set forth in the Final Official Statement. No assurance can be given by the City that the CUSIP numbers for the Bonds will remain the same after the delivery of the Final Official Statement or the date of issuance and delivery of the Bonds. TABLE OF CONTENTS Page(s) Terms of Proposal .............................................................................................................................. i-iv Introductory Statement ....................................................................................................................... 1 Continuing Disclosure ....................................................................................................................... 1 The Bonds .......................................................................................................................................... 2 Authority and Purpose ....................................................................................................................... 4 Sources and Uses of Funds ................................................................................................................ 4 Security and Financing ...................................................................................................................... 5 Future Financing ................................................................................................................................ 5 Litigation ............................................................................................................................................ 5 Legality .............................................................................................................................................. 5 Tax Exemption ................................................................................................................................... 6 Other Federal and State Tax Considerations ...................................................................................... 6 Qualified Tax-Exempt Obligations .................................................................................................... 7 Rating ................................................................................................................................................. 7 Municipal Advisor ............................................................................................................................. 8 Certification ....................................................................................................................................... 8 City Property Values .......................................................................................................................... 9 City Indebtedness ............................................................................................................................... 10 City Tax Rates, Levies and Collections ............................................................................................. 14 Funds on Hand ................................................................................................................................... 15 Investments ........................................................................................................................................ 15 General Information Concerning the City ......................................................................................... 16 Governmental Organization and Services .......................................................................................... 22 Proposed Form of Legal Opinion ............................................................................................ Appendix I Continuing Disclosure Certificate ........................................................................................... Appendix II Summary of Tax Levies, Payment Provisions, and Minnesota Real Property Valuation ..................................................................................... Appendix III Excerpt of 2015 Comprehensive Annual Financial Report .................................................... Appendix IV ________________________________ * Preliminary; subject to change. - i - THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: TERMS OF PROPOSAL $8,830,000* CITY OF BROOKLYN CENTER, MINNESOTA GENERAL OBLIGATION IMPROVEMENT AND UTILITY REVENUE BONDS, SERIES 2017A (BOOK ENTRY ONLY) Proposals for the above-referenced obligations (the “Bonds”) will be received by the City of Brooklyn Center, Minnesota (the “City”) on Monday, May 8, 2017, (the “Sale Date”) until 10:30 A.M., Central Time at the offices of Springsted Incorporated (“Springsted”), 380 Jackson Street, Suite 300, Saint Paul, Minnesota, 55101, after which time proposals will be opened and tabulated. Consideration for award of the Bonds will be by the City Council at 7:00 P.M., Central Time, of the same day. SUBMISSION OF PROPOSALS Springsted will assume no liability for the inability of a bidder to reach Springsted prior to the time of sale specified above. All bidders are advised that each proposal shall be deemed to constitute a contract between the bidder and the City to purchase the Bonds regardless of the manner in which the proposal is submitted. (a) Sealed Bidding. Proposals may be submitted in a sealed envelope or by fax (651) 223-3046 to Springsted. Signed proposals, without final price or coupons, may be submitted to Springsted prior to the time of sale. The bidder shall be responsible for submitting to Springsted the final proposal price and coupons, by telephone (651) 223-3000 or fax (651) 223-3046 for inclusion in the submitted proposal. OR (b) Electronic Bidding. Notice is hereby given that electronic proposals will be received via PARITY®. For purposes of the electronic bidding process, the time as maintained by PARITY® shall constitute the official time with respect to all proposals submitted to PARITY®. Each bidder shall be solely responsible for making necessary arrangements to access PARITY® for purposes of submitting its electronic proposal in a timely manner and in compliance with the requirements of the Terms of Proposal. Neither the City, its agents, nor PARITY® shall have any duty or obligation to undertake registration to bid for any prospective bidder or to provide or ensure electronic access to any qualified prospective bidder, and neither the City, its agents, nor PARITY® shall be responsible for a bidder’s failure to register to bid or for any failure in the proper operation of, or have any liability for any delays or interruptions of or any damages caused by the services of PARITY®. The City is using the services of PARITY® solely as a communication mechanism to conduct the electronic bidding for the Bonds, and PARITY® is not an agent of the City. If any provisions of this Terms of Proposal conflict with information provided by PARITY®, this Terms of Proposal shall control. Further information about PARITY®, including any fee charged, may be obtained from: PARITY®, 1359 Broadway, 2nd Floor, New York, New York 10018 Customer Support: (212) 849-5000 - ii - DETAILS OF THE BONDS The Bonds will be dated as of the date of delivery and will bear interest payable on February 1 and August 1 of each year, commencing February 1, 2018. Interest will be computed on the basis of a 360- day year of twelve 30-day months. The Bonds will mature February 1 in the years and amounts* as follows: 2019 $840,000 2020 $835,000 2021 $845,000 2022 $860,000 2023 $875,000 2024 $885,000 2025 $900,000 2026 $915,000 2027 $930,000 2028 $945,000 * The City reserves the right, after proposals are opened and prior to award, to increase or reduce the principal amount of the Bonds or the amount of any maturity in multiples of $5,000. In the event the amount of any maturity is modified, the aggregate purchase price will be adjusted to result in the same gross spread per $1,000 of Bonds as that of the original proposal. Gross spread is the differential between the price paid to the City for the new issue and the prices at which the securities are initially offered to the investing public. Proposals for the Bonds may contain a maturity schedule providing for a combination of serial bonds and term bonds. All term bonds shall be subject to mandatory sinking fund redemption at a price of par plus accrued interest to the date of redemption scheduled to conform to the maturity schedule set forth above. In order to designate term bonds, the proposal must specify “Years of Term Maturities” in the spaces provided on the proposal form. BOOK ENTRY SYSTEM The Bonds will be issued by means of a book entry system with no physical distribution of Bonds made to the public. The Bonds will be issued in fully registered form and one Bond, representing the aggregate principal amount of the Bonds maturing in each year, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company (“DTC”), New York, New York, which will act as securities depository for the Bonds. Individual purchases of the Bonds may be made in the principal amount of $5,000 or any multiple thereof of a single maturity through book entries made on the books and records of DTC and its participants. Principal and interest are payable by the registrar to DTC or its nominee as registered owner of the Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The purchaser, as a condition of delivery of the Bonds, will be required to deposit the Bonds with DTC. REGISTRAR The City will name the registrar which shall be subject to applicable regulations of the Securities and Exchange Commission. The City will pay for the services of the registrar. OPTIONAL REDEMPTION The City may elect on February 1, 2026, and on any day thereafter, to redeem Bonds due on or after February 1, 2027. Redemption may be in whole or in part and if in part at the option of the City and in such manner as the City shall determine. If less than all Bonds of a maturity are called for redemption, the City will notify DTC of the particular amount of such maturity to be redeemed. DTC will determine by lot the amount of each participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. All redemptions shall be at a price of par plus accrued interest. - iii - SECURITY AND PURPOSE The Bonds will be general obligations of the City for which the City will pledge its full faith and credit and power to levy direct general ad valorem taxes. In addition, the City will pledge special assessments against benefited properties and net revenues of the City’s water, storm drainage, and sanitary sewer utility funds for repayment of the Bonds. The proceeds will be used to finance street and utility improvements within the City. BIDDING PARAMETERS Proposals shall be for not less than $8,759,360 plus accrued interest, if any, on the total principal amount of the Bonds. No proposal can be withdrawn or amended after the time set for receiving proposals on the Sale Date unless the meeting of the City scheduled for award of the Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been made. Rates shall be in integral multiples of 1/100 or 1/8 of 1%. The initial price to the public for each maturity must be 98.0% or greater. Bonds of the same maturity shall bear a single rate from the date of the Bonds to the date of maturity. No conditional proposals will be accepted. GOOD FAITH DEPOSIT To have its proposal considered for award, the lowest bidder is required to submit a good faith deposit to the City in the amount of $88,300 (the “Deposit”) no later than 1:30 P.M., Central Time on the Sale Date. The Deposit may be delivered as described herein in the form of either (i) a certified or cashier’s check payable to the City; or (ii) a wire transfer. The lowest bidder shall be solely responsible for the timely delivery of its Deposit whether by check or wire transfer. Neither the City nor Springsted have any liability for delays in the receipt of the Deposit. If the Deposit is not received by the specified time, the City may, at its sole discretion, reject the proposal of the lowest bidder, direct the second lowest bidder to submit a Deposit, and thereafter award the sale to such bidder. Certified or Cashier’s Check. A Deposit made by certified or cashier’s check will be considered timely delivered to the City if it is made payable to the City and delivered to Springsted Incorporated, 380 Jackson Street, Suite 300, St. Paul, Minnesota 55101 by the time specified above. Wire Transfer. A Deposit made by wire will be considered timely delivered to the City upon submission of a federal wire reference number by the specified time. Wire transfer instructions will be available from Springsted following the receipt and tabulation of proposals. The successful bidder must send an e-mail including the following information: (i) the federal reference number and time released; (ii) the amount of the wire transfer; and (iii) the issue to which it applies. Once an award has been made, the Deposit received from the lowest bidder (the “Purchaser”) will be retained by the City and no interest will accrue to the Purchaser. The amount of the Deposit will be deducted at settlement from the purchase price. In the event the Purchaser fails to comply with the accepted proposal, said amount will be retained by the City. AWARD The Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost (TIC) basis calculated on the proposal prior to any adjustment made by the City. The City's computation of the interest rate of each proposal, in accordance with customary practice, will be controlling. The City will reserve the right to: (i) waive non-substantive informalities of any proposal or of matters relating to the receipt of proposals and award of the Bonds, (ii) reject all proposals without cause, and (iii) reject any proposal that the City determines to have failed to comply with the terms herein. - iv - BOND INSURANCE AT PURCHASER'S OPTION The City has not applied for or pre-approved a commitment for any policy of municipal bond insurance with respect to the Bonds. If the Bonds qualify for municipal bond insurance and a bidder desires to purchase a policy, such indication, the maturities to be insured, and the name of the desired insurer must be set forth on the bidder’s proposal. The City specifically reserves the right to reject any bid specifying municipal bond insurance, even though such bid may result in the lowest TIC to the City. All costs associated with the issuance and administration of such policy and associated ratings and expenses (other than any independent rating requested by the City) shall be paid by the successful bidder. Failure of the municipal bond insurer to issue the policy after the award of the Bonds shall not constitute cause for failure or refusal by the successful bidder to accept delivery of the Bonds. CUSIP NUMBERS If the Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Bonds, but neither the failure to print such numbers on any Bond nor any error with respect thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the Purchaser. SETTLEMENT On or about June 8, 2017, the Bonds will be delivered without cost to the Purchaser through DTC in New York, New York. Delivery will be subject to receipt by the Purchaser of an approving legal opinion of Kennedy & Graven, Chartered of Minneapolis, Minnesota, and of customary closing papers, including a no-litigation certificate. On the date of settlement, payment for the Bonds shall be made in federal, or equivalent, funds that shall be received at the offices of the City or its designee not later than 12:00 Noon, Central Time. Unless compliance with the terms of payment for the Bonds has been made impossible by action of the City, or its agents, the Purchaser shall be liable to the City for any loss suffered by the City by reason of the Purchaser's non-compliance with said terms for payment. CONTINUING DISCLOSURE In accordance with SEC Rule 15c2-12(b)(5), the City will undertake, pursuant to the resolution awarding sale of the Bonds, to provide annual reports and notices of certain events. A description of this undertaking is set forth in the Official Statement. The Purchaser's obligation to purchase the Bonds will be conditioned upon receiving evidence of this undertaking at or prior to delivery of the Bonds. OFFICIAL STATEMENT The City has authorized the preparation of a Preliminary Official Statement containing pertinent information relative to the Bonds, and said Preliminary Official Statement will serve as a near -final Official Statement within the meaning of Rule 15c2-12 of the Securities and Exchange Commission. For copies of the Preliminary Official Statement or for any additional information prior to sale, any prospective purchaser is referred to the Municipal Advisor to the City, Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota 55101, telephone (651) 223-3000. A Final Official Statement (as that term is defined in Rule 15c2 -12) will be prepared, specifying the maturity dates, principal amounts, and interest rates of the Bonds, together with any other information required by law. By awarding the Bonds to the Purchaser, the City agrees that, no more than seven business days after the date of such award, it shall provide without cost to the Purchaser up to 25 copies of the Final Official Statement. The City designates the Purchaser as its agent for purposes of distributing copies of the Final Official Statement to each syndicate member, if applicable. The Purchaser agrees that if its proposal is accepted by the City, (i) it shall accept designation and (ii) it shall enter into a contractual relationship with its syndicate members for purposes of assuring the receipt of the Final Official Statement by each such syndicate member. Dated April 10, 2017 BY ORDER OF THE CITY COUNCIL /s/ Sharon Knutson City Clerk ____________________________ * Preliminary; subject to change. - 1 - OFFICIAL STATEMENT $8,830,000* CITY OF BROOKLYN CENTER, MINNESOTA GENERAL OBLIGATION IMPROVEMENT AND UTILITY REVENUE BONDS, SERIES 2017A (BOOK ENTRY ONLY) INTRODUCTORY STATEMENT This Official Statement contains certain information relating to the City of Brooklyn Center, Minnesota (the “City”) and its issuance of $8,830,000* General Obligation Improvement and Utility Revenue Bonds, Series 2017A (the “Bonds”). The Bonds are general obligations of the City for which it pledges its full faith and credit and power to levy direct general ad valorem taxes. In addition, the City will pledge special assessments against benefited properties and net revenues of the City’s water, storm drainage, and sanitary sewer utility funds for repayment of the Bonds. See “SECURITY AND FINANCING” herein for additional discussion regarding repayment sources for the Bonds. Inquiries may be directed to Mr. Nathan Reinhardt, Finance Director, City of Brooklyn Center, 6301 Shingle Creek Parkway, Brooklyn Center, Minnesota 55430, by telephoning (763) 569-3320, or by e-mailing nreinhardt@ci.brooklyn-center.mn.us. Inquiries may also be made to Springsted Incorporated, 380 Jackson Street, Suite 300, St. Paul, Minnesota 55101-2887, by telephoning (651) 223-3000, or by e-mailing bond_services@springsted.com. CONTINUING DISCLOSURE In order to assist the Underwriters in complying with SEC Rule 15c2-12 (the “Rule”), pursuant to the Awarding Resolution, the City has covenanted to comply with the continuing disclosure undertaking (the “Undertaking”) for the benefit of holders or beneficial owners of the Bonds to provide certain financial information and operating data relating to the City to the Municipal Securities Rulemaking Board annually, and to provide notices of the occurrence of certain events enumerated in the Rule to the Municipal Securities Rulemaking Board and to any state information depository. The specific nature of the Undertaking, as well as the information to be contained in the annual report or the notices of material events, is set forth in the Undertaking in substantially the form attached hereto as Appendix II, subject to such modifications thereof or additions thereto as: (i) consistent with requirements under the Rule, (ii) required by the purchaser of the Bonds from the City, and (iii) acceptable to the Mayor and the Manager of the City. The City has complied for the past five years in all material respects in accordance with the terms of its previous continuing disclosure undertakings entered into pursuant to the Rule, except as follows:  The City’s General Obligation Improvement Bonds, Series 2008B (CUSIP 113835) were originally insured by Assured Guarantee Corp (AGC). AGC’s Moody’s rating was downgraded from Aa3 to A3 on January 17, 2013. The material event and notices of failure to timely file related to this rating change were filed with the MSRB through EMMA on April 6, 2017. - 2 - A failure by the City to comply with the Undertaking will not constitute an event of default on the Bonds (although holders or other beneficial owners of the Bonds will have the sole remedy of bringing an action for specific performance). Nevertheless, such a failure must be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Bonds in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Bonds and their market price. THE BONDS General Description The Bonds are dated as of the date of delivery and will mature annually on February 1 as set forth on the front cover of this Official Statement. The Bonds are issued in book entry form. Interest on the Bonds is payable on February 1 and August 1 of each year, commencing February 1, 2018. Interest will be payable to the holder (initially Cede & Co.) registered on the books of the Registrar as of the fifteenth day of the calendar month next preceding such interest payment date. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Principal of and interest on the Bonds will be paid as described in the section herein entitled “Book Entry System.” U.S. Bank National Association, St. Paul, Minnesota will serve as Registrar for the Bonds, and the City will pay for registrar services. Redemption Provisions Twenty days’ written notice of redemption shall be given to the registered owner(s) of the Bonds in accordance with the City’s agreement to comply with DTC’s rules with respect to notices to DTC . Failure to give such written notice to any registered owner of the Bonds or any defect therein shall not affect the validity of any proceedings for the redemption of the Bonds. All Bonds or portions thereof called for redemption will cease to bear interest after the specified redemption date, provided funds for their redemption are on deposit at the place of payment. Optional Redemption The City may elect on February 1, 2026, and on any day thereafter, to redeem Bonds due on or after February 1, 2027. Redemption may be in whole or in part and if in part at the option of the City and in such manner as the City shall determine. If less than all the Bonds of a maturity are called for redemption, the City will notify DTC of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant’s interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. All redemptions shall be at a price of par plus accrued interest. Book Entry System The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of - 3 - 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation, and Fixed Income Clearing Corporation all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participa nts’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of the Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). - 4 - Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co. or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the City or its agent on the payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or its agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to City or its agent. Under such circumstances, in the event that a successor depository is not obtained, certificates are required to be printed and delivered. The City may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof. AUTHORITY AND PURPOSE The Bonds are being issued pursuant to Minnesota Statutes, Chapters 429, 444, and 475. The proceeds of the Bonds, along with other City funds, will be used to finance street improvements (the “Improvement Portion”) and utility improvements (the “Utility Portion”) within the City. SOURCES AND USES OF FUNDS The composition of the Bonds is estimated to be as follows: Improvement Utility Portion Portion Total Sources of Funds: Principal Amount $3,950,000 $4,880,000 $8,830,000 Other City Funds 812,307 0 812,307 Total Sources of Funds $4,762,307 $4,880,000 $9,642,307 Uses of Funds: Deposit to Project Funds $4,697,655 $4,804,267 $9,501,922 Costs of Issuance 33,052 36,693 69,745 Allowance for Discount Bidding 31,600 39,040 70,640 Total Uses of Funds $4,762,307 $4,880,000 $9,642,307 - 5 - SECURITY AND FINANCING The Bonds will be general obligations of the City for which the City will pledge its full faith and credit and power to levy direct general ad valorem taxes. Additional sources of security for the Bonds are discussed below. Improvement Portion The City pledges special assessments against benefited properties for repayment of the Improvement Portion of the Bonds. Special assessments in the principal amount of approximately $1,422,897 are expected to be filed in 2017 for first collection in 2018. Assessments will be filed over a term of ten years with equal annual payments of principal. Interest on the unpaid balance will be charged at an interest rate of 3.50%. The City will also levy taxes for repayment of a portion of the Improvement Portion of the Bonds, and will make its first levy in 2017 for collection in 2018. The City will make the February 1, 2018 interest payment from available City funds. Thereafter, each year’s collection of taxes and special assessments, if collected in full, will be sufficient to pay 105% of the interest payment due August 1 of the collection year and the principal and interest payment due February 1 of the following year. Utility Portion Pursuant to Minnesota Statutes, Chapter 444, and the resolution awarding the sale of the Bonds, the City will covenant to impose and collect charges for the service, use, availability and connection to the water, storm drainage, and sanitary sewer utilities (the “Utilities”) to produce net revenues in amounts sufficient to support the operation of the Utilities and to pay 105% of debt service on obligations to which it has pledged the net revenues of the Utilities, including the Utility Portion of the Bonds. The City is required to annually review the budget of the Utilities to determine whether current rates and charges are sufficient and to adjust such rates and charges as necessary. The City does not anticipate the need to levy taxes for repayment of the Utility Portion of the Bonds. FUTURE FINANCING The City does not anticipate issuing any additional long-term general obligation debt within the next 90 days. LITIGATION The City is not aware of any threatened or pending litigation affecting the validity of the Bonds or the City's ability to meet its financial obligations. LEGALITY The Bonds are subject to approval as to certain matters by Kennedy & Graven, Chartered, of Minneapolis, Minnesota, as Bond Counsel. Bond Counsel has not participated in the preparation of this Official Statement and will not pass upon its accuracy, completeness, or sufficiency. Bond Counsel has not examined nor attempted to examine or verify any of the financial or statistical statements or data contained in this Official Statement and will express no opinion with respect thereto. A legal opinion in substantially the form set out in Appendix I herein will be delivered at closing. - 6 - TAX EXEMPTION At closing Kennedy & Graven, Chartered, of Minneapolis, Minnesota, Bond Counsel for the Bonds, will render an opinion that, at the time of their issuance and delivery to the original purchaser, under present federal and State of Minnesota laws, regulations, rulings and decisions (which excludes any pending legislation which may have a retroactive effect), the interest on the Bonds is excluded from gross income for purposes of United States income tax and is excluded, to the same extent, from taxable net income of individuals, estates and trusts for Minnesota income purposes, and is not a preference item for purposes of computing the federal alternative minimum tax or the Minnesota alternative minimum tax imposed on individuals, trusts, and estates. Such interest is taken into account in determining adjusted current earnings for the purpose of computing the federal alternative minimum tax imposed on certain corporations and is subject to Minnesota franchise taxes on corporations (including financial institutions) measured by income. No opinion will be expressed by Kennedy & Graven regarding other federal or state tax consequences caused by the receipt or accrual of interest on the Bonds or arising with respect to ownership of the Bonds. Preservation of the exclusion of interest on the Bonds from federal gross income and state gross and taxable net income, however, depends upon compliance by the City with all requirements of the Internal Revenue Code of 1986, as amended, (the “Code”) that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be (or continue to be) excluded from federal gross income and state gross and taxable net income. The City will covenant to comply with requirements necessary under the Code to establish and maintain the Bonds as tax-exempt under Section 103 thereof, including without limitation, requirements relating to temporary periods for investments and limitations on amounts invested at a yield greater than the yield on the Bonds. OTHER FEDERAL AND STATE TAX CONSIDERATIONS Property and Casualty Insurance Companies Property and casualty insurance companies are required to reduce the amount of their loss reserve deduction by 15% of the amount of tax-exempt interest received or accrued during the taxable year on certain Bonds, including interest on the Bonds. Foreign Insurance Companies Foreign companies carrying on an insurance business in the United States are subject to a tax on income which is effectively connected with their conduct of any trade or business in the United States, including “net investment income.” Net investment income includes tax-exempt interest such as interest on the Bonds. Branch Profits Tax A foreign corporation is subject to a branch profits tax equal to 30% of the “dividend equivalent amount” for the taxable year. The “dividend equivalent amount” is the foreign corporation's “effectively connected earnings and profits” adjusted for increase or decrease in “U.S. net equity.” A branch's earnings and profits may include tax-exempt municipal bond interest, such as interest on the Bonds. - 7 - Passive Investment Income of S Corporations Passive investment income, including interest on the Bonds, may be subject to federal income taxation under Section 1375 of the Code for an S corporation that has Subchapter C earnings and profits at the close of the taxable year if more than 25% of the gross receipts of such S corporation is passive investment income. Financial Institutions Financial institutions are generally not entitled to a deduction for interest expenses allocable to the owners of tax-exempt obligations purchased after August 7, 1986. The City will designate the Bonds as qualified tax-exempt obligations pursuant to Section 265(b)(3) of the Code. General The preceding is not a comprehensive list of all federal or State tax consequences which may arise from the receipt or accrual of interest on the Bonds. The receipt or accrual of interest on the Bonds may otherwise affect the federal income tax (or Minnesota income tax or franchise tax) liability of the recipient based on the particular taxes to which the recipient is subject and the particular tax status of other items of income or deductions. All prospective purchasers of the Bonds are advised to consult their own tax advisors as to the tax consequences of, or tax considerations for, purchasing or holding the Bonds. QUALIFIED TAX-EXEMPT OBLIGATIONS The City will designate the Bonds as “qualified tax-exempt obligations” for purposes of Section 265(b)(3) of the Code, relating to the ability of financial institutions to deduct from income for federal income tax purposes, interest expense that is allocable to carrying and acquiring tax-exempt obligations. RATING Application for a rating of the Bonds has been made to S&P Global Ratings (“S&P”), 55 Water Street, New York, New York. If a rating is assigned, it will reflect only the opinion of S&P. Any explanation of the significance of the rating may be obtained only from S&P. There is no assurance that a rating, if assigned, will continue for any given period of time, or that such rating will not be revised, suspended or withdrawn, if, in the judgment of S&P, circumstances so warrant. A revision, suspension or withdrawal of a rating may have an adverse effect on the market price of the Bonds. - 8 - MUNICIPAL ADVISOR The City has retained Springsted Incorporated, Public Sector Advisors, of St. Paul, Minnesota (“Springsted”), as municipal advisor in connection with certain aspects of the issuance of the Bonds. In preparing this Official Statement, Springsted has relied upon governmental officials, and other sources, who have access to relevant data to provide accurate information for this Official Statement, and Springsted has not been engaged, nor has it undertaken, to independently verify the accuracy of such information. Springsted is not a public accounting firm and has not been engaged by the City to compile, review, examine or audit any information in this Official Statement in accordance with accounting standards. Springsted is an independent advisory firm, registered as a municipal advisor, and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities. Springsted is under common ownership with Springsted Investment Advisors, Inc. (“SIA”), an investment adviser registered in the states where services are provided. SIA may provide investment advisory services to the City from time to time in connection with the investment of proceeds from the Bonds as well as advice with respect to portfolio management and investment policies for the City. SIA pays Springsted, as municipal advisor, a referral fee from the fees paid to SIA by the City. CERTIFICATION The City has authorized the distribution of the Preliminary Official Statement for use in connection with the initial sale of the Bonds and a Final Official Statement following award of the Bonds. The Purchaser will be furnished with a certificate signed by the appropriate officers of the City stating that the City examined each document and that, as of the respective date of each and the date of such certificate, each document did not and does not contain any untrue statement of material fact or omit to state a material fact necessary, in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. (The Balance of This Page Has Been Intentionally Left Blank) - 9 - CITY PROPERTY VALUES Trend of Values(a) Assessment/ Assessor’s Market Value Adjusted Collection Estimated Sales Economic Homestead Taxable Taxable Net Year Market Value Ratio(b) Market Value(c) Exclusion Market Value Tax Capacity 2016/17(d) $1,870,150,101 N/A N/A N/A $1,699,535,316 $22,841,269 2015/16 1,778,802,900 93.7% $1,898,823,284 $166,968,111 1,605,660,789 21,570,419 2014/15 1,667,663,500 83.0 2,008,478,171 173,160,024 1,489,548,076 20,703,061 2013/14 1,515,999,000 91.5 1,656,700,488 179,157,923 1,329,268,428 19,665,833 2012/13 1,524,919,100 100.2 1,646,174,750 180,200,766 1,338,405,415 19,827,575 2011/12 1,649,467,100 104.3 1,627,809,108 179,157,923 1,468,159,885 21,320,986 (a) For a description of the Minnesota property tax system, see Appendix III. (b) Sales Ratio Study for the year of assessment as posted by the Minnesota Department of Revenue, http://www.revenue.state.mn.us/propertytax/Pages/statistics-imv.aspx. (c) Economic market values for the year of assessment as posted by the Minnesota Departm ent of Revenue, http://www.revenue.state.mn.us/propertytax/Pages/statistics-imv.aspx. (d) 2016/17 valuations are preliminary and are subject to change as provided by Hennepin County, Minnesota, http://www.hennepin.us/residents/property/taxing-district-info. Source: Hennepin County, Minnesota, April 2016, except as otherwise noted. 2015/16 Adjusted Taxable Net Tax Capacity: $21,570,419 Real Estate: Residential Homestead $ 9,817,812 47.7% Commercial/Industrial, Railroad, and Public Utility 8,010,524 38.9 Residential Non-Homestead 2,263,263 11.0 Agricultural and Seasonal Recreational 94,046 0.5 Personal Property 398,267 1.9 2015/16 Net Tax Capacity $20,583,912 100.0% Less: Captured Tax Increment (2,884,208) Contribution to Fiscal Disparities (2,635,082) Plus: Distribution from Fiscal Disparities 6,505,797 2015/16 Adjusted Taxable Net Tax Capacity $21,570,419 - 10 - Ten of the Largest Taxpayers in the City 2015/16 Net Taxpayer Type of Property Tax Capacity The Luther Company LLC Car Dealer $ 609,560 The Molasky Group of COS FBI Regional Headquarters 461,250 Wal-Mart Stores Inc. Retail 333,590 AX RER L.P. Real Estate 319,950 TLN Lanel Ltd Partnership Apartments 205,425 Medtronic Inc. Industrial 197,890 Lake Point Apartments LLC Apartments 194,613 Brookdale Corner LLC Retail 191,310 G B Homes LLC Custom Home Builders 181,975 Brooklyn Hotel Partners Hotel 155,370 Total $2,850,933* * Represents 13.2% of the City's 2015/16 adjusted taxable net tax capacity. CITY INDEBTEDNESS Legal Debt Limit and Debt Margin* Legal Debt Limit (3% of 2016/17 Preliminary Estimated Market Value) $56,104,503 Less: Outstanding Debt Subject to Limit 0 Legal Debt Margin as of June 8, 2017 $56,104,503 * The legal debt margin is referred to statutorily as the “Net Debt Limit” and may be increased by debt service funds and current revenues which are applicable to the payment of debt in the current fiscal year. NOTES: Certain types of debt are not subject to the legal debt limit. See Appendix III – Debt Limitations. General Obligation Special Assessment Debt Est. Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 6-8-17 12-15-08 $2,390,000 Improvements 2-1-2019 $ 390,000 12-19-13 4,920,000 Improvements 2-1-2024 3,080,000 7-9-15 5,240,000 Improvements 2-1-2026 4,730,000 10-13-16 1,820,000 Street Improvements 2-1-2027 1,820,000 6-8-17 3,950,000 Street Improvements (the Improvement Portion of the Bonds) 2-1-2028 3,950,000 Total $13,970,000 - 11 - General Obligation Tax Increment Debt Est. Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 6-8-17 6-1-08 $4,335,000 Taxable Tax Increment 2-1-2018 $ 125,000 12-19-13 6,040,000 Taxable Tax Increment 2-1-2022 5,265,000 7-9-15 6,600,000 Taxable Tax Increment Refunding 2-1-2020 5,030,000 12-8-16 2,075,000 Tax Increment Refunding 2-1-2029 2,075,000 12-8-16 1,725,000 Taxable Tax Increment Refunding 2-1-2023 1,725,000 Total $14,220,000 General Obligation Utility Revenue Debt Est. Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 6-8-17 7-9-15 $1,660,000 Utility Revenue Refunding 2-1-2025 $1,355,000 10-13-16 3,605,000 Utility Revenue 2-1-2027 3,605,000 6-8-17 4,880,000 Utility Revenue (the Utility Portion of the Bonds) 2-1-2028 4,880,000 Total $9,840,000 Revenue Debt Est. Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 6-8-17 1-20-15 $19,662,352 Taxable GO PFA Water Loan 8-20-2034 $18,703,000 Estimated Calendar Year Debt Service Payments Including the Bonds G.O. Special Assessment Debt G.O. Tax Increment Debt Principal Principal Year Principal & Interest(a) Principal & Interest 2017 (at 6-8) (Paid) $ 134,199 (Paid) $ 213,995 2018 $ 1,405,000 1,730,155 $ 2,275,000 2,644,433 2019 1,760,000 2,032,320 2,295,000 2,597,195 2020 1,610,000 1,843,046 2,350,000 2,585,345 2021 1,615,000 1,811,434 2,430,000 2,596,520 2022 1,630,000 1,788,850 2,490,000 2,582,680 2023 1,320,000 1,445,210 305,000 355,333 2024 1,335,000 1,430,055 330,000 373,525 2025 1,135,000 1,201,055 335,000 371,875 2026 1,145,000 1,183,918 340,000 369,700 2027 605,000 623,029 350,000 371,938 2028 410,000 415,433 355,000 368,563 2029 365,000 369,563 Total $13,970,000(b) $15,638,704 $14,220,000(c) $15,800,665 (a) Includes the Improvement Portion of the Bonds at an assumed average annual interest rate of 2.32%. (b) 97.1% of this debt will be retired within ten years. (c) 94.9% of this debt will be retired within ten years. - 12 - Estimated Calendar Year Debt Service Payments Including the Bonds (Continued) G.O. Utility Revenue Debt Revenue Debt Principal Principal Year Principal & Interest(a) Principal & Interest 2017 (at 6-8) (Paid) $ 71,874 $ 954,000 $ 1,047,515 2018 $ 470,000 687,313 963,000 1,140,490 2019 950,000 1,138,530 973,000 1,140,860 2020 965,000 1,136,180 982,000 1,140,130 2021 975,000 1,127,913 992,000 1,140,310 2022 1,010,000 1,143,290 1,002,000 1,140,390 2023 1,025,000 1,137,459 1,012,000 1,140,370 2024 1,040,000 1,130,614 1,022,000 1,140,250 2025 1,050,000 1,117,583 1,033,000 1,141,030 2026 900,000 945,624 1,043,000 1,140,700 2027 920,000 944,821 1,053,000 1,140,270 2028 535,000 542,089 1,064,000 1,140,740 2029 1,075,000 1,141,100 2030 1,085,000 1,140,350 2031 1,096,000 1,140,500 2032 1,107,000 1,140,540 2033 1,118,000 1,140,470 2034 1,129,000 1,140,290 Total $9,840,000(b) $11,132,290 $18,703,000(c) $20,436,305 (a) Includes the Utility Portion of the Bonds at an assumed average annual interest rate of 2.33%. (b) 94.6% of this debt will be retired within ten years. (c) 53.3% of this debt will be retired within ten years. Other Debt Obligations Operating Leases The City has entered into two operating leases for its municipal liquor stores. Rent expenses for the fiscal year ended December 31, 2016 were $310,553. The following is a schedule by years of future minimum rental payments required under these operating leases as of December 31, 2016: Year Ending December 31 2017 $ 234,888 2018 234,888 2019 234,888 2020 164,124 2021-2023 280,080 Total $1,148,868 - 13 - The City has leased a portion of its police second floor expansion area to the Local Government Information Systems Association as a backup computer facility. The lease commenced on January 12, 2016, has a term of ten years, and calls for monthly lease payments based on square-footage. Lease revenue for the year ended December 31, 2016 was $12,100. Future lease revenues under the current agreement is as follows: Year Ending December 31 2017 $ 12,000 2018 12,000 2019 12,000 2020 12,000 2021-2025 60,000 Total $108,000 The City is the lessor in an operating lease for a building used for a sit-down restaurant. The lease was originally signed in 2011 with a ten-year term, with an option to extend the lease for an additional five years. For the year ended December 31, 2016, the City received $76,441 in rental revenue. Future minimum base rent revenues under the current agreement is as follows: Year Ending December 31 2017 $ 84,378 2018 92,816 2019 102,942 2020 112,048 2021 96,190 Total $488,374 Overlapping Debt 2015/16 Debt Applicable to Adjusted Taxable Est. G.O. Debt Tax Capacity in City Taxing Unit(a) Net Tax Capacity As of 6-8-17(b) Percent Amount Hennepin County $1,602,471,674 $853,180,000 1.4% $11,944,520 Hennepin County Regional Railroad 1,602,471,674 33,145,000 1.4 464,030 Three Rivers Park District 1,147,830,415 52,530,000 1.9 998,070 I.S.D. No. 11 (Anoka-Hennepin) 43,193,866 43,790,000 6.7 2,933,930 I.S.D. No. 279 (Osseo) 156,333,069 148,925,000 4.4 6,552,700 I.S.D. No. 281 (Robbinsdale) 93,317,239 190,380,000 5.2 9,899,760 I.S.D. No. 286 (Brooklyn Center) 6,994,194 23,010,000 100.0 23,010,000 Metropolitan Council 3,475,846,085 10,910,000(c) 0.6 65,460 Metropolitan Transit 2,767,556,165 141,535,000 0.8 1,132,280 Total $57,000,750 (a) Only those units with outstanding general obligation debt are shown here. (b) Excludes general obligation tax and aid anticipation certificates and revenue-supported debt. (c) Excludes general obligation debt supported by wastewater revenues and housing rental payments. Includes certificates of participation. - 14 - Debt Ratios* G.O. G.O. Direct & Direct Debt Overlapping Debt To 2016/17 Preliminary Estimated Market Value ($1,870,150,101) 1.51% 4.56% Per Capita - (30,864 - 2015 MN Demographer Estimate) $913 $2,760 * Excludes general obligation revenue debt, revenue debt, and other debt obligations. CITY TAX RATES, LEVIES AND COLLECTIONS Tax Capacity Rates for a Resident in Independent School District No. 286 (Brooklyn Center) 2012/13 2013/14 2014/15 2015/16 2016/17 Hennepin County 49.461% 49.959% 46.398% 45.356% 44.087% City of Brooklyn Center 72.202 75.742 71.256 73.292 70.498 I.S.D. No. 286 (Brooklyn Center)(a) 56.031 54.422 52.984 54.573 40.438 Special Districts(b) 9.611 10.047 9.314 9.091 8.822 Total 187.305% 190.170% 179.952% 182.312% 163.845% (a) In addition, Independent School District No. 286 (Brooklyn Center) has a 201 6/17 market value tax rate of 0.12136% spread across the market value of property in support of an excess operating levy. (b) Special districts include Metropolitan Council, Metropolitan Transit, Metropolitan Mosquito Control, Hennepin Park Museum, Hennepin County Regional Rail Authority, and Three Rivers Park District. NOTE: This table includes only net tax capacity-based rates. Certain other tax rates are based on market value. See Appendix III. Tax Levies and Collections Collected During Collected and/or Abated Net Collection Year as of 12-31-15 Levy/Collect Levy* Amount Percent Amount Percent 2015/16 $15,676,933 (Not Yet Available) 2014/15 14,988,762 $14,770,223 98.5% $14,770,223 98.5% 2013/14 14,643,347 14,470,227 98.8 14,618,974 99.8 2012/13 14,590,560 14,444,534 99.0 14,590,560 100.0 2011/12 14,219,162 13,942,766 98.1 14,188,825 99.8 * The net levy excludes state aid for property tax relief and fiscal disparities, if applicable. Th e net levy is the basis for computing tax capacity rates. See Appendix III. - 15 - FUNDS ON HAND As of February 28, 2017 General Fund $ 9,016,141 Special Revenue Funds 2,875,689 Debt Service Funds 636,382 Capital Project Funds 11,246,227 Enterprise Fund 14,675,162 Internal Service 6,335,915 Total Cash and Investments $44,785,516 INVESTMENTS The City’s investment policy, last revised in April 2016, has the objectives of preserving safety of principal, retaining sufficient liquidity, providing a market rate of return, and yielding stable earnings on invested City funds. Investments of the City shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. Safety of principal is the foremost objective. Liquidity and yield are also important considerations. It is essential that the investment portfolio remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. The investment portfolio of the City shall be designed to attain a market -average rate of return during budgetary and economic cycles, taking into account the City’s investment risk constraints and liquidity needs. Return on investment is of least importance compared to the objectives for safety and liquidity. Securities shall be held to maturity with the exceptions of meeting the liquidity needs of the portfolio and minimizing loss of principal for a security of declining credit. Minnesota Statutes, Chapter 118A, authorizes and defines an investment program for municipal governments. The City may invest in the following instruments allowed by Minnesota Statutes: a. United States Securities: including bonds, notes, bills or other securities which are direct obligations of the United States, its agencies, its instrumentalities, or organizations created by an act of Congress, which carry the full faith and credit of the United States. b. Commercial paper issued by U.S. corporations or their Canadian subsidiaries that is rated i n the highest quality by at least two nationally recognized rating agencies and matures in 90 days or less. c. Certificates of Deposit (Time Deposits) that are fully insured by the Federal Deposit Insurance Corporation. d. Repurchase agreements and reverse repurchase agreements may be entered into with financial institutions identified by Minnesota Statutes, Chapter 118A. Reverse repurchase agreements may only be entered into for a period of 90 days or less and only to meet short-term cash flow needs. e. Securities lending agreements may be entered into with financial institutions identified by Minnesota Statutes, Chapter 118A. - 16 - 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, Chapter 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 maturity using surplus funds of the debt service fund set up for that issue. Such repurchased bonds shall be canceled and removed from the obligation of the fund. i. General obligation bonds of state or local governments rated A or better by a national bond rating services. j. Revenue obligations of state or local governments rated AA or better by a national bond rating agency. k. The Minnesota Municipal Money Market Fund (4M) that was established by th e League of Minnesota Cities to address the investment needs of the Minnesota cities. Authority to manage the investment program is vested in the City Manager, City Treasurer, and Assistant Finance Director, with the City Treasurer responsible for establi shing and maintaining an internal control structure to provide reasonable assurance that the objectives of the investment policy are met. As of February 28, 2017, the City had $44,347,109 (par value) invested, with a market value of $44,368,774 (100% of the original cost to the City plus amortized premium). The City’s investments include the following: $15,172,298 (34.21%) in government agency securities; $19,043,208 (42.94%) in certificates of deposit; $7,631,284 (17.21%) in money market accounts and $2,500,319 (5.64%) in municipal bonds. All of the investments in the City’s portfolio mature within 72 months or less. The longest investment held by the City is currently scheduled to mature in October of 2022. GENERAL INFORMATION CONCERNING THE CITY The City is a northern suburb of the Minneapolis/Saint Paul metropolitan area, adjacent to the City of Minneapolis. The City is wholly within Hennepin County and encompasses an area of approximately 8.5 square miles (5,440 acres). The Mississippi River forms the City’s eastern boundary. Population The City’s population trend is shown below. Percent Population Change 2015 MN Demographer Estimate 30,864 2.5% 2010 U.S. Census 30,104 3.2 2000 U.S. Census 29,172 1.0 1990 U.S. Census 28,887 (7.5) 1980 U.S. Census 31,230 -- Sources: Minnesota State Demographic Center, mn.gov/admin/demography and United States Census Bureau, http://www.census.gov/. - 17 - The City’s population by age group for the past four years is as follows: Data Year/ Report Year 0-17 18-34 35-64 65 and Over 2016/17 8,956 7,650 11,255 3,879 2015/16 8,906 7,664 11,211 3,847 2014/15 8,786 7,734 11,171 3,811 2013/14 8,696 7,621 11,042 3,763 Source: Claritas, Inc. and The Nielsen Company. Transportation Major transportation routes in and through the City, including Interstate Highways 94 and 694 and State Highways 100 and 252, have provided a continued impetus for the development of the City's commercial tax base. Major Employers Approximate Number Employer Product/Service of Employees Hennepin County Government 8,500 Promeon, Inc. (a division of Medtronic) Medical devices 1,100 Independent School District No. 286 (Brooklyn Center) Education 425 Luther Auto Group (three locations) Automobile dealership 341 City of Brooklyn Center Government 299* Walmart Retail 294* Caribou Coffee (Headquarters) Coffee retailer 225 University of Minnesota Physicians Healthcare 212 Maranatha Care Center, Presbyterian Homes Continuing care/retirement community 200* TCR Corporation Metal components 150 Cub Foods Grocery 130 Target Retail 120 Cass Screw Machine Products Screw machine parts 112 Health Partners-Brooklyn Center Medical and dental clinic 97 Sears Retail 46 * Includes full-time and part-time employees. Source: This does not purport to be a comprehensive list and is based on an April 2017 best efforts telephone survey of individual employers. Some employers do not respond to inquiries. - 18 - Labor Force Data Annual Average February 2013 2014 2015 2016 2017 Labor Force: City of Brooklyn Center 15,322 15,190 15,319 15,353 15,189 Hennepin County 669,800 674,658 679,549 683,629 678,413 Minneapolis-St. Paul Metro Area 1,909,871 1,923,003 1,938,857 1,952,204 1,942,461 State of Minnesota 2,955,266 2,961,331 2,975,533 3,001,131 2,999,305 Unemployment Rate: City of Brooklyn Center 6.1% 4.8% 4.4% 4.1% 4.9% Hennepin County 4.6 3.8 3.3 3.3 3.7 Minneapolis-St. Paul Metro Area 4.7 3.9 3.4 3.5 4.2 State of Minnesota 5.0 4.2 3.7 3.9 4.8 Source: Minnesota Department of Employment and Economic Development, https://apps.deed.state.mn.us/lmi/laus. 2017 data are preliminary. Retail Sales and Effective Buying Income (EBI) City of Brooklyn Center Data Year/ Total Retail Total Median Report Year Sales ($000) EBI ($000) Household EBI 2016/17 $623,655 $545,667 $40,885 2015/16 561,219 550,267 41,469 2014/15 505,332 531,155 40,188 2013/14 596,059 512,550 39,878 2012/13 703,490 483,895 37,788 Hennepin County Data Year/ Total Retail Total Median Report Year Sales ($000) EBI ($000) Household EBI 2016/17 $33,502,543 $40,956,757 $57,190 2015/16 26,004,909 38,495,032 55,756 2014/15 21,713,206 36,578,500 52,644 2013/14 21,457,980 34,013,567 50,131 2012/13 23,055,734 32,511,237 47,033 The 2016/17 Median Household EBI for the State of Minnesota was $54,485. The 201 6/17 Median Household EBI for the United States was $48,043. Source: Claritas, Inc. and The Nielsen Company. - 19 - Permits Issued by the City Total Permits Commercial Permits Residential Permits Year Number Value Number Value Number Value 2017 (to 2-28) 107 $ 1,330,245 25 $ 615,625 82 $ 714,620 2016 807 42,389,415 96 35,961,472 711 6,427,943 2015 798 25,173,241 112 18,348,998 686 6,824,243 2014 849 47,990,030 156 41,458,102 693 6,531,928 2013 1,867 34,866,050 217 21,857,116 1,650 13,008,934 2012 929 24,766,964 132 19,029,921 797 5,737,043 2011 752 54,499,418 105 50,193,835 647 4,305,583 2010 772 55,631,100 146 50,688,194 626 4,942,906 2009 773 15,201,903 153 10,497,326 620 4,704,577 Source: City of Brooklyn Center. Growth and Development Successful redevelopment continues to be the key to commercial and industrial tax base growth within the City, including the following: Shingle Creek Crossing. Shingle Creek Crossing is an 80-acre planned unit development that includes the redevelopment of the former Brookdale Mall. In 2011, a significant portion of Brookdale Mall w as removed and the City planned for redevelopment of a shopping center in this space. The initial phase, completed in 2012, included the partial daylighting of Shingle Creek and the infrastructure improvements for a Walmart store, 15 new building pads, and the renovation of the former Brookdale Mall. The second phase, completed in 2013, included construction of a LA Fitness building, and three retail buildings providing for new commercial tenant space. In 2014, demolition of the food court building occur red, as well as construction of additional retail buildings, a multi-tenant building, and a multi-tenant retail/restaurant building. Site plans were also approved for the remaining four lots within the former food court lot. In 2015, construction was completed on a Discount Tire Store, a Kid’s Foot Locker, Rue 21 and Villa; a lease was signed with Caribou Coffee and Bruegger’s Bagels; and an amendment was approved to add an additional 9,400 square-foot retail building to the former Kohl’s site. Business activity in 2016 included Wing Stop, Five Below, Nail & Spa, Rainbow Apparel and a P.U.D. application by HOM furniture to renovate the former Kohl’s building with a 24,000 square -foot medical office building. Opportunity Site. The southern portion of the 80-acre Opportunity Site comprises 46 acres planned for a mixed use commercial, office and residential. 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 site. On December 20, 2013, the City’s Economic Development Authority (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. In 2014, the EDA acquired an additional 1.6 acre site and 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. In 2016, the City Council approved the creation of a 25-year tax increment redevelopment district and completed the soil corrections and final demolition of the former Brookdale Ford building, floor lifts and underground LP tank. A new development concept which includes market rate apartments, senior independent and care apartments, town homes and a brew pub-restaurant was proposed by the Devean George Group and is currently being considered. - 20 - Luther Auto Group. 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. In 2013, the City received 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 to open up space for a sixth dealership along I-694. In 2014, Luther demolished the old Honda dealership buildings, began construction of the new Volkswagen dealership, and completed the expansion of Honda sales lot. The Volkswagen dealership opened in 2015. Additionally, Luther’s master plans for this area include an additional dealership with frontage along I-694. One of the two buildings that occupied this future dealership site, Atlantic Pool, was demolished in 2015. Industrial Redevelopment. 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, the Minnesota Department of Employment and Economic Development and the Metropolitan 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-foot building, which was completed in 2015. Additional Development. The EDA acquired the former Chrysler Auto Dealership, also known as Cars with Heart, a 5 -acre commercial site located 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 will provide affordable assisted care opportunities for senior citizens. In 2016, City Council established a tax increment housing district, approved a tax increment development agreement, and provided the necessary zoning and site development approvals for the Sanctuary at Brooklyn Center. Construction began in November 2016 and is scheduled to be completed by December 2017 and ready for occupancy by late spring 2018. 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 the 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 County Road 10/Bass Lake Road). Construction is planned for 2018. In 2015, construction of the New Millennium Academy, a 550 student capacity Charter School, completed on the former Malmborg’s Nursery site and opened in the fall of 2016. In 2016, construction began on Phase II of the Maranatha Senior Campus (34 independent living senior apartment units). Occupancy is scheduled for the summer of 2017. - 21 - Financial Institutions* City residents are served by branch facilities of Wells Fargo Bank, National Association; Bremer Bank, National Association; and TCF National Bank, as well as numerous credit unions. * This does not purport to be a comprehensive list. Source: Federal Deposit Insurance Corporation, https://research.fdic.gov/bankfind/. Health Care Services The following is a summary of inpatient health care facilities located in and around the City: Facility Location No. of Beds Maranatha Care Center City of Brooklyn Center 97 Nursing Home Living Well Lyndale City of Brooklyn Center 8 Supervised Living Brooklyn Center Outreach Home City of Brooklyn Center 6 Supervised Living North Memorial Medical Center City of Robbinsdale 518 Hospital 42 Infant Bassinets Unity Hospital City of Fridley 275 Hospital Source: Minnesota Department of Health, http://www.health.state.mn.us/. Education Public Education The following districts serve the residents of the City: 2016/17 School Location Grades Enrollment ISD No. 11 (Anoka-Hennepin) City of Anoka K-12 38,739 ISD No. 279 (Osseo) City of Osseo K-12 20,847 ISD No. 281 (Robbinsdale) City of Robbinsdale K-12 12,553 ISD No. 286 (Brooklyn Center) City of Brooklyn Center K-12 2,415 Source: Minnesota Department of Education, www.education.state.mn.us. The City’s taxable net tax capacity is attributable to each of the four school districts as follows: Portion of 2015/16 Taxable Net Tax Capacity Located in the City % of Total ISD No. 286 (Brooklyn Center)* $ 6,994,194 32.4% ISD No. 279 (Osseo) 6,828,607 31.7 ISD No. 281 (Robbinsdale) 4,832,955 22.4 ISD No. 11 (Anoka-Hennepin) 2,914,663 13.5 Total $21,570,419 100.0% * Independent School District No. 286 is located entirely within the City of Brooklyn Center. - 22 - Non-Public Education City residents are also served by the following private schools: 2016/17 School Location Grades Enrollment Sacred Heart Catholic School City of Robbinsdale K-8 179 King of Grace Lutheran School City of Golden Valley K-8 173 St. Raphael Catholic School City of Crystal K-8 147 St. Alphonsus City of Brooklyn Center K-8 138 RiverTree School City of Crystal K-12 110 Holy Trinity Lutheran School City of New Hope K-8 62 Future Leaders Learning City of Brooklyn Center K-7 9 Source: Minnesota Department of Education, www.education.state.mn.us. Post-Secondary Education City residents have access to various colleges and universities located throughout the Minneapolis/St. Paul metropolitan area. GOVERNMENTAL ORGANIZATION AND SERVICES Organization The City has been a municipal corporation since 1911 and is governed under a Home Rule Charter adopted in 1966 and subsequently amended. The City has a Council-Manager form of government and the Mayor and four Council Members are elected to serve overlapping four-year terms. The following individuals comprise the current City Council: Expiration of Term Tim Willson Mayor December 31, 2018 Marquita Butler Council Member December 31, 2020 April Graves Council Member December 31, 2018 Kris Lawrence-Anderson Council Member December 31, 2020 Dan Ryan Council Member December 31, 2018 The City Manager, Mr. Cornelius L. Boganey, is responsible for the administration of Council policy and the daily management of the City. The Manager is appointed by the Council and serves at its discretion. Mr. Boganey has served the City in this position since June 2006. Prior to that, Mr. Boganey served as the City's Assistant Manager since March 2003. He has also served as City Manager in the cities of Brooklyn Park, Minnesota and Port Arthur, Texas, and as Assistant City Manager in the City of Kalamazoo, Michigan. The Finance Director, Mr. Nathan Reinhardt, is responsible for directing the City’s financial operations, including preparation of the comprehensive annual financial report and interim reports, and the investment of City funds. Mr. Reinhardt has served as the City’s Finance Director since November 2013. Previously, Mr. Reinhardt served as Finance Director for the City of Waseca, Minnesota. The City has 159 regular full-time and 140 seasonal full- and part-time employees. - 23 - Services Forty-nine full-time sworn police officers and a support staff of 9 provide protective services in the City. Fire protection is provided by one full-time Chief, one full-time Deputy Chief, one full-time fire inspector/educator, and a 29-member volunteer force. The City has 2 fire stations and a class 4 insurance rating. All areas of the City are serviced by municipal water and sewer systems, with exception to one property located at 5306 Perry Avenue North. Water is supplied by nine wells and storage is provided by three elevated tanks with a combined total capacity of 3.0 million gallons. The municipal water system has a pumping capacity of 16.4 million gallons per day (mgd). In 2016, the City brought a new water treatment plant online, capable of filtering 10 mgd. When combined with the capacity of 1.7 mdg from Well #2, the City now has a total finished water capacity of 11.7 mgd. The average daily water demand is estimated to be 3.4 mgd and peak demand is estimated to be 9.7 mgd. Water connections totaled 8,933 as of February 13, 2017. Although the City owns and maintains its own sanitary and storm sewer collection systems, wastewater treatment facilities are owned and operated by the Metropolitan Council Environmental Services (MCES). The City is billed an annual service charge by MCES, which is adjusted each year based on the prior years’ actual usage. The City had 8,788 sewer connections as of February 13, 2017. The City owns and operates the Earle Brown Heritage Center, a convention center with catering se rvices and commercial office rentals. The Earle Brown Heritage Center is a unique and spacious event center located on the site of an historic estate in Brooklyn Center. Awarded the WeddingWire Couples’ Choice in 2015, the venue boasts more than 40,000 square feet of space, with intimate meeting rooms hosting groups in size from 6 to 1,200. The Earle Brown Heritage Center hosts approximately 500 events annually and includes a full staff of event specialists, an in-house Executive Chef, audio visual and free onsite parking. City offices are located in the City's Civic Center, which also includes community facilities such as exercise and game rooms, classrooms, craft rooms, a 300-seat hall, and a 50-meter indoor swimming pool. The City maintains 520 acres of parkland, much of which is located along Shingle Creek forming a “green way” north to south through the City. Recreational facilities include a par 3 nine-hole golf course, 20 playgrounds, softball and baseball diamonds, basketball courts, tennis courts, hockey and skating rinks, nature areas, trails, and an arboretum. Labor Contracts The status of labor contracts in the City are as follows: Expiration Date Bargaining Unit No. of Employees of Current Contract IUOE Local 49 25 December 31, 2018 LELS Local 82 39 December 31, 2017 LELS Local 86 9 December 31, 2018 Subtotal 73 Non-unionized employees 226 Total employees 299 - 24 - Employee Pensions All full-time employees and certain part-time employees of the City are covered by defined benefit pension plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the General Employees Retirement Fund (GERF) and the Public Employees Police and Fire Fund (PEPFF), which are cost-sharing multiple-employer retirement plans. GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated members are covered by Social Security and Basic members are not. All new members must participate in the Coordinated Plan. All police officers, fire fighters and peace officers who qualify for membership by statute are covered by PEPFF. The City’s contributions to GERF and PEPFF are equal to the contractually required contributions for each year as set by State Statute, and are as follows for the past five years: GERF PEPFF 2016 (unaudited) $550,846 $694,601 2015 564,168 687,935 2014 531,385 600,402 2013 521,512 560,053 2012 498,832 544,497 For more information regarding the liability of the City with respect to its employees, please reference “Note 4. Defined Benefit Pension Plan – City Employees” of the City’s Comprehensive Annual Financial Report for fiscal year ended December 31, 2015, an excerpt of which is included as Appendix IV of this Official Statement. (The City’s Comprehensive Annual Financial Report for the fiscal year ended December 31, 2016 is not yet available.) Multiple-Employer Defined Benefit Pension City employees belonging to the International Union of Operating Engineers (IUOE) are participants in a multiple-employer defined benefit pension plan, the 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 to employers that are not state or local governmental employers, and has no predominate 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 City’s contributions to the plan are pursuant to a collective bargaining agreement with the IUOE which expires December 31, 2018. The required contribution rate is $0.96 per hour, which is applied to all compensated hours, and capped at $5,000 per year. With regards 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. The City’s contributions to IOUE for the past five years are as follows: IUOE 2016 (unaudited) $51,410 2015 51,699 2014 51,868 2013 52,046 2012 51,636 - 25 - For more information regarding the liability of the City with respect to its employees, please reference “Note 6. Multiple-Employer Defined Benefit Pension Plan” of the City’s Comprehensive Annual Financial Report for fiscal year ended December 31, 2015, an excerpt of which is included as Appendix IV of this Official Statement. (The City’s Comprehensive Annual Financial Report for the fiscal year ended December 31, 2016 is not yet available.) PEDCP Five 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 the time of withdrawal. Plan benefits depend solely on the amounts contributed to the plan plus investment earnings less administrative expenses. An eligible elected official who chooses to participate in the plan contributes 5% of their salary, which is matched by the elected official’s employer. PERA receives 2% of employer contributions and 0.025% of the assets in each member’s account annually for administering the plan. The City’s contributions to PEDCP for the past four years are as follows: PEDCP 2016 (unaudited) $907 2015 907 2014 907 2013 880 For more information regarding the liability of the City with respect to its employees, please reference “Note 7. Defined Contribution Plan” of the City’s Comprehensive Annual Financial Report for fiscal year ended December 31, 2015, an excerpt of which is included as Appendix IV of this Official Statement. (The City’s Comprehensive Annual Financial Report for the fiscal year ended December 31, 2016 is not yet available.) City Firefighter’s Association 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 the Minnesota State Statutes 424A, and provides benefits in accordance with those statutes. The Association provides retirement benefits to members and survivors upon death of eligible members. Benefits are established by the Association and approved by the City Council under the applicable statutes. The defined retirement benefits are based on a member’s years of service. Vesting begins after the tenth year of service with a 60% benefit increasing to 100% after the 20th year of service. Full benefits are available to members after 20 years of service and having attained the age of 50. The current benefit available is a lump sum distribution of $7,600 per year of service. 