HomeMy WebLinkAbout2018 06-04 Joint Session with Financial CommissionAGENDA
CITY COUNCIL/FINANCIAL COMMISSION JOINT WORK SESSION
JUNE 4, 2018
6:30 p.m.
Council Chambers
City Hall
1.Introductions
2.Call to Order
3.Approval of Agenda
4.Presentation of Audit Report and Management Letter
5.Council/Commission Questions
6.Staff Overview of Comprehensive Annual Financial Report
7.Council/Commission Questions
8.Miscellaneous
9. Adjourn
MEMORANDUM - COUNCIL/FINANCIAL
COMMISSION JOINT WORK SESSION
DATE: June 4, 2018
TO: Curt Boganey, City Man
FROM: Nathan Reinhardt, Finance Director (VS&
SUBJECT: Joint Work Session for Review of the City of Brooklyn Center's 2017
Comprehensive Annual Financial Report (CAFR)
Recommendation:
No action will be requested. Each year the City prepares a Comprehensive Annual Financial
Report (CAFR) in accordance with City charter and State statutory regulations. As required by
those regulations, the City is annually audited by an independent auditing firm. This session will
be held to provide an overview of the 2017 Comprehensive Annual Financial Report (CAFR)
and Management Report to the City Council and the Financial Commission. James Eichten,
from Malloy, Montague, Karnowski & Radosevich (MMKR) will present this information and
will be available to respond to questions.
Background:
Enclosed please find the 2017 CAFR, Management Report and Special Purpose Report. The
CAFR sets forth the City's financial position, results of operations, cash flows and all disclosures
necessary to enable maximum understanding of the City's financial affairs. Responsibility for
both the accuracy and completeness of the presented data and the fairness of the presentation,
including all disclosures, rests with the City. A copy of the 2017 CAFR will also be available on
the Fiscal & Support Services page of the City's website.
I would like to point out several items that you might find particularly interesting:
1.Pages 1-7: Letter of Transmittal, which provides a profile of the City and information of
the City's long-term financial planning, major initiatives and financial policies.
2.Page 10: The Certificate of Achievement for Excellence in Financial Reporting for the
2016 CAFR,
3.Pages 15-26: The Management Discussion and Analysis, which is the Executive
Summary of the City's financial statements.
4.Pages 30-31: Balance Sheet shows the General Fund balance at year-end was
$11,355,203. Unassigned/Assigned General Fund balance represents 52.7% of 2018
General fund budgeted expenses.
5. Page 34-35: The Statement of Revenues, Expenditures, & Changes in Fund Balances
provides the net change in fund balances of the governmental funds. The General Fund
had excess revenues over expenditures of $664,850 (prior to transfers). The General
Fund transferred $715,544 to the Capital Improvements Fund in 2017 to provide funding
for future capital improvements.
Our Vision. We envision Brooklyn Center as a thriving, diverse community with a full range of housing, business, cultural and
recreational ofl'rings. It is a safe and inclusive place I/mci! people of all ages love to call home, and visitors enjoy clime to its
convenient location and commitment to a healthy environment
MEMORANDUM - COUNCIL/FINANCIAL
COMMISSION JOINT WORK SESSION
6.Pages 44-45: The Statement of Cash Flows shows the changes in cash balances of all the
enterprise and utility funds.
7.Management Report (Issued under a separate cover): Includes summarized and
comparison information of the City's funds and financial information.
8. Special Purpose Audit Reports (Issued under a separate cover): Includes results of the
audit of internal controls and legal compliance.
MMKR audited the City's financial statements and issued an unmodified opinion, which is
commonly referred to as a "clean audit opinion". This means that, in the auditor's opinion, the
financial statements conform with applicable accounting standards. In addition to formulating an
opinion on the City's financial statements, the auditors reviewed the City's internal controls,
legal compliance and financial management practices. Those results were included in the
Special Purpose Audit Reports which did not contain any legal compliance findings.
Policy Issues:
The 2017 CAFR conveys the fiscal condition of the City as of December 31, 2017 and lays the
groundwork for understanding the financial resources available to the City when planning for the
future.
Strategic Priorities:
e Safe, Secure, Stable Community
Our I Vision: TTe envision Brooklyn Center as a thriving, diverse community with a/hill range of housing, business, cultural and
recreational o/jerings. It is a safe and inclusive place that people ofall ages love to call home, and visitors enjoy due to its
convenient location and commitment to a healthy environment
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United St
tates
COMPREHENSIVE ANNUAL FINANCIAL REPORT
OF THE
CITY OF BROOKLYN CENTER,
MINNESOTA
Cornelius L. Boganey
City Manager
Prepared By:
FINANCE DIVISION
DEPARTMENT OF FISCAL & SUPPORT SERVICES
Nathan Reinhardt
Finance Director
Andrew Splinter
Assistant Finance Director
FOR THE YEAR ENDED
DECEMBER 31, 2017
Member of Government Finance Officers
Association of the United States and Canada
This page has been left blank intentionally.
CITY OF BROOKLYN CENTER, MINNESOTA
TABLE OF CONTENTS
Page No.
INTRODUCTORY SECTION
Letter of Transmittal 1
Principal Officials 8
Organizational Chart 9
Certificate of Achievement 10
FINANCIAL SECTION
Independent Auditor's Report 11
Management's Discussion and Analysis 15
Basic Financial Statements
Government-wide Financial Statements
Statement of Net Position 27
Statement of Activities 28
Fund Financial Statements
Governmental Funds
Balance Sheet 30
Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Position 33
Statement of Revenues, Expenditures and Changes in Fund Balances 34
Reconciliation of the Statement of Revenues, Expenditures and Changes in
Fund Balances of Governmental Funds to the Statement of Activities 36
Statement of Revenues, Expenditures and Changes in Fund Balance: Budget and Actual
General Fund 37
Tax Increment District No. 3 Special Revenue Fund 38
Proprietary Funds
Statement of Net Position 40
Statement of Revenues, Expenses and Changes in Net Position 42
Statement of Cash Flows 44
Notes to the Financial Statements 47
Required Supplementary Information
Schedule of Funding Progress - Other Postemployment Benefits 87
Schedule of City Contributions - Public Employees General Employees
Retirement Fund 88
Schedule of City's and Non-Employer Proportionate Share of Net Pension
Liability - Public Employees General Employees Retirement Fund 89
Schedule of City Contributions - Public Employees Police and Fire Fund 90
Schedule of City's Proportionate Share of Net Pension Liability - Public Employees
Police and Fire Fund 91
Schedule of Changes in Net Pension Asset and Related Ratio - Fire Relief Association 92
Schedule of City Contributions - Fire Relief Association 93
Schedule of City Contributions - International Union of Operating Engineers
Central Pension Fund 94
Combining and Individual Fund Statements and Schedules
Governmental Funds
Nonmajor Governmental Funds
Combining Balance Sheet 98
Combining Statement of Revenues, Expenditures and Changes in Fund Balances 99
Nonmajor Special Revenue Funds
Combining Balance Sheet 100
Combining Statement of Revenues, Expenditures and Changes in Fund Balances 102
Nonmajor Capital Projects Funds
Combining Balance Sheet 104
Combining Statement of Revenues, Expenditures and Changes in Fund Balances 105
Schedule of Revenues, Expenditures and Changes in Fund Balance: Budget and Actual
General Fund 106
Special Revenue Funds
Housing and Redevelopment Authority 111
CITY OF BROOKLYN CENTER, MINNESOTA
TABLE OF CONTENTS
Economic Development Authority 112
Community Development Block Grant 113
Police Forfeitures 114
Tax Increment District No. 2 115
Tax Increment District No. 3 116
Tax Increment District No. 4 117
Tax Increment District No. 5 118
City Initiatives Grant 119
Debt Service Fund 120
Capital Projects Funds
Capital Improvements 121
Municipal State-Aid for Construction 122
Special Assessment Construction 123
Capital Reserve Emergency 124
Street Reconstruction 125
Technology 126
Debt Service Fund by Account
Combining Balance Sheet 128
Combining Schedule of Revenues, Expenditures and Changes in Fund Balances 130
Schedule of Revenues, Expenditures and Changes in Fund Balance: Budget and Actual
G.O. Improvement Bonds, 2006A 132
G.O. Improvement Bonds, 2008B 133
G.O. Improvement Bonds, 2013B 134
G.O. Improvement Bonds, 2015A 135
G.O. Improvement Bonds, 2016A 136
G.O. Improvement Bonds, 2017A 137
G.O. Tax Increment Bonds, 2016C 138
G.O. Tax Increment Bonds, 2016B 139
G.O. Tax Increment Refunding Bonds, 2015B 140
G.O. Tax Increment Bonds, 2013A 141
G.O. Tax Increment Bonds, 2008A 142
Proprietary Funds
Internal Service Funds
Combining Statement of Net Position 144
Combining Statement of Revenues, Expenses and Changes in Net Position 146
Combining Statement of Cash Flows 148
STATISTICAL SECTION (UNAUDITED)
Financial Trends
Net Position by Component 152
Changes in Net Position 154
Governmental Activities Tax Revenue by Source 160
Fund Balances Governmental Funds 162
Changes in Fund Balances Governmental Funds 164
Revenue Capacity
Assessed Tax Capacity and Estimated Actual Value of Taxable Property 166
Property Tax Rates - Direct and Overlapping Governments 168
Principal Property Taxpayers 170
Property Tax Levies and Collections 171
Debt Capacity
Ratios of Outstanding Debt by Type 172
Ratios of General Bonded Debt Outstanding 173
Computation of Direct and Overlapping Governmental Activities Debt 174
Legal Debt Margin Information 176
Pledged Revenue Coverage 178
Demographic and Economic Information
Demographic and Economic Statistics 179
Principal Employers 180
Operating Information
Full-Time City Government Positions by Function 181
Operating Indicators by Function 182
Capital Asset Statistics by Function 183
Introductory
Section
May 21, 2018
Honorable Mayor and Members of the City Council
City of Brooklyn Center
Transmitted herewith is the Comprehensive Annual Financial Report of the City of Brooklyn Center
for the fiscal year ended December 31, 2017.
Management of the City of Brooklyn Center assumes full responsibility for the completeness and
reliability of the information contained in this report based on the current system of internal control.
Because the cost of internal control should not exceed anticipated benefits, the objective is to provide
reasonable, rather than absolute, assurance that the financial statements are free of any material
misstatements.
Minnesota Statutes and City Charter Section 7.12 require that the financial statements of the City of
Brooklyn Center be audited annually by the State Auditor or a certified public accountant selected by
the City Council. These financial statements have been audited by Malloy, Montague, Karnowski,
Radosevich, & Co., P.A. (MMKR). Their opinion is included in the financial section of this report
Management’s Discussion and Analysis (MD&A) immediately follows the independent auditor’s
report and provides a narrative introduction, overview, and analysis of the basic financial statements.
Management’s Discussion and Analysis complements this letter of transmittal and should be read in
conjunction with it.
Profile of the City of Brooklyn Center
The City of Brooklyn Center was incorporated in 1911. It is a northern suburb of the Twin Cities
metropolitan area, adjacent to the City of Minneapolis and located 10 miles from its downtown area.
The City is wholly within Hennepin County and covers an area of about 8.5 square miles. The
Mississippi River forms the City’s eastern boundary.
The City has operated under the council-manager form of government since the adoption of the
City Charter in 1966. The governing body is comprised of the Mayor and four Council Members
elected at large. All members serve four-year terms with two of the Council Members standing
for election during each national election year cycle. The Mayor and Council Members hire a
City Manager who is responsible for the daily operations of the City.
The City provides a full range of municipal services to its citizens. These include police and fire
protection and services, zoning and code enforcement, municipal planning, parks, recreation
activities, construction and maintenance of streets, provision of water, wastewater collection and
1
treatment, stormwater collection and treatment, and street lighting. Community and economic
development are facilitated through a Housing and Redevelopment Authority and an Economic
Development Authority. The Boards of those two organizations are comprised of the Mayor and
members of the City Council. The City also has internal departments providing human
resources, engineering, financial management and information technology support to these
various functions. The City operates a conference and meeting facility at the Earle Brown
Heritage Center, two municipal liquor stores, and Centerbrook, an executive nine-hole golf
course.
Financial planning and control for the City of Brooklyn Center is based on the Annual Operating
Budget and the multi-year Capital Improvement Program. Under Minnesota Statutes, a
preliminary property tax levy must be adopted no later than September 30 of each year for the
ensuing year’s collection. This establishes a maximum levy that may subsequently be lowered
but not raised. Effective establishment of this levy requires that a preliminary budget be
prepared. The City Manager, with the assistance of staff, prepares such a budget each year and
presents it to the City Council in August, prior to the consideration of the preliminary tax levy.
In addition, the City Council reviews the recommended rates and charges for utility funds and
other operations on an annual basis as part of the budget process. Citizens receive a notice of
taxes proposed for their individual properties in November based on the preliminary levies
established by all taxing districts. Following the receipt of this notice citizens are invited to
public meetings in each taxing jurisdiction. The City’s meeting includes information about the
budget, the property tax levy and the priorities of the City Council for the coming year as
reflected by the budget allocations proposed. Public comment is received and considered at this
meeting. The final property tax levy and the resulting operational budgets for the ensuing fiscal
year are adopted at a subsequent meeting.
In addition, a Capital Improvement Program is reviewed and revised during the budget process
each year. This includes projects for which the City may issue debt and/or assess portions of the
cost to adjacent or benefited property owners. Because there are limited funds available each
year and the City does not wish to issue excessive amounts of debt, these projects are reviewed
and reprioritized each year.
The City Council remains focused on the achievement of strategic priorities. City financial
planning, policies, spending and initiatives reflect these priorities. The City Council adopted six
strategic priorities as follows:
Resident Economic Stability
The economic stability of residents is essential to vibrant neighborhoods and to retail, restaurant,
and business growth. We will lead by supporting collaborative efforts of education, business,
and government sectors to improve income opportunities for residents.
Targeted Redevelopment
Redeveloping properties to the highest value and best use will accomplish our goals regarding
housing, job creation, and growth of the City’s tax base. We will appropriately prepare sites and
provide the necessary supporting infrastructure investments to guide redevelopment of publicly-
and privately-owned properties.
2
Enhanced Community Image
Our ability to attract and retain residents and businesses is influenced by the perception of the
City. We will take specific actions to assure that Brooklyn Center is recognized by residents,
businesses, stakeholders, and visitors as a high quality, attractive, and safe community.
Inclusive Community Engagement
In order to provide effective and appropriate services, we must clearly understand and respond
to community needs. We will consistently seek input from a broad range of stakeholders from
the general public, non-profit, and for-profit sectors. Efforts to engage the community will be
transparent, responsive, deliberately inclusive, and culturally sensitive.
Safe, Secure, and Stable Community
For residents and visitors to fully appreciate and enjoy a great quality of life, it is essential that
all neighborhoods are safe, secure, and stable. We are committed to assuring compliance with
neighborhood conditions and building safety standards, providing proactive and responsive
public safety protection, wise stewardship of City resources and policies that promote safety,
security, and a lasting stable environment.
Key Transportation Investments
Proactively maintaining an efficient and effective infrastructure will meet the high level of
community expectations. We will plan for and invest in critical infrastructure improvements
that enhance safety, improve life quality, and support opportunities for redevelopment, while
sustaining the natural environment.
Local Economy
Brooklyn Center is a mature, fully developed first ring suburb of Minneapolis. With its
affordable housing, excellent schools, beautiful parks, and convenient transportation access it has
the attributes to continue as a vibrant community for many years to come.
The City experienced its most rapid growth from 1950 to 1970 when the City’s population grew
from 4,300 to its peak of 35,173. The 2016 population estimated from the Metropolitan Council
estimates the population for Brooklyn Center at 31,231. The number of housing units has
decreased from 11,704 in 1990 to an estimated 11,042.
The City’s taxable market value is $1,869,271,194 for taxes payable 2018, which is an increase
of $191,775,079 or 11.4 percent from last year. The taxable market value increase is driven by
large increases in residential (14.0%) and apartment properties (10.5%). The total tax capacity
of the City is estimated at $22,841,269 compared to $21,570,419 for taxes payable 2017, which
is an increase of $1,270,850 (5.9%). Residential housing makes up 50.5% of the 2018 tax
capacity base. According to the Hennepin County Assessor’s Office, for the valuation used to
calculate the 2018 property tax payments, the median value home in Brooklyn Center is
$167,000 compared to $150,000 in the previous valuation.
Major transportation routes in and through the City, including Interstates 94 and 694, and State
Highways 100 and 252, have provided a continued impetus for development of a strong
commercial tax base in the City along these corridors.
3
There are no large, undeveloped tracts of land in Brooklyn Center and no potential for
annexation of additional undeveloped land. Therefore, the revitalization of Brooklyn Center is
proceeding on three tracks: redevelopment and renewal of the commercial and industrial areas
of the City; reconstruction and enhancement of its streets, utilities, and parks; and the
revitalization of neighborhoods.
The hospitality industry contributes a significant amount to Brooklyn Center’s economy.
Lodging tax receipts for fiscal year 2017 totaled $1,206,565, which is an increase of $47,046
from 2016.
City issued building permits in 2017 had a total permit value of $59,017,940, showing a
continued trend of significant investments being made in the community.
Long Term Financial Planning
The City maintains a comprehensive Capital Improvement Plan to facilitate the replacement of
its aging infrastructure. When streets are reconstructed in this program, aging water, sanitary
and storm sewer infrastructure is also repaired or replaced. These improvements are funded by a
combination of general obligation improvement bonds supported with special assessments
against benefited properties and cash from the capital projects funds and utility enterprise funds.
About one twenty-fifth of the City’s streets and utilities are reconstructed each year. It is
expected that this will be an ongoing process and the Plan is reviewed and amended as a part of
each budget cycle. In addition, cash flows for all funds providing financing for the Plan are
updated for cash flow projections during the 15 year timeframe o f t h e P l a n . T h e C a p i t a l
Improvements Plan projects completion of the first citywide round of reconstruction of the
streets and utilities throughout the entire community by 2021. An additional benefit of these
neighborhood projects has been the increased investment by residents in their properties
following reconstruction projects.
The development of utility rate models and of non-utility cash flow projection models has
improved the City’s ability to plan and generate cash for operations, scheduled maintenance and
capital improvements. A plan for the maintenance and upgrading of the City’s buildings and
facilities is being incorporated into spending plans for both operational repairs and for large
capital expenditure type improvements.
Major Initiatives
Successful redevelopment continues to be the key to commercial and industrial tax base growth
including:
The southern portion of the 80 acre Opportunity Site, comprises 46 acres planned for a mixed
use commercial, office and residential redevelopment.
On December 20, 2013, the EDA acquired the 23.2 acre Brookdale Square shopping
center site which adjoins the EDA’s 8.4 acre former Brookdale Ford dealership property.
4
In 2014, the EDA acquired an additional 1.6 acre site and has discussed future
redevelopment plans with the four remaining businesses and/or property owner along
John Martin Drive (the northern portion of this redevelopment area).
In 2015, the EDA adopted the necessary findings of blighted building conditions that
would qualify this area as a future Tax Increment Redevelopment District or a Renewal
and Renovation District. The demolition of the buildings was completed in the fall of
2015.
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.
New development concepts which included market rate apartments and commercial
development were introduced to City Council on February 20, 2018. The EDA approved
a preliminary development agreement with Alatus, LLC for the redevelopment of the
Opportunity site on March 26, 2018. The preliminary development concept proposed
involves the construction of a mixed-use apartment/hotel/commercial/single-family
development together with related improvements including a centralized park area, new
roads and storm water ponding improvements.
Additional development activities in 2017/2018 include:
The EDA acquired the former Chrysler Auto Dealership, also known as Cars with Heart,
a 5 acre commercial site at 6121 Brooklyn Boulevard. The buildings have been
demolished and the EDA has approved plans and entered into a development agreement
for the construction of a 156 unit senior apartment building that provides affordable
assisted care opportunities for senior citizens. 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 was completed in January 2018 and the facility opened
March 2018.
Construction was completed on Phase II of the Maranatha Senior Campus (34
independent living senior apartment units).
TOPGOLF USA purchased an existing 85,240 square foot Regal Theater to allow for the
construction of a 65,000 square foot commercial recreational/entertainment development.
The three level facility will include 102 hitting bays, a 50 table restaurant and lounge, a
3,000 square foot roof terrace, a 3,000 square foot event area and a 220 yard driving
range with 11 outfield targets. The facility will open in August 2018.
On November 13, 2017, the EDA approved a site plan for the Shingle Creek Crossing
Development that includes an expansion of 24,822 square feet and renovation of the
former Kohl’s building by HOM furniture, the future development of a three story 32,800
square foot medical center/office building, and a 4,000 square foot bank. On December
11, 2017, the City Council approved the site and building plan for a Bank of America.
The building remodel/expansion of the former Kohl’s building and the construction of
Bank of America began in early 2018.
On April 23, 2018 Medtronic received approval for a substantial renovation and 13,427
square foot expansion of their dry room facilities, which will allow for production of their
lithium ion batteries for pacemakers.
5
Brooklyn Boulevard (49th Avenue to Bass Lake Road) will be reconstructed and
modernized to improve roadway safety, enhance traffic operations, reduce access points
and provide improvement bicycle and pedestrian facilities. Federal funding through the
Surface Transportation Program has been awarded to the City and Hennepin County for
this project.
Relevant Financial Policies
The City of Brooklyn Center includes in its Financial Policies a requirement that the General
Fund balance at year end must be between 50.0% and 52.0% of the ensuing year’s General Fund
operating budget. This provides both for cash flow needs and emergency expenditures in the
short term.
The City’s Capital Project Funding Policy provides recurring sources of funding for the City’s
15-year Capital Improvement Plan. The Policy specifically identifies three main funding sources
as follows:
1. Audited year-end General Fund unassigned fund balance above 52% of the next year’s
General Fund operating budget
2. Audited year-end Liquor Fund unrestricted cash balance that exceeds three and a half
months of the next year’s operating budget and one year of budgeted capital equipment
needs.
3. Local Governmental Aid (LGA) received in the amount of $650,000 o r h a l f o f t h e
amount received by the City (whichever is greater).
Also included in the Financial Policies are internal control directives to protect the City’s assets
from loss, theft or misuse. These controls provide reasonable assurance of the safety of the
City’s assets while recognizing that management estimates and judgments as to the cost of such
controls are also important to deriving maximum benefit from these controls.
Awards and Acknowledgements
The Government Finance Officers Association of the United States and Canada (GFOA)
awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of
Brooklyn Center for its Comprehensive Annual Financial Report (CAFR) for the fiscal year
ended December 31, 2016. The City was first awarded this certificate in 1966. In order to be
awarded a Certificate of Achievement, a government must publish an easily readable and
efficiently organized CAFR. The CAFR must satisfy both accounting principles generally
accepted in the United States and applicable federal, state and local legal requirements.
A Certificate of Achievement is valid for a period of one year. It is expected that the 2017 report
conforms to Certificate of Achievement Program requirements. It will be submitted to the
GFOA to determine its eligibility for another certificate.
6
7
CITY OF BROOKLYN CENTER, MINNESOTA
PRINCIPAL OFFICIALS
December 31, 2017
Name Position Term of Office Term Expires
ELECTED OFFICIALS
Tim Willson Mayor Four Years December 31, 2018
April Graves Council Member Four Years December 31, 2018
Kris Lawrence-Anderson Council Member Four Years December 31, 2020
Dan Ryan Council Member Four Years December 31, 2018
Marquita Butler Council Member Four Years December 31, 2020
APPOINTED OFFICIALS
Cornelius L. Boganey City Manager Appointed
Troy Gilchrist City Attorney Contractual Appointee
Sharon Knutson City Clerk Appointed
Reggie Edwards Deputy City Manager Appointed
Tim Gannon Police Chief Appointed
Gary Eitel Business and Development Director Appointed
Jeremy Hulke Fire Chief Appointed
James Glasoe Community Activities, Recreation and Services Director Appointed
Doran Cote Director of Public Works Appointed
Nathan Reinhardt Finance Director Appointed
8
CITY OF BROOKLYN CENTER, MINNESOTA
ORGANIZATIONAL CHART
December 31, 2017
9
10
Financial
Section
C ERTIFIED
A CCOUNTANTS
P UBLIC
PRINCIPALS
Thomas A. Karnowski, CPA
Paul A. Radosevich, CPA
William J. Lauer, CPA
James H. Eichten, CPA
Aaron J. Nielsen, CPA
Victoria L. Holinka, CPA/CMA
Malloy, Montague, Karnowski, Radosevich & Co., P.A.
5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com
11
INDEPENDENT AUDITOR’S REPORT
To the City Council and Management
City of Brooklyn Center, Minnesota
REPORT ON THE FINANCIAL STATEMENTS
We have audited the accompanying financial statements of the governmental activities, the business-type
activities, each major fund, and the aggregate remaining fund information of the City of Brooklyn Center,
Minnesota (the City) as of and for the year ended December 31, 2017, and the related notes to the
financial statements, which collectively comprise the City’s basic financial statements as listed in the
table of contents.
MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
AUDITOR’S RESPONSIBILITY
Our responsibility is to express opinions on these financial statements based on our audit . We conducted
our audit in accordance with auditing standards generally accepted in the United States of America and
the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or error .
In making those risk assessments, the auditor considers internal control relevant to the City’s preparation
and fair presentation of the financial statements in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s
internal control. Accordingly, we express no such opinion. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of significant accounting estimates
made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
(continued)
12
OPINIONS
In our opinion, the financial statements referred to on the previous page present fairly, in all material
respects, the respective financial position of the governmental activities, the business-type activities, each
major fund, and the aggregate remaining fund information of the City as of December 31, 2017, 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.
OTHER MATTERS
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s
discussion and analysis and the required supplementary information (RSI), as listed in the table of
contents, be presented to supplement the basic financial statements. Such information, although not a part
of the basic financial statements, is required by the Governmental Accounting Standards Board, who
considers it to be an essential part of financial reporting for placing the basic financial statements in an
appropriate operational, economic, or historical context. We have applied certain limited procedures to
the RSI in accordance with auditing standards generally accepted in the United States of America, which
consisted of inquiries of management about the methods of preparing the information and comparing the
information for consistency with management’s responses to our inquiries, the basic financial statements,
and other knowledge we obtained during our audit of the basic financial statements. We do not express an
opinion or provide any assurance on the information because the limited procedures do not provide us
with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City’s basic financial statements. The introductory section, combining and individual fund
statements and schedules, and statistical section, as listed in the table of contents, are presented for
purposes of additional analysis and are not required parts of the basic financial statements.
The combining and individual fund statements and schedules are the responsibility of management and
were derived from and relate directly to the underlying accounting and other records used to prepare the
basic financial statements. Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and certain additional procedures, including comparing and
reconciling such information directly to the underlying accounting and other records used to prepare the
basic financial statements or to the basic financial statements themselves, and other additional procedures
in accordance with auditing standards generally accepted in the United States of America. In our opinion,
the combining and individual fund statements and schedules are fairly stated, in all material respects, in
relation to the basic financial statements as a whole.
The introductory and statistical sections have not been subjected to the auditing procedures applied in the
audit of the basic financial statements and, accordingly, we do not express an opinion or provide any
assurance on them.
(continued)
13
OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS
In accordance with Government Auditing Standards, we have also issued our report dated May 21, 2018
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 solely 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 the effectiveness
of the City’s 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 21, 2018
This page has been left blank intentionally.
14
CITY OF BROOKLYN CENTER, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2017
As management of the City of Brooklyn Center (the City), we offer readers of the City's Comprehensive Annual Financial Report
(CAFR), this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2017.
We encourage readers to consider the information presented here in conjunction with additional information that we have furnished
in our letter of transmittal, which can be found on pages 1-7 of this CAFR.
Financial Highlights
• The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the
close of the most recent fiscal year by $140,030,060 (net position). Of this amount, $16,014,067 (unrestricted net position)
may be used to meet the City's ongoing obligations to citizens and creditors.
• The City’s total net position increased by $4,236,741 (3.12%) from the previous year. The increase can be primarily
attributed to a significant amount of tax increment revenues and utility revenues used towards non-operational expenses
including the paying down of debt service and capital outlay.
• As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of
$43,825,719, which is an decrease of $42,010 (0.10%) from the previous year. Of the total fund balance, $9,428,584
(21.51%) is unassigned, which is free from any internal or external constraints of its use.
• The General fund has a fund balance of $11,355,203 at the close of the current fiscal year. During 2017, the fund balance
decreased $85,694 (0.75%) from the previous year. The unassigned fund balance at year end is $11,099,939, which
represents 52% of the following year's budget. The remaining portion of the fund balance is nonspendable or assigned (for
the capital improvement funding plan).
• The City’s total outstanding bonded debt increased by $3,561,000 during the current fiscal year, from $51,318,445 to
$54,879,445. The City retired $4,799,000 in principal in 2017, and issued $8,360,000 in new debt that included the
rehabilitation of water tower number 3, infrastructure improvements and the Evergreen Park Area neighborhood reconstruction
project.
Overview of the Financial Statements
The discussion and analysis are intended to serve as an introduction to the City’s basic financial statements. The City's basic
financial statements include three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes
to the financial statements. This CAFR also contains other supplementary information in addition to the basic financial statements
themselves.
Government-Wide Financial Statements: The government-wide financial statements are designed to provide readers with a
broad overview of the City's finances, in a manner similar to a private-sector business.
The statement of net position presents information on all of the City’s assets, deferred outflows of resources, liabilities, and deferred
inflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a
useful indicator of whether the financial position of the City is improving or deteriorating.
15
CITY OF BROOKLYN CENTER, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2017
The statement of activities presents information showing how the City’s net position changed during the most recent fiscal year.
All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of
the related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash
flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave).
Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and
intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion
of their costs through user fees and charges (business-type activities). The governmental activities of the City include: general
government, public safety, public works, community services, parks & recreation, economic development, and interest on
long-term debt. The business- type activities of the City include: municipal liquor, golf course, Earle Brown Heritage Center,
water utility, sanitary sewer utility, storm drainage utility, street light utility, and the recycling utility.
The government-wide financial statements include not only the City itself (known as the primary government), but also a legally
separate Housing and Redevelopment Authority and Economic Development Authority, for which the City is financially
accountable. Although legally separate, these component units, function for all practical purposes as a department of the City, and
therefore have been included as an integral part of the primary government.
The government-wide financial statements can be found on pages 27 through 29 of this CAFR.
Fund Financial Statements: A fund is a grouping of related accounts that is used to maintain control over resources
that have been segregated for specific activities or objectives. The City, like state and local governments, uses fund accounting to
ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into two
categories: governmental funds and proprietary funds.
Governmental Funds: Governmental funds are used to account for essentially the same functions reported as governmental
activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental
fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable
resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financial
requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to
compare the information presented for governmental funds with similar information presented for governmental activities in the
government-wide financial statements. By doing so, readers may better understand the long-term impact of the City's near-term
financial decisions. Both the governmental fund balance sheet and governmental fund statement of revenues, expenditures, and
changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental
activities.
The City maintains 17 individual governmental funds. Information is presented separately in the governmental fund balance sheet
and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the following: General fund,
Tax Increment District No. 3, Debt Service, Capital Improvements, Municipal State Aid for Construction, and the Special Assessment
Construction fund, which are considered to be major funds. Data from the other 11 governmental funds are combined into a single,
aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining
statements or schedules, elsewhere in this CAFR.
16
CITY OF BROOKLYN CENTER, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2017
The City adopts an annual appropriated budget for nearly all funds presented in this CAFR. A budgetary comparison statement has
been provided in the basic financial statements for the General fund and the Tax Increment District No. 3 fund. The budgetary
comparison statements for any nonmajor funds are provided elsewhere in this CAFR.
The basic governmental fund financial statements can be found on pages 30 through 38 of this CAFR.
Proprietary Funds: Proprietary funds provide similar information to the government-wide financial statements, but in more
detail. The City maintains two different types of proprietary funds.
Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial
statements. The City uses enterprise funds to account for its: municipal liquor, golf course, Earle Brown Heritage Center, water
utility, sanitary sewer utility, storm drainage utility, street light utility, and recycling utility. All of the City's enterprise funds are
considered to be major funds, and separate information is provided for each of them in the basic financial statements.
Internal service funds are an accounting device to accumulate and allocate costs internally among the City's various functions.
The City uses internal service funds to account for its: central garage, employee retirement benefits, pension - coordinated, pension -
police and fire, and compensated absences accumulations. All internal service funds are combined into a single, aggregated
presentation in the proprietary fund financial statements. Individual data for the internal service funds is provided in the form of
combining statements elsewhere in this CAFR. Because all of these services predominately benefit governmental rather than
business-type functions, they have been included as governmental activities in the government-wide financial statements.
The basic proprietary fund financial statements can be found on pages 40 through 45 of this CAFR.
Notes to the Financial Statements: The notes provide additional information that is essential to a full understanding of the data
provided in the government-wide and fund financial statements. The notes to the financial statements can be found on
pages 47 through 85 of this CAFR.
Other Information: In addition to the basic financial statements and accompanying notes, this report also presents certain
required supplementary information, for other post-employment benefits (OPEB) and defined benefit pension plans. The schedules
of funding progress, City contributions, City's and non-employer proportionate share of net pension liability, and schedule of changes
in Net Pension Asset can be found on pages 87 through 94 of this CAFR. The combining and budgetary comparison statements referred
to earlier in connection with nonmajor governmental funds and internal service funds are presented immediately following the required
supplementary information. Combining and budgetary comparison statements can be found on pages 98 through 142 of this CAFR.
17
CITY OF BROOKLYN CENTER, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2017
Government-wide Financial Analysis
As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the City,
assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $140,030,060 at the close of the
most recent fiscal year.
The largest portion of the City's net position ($96,706,657 or 69.06%) reflects its investment in capital assets, which includes: land
infrastructure, buildings, and machinery & equipment, less any related debt used to acquire those assets that is still outstanding.
The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending.
Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to
repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these
liabilities.
2017 2016 2017 2016 2017 2016
Current and other assets 68,370,031$ 64,965,222$ 19,016,531$ 17,213,530$ 87,386,562$ 82,178,752$
Capital Assets 64,328,499 57,885,123 70,098,510 67,156,546 134,427,009 125,041,669
Total assets 132,698,530 122,850,345 89,115,041 84,370,076 221,813,571 207,220,421
Deferred outflows of resources 11,179,532 17,394,299 - - 11,179,532 17,394,299
Long-term liabilities outstanding 38,244,914 51,163,461 27,333,672 24,315,694 65,578,586 75,479,155
Other liabilities 5,788,818 6,666,100 3,614,288 2,964,766 9,403,106 9,630,866
Total liabilities 44,033,732 57,829,561 30,947,960 27,280,460 74,981,692 85,110,021
Deferred inflows of resources 17,981,351 3,711,380 - - 17,981,351 3,711,380
Net investment in capital assets 53,152,985 48,358,875 43,553,672 43,483,294 96,706,657 91,842,169
Restricted 27,309,336 29,554,944 - - 27,309,336 29,554,944
Unrestricted 1,400,658 789,884 14,613,409 13,606,322 16,014,067 14,396,206
Total Net Position 81,862,979$ 78,703,703$ 58,167,081$ 57,089,616$ 140,030,060$ 135,793,319$
At the end of the current fiscal year, the City is able to report positive balances in all three categories of net position, both for the
government as a whole, as well as for its separate governmental and business-type activities.
A portion of the City’s net position (19.5%) represents resources that are subject to external restrictions on how they may be
used. The remaining portion (11.44%) may be used to meet the City's ongoing obligations.
The governmental activities have a significant increase in capital assets from the previous year. The largest factor of this
increase were from street improvements. Governmental activities also saw a significant decrease in long-term liabilities outstanding
as a result of a decrease in the pension liability for the Public Employees Police & Fire Fund.
The business-type activities had a significant increase in long-term liabilities and capital assets. The increase is primarily due
to the issuance of revenue bonds for utility infrastructure improvements.
The governmental activities had a significant increase in the amount of deferred inflows of resources, and decrease in deferred
outflows of resources and long-term liabilities from the previous year. The change is primarily a result of GASB Statement No. 68 in
which the City is required to report its proportionate share of the Minnesota Public Employees Retirement Association (PERA) net
pension liabilities. Recording the liability does not change the City's future contribution requirements or obligations under the plans,
which are determined by Minnesota statutes.
CITY OF BROOKLYN CENTER - SUMMARY OF NET POSITION
Governmental Activities Business-Type Activities Total
18
CITY OF BROOKLYN CENTER, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2017
Governmental Activities
Governmental activities resulted in an increase of the City's net position by $3,159,276 (4.01%). Key elements of the changes are as
follows:
Revenues:2017 2016 2017 2016 2017 2016
Program revenues
Charges for services 2,164,683$ 2,353,302$ 21,964,369$ 21,074,194$ 24,129,052$ 23,427,496$
Operating grants and contributions 1,716,671 2,323,913 - 16,481 1,716,671 2,340,394
Capital grants and contributions 1,407,482 4,061,903 - 106,488 1,407,482 4,168,391
General revenues
Property taxes 16,736,759 15,757,198 - - 16,736,759 15,757,198
Other taxes 5,858,938 4,827,109 - - 5,858,938 4,827,109
Grants and contributions not
restricted to specific programs 1,701,232 1,939,431 - - 1,701,232 1,939,431
Unrestricted investment earnings 265,604 230,705 165,819 120,485 431,423 351,190
Gain on disposal of assets 88,326 57,765 - - 88,326 57,765
Total revenues 29,939,695 31,551,326 22,130,188 21,317,648 52,069,883 52,868,974
Expenses:
General government 4,007,850 3,891,671 - - 4,007,850 3,891,671
Public safety 12,438,818 13,222,625 - - 12,438,818 13,222,625
Public works 4,542,244 4,099,559 - - 4,542,244 4,099,559
Community services 143,103 136,349 - - 143,103 136,349
Parks and recreation 2,995,396 3,183,198 - - 2,995,396 3,183,198
Economic development 1,917,039 6,825,271 - - 1,917,039 6,825,271
Interest on long-term debt 540,799 654,205 - - 540,799 654,205
Municipal liquor - - 6,241,998 6,123,608 6,241,998 6,123,608
Golf course - - 335,029 309,910 335,029 309,910
Earle Brown Heritage Center - - 4,825,489 4,507,406 4,825,489 4,507,406
Water utility - - 3,294,345 2,903,198 3,294,345 2,903,198
Sanitary sewer utility - - 4,068,468 3,864,514 4,068,468 3,864,514
Storm drainage utility - - 1,848,887 1,700,515 1,848,887 1,700,515
Street light utility - - 267,069 272,072 267,069 272,072
Recycling utility - - 366,608 291,980 366,608 291,980
Total expenses 26,585,249 32,012,878 21,247,893 19,973,203 47,833,142 51,986,081
Change in net position
before transfers 3,354,446 (461,552) 882,295 1,344,445 4,236,741 882,893
Transfers 67,898 93,935 (67,898) (93,935) - -
Transfers - capital assets (263,068) (185,237) 263,068 185,237 - -
Change in net position 3,159,276 (552,854) 1,077,465 1,435,747 4,236,741 882,893
Net Position - January 1 78,703,703 79,256,557 57,089,616 55,653,869 135,793,319 134,910,426
Net Position - December 31 81,862,979$ 78,703,703$ 58,167,081$ 57,089,616$ 140,030,060$ 135,793,319$
CITY OF BROOKLYN CENTER - CHANGES IN NET POSITION
Governmental Activities Business-Type Activities Total
19
CITY OF BROOKLYN CENTER, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2017
Governmental activities accounted for (74.57%) of the increase in the City's net position. The change in net position from the
previous year can be attributed to an decrease in economic development expenditures related to the 2016 Sanctuary Senior
Housing Project.
Below are specific graphs which provide comparisons of the governmental activities revenues and expenses:
Charges for services
7.2%
Operating grants
5.7%
Capital grants
4.7%
Property taxes
55.9%
Other taxes
19.6%
Other general revenues
6.0%Investment earnings
0.9%
Revenues by Source
-
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
General
government
Public safety Public works Community
services
Parks and
recreation
Economic
development
Interest on
long-term debt
Function Expenses vs. Program Revenues
Expense Program Revenue
20
CITY OF BROOKLYN CENTER, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2017
Business-type Activities
Business-type activities increased net position by $1,077,465, which accounts for 25.43% of the total growth in the City's net
position. The factors contributing to this change are illustrated below:
The net position of the business-type activities increased in total, but operations of the Centerbrook Golf Course decreased
net position.
Municipal liquor
29.4%
Golf course
1.6%
Earle Brown Heritage
Center
22.7%
Water utility
15.5%
Sanitary sewer utility
19.1%
Storm drainage utility
8.7%
Street Light Utility
1.3%
Recycling utility
1.7%
Business-type Activities - Function Expenses
-
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
Municipal
liquor
Golf course Earle Brown
Heritage
Center
Water utility Sanitary
sewer utility
Storm
drainage
utility
Street light
utility
Recycling
utility
Function Expenses vs. Program Revenues
Expense Program Revenue
21
CITY OF BROOKLYN CENTER, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2017
Financial Analysis of the Government's Funds
Governmental Funds: The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and
balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular,
unassigned fund balance may serve as useful measure of a government's net resources available at the end of the fiscal year.
At the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $43,825,719, which
is a decrease of $42,010 (0.10%) from the previous year. The unassigned fund balance, which is not subject to internal or
external constraints upon its use, is $9,428,584, or 21.51% of total fund balance. A small portion of the fund balance, $113,610
(0.26%) is in nonspendable form. The remaining fund balance has either internal or external constraints upon its use, and can be
broken down into the following components: $23,888,356 (54.51%) of restricted fund balance; $9,678,002 (22.08%) of committed
fund balance; and $717,167 (1.64%) of assigned fund balance. A more detailed breakdown of fund balance components can be
found in the basic financial statements.
The General fund is the primary operating fund of the City. At the end of the current fiscal year, total fund balance is $11,355,203.
As a measure of the General fund's liquidity, it may be useful to compare both unassigned and total fund balance, to total fund
expenditures. Unassigned balance, which is $11,099,939, represents 55.85% of the current year General fund expenditures. Total
General fund balance represents 57.14% of those same expenditures.
The fund balance of the City’s general fund decreased by $85,694 (0.75%) from the previous year. The City had budgeted for
a break-even year in 2017, however the City Council approved a transfer to the Capital Improvements Fund of $715,544 of available
fund balance. Prior to the transfer the City had a significant increase in fund balance, which was attributed to positive variances in
both revenues and expenditures. Building and related permit revenues exceeded the budget by $172,209. There were also significant
savings in expenditures for personnel vacancies, contractual services, fuel and utilities. Additionally, the City did not expend any of its
budgeted $125,000 contingency.
The Tax Increment District No. 3 fund has a total fund balance of $17,984,598 at the end of the year. The increase in fund balance was
$708,364 (4.10%) from the previous year. The fund received $3,922,749 in tax increment revenues, expended $1,198,123 on
Economic Development and transferred $2,314,977 for Debt Service. As of December 31, 2017 the fund has total assets held for
resale of $14,673,081.
The Debt Service fund has a total fund balance of $1,837,237 at the end of the year. The decrease in fund balance was $39,244 (2.09%)
from the previous year. The decrease in fund balance is primarily the result of the early payoff of $390,000 of the City's General
Obligation Improvement Bonds, Series 2008B on August 1, 2017.
The Capital Improvements fund has a total fund balance of $3,036,868, a decrease of $2,148,773 (41.44%) from the previous year. The
decrease was the result of the purchase of emergency responder radios, City Hall parking lot improvements and engineering costs
related to the Brooklyn Boulevard improvement project.
The Municipal State Aid Construction fund has a deficit fund balance of $381,395 at the end of the year. The decrease in fund
balance was $481,209 (482.1%) from the previous year. As of December 31, 2017 the fund had a cash balance of $2,475,783 and
a receivable balance in the amount of $3,112,810 in Municipal State Aid Construction funds.
22
CITY OF BROOKLYN CENTER, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2017
The Special Assessments Construction fund has an ending fund balance of $567,537 an increase of $617,756 from the previous year.
The fund incurred $1,552,084 of capital expenditures during the year primarily for Evergreen Park Area neighborhood infrastructure
reconstruction project.
Proprietary Funds: The City's proprietary funds provide the same type of information presented as business-type activities
found in the government-wide financial statements, but in more detail.
The enterprise funds have a combined ending net position of $60,502,543, of which $16,948,871 (28.01%) is unrestricted and can
be used to meet the operations. As a measure of the liquidity of the enterprise funds, it may be useful to compare the unrestricted
net position to the operating expenses. For the current year, unrestricted net position is 122.29% of the current year operating
expenses. Other factors concerning the finances of these funds have already been addressed in the discussion of the City's
business-type activities.
General Fund Budgetary Highlights
During the year, there were no amendments to the General Fund budget. Actual revenues and other financing sources were
over the adopted budget by $240,379. The major contributors of this increase were lodging tax revenues, building permit fees,
and public safety charges for services. Actual expenditures and other financing uses exceeded the final budget for the year by
$326,073. This was the result of a non-budgeted transfer of $715,544 to the Capital Improvement Fund in accordance with City
policy to transfer unassigned fund balance of the General Fund that exceeds 52% of General Fund budgeted expenditures
following the completion of the annual audit. The reduction in fund balance from the transfer was offset by savings from
several staff positions being left unfilled during a portion of 2017, in the Information Technology, Building & Community
Standards and Public Works departments. Additionally, savings were realized in contractual services, fuel, utilities and
unspent budgeted contingency funds.
23
CITY OF BROOKLYN CENTER, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2017
Capital Asset and Debt Administration
Capital Assets: The City's investment in capital assets for its governmental and business-type activities at the end of the
current year, amounts to $134,427,009 (net of accumulated depreciation). This investment in capital assets includes: land,
buildings, infrastructure, machinery and equipment and construction in progress. The City's investment in capital assets
increased $9,385,340 (7.51%) from the previous year.
Major capital asset events during the current year included the following:
• The Evergreen Park Area neighborhood infrastructure reconstruction project was substantially completed, with a total
cost of $7,960,685 including construction in progress from the previous year. This amount includes work on streets, as well as
water, sewer and storm utilities.
• The 69th Avenue mill and overlay project was substantially completed, with a total of $1,083,505 including construction
in progress. This amount includes work on streets, as well as water, sewer and storm utilities.
• Water Tower #3 Rehabilitation project is near completion, with $1,008,775 of additions to construction in progress to
the Water Utility Fund.
• Other significant capital investments include the purchase of replacement emergency response radios ($588,213), City
Hall parking lot improvements ($763,788) and the Centennial Park playground structure ($155,844).
• The Central Garage replaced 13 pieces of machinery & equipment during the year. The total outlay for machinery and
equipment during the year was $549,488. The additions include, but are not limited to: street sweeper, police vehicles,
and public works trucks.
2017 2016 2017 2016 2017 2016
Land 4,242,481$ 3,537,473$ 3,194,983$ 3,194,983$ 7,437,464$ 6,732,456$
Easements 88,704 88,704 10,285 10,285 98,989 98,989
Construction in progress 7,746,038 6,959,480 6,638,414 7,714,819 14,384,452 14,674,299
Land improvements - - 202,449 221,466 202,449 221,466
Other land improvements 6,137,233 5,362,186 - - 6,137,233 5,362,186
Buildings and improvements 10,526,000 10,571,643 20,951,877 21,536,759 31,477,877 32,108,402
Machinery and equipment 4,098,359 3,841,568 261,511 306,493 4,359,870 4,148,061
Street infrastructure 31,489,684 27,524,069 - - 31,489,684 27,524,069
Street light systems - - 615,352 579,047 615,352 579,047
Mains and lines - - 38,223,639 33,592,694 38,223,639 33,592,694
Total 64,328,499$ 57,885,123$ 70,098,510$ 67,156,546$ 134,427,009$ 125,041,669$
Additional information on the City’s capital assets can be found in Note 3 (C) on pages 60 through 61 of this CAFR.
Governmental Activities Business-type Activities Total
CITY OF BROOKLYN CENTER - CAPITAL ASSETS
(net of depreciation)
24
CITY OF BROOKLYN CENTER, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2017
Long-Term Debt: At the end of the current year, the City had outstanding long-term bonded debt of $54,879,445.
2017 2016 2017 2016 2017 2016
General obligation tax increment bonds 14,220,000$ 16,180,000$ -$ -$ 14,220,000$ 16,180,000$
General obligation improvement bonds 11,718,751 9,526,248 - - 11,718,751 9,526,248
General obligation revenue bonds - - 11,231,249 6,948,752 11,231,249 6,948,752
General obligation revenue notes - - 17,709,445 18,663,445 17,709,445 18,663,445
Compensated absences 1,297,552 1,235,925 - - 1,297,552 1,235,925
Net pension liability 13,621,131 26,732,577 - - 13,621,131 26,732,577
Net OPEB obligation 793,213 724,801 - - 793,213 724,801
Total 41,650,647$ 54,399,551$ 28,940,694$ 25,612,197$ 70,591,341$ 80,011,748$
The City’s total bonded debt increased $3,561,000 (6.94%) from the previous year. The City retired $4,799,000 in principal,
(including $390,000 for the early pay off of the 2008B general obligation improvement bonds paid in August 2017), and issued
$8,360,000 in new general obligation improvement bonds for the infrastructure improvements.
The City’s bond rating is AA from Standard & Poor’s Ratings Services.
State statutes limit the amount of general obligation debt a Minnesota city may issue to 3% of total Taxable Market Value. The
current debt limitation for the City is $50,324,883. The City does not currently have any debt outstanding that is applicable to the
limit.
Additional information on the City’s long-term debt can be found in Note 3 (F) on pages 65 through 68 of this CAFR.
Economic Factors and Next Year's Budget and Rates
All of these factors were considered in the preparation of the City’s budget for the 2018 fiscal year.
• The unemployment rate for the City is 4.30% at the end of the 2017 fiscal year, which is the same as the rate of 4.30% a
year ago. This compares to the State’s average unemployment rate of 3.50% and the national average of 4.40%.
