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Home My WebLink About2020 6-01 FCAV I RT UA L meeting being conducted by electronic means in accordance with Minnesota S tatutes, section 13D.021 P ublic portion available for connection via telephone Dial: 1-312-535- 8110 Access Code: 133 081 2523 J une 1, 2020 AGE NDA 1.Introductions - 6:30 p.m. The City Council requests that attendees turn off cell phones and pagers during the meeting. A copy of the full City C ounc il packet is available to the public . The packet ring binder is loc ated at the entrance of the council chambers. 2.Roll Call 3.Approval of Agenda 4.P resentation of Audit Report and M anagement Letter a.C AF R Report b.Council/Commission Questions 5.S taff Overview of Comprehensive Annual F inancial Report a.Council/Commission Questions 6.M iscellaneous 7.Adjourn COU N C IL ITEM MEMOR ANDUM DAT E:6/1/2020 TO :C urt Boganey, C ity Manager T HR O UG H:N/A F R O M:Mark Ebensteiner, F inance Director S UBJ EC T:C AF R R eport Background: AT TAC HME N T S: Desc ription Upload Date Type F inal Draft 5/29/2020 Bac kup Material S pec ial P urpos e R eport 5/29/2020 Exhibit Management R eport 5/29/2020 Exhibit C AP R eport 5/29/2020 Exhibit P owerpoint 5/29/2020 P res entation Comprehensive Annual Financial Report For the year ended December 31, 2019 City of Brooklyn Center, Minnesota Member of the Government Finance Officers Association of the United States 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 Mark Ebensteiner Finance Director Andrew Splinter Assistant Finance Director FOR THE YEAR ENDED DECEMBER 31, 2019 Member of Government Finance Officers Association of the United States and Canada This page has been left blank intentionally. CITY OF BROOKLYN CENTER, MINNESOTA TABLE OF CONTENTS Page No. INTRODUCTORY SECTION Letter of Transmittal 1 Principal Officials 9 Organizational Chart 10 Certificate of Achievement 11 FINANCIAL SECTION Independent Auditor's Report 13 Management's Discussion and Analysis 17 Basic Financial Statements Government-wide Financial Statements Statement of Net Position 29 Statement of Activities 30 Fund Financial Statements Governmental Funds Balance Sheet 32 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 35 Statement of Revenues, Expenditures and Changes in Fund Balances 36 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 38 Statement of Revenues, Expenditures and Changes in Fund Balance: Budget and Actual General Fund 39 Tax Increment District No. 3 Special Revenue Fund 40 Proprietary Funds Statement of Net Position 42 Statement of Revenues, Expenses and Changes in Net Position 44 Statement of Cash Flows 46 Notes to the Financial Statements 49 Required Supplementary Information Schedule of Changes in the City's Total OPEB Liability and Related Ratios 91 Schedule of City Contributions - Public Employees General Employees Retirement Fund 92 Schedule of City's and Non-Employer Proportionate Share of Net Pension Liability - Public Employees General Employees Retirement Fund 93 Schedule of City Contributions - Public Employees Police and Fire Fund 94 Schedule of City's Proportionate Share of Net Pension Liability - Public Employees Police and Fire Fund 95 Schedule of Changes in Net Pension Asset and Related Ratio - Fire Relief Association 96 Schedule of City Contributions - Fire Relief Association 97 Schedule of City Contributions - International Union of Operating Engineers Central Pension Fund 98 Combining and Individual Fund Statements and Schedules Governmental Funds Nonmajor Governmental Funds Combining Balance Sheet 102 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 103 Nonmajor Special Revenue Funds Combining Balance Sheet 104 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 106 Nonmajor Capital Projects Funds Combining Balance Sheet 108 CITY OF BROOKLYN CENTER, MINNESOTA TABLE OF CONTENTS Combining Statement of Revenues, Expenditures and Changes in Fund Balances 109 Schedule of Revenues, Expenditures and Changes in Fund Balance: Budget and Actual General Fund 110 Special Revenue Funds Housing and Redevelopment Authority 115 Economic Development Authority 116 Community Development Block Grant 117 Police Forfeitures 118 Revolving Loan Fund 119 Centerbrook Golf Course 120 Tax Increment District No. 2 121 Tax Increment District No. 3 122 Tax Increment District No. 4 123 Tax Increment District No. 5 124 Tax Increment District No. 6 125 Tax Increment District No. 7 126 Tax Increment District No. 8 127 City Initiatives Grant 128 Debt Service Fund 129 Capital Projects Funds Capital Improvements 130 Municipal State-Aid for Construction 131 Special Assessment Construction 132 Capital Reserve Emergency 133 Street Reconstruction 134 Technology 135 Debt Service Fund by Account Combining Balance Sheet 136 Combining Schedule of Revenues, Expenditures and Changes in Fund Balances 138 Schedule of Revenues, Expenditures and Changes in Fund Balance: Budget and Actual G.O. Improvement Bonds, 2013B 140 G.O. Improvement Bonds, 2015A 141 G.O. Improvement Bonds, 2016A 142 G.O. Improvement Bonds, 2017A 143 G.O. Improvement Bonds, 2018A 144 G.O. Improvement Bonds, 2019A 145 G.O. Tax Increment Bonds, 2016C 146 G.O. Tax Increment Bonds, 2016B 147 G.O. Tax Increment Refunding Bonds, 2015B 148 G.O. Tax Increment Bonds, 2013A 149 G.O. Tax Increment Bonds, 2008A 150 Proprietary Funds Internal Service Funds Combining Statement of Net Position 152 Combining Statement of Revenues, Expenses and Changes in Net Position 154 Combining Statement of Cash Flows 156 STATISTICAL SECTION (UNAUDITED) Financial Trends Net Position by Component 160 Changes in Net Position 162 Governmental Activities Tax Revenue by Source 168 Fund Balances Governmental Funds 170 Changes in Fund Balances Governmental Funds 172 Revenue Capacity Assessed Tax Capacity and Estimated Actual Value of Taxable Property 174 CITY OF BROOKLYN CENTER, MINNESOTA TABLE OF CONTENTS Property Tax Rates - Direct and Overlapping Governments 176 Principal Property Taxpayers 178 Property Tax Levies and Collections 179 Debt Capacity Ratios of Outstanding Debt by Type 180 Ratios of General Bonded Debt Outstanding 181 Computation of Direct and Overlapping Governmental Activities Debt 182 Legal Debt Margin Information 184 Pledged Revenue Coverage 186 Demographic and Economic Information Demographic and Economic Statistics 187 Principal Employers 188 Operating Information Full-Time City Government Positions by Function 189 Operating Indicators by Function 190 Capital Asset Statistics by Function 191 This page has been left blank intentionally. May 20, 2020 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, 2019. 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 (EDA). 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 2018 population estimated from the Metropolitan Council estimates the population for Brooklyn Center at 32,299. The number of housing units has increased from 10,756 in 2010 to an estimated 11,289. The City’s taxable market value is $2,279,459,103 for taxes payable 2020, which is an increase of $219,384,745 or 10.6 percent from last year. The taxable market value increase is driven by large increases in residential (5.0%), Industrial (10.8%), and apartment properties (7.3%). The total tax capacity of the City is estimated at $28,320,711 compared to $25,525,066 for taxes payable 2019, which is an increase of $2,795,645 (11.0%). Residential housing makes up 51.2% of the 2020 tax capacity base. According to the Hennepin County Assessor’s Office, for the valuation used to calculate the 2020 property tax payments, the median value home in Brooklyn Center is $220,000 compared to $204,000 in the previous valuation. 3 Major transportation routes in and through the City, including Interstates 94 and 694, and State Highways 100 and 252, have provided a continued impetus for development of a strong commercial tax base in the City along these corridors. There are no large, undeveloped tracts of land in Brooklyn Center and no potential for annexation of additional undeveloped land. Therefore, the revitalization of Brooklyn Center is proceeding on three tracks: redevelopment and renewal of the commercial and industrial areas of the City; reconstruction and enhancement of its streets, utilities, and parks; and the revitalization of neighborhoods. The hospitality industry contributes a significant amount to Brooklyn Center’s economy. Lodging tax receipts for fiscal year 2019 totaled $1,091,105. City issued building permits in 2019 had a total permit value of $79,081,231, showing a continued trend of significant investments being made in the community. Long Term Financial Planning The City maintains a comprehensive Capital Improvement Plan to facilitate the replacement of its aging infrastructure. When streets are reconstructed in this program, aging water, sanitary and storm sewer infrastructure is also repaired or replaced. These improvements are funded by a combination of general obligation improvement bonds supported with special assessments against benefited properties and cash from the capital projects funds and utility enterprise funds. About one twenty-fifth of the City’s streets and utilities are reconstructed each year. It is expected that this will be an ongoing process and the Plan is reviewed and amended as a part of each budget cycle. In addition, cash flows for all funds providing financing for the Plan are updated for cash flow projections during the 15 year timeframe of the Plan. The Capital Improvements Plan projects completion of the first citywide round of reconstruction of the streets and utilities throughout the entire community by 2022. 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 80-acre Opportunity Site, which is planned for a mix of commercial and residential redevelopment, along with regional recreational and entertainment amenities. 4  Since 2008, the EDA has acquired 44 acres of land within the Opportunity Site. This includes the former Brookdale Square shopping center site, former Brookdale Ford dealership property, and former Target store.  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.  The EDA entered into a Preliminary Development Agreement (PDA) with Alatus, LLC, a Minneapolis-based developer, in April 2018 for the southern 35 acres of the Opportunity Site. The PDA identified Alatus as the master developer to plan the site and initiate a Phase I development.  In May 2018, the census tract (27053020200) that the Opportunity Site is located within was designated as an Opportunity Zone.  City EDA renewed its PDA with Alatus in April of 2019, taking the lead on the master planning for the entire 80-acre Opportunity Site in collaboration with Alatus. The timing was structured to allow Alatus to move forward with a Phase I in conjunction with the creation of a master plan.  The City engaged a consultant to update the 2006 Opportunity Site Master Plan. A draft of the Master Plan has been completed and a traffic study and stormwater plan are underway.  Alatus is in predevelopment on a Phase I of the development, which they intend to move ahead with in 2020. Phase I would include 400 units of multi-family housing with a mix of market-rate and affordable, a movie theater, and 36,000 square feet of additional commercial space. A movie theater group has signed onto the project, and the city is supporting a retail incubator and public market in 16,000 square feet of the commercial space. Alatus is seeking a grocer for the remaining commercial space. They anticipate bringing the project through entitlements in the fall of 2020 with a spring 2021 construction start. Additional development activities in 2019/2020 include:  TOPGOLF USA purchased an existing 85,240 square foot Regal Theater at 6420 Camden Avenue North to allow for the construction of a 65,000 square foot commercial recreational/entertainment development. The three-level facility opened in September 2018 and includes 103 hitting bays, 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.  In January 2019, HOM Furniture opened in the renovated former Kohl’s building. The project includes a 24,822 addition, with approximately 12,000 square feet of the main level available for lease. The project also contemplated the development of Building Site X in the west parking lot area for future retail, restaurant, or medical/office use.  In fall 2018, a new approximately 4,000 square foot Bank of America opened with an ATM drive-thru.  On March 18, 2018 Ebert Construction received approval for the construction of a four- story, 112,000 square foot indoor commercial storage facility on a portion of what was the former Northbrook Shopping Center. The storage facility opened in July 2019. 5  On May 29, 2018 law firm Milavetz, Gallop & Milavetz, located at 1915 57th Avenue North, received approval for an approximately 1,000 square foot addition to their building to expand their offices. The work was completed in summer 2019.  On April 23, 2018 Medtronic received approval for a substantial renovation and 13,427 square foot expansion of their dry room facilities at 6800 Shingle Creek Parkway (north building), which will allow for the additional production of their lithium ion batteries for pacemakers. On July 22, 2019 Medtronic received approval for a 26-foot tall, 2,600 square foot chiller plant addition to 6700 Shingle Creek Parkway (south building). Both projects are both under construction as of this date.  On September 10, 2018 Unity Place (7256 Unity Place), which is an affordable townhome development, was granted approval for a $26 million modernization and improvement project which included construction of a new 2,600 square foot community/service building and maintenance garage, new outdoor space and playground, and updating all 112 townhouse units. The project was completed in late 2019.  Luther Automotive opened a new 35,424 square foot Mazda and Mitsubishi dealership in late 2019.  A four story, 82-room Fairfield Inn and Suites on a former EDA-owned site at 6250 Earle Brown Drive is currently under construction with an anticipated summer 2020 opening.  In July 2018, the City Council approved the conversion of a vacant former senior assisted living facility into market-rate apartments. The project, called LUX Apartments, includes 140 fully renovated units and community space, as well as the installation of expanded parking and other site improvements. Should they so choose in the future, the PUD approvals provided for a potential expansion of three additional apartment units. The total project cost was approximately $4 million, began renting in late 2018 during construction, and was fully leased by spring 2019.  On July 23, 2018, Casey’s Gas Station and Convenience Stores received approval for a new 4,600 square foot store at 2101 Freeway Boulevard. The gas station and convenience store opened in November 2019.  On July 23, 2018 Brooklyn Center STEAM Middle and High School (6500 Humboldt Avenue North) received approval to construct a 2,250 square foot new front entry addition, an 845 square foot mechanical mezzanine, as well as other select site improvements to the front of the building. These approvals were part of a much larger interior renovation project to separate the middle and high school spaces and provide much needed updates. Construction is underway.  On September 24, 2018 Earle Brown Elementary School (1500 59th Avenue North) received approval to construct a new 1,200 square foot front entry, a 23,551-square foot second story addition, and select site improvements. Construction began following end of the school year in June 2019 and construction is still underway at this time.  On May 28, 2019 the City approved plans to construct a new 9,600 square foot municipal liquor store within the Shingle Creek Crossing shopping center and an approximately 4,000 square foot attached retail space, to be owned by the EDA for future use. The new Brooklyn Center Liquor Store #1 held a grand opening in March 2020.  Construction is currently underway with Developer Real Estate Equities for a two building, 270-unit multi-family development at 5801 and 5803 Xerxes Avenue North. The project includes a mix of 143 affordable independent senior units (Sonder Point) and 6 127 workforce units (Sonder House). It is anticipated that both buildings will be completed by the summer of 2021.  Construction is currently underway on the 30-lot Eastbrook Estates subdivision by Developer Centra Homes on approximately 8 acres of land located west of 252 and south of 69th Avenue North. The land is assembled of acreage previously owned by the EDA, as well as private ownership. Site grading took place in November 2019 and the first building permits were issued in February 2020 for the new construction homes. Construction on the new interior roads is currently underway with pavement expected by June 2020. All but five of the original 30 lots have been sold as of this date.  The City has entered into a Preliminary Development Agreement with J O Companies for an 83-unit multi-family apartment on the EDA-owned properties at Brooklyn Boulevard and 61st Avenue North. Other Activities in 2019/2020  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. Phase I of the project began in 2018 and will be completed in 2020. Phase II design will begin in 2020, with construction anticipated for 2021/2022.  In conjunction with the Brooklyn Boulevard reconstruction the City is undertaking a land use study along the corridor and the creation of an overlay district with regulatory framework intended to facilitate redevelopment. The study will include the numerous EDA-owned properties along the corridor and identify a plan for their reuse.  The City has begun a rewrite of its zoning ordinances. This will include the creation of several new mixed use zoning districts to implement the recent 2040 Comprehensive Plan. The mixed use zoning districts will introduce higher density housing to currently underdeveloped areas of the City where housing has historically not been allowed, such as the Opportunity Site, along Brooklyn Boulevard, and in other key redevelopment sites in the City.  The City will complete a Master Development Strategies for the former 15-acre Sears site and the EDA-owned 5-acre property at 57th and Logan Avenue. This will include identifying future land use and zoning for the property, as well as an implementation plan and financial feasibility analysis. 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: 7 8 CITY OF BROOKLYN CENTER, MINNESOTA PRINCIPAL OFFICIALS December 31, 2019 Name Position Term of Office Term Expires ELECTED OFFICIALS Mike Elliott Mayor Four Years December 31, 2022 April Graves Council Member Four Years December 31, 2022 Kris Lawrence-Anderson Council Member Four Years December 31, 2020 Dan Ryan Council Member Four Years December 31, 2022 Marquita Butler Council Member Four Years December 31, 2020 APPOINTED OFFICIALS Cornelius L. Boganey City Manager Appointed Troy Gilchrist City Attorney Contractual Appointee Barb Suciu City Clerk Appointed Reggie Edwards Deputy City Manager Appointed Tim Gannon Police Chief Appointed Meg Beekman Community Development Director Appointed Todd Berg Fire Chief Appointed James Glasoe Community Activities, Recreation and Services Director Appointed Doran Cote Director of Public Works Appointed Mark Ebensteiner Finance Director Appointed 9 Community City Council City Manager Department of Community Activities Recreation Services (CARS) Department of Community Development Department of Public Works Department of Fiscal & Support Services Police Department Fire Department City Advisory CommissionsCity Attorney City of Brooklyn Center Organizational Chart December, 2019 Department of Administration 10 11 This page has been left blank intentionally. 12 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, 2019, 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) C E R T I F I E D A C C O U N T A N T S 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 Jaclyn M. Huegel, CPA Kalen T. Karnowski, CPA 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 Standard Letterhead-r2.qxp_167639 Letterhead-RV1 9/7/18 6:34 PM Page 1 13 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, 2019, 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) 14 OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we have also issued our report dated May 20, 2020 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 20, 2020 15 This page has been left blank intentionally. 16 CITY OF BROOKLYN CENTER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2019 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, 2019. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages 1-8 of this CAFR. Financial Highlights •The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $152,912,706 (net position). Of this amount, $21,157,961 (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 $7,947,585 (5.48%) from the previous year, The increase can be primarily attributed to a significant amount of tax increment revenues and utility revenues being used for 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 $54,312,512, which is an increase of $7,473,151 (15.95%) from the previous year. Of the total fund balance, $11,241,736 (20.70%) is unassigned, which is free from any internal or external constraints of its use. •The General fund has a fund balance of $12,524,217 at the close of the current fiscal year. During 2019, the fund balance increased $960,392 (8.31%) from the previous year. The unassigned fund balance at year end is $12,372,864, which represents 52.00% of the following year's budget. The remaining portion of the fund balance is nonspendable or assigned. •The City’s total outstanding bonded debt increased by $4,932,000 during the current fiscal year, from $58,181,445 to $63,113,445. The City retired $5,733,000 in principal in 2019, and issued $10,665,000 in new debt for infrastructure projects that included the Interstate Area Neighborhood Improvement project, Bellvue Mill and Overlay project, and construction of a new Municipal Liquor Store. 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. 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). 17 CITY OF BROOKLYN CENTER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2019 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, Earle Brown Heritage Center, water utility, sanitary sewer utility, storm drainage utility, street light utility, and the recycling utility. The government-wide financial statements include not only the City itself (known as the primary government), but also a legally separate Housing and Redevelopment Authority and Economic Development Authority, for which the City is financially accountable. Although legally separate, these component units, function for all practical purposes as a department of the City, and therefore have been included as an integral part of the primary government. The government-wide financial statements can be found on pages 29 through 31 of this CAFR. Fund Financial Statements: A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into two categories: governmental funds and proprietary funds. Governmental Funds: Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financial requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City's near-term financial decisions. Both the governmental fund balance sheet and governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains 22 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, Tax Increment District No. 3, Debt Service, Capital Improvements, Municipal State Aid for Construction, and the Special Assessment Construction, which are considered to be major funds. Data from the other 16 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. 