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HomeMy WebLinkAboutCAFR-2017 Membe Com For C r of the G mprehen r the ye ity of B Governmen nsive A ear end Brookly nt Finance Annual F ed Dec yn Cent e Officers Financ cember ter, Min Associati cial Rep 31, 201 nnesota on of the port 17 a 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 This page has been left blank intentionally. 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 This page has been left blank intentionally. 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 This page has been left blank intentionally. 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 $63,131 of property taxes to Hurlbut-Zeppa Charitable Trust AR for the construction and opening of the Embassy Suites Hotel. The abatement is equal to the City's portion of increased property taxes paid on the increased market value of the development of the property for payable years 2010 to 2019. 85 This page has been left blank intentionally. 86             Required   Supplementary Information                                    CITY OF BROOKLYN CENTER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF FUNDING PROGRESS - OTHER POSTEMPLOYMENT BENEFITS For the Year Ended December 31, 2017 Unfunded Actuarial Actuarial Actuarial Actuarial UAAL as a Valuation Value of Accrued Accrued Funded Covered Percentage of Date Assets Liability (AAL) Liability (UAAL) Ratio Payroll Covered Payroll January 1, 2012 -$ 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 This page has been left blank intentionally. 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 This page has been left blank intentionally. 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 This page has been left blank intentionally. 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 This page has been left blank intentionally. 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 CI T Y O F B R O O K L Y N C E N T E R , M I N N E S O T A ST A T I S T I C A L S E C T I O N ( U N A U D I T E D ) OP E R A T I N G I N D I C A T O R S B Y F U N C T I O N Table 18 La s t t e n f i s c a l y e a r s Fu n c t i o n 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 Po l i c e Vi o l e n t C r i m e s 1 9 2 1 6 6 1 3 8 1 3 5 1 1 3 1 2 9 9 7 1 1 3 1 1 2 1 2 5 Pr o p e r t y C r i m e s 2 , 0 4 9 1 , 6 9 6 1 , 3 5 8 1 , 5 2 9 1 , 5 6 1 1 , 7 1 2 1 , 1 9 5 1 , 0 8 0 1 , 0 7 6 1 , 0 8 7 To t a l C a l l s f o r S e r v i c e 36 , 9 2 3 4 4 , 1 5 2 4 3 , 0 6 9 4 1 , 3 4 7 3 9 , 7 3 6 3 7 , 3 7 0 3 5 , 9 1 4 3 4 , 9 9 7 3 5 , 5 5 8 3 7 , 0 4 1 Fi r e Fi r e s / A l l o t h e r c a l l s 68 4 6 8 8 7 7 2 7 7 4 7 8 1 6 3 4 8 4 4 7 6 9 8 2 4 7 2 6 Me d i c a l c a l l s 41 9 5 3 8 9 8 0 1 , 1 3 5 1 , 2 0 9 1 , 2 0 9 1 , 2 6 3 1 , 2 1 2 1 , 3 4 8 7 4 2 Fi r e i n s p e c t i o n s p e r f o r m e d 10 6 1 0 5 2 4 5 1 4 1 2 9 5 2 7 0 1 9 7 9 33 140 St r e e t s To t a l m i l e s 10 5 . 7 8 1 0 5 . 7 8 1 0 5 . 7 3 1 0 5 . 7 3 1 0 5 . 7 3 1 0 5 . 7 3 1 0 5 . 7 3 1 0 5 . 7 3 1 0 5 . 7 3 1 0 5 . 7 3 Mi l e s o f s t r e e t s r e c o n s t r u c t e d 4. 1 5 2 . 6 4 5 . 1 7 5 . 6 2 0 . 7 0 2 . 9 0 3 . 0 1 3 . 9 1 2 . 7 4 5 . 