• An increase in estimated taxable market value of 11.4% from taxes payable 2017 to 2018. The taxable market value increase was
driven by significant increases in residential property values (14.0%) and apartment property values (10.5%).
• Continuing redevelopment throughout the City will yield net growth in tax base and stability in tax base along with providing job
growth in the City.
• In December 2013 the EDA purchased a 23.2 acre property formerly known as the Brookdale Square shopping center which adjoins
the EDA's 8.4 acre former Brookdale Ford dealership site. New development concepts which include market rate apartment, and
commercial development were introduced to City Council in February 2018. The EDA approved a preliminary development
agreement with Alatus, LLC for the redevelopment of the Opportunity site on March 26, 2018. The preliminary development
concept proposed involves the construction of a mixed-use apartment/hotel/commercial/single-family development together with
related improvements including a centralized park area, new roads and storm water ponding improvements.
Governmental Activities Business-type Activities Total
CITY OF BROOKLYN CENTER - OUTSTANDING DEBT
25
CITY OF BROOKLYN CENTER, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2017
• The EDA acquired the former Chrysler Auto Dealership, also known as Cars with Heart, a five acre commercial site at 6121
Brooklyn Boulevard. The buildings have been demolished and the EDA has approved plans and entered into a development
agreement for the construction of a 156 unit senior apartment building that provides affordable assisted care opportunities for
senior citizens. 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
was completed in January 2018 and the facility opened March 2018.
• In 2017, construction was completed on Phase II of the Maranatha Senior Campus (34 independent living senior apartment units).
• TOPGOLF USA purchased an existing 85,240 square foot Regal Theater to allow for the construction of a 65,000 square foot
commercial recreational/entertainment development. The three level facility will include 102 hitting bays, a 50 table restaurant and
lounge, a 3,000 square foot roof terrace, a 3,000 square foot event area and a 220 yard driving range with 11 outfield targets. The
facility will open in August 2018.
• On November 13, 2017, the EDA approved a site plan for the Shingle Creek Crossing Development that includes an expansion of
24,822 square feet and renovation of the former Kohl’s building by HOM furniture, the future development of a three story 32,800
square foot medical center/office building, and a 4,000 square foot bank. On December 11, 2017, the City Council approved the site
and building plan for a Bank of America. The building remodel/expansion of the former Kohl’s building and the construction of
Bank of America began in early 2018.
• On April 23, 2018 Medtronic received approval for a substantial renovation and 13,427 square foot expansion of their dry room
facilities, which will allow for production of their lithium ion batteries for pacemakers.
• Brooklyn Boulevard (49th Avenue to Bass Lake Road) will be reconstructed and modernized to improve roadway safety,
enhance traffic operations, reduce access points and provide improvement bicycle and pedestrian facilities. Federal funding
through the Surface Transportation Program has been awarded to the City and Hennepin County for this project.
The City’s policy is to maintain a General fund unassigned fund balance of 50% - 52% of the ensuing year’s budgeted General
fund operations. Additionally the City's capital project funding policy that transfers the amount of fund balance exceeding 52%
to the Capital Improvements fund following the completed audit of the City's CAFR. The City transferred $715,544 for Capital
Improvements from the General Fund. The City has assigned $149,630 (the amount exceeding 52%) for capital improvements
within the General Fund. Total unassigned and assigned fund balance at the end of 2017 was $11,249,569 (52.70%) of the
adopted 2018 budgeted expenditures.
Requests for Information
This financial report is designed to provide a general overview of the City of Brooklyn Center's finances for all those with an
interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional
financial information should be addressed to the Finance Director, 6301 Shingle Creek Parkway, Brooklyn Center, MN 55430.
26
Basic Financial
Statements
CITY OF BROOKLYN CENTER, MINNESOTA
STATEMENT OF NET POSITION
December 31, 2017
Governmental Business-Type
Activities Activities Total
ASSETS
Cash and investments 38,365,624$ 18,072,068$ 56,437,692$
Receivables:
Accounts - net 381,208 2,605,815 2,987,023
Taxes 291,689 - 291,689
Special assessments 6,782,609 504,117 7,286,726
Internal balances 3,323,096 (3,323,096) -
Due from other governments 3,438,831 750 3,439,581
Prepaid items 73,332 275,700 349,032
Inventories 60,497 881,177 941,674
Notes receivable 305,800 - 305,800
Assets held for resale 14,710,081 - 14,710,081
Capital assets:
Nondepreciable 12,077,223 9,843,682 21,920,905
Depreciable 52,251,276 60,254,828 112,506,104
Net pension asset 637,264 - 637,264
Total assets 132,698,530 89,115,041 221,813,571
DEFERRED OUTFLOWS OF RESOURCES
Deferred pension resources 11,179,532 - 11,179,532
LIABILITIES
Accounts payable 884,904 510,112 1,395,016
Contracts payable 437,333 360,360 797,693
Accrued salaries and wages 273,131 50,937 324,068
Accrued interest payable 309,111 194,470 503,581
Due to other governments 240,278 198,467 438,745
Deposits payable 236,459 429,787 666,246
Unearned revenue 1,869 263,133 265,002
Compensated absences payable:
Due within one year 129,755 - 129,755
Due in more than one year 1,167,797 - 1,167,797
Net OPEB obligation:
Due in more than one year 793,213 - 793,213
Bonds and net pension liability payable:
Due within one year 3,275,978 1,607,022 4,883,000
Due in more than one year 36,283,904 27,333,672 63,617,576
Total liabilities 44,033,732 30,947,960 74,981,692
DEFERRED INFLOWS OF RESOURCES
Deferred pension resources 12,020,361 - 12,020,361
State aid received for subsequent years 5,960,990 - 5,960,990
Total deferred inflows of resources 17,981,351 - 17,981,351
NET POSITION
Net investment in capital assets 53,152,985 43,553,672 96,706,657
Restricted for:
Tax increment financing 20,601,403 - 20,601,403
Economic development 1,438,283 - 1,438,283
Law enforcement enhancements 44,313 - 44,313
Debt service 4,228,433 - 4,228,433
Pension benefits 996,904 - 996,904
Unrestricted 1,400,658 14,613,409 16,014,067
Total net position 81,862,979$ 58,167,081$ 140,030,060$
The notes to the financial statements are an integral part of this statement.
27
CITY OF BROOKLYN CENTER, MINNESOTA
STATEMENT OF ACTIVITIES
For the Year Ended December 31, 2017
Charges For
FUNCTIONS/PROGRAMS Expenses Services
Government activities:
General government 4,007,850$ 530,459$
Public safety 12,438,818 683,172
Public works 4,542,244 46,359
Community services 143,103 -
Parks and recreation 2,995,396 608,590
Economic development 1,917,039 296,103
Interest on long-term debt 540,799 -
Total government activities 26,585,249 2,164,683
Business-type activities:
Municipal liquor 6,241,998 6,503,094
Golf course 335,029 212,170
Earle Brown Heritage Center 4,825,489 4,917,167
Water utility 3,294,345 3,585,597
Sanitary sewer utility 4,068,468 4,288,655
Storm drainage utility 1,848,887 1,598,624
Street light utility 267,069 454,293
Recycling utility 366,608 404,769
Total business-type activities 21,247,893 21,964,369
Total 47,833,142$ 24,129,052$
The notes to the financial statements are an integral part of this statement.
28
Program Revenues Net (Expense) Revenue and Changes in Net Position
Operating Capital
Grants and Grants and Governmental Business-Type
Contributions Contributions Activities Activities Total
-$ -$ (3,477,391)$ -$ (3,477,391)$
1,220,693 - (10,534,953) - (10,534,953)
162,246 1,319,482 (3,014,157) - (3,014,157)
- - (143,103) - (143,103)
104,156 88,000 (2,194,650) - (2,194,650)
229,576 - (1,391,360) - (1,391,360)
- - (540,799) - (540,799)
1,716,671 1,407,482 (21,296,413) - (21,296,413)
- - - 261,096 261,096
- - - (122,859) (122,859)
- - - 91,678 91,678
- - - 291,252 291,252
- - - 220,187 220,187
- - - (250,263) (250,263)
- - - 187,224 187,224
- - - 38,161 38,161
- - - 716,476 716,476
1,716,671$ 1,407,482$ (21,296,413) 716,476 (20,579,937)
General revenues:
Property taxes 16,736,759 - 16,736,759
Tax increments 4,652,373 - 4,652,373
Lodging taxes 1,206,565 - 1,206,565
Grants and contributions not
restricted to specific programs 1,701,232 - 1,701,232
Unrestricted investment earnings 265,604 165,819 431,423
Gain on disposal of capital asset 88,326 - 88,326
Transfers 67,898 (67,898) -
Transfers - capital assets (263,068) 263,068 -
Total general revenues and transfers 24,455,689 360,989 24,816,678
Change in net position 3,159,276 1,077,465 4,236,741
Net position - January 1 78,703,703 57,089,616 135,793,319
Net position - December 31 81,862,979$ 58,167,081$ 140,030,060$
29
CITY OF BROOKLYN CENTER, MINNESOTA
BALANCE SHEET
GOVERNMENTAL FUNDS
December 31, 2017
Tax
Increment Debt
General District No. 3 Service
ASSETS
Cash and investments 11,787,694$ 2,006,959$ 1,830,694$
Receivables:
Accounts - net 152,487 - -
Current taxes 62,260 21,706 3,908
Delinquent taxes 130,879 28,509 8,001
Special assessments 41,255 - 2,694,941
Due from other funds 272,081 - -
Due from other governments 14,105 - -
Notes receivable - - -
Inventories 40,828 - -
Prepaid items 64,806 - -
Advances to other funds - 1,294,476 -
Assets held for resale - 14,673,081 -
Total assets 12,566,395 18,024,731 4,537,544
LIABILITIES
Accounts payable 330,709 2,367 -
Contracts payable - - -
Accrued salaries and wages 253,868 - -
Due to other funds 1,935 - -
Due to other governments 231,473 6,366 -
Deposits payable 221,146 1,856 -
Unearned revenue 834 1,035 -
Advances from other funds - - -
Total liabilities 1,039,965 11,624 -
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - property taxes 130,879 - 8,001
Unavailable revenue - tax increments - 28,509 -
Unavailable revenue - special assessments 40,348 - 2,692,306
Unavailable revenue - notes receivable - - -
Unavailable revenue - intergovernmental - - -
Total deferred inflows of resources 171,227 28,509 2,700,307
FUND BALANCES (DEFICITS)
Nonspendable 105,634 - -
Restricted - 17,984,598 1,837,237
Committed - - -
Assigned 149,630 - -
Unassigned 11,099,939 - -
Total fund balances (deficits)11,355,203 17,984,598 1,837,237
Total liabilities, deferred inflows of
resources and fund balances (deficits)12,566,395$ 18,024,731$ 4,537,544$
The notes to the financial statements are an integral part of this statement.
30
Municipal Special
Capital State Aid Assessment Other
Improvements for Construction Nonmajor Total
Fund Construction Fund Governmental Governmental
2,419,668$ 2,475,783$ 1,008,817$ 10,301,417$ 31,831,032$
- - 27,409 178,703 358,599
- - - 33,354 121,228
- - - 4,371 171,760
2,036 - 4,044,377 - 6,782,609
- - - - 272,081
154,585 3,112,810 - 142,050 3,423,550
- - - 305,800 305,800
- - - - 40,828
- - - 7,976 72,782
792,488 - - 661,627 2,748,591
- - - 37,000 14,710,081
3,368,777 5,588,593 5,080,603 11,672,298 60,838,941
265,790 8,998 103,742 99,226 810,832
62,784 - 374,549 - 437,333
- - - 10,288 264,156
- - - 75,000 76,935
1,299 - - 2,382 241,520
- - - 13,457 236,459
- - - - 1,869
- - - 1,956,103 1,956,103
329,873 8,998 478,291 2,156,456 4,025,207
- - - 4,290 143,170
- - - 81 28,590
2,036 - 4,034,775 - 6,769,465
- - - 85,800 85,800
- 5,960,990 - - 5,960,990
2,036 5,960,990 4,034,775 90,171 12,988,015
- - - 7,976 113,610
- - - 4,066,521 23,888,356
3,036,868 - - 6,641,134 9,678,002
- - 567,537 - 717,167
- (381,395) - (1,289,960) 9,428,584
3,036,868 (381,395) 567,537 9,425,671 43,825,719
3,368,777$ 5,588,593$ 5,080,603$ 11,672,298$ 60,838,941$
31
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32
CITY OF BROOKLYN CENTER, MINNESOTA
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE
STATEMENT OF NET POSITION
December 31, 2017
Fund balances - governmental funds 43,825,719$
Amounts reported for the governmental activities within the statement
of net position are different because:
Capital assets used in governmental activities are not financial resources,
and therefore, are not reported as assets in governmental funds.
Cost of capital assets 102,467,238
Accumulated depreciation (41,584,667)
Long-term liabilities, including bonds payable, are not due and payable in the
current period, and therefore, are not reported as liabilities in governmental funds.
Bonds payable (25,938,751)
Accrued interest payable (309,111)
Some receivables are not available soon enough to pay for the current period's
expenditures, and therefore, are unavailable in governmental funds.
Delinquent property taxes receivable 143,170
Delinquent tax increments receivable 28,590
Special assessments receivable 6,769,465
Interest on notes receivable 85,800
The Plan Fiduciary Net Position of the City's Fire Relief Association Pension Fund currently
exceeds the actuarially determined total pension liability creating a net pension asset 637,264
Deferred outflows related to the City's Fire Relief Association Pension Fund
Net difference between projected and actual investment earnings and change of assumptions 464,821
Contributions to the plan subsequent to the measurement date 154,366
Deferred inflows related to City's Fire Relief Association Pension Fund
Grant funding of contributions to the plan subsequent to the measurement date (154,366)
Net difference between expected and actual liability and change of assumptions (105,181)
Internal service funds are used by management to charge the cost of certain activities to individual
funds. The assets, liabilities, and deferred outflows/inflows are included in the governmental
statement of net position.(4,621,378)
Total net position - governmental activities 81,862,979$
The notes to the financial statements are an integral part of this statement.
33
CITY OF BROOKLYN CENTER, MINNESOTA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the Year Ended December 31, 2017
Tax
Increment Debt
General District No. 3 Service
REVENUES
Property taxes 15,560,282$ -$ 842,093$
Tax increments - 3,922,749 -
Lodging taxes 1,206,565 - -
Franchise fees - - -
Licenses and permits 904,785 - -
Intergovernmental 1,496,165 - -
Charges for services 809,031 109,376 -
Special assessments 109,352 - 1,040,491
Fines and forfeits 243,915 - -
Investment earnings (net of market value adjustment) 65,592 9,334 6,412
Miscellaneous 142,702 180,005 -
Total revenues 20,538,389 4,221,464 1,888,996
EXPENDITURES
Current:
General government 3,201,067 - -
Public safety 10,678,834 - -
Public works 2,037,136 - -
Community services 143,103 - -
Parks and recreation 2,678,481 - -
Economic development 573,065 430,214 -
Nondepartmental 505,586 - -
Capital outlay:
General government 22,699 - -
Public safety 8,574 - -
Public works - - -
Parks and recreation 24,994 - -
Economic development - 767,909 -
Debt service:
Principal - - 3,502,497
Interest - - 625,032
Fiscal agent fees - - 10,625
Bond issuance costs - - -
Total expenditures 19,873,539 1,198,123 4,138,154
Excess (deficiency) of revenues
over (under) expenditures 664,850 3,023,341 (2,249,158)
OTHER FINANCING SOURCES (USES)
Transfers in 150,000 - 2,371,490
Issuance of debt - - -
Premium on issuance of debt - - -
Transfers out (900,544) (2,314,977) (161,576)
Total other financing sources (uses)(750,544) (2,314,977) 2,209,914
Net change in fund balance (85,694) 708,364 (39,244)
Fund balances (deficits) - January 1 11,440,897 17,276,234 1,876,481
Fund balances (deficits) - December 31 11,355,203$ 17,984,598$ 1,837,237$
The notes to the financial statements are an integral part of this statement.
34
Municipal Special
Capital State Aid Assessment Other
Improvements for Construction Nonmajor Total
Fund Construction Fund Governmental Governmental
311$ -$ -$ 326,307$ 16,728,993$
- - - 901,910 4,824,659
- - - - 1,206,565
- - - 702,600 702,600
- - - - 904,785
1,005,474 926,301 - 454,962 3,882,902
- - 1,200 14,001 933,608
- - 616,893 - 1,766,736
- - - 51,269 295,184
32,494 - 525 94,084 208,441
- - 3,738 92,589 419,034
1,038,279 926,301 622,356 2,637,722 31,873,507
30,181 - - - 3,231,248
- - - 285,198 10,964,032
- 97,258 33,762 - 2,168,156
- - - - 143,103
- - - 59,937 2,738,418
- - - 760,919 1,764,198
- - - - 505,586
564,735 - - 19,465 606,899
588,213 - - - 596,787
2,355,381 1,310,252 1,552,084 2,165,370 7,383,087
476,984 - - 275,269 777,247
- - - 79,064 846,973
- - - - 3,502,497
- - - - 625,032
- - - - 10,625
- - 16,467 24,563 41,030
4,015,494 1,407,510 1,602,313 3,669,785 35,904,918
(2,977,215) (481,209) (979,957) (1,032,063) (4,031,411)
828,442 - 161,576 466,770 3,978,278
- - 1,367,836 2,367,164 3,735,000
- - 68,301 118,201 186,502
- - - (533,283) (3,910,380)
828,442 - 1,597,713 2,418,852 3,989,400
(2,148,773) (481,209) 617,756 1,386,789 (42,011)
5,185,641 99,814 (50,219) 8,038,882 43,867,730
3,036,868$ (381,395)$ 567,537$ 9,425,671$ 43,825,719$
35
CITY OF BROOKLYN CENTER, MINNESOTA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
For the Year Ended December 31, 2017
Total net change in fund balances - governmental funds (42,011)$
Amounts reported for governmental activities in the statement of activities are different because:
Governmental funds report capital outlays as expenditures. However, in the statement of
activities the cost of those assets is allocated over their estimated useful lives as depreciation.
Capital outlays 10,077,486
Depreciation expense (3,110,731)
Contributions of capital assets to the proprietary funds decrease net position in the statement of
activities, but do not appear in the governmental funds because they are not financial resources.(263,068)
The issuance of long-term debt provides current financial resources to governmental funds, while
the repayment of principal of long-term debt consumes the current financial resources of
governmental funds. Neither transaction, however, has any effect on net position.
Long-term debt issued (3,735,000)
Principal repayments 3,502,497
Interest on long-term debt in the statement of activities differs from the amount reported in the
governmental funds because interest is recognized as an expenditure in the funds when it is due,
and thus requires the use of current financial resources. In the statement of activities, however,
interest expense is recognized as the interest accrues, regardless of when it is due.(50,613)
Contributions to the Fire Relief Association Pension are reported as expenses in the fund
financial statements. In the statement of activities, however, all facets of the pension plan
are taken into account and when considering things such as investment return, changes in
assumptions, and plan performance differing from expectations, pension expense related to
this retirement plan for the year was reported at the following amount.(121,749)
Certain revenues are recognized as soon as they are earned. Under the modified accrual
basis of accounting, certain revenues cannot be recognized until they are available to
liquidate liabilities of the current period.
Property taxes 7,766
Tax increments (172,286)
Special assessments 907,331
Interest on notes receivable (forgiven)13,200
Intergovernmental (2,842,373)
Internal service funds are used by management to charge the cost of certain activities to
individual funds. This amount is net revenue attributable to governmental activities.(1,011,173)
Change in net position - governmental activities 3,159,276$
The notes to the financial statements are an integral part of this statement.
36
CITY OF BROOKLYN CENTER, MINNESOTA
GENERAL FUND - STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Variance with
Final Budget -
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
REVENUES
Property taxes 15,658,667$ 15,658,667$ 15,560,282$ (98,385)$
Lodging taxes 1,050,000 1,050,000 1,206,565 156,565
Licenses and permits 728,555 728,555 904,785 176,230
Intergovernmental 1,430,253 1,430,253 1,496,165 65,912
Charges for services 834,095 834,095 809,031 (25,064)
Special assessments 130,000 130,000 109,352 (20,648)
Fines and forfeits 262,500 262,500 243,915 (18,585)
Investment earnings (net of market value adjustment)77,990 77,990 65,592 (12,398)
Miscellaneous 125,950 125,950 142,702 16,752
Total revenues 20,298,010 20,298,010 20,538,389 240,379
EXPENDITURES
Current:
General government 3,257,049 3,257,049 3,201,067 55,982
Public safety 10,906,034 10,906,034 10,678,834 227,200
Public works 2,174,920 2,174,920 2,037,136 137,784
Community services 180,000 180,000 143,103 36,897
Parks and recreation 2,783,853 2,783,853 2,678,481 105,372
Economic development 498,750 498,750 573,065 (74,315)
Nondepartmental 352,904 352,904 505,586 (152,682)
Capital outlay:
General government 50,000 50,000 22,699 27,301
Public safety 12,500 12,500 8,574 3,926
Public works 7,500 7,500 - 7,500
Parks and recreation 39,500 39,500 24,994 14,506
Total expenditures 20,263,010 20,263,010 19,873,539 389,471
Excess of revenues
over expenditures 35,000 35,000 664,850 629,850
OTHER FINANCING SOURCES (USES)
Transfers in 150,000 150,000 150,000 -
Transfers out (185,000) (185,000) (900,544) (715,544)
Total other financing sources (uses)(35,000) (35,000) (750,544) (715,544)
Net change in fund balance - - (85,694) (85,694)
Fund balance - January 1 11,440,897 11,440,897 11,440,897 -
Fund balance - December 31 11,440,897$ 11,440,897$ 11,355,203$ (85,694)$
The notes to the financial statements are an integral part of this statement.
37
CITY OF BROOKLYN CENTER, MINNESOTA
TAX INCREMENT DISTRICT NO. 3 - STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Variance with
Final Budget -
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
REVENUES
Tax increments 3,177,598$ 3,177,598$ 3,922,749$ 745,151$
Charges for services 84,378 84,378 109,376 24,998
Investment earnings (net of market value adjustment) 9,858 9,858 9,334 (524)
Miscellaneous 35,000 35,000 180,005 145,005
Total revenues 3,306,834 3,306,834 4,221,464 914,630
EXPENDITURES
Current:
Economic development 472,834 472,834 430,214 42,620
Capital outlay:
Economic development 150,000 150,000 767,909 (617,909)
Total expenditures 622,834 622,834 1,198,123 (575,289)
Excess of revenues
over expenditures 2,684,000 2,684,000 3,023,341 339,341
OTHER FINANCING SOURCES (USES)
Transfers out (2,164,213) (2,164,213) (2,314,977) (150,764)
Net change in fund balance 519,787 519,787 708,364 188,577
Fund balance - January 1 17,276,234 17,276,234 17,276,234 -
Fund balance - December 31 17,796,021$ 17,796,021$ 17,984,598$ 188,577$
The notes to the financial statements are an integral part of this statement.
38
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39
CITY OF BROOKLYN CENTER, MINNESOTA
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
December 31, 2017
Municipal Golf Earle Brown Water
Liquor Course Heritage Center Utility
ASSETS
Current assets:
Cash and cash equivalents 2,027,330$ -$ 2,853,768$ 3,655,053$
Receivables:
Accounts - net 7,780 - 248,735 917,546
Special assessments - - - 504,117
Due from other funds - - 1,935 -
Due from other governments - - 750 -
Prepaid items 27,588 1,731 40,509 3,671
Inventories 777,688 1,597 45,075 56,817
Total current assets 2,840,386 3,328 3,190,772 5,137,204
Noncurrent assets:
Capital assets:
Land - 1,390,402 1,493,300 20,734
Easements - - - -
Land improvements - 65,637 437,054 -
Buildings and improvements 192,771 664,322 12,794,311 22,740,755
Machinery and equipment 276,676 11,160 472,134 128,668
Street light systems - - - -
Mains and lines - - - 25,656,106
Construction in progress - - - 2,594,583
Total capital assets 469,447 2,131,521 15,196,799 51,140,846
Less: accumulated depreciation (367,686) (492,890) (11,701,220) (18,808,649)
Net capital assets 101,761 1,638,631 3,495,579 32,332,197
Total noncurrent assets 101,761 1,638,631 3,495,579 32,332,197
Total assets 2,942,147 1,641,959 6,686,351 37,469,401
DEFERRED OUTFLOWS OF RESOURCES
Deferred pension resources - - - -
LIABILITIES
Current liabilities:
Accounts payable 80,132 1,524 119,134 291,604
Contracts payable - - 187,960 140,821
Accrued salaries and wages 15,988 1,601 17,568 9,750
Accrued interest payable - - - 135,282
Due to other funds - 197,081 - -
Due to other governments 60,446 138 20,891 20,370
Deposits payable - - 427,262 2,525
Unearned revenue 3,556 - 1,600 257,977
Notes payable - - - 963,000
Bonds payable - - - 233,750
Compensated absences payable - - - -
Total current liabilities 160,122 200,344 774,415 2,055,079
Noncurrent liabilities:
Notes payable - - - 16,746,445
Bonds payable - - - 5,302,500
Advances from other funds - 792,488 - -
Compensated absences payable - - - -
Net OPEB obligation - - - -
Net pension liability - - - -
Total noncurrent liabilities - 792,488 - 22,048,945
Total liabilities 160,122 992,832 774,415 24,104,024
DEFERRED INFLOWS OF RESOURCES
Deferred pension resources - - - -
NET POSITION
Net investment in capital assets 101,761 1,638,631 3,495,579 10,886,192
Unrestricted 2,680,264 (989,504) 2,416,357 2,479,185
Total net position 2,782,025$ 649,127$ 5,911,936$ 13,365,377$
Net position from this Statement
Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds
Net position of business-type activities
The notes to the financial statements are an integral part of this statement.
Business-Type Activities
40
Governmental
Activities-
Sanitary Sewer Storm Drainage Street Light Recycling Total Internal
Utility Utility Utility Utility Enterprise Service
4,866,159$ 3,685,862$ 721,686$ 262,210$ 18,072,068$ 6,534,592$
939,229 324,891 93,693 73,941 2,605,815 22,609
- - - - 504,117 -
- - - - 1,935 -
- - - - 750 15,281
200,967 1,234 - - 275,700 550
- - - - 881,177 19,669
6,006,355 4,011,987 815,379 336,151 22,341,562 6,592,701
3,389 287,158 - - 3,194,983 -
20,335 10,285 - - 30,620 -
- - - - 502,691 166,108
2,571,416 - - - 38,963,575 -
179,130 24,587 - - 1,092,355 9,544,654
- - 928,396 - 928,396 -
24,240,607 31,646,643 - - 81,543,356 -
1,999,289 1,927,287 117,255 - 6,638,414 -
29,014,166 33,895,960 1,045,651 - 132,894,390 9,710,762
(15,477,356) (15,635,034) (313,045) - (62,795,880) (6,264,834)
13,536,810 18,260,926 732,606 - 70,098,510 3,445,928
13,536,810 18,260,926 732,606 - 70,098,510 3,445,928
19,543,165 22,272,913 1,547,985 336,151 92,440,072 10,038,629
- - - - - 10,560,345
10,871 2,840 3,297 710 510,112 74,072
31,579 - - - 360,360 -
1,938 4,092 - - 50,937 8,975
49,771 9,417 - - 194,470 -
- - - - 197,081 -
9,902 - - 86,720 198,467 57
- - - - 429,787 -
- - - - 263,133 -
- - - - 963,000 -
315,272 95,000 - - 644,022 -
- - - - - 129,755
419,333 111,349 3,297 87,430 3,811,369 212,859
- - - - 16,746,445 -
4,249,727 1,035,000 - - 10,587,227 -
- - - - 792,488 -
- - - - - 1,167,797
- - - - - 793,213
- - - - - 13,621,131
4,249,727 1,035,000 - - 28,126,160 15,582,141
4,669,060 1,146,349 3,297 87,430 31,937,529 15,795,000
- - - - - 11,760,814
9,567,977 17,130,926 732,606 - 43,553,672 3,445,928
5,306,128 3,995,638 812,082 248,721 16,948,871 (10,402,768)
14,874,105$ 21,126,564$ 1,544,688$ 248,721$ 60,502,543$ (6,956,840)$
60,502,543$
(2,335,462)
58,167,081$
Business-Type Activities
41
CITY OF BROOKLYN CENTER, MINNESOTA
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
For the Year Ended December 31, 2017
Municipal Golf Earle Brown Water
Liquor Course Heritage Center Utility
OPERATING REVENUES
Sales and user fees 6,495,300$ 212,130$ 4,891,574$ 3,543,323$
Cost of sales (4,769,844) - (2,257,315) -
Total operating revenues 1,725,456 212,130 2,634,259 3,543,323
OPERATING EXPENSES
Personal services 757,662 155,516 1,123,844 551,680
Supplies 35,895 24,713 163,894 207,869
Other services 238,613 99,538 821,310 506,952
Insurance 14,828 4,657 32,137 35,174
Utilities 45,606 24,588 200,008 222,056
Rent 319,933 - - -
Depreciation 21,803 18,737 178,387 1,635,255
Total operating expenses 1,434,340 327,749 2,519,580 3,158,986
Operating income (loss) 291,116 (115,619) 114,679 384,337
NONOPERATING REVENUES (EXPENSES)
Intergovernmental - - - -
Investment earnings (net of market value adjustment) 16,344 - 24,285 28,154
Special assessments - - - 31,001
Gain on sale of capital assets - - - -
Loss on disposal of capital assets - - - -
Other revenue (expense) 7,794 40 25,593 11,273
Interest and fiscal agent fees - - - (100,999)
Total nonoperating revenues (expenses)24,138 40 49,878 (30,571)
Income (loss) before contributions and transfers 315,254 (115,579) 164,557 353,766
Capital contributions from other funds - - - -
Transfers in - 45,000 - -
Transfers out (112,898) - - -
Change in net position 202,356 (70,579) 164,557 353,766
Net position - January 1 2,579,669 719,706 5,747,379 13,011,611
Net position - December 31 2,782,025$ 649,127$ 5,911,936$ 13,365,377$
Change in net position from this Statement
Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds
Change in net position of business-type activities
The notes to the financial statements are an integral part of this statement.
Business-Type Activities
42
Governmental
Activities-
Sanitary Sewer Storm Drainage Street Light Recycling Total Internal
Utility Utility Utility Utility Enterprise Service
4,287,674$ 1,598,374$ 451,358$ 404,769$ 21,884,502$ 3,191,033$
- - - - (7,027,159) -
4,287,674 1,598,374 451,358 404,769 14,857,343 3,191,033
195,865 208,932 - - 2,993,499 3,187,444
13,077 19,420 5,901 107 470,876 417,133
2,792,448 304,281 32,950 365,065 5,161,157 183,580
25,063 2,233 798 1,436 116,326 45,481
44,755 2,924 168,118 - 708,055 374
- - - - 319,933 -
897,803 1,277,883 59,302 - 4,089,170 806,062
3,969,011 1,815,673 267,069 366,608 13,859,016 4,640,074
318,663 (217,299) 184,289 38,161 998,327 (1,449,041)
- - - - - 110,691
46,987 42,220 6,170 1,659 165,819 57,163
- - - - 31,001 -
- - - - - 88,326
- - - - - (3,737)
981 250 2,935 - 48,866 34,779
(87,468) (22,605) - - (211,072) -
(39,500) 19,865 9,105 1,659 34,614 287,222
279,163 (197,434) 193,394 39,820 1,032,941 (1,161,819)
- 263,068 - - 263,068 -
- - - - 45,000 -
- - - - (112,898) -
279,163 65,634 193,394 39,820 1,228,111 (1,161,819)
14,594,942 21,060,930 1,351,294 208,901 59,274,432 (5,795,021)
14,874,105$ 21,126,564$ 1,544,688$ 248,721$ 60,502,543$ (6,956,840)$
1,228,111$
(150,646)
1,077,465$
Business-Type Activities
43
CITY OF BROOKLYN CENTER, MINNESOTA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
For the Year Ended December 31, 2017
Municipal Golf Earle Brown Water
Liquor Course Heritage Center Utility
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers and users 6,495,389$ 212,130$ 4,838,334$ 3,514,612$
Receipts from interfund services provided - - - -
Other operating receipts 7,794 6,521 25,593 11,273
Payments to suppliers (5,534,120) (152,969) (3,400,839) (477,085)
Payments to employees (755,127) (155,445) (1,123,022) (549,670)
Net cash flows provided (used) by operating activities 213,936 (89,763) 340,066 2,499,130
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Transfers in (operating) - 45,000 - -
Interfund payable (operating) - 44,763 (931) -
Special assessments - - - 9,978
Intergovernmental grants - - - -
Transfers out (112,898) - - -
Net cash flows provided (used) by noncapital financing activities (112,898) 89,763 (931) 9,978
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Acquisition and construction of capital assets - - (306,222) (2,766,009)
Intergovernmental grants - - - -
Principal paid on revenue bonds - - - (123,750)
Principal paid on revenue notes - - - (954,000)
Interest paid on capital debt - - - (48,308)
Proceeds from g.o. revenue bonds - - - 3,230,000
Proceeds from sale of assets - - - -
Net cash flows provided (used) by capital and related financing activities - - (306,222) (662,067)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest on investments 16,344 - 24,285 28,154
Net increase (decrease) in cash and cash equivalents 117,382 - 57,198 1,875,195
Cash and cash equivalents - January 1 1,909,948 - 2,796,570 1,779,858
Cash and cash equivalents - December 31 2,027,330$ -$ 2,853,768$ 3,655,053$
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES
Operating income (loss) 291,116$ (115,619)$ 114,679$ 384,337$
Adjustments to reconcile operating income (loss)
to net cash flows provided (used) by operating activities:
Depreciation 21,803 18,737 178,387 1,635,255
Other income (expense) related to operations 7,794 40 25,593 11,273
(Increase) decrease in assets:
Accounts receivable - - (53,240) (67,742)
Due from other governments - 6,481 48,260 243,161
Prepaid items 1,495 (1,621) (786) (3,671)
Inventories (55,784) 1,732 (6,545) (4,487)
(Increase) decrease in deferred outflows of resources:
Deferred outflows for pension - - - -
Increase (decrease) in liabilities
Accounts payable (55,112) 416 32,896 259,963
Due to other governments - - - -
Net pension liability - - - -
Accrued salaries and wages 2,535 71 822 2,010
Unearned revenue 89 - - 39,031
(Increase) decrease in deferred inflows of resources:
Deferred pension resources - - - -
Net cash flows provided (used) by operating activities 213,936$ (89,763)$ 340,066$ 2,499,130$
NONCASH FINANCING ACTIVITIES
Acquisitions of capital assets on account -$ -$ -$ -$
Capital assets contributed from other funds -$ -$ -$ -$
Capital asset trade-ins -$ -$ -$ -$
Grants deposited with pension plan -$ -$ -$ -$
The notes to the financial statements are an integral part of this statement.
Business-Type Activities
44
Governmental
Activities-
Sanitary Sewer Storm Drainage Street Light Recycling Total Internal
Utility Utility Utility Utility Enterprise Service
4,290,446$ 1,609,582$ 454,868$ 416,105$ 21,831,466$ -$
- - - - - 3,173,956
981 250 2,935 - 55,347 34,779
(3,170,986) (349,251) (206,501) (279,846) (13,571,597) (630,710)
(197,407) (207,672) - - (2,988,343) (1,935,248)
923,034 1,052,909 251,302 136,259 5,326,873 642,777
- - - - 45,000 -
- - - - 43,832 -
- - - - 9,978 -
- - - - - 7,058
- - - - (112,898) -
- - - - (14,088) 7,058
(1,949,778) (1,628,802) (117,255) - (6,768,066) (494,957)
- - - - - 61,159
(218,753) - - - (342,503) -
- - - - (954,000) -
(62,313) (18,080) - - (128,701) -
1,395,000 - - - 4,625,000 -
- - - - - 79,243
(835,844) (1,646,882) (117,255) - (3,568,270) (354,555)
46,987 42,220 6,170 1,659 165,819 57,163
134,177 (551,753) 140,217 137,918 1,910,334 352,443
4,731,982 4,237,615 581,469 124,292 16,161,734 6,182,149
4,866,159$ 3,685,862$ 721,686$ 262,210$ 18,072,068$ 6,534,592$
318,663$ (217,299)$ 184,289$ 38,161$ 998,327$ (1,449,041)$
897,803 1,277,883 59,302 - 4,089,170 806,062
981 250 2,935 - 48,866 77,253
2,772 11,208 3,510 11,336 (92,156) (13,741)
- - - - 297,902
(200,967) (1,234) - - (206,784) -
- - - - (65,084) (243)
- - - - - 5,989,124
(94,676) (19,159) 1,266 42 125,636 16,101
- - - 86,720 86,720 -
- - - - - (13,111,446)
(1,542) 1,260 - - 5,156 133,272
- - - - 39,120 -
- - - - - 8,195,436
923,034$ 1,052,909$ 251,302$ 136,259$ 5,326,873$ 642,777$
-$ -$ -$ -$ -$ 47,442$
-$ 263,068$ -$ -$ 263,068$ -$
-$ -$ -$ -$ -$ 5,346$
-$ -$ -$ -$ -$ 42,474$
Business-Type Activities
45
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46
Notes to
Financial Statements
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
The City of Brooklyn Center was incorporated in 1911 and has operated under a Council/Manager form of government since
the adoption of the City charter in 1966. The governing body consists of a Mayor and four City Council members. elected
at-large to serve four-year staggered terms. The City provides a full range of municipal services to its citizens, including public
safety (police and fire protection), highways and streets, parks and recreation, public improvements, planning and inspections,
economic development, sanitary and storm sewer, water, and general administrative services.
Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the City have been prepared in accordance with accounting principles generally accepted in
the United States of America (GAAP), as applied to governmental units by the Governmental Accounting Standards
Board (GASB).
The City’s significant accounting policies are described below.
A. REPORTING ENTITY
The City includes all funds, organizations, institutions, agencies, departments, boards, and offices that are not legally separate
from the City. Component units are legally separate organizations for which the elected officials of the City are financially
accountable and are included within the basic financial statements of the City because of the significance of their operational or
financial relationships with the City.
The City is considered financially accountable for a component unit if it appoints a voting majority of the organization’s
governing body and is able to impose its will on the organization by significantly influencing the programs, projects, activities,
or level of services performed or provided by the organization, or there is a potential for the organization to provide specific
financial benefits to, or impose specific financial burdens on, the City.
Blended component units, although legally separate, are, in substance, part of the government’s operations. A blended
component unit is reported as if it were a fund of the City throughout the year. It is included at both the government-wide
and fund financial reporting levels.
A description of the City’s blended component units follows:
City of Brooklyn Center Housing and Redevelopment Authority (HRA) - The City Council serves as the Board of Directors
for the HRA, with the power to levy taxes and enter into contracts. The Council reviews and approves the tax levy and all
expenditures for the HRA. The HRA is reported as a Special Revenue fund. The HRA does not issue separate financial
statements. Financial information may be obtained at the City’s offices.
City of Brooklyn Center Economic Development Authority (EDA) – The governing board for the EDA is the City Council,
with the power to issue bonds and enter into contracts. The council reviews and approves major community development
improvement activities. City general obligation tax increment financing bonds are issued to finance EDA activities. The
EDA is reported as a Special Revenue fund. The EDA does not issue separate financial statements. Financial information
may be obtained at the City’s offices.
B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information
on all activities of the primary government and its component units. Governmental activities , which normally are supported by
taxes and intergovernmental revenues, are reported separately from business-type activities , which rely to a significant extent
on fees and charges for support.
47
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by
program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program
revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or
privileges provided by a given function or business-type activity and 2) grants and contributions that are restricted to meeting
the operational or capital requirements of a particular function or business-type activity. Taxes and other items not included
among program revenues are reported instead as general revenues.
Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds
and major individual enterprise funds are reported as separate columns in the fund financial statements.
C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT
PRESENTATION
The government-wide financial statements are reported using the economic resources measurement focus and the accrual
basis of accounting , as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are
recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes and special assessments
are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon
as all eligibility requirements imposed by the provider have been met.
Governmental fund financial statements are reported using the current financial resources measurement focus and the
modified accrual basis of accounting . Revenues are recognized as soon as they are both measurable and available.
Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay
liabilities of the current period. For this purpose, the City considers all revenues, except reimbursement grants, to be available
if they are collected within 60 days of the end of the current fiscal year. Reimbursement grants are considered available if
they are collected within one year of the end of the current fiscal year. Expenditures generally are recorded when a liability is
incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to claims and
judgments, compensated absences, net pension liabilities, and OPEB are recorded only when payment is due.
Property taxes, special assessments, intergovernmental revenues, charges for services and interest associated with the current
fiscal year are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal year.
Only the portion of special assessments receivable due within the current fiscal year is considered to be susceptible to accrual
as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is
received by the government.
The City reports the following major governmental funds:
General Fund
This is the City’s primary operating fund. It accounts for all financial resources of the general government,
except those required to be accounted for in another fund. Most of the current day-to-day operations of the
governmental units are financed from this fund.
Tax Increment District No. 3 Special Revenue Fund
This fund was established to account for the collection of tax increment generated revenues for parcels within
the District. These funds are used to finance the various redevelopment activities throughout the City. This
fund also provides the resources to repay the debt service on bonds issued to finance these redevelopment
activities.
Debt Service Fund
This fund is used to account for the collection of property taxes, special assessments and other resources
which are used to repay the principal and interest on debt issued for various improvements in the City.
48
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
Capital Improvements Capital Project Fund
This fund was established to provide funds and to account for the expenditure of such funds, for major capital
outlays. The accumulation of funds to provide for such outlays is an attempt to reduce future debt issuance.
The financing sources of the fund primarily consist of transfers from other funds.
Municipal State-Aid for Construction Capital Project Fund
This fund was established to account for the state allotment of construction and maintenance aid. The source
of the State funding is provided for through the collection of gasoline taxes. The funds accumulated must be
used on transportation related construction and maintenance projects.
Special Assessment Construction Capital Project Fund
This fund was established to account for the resources and expenditures required for the acquisition and
construction of capital facilities or improvements financed wholly or in part by special assessments levied
against benefited properties.
The government reports the following major enterprise funds:
Municipal Liquor Fund
The fund accounts for the operations of the City’s municipal off-sale liquor stores.
Golf Course Fund
The fund accounts for operations of Centerbrook Golf Course, a 9 hole executive golf course owned by
the City.
Earle Brown Heritage Center Fund
The Earle Brown Heritage Center is a pioneer farmstead that has been historically preserved and restored
as a modern multipurpose facility. Its convention center can host conferences, trade shows and concerts.
Water Utility Fund
The fund accounts for pumping, treatment and distribution of water to customers. Administration, wells,
water storage, and distribution are included.
Sanitary Sewer Utility Fund
The fund accounts for the collection and pumping of sanitary sewage through a system of sewer lines and lift
stations. Sewage is treated by the Metropolitan Council Environmental Services whose fees represent about
60% of this fund’s operating expenses.
Storm Drainage Utility Fund
The fund accounts for the collection and treatment of surface runoff water that does not require sanitary
wastewater treatment. It incorporates not only the storm sewer collection system, but also structures such as
holding ponds and facilities to improve water quality. Fees are based upon the quantity of water running off a
property and vary with both size and absorption characteristics of the parcel.
Street Light Utility Fund
The fund accounts for the electrical service, maintenance, repair and replacement of lights owned by the City
as well as those lights owned by Xcel Energy.
Recycling Utility Fund
The fund accounts for the contracted services to provide a City wide recycling program.
49
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
Additionally, the City reports the following fund type:
Internal Service Funds
Account for compensated absences, health care insurance benefits for retired employees, pension liabilities,
and central garage services provided to other departments of the City on a cost reimbursement basis.
As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements.
Exceptions to this general rule are transactions that would be treated as revenues, expenditures or expenses if they involved
external organizations, such as buying goods and services or payments in lieu of taxes. Elimination of these charges would
distort the direct costs and program revenues reported for the various functions concerned.
Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and
expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s
principal ongoing operations. The principal operating revenues of the enterprise funds and internal service funds are charges
to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of
sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this
definition are reported as nonoperating revenues and expenses.
D. CASH AND INVESTMENTS
The City considers all highly liquid investments with a maturity of three months or less when purchased to be cash
equivalents. All of the cash and investments allocated to the proprietary funds have original maturities of 90 days or less.
Cash balances from all funds are pooled and invested, to the extent available, in certificates of deposit and other authorized
investments. Earnings from such investments are allocated on the basis of applicable participation by each of the funds.
The City’s investment policy authorizes the City to invest in the following:
a) 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 full faith and
credit of the United States.
b) Commercial paper issued by U.S. corporations or their Canadian subsidiaries that is rated in the highest quality by at least
two nationally recognized rating agencies and matures in 90 days or less.
c) Certificates of Deposits (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.
f) Minnesota joint powers investment trusts may be entered into with trusts identified by Minnesota Statutes Chapter 118A.
g) Money market mutual funds regulated by the Securities and Exchange Commission and whose portfolios consist only of
short term securities permitted by Minnesota Statutes 118A.
h) Bonds of the City of Brooklyn Center issued in prior years, may be redeemed at current market price, which may include a
premium, prior to maturing using surplus funds of the debt service fund set up for that issue.
50
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
i) General obligation bonds of state or local governments rated A or better by a national bond rating service.
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 the League of Minnesota Cities to address
the investment needs of Minnesota cities.
Investments are reported at fair value, based on quoted market prices as of the balance sheet date, except for investments
in external investment pools, which are stated at amortized cost. The reported value of these funds is the same as the
value of the pool shares. The fund has no restrictions on withdrawls. Adjustments necessary to record investments at fair value
are recorded in the operating statement as increases or decreases in investment earnings. Investment income on commingled
funds is allocated monthly, based on month-end balances.
E. RECEIVABLES AND PAYABLES
During the course of operations, numerous transactions occur between individual funds for goods provided or services
rendered. Short-term interfund loans are classified as “due to/from other funds.” All short-term interfund receivables and
payables at December 31, 2017 are planned to be eliminated in 2018. Long-term interfund loans are classified as “advances
to/from other funds.” Any residual balances outstanding between the governmental activities and business-type activities are
reported in the government-wide financial statements as "internal balances".
Advances between funds, as reported in the fund financial statements, are offset by restricted or committed fund balance in
applicable governmental funds. This classification is based on the restraint that will be placed on the advanced funds when
they are returned to the lending fund.
All miscellaneous accounts receivable and trade receivables, other than utilities, are presented net of an allowance for doubtful
accounts. All utility trade receivables are reported at gross because it is the City’s policy to certify delinquent account
balances as special assessments. The City expects to make full collection of all property tax and special assessment
receivables, so no allowance is considered necessary.
Property tax levies are submitted to the County in December each year. The County allocates these levies across taxable
properties in the City based on valuations certified in the prior year. The County collects these levies and distributes the City’s
proceeds in June and December of the fiscal year. These taxes are reported as general revenues in the government-wide
financial statements in the year levied. Unpaid taxes at December 31 become liens on the respective property and are
classified as delinquent receivables and are fully offset by a deferred inflow of resources in the fund financial statements.
Delinquent taxes receivable includes the past six years of uncollected taxes.
Special assessments represent the financing for public improvements paid for by benefiting property owners. These
assessments are recorded as receivables upon certification to the County. Governmental special assessments have been offset
by a deferred inflow of resources for collections not received within 60 days after year end in the fund financial statements.
F. INVENTORIES AND PREPAID ITEMS
Inventories in the governmental funds are reported using the consumption method and valued at cost, using the first in/first out
(FIFO) method. Inventories in the proprietary funds are valued at cost, using the weighted average method in the Municipal
Liquor and Earle Brown Heritage Center Funds and the FIFO method in all other funds.
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both
government-wide and fund financial statements. Prepaid items are reported using the consumption method and recorded as
expenditures/expenses at the time of consumption.
51
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
G. ASSETS HELD FOR RESALE
Assets held for resale represent various property purchases made by the City with the intent to sell in order to increase tax base
or to attract new businesses. These assets are stated at the lower of cost or acquisition value. During the year ended December
31, 2017 management has reviewed the cost value reported for these assets and has indicated the properties are fairly presented
for financial reporting purposes.
H. CAPITAL ASSETS
Capital assets, which include property, plant, equipment, infrastructure assets (e.g., roads, bridges, sidewalks, and similar
items), and intangible assets such as easements and computer software, are reported in the applicable governmental or
business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets
with an initial, individual cost in excess of the amounts in the table below and an estimated useful life in excess of one year.
Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are
recorded at estimated acquisition value at the date of donation.
Infrastructure $ 250,000
Buildings and Building Improvements 50,000
Land Improvements 25,000
Heavy Equipment 25,000
Furniture and Furnishings 10,000
Motorized Vehicles 10,000
Technology Equipment 10,000
Land Easements 10,000
The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not
capitalized.
Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the
construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets
constructed . For the year ended December 31, 2017 no interest was capitalized in connection with construction in progress.
Capital assets of the City, as well as the component units, are depreciated using the straight line method over the following
estimated useful lives:
Easements - temporary
Land improvements 25 years
Buildings and structures 25 years
Water and sewer mains and lines, wells and storage
tanks, sewer lift stations 25 years
Infrastructure 25 years
Street light systems 15 years
Machinery and equipment 5 - 15 years
Based on Contract
52
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
I. DEFERRED OUTFLOWS OF RESOURCES
In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of
resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net
position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until
then. The City has only one item that qualifies for reporting in the category. Accordingly, the item, deferred pension
resources, is reported only in the statements of net position. This item results from actuarial calculations and current year
pension contributions made subsequent to the measurement date.
J. PENSIONS
For purposes of measuring the net pension liability/asset, deferred outflows of resources, deferred inflows of resources, and
pension expense, information about the fiduciary net position of the applicable pension and additions to or deductions from
the pension plan's fiduciary net position have been determined on the same basis as they are reported by the plan except that
PERA's fiscal year end is June 30. For this purpose, plan contributions are recognized as of employer payroll paid dates and
benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are
reported at fair value.