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 32 through 40 of this CAFR. 18 CITY OF BROOKLYN CENTER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2019 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, 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 42 through 47 of this CAFR. Notes to the Financial Statements: The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 49 through 89 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 schedule of changes in the City's total OPEB liability and related ratios, 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 91 through 98 of this CAFR. The combining and budgetary comparison statements referred to earlier in connection with nonmajor governmental funds and internal service funds are presented immediately following the required supplementary information. Combining and budgetary comparison statements can be found on pages 99 through 157 of this CAFR. 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 $152,912,706 at the close of the most recent fiscal year. The largest portion of the City's net position ($96,010,898 or 62.78%) reflects its investment in capital assets, which includes: land infrastructure, buildings, and machinery & equipment, less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. 19 CITY OF BROOKLYN CENTER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2019 2019 2018 2019 2018 2019 2018 Current and other assets 78,587,258$ 70,899,936$ 25,042,033$ 20,037,095$ 103,629,291$ 90,937,031$ Capital Assets 68,784,513 68,108,073 76,186,001 73,199,880 144,970,514 141,307,953 Total assets 147,371,771 139,008,009 101,228,034 93,236,975 248,599,805 232,244,984 Deferred outflows of resources 6,222,876 8,442,673 - - 6,222,876 8,442,673 Long-term liabilities outstanding 38,201,286 38,168,918 36,385,096 30,375,219 74,586,382 68,544,137 Other liabilities 7,613,928 6,227,432 5,387,561 4,202,601 13,001,489 10,430,033 Total liabilities 45,815,214 44,396,350 41,772,657 34,577,820 87,587,871 78,974,170 Deferred inflows of resources 14,322,104 16,748,366 - - 14,322,104 16,748,366 Net investment in capital assets 52,560,591 52,794,327 43,450,307 42,831,977 96,010,898 95,626,304 Restricted 35,743,847 30,501,419 - - 35,743,847 30,501,419 Unrestricted 5,152,891 3,010,220 16,005,070 15,827,178 21,157,961 18,837,398 Total Net Position 93,457,329$ 86,305,966$ 59,455,377$ 58,659,155$ 152,912,706$ 144,965,121$ 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 (23.38%) represents resources that are subject to external restrictions on how they may be used. The remaining portion (13.84%) may be used to meet the City's ongoing obligations. Current and other assets increased by nearly thirteen million dollars during 2019. This relates to the purchase of the target property for resale on the governmental side and unspent bond proceeds in both governmental and business type activities. 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 and lease revenue bonds for construction of the Municipal Liquor Store. The governmental activities had a significant decrease in the amount of deferred outflows and inflows of resources. 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 and deferred outflows and inflows of resources. Recording these items 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 20 CITY OF BROOKLYN CENTER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2019 Governmental Activities Governmental activities resulted in an increase of the City's net position by $7,151,363 (8.29%). Key elements of the changes are as follows: Revenues:2019 2018 2019 2018 2019 2018 Program revenues Charges for services 2,781,595$ 2,802,048$ 22,857,361$ 22,700,513$ 25,638,956$ 25,502,561$ Operating grants and contributions 9,562,139 3,872,109 - - 9,562,139 3,872,109 Capital grants and contributions 3,148,710 3,435,074 455,363 - 3,604,073 3,435,074 General revenues Property taxes 19,073,449 17,650,461 - - 19,073,449 17,650,461 Other taxes 6,445,854 6,315,925 - - 6,445,854 6,315,925 Grants and contributions not restricted to specific programs 2,239,180 2,065,832 - - 2,239,180 2,065,832 Unrestricted investment earnings 1,271,500 442,835 656,456 258,591 1,927,956 701,426 Gain on disposal of capital assets 58,869 80,786 - - 58,869 80,786 Total revenues 44,581,296 36,665,070 23,969,180 22,959,104 68,550,476 59,624,174 Expenses: General government 4,423,425 4,426,549 - - 4,423,425 4,426,549 Public safety 12,706,644 11,757,362 - - 12,706,644 11,757,362 Public works 12,787,805 6,501,746 - - 12,787,805 6,501,746 Community services 181,159 164,544 - - 181,159 164,544 Parks and recreation 3,827,299 3,234,386 - - 3,827,299 3,234,386 Economic development 2,146,011 2,543,381 - - 2,146,011 2,543,381 Interest on long-term debt 666,343 693,575 - - 666,343 693,575 Municipal liquor - - 6,775,430 6,478,599 6,775,430 6,478,599 Golf course - - - 333,768 - 333,768 Earle Brown Heritage Center - - 5,242,416 4,874,026 5,242,416 4,874,026 Water utility - - 4,148,609 3,670,089 4,148,609 3,670,089 Sanitary sewer utility - - 4,546,350 4,213,511 4,546,350 4,213,511 Storm drainage utility - - 2,407,046 1,959,195 2,407,046 1,959,195 Street light utility - - 333,744 274,252 333,744 274,252 Recycling utility - - 410,610 385,811 410,610 385,811 Total expenses 36,738,686 29,321,543 23,864,205 22,189,251 60,602,891 51,510,794 Change in net position before transfers 7,842,610 7,343,527 104,975 769,853 7,947,585 8,113,380 Transfers 325,487 (782,750) (325,487) 782,750 - - Transfers - capital assets (1,016,734) 478,610 1,016,734 (478,610) - - Change in net position 7,151,363 7,039,387 796,222 1,073,993 7,947,585 8,113,380 Net Position - January 1 86,305,966 79,266,579 58,659,155 57,585,162 144,965,121 136,851,741 Net Position - December 31 93,457,329$ 86,305,966$ 59,455,377$ 58,659,155$ 152,912,706$ 144,965,121$ CITY OF BROOKLYN CENTER - CHANGES IN NET POSITION Governmental Activities Business-Type Activities Total 21 CITY OF BROOKLYN CENTER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2019 Governmental activities accounted for (89.98%) of the increase in the City's net position. The change in net position from the previous year can be attributed to prepaid special assessments, tax increment revenues received in Tax Increment District #3, and municipal state aid and other intergovernmental revenues earned related to capital spending. The City also reported a large increase in operating grants and related public works expenditures from the Brooklyn Blvd Infrastructure project. This roadway is owned by Hennepin County, therefore a large portion of the expenditures can not be capitalized by the City. Below are specific graphs which provide comparisons of the governmental activities revenues and expenses: Charges for services 6.2% Operating grants 21.4% Capital grants 7.1% Property taxes 42.8% Other taxes 14.5% Other general revenues 5.1%Investment earnings 2.9% 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 22 CITY OF BROOKLYN CENTER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2019 Business-type Activities Business-type activities increased net position by $796,222, which accounts for 10.02% 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 for the Sanitary Sewer, Storm Drainage, Street Light, and Recycling Utilities. Net position of the Municpal liquor fund, Earle Brown Heritage Center, and Water Utility decreased during 2019. Municipal liquor 28.4% Earle Brown Heritage Center 22.0% Water utility 17.4% Sanitary sewer utility 19.0% Storm drainage utility 10.1%Street Light Utility 1.4%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 $8,000,000 Municipal liquor 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 23 CITY OF BROOKLYN CENTER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2019 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 $54,312,512, which is an increase of $7,473,151 (15.95%) from the previous year. The unassigned fund balance, which is not subject to internal or external constraints upon its use, is $11,241,736, or 20.70% of total fund balance. A small portion of the fund balance, $88,109 (0.16%) 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: $32,219,640 (59.32%) of restricted fund balance; $9,570,360 (17.62%) of committed fund balance; and $1,192,667 (2.20%) 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 $12,524,217. 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 $12,372,864, represents 56.35% of the current year General fund expenditures. Total General fund balance represents 57.04% of those same expenditures. The fund balance of the City’s General fund increased by $960,392 (8.31%) from the previous year. The City had budgeted for a break-even year in 2019, however there was a positive variance in revenues of $712,571, and expenditures of $247,821. The revenue variance was driven by building permits, investment earnings, and other miscellaneous revenues exceeding budget. The miscellaneous revenues were predominantly charges related to the development and conduit financing of the Sonderpoint project at the former Jerry's Foods site and Unity Place Project. The largest positive expenditure variances occurred in parks and recreation activities. The Tax Increment District No. 3 fund has a total fund balance of $21,614,535 at the end of the year. The increase in fund balance was $2,056,939 (10.52%) from the previous year. The fund received $4,554,621 in tax increment revenues, expended $678,551 on Economic Development and transferred $2,237,287 for Debt Service. As of December 31, 2019 the fund has total assets held for resale of $18,118,722, the largest contributor to the increase from prior year was acquisition of former Target property. The Debt Service fund has a total fund balance of $3,991,322 at the end of the year. The increase in fund balance was $1,174,979 (41.72%) from the previous year. The increase in fund balance is primarily the result of prepaid special assessments received for the General Obligation Improvement Bonds, Series 2019A. The first principal payment for this bond occurred February 1, 2020. The Capital Improvements fund has a total fund balance of $1,613,299, a decrease of $430,061 (21.05%) from the previous year. The decrease was the result of the Brooklyn Boulevard improvement project. The Municipal State Aid Construction fund has a fund balance of $1,294,135 at the end of the year. The increase in fund balance was $1,004,720 (347.16%) from the previous year. As of December 31, 2019 the fund had a cash balance of $2,984,961 and a receivable balance in the amount of $2,522,364 in Municipal State Aid Construction funds. The Special Assessments Construction fund has an ending fund balance of $2,742,063 an increase of $1,207,397 from the previous year. The fund incurred $1,377,180 of capital expenditures during the year primarily for Interstate 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. 24 CITY OF BROOKLYN CENTER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2019 The enterprise funds have a combined ending net position of $62,055,094, of which $18,604,787 (29.98%) is unrestricted and can be used for 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 119.03% 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 $712,571. The major contributors of this increase were building permit revenues, investment earnings and miscellaneous revenues related to development and conduit financing of the Sonderpoint housing project. Actual expenditures fell under the final budget for the year by $247,821. This was primarily the result of budget variances in parks and recreation including a variance of $48,000 in lodging tax remittances and various wage accounts. 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 $144,970,514 (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 $3,662,561 (2.59%) from the previous year. Major capital asset events during the current year included the following: •The Interstate Area neighborhood infrastructure reconstruction project was partially completed, with a total cost of $2,255,708 including construction in progress from the previous year. This amount includes work on streets, as well as water, sewer, storm and street light utilities. •The Brooklyn Boulevard street reconstruction project (49th Avenue to Bass Lake Road) continued construction, with a total of $13,693,635 in costs (including previous years). This amount includes work on streets, as well as water, sewer, storm and street light utilities. Federal funding through the Surface Transportation Program has been awarded to the City and Hennepin County for this project. •The Bellvue Mill and Overlay project was partially completed, with a total cost of $2,107,692 (including previous years) This amount includes work on streets, water, sewer, storm, and street light utilities. •The 57th and 69th Avenue Mill and Overlay projects were finalized and moved from construction in progress to infrastructure with a total combined cost of $1,378,692. •The Evergreen Park Area infrastructure reconstruction project was finalized and moved from construction in progress to infrastructure with a total combined cost of $8,284,431. •The Firehouse Park Area infrastructure reconstruction project was finalized and moved from construction in progress to infrastructure with a total combined cost of $8,646,699. •The Rehabilitation of Water Towers #2 and #3 were completed at a total combined cost of $3,467,031. •The City purchased land and began construction of a municipal liquor store with total costs of $2,900,588. •The Central Garage purchased 16 pieces of machinery & equipment during the year. The total outlay for machinery and equipment during the year was $721,246. The additions include, but are not limited to: a trash pump, striper, small garbage truck, Freightliner M2, Wester Star 4700, and police vehicles. 25 CITY OF BROOKLYN CENTER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2019 2019 2018 2019 2018 2019 2018 Land 5,632,883$ 5,632,883$ 2,698,879$ 2,104,581$ 8,331,762$ 7,737,464$ Easements 88,704 88,704 10,285 10,285 98,989 98,989 Construction in progress 5,699,286 10,908,187 6,920,806 12,912,399 12,620,092 23,820,586 Land improvements - - 267,754 296,830 267,754 296,830 Other land improvements 6,209,125 6,536,716 - - 6,209,125 6,536,716 Buildings and improvements 9,905,593 10,776,581 22,316,360 19,763,924 32,221,953 30,540,505 Machinery and equipment 4,536,876 4,555,748 416,323 340,423 4,953,199 4,896,171 Street infrastructure 36,712,046 29,609,254 - - 36,712,046 29,609,254 Street light systems - - 646,273 556,050 646,273 556,050 Mains and lines - - 42,909,321 37,215,388 42,909,321 37,215,388 Total 68,784,513$ 68,108,073$ 76,186,001$ 73,199,880$ 144,970,514$ 141,307,953$ Additional information on the City’s capital assets can be found in Note 3 (C) on pages 62 through 63 of this CAFR. Long-Term Debt: At the end of the current year, the City had outstanding long-term bonded debt of $63,113,445. 2019 2018 2019 2018 2019 2018 General obligation tax increment bonds 9,650,000$ 11,945,000$ -$ -$ 9,650,000$ 11,945,000$ General obligation improvement bonds 16,525,276 14,552,773 1,294,724 1,472,227 17,820,000 16,025,000 General obligation revenue bonds - - 17,350,000 13,465,000 17,350,000 13,465,000 General obligation lease revenue bonds - - 2,520,000 - 2,520,000 - General obligation revenue notes - - 15,773,445 16,746,445 15,773,445 16,746,445 Unamortized premiums (discounts)1,463,854 903,685 1,883,170 747,050 3,347,024 1,650,735 Compensated absences 1,408,546 1,323,469 - - 1,408,546 1,323,469 Net pension liability 11,346,322 11,239,156 - - 11,346,322 11,239,156 Total OPEB liability 2,038,900 2,014,679 - - 2,038,900 2,014,679 Total 42,432,898$ 41,978,762$ 38,821,339$ 32,430,722$ 81,254,237$ 74,409,484$ The City’s total bonded debt increased $4,932,000 (8.48%) from the previous year. The City retired $5,733,000 in principal, and issued $10,665,000 in new general obligation improvement bonds and lease revenue bonds for the infrastructure improvements and liquor store construction. 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 $61,802,231. 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 67 through 71 of this CAFR. Governmental Activities Business-type Activities Total CITY OF BROOKLYN CENTER - OUTSTANDING DEBT (net of depreciation) Governmental Activities Business-type Activities Total CITY OF BROOKLYN CENTER - CAPITAL ASSETS 26 CITY OF BROOKLYN CENTER, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2019 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 2020 fiscal year. •The unemployment rate for the City is 3.60% at the end of the 2019 fiscal year, which is an increase from the rate of 3.30% a year ago. This compares to the State’s average unemployment rate of 3.20% and the national average of 3.70%. •An increase in estimated taxable market value of 10.69% from taxes payable 2019 to 2020. The taxable market value increase was driven by significant increases in residential property values (9.4%) and apartment property values (13.3%). •Continuing redevelopment throughout the City will yield net growth in tax base and stability in tax base along with providing job growth in the City. •Since 2008, the EDA has acquired approximately 35 acres of land including the former Brookdale Square shopping center site and former Brookdale Ford dealership property. The EDA entered into a Preliminary Development Agreement with Alatus, LLC as the master developer of this site. In May 2018, the site was federally designated as an Opportunity Zone. The preliminary development concept proposed involves the construction of a mixed-use apartment/hotel/commercial/single-family development together with related improvements including a centralized park area, new roads and storm water ponding improvements. •In regard to Covid-19, the City expects increased delinquency in property tax and other receipts for 2020 associated with relaxed deadlines for payment in response to rapidly increasing unemployment nationwide. The City anticipates bridging the gap in receipts with laddered investment maturities of reserve funds that will not be immediately reinvested as has been past practice. The City does not currently anticipate the need for short term financing in response to this disruption in cash flow. 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. Total unassigned and assigned fund balance at the end of 2019 was $12,437,738 (52.00%) of the adopted 2020 budgeted expenditures. The City intends to make a Capital Improvements fund transfer of $64,874 during 2020. Requests for Information This financial report is designed to provide a general overview of the City of Brooklyn Center's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Finance Director, 6301 Shingle Creek Parkway, Brooklyn Center, MN 55430. 27 This page has been left blank intentionally. 28 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF NET POSITION December 31, 2019 Governmental Business-Type Activities Activities Total ASSETS Cash and investments 43,432,221$ 21,860,961$ 65,293,182$ Restricted assets - temporarily restricted Cash and temporary investments - 984,583 984,583 Receivables: Accounts - net 379,246 3,032,728 3,411,974 Taxes 361,415 - 361,415 Special assessments 5,926,445 577,249 6,503,694 Internal balances 2,594,855 (2,594,855) - Due from other governments 6,422,721 104,238 6,526,959 Prepaid items 68,631 276,178 344,809 Inventories 41,307 800,951 842,258 Notes receivable 79,519 - 79,519 Assets held for resale 18,578,700 - 18,578,700 Capital assets: Nondepreciable 11,420,873 9,629,970 21,050,843 Depreciable 57,363,640 66,556,031 123,919,671 Net pension asset 702,198 - 702,198 Total assets 147,371,771 101,228,034 248,599,805 DEFERRED OUTFLOWS OF RESOURCES Deferred pension resources 5,946,020 - 5,946,020 Deferred OPEB resources 276,856 - 276,856 Total deferred outflows of resources 6,222,876 - 6,222,876 LIABILITIES Accounts payable 1,255,352 948,699 2,204,051 Contracts payable 605,947 270,207 876,154 Accrued salaries and wages 497,923 73,218 571,141 Accrued interest payable 329,680 323,000 652,680 Due to other governments 82,630 317,746 400,376 Deposits payable 609,046 576,179 1,185,225 Unearned revenue 1,738 442,269 444,007 Compensated absences payable: Due within one year 140,855 - 140,855 Due in more than one year 1,267,691 - 1,267,691 Total OPEB liability: Due in more than one year 2,038,900 - 2,038,900 Bonds and net pension liability payable: Due within one year 4,090,757 2,436,243 6,527,000 Due in more than one year 34,894,695 36,385,096 71,279,791 Total liabilities 45,815,214 41,772,657 87,587,871 DEFERRED INFLOWS OF RESOURCES Deferred pension resources 8,686,108 - 8,686,108 Deferred OPEB resources 93,034 - 93,034 Capital grants received in advance of project spending 1,332,272 - 1,332,272 State aid received for subsequent years..4,210,690 - 4,210,690 Total deferred inflows of resources 14,322,104 - 14,322,104 NET POSITION Net investment in capital assets 52,560,591 43,450,307 96,010,898 Restricted for: Tax increment financing 23,409,890 - 23,409,890 Economic development 1,712,362 - 1,712,362 Law enforcement enhancements 66,472 - 66,472 Debt service 8,338,166 - 8,338,166 Pension benefits 922,822 - 922,822 State-aid street systems 1,294,135 - 1,294,135 Unrestricted 5,152,891 16,005,070 21,157,961 Total net position 93,457,329$ 59,455,377$ 152,912,706$ The notes to the financial statements are an integral part of this statement. 29 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF ACTIVITIES For the Year Ended December 31, 2019 Charges For FUNCTIONS/PROGRAMS Expenses Services Government activities: General government 4,423,425$ 476,377$ Public safety 12,706,644 1,030,980 Public works 12,787,805 259,675 Community services 181,159 - Parks and recreation 3,827,299 754,408 Economic development 2,146,011 260,155 Interest on long-term debt 666,343 - Total government activities 36,738,686 2,781,595 Business-type activities: Municipal liquor 6,775,430 6,860,482 Earle Brown Heritage Center 5,242,416 5,068,900 Water utility 4,148,609 3,819,747 Sanitary sewer utility 4,546,350 4,555,940 Storm drainage utility 2,407,046 1,680,454 Street light utility 333,744 466,857 Recycling utility 410,610 404,981 Total business-type activities 23,864,205 22,857,361 Total 60,602,891$ 25,638,956$ The notes to the financial statements are an integral part of this statement. 