5 7 Pa r k s a n d r e c r e a t i o n Co m m u n i t y C e n t e r A d m i s s i o n s 6 0 , 3 2 3 6 1 , 2 7 2 5 9 , 3 1 0 5 7 , 8 7 4 5 9 , 5 5 0 6 2 , 4 3 4 5 6 , 1 4 2 3 1 , 8 8 2 5 0 , 9 4 4 5 5 , 4 1 8 Ac r e s o f p a r k m a i n t a i n e d 52 7 5 2 7 5 2 7 5 2 7 5 2 7 5 2 7 5 2 7 5 2 7 5 2 7 5 2 7 Mu n i c i p a l l i q u o r Nu m b e r o f s t o r e s 22 2 2 2 2 2 2 2 2 Sa l e s ( i n t h o u s a n d s ) $5 , 4 8 5 $ 5 , 6 1 0 $ 5 , 5 4 3 $ 5 , 7 8 9 $ 5 , 9 6 4 $ 6 , 0 6 3 $ 5 , 8 5 2 $ 6 , 0 5 7 $ 6 , 1 9 7 $ 6 , 4 9 5 Go l f c o u r s e Ro u n d s s o l d 15 , 8 0 2 1 4 , 0 4 0 1 3 , 5 2 4 1 2 , 1 6 9 1 2 , 8 7 5 1 1 , 7 2 4 1 1 , 0 2 3 1 2 , 3 5 9 1 2 , 6 0 1 1 1 , 9 6 0 Ea r l e B r o w n H e r i t a g e C e n t e r Bo o k i n g s 52 2 4 2 1 4 3 3 5 4 8 4 6 0 3 9 7 4 0 9 3 7 4 3 7 5 3 7 1 Fu n c t i o n s 1, 4 1 2 1 , 1 7 8 1 , 1 1 9 1 , 0 5 5 1 , 0 5 3 1 , 0 8 2 1 , 0 1 4 9 3 5 9 5 5 8 6 1 Wa t e r Co n n e c t i o n s 8, 9 8 6 8 , 9 9 0 8 , 9 6 0 8 , 8 8 7 8 , 8 9 4 8 , 8 9 6 8 , 9 0 9 8 , 9 2 7 8 , 9 3 3 8 , 9 4 2 Mi l e s o f w a t e r m a i n s 12 1 . 8 0 1 2 1 . 8 0 1 2 1 . 8 0 1 2 1 . 8 0 1 2 1 . 8 0 1 1 9 . 7 0 1 1 9 . 8 7 1 1 9 . 4 0 1 2 1 . 1 0 1 2 1 . 4 0 Av e r a g e d a i l y c o n s u m p t i o n 3 , 5 5 0 , 1 2 6 3 , 7 3 3 , 6 0 2 3 , 1 9 0 , 0 0 0 2 , 9 3 9 , 0 0 0 3 , 1 9 6 , 0 7 2 3 , 0 0 0 , 3 7 8 2 , 8 1 9 , 8 7 4 2 , 7 9 4 , 8 7 4 2 , 9 2 7 , 5 6 2 3 , 0 6 7 , 3 6 2 Sa n i t a r y s e w e r Co n n e c t i o n s 8, 8 3 7 8 , 8 3 7 8 , 8 2 9 8 , 8 2 0 8 , 8 1 3 8 , 7 8 3 8 , 7 8 9 8 , 7 8 8 8 , 7 8 8 8 , 7 6 9 Mi l e s o f s a n i t a r y s e w e r 10 5 . 6 1 1 0 5 . 6 1 1 0 5 . 6 1 1 0 5 . 6 1 1 0 5 . 6 1 1 0 5 . 6 1 1 0 5 . 6 1 9 7 . 5 1 9 8 . 4 0 9 8 . 4 0 So u r c e s : T h e d a t a f o r t h i s t a b l e h a s b e e n p r o v i d e d b y e a c h r e s p e c t i v e C i t y d e p a r t m e n t . 18 2 CI T Y O F B R O O K L Y N C E N T E R , M I N N E S O T A ST A T I S T I C A L S E C T I O N ( U N A U D I T E D ) CA P I T A L A S S E T S T A T I S T I C S B Y F U N C T I O N Table 19 La s t t e n f i s c a l y e a r s Fu n c t i o n 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 Pu b l i c s a f e t y Po l i c e St a t i o n s 1 1 1 1 11 1 1 1 1 Pa t r o l u n i t s Ma r k e d s q u a d s 9 9 9 9 9 1 0 1 0 1 0 1 0 1 0 Ot h e r v e h i c l e s 1 4 1 8 1 8 1 8 1 6 1 8 1 8 1 8 1 8 1 8 Fi r e St a t i o n s 2 2 2 2 22 2 2 2 2 Fi r e t r u c k s 8 8 8 8 88 8 8 8 8 Ot h e r v e h i c l e s 2 3 3 3 33 3 5 5 5 Pu b l i c w o r k s St r e e t s ( m i l e s ) 1 0 5 . 7 8 1 0 5 . 7 8 1 0 5 . 7 3 1 0 5 . 7 3 1 0 5 . 7 3 1 0 5 . 7 3 1 0 5 . 7 3 1 0 5 . 7 3 1 0 5 . 7 3 1 0 5 . 7 3 Mo b i l e e q u i p m e n t 14 1 4 1 4 1 4 1 4 1 3 1 4 1 4 1 4 1 4 He a v y d u t y t r u c k s 1 3 1 3 1 3 1 3 1 3 1 2 1 3 1 3 1 3 1 3 Ot h e r v e h i c l e s 6 6 6 6 67 6 4 5 4 Pa r k s a n d r e c r e a t i o n Pa r k s a c r e a g e 5 2 7 5 2 7 5 2 7 5 2 7 5 2 7 5 2 7 5 2 7 5 2 7 5 2 7 5 2 7 Tr a i l s ( m i l e s ) 2 1 . 6 2 1 . 6 2 1 . 6 2 1 . 6 2 1 . 6 2 1 . 6 1 4 . 2 1 4 . 9 1 5 . 3 1 5 . 7 Co m m u n i t y c e n t e r s 1 1 1 1 11 1 1 1 1 Gr o u n d m a i n t e n a n c e e q u i p m e n t 1 5 1 5 1 5 1 5 1 5 1 4 1 2 1 1 1 1 1 1 Ot h e r v e h i c l e s 9 8 8 8 88 8 8 8 8 Wa t e r Wa t e r m a i n s ( m i l e s ) 1 2 1 . 8 0 1 2 1 . 8 0 1 2 1 . 8 0 1 2 1 . 8 0 1 2 1 . 8 0 1 1 9 . 7 0 1 1 9 . 8 7 1 1 9 . 4 0 1 2 1 . 1 0 1 2 1 . 4 0 We l l s 9 9 9 9 99 9 9 9 9 Se w e r Sa n i t a r y s e w e r s ( m i l e s ) 10 5 . 6 1 10 5 . 6 1 10 5 . 6 1 10 5 . 6 1 10 5 . 6 1 10 5 . 6 1 10 5 . 6 1 97.51 98.40 98.40 Li f t S t a t i o n s 10 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 St o r m s e w e r s ( m i l e s ) 74 . 2 0 74 . 2 0 74 . 2 0 74 . 2 0 74 . 2 0 8 3 . 0 1 8 4 . 5 5 8 6 . 2 8 8 8 . 1 8 8 8 . 6 0 So u r c e s : T h e d a t a f o r t h i s t a b l e h a s b e e n p r o v i d e d b y e a c h r e s p e c t i v e C i t y d e p a r t m e n t . 18 3 This page has been left blank intentionally. 184