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 of membership. The City levies property taxes at the direction of and for the benefit of this plan and passes through state aids allocated to the plan, all in accordance with State statutes. The minimum tax levy obligation is th e financial contribution requirement for the year less anticipated state aids. - 26 - The City’s contributions to the Firefighter’s Association for the past five years are as follows: Annual Percentage Net Year Pension of APC Pension Ending Cost (APC) Contributed Obligation December 31, 2016 (unaudited) $101,453 141% $0 December 31, 2015 101,453 156 -0- December 31, 2014 108,883 129 -0- December 31, 2013 100,728 147 -0- December 31, 2012 105,244 144 -0- Funded status of the Association as reported to-date: Assets in Actuarial Excess of Actuarial Actuarial Value Accrued Unfunded Accrued Funded Valuation Date of Assets Liability Liability Ratio January 1, 2015 $3,508,210 $3,084,717 $ 423,493 113.7% January 1, 2013 3,282,317 3,279,231 3,086 100.1 January 1, 2011 3,303,595 3,253,686 49,909 101.5 January 1, 2009 2,654,832 3,240,590 (585,758) 81.9 January 1, 2007 4,024,987 3,713,292 311,695 108.4 For more information regarding the liability of the City with respect to its employees, please refe rence “Note 5. Defined Benefit Pension Plan – Single Employer – Fire Relief Association” of the City’s Comprehensive Annual Financial Report for fiscal year ended December 31, 2015, an excerpt of which is included as Appendix IV of this Official Statement. (The City’s Comprehensive Annual Financial Report for the fiscal year ended December 31, 2016 is not yet available.) Sources: City’s Comprehensive Annual Financial Reports. GASB 68 The Government Accounting Standards Board (GASB) has issued Statement No. 68, Accounting and Financial Reporting for Pensions (GASB 68) and related GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date-an amendment to GASB 68, which revised existing standards for measuring and reporting pension liabilities for pension plans provided to City employees and require recognition of a liability equal to the City’s proportionate share of net pension liability, which is measured as the total pension liability less the amount of the pension plan's fiduciary net position. The City’s proportionate shares of the pension costs and the City’s net pension liability for GERF and PEPFF for the past two years are as follows: Proportionate Net Proportionate Net Share of Pension Share of Pension Pension Costs Liability Pension Costs Liability 2016 (unaudited) 0.1172% $9,516,059 0.4290% $17,216,516 2015 0.1243 6,441,872 0.4460 5,067,604 For more information regarding GASB 68 with respect to the City, please reference “Note 4. Defined Benefit Pension Plan” of the City’s Comprehensive Annual Financial Report for fiscal year ended December 31, 2015, an excerpt of which is included as Appendix IV of this Official Statement. (The City’s Comprehensive Annual Financial Report for the fiscal year ended December 31, 2016 is not yet available.) - 27 - Additional and detailed information about GERF’s net position is available in a separately-issued PERA financial report, which may be obtained at www.mnpera.org; by writing to PERA at 60 Empire Drive #200, St. Paul, Minnesota, 55103-2088; or by calling 1-800-652-9026. Sources: City’s Comprehensive Annual Financial Reports. Other Post-Employment Benefits The City provides continued health insurance coverage for retired City employees who, on the date of their retirement, meet PERA or PEPFF eligibility requirements for a full retirement annuity, without reduction of benefits because of age, disability, or any other reason. This coverage does not extend to the retiree’s family, except that if the retiree desires to continue additional coverage, the cost in excess of the single premium must be paid by the retiree. This benefit began in 1986 and was subsequently discontinued for employees hired after January 31, 1992. As of December 31, 2016, the City had 166 eligible participants. The City currently finances the plan on a pay-as-you-go basis. During 2016, the City expended $162,392 for these benefits. With the advent of GASB Statement 45, the City has engaged actuaries to provide biennial actuarial valuation reports. Under GASB 45 such costs must be accounted for on an accrual basis. The City must report an annual OPEB cost based on actuarially determined amounts that, if paid on an ongoing basis, will provide sufficient resources to pay these benefits. The most recent actuarial report is dated January 1, 2016, for a valuation date of December 31, 2016. Components of the City’s annual OPEB cost, the amount actually contributed to the plan, and the changes in the City’s net OPEB obligation to the plan for the fiscal year ended December 31, 2016 (unaudited) are as follows: Annual required contribution $ 172,350 Interest on net OPEB obligation 31,977 Adjustment to annual required contribution (27,739) Annual OPEB cost (expense) $176,588 Contributions made: Direct $169,896 Indirect Implicit Rate Subsidy (7,504) Increase in net OPEB obligation $ 14,196 Net OPEB obligation – beginning of year 710,605 Net OPEB obligation – end of year $724,801 Funded status of the City’s OPEB as reported in the actuarial reports received to-date: Unfunded UAAL as a Actuarial Actuarial Percentage of Actuarial Accrued Accrued Covered Covered Valuation Date Liability (AAL) Liability (UAAL) Payroll Payroll January 1, 2016 $2,620,367 $2,620,367 $9,472,237 27.66% January 1, 2014 2,574,529 2,574,529 9,934,960 25.91 January 1, 2012 2,620,367 2,620,367 9,472,237 27.66 - 28 - Required contributions as reported in the actuarial reports received to-date: Annual Net Fiscal OPEB Employer % of Annual OPEB OPEB Year Ended Cost Contributions Cost Contributed Obligation December 31, 2016* $176,587 $162,392 91.96% $724,800 December 31, 2015 229,237 148,626 64.84 710,605 December 31, 2014 226,724 182,756 80.61 629,994 December 31, 2013 238,744 140,071 58.67 586,026 December 31, 2012 235,915 159,375 67.56 487,353 * Unaudited. For more information regarding the liability of the City with respect to its employees, please reference “Note 8. Other Post-Employment Benefits” of the City’s Comprehensive Annual Financial Report for fiscal year ended December 31, 2015, an excerpt of which is included as Appendix IV of this Official Statement. (The City’s Comprehensive Annual Financial Report for the fiscal year ended December 31, 2016 is not yet available.) Sources: City’s Comprehensive Annual Financial Reports. General Fund Budget Summary 2016 Budget 2016 Estimated 2017 Budget January 1 Fund Balance $11,170,917 $11,170,917 $11,440,897 Revenues: Taxes $16,003,749 $16,128,373 $16,708,667 Licenses and Permits 806,850 932,051 728,555 Intergovernmental 1,386,437 1,466,341 1,430,253 Charges for Services 813,397 765,831 834,095 Fines & Forfeits 301,500 211,712 262,500 Special Assessments 130,000 122,988 130,000 Investment Earnings 74,526 66,355 77,990 Transfers In 150,000 134,605 150,000 Miscellaneous 116,700 298,154 125,950 Total Revenues $19,783,159 $20,126,410 $20,448,010 Expenditures: General Government $ 3,757,001 $ 3,019,888 $ 3,897,533 Public Safety 10,569,024 10,067,963 10,918,534 Public Works 3,735,795 1,918,330 3,786,811 CARS 1,627,484 2,627,958 1,668,962 Non-Departmental 953,643 1,214,940 1,031,654 Transfers Out (856,788)* 1,007,351 (855,484)* Total Expenditures $19,786,159 $19,856,430 $20,448,010 December 31 Fund Balance $11,167,917 $11,440,897 $11,440,897 * Budgeted transfers out include reimbursements of administrative expenses from other funds. Sources: City’s Comprehensive Annual Financial Reports and 2017 Budget. - 29 - Major General Fund Revenue Sources Revenue 2011 2012 2013 2014 2015 Taxes $13,253,417 $14,266,612 $15,017,242 $14,991,781 $15,532,039 Intergovernmental 934,948 966,479 1,086,162 1,401,447 1,410,695 Licenses and Permits 961,947 858,593 1,084,003 1,021,410 859,534 Charges for Services 1,098,334 1,046,626 990,123 810,597 749,569 Fines & Forfeits 340,356 336,740 160,755 312,130 268,116 Sources: City’s Comprehensive Annual Financial Reports. APPENDIX I ____________________________ * Preliminary; subject to change. I-1 PROPOSED FORM OF LEGAL OPINION $8,830,000* General Obligation Improvement and Utility Revenue Bonds, Series 2017A City of Brooklyn Center Hennepin, Minnesota We have acted as bond counsel to the City of Brooklyn Center, Hennepin, Minnesota (the “Issuer”) in connection with the issuance by the Issuer of its General Obligation Improvement and Utility Revenue Bonds, Series 2017A (the “Bonds”), originally dated the date hereof and issued in the original aggregate principal amount of $8,830,000*. In such capacity and for the purpose of rendering this opinion we have examined certified copies of certain proceedings, certifications and other documents, and applicable laws as we have deemed necessary. Regarding questions of fact material to this opinion, we have relied on certified proceedings and other certifications of public officials and other documents furnished to us without undertaking to verify the same by independent investigation. Under existing laws, regulations, rulings and decisions in effect on the date hereof, and based on the foregoing we are of the opinion that: 1. The Bonds have been duly authorized and executed, and are valid and binding general obligations of the Issuer, enforceable in accordance with their terms. 2. The principal of and interest on the Bonds are payable primarily from special assessments levied or to be levied on property specially benefited by local improvements and revenues of the water, storm drainage and sanitary sewer utility systems of the Issuer, but if necessary for the payment thereof ad valorem taxes are required by law to be levied on all taxable property of the Issuer, whi ch taxes are not subject to any limitation as to rate or amount. 3. Interest on the Bonds is excludable from gross income of the recipient for federal income tax purposes and, to the same extent, is excludable from taxable net income of individuals, trusts, and estates for Minnesota income tax purposes, and is not a preference item for purposes of the computation of the federal alternative minimum tax, or the computation of the Minnesota alternative minimum tax imposed on individuals, trusts and estates. However, such interest is taken into account in determining adjusted current earnings for the purpose of computing the federal alternative minimum tax imposed on certain corporations and is subject to Minnesota franchise taxes on corporations (including financial institutions) measured by income. The opinion set forth in this paragraph is subject to the condition that the Issuer comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excludable from gross income for federal income tax purposes and from taxable net income for Minnesota income tax purposes. The Issuer has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes and taxable net income for Minnesota income tax purposes retroactively to the date of issuance of the Bonds. We express no opinion regarding tax consequences arising with respect to the Bonds other than as expressly set forth herein. 4. The rights of the owners of the Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting creditor’s rights generally and by equitable principles, whether considered at law or in equity. We have not been asked and have not undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds, and accordingly we express no opinion with respect thereto. I-2 This opinion is given as of the date hereof and we assume no obligation to update, revise, or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. Dated __________, 2017 at Minneapolis, Minnesota. APPENDIX II ____________________________ * Preliminary; subject to change. II-1 CONTINUING DISCLOSURE CERTIFICATE $8,830,000* City of Brooklyn Center, Minnesota General Obligation Improvement and Utility Revenue Bonds, Series 2017A ___________, 2017 This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and delivered by the City of Brooklyn Center, Minnesota (the “Issuer”) in connection with the issuance of its General Obligation Improvement and Utility Revenue Bonds, Series 2017A, (the “Bonds”) in the original aggregate principal amount of $8,830,000*. The Bonds are being issued pursuant to resolutions adopted by the City Council of the Issuer (the “Resolutions”). The Bonds are being delivered to __________________________________ in _____________, _____________ (the “Purchaser”) on the date hereof. Pursuant to the Resolutions, the Issuer has covenanted and agreed to provide continuing disclosure of certain financial information and operating data and timely notices of the occurrence of certain events. The Issuer hereby covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Issuer for the benefit of the Holders (as defined herein) of the Bonds in order to provide for the public availability of such information and assist the Participating Underwriter(s) (defined herein) in complying with the Rule (as defined herein). This Disclosure Certificate, together with the Resolutions, constitutes the written agreement or contract for the benefit of the Holders of the Bonds that is required by the Rule. Section 2. Definitions. In addition to the defined terms set forth in the Resolutions, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: “Annual Report” means any annual report provided by the Issuer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Audited Financial Statements” means the Issuer’s annual financial statements, prepared in accordance with generally accepted accounting principles (“GAAP”) for Governmental Units as Prescribed by the Governmental Accounting Standards Board (“GASB”). “Bonds” means the General Obligation Improvement and Utility Revenue Bonds, Series 2017A, issued by the Issuer in the original aggregate principal amount of $8,830,000. “Disclosure Certificate” means this Continuing Disclosure Certificate. “EMMA” means the Electronic Municipal Market Access system operated by the MSRB and designated as a nationally recognized municipal securities information repository and the exclusive portal for complying with the continuing disclosure requirements of the Rule. “Final Official Statement” means the deemed final official statement dated ________, 2017, which constitutes the final official statement delivered in connection with the Bonds, which is available from the MSRB. II-2 “Fiscal Year” means the fiscal year of the Issuer. “Holder” means the person in whose name a security is registered or a beneficial owner of such a security. “Issuer” means the City of Brooklyn Center, Minnesota, which is the obligated person with respect to the Bonds. “Material Event” means any of the events listed in Section 5(a) of this Disclosure Certificate. “MSRB” means the Municipal Securities Rulemaking Board located at 1300 I Street NW, Suite 1000, Washington, DC 20005. “Participating Underwriter” means any of the original underwriter(s) of the Bonds (including the Purchaser) required to comply with the Rule in connection with the offering of the Bonds. “Purchaser” means _____________________, ___________, _____________. “Repository” means EMMA, or any successor thereto designated by the SEC. “Rule” means SEC Rule 15c2-12(b)(5) promulgated by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time, and including written interpretations thereof by the SEC. “SEC” means the Securities and Exchange Commission. Section 3. Provision of Annual Financial Information and Audited Financial Statements. (a) The Issuer shall provide, as soon as available, but not later than 12 months after the end of the Fiscal Year commencing with the year that ends December 31, 2016, the Repository with an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Certificate; provided that the Audited Financial Statements of the Issuer may be submitted separately from the balance of the Annual Report and will be submitted as soon as available. (b) If the Issuer is unable or fails to provide to the Repository an Annual Report by the date required in subsection (a), the Issuer shall send a notice of that fact to the Repository and the MSRB. (c) The Issuer shall determine each year prior to the date for providing the Annual Report the name and address of each Repository. Section 4. Content of Annual Reports. The Issuer’s Annual Report shall contain or incorporate by reference the following sections of the Final Official Statement: 1. City Property Values 2. City Indebtedness 3. City Tax Rates, Levies and Collections In addition to the items listed above, the Annual Report shall include Audited Financial Statements submitted in accordance with Section 3 of this Disclosure Certificate. II-3 Any or all of the items listed above may be incorporated by reference from other documents, including official statements of debt issues of the Issuer or related public entities, which have been submitted to the Repository or the SEC. If the document incorporated by reference is a final official statement, it must also be available from the MSRB. The Issuer shall clearly identify each such other document so incorporated by reference. Section 5. Reporting of Material Events. (a) This Section 5 shall govern the giving of notice of the occurrence of any of the following events (“Material Events”) with respect to the Bonds: 1. Principal and interest payment delinquencies; 2. Non-payment related defaults, if material; 3. Unscheduled draws on debt service reserves reflecting financial difficulties; 4. Unscheduled draws on credit enhancements reflecting financial difficulties; 5. Substitution of credit or liquidity providers, or their failure to perform; 6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701–TEB) or other material notices or determinations with respect to the tax status of the securit y, or other material events affecting the tax status of the security; 7. Modifications to rights of security holders, if material; 8. Bond calls, if material, and tender offers; 9. Defeasances; 10. Release, substitution, or sale of property securing repayment of the securities, if material; 11. Rating changes; 12. Bankruptcy, insolvency, receivership or similar event of the obligated person; 13. The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; 14. Appointment of a successor or additional trustee or the change of name of a trustee, if material; and 15. Failure of an issuer or obligated person to provide annual financial information as required. (b) The Issuer shall file a notice of such occurrence with the Repository or with the MSRB within 10 business days of the occurrence of the Material Event. II-4 (c) Unless otherwise required by law and subject to technical and economic feasibility, the Issuer shall employ such methods of information transmission as shall be requested or recommended by the designated recipients of the Issuer’s information. Section 6. EMMA. The SEC has designated EMMA as a nationally recognized municipal securities information repository and the exclusive portal for complying with the continuing disclosure requirements of the Rule. Until the EMMA system is amended or altered by the MSRB and the SEC, the Issuer shall make all filings required under this Disclosure Certificate solely with EMMA. Section 7. Termination of Reporting Obligation. The Issuer’s obligations under the Resolutions and this Disclosure Certificate shall terminate upon the legal defeasance, or upon the redemption or payment in full of all the Bonds. Section 8. Agent. The Issuer may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obligations under the Resolutions and this Disclosure Certificate, and may discharge any such agent, with or without appointing a successor dissemination agent. Section 9. Amendment; Waiver. Notwithstanding any other provision of the Resolutions or this Disclosure Certificate, the Issuer may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, if such amendment or waiver is supported by an opinion of nationally recognized bond counsel to the effect that such amendment or waiver would not, in and of itself, cause a violation of the Rule. The provisions of the Resolutions constituting the undertaking and this Disclosure Certificate, or any provision hereof, shall be null and void in the event that the Issuer delivers to the Repository an opinion of nationally recognized bond counsel to the effect that those portions of the Rule which require the Resolutions and this Disclosure Certificate are invalid, have been repealed retroactively or otherwise do not apply to the Bonds. The provisions of the Resolutions and this Disclosure Certificate may be amended without the consent of the Holders of the Bonds, but only upon the delivery by the Issuer to the Repository of the proposed amendment and an opinion of nationally recognized bond counsel to the effect that such amendment, and giving effect thereto, will not adversely affect the compliance of the Resolutions and this Disclosure Certificate and by the Issuer with the Rule. Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is required by this Disclosure Certificate. If the Issuer chooses to include any information in any Annual Report or notice of occurrence of a Material Event in addition to that which is specifically required by this Disclosure Certificate, the Issuer shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Material Event. Section 11. Default. In the event of a failure of the Issuer to comply with any provision of this Disclosure Certificate any Holder of the Bonds may take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order, to cause the Issuer to comply with its obligations under the Resolutions and this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an event of default with respect to the Bonds and the sole remedy under this Disclosure Certificate in the event of any failure of the Issuer to comply with this Disclosure Certificate shall be an action to compel performance. Section 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Issuer, the Participating Underwriters and Holders from time to time of the Bonds, and shall create no rights in any other person or entity. II-5 IN WITNESS WHEREOF, we have executed this Disclosure Certificate in our official capacities effective as of the date and year first written above. CITY OF BROOKLYN CENTER, MINNESOTA By __________________________________________ Its Mayor By _________________________________________ Its Manager APPENDIX III III-1 SUMMARY OF TAX LEVIES, PAYMENT PROVISIONS, AND MINNESOTA REAL PROPERTY VALUATION Following is a summary of certain statutory provisions relative to tax levy procedures, tax payment and credit procedures, and the mechanics of real property valuation. The summary does not purport to be inclusive of all such provisions or of the specific provisions discussed, and is qualified by reference to the complete text of applicable statutes, rules and regulations of the State of Minnesota. Property Valuations (Chapter 273, Minnesota Statutes) Assessor's Estimated Market Value. Each parcel of real property subject to taxation must, by statute, be appraised at least once every five years as of January 2 of the year of appraisal. With certain exceptions, all property is valued at its market value, which is the value the assessor determines to be the price the property to be fairly worth, and which is referred to as the “Estimated Market Value.” The 2013 Minnesota Legislature established the Estimated Market Value as the value used to calculate a municipality’s legal debt limit. Economic Market Value. The Economic Market Value is the value of locally assessed real property (Assessor’s Estimated Market Value) divided by the sales ratio as provided by the State of Minnesota Department of Revenue plus the estimated market value of personal property, utilities, railroad, and minerals. Taxable Market Value. The Taxable Market Value is the value that Net Tax Capacity is based on, after all reductions, limitations, exemptions and deferrals. Net Tax Capacity. The Net Tax Capacity is the value upon which net taxes are levied, extended and collected. The Net Tax Capacity is computed by applying the class rate percentages specific to each type of property classification against the Taxable Market Value. Class rate percentages vary depending on the type of property as shown on the last page of this Appendix. The formulas and class rates for converting Taxable Market Value to Net Tax Capacity represent a basic element of the State's property tax relief system and are subject to annual revisions by the Sta te Legislature. Property taxes are the sum of the amounts determined by (i) multiplying the Net Tax Capacity by the tax capacity rate, and (ii) multiplying the referendum market value by the market value rate. Market Value Homestead Exclusion. In 2011, the Market Value Homestead Exclusion Program (MVHE) was implemented to offset the elimination of the Market Value Homestead Credit Program that provided relief to certain homesteads. The MVHE reduces the taxable market value of a homestead with an Assessor’s Estimated Market Value up to $413,800 in an attempt to result in a property tax similar to the effective property tax prior to the elimination of the homestead credit. The MVHE applies to property classified as Class 1a or 1b and Class 2a, and causes a decrease in the City’s aggregate Taxable Market Value, even if the Assessor’s Estimated Market Value on the same properties did not decline. Property Tax Payments and Delinquencies (Chapters 275, 276, 277, 279-282 and 549, Minnesota Statutes) Ad valorem property taxes levied by local governments in Minnesota are extended and collected by the various counties within the State. Each taxing jurisdiction is required to certify the annual tax levy to the county auditor within five (5) working days after December 20 of the year preceding the collection year. A listing of property taxes due is prepared by the county auditor and turned over to the county treasurer on or before the first business day in March. III-2 The county treasurer is responsible for collecting all property taxes within the county. Real estate and personal property tax statements are mailed out by March 31. One-half (1/2) of the taxes on real property is due on or before May 15. The remainder is due on or before October 15. Real property taxes not paid by their due date are assessed a penalty on homestead property of 2% until May 31 and increased to 4% on June 1. The penalty on nonhomestead property is assessed at a rate of 4% until May 31 and increased to 8% on June 1. Thereafter, an additional 1% penalty shall accrue each month through October 1 of the collection year for unpaid real property taxes. In the case of the second installment of real property taxes due October 15, a penalty of 2% on homestead property and 4% on nonhomestead property is assessed. The penalty for homestead property increases to 6% on November 1 and again to 8% on December 1. The penalty for nonhomestead property increases to 8% on November 1 and again to 12% on December 1. Personal property taxes remaining unpaid on May 16 are deemed to be delinquent and a penalty of 8% attaches to the unpaid tax. However, personal property that is owned by a tax -exempt entity, but is treated as taxable by virtue of a lease agreement, is subject to the same delinquent property tax penalties as real property. On the first business day of January of the year following collection all delinquencies are subject to an additional 2% penalty, and those delinquencies outstanding as of February 15 are filed for a tax lien judgment with the district court. By March 20 the county auditor files a publication of legal action and a mailing of notice of action to delinquent parties. Those property interests not responding to this notice have judgment entered for the amount of the delinquency and associated penalties. The amount of the judgment is subject to a variable interest determined annually by the Department of Revenue, and equal to the adjusted prime rate charged by banks but in no event is the rate less than 10% or more than 14%. Property owners subject to a tax lien judgment generally have three years (3) to redeem the property. After expiration of the redemption period, unredeemed properties are declared tax forfeit with title held in trust by the State of Minnesota for the respective taxing districts. The county auditor, or equivalent thereof, then sells those properties not claimed for a public purpose at auction. The net proceeds of the sale are first dedicated to the satisfaction of outstanding special assessments on the parcel, with any remaining balance in most cases being divided on the following basis: county - 40%; town or city - 20%; and school district - 40%. Property Tax Credits (Chapter 273, Minnesota Statutes) In addition to adjusting the taxable value for various property types, primary elements of Minnesota's property tax relief system are: property tax levy reduction aids; the homestead credit refund and the renter’s property tax refund, which relate property taxes to income and provide relief on a sliding income scale; and targeted tax relief, which is aimed primarily at easing the effect of significant tax increases. The homestead credit refund, the renter’s property tax refund, and targeted credits are reimbursed to the taxpayer upon application by the taxpayer. Property tax levy reduction aid includes educational aids, local governmental aid, equalization aid, county program aid and disparity reduction aid. Debt Limitations All Minnesota municipalities (counties, cities, towns and school districts) are subject to statutory “net debt” limitations under the provisions of Minnesota Statutes, Section 475.53. Net debt is defined as the amount remaining after deducting from gross debt the amount of current revenues that are applicable within the current fiscal year to the payment of any debt and the aggregate of the principal of the following: 1. Obligations issued for improvements that are payable wholly or partially from the proceeds of special assessments levied upon benefited property. 2. Warrants or orders having no definite or fixed maturity. 3. Obligations payable wholly from the income from revenue producing conveniences. III-3 4. Obligations issued to create or maintain a permanent improvement revolving fund. 5. Obligations issued for the acquisition and betterment of public waterworks systems, and public lighting, heating or power systems, and any combination thereof, or for any other public convenience from which revenue is or may be derived. 6. Certain debt service loans and capital loans made to school districts. 7. Certain obligations to repay loans. 8. Obligations specifically excluded under the provisions of law authorizing their issuance. 9. Certain obligations to pay pension fund liabilities. 10. Debt service funds for the payment of principal and interest on obligations other than those described above. 11. Obligations issued to pay judgments against the municipality. Levies for General Obligation Debt (Sections 475.61 and 475.74, Minnesota Statutes) Any municipality that issues general obligation debt must, at the time of issuance, certify levies to the county auditor of the county(ies) within which the municipality is situated. Such levies shall be in an amount that if collected in full will, together with estimates of other revenues pledged for payment of the obligations, produce at least five percent in excess of the amount needed to pay principal and interest when due. Notwithstanding any other limitations upon the ability of a taxing unit to levy taxes, its ability to levy taxes for a deficiency in prior levies for payment of general obligation indebtedness is without limitation as to rate or amount. Metropolitan Revenue Distribution (Chapter 473F, Minnesota Statutes) “Fiscal Disparities Law” The Charles R. Weaver Metropolitan Revenue Distribution Act, more commonly known as “Fiscal Disparities,” was first implemented for taxes payable in 1975. Forty percent of the increase in commercial-industrial (including public utility and railroad) net tax capacity valuation since 1971 in each assessment district in the Minneapolis/St. Paul seven-county metropolitan area (Anoka, Carver, Dakota, excluding the City of Northfield, Hennepin, Ramsey, Scott, excluding the City of New Prague, and Washington Counties) is contributed to an area-wide tax base. A distribution index, based on the factors of population and real property market value per capita, is employed in determining what proportion of the net tax capacity value in the area-wide tax base shall be distributed back to each assessment district. III-4 STATUTORY FORMULAE: CONVERSION OF TAXABLE MARKET VALUE (TMV) TO NET TAX CAPACITY FOR MAJOR PROPERTY CLASSIFICATIONS Local Tax Payable Local Tax Payable Property Type 2013-2014 2015-2017 Residential Homestead (1a) Up to $500,000 1.00% 1.00% Over $500,000 1.25% 1.25% Residential Non-homestead Single Unit (4bb1) Up to $500,000 1.00% 1.00% Over $500,000 1.25% 1.25% 1-3 unit and undeveloped land (4b1) 1.25% 1.25% Market Rate Apartments Regular (4a) 1.25% 1.25% Low-Income (4d) 0.75% Up to $115,000(c) 0.75% Over $115,000(c) 0.25% Commercial/Industrial/Public Utility (3a) Up to $150,000 1.50%(a) 1.50%(a) Over $150,000 2.00%(a) 2.00%(a) Electric Generation Machinery 2.00% 2.00% Commercial Seasonal Residential Homestead Resorts (1c) Up to $600,000 0.55% 0.50% $600,000 - $2,300,000 1.00% 1.00% Over $2,300,000 1.25%(a) 1.25%(a) Seasonal Resorts (4c) Up to $500,000 1.00%(a) 1.00%(a) Over $500,000 1.25%(a) 1.25%(a) Non-Commercial (4c12) Up to $500,000 1.00%(a)(b) 1.00%(a)(b) Over $500,000 1.25%(a)(b) 1.25%(a)(b) Disabled Homestead (1b) Up to $50,000 0.45% 0.45% Agricultural Land & Buildings Homestead (2a) Up to $500,000 1.00% 1.00% Over $500,000 1.25% 1.25% Remainder of Farm Up to $2,050,000(d) 0.50%(b) 0.50%(b) Over $2,050,000(d) 1.00%(b) 1.00%(b) Non-homestead (2b) 1.00%(b) 1.00%(b) (a) State tax is applicable to these classifications. (b) Exempt from referendum market value based taxes. (c) Legislative increases, payable 2017. Historical valuations are: Payable 2016 - $106,000 and Payable 2015 - $100,000. (d) Legislative increases, payable 2017. Historical valuations are: Payable 2016 - $2,140,000; Payable 2015 - $1,900,000; Payable 2014 - $1,500,000; and Payable 2013 - $1,290,000. NOTE: For purposes of the State general property tax only, the net tax capacity of non-commercial class 4c(1) seasonal residential recreational property has the following class rate structure: First $76,000 – 0.40%; $76,000 to $500,000 – 1.00%; and over $500,000 – 1.25%. In addition to the State tax base exemptions referenced by property classification, airport property exempt from city and school district property taxes under M.S. 473.625 is exempt from the State general property tax (MSP International Airport and Holman Field in St. Paul are exempt under this provision). APPENDIX IV IV -1 EXCERPT OF 2015 COMPREHENSIVE ANNUAL FINANCIAL REPORT Data on the following pages was extracted from the City’s Comprehensive Annual Financial Report for fiscal year ended December 31, 2015. (The City’s Comprehensive Annual Financial Report for the fiscal year ended December 31, 2016 is not yet available.) The reader should be aware that the complete financial statements may contain additional information which may interpret, explain or modify the data presented here. The City’s comprehensive annual financial reports for the years ending 1966 through 2015 were awarded the Certificate of Achievement for Excellence in Financial Reporting by the Government Finance Officers Association of the United States and Canada (GFOA). The Certificate of Achievement is the highest form of recognition for excellence in state and local government financial reporting. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report (CAFR), whose contents conform to program standards. Such CAFR must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. IV-2 Financial Section IV-3 INDEPENDENT AUDITQR'S REPQRT 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 REsPONSmiLITY FOR THE FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of these fmancial 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 RESPONSWILITY 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 perfonn 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 asse&sments, 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. 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 m~or 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 Govermnental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions--an amendment ofGASB Statement No. 27, and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date-an amendment ofGASB Statement No. 68, during the year ended December 31, 2015. Our opinion is not modified with respect to this matter. OTHER MATTERS Required Sopplemeutary 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 infonnat:ion, 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 infonnation and comparing the information for consistency with management's responses to our inquiries, the basic fmancial 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 infonnation because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Informatjon 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 fmancial 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 Wlderlying 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 01U' opinion, the combining and individual fund statements and schedules are fairly stated, in all material respects, in relation to the basic flnancial 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. 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 IV-4 CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A MA N A G E M E N T ' S DI S C U S S I O N AN D AN A L Y S I S De c e m b e r 3 1 , 2 0 1 5 As ma n a g e m e n t of 1 h e Ci t y o f Br o o k l y n Ce n t e r (1 h e Ci t y ) , we of f e r re a d e r s of 1 h e Ci t y ' s Co m p r e h e n s i v e An n u a l Fi n a n c i a l Re p o r t (C A F R ) , 1 h i s na m r t i v e ov e r v i e w an d an a l y s i s of 1 h e fi n a n c i a l ac t i v i t i e s of 1 h e Ci t y fo r 1 h e fi s c a l ye a r en d e d De c e m b e r 31 , 2 0 1 5 . We en c o u r a g e re a d e r s to co n s i d e r 1h e in f o r m a t i o n pr e s e n t e d he r e in co n j u n c t i o n wi 1 h ad d i t i o n a l in f o r m a t i o n 1h a t we ha v e fu r n i s h e d in ou r le t t e r o f tn m s m i t t a l , wh i c h ca n be fo u n d on pa g e s 1- 8 o f th i s CA F R . Fl n a n d a l Bi g h H g h t s Th e as s e t s an d de f e r r e d ou t f l o w s o f re s o u r c e s o f 1h e Ci t y ex c e e d e d it s li a b i l i t i e s an d de f e r r e d in f l o w s o f re s o u r c e s at lh e cl o s e o f 1h e mo s t re c e n t fi s c a l ye a r by $1 3 4 , 9 1 0 , 4 2 6 (n e t pc s i t i o n ) . Of th i s am o u n t , $2 , 9 5 6 , 7 9 4 (u n r e s t r i c t e d ne t pc s i t i o n ) ma y be us e d to me e t th e Ci t y ' s on g o i n g ob l i g a t i o n s to ci t i z e n s an d cr e d i t o r s . Th e Ci t y ' s to t a l ne t pc s i t i o n in c r e a s e d by $5 , 7 9 9 , 6 4 1 ( 4. 4 9 " / o ) fr o m lh e pr e v i o u s ye a r . Th e in c r e a s e ca n be pr i m a r i l y at t r i b u t e d to ca p i t a l gr a n t s fo r pu b l i c wo r k s wh i c h in c l u d e s fu n d s sp e n t on Mu n i c i p a l St a t e Ai d St r e e t Im p r o v e m e n t s in 20 1 5 , ne w sp e c i a l as s e s s m e n t le v i e s , an d o1 h e r fu n d i n g re l a t e d to co n s t r u c t i o n of Ci t y in f r a s t t u c t u r e . As o f l h e cl o s e of 1 h e cu r r e n t fi s c a l ye a r , 1 h e Ci t y ' s go v e r n m e n t a l fu n d s re p c r t e d co m b i n e d en d i n g fu n d ba l a n c e s o f $4 8 , 4 1 8 , 9 8 8 , wh i c h is an in c r e a s e of $ 2 , 2 1 3 , 8 0 0 (4 . 7 9 " / o ) fr o m 1h e pr e v i o u s ye a r . Of 1 h e to t a l fu n d ba l a n c e , $7 , 8 6 2 , 1 7 9 (1 6 . 2 4 % ) is un a s s i g n e d , wh i c h is fr e e fr o m an y in t e r n a l or ex t e r n a l co n s t r a i n t s o f it s us e . Th e Ge n e r a l fu n d ha s a fu n d ba l a n c e of $ 1 1 , 1 7 0 , 9 1 7 at lh e cl o s e of 1 h e cu r r e n t fi s c a l ye a r . Du r i n g 20 1 5 , lh e fu n d ba l a n c e in c r e a s e d $1 5 0 , 8 3 6 (1 . 3 7 % ) fr o m 1h e pr e v i o u s ye a r . Th e un a s s i g n e d fu n d ba l a n c e at ye a r en d is $1 0 , 2 8 7 , 2 4 3 , wh i c h re p r e s e n t s 52 % o f lh e fo l l o w i n g ye a r s bu d g e t . Th e re m a i n i n g pc r t i o n of lh e fu n d ba l a n c e is no n s p e n d a b l e or as s i g n e d (f o r 1h e ca p i t a l im p r o v e m e n t fu n d i n g pl a n ) . Th e Ci t y ' s to t a l ou t s t a n d i n g bu u d e d de b t in c r e a s e d by $2 6 , 2 2 0 , 1 5 8 du r i n g 1h e cu r r e n t fi a c a l ye a r , fr o m $2 4 , 2 8 5 , 0 0 0 to $5 0 , 5 0 5 , 1 5 8 . Th e Ci t y re t i r e d $3 , 1 8 0 , 3 5 2 in pr i n c i p a l , re f u n d e d $8 , 2 6 0 , 0 0 0 in pr i n c i p a l (i n c l u d i n g a cr o a s o v e r ad v a n c e d re f u n d i n g o f $6 , 6 0 0 , 0 0 0 ) , an d ia s u e d $2 2 , 8 0 0 , 5 1 0 in co m b i n e d ne w de b t fo r lh e co n s t t u c t i o n o f a wa t e r tr e a t m e n t pl a n t an d in f r a s t t u c t u r e im p r o v e m e n t s . Th e ne t pc s i t i o n of l h e Ci t y wa s ne g a t i v e l y im p a c t e d du e to th e re q u i r e d im p l e m e n t a t i o n of GA S B St a t e m e n t No . 68 , wh i c h re l a t e d to 1h e ac c o u n t i n g tr e a t m e n t o f de f i n e d be n e f i t pe n s i o n pl a n s , sp e c i f i c a l l y lh e Pu b l i c Em p l o y e e s Re t i r e m e n t Aa s o c i a t i o n o f Mi n n e s o t a (P E R A ) an d 1h e Br o o k l y n Ce n t e r Fi r e Re l i e f As s o c i a t i o n . Th i s is a re s u l t o f a ch a n g e in an ac c o u n t i n g pr i n c i p l e an d do e s no t af f e c t 1h e Ci t y ' s ob l i g a t i o n re q u i r e m e n t s as se t by Mi n n e s o t a st a t o t e . Th i s is mo r e fu l l y de s c r i b e d in 1h e no t e s to lh e fi n a n c i a l st a t e m e n t s . Wh i l e lh e ac c o u n t i n g st a n d a r d ch a n g e d , 1h e Ci t y wi l l co n t i n u e to fu n d lh e pe n s i o n pl a n ba s e d on 1h e re q u i r e d co n t r i b u t i o n ra t e s as se t by Mi n n e s o t a st a t u t e . Ov e r v i e w o f th e Fi n a n d a l St a t e m e n t s Th e di s c u s s i o n an d an a l y s i s ar e in t e n d e d to se r v e as an in t r o d u c t i o n to lh e Ci t y ' s ba s i c fu u m c i a l st a t e m e n t s . Th e Ci t y ' s ba s i c fi n a n c i a l st a t e m e n t s in c l u d e lh r e e co m p c n e n t s : 1) go v e r n m e n t - w i d e fm a n c i a l st a t e m e n t s , 2) fu n d fm a n c i a l st a t e m e n t s , an d 3) no t e s to 1h e fi n a n c i a l st s t e m e n t s . Th i s CA F R al s o co n t a i n s o1 h e r su p p l e m e n t a r y in f o r m a t i o n in ad d i t i o n to lh e ba s i c fu u m c i a l st a t e m e n t s th e m s e l v e s . Go v e r n m e n t - Wi d e Fl n a n d a l St a t e m e n t s : Th e go v e r n m e n t - w i d e fi n a n c i a l st a t e m e n t s or e de s i g n e d to pr o v i d e re a d e r s wi l h a br o a d ov e r v i e w o f th e Ci t y ' s fi n a n c e s , in a ma n n e r si m i l a r to a pr i v a t e - - s e c t o r bu s i n e s s . Th e st a t e m e n t o f ne t pc s i t i o n pr e s e n t s in f o r m a t i o n on al l o f lh e Ci t y ' s as s e t s , de f e r r e d ou t f l o w s o f re s o u r c e s , li a b i l i t i e s , an d de f e r r e d in f l o w s o f re s o u r c e s , wi t h th e di f f e r e n c e re p o r t e d as ne t po s i t i o n . Ov e r ti m e , in c r e a s e s or de c r e a s e s in ne t po s i t i o n ma y se r v e as a us e f u l in d i c a t o r o f wh e 1 h e r lh e fi n a n c i a l pc s i t i o n o f 1h e Ci t y is im p r o v i n g or de t e r i o r a t i n g . CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A MA N A G E M E N T ' S DI S C U S S I O N AN D AN A L Y S I S De c e m b e r 3 I, 20 1 5 Th e st a t e m e n t o f ac t i v i t i e s pr e s e n t s in f o r m a t i o n sh o w i n g ho w th e City's net pcsition changed during 1he most recent fiscal year. Al l ch a n g e s in ne t pc s i t i o n or e re p c r t e d as so o n as 1 h e un d e r l y i n g event giving rise to 1he change occurs, regardless of lhe timing of lh e re l a t e d ca s h fl o w s . Th u s , re v e n u e s an d ex p e n s e s or e re p c r t e d in this ststement for some items 1hat will only result in cssh fl o w s in fu t u r e fi s c a l pe r i o d s (e . g . lU l c o l l e c t e d ta s e s an d co r n e d bu t unused vscation leave). Bo l h o f lh e go v e r n m e n t - w i d e fi n a n c i a l st a t e m e n t s di s t i n g u i s h fu n c t i o n s of lhe City lhat are principally supported by tases and in t e r g o v e r n m e n t a l re v e n u e s (g o v e r n m e n t a l ac t i v i t i e s ) fr o m ol h e r functions 1hat are intended to recover all or a significant pcrtion of 1 h e i r co s t s lh r o u g h us e r fe e s an d ch a r g e s (b u s i n e a s - t y p e ac t i v i t i e s ) . The governmental activities oflhe City include: general go v e r n m e n t , pu b l i c as f e t y , pu b l i c wo r k s , co m n n m i t y se r v i c e s , pa t k s & recreation, economic development, and interest on lo n g - t e r m de b t . Th e bu s i n e s s - ty p e ac t i v i t i e s o f 1h e Ci t y in c l u d e : municipal liquor, golf course, Earle Brown Heritage Center, wa t e r ut i l i t y , sa n i t a r y se w e r ut i l i t y , st o r m dr a i n a g e ut i l i t y , st r e e t li g h t utility, and lhe recycling utility. Th e go v e r n m e n t - w i d e fm a n c i a l st a t e m e n t s in c l u d e no t on l y 1h e Ci t y itself (known aslhe primary government), but also a legally se p a r a t e Ho u s i n g an d Re d e v e l o p m e n t Au l h o r i t y an d Ec o n o m i c De v e l o p m e n t Authority, for which lhe City is fmancially ac c o u n t a b l e . Al l h o u g h le g a l l y se p a r a t e , lh e s e co m p c n e n t un i t s , fu n c t i o n for all practical purpcses as a department oflhe City, and lh e r e f o r e ha v e be e n in c l u d e d as an in t e g r a l pa r t of lh e pr i m a r y go v e r n m e n t Th e go v e r n m e n t - w i d e fu u m c i a l st a t e m e n t s ca n be fo u n d on pa g e s 29 lhrough 31 of lhis CAFR. Fn n d Fl n a n d a l St a t e m e n t s : A fu n d is a gr o u p i n g o f re l a t e d ac c o u n t s 1hat is used to maintain control over resources 1h a t ha v e be e n se g r e g a t e d fo r sp e c i f i c ac t i v i t i e s or ob j e c t i v e s . Th e City, like state and local goveroments, uses fund accounting to en s u r e an d de m o n s t r a t e co m p l i a n c e wi l h fi n a n c e - r e l a t e d le g a l re q u i r e m e n t s . All of lhe funds of lhe City can be divided into two ca t e g o r i e s : go v e r n m e n t a l fu n d s an d pr o p r i e t a r y fu n d s . Go v e r n m e n t a l Fn n d s : Go v e r n m e n t a l fu n d s ar e us e d to ac c o u n t for essentially 1he same functions reported as governmental ac t i v i t i e s in th e go v e r n m e n t - w i d e fm a n c i a l st a t e m e n t s . Ho w e v e r , lmlike the government-wide financial statements, governmental fu n d fi n a n c i a l st a t e m e n t s fo c u s on ne a r - t e r m in f l o w s an d ou t f l o w s of spendable resources, as well as on balances of spendable re s o u r c e s av a i l a b l e at lh e en d o f lh e fi s c a l ye a r . Su c h in f o r m a t i o n may he useful in evaluating a government's near-term fmancial re q u i r e m e n t s . Be c a u s e th e fo c u s of go v e r n m e n t a l fu n d s is na r r o w e r th a n th a t of the government-wide financial statements, it is useful to co m p a r e 1h e in f o r m a t i o n pr e s e n t e d fo r go v e r n m e n t a l fu n d s wi l h si m i l a r information presented for governmental activities in lhe go v e r n m e n t - w i d e fu u m c i a l st a t e m e n t s . By do i n g so , re a d e r s ma y better understand lhe long-term impact of lhe City's near-term fm a n c i a l de c i s i o n s . Bo l h lh e go v e r n m e n t a l fu n d ba l a n c e sh e e t an d governmental fund ststement of revenues, expenditures, and ch a n g e s in fu n d ba l a n c e s pr o v i d e a re c o n c i l i a t i o n to fa c i l i t s t e th i s comparison between governmental funds and governmental ac t i v i t i e s . Th e Ci t y ma i n t a i n s 18 in d i v i d u a l go v e r n m e n t a l fu n d s . In f o r m a t i o n is presented separately in lhe governmental fund balance sheet an d in 1h e go v e r n m e n t a l fu n d st s t e m e n t o f re v e n u e s , ex p e n d i t u r e s , and changes in fund balances for lhe following: General fund, Ta x In c r e m e n t Di s t r i c t N o . 3 , Ta x In c r e m e n t Di s t r i c t No . 5 , De b t Service, Cspital Improvements, Municipal State Aid for Co n s t t u c t i o n , an d lh e In f r a s t t u c t u r e Co n s t r u c t i o n fu n d , wh i c h or e considered to be major funds. Data from lhe olher II go v e r n m e n t a l fu n d s or e co m b i n e d in t o a si n g l e , ag g r e g a t e d pr e s e n t a t i o n . Individual fund data for each oflhese nonmajor go v e r n m e n t a l fu n d s is pr o v i d e d in 1h e fo r m o f co m b i n i n g st a t e m e n t s or schedules, elsewhere in this CAFR. IV-5 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A MA N A G E M E N T ' S DI S C U S S I O N AN D AN A L Y S I S De c e m b e r 31 , 2 0 1 5 Th e Ci t y ad o p t s an an n u a l ap p r o p r i a t e d bu d g e t fo r ne a r l y al l fu n d a pr e s e n t e d in th i s CA F R . A bu d g e t a r y co m p a r i s o n st a t e m e n t ha s be e n pr o v i d e d in th e ba s i c fi n a n c i a l st a t e m e n t s fo r th e Ge n e r a l fu n d , th e Ta x In c r e m e n t Di s t r i c t No . 3 fu n d an d th e Ta x In c r e m e n t Di s t r i c t No . 5 fu n d . Th e bu d g e t a r y co m p a r i s o n st a t e m e n t s fo r an y no n m a j o r fu n d s ar e pr o v i d e d el s e w h e r e in th i s CA F R . Th e ba s i c go v e r n m e n t a l fu n d fi n a n c i a l st a t e m e n t s ca n be fo u n d on pa g e s 32 th r o u g h 41 of th i s CA F R . Pr o p r i e t a r y Fu n d s : Pr o p r i e t a r y fu n d a pr o v i d e si m i l a r in f o r m a t i o n to th e go v e r n m e n t - w i d e fi n a n c i a l st a t e m e n t s , bu t in mo r e de t a i l . Th e Ci t y ma i n t a i n s tw o di f f e r e n t ty p e s o f pr o p r i e t a r y fu n d a . En t e r p r i s e fu n d a ar e us e d to re p o r t !h e sa m e fu n c t i o n s pr e s e n t e d as bu s i n e s s - t y p e ac t i v i t i e s in th e go v e r n m e n t - w i d e fi n a n c i a l st a t e m e n t s . Th e Ci t y us e s en t e r p r i s e fu n d s to ac c o u n t fo r it s : mu n i c i p a l li q u o r , go l f co u r s e , Ea r l e Br o w n He r i t a g e Ce n t e r , wa t e r ut i l i t y , sa n i t a r y se w e r ut i l i t y , st o r m dr a i n a g e ut i l i t y , st r e e t li g h t ut i l i t y , an d re c y c l i n g ut i l i t y . Al l o f !h e Ci t y ' s en t e r p r i s e fu n d a ar e co n s i d e r e d to be ma j o r fu n d s , an d se p a r a t e in f o r m a t i o n is pr o v i d e d fo r ea c h o f !h e m in !h e ba s i c fi n a n c i a l st a t e m e n t s . In t e r n a l se r v i c e fo n d s ar e an ac c o u n t i n g de v i c e to ac c u m u l a t e an d al l o c a t e co s t s in t e r n a l l y am o n g !h e Ci t y ' s va r i o u s fu n c t i o n s . Th e Ci t y us e s in t e r n a l se r v i c e fu n d a to ac c o u n t fo r it s : ce n t r a l ga r a g e , em p l o y e e re t i r e m e n t , pe n s i o n - co o r d i n a t e d , pe n s i o n - po l i c e an d ft r e , an d co m p e n s a t e d ab s e n c e s ac c u m u l a t i o n s . Al l in t e r n a l se r v i c e fu n d a ar e co m b i n e d in t o a si n g l e , ag g r e g a t e d pr e s e n t a t i o n in th e pr o p r i e t a r y fu n d fi n a n c i a l st a t e m e n t s . In d i v i d u a l da t a fo r !h e in t e r n a l se r v i c e fu n d a is pr o v i d e d in !h e fo r m o f co m b i n i n g st a t e m e n t s el s e w h e r e in th i s CA F R . Be c a u s e al l o f 1h e s e se r v i c e s pr e d o m i n a t e l y be n e f i t go v e r n m e n t a l ra l h e r 1h a n bu s i n e s s - t y p e fu n c t i o n s , !h e y ha v e be e n in c l u d e d as go v e r n m e n t a l ac t i v i t i e s in th e go v e r n m e n t - w i d e fi n a n c i a l st a t e m e n t s . Th e ba s i c pr o p r i e t a r y fu n d fm a n c i a l st a t e m e n t s ca n be fo u n d on pa g e s 42 th r o u g h 47 of th i s CA F R . No t e s to th o Fi n a n c i a l St a t e m e n t s : Th e no t e s pr o v i d e ad d i t i o n a l in f o r m a t i o n !h a t is es s e n t i a l to a fu l l uo d e r s t a n d i n g o f !h e de t a pr o v i d e d in !h e go v e r n m e n t - w i d e an d fu n d fi n a n c i a l st a t e m e n t s . Th e no t e s to !h e fi n a n c i a l st a t e m e n t s ca n be fo u n d on pa g e s 49 th r o u g h 90 o f th i s CA F R . O t h e r In f o r m a t i o n : In ad d i t i o n to th e ba s i c fi n a n c i a l st a t e m e n t s an d ac c o m p a n y i n g no t e s , th i s re p o r t al s o pr e s e n t s ce r t a i n re q u i r e d su p p l e m e n t a r y in f o r m a t i o n , fo r ot h e r po s t - e m p l o y m e n t be n e f i t s (O P E B ) an d de f i n e d be n e f i t pe n s i o n pl a n s . Th e sc h e d u l e s o f fu n d i n g pr o g r e s s , Ci t y co n t r i b u t i o n s , Ci t y ' s pr o p o r t i o n a t e sh a r e of ne t pe n s i o n li a b i l i t y , an d sc h e d u l e o f ch a n g e s in Ne t Pe n s i o n As s e t ca n be fo u n d on pa g e s 91 th r o u g h 98 o f th i s CA F R . Th e co m b i n i n g an d bu d g e t a r y co m p a r i s o n st a t e m e n t s re f e r r e d to ea r l i e r in co n n e c t i o n wi l h no n m a j o r go v e r n m e n t a l fu n d a an d in t e r n a l se r v i c e fu n d a ar e pr e s e n t e d in u n e d i a t e l y fo l l o w i n g th e re q u i r e d su p p l e m e n t a r y in f o r m a t i o n . Co m b i n i n g an d bu d g e t a r y co m p a r i s o n st a t e r o e n t s ca n be fo u n d on pa g e s I 02 th r o u g h 14 8 o f !h i s CA F R . CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A MA N A G E M E N T ' S DI S C U S S I O N AN D AN A L Y S I S De c e m b e r 31 , 20 1 5 Go v e r n m e n t - w i d e Fi n u c W An a l y s i s As no t e d ea r l i e r , ne t po s i t i o n ma y se r v e ov e r ti m e as a us e f u l in d i c t o r of a governmenfs financial position. In the case of the City, as s e t s an d de f e r r e d ou t f l o w s of re s o u r c e s ex c e e d e d li a b i l i t i e s an d deferred inflows of resources by $134,910,426 at the close of the mo s t re c e n t fi s c a l ye a r . Th e la r g e s t po r t i o n o f th e Ci t y ' s ne t po s i t i o n ($ 9 5 , 1 4 3 , 0 3 9 or 70 . 5 2 % ) reflects its investment in capital assets, which includes: land in f r a s t r u c t u r e , bu i l d i n g s , an d ma c h i n e r y & eq u i p m e n t , le s s an y re l a t e d debt used to acquire those assets that is still outstanding. Th e Ci t y us e s th e s e ca p i t a l as s e t s to pr o v i d e se r v i c e s to ci t i z e n s ; consequently, these assets are not available for futore spending. Al t h o u g h th e Ci t y ' s in v e s t m e n t in it s ca p i t a l as s e t s is re p o r t e d ne t of related debt, it should be noted that the resources needed to re p a y th i s de b t mu s t be pr o v i d e d fr o m ot h e r so u r c e s , si n c e th e ca p i t a l assets themselves cannot be used to liquidate !hose li a b i l i t i e s . CI T Y O F BR O O K L Y N C E N T E R - SUMMARY OF NET POSITION Go v e r n m e n t a l Ac t i v i t i e s Business-I~ Activities Total 20 1 5 20 1 4 2015 2014 2015 2014 Cu r r e n t an d ol h e r as s e t s $ 67 , 4 5 6 , 6 0 1 $ 60 , 4 6 4 , 7 0 1 $ 13,392,970 $ J1,047,209 $ 80,849,571 $ 71,5Jl,910 Ca p i t a l As s e t s 56 , 5 3 3 , 0 4 8 49 , 3 9 2 , 5 7 7 66,570,149 48,537,132 123,103,197 97,929,709 To t a l as s e t s 12 3 , 9 8 9 , 6 4 9 10 9 , 8 5 7 , 2 7 8 79,963,J19 59,584,341 203,952,768 169,441,619 De f e r r e d ou t f l o w s of re s o u r c e s 2, 4 3 6 , 6 8 8 2,436,688 Lo n g - t e r m li a b i l i t i e s ou t s t a n d i n g 33 , 4 3 5 , 6 9 5 21 , 2 4 3 , 8 7 8 19,944,910 1,660,000 53,380,605 22,903,878 01 h e r li a b i l i t i e s J1 , 9 3 0 , 0 6 9 5, 2 4 6 , 6 5 0 4,364,340 2,567,444 16,294,409 7,814,094 T ot a l l i a b i l i t i e s 45 , 3 6 5 , 7 6 4 26 , 4 9 0 , 5 2 8 24,309,250 4,227,444 69,675,014 30,717,972 De f e r r e d in f l o w s of re s o u r c e s 1, 8 0 4 , 0 1 6 1,804,016 Ne t in v e s t m e n t in ca p i t a l as s e t s 47 , 9 4 1 , 8 0 0 42 , 9 4 7 , 5 7 7 4 7 , 2 0 1 , 2 3 9 4 8 , 5 3 7 , 1 3 2 95,143,039 91,484,709 Re s t r i c t e d 36 , 8 1 0 , 5 9 3 28 , 0 6 1 , 9 7 7 36,810,593 28,061,977 Un r e s t r i c t e d (5 , 4 9 5 , 8 3 6 ) 12 , 3 5 7 , 1 9 6 8,452,630 6,819,765 2,956,794 19,176,961 To t a l Ne t Po s i t i o n $ 79 , 2 5 6 , 5 5 7 j_ 8 3 , 3 6 6 , 7 5 _ ( ) _ _$ 5.5,653,869 $ 55,356,897 $ 134,910,426 s 138,723,647 At !h e en d o f !h e cu r r e n t fi s c a l ye a r , th e Ci t y is ab l e to re p o r t po s i t i v e balances in all three categories of net position, bolh for !he go v e r n m e n t as a wh o l e , as we l l as fo r it s se p a r a t e go v e r n m e n t a l an d business-type activities wilh !he exception of unrestricted ne t po s i t i o n in th e go v e r n m e n t a l ac t i v i t i e s . A po r t i o n o f th e Ci t y ' s ne t po s i t i o n (2 7 . 2 9 % ) re p t e s e n t s re s o u r c e s !hat are subject to external restrictions on how !hey may be us e d . Th e re m a i n i n g po r t i o n (2 . 1 9 % ) ma y be us e d to me e t !h e Ci t y ' s ongoing obligations. Th e go v e r n m e n t a l ac t i v i t i e s ha v e a si g n i f i c a n t in c r e a s e in cu r r e n t assets from the previous year. The largest factor in this increase is wi l h !h e ca s h wi l h ft s c a l ag e n t s . At th e en d of 2 0 1 5 , th e Ci t y ha d $6,782,081 in escrow as part of a crossover advanced refunding. Th e bu s i n e s s - t y p e ac t i v i t i e s ha d la r g e in c r e a s e s in ca p i t a l as s e t s an d long-term liabilities. These increases are primarily dne to !h e Ci t y ' s co n s t r n c t i o n of a wa t e r tr e a t m e n t pl a n t , wh i c h is be i n g funded wilh debt proceeda from !he Minnesota Public Fa c i l i t i e s Au l h o r i t y (P F A ) lo a n pr o g r a m . Th e go v e r n m e n t a l ac t i v i t i e s , al s o ha d a si g n i f i c a n t in c r e a s e in !h e amount of deferred outflows of resources, long-term liabilities, an d de f e r r e d in f l o w s o f re s o u r c e s fr o m !h e pr e v i o u s ye a r . Th e pr i m a r y reason for 1he increase was the implementation ofGASB St a t e m e n t No . 68 in wh i c h !h e Ci t y is re q u i r e d to re p o r t it s pr o p o r t i o n a t e share of !he Minnesota Public Employees Retirement As s o c i a t i o n (P E R A ) ne t pe n s i o n li a b i l i t i e s . Re c o r d i n g th e li a b i l i t y does not change the City's future contibution requirements or ob l i g a t i o n s un d e r th e pl a n s , wh i c h ar e de t e r m i n e d by Mi n n e s o t a statutes. IV-8 CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A MA N A G E M E N T ' S DI S C U S S I O N AN D AN A L Y S I S De c e m b e r 31 , 20 1 5 Th e In f r a s t r u c t u r e Co n s t r u c t i o n fu n d ha s an en d i n g de f i c i t fu n d ba l a n c e of $ 1 8 3 , 1 4 5 a in c r e a s e of $ 2 8 0 , 0 4 8 (6 0 . 4 6 % ) fr o m th e pr e v i o u s ye a r . Th e fu n d in c u r r e d $1 , 4 5 5 , 1 2 8 of ca p i t a l ex p e n d i t u r e s du r i n g th e ye a r fo r th e Fr e e w a y Pa r k Ar e a an d 63 r d Av e n u e ne i g h b o r h o o d re - c o n s t r u c t i o n pr o j e c t s . Pr o p r i e t a r y Fu n d s : Th e Ci t y ' s pr o p r i e t a r y fu n d s pr o v i d e th e sa m e ty p e of in f o r m a t i o n pr e s e n t e d as bu s i n e s s - t y p e ac t i v i t i e s fo u n d in th e go v e r n m e n t - w i d e fi n a n c i a l st a t e m e n t s , bu t in mo r e de t a i l . Th e en t e r p r i s e fu n d s ha v e a co m b i n e d en d i n g ne t p o s i t i o n o f $ 5 7 , 6 4 0 , 2 1 0 , of wh i c h $1 0 , 4 3 8 , 9 7 1 (1 8 . 1 1 % ) is un r e s t r i c t e d an d ca n be us e d to me e t th e op e r a t i o n s . As a me a s u r e of th e li q u i d i t y of th e en t e r p r i s e fu n d s , it ma y be us e f u l to co m p a r e th e un r e s t r i c t e d ne t po s i t i o n to th e op e m t i n g ex p e n s e s . Fo r th e cu r r e n t ye a r , un r e s t r i c t e d ne t po s i t i o n is 83 . 9 2 % of th e cu r r e n t ye a r op e r a t i n g ex p e n s e s . Ot h e r fa c t o r s co n c e r n i n g th e fi n a n c e s of th e s e fu n d s ha v e al r e a d y be e n ad d r e s s e d in th e di s c u s s i o n of th e Ci t y ' s bu s i n e s s - t y p e ac t i v i t i e s . Ge a e r a l Fu a d Bu d g e t a r v H! g h H g b t s Du r i n g th e ye a r , th e r e we r e no am e n d m e n t s to th e Ge n e r a l Fu n d bu d g e t . Ac t u a l re v e n u e s an d ot h e r fm a o c i n g so u r c e s we r e un d e r th e ad o p t e d bu d g e t by $2 7 , 6 5 4 . Th e ma j o r co n t r i b u t o r to th i s de c r e a s e wa s in de l i n q u e n t pr o p e r t y ta x co l l e c t i o n s , th e Ci t y ha d a ne g a t i v e $4 8 , 6 7 2 as a re s u l t of ta x re f u n d s an d wa s un d e r bu d g e t fo r ex c e s s ta x re v e n u e s by $1 4 1 , 3 2 0 . Ac t u a l ex p e n d i t u r e s an d ot h e r fi n a n c i n g us e s we r e lo w e r th a n th e f" m a l bu d g e t fo r th e ye a r by $1 7 8 , 4 9 0 . Th i s wa s th e re s u l t of a no n - b u d g e t e d tr a n s f e r of $9 0 8 , 7 6 1 to th e Ca p i t a l Im p r o v e m e n t Fu n d in ac c o r d a n c e wi t h Ci t y po l i c y to tr a n s f e r un a s s i g n e d fu n d ba l a n c e of th e Ge n e r a l Fu n d th a t ex c e e d s 52 % of Ge n e r a l Fu n d bu d g e t e d ex p e n d i t u r e s fo l l o w i n g th e co m p l e t i o n of th e an n u a l au d i t . Th e re d u c t i o n in fu n d ba l a n c e fr o m th e tr a n s f e r wa s of f s e t by sa v i n g s fr o m se v e r a l st a f f po s i t i o n s be i n g le f t un f i l l e d du r i n g a po r t i o n of 2 0 1 5 , in th e Po l i c e an d Pu b l i c Wo r k s de p a r t m e n t s . CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A MA N A G E M E N T ' S DI S C U S S I O N AN D AN A L Y S I S De c e m b e r 31 , 20 1 5 Ca p i t a l As s e t an d De b t Ad m i a i s t r a t i o a Ca p i t a l As s e t s : Th e Ci t y ' s in v e s t m e n t in ca p i t a l as s e t s fo r it s go v e r n m e n t a l and business-type activities at the end of the cu r r e n t ye a r , am o u n t s to $1 2 3 , 1 0 3 , 1 9 7 (n e t of ac c u m u l a t e d de p r e c i a t i o n ) . This investment in capital assets includes: land, bu i l d i n g s , in f r a s t r u c t u r e , ma c h i n e r y an d eq u i p m e n t an d co n s t r u c t i o n in progress. The City's investment in capital assets in c r e a a e d $2 5 , 1 7 3 , 4 8 8 (2 5 . 7 1 % ) fr o m th e pr e v i o u s ye a r . Ma j o r ca p i t a l as s e t ev e n t s du r i n g th e cu r r e n t ye a r in c l u d e d th e fo l l o w i n g : Th e Fr e e w a y Pa r k Ar e a Ne i g h b o r h o o d in f r a s t r u c t u r e re c o n s t r u c t i o n project is near completion, with $8,791,044 of ad d i t i o n s to co n s t r u c t i o n in pr o g r e s s . Th i s am o u n t in c l u d e s work on streets, as well as water, sewer and storm utilities. Th e 63 r d Av e n u e Ne i g h b o r h o o d in f r a s t r u c t u r e re c o n s t r u c t i o n project is near completion, with $4,676,392 of additions to co n s t r u c t i o n in pr o g r e s s . Th i s am o t m t in c l u d e s wo r k on str e e t s ~ as well as water, sewer and storm utilities. Th e Ci t y co n t i n u e d co n s t r u c t i o n of a wa t e r tr e a t m e n t pl a n t At the end of 2015, the City had completed $19,371,703 of the $1 9 , 6 6 2 , 3 5 2 pr o j e c t . Th e pr o j e c t is be i n g fu n d e d th r o u g h a low interest loan (1%) with the Minnesota Public Facilities Au t h o r i t y . Th e wa t e r tr e a t m e n t pl a n t be c a m e op e r a t i o n a l in January 2016. Th e co n s t r u c t i o n of a Co m m u n i t y Am p h i t h e a t e r is ne a r co m p l e t i o n , with $632,925 of additions to construction in progress. Th e Am p h i t h e s t e r wa s pr i m a r i l y fu n d e d th r o u g h do n a t i o n s . Th e Ci t y is ne a r co m p l e t i o n wi t h a Ci t y Ha l V C o m m u n i t y Ce n t e r reroudel, with $3,519,011 of additions to construction in pr o g r e s s . Th e pr o j e c t in c l u d e d ro o f re p l a c e m e n t an d me c h a n i c a l and electrical upgrades. Th e Ce n t r a l Ga r a g e re p l a c e d 17 pi e c e s of ma c h i n e r y & eq u i p m e n t during the year. The total outlay for machinery and eq u i p m e n t du r i n g th e ye a r wa s $1 , 0 3 9 , 5 3 0 . Th e ad d i t i o n s in c l u d e , but are not limited to: mowers, police vehicles, a pu b l i c wo r k s tr u c k an d a st r e e t sw e e p e r . CI T Y OF BR O O K L Y N CE N T E R - CAPITAL ASSETS (n e t o f de p r e c i a t i o n ) Go v e r n m e n t a l Ac t i v i t i e s Business-!l,Ee Activities Total 20 1 5 20 1 4 2015 2014 2015 2014 La n d $ 3, 5 3 7 , 4 7 3 $ 3, 5 3 7 , 4 7 3 $ 3,194,983 $ 3,194,983 $ 6,732,456 $ 6,732,456 Ea s e m e n t s 90 , 5 9 4 95 , 1 3 2 11,976 16,039 102,570 111,171 Co n s t r u c t i o n in pr o g r e s s 9, 0 1 1 , 1 3 8 3, 2 7 6 , 2 1 3 25,636,604 8,425,511 34,647,742 11,701,724 La n d im p r o v e m e n t s 179,944 196,571 179,944 196,571 Ot h e r pa r k im p r o v e m e n t s 5, 7 2 8 , 4 9 6 5, 9 5 5 , 8 8 9 5,728,496 5,955,889 Bu i l d i n g s an d st r u c t u r e s 7, 6 2 6 , 6 8 1 7, 7 1 8 , 9 3 0 2,723,125 3,307,370 10,349,806 11,026,300 Ma c h i n e r y an d eq u i p m e n t 3, 9 6 3 , 1 6 8 3, 7 6 3 , 0 0 3 273,538 297,976 4,236,706 4,060,979 St r e e t s 26 , 5 7 5 , 4 9 8 25 , 0 4 5 , 9 3 8 26,575,498 25,045,938 St r e e t li g h t sy s t e m s 634,678 630,342 634,678 630,342 Ma i n s an d li n e s 33,915,301 32,468,340 33,915,301 32,468,340 To t a l $ 56 , 5 3 3 , 0 4 8 $ 49 , 3 9 2 , 5 7 8 $ 66,570,149 $ 48,537,132 $ 123,103,197 $ 97,929,710 Ad d i t i o n a l in f o r m a t i o n on th e Ci t y ' s ca p i t a l as s e t s ca n be fo u n d in Note 3 (C) on psges 64 through 65 of this CAFR. IV-9 CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A MA N A G E M E N T ' S DI S C U S S I O N AN D AN A L Y S I S De c e m b e r 31 , 2 0 1 5 Lo n g - T e r m De b t : At th e en d of th e cu r r e n t ye a r , th e Ci t y ha d ou t s t a n d i n g lo n g - t e m 1 bo n d e d de b t o f $5 0 , 5 0 5 , 1 5 8 . CI T Y OF BR O O K L Y N CE N T E R - OU T S T A N D I N G DE B T Go v e r n m e n t a l Ac t i v i t i e s Bu s i n e s s - ! l : E e Ac t i v i t i e s To t a l 20 1 5 20 1 4 20 1 5 20 1 4 20 1 5 Ge n e r a l ob l i g a t i o n ta x in c r e m e n t bo n d s $ 20 , 8 8 5 , 0 0 0 $ 16 , 0 4 0 , 0 0 0 20 , 8 8 5 , 0 0 0 $ Ge n e r a l ob l i g a t i o n im p r o v e m e n t bo n d s 8, 5 9 1 , 2 4 8 6, 4 4 5 , 0 0 0 8, 5 9 1 , 2 4 8 Ge n e r a l ob l i g a t i o n re v e n u e bo n d s 3, 4 8 3 , 7 5 2 1, 8 0 0 , 0 0 0 3, 4 8 3 , 7 5 2 Ge n e r a l ob l i g a t i o n re v e n u e no t e s 17 , 5 4 5 , 1 5 8 17 , 5 4 5 , 1 5 8 Co m p e n s a t e d ab s e n c e s 1, 2 5 4 , 8 5 1 1, 2 8 2 , 0 9 3 1, 2 5 4 , 8 5 1 Ne t pe n s i o n li a b i l i t y 11 , 5 0 9 , 4 7 6 11 , 5 0 9 , 4 7 6 Ne t OP E B ob l i g a t i o n 71 0 , 6 0 5 62 9 , 9 9 4 71 0 , 6 0 5 To t a l $ 42 , 9 5 1 , 1 8 0 $ 24 , 3 9 7 , 0 8 7 $ 21 , 0 2 8 , 9 1 0 $ 1, 8 0 0 , 0 0 0 63 , 9 8 0 , 0 9 0 $ 20 1 4 16 , 0 4 0 , 0 0 0 6, 4 4 5 , 0 0 0 1, 8 0 0 , 0 0 0 1, 2 8 2 , 0 9 3 62 9 , 9 9 4 26 , 1 9 7 , 0 8 7 Th e Ci t y ' s to t a l bo n d e d de b t in c r e a s e d $2 6 , 2 2 0 , 1 5 8 (1 0 7 . 9 7 % ) fr o m th e pr e v i o u s ye a r . Th e Ci t y re t i r e d $3 , 1 8 0 , 3 5 2 in pr i n c i p a l , re f u n d e d $8 , 2 6 0 , 0 0 0 in pr i n c i p a l (i n c l u d i n g a cr o s s o v e r ad v a n c e d re f u n d i n g of $ 6 , 6 0 0 , 0 0 0 ) , an d is s u e d $2 2 , 8 0 0 , 5 1 0 in co m b i n e d ne w de b t fo r th e co n s t r u c t i o n of a wa t e r tr e a t m e n t pl a n t an d in f r a s t r u c t u r e im p r o v e m e n t s . Th e Ci t y ' s bo n d ra t i n g is A A fr o m St a n d a r d & Po o r ' s Ra t i n g s Se r v i c e s . St a t e st a t u t e s li m i t th e am o u n t o f ge n e r a l ob l i g a t i o n de b t a Mi n n e s o t a ci t y ma y is s u e to 3% of to t a l Es t i m a t e d Ma r k e t Va l u e . Th e cu r r e n t de b t li m i t a t i o n fo r th e Ci t y is $4 4 , 6 8 6 , 4 4 2 . Th e Ci t y do e s no t cu r r e n t l y ha v e an y de b t ou t s t a n d i n g th a t is ap p l i c a b l e to th e li m i t . Ad d i t i o n a l in f o r m a t i o n on th e Ci t y ' s lo n g - t e r m de b t ca n be fo u n d in No t e 3 (F ) on pa g e s 69 th r o u g h 72 of th i s CA F R Ec o n o m i c Fa c t o r s an d Ne x t Ye a r ' s Bu d g e t an d Ra t e s Al l o f th e s e fa c t o r s we r e co n s i d e r e d in th e pr e p a r a t i o n of th e Ci t y ' s bu d g e t fo r th e 20 1 6 fi s c a l ye a r . • Th e un e m p l o y m e n t ra t e fo r th e Ci t y is 4. 0 0 % at th e en d of th e 20 1 5 fi s c a l ye a r , wh i c h is a in c r e a s e fr o m th e ra t e of 3 . 6 0 % a ye a r ag o . Th i s co m p a r e s to th e St a t e ' s av e r a g e un e m p l o y m e n t ra t e o f 3. 70 % an d th e na t i o n a l av e r a g e of 4. 8 0 % . • An in c r e a s e in es t i m a t e d ta x a b l e ma r k e t va l u e o f 6. 4 pe r c e n t fr o m ta x e s pa y a b l e 20 1 5 to 20 1 6 . Th e ta x a b l e ma r k e t va l u e in c r e a s e wa s dr i v e n by si g n i f i c a n t in c r e a s e s in re s i d e n t i a l pr o p e r t y va l u e s (1 1 . 4 % ) . • Co n t i n u i n g re d e v e l o p m e n t th r o u g h o u t th e Ci t y wi l l yi e l d ne t gr o w t h in ta x ba s e an d st a b i l i t y in ta x ba s e al o n g wi t h pr o v i d i n g jo b gr o w t h in th e Ci t y . • De v e l o p m e n t ac t i v i t y co n t i n u e s at th e Sh i n g l e Cr e e k Cr o s s i n g si t e , th e bu s i n e s s ac t i v i t y in 20 1 5 in c l u d e d th e co m p l e t i o n o f th e Di s c o u n t Ti r e St o r e , Ki d ' s Fo o t Lo c k e r , Ru e 21 , Vi l l a , a le a s e wi t h Ca r i b o u Co f f e e an d Br u e g g e r s Ba g e l an d a PU D am e n d m e n t to th e fo r m e r Ko h l ' s si t e wa s ap p r o v e d to ad d an ad d i t i o n a l 9 , 4 0 0 sq u a r e fo o t re t a i l bu i l d i n g . • In De c e m b e r 20 1 3 th e ED A pu r c h a s e d a 23 . 2 ac r e pr o p e r t y fo r m e r l y kn o w n as th e Br o o k d a l e Sq u a r e sh o p p i n g ce n t e r wh i c h ad j o i n s th e ED A' s 8. 