The PERA has a special funding situation created by a direct aid contribution made by the State of Minnesota. The direct
aid is a result of the merger of the Minneapolis Employees Retirement Fund into the PERA on January 1, 2015.
K. DEFERRED INFLOWS OF RESOURCES
In addition to liabilities, statements of financial position or balance sheets will sometimes report a separate section for deferred
inflows of resources. This separate financial statement element represents an acquisition of net position that applies to future
periods and so will not be recognized as an inflow of resources (revenue) until that time. The City has three types of items, which
arise under a modified accrual basis of accounting, which qualify for reporting in this category. One item, unavailable revenue, is
reported only in the governmental funds Balance Sheet. The governmental funds report unavailable revenue from sources such
as: property taxes, tax increments, special assessments and other receivables not collected within 60 days of year-end. These
amounts are deferred and recognized as an inflow of resources in the period the amounts become available. The second item,
imposed nonexchange revenue transactions, state aid received for subsequent years, is deferred and recognized as an inflow of
resources in the period that the resources are required to be used. This item is reported both in the governmental fund balance
sheet and the government-wide statement of Net Position as a deferred inflow of resources. The third item results from actuarial
calculations related to the City's pension obligations.
L. COMPENSATED ABSENCES
It is the City's policy to permit employees to accumulate earned but unused vacation and sick pay benefits. All vacation and
vested sick leave pay is accrued in the Public Employees Compensated Absences internal service fund. In accordance with
the provisions of Statement of Government Accounting Standards No. 16, Accounting for Compensated Absences, a liability is
recognized for that portion of accumulating sick leave benefits that is vested.
M. POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS
Under Minnesota Statute 471.61, subdivision 2(b), public employers must allow retirees and their dependents to continue
coverage indefinitely in an employer-sponsored health care plan, under the following conditions: 1) retirees must be receiving
(or eligible to receive) an annuity from a Minnesota public pension plan; 2) coverage must continue in group plan until age 65
and pay no more than the group premium; and 3) retirees may obtain dependent coverage immediately before retirement. All
premiums are funded on a pay-as-you-go basis. The liability was actuarially determined, in accordance with GASB Statement
No. 45, at January 1, 2016. The liability is accrued in the Public Employees Retirement internal service fund.
53
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
N. LONG TERM OBLIGATIONS
In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and
other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or
proprietary fund type statement of net position. Bond premiums and discounts, as well as issuance costs, are immaterial and
are expensed in the year of bond issuance.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance
costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received
on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing
uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service
expenditures.
O. FUND EQUITY
Fund equity in the fund financial statements is classified as fund balance for governmental funds and net position for
proprietary funds. Fund equity in the government-wide financial statements is classified as net position for both governmental
and business-type activities.
Fund Balance – In the fund financial statements, governmental funds report fund balance in classifications that
disclose restraints for which amounts in those funds can be spent. These classifications are as follows:
Nonspendable – consists of amounts that are not in spendable form or are required to be maintained intact.
Restricted – consists of amounts related to externally imposed constraints established by creditors, grantors or
contributors; or constraints imposed by state statutory provisions.
Committed – consists of internally imposed constraints. These constraints are imposed by formal action (resolution)
of the City Council, which is the highest level of decision making authority.
Assigned – consists of internally imposed constraints. These constraints reflect the specific purpose for which it is the
City’s intended use. These constraints are established by the City Council or, pursuant to council resolution, the City
Manager or the City Manager's designee.
Unassigned – is the residual classification for the general fund and also reflects negative residual amounts in other
funds.
When both restricted and unrestricted fund balances are available for an allowable use, it is the City’s policy to use restricted
resources first, then unrestricted resources as they are needed. When committed, assigned, or unassigned resources are
available for an allowable use, it is the City’s policy to use resources in the following order; 1) committed, 2) assigned, and 3)
unassigned.
The City has formally adopted a fund balance policy for the General Fund. The policy establishes a year-end target unassigned
fund balance amount of 50-52% of the next year’s operating budget for cash flow needs (working capital). At December 31,
2017 the unassigned fund balance of the General fund was 52% of the subsequent year’s budgeted expenditures.
54
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
Net Position – Net position represents the difference between assets, deferred outflows of resources, deferred inflows of
resources, and liabilities. Net position, net investment in capital assets, consists of capital assets, net of accumulated
depreciation, reduced by the outstanding balances of any bonds used for the acquisition, construction, or improvement of those
assets. Net position is reported as restricted when there are limitations imposed on their use either through constitutional
provisions or enabling legislation, or through external restrictions imposed by creditors, grantors, or laws or regulations of other
governments. All remaining net position is reported as unrestricted.
When both restricted and unrestricted net position are available for an allowable use, it is the government’s policy to use
restricted resources first, then unrestricted resources as they are needed.
P. INTERFUND TRANSACTIONS
Interfund services provided and used are accounted for as revenues and expenditures or expenses. Transactions that constitute
reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund, are
recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the fund that is
reimbursed. All other interfund transactions are reported as transfers.
Q. USE OF ESTIMATES
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions
that affect amounts reported in the financial statements and accompanying notes. Actual results could differ from such
estimates.
R. NEW ACCOUNTING PRONOUNCEMENTS
The Governmental Accounting Standards Board recently approved the following statements which were not implemented in
these financial statements. The effect these standards may have on future financial statements has not been determined at
this time.
Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions . The primary
objective of this statement is to improve accounting and financial reporting by state and local governments for post-employment
benefits other than pensions (OPEB). It also improves information provided by state and local government employers about
financial support for OPEB that is provided by other entities. This statement replaces the requirements of GASB Statement
Nos. 45 and 57. The provisions of this statement are effective for fiscal years beginning after June 15, 2017.
Note 2 STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
A. BUDGETARY INFORMATION
Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States for all
governmental funds. All annual appropriations lapse at fiscal year end.
In September, the City Manager submits to the City Council proposed operating budgets for the fiscal year commencing the
following January. The proposed general fund budget and preliminary tax levy must be certified to the County prior to
September 30. The Council holds public hearings on the certified budget and levy and must submit a final levy to the County
prior to the end of December.
The appropriated budget is prepared by fund and department. The City Council must authorize any transfer of budgeted
amounts between departments or funds. Transfers of budgeted amounts within departments in the General Fund must be
authorized by the City Manager. The legal level of budgetary control is the department level for the General Fund and the
fund level for all other governmental funds. There were no supplemental budgetary appropriations or amendments
during the year.
55
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
For the year ended December 31, 2017 expenditures and transfers out exceeded appropriations in the following General
Fund departments and other governmental funds:
Final Excess of
Budget Actual Appropriations
Major Funds:
General Fund:
Mayor and council 123,686$ 126,002$ (2,316)$
Administrative 985,583 1,000,388 (14,805)
Assessing 206,000 211,550 (5,550)
Park and recreation administration 230,193 232,357 (2,164)
Convention bureau 498,750 573,065 (74,315)
Nondepartmental 352,904 505,586 (152,682)
Transfers out 185,000 900,544 (715,544)
Special Revenue Funds:
Tax Increment District No. 3 2,787,047 3,513,100 (726,053)
Debt Service Fund 3,696,014 4,299,730 (603,716)
Nonmajor Funds:
Special Revenue Funds:
Community Development Block Grant 150,000 180,017 (30,017)
Police Forfeitures 37,100 76,654 (39,554)
Tax Increment District No. 2 20,000 79,064 (59,064)
City Initiatives Grant 236,943 543,750 (306,807)
B. DEFICIT FUND EQUITY
Deficit fund equity exists at December 31, 2017 in the following funds:
Unassigned deficit fund balance
Major Funds:
Municipal State Aid for Construction 381,395$
Nonmajor Funds:
Tax Increment District No. 4 1,289,960
Unrestricted deficit net position
Major Funds:
Golf Course 989,504
Internal Service Funds:
EE Retirement Benefit 475,978
Pension - GERF 7,285,949
Pension - PEPFF 7,535,651
The deficits are being funded through internal borrowing and will be repaid from future collections of tax increment, future
collections of special assessments, internal transfers, and future bond issuance. The Internal service deficits will
be funded through future interfund charges, state grant revenues, and employee withholdings.
56
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
Note 3 DETAILED NOTES ON ALL FUNDS
A. DEPOSITS AND INVESTMENTS
In accordance with Minnesota Statutes, the City maintains deposits at only those depository banks authorized by the City
Council. All such depositories are members of the Federal Reserve System.
Minnesota Statutes require that all City deposits be protected by insurance, surety bond, or collateral. The market value of
collateral pledged must equal 110% of the deposits not covered by insurance or bonds. Authorized collateral includes the legal
investments described in Note 1.D., as well as certain first mortgage notes, and certain other state or local government
obligations. Minnesota Statutes require that securities pledged as collateral be placed in safekeeping in a restricted account at
the Federal Reserve bank, or in an account at a trust department of a commercial bank or other financial institution that is not
owned or controlled by the financial institution furnishing the collateral.
At year-end, the City’s carrying value and bank balance of deposits was $0.
As of December 31, 2017 the City had the following investments and maturities:
Investment Type Fair Value No maturity < 1 1 - 3 3 - 6
Negotiable certificates of deposit 23,995,582$ -$ 5,333,065$ 12,619,643$ 6,042,874$
Federal agency notes 18,620,784 - 9,809,156 2,983,670 5,827,958
Municipal bonds 2,816,939 - 454,991 299,022 2,062,926
External investment pool - 4M Fund 10,957,923 10,957,923 - - -
Money market 32,659 32,659 - - -
Total Investments 56,423,887$ 10,990,582$ 15,597,212$ 15,902,335$ 13,933,758$
As of December 31, 2017, the City had the following summary of investments related to the credit risk, par values and fair
values of securities:
% of total
Investment Type Credit Risk (*) Par Fair Value Portfolio
Negotiable certificates of deposit Not rated 24,085,000$ 23,995,582$ 42.53%
Federal agency notes AA 18,588,000 18,620,784 33.00%
Municipal bonds A or better 2,785,000 2,816,939 4.99%
External investment pool - 4M Fund Not rated 10,957,923 10,957,923 19.42%
Money market AAA 31,527 32,659 0.06%
Total Investments 56,447,450$ 56,423,887$ 100.00%
(*) The credit risk for the Federal Agency Notes, Municipal Bonds and Money Market ratings are provided by S&P.
Cash and investments at year-end consist of the following:
Investments 56,423,887$
Petty cash and change funds 13,805
Total cash, cash equivalents, and investments 56,437,692$
The deposits and investments of the City are presented in the financial statements as follows:
Statement of Net Position
Cash and investments 56,437,692$
Investment Maturities (in years)
57
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted
accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1
inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs;
Level 3 inputs are significant unobservable inputs.
Debt securities classified in Level 2 of the fair value hierarchy are valued using a matrix pricing technique. Matrix pricing is
used to value securities based on the securities relationship to benchmark quoted prices.
The City has the following recurring fair value measurements as of December 31, 2017:
Investment Type 12/31/2017 Level 1 Level 2 Level 3
Investments at fair value:
Negotiable certificates of deposit 23,995,582$ -$ 23,995,582$ -$
Federal agency notes 18,620,784 - 18,620,784 -
Municipal bonds 2,816,939 - 2,816,939 -
Total Investments 45,433,305$ -$ 45,433,305$ -$
Investments at amortized cost:
Money market 32,659$
External investment pool - 4M Fund 10,957,923
Total 56,423,887$
Interest rate risk – The City’s investment policy mitigates interest rate risk by structuring the investment portfolio so that
securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open
market prior to maturity; and by investing operating funds primarily in short-term securities. The City's policy restricts
investments to investments maturing no more than six years from the date of the purchase. No more than ten percent of the
City's portfolio at any time shall be invested in securities with maturities of more than five years. The policy also states that the
portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably expected.
Credit risk – The City’s investment policy restricts investment instruments to those authorized by Minnesota Statutes §118A as
listed in Note 1.D. The policy also requires that any counterparty in investment transactions be pre-qualified and approved by the
City Council and that the portfolio be diversified to limit potential losses on individual securities. As of December 31, 2017 the
City’s investment in FHLMC, FNMA, FHLB and FFCB federal agency notes were rated AA by Standard & Poors (S&P). The
City's investment in Municipal bonds were rated A or better by S&P. The City’s external investment pool is with the Minnesota
Municipal Money Market Fund which is regulated by Minnesota Statutes and the Board of Directors of the League of Minnesota
Cities. The 4M fund is valued using the amortized cost method that approximates fair value and the pool is not rated.
Concentration of credit risk – The City’s investment policy requires that the investment portfolio be diversified to minimize
potential losses on individual securities. As of year end, the City had portfolio concentrations in excess of five percent (excluding
external investment pools) in the following federal agencies: Federal Home Loan Mortgage Corporation (7.8%), Federal National
Mortgage Association (13.0%) and Federal Farm Credit Bank (8.6%).
Custodial credit risk – The City’s investment policy requires that securities purchased from any bank or dealer be placed with
an independent third party for custodial safekeeping. Investments in investment pools and money markets are not evidenced
by securities that exist in physical or book entry form, and therefore are not subject to custodial credit risk disclosures. All of
the City’s remaining investments were held in an institutional trust under contract with the City for safekeeping services.
Fair Value Measurement Using
58
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
B. RECEIVABLES
Significant receivable balances not expected to be collected within one year of December 31, 2017 are as follows:
Delinquent Delinquent
Property Tax Special Municipal Notes
Taxes Increments Assessments State-Aid Receivable
Major Funds:
General 130,879$ -$ 40,348$ -$ -$
Tax Increment District No. 3 - 28,509 - - -
Debt Service 8,001 - 2,692,306 - -
Capital Improvements - - 2,036 - -
Municipal State Aid for Construction - - - 5,960,990 -
Special Assessment Construction - - 4,034,775 - -
Nonmajor Funds
Tax Increment District No. 5 - 81 - - 305,800
Housing and Redevelopment Authority 4,290 - - - -
Total 143,170$ 28,590$ 6,769,465$ 5,960,990$ 305,800$
The Economic Development Authority (EDA) offers a down payment and closing cost assistance program to home buyers
purchasing foreclosed or vacant properties as their principal residence. The program offers up to a $10,000, no-interest
deferred loan that is forgivable if the borrower resides in the property for five consecutive years. As of December 31, 2017,
the balance of these loans is $250,000. There has been an allowance for doubtful accounts recorded for the same amount, as it
is fully expected that these loans will be forgiven.
Pursuant to a TIF Development Agreement, dated November 9, 2016, between the EDA and The Sanctuary At Brooklyn
Center, the EDA has agreed to convey certain real property to the Developer to assist in financing a housing facility that meets
the requirement for a qualified low-income building, in exchange for a Purchase Price Promissory Note, in the amount of
$1,500,000. This note will be credited the tax increment received from TIF District No. 4 which is not otherwise pledged to
other obligations of TIF District No. 4 unless the Developer is obligated to repay the Purchase Price Note from net sale
proceeds. There has been an allowance for doubtful accounts recorded for the same amount, as it is fully expected that this
loan will be forgiven.
59
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
C. CAPITAL ASSETS
Capital asset activity for the year ended December 31, 2017 was as follows:
Beginning Ending
Balance Increases Decreases Balance
Governmental activities:
Capital assets, not being depreciated:
Land 3,537,473$ 705,008$ -$ 4,242,481$
Easements - perpetual 88,704 - - 88,704
Construction in progress 6,959,480 8,272,250 (7,485,692) 7,746,038
Total capital assets, not being depreciated 10,585,657 8,977,258 (7,485,692) 12,077,223
Capital assets, being depreciated:
Easements - temporary 22,715 - - 22,715
Buildings and improvements 23,551,929 793,346 - 24,345,275
Land improvements 10,500,244 1,093,760 - 11,594,004
Machinery and equipment 9,992,176 1,168,114 (466,276) 10,694,014
Street infrastructure 47,597,233 5,847,536 - 53,444,769
Total capital assets, being depreciated 91,664,297 8,902,756 (466,276) 100,100,777
Less accumulated depreciation for:
Easements - temporary 22,715 - - 22,715
Buildings and improvements 12,980,286 838,989 - 13,819,275
Land improvements 5,138,058 318,713 - 5,456,771
Machinery and equipment 6,150,608 877,170 (432,123) 6,595,655
Street infrastructure 20,073,164 1,881,921 - 21,955,085
Total accumulated depreciation 44,364,831 3,916,793 (432,123) 47,849,501
Total capital assets being depreciated - net 47,299,466 4,985,963 (34,153) 52,251,276
Governmental activities capital assets - net 57,885,123$ 13,963,221$ (7,519,845)$ 64,328,499$
Depreciation expense was charged to functions/programs of the City as follows:
Governmental activities:
General government 140,785$
Public safety 430,298
Public works 2,152,265
Parks and recreation 387,383
Capital assets held by the City's internal service funds are
charged to the various functions based on their usage of the assets 806,062
Total depreciation expense - governmental activities 3,916,793$
60
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
Beginning Ending
Balance Increases Decreases Balance
Business-type activities:
Capital assets, not being depreciated:
Land 3,194,983$ -$ -$ 3,194,983$
Easements - perpetual 10,285 - - 10,285
Construction in progress 7,714,819 6,530,822 (7,607,227) 6,638,414
Total capital assets, not being depreciated 10,920,087 6,530,822 (7,607,227) 9,843,682
Capital assets, being depreciated:
Easements - temporary 20,335 - - 20,335
Land improvements 502,691 - - 502,691
Buildings and improvements 38,477,337 486,238 - 38,963,575
Machinery and equipment 1,078,280 14,075 - 1,092,355
Street light systems 832,789 95,607 - 928,396
Mains and lines 74,031,737 7,511,619 - 81,543,356
Total capital assets, being depreciated 114,943,169 8,107,539 - 123,050,708
Less accumulated depreciation for:
Easements - temporary 20,335 - - 20,335
Land improvements 281,225 19,017 - 300,242
Buildings and improvements 16,940,578 1,071,120 - 18,011,698
Machinery and equipment 771,787 59,057 - 830,844
Street light systems 253,742 59,302 - 313,044
Mains and lines 40,439,043 2,880,674 - 43,319,717
Total accumulated depreciation 58,706,710 4,089,170 - 62,795,880
Total capital assets being depreciated - net 56,236,459 4,018,369 - 60,254,828
Business-type activities capital assets - net 67,156,546$ 10,549,191$ (7,607,227)$ 70,098,510$
Depreciation expense was charged to functions/programs of the City as follows:
Business-type activities:
Municipal liquor 21,803$
Golf course 18,737
Earle Brown Heritage Center 178,387
Water utility 1,635,255
Sanitary sewer utility 897,803
Storm drainage utility 1,277,883
Street light utility 59,302
Total depreciation expense - business-type activities 4,089,170$
61
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
CONSTRUCTION COMMITMENTS
At December 31, 2017 the City had construction project contracts in progress. The commitments related to remaining contract
balances are summarized as follows:
Contract Remaining
Amount Commitment
Freeway Park Area Improvements 6,372,234$ 28,280$
57th Avenue Pavement Rehabilitation 258,674 26,570
Freeway Boulevard Mill &Overlay 553,334 47,454
Cahlander Park Fence Improvements 12,497 1,500
Water Tower #3 Rehabilitation 1,282,000 418,574
Mississippi River Trunk Sanitary Sewer Lining Project 633,974 2,396
Evergreen Park Area Improvements 7,565,719 475,419
Evergreen School Area Trail and Sidewalk (Safe Routes to School)243,420 40,019
69th and France Avenue Pavement and Signal Rehab 1,056,712 174,229
Community Center Mechanical System Improvements 776,519 490,597
Total 18,755,083$ 1,705,038$
D. INTERFUND BALANCES AND TRANSFERS
The composition of due to/from other fund balances at December 31, 2017 are as follows:
Due from Due to
Other Funds Other Funds
Major Funds:
General 272,081$ 1,935$
Earle Brown Heritage Center 1,935 -
Golf Course - 197,081
Nonmajor Funds:
Community Development Block Grant - 75,000
Total 274,016$ 274,016$
Interfund due to/from balances are representative of lending/borrowing arrangements to cover deficit cash balances at the end of
the fiscal year. Balances will be paid with future operating revenues and/or interfund transfers, and receipt of federal grant
funds.
Individual fund advances to and advances from other funds at December 31, 2017 are as follows:
Advances to Advances From
Other Funds Other Funds
Major Funds:
Tax Increment District No. 3 1,294,476$ -$
Capital Improvements 792,488 -
Golf Course - 792,488
Nonmajor Funds:
Tax Increment District No. 5 - 661,627
Tax Increment District No. 4 - 1,294,476
Tax Increment District No. 2 661,627 -
2,748,591$ 2,748,591$
Project
Fund
Fund
62
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
The $661,627 advance between the Tax Increment District No. 2 and the Tax Increment District No. 5 funds was made to
provide funding for a specific development project within the City. The financing plan for the Tax Increment District projects
payments of approximately $110,000 in 2018 through 2024. The $1,294,476 advance between Tax Increment District No. 3
and Tax Increment District No. 4 provided funding for property transferred to a developer in conjunction with the Sanctuary
project. This advance will be repaid at $281,502 per year from 2018 through 2022. The $792,488 advance between the Golf
Course and Capital Improvements fund was made for improvements to the golf course. A repayment schedule for this
advance has not yet been adopted.
The composition of interfund transfers as of December 31, 2017 are as follows:
Transfer In Transfer Out
Governmental Funds:
Major Funds:
General 150,000$ 900,544$
Tax Increment District No. 3 - 2,314,977
Debt Service 2,371,490 161,576
Capital Improvements 828,442 -
Special Assessment Construction 161,576 -
Nonmajor Funds:
Housing and Redevelopment Authority - 326,770
Economic Development Authority 326,770 -
Community Development Block Grant - 150,000
Tax Increment District No. 5 - 56,513
Technology 140,000 -
Total governmental funds 3,978,278 3,910,380
Proprietary Funds:
Major Funds:
Municipal Liquor - 112,898
Golf Course 45,000 -
Total proprietary funds 45,000 112,898
Total all funds 4,023,278$ 4,023,278$
Interfund transfers allow the City to allocate financial resources to the funds that receive benefit from services provided by
another fund or to provide additional capital and infrastructure funding. In addition, interfund transfers are occasionally
authorized to allow redistribution of resources between funds for the most efficient use of funds. In 2017, the following
non-routine transfers were made between funds:
•The General fund transferred $715,544, and the Municipal Liquor fund transferred $112,898 to the Capital Improvements
fund in accordance with the City's Capital Project Funding policy.
•The Debt Service fund transferred $161,576 to the Special Assessment Construction fund upon satisfaction of the 2006A and
2008B G.O. Improvement bonds.
63
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
E. OPERATING LEASES
The City has leased a portion of the police second floor expansion area to the Local Government Information Systems
Association (LOGIS) as a backup computer facility. The lease has a term of ten years, commencing on January 12, 2016
and calls for monthly lease payments based on square-footage. Lease revenue for the year ended December 31, 2017 was
$12,000. Future minimum lease revenues under the current agreement is as follows:
Year Total
Ending Minimum Rents
2018 12,000$
2019 12,000
2020 12,000
2021 12,000
2022 12,000
2023 - 2025 36,000
96,000$
The City leases space for its municipal liquor stores. The leases are ten-year leases and began in 2010 and 2013. The leases
provide for a minimum monthly base rent payment, plus a pro-rata share of common area expenses. Additional lease payments
are required if agreed-upon revenue thresholds are attained. These leases may be cancelled at the City’s option if the City
ceases liquor operations. Total rental expense under the lease agreements for the year ended December 31, 2017 was
$319,933. Future minimum base rent payments under the current agreements are as follows:
Year Total
Ending Minimum Rents
2018 234,888$
2019 234,888
2020 164,124
2021 93,360
2022 93,360
2023 93,360
913,980$
The City is the lessor in an operating lease for a building being used for a sit-down restaurant. The lease was originally signed
in 2011 with a ten year term with an option to extend for an additional five years. For the year ended 2017, the City received
$100,401 in rental revenue. Future minimum base rent revenues under the current agreement are as follows:
Year Total
Ending Minimum Rents
2018 92,816$
2019 102,942
2020 112,048
2021 96,190
403,996$
The City is the lessor in an operating lease for a building, known as "Building D", consisting of approximately 4,100
square feet and located within the Earle Brown Heritage Center. The lease was originally signed January 1, 2009 with a ten
year term with an option for two renewals of five years each. For the year ended 2017, the City received $77,495 in rental
revenue. Future minimum base rent revenues under the current agreement are as follows:
Year Total
Ending Minimum Rents
2018 73,800$
64
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
The City leases golf carts used at Centerbrook Golf Course. Two separate leases were originally signed in 2016 with four
year terms. Total rental expenses under the lease agreements for the year ended December 31, 2017 was $11,195. Future
minimum base rent payments under the current agreement are as follows:
Year Total
Ending Minimum Rents
2018 8,742$
2019 8,742
17,484$
F. LONG-TERM DEBT
GOVERNMENTAL ACTIVITIES
The City issued general obligation improvement bonds to provide funds for the construction of major capital facilities and
construction of infrastructure. These bonds are reported in the governmental activities of the City.
The City issued general obligation tax increment bonds to finance various redevelopment projects and redevelopment property
acquisitions within the City. These bonds are reported in the governmental activities of the City.
Final
Interest Maturity Original Payable
Rates Date Date Issue 12/31/2017
G.O. Tax Increment Bonds:
Taxable Tax Increment Bonds of 2008A 3.00 - 5.30% 05/01/2008 02/01/2018 4,335,000$ 125,000$
Taxable Tax Increment Bonds of 2013A 2.00 - 3.25% 12/19/2013 02/01/2022 6,040,000 5,265,000
Taxable Tax Increment Refunding
Bonds of 2015B 3.00% 07/09/2015 02/01/2020 6,600,000 5,030,000
Tax Increment Bonds of 2016B 2.00 - 2.50% 12/08/2016 02/01/2029 2,075,000 2,075,000
Taxable Tax Increment Bonds of 2016C 2.00 - 2.30% 12/08/2016 02/01/2023 1,725,000 1,725,000
Total G.O. Tax Increment Bonds 20,775,000 14,220,000
G.O. Improvement Bonds:
Improvement Bonds, 2013B 3.00% 12/19/2013 02/01/2024 4,920,000 3,080,000
Improvement Bonds, 2015A 2.00 - 2.50% 07/09/2015 02/01/2026 3,416,248 3,083,751
Improvement Bonds, 2016A 2.00% 10/13/2016 02/01/2027 1,820,000 1,820,000
Improvement Bonds, 2017A 2.25 - 3.00% 06/08/2017 02/01/2028 3,735,000 3,735,000
Total G.O. Improvement Bonds 13,891,248 11,718,751
Total - bonded indebtedness 34,666,248$ 25,938,751
Other Liabilities:
Compensated absences payable 1,297,552
Net pension liability 13,621,131
Net OPEB obligation 793,213
Total governmental activities 41,650,647$
65
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
All long-term bonded indebtedness outstanding at December 31, 2017 is backed by the full faith and credit of the City,
including improvement and tax increment bond issues. Bonds in the governmental activities will be retired by future property
tax levies, tax increments or special assessments accumulated in the specific debt services funds. In the event that a deficiency
exists because of unpaid or delinquent taxes or special assessments at the time a debt service payment is due, the City must
provide resources to cover the deficiency until other resources are available. At the end of the current year, there are
$4,537,544 of assets accumulated in the debt service funds for future debt service. Included within those accumulated assets,
there was a combined $2,706,850 of property taxes and special assessments receivable.
Annual debt service requirements to maturity for governmental activities long-term debt are as follows:
G.O. Tax Increment Bonds G.O. Improvement Bonds
Principal Interest Principal Interest
2,275,000$ 369,433$ 1,000,978$ 304,586$
2,295,000 302,195 1,382,497 258,059
2,350,000 235,345 1,395,757 221,452
2,430,000 166,520 1,404,017 184,604
2,490,000 92,680 1,422,277 147,416
1,660,000 182,370 4,713,225 310,154
720,000 18,125 400,000 4,750
14,220,000$ 1,366,668$ 11,718,751$ 1,431,021$
BUSINESS-TYPE ACTIVITIES
The City issued general obligation revenue bonds to finance the metering of all City connected water and sewer utility services
in 2010 which were refunded in 2015. The City also issued general obligation revenue bonds in 2015, 2016 and 2017 for utility
portions of infrastructure improvement projects and a Revenue Note financed by the MN Public Facilities Authority Drinking
Water State Revolving Fund for the construction of a new water treatment plant authorized in the amount of $19,662,352. As of
December 31, 2017, only $19,622,797 of the Revenue Note has been drawn down. These bonds are reported in the
business-type activities of the City.
Final
Interest Maturity Original Payable
Rates Date Date Issue 12/31/2017
General Obligation Taxable Utility Revenue Bonds:
Revenue Bonds of 2015A 2.00 - 2.50% 07/09/2015 02/01/2026 1,823,752$ 1,646,249$
Revenue Refunding Bonds of 2015A 2.00 - 2.50% 07/09/2015 02/01/2026 1,660,000 1,355,000
Revenue Bonds of 2016A 2.00% 10/13/2016 02/01/2027 3,605,000 3,605,000
Revenue Bonds of 2017A 2.25 - 3.00% 06/08/2017 02/01/2028 4,625,000 4,625,000
Total General Obligation Taxable Utility Revenue Bonds 11,713,752 11,231,249
General Obligation Taxable Utility Revenue Notes:
PFA Revenue Note of 2015 1.00% 01/20/2015 08/20/2034 19,622,797 17,709,445
Total business-type activities 31,336,549$ 28,940,694$
2028-2029
2023-2027
Governmental Activities
Year Ending
December 31
2018
2019
2020
2021
2022
Total
66
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
Annual debt service requirements to maturity for business-type activities long-term debt are as follows:
Year Ending G.O. Revenue Bonds
December 31 Principal Interest Principal Interest
2018 644,022$ 280,368$ 963,000$ 177,490$
2019 1,082,503 241,697 973,000 167,860
2020 1,109,243 215,679 982,000 158,130
2021 1,120,983 189,177 992,000 148,310
2022 1,162,723 162,015 1,002,000 138,390
2023-2027 5,586,775 382,171 5,163,000 539,620
2028-2032 525,000 6,234 5,427,000 276,230
2033-2034 - - 2,207,445 33,760
Total 11,231,249$ 1,477,341$ 17,709,445$ 1,639,790$
The utility revenue bonds and notes are backed by the full faith and credit of the City. Bonds and Notes in the business-type
activities will be retired with the net revenues of the Water Utility, Sanitary Sewer Utility, and Storm Drainage Utility systems.
(Net revenues of each system are defined as the excess of gross revenues and earnings over the normal, reasonable, and
current costs of operating and maintaining the system.) In the event that a deficiency exists because of inadequate net revenues
at the time a debt service payment is due, the City must provide resources to cover the deficiency until other resources are
available. For the year ended December 31, 2017, the water, sewer, and storm utility funds provided net revenues of $485,701,
which accounts for a debt-service coverage ratio of 34.08% on principal and interest payments of $1,425,204.
CHANGE IN LONG-TERM LIABILITIES
Long-term liability activity for the year ended December 31, 2017 was as follows:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental activities:
Bonds payable:
G.O. tax increment bonds 16,180,000$ -$ (1,960,000)$ 14,220,000$ 2,275,000$
G.O. improvement bonds 9,526,248 3,735,000 (1,542,497) 11,718,751 1,000,978
Total bonds payable 25,706,248 3,735,000 (3,502,497) 25,938,751 3,275,978
Compensated absences 1,235,925 159,177 (97,550) 1,297,552 129,755
Pension liability:
GERF 9,516,060 1,671,283 (3,520,238) 7,667,105 -
PEPFF 17,216,517 2,377,565 (13,640,056) 5,954,026 -
Net OPEB obligation 724,801 179,780 (111,368) 793,213 -
Total government activity
long-term liabilities 54,399,551$ 8,122,805$ (20,871,709)$ 41,650,647$ 3,405,733$
Business-type activities:
Bonds payable:
G.O. revenue bonds 6,948,752$ 4,625,000$ (342,503)$ 11,231,249$ 644,022$
G.O. revenue notes 18,663,445 - (954,000) 17,709,445 963,000
Total business-type activity
long-term liabilities 25,612,197$ 4,625,000$ (1,296,503)$ 28,940,694$ 1,607,022$
Business-Type Activities
G.O. Revenue Notes
67
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
Compensated absences are liquidated by the Public Employees Compensated Absences internal service fund and the net
OPEB obligation by the Public Employees Retirement internal service fund. Net pension liabilities will be liquidated by
the Pension - GERF and Pension - PEPFF internal service funds.
CONDUIT DEBT OBLIGATIONS
From time to time, the City has issued Housing Revenue Bonds and Industrial Revenue Bonds or Notes to provide assistance
to qualified private sector entities for the acquisition and construction of housing, industrial, or commercial facilities deemed to
be in the public interest. The bonds or notes are secured by the property financed and are payable solely from payments
received on the underlying mortgage loans. The City has no obligation of its assets or of its general tax base for the repayment
of any of these bonds or notes. Accordingly, the bonds or notes are not reported as liabilities in the accompanying financial
statements. Upon final redemption of the bonds or notes, ownership of the property transfers to the private sector entity
served by the bond or note issue.
As of December 31, 2017 there were two series of fixed rate Multifamily Housing Revenue Refunding bonds, one Housing
Revenue Development Refinancing Note, two Healthcare Revenue Notes, four Senior Housing Development Revenue Notes,
two Multifamily Housing Revenue bonds, and two Charter School Lease Revenue bonds outstanding. The aggregate amount of
conduit debt as of December 31, 2017 is $47,321,903.
G. FUND EQUITY
Net position reported in the government-wide statement of net position at December 31, 2017 include the following:
Governmental activities
Net investment in capital assets:
Cost of capital assets 112,178,000$
Less: accumulated depreciation (47,849,501)
Less: related long-term debt outstanding (11,718,751)
Add: unspent bond proceeds 543,237
Total net investment in capital assets 53,152,985
Restricted:
Tax increment financing 20,601,403
Economic development 1,438,283
Law enforcement enhancements 44,313
Debt service 4,228,433
Pension benefits 996,904
Total restricted 27,309,336
Unrestricted 1,400,658
Total governmental activities net position 81,862,979$
Related debt for governmental activities capital assets includes $11,718,751 in G.O. Improvement Bonds which was the amount
issued to finance the street portion of construction projects.
68
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
Business-type activities
Net investment in capital assets:
Cost of capital assets 132,894,390$
Less: accumulated depreciation (62,795,880)
Less: related long-term debt outstanding (27,585,694)
Add: unspent bond proceeds 1,040,856
Total net investment in capital assets 43,553,672
Unrestricted 14,613,409
Total business-type activities net position 58,167,081$
Aggregated fund balances reported in the governmental funds balance sheet at December 31, 2017 include the following:
Governmental funds
Nonspendable Restricted Committed Assigned
General
Inventories 40,828$ -$ -$ -$
Prepaid Items 64,806 - - -
Capital Improvements - - - 149,630
Tax Increment District No. 3
Tax Increment Financing - 17,984,598 - -
Debt Service
Debt Service - 1,837,237 - -
Capital Improvements
Capital Improvements - - 3,036,868 -
Special Assessment Construction
Capital Improvements - - - 567,537
Nonmajor Funds
Tax Increment Financing - 2,588,215 - -
Economic Development 7,976 1,433,993 - -
Law Enforcement Enhancements - 44,313 - -
Public Safety - - 12,377 -
Cable Communications - - 5,286 -
Community Recreation - - 94,604 -
Emergency Capital Improvements - - 1,093,935 -
Street Improvements - - 5,062,093 -
Technology Improvements - - 372,839 -
Total fund balances 113,610$ 23,888,356$ 9,678,002$ 717,167$
69
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
Note 4 DEFINED BENEFIT PENSION PLAN - CITY EMPLOYEES
A. PLAN DESCRIPTION
The City participates in the following cost-sharing multiple-employer defined benefit pension plans administered by the Public
Employees Retirement Association of Minnesota (PERA). PERA's defined benefit pension plans are established and
administered in accordance with Minnesota Statutes, Chapters 353 and 356. PERA's defined benefit pension plans are tax
qualified plans under Section 401(a) of the Internal Revenue Code.
1. GENERAL EMPLOYEES RETIREMENT FUND (GERF)
All full-time and certain part-time employees of the City are covered by the GERF. GERF members belong to either the
Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members
are not. The Basic Plan was closed to new members in 1967. All new members must participate in the Coordinated Plan.
2. PUBLIC EMPLOYEES POLICE AND FIRE FUND (PEPFF)
The PEPFF, originally established for police officers and firefighters not covered by a local relief association, now covers
all police officers and firefighters hired since 1980. Effective July 1, 1999, the PEPFF also covers police officers and
firefighters belonging to a local fire relief association that elected to merge with and transfer assets and administration to
PERA.
B. BENEFITS PROVIDED
PERA provides retirement, disability, and death benefits. Benefit provisions are established by state statute and can only
be modified by the state legislature.
Benefit increases are provided to benefit recipients each January. Increases are related to the funding ratio of the plan.
Members in plans that are at least 90 percent funded for two consecutive years are given 2.5 percent increases. Members in
plans that have not exceeded 90 percent funded, or have fallen below 80 percent, are given 1 percent increases.
The benefit provisions stated in the following paragraphs of this section are current provisions and apply to active plan
participants. Vested, terminated employees who are entitled to benefits but are not receiving them yet are bound by the
provisions in effect at the time they last terminated their public service.
1. GERF BENEFITS
Benefits are based on a member's highest average salary for any five successive years of allowable service, age, and
years of credit at termination of service. Two methods are used to compute benefits for PERA's Coordinated and Basic
Plan members. The retiring member receives the higher of a step-rate benefit accrual formula (Method 1) or level accrual
formula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2 percent of average salary
for each of the first ten years of service, and 2.7 percent for each remaining year. The annuity accrual rate for a
Coordinated Plan member is 1.2 percent of average salary for each of the first ten years and 1.7 percent for each
remaining year. Under Method 2, the annuity accrual rate is 2.7 percent of average salary for Basic Plan members and 1.7
percent for Coordinated Plan members for each year of service. For members hired prior to July 1, 1989, a full annuity is
available when age plus years of service equal 90 and normal retirement age is 65. For members hired on or after July 1,
1989, normal retirement age is the age for unreduced Social Security benefits capped at 66.
2. PEPFF BENEFITS
Benefits for the PEPFF members first hired after June 30, 2010, but before July 1, 2014, vest on a prorated basis from 50
percent after five years up to 100 percent after ten years of credited service. Benefits for PEPFF members first hired
after June 30, 2014, vest on a prorated basis from 50 percent after ten years of service up to 100 percent after twenty
years of credited service. The annuity accrual rate is 3 percent of average salary for each year of service. For PEPFF
who were first hired prior to July 1, 1989, a full annuity is available when age plus years of service equal at least 90.
70
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
C. CONTRIBUTIONS
Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. Contribution rates can only be
modified by the state legislature.
1. GERF CONTRIBUTIONS
Basic Plan members and Coordinated Plan members were required to contribute 9.1 percent and 6.5 percent, respectively,
of their annual covered salary in calendar year 2017. The City was required to contribute 11.78 percent of pay for Basic
Plan members and 7.5 percent for Coordinated Plan members in calendar year 2017. The City's contributions to the GERF
for years ended December 31, 2017, 2016 and 2015 were $572,442, $550,846, and $564,168. The City's contributions were
equal to the required contributions as set by state statute.
2. PEPFF CONTRIBUTIONS
Plan members were required to contribute 10.8 percent of their annual covered salary in calendar year 2017. The City was
required to contribute 16.2 percent of pay for PEPFF members in calendar year 2017. The City contributions to the PEPFF
for the year ended December 31, 2017, 2016 and 2015 were $720,865, $689,601, and $687,935 respectively. The City's
contributions were equal to the required contributions as set by state statute.
D. PENSION COSTS
The City reported amounts for pension expense in the statement of activities, as well as deferred outflows, deferred inflows,
and net pension liability in the statement of net assets associated with various plans as follows:
Pension Deferred Deferred Net Pension
Pension Plan Expense Outflows Inflows Liability
PERA - GERF 931,099$ 1,992,739$ 1,611,582$ 7,667,105$
PERA - PEPFF 1,477,799 8,567,606 10,149,232 5,954,026
PERA - PEDCP 925 - - -
Fire Relief Association 154,366 619,187 259,547 -
Central Pension Fund 50,782 - - -
Total 2,614,971$ 11,179,532$ 12,020,361$ 13,621,131$
1. GERF PENSION COSTS
At December 31, 2017, the City reported a liability of $7,667,105 for its proportionate share of the GERF's net pension
liability. The City's net pension liability reflected a reduction due to the State of Minnesota's contribution of $6 million to the
fund in 2017. The State of Minnesota is considered a nonemployer contributing entity and their contribution meets the
definition of a special funding situation. The State of Minnesota's proportionate share of the net pension liability associated
with the City totaled $96,388. The net pension liability was measured as of June 30, 2017, and the total pension liability
used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City's proportion of
the net pension liability was based on the City's contributions received by PERA during the measurement period for
employer payroll paid dates from July 1, 2016 through June 30, 2017, relative to the total employer contributions received
from all of PERA's participating employers. At June 30, 2017, the City's proportion was 0.1201 percent which was an
increase of 0.0029 percent from its proportion measured as of June 30, 2016.
For the year ended December 31, 2017, the City recognized pension expense of $313,510 for its proportionate share of
the GERF's pension expense. In addition, the City recognized an additional $2,784 as pension expense (and grant
revenue) for its proportionate share of the State of Minnesota's contribution of $6 million to the GERF. Adjustments for
deferred inflows and outflows increased the total amount reported across governmental and business type activities
to $931,099
71
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
At December 31, 2017, the City reported its proportionate share of the GERF's deferred outflows of resources and
deferred inflows of resources related to pensions from the following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Differences between expected and actual economic experience 252,684$ 487,517$
Changes in actuarial assumptions 1,242,169 768,628
Differences between projected and actual investment earnings 34,304 -
Changes in proportion 176,600 355,437
GERF contributions paid subsequent to the measurement date 286,982 -
Totals 1,992,739$ 1,611,582$
$286,982 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to
the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2018.
Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized
in pension expense as follows:
Year Pension
Ended Expense
December 31,Amount
2018 117,372$
2019 397,091
2020 (94,834)
2021 (325,454)
Total 94,175$
2. PEPFF PENSION COSTS
At December 31, 2017, the City reported a liability of $5,954,026 for its proportionate share of the PEPFF's net pension
liability. The net pension liability was measured as of June 30, 2017, and the total pension liability used to calculate the net
pension liability was determined by an actuarial valuation as of that date. The City's proportion of the net pension liability
was based on the City's contributions received by PERA during the measurement period for employer payroll paid dates
from July 1, 2016 through June 30, 2017, relative to the total employer contributions received from all of PERA's
participating employers. At June 30, 2017, the City's proportion was 0.441 percent which was an increase of 0.012
percent from its proportion measured as of June 30, 2016.
For the year ended December 31, 2017, the City recognized pension expense (revenue) of ($765,111) for its
proportionate share of the PEPFF's pension expense. Adjustments for deferred inflows and outflows adjusted this
amount reported across governmental and business-type activities to $1,477,799. The City also recognized
$39,690 for the year ended December 31, 2017, as a reduction in net pension liability (and grant revenue) for its
proportionate share of the State of Minnesota's on-behalf contributions to the PEPFF. Legislation passed in 2013
required the State of Minnesota to begin contributing $9 million to the PEPFF each year, starting in fiscal year 2014.
72
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
At December 31, 2017, the City reported its proportionate share of the PEPFF's deferred outflows of resources and
deferred inflows of resources related to pension from the following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Differences between expected and actual economic experience 137,048$ 1,567,224$
Changes in actuarial assumptions 7,580,001 8,453,235
Differences between projected and actual investment earnings 44,968 -
Changes in proportion 444,517 128,773
PEPFF contributions paid subsequent to the measurement date 361,072 -
Totals 8,567,606$ 10,149,232$
$361,072 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to
the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2018.
Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized
in pension expense as follows:
Year Pension
Ended Expense
December 31,Amount
2018 107,348$
2019 107,348
2020 (113,391)
2021 (461,029)
2022 (1,582,974)
Total (1,942,698)$
E. ACTUARIAL ASSUMPTIONS
The total pension liability in the June 30, 2017, actuarial valuation was determined using the following actuarial assumptions:
Inflation 2.5% per year
Active Member Payroll Growth 3.25% per year
Investment Rate of Return 7.50%
Salary increases were based on a service-related table. Mortality rates for active members, retirees, survivors and
disabilitants were based on RP 2014 tables for all plans for males or females, as appropriate, with slight adjustments to fit
PERA’s experience. Cost of living benefit increases for retirees are assumed to be one percent per year for the General
Employees Plan through 2044 and Police and Fire Plan through 2064 and then 2.5 percent thereafter for both plans.
Actuarial assumptions used in the June 30, 2017 valuation were based on the results of actuarial experience studies. The
most recent four-year experience study in the General Employees Plan was completed in 2015. The most recent
five-year experience study for Police and Fire Plan was completed in 2016.
73
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
The following changes in actuarial assumptions occurred in 2017:
General Employees Fund
• The Combined Service Annuity (CSA) loads were changed from 0.8 percent for active members and 60
percent for vested and non-vested deferred members. The revised CSA loads are now 0.00 percent for
active member liability, 15.00 percent for vested deferred member liability and 3.00 percent for non-vested
deferred member liability.
• The assumed post-retirement benefit increase rate was changed from 1.00 percent per year for all years
to 1.00 percent per year through 2044 and 2.50 percent per year thereafter.
Police and Fire Fund
• Assumed salary increases were changed as recommended in the June 30, 2016 experience study. The net
effect is proposed rates that average 0.34 percent lower than the previous rates.
• Assumed rates of retirement were changed, resulting in fewer retirements.
• The Combined Service Annuity (CSA) load was 30.00 percent for vested and non-vested deferred members.
The CSA has been changed to 33.00 percent for vested members and 2.00 percent for non-vested members.
• The base mortality table for healthy annuitants was changed from the RP-2000 fully generational table to
the RP-2014 fully generational table (with a base year of 2006), with male rates adjusted by a factor of
0.96. The mortality improvement scale was changed from Scale AA to Scale MP-2016. The base
mortality table for disabled annuitants was changed from the RP-2000 disabled mortality table to the
mortality tables assumed for healthy retirees.
• Assumed termination rates were decreased to 3.00 percent for the first three years of service. Rates
beyond the select period of three years were adjusted, resulting in more expected terminations overall.
• Assumed percentage of married female members was decreased from 65.00 percent to 60.00 percent.
• Assumed age difference was changed from separate assumptions for male members (wives assumed to
be three years younger) and female members (husbands assumed to be four years older) to the
assumption that males are two years older than females.
• The assumed percentage of female members electing Joint and Survivor annuities was increased.
• The assumed post-retirement benefit increase rate was changed from 1.00 percent for all years to 1.00
percent per year through 2064 and 2.50 percent thereafter.
• The single discount rate changed from 5.60 percent to 7.50 percent.
The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonableness of the
long-term expected rate of return on a regular basis using a building-block method in which best-estimate ranges of
expected future rates of return are developed for each major asset class. These ranges are combined to produce an expected
long-term rate of return by weighting the expected future rates of return by the target asset allocation percentages. The
target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the
following table:
Long-Term
Target Expected Real
Allocation Rate of Return
Domestic Stocks 39.00% 5.10%
International Stocks 19.00% 5.30%
Bonds 20.00% 0.75%
Alternative Assets 20.00% 5.90%
Cash 2.00% 0.00%
Asset Class
74
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
F. DISCOUNT RATE
The discount rate used to measure the total pension liability was 7.5%. The projection of cash flows used to determine
the discount rate assumed that employee and employer contributions will be made at the rate specified in statute. Based
on these assumptions, the fiduciary net positions of the General Employees Fund and the Police and Fire Fund was
projected to be available to make all projected future benefit payments of current plan members. Therefore, the
long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to
determine the total pension liability.
G. PENSION LIABILITY SENSITIVITY
The following presents the City's proportionate share of the net pension liability for all plans it participates in, calculated using
the discount rates disclosed in the preceding paragraphs, as well as what the City's proportionate share of the net pension
liability would be if it were calculated using a discount rate 1 percentage point lower or 1 percentage point higher than the
current discount rates:
1% Lower 6.50% 11,892,250$ 6.50% 11,213,168$
Current Discount Rate 7.50% 7,667,105 7.50% 5,954,026
1% Higher 8.50% 4,208,057 8.50% 1,612,314
H. PENSION PLAN FIDUCIARY NET POSITION
Detailed information about each pension plan's fiduciary net position is available in a separately issued PERA financial report
that includes financial statements and required supplementary information. That report may be obtained by:
Internet:www.mnpera.org
Phone:(651) 296-7460
Mail:60 Empire Drive, #200
St. Paul, MN 55103-2088
Note 5 DEFINED BENEFIT PENSION PLAN - SINGLE EMPLOYER - FIRE RELIEF ASSOCIATION
A. PLAN DESCRIPTION
The City contributes to the Brooklyn Center Fire Department Relief Association (the Association) which is the administrator
of a single employer, public employee defined benefit retirement system to provide a retirement plan (the Plan) to volunteer
firefighters of the City who are members of the Association. The Association is organized and operates under the provisions
of Minnesota State Statutes 424A, and provides benefits in accordance with those statutes.
At December 31, 2016, the membership of the Association consisted of:
Retirees and beneficiaries currently receiving benefits 21
Terminated employees entitled to benefits but not yet receiving them 9
Active plan participants - vested 15
Active plan participants - non-vested 17
Total 62
The Association issues a financial report that includes financial statements and required supplementary information for the
Brooklyn Center Fire Department Relief Association. That report is available at the City of Brooklyn Center City offices.