30 Program Revenues Net (Expense) Revenue and Changes in Net Position Operating Capital Grants and Grants and Governmental Business-Type Contributions Contributions Activities Activities Total -$ -$ (3,947,048)$ -$ (3,947,048)$ 1,250,290 - (10,425,374) - (10,425,374) 8,081,246 2,997,991 (1,448,893) - (1,448,893) - - (181,159) - (181,159) 66,207 150,719 (2,855,965) - (2,855,965) 164,396 - (1,721,460) - (1,721,460) - - (666,343) - (666,343) 9,562,139 3,148,710 (21,246,242) - (21,246,242) - - - 85,052 85,052 - - - (173,516) (173,516) - - - (328,862) (328,862) - 455,363 - 464,953 464,953 - - - (726,592) (726,592) - - - 133,113 133,113 - - - (5,629) (5,629) - 455,363 - (551,481) (551,481) 9,562,139$ 3,604,073$ (21,246,242) (551,481) (21,797,723) General revenues: Property taxes 19,073,449 - 19,073,449 Tax increments 5,354,749 - 5,354,749 Lodging taxes 1,091,105 - 1,091,105 Grants and contributions not restricted to specific programs 2,239,180 - 2,239,180 Unrestricted investment earnings 1,271,500 656,456 1,927,956 Gain on disposal of capital asset 58,869 - 58,869 Transfers 325,487 (325,487) - Transfers - capital assets (1,016,734) 1,016,734 - Total general revenues and transfers 28,397,605 1,347,703 29,745,308 Change in net position 7,151,363 796,222 7,947,585 Net position - January 1 86,305,966 58,659,155 144,965,121 Net position - December 31 93,457,329$ 59,455,377$ 152,912,706$ 31 CITY OF BROOKLYN CENTER, MINNESOTA BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2019 Tax Increment Debt General District No. 3 Service ASSETS Cash and investments 13,341,151$ 2,563,392$ 3,977,835$ Receivables: Accounts - net 156,950 7,500 - Current taxes 99,947 59,672 7,606 Delinquent taxes 162,668 29,412 - Special assessments 98,422 - 4,682,905 Due from other funds 334,864 - - Due from other governments 28,855 - - Notes receivable - - - Inventories 18,398 - - Prepaid items 68,081 - - Advances to other funds - 895,898 - Assets held for resale - 18,118,722 - Total assets 14,309,336 21,674,596 8,668,346 LIABILITIES Accounts payable 414,985 27,758 500 Contracts payable - - - Accrued salaries and wages 477,206 - - Due to other funds 4,862 - - Due to other governments 33,582 - - Deposits payable 594,137 1,856 - Unearned revenue 703 1,035 - Advances from other funds - - - Total liabilities 1,525,475 30,649 500 DEFERRED INFLOWS OF RESOURCES Unavailable revenue - property taxes 162,668 - - Unavailable revenue - tax increments - 29,412 - Unavailable revenue - special assessments 96,976 - 4,676,524 Unavailable revenue - intergovernmental - - - Total deferred inflows of resources 259,644 29,412 4,676,524 FUND BALANCES (DEFICITS) Nonspendable 86,479 - - Restricted - 21,614,535 3,991,322 Committed - - - Assigned 64,874 - - Unassigned 12,372,864 - - Total fund balances 12,524,217 21,614,535 3,991,322 Total liabilities, deferred inflows of resources and fund balances 14,309,336$ 21,674,596$ 8,668,346$ The notes to the financial statements are an integral part of this statement. 32 Municipal Special Capital State Aid Assessment Other Improvements for Construction Nonmajor Total Fund Construction Fund Governmental Governmental 117,375$ 2,984,961$ 2,985,915$ 11,144,605$ 37,115,234$ - - - 177,580 342,030 - - - 2,110 169,335 - - - - 192,080 524 - 1,144,594 - 5,926,445 - - - - 334,864 3,710,335 2,522,364 - 143,956 6,405,510 - - - 79,519 79,519 - - - 1,630 20,028 - - - - 68,081 - - - 460,158 1,356,056 - - - 459,978 18,578,700 3,828,234 5,507,325 4,130,509 12,469,536 70,587,882 328,251 2,500 194,309 174,131 1,142,434 552,836 - 53,111 - 605,947 - - - 10,691 487,897 - - - 334,864 339,726 1,052 - - 47,800 82,434 - - - 13,053 609,046 - - - - 1,738 - - - 1,356,056 1,356,056 882,139 2,500 247,420 1,936,595 4,625,278 - - - - 162,668 - - - - 29,412 524 - 1,141,026 - 5,915,050 1,332,272 4,210,690 - - 5,542,962 1,332,796 4,210,690 1,141,026 - 11,650,092 - - - 1,630 88,109 - 1,294,135 1,614,270 3,705,378 32,219,640 1,613,299 - - 7,957,061 9,570,360 - - 1,127,793 - 1,192,667 - - - (1,131,128) 11,241,736 1,613,299 1,294,135 2,742,063 10,532,941 54,312,512 3,828,234$ 5,507,325$ 4,130,509$ 12,469,536$ 70,587,882$ 33 This page has been left blank intentionally. 34 CITY OF BROOKLYN CENTER, MINNESOTA RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION December 31, 2019 Fund balances - governmental funds 54,312,512$ 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 113,998,806 Accumulated depreciation (48,927,924) 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 (26,175,276) Accrued interest payable (329,680) Unamortized premium (1,463,854) 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 162,668 Delinquent tax increments receivable 29,412 Special assessments receivable 5,915,050 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 702,198 Deferred outflows related to the City's Fire Relief Association Pension Fund Net difference between projected and actual investment earnings and change of assumptions 406,080 Contributions to the plan subsequent to the measurement date 170,652 Deferred inflows related to City's Fire Relief Association Pension Fund Grant funding of contributions to the plan subsequent to the measurement date (170,652) Net difference between expected and actual liability, projected and actual investment earnings, and change of assumptions (185,456) 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.(4,987,207) Total net position - governmental activities 93,457,329$ The notes to the financial statements are an integral part of this statement. 35 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended December 31, 2019 Tax Capital Increment Debt Improvements General District No. 3 Service Fund REVENUES Property taxes 17,265,914$ -$ 1,383,180$ -$ Tax increments - 4,554,621 - - Lodging taxes 1,091,105 - - - Franchise fees - - - - Licenses and permits 1,172,439 - - - Intergovernmental 1,692,425 - - 8,863,750 Charges for services 792,319 198,057 - - Special assessments 42,502 - 1,547,331 345 Fines and forfeits 239,893 - - - Investment earnings (net of market value adjustment)327,748 153,401 82,327 27,672 Miscellaneous 354,795 63,097 - 269,554 Total revenues 22,979,140 4,969,176 3,012,838 9,161,321 EXPENDITURES Current: General government 3,545,278 - - - Public safety 11,815,124 - - - Public works 2,288,390 - - - Community services 181,159 - - - Parks and recreation 2,829,041 - - - Economic development 722,280 678,551 - - Nondepartmental 520,518 - - - Capital outlay: General government - - - 58,804 Public safety 46,337 - - - Public works - - - 9,839,612 Parks and recreation 10,621 - - 18,453 Economic development - - - - Debt service: Principal - - 3,677,497 - Interest - - 736,838 - Fiscal agent fees - - 7,491 - Bond issuance costs - - - - Total expenditures 21,958,748 678,551 4,421,826 9,916,869 Excess (deficiency) of revenues over (under) expenditures 1,020,392 4,290,625 (1,408,988) (755,548) OTHER FINANCING SOURCES (USES) Transfers in 150,000 3,601 2,587,568 325,487 Issuance of debt - - - - Premium on issuance of debt - - - - Sale of capital assets - - - - Transfers out (210,000) (2,237,287) (3,601) - Total other financing sources (uses)(60,000) (2,233,686) 2,583,967 325,487 Net change in fund balance 960,392 2,056,939 1,174,979 (430,061) Fund balances - January 1 11,563,825 19,557,596 2,816,343 2,043,360 Fund balances - December 31 12,524,217$ 21,614,535$ 3,991,322$ 1,613,299$ The notes to the financial statements are an integral part of this statement. 36 Municipal Special State Aid Assessment Other for Construction Nonmajor Total Construction Fund Governmental Governmental -$ -$ 377,717$ 19,026,811$ - - 830,313 5,384,934 - - - 1,091,105 - - 711,255 711,255 - - - 1,172,439 1,227,955 - 457,595 12,241,725 - 1,860 241,442 1,233,678 - 462,009 - 2,052,187 - - 35,290 275,183 99,907 32,891 350,168 1,074,114 - - 46,901 734,347 1,327,862 496,760 3,050,681 44,997,778 - - 186,806 3,732,084 - - 189,397 12,004,521 151,400 51,659 - 2,491,449 - - - 181,159 - - 353,880 3,182,921 - - 559,262 1,960,093 - - - 520,518 - - - 58,804 - - 25,819 72,156 171,742 1,377,180 1,608,135 12,996,669 - - 18,135 47,209 - - 177,474 177,474 - - - 3,677,497 - - - 736,838 - - - 7,491 - 22,990 11,845 34,835 323,142 1,451,829 3,130,753 41,881,718 1,004,720 (955,069) (80,072) 3,116,060 - - 984,960 4,051,616 - 2,135,000 1,220,000 3,355,000 - 424,817 242,587 667,404 - - 9,200 9,200 - (397,351) (877,890) (3,726,129) - 2,162,466 1,578,857 4,357,091 1,004,720 1,207,397 1,498,785 7,473,151 289,415 1,534,666 9,034,156 46,839,361 1,294,135$ 2,742,063$ 10,532,941$ 54,312,512$ 37 CITY OF BROOKLYN CENTER, MINNESOTA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended December 31, 2019 Total net change in fund balances - governmental funds 7,473,151$ 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 5,381,828 Depreciation expense (3,644,753) Contributions of capital assets from the proprietary funds increase net position in the statement of activities, but do not appear in the governmental funds because they are not financial resources.(1,016,734) The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, the governmental funds report the affect of premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities Long-term debt issued (including premiums on current year bonds)(4,022,404) Principal repayments 3,677,497 Amortization of bond discount and premium 107,235 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.5,586 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.(79,732) 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 46,638 Tax increments (30,184) Special assessments (790,903) 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.44,138 Change in net position - governmental activities 7,151,363$ The notes to the financial statements are an integral part of this statement. 38 CITY OF BROOKLYN CENTER, MINNESOTA GENERAL FUND - STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2019 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Property taxes 17,200,591$ 17,200,591$ 17,265,914$ 65,323$ Lodging taxes 1,180,000 1,180,000 1,091,105 (88,895) Licenses and permits 861,315 861,315 1,172,439 311,124 Intergovernmental 1,634,150 1,634,150 1,692,425 58,275 Charges for services 834,650 834,650 792,319 (42,331) Special assessments 85,000 85,000 42,502 (42,498) Fines and forfeits 231,500 231,500 239,893 8,393 Investment earnings (net of market value adjustment)93,663 93,663 327,748 234,085 Miscellaneous 145,700 145,700 354,795 209,095 Total revenues 22,266,569 22,266,569 22,979,140 712,571 EXPENDITURES Current: General government 3,604,232 3,604,232 3,545,278 58,954 Public safety 11,915,328 11,915,328 11,815,124 100,204 Public works 2,323,748 2,323,748 2,288,390 35,358 Community services 187,000 187,000 181,159 5,841 Parks and recreation 3,058,413 3,058,413 2,829,041 229,372 Economic development 772,553 772,553 722,280 50,273 Nondepartmental 297,345 297,345 520,518 (223,173) Capital outlay: Public safety 47,950 47,950 46,337 1,613 Parks and recreation - - 10,621 (10,621) Total expenditures 22,206,569 22,206,569 21,958,748 247,821 Excess of revenues over expenditures 60,000 60,000 1,020,392 960,392 OTHER FINANCING SOURCES (USES) Transfers in 150,000 150,000 150,000 - Transfers out (210,000) (210,000) (210,000) - Total other financing sources (uses)(60,000) (60,000) (60,000) - Net change in fund balance - - 960,392 960,392 Fund balance - January 1 11,563,825 11,563,825 11,563,825 - Fund balance - December 31 11,563,825$ 11,563,825$ 12,524,217$ 960,392$ The notes to the financial statements are an integral part of this statement. 39 CITY OF BROOKLYN CENTER, MINNESOTA TAX INCREMENT DISTRICT NO. 3 - STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2019 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Tax increments 4,111,392$ 4,111,392$ 4,554,621$ 443,229$ Charges for services 192,942 192,942 198,057 5,115 Investment earnings (net of market value adjustment)26,147 26,147 153,401 127,254 Miscellaneous 250,000 250,000 63,097 (186,903) Total revenues 4,580,481 4,580,481 4,969,176 388,695 EXPENDITURES Current: Economic development 1,080,398 1,080,398 678,551 401,847 Capital outlay: Economic development 370,000 370,000 - 370,000 Total expenditures 1,450,398 1,450,398 678,551 771,847 Excess of revenues over expenditures 3,130,083 3,130,083 4,290,625 1,160,542 OTHER FINANCING SOURCES (USES) Transfers in 281,502 281,502 3,601 (277,901) Transfers out (2,245,713) (2,245,713) (2,237,287) 8,426 Total other financing sources (uses)(1,964,211) (1,964,211) (2,233,686) (269,475) Net change in fund balance 1,165,872 1,165,872 2,056,939 891,067 Fund balance - January 1 19,557,596 19,557,596 19,557,596 - Fund balance - December 31 20,723,468$ 20,723,468$ 21,614,535$ 891,067$ The notes to the financial statements are an integral part of this statement. 40 This page has been left blank intentionally. 41 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF NET POSITION PROPRIETARY FUNDS December 31, 2019 Municipal Earle Brown Water Liquor Heritage Center Utility ASSETS Current assets: Cash and cash equivalents 1,783,378$ 2,658,544$ 3,844,265$ Cash with fiscal agent 984,583 - - Receivables: Accounts - net 7,780 189,183 1,169,876 Special assessments - - 577,249 Due from other funds - 4,862 - Due from other governments - 104,238 - Prepaid items 28,384 31,441 3,888 Inventories 728,544 33,811 38,596 Total current assets 3,532,669 3,022,079 5,633,874 Noncurrent assets: Capital assets: Land 594,298 1,493,300 20,734 Easements - - - Land improvements - 570,769 - Buildings and improvements 192,771 13,013,424 26,220,790 Machinery and equipment 276,676 740,815 163,334 Street light systems - - - Mains and lines - - 28,796,730 Construction in progress 2,306,290 - 1,117,907 Total capital assets 3,370,035 15,818,308 56,319,495 Less: accumulated depreciation (407,944) (12,126,967) (22,067,110) Net capital assets 2,962,091 3,691,341 34,252,385 Total noncurrent assets 2,962,091 3,691,341 34,252,385 Total assets 6,494,760 6,713,420 39,886,259 DEFERRED OUTFLOWS OF RESOURCES Deferred pension resources - - - Deferred OPEB resources - - - Total deferred outflows of resources - - - LIABILITIES Current liabilities: Accounts payable 805,389 38,744 53,067 Contracts payable 86,121 184,086 - Accrued salaries and wages 22,185 26,263 11,828 Accrued interest payable 24,340 - 184,528 Due to other governments 59,892 18,055 5,613 Deposits payable - 567,654 8,525 Unearned revenue 48,991 1,600 391,678 Notes payable - - 982,000 Bonds payable - - 773,750 Compensated absences payable - - - Total current liabilities 1,046,918 836,402 2,410,989 Noncurrent liabilities: Notes payable - - 14,791,445 Bonds payable 2,729,806 - 9,460,067 Compensated absences payable - - - Total OPEB liability - - - Net pension liability - - - Total noncurrent liabilities 2,729,806 - 24,251,512 Total liabilities 3,776,724 836,402 26,662,501 DEFERRED INFLOWS OF RESOURCES Deferred pension resources - - - Deferred OPEB resources - - - Total deferred inflows of resources - - - NET POSITION Net investment in capital assets 1,216,868 3,691,341 10,362,421 Unrestricted 1,501,168 2,185,677 2,861,337 Total net position 2,718,036$ 5,877,018$ 13,223,758$ Net position from this Statement Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Net position of business-type activities The notes to the financial statements are an integral part of this statement. Business-Type Activities 42 Governmental Activities- Sanitary Sewer Storm Drainage Street Light Recycling Total Internal Utility Utility Utility Utility Enterprise Service 6,569,127$ 5,887,664$ 917,936$ 200,047$ 21,860,961$ 6,316,987$ - - - - 984,583 - 1,102,077 378,581 100,488 84,743 3,032,728 37,216 - - - - 577,249 - - - - - 4,862 - - - - - 104,238 17,211 211,231 1,234 - - 276,178 550 - - - - 800,951 21,279 7,882,435 6,267,479 1,018,424 284,790 27,641,750 6,393,243 3,389 587,158 - - 2,698,879 - 20,335 10,285 - - 30,620 - - - - - 570,769 166,108 2,571,416 - - - 41,998,401 - 179,130 24,587 - - 1,384,542 10,383,028 - - 1,087,627 - 1,087,627 - 27,981,910 35,512,275 - - 92,290,915 - 696,271 1,958,072 842,266 - 6,920,806 - 31,452,451 38,092,377 1,929,893 - 146,982,559 10,549,136 (17,371,587) (18,381,596) (441,354) - (70,796,558) (6,835,505) 14,080,864 19,710,781 1,488,539 - 76,186,001 3,713,631 14,080,864 19,710,781 1,488,539 - 76,186,001 3,713,631 21,963,299 25,978,260 2,506,963 284,790 103,827,751 10,106,874 - - - - - 5,369,288 - - - - - 276,856 - - - - - 5,646,144 23,403 21,484 5,208 1,404 948,699 112,918 - - - - 270,207 - 5,668 7,274 - - 73,218 10,026 62,103 52,029 - - 323,000 - 234,186 - - - 317,746 196 - - - - 576,179 - - - - - 442,269 - - - - - 982,000 - 460,493 220,000 - - 1,454,243 - - - - - - 140,855 785,853 300,787 5,208 1,404 5,387,561 263,995 - - - - 14,791,445 - 5,538,098 3,865,680 - - 21,593,651 - - - - - - 1,267,691 - - - - - 2,038,900 - - - - - 11,346,322 5,538,098 3,865,680 - - 36,385,096 14,652,913 6,323,951 4,166,467 5,208 1,404 41,772,657 14,916,908 - - - - - 8,330,000 - - - - - 93,034 - - - - - 8,423,034 9,895,624 16,795,514 1,488,539 - 43,450,307 3,713,631 5,743,724 5,016,279 1,013,216 283,386 18,604,787 (11,300,555) 15,639,348$ 21,811,793$ 2,501,755$ 283,386$ 62,055,094$ (7,586,924)$ 62,055,094$ (2,599,717) 59,455,377$ Business-Type Activities 43 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION PROPRIETARY FUNDS For the Year Ended December 31, 2019 Municipal Earle Brown Water Liquor Heritage Center Utility OPERATING REVENUES Sales and user fees 6,855,696$ 5,066,519$ 3,760,995$ Cost of sales (5,008,694) (2,385,593) - Total operating revenues 1,847,002 2,680,926 3,760,995 OPERATING EXPENSES Personal services 913,024 1,310,119 588,612 Supplies 33,065 193,666 314,100 Other services 286,518 876,082 882,043 Insurance 17,772 35,617 41,324 Utilities 45,875 190,093 211,180 Rent 332,456 - - Depreciation 18,454 225,883 1,664,921 Total operating expenses 1,647,164 2,831,460 3,702,180 Operating income (loss)199,838 (150,534) 58,815 NONOPERATING REVENUES (EXPENSES) Intergovernmental - - - Investment earnings (net of market value adjustment)54,473 87,643 124,230 Special assessments - - 45,439 Gain on sale of capital assets - - - Other revenue (expense)4,786 2,381 13,313 Interest and fiscal agent fees (105,072) - (431,842) Total nonoperating revenues (expenses)(45,813) 90,024 (248,860) Income (loss) before contributions and transfers 154,025 (60,510) (190,045) Capital contributions from other funds - - - Transfers out (325,487) - - Change in net position (171,462) (60,510) (190,045) Net position - January 1 2,889,498 5,937,528 13,413,803 Net position - December 31 2,718,036$ 5,877,018$ 13,223,758$ Change in net position from this Statement Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Change in net position of business-type activities The notes to the financial statements are an integral part of this statement. Business-Type Activities 44 Governmental Activities- Sanitary Sewer Storm Drainage Street Light Recycling Total Internal Utility Utility Utility Utility Enterprise Service 4,555,940$ 1,680,204$ 456,971$ 404,981$ 22,781,306$ 3,432,527$ - - - - (7,394,287) - 4,555,940 1,680,204 456,971 404,981 15,387,019 3,432,527 222,350 309,491 - - 3,343,596 2,290,747 18,853 15,660 4,138 19,550 599,032 462,978 3,060,535 582,919 78,778 389,623 6,156,498 174,804 22,946 3,108 1,640 1,437 123,844 58,163 37,066 3,090 180,180 - 667,484 675 - - - - 332,456 - 991,951 1,437,108 69,008 - 4,407,325 828,781 4,353,701 2,351,376 333,744 410,610 15,630,235 3,816,148 202,239 (671,172) 123,227 (5,629) (243,216) (383,621) 455,363 - - - 455,363 75,823 168,420 185,013 30,135 6,542 656,456 197,386 - - - - 45,439 - - - - - - 49,669 - 250 9,886 - 30,616 25,895 (181,542) (42,241) - - (760,697) - 442,241 143,022 40,021 6,542 427,177 348,773 644,480 (528,150) 163,248 913 183,961 (34,848) - 560,675 456,059 - 1,016,734 - - - - - (325,487) - 644,480 32,525 619,307 913 875,208 (34,848) 14,994,868 21,779,268 1,882,448 282,473 61,179,886 (7,552,076) 15,639,348$ 21,811,793$ 2,501,755$ 283,386$ 62,055,094$ (7,586,924)$ 875,208$ (78,986) 796,222$ Business-Type Activities 45 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2019 Municipal Earle Brown Water Liquor Heritage Center Utility CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users 6,871,181$ 4,970,250$ 3,525,683$ Receipts from interfund services provided - - - Other operating receipts 4,786 2,381 13,313 Payments for interfund services received (135,899) (178,367) (214,737) Payments to suppliers (4,877,725) (3,620,257) (1,399,091) Payments to employees (857,733) (1,240,422) (556,166) Net cash flows provided (used) by operating activities 1,004,610 (66,415) 1,369,002 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Interfund payable (operating)- (4,862) - Special assessments - - 33,740 Transfers out (325,487) - - Net cash flows provided (used) by noncapital financing activities (325,487) (4,862) 33,740 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (2,898,757) (293,809) (1,613,178) Intergovernmental grants - - - Principal paid on revenue and improvement bonds - - (528,750) Principal paid on revenue notes - - (973,000) Interest paid on capital debt (80,732) - (448,145) Proceeds from lease revenue bonds 2,729,806 - - Proceeds from g.o. revenue bonds - - 2,087,496 Proceeds from sale of assets - - - Net cash flows provided (used) by capital and related financing activities (249,683) (293,809) (1,475,577) CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments 54,473 87,643 124,230 Net increase (decrease) in cash and cash equivalents 483,913 (277,443) 51,395 Cash and cash equivalents - January 1 2,284,048 2,935,987 3,792,870 Cash and cash equivalents - December 31 2,767,961$ 2,658,544$ 3,844,265$ RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES Operating income (loss) 199,838$ (150,534)$ 58,815$ Adjustments to reconcile operating income (loss) to net cash flows provided (used) by operating activities: Depreciation 18,454 225,883 1,664,921 Other income (expense) related to operations 4,786 2,381 13,313 (Increase) decrease in assets: Accounts receivable - (96,269) (258,529) Due from other governments - (38,573) - Prepaid items (602) (7,209) (659) Inventories 91,330 (878) 20,619 (Increase) decrease in deferred outflows of resources: Deferred outflows for pension - - - Increase (decrease) in liabilities Accounts payable 678,294 (5,865) (154,001) Due to other governments (5,676) - - Net pension liability - - - Accrued salaries and wages 2,701 4,649 1,306 Unearned revenue 15,485 - 23,217 (Increase) decrease in deferred inflows of resources: Deferred pension resources - - - Net cash flows provided (used) by operating activities 1,004,610$ (66,415)$ 1,369,002$ NONCASH FINANCING ACTIVITIES Acquisitions of capital assets on account -$ -$ -$ Capital assets contributed from other funds -$ -$ -$ Grants deposited with pension plan -$ -$ -$ The notes to the financial statements are an integral part of this statement. Business-Type Activities 46 Governmental Activities- Sanitary Sewer Storm Drainage Street Light Recycling Total Internal Utility Utility Utility Utility Enterprise Service 4,470,929$ 1,677,344$ 450,284$ 405,685$ 22,371,356$ -$ - - - - - 3,421,657 - 250 9,886 - 30,616 25,895 (202,297) (204,477) (25,766) (11,169) (972,712) (19,903) (2,726,543) (413,204) (236,370) (459,534) (13,732,724) (700,551) (207,756) (289,999) - - (3,152,076) (2,111,736) 1,334,333 769,914 198,034 (65,018) 4,544,460 615,362 - - - - (4,862) - - - - - 33,740 - - - - - (325,487) - - - - - (296,609) - (601,171) (887,848) (81,948) - (6,376,711) (787,810) 455,363 - - - 455,363 - (448,753) (105,000) - - (1,082,503) - - - - - (973,000) - (175,464) (32,536) - - (736,877) - - - - - 2,729,806 - 2,081,209 1,589,772 - - 5,758,477 - - - - - - 52,599 1,311,184 564,388 (81,948) - (225,445) (735,211) 168,420 185,013 30,135 6,542 656,456 197,386 2,813,937 1,519,315 146,221 (58,476) 4,678,862 77,537 3,755,190 4,368,349 771,715 258,523 18,166,682 6,239,450 6,569,127$ 5,887,664$ 917,936$ 200,047$ 22,845,544$ 6,316,987$ 202,239$ (671,172)$ 123,227$ (5,629)$ (243,216)$ (383,621)$ 991,951 1,437,108 69,008 - 4,407,325 828,781 - 250 9,886 - 30,616 101,718 (85,011) (2,860) (6,687) 704 (448,652) (10,870) - - - - (38,573) - (3,877) - - - (12,347) (550) - - - - 111,071 57 - - - - - 2,426,241 225,824 2,659 2,600 1,031 750,542 (930) - - - (61,124) (66,800) - - - - - - 107,166 3,207 3,929 - - 15,792 109,355 - - - - 38,702 - - - - - - (2,561,985) 1,334,333$ 769,914$ 198,034$ (65,018)$ 4,544,460$ 615,362$ -$ -$ -$ -$ -$ 47,037$ -$ 560,675$ 456,059$ -$ 1,016,734$ -$ -$ -$ -$ -$ -$ 42,474$ Business-Type Activities 47 This page has been left blank intentionally. 