4 ac r e fo r m e r Br o o k d a l e Fo r d de a l e r s h i p si t e . Th e ED A ha s en t e r e d in t o a pr e l i m i n a r y de v e l o p m e n t ag r e e m e n t wi t h Sa n d De v e l o p m e n t Co m p a n y fo r th e ph a s e d de v e l o p m e n t of se v e n ap a r t m e n t bu i l d i n g s , pr o v i d i n g 74 8 ma r k e t ra t e ap a r t m e n t un i t s wi t h un d e r g r o u n d pa r k i n g , an d pr o j e c t am e n i t i e s de s i g n e d fo r to d a y ' s ap a r t m e n t li f e st y l e wi t h i n th e Me t r o ar e a . Th e in i t i a l ph a s e o f th i s de v e l o p m e n t in c l u d e s tw o ap a r t m e n t bu i l d i n g s wi t h 30 0 un i t s an d a ce n t r a l pa r k ar e a wi t h a re c r e a t i o n a l bu i l d i n g , po o l an d pa t i o ar e a s . CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A MA N A G E M E N T ' S DI S C U S S I O N AN D AN A L Y S I S De c e m b e r 31 , 2 0 1 5 He n n e p i n Co u n t y , Mi n n e s o t a De p a r t m e n t of Em p l o y m e n t an d Economic Development (DEED), and the Metropolitan Council ap p r o v e d th r e e gr a n t ap p l i c a t i o n s to t a l i n g $1 . 5 mi l l i o n to co m p l e t e a soils investigation and remediation action plan for the fo r m e r Ho w e Fe r t i l i z e r Si t e . Th i s en a b l e d a de v e l o p e r to pr o c e e d with the development of a 61,000 square foot building that wa s co m p l e t e d an d le a s e d in 20 1 5 . Th e ED A ac q u i r e d th e fo r m e r Ch r y s l e r Au t o De a l e r s h i p , al s o known as Cars with Heart, a five acre commercial site at 61 2 1 Br o o k l y n Bo u l e v a r d . Th e bu i l d i n g s ha v e be e n de m o l i s h e d and the EDA has approved plans and entered into a de v e l o p m e n t ag r e e m e n t fo r th e co n s t r u c t i o n o f a 15 6 un i t se n i o r apartment building that provides affordable assisted care op p o r t u n i t i e s fo r se n i o r ci t i z e n s . Th e Th r e e Ri v e r s Pa r k Di s t r i c t pr o v i d e d fu n d i n g fo r a re a l i g n m e n t of the Twin Lakes Regional Trail Corridor within the ea s t e r n po r t i o n o f th e pl a n n e d re n o v a t i o n o f th e La k e Po i n t e Ap a r t m e n t s . Planning for the 2016-17 construction of an ex t e n s i o n o f th i s re g i o n a l tr a i l al o n g 57 t h A ve n u e ea s t of Hi g h w a y 100, to connect the Mississippi Regional Corridor is un d e r w a y . Th e Br o o k l y n Bo u l e v a r d br i d g e an d tr a i l im p r o v e m e n t s ov e r State Highway 100 were completed and a cooperative grant ap p l i c a t i o n wi t h He n n e p i n Co u n t y ha s re c e i v e d fa v o r a b l e sc o r i n g for Federal funding of the reconstruction of the southern po r t i o n o f th e Br o o k l y n Bo u l e v a r d Co r r i d o r St u d y (s o u t h e r n bo r d e r ofthe City to County Road 10/Bass Lake Road). Co n s t r u c t i o n is pl a r m e d fo r 20 1 8 . In 20 1 5 , co n s t r u c t i o n o f th e Ne w Mi l l e n n i u m Ac a d e m y , a 55 0 student charter school commenced on the former Malmborg's Nu r s e r y si t e an d is sc h e d u l e d to op e n in th e fa l l of 20 1 6 . • Th e Ci t y ' s wa t e r tr e a t m e n t pl a n t is fu l l y op e r a t i o n a l be g i n n i n g in January 2016, which reduced the level of manganese from ou r wa t e r su p p l y . Th e es t i m a t e d to t a l co s t fo r th e wa t e r tr e a t m e n t plant is $19.66 million. Financing is being provided th r o u g h a lo w in t e r e s t lo a n un d e r th e Dr i n k i n g Wa t e r Re v o l v i n g Fund through the Minnesota Public Facilities (PFA) loan pr o g r a m . Th e lo a n wi l l be re p a i d ov e r tw e n t y ye a r s at an in t e r e s t rate of one percent. • Ut i l i t y ra t e s ha v e be e n pr o j e c t e d in t o a ro l l i n g 15 ye a r mo d e l to allow for funding of system maintenance, technology changes an d ca p i t a l re p a i r an d re p l a c e m e n t s wh i l e mo d e r a t i n g an n u a l ra t e adjustments. On January 1, 2016 the sanitary sewer utility qu a r t e r l y ba s e ch a r g e in c r e a s e d fr o m $7 8 . 4 5 to $8 0 . 0 2 . Th e wa t e r utility rates increased for both base and consumption ch a r g e s . Th e qu a r t e r l y ba s e ch a r g e of $ 1 0 . 0 0 pe r re s i d e n t i a l an d commercial irrigation meter increased to $12.20 per me t e r . Th e co n s u m p t i o n ch a r g e of $ 1 . 6 6 pe r 1, 0 0 0 ga l l o n s (u p to 30,000 gallons per quarter), increased by $0.37 per 1,000 ga l l o n s . Mu l t i - f a m i l y , co m m e r c i a l an d in d u s t r i a l pr o p e r t i e s pa y a quarterly base charge depending on the size of the meters an d a co n s m n p t i o n ra t e pe r 1, 0 0 0 ga l l o n s . Th e co n s u n 1 p t i o n ra t e increased $0.56 to $2.53 per 1,000 gallons. Th e Ci t y ' s po l i c y is to ma i n t a i n a Ge n e r a l fu n d un a s s i g n e d fu n d balance of 50% -52% of the ensuing year's budgeted General fu n d op e r a t i o n s . Ad d i t i o n a l l y th e Ci t y ' s ca p i t a l pr o j e c t fu n d i n g po l i c y that transfers the amount of fund balance exceeding 52% to th e Ca p i t a l Im p r o v e m e n t s fu n d fo l l o w i n g th e co m p l e t e d au d i t of the City's CAFR The City transferred $908,761 for Capital Im p r o v e m e n t s fr o m th e Ge n e r a l Fu n d . Th e Ci t y ha s as s i g n e d $8 0 4 , 8 1 5 (the amount exceeding 52%) for capital improvements wi t h i n th e Ge n e r a l Fu n d . To t a l un a s s i g n e d an d as s i g n e d fu n d ba l a n c e at the end of 2015 was $11,092,058 (56.07%) of the ad o p t e d 20 1 6 bu d g e t e d ex p e n d i t u r e s . Re q u e s t s fo r In f o r m a t i o n Th i s fm a n c i a l re p o r t is de s i g n e d to pr o v i d e a ge n e r a l ov e r v i e w of the City of Brooklyn Center's finances for all those with an in t e r e s t in th e go v e r n m e n t ' s fi n a n c e s . Qu e s t i o n s co n c e r n i n g an y o f the information provided in this report or requests for additional fm a n c i a l in f o r m a t i o n sh o u l d be ad d r e s s e d to th e Fi n a n c e Di r e c t o r , 6301 Shingle Creek Parkway, Brooklyn Center, MN 55430. IV-10 Basic Financial Statements IV-12 CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A ST A T E M E N T OF AC T I V I T I E S Fo r th e Ye a r En d e d De c e m b e r 31 , 2 0 1 5 FU N C T I O N _ S L P R O G R A M § Go v e r n m e n t ac t i v i t i e s : Ge n e r a l go v e r n m e n t Pu b l i c sa f e t y Pu b l i c wo r k s Co m m u n i t y se r v i c e s Pa r k s an d re c r e a t i o n Ec o n o m i c de v e l o p m e n t In t e r e s t on lo n g - t e r m de b t To t a l go v e r n m e n t ac t i v i t i e s Bu s i n e s s - t y p e ac t i v i t i e s : Mu n i c i p a l li q u o r Go l f co u r s e Ea r l e Br o w n He r i t a g e Ce n t e r Wa t e r ut i l i t y Sa n i t a r y se w e r ut i l i t y St o r m dr a i n a g e ut i l i t y St r e e t li g h t ut i l i t y Re c y c l i n g ut i l i t y To t a l bu s i n e s s - t y p e ac t i v i t i e s To t a l ~ e n s e s $ 3, 5 2 7 , 3 2 3 10 , 7 0 7 , 6 0 2 3, 8 6 7 , 4 0 6 13 5 , 6 0 4 3, 0 5 3 , 3 2 8 5, 4 1 9 , 3 0 4 72 3 , 0 0 0 27 , 4 3 3 , 5 6 7 5, 8 1 6 , 3 6 3 27 0 , 3 0 7 4, 7 3 9 , 5 4 3 2, 1 7 9 , 8 9 2 3, 6 9 4 , 8 8 0 1, 8 8 3 , 1 5 4 28 1 , 6 6 1 29 2 , 2 8 2 19 , 1 5 8 , 0 8 2 $ 46 , 5 9 1 , 6 4 9 Th e no t e s to th e fm a n c i a l st a t e m e n t s ar e an in t e g r a l pa r t o f th i s st a t e m e n t . Ch a r g e s Fo r Se r v i c e s $ 65 3 , 5 3 5 54 8 , 6 6 9 22 6 , 6 4 5 56 4 , 2 1 7 22 5 , 0 5 7 - 2, 2 1 8 , 1 2 3 6, 0 6 1 , 6 8 0 20 8 , 3 4 6 4, 6 4 9 , 1 6 2 2, 6 4 0 , 6 6 5 4, 0 9 5 , 0 1 7 1, 6 3 5 , 6 5 5 46 4 , 2 5 8 31 5 , 4 3 4 20 , 0 7 0 , 2 1 7 $ 22 , 2 8 8 , 3 4 0 Pr o s r a m Re v e n u e s Op e r a t i n g Ca p i t a l Gr a n t s an d Gr a n t s an d Co n t r i b u t i o n s C o n t r i b u t i o n s $ - $ - 1, 1 9 8 , 5 4 4 - 11 0 , 0 0 0 5, 1 5 1 , 3 0 6 98 , 6 9 4 33 , 0 7 5 1, 1 9 8 , 2 3 9 - - - 2, 6 0 5 , 4 7 7 5, 1 8 4 , 3 8 1 6, 7 4 6 -- 17 , 8 3 2 5, 9 4 4 - - - - 30 2 2 2 $ 2, 6 3 5 , 9 9 9 $ 5, 1 8 4 , 3 8 1 Ge n e r a l re v e n u e s : Pr o p e r t y ta x e s Ta x in c r e m e n t s Lo d g i n g ta x e s Gr a n t s an d co n t n o u t i o n s no t re s t r i c t e d to sp e c i f i c pr o g r a m s Un r e s t r i c t e d in v e s t m e n t ea r n i n g s Ga i n on di s p o s a l o f ca p i t a l as s e t Tr a n s f e r s Tr a n s f e r s - ca p i t a l as s e t s To t a l ge n e r a l re v e n u e s an d tr a n s f e r s Ch a n g e in ne t po s i t i o n Ne t po s i t i o n - Ja n u a r y 1 Ch a n g e in Ac c o u n t i n g Pr i n c i p l e - Pe n s i o n Ne t po s i t i o n - Ja n u a r y 1, re s t a t e d Ne t po s i t i o n - De c e m b e r 31 Ne t !E!I!!:!!sel Revenue and Chanses in Net Position Go v e r n m e n t a l Business-Type Ac t i v i t i e s Activities Total $ (2 , 8 7 3 , 788) $ $ (2,873,788) (8 , 9 6 0 , 3 8 9 ) (8,960,389) 1, 6 2 0 , 5 4 5 1,620,545 (135,604) -(135,604) (2 , 3 5 7 ,342) (2,357 ,342) (3 , 9 9 6 , 0 0 8 ) (3,996,008) (723,000) -(723,000) (1 7 ,425,586) -(17 ,425,586) 245,317 245,317 -(55,215) (55,215) -(90,381) (90,381) 478,605 478,605 -406,081 406,081 (247,499) (247,499) 182,597 182,597 23,152 23,152 -942 657 942 657 (1 7 , 4 2 5 , 5 8 6 ~ 942,657 __ (16,482,929) 15 , 3 2 0 , 9 9 8 -15,320,998 3, 8 0 5 , 3 6 7 3,805,367 1, 0 7 5 , 4 2 5 -1,075,425 1, 6 7 0 , 9 2 8 -1,670,928 254,366 127,686 382,052 27,800 -27,800 236,312 (236,312) !1 , 0 3 4 , 5 7 4 l 1 034 574 21 , 3 5 6 , 6 2 2 925,948 --22,282,570 3, 9 3 1 , 0 3 6 1,868,605 5,799,641 83 , 3 6 6 , 7 5 0 55,356,897 138,723,647 !8 , 0 4 1 J 2 9 l !1,571,633l !9,612,862l 75 , 3 2 5 , 5 2 1 53,785J64 129,110,785 $ 79 , 2 5 6 , 5 5 7 $ 55,653,869 $ 134,910,426 IV-13 CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A BA L A N C E SH E E T GO V E R N M E N T A L FU N D S De c e m b e r 31 , 20 1 5 AS S E T S Ca s h an d in v e s t m e n t s Ca s h wi t h fi s c a l ag e n t s Re c e i v a b l e s : Ac c o u n t s - ne t Cu r r e n t ta x e s De l i n q u e n t ta x e s Sp e c i a l as s e s s m e n t s Du e fr o m ot h e r fu n d s Du e fr o m ot h e r go v e r n m e n t s No t e s re c e i v a b l e In v e n t o r i e s Pr e p a i d it e m s Ad v a n c e s to ot h e r fu n d s As s e t s he l d fo r re s a l e To t a l as s e t s LI A B I L I T I E S Ac c o u n t s pa y a b l e Co n t r a c t s pa y a b l e Ac c r u e d sa l a r i e s an d wa g e s Du e to ot h e r fu n d s Du e to ot h e r go v e r n m e n t s De p o s i t s pa y a b l e Un e a r n e d re v e n u e Ad v a n c e s fr o m ot h e r fu n d s To t a l li a b i l i t i e s DE F E R R E D IN F L O W S OF RE S O U R C E S Un a v a i l a b l e re v e n u e - pr o p e r t y ta x e s Un a v a i l a b l e re v e n u e - ta x in c r e m e n t s Un a v a i l a b l e re v e n u e - sp e c i a l as s e s s m e n t s Un a v a i l a b l e re v e n u e - no t e s re c e i v a b l e Un a v a i l a b l e re v e n u e - in t e r g o v e r n m e n t a l To t a l de f e r r e d in f l o w s o f re s o u r c e s FU N D BA L A N C E S (D E F I C I T S ) No n s p e n d a b l e Re s t r i c t e d Co m m i t t e d As s i g n e d Un a s s i g n e d To t a l fu n d ba l a n c e s (d e f i c i t s ) To t a l li a b i l i t i e s , de f e r r e d in f l o w s o f re s o u r c e s an d fu n d ba l a n c e s (d e f i c i t s ) Ge n e r a l $ 11 , 4 5 7 , 2 5 4 - 11 6 , 3 9 8 67 , 7 7 2 26 8 , 5 8 6 13 7 , 5 8 2 14 4 , 9 8 2 40 , 0 8 0 44 , 0 4 4 34 , 8 1 5 - 12 , 3 1 1 , 5 1 3 34 3 , 6 7 8 15 5 , 0 0 1 - 26 , 0 2 6 21 6 , 8 4 6 1, 1 0 0 - 74 2 65 1 26 8 , 5 8 6 - 12 9 , 3 5 9 - 39 7 , 9 4 5 78 , 8 5 9 80 4 , 8 1 5 10 ~ 8 7 , 2 4 3 11 , 1 7 0 , 9 1 7 $ 12 , 3 1 1 , 5 1 3 Th e no t e s to th e fi n a n c i a l st a t e m e n t s ar e an in t e g r a l pa r t o f th i s st a t e m e n t . Ta x Ta x In c r e m e n t I n c r e m e n t De b t Di s t r i c t No . 3 Di s t r i c t No . 5 Se r v i c e $ 1, 6 6 7 , 2 0 0 $ 10 4 , 8 5 9 $ 2, 0 4 8 , 0 2 1 6, 7 8 2 , 0 8 1 19 , 8 0 7 - 16 , 2 7 5 1, 6 4 3 89 , 8 0 6 11 0 , 4 9 3 - - 2, 9 2 1 , 8 8 7 - - 27 9 , 4 0 0 --- 15 , 5 7 8 , 0 7 5 17 , 3 7 1 , 1 6 3 49 4 , 7 5 2 11 , 7 5 3 , 6 3 2 84 , 5 9 8 10 2 , 6 4 2 1, 3 0 0 ---- - 85 , 5 3 0 - - - - - - 2, 4 6 3 , 6 8 3 - 84 2 9 8 2, 5 6 6 , 3 2 5 86 83 0 - - - 89 , 8 0 6 11 0 , 4 9 3 - - 2, 9 1 8 , 8 8 8 59 , 4 0 0 - - - 89 80 6 16 9 89 3 2, 9 1 8 , 8 8 8 - - - 17 , 1 9 6 , 7 5 9 8, 7 4 7 , 9 1 4 -- - - ~2, 2 4 1 ,4 6 6 2 17 , 1 9 6 , 7 5 9 (2 , 2 4 1 , 4 6 6 ) 8 74 7 91 4 $ 17 , 3 7 1 , 1 6 3 $ 49 4 , 7 5 2 $ 11 , 7 5 3 , 6 3 2 Mu n i c i p a l Ca p i t a l St a t e Ai d In f r a s t r u c t u r e Other Im p r o v e m e n t s fo r Co n s t r u c t i o n Nonmajor Total Fu n d Co n s t r u c t i o n Fund Governmental Governmental $ 3, 2 1 0 , 6 7 9 $ $ $ 6,168,923 $ 24,656,936 - - -6,782,081 - 71,308 164,692 372,205 61 7 - 1,173 87,480 9, 4 4 2 -6,663 484,990 2, 0 3 6 - 1,441,134 4,502,639 70 6 , 8 3 4 -851,816 3, 5 8 3 , 5 5 7 153,295 3,776,932 - -279,400 - -44,044 - - 1,500 36,315 79 2 , 4 8 8 - - 2,463,683 3,256,171 - 537 000 16,115,075 4, 7 2 2 , 0 9 6 3, 5 8 3 , 5 5 7 1,512,442 9,496,929 61,246,084 12 1 , 2 0 1 5, 0 0 0 151,393 353,568 1,163,380 18 0 , 5 3 8 - 57,840 238,378 - - 5,269 160,270 - 65 5 , 2 4 8 51,586 -706,834 - 45 6 37 112,049 - 35,793 252,639 1,100 -2,463,683 30 1 73 9 66 0 7 0 4 260 819 394 667 __ 5,098,333 9, 4 4 2 6,663 284,691 - -200,299 2, 0 3 6 - 1,434,768 4,485,051 - - - 59,400 2, 6 9 9 , 3 2 2 -2,699,322 11 4 7 8 2, 6 9 9 , 3 2 2 _ _ 1,434,768 6,663 7,728,763 - -1,500 80,359 22 3 , 5 3 1 -4,197,207 30,365,411 4, 4 0 8 , 8 7 9 - - 4,897,345 9,306,224 - - 804,815 - !J83,1452 ~4532 7,862,179 - - 4, 4 0 8 , 8 7 9 2~ , 5 3 1 (183,145) 9,095,599 48,418,988 $ 4, 7 2 2 , 0 9 6 $ 3, 5 8 3 , 5 5 7 $ 1,512,442 $ 9,496,929 $ 61,246,084 IV-15 C I T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A ST A T E M E N T OF RE V E N U E S , EX P E N D I 1 U R E S , AN D CH A N G E S IN FU N D BA L A N C E S GO V E R N M E N T A L FU N D S Fo r th e Ye a r En d e d De c e m b e r 31 , 20 1 5 Mu n i c i p a l Ta x Ta x Ca p i t a l St a t e Ai d ln f r a s 1 r u c t u r e Other In c r e m e n t In c r e m e n t De b t Im p r o v e m e n t s fo r Construction Nonmajor Total Ge n e r a l Di s t r i c t No . 3 Di s t r i c t No . 5 Se r v i c e Fu n d Co n s t r u c t i o n Fund Governmental Governmental RE V E N U E S Pr o p e r t y ta x e s $ 14 , 4 5 6 , 6 1 4 $ $ $ 38 9 , 7 0 5 $ (5 , 2 0 6 ) $ $ $ 274,058 $ 15,115,171 Ta x in c r e m e n t s 2, 9 5 3 , 7 2 8 35 3 , 4 1 7 362,053 3,669,198 Fr a n c h i a e fe e s 653,648 653,648 Lo d g i n g ta x e s 1, 0 7 5 , 4 2 5 1,075,425 Li c e n s e s an d pe r m i t a 85 9 , 5 3 4 859,534 In t e r g o v e r n m e n t a l 1, 4 1 0 , 6 9 5 - 74 7 , 0 7 6 1, 0 7 2 , 0 3 1 1,518,674 4,748,476 Ch a r g e s fo r ae r v i c e s 74 9 , 5 6 9 17 7 , 2 1 3 18 8 33,785 6,952 967,707 Sp e c i a l as a e s s m e n t s 14 8 , 2 3 4 1, 1 2 0 , 9 4 6 15 7 445,822 1,715,159 Fi n e s an d fo r f e i t s 26 8 , 1 1 6 23,566 291,682 In v e s t m e n t ea r n i n g s (n e t o f ma r k e t va l u e ad j u s t m e n t ) 62 , 2 7 6 19 , 8 3 3 45 8 8, 2 0 3 43 , 3 8 9 15 , 2 3 0 53,783 203,172 Mi s c e l l a n e o u s 14 2 , 8 0 0 21 8 7 4 11 6 , 5 0 0 76172 72229 429 575 To t a l re v e n u e s 19 , 1 7 3 , 2 6 3 3, 1 7 ~ 6 4 8 35 3 87 5 15 1 8 85 4 90 2 , 1 0 4 1, 0 8 7 , 2 6 1 555,779 2,964,963 29,728,747 EX P E N D I T U R E S Cu r r e n t : Ge n e r a l go v e r n m e n t 2, 7 6 0 , 7 5 6 16 1 , 3 1 5 16,365 2,938,436 Pu b l i c sa f e t y 9, 7 8 5 , 4 8 7 218,988 10,004,475 Pu b l i c wo r k s 1, 8 7 6 , 8 9 9 10 9 , 9 8 1 44,933 2,031,813 Co m m u n i t y se r v i c e s 13 5 , 6 0 4 135,604 Pa r k s an d re c r e a t i o n 2, 4 8 8 , 9 9 0 16 1 , 3 1 5 140,319 2,790,624 Ec o n o m i c d e v e l o p m e n t 51 0 , 8 2 7 1, 4 8 3 , 4 7 6 1, 2 9 5 , 4 8 2 1,979,840 5,269,625 No n d e p a r t m e n t a l 45 0 , 1 2 9 450,129 Ca p i t a l ou t l a y : Ge n e r a l go v e r n m e n t 8, 2 5 3 69 9 , 3 8 4 27,723 735,360 Pu b l i c sa f e t y 23 , 6 9 0 19,010 42,700 Pu b l i c wo r k s 3, 8 9 3 - 2, 5 8 3 , 8 4 9 1,455,128 2,241,978 6,284,848 Pa r k s an d re c r e a t i o n 3, 2 7 0 2, 8 4 1 , 3 3 8 568,254 3,412,862 De b t se r v i c e : Pr i n c i p a l 3, 0 2 5 , 0 0 0 3,025,000 In t e r e s t 82 6 , 0 5 3 826,053 Fi s c a l ag e n t fe e s 9, 8 3 8 9,838 Bo n d is s u a n c e co s t s 71 1 0 2 17769 28509 117 380 To t a l ex p e n d i t u r e s 18 , 0 4 7 , 7 9 8 1, 4 8 3 , 4 7 6 1, 2 9 5 , 4 8 2 3, 9 3 1 , 9 9 3 3, 8 6 3 , 3 5 2 _ 2, 6 9 : ! , 8 3 0 1_,5_17,830 5,240,986 38,074,747 Ex c e s s (d e f i c i e n c y ) o f re v e n u e s ov e r (u n d e r ) ex p e n d i t u r e s 1, 1 2 5 , 4 6 5 1, 6 8 9 , 1 7 2 !9 4 1 , 6 0 : z l !2 , 4 1 3 , 1 3 9 ) (2 , 9 6 1 , 2 4 8 ) ( 1 , 6 0 6 , 5 6 9 ) (962,051) (2,276,023) (8,346,000) OT H E R FI N A N C I N G SO U R C E S (U S E S ) Tr a n s f e r s in 20 1 , 6 8 4 2, 3 9 5 , 9 8 2 1, 1 2 5 , 2 1 6 -818,702 4,541,584 Is s u a n c e o f de b t 6, 6 0 0 , 0 0 0 1,222,708 2,193,540 10,016,248 Pr e m i u m on is s u a n c e o f de b t 25 5 , 6 3 0 19,391 34,788 309,809 Sa l e o f ca p i t a l as s e t s 4, 8 2 0 4,820 Tr a n s f e r s ou t !1 , 1 7 6 , 3 1 3 ) !2 , 3 9 5 , 9 8 2 ) !2 6 4 , 3 1 9 ) !476,04:zl !4,312,661) To t a l ot h e r fi n a n c i n g so u r c e s (u s e s ) (9 7 4 , 6 2 9 ) (2 , 3 9 1 , 1 6 2 ) 9~ 5 1 , 6 1 2 86 0 8 9 7 1,242,099 2,570,983 10,559,800 Ne t ch a n g e in fu n d ba l a n c e 15 0 , 8 3 6 (7 0 1 , 9 9 0 ) (9 4 1 , 6 0 7 ) 6, 8 3 8 , 4 7 3 (2 , 1 0 0 , 3 5 1 ) (1 , 6 0 6 , 5 6 9 ) 280,D48 294,960 2,213,800 Fu n d ba l a n c e s (d e f i c i t s ) -J a n u a r y 1 11 , 0 2 0 , 0 8 1 17 , 8 9 8 , 7 4 9 (1 , 2 9 9 , 8 5 9 ) 19 0 9 44 1 6, 5 0 9 , 2 3 0 1, 8 3 0 , 1 0 0 !463,193) 8,800,639 46,205,188 Fu n d ba l a n c e a (d e f i c i t s ) - De c e m b e r 31 $ 11 , 1 7 0 , 9 1 7 $ 17 , 1 9 6 , 7 5 9 $ (2 , 2 4 1 , 4 6 6 ) $ 8, 7 4 7 , 9 1 4 $ 4, 4 0 8 , 8 7 9 $ 22 3 , 5 3 1 $ (183,145) $ 9,095,599 _j_ 4ll,418,988 Th e no t e s to th e fi n a n c i a l st a t e m e n t s ar e an in t e g r a l pa r t o f th i s st a t e m e n t . IV-19 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 Amounts Actual Positive Oris!nal Final Amounts (Neaative~ REVENUES Tax increments $ 435,437 $ 435,437 $ 353,417 $ (82,020) Investment earnings (net of market value adjustment) 816 816 458 ~358~ Total revenues 436,253 436,253 353,875 ~82,378~ EXPENDITURES Current: Economic development: Services and other charges 400,469 400,469 1,295,482 ~895,013~ Excess (deficiency) of revenues over(under)expenditures 35,784 35,784 (941,607) (977,391) OTHER FINANCING SOURCES (USES) Transfers out ~34,968l ~34,968~ 34,968 Net change in fund balance 816 816 (941,607) (942,423) Fund balance-January 1 ~1,299,859l p,299,859l p,299,859l Fund balance -December 31 $ (1,299,043l $ (1,299,043l $ (2,241,466l $ (942,423) The notes to the financial statements are an integral part of this statement. IV-20 CI T Y OF BR O O K L Y N CE N T E R , Ml N N E S O T A ST A T E M E N T OF NE T PO S I T I O N PR O P R I E T A R Y FU N D S De c e m b e r 3 1 , 2 0 1 5 AS S E T S Cu r r e n t as s e t s : Ca s h an d ca s h eq u i v a l e n t s Re c e i v a b l e s : Ac c o u n t s - ne t Sp e c i a l as s e s s m e n t s Du e fr o m ot h e r go v e r n m e n t s Pr e p a i d it e m s In v e n t o r i e s To t a l cu r r e n t as s e t s No n c u r r e n t as s e t s : Ca p i t a l as s e t s : La n d Ea s e m e n t s La n d im p r o v e m e n t s Bu i l d i n g s an d im p r o v e m e n t s Ma c h i n e r y an d eq u i p m e n t St r e e t li g h t sy s t e m s Ma i n s an d li n e s Co n s t r u c t i o n in pr o g r e s s To t a l ca p i t a l as s e t s Le s s : ac c u m u l a t e d de p r e c i a t i o n Ne t ca p i t a l as s e t s To t a l no n c u r r e n t as s e t s To t a l as s e t s DE F E R R E D OU T F L O W S OF RE S O U R C E S De f e r r e d pe n s i o n re s o u r c e s LI A B I L I T I E S Cu r r e n t li a b i l i t i e s : Ac c o u n t s pa y a b l e Co n t r a c t s pa y a b l e Ac c r u e d sa l a r i e s an d wa g e s Ac c r u e d in t e r e s t pa y a b l e Du e to ot h e r fu n d s Du e to ot h e r go v e r n m e n t s De p o s i t s pa y a b l e Un e a r n e d re v e n u e No t e s pa y a b l e Bo n d s pa y a b l e Co m p e n s a t e d ab s e n c e s pa y a b l e To t a l cu r r e n t li a b i l i t i e s No n c u r r e n t li a b i l i t i e s : No t e s pa y a b l e Bo n d s pa y a b l e Ad v a n c e s fr o m ot h e r fu n d s Co m p e n s a t e d ab s e n c e s pa y a b l e Ne t OP E B ob l i g a t i o n Ne t pe n s i o n li a b i l i t y To t a l no n c u r r e n t li a b i l i t i e s T ot a l l i a b i l i t i e s DE F E R R E D IN F L O W S OF RE S O U R C E S De f e r r e d pe n s i o n re s o u r c e s NE T PO S I T I O N Ne t in v e s t m e n t in ca p i t a l as s e t s Un r e s t r i c t e d To t a l ne t po s i t i o n Ne t po s i t i o n fr o m th i s St a t e m e n t $ $ Bu s i n e s s a T l : : E e Ac t i v i t i e s Mu n i c i p a l Go l f Ea r l e Br o w n Li g u o r Co u r s e He r i t a s e Ce n t e r 1, 9 1 6 , 5 0 1 $ $ 2, 4 0 5 , 6 8 0 9, 2 8 0 24 7 , 2 3 6 28 , 3 8 6 17 , 1 0 2 70 6 , 2 2 0 1, 9 3 0 32 , 2 7 5 2, 6 6 0 , 3 8 7 1, 9 3 0 2 70 2 , 2 9 3 1, 3 9 0 , 4 0 2 1, 4 9 3 , 3 0 0 65 , 6 3 7 37 7 , 2 5 4 19 2 , 7 7 1 66 4 , 3 2 2 12 , 5 0 2 , 1 6 3 26 1 , 7 8 6 11 , 1 6 0 38 6 , 3 0 9 45 4 , 5 5 7 2, 1 3 1 , 5 2 1 14 , 7 5 9 , 0 2 6 p2 4 , 8 9 0 l ~45 5 , 3 6 5 l ~1 1 , 3 4 0 , 8 2 8 l 12 9 , 6 6 7 1, 6 7 6 , 1 5 6 3, 4 1 8 , 1 9 8 12 9 , 6 6 7 1, 6 7 6 , 1 5 6 3 41 8 , 1 9 8 2, 7 9 0 , 0 5 4 1, 6 7 8 , 0 8 6 6, 1 2 0 , 4 9 1 14 9 , 4 1 3 70 0 66 , 6 9 1 16 1 , 2 0 2 8, 0 3 7 1, 1 1 5 12 , 8 1 1 14 4 , 9 8 2 55 , 0 2 1 22 , 7 4 0 40 7 , 9 2 1 3, 4 7 2 1, 6 0 0 21 5 94 3 14 6 79 7 6 7 2 96 5 79 2 , 4 8 8 79 2 , 4 8 8 21 5 , 9 4 3 93 9 , 2 8 5 67 2 96 5 12 9 , 6 6 7 1, 6 7 6 , 1 5 6 3, 4 1 8 , 1 9 8 2 44 4 44 4 ~93 7 , 3 5 5 l 2, 0 2 9 , 3 2 8 25 7 4 1 1 1 $ 73 8 80 1 $ 5 44 7 52 6 Ad j u s t m e n t to re f l e c t th e co n s o l i d a t i o n of in t e r n a l se r v i c e fu n d ac t i v i t i e s re l a t e d to en t e r p r i s e fu n d s Ne t po s i t i o n of bu s i n e s s - t y p e ac t i v i t i e s Th e no t e s to th e fi n a n c i a l st a t e m e n t s ar e an in t e g r a l pa r t o f th i s st a t e m e n t . Wa t e r Ut i l i ! J : $ 1, 2 6 5 , 1 9 4 67 9 , 1 5 8 47 5 , 1 2 7 1, 8 3 4 44 , 7 4 2 2, 4 6 6 , 0 5 5 20 , 7 3 4 3, 0 3 3 , 2 1 2 12 8 , 6 6 8 22 , 3 9 5 , 0 8 3 21 55 5 , 7 0 9 47 , 1 3 3 , 4 0 6 ~1 6 , 0 2 9 , 7 3 0 l 31 10 3 , 6 7 6 31 , 1 0 3 67 6 33 56 9 73 1 91 8 , 8 5 9 91 5 , 6 2 6 6, 1 5 1 70 , o 4 8 4, 0 2 3 5, 6 2 5 21 2 , 8 9 1 94 4 , 0 0 0 10 5 , 0 0 0 3 18 2 22 3 16 , 6 0 1 , 1 5 8 1, 1 4 0 , 0 0 0 17 , 7 4 1 , 1 5 8 20 , 9 2 3 , 3 8 1 13 , 5 5 8 , 5 1 8 ~9 1 2 , 1 6 8 l $ 12 , 6 4 6 , 3 5 0 Governmental Bu s i n e s s - T~ £ e Ac t i v i t i e s Activities- Sa n i t a r y Se w e r St o r m Dr a i n a g e St r e e t Li g h t Recycling Total Internal Ut i l i ! J : : Ut i l i ! J : Ut i l i ! J : : Utili!J: ~se Service $ 3, 0 6 1 , 1 2 0 $ 3, 3 3 7 , 8 3 2 $ 40 5 , 1 0 3 $ 41,420 $ 12,432,850 $ 6,230,655 94 3 , 5 1 3 34 9 , 6 3 3 10 0 , 5 2 6 61,616 2,390,962 35,557 475,127 19,270 18 5 , 3 5 3 232,675 785,167 16,795 4, 1 8 9 98 6 3, 6 8 7 , 4 6 5 50 5 629 103,036 16,316,781 ~277 3, 3 8 9 28 7 , 1 5 8 3,194,983 20 , 3 3 5 10 , 2 8 5 30,620 442,891 166,108 2, 5 7 1 , 4 1 6 18,963,884 17 9 , 1 3 0 24 , 5 8 7 991,640 9,181,885 83 2 , 7 8 9 832,789 21 , 5 4 3 , 3 6 2 27 , 8 6 0 , 1 9 1 71,798,636 1, 6 6 4 , 6 5 1 2, 3 8 3 , 1 0 7 33 , 1 3 7 25,636,604 25 , 9 8 2 , 2 8 3 30 , 5 6 5 , 3 2 8 86 5 , 9 2 6 121,892,047 ~993 ~1 3 , 7 6 1 , 9 3 2 l ~1 3 , 2 1 1 104 2 l 11 9 8 , 1 1 1 l ~55,321,898l ~5,456,463l 12 , 2 2 0 , 3 5 1 17 , 3 5 4 , 2 8 6 66 7 , 8 1 5 66 570,149 3,891,530 12 , 2 2 0 , 3 5 1 17 35 4 28 6 66 7 815 66 570 149 3 891 530 16 41 0 33 7 21 04 1 75 1 11 7 3 4 4 4 103 036 82 886 930 ~807 2,207,122 17 , 9 8 0 14 2 , 9 9 8 24 , 2 6 7 301 1,321,209 34,163 18 , 3 1 2 23 , 5 8 4 1,118,724 2, 2 9 0 3, 1 2 7 33,531 4,138 22 , 8 3 0 92,878 144,982 70 5 82,489 48 413,546 217,963 944,000 35 , 0 0 0 140,000 125,485 97 , 1 1 7 16 9 , 7 0 9 24 , 2 6 7 301 4,509 322 ~834 16,601,158 2, 2 0 3 , 7 5 2 3,343,752 792,488 1,129,366 710,605 11,509,476 2, 2 0 3 , 7 5 2 20,737 398 13,349,447 2, 3 0 0 , 8 6 9 16 9 70 9 24 , 2 6 7 301 25,246,720 ~281 1,660,956 10 , 3 9 6 , 5 9 9 17 , 3 5 4 , 2 8 6 66 7 , 8 1 5 47,201,239 3,891,530 3 71 2 86 9 3, 5 1 7 , 7 5 6 48 1 , 3 6 2 102 735 10,438,971 16,664,838l $ 14 10 9 , 4 6 8 $ 20 , 8 7 2 , 0 4 2 $ 11 4 9 , 1 7 7 $ 102,735 $ 57,640,210 $ (2,773,308) $ 57,640,210 ~1,986,341l $ 55,653,869 IV-21 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A ST A T E M E N T OF RE V E N U E S , EX P E N S E S , AN D CH A N G E S IN NE T PO S I T I O N PR O P R I E T A R Y FU N D S Fo r th e Ye a r En d e d De c e m b e r 31 , 20 1 5 Governmental Bu s i n e s s - Tl l ! e Ac t i v i t i e s Bu s i n e s s - Tl l ! e Ac t i v i t i e s Activities- Mu n i c i p a l Go l f Ea r l e Br o w n Wa t e r Sa n i t a r y Se w e r St o r m Dr a i n a g e St r e e t Li g h t Recycling Total Internal Li 9 ! ! ! ! ! Co m s e He r i ! ! ! ! e Ce n t e r Ut i l i ! l : Ut i l i ! l : Ut i l i ! l : Ut i l i ! l : Utili!l: Enterprise Service OP E R A T I N G RE V E N U E S Sa l e s an d us e r fe e s $ 6, 0 5 6 , 6 6 8 $ 20 8 , 2 2 5 $ 4, 4 8 7 , 2 6 0 $ 2, 5 7 3 , 4 9 3 $ 4, 0 9 3 , 7 2 5 $ 1, 6 3 5 , 5 5 5 $ 45 5 , 3 5 8 $ 315,434 $ 19,825,718 $ 3,022,951 Co s t o f sa l e s 4, 4 3 1 , 5 0 1 2 03 3 , 4 6 4 6,464,965 To t a l op e r a t i n g re v e n u e s 1, 6 2 5 , 1 6 7 20 8 , 2 2 5 2, 4 5 3 , 7 9 6 2, 5 7 3 , 4 ! 1 3 4, 0 9 3 , 7 2 5 1, 6 3 5 , 5 5 5 45 5 , 3 5 8 315,434 13,360,753 3,022,951 OP E R A T I N G EX P E N S E S Pe r s o n a l se r v i c e s 65 3 , 5 5 3 13 7 , 6 7 9 1, 0 2 5 , 8 7 5 52 1 , 3 9 4 20 3 , 3 6 5 19 3 , 7 9 5 2,735,661 2,279,251 Su p p l i e s 52 , 2 4 7 24 , 0 5 1 12 3 , 0 7 2 16 1 , 7 5 7 53 , 2 6 0 45 , 0 0 5 2, 4 3 9 25 461,856 405,086 Ot h e r se r v i c e s 27 0 , 6 0 6 66 , 6 9 1 69 7 , 2 6 9 44 9 , 3 6 1 2, 5 4 7 , 1 4 7 52 7 , 5 0 6 57 , 1 4 3 291,102 4,906,825 160,554 In s u r a n c e 15 , 7 4 1 4, 1 3 5 37 , 8 5 2 26 , 3 9 2 32 , 8 9 6 3, 2 4 2 1, 3 6 3 1,155 122,776 56,693 Ut i l i t i e s 46 , 3 8 4 16 , 3 3 4 18 5 , 4 0 6 14 5 , 4 9 6 36 , 8 2 6 16 7 , 1 4 9 597,595 895 Re n t 31 1 , 5 5 3 311,553 De p r e c i a t i o n 16 9 6 6 18 7 3 7 62 0 , 2 4 9 70 3 93 3 78 3 50 0 1, 1 0 6 , 2 7 6 53 567 -3,303,228 761629 To t a l op e r a t i n g ex p e n s e s 1, 3 6 7 , 0 5 0 26 7 62 7 2, 6 8 9 , 7 2 3 2, 0 0 8 , 3 3 3 3, 6 5 6 , 9 9 4 1, 8 7 5 , 8 2 4 28 1 661 292,282 12,439,494 3,664,108 Op e r a t i n g in c o m e (l o s s ) 25 8 , 1 1 7 (5 9 , 4 0 2 ) (2 3 5 , 9 2 7 ) 56 5 , 1 6 0 43 6 , 7 3 1 (2 4 0 , 2 6 9 ) 17 3 , 6 9 7 23,152 921,259 (641,157) NO N O P E R A T I N G RE V E N U E S (E X P E N S E S ) In t e r g o v e r n m e n t a l 6, 7 4 6 17 , 8 3 2 5, 9 4 4 30,522 48,746 In v e s t m e n t ea r n i n g s (n e t o f ma r k e t va l u e ad j u s t m e n t ) 15 , 0 0 6 16 , 8 2 9 30 , 4 2 3 26 , 6 8 8 35 , 8 4 9 2, 5 8 6 305 127,686 51,194 Sp e c i a l as s e s s m e n t s 39 , 8 8 7 39,887 Ga i n on sa l e o f ca p i t a l as s e t s -27,800 Lo s s on di s p o s a l o f ca p i t a l as s e t s (18,175) Ot h e r re v e n u e (e x p e n s e ) 5, 0 1 2 12 1 16 1 , 9 0 2 27 , 2 8 5 1, 2 9 2 10 0 8, 9 0 0 204,612 40,121 In t e r e s t an d fi s c a l ag e n t fe e s !1 5 4 , 7 0 2 l !2 9 , 3 6 2 l !184,064l To t a l no n o p e r a t i n g re v e n u e s (e x p e n s e s ) 20 0 1 8 6 86 7 17 8 7 3 1 {3 9 , 2 7 5 l 4 5 6 2 35 94 9 11 4 8 6 305 218,643 149,686 In c o m e (l o s s ) be f o r e tr a n s f e r s 27 8 , 1 3 5 (5 2 , 5 3 5 ) (5 7 , 1 9 6 ) 52 5 , 8 8 5 44 1 , 2 9 3 (2 0 4 , 3 2 0 ) 18 5 , 1 8 3 23,457 1,139,902 (491,471) Ca p i t a l co n t r i b u t i o n s fr o m ot h e r fu n d s 1, 0 3 4 , 5 7 4 1,034,574 Tr a n s f e r s in 40 , 0 0 0 40,000 7,389 Tr a n s f e r s ou t (2 1 6 , 4 5 5 l p4 , 8 5 £ l !4 5 , 0 0 0 l {276,312l Ch a n g e in ne t po s i t i o n 61 , 6 8 0 (1 2 , 5 3 5 ) (7 2 , 0 5 3 ) 52 5 , 8 8 5 44 1 , 2 9 3 78 5 , 2 5 4 18 5 , 1 8 3 23,457 1,938,164 (484,082) Ne t po s i t i o n - Ja n u a r y 1 2, 5 1 2 , 4 3 1 75 1 , 3 3 6 5, 5 1 9 , 5 7 9 12 , 1 2 0 , 4 6 5 13 , 6 6 8 , 1 7 5 20 , 0 8 6 , 7 8 8 96 3 , 9 9 4 79,278 55,702,046 8,401,896 Ch a n g e in Ac c o u n t i n g Pr i n c i p l e - Pe n s i o n !10,691,122l Ne t po s i t i o n - Ja n u a r y 1, re s t a t e d 2, 5 1 2 , 4 3 1 75 1 33 6 5, 5 1 9 , 5 7 9 1~ 1 2 0 , 4 6 5 13 , 6 6 8 , 1 7 5 20 , 0 8 6 , 7 8 8 96 3 994 79278 55,702,046 {2,289,222! Ne t po s i t i o n - De c e m b e r 31 $ 21 5 7 4 1 1 1 1 $ 73 8 1 8 0 1 $ 51 4 4 7 1 5 2 6 $ 12 1 6 4 6 1 3 5 0 $ 14 1 1 0 9 1 4 6 8 $ 20 . 8 7 2 . 0 4 2 $ 1 1 4 9 177 $ 1021735 $ 57,640,210 $ (2,773,308) Ch a n g e in ne t po s i t i o n fr o m th i s St a t e m e n t $ 1,938,164 Ad j u s t m e n t to re f l e c t th e co n s o l i d a t i o n o f in t e r n a l se r v i c e fu n d ac t i v i t i e s re l a t e d to en t e t p r i s e fu n d s {69,559l Ch a n g e in ne t po s i t i o n o f bu s i n e s s - t y p e ac t i v i t i e s $ 1,868,605 Th e no t e s to th e fi n a n c i a l st a t e m e n t s ar e an in t e g r a l pa r t o f th i s st a t e m e n t . IV-22 CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A ST A T E M E N T OF CA S H FL O W S PR O P R I E T A R Y FU N D S Fo r t h e Y e a r E n d e d D e c e m b e r 31 , 2 0 1 5 Governmental Bu s i n e s s - T~ ] ! Ac t i v i t i e s Bu s i n e s s - Tz ~ Ac t i v i t i e s Activities- Mu n i c i p a l Go l f Ea r l e Br o w n Wa l c r Sa n i t a r y Se w e r St o r m Dr a i n a g e St r e e t L i g h t Recycling Total lnlcrnal Li g u o r Co u n e He r i t a 1 ee e n t e r Ut i l i ! ) : Ut i l i ! ) : Ut i l i ! ) : Ut i l i ! ; ! Utili!): Ent5!1?!!!e Service CA S H FL O W S FR O M OP E R A T I N G AC T I V I T I E S Re c e i p t s fr o m cu s t o m e n an d us e r s $ 6, 0 5 5 , 8 5 8 $ 20 8 , 2 2 5 s 4, 4 5 8 , 7 1 0 s 2, 4 1 1 , 0 6 4 $ 4, 0 6 3 , 2 4 0 $ 1, 6 3 7 , 8 3 8 $ 45 6 , 6 0 0 $ 318,513 $ 19,610,048 Re c e i p t s fr o m in t e r f u n d se r v i c e s pr o v i d e d 2,986,442 Ol h e r op e r a t i n g re c e i p t s 5, 0 1 2 5, 6 8 1 16 1 , 9 0 2 27 , 2 8 5 1, 2 9 2 !0 0 8, 9 0 0 210,172 40,121 Pa y m e n t s to su p p l i e n (5 , 1 1 6 , 8 5 8 ) (1 1 1 , 6 9 5 ) (3 , 0 0 1 , 8 5 8 ) (6 5 3 , 8 4 8 ) (2 , 7 1 7 , 2 3 3 ) (4 8 2 , 2 4 0 ) (2 0 6 , 0 6 6 ) (292,585) (12,582,383) (538,525) Pa y m e n t s to em p l o y e e s !6 7 4 , 0 4 3 ! !1 4 0 , 1 2 9 ! !1 , 0 5 5 , 6 3 9 ! !5 3 6 , 8 7 6 ! !2 0 5 , 1 1 9 ! !1 9 9 , 3 0 8 ! !2,811,114! !1,923,169! Ne t ca s h fl o w s pr o v i d e d (u s e d ) by op e r a t i n g ac t i v i t i e s 26 9 , 9 6 9 (3 7 , 9 1 8 ! 56 3 11 5 1, 2 4 7 , 6 2 5 1, 1 4 2 , 1 8 0 95 6 , 3 9 0 25 9 43 4 25,928 4 426,723 ~869 CA S H FL O W S FR O M N O N C A P I T A L FI N A N C I N G AC T I V I T I E S Tr a n s f e r s in (o p e r a t i n g ) 40 , 0 0 0 40,000 Jn l c r f u n d pa y a b l o (o p e r a t i n g ) (8 , 8 2 8 ) (8,828) Sp e c i a l as s e s s m e n t s 50 , 5 6 5 50,565 In t e r g o v e r n m e n t a l gr a n t s 6, 7 4 6 6,746 8,606 Tr a n s f e r s ou t !2 1 6 , 4 5 5 ! !1 4 , 8 5 7 ! !4 5 , 0 0 0 ) !276,312! Ne t ca s h fl o w s pr o v i d e d (u s e d ) by no n c a p i t a l fi n a n c i n g ac t i v i t i e s !2 1 6 , 4 5 5 ! 37 9 1 8 !1 4 , 8 5 7 ! 50 . ; ! 6 5 !4 5 , 0 0 0 ! !187 829! 8 606 CA S H FL O W S FR O M CA P I T A L AN D RE L A T E D FI N A N C I N G AC T I V I T I E S Ac q u i s i t i o n an d co n s l r u c t i o n of ca p i t a l as s e t s (1 0 , 0 5 0 ) (1 1 1 , 0 8 3 ) (1 6 , 3 7 5 , 9 9 0 ) (! , 6 4 3 , 4 6 2 ) (1 , 5 9 6 , 8 1 0 ) (3 3 , 1 3 8 ) (19,770,533) (1,082,843) In t e r g o v e r n m e n t a l gr a n t s 17 , 8 3 2 5, 9 4 4 23,776 In t e r f u n d pa y a b l e (c a p i t a l ) (3 , 5 4 2 , 7 6 9 ) (3,542,769) Tr a n s f e r s in (c a p i t a l ) 7,389 Pr i n c i p a l pa i d on re v e n u e bo n d s (1 , 3 5 0 , 0 0 0 ) (4 5 0 , 0 0 0 ) (1,800,000) Pr i n c i p a l pa i d on re v e n u e no t e s (1 5 , 3 5 2 ) (15,352) In t e r e s t pa i d on ca p i t a l de b t (1 0 8 , 3 7 7 ) (4 9 , 7 1 7 ) (158,094) Pr o c e e d s fr o m g. o . re v e n u e no t e s 17 , 5 6 0 , 5 1 0 17,560,510 Pr o c e e d s fr o m g. o . re v e n u e bo n d s (n e t ) 1, 8 5 2 , 6 7 6 1,852,676 Pr o c e e d s fr o m re f u n d i n g bo n d s is s u e d (n e t ) 1, 2 4 5 , 0 0 0 42 1 , 3 5 3 1,666,353 Pr o c e e d s fr o m sa l e of as s e t s 33 978 Ne t ca s h fl o w s pr o v i d e d (u s e d ) by ca p i t a l an d re l a t e d fi n a n c i n g ac t i v i t i e s !1 0 , 0 5 0 ) !l l l , 0 8 3 ) !2 , 5 6 9 , 1 4 6 ! 13 6 , 7 9 4 !1 , 5 9 6 , 8 1 0 ! !J 3 , 1 3 8 ! !4,183,433) ~476) CA S H FL O W S F R O M IN V E S T I N G AC T I V I T I E S In t e r e s t on in v e s t m e n t s 15 00 6 16 82 9 30 , 4 2 3 26 6 8 8 35 , 8 4 9 2, 5 8 6 305 127,686 51,194 Ne t in c r e a s e (d e c r e a s e ) in ca s h an d ca s h eq u i v a l e n t s 58 , 4 7 0 45 4 , 0 0 4 (1 , 2 4 0 , 5 3 3 ) 1, 3 0 5 , 6 6 2 (6 4 9 , 5 7 1 ) 22 8 , 8 8 2 26,233 183,147 (416,807) Ca s h an d ca s h eq u i v a l e n t s - Ja n u a r y 1 1, 8 5 8 , 0 3 1 1, 9 5 1 , 6 7 6 2, 5 0 5 , 7 2 7 1, 7 5 5 , 4 5 8 3 98 7 40 3 17 6 , 2 2 1 15,187 12,249,703 6,647,462 Ca s h an d ca s h eq u i v a l e n t s - De c e m b e r 31 s 1, 9 1 6 , 5 0 1 $ $ 2, 4 0 5 , 6 8 0 s 1, 2 6 5 , 1 9 4 ~ 3M 1 , 1 2 0 $ 3, 3 3 7 , 8 3 2 $ _4 _ ( ) 5 " 1 0 3 $ 41,420 $ 12,432,850 $ 6,230,655 RE C O N C I L I A T I O N OF OP E R A T I N G IN C O M E (L O S S ) TO NE T CA S H FL O W S PR O V I D E D (U S E D ) BY OP E R A T I N G AC T I V I T I E S Op e r a t i n g in c o m e (l o s s ) s 25 8 , 1 1 7 $ (5 9 , 4 0 2 ) $ (2 3 5 , 9 2 7 ) $ 56 5 , 1 6 0 $ 43 6 , 7 3 1 $ (2 4 0 , 2 6 9 ) $ 17 3 , 6 9 7 $ 23,152 $ 921,259 $ (641,157) Ad j u s t m e n t s to re c o n c i l e op e r a t i n g in c o m e (l o s s ) to ne t ca s h fl o w s pr o v i d e d (u s e d ) by op e r a t i n g ac t i v i t i e s : De p r e c i a t i o n 16 , 9 6 6 18 , 7 3 7 62 0 , 2 4 9 70 3 , 9 3 3 78 3 , 5 0 0 1, 1 0 6 , 2 7 6 53 , 5 6 7 3,303,228 761,629 Ot h e r in c o m e (e x p e n s e ) re l a t e d to op e r a t i o n s 5, 0 1 2 12 1 16 1 , 9 0 2 27 , 2 8 5 1, 2 9 2 !0 0 8, 9 0 0 204,612 80,261 (I n c r e a s e ) de c r e a s e in as s e t s : Ac c o u n t s re c e i v a b l e (1 , 5 0 0 ) (2 8 , 5 5 0 ) (1 5 1 , 6 4 6 ) (3 0 , 4 8 5 ) 2, 2 8 3 1, 2 4 2 3,079 (205,577) (36,509) Du e :f r o m ot h e r go v e r n m e n t s 5, 5 6 0 5,560 Pr e p a i d it e m s (7 2 9 ) (8 , 2 8 5 ) ( 1 , 8 3 4 ) (1 0 , 0 4 6 ) (20,894) In v e n t o r i e s (3 1 , 1 5 3 ) (3 4 1 ) (1 , 0 8 2 ) (9 , 4 0 0 ) (41,976) 6,742 (I n c r e a s e ) de c r e a s e in de f e r r e d ou t f l o w s of re s o u r c e s : Dc f e t t e d ou t f l o w s fo r pe n s i o n (2,207,122) In c r e a s e (d e c r e a s e ) in li a b i l i t i e s Ac c o u n t s pa y a b l e 43 , 0 5 6 (1 4 3 ) 84 , 5 7 2 14 0 , 3 9 2 (3 7 , 0 5 8 ) 93 , 5 1 3 22 , 0 2 8 (303) 346,057 77,961 Ne t pe n s i o n li a b i l i t y 818,354 Ac c r u e d sa l a r i e s an d wa g e s (2 0 , 4 9 0 ) (2 , 4 5 0 ) (2 9 , 7 6 4 ) ( 1 5 , 4 8 2 ) (1 , 7 5 4 ) (5 , 5 1 3 ) (75,453) 43,754 Un e a r n e d re v e n u e 69 0 (1 0 , 7 8 3 ) (10,093) (I n c r e a s e ) de c r e a s e in de f e r r e d in f l o w s of re s o u r c e s : De f e r r e d pe n s i o n re s o u r c e s 1,660,956 Ne t ca s h fl o w s pr o v i d e d (u s e d ) by op e r a t i n g ac t i v i t i e s s 26 9 , 9 6 9 $ (3 7 , 9 1 8 ) $ 56 3 , 1 1 5 s 1, 2 4 7 , 6 2 5 $ 1, 1 4 2 , 1 8 0 s 95 6 , 3 9 0 s 25 9 , 4 3 4 $ 25,928 s 4,426,723 s 564,869 NO N C A S H FI N A N C I N G AC T I V I T I E S Ac q u i s i t i o n s of ca p i t a l as s e t s on ac c o u n t $ $ $ $ 1, 6 5 9 , 5 0 3 $ 18 ~ 6 4 $ 23 58 4 $ $ $ I 701451 $ 38 670 Ca p i t a l as s e t s co n t r i b u t e d fr o m ot h e r fb n d s $ $ $ s s $ 1, 0 3 4 , 5 7 4 s $ $ 1,034,574 $ Ca p i t a l as s e t tr a d e - i n s $ $ $ s $ $ s $ $ $ !24,353! Gr a n t s de p o s i t e d wi t h pe n s i o n pl a n $ $ $ $ $ $ $ $ $ $ 40,140 Ch a n g e in Ac c o u n t i n g Pr i n c i p l e fo r pe n s i o n s $ s $ - - - - $ s $ $ $ $ $ (10,691,122) 'l ' h t t no t e s to th e fi n a n c i a l st a t e m e n t s ar e an in t e g r a l pa r t of th i s st a t e m e n t . IV-23 Notes to Financial Statements IV-24 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 Th e Ci t y of Br o o k l y n Ce n t e r wa s in c o r p o r a t e d in 19 1 1 an d ha s op e r a t e d un d e r a Co u n c i l / M a n a g e r fo r m of go v e r n m e n t si n c e th e ad o p t i o n of th e Ci t y ch a r t e r in 19 6 6 . Th e go v e r n i n g bo d y co n s i s t s of a Ma y o r an d fo u r Ci t y Co u n c i l me m b e r s . el e c t e d at - l a r g e to se t V e fo u r - y e a r st a g g e r e d te r m s . Th e Ci t y pr o v i d e s a fu l l ra n g e of mu n i c i p a l se r v i c e s to it s ci t i z e n s , in c l u d i n g pu b l i c sa f e t y (p o l i c e an d fi r e pr o t e c t i o n ) , hi g h w a y s an d st r e e t s , pa r k s an d re c r e a t i o n , pu b l i c im p r o v e m e n t s , pl a n n i n g an d in s p e c t i o n s , ec o n o m i c d e v e l o p m e n t , sa n i t a r y an d st o r m se w e r , wa t e r , an d go n e r s ! ad m i n i s t r a t i v e se t V i c e s . No t e 1 SU M M A R Y OF SI G N I F l C A N T AC C O U N T I N G PO L I C I E S Th e fi n a n c i a l st a t e m e n t s of th e Ci t y ha v e be e n pr e p a r e d in ac c o r d a n c e wi t h ac c o u n t i n g pr i n c i p l e s ge n e r a l l y ac c e p t e d in th e Un i t e d St a t e s of Am e r i c a (G A A P ) , as ap p l i e d to go v e r n m e n t a l un i t s by th e Go v e r n m e n t a l Ac c o u n t i n g St a n d a r d s Bo a r d (G A S B ) . Th e Ci t y ' s si g n i f i c a n t ac c o u n t i n g po l i c i e s ar e de s c r i b e d be l o w . A. RE P O R T I N G EN T I T Y Th e Ci t y in c l u d e s al l fu n d s , or g a n i z a t i o n s , in s t i t u t i o n s , ag e n c i e s , de p a r t m e n t s , bo a r d s , an d of f i c e s th a t ar e no t le g a l l y se p a r a t e fr o m th e Ci t y . Co m p o n e n t un i t s ar e le g a l l y se p a r a t e or g a n i z a t i o n s fo r wh i c h th e el e c t e d of f i c i a l s of th e Ci t y ar e fi n a n c i a l l y ac c o u n t a b l e an d ar e in c l u d e d wi t h i n th e ba s i c fi n a n c i a l st a t e m e n t s of th e Ci t y be c a u s e of th e si g n i f i c a n c e of th e i r op e r s t i o n a l or fi n a n c i a l re l a t i o n s h i p s wi t h th e Ci t y . Th e Ci t y is co n s i d e r e d fi n a n c i a l l y ac c o u n t a b l e fo r a co m p o n e n t un i t if it ap p o i n t s a vo t i n g ma j o r i t y of th e or g a n i z a t i o n ' s go v e r n i n g bo d y an d is ab l e to im p o s e it s wi l l on th e or g l l n i z a t i o n by si g n i f i c a n t l y in f l u e n c i n g th e pr o g r a m s , pr o j e c t s , ac t i v i t i e s , or le v e l of se r v i c e s pe r f o r m e d or pr o v i d e d by th e or g l l n i z a t i o n , or th e r e is a po t e n t i a l fo r th e or g l l n i z a t i o n to pr o v i d e sp e c i f i c fi n a n c i a l be n e f i t s to , or im p o s e sp e c i f i c fi n a n c i a l bu r d e n s on , th e Ci t y . Bl e n d e d co m p o n e n t un i t s , al t h o u g h le g a l l y se p a r a t e , ar e , in su b s t a n c e , pa r t of th e go v e r n m e n t ' s op e r a t i o n s . A bl e n d e d co m p o n e n t un i t is re p o r t e d as if it we r e a fu n d of th e Ci t y th r o u g h o u t th e ye a r . It is in c l u d e d at bo t h th e go v e r n m e n t - w i d e an d fu n d fi n a n c i a l re p o r t i n g le v e l s . A de s c r i p t i o n of th e Ci t y ' s bl e n d e d co m p o n e n t un i t s fo l l o w s : Ci t y of B r o o k l y n Ce n t e r Ho u s i n g an d Re d e v e l o p m e n t Au t h o r i t y (l i R A ) - Th e Ci t y Co u n c i l se r v e s as th e Bo a r d of Di r e c t o r s fo r th e HR A , wi t h th e po w e r to le v y ta x e s an d en t e r in t o co n t r a c t s . Th e Co u n c i l re v i e w s an d ap p r o v e s th e t a x le v y an d al l ex p e n d i t u r e s fo r th e HR A . Th e HR A is re p o r t e d as a Sp e c i a l Re v e n u e fu n d . Th e HR A do e s no t is s u e se p a r a t e fi n a n c i a l st a t e m e n t s . Fi n a n c i a l in f o r m a t i o n ma y be ob t a i n e d at th e Ci t y ' s of f i c e s . Ci t y of Br o o k l y n Ce n t e r Ec o n o m i c De v e l o p m e n t Au t h o r i t y (E D A ) - Th e go v e r n i n g bo a r d fo r th e ED A is th e Ci t y Co u n c i l , wi t h th e po w e r to is s u e bo n d s an d en t e r in t o co n t r a c t s . Th e co u n c i l re v i e w s an d ap p r o v e s ma j o r co m m u n i t y de v e l o p m e n t im p r o v e m e n t ac t i v i t i e s . Ci t y ge n e r a l ob l i g a t i o n ta x in c r e m e n t fi n a n c i n g bo n d s ar e ia s u e d to fi n a n c e ED A ac t i v i t i e s . Th e ED A is re p o r t e d as a Sp e c i a l Re v e n u e fu n d . Th e ED A do e s no t is s u e se p a r a t e fi n a n c i a l st a t e m e n t s . Fi n a n c i a l in f o r m a t i o n ma y be ob t a i n e d at th e Ci t y ' s of f i c e s . CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 3 1 , 2 0 1 5 B. GO V E R N M E N T - W I D E AN D FU N D FI N A N C I A L STATEMENTS Th e go v e r n m e n t - w i d e fi n a n c i a l st a t e m e n t s (i . e . , th e st a t e m e n t of net position and the statement of activities) report information on al l ac t i v i t i e s of th e pr i m a r y go v e r n m e n t an d it s co m p o n e n t units. Governmental activities, which normally are supported by ta x e s an d in t e r g o v e r n m e n t a l re v e n u e s , ar e re p o r t e d se p a r a t e l y from business-type activities, which rely to a significant extent on fe e s an d ch a r g e s fo r su p p o r t . Th e st a t e m e n t of ac t i v i t i e s de m o n s t r a t e s th e de g r e e to wh i c h the direct expenses of a given function or segment are offset by pr o g r a m re v e n u e s . Di r e c t ex p e n s e s ar e th o s e th a t ar e cl e a r l y identifiable with a specific function or segment. Program re v e n u e s in c l u d e I) ch a r g e s to cu s t o m e r s or ap p l i c a n t s wh o purchase, use, or directly benefit from goods, services, or pr i v i l e g e s pr o v i d e d by a gi v e n fu n c t i o n or bu s i n e s s - t y p e ac t i v i t y and 2) grants and contributions that are restricted to meeting th e op e r a t i o n a l or ca p i t a l re q u i r e m e n t s of a pa r t i c u l a r fu n c t i o n or business-type activity. Taxes and other items not included am o n g pr o g r a m re v e n u e s ar e re p o r t e d in s t e a d as ge n e r a l re v e n u e s . Se p a r a t e fi n a n c i a l st a t e m e n t s ar e pr o v i d e d fo r go v e r n m e n t a l funds and proprietsry funds. Major individual governmental funds an d ma j o r in d i v i d u a l en t e r p r i s e fu n d s ar e re p o r t e d as se p a r a t e columns in the fund financial statements. C. ME A S U R E M E N T FO C U S , BA S I S O F AC C O U N T I N G , AND FINANCIAL STATEMENT PR E S E N T A T I O N Th e go v e r n m e n t - w i d e fi n a n c i a l st a t e m e n t s ar e re p o r t e d us i n g the economic resources measurement focus and the accrual ba s i s o f ac c o u n t i n g , as ar e th e pr o p r i e t s r y fu n d fi n a n c i a l st a t e m e n t s . Revenues are recorded when eamed and expenses are re c o r d e d wh e n a li a b i l i t y is in c u r r e d , re g a r d l e s s of th e ti m i n g of related caab flows. Property taxes and special assessments ar e re c o g n i z e d as re v e n u e s in th e ye a r fm wh i c h th e y ar e le v i e d . Grants and similar items are recognized as revenue as soon as al l el i g t " b i l i t y re q u i r e m e n t s im p o s e d by th e pr o v i d e r ha v e been met. Go v e r n m e n t a l fu n d fi n a n c i a l st a t e m e n t s ar e re p o r t e d us i n g th e current financial resources messurement focus and the mo d i f i e d ac c r u a l ba s i s o f ac c o u n t i n g . Re v e n u e s ar e re c o g n i z e d as soon as they are both measurable and available. Re v e n u e s ar e co n s i d e r e d to be av a i l a b l e wh e n th e y ar e co l l e c t i b l e within the current period or soon enough thereafter to pay li a b i l i t i e s of th e cu r r e n t pe r i o d . Fo r th i s pu r p o s e , th e Ci t y co n s i d e r s all revenues, except reimbursement grants, to be available if th e y ar e co l l e c t e d wi t h i n 60 da y s of th e en d of th e cu r r e n t fiscal year. Reimbursement grants are considered available if th e y ar e co l l e c t e d wi t h i n on e ye a r of th e en d of th e cu r r e n t fi s c a l year. Expenditures generslly are recorded when a liability is in c u r r e d , as un d e r ac c r u a l ac c o u n t i n g . Ho w e v e r , de b t se r v i c e expenditures, as well as expenditures related to claims and ju d g m e n t s , co m p e n s a t e d ab s e n c e s , ne t pe n s i o n li s b i l i t i e s , an d OPEB are recorded only when payment is due. Pr o p e r t y ta x e s , sp e c i a l as s e s s m e n t s , in t e r g o v e r n m e n t a l re v e n u e s , charges for sexvices and interest associated with the current fi s c a l ye a r ar e al l co n s i d e r e d to be su s c e p t i b l e to ac c r u a l an d so have been recognized as revenues of the current fiscal year. Oa l y th e po r t i o n of sp e c i a l as s e s s m e n t s re c e i v a b l e du e wi t h i n the current fiscal year is considered to be susceptible to accrual as re v e n u e of th e cu r r e n t pe r i o d . Al l ot h e r re v e n u e it e m s ar e considered to be measurable and available only when cash is re c e i v e d by th e go v e r n m e n t . IV-25 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e n l b e r 31 , 20 1 5 Th e Ci t y re p o r t s th e fo l l o w i n g ma j o r go v e r n m e n t a l fu n d s : Ge n e r a l Fu n d Th i s is th e Ci t y ' s pr i m a r y op e r a t i n g fu n d . It ac c o u n t s fo r al l fi n a n c i a l re s o u r c e s o f th e ge n e r a l go v e r n m e n t , eX < : e p t th o s e re q u i r e d to be ac c o u n t e d fo r in an o t h e r fu n d . Mo s t o f th e cu r r e n t ds y - t o - d s y op e r a t i o n s o f th e go v e r n m e n t a l un i t s ar e fi n a n c e d fr o m th i s fu n d . Ta x In c r e m e n t Di s t r i c t No . 3 Sp e c i a l Re v e n u e Fu n d Th i s fu n d wa s es t a b l i s h e d to ac c o u n t fo r th e co l l e c t i o n o f ta x in c r e m e n t ge n e r a t e d re v e n u e s fo r pa r c e l s wi t h i n th e Di s t r i c t . Th e s e fu n d s ar e us e d to fi n a n c e th e va r i o u s re d e v e l o p m m t ac t i v i t i e s th r o u g h o u t th e Ci t y . Th i s fu n d al s o pr o v i d e s th e re s o u r c e s to re p a y th e de b t se r v i c e on bo n d s is s u e d to fi n a n c e th e s e re d e v e l o p m e n t ac t i v i t i e s . Ta x In c r e m e n t Di s t r i c t No . 5 Sp e c i a l Re v e n u e Fu n d Th i s fu n d wa s es t a b l i s h e d to ac c o u n t fo r th e co l l e c t i o n o f ta x in c r e m e n t ge n e r a t e d re v e n u e s fo r pa r c e l s wi t h i n th e Di s 1 r i c t . Th e s e fu n d s ar e us e d to fi n a n c e th e va r i o u s re d e v e l o p m e n t ac t i v i t i e s wi t h i n th e Di s t r i c t , wh i c h co o s i s t e d o f th e re d e v e l o p m e n t o f th e fo r m e r Br o o k d a l e ma l l si t e , wh i c h is no w ca l l e d Sh i n g l e Cr e e k Cr o s s i n g . De b t Se r v i c e Fu n d Th i s fu n d is us e d to ac c o u n t fo r th e co l l e c t i o n of pr o p e r t y ta x e s , sp e c i a l as s e s s m e n t s an d ot h e r re s o u r c e s wh i c h ar e us e d to re p a y th e pt i n c i p a l an d in t e r e s t on de b t is s u e d fo r va r i o u s im p r o v e m e n t s in th e Ci t y . Mu n i c i p a l St a t e - A i d fo r Co n s t r u c t i o n Ca p i t a l Pr o j e c t Fu n d Th i s fu n d wa s es t a b l i s h e d to ac c o u n t fo r th e st a t e al l o t m e n t o f co n s t r u c t i o n an d ma i n t e n a n c e ai d . Th e so u r c e o f th e St a t e fu n d i n g is pr o v i d e d fo r th r o u g h th e co l l e c t i o n o f ga s o l i n e ta x e s . Th e fu n d s ac c u m u l a t e d mu s t be us e d on tr a n s p o r t a t i o n re l a t e d co n s t r u c t i o n an d ma i n t e n a n c e Jll " ' ! i e c t s . Ca p i t a l Im p r o v e m e n t s Ca p i t a l Pr o j e c t Fu n d Th i s fu n d wa s es t a b l i s h e d to pr o v i d e fu n d s an d to ac c o u n t fo r th e ex p e n d i t u r e o f su c h fu n d s , fo r ma j o r ca p i t a l ou t l a y s . Th e ac c u m u l a t i o n o f fu n d s to pr o v i d e fo r su c h ou t l a y s is an at t e m p t to re d u c e fu t u r e de b t is s u a n c e . Th e fi n a n c i n g so u r c e s o f th e fu n d pr i m a r i l y co n s i s t o f tr a n s f e r s fr o m ot h e r fu n d s . In f r a s t r u c t u r e Co n s t r u c t i o n Ca p i t a l Pr o j e c t Fu n d Th i s fu n d wa s es t a b l i s h e d to ac c o u n t fo r th e re s o u r c e s an d ex p e n d i t u r e s re q u i r e d fo r th e ac q u i s i t i o n an d co o s t r u c t i o n o f ca p i t a l fa c i l i t i e s or im p r o v e m e n t s fi n a n c e d wh o l l y or in pa r t by sp e c i a l as s e s s m e n t s le v i e d ag a i n s t be n e f i t e d pr o p e r t i e s . CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 Th e go v e r n m e n t re p o r t s th e fo l l o w i n g ma j o r en t e r p r i s e fu n d s : Mu n i c i p a l Li q u o r Fu n d Th e fu n d ac c o u n t s fo r th e op e r a t i o n s o f th e City's municipal off-sale liquor stores. Go ! [ Co u r s e Fu n d Th e fu n d ac c o u n t s fo r op e r a t i o o s o f C. . . t e r b r o o k Golf Course, a 9 hole executive golf course owned by th e Ci t y . Ea r l e Br o w n He r i t a g e Ce n t e r Fu n d Th e Ea r l e Br o w n He r i t a g e Ce n t e r is a pi o n e e r farmstead that has been historically preserved and restored as a mo d e m mu l t i p u r p o s e fa c i l i t y . It s co o v m t i o n center can host conferences, trade shows and coocerts. Wa t e r Ut i l i t y Fu n d Th e fu n d ac c o u n t s fo r pu m p i n g , tr e a t m e n t and distribution of water to customers. Administration, wells, wa t e r st o r a g e , an d di s t r i b u t i o n ar e in c l u d e d . Sa n i t a r y Se w e r Ut i l i t y Fu n d Th e fu n d ac c o u n t s fo r th e co l l e c t i o n an d pu m p i n g of sanitary sewage through a system of sewer lines and lift st a t i o n s . Se w a g e is tr e a t e d by th e Me t r o p o l i t a n Council Euvironmental Services whose fees represent about 60 % o f th i s fu n d ' s op e r a t i n g ex p e n s e s . St o r m Dr a i n a g e Ut i l i t y Fu n d Th e fu n d ac c o u n t s fo r th e co l l e c t i o n an d tr e a t m e n t of surface runoff water that does not require sanitary wa s t e w a t e r tr e a t m e n t . It in c o r p o r a t e s no t on l y the storm sewer collection system, but also structures such as ho l d i n g po n d s an d fa c i l i t i e s to im p r o v e wa t e r quality. Fees are based upon the quantity of water running off a pr o p e r t y an d va r y wi t h bo t h si z e an d ab S O ! p l i o n characteristics of the parcel. St r e e t Li g h t Ut i l i t y Fu n d Th e fu n d ac c o u n t s fo r th e el e c 1 r i c a l se r v i c e , maintenance, repair and replacement of lights owned by the City as we l l as th o s e li g h t s ow n e d by Xc e l Eu e r g y . Re c y c l i n g Ut i l i t y Fu n d Th e fu n d ac c o u n t s fo r th e co n t r a c t e d se r v i c e s to provide a City wide recycling program. Ad d i t i o n a l l y , th e Ci t y re p o r t s th e fo l l o w i n g fu n d ty p e : In t e r n a l Se r v i c e Fu n d s Ac c o u n t fo r co m p e n s a t e d ab s e n c e s , he a l t h care insurance benefits for retired employees, pension liabilities, an d ce n t r a l ga r a g e se r v i c e s pr o v i d e d to ot h e r departments of the City on a cost reimbursement basis. As a ge n e r a l ru l e , th e ef f e c t of in t e r f u n d ac t i v i t y ha s be e n el i m i n a t e d from the government-wide financial statements. EX < : e p t i o n s to th i s ge n e r a l ru l e ar e tr a n s a c t i o n s th a t wo u l d be treated as revenues, expenditures or expenses if they involved ex t e r n a l or g a n i z a t i o n s , su c h as bu y i n g go u d s an d se r v i c e s or payments in lieu of taxes. Elimination of these charges would di s t o r t th e di r e c t co s t s an d pr o g r a m re v e n u e s re p o r t e d fo r th e various functions concerned. IV-26 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO Ti l E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 Pr o p r i e t a r y fu n d s di s t i n g u i s h op e r a t i n g re v e n u e s an d ex p e n s e s fr o m no n - o p e r a t i n g it e m s . Op e r a t i n g re v e n u e s an d ex p e n s e s ge n e r a l l y re s u l t fr o m pr o v i d i n g se r v i c e s an d pr o d u c i n g an d de l i v e r i n g go o d s in co n n e c t i o o wi 1 h a pr o p r i e t a r y fu n d ' s pr i n c i p a l on g o i n g op e r a t i o o s . Th e pr i n c i p a l op e r a t i n g re v e n u e s of 1h e en t e r p r i s e fu n d s an d in t e r n a l se r v i c e fu n d s ar e c! w g e s to cu s t o m e r s fo r sa l e s an d se r v i c e s . Op e r a t i n g ex p e n s e s fo r en t e r p r i s e fu n d s an d in t e r n a l se r v i c e fu n d s in c l u d e 1h e co s t of sa l e s an d se i V i . c e s , ad m i n i s t r a t i v e ex p e n s e s , an d de p r e c i a t i o n on ca p i t a l as s e t s . Al l re v e n u e s an d ex p e n s e s no t me e t i n g th i s de f i n i t i o n ar e re p o r t e d as no n o p e r a t i n g re v e n u e s an d ex p e n s e s . D. CA S H AN D IN V E S T M E N T S Th e Ci t y co n s i d e r s al l hi g h l y li q u i d in v e s b n e n t s wi 1 h a ma t u r i t y of 1 h r e e mo n 1 h s or le s s wh e n pu r c h a s e d to be ca s h eq u i v a l e n t s . Al l o f !h e ca s h an d in v e s 1 m e n t s al l o c a t e d to 1h e pr o p r i e t a r y fu n d s ha v e or i g i n a l ma t u r i t i e s of 90 da y s or le s s . Ca s h ba l a n c e s fr o m al l fu n d s ar e po o l e d an d in v e s t e d , to 1h e ex t e n t av a i l a b l e , in ce r t i f i c a t e s o f de p o s i t an d o1 h e r au 1 h o r i z e d in v e s b n e n t s . Ea r n i n g s fr o m su c h in v e s b n e n t s ar e al l o c a t e d on 1h e ba s i s of ap p l i c a b l e pa r t i c i p a t i o n by ea c h of 1h e fu n d s . Th e Ci t y ' s in v e s b n e n t po l i c y au 1 h o r i z e s 1h e Ci t y to in v e s t in 1h e fo l l o w i n g : a) Se c n r i t i e s wh i c h ar e di r e c t ob l i g a t i o n s or ar e gu a r a n t e e d or in s u r e d is s u e s of 1 h e Un i t e d St a t e s , it s ag e n c i e s , it s in s t r u m e n t a l i t i e s , or or g a n i z a t i o n s cr e a t e d by an ac t o f Co n g r e s s , in c l u d i n g go v e r n m e n t a l bo n d s , no t e s , bi l l s , mo r t g a g e s (e x c l u d i n g hi g h - r i s k mo r t g a g e - b a c k e d se c o r i t i e s ) , an d ot h e r se c n r i t i e s . b) Co m m e r c i a l pa p e r is s u e d by U. S . co r p o r a t i o n s or 1h e i r Ca n a d i a n su b s i d i a r i e s 1h a t is ra t e d in 1h e hi g h e s t qu a l i t y by at le a s t tw o na t i o n a l l y re c o g n i z e d ra t i n g ag e n c i e s an d ma t u r e s in 27 0 da y s or le s s . c) Ti m e de p o s i t s 1h a t ar e fu l l y in a u r e d b y 1h e Fe d e r a l De p o s i t In s u r a n c e Co r p o r a t i o n or ba n k e r s ac c e p t a n c e s of U . S . ba n k s . d) Re p u r c h a a e ag r e e m e n t s an d re v e r s e re p u r c h a s e ag r e e m e n t s wi 1 h fi n a n c i a l in s t i t u t i o n s id e n t i f i e d by Mi n n e s o t a St a t u t e s Ch a p t e r li S A . e) Se c n r i t i e s le n d i n g ag r e e m e n t s ma y be en t e r e d in t o wi 1 h fi n a n c i a l in s t i t u t i o o s id e n t i f i e d by Mi n n e s o t a St a t u t e s Ch a p t e r li S A . f) Mi n n e s o t a jo i n t po w e r s in v e s b n e n t tr u s t s ma y be en t e r e d in t o wi 1 h tr u s t s id e n t i f i e d by Mi n a e s o t a St a t u t e s Ch a p t e r li S A . g) Mo n e y ma r k e t mu t u a l fu n d s re g u l a t e d by 1h e Se c u r i t i e s an d Ex c h a n g e Co m m i s s i o n an d wh o s e po r t f o l i o s co n s i s t on l y of sh o r t te r m se c u r i t i e s pe r m i t t e d by Mi n n e s o t a St a t u t e s li S A . h) Bo n d s of 1h e Ci t y o f Br o o k l y n Ce n t e r is s u e d in pr i o r ye a r s , ma y be re d e e m e d at cu r r e n t ma r k e t pr i c e , wh i c h ma y in c l u d e a pr e m i u m , pr i o r to ma t u r i n g us i n g su r p l u s fu n d s of 1h e de b t se r v i c e fu n d se t up fo r 1h a t is s u e . Ce r t a i n pr o c e e d s of th e Ci t y ' s 20 1 5 B Ta x In c r e m e n t Re f u n d i n g Bo n d s , ar e cl a s s i f i e d as ca s h wi 1 h fi s c a l ag e n t on 1h e ba l a n c e sh e e t be c a u s e !h e y ar e ma i n t a i n e d in se p a r a t e ba n k ac c o u n t s an d 1h c i r us e is li m i t e d by ap p l i c a b l e ho o d co v e n a n t s . CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO Ti l E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 ln v e s b n e n t s ar e re p o r t e d at fa i r va l u e , ba s e d on qu o t e d ma r k e t prices as of 1he balance sheet date, eX<:eJ>t for invesbnents in 2a 7 - l i k e ex t e r n a l in v e s b n e n t po o l s , wh i c h ar e st a t e d at am o r t i z e d cost. Adjusbnents necessary to record invesbnents at fair va l u e ar e re c o r d e d in 1h e op e r a t i n g st a t e m e n t as in c r e a s e s or decreases in inves1ment earnings. lnvesbnent income oo co m m i n g l e d fu n d s is al l o c a t e d mo o t h l y , ba s e d oo mo o 1 h - e n d balances. E. RE C E I V A B L E S A N D P A Y A B L E S Do r i n g 1h e co u r s e of op e r a t i o n s , nu m e r o u s tr a n s a c t i o n s oc c u r between individual funds for goods provided or services re n d e r e d . Sh o r t - t e r m in t e r f u n d lo a n s ar e cl a s s i f i e d as "d u e to / f r o m other funds." All short-term interfund receivables and pa y a b l e s at De c e m b e r 31 , 2 0 1 5 ar e pl a n n e d to be el i m i n a t e d in 2016. Long-term interfund loans are classified as "advances to / f r o m ot h e r fu n d s . " An y re s i d u a l ba l a n c e s ou t s t a n d i n g be t w e e n 1he governmental activities and business-type activities are re p o r t e d in th e go v e m m e n t ~ w i d e fi n a n c i a l st a t e m e n t s as "i n t e r n a l balances". Ad v a n c e s be t w e e n fu n d s , as re p o r t e d in 1h e fu n d fi n a n c i a l st a t e m e n t s , are offset by restricted or committed fund balance in ap p l i c a b l e go v e r n m e n t a l fu n d s . Th i s cl a s s i f i c a t i o n is ba s e d on 1he restraint 1hat will be placed on 1he advanced funds when 1h e y ar e re t u r n e d to 1h e le n d i n g fu n d . AU mi s c e l l a n e o u s ac c o u n t s re c e i v a b l e an d tr a d e re c e i v a b l e s , other 1han utilities, are presented net of an allowance for doubtful ac c o u n t s . AU ut i l i t y tr a d e re c e i v a b l e s ar e re p o r t e d at gr o s s because it is 1he City's policy to certify delinquent account ba l a n c e s as sp e c i a l as s e s s m e n t s . Th e Ci t y ex p e c t s to ma k e fu l l collection of all property tax and special assessment re c e i v a b l e s , so no al l o w a n c e is co n s i d e r e d ne c e s s a t y . Pr o p e r t y ta x le v i e s ar e au b m i t t e d to 1h e Co u n t y in De c e m b e r each year. The County allocates 1hese levies across taxable pr o p e r t i e s in 1h e Ci t y ba s e d on va l u a t i o n s ce r t i f i e d in 1h e pr i o r year. The County collects 1heae levies and distributes 1he City's pr o c e e d s in Ju n e an d De c e m b e r of 1h e fi s c a l ye a r . Th e s e ta x e s are reported as general revenues in 1he government-wide fi n a n c i a l st a t e m e n t s in 1h e ye a r le v i e d . Un p a i d ta x e s at De c e m b e r 31 become liens on 1he respective property and are cl a s s i f i e d as de l i n q u e n t re c e i v a b l e s an d ar e fu l l y of f s e t by a deferred inflow of resources in 1he fund financial statements. De l i n q u e n t ta x e s re c e i v a b l e in c l u d e s 1h e pa s t si x ye a r s of un c o l l e c t e d taxes. Sp e c i a l as s e s s m e n t s re p r e s e n t 1h e fi n a n c i n g fo r pu b l i c im p r o v e m e n t s paid for by benefiting property owners. These as s e s s m e n t s ar e re c o r d e d as re c e i v a b l e s up m ce r t i f i c a t i o n to the County. Governmental special assessments have been offset by a de f e r r e d in f l o w of re s o u r c e s fo r co l l e c t i o n s no t re c e i v e d wi1hin 60 days after year end in 1he fund financial statements. IV-27 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S T O Ti l E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 F. IN V E N T O R I E S AN D PR E P A I D IT E M S In v e n t o r i e s in th e go v e r n m e n t a l fu n d s ar e re p o r t e d ua i n g th e co n s u m p t i o n me t h o d an d va l u e d at co s t , ua i n g th e fi r s t in / f i r s t ou t (F I F O ) me t h o d . In v e n t o r i e s in th e pr o p r i e t a r y fu n d s ar e va l u e d at co s t , us i n g th e we i g h t e d av e r a g e me t h o d in th e Mu n i c i p a l Li q u o r an d Ea r l e Br o w n He r i t a g e Ce n t e r Fu n d s an d th e FI F O me t h o d in al l ot h e r fu n d s . Ce r t a i n pa y m e n t s to ve n d o r s re f l e c t co s t s ap p l i c a b l e to fu t u r e ae c o u n t i n g pe r i o d s an d ar e re c o r d e d as pr e p a i d it e m s in bo t h go v e r n m e n t - w i d e an d fu n d fi n a n c i a l st a t e m e n t s . Pr e p a i d it e m s ar e re p o r t e d us i n g th e co n s u m p t i o n me t h o d an d re c o r d e d as ex p e n d i t u r e s / e x p e n s e s at th e ti m e o f co n s o m p t i o n . G. AS S E T S HE L D FO R RE S A L E As s e t s he l d fo r re s a l e re p r e s e n t va r i o u s pr o p e r t y pu r c h a s e s ma d e by th e Ci t y wi t h th e in t t m t to se l l in or d e r to in c r e a s e ta x ba s e or to at t r a c t ne w bo s i n e s s e s . Th e s e as s e t s ar e st a t e d at th e lo w e r o f co s t or ne t re a l i z a b l e v a l u e . Du r i n g th e ye a r en d e d De c e m b e r 31 , 20 1 5 ma n a g e m e n t ha s re v i e w e d th e co s t va l u e re p o r t e d fo r th e s e as s e t s an d ha s in d i c a t e d th e pr o p e r t i e s ar e fa i r l y pr e s e n t e d fo r fi n n n c i a l re p o r t i n g pw p o s e s . H. CA P I T A L AS S E T S Ca p i t a l as s e t s , wh i c h in c l u d e pr o p e r t y , pl a n t , eq u i p m e n t , in f r a s t r u c t u r e as s e t s (e . g . , ro a d s , br i d g e s , si d e w a l k s , an d si m i l a r it e m s ) , an d in t a n g i b l e as s e t s su c h as ea s e m e n t s an d co m p u t e r so f t w a r e , ar e re p o r t e d in th e ap p l i c a b l e go v e r n m e n t a l or bu a i n e s s - t y p e nc t i v i t i e s co l u m n s in th e go v e r n m e n t - w i d e fm a n c i a l st a t e m e n t s . Ca p i t a l as s e t s ar e de f i n e d by th e Ci t y as as s e t s wi t h an in i t i a l , in d i v i d u a l co s t in ex c e s s o f th e am o u n t s in th e ta b l e be l o w an d an es t i m a t e d us e f u l li f e in ex c e s s o f on e ye a r . Su c h as s e t s ar e re c o r d e d at hi s t o r i c a l co s t or es t i m a t e d hi s t o r i c a l co s t i f pu r c h a s e d or co n s t r u c t e d . Do n a t e d ca p i t a l as s e t s ar e re c o r d e d at es t i m a t e d fa i r ma r k e t va l u e at th e da t e o f do n a t i o n . In f r a s t r u c t u r e Bu i l d i n g s an d Bu i l d i n g Im p r o v e m e n t s La n d Im p r o v e m e n t s He a v y Eq u i p m e n t Fu r n i t u r e an d fu r n i s h i n g s Mo t o r i z e d ve h i c l e s Te c h n o l o g y eq u i p m e n t $ 25 0 , 0 0 0 50 , 0 0 0 25 , 0 0 0 25 , 0 0 0 10 , 0 0 0 10 , 0 0 0 10 , 0 0 0 Th e co s t s o f no r m a l ma i n t e n a n c e an d re p a i r s th a t do no t ad d to th e va l u e o f th e as s e t or ma t e r i a l l y ex t e n d as s e t s li v e s ar e no t ca p i t a l i z e d . CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S T O TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 Ml \ i o r ou t l a y s fo r ca p i t a l as s e t s an d im p r o v e m e n t s ar e ca p i t a l i z e d as projects are constructed. Interest incurred during the co n s t r u c t i o n ph a s e o f ca p i t a l as s e t s of b u a i n e s s - t y p e ac t i v i t i e s is included as part of the capitalized value of the assets co n s t r u c t e d . Fo r th e ye a r tm d e d De c e m b e r 31 , 20 1 5 no in t e r e s t was capitalized in connection with construction in progress. Ca p i t a l as s e t s o f th e Ci t y , as we l l as th e co m p o n e n t un i t s , ar e depreciated using the ~gbt line method over the following es t i m a t e d us e f u l li v e s : Ea s e m e n t s - te m p o r a r y La n d im p r o v e m e n t s Bu i l d i n g s an d st r u c t u r e s Wa t e r an d se w e r ma i n s an d li n e s , wells and storage ta n k s , se w e r li f t st a t i o n s In f r a s t r u c t u r e St r e e t li g h t sy s t e m s Ma c h i n e r y an d eq u i p m e n t I. DE F E R R E D OU T F L O W S O F RE S O U R C E S 5 years 25 years 25 years 25 years 25 years 15 years 3-15 years In ad d i t i o n to as s e t s , th e st a t e m e n t o f fi n a n c i a l po a i t i o n wi l l sometimes report a separate section for deferted outllows of re s o u r c e s . Th i s se p a r a t e fi n a n c i a l st a t e m e n t el e m e n t , de f e r t e d outflows of resources, represents a consumption of net po s i t i o n th a t ap p l i e s to a fu t o r e pe r i o d ( s ) an d so wi l l no t be recognized as an outllow of resources (expense/expenditure) until th e n . Th e Ci t y ha s oo l y on e it e m th a t qu a l i f i e s fo r re p o r t i n g in the category. Aecordingly, the item, deferted pension re s o u r c e s , is re p o r t e d on l y in th e st a t e m e n t s o f ne t po s i t i o n . This item results from actoarial calculations and current year pe n s i o n co n t r i b u t i o n s ma d e su b s e q u e n t to th e me a s u r e m e n t date. J. PE N S I O N S Fo r pw p o s e s o f me s s u r i n g th e ne t pe n s i o n li a b i l i t y / a s s e t , de f e r t e d outllows of resources, deferred inflows of resources, and pe n s i o n ex p e n s e , in f o r m a t i o n ab o u t th e fi d o c i a r y ne t po s i t i o n of the applicable pension and additions to or dedoctioos from th e pe n s i o n pl a n ' s fi d u c i a r y ne t po s i t i o n ha v e be e n de t e r m i n e d oo the same basis as they are reported by the plan except that PE R A ' s fi a c a l ye a r en d is Ju n e 30 . Fo r th i s pu t p O S e , pl a n co n t r i b u t i o n s are recognized as of employer payroll paid dates and be n e f i t pa y m e n t s an d re f u n d s ar e re c o g n i z e d wh e n do e an d payable in accordance with the benefit terms. Investments are re p o r t e d at fa i r va l u e . K. DE F E R R E D IN F L O W S O F RE S O U R C E S In ad d i t i m to li a b i l i t i e s , st a t e m e n t s o f fi n a n c i a l po s i t i o n or balance sheets will soroetimes report a separate section for deferred in f l o w s o f re s o u r c e s . Th i s se p a r a t e fi n a n c i a l st a t e m e n t el e m e n t represents an acquisition of net position that applies to futore pe r i o d s an d so wi l l no t be re c o g n i z e d as an in f l o w o f re s o u r c e s (revenue) until that time. The City has two types of items, wh i c h ar i s e un d e r a mo d i f i e d ac c r u a l ba s i s o f ac c o u n t i n g , wh i c h qualifY for reporting in this category. One item, unavailable re v e n u e , is re p o r t e d on l y in th e go v e r n m e n t a l fu n d s Ba l a n c e Sheet. The governmental funds report unavailable revenue from so u r c e s su c h as : pr o p e r t y ta x e s , ta x in c r e m e n t s , sp e c i a l as s e s s m e n t s and other receivables not collected within 60 days of ye & l ' - e n d . Th e s e am o u n t s ar e de f e r t e d an d re c o g n i z e d as an in f l o w of resources in the period the amounts become available. Th e ot h e r it e m re s u l t s fr o m ac t o a r i a l ca l c u l a t i o n s re l a t e d to th e City's pension obligations. IV-28 CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO T i l E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 L. CO M P E N S A T E D AB S E N C E S It is th e Ci t y ' s po l i c y to pe r m i t em p l o y e e s to ~~£ C U m u l a t e ea r n e d bu t un u s e d va c a t i o n an d si c k pa y be n e f i t s . Al l va c a t i o n an d ve s t e d si c k le a v e pa y is ac c r u e d in th e Pu b l i c Em p l o y e e s Co m p e n s a t e d Ab s e n c e s in t e r n a l se r v i c e fu n d . In ac c o r d a n c e wi t h th e pr o v i s i o n s of S t a t e r n e n t o f Go v e r n m e n t Ac c o u n t i n g St a n d a r d s No . 16 , Ac c o u n t i n g fo r Co m p e n s a t e d Ab s e n c e s , a li a b i l i t y is re c o g n i z e d fo r th a t po r t i o n o f ac c u m u l a t i n g si c k le a v e be n e f i t s th a t is ve s t e d . M. PO S T E M P L O Y M E N T BE N E F I T S OT H E R TH A N PE N S I O N S Un d e r Mi n n e s o t a St a t u t e 47 1 . 