Sensitivity of Net Pension Liability
General Employees Fund Police and Fire Fund
75
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
B. BENEFITS PROVIDED
Basic Service Pension for Retired Members -Upon retirement each individual will receive a lump sum distribution of $7,600
per year of service. This benefit level was placed into effect on January 1, 2016. Prior to 1998, a monthly benefit level of
$26.50 was available for retirees. The monthly benefit is no longer an option for retiring members. Vested, terminated
members, who are entitled to benefits but are not yet receiving them, are bound by the provisions in effect at the time of
termination from membership.
Basic Service Pension for Deferred Pensioner - A member who is otherwise qualified for a service pension but who has not
reached the age of 50 years may retire from the Fire Department without forfeiting the member's right to such pension. Upon
approval of an application therefore, the deferred pensioner shall receive a pension based on the benefit level at that time
multiplied by such person's years of active service with the Fire Department and further multiplied by the decimal equivalent
of the applicable percentage determined from the following table:
Years of Service Applicable Percentage
10 60%
11 64
12 68
13 72
14 76
15 80
16 84
17 88
18 92
19 96
20 and beyond 100
C. FUNDING POLICY
The City levies property taxes at the direction of and for the benefit of the Plan and passes through state aids allocated to the
Plan, all in accordance with enabling State statutes. The minimum tax levy obligation is the financial contribution requirement
for the year less anticipated state aids.
D. CONTRIBUTIONS
Authority for contributions to the pension plan is established by Minn. Stat. § 69.77 and may be amended only by the
Minnesota State Legislature. See 2013 Minn. Laws, ch. 111, art. 5, §§ 31 to 42 and 80. There are no employee contributions.
The City provided statutory contributions in 2017. The actuary compares the actual statutory contribution rate to a "required"
contribution rate. The required contribution rate consists of: (a) normal costs based on entry age normal cost methods, (b) a
supplemental contribution for amortizing any unfunded actuarial accrued liability, and (c) an allowance for administrative
expenses.
76
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
E. PENSION COSTS
At December 31, 2017, the City reported an asset of $637,264 for the difference between the Fire Relief Plan Fiduciary net
position and the total pension liability. The net pension asset was measured as of December 31, 2016, and the total pension
liability used to calculate the net pension asset was determined by an actuarial valuation as of that date.
Changes in Net Pension Asset
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability (Asset)
Balance at 12/31/16 2,976,685$ 3,396,510$ (419,825)$
Changes for the year
Service cost 120,802 - 120,802
Interest 174,191 - 174,191
Differences between expected and actual experience (75,613) - (75,613)
Changes of assumptions (50,396) - (50,396)
Changes of benefit terms 26,709 - 26,709
Contributions - State and local - 147,002 (147,002)
Net investment income - 275,625 (275,625)
Benefit payments (136,168) (136,168) -
Administrative expenses - (9,495) 9,495
Net changes 59,525 276,964 (217,439)
Balance at 12/31/17 3,036,210$ 3,673,474$ (637,264)$
At December 31, 2017, the City reported deferred outflows of resources, and deferred inflows of resources related to pensions
from the following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Changes in actuarial assumptions 235,674$ 42,066$
Difference between expected and actual economic experience - 63,115
Difference between projected and actual investment earnings 229,147 -
Contribution paid subsequent to measurement date 154,366 154,366
Totals 619,187$ 259,547$
$154,366 reported as deferred outflows of resources related to pensions resulting from state aid received subsequent
to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2018.
Deferred inflows of resources totaling $154,366 related to state aid received subsequent to the measurement date will be
recognized for its impact on the net pension liability in the year ended December 31, 2018.
Increase (Decrease)
77
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in
pension expense as follows:
Year Pension
Ended Expense
December 31, Amount
2018 129,313$
2019 129,311
2020 108,936
2021 13,949
2022 (20,828)
Thereafter (1,041)
Total 359,640$
F. ACTUARIAL ASSUMPTIONS
The Association is funded with contributions from the City of Brooklyn Center. The actuarially determined contributions in the
Schedule of Contributions are calculated as of the beginning of the fiscal year in which contributions were reported.
The following methods and assumptions were used to calculate the actuarially determined contributions reported in the most
recent fiscal year end.
• The most recent actuarial valuation date is January 1, 2017.
• Actuarial cost is determined using the Entry Age Normal Cost Method.
• The actuarial value of assets is market value.
• The unfunded accrued liability is amortized using a 20-year rolling end date.
• Investment rate of return is 6.25 percent.
• The inflation rate assumption is 2.75 percent.
• Mortality assumptions for pre-retirement, post-retirement, and post-disability are:
Pre-retirement:RP 2000 Non-annuitant Table with white collar adjustment,
generationally projected using Scale AA, and set back two
years for males and females.
Post-retirement:RP 2000 Annuitant Mortality Table with white collar
adjustment, generationally projected using Scale AA for males
and females.
Post-disability:RP 2000 Annuitant Mortality Table with white collar
adjustment, set forward eight years for males and females.
78
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
The discount rate was changed from 5.75% to 6.25% to reflect updated capital market assumptions.
The best estimate range for the long-term expected rate of return is determined by adding expected inflation to expected
long-term real returns and reflecting expected volatility and correlation. The capital market assumptions are per the actuary's
investment consulting practice as of January 1, 2017.
Long-Term
Allocation at Expected Nominal
Measurement Date Rate of Return
Cash and Equivalents 11.97% 3.59%
Fixed Income 25.51% 4.14% - 7.25%
Domestic Equity 42.55% 8.33% - 8.67%
International Equity 19.66% 8.46% - 9.55%
Real Estate and Alternatives 0.31% 5.28% - 7.19%
Total 100.00% 7.55%
Reduced for assumed investment expense -1.42%
Net assumed investment return (weighted average rounded to 1/4%) 6.25%
G. DISCOUNT RATE
The discount rate used to measure the total pension liability was 6.25 percent. The projection of cash flows used to determine
the discount rate assumed that City contributions will be made at the actual statutory contribution rate. Based on those
assumptions, the Association's fiduciary net position was projected to be available to make all projected future benefit
payments of the current plan members. Therefore, the long-term expected rate of return on pension plan investments was
applied to all periods of projected benefit payments to determine the total pension liability.
H. PENSION LIABILITY (ASSET) SENSITIVITY
The following presents the net pension asset calculated using the discount rate of 6.25 percent, as well as what the net
pension (asset)/liability would be if it were calculated using a discount rate that is one-percentage-point lower (5.25 percent)
or one percentage- point higher (7.25 percent) than the current rate:
5.25% 6.25% 7.25%
One Point Current One Point
Decrease Rate Increase
Net Pension (Asset)/Liability (534,511)$ (637,264)$ (735,009)$
of the Net Pension (Asset) Liability
Asset Class
City's Proportionate Share
79
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
Note 6 MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLAN
City employees belonging to International Union of Operating Engineers (IUOE) are participants in a multiple-employer
defined benefit pension plan Central Pension Fund of the International Union of Operating Engineers and Participating
Employers (CPF) administered by the Board of Trustees of the Central Pension Fund. The plan is a cost-sharing pension plan
that is not a state or local governmental pension plan, is used to provide defined benefit pensions both to employers that are not
state or local governmental employers, and has no predominant state or local government employer. The Plan issues a publicly
available financial report located on their website at www.cpfiuoe.org.
The City has 22 employees who are covered by this pension plan. The plan provides benefits such as monthly retirement
income, special and early retirement benefits, post-retirement surviving spouse benefits, pre-retirement surviving spouse
benefits, and disability benefits. The CPF is a supplemental Pension Fund authorized by Minnesota Statutes, 356.24,
subdivision 1(9). The CPF Plan of Benefits and the Agreement and Declaration of Trust will serve as the governing
documents.
The City's contributions to the plan are pursuant to a collective bargaining agreement with the IUOE which expires December
31, 2018. The required contribution rate is $0.96 per hour, which is applied to all compensated hours, and capped at $5,000 per
year. Total employer contributions for the year ended December 31, 2017 were $50,782. With regard to withdrawal from the
pension plan, the parties agree that the amount that would otherwise be paid in salary or wages will be contributed instead to
the CPF as pre-tax employer contributions.
Note 7 DEFINED CONTRIBUTION PLAN
There are five City Council members of the City covered by the Public Employees Defined Contribution Plan (PEDCP),
a multiple-employer deferred compensation plan administered by PERA. The PEDCP is a tax qualified plan under Section
401(a) of the Internal Revenue Code and all contributions by or on behalf of employees are tax deferred until time of
withdrawal.
The defined contribution plan consists of individual accounts paying a lump-sum benefit, plan benefits depend solely on
amounts contributed to the plan plus investment earnings, less administrative expenses, therefore, there is no future liability to
the employer. Minnesota Statutes, Chapter 353(D.03), specifies plan provisions, including the employee and employer
contribution rates for those qualified personnel who elect to participate. An eligible elected official who decides to participate
contributes 5 percent of salary which is matched by the elected official's employer. Employer and employee contributions are
combined and used to purchase shares in one or more of the seven accounts of the Minnesota Supplemental Investment Fund.
For administering the plan, PERA receives 2 percent of employer contributions and twenty-five hundredths of 1 percent
(.0025%) of the assets in each member's account annually.
Pension expense for the year is equal to contributions made. Total contributions made by the City for the last three fiscal years
were:
For the Year Ended: Employee Employer Employee Employer Employee Employer
925$ 925$ 5.0% 5.0% 5.0%5.0%
907 907 5.0% 5.0% 5.0%5.0%
907 907 5.0% 5.0% 5.0%5.0%
Required Rate for Employees &
Employers Percentage of Covered Payroll
December 31, 2016
December 31, 2015
Contribution Amount
December 31, 2017
80
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
Note 8 OTHER POST-EMPLOYMENT BENEFITS
A. PLAN DESCRIPTION
In addition to providing the pension benefits described in Note 4.B., the City provides postemployment health care benefits for
retired employees and police disabled in the line of duty, through a single-employer defined benefit plan administered by the
City. The authority to provide these benefits is established in Minnesota Statutes Sections 471.61 subd. 2a. and 299A.465.
The benefits, benefit levels, employee contributions and employer contributions are governed by the City and can be amended
by the City through its personnel manual and collective bargaining agreements with employee groups. The Plan is not
accounted for as a trust fund, as an irrevocable trust has not been established to account for the Plan. The Plan does not
issue a separate report.
B. BENEFITS PROVIDED
Retirees
The City is required by State Statute to allow retirees to continue participation in the City’s group health insurance plan if the
individual terminates service with the City through service retirement or disability retirement. Former employees who are
receiving, or who have met age and service requirements to receive, an annuity from a Minnesota public pension plan and
those receiving a disability benefit from such a plan are immediately eligible to participate in this Plan. Retirees may obtain
dependent coverage if the employee received dependent coverage immediately before leaving employment. Covered spouses
may continue coverage after the death of a retiree. In addition, the surviving spouse of an active employee may continue
coverage in the group health insurance plan after the employee’s death.
All health care coverage is provided through the City’s group health insurance plans. The retiree is required to pay the
premium as described below:
Employees hired before January 1, 1992 with continuous full-time employment
Employees who, on the date of their retirement, meet eligibility requirement for a full retirement annuity under PERA or
PERA Police without reduction of benefits because of age, disability, or any other reason for reduction shall be eligible for the
City to pay 100% of the single-person premium until such time as the retiree is eligible for Medicare or at age 65, whichever
is sooner. If the retiree desires to continue coverage in excess of single coverage, the additional cost for the coverage shall
be paid to the City by the retiree on a monthly basis.
Employees hired after January 1, 1992
The retiree is required to pay 100% of their premium cost for the City-sponsored group health insurance plan in which they
participate.
The premium is a blended rate determined on the entire active and retiree population. Since the projected claims costs for
retirees exceed the blended premium paid by retirees, they are receiving an implicit rate subsidy (benefit). The coverage
levels are the same as those afforded to active employees.
Disabled police and firefighter
The City is required to continue to pay the employer’s contribution toward health coverage for police or firefighters disabled
in the line of duty per Minnesota Statute 299A.465, until age 65. Dependent coverage is included, if the dependents were
covered at the time of the disability.
81
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
PARTICIPANTS
As of the actuarial valuation dated January 1, 2016, participants consisted of:
Retirees for which the City is paying the single premium 11
Disabled police officers 2
Active employees 153
Total 166
C. FUNDING POLICY
The additional cost of using a blended rate for actives and retirees is currently funded on a pay-as-you-go basis. The
City Council may change the funding policy at any time.
D. ANNUAL OPEB COSTS AND NET OPEB OBLIGATION
The City’s annual other post-employment benefit (OPEB) cost is calculated based on the annual required contribution (ARC)
of the employer, an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC
represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and amortize
any unfunded actuarial obligation (or funding excess) over a period not to exceed 30 years. The net OPEB obligation as of
December 31, 2017 was calculated as follows:
Annual required contribution 175,155$
Interest on net OPEB obligation 32,616
Adjustment to ARC (27,991)
Annual OPEB cost 179,780
Employer Contributions
Direct 123,382
Indirect Implicit Rate Subsidy (12,014)
Increase (decrease) in net OPEB obligation 68,412
Net OPEB obligation, beginning of year 724,801
Net OPEB obligation, end of year 793,213$
The City had an actuarial valuation performed for the plan as of January 1, 2016 to determine the funded status of the plan as
of that date as well as the employer’s ARC for the fiscal year ended December 31, 2016. The City’s annual OPEB cost, the
percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the past three years were as
follows:
Percentage of
Fiscal Annual Annual Net
Year OPEB Employer OPEB Cost OPEB
Ended Cost Contributions Contributed Obligation
12/31/2015 229,237$ 148,626$ 64.84% 710,605$
12/31/2016 176,587 162,391 91.96%724,801
12/31/2017 179,780 111,368 61.95%793,213
82
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
E. FUNDED STATUS AND FUNDING PROGRESS
The City currently has no assets that have been irrevocably deposited into a trust for future benefits; therefore, the actuarial
value of assets is zero. Instead of depositing funds into an irrevocable trust, the City has chosen to accumulate funding into
an internal service fund. The cash and investment balance of the internal service fund is $319,637 for the year ended
December 31, 2017. The funded status of the plan was as follows:
Unfunded
Actuarial Actuarial UAAL as a
Actuarial Accrued Accrued Percentage
Value of Liability Liability Funded Covered of Covered
Assets (AAL) (UAAL) Ratio Payroll Payroll
-$ 1,901,745$ 1,901,745$ 0.00% 10,471,960$ 18.16%
F. ACTUARIAL METHODS AND ASSUMPTIONS
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the
probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and
the health care cost trend. Amounts determined regarding the funding status of the plan and the annual required contribution
of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are
made about the future. The schedule of funding progress, presented as required supplementary information following the
notes to the financial statements, presents multi-year trend information that shows whether the actuarial value of the plan
assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the
employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern
of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions
used include techniques that are designed to reduce the effect of short-term volatility in actuarial accrued liabilities and the
actuarial value of assets, consistent with the long-term perspective of the calculations.
In the January 1, 2016 actuarial valuation, the Projected Unit Credit actuarial cost was used. The actuarial assumptions
included a 4.5% investment rate of return (net of administrative expenses) and an initial annual health care cost trend rate of
9.0% reduced by 0.33% each year to arrive at an ultimate health care cost trend rate of 5.0%. Both rates include a 2.75%
inflation assumption. The actuarial value of assets is $0, however the City does have $319,637 of funds accumulated in an
internal service fund. The plans' unfunded actuarial accrued liability is being amortized as of the valuation date with a payroll
growth rate of 3.50% over 30 years on an open basis.
Note 9 OTHER INFORMATION
A. RISK MANAGEMENT
The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions and
natural disasters.
Property and casualty insurance is provided through the League of Minnesota Cities Insurance Trust (LMCIT), a public entity
risk pool currently operating as a common risk management and insurance program for Minnesota cities: general liability,
property, automobile, mobile property and marine, crime, employee dishonesty, boiler, and open meeting law. The City pays an
annual insurance premium to the LMCIT for its insurance coverage. The City is subject to supplemental assessments if deemed
necessary by the LMCIT. Currently, the LMCIT is self-sustaining through member premiums and reinsures through commercial
companies for claims in excess of various amounts. The City retains risk for the deductible portions of the insurance policies.
The amount of these deductibles is considered immaterial to the financial statements.
1/1/2016
Actuarial
Valuation
Date
83
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
Workers’ compensation coverage is provided through a pooled self-insurance program through the LMCIT. The City pays an
annual premium to the LMCIT. The City is subject to supplemental assessments if deemed necessary by the LMCIT. The
LMCIT reinsures through Workers’ Compensation Reinsurance Association (WCRA) as required by law. For workers’
compensation, the City is not subject to a deductible. The City’s workers’ compensation is retroactively rated. With this type of
coverage, final premiums are determined after loss experience is known. The amount of premium adjustment, if any, is
considered immaterial and not recorded until received or paid.
There were no significant changes in insurance from the previous year or settlements in excess of insurance coverage for
any of the past three years.
B. ARBITRAGE REBATE
The Tax Reform Act of 1986 requires governmental entities to pay to the federal government income earned on the proceeds
from the issuance of debt in excess of interest costs, pending the expenditure of the borrowed funds. This rebate of interest
income (known as arbitrage) applies to governmental debt issued after August 31, 1986. The City issued greater than $5 million
of bonds in 2004 and therefore is required to rebate excess investment income relating to these issues to the federal
government. The extent of the City’s liability for arbitrage rebates on the remaining bond issues is not determinable at this
time. However, in the opinion of management, any such liability would be immaterial.
C. LITIGATION
The City is subject to certain legal claims in the normal course of business. Management does not expect the resolution
of these claims will have a material impact on the City’s financial condition or results of operations.
D. JOINT VENTURES AND JOINTLY GOVERNED ORGANIZATIONS
The City has several agreements with other entities that provide reduced costs, better service, and additional benefits to the
participants. The programs in which the City participates are listed below and amounts recorded within the current year’s
financial statements are disclosed.
Local Government Information Systems Association (LOGIS)
This consortium of approximately 30 government entities provides computerized data processing and support services to its
members. LOGIS is legally separate; the City does not appoint a voting majority of its board, and the Consortium is fiscally
independent of the City. The total amount recorded within the 2017 financial statements of the City is $646,760 for general
services and application upgrades provided. Costs were allocated to the various funds based on applications and/or use of
services. Complete financial statements for LOGIS may be obtained at the LOGIS offices located at 5750 Duluth Street,
Golden Valley, Minnesota 55422.
LOGIS Insurance Group
This group provides cooperative purchasing of health and life insurance benefits for approximately 45 governmental entities.
The total of 2017 health and life insurance costs paid by the City was $1,535,890. Complete financial statements may be
obtained from Gallagher Benefit Services, Inc. located at 3600 American Blvd West, Bloomington, MN 55431.
84
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2017
The Brooklyn Center Fire Department Relief Association (the Association)
The Association is organized as a nonprofit organization, legally separate from the City, by its members to provide pension and
other benefits to members in accordance with Minnesota Statutes. Its board of directors is elected by the membership of the
Association and not by the City Council. The Association issues its own set of financial statements. All funding is conducted in
accordance with applicable Minnesota Statutes, whereby state aids flow to the Association, tax levies are determined by the
Association and are only reviewed by the City. The Association pays benefits directly to its members. The Association may
certify tax levies to Hennepin County directly if the City does not carry out this function. Because the Association is fiscally
independent of the City, the financial information of the Association has not been included within the City’s financial statements.
(See Note 5 for disclosures relating to the pension plan operated by the Association.) Complete financial statements for the
Association may be obtained at the City offices located at 6301 Shingle Creek Parkway, Brooklyn Center, Minnesota 55430.
E. TAX ABATEMENTS
The City entered into a property tax abatement with Hurlbut-Zeppa Charitable Trust AR under Minnesota Statute
469.1813. Under the Statute the City may grant a prospective property tax abatement if (1) it expects the benefits to the
City of the abatement agreement to at least equal the costs of the proposed agreement or intends the abatement to
phase in a property tax increase and (2) it finds that doing so is in the public interest. The abatement increased the
City's tax base and provided employment opportunities within the City.
For the year ended December 31, 2017, the City abated $63,131 of property taxes to Hurlbut-Zeppa Charitable Trust
AR for the construction and opening of the Embassy Suites Hotel. The abatement is equal to the City's portion of
increased property taxes paid on the increased market value of the development of the property for payable years
2010 to 2019.
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86
Required
Supplementary Information
CITY OF BROOKLYN CENTER, MINNESOTA
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF FUNDING PROGRESS - OTHER POSTEMPLOYMENT BENEFITS
For the Year Ended December 31, 2017
Unfunded
Actuarial Actuarial Actuarial Actuarial UAAL as a
Valuation Value of Accrued Accrued Funded Covered Percentage of
Date Assets Liability (AAL) Liability (UAAL) Ratio Payroll Covered Payroll
January 1, 2012 -$ 2,620,367$ 2,620,367$ 0.00% 9,472,237$ 27.66%
January 1, 2014 - 2,574,529 2,574,529 0.00% 9,934,960 25.91%
January 1, 2016 - 1,901,745 1,901,745 0.00% 10,471,960 18.16%
87
CITY OF BROOKLYN CENTER, MINNESOTA
SCHEDULE OF CITY CONTRIBUTIONS
PUBLIC EMPLOYEES GENERAL EMPLOYEES RETIREMENT FUND
Required Supplementary Information (Last Ten Years*)
Statutorily Contributions in Relation Contribution Contributions as a
Required to the Statutorily Required Deficiency Covered Percentage of
Fiscal Year Ending Contributions (a) Contributions (b) (Excess) (a -b) Payroll** (d) Covered Payroll (b/d)
December 31, 2017 572,442$ 572,442$ -$ 7,634,297$ 7.50%
December 31, 2016 550,846 550,846 - 7,344,613 7.50%
December 31, 2015 564,168 564,168 - 7,522,240 7.50%
* This schedule is presented prospectively beginning with the fiscal year ended December 31, 2015.
** For purposes of this schedule, covered payroll is defined as "pensionable wages".
88
CITY OF BROOKLYN CENTER, MINNESOTA
SCHEDULE OF CITY'S AND NON-EMPLOYER PROPORTIONATE SHARE OF NET PENSION LIABILITY
PUBLIC EMPLOYEES GENERAL EMPLOYEES RETIREMENT FUND
Required Supplementary Information (Last Ten Years*)
Proportionate share
of the Net Pension Employer's
Employer's Employer's Employer's proportionate Liability and the Proportionate Share Plan Fiduciary
Proportion Proportionate Share share of the State of Employer's share of the of the Net Pension Net Position as a
(Percentage) of (Amount) of the Minnesota's proportionate State of Minnesota's Employer's Liability (Asset) as Percentage of
the Net Pension Net Pension share of the Net Share of the Net Covered a Percentage of its the Total Pension
Fiscal Year Ending Liability (Asset) Liability (Assets) Pension Liability Pension Liability Payroll** Covered Payroll Liability
June 30, 2017 0.1201% 7,667,105$ 96,388$ 7,763,493$ 7,735,587$ 100.36% 75.90%
June 30, 2016 0.1172% 9,516,060 124,251 9,640,311 7,269,667 132.61% 68.91%
June 30, 2015 0.1243% 6,441,872 - 6,441,872 7,303,595 88.20% 78.20%
* This schedule is presented prospectively beginning with the fiscal year ended December 31, 2015.
** For purposes of this schedule, covered payroll is defined as "pensionable wages".
2017 Changes in Actuarial Assumptions
The Combined Service Annuity (CSA) loads were changed from 0.8 percent for active members and 60.0 percent for vested and nonvested deferred members. The
revised CSA loads are now zero percent for active member liability, 15.0 percent for vested deferred member liability, and 3.0 percent for nonvested deferred member
liability.
The assumed post-retirement benefit increase rate was changed from 1.0 percent per year for all years to 1.0 percent per year through 2044, and 2.5 percent per
year thereafter.
2016 Changes in Actuarial Assumptions
The assumed post-retirement benefit increase rate was changed from 1.0 percent per year through 2035, and 2.5 percnet per year thereafter, to 1.0 percent per year
for all years.
The assumed investment return was changed from 7.9 percent to 7.5 percent. The single discount rate was changed from 7.9 percent to 7.5 percent.
Other assumptions were changed pursuant to the experience study dated June 30, 2015. The assumed future salary increases, payroll growth, and inflation were
decreased by .25 percent to 3.25 percent for payroll growth, and 2.5 percent for inflation.
2015 Changes in Plan Provisions
On January 1, 2015, the Minneapolis Employees Retirement Fund was merged in the General Employees Retirement Fund, which increased the total pension
liability by $1.1 billion and increased the fiduciary plan net position by $892 million. Upon consolidation, state and employer contributions were revised.
2015 Changes in Actuarial Assumptions
The assumed post-retirement benefit increase rate was changed from 1.0 percent per year through 2030, and 2.5 percent per year thereafter, to 1.0 percent per year
through 2035, and 2.5 percent per year thereafter.
89
CITY OF BROOKLYN CENTER, MINNESOTA
SCHEDULE OF CITY CONTRIBUTIONS
PUBLIC EMPLOYEES POLICE AND FIRE FUND
Required Supplementary Information (Last Ten Years*)
Statutorily Contributions in Relation Contribution Contributions as a
Required to the Statutorily Required Deficiency Covered Percentage of
Fiscal Year Ending Contributions (a) Contributions (b) (Excess) (a -b) Payroll** (d) Covered Payroll (b/d)
December 31, 2017 720,865$ 720,865$ -$ 4,449,784$ 16.20%
December 31, 2016 689,601 689,601 - 4,256,796 16.20%
December 31, 2015 687,935 687,935 - 4,246,511 16.20%
* This schedule is presented prospectively beginning with the fiscal year ended December 31, 2015.
** For purposes of this schedule, covered payroll is defined as "pensionable wages".
90
CITY OF BROOKLYN CENTER, MINNESOTA
SCHEDULE OF CITY'S PROPORTIONATE SHARE OF NET PENSION LIABILITY
PUBLIC EMPLOYEES POLICE & FIRE FUND
Required Supplementary Information (Last Ten Years*)
Employer's Proportionate
Employer's Proportion Employer's Proportionate Share of the Net Pension Plan Fiduciary Net
(Percentage) Share (Amount) of the Employer's Liability (Asset) as a Position as a
of the Net Pension Net Pension Liability Covered Percentage of its Percentage of the
Fiscal Year Ending Liability (Asset)(Assets) (a)Payroll** (b) Covered Payroll (a/b) Total Pension Liability
June 30, 2017 0.4410%5,954,026$ 4,529,519$ 131.45% 85.40%
June 30, 2016 0.4290%17,216,517 4,128,855 416.98% 63.90%
June 30, 2015 0.4460%5,067,604 4,031,138 125.71% 86.60%
* This schedule is presented prospectively beginning with the fiscal year ended December 31, 2015.
** For purposes of this schedule, covered payroll is defined as "pensionable wages".
2017 Changes in Actuarial Assumptions
Assumed salary increases were changed as recommended in the June 30, 2016 experience study. The net effect is proposed rates that average
0.34 percent lower than the previous rates.
Assumed rates of retirement were changed, resulting in fewer retirements
The Combined Service Annuity (CSA) load was 30 percent for vested and nonvested deferred members. The CSA has been changed to
33 percent for vested members and 2 percent for nonvested members.
The base mortality table for healthy annuitants was changed from the RP-2000 fully generational table to the RP-2014 fully generational table
(with a base year of 2006), with male rates adjusted by a factor of 0.96. The mortality improvement scale was changed from Scale AA to Scale
MP-2016. The base mortality table for disabled annuitants was changed from the RP-2000 Disabled Mortality Table to the mortality tables
assumed for healthy retirees.
Assumed termination rates were decreased to 3.0 percent for the first three years of service. Rates beyond the select period of three years
were adjusted, resulting in more expected terminations overall.
Assumed percentage of married female members was decreased from 65 percent to 60 percent.
Assumed age difference was changed from separate assumptions for male members (wives assumed to be three years younger) and female
members (husbands assumed to be four years older) to the assumption that males are two years older than females.
The assumed percentage of female members electing joint and survivor annuities was increased.
The assumed post-retirement benefit increase rate was changed from 1.0 percent for all years to 1.0 percent per year through 2064, and 2.5
percent thereafter.
The single discount rate changed from 5.6 percent to 7.5 percent.
2016 Changes in Actuarial Assumptions
The assumed post-retirement benefit increase rate was changed from 1.0 percent per year through 2037, and 2.5 percent thereafter, to 1.0
percent per year for all future years.
The assumed investment return was changed from 7.9 percent to 7.5 percent. The single discount rate changed from 7.9 percent to 5.6 percent.
The assumed future salary increases, payroll growth, and inflation were decreased by .25 percent to 3.25 percent for payroll growth, and 2.5
percent for inflation.
2015 Changes in Plan Provisions
The post-retirement benefit increase to be paid after attainment of the 90 percent funding threshold was changed, from inflation up to 2.5 percent,
to a fixed rate of 2.5 percent.
2015 Changes in Actuarial Assumptions
The assumed post-retirement benefit increase rate was changed from 1.0 percent per year through 2030, and 2.5 percent per year thereafter,
to 1.0 percent per year through 2037, and 2.5 percent per year thereafter.
91
CITY OF BROOKLYN CENTER, MINNESOTA
SCHEDULE OF CHANGES IN NET PENSION ASSET AND RELATED RATIO
FIRE RELIEF ASSOCIATION
Required Supplementary Information (Last Ten Years*)
2017 2016 2015
Total Pension Liability
Service Cost 120,802$ 88,266$ 85,904$
Interest 174,191 173,219 178,242
Changes in Benefit Terms 26,709 - -
Differences Between Expected and Actual Experience (75,613) - -
Changes of Assumptions (50,396) 358,422 -
Benefit Payments (136,168) (59,016) (617,541)
Net Change in Total Pension Liability 59,525 560,891 (353,395)
Total Pension Liability - Beginning of Year 2,976,685 2,415,794 2,769,189
Total Pension Liability - End of Year 3,036,210 2,976,685 2,415,794
Plan Fiduciary Net Position
Contributions - State and Local 147,002 143,061 158,545
Net Investment Income 275,625 (181,185) 149,635
Benefit Payments (136,168) (59,016) (617,541)
Administrative Expenses (9,495) (14,560) (10,080)
Net Change in Plan Fiduciary Net Position 276,964 (111,700) (319,441)
Plan Fiduciary Net Position - Beginning of Year 3,396,510 3,508,210 3,827,651
Plan Fiduciary Net Position - End of Year 3,673,474 3,396,510 3,508,210
Net Pension Liability (Asset) - End of Year (637,264) (419,825) (1,092,416)
Plan Fiduciary Net Position as a Percentage of the Total
Pension Liability 121.0% 114.1% 145.2%
Covered Employee Payroll n/a n/a n/a
Net Pension Liability as a Percentage of Covered Payroll n/a n/a n/a
* This schedule is presented prospectively beginning with the fiscal year ended December 31, 2015
(using a December 31, 2014 measurement date).
92
CITY OF BROOKLYN CENTER, MINNESOTA
SCHEDULE OF CITY CONTRIBUTIONS
FIRE RELIEF ASSOCIATION
Required Supplementary Information (Last Ten Years^)
2017 2016 2015 2014 2013 2012 2011
Actuarially Determined Contribution 71,203 $ 101,453$ 101,453 $ 111,463 $ 111,463 $ 135,929 $ 183,928$
Contributions in Relation of the
Actuarially Determined Contribution 147,002 143,061 158,545 134,340 151,503 101,119 165,697
Contribution Deficiency (Excess) (75,799) (41,608) (57,092) (22,877) (40,040) 34,810 18,231
Covered - Employee Payroll n/a n/a n/a n/a n/a n/a n/a
Contributions as a Percentage of
Covered Employee Payroll n/a n/a n/a n/a n/a n/a n/a
Notes to Schedule
Valuation date:
Actuarilly determined contribution rates are calculated as of June 30, two years prior to the end of the fiscal
year in which contributions are reported.
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry age normal cost method
Amortization method Straight-line amortization over a closed 5-year period
Remaining amortization period 5 years
Asset valuation method Fair value
Inflation 2.75%
Salary increases Not applicable
Investment rate of return 6.25% compounded annually
Retirement age Members are assumed to retire at the later of age 52 or 20 years of service
Mortality Based on RP-2000 Annuitant Mortality Table
^ This schedule is presented prospectively beginning with the fiscal year ended December 31, 2011.
93
CITY OF BROOKLYN CENTER, MINNESOTA
SCHEDULE OF CITY CONTRIBUTIONS
INTERNATIONAL UNION OF OPERATING ENGINEERS CENTRAL PENSION FUND
Required Supplementary Information (Last Ten Years)
Required
Fiscal Year Ending Contributions
December 31, 2017 50,782$
December 31, 2016 51,410
December 31, 2015 51,699
December 31, 2014 51,868
December 31, 2013 52,046
December 31, 2012 51,636
December 31, 2011 50,603
December 31, 2010 52,004
December 31, 2009 50,566
December 31, 2008 47,822
94
Combining & Individual
Fund Statements & Schedules
CITY OF BROOKLYN CENTER, MINNESOTA
NONMAJOR SPECIAL REVENUE FUNDS
A special revenue fund is used to account for and report the proceeds of specific revenue sources that are restricted
or committed to expenditure for specified purposes other than debt service or capital projects.
Housing and Redevelopment Authority (HRA)
This fund was established to account for housing and redevelopment projects within the City of Brooklyn Center.
The HRA has the authority to levy an ad-valorem property tax levy, which is the primary funding source for
the expenditures from this fund. Annually, the cash balance at the end of the year is transferred into the EDA fund.
Economic Development Authority (EDA)
This fund was established to account for the development related activities in the City of Brooklyn Center. The
EDA generates the funding to accomplish the development projects from grants, excess funding from the HRA
property tax levy, or from transfers from other funds of the City.
This fund was established to account for the collection of grant funding for related projects within the City. During
the year, the City received grant funding through the Neighborhood Stabilization Program, which is for the
acquisition of run-down properties, the improvement of said properties, and then marketing them to the public.
Police Forfeitures
This fund was established to account for the proceeds from property seized by Police Department personnel.
Tax Increment District No. 2
This fund was established to account for the collection of tax increment generated revenues for parcels within
the District. These funds are used to finance the various redevelopment activities within the District, which
consisted of the redevelopment of the properties historically referred to as the Earle Brown Farm.
Tax Increment District No. 4
This fund was established to account for the collection of tax increment generated revenues for parcels within
the District. These funds are used to finance the various redevelopment activities within the District, which
consisted of soil remediation projects within the France Avenue Business Park.
Tax Increment District No. 5
This fund was established to account for the collection of tax increment generated revenues for parcels within
the District. These funds are used to finance the various redevelopment activities within the District, which
consisted of the redevelopment of the former Brookdale mall site, which is now called Shingle Creek Crossing.
City Initiative Grants
Revenues and expenditures from grants received from outside entities are accounted for in the fund. The Police
Department receive several federal, state and other local grants, which are accounted for here. Other activities
include grant funding for local recreation programs and cable television.
Community Development Block Grant
95
CITY OF BROOKLYN CENTER, MINNESOTA
DEBT SERVICE FUND
Debt service funds are used to account for and report financial resources that are restricted, committed or
assigned to expenditure for principal, interest and other charges related to long-term debt.
General Obligation Improvement Bonds, 2006A
This fund was established to accumulate collections of special assessments which were levied on the property
owners who benefited from the improvements that were constructed with the proceeds of this bond. This bond
has a final maturity date of February 1, 2017.
General Obligation Improvement Bonds, 2008B
This fund was established to accumulate collections of special assessments which were levied on the property
owners who benefited from the improvements that were constructed with the proceeds of this bond. This bond
has a final maturity date of February 1, 2019.
General Obligation Improvement Bonds, 2013B
This fund was established to accumulate collections of special assessments which were levied on the property
owners who benefited from the improvements that were constructed with the proceeds of this bond. This bond
has a final maturity date of February 1, 2024.
General Obligation Improvement Bonds, 2015A
This fund was established to accumulate collections of special assessments which were levied on the property
owners who benefited from the improvements that were constructed with the proceeds of this bond. This bond
has a final maturity date of February 1, 2026.
General Obligation Improvement Bonds, 2016A
This fund was established to accumulate collections of special assessments which were levied on the property
owners who benefited from the improvements that were constructed with the proceeds of this bond. This bond
has a final maturity date of February 1, 2027.
General Obligation Improvement Bonds, 2017A
This fund was established to accumulate collections of special assessments which were levied on the property
owners who benefited from the improvements that were constructed with the proceeds of this bond. This bond
has a final maturity date of February 1, 2028.
Tax Increment Bonds, 2016C
This fund was established to account for the collection of tax-increment generated revenues, which are annually
transferred from Tax Increment District No. 5 fund. This bond was issued to finance various redevelopment projects
within the City. This bond has a final maturity date of February 1, 2023.
Tax Increment Bonds, 2016B
This fund was established to account for the collection of tax-increment generated revenues, which are annually
transferred from Tax Increment District No. 5 fund. This bond was issued to finance various redevelopment projects
within the City. This bond has a final maturity date of February 1, 2029.
Tax Increment Refunding Bonds, 2015B
This fund was established to account for the collection of tax-increment generated revenues, which are annually
transferred from Tax Increment District No. 3 fund. The bond was issued to refund the maturities of the Tax
Increment Bonds, 2004D. This original bond was issued to finance various redevelopment projects within the City.
This bond has a final maturity date of February 1, 2020.
Tax Increment Bonds, 2013A
This fund was established to account for the collection of tax-increment generated revenues, which are annually
transferred from Tax Increment District No. 3 fund. This bond was issued to finance various redevelopment projects
within the City. This bond has a final maturity date of February 1, 2022.
Tax Increment Bonds, 2008A
This fund was established to account for the collection of tax-increment generated revenues, which are annually
transferred from Tax Increment District No. 3 fund. This bond was issued to finance various redevelopment projects
within the City. This bond has a final maturity date of February 1, 2018.
96
CITY OF BROOKLYN CENTER, MINNESOTA
NONMAJOR CAPITAL PROJECTS FUNDS
Capital projects funds are used to account for and report financial resources that are restricted, committed, or
assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other
capital assets.
Capital Reserve Emergency
This fund was established to account for monies held in reserve for catastrophic losses or unforeseen capital items.
Street Reconstruction
This fund was established to provide funds and to account for the expenditure of such funds, for major street
infrastructure improvements. The accumulation of funds to provide for such improvements is an attempt to reduce
future debt issuance. The primary financing source for such improvements are franchise fees.
Technology
This fund was established to provide funds and to account for the expenditure of such funds, for technological
improvements/renovations.