48 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 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. 49 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 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. 50 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 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. 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 treatment, water storage, and distribution are included. Sanitary Sewer Utility Fund The fund accounts for the collection and pumping of sanitary sewage through a system of sewer lines and lift stations. Sewage is treated by the Metropolitan Council Environmental Services whose fees represent about 60% of this fund’s operating expenses. Storm Drainage Utility Fund The fund accounts for the collection and treatment of surface runoff water that does not require sanitary wastewater treatment. It incorporates not only the storm sewer collection system, but also structures such as holding ponds and facilities to improve water quality. Fees are based upon the quantity of water running off a property and vary with both size and absorption characteristics of the parcel. Street Light Utility Fund The fund accounts for the electrical service, maintenance, repair and replacement of lights owned by the City as well as those lights owned by Xcel Energy. Recycling Utility Fund The fund accounts for the contracted services to provide a City wide recycling program. Additionally, the City reports the following fund type: Internal Service Funds Account for compensated absences, health care insurance benefits for retired employees, pension liabilities, and central garage services provided to other departments of the City on a cost reimbursement basis. 51 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 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 with the exception of Cash held with Fiscal Agent in the Liqour Fund. Earnings from pooled investments are allocated on the basis of applicable participation by each of the funds. Interest earned on Cash held with Fiscal Agent is recorded in the fund in which it is being held. Certain bond proceeds are held by trustees for current capital projects. Earnings on these accounts are allocated directly to the respective funds. The investments are reported as restricted assets in the government-wide financial statements. The City’s investment policy authorizes the City to invest in the following: a) Securities which are direct obligations or are guaranteed or insured issues of the United States, its agencies, itsUnited 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. 52 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 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. For the 4M fund, there are no unfunded commitments, redemption frequency is daily, and there is no redemption notice for the Liquid class; the redemption notice period is 14 days for the Plus Class. 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, 2019 are planned to be eliminated in 2020. 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. 53 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 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, 2019 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, 2019 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 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 two items that qualify for reporting in the category and are reported only in the statements of net position. These items result from actuarial calculations and current year pension and OPEB contributions made subsequent to the measurement date. Based on Contract 54 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 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, and special assessments. 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, and capital funding received for subsequent years, is deferred and recognized as an inflow of resources in the period that the resources are required to be used. This item is reported both in the governmental fund balance sheet and the 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 and OPEB 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. The City pays out up to 230 hours of vacation upon seperation and one third of accrued sick leave time. 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. 75, at January 1, 2018. The liability is accrued in the Public Employees Retirement internal service fund. N. LONG TERM OBLIGATIONS In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts, if material, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. 55 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 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, 2019 the unassigned fund balance of the General fund was 52% of the subsequent year’s budgeted expenditures. Net Position – Net position represents the difference between assets, deferred outflows of resources, deferred inflows of resources, and liabilities. Net position, net investment in capital assets, consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any bonds used for the acquisition, construction, or improvement of those assets. Net position is reported as restricted when there are limitations imposed on their use either through constitutional provisions or enabling legislation, or through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. All remaining net position is reported as unrestricted. When both restricted and unrestricted net position are available for an allowable use, it is the government’s policy to use restricted resources first, then unrestricted resources as they are needed. 56 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 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. 87, Leases. The goal of this statement is to better meet the information needs of users by improving accounting and financial reporting for leases by governments. It establishes a single model for lease accounting based on the principle that leases are financings of the right to use an underlying asset. This statement increases the usefulness of financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. The statement excludes short-term leases of 12 months (or less). The requirements of this statement are effective for reporting periods beginning after December 15, 2019. 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. 57 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 For the year ended December 31, 2019 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 124,962$ 144,560$ (19,598)$ Assessing 206,200 222,829 (16,629) Legal 420,000 431,849 (11,849) Government buildings 906,105 951,829 (45,724) Building and community standards 1,136,506 1,193,579 (57,073) Park and recreation administration 235,368 260,088 (24,720) Nondepartmental 297,345 520,518 (223,173) Nonmajor Funds: Special Revenue Funds: Centerbrook Golf Course 315,180 318,237 (3,057) Tax Increment District No. 6 174,016 200,818 (26,802) Tax Increment District No. 7 - 832 (832) Tax Increment District No. 8 - 12,500 (12,500) City Initiatives Grant 240,919 243,175 (2,256) B. DEFICIT FUND EQUITY Deficit fund equity exists at December 31, 2019 in the following funds: Unassigned deficit fund balance Nonmajor Funds: Centerbrook Golf 257,521$ Tax Increment District No. 4 895,898 Tax Increment District No. 8 12,500 Unrestricted deficit net position Internal Service Funds: EE Retirement Benefit 1,718,694 Pension - GERF 7,245,683 Pension - PEPFF 7,061,351 The deficits are being funded through internal borrowing and will be repaid from future collections of tax increment revenues, intergovernmental revenue, customer revenues, and internal transfers. The Internal service deficits will be funded through future interfund charges, state grant revenues, and employee withholdings. 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. 58 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 Minnesota Statutes require that all City deposits be protected by insurance, surety bond, or collateral. The fair 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 $0. As of December 31, 2019 the City had the following investments and maturities: Investment Type Fair Value No maturity < 1 1 - 3 3 - 6 Negotiable certificates of deposit 24,431,581$ -$ 10,703,097$ 9,636,161$ 4,092,323$ Federal agency notes 14,326,823 - 2,188,770 4,324,737 7,813,316 Municipal bonds 6,031,794 - 302,400 1,743,289 3,986,105 External investment pool - 4M Fund 18,166,024 18,166,024 - - - Money market 3,307,738 3,307,738 - - - Total Investments 66,263,960$ 21,473,762$ 13,194,267$ 15,704,187$ 15,891,744$ As of December 31, 2019, 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 24,246,000$ 24,431,581$ 36.87% Federal agency notes AA 14,233,000 14,326,823 21.62% Municipal bonds A or better 5,820,000 6,031,794 9.09% External investment pool - 4M Fund Not rated 18,166,024 18,166,024 27.41% Money market AAA 3,307,738 3,307,738 4.99% Total Investments 65,772,762$ 66,263,960$ 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 (including cash with fiscal agent)66,263,960$ Petty cash and change funds 13,805 Total cash, cash equivalents, and investments 66,277,765$ The deposits and investments of the City are presented in the financial statements as follows: Statement of Net Position Cash and investments 65,293,182$ Cash with fiscal agent 984,583 Total cash, cash equivalents, and investments 66,277,765$ 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. Investment Maturities (in years) 59 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 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, 2019: Investment Type 12/31/2019 Level 1 Level 2 Level 3 Investments at fair value: Negotiable certificates of deposit 24,431,581$ -$ 24,431,581$ -$ Federal agency notes 14,326,823 - 14,326,823 - Municipal bonds 6,031,794 - 6,031,794 - Money market 3,307,738 3,307,738 - - Total Investments 48,097,936$ 3,307,738$ 44,790,198$ -$ Investments at amortized cost: External investment pool - 4M Fund 18,166,024 Total 66,263,960$ 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. 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 Farm Credit Bank (12.86%). 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 60 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 B. RECEIVABLES Significant receivable balances not expected to be collected within one year of December 31, 2019 are as follows: Delinquent Delinquent Due from Property Tax Special Other Notes Taxes Increments Assessments Governments Receivable Major Funds: General 162,668$ -$ 96,976$ -$ -$ Tax Increment District No. 3 - 29,412 - - - Debt Service - - 4,676,524 - - Capital Improvements - - 524 1,332,272 - Municipal State Aid for Construction - - - 4,210,690 - Special Assessment Construction - - 1,141,026 - - Nonmajor Funds Revolving Loan - - - - 79,519 Total 162,668$ 29,412$ 5,915,050$ 5,542,962$ 79,519$ 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, 2019, the balance of these loans is $90,000. There has been an allowance for doubtful accounts recorded for the same amount, as it is fully expected that these loans will be forgiven. The Revolving Loan Fund received a grant from the Minnesota Investment Fund and disbursed an interest-free loan to Get Bizzy coffee in the amount of $101,513 in 2018. It will be repaid in 60 monthly installments of $1,692 ending December 1, 2023. As the repayments are made, the City will remit 60% to the Minnesota Department of Employment and Economic Development. 61 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 C. CAPITAL ASSETS Capital asset activity for the year ended December 31, 2019 was as follows: Beginning Ending Balance Increases Decreases Balance Governmental activities: Capital assets, not being depreciated: Land 5,632,883$ -$ -$ 5,632,883$ Easements - perpetual 88,704 - - 88,704 Construction in progress 10,908,187 4,446,001 (9,654,902) 5,699,286 Total capital assets, not being depreciated 16,629,774 4,446,001 (9,654,902) 11,420,873 Capital assets, being depreciated: Easements - temporary 22,715 - - 22,715 Buildings and improvements 25,933,919 57,816 - 25,991,735 Land improvements 12,393,011 43,703 - 12,436,714 Machinery and equipment 11,376,771 942,178 (406,727) 11,912,222 Street infrastructure 53,445,575 9,318,108 - 62,763,683 Total capital assets, being depreciated 103,171,991 10,361,805 (406,727) 113,127,069 Less accumulated depreciation for: Easements - temporary 22,715 - - 22,715 Buildings and improvements 15,157,338 928,804 - 16,086,142 Land improvements 5,856,295 371,294 - 6,227,589 Machinery and equipment 6,821,023 958,120 (403,797) 7,375,346 Street infrastructure 23,836,321 2,215,316 - 26,051,637 Total accumulated depreciation 51,693,692 4,473,534 (403,797) 55,763,429 Total capital assets being depreciated - net 51,478,299 5,888,271 (2,930) 57,363,640 Governmental activities capital assets - net 68,108,073$ 10,334,272$ (9,657,832)$ 68,784,513$ Depreciation expense was charged to functions/programs of the City as follows: Governmental activities: General government 158,704$ Public safety 500,062 Public works 2,490,736 Parks and recreation 495,251 Capital assets held by the City's internal service funds are charged to the various functions based on their usage of the assets 828,781 Total depreciation expense - governmental activities 4,473,534$ 62 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 Beginning Ending Balance Increases Decreases Balance Business-type activities: Capital assets, not being depreciated: Land 2,104,581$ 594,298$ -$ 2,698,879$ Easements - perpetual 10,285 - - 10,285 Construction in progress 12,912,399 6,665,697 (12,657,290) 6,920,806 Total capital assets, not being depreciated 15,027,265 7,259,995 (12,657,290) 9,629,970 Capital assets, being depreciated: Easements - temporary 20,335 - - 20,335 Land improvements 570,769 - - 570,769 Buildings and improvements 38,394,147 3,604,254 - 41,998,401 Machinery and equipment 1,227,956 156,586 - 1,384,542 Street light systems 928,396 159,231 - 1,087,627 Mains and lines 83,420,245 8,870,670 - 92,290,915 Total capital assets, being depreciated 124,561,848 12,790,741 - 137,352,589 Less accumulated depreciation for: Easements - temporary 20,335 - - 20,335 Land improvements 273,939 29,076 - 303,015 Buildings and improvements 18,630,223 1,051,818 - 19,682,041 Machinery and equipment 887,533 80,686 - 968,219 Street light systems 372,346 69,008 - 441,354 Mains and lines 46,204,857 3,176,737 - 49,381,594 Total accumulated depreciation 66,389,233 4,407,325 - 70,796,558 Total capital assets being depreciated - net 58,172,615 8,383,416 - 66,556,031 Business-type activities capital assets - net 73,199,880$ 15,643,411$ (12,657,290)$ 76,186,001$ Depreciation expense was charged to functions/programs of the City as follows: Business-type activities: Municipal liquor 18,454$ Earle Brown Heritage Center 225,883 Water utility 1,664,921 Sanitary sewer utility 991,951 Storm drainage utility 1,437,108 Street light utility 69,008 Total depreciation expense - business-type activities 4,407,325$ 63 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 CONSTRUCTION COMMITMENTS At December 31, 2019 the City had construction project contracts in progress. The commitments related to remaining contract balances are summarized as follows: Contract Remaining Amount Commitment Brooklyn Boulevard Corridor Project Phase 1 12,670,125$ 2,166,246$ 51st Avenue Frontage Road Improvements 616,511 18,575 Bellvue Mill & Overlay 2,472,410 329,945 Interstate Area Improvements 9,667,269 7,734,751 Liquor Store Construction 2,257,026 387,303 Total 27,683,341$ 10,636,820$ D. INTERFUND BALANCES AND TRANSFERS The composition of due to/from other fund balances at December 31, 2019 are as follows: Due from Due to Other Funds Other Funds Major Funds: General 334,864$ 4,862$ Earle Brown Heritage Center 4,862 - Nonmajor Funds: Community Development Block Grant - 75,000 Centerbrook Golf Course - 247,364 TIF #8 - 12,500 Total 339,726$ 339,726$ 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 tax increments, operating revenues, interfund transfers, and/or receipt of federal grant funds. Individual fund advances to and advances from other funds at December 31, 2019 are as follows: Advances to Advances From Other Funds Other Funds Major Funds: Tax Increment District No. 3 895,898$ -$ Nonmajor Funds: Tax Increment District No. 5 - 460,158 Tax Increment District No. 4 - 895,898 Tax Increment District No. 2 460,158 - 1,356,056$ 1,356,056$ The $460,158 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 2019 through 2024. The $895,898 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 $281,502 per year from 2019 through 2022. Project Fund Fund 64 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 The composition of interfund transfers as of December 31, 2019 are as follows: Transfer In Transfer Out Governmental Funds: Major Funds: General 150,000$ 210,000$ Tax Increment District No. 3 3,601 2,237,287 Debt Service 2,587,568 3,601 Capital Improvements 325,487 - Special Assessment Construction - 397,351 Nonmajor Funds: Housing and Redevelopment Authority - 377,609 Economic Development Authority 377,609 - Community Development Block Grant - 150,000 Centerbrook Golf Course 70,000 - Tax Increment District No. 5 - 350,281 Street Reconstruction 397,351 - Technology 140,000 - Total governmental funds 4,051,616 3,726,129 Proprietary Funds: Major Funds: Municipal Liquor - 325,487 Total all funds 4,051,616$ 4,051,616$ 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 2019, the following non-routine transfers were made between funds: •The Municipal Liquor fund transferred $325,487 to the Capital Improvements fund in accordance with the City's Capital Project Funding policy. •The Special Assessment Construction fund transferred $397,351 to the Street Reconstruction fund due to reallocation of project costs based on final approved funding sources adopted by Council resolution. •The 2008A Debt Service fund transferred $3,601 to TIF district #3 upon satisfaction of related bond obligations. 65 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 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, 2019 was $12,000. Future minimum lease revenues under the current agreement is as follows: Year Total Ending Minimum Rents 2020 12,000$ 2021 12,000 2022 12,000 2023 12,000 2024 12,000 2025 12,000 72,000$ 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, 2019 was $332,456. Future minimum base rent payments under the current agreements are as follows: Year Total Ending Minimum Rents 2020 164,124 2021 93,360 2022 93,360 2023 93,360 444,204$ 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 2019, the City received $104,556 in rental revenue. Future minimum base rent revenues under the current agreement are as follows: Year Total Ending Minimum Rents 2020 112,048$ 2021 96,190 208,238$ The City is the lessor in an operating lease for property used as a parking lot. The lease was originally signed on August 1, 2018 and terminates on July 31, 2020. For the year ended 2019, the City received $90,000 in rental revenue. Future minimum base rent revenues under the current agreement are as follows: Year Total Ending Minimum Rents 2020 52,500$ 66 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 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 2019, the City received $78,810 in rental revenue. Future minimum base rent revenues under the current agreement are as follows: Year Total Ending Minimum Rents 2020 78,810$ 2021 78,810 2022 78,810 2023 78,810 315,240$ The City leases golf carts used at Centerbrook Golf Course. A new lease was signed May 10, 2019 with a 4 year term. Total rental expenses under the lease agreements for the year ended December 31, 2019 was $15,329. Future minimum base rent payments under the current agreement are as follows: Year Total Ending Minimum Rents 2020 12,012$ 2021 12,012 2022 12,012 2023 12,012 48,048$ 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. 67 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 Final Interest Maturity Original Payable Rates Date Date Issue 12/31/2019 G.O. Tax Increment Bonds: Taxable Tax Increment Bonds of 2013A 2.00 - 3.25%12/19/2013 02/01/2022 6,040,000$ 4,670,000$ Taxable Tax Increment Refunding Bonds of 2015B 3.00%07/09/2015 02/01/2020 6,600,000 1,730,000 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 1,175,000 Total G.O. Tax Increment Bonds 16,440,000 9,650,000 G.O. Improvement Bonds: Improvement Bonds, 2013B 3.00%12/19/2013 02/01/2024 4,920,000 2,030,000 Improvement Bonds, 2015A 2.00 - 2.50%07/09/2015 02/01/2026 3,416,248 2,425,276 Improvement Bonds, 2016A 2.00%10/13/2016 02/01/2027 1,820,000 1,495,000 Improvement Bonds, 2017A 2.25 - 3.00%06/08/2017 02/01/2028 3,735,000 3,385,000 Improvement Bonds, 2018A 3.00 - 5.00%07/10/2018 02/01/2029 3,835,000 3,835,000 Improvement Bonds, 2019A 4.00 - 5.00%09/12/2019 02/01/2030 3,355,000 3,355,000 Total G.O. Improvement Bonds 21,081,248 16,525,276 Unamortized Bond Premiums 1,861,558 1,463,854 Total - bonded indebtedness 39,382,806$ 27,639,130 Other Liabilities: Compensated absences payable 1,408,546 Net pension liability 11,346,322 Total OPEB liability 2,038,900 Total governmental activities 42,432,898$ All long-term bonded indebtedness outstanding at December 31, 2019 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 $8,668,346 of assets accumulated in the debt service funds for future debt service. Included within those accumulated assets, there was a combined $4,690,511 of property taxes and special assessments receivable. 