6 1 , su b d i v i s i o n 2( b ) , pu b l i c em p l o y e r s mu s t al l o w re t i r e e s an d th e i r de p e n d e n t s to co n t i n u e co v e r a g e in d e f i n i t e l y in an em p l o y e r - s p o n s o r e d he a l t h ca r e pl a n , un d e r th e fo l l o w i n g co n d i t i o n s : I) re t i r e e s mu s t be re c e i v i n g (o r el i g i b l e to re c e i v e ) an an n u i t y fr o m a Mi n n e s o t a pu b l i c pe n s i o n pl a n ; 2) co v e r a g e mu s t co n t i n u e in gr o u p pl a n un t i l ag e 65 an d pa y no mo r e th a n th e gr o u p pr e m i u m ; an d 3) re t i r e e s ma y ob t a i n de p e n d e n t co v e r a g e in n n e d i a t e l y be f o r e re t i r e m e n t . Al l pr e m i u m s ar e fu n d e d on a pa y - a s - y o u - g o ba s i s . Th e li a b i l i t y wa s ac t u a r i a l l y de t e r m i n e d , in ac c o r d a n c e wi t h GA S B St a t e m e n t 45 , at Ja n u a r y I, 20 1 4 . Th e li a b i l i t y is ac c r u e d in th e Pu b l i c Em p l o y e e s Re t i r e m e n t in t e r n a l se r v i c e fu n d . N. LO N G T E R M O B L I G A T I O N S In th e go v e r n m e n t - w i d e fi n a n c i a l st a t e m e n t s an d pr o p r i e t a r y fu n d ty p e s in th e fu n d fi n a n c i a l st a t e m e n t s , lo n g - t e r m de b t an d ot h e r lo n g - t e r m ob l i g a t i o n s ar e re p o r t e d as li a b i l i t i e s in th e ap p l i c a b l e go v e r n m e n t a l ac t i v i t i e s , bu s i n e s s - t y p e ac t i v i t i e s , or pr o p r i e t a r y fu n d ty p e st a t e m e n t o f ne t po s i t i o n . Bo n d pr e m i u m s an d di s c o u n t s , as we l l as is s u a n c e co s t s , ar e im m a t e r i a l an d ar e ex p e n s e d in th e ye a r o f bo n d is s u a n c e . In th e fu n d fi n a n c i a l st a t e m e n t s , go v e r n m e n t a l fu n d ty p e s re c o g n i z e bo n d pr e m i u m s an d di s c o u n t s , as we l l as bo n d is s u a n c e co s t s , du r i n g th e cu r r e n t pe r i o d . Th e fa c e am o u n t o f de b t is s u e d is re p o r t e d as ot h e r fi n a n c i n g so u r c e s . Pr e m i u m s re c e i v e d on de b t is s u a n c e s ar e re p o r t e d as ot h e r fi n a n c i n g so u r c e s wh i l e di s c o u n t s on de b t is s u a n c e s ar e re p o r t e d as ot h e r fi n a n c i n g us e s . Is s u a n c e co s t s , wh e t h e r or no t wi t h h e l d fr o m th e ac t u a l de b t pr o c e e d s re c e i v e d , ar e re p o r t e d as de b t se r v i c e ex p e n d i t u r e s . 0 . FU N D EQ U I T Y Fu n d eq u i t y in th e fu n d fi n a n c i a l st a t e m e n t s is cl a s s i f i e d as fu n d ba l a n c e fo r go v e r n m e n t a l fu n d s an d ne t po s i t i o n fo r pr o p r i e t a r y fu n d s . Fu n d eq u i t y in th e go v e r n m e n t - w i d e fi n a n c i a l st a t e m e n t s is cl a s s i f i e d as ne t po s i t i o n fo r bo t h go v e r n m e n t a l an d bu s i n e s s - - t y p e ac t i v i t i e s . FI U I I I Ba l a n c e - I n th e fu n d fi n a n c i a l st a t e m e n t s , go v e r n m e n t a l fu n d s re p o r t fu n d ba l a n c e in cl a s s i f i c a t i o n s th a t di s c l o s e re s t r a i n t s fo r wh i c h am o u n t s in th o s e fu n d s ca n be sp e n t . Th e s e cl a s s i f i c a t i o n s ar e as fo l l o w s : No n s p e n d a b l e - co n s i s t s o f am o u n t s th a t ar e no t in sp e n d a b l e fo r m or ar e re q u i r e d to be ma i n t a i n e d in t a c t . Re s t r i c t e d - co n s i s t s o f am o u n t s re l a t e d to ex t e r n a l l y im p o s e d co n s t r a i n t s es t a b l i s h e d by cr e d i t o r s , gr a n t o r s or co n t r i b u t o r s ; or co n s t r a i n t s im p o s e d by st a t e st a t u t o r y pr o v i s i o n s . Co m m U t e d - co n s i s t s o f in t e r n a l l y im p o s e d co n s t r a i n t s . Th e s e co n s t r a i n t s ar e im p o s e d by fo r m a l ac t i o n (r e s o l u t i o n ) of th e Ci t y Co u n c i l , wh i c h is th e hi g h e s t le v e l o f de c i s i o n ma k i n g au t h o r i t y . As s i g n e d - co n s i s t s o f in t e r n a l l y im p o s e d co n s t r a i n t s . Th e s e co n s t r a i n t s re f l e c t th e sp e c i f i c pu r p o s e fo r wh i c h it is th e Ci t y ' s in t e n d e d us e . Th e s e co n s t r a i n t s ar e es t a b l i s h e d by th e Ci t y Co u n c i l or , pu r s u a n t to co u n c i l re s o l u t i o n , th e Ci t y Ma n a g e r or th e Di r e c t o r o f Fi n a n c e . CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO Ti l E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 Un a s s i g n e d - is th e re s i d u a l cl a s s i f i c a t i o n fo r th e ge n e r a l fund and also reflects negative residual amounts in other fu n d s . Wh e n bo t h re s t r i c t e d an d un r e s t r i c t e d fu n d ba l a n c e s ar e av a i l a b l e for an allowable use, it is the City's policy to use restricted re s o u r c e s fi r s t , th e n un r e s t r i c t e d re s o u r c e s as th e y ar e ne e d e d . When committed, assigned, or unassigned resources are av a i l a b l e fo r an al l o w a b l e us e , it is th e Ci t y ' s po l i c y to us e resources in the following order; I) committed, 2) assigned, and 3) un a s s i g n e d . Th e Ci t y ha s fo r m a l l y ad o p t e d a fu n d ba l a n c e po l i c y fo r th e General Fund. The policy establishes a year-end target un a s s i g n e d fu n d ba l a n c e am o u n t o f 50 - 5 2 % o f th e ne x t ye a r ' s operating budget for csah flow needs (working capital). At De c e m b e r 31 , 20 1 5 th e un a s s i g n e d fu n d ba l a n c e o f th e Ge n e r a l fund was 52% of the subsequent year's budgeted ex p e n d i t u r e s . Ne t Po s i t i o n - Ne t po s i t i o n re p r e s e n t s th e di f f e r e n c e be t w e e n assets, deferred outflows of resources, deferred inflows of re s o u r c e s , an d li a b i l i t i e s . Ne t po s i t i o n , ne t in v e s t m e n t in ca p i t a l assets, consists of capital assets, net of accumulated de p r e c i a t i o n , re d u c e d by th e ou t s t a n d i n g ba l a n c e s o f an y bo n d s used for the acquisition, construction, or improvement of th o s e as s e t s . Ne t po s i t i o n is re p o r t e d as re s t r i c t e d wh e n th e r e are limitations imposed on their use either through co n a t i t u t i o n a l pr o v i s i o n s or en a b l i n g le g i s l a t i o n , or th r o u g h external restrictions imposed by creditors, grantors, or laws or re g n l a t i o n s o f ot h e r go v e r n m e n t s . Al l re m a i n i n g no t po s i t i o n is reported as unrestricted. Wh e n bo t h re s t r i c t e d an d un r e s t r i c t e d ne t po s i t i o n ar e av a i l a b l e for an allowable use, it is the government's policy to use re s t r i c t e d re s o u r c e s fi r s t , th e n un r e s t r i c t e d re s o u r c e s as th e y are needed. P. IN T E R F U N D TR A N S A C T I O N S ln t e r f u n d se r v i c e s pr o v i d e d an d us e d ar e ac c o u n t e d fo r as re v e n u e s and expenditures or expenses. Transactions that co n s t i t u t e re i m b u r s e m e n t s to a fu n d fo r ex p e n d i t u r e s / e x p e n s e s initially made from it that are properly applicable to another fu n d , ar e re c o r d e d as ex p e n d i t u r e s / e x p e n s e s in th e re i m b u r s i n g fund and as reductions of expenditures/expenses in the fund th a t is re i m b u r s e d . Al l ot h e r in t e r f u n d tr a n s a c t i o n s ar e re p o r t e d as transfers. Q. US E OF ES T I M A T E S Th e pr e p a r a t i o n o f fi n a n c i a l st a t e m e n t s in co n f o r m i t y wi t h GAAP requires management to make estimates and assumptions th a t af f e c t am o u n t s re p o r t e d in th e fi n a n c i a l st a t e m e n t s an d accompanying notes. Actual results could differ from such es t i m a t e s . R. NE W AC C O U N T I N G PR O N O U N C E M E N T S Th e Go v e r n m e n t a l Ac c o u n t i n g St a n d a r d s Bo a r d re c e n t l y ap p r o v e d the following statemcmts which were not implemented in th e s e fi n a n c i a l st a t e m e n t s . Th e ef f e c t th e s e st a n d a r d s ma y ha v e on future financial statements has not been determined at th i s ti m e . St a t e m e n t No . 72 , Fa i r Va l u e Me a s u r e m e n t an d Ap p l i c a t i o n . The primary objective of this statement is to enhance the co m p a r a b i l i t y o f fi n a n c i a l st a t e m e n t s am o n g go v e r n m e n t s by requiring measurement of certain assets and liabilities at fair va l u e us i n g a mo r e de t a i l e d de f i n i t i o n o f fa i r va l u e an d ac c e p t e d valuation techniques. The provisions of this statement are ef f e c t i v e fo r pe r i o d s be g i n n i n g af t e r Ju n e 15 , 2 0 1 5 . IV-29 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 S. CH A N G E IN AC C O U N T I N G PR I N C I P L E S Do r i n g fi s c a l ye a r 20 1 5 , th e Ci t y im p l e m e n t e d se v e r a l ne w ac c o u n t i n g pr o n o u n c e m e n t s is s u e d by th e Go v e r n m e n t Ac c o u n t i n g St a n d a r d s Bo a r d (G A S B ) , in c l u d i n g St a t e m e n t No . 68 , Ac c o u n t i n g an d Fi n a n c i a l Re p o r t i n g fo r Pe n s i o n s - an Am e n d m e n t o f GA S B St a t e m e n t No . 27 an d St a t e m e n t No . 71 , Pe n s i o n Tr a n s i t i o n fo r Co n t r i b u t i o n s Ma d e Su b s e q u e n t to th e Me a s u r e m e n t Da t e - an A m e n d m e n t o f O A S B St a t e m e n t No . 68 , fo r t h e y e a r e n d e d D e c e m b e r 31 , 2 0 1 5 . Th e s e st a n d a r d s re q u i r e d a re t r o a c t i v e im p l e m e n t a t i o n wh i c h re s u l t e d in th e re s t a t e m e n t o f be g i n n i n g ba l a n c e s in th e De c e m b e r 31 , 20 1 4 fi n a n c i a l st a t e m e n t s . Ch a n g e s re l a t e d to th e s e st a n d a r d s ar e re f l e c t e d in th e fi n a n c i a l st a t e m e n t s an d sc h e d u l e s an d re l a t e d di s c l o s u r e s ar e in c l u d e d in No t e 4 an d 5. As a re s u l t o f th e re s t a t e m e n t o f be g i n n i n g ba l a n c e s , th e fo l l o w i n g sc h e d u l e re c o n c i l e s th e pr e v i o o s l y re p o r t e d De c e m b e r 31 , 20 1 4 ba l a n c e s to th e De c e m b e r 31 , 20 1 5 fi n a n c i a l st a t e m e n t s : Ne t Po s i t i o n - be g i n n i n g . as pr e v i o u a l y re p o r t e d Ch a n g e in ac c o u n t i n g pr i n c i p l e Ne t Pe n s i o n As s e t D e f = e d ou t f l o w s re l n t e d to pe n s i o n s De f C ! T e d in f l o w s re l a t e d to pe n s i o n s Ne t pe n s i o n li a b i l i t y To t a l Ne t Po s i t i o n - be g i n n i n g . re s t a t e d Go v e r n m e n t a l Bu s i n e s s - t y p e In t e r n a l Ac t i v i t i e s Ac t i v i t i e s Se r v i c e Fu n d s $ 83 , 3 6 6 , 7 5 0 $ 55 , 3 5 6 , 8 9 7 $ 8, 4 0 1 , 8 9 6 1, 0 5 8 , 4 6 2 65 6 , 6 6 3 66 , 1 6 6 56 4 , 2 8 6 (1 3 8 , 7 4 5 ) (9 , 6 1 7 , 6 0 9 ) ( 1 , 6 3 7 , 7 9 9 ) (1 1 , 2 5 5 , 4 0 8 ) (8 , 0 4 1 , 2 2 9 ) (1 , 5 7 1 , 6 3 3 ) (1 0 , 6 9 1 , 1 2 2 ) $ 75 , 3 2 5 , 5 2 1 $ 53 , 7 8 5 , 2 6 4 $ (2 , 2 8 9 , 2 2 6 ) No t e l ST E W AR D S B I P . CO M P L I A N C E . AN D AC C O U N T A B I L I T Y A. BU D G E T A R Y IN F O R M A T I O N Au n u a l bu d g e t s ar e ad o p t e d on a ba s i s co n s i s t e n t wi t h ac c o u n t i n g pr i n c i p l e s ge n e r a l l y ac c e p t e d in th e Un i t e d St a t e s fo r al l go v e r n m e n t a l fu n d s . Al l an n u a l ap p r o p r i a t i o n s la p s e at fi s c a l ye s r en d . In Se p t e m b e r , th e Ci t y Ma n a g e r su b m i t s to th e Ci t y Co u n c i l pr o p o s e d op e r a t i n g bu d g e t s fa r th e fi s c a l ye a r co m m e n c i n g th e fo l l o w i n g Ja n u a r y . Th e pr o p o s e d ge n e r a l fu n d bu d g e t an d pr e l i m i n a r y ta x le v y mu s t be ce r t i f i e d to th e Co u n t y pr i m : to Se p t e m b e r 30 . Th e Co u n c i l ho l d s pu b l i c he s r i n g s on th e ce r t i f i e d bu d g e t an d le v y an d mu s t su b m i t a fi n a l le v y to th e Co u n t y pr i o r to th e en d of D e c e r n b e r . CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 Th e ap p r o p r i a t e d bu d g e t is pr e p a r e d by fu n d an d de p o r t m e n t . The City Council must authorize any transfer of budgeted am o u n t s be t w e e n de p a r t m e n t s ar fu n d s . Tr a n s f e r s of bu d g e t e d amounts within departments in the General Fund must be au t h o r i z e d by th e Ci t y Ma n s g e r . Th e le g a l le v e l of b u d g e t s r y control is the deportment level fur the Gtmeral Fund and the fu n d le v e l fo r al l ot h e r go v e r n m e n t a l fu n d s . Th e r e we r e no supplemental budgetsry appropriations or amendments do r i n g th e ye a r . Fo r th e ye a r en d e d De c e m b e r 31 , 20 1 5 ex p e n d i t u r e s an d tr a n s f e r s out exceeded appropriations in the following General Fu n d de p a r t m e n t s an d ot h e r go v e r n m e n t a l fu n d s : Final Excess of Budset Actual Appropriations Ma j o r Fu n d s : Ge n e r a l Fu n d : Ma y o r an d co u n c i l $ 122,010 $ 123,085 $ (1,075) As s e s s i n g 201,100 202,443 (1,343) Pa r k an d re c r e a t i o n ad m i n i s t r a t i o n 219,626 221,922 (2,296) Co n v e n t i o n bu r e a u 418,000 510,827 (92,827) No n d e p a r t m e n t a l 404,253 450,129 (45,876) Tr a n s f e r s ou t 187,389 1,176,313 (988,924) Ma j o r Fu n d s : Sp e c i a l Re v e n u e Fu n d s : Ta x In c r e m e n t Di s t r i c t N o . 3 2,505,331 3,879,458 (1,374,127) Ta x ln c r e m t m t Di s t r i c t No . 5 435,437 1,295,482 (860,045) De b t Se r v i c e Fu n d 3,861,553 3,931,993 (70,440) Ca p i t a l Pr o j e c t Fu n d s : Ca p i t a l Im p r o v e m e n t s 956,000 4,127,671 (3,171,671) Mu n i c i p a l St a t e Ai d fo r Co n s t t u c t i o n 2,670,000 2,693,830 (23,830) ln f r a s l r u c t u r e Cm s t t u c t i o n 1,371,595 1,517,830 (146,235) No n m a j o r Fu n d s : Sp e c i a l Re v e n u e Fu n d s : Ec o n o m i c De v e l o p m e n t Au t h o r i t y 436,983 1,137,307 (700,324) Co m m u n i t y De v e l o p m e n t Bl o c k Gr a n t 150,000 368,841 (218,841) Ta x In c r e m e n t Di s t r i c t No . 2 21,655 (21,655) Ta x In c r e m e n t Di s 1 r i c t No . 4 464,683 640,137 (175,454) Ce n t e n n i a l Am p h i t h e a t e r 588,500 632,925 (44,425) Ca p i t a l Pr o j e c t Fu n d s : St t e e t Re c o n s t t u c t i o n 2,150,000 2,270,487 (120,487) IV-30 CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 B. DE F l C I T FU N D EQ f f i T Y De f i c i t fu n d eq u i t y ex i s t s at De c e m b e r 31 , 2 0 1 5 in th e fo l l o w i n g fu n d s : Un a s s i g n e d de f i c i t fu n d ba l a n c e Ma j o r Fu n d s : Ta x l n c r e m e n t D i s t r i c t N o . 5 In f r a s t r u c t u r e Co n s t r u c t i o n No n m a j o r Fu n d s : Co m m u n i t y De v e l o p m e n t Bl o c k Gr a n t Un r e s t r i c t e d de f i c i t ne t po s i t i o n Ma j o r Fu n d s : Go l f Co u r s e Wa t e r Ut i l i t y In t e r n a l Se r v i c e Fu n d s : EE Re t i r e m e n t Be n e f i t Pe n s i m - GE R F Pe n s i o n - PE P F F 2, 2 4 1 , 4 6 6 18 3 , 1 4 5 45 3 93 7 , 3 5 5 91 2 , 1 6 8 14 4 , 8 7 5 6, 3 8 2 , 1 1 8 4, 5 8 1 , 1 9 2 Th e de f i c i t s ar e be i n g fu n d e d th r o u g h in t e r n a l bo r r o w i n g an d wi l l be re p a i d fr o m fu t u r e co l l e c t i o n s of ta x in c r e m e n t , fu t u r e co l l e c t i o n s of sp e c i a l as s e s s m e n t s , in t e r n a l tr a n s f e r s , an d fu t u r e bo n d is s u a n c e . Th e In t e r n a l se r v i c e de f i c i t s wi l l be fu n d e d th r o u g h fu t u r e in t e r f u n d ch a r g e s , st a t e gr a n t re v e n u e s , an d em p l o y e e wi t h o l d i n g s . No t e 3 DE T A I L E D NO T E S ON AL L FU N D S A. DE P O S I T S AN D IN V E S T M E N T S In ac c o r d a n c e wi t h Mi n n e s o t a St a t u t e s , th e Ci t y ma i n t a i n s de p o s i t s at on l y th o s e de p o s i t o r y ba n k s au t h o r i z e d by th e Ci t y Co u n c i l . Al l su c h de p o s i t o r i e s ar e me m b e r s o f th e Fe d e r a l Re s e r v e Sy s t e m . Mi n n e s o t a St a t u t e s r e q u i r e th a t al l Ci t y de p o s i t s be pr o t e c t e d by in s u r a n c e , su r e t y bo n d , or co l l a t e r a l . Th e ma r k e t va l u e of co l l a t e r a l pl e d g e d mu s t eq u a l I I 0' / o o f th e de p o s i t s no t co v e r e d by in s u r a n c e or bo n d s . Au t h o r i z e d co l l a t e r a l in c l u d e s th e le g s ! in v e s t m e n t s de s c r i b e d in No t e I .D . , as we l l as ce r t a i n fi r s t mo r t g n g e no t e s , an d ce r t a i n ot h e r st a t e or lo c a l go v e r n m e n t ob l i g s t i o n s . Mi n n e s o t a St a t u t e s re q u i r e th a t se c o r i t i e s pl e d g e d as co l l a t e r a l be pl a c e d in aa f e k e e p i n g in a re s t r i c t e d ac c o u n t a t th e Fe d e r a l Re s e r v e ba n k , or in an ac c o u n t at a tr u s t de p a r t m e n t o f a co m m e r c i a l ha n k or ot h e r fi n a n c i a l in s t i t u t i o n th a t is no t ow n e d or co n t r o l l e d by th e fi n a n c i a l in s t i t u t i o n fu m i s h i n g th e co l l a t e r a l . At ye a r - e n d , th e Ci t y ' s ca r r y i n g va l u e am o u n t o f de p o s i t s wa s $6 , 7 8 2 , 0 8 1 co m p o s e d o f ba n k ba l a n c e s o f $6 , 7 8 2 , 0 8 1 . A s of D e c e m b e r 31 , 20 1 5 th e Ci t y ha d th e fo l l o w i n g in v e s t m e n t s an d ma t u r i t i e s : In v e s t m e n t ~ Fa i r Va l u e No ma t u r i t y Ne g o t i a b l e ce r t i f i c a t e s of de p o s i t $ 13 , 0 4 6 , 4 2 7 $ Fe d e r a l ag e n c y no t e s 14 , 0 5 6 , 2 7 7 Ex t e r n a l in v e s t m e n t po o l - 4M Fu n d 14 , 1 3 4 , 8 1 6 1 4 , 1 3 4 , 8 1 6 Mo n e y ma r k e t 2, 0 6 9 , 1 1 6 2, 0 6 9 , 1 1 6 To t a l In v e s t m e n t s $ 43 , 3 0 6 , 6 3 6 $ 16 , 2 0 3 , 9 3 2 In v e s t m e n t Ma t u r i t i e s (i n ye a r s ) < I 1 - 3 2, 9 3 9 , 9 3 0 $ 5, 2 2 2 , 8 0 0 1, 0 0 4 , 9 5 4 11 , 0 3 1 , 8 7 5 3 - 5 4, 8 8 3 , 6 9 7 2, 0 1 9 , 4 4 8 3, 9 4 4 , 8 8 4 16 , 2 5 4 , 6 7 5 $ 6, 9 0 3 , 1 4 5 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S T O T H E F I N A N C I A L S T A T E M E N T S De c e m b e r 31 , 20 1 5 As of D e c e m b e r 31 , 20 1 5 , th e Ci t y ba d th e fo l l o w i n g SU I D l D l l l Y of investments related to the credit risk, par values and fair va l u e s of se c u r i t i e s : ID V e s t m e n t 1y P e Cm l i t Ri s k ( * ) Ne g o t i a b l e ce r l i : r u : - of de p o s i t Fe d e r a l ag m c y no t e s Ex t e m a l in v e s t m e n t po o l · 4M Fu n d Mo n e y ma r k e t To t a l l n v e s t m c n 1 S n/ a AA n/ a AA A Par 13,067,000 14,018,115 Fair Value 13,046,427 14,056,277 14,057,174 14,134,816 2,441,867 2,069,116 43,584,156 __ L 43,306,636 % oftotal Portfolio 30.13% 32.46% 32.64% 4.77% 100.00% ( 0 ) Th e cr e d i t ri s k fo r th e Fe d e r a l Ag e n c y No t e s an d Mo n e y Market ratings are provided by S&P. Ca s b an d in v e s t m e n t s at ye a r - e n d co n s i s t o f th e fo l l o w i n g : In v e s t m e n t s De p o s i t s Pe t t y ca s h an d ch a n g e fu n d s To t a l ca s h , ca s h eq u i v a l e n t s , an d in v e s t m e n t s Th e de p o s i t s an d in v e s t m e n t s o f th e Ci t y ar e pr e s e n t e d in th e financial statements as follows: St a t e m e n t of N e t Po s i t i o n Ca s h an d in v e s t m e n t s Ca s h wi t h fi s c a l ag e n t s To t a l $ 43,306,636 6,782,081 13,805 50,102,522 43,320,441 6,782,081 $ 50,102,522 In t e r e s t ra t e ri s k - - Th e Ci t y ' s in v e s t m e n t po l i c y re q u i r e s in t e r e s t earnings remain stable and predictable through at least the ne x t bu d g e t cy c l e an d th a t at le a s t 50 ' / o o f th e in v e s t m e n t po r t f o l i o remain for two or more years with known interest rates. Th e po l i c y al s o st a t e s th a t th e po r t f o l i o sh a l l re m s i n su f f i c i e n t l y liquid to meet all operating requirements that may be re a s o n a b l y ex p e c t e d . Cr e d i t ri s k - - Th e Ci t y ' s in v e s t m e n t po l i c y re s t r i c t s in v e s t m e n t instruments to those authorized by Minnesota Statutes § 118A as li s t e d in No t e I .D . Th e po l i c y al s o re q u i r e s th a t an y co u n t e r p a r t y in investment tranaactions be pro-qualified and approved by th e Ci t y Co u n c i l an d th a t th e po r t f o l i o be di v e r s i f i e d to li m i t potential losses on individual securities. As of December 31, 2015 th e Ci t y ' s in v e s t m e n t in FH L M C , FN M A , FH L B an d FF C B federal agency notes were rated AA by Standsrd & Poors (S & P ) . Th e Ci t y ' s ex t e r n a l in v e s t m e n t po o l is wi t h th e Mi n n e s o t a Municipal Money Market Fund which is regulated by Mi n n e s o t a St a t u t e s an d th e Bo a r d o f Di r e c t o r s o f th e Le a g u e of Minnesota Cities. The 4M fund is a 2a7-like pool and is based on an am o r t i z e d co s t me t h o d th a t ap p r o x i m a t e s fa i r va l u e . IV-31 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 Co n c e n t r a t i o n o f cr e d i t ri s k - Th e Ci t y ' s in v e s t m e n t po l i c y re q u i r e s th a t th e in v e s t m e n t po r t f o l i o be di v e r s i f i e d to mi n i m i z e po t e n t i a l lo s s e s on in d i v i d u a l se c u r i t i e s . As of y e s r en d , th e Ci t y hs d po r t f o l i o co n c e n t r a t i o n s in ex c e s s o f fi v e pe r c e n t (e x c l u d i n g ex t e r n a l in v e s t m < m t p o o l s ) in th e fo l l o w i n g fe d e r a l ag e n c i e s : Fe d e r a l Ho m e Lo a n Mo r t g a g e Co r p o r a t i o n (1 0 . 4 % ) , Fe d e r a l Na t i o u a l Mo r t g a g e As s o c i a t i o n (1 3 . 9 " / o ) Fe d e r a l Fa r m Cr e d i t Ba n k (4 . 7 % ) an d Fe d e r a l Ho m e Le a n Ba n k (3 . 5 % ) . Cu s t o d i a l cr e d i t ri s k Th e Ci t y ' s in v e s t m e n t po l i c y re q u i r e a th a t se c u r i t i e s pu r c h a s e d fr o m an y ba n k or de a l e r be pl a c e d wi t h an in d e p e a d e n t th i r d pa r t y fo r cu s t o d i a l sa f e k e e p i n g . la v e s t m e a t s in in v e s t m e n t po o l s an d mo n e y ma r k e t s ar e no t ev i d e n c e d by se c u r i t i e s th a t ex i s t in ph y s i c a l or bo o k en t r y fo r m , an d th e r e f o r e ar e no t su b j e c t to cu s t o d i a l cr e d i t ri s k di s c l o s u r e s . Al l of th e Ci t y ' s re m a i n i n g in v e s t m e n t s we r e he l d in an in s t i t u t i o n a l tr u s t un d e r co n t r a c t wi t h th e Ci t y fo r sa f e k e e p i n g se r v i c e s . B. RE C E I V A B L E S Si g n i f i c a n t re c e i v a b l e ba l a n c e s no t ex p e c t e d to be co l l e c t e d wi t h i n on e ye a r o f De c e m b e r 31 , 20 1 5 ar e as fo l l o w s : De l i n q u e a t De l i n q u e n t Pr o p e r t y Ta x Sp e c i a l Mu n i c i p a l No t e s Ta x e s la c r e m e n t s As s e s s m e n t s St a t e > - Ai d __ _ _ . Re c e i v a b l e Ma j o r Fu n d s : Ge n e r a l $ 26 8 , 5 8 6 $ $ 12 9 , 3 5 9 $ Ta x l n c r e m e n t D i s t r i c t N o . 3 89 , 8 0 6 Ta x la c r e m e n t Di s t r i c t N o . 5 11 0 , 4 9 3 27 9 , 4 0 0 De b t Se r v i c e 2, 9 1 8 , 8 8 8 Ca p i t a l i m p r o v e m e n t s 9, 4 4 2 2, 0 3 6 Mu n i c i p a l St a t e Ai d fo r Co n s t r u c t i o n 2, 6 9 9 , 3 2 2 la f r a s t r u c t u r e Co n s t r u c t i o n 1, 4 3 4 , 7 6 8 No n m a j o r F u n d s Ho u s i n g an d Re d e v e l o p m e n t Au t h o r i t y 6, 6 6 3 To t a l $ 28 4 , 6 9 1 $ 20 0 , 2 ! 1 _ ! 1 _ _ $ 4, _ 4 8 5 , 0 5 1 $ 2, 6 9 9 , 3 2 2 $ 27 9 , 4 0 0 Th e Ec o n o m i c De v e l o p m e n t Au t h o r i t y (E D A ) of f e r s a dc w n pa y m e n t aa d cl o s i n g co s t as s i s t a n c e pr o g r a m to ho m e bu y e r s pu r c h a s i n g fo r e c l o s e d or va c a a t pr o p e r t i e s as th e i r pr i n c i p a l re s i d e n c e . Th e pr o g r a m of f e r s up to a $1 0 , 0 0 0 , no - i n t e r e s t de f e r r e d lo a n th a t is fo r g i v a b l e i f th e bo r r o w e r re s i d e s in th e pr o p e r t y fo r fi v e co n s e c u t i v e ye a r s . As of De c e m b e r 31 , 20 1 5 , th e ba l a n c e o f th e s e lo a n s is $5 1 3 , 7 5 0 . Th e r e ha s be e n an al l o w a n c e fo r dc u b t f u l ac c o u n t s re c o r d e d fo r th e sa m e am o u a t , as it is fu l l y ex p e c t e d th a t th e s e lo a n s wi l l be fo r g i v e n . CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 C. CA P I T A L AS S E T S Ca p i t a l as s e t ac t i v i t y fo r th e ye a r en d e d De c e m b e r 31 , 20 1 5 was as follows: Go v e r n n u m t a l ac t i v i t i e s : Ca p i t a l as s e t s , no t be i n g de p r e c i a t e d : La n d Ea s e m e n t s - pe r p e t u a l Co n s t r u c t i o n in pr o g r e s s To t a l ca p i t a l as s e t s , no t be i n g de p r e c i a t e d Ca p i t a l as s e t s , be i n g de p r e c i a t e d : Ea s e m e n t s - te m p o r a r y Bu i l d i n g s an d im p r o v e m e n t s Pa r k im p r o v e m e n t s Ma c h i n e r y an d eq u i p m e n t St r e e t in f r a s t r u c t u r e To t a l ca p i t a l as s e t s , be i n g de p r e c i a t e d Le s s ac c u m u l a t e d de p r e c i a t i o n fo r : Ea s e m e n t s - te m p o r a r y Bu i l d i n g s an d im p r o v e m e n t s Pa r k im p r o v e m e n t s Ma c h i n e r y an d eq u i p m e n t St r e e t in f r a s t r u c t u r e To t a l ac c u m u l a t e d de p r e c i a t i o n To t a l ca p i t a l as s e t s be i n g de p r e c i a t e d - ne t Go v e r n m e n t a l ac t i v i t i e s ca p i t a l as s e t s - ne t Beginaing Balance $ 3,537,473 88,704 3,276,213 6,902,390 Increases 8,829,037 8,829,037 Decreases (3,094,112) (3,094,112) Ending Balance 3,537,473 88,704 9,011,138 12,637,315 22,715 22,715 19,566,900 632,925 (280,291) 19,919,534 10,500,244 10,500,244 9,246,814 1,066,068 (658,634) 9,654,248 42,009,818 3,036,991 45,046,809 81,346,491 4,735,984 (938,925) 85,143,550 16,287 11,847,970 4,544,355 5,483,811 16,963,881 38,856,304 4,538 725,174 227,393 786,681 1,507,430 3,251,216 20,825 (280,291) 12,292,853 4,771,748 (579,412) 5,691,080 18,471,311 (859,703) 41,247,817 42,490,187 1,484,768 (79,222) 43,895,733 $ 49,392,577 $ 10,313,805 $ (3,173,334) $ 56,533,048 De p r e c i a t i o n ex p e n s e wa s ch a r g e d to fu n c t i o n s / p r o g r a m s o f the City as follows: Go v e r n m e n t a l ac t i v i t i e s : Ge n e r a l go v e r n m e n t Pu b l i c sa f e t y Pu b l i c wo r k s Pa r k s aa d re c r e a t i o n Ca p i t a l as s e t s he l d by th e Ci t y ' s in t e r u a l se r v i c e fu n d s are ch a r g e d to th e va r i o u s fu n c t i o n s ba s e d on th e i r us a g e of the assets To t a l de p r e c i a t i o n ex p e n s e - go v e r n m e n t a l ac t i v i t i e s 71,389 397,011 1,779,286 241,901 761,629 3,251,216 IV-32 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 Bu s i n e s s - t y p e ac t i v i t i e s : Ca p i t a l as s e t s , no t be i n g de p r e c i a t e d : La n d Ea s e m e n t s - pe r p e t u a l Co n s t r u c t i o n in pr o g r e s s To t a l ca p i t a l as s e t s , no t be i n g de p r e c i a t e d Ca p i t a l as s e t s , be i n g de p r e c i a t e d : Ea s e m e n t s - te m p o r a r y La n d im p r o v e m e n t s Bu i l d i n g s an d im p r o v e m e n t s Ma c h i n e r y an d eq u i p m e n t St r e e t li g h t sy s t e m s Ma i n s an d li n e s To t a l ca p i t a l as s e t s , be i n g de p r e c i a t e d Le s s ac c u m u l a t e d de p r e c i a t i o n fo r : Ea s e m e n t s - te m p o r a r y La n d im p r o v e m e n t s Bu i l d i n g s an d im p r o v e m e n t s Ma c h i n e r y an d eq u i p m e n t St r e e t li g h t sy s t e m s Ma i n s an d li n e s To t a l ac c u m u l a t e d de p r e c i a t i o n To t a l ca p i t a l as s e t s be i n g de p r e c i a t e d - ne t Bu s i n e s s - t y p e ac t i v i t i e s ca p i t a l as s e t s - ne t Be g i n n i n g Ba l a n c e $ 3, 1 9 4 , 9 8 3 10 , 2 8 5 8, 4 2 5 , 5 1 1 11 , 6 3 0 , 7 7 9 20 , 3 3 5 44 2 , 8 9 1 18 , 8 6 2 , 8 5 3 95 9 , 6 6 9 77 4 , 8 8 6 67 , 8 6 4 , 3 8 9 88 , 9 2 5 , 0 2 3 14 , 5 8 1 24 6 , 3 2 0 15 , 5 5 5 , 4 8 3 66 1 , 6 9 3 14 4 , 5 4 4 35 , 3 9 6 , 0 4 9 52 , D l 8 , 6 7 0 36 , 9 0 6 , 3 5 3 $ 48 , 5 3 7 , 1 3 2 De p r e c i a t i o n ex p e n s e wa s ch a r g e d to fu n c t i o n s / p r o g r a m s o f 1h e Ci t y as fo l l o w s : Bu s i n e s s - t y p e ac t i v i t i e s : Mu n i c i p a l li q u o r Go l f co u r s e Ea r l e Br o w n He r i t a g e Ce n t e r Wa t e r ut i l i t y Sa n i t a r y se w e r ut i l i t y St o r m dr a i n a g e u t i l i t y St r e e t li g h t ut i l i t y To t a l de p r e c i a t i o n ex p e n s e - bu s i n e s s - t y p e ac t i v i t i e s In c r e a s e s $ 20 , 9 0 8 , 8 3 0 20 , 9 0 8 , 8 3 0 10 1 , 0 3 1 31 , 9 7 1 57 , 9 0 3 3, 9 3 4 , 2 4 7 4, 1 2 5 , 1 5 2 4, 0 6 3 16 , 6 2 7 73 8 , 8 7 2 56 , 4 0 9 53 , 5 6 7 2, 4 3 3 , 6 9 0 3, 3 0 3 , 2 2 8 82 1 , 9 2 4 $ 21 , 7 3 0 , 7 5 4 En d i n g De c r e a s e s Ba l a n c e $ $ 3, 1 9 4 , 9 8 3 10 , 2 8 5 (3 , 6 9 7 , 7 3 7 ) 25 , 6 3 6 , 6 0 4 (3 , 6 9 7 , 7 3 7 ) 28 , 8 4 1 , 8 7 2 20 , 3 3 5 44 2 , 8 9 1 18 , 9 6 3 , 8 8 4 99 1 , 6 4 0 83 2 , 7 8 9 71 , 7 9 8 , 6 3 6 93 , 0 5 0 , 1 7 5 18 , 6 4 4 26 2 , 9 4 7 (5 3 , 5 9 6 ) 16 , 2 4 0 , 7 5 9 71 8 , 1 0 2 19 8 , 1 1 1 53 , 5 9 6 37 , 8 8 3 , 3 3 5 55 , 3 2 1 , 8 9 8 37 , 7 2 8 , 2 7 7 $ (3 , 6 9 7 , 7 3 7 ) $ 66 , 5 7 0 , 1 4 9 $ 16 , 9 6 6 18 , 7 3 7 62 0 , 2 4 9 70 3 , 9 3 3 78 3 , 5 0 0 1, 1 0 6 , 2 7 6 53 , 5 6 7 $~ 3 , 2 2 8 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 CO N S T R U C T I O N CO M M I T M E N T S At De c e m b e r 31 , 20 1 5 1 h e Ci t y ha d co n s t r u c t i o n pr q j e c t co n t r a c t s in progress. The commitments related to remaining co n t r a c t ba l a n c e s ar e su m m a r i z e d as fo l l o w s : Pr o j e c t Fr e e w a y Pa r k Ar e a Im p r o v e m e n t s 63 r d A ve n u e Re c o n s t r u c t i o n Pr o j e c t 20 1 4 Ca p i t a l Ma i n t e n a n c e Bu i l d i n g Pr o g r a m Pr o j e c t Wa t e r Tr e a t m e n t Pl a n t To t a l D. IN T E R F U N D BA L A N C E S AN D TR A N S F E R S Th e co m p o s i t i o n o f du e to / f r o m ot h e r fu n d ba l a n c e s at De c e m b e r 31, 2015 are as follows: Fu n d Ma j ( ) f Fu n d S : Ge n e r a l Ca p i t a l Im p r o v e m e n t s Mu n i c i p a l St a t e Ai d fo r Co n s t r u c t i o n In f r a s t r u c t u r e Co n s t r u c t i o n Go l f Co u r s e To t a l Due from Due to Oilier Funds Oilier Funds 144,982 $ 706,834 851,816 655,248 51,586 144,982 851,816 Contract Amount 6,768,387 4,310,875 3,702,259 18,066,121 32,8'47,642' Remaining Commitment 478,149 209,131 91,500 247,439 1,026,219 ln t e r f u n d du e to / f r o m ba l a n c e s ar e re p r e s e n t a t i v e of le n d i n & ' b o r r o w i n g arrangements to cover deficit cash balances at 1he end of 1 h e fi s c a l ye a r . Ba l a n c e s wi l l be pa i d wi 1 h fu t u r e op e r a t i n g revenues and/or interfund transfers, collections of special as s e s s m e n t s on be n e f i t i n g pr o p e r t y ow n e r s , an d re c e i p t of M u n i c i p a l State Aid funds. In d i v i d u a l fu n d ad v a n c e s to an d ad v a n c e s fr o m ot h e r fu n d s at December 31, 2015 are as follows: Advances to Advances From Fu n d Oilier Funds Oilier Funds Ma j o r Fu n d s : Ta x In c r e m e n t Di s t r i c t No . 5 $ $ 2,463,683 Ca p i t a l Im p r o v e m e n t s 792,488 Go l f Co u r s e 792,488 No n m a j o r F u n d s : Ta x In c r e m e n t Di s t r i c t No . 2 2,463,683 3,256,171 $ 3,256,171 IV-33 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 Th e $2 , 4 6 3 , 6 8 3 ad v a n c e be t w e e n th e Ta x In c r e m e n t Di s t r i c t No . 2 an d th e Ta x In c r e m e n t Di s t r i c t No . 5 fu n d s wa s ma d e to pr o v i d e fu n d i n g fo r a sp e c i f i c de v e l o p m e n t pr o j e c t wi t h i n th e Ci t y . Th e fi n a n c i n g pl a n ad o p t e d fo r th e Ta x In c r e m e n t Di s t r i c t No . 5 hn s th e re p a y m e n t o f pr i n c i p a l sc h e d u l e d to be g i n in 20 2 4 , ho w e v e r cu r r e n t ca a h fl o w ~e c t i o n s im p l y a mo r e im m e d i a t e re p a y m e n t pl n n , be g i n n i n g in 20 2 2 . Th e $7 9 2 , 4 8 8 ad v a n c e be t w e e n th e Go l f Co u r s e an d Ca p i t a l Im p r o v e m e n t s fu n d wa s ma d e fo r im p r o v e m e n t s to th e go l f co u r s e . A re p a y m e n t sc h e d u l e fo r th i s ad v a n c e hn a no t ye t be e n ad o p t e d . Th e co m p o s i t i o n o f in t e r f u n d tr a n s f e r s as of De c e m b e r 31 , 20 IS ar e as fo l l o w s : Go v e r n m e n t a l Fu n d s : M. Y o r F u n d s : Ge n e r a l Ta x l n c r e m e n t D i s t r i c t N o . 3 De b t Se r v i c e Ca p i t a l Im p r o v e m e n t s No n m a j o r Fu n d s : Ho u s i n g an d Re d e v e l o p m e n t Au t h o r i t y Ec o n o m i c De v e l o p m e n t Au t h o r i t y Ci t y In i t i a t i v e s Gr a n t Fu n d Ce n t e n n i a l Am p h i t h e a t e r Co m m u n i t y De v e l o p m e n t Bl o c k Gr a n t Te c h n o l o g y To t a l go v e r n m e n t a l fu n d s Pr o p r i e t a r y Fu n d s : Ma j o r Fu n d s : Mu n i c i p a l Li q u o r Go l f Co u r s e Ea r l e Br o w n He r i t s g e Ce n t e r St o r m Dr a i n a g e Ut i l i t y Go v e r n m e n t a l ac t i v i t i e s : In t e r n a l Se r v i c e To t a l pr o p r i e t a r y fu n d s To t a l al l fu n d s Tr a n s f e r In Tr a n s f e r Ou t 20 1 , 6 8 4 $ 1, 1 7 6 , 3 1 3 2, 3 9 5 , 9 8 2 2, 3 9 5 , 9 8 2 1, 1 2 5 , 2 1 6 26 4 , 3 1 9 27 4 , 3 6 3 27 4 , 3 6 3 13 , 5 8 4 30 9 , 3 1 9 18 8 , 1 0 0 23 5 , 0 2 0 4, 5 4 1 , 5 8 4 4, 3 1 2 , 6 6 1 21 6 , 4 5 5 40 , 0 0 0 14 , 8 5 7 45 , 0 0 0 7, 3 8 9 47 , 3 8 9 27 6 , 3 1 2 4, 5 8 8 , 9 7 3 $ 4, 5 8 8 , 9 7 3 ln t e r f u n d tr a n s f e r s al l o w th e Ci t y to al l o c a t e fi n a n c i a l re s o u r c e s to th e fu n d s th a t re c e i v e be n e f i t fr o m se r v i c e s pr o v i d e d by an o t h e r ll m d or to pr o v i d e ad d i t i o n a l ca p i t a l an d in f r a s t t u c t o r e fu n d i n g . In ad d i t i o n , in t e r f u n d tr a n s f e r s ar e oc c a s i o n a l l y au t h o r i z e d to al l o w re d i s l r i b u t i o n o f re s o u r c e s be t w e e n fu n d s fo r th e mo s t ef f i c i e n t us e o f fu n d s . In 20 1 5 , th e fo l l o w i n g no n - r o u t i n e tr a n s f e r s we r e ma d e be t w e e n fu n d s : Th e Ge n e r a l fu n d tr a n s f e r t e d $9 0 8 , 7 6 1 , an d th e Mu n i c i p a l Li q u o r fu n d tr a n s f e r t e d $2 1 6 , 4 5 5 to th e Ca p i t a l Im p r o v e m e n t s fu n d in ac c o r d a n c e wi t h th e Ci t y ' s Ca p i t a l Pr o j e c t Fu n d i n g po l i c y . CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO T i l E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 E. OP E R A T I N G LE A S E S Th e Ci t y hn a le n a e d a po r t i o n o f th e po l i c e se c o n d fl o o r ex p a n s i o n area to the Local Government Information Systems As s o c i a t i o n (L O G IS ) as a ba c k u p co m p u t e r fa c i l i t y . Th e le a s e hna a term of five yesrs, commencing on August I, 2011 and ca l l s fo r mo n t h l y le a s e pa y m e n t s ba s e d on sq U I I l ' e - f o o t a g e . Lease revenue for the year ended December 31, 2015 was $1 3 , 2 0 0 . Fu t u r e mi n i m u m le a s e re v e n u e s un d e r th e cu r r e n t agreement is as follows: Year Ending 2016 Total Minimum Rents $ 7,700 Th e Ci t y Je s s e s sp a c e fo r it s mu n i c i p a l li q u o r st o r e s . Th e le a s e s are leu-year leases and began in 2010 and 2013. The leases pr o v i d e fo r a mi n i m u m mo n t h l y ba s e re n t pa y m e n t , pl u s a pr o - r a t a shnre of common area expenaes. Additionallesae payments ar e re q u i r e d if ag r e e d - u p o n re v e n u e th r e s h o l d s ar e at t a i n e d . These leases may be cancelled at the City's oprion if the City ce a s e s li q u o r op e r a t i o n s . To t a l re n t a l ex p e n s e un d e r th e le s a e agreements for the year ended December 31, 2015 was $3 1 1 , 5 5 3 . Fu t u r e mi n i m u m ba s e re n t pa y m e n t s un d e r th e cu r r e n t agreemcmts are as follows: Year Ending 2016 2017 2018 2019 2020 2021-2023 Total Minimum Rents $ 234,888 234,888 234,888 234,888 164,124 280,080 1,383,756 Th e Ci t y is th e le s s o r in an op e r a t i n g l e a s e fo r a bu i l d i n g be i n g used for a sit-down restaurant. The lease was originally signed in 20 1 1 wi t h a te n ye a r te r m wi t h an op r i o n to ex t e n d fo r an additional five years. For the year ended 2015, the City received $1 7 7 , 2 1 3 in re n t a l re v e n u e . Fu t u r e mi n i m u m ba s e re n t re v e n u e s under the current agreement are as follows: Yesr Total Endins Minimum Rents 2016 $ 67,838 2017 84,378 2018 92,816 2019 102,942 2020 112,048 2021 96,190 $ 556,212 IV-34 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 F. LO N G - T E R M DE B T GO V E R N M E N T A L AC T M T I E S Th e Ci t y is s u e d ge n e r a l ob l i g a t i o n im p r o v e m e n t bo n d s to pr o v i d e fu n d s fo r th e co n s t r u c t i o n o f ma j o r ca p i t a l fa c i l i t i e s an d co n s t r n c t i o n o f in f r a s t r u c t u r e . Th e s e bo n d s ar e re p o r t e d in th e go v e r n m e n t a l ac t i v i t i e s o f th e Ci t y . Th e Ci t y is s u e d ge n e r a l ob l i g a t i o n ts x in c r e m e n t bo n d s tc fi n a n c e va r i o u s re d e v e l o p m e n t pr o j e c t s an d re d e v e l o p m e n t pr o p e r t y ac q u i s i t i o n s wi t h i n th e Ci t y . Th e s e bo n d s ar e re p o r t e d in th e go v e r n m e n t a l ac t i v i t i e s o f th e Ci t y . G. O . Ta x In c r e m e n t Bo n d s : Ta x a b l e Ta x In c r e m e n t Bo n d s o f 20 0 4 D Ta x a b l e Ta x In c r e m e n t Bo n d s of 2 0 0 8 A Ta x a b l e Ta x ln c r e m e n t B o o d s of 2 0 1 3 A Ta x a b l e Ta x In c r e m e n t Re f u n d i n g Bo n d s of 20 1 5 B To t a l G . O . Ta x l n c r e m e n t B o n d s G. O . Im p r o v e m e n t Bo n d s : Im p r o v e m e n t Bo n d s , 20 0 6 A Im p r o v e m e n t Bo n d s , 20 0 8 B Im p r o v e m e n t Bo n d s , 20 1 3 B Im p r o v e m e n t Bo n d s , 20 1 5 A To t a l G. O . Im p r o v e m e n t Bo n d s To t a l - bo n d e d in d e b t e d n e s s Ot h e r Li a b i l i t i e s : Co m p e n s a t e d ab s e n c e s pa y a b l e Ne t pe n s i o n li a b i l i t y Ne t OP E B ob l i g a t i o n To t a l go v e r n m e n t a l ac t i v i t i e s In t e r e s t Ra t e s Da t e 4. 7 5 - 5 . 1 3 % 12 / 0 1 / 2 0 0 4 3. 0 0 - 5. 3 0 ' 4 > 05 / 0 1 / 2 0 0 8 2. 0 0 - 3 . 2 5 % 12 / 1 9 / 2 0 1 3 3. 0 0 ' 4 > 07 / 0 9 / 2 0 1 5 3. 5 5 - 3. 8 0 ' 4 > 12 / 1 5 / 2 0 0 6 3. 2 5 - 4. 2 5 % 12 / 1 5 / 2 0 0 8 3. 0 0 ' 4 > 12 / 1 9 / 2 0 1 3 2. 0 0 - 2. 5 0 ' / o 07 / 0 9 / 2 0 1 5 Fi n a l Ma t u r i t y Da t e 02 / 0 1 / 2 0 2 0 02 / 0 1 / 2 0 1 8 02 / 0 1 / 2 0 2 2 02 / 0 1 / 2 0 2 0 02 / 0 1 / 2 0 1 7 02 / 0 1 / 2 0 1 9 02 / 0 1 1 2 0 2 4 02 / 0 1 / 2 0 2 6 Or i g i n a l Pa y a b l e Is s u e 12 - 3 1 - 1 5 $ 17 , 2 4 5 , 0 0 0 $ 8, 1 2 0 , 0 0 0 4, 3 3 5 , 0 0 0 37 5 , 0 0 0 6, 0 4 0 , 0 0 0 5, 7 9 0 , 0 0 0 6, 6 0 0 , 0 0 0 6, 6 0 0 , 0 0 0 34 , 2 2 0 , 0 0 0 ~0 , 8 8 5 , 0 0 0 1, 4 6 0 , 0 0 0 19 5 , 0 0 0 2, 3 9 0 , 0 0 0 86 5 , 0 0 0 4, 9 2 0 , 0 0 0 4, 1 1 5 , 0 0 0 3, 4 1 6 , 2 4 8 3, 4 1 6 , 2 4 8 12 , 1 8 6 , 2 4 8 8, 5 9 1 , 2 4 8 $ 46 , 4 0 6 , 2 4 8 29 , 4 7 6 , 2 4 8 1, 2 5 4 , 8 5 1 11 , 5 0 9 , 4 7 6 71 0 , 6 0 5 42 , 9 5 1 , 1 8 0 CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 Al l lo n g - t e r m bo n d e d in d e b t e d n e s s ou t s t a n d i n g at De c e m b e r 31, 2015 is backed by the full faith and credit of the City, including im p r o v e m e n t an d ts x in c r e m e n t bo n d is s u e s . Bo n d s in th e governmental activities will be retired by future property tsx levies, ts x in c r e m e n t s or sp e c i a l as s e s s m e n t s ac c u m u l a t e d in th e sp e c i f i c debt services funds. In the event thet a deficiency exists be c a n s e o f un p a i d or de l i n q u e n t ts x e s or sp e c i a l as s e s s m e n t s at the time a debt service payment is due, the City must provide re s o u r c e s tc co v e r th e de f i c i e n c y un t i l ot h e r re s o u r c e s ar e av a i l a b l e . At the end of the current year, there are $11,753,632 of as s e t s ac c u m u l a t e d in th e de b t se r v i c e fu n d s fo r fu t u r e de b t service. Included within those accumulated assets, there was $6 , 7 8 2 , 0 8 1 he l d by a fi s c a l ag e n t an d th e r e wa s a co m b i n e d $2,923,530 of delinquent property tsxes and special assessments re c e i v a b l e . An n u a l de b t se r v i c e re q u i r e m e n t s tc ma t u r i t y fo r go v e r n m e n t a l activities long-term debt are as follows: BU S I N E S S - TY P E AC T M T I E S Ye a r En d i n g De c e m b e r 3 1 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 20 2 1 - 2 0 2 5 20 2 6 To t a l Governmental Activities G.O. Tax Increment Bonds G.O. lmprovema1t Bonds Principal Interest Principal Interest 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 $ 8,591,2<1l!_$ 1,028,764 Th e Ci t y is s u e d ge n e r a l ob l i g a t i o n re v e n u e bo n d s to fi n a n c e the metering of all City connected water and sewer utility services in 20 1 0 wh i c h we r e re f u n d e d in 20 1 5 . Th e Ci t y al s o is s u e d general obligatim revenue bonds in 2015 for utility portims of in f r a s t r n c t u r e im p r o v e m e n t pr o j e c t s an d a Re v e n u e No t e fi n a n c e d by the MN Public Facilities Authority Drinking Water State Re v o l v i n g Fu n d fo r th e co n s t r u c t i o n o f a ne w wa t e r tr e a t m e n t plant authorized in the amount of $19,662,352. As of December 31 , 20 1 5 , on l y $1 7 , 5 6 0 , 5 1 0 o f th e Re v e n u e No t e ha s be e n dr a w n down. These bonds are reported in the business-type ac t i v i t i e s o f th e Ci t y . Final In t e r e s t Maturity Original Payable Ra t e s Date Date Issue 12/31/2015 Ge n e r a l Ob l i g a t i o n Ta x a b l e Ut i l i t y Re v e n u e Bo n d s : Re v e n u e Bo n d s o f 20 1 5 A 2. 0 0 - 2. 5 0 ' 4 > 07/09/2015 02/01/2026 $ 1,823,752 $ 1,823,752 Re v e n u e Re f u n d i n g Bo n d s of 20 1 5 A 2. 0 0 - 2. 5 0 ' / o 07/09/2015 02/01/2026 1,660,000 1,660000 To t a l Ge n e r a l Ob l i g a t i o n Ta x a b l e Ut i l i t y Re v e n u e Bo n d s 3,483,752 3,483,752 Ge n e r a l Ob l i g a t i o n Ta x a b l e Ut i l i t y Re v e n u e No t e s : PF A Re v e n u e No t e of 2 0 1 5 1. 0 0 ' 4 > 01/20/2015 08/20/2034 17,560,510 17,545,158 T ot a 1 bu s i n e s s - t y p e ac t i v i t i e s _j;_ 21,044,262 $ 21,028,910 IV-35 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO T i f f i FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 An n u a l de b t se r v i c e re q u i r e m e n t s tc ma t u r i t y fo r bu s i n e s s - t y p e ac t i v i t i e s lo n g - t e r m de b t ar e as fo l l o w s : Bu s i n e s s - T x . e e Ac t i v i t i e s Ye a r En d i n g G. O . Re v e n u e Bo n d s G. O . Re v e n u e No t e s De c e m b e r 3 1 Pr i n c i J ! ! ! ! In t e r e s t Pr i n c i J ! ! ! ! In t e r e s t 20 1 6 $ 14 0 , 0 0 0 $ 76 , 4 1 5 $ 94 4 , 0 0 0 $ 17 3 , 3 5 1 20 1 7 34 2 , 5 0 3 67 , 1 0 9 95 4 , 0 0 0 18 7 , 0 3 0 20 1 8 33 9 , 0 2 2 60 , 2 9 3 96 3 , 0 0 0 17 7 , 4 9 0 20 1 9 34 2 , 5 0 3 53 , 4 7 8 97 3 , 0 0 0 16 7 , 8 6 0 20 2 0 34 4 , 2 4 3 46 , 6 1 1 98 2 , 0 0 0 15 8 , 1 3 0 20 2 1 - 2 0 2 5 1, 7 8 4 , 0 5 7 12 5 , 0 0 2 5, 0 6 1 , 0 0 0 64 1 , 3 5 0 20 2 6 - 2 0 3 0 19 1 , 4 2 4 2, 3 9 3 5, 3 2 0 , 0 0 0 38 3 , 1 6 0 20 3 1 - 2 0 3 4 2, 3 4 8 , 1 5 8 11 1 , 8 0 0 To t a l $ 3, 4 8 3 , 7 5 2 $ 43 1 , 3 0 1 $ 17 , 5 4 5 , 1 5 8 $ 2, 0 0 0 , 1 7 1 Th e ut i l i t y re v e n u e bo n d s an d no t e a ar e ba c k e d by th e fu l l fa i t h an d cr e d i t o f th e Ci t y . Bo n d s an d No t e s in th e bu s i n e s s - t y p e ac t i v i t i e s wi l l be re t i r e d wi t h th e ne t re v e n u e s o f th e Wa t e r Ut i l i t y an d Sa n i t a r y Se w e r Ut i l i t y sy s t e m s . (N e t re v e n u e s o f ea c h sy s t e m ar e de f i n e d as th e ex c e s s o f gr o a s re v e n u e s an d ea r n i n g s ov e r th e no r m a l , re a s o n a b l e , an d cn r r e n t co s t s o f op e r a t i n g an d ma i n t a i n i n g th e sy s t e m . ) In th e ev e n t th a t a de f i c i e n c y ex i s t s be c a u s e o f in a d e q u a t e ne t re v e n u e s at th e ti m e a de b t se r v i c e pa y m e n t is du e , th e Ci t y mu s t pr o v i d e re s o u r c e s tc co v e r th e de f i c i e n c y un t i l ot b e r re s o u r c e s ar e av a i l a b l e . Fo r th e ye a r en d e d De c e m b e r 31 , 20 1 5 , th e wa t e r an d se w e r ut i l i t y fu n d s pr o v i d e d ne t re v m u e s (e x c l u d i n g bo n d re f u n d i n g ) o f $1 , 0 0 1 , 8 9 1 , wh i c h ac c o u n t s fo r a de b t - s e r v i c e co v e r a g e ra t i o of 2 5 4 . 4 5 % . CH A N G E IN LO N G - T E R M LI A B I I J T I E S Lo n g - t e r m li a b i l i t y ac t i v i t y fo r th e ye a r en d e d De c e m b e r 31 , 20 1 5 wa s as fo l l o w s : Go v e r n m e n t a l ac t i v i t i e s : Bo n d s pa y a b l e : G. O . ta x in c r e m e n t bo n d s G. O . im p r o v e m e n t bo n d s To t a l bo n d s pa y a b l e Co m p e n s a t e d ab s e n c e s Pe n s i o n li a b i l i t y : GE R F • PE P F F • Ne t OP E B ob l i g a t i o n To t a l go v e r n m e n t ac t i v i t y lo n g - t e r m li a b i l i t i e s Bu s i n e s s - t y p e ac t i v i t i e s : Bo n d s pa y a b l e : G. O . re v e n u e bo n d s G. O . re v e n u e no t e s To t a l bu s i n e s s - t y p e ac t i v i t y lo n g - t e r m li a b i l i t i e s Be g i n n i n g Ba l a n c e $ 16 , 0 4 0 , 0 0 0 6, 4 4 5 , 0 0 0 22 , 4 8 5 , 0 0 0 1, 2 8 2 , 0 9 3 62 9 , 9 9 4 Ad d i t i o n s $ 6, 6 0 0 , 0 0 0 3, 4 1 6 , 2 4 8 10 , 0 1 6 , 2 4 8 14 6 , 5 3 0 6, 5 6 2 , 7 6 4 5, 2 5 9 , 0 4 0 22 9 , 2 3 7 !_ 2 4 . ~ 9 7 , 0 8 7 __ $ 22 , 2 1 3 , 8 1 9 $ 1, 8 0 0 , 0 0 0 $ 3, 4 8 3 , 7 5 2 17 , 5 6 0 , 5 1 0 Re d u c t i o n s En d i n g Ba l a n c e $ (1 , 7 5 5 , 0 0 0 ) $ 20 , 8 8 5 , 0 0 0 (1 , 2 7 0 , 0 0 0 ) 8, 5 9 1 , 2 4 8 (3 , 0 2 5 , 0 0 0 ) 29 , 4 7 6 , 2 4 8 (1 7 3 , 7 7 2 ) 1, 2 5 4 , 8 5 1 (1 2 0 , 8 9 2 ) 6, 4 4 1 , 8 7 2 (1 9 1 , 4 3 6 ) 5, 0 6 7 , 6 0 4 (1 4 8 , 6 2 6 ) 71 0 , 6 0 5 $ (3 , 6 5 9 , 7 2 6 ) $ 42 , 9 5 1 , 1 8 0 $ (1 , 8 0 0 , 0 0 0 ) $ 3, 4 8 3 , 7 5 2 ~15 , 3 5 2 ! 17 , 5 4 5 , 1 5 8 $ 1, 8 0 0 , 0 0 0 _ _ l 1 ! , 0 4 4 , 2 6 2 . $ (1 , 8 1 5 , 3 5 2 ) $ 21 , 0 2 8 , 9 1 0 •I n c l u d e s Ja n u a r y I, 20 1 5 pe n s i o n li a b i l i t y ba l a n c e re l a t e d tc GA S B St a t e m e n t No . 68 im p l e m e n t a t i o n . Du e Wi t h i n On e Y e s r $ 8, 5 0 5 , 0 0 0 88 5 , 0 0 0 9, 3 9 0 , 0 0 0 12 5 , 4 8 5 $ 9, 5 1 5 , 4 8 5 $ 14 0 , 0 0 0 94 4 , 0 0 0 $ 1, 0 8 4 , 0 0 0 Co m p e n s a t e d ab s e n c e s ar e li q u i d a t e d by th e Pu b l i c Em p l o y e e s Co m p e n s a t e d Ab s m c e s in t e r n a l se r v i c e fu n d an d th e ne t OP E B ob l i g a t i o n by th e Pu b l i c Em p l o y e e s Re t i r e m e n t in t e r n a l se r v i c e fu n d . Ne t pe n s i o n li a b i l i t i e s wi l l be li q u i d a t e d by th e Pe n s i o n - GE R F an d Pe n s i o n - PE P F F in t e r n a l se r v i c e fu n d s . CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 CU R R E N T RE F U N D I N G On Ju l y 9, 20 1 5 , th e Ci t y is s u e d $1 , 6 6 0 , 0 0 0 o f Ge n e r a l Ob l i g a t i o n Revenue Refunding Bonds, Series 2015A, bearing an av e r a g e co u p o n ra t e of 2 . 1 4 pe r o e n t , tc pr o v i d e Cl l l T C i l t re f u n d i n g of$1,660,000 in principal on the City's Taxable General Ob l i g a t i o n Ut i l i t y Re v e n u e Bo n d s , Se r i e s 20 1 OA re l a t i n g to the 2016 tc 2025 maturities. As a result of the refunding, the City wi l l ac h i e v e an ec o n o m i c ga i n of $ 7 0 , 4 5 0 (t h e pr e s e n t va l u e of the difference between the old and the new debt service). CR O S S O V E R RE F U N D I N G On Ju l y 9, 20 1 5 , th e Ci t y is s u e d $6 , 6 0 0 , 0 0 0 o f Ge n e r a l Ob l i g a t i o n Tax Increment Refunding Bonds, Series 2015B, bearing an av e r a g e co u p o n ra t e of 3. 0 0 pe r c e n t , tc pr o v i d e ad v a n c e cr o s s o v e r refunding on February I, 2016, of the 2017 through 2020 ma t u r i t i e s o f th e Ci t y ' s Ge n e r a l Ob l i g a t i o n Ta x In c r e m e n t Bo n d s , Series 2004D tctslling $6,670,000 in principal. The proceeds o f th e cr o s s o v e r bo n d we r e pl a c e d in t o an es c r o w ac c o u n t pe n d i n g the call date. The escrow account bears interest rates that wi l l pr o v i d e su f f i c i e n t fu n d s tc re f u n d th e ol d bo n d s on Fe b r u a r y I, 2016. The old bonds are not considered defensed until the cr o s s o v e r da t e , an d th e r e f o r e wi l l no t be re m o v e d as a li a b i l i t y until then. As a result of the refunding, the City will achieve an ec o n o m i c ga i n of $4 2 4 , 0 5 9 (t h e pr e s e n t va l u e o f th e di f f e r e n c e between the old and the new debt service). CO N P U I T DE B T OB L I Q A T I O N S Fr o m ti m e tc ti m e , th e Ci t y ha s is s u e d Ho u s i n g Re v e n u e Bo n d s and Industrial Revenue Bonds or Notes to provide assistance to qu a l i f i e d pr i v a t e se c t o r en t i t i e s fo r th e ac q u i s i t i o n an d cm s t r u c t i o n of housing, industrial, or commercial facilities deemed to be in th e pu b l i c in t e r e s t . Th e bo n d s or no t e s ar e se c u r e d by the property financed and are payable solely from payments re c e i v e d on th e un d e r l y i n g mo r t g a g e lo a n s . Th e Ci t y ha s no obligation of its assets or of its general tax base for the repayment o f an y o f th e s e bo n d s or no t e s . Ac c o r d i n g l y , th e bo n d s or no t e s are not reported as liabilities in the accompanying financial st a t e m e n t s . Up o n fi n a l re d e m p t i o n o f th e bo n d s or no t e s , ow n e r s h i p of the property transfers tc the private sectcr entity se r v e d by th e bo n d or no t e is s u e . As o f De c e m b e r 31 , 20 1 5 th e r e we r e tw o se r i e s o f fi x e d ra t e Multifamily Housing Revenue Refunding bonds, one Housing Re v e n u e De v e l o p m e n t Re f i n a n c i n g No t e , tw o He a l t h c a r e Re v e n u e Notes, four Senior Housing Developmmt Revenue Notes, an d tw o Ch a r t e r Sc h o o l Le a s e Re v e n u e bo n d s ou t s t a n d i n g . The aggregate amount of conduit debt as ofDecember 31, 2015 is $2 1 , 3 6 5 , 9 0 8 . G. FU N D EQ U I T Y Ne t po s i t i o n re p o r t e d in th e go v e r n m e n t - w i d e st a t e m e n t o f ne t position at December 31, 2015 include the following: Go v e n m o . t a l ac t i v i t i e s Ne t in v e s t m e n t in ca p i t a l as s e t s : Co s t o f ca p i t a l as s e t s Le s s : ac c u m u l a t e d de p r e c i a t i o n Le s s : re l a t e d lo n g - t e r m de b t ou t s t a n d i n g To t a l ne t in v e s t m e n t in ca p i t a l assets Re s t r i c t e d : St a t c t o r y ho u s i n g ob l i g a t i o n s Ta x in c r e m e n t fi n a n c i n g Ec o n o m i c de v e l o p m e n t La w en f o r c e m e n t en h a n c e m e n t s De b t se r v i c e Pe n s i o n be n e f i t s St a t e - A i d st r e e t sy s t e m s To t a l re s t r i c t e d Un r e s t r i c t e d To t a l go v e r n m m t a l ac t i v i t i e s ne t po s i t i o n $ 97.780,865 (41,247,817) (8,591,248) 47,941,800 556,470 19,328,012 1,522,267 83,686 11,218,383 1,178,922 2,922,853 36,8f0,593 (5,495,836) $ 79,256,557 Re l a t e d de b t fo r go v e r n m e n t a l ac t i v i t i e s ca p i t a l as s e t s in c l u d e s $8,591,248 in G.O. Improvement Bonds which was the amount is s u e d to fi n a n c e th e st r e e t po r t i o n o f co n s t r u c t i o n pr o j e c t s . IV-36 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 Bu s i n e s s - t y p e ac t i v i t i e s Ne t in v e s t m e n t in ca p i t a l as s e t s : Co s t of ca p i t a l as s e t s Le s s : ac c u m u l a t e d de p r e c i a t i o n Le s s : re l a t e d lo n g - t e r m de b t ou t s t a n d i n g To t a l ne t in v e s t m e n t in ca p i t a l as s e t s Un r e s t r i c t e d To t a l bu s i n e s s - t y p e ac t i v i t i e s ne t po s i t i o n $ 12 1 , 8 9 2 , 0 4 7 (5 5 , 3 2 1 , 8 9 8 ) (1 9 , 3 6 8 , 9 1 0 ) 47 , 2 0 1 , 2 3 9 8, 4 5 2 , 6 3 0 $ 55 , 6 5 3 , 8 6 9 Ag g r e g a t e d fu n d s ba l a n c e s re p o r t e d in th e go v e r n m e n t a l fu n d s ba l a n c e sh e e t at De c e m b e r 31 , 20 1 5 in c l u d e th e fo l l o w i n g : Go v e n m e u t a l fu n d s No n s ~ d a b l e Re s t r i c t e d Co m m i t t e d Aa s i i ! ! ! e d Ge n e r a l In v e n t o r i e s $ 44 , 0 4 4 Pr e p a i d It e m s 34 , 8 1 5 Ca p i t a l Im p r o v e m e n t s 80 4 , 8 1 5 Ta x In c r e m e n t Di s t r i c t No . 3 St a t u t m y Ho u s i n g Ob l i g a t i o n 55 6 , 4 7 0 Ta x In c r e m e n t Fi n a n c i n g 16 , 6 4 0 , 2 8 9 De b t Se r v i c e De b t Se r v i c e 8, 7 4 7 , 9 1 4 Ca p i t a l Im p r o v e m e n t s Ca p i t a l Im p r o v e m e n t s 4, 4 0 8 , 8 7 9 Mu n i c i p a l St a t < > - A i d fo r Co n s t r u c t i o n St a t < > - Ai d St r e e t Sy s t e m s 22 3 , 5 3 1 No n m a j o r Fu n d s Ta x In c r e m e n t Fi n a n c i n g 2, 5 9 7 , 9 1 7 Ec o n o m i c De v e l o p m e n t 1, 5 0 0 1, 5 1 5 , 6 0 4 La w En f o r c e m e n t En h a n c e m e n t s 83 , 6 8 6 Pu b l i c Sa f e t y 86 , 8 9 1 Ca b l e Co m m u n i c a t i o n s 28 1 , 8 2 1 Co m m u n i t y Re c r e a t i o n 55 , 5 0 1 Em e r g e n c y Ca p i t a l Im p r o v e m e n t s 1, 0 7 4 , 6 2 2 St r e e t Im p r o v e m e n t s 3, 1 8 3 , 7 5 4 Te c h n o l o g y Im p r o v e m e n t s 21 4 , 7 5 6 To t a l fu n d ba l a n c e s $ 80 , 3 5 9 $ 30 , 3 6 5 , 4 1 1 $ 9, 3 0 6 , 2 2 4 $ 80 4 , 8 1 5 CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 No t e 4 DE F I N E D BE N E F 1 T PE N S I O N PL A N - CI T Y EM P L O Y E E S A. PL A N DE S C R I P I I O N Th e Ci t y pa r t i c i p a t e s in th e fo l l o w i n g co s t - s h a r i n g mu l t i p l < > - e m p l o y e r defined btmefit ptmsion plans administered by the Public Em p l o y e e s Re t i r e m e n t As s o c i a t i o n of M i n n e s c t a (P E R A ) . PERA's defined benefit ptmsion plans are established and ad m i n i s t e r e d in ac c o r d a n c e wi t h Mi n n e s o t a St a t u t e s , Ch a p t e r s 353 and 356. PERA's defined benefit ptmsion plans are tax qu a l i f i e d pl a n s un d e r Se c t i o n 40 l ( a ) o f th e In t e r n a l Re v e n u e Code. 1. GE N E R A L EM P L O Y E E S RE T I R E M E N T Fl J N D (GERF) Al l fu l l - t i m e an d ce r t a i n pa r t - t i m e em p l o y e e s o f th e Ci t y are covered by the GERF. GERF members belong to either the Co o r d i n a t e d Pl a n or th e Ba s i c Pl a n . Co o r d i n a t e d Pl a n me m b e r s are covered by Social Security and Basic Plan members ar e no t . Th e Ba s i c Pl a n wa s cl o s e d to ne w me m b e r s in 1967. All new members must participate in the Coordinated Plan. 2. PU B L I C EM P L O Y E E S PO L I C E AN D FI R E FU N D (PEPFF) Th e PE P F F , or i g i n a l l y es t a b l i s h e d fo r po l i c e of f i c e r s an d firefighters not covered by a local relief association, now covers al l po l i c e of f i c e r s an d fi r e f i g h t e r s hi r e d si n c e 19 8 0 . Ef f e c t i v e July I, 1999, the PEPFF also covers police officers and fi r e f i g h t e r s be l o n g i n g to a lo c a l fi r e re l i e f as s o c i a t i o n th a t elected to merge with and 1ransfer assets and adminis1ration to PE R A . B. BE N E F 1 T S PR O V I D E D PE R A pr o v i d e s re t i r e m e n t , di s a b i l i t y , an d de a t h be n e f i t s . Benefit provisions are established by state statute and can only be mo d i f i e d by th e st a t e le g i s l a t u r e . Be n e f i t in c r e a s e s ar e pr o v i d e d to be n e f i t re c i p i e n t s es c h Ja n u a r y . Increases are related to the funding ratio of the plan. Me m b e r s in pl a n s th a t ar e at le a s t 90 pe r c e n t fu n d e d fu r tw o consecutive years are given 2.5 percent increases. Members in pl a n s th a t ha v e no t ex c e e d e d 90 pe r c e n t fu n d e d , or ha v e fu l l e n below 80 percent, are given I percent increases. Th e be n e f i t pr o v i s i o n s st a t e d in th e fo l l o w i n g pa r a g r a p h s o f this section are current provisions and apply tu active plan pa r t i c i p a n t s . Ve s t e d , te r m i n a t e d em p l o y e e s wh o ar e en t i t l e d to benefits but are not receiving them yet are bound by the pr o v i s i o n s in ef f e c t at th e ti m e th e y la s t te r m i n a t e d th e i r pu b l i c service. 1. GE R F BE N E F 1 T S Be n e f i t s ar e ba s e d on a me m b e r ' s h i g h e s t av e r a g e sa l a r y for any five successive years of allowable service, age, and ye a r s of cr e d i t at te r m i n a t i o n or se r v i c e . Tw o me t h o d s ar e used to compute benefits for PERA's Coordinated and Basic Pl a n me m b e r s . Th e re t i r i n g me m b e r re c e i v e s th e hi g h e r of a step-rate benefit accrual formula (Method I) or level accrual fo r m u l a (M e t h o d 2) . Un d e r Me t h o d 1, th e an n u i t y ac c r u a l rate far a Basic Plan member is 2.2 percent of average salary fo r ea c h o f th e fi r s t te n ye a r s o f se r v i c e , an d 2. 7 pe r c ~ m t fur esch remaining yesr. The annuity accrual rate for a Co o r d i n a t e d Pl a n me m b e r is 1. 2 pe n : e n t o f av e r a g e sa l a r y for esch of the first ten years and I. 7 percent for each re m a i n i n g ye a r . Un d e r Me t h o d 2, th e an n u i t y ac c r u a l ra t e is 2. 7 percent of average salary for Basic Plan members and I. 7 pe r c e n t fo r Co o r d i n a t e d Pl a n me m b e r s fo r es c h ye a r o f service. For members hired prior to July I, 1989, a full annuity is av a i l a b l e wh e n ag e pl u s ye a r s o f se r v i c e eq u a l 9 0 an d no r m a l retirement age is 65. For members hired on or after July I, 19 8 9 , no r m a l re t i r e m e n t ag e is th e ag e fo r un r e d u c e d So c i a l Security benefits capped at 66. Disability benefits are available fo r ve s t e d me m b e r s an d ar e ba s e d up c n ye a r s o f se r v i c e and average high-five salary. IV-37 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S T O Ti l E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 2. PE P F F BE N E F I T S Be n e f i t s fo r th e PE P F F me m b e r s fu s t h i r e d af t e r Ju n e 30 , 2 0 1 0 , bu t h e f o r e J u l y I, 20 1 4 , ve s t on a pr o r a t e d ba s i s fr o m 50 pe r c e n t af t e r fi v e ye a r s up to 10 0 pe r c e n t af t e r te n ye a r s o f cr e d i t e d se r v i c e . Be n e f i t s fo r PE P F F me m b e r s fu s t hi r e d af t e r Ju n e 30 , 20 1 4 , ve s t on a pr o r a t e d ba s i s fr o m 50 pe r c e n t af t e r te n ye a r s o f se r v i c e up to 10 0 pe r c e n t af t e r tw e n t y ye a r s o f cr e d i t e d se r v i c e . Th e an n u i t y ac c r u a l mt e is 3 pe r c e n t o f av e r a g e sa l a r y fo r ea c h ye a r o f se r v i c e . Fo r PE P F F wh o we r e fi r s t hi r e d pr i o r to Ju l y I, 19 8 9 , a fu l l an n u i t y is av a i l a b l e wh e n ag e pl u s ye a r s o f se r v i c e eq u a l at le a s t 90 . C. CO N T R I B U T I O N S Mi n n e s o t s St a t u t e s Ch a p t e r 35 3 se t s th e mt e s fo r em p l o y e r an d em p l o y e e co n t r i b u t i o n s . Co n t r i b u t i o n ra t e s ca n on l y be mo d i f i e d by th e st a t e le g i s l a t u r e . 1. GE R F CO N T R I B U T I O N S Ba s i c Pl a n me m b e r s an d Co o r d i n a t e d Pl a n me m b e r s we r e re q u i r e d to co n t r i b u t e 9. 1 pe r c e n t an d 6. 5 pe r c e n t , re s p e c t i v e l y , of t h e i r an n u a l co v e r e d sa l a r y in ca l e n d a r ye a r 20 1 5 . Th e Ci t y wa s re q u i r e d to co n t r i b u t e 11 . 7 8 pe r c e n t of pa y fo r Ba s i c Pl a n me m b e r s an d 7. 5 pe r c e n t fo r Co o r d i n a t e d Pl a n me m b e r s in ca l e n d a r ye a r 20 1 5 . Th e Ci t y ' s co n t r i b u t i o n s to th e GE R F fo r ye a r s en d e d De c e m b e r 31 , 20 1 5 , 2 0 1 4 an d 20 1 3 we r e $5 6 4 , 1 6 8 , $ 5 3 1 , 3 8 5 , an d $5 2 1 , 5 1 2 . Th e Ci t y ' s co n t r i b u t i o n s we r e eq u a l to th e re q u i r e d co n t r i b u t i o n s as se t by st a t e st a t u t e . 2. PE P F F CO N T R I B U T I O N S Pl a n me m b e r s we r e re q u i r e d to co n t r i b u t e 10 . 8 pe r c e n t o f th e i r an n u a l co v e r e d sa l a r y in ca l e n d a r ye a r 20 1 5 . Th e Ci t y wa s re q u i r e d to co n t r i b u t e 16 . 2 pe r c e n t o f pa y fo r PE P F F me m b e r s in ca l e n d a r ye a r 20 1 5 . Th e Ci t y co n t r i b u t i o n s to th e PE P F F fo r th e ye a r en d e d De c e m b e r 31 , 2 0 1 5 , 2 0 1 4 an d 20 1 3 we r e $6 8 7 , 9 3 5 , $6 0 0 , 4 0 2 , an d $5 6 0 , 0 5 3 re s p e c t i v e l y . Th e Ci t y ' s co n t r i b u t i o n s we r e eq u a l to th e re q u i r e d co n t r i b u t i o n s as se t by st a t e st a t u t e . D. PE N S I O N CO S T S 1. GE R F PE N S I O N CO S T S At De c e m b e r 31 , 20 1 5 , th e Ci t y re p o r t e d a li a b i l i t y o f $6 , 4 4 1 , 8 7 2 fo r it s pr o p o r t i o n a t e sh a r e o f th e GE R F ' s ne t pe n s i o n li a b i l i t y . Th e ne t pe n s i o n li a b i l i t y wa s me a s u r e d as o f Ju n e 30 , 20 1 5 , an d th e to t a l pe n s i o n li a b i l i t y us e d to ca l c u l a t e th e ne t pe n s i o n li a b i l i t y wa s de t e r m i n e d by an ac t u a r i a l va l u a t i o n as o f th a t da t e . Th e Ci t y ' s pr o p o r t i o n o f th e ne t pe n s i o n li a b i l i t y wa s ba s e d on th e Ci t y ' s co n t r i b u t i o n s r e c e i v e d by PE R A du r i n g th e me a s u r e m e n t pe r i o d fo r em p l o y e r pa y r o l l pa i d da t e s fr o m Ju l y I, 20 1 4 th r o u g h Ju n e 30 , 2 0 1 5 , re l a t i v e to th e to t a l em p l o y e r co n t r i b u t i o n s re c e i v e d fr o m al l of P E R A ' s pa r t i c i p a t i n g em p l o y e r s . At Ju n e 30 , 20 1 5 , th e Ci t y ' s pr o p o r t i o n wa s 0. 1 2 4 3 pe r c e n t wh i c h wa s a de c r e a s e of 0 . 0 1 4 6 pe r c e n t fr o m it s pr o p o r t i o n me a s u r e d as o f Ju n e 30 , 20 1 4 . Fo r th e ye a r en d e d De c e m b e r 31 , 2 0 1 5 , th e Ci t y re c o g n i z e d pe n s i o n ex p e n s e of $ 6 8 5 , 0 6 0 fo r it s pr o p o r t i o n n t e sh a r e of th e OE R F ' s pe n s i o n ex p e n s e . CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO Ti l E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 At De c e m b e r 31 , 2 0 1 5 , th e Ci t y re p o r t e d it s pr o p o r t i o n a t e share of the GERF's de:ferred outflows of resources and de f e r r e d in f l o w s o f re s o u r c e s re l a t e d to pe n s i o n s fr o m th e following sources: Di f f e r e n c e s be t w e e n ex p e c t e d an d ac t u a l ec o n o m i c ex p e r i e n c e Ch a n g e s in ac t u a r i a l as s u m p t i o n s Di f f e r e n c e s be t w e e n pr o j e c t e d an d ac t u a l in v e s t m e n t es m i n g s Ch a n g e s in pr o p o r t i o n GE R F co n t r i b u t i o n s pa i d su b s e q u e n t to th e me a s u r e m e n t date To t a l s Deferred Outflows of Resources $ 609,822 289,088 898,910 Deferred Inflows of Resources $ 324,780 514,376 $ 839,156 $2 8 9 , 0 8 8 re p o r t e d as de f e r r e d ou t f l o w s o f re s o u r c e s re l a t e d to pensions resulting from City conttibutions subsequent to th e me a s u r e m e n t da t e wi l l be re c o g n i z e d as a re d u c t i o n of the net pension liability in the yesr ended December 31, 2016. Ot h e r am o u n t s re p o r t e d as de f e r r e d ou t f l o w s an d de f e r r e d inflows of resources related to pensions will be recognized in pe n s i o n ex p e n s e as fo l l o w s : 2. PE P F F PE N S I O N CO S T S Ye a r En d e d De c e m b e r 31, 20 1 6 20 1 7 20 1 8 20 1 9 To t a l Pension Expense Amount (127,263) (127,263) (127,263) 152,455 (229,334) At De c e m b e r 31 , 20 1 5 , th e Ci t y re p o r t e d a li a b i l i t y of $ 5 , 0 6 7 , 6 0 4 for its proportionate share of the PEPFF's net pension li a b i l i t y . Th e ne t pe n s i o n li a b i l i t y wa s me a s u r e d as o f Ju n e 30, 2015, and the total pension liability used to calculate the net pe n s i o n li a b i l i t y wa s de t e r m i n e d by an ac t u a r i a l va l u a t i o n as of that date. The City's proportion of the net pension liability wa s ba s e d on th e Ci t y ' s co n t r i b u t i o n s re c e i v e d by PE R A during the measurement period for employer payroll paid dates fr o m Ju l y I, 20 1 4 th r o u g h Ju n e 30 , 20 1 5 , re l a t i v e to th e total employer contributions received from all ofPERA's pa r t i c i p a t i n g em p l o y e r s . At Ju n e 30 , 2 0 1 5 , th e Ci t y ' s pr o p o r t i o n was 0.446 percent which was an increase of0.008 pe r c e n t fr o m it s pr o p o r t i o n me a s u r e d as o f Ju n e 30 , 20 1 4 . Fo r th e ye a r en d e d De c e m b e r 31 , 20 1 5 , th e Ci t y re c o g n i z e d pension expense of$887,890 for its proportionate share of th e PE P F F ' s pe n s i o n ex p e n s e . Th e Ci t y al s o re c o g n i z e d $40,140 for the year ended December 31, 2015, as pension ex p e n s e (a n d gr a n t re v e n u e ) fo r it s pr o p o r t i o n a t e sh a r e of the State of Minnesota's on-behalf contributions to the PEPFF. Le g i s l a t i o n pa s s e d in 20 1 3 re q u i r e d th e St a t e of M i n n e s o t s to begin contributing $9 million to the PEPFF each year, st a r t i n g in fi s c a l ye a r 20 1 4 . IV-38 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO T i l E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 At De c e m b e r 31 , 20 1 5 , th e Ci t y re p o r t e d it s pr o p o r t i o n a t e sh a r e o f th e PE P F F ' s de f e r r e d ou t f i o w s of re s o u r c e s an d de f e r r e d in f l o w s o f re s o u r c e s re l a t e d to pe n s i o n fr o m th e fo l l o w i n g so u r c e s : Di f f e r e n c e s be t w e e n ex p e c t e d an d ac t u a l ec o n o m i c ex p e r i e n c e Ch a n g e s in ac t u a r i a l as s u m p t i o n s Di f f e r e n c e s be t w e e n pr o j e c t e d an d ac t u a l in v e s t m e n t ea r n i n g s Ch a n g e s in pr o p o r t i o n PE P F F co n t r i b u t i o n s pa i d su b s e q u e n t to th e me a s u r e m e n t da t e To t a l s De f e r r e d Ou t f l o w s of Re a o u r c e s 88 2 , 9 4 5 72 , 0 0 3 35 3 , 2 6 3 $ 1, 3 0 8 , 2 1 1 De f e r r e d In f l o w s o f Re s o u r c e s 82 1 , 7 9 9 $ 82 1 , 7 9 9 $3 5 3 , 2 6 3 re p o r t e d as de f e r r e d ou t f l o w s o f re s o u r c e s re l a t e d to pe n s i o n s re s u l t i n g fr o m Ci t y co n t r i b u t i o n s su b s e q u e n t to th e me a s u r e m e n t da t e wi l l be re c o g u i z e d as a re d u c t i o n o f th e ne t pe n s i o n li a b i l i t y in th e ye a r en d e d De c e m b e r 31 , 20 1 6 . Ot h e r am o u n t s re p o r t e d as de f e r r e d ou t f i o w s an d de f e r r e d in f l o w s o f re s o u r c e s re l a t e d to pe n s i o n s wi l l be re c o g u i z e d in pe n s i o n ex p e n s e as fo l l o w s : E. AC T U A R I A L AS S U M P T I O N S Ye a r En d e d De c e m b e r 31 , 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 To t a l Pe n s i o n EJ q ~ e n s e Am o u n t 70 , 7 7 7 70 , 7 7 7 70 , 7 7 7 70 , 7 7 7 (1 4 9 , 9 5 9 ) 13 3 , 1 4 9 Th e to t a l pe n s i o n li a b i l i t y in th e Ju n e 30 , 20 1 5 , ac t u a r i a l va l u a t i o n wa s de t e r m i n e d us i n g th e fo l l o w i n g ac t u a r i a l as s u m p t i o n s : In f l a t i o n Ac t i v e Me m b e r Pa y r o l l Gr o w t h In v e s t m e n t Ra t e o f Re t u r n 2. 7 5 % p e r y e s r 3. 5 0 ' / o pe r ye s r 7. 9 0 ' / o Sa l a r y in c r e a s e s we r e ba s e d on a se r v i c e - r e l a t e d ta b l e . Mo r t a l i t y ra t e s fo r ac t i v e me m b e r s , re t i r e e s , su r v i v o r s an d di s a b i l i t a n t s we r e ba s e d on th e RP - 2 0 0 0 ta b l e s fo r ma l e s or fe m a l e s , as ap p r o p r i a t e , wi t h sl i g h t ad j u s t m e n t s . Co s t of l i v i n g be n e f i t in c r e a s e s fo r re t i r e e s ar e as s u m e d to be : 1 pe r c e n t ef f e c t i v e Ja n u a r y 1s t un t i l 2 0 3 4 , th e n 2. 