97
CITY OF BROOKLYN CENTER, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
December 31, 2017
Total
Special Capital Nonmajor
Revenue Project Governmental
ASSETS
Cash and investments 3,948,171$ 6,353,246$ 10,301,417$
Receivables:
Accounts - net 3,082 175,621 178,703
Current taxes 33,354 - 33,354
Delinquent taxes 4,371 - 4,371
Due from other governments 142,050 - 142,050
Prepaid items 7,976 - 7,976
Notes receivable 305,800 - 305,800
Advances to other funds 661,627 - 661,627
Assets held for resale 37,000 - 37,000
Total assets 5,143,431 6,528,867 11,672,298
LIABILITIES
Accounts payable 99,226 - 99,226
Accrued salaries and wages 10,288 - 10,288
Due to other funds 75,000 - 75,000
Due to other governments 2,382 - 2,382
Deposits payable 13,457 - 13,457
Advances from other funds 1,956,103 - 1,956,103
Total liabilities 2,156,456 - 2,156,456
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - property taxes 4,290 - 4,290
Unavailable revenue - tax increments 81 - 81
Unavailable revenue - notes receivable 85,800 - 85,800
Total deferred inflows of resources 90,171 - 90,171
FUND BALANCES
Nonspendable
Prepaid items 7,976 - 7,976
Restricted
Tax increment financing 2,588,215 - 2,588,215
Economic development 1,433,993 - 1,433,993
Law enforcement enhancements 44,313 - 44,313
Committed
Public safety 12,377 - 12,377
Cable communications 5,286 - 5,286
Community recreation 94,604 - 94,604
Emergency capital improvements - 1,093,935 1,093,935
Street improvements - 5,062,093 5,062,093
Technology improvements - 372,839 372,839
Unassigned (1,289,960) - (1,289,960)
Total fund balances 2,896,804 6,528,867 9,425,671
Total liabilities, deferred inflows of
resources and fund balances 5,143,431$ 6,528,867$ 11,672,298$
98
CITY OF BROOKLYN CENTER, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2017
Total
Special Capital Nonmajor
Revenue Project Governmental
REVENUES
Property taxes 326,307$ -$ 326,307$
Tax increments 901,910 - 901,910
Franchise fees - 702,600 702,600
Intergovernmental 454,962 - 454,962
Charges for services 14,001 - 14,001
Fines and forfeits 51,269 - 51,269
Investment earnings (net of market value adjustment) 34,443 59,641 94,084
Miscellaneous 92,589 - 92,589
Total revenues 1,875,481 762,241 2,637,722
EXPENDITURES
Current:
Public safety 285,198 - 285,198
Parks and recreation 59,937 - 59,937
Economic development 760,919 - 760,919
Capital outlay:
General government - 19,465 19,465
Public Works - 2,165,370 2,165,370
Parks and recreation 275,269 - 275,269
Economic development 79,064 - 79,064
Debt service - 24,563 24,563
Total expenditures 1,460,387 2,209,398 3,669,785
Excess (deficiency) of revenues
over (under) expenditures 415,094 (1,447,157) (1,032,063)
OTHER FINANCING SOURCES (USES)
Transfers in 326,770 140,000 466,770
Issuance of debt - 2,367,164 2,367,164
Premium on issuance of debt - 118,201 118,201
Transfers out (533,283) - (533,283)
Total other financing sources (uses)(206,513) 2,625,365 2,418,852
Net change in fund balance 208,581 1,178,208 1,386,789
Fund balances - January 1 2,688,223 5,350,659 8,038,882
Fund balances - December 31 2,896,804$ 6,528,867$ 9,425,671$
99
CITY OF BROOKLYN CENTER, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR SPECIAL REVENUE FUNDS
December 31, 2017
Housing and Economic Community
Redevelopment Development Development Police
Authority Authority Block Grant Forfeitures
ASSETS
Cash and investments -$ 1,338,234$ 69,293$ 64,239$
Receivables:
Accounts - net - - 3,082 -
Current taxes 1,235 - - -
Delinquent taxes 4,290 - - -
Due from other governments - - 75,000 -
Prepaid items - 7,856 - -
Notes receivable - - - -
Advances to other funds - - - -
Assets held for resale - 37,000 - -
Total assets 5,525 1,383,090 147,375 64,239
LIABILITIES
Accounts payable - 7,499 - 6,469
Accrued salaries and wages - 7,352 - -
Due to other funds - - 75,000 -
Due to other governments - - - -
Deposits payable - - - 13,457
Advances from other funds - - - -
Total liabilities - 14,851 75,000 19,926
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - property taxes 4,290 - - -
Unavailable revenue - tax increments - - - -
Unavailable revenue - notes receivable - - - -
Total deferred inflows of resources 4,290 - - -
FUND BALANCES
Nonspendable
Prepaid items - 7,856 - -
Restricted
Tax increment financing - - - -
Economic development 1,235 1,360,383 72,375 -
Law enforcement enhancements - - - 44,313
Committed
Public safety - - - -
Cable communications - - - -
Community recreation - - - -
Unassigned - - - -
Total fund balances 1,235 1,368,239 72,375 44,313
Total liabilities, deferred inflows of
resources and fund balances 5,525$ 1,383,090$ 147,375$ 64,239$
100
Total
Tax Tax Tax City Nonmajor
Increment Increment Increment Initiative Special
District No. 2 District No. 4 District No. 5 Grants Revenue
1,924,108$ 5,475$ 493,779$ 53,043$ 3,948,171$
- - - - 3,082
- - 32,119 - 33,354
- - 81 - 4,371
- - - 67,050 142,050
- - - 120 7,976
- - 305,800 - 305,800
661,627 - - - 661,627
- - - - 37,000
2,585,735 5,475 831,779 120,213 5,143,431
79,064 - 1,360 4,834 99,226
- - - 2,936 10,288
- - - - 75,000
- 959 1,367 56 2,382
- - - - 13,457
- 1,294,476 661,627 - 1,956,103
79,064 1,295,435 664,354 7,826 2,156,456
- - - - 4,290
- - 81 - 81
- - 85,800 - 85,800
- - 85,881 - 90,171
- - - 120 7,976
2,506,671 - 81,544 - 2,588,215
- - - - 1,433,993
- - - - 44,313
- - - 12,377 12,377
- - - 5,286 5,286
- - - 94,604 94,604
- (1,289,960) - - (1,289,960)
2,506,671 (1,289,960) 81,544 112,387 2,896,804
2,585,735$ 5,475$ 831,779$ 120,213$ 5,143,431$
101
CITY OF BROOKLYN CENTER, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES
NONMAJOR SPECIAL REVENUE FUNDS
For the Year Ended December 31, 2017
20200-46321 20300-4631* 20400-46323 20500-4219*
Housing and Economic Community
Redevelopment Development Development Police
Authority Authority Block Grant Forfeitures
REVENUES
Property taxes 326,307$ -$ -$ -$
Tax increments - - - -
Intergovernmental - 25,958 172,517 -
Charges for services - - - -
Fines and forfeits - - - 51,269
Investment earnings (net of market value adjustment) - 12,473 - 886
Miscellaneous - 4,634 - -
Total revenues 326,307 43,065 172,517 52,155
EXPENDITURES
Current:
Public safety - - - 76,654
Parks and recreation - - - -
Economic development - 406,258 30,017 -
Capital outlay:
Parks and recreation - - - -
Economic development - - - -
Total expenditures - 406,258 30,017 76,654
Excess (deficiency) of revenues
over (under) expenditures 326,307 (363,193) 142,500 (24,499)
OTHER FINANCING SOURCES (USES)
Transfers in - 326,770 - -
Transfers out (326,770) - (150,000) -
Total other financing sources (uses)(326,770) 326,770 (150,000) -
Net change in fund balance (463) (36,423) (7,500) (24,499)
Fund balances (deficits) - January 1 1,698 1,404,662 79,875 68,812
Fund balances (deficits) - December 31 1,235$ 1,368,239$ 72,375$ 44,313$
102
27700-46412 27900-46414 28000-46415 28600-*
Total
Tax Tax Tax City Nonmajor
Increment Increment Increment Initiative Special
District No. 2 District No. 4 District No. 5 Grants Revenue
-$ -$ -$ -$ 326,307$
- 324,330 577,580 - 901,910
- - - 256,487 454,962
- - - 14,001 14,001
- - - - 51,269
16,212 - 3,883 989 34,443
19,990 - - 67,965 92,589
36,202 324,330 581,463 339,442 1,875,481
- - - 208,544 285,198
- - - 59,937 59,937
- 84,096 240,548 - 760,919
- - - 275,269 275,269
79,064 - - - 79,064
79,064 84,096 240,548 543,750 1,460,387
(42,862) 240,234 340,915 (204,308) 415,094
- - - - 326,770
- - (56,513) - (533,283)
- - (56,513) - (206,513)
(42,862) 240,234 284,402 (204,308) 208,581
2,549,533 (1,530,194) (202,858) 316,695 2,688,223
2,506,671$ (1,289,960)$ 81,544$ 112,387$ 2,896,804$
103
CITY OF BROOKLYN CENTER, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR CAPITAL PROJECT FUNDS
December 31, 2017
Total
Capital Nonmajor
Reserve Street Capital
Emergency Reconstruction Technology Projects
ASSETS
Cash and investments 1,093,935$ 4,886,472$ 372,839$ 6,353,246$
Receivables:
Accounts - net - 175,621 - 175,621
Total assets 1,093,935 5,062,093 372,839 6,528,867
FUND BALANCES
Committed
Emergency capital improvements 1,093,935 - - 1,093,935
Street improvements - 5,062,093 - 5,062,093
Technology improvements - - 372,839 372,839
Total fund balances 1,093,935 5,062,093 372,839 6,528,867
Total fund balances 1,093,935$ 5,062,093$ 372,839$ 6,528,867$
104
CITY OF BROOKLYN CENTER, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES
NONMAJOR CAPITAL PROJECT FUNDS
For the Year Ended December 31, 2017
Total
Capital Nonmajor
Reserve Street Capital
Emergency Reconstruction Technology Projects
REVENUES
Franchise fees -$ 702,600$ -$ 702,600$
Investment earnings (net of market value adjustment) 9,878 47,700 2,063 59,641
Total revenues 9,878 750,300 2,063 762,241
EXPENDITURES
Capital outlay:
General government - - 19,465 19,465
Public works - 2,165,370 - 2,165,370
Debt service:
Bond issuance costs - 24,563 - 24,563
Total expenditures - 2,189,933 19,465 2,209,398
Excess (deficiency) of revenues
over (under) expenditures 9,878 (1,439,633) (17,402) (1,447,157)
OTHER FINANCING SOURCES
Transfers in - - 140,000 140,000
Issuance of debt - 2,367,164 - 2,367,164
Premium on issuance of debt - 118,201 - 118,201
Total other financing sources - 2,485,365 140,000 2,625,365
Net change in fund balance 9,878 1,045,732 122,598 1,178,208
Fund balances - January 1 1,084,057 4,016,361 250,241 5,350,659
Fund balances - December 31 1,093,935$ 5,062,093$ 372,839$ 6,528,867$
105
CITY OF BROOKLYN CENTER, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND Page 1 of 5
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Variance with
Final Budget -
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
REVENUES
Taxes:
Property taxes 15,651,303$ 15,651,303$ 15,534,895$ (116,408)$
Penalties and interest 7,364 7,364 25,387 18,023
Lodging tax 1,050,000 1,050,000 1,206,565 156,565
Total taxes 16,708,667 16,708,667 16,766,847 58,180
Special assessments 130,000 130,000 109,352 (20,648)
Licenses and permits:
Liquor and beer licenses 54,650 54,650 47,816 (6,834)
Building permits 307,150 307,150 364,069 56,919
Mechanical permits 45,000 45,000 96,942 51,942
Sewer and water permits 1,500 1,500 8,837 7,337
Plumbing permits 35,000 35,000 65,318 30,318
Garbage licenses 3,360 3,360 3,466 106
Mechanical licenses 9,000 9,000 8,995 (5)
Service station licenses 2,190 2,190 2,380 190
Vehicle dealer licenses 1,500 1,500 1,500 -
Cigarette licenses 2,850 2,850 3,175 325
Sign permits 5,000 5,000 1,748 (3,252)
Rental dwelling licenses 220,000 220,000 219,294 (706)
Amusement licenses 605 605 515 (90)
Electrical Permits 35,000 35,000 60,693 25,693
ROW permits 1,500 1,500 12,868 11,368
Miscellaneous licenses and permits 4,250 4,250 7,169 2,919
Total licenses and permits 728,555 728,555 904,785 176,230
Intergovernmental:
Federal:
Other federal grants - - 2,246 2,246
State:
Local government aid 775,888 775,888 775,888 -
Police pension aid 360,000 360,000 402,370 42,370
PERA aid 34,365 34,365 34,365 -
Fireperson pension aid 148,000 148,000 154,366 6,366
Police training 15,000 15,000 15,260 260
Other state grants 3,000 3,000 13,976 10,976
Local:
Miscellaneous grants 94,000 94,000 97,694 3,694
Total intergovernmental 1,430,253 1,430,253 1,496,165 65,912
Charges for services:
General government charges 120,300 120,300 118,834 (1,466)
Public safety charges 15,250 15,250 69,703 54,453
Community development fees 46,000 46,000 24,535 (21,465)
Recreation fees 257,775 257,775 248,052 (9,723)
Community Center fees 394,770 394,770 347,907 (46,863)
Total charges for services 834,095 834,095 809,031 (25,064)
106
CITY OF BROOKLYN CENTER, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND Page 2 of 5
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Variance with
Final Budget -
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
Revenues (continued):
Fines and forfeits 262,500$ 262,500$ 243,915$ (18,585)$
Miscellaneous:
Investment earnings (net of market value change) 77,990 77,990 65,592 (12,398)
Other 125,950 125,950 142,702 16,752
Total miscellaneous 203,940 203,940 208,294 4,354
Total revenues 20,298,010 20,298,010 20,538,389 240,379
EXPENDITURES
General government:
Mayor and council:
Current:
Personal services 52,636 52,636 52,845 (209)
Supplies 350 350 687 (337)
Services and other charges 70,700 70,700 72,470 (1,770)
Total mayor and council 123,686 123,686 126,002 (2,316)
Administrative (Manager, Clerk, HR) offices:
Current:
Personal services 797,613 797,613 866,519 (68,906)
Supplies 1,420 1,420 11,540 (10,120)
Services and other charges 186,550 186,550 122,329 64,221
Total administrative office 985,583 985,583 1,000,388 (14,805)
Elections and voter registration:
Current:
Personal services 76,108 76,108 73,739 2,369
Supplies 7,600 7,600 6,862 738
Services and other charges 10,250 10,250 7,581 2,669
Total elections and voter registration 93,958 93,958 88,182 5,776
Finance:
Current:
Personal services 530,157 530,157 531,599 (1,442)
Supplies 2,000 2,000 969 1,031
Services and other charges 56,600 56,600 54,387 2,213
Total finance 588,757 588,757 586,955 1,802
Assessing
Current:
Supplies 200 200 59 141
Services and other charges 205,800 205,800 211,491 (5,691)
Total assessing 206,000 206,000 211,550 (5,550)
Legal:
Current:
Services and other charges 435,000 435,000 406,575 28,425
107
CITY OF BROOKLYN CENTER, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND Page 3 of 5
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Variance with
Final Budget -
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
Expenditures (continued):
General government (continued):
Government buildings:
Current:
Personal services 257,259$ 257,259$ 256,450$ 809$
Supplies 63,350 63,350 64,989 (1,639)
Services and other charges 478,355 478,355 495,028 (16,673)
Total current 798,964 798,964 816,467 (17,503)
Capital outlay 50,000 50,000 22,699 27,301
Total government buildings 848,964 848,964 839,166 9,798
Information technology:
Current:
Personal services 322,794 322,794 297,803 24,991
Supplies 3,000 3,000 4,154 (1,154)
Services and other charges 289,791 289,791 253,451 36,340
Total information technology 615,585 615,585 555,408 60,177
Total general government 3,897,533 3,897,533 3,814,226 83,307
Public safety:
Police protection:
Current:
Personal services 6,843,536 6,843,536 6,786,359 57,177
Supplies 137,900 137,900 160,844 (22,944)
Services and other charges 1,188,497 1,188,497 1,185,085 3,412
Total current 8,169,933 8,169,933 8,132,288 37,645
Capital outlay 12,500 12,500 8,574 3,926
Total police protection 8,182,433 8,182,433 8,140,862 41,571
Fire protection:
Current:
Personal services 980,276 980,276 945,303 34,973
Supplies 66,540 66,540 58,163 8,377
Services and other charges 372,853 372,853 391,317 (18,464)
Total fire protection 1,419,669 1,419,669 1,394,783 24,886
Protective inspection:
Current:
Personal services 1,029,041 1,029,041 876,315 152,726
Supplies 13,500 13,500 11,390 2,110
Services and other charges 262,101 262,101 261,180 921
Total protective inspection 1,304,642 1,304,642 1,148,885 155,757
Emergency preparedness:
Current:
Personal services - - 278 (278)
Supplies 5,000 5,000 - 5,000
Services and other charges 6,790 6,790 2,600 4,190
Total emergency preparedness 11,790 11,790 2,878 8,912
Total public safety 10,918,534 10,918,534 10,687,408 231,126
108
CITY OF BROOKLYN CENTER, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND Page 4 of 5
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Variance with
Final Budget -
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
Expenditures (continued):
Public works:
Engineering department:
Current:
Personal services 810,550$ 810,550$ 702,532$ 108,018$
Supplies 17,520 17,520 12,031 5,489
Services and other charges 67,329 67,329 85,897 (18,568)
Total current 895,399 895,399 800,460 94,939
Capital outlay 7,500 7,500 - 7,500
Total engineering department 902,899 902,899 800,460 102,439
Street department:
Current:
Personal services 854,452 854,452 864,806 (10,354)
Supplies 129,440 129,440 109,307 20,133
Services and other charges 745,629 745,629 655,807 89,822
Total street department 1,729,521 1,729,521 1,629,920 99,601
Total public works 2,632,420 2,632,420 2,430,380 202,040
Community services:
Social services:
Current:
Services and other charges 180,000 180,000 143,103 36,897
Parks and recreation:
Administration:
Current:
Personal services 224,393 224,393 228,903 (4,510)
Services and other charges 5,800 5,800 3,454 2,346
Total administration 230,193 230,193 232,357 (2,164)
Recreation programs:
Current:
Personal services 555,236 555,236 562,512 (7,276)
Supplies 47,635 47,635 37,273 10,362
Services and other charges 236,508 236,508 226,516 9,992
Total recreation programs 839,379 839,379 826,301 13,078
Community center:
Current:
Personal services 327,140 327,140 319,412 7,728
Supplies 42,700 42,700 34,194 8,506
Services and other charges 190,050 190,050 152,456 37,594
Total current 559,890 559,890 506,062 53,828
Capital outlay 39,500 39,500 24,994 14,506
Total community center 599,390 599,390 531,056 68,334
109
CITY OF BROOKLYN CENTER, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND Page 5 of 5
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Variance with
Final Budget -
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
Expenditures (continued):
Parks and recreation (continued):
Park maintenance:
Current:
Personal services 669,437$ 669,437$ 664,854$ 4,583$
Supplies 58,915 58,915 51,386 7,529
Services and other charges 426,039 426,039 397,521 28,518
Total park maintenance 1,154,391 1,154,391 1,113,761 40,630
Total parks and recreation 2,823,353 2,823,353 2,703,475 119,878
Economic development:
Convention bureau:
Current:
Services and other charges 498,750 498,750 573,065 (74,315)
Nondepartmental:
Expenditures not charged to departments:
Current:
Personal services (230,000) (230,000) - (230,000)
Supplies 23,550 23,550 18,235 5,315
Services and other charges 559,354 559,354 487,351 72,003
Total current 352,904 352,904 505,586 (152,682)
Total expenditures 21,303,494 21,303,494 20,857,243 446,251
Excess (deficiency) of revenues
over (under) expenditures (1,005,484) (1,005,484) (318,854) 686,630
OTHER FINANCING SOURCES (USES)
Transfers in 150,000 150,000 150,000 -
Transfers in - administrative services reimbursed 1,040,484 1,040,484 983,704 (56,780)
Transfers out (185,000) (185,000) (900,544) (715,544)
Total other financing sources (uses) 1,005,484 1,005,484 233,160 (772,324)
Net change in fund balance - - (85,694) (85,694)
Fund balance - January 1 11,440,897 11,440,897 11,440,897 -
Fund balance - December 31 11,440,897$ 11,440,897$ 11,355,203$ (85,694)$
110
CITY OF BROOKLYN CENTER, MINNESOTA
SPECIAL REVENUE FUND - HOUSING AND REDEVELOPMENT AUTHORITY
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Actual
Original Final Amounts
REVENUES
Taxes:
Property taxes 329,079$ 329,079$ 326,307$
OTHER FINANCING SOURCES (USES)
Transfers out (329,079) (329,079) (326,770)
Net change in fund balance - - (463)
Fund balance - January 1 1,698 1,698 1,698
Fund balance - December 31 1,698$ 1,698$ 1,235$
Budgeted Amounts
111
CITY OF BROOKLYN CENTER, MINNESOTA
SPECIAL REVENUE FUND - ECONOMIC DEVELOPMENT AUTHORITY
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Actual
Original Final Amounts
REVENUES
Intergovernmental -$ -$ 25,958$
Investment earnings (net of market value adjustment) 6,500 6,500 12,473
Miscellaneous - - 4,634
Total revenues 6,500 6,500 43,065
EXPENDITURES
Current:
Economic development:
Personal services 294,224 294,224 326,538
Supplies 2,100 2,100 2,226
Services and other charges 170,935 170,935 77,494
Total expenditures 467,259 467,259 406,258
Excess (deficiency) of revenues
over (under) expenditures (460,759) (460,759) (363,193)
OTHER FINANCING SOURCES
Transfers in 478,853 478,853 326,770
Net change in fund balance 18,094 18,094 (36,423)
Fund balance - January 1 1,404,662 1,404,662 1,404,662
Fund balance - December 31 1,422,756$ 1,422,756$ 1,368,239$
Budgeted Amounts
112
CITY OF BROOKLYN CENTER, MINNESOTA
SPECIAL REVENUE FUND - COMMUNITY DEVELOPMENT BLOCK GRANT
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Budgeted Amounts Actual
Original Final Amounts
REVENUES
Intergovernmental 150,000$ 150,000$ 172,517$
EXPENDITURES
Current:
Economic development:
Services and other charges - - 30,017
Excess of revenues
over expenditures 150,000 150,000 142,500
OTHER FINANCING SOURCES (USES)
Transfers out (150,000) (150,000) (150,000)
Net change in fund balance - - (7,500)
Fund balance - January 1 79,875 79,875 79,875
Fund balance - December 31 79,875$ 79,875$ 72,375$
113
CITY OF BROOKLYN CENTER, MINNESOTA
SPECIAL REVENUE FUND - POLICE FORFEITURES
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Budgeted Amounts Actual
Original Final Amounts
REVENUES
Fines and forfeitures 40,000$ 40,000$ 51,269$
Investment earnings (net of market value adjustment) 709 709 886
Total revenues 40,709 40,709 52,155
EXPENDITURES
Current:
Public safety:
Supplies 35,000 35,000 50,838
Services and other charges 2,100 2,100 25,816
Total expenditures 37,100 37,100 76,654
Net change in fund balance 3,609 3,609 (24,499)
Fund balance - January 1 68,812 68,812 68,812
Fund balance - December 31 72,421$ 72,421$ 44,313$
114
CITY OF BROOKLYN CENTER, MINNESOTA
SPECIAL REVENUE FUND - TAX INCREMENT DISTRICT NO. 2
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Budgeted Amounts Actual
Original Final Amounts
REVENUES
Investment earnings (net of market value adjustment)568$ 568$ 16,212$
Miscellaneous 11,962 11,962 19,990
Total revenues 12,530 12,530 36,202
EXPENDITURES
Current:
Economic development:
Services and other charges 20,000 20,000 -
Capital outlay:
Economic development - - 79,064
Total expenditures 20,000 20,000 79,064
Net change in fund balance (7,470) (7,470) (42,862)
Fund balance - January 1 2,549,533 2,549,533 2,549,533
Fund balance - December 31 2,542,063$ 2,542,063$ 2,506,671$
115
CITY OF BROOKLYN CENTER, MINNESOTA
SPECIAL REVENUE FUND - TAX INCREMENT DISTRICT NO. 3
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Budgeted Amounts Actual
Original Final Amounts
REVENUES
Tax increments 3,177,598$ 3,177,598$ 3,922,749$
Charges for services 84,378 84,378 109,376
Investment earnings (net of market value adjustment) 9,858 9,858 9,334
Miscellaneous 35,000 35,000 180,005
Total revenues 3,306,834 3,306,834 4,221,464
EXPENDITURES
Current:
Economic development:
Services and other charges 472,834 472,834 430,214
Capital outlay:
Economic development 150,000 150,000 767,909
Total expenditures 622,834 622,834 1,198,123
Excess of revenues over expenditures 2,684,000 2,684,000 3,023,341
OTHER FINANCING SOURCES (USES)
Transfers out (2,164,213) (2,164,213) (2,314,977)
Net change in fund balance 519,787 519,787 708,364
Fund balance - January 1 17,276,234 17,276,234 17,276,234
Fund balance - December 31 17,796,021$ 17,796,021$ 17,984,598$
116
CITY OF BROOKLYN CENTER, MINNESOTA
SPECIAL REVENUE FUND - TAX INCREMENT DISTRICT NO. 4
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Budgeted Amounts Actual
Original Final Amounts
REVENUES
Tax increments 437,808$ 437,808$ 324,330$
Investment earnings (net of market value adjustment) 317 317 -
Total revenues 438,125 438,125 324,330
EXPENDITURES
Current:
Economic development:
Services and other charges 252,713 252,713 84,096
Excess of revenues over expenditures 185,412 185,412 240,234
OTHER FINANCING SOURCES (USES)
Transfers out (10,000) (10,000) -
Net change in fund balance 175,412 175,412 240,234
Fund balance (deficit) - January 1 (1,530,194) (1,530,194) (1,530,194)
Fund balance (deficit) - December 31 (1,354,782)$ (1,354,782)$ (1,289,960)$
117
CITY OF BROOKLYN CENTER, MINNESOTA
SPECIAL REVENUE FUND - TAX INCREMENT DISTRICT NO. 5
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Budgeted Amounts Actual
Original Final Amounts
REVENUES
Tax increments 498,810$ 498,810$ 577,580$
Investment earnings (net of market value adjustment) 15 15 3,883
Total revenues 498,825 498,825 581,463
EXPENDITURES
Current:
Economic development:
Services and other charges 449,019 449,019 240,548
Excess of revenues over expenditures 49,806 49,806 340,915
OTHER FINANCING SOURCES (USES)
Transfers out (49,881) (49,881) (56,513)
Net change in fund balance (75) (75) 284,402
Fund balance (deficit) - January 1 (202,858) (202,858) (202,858)
Fund balance (deficit) - December 31 (202,933)$ (202,933)$ 81,544$
118
CITY OF BROOKLYN CENTER, MINNESOTA
SPECIAL REVENUE FUND - CITY INITIATIVES GRANT
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Budgeted Amounts Actual
Original Final Amounts
REVENUES
Intergovernmental 215,437$ 215,437$ 256,487$
Charges for services 10,650 10,650 14,001
Investment earnings (net of market value adjustment) 2,771 2,771 989
Miscellaneous 35,865 35,865 67,965
Total revenues 264,723 264,723 339,442
EXPENDITURES
Current:
Public safety:
Personal services 167,737 167,737 160,434
Supplies 4,000 4,000 27,658
Services and other charges 7,700 7,700 20,452
Parks and recreation:
Personal services 14,106 14,106 9,049
Supplies 20,400 20,400 25,242
Services and other charges 23,000 23,000 25,646
Capital outlay:
Parks and recreation - - 275,269
Total expenditures 236,943 236,943 543,750
Net change in fund balance 27,780 27,780 (204,308)
Fund balance - January 1 316,695 316,695 316,695
Fund balance - December 31 344,475$ 344,475$ 112,387$
119
CITY OF BROOKLYN CENTER, MINNESOTA
DEBT SERVICE FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Budgeted Amounts Actual
Original Final Amounts
REVENUES
Property taxes 849,967$ 849,967$ 842,093$
Special assessments 570,458 570,458 1,040,491
Investment earnings (net of market value adjustment) 14,493 14,493 6,412
Total revenues 1,434,918 1,434,918 1,888,996
EXPENDITURES
Debt service:
Principal 3,112,497 3,112,497 3,502,497
Interest 571,517 571,517 625,032
Fiscal agent fees 12,000 12,000 10,625
Total expenditures 3,696,014 3,696,014 4,138,154
Excess (defiency) of revenues
over (under) expenditures (2,261,096) (2,261,096) (2,249,158)
OTHER FINANCING SOURCES (USES)
Transfers in 2,314,976 2,314,976 2,371,490
Transfers out - - (161,576)
Total other financing sources (uses) 2,314,976 2,314,976 2,209,914
Net change in fund balance 53,880 53,880 (39,244)
Fund balance - January 1 1,876,481 1,876,481 1,876,481
Fund balance - December 31 1,930,361$ 1,930,361$ 1,837,237$
120
CITY OF BROOKLYN CENTER, MINNESOTA
CAPITAL PROJECT FUND - CAPITAL IMPROVEMENTS
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Actual
Original Final Amounts
REVENUES
Property taxes -$ -$ 311$
Intergovernmental 2,698,279 2,698,279 1,005,474
Investment earnings (net of market value adjustment) 24,298 24,298 32,494
Total revenues 2,722,577 2,722,577 1,038,279
EXPENDITURES
Current:
General government - - 30,181
Capital outlay:
General government - - 564,735
Public safety - - 588,213
Public works - - 2,355,381
Parks and recreation 4,335,000 4,335,000 476,984
Total expenditures 4,335,000 4,335,000 4,015,494
Excess (deficiency) of revenues
over (under) expenditures (1,612,423) (1,612,423) (2,977,215)
OTHER FINANCING SOURCES
Transfers in 500,000 500,000 828,442
Net change in fund balance (1,112,423) (1,112,423) (2,148,773)
Fund balance - January 1 5,185,641 5,185,641 5,185,641
Fund balance - December 31 4,073,218$ 4,073,218$ 3,036,868$
Budgeted Amounts
121
CITY OF BROOKLYN CENTER, MINNESOTA
CAPITAL PROJECT FUND - MUNICIPAL STATE AID FOR CONSTRUCTION
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Actual
Original Final Amounts
REVENUES
Intergovernmental 1,045,713$ 1,045,713$ 926,301$
EXPENDITURES
Current:
Public works:
Supplies 70,000 70,000 41,106
Services and other charges 90,000 90,000 56,152
Capital outlay:
Public works 2,035,000 2,035,000 1,310,252
Total expenditures 2,195,000 2,195,000 1,407,510
Net change in fund balance (1,149,287) (1,149,287) (481,209)
Fund balance - January 1 99,814 99,814 99,814
Fund balance (deficit) - December 31 (1,049,473)$ (1,049,473)$ (381,395)$
Budgeted Amounts
122
CITY OF BROOKLYN CENTER, MINNESOTA
CAPITAL PROJECT FUND - SPECIAL ASSESSMENT CONSTRUCTION
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Actual
Original Final Amounts
REVENUES
Charges for services -$ -$ 1,200$
Special assessments 887,722 887,722 616,893
Investment earnings (net of market value adjustment) - - 525
Miscellaneous - - 3,738
Total revenues 887,722 887,722 622,356
EXPENDITURES
Current:
Public works
Services and other charges 2,800 2,800 33,762
Capital outlay:
Public works 1,860,000 1,860,000 1,552,084
Debt service:
Bond issuance costs - - 16,467
Total expenditures 1,862,800 1,862,800 1,602,313
Excess (deficiency) of revenues
over (under) expenditures (975,078) (975,078) (979,957)
OTHER FINANCING SOURCES
Transfers in - - 161,576
Issuance of debt 1,470,000 1,470,000 1,367,836
Premium on issuance of debt - - 68,301
Total other financing sources 1,470,000 1,470,000 1,597,713
Net change in fund balance 494,922 494,922 617,756
Fund balance (deficit) - January 1 (50,219) (50,219) (50,219)
Fund balance - December 31 444,703$ 444,703$ 567,537$
Budgeted Amounts
123
CITY OF BROOKLYN CENTER, MINNESOTA
CAPITAL PROJECT FUND - CAPITAL RESERVE EMERGENCY
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Actual
Original Final Amounts
REVENUES
Investment earnings (net of market value adjustment) 7,294$ 7,294$ 9,878$
Net change in fund balance 7,294 7,294 9,878
Fund balance - January 1 1,084,057 1,084,057 1,084,057
Fund balance - December 31 1,091,351$ 1,091,351$ 1,093,935$
Budgeted Amounts
124
CITY OF BROOKLYN CENTER, MINNESOTA
CAPITAL PROJECT FUND - STREET RECONSTRUCTION
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Actual
Original Final Amounts
REVENUES
Franchise fees 689,000$ 689,000$ 702,600$
Investment earnings (net of market value adjustment) 30,627 30,627 47,700
Total revenues 719,627 719,627 750,300
EXPENDITURES
Capital outlay:
Public works 3,175,000 3,175,000 2,165,370
Debt service:
Bond issuance costs - - 24,563
Total expenditures 3,175,000 3,175,000 2,189,933
Excess (deficiency) of revenues
over (under) expenditures (2,455,373) (2,455,373) (1,439,633)
OTHER FINANCING SOURCES
Issuance of debt 2,800,000 2,800,000 2,367,164
Premium on issuance of debt - - 118,201
Total other financing sources 2,800,000 2,800,000 2,485,365
Net change in fund balance 344,627 344,627 1,045,732
Fund balance - January 1 4,016,361 4,016,361 4,016,361
Fund balance - December 31 4,360,988$ 4,360,988$ 5,062,093$
Budgeted Amounts
125
CITY OF BROOKLYN CENTER, MINNESOTA
CAPITAL PROJECT FUND - TECHNOLOGY
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Actual
Original Final Amounts
REVENUES
Investment earnings (net of market value adjustment) 1,349$ 1,349$ 2,063$
EXPENDITURES
Current:
General government:
Supplies 53,600 53,600 -
Services and other charges 62,500 62,500 -
Capital outlay:
General government 22,000 22,000 19,465
Total expenditures 138,100 138,100 19,465
Excess (deficiency) of revenues
over (under) expenditures (136,751) (136,751) (17,402)
OTHER FINANCING SOURCES
Transfers in 140,000 140,000 140,000
Net change in fund balance 3,249 3,249 122,598
Fund balance - January 1 250,241 250,241 250,241
Fund balance - December 31 253,490$ 253,490$ 372,839$
Budgeted Amounts
126
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127
CITY OF BROOKLYN CENTER, MINNESOTA
COMBINING BALANCE SHEET
DEBT SERVICE FUND BY ACCOUNT
December 31, 2017
General General General General
Obligation Obligation Obligation Obligation
Improvement Improvement Improvement Improvement
Bonds Bonds Bonds Bonds
2006A 2008B 2013B 2015A
ASSETS
Cash and investments -$ -$ 790,650$ 471,557$
Receivables:
Current taxes - - 1,800 1,131
Delinquent taxes - - 8,001 -
Special assessments - - 786,166 869,042
Total assets - - 1,586,617 1,341,730
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - property taxes - - 8,001 -
Unavailable revenue - special assessments - - 784,308 868,265
Total deferred inflows of resources - - 792,309 868,265
FUND BALANCES
Restricted for debt service - - 794,308 473,465
Total deferred inflows of
resources and fund balances -$ -$ 1,586,617$ 1,341,730$
128
General General Tax
Obligation Obligation Tax Tax Increment Tax Tax
Improvement Improvement Increment Increment Refunding Increment Increment Total
Bonds Bonds Bonds Bonds Bonds Bonds Bonds Debt
2016A 2017A 2016C 2016B 2015B 2013A 2008A Service
179,676$ 379,459$ 1,500$ 1,500$ 2,100$ 2,151$ 2,101$ 1,830,694$
977 - - - - - - 3,908
- - - - - - - 8,001
- 1,039,733 - - - - - 2,694,941
180,653 1,419,192 1,500 1,500 2,100 2,151 2,101 4,537,544
- - - - - - - 8,001
- 1,039,733 - - - - - 2,692,306
- 1,039,733 - - - - - 2,700,307
180,653 379,459 1,500 1,500 2,100 2,151 2,101 1,837,237
180,653$ 1,419,192$ 1,500$ 1,500$ 2,100$ 2,151$ 2,101$ 4,537,544$
129
CITY OF BROOKLYN CENTER, MINNESOTA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES
DEBT SERVICE FUND BY ACCOUNT
For the Year Ended December 31, 2017
General General General General
Obligation Obligation Obligation Obligation
Improvement Improvement Improvement Improvement
Bonds Bonds Bonds Bonds
2006A 2008B 2013B 2015A
REVENUES
Property taxes -$ -$ 388,364$ 243,507$
Special assessments 310 183,445 269,398 208,441
Investment earnings (net of market value adjustment) 911 1,658 2,309 972
Total revenues 1,221 185,103 660,071 452,920
EXPENDITURES
Debt service:
Principal 65,000 625,000 520,000 332,497
Interest 1,236 21,044 100,200 69,444
Fiscal agent fees 3,100 2,311 2,220 1,220
Total expenditures 69,336 648,355 622,420 403,161
Excess (deficiency) of revenues
over (under) expenditures (68,115) (463,252) 37,651 49,759
OTHER FINANCING SOURCES (USES)
Transfers in - - - -
Transfers out (98,565) (63,011) - -
Total other financing sources (uses) (98,565) (63,011) - -
Net change in fund balances (166,680) (526,263) 37,651 49,759
Fund balances - January 1 166,680 526,263 756,657 423,706
Fund balances - December 31 -$ -$ 794,308$ 473,465$
130
General General Tax
Obligation Obligation Tax Tax Increment Tax Tax
Improvement Improvement Increment Increment Refunding Increment Increment Total
Bonds Bonds Bonds Bonds Bonds Bonds Bonds Debt
2016A 2017A 2016C 2016B 2015B 2013A 2008A Service
210,222$ -$ -$ -$ -$ -$ -$ 842,093$
- 378,897 - - - - - 1,040,491
- 562 - - - - - 6,412
210,222 379,459 - - - - - 1,888,996
- - - - 1,570,000 265,000 125,000 3,502,497
29,120 - 23,208 30,306 174,450 166,087 9,937 625,032
449 - - - 450 425 450 10,625
29,569 - 23,208 30,306 1,744,900 431,512 135,387 4,138,154
180,653 379,459 (23,208) (30,306) (1,744,900) (431,512) (135,387) (2,249,158)
- - 24,708 31,806 1,745,950 432,588 136,438 2,371,490
- - - - - - - (161,576)
- - 24,708 31,806 1,745,950 432,588 136,438 2,209,914
180,653 379,459 1,500 1,500 1,050 1,076 1,051 (39,244)
- - - - 1,050 1,075 1,050 1,876,481
180,653$ 379,459$ 1,500$ 1,500$ 2,100$ 2,151$ 2,101$ 1,837,237$
131
CITY OF BROOKLYN CENTER, MINNESOTA
DEBT SERVICE FUND - G.O. IMPROVEMENT BONDS, 2006A
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Actual
Original Final Amounts
REVENUES
Special assessments -$ -$ 310$
Investment earnings (net of market value adjustment) 1,308 1,308 911
Total revenues 1,308 1,308 1,221
EXPENDITURES
Debt service:
Principal 65,000 65,000 65,000
Interest 1,235 1,235 1,236
Fiscal agent fees 1,500 1,500 3,100
Total expenditures 67,735 67,735 69,336
Excess (deficiency) of revenues
over (under) expenditures (66,427) (66,427) (68,115)
OTHER FINANCING USES
Transfers out - - (98,565)
Net change in fund balance (66,427) (66,427) (166,680)
Fund balance - January 1 166,680 166,680 166,680
Fund balance - December 31 100,253$ 100,253$ -$
Budgeted Amounts
132
CITY OF BROOKLYN CENTER, MINNESOTA
DEBT SERVICE FUND - G.O. IMPROVEMENT BONDS, 2008B
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Actual
Original Final Amounts
REVENUES
Special assessments 168,487$ 168,487$ 183,445$
Investment earnings (net of market value adjustment) 4,681 4,681 1,658
Total revenues 173,168 173,168 185,103
EXPENDITURES
Debt service:
Principal 235,000 235,000 625,000
Interest 21,045 21,045 21,044
Fiscal agent fees 1,500 1,500 2,311
Total expenditures 257,545 257,545 648,355
Excess (deficiency) of revenues
over (under) expenditures (84,377) (84,377) (463,252)
OTHER FINANCING USES
Transfers out - - (63,011)
Net change in fund balance (84,377) (84,377) (526,263)
Fund balance - January 1 526,263 526,263 526,263
Fund balance - December 31 441,886$ 441,886$ -$
Budgeted Amounts
133
CITY OF BROOKLYN CENTER, MINNESOTA
DEBT SERVICE FUND - G.O. IMPROVEMENT BONDS, 2013B
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Actual
Original Final Amounts
REVENUES
Property taxes 391,461$ 391,461$ 388,364$
Special assessments 239,614 239,614 269,398
Investment earnings (net of market value adjustment) 5,571 5,571 2,309
Total revenues 636,646 636,646 660,071
EXPENDITURES
Debt service:
Principal 520,000 520,000 520,000
Interest 100,200 100,200 100,200
Fiscal agent fees 1,500 1,500 2,220
Total expenditures 621,700 621,700 622,420
Net change in fund balance 14,946 14,946 37,651
Fund balance - January 1 756,657 756,657 756,657
Fund balance - December 31 771,603$ 771,603$ 794,308$
Budgeted Amounts
134
CITY OF BROOKLYN CENTER, MINNESOTA
DEBT SERVICE FUND - G.O. IMPROVEMENT BONDS, 2015A
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Actual
Original Final Amounts
REVENUES
Property taxes 246,070$ 246,070$ 243,507$
Special assessments 162,357 162,357 208,441
Investment earnings (net of market value adjustment) 2,933 2,933 972
Total revenues 411,360 411,360 452,920
EXPENDITURES
Debt service:
Principal 332,497 332,497 332,497
Interest 69,441 69,441 69,444
Fiscal agent fees 1,500 1,500 1,220
Total expenditures 403,438 403,438 403,161
Net change in fund balance 7,922 7,922 49,759
Fund balance - January 1 423,706 423,706 423,706
Fund balance - December 31 431,628$ 431,628$ 473,465$
Budgeted Amounts
135
CITY OF BROOKLYN CENTER, MINNESOTA
DEBT SERVICE FUND - G.O. IMPROVEMENT BONDS, 2016A
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Actual
Original Final Amounts
REVENUES
Property taxes 212,436$ 212,436$ 210,222$
EXPENDITURES
Debt service:
Interest 29,120 29,120 29,120
Fiscal agent fees 1,500 1,500 449
Total expenditures 30,620 30,620 29,569
Net change in fund balance 181,816 181,816 180,653
Fund balance - January 1 - - -
Fund balance - December 31 181,816$ 181,816$ 180,653$
Budgeted Amounts
136
CITY OF BROOKLYN CENTER, MINNESOTA
DEBT SERVICE FUND - G.O. IMPROVEMENT BONDS, 2017A
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Actual
Original Final Amounts
REVENUES
Special assessments -$ -$ 378,897$
Investment earnings (net of market value adjustment) - - 562
Total revenues - - 379,459
Net change in fund balance - - 379,459
Fund balance - January 1 - - -
Fund balance - December 31 -$ -$ 379,459$
Budgeted Amounts
137
CITY OF BROOKLYN CENTER, MINNESOTA
DEBT SERVICE FUND - G.O. TAX INCREMENT BONDS, 2016C
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Actual
Original Final Amounts
EXPENDITURES
Debt service:
Interest -$ -$ 23,208$
Excess (deficiency) of revenues
over (under) expenditures - - (23,208)
OTHER FINANCING SOURCES
Transfers in - - 24,708
Net change in fund balance - - 1,500
Fund balance - January 1 - - -
Fund balance - December 31 -$ -$ 1,500$
Budgeted Amounts
138
CITY OF BROOKLYN CENTER, MINNESOTA
DEBT SERVICE FUND - G.O. TAX INCREMENT BONDS, 2016B
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Actual
Original Final Amounts
EXPENDITURES
Debt service:
Interest -$ -$ 30,306$
Excess (deficiency) of revenues
over (under) expenditures - - (30,306)
OTHER FINANCING SOURCES
Transfers in - - 31,806
Net change in fund balance - - 1,500
Fund balance - January 1 - - -
Fund balance - December 31 -$ -$ 1,500$
Budgeted Amounts
139
CITY OF BROOKLYN CENTER, MINNESOTA
DEBT SERVICE FUND - G.O. TAX INCREMENT REFUNDING BONDS, 2015B
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Actual
Original Final Amounts
EXPENDITURES
Debt service:
Principal 1,570,000$ 1,570,000$ 1,570,000$
Interest 174,450 174,450 174,450
Fiscal agent fees 1,500 1,500 450
Total expenditures 1,745,950 1,745,950 1,744,900
Excess (deficiency) of revenues
over (under) expenditures (1,745,950) (1,745,950) (1,744,900)
OTHER FINANCING SOURCES
Transfers in 1,745,950 1,745,950 1,745,950
Net change in fund balance - - 1,050
Fund balance - January 1 1,050 1,050 1,050
Fund balance - December 31 1,050$ 1,050$ 2,100$
Budgeted Amounts
140
CITY OF BROOKLYN CENTER, MINNESOTA
DEBT SERVICE FUND - G.O. TAX INCREMENT BONDS, 2013A
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Actual
Original Final Amounts
EXPENDITURES
Debt service:
Principal 265,000$ 265,000$ 265,000$
Interest 166,088 166,088 166,087
Fiscal agent fees 1,500 1,500 425
Total expenditures 432,588 432,588 431,512
Excess (deficiency) of revenues
over (under) expenditures (432,588) (432,588) (431,512)
OTHER FINANCING SOURCES
Transfers in 432,588 432,588 432,588
Net change in fund balance - - 1,076
Fund balance - January 1 1,075 1,075 1,075
Fund balance - December 31 1,075$ 1,075$ 2,151$
Budgeted Amounts
141
CITY OF BROOKLYN CENTER, MINNESOTA
DEBT SERVICE FUND - G.O. TAX INCREMENT BONDS, 2008A
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2017
Actual
Original Final Amounts
EXPENDITURES
Debt service:
Principal 125,000$ 125,000$ 125,000$
Interest 9,938 9,938 9,937
Fiscal agent fees 1,500 1,500 450
Total expenditures 136,438 136,438 135,387
Excess (deficiency) of revenues
over (under) expenditures (136,438) (136,438) (135,387)
OTHER FINANCING SOURCES
Transfers in 136,438 136,438 136,438
Net change in fund balance - - 1,051
Fund balance - January 1 1,050 1,050 1,050
Fund balance - December 31 1,050$ 1,050$ 2,101$
Budgeted Amounts
142
CITY OF BROOKLYN CENTER, MINNESOTA
INTERNAL SERVICE FUNDS
Internal service funds are used to account for and report financial resources for the purchase of goods or services
provided by one department to other departments of the City on a cost reimbursement basis.
Central Garage
This fund was established to account for the acquisition and maintenance of all City vehicles and rolling stock
equipment. Vehicle and equipment maintenance and repair costs are charged to the departments as incurred.
Replacement costs are charged to the departments over the estimated useful life of the vehicles and equipment.
Employees (EE) Retirement Benefits
This fund accounts for certain health care insurance benefits for City employees who retire before age 65.
Substantially all of the City's full-time police and fire employees and all other full-time employeers hired
before July 1, 1989 may be eligible for those benefits from the time they qualify for an unreduced PERA
pension, until they reach age 65 or become eligible for Medicare. In the event that future costs would exceed
earnings, other funds would be charged for the costs associated with their employees.
Employees (EE) Compensated Absences
This fund accounts for payment of unused vacation and vested sick leave benefits, and the allocation of such
costs to the respective departments and funds of the City.
Pension - GERF
This fund was established to account for the net pension liability and related expense recorded with the adoption
of GASB Statement No. 68 related to the PERA Coordinated plan, and the allocation of such costs to the
respective departments and funds of the City.
Pension - PEPFF
This fund was established to account for the net pension liability and related expense recorded with the adoption
of GASB Statement No. 68 related to the PERA Police and Fire plan, and the allocation of such costs to the
repsective departments and funds of the City.
143
CITY OF BROOKLYN CENTER, MINNESOTA
COMBINING STATEMENT OF NET POSITION
INTERNAL SERVICE FUNDS
December 31, 2017
Central EE Retirement EE Comp
Garage Benefit Absences
ASSETS
Current assets:
Cash and cash equivalents 4,917,403$ 319,637$ 1,297,552$
Receivables:
Accounts - net 22,609 - -
Due from other governments 15,281 - -
Inventories 19,669 - -
Prepaid items 550 - -
Total current assets 4,975,512 319,637 1,297,552
Noncurrent assets:
Capital assets:
Land improvements 166,108 - -
Machinery and equipment 9,544,654 - -
Total capital assets 9,710,762 - -
Less: accumulated depreciation (6,264,834) - -
Net capital assets 3,445,928 - -
Total noncurrent assets 3,445,928 - -
Total assets 8,421,440 319,637 1,297,552
DEFERRED OUTFLOWS OF RESOURCES
Deferred pension resources - - -
LIABILITIES
Current liabilities:
Accounts payable 74,072 - -
Accrued salaries and wages 6,573 2,402 -
Due to other governments 57 - -
Compensated absences payable - - 129,755
Total current liabilities 80,702 2,402 129,755
Noncurrent liabilities:
Compensated absences payable - - 1,167,797
Net OPEB obligation - 793,213 -
Net pension liability - - -
Total noncurrent liabilities - 793,213 1,167,797
Total liabilities 80,702 795,615 1,297,552
DEFERRED INFLOWS OF RESOURCES
Deferred pension resources - - -
NET POSITION
Net investment in capital assets 3,445,928 - -
Unrestricted 4,894,810 (475,978) -
Total net position 8,340,738$ (475,978)$ -$
144
Total
Pension - Pension - Internal
GERF PEPFF Service
-$ -$ 6,534,592$
- - 22,609
- - 15,281
- - 19,669
- - 550
- - 6,592,701
- - 166,108
- - 9,544,654
- - 9,710,762
- - (6,264,834)
- - 3,445,928
- - 3,445,928
- - 10,038,629
1,992,739 8,567,606 10,560,345
- - 74,072
- - 8,975
- - 57
- - 129,755
- - 212,859
- - 1,167,797
- - 793,213
7,667,105 5,954,026 13,621,131
7,667,105 5,954,026 15,582,141
7,667,105 5,954,026 15,795,000
1,611,583 10,149,231 11,760,814
- - 3,445,928
(7,285,949) (7,535,651) (10,402,768)
(7,285,949)$ (7,535,651)$ (6,956,840)$
145
CITY OF BROOKLYN CENTER, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENSES,
AND CHANGES IN NET POSITION
INTERNAL SERVICE FUNDS
For the Year Ended December 31, 2017
Central EE Retirement EE Comp
Garage Benefit Absences
OPERATING REVENUES
Sales and user fees 1,733,951$ -$ 147,915$
OPERATING EXPENSES
Personal services 411,697 191,815 159,177
Supplies 417,133 - -
Other services 183,580 - -
Insurance 45,481 - -
Utilities 374 - -
Depreciation 806,062 - -
Total operating expenses 1,864,327 191,815 159,177
Operating income (loss)(130,376) (191,815) (11,262)
NONOPERATING REVENUES (EXPENSES)
Intergovernmental 61,159 7,058 -
Investment earnings (net of market value adjustment)42,452 3,449 11,262
Gain on sale of capital assets 88,326 - -
Loss on sale of capital assets (3,737) - -
Other revenue 34,779 - -
Total nonoperating revenues 222,979 10,507 11,262
Change in net position 92,603 (181,308) -
Net position - January 1 8,248,135 (294,670) -
Net position - December 31 8,340,738$ (475,978)$ -$
146
Total
Pension - Pension - Internal
GERF PEPFF Service
588,300$ 720,867$ 3,191,033$
946,956 1,477,799 3,187,444
- - 417,133
- - 183,580
- - 45,481
- - 374
- - 806,062
946,956 1,477,799 4,640,074
(358,656) (756,932) (1,449,041)
2,784 39,690 110,691
- - 57,163
- - 88,326
- - (3,737)
- - 34,779
2,784 39,690 287,222
(355,872) (717,242) (1,161,819)
(6,930,077) (6,818,409) (5,795,021)
(7,285,949)$ (7,535,651)$ (6,956,840)$
147
CITY OF BROOKLYN CENTER, MINNESOTA
COMBINING STATEMENT OF CASH FLOWS
INTERNAL SERVICE FUNDS
For the Year Ended December 31, 2017
Central EE Retirement EE Comp
Garage Benefit Absences
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from interfund services provided 1,716,874$ -$ 147,915$
Other operating receipts 34,779 - -
Payments to suppliers (630,710) - -
Payments to employees (410,866) (117,665) (97,550)
Net cash flows provided (used) by
operating activities 710,077 (117,665) 50,365
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Intergovernmental - 7,058 -
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition and construction of capital assets (494,957) - -
Intergovernmental 61,159 - -
Proceeds from sale of assets 79,243 - -
Net cash flows provided (used) by capital
and related financing activities (354,555) - -
CASH FLOWS FROM INVESTING ACTIVITIES
Interest on investments 42,452 3,449 11,262
Net increase (decrease) in cash and cash equivalents 397,974 (107,158) 61,627
Cash and cash equivalents - January 1 4,519,429 426,795 1,235,925
Cash and cash equivalents - December 31 4,917,403$ 319,637$ 1,297,552$
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES
Operating income (loss) (130,376)$ (191,815)$ (11,262)$
Adjustments to reconcile operating income (loss)
to net cash flows provided (used) by operating activities:
Other income related to operations 34,779 - -
Depreciation 806,062 - -
(Increase) decrease in assets:
Accounts receivable (17,077) 3,336 -
Inventories (243) - -
(Increase) decrease in deferred outflows of resources:
Deferred pension resources - - -
Increase (decrease) in liabilities:
Accounts payable 16,101 - -
Net pension liability - - -
Accrued salaries and wages 831 70,814 61,627
(Increase) decrease in deferred inflows of resources:
Deferred pension resources - - -
Net cash provided (used) by operating activities 710,077$ (117,665)$ 50,365$
NONCASH FINANCING ACTIVITIES
Acquisitions of capital assets on account 47,442$ -$ -$
Capital asset trade-ins 5,346$ -$ -$
Grants deposited with pension plan -$ -$ -$
148
Total
Pension - Pension - Internal
GERF PEPFF Service
588,300$ 720,867$ 3,173,956$
- - 34,779
- - (630,710)
(588,300) (720,867) (1,935,248)
- - 642,777
- - 7,058
- - (494,957)
- - 61,159
- - 79,243
- - (354,555)
- - 57,163
- - 352,443
- - 6,182,149
-$ -$ 6,534,592$
(358,656)$ (756,932)$ (1,449,041)$
2,784 39,690 77,253
- - 806,062
- - (13,741)
- - (243)
1,997,536 3,991,588 5,989,124
- - 16,101
(1,848,955) (11,262,491) (13,111,446)
- - 133,272
207,291 7,988,145 8,195,436
-$ -$ 642,777$
-$ -$ 47,442$
-$ -$ 5,346$
2,784$ 39,690$ 42,474$
149
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150
Statistical Section
STATISTICAL SECTION
This part of the City of Brooklyn Center’s comprehensive annual financial report presents detailed
information as a context for understanding the financial statements, note disclosures, and supplementary
information. This section includes information for the primary government, including any blended
component units.
Contents Page
Financial Trends 152
These tables contain trend information to help the reader understand the
City’s financial performance by placing it in historical perspective.
Revenue Capacity 166
These tables contain information to help the reader assess the City’s most
significant “own-source” revenue, property taxes.
Debt Capacity 172
These tables present information to help the reader assess the affordability
of the government’s current levels of outstanding debt and the City’s ability
to issue debt in the future.
Demographic and Economic Information 179
These tables offer demographic and economic indicators to help the reader
understand the environment within which the City’s financial activities take
place.
Operating Information 181
These tables contain service and infrastructure data to help the reader
understand how the City’s financial report relates to the services the City
provides and the activities it performs.
Sources: unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial
reports for the relevant year.
151
CITY OF BROOKLYN CENTER, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
NET POSITION BY COMPONENT
Last ten fiscal years
(accrual basis of accounting)
2008 2009 2010 2011
Governmental activities
Net investment in capital assets 31,423,905$ 33,550,664$ 40,978,165$ 45,761,042$
Restricted 31,850,784 29,027,991 22,067,726 24,847,507
Unrestricted 690,424 4,082,990 6,985,972 4,376,334
Total governmental activities net position 63,965,113$ 66,661,645$ 70,031,863$ 74,984,883$
Business-type activities
Net investment in capital assets 42,572,360$ 42,297,110$ 42,800,624$ 45,051,128$
Unrestricted 10,466,919 8,835,644 8,673,168 8,300,659
Total business-type activities net position 53,039,279$ 51,132,754$ 51,473,792$ 53,351,787$
Primary government
Net investment in capital assets 73,996,265$ 75,847,774$ 83,778,789$ 90,812,170$
Restricted 31,850,784 29,027,991 22,067,726 24,847,507
Unrestricted 11,157,343 12,918,634 15,659,140 12,676,993
Total primary government net position 117,004,392$ 117,794,399$ 121,505,655$ 128,336,670$
Sources: The data for this table has been extracted from the respective years CAFR document.
Note: During 2011, the City implemented GASB Statement No. 54, Fund Balance and Governmental Fund Type
Definitions. As part of this implementation, certain reclassifications occurred for funds that were reported as Governmental
activities prior to 2011, that are now reported as business-type activities. Those balances prior to 2011 have not been
restated in this statistical schedule.
The City implemented GASB Statement No. 68 and GASB No. 71 in fiscal 2015. Years prior to 2015 have not been restated.