68 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 Annual debt service requirements to maturity for governmental activities long-term debt are as follows: G.O. Tax Increment Bonds G.O. Improvement Bonds Principal Interest Principal Interest 2,350,000$ 235,345$ 1,740,757$ 521,277$ 2,430,000 166,520 1,929,017 480,879 2,490,000 92,680 2,002,277 416,066 305,000 50,333 1,820,537 351,138 330,000 43,525 1,853,796 286,634 1,745,000 106,638 6,778,892 586,807 - - 400,000 8,000 9,650,000$ 695,041$ 16,525,276$ 2,650,801$ 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, 2017, 2018 and 2019 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. In 2019 the City issued Lease Revenue Bonds for the construction of a City-owned municipal liquor store. These bonds are reported in the business-type activities of the City. Final Interest Maturity Original Payable Rates Date Date Issue 12/31/2019 G.O. Improvement Bonds: Improvement Bonds, 2015A 2.00 - 2.50%07/09/2015 02/01/2026 1,823,752$ 1,294,724$ G.O. Lease Revenue Bonds: Lease Revenue Bonds of 2019B 3.00 - 4.00%09/18/2019 02/01/2035 2,520,000 2,520,000 General Obligation Taxable Utility Revenue Bonds: Revenue Refunding Bonds of 2015A 2.00 - 2.50%07/09/2015 02/01/2026 1,660,000 1,025,000 Revenue Bonds of 2016A 2.00%10/13/2016 02/01/2027 3,605,000 2,965,000 Revenue Bonds of 2017A 2.25 - 3.00%06/08/2017 02/01/2028 4,625,000 4,220,000 Revenue Bonds of 2018A 3.00 - 5.00%07/10/2018 02/01/2029 4,350,000 4,350,000 Revenue Bonds of 2019A 4.00 - 5.00%09/12/2019 02/01/2030 4,790,000 4,790,000 Total General Obligation Taxable Utility Revenue Bonds 19,030,000 17,350,000 General Obligation Taxable Utility Revenue Notes: PFA Revenue Note of 2015 1.00%01/20/2015 08/20/2034 19,622,797 15,773,445 Unamortized Bond Premiums 1,977,450 1,883,170 Total business-type activities 44,973,999$ 38,821,339$ 2030 2025 - 2029 Governmental Activities Year Ending December 31 2020 2021 2022 2023 2024 Total 69 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 Annual debt service requirements to maturity for business-type activities long-term debt are as follows: G.O. Improvement Bonds Principal Interest Principal Interest 179,243$ 26,473$ -$ 74,424$ 180,983 22,871 100,000 83,600 182,723 19,234 135,000 78,900 184,463 15,562 140,000 73,400 186,204 11,623 145,000 67,700 381,108 9,549 825,000 246,925 - - 965,000 105,825 - - 210,000 3,150 1,294,724$ 105,312$ 2,520,000$ 733,924$ G.O. Revenue Bonds Principal Interest Principal Interest 1,275,000$ 568,530$ 982,000$ 158,130$ 1,560,000 547,306 992,000 148,310 1,715,000 489,906 1,002,000 138,390 1,765,000 428,006 1,012,000 128,370 1,830,000 363,463 1,022,000 118,250 8,545,000 820,978 5,268,000 435,840 660,000 13,200 5,495,445 167,150 17,350,000$ 3,231,389$ 15,773,445$ 1,294,440$ The utility revenue bonds, lease 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 Liquor fund, 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, 2019, the water, sewer, and storm utility funds provided net revenues of $(410,118), which accounts for a debt-service coverage ratio of (16.71)% on principal and interest payments of $2,711,648. Business-Type Activities G.O. Lease Revenue Bonds G.O. Revenue Notes Business-Type Activities Total Year Ending December 31 Year Ending December 31 2020 2021 2022 2023 2024 2025-2029 2030-2034 2035 2020 2021 2022 Total 2023 2024 2025-2029 2030-2034 70 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 CHANGE IN LONG-TERM LIABILITIES Long-term liability activity for the year ended December 31, 2019 was as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental activities: Bonds payable: G.O. tax increment bonds 11,945,000$ -$ (2,295,000)$ 9,650,000$ 2,350,000$ G.O. improvement bonds 14,552,773 3,355,000 (1,382,497) 16,525,276 1,740,757 Premium 903,685 667,404 (107,235) 1,463,854 - Total bonds payable 27,401,458 4,022,404 (3,784,732) 27,639,130 4,090,757 Compensated absences 1,323,469 185,291 (100,214) 1,408,546 140,855 Net Pension liability: GERF 6,623,822 1,081,123 (1,131,230) 6,573,715 - PEPFF 4,615,334 1,509,381 (1,352,108) 4,772,607 - Total OPEB liability 2,014,679 141,673 (117,452) 2,038,900 - Total government activity long-term liabilities 41,978,762$ 6,939,872$ (6,485,736)$ 42,432,898$ 4,231,612$ Business-type activities: Bonds payable: G.O. improvement bonds 1,472,227$ -$ (177,503)$ 1,294,724$ 179,243$ G.O. lease revenue bonds - 2,520,000 - 2,520,000 - G.O. revenue bonds 13,465,000 4,790,000 (905,000) 17,350,000 1,275,000 G.O. revenue notes 16,746,445 - (973,000) 15,773,445 982,000 Premium 747,050 1,178,283 (42,163) 1,883,170 - Total business-type activity long-term liabilities 32,430,722$ 8,488,283$ (2,097,666)$ 38,821,339$ 2,436,243$ Compensated absences are liquidated by the Public Employees Compensated Absences internal service fund and the total OPEB liability 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, 2019 there were two series of fixed rate Multifamily Housing Revenue Refunding bonds, one Housing Revenue Development Refinancing Note, two Healthcare Revenue Notes, four Senior Housing Development Revenue Notes, three Multifamily Housing Revenue bonds, and two Charter School Lease Revenue bonds outstanding. The aggregate amount of conduit debt as of December 31, 2019 is $67,436,754. 71 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 G. FUND EQUITY Net position reported in the government-wide statement of net position at December 31, 2019 include the following: Governmental activities Net investment in capital assets: Cost of capital assets 124,547,942$ Less: accumulated depreciation (55,763,429) Less: related long-term debt outstanding (17,899,720) Add: unspent bond proceeds 1,675,798 Total net investment in capital assets 52,560,591 Restricted: Tax increment financing 23,409,890 Economic development 1,712,362 Law enforcement enhancements 66,472 Debt service 8,338,166 Pension benefits 922,822 State-aid Street Systems 1,294,135 Total restricted 35,743,847 Unrestricted 5,152,891 Total governmental activities net position 93,457,329$ Related debt for governmental activities capital assets includes $17,899,720 in G.O. Improvement Bonds and premium which was the amount issued to finance the street portion of construction projects. Business-type activities Net investment in capital assets: Cost of capital assets 146,982,559$ Less: accumulated depreciation (70,796,558) Less: related long-term debt outstanding (37,796,339) Add: unspent bond proceeds 5,060,645 Total net investment in capital assets 43,450,307 Unrestricted 16,005,070 Total business-type activities net position 59,455,377$ 72 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 Aggregated fund balances reported in the governmental funds balance sheet at December 31, 2019 include the following: Governmental funds Nonspendable Restricted Committed Assigned General Inventories 18,398$ -$ -$ -$ Prepaid Items 68,081 - - - Capital Improvements - - - 64,874 Tax Increment District No. 3 Tax Increment Financing - 21,614,535 - - Debt Service Debt Service - 3,991,322 - - Capital Improvements Capital Improvements - - 1,613,299 - Municipal State-Aid for Construction State-Aid street systems - 1,294,135 - - Special Assessment Construction Capital Improvements - 1,614,270 - 1,127,793 Nonmajor Funds Centerbrook Golf Course 1,630 - - - Tax Increment Financing - 1,765,943 - - Economic Development - 1,712,362 - - Law Enforcement Enhancements - 66,472 - - Public Safety - - 18,739 - Cable Communications - - 48,981 - Community Recreation - - 73,735 - Emergency Capital Improvements - - 1,144,755 - Street Improvements - 160,601 6,281,888 - Technology Improvements - - 388,963 - Total fund balances 88,109$ 32,219,640$ 9,570,360$ 1,192,667$ 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 the Coordinated Plan. Coordinated Plan members are covered by Social Security. 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. 73 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 B. BENEFITS PROVIDED PERA provides retirement, disability, and death benefits. Benefit provisions are established by state statute and can only be modified by the state legislature. Vested, terminated employees who are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. 1. GERF BENEFITS General Employees Plan benefits are based on a member’s highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. Two methods are used to compute benefits for PERA's Coordinated Plan members. Members hired prior to July 1, 1989, receive the higher of Method 1 or Method 2 formulas. Only Method 2 is used for members hired after June 30, 1989. Under Method 1, the accrual rate for Coordinated members is 1.2 percent of average salary for each of the first 10 years of service and 1.7 percent of average salary for each additional year. Under Method 2, the accrual rate for Coordinated members is 1.7 percent of average salary for all years of service. For members hired prior to July 1, 1989, a full annuity is available when age plus years of service equal 90 and normal retirement age is 65. For members hired on or after July 1, 1989, normal retirement age is the age for unreduced Social Security benefits capped at 66. Annuities, disability benefits, and survivor benefits are increased effective every January 1. Beginning January 1, 2019, the postretirement increase will be equal to 50 percent of the cost-of-living adjustment (COLA) announced by the Social Security Administration (SSA), with a minimum increase of at least 1 percent and a maximum of 1.5 percent. Recipients that have been receiving the annuity or benefit for at least a full year as of the June 30 before the effective date of the increase will receive the full increase. For recipients receiving the annuity or benefit for at least one month but less than a full year as of the June 30 before the effective date of the increase will receive a reduced prorated increase. For members retiring on January 1, 2024, or later, the increase will be delayed until normal retirement age (age 65 if hired prior to July 1, 1989, or age 66 for individuals hired on or after July 1, 1989). Members retiring under Rule of 90 are exempt from the delay to normal retirement. 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. A full, unreduced pension is earned when members are age 55 and vested, or for members who were first hired prior to July 1, 1989, when age plus years of service equal at least 90. Annuities, disability benefits, and survivor benefits are increased effective every January 1. Beginning January 1, 2019, the postretirement increase will be fixed at 1 percent. Recipients that have been receiving the annuity or benefit for at least 36 months as of the June 30 before the effective date of the increase will receive the full increase. For recipients receiving the annuity or benefit for at least 25 months but less than 36 months as of the June 30 before the effective date of the increase will receive a reduced prorated increase. 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 Coordinated Plan members were required to contribute 6.5 percent of their annual covered salary in calendar year 2019. The City was required to contribute 7.5 percent for Coordinated Plan members in calendar year 2019. The City's contributions to the GERF for years ended December 31, 2019 were $651,633. The City's contributions were equal to the required contributions as set by state statute. 74 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 2. PEPFF CONTRIBUTIONS Police and Fire member’s contribution rates increased from 10.8 percent of pay to 11.3 percent and employer rates increased from 16.2 percent to 16.95 percent on January 1, 2019. The City contributions to the PEPFF for the year ended December 31, 2019 were $818,676. The City's contributions were equal to the required contributions as set by state statute. D. PENSION COSTS The City reported amounts for pension expense in the statement of activities, as well as deferred outflows, deferred inflows, and net pension liability in the statement of net position associated with various plans as follows: Pension Deferred Deferred Net Pension Pension Plan Expense Outflows Inflows Liability PERA - GERF 760,097$ 570,644$ 1,242,612$ 6,573,715$ PERA - PEPFF 698,582 4,798,644 7,087,388 4,772,607 PERA - PEDCP 1,591 - - - Fire Relief Association 79,732 576,732 356,108 - Central Pension Fund 53,912 - - - Total 1,593,914$ 5,946,020$ 8,686,108$ 11,346,322$ 1. GERF PENSION COSTS At December 31, 2019, the City reported a liability of $6,573,715 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 $16 million to the fund in 2019. 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 $204,324. The net pension liability was measured as of June 30, 2019, 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, 2018 through June 30, 2019, relative to the total employer contributions received from all of PERA's participating employers. At June 30, 2019, the City's proportion was 0.1189 percent which was an decrease of 0.0005 percent from its proportion measured as of June 30, 2018. For the year ended December 31, 2019, the City recognized pension expense of $580,712 for its proportionate share of the GERF's pension expense. In addition, the City recognized an additional $15,302 as pension expense (and grant revenue) for its proportionate share of the State of Minnesota's contribution of $16 million to the GERF. Adjustments for deferred inflows and outflows increased the total amount reported across governmental and business type activities to $760,097. 75 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 At December 31, 2019, the City reported its proportionate share of the GERF's deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual economic experience 183,042$ -$ Changes in actuarial assumptions - 519,914 Differences between projected and actual investment earnings - 679,549 Changes in proportion 58,868 43,149 GERF contributions paid subsequent to the measurement date 328,734 - Totals 570,644$ 1,242,612$ $328,734 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2020. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Pension Ended Expense December 31,Amount 2020 (320,779)$ 2021 (551,400) 2022 (139,113) 2023 10,590 Total (1,000,702)$ 2. PEPFF PENSION COSTS At December 31, 2019, the City reported a liability of $4,772,607 for its proportionate share of the PEPFF's net pension liability. The net pension liability was measured as of June 30, 2019, 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, 2018 through June 30, 2019, relative to the total employer contributions received from all of PERA's participating employers. At June 30, 2019, the City's proportion was 0.4483 percent which was an increase of 0.0153 percent from its proportion measured as of June 30, 2018. For the year ended December 31, 2019, the City recognized pension expense of $795,634 for its proportionate share of the PEPFF's pension expense. Adjustments for deferred inflows and outflows adjusted this amount reported to public safety activities to $698,582. The City also recognized $60,521 for the year ended December 31, 2019, 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 Police and Fire Fund each year until the plan is 90 percent funded or until the State Patrol Plan (administered by the Minnesota State Retirement System) is 90 percent funded, whichever occurs later. In addition, the state will pay $4.5 million on October 1, 2018 and October 1, 2019 in direct state aid. Thereafter, by October 1 of each year, the state will pay $9 million until full funding is reached or July 1, 2048, whichever is earlier. 76 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 At December 31, 2019, the City reported its proportionate share of the PEPFF's deferred outflows of resources and deferred inflows of resources related to pension from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual economic experience 199,063$ 701,432$ Changes in actuarial assumptions 3,790,001 5,269,847 Differences between projected and actual investment earnings - 979,720 Changes in proportion 391,088 136,389 PEPFF contributions paid subsequent to the measurement date 418,492 - Totals 4,798,644$ 7,087,388$ $418,492 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2020. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Pension Ended Expense December 31,Amount 2020 (306,274)$ 2021 (653,912) 2022 (1,775,860) 2023 5,665 2024 23,145 Total (2,707,236)$ E. ACTUARIAL ASSUMPTIONS The total pension liability in the June 30, 2019, actuarial valuation was determined using an individual entry-age normal actuarial cost method and the following actuarial assumptions: Inflation Active Member Payroll Growth Investment Rate of Return Salary increases were based on a service-related table. Martality rates for active members, retirees, survivors, and disabilitants for all plans were based on RP 2014 tables for males or females, as appropriate, with slight adjustments to fit PERA's experience. Cost of living benefit increases after retirement for retirees are assumed to be 1.25 percent per year for the General Employees Plan and 1.0 percent per year for the Police and Fire Plan. Actuarial assumptions used in the June 30, 2019 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 2019. The most recent four-year experience study for Police and Fire Plan was completed in 2016. Economic assumptions were updated in 2018 based on a review of inflation and investment return assumptions. 7.50% Police & Fire Plan 3.25% per year 7.50% 2.5% per year General Employees Plan 2.5% per year 3.25% per year 77 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 The following changes in actuarial assumptions and plan provisions occurred in 2019: General Employees Fund Changes in Actuarial Assumptions • The mortality projection scale was changed from MP-2017 to MP-2018. Changes in Plan Provisions • The employer supplemental contribution was changed prospectively, decreasing from $31.0 million to $21.0 million per year. The State's special funding contribution was changed prospectively, requiring $16.0 million due per year through 2031. Police and Fire Fund Changes in Actuarial Assumptions • The morality projection scale was changed from MP-2017 to MP-2018. 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 Equity 35.50%5.10% Private Markets 25.00%5.90% Fixed Income 20.00%0.75% International Equity 17.50%5.90% Cash 2.00%0.00% 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%10,806,833$ 6.50%10,432,032$ Current Discount Rate 7.50%6,573,715 7.50%4,772,607 1% Higher 8.50%3,078,434 8.50%92,354 Sensitivity of Net Pension Liability General Employees Fund Police and Fire Fund Asset Class 78 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 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, 2018, the membership of the Association consisted of: Retirees and beneficiaries currently receiving benefits 17 Terminated employees entitled to benefits but not yet receiving them 11 Active plan participants - vested 12 Active plan participants - non-vested 19 Total 59 The Association issues a financial report that includes financial statements and required supplementary information for the Brooklyn Center Fire Department Relief Association. That report is available at the City of Brooklyn Center City offices. B. BENEFITS PROVIDED Basic Service Pension for Retired Members -Upon retirement each individual will receive a lump sum distribution of $7,700 per year of service. This benefit level was placed into effect on March 1, 2018. 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 79 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 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 2017 Minn. Laws, ch. 111, art. 5, §§ 31 to 42 and 80. There are no employee contributions. The City provided statutory contributions in 2019. The actuary compares the actual statutory contribution rate to a "required" contribution rate. The required contribution rate consists of: (a) normal costs based on entry age normal cost methods, (b) a supplemental contribution for amortizing any unfunded actuarial accrued liability, and (c) an allowance for administrative expenses. E. PENSION COSTS At December 31, 2019, the City reported an asset of $702,198 for the difference between the Fire Relief Plan Fiduciary net position and the total pension liability. The net pension asset was measured as of December 31, 2018, and the total pension liability used to calculate the net pension asset was determined by an actuarial valuation as of that date. Changes in Net Pension Asset Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (Asset) Balance at 12/31/18 3,239,606$ 4,238,325$ (998,719)$ Changes for the year Service cost 107,405 - 107,405 Interest 171,057 - 171,057 Differences in experiences (141,409) - (141,409) Changes of assumptions 52,746 - 52,746 Changes of benefit terms 18,251 - 18,251 Contributions - State and local - 164,147 (164,147) Net investment income - (236,910) 236,910 Benefit payments (744,211) (744,211) - Administrative expenses - (15,708) 15,708 Net changes (536,161) (832,682) 296,521 Balance at 12/31/19 2,703,445$ 3,405,643$ (702,198)$ At December 31, 2019, 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 187,115$ 25,406$ Difference between expected and actual liability - 160,050 Difference between projected and actual investment earnings 218,965 - Contribution paid subsequent to measurement date 170,652 170,652 Totals 576,732$ 356,108$ Increase (Decrease) 80 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 $170,652 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, 2020. Deferred inflows of resources totaling $170,652 related to state aid received subsequent to the measurement date will be recognized for its impact on the net pension liability in the year ended December 31, 2020. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Pension Ended Expense December 31,Amount 2020 130,237$ 2021 35,248 2022 470 2023 82,269 2024 (12,213) Thereafter (15,387) Total 220,624$ 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. 81 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 • The most recent actuarial valuation date is January 1, 2019. • 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 5.25 percent. • The inflation rate assumption is 2.50 percent. • Mortality assumptions for pre-retirement, post-retirement, and post-disability are: Pre-retirement:RP-2014 employee generational mortality table projected with mortality improvement scale MP-2017, from a base year of 2006. Post-retirement:RP-2014 annuitant generational mortality table projected with mortality improvement scale MP-2017 from a base year of 2006. Male rates are adjusted by a factor of .96. Post-disability:RP-2014 annuitant generational mortality table projected with mortality improvement scale MP-2017 from a base year of 2006. Male rates are adjusted by a factor of .96. The discount rate was changed from 5.75% to 5.25% to reflect updated capital market assumptions. The mortality and withdrawel assumptions were updated from the rates used on the July 1, 2016 Minnesota PERA Police & Fire Plan actuarial valuation to the rates used in the July 1, 2018 Minnesota PERA Police & Fire Plan actuarial valuation. The inflation assumption was updated from 2.75% to 2.50%. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimates of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These asset class estimates are combined to produce the portfolio long-term expected rate of return by weighting the expected future real rates of return by the current asset allocation percentage (or target allocation, if available) and by adding expected inflation. Best-estimates of geometric real and nominal rates of return for each major asset class included in the pension plan's asset allocation as of the measurement date are summarized in the following table: Long-term Long-Term Allocation at Expected Real Expected Nominal Measurement Date Rate of Return Rate of Return Cash and Equivalents 10.46%0.58%3.08% Fixed Income 31.54%1.99%4.49% Domestic Equity 40.26%4.95%7.45% International Equity 16.83%5.24%7.74% Real Estate and Alternatives 0.91%4.19%6.69% Total 100.00%6.65% Reduced for assumed investment expense -1.40% Net assumed investment return (weighted average rounded to 1/4%)5.25% Asset Class 82 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 G. DISCOUNT RATE The discount rate used to measure the total pension liability was 5.25 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 5.25 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 (4.25 percent) or one percentage- point higher (6.25 percent) than the current rate: 4.25%5.25%6.25% One Point Current One Point Decrease Rate Increase Net Pension (Asset)/Liability (604,682)$ (702,198)$ (793,875)$ 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 26 employees who are covered by this pension plan. The plan provides benefits such as monthly retirement income, special and early retirement benefits, post-retirement surviving spouse benefits, pre-retirement surviving spouse benefits, and disability benefits. The 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, 2021. 