5 pe r c e n t th e r e s f l e r . Ac t u a r i a l as s u m p t i o n s us e d in th e Ju n e 30 , 20 1 5 , va l u a t i o n we r e ba s e d on th e re s u l t s of ac t u a r i a l el q l e r i e n c e st u d i e s . Th e el q l e r i e n c e st u d y in th e GE R F wa s fo r th e pe r i o d Ju l y 1, 20 0 4 , th r o u g h Ju n e 30 , 20 0 8 , wi t h an up d a t e o f ec o n o m i c as s u m p t i o n s in 20 1 4 . Th e el q l e r i e n c e st u d y fo r PE P F F wa s fo r th e pe r i o d Ju l y 1, 20 0 4 , th r o u g h Ju n e 30 , 2 0 0 9 . Th e r e we r e no ch a n g e s in ac t u a r i a l as s u m p t i o n s in 20 1 5 . CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO Ti l E FI N A N C i A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 Th e lo n g - t e r m ex p e c t e d ra t e o f re t u r n on pe n s i o n pl a n in v e s t m e n t s is 7.9 percent. The State Board of Investment, which ma n a g e s th e in v e s t m e n t s of P E R A , pr e p a r e s an an a l y s i s of the reasonableness of the long-term expected rate of return on a re g u l a r ba s i s us i n g a bu i l d i n g - b l o c k me t h o d in wh i c h be s t - e s t i m a t e ranges of expected future rates of return are developed for ea c h m~ o r as s e t cl a s s . Th e s e ra n g e s ar e co m b i n e d to pr o d u c e an eJq~ected long-term rate of return by weighting the ex p e c t e d fu t u r e ra t e s o f re t u r n by th e ta r g e t as s e t al l o c a t i o n percentages. The target allocation and best estimates of ar i t h m e t i c re a l mt e s o f re t u r n . fo r ea c h ma j o r as s e t cl a s s ar e summarized in the following table: As s e t Cl a s s Do m e s t i c St o c k s In t e r n a t i o n a l St o c k s Bo n d s Al t e r n a t i v e As s e t s Ca s h F. DI S C O U N T RA T E Target Allocation 45.000/o 15.00% 18.00'/o 20.00'/o 2.00% Long-Term ElqlCCted Real Rate of Return 5.50% 6.00'/o 1.45% 6.40% 0.50'/o Th e di s c o u n t ra t e us e d to me s s u r e th e to t a l pe n s i o n li a b i l i t y was 7.9 percent. The prqjection of cash flows used to determine th e di s c o u n t ra t e as s u m e d th a t em p l o y e e an d em p l o y e r co n t r i b u t i o n s will be made at the rate specified in statute. Based on th a t as s u m p t i o n , ea c h o f th e pe n s i o n pl a n ' s fi d u c i a r y ne t po s i t i o n was prqjected to be avsilable to make all projected future be n e f i t pa y m e n t s of cu r r e n t ac t i v e an d in a c t i v e em p l o y e e s . Therefore, the long-term expected rate of return on pension plan in v e s t m e n t s wa s ap p l i e d to al l pe r i o d s of p r q j e c t e d be n e f i t payments to deterutine the total pension liability. G. PE N S I O N LI A B I L I T Y SE N S I T I V I T Y Th e fo l l o w i n g pr e s e n t s th e Ci t y ' s pr o p o r t i o n a t e sh a r e o f th e net pension liability for all plans it participates in, calculated using th e di s c o u n t ra t e di s c l o s e d in th e pr e c e d i n g pa r a g r a p h , as we l l as what the City's proportionate share of the net pension li a b i l i t y wo u l d be i f it we r e ca l c u l a t e d us i n g a di s c o u n t ra t e 1 percentage point lower or 1 percentage point higher than the cu r r e n t di s c o u n t ra t e : GE R F PE P F F To t a l Ci t y ' s Pr o p o r t i o n a t e Sh a r e o f th e Ne t Pe n s i o n Li a b i l i t y 6.90% One Point Decrease 10,128,911 9,876,813 7.90% Current Rate 6,441,872 5,067,604 8.90'/o One Point Increase 3,396,942 1,Q9~,359 $ 20,005,724 $ 11,509,476 $ 4,491,301 IV-39 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 H. PE N S I O N PL A N FI D U C I A R Y NE T PO S I T I O N De t a i l e d in f o r m a t i o n ab o u t ea c h pe n s i o n pl a n ' s fi d u c i a r y ne t po s i t i o n is av a i l a b l e in a se p m a t e l y is s u e d PE R A fi n a n c i a l re p o r t th a t in c l u d e s fi n a n c i a l st a t e m e n t s an d re q u i r e d su p p l e m e n t a r y in f o r m a t i o o . Th a t re p o r t ma y be ob t s i n e d by : In t e r n e t : Ph o n e : Ma i l : ww w . m n p e r a . o r g (6 5 1 ) 29 6 - 7 4 6 0 60 Em p i r e Dr i v e , #2 0 0 St . Pa u l , MN 55 1 0 3 - 2 0 8 8 No t e 5 DE F I N E D BE N E F I T PE N S I O N PL A N - SI N G L E E M P W Y E R - FI R E RE L I E F AS S O C I A T I O N A. PL A N DE S C R I P I 1 0 N Th e Ci t y co n t r i b u t e s tc th e Br o o k l y n Ce n t e r Fi r e De p a r t m e n t Re l i e f As s o c i a t i o n (t h e As s o c i a t i o n ) wh i c h is th e ad m i n i s t r a t o r o f a si n g l e em p l o y e r , pu b l i c em p l o y e e de f i n e d be n e f i t re t i r e m e n t sy s t e m tc pr o v i d e a re t i r e m e n t pl a n (t h e Pl a n ) tc vo l u n t e e r fi r e f i g h t e r s o f th e Ci t y wh o ar e me m b e r s of th e As s o c i a t i o n . Th e As s o c i a t i o n is or g a n i z e d an d op e r a t e s un d e r th e pr o v i s i o n s o f Mi n n e s o t a St a t e St a t u t e s 42 4 A , an d pr o v i d e s be n e f i t s in ac c o r d a n c e wi t h th o s e st a t u t e s . At De c e m b e r 31 , 20 1 4 , th e me m b e r s h i p o f th e As s o c i a t i o n co n s i a t e d of : Re t i r e e s an d be n e f i c i a r i e s cu r r e n t l y re c e i v i n g be n e f i t s Te r m i n a t e d em p l o y e e s en t i t l e d tc be n e f i t s bu t no t ye t re c e i v i n g th e m Ac t i v e pl a n pa r t i c i p a n t s - ve s t e d Ac t i v e pl a n pa r t i c i p a n t s - no n - v e s t e d To t s ! 21 6 16 18 61 Th e As s o c i a t i o n is s u e s a fi n a n c i a l re p o r t th a t in c l u d e s fi n a n c i a l st a t e m e n t s an d re q u i r e d su p p l e m e n t a r y in f o r m a t i o n fo r th e Br o o k l y n Ce n t e r Fi r e De p a r t m e n t Re l i e f As s o c i a t i o n . Th a t re p o r t is av a i l a b l e at th e Ci t y of B r o c k l y n Ce n t e r Ci t y of f i c e s . B. BE N E F I T S PR O V I D E D Ba s i c Se r v i c e Pe n s i o n fo r Re t i r e d Me m b e r s -U p o n re t i r e m e n t ea c h in d i v i d u a l wi l l re c e i v e a lu m p su m di s t r i b u t i o n of $ 7 , 5 0 0 pe r ye a r o f se r v i c e . Th i a be n e f i t le v e l wa s pl a c e d in t c ef f e c t on Ja n u a r y I, 20 0 6 . Pr i o r to 19 9 8 , a mo n t h l y be n e f i t le v e l o f $2 6 . 5 0 wa s av a i l a b l e fo r re t i r e e s . Th e mo n t h l y be n e f i t is no lo n g e r an op t i o n fo r re t i r i n g me m b e r s . Ve s t e d , te r u t i n a t e d me m b e r s , wh o ar e en t i t l e d to be n e f i t s bu t ar e no t ye t re c e i v i n g th e m , ar e bo u n d by th e pr o v i s i o n s in ef f e c t at th e ti m e o f te r m i n a t i o n fr o m me r o b e r s h i p . CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 Ba s i c Se n r i c e Pe n s i o n fo r De f e r r e d Pe n s i o n e r - A me m b e r who is otheiWi.se qualified for a service pension but who bas not re a c h e d th e ag e o f 50 ye s r s ma y re t i r e fr o m th e Fi r e De p a r t m e n t without forfeiting the members right to such pension. Upon ap p r o v a l o f an ap p l i c a t i o n th e r e f o r e , th e de f e r r e d pe n s i o n e r shall receive a pension baaed on the benefit level at that time mu l t i p l i e d by su c h pe r s o n ' s ye s r s o f ac t i v e se r v i c e wi t h th e Fire Department and further multiplied by the decimal equivalent o f th e ap p l i c a b l e pe r c e u t s g e de t e r m i n e d fr o m th e fu l l ow i n g table: Ye a r s o f Se r v i c e 10 11 12 13 14 15 16 17 18 19 20 an d be y o n d C. FU N D I N G PO L I C Y Applicable Percentage 60% 64 68 72 76 80 84 88 92 96 100 Th e Ci t y le v i e s pr o p e r t y ta x e s at th e di r e c t i o o o f an d fo r th e benefit of the Plan and passes through stare aids allocated to the Pl a n , al l in ac c o r d a n c e wi t h en a b l i n g St a t e st a t u t e s . Th e mi n i m u m tax levy obligation is the financial contribution requirement fo r th e ye a r le s s an t i c i p a t e d st a t e ai d s . D. CO N T R I B U T I O N S Au t h o r i t y fu r co n t r i b u t i o n s to th e pe n s i o o pl a n is es t a b l i s h e d by Minn. Stat. § 69.77 and may be amended only by the Mi n n e s o t s St a t e Le g i s l a t u r e . Se e 20 1 3 Mi n n . La w s , ch . 11 1 , art. 5, §§ 31 to 42 and 80. There are no employee contributions. Th e Ci t y pr o v i d e d st a t u t o r y co n t r i b u t i o n s in 20 1 5 . Th e ac t u a r y compares the actual statutory contribution rate tc a "required" co n t r i b u t i o n ra t e . Th e re q u i r e d co n t r i b u t i o n ra t e co n s i s t s of : (a) normal costs baaed on entry age normal cost methods, (b) a su p p l e m e n t a l co n t r i b u t i o n fo r am o r t i z i n g an y un f u n d e d ac t u a r i a l accrued liability, and (c) an allowance for administrative ex p e n s e s . E. PE N S I O N CO S T S At De c e m b e r 31 , 2 0 1 5 , th e Ci t y re p o r t e d an as s e t of $ 1 , 0 9 2 , 4 1 6 for the difference b-een the Fire Relief Plan Fiduciary net po s i t i o n an d th e to t a l pe n s i o n li a b i l i t y . Th e ne t pe n s i o n as s e t was measured as of December 31, 2014, and the total pension li a b i l i t y us e d tc ca l c u l a t e th e ne t pe n s i o n as s e t wa s de t e r m i n e d by an actuarial valuation as of that date. IV-40 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S T O Ti l E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 Ch a n g e s in Ne t Pe n s i o n As s e t Ba l a n c e at 12 / 3 1 1 1 4 Ch a n g e s fo r th e Ye a r Se r v i c e Co s t In t e r e s t Co n t r i b u t i o o s - st a t e an d lo c a l Ne t In v e s t m e n t in c o m e Be n e f i t Pa y m e n t s Ad m i n i s t r a t i v e Ex p e n s e s Ne t Ch a n g e s Ba l a n c e at 12 / 3 1 / 1 5 In c r e a s e (D e c r e a s e ) To t a l Pe n s i o n Pl a n Fi d u c i a r y Ne t Pe n s i o o Li a b i l i t y N e t Po s i t i o n Li a b i l i t y {A s s e t ) $ 2, 7 6 9 , 1 8 9 $ 3, 8 2 7 , 6 5 1 $ {1 , 0 5 8 , 4 6 2 ) 85 , 9 0 4 17 8 , 2 4 2 (6 1 7 , 5 4 1 ) 15 8 , 5 4 5 14 9 , 6 3 5 {6 1 7 , 5 4 1 ) 85 , 9 0 4 17 8 , 2 4 2 {1 5 8 , 5 4 5 ) (1 4 9 , 6 3 5 ) { I 0, 0 8 0 ) 10 , 0 8 0 {3 5 3 , 3 9 5 ) { 3 1 9 , 4 4 1 ) {3 3 , 9 5 4 ) 2, 4 1 5 , 7 9 4 $ 3, 5 0 8 , 2 1 0 $ {1 , 0 9 2 , 4 1 6 ) At De c e m b e r 31 , 20 1 5 , th e Ci t y re p o r t e d de f e r r e d ou t f l o w s o f re s o u r c e s , an d de f e r r e d in f l o w s o f re s o u r c e s , it s co n t r i b u t i o o s su b s e q u e n t to th e me a s u r e m e n t da t e , re l a t e d to pe n s i o n s fr o m th e fo l l o w i n g so u r c e s : Di f f e r e n c e s be t w e e n pr o j e c t e d an d ac t u a l in v e s t m e n t ea r n i n g s Co n t r i b u t i o o s pa i d su b s e q u e n t to th e me a s u r e m e n t da t e To t a l s De f e r r e d Ou t f l o w s o f R e s o ~ 81 , 5 0 6 14 8 , 0 6 1 $ 22 9 , 5 6 7 De f e r r e d In f l o w s of Re s o u r c e s 14 3 , 0 6 1 $ 14 3 , 0 6 1 $1 4 8 , 0 6 1 re p o r t e d as de f e r r e d ou t f l o w s o f re s o u r c e s re l a t e d to pe n s i o n s re s u l t i n g fr o m Ci t y co n t r i b u t i o n s su b s e q u e n t to th e me a s u r e m e n t da t e wi l l be re c o g n i z e d as a re d u c t i o n o f th e ne t pe n s i o n li a b i l i t y in th e ye a r en d e d De c e m b e r 31 , 20 1 6 . De f e r r e d in f l o w s o f re s o u r c e s to t a l l i n g $1 4 3 , 0 6 1 re l a t e d to st a t e ai d re c e i v e d su b s e q u e n t to th e me a s u r e m e n t da t e wi l l be re c o g n i z e d fo r it s im p a c t on th e ne t pe n s i o n li a b i l i t y in th e ye a r m d e d De c e m b e r 31 , 2 0 1 6 . Ot h e r am o u n t s re p o r t e d as de f e r r e d ou t f l o w s an d de f e r r e d in f l o w s o f re s o u r c e s re l a t e d to pe n s i o n s wi l l be re c o g n i z e d in pe n s i o n ex p e n s e as fo l l o w s : Ye a r Pe n s i o n En d e d Ex p e n s e De c e m b e r 31 , _ Am o u n t 20 1 6 $ 20 , 3 7 7 20 1 7 20 , 3 7 7 20 1 8 20 , 3 7 7 20 1 9 20 , 3 7 5 To t a l $ 81 , 5 0 6 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 F. AC T U A R I A L AS S U M P T I O N S Th e As s o c i a t i o n is fu n d e d wi t h co n t r i b u t i o n s fr o m th e Ci t y of Brooklyn Center. The actuarially determined contributions in the Sc h e d u l e o f Co n t r i b u t i o n s ar e ca l c u l a t e d as o f th e be g i n n i n g of the fiscal year in which contributioos were reported. Th e fo l l o w i n g me t h o d s an d as s u m p t i o n s we r e us e d to ca l c u l a t e the actuarially determined contributions reported in the most re c e u t fi s c a l ye a r en d . • Th e mo s t re c e n t ac t u a r i a l va l u a t i o n da t e is January 1, 2015. • Ac t u a r i a l co s t is de t e r m i n e d us i n g th e En t r y Age Normal Cost Method. • Th e ac t u a r i a l va l u e o f as s e t s is ma r k e t va l u e . • Th e un f u n d e d ac c r u e d li a b i l i t y is am o r t i z e d using a 20-year rolling end date. • In v e s t m e n t ra t e o f re t u m is 7. 0 0 pe r c e n t . • Th e in f l a t i o n ra t e as s u m p t i o n is 2. 7 5 pe r c e n t . • Mo r t a l i t y as s u m p t i o n s fo r pr e - r e t i r e m e n t , post-retirement, and post-disability are: Pr e - r e t i r e m e n t : R P 20 0 0 No n - a n n u i t a n t Table with white collar adjustment, ge n e r a t i o o a l l y projected using Scale AA, and set back two ye a r s fu r ma l e s and feroales. Po s t - r e t i r e m e n t : Po s t - d i s a b i l i t y : RP 20 0 0 An n u i t a n t Mortality Table with white collar ad j u s t m e n t , generatiooally projected uaing Scale AA for males an d fe m a l e s . RP 20 0 0 An n u i t a n t Mortality Table with white collar ad j u s t m e n t , set forward eight years for males and feroales. Th e r e we r e no ch a n g e s in ac t u a r i a l as s u m p t i o n s in 20 1 5 . Th e be s t es t i m a t e ra n g e fo r th e lo n g - t e r m ex p e c t e d ra t e o f re t u m is determined by adding expected inflation to expected lo n g - t e r m re a l re t u m s an d re f l e e t i n g ex p e c t e d vo l a t i l i t y an d correlation. The capital market assumptions are per the actuary's in v e s t m e n t co n s u l t i n g pr a c t i c e as o f Ja n u a r y I, 20 1 5 Long-Term Target Expected Real As s e t Cl a s s Allocation Rate of Return Do m e s t i c an d In t e r n a t i o n a l Eq u i t i e s 50.00'/, 5.00'/o Fi x e d In c o m e 45.00'/o 1.75% Ca s h an d eq u i v a l e n t s 5.ooo;, 0.25% G. DI S C O U N T RA T E Th e di s c o u n t ra t e us e d to me a s u r e th e to t a l pe n s i o n li a b i l i t y was 7.00 percent. The ~ection of cash flows used to determine th e di s c o u n t ra t e as s u m e d th a t Ci t y co n t r i b u t i o n s wi l l be ma d e at the acmal statutory contribution rate. Based on those as s u m p t i o a s , th e As s o c i a t i o n ' s fi d u c i a r y ne t po s i t i o n wa s pr o j e c t e d to be available to make all projected future benefit pa y m e n t s o f th e cu r r e n t pl a n me m b e r s . Th e r e f o r e , th e lo a g - t e r m expected rate of retum on peasion plaa investments was ap p l i e d to al l pe r i o d s o f pr o j e c t e d be n e f i t pa y m e n t s to de t e r m i n e the total pension liability. IV-41 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO T i f f i FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 H. PE N S I O N LI A B I L I T Y (A S S E T ) SE N S I T I V I T Y Th e fo l l o w i n g pr e s e n t s th e ne t pe n s i o n as s e t ca l c u l a t e d us i n g th e di s c o u n t mt e o f 7. 0 0 pe r c e n t , as we l l as wh a t th e ne t pe n s i o n (a s s e t ) / l i a b i l i t y wo u l d be i f it we r e ca l c u l a t e d us i n g a di s c o u n t mt e th a t is on . , . p e r c e n t s g e - p o i n t lo w e r (6 . 0 0 pe r c e n t ) or on e pe r c e n t s g . , . po i n t hi g h e r (8 . 0 0 pe r c e n t ) th a n th e CU I T e l l t mt e : Ci t y ' s Pr o p o r t i o n a t e Sh a r e o f th e N e t Pe n s i o n Li a b i l i t y Ne t Pe n s i o n (A s s e t ) / L i a b i l i t y 6. 0 0 " / o On e Po i n t De c r e a s e (9 7 4 , 7 7 0 ) No t e 6 MU L T I P L E - E M P L O Y E R DE F I N E D BE N E F I T PE N S I O N PL A N 7. 0 0 % Cu r r e n t Ra t e 8. 0 0 " / o On e Po i n t In c r e a s e (1 , 0 9 2 , 4 1 6 ) $ (1 , 1 9 5 , 4 8 4 ) Ci t y er o p l o y e e s be l o n g i n g to In t e r n a t i o n a l Un i o n o f Op e r a t i n g En g i n e e r s (I U O E ) ar e pa r t i c i p a n t s in a mu l t i p l . , . e m p l o y e r de f i n e d be n e f i t pe n s i o n pl a n Ce n t r a l Pe n s i o n Fu n d o f th e In t e r n a t i o n a l Un i o n o f Op e r a t i n g En g i n e e r s an d Pa r t i c i p a t i n g Em p l o y e r s (C P F ) ad m i n i s t e r e d by th e Bo a r d o f Tr u s t e e s o f th e Ce n t r a l Pe n s i o n Fu n d . Th e pl a n is a co s t - s h a r i n g pe n s i o n pl a n th a t is no t a st a t e or lo c a l go v e r n m e n t a l pe n s i o n pl a n , is us e d to pr o v i d e de f i n e d be n e f i t pe n s i o n s bo t h to em p l o y e r s th a t ar e no t st a t e or lo c a l go v e r n m e n t a l em p l o y e r s , an d ha s no pr e d o m i n a n t st a t e or lo c a l go v e r n m e n t er o p l o y e r . Th e Pl a n is s u e s a pu b l i c l y av a i l a b l e fi n a n c i a l re p o r t lo c a t e d on th e i r we b s i t e at ww w . c p f i u o e . o r g . Th e Ci t y ha s 22 em p l o y e e s wh o ar e co v e r e d by th i s pe n s i o n pl a n . Th e pl a n pr o v i d e s be n e f i t s su c h as mo n t h l y re t i r e m e n t in c o m e , sp e c i a l an d ea r l y re t i r e m e n t be n e f i t s , po s t - r e t i n : m e n t su r v i v i n g sp o u s e be n e f i t s , Pf " ' r e t i r e m e n t su r v i v i n g sp o u s e be n e f i t s , an d di s a b i l i t y be n e f i t s . Th e CP F is a su p p l e m e n t a l Pe n s i o n Fu n d au t h o r i z e d by Mi n n e s o t a St a t u t e s , 35 6 . 2 4 , su b d i v i s i o n 1( 9 ) . Th e CP F Pl a n o f Be n e f i t s an d th e Ag r e e m e n t an d De c l a r a t i o n o f Tr u s t wi l l se r v e as th e go v e r n i n g do c u m e n t s . Th e Ci t y ' s co n t r i b u t i o n s to th e pl a n ar e pu r s u a n t to a co l l e c t i v e ba r g a i n i n g ag r e e m e n t wi t h th e IU O E wh i c h ex p i r e s De c e m b e r 31 , 2 0 1 6 . Th e re q u i r e d co n t r i b u t i o n mt e is $0 . 9 6 pe r ho u r , wh i c h is ap p l i e d to al l co m p e n s a t e d ho u r s , an d ca p p e d at $5 , 0 0 0 pe r ye a r . To t a l em p l o y e r co n t r i b u t i o n s fo r th e ye a r en d e d De c e m b e r 31 , 20 1 5 we r e $5 1 , 6 9 9 . Wi t h re g a r d to wi t h d m w a l fr o m th e pe n s i o n pl a n , th e pa r t i e s ag r e e th a t th e am o u n t th a t wo u l d ot h e r w i s e be pa i d in sa l a r y or wa g e s wi l l be co n t r i b u t e d in s t e s d to th e CP F as Pf " ' t a x em p l o y e r co n t r i b u t i o n s . No t e 7 DE F I N E D CO N T R I B U T I O N PL A N Th e r e ar e fi v e Ci t y Co u n c i l me m b e r s o f th e Ci t y ar e co v e r e d by th e Pu b l i c Em p l o y e e s De f i n e d Co n t r i b u t i o n Pl a n (P E D C P ) , a mu l t i p l . , . e r o p l o y e r de f e r r e d co m p e n s a t i o n pl a n ad m i n i s t e r e d by PE R A . Th e PE D C P is a ta x qu a l i f i e d pl a n un d e r Se c t i o n 40 1 ( a ) o f th e In t e r n a l Re v e n u e Co d e an d al l co n t r i b u t i o n s by or on be h a l f o f er o p l o y e e s ar e ta x de f e r r e d un t i l ti m e of wi t h d m w a l . Pl a n be n e f i t s de p e n d so l e l y on am o u n t s oo n t r i b u t e d to th e pl a n pl u s in v e s t m e n t ea r n i n g s , le s s ad m i n i s t m t i v e es p e n s e s . Mi n n e s o t a St a t u t e s , Ch a p t e r 35 3 ( 0 . 0 3 ) , sp e c i f i e s pl a n pr o v i s i o n s , in c l u d i n g th e em p l o y e e an d er o p l o y e r co n t r i b u t i o n ra t e s fo r th o s e qu a l i f i e d pe r s o n n e l wh o el e c t to pa r t i c i p a t e . An el i g i b l e el e c t e d of f i c i a l wh o de c i d e s to pa r t i c i p a t e co n t r i b u t e s 5 pe r c e n t o f sa l a r y wh i c h is ma t c h e d by th e el e c t e d of f i c i a l ' s er o p l o y e r . Em p l o y e r an d er o p l o y e e co n t r i b u t i o n s ar e co m b i n e d an d us e d to pu r c h a s e sh a r e s in on e or mo r e o f th e se v e n ac c o u n t s o f th e Mi n n e s o t a Su p p l e m e n t a l In v e s t m e n t Fu n d . Fo r ad m i n i s t e t i u g th e pl a n , PE R A re c e i v e s 2 pe r c e n t o f em p l o y e r co n t r i b u t i o n s an d tw e n t y - f i v e hu n d r e d t h s o f I pe r c e n t (. 0 0 2 5 % ) o f th e as s e t s in ea c h me m b e r s ac c o u n t an n u a l l y . CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO T i f f i FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 To t a l co n t r i b u t i o n s ma d e by th e Ci t y fo r th e la s t th r e e fi s c a l years were: Required Rate for Employees & Co n t r i b u t i o n Am o u n t Percentaj!e of Covered Payroll Employers Fo r th e Ye a r En d e d : Em p l o y e e Em p l o y e r Employee Employer Employee Employer De c e m b e r 31 , 20 1 5 De c e m b e r 31 , 20 1 4 De c e m b e r 31 , 2 0 1 3 $ 90 7 90 7 88 0 No t e 8 OT H E R PO S T - E M P L O X M E N T BE N E F I T S A. PL A N DE S C R I P T I O N 90 7 90 7 88 0 5.0"/o 5.0% 5.0"/o 5.0°/o 5.0% 5.0% 5.0"/o 5.0"/o 5.0"/o 5.0% 5.0% 5.0"/o In ad d i t i o n to pr o v i d i n g th e pe n s i o n be n e f i t s de s c r i b e d in Note 4.B., the City provides postemployment health care benefits for re t i r e d em p l o y e e s an d po l i c e di s a b l e d in th e li n e o f du t y , th r o u g h a singl~ployer defined benefit plan administered by the Ci t y . Th e au t h o r i t y to pr o v i d e th e s e be n e f i t s is es t a b l i s h e d in Minnesota Statutes Sections 471.61 subd 2a. and 299A.465. Th e be n e f i t s , be n e f i t le v e l s , em p l o y e e co n t r i b u t i o n s an d em p l o y e r contributions are governed by the City and can be amended by th e Ci t y th r o u g h it s pe r s o n n e l ma n u a l an d co l l e c t i v e ba r g a i n i n g agreements with employee groups. The Plan is not ac c o u n t e d fo r as a tr u s t fu n d , as an ir r e v o c a b l e tr u s t ha s no t been established to account for the Plan. The Plan does not is s u e a se p a r a t e re p o r t . B. BE N E F I T S PR O V I D E D Re t i r e e s Th e Ci t y is re q n i r e d by St a t e St a t u t e to al l o w re t i r e e s to co n t i n u e participation in the City's group health insumnce plan if the in d i v i d u a l te r m i n a t e s se r v i c e wi t h th e Ci t y th r u u g h se r v i c e retirement or disability retirement. Former employees who are re c e i v i n g . or wh o ha v e me t ag e an d se r v i c e re q u i r e m e n t s to receive. an annuity from a Minnesota public pension plan and th o s e re c e i v i n g a di s a b i l i t y be n e f i t fr o m su c h a pl a n ar e in u u e d i a t e l y eligible to participate in this Plan. Retirees may obtain de p e n d e n t co v e r a g e i f th e em p l o y e e re c e i v e d de p e n d e n t co v e r a g e immediately before leaving employmmt. Covered spouses ma y co n t i n u e co v e r a g e af t e r th e de a t h o f a re t i r e e . In ad d i t i o n , the surviving spouse of an active employee may continue co v e r a g e in th e gr o u p he a l t h in s u m n c e pl a n af t e r th e em p l o y e e ' s death. Al l he a l t h ca r e co v e r a g e is pr o v i d e d th r u u g h th e Ci t y ' s gr o u p health insumnce plans. The retiree is reqnired to pay the pr e m i u m as de s c r i b e d be l o w : Em p l o v e e s hi r e d be f o r e Ja n u a c y I 19 9 2 wi t h co n t i n u o u s fu l l - t i m e employment Em p l o y e e s wh o , on th e da t e o f th e i r re t i r e m e n t , me e t el i g i b i l i t y requirement for a full retin:ment annuity under PERA or PE R A Po l i c e wi t h o u t re d u c t i o n o f be n e f i t s be c a u s e o f ag e , disability, or any other reason for reduction shall be eligible for the Ci t y to pa y 10 0 " / o o f th e si n g l . , . p e r s o n pr e m i u m un t i l su c h time as the retiree is eligible for Medicare or at age 65, whichever is so o n e r . I f th e re t i r e e de s i r e s to co n t i n u e co v e r a g e in eJ W e s s of single coverage, the additional cost for the coverage shall be pa i d to th e Ci t y by th e re t i r e e on a mo n t h l y ba s i s . IV-42 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 Em p l o y e e s hi r e d af t e r Ja n l ! l ! l } ' I 19 9 2 Th e re t i r e e is re q u i r e d to pa y I OO " A > o f th e i r pr e m i u m co s t fo r th e Ci t y - s p o n s o r e d gr o u p he a l t h in s u r a n c e pl a n in wh i c h th e y pa r t i c i p a t e . Th e pr e m i u m is a bl e n d e d ra t e de t e r m i n e d on th e en t i r e ac t i v e an d re t i r e e po p u l a t i o n . Si n c e th e pr o j e c t e d cl a i m s co s t s fo r re t i r e e s ex c e e d th e bl e n d e d pr e m i u m pa i d by re t i r e e s , th e y ar e re c e i v i n g an im p l i c i t ra t e su b s i d y (b e n e f i t ) . Th e co v e r a g e le v e l s ar e th e sa m e as th o s e af f o r d e d to ac t i v e em p l o y e e s . Di s a b l e d oo l i c e an d fi r e f i g h t e r Th e Ci t y is re q u i r e d to co n t i n u e to pa y th e em p l o y e r ' s co n t r i b u t i o n to w a r d he a l t h co v e r a g e fo r po l i c e or fi r e f i g h t e r s di s a b l e d in th e li n e o f du t y pe r Mi n n e s o t a St a t u t e 29 9 A . 4 6 5 , un t i l ag e 65 . De p e n d e n t co v e r a g e is in c l u d e d , if th e de p e n d e n t s we r e co v e r e d at th e ti m e o f th e di s a b i l i t y . PA R T I C l l ' A N T S As o f th e ac t u a r i a l va l u a t i o n da t e d Ja n u a r y I, 20 1 4 , pa r t i c i p a n t s co n s i s t e d of : C. FU N D I N G PO L I C Y Re t i r e e s fo r wh i c h th e Ci t y is pa y i n g th e si n g l e pr e m i u m Re t i r e e s an d be n e f i c i a r i e s cu r r e n t l y pu r c h a s i n g he a l t h in s u r a n c e th r o u g h th e Ci t y Di s a b l e d po l i c e of f i c e r s Ac t i v e em p l o y e e s To t a l 14 2 !5 1 16 8 Th e ad d i t i o n a l co s t o f us i n g a bl e n d e d ra t e fo r ac t i v e s an d re t i r e e s is cu r r e n t l y fu n d e d on a pa y - a s - y o u - g o ba s i s . Th e Ci t y Co o n c i l ma y ch a n g e th e fu n d i n g po l i c y at an y ti m e . D. AN N U A L OP E D CO S T S AN D NE T OP E B OB L I G A T I O N Th e Ci t y ' s an n u a l ot h e r pe s t - e m p l o y m e n t be n e f i t (O P E B ) co s t is ea l c u l a t e d ba s e d on th e an n u a l re q u i r e d co n t r i b u t i o n (A R C ) o f th e er u p l o y e r , an am o o n t ac t u a r i a l l y de t e r m i n e d in ac c o r d a n c e wi t h th e pa r a m e t e r s o f GA S B St a t e m e n t No . 45 . Th e AR C re p r e s e n t s a le v e l o f fu n d i n g th a t , i f pa i d on an on g o i n g ba s i s , is p~ e c t e d to co v e r th e no r m a l co s t ea c h ye a r an d am o r t i z e an y un f u n d e d ac t u a r i a l ob l i g a t i o n (o r fu n d i n g ex c e s s ) ov e r a pe t i o d no t to ex c e e d 30 ye s r s . Th e ne t OP E B ob l i g a t i o n as o f De c e m b e r 31 , 20 1 5 wa s ea l c u l s t e d as fo l l o w s : An n u a l re q u i r e d co n t r i b u t i o n In t e r e s t on ne t OP E B ob l i g a t i o n Ad j u s t m e n t to AR C An n u a l OP E B co s t Em p l o y e r Co n t r i b u t i o n s Di r e c t In d i r e c t Im p l i c i t Ra t e Su b s i d y In c r e a s e (d e c r e a s e ) in ne t OP E B ob l i g a t i o n Ne t OP E B ob l i g a t i o n , be g i n n i n g o f ye a r Ne t OP E B ob l i g a t i o n , en d o f ye a r $ 22 6 , 4 6 9 28 , 3 5 0 (2 5 , 5 8 2 ) 22 9 , 2 3 7 12 3 , 4 1 6 25 , 2 1 0 80 , 6 1 1 62 9 , 9 9 4 71 0 , 6 0 5 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 Th e Ci t y ha d an ac t u a r i a l va l u a t i o n pe r f o r m e d fo r th e pl a n as ofJanuacy I, 2014 to determine the funded status of the plan as o f th a t da t e as we l l as th e er u p l o y e r ' s AR C fo r th e fi s c a l ye a r ended December 31, 2015. The City's annual OPEB cost, the pe r c e n t a g e o f an n u a l OP E B co s t co n t r i b u t e d to th e pl a n , an d the net OPEB obligation for the past three years were as fo l l o w s : Percentage of Fi s c a l An n u a l Annual Net Ye a r OP E B Employer OPEBCost OPEB En d e d Co s t Contributions Contributed Oblisation 12 1 3 1 / 2 0 1 3 $ 23 8 , 7 4 4 $ 140,071 58.67% $ 586,026 12 / 3 1 / 2 0 1 4 22 6 , 7 2 4 182,756 80.61% 629,994 12 / 3 1 / 2 0 1 5 22 9 , 2 3 7 148,626 64.84% 710,605 IV-43 C I T Y O F B R O O K L Y N C E N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 E . FU N D E D ST A T U S AN D FU N D I N G PR O G R E S S Th e Ci t y cu r r e n t l y ha s no as s e t s th a t ha v e be e n ir r e v o c a b l y de p o s i t e d in t o a tr u s t fo r fu t u r e be n e f i t s ; th e r e f o r e , th e ac t u a r i a l va l u e o f as s e t s is ze r o . In s t e a d o f de p o s i t i n g fu n d s in t o an ir r e v o c a b l e tr u s t , th e Ci t y ha s ch o s e n to ac c u m u l a t e fu n d i n g in t o an in t e r n a l se r v i c e fu n d . Th e ca s h an d in v e s t m e n t ba l a n c e o f th e in t e r u a l se r v i c e fu n d is $5 6 5 , 8 5 6 fo r th e ye a r en d e d De c e m b e r 31 , 20 1 5 . Th e fu n d e d st a t u s o f th e pl a n wa s as fo l l o w s : Ac t u a r i a l Va l u a t i o n Da t e 11 1 1 2 0 1 0 11 1 1 2 0 1 2 1/ 1 / 2 0 1 4 Ac t u a r i a l Va l u e o f As s e t s Un f u n d e d Ac t u a r i a l A c t u a r i a l UA A L as a Ac c r u e d Ac c r u e d Pe r c e n t a g e Li a b i l i t y L i a b i l i t y Fu n d e d Co v e r e d o f Co v e r e d (A A L ) (U A A L ) Ra t i o Pa y r o l l Pa y r o l l 3, 0 1 2 , 3 8 3 2, 6 2 0 , 3 6 7 2, 5 7 4 , 5 2 9 3, 0 1 2 , 3 8 3 2, 6 2 0 , 3 6 7 2, 5 7 4 , 5 2 9 0. 0 0 " / o 0. 0 0 " / o 0. 0 0 " / o 9, 1 4 3 , 2 7 6 9, 4 7 2 , 2 3 7 9, 9 3 4 , 9 6 0 32 . 9 5 % 27 . 6 6 % 25 . 9 1 % F. AC T U A R I A L M E T H O D S AN D AS S U M P T I O N S Ac t u a r i a l va l u a t i o n s o f an on g o i n g pl a n in v o l v e es t i m a t e s o f th e va l u e o f re p o r t e d am o u n t s an d as s u m p t i o n s ab o u t th e pr o b a b i l i t y o f oc c u r r e n c e o f ev e n t s fa r in t o th e fu t u r e . Ex a m p l e s in c l u d e as s u m p t i c m s ab o u t fu t u r e em p l o y m e n t , mo r t a l i t y , an d th e he a l t h ca r e co s t tr e n d . Am o u n t s de t e r m i n e d re g a r d i n g th e fu n d i n g st a t u s o f th e pl a n an d th e an n u a l re q u i r e d co n t r i b u t i o n of th e em p l o y e r ar e su b j e c t to co n t i n u a l re v i s i o n as ac t u a l re s u l t s ar e co m p a r e d wi t h pa s t ex p e c t a t i o n s an d ne w es t i m a t e s ar e ma d e ab o u t th e fu t u r e . Th e sc h e d u l e o f fu n d i n g pr o g r e s s , pr e s e n t e d as re q u i r e d su p p l e m e n t a r y in f o r m a t i o n fo l l o w i n g th e no t e s to th e fi n a n c i a l st a t e m e n t s , pr e s e n t s mu l t i · y e a r tr e n d in f o r m a t i o n th a t sh o w s wh e t h e r th e ac t u a r i a l va l u e o f th e pl a n as s e t s is in c r e a s i n g or de c r e a s i n g ov e r ti m e re l a t i v e to th e ac t u a r i a l ac c r u e d li a b i l i t i e s fo r be n e f i t s . Pr o j e c t i o n s o f be n e f i t s fo r fi n a n c i a l re p o r t i n g pw p o s e s ar e ba s e d on th e su b s t a n t i v e pl a n (t h e pl a n as un d e r s t o o d by th e em p l o y e r an d pl a n me m b e r s ) an d in c l u d e th e ty p e s o f be n e f i t s pr o v i d e d at th e ti m e o f ea c h va l u a t i o n an d th e hi s t o r i c a l pa t t e r n o f sh a r i n g o f be n e f i t co s t s be t w e e n th e em p l o y e r an d pl a n me m b e r s to th a t po i n t . Th e ac t u a r i a l me t h o d s an d as s u m p t i o n s us e d in c l u d e te c h n i q u e s th a t ar e de s i g n e d to re d u c e th e ef f e c t o f sh o r t - t e r m vo l a t i l i t y in ac t u a r i a l ac c r u e d li a b i l i t i e s an d th e ac t u a r i a l va l u e o f as s e t s , co n s i s t e n t wi t h th e la n g - t e r m pe r s p e c t i v e o f th e ca l c u l a t i o n s . C I T Y O F B R O O K L Y N C E N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 In th e Ja n u a r y I , 20 1 4 ac t u a r i a l va l u a t i o n , th e Pr o j e c t e d Un i t Credit actuarial cost was used. The actuarial assumptions in c l u d e d a 4. 5 % in v e s b n e n t ra t e o f re t u r n (n e t o f ad m i n i s t r a t i v e expenses) and an initial annual health care cost trend rate of 9. 0 % re d u c e d by 0. 3 3 % ea c h ye a r to ar r i v e at an ul t i m a t e health care cost trend rate of 5.0%. Both rates include a 3.0% in f l a t i o n as s u m p t i o n . Th e ac t u a r i a l va l u e o f as s e t s is $0 , ho w e v e r the City does have $565,856 of funds accumulated in an in t e r n a l se r v i c e fu n d . Th e pl a n s ' un f u n d e d ac t u a r i a l ac c r u e d liability is being amortized as of the valuation date with a payroll gr o w t h ra t e of 3 . 7 5 % ov e r 30 ye a r s on an op e n ba s i s . No t e 9 O T I I E R IN F O R M A T I O N A. R I S K MA N A G E M E N T Th e Ci t y is ex p o s e d to va r i o u s ri s k s o f lo s s re l a t e d to to r t s ; th e f t of, damage to and destruction of assets; errors and om i s s i o n s an d na t u r a l di s a s t e r s . Pr o p e r t y an d ca s u a l t y in s u r a n c e is pr o v i d e d th r o u g h th e Le a g u e ofMinnescta Cities Insurance Trust (LMCIT), a public entity ri s k po o l cu r r e n t l y op e r a t i n g as a co m m o n ri s k ma n a g e m e n t and insurance program for Minnesota cities: general liability, pr o p e r t y , au t o m o b i l e , mo b i l e pr o p e r t y an d ma r i n e , cr i m e , em p l o y e e dishonesty, boiler, and open meeting law. The City pays an an n u a l in s u r a n c e pr e m i u m to th e LM C l T fo r it s in s u r a n c e co v e r a g e . The City is subject to supplemental assessments if de e m e d ne c e s s a r y by th e LM C I T . Cu r r e n t l y , th e LM C I T is self-sustaining through member premiums and reinsures through co m m e r c i a l co m p a n i e s fo r cl a i m s in ex c e s s of va r i o u s am o u n t s . The City retains risk for the deductible portions of the in s u r a n c e pu l i c i e s . Th e am o u n t o f th e s e de d u c t i b l e & is co n s i d e r e d immaterial to the financial statements. W or l c e r s ' co m p e n s a t i o n co v e r a g e is pr o v i d e d th r o u g h a po o l e d self-insurance program through the LMClT. The City pays an au n u a l pr e m i u m to th e LM C I T . Th e Ci t y is su b j e c t to su p p l e m e n t a l assessments if deemed necessary by the LMCIT. The LM C I T re i n s u r e s th r o u g h Wo r k e r s ' Co m p e n s a t i o n Re i n s u r a n c e Association (WCRA) as required by law. For worlcers' co m p e n a a t i c m . , th e Ci t y is no t su b j e c t to a de d u c t i b l e . Th e City's worlcers' compensation is retroactively rated With this type o f co v e r a g e , fi n a l pr e m i u m s ar e de t e r m i n e d af t e r lo s s ex p e r i e n c e is known. The amount of premium adjustment, if any, is co n s i d e r e d im m a t e r i a l an d no t re c o r d e d un t i l re c e i v e d or pa i d . Th e r e we r e no si g n i f i c a n t re d u c t i o n s in in s u r a n c e fr o m th e previous year or settlements in excess of insurance coverage for an y o f th e pa s t th r e e ye a r a . B. AR B I T R A G E R E B A T E Th e T a x Re f o r m Ac t o f 19 8 6 re q u i r e s go v e r n m e n t a l en t i t i e s to pay to the federal government income earned on the proceeds fr o m th e is s u a n c e o f de b t in ex c e s s o f in t e r e s t co s t s , pe n d i n g the expenditure of the borrowed funds. This rebate of interest in c o m e (k n o w n as ar b i t r a g e ) ap p l i e s to go v e r n m e n t a l de b t is s u e d after Augnst 31, 1986. The City issued greater than $5 million o f bo n d s in 20 0 4 an d th e r e f o r e is re q u i r e d to re b a t e ex c e s s in v e s b n e n t income relating to these issues to the federal go v e r n m e n t . Th e ex t e n t o f th e Ci t y ' s li a b i l i t y fo r ar b i t r a g e re b a t e s on the remaining bond issues is not determinable at this ti m e . Ho w e v e r , in th e op i n i o n o f ma n a g e m e n t , an y su c h li a b i l i t y would be innuaterial. IV-44 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 C. LI T I G A T I O N Th e Ci t y is su b j e c t to ce r t a i n le g a l cl a i m s in th e no r m a l cc u r s e o f bu s i n e s s . Ma n a g e m e n t do e s no t ex p e c t th e re s c l u t i o n of t h e s e cl a i m s wi l l ha v e a ma t e r i a l im p a c t on th e Ci t y ' s fi n a n c i a l co n d i t i o n or re s u l t s o f op e r a t i o n s . D. CO N T I N G E N T LI A B I L I T I E S Ta x In c r e m e n t No t e s In Ma y 20 0 2 , th e Ci t y en t e r e d in t o tw o li m i t e d ta x in c r e m e n t no t e s wi t h de v e l o p e r s wh e r e b y th e Ci t y wi l l pa y th e de v e l o p e r s a pe r c e n t a g e o f th e av a i l a b l e ta x in c r e m e n t . Wh e t h e r pa y m e n t s wi l l oc c u r an d th e am o u n t o f th e pa y m e n t s is un p r e d i c t a b l e si n c e al l pa y m e n t s ar e de p e n d e n t on th e Ci t y re c e i v i n g ta x in c r e m e n t re v e n u e s fr o m th e de v e l o p e r ' s pr o j e c t . As su c h , th i s li a b i l i t y ha s no t be e n re c o r d e d in th e fi n a n c i a l st a t e m e n t s . An y po t e n t i a l li a b i l i t y en d s wi t h th e de c e r t i f i c s t i o n o f th e ta x in c r e m e n t di s t r i c t . In De c e m b e r 20 1 2 , th e Ci t y en t e r e d in t o a ta x in c r e m e n t re v e n u e no t e wi t h a de v e l o p e r wh e r e b y th e Ci t y wi l l pa y th e de v e l o p e r th e av a i l a b l e ta x in c r e m e n t s as de f i n e d in th e Ta x In c r e m e n t De v e l o p m e n t Ag r e e m e n t . Wh e t h e r pa y m e n t s wi l l oc c u r an d th e am o u n t o f th e pa y m e n t s is un p r e d i c t a b l e si n c e al l pa y m e n t s ar e de p e n d e n t on th e Ci t y re c e i v i n g ta x in c r e m e n t re v e n u e s fr o m th e de v e l o p e r ' s pr o j e c t . As su c h , th i s li a b i l i t y ha s no t be e n re c o r d e d in th e fi n a n c i a l st a t e m e n t s . An y po t e n t i a l li a b i l i t y en d s wi t h th e de c e r t i f i c s t i o n o f th e ta x in c r e m e n t di s t r i c t . A sc h e d u l e o f th o no t e s ou t s t a n d i n g at De c e m b e r 31 , 2 0 1 5 is as fo l l o w s : Am e n d e d or Or i g i n a l 12 1 3 1 / 2 0 1 5 In t e r e s t Ma t u r i t y No t e Pr i n c i J ! ! ! ! Ba l a n c e Ra t e Da t e Tw i n La k e s Bu s i n e s s Pa r k $ 2, 4 2 4 , 1 9 9 $ 35 1 , 2 7 4 8. 0 0 0 / o 01 1 3 1 / 2 0 2 1 Sh i n g l e Cr e e k Cr o s s i n g Pr o j e c t 2, 3 0 0 , 0 0 0 2, 1 8 4 , 9 1 2 6. 0 0 % 02 1 0 1 / 2 0 2 8 E. JO I N T VE N T U R E S AN D JO I N T L Y GO V E R N E D OR G A N I Z A T I O N S Th e Ci t y ha s se v e r a l ag r e e m e n t s wi t h ot h e r en t i t i e s th a t pr o v i d e re d u c e d co s t s , be t t e r se r v i c e , an d ad d i t i o n a l be n e f i t s to th e pa r t i c i p a n t s . Th e pr o g r a m s in wh i c h th e Ci t y pa r t i c i p a t e s ar e li s t e d be l o w an d am o u n t s re c o r d e d wi t h i n th e cu r r e n t yo n r ' s fi n a n c i a l st a t e m e n t s ar e di s c l o s e d . Lo c a l Go v e r n m e n t In f u r m a t i o n Sy s t e m s As s o c i a t i o n (L O O ! S l Th i s co n s o r t i u m o f ap p r o x i m a t e l y 30 go v e r n m e n t en t i t i e s pr o v i d e s cc m p u t e r i z e d da t a pr o c e s s i n g an d su p p o r t se r v i c e s to it s me m b e r s . LO G IS is le g a l l y se p a r a t e ; th e Ci t y do e s no t ap p o i n t a vo t i n g ma j o r i t y of i t s bo a r d , an d th e Co n s o r t i u m is fi s c a l l y in d e p e n d e n t o f th e Ci t y . Th e to t a l am o u n t re c o r d e d wi t h i n th e 20 1 5 fi n a n c i a l st a t e m e n t s o f th e Ci t y is $5 4 9 , 1 5 1 fo r ge n e r a l se r v i c e s an d ap p l i c a t i o n up g r a d e s pr o v i d e d . Co s t s we r e al l o c a t e d to th e va r i o u s fu n d s ba s e d on ap p l i c s t i o n s an d / o r us e o f se r v i c e s . Co m p l e t e fi n a n c i a l st a t e m e n t s fo r LO O I S ma y be ob t a i n e d at th e LO G IS of f i c e s lo c a t e d at 57 5 0 Du l u t h St r e e t , Go l d e n Va l l e y , Mi n n e s o t a 55 4 2 2 . LO G IS In s u r a n c e Gr o u p Th i s gr o u p pr o v i d e s co o p e r a t i v e pu r c h a s i n g o f he a l t h an d li f e in s u r a n c e be n e f i t s fo r ap p r o x i m a t e l y 45 go v e r n m e n t a l en t i t i e s . Th e to t a l o f 20 1 5 he a l t h an d li f e in s u r a n c e co s t s pa i d by th o Ci t y wa s $ ! ,4 0 0 , 9 4 1 . Co m p l e t e fi n a n c i a l st a t e m e n t s ma y be ob t a i n e d fr o m Ga l l a g h e r Be n e f i t se r v i c e s , In c . lo c a t e d at 36 0 0 Am e r i c a n Bl v d We s t , Bl o o m i n g t o n , MN 55 4 3 1 . CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 Th e Br o o k l v n Ce n t e r Fi r e Pe o a r t m m t Re l i e f As s o c i a t i o n (t h e Association) Th e As s o c i a t i o n is or g a n i z e d as a no n p r o f i t or g a n i z a t i o n , le g a l l y separate from the City, by its members to provide pe n s i o n an d ot h e r be n e f i t s to me m b e r s in ac c o r d a n c e wi t h Minnesota Statutes. Its board of directors is elected by the me m b e r s h i p o f th e As s o c i a t i o n an d no t by th e Ci t y Co o n c i l . The Association issues its own set of financial statements. Al l fu n d i n g is co n d u c t e d in ac c o r d a n c e wi t h ap p l i c s b l e Mi n n e s o t a Statutes, whareby state aids flow to the Association, ta x le v i e s ar e de t e r m i n e d by th e As s o c i a t i o n an d ar e on l y re v i e w e d by tho City. The Association pays benefits directly to it s me m b e r s . Th e As s o c i a t i o n ma y ce r t i f y ta x le v i e s to He n n e p i n County directly if the City does not COlT)' out this fu n c t i o n . Be c a u s e th e As s o c i a t i o n is fi s c a l l y in d e p e n d e n t o f the City, the financial information of the Association has no t be e n in c l u d e d wi t h i n th e Ci t y ' s fi n a n c i a l s t a t e m m t s . (S e e Note 5 for disclosures relating to the pension plan op e r a t e d by th e As s o c i a t i o n . ) Co m p l e t e fi n a n c i a l st a t e m e n t s for the Association may be ob¥:ned at the City offices lo c a t e d at 63 0 1 Sh i n g l e Cr e e k Pa r k w a y , Br o o k l y n Ce n t e r , Minnesota 55430. IV-45 Re q u i r e d Su p p l e m e n t a r y In f o r m a t i o n CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A RE Q U I R E D SU P P L E M E N T A R Y IN F O R M A T I O N SC H E D U L E OF FU N D I N G PR O G R E S S - OT H E R PO S T E M P L O Y M E N T BENEFITS Fo r th e Ye a r En d e d De c e m b e r 31 , 2 0 1 5 Un f u n d e d Ac t u a r i a l Ac t u a r i a l Ac t u a r i a l A c t u a r i a l Va l u a t i o n V a l n e o f Ac c r u e d A c c r u e d Fnnded Da t e As s e t s Li a b i l i t y (A A L ) Li a b i l i t y (U A A L ) Ratio Ja n n a r y I, 20 1 0 $ $ 3, 0 1 2 , 3 8 3 $ 3, 0 1 2 , 3 8 3 0.00% Ja n n a r y I, 20 1 2 2, 6 2 0 , 3 6 7 2, 6 2 0 , 3 6 7 0.00% Ja n n a r y I, 20 1 4 2, 5 7 4 , 5 2 9 2 , 5 7 4 , 5 2 9 0.00% UAALasa Covered Percentage of Pa~roll Covered P~roll $ 9,143,276 32.95% 9,472,237 27.66% 9,934,960 25.91% IV-46 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A SC H E D U L E OF CI T Y CO N T R I B U T I O N S PU B L I C EM P L O Y E E S GE N E R A L EM P L O Y E E S RE T I R E M E N T FU N D Re q u i r e d Su p p l e m e n t a r y In f o r m a t i o n (L a s t Te n Ye a r s * ) St a t u t o r i l y Re q u i r e d Fi s c a l Ye a r En d i n g Co n l r i b u t i o n s (a ) De c e m b e r 31 , 20 1 5 56 4 , 1 6 8 Co n 1 r i b n t i o n s in Re l a t i o n to th e St a t u t o r i l y Re q u i r e d Co n t r i b u t i o n s (b ) 56 4 , 1 6 8 Co n t r i b u t i o n De f i c i e n c y (E x c e s s ) ( a- b ) Co v e r e d Pa y r o l l * * (d ) 7, 5 2 2 , 2 0 6 • Th i s sc h e d u l e is pr e s e n t e d pr o s p e c t i v e l y be g i n n i n g wi 1 h 1h e fi s c a l ye a r en d e d De c e m b e r 31 , 20 1 5 . • • Fo r pu r p o s e s of th i s sc h e d u l e , co v e r e d pa y r o l l is de f m e d as 11 pe n s i o n a b l e wa g e s 11 • Co n t r i b u t i o n s as a Pe r c e n t a g e o f Co v e r e d Pa y r o l l (b i d ) 7. 5 0 ' / o CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A SC H E D U L E OF CI T Y ' S PR O P O R T I O N A T E SH A R E OF NE T PE N S I O N LI A B I L I T Y PU B L I C EM P W Y E E S GE N E R A L EM P W Y E E S RE T I R E M E N T FU N D Re q u i r e d Su p p l e m e n t a r y In f o r m s t i o n (L a s t Te n Y e l l l ! ! 0 ) Em p l o y e r s Pr o p o r t i o n (P e r c e n t a g e ) o f th e Ne t Pe n s i o n Fi s c a l Ye a r En d i n g Li a b i l i t y (A s s e t ) Ju n e 30 , 20 1 5 0. 1 2 4 3 % Em p l o y e r s Pr o p o r t i o n a t e Sh l l r e (A m o u n t ) of th e Ne t Pe n s i o n Li a b i l i t y (A s s e t s ) (a ) 6, 4 4 1 , 8 7 2 Employers Covered ~ $7,303,595 • Th i s sc b e d n l e is pr e s e n t e d pr o s p e c 1 i v e l y be g i n n i n g wi t h th e fi s c a l ye a r en d e d December 31, 2015. "' " ' F o r pm p o s e s of th i s sc h e d u l e , co v e r e d pa y r o l l is de f i n e d as "p e n s i o n a b l e wa g e s " . Employers Proportionate Share of the Net Pension Lisbility (Asset) ••• Percentage of its Covered Payroll (alb) 88.20"/o Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 78.20"/o IV-47 CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A SC H E D U L E OF CI T Y CO N T R I B m i O N S PU B L I C EM P L O Y E E S PO L I C E AN D FI R E FU N D Re q u i r e d Su p p l e m e n t a r y In f o r m a t i o n (L a s t Te n Ye a r s * ) St a t u t o r i l y Co n t r i b u t i o n s in Re l a t i o n Re q u i r e d to th e St a t u t o r i l y Re q u i r e d Fi s c a l Ye B t En d i 1 1 1 1 Co n t r i b u t i o n s (• ) Co n t r i b u t i o n s (2 ) De c e m b e r 31 , 20 1 5 $ 68 7 , 9 3 5 $ 68 7 , 9 3 5 Co n t r i b u t i o n De f i c i e n c y Co v e r e d @x c e s s l ( a -b ) Pa ) ! ! ! l l * * (d ) $ $ 4, 2 4 6 , 5 1 1 * Th i s sc h e d u l e is pr e s e n t e d pr o s p e c t i v e l y be g i n n i n g wi t h th e fi s c a l ye B t en d e d De c e m b e r 31 , 20 1 5 . • • Fo r pu r p o s e s of th i s sc h e d u l e , co v e r e d pa y r o l l is de f i n e d as "p e n s i o n a b l e wa g e s " . Co n t r i b u t i o n s as a Pe r c e n t a g e o f Co v e r e d Pa~ r o l l (b i d ) 16 . 2 0 % CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A SC H E D U L E OF CI T Y ' S PR O P O R T I O N A T E SH A R E OF NE T PE N S I O N LI A B I U f Y PU B L I C EM P L O Y E E S PO L I C E & FI R E FU N D Re q u i r e d Su p p l e m e n t a r y In f o r m a t i o n (L s s t Te n Ye a r s * ) Em p l o y e r ' s Pr o p o r t i o n (P e r c e n t a g e ) of th e Ne t Pe n s i o n Fi s c a l Ye a r Eu d i n g Li a b i l i t y (A s s e t ) Ju n e 30 , 20 1 5 0. 4 4 6 0 ' , 1 , Em p l o y e i ' s Pr o p o r t i o n s t e Sh a r e (A m m m t ) of th e Ne t Pe n s i o n Li a b i l i t y (A s s e t s ) ( a ) . 5, 0 6 7 , 6 0 4 Employer's Cuvered ~ 4,031,138 • Th i s sc h e d u l e is pr e s e n t e d pr o s p e e 1 i v e l y be g i n n i n g wi t h th e fi s c a l ye a r en d e d De c e m b e r 31, 2015. •• Fo r pu r p o s e s of th i s sc h e d u l e , co v e r e d pa y r o l l is de f i n e d as "p e n s i o o . a b l e wa g e s " . Employei's Proportionate Share of the Net Pension Uability (Asset) as a Percentage of its Cuvered Payroll (a/b) 125.71% Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 86.60% IV-48 CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A SC H E D U L E OF CH A N G E S IN NE T PE N S I O N AS S E T AN D RE L A T E D RA T I O FI R E RE L I E F AS S O C I A T I O N Re q u i r e d Su p p l e m e n t a r y In f o n n a t i o n (L a s t Te n Ye a r s * ) To t a l pe n s i o n Li a b i l i t y Se r v i c e Co s t In t e r e s t Be n e f i t Pa y m e n t s Ne t Cb a n g e in To t a l Pe n s i o n Li a b i l i t y To t a l Pe n s i o n Li a b i l i t y - Be g i n n i n g of Ye a r To t a l Pe n s i o n Li a b i l i t y - En d of Ye a r Pl a n Fi d u c i a r y Ne t Po s i t i o n Co n t r i b u t i o n s - St a t e an d Lo c a l Ne t In v e s t m e n t In c o m e Be n e f i t Pa y m e n t s Ad m i n i s t r a t i v e Ex p e n s e s Ne t Ch a n g e in Pl a n Fi d u c i a r y Ne t Po s i t i o n Pl a n Fi d u c i a r y Ne t Po s i t i o n - Be g i n n i n g of Ye a r Pl a n Fi d u c i a r y Ne t Po s i t i o n - En d o f Ye a r Ne t Pe n s i o n Li a b i l i t y (A s s e t ) -E n d o f Ye a r Pl a n Fi d u c i a r y Ne t Po s i t i o n as a Pe r c e n t a g e of t b e To t a l Pe n s i o n Li a b i l i t y Co v e r e d Em p l o y e e Pa y r o l l Ne t Pe n s i o n Li a b i l i t y as a Pe r c e n t a g e of Co v e r e d Pa y r o l l _ 2 2 ! . 5 $ 85 , 9 0 4 17 8 , 2 4 2 (6 1 7 , 5 4 1 ) (3 5 3 , 3 9 5 ) 2, 7 6 9 , 1 8 9 2, 4 1 5 , 7 9 4 15 8 , 5 4 5 14 9 , 6 3 5 (6 1 7 , 5 4 1 ) (1 0 , 0 8 0 ) (3 1 9 , 4 4 1 ) 3, 8 2 7 , 6 5 1 3, 5 0 8 , 2 1 0 (1 , 0 9 2 , 4 1 6 ) 14 5 . 2 % n/ a n/ a * Th i s sc h e d u l e is pr e s e n t e d pr o s p e c t i v e l y be g i n n i n g wi t b tb e fi s c a l ye a r en d e d De c e m b e r 31 , 20 1 5 (u s i n g a De c e m b e r 31 , 20 1 4 me a s u r e m e n t da t e ) . CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A SC H E D U L E OF CI T Y CO N T R I B U T I O N S FI R E RE L I E F AS S O C I A T I O N Re q u i r e d Su p p l e m e n t a r y In f o n n a t i o n (L a s t Te n Ye a r s " ) 20 1 5 Ac t u a r i a l l y De t e n n i n e d Co n t r i b u t i o n * Co n t r i b u t i o n s in Re l a t i o n of tb e Ac t u a r i a l l y De t e n n i n e d Co n t r i b u t i o n 14 8 , 0 6 1 Co n t r i b u t i o n De f i c i e n c y (E x c e s s ) * Co v e r e d - Em p l o y e e Pa y r o l l n/ a Co n t r i b u t i o n s as a Pe r c e n t a g e of Co v e r e d Em p l o y e e Pa y r o l l n/ a No t e s to Sc b e d u l e Va l u a t i o n da t e : 2014 $ 101,453 158,545 (57,092) n/a n/a 2013 2012 _2Q!! $ 111,463 $ 111,463 $ 135,929 134,340 151,503 101,119 (22,877) (40,040) 34,810 n/a n/a n/a n/a n/a n/a Ac t n a r i l l y de t e n n i n e d co n t r i b u t i o n ra t e s ar e ca l c u l a t e d as of June 30, two years prior to tbe end of tbe fiscal ye a r in wh i c h co n t r i b u t i o n s ar e re p o r t e d . Me t b o d s an d as s u m p t i o n s us e d to de t e n n i n e co n t r i b u t i o n rates: Ac t u a r i a l co s t me t b o d En t r y ag e no r m a l cost metbod Am o r t i z a t i o n me t b o d Le v e l do l l a r am o u n t amortized on a closed basis Re m a i n i n g am o r t i z a t i o n pe r i o d 8 ye a r s As s e t va l u a t i o n me t b o d fa i r va l u e In f l a t i o n No t ap p l i c a b l e Sa l a r y in c r e a s e s No t ap p l i c a b l e In v e s t m e n t ra t e of re t u r n 7. 0 % co m p o u n d e d annually Re t i r e m e n t ag e Me m b e r s ar e as s u m e d to retire at tbe later of age 52 or 20 years of service Mo r t a l i t y Ba s e d on RP - 2 0 0 0 Annuitant Mortality Table " Th i s sc b e d u l e is pr e s e n t e d pr o s p e c t i v e l y be g i n n i n g wi t b tbe fiscal year ended December 31, 2015. * In f o n n a t i o n un a v a i l a b l e at ti m e o f au d i t IV-2 Financial Section IV-3 INDEPENDENT AUDITQR'S REPQRT 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 REsPONSmiLITY FOR THE FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of these fmancial 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 RESPONSWILITY 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 perfonn 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 asse&sments, 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. 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 m~or 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 Govermnental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions--an amendment ofGASB Statement No. 27, and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date-an amendment ofGASB Statement No. 68, during the year ended December 31, 2015. Our opinion is not modified with respect to this matter. OTHER MATTERS Required Sopplemeutary 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 infonnat:ion, 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 infonnation and comparing the information for consistency with management's responses to our inquiries, the basic fmancial 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 infonnation because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Informatjon 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 fmancial 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 Wlderlying 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 01U' opinion, the combining and individual fund statements and schedules are fairly stated, in all material respects, in relation to the basic flnancial 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. 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 IV-4 CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A MA N A G E M E N T ' S DI S C U S S I O N AN D AN A L Y S I S De c e m b e r 3 1 , 2 0 1 5 As ma n a g e m e n t of 1 h e Ci t y o f Br o o k l y n Ce n t e r (1 h e Ci t y ) , we of f e r re a d e r s of 1 h e Ci t y ' s Co m p r e h e n s i v e An n u a l Fi n a n c i a l Re p o r t (C A F R ) , 1 h i s na m r t i v e ov e r v i e w an d an a l y s i s of 1 h e fi n a n c i a l ac t i v i t i e s of 1 h e Ci t y fo r 1 h e fi s c a l ye a r en d e d De c e m b e r 31 , 2 0 1 5 . We en c o u r a g e re a d e r s to co n s i d e r 1h e in f o r m a t i o n pr e s e n t e d he r e in co n j u n c t i o n wi 1 h ad d i t i o n a l in f o r m a t i o n 1h a t we ha v e fu r n i s h e d in ou r le t t e r o f tn m s m i t t a l , wh i c h ca n be fo u n d on pa g e s 1- 8 o f th i s CA F R . Fl n a n d a l Bi g h H g h t s Th e as s e t s an d de f e r r e d ou t f l o w s o f re s o u r c e s o f 1h e Ci t y ex c e e d e d it s li a b i l i t i e s an d de f e r r e d in f l o w s o f re s o u r c e s at lh e cl o s e o f 1h e mo s t re c e n t fi s c a l ye a r by $1 3 4 , 9 1 0 , 4 2 6 (n e t pc s i t i o n ) . Of th i s am o u n t , $2 , 9 5 6 , 7 9 4 (u n r e s t r i c t e d ne t pc s i t i o n ) ma y be us e d to me e t th e Ci t y ' s on g o i n g ob l i g a t i o n s to ci t i z e n s an d cr e d i t o r s . Th e Ci t y ' s to t a l ne t pc s i t i o n in c r e a s e d by $5 , 7 9 9 , 6 4 1 ( 4. 4 9 " / o ) fr o m lh e pr e v i o u s ye a r . Th e in c r e a s e ca n be pr i m a r i l y at t r i b u t e d to ca p i t a l gr a n t s fo r pu b l i c wo r k s wh i c h in c l u d e s fu n d s sp e n t on Mu n i c i p a l St a t e Ai d St r e e t Im p r o v e m e n t s in 20 1 5 , ne w sp e c i a l as s e s s m e n t le v i e s , an d o1 h e r fu n d i n g re l a t e d to co n s t r u c t i o n of Ci t y in f r a s t t u c t u r e . As o f l h e cl o s e of 1 h e cu r r e n t fi s c a l ye a r , 1 h e Ci t y ' s go v e r n m e n t a l fu n d s re p c r t e d co m b i n e d en d i n g fu n d ba l a n c e s o f $4 8 , 4 1 8 , 9 8 8 , wh i c h is an in c r e a s e of $ 2 , 2 1 3 , 8 0 0 (4 . 7 9 " / o ) fr o m 1h e pr e v i o u s ye a r . Of 1 h e to t a l fu n d ba l a n c e , $7 , 8 6 2 , 1 7 9 (1 6 . 2 4 % ) is un a s s i g n e d , wh i c h is fr e e fr o m an y in t e r n a l or ex t e r n a l co n s t r a i n t s o f it s us e . Th e Ge n e r a l fu n d ha s a fu n d ba l a n c e of $ 1 1 , 1 7 0 , 9 1 7 at lh e cl o s e of 1 h e cu r r e n t fi s c a l ye a r . Du r i n g 20 1 5 , lh e fu n d ba l a n c e in c r e a s e d $1 5 0 , 8 3 6 (1 . 3 7 % ) fr o m 1h e pr e v i o u s ye a r . Th e un a s s i g n e d fu n d ba l a n c e at ye a r en d is $1 0 , 2 8 7 , 2 4 3 , wh i c h re p r e s e n t s 52 % o f lh e fo l l o w i n g ye a r s bu d g e t . Th e re m a i n i n g pc r t i o n of lh e fu n d ba l a n c e is no n s p e n d a b l e or as s i g n e d (f o r 1h e ca p i t a l im p r o v e m e n t fu n d i n g pl a n ) . Th e Ci t y ' s to t a l ou t s t a n d i n g bu u d e d de b t in c r e a s e d by $2 6 , 2 2 0 , 1 5 8 du r i n g 1h e cu r r e n t fi a c a l ye a r , fr o m $2 4 , 2 8 5 , 0 0 0 to $5 0 , 5 0 5 , 1 5 8 . Th e Ci t y re t i r e d $3 , 1 8 0 , 3 5 2 in pr i n c i p a l , re f u n d e d $8 , 2 6 0 , 0 0 0 in pr i n c i p a l (i n c l u d i n g a cr o a s o v e r ad v a n c e d re f u n d i n g o f $6 , 6 0 0 , 0 0 0 ) , an d ia s u e d $2 2 , 8 0 0 , 5 1 0 in co m b i n e d ne w de b t fo r lh e co n s t t u c t i o n o f a wa t e r tr e a t m e n t pl a n t an d in f r a s t t u c t u r e im p r o v e m e n t s . Th e ne t pc s i t i o n of l h e Ci t y wa s ne g a t i v e l y im p a c t e d du e to th e re q u i r e d im p l e m e n t a t i o n of GA S B St a t e m e n t No . 68 , wh i c h re l a t e d to 1h e ac c o u n t i n g tr e a t m e n t o f de f i n e d be n e f i t pe n s i o n pl a n s , sp e c i f i c a l l y lh e Pu b l i c Em p l o y e e s Re t i r e m e n t Aa s o c i a t i o n o f Mi n n e s o t a (P E R A ) an d 1h e Br o o k l y n Ce n t e r Fi r e Re l i e f As s o c i a t i o n . Th i s is a re s u l t o f a ch a n g e in an ac c o u n t i n g pr i n c i p l e an d do e s no t af f e c t 1h e Ci t y ' s ob l i g a t i o n re q u i r e m e n t s as se t by Mi n n e s o t a st a t o t e . Th i s is mo r e fu l l y de s c r i b e d in 1h e no t e s to lh e fi n a n c i a l st a t e m e n t s . Wh i l e lh e ac c o u n t i n g st a n d a r d ch a n g e d , 1h e Ci t y wi l l co n t i n u e to fu n d lh e pe n s i o n pl a n ba s e d on 1h e re q u i r e d co n t r i b u t i o n ra t e s as se t by Mi n n e s o t a st a t u t e . Ov e r v i e w o f th e Fi n a n d a l St a t e m e n t s Th e di s c u s s i o n an d an a l y s i s ar e in t e n d e d to se r v e as an in t r o d u c t i o n to lh e Ci t y ' s ba s i c fu u m c i a l st a t e m e n t s . Th e Ci t y ' s ba s i c fi n a n c i a l st a t e m e n t s in c l u d e lh r e e co m p c n e n t s : 1) go v e r n m e n t - w i d e fm a n c i a l st a t e m e n t s , 2) fu n d fm a n c i a l st a t e m e n t s , an d 3) no t e s to 1h e fi n a n c i a l st s t e m e n t s . Th i s CA F R al s o co n t a i n s o1 h e r su p p l e m e n t a r y in f o r m a t i o n in ad d i t i o n to lh e ba s i c fu u m c i a l st a t e m e n t s th e m s e l v e s . Go v e r n m e n t - Wi d e Fl n a n d a l St a t e m e n t s : Th e go v e r n m e n t - w i d e fi n a n c i a l st a t e m e n t s or e de s i g n e d to pr o v i d e re a d e r s wi l h a br o a d ov e r v i e w o f th e Ci t y ' s fi n a n c e s , in a ma n n e r si m i l a r to a pr i v a t e - - s e c t o r bu s i n e s s . Th e st a t e m e n t o f ne t pc s i t i o n pr e s e n t s in f o r m a t i o n on al l o f lh e Ci t y ' s as s e t s , de f e r r e d ou t f l o w s o f re s o u r c e s , li a b i l i t i e s , an d de f e r r e d in f l o w s o f re s o u r c e s , wi t h th e di f f e r e n c e re p o r t e d as ne t po s i t i o n . Ov e r ti m e , in c r e a s e s or de c r e a s e s in ne t po s i t i o n ma y se r v e as a us e f u l in d i c a t o r o f wh e 1 h e r lh e fi n a n c i a l pc s i t i o n o f 1h e Ci t y is im p r o v i n g or de t e r i o r a t i n g . CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A MA N A G E M E N T ' S DI S C U S S I O N AN D AN A L Y S I S De c e m b e r 3 I, 20 1 5 Th e st a t e m e n t o f ac t i v i t i e s pr e s e n t s in f o r m a t i o n sh o w i n g ho w th e City's net pcsition changed during 1he most recent fiscal year. Al l ch a n g e s in ne t pc s i t i o n or e re p c r t e d as so o n as 1 h e un d e r l y i n g event giving rise to 1he change occurs, regardless of lhe timing of lh e re l a t e d ca s h fl o w s . Th u s , re v e n u e s an d ex p e n s e s or e re p c r t e d in this ststement for some items 1hat will only result in cssh fl o w s in fu t u r e fi s c a l pe r i o d s (e . g . lU l c o l l e c t e d ta s e s an d co r n e d bu t unused vscation leave). Bo l h o f lh e go v e r n m e n t - w i d e fi n a n c i a l st a t e m e n t s di s t i n g u i s h fu n c t i o n s of lhe City lhat are principally supported by tases and in t e r g o v e r n m e n t a l re v e n u e s (g o v e r n m e n t a l ac t i v i t i e s ) fr o m ol h e r functions 1hat are intended to recover all or a significant pcrtion of 1 h e i r co s t s lh r o u g h us e r fe e s an d ch a r g e s (b u s i n e a s - t y p e ac t i v i t i e s ) . The governmental activities oflhe City include: general go v e r n m e n t , pu b l i c as f e t y , pu b l i c wo r k s , co m n n m i t y se r v i c e s , pa t k s & recreation, economic development, and interest on lo n g - t e r m de b t . Th e bu s i n e s s - ty p e ac t i v i t i e s o f 1h e Ci t y in c l u d e : municipal liquor, golf course, Earle Brown Heritage Center, wa t e r ut i l i t y , sa n i t a r y se w e r ut i l i t y , st o r m dr a i n a g e ut i l i t y , st r e e t li g h t utility, and lhe recycling utility. Th e go v e r n m e n t - w i d e fm a n c i a l st a t e m e n t s in c l u d e no t on l y 1h e Ci t y itself (known aslhe primary government), but also a legally se p a r a t e Ho u s i n g an d Re d e v e l o p m e n t Au l h o r i t y an d Ec o n o m i c De v e l o p m e n t Authority, for which lhe City is fmancially ac c o u n t a b l e . Al l h o u g h le g a l l y se p a r a t e , lh e s e co m p c n e n t un i t s , fu n c t i o n for all practical purpcses as a department oflhe City, and lh e r e f o r e ha v e be e n in c l u d e d as an in t e g r a l pa r t of lh e pr i m a r y go v e r n m e n t Th e go v e r n m e n t - w i d e fu u m c i a l st a t e m e n t s ca n be fo u n d on pa g e s 29 lhrough 31 of lhis CAFR. Fn n d Fl n a n d a l St a t e m e n t s : A fu n d is a gr o u p i n g o f re l a t e d ac c o u n t s 1hat is used to maintain control over resources 1h a t ha v e be e n se g r e g a t e d fo r sp e c i f i c ac t i v i t i e s or ob j e c t i v e s . Th e City, like state and local goveroments, uses fund accounting to en s u r e an d de m o n s t r a t e co m p l i a n c e wi l h fi n a n c e - r e l a t e d le g a l re q u i r e m e n t s . All of lhe funds of lhe City can be divided into two ca t e g o r i e s : go v e r n m e n t a l fu n d s an d pr o p r i e t a r y fu n d s . Go v e r n m e n t a l Fn n d s : Go v e r n m e n t a l fu n d s ar e us e d to ac c o u n t for essentially 1he same functions reported as governmental ac t i v i t i e s in th e go v e r n m e n t - w i d e fm a n c i a l st a t e m e n t s . Ho w e v e r , lmlike the government-wide financial statements, governmental fu n d fi n a n c i a l st a t e m e n t s fo c u s on ne a r - t e r m in f l o w s an d ou t f l o w s of spendable resources, as well as on balances of spendable re s o u r c e s av a i l a b l e at lh e en d o f lh e fi s c a l ye a r . Su c h in f o r m a t i o n may he useful in evaluating a government's near-term fmancial re q u i r e m e n t s . Be c a u s e th e fo c u s of go v e r n m e n t a l fu n d s is na r r o w e r th a n th a t of the government-wide financial statements, it is useful to co m p a r e 1h e in f o r m a t i o n pr e s e n t e d fo r go v e r n m e n t a l fu n d s wi l h si m i l a r information presented for governmental activities in lhe go v e r n m e n t - w i d e fu u m c i a l st a t e m e n t s . By do i n g so , re a d e r s ma y better understand lhe long-term impact of lhe City's near-term fm a n c i a l de c i s i o n s . Bo l h lh e go v e r n m e n t a l fu n d ba l a n c e sh e e t an d governmental fund ststement of revenues, expenditures, and ch a n g e s in fu n d ba l a n c e s pr o v i d e a re c o n c i l i a t i o n to fa c i l i t s t e th i s comparison between governmental funds and governmental ac t i v i t i e s . Th e Ci t y ma i n t a i n s 18 in d i v i d u a l go v e r n m e n t a l fu n d s . In f o r m a t i o n is presented separately in lhe governmental fund balance sheet an d in 1h e go v e r n m e n t a l fu n d st s t e m e n t o f re v e n u e s , ex p e n d i t u r e s , and changes in fund balances for lhe following: General fund, Ta x In c r e m e n t Di s t r i c t N o . 3 , Ta x In c r e m e n t Di s t r i c t No . 5 , De b t Service, Cspital Improvements, Municipal State Aid for Co n s t t u c t i o n , an d lh e In f r a s t t u c t u r e Co n s t r u c t i o n fu n d , wh i c h or e considered to be major funds. Data from lhe olher II go v e r n m e n t a l fu n d s or e co m b i n e d in t o a si n g l e , ag g r e g a t e d pr e s e n t a t i o n . Individual fund data for each oflhese nonmajor go v e r n m e n t a l fu n d s is pr o v i d e d in 1h e fo r m o f co m b i n i n g st a t e m e n t s or schedules, elsewhere in this CAFR. IV-5 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A MA N A G E M E N T ' S DI S C U S S I O N AN D AN A L Y S I S De c e m b e r 31 , 2 0 1 5 Th e Ci t y ad o p t s an an n u a l ap p r o p r i a t e d bu d g e t fo r ne a r l y al l fu n d a pr e s e n t e d in th i s CA F R . A bu d g e t a r y co m p a r i s o n st a t e m e n t ha s be e n pr o v i d e d in th e ba s i c fi n a n c i a l st a t e m e n t s fo r th e Ge n e r a l fu n d , th e Ta x In c r e m e n t Di s t r i c t No . 3 fu n d an d th e Ta x In c r e m e n t Di s t r i c t No . 5 fu n d . Th e bu d g e t a r y co m p a r i s o n st a t e m e n t s fo r an y no n m a j o r fu n d s ar e pr o v i d e d el s e w h e r e in th i s CA F R . Th e ba s i c go v e r n m e n t a l fu n d fi n a n c i a l st a t e m e n t s ca n be fo u n d on pa g e s 32 th r o u g h 41 of th i s CA F R . Pr o p r i e t a r y Fu n d s : Pr o p r i e t a r y fu n d a pr o v i d e si m i l a r in f o r m a t i o n to th e go v e r n m e n t - w i d e fi n a n c i a l st a t e m e n t s , bu t in mo r e de t a i l . Th e Ci t y ma i n t a i n s tw o di f f e r e n t ty p e s o f pr o p r i e t a r y fu n d a . En t e r p r i s e fu n d a ar e us e d to re p o r t !h e sa m e fu n c t i o n s pr e s e n t e d as bu s i n e s s - t y p e ac t i v i t i e s in th e go v e r n m e n t - w i d e fi n a n c i a l st a t e m e n t s . Th e Ci t y us e s en t e r p r i s e fu n d s to ac c o u n t fo r it s : mu n i c i p a l li q u o r , go l f co u r s e , Ea r l e Br o w n He r i t a g e Ce n t e r , wa t e r ut i l i t y , sa n i t a r y se w e r ut i l i t y , st o r m dr a i n a g e ut i l i t y , st r e e t li g h t ut i l i t y , an d re c y c l i n g ut i l i t y . Al l o f !h e Ci t y ' s en t e r p r i s e fu n d a ar e co n s i d e r e d to be ma j o r fu n d s , an d se p a r a t e in f o r m a t i o n is pr o v i d e d fo r ea c h o f !h e m in !h e ba s i c fi n a n c i a l st a t e m e n t s . In t e r n a l se r v i c e fo n d s ar e an ac c o u n t i n g de v i c e to ac c u m u l a t e an d al l o c a t e co s t s in t e r n a l l y am o n g !h e Ci t y ' s va r i o u s fu n c t i o n s . Th e Ci t y us e s in t e r n a l se r v i c e fu n d a to ac c o u n t fo r it s : ce n t r a l ga r a g e , em p l o y e e re t i r e m e n t , pe n s i o n - co o r d i n a t e d , pe n s i o n - po l i c e an d ft r e , an d co m p e n s a t e d ab s e n c e s ac c u m u l a t i o n s . Al l in t e r n a l se r v i c e fu n d a ar e co m b i n e d in t o a si n g l e , ag g r e g a t e d pr e s e n t a t i o n in th e pr o p r i e t a r y fu n d fi n a n c i a l st a t e m e n t s . In d i v i d u a l da t a fo r !h e in t e r n a l se r v i c e fu n d a is pr o v i d e d in !h e fo r m o f co m b i n i n g st a t e m e n t s el s e w h e r e in th i s CA F R . Be c a u s e al l o f 1h e s e se r v i c e s pr e d o m i n a t e l y be n e f i t go v e r n m e n t a l ra l h e r 1h a n bu s i n e s s - t y p e fu n c t i o n s , !h e y ha v e be e n in c l u d e d as go v e r n m e n t a l ac t i v i t i e s in th e go v e r n m e n t - w i d e fi n a n c i a l st a t e m e n t s . Th e ba s i c pr o p r i e t a r y fu n d fm a n c i a l st a t e m e n t s ca n be fo u n d on pa g e s 42 th r o u g h 47 of th i s CA F R . No t e s to th o Fi n a n c i a l St a t e m e n t s : Th e no t e s pr o v i d e ad d i t i o n a l in f o r m a t i o n !h a t is es s e n t i a l to a fu l l uo d e r s t a n d i n g o f !h e de t a pr o v i d e d in !h e go v e r n m e n t - w i d e an d fu n d fi n a n c i a l st a t e m e n t s . Th e no t e s to !h e fi n a n c i a l st a t e m e n t s ca n be fo u n d on pa g e s 49 th r o u g h 90 o f th i s CA F R . O t h e r In f o r m a t i o n : In ad d i t i o n to th e ba s i c fi n a n c i a l st a t e m e n t s an d ac c o m p a n y i n g no t e s , th i s re p o r t al s o pr e s e n t s ce r t a i n re q u i r e d su p p l e m e n t a r y in f o r m a t i o n , fo r ot h e r po s t - e m p l o y m e n t be n e f i t s (O P E B ) an d de f i n e d be n e f i t pe n s i o n pl a n s . Th e sc h e d u l e s o f fu n d i n g pr o g r e s s , Ci t y co n t r i b u t i o n s , Ci t y ' s pr o p o r t i o n a t e sh a r e of ne t pe n s i o n li a b i l i t y , an d sc h e d u l e o f ch a n g e s in Ne t Pe n s i o n As s e t ca n be fo u n d on pa g e s 91 th r o u g h 98 o f th i s CA F R . Th e co m b i n i n g an d bu d g e t a r y co m p a r i s o n st a t e m e n t s re f e r r e d to ea r l i e r in co n n e c t i o n wi l h no n m a j o r go v e r n m e n t a l fu n d a an d in t e r n a l se r v i c e fu n d a ar e pr e s e n t e d in u n e d i a t e l y fo l l o w i n g th e re q u i r e d su p p l e m e n t a r y in f o r m a t i o n . Co m b i n i n g an d bu d g e t a r y co m p a r i s o n st a t e r o e n t s ca n be fo u n d on pa g e s I 02 th r o u g h 14 8 o f !h i s CA F R . CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A MA N A G E M E N T ' S DI S C U S S I O N AN D AN A L Y S I S De c e m b e r 31 , 20 1 5 Go v e r n m e n t - w i d e Fi n u c W An a l y s i s As no t e d ea r l i e r , ne t po s i t i o n ma y se r v e ov e r ti m e as a us e f u l in d i c t o r of a governmenfs financial position. In the case of the City, as s e t s an d de f e r r e d ou t f l o w s of re s o u r c e s ex c e e d e d li a b i l i t i e s an d deferred inflows of resources by $134,910,426 at the close of the mo s t re c e n t fi s c a l ye a r . Th e la r g e s t po r t i o n o f th e Ci t y ' s ne t po s i t i o n ($ 9 5 , 1 4 3 , 0 3 9 or 70 . 5 2 % ) reflects its investment in capital assets, which includes: land in f r a s t r u c t u r e , bu i l d i n g s , an d ma c h i n e r y & eq u i p m e n t , le s s an y re l a t e d debt used to acquire those assets that is still outstanding. Th e Ci t y us e s th e s e ca p i t a l as s e t s to pr o v i d e se r v i c e s to ci t i z e n s ; consequently, these assets are not available for futore spending. Al t h o u g h th e Ci t y ' s in v e s t m e n t in it s ca p i t a l as s e t s is re p o r t e d ne t of related debt, it should be noted that the resources needed to re p a y th i s de b t mu s t be pr o v i d e d fr o m ot h e r so u r c e s , si n c e th e ca p i t a l assets themselves cannot be used to liquidate !hose li a b i l i t i e s . CI T Y O F BR O O K L Y N C E N T E R - SUMMARY OF NET POSITION Go v e r n m e n t a l Ac t i v i t i e s Business-I~ Activities Total 20 1 5 20 1 4 2015 2014 2015 2014 Cu r r e n t an d ol h e r as s e t s $ 67 , 4 5 6 , 6 0 1 $ 60 , 4 6 4 , 7 0 1 $ 13,392,970 $ J1,047,209 $ 80,849,571 $ 71,5Jl,910 Ca p i t a l As s e t s 56 , 5 3 3 , 0 4 8 49 , 3 9 2 , 5 7 7 66,570,149 48,537,132 123,103,197 97,929,709 To t a l as s e t s 12 3 , 9 8 9 , 6 4 9 10 9 , 8 5 7 , 2 7 8 79,963,J19 59,584,341 203,952,768 169,441,619 De f e r r e d ou t f l o w s of re s o u r c e s 2, 4 3 6 , 6 8 8 2,436,688 Lo n g - t e r m li a b i l i t i e s ou t s t a n d i n g 33 , 4 3 5 , 6 9 5 21 , 2 4 3 , 8 7 8 19,944,910 1,660,000 53,380,605 22,903,878 01 h e r li a b i l i t i e s J1 , 9 3 0 , 0 6 9 5, 2 4 6 , 6 5 0 4,364,340 2,567,444 16,294,409 7,814,094 T ot a l l i a b i l i t i e s 45 , 3 6 5 , 7 6 4 26 , 4 9 0 , 5 2 8 24,309,250 4,227,444 69,675,014 30,717,972 De f e r r e d in f l o w s of re s o u r c e s 1, 8 0 4 , 0 1 6 1,804,016 Ne t in v e s t m e n t in ca p i t a l as s e t s 47 , 9 4 1 , 8 0 0 42 , 9 4 7 , 5 7 7 4 7 , 2 0 1 , 2 3 9 4 8 , 5 3 7 , 1 3 2 95,143,039 91,484,709 Re s t r i c t e d 36 , 8 1 0 , 5 9 3 28 , 0 6 1 , 9 7 7 36,810,593 28,061,977 Un r e s t r i c t e d (5 , 4 9 5 , 8 3 6 ) 12 , 3 5 7 , 1 9 6 8,452,630 6,819,765 2,956,794 19,176,961 To t a l Ne t Po s i t i o n $ 79 , 2 5 6 , 5 5 7 j_ 8 3 , 3 6 6 , 7 5 _ ( ) _ _$ 5.5,653,869 $ 55,356,897 $ 134,910,426 s 138,723,647 At !h e en d o f !h e cu r r e n t fi s c a l ye a r , th e Ci t y is ab l e to re p o r t po s i t i v e balances in all three categories of net position, bolh for !he go v e r n m e n t as a wh o l e , as we l l as fo r it s se p a r a t e go v e r n m e n t a l an d business-type activities wilh !he exception of unrestricted ne t po s i t i o n in th e go v e r n m e n t a l ac t i v i t i e s . A po r t i o n o f th e Ci t y ' s ne t po s i t i o n (2 7 . 