152
Table 1
2012 2013 2014 2015 2016 2017
45,261,629$ 42,281,203$ 42,947,577$ 47,941,800$ 48,358,875$ 53,152,985$
24,259,292 27,219,086 28,061,977 36,810,593 29,554,944 27,309,336
5,875,289 11,205,289 12,357,196 (5,495,836) 789,884 1,400,658
75,396,210$ 80,705,578$ 83,366,750$ 79,256,557$ 78,703,703$ 81,862,979$
42,406,210$ 42,466,488$ 48,537,132$ 47,201,239$ 43,483,294$ 43,553,672$
11,856,924 12,208,126 6,819,765 8,452,630 13,606,322 14,613,409
54,263,134$ 54,674,614$ 55,356,897$ 55,653,869$ 57,089,616$ 58,167,081$
87,667,839$ 84,747,691$ 91,484,709$ 95,143,039$ 91,842,169$ 96,706,657$
24,259,292 27,219,086 28,061,977 36,810,593 29,554,944 27,309,336
17,732,213 23,413,415 19,176,961 2,956,794 14,396,206 16,014,067
129,659,344$ 135,380,192$ 138,723,647$ 134,910,426$ 135,793,319$ 140,030,060$
153
CITY OF BROOKLYN CENTER, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
CHANGES IN NET POSITION - CONTINUED ON THE FOLLOWING PAGES
Last ten fiscal years
(accrual basis of accounting)
2008 2009 2010 2011
GOVERNMENTAL ACTIVITIES
Expenses
General government 3,498,767$ 3,653,956$ 3,553,737$ 3,216,321$
Public safety 8,760,880 9,036,176 9,125,547 9,268,897
Public works 2,596,754 2,687,980 2,747,641 2,771,602
Community services 72,893 71,519 82,645 100,849
Parks and recreation 2,910,825 2,773,528 2,732,401 2,895,769
Economic development 3,713,340 2,151,916 6,504,034 2,542,520
Interest on long-term debt 1,125,712 1,143,546 974,950 865,799
Total expenses 22,679,171 21,518,621 25,720,955 21,661,757
Program Revenues
Charges for services:
General government 1,115,038 1,102,360 1,081,998 1,078,109
Public safety 780,080 1,234,678 1,501,513 1,547,446
Public works 127,489 26,027 43,194 16,191
Parks and recreation 754,079 740,782 725,891 721,663
Economic development 24,435 445 5,525 88,737
Operating grants and contributions 1,003,884 1,034,905 2,013,099 1,637,743
Capital grants and contributions 2,706,056 1,566,224 6,627,777 5,299,705
Total program revenues 6,511,061 5,705,421 11,998,997 10,389,594
Net (expense) / revenue (16,168,110) (15,813,200) (13,721,958) (11,272,163)
General Revenues and Transfers
Taxes:
Property 12,458,724 12,899,250 12,949,069 13,336,056
Tax increments 2,912,773 3,616,157 3,127,373 2,525,057
Lodging taxes 619,962 591,291 696,746 852,302
Unrestricted grants and contributions 607,073 1,019,990 411,378 549,649
Investment earnings (net)903,939 309,715 33,885 191,510
Gain on disposal of capital asset 73,036 40,632 - 111,530
Transfers (1,693,225) 32,697 (126,275) (749,308)
Transfers - capital assets - - - -
Total general revenues and transfers 15,882,282 18,509,732 17,092,176 16,816,796
Restatements for: prior period adjustments
or change in accounting principle 3,670,679 - - -
Change in Net Position 3,384,851$ 2,696,532$ 3,370,218$ 5,544,633$
154
Table 2
Page 1 of 3
2012 2013 2014 2015 2016 2017
3,246,015$ 3,165,400$ 3,736,487$ 3,527,323$ 3,891,671$ 4,007,850$
9,604,521 9,618,906 10,186,645 10,707,602 13,222,625 12,438,818
3,561,914 4,215,855 3,688,238 3,867,406 4,099,559 4,542,244
141,505 149,203 145,503 135,604 136,349 143,103
2,796,561 2,752,539 2,977,707 3,053,328 3,183,198 2,995,396
5,438,372 3,833,915 3,234,623 5,419,304 6,825,271 1,917,039
768,241 490,162 887,190 723,000 654,205 540,799
25,557,129 24,225,980 24,856,393 27,433,567 32,012,878 26,585,249
1,082,741 798,088 651,188 653,535 563,744 530,459
1,402,204 786,828 722,697 548,669 656,642 683,172
270,680 5,879 157,889 226,645 79,987 46,359
897,592 650,522 598,173 564,217 635,597 608,590
19,734 90,656 477,088 225,057 417,332 296,103
3,165,588 3,089,220 1,746,637 2,605,477 2,323,913 1,716,671
491,404 4,427,586 1,671,830 5,184,381 4,061,903 1,407,482
7,329,943 9,848,779 6,025,502 10,007,981 8,739,118 5,288,836
(18,227,186) (14,377,201) (18,830,891) (17,425,586) (23,273,760) (21,296,413)
14,307,993 14,943,008 14,988,007 15,320,998 15,757,198 16,736,759
2,751,249 3,098,620 3,790,363 3,805,367 3,667,590 4,652,373
882,620 881,252 914,651 1,075,425 1,159,519 1,206,565
496,679 590,916 1,499,015 1,670,928 1,939,431 1,701,232
85,560 (81,438) 236,936 254,366 230,705 265,604
113,976 54,211 27,100 27,800 57,765 88,326
436 200,000 675,257 236,312 93,935 67,898
- - (639,266) (1,034,574) (185,237) (263,068)
18,638,513 19,686,569 21,492,063 21,356,622 22,720,906 24,455,689
- - - (8,041,229) - -
411,327$ 5,309,368$ 2,661,172$ (4,110,193)$ (552,854)$ 3,159,276$
155
CITY OF BROOKLYN CENTER, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
CHANGES IN NET POSITION - CONTINUED
Last ten fiscal years
(accrual basis of accounting)
2008 2009 2010 2011
BUSINESS-TYPE ACTIVITIES
Expenses
Municipal liquor 1,125,517$ 1,249,946$ 1,262,076$ 1,218,399$
Golf course 304,832 323,340 317,539 284,673
Earle Brown Heritage Center 2,403,676 2,363,085 2,345,920 2,602,074
Water utility 1,783,275 3,448,819 1,792,628 1,825,558
Sanitary sewer utility 3,018,418 3,736,989 3,282,472 3,277,874
Storm drainage utility 1,162,957 1,282,505 1,348,974 1,407,712
Recycling utility 265,983 276,058 278,381 284,440
Street light utility 182,402 220,020 213,752 232,716
Total expenses 10,247,060 12,900,762 10,841,742 11,133,446
Program Revenues
Charges for services:
Municipal liquor 1,492,644 1,530,175 1,538,403 1,620,315
Earle Brown Heritage Center 1,959,628 1,725,858 1,879,902 2,026,063
Water utility 2,003,633 2,019,325 1,959,684 1,990,664
Sanitary sewer utility 3,264,649 3,315,726 3,321,373 3,474,588
Storm drainage utility 1,553,236 1,577,879 1,575,679 1,621,104
Other activities 763,858 770,472 760,757 778,584
Operating grants and contributions - - - -
Capital grants and contributions - - - 80,186
Total program revenues 11,037,648 10,939,435 11,035,798 11,591,504
Net (expense) / revenue 790,588 (1,961,327) 194,056 458,058
General Revenues and Transfers
Investment earnings (net)243,322 87,499 20,707 79,016
Transfers 1,693,225 (32,697) 126,275 749,308
Transfers - capital assets - - - -
Total general revenues and transfers 1,936,547 54,802 146,982 828,324
Restatements for: prior period adjustments
or change in accounting principle - - - -
Change in Net Position 2,727,135$ (1,906,525)$ 341,038$ 1,286,382$
156
Table 2
Page 2 of 3
2012 2013 2014 2015 2016 2017
1,274,375$ 5,674,937$ 5,690,792$ 5,816,363$ 6,123,608$ 6,241,998$
273,023 263,425 271,698 270,307 309,910 335,029
2,768,719 4,835,131 5,137,712 4,739,543 4,507,406 4,825,489
1,855,345 2,025,496 1,900,518 2,179,892 2,903,198 3,294,345
3,317,427 3,382,810 3,514,687 3,694,880 3,864,514 4,068,468
1,501,652 1,552,327 1,784,907 1,883,154 1,700,515 1,848,887
285,853 289,043 291,239 292,282 291,980 366,608
222,835 257,079 245,426 281,661 272,072 267,069
11,499,229 18,280,248 18,836,979 19,158,082 19,973,203 21,247,893
1,656,125 6,072,334 5,861,066 6,061,680 6,206,584 6,503,094
2,293,386 4,294,723 4,578,433 4,649,162 4,731,876 4,917,167
2,321,539 2,318,176 2,235,332 2,640,665 3,216,506 3,585,597
3,592,530 3,675,936 3,942,534 4,095,017 4,210,081 4,288,655
1,660,849 1,622,012 1,638,575 1,635,655 1,620,452 1,598,624
853,585 882,995 1,127,116 988,038 1,088,695 1,071,232
- 52,775 63,547 30,522 16,481 -
- - - - 106,488 -
12,378,014 18,918,951 19,446,603 20,100,739 21,197,163 21,964,369
878,785 638,703 609,624 942,657 1,223,960 716,476
32,998 (27,223) 108,650 127,686 120,485 165,819
(436) (200,000) (675,257) (236,312) (93,935) (67,898)
- - 639,266 1,034,574 185,237 263,068
32,562 (227,223) 72,659 925,948 211,787 360,989
- - - (1,571,633) - -
911,347$ 411,480$ 682,283$ 296,972$ 1,435,747$ 1,077,465$
157
CITY OF BROOKLYN CENTER, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
CHANGES IN NET POSITION - CONTINUED
Last ten fiscal years
(accrual basis of accounting)
2008 2009 2010 2011
TOTAL PRIMARY GOVERNMENT
Expenses
Governmental activities 22,679,171$ 21,518,621$ 25,720,955$ 21,661,757$
Business-type activities 10,247,060 12,900,762 10,841,742 11,133,446
Total expenses 32,926,231 34,419,383 36,562,697 32,795,203
Program Revenues
Governmental activities 6,511,061 5,705,421 11,998,997 10,389,594
Business-type activities 11,037,648 10,939,435 11,035,798 11,591,504
Total program revenues 17,548,709 16,644,856 23,034,795 21,981,098
Net (expense) / revenue (15,377,522) (17,774,527) (13,527,902) (10,814,105)
General Revenues and Transfers
Governmental activities 15,882,282 18,509,732 17,092,176 16,816,796
Business-type activities 1,936,547 54,802 146,982 828,324
Total general revenues and transfers 17,818,829 18,564,534 17,239,158 17,645,120
Restatements for: prior period adjustments
or change in accounting principle
Governmental activities 3,670,679 - - -
Business-type activities - - - -
Total restatements 3,670,679 - - -
Change in Net Position 6,111,986$ 790,007$ 3,711,256$ 6,831,015$
Sources: The data for this table has been extracted from the respective years CAFR document.
Note: During 2011, the City implemented GASB Statement No. 54, Fund Balance and Governmental Fund Type
Definitions. As part of this implementation, certain reclassifications occurred for funds that were reported as Governmental
activities prior to 2011, that are now reported as business-type activities. Those balances prior to 2011 have not been
restated in this statistical schedule.
The City implemented GASB Statement No. 68 and GASB No. 71 in fiscal 2015. Years prior to 2015 have not been restated
158
Table 2
Page 3 of 3
2012 2013 2014 2015 2016 2017
25,557,129$ 24,225,980$ 24,856,393$ 27,433,567$ 32,012,878$ 26,585,249$
11,499,229 18,280,248 18,836,979 19,158,082 19,973,203 21,247,893
37,056,358 42,506,228 43,693,372 46,591,649 51,986,081 47,833,142
7,329,943 9,848,779 6,025,502 10,007,981 8,739,118 5,288,836
12,378,014 18,918,951 19,446,603 20,100,739 21,197,163 21,964,369
19,707,957 28,767,730 25,472,105 30,108,720 29,936,281 27,253,205
(17,348,401) (13,738,498) (18,221,267) (16,482,929) (22,049,800) (20,579,937)
18,638,513 19,686,569 21,492,063 21,356,622 22,720,906 24,455,689
32,562 (227,223) 72,659 925,948 211,787 360,989
18,671,075 19,459,346 21,564,722 22,282,570 22,932,693 24,816,678
- - - (8,041,229) - -
- - - (1,571,633) - -
- - - (9,612,862) - -
1,322,674$ 5,720,848$ 3,343,455$ (3,813,221)$ 882,893$ 4,236,741$
159
CITY OF BROOKLYN CENTER, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
GOVERNMENTAL ACTIVITIES TAX REVENUE BY SOURCE Table 3
Last ten fiscal years
(accrual basis of accounting)
Property Tax Lodging
Taxes Increments Taxes Total
2008 12,458,724$ 2,912,773$ 619,962$ 15,991,459$
2009 12,899,250 3,616,157 591,291 17,106,698
2010 12,949,069 3,127,373 696,746 16,773,188
2011 13,336,056 2,525,057 852,302 16,713,415
2012 14,307,993 2,751,249 882,620 17,941,862
2013 14,943,008 3,098,620 881,252 18,922,880
2014 14,988,007 3,790,363 914,651 19,693,021
2015 15,320,998 3,805,367 1,075,425 20,201,790
2016 15,757,198 3,667,590 1,159,519 20,584,307
2017 16,736,759 4,652,373 1,206,565 22,595,697
Sources: The data for this table has been extracted from the respective years CAFR document.
160
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161
CITY OF BROOKLYN CENTER, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
FUND BALANCES - GOVERNMENTAL FUNDS
Last ten fiscal years
(modified accrual basis of accounting)
2008 2009 2010 2011
General Fund
Reserved 21,995$ 27,993$ 26,405$ -$
Unreserved 7,721,443 8,502,012 8,803,942 -
Nonspendable - - - 32,308
Assigned - - - 2,614
Unassigned - - - 9,695,913
Total general fund 7,743,438$ 8,530,005$ 8,830,347$ 9,730,835$
All other governmental funds
Reserved 9,997,668$ 8,696,324$ 7,388,488$ -$
Unreserved, reported in:
Special revenue funds 10,523,743 9,399,556 7,095,645 -
Capital project funds 4,282,881 3,609,961 2,203,823 -
Nonspendable - - - -
Restricted - - - 13,331,705
Committed - - - 3,021,318
Assigned - - - -
Unassigned - - - (2,515,053)
Total all other governmental funds 24,804,292$ 21,705,841$ 16,687,956$ 13,837,970$
Sources: The data for this table has been extracted from the respective years CAFR document.
Note: During 2011, the City implemented GASB Statement No. 54, Fund Balance and Governmental Fund Type
Definitions. As part of this implementation, certain reclassifications occurred for funds that were reported as Governmental
activities prior to 2011, that are now reported as business-type activities. Those balances prior to 2011 have not been
restated in this statistical schedule.
Note: The 2013 fund balances have been restated to align the City's reporting using GASB No. 65.
162
Table 4
2012 2013 2014 2015 2016 2017
-$ -$ -$ -$ -$ -$
- - - - - -
88,952 26,139 21,967 78,859 92,388 105,634
- 2,754,124 908,761 804,815 715,544 149,630
10,597,944 9,602,450 10,089,353 10,287,243 10,632,965 11,099,939
10,686,896$ 12,382,713$ 11,020,081$ 11,170,917$ 11,440,897$ 11,355,203$
-$ -$ -$ -$ -$ -$
- - - - - -
- - - - - -
- - - 1,500 1,500 7,976
12,912,357 26,350,322 26,434,113 30,365,411 23,355,609 23,888,356
3,651,995 7,579,688 10,514,871 9,306,224 10,852,995 9,678,002
- - - - - 567,537
(3,425,001) (1,432,495) (1,763,877) (2,425,064) (1,783,271) (1,671,355)
13,139,351$ 32,497,515$ 35,185,107$ 37,248,071$ 32,426,833$ 32,470,516$
163
CITY OF BROOKLYN CENTER, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS
Last ten fiscal years
(modified accrual basis of accounting)
2008 2009 2010 2011 2012
Revenues
Property taxes 12,403,914$ 12,897,002$ 13,012,317$ 13,396,611$ 14,389,842$
Tax increments 2,894,595 3,601,747 3,111,882 2,527,316 2,685,822
Franchise fees 643,934 656,772 647,796 659,066 647,346
Lodging taxes 619,962 591,291 696,746 852,302 882,620
Special assessments 1,289,148 1,352,908 1,491,194 1,975,470 1,294,521
Licenses and permits 643,736 616,135 1,063,945 961,947 858,593
Intergovernmental 2,211,560 2,789,007 6,859,817 4,929,902 3,607,218
Charges for services 761,404 1,120,341 1,001,019 1,122,350 1,056,241
Fines and forfeits 302,986 340,536 359,937 340,356 336,740
Investment earnings (net)733,877 247,260 24,212 143,661 48,322
Miscellaneous 449,061 370,508 285,425 296,427 742,269
Total revenues 22,954,177 24,583,507 28,554,290 27,205,408 26,549,534
Expenditures
General government 3,127,917 3,427,024 3,280,340 2,930,516 2,978,738
Public safety 8,048,529 8,452,348 8,524,140 8,674,195 9,090,324
Public works 1,784,319 1,722,680 1,662,343 2,030,930 1,982,540
Community services 72,893 71,519 82,645 100,849 141,505
Parks and recreation 2,409,291 2,462,275 2,442,938 2,412,952 2,532,827
Economic development 7,666,319 2,531,062 3,105,007 2,337,253 5,215,619
Nondepartmental 301,396 313,723 300,549 316,376 287,692
Capital outlay 4,531,003 2,820,761 8,549,489 5,558,718 699,563
Debt service
Principal 2,884,953 4,445,471 4,676,066 2,965,613 2,666,790
Interest 1,060,165 1,183,560 1,026,800 895,053 797,785
Other charges 101,809 15,170 14,104 14,581 7,677
Total expenditures 31,988,594 27,445,593 33,664,421 28,237,036 26,401,060
Excess (deficiency) of revenues
over (under) expenditures (9,034,417) (2,862,086) (5,110,131) (1,031,628) 148,474
Other financing sources (uses)
Transfers in 1,969,533 3,632,013 4,888,536 3,083,093 2,320,883
Issuance of debt 6,725,000 - - - -
Premium on issuance of debt 1,384 - - - -
Sale of capital assets - - - - 108,532
Refunded bonds redeemed - - - - -
Transfers out (1,549,358) (3,081,811) (4,495,948) (3,409,350) (2,320,447)
Total other financing sources (uses)7,146,559 550,202 392,588 (326,257) 108,968
Restatements for: prior period adjustments
or change in accounting principle - - - - -
Net change in fund balances (1,887,858)$ (2,311,884)$ (4,717,543)$ (1,357,885)$ 257,442$
Debt service as a percentage of
noncapital expenditures 14.37%22.86%22.71%17.02%13.48%
Sources: The data for this table has been extracted from the respective years CAFR document.
Note: During 2011, the City implemented GASB Statement No. 54, Fund Balance and Governmental Fund Type
Definitions. As part of this implementation, certain reclassifications occurred for funds that were reported as Governmental
activities prior to 2011, that are now reported as business-type activities. Those balances prior to 2011 have not been
restated in this statistical schedule.
Note: The 2013 fund balances have been restated to align the City's reporting using GASB No. 65.
164
Table 5
2013 2014 2015 2016 2017
15,094,464$ 15,036,602$ 15,115,171$ 15,906,488$ 16,728,993$
3,149,533 3,795,708 3,669,198 3,667,013 4,824,659
651,832 647,071 653,648 664,501 702,600
881,252 914,651 1,075,425 1,159,519 1,206,565
1,877,116 1,794,126 1,715,159 1,788,247 1,766,736
1,084,003 1,021,410 859,534 932,051 904,785
3,159,571 2,706,299 4,748,476 3,745,850 3,882,902
1,073,917 1,229,513 967,707 882,473 933,608
315,982 364,927 291,682 240,197 295,184
(71,059) 188,913 203,172 175,675 208,441
423,822 344,690 429,575 884,187 419,034
27,640,433 28,043,910 29,728,747 30,046,201 31,873,507
3,045,365 3,173,282 2,938,436 3,011,710 3,231,248
9,117,541 9,622,239 10,004,475 10,309,827 10,964,032
1,982,311 2,107,959 2,031,813 2,109,867 2,168,156
149,203 145,503 135,604 136,349 143,103
2,481,763 2,457,622 2,790,624 2,678,944 2,738,418
3,076,454 2,855,983 5,269,625 5,307,692 1,764,198
400,835 364,501 450,129 527,819 505,586
4,319,756 3,950,187 10,475,770 5,987,524 10,210,993
2,655,000 1,905,000 3,025,000 2,720,000 3,502,497
698,702 802,892 826,053 829,812 625,032
179,044 9,039 127,218 127,194 51,655
28,105,974 27,394,207 38,074,747 33,746,738 35,904,918
(465,541) 649,703 (8,346,000) (3,700,537) (4,031,411)
4,860,459 10,463,495 4,541,584 4,318,650 3,978,278
10,960,000 - 10,016,248 5,620,000 3,735,000
367,405 - 309,809 112,879 186,502
- - 4,820 - -
- - - (6,670,000) -
(4,660,459) (9,788,238) (4,312,661) (4,232,250) (3,910,380)
11,527,405 675,257 10,559,800 (850,721) 3,989,400
9,992,117 - - - -
21,053,981$ 1,324,960$ 2,213,800$ (4,551,258)$ (42,011)$
14.10%11.55%13.95%12.79%16.06%
165
CITY OF BROOKLYN CENTER, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
ASSESSED TAX CAPACITY AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
Last ten fiscal years
2008 2009 2010 2011
Estimated actual value:
Real estate 2,182,205,700$ 2,079,719,700$ 1,882,823,900$ 1,682,317,900$
Personal property 14,862,000 14,386,500 14,219,700 15,487,000
Total estimated actual value 2,197,067,700$ 2,094,106,200$ 1,897,043,600$ 1,697,804,900$
Tax Capacity
Real estate 25,898,336$ 25,158,441$ 23,099,333$ 20,759,133$
Personal property 291,815 283,070 278,984 304,150
Contribution to fiscal disparities (2,470,328) (2,719,868) (2,998,145) (2,774,593)
Receipt from fiscal disparities 4,625,964 5,259,685 7,002,213 7,123,008
Tax increments (2,405,929) (2,739,457) (2,420,044) (2,093,764)
Net tax capacity for direct rate 25,939,858$ 25,241,871$ 24,962,341$ 23,317,934$
Net Tax Capacity as a Percentage
of Estimated Actual Market Value 1.18%1.21%1.32%1.37%
Property Tax Levies
General revenues 11,404,750$ 11,804,016$ 12,504,044$ 12,905,340$
Debt service 730,152 703,903 715,183 695,632
Housing and Redevelopment Authority 302,191 385,289 349,745 310,831
Total property taxes levied 12,437,093$ 12,893,208$ 13,568,972$ 13,911,803$
Tax Rates
General revenues 41.081 44.732 48.230 54.234
Debt service 2.815 2.789 2.865 2.983
Housing and Redevelopment Authority 1.185 1.617 1.317 1.341
Total Direct Tax Rate 45.081 49.138 52.412 58.558
Sources: The data for this table has been provided by Hennepin County.
166
Table 6
2012 2013 2014 2015 2016 2017
1,633,327,900$ 1,506,661,400$ 1,497,679,200$ 1,648,833,600$ 1,758,565,800$ 1,848,110,900$
16,139,200 18,257,700 18,319,800 18,829,900 20,237,100 22,039,201
1,649,467,100$ 1,524,919,100$ 1,515,999,000$ 1,667,663,500$ 1,778,802,900$ 1,870,150,101$
18,351,627$ 17,129,016$ 17,358,722$ 18,953,288$ 20,185,645$ 21,298,314$
316,491 358,867 360,506 370,476 398,267 435,044
(2,619,012) (2,335,813) (2,495,133) (2,690,138) (2,635,082) (2,833,028)
7,194,133 6,844,540 7,117,154 6,833,738 6,505,797 7,233,190
(1,922,253) (2,169,035) (2,675,416) (2,764,303) (2,884,208) (3,292,251)
21,320,986$ 19,827,575$ 19,665,833$ 20,703,061$ 21,570,419$ 22,841,269$
1.29%1.30%1.30%1.24%1.21%1.22%
13,207,954$ 13,632,326$ 13,673,970$ 14,381,534$ 14,728,750$ 15,344,946$
708,581 711,725 687,000 396,496 639,485 849,968
302,288 246,160 282,110 280,460 308,518 329,079
14,218,823$ 14,590,211$ 14,643,080$ 15,058,490$ 15,676,753$ 16,523,993$
61.036 67.485 70.587 68.266 68.788 66.798
3.323 3.590 3.547 1.760 2.987 3.700
1.457 1.128 1.609 1.230 1.517 1.406
65.816 72.202 75.742 71.256 73.292 71.904
167
CITY OF BROOKLYN CENTER, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS
Last ten fiscal years
Overlapping Rates
Operating Debt Service Total Direct School School School School
Rate Rate Rate County District 11 District 279 District 281 District 286
2008 42.266 2.815 45.081 38.571 16.983 19.710 27.243 37.519
2009 46.349 2.789 49.138 40.413 18.263 21.033 27.214 43.163
2010 49.547 2.865 52.412 42.640 19.939 22.381 28.621 51.173
2011 55.575 2.983 58.558 45.840 23.999 24.217 34.387 47.697
2012 62.493 3.323 65.816 48.231 23.325 24.930 32.810 48.020
2013 68.613 3.590 72.202 49.461 26.801 27.973 32.347 56.031
2014 72.195 3.547 75.742 49.959 28.265 29.819 34.777 54.422
2015 69.495 1.760 71.256 46.398 22.482 27.156 33.226 52.984
2016 70.305 2.987 73.292 45.356 21.105 26.545 34.115 54.720
2017 68.204 3.700 71.904 44.087 18.805 27.005 31.861 40.559
Sources: The data for this table has been provided by Hennepin County.
Note (1) - Metro Districts include: Mosquito Control, Metropolitan Council, and Metro Transit
Note (2) - Other Districts include: Hennepin Parks, Park Museum, Regional Railroad Authority, and Hennepin HRA.
Note (3) - The Watershed levy is applicable to all of School Districts 279 & 281, and portions of School Districts 11 & 286.
City Direct Rate
168
Table 7
Total Direct and Overlapping Rates
Metro Other Watershed ISD 11 &ISD 286 &
Districts (1) Districts (2) Districts (3) ISD 11 Watershed ISD 279 ISD 281 ISD 286 Watershed
2.562 4.835 0.265 108.032 108.297 111.024 118.557 128.568 128.833
2.579 4.575 0.047 114.968 115.015 117.785 123.966 139.868 139.915
2.620 5.518 0.081 123.129 123.210 125.652 131.892 154.363 154.444
2.949 6.223 0.568 137.569 138.137 138.355 148.525 161.267 161.835
3.084 6.439 0.001 146.895 146.896 148.501 156.381 171.590 171.591
3.242 6.847 0.101 158.553 158.654 159.826 164.200 187.783 187.884
3.335 7.226 - 164.527 164.527 166.081 171.039 190.684 190.684
3.006 6.779 0.256 149.921 150.177 154.851 160.921 180.423 180.679
2.899 6.631 0.247 149.283 149.530 154.970 162.540 182.898 183.145
2.821 6.498 0.267 144.115 144.382 152.582 157.438 165.869 166.136
169
CITY OF BROOKLYN CENTER, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
PRINCIPAL PROPERTY TAXPAYERS Table 8
Current Year and Nine Years Ago
2017 2008
Percentage of Percentage of
Net Tax Total Tax Net Tax Total Tax
Taxpayer Classification Capacity Rank Capacity Value Capacity Rank Capacity Value
The Luther Company, LLP Commercial 850,800$ 1 3.72%382,452$ 2 1.47%
The Molasky Group Commercial 461,250 2 2.02%
E L Shingle Creek LLC Commercial 388,510 3 1.70%
Wal-Mart Stores Inc.Commercial 294,730 4 1.29%
BCC Associates, LLC Commercial 246,530 5 1.08%223,250 4 0.86%
Ax Rer, LP Industrial 228,620 6 1.00%
TLN Lanel, LTD Apartment 224,925 7 0.98%175,738 9 0.68%
Lake Point, LLC Apartment 219,425 8 0.96%
GB Homes, LLC Apartment 212,463 9 0.93%
Brookdale Corner, LLC Commercial 210,050 10 0.92%209,850 7 0.81%
Medtronic, Inc.Industrial 199,398 8 0.77%
Brooks Mall Properties LLC Commercial 394,290 1 1.52%
Regal Cinemas, Inc.Commercial 245,758 3 0.95%
CSM Freeway Airport, LLC Commercial 221,970 5 0.86%
Twin Lakes LLC Apartment 217,800 6 0.84%
Wickes Furniture Company Commercial 171,170 10 0.66%
Totals 3,337,303$ 14.60%2,441,676$ 9.42%
Sources: The data for this table has been provided by Hennepin County.
170
CITY OF BROOKLYN CENTER, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
PROPERTY TAX LEVIES AND COLLECTIONS Table 9
Last ten fiscal years
Collected within the
Certified Fiscal Year of the Levy Collections in Total Collections to Date
Property Percentage Subsequent Percentage
Tax Levy Amount of Levy Years Amount to Date
2008 12,437,093$ 11,577,739$ 93.1% 859,354$ 12,437,093$ 100.0%
2009 12,893,208 11,983,738 92.9% 909,470 12,893,208 100.0%
2010 13,568,972 12,633,425 93.1% 935,547 13,568,972 100.0%
2011 13,911,803 12,947,358 93.1% 964,445 13,911,803 100.0%
2012 14,218,823 13,942,766 98.1% 275,291 14,218,057 99.9%
2013 14,590,211 14,472,075 99.2% 118,136 14,590,211 100.0%
2014 14,643,080 14,470,227 98.8% 172,853 14,643,080 100.0%
2015 15,058,490 14,815,657 98.4% 232,591 15,048,248 99.9%
2016 15,676,753 15,563,707 99.3%49,309 15,613,016 99.6%
2017 16,523,993 16,411,246 99.3%- 16,411,246 99.3%
Sources: The data for this table has been provided by Hennepin County and from City financial documents.
Note: The components of the Certified Property Tax Levy can be viewed in table 6 of the statistical section.
171
CITY OF BROOKLYN CENTER, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
RATIOS OF OUTSTANDING DEBT BY TYPE Table 10
Last ten fiscal years
Governmental Activities
General Tax G.O.Utility Utility Percentage
Obligation Increment Improvement Revenue Revenue Total of Personal Per
Bonds Bonds Bonds Notes (PFA) Bonds Debt Income Capita
2008 3,275,000$ 20,560,000$ 5,690,000$ -$ -$ 29,525,000$ 1.71%973$
2009 2,665,000 17,795,000 4,925,000 - - 25,385,000 1.61%852
2010 2,025,000 15,010,000 4,005,000 - 2,350,000 23,390,000 1.42%777
2011 1,385,000 13,720,000 3,260,000 - 2,210,000 20,575,000 1.19%681
2012 700,000 12,795,000 2,590,000 - 2,075,000 18,160,000 1.01%594
2013 - 17,470,000 6,920,000 - 1,940,000 26,330,000 1.43%865
2014 - 16,040,000 6,445,000 - 1,800,000 24,285,000 1.27%813
2015 - 20,885,000 8,591,248 17,545,158 3,483,752 50,505,158 2.51%1,636
2016 - 16,180,000 9,526,248 18,663,445 6,948,752 51,318,445 2.44%1,643
2017 - 14,220,000 11,718,751 17,709,445 11,231,249 54,879,445 2.61%1,757
Sources: The data for this table has been provided from City financial documents.
Note: More detailed information for Population and Personal Income can be viewed in table 15 of the statistical section.
Business-Type Activities
172
CITY OF BROOKLYN CENTER, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
RATIOS OF GENERAL BONDED DEBT OUTSTANDING Table 11
Last ten fiscal years
Percentage of
General Less: Amounts Net General Estimated
Obligation Restricted to Obligation Market Value Per
Bonds Debt Service Debt of Property Capita
2008 3,275,000$ 1,202,802$ 2,072,198$ 0.09% 68$
2009 2,665,000 1,211,620 1,453,380 0.07% 49
2010 2,025,000 1,201,263 823,737 0.04% 27
2011 1,385,000 1,203,611 181,389 0.01% 6
2012 700,000 1,186,758 - 0.00% -
2013 - - - 0.00% -
2014 - - - 0.00% -
2015 - - - 0.00% -
2016 - - - 0.00% -
2017 - - - 0.00% -
Sources: The data for this table has been provided from City financial documents.
Note: More detailed information for Population can be viewed in table 15 of the statistical section.
Note: More detailed information for Estimated Property Values can be viewed in table 6 of the statistical section.
173
CITY OF BROOKLYN CENTER, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
COMPUTATION OF DIRECT AND OVERLAPPING Table 12
GOVERNMENTAL ACTIVITIES DEBT
December 31, 2017
Estimated Estimated Share
Debt Percentage of Overlapping
Governmental Unit Outstanding Applicable 1 Debt
Overlapping debt:
School Districts:
No. 11 Anoka 43,790,000$ 5.37% 2,353,275$
No. 279 Osseo 97,350,000 3.39% 3,300,165
No. 281 Robbinsdale 196,919,204 4.40% 8,664,445
No. 286 Brooklyn Center 23,010,000 100.00% 23,010,000
Metropolitan Council 188,620,614 0.53% 999,689
Hennepin County 925,550,000 1.04% 9,625,720
Hennepin Regional RR Authority 31,535,000 1.46% 460,411
Three Rivers Park District 52,530,000 1.90% 998,070
Total overlapping debt 1,559,304,818$ 49,411,775
City of Brooklyn Center direct debt 25,938,751
Total direct and overlapping debt 75,350,526$
Source: Official statement for bonds issued in 2017 and updated March 30, 2018 with numbers provided by Hennepin County.
Note: More detailed information for the City's outstanding debt can be viewed in table 10 of the statistical section.
Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. The schedule
estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of
the City. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt
burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a
resident, and therefore responsible for repaying the debt, of each overlapping government.
Note 1: The percentage of overlapping debt applicable is estimated using tax capacity values. Applicable percentages were estimated
by determining the portion of each entity's tax capacity that is within the City's boundaries, and dividing it by the entity's
total tax capacity.
174
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175
CITY OF BROOKLYN CENTER, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
LEGAL DEBT MARGIN INFORMATION
Last ten fiscal years
2008 2009 2010 2011
Taxable Market Value 2,189,212,600$ 2,087,517,800$ 1,891,591,400$ 1,692,594,600$
Debt Limit Percentage 3.00% 3.00% 3.00% 3.00%
Debt Limit 65,676,378 62,625,534 56,747,742 50,777,838
Total net debt applicable to limit 2,072,198 1,453,380 823,737 181,389
Legal debt margin 63,604,180$ 61,172,154$ 55,924,005$ 50,596,449$
Total net debt applicable to the limit
as a percentage of debt limit 3.16% 2.32% 1.45% 0.36%
Sources: The data for this table has been provided by Hennepin County and from City financial documents.
176
Table 13
2012 2013 2014 2015 2016 2017
1,468,159,885$ 1,338,405,415$ 1,329,268,428$ 1,489,548,076$ 1,585,423,689$ 1,677,496,115$
3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
44,044,797 40,152,162 39,878,053 44,686,442 47,562,711 50,324,883
- - - - - -
44,044,797$ 40,152,162$ 39,878,053$ 44,686,442$ 47,562,711$ 50,324,883$
0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
177
CITY OF BROOKLYN CENTER, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
PLEDGED-REVENUE COVERAGE Table 14
Last ten fiscal years
Special Assessment Bonds
Special
Assessment Debt Service
Collections Principal Interest Coverage
2008 816,798$ 980,000$ 145,121$ 72.60%
2009 1,173,435 765,000 166,946 125.91%
2010 750,168 920,000 167,686 68.97%
2011 747,145 745,000 136,890 84.72%
2012 561,618 670,000 111,460 71.87%
2013 485,034 590,000 88,870 71.45%
2014 674,253 475,000 160,447 106.11%
2015 1,120,946 1,270,000 187,221 76.92%
2016 797,089 885,000 228,423 71.59%
2017 1,040,491 1,542,497 221,044 59.00%
Tax Increment Bonds
Tax Increment Debt Service
Collections Principal Interest Coverage
2008 1,906,053$ 1,030,000$ 804,491$ 103.90%
2009 2,356,641 2,765,000 922,711 63.91%
2010 1,794,442 2,785,000 783,961 50.28%
2011 1,321,205 1,290,000 702,530 66.31%
2012 2,388,702 925,000 651,744 151.50%
2013 2,766,160 1,365,000 598,107 140.91%
2014 3,038,983 1,430,000 642,445 146.64%
2015 2,953,728 1,755,000 638,832 123.39%
2016 2,969,836 1,835,000 601,389 121.89%
2017 4,500,329 1,960,000 403,988 190.37%
Utility Revenue Bonds
Water, Sewer,
and Storm Less:Net
Utility Operating Available Debt Service
Charges Expenses Revenue Principal Interest Coverage
2010 5,249,263$ 4,934,032$ 315,231$ -$ 68,081$ 463.02%
2011 5,421,679 5,011,775 409,904 140,000 83,438 183.45%
2012 5,889,769 5,084,012 805,757 135,000 81,562 372.07%
2013 5,951,703 5,335,477 616,226 135,000 80,188 286.37%
2014 6,151,426 5,334,905 816,521 140,000 76,902 376.45%
2015 6,667,218 5,665,327 1,001,891 1,815,352 238,401 48.78%
2016 9,016,802 8,194,267 822,535 1,084,000 226,543 62.76%
2017 9,429,371 8,943,670 485,701 1,296,503 211,072 32.22%
Sources: The data for this table has been provided from City financial documents.
Note: The Utility Revenue bonds were issued in 2010. Determined it was not necessary to show data prior to that year.
178
CITY OF BROOKLYN CENTER, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
DEMOGRAPHIC AND ECONOMIC STATISTICS Table 15
Last ten fiscal years
School Enrollments
Per Capita No. 286
No. of Personal Personal Unemployment Median No. 11 No. 279 No. 281 Brooklyn
Population Households Income Income Rate Age Anoka Osseo Robbinsdale Center
2008 30,330 11,250 1,723,775,220$ 56,834 $ 6.7%34.4 40,152 21,001 12,526 2,012
2009 29,810 11,175 1,572,835,220 52,762 9.7%33.6 39,822 20,903 11,947 2,250
2010 30,104 10,756 1,649,036,912 54,778 9.2%31.3 39,106 20,835 12,036 2,311
2011 30,204 10,791 1,734,223,068 57,417 8.2%32.8 38,686 20,686 12,062 2,109
2012 30,569 10,812 1,800,452,962 58,898 7.2%33.1 38,403 20,623 12,181 2,177
2013 30,426 10,862 1,843,846,026 60,601 6.1%33.3 38,183 20,689 12,266 2,182
2014 29,889 10,756 1,909,936,989 63,901 4.8%32.3 37,853 20,398 12,385 2,399
2015 30,864 10,994 2,013,289,584 65,231 4.6%32.8 38,016 20,511 12,714 2,401
2016 31,231 11,042 2,105,812,637 67,427 4.3%32.8 38,739 20,847 12,553 2,415
2017 31,231 11,042 2,105,812,637 67,427 4.3%32.8 38,739 20,847 12,553 2,415
Sources: Population & Households - Metropolitan Council
Personal Income - Calculated by the City
Per Capita Personal Income - US Department of Commerce; Bureau of Economic Analysis
Unemployment Rate - Minnesota Department of Employment and Economic Development
Median Age - US Department of Commerce, Bureau of the Census
School Enrollment - Minnesota Department of Education
Note: Some data was not yet available for 2017. In those instances, 2016 data was shown for the current year.
179
CITY OF BROOKLYN CENTER, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
PRINCIPAL EMPLOYERS Table 16
Current Year and Nine Years Ago
2017 2008
Percentage of Percentage of
Total City Total City
Employer Employees Rank Employment Employees Rank Employment
Hennepin County 8,500 1 55.96%
Promeon Inc., A Division of Medtronic 1,100 2 7.24% 1,350 2 9.70%
Independent School District #286 425 3 2.80% 303 4 2.18%
Luther Auto Group 341 4 2.25%
City of Brooklyn Center 299 5 1.97% 153 7 1.10%
Wal-Mart 294 6 1.94%
Caribou Coffee Headquarters 225 7 1.48%
University of Minnesota Physicians 212 8 1.40%
Presbyterian Homes, Marantha Care Center 200 9 1.32%
TCR Corporation 150 10 0.99% 140 10 1.01%
Brookdale Center 1,900 1 13.65%
Graco, Inc.800 3 5.75%
Nations Care Link 225 5 1.62%
Cub Foods 170 6 1.22%
Best Buy 145 8 1.04%
Target 140 9 1.01%
Totals 11,746 77.33% 5,326 38.26%
Sources: The data for this table has been extracted from Official Statements for bonds issued in 2008 and 2017.
180
CITY OF BROOKLYN CENTER, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
FULL TIME CITY GOVERNMENT POSITIONS BY FUNCTION Table 17
Last ten fiscal years
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
General government
Administrative 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0
Elections 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0
City Clerk 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0
Finance 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0
Assessor 3.0 3.0 3.0 3.0 3.0 3.5 3.5 - - -
Human Resources 2.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0
Communications and Engagement - - - - - - - - - 1.0
Information technology 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 3.0
Building Maintenance 4.0 4.0 4.0 4.0 3.0 3.0 3.0 3.0 3.0 3.0
Total general government 21.0 22.0 22.0 22.0 21.0 21.5 21.5 18.0 18.0 20.0
Public safety
Police
Administration 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0
Investigation 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0
Patrol 41.0 40.0 42.0 42.0 42.0 42.0 41.0 41.0 40.0 42.0
Support Services 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0
Facility Maintenance 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0
Fire 1.0 1.0 1.0 1.0 1.0 1.0 1.0 2.0 3.0 3.0
Emergency Preparedness 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0
Planning & Zoning 2.0 2.0 2.0 1.5 1.5 1.5 1.5 1.5 1.2 1.2
Inspections 4.0 4.0 4.0 4.0 4.0 4.0 5.0 5.0 5.2 4.2
Code Enforcement 2.0 5.0 5.0 5.0 4.0 5.0 5.0 4.0 3.4 4.4
Total public safety 70.0 72.0 74.0 73.5 72.5 73.5 73.5 73.5 72.8 74.8
Public works
Engineering & Admin 6.0 6.0 6.0 6.0 6.0 7.0 7.0 7.0 7.0 7.0
Street Maintenance 8.0 8.0 8.0 8.0 7.0 7.0 7.0 7.0 7.0 7.0
Traffic Control 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0
Total public works 16.0 16.0 16.0 16.0 15.0 16.0 16.0 16.0 16.0 16.0
Parks and recreation
Administration 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0
Recreation Programs 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0
Community Center 3.0 3.0 3.0 3.0 - - - - - -
Parks Maintenance 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0
Forestry 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0
Total park and recreation 16.0 16.0 16.0 16.0 13.0 13.0 13.0 13.0 13.0 13.0
Economic Development 2.0 2.0 2.0 2.5 2.5 2.5 2.5 2.5 2.2 2.2
Municipal Liquor 4.0 4.0 5.0 4.0 4.0 5.0 5.0 5.0 6.0 6.0
Golf Course 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0
Earle Brown Heritage Center 11.0 11.0 11.0 11.0 11.0 11.0 12.0 12.0 13.0 13.0
Water 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3
Sanitary Sewer 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3
Storm Drainage 1.4 1.4 1.4 1.4 2.4 2.4 2.4 2.4 2.4 2.4
Central Garage 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0
Total 155.0 158.0 161.0 160.0 155.0 158.5 159.5 156.0 157.0 161.0
Sources: The data for this table has been extracted from the respective years budget document.
181
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Table 19
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18
3
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184
Management Report
for
City of Brooklyn Center, Minnesota
December 31, 2017
THIS PAGE INTENTIONALLY LEFT BLANK
To the City Council and Management
City of Brooklyn Center, Minnesota
We have prepared this management report in conjunction with our audit of the City of Brooklyn Center,
Minnesota’s (the City) financial statements for the year ended December 31, 2017. We have organized
this report into the following sections:
•Audit Summary
•Governmental Funds Overview
•Enterprise Funds Overview
•Government-Wide Financial Statements
•Legislative Updates
•Accounting and Auditing Updates
We would be pleased to further discuss any of the information contained in this report or any other
concerns that you would like us to address. We would also like to express our thanks for the courtesy and
assistance extended to us during the course of our audit.
The purpose of this report is solely to provide those charged with governance of the City, management,
and those who have responsibility for oversight of the financial reporting process comments resulting
from our audit process and information relevant to city finances in Minnesota. Accordingly, this report is
not suitable for any other purpose.
Minneapolis, Minnesota
May 21, 2018
THIS PAGE INTENTIONALLY LEFT BLANK
-1-
AUDIT SUMMARY
The following is a summary of our audit work, key conclusions, and other information that we consider
important or that is required to be communicated to the City Council, administration, or those charged
with governance of the City.
OUR RESPONSIBILITY UNDER AUDITING STANDARDS GENERALLY ACCEPTED IN THE UNITED
STATES OF AMERICA AND GOVERNMENT AUDITING STANDARDS
We have audited the financial statements of the governmental activities, the business -type activities, each
major fund, and the aggregate remaining fund information of the City as of and for the year ended
December 31, 2017, and the related notes to the financial statements. Professional standards require that
we provide you with information about our responsibilities under auditing standards generally accepted in
the United States of America and Government Auditing Standards, as well as certain information related
to the planned scope and timing of our audit. We have communicated such information to you verbally
and in our audit engagement letter. Professional standards also require that we communicate the following
information related to our audit.
PLANNED SCOPE AND TIMING OF THE AUDIT
We performed the audit according to the planned scope and timing previously discussed and coordinated
in order to obtain sufficient audit evidence and complete an effective audit.
AUDIT OPINION AND FINDINGS
Based on our audit of the City’s financial statements for the year ended December 31, 2017:
• We have issued an unmodified opinion on the City’s basic financial statements.
• We reported no deficiencies in the City’s internal control over financial reporting that we
considered to be material weaknesses.
• The results of our testing disclosed no instances of noncompliance required to be reported under
Government Auditing Standards.
• We reported no findings based on our testing of the City’s compliance with Minnesota laws and
regulations.
SIGNIFICANT ACCOUNTING POLICIES
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the City are described in Note 1 of the notes to basic financial statements.
No new accounting policies were adopted and the application of existing policies was not changed during
the year ended December 31, 2017; however, the City implemented the following governmental
accounting standards during the fiscal year:
• Governmental Accounting Standards Board (GASB) Statement No. 79, Certain External
Investment Pools and Pool Participants, which enhanced disclosures regarding investments.
• GASB Statement No. 82, Pension Issues, an amendment of GASB Statement Nos. 67, No. 68, and
No. 73, which addressed certain issues related to pension reporting and disclosures.
We noted no transactions entered into by the City during the year for which there is a lack of authoritative
guidance or consensus. All significant transactions have been recognized in the financial statements in the
proper period.
-2-
ACCOUNTING ESTIMATES AND MANAGEMENT JUDGMENTS
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management’s knowledge and experience about past and current events and assumptions about
future events. Certain accounting estimates are particularly sensitive because of their significance to the
financial statements and because of the possibility that future events affecting them may differ
significantly from those expected. The most sensitive estimates affecting the financial statements were:
• Net Other Post-Employment Benefit (OPEB) and Pension Liabilities – The City has recorded
liabilities and activity for other post-employment benefits (OPEB) and pension benefits. These
obligations are calculated using actuarial methodologies described in GASB Statement Nos. 45
and 68. These actuarial calculations include significant assumptions, including projected changes,
healthcare insurance costs, investment returns, retirement ages, proportionate share, and
employee turnover.
• Depreciation – Management’s estimates of depreciation expense are based on the estimated
useful lives of the assets.
• Compensated Absences – Management’s estimate is based on current rates of pay and sick leave
balances.
• Assets Held for Resale – Management’s estimates of this asset are based on the lower of cost or
acquisition value.
We evaluated the key factors and assumptions used by management to develop these accounting estimates
in determining that they are reasonable in relation to the basic financial statements taken as a whole.
The financial statement disclosures are neutral, consistent, and clear.
CORRECTED AND UNCORRECTED MISSTATEMENTS
Professional standards require us to accumulate all known and likely misstatements identified during the
audit, other than those that are trivial, and communicate them to the appropriate level of management.
Where applicable, management has corrected all such misstatements. In addition, none of the
misstatements detected as a result of audit procedures and corrected by management, when applicable,
were material, either individually or in the aggregate, to each opinion unit’s financial statements taken as
a whole.
We proposed one uncorrected audit adjustment to the financial statements for the reporting of
governmental activities and business-type activities unamortized premiums and discounts on bond
proceeds totaling $113,365 and $225,771, respectively. The City recorded these amounts as revenue or
expense in the period of issuance rather than amortizing over the payback period of the bonds.
Management has determined that the effects of these items were immaterial, both individually and taken
together, to each opinion unit’s financial statements taken as a whole.
DIFFICULTIES ENCOUNTERED IN PERFORMING THE AUDIT
We encountered no significant difficulties in dealing with management in performing and completing our
audit.
-3-
DISAGREEMENTS WITH MANAGEMENT
For purposes of this report, a disagreement with management is a financial accounting, reporting, or
auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial
statements or the auditor’s report. We are pleased to report that no such disagre ements arose during the
course of our audit.
MANAGEMENT REPRESENTATIONS
We have requested certain representations from management that are included in the management
representation letter dated May 21, 2018.
MANAGEMENT CONSULTATIONS WITH OTHER INDEPENDENT ACCOUNTANTS
In some cases, management may decide to consult with other accountants about auditing and accounting
matters, similar to obtaining a “second opinion” on certain situations . If a consultation involves
application of an accounting principle to the City’s financial statements or a determination of the type of
auditor’s opinion that may be expressed on those statements, our professional standards require the
consulting accountant to check with us to determine that the consultant has all the relevant facts. To our
knowledge, there were no such consultations with other accountants.
OTHER AUDIT FINDINGS OR ISSUES
We generally discuss a variety of matters, including the application of accounting principles and auditing
standards, with management each year prior to retention as the City’s auditors . However, these
discussions occurred in the normal course of our professional relationship and our responses were not a
condition to our retention.
OTHER MATTERS
We applied certain limited procedures to the management’s discussion and analysis (MD&A) and the
pension and OPEB-related required supplementary information (RSI) that supplements the basic financial
statements. Our procedures consisted of inquiries of management regarding the methods of preparing the
information and comparing the information for consistency with management’s responses to our
inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic
financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on
the RSI.
We were engaged to report on the combining and individual fund statements and schedules accompanying
the financial statements which are not RSI. With respect to this information, we made certain inquiries of
management and evaluated the form, content, and methods of preparing the information to determine that
the information complies with accounting principles generally accepted in the United States of America,
the method of preparing it has not changed from the prior period, and the information is appropriate and
complete in relation to our audit of the financial statements. We compared and reconciled the combining
and individual fund statements and schedules to the underlying accounting records used to prepare the
financial statements or to the financial statements themselves.
We were not engaged to report on the introductory section and statistical section which accompany the
financial statements but are not RSI. Such information has 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 it.
-4-
GOVERNMENTAL FUNDS OVERVIEW
This section of the report provides you with an overview of the financial trends and activities of the City’s
governmental funds, which includes the General, special revenue, debt service, and capital project funds.
These funds are used to account for the basic services the City provides to all of its citizens, which are
financed primarily with property taxes. The governmental fund information in the City’s financial
statements focuses on budgetary compliance and the sufficiency of each governmental fund’s current
assets to finance its current liabilities.
PROPERTY TAXES
Minnesota cities rely heavily on local property tax levies to support their governmental fund activities.
For the 2016 fiscal year, local ad valorem property tax levies provided 39.8 percent of the total
governmental fund revenues for cities over 2,500 in population, and 36.4 percent for cities under 2,500 in
population.
The total market value of property in Minnesota cities increased about 5.6 percent for the 2017 levy year,
which followed an increase of 5.7 percent for levy year 2016. The market values used for levying
property taxes are based on the previous fiscal year (e.g., market values for taxes levied in 2017 were
based on assessed values as of January 1, 2016), so the trend of change in these market values lags
somewhat behind the housing market and economy in general.
The City’s taxable market value increased 6.4 percent for taxes payable in 2016 and increased 5.8 percent
for taxes payable in 2017. The following graph shows the City’s changes in taxable market value over the
past 10 years:
$–
$500,000,000
$1,000,000,000
$1,500,000,000
$2,000,000,000
$2,500,000,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Taxable Market Value
-5-
Tax capacity is considered the actual base available for taxation. It is calculated by applying the state’s
property classification system to each property’s market value . Each property classification, such as
commercial or residential, has a different calculation and uses different rates . Consequently, a city’s total
tax capacity will change at a different rate than its total market value, as tax capacity is affected by the
proportion of its tax base that is in each property classification from year-to-year, as well as legislative
changes to tax rates. The City’s tax capacity increased 4.2 percent for taxes payable in 2016 and increased
5.9 percent for taxes payable in 2017.