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, 2019 were $53,912. With regard to withdrawal from the pension plan, the parties agree that the amount that would otherwise be paid in salary or wages will be contributed instead to the CPF as pre-tax employer contributions. Note 7 DEFINED CONTRIBUTION PLAN There are five City Council members of the City covered by the Public Employees Defined Contribution Plan (PEDCP), a multiple-employer deferred compensation plan administered by PERA. The PEDCP is a tax qualified plan under Section 401(a) of the Internal Revenue Code and all contributions by or on behalf of employees are tax deferred until time of withdrawal. City's Proportionate Share of the Net Pension (Asset) Liability 83 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 The defined contribution plan consists of individual accounts paying a lump-sum benefit, plan benefits depend solely on amounts contributed to the plan plus investment earnings, less administrative expenses, therefore, there is no future liability to the employer. Minnesota Statutes, Chapter 353(D.03), specifies plan provisions, including the employee and employer contribution rates for those qualified personnel who elect to participate. An eligible elected official who decides to participate contributes 5 percent of salary which is matched by the elected official's employer. Employer and employee contributions are combined and used to purchase shares in one or more of the seven accounts of the Minnesota Supplemental Investment Fund. For administering the plan, PERA receives 2 percent of employer contributions and twenty-five hundredths of 1 percent (.0025%) of the assets in each member's account annually. Pension expense for the year is equal to contributions made. Total contributions made by the City for the last three fiscal years were: For the Year Ended:Employee Employer Employee Employer Employee Employer 1,591$ 1,591$ 5.0%5.0%5.0%5.0% Note 8 OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN A. Plan Description The City provides post-employment insurance benefits to certain eligible employees through its OPEB Plan, a single-employer defined benefit plan administered by the City. All post-employment benefits are based on contractual agreements with employee groups. Eligibility for these benefits is based on years of service and/or minimum age requirements. These contractual agreements do not include any specific contribution or funding requirements. The plan does not issue a publicly available financial report. No plan assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75. 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. Required Rate for Employees & Employers Percentage of Covered PayrollContribution Amount December 31, 2019 84 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 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. C. Contributions The required contribution is based on projected pay-as-you-go financing requirements, with additional amounts to prefund benefits as determined periodically by the City. The City’s current year required pay-as-you-go contributions to finance the benefits described in the previous section totaled $138,786. D. Membership Membership in the plan consisted of the following as of the latest actuarial valuation Retirees and beneficiaries receiving benefits 12 Active plan members 150 Total members 162 E. Total OPEB Liability of the City The City’s total OPEB liability of $2,038,900 as of year-end was measured as of December 31, 2018, and was determined by an actuarial valuation as of January 1, 2018. F. Actuarial Assumptions The total OPEB liability was determined by an actuarial valuation as of January 1, 2018, using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified: Discount rate 4.09% 20-year municipal bond yield 4.09% Inflation rate 2.75% Salary increases 3.50% Medical trend rate 8.00% grading to 5.00% over 9 years The actuarial assumptions used in the latest valuation were based on those used to value pension liabilities for Minnesota city employees. The state pension plans base their assumptions on periodic experience studies. Economic assumptions are based on input from a variety of published sources of historical and projected future financial data. Each assumption was reviewed for reasonableness with the source information as well as for consistency with the other economic assumptions. Since the plan is not funded by an irrevocable trust, the discount rate is equal to the 20-year municipal bond yield rate of 4.09 percent, which was set by considering published rate information for 20-year high quality, tax-exempt, general obligation municipal bonds as of the measurement date. The City discount rate used in the prior measurement date was 3.44 percent. 85 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 Mortality rates were based on the RP-2014 White Collar Mortality Tables with MP-2016 Generational Improvement Scale (with Blue Collar adjustment for Police and Fire Personnel). The mortality rates used in the previous study were based on the RP-2014 adjusted to 2006 White Collar Mortality Tables with MP-2016 Generational Improvement Scale (Blue Collar Tables for Police and Fire Personnel). Medical trend rates were also changed from the previous study to better anticipate short-term and long-term medical increases. Future retirees electing coverage is assumed to be 55 percent for employees. Spouses of Coordinated Plan participants is assumed to be 40% electing coverage and spouses of Police & Fire Fund participants is assumed to be 60%. G. Changes in the Total OPEB Liability Total OPEB Liability Beginning balance – January 1, 2019 2,014,679$ Changes for the year Service cost 143,059 Interest 71,986 Differences between expected and actual experience 43,355 Changes of assumptions (103,957) Benefit payments (130,222) Total net changes 24,221 Ending balance – December 31, 2019 2,038,900$ Assumption changes since the prior measurement date include the following: • The discount rate was changed from 3.44 percent to 4.09 percent. H. Total OPEB Liability Sensitivity to Discount and Health-Care Trend Rate Changes The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using a discount rate that is 1 percentage point lower or 1 percentage point higher than the current discount rate: Current 1% Decrease Discount Rate 1% Increase OPEB Discount Rate 3.09%4.09%5.09% Total OPEB Liability 2,201,091$ 2,038,900$ 1,889,411$ The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using healthcare cost trend rates that are 1 percentage point lower or 1 percentage point higher than the current healthcare cost trend rates: Current Medical 1% Decrease Trend Rate 1% Increase Medical Trend Rate 7.00 to 4.00%8.00 to 5.00%9.00 to 6.00% over 9 years over 9 years over 9 years Total OPEB Liability 1,810,059$ 2,038,900$ 2,310,949$ 86 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 I. OPEB Expense and Related Deferred Outflows of Resources and Deferred Inflows of Resources For the current year ended, the City recognized OPEB expense of $221,882 As of year-end, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Changes in actuarial assumptions 41,017$ 93,034$ Difference between expected and actual economic experience 97,053 - Contribution paid subsequent to measurement date 138,786 - Totals 276,856$ 93,034$ A total of $138,786 reported as defered outflows of resources related to OPEB resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the total OPEB liability in the year ending December 31, 2020. Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Year OPEB Ended Expense December 31,Amount 2020 6,837$ 2021 6,837 2022 6,837 2023 6,837 2024 6,837 Thereafter 10,851 Total 45,036$ Note 9 OTHER INFORMATION A. RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions and natural disasters. Property and casualty insurance is provided through the League of Minnesota Cities Insurance Trust (LMCIT), a public entity risk pool currently operating as a common risk management and insurance program for Minnesota cities: general liability, property, automobile, mobile property and marine, crime, employee dishonesty, boiler, and open meeting law. The City pays an annual insurance premium to the LMCIT for its insurance coverage. The City is subject to supplemental assessments if deemed necessary by the LMCIT. Currently, the LMCIT is self-sustaining through member premiums and reinsures through commercial companies for claims in excess of various amounts. The City retains risk for the deductible portions of the insurance policies. The amount of these deductibles is considered immaterial to the financial statements. Workers’ compensation coverage is provided through a pooled self-insurance program through the LMCIT. The City pays an annual premium to the LMCIT. The City is subject to supplemental assessments if deemed necessary by the LMCIT. The LMCIT reinsures through Workers’ Compensation Reinsurance Association (WCRA) as required by law. For workers’ compensation, the City is not subject to a deductible. The City’s workers’ compensation is retroactively rated. With this type of coverage, final premiums are determined after loss experience is known. The amount of premium adjustment, if any, is considered immaterial and not recorded until received or paid. 87 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 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 subsequent years 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 2019 financial statements of the City is $823,868 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 2019 health and life insurance costs paid by the City was $1,723,442. Complete financial statements may be obtained from Gallagher Benefit Services, Inc. located at 3600 American Blvd West, Bloomington, MN 55431. 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. 88 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2019 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, 2019, the City abated $99,670 of property taxes to Hurlbut-Zeppa Charitable Trust AR for the construction and opening of the Embassy Suites Hotel. The abatement is equal to the City's portion of increased property taxes paid on the increased market value of the development of the property for payable years 2010 to 2019. F. SUBSEQUENT EVENTS - COVID-19 The City generally reports its investments at fair value based on standards described earlier in these notes. Subsequent to year end, the Novel Coronavirus (COVID – 19) pandemic has caused significant volatility in economic conditions, including substantial reductions in the quoted active-market prices of some investments. The City’s portfolio consists primarily of shorter-term investments, many with guaranteed maturity values. The City does not expect any losses ultimately realized from this market decline to be material. However, the potential negative impact could be heightened if increased demand on City resources and/or a sustained economic downturn hampers the City’s ability to hold such investments to maturity as planned. The potential future impact of these conditions on the fair value of the City’s investment portfolio is not determinable at this time. The City expects increased delinquency in property tax and other receipts for 2020 associated with relaxed deadlines for payment in response to rapidly increasing unemployment nationwide. The City anticipates bridging the gap in receipts with laddered investment maturities of reserve funds that will not be immediately reinvested as has been past practice. The City does not currently anticipate the need for short term financing in response to this disruption in cash flow. 89 This page has been left blank intentionally. 90 CITY OF BROOKLYN CENTER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN THE CITY'S TOTAL OPEB LIABILITY AND RELATED RATIOS For the Year Ended December 31, 2019 2019 2018 Total OPEB liability Service cost 143,059$ 130,096$ Interest 71,986 71,659 Differences between expected and actual experience 43,355 73,751 Changes of assumptions (103,957) 51,929 Benefit payments (130,222) (156,791) Net change in total OPEB liability 24,221 170,644 Total OPEB liability - beginning of year 2,014,679 1,844,035 Total OPEB liability - end of year 2,038,900$ 2,014,679$ Covered payroll 12,122,568$ 11,524,587$ Total OPEB liability as a percentage of covered payroll 16.82%17.48% Note 1: 2019 Changes in Actuarial Assumptions The discount rate was changed from 3.44 percent to 4.09 percent. 2018 Changes in Actuarial Assumptions The health care trend rates were changed to better anticipate short-term and long-term medical increases. The mortality table was updated from RP-2014 adjusted to 2006 to the RP-2014 White Collar Mortality Tables with MP-2016 Generational Improvement Scale. The actuarial cost method was changed from entry age, level dollar to entry age, level percent of pay as prescribed by GASB 75. The discount rate was changed from 4.50 percent to 3.44 percent. Note 2:The City implemented GASB Statement No. 75 for the year ended December 31, 2018. The schedules within the RSI section require a 10-year presentation. Additional years will be presented as they become available. 91 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, 2019 651,633$ 651,633$ -$ 8,688,397$ 7.50% December 31, 2018 612,983 612,983 - 8,173,316 7.50% 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". 92 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, 2019 0.1189%6,573,715$ 204,324$ 6,778,039$ 8,411,938$ 78.15%80.23% June 30, 2018 0.1194%6,623,822 217,244 6,841,066 7,892,915 83.92%79.50% June 30, 2017 0.1201%7,667,105 96,388 7,763,493 7,735,587 99.11%75.90% June 30, 2016 0.1172%9,516,060 124,251 9,640,311 7,269,667 130.90%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". 2019 Changes in Plan Provisions The employer supplemental contribution was changed prospectively, decreasing from $31.0 million to $21.0 million per year. The State's special funding contribution was changed prospectively, requiring $16.0 million due per year through 2031. 2019 Changes in Actuarial Assumptions The mortality projection scale was changed from MP-2017 to MP-2018 2018 Changes in Plan Provisions The augmentation adjustment in early retirement factors is eliminated over a five-year period starting July 1, 2019, resulting in actuarial equivalence after June 30,2024. Interest credited on member contributions decreased from 4.00 percent to 3.00 percent, beginning July 1, 2018. Deferred augmentation was changed to 0.00 percent, effective January 1, 2019. Augmentation that has already accrued fro deferred members will still apply. Contribution stabilizer provisions were repealed Postretirement benefit increases were changed from 1.00 percent per year with a provision to increase to 2.50 percent upon attainment of 90.00 percent funding ratio to 50.00 percent of the Social Security Cost of Living Adjustment, not less than 1.00 percent and not more than 1.50 percent, beginning January 1, 2019. For retirements on or after January 1, 2024, the first benefit increase is delayed until the ritiree reaches normal retirement age; does not apply to Rule of 90 reitrees, disability benefit recipients, or survivors. Actuarial equivalent factors were updated to reflect revised mortality and iterest assumptions. 2018 Changes in Actuarial Assumptions The mortality projection scale was changed from MP-2015 to MP-2017 The assumed benefit increase was changed from 1.00 percent per year through 2044 and 2.50 percent per year thereafter to 1.25 percent per year. 2017 Changes in Plan Provisions The State's special funding contribution increased from $6 million to $16 million. The Employer Supplemental Contribution for the Minneapolis Employees Retirement Fund changed from $21,000,000 to $31,000,000 in calendar years 2019 to 2031. The state's contribution changed from $16,000,000 to $6,000,000 in calendar years 2019 to 2031. 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 percent 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 $892 million. Upon consolidation, state and employer contributions were revised. 2015 Changes in Actuarial Assumptions The assumed post-retirement benefit increase rate was changed from 1.0 percent per year through 2030, and 2.5 percent per year thereafter, to 1.0 percent per year through 2035, and 2.5 percent per year thereafter. 93 CITY OF BROOKLYN CENTER, MINNESOTA SCHEDULE OF CITY CONTRIBUTIONS PUBLIC EMPLOYEES POLICE AND FIRE FUND Required Supplementary Information (Last Ten Years*) Statutorily Contributions in Relation Contribution Contributions as a Required to the Statutorily Required Deficiency Covered Percentage of Fiscal Year Ending Contributions (a)Contributions (b)(Excess) (a -b)Payroll** (d)Covered Payroll (b/d) December 31, 2019 818,676$ 818,676$ -$ 4,829,945$ 16.95% December 31, 2018 761,952 761,952 - 4,703,405 16.20% 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". 94 CITY OF BROOKLYN CENTER, MINNESOTA SCHEDULE OF CITY'S PROPORTIONATE SHARE OF NET PENSION LIABILITY PUBLIC EMPLOYEES POLICE & FIRE FUND Required Supplementary Information (Last Ten Years*) Employer's Proportionate Employer's 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, 2019 0.4483%4,772,607$ 4,729,530$ 100.91%89.30% June 30, 2018 0.4330%4,615,334 4,549,453 101.45%88.80% 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". 2019 Changes in Actuarial Assumptions The mortality projection scale was changed from MP-2017 to MP-2018. 2018 Changes in Plan Provisions Postretirement benefit increases were changed to 1.00 percent for all years, with no trigger. An end date of July 1, 2048 was added to the existing $9.0 million state contribution. New annual state aid will equal $4.5 million in fiscal years 2019 and 2020, and $9.0 million thereafter until the plan reaches 100 percent funding, or July 1, 2048, if earlier Member contributions were changed from 10.80 percent to 11.20 percent of pay, effective January 1, 2019 and 17.70 percent of pay, effective January 1, 2020. Employer Contributions were changed from 16.20 percent to 16.95 percent of pay, effective January 1, 2019 and 17.7 percent of pay, effective January 1, 2020. Interest credited on member contributions decreased from 4.00 percent to 3.00 percent, beginning July 1, 2018. Deferred augmentation was changed to 0.00 percen, effective January 1, 2019. Augmentation that has already accrued for deferred members will still apply. Actuarial equivalent factors were updated to reflect revised mortality and interest assumptions. 2018 Changes in Actuarial Assumptions The mortality projection scale was changed from MP-2016 to MP-2017. 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. 95 CITY OF BROOKLYN CENTER, MINNESOTA SCHEDULE OF CHANGES IN NET PENSION ASSET AND RELATED RATIO FIRE RELIEF ASSOCIATION Required Supplementary Information (Last Ten Years*) 2019 2018 2017 2016 2015 Total Pension Liability Service Cost 107,405$ 98,240$ 120,802$ 88,266$ 85,904$ Interest 171,057 191,790 174,191 173,219 178,242 Changes in Benefit Terms 18,251 - 26,709 - - Differences Between Expected and Actual Experience (141,409) - (75,613) - - Changes of Assumptions 52,746 44,974 (50,396) 358,422 - Benefit Payments (744,211) (131,608) (136,168) (59,016) (617,541) Net Change in Total Pension Liability (536,161) 203,396 59,525 560,891 (353,395) Total Pension Liability - Beginning of Year 3,239,606 3,036,210 2,976,685 2,415,794 2,769,189 Total Pension Liability - End of Year 2,703,445 3,239,606 3,036,210 2,976,685 2,415,794 Plan Fiduciary Net Position Contributions - State and Local 164,147 154,366 147,002 143,061 158,545 Net Investment Income (236,910) 557,117 275,625 (181,185) 149,635 Benefit Payments (744,211) (131,608) (136,168) (59,016) (617,541) Administrative Expenses (15,708) (15,024) (9,495) (14,560) (10,080) Net Change in Plan Fiduciary Net Position (832,682) 564,851 276,964 (111,700) (319,441) Plan Fiduciary Net Position - Beginning of Year 4,238,325 3,673,474 3,396,510 3,508,210 3,827,651 Plan Fiduciary Net Position - End of Year 3,405,643 4,238,325 3,673,474 3,396,510 3,508,210 Net Pension Liability (Asset) - End of Year (702,198) (998,719) (637,264) (419,825) (1,092,416) Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 126.0%130.8%121.0%114.1%145.2% Covered Payroll n/a n/a n/a n/a n/a Net Pension Liability as a Percentage of Covered Payroll n/a n/a 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). 2019 Changes in Actuarial Assumptions The discount rate was changed from 5.75% to 5.25% to reflect updated capital market assumptions. The mortality and withdrawel assumptions were updated from the rates used in the July 1, 2016 Minnesota PERA Police & Fire Plan actuarial valuation to the rates used in the July 1, 2018 Minnesota PERA Police & Fire Plan actuarial valuation. The inflation assumption was updated from 2.75% to 2.50%. 2019 Changes in Benefit Terms The lump sum distribution upon retirement per year of service was changed from $7,600 to $7,700 2018 Changes in Actuarial Assumptions The discount rate was changed from 6.25% to 5.75% to reflect updated capital market assumptions. 2017 Changes in Actuarial Assumptions The discount rate was changed from 5.75% to 6.25% to reflect updated capital market assumptions. 2017 Changes in Benefit Terms The lump sum distribution upon retirement per year of service was changed from $7,500 to $7,600 2016 Changes in Actuarial Assumptions The discount rate was changed from 7.00% to 5.75% to reflect updated capital market assumptions. 96 CITY OF BROOKLYN CENTER, MINNESOTA SCHEDULE OF CITY CONTRIBUTIONS FIRE RELIEF ASSOCIATION Required Supplementary Information (Last Ten Years^) 2019 2018 2017 2016 2015 2014 2013 2012 2011 Actuarially Determined Contribution 85,089$ 85,089$ 71,203$ 101,453$ 101,453$ 111,463$ 111,463$ 135,929$ 183,928$ Contributions in Relation of the Actuarially Determined Contribution 159,147 154,366 147,002 143,061 158,545 134,340 151,503 101,119 165,697 Contribution Deficiency (Excess)(74,058) (69,277) (75,799) (41,608) (57,092) (22,877) (40,040) 34,810 18,231 Covered Payroll n/a n/a n/a n/a n/a n/a n/a n/a n/a Contributions as a Percentage of Covered Payroll n/a n/a 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 2.50% Salary increases Not applicable Investment rate of return 5.25% compounded annually Retirement age Members are assumed to retire at the later of age 50 or 20 years of service Mortality Based on RP-2014 Annuitant Mortality Table ^ This schedule is presented prospectively beginning with the fiscal year ended December 31, 2011. 