2 9 % ) re p t e s e n t s re s o u r c e s !hat are subject to external restrictions on how !hey may be us e d . Th e re m a i n i n g po r t i o n (2 . 1 9 % ) ma y be us e d to me e t !h e Ci t y ' s ongoing obligations. Th e go v e r n m e n t a l ac t i v i t i e s ha v e a si g n i f i c a n t in c r e a s e in cu r r e n t assets from the previous year. The largest factor in this increase is wi l h !h e ca s h wi l h ft s c a l ag e n t s . At th e en d of 2 0 1 5 , th e Ci t y ha d $6,782,081 in escrow as part of a crossover advanced refunding. Th e bu s i n e s s - t y p e ac t i v i t i e s ha d la r g e in c r e a s e s in ca p i t a l as s e t s an d long-term liabilities. These increases are primarily dne to !h e Ci t y ' s co n s t r n c t i o n of a wa t e r tr e a t m e n t pl a n t , wh i c h is be i n g funded wilh debt proceeda from !he Minnesota Public Fa c i l i t i e s Au l h o r i t y (P F A ) lo a n pr o g r a m . Th e go v e r n m e n t a l ac t i v i t i e s , al s o ha d a si g n i f i c a n t in c r e a s e in !h e amount of deferred outflows of resources, long-term liabilities, an d de f e r r e d in f l o w s o f re s o u r c e s fr o m !h e pr e v i o u s ye a r . Th e pr i m a r y reason for 1he increase was the implementation ofGASB St a t e m e n t No . 68 in wh i c h !h e Ci t y is re q u i r e d to re p o r t it s pr o p o r t i o n a t e share of !he Minnesota Public Employees Retirement As s o c i a t i o n (P E R A ) ne t pe n s i o n li a b i l i t i e s . Re c o r d i n g th e li a b i l i t y does not change the City's future contibution requirements or ob l i g a t i o n s un d e r th e pl a n s , wh i c h ar e de t e r m i n e d by Mi n n e s o t a statutes. IV-8 CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A MA N A G E M E N T ' S DI S C U S S I O N AN D AN A L Y S I S De c e m b e r 31 , 20 1 5 Th e In f r a s t r u c t u r e Co n s t r u c t i o n fu n d ha s an en d i n g de f i c i t fu n d ba l a n c e of $ 1 8 3 , 1 4 5 a in c r e a s e of $ 2 8 0 , 0 4 8 (6 0 . 4 6 % ) fr o m th e pr e v i o u s ye a r . Th e fu n d in c u r r e d $1 , 4 5 5 , 1 2 8 of ca p i t a l ex p e n d i t u r e s du r i n g th e ye a r fo r th e Fr e e w a y Pa r k Ar e a an d 63 r d Av e n u e ne i g h b o r h o o d re - c o n s t r u c t i o n pr o j e c t s . Pr o p r i e t a r y Fu n d s : Th e Ci t y ' s pr o p r i e t a r y fu n d s pr o v i d e th e sa m e ty p e of in f o r m a t i o n pr e s e n t e d as bu s i n e s s - t y p e ac t i v i t i e s fo u n d in th e go v e r n m e n t - w i d e fi n a n c i a l st a t e m e n t s , bu t in mo r e de t a i l . Th e en t e r p r i s e fu n d s ha v e a co m b i n e d en d i n g ne t p o s i t i o n o f $ 5 7 , 6 4 0 , 2 1 0 , of wh i c h $1 0 , 4 3 8 , 9 7 1 (1 8 . 1 1 % ) is un r e s t r i c t e d an d ca n be us e d to me e t th e op e r a t i o n s . As a me a s u r e of th e li q u i d i t y of th e en t e r p r i s e fu n d s , it ma y be us e f u l to co m p a r e th e un r e s t r i c t e d ne t po s i t i o n to th e op e m t i n g ex p e n s e s . Fo r th e cu r r e n t ye a r , un r e s t r i c t e d ne t po s i t i o n is 83 . 9 2 % of th e cu r r e n t ye a r op e r a t i n g ex p e n s e s . Ot h e r fa c t o r s co n c e r n i n g th e fi n a n c e s of th e s e fu n d s ha v e al r e a d y be e n ad d r e s s e d in th e di s c u s s i o n of th e Ci t y ' s bu s i n e s s - t y p e ac t i v i t i e s . Ge a e r a l Fu a d Bu d g e t a r v H! g h H g b t s Du r i n g th e ye a r , th e r e we r e no am e n d m e n t s to th e Ge n e r a l Fu n d bu d g e t . Ac t u a l re v e n u e s an d ot h e r fm a o c i n g so u r c e s we r e un d e r th e ad o p t e d bu d g e t by $2 7 , 6 5 4 . Th e ma j o r co n t r i b u t o r to th i s de c r e a s e wa s in de l i n q u e n t pr o p e r t y ta x co l l e c t i o n s , th e Ci t y ha d a ne g a t i v e $4 8 , 6 7 2 as a re s u l t of ta x re f u n d s an d wa s un d e r bu d g e t fo r ex c e s s ta x re v e n u e s by $1 4 1 , 3 2 0 . Ac t u a l ex p e n d i t u r e s an d ot h e r fi n a n c i n g us e s we r e lo w e r th a n th e f" m a l bu d g e t fo r th e ye a r by $1 7 8 , 4 9 0 . Th i s wa s th e re s u l t of a no n - b u d g e t e d tr a n s f e r of $9 0 8 , 7 6 1 to th e Ca p i t a l Im p r o v e m e n t Fu n d in ac c o r d a n c e wi t h Ci t y po l i c y to tr a n s f e r un a s s i g n e d fu n d ba l a n c e of th e Ge n e r a l Fu n d th a t ex c e e d s 52 % of Ge n e r a l Fu n d bu d g e t e d ex p e n d i t u r e s fo l l o w i n g th e co m p l e t i o n of th e an n u a l au d i t . Th e re d u c t i o n in fu n d ba l a n c e fr o m th e tr a n s f e r wa s of f s e t by sa v i n g s fr o m se v e r a l st a f f po s i t i o n s be i n g le f t un f i l l e d du r i n g a po r t i o n of 2 0 1 5 , in th e Po l i c e an d Pu b l i c Wo r k s de p a r t m e n t s . CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A MA N A G E M E N T ' S DI S C U S S I O N AN D AN A L Y S I S De c e m b e r 31 , 20 1 5 Ca p i t a l As s e t an d De b t Ad m i a i s t r a t i o a Ca p i t a l As s e t s : Th e Ci t y ' s in v e s t m e n t in ca p i t a l as s e t s fo r it s go v e r n m e n t a l and business-type activities at the end of the cu r r e n t ye a r , am o u n t s to $1 2 3 , 1 0 3 , 1 9 7 (n e t of ac c u m u l a t e d de p r e c i a t i o n ) . This investment in capital assets includes: land, bu i l d i n g s , in f r a s t r u c t u r e , ma c h i n e r y an d eq u i p m e n t an d co n s t r u c t i o n in progress. The City's investment in capital assets in c r e a a e d $2 5 , 1 7 3 , 4 8 8 (2 5 . 7 1 % ) fr o m th e pr e v i o u s ye a r . Ma j o r ca p i t a l as s e t ev e n t s du r i n g th e cu r r e n t ye a r in c l u d e d th e fo l l o w i n g : Th e Fr e e w a y Pa r k Ar e a Ne i g h b o r h o o d in f r a s t r u c t u r e re c o n s t r u c t i o n project is near completion, with $8,791,044 of ad d i t i o n s to co n s t r u c t i o n in pr o g r e s s . Th i s am o u n t in c l u d e s work on streets, as well as water, sewer and storm utilities. Th e 63 r d Av e n u e Ne i g h b o r h o o d in f r a s t r u c t u r e re c o n s t r u c t i o n project is near completion, with $4,676,392 of additions to co n s t r u c t i o n in pr o g r e s s . Th i s am o t m t in c l u d e s wo r k on str e e t s ~ as well as water, sewer and storm utilities. Th e Ci t y co n t i n u e d co n s t r u c t i o n of a wa t e r tr e a t m e n t pl a n t At the end of 2015, the City had completed $19,371,703 of the $1 9 , 6 6 2 , 3 5 2 pr o j e c t . Th e pr o j e c t is be i n g fu n d e d th r o u g h a low interest loan (1%) with the Minnesota Public Facilities Au t h o r i t y . Th e wa t e r tr e a t m e n t pl a n t be c a m e op e r a t i o n a l in January 2016. Th e co n s t r u c t i o n of a Co m m u n i t y Am p h i t h e a t e r is ne a r co m p l e t i o n , with $632,925 of additions to construction in progress. Th e Am p h i t h e s t e r wa s pr i m a r i l y fu n d e d th r o u g h do n a t i o n s . Th e Ci t y is ne a r co m p l e t i o n wi t h a Ci t y Ha l V C o m m u n i t y Ce n t e r reroudel, with $3,519,011 of additions to construction in pr o g r e s s . Th e pr o j e c t in c l u d e d ro o f re p l a c e m e n t an d me c h a n i c a l and electrical upgrades. Th e Ce n t r a l Ga r a g e re p l a c e d 17 pi e c e s of ma c h i n e r y & eq u i p m e n t during the year. The total outlay for machinery and eq u i p m e n t du r i n g th e ye a r wa s $1 , 0 3 9 , 5 3 0 . Th e ad d i t i o n s in c l u d e , but are not limited to: mowers, police vehicles, a pu b l i c wo r k s tr u c k an d a st r e e t sw e e p e r . CI T Y OF BR O O K L Y N CE N T E R - CAPITAL ASSETS (n e t o f de p r e c i a t i o n ) Go v e r n m e n t a l Ac t i v i t i e s Business-!l,Ee Activities Total 20 1 5 20 1 4 2015 2014 2015 2014 La n d $ 3, 5 3 7 , 4 7 3 $ 3, 5 3 7 , 4 7 3 $ 3,194,983 $ 3,194,983 $ 6,732,456 $ 6,732,456 Ea s e m e n t s 90 , 5 9 4 95 , 1 3 2 11,976 16,039 102,570 111,171 Co n s t r u c t i o n in pr o g r e s s 9, 0 1 1 , 1 3 8 3, 2 7 6 , 2 1 3 25,636,604 8,425,511 34,647,742 11,701,724 La n d im p r o v e m e n t s 179,944 196,571 179,944 196,571 Ot h e r pa r k im p r o v e m e n t s 5, 7 2 8 , 4 9 6 5, 9 5 5 , 8 8 9 5,728,496 5,955,889 Bu i l d i n g s an d st r u c t u r e s 7, 6 2 6 , 6 8 1 7, 7 1 8 , 9 3 0 2,723,125 3,307,370 10,349,806 11,026,300 Ma c h i n e r y an d eq u i p m e n t 3, 9 6 3 , 1 6 8 3, 7 6 3 , 0 0 3 273,538 297,976 4,236,706 4,060,979 St r e e t s 26 , 5 7 5 , 4 9 8 25 , 0 4 5 , 9 3 8 26,575,498 25,045,938 St r e e t li g h t sy s t e m s 634,678 630,342 634,678 630,342 Ma i n s an d li n e s 33,915,301 32,468,340 33,915,301 32,468,340 To t a l $ 56 , 5 3 3 , 0 4 8 $ 49 , 3 9 2 , 5 7 8 $ 66,570,149 $ 48,537,132 $ 123,103,197 $ 97,929,710 Ad d i t i o n a l in f o r m a t i o n on th e Ci t y ' s ca p i t a l as s e t s ca n be fo u n d in Note 3 (C) on psges 64 through 65 of this CAFR. IV-9 CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A MA N A G E M E N T ' S DI S C U S S I O N AN D AN A L Y S I S De c e m b e r 31 , 2 0 1 5 Lo n g - T e r m De b t : At th e en d of th e cu r r e n t ye a r , th e Ci t y ha d ou t s t a n d i n g lo n g - t e m 1 bo n d e d de b t o f $5 0 , 5 0 5 , 1 5 8 . CI T Y OF BR O O K L Y N CE N T E R - OU T S T A N D I N G DE B T Go v e r n m e n t a l Ac t i v i t i e s Bu s i n e s s - ! l : E e Ac t i v i t i e s To t a l 20 1 5 20 1 4 20 1 5 20 1 4 20 1 5 Ge n e r a l ob l i g a t i o n ta x in c r e m e n t bo n d s $ 20 , 8 8 5 , 0 0 0 $ 16 , 0 4 0 , 0 0 0 20 , 8 8 5 , 0 0 0 $ Ge n e r a l ob l i g a t i o n im p r o v e m e n t bo n d s 8, 5 9 1 , 2 4 8 6, 4 4 5 , 0 0 0 8, 5 9 1 , 2 4 8 Ge n e r a l ob l i g a t i o n re v e n u e bo n d s 3, 4 8 3 , 7 5 2 1, 8 0 0 , 0 0 0 3, 4 8 3 , 7 5 2 Ge n e r a l ob l i g a t i o n re v e n u e no t e s 17 , 5 4 5 , 1 5 8 17 , 5 4 5 , 1 5 8 Co m p e n s a t e d ab s e n c e s 1, 2 5 4 , 8 5 1 1, 2 8 2 , 0 9 3 1, 2 5 4 , 8 5 1 Ne t pe n s i o n li a b i l i t y 11 , 5 0 9 , 4 7 6 11 , 5 0 9 , 4 7 6 Ne t OP E B ob l i g a t i o n 71 0 , 6 0 5 62 9 , 9 9 4 71 0 , 6 0 5 To t a l $ 42 , 9 5 1 , 1 8 0 $ 24 , 3 9 7 , 0 8 7 $ 21 , 0 2 8 , 9 1 0 $ 1, 8 0 0 , 0 0 0 63 , 9 8 0 , 0 9 0 $ 20 1 4 16 , 0 4 0 , 0 0 0 6, 4 4 5 , 0 0 0 1, 8 0 0 , 0 0 0 1, 2 8 2 , 0 9 3 62 9 , 9 9 4 26 , 1 9 7 , 0 8 7 Th e Ci t y ' s to t a l bo n d e d de b t in c r e a s e d $2 6 , 2 2 0 , 1 5 8 (1 0 7 . 9 7 % ) fr o m th e pr e v i o u s ye a r . Th e Ci t y re t i r e d $3 , 1 8 0 , 3 5 2 in pr i n c i p a l , re f u n d e d $8 , 2 6 0 , 0 0 0 in pr i n c i p a l (i n c l u d i n g a cr o s s o v e r ad v a n c e d re f u n d i n g of $ 6 , 6 0 0 , 0 0 0 ) , an d is s u e d $2 2 , 8 0 0 , 5 1 0 in co m b i n e d ne w de b t fo r th e co n s t r u c t i o n of a wa t e r tr e a t m e n t pl a n t an d in f r a s t r u c t u r e im p r o v e m e n t s . Th e Ci t y ' s bo n d ra t i n g is A A fr o m St a n d a r d & Po o r ' s Ra t i n g s Se r v i c e s . St a t e st a t u t e s li m i t th e am o u n t o f ge n e r a l ob l i g a t i o n de b t a Mi n n e s o t a ci t y ma y is s u e to 3% of to t a l Es t i m a t e d Ma r k e t Va l u e . Th e cu r r e n t de b t li m i t a t i o n fo r th e Ci t y is $4 4 , 6 8 6 , 4 4 2 . Th e Ci t y do e s no t cu r r e n t l y ha v e an y de b t ou t s t a n d i n g th a t is ap p l i c a b l e to th e li m i t . Ad d i t i o n a l in f o r m a t i o n on th e Ci t y ' s lo n g - t e r m de b t ca n be fo u n d in No t e 3 (F ) on pa g e s 69 th r o u g h 72 of th i s CA F R Ec o n o m i c Fa c t o r s an d Ne x t Ye a r ' s Bu d g e t an d Ra t e s Al l o f th e s e fa c t o r s we r e co n s i d e r e d in th e pr e p a r a t i o n of th e Ci t y ' s bu d g e t fo r th e 20 1 6 fi s c a l ye a r . • Th e un e m p l o y m e n t ra t e fo r th e Ci t y is 4. 0 0 % at th e en d of th e 20 1 5 fi s c a l ye a r , wh i c h is a in c r e a s e fr o m th e ra t e of 3 . 6 0 % a ye a r ag o . Th i s co m p a r e s to th e St a t e ' s av e r a g e un e m p l o y m e n t ra t e o f 3. 70 % an d th e na t i o n a l av e r a g e of 4. 8 0 % . • An in c r e a s e in es t i m a t e d ta x a b l e ma r k e t va l u e o f 6. 4 pe r c e n t fr o m ta x e s pa y a b l e 20 1 5 to 20 1 6 . Th e ta x a b l e ma r k e t va l u e in c r e a s e wa s dr i v e n by si g n i f i c a n t in c r e a s e s in re s i d e n t i a l pr o p e r t y va l u e s (1 1 . 4 % ) . • Co n t i n u i n g re d e v e l o p m e n t th r o u g h o u t th e Ci t y wi l l yi e l d ne t gr o w t h in ta x ba s e an d st a b i l i t y in ta x ba s e al o n g wi t h pr o v i d i n g jo b gr o w t h in th e Ci t y . • De v e l o p m e n t ac t i v i t y co n t i n u e s at th e Sh i n g l e Cr e e k Cr o s s i n g si t e , th e bu s i n e s s ac t i v i t y in 20 1 5 in c l u d e d th e co m p l e t i o n o f th e Di s c o u n t Ti r e St o r e , Ki d ' s Fo o t Lo c k e r , Ru e 21 , Vi l l a , a le a s e wi t h Ca r i b o u Co f f e e an d Br u e g g e r s Ba g e l an d a PU D am e n d m e n t to th e fo r m e r Ko h l ' s si t e wa s ap p r o v e d to ad d an ad d i t i o n a l 9 , 4 0 0 sq u a r e fo o t re t a i l bu i l d i n g . • In De c e m b e r 20 1 3 th e ED A pu r c h a s e d a 23 . 2 ac r e pr o p e r t y fo r m e r l y kn o w n as th e Br o o k d a l e Sq u a r e sh o p p i n g ce n t e r wh i c h ad j o i n s th e ED A' s 8. 4 ac r e fo r m e r Br o o k d a l e Fo r d de a l e r s h i p si t e . Th e ED A ha s en t e r e d in t o a pr e l i m i n a r y de v e l o p m e n t ag r e e m e n t wi t h Sa n d De v e l o p m e n t Co m p a n y fo r th e ph a s e d de v e l o p m e n t of se v e n ap a r t m e n t bu i l d i n g s , pr o v i d i n g 74 8 ma r k e t ra t e ap a r t m e n t un i t s wi t h un d e r g r o u n d pa r k i n g , an d pr o j e c t am e n i t i e s de s i g n e d fo r to d a y ' s ap a r t m e n t li f e st y l e wi t h i n th e Me t r o ar e a . Th e in i t i a l ph a s e o f th i s de v e l o p m e n t in c l u d e s tw o ap a r t m e n t bu i l d i n g s wi t h 30 0 un i t s an d a ce n t r a l pa r k ar e a wi t h a re c r e a t i o n a l bu i l d i n g , po o l an d pa t i o ar e a s . CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A MA N A G E M E N T ' S DI S C U S S I O N AN D AN A L Y S I S De c e m b e r 31 , 2 0 1 5 He n n e p i n Co u n t y , Mi n n e s o t a De p a r t m e n t of Em p l o y m e n t an d Economic Development (DEED), and the Metropolitan Council ap p r o v e d th r e e gr a n t ap p l i c a t i o n s to t a l i n g $1 . 5 mi l l i o n to co m p l e t e a soils investigation and remediation action plan for the fo r m e r Ho w e Fe r t i l i z e r Si t e . Th i s en a b l e d a de v e l o p e r to pr o c e e d with the development of a 61,000 square foot building that wa s co m p l e t e d an d le a s e d in 20 1 5 . Th e ED A ac q u i r e d th e fo r m e r Ch r y s l e r Au t o De a l e r s h i p , al s o known as Cars with Heart, a five acre commercial site at 61 2 1 Br o o k l y n Bo u l e v a r d . Th e bu i l d i n g s ha v e be e n de m o l i s h e d and the EDA has approved plans and entered into a de v e l o p m e n t ag r e e m e n t fo r th e co n s t r u c t i o n o f a 15 6 un i t se n i o r apartment building that provides affordable assisted care op p o r t u n i t i e s fo r se n i o r ci t i z e n s . Th e Th r e e Ri v e r s Pa r k Di s t r i c t pr o v i d e d fu n d i n g fo r a re a l i g n m e n t of the Twin Lakes Regional Trail Corridor within the ea s t e r n po r t i o n o f th e pl a n n e d re n o v a t i o n o f th e La k e Po i n t e Ap a r t m e n t s . Planning for the 2016-17 construction of an ex t e n s i o n o f th i s re g i o n a l tr a i l al o n g 57 t h A ve n u e ea s t of Hi g h w a y 100, to connect the Mississippi Regional Corridor is un d e r w a y . Th e Br o o k l y n Bo u l e v a r d br i d g e an d tr a i l im p r o v e m e n t s ov e r State Highway 100 were completed and a cooperative grant ap p l i c a t i o n wi t h He n n e p i n Co u n t y ha s re c e i v e d fa v o r a b l e sc o r i n g for Federal funding of the reconstruction of the southern po r t i o n o f th e Br o o k l y n Bo u l e v a r d Co r r i d o r St u d y (s o u t h e r n bo r d e r ofthe City to County Road 10/Bass Lake Road). Co n s t r u c t i o n is pl a r m e d fo r 20 1 8 . In 20 1 5 , co n s t r u c t i o n o f th e Ne w Mi l l e n n i u m Ac a d e m y , a 55 0 student charter school commenced on the former Malmborg's Nu r s e r y si t e an d is sc h e d u l e d to op e n in th e fa l l of 20 1 6 . • Th e Ci t y ' s wa t e r tr e a t m e n t pl a n t is fu l l y op e r a t i o n a l be g i n n i n g in January 2016, which reduced the level of manganese from ou r wa t e r su p p l y . Th e es t i m a t e d to t a l co s t fo r th e wa t e r tr e a t m e n t plant is $19.66 million. Financing is being provided th r o u g h a lo w in t e r e s t lo a n un d e r th e Dr i n k i n g Wa t e r Re v o l v i n g Fund through the Minnesota Public Facilities (PFA) loan pr o g r a m . Th e lo a n wi l l be re p a i d ov e r tw e n t y ye a r s at an in t e r e s t rate of one percent. • Ut i l i t y ra t e s ha v e be e n pr o j e c t e d in t o a ro l l i n g 15 ye a r mo d e l to allow for funding of system maintenance, technology changes an d ca p i t a l re p a i r an d re p l a c e m e n t s wh i l e mo d e r a t i n g an n u a l ra t e adjustments. On January 1, 2016 the sanitary sewer utility qu a r t e r l y ba s e ch a r g e in c r e a s e d fr o m $7 8 . 4 5 to $8 0 . 0 2 . Th e wa t e r utility rates increased for both base and consumption ch a r g e s . Th e qu a r t e r l y ba s e ch a r g e of $ 1 0 . 0 0 pe r re s i d e n t i a l an d commercial irrigation meter increased to $12.20 per me t e r . Th e co n s u m p t i o n ch a r g e of $ 1 . 6 6 pe r 1, 0 0 0 ga l l o n s (u p to 30,000 gallons per quarter), increased by $0.37 per 1,000 ga l l o n s . Mu l t i - f a m i l y , co m m e r c i a l an d in d u s t r i a l pr o p e r t i e s pa y a quarterly base charge depending on the size of the meters an d a co n s m n p t i o n ra t e pe r 1, 0 0 0 ga l l o n s . Th e co n s u n 1 p t i o n ra t e increased $0.56 to $2.53 per 1,000 gallons. Th e Ci t y ' s po l i c y is to ma i n t a i n a Ge n e r a l fu n d un a s s i g n e d fu n d balance of 50% -52% of the ensuing year's budgeted General fu n d op e r a t i o n s . Ad d i t i o n a l l y th e Ci t y ' s ca p i t a l pr o j e c t fu n d i n g po l i c y that transfers the amount of fund balance exceeding 52% to th e Ca p i t a l Im p r o v e m e n t s fu n d fo l l o w i n g th e co m p l e t e d au d i t of the City's CAFR The City transferred $908,761 for Capital Im p r o v e m e n t s fr o m th e Ge n e r a l Fu n d . Th e Ci t y ha s as s i g n e d $8 0 4 , 8 1 5 (the amount exceeding 52%) for capital improvements wi t h i n th e Ge n e r a l Fu n d . To t a l un a s s i g n e d an d as s i g n e d fu n d ba l a n c e at the end of 2015 was $11,092,058 (56.07%) of the ad o p t e d 20 1 6 bu d g e t e d ex p e n d i t u r e s . Re q u e s t s fo r In f o r m a t i o n Th i s fm a n c i a l re p o r t is de s i g n e d to pr o v i d e a ge n e r a l ov e r v i e w of the City of Brooklyn Center's finances for all those with an in t e r e s t in th e go v e r n m e n t ' s fi n a n c e s . Qu e s t i o n s co n c e r n i n g an y o f the information provided in this report or requests for additional fm a n c i a l in f o r m a t i o n sh o u l d be ad d r e s s e d to th e Fi n a n c e Di r e c t o r , 6301 Shingle Creek Parkway, Brooklyn Center, MN 55430. IV-10 Basic Financial Statements IV-12 CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A ST A T E M E N T OF AC T I V I T I E S Fo r th e Ye a r En d e d De c e m b e r 31 , 2 0 1 5 FU N C T I O N _ S L P R O G R A M § Go v e r n m e n t ac t i v i t i e s : Ge n e r a l go v e r n m e n t Pu b l i c sa f e t y Pu b l i c wo r k s Co m m u n i t y se r v i c e s Pa r k s an d re c r e a t i o n Ec o n o m i c de v e l o p m e n t In t e r e s t on lo n g - t e r m de b t To t a l go v e r n m e n t ac t i v i t i e s Bu s i n e s s - t y p e ac t i v i t i e s : Mu n i c i p a l li q u o r Go l f co u r s e Ea r l e Br o w n He r i t a g e Ce n t e r Wa t e r ut i l i t y Sa n i t a r y se w e r ut i l i t y St o r m dr a i n a g e ut i l i t y St r e e t li g h t ut i l i t y Re c y c l i n g ut i l i t y To t a l bu s i n e s s - t y p e ac t i v i t i e s To t a l ~ e n s e s $ 3, 5 2 7 , 3 2 3 10 , 7 0 7 , 6 0 2 3, 8 6 7 , 4 0 6 13 5 , 6 0 4 3, 0 5 3 , 3 2 8 5, 4 1 9 , 3 0 4 72 3 , 0 0 0 27 , 4 3 3 , 5 6 7 5, 8 1 6 , 3 6 3 27 0 , 3 0 7 4, 7 3 9 , 5 4 3 2, 1 7 9 , 8 9 2 3, 6 9 4 , 8 8 0 1, 8 8 3 , 1 5 4 28 1 , 6 6 1 29 2 , 2 8 2 19 , 1 5 8 , 0 8 2 $ 46 , 5 9 1 , 6 4 9 Th e no t e s to th e fm a n c i a l st a t e m e n t s ar e an in t e g r a l pa r t o f th i s st a t e m e n t . Ch a r g e s Fo r Se r v i c e s $ 65 3 , 5 3 5 54 8 , 6 6 9 22 6 , 6 4 5 56 4 , 2 1 7 22 5 , 0 5 7 - 2, 2 1 8 , 1 2 3 6, 0 6 1 , 6 8 0 20 8 , 3 4 6 4, 6 4 9 , 1 6 2 2, 6 4 0 , 6 6 5 4, 0 9 5 , 0 1 7 1, 6 3 5 , 6 5 5 46 4 , 2 5 8 31 5 , 4 3 4 20 , 0 7 0 , 2 1 7 $ 22 , 2 8 8 , 3 4 0 Pr o s r a m Re v e n u e s Op e r a t i n g Ca p i t a l Gr a n t s an d Gr a n t s an d Co n t r i b u t i o n s C o n t r i b u t i o n s $ - $ - 1, 1 9 8 , 5 4 4 - 11 0 , 0 0 0 5, 1 5 1 , 3 0 6 98 , 6 9 4 33 , 0 7 5 1, 1 9 8 , 2 3 9 - - - 2, 6 0 5 , 4 7 7 5, 1 8 4 , 3 8 1 6, 7 4 6 -- 17 , 8 3 2 5, 9 4 4 - - - - 30 2 2 2 $ 2, 6 3 5 , 9 9 9 $ 5, 1 8 4 , 3 8 1 Ge n e r a l re v e n u e s : Pr o p e r t y ta x e s Ta x in c r e m e n t s Lo d g i n g ta x e s Gr a n t s an d co n t n o u t i o n s no t re s t r i c t e d to sp e c i f i c pr o g r a m s Un r e s t r i c t e d in v e s t m e n t ea r n i n g s Ga i n on di s p o s a l o f ca p i t a l as s e t Tr a n s f e r s Tr a n s f e r s - ca p i t a l as s e t s To t a l ge n e r a l re v e n u e s an d tr a n s f e r s Ch a n g e in ne t po s i t i o n Ne t po s i t i o n - Ja n u a r y 1 Ch a n g e in Ac c o u n t i n g Pr i n c i p l e - Pe n s i o n Ne t po s i t i o n - Ja n u a r y 1, re s t a t e d Ne t po s i t i o n - De c e m b e r 31 Ne t !E!I!!:!!sel Revenue and Chanses in Net Position Go v e r n m e n t a l Business-Type Ac t i v i t i e s Activities Total $ (2 , 8 7 3 , 788) $ $ (2,873,788) (8 , 9 6 0 , 3 8 9 ) (8,960,389) 1, 6 2 0 , 5 4 5 1,620,545 (135,604) -(135,604) (2 , 3 5 7 ,342) (2,357 ,342) (3 , 9 9 6 , 0 0 8 ) (3,996,008) (723,000) -(723,000) (1 7 ,425,586) -(17 ,425,586) 245,317 245,317 -(55,215) (55,215) -(90,381) (90,381) 478,605 478,605 -406,081 406,081 (247,499) (247,499) 182,597 182,597 23,152 23,152 -942 657 942 657 (1 7 , 4 2 5 , 5 8 6 ~ 942,657 __ (16,482,929) 15 , 3 2 0 , 9 9 8 -15,320,998 3, 8 0 5 , 3 6 7 3,805,367 1, 0 7 5 , 4 2 5 -1,075,425 1, 6 7 0 , 9 2 8 -1,670,928 254,366 127,686 382,052 27,800 -27,800 236,312 (236,312) !1 , 0 3 4 , 5 7 4 l 1 034 574 21 , 3 5 6 , 6 2 2 925,948 --22,282,570 3, 9 3 1 , 0 3 6 1,868,605 5,799,641 83 , 3 6 6 , 7 5 0 55,356,897 138,723,647 !8 , 0 4 1 J 2 9 l !1,571,633l !9,612,862l 75 , 3 2 5 , 5 2 1 53,785J64 129,110,785 $ 79 , 2 5 6 , 5 5 7 $ 55,653,869 $ 134,910,426 IV-13 CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A BA L A N C E SH E E T GO V E R N M E N T A L FU N D S De c e m b e r 31 , 20 1 5 AS S E T S Ca s h an d in v e s t m e n t s Ca s h wi t h fi s c a l ag e n t s Re c e i v a b l e s : Ac c o u n t s - ne t Cu r r e n t ta x e s De l i n q u e n t ta x e s Sp e c i a l as s e s s m e n t s Du e fr o m ot h e r fu n d s Du e fr o m ot h e r go v e r n m e n t s No t e s re c e i v a b l e In v e n t o r i e s Pr e p a i d it e m s Ad v a n c e s to ot h e r fu n d s As s e t s he l d fo r re s a l e To t a l as s e t s LI A B I L I T I E S Ac c o u n t s pa y a b l e Co n t r a c t s pa y a b l e Ac c r u e d sa l a r i e s an d wa g e s Du e to ot h e r fu n d s Du e to ot h e r go v e r n m e n t s De p o s i t s pa y a b l e Un e a r n e d re v e n u e Ad v a n c e s fr o m ot h e r fu n d s To t a l li a b i l i t i e s DE F E R R E D IN F L O W S OF RE S O U R C E S Un a v a i l a b l e re v e n u e - pr o p e r t y ta x e s Un a v a i l a b l e re v e n u e - ta x in c r e m e n t s Un a v a i l a b l e re v e n u e - sp e c i a l as s e s s m e n t s Un a v a i l a b l e re v e n u e - no t e s re c e i v a b l e Un a v a i l a b l e re v e n u e - in t e r g o v e r n m e n t a l To t a l de f e r r e d in f l o w s o f re s o u r c e s FU N D BA L A N C E S (D E F I C I T S ) No n s p e n d a b l e Re s t r i c t e d Co m m i t t e d As s i g n e d Un a s s i g n e d To t a l fu n d ba l a n c e s (d e f i c i t s ) To t a l li a b i l i t i e s , de f e r r e d in f l o w s o f re s o u r c e s an d fu n d ba l a n c e s (d e f i c i t s ) Ge n e r a l $ 11 , 4 5 7 , 2 5 4 - 11 6 , 3 9 8 67 , 7 7 2 26 8 , 5 8 6 13 7 , 5 8 2 14 4 , 9 8 2 40 , 0 8 0 44 , 0 4 4 34 , 8 1 5 - 12 , 3 1 1 , 5 1 3 34 3 , 6 7 8 15 5 , 0 0 1 - 26 , 0 2 6 21 6 , 8 4 6 1, 1 0 0 - 74 2 65 1 26 8 , 5 8 6 - 12 9 , 3 5 9 - 39 7 , 9 4 5 78 , 8 5 9 80 4 , 8 1 5 10 ~ 8 7 , 2 4 3 11 , 1 7 0 , 9 1 7 $ 12 , 3 1 1 , 5 1 3 Th e no t e s to th e fi n a n c i a l st a t e m e n t s ar e an in t e g r a l pa r t o f th i s st a t e m e n t . Ta x Ta x In c r e m e n t I n c r e m e n t De b t Di s t r i c t No . 3 Di s t r i c t No . 5 Se r v i c e $ 1, 6 6 7 , 2 0 0 $ 10 4 , 8 5 9 $ 2, 0 4 8 , 0 2 1 6, 7 8 2 , 0 8 1 19 , 8 0 7 - 16 , 2 7 5 1, 6 4 3 89 , 8 0 6 11 0 , 4 9 3 - - 2, 9 2 1 , 8 8 7 - - 27 9 , 4 0 0 --- 15 , 5 7 8 , 0 7 5 17 , 3 7 1 , 1 6 3 49 4 , 7 5 2 11 , 7 5 3 , 6 3 2 84 , 5 9 8 10 2 , 6 4 2 1, 3 0 0 ---- - 85 , 5 3 0 - - - - - - 2, 4 6 3 , 6 8 3 - 84 2 9 8 2, 5 6 6 , 3 2 5 86 83 0 - - - 89 , 8 0 6 11 0 , 4 9 3 - - 2, 9 1 8 , 8 8 8 59 , 4 0 0 - - - 89 80 6 16 9 89 3 2, 9 1 8 , 8 8 8 - - - 17 , 1 9 6 , 7 5 9 8, 7 4 7 , 9 1 4 -- - - ~2, 2 4 1 ,4 6 6 2 17 , 1 9 6 , 7 5 9 (2 , 2 4 1 , 4 6 6 ) 8 74 7 91 4 $ 17 , 3 7 1 , 1 6 3 $ 49 4 , 7 5 2 $ 11 , 7 5 3 , 6 3 2 Mu n i c i p a l Ca p i t a l St a t e Ai d In f r a s t r u c t u r e Other Im p r o v e m e n t s fo r Co n s t r u c t i o n Nonmajor Total Fu n d Co n s t r u c t i o n Fund Governmental Governmental $ 3, 2 1 0 , 6 7 9 $ $ $ 6,168,923 $ 24,656,936 - - -6,782,081 - 71,308 164,692 372,205 61 7 - 1,173 87,480 9, 4 4 2 -6,663 484,990 2, 0 3 6 - 1,441,134 4,502,639 70 6 , 8 3 4 -851,816 3, 5 8 3 , 5 5 7 153,295 3,776,932 - -279,400 - -44,044 - - 1,500 36,315 79 2 , 4 8 8 - - 2,463,683 3,256,171 - 537 000 16,115,075 4, 7 2 2 , 0 9 6 3, 5 8 3 , 5 5 7 1,512,442 9,496,929 61,246,084 12 1 , 2 0 1 5, 0 0 0 151,393 353,568 1,163,380 18 0 , 5 3 8 - 57,840 238,378 - - 5,269 160,270 - 65 5 , 2 4 8 51,586 -706,834 - 45 6 37 112,049 - 35,793 252,639 1,100 -2,463,683 30 1 73 9 66 0 7 0 4 260 819 394 667 __ 5,098,333 9, 4 4 2 6,663 284,691 - -200,299 2, 0 3 6 - 1,434,768 4,485,051 - - - 59,400 2, 6 9 9 , 3 2 2 -2,699,322 11 4 7 8 2, 6 9 9 , 3 2 2 _ _ 1,434,768 6,663 7,728,763 - -1,500 80,359 22 3 , 5 3 1 -4,197,207 30,365,411 4, 4 0 8 , 8 7 9 - - 4,897,345 9,306,224 - - 804,815 - !J83,1452 ~4532 7,862,179 - - 4, 4 0 8 , 8 7 9 2~ , 5 3 1 (183,145) 9,095,599 48,418,988 $ 4, 7 2 2 , 0 9 6 $ 3, 5 8 3 , 5 5 7 $ 1,512,442 $ 9,496,929 $ 61,246,084 IV-15 C I T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A ST A T E M E N T OF RE V E N U E S , EX P E N D I 1 U R E S , AN D CH A N G E S IN FU N D BA L A N C E S GO V E R N M E N T A L FU N D S Fo r th e Ye a r En d e d De c e m b e r 31 , 20 1 5 Mu n i c i p a l Ta x Ta x Ca p i t a l St a t e Ai d ln f r a s 1 r u c t u r e Other In c r e m e n t In c r e m e n t De b t Im p r o v e m e n t s fo r Construction Nonmajor Total Ge n e r a l Di s t r i c t No . 3 Di s t r i c t No . 5 Se r v i c e Fu n d Co n s t r u c t i o n Fund Governmental Governmental RE V E N U E S Pr o p e r t y ta x e s $ 14 , 4 5 6 , 6 1 4 $ $ $ 38 9 , 7 0 5 $ (5 , 2 0 6 ) $ $ $ 274,058 $ 15,115,171 Ta x in c r e m e n t s 2, 9 5 3 , 7 2 8 35 3 , 4 1 7 362,053 3,669,198 Fr a n c h i a e fe e s 653,648 653,648 Lo d g i n g ta x e s 1, 0 7 5 , 4 2 5 1,075,425 Li c e n s e s an d pe r m i t a 85 9 , 5 3 4 859,534 In t e r g o v e r n m e n t a l 1, 4 1 0 , 6 9 5 - 74 7 , 0 7 6 1, 0 7 2 , 0 3 1 1,518,674 4,748,476 Ch a r g e s fo r ae r v i c e s 74 9 , 5 6 9 17 7 , 2 1 3 18 8 33,785 6,952 967,707 Sp e c i a l as a e s s m e n t s 14 8 , 2 3 4 1, 1 2 0 , 9 4 6 15 7 445,822 1,715,159 Fi n e s an d fo r f e i t s 26 8 , 1 1 6 23,566 291,682 In v e s t m e n t ea r n i n g s (n e t o f ma r k e t va l u e ad j u s t m e n t ) 62 , 2 7 6 19 , 8 3 3 45 8 8, 2 0 3 43 , 3 8 9 15 , 2 3 0 53,783 203,172 Mi s c e l l a n e o u s 14 2 , 8 0 0 21 8 7 4 11 6 , 5 0 0 76172 72229 429 575 To t a l re v e n u e s 19 , 1 7 3 , 2 6 3 3, 1 7 ~ 6 4 8 35 3 87 5 15 1 8 85 4 90 2 , 1 0 4 1, 0 8 7 , 2 6 1 555,779 2,964,963 29,728,747 EX P E N D I T U R E S Cu r r e n t : Ge n e r a l go v e r n m e n t 2, 7 6 0 , 7 5 6 16 1 , 3 1 5 16,365 2,938,436 Pu b l i c sa f e t y 9, 7 8 5 , 4 8 7 218,988 10,004,475 Pu b l i c wo r k s 1, 8 7 6 , 8 9 9 10 9 , 9 8 1 44,933 2,031,813 Co m m u n i t y se r v i c e s 13 5 , 6 0 4 135,604 Pa r k s an d re c r e a t i o n 2, 4 8 8 , 9 9 0 16 1 , 3 1 5 140,319 2,790,624 Ec o n o m i c d e v e l o p m e n t 51 0 , 8 2 7 1, 4 8 3 , 4 7 6 1, 2 9 5 , 4 8 2 1,979,840 5,269,625 No n d e p a r t m e n t a l 45 0 , 1 2 9 450,129 Ca p i t a l ou t l a y : Ge n e r a l go v e r n m e n t 8, 2 5 3 69 9 , 3 8 4 27,723 735,360 Pu b l i c sa f e t y 23 , 6 9 0 19,010 42,700 Pu b l i c wo r k s 3, 8 9 3 - 2, 5 8 3 , 8 4 9 1,455,128 2,241,978 6,284,848 Pa r k s an d re c r e a t i o n 3, 2 7 0 2, 8 4 1 , 3 3 8 568,254 3,412,862 De b t se r v i c e : Pr i n c i p a l 3, 0 2 5 , 0 0 0 3,025,000 In t e r e s t 82 6 , 0 5 3 826,053 Fi s c a l ag e n t fe e s 9, 8 3 8 9,838 Bo n d is s u a n c e co s t s 71 1 0 2 17769 28509 117 380 To t a l ex p e n d i t u r e s 18 , 0 4 7 , 7 9 8 1, 4 8 3 , 4 7 6 1, 2 9 5 , 4 8 2 3, 9 3 1 , 9 9 3 3, 8 6 3 , 3 5 2 _ 2, 6 9 : ! , 8 3 0 1_,5_17,830 5,240,986 38,074,747 Ex c e s s (d e f i c i e n c y ) o f re v e n u e s ov e r (u n d e r ) ex p e n d i t u r e s 1, 1 2 5 , 4 6 5 1, 6 8 9 , 1 7 2 !9 4 1 , 6 0 : z l !2 , 4 1 3 , 1 3 9 ) (2 , 9 6 1 , 2 4 8 ) ( 1 , 6 0 6 , 5 6 9 ) (962,051) (2,276,023) (8,346,000) OT H E R FI N A N C I N G SO U R C E S (U S E S ) Tr a n s f e r s in 20 1 , 6 8 4 2, 3 9 5 , 9 8 2 1, 1 2 5 , 2 1 6 -818,702 4,541,584 Is s u a n c e o f de b t 6, 6 0 0 , 0 0 0 1,222,708 2,193,540 10,016,248 Pr e m i u m on is s u a n c e o f de b t 25 5 , 6 3 0 19,391 34,788 309,809 Sa l e o f ca p i t a l as s e t s 4, 8 2 0 4,820 Tr a n s f e r s ou t !1 , 1 7 6 , 3 1 3 ) !2 , 3 9 5 , 9 8 2 ) !2 6 4 , 3 1 9 ) !476,04:zl !4,312,661) To t a l ot h e r fi n a n c i n g so u r c e s (u s e s ) (9 7 4 , 6 2 9 ) (2 , 3 9 1 , 1 6 2 ) 9~ 5 1 , 6 1 2 86 0 8 9 7 1,242,099 2,570,983 10,559,800 Ne t ch a n g e in fu n d ba l a n c e 15 0 , 8 3 6 (7 0 1 , 9 9 0 ) (9 4 1 , 6 0 7 ) 6, 8 3 8 , 4 7 3 (2 , 1 0 0 , 3 5 1 ) (1 , 6 0 6 , 5 6 9 ) 280,D48 294,960 2,213,800 Fu n d ba l a n c e s (d e f i c i t s ) -J a n u a r y 1 11 , 0 2 0 , 0 8 1 17 , 8 9 8 , 7 4 9 (1 , 2 9 9 , 8 5 9 ) 19 0 9 44 1 6, 5 0 9 , 2 3 0 1, 8 3 0 , 1 0 0 !463,193) 8,800,639 46,205,188 Fu n d ba l a n c e a (d e f i c i t s ) - De c e m b e r 31 $ 11 , 1 7 0 , 9 1 7 $ 17 , 1 9 6 , 7 5 9 $ (2 , 2 4 1 , 4 6 6 ) $ 8, 7 4 7 , 9 1 4 $ 4, 4 0 8 , 8 7 9 $ 22 3 , 5 3 1 $ (183,145) $ 9,095,599 _j_ 4ll,418,988 Th e no t e s to th e fi n a n c i a l st a t e m e n t s ar e an in t e g r a l pa r t o f th i s st a t e m e n t . IV-19 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 Amounts Actual Positive Oris!nal Final Amounts (Neaative~ REVENUES Tax increments $ 435,437 $ 435,437 $ 353,417 $ (82,020) Investment earnings (net of market value adjustment) 816 816 458 ~358~ Total revenues 436,253 436,253 353,875 ~82,378~ EXPENDITURES Current: Economic development: Services and other charges 400,469 400,469 1,295,482 ~895,013~ Excess (deficiency) of revenues over(under)expenditures 35,784 35,784 (941,607) (977,391) OTHER FINANCING SOURCES (USES) Transfers out ~34,968l ~34,968~ 34,968 Net change in fund balance 816 816 (941,607) (942,423) Fund balance-January 1 ~1,299,859l p,299,859l p,299,859l Fund balance -December 31 $ (1,299,043l $ (1,299,043l $ (2,241,466l $ (942,423) The notes to the financial statements are an integral part of this statement. IV-20 CI T Y OF BR O O K L Y N CE N T E R , Ml N N E S O T A ST A T E M E N T OF NE T PO S I T I O N PR O P R I E T A R Y FU N D S De c e m b e r 3 1 , 2 0 1 5 AS S E T S Cu r r e n t as s e t s : Ca s h an d ca s h eq u i v a l e n t s Re c e i v a b l e s : Ac c o u n t s - ne t Sp e c i a l as s e s s m e n t s Du e fr o m ot h e r go v e r n m e n t s Pr e p a i d it e m s In v e n t o r i e s To t a l cu r r e n t as s e t s No n c u r r e n t as s e t s : Ca p i t a l as s e t s : La n d Ea s e m e n t s La n d im p r o v e m e n t s Bu i l d i n g s an d im p r o v e m e n t s Ma c h i n e r y an d eq u i p m e n t St r e e t li g h t sy s t e m s Ma i n s an d li n e s Co n s t r u c t i o n in pr o g r e s s To t a l ca p i t a l as s e t s Le s s : ac c u m u l a t e d de p r e c i a t i o n Ne t ca p i t a l as s e t s To t a l no n c u r r e n t as s e t s To t a l as s e t s DE F E R R E D OU T F L O W S OF RE S O U R C E S De f e r r e d pe n s i o n re s o u r c e s LI A B I L I T I E S Cu r r e n t li a b i l i t i e s : Ac c o u n t s pa y a b l e Co n t r a c t s pa y a b l e Ac c r u e d sa l a r i e s an d wa g e s Ac c r u e d in t e r e s t pa y a b l e Du e to ot h e r fu n d s Du e to ot h e r go v e r n m e n t s De p o s i t s pa y a b l e Un e a r n e d re v e n u e No t e s pa y a b l e Bo n d s pa y a b l e Co m p e n s a t e d ab s e n c e s pa y a b l e To t a l cu r r e n t li a b i l i t i e s No n c u r r e n t li a b i l i t i e s : No t e s pa y a b l e Bo n d s pa y a b l e Ad v a n c e s fr o m ot h e r fu n d s Co m p e n s a t e d ab s e n c e s pa y a b l e Ne t OP E B ob l i g a t i o n Ne t pe n s i o n li a b i l i t y To t a l no n c u r r e n t li a b i l i t i e s T ot a l l i a b i l i t i e s DE F E R R E D IN F L O W S OF RE S O U R C E S De f e r r e d pe n s i o n re s o u r c e s NE T PO S I T I O N Ne t in v e s t m e n t in ca p i t a l as s e t s Un r e s t r i c t e d To t a l ne t po s i t i o n Ne t po s i t i o n fr o m th i s St a t e m e n t $ $ Bu s i n e s s a T l : : E e Ac t i v i t i e s Mu n i c i p a l Go l f Ea r l e Br o w n Li g u o r Co u r s e He r i t a s e Ce n t e r 1, 9 1 6 , 5 0 1 $ $ 2, 4 0 5 , 6 8 0 9, 2 8 0 24 7 , 2 3 6 28 , 3 8 6 17 , 1 0 2 70 6 , 2 2 0 1, 9 3 0 32 , 2 7 5 2, 6 6 0 , 3 8 7 1, 9 3 0 2 70 2 , 2 9 3 1, 3 9 0 , 4 0 2 1, 4 9 3 , 3 0 0 65 , 6 3 7 37 7 , 2 5 4 19 2 , 7 7 1 66 4 , 3 2 2 12 , 5 0 2 , 1 6 3 26 1 , 7 8 6 11 , 1 6 0 38 6 , 3 0 9 45 4 , 5 5 7 2, 1 3 1 , 5 2 1 14 , 7 5 9 , 0 2 6 p2 4 , 8 9 0 l ~45 5 , 3 6 5 l ~1 1 , 3 4 0 , 8 2 8 l 12 9 , 6 6 7 1, 6 7 6 , 1 5 6 3, 4 1 8 , 1 9 8 12 9 , 6 6 7 1, 6 7 6 , 1 5 6 3 41 8 , 1 9 8 2, 7 9 0 , 0 5 4 1, 6 7 8 , 0 8 6 6, 1 2 0 , 4 9 1 14 9 , 4 1 3 70 0 66 , 6 9 1 16 1 , 2 0 2 8, 0 3 7 1, 1 1 5 12 , 8 1 1 14 4 , 9 8 2 55 , 0 2 1 22 , 7 4 0 40 7 , 9 2 1 3, 4 7 2 1, 6 0 0 21 5 94 3 14 6 79 7 6 7 2 96 5 79 2 , 4 8 8 79 2 , 4 8 8 21 5 , 9 4 3 93 9 , 2 8 5 67 2 96 5 12 9 , 6 6 7 1, 6 7 6 , 1 5 6 3, 4 1 8 , 1 9 8 2 44 4 44 4 ~93 7 , 3 5 5 l 2, 0 2 9 , 3 2 8 25 7 4 1 1 1 $ 73 8 80 1 $ 5 44 7 52 6 Ad j u s t m e n t to re f l e c t th e co n s o l i d a t i o n of in t e r n a l se r v i c e fu n d ac t i v i t i e s re l a t e d to en t e r p r i s e fu n d s Ne t po s i t i o n of bu s i n e s s - t y p e ac t i v i t i e s Th e no t e s to th e fi n a n c i a l st a t e m e n t s ar e an in t e g r a l pa r t o f th i s st a t e m e n t . Wa t e r Ut i l i ! J : $ 1, 2 6 5 , 1 9 4 67 9 , 1 5 8 47 5 , 1 2 7 1, 8 3 4 44 , 7 4 2 2, 4 6 6 , 0 5 5 20 , 7 3 4 3, 0 3 3 , 2 1 2 12 8 , 6 6 8 22 , 3 9 5 , 0 8 3 21 55 5 , 7 0 9 47 , 1 3 3 , 4 0 6 ~1 6 , 0 2 9 , 7 3 0 l 31 10 3 , 6 7 6 31 , 1 0 3 67 6 33 56 9 73 1 91 8 , 8 5 9 91 5 , 6 2 6 6, 1 5 1 70 , o 4 8 4, 0 2 3 5, 6 2 5 21 2 , 8 9 1 94 4 , 0 0 0 10 5 , 0 0 0 3 18 2 22 3 16 , 6 0 1 , 1 5 8 1, 1 4 0 , 0 0 0 17 , 7 4 1 , 1 5 8 20 , 9 2 3 , 3 8 1 13 , 5 5 8 , 5 1 8 ~9 1 2 , 1 6 8 l $ 12 , 6 4 6 , 3 5 0 Governmental Bu s i n e s s - T~ £ e Ac t i v i t i e s Activities- Sa n i t a r y Se w e r St o r m Dr a i n a g e St r e e t Li g h t Recycling Total Internal Ut i l i ! J : : Ut i l i ! J : Ut i l i ! J : : Utili!J: ~se Service $ 3, 0 6 1 , 1 2 0 $ 3, 3 3 7 , 8 3 2 $ 40 5 , 1 0 3 $ 41,420 $ 12,432,850 $ 6,230,655 94 3 , 5 1 3 34 9 , 6 3 3 10 0 , 5 2 6 61,616 2,390,962 35,557 475,127 19,270 18 5 , 3 5 3 232,675 785,167 16,795 4, 1 8 9 98 6 3, 6 8 7 , 4 6 5 50 5 629 103,036 16,316,781 ~277 3, 3 8 9 28 7 , 1 5 8 3,194,983 20 , 3 3 5 10 , 2 8 5 30,620 442,891 166,108 2, 5 7 1 , 4 1 6 18,963,884 17 9 , 1 3 0 24 , 5 8 7 991,640 9,181,885 83 2 , 7 8 9 832,789 21 , 5 4 3 , 3 6 2 27 , 8 6 0 , 1 9 1 71,798,636 1, 6 6 4 , 6 5 1 2, 3 8 3 , 1 0 7 33 , 1 3 7 25,636,604 25 , 9 8 2 , 2 8 3 30 , 5 6 5 , 3 2 8 86 5 , 9 2 6 121,892,047 ~993 ~1 3 , 7 6 1 , 9 3 2 l ~1 3 , 2 1 1 104 2 l 11 9 8 , 1 1 1 l ~55,321,898l ~5,456,463l 12 , 2 2 0 , 3 5 1 17 , 3 5 4 , 2 8 6 66 7 , 8 1 5 66 570,149 3,891,530 12 , 2 2 0 , 3 5 1 17 35 4 28 6 66 7 815 66 570 149 3 891 530 16 41 0 33 7 21 04 1 75 1 11 7 3 4 4 4 103 036 82 886 930 ~807 2,207,122 17 , 9 8 0 14 2 , 9 9 8 24 , 2 6 7 301 1,321,209 34,163 18 , 3 1 2 23 , 5 8 4 1,118,724 2, 2 9 0 3, 1 2 7 33,531 4,138 22 , 8 3 0 92,878 144,982 70 5 82,489 48 413,546 217,963 944,000 35 , 0 0 0 140,000 125,485 97 , 1 1 7 16 9 , 7 0 9 24 , 2 6 7 301 4,509 322 ~834 16,601,158 2, 2 0 3 , 7 5 2 3,343,752 792,488 1,129,366 710,605 11,509,476 2, 2 0 3 , 7 5 2 20,737 398 13,349,447 2, 3 0 0 , 8 6 9 16 9 70 9 24 , 2 6 7 301 25,246,720 ~281 1,660,956 10 , 3 9 6 , 5 9 9 17 , 3 5 4 , 2 8 6 66 7 , 8 1 5 47,201,239 3,891,530 3 71 2 86 9 3, 5 1 7 , 7 5 6 48 1 , 3 6 2 102 735 10,438,971 16,664,838l $ 14 10 9 , 4 6 8 $ 20 , 8 7 2 , 0 4 2 $ 11 4 9 , 1 7 7 $ 102,735 $ 57,640,210 $ (2,773,308) $ 57,640,210 ~1,986,341l $ 55,653,869 IV-21 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A ST A T E M E N T OF RE V E N U E S , EX P E N S E S , AN D CH A N G E S IN NE T PO S I T I O N PR O P R I E T A R Y FU N D S Fo r th e Ye a r En d e d De c e m b e r 31 , 20 1 5 Governmental Bu s i n e s s - Tl l ! e Ac t i v i t i e s Bu s i n e s s - Tl l ! e Ac t i v i t i e s Activities- Mu n i c i p a l Go l f Ea r l e Br o w n Wa t e r Sa n i t a r y Se w e r St o r m Dr a i n a g e St r e e t Li g h t Recycling Total Internal Li 9 ! ! ! ! ! Co m s e He r i ! ! ! ! e Ce n t e r Ut i l i ! l : Ut i l i ! l : Ut i l i ! l : Ut i l i ! l : Utili!l: Enterprise Service OP E R A T I N G RE V E N U E S Sa l e s an d us e r fe e s $ 6, 0 5 6 , 6 6 8 $ 20 8 , 2 2 5 $ 4, 4 8 7 , 2 6 0 $ 2, 5 7 3 , 4 9 3 $ 4, 0 9 3 , 7 2 5 $ 1, 6 3 5 , 5 5 5 $ 45 5 , 3 5 8 $ 315,434 $ 19,825,718 $ 3,022,951 Co s t o f sa l e s 4, 4 3 1 , 5 0 1 2 03 3 , 4 6 4 6,464,965 To t a l op e r a t i n g re v e n u e s 1, 6 2 5 , 1 6 7 20 8 , 2 2 5 2, 4 5 3 , 7 9 6 2, 5 7 3 , 4 ! 1 3 4, 0 9 3 , 7 2 5 1, 6 3 5 , 5 5 5 45 5 , 3 5 8 315,434 13,360,753 3,022,951 OP E R A T I N G EX P E N S E S Pe r s o n a l se r v i c e s 65 3 , 5 5 3 13 7 , 6 7 9 1, 0 2 5 , 8 7 5 52 1 , 3 9 4 20 3 , 3 6 5 19 3 , 7 9 5 2,735,661 2,279,251 Su p p l i e s 52 , 2 4 7 24 , 0 5 1 12 3 , 0 7 2 16 1 , 7 5 7 53 , 2 6 0 45 , 0 0 5 2, 4 3 9 25 461,856 405,086 Ot h e r se r v i c e s 27 0 , 6 0 6 66 , 6 9 1 69 7 , 2 6 9 44 9 , 3 6 1 2, 5 4 7 , 1 4 7 52 7 , 5 0 6 57 , 1 4 3 291,102 4,906,825 160,554 In s u r a n c e 15 , 7 4 1 4, 1 3 5 37 , 8 5 2 26 , 3 9 2 32 , 8 9 6 3, 2 4 2 1, 3 6 3 1,155 122,776 56,693 Ut i l i t i e s 46 , 3 8 4 16 , 3 3 4 18 5 , 4 0 6 14 5 , 4 9 6 36 , 8 2 6 16 7 , 1 4 9 597,595 895 Re n t 31 1 , 5 5 3 311,553 De p r e c i a t i o n 16 9 6 6 18 7 3 7 62 0 , 2 4 9 70 3 93 3 78 3 50 0 1, 1 0 6 , 2 7 6 53 567 -3,303,228 761629 To t a l op e r a t i n g ex p e n s e s 1, 3 6 7 , 0 5 0 26 7 62 7 2, 6 8 9 , 7 2 3 2, 0 0 8 , 3 3 3 3, 6 5 6 , 9 9 4 1, 8 7 5 , 8 2 4 28 1 661 292,282 12,439,494 3,664,108 Op e r a t i n g in c o m e (l o s s ) 25 8 , 1 1 7 (5 9 , 4 0 2 ) (2 3 5 , 9 2 7 ) 56 5 , 1 6 0 43 6 , 7 3 1 (2 4 0 , 2 6 9 ) 17 3 , 6 9 7 23,152 921,259 (641,157) NO N O P E R A T I N G RE V E N U E S (E X P E N S E S ) In t e r g o v e r n m e n t a l 6, 7 4 6 17 , 8 3 2 5, 9 4 4 30,522 48,746 In v e s t m e n t ea r n i n g s (n e t o f ma r k e t va l u e ad j u s t m e n t ) 15 , 0 0 6 16 , 8 2 9 30 , 4 2 3 26 , 6 8 8 35 , 8 4 9 2, 5 8 6 305 127,686 51,194 Sp e c i a l as s e s s m e n t s 39 , 8 8 7 39,887 Ga i n on sa l e o f ca p i t a l as s e t s -27,800 Lo s s on di s p o s a l o f ca p i t a l as s e t s (18,175) Ot h e r re v e n u e (e x p e n s e ) 5, 0 1 2 12 1 16 1 , 9 0 2 27 , 2 8 5 1, 2 9 2 10 0 8, 9 0 0 204,612 40,121 In t e r e s t an d fi s c a l ag e n t fe e s !1 5 4 , 7 0 2 l !2 9 , 3 6 2 l !184,064l To t a l no n o p e r a t i n g re v e n u e s (e x p e n s e s ) 20 0 1 8 6 86 7 17 8 7 3 1 {3 9 , 2 7 5 l 4 5 6 2 35 94 9 11 4 8 6 305 218,643 149,686 In c o m e (l o s s ) be f o r e tr a n s f e r s 27 8 , 1 3 5 (5 2 , 5 3 5 ) (5 7 , 1 9 6 ) 52 5 , 8 8 5 44 1 , 2 9 3 (2 0 4 , 3 2 0 ) 18 5 , 1 8 3 23,457 1,139,902 (491,471) Ca p i t a l co n t r i b u t i o n s fr o m ot h e r fu n d s 1, 0 3 4 , 5 7 4 1,034,574 Tr a n s f e r s in 40 , 0 0 0 40,000 7,389 Tr a n s f e r s ou t (2 1 6 , 4 5 5 l p4 , 8 5 £ l !4 5 , 0 0 0 l {276,312l Ch a n g e in ne t po s i t i o n 61 , 6 8 0 (1 2 , 5 3 5 ) (7 2 , 0 5 3 ) 52 5 , 8 8 5 44 1 , 2 9 3 78 5 , 2 5 4 18 5 , 1 8 3 23,457 1,938,164 (484,082) Ne t po s i t i o n - Ja n u a r y 1 2, 5 1 2 , 4 3 1 75 1 , 3 3 6 5, 5 1 9 , 5 7 9 12 , 1 2 0 , 4 6 5 13 , 6 6 8 , 1 7 5 20 , 0 8 6 , 7 8 8 96 3 , 9 9 4 79,278 55,702,046 8,401,896 Ch a n g e in Ac c o u n t i n g Pr i n c i p l e - Pe n s i o n !10,691,122l Ne t po s i t i o n - Ja n u a r y 1, re s t a t e d 2, 5 1 2 , 4 3 1 75 1 33 6 5, 5 1 9 , 5 7 9 1~ 1 2 0 , 4 6 5 13 , 6 6 8 , 1 7 5 20 , 0 8 6 , 7 8 8 96 3 994 79278 55,702,046 {2,289,222! Ne t po s i t i o n - De c e m b e r 31 $ 21 5 7 4 1 1 1 1 $ 73 8 1 8 0 1 $ 51 4 4 7 1 5 2 6 $ 12 1 6 4 6 1 3 5 0 $ 14 1 1 0 9 1 4 6 8 $ 20 . 8 7 2 . 0 4 2 $ 1 1 4 9 177 $ 1021735 $ 57,640,210 $ (2,773,308) Ch a n g e in ne t po s i t i o n fr o m th i s St a t e m e n t $ 1,938,164 Ad j u s t m e n t to re f l e c t th e co n s o l i d a t i o n o f in t e r n a l se r v i c e fu n d ac t i v i t i e s re l a t e d to en t e t p r i s e fu n d s {69,559l Ch a n g e in ne t po s i t i o n o f bu s i n e s s - t y p e ac t i v i t i e s $ 1,868,605 Th e no t e s to th e fi n a n c i a l st a t e m e n t s ar e an in t e g r a l pa r t o f th i s st a t e m e n t . IV-22 CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A ST A T E M E N T OF CA S H FL O W S PR O P R I E T A R Y FU N D S Fo r t h e Y e a r E n d e d D e c e m b e r 31 , 2 0 1 5 Governmental Bu s i n e s s - T~ ] ! Ac t i v i t i e s Bu s i n e s s - Tz ~ Ac t i v i t i e s Activities- Mu n i c i p a l Go l f Ea r l e Br o w n Wa l c r Sa n i t a r y Se w e r St o r m Dr a i n a g e St r e e t L i g h t Recycling Total lnlcrnal Li g u o r Co u n e He r i t a 1 ee e n t e r Ut i l i ! ) : Ut i l i ! ) : Ut i l i ! ) : Ut i l i ! ; ! Utili!): Ent5!1?!!!e Service CA S H FL O W S FR O M OP E R A T I N G AC T I V I T I E S Re c e i p t s fr o m cu s t o m e n an d us e r s $ 6, 0 5 5 , 8 5 8 $ 20 8 , 2 2 5 s 4, 4 5 8 , 7 1 0 s 2, 4 1 1 , 0 6 4 $ 4, 0 6 3 , 2 4 0 $ 1, 6 3 7 , 8 3 8 $ 45 6 , 6 0 0 $ 318,513 $ 19,610,048 Re c e i p t s fr o m in t e r f u n d se r v i c e s pr o v i d e d 2,986,442 Ol h e r op e r a t i n g re c e i p t s 5, 0 1 2 5, 6 8 1 16 1 , 9 0 2 27 , 2 8 5 1, 2 9 2 !0 0 8, 9 0 0 210,172 40,121 Pa y m e n t s to su p p l i e n (5 , 1 1 6 , 8 5 8 ) (1 1 1 , 6 9 5 ) (3 , 0 0 1 , 8 5 8 ) (6 5 3 , 8 4 8 ) (2 , 7 1 7 , 2 3 3 ) (4 8 2 , 2 4 0 ) (2 0 6 , 0 6 6 ) (292,585) (12,582,383) (538,525) Pa y m e n t s to em p l o y e e s !6 7 4 , 0 4 3 ! !1 4 0 , 1 2 9 ! !1 , 0 5 5 , 6 3 9 ! !5 3 6 , 8 7 6 ! !2 0 5 , 1 1 9 ! !1 9 9 , 3 0 8 ! !2,811,114! !1,923,169! Ne t ca s h fl o w s pr o v i d e d (u s e d ) by op e r a t i n g ac t i v i t i e s 26 9 , 9 6 9 (3 7 , 9 1 8 ! 56 3 11 5 1, 2 4 7 , 6 2 5 1, 1 4 2 , 1 8 0 95 6 , 3 9 0 25 9 43 4 25,928 4 426,723 ~869 CA S H FL O W S FR O M N O N C A P I T A L FI N A N C I N G AC T I V I T I E S Tr a n s f e r s in (o p e r a t i n g ) 40 , 0 0 0 40,000 Jn l c r f u n d pa y a b l o (o p e r a t i n g ) (8 , 8 2 8 ) (8,828) Sp e c i a l as s e s s m e n t s 50 , 5 6 5 50,565 In t e r g o v e r n m e n t a l gr a n t s 6, 7 4 6 6,746 8,606 Tr a n s f e r s ou t !2 1 6 , 4 5 5 ! !1 4 , 8 5 7 ! !4 5 , 0 0 0 ) !276,312! Ne t ca s h fl o w s pr o v i d e d (u s e d ) by no n c a p i t a l fi n a n c i n g ac t i v i t i e s !2 1 6 , 4 5 5 ! 37 9 1 8 !1 4 , 8 5 7 ! 50 . ; ! 6 5 !4 5 , 0 0 0 ! !187 829! 8 606 CA S H FL O W S FR O M CA P I T A L AN D RE L A T E D FI N A N C I N G AC T I V I T I E S Ac q u i s i t i o n an d co n s l r u c t i o n of ca p i t a l as s e t s (1 0 , 0 5 0 ) (1 1 1 , 0 8 3 ) (1 6 , 3 7 5 , 9 9 0 ) (! , 6 4 3 , 4 6 2 ) (1 , 5 9 6 , 8 1 0 ) (3 3 , 1 3 8 ) (19,770,533) (1,082,843) In t e r g o v e r n m e n t a l gr a n t s 17 , 8 3 2 5, 9 4 4 23,776 In t e r f u n d pa y a b l e (c a p i t a l ) (3 , 5 4 2 , 7 6 9 ) (3,542,769) Tr a n s f e r s in (c a p i t a l ) 7,389 Pr i n c i p a l pa i d on re v e n u e bo n d s (1 , 3 5 0 , 0 0 0 ) (4 5 0 , 0 0 0 ) (1,800,000) Pr i n c i p a l pa i d on re v e n u e no t e s (1 5 , 3 5 2 ) (15,352) In t e r e s t pa i d on ca p i t a l de b t (1 0 8 , 3 7 7 ) (4 9 , 7 1 7 ) (158,094) Pr o c e e d s fr o m g. o . re v e n u e no t e s 17 , 5 6 0 , 5 1 0 17,560,510 Pr o c e e d s fr o m g. o . re v e n u e bo n d s (n e t ) 1, 8 5 2 , 6 7 6 1,852,676 Pr o c e e d s fr o m re f u n d i n g bo n d s is s u e d (n e t ) 1, 2 4 5 , 0 0 0 42 1 , 3 5 3 1,666,353 Pr o c e e d s fr o m sa l e of as s e t s 33 978 Ne t ca s h fl o w s pr o v i d e d (u s e d ) by ca p i t a l an d re l a t e d fi n a n c i n g ac t i v i t i e s !1 0 , 0 5 0 ) !l l l , 0 8 3 ) !2 , 5 6 9 , 1 4 6 ! 13 6 , 7 9 4 !1 , 5 9 6 , 8 1 0 ! !J 3 , 1 3 8 ! !4,183,433) ~476) CA S H FL O W S F R O M IN V E S T I N G AC T I V I T I E S In t e r e s t on in v e s t m e n t s 15 00 6 16 82 9 30 , 4 2 3 26 6 8 8 35 , 8 4 9 2, 5 8 6 305 127,686 51,194 Ne t in c r e a s e (d e c r e a s e ) in ca s h an d ca s h eq u i v a l e n t s 58 , 4 7 0 45 4 , 0 0 4 (1 , 2 4 0 , 5 3 3 ) 1, 3 0 5 , 6 6 2 (6 4 9 , 5 7 1 ) 22 8 , 8 8 2 26,233 183,147 (416,807) Ca s h an d ca s h eq u i v a l e n t s - Ja n u a r y 1 1, 8 5 8 , 0 3 1 1, 9 5 1 , 6 7 6 2, 5 0 5 , 7 2 7 1, 7 5 5 , 4 5 8 3 98 7 40 3 17 6 , 2 2 1 15,187 12,249,703 6,647,462 Ca s h an d ca s h eq u i v a l e n t s - De c e m b e r 31 s 1, 9 1 6 , 5 0 1 $ $ 2, 4 0 5 , 6 8 0 s 1, 2 6 5 , 1 9 4 ~ 3M 1 , 1 2 0 $ 3, 3 3 7 , 8 3 2 $ _4 _ ( ) 5 " 1 0 3 $ 41,420 $ 12,432,850 $ 6,230,655 RE C O N C I L I A T I O N OF OP E R A T I N G IN C O M E (L O S S ) TO NE T CA S H FL O W S PR O V I D E D (U S E D ) BY OP E R A T I N G AC T I V I T I E S Op e r a t i n g in c o m e (l o s s ) s 25 8 , 1 1 7 $ (5 9 , 4 0 2 ) $ (2 3 5 , 9 2 7 ) $ 56 5 , 1 6 0 $ 43 6 , 7 3 1 $ (2 4 0 , 2 6 9 ) $ 17 3 , 6 9 7 $ 23,152 $ 921,259 $ (641,157) Ad j u s t m e n t s to re c o n c i l e op e r a t i n g in c o m e (l o s s ) to ne t ca s h fl o w s pr o v i d e d (u s e d ) by op e r a t i n g ac t i v i t i e s : De p r e c i a t i o n 16 , 9 6 6 18 , 7 3 7 62 0 , 2 4 9 70 3 , 9 3 3 78 3 , 5 0 0 1, 1 0 6 , 2 7 6 53 , 5 6 7 3,303,228 761,629 Ot h e r in c o m e (e x p e n s e ) re l a t e d to op e r a t i o n s 5, 0 1 2 12 1 16 1 , 9 0 2 27 , 2 8 5 1, 2 9 2 !0 0 8, 9 0 0 204,612 80,261 (I n c r e a s e ) de c r e a s e in as s e t s : Ac c o u n t s re c e i v a b l e (1 , 5 0 0 ) (2 8 , 5 5 0 ) (1 5 1 , 6 4 6 ) (3 0 , 4 8 5 ) 2, 2 8 3 1, 2 4 2 3,079 (205,577) (36,509) Du e :f r o m ot h e r go v e r n m e n t s 5, 5 6 0 5,560 Pr e p a i d it e m s (7 2 9 ) (8 , 2 8 5 ) ( 1 , 8 3 4 ) (1 0 , 0 4 6 ) (20,894) In v e n t o r i e s (3 1 , 1 5 3 ) (3 4 1 ) (1 , 0 8 2 ) (9 , 4 0 0 ) (41,976) 6,742 (I n c r e a s e ) de c r e a s e in de f e r r e d ou t f l o w s of re s o u r c e s : Dc f e t t e d ou t f l o w s fo r pe n s i o n (2,207,122) In c r e a s e (d e c r e a s e ) in li a b i l i t i e s Ac c o u n t s pa y a b l e 43 , 0 5 6 (1 4 3 ) 84 , 5 7 2 14 0 , 3 9 2 (3 7 , 0 5 8 ) 93 , 5 1 3 22 , 0 2 8 (303) 346,057 77,961 Ne t pe n s i o n li a b i l i t y 818,354 Ac c r u e d sa l a r i e s an d wa g e s (2 0 , 4 9 0 ) (2 , 4 5 0 ) (2 9 , 7 6 4 ) ( 1 5 , 4 8 2 ) (1 , 7 5 4 ) (5 , 5 1 3 ) (75,453) 43,754 Un e a r n e d re v e n u e 69 0 (1 0 , 7 8 3 ) (10,093) (I n c r e a s e ) de c r e a s e in de f e r r e d in f l o w s of re s o u r c e s : De f e r r e d pe n s i o n re s o u r c e s 1,660,956 Ne t ca s h fl o w s pr o v i d e d (u s e d ) by op e r a t i n g ac t i v i t i e s s 26 9 , 9 6 9 $ (3 7 , 9 1 8 ) $ 56 3 , 1 1 5 s 1, 2 4 7 , 6 2 5 $ 1, 1 4 2 , 1 8 0 s 95 6 , 3 9 0 s 25 9 , 4 3 4 $ 25,928 s 4,426,723 s 564,869 NO N C A S H FI N A N C I N G AC T I V I T I E S Ac q u i s i t i o n s of ca p i t a l as s e t s on ac c o u n t $ $ $ $ 1, 6 5 9 , 5 0 3 $ 18 ~ 6 4 $ 23 58 4 $ $ $ I 701451 $ 38 670 Ca p i t a l as s e t s co n t r i b u t e d fr o m ot h e r fb n d s $ $ $ s s $ 1, 0 3 4 , 5 7 4 s $ $ 1,034,574 $ Ca p i t a l as s e t tr a d e - i n s $ $ $ s $ $ s $ $ $ !24,353! Gr a n t s de p o s i t e d wi t h pe n s i o n pl a n $ $ $ $ $ $ $ $ $ $ 40,140 Ch a n g e in Ac c o u n t i n g Pr i n c i p l e fo r pe n s i o n s $ s $ - - - - $ s $ $ $ $ $ (10,691,122) 'l ' h t t no t e s to th e fi n a n c i a l st a t e m e n t s ar e an in t e g r a l pa r t of th i s st a t e m e n t . IV-23 Notes to Financial Statements IV-24 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 Th e Ci t y of Br o o k l y n Ce n t e r wa s in c o r p o r a t e d in 19 1 1 an d ha s op e r a t e d un d e r a Co u n c i l / M a n a g e r fo r m of go v e r n m e n t si n c e th e ad o p t i o n of th e Ci t y ch a r t e r in 19 6 6 . Th e go v e r n i n g bo d y co n s i s t s of a Ma y o r an d fo u r Ci t y Co u n c i l me m b e r s . el e c t e d at - l a r g e to se t V e fo u r - y e a r st a g g e r e d te r m s . Th e Ci t y pr o v i d e s a fu l l ra n g e of mu n i c i p a l se r v i c e s to it s ci t i z e n s , in c l u d i n g pu b l i c sa f e t y (p o l i c e an d fi r e pr o t e c t i o n ) , hi g h w a y s an d st r e e t s , pa r k s an d re c r e a t i o n , pu b l i c im p r o v e m e n t s , pl a n n i n g an d in s p e c t i o n s , ec o n o m i c d e v e l o p m e n t , sa n i t a r y an d st o r m se w e r , wa t e r , an d go n e r s ! ad m i n i s t r a t i v e se t V i c e s . No t e 1 SU M M A R Y OF SI G N I F l C A N T AC C O U N T I N G PO L I C I E S Th e fi n a n c i a l st a t e m e n t s of th e Ci t y ha v e be e n pr e p a r e d in ac c o r d a n c e wi t h ac c o u n t i n g pr i n c i p l e s ge n e r a l l y ac c e p t e d in th e Un i t e d St a t e s of Am e r i c a (G A A P ) , as ap p l i e d to go v e r n m e n t a l un i t s by th e Go v e r n m e n t a l Ac c o u n t i n g St a n d a r d s Bo a r d (G A S B ) . Th e Ci t y ' s si g n i f i c a n t ac c o u n t i n g po l i c i e s ar e de s c r i b e d be l o w . A. RE P O R T I N G EN T I T Y Th e Ci t y in c l u d e s al l fu n d s , or g a n i z a t i o n s , in s t i t u t i o n s , ag e n c i e s , de p a r t m e n t s , bo a r d s , an d of f i c e s th a t ar e no t le g a l l y se p a r a t e fr o m th e Ci t y . Co m p o n e n t un i t s ar e le g a l l y se p a r a t e or g a n i z a t i o n s fo r wh i c h th e el e c t e d of f i c i a l s of th e Ci t y ar e fi n a n c i a l l y ac c o u n t a b l e an d ar e in c l u d e d wi t h i n th e ba s i c fi n a n c i a l st a t e m e n t s of th e Ci t y be c a u s e of th e si g n i f i c a n c e of th e i r op e r s t i o n a l or fi n a n c i a l re l a t i o n s h i p s wi t h th e Ci t y . Th e Ci t y is co n s i d e r e d fi n a n c i a l l y ac c o u n t a b l e fo r a co m p o n e n t un i t if it ap p o i n t s a vo t i n g ma j o r i t y of th e or g a n i z a t i o n ' s go v e r n i n g bo d y an d is ab l e to im p o s e it s wi l l on th e or g l l n i z a t i o n by si g n i f i c a n t l y in f l u e n c i n g th e pr o g r a m s , pr o j e c t s , ac t i v i t i e s , or le v e l of se r v i c e s pe r f o r m e d or pr o v i d e d by th e or g l l n i z a t i o n , or th e r e is a po t e n t i a l fo r th e or g l l n i z a t i o n to pr o v i d e sp e c i f i c fi n a n c i a l be n e f i t s to , or im p o s e sp e c i f i c fi n a n c i a l bu r d e n s on , th e Ci t y . Bl e n d e d co m p o n e n t un i t s , al t h o u g h le g a l l y se p a r a t e , ar e , in su b s t a n c e , pa r t of th e go v e r n m e n t ' s op e r a t i o n s . A bl e n d e d co m p o n e n t un i t is re p o r t e d as if it we r e a fu n d of th e Ci t y th r o u g h o u t th e ye a r . It is in c l u d e d at bo t h th e go v e r n m e n t - w i d e an d fu n d fi n a n c i a l re p o r t i n g le v e l s . A de s c r i p t i o n of th e Ci t y ' s bl e n d e d co m p o n e n t un i t s fo l l o w s : Ci t y of B r o o k l y n Ce n t e r Ho u s i n g an d Re d e v e l o p m e n t Au t h o r i t y (l i R A ) - Th e Ci t y Co u n c i l se r v e s as th e Bo a r d of Di r e c t o r s fo r th e HR A , wi t h th e po w e r to le v y ta x e s an d en t e r in t o co n t r a c t s . Th e Co u n c i l re v i e w s an d ap p r o v e s th e t a x le v y an d al l ex p e n d i t u r e s fo r th e HR A . Th e HR A is re p o r t e d as a Sp e c i a l Re v e n u e fu n d . Th e HR A do e s no t is s u e se p a r a t e fi n a n c i a l st a t e m e n t s . Fi n a n c i a l in f o r m a t i o n ma y be ob t a i n e d at th e Ci t y ' s of f i c e s . Ci t y of Br o o k l y n Ce n t e r Ec o n o m i c De v e l o p m e n t Au t h o r i t y (E D A ) - Th e go v e r n i n g bo a r d fo r th e ED A is th e Ci t y Co u n c i l , wi t h th e po w e r to is s u e bo n d s an d en t e r in t o co n t r a c t s . Th e co u n c i l re v i e w s an d ap p r o v e s ma j o r co m m u n i t y de v e l o p m e n t im p r o v e m e n t ac t i v i t i e s . Ci t y ge n e r a l ob l i g a t i o n ta x in c r e m e n t fi n a n c i n g bo n d s ar e ia s u e d to fi n a n c e ED A ac t i v i t i e s . Th e ED A is re p o r t e d as a Sp e c i a l Re v e n u e fu n d . Th e ED A do e s no t is s u e se p a r a t e fi n a n c i a l st a t e m e n t s . Fi n a n c i a l in f o r m a t i o n ma y be ob t a i n e d at th e Ci t y ' s of f i c e s . CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 3 1 , 2 0 1 5 B. GO V E R N M E N T - W I D E AN D FU N D FI N A N C I A L STATEMENTS Th e go v e r n m e n t - w i d e fi n a n c i a l st a t e m e n t s (i . e . , th e st a t e m e n t of net position and the statement of activities) report information on al l ac t i v i t i e s of th e pr i m a r y go v e r n m e n t an d it s co m p o n e n t units. Governmental activities, which normally are supported by ta x e s an d in t e r g o v e r n m e n t a l re v e n u e s , ar e re p o r t e d se p a r a t e l y from business-type activities, which rely to a significant extent on fe e s an d ch a r g e s fo r su p p o r t . Th e st a t e m e n t of ac t i v i t i e s de m o n s t r a t e s th e de g r e e to wh i c h the direct expenses of a given function or segment are offset by pr o g r a m re v e n u e s . Di r e c t ex p e n s e s ar e th o s e th a t ar e cl e a r l y identifiable with a specific function or segment. Program re v e n u e s in c l u d e I) ch a r g e s to cu s t o m e r s or ap p l i c a n t s wh o purchase, use, or directly benefit from goods, services, or pr i v i l e g e s pr o v i d e d by a gi v e n fu n c t i o n or bu s i n e s s - t y p e ac t i v i t y and 2) grants and contributions that are restricted to meeting th e op e r a t i o n a l or ca p i t a l re q u i r e m e n t s of a pa r t i c u l a r fu n c t i o n or business-type activity. Taxes and other items not included am o n g pr o g r a m re v e n u e s ar e re p o r t e d in s t e a d as ge n e r a l re v e n u e s . Se p a r a t e fi n a n c i a l st a t e m e n t s ar e pr o v i d e d fo r go v e r n m e n t a l funds and proprietsry funds. Major individual governmental funds an d ma j o r in d i v i d u a l en t e r p r i s e fu n d s ar e re p o r t e d as se p a r a t e columns in the fund financial statements. C. ME A S U R E M E N T FO C U S , BA S I S O F AC C O U N T I N G , AND FINANCIAL STATEMENT PR E S E N T A T I O N Th e go v e r n m e n t - w i d e fi n a n c i a l st a t e m e n t s ar e re p o r t e d us i n g the economic resources measurement focus and the accrual ba s i s o f ac c o u n t i n g , as ar e th e pr o p r i e t s r y fu n d fi n a n c i a l st a t e m e n t s . Revenues are recorded when eamed and expenses are re c o r d e d wh e n a li a b i l i t y is in c u r r e d , re g a r d l e s s of th e ti m i n g of related caab flows. Property taxes and special assessments ar e re c o g n i z e d as re v e n u e s in th e ye a r fm wh i c h th e y ar e le v i e d . Grants and similar items are recognized as revenue as soon as al l el i g t " b i l i t y re q u i r e m e n t s im p o s e d by th e pr o v i d e r ha v e been met. Go v e r n m e n t a l fu n d fi n a n c i a l st a t e m e n t s ar e re p o r t e d us i n g th e current financial resources messurement focus and the mo d i f i e d ac c r u a l ba s i s o f ac c o u n t i n g . Re v e n u e s ar e re c o g n i z e d as soon as they are both measurable and available. Re v e n u e s ar e co n s i d e r e d to be av a i l a b l e wh e n th e y ar e co l l e c t i b l e within the current period or soon enough thereafter to pay li a b i l i t i e s of th e cu r r e n t pe r i o d . Fo r th i s pu r p o s e , th e Ci t y co n s i d e r s all revenues, except reimbursement grants, to be available if th e y ar e co l l e c t e d wi t h i n 60 da y s of th e en d of th e cu r r e n t fiscal year. Reimbursement grants are considered available if th e y ar e co l l e c t e d wi t h i n on e ye a r of th e en d of th e cu r r e n t fi s c a l year. Expenditures generslly are recorded when a liability is in c u r r e d , as un d e r ac c r u a l ac c o u n t i n g . Ho w e v e r , de b t se r v i c e expenditures, as well as expenditures related to claims and ju d g m e n t s , co m p e n s a t e d ab s e n c e s , ne t pe n s i o n li s b i l i t i e s , an d OPEB are recorded only when payment is due. Pr o p e r t y ta x e s , sp e c i a l as s e s s m e n t s , in t e r g o v e r n m e n t a l re v e n u e s , charges for sexvices and interest associated with the current fi s c a l ye a r ar e al l co n s i d e r e d to be su s c e p t i b l e to ac c r u a l an d so have been recognized as revenues of the current fiscal year. Oa l y th e po r t i o n of sp e c i a l as s e s s m e n t s re c e i v a b l e du e wi t h i n the current fiscal year is considered to be susceptible to accrual as re v e n u e of th e cu r r e n t pe r i o d . Al l ot h e r re v e n u e it e m s ar e considered to be measurable and available only when cash is re c e i v e d by th e go v e r n m e n t . IV-25 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e n l b e r 31 , 20 1 5 Th e Ci t y re p o r t s th e fo l l o w i n g ma j o r go v e r n m e n t a l fu n d s : Ge n e r a l Fu n d Th i s is th e Ci t y ' s pr i m a r y op e r a t i n g fu n d . It ac c o u n t s fo r al l fi n a n c i a l re s o u r c e s o f th e ge n e r a l go v e r n m e n t , eX < : e p t th o s e re q u i r e d to be ac c o u n t e d fo r in an o t h e r fu n d . Mo s t o f th e cu r r e n t ds y - t o - d s y op e r a t i o n s o f th e go v e r n m e n t a l un i t s ar e fi n a n c e d fr o m th i s fu n d . Ta x In c r e m e n t Di s t r i c t No . 3 Sp e c i a l Re v e n u e Fu n d Th i s fu n d wa s es t a b l i s h e d to ac c o u n t fo r th e co l l e c t i o n o f ta x in c r e m e n t ge n e r a t e d re v e n u e s fo r pa r c e l s wi t h i n th e Di s t r i c t . Th e s e fu n d s ar e us e d to fi n a n c e th e va r i o u s re d e v e l o p m m t ac t i v i t i e s th r o u g h o u t th e Ci t y . Th i s fu n d al s o pr o v i d e s th e re s o u r c e s to re p a y th e de b t se r v i c e on bo n d s is s u e d to fi n a n c e th e s e re d e v e l o p m e n t ac t i v i t i e s . Ta x In c r e m e n t Di s t r i c t No . 