The following graph shows the City’s change in tax capacities over the past 10 years:
$–
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Tax Capacity
The following table presents the average tax rates applied to city residents for each of the last three levy
years, along with comparative state-wide and metro area average rates from the two most recent years for
which the information is available:
2015 2016 2015 2016 2015 2016 2017
Average tax rate
City 46.9 46.5 43.4 43.0 70.0 71.8 70.5
County 44.7 44.1 42.9 42.3 46.4 45.4 44.1
School 27.1 27.5 28.3 28.6 36.9 37.0 40.6
Special taxing 6.9 6.9 8.8 8.7 11.2 11.2 11.0
Total 125.6 125.0 123.4 122.6 164.5 165.4 166.2
Note: State-wide and metro area average tax rates are not available for 2017.
Rates Expressed as a Percentage of Net Tax Capacity
Metro Area
Seven-CountyAll Cities
State-Wide
City of
Brooklyn Center
Both the City’s portion and the total tax capacity rates for Brooklyn Center residents are significantly
higher than the state-wide and metro area averages the last two years. These rates are higher than average
due to a combination of factors, including lower than average property values, makeup of residential
properties, and the use of tax increments within the City.
-6-
GOVERNMENTAL FUNDS REVENUE AND EXPENDITURES
The following table presents the per capita revenue of the City’s governmental funds for the past three
years, along with state-wide averages.
We have included the most recent comparative state-wide averages available from the Office of the State
Auditor to provide a benchmark for interpreting the City’s data. The amounts received from the typical
major sources of governmental fund revenue will naturally vary between cities based on factors such as a
city’s stage of development, location, size and density of its population, property values, services it
provides, and other attributes. It will also differ from year -to-year due to the effect of inflation and
changes in its operation. Also, certain data on these tables may be classified differently than how they
appear on the City’s financial statements in order to be more comparable to the state -wide information,
particularly in separating capital expenditures from current expenditures.
We have designed this section of our management report using per capita data in order to better identify
unique or unusual trends and activities of your city. We intend for this type of comparative and trend
information to complement, rather than duplicate, information in the MD&A. An inherent difficulty in
presenting per capita information is the accuracy of the population count, which for most years is based
on estimates.
Year 2015 2016 2017
Population 2,500–10,000 10,000–20,000 20,000–100,000 30,864 31,231 31,231
Property taxes 460$ 432$ 455$ 490$ 509$ 536$
Tax increments 26 26 42 119 117 154
Franchise fees and other taxes 35 43 45 56 58 61
Special assessments 59 44 59 56 57 57
Licenses and permits 35 33 42 28 30 29
Intergovernmental revenues 313 275 152 154 120 124
Charges for services 110 92 103 31 28 30
Other 91 57 54 30 42 30
Total revenue 1,129$ 1,002$ 952$ 964$ 961$ 1,021$
December 31, 2016
Governmental Funds Revenue per Capita
With State-Wide Averages by Population Class
State-Wide City of Brooklyn Center
The City relies more on property tax revenue for its governmental funds revenu e compared to the average
Minnesota city. The City continues to generate significantly more tax increment revenue per capita than
average, as it has made extensive use of this tool to finance commercial development.
The City’s per capita governmental funds revenue for 2017 was $1,021, an increase of about 6.2 percent
from the prior year. Property tax revenue increased $27 per capita due to the increased tax levy, and tax
increment revenue increased $37 per capita. This increase was offset by the $12 per capita decrease in
other revenue due to conduit debt issuance fees, development fees , and insurance dividends received in
the prior year.
-7-
The expenditures of governmental funds will also vary from state-wide averages and from year-to-year,
based on the City’s circumstances. Expenditures are classified into three types as follows:
• Current – These are typically the general operating type expenditures occurring on an annual
basis, and are primarily funded by general sources, such as taxes and intergovernmental revenues.
• Capital Outlay and Construction – These expenditures do not occur on a consistent basis, more
typically fluctuating significantly from year-to-year. Many of these expenditures are
project-oriented, and are often funded by specific sources that have benefited from the
expenditure, such as special assessment improvement projects.
• Debt Service – Although the expenditures for debt service may be relatively consistent over the
term of the respective debt, the funding source is the important factor . Some debt may be repaid
through specific sources such as special assessments or redevelopment funding, while other debt
may be repaid with general property taxes.
The City’s expenditures per capita of its governmental funds for the past three years, together with
state-wide averages, are presented in the following table:
Year 2015 2016 2017
Population 2,500–10,000 10,000–20,000 20,000–100,000 30,864 31,231 31,231
Current
General government 145$ 114$ 97$ 95$ 96$ 103$
Public safety 263 250 273 324 330 351
Street maintenance 126 123 95 66 68 69
Parks and recreation 93 109 95 90 86 88
All other 74 77 91 190 191 77
701$ 673$ 651$ 765$ 771$ 688$
Capital outlay
and construction 381$ 370$ 301$ 339$ 192$ 327$
Debt service
Principal 196$ 163$ 115$ 98$ 87$ 112$
Interest and fiscal 48 38 34 31 31 22
244$ 201$ 149$ 129$ 118$ 134$
Total expenditures 1,326$ 1,244$ 1,101$ 1,233$ 1,081$ 1,149$
State-Wide
December 31, 2016
Governmental Funds Expenditures per Capita
With State-Wide Averages by Population Class
City of Brooklyn Center
The City’s governmental funds current per capita expenditures are higher than state-wide averages for
cities in the same population class. The City’s current operating costs are higher than average due to
above average public safety costs. The City’s per capita current expenditures decreased $83 per capita in
2017, mainly due to the $114 per capita decrease in the all other category attributed to a decrease in
economic development expenditures related to the 2016 Sanctuary Senior Housing Project. Capital outlay
costs per capita increased $135 as a result of the purchase of emergency responder radios, City Hall
parking lot improvements, and engineering costs related to the Brooklyn Boulevard improvement project.
Debt service costs per capita increased $16 as a result of scheduled bond payments and the early payoff of
the City’s General Obligation Improvement Bonds, Series 2008B.
-8-
GOVERNMENTAL FUND BALANCES
The following table summarizes the changes in the fund balances of the City’s governmental funds during
the year ended December 31, 2017, presented both by fund balance classification and by fund:
Increase
2017 2016 (Decrease)
Fund balances of governmental funds
Total by classification
Nonspendable 113,610$ 93,888$ 19,722$
Restricted 23,888,356 23,355,609 532,747
Committed 9,678,002 10,852,995 (1,174,993)
Assigned 717,167 715,544 1,623
Unassigned 9,428,584 8,849,694 578,890
Total – governmental funds 43,825,719$ 43,867,730$ (42,011)$
Total by fund
General 11,355,203$ 11,440,897$ (85,694)$
Tax Increment District No. 3 17,984,598 17,276,234 708,364
Debt Service 1,837,237 1,876,481 (39,244)
Capital Improvements 3,036,868 5,185,641 (2,148,773)
Municipal State Aid for Construction (381,395) 99,814 (481,209)
Special Assessment Construction 567,537 (50,219) 617,756
Nonmajor funds 9,425,671 8,038,882 1,386,789
Total – governmental funds 43,825,719$ 43,867,730$ (42,011)$
Governmental Funds Change in Fund Balance
Fund Balance
as of December 31,
In total, the fund balances of the City’s governmental funds decreased by $42,011 during the year ended
December 31, 2017. The majority of the decrease was in committed fund balances offset by an increase in
restricted and unassigned fund balances. Committed fund balances decreased $1,174,993, mainly in the
committed fund balance in the Capital Improvements Fund. Restricted fund balances increased $532,747,
mainly in the restricted fund balance in the Tax Increment District No. 3 Fund.
-9-
GENERAL FUND
The City’s General Fund accounts for the financial activity of the basic services provided to the
community. The primary services included within this fund are the administration of the municipal
operation, police and fire protection, building inspection, streets and highway maintenance, and parks and
recreation. The graph below illustrates the change in the General Fund financial position over the last
five years. We have also included a line representing annual expenditures to reflect the change in the size
of the General Fund operation over the same period.
2013 2014 2015 2016 2017
Fund Balance $12,382,713 $11,020,081 $11,170,917 $11,440,897 $11,355,203
Cash (Net)$13,037,962 $11,754,777 $11,602,236 $12,326,654 $12,057,840
Expenditures $17,106,244 $17,503,674 $18,047,798 $18,849,079 $19,873,539
$–
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
$20,000,000
General Fund Financial Position
Year Ended December 31,
The City’s General Fund cash and investments balance (net of interfund borrowing) at December 31,
2017 was $12,057,840, which decreased $268,814 from 2016. Total fund balance at December 31, 2017
was $11,355,203, a decrease of $85,694 from the prior year.
Having an appropriate fund balance is an important factor in assessing the City’s financial health because
a government, like any organization, requires a certain amount of equity to operate. Generally, the amount
of equity required typically increases as the size of the operation increases. A healthy financial position
allows the City to avoid volatility in tax rates; helps minimize the impact of state funding changes; allows
for the adequate and consistent funding of services, repairs, and unexpected costs; and can be a factor in
determining the City’s bond rating and resulting interest costs.
The City has an approved fund balance policy that states the General Fund will manage its cash flow by
having a year-end target unassigned fund balance of between 50 percent and 52 percent of next year’s
General Fund budgeted expenditures. At December 31, 2017, the City’s General Fund had an unassigned
fund balance of 52 percent of the subsequent year’s budgeted expenditures.
-10-
The following graph reflects the City’s General Fund revenue sources for 2017 compared to budget:
Other
Charges for Services
Intergovernmental
Licenses and Permits
Taxes
General Fund Revenue
Budget Actual
Total General Fund revenues for 2017 were $20,538,389, which was $240,379 (1.2 percent) over the final
budget. The majority of this variance was from licenses and permits. Licenses and permits revenue was
$176,230 over budget from more than anticipated building-related activities.
The following graph presents the City’s General Fund revenues by source for the last five years . The
graph reflects the City’s reliance on property taxes and other local sources of revenue, and shows the
virtual elimination of general state aid revenue in recent years.
Taxes Intergovernmental Other
2013 $15,017,242 $1,086,162 $2,662,306
2014 $14,991,781 $1,401,447 $2,472,394
2015 $15,532,039 $1,410,695 $2,230,529
2016 $16,128,373 $1,466,341 $2,397,091
2017 $16,766,847 $1,496,165 $2,275,377
$–
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
General Fund Revenue by Source
Year Ended December 31,
Overall, General Fund revenues increased $546,584 (2.7 percent) from the previous year, mainly in tax
revenue. Tax revenue increased $638,474, mainly due to the increased levy in the current year.
-11-
The following graph illustrates the components of General Fund spending for 2017 compared to budget:
Other
Parks and Recreation
Public Works
Public Safety
General Government
General Fund Expenditures
Budget Actual
Total General Fund expenditures for 2017 were $19,873,539, which was $389,471 (1.9 percent) less than
budget, spread across all functions. Public safety expenditures were $231,126 under budget in the
protective inspection department, due to open staff positions during the year. Public works expenditures
were $145,284 under budget in the engineering and street departments. Parks and recreation expenditures
were $119,878 under budget in the community center and park maintenance departments. Expenditures in
the general government function were $83,283 under budget, mainly in the information technology and
legal departments. These budget variances were offset by the other expenditures which were $190,100
over budget, due to increased lodging taxes and nondepartmental expenditures.
The following graph presents the City’s General Fund expenditures by function for the last five years.
General
Government Public Safety Public Works Parks and
Recreation Other
2013 $2,898,973 $8,933,419 $1,893,427 $2,411,792 $968,633
2014 $2,745,046 $9,444,438 $1,963,110 $2,406,617 $944,463
2015 $2,769,009 $9,809,177 $1,880,792 $2,492,260 $1,096,560
2016 $3,019,888 $10,067,963 $1,918,330 $2,627,958 $1,214,940
2017 $3,223,766 $10,687,408 $2,037,136 $2,703,475 $1,221,754
$–
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
$9,000,000
$10,000,000
$11,000,000
General Fund Expenditures by Function
Year Ended December 31,
General Fund expenditures increased by $1,024,460, or 5.4 percent, from the prior year, mainly due to the
$619,445 increase in the public safety function, the $203,878 increase in the general government function,
and the $118,806 increase in the public works function. Public safety expenditures and general
government expenditures increased, mainly due to increased personal services. The public works function
increased, mainly due to increased services and other charges.
-12-
ENTERPRISE FUNDS OVERVIEW
The City maintains several enterprise funds to account for services the City provides that are financed
primarily through fees charged to those utilizing the service. This section of the report provides you with
an overview of the financial trends and activities of the City’s enterprise funds, which includes the
Municipal Liquor, Golf Course, Earle Brown Heritage Center, Water Utility, Sanitary Sewer Utility,
Storm Drainage Utility, Street Light Utility, and Recycling Utility Funds.
The utility funds comprise a considerable portion of the City’s activities. These funds significantly help to
defray overhead and administrative costs and provide additional support to general government operations
by way of annual transfers. We understand that the City is proactive in reviewing these activities on an
ongoing basis and we want to reiterate the importance of continually monitoring these operations. Over
the years, we have emphasized to our city clients the importance of these utility operations being
self-sustaining, preventing additional burdens on general government funds . This would include the
accumulation of net position for future capital improvements and to provide a cushion in the event of a
negative trend in operations.
ENTERPRISE FUNDS FINANCIAL POSITION
The following table summarizes the changes in the financial position of the City’s enterprise funds during
the year ended December 31, 2017, presented both by classification and by fund:
Increase
2017 2016 (Decrease)
Net position of enterprise funds
Total by classification
Net investment in capital assets 43,553,672$ 43,483,294$ 70,378$
Unrestricted 16,948,871 15,791,138 1,157,733
Total – enterprise funds 60,502,543$ 59,274,432$ 1,228,111$
Total by fund
Municipal Liquor 2,782,025$ 2,579,669$ 202,356$
Golf Course 649,127 719,706 (70,579)
Earle Brown Heritage Center 5,911,936 5,747,379 164,557
Water Utility 13,365,377 13,011,611 353,766
Sanitary Sewer Utility 14,874,105 14,594,942 279,163
Storm Drainage Utility 21,126,564 21,060,930 65,634
Street Light Utility 1,544,688 1,351,294 193,394
Recycling Utility 248,721 208,901 39,820
Total – enterprise funds 60,502,543$ 59,274,432$ 1,228,111$
Enterprise Funds Change in Financial Position
Net Position
as of December 31,
In total, the net position of the City’s enterprise funds increased by $1,228,111 during the year ended
December 31, 2017. As noted above, all of the City’s enterprise funds had positive operating results with
the exception of the Golf Course Fund.
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Water Fund
The following graph presents five years of operating results for the Water Fund:
2013 2014 2015 2016 2017
Oper Rev $2,275,767 $2,206,311 $2,573,493 $3,191,538 $3,543,323
Oper Exp $1,966,957 $1,838,841 $2,008,333 $2,681,066 $3,158,986
Oper Inc (Loss)$308,810 $367,470 $565,160 $510,472 $384,337
$–
$250,000
$500,000
$750,000
$1,000,000
$1,250,000
$1,500,000
$1,750,000
$2,000,000
$2,250,000
$2,500,000
$2,750,000
$3,000,000
$3,250,000
$3,500,000
$3,750,000
Water Fund
Year Ended December 31,
The Water Fund ended 2017 with a net position of $13,365,377, an increase of $353,766 from the prior
year. Of this, $10,886,192 represents the investment in utility distribution system capital assets, leaving
$2,479,185 of unrestricted net position.
Water Fund operating revenue was $3,543,323 for 2017, an increase of $351,785 (11.0 percent) from the
prior year, due to an increase in rates in the current year. Operating expenses of $3,158,986 were
$477,920 (17.8 percent) more than last year, mainly due to an increase in depreciation expense in the
current year as a result of the completion of the water treatment plant.
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Sanitary Sewer Fund
The following graph presents five years of operating results for the Sanitary Sewer Fund:
2013 2014 2015 2016 2017
Oper Rev $3,675,936 $3,945,115 $4,093,725 $4,204,962 $4,287,674
Oper Exp $3,368,520 $3,496,064 $3,656,994 $3,812,606 $3,969,011
Oper Inc (Loss)$307,416 $449,051 $436,731 $392,356 $318,663
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
$2,000,000
$2,200,000
$2,400,000
$2,600,000
$2,800,000
$3,000,000
$3,200,000
$3,400,000
$3,600,000
$3,800,000
$4,000,000
$4,200,000
$4,400,000
Sanitary Sewer Fund
Year Ended December 31,
The Sanitary Sewer Fund ended 2017 with a net position of $14,874,105, an increase of $279,163 from
the prior year. Of this, $9,567,977 represents the investment in the sanitary sewer capital assets, leaving
$5,306,128 of unrestricted net position.
Sanitary Sewer Fund operating revenues for 2017 were $4,287,674, which was an increase of $82,712
(2.0 percent) from the prior year due to an approved rate increase.
Operating expenses for 2017 were $3,969,011, which was an increase of $156,405 (4.1 percent) from the
prior year. The largest operating expense of this fund is to Metropolitan Council Environmental
Services (MCES) for sewer service charges. MCES disposal charges in 2017 increased by $98,050 from
the prior year.
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Storm Drainage Fund
The following graph presents five years of operating results for the Storm Drainage Fund:
2013 2014 2015 2016 2017
Oper Rev $1,621,912 $1,638,475 $1,635,555 $1,620,302 $1,598,374
Oper Exp $1,556,358 $1,787,064 $1,875,824 $1,700,595 $1,815,673
Oper Inc (Loss)$65,554 $(148,589)$(240,269)$(80,293)$(217,299)
$(400,000)
$(200,000)
$–
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
$2,000,000
Storm Drainage Fund
Year Ended December 31,
The Storm Drainage Fund ended 2017 with a net position of $21,126,564, an increase of $65,634 from
the prior year. Of this, $17,130,926 represents the net investment in capital assets, leaving $3,995,638 of
unrestricted net position.
Storm Drainage Fund operating revenues for 2017 were $1,598,374, which was a slight decrease of
$21,928 from the prior year.
Operating expenses for 2017 were $1,815,673, which was $115,078 higher than the prior year due to
increased depreciation expense in the current year.
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OTHER ENTERPRISE FUNDS
Liquor Fund
The following graph presents five years of operating results for the Liquor Fund:
2013 2014 2015 2016 2017
Sales $6,063,231 $5,852,465 $6,056,668 $6,197,094 $6,495,300
Cost of Sales $4,341,225 $4,293,383 $4,431,501 $4,611,919 $4,769,844
Oper Exp $1,332,748 $1,354,123 $1,367,050 $1,465,790 $1,434,340
Oper Inc (Loss)$389,258 $204,959 $258,117 $119,385 $291,116
$–
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
$5,000,000
$5,500,000
$6,000,000
$6,500,000
$7,000,000
Liquor Fund
Year Ended December 31,
The Liquor Fund ended 2017 with a net position of $2,782,025, an increase of $202,356 from the prior
year. Of the net position balance, $101,761 represents the investment in liquor capital assets, leaving
$2,680,264 of unrestricted net position.
Liquor sales for 2017 were $6,495,300, which is $298,206 (4.8 percent) more than the prior year. The
Liquor Fund generated operating income of $291,116 in 2017, or about 4.5 percent of gross sales, which
is an increase from the 1.9 percent of gross sales in fiscal 2016. In 2017, the Liquor Fund transferred
$112,898 to the Capital Improvements Fund for future capital projects
The Liquor Fund gross profit margin was 26.56 in fiscal 2017, which is lower than the average gross
profit margin of 27.01 seen over the previous five years.
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Earle Brown Heritage Center Fund
The following graph presents five years of operating results for the Earle Brown Heritage Center Fund:
2013 2014 2015 2016 2017
Sales and User Fees $4,271,578 $4,518,231 $4,487,260 $4,700,175 $4,891,574
Cost of Sales $2,134,988 $2,089,293 $2,033,464 $2,066,065 $2,257,315
Oper Exp $2,696,297 $3,048,763 $2,689,723 $2,388,597 $2,519,580
Oper Inc (Loss)$(559,707)$(619,825)$(235,927)$245,513 $114,679
$(800,000)
$(400,000)
$–
$400,000
$800,000
$1,200,000
$1,600,000
$2,000,000
$2,400,000
$2,800,000
$3,200,000
$3,600,000
$4,000,000
$4,400,000
$4,800,000
$5,200,000
Earle Brown Heritage Center Fund
Year Ended December 31,
The Earle Brown Heritage Center Fund ended 2017 with a net position of $5,911,936, an increase of
$164,557 from the prior year. Of the net position balance, $3,495,579 represents investments in Earle
Brown Heritage Center capital assets, leaving $2,416,357 of unrestricted net position.
Earle Brown Heritage Center Fund sales and user fees for 2017 were $4,891,574, which is $191,399
(4.1 percent) more than last year, due to the increased number of events hosted in the current year.
Operating expenses for 2017 were $2,519,580, an increase of $130,983 from the prior year. The increase
in operating expense is mainly due to increased personal services.
During fiscal 2017, this fund experienced depreciation expense totaling $178,387.
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Golf Course Fund
The following graph presents five years of operating results for the Golf Course Fund:
2013 2014 2015 2016 2017
Oper Rev $167,280 $183,311 $208,225 $221,604 $212,130
Oper Exp $264,259 $271,229 $267,627 $302,202 $327,749
Oper Inc (Loss)$(96,979)$(87,918)$(59,402)$(80,598)$(115,619)
$(150,000)
$(100,000)
$(50,000)
$–
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
Golf Course Fund
Year Ended December 31,
The Golf Course Fund ended 2017 with a net position of $649,127, a decrease of $70,579 from the prior
year. Of this, $1,638,631 represents the investment in golf course land and capital assets, leaving a deficit
of ($989,504) in unrestricted net position.
Golf Course Fund operating revenues for 2017 were $212,130, which is $9,474 lower than last year.
Operating expenses for 2017 were $327,749, up $25,547 from the prior year. On an annual basis, this
fund has had to borrow from other funds to fund cash flow needs. The interfund borrowing totals
$989,569 (including $792,488 in initial funding of the golf course) at December 31, 2017.
We recommend that the City continue to monitor the financial results in this fund. We also recommend
that the City continue to update the long-range financial plan for this fund, including considering alternate
plans for financing the payback of the interfund borrowing in this fund.
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GOVERNMENT-WIDE FINANCIAL STATEMENTS
In addition to fund-based information, the current reporting model for governmental entities also requires
the inclusion of two government -wide financial statements designed to present a clear picture of the City
as a single, unified entity. These government-wide financial statements provide information on the total
cost of delivering services, including capital assets and long-term liabilities.
STATEMENT OF NET POSITION
The Statement of Net Position essentially tells you what the City owns and owes at a given point in time,
the last day of the fiscal year. Theoretically, net position represents the resources the City has leftover to
use for providing services after its debts are settled. However, those resources are not always in spendable
form, or there may be restrictions on how some of those resources can be used. Therefore, the Statement
of Net Position divides the net position into three components:
• Net Investment in Capital Assets – The portion of net position reflecting equity in capital assets
(i.e., capital assets minus related debt).
• Restricted Net Position – The portion of net position equal to resources whose use is legally
restricted minus any noncapital-related liabilities payable from those same resources.
• Unrestricted Net Position – The residual balance of net position after the elimination of net
investment in capital assets and restricted net position.
The following table presents the components of the City’s net position as of December 31, 2017 and 2016
for governmental activities and business-type activities:
Increase
2017 2016 (Decrease)
Net position
Governmental activities
Net investment in capital assets 53,152,985$ 48,358,875$ 4,794,110$
Restricted 27,309,336 29,554,944 (2,245,608)
Unrestricted 1,400,658 789,884 610,774
Total governmental activities 81,862,979 78,703,703 3,159,276
Business-type activities
Net investment in capital assets 43,553,672 43,483,294 70,378
Unrestricted 14,613,409 13,606,322 1,007,087
Total business-type activities 58,167,081 57,089,616 1,077,465
Total net position 140,030,060$ 135,793,319$ 4,236,741$
As of December 31,
The City’s total net position at December 31, 2017 was $4,236,741 higher than the previous year-end. Of
the increase, $3,159,276 came from governmental activities and $1,077,465 came from business-type
activities. The increase in both of these is due to the positive operating results of the City as a whole.
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STATEMENT OF ACTIVITIES
The Statement of Activities tracks the City’s yearly revenues and expenses, as well as any other
transactions that increase or reduce total net position. These amounts represent the full cost of providing
services. The Statement of Activities provides a more comprehensive measure than just the amount of
cash that changed hands, as reflected in the fund-based financial statements. This statement includes the
cost of supplies used, depreciation of long-lived capital assets, and other accrual-based expenses.
The following table presents the change in the net position of the City for the years ended December 31,
2017 and 2016:
2016
Program
Expenses Revenues Net Change Net Change
Governmental activities
General government 4,007,850$ 530,459$ (3,477,391)$ (3,327,927)$
Public safety 12,438,818 1,903,865 (10,534,953) (11,467,279)
Public works 4,542,244 1,528,087 (3,014,157) 161,701
Community service 143,103 – (143,103) (136,349)
Parks and recreation 2,995,396 800,746 (2,194,650) (2,481,451)
Economic development 1,917,039 525,679 (1,391,360) (5,368,250)
Interest on long-term debt 540,799 – (540,799) (654,205)
Business-type activities
Municipal liquor 6,241,998 6,503,094 261,096 82,976
Golf course 335,029 212,170 (122,859) (71,803)
Earle Brown Heritage Center 4,825,489 4,917,167 91,678 224,470
Water utility 3,294,345 3,585,597 291,252 313,308
Sanitary sewer utility 4,068,468 4,288,655 220,187 423,939
Storm drainage utility 1,848,887 1,598,624 (250,263) (51,947)
Street light utility 267,069 454,293 187,224 105,475
Recycling utility 366,608 404,769 38,161 197,542
Total net (expense) revenue 47,833,142$ 27,253,205$ (20,579,937) (22,049,800)
General revenues
Property taxes 16,736,759 15,757,198
Tax increments 4,652,373 3,667,590
Lodging taxes 1,206,565 1,159,519
Grants and contributions not
restricted to specific programs 1,701,232 1,939,431
Unrestricted investment earnings 431,423 351,190
Gain on disposal of capital assets 88,326 57,765
Total general revenues 24,816,678 22,932,693
Change in net position 4,236,741 882,893
Net position – beginning 135,793,319 134,910,426
Net position – ending 140,030,060$ 135,793,319$
Net (expense) revenue
2017
One of the goals of this statement is to provide a side-by-side comparison to illustrate the difference in the
way the City’s governmental and business-type operations are financed. The table clearly illustrates the
dependence of the City’s governmental operations on general revenues, such as property taxes and
unrestricted grants. It also shows that, for the most part, the City’s business-type activities are generating
sufficient program revenues (service charges and program-specific grants) to cover expenses. This is
critical given the current downward pressures on the general revenue sources.
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LEGISLATIVE UPDATES
The 2017 legislative session began with a full agenda, which included adopting a fiscal year 2018–2019
biennial state budget. The February 2017, state budget forecast projected that the state General Fund
would end the 2016–2017 biennium with a surplus of $743 million, eliminating the need for budget cuts
or transfers to balance the fund. However, the Legislature was expected to address several significant
spending areas for which successful funding appropriations had not been passed in recent legislative
sessions. The 2017 regular legislative session ended with four omnibus budget bills being vetoed,
potentially leaving a number of these same areas without appropriations. After a three-day special session,
the Governor and Legislature were able to agree on budget and appropriation bills addressing most of the
state budgetary needs for the upcoming biennium, albeit not without several line item vetoes invoked by
the Governor, including striking the appropriations for operating the House and Senate from the bills.
The following is a summary of recent legislation affecting Minnesota cities:
Omnibus Bonding Bill – The omnibus bonding bill authorizes financing for approximately $1.1 billion
in capital improvements. Included in the approved funding was $255 million for transportation
infrastructure, $83 million for economic development, $116 million for Public Financing Agency water
infrastructure loans and grants to municipalities, and $4 million for Metropolitan Council inflow and
infiltration improvement grants to metro area cities.
Omnibus Transportation Bill – The omnibus transportation bill appropriates $2.95 billion in fiscal 2018
and $2.87 billion in fiscal 2019, for a wide variety of transportation related projects. Included in the
appropriations are approximately $191 million and $198 million for municipal state aid street fund
purposes in fiscal 2018 and fiscal 2019, respectively.
Property Tax Relief – The omnibus tax bill contained a number of property tax relief measures,
including:
• Elimination of the implicit price deflator annual increase for the state general property tax
levy, effectively freezing it at the payable 2018 level for many property classes;
• Exempting the first $100,000 of each commercial-industrial parcel’s tax capacity from the
state general property tax levy;
• Expanding eligibility for homestead or agricultural property classification exemptions for
certain types of resort and conservation property for general property taxes; and
• Increasing the minimum value for a storage shed, deck, or similar structure on a leased
mobile home to be considered taxable from $1,000 to $10,000.
Local Government Aid – The annual appropriation for Local Government Aid (LGA) for cities was
increased $15.0 million to $534.4 million for aid payable in 2018 and thereafter, and the LGA payment
schedule was accelerated for fiscal 2019 only. Several corrections were also made to the city LGA
formula calculation, and a sparsity adjustment was incorporated for certain medium and small cities
beginning in 2018.
Minnesota Investment Fund – The omnibus jobs and economic growth bill appropriates $12.5 million
for each year of the biennium for the Minnesota Investment Fund, which is available for municipalities to
provide loans to assist with the expansion of local businesses.
Electronic Funds Transfers – Effective August 1, 2017, home rule charter cities of the second, third, or
fourth class are added to the list of local government entities allowed to pay certain claims using
electronic funds transfers. To be eligible, local governments must enact specified policy controls
governing the initiation, authorization, and documentation of electronic funds transfers.
Claims Declaration – The requirement to obtain a specific form of written claim declaration was also
repealed based on the understanding that by making the claim, the party making the claim is declaring
that the claim is just and correct and has not been paid previously.
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City E-mail Address Required to Receive State Aid – Effective for state aids payable in 2018 and
thereafter, cities will be required to register an official e-mail address with the Commissioner of the state
Department of Revenue in order to receive state aid payments.
Workforce Housing Tax Increment Financing – The omnibus tax bill created a new authorized use of
tax increment financing (TIF), for workforce housing in cities located outside of the statutorily defined
metropolitan area that meet certain criteria.
Tax Increment Financing Interfund Loans – Interfund loan provisions for TIF were amended to make
it easier for cities and development authorities to make and document interfund loans. Loans may now be
made or documented up to 60 days after the actual transfer or expenditure occurs. Interfund loan
resolutions may now be passed prior to the final approval of the related TIF plan. Loan terms may be
amended after the loan has been made if the TIF district has not been decertified.
Public Debt – The Legislature passed several amendments to statutes governing public debt that took
effect on July 1, 2017, including:
• Allowing both home rule charter and statutory cities to issue 20-year capital notes for projects
to eliminate R-22 Freon-based refrigerant;
• Increasing the maximum dollar limit on Housing and Redevelopment Authority general
obligation bond issues from $3 million to $5 million; and
• Modifying the requirements for street reconstruction bonds to be approved by a two -thirds
majority of the governing body rather than requiring unanimous approval.
Local Housing Trust Funds – The omnibus jobs and economic growth appropriations bill established
authority for cities to create a local housing trust fund by ordinance, or to participate in a joint powers
agreement to establish a regional housing trust fund. The funds, which may be financed from sources such
as local government appropriations or housing and redevelopment authority levies, may be used for grants
or loans for development, rehabilitation, financing of housing to match federal or state or private funds for
housing, down payment assistance, rental assistance, or homebuyer counseling.
Long-Term Equity Investment Authority – Effective July 1, 2017, cities with a population of more
than 100,000 or those that had their most recently issued general obligation bonds rated in the highest
category, are authorized to invest in an expanded list of authorized investments that includes certain
equity-based investments. The amount invested in equity-based investments cannot exceed 15 percent of
the sum of a city’s assigned cash, cash equivalents, deposits, and investments. Before investing in the
expanded list of authorized investments, the governing body of the municipality must adopt a resolution
acknowledging the risks assumed.
Border-to-Border Broadband Grants – The Legislature appropriated $20 million in fiscal 2018 for the
Border-to-Border Broadband Grant Program. The grants, available through the Office of Broadband
Development in the Department of Employment and Economic Development, provide funding to help
communities meet state goals for the development of state-wide, high-speed broadband access, focusing
on areas currently considered to be underserved or with a high concentration of low-income households.
Elections – An omnibus elections law was passed making several modifications to election
administration, including: requiring special elections conducted by local governments be held on one of
five uniform election dates, clarifying the timeline for municipalities to chan ge from odd to even-year
election cycles or vise-versa, allowing municipalities to canvass the results of a primary election on the
second or third day after the primary, and appropriating $7 million for grants to replace aging election
equipment or purchase electronic poll books.
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Workers’ Compensation and PERA Retirement Benefits – A statutory change was adopted based on
the results of recent court rulings that Public Employees Retirement Association (PERA) retirement
benefits should not be offset against workers’ compensation permanent total disability benefits. Under the
new law, claimants would receive all past and future permanent and total disability benefits without a
PERA retirement offset.
Notice of Proposed Ordinances – A new statute was created requiring cities to provide a 10-day notice
prior to a scheduled final vote on most new proposed ordinances or amendments to ordinances, and
specifying the various acceptable means of providing the required notification.
State Building Code Applicability – Construction, additions, and alterations to places of public
accommodation; defined as publicly or privately-owned facilities designed for occupancy by 200 or more
people as a sports or entertainment arena, stadium, theater, community or convention hall, special event
center, indoor amusement facility or water park, or indoor swimming pool; must comply with the state
building code.
Sunday Liquor Sales – Minnesota Statutes were amended to allow for the sale of intoxicating liquor on
Sundays between the hours of 11:00 a.m. and 6:00 p.m. by off-sale licensees, effective July 1, 2017.
REAL ID Act – Minnesota Statutes were amended to make the state compliant with federal REAL ID
Act requirements, which will change identity verification and security related to state-issued identification
cards and driver’s licenses.
THIS PAGE INTENTIONALLY LEFT BLANK
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ACCOUNTING AND AUDITING UPDATES
GASB STATEMENT NO. 75, ACCOUNTING AND FINANCIAL REPORTING FOR POSTEMPLOYMENT
BENEFITS OTHER THAN PENSIONS
GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than
Pensions, establishes new accounting and financial reporting requirements for governments whose
employees are provided with other post-employment benefits (OPEB), as well as for certain nonemployer
governments that have a legal obligation to provide financial support for OPEB provided to the
employees of other entities. This statement replaces the requirements of GASB Statement Nos. 45 and 57.
This statement establishes standards for recognizing and measuring liabilities, deferred outflows of
resources, deferred inflows of resources, and expense/expenditures. Similar to changes implemented for
pensions, this statement requires the liability of employer and nonemployer contributing entities to
employees for defined benefit OPEB (net OPEB liability) to be measured as the portion of the present
value of projected benefit payments to be provided to current active and inactive employees that is
attributed to those employees’ past periods of service (total OPEB liability), less the amount of the OPEB
plan’s fiduciary net position. Note disclosure and RSI requirements about defined benefit OPEB also are
addressed.
The requirements for this statement are effective for fiscal years beginning after June 15, 2017. Earlier
application is encouraged.
GASB STATEMENT NO. 83, CERTAIN ASSET RETIREMENT OBLIGATIONS
This statement addresses accounting and financial reporting for certain asset retirement obligations
(ARO), which are legally enforceable liabilities associated with the retirement of a tangible capital asset.
This statement establishes criteria for determining the timing and pattern of recognition of a liability and a
corresponding deferred outflow of resources for ARO. A government that has legal obligations to perform
future asset retirement activities related to its tangible capital assets should recognize a liability when it is
both incurred and reasonably estimable. The measurement of an ARO is req uired to be based on the best
estimate of the current value of outlays expected to be incurred, and a deferred outflow of resources
associated with an ARO is required to be measured at the amount of the corresponding liability upon
initial measurement.
This statement requires the current value of a government’s AROs to be adjusted for the effects of general
inflation or deflation at least annually, and a government to evaluate all relevant factors at least annually
to determine whether the effects of one or more of the factors are expected to significantly change the
estimated asset retirement outlays. A government should remeasure an ARO only when the result of the
evaluation indicates there is a significant change in the estimated outlays. Deferred outflows of resources
should be reduced and recognized as outflows of resources in a systematic and rational manner over the
estimated useful life of the tangible capital asset.
If a government owns a minority interest in a jointly owned tangible asset where a nongovernmental
entity is the majority owner or has operational responsibility for the jointly owned asset, the government’s
minority share of an ARO should be reported using the measurement produced by the nongovernmental
majority owner or the nongovernmental minority owner that has operational responsibility, without
adjustment to conform to the liability measurement and recognition requirements of this statement.
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The statement also requires disclosures of any funding or financial assurance requirements a government
has related to the performance of asset retirement activities, along with any assets restricted for the
payment of the government’s AROs. This statement also requires disclosure of information about the
nature of a government’s AROs, the methods and assumptions used for the estimates of the liabilities, and
the estimated remaining useful life of the associated tangible capital assets. If an ARO (or portions
thereof) has been incurred by a government but is not yet recognized because it is not reasonably
estimable, the government is required to disclose that fact and the reasons therefor. This statement
requires similar disclosures for a government’s minority shares of AROs.
The requirements of this statement are effective for reporting periods beginning after June 15, 2018.
Earlier application is encouraged.
GASB STATEMENT NO. 84, FIDUCIARY ACTIVITIES
This statement establishes criteria for identifying fiduciary activities of all state and local governments.
The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary
activity and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included
to identify fiduciary component units and post-employment benefit arrangements that are fiduciary
activities.
An activity meeting the criteria should be reported in a fiduciary fund in the basic financial statements,
which should present a statement of fiduciary net position and a statement of changes in fiduciary net
position. This statement describes four fiduciary funds that should be reported, if applicable: (1) pension
(and other employee benefit) trust funds, (2) investment trust funds, (3) private -purpose trust funds, and
(4) custodial funds. Custodial funds generally should report fiduciary activities that are not held in a trust
or equivalent arrangement that meets specific criteria.
A fiduciary component unit, when reported in the fiduciary fund financial statements of a primary
government, should combine its information with its component units that are fiduciary component units
and aggregate that combined information with the primary government’s fiduciary funds.
This statement also provides for recognition of a liability to the beneficiaries in a fiduciary fund when an
event has occurred that compels the government to disburse fiduciary resources, defined as when a
demand for the resources has been made or when no further action, approval, or condition is required to
be taken or met by the beneficiary to release the assets.
The requirements of this statement are effective for reporting periods beginning after December 15, 2018.
Earlier application is encouraged.
GASB STATEMENT NO. 85, OMNIBUS 2017
The objective of this statement is to address issues that have been identified during implementation and
application of certain GASB statements. The statement addresses a variety of topics, including issues
related to blending component units, goodwill, fair value measurement and application, and
post-employment benefits (pensions and OPEB). The statement is meant to enhance consistency in the
application of recent accounting and financial reporting standards. The requirements of this statement are
effective for reporting periods beginning after June 15, 2017.
-26-
GASB STATEMENT NO. 86, CERTAIN DEBT EXTINGUISHMENT ISSUES
Current GASB guidance requires that debt be considered defeased in substance when the debtor
irrevocably places cash or other monetary assets acquired with refunding debt proceeds in a trust to be
used solely for satisfying scheduled payments of both principal and interest of the defeased debt. This
new standard establishes essentially the same requirements for when a government places cash and other
monetary assets acquired with only existing resources in an irrevocable trust to extinguish the debt.
The primary objective of this statement is to improve consistency in accounting and financial reporting
for in-substance defeasance of debt by providing guidance for transactions in which cash and other
monetary assets acquired with only existing resources—resources other than the proceeds of refunding
debt—are placed in an irrevocable trust for the sole purpose of extinguishing debt. This statement also
improves accounting and financial reporting for prepaid insurance on debt that is extinguished and notes
to financial statements for debt that is defeased in substance. The requirements of this statement are
effective for reporting periods beginning after June 15, 2017.
GASB STATEMENT NO. 87, LEASES
A lease is a contract that transfers control of the right to use another entity’s nonfinancial asset as
specified in the contract for a period of time in an exchange or exchange -like transaction. Examples of
nonfinancial assets include buildings, land, vehicles, and equipment. Any contract that meets this
definition should be accounted for under the leases guidance, unless specifically excluded in this
statement.
Governments enter into leases for many types of assets. Under the previous guidance, leases were
classified as either capital or operating depending on whether the lease met any of four tests. In many
cases, the previous guidance resulted in reporting lease transactions differently than similar nonlease
financing transactions.
The goal of this statement is to better meet the information needs of users by improving accounting and
financial reporting for leases by governments. It establishes a single model for lease accounting based on
the principle that leases are financings of the right to use an underlying asset. This statement increases the
usefulness of financial statements by requiring recognition of certain lease assets and liabilities for leases
that previously were classified as operating leases and recognized as inflows of resources or outflows of
resources based on the payment provisions of the contract.
Under this statement, a lessee is required to recognize a lease liability and an intangible right -to-use lease
asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby
enhancing the relevance and consistency of information about governments’ leasing activities.
To reduce the cost of implementation, this statement includes an exception for short -term leases, defined
as a lease that, at the commencement of the lease term, has a maximum possible term under the lease
contract of 12 months (or less), including any options to extend, regardless of their probability of being
exercised. Lessees and lessors should recognize short-term lease payments as outflows of resources or
inflows of resources, respectively, based on the payment provisions of the lease contract. The
requirements of this statement are effective for reporting periods beginning after December 15, 2019.
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CITY OF BROOKLYN CENTER
HENNEPIN COUNTY, MINNESOTA
Special Purpose Audit Reports
Year Ended
December 31, 2017
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Page
Independent Auditor’s Report on Internal Control Over Financial Reporting
and on Compliance and Other Matters Based on an Audit of Financial
Statements Performed in Accordance With Government Auditing Standards 1–2
Independent Auditor’s Report on Minnesota Legal Compliance 3
Table of Contents
CITY OF BROOKLYN CENTER
HENNEPIN COUNTY, MINNESOTA
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-1-
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the City Council and Management
City of Brooklyn Center, Minnesota
We have audited, in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States, the financial statements of the governmental
activities, the business-type activities, each major fund, and the aggregate remaining fund information of
the City of Brooklyn Center, Minnesota (the City) as of and for the year ended December 31, 2017, and
the related notes to the financial statements, which collectively comprise the City’s basic financial
statements, and have issued our report thereon dated May 21, 2018.
INTERNAL CONTROL OVER FINANCIAL REPORTING
In planning and performing our audit of the financial statements, we considered the City’s internal control
over financial reporting (internal control) to determine the audit procedures that are appropriate in the
circumstances for the purpose of expressing our opinions on the financial statements, but not for the
purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do
not express an opinion on the effectiveness of the City’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination
of deficiencies, in internal control, such that there is a reasonable possibility that a material misstateme nt
of the City’s financial statements will not be prevented, or detected and corrected, on a timely basis. A
significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less
severe than a material weakness, yet important enough to merit attention by those charged with
governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any
deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses
may exist that have not been identified.
(continued)
-2-
COMPLIANCE AND OTHER MATTERS
As part of obtaining reasonable assurance about whether the City’s financial statements are free from
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on compliance with those
provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The
results of our tests disclosed no instances of noncompliance or other matters that are required to be
reported under Government Auditing Standards.
PURPOSE OF THIS REPORT
The purpose of this report is solely to describe the scope of our testing of internal control and compliance
and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal
control or on compliance. This report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the City’s internal control and compliance. Accordingly,
this report is not suitable for any other purpose.
Minneapolis, Minnesota
May 21, 2018
-3-
INDEPENDENT AUDITOR’S REPORT
ON MINNESOTA LEGAL COMPLIANCE
To the City Council and Management
City of Brooklyn Center, Minnesota
We have audited, in accordance with auditing standards generally accepted in the United States of
America, and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States, the financial statements of the governmental
activities, the business-type activities, each major fund, and the aggregate remaining fund information of
the City of Brooklyn Center, Minnesota (the City) as of and for the year ended December 31, 20 17, and
the related notes to the financial statements, which collectively comprise the City’s basic financial
statements, and have issued our report thereon dated May 21, 2018.
MINNESOTA LEGAL COMPLIANCE
The Minnesota Legal Compliance Audit Guide for Cities, promulgated by the State Auditor pursuant to
Minnesota Statutes § 6.65, contains seven categories of compliance to be tested: contracting and bidding,
deposits and investments, conflicts of interest, public indebtedness, claims and disbursements,
miscellaneous provisions, and tax increment financing. Our audit considered all of the listed categories.
In connection with our audit, nothing came to our attention that caused us to believe that the City failed to
comply with the provisions of the Minnesota Legal Compliance Audit Guide for Cities. However, our
audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had
we performed additional procedures, other matters may have come to our attention regarding the City’s
noncompliance with the above referenced provisions.
PURPOSE OF THIS REPORT
The purpose of this report is solely to describe the scope of our testing of compliance and the results of
that testing, and not to provide an opinion on compliance. Accordingly, this report is not suitable for any
other purpose.
Minneapolis, Minnesota
May 21, 2018
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Management Report
for
City of Brooklyn Center, Minnesota
December 31, 2017
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To the City Council and Management
City of Brooklyn Center, Minnesota
We have prepared this management report in conjunction with our audit of the City of Brooklyn Center,
Minnesota’s (the City) financial statements for the year ended December 31, 2017. We have organized
this report into the following sections:
•Audit Summary
•Governmental Funds Overview
•Enterprise Funds Overview
•Government-Wide Financial Statements
•Legislative Updates
•Accounting and Auditing Updates
We would be pleased to further discuss any of the information contained in this report or any other
concerns that you would like us to address. We would also like to express our thanks for the courtesy and
assistance extended to us during the course of our audit.
The purpose of this report is solely to provide those charged with governance of the City, management,
and those who have responsibility for oversight of the financial reporting process comments resulting
from our audit process and information relevant to city finances in Minnesota. Accordingly, this report is
not suitable for any other purpose.
Minneapolis, Minnesota
May 21, 2018
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-1-
AUDIT SUMMARY
The following is a summary of our audit work, key conclusions, and other information that we consider
important or that is required to be communicated to the City Council, administration, or those charged
with governance of the City.
OUR RESPONSIBILITY UNDER AUDITING STANDARDS GENERALLY ACCEPTED IN THE UNITED
STATES OF AMERICA AND GOVERNMENT AUDITING STANDARDS
We have audited the financial statements of the governmental activities, the business -type activities, each
major fund, and the aggregate remaining fund information of the City as of and for the year ended
December 31, 2017, and the related notes to the financial statements. Professional standards require that
we provide you with information about our responsibilities under auditing standards generally accepted in
the United States of America and Government Auditing Standards, as well as certain information related
to the planned scope and timing of our audit. We have communicated such information to you verbally
and in our audit engagement letter. Professional standards also require that we communicate the following
information related to our audit.
PLANNED SCOPE AND TIMING OF THE AUDIT
We performed the audit according to the planned scope and timing previously discussed and coordinated
in order to obtain sufficient audit evidence and complete an effective audit.
AUDIT OPINION AND FINDINGS
Based on our audit of the City’s financial statements for the year ended December 31, 2017:
• We have issued an unmodified opinion on the City’s basic financial statements.
• We reported no deficiencies in the City’s internal control over financial reporting that we
considered to be material weaknesses.
• The results of our testing disclosed no instances of noncompliance required to be reported under
Government Auditing Standards.
• We reported no findings based on our testing of the City’s compliance with Minnesota laws and
regulations.
SIGNIFICANT ACCOUNTING POLICIES
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the City are described in Note 1 of the notes to basic financial statements.
No new accounting policies were adopted and the application of existing policies was not changed during
the year ended December 31, 2017; however, the City implemented the following governmental
accounting standards during the fiscal year:
• Governmental Accounting Standards Board (GASB) Statement No. 79, Certain External
Investment Pools and Pool Participants, which enhanced disclosures regarding investments.
• GASB Statement No. 82, Pension Issues, an amendment of GASB Statement Nos. 67, No. 68, and
No. 73, which addressed certain issues related to pension reporting and disclosures.
We noted no transactions entered into by the City during the year for which there is a lack of authoritative
guidance or consensus. All significant transactions have been recognized in the financial statements in the
proper period.
-2-
ACCOUNTING ESTIMATES AND MANAGEMENT JUDGMENTS
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management’s knowledge and experience about past and current events and assumptions about
future events. Certain accounting estimates are particularly sensitive because of their significance to the
financial statements and because of the possibility that future events affecting them may differ
significantly from those expected. The most sensitive estimates affecting the financial statements were:
• Net Other Post-Employment Benefit (OPEB) and Pension Liabilities – The City has recorded
liabilities and activity for other post-employment benefits (OPEB) and pension benefits. These
obligations are calculated using actuarial methodologies described in GASB Statement Nos. 45
and 68. These actuarial calculations include significant assumptions, including projected changes,
healthcare insurance costs, investment returns, retirement ages, proportionate share, and
employee turnover.
• Depreciation – Management’s estimates of depreciation expense are based on the estimated
useful lives of the assets.
• Compensated Absences – Management’s estimate is based on current rates of pay and sick leave
balances.
• Assets Held for Resale – Management’s estimates of this asset are based on the lower of cost or
acquisition value.
We evaluated the key factors and assumptions used by management to develop these accounting estimates
in determining that they are reasonable in relation to the basic financial statements taken as a whole.
The financial statement disclosures are neutral, consistent, and clear.