5 Sp e c i a l Re v e n u e Fu n d Th i s fu n d wa s es t a b l i s h e d to ac c o u n t fo r th e co l l e c t i o n o f ta x in c r e m e n t ge n e r a t e d re v e n u e s fo r pa r c e l s wi t h i n th e Di s 1 r i c t . Th e s e fu n d s ar e us e d to fi n a n c e th e va r i o u s re d e v e l o p m e n t ac t i v i t i e s wi t h i n th e Di s t r i c t , wh i c h co o s i s t e d o f th e re d e v e l o p m e n t o f th e fo r m e r Br o o k d a l e ma l l si t e , wh i c h is no w ca l l e d Sh i n g l e Cr e e k Cr o s s i n g . De b t Se r v i c e Fu n d Th i s fu n d is us e d to ac c o u n t fo r th e co l l e c t i o n of pr o p e r t y ta x e s , sp e c i a l as s e s s m e n t s an d ot h e r re s o u r c e s wh i c h ar e us e d to re p a y th e pt i n c i p a l an d in t e r e s t on de b t is s u e d fo r va r i o u s im p r o v e m e n t s in th e Ci t y . Mu n i c i p a l St a t e - A i d fo r Co n s t r u c t i o n Ca p i t a l Pr o j e c t Fu n d Th i s fu n d wa s es t a b l i s h e d to ac c o u n t fo r th e st a t e al l o t m e n t o f co n s t r u c t i o n an d ma i n t e n a n c e ai d . Th e so u r c e o f th e St a t e fu n d i n g is pr o v i d e d fo r th r o u g h th e co l l e c t i o n o f ga s o l i n e ta x e s . Th e fu n d s ac c u m u l a t e d mu s t be us e d on tr a n s p o r t a t i o n re l a t e d co n s t r u c t i o n an d ma i n t e n a n c e Jll " ' ! i e c t s . Ca p i t a l Im p r o v e m e n t s Ca p i t a l Pr o j e c t Fu n d Th i s fu n d wa s es t a b l i s h e d to pr o v i d e fu n d s an d to ac c o u n t fo r th e ex p e n d i t u r e o f su c h fu n d s , fo r ma j o r ca p i t a l ou t l a y s . Th e ac c u m u l a t i o n o f fu n d s to pr o v i d e fo r su c h ou t l a y s is an at t e m p t to re d u c e fu t u r e de b t is s u a n c e . Th e fi n a n c i n g so u r c e s o f th e fu n d pr i m a r i l y co n s i s t o f tr a n s f e r s fr o m ot h e r fu n d s . In f r a s t r u c t u r e Co n s t r u c t i o n Ca p i t a l Pr o j e c t Fu n d Th i s fu n d wa s es t a b l i s h e d to ac c o u n t fo r th e re s o u r c e s an d ex p e n d i t u r e s re q u i r e d fo r th e ac q u i s i t i o n an d co o s t r u c t i o n o f ca p i t a l fa c i l i t i e s or im p r o v e m e n t s fi n a n c e d wh o l l y or in pa r t by sp e c i a l as s e s s m e n t s le v i e d ag a i n s t be n e f i t e d pr o p e r t i e s . CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 Th e go v e r n m e n t re p o r t s th e fo l l o w i n g ma j o r en t e r p r i s e fu n d s : Mu n i c i p a l Li q u o r Fu n d Th e fu n d ac c o u n t s fo r th e op e r a t i o n s o f th e City's municipal off-sale liquor stores. Go ! [ Co u r s e Fu n d Th e fu n d ac c o u n t s fo r op e r a t i o o s o f C. . . t e r b r o o k Golf Course, a 9 hole executive golf course owned by th e Ci t y . Ea r l e Br o w n He r i t a g e Ce n t e r Fu n d Th e Ea r l e Br o w n He r i t a g e Ce n t e r is a pi o n e e r farmstead that has been historically preserved and restored as a mo d e m mu l t i p u r p o s e fa c i l i t y . It s co o v m t i o n center can host conferences, trade shows and coocerts. Wa t e r Ut i l i t y Fu n d Th e fu n d ac c o u n t s fo r pu m p i n g , tr e a t m e n t and distribution of water to customers. Administration, wells, wa t e r st o r a g e , an d di s t r i b u t i o n ar e in c l u d e d . Sa n i t a r y Se w e r Ut i l i t y Fu n d Th e fu n d ac c o u n t s fo r th e co l l e c t i o n an d pu m p i n g of sanitary sewage through a system of sewer lines and lift st a t i o n s . Se w a g e is tr e a t e d by th e Me t r o p o l i t a n Council Euvironmental Services whose fees represent about 60 % o f th i s fu n d ' s op e r a t i n g ex p e n s e s . St o r m Dr a i n a g e Ut i l i t y Fu n d Th e fu n d ac c o u n t s fo r th e co l l e c t i o n an d tr e a t m e n t of surface runoff water that does not require sanitary wa s t e w a t e r tr e a t m e n t . It in c o r p o r a t e s no t on l y the storm sewer collection system, but also structures such as ho l d i n g po n d s an d fa c i l i t i e s to im p r o v e wa t e r quality. Fees are based upon the quantity of water running off a pr o p e r t y an d va r y wi t h bo t h si z e an d ab S O ! p l i o n characteristics of the parcel. St r e e t Li g h t Ut i l i t y Fu n d Th e fu n d ac c o u n t s fo r th e el e c 1 r i c a l se r v i c e , maintenance, repair and replacement of lights owned by the City as we l l as th o s e li g h t s ow n e d by Xc e l Eu e r g y . Re c y c l i n g Ut i l i t y Fu n d Th e fu n d ac c o u n t s fo r th e co n t r a c t e d se r v i c e s to provide a City wide recycling program. Ad d i t i o n a l l y , th e Ci t y re p o r t s th e fo l l o w i n g fu n d ty p e : In t e r n a l Se r v i c e Fu n d s Ac c o u n t fo r co m p e n s a t e d ab s e n c e s , he a l t h care insurance benefits for retired employees, pension liabilities, an d ce n t r a l ga r a g e se r v i c e s pr o v i d e d to ot h e r departments of the City on a cost reimbursement basis. As a ge n e r a l ru l e , th e ef f e c t of in t e r f u n d ac t i v i t y ha s be e n el i m i n a t e d from the government-wide financial statements. EX < : e p t i o n s to th i s ge n e r a l ru l e ar e tr a n s a c t i o n s th a t wo u l d be treated as revenues, expenditures or expenses if they involved ex t e r n a l or g a n i z a t i o n s , su c h as bu y i n g go u d s an d se r v i c e s or payments in lieu of taxes. Elimination of these charges would di s t o r t th e di r e c t co s t s an d pr o g r a m re v e n u e s re p o r t e d fo r th e various functions concerned. IV-26 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO Ti l E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 Pr o p r i e t a r y fu n d s di s t i n g u i s h op e r a t i n g re v e n u e s an d ex p e n s e s fr o m no n - o p e r a t i n g it e m s . Op e r a t i n g re v e n u e s an d ex p e n s e s ge n e r a l l y re s u l t fr o m pr o v i d i n g se r v i c e s an d pr o d u c i n g an d de l i v e r i n g go o d s in co n n e c t i o o wi 1 h a pr o p r i e t a r y fu n d ' s pr i n c i p a l on g o i n g op e r a t i o o s . Th e pr i n c i p a l op e r a t i n g re v e n u e s of 1h e en t e r p r i s e fu n d s an d in t e r n a l se r v i c e fu n d s ar e c! w g e s to cu s t o m e r s fo r sa l e s an d se r v i c e s . Op e r a t i n g ex p e n s e s fo r en t e r p r i s e fu n d s an d in t e r n a l se r v i c e fu n d s in c l u d e 1h e co s t of sa l e s an d se i V i . c e s , ad m i n i s t r a t i v e ex p e n s e s , an d de p r e c i a t i o n on ca p i t a l as s e t s . Al l re v e n u e s an d ex p e n s e s no t me e t i n g th i s de f i n i t i o n ar e re p o r t e d as no n o p e r a t i n g re v e n u e s an d ex p e n s e s . D. CA S H AN D IN V E S T M E N T S Th e Ci t y co n s i d e r s al l hi g h l y li q u i d in v e s b n e n t s wi 1 h a ma t u r i t y of 1 h r e e mo n 1 h s or le s s wh e n pu r c h a s e d to be ca s h eq u i v a l e n t s . Al l o f !h e ca s h an d in v e s 1 m e n t s al l o c a t e d to 1h e pr o p r i e t a r y fu n d s ha v e or i g i n a l ma t u r i t i e s of 90 da y s or le s s . Ca s h ba l a n c e s fr o m al l fu n d s ar e po o l e d an d in v e s t e d , to 1h e ex t e n t av a i l a b l e , in ce r t i f i c a t e s o f de p o s i t an d o1 h e r au 1 h o r i z e d in v e s b n e n t s . Ea r n i n g s fr o m su c h in v e s b n e n t s ar e al l o c a t e d on 1h e ba s i s of ap p l i c a b l e pa r t i c i p a t i o n by ea c h of 1h e fu n d s . Th e Ci t y ' s in v e s b n e n t po l i c y au 1 h o r i z e s 1h e Ci t y to in v e s t in 1h e fo l l o w i n g : a) Se c n r i t i e s wh i c h ar e di r e c t ob l i g a t i o n s or ar e gu a r a n t e e d or in s u r e d is s u e s of 1 h e Un i t e d St a t e s , it s ag e n c i e s , it s in s t r u m e n t a l i t i e s , or or g a n i z a t i o n s cr e a t e d by an ac t o f Co n g r e s s , in c l u d i n g go v e r n m e n t a l bo n d s , no t e s , bi l l s , mo r t g a g e s (e x c l u d i n g hi g h - r i s k mo r t g a g e - b a c k e d se c o r i t i e s ) , an d ot h e r se c n r i t i e s . b) Co m m e r c i a l pa p e r is s u e d by U. S . co r p o r a t i o n s or 1h e i r Ca n a d i a n su b s i d i a r i e s 1h a t is ra t e d in 1h e hi g h e s t qu a l i t y by at le a s t tw o na t i o n a l l y re c o g n i z e d ra t i n g ag e n c i e s an d ma t u r e s in 27 0 da y s or le s s . c) Ti m e de p o s i t s 1h a t ar e fu l l y in a u r e d b y 1h e Fe d e r a l De p o s i t In s u r a n c e Co r p o r a t i o n or ba n k e r s ac c e p t a n c e s of U . S . ba n k s . d) Re p u r c h a a e ag r e e m e n t s an d re v e r s e re p u r c h a s e ag r e e m e n t s wi 1 h fi n a n c i a l in s t i t u t i o n s id e n t i f i e d by Mi n n e s o t a St a t u t e s Ch a p t e r li S A . e) Se c n r i t i e s le n d i n g ag r e e m e n t s ma y be en t e r e d in t o wi 1 h fi n a n c i a l in s t i t u t i o o s id e n t i f i e d by Mi n n e s o t a St a t u t e s Ch a p t e r li S A . f) Mi n n e s o t a jo i n t po w e r s in v e s b n e n t tr u s t s ma y be en t e r e d in t o wi 1 h tr u s t s id e n t i f i e d by Mi n a e s o t a St a t u t e s Ch a p t e r li S A . g) Mo n e y ma r k e t mu t u a l fu n d s re g u l a t e d by 1h e Se c u r i t i e s an d Ex c h a n g e Co m m i s s i o n an d wh o s e po r t f o l i o s co n s i s t on l y of sh o r t te r m se c u r i t i e s pe r m i t t e d by Mi n n e s o t a St a t u t e s li S A . h) Bo n d s of 1h e Ci t y o f Br o o k l y n Ce n t e r is s u e d in pr i o r ye a r s , ma y be re d e e m e d at cu r r e n t ma r k e t pr i c e , wh i c h ma y in c l u d e a pr e m i u m , pr i o r to ma t u r i n g us i n g su r p l u s fu n d s of 1h e de b t se r v i c e fu n d se t up fo r 1h a t is s u e . Ce r t a i n pr o c e e d s of th e Ci t y ' s 20 1 5 B Ta x In c r e m e n t Re f u n d i n g Bo n d s , ar e cl a s s i f i e d as ca s h wi 1 h fi s c a l ag e n t on 1h e ba l a n c e sh e e t be c a u s e !h e y ar e ma i n t a i n e d in se p a r a t e ba n k ac c o u n t s an d 1h c i r us e is li m i t e d by ap p l i c a b l e ho o d co v e n a n t s . CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO Ti l E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 ln v e s b n e n t s ar e re p o r t e d at fa i r va l u e , ba s e d on qu o t e d ma r k e t prices as of 1he balance sheet date, eX<:eJ>t for invesbnents in 2a 7 - l i k e ex t e r n a l in v e s b n e n t po o l s , wh i c h ar e st a t e d at am o r t i z e d cost. Adjusbnents necessary to record invesbnents at fair va l u e ar e re c o r d e d in 1h e op e r a t i n g st a t e m e n t as in c r e a s e s or decreases in inves1ment earnings. lnvesbnent income oo co m m i n g l e d fu n d s is al l o c a t e d mo o t h l y , ba s e d oo mo o 1 h - e n d balances. E. RE C E I V A B L E S A N D P A Y A B L E S Do r i n g 1h e co u r s e of op e r a t i o n s , nu m e r o u s tr a n s a c t i o n s oc c u r between individual funds for goods provided or services re n d e r e d . Sh o r t - t e r m in t e r f u n d lo a n s ar e cl a s s i f i e d as "d u e to / f r o m other funds." All short-term interfund receivables and pa y a b l e s at De c e m b e r 31 , 2 0 1 5 ar e pl a n n e d to be el i m i n a t e d in 2016. Long-term interfund loans are classified as "advances to / f r o m ot h e r fu n d s . " An y re s i d u a l ba l a n c e s ou t s t a n d i n g be t w e e n 1he governmental activities and business-type activities are re p o r t e d in th e go v e m m e n t ~ w i d e fi n a n c i a l st a t e m e n t s as "i n t e r n a l balances". Ad v a n c e s be t w e e n fu n d s , as re p o r t e d in 1h e fu n d fi n a n c i a l st a t e m e n t s , are offset by restricted or committed fund balance in ap p l i c a b l e go v e r n m e n t a l fu n d s . Th i s cl a s s i f i c a t i o n is ba s e d on 1he restraint 1hat will be placed on 1he advanced funds when 1h e y ar e re t u r n e d to 1h e le n d i n g fu n d . AU mi s c e l l a n e o u s ac c o u n t s re c e i v a b l e an d tr a d e re c e i v a b l e s , other 1han utilities, are presented net of an allowance for doubtful ac c o u n t s . AU ut i l i t y tr a d e re c e i v a b l e s ar e re p o r t e d at gr o s s because it is 1he City's policy to certify delinquent account ba l a n c e s as sp e c i a l as s e s s m e n t s . Th e Ci t y ex p e c t s to ma k e fu l l collection of all property tax and special assessment re c e i v a b l e s , so no al l o w a n c e is co n s i d e r e d ne c e s s a t y . Pr o p e r t y ta x le v i e s ar e au b m i t t e d to 1h e Co u n t y in De c e m b e r each year. The County allocates 1hese levies across taxable pr o p e r t i e s in 1h e Ci t y ba s e d on va l u a t i o n s ce r t i f i e d in 1h e pr i o r year. The County collects 1heae levies and distributes 1he City's pr o c e e d s in Ju n e an d De c e m b e r of 1h e fi s c a l ye a r . Th e s e ta x e s are reported as general revenues in 1he government-wide fi n a n c i a l st a t e m e n t s in 1h e ye a r le v i e d . Un p a i d ta x e s at De c e m b e r 31 become liens on 1he respective property and are cl a s s i f i e d as de l i n q u e n t re c e i v a b l e s an d ar e fu l l y of f s e t by a deferred inflow of resources in 1he fund financial statements. De l i n q u e n t ta x e s re c e i v a b l e in c l u d e s 1h e pa s t si x ye a r s of un c o l l e c t e d taxes. Sp e c i a l as s e s s m e n t s re p r e s e n t 1h e fi n a n c i n g fo r pu b l i c im p r o v e m e n t s paid for by benefiting property owners. These as s e s s m e n t s ar e re c o r d e d as re c e i v a b l e s up m ce r t i f i c a t i o n to the County. Governmental special assessments have been offset by a de f e r r e d in f l o w of re s o u r c e s fo r co l l e c t i o n s no t re c e i v e d wi1hin 60 days after year end in 1he fund financial statements. IV-27 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S T O Ti l E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 F. IN V E N T O R I E S AN D PR E P A I D IT E M S In v e n t o r i e s in th e go v e r n m e n t a l fu n d s ar e re p o r t e d ua i n g th e co n s u m p t i o n me t h o d an d va l u e d at co s t , ua i n g th e fi r s t in / f i r s t ou t (F I F O ) me t h o d . In v e n t o r i e s in th e pr o p r i e t a r y fu n d s ar e va l u e d at co s t , us i n g th e we i g h t e d av e r a g e me t h o d in th e Mu n i c i p a l Li q u o r an d Ea r l e Br o w n He r i t a g e Ce n t e r Fu n d s an d th e FI F O me t h o d in al l ot h e r fu n d s . Ce r t a i n pa y m e n t s to ve n d o r s re f l e c t co s t s ap p l i c a b l e to fu t u r e ae c o u n t i n g pe r i o d s an d ar e re c o r d e d as pr e p a i d it e m s in bo t h go v e r n m e n t - w i d e an d fu n d fi n a n c i a l st a t e m e n t s . Pr e p a i d it e m s ar e re p o r t e d us i n g th e co n s u m p t i o n me t h o d an d re c o r d e d as ex p e n d i t u r e s / e x p e n s e s at th e ti m e o f co n s o m p t i o n . G. AS S E T S HE L D FO R RE S A L E As s e t s he l d fo r re s a l e re p r e s e n t va r i o u s pr o p e r t y pu r c h a s e s ma d e by th e Ci t y wi t h th e in t t m t to se l l in or d e r to in c r e a s e ta x ba s e or to at t r a c t ne w bo s i n e s s e s . Th e s e as s e t s ar e st a t e d at th e lo w e r o f co s t or ne t re a l i z a b l e v a l u e . Du r i n g th e ye a r en d e d De c e m b e r 31 , 20 1 5 ma n a g e m e n t ha s re v i e w e d th e co s t va l u e re p o r t e d fo r th e s e as s e t s an d ha s in d i c a t e d th e pr o p e r t i e s ar e fa i r l y pr e s e n t e d fo r fi n n n c i a l re p o r t i n g pw p o s e s . H. CA P I T A L AS S E T S Ca p i t a l as s e t s , wh i c h in c l u d e pr o p e r t y , pl a n t , eq u i p m e n t , in f r a s t r u c t u r e as s e t s (e . g . , ro a d s , br i d g e s , si d e w a l k s , an d si m i l a r it e m s ) , an d in t a n g i b l e as s e t s su c h as ea s e m e n t s an d co m p u t e r so f t w a r e , ar e re p o r t e d in th e ap p l i c a b l e go v e r n m e n t a l or bu a i n e s s - t y p e nc t i v i t i e s co l u m n s in th e go v e r n m e n t - w i d e fm a n c i a l st a t e m e n t s . Ca p i t a l as s e t s ar e de f i n e d by th e Ci t y as as s e t s wi t h an in i t i a l , in d i v i d u a l co s t in ex c e s s o f th e am o u n t s in th e ta b l e be l o w an d an es t i m a t e d us e f u l li f e in ex c e s s o f on e ye a r . Su c h as s e t s ar e re c o r d e d at hi s t o r i c a l co s t or es t i m a t e d hi s t o r i c a l co s t i f pu r c h a s e d or co n s t r u c t e d . Do n a t e d ca p i t a l as s e t s ar e re c o r d e d at es t i m a t e d fa i r ma r k e t va l u e at th e da t e o f do n a t i o n . In f r a s t r u c t u r e Bu i l d i n g s an d Bu i l d i n g Im p r o v e m e n t s La n d Im p r o v e m e n t s He a v y Eq u i p m e n t Fu r n i t u r e an d fu r n i s h i n g s Mo t o r i z e d ve h i c l e s Te c h n o l o g y eq u i p m e n t $ 25 0 , 0 0 0 50 , 0 0 0 25 , 0 0 0 25 , 0 0 0 10 , 0 0 0 10 , 0 0 0 10 , 0 0 0 Th e co s t s o f no r m a l ma i n t e n a n c e an d re p a i r s th a t do no t ad d to th e va l u e o f th e as s e t or ma t e r i a l l y ex t e n d as s e t s li v e s ar e no t ca p i t a l i z e d . CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S T O TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 Ml \ i o r ou t l a y s fo r ca p i t a l as s e t s an d im p r o v e m e n t s ar e ca p i t a l i z e d as projects are constructed. Interest incurred during the co n s t r u c t i o n ph a s e o f ca p i t a l as s e t s of b u a i n e s s - t y p e ac t i v i t i e s is included as part of the capitalized value of the assets co n s t r u c t e d . Fo r th e ye a r tm d e d De c e m b e r 31 , 20 1 5 no in t e r e s t was capitalized in connection with construction in progress. Ca p i t a l as s e t s o f th e Ci t y , as we l l as th e co m p o n e n t un i t s , ar e depreciated using the ~gbt line method over the following es t i m a t e d us e f u l li v e s : Ea s e m e n t s - te m p o r a r y La n d im p r o v e m e n t s Bu i l d i n g s an d st r u c t u r e s Wa t e r an d se w e r ma i n s an d li n e s , wells and storage ta n k s , se w e r li f t st a t i o n s In f r a s t r u c t u r e St r e e t li g h t sy s t e m s Ma c h i n e r y an d eq u i p m e n t I. DE F E R R E D OU T F L O W S O F RE S O U R C E S 5 years 25 years 25 years 25 years 25 years 15 years 3-15 years In ad d i t i o n to as s e t s , th e st a t e m e n t o f fi n a n c i a l po a i t i o n wi l l sometimes report a separate section for deferted outllows of re s o u r c e s . Th i s se p a r a t e fi n a n c i a l st a t e m e n t el e m e n t , de f e r t e d outflows of resources, represents a consumption of net po s i t i o n th a t ap p l i e s to a fu t o r e pe r i o d ( s ) an d so wi l l no t be recognized as an outllow of resources (expense/expenditure) until th e n . Th e Ci t y ha s oo l y on e it e m th a t qu a l i f i e s fo r re p o r t i n g in the category. Aecordingly, the item, deferted pension re s o u r c e s , is re p o r t e d on l y in th e st a t e m e n t s o f ne t po s i t i o n . This item results from actoarial calculations and current year pe n s i o n co n t r i b u t i o n s ma d e su b s e q u e n t to th e me a s u r e m e n t date. J. PE N S I O N S Fo r pw p o s e s o f me s s u r i n g th e ne t pe n s i o n li a b i l i t y / a s s e t , de f e r t e d outllows of resources, deferred inflows of resources, and pe n s i o n ex p e n s e , in f o r m a t i o n ab o u t th e fi d o c i a r y ne t po s i t i o n of the applicable pension and additions to or dedoctioos from th e pe n s i o n pl a n ' s fi d u c i a r y ne t po s i t i o n ha v e be e n de t e r m i n e d oo the same basis as they are reported by the plan except that PE R A ' s fi a c a l ye a r en d is Ju n e 30 . Fo r th i s pu t p O S e , pl a n co n t r i b u t i o n s are recognized as of employer payroll paid dates and be n e f i t pa y m e n t s an d re f u n d s ar e re c o g n i z e d wh e n do e an d payable in accordance with the benefit terms. Investments are re p o r t e d at fa i r va l u e . K. DE F E R R E D IN F L O W S O F RE S O U R C E S In ad d i t i m to li a b i l i t i e s , st a t e m e n t s o f fi n a n c i a l po s i t i o n or balance sheets will soroetimes report a separate section for deferred in f l o w s o f re s o u r c e s . Th i s se p a r a t e fi n a n c i a l st a t e m e n t el e m e n t represents an acquisition of net position that applies to futore pe r i o d s an d so wi l l no t be re c o g n i z e d as an in f l o w o f re s o u r c e s (revenue) until that time. The City has two types of items, wh i c h ar i s e un d e r a mo d i f i e d ac c r u a l ba s i s o f ac c o u n t i n g , wh i c h qualifY for reporting in this category. One item, unavailable re v e n u e , is re p o r t e d on l y in th e go v e r n m e n t a l fu n d s Ba l a n c e Sheet. The governmental funds report unavailable revenue from so u r c e s su c h as : pr o p e r t y ta x e s , ta x in c r e m e n t s , sp e c i a l as s e s s m e n t s and other receivables not collected within 60 days of ye & l ' - e n d . Th e s e am o u n t s ar e de f e r t e d an d re c o g n i z e d as an in f l o w of resources in the period the amounts become available. Th e ot h e r it e m re s u l t s fr o m ac t o a r i a l ca l c u l a t i o n s re l a t e d to th e City's pension obligations. IV-28 CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO T i l E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 L. CO M P E N S A T E D AB S E N C E S It is th e Ci t y ' s po l i c y to pe r m i t em p l o y e e s to ~~£ C U m u l a t e ea r n e d bu t un u s e d va c a t i o n an d si c k pa y be n e f i t s . Al l va c a t i o n an d ve s t e d si c k le a v e pa y is ac c r u e d in th e Pu b l i c Em p l o y e e s Co m p e n s a t e d Ab s e n c e s in t e r n a l se r v i c e fu n d . In ac c o r d a n c e wi t h th e pr o v i s i o n s of S t a t e r n e n t o f Go v e r n m e n t Ac c o u n t i n g St a n d a r d s No . 16 , Ac c o u n t i n g fo r Co m p e n s a t e d Ab s e n c e s , a li a b i l i t y is re c o g n i z e d fo r th a t po r t i o n o f ac c u m u l a t i n g si c k le a v e be n e f i t s th a t is ve s t e d . M. PO S T E M P L O Y M E N T BE N E F I T S OT H E R TH A N PE N S I O N S Un d e r Mi n n e s o t a St a t u t e 47 1 . 6 1 , su b d i v i s i o n 2( b ) , pu b l i c em p l o y e r s mu s t al l o w re t i r e e s an d th e i r de p e n d e n t s to co n t i n u e co v e r a g e in d e f i n i t e l y in an em p l o y e r - s p o n s o r e d he a l t h ca r e pl a n , un d e r th e fo l l o w i n g co n d i t i o n s : I) re t i r e e s mu s t be re c e i v i n g (o r el i g i b l e to re c e i v e ) an an n u i t y fr o m a Mi n n e s o t a pu b l i c pe n s i o n pl a n ; 2) co v e r a g e mu s t co n t i n u e in gr o u p pl a n un t i l ag e 65 an d pa y no mo r e th a n th e gr o u p pr e m i u m ; an d 3) re t i r e e s ma y ob t a i n de p e n d e n t co v e r a g e in n n e d i a t e l y be f o r e re t i r e m e n t . Al l pr e m i u m s ar e fu n d e d on a pa y - a s - y o u - g o ba s i s . Th e li a b i l i t y wa s ac t u a r i a l l y de t e r m i n e d , in ac c o r d a n c e wi t h GA S B St a t e m e n t 45 , at Ja n u a r y I, 20 1 4 . Th e li a b i l i t y is ac c r u e d in th e Pu b l i c Em p l o y e e s Re t i r e m e n t in t e r n a l se r v i c e fu n d . N. LO N G T E R M O B L I G A T I O N S In th e go v e r n m e n t - w i d e fi n a n c i a l st a t e m e n t s an d pr o p r i e t a r y fu n d ty p e s in th e fu n d fi n a n c i a l st a t e m e n t s , lo n g - t e r m de b t an d ot h e r lo n g - t e r m ob l i g a t i o n s ar e re p o r t e d as li a b i l i t i e s in th e ap p l i c a b l e go v e r n m e n t a l ac t i v i t i e s , bu s i n e s s - t y p e ac t i v i t i e s , or pr o p r i e t a r y fu n d ty p e st a t e m e n t o f ne t po s i t i o n . Bo n d pr e m i u m s an d di s c o u n t s , as we l l as is s u a n c e co s t s , ar e im m a t e r i a l an d ar e ex p e n s e d in th e ye a r o f bo n d is s u a n c e . In th e fu n d fi n a n c i a l st a t e m e n t s , go v e r n m e n t a l fu n d ty p e s re c o g n i z e bo n d pr e m i u m s an d di s c o u n t s , as we l l as bo n d is s u a n c e co s t s , du r i n g th e cu r r e n t pe r i o d . Th e fa c e am o u n t o f de b t is s u e d is re p o r t e d as ot h e r fi n a n c i n g so u r c e s . Pr e m i u m s re c e i v e d on de b t is s u a n c e s ar e re p o r t e d as ot h e r fi n a n c i n g so u r c e s wh i l e di s c o u n t s on de b t is s u a n c e s ar e re p o r t e d as ot h e r fi n a n c i n g us e s . Is s u a n c e co s t s , wh e t h e r or no t wi t h h e l d fr o m th e ac t u a l de b t pr o c e e d s re c e i v e d , ar e re p o r t e d as de b t se r v i c e ex p e n d i t u r e s . 0 . FU N D EQ U I T Y Fu n d eq u i t y in th e fu n d fi n a n c i a l st a t e m e n t s is cl a s s i f i e d as fu n d ba l a n c e fo r go v e r n m e n t a l fu n d s an d ne t po s i t i o n fo r pr o p r i e t a r y fu n d s . Fu n d eq u i t y in th e go v e r n m e n t - w i d e fi n a n c i a l st a t e m e n t s is cl a s s i f i e d as ne t po s i t i o n fo r bo t h go v e r n m e n t a l an d bu s i n e s s - - t y p e ac t i v i t i e s . FI U I I I Ba l a n c e - I n th e fu n d fi n a n c i a l st a t e m e n t s , go v e r n m e n t a l fu n d s re p o r t fu n d ba l a n c e in cl a s s i f i c a t i o n s th a t di s c l o s e re s t r a i n t s fo r wh i c h am o u n t s in th o s e fu n d s ca n be sp e n t . Th e s e cl a s s i f i c a t i o n s ar e as fo l l o w s : No n s p e n d a b l e - co n s i s t s o f am o u n t s th a t ar e no t in sp e n d a b l e fo r m or ar e re q u i r e d to be ma i n t a i n e d in t a c t . Re s t r i c t e d - co n s i s t s o f am o u n t s re l a t e d to ex t e r n a l l y im p o s e d co n s t r a i n t s es t a b l i s h e d by cr e d i t o r s , gr a n t o r s or co n t r i b u t o r s ; or co n s t r a i n t s im p o s e d by st a t e st a t u t o r y pr o v i s i o n s . Co m m U t e d - co n s i s t s o f in t e r n a l l y im p o s e d co n s t r a i n t s . Th e s e co n s t r a i n t s ar e im p o s e d by fo r m a l ac t i o n (r e s o l u t i o n ) of th e Ci t y Co u n c i l , wh i c h is th e hi g h e s t le v e l o f de c i s i o n ma k i n g au t h o r i t y . As s i g n e d - co n s i s t s o f in t e r n a l l y im p o s e d co n s t r a i n t s . Th e s e co n s t r a i n t s re f l e c t th e sp e c i f i c pu r p o s e fo r wh i c h it is th e Ci t y ' s in t e n d e d us e . Th e s e co n s t r a i n t s ar e es t a b l i s h e d by th e Ci t y Co u n c i l or , pu r s u a n t to co u n c i l re s o l u t i o n , th e Ci t y Ma n a g e r or th e Di r e c t o r o f Fi n a n c e . CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO Ti l E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 Un a s s i g n e d - is th e re s i d u a l cl a s s i f i c a t i o n fo r th e ge n e r a l fund and also reflects negative residual amounts in other fu n d s . Wh e n bo t h re s t r i c t e d an d un r e s t r i c t e d fu n d ba l a n c e s ar e av a i l a b l e for an allowable use, it is the City's policy to use restricted re s o u r c e s fi r s t , th e n un r e s t r i c t e d re s o u r c e s as th e y ar e ne e d e d . When committed, assigned, or unassigned resources are av a i l a b l e fo r an al l o w a b l e us e , it is th e Ci t y ' s po l i c y to us e resources in the following order; I) committed, 2) assigned, and 3) un a s s i g n e d . Th e Ci t y ha s fo r m a l l y ad o p t e d a fu n d ba l a n c e po l i c y fo r th e General Fund. The policy establishes a year-end target un a s s i g n e d fu n d ba l a n c e am o u n t o f 50 - 5 2 % o f th e ne x t ye a r ' s operating budget for csah flow needs (working capital). At De c e m b e r 31 , 20 1 5 th e un a s s i g n e d fu n d ba l a n c e o f th e Ge n e r a l fund was 52% of the subsequent year's budgeted ex p e n d i t u r e s . Ne t Po s i t i o n - Ne t po s i t i o n re p r e s e n t s th e di f f e r e n c e be t w e e n assets, deferred outflows of resources, deferred inflows of re s o u r c e s , an d li a b i l i t i e s . Ne t po s i t i o n , ne t in v e s t m e n t in ca p i t a l assets, consists of capital assets, net of accumulated de p r e c i a t i o n , re d u c e d by th e ou t s t a n d i n g ba l a n c e s o f an y bo n d s used for the acquisition, construction, or improvement of th o s e as s e t s . Ne t po s i t i o n is re p o r t e d as re s t r i c t e d wh e n th e r e are limitations imposed on their use either through co n a t i t u t i o n a l pr o v i s i o n s or en a b l i n g le g i s l a t i o n , or th r o u g h external restrictions imposed by creditors, grantors, or laws or re g n l a t i o n s o f ot h e r go v e r n m e n t s . Al l re m a i n i n g no t po s i t i o n is reported as unrestricted. Wh e n bo t h re s t r i c t e d an d un r e s t r i c t e d ne t po s i t i o n ar e av a i l a b l e for an allowable use, it is the government's policy to use re s t r i c t e d re s o u r c e s fi r s t , th e n un r e s t r i c t e d re s o u r c e s as th e y are needed. P. IN T E R F U N D TR A N S A C T I O N S ln t e r f u n d se r v i c e s pr o v i d e d an d us e d ar e ac c o u n t e d fo r as re v e n u e s and expenditures or expenses. Transactions that co n s t i t u t e re i m b u r s e m e n t s to a fu n d fo r ex p e n d i t u r e s / e x p e n s e s initially made from it that are properly applicable to another fu n d , ar e re c o r d e d as ex p e n d i t u r e s / e x p e n s e s in th e re i m b u r s i n g fund and as reductions of expenditures/expenses in the fund th a t is re i m b u r s e d . Al l ot h e r in t e r f u n d tr a n s a c t i o n s ar e re p o r t e d as transfers. Q. US E OF ES T I M A T E S Th e pr e p a r a t i o n o f fi n a n c i a l st a t e m e n t s in co n f o r m i t y wi t h GAAP requires management to make estimates and assumptions th a t af f e c t am o u n t s re p o r t e d in th e fi n a n c i a l st a t e m e n t s an d accompanying notes. Actual results could differ from such es t i m a t e s . R. NE W AC C O U N T I N G PR O N O U N C E M E N T S Th e Go v e r n m e n t a l Ac c o u n t i n g St a n d a r d s Bo a r d re c e n t l y ap p r o v e d the following statemcmts which were not implemented in th e s e fi n a n c i a l st a t e m e n t s . Th e ef f e c t th e s e st a n d a r d s ma y ha v e on future financial statements has not been determined at th i s ti m e . St a t e m e n t No . 72 , Fa i r Va l u e Me a s u r e m e n t an d Ap p l i c a t i o n . The primary objective of this statement is to enhance the co m p a r a b i l i t y o f fi n a n c i a l st a t e m e n t s am o n g go v e r n m e n t s by requiring measurement of certain assets and liabilities at fair va l u e us i n g a mo r e de t a i l e d de f i n i t i o n o f fa i r va l u e an d ac c e p t e d valuation techniques. The provisions of this statement are ef f e c t i v e fo r pe r i o d s be g i n n i n g af t e r Ju n e 15 , 2 0 1 5 . IV-29 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 S. CH A N G E IN AC C O U N T I N G PR I N C I P L E S Do r i n g fi s c a l ye a r 20 1 5 , th e Ci t y im p l e m e n t e d se v e r a l ne w ac c o u n t i n g pr o n o u n c e m e n t s is s u e d by th e Go v e r n m e n t Ac c o u n t i n g St a n d a r d s Bo a r d (G A S B ) , in c l u d i n g St a t e m e n t No . 68 , Ac c o u n t i n g an d Fi n a n c i a l Re p o r t i n g fo r Pe n s i o n s - an Am e n d m e n t o f GA S B St a t e m e n t No . 27 an d St a t e m e n t No . 71 , Pe n s i o n Tr a n s i t i o n fo r Co n t r i b u t i o n s Ma d e Su b s e q u e n t to th e Me a s u r e m e n t Da t e - an A m e n d m e n t o f O A S B St a t e m e n t No . 68 , fo r t h e y e a r e n d e d D e c e m b e r 31 , 2 0 1 5 . Th e s e st a n d a r d s re q u i r e d a re t r o a c t i v e im p l e m e n t a t i o n wh i c h re s u l t e d in th e re s t a t e m e n t o f be g i n n i n g ba l a n c e s in th e De c e m b e r 31 , 20 1 4 fi n a n c i a l st a t e m e n t s . Ch a n g e s re l a t e d to th e s e st a n d a r d s ar e re f l e c t e d in th e fi n a n c i a l st a t e m e n t s an d sc h e d u l e s an d re l a t e d di s c l o s u r e s ar e in c l u d e d in No t e 4 an d 5. As a re s u l t o f th e re s t a t e m e n t o f be g i n n i n g ba l a n c e s , th e fo l l o w i n g sc h e d u l e re c o n c i l e s th e pr e v i o o s l y re p o r t e d De c e m b e r 31 , 20 1 4 ba l a n c e s to th e De c e m b e r 31 , 20 1 5 fi n a n c i a l st a t e m e n t s : Ne t Po s i t i o n - be g i n n i n g . as pr e v i o u a l y re p o r t e d Ch a n g e in ac c o u n t i n g pr i n c i p l e Ne t Pe n s i o n As s e t D e f = e d ou t f l o w s re l n t e d to pe n s i o n s De f C ! T e d in f l o w s re l a t e d to pe n s i o n s Ne t pe n s i o n li a b i l i t y To t a l Ne t Po s i t i o n - be g i n n i n g . re s t a t e d Go v e r n m e n t a l Bu s i n e s s - t y p e In t e r n a l Ac t i v i t i e s Ac t i v i t i e s Se r v i c e Fu n d s $ 83 , 3 6 6 , 7 5 0 $ 55 , 3 5 6 , 8 9 7 $ 8, 4 0 1 , 8 9 6 1, 0 5 8 , 4 6 2 65 6 , 6 6 3 66 , 1 6 6 56 4 , 2 8 6 (1 3 8 , 7 4 5 ) (9 , 6 1 7 , 6 0 9 ) ( 1 , 6 3 7 , 7 9 9 ) (1 1 , 2 5 5 , 4 0 8 ) (8 , 0 4 1 , 2 2 9 ) (1 , 5 7 1 , 6 3 3 ) (1 0 , 6 9 1 , 1 2 2 ) $ 75 , 3 2 5 , 5 2 1 $ 53 , 7 8 5 , 2 6 4 $ (2 , 2 8 9 , 2 2 6 ) No t e l ST E W AR D S B I P . CO M P L I A N C E . AN D AC C O U N T A B I L I T Y A. BU D G E T A R Y IN F O R M A T I O N Au n u a l bu d g e t s ar e ad o p t e d on a ba s i s co n s i s t e n t wi t h ac c o u n t i n g pr i n c i p l e s ge n e r a l l y ac c e p t e d in th e Un i t e d St a t e s fo r al l go v e r n m e n t a l fu n d s . Al l an n u a l ap p r o p r i a t i o n s la p s e at fi s c a l ye s r en d . In Se p t e m b e r , th e Ci t y Ma n a g e r su b m i t s to th e Ci t y Co u n c i l pr o p o s e d op e r a t i n g bu d g e t s fa r th e fi s c a l ye a r co m m e n c i n g th e fo l l o w i n g Ja n u a r y . Th e pr o p o s e d ge n e r a l fu n d bu d g e t an d pr e l i m i n a r y ta x le v y mu s t be ce r t i f i e d to th e Co u n t y pr i m : to Se p t e m b e r 30 . Th e Co u n c i l ho l d s pu b l i c he s r i n g s on th e ce r t i f i e d bu d g e t an d le v y an d mu s t su b m i t a fi n a l le v y to th e Co u n t y pr i o r to th e en d of D e c e r n b e r . CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 Th e ap p r o p r i a t e d bu d g e t is pr e p a r e d by fu n d an d de p o r t m e n t . The City Council must authorize any transfer of budgeted am o u n t s be t w e e n de p a r t m e n t s ar fu n d s . Tr a n s f e r s of bu d g e t e d amounts within departments in the General Fund must be au t h o r i z e d by th e Ci t y Ma n s g e r . Th e le g a l le v e l of b u d g e t s r y control is the deportment level fur the Gtmeral Fund and the fu n d le v e l fo r al l ot h e r go v e r n m e n t a l fu n d s . Th e r e we r e no supplemental budgetsry appropriations or amendments do r i n g th e ye a r . Fo r th e ye a r en d e d De c e m b e r 31 , 20 1 5 ex p e n d i t u r e s an d tr a n s f e r s out exceeded appropriations in the following General Fu n d de p a r t m e n t s an d ot h e r go v e r n m e n t a l fu n d s : Final Excess of Budset Actual Appropriations Ma j o r Fu n d s : Ge n e r a l Fu n d : Ma y o r an d co u n c i l $ 122,010 $ 123,085 $ (1,075) As s e s s i n g 201,100 202,443 (1,343) Pa r k an d re c r e a t i o n ad m i n i s t r a t i o n 219,626 221,922 (2,296) Co n v e n t i o n bu r e a u 418,000 510,827 (92,827) No n d e p a r t m e n t a l 404,253 450,129 (45,876) Tr a n s f e r s ou t 187,389 1,176,313 (988,924) Ma j o r Fu n d s : Sp e c i a l Re v e n u e Fu n d s : Ta x In c r e m e n t Di s t r i c t N o . 3 2,505,331 3,879,458 (1,374,127) Ta x ln c r e m t m t Di s t r i c t No . 5 435,437 1,295,482 (860,045) De b t Se r v i c e Fu n d 3,861,553 3,931,993 (70,440) Ca p i t a l Pr o j e c t Fu n d s : Ca p i t a l Im p r o v e m e n t s 956,000 4,127,671 (3,171,671) Mu n i c i p a l St a t e Ai d fo r Co n s t t u c t i o n 2,670,000 2,693,830 (23,830) ln f r a s l r u c t u r e Cm s t t u c t i o n 1,371,595 1,517,830 (146,235) No n m a j o r Fu n d s : Sp e c i a l Re v e n u e Fu n d s : Ec o n o m i c De v e l o p m e n t Au t h o r i t y 436,983 1,137,307 (700,324) Co m m u n i t y De v e l o p m e n t Bl o c k Gr a n t 150,000 368,841 (218,841) Ta x In c r e m e n t Di s t r i c t No . 2 21,655 (21,655) Ta x In c r e m e n t Di s 1 r i c t No . 4 464,683 640,137 (175,454) Ce n t e n n i a l Am p h i t h e a t e r 588,500 632,925 (44,425) Ca p i t a l Pr o j e c t Fu n d s : St t e e t Re c o n s t t u c t i o n 2,150,000 2,270,487 (120,487) IV-30 CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 B. DE F l C I T FU N D EQ f f i T Y De f i c i t fu n d eq u i t y ex i s t s at De c e m b e r 31 , 2 0 1 5 in th e fo l l o w i n g fu n d s : Un a s s i g n e d de f i c i t fu n d ba l a n c e Ma j o r Fu n d s : Ta x l n c r e m e n t D i s t r i c t N o . 5 In f r a s t r u c t u r e Co n s t r u c t i o n No n m a j o r Fu n d s : Co m m u n i t y De v e l o p m e n t Bl o c k Gr a n t Un r e s t r i c t e d de f i c i t ne t po s i t i o n Ma j o r Fu n d s : Go l f Co u r s e Wa t e r Ut i l i t y In t e r n a l Se r v i c e Fu n d s : EE Re t i r e m e n t Be n e f i t Pe n s i m - GE R F Pe n s i o n - PE P F F 2, 2 4 1 , 4 6 6 18 3 , 1 4 5 45 3 93 7 , 3 5 5 91 2 , 1 6 8 14 4 , 8 7 5 6, 3 8 2 , 1 1 8 4, 5 8 1 , 1 9 2 Th e de f i c i t s ar e be i n g fu n d e d th r o u g h in t e r n a l bo r r o w i n g an d wi l l be re p a i d fr o m fu t u r e co l l e c t i o n s of ta x in c r e m e n t , fu t u r e co l l e c t i o n s of sp e c i a l as s e s s m e n t s , in t e r n a l tr a n s f e r s , an d fu t u r e bo n d is s u a n c e . Th e In t e r n a l se r v i c e de f i c i t s wi l l be fu n d e d th r o u g h fu t u r e in t e r f u n d ch a r g e s , st a t e gr a n t re v e n u e s , an d em p l o y e e wi t h o l d i n g s . No t e 3 DE T A I L E D NO T E S ON AL L FU N D S A. DE P O S I T S AN D IN V E S T M E N T S In ac c o r d a n c e wi t h Mi n n e s o t a St a t u t e s , th e Ci t y ma i n t a i n s de p o s i t s at on l y th o s e de p o s i t o r y ba n k s au t h o r i z e d by th e Ci t y Co u n c i l . Al l su c h de p o s i t o r i e s ar e me m b e r s o f th e Fe d e r a l Re s e r v e Sy s t e m . Mi n n e s o t a St a t u t e s r e q u i r e th a t al l Ci t y de p o s i t s be pr o t e c t e d by in s u r a n c e , su r e t y bo n d , or co l l a t e r a l . Th e ma r k e t va l u e of co l l a t e r a l pl e d g e d mu s t eq u a l I I 0' / o o f th e de p o s i t s no t co v e r e d by in s u r a n c e or bo n d s . Au t h o r i z e d co l l a t e r a l in c l u d e s th e le g s ! in v e s t m e n t s de s c r i b e d in No t e I .D . , as we l l as ce r t a i n fi r s t mo r t g n g e no t e s , an d ce r t a i n ot h e r st a t e or lo c a l go v e r n m e n t ob l i g s t i o n s . Mi n n e s o t a St a t u t e s re q u i r e th a t se c o r i t i e s pl e d g e d as co l l a t e r a l be pl a c e d in aa f e k e e p i n g in a re s t r i c t e d ac c o u n t a t th e Fe d e r a l Re s e r v e ba n k , or in an ac c o u n t at a tr u s t de p a r t m e n t o f a co m m e r c i a l ha n k or ot h e r fi n a n c i a l in s t i t u t i o n th a t is no t ow n e d or co n t r o l l e d by th e fi n a n c i a l in s t i t u t i o n fu m i s h i n g th e co l l a t e r a l . At ye a r - e n d , th e Ci t y ' s ca r r y i n g va l u e am o u n t o f de p o s i t s wa s $6 , 7 8 2 , 0 8 1 co m p o s e d o f ba n k ba l a n c e s o f $6 , 7 8 2 , 0 8 1 . A s of D e c e m b e r 31 , 20 1 5 th e Ci t y ha d th e fo l l o w i n g in v e s t m e n t s an d ma t u r i t i e s : In v e s t m e n t ~ Fa i r Va l u e No ma t u r i t y Ne g o t i a b l e ce r t i f i c a t e s of de p o s i t $ 13 , 0 4 6 , 4 2 7 $ Fe d e r a l ag e n c y no t e s 14 , 0 5 6 , 2 7 7 Ex t e r n a l in v e s t m e n t po o l - 4M Fu n d 14 , 1 3 4 , 8 1 6 1 4 , 1 3 4 , 8 1 6 Mo n e y ma r k e t 2, 0 6 9 , 1 1 6 2, 0 6 9 , 1 1 6 To t a l In v e s t m e n t s $ 43 , 3 0 6 , 6 3 6 $ 16 , 2 0 3 , 9 3 2 In v e s t m e n t Ma t u r i t i e s (i n ye a r s ) < I 1 - 3 2, 9 3 9 , 9 3 0 $ 5, 2 2 2 , 8 0 0 1, 0 0 4 , 9 5 4 11 , 0 3 1 , 8 7 5 3 - 5 4, 8 8 3 , 6 9 7 2, 0 1 9 , 4 4 8 3, 9 4 4 , 8 8 4 16 , 2 5 4 , 6 7 5 $ 6, 9 0 3 , 1 4 5 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S T O T H E F I N A N C I A L S T A T E M E N T S De c e m b e r 31 , 20 1 5 As of D e c e m b e r 31 , 20 1 5 , th e Ci t y ba d th e fo l l o w i n g SU I D l D l l l Y of investments related to the credit risk, par values and fair va l u e s of se c u r i t i e s : ID V e s t m e n t 1y P e Cm l i t Ri s k ( * ) Ne g o t i a b l e ce r l i : r u : - of de p o s i t Fe d e r a l ag m c y no t e s Ex t e m a l in v e s t m e n t po o l · 4M Fu n d Mo n e y ma r k e t To t a l l n v e s t m c n 1 S n/ a AA n/ a AA A Par 13,067,000 14,018,115 Fair Value 13,046,427 14,056,277 14,057,174 14,134,816 2,441,867 2,069,116 43,584,156 __ L 43,306,636 % oftotal Portfolio 30.13% 32.46% 32.64% 4.77% 100.00% ( 0 ) Th e cr e d i t ri s k fo r th e Fe d e r a l Ag e n c y No t e s an d Mo n e y Market ratings are provided by S&P. Ca s b an d in v e s t m e n t s at ye a r - e n d co n s i s t o f th e fo l l o w i n g : In v e s t m e n t s De p o s i t s Pe t t y ca s h an d ch a n g e fu n d s To t a l ca s h , ca s h eq u i v a l e n t s , an d in v e s t m e n t s Th e de p o s i t s an d in v e s t m e n t s o f th e Ci t y ar e pr e s e n t e d in th e financial statements as follows: St a t e m e n t of N e t Po s i t i o n Ca s h an d in v e s t m e n t s Ca s h wi t h fi s c a l ag e n t s To t a l $ 43,306,636 6,782,081 13,805 50,102,522 43,320,441 6,782,081 $ 50,102,522 In t e r e s t ra t e ri s k - - Th e Ci t y ' s in v e s t m e n t po l i c y re q u i r e s in t e r e s t earnings remain stable and predictable through at least the ne x t bu d g e t cy c l e an d th a t at le a s t 50 ' / o o f th e in v e s t m e n t po r t f o l i o remain for two or more years with known interest rates. Th e po l i c y al s o st a t e s th a t th e po r t f o l i o sh a l l re m s i n su f f i c i e n t l y liquid to meet all operating requirements that may be re a s o n a b l y ex p e c t e d . Cr e d i t ri s k - - Th e Ci t y ' s in v e s t m e n t po l i c y re s t r i c t s in v e s t m e n t instruments to those authorized by Minnesota Statutes § 118A as li s t e d in No t e I .D . Th e po l i c y al s o re q u i r e s th a t an y co u n t e r p a r t y in investment tranaactions be pro-qualified and approved by th e Ci t y Co u n c i l an d th a t th e po r t f o l i o be di v e r s i f i e d to li m i t potential losses on individual securities. As of December 31, 2015 th e Ci t y ' s in v e s t m e n t in FH L M C , FN M A , FH L B an d FF C B federal agency notes were rated AA by Standsrd & Poors (S & P ) . Th e Ci t y ' s ex t e r n a l in v e s t m e n t po o l is wi t h th e Mi n n e s o t a Municipal Money Market Fund which is regulated by Mi n n e s o t a St a t u t e s an d th e Bo a r d o f Di r e c t o r s o f th e Le a g u e of Minnesota Cities. The 4M fund is a 2a7-like pool and is based on an am o r t i z e d co s t me t h o d th a t ap p r o x i m a t e s fa i r va l u e . IV-31 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 Co n c e n t r a t i o n o f cr e d i t ri s k - Th e Ci t y ' s in v e s t m e n t po l i c y re q u i r e s th a t th e in v e s t m e n t po r t f o l i o be di v e r s i f i e d to mi n i m i z e po t e n t i a l lo s s e s on in d i v i d u a l se c u r i t i e s . As of y e s r en d , th e Ci t y hs d po r t f o l i o co n c e n t r a t i o n s in ex c e s s o f fi v e pe r c e n t (e x c l u d i n g ex t e r n a l in v e s t m < m t p o o l s ) in th e fo l l o w i n g fe d e r a l ag e n c i e s : Fe d e r a l Ho m e Lo a n Mo r t g a g e Co r p o r a t i o n (1 0 . 4 % ) , Fe d e r a l Na t i o u a l Mo r t g a g e As s o c i a t i o n (1 3 . 9 " / o ) Fe d e r a l Fa r m Cr e d i t Ba n k (4 . 7 % ) an d Fe d e r a l Ho m e Le a n Ba n k (3 . 5 % ) . Cu s t o d i a l cr e d i t ri s k Th e Ci t y ' s in v e s t m e n t po l i c y re q u i r e a th a t se c u r i t i e s pu r c h a s e d fr o m an y ba n k or de a l e r be pl a c e d wi t h an in d e p e a d e n t th i r d pa r t y fo r cu s t o d i a l sa f e k e e p i n g . la v e s t m e a t s in in v e s t m e n t po o l s an d mo n e y ma r k e t s ar e no t ev i d e n c e d by se c u r i t i e s th a t ex i s t in ph y s i c a l or bo o k en t r y fo r m , an d th e r e f o r e ar e no t su b j e c t to cu s t o d i a l cr e d i t ri s k di s c l o s u r e s . Al l of th e Ci t y ' s re m a i n i n g in v e s t m e n t s we r e he l d in an in s t i t u t i o n a l tr u s t un d e r co n t r a c t wi t h th e Ci t y fo r sa f e k e e p i n g se r v i c e s . B. RE C E I V A B L E S Si g n i f i c a n t re c e i v a b l e ba l a n c e s no t ex p e c t e d to be co l l e c t e d wi t h i n on e ye a r o f De c e m b e r 31 , 20 1 5 ar e as fo l l o w s : De l i n q u e a t De l i n q u e n t Pr o p e r t y Ta x Sp e c i a l Mu n i c i p a l No t e s Ta x e s la c r e m e n t s As s e s s m e n t s St a t e > - Ai d __ _ _ . Re c e i v a b l e Ma j o r Fu n d s : Ge n e r a l $ 26 8 , 5 8 6 $ $ 12 9 , 3 5 9 $ Ta x l n c r e m e n t D i s t r i c t N o . 3 89 , 8 0 6 Ta x la c r e m e n t Di s t r i c t N o . 5 11 0 , 4 9 3 27 9 , 4 0 0 De b t Se r v i c e 2, 9 1 8 , 8 8 8 Ca p i t a l i m p r o v e m e n t s 9, 4 4 2 2, 0 3 6 Mu n i c i p a l St a t e Ai d fo r Co n s t r u c t i o n 2, 6 9 9 , 3 2 2 la f r a s t r u c t u r e Co n s t r u c t i o n 1, 4 3 4 , 7 6 8 No n m a j o r F u n d s Ho u s i n g an d Re d e v e l o p m e n t Au t h o r i t y 6, 6 6 3 To t a l $ 28 4 , 6 9 1 $ 20 0 , 2 ! 1 _ ! 1 _ _ $ 4, _ 4 8 5 , 0 5 1 $ 2, 6 9 9 , 3 2 2 $ 27 9 , 4 0 0 Th e Ec o n o m i c De v e l o p m e n t Au t h o r i t y (E D A ) of f e r s a dc w n pa y m e n t aa d cl o s i n g co s t as s i s t a n c e pr o g r a m to ho m e bu y e r s pu r c h a s i n g fo r e c l o s e d or va c a a t pr o p e r t i e s as th e i r pr i n c i p a l re s i d e n c e . Th e pr o g r a m of f e r s up to a $1 0 , 0 0 0 , no - i n t e r e s t de f e r r e d lo a n th a t is fo r g i v a b l e i f th e bo r r o w e r re s i d e s in th e pr o p e r t y fo r fi v e co n s e c u t i v e ye a r s . As of De c e m b e r 31 , 20 1 5 , th e ba l a n c e o f th e s e lo a n s is $5 1 3 , 7 5 0 . Th e r e ha s be e n an al l o w a n c e fo r dc u b t f u l ac c o u n t s re c o r d e d fo r th e sa m e am o u a t , as it is fu l l y ex p e c t e d th a t th e s e lo a n s wi l l be fo r g i v e n . CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 C. CA P I T A L AS S E T S Ca p i t a l as s e t ac t i v i t y fo r th e ye a r en d e d De c e m b e r 31 , 20 1 5 was as follows: Go v e r n n u m t a l ac t i v i t i e s : Ca p i t a l as s e t s , no t be i n g de p r e c i a t e d : La n d Ea s e m e n t s - pe r p e t u a l Co n s t r u c t i o n in pr o g r e s s To t a l ca p i t a l as s e t s , no t be i n g de p r e c i a t e d Ca p i t a l as s e t s , be i n g de p r e c i a t e d : Ea s e m e n t s - te m p o r a r y Bu i l d i n g s an d im p r o v e m e n t s Pa r k im p r o v e m e n t s Ma c h i n e r y an d eq u i p m e n t St r e e t in f r a s t r u c t u r e To t a l ca p i t a l as s e t s , be i n g de p r e c i a t e d Le s s ac c u m u l a t e d de p r e c i a t i o n fo r : Ea s e m e n t s - te m p o r a r y Bu i l d i n g s an d im p r o v e m e n t s Pa r k im p r o v e m e n t s Ma c h i n e r y an d eq u i p m e n t St r e e t in f r a s t r u c t u r e To t a l ac c u m u l a t e d de p r e c i a t i o n To t a l ca p i t a l as s e t s be i n g de p r e c i a t e d - ne t Go v e r n m e n t a l ac t i v i t i e s ca p i t a l as s e t s - ne t Beginaing Balance $ 3,537,473 88,704 3,276,213 6,902,390 Increases 8,829,037 8,829,037 Decreases (3,094,112) (3,094,112) Ending Balance 3,537,473 88,704 9,011,138 12,637,315 22,715 22,715 19,566,900 632,925 (280,291) 19,919,534 10,500,244 10,500,244 9,246,814 1,066,068 (658,634) 9,654,248 42,009,818 3,036,991 45,046,809 81,346,491 4,735,984 (938,925) 85,143,550 16,287 11,847,970 4,544,355 5,483,811 16,963,881 38,856,304 4,538 725,174 227,393 786,681 1,507,430 3,251,216 20,825 (280,291) 12,292,853 4,771,748 (579,412) 5,691,080 18,471,311 (859,703) 41,247,817 42,490,187 1,484,768 (79,222) 43,895,733 $ 49,392,577 $ 10,313,805 $ (3,173,334) $ 56,533,048 De p r e c i a t i o n ex p e n s e wa s ch a r g e d to fu n c t i o n s / p r o g r a m s o f the City as follows: Go v e r n m e n t a l ac t i v i t i e s : Ge n e r a l go v e r n m e n t Pu b l i c sa f e t y Pu b l i c wo r k s Pa r k s aa d re c r e a t i o n Ca p i t a l as s e t s he l d by th e Ci t y ' s in t e r u a l se r v i c e fu n d s are ch a r g e d to th e va r i o u s fu n c t i o n s ba s e d on th e i r us a g e of the assets To t a l de p r e c i a t i o n ex p e n s e - go v e r n m e n t a l ac t i v i t i e s 71,389 397,011 1,779,286 241,901 761,629 3,251,216 IV-32 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 Bu s i n e s s - t y p e ac t i v i t i e s : Ca p i t a l as s e t s , no t be i n g de p r e c i a t e d : La n d Ea s e m e n t s - pe r p e t u a l Co n s t r u c t i o n in pr o g r e s s To t a l ca p i t a l as s e t s , no t be i n g de p r e c i a t e d Ca p i t a l as s e t s , be i n g de p r e c i a t e d : Ea s e m e n t s - te m p o r a r y La n d im p r o v e m e n t s Bu i l d i n g s an d im p r o v e m e n t s Ma c h i n e r y an d eq u i p m e n t St r e e t li g h t sy s t e m s Ma i n s an d li n e s To t a l ca p i t a l as s e t s , be i n g de p r e c i a t e d Le s s ac c u m u l a t e d de p r e c i a t i o n fo r : Ea s e m e n t s - te m p o r a r y La n d im p r o v e m e n t s Bu i l d i n g s an d im p r o v e m e n t s Ma c h i n e r y an d eq u i p m e n t St r e e t li g h t sy s t e m s Ma i n s an d li n e s To t a l ac c u m u l a t e d de p r e c i a t i o n To t a l ca p i t a l as s e t s be i n g de p r e c i a t e d - ne t Bu s i n e s s - t y p e ac t i v i t i e s ca p i t a l as s e t s - ne t Be g i n n i n g Ba l a n c e $ 3, 1 9 4 , 9 8 3 10 , 2 8 5 8, 4 2 5 , 5 1 1 11 , 6 3 0 , 7 7 9 20 , 3 3 5 44 2 , 8 9 1 18 , 8 6 2 , 8 5 3 95 9 , 6 6 9 77 4 , 8 8 6 67 , 8 6 4 , 3 8 9 88 , 9 2 5 , 0 2 3 14 , 5 8 1 24 6 , 3 2 0 15 , 5 5 5 , 4 8 3 66 1 , 6 9 3 14 4 , 5 4 4 35 , 3 9 6 , 0 4 9 52 , D l 8 , 6 7 0 36 , 9 0 6 , 3 5 3 $ 48 , 5 3 7 , 1 3 2 De p r e c i a t i o n ex p e n s e wa s ch a r g e d to fu n c t i o n s / p r o g r a m s o f 1h e Ci t y as fo l l o w s : Bu s i n e s s - t y p e ac t i v i t i e s : Mu n i c i p a l li q u o r Go l f co u r s e Ea r l e Br o w n He r i t a g e Ce n t e r Wa t e r ut i l i t y Sa n i t a r y se w e r ut i l i t y St o r m dr a i n a g e u t i l i t y St r e e t li g h t ut i l i t y To t a l de p r e c i a t i o n ex p e n s e - bu s i n e s s - t y p e ac t i v i t i e s In c r e a s e s $ 20 , 9 0 8 , 8 3 0 20 , 9 0 8 , 8 3 0 10 1 , 0 3 1 31 , 9 7 1 57 , 9 0 3 3, 9 3 4 , 2 4 7 4, 1 2 5 , 1 5 2 4, 0 6 3 16 , 6 2 7 73 8 , 8 7 2 56 , 4 0 9 53 , 5 6 7 2, 4 3 3 , 6 9 0 3, 3 0 3 , 2 2 8 82 1 , 9 2 4 $ 21 , 7 3 0 , 7 5 4 En d i n g De c r e a s e s Ba l a n c e $ $ 3, 1 9 4 , 9 8 3 10 , 2 8 5 (3 , 6 9 7 , 7 3 7 ) 25 , 6 3 6 , 6 0 4 (3 , 6 9 7 , 7 3 7 ) 28 , 8 4 1 , 8 7 2 20 , 3 3 5 44 2 , 8 9 1 18 , 9 6 3 , 8 8 4 99 1 , 6 4 0 83 2 , 7 8 9 71 , 7 9 8 , 6 3 6 93 , 0 5 0 , 1 7 5 18 , 6 4 4 26 2 , 9 4 7 (5 3 , 5 9 6 ) 16 , 2 4 0 , 7 5 9 71 8 , 1 0 2 19 8 , 1 1 1 53 , 5 9 6 37 , 8 8 3 , 3 3 5 55 , 3 2 1 , 8 9 8 37 , 7 2 8 , 2 7 7 $ (3 , 6 9 7 , 7 3 7 ) $ 66 , 5 7 0 , 1 4 9 $ 16 , 9 6 6 18 , 7 3 7 62 0 , 2 4 9 70 3 , 9 3 3 78 3 , 5 0 0 1, 1 0 6 , 2 7 6 53 , 5 6 7 $~ 3 , 2 2 8 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 CO N S T R U C T I O N CO M M I T M E N T S At De c e m b e r 31 , 20 1 5 1 h e Ci t y ha d co n s t r u c t i o n pr q j e c t co n t r a c t s in progress. The commitments related to remaining co n t r a c t ba l a n c e s ar e su m m a r i z e d as fo l l o w s : Pr o j e c t Fr e e w a y Pa r k Ar e a Im p r o v e m e n t s 63 r d A ve n u e Re c o n s t r u c t i o n Pr o j e c t 20 1 4 Ca p i t a l Ma i n t e n a n c e Bu i l d i n g Pr o g r a m Pr o j e c t Wa t e r Tr e a t m e n t Pl a n t To t a l D. IN T E R F U N D BA L A N C E S AN D TR A N S F E R S Th e co m p o s i t i o n o f du e to / f r o m ot h e r fu n d ba l a n c e s at De c e m b e r 31, 2015 are as follows: Fu n d Ma j ( ) f Fu n d S : Ge n e r a l Ca p i t a l Im p r o v e m e n t s Mu n i c i p a l St a t e Ai d fo r Co n s t r u c t i o n In f r a s t r u c t u r e Co n s t r u c t i o n Go l f Co u r s e To t a l Due from Due to Oilier Funds Oilier Funds 144,982 $ 706,834 851,816 655,248 51,586 144,982 851,816 Contract Amount 6,768,387 4,310,875 3,702,259 18,066,121 32,8'47,642' Remaining Commitment 478,149 209,131 91,500 247,439 1,026,219 ln t e r f u n d du e to / f r o m ba l a n c e s ar e re p r e s e n t a t i v e of le n d i n & ' b o r r o w i n g arrangements to cover deficit cash balances at 1he end of 1 h e fi s c a l ye a r . Ba l a n c e s wi l l be pa i d wi 1 h fu t u r e op e r a t i n g revenues and/or interfund transfers, collections of special as s e s s m e n t s on be n e f i t i n g pr o p e r t y ow n e r s , an d re c e i p t of M u n i c i p a l State Aid funds. In d i v i d u a l fu n d ad v a n c e s to an d ad v a n c e s fr o m ot h e r fu n d s at December 31, 2015 are as follows: Advances to Advances From Fu n d Oilier Funds Oilier Funds Ma j o r Fu n d s : Ta x In c r e m e n t Di s t r i c t No . 5 $ $ 2,463,683 Ca p i t a l Im p r o v e m e n t s 792,488 Go l f Co u r s e 792,488 No n m a j o r F u n d s : Ta x In c r e m e n t Di s t r i c t No . 2 2,463,683 3,256,171 $ 3,256,171 IV-33 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 Th e $2 , 4 6 3 , 6 8 3 ad v a n c e be t w e e n th e Ta x In c r e m e n t Di s t r i c t No . 2 an d th e Ta x In c r e m e n t Di s t r i c t No . 5 fu n d s wa s ma d e to pr o v i d e fu n d i n g fo r a sp e c i f i c de v e l o p m e n t pr o j e c t wi t h i n th e Ci t y . Th e fi n a n c i n g pl a n ad o p t e d fo r th e Ta x In c r e m e n t Di s t r i c t No . 5 hn s th e re p a y m e n t o f pr i n c i p a l sc h e d u l e d to be g i n in 20 2 4 , ho w e v e r cu r r e n t ca a h fl o w ~e c t i o n s im p l y a mo r e im m e d i a t e re p a y m e n t pl n n , be g i n n i n g in 20 2 2 . Th e $7 9 2 , 4 8 8 ad v a n c e be t w e e n th e Go l f Co u r s e an d Ca p i t a l Im p r o v e m e n t s fu n d wa s ma d e fo r im p r o v e m e n t s to th e go l f co u r s e . A re p a y m e n t sc h e d u l e fo r th i s ad v a n c e hn a no t ye t be e n ad o p t e d . Th e co m p o s i t i o n o f in t e r f u n d tr a n s f e r s as of De c e m b e r 31 , 20 IS ar e as fo l l o w s : Go v e r n m e n t a l Fu n d s : M. Y o r F u n d s : Ge n e r a l Ta x l n c r e m e n t D i s t r i c t N o . 3 De b t Se r v i c e Ca p i t a l Im p r o v e m e n t s No n m a j o r Fu n d s : Ho u s i n g an d Re d e v e l o p m e n t Au t h o r i t y Ec o n o m i c De v e l o p m e n t Au t h o r i t y Ci t y In i t i a t i v e s Gr a n t Fu n d Ce n t e n n i a l Am p h i t h e a t e r Co m m u n i t y De v e l o p m e n t Bl o c k Gr a n t Te c h n o l o g y To t a l go v e r n m e n t a l fu n d s Pr o p r i e t a r y Fu n d s : Ma j o r Fu n d s : Mu n i c i p a l Li q u o r Go l f Co u r s e Ea r l e Br o w n He r i t s g e Ce n t e r St o r m Dr a i n a g e Ut i l i t y Go v e r n m e n t a l ac t i v i t i e s : In t e r n a l Se r v i c e To t a l pr o p r i e t a r y fu n d s To t a l al l fu n d s Tr a n s f e r In Tr a n s f e r Ou t 20 1 , 6 8 4 $ 1, 1 7 6 , 3 1 3 2, 3 9 5 , 9 8 2 2, 3 9 5 , 9 8 2 1, 1 2 5 , 2 1 6 26 4 , 3 1 9 27 4 , 3 6 3 27 4 , 3 6 3 13 , 5 8 4 30 9 , 3 1 9 18 8 , 1 0 0 23 5 , 0 2 0 4, 5 4 1 , 5 8 4 4, 3 1 2 , 6 6 1 21 6 , 4 5 5 40 , 0 0 0 14 , 8 5 7 45 , 0 0 0 7, 3 8 9 47 , 3 8 9 27 6 , 3 1 2 4, 5 8 8 , 9 7 3 $ 4, 5 8 8 , 9 7 3 ln t e r f u n d tr a n s f e r s al l o w th e Ci t y to al l o c a t e fi n a n c i a l re s o u r c e s to th e fu n d s th a t re c e i v e be n e f i t fr o m se r v i c e s pr o v i d e d by an o t h e r ll m d or to pr o v i d e ad d i t i o n a l ca p i t a l an d in f r a s t t u c t o r e fu n d i n g . In ad d i t i o n , in t e r f u n d tr a n s f e r s ar e oc c a s i o n a l l y au t h o r i z e d to al l o w re d i s l r i b u t i o n o f re s o u r c e s be t w e e n fu n d s fo r th e mo s t ef f i c i e n t us e o f fu n d s . In 20 1 5 , th e fo l l o w i n g no n - r o u t i n e tr a n s f e r s we r e ma d e be t w e e n fu n d s : Th e Ge n e r a l fu n d tr a n s f e r t e d $9 0 8 , 7 6 1 , an d th e Mu n i c i p a l Li q u o r fu n d tr a n s f e r t e d $2 1 6 , 4 5 5 to th e Ca p i t a l Im p r o v e m e n t s fu n d in ac c o r d a n c e wi t h th e Ci t y ' s Ca p i t a l Pr o j e c t Fu n d i n g po l i c y . CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO T i l E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 E. OP E R A T I N G LE A S E S Th e Ci t y hn a le n a e d a po r t i o n o f th e po l i c e se c o n d fl o o r ex p a n s i o n area to the Local Government Information Systems As s o c i a t i o n (L O G IS ) as a ba c k u p co m p u t e r fa c i l i t y . Th e le a s e hna a term of five yesrs, commencing on August I, 2011 and ca l l s fo r mo n t h l y le a s e pa y m e n t s ba s e d on sq U I I l ' e - f o o t a g e . Lease revenue for the year ended December 31, 2015 was $1 3 , 2 0 0 . Fu t u r e mi n i m u m le a s e re v e n u e s un d e r th e cu r r e n t agreement is as follows: Year Ending 2016 Total Minimum Rents $ 7,700 Th e Ci t y Je s s e s sp a c e fo r it s mu n i c i p a l li q u o r st o r e s . Th e le a s e s are leu-year leases and began in 2010 and 2013. The leases pr o v i d e fo r a mi n i m u m mo n t h l y ba s e re n t pa y m e n t , pl u s a pr o - r a t a shnre of common area expenaes. Additionallesae payments ar e re q u i r e d if ag r e e d - u p o n re v e n u e th r e s h o l d s ar e at t a i n e d . These leases may be cancelled at the City's oprion if the City ce a s e s li q u o r op e r a t i o n s . To t a l re n t a l ex p e n s e un d e r th e le s a e agreements for the year ended December 31, 2015 was $3 1 1 , 5 5 3 . Fu t u r e mi n i m u m ba s e re n t pa y m e n t s un d e r th e cu r r e n t agreemcmts are as follows: Year Ending 2016 2017 2018 2019 2020 2021-2023 Total Minimum Rents $ 234,888 234,888 234,888 234,888 164,124 280,080 1,383,756 Th e Ci t y is th e le s s o r in an op e r a t i n g l e a s e fo r a bu i l d i n g be i n g used for a sit-down restaurant. The lease was originally signed in 20 1 1 wi t h a te n ye a r te r m wi t h an op r i o n to ex t e n d fo r an additional five years. For the year ended 2015, the City received $1 7 7 , 2 1 3 in re n t a l re v e n u e . Fu t u r e mi n i m u m ba s e re n t re v e n u e s under the current agreement are as follows: Yesr Total Endins Minimum Rents 2016 $ 67,838 2017 84,378 2018 92,816 2019 102,942 2020 112,048 2021 96,190 $ 556,212 IV-34 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 F. LO N G - T E R M DE B T GO V E R N M E N T A L AC T M T I E S Th e Ci t y is s u e d ge n e r a l ob l i g a t i o n im p r o v e m e n t bo n d s to pr o v i d e fu n d s fo r th e co n s t r u c t i o n o f ma j o r ca p i t a l fa c i l i t i e s an d co n s t r n c t i o n o f in f r a s t r u c t u r e . Th e s e bo n d s ar e re p o r t e d in th e go v e r n m e n t a l ac t i v i t i e s o f th e Ci t y . Th e Ci t y is s u e d ge n e r a l ob l i g a t i o n ts x in c r e m e n t bo n d s tc fi n a n c e va r i o u s re d e v e l o p m e n t pr o j e c t s an d re d e v e l o p m e n t pr o p e r t y ac q u i s i t i o n s wi t h i n th e Ci t y . Th e s e bo n d s ar e re p o r t e d in th e go v e r n m e n t a l ac t i v i t i e s o f th e Ci t y . G. O . Ta x In c r e m e n t Bo n d s : Ta x a b l e Ta x In c r e m e n t Bo n d s o f 20 0 4 D Ta x a b l e Ta x In c r e m e n t Bo n d s of 2 0 0 8 A Ta x a b l e Ta x ln c r e m e n t B o o d s of 2 0 1 3 A Ta x a b l e Ta x In c r e m e n t Re f u n d i n g Bo n d s of 20 1 5 B To t a l G . O . Ta x l n c r e m e n t B o n d s G. O . Im p r o v e m e n t Bo n d s : Im p r o v e m e n t Bo n d s , 20 0 6 A Im p r o v e m e n t Bo n d s , 20 0 8 B Im p r o v e m e n t Bo n d s , 20 1 3 B Im p r o v e m e n t Bo n d s , 20 1 5 A To t a l G. O . Im p r o v e m e n t Bo n d s To t a l - bo n d e d in d e b t e d n e s s Ot h e r Li a b i l i t i e s : Co m p e n s a t e d ab s e n c e s pa y a b l e Ne t pe n s i o n li a b i l i t y Ne t OP E B ob l i g a t i o n To t a l go v e r n m e n t a l ac t i v i t i e s In t e r e s t Ra t e s Da t e 4. 7 5 - 5 . 1 3 % 12 / 0 1 / 2 0 0 4 3. 0 0 - 5. 3 0 ' 4 > 05 / 0 1 / 2 0 0 8 2. 0 0 - 3 . 2 5 % 12 / 1 9 / 2 0 1 3 3. 0 0 ' 4 > 07 / 0 9 / 2 0 1 5 3. 5 5 - 3. 8 0 ' 4 > 12 / 1 5 / 2 0 0 6 3. 2 5 - 4. 2 5 % 12 / 1 5 / 2 0 0 8 3. 0 0 ' 4 > 12 / 1 9 / 2 0 1 3 2. 0 0 - 2. 5 0 ' / o 07 / 0 9 / 2 0 1 5 Fi n a l Ma t u r i t y Da t e 02 / 0 1 / 2 0 2 0 02 / 0 1 / 2 0 1 8 02 / 0 1 / 2 0 2 2 02 / 0 1 / 2 0 2 0 02 / 0 1 / 2 0 1 7 02 / 0 1 / 2 0 1 9 02 / 0 1 1 2 0 2 4 02 / 0 1 / 2 0 2 6 Or i g i n a l Pa y a b l e Is s u e 12 - 3 1 - 1 5 $ 17 , 2 4 5 , 0 0 0 $ 8, 1 2 0 , 0 0 0 4, 3 3 5 , 0 0 0 37 5 , 0 0 0 6, 0 4 0 , 0 0 0 5, 7 9 0 , 0 0 0 6, 6 0 0 , 0 0 0 6, 6 0 0 , 0 0 0 34 , 2 2 0 , 0 0 0 ~0 , 8 8 5 , 0 0 0 1, 4 6 0 , 0 0 0 19 5 , 0 0 0 2, 3 9 0 , 0 0 0 86 5 , 0 0 0 4, 9 2 0 , 0 0 0 4, 1 1 5 , 0 0 0 3, 4 1 6 , 2 4 8 3, 4 1 6 , 2 4 8 12 , 1 8 6 , 2 4 8 8, 5 9 1 , 2 4 8 $ 46 , 4 0 6 , 2 4 8 29 , 4 7 6 , 2 4 8 1, 2 5 4 , 8 5 1 11 , 5 0 9 , 4 7 6 71 0 , 6 0 5 42 , 9 5 1 , 1 8 0 CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 Al l lo n g - t e r m bo n d e d in d e b t e d n e s s ou t s t a n d i n g at De c e m b e r 31, 2015 is backed by the full faith and credit of the City, including im p r o v e m e n t an d ts x in c r e m e n t bo n d is s u e s . Bo n d s in th e governmental activities will be retired by future property tsx levies, ts x in c r e m e n t s or sp e c i a l as s e s s m e n t s ac c u m u l a t e d in th e sp e c i f i c debt services funds. In the event thet a deficiency exists be c a n s e o f un p a i d or de l i n q u e n t ts x e s or sp e c i a l as s e s s m e n t s at the time a debt service payment is due, the City must provide re s o u r c e s tc co v e r th e de f i c i e n c y un t i l ot h e r re s o u r c e s ar e av a i l a b l e . At the end of the current year, there are $11,753,632 of as s e t s ac c u m u l a t e d in th e de b t se r v i c e fu n d s fo r fu t u r e de b t service. Included within those accumulated assets, there was $6 , 7 8 2 , 0 8 1 he l d by a fi s c a l ag e n t an d th e r e wa s a co m b i n e d $2,923,530 of delinquent property tsxes and special assessments re c e i v a b l e . An n u a l de b t se r v i c e re q u i r e m e n t s tc ma t u r i t y fo r go v e r n m e n t a l activities long-term debt are as follows: BU S I N E S S - TY P E AC T M T I E S Ye a r En d i n g De c e m b e r 3 1 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 20 2 1 - 2 0 2 5 20 2 6 To t a l Governmental Activities G.O. Tax Increment Bonds G.O. lmprovema1t Bonds Principal Interest Principal Interest 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 $ 8,591,2<1l!_$ 1,028,764 Th e Ci t y is s u e d ge n e r a l ob l i g a t i o n re v e n u e bo n d s to fi n a n c e the metering of all City connected water and sewer utility services in 20 1 0 wh i c h we r e re f u n d e d in 20 1 5 . Th e Ci t y al s o is s u e d general obligatim revenue bonds in 2015 for utility portims of in f r a s t r n c t u r e im p r o v e m e n t pr o j e c t s an d a Re v e n u e No t e fi n a n c e d by the MN Public Facilities Authority Drinking Water State Re v o l v i n g Fu n d fo r th e co n s t r u c t i o n o f a ne w wa t e r tr e a t m e n t plant authorized in the amount of $19,662,352. As of December 31 , 20 1 5 , on l y $1 7 , 5 6 0 , 5 1 0 o f th e Re v e n u e No t e ha s be e n dr a w n down. These bonds are reported in the business-type ac t i v i t i e s o f th e Ci t y . Final In t e r e s t Maturity Original Payable Ra t e s Date Date Issue 12/31/2015 Ge n e r a l Ob l i g a t i o n Ta x a b l e Ut i l i t y Re v e n u e Bo n d s : Re v e n u e Bo n d s o f 20 1 5 A 2. 0 0 - 2. 5 0 ' 4 > 07/09/2015 02/01/2026 $ 1,823,752 $ 1,823,752 Re v e n u e Re f u n d i n g Bo n d s of 20 1 5 A 2. 0 0 - 2. 5 0 ' / o 07/09/2015 02/01/2026 1,660,000 1,660000 To t a l Ge n e r a l Ob l i g a t i o n Ta x a b l e Ut i l i t y Re v e n u e Bo n d s 3,483,752 3,483,752 Ge n e r a l Ob l i g a t i o n Ta x a b l e Ut i l i t y Re v e n u e No t e s : PF A Re v e n u e No t e of 2 0 1 5 1. 0 0 ' 4 > 01/20/2015 08/20/2034 17,560,510 17,545,158 T ot a 1 bu s i n e s s - t y p e ac t i v i t i e s _j;_ 21,044,262 $ 21,028,910 IV-35 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO T i f f i FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 An n u a l de b t se r v i c e re q u i r e m e n t s tc ma t u r i t y fo r bu s i n e s s - t y p e ac t i v i t i e s lo n g - t e r m de b t ar e as fo l l o w s : Bu s i n e s s - T x . e e Ac t i v i t i e s Ye a r En d i n g G. O . Re v e n u e Bo n d s G. O . Re v e n u e No t e s De c e m b e r 3 1 Pr i n c i J ! ! ! ! In t e r e s t Pr i n c i J ! ! ! ! In t e r e s t 20 1 6 $ 14 0 , 0 0 0 $ 76 , 4 1 5 $ 94 4 , 0 0 0 $ 17 3 , 3 5 1 20 1 7 34 2 , 5 0 3 67 , 1 0 9 95 4 , 0 0 0 18 7 , 0 3 0 20 1 8 33 9 , 0 2 2 60 , 2 9 3 96 3 , 0 0 0 17 7 , 4 9 0 20 1 9 34 2 , 5 0 3 53 , 4 7 8 97 3 , 0 0 0 16 7 , 8 6 0 20 2 0 34 4 , 2 4 3 46 , 6 1 1 98 2 , 0 0 0 15 8 , 1 3 0 20 2 1 - 2 0 2 5 1, 7 8 4 , 0 5 7 12 5 , 0 0 2 5, 0 6 1 , 0 0 0 64 1 , 3 5 0 20 2 6 - 2 0 3 0 19 1 , 4 2 4 2, 3 9 3 5, 3 2 0 , 0 0 0 38 3 , 1 6 0 20 3 1 - 2 0 3 4 2, 3 4 8 , 1 5 8 11 1 , 8 0 0 To t a l $ 3, 4 8 3 , 7 5 2 $ 43 1 , 3 0 1 $ 17 , 5 4 5 , 1 5 8 $ 2, 0 0 0 , 1 7 1 Th e ut i l i t y re v e n u e bo n d s an d no t e a ar e ba c k e d by th e fu l l fa i t h an d cr e d i t o f th e Ci t y . Bo n d s an d No t e s in th e bu s i n e s s - t y p e ac t i v i t i e s wi l l be re t i r e d wi t h th e ne t re v e n u e s o f th e Wa t e r Ut i l i t y an d Sa n i t a r y Se w e r Ut i l i t y sy s t e m s . (N e t re v e n u e s o f ea c h sy s t e m ar e de f i n e d as th e ex c e s s o f gr o a s re v e n u e s an d ea r n i n g s ov e r th e no r m a l , re a s o n a b l e , an d cn r r e n t co s t s o f op e r a t i n g an d ma i n t a i n i n g th e sy s t e m . ) In th e ev e n t th a t a de f i c i e n c y ex i s t s be c a u s e o f in a d e q u a t e ne t re v e n u e s at th e ti m e a de b t se r v i c e pa y m e n t is du e , th e Ci t y mu s t pr o v i d e re s o u r c e s tc co v e r th e de f i c i e n c y un t i l ot b e r re s o u r c e s ar e av a i l a b l e . Fo r th e ye a r en d e d De c e m b e r 31 , 20 1 5 , th e wa t e r an d se w e r ut i l i t y fu n d s pr o v i d e d ne t re v m u e s (e x c l u d i n g bo n d re f u n d i n g ) o f $1 , 0 0 1 , 8 9 1 , wh i c h ac c o u n t s fo r a de b t - s e r v i c e co v e r a g e ra t i o of 2 5 4 . 4 5 % . CH A N G E IN LO N G - T E R M LI A B I I J T I E S Lo n g - t e r m li a b i l i t y ac t i v i t y fo r th e ye a r en d e d De c e m b e r 31 , 20 1 5 wa s as fo l l o w s : Go v e r n m e n t a l ac t i v i t i e s : Bo n d s pa y a b l e : G. O . ta x in c r e m e n t bo n d s G. O . im p r o v e m e n t bo n d s To t a l bo n d s pa y a b l e Co m p e n s a t e d ab s e n c e s Pe n s i o n li a b i l i t y : GE R F • PE P F F • Ne t OP E B ob l i g a t i o n To t a l go v e r n m e n t ac t i v i t y lo n g - t e r m li a b i l i t i e s Bu s i n e s s - t y p e ac t i v i t i e s : Bo n d s pa y a b l e : G. O . re v e n u e bo n d s G. O . re v e n u e no t e s To t a l bu s i n e s s - t y p e ac t i v i t y lo n g - t e r m li a b i l i t i e s Be g i n n i n g Ba l a n c e $ 16 , 0 4 0 , 0 0 0 6, 4 4 5 , 0 0 0 22 , 4 8 5 , 0 0 0 1, 2 8 2 , 0 9 3 62 9 , 9 9 4 Ad d i t i o n s $ 6, 6 0 0 , 0 0 0 3, 4 1 6 , 2 4 8 10 , 0 1 6 , 2 4 8 14 6 , 5 3 0 6, 5 6 2 , 7 6 4 5, 2 5 9 , 0 4 0 22 9 , 2 3 7 !_ 2 4 . ~ 9 7 , 0 8 7 __ $ 22 , 2 1 3 , 8 1 9 $ 1, 8 0 0 , 0 0 0 $ 3, 4 8 3 , 7 5 2 17 , 5 6 0 , 5 1 0 Re d u c t i o n s En d i n g Ba l a n c e $ (1 , 7 5 5 , 0 0 0 ) $ 20 , 8 8 5 , 0 0 0 (1 , 2 7 0 , 0 0 0 ) 8, 5 9 1 , 2 4 8 (3 , 0 2 5 , 0 0 0 ) 29 , 4 7 6 , 2 4 8 (1 7 3 , 7 7 2 ) 1, 2 5 4 , 8 5 1 (1 2 0 , 8 9 2 ) 6, 4 4 1 , 8 7 2 (1 9 1 , 4 3 6 ) 5, 0 6 7 , 6 0 4 (1 4 8 , 6 2 6 ) 71 0 , 6 0 5 $ (3 , 6 5 9 , 7 2 6 ) $ 42 , 9 5 1 , 1 8 0 $ (1 , 8 0 0 , 0 0 0 ) $ 3, 4 8 3 , 7 5 2 ~15 , 3 5 2 ! 17 , 5 4 5 , 1 5 8 $ 1, 8 0 0 , 0 0 0 _ _ l 1 ! , 0 4 4 , 2 6 2 . $ (1 , 8 1 5 , 3 5 2 ) $ 21 , 0 2 8 , 9 1 0 •I n c l u d e s Ja n u a r y I, 20 1 5 pe n s i o n li a b i l i t y ba l a n c e re l a t e d tc GA S B St a t e m e n t No . 68 im p l e m e n t a t i o n . Du e Wi t h i n On e Y e s r $ 8, 5 0 5 , 0 0 0 88 5 , 0 0 0 9, 3 9 0 , 0 0 0 12 5 , 4 8 5 $ 9, 5 1 5 , 4 8 5 $ 14 0 , 0 0 0 94 4 , 0 0 0 $ 1, 0 8 4 , 0 0 0 Co m p e n s a t e d ab s e n c e s ar e li q u i d a t e d by th e Pu b l i c Em p l o y e e s Co m p e n s a t e d Ab s m c e s in t e r n a l se r v i c e fu n d an d th e ne t OP E B ob l i g a t i o n by th e Pu b l i c Em p l o y e e s Re t i r e m e n t in t e r n a l se r v i c e fu n d . Ne t pe n s i o n li a b i l i t i e s wi l l be li q u i d a t e d by th e Pe n s i o n - GE R F an d Pe n s i o n - PE P F F in t e r n a l se r v i c e fu n d s . CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 CU R R E N T RE F U N D I N G On Ju l y 9, 20 1 5 , th e Ci t y is s u e d $1 , 6 6 0 , 0 0 0 o f Ge n e r a l Ob l i g a t i o n Revenue Refunding Bonds, Series 2015A, bearing an av e r a g e co u p o n ra t e of 2 . 1 4 pe r o e n t , tc pr o v i d e Cl l l T C i l t re f u n d i n g of$1,660,000 in principal on the City's Taxable General Ob l i g a t i o n Ut i l i t y Re v e n u e Bo n d s , Se r i e s 20 1 OA re l a t i n g to the 2016 tc 2025 maturities. As a result of the refunding, the City wi l l ac h i e v e an ec o n o m i c ga i n of $ 7 0 , 4 5 0 (t h e pr e s e n t va l u e of the difference between the old and the new debt service). CR O S S O V E R RE F U N D I N G On Ju l y 9, 20 1 5 , th e Ci t y is s u e d $6 , 6 0 0 , 0 0 0 o f Ge n e r a l Ob l i g a t i o n Tax Increment Refunding Bonds, Series 2015B, bearing an av e r a g e co u p o n ra t e of 3. 0 0 pe r c e n t , tc pr o v i d e ad v a n c e cr o s s o v e r refunding on February I, 2016, of the 2017 through 2020 ma t u r i t i e s o f th e Ci t y ' s Ge n e r a l Ob l i g a t i o n Ta x In c r e m e n t Bo n d s , Series 2004D tctslling $6,670,000 in principal. The proceeds o f th e cr o s s o v e r bo n d we r e pl a c e d in t o an es c r o w ac c o u n t pe n d i n g the call date. The escrow account bears interest rates that wi l l pr o v i d e su f f i c i e n t fu n d s tc re f u n d th e ol d bo n d s on Fe b r u a r y I, 2016. The old bonds are not considered defensed until the cr o s s o v e r da t e , an d th e r e f o r e wi l l no t be re m o v e d as a li a b i l i t y until then. As a result of the refunding, the City will achieve an ec o n o m i c ga i n of $4 2 4 , 0 5 9 (t h e pr e s e n t va l u e o f th e di f f e r e n c e between the old and the new debt service). CO N P U I T DE B T OB L I Q A T I O N S Fr o m ti m e tc ti m e , th e Ci t y ha s is s u e d Ho u s i n g Re v e n u e Bo n d s and Industrial Revenue Bonds or Notes to provide assistance to qu a l i f i e d pr i v a t e se c t o r en t i t i e s fo r th e ac q u i s i t i o n an d cm s t r u c t i o n of housing, industrial, or commercial facilities deemed to be in th e pu b l i c in t e r e s t . Th e bo n d s or no t e s ar e se c u r e d by the property financed and are payable solely from payments re c e i v e d on th e un d e r l y i n g mo r t g a g e lo a n s . Th e Ci t y ha s no obligation of its assets or of its general tax base for the repayment o f an y o f th e s e bo n d s or no t e s . Ac c o r d i n g l y , th e bo n d s or no t e s are not reported as liabilities in the accompanying financial st a t e m e n t s . Up o n fi n a l re d e m p t i o n o f th e bo n d s or no t e s , ow n e r s h i p of the property transfers tc the private sectcr entity se r v e d by th e bo n d or no t e is s u e . As o f De c e m b e r 31 , 20 1 5 th e r e we r e tw o se r i e s o f fi x e d ra t e Multifamily Housing Revenue Refunding bonds, one Housing Re v e n u e De v e l o p m e n t Re f i n a n c i n g No t e , tw o He a l t h c a r e Re v e n u e Notes, four Senior Housing Developmmt Revenue Notes, an d tw o Ch a r t e r Sc h o o l Le a s e Re v e n u e bo n d s ou t s t a n d i n g . The aggregate amount of conduit debt as ofDecember 31, 2015 is $2 1 , 3 6 5 , 9 0 8 . G. FU N D EQ U I T Y Ne t po s i t i o n re p o r t e d in th e go v e r n m e n t - w i d e st a t e m e n t o f ne t position at December 31, 2015 include the following: Go v e n m o . t a l ac t i v i t i e s Ne t in v e s t m e n t in ca p i t a l as s e t s : Co s t o f ca p i t a l as s e t s Le s s : ac c u m u l a t e d de p r e c i a t i o n Le s s : re l a t e d lo n g - t e r m de b t ou t s t a n d i n g To t a l ne t in v e s t m e n t in ca p i t a l assets Re s t r i c t e d : St a t c t o r y ho u s i n g ob l i g a t i o n s Ta x in c r e m e n t fi n a n c i n g Ec o n o m i c de v e l o p m e n t La w en f o r c e m e n t en h a n c e m e n t s De b t se r v i c e Pe n s i o n be n e f i t s St a t e - A i d st r e e t sy s t e m s To t a l re s t r i c t e d Un r e s t r i c t e d To t a l go v e r n m m t a l ac t i v i t i e s ne t po s i t i o n $ 97.780,865 (41,247,817) (8,591,248) 47,941,800 556,470 19,328,012 1,522,267 83,686 11,218,383 1,178,922 2,922,853 36,8f0,593 (5,495,836) $ 79,256,557 Re l a t e d de b t fo r go v e r n m e n t a l ac t i v i t i e s ca p i t a l as s e t s in c l u d e s $8,591,248 in G.O. Improvement Bonds which was the amount is s u e d to fi n a n c e th e st r e e t po r t i o n o f co n s t r u c t i o n pr o j e c t s . IV-36 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 Bu s i n e s s - t y p e ac t i v i t i e s Ne t in v e s t m e n t in ca p i t a l as s e t s : Co s t of ca p i t a l as s e t s Le s s : ac c u m u l a t e d de p r e c i a t i o n Le s s : re l a t e d lo n g - t e r m de b t ou t s t a n d i n g To t a l ne t in v e s t m e n t in ca p i t a l as s e t s Un r e s t r i c t e d To t a l bu s i n e s s - t y p e ac t i v i t i e s ne t po s i t i o n $ 12 1 , 8 9 2 , 0 4 7 (5 5 , 3 2 1 , 8 9 8 ) (1 9 , 3 6 8 , 9 1 0 ) 47 , 2 0 1 , 2 3 9 8, 4 5 2 , 6 3 0 $ 55 , 6 5 3 , 8 6 9 Ag g r e g a t e d fu n d s ba l a n c e s re p o r t e d in th e go v e r n m e n t a l fu n d s ba l a n c e sh e e t at De c e m b e r 31 , 20 1 5 in c l u d e th e fo l l o w i n g : Go v e n m e u t a l fu n d s No n s ~ d a b l e Re s t r i c t e d Co m m i t t e d Aa s i i ! ! ! e d Ge n e r a l In v e n t o r i e s $ 44 , 0 4 4 Pr e p a i d It e m s 34 , 8 1 5 Ca p i t a l Im p r o v e m e n t s 80 4 , 8 1 5 Ta x In c r e m e n t Di s t r i c t No . 3 St a t u t m y Ho u s i n g Ob l i g a t i o n 55 6 , 4 7 0 Ta x In c r e m e n t Fi n a n c i n g 16 , 6 4 0 , 2 8 9 De b t Se r v i c e De b t Se r v i c e 8, 7 4 7 , 9 1 4 Ca p i t a l Im p r o v e m e n t s Ca p i t a l Im p r o v e m e n t s 4, 4 0 8 , 8 7 9 Mu n i c i p a l St a t < > - A i d fo r Co n s t r u c t i o n St a t < > - Ai d St r e e t Sy s t e m s 22 3 , 5 3 1 No n m a j o r Fu n d s Ta x In c r e m e n t Fi n a n c i n g 2, 5 9 7 , 9 1 7 Ec o n o m i c De v e l o p m e n t 1, 5 0 0 1, 5 1 5 , 6 0 4 La w En f o r c e m e n t En h a n c e m e n t s 83 , 6 8 6 Pu b l i c Sa f e t y 86 , 8 9 1 Ca b l e Co m m u n i c a t i o n s 28 1 , 8 2 1 Co m m u n i t y Re c r e a t i o n 55 , 5 0 1 Em e r g e n c y Ca p i t a l Im p r o v e m e n t s 1, 0 7 4 , 6 2 2 St r e e t Im p r o v e m e n t s 3, 1 8 3 , 7 5 4 Te c h n o l o g y Im p r o v e m e n t s 21 4 , 7 5 6 To t a l fu n d ba l a n c e s $ 80 , 3 5 9 $ 30 , 3 6 5 , 4 1 1 $ 9, 3 0 6 , 2 2 4 $ 80 4 , 8 1 5 CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 No t e 4 DE F I N E D BE N E F 1 T PE N S I O N PL A N - CI T Y EM P L O Y E E S A. PL A N DE S C R I P I I O N Th e Ci t y pa r t i c i p a t e s in th e fo l l o w i n g co s t - s h a r i n g mu l t i p l < > - e m p l o y e r defined btmefit ptmsion plans administered by the Public Em p l o y e e s Re t i r e m e n t As s o c i a t i o n of M i n n e s c t a (P E R A ) . PERA's defined benefit ptmsion plans are established and ad m i n i s t e r e d in ac c o r d a n c e wi t h Mi n n e s o t a St a t u t e s , Ch a p t e r s 353 and 356. PERA's defined benefit ptmsion plans are tax qu a l i f i e d pl a n s un d e r Se c t i o n 40 l ( a ) o f th e In t e r n a l Re v e n u e Code. 1. GE N E R A L EM P L O Y E E S RE T I R E M E N T Fl J N D (GERF) Al l fu l l - t i m e an d ce r t a i n pa r t - t i m e em p l o y e e s o f th e Ci t y are covered by the GERF. GERF members belong to either the Co o r d i n a t e d Pl a n or th e Ba s i c Pl a n . Co o r d i n a t e d Pl a n me m b e r s are covered by Social Security and Basic Plan members ar e no t . Th e Ba s i c Pl a n wa s cl o s e d to ne w me m b e r s in 1967. All new members must participate in the Coordinated Plan. 2. PU B L I C EM P L O Y E E S PO L I C E AN D FI R E FU N D (PEPFF) Th e PE P F F , or i g i n a l l y es t a b l i s h e d fo r po l i c e of f i c e r s an d firefighters not covered by a local relief association, now covers al l po l i c e of f i c e r s an d fi r e f i g h t e r s hi r e d si n c e 19 8 0 . Ef f e c t i v e July I, 1999, the PEPFF also covers police officers and fi r e f i g h t e r s be l o n g i n g to a lo c a l fi r e re l i e f as s o c i a t i o n th a t elected to merge with and 1ransfer assets and adminis1ration to PE R A . B. BE N E F 1 T S PR O V I D E D PE R A pr o v i d e s re t i r e m e n t , di s a b i l i t y , an d de a t h be n e f i t s . Benefit provisions are established by state statute and can only be mo d i f i e d by th e st a t e le g i s l a t u r e . Be n e f i t in c r e a s e s ar e pr o v i d e d to be n e f i t re c i p i e n t s es c h Ja n u a r y . Increases are related to the funding ratio of the plan. Me m b e r s in pl a n s th a t ar e at le a s t 90 pe r c e n t fu n d e d fu r tw o consecutive years are given 2.5 percent increases. Members in pl a n s th a t ha v e no t ex c e e d e d 90 pe r c e n t fu n d e d , or ha v e fu l l e n below 80 percent, are given I percent increases. Th e be n e f i t pr o v i s i o n s st a t e d in th e fo l l o w i n g pa r a g r a p h s o f this section are current provisions and apply tu active plan pa r t i c i p a n t s . Ve s t e d , te r m i n a t e d em p l o y e e s wh o ar e en t i t l e d to benefits but are not receiving them yet are bound by the pr o v i s i o n s in ef f e c t at th e ti m e th e y la s t te r m i n a t e d th e i r pu b l i c service. 