CORRECTED AND UNCORRECTED MISSTATEMENTS
Professional standards require us to accumulate all known and likely misstatements identified during the
audit, other than those that are trivial, and communicate them to the appropriate level of management.
Where applicable, management has corrected all such misstatements. In addition, none of the
misstatements detected as a result of audit procedures and corrected by management, when applicable,
were material, either individually or in the aggregate, to each opinion unit’s financial statements taken as
a whole.
We proposed one uncorrected audit adjustment to the financial statements for the reporting of
governmental activities and business-type activities unamortized premiums and discounts on bond
proceeds totaling $113,365 and $225,771, respectively. The City recorded these amounts as revenue or
expense in the period of issuance rather than amortizing over the payback period of the bonds.
Management has determined that the effects of these items were immaterial, both individually and taken
together, to each opinion unit’s financial statements taken as a whole.
DIFFICULTIES ENCOUNTERED IN PERFORMING THE AUDIT
We encountered no significant difficulties in dealing with management in performing and completing our
audit.
-3-
DISAGREEMENTS WITH MANAGEMENT
For purposes of this report, a disagreement with management is a financial accounting, reporting, or
auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial
statements or the auditor’s report. We are pleased to report that no such disagre ements arose during the
course of our audit.
MANAGEMENT REPRESENTATIONS
We have requested certain representations from management that are included in the management
representation letter dated May 21, 2018.
MANAGEMENT CONSULTATIONS WITH OTHER INDEPENDENT ACCOUNTANTS
In some cases, management may decide to consult with other accountants about auditing and accounting
matters, similar to obtaining a “second opinion” on certain situations . If a consultation involves
application of an accounting principle to the City’s financial statements or a determination of the type of
auditor’s opinion that may be expressed on those statements, our professional standards require the
consulting accountant to check with us to determine that the consultant has all the relevant facts. To our
knowledge, there were no such consultations with other accountants.
OTHER AUDIT FINDINGS OR ISSUES
We generally discuss a variety of matters, including the application of accounting principles and auditing
standards, with management each year prior to retention as the City’s auditors . However, these
discussions occurred in the normal course of our professional relationship and our responses were not a
condition to our retention.
OTHER MATTERS
We applied certain limited procedures to the management’s discussion and analysis (MD&A) and the
pension and OPEB-related required supplementary information (RSI) that supplements the basic financial
statements. Our procedures consisted of inquiries of management regarding the methods of preparing the
information and comparing the information for consistency with management’s responses to our
inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic
financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on
the RSI.
We were engaged to report on the combining and individual fund statements and schedules accompanying
the financial statements which are not RSI. With respect to this information, we made certain inquiries of
management and evaluated the form, content, and methods of preparing the information to determine that
the information complies with accounting principles generally accepted in the United States of America,
the method of preparing it has not changed from the prior period, and the information is appropriate and
complete in relation to our audit of the financial statements. We compared and reconciled the combining
and individual fund statements and schedules to the underlying accounting records used to prepare the
financial statements or to the financial statements themselves.
We were not engaged to report on the introductory section and statistical section which accompany the
financial statements but are not RSI. Such information has 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 it.
-4-
GOVERNMENTAL FUNDS OVERVIEW
This section of the report provides you with an overview of the financial trends and activities of the City’s
governmental funds, which includes the General, special revenue, debt service, and capital project funds.
These funds are used to account for the basic services the City provides to all of its citizens, which are
financed primarily with property taxes. The governmental fund information in the City’s financial
statements focuses on budgetary compliance and the sufficiency of each governmental fund’s current
assets to finance its current liabilities.
PROPERTY TAXES
Minnesota cities rely heavily on local property tax levies to support their governmental fund activities.
For the 2016 fiscal year, local ad valorem property tax levies provided 39.8 percent of the total
governmental fund revenues for cities over 2,500 in population, and 36.4 percent for cities under 2,500 in
population.
The total market value of property in Minnesota cities increased about 5.6 percent for the 2017 levy year,
which followed an increase of 5.7 percent for levy year 2016. The market values used for levying
property taxes are based on the previous fiscal year (e.g., market values for taxes levied in 2017 were
based on assessed values as of January 1, 2016), so the trend of change in these market values lags
somewhat behind the housing market and economy in general.
The City’s taxable market value increased 6.4 percent for taxes payable in 2016 and increased 5.8 percent
for taxes payable in 2017. The following graph shows the City’s changes in taxable market value over the
past 10 years:
$–
$500,000,000
$1,000,000,000
$1,500,000,000
$2,000,000,000
$2,500,000,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Taxable Market Value
-5-
Tax capacity is considered the actual base available for taxation. It is calculated by applying the state’s
property classification system to each property’s market value . Each property classification, such as
commercial or residential, has a different calculation and uses different rates . Consequently, a city’s total
tax capacity will change at a different rate than its total market value, as tax capacity is affected by the
proportion of its tax base that is in each property classification from year-to-year, as well as legislative
changes to tax rates. The City’s tax capacity increased 4.2 percent for taxes payable in 2016 and increased
5.9 percent for taxes payable in 2017.
The following graph shows the City’s change in tax capacities over the past 10 years:
$–
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Tax Capacity
The following table presents the average tax rates applied to city residents for each of the last three levy
years, along with comparative state-wide and metro area average rates from the two most recent years for
which the information is available:
2015 2016 2015 2016 2015 2016 2017
Average tax rate
City 46.9 46.5 43.4 43.0 70.0 71.8 70.5
County 44.7 44.1 42.9 42.3 46.4 45.4 44.1
School 27.1 27.5 28.3 28.6 36.9 37.0 40.6
Special taxing 6.9 6.9 8.8 8.7 11.2 11.2 11.0
Total 125.6 125.0 123.4 122.6 164.5 165.4 166.2
Note: State-wide and metro area average tax rates are not available for 2017.
Rates Expressed as a Percentage of Net Tax Capacity
Metro Area
Seven-CountyAll Cities
State-Wide
City of
Brooklyn Center
Both the City’s portion and the total tax capacity rates for Brooklyn Center residents are significantly
higher than the state-wide and metro area averages the last two years. These rates are higher than average
due to a combination of factors, including lower than average property values, makeup of residential
properties, and the use of tax increments within the City.
-6-
GOVERNMENTAL FUNDS REVENUE AND EXPENDITURES
The following table presents the per capita revenue of the City’s governmental funds for the past three
years, along with state-wide averages.
We have included the most recent comparative state-wide averages available from the Office of the State
Auditor to provide a benchmark for interpreting the City’s data. The amounts received from the typical
major sources of governmental fund revenue will naturally vary between cities based on factors such as a
city’s stage of development, location, size and density of its population, property values, services it
provides, and other attributes. It will also differ from year -to-year due to the effect of inflation and
changes in its operation. Also, certain data on these tables may be classified differently than how they
appear on the City’s financial statements in order to be more comparable to the state -wide information,
particularly in separating capital expenditures from current expenditures.
We have designed this section of our management report using per capita data in order to better identify
unique or unusual trends and activities of your city. We intend for this type of comparative and trend
information to complement, rather than duplicate, information in the MD&A. An inherent difficulty in
presenting per capita information is the accuracy of the population count, which for most years is based
on estimates.
Year 2015 2016 2017
Population 2,500–10,000 10,000–20,000 20,000–100,000 30,864 31,231 31,231
Property taxes 460$ 432$ 455$ 490$ 509$ 536$
Tax increments 26 26 42 119 117 154
Franchise fees and other taxes 35 43 45 56 58 61
Special assessments 59 44 59 56 57 57
Licenses and permits 35 33 42 28 30 29
Intergovernmental revenues 313 275 152 154 120 124
Charges for services 110 92 103 31 28 30
Other 91 57 54 30 42 30
Total revenue 1,129$ 1,002$ 952$ 964$ 961$ 1,021$
December 31, 2016
Governmental Funds Revenue per Capita
With State-Wide Averages by Population Class
State-Wide City of Brooklyn Center
The City relies more on property tax revenue for its governmental funds revenu e compared to the average
Minnesota city. The City continues to generate significantly more tax increment revenue per capita than
average, as it has made extensive use of this tool to finance commercial development.
The City’s per capita governmental funds revenue for 2017 was $1,021, an increase of about 6.2 percent
from the prior year. Property tax revenue increased $27 per capita due to the increased tax levy, and tax
increment revenue increased $37 per capita. This increase was offset by the $12 per capita decrease in
other revenue due to conduit debt issuance fees, development fees , and insurance dividends received in
the prior year.
-7-
The expenditures of governmental funds will also vary from state-wide averages and from year-to-year,
based on the City’s circumstances. Expenditures are classified into three types as follows:
• Current – These are typically the general operating type expenditures occurring on an annual
basis, and are primarily funded by general sources, such as taxes and intergovernmental revenues.
• Capital Outlay and Construction – These expenditures do not occur on a consistent basis, more
typically fluctuating significantly from year-to-year. Many of these expenditures are
project-oriented, and are often funded by specific sources that have benefited from the
expenditure, such as special assessment improvement projects.
• Debt Service – Although the expenditures for debt service may be relatively consistent over the
term of the respective debt, the funding source is the important factor . Some debt may be repaid
through specific sources such as special assessments or redevelopment funding, while other debt
may be repaid with general property taxes.
The City’s expenditures per capita of its governmental funds for the past three years, together with
state-wide averages, are presented in the following table:
Year 2015 2016 2017
Population 2,500–10,000 10,000–20,000 20,000–100,000 30,864 31,231 31,231
Current
General government 145$ 114$ 97$ 95$ 96$ 103$
Public safety 263 250 273 324 330 351
Street maintenance 126 123 95 66 68 69
Parks and recreation 93 109 95 90 86 88
All other 74 77 91 190 191 77
701$ 673$ 651$ 765$ 771$ 688$
Capital outlay
and construction 381$ 370$ 301$ 339$ 192$ 327$
Debt service
Principal 196$ 163$ 115$ 98$ 87$ 112$
Interest and fiscal 48 38 34 31 31 22
244$ 201$ 149$ 129$ 118$ 134$
Total expenditures 1,326$ 1,244$ 1,101$ 1,233$ 1,081$ 1,149$
State-Wide
December 31, 2016
Governmental Funds Expenditures per Capita
With State-Wide Averages by Population Class
City of Brooklyn Center
The City’s governmental funds current per capita expenditures are higher than state-wide averages for
cities in the same population class. The City’s current operating costs are higher than average due to
above average public safety costs. The City’s per capita current expenditures decreased $83 per capita in
2017, mainly due to the $114 per capita decrease in the all other category attributed to a decrease in
economic development expenditures related to the 2016 Sanctuary Senior Housing Project. Capital outlay
costs per capita increased $135 as a result of the purchase of emergency responder radios, City Hall
parking lot improvements, and engineering costs related to the Brooklyn Boulevard improvement project.
Debt service costs per capita increased $16 as a result of scheduled bond payments and the early payoff of
the City’s General Obligation Improvement Bonds, Series 2008B.
-8-
GOVERNMENTAL FUND BALANCES
The following table summarizes the changes in the fund balances of the City’s governmental funds during
the year ended December 31, 2017, presented both by fund balance classification and by fund:
Increase
2017 2016 (Decrease)
Fund balances of governmental funds
Total by classification
Nonspendable 113,610$ 93,888$ 19,722$
Restricted 23,888,356 23,355,609 532,747
Committed 9,678,002 10,852,995 (1,174,993)
Assigned 717,167 715,544 1,623
Unassigned 9,428,584 8,849,694 578,890
Total – governmental funds 43,825,719$ 43,867,730$ (42,011)$
Total by fund
General 11,355,203$ 11,440,897$ (85,694)$
Tax Increment District No. 3 17,984,598 17,276,234 708,364
Debt Service 1,837,237 1,876,481 (39,244)
Capital Improvements 3,036,868 5,185,641 (2,148,773)
Municipal State Aid for Construction (381,395) 99,814 (481,209)
Special Assessment Construction 567,537 (50,219) 617,756
Nonmajor funds 9,425,671 8,038,882 1,386,789
Total – governmental funds 43,825,719$ 43,867,730$ (42,011)$
Governmental Funds Change in Fund Balance
Fund Balance
as of December 31,
In total, the fund balances of the City’s governmental funds decreased by $42,011 during the year ended
December 31, 2017. The majority of the decrease was in committed fund balances offset by an increase in
restricted and unassigned fund balances. Committed fund balances decreased $1,174,993, mainly in the
committed fund balance in the Capital Improvements Fund. Restricted fund balances increased $532,747,
mainly in the restricted fund balance in the Tax Increment District No. 3 Fund.
-9-
GENERAL FUND
The City’s General Fund accounts for the financial activity of the basic services provided to the
community. The primary services included within this fund are the administration of the municipal
operation, police and fire protection, building inspection, streets and highway maintenance, and parks and
recreation. The graph below illustrates the change in the General Fund financial position over the last
five years. We have also included a line representing annual expenditures to reflect the change in the size
of the General Fund operation over the same period.
2013 2014 2015 2016 2017
Fund Balance $12,382,713 $11,020,081 $11,170,917 $11,440,897 $11,355,203
Cash (Net)$13,037,962 $11,754,777 $11,602,236 $12,326,654 $12,057,840
Expenditures $17,106,244 $17,503,674 $18,047,798 $18,849,079 $19,873,539
$–
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
$20,000,000
General Fund Financial Position
Year Ended December 31,
The City’s General Fund cash and investments balance (net of interfund borrowing) at December 31,
2017 was $12,057,840, which decreased $268,814 from 2016. Total fund balance at December 31, 2017
was $11,355,203, a decrease of $85,694 from the prior year.
Having an appropriate fund balance is an important factor in assessing the City’s financial health because
a government, like any organization, requires a certain amount of equity to operate. Generally, the amount
of equity required typically increases as the size of the operation increases. A healthy financial position
allows the City to avoid volatility in tax rates; helps minimize the impact of state funding changes; allows
for the adequate and consistent funding of services, repairs, and unexpected costs; and can be a factor in
determining the City’s bond rating and resulting interest costs.
The City has an approved fund balance policy that states the General Fund will manage its cash flow by
having a year-end target unassigned fund balance of between 50 percent and 52 percent of next year’s
General Fund budgeted expenditures. At December 31, 2017, the City’s General Fund had an unassigned
fund balance of 52 percent of the subsequent year’s budgeted expenditures.
-10-
The following graph reflects the City’s General Fund revenue sources for 2017 compared to budget:
Other
Charges for Services
Intergovernmental
Licenses and Permits
Taxes
General Fund Revenue
Budget Actual
Total General Fund revenues for 2017 were $20,538,389, which was $240,379 (1.2 percent) over the final
budget. The majority of this variance was from licenses and permits. Licenses and permits revenue was
$176,230 over budget from more than anticipated building-related activities.
The following graph presents the City’s General Fund revenues by source for the last five years . The
graph reflects the City’s reliance on property taxes and other local sources of revenue, and shows the
virtual elimination of general state aid revenue in recent years.
Taxes Intergovernmental Other
2013 $15,017,242 $1,086,162 $2,662,306
2014 $14,991,781 $1,401,447 $2,472,394
2015 $15,532,039 $1,410,695 $2,230,529
2016 $16,128,373 $1,466,341 $2,397,091
2017 $16,766,847 $1,496,165 $2,275,377
$–
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
General Fund Revenue by Source
Year Ended December 31,
Overall, General Fund revenues increased $546,584 (2.7 percent) from the previous year, mainly in tax
revenue. Tax revenue increased $638,474, mainly due to the increased levy in the current year.
-11-
The following graph illustrates the components of General Fund spending for 2017 compared to budget:
Other
Parks and Recreation
Public Works
Public Safety
General Government
General Fund Expenditures
Budget Actual
Total General Fund expenditures for 2017 were $19,873,539, which was $389,471 (1.9 percent) less than
budget, spread across all functions. Public safety expenditures were $231,126 under budget in the
protective inspection department, due to open staff positions during the year. Public works expenditures
were $145,284 under budget in the engineering and street departments. Parks and recreation expenditures
were $119,878 under budget in the community center and park maintenance departments. Expenditures in
the general government function were $83,283 under budget, mainly in the information technology and
legal departments. These budget variances were offset by the other expenditures which were $190,100
over budget, due to increased lodging taxes and nondepartmental expenditures.
The following graph presents the City’s General Fund expenditures by function for the last five years.
General
Government Public Safety Public Works Parks and
Recreation Other
2013 $2,898,973 $8,933,419 $1,893,427 $2,411,792 $968,633
2014 $2,745,046 $9,444,438 $1,963,110 $2,406,617 $944,463
2015 $2,769,009 $9,809,177 $1,880,792 $2,492,260 $1,096,560
2016 $3,019,888 $10,067,963 $1,918,330 $2,627,958 $1,214,940
2017 $3,223,766 $10,687,408 $2,037,136 $2,703,475 $1,221,754
$–
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
$9,000,000
$10,000,000
$11,000,000
General Fund Expenditures by Function
Year Ended December 31,
General Fund expenditures increased by $1,024,460, or 5.4 percent, from the prior year, mainly due to the
$619,445 increase in the public safety function, the $203,878 increase in the general government function,
and the $118,806 increase in the public works function. Public safety expenditures and general
government expenditures increased, mainly due to increased personal services. The public works function
increased, mainly due to increased services and other charges.
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ENTERPRISE FUNDS OVERVIEW
The City maintains several enterprise funds to account for services the City provides that are financed
primarily through fees charged to those utilizing the service. This section of the report provides you with
an overview of the financial trends and activities of the City’s enterprise funds, which includes the
Municipal Liquor, Golf Course, Earle Brown Heritage Center, Water Utility, Sanitary Sewer Utility,
Storm Drainage Utility, Street Light Utility, and Recycling Utility Funds.
The utility funds comprise a considerable portion of the City’s activities. These funds significantly help to
defray overhead and administrative costs and provide additional support to general government operations
by way of annual transfers. We understand that the City is proactive in reviewing these activities on an
ongoing basis and we want to reiterate the importance of continually monitoring these operations. Over
the years, we have emphasized to our city clients the importance of these utility operations being
self-sustaining, preventing additional burdens on general government funds . This would include the
accumulation of net position for future capital improvements and to provide a cushion in the event of a
negative trend in operations.
ENTERPRISE FUNDS FINANCIAL POSITION
The following table summarizes the changes in the financial position of the City’s enterprise funds during
the year ended December 31, 2017, presented both by classification and by fund:
Increase
2017 2016 (Decrease)
Net position of enterprise funds
Total by classification
Net investment in capital assets 43,553,672$ 43,483,294$ 70,378$
Unrestricted 16,948,871 15,791,138 1,157,733
Total – enterprise funds 60,502,543$ 59,274,432$ 1,228,111$
Total by fund
Municipal Liquor 2,782,025$ 2,579,669$ 202,356$
Golf Course 649,127 719,706 (70,579)
Earle Brown Heritage Center 5,911,936 5,747,379 164,557
Water Utility 13,365,377 13,011,611 353,766
Sanitary Sewer Utility 14,874,105 14,594,942 279,163
Storm Drainage Utility 21,126,564 21,060,930 65,634
Street Light Utility 1,544,688 1,351,294 193,394
Recycling Utility 248,721 208,901 39,820
Total – enterprise funds 60,502,543$ 59,274,432$ 1,228,111$
Enterprise Funds Change in Financial Position
Net Position
as of December 31,
In total, the net position of the City’s enterprise funds increased by $1,228,111 during the year ended
December 31, 2017. As noted above, all of the City’s enterprise funds had positive operating results with
the exception of the Golf Course Fund.
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Water Fund
The following graph presents five years of operating results for the Water Fund:
2013 2014 2015 2016 2017
Oper Rev $2,275,767 $2,206,311 $2,573,493 $3,191,538 $3,543,323
Oper Exp $1,966,957 $1,838,841 $2,008,333 $2,681,066 $3,158,986
Oper Inc (Loss)$308,810 $367,470 $565,160 $510,472 $384,337
$–
$250,000
$500,000
$750,000
$1,000,000
$1,250,000
$1,500,000
$1,750,000
$2,000,000
$2,250,000
$2,500,000
$2,750,000
$3,000,000
$3,250,000
$3,500,000
$3,750,000
Water Fund
Year Ended December 31,
The Water Fund ended 2017 with a net position of $13,365,377, an increase of $353,766 from the prior
year. Of this, $10,886,192 represents the investment in utility distribution system capital assets, leaving
$2,479,185 of unrestricted net position.
Water Fund operating revenue was $3,543,323 for 2017, an increase of $351,785 (11.0 percent) from the
prior year, due to an increase in rates in the current year. Operating expenses of $3,158,986 were
$477,920 (17.8 percent) more than last year, mainly due to an increase in depreciation expense in the
current year as a result of the completion of the water treatment plant.
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Sanitary Sewer Fund
The following graph presents five years of operating results for the Sanitary Sewer Fund:
2013 2014 2015 2016 2017
Oper Rev $3,675,936 $3,945,115 $4,093,725 $4,204,962 $4,287,674
Oper Exp $3,368,520 $3,496,064 $3,656,994 $3,812,606 $3,969,011
Oper Inc (Loss)$307,416 $449,051 $436,731 $392,356 $318,663
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
$2,000,000
$2,200,000
$2,400,000
$2,600,000
$2,800,000
$3,000,000
$3,200,000
$3,400,000
$3,600,000
$3,800,000
$4,000,000
$4,200,000
$4,400,000
Sanitary Sewer Fund
Year Ended December 31,
The Sanitary Sewer Fund ended 2017 with a net position of $14,874,105, an increase of $279,163 from
the prior year. Of this, $9,567,977 represents the investment in the sanitary sewer capital assets, leaving
$5,306,128 of unrestricted net position.
Sanitary Sewer Fund operating revenues for 2017 were $4,287,674, which was an increase of $82,712
(2.0 percent) from the prior year due to an approved rate increase.
Operating expenses for 2017 were $3,969,011, which was an increase of $156,405 (4.1 percent) from the
prior year. The largest operating expense of this fund is to Metropolitan Council Environmental
Services (MCES) for sewer service charges. MCES disposal charges in 2017 increased by $98,050 from
the prior year.
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Storm Drainage Fund
The following graph presents five years of operating results for the Storm Drainage Fund:
2013 2014 2015 2016 2017
Oper Rev $1,621,912 $1,638,475 $1,635,555 $1,620,302 $1,598,374
Oper Exp $1,556,358 $1,787,064 $1,875,824 $1,700,595 $1,815,673
Oper Inc (Loss)$65,554 $(148,589)$(240,269)$(80,293)$(217,299)
$(400,000)
$(200,000)
$–
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
$2,000,000
Storm Drainage Fund
Year Ended December 31,
The Storm Drainage Fund ended 2017 with a net position of $21,126,564, an increase of $65,634 from
the prior year. Of this, $17,130,926 represents the net investment in capital assets, leaving $3,995,638 of
unrestricted net position.
Storm Drainage Fund operating revenues for 2017 were $1,598,374, which was a slight decrease of
$21,928 from the prior year.
Operating expenses for 2017 were $1,815,673, which was $115,078 higher than the prior year due to
increased depreciation expense in the current year.
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OTHER ENTERPRISE FUNDS
Liquor Fund
The following graph presents five years of operating results for the Liquor Fund:
2013 2014 2015 2016 2017
Sales $6,063,231 $5,852,465 $6,056,668 $6,197,094 $6,495,300
Cost of Sales $4,341,225 $4,293,383 $4,431,501 $4,611,919 $4,769,844
Oper Exp $1,332,748 $1,354,123 $1,367,050 $1,465,790 $1,434,340
Oper Inc (Loss)$389,258 $204,959 $258,117 $119,385 $291,116
$–
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
$5,000,000
$5,500,000
$6,000,000
$6,500,000
$7,000,000
Liquor Fund
Year Ended December 31,
The Liquor Fund ended 2017 with a net position of $2,782,025, an increase of $202,356 from the prior
year. Of the net position balance, $101,761 represents the investment in liquor capital assets, leaving
$2,680,264 of unrestricted net position.
Liquor sales for 2017 were $6,495,300, which is $298,206 (4.8 percent) more than the prior year. The
Liquor Fund generated operating income of $291,116 in 2017, or about 4.5 percent of gross sales, which
is an increase from the 1.9 percent of gross sales in fiscal 2016. In 2017, the Liquor Fund transferred
$112,898 to the Capital Improvements Fund for future capital projects
The Liquor Fund gross profit margin was 26.56 in fiscal 2017, which is lower than the average gross
profit margin of 27.01 seen over the previous five years.
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Earle Brown Heritage Center Fund
The following graph presents five years of operating results for the Earle Brown Heritage Center Fund:
2013 2014 2015 2016 2017
Sales and User Fees $4,271,578 $4,518,231 $4,487,260 $4,700,175 $4,891,574
Cost of Sales $2,134,988 $2,089,293 $2,033,464 $2,066,065 $2,257,315
Oper Exp $2,696,297 $3,048,763 $2,689,723 $2,388,597 $2,519,580
Oper Inc (Loss)$(559,707)$(619,825)$(235,927)$245,513 $114,679
$(800,000)
$(400,000)
$–
$400,000
$800,000
$1,200,000
$1,600,000
$2,000,000
$2,400,000
$2,800,000
$3,200,000
$3,600,000
$4,000,000
$4,400,000
$4,800,000
$5,200,000
Earle Brown Heritage Center Fund
Year Ended December 31,
The Earle Brown Heritage Center Fund ended 2017 with a net position of $5,911,936, an increase of
$164,557 from the prior year. Of the net position balance, $3,495,579 represents investments in Earle
Brown Heritage Center capital assets, leaving $2,416,357 of unrestricted net position.
Earle Brown Heritage Center Fund sales and user fees for 2017 were $4,891,574, which is $191,399
(4.1 percent) more than last year, due to the increased number of events hosted in the current year.
Operating expenses for 2017 were $2,519,580, an increase of $130,983 from the prior year. The increase
in operating expense is mainly due to increased personal services.
During fiscal 2017, this fund experienced depreciation expense totaling $178,387.
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Golf Course Fund
The following graph presents five years of operating results for the Golf Course Fund:
2013 2014 2015 2016 2017
Oper Rev $167,280 $183,311 $208,225 $221,604 $212,130
Oper Exp $264,259 $271,229 $267,627 $302,202 $327,749
Oper Inc (Loss)$(96,979)$(87,918)$(59,402)$(80,598)$(115,619)
$(150,000)
$(100,000)
$(50,000)
$–
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
Golf Course Fund
Year Ended December 31,
The Golf Course Fund ended 2017 with a net position of $649,127, a decrease of $70,579 from the prior
year. Of this, $1,638,631 represents the investment in golf course land and capital assets, leaving a deficit
of ($989,504) in unrestricted net position.
Golf Course Fund operating revenues for 2017 were $212,130, which is $9,474 lower than last year.
Operating expenses for 2017 were $327,749, up $25,547 from the prior year. On an annual basis, this
fund has had to borrow from other funds to fund cash flow needs. The interfund borrowing totals
$989,569 (including $792,488 in initial funding of the golf course) at December 31, 2017.
We recommend that the City continue to monitor the financial results in this fund. We also recommend
that the City continue to update the long-range financial plan for this fund, including considering alternate
plans for financing the payback of the interfund borrowing in this fund.
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GOVERNMENT-WIDE FINANCIAL STATEMENTS
In addition to fund-based information, the current reporting model for governmental entities also requires
the inclusion of two government -wide financial statements designed to present a clear picture of the City
as a single, unified entity. These government-wide financial statements provide information on the total
cost of delivering services, including capital assets and long-term liabilities.
STATEMENT OF NET POSITION
The Statement of Net Position essentially tells you what the City owns and owes at a given point in time,
the last day of the fiscal year. Theoretically, net position represents the resources the City has leftover to
use for providing services after its debts are settled. However, those resources are not always in spendable
form, or there may be restrictions on how some of those resources can be used. Therefore, the Statement
of Net Position divides the net position into three components:
• Net Investment in Capital Assets – The portion of net position reflecting equity in capital assets
(i.e., capital assets minus related debt).
• Restricted Net Position – The portion of net position equal to resources whose use is legally
restricted minus any noncapital-related liabilities payable from those same resources.
• Unrestricted Net Position – The residual balance of net position after the elimination of net
investment in capital assets and restricted net position.
The following table presents the components of the City’s net position as of December 31, 2017 and 2016
for governmental activities and business-type activities:
Increase
2017 2016 (Decrease)
Net position
Governmental activities
Net investment in capital assets 53,152,985$ 48,358,875$ 4,794,110$
Restricted 27,309,336 29,554,944 (2,245,608)
Unrestricted 1,400,658 789,884 610,774
Total governmental activities 81,862,979 78,703,703 3,159,276
Business-type activities
Net investment in capital assets 43,553,672 43,483,294 70,378
Unrestricted 14,613,409 13,606,322 1,007,087
Total business-type activities 58,167,081 57,089,616 1,077,465
Total net position 140,030,060$ 135,793,319$ 4,236,741$
As of December 31,
The City’s total net position at December 31, 2017 was $4,236,741 higher than the previous year-end. Of
the increase, $3,159,276 came from governmental activities and $1,077,465 came from business-type
activities. The increase in both of these is due to the positive operating results of the City as a whole.
-20-
STATEMENT OF ACTIVITIES
The Statement of Activities tracks the City’s yearly revenues and expenses, as well as any other
transactions that increase or reduce total net position. These amounts represent the full cost of providing
services. The Statement of Activities provides a more comprehensive measure than just the amount of
cash that changed hands, as reflected in the fund-based financial statements. This statement includes the
cost of supplies used, depreciation of long-lived capital assets, and other accrual-based expenses.
The following table presents the change in the net position of the City for the years ended December 31,
2017 and 2016:
2016
Program
Expenses Revenues Net Change Net Change
Governmental activities
General government 4,007,850$ 530,459$ (3,477,391)$ (3,327,927)$
Public safety 12,438,818 1,903,865 (10,534,953) (11,467,279)
Public works 4,542,244 1,528,087 (3,014,157) 161,701
Community service 143,103 – (143,103) (136,349)
Parks and recreation 2,995,396 800,746 (2,194,650) (2,481,451)
Economic development 1,917,039 525,679 (1,391,360) (5,368,250)
Interest on long-term debt 540,799 – (540,799) (654,205)
Business-type activities
Municipal liquor 6,241,998 6,503,094 261,096 82,976
Golf course 335,029 212,170 (122,859) (71,803)
Earle Brown Heritage Center 4,825,489 4,917,167 91,678 224,470
Water utility 3,294,345 3,585,597 291,252 313,308
Sanitary sewer utility 4,068,468 4,288,655 220,187 423,939
Storm drainage utility 1,848,887 1,598,624 (250,263) (51,947)
Street light utility 267,069 454,293 187,224 105,475
Recycling utility 366,608 404,769 38,161 197,542
Total net (expense) revenue 47,833,142$ 27,253,205$ (20,579,937) (22,049,800)
General revenues
Property taxes 16,736,759 15,757,198
Tax increments 4,652,373 3,667,590
Lodging taxes 1,206,565 1,159,519
Grants and contributions not
restricted to specific programs 1,701,232 1,939,431
Unrestricted investment earnings 431,423 351,190
Gain on disposal of capital assets 88,326 57,765
Total general revenues 24,816,678 22,932,693
Change in net position 4,236,741 882,893
Net position – beginning 135,793,319 134,910,426
Net position – ending 140,030,060$ 135,793,319$
Net (expense) revenue
2017
One of the goals of this statement is to provide a side-by-side comparison to illustrate the difference in the
way the City’s governmental and business-type operations are financed. The table clearly illustrates the
dependence of the City’s governmental operations on general revenues, such as property taxes and
unrestricted grants. It also shows that, for the most part, the City’s business-type activities are generating
sufficient program revenues (service charges and program-specific grants) to cover expenses. This is
critical given the current downward pressures on the general revenue sources.
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LEGISLATIVE UPDATES
The 2017 legislative session began with a full agenda, which included adopting a fiscal year 2018–2019
biennial state budget. The February 2017, state budget forecast projected that the state General Fund
would end the 2016–2017 biennium with a surplus of $743 million, eliminating the need for budget cuts
or transfers to balance the fund. However, the Legislature was expected to address several significant
spending areas for which successful funding appropriations had not been passed in recent legislative
sessions. The 2017 regular legislative session ended with four omnibus budget bills being vetoed,
potentially leaving a number of these same areas without appropriations. After a three-day special session,
the Governor and Legislature were able to agree on budget and appropriation bills addressing most of the
state budgetary needs for the upcoming biennium, albeit not without several line item vetoes invoked by
the Governor, including striking the appropriations for operating the House and Senate from the bills.
The following is a summary of recent legislation affecting Minnesota cities:
Omnibus Bonding Bill – The omnibus bonding bill authorizes financing for approximately $1.1 billion
in capital improvements. Included in the approved funding was $255 million for transportation
infrastructure, $83 million for economic development, $116 million for Public Financing Agency water
infrastructure loans and grants to municipalities, and $4 million for Metropolitan Council inflow and
infiltration improvement grants to metro area cities.
Omnibus Transportation Bill – The omnibus transportation bill appropriates $2.95 billion in fiscal 2018
and $2.87 billion in fiscal 2019, for a wide variety of transportation related projects. Included in the
appropriations are approximately $191 million and $198 million for municipal state aid street fund
purposes in fiscal 2018 and fiscal 2019, respectively.
Property Tax Relief – The omnibus tax bill contained a number of property tax relief measures,
including:
• Elimination of the implicit price deflator annual increase for the state general property tax
levy, effectively freezing it at the payable 2018 level for many property classes;
• Exempting the first $100,000 of each commercial-industrial parcel’s tax capacity from the
state general property tax levy;
• Expanding eligibility for homestead or agricultural property classification exemptions for
certain types of resort and conservation property for general property taxes; and
• Increasing the minimum value for a storage shed, deck, or similar structure on a leased
mobile home to be considered taxable from $1,000 to $10,000.
Local Government Aid – The annual appropriation for Local Government Aid (LGA) for cities was
increased $15.0 million to $534.4 million for aid payable in 2018 and thereafter, and the LGA payment
schedule was accelerated for fiscal 2019 only. Several corrections were also made to the city LGA
formula calculation, and a sparsity adjustment was incorporated for certain medium and small cities
beginning in 2018.
Minnesota Investment Fund – The omnibus jobs and economic growth bill appropriates $12.5 million
for each year of the biennium for the Minnesota Investment Fund, which is available for municipalities to
provide loans to assist with the expansion of local businesses.
Electronic Funds Transfers – Effective August 1, 2017, home rule charter cities of the second, third, or
fourth class are added to the list of local government entities allowed to pay certain claims using
electronic funds transfers. To be eligible, local governments must enact specified policy controls
governing the initiation, authorization, and documentation of electronic funds transfers.
Claims Declaration – The requirement to obtain a specific form of written claim declaration was also
repealed based on the understanding that by making the claim, the party making the claim is declaring
that the claim is just and correct and has not been paid previously.
-22-
City E-mail Address Required to Receive State Aid – Effective for state aids payable in 2018 and
thereafter, cities will be required to register an official e-mail address with the Commissioner of the state
Department of Revenue in order to receive state aid payments.
Workforce Housing Tax Increment Financing – The omnibus tax bill created a new authorized use of
tax increment financing (TIF), for workforce housing in cities located outside of the statutorily defined
metropolitan area that meet certain criteria.
Tax Increment Financing Interfund Loans – Interfund loan provisions for TIF were amended to make
it easier for cities and development authorities to make and document interfund loans. Loans may now be
made or documented up to 60 days after the actual transfer or expenditure occurs. Interfund loan
resolutions may now be passed prior to the final approval of the related TIF plan. Loan terms may be
amended after the loan has been made if the TIF district has not been decertified.
Public Debt – The Legislature passed several amendments to statutes governing public debt that took
effect on July 1, 2017, including:
• Allowing both home rule charter and statutory cities to issue 20-year capital notes for projects
to eliminate R-22 Freon-based refrigerant;
• Increasing the maximum dollar limit on Housing and Redevelopment Authority general
obligation bond issues from $3 million to $5 million; and
• Modifying the requirements for street reconstruction bonds to be approved by a two -thirds
majority of the governing body rather than requiring unanimous approval.
Local Housing Trust Funds – The omnibus jobs and economic growth appropriations bill established
authority for cities to create a local housing trust fund by ordinance, or to participate in a joint powers
agreement to establish a regional housing trust fund. The funds, which may be financed from sources such
as local government appropriations or housing and redevelopment authority levies, may be used for grants
or loans for development, rehabilitation, financing of housing to match federal or state or private funds for
housing, down payment assistance, rental assistance, or homebuyer counseling.
Long-Term Equity Investment Authority – Effective July 1, 2017, cities with a population of more
than 100,000 or those that had their most recently issued general obligation bonds rated in the highest
category, are authorized to invest in an expanded list of authorized investments that includes certain
equity-based investments. The amount invested in equity-based investments cannot exceed 15 percent of
the sum of a city’s assigned cash, cash equivalents, deposits, and investments. Before investing in the
expanded list of authorized investments, the governing body of the municipality must adopt a resolution
acknowledging the risks assumed.
Border-to-Border Broadband Grants – The Legislature appropriated $20 million in fiscal 2018 for the
Border-to-Border Broadband Grant Program. The grants, available through the Office of Broadband
Development in the Department of Employment and Economic Development, provide funding to help
communities meet state goals for the development of state-wide, high-speed broadband access, focusing
on areas currently considered to be underserved or with a high concentration of low-income households.
Elections – An omnibus elections law was passed making several modifications to election
administration, including: requiring special elections conducted by local governments be held on one of
five uniform election dates, clarifying the timeline for municipalities to chan ge from odd to even-year
election cycles or vise-versa, allowing municipalities to canvass the results of a primary election on the
second or third day after the primary, and appropriating $7 million for grants to replace aging election
equipment or purchase electronic poll books.
-23-
Workers’ Compensation and PERA Retirement Benefits – A statutory change was adopted based on
the results of recent court rulings that Public Employees Retirement Association (PERA) retirement
benefits should not be offset against workers’ compensation permanent total disability benefits. Under the
new law, claimants would receive all past and future permanent and total disability benefits without a
PERA retirement offset.
Notice of Proposed Ordinances – A new statute was created requiring cities to provide a 10-day notice
prior to a scheduled final vote on most new proposed ordinances or amendments to ordinances, and
specifying the various acceptable means of providing the required notification.
State Building Code Applicability – Construction, additions, and alterations to places of public
accommodation; defined as publicly or privately-owned facilities designed for occupancy by 200 or more
people as a sports or entertainment arena, stadium, theater, community or convention hall, special event
center, indoor amusement facility or water park, or indoor swimming pool; must comply with the state
building code.
Sunday Liquor Sales – Minnesota Statutes were amended to allow for the sale of intoxicating liquor on
Sundays between the hours of 11:00 a.m. and 6:00 p.m. by off-sale licensees, effective July 1, 2017.
REAL ID Act – Minnesota Statutes were amended to make the state compliant with federal REAL ID
Act requirements, which will change identity verification and security related to state-issued identification
cards and driver’s licenses.
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ACCOUNTING AND AUDITING UPDATES
GASB STATEMENT NO. 75, ACCOUNTING AND FINANCIAL REPORTING FOR POSTEMPLOYMENT
BENEFITS OTHER THAN PENSIONS
GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than
Pensions, establishes new accounting and financial reporting requirements for governments whose
employees are provided with other post-employment benefits (OPEB), as well as for certain nonemployer
governments that have a legal obligation to provide financial support for OPEB provided to the
employees of other entities. This statement replaces the requirements of GASB Statement Nos. 45 and 57.
This statement establishes standards for recognizing and measuring liabilities, deferred outflows of
resources, deferred inflows of resources, and expense/expenditures. Similar to changes implemented for
pensions, this statement requires the liability of employer and nonemployer contributing entities to
employees for defined benefit OPEB (net OPEB liability) to be measured as the portion of the present
value of projected benefit payments to be provided to current active and inactive employees that is
attributed to those employees’ past periods of service (total OPEB liability), less the amount of the OPEB
plan’s fiduciary net position. Note disclosure and RSI requirements about defined benefit OPEB also are
addressed.
The requirements for this statement are effective for fiscal years beginning after June 15, 2017. Earlier
application is encouraged.
GASB STATEMENT NO. 83, CERTAIN ASSET RETIREMENT OBLIGATIONS
This statement addresses accounting and financial reporting for certain asset retirement obligations
(ARO), which are legally enforceable liabilities associated with the retirement of a tangible capital asset.
This statement establishes criteria for determining the timing and pattern of recognition of a liability and a
corresponding deferred outflow of resources for ARO. A government that has legal obligations to perform
future asset retirement activities related to its tangible capital assets should recognize a liability when it is
both incurred and reasonably estimable. The measurement of an ARO is req uired to be based on the best
estimate of the current value of outlays expected to be incurred, and a deferred outflow of resources
associated with an ARO is required to be measured at the amount of the corresponding liability upon
initial measurement.
This statement requires the current value of a government’s AROs to be adjusted for the effects of general
inflation or deflation at least annually, and a government to evaluate all relevant factors at least annually
to determine whether the effects of one or more of the factors are expected to significantly change the
estimated asset retirement outlays. A government should remeasure an ARO only when the result of the
evaluation indicates there is a significant change in the estimated outlays. Deferred outflows of resources
should be reduced and recognized as outflows of resources in a systematic and rational manner over the
estimated useful life of the tangible capital asset.
If a government owns a minority interest in a jointly owned tangible asset where a nongovernmental
entity is the majority owner or has operational responsibility for the jointly owned asset, the government’s
minority share of an ARO should be reported using the measurement produced by the nongovernmental
majority owner or the nongovernmental minority owner that has operational responsibility, without
adjustment to conform to the liability measurement and recognition requirements of this statement.
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The statement also requires disclosures of any funding or financial assurance requirements a government
has related to the performance of asset retirement activities, along with any assets restricted for the
payment of the government’s AROs. This statement also requires disclosure of information about the
nature of a government’s AROs, the methods and assumptions used for the estimates of the liabilities, and
the estimated remaining useful life of the associated tangible capital assets. If an ARO (or portions
thereof) has been incurred by a government but is not yet recognized because it is not reasonably
estimable, the government is required to disclose that fact and the reasons therefor. This statement
requires similar disclosures for a government’s minority shares of AROs.
The requirements of this statement are effective for reporting periods beginning after June 15, 2018.
Earlier application is encouraged.
GASB STATEMENT NO. 84, FIDUCIARY ACTIVITIES
This statement establishes criteria for identifying fiduciary activities of all state and local governments.
The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary
activity and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included
to identify fiduciary component units and post-employment benefit arrangements that are fiduciary
activities.
An activity meeting the criteria should be reported in a fiduciary fund in the basic financial statements,
which should present a statement of fiduciary net position and a statement of changes in fiduciary net
position. This statement describes four fiduciary funds that should be reported, if applicable: (1) pension
(and other employee benefit) trust funds, (2) investment trust funds, (3) private -purpose trust funds, and
(4) custodial funds. Custodial funds generally should report fiduciary activities that are not held in a trust
or equivalent arrangement that meets specific criteria.
A fiduciary component unit, when reported in the fiduciary fund financial statements of a primary
government, should combine its information with its component units that are fiduciary component units
and aggregate that combined information with the primary government’s fiduciary funds.
This statement also provides for recognition of a liability to the beneficiaries in a fiduciary fund when an
event has occurred that compels the government to disburse fiduciary resources, defined as when a
demand for the resources has been made or when no further action, approval, or condition is required to
be taken or met by the beneficiary to release the assets.
The requirements of this statement are effective for reporting periods beginning after December 15, 2018.
Earlier application is encouraged.
GASB STATEMENT NO. 85, OMNIBUS 2017
The objective of this statement is to address issues that have been identified during implementation and
application of certain GASB statements. The statement addresses a variety of topics, including issues
related to blending component units, goodwill, fair value measurement and application, and
post-employment benefits (pensions and OPEB). The statement is meant to enhance consistency in the
application of recent accounting and financial reporting standards. The requirements of this statement are
effective for reporting periods beginning after June 15, 2017.
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GASB STATEMENT NO. 86, CERTAIN DEBT EXTINGUISHMENT ISSUES
Current GASB guidance requires that debt be considered defeased in substance when the debtor
irrevocably places cash or other monetary assets acquired with refunding debt proceeds in a trust to be
used solely for satisfying scheduled payments of both principal and interest of the defeased debt. This
new standard establishes essentially the same requirements for when a government places cash and other
monetary assets acquired with only existing resources in an irrevocable trust to extinguish the debt.
The primary objective of this statement is to improve consistency in accounting and financial reporting
for in-substance defeasance of debt by providing guidance for transactions in which cash and other
monetary assets acquired with only existing resources—resources other than the proceeds of refunding
debt—are placed in an irrevocable trust for the sole purpose of extinguishing debt. This statement also
improves accounting and financial reporting for prepaid insurance on debt that is extinguished and notes
to financial statements for debt that is defeased in substance. The requirements of this statement are
effective for reporting periods beginning after June 15, 2017.
GASB STATEMENT NO. 87, LEASES
A lease is a contract that transfers control of the right to use another entity’s nonfinancial asset as
specified in the contract for a period of time in an exchange or exchange -like transaction. Examples of
nonfinancial assets include buildings, land, vehicles, and equipment. Any contract that meets this
definition should be accounted for under the leases guidance, unless specifically excluded in this
statement.
Governments enter into leases for many types of assets. Under the previous guidance, leases were
classified as either capital or operating depending on whether the lease met any of four tests. In many
cases, the previous guidance resulted in reporting lease transactions differently than similar nonlease
financing transactions.
The goal of this statement is to better meet the information needs of users by improving accounting and
financial reporting for leases by governments. It establishes a single model for lease accounting based on
the principle that leases are financings of the right to use an underlying asset. This statement increases the
usefulness of financial statements by requiring recognition of certain lease assets and liabilities for leases
that previously were classified as operating leases and recognized as inflows of resources or outflows of
resources based on the payment provisions of the contract.
Under this statement, a lessee is required to recognize a lease liability and an intangible right -to-use lease
asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby
enhancing the relevance and consistency of information about governments’ leasing activities.
To reduce the cost of implementation, this statement includes an exception for short -term leases, defined
as a lease that, at the commencement of the lease term, has a maximum possible term under the lease
contract of 12 months (or less), including any options to extend, regardless of their probability of being
exercised. Lessees and lessors should recognize short-term lease payments as outflows of resources or
inflows of resources, respectively, based on the payment provisions of the lease contract. The
requirements of this statement are effective for reporting periods beginning after December 15, 2019.
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CITY OF BROOKLYN CENTER
HENNEPIN COUNTY, MINNESOTA
Special Purpose Audit Reports
Year Ended
December 31, 2017
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Page
Independent Auditor’s Report on Internal Control Over Financial Reporting
and on Compliance and Other Matters Based on an Audit of Financial
Statements Performed in Accordance With Government Auditing Standards 1–2
Independent Auditor’s Report on Minnesota Legal Compliance 3
Table of Contents
CITY OF BROOKLYN CENTER
HENNEPIN COUNTY, MINNESOTA
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INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the City Council and Management
City of Brooklyn Center, Minnesota
We have audited, in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States, the financial statements of the governmental
activities, the business-type activities, each major fund, and the aggregate remaining fund information of
the City of Brooklyn Center, Minnesota (the City) as of and for the year ended December 31, 2017, and
the related notes to the financial statements, which collectively comprise the City’s basic financial
statements, and have issued our report thereon dated May 21, 2018.
INTERNAL CONTROL OVER FINANCIAL REPORTING
In planning and performing our audit of the financial statements, we considered the City’s internal control
over financial reporting (internal control) to determine the audit procedures that are appropriate in the
circumstances for the purpose of expressing our opinions on the financial statements, but not for the
purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do
not express an opinion on the effectiveness of the City’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination
of deficiencies, in internal control, such that there is a reasonable possibility that a material misstateme nt
of the City’s financial statements will not be prevented, or detected and corrected, on a timely basis. A
significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less
severe than a material weakness, yet important enough to merit attention by those charged with
governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any
deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses
may exist that have not been identified.
(continued)
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COMPLIANCE AND OTHER MATTERS
As part of obtaining reasonable assurance about whether the City’s financial statements are free from
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on compliance with those
provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The
results of our tests disclosed no instances of noncompliance or other matters that are required to be
reported under Government Auditing Standards.
PURPOSE OF THIS REPORT
The purpose of this report is solely to describe the scope of our testing of internal control and compliance
and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal
control or on compliance. This report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the City’s internal control and compliance. Accordingly,
this report is not suitable for any other purpose.
Minneapolis, Minnesota
May 21, 2018
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INDEPENDENT AUDITOR’S REPORT
ON MINNESOTA LEGAL COMPLIANCE
To the City Council and Management
City of Brooklyn Center, Minnesota
We have audited, in accordance with auditing standards generally accepted in the United States of
America, and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States, the financial statements of the governmental
activities, the business-type activities, each major fund, and the aggregate remaining fund information of
the City of Brooklyn Center, Minnesota (the City) as of and for the year ended December 31, 20 17, and
the related notes to the financial statements, which collectively comprise the City’s basic financial
statements, and have issued our report thereon dated May 21, 2018.
MINNESOTA LEGAL COMPLIANCE
The Minnesota Legal Compliance Audit Guide for Cities, promulgated by the State Auditor pursuant to
Minnesota Statutes § 6.65, contains seven categories of compliance to be tested: contracting and bidding,
deposits and investments, conflicts of interest, public indebtedness, claims and disbursements,
miscellaneous provisions, and tax increment financing. Our audit considered all of the listed categories.
In connection with our audit, nothing came to our attention that caused us to believe that the City failed to
comply with the provisions of the Minnesota Legal Compliance Audit Guide for Cities. However, our
audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had
we performed additional procedures, other matters may have come to our attention regarding the City’s
noncompliance with the above referenced provisions.
PURPOSE OF THIS REPORT
The purpose of this report is solely to describe the scope of our testing of compliance and the results of
that testing, and not to provide an opinion on compliance. Accordingly, this report is not suitable for any
other purpose.
Minneapolis, Minnesota
May 21, 2018
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