1. GE R F BE N E F 1 T S Be n e f i t s ar e ba s e d on a me m b e r ' s h i g h e s t av e r a g e sa l a r y for any five successive years of allowable service, age, and ye a r s of cr e d i t at te r m i n a t i o n or se r v i c e . Tw o me t h o d s ar e used to compute benefits for PERA's Coordinated and Basic Pl a n me m b e r s . Th e re t i r i n g me m b e r re c e i v e s th e hi g h e r of a step-rate benefit accrual formula (Method I) or level accrual fo r m u l a (M e t h o d 2) . Un d e r Me t h o d 1, th e an n u i t y ac c r u a l rate far a Basic Plan member is 2.2 percent of average salary fo r ea c h o f th e fi r s t te n ye a r s o f se r v i c e , an d 2. 7 pe r c ~ m t fur esch remaining yesr. The annuity accrual rate for a Co o r d i n a t e d Pl a n me m b e r is 1. 2 pe n : e n t o f av e r a g e sa l a r y for esch of the first ten years and I. 7 percent for each re m a i n i n g ye a r . Un d e r Me t h o d 2, th e an n u i t y ac c r u a l ra t e is 2. 7 percent of average salary for Basic Plan members and I. 7 pe r c e n t fo r Co o r d i n a t e d Pl a n me m b e r s fo r es c h ye a r o f service. For members hired prior to July I, 1989, a full annuity is av a i l a b l e wh e n ag e pl u s ye a r s o f se r v i c e eq u a l 9 0 an d no r m a l retirement age is 65. For members hired on or after July I, 19 8 9 , no r m a l re t i r e m e n t ag e is th e ag e fo r un r e d u c e d So c i a l Security benefits capped at 66. Disability benefits are available fo r ve s t e d me m b e r s an d ar e ba s e d up c n ye a r s o f se r v i c e and average high-five salary. IV-37 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S T O Ti l E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 2. PE P F F BE N E F I T S Be n e f i t s fo r th e PE P F F me m b e r s fu s t h i r e d af t e r Ju n e 30 , 2 0 1 0 , bu t h e f o r e J u l y I, 20 1 4 , ve s t on a pr o r a t e d ba s i s fr o m 50 pe r c e n t af t e r fi v e ye a r s up to 10 0 pe r c e n t af t e r te n ye a r s o f cr e d i t e d se r v i c e . Be n e f i t s fo r PE P F F me m b e r s fu s t hi r e d af t e r Ju n e 30 , 20 1 4 , ve s t on a pr o r a t e d ba s i s fr o m 50 pe r c e n t af t e r te n ye a r s o f se r v i c e up to 10 0 pe r c e n t af t e r tw e n t y ye a r s o f cr e d i t e d se r v i c e . Th e an n u i t y ac c r u a l mt e is 3 pe r c e n t o f av e r a g e sa l a r y fo r ea c h ye a r o f se r v i c e . Fo r PE P F F wh o we r e fi r s t hi r e d pr i o r to Ju l y I, 19 8 9 , a fu l l an n u i t y is av a i l a b l e wh e n ag e pl u s ye a r s o f se r v i c e eq u a l at le a s t 90 . C. CO N T R I B U T I O N S Mi n n e s o t s St a t u t e s Ch a p t e r 35 3 se t s th e mt e s fo r em p l o y e r an d em p l o y e e co n t r i b u t i o n s . Co n t r i b u t i o n ra t e s ca n on l y be mo d i f i e d by th e st a t e le g i s l a t u r e . 1. GE R F CO N T R I B U T I O N S Ba s i c Pl a n me m b e r s an d Co o r d i n a t e d Pl a n me m b e r s we r e re q u i r e d to co n t r i b u t e 9. 1 pe r c e n t an d 6. 5 pe r c e n t , re s p e c t i v e l y , of t h e i r an n u a l co v e r e d sa l a r y in ca l e n d a r ye a r 20 1 5 . Th e Ci t y wa s re q u i r e d to co n t r i b u t e 11 . 7 8 pe r c e n t of pa y fo r Ba s i c Pl a n me m b e r s an d 7. 5 pe r c e n t fo r Co o r d i n a t e d Pl a n me m b e r s in ca l e n d a r ye a r 20 1 5 . Th e Ci t y ' s co n t r i b u t i o n s to th e GE R F fo r ye a r s en d e d De c e m b e r 31 , 20 1 5 , 2 0 1 4 an d 20 1 3 we r e $5 6 4 , 1 6 8 , $ 5 3 1 , 3 8 5 , an d $5 2 1 , 5 1 2 . Th e Ci t y ' s co n t r i b u t i o n s we r e eq u a l to th e re q u i r e d co n t r i b u t i o n s as se t by st a t e st a t u t e . 2. PE P F F CO N T R I B U T I O N S Pl a n me m b e r s we r e re q u i r e d to co n t r i b u t e 10 . 8 pe r c e n t o f th e i r an n u a l co v e r e d sa l a r y in ca l e n d a r ye a r 20 1 5 . Th e Ci t y wa s re q u i r e d to co n t r i b u t e 16 . 2 pe r c e n t o f pa y fo r PE P F F me m b e r s in ca l e n d a r ye a r 20 1 5 . Th e Ci t y co n t r i b u t i o n s to th e PE P F F fo r th e ye a r en d e d De c e m b e r 31 , 2 0 1 5 , 2 0 1 4 an d 20 1 3 we r e $6 8 7 , 9 3 5 , $6 0 0 , 4 0 2 , an d $5 6 0 , 0 5 3 re s p e c t i v e l y . Th e Ci t y ' s co n t r i b u t i o n s we r e eq u a l to th e re q u i r e d co n t r i b u t i o n s as se t by st a t e st a t u t e . D. PE N S I O N CO S T S 1. GE R F PE N S I O N CO S T S At De c e m b e r 31 , 20 1 5 , th e Ci t y re p o r t e d a li a b i l i t y o f $6 , 4 4 1 , 8 7 2 fo r it s pr o p o r t i o n a t e sh a r e o f th e GE R F ' s ne t pe n s i o n li a b i l i t y . Th e ne t pe n s i o n li a b i l i t y wa s me a s u r e d as o f Ju n e 30 , 20 1 5 , an d th e to t a l pe n s i o n li a b i l i t y us e d to ca l c u l a t e th e ne t pe n s i o n li a b i l i t y wa s de t e r m i n e d by an ac t u a r i a l va l u a t i o n as o f th a t da t e . Th e Ci t y ' s pr o p o r t i o n o f th e ne t pe n s i o n li a b i l i t y wa s ba s e d on th e Ci t y ' s co n t r i b u t i o n s r e c e i v e d by PE R A du r i n g th e me a s u r e m e n t pe r i o d fo r em p l o y e r pa y r o l l pa i d da t e s fr o m Ju l y I, 20 1 4 th r o u g h Ju n e 30 , 2 0 1 5 , re l a t i v e to th e to t a l em p l o y e r co n t r i b u t i o n s re c e i v e d fr o m al l of P E R A ' s pa r t i c i p a t i n g em p l o y e r s . At Ju n e 30 , 20 1 5 , th e Ci t y ' s pr o p o r t i o n wa s 0. 1 2 4 3 pe r c e n t wh i c h wa s a de c r e a s e of 0 . 0 1 4 6 pe r c e n t fr o m it s pr o p o r t i o n me a s u r e d as o f Ju n e 30 , 20 1 4 . Fo r th e ye a r en d e d De c e m b e r 31 , 2 0 1 5 , th e Ci t y re c o g n i z e d pe n s i o n ex p e n s e of $ 6 8 5 , 0 6 0 fo r it s pr o p o r t i o n n t e sh a r e of th e OE R F ' s pe n s i o n ex p e n s e . CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO Ti l E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 At De c e m b e r 31 , 2 0 1 5 , th e Ci t y re p o r t e d it s pr o p o r t i o n a t e share of the GERF's de:ferred outflows of resources and de f e r r e d in f l o w s o f re s o u r c e s re l a t e d to pe n s i o n s fr o m th e following sources: Di f f e r e n c e s be t w e e n ex p e c t e d an d ac t u a l ec o n o m i c ex p e r i e n c e Ch a n g e s in ac t u a r i a l as s u m p t i o n s Di f f e r e n c e s be t w e e n pr o j e c t e d an d ac t u a l in v e s t m e n t es m i n g s Ch a n g e s in pr o p o r t i o n GE R F co n t r i b u t i o n s pa i d su b s e q u e n t to th e me a s u r e m e n t date To t a l s Deferred Outflows of Resources $ 609,822 289,088 898,910 Deferred Inflows of Resources $ 324,780 514,376 $ 839,156 $2 8 9 , 0 8 8 re p o r t e d as de f e r r e d ou t f l o w s o f re s o u r c e s re l a t e d to pensions resulting from City conttibutions subsequent to th e me a s u r e m e n t da t e wi l l be re c o g n i z e d as a re d u c t i o n of the net pension liability in the yesr ended December 31, 2016. Ot h e r am o u n t s re p o r t e d as de f e r r e d ou t f l o w s an d de f e r r e d inflows of resources related to pensions will be recognized in pe n s i o n ex p e n s e as fo l l o w s : 2. PE P F F PE N S I O N CO S T S Ye a r En d e d De c e m b e r 31, 20 1 6 20 1 7 20 1 8 20 1 9 To t a l Pension Expense Amount (127,263) (127,263) (127,263) 152,455 (229,334) At De c e m b e r 31 , 20 1 5 , th e Ci t y re p o r t e d a li a b i l i t y of $ 5 , 0 6 7 , 6 0 4 for its proportionate share of the PEPFF's net pension li a b i l i t y . Th e ne t pe n s i o n li a b i l i t y wa s me a s u r e d as o f Ju n e 30, 2015, and the total pension liability used to calculate the net pe n s i o n li a b i l i t y wa s de t e r m i n e d by an ac t u a r i a l va l u a t i o n as of that date. The City's proportion of the net pension liability wa s ba s e d on th e Ci t y ' s co n t r i b u t i o n s re c e i v e d by PE R A during the measurement period for employer payroll paid dates fr o m Ju l y I, 20 1 4 th r o u g h Ju n e 30 , 20 1 5 , re l a t i v e to th e total employer contributions received from all ofPERA's pa r t i c i p a t i n g em p l o y e r s . At Ju n e 30 , 2 0 1 5 , th e Ci t y ' s pr o p o r t i o n was 0.446 percent which was an increase of0.008 pe r c e n t fr o m it s pr o p o r t i o n me a s u r e d as o f Ju n e 30 , 20 1 4 . Fo r th e ye a r en d e d De c e m b e r 31 , 20 1 5 , th e Ci t y re c o g n i z e d pension expense of$887,890 for its proportionate share of th e PE P F F ' s pe n s i o n ex p e n s e . Th e Ci t y al s o re c o g n i z e d $40,140 for the year ended December 31, 2015, as pension ex p e n s e (a n d gr a n t re v e n u e ) fo r it s pr o p o r t i o n a t e sh a r e of the State of Minnesota's on-behalf contributions to the PEPFF. Le g i s l a t i o n pa s s e d in 20 1 3 re q u i r e d th e St a t e of M i n n e s o t s to begin contributing $9 million to the PEPFF each year, st a r t i n g in fi s c a l ye a r 20 1 4 . IV-38 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO T i l E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 At De c e m b e r 31 , 20 1 5 , th e Ci t y re p o r t e d it s pr o p o r t i o n a t e sh a r e o f th e PE P F F ' s de f e r r e d ou t f i o w s of re s o u r c e s an d de f e r r e d in f l o w s o f re s o u r c e s re l a t e d to pe n s i o n fr o m th e fo l l o w i n g so u r c e s : Di f f e r e n c e s be t w e e n ex p e c t e d an d ac t u a l ec o n o m i c ex p e r i e n c e Ch a n g e s in ac t u a r i a l as s u m p t i o n s Di f f e r e n c e s be t w e e n pr o j e c t e d an d ac t u a l in v e s t m e n t ea r n i n g s Ch a n g e s in pr o p o r t i o n PE P F F co n t r i b u t i o n s pa i d su b s e q u e n t to th e me a s u r e m e n t da t e To t a l s De f e r r e d Ou t f l o w s of Re a o u r c e s 88 2 , 9 4 5 72 , 0 0 3 35 3 , 2 6 3 $ 1, 3 0 8 , 2 1 1 De f e r r e d In f l o w s o f Re s o u r c e s 82 1 , 7 9 9 $ 82 1 , 7 9 9 $3 5 3 , 2 6 3 re p o r t e d as de f e r r e d ou t f l o w s o f re s o u r c e s re l a t e d to pe n s i o n s re s u l t i n g fr o m Ci t y co n t r i b u t i o n s su b s e q u e n t to th e me a s u r e m e n t da t e wi l l be re c o g u i z e d as a re d u c t i o n o f th e ne t pe n s i o n li a b i l i t y in th e ye a r en d e d De c e m b e r 31 , 20 1 6 . Ot h e r am o u n t s re p o r t e d as de f e r r e d ou t f i o w s an d de f e r r e d in f l o w s o f re s o u r c e s re l a t e d to pe n s i o n s wi l l be re c o g u i z e d in pe n s i o n ex p e n s e as fo l l o w s : E. AC T U A R I A L AS S U M P T I O N S Ye a r En d e d De c e m b e r 31 , 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 To t a l Pe n s i o n EJ q ~ e n s e Am o u n t 70 , 7 7 7 70 , 7 7 7 70 , 7 7 7 70 , 7 7 7 (1 4 9 , 9 5 9 ) 13 3 , 1 4 9 Th e to t a l pe n s i o n li a b i l i t y in th e Ju n e 30 , 20 1 5 , ac t u a r i a l va l u a t i o n wa s de t e r m i n e d us i n g th e fo l l o w i n g ac t u a r i a l as s u m p t i o n s : In f l a t i o n Ac t i v e Me m b e r Pa y r o l l Gr o w t h In v e s t m e n t Ra t e o f Re t u r n 2. 7 5 % p e r y e s r 3. 5 0 ' / o pe r ye s r 7. 9 0 ' / o Sa l a r y in c r e a s e s we r e ba s e d on a se r v i c e - r e l a t e d ta b l e . Mo r t a l i t y ra t e s fo r ac t i v e me m b e r s , re t i r e e s , su r v i v o r s an d di s a b i l i t a n t s we r e ba s e d on th e RP - 2 0 0 0 ta b l e s fo r ma l e s or fe m a l e s , as ap p r o p r i a t e , wi t h sl i g h t ad j u s t m e n t s . Co s t of l i v i n g be n e f i t in c r e a s e s fo r re t i r e e s ar e as s u m e d to be : 1 pe r c e n t ef f e c t i v e Ja n u a r y 1s t un t i l 2 0 3 4 , th e n 2. 5 pe r c e n t th e r e s f l e r . Ac t u a r i a l as s u m p t i o n s us e d in th e Ju n e 30 , 20 1 5 , va l u a t i o n we r e ba s e d on th e re s u l t s of ac t u a r i a l el q l e r i e n c e st u d i e s . Th e el q l e r i e n c e st u d y in th e GE R F wa s fo r th e pe r i o d Ju l y 1, 20 0 4 , th r o u g h Ju n e 30 , 20 0 8 , wi t h an up d a t e o f ec o n o m i c as s u m p t i o n s in 20 1 4 . Th e el q l e r i e n c e st u d y fo r PE P F F wa s fo r th e pe r i o d Ju l y 1, 20 0 4 , th r o u g h Ju n e 30 , 2 0 0 9 . Th e r e we r e no ch a n g e s in ac t u a r i a l as s u m p t i o n s in 20 1 5 . CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO Ti l E FI N A N C i A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 Th e lo n g - t e r m ex p e c t e d ra t e o f re t u r n on pe n s i o n pl a n in v e s t m e n t s is 7.9 percent. The State Board of Investment, which ma n a g e s th e in v e s t m e n t s of P E R A , pr e p a r e s an an a l y s i s of the reasonableness of the long-term expected rate of return on a re g u l a r ba s i s us i n g a bu i l d i n g - b l o c k me t h o d in wh i c h be s t - e s t i m a t e ranges of expected future rates of return are developed for ea c h m~ o r as s e t cl a s s . Th e s e ra n g e s ar e co m b i n e d to pr o d u c e an eJq~ected long-term rate of return by weighting the ex p e c t e d fu t u r e ra t e s o f re t u r n by th e ta r g e t as s e t al l o c a t i o n percentages. The target allocation and best estimates of ar i t h m e t i c re a l mt e s o f re t u r n . fo r ea c h ma j o r as s e t cl a s s ar e summarized in the following table: As s e t Cl a s s Do m e s t i c St o c k s In t e r n a t i o n a l St o c k s Bo n d s Al t e r n a t i v e As s e t s Ca s h F. DI S C O U N T RA T E Target Allocation 45.000/o 15.00% 18.00'/o 20.00'/o 2.00% Long-Term ElqlCCted Real Rate of Return 5.50% 6.00'/o 1.45% 6.40% 0.50'/o Th e di s c o u n t ra t e us e d to me s s u r e th e to t a l pe n s i o n li a b i l i t y was 7.9 percent. The prqjection of cash flows used to determine th e di s c o u n t ra t e as s u m e d th a t em p l o y e e an d em p l o y e r co n t r i b u t i o n s will be made at the rate specified in statute. Based on th a t as s u m p t i o n , ea c h o f th e pe n s i o n pl a n ' s fi d u c i a r y ne t po s i t i o n was prqjected to be avsilable to make all projected future be n e f i t pa y m e n t s of cu r r e n t ac t i v e an d in a c t i v e em p l o y e e s . Therefore, the long-term expected rate of return on pension plan in v e s t m e n t s wa s ap p l i e d to al l pe r i o d s of p r q j e c t e d be n e f i t payments to deterutine the total pension liability. G. PE N S I O N LI A B I L I T Y SE N S I T I V I T Y Th e fo l l o w i n g pr e s e n t s th e Ci t y ' s pr o p o r t i o n a t e sh a r e o f th e net pension liability for all plans it participates in, calculated using th e di s c o u n t ra t e di s c l o s e d in th e pr e c e d i n g pa r a g r a p h , as we l l as what the City's proportionate share of the net pension li a b i l i t y wo u l d be i f it we r e ca l c u l a t e d us i n g a di s c o u n t ra t e 1 percentage point lower or 1 percentage point higher than the cu r r e n t di s c o u n t ra t e : GE R F PE P F F To t a l Ci t y ' s Pr o p o r t i o n a t e Sh a r e o f th e Ne t Pe n s i o n Li a b i l i t y 6.90% One Point Decrease 10,128,911 9,876,813 7.90% Current Rate 6,441,872 5,067,604 8.90'/o One Point Increase 3,396,942 1,Q9~,359 $ 20,005,724 $ 11,509,476 $ 4,491,301 IV-39 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 H. PE N S I O N PL A N FI D U C I A R Y NE T PO S I T I O N De t a i l e d in f o r m a t i o n ab o u t ea c h pe n s i o n pl a n ' s fi d u c i a r y ne t po s i t i o n is av a i l a b l e in a se p m a t e l y is s u e d PE R A fi n a n c i a l re p o r t th a t in c l u d e s fi n a n c i a l st a t e m e n t s an d re q u i r e d su p p l e m e n t a r y in f o r m a t i o o . Th a t re p o r t ma y be ob t s i n e d by : In t e r n e t : Ph o n e : Ma i l : ww w . m n p e r a . o r g (6 5 1 ) 29 6 - 7 4 6 0 60 Em p i r e Dr i v e , #2 0 0 St . Pa u l , MN 55 1 0 3 - 2 0 8 8 No t e 5 DE F I N E D BE N E F I T PE N S I O N PL A N - SI N G L E E M P W Y E R - FI R E RE L I E F AS S O C I A T I O N A. PL A N DE S C R I P I 1 0 N Th e Ci t y co n t r i b u t e s tc th e Br o o k l y n Ce n t e r Fi r e De p a r t m e n t Re l i e f As s o c i a t i o n (t h e As s o c i a t i o n ) wh i c h is th e ad m i n i s t r a t o r o f a si n g l e em p l o y e r , pu b l i c em p l o y e e de f i n e d be n e f i t re t i r e m e n t sy s t e m tc pr o v i d e a re t i r e m e n t pl a n (t h e Pl a n ) tc vo l u n t e e r fi r e f i g h t e r s o f th e Ci t y wh o ar e me m b e r s of th e As s o c i a t i o n . Th e As s o c i a t i o n is or g a n i z e d an d op e r a t e s un d e r th e pr o v i s i o n s o f Mi n n e s o t a St a t e St a t u t e s 42 4 A , an d pr o v i d e s be n e f i t s in ac c o r d a n c e wi t h th o s e st a t u t e s . At De c e m b e r 31 , 20 1 4 , th e me m b e r s h i p o f th e As s o c i a t i o n co n s i a t e d of : Re t i r e e s an d be n e f i c i a r i e s cu r r e n t l y re c e i v i n g be n e f i t s Te r m i n a t e d em p l o y e e s en t i t l e d tc be n e f i t s bu t no t ye t re c e i v i n g th e m Ac t i v e pl a n pa r t i c i p a n t s - ve s t e d Ac t i v e pl a n pa r t i c i p a n t s - no n - v e s t e d To t s ! 21 6 16 18 61 Th e As s o c i a t i o n is s u e s a fi n a n c i a l re p o r t th a t in c l u d e s fi n a n c i a l st a t e m e n t s an d re q u i r e d su p p l e m e n t a r y in f o r m a t i o n fo r th e Br o o k l y n Ce n t e r Fi r e De p a r t m e n t Re l i e f As s o c i a t i o n . Th a t re p o r t is av a i l a b l e at th e Ci t y of B r o c k l y n Ce n t e r Ci t y of f i c e s . B. BE N E F I T S PR O V I D E D Ba s i c Se r v i c e Pe n s i o n fo r Re t i r e d Me m b e r s -U p o n re t i r e m e n t ea c h in d i v i d u a l wi l l re c e i v e a lu m p su m di s t r i b u t i o n of $ 7 , 5 0 0 pe r ye a r o f se r v i c e . Th i a be n e f i t le v e l wa s pl a c e d in t c ef f e c t on Ja n u a r y I, 20 0 6 . Pr i o r to 19 9 8 , a mo n t h l y be n e f i t le v e l o f $2 6 . 5 0 wa s av a i l a b l e fo r re t i r e e s . Th e mo n t h l y be n e f i t is no lo n g e r an op t i o n fo r re t i r i n g me m b e r s . Ve s t e d , te r u t i n a t e d me m b e r s , wh o ar e en t i t l e d to be n e f i t s bu t ar e no t ye t re c e i v i n g th e m , ar e bo u n d by th e pr o v i s i o n s in ef f e c t at th e ti m e o f te r m i n a t i o n fr o m me r o b e r s h i p . CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 Ba s i c Se n r i c e Pe n s i o n fo r De f e r r e d Pe n s i o n e r - A me m b e r who is otheiWi.se qualified for a service pension but who bas not re a c h e d th e ag e o f 50 ye s r s ma y re t i r e fr o m th e Fi r e De p a r t m e n t without forfeiting the members right to such pension. Upon ap p r o v a l o f an ap p l i c a t i o n th e r e f o r e , th e de f e r r e d pe n s i o n e r shall receive a pension baaed on the benefit level at that time mu l t i p l i e d by su c h pe r s o n ' s ye s r s o f ac t i v e se r v i c e wi t h th e Fire Department and further multiplied by the decimal equivalent o f th e ap p l i c a b l e pe r c e u t s g e de t e r m i n e d fr o m th e fu l l ow i n g table: Ye a r s o f Se r v i c e 10 11 12 13 14 15 16 17 18 19 20 an d be y o n d C. FU N D I N G PO L I C Y Applicable Percentage 60% 64 68 72 76 80 84 88 92 96 100 Th e Ci t y le v i e s pr o p e r t y ta x e s at th e di r e c t i o o o f an d fo r th e benefit of the Plan and passes through stare aids allocated to the Pl a n , al l in ac c o r d a n c e wi t h en a b l i n g St a t e st a t u t e s . Th e mi n i m u m tax levy obligation is the financial contribution requirement fo r th e ye a r le s s an t i c i p a t e d st a t e ai d s . D. CO N T R I B U T I O N S Au t h o r i t y fu r co n t r i b u t i o n s to th e pe n s i o o pl a n is es t a b l i s h e d by Minn. Stat. § 69.77 and may be amended only by the Mi n n e s o t s St a t e Le g i s l a t u r e . Se e 20 1 3 Mi n n . La w s , ch . 11 1 , art. 5, §§ 31 to 42 and 80. There are no employee contributions. Th e Ci t y pr o v i d e d st a t u t o r y co n t r i b u t i o n s in 20 1 5 . Th e ac t u a r y compares the actual statutory contribution rate tc a "required" co n t r i b u t i o n ra t e . Th e re q u i r e d co n t r i b u t i o n ra t e co n s i s t s of : (a) normal costs baaed on entry age normal cost methods, (b) a su p p l e m e n t a l co n t r i b u t i o n fo r am o r t i z i n g an y un f u n d e d ac t u a r i a l accrued liability, and (c) an allowance for administrative ex p e n s e s . E. PE N S I O N CO S T S At De c e m b e r 31 , 2 0 1 5 , th e Ci t y re p o r t e d an as s e t of $ 1 , 0 9 2 , 4 1 6 for the difference b-een the Fire Relief Plan Fiduciary net po s i t i o n an d th e to t a l pe n s i o n li a b i l i t y . Th e ne t pe n s i o n as s e t was measured as of December 31, 2014, and the total pension li a b i l i t y us e d tc ca l c u l a t e th e ne t pe n s i o n as s e t wa s de t e r m i n e d by an actuarial valuation as of that date. IV-40 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S T O Ti l E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 Ch a n g e s in Ne t Pe n s i o n As s e t Ba l a n c e at 12 / 3 1 1 1 4 Ch a n g e s fo r th e Ye a r Se r v i c e Co s t In t e r e s t Co n t r i b u t i o o s - st a t e an d lo c a l Ne t In v e s t m e n t in c o m e Be n e f i t Pa y m e n t s Ad m i n i s t r a t i v e Ex p e n s e s Ne t Ch a n g e s Ba l a n c e at 12 / 3 1 / 1 5 In c r e a s e (D e c r e a s e ) To t a l Pe n s i o n Pl a n Fi d u c i a r y Ne t Pe n s i o o Li a b i l i t y N e t Po s i t i o n Li a b i l i t y {A s s e t ) $ 2, 7 6 9 , 1 8 9 $ 3, 8 2 7 , 6 5 1 $ {1 , 0 5 8 , 4 6 2 ) 85 , 9 0 4 17 8 , 2 4 2 (6 1 7 , 5 4 1 ) 15 8 , 5 4 5 14 9 , 6 3 5 {6 1 7 , 5 4 1 ) 85 , 9 0 4 17 8 , 2 4 2 {1 5 8 , 5 4 5 ) (1 4 9 , 6 3 5 ) { I 0, 0 8 0 ) 10 , 0 8 0 {3 5 3 , 3 9 5 ) { 3 1 9 , 4 4 1 ) {3 3 , 9 5 4 ) 2, 4 1 5 , 7 9 4 $ 3, 5 0 8 , 2 1 0 $ {1 , 0 9 2 , 4 1 6 ) At De c e m b e r 31 , 20 1 5 , th e Ci t y re p o r t e d de f e r r e d ou t f l o w s o f re s o u r c e s , an d de f e r r e d in f l o w s o f re s o u r c e s , it s co n t r i b u t i o o s su b s e q u e n t to th e me a s u r e m e n t da t e , re l a t e d to pe n s i o n s fr o m th e fo l l o w i n g so u r c e s : Di f f e r e n c e s be t w e e n pr o j e c t e d an d ac t u a l in v e s t m e n t ea r n i n g s Co n t r i b u t i o o s pa i d su b s e q u e n t to th e me a s u r e m e n t da t e To t a l s De f e r r e d Ou t f l o w s o f R e s o ~ 81 , 5 0 6 14 8 , 0 6 1 $ 22 9 , 5 6 7 De f e r r e d In f l o w s of Re s o u r c e s 14 3 , 0 6 1 $ 14 3 , 0 6 1 $1 4 8 , 0 6 1 re p o r t e d as de f e r r e d ou t f l o w s o f re s o u r c e s re l a t e d to pe n s i o n s re s u l t i n g fr o m Ci t y co n t r i b u t i o n s su b s e q u e n t to th e me a s u r e m e n t da t e wi l l be re c o g n i z e d as a re d u c t i o n o f th e ne t pe n s i o n li a b i l i t y in th e ye a r en d e d De c e m b e r 31 , 20 1 6 . De f e r r e d in f l o w s o f re s o u r c e s to t a l l i n g $1 4 3 , 0 6 1 re l a t e d to st a t e ai d re c e i v e d su b s e q u e n t to th e me a s u r e m e n t da t e wi l l be re c o g n i z e d fo r it s im p a c t on th e ne t pe n s i o n li a b i l i t y in th e ye a r m d e d De c e m b e r 31 , 2 0 1 6 . Ot h e r am o u n t s re p o r t e d as de f e r r e d ou t f l o w s an d de f e r r e d in f l o w s o f re s o u r c e s re l a t e d to pe n s i o n s wi l l be re c o g n i z e d in pe n s i o n ex p e n s e as fo l l o w s : Ye a r Pe n s i o n En d e d Ex p e n s e De c e m b e r 31 , _ Am o u n t 20 1 6 $ 20 , 3 7 7 20 1 7 20 , 3 7 7 20 1 8 20 , 3 7 7 20 1 9 20 , 3 7 5 To t a l $ 81 , 5 0 6 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 F. AC T U A R I A L AS S U M P T I O N S Th e As s o c i a t i o n is fu n d e d wi t h co n t r i b u t i o n s fr o m th e Ci t y of Brooklyn Center. The actuarially determined contributions in the Sc h e d u l e o f Co n t r i b u t i o n s ar e ca l c u l a t e d as o f th e be g i n n i n g of the fiscal year in which contributioos were reported. Th e fo l l o w i n g me t h o d s an d as s u m p t i o n s we r e us e d to ca l c u l a t e the actuarially determined contributions reported in the most re c e u t fi s c a l ye a r en d . • Th e mo s t re c e n t ac t u a r i a l va l u a t i o n da t e is January 1, 2015. • Ac t u a r i a l co s t is de t e r m i n e d us i n g th e En t r y Age Normal Cost Method. • Th e ac t u a r i a l va l u e o f as s e t s is ma r k e t va l u e . • Th e un f u n d e d ac c r u e d li a b i l i t y is am o r t i z e d using a 20-year rolling end date. • In v e s t m e n t ra t e o f re t u m is 7. 0 0 pe r c e n t . • Th e in f l a t i o n ra t e as s u m p t i o n is 2. 7 5 pe r c e n t . • Mo r t a l i t y as s u m p t i o n s fo r pr e - r e t i r e m e n t , post-retirement, and post-disability are: Pr e - r e t i r e m e n t : R P 20 0 0 No n - a n n u i t a n t Table with white collar adjustment, ge n e r a t i o o a l l y projected using Scale AA, and set back two ye a r s fu r ma l e s and feroales. Po s t - r e t i r e m e n t : Po s t - d i s a b i l i t y : RP 20 0 0 An n u i t a n t Mortality Table with white collar ad j u s t m e n t , generatiooally projected uaing Scale AA for males an d fe m a l e s . RP 20 0 0 An n u i t a n t Mortality Table with white collar ad j u s t m e n t , set forward eight years for males and feroales. Th e r e we r e no ch a n g e s in ac t u a r i a l as s u m p t i o n s in 20 1 5 . Th e be s t es t i m a t e ra n g e fo r th e lo n g - t e r m ex p e c t e d ra t e o f re t u m is determined by adding expected inflation to expected lo n g - t e r m re a l re t u m s an d re f l e e t i n g ex p e c t e d vo l a t i l i t y an d correlation. The capital market assumptions are per the actuary's in v e s t m e n t co n s u l t i n g pr a c t i c e as o f Ja n u a r y I, 20 1 5 Long-Term Target Expected Real As s e t Cl a s s Allocation Rate of Return Do m e s t i c an d In t e r n a t i o n a l Eq u i t i e s 50.00'/, 5.00'/o Fi x e d In c o m e 45.00'/o 1.75% Ca s h an d eq u i v a l e n t s 5.ooo;, 0.25% G. DI S C O U N T RA T E Th e di s c o u n t ra t e us e d to me a s u r e th e to t a l pe n s i o n li a b i l i t y was 7.00 percent. The ~ection of cash flows used to determine th e di s c o u n t ra t e as s u m e d th a t Ci t y co n t r i b u t i o n s wi l l be ma d e at the acmal statutory contribution rate. Based on those as s u m p t i o a s , th e As s o c i a t i o n ' s fi d u c i a r y ne t po s i t i o n wa s pr o j e c t e d to be available to make all projected future benefit pa y m e n t s o f th e cu r r e n t pl a n me m b e r s . Th e r e f o r e , th e lo a g - t e r m expected rate of retum on peasion plaa investments was ap p l i e d to al l pe r i o d s o f pr o j e c t e d be n e f i t pa y m e n t s to de t e r m i n e the total pension liability. IV-41 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO T i f f i FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 H. PE N S I O N LI A B I L I T Y (A S S E T ) SE N S I T I V I T Y Th e fo l l o w i n g pr e s e n t s th e ne t pe n s i o n as s e t ca l c u l a t e d us i n g th e di s c o u n t mt e o f 7. 0 0 pe r c e n t , as we l l as wh a t th e ne t pe n s i o n (a s s e t ) / l i a b i l i t y wo u l d be i f it we r e ca l c u l a t e d us i n g a di s c o u n t mt e th a t is on . , . p e r c e n t s g e - p o i n t lo w e r (6 . 0 0 pe r c e n t ) or on e pe r c e n t s g . , . po i n t hi g h e r (8 . 0 0 pe r c e n t ) th a n th e CU I T e l l t mt e : Ci t y ' s Pr o p o r t i o n a t e Sh a r e o f th e N e t Pe n s i o n Li a b i l i t y Ne t Pe n s i o n (A s s e t ) / L i a b i l i t y 6. 0 0 " / o On e Po i n t De c r e a s e (9 7 4 , 7 7 0 ) No t e 6 MU L T I P L E - E M P L O Y E R DE F I N E D BE N E F I T PE N S I O N PL A N 7. 0 0 % Cu r r e n t Ra t e 8. 0 0 " / o On e Po i n t In c r e a s e (1 , 0 9 2 , 4 1 6 ) $ (1 , 1 9 5 , 4 8 4 ) Ci t y er o p l o y e e s be l o n g i n g to In t e r n a t i o n a l Un i o n o f Op e r a t i n g En g i n e e r s (I U O E ) ar e pa r t i c i p a n t s in a mu l t i p l . , . e m p l o y e r de f i n e d be n e f i t pe n s i o n pl a n Ce n t r a l Pe n s i o n Fu n d o f th e In t e r n a t i o n a l Un i o n o f Op e r a t i n g En g i n e e r s an d Pa r t i c i p a t i n g Em p l o y e r s (C P F ) ad m i n i s t e r e d by th e Bo a r d o f Tr u s t e e s o f th e Ce n t r a l Pe n s i o n Fu n d . Th e pl a n is a co s t - s h a r i n g pe n s i o n pl a n th a t is no t a st a t e or lo c a l go v e r n m e n t a l pe n s i o n pl a n , is us e d to pr o v i d e de f i n e d be n e f i t pe n s i o n s bo t h to em p l o y e r s th a t ar e no t st a t e or lo c a l go v e r n m e n t a l em p l o y e r s , an d ha s no pr e d o m i n a n t st a t e or lo c a l go v e r n m e n t er o p l o y e r . Th e Pl a n is s u e s a pu b l i c l y av a i l a b l e fi n a n c i a l re p o r t lo c a t e d on th e i r we b s i t e at ww w . c p f i u o e . o r g . Th e Ci t y ha s 22 em p l o y e e s wh o ar e co v e r e d by th i s pe n s i o n pl a n . Th e pl a n pr o v i d e s be n e f i t s su c h as mo n t h l y re t i r e m e n t in c o m e , sp e c i a l an d ea r l y re t i r e m e n t be n e f i t s , po s t - r e t i n : m e n t su r v i v i n g sp o u s e be n e f i t s , Pf " ' r e t i r e m e n t su r v i v i n g sp o u s e be n e f i t s , an d di s a b i l i t y be n e f i t s . Th e CP F is a su p p l e m e n t a l Pe n s i o n Fu n d au t h o r i z e d by Mi n n e s o t a St a t u t e s , 35 6 . 2 4 , su b d i v i s i o n 1( 9 ) . Th e CP F Pl a n o f Be n e f i t s an d th e Ag r e e m e n t an d De c l a r a t i o n o f Tr u s t wi l l se r v e as th e go v e r n i n g do c u m e n t s . Th e Ci t y ' s co n t r i b u t i o n s to th e pl a n ar e pu r s u a n t to a co l l e c t i v e ba r g a i n i n g ag r e e m e n t wi t h th e IU O E wh i c h ex p i r e s De c e m b e r 31 , 2 0 1 6 . Th e re q u i r e d co n t r i b u t i o n mt e is $0 . 9 6 pe r ho u r , wh i c h is ap p l i e d to al l co m p e n s a t e d ho u r s , an d ca p p e d at $5 , 0 0 0 pe r ye a r . To t a l em p l o y e r co n t r i b u t i o n s fo r th e ye a r en d e d De c e m b e r 31 , 20 1 5 we r e $5 1 , 6 9 9 . Wi t h re g a r d to wi t h d m w a l fr o m th e pe n s i o n pl a n , th e pa r t i e s ag r e e th a t th e am o u n t th a t wo u l d ot h e r w i s e be pa i d in sa l a r y or wa g e s wi l l be co n t r i b u t e d in s t e s d to th e CP F as Pf " ' t a x em p l o y e r co n t r i b u t i o n s . No t e 7 DE F I N E D CO N T R I B U T I O N PL A N Th e r e ar e fi v e Ci t y Co u n c i l me m b e r s o f th e Ci t y ar e co v e r e d by th e Pu b l i c Em p l o y e e s De f i n e d Co n t r i b u t i o n Pl a n (P E D C P ) , a mu l t i p l . , . e r o p l o y e r de f e r r e d co m p e n s a t i o n pl a n ad m i n i s t e r e d by PE R A . Th e PE D C P is a ta x qu a l i f i e d pl a n un d e r Se c t i o n 40 1 ( a ) o f th e In t e r n a l Re v e n u e Co d e an d al l co n t r i b u t i o n s by or on be h a l f o f er o p l o y e e s ar e ta x de f e r r e d un t i l ti m e of wi t h d m w a l . Pl a n be n e f i t s de p e n d so l e l y on am o u n t s oo n t r i b u t e d to th e pl a n pl u s in v e s t m e n t ea r n i n g s , le s s ad m i n i s t m t i v e es p e n s e s . Mi n n e s o t a St a t u t e s , Ch a p t e r 35 3 ( 0 . 0 3 ) , sp e c i f i e s pl a n pr o v i s i o n s , in c l u d i n g th e em p l o y e e an d er o p l o y e r co n t r i b u t i o n ra t e s fo r th o s e qu a l i f i e d pe r s o n n e l wh o el e c t to pa r t i c i p a t e . An el i g i b l e el e c t e d of f i c i a l wh o de c i d e s to pa r t i c i p a t e co n t r i b u t e s 5 pe r c e n t o f sa l a r y wh i c h is ma t c h e d by th e el e c t e d of f i c i a l ' s er o p l o y e r . Em p l o y e r an d er o p l o y e e co n t r i b u t i o n s ar e co m b i n e d an d us e d to pu r c h a s e sh a r e s in on e or mo r e o f th e se v e n ac c o u n t s o f th e Mi n n e s o t a Su p p l e m e n t a l In v e s t m e n t Fu n d . Fo r ad m i n i s t e t i u g th e pl a n , PE R A re c e i v e s 2 pe r c e n t o f em p l o y e r co n t r i b u t i o n s an d tw e n t y - f i v e hu n d r e d t h s o f I pe r c e n t (. 0 0 2 5 % ) o f th e as s e t s in ea c h me m b e r s ac c o u n t an n u a l l y . CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO T i f f i FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 To t a l co n t r i b u t i o n s ma d e by th e Ci t y fo r th e la s t th r e e fi s c a l years were: Required Rate for Employees & Co n t r i b u t i o n Am o u n t Percentaj!e of Covered Payroll Employers Fo r th e Ye a r En d e d : Em p l o y e e Em p l o y e r Employee Employer Employee Employer De c e m b e r 31 , 20 1 5 De c e m b e r 31 , 20 1 4 De c e m b e r 31 , 2 0 1 3 $ 90 7 90 7 88 0 No t e 8 OT H E R PO S T - E M P L O X M E N T BE N E F I T S A. PL A N DE S C R I P T I O N 90 7 90 7 88 0 5.0"/o 5.0% 5.0"/o 5.0°/o 5.0% 5.0% 5.0"/o 5.0"/o 5.0"/o 5.0% 5.0% 5.0"/o In ad d i t i o n to pr o v i d i n g th e pe n s i o n be n e f i t s de s c r i b e d in Note 4.B., the City provides postemployment health care benefits for re t i r e d em p l o y e e s an d po l i c e di s a b l e d in th e li n e o f du t y , th r o u g h a singl~ployer defined benefit plan administered by the Ci t y . Th e au t h o r i t y to pr o v i d e th e s e be n e f i t s is es t a b l i s h e d in Minnesota Statutes Sections 471.61 subd 2a. and 299A.465. Th e be n e f i t s , be n e f i t le v e l s , em p l o y e e co n t r i b u t i o n s an d em p l o y e r contributions are governed by the City and can be amended by th e Ci t y th r o u g h it s pe r s o n n e l ma n u a l an d co l l e c t i v e ba r g a i n i n g agreements with employee groups. The Plan is not ac c o u n t e d fo r as a tr u s t fu n d , as an ir r e v o c a b l e tr u s t ha s no t been established to account for the Plan. The Plan does not is s u e a se p a r a t e re p o r t . B. BE N E F I T S PR O V I D E D Re t i r e e s Th e Ci t y is re q n i r e d by St a t e St a t u t e to al l o w re t i r e e s to co n t i n u e participation in the City's group health insumnce plan if the in d i v i d u a l te r m i n a t e s se r v i c e wi t h th e Ci t y th r u u g h se r v i c e retirement or disability retirement. Former employees who are re c e i v i n g . or wh o ha v e me t ag e an d se r v i c e re q u i r e m e n t s to receive. an annuity from a Minnesota public pension plan and th o s e re c e i v i n g a di s a b i l i t y be n e f i t fr o m su c h a pl a n ar e in u u e d i a t e l y eligible to participate in this Plan. Retirees may obtain de p e n d e n t co v e r a g e i f th e em p l o y e e re c e i v e d de p e n d e n t co v e r a g e immediately before leaving employmmt. Covered spouses ma y co n t i n u e co v e r a g e af t e r th e de a t h o f a re t i r e e . In ad d i t i o n , the surviving spouse of an active employee may continue co v e r a g e in th e gr o u p he a l t h in s u m n c e pl a n af t e r th e em p l o y e e ' s death. Al l he a l t h ca r e co v e r a g e is pr o v i d e d th r u u g h th e Ci t y ' s gr o u p health insumnce plans. The retiree is reqnired to pay the pr e m i u m as de s c r i b e d be l o w : Em p l o v e e s hi r e d be f o r e Ja n u a c y I 19 9 2 wi t h co n t i n u o u s fu l l - t i m e employment Em p l o y e e s wh o , on th e da t e o f th e i r re t i r e m e n t , me e t el i g i b i l i t y requirement for a full retin:ment annuity under PERA or PE R A Po l i c e wi t h o u t re d u c t i o n o f be n e f i t s be c a u s e o f ag e , disability, or any other reason for reduction shall be eligible for the Ci t y to pa y 10 0 " / o o f th e si n g l . , . p e r s o n pr e m i u m un t i l su c h time as the retiree is eligible for Medicare or at age 65, whichever is so o n e r . I f th e re t i r e e de s i r e s to co n t i n u e co v e r a g e in eJ W e s s of single coverage, the additional cost for the coverage shall be pa i d to th e Ci t y by th e re t i r e e on a mo n t h l y ba s i s . IV-42 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 Em p l o y e e s hi r e d af t e r Ja n l ! l ! l } ' I 19 9 2 Th e re t i r e e is re q u i r e d to pa y I OO " A > o f th e i r pr e m i u m co s t fo r th e Ci t y - s p o n s o r e d gr o u p he a l t h in s u r a n c e pl a n in wh i c h th e y pa r t i c i p a t e . Th e pr e m i u m is a bl e n d e d ra t e de t e r m i n e d on th e en t i r e ac t i v e an d re t i r e e po p u l a t i o n . Si n c e th e pr o j e c t e d cl a i m s co s t s fo r re t i r e e s ex c e e d th e bl e n d e d pr e m i u m pa i d by re t i r e e s , th e y ar e re c e i v i n g an im p l i c i t ra t e su b s i d y (b e n e f i t ) . Th e co v e r a g e le v e l s ar e th e sa m e as th o s e af f o r d e d to ac t i v e em p l o y e e s . Di s a b l e d oo l i c e an d fi r e f i g h t e r Th e Ci t y is re q u i r e d to co n t i n u e to pa y th e em p l o y e r ' s co n t r i b u t i o n to w a r d he a l t h co v e r a g e fo r po l i c e or fi r e f i g h t e r s di s a b l e d in th e li n e o f du t y pe r Mi n n e s o t a St a t u t e 29 9 A . 4 6 5 , un t i l ag e 65 . De p e n d e n t co v e r a g e is in c l u d e d , if th e de p e n d e n t s we r e co v e r e d at th e ti m e o f th e di s a b i l i t y . PA R T I C l l ' A N T S As o f th e ac t u a r i a l va l u a t i o n da t e d Ja n u a r y I, 20 1 4 , pa r t i c i p a n t s co n s i s t e d of : C. FU N D I N G PO L I C Y Re t i r e e s fo r wh i c h th e Ci t y is pa y i n g th e si n g l e pr e m i u m Re t i r e e s an d be n e f i c i a r i e s cu r r e n t l y pu r c h a s i n g he a l t h in s u r a n c e th r o u g h th e Ci t y Di s a b l e d po l i c e of f i c e r s Ac t i v e em p l o y e e s To t a l 14 2 !5 1 16 8 Th e ad d i t i o n a l co s t o f us i n g a bl e n d e d ra t e fo r ac t i v e s an d re t i r e e s is cu r r e n t l y fu n d e d on a pa y - a s - y o u - g o ba s i s . Th e Ci t y Co o n c i l ma y ch a n g e th e fu n d i n g po l i c y at an y ti m e . D. AN N U A L OP E D CO S T S AN D NE T OP E B OB L I G A T I O N Th e Ci t y ' s an n u a l ot h e r pe s t - e m p l o y m e n t be n e f i t (O P E B ) co s t is ea l c u l a t e d ba s e d on th e an n u a l re q u i r e d co n t r i b u t i o n (A R C ) o f th e er u p l o y e r , an am o o n t ac t u a r i a l l y de t e r m i n e d in ac c o r d a n c e wi t h th e pa r a m e t e r s o f GA S B St a t e m e n t No . 45 . Th e AR C re p r e s e n t s a le v e l o f fu n d i n g th a t , i f pa i d on an on g o i n g ba s i s , is p~ e c t e d to co v e r th e no r m a l co s t ea c h ye a r an d am o r t i z e an y un f u n d e d ac t u a r i a l ob l i g a t i o n (o r fu n d i n g ex c e s s ) ov e r a pe t i o d no t to ex c e e d 30 ye s r s . Th e ne t OP E B ob l i g a t i o n as o f De c e m b e r 31 , 20 1 5 wa s ea l c u l s t e d as fo l l o w s : An n u a l re q u i r e d co n t r i b u t i o n In t e r e s t on ne t OP E B ob l i g a t i o n Ad j u s t m e n t to AR C An n u a l OP E B co s t Em p l o y e r Co n t r i b u t i o n s Di r e c t In d i r e c t Im p l i c i t Ra t e Su b s i d y In c r e a s e (d e c r e a s e ) in ne t OP E B ob l i g a t i o n Ne t OP E B ob l i g a t i o n , be g i n n i n g o f ye a r Ne t OP E B ob l i g a t i o n , en d o f ye a r $ 22 6 , 4 6 9 28 , 3 5 0 (2 5 , 5 8 2 ) 22 9 , 2 3 7 12 3 , 4 1 6 25 , 2 1 0 80 , 6 1 1 62 9 , 9 9 4 71 0 , 6 0 5 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 Th e Ci t y ha d an ac t u a r i a l va l u a t i o n pe r f o r m e d fo r th e pl a n as ofJanuacy I, 2014 to determine the funded status of the plan as o f th a t da t e as we l l as th e er u p l o y e r ' s AR C fo r th e fi s c a l ye a r ended December 31, 2015. The City's annual OPEB cost, the pe r c e n t a g e o f an n u a l OP E B co s t co n t r i b u t e d to th e pl a n , an d the net OPEB obligation for the past three years were as fo l l o w s : Percentage of Fi s c a l An n u a l Annual Net Ye a r OP E B Employer OPEBCost OPEB En d e d Co s t Contributions Contributed Oblisation 12 1 3 1 / 2 0 1 3 $ 23 8 , 7 4 4 $ 140,071 58.67% $ 586,026 12 / 3 1 / 2 0 1 4 22 6 , 7 2 4 182,756 80.61% 629,994 12 / 3 1 / 2 0 1 5 22 9 , 2 3 7 148,626 64.84% 710,605 IV-43 C I T Y O F B R O O K L Y N C E N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 E . FU N D E D ST A T U S AN D FU N D I N G PR O G R E S S Th e Ci t y cu r r e n t l y ha s no as s e t s th a t ha v e be e n ir r e v o c a b l y de p o s i t e d in t o a tr u s t fo r fu t u r e be n e f i t s ; th e r e f o r e , th e ac t u a r i a l va l u e o f as s e t s is ze r o . In s t e a d o f de p o s i t i n g fu n d s in t o an ir r e v o c a b l e tr u s t , th e Ci t y ha s ch o s e n to ac c u m u l a t e fu n d i n g in t o an in t e r n a l se r v i c e fu n d . Th e ca s h an d in v e s t m e n t ba l a n c e o f th e in t e r u a l se r v i c e fu n d is $5 6 5 , 8 5 6 fo r th e ye a r en d e d De c e m b e r 31 , 20 1 5 . Th e fu n d e d st a t u s o f th e pl a n wa s as fo l l o w s : Ac t u a r i a l Va l u a t i o n Da t e 11 1 1 2 0 1 0 11 1 1 2 0 1 2 1/ 1 / 2 0 1 4 Ac t u a r i a l Va l u e o f As s e t s Un f u n d e d Ac t u a r i a l A c t u a r i a l UA A L as a Ac c r u e d Ac c r u e d Pe r c e n t a g e Li a b i l i t y L i a b i l i t y Fu n d e d Co v e r e d o f Co v e r e d (A A L ) (U A A L ) Ra t i o Pa y r o l l Pa y r o l l 3, 0 1 2 , 3 8 3 2, 6 2 0 , 3 6 7 2, 5 7 4 , 5 2 9 3, 0 1 2 , 3 8 3 2, 6 2 0 , 3 6 7 2, 5 7 4 , 5 2 9 0. 0 0 " / o 0. 0 0 " / o 0. 0 0 " / o 9, 1 4 3 , 2 7 6 9, 4 7 2 , 2 3 7 9, 9 3 4 , 9 6 0 32 . 9 5 % 27 . 6 6 % 25 . 9 1 % F. AC T U A R I A L M E T H O D S AN D AS S U M P T I O N S Ac t u a r i a l va l u a t i o n s o f an on g o i n g pl a n in v o l v e es t i m a t e s o f th e va l u e o f re p o r t e d am o u n t s an d as s u m p t i o n s ab o u t th e pr o b a b i l i t y o f oc c u r r e n c e o f ev e n t s fa r in t o th e fu t u r e . Ex a m p l e s in c l u d e as s u m p t i c m s ab o u t fu t u r e em p l o y m e n t , mo r t a l i t y , an d th e he a l t h ca r e co s t tr e n d . Am o u n t s de t e r m i n e d re g a r d i n g th e fu n d i n g st a t u s o f th e pl a n an d th e an n u a l re q u i r e d co n t r i b u t i o n of th e em p l o y e r ar e su b j e c t to co n t i n u a l re v i s i o n as ac t u a l re s u l t s ar e co m p a r e d wi t h pa s t ex p e c t a t i o n s an d ne w es t i m a t e s ar e ma d e ab o u t th e fu t u r e . Th e sc h e d u l e o f fu n d i n g pr o g r e s s , pr e s e n t e d as re q u i r e d su p p l e m e n t a r y in f o r m a t i o n fo l l o w i n g th e no t e s to th e fi n a n c i a l st a t e m e n t s , pr e s e n t s mu l t i · y e a r tr e n d in f o r m a t i o n th a t sh o w s wh e t h e r th e ac t u a r i a l va l u e o f th e pl a n as s e t s is in c r e a s i n g or de c r e a s i n g ov e r ti m e re l a t i v e to th e ac t u a r i a l ac c r u e d li a b i l i t i e s fo r be n e f i t s . Pr o j e c t i o n s o f be n e f i t s fo r fi n a n c i a l re p o r t i n g pw p o s e s ar e ba s e d on th e su b s t a n t i v e pl a n (t h e pl a n as un d e r s t o o d by th e em p l o y e r an d pl a n me m b e r s ) an d in c l u d e th e ty p e s o f be n e f i t s pr o v i d e d at th e ti m e o f ea c h va l u a t i o n an d th e hi s t o r i c a l pa t t e r n o f sh a r i n g o f be n e f i t co s t s be t w e e n th e em p l o y e r an d pl a n me m b e r s to th a t po i n t . Th e ac t u a r i a l me t h o d s an d as s u m p t i o n s us e d in c l u d e te c h n i q u e s th a t ar e de s i g n e d to re d u c e th e ef f e c t o f sh o r t - t e r m vo l a t i l i t y in ac t u a r i a l ac c r u e d li a b i l i t i e s an d th e ac t u a r i a l va l u e o f as s e t s , co n s i s t e n t wi t h th e la n g - t e r m pe r s p e c t i v e o f th e ca l c u l a t i o n s . C I T Y O F B R O O K L Y N C E N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 2 0 1 5 In th e Ja n u a r y I , 20 1 4 ac t u a r i a l va l u a t i o n , th e Pr o j e c t e d Un i t Credit actuarial cost was used. The actuarial assumptions in c l u d e d a 4. 5 % in v e s b n e n t ra t e o f re t u r n (n e t o f ad m i n i s t r a t i v e expenses) and an initial annual health care cost trend rate of 9. 0 % re d u c e d by 0. 3 3 % ea c h ye a r to ar r i v e at an ul t i m a t e health care cost trend rate of 5.0%. Both rates include a 3.0% in f l a t i o n as s u m p t i o n . Th e ac t u a r i a l va l u e o f as s e t s is $0 , ho w e v e r the City does have $565,856 of funds accumulated in an in t e r n a l se r v i c e fu n d . Th e pl a n s ' un f u n d e d ac t u a r i a l ac c r u e d liability is being amortized as of the valuation date with a payroll gr o w t h ra t e of 3 . 7 5 % ov e r 30 ye a r s on an op e n ba s i s . No t e 9 O T I I E R IN F O R M A T I O N A. R I S K MA N A G E M E N T Th e Ci t y is ex p o s e d to va r i o u s ri s k s o f lo s s re l a t e d to to r t s ; th e f t of, damage to and destruction of assets; errors and om i s s i o n s an d na t u r a l di s a s t e r s . Pr o p e r t y an d ca s u a l t y in s u r a n c e is pr o v i d e d th r o u g h th e Le a g u e ofMinnescta Cities Insurance Trust (LMCIT), a public entity ri s k po o l cu r r e n t l y op e r a t i n g as a co m m o n ri s k ma n a g e m e n t and insurance program for Minnesota cities: general liability, pr o p e r t y , au t o m o b i l e , mo b i l e pr o p e r t y an d ma r i n e , cr i m e , em p l o y e e dishonesty, boiler, and open meeting law. The City pays an an n u a l in s u r a n c e pr e m i u m to th e LM C l T fo r it s in s u r a n c e co v e r a g e . The City is subject to supplemental assessments if de e m e d ne c e s s a r y by th e LM C I T . Cu r r e n t l y , th e LM C I T is self-sustaining through member premiums and reinsures through co m m e r c i a l co m p a n i e s fo r cl a i m s in ex c e s s of va r i o u s am o u n t s . The City retains risk for the deductible portions of the in s u r a n c e pu l i c i e s . Th e am o u n t o f th e s e de d u c t i b l e & is co n s i d e r e d immaterial to the financial statements. W or l c e r s ' co m p e n s a t i o n co v e r a g e is pr o v i d e d th r o u g h a po o l e d self-insurance program through the LMClT. The City pays an au n u a l pr e m i u m to th e LM C I T . Th e Ci t y is su b j e c t to su p p l e m e n t a l assessments if deemed necessary by the LMCIT. The LM C I T re i n s u r e s th r o u g h Wo r k e r s ' Co m p e n s a t i o n Re i n s u r a n c e Association (WCRA) as required by law. For worlcers' co m p e n a a t i c m . , th e Ci t y is no t su b j e c t to a de d u c t i b l e . Th e City's worlcers' compensation is retroactively rated With this type o f co v e r a g e , fi n a l pr e m i u m s ar e de t e r m i n e d af t e r lo s s ex p e r i e n c e is known. The amount of premium adjustment, if any, is co n s i d e r e d im m a t e r i a l an d no t re c o r d e d un t i l re c e i v e d or pa i d . Th e r e we r e no si g n i f i c a n t re d u c t i o n s in in s u r a n c e fr o m th e previous year or settlements in excess of insurance coverage for an y o f th e pa s t th r e e ye a r a . B. AR B I T R A G E R E B A T E Th e T a x Re f o r m Ac t o f 19 8 6 re q u i r e s go v e r n m e n t a l en t i t i e s to pay to the federal government income earned on the proceeds fr o m th e is s u a n c e o f de b t in ex c e s s o f in t e r e s t co s t s , pe n d i n g the expenditure of the borrowed funds. This rebate of interest in c o m e (k n o w n as ar b i t r a g e ) ap p l i e s to go v e r n m e n t a l de b t is s u e d after Augnst 31, 1986. The City issued greater than $5 million o f bo n d s in 20 0 4 an d th e r e f o r e is re q u i r e d to re b a t e ex c e s s in v e s b n e n t income relating to these issues to the federal go v e r n m e n t . Th e ex t e n t o f th e Ci t y ' s li a b i l i t y fo r ar b i t r a g e re b a t e s on the remaining bond issues is not determinable at this ti m e . Ho w e v e r , in th e op i n i o n o f ma n a g e m e n t , an y su c h li a b i l i t y would be innuaterial. IV-44 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 C. LI T I G A T I O N Th e Ci t y is su b j e c t to ce r t a i n le g a l cl a i m s in th e no r m a l cc u r s e o f bu s i n e s s . Ma n a g e m e n t do e s no t ex p e c t th e re s c l u t i o n of t h e s e cl a i m s wi l l ha v e a ma t e r i a l im p a c t on th e Ci t y ' s fi n a n c i a l co n d i t i o n or re s u l t s o f op e r a t i o n s . D. CO N T I N G E N T LI A B I L I T I E S Ta x In c r e m e n t No t e s In Ma y 20 0 2 , th e Ci t y en t e r e d in t o tw o li m i t e d ta x in c r e m e n t no t e s wi t h de v e l o p e r s wh e r e b y th e Ci t y wi l l pa y th e de v e l o p e r s a pe r c e n t a g e o f th e av a i l a b l e ta x in c r e m e n t . Wh e t h e r pa y m e n t s wi l l oc c u r an d th e am o u n t o f th e pa y m e n t s is un p r e d i c t a b l e si n c e al l pa y m e n t s ar e de p e n d e n t on th e Ci t y re c e i v i n g ta x in c r e m e n t re v e n u e s fr o m th e de v e l o p e r ' s pr o j e c t . As su c h , th i s li a b i l i t y ha s no t be e n re c o r d e d in th e fi n a n c i a l st a t e m e n t s . An y po t e n t i a l li a b i l i t y en d s wi t h th e de c e r t i f i c s t i o n o f th e ta x in c r e m e n t di s t r i c t . In De c e m b e r 20 1 2 , th e Ci t y en t e r e d in t o a ta x in c r e m e n t re v e n u e no t e wi t h a de v e l o p e r wh e r e b y th e Ci t y wi l l pa y th e de v e l o p e r th e av a i l a b l e ta x in c r e m e n t s as de f i n e d in th e Ta x In c r e m e n t De v e l o p m e n t Ag r e e m e n t . Wh e t h e r pa y m e n t s wi l l oc c u r an d th e am o u n t o f th e pa y m e n t s is un p r e d i c t a b l e si n c e al l pa y m e n t s ar e de p e n d e n t on th e Ci t y re c e i v i n g ta x in c r e m e n t re v e n u e s fr o m th e de v e l o p e r ' s pr o j e c t . As su c h , th i s li a b i l i t y ha s no t be e n re c o r d e d in th e fi n a n c i a l st a t e m e n t s . An y po t e n t i a l li a b i l i t y en d s wi t h th e de c e r t i f i c s t i o n o f th e ta x in c r e m e n t di s t r i c t . A sc h e d u l e o f th o no t e s ou t s t a n d i n g at De c e m b e r 31 , 2 0 1 5 is as fo l l o w s : Am e n d e d or Or i g i n a l 12 1 3 1 / 2 0 1 5 In t e r e s t Ma t u r i t y No t e Pr i n c i J ! ! ! ! Ba l a n c e Ra t e Da t e Tw i n La k e s Bu s i n e s s Pa r k $ 2, 4 2 4 , 1 9 9 $ 35 1 , 2 7 4 8. 0 0 0 / o 01 1 3 1 / 2 0 2 1 Sh i n g l e Cr e e k Cr o s s i n g Pr o j e c t 2, 3 0 0 , 0 0 0 2, 1 8 4 , 9 1 2 6. 0 0 % 02 1 0 1 / 2 0 2 8 E. JO I N T VE N T U R E S AN D JO I N T L Y GO V E R N E D OR G A N I Z A T I O N S Th e Ci t y ha s se v e r a l ag r e e m e n t s wi t h ot h e r en t i t i e s th a t pr o v i d e re d u c e d co s t s , be t t e r se r v i c e , an d ad d i t i o n a l be n e f i t s to th e pa r t i c i p a n t s . Th e pr o g r a m s in wh i c h th e Ci t y pa r t i c i p a t e s ar e li s t e d be l o w an d am o u n t s re c o r d e d wi t h i n th e cu r r e n t yo n r ' s fi n a n c i a l st a t e m e n t s ar e di s c l o s e d . Lo c a l Go v e r n m e n t In f u r m a t i o n Sy s t e m s As s o c i a t i o n (L O O ! S l Th i s co n s o r t i u m o f ap p r o x i m a t e l y 30 go v e r n m e n t en t i t i e s pr o v i d e s cc m p u t e r i z e d da t a pr o c e s s i n g an d su p p o r t se r v i c e s to it s me m b e r s . LO G IS is le g a l l y se p a r a t e ; th e Ci t y do e s no t ap p o i n t a vo t i n g ma j o r i t y of i t s bo a r d , an d th e Co n s o r t i u m is fi s c a l l y in d e p e n d e n t o f th e Ci t y . Th e to t a l am o u n t re c o r d e d wi t h i n th e 20 1 5 fi n a n c i a l st a t e m e n t s o f th e Ci t y is $5 4 9 , 1 5 1 fo r ge n e r a l se r v i c e s an d ap p l i c a t i o n up g r a d e s pr o v i d e d . Co s t s we r e al l o c a t e d to th e va r i o u s fu n d s ba s e d on ap p l i c s t i o n s an d / o r us e o f se r v i c e s . Co m p l e t e fi n a n c i a l st a t e m e n t s fo r LO O I S ma y be ob t a i n e d at th e LO G IS of f i c e s lo c a t e d at 57 5 0 Du l u t h St r e e t , Go l d e n Va l l e y , Mi n n e s o t a 55 4 2 2 . LO G IS In s u r a n c e Gr o u p Th i s gr o u p pr o v i d e s co o p e r a t i v e pu r c h a s i n g o f he a l t h an d li f e in s u r a n c e be n e f i t s fo r ap p r o x i m a t e l y 45 go v e r n m e n t a l en t i t i e s . Th e to t a l o f 20 1 5 he a l t h an d li f e in s u r a n c e co s t s pa i d by th o Ci t y wa s $ ! ,4 0 0 , 9 4 1 . Co m p l e t e fi n a n c i a l st a t e m e n t s ma y be ob t a i n e d fr o m Ga l l a g h e r Be n e f i t se r v i c e s , In c . lo c a t e d at 36 0 0 Am e r i c a n Bl v d We s t , Bl o o m i n g t o n , MN 55 4 3 1 . CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A NO T E S TO TH E FI N A N C I A L ST A T E M E N T S De c e m b e r 31 , 20 1 5 Th e Br o o k l v n Ce n t e r Fi r e Pe o a r t m m t Re l i e f As s o c i a t i o n (t h e Association) Th e As s o c i a t i o n is or g a n i z e d as a no n p r o f i t or g a n i z a t i o n , le g a l l y separate from the City, by its members to provide pe n s i o n an d ot h e r be n e f i t s to me m b e r s in ac c o r d a n c e wi t h Minnesota Statutes. Its board of directors is elected by the me m b e r s h i p o f th e As s o c i a t i o n an d no t by th e Ci t y Co o n c i l . The Association issues its own set of financial statements. Al l fu n d i n g is co n d u c t e d in ac c o r d a n c e wi t h ap p l i c s b l e Mi n n e s o t a Statutes, whareby state aids flow to the Association, ta x le v i e s ar e de t e r m i n e d by th e As s o c i a t i o n an d ar e on l y re v i e w e d by tho City. The Association pays benefits directly to it s me m b e r s . Th e As s o c i a t i o n ma y ce r t i f y ta x le v i e s to He n n e p i n County directly if the City does not COlT)' out this fu n c t i o n . Be c a u s e th e As s o c i a t i o n is fi s c a l l y in d e p e n d e n t o f the City, the financial information of the Association has no t be e n in c l u d e d wi t h i n th e Ci t y ' s fi n a n c i a l s t a t e m m t s . (S e e Note 5 for disclosures relating to the pension plan op e r a t e d by th e As s o c i a t i o n . ) Co m p l e t e fi n a n c i a l st a t e m e n t s for the Association may be ob¥:ned at the City offices lo c a t e d at 63 0 1 Sh i n g l e Cr e e k Pa r k w a y , Br o o k l y n Ce n t e r , Minnesota 55430. IV-45 Re q u i r e d Su p p l e m e n t a r y In f o r m a t i o n CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A RE Q U I R E D SU P P L E M E N T A R Y IN F O R M A T I O N SC H E D U L E OF FU N D I N G PR O G R E S S - OT H E R PO S T E M P L O Y M E N T BENEFITS Fo r th e Ye a r En d e d De c e m b e r 31 , 2 0 1 5 Un f u n d e d Ac t u a r i a l Ac t u a r i a l Ac t u a r i a l A c t u a r i a l Va l u a t i o n V a l n e o f Ac c r u e d A c c r u e d Fnnded Da t e As s e t s Li a b i l i t y (A A L ) Li a b i l i t y (U A A L ) Ratio Ja n n a r y I, 20 1 0 $ $ 3, 0 1 2 , 3 8 3 $ 3, 0 1 2 , 3 8 3 0.00% Ja n n a r y I, 20 1 2 2, 6 2 0 , 3 6 7 2, 6 2 0 , 3 6 7 0.00% Ja n n a r y I, 20 1 4 2, 5 7 4 , 5 2 9 2 , 5 7 4 , 5 2 9 0.00% UAALasa Covered Percentage of Pa~roll Covered P~roll $ 9,143,276 32.95% 9,472,237 27.66% 9,934,960 25.91% IV-46 CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A SC H E D U L E OF CI T Y CO N T R I B U T I O N S PU B L I C EM P L O Y E E S GE N E R A L EM P L O Y E E S RE T I R E M E N T FU N D Re q u i r e d Su p p l e m e n t a r y In f o r m a t i o n (L a s t Te n Ye a r s * ) St a t u t o r i l y Re q u i r e d Fi s c a l Ye a r En d i n g Co n l r i b u t i o n s (a ) De c e m b e r 31 , 20 1 5 56 4 , 1 6 8 Co n 1 r i b n t i o n s in Re l a t i o n to th e St a t u t o r i l y Re q u i r e d Co n t r i b u t i o n s (b ) 56 4 , 1 6 8 Co n t r i b u t i o n De f i c i e n c y (E x c e s s ) ( a- b ) Co v e r e d Pa y r o l l * * (d ) 7, 5 2 2 , 2 0 6 • Th i s sc h e d u l e is pr e s e n t e d pr o s p e c t i v e l y be g i n n i n g wi 1 h 1h e fi s c a l ye a r en d e d De c e m b e r 31 , 20 1 5 . • • Fo r pu r p o s e s of th i s sc h e d u l e , co v e r e d pa y r o l l is de f m e d as 11 pe n s i o n a b l e wa g e s 11 • Co n t r i b u t i o n s as a Pe r c e n t a g e o f Co v e r e d Pa y r o l l (b i d ) 7. 5 0 ' / o CI T Y O F BR O O K L Y N CE N T E R , MI N N E S O T A SC H E D U L E OF CI T Y ' S PR O P O R T I O N A T E SH A R E OF NE T PE N S I O N LI A B I L I T Y PU B L I C EM P W Y E E S GE N E R A L EM P W Y E E S RE T I R E M E N T FU N D Re q u i r e d Su p p l e m e n t a r y In f o r m s t i o n (L a s t Te n Y e l l l ! ! 0 ) Em p l o y e r s Pr o p o r t i o n (P e r c e n t a g e ) o f th e Ne t Pe n s i o n Fi s c a l Ye a r En d i n g Li a b i l i t y (A s s e t ) Ju n e 30 , 20 1 5 0. 1 2 4 3 % Em p l o y e r s Pr o p o r t i o n a t e Sh l l r e (A m o u n t ) of th e Ne t Pe n s i o n Li a b i l i t y (A s s e t s ) (a ) 6, 4 4 1 , 8 7 2 Employers Covered ~ $7,303,595 • Th i s sc b e d n l e is pr e s e n t e d pr o s p e c 1 i v e l y be g i n n i n g wi t h th e fi s c a l ye a r en d e d December 31, 2015. "' " ' F o r pm p o s e s of th i s sc h e d u l e , co v e r e d pa y r o l l is de f i n e d as "p e n s i o n a b l e wa g e s " . Employers Proportionate Share of the Net Pension Lisbility (Asset) ••• Percentage of its Covered Payroll (alb) 88.20"/o Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 78.20"/o IV-47 CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A SC H E D U L E OF CI T Y CO N T R I B m i O N S PU B L I C EM P L O Y E E S PO L I C E AN D FI R E FU N D Re q u i r e d Su p p l e m e n t a r y In f o r m a t i o n (L a s t Te n Ye a r s * ) St a t u t o r i l y Co n t r i b u t i o n s in Re l a t i o n Re q u i r e d to th e St a t u t o r i l y Re q u i r e d Fi s c a l Ye B t En d i 1 1 1 1 Co n t r i b u t i o n s (• ) Co n t r i b u t i o n s (2 ) De c e m b e r 31 , 20 1 5 $ 68 7 , 9 3 5 $ 68 7 , 9 3 5 Co n t r i b u t i o n De f i c i e n c y Co v e r e d @x c e s s l ( a -b ) Pa ) ! ! ! l l * * (d ) $ $ 4, 2 4 6 , 5 1 1 * Th i s sc h e d u l e is pr e s e n t e d pr o s p e c t i v e l y be g i n n i n g wi t h th e fi s c a l ye B t en d e d De c e m b e r 31 , 20 1 5 . • • Fo r pu r p o s e s of th i s sc h e d u l e , co v e r e d pa y r o l l is de f i n e d as "p e n s i o n a b l e wa g e s " . Co n t r i b u t i o n s as a Pe r c e n t a g e o f Co v e r e d Pa~ r o l l (b i d ) 16 . 2 0 % CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A SC H E D U L E OF CI T Y ' S PR O P O R T I O N A T E SH A R E OF NE T PE N S I O N LI A B I U f Y PU B L I C EM P L O Y E E S PO L I C E & FI R E FU N D Re q u i r e d Su p p l e m e n t a r y In f o r m a t i o n (L s s t Te n Ye a r s * ) Em p l o y e r ' s Pr o p o r t i o n (P e r c e n t a g e ) of th e Ne t Pe n s i o n Fi s c a l Ye a r Eu d i n g Li a b i l i t y (A s s e t ) Ju n e 30 , 20 1 5 0. 4 4 6 0 ' , 1 , Em p l o y e i ' s Pr o p o r t i o n s t e Sh a r e (A m m m t ) of th e Ne t Pe n s i o n Li a b i l i t y (A s s e t s ) ( a ) . 5, 0 6 7 , 6 0 4 Employer's Cuvered ~ 4,031,138 • Th i s sc h e d u l e is pr e s e n t e d pr o s p e e 1 i v e l y be g i n n i n g wi t h th e fi s c a l ye a r en d e d De c e m b e r 31, 2015. •• Fo r pu r p o s e s of th i s sc h e d u l e , co v e r e d pa y r o l l is de f i n e d as "p e n s i o o . a b l e wa g e s " . Employei's Proportionate Share of the Net Pension Uability (Asset) as a Percentage of its Cuvered Payroll (a/b) 125.71% Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 86.60% IV-48 CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A SC H E D U L E OF CH A N G E S IN NE T PE N S I O N AS S E T AN D RE L A T E D RA T I O FI R E RE L I E F AS S O C I A T I O N Re q u i r e d Su p p l e m e n t a r y In f o n n a t i o n (L a s t Te n Ye a r s * ) To t a l pe n s i o n Li a b i l i t y Se r v i c e Co s t In t e r e s t Be n e f i t Pa y m e n t s Ne t Cb a n g e in To t a l Pe n s i o n Li a b i l i t y To t a l Pe n s i o n Li a b i l i t y - Be g i n n i n g of Ye a r To t a l Pe n s i o n Li a b i l i t y - En d of Ye a r Pl a n Fi d u c i a r y Ne t Po s i t i o n Co n t r i b u t i o n s - St a t e an d Lo c a l Ne t In v e s t m e n t In c o m e Be n e f i t Pa y m e n t s Ad m i n i s t r a t i v e Ex p e n s e s Ne t Ch a n g e in Pl a n Fi d u c i a r y Ne t Po s i t i o n Pl a n Fi d u c i a r y Ne t Po s i t i o n - Be g i n n i n g of Ye a r Pl a n Fi d u c i a r y Ne t Po s i t i o n - En d o f Ye a r Ne t Pe n s i o n Li a b i l i t y (A s s e t ) -E n d o f Ye a r Pl a n Fi d u c i a r y Ne t Po s i t i o n as a Pe r c e n t a g e of t b e To t a l Pe n s i o n Li a b i l i t y Co v e r e d Em p l o y e e Pa y r o l l Ne t Pe n s i o n Li a b i l i t y as a Pe r c e n t a g e of Co v e r e d Pa y r o l l _ 2 2 ! . 5 $ 85 , 9 0 4 17 8 , 2 4 2 (6 1 7 , 5 4 1 ) (3 5 3 , 3 9 5 ) 2, 7 6 9 , 1 8 9 2, 4 1 5 , 7 9 4 15 8 , 5 4 5 14 9 , 6 3 5 (6 1 7 , 5 4 1 ) (1 0 , 0 8 0 ) (3 1 9 , 4 4 1 ) 3, 8 2 7 , 6 5 1 3, 5 0 8 , 2 1 0 (1 , 0 9 2 , 4 1 6 ) 14 5 . 2 % n/ a n/ a * Th i s sc h e d u l e is pr e s e n t e d pr o s p e c t i v e l y be g i n n i n g wi t b tb e fi s c a l ye a r en d e d De c e m b e r 31 , 20 1 5 (u s i n g a De c e m b e r 31 , 20 1 4 me a s u r e m e n t da t e ) . CI T Y OF BR O O K L Y N CE N T E R , MI N N E S O T A SC H E D U L E OF CI T Y CO N T R I B U T I O N S FI R E RE L I E F AS S O C I A T I O N Re q u i r e d Su p p l e m e n t a r y In f o n n a t i o n (L a s t Te n Ye a r s " ) 20 1 5 Ac t u a r i a l l y De t e n n i n e d Co n t r i b u t i o n * Co n t r i b u t i o n s in Re l a t i o n of tb e Ac t u a r i a l l y De t e n n i n e d Co n t r i b u t i o n 14 8 , 0 6 1 Co n t r i b u t i o n De f i c i e n c y (E x c e s s ) * Co v e r e d - Em p l o y e e Pa y r o l l n/ a Co n t r i b u t i o n s as a Pe r c e n t a g e of Co v e r e d Em p l o y e e Pa y r o l l n/ a No t e s to Sc b e d u l e Va l u a t i o n da t e : 2014 $ 101,453 158,545 (57,092) n/a n/a 2013 2012 _2Q!! $ 111,463 $ 111,463 $ 135,929 134,340 151,503 101,119 (22,877) (40,040) 34,810 n/a n/a n/a n/a n/a n/a Ac t n a r i l l y de t e n n i n e d co n t r i b u t i o n ra t e s ar e ca l c u l a t e d as of June 30, two years prior to tbe end of tbe fiscal ye a r in wh i c h co n t r i b u t i o n s ar e re p o r t e d . Me t b o d s an d as s u m p t i o n s us e d to de t e n n i n e co n t r i b u t i o n rates: Ac t u a r i a l co s t me t b o d En t r y ag e no r m a l cost metbod Am o r t i z a t i o n me t b o d Le v e l do l l a r am o u n t amortized on a closed basis Re m a i n i n g am o r t i z a t i o n pe r i o d 8 ye a r s As s e t va l u a t i o n me t b o d fa i r va l u e In f l a t i o n No t ap p l i c a b l e Sa l a r y in c r e a s e s No t ap p l i c a b l e In v e s t m e n t ra t e of re t u r n 7. 0 % co m p o u n d e d annually Re t i r e m e n t ag e Me m b e r s ar e as s u m e d to retire at tbe later of age 52 or 20 years of service Mo r t a l i t y Ba s e d on RP - 2 0 0 0 Annuitant Mortality Table " Th i s sc b e d u l e is pr e s e n t e d pr o s p e c t i v e l y be g i n n i n g wi t b tbe fiscal year ended December 31, 2015. * In f o n n a t i o n un a v a i l a b l e at ti m e o f au d i t PROPOSAL SALE DATE: May 8, 2017 ________________________________ Phone: 651-223-3000 * Preliminary; subject to change. Fax: 651-223-3046 Email: bond_services@springsted.com Website: www.springsted.com City of Brooklyn Center, Minnesota $8,830,000* General Obligation Improvement and Utility Revenue Bonds, Series 2017 For the Bonds of this Issue which shall mature and bear interest at the respective annual rates, as follow, we offer a price of $_________________ (which may not be less than $8,759,360) plus accrued interest, if any, to the date of delivery. Year Interest Rate (%) Yield (%) Dollar Price Year Interest Rate (%) Yield (%) Dollar Price 2019 % % % 2024 % % % 2020 % % % 2025 % % % 2021 % % % 2026 % % % 2022 % % % 2027 % % % 2023 % % % 2028 % % % Designation of Term Maturities Years of Term Maturities In making this offer on the sale date of May 8, 2017 we accept all of the terms and conditions of the Terms of Proposal published in the Preliminary Official Statement dated April 18, 2017 including the City’s right to modify the principal amount of the Bonds. (See “Terms of Proposal” herein.) In the event of failure to deliver these Bonds in accordance with said Terms of Proposal, we reserve the right to withdraw our offer, whereupon the deposit accompanying it will be immediately returned. All blank spaces of this offer are intentional and are not to be construed as an omission. Not as a part of our offer, the above quoted prices being controlling, but only as an aid for the verificatio n of the offer, we have made the following computations: NET INTEREST COST: $____________________________ TRUE INTEREST RATE: ______________ % The Bidder  will not  will purchase municipal bond insurance from . Account Members ______________________________ Account Manager By: ___________________________ Phone: ________________________ ........................................................................................................................................................................................................................... The foregoing proposal has been accepted by the City. Attest: _______________________________ Date: ________________________________ ........................................................................................................................................................................................................................... $8,830,000 General Obligation Improvement and Utility Revenue Bonds, Series 2017A Nate Reinhardt, Finance Director May 8, 2017 2 Palmer Lake West Area Project Summary Amount proposed in Bond (By Repayment Source): Property Tax Levy $2,500,000 Special Assessments $1,450,000 Water Charges $3,410,000 Sanitary Sewer Charges $1,470,000 Total Proposed Bond Issue $8,830,000* •Provides the funding for the Evergreen Park Area Improvements (street and utility) and Water Tower No. 3 Reconditioning •Project Costs •Evergreen Park Area Improvements - $9,882,457 •Water Tower No. 3 Reconditioning - $1,482,000 *Includes costs of issuance of $65,397 Background Sale Summary •Bids received at 10am (9 bids received) •Stifel, Nicolaus & Co., Inc. (lowest bidder) Terms •Repaid over 10 years •Interest rate of 1.96% •Average maturity of 6.3 years •Adjusted principal amount from $8,830,000 to $8,360,000 Required 2018 debt service property tax levy of $280,962 3 Standard & Poor’s Credit Rating •Assigned/Affirmed “AA long-tern rating on City debt •Long-term rating reflects the following factors: •Adequate economy •Market value per capita of $60,276 •Per capita effective buying income at 72.5% •Benefits from access to a broad and diverse metropolitan area •Very strong management •Strong financial policies (investment, debt management, fund balance) •Two year budget, 15-year capital improvement plan, monthly financial reporting •Strong budgetary performance •Positive operating surpluses in General Fund/Governmental Fund 4 Standard & Poor’s Credit Rating •Long-term rating reflects the following factors (continued): •Very strong budgetary flexibility •Available fund balance of 70% of operating expenditures •Very strong liquidity •Total governmental fund cash is 80.4% of total expenditures and 6.7 times governmental debt service •Adequate debt and contingent liability position •Low debt in comparison with revenue •78.4% of debt scheduled to be retired in 10 years •Strong institutional framework •Minnesota city with a population greater than 2,500 5 6 Brooklyn Center Bond Sale Process Doug Green Springsted Incorporated Brooklyn Center’s Financial Advisor 7 City of Brooklyn Center City Council May 8, 2017 Presenter: Doug Green, Springsted Incorporated PRESENTATION TO Bond Sale Participants Engineer Bond Counsel Financial Advisor Credit Enhancement Provider Paying Agent and Registrar Rating Agency Primary Participants Issuer Investor Underwriter 1 Bond Sale Process Step 2: MA prepares pre-sale report and Bond Counsel prepares Authorizing Resolution. Step 1: Financing team works out details of sale. Step 3: City Council authorizes bond sale. Step 4: Preliminary Official Statement (OS) and credit rating review. Step 5: Take bids from underwriters. Elected body considers sale. Step 6: MA and Bond Counsel prepare closing legal documents. Step 7: Issuer receives bond proceeds. Goals of the Financing Team - Lead by the Finance Department •Legal and Reasonable –Is there authority to finance the projects? –Does it align with established policies? •Efficient –What financing method is most cost effective? –Finance Department cash flow modelling •Sustainable –Is the plan structurally balanced into the future? –Is the plan affordable to the city, residents, and businesses? Authority to Issue Debt: The authority to issue debt is granted in federal and state law. •Federal Law –Tax-Exempt –Taxable –Bank Qualification –Continuing Disclosure –Advance Refundings –Arbitrage •State Law –Voter Approval –Eligible projects –Security –Method of Sale –Debt Limits –Process Municipal Securities Rulemaking Board: Electronic Municipal Market Access (EMMA) 5 Holders of Municipal Debt 6 Source: Securities Industry and Financial Markets Association (SIFMA) 7 U.S. Financial Markets Federal Agencies Corporate Debt Government Securities __T-Bills_ __Notes_ __Bonds_ __GNMA_ __FNMA_ __FHLMC __Commercial Paper_ __Corporate Bonds__ Mortgage Related_ Asset-Backed____ Equity Markets Debt Markets Taxable Debt Tax Free Debt (Municipal Bonds) Commodity Markets Foreign Exchange Markets Federal Reserve System (Banks) Money Market Funds Time Deposits __CD’s_ Bank Securities 2016 Bond Issuance ($ in Billions) 8 Source: Securities Industry and Financial Markets Association (SIFMA)