97 CITY OF BROOKLYN CENTER, MINNESOTA SCHEDULE OF CITY CONTRIBUTIONS INTERNATIONAL UNION OF OPERATING ENGINEERS CENTRAL PENSION FUND Required Supplementary Information (Last Ten Years) Required Fiscal Year Ending Contributions December 31, 2019 53,912$ December 31, 2018 51,152 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 98 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. Revolving Loan This fund was established to account for the proceeds and disbursement of revolving loan funds granted from the Minnesota Investment Fund. Centerbrook Golf The Centerbrook Golf fund accounts for operations of Centerbrook Golf Course, a 9 hole executive golf course owned by the City. 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. Tax Increment District No. 6 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. Tax Increment District No. 7 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. Tax Increment District No. 8 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. 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 99 CITY OF BROOKLYN CENTER, MINNESOTA DEBT SERVICE FUND Debt service funds are used to account for and report financial resources that are restricted, committed or assigned to expenditure for principal, interest and other charges related to long-term debt. General Obligation Improvement Bonds, 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. General Obligation Improvement Bonds, 2018A 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, 2029. General Obligation Improvement Bonds, 2019A 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, 2030. 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 had a final maturity date of February 1, 2018. 100 CITY OF BROOKLYN CENTER, MINNESOTA NONMAJOR CAPITAL PROJECTS FUNDS Capital projects funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. Capital Reserve Emergency This fund was established to account for monies held in reserve for catastrophic losses or unforeseen capital items. Street Reconstruction This fund was established to provide funds and to account for the expenditure of such funds, for major street infrastructure improvements. The accumulation of funds to provide for such improvements is an attempt to reduce future debt issuance. The primary financing source for such improvements are franchise fees. Technology This fund was established to provide funds and to account for the expenditure of such funds, for technological improvements/renovations. 101 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS December 31, 2019 Total Special Capital Nonmajor Revenue Project Governmental ASSETS Cash and investments 3,318,945$ 7,825,660$ 11,144,605$ Receivables: Accounts - net - 177,580 177,580 Current taxes 2,110 - 2,110 Due from other governments 143,956 - 143,956 Inventory 1,630 - 1,630 Notes receivable 79,519 - 79,519 Advances to other funds 460,158 - 460,158 Assets held for resale 459,978 - 459,978 Total assets 4,466,296 8,003,240 12,469,536 LIABILITIES Accounts payable 147,098 27,033 174,131 Accrued salaries and wages 10,691 - 10,691 Due to other funds 334,864 - 334,864 Due to other governments 47,800 - 47,800 Deposits payable 13,053 - 13,053 Advances from other funds 1,356,056 - 1,356,056 Total liabilities 1,909,562 27,033 1,936,595 FUND BALANCES Nonspendable Inventory 1,630 - 1,630 Restricted Tax increment financing 1,765,943 - 1,765,943 Economic development 1,712,362 - 1,712,362 Law enforcement enhancements 66,472 - 66,472 Street improvements - 160,601 160,601 Committed Public safety 18,739 - 18,739 Cable communications 48,981 - 48,981 Community recreation 73,735 - 73,735 Emergency capital improvements - 1,144,755 1,144,755 Street improvements - 6,281,888 6,281,888 Technology improvements - 388,963 388,963 Unassigned (1,131,128) - (1,131,128) Total fund balances 2,556,734 7,976,207 10,532,941 Total liabilities and fund balances 4,466,296$ 8,003,240$ 12,469,536$ 102 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended December 31, 2019 Total Special Capital Nonmajor Revenue Project Governmental REVENUES Property taxes 377,717$ -$ 377,717$ Tax increments 830,313 - 830,313 Franchise fees - 711,255 711,255 Intergovernmental 457,595 - 457,595 Charges for services 241,442 - 241,442 Fines and forfeits 35,290 - 35,290 Investment earnings (net of market value adjustment)101,611 248,557 350,168 Miscellaneous 46,766 135 46,901 Total revenues 2,090,734 959,947 3,050,681 EXPENDITURES Current: General government - 186,806 186,806 Public safety 189,397 - 189,397 Parks and recreation 353,880 - 353,880 Economic development 559,262 - 559,262 Capital outlay: Public safety 25,819 - 25,819 Public works - 1,608,135 1,608,135 Parks and recreation 18,135 - 18,135 Economic development 177,474 - 177,474 Debt service - 11,845 11,845 Total expenditures 1,323,967 1,806,786 3,130,753 Excess (deficiency) of revenues over (under) expenditures 766,767 (846,839) (80,072) OTHER FINANCING SOURCES (USES) Transfers in 447,609 537,351 984,960 Issuance of debt - 1,220,000 1,220,000 Premium on issuance of debt - 242,587 242,587 Sale of capital assets 9,200 - 9,200 Transfers out (877,890) - (877,890) Total other financing sources (uses)(421,081) 1,999,938 1,578,857 Net change in fund balance 345,686 1,153,099 1,498,785 Fund balances - January 1 2,211,048 6,823,108 9,034,156 Fund balances - December 31 2,556,734$ 7,976,207$ 10,532,941$ 103 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS December 31, 2019 Housing and Economic Community Redevelopment Development Development Police Revolving Centerbrook Authority Authority Block Grant Forfeitures Loan Golf ASSETS Cash and investments -$ 1,566,845$ 72,376$ 116,298$ 8,998$ 400$ Receivables: Current taxes 2,110 - - - - - Due from other governments - - 75,000 - - - Inventory - - - - - 1,630 Notes receivable - - - - 79,519 - Advances to other funds - - - - - - Assets held for resale - 37,000 - - - - Total assets 2,110 1,603,845 147,376 116,298 88,517 2,030 LIABILITIES Accounts payable - 2,221 - 36,773 - 8,069 Accrued salaries and wages - 4,554 - - - 2,399 Due to other funds - - 75,000 - - 247,364 Due to other governments - - - - 47,711 89 Deposits payable - - - 13,053 - - Advances from other funds - - - - - - Total liabilities - 6,775 75,000 49,826 47,711 257,921 FUND BALANCES (DEFICITS) Nonspendable Inventory - - - - - 1,630 Restricted Tax increment financing - - - - - - Economic development 2,110 1,597,070 72,376 - 40,806 - Law enforcement enhancements - - - 66,472 - - Committed Public safety - - - - - - Cable communications - - - - - - Community recreation - - - - - - Unassigned - - - - - (257,521) Total fund balances (deficits)2,110 1,597,070 72,376 66,472 40,806 (255,891) Total liabilities and fund balances 2,110$ 1,603,845$ 147,376$ 116,298$ 88,517$ 2,030$ 104 Total Tax Tax Tax Tax Tax Tax City Nonmajor Increment Increment Increment Increment Increment Increment Initiative Special District No. 2 District No. 4 District No. 5 District No. 6 District No. 7 District No. 8 Grants Revenue 811,336$ -$ 495,372$ 103,123$ 31,878$ -$ 112,319$ 3,318,945$ - - - - - - - 2,110 - - - - - - 68,956 143,956 - - - - - - - 1,630 - - - - - - - 79,519 460,158 - - - - - - 460,158 422,978 - - - - - - 459,978 1,694,472 - 495,372 103,123 31,878 - 181,275 4,466,296 277 - - 98,467 - - 1,291 147,098 - - - - - - 3,738 10,691 - - - - - 12,500 - 334,864 - - - - - - - 47,800 - - - - - - - 13,053 - 895,898 460,158 - - - - 1,356,056 277 895,898 460,158 98,467 - 12,500 5,029 1,909,562 - - - - - - - 1,630 1,694,195 - 35,214 4,656 31,878 - - 1,765,943 - - - - - - - 1,712,362 - - - - - - - 66,472 - - - - - - 18,739 18,739 - - - - - - 48,981 48,981 - - - - - - 73,735 73,735 - (895,898) - - - (12,500) 34,791 (1,131,128) 1,694,195 (895,898) 35,214 4,656 31,878 (12,500) 176,246 2,556,734 1,694,472$ -$ 495,372$ 103,123$ 31,878$ -$ 181,275$ 4,466,296$ 105 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS For the Year Ended December 31, 2019 20200-46321 20300-4631*20400-46323 20500-4219*20500-4219*20500-4219* Housing and Economic Community Redevelopment Development Development Police Revolving Centerbrook Authority Authority Block Grant Forfeitures Loan Golf REVENUES Property taxes 377,717$ -$ -$ -$ -$ -$ Tax increments - - - - - - Intergovernmental - - 150,000 - - - Charges for services - - - - - 218,618 Fines and forfeits - - - 35,290 - - Investment earnings (net of market value adjustment)- 43,463 - 2,370 201 - Miscellaneous - 3,309 - - - 841 Total revenues 377,717 46,772 150,000 37,660 201 219,459 EXPENDITURES Current: Public safety - - - - - - Parks and recreation - - - - - 318,237 Economic development - 244,135 - - - - Capital outlay: Public safety - - - 25,819 - - Parks and recreation - - - - - - Economic development - - - - - - Total expenditures - 244,135 - 25,819 - 318,237 Excess (deficiency) of revenues over (under) expenditures 377,717 (197,363) 150,000 11,841 201 (98,778) OTHER FINANCING SOURCES (USES) Transfers in - 377,609 - - - 70,000 Sale of capital assets - - - 9,200 - - Transfers out (377,609) - (150,000) - - - Total other financing sources (uses)(377,609) 377,609 (150,000) 9,200 - 70,000 Net change in fund balance 108 180,246 - 21,041 201 (28,778) Fund balances (deficits) - January 1 2,002 1,416,824 72,376 45,431 40,605 (227,113) Fund balances (deficits) - December 31 2,110$ 1,597,070$ 72,376$ 66,472$ 40,806$ (255,891)$ 106 27700-46412 27900-46414 28000-46415 28000-46415 28000-46415 28000-46415 28600-* Total Tax Tax Tax Tax Tax Tax City Nonmajor Increment Increment Increment Increment Increment Increment Initiative Special District No. 2 District No. 4 District No. 5 District No. 6 District No. 7 District No. 8 Grants Revenue -$ -$ -$ -$ -$ -$ -$ 377,717$ - 101,489 492,402 204,242 32,180 - - 830,313 - - - - - - 307,595 457,595 - - - - - - 22,824 241,442 - - - - - - - 35,290 24,932 3,245 23,067 1,232 530 - 2,571 101,611 10,038 - - - - - 32,578 46,766 34,970 104,734 515,469 205,474 32,710 - 365,568 2,090,734 - - - - - - 189,397 189,397 - - - - - - 35,643 353,880 20,336 42,164 38,477 200,818 832 12,500 - 559,262 - - - - - - - 25,819 - - - - - - 18,135 18,135 177,474 - - - - - - 177,474 197,810 42,164 38,477 200,818 832 12,500 243,175 1,323,967 (162,840) 62,570 476,992 4,656 31,878 (12,500) 122,393 766,767 - - - - - - - 447,609 - - - - - - - 9,200 - - (350,281) - - - - (877,890) - - (350,281) - - - - (421,081) (162,840) 62,570 126,711 4,656 31,878 (12,500) 122,393 345,686 1,857,035 (958,468) (91,497) - - - 53,853 2,211,048 1,694,195$ (895,898)$ 35,214$ 4,656$ 31,878$ (12,500)$ 176,246$ 2,556,734$ 107 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING BALANCE SHEET NONMAJOR CAPITAL PROJECT FUNDS December 31, 2019 Total Capital Nonmajor Reserve Street Capital Emergency Reconstruction Technology Projects ASSETS Cash and investments 1,144,755$ 6,264,909$ 415,996$ 7,825,660$ Receivables: Accounts - net - 177,580 - 177,580 Total assets 1,144,755 6,442,489 415,996 8,003,240 LIABILITIES Accounts payable - - 27,033 27,033 FUND BALANCES Restricted Street improvements - 160,601 - 160,601 Committed Emergency capital improvements 1,144,755 - - 1,144,755 Street improvements - 6,281,888 - 6,281,888 Technology improvements - - 388,963 388,963 Total fund balances 1,144,755 6,442,489 388,963 7,976,207 Total liabilities and fund balances 1,144,755$ 6,442,489$ 415,996$ 8,003,240$ 108 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR CAPITAL PROJECT FUNDS For the Year Ended December 31, 2019 Total Capital Nonmajor Reserve Street Capital Emergency Reconstruction Technology Projects REVENUES Franchise fees -$ 711,255$ -$ 711,255$ Investment earnings (net of market value adjustment)35,911 202,623 10,023 248,557 Miscellaneous - 135 - 135 Total revenues 35,911 914,013 10,023 959,947 EXPENDITURES Current: General government - - 186,806 186,806 Capital outlay: Public works - 1,608,135 - 1,608,135 Debt service: Bond issuance costs - 11,845 - 11,845 Total expenditures - 1,619,980 186,806 1,806,786 Excess (deficiency) of revenues over (under) expenditures 35,911 (705,967) (176,783) (846,839) OTHER FINANCING SOURCES Transfers in - 397,351 140,000 537,351 Issuance of debt - 1,220,000 - 1,220,000 Premium on issuance of debt - 242,587 - 242,587 Total other financing sources - 1,859,938 140,000 1,999,938 Net change in fund balance 35,911 1,153,971 (36,783) 1,153,099 Fund balances - January 1 1,108,844 5,288,518 425,746 6,823,108 Fund balances - December 31 1,144,755$ 6,442,489$ 388,963$ 7,976,207$ 109 CITY OF BROOKLYN CENTER, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND Page 1 of 5 CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2019 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Taxes: Property taxes 17,183,555$ 17,183,555$ 17,259,011$ 75,456$ Penalties and interest 17,036 17,036 6,903 (10,133) Lodging tax 1,180,000 1,180,000 1,091,105 (88,895) Total taxes 18,380,591 18,380,591 18,357,019 (23,572) Special assessments 85,000 85,000 42,502 (42,498) Licenses and permits: Liquor and beer licenses 60,450 60,450 56,017 (4,433) Building permits 360,000 360,000 592,294 232,294 Mechanical permits 65,000 65,000 99,182 34,182 Sewer and water permits 3,500 3,500 3,750 250 Plumbing permits 65,000 65,000 76,488 11,488 Garbage licenses 3,265 3,265 2,945 (320) Mechanical licenses 9,000 9,000 10,102 1,102 Service station licenses 2,190 2,190 3,500 1,310 Vehicle dealer licenses 1,500 1,500 1,750 250 Cigarette licenses 2,850 2,850 3,150 300 Sign permits 3,500 3,500 3,489 (11) Rental dwelling licenses 214,300 214,300 217,252 2,952 Amusement licenses 515 515 260 (255) Electrical Permits 60,000 60,000 79,821 19,821 ROW permits 5,000 5,000 12,400 7,400 Miscellaneous licenses and permits 5,245 5,245 10,039 4,794 Total licenses and permits 861,315 861,315 1,172,439 311,124 Intergovernmental: State: Local government aid 891,785 891,785 891,784 (1) Police pension aid 402,000 402,000 430,498 28,498 PERA aid 34,365 34,365 34,365 - Fireperson pension aid 154,000 154,000 170,652 16,652 Police training 48,000 48,000 46,726 (1,274) Other state grants 3,000 3,000 32,695 29,695 Local: Miscellaneous grants 101,000 101,000 85,705 (15,295) Total intergovernmental 1,634,150 1,634,150 1,692,425 58,275 Charges for services: General government charges 86,650 86,650 118,499 31,849 Public safety charges 95,250 95,250 157,485 62,235 Community development fees 34,000 34,000 2,448 (31,552) Recreation fees 250,000 250,000 217,720 (32,280) Community Center fees 368,750 368,750 296,167 (72,583) Total charges for services 834,650 834,650 792,319 (42,331) Fines and forfeits 231,500 231,500 239,893 8,393 Miscellaneous: Investment earnings (net of market value change)93,663 93,663 327,748 234,085 Other 145,700 145,700 354,795 209,095 Total miscellaneous 239,363 239,363 682,543 443,180 Total revenues 22,266,569 22,266,569 22,979,140 712,571 110 CITY OF BROOKLYN CENTER, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND Page 2 of 5 CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2019 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) EXPENDITURES General government: Mayor and council: Current: Personal services 54,812$ 54,812$ 54,891$ (79)$ Supplies 350 350 1,205 (855) Services and other charges 69,800 69,800 88,464 (18,664) Total mayor and council 124,962 124,962 144,560 (19,598) Administrative (Manager, Clerk, HR) offices: Current: Personal services 857,884 857,884 818,067 39,817 Supplies 2,860 2,860 4,417 (1,557) Services and other charges 107,495 107,495 120,265 (12,770) Total administrative office 968,239 968,239 942,749 25,490 Elections and voter registration: Current: Personal services 85,253 85,253 68,700 16,553 Supplies 2,100 2,100 9,472 (7,372) Services and other charges 7,000 7,000 2,699 4,301 Total elections and voter registration 94,353 94,353 80,871 13,482 Finance: Current: Personal services 570,432 570,432 551,292 19,140 Supplies 1,100 1,100 554 546 Services and other charges 55,750 55,750 55,555 195 Total finance 627,282 627,282 607,401 19,881 Assessing Current: Supplies 200 200 - 200 Services and other charges 206,000 206,000 222,829 (16,829) Total assessing 206,200 206,200 222,829 (16,629) Legal: Current: Services and other charges 420,000 420,000 431,849 (11,849) Communications and engagement Current: Personal services 151,603 151,603 139,335 12,268 Supplies 6,800 6,800 6,123 677 Services and other charges 101,590 101,590 88,932 12,658 Total communications and engagement 259,993 259,993 234,390 25,603 Government buildings: Current: Personal services 272,107 272,107 273,395 (1,288) Supplies 71,100 71,100 70,775 325 Services and other charges 562,898 562,898 607,659 (44,761) Total government buildings 906,105 906,105 951,829 (45,724) Information technology: Current: Personal services 339,593 339,593 301,573 38,020 Supplies 7,550 7,550 9,100 (1,550) Services and other charges 308,109 308,109 276,281 31,828 Total information technology 655,252 655,252 586,954 68,298 Total general government 4,262,386 4,262,386 4,203,432 58,954 111 CITY OF BROOKLYN CENTER, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND Page 3 of 5 CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2019 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) Expenditures (continued): Public safety: Police protection: Current: Personal services 7,600,970$ 7,600,970$ 7,447,056$ 153,914$ Supplies 175,800 175,800 235,944 (60,144) Services and other charges 1,222,535 1,222,535 1,249,946 (27,411) Total current 8,999,305 8,999,305 8,932,946 66,359 Capital outlay 47,950 47,950 46,337 1,613 Total police protection 9,047,255 9,047,255 8,979,283 67,972 Fire protection: Current: Personal services 1,014,143 1,014,143 988,360 25,783 Supplies 85,175 85,175 44,703 40,472 Services and other charges 420,498 420,498 428,530 (8,032) Total fire protection 1,519,816 1,519,816 1,461,593 58,223 Protective inspection: Current: Personal services 146,451 146,451 145,631 820 Supplies 50 50 - 50 Services and other charges 104,500 104,500 76,380 28,120 Total protective inspection 251,001 251,001 222,011 28,990 Building and community standards Current: Personal services 919,557 919,557 963,255 (43,698) Supplies 29,550 29,550 34,091 (4,541) Services and other charges 187,399 187,399 196,233 (8,834) Total building and community standards 1,136,506 1,136,506 1,193,579 (57,073) Emergency preparedness: Current: Supplies 2,700 2,700 803 1,897 Services and other charges 6,000 6,000 4,192 1,808 Total emergency preparedness 8,700 8,700 4,995 3,705 Total public safety 11,963,278 11,963,278 11,861,461 101,817 Public works: Engineering department: Current: Personal services 956,202 956,202 916,210 39,992 Supplies 7,055 7,055 13,667 (6,612) Services and other charges 59,483 59,483 46,907 12,576 Total engineering department 1,022,740 1,022,740 976,784 45,956 Street department: Current: Personal services 923,299 923,299 841,108 82,191 Supplies 142,230 142,230 178,909 (36,679) Services and other charges 725,479 725,479 746,914 (21,435) Total street department 1,791,008 1,791,008 1,766,931 24,077 Total public works 2,813,748 2,813,748 2,743,715 70,033 112 CITY OF BROOKLYN CENTER, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND Page 4 of 5 CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2019 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) Expenditures (continued): Community services: Social services: Current: Services and other charges 187,000$ 187,000$ 181,159$ 5,841$ Parks and recreation: Administration: Current: Personal services 227,393 227,393 246,215 (18,822) Services and other charges 7,975 7,975 13,873 (5,898) Total administration 235,368 235,368 260,088 (24,720) Recreation programs: Current: Personal services 608,198 608,198 541,836 66,362 Supplies 54,300 54,300 26,194 28,106 Services and other charges 255,723 255,723 231,587 24,136 Total recreation programs 918,221 918,221 799,617 118,604 Community center: Current: Personal services 428,383 428,383 379,040 49,343 Supplies 32,250 32,250 56,241 (23,991) Services and other charges 198,850 198,850 147,198 51,652 Total community center 659,483 659,483 582,479 77,004 Park maintenance: Current: Personal services 718,108 718,108 701,713 16,395 Supplies 85,995 85,995 73,718 12,277 Services and other charges 441,238 441,238 411,426 29,812 Total current 1,245,341 1,245,341 1,186,857 58,484 Capital outlay - - 10,621 (10,621) Total park maintenance 1,245,341 1,245,341 1,197,478 47,863 Total parks and recreation 3,058,413 3,058,413 2,839,662 218,751 Economic development: Convention bureau: Current: Services and other charges 562,900 562,900 514,813 48,087 Community development administration Personal services 199,703 199,703 206,695 (6,992) Supplies 4,950 4,950 772 4,178 Services and other charges 5,000 5,000 - 5,000 Total community development administration 209,653 209,653 207,467 2,186 Total economic development 772,553 772,553 722,280 50,273 Nondepartmental: Expenditures not charged to departments: Current: Personal services (294,947) (294,947) - (294,947) Supplies 22,500 22,500 15,314 7,186 Services and other charges 569,792 569,792 505,204 64,588 Total nondepartmental 297,345 297,345 520,518 (223,173) Total expenditures 23,354,723 23,354,723 23,072,227 282,496 113 CITY OF BROOKLYN CENTER, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND Page 5 of 5 CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2019 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) Excess (deficiency) of revenues over (under) expenditures (1,088,154)$ (1,088,154)$ (93,087)$ 995,067$ OTHER FINANCING SOURCES (USES) Transfers in 150,000 150,000 150,000 - Transfers in - administrative services reimbursed 1,148,154 1,148,154 1,113,479 (34,675) Transfers out (210,000) (210,000) (210,000) - Total other financing sources (uses)1,088,154 1,088,154 1,053,479 (34,675) Net change in fund balance - - 960,392 960,392 Fund balance - January 1 11,563,825 11,563,825 11,563,825 - Fund balance - December 31 11,563,825$ 11,563,825$ 12,524,217$ 960,392$ 114 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - HOUSING AND REDEVELOPMENT AUTHORITY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2019 Actual Original Final Amounts REVENUES Taxes: Property taxes 380,098$ 380,098$ 377,717$ OTHER FINANCING SOURCES (USES) Transfers out (380,098) (380,098) (377,609) Net change in fund balance - - 108 Fund balance - January 1 2,002 2,002 2,002 Fund balance - December 31 2,002$ 2,002$ 2,110$ Budgeted Amounts 115 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - ECONOMIC DEVELOPMENT AUTHORITY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2019 Actual Original Final Amounts REVENUES Investment earnings (net of market value adjustment)15,649$ 15,649$ 43,463$ Miscellaneous - - 3,309 Total revenues 15,649 15,649 46,772 EXPENDITURES Current: Economic development: Personal services 305,969 305,969 227,399 Supplies 200 200 - Services and other charges 104,307 104,307 16,736 Total expenditures 410,476 410,476 244,135 Excess (deficiency) of revenues over (under) expenditures (394,827) (394,827) (197,363) OTHER FINANCING SOURCES Transfers in 380,098 380,098 377,609 Net change in fund balance (14,729) (14,729) 180,246 Fund balance - January 1 1,416,824 1,416,824 1,416,824 Fund balance - December 31 1,402,095$ 1,402,095$ 1,597,070$ Budgeted Amounts 116 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - COMMUNITY DEVELOPMENT BLOCK GRANT SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2019 Budgeted Amounts Actual Original Final Amounts REVENUES Intergovernmental 150,000$ 150,000$ 150,000$ Excess of revenues over expenditures 150,000 150,000 150,000 OTHER FINANCING SOURCES (USES) Transfers out (150,000) (150,000) (150,000) Net change in fund balance - - - Fund balance - January 1 72,376 72,376 72,376 Fund balance - December 31 72,376$ 72,376$ 72,376$ 117 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - POLICE FORFEITURES SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2019 Budgeted Amounts Actual Original Final Amounts REVENUES Fines and forfeitures 13,000$ 13,000$ 35,290$ Investment earnings (net of market value adjustment)833 833 2,370 Total revenues 13,833 13,833 37,660 EXPENDITURES Current: Public safety: Supplies 12,400 12,400 - Services and other charges 600 600 - Capital outlay: Public safety 66,000 66,000 25,819 Total expenditures 79,000 79,000 25,819 Excess (deficiency) of revenues over (under) expenditures (65,167) (65,167) 11,841 OTHER FINANCING SOURCES Sale of capital assets - - 9,200 Net change in fund balance (65,167) (65,167) 21,041 Fund balance - January 1 45,431 45,431 45,431 Fund balance - December 31 (19,736)$ (19,736)$ 66,472$ 118 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - REVOLVING LOAN FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2019 Budgeted Amounts Actual Original Final Amounts REVENUES Investment earnings (net of market value adjustment)-$ -$ 201$ Net change in fund balance - - 201 Fund balance - January 1 40,605 40,605 40,605 Fund balance - December 31 40,605$ 40,605$ 40,806$ 119 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - CENTERBROOK GOLF COURSE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2019 Budgeted Amounts Actual Original Final Amounts REVENUES Charges for services 235,000$ 235,000$ 218,618$ Miscellaneous 2,000 2,000 841 Total revenues 237,000 237,000 219,459 EXPENDITURES Current: Parks and Recreation: Personal services 162,195 162,195 159,279 Supplies 24,800 24,800 22,389 Services and other charges 128,185 128,185 136,569 Total expenditures 315,180 315,180 318,237 Excess (deficiency) of revenues over (under) expenditures (78,180) (78,180) (98,778) OTHER FINANCING SOURCES Transfers in 60,000 60,000 70,000 Net change in fund balance (18,180) (18,180) (28,778) Fund balance (deficit) - January 1 (227,113) (227,113) (227,113) Fund balance (deficit) - December 31 (245,293)$ (245,293)$ (255,891)$ 120 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, 2019 Budgeted Amounts Actual Original Final Amounts REVENUES Investment earnings (net of market value adjustment)15,293$ 15,293$ 24,932$ Miscellaneous 6,270 6,270 10,038 Total revenues 21,563 21,563 34,970 EXPENDITURES Current: Economic development: Services and other charges 1,000 1,000 20,336 Capital outlay: Economic development 830,000 830,000 177,474 Total expenditures 831,000 831,000 197,810 Excess (deficiency) of revenues over (under) expenditures (809,437) (809,437) (162,840) OTHER FINANCING SOURCES Transfers in 116,212 116,212 - Net change in fund balance (693,225) (693,225) (162,840) Fund balance - January 1 1,857,035 1,857,035 1,857,035 Fund balance - December 31 1,163,810$ 1,163,810$ 1,694,195$ 121 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, 2019 Budgeted Amounts Actual Original Final Amounts REVENUES Tax increments 4,111,392$ 4,111,392$ 4,554,621$ Charges for services 192,942 192,942 198,057 Investment earnings (net of market value adjustment)26,147 26,147 153,401 Miscellaneous 250,000 250,000 63,097 Total revenues 4,580,481 4,580,481 4,969,176 EXPENDITURES Current: Economic development: Services and other charges 1,080,398 1,080,398 678,551 Capital outlay: Economic development 370,000 370,000 - Total expenditures 1,450,398 1,450,398 678,551 Excess of revenues over expenditures 3,130,083 3,130,083 4,290,625 OTHER FINANCING SOURCES (USES) Transfers in 281,502 281,502 3,601 Transfers out (2,245,713) (2,245,713) (2,237,287) Total other financing sources (uses)(1,964,211) (1,964,211) (2,233,686) Net change in fund balance 1,165,872 1,165,872 2,056,939 Fund balance - January 1 19,557,596 19,557,596 19,557,596 Fund balance - December 31 20,723,468$ 20,723,468$ 21,614,535$ 122 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, 2019 Budgeted Amounts Actual Original Final Amounts REVENUES Tax increments 343,087$ 343,087$ 101,489$ Investment earnings (net of market value adjustment)64 64 3,245 Total revenues 343,151 343,151 104,734 EXPENDITURES Current: Economic development: Services and other charges 287,502 287,502 42,164 Net change in fund balance 55,649 55,649 62,570 Fund balance (deficit) - January 1 (958,468) (958,468) (958,468) Fund balance (deficit) - December 31 (902,819)$ (902,819)$ (895,898)$ 123 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, 2019 Budgeted Amounts Actual Original Final Amounts REVENUES Tax increments 581,060$ 581,060$ 492,402$ Investment earnings (net of market value adjustment)6,823 6,823 23,067 Total revenues 587,883 587,883 515,469 EXPENDITURES Current: Economic development: Services and other charges 162,248 162,248 38,477 Excess of revenues over expenditures 425,635 425,635 476,992 OTHER FINANCING SOURCES (USES) Transfers out (357,483) (357,483) (350,281) Net change in fund balance 68,152 68,152 126,711 Fund balance (deficit) - January 1 (91,497) (91,497) (91,497) Fund balance (deficit) - December 31 (23,345)$ (23,345)$ 35,214$ 124 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - TAX INCREMENT DISTRICT NO. 6 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2019 Budgeted Amounts Actual Original Final Amounts REVENUES Tax increments 174,016$ 174,016$ 204,242$ Investment earnings (net of market value adjustment)- - 1,232 Total revenues 174,016 174,016 205,474 EXPENDITURES Current: Economic development: Services and other charges 174,016 174,016 200,818 Net change in fund balance - - 4,656 Fund balance - January 1 - - - Fund balance - December 31 -$ -$ 4,656$ 125 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - TAX INCREMENT DISTRICT NO. 7 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2019 Budgeted Amounts Actual Original Final Amounts REVENUES Tax increments -$ -$ 32,180$ Investment earnings (net of market value adjustment)- - 530 Total revenues - - 32,710 EXPENDITURES Current: Economic development: Services and other charges - - 832 Net change in fund balance - - 31,878 Fund balance - January 1 - - - Fund balance - December 31 -$ -$ 31,878$ 126 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - TAX INCREMENT DISTRICT NO. 8 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2019 Budgeted Amounts Actual Original Final Amounts EXPENDITURES Current: Economic development: Services and other charges -$ -$ 12,500$ Net change in fund balance - - (12,500) Fund balance - January 1 - - - Fund balance (deficit) - December 31 -$ -$ (12,500)$ 127 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, 2019 Budgeted Amounts Actual Original Final Amounts REVENUES Intergovernmental 241,820$ 241,820$ 307,595$ Charges for services 14,500 14,500 22,824 Investment earnings (net of market value adjustment)981 981 2,571 Miscellaneous 20,200 20,200 32,578 Total revenues 277,501 277,501 365,568 EXPENDITURES Current: Public safety: Personal services 177,620 177,620 145,807 Supplies 16,600 16,600 32,730 Services and other charges 8,600 8,600 10,860 Parks and recreation: Personal services 5,899 5,899 3,999 Supplies 16,500 16,500 14,645 Services and other charges 15,700 15,700 16,999 Capital outlay: Parks and recreation - - 18,135 Total expenditures 240,919 240,919 243,175 Net change in fund balance 36,582 36,582 122,393 Fund balance - January 1 53,853 53,853 53,853 Fund balance - December 31 90,435$ 90,435$ 176,246$ 128 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, 2019 Budgeted Amounts Actual Original Final Amounts REVENUES Property taxes 1,394,062$ 1,394,062$ 1,383,180$ Special assessments 695,527 695,527 1,547,331 Investment earnings (net of market value adjustment)4,671 4,671 82,327 Total revenues 2,094,260 2,094,260 3,012,838 EXPENDITURES Debt service: Principal 3,677,497 3,677,497 3,677,497 Interest 736,838 736,838 736,838 Fiscal agent fees 13,500 13,500 7,491 Total expenditures 4,427,835 4,427,835 4,421,826 Excess (deficiency) of revenues over (under) expenditures (2,333,575) (2,333,575) (1,408,988) OTHER FINANCING SOURCES (USES) Transfers in 2,603,196 2,603,196 2,587,568 Transfers out - - (3,601) Total other financing sources (uses)2,603,196 2,603,196 2,583,967 Net change in fund balance 269,621 269,621 1,174,979 Fund balance - January 1 2,816,343 2,816,343 2,816,343 Fund balance - December 31 3,085,964$ 3,085,964$ 3,991,322$ 129 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, 2019 Actual Original Final Amounts REVENUES Intergovernmental 13,198,785$ 13,198,785$ 8,863,750$ Special assessments - - 345 Investment earnings (net of market value adjustment)24,302 24,302 27,672 Miscellaneous - - 269,554 Total revenues 13,223,087 13,223,087 9,161,321 EXPENDITURES Capital outlay: General government - - 58,804 Public works 17,648,000 17,648,000 9,839,612 Parks and recreation - - 18,453 Total expenditures 17,648,000 17,648,000 9,916,869 Excess (deficiency) of revenues over (under) expenditures (4,424,913) (4,424,913) (755,548) OTHER FINANCING SOURCES Transfers in 450,000 450,000 325,487 Net change in fund balance (3,974,913) (3,974,913) (430,061) Fund balance - January 1 2,043,360 2,043,360 2,043,360 Fund balance - December 31 (1,931,553)$ (1,931,553)$ 1,613,299$ Budgeted Amounts 130 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, 2019 Actual Original Final Amounts REVENUES Intergovernmental 1,141,870$ 1,141,870$ 1,227,955$ Investment earnings (net of market value adjustment)46,864 46,864 99,907 Total revenues 1,188,734 1,188,734 1,327,862 EXPENDITURES Current: Public works: Supplies 70,000 70,000 69,584 Services and other charges 90,000 90,000 81,816 Capital outlay: Public works 370,000 370,000 171,742 Total expenditures 530,000 530,000 323,142 Net change in fund balance 658,734 658,734 1,004,720 Fund balance - January 1 289,415 289,415 289,415 Fund balance - December 31 948,149$ 948,149$ 1,294,135$ Budgeted Amounts 131 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, 2019 Actual Original Final Amounts REVENUES Charges for services -$ -$ 1,860$ Special assessments 1,619,453 1,619,453 462,009 Investment earnings (net of market value adjustment)- - 32,891 Total revenues 1,619,453 1,619,453 496,760 EXPENDITURES Current: Public works Services and other charges 2,300 2,300 51,659 Capital outlay: Public works 3,088,295 3,088,295 1,377,180 Debt service: Bond issuance costs - - 22,990 Total expenditures 3,090,595 3,090,595 1,451,829 Excess (deficiency) of revenues over (under) expenditures (1,471,142) (1,471,142) (955,069) OTHER FINANCING SOURCES (USES) Issuance of debt 2,810,000 2,810,000 2,135,000 Premium on issuance of debt - - 424,817 Transfers out - - (397,351) Total other financing sources (uses)2,810,000 2,810,000 2,162,466 Net change in fund balance 1,338,858 1,338,858 1,207,397 Fund balance - January 1 1,534,666 1,534,666 1,534,666 Fund balance - December 31 2,873,524$ 2,873,524$ 2,742,063$ Budgeted Amounts 132 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, 2019 Actual Original Final Amounts REVENUES Investment earnings (net of market value adjustment)14,236$ 14,236$ 35,911$ Net change in fund balance 14,236 14,236 35,911 Fund balance - January 1 1,108,844 1,108,844 1,108,844 Fund balance - December 31 1,123,080$ 1,123,080$ 1,144,755$ Budgeted Amounts 133 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, 2019 Actual Original Final Amounts REVENUES Franchise fees 689,000$ 689,000$ 711,255$ Investment earnings (net of market value adjustment)71,495 71,495 202,623 Miscellaneous - - 135 Total revenues 760,495 760,495 914,013 EXPENDITURES Capital outlay: Public works 5,526,305 5,526,305 1,608,135 Debt service: Bond issuance costs 30,000 30,000 11,845 Total expenditures 5,556,305 5,556,305 1,619,980 Excess (deficiency) of revenues over (under) expenditures (4,795,810) (4,795,810) (705,967) OTHER FINANCING SOURCES Transfers in - - 397,351 Issuance of debt 2,800,000 2,800,000 1,220,000 Premium on issuance of debt - - 242,587 Total other financing sources 2,800,000 2,800,000 1,859,938 Net change in fund balance (1,995,810) (1,995,810) 1,153,971 Fund balance - January 1 5,288,518 5,288,518 5,288,518 Fund balance - December 31 3,292,708$ 3,292,708$ 6,442,489$ Budgeted Amounts 134 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, 2019 Actual Original Final Amounts REVENUES Investment earnings (net of market value adjustment)4,736$ 4,736$ 10,023$ EXPENDITURES Current: General government: Supplies 141,500 141,500 175,435 Services and other charges - - 11,371 Capital outlay: General government 50,000 50,000 - Total expenditures 191,500 191,500 186,806 Excess (deficiency) of revenues over (under) expenditures (186,764) (186,764) (176,783) OTHER FINANCING SOURCES Transfers in 140,000 140,000 140,000 Net change in fund balance (46,764) (46,764) (36,783) Fund balance - January 1 425,746 425,746 425,746 Fund balance - December 31 378,982$ 378,982$ 388,963$ Budgeted Amounts 135 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING BALANCE SHEET DEBT SERVICE FUND BY ACCOUNT December 31, 2019 General General General General General Obligation Obligation Obligation Obligation Obligation Improvement Improvement Improvement Improvement Improvement Bonds Bonds Bonds Bonds Bonds 2013B 2015A 2016A 2017A 2018A ASSETS Cash and investments 850,204$ 575,930$ 219,615$ 767,391$ 919,542$ Receivables: Current taxes 2,163 1,377 1,184 1,535 1,347 Special assessments 404,709 561,078 - 734,812 1,245,667 Total assets 1,257,076 1,138,385 220,799 1,503,738 2,166,556 LIABILITIES Accounts payable - - - - - DEFERRED INFLOWS OF RESOURCES Unavailable revenue - special assessments 399,966 559,854 - 734,417 1,245,648 FUND BALANCES (DEFICITS) Restricted for debt service 857,110 578,531 220,799 769,321 920,908 Total liabilities, deferred inflows of resources, and fund balances 1,257,076$ 1,138,385$ 220,799$ 1,503,738$ 2,166,556$ 136 General Tax Obligation Tax Tax Increment Tax Tax Improvement Increment Increment Refunding Increment Increment Total Bonds Bonds Bonds Bonds Bonds Bonds Debt 2019A 2016C 2016B 2015B 2013A 2008A Service 645,153$ -$ -$ -$ -$ -$ 3,977,835$ - - - - - - 7,606 1,736,639 - - - - - 4,682,905 2,381,792 - - - - - 8,668,346 - - - - 500 - 500 1,736,639 - - - - - 4,676,524 645,153 - - - (500) - 3,991,322 2,381,792$ -$ -$ -$ -$ -$ 8,668,346$ 137 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, 2019 General General General General General Obligation Obligation Obligation Obligation Obligation Improvement Improvement Improvement Improvement Improvement Bonds Bonds Bonds Bonds Bonds 2013B 2015A 2016A 2017A 2018A REVENUES Property taxes 393,386$ 250,336$ 215,409$ 279,105$ 244,944$ Special assessments 218,560 176,530 - 165,468 351,357 Investment earnings (net of market value adjustment)17,986 12,122 3,770 17,914 20,798 Total revenues 629,932 438,988 219,179 462,487 617,099 EXPENDITURES Debt service: Principal 530,000 332,497 170,000 350,000 - Interest 68,850 56,272 31,600 101,338 176,583 Fiscal agent fees 1,600 1,068 450 1,155 1,368 Total expenditures 600,450 389,837 202,050 452,493 177,951 Excess (deficiency) of revenues over (under) expenditures 29,482 49,151 17,129 9,994 439,148 OTHER FINANCING SOURCES (USES) Transfers in - - - - - Transfers out - - - - - Total other financing sources (uses)- - - - - Net change in fund balances 29,482 49,151 17,129 9,994 439,148 Fund balances - January 1 827,628 529,380 203,670 759,327 481,760 Fund balances (deficits) - December 31 857,110$ 578,531$ 220,799$ 769,321$ 920,908$ 138 General Tax Obligation Tax Tax Increment Tax Tax Improvement Increment Increment Refunding Increment Increment Total Bonds Bonds Bonds Bonds Bonds Bonds Debt 2019A 2016C 2016B 2015B 2013A 2008A Service -$ -$ -$ -$ -$ -$ 1,383,180$ 635,416 - - - - - 1,547,331 9,737 - - - - - 82,327 645,153 - - - - - 3,012,838 - 280,000 - 1,690,000 325,000 - 3,677,497 - 27,657 46,825 77,250 150,463 - 736,838 - 450 450 450 500 - 7,491 - 308,107 47,275 1,767,700 475,963 - 4,421,826 645,153 (308,107) (47,275) (1,767,700) (475,963) - (1,408,988) - 305,556 44,725 1,764,550 472,737 - 2,587,568 - - - - - (3,601) (3,601) - 305,556 44,725 1,764,550 472,737 (3,601) 2,583,967 645,153 (2,551) (2,550) (3,150) (3,226) (3,601) 1,174,979 - 2,551 2,550 3,150 2,726 3,601 2,816,343 645,153$ -$ -$ -$ (500)$ -$ 3,991,322$ 139 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, 2019 Actual Original Final Amounts REVENUES Property taxes 396,452$ 396,452$ 393,386$ Special assessments 196,247 196,247 218,560 Investment earnings (net of market value adjustment)3,012 3,012 17,986 Total revenues 595,711 595,711 629,932 EXPENDITURES Debt service: Principal 530,000 530,000 530,000 Interest 68,850 68,850 68,850 Fiscal agent fees 1,500 1,500 1,600 Total expenditures 600,350 600,350 600,450 Net change in fund balance (4,639) (4,639) 29,482 Fund balance - January 1 827,628 827,628 827,628 Fund balance - December 31 822,989$ 822,989$ 857,110$ Budgeted Amounts 140 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, 2019 Actual Original Final Amounts REVENUES Property taxes 252,287$ 252,287$ 250,336$ Special assessments 138,348 138,348 176,530 Investment earnings (net of market value adjustment)1,659 1,659 12,122 Total revenues 392,294 392,294 438,988 EXPENDITURES Debt service: Principal 332,497 332,497 332,497 Interest 56,272 56,272 56,272 Fiscal agent fees 1,500 1,500 1,068 Total expenditures 390,269 390,269 389,837 Net change in fund balance 2,025 2,025 49,151 Fund balance - January 1 529,380 529,380 529,380 Fund balance - December 31 531,405$ 531,405$ 578,531$ Budgeted Amounts 141 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, 2019 Actual Original Final Amounts REVENUES Property taxes 217,089$ 217,089$ 215,409$ Investment earnings (net of market value adjustment)- - 3,770 Total revenues 217,089 217,089 219,179 EXPENDITURES Debt service: Principal 170,000 170,000 170,000 Interest 31,600 31,600 31,600 Fiscal agent fees 1,500 1,500 450 Total expenditures 203,100 203,100 202,050 Net change in fund balance 13,989 13,989 17,129 Fund balance - January 1 203,670 203,670 203,670 Fund balance - December 31 217,659$ 217,659$ 220,799$ Budgeted Amounts 142 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, 2019 Actual Original Final Amounts REVENUES Property taxes 281,281$ 281,281$ 279,105$ Special assessments 136,725 136,725 165,468 Investment earnings (net of market value adjustment)- - 17,914 Total revenues 418,006 418,006 462,487 EXPENDITURES Debt service: Principal 350,000 350,000 350,000 Interest 101,337 101,337 101,338 Fiscal agent fees 1,500 1,500 1,155 Total expenditures 452,837 452,837 452,493 Net change in fund balance (34,831) (34,831) 9,994 Fund balance - January 1 759,327 759,327 759,327 Fund balance - December 31 724,496$ 724,496$ 769,321$ Budgeted Amounts 143 CITY OF BROOKLYN CENTER, MINNESOTA DEBT SERVICE FUND - G.O. IMPROVEMENT BONDS, 2018A SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2019 Actual Original Final Amounts REVENUES Property taxes 246,953$ 246,953$ 244,944$ Special assessments 224,207 224,207 351,357 Investment earnings (net of market value adjustment)- - 20,798 Total revenues 471,160 471,160 617,099 EXPENDITURES Debt service: Interest 176,583 176,583 176,583 Fiscal agent fees 1,500 1,500 1,368 Total expenditures 178,083 178,083 177,951 Net change in fund balance 293,077 293,077 439,148 Fund balance - January 1 481,760 481,760 481,760 Fund balance - December 31 774,837$ 774,837$ 920,908$ Budgeted Amounts 144 CITY OF BROOKLYN CENTER, MINNESOTA DEBT SERVICE FUND - G.O. IMPROVEMENT BONDS, 2019A SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2019 Actual Original Final Amounts REVENUES Special assessments -$ -$ 635,416$ Investment earnings (net of market value adjustment)- - 9,737 Total revenues - - 645,153 Net change in fund balance - - 645,153 Fund balance - January 1 - - - Fund balance - December 31 -$ -$ 645,153$ Budgeted Amounts 145 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, 2019 Actual Original Final Amounts EXPENDITURES Debt service: Principal 280,000$ 280,000$ 280,000$ Interest 27,658 27,658 27,657 Fiscal agent fees 1,500 1,500 450 Total expenditures 309,158 309,158 308,107 Excess (deficiency) of revenues over (under) expenditures (309,158) (309,158) (308,107) OTHER FINANCING SOURCES Transfers in 309,158 309,158 305,556 Net change in fund balance - - (2,551) Fund balance - January 1 2,551 2,551 2,551 Fund balance - December 31 2,551$ 2,551$ -$ Budgeted Amounts 146 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, 2019 Actual Original Final Amounts EXPENDITURES Debt service: Interest 46,825$ 46,825$ 46,825$ Fiscal agent fees 1,500 1,500 450 Total expenditures 48,325 48,325 47,275 Excess (deficiency) of revenues over (under) expenditures (48,325) (48,325) (47,275) OTHER FINANCING SOURCES Transfers in 48,325 48,325 44,725 Net change in fund balance - - (2,550) Fund balance - January 1 2,550 2,550 2,550 Fund balance - December 31 2,550$ 2,550$ -$ Budgeted Amounts 147 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, 2019 Actual Original Final Amounts EXPENDITURES Debt service: Principal 1,690,000$ 1,690,000$ 1,690,000$ Interest 77,250 77,250 77,250 Fiscal agent fees 1,500 1,500 450 Total expenditures 1,768,750 1,768,750 1,767,700 Excess (deficiency) of revenues over (under) expenditures (1,768,750) (1,768,750) (1,767,700) OTHER FINANCING SOURCES Transfers in 1,768,750 1,768,750 1,764,550 Net change in fund balance - - (3,150) Fund balance - January 1 3,150 3,150 3,150 Fund balance - December 31 3,150$ 3,150$ -$ Budgeted Amounts 148 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, 2019 Actual Original Final Amounts EXPENDITURES Debt service: Principal 325,000$ 325,000$ 325,000$ Interest 150,463 150,463 150,463 Fiscal agent fees 1,500 1,500 500 Total expenditures 476,963 476,963 475,963 Excess (deficiency) of revenues over (under) expenditures (476,963) (476,963) (475,963) OTHER FINANCING SOURCES Transfers in 476,963 476,963 472,737 Net change in fund balance - - (3,226) Fund balance - January 1 2,726 2,726 2,726 Fund balance (deficit) - December 31 2,726$ 2,726$ (500)$ Budgeted Amounts 149 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, 2019 Actual Original Final Amounts OTHER FINANCING SOURCES (USES) Transfers out -$ -$ (3,601)$ Net change in fund balance - - (3,601) Fund balance - January 1 3,601 3,601 3,601 Fund balance - December 31 3,601$ 3,601$ -$ Budgeted Amounts 150 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. 151 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS December 31, 2019 Central EE Retirement EE Comp Garage Benefit Absences ASSETS Current assets: Cash and cash equivalents 4,772,556$ 135,885$ 1,408,546$ Receivables: Accounts - net 36,717 499 - Due from other governments 17,211 - - Inventories 21,279 - - Prepaid items 550 - - Total current assets 4,848,313 136,384 1,408,546 Noncurrent assets: Capital assets: Land improvements 166,108 - - Machinery and equipment 10,383,028 - - Total capital assets 10,549,136 - - Less: accumulated depreciation (6,835,505) - - Net capital assets 3,713,631 - - Total noncurrent assets 3,713,631 - - Total assets 8,561,944 136,384 1,408,546 DEFERRED OUTFLOWS OF RESOURCES Deferred pension resources - - - Deferred OPEB Resources - 276,856 - Total Deferred outflows of resources - 276,856 - LIABILITIES Current liabilities: Accounts payable 112,918 - - Accrued salaries and wages 10,026 - - Due to other governments 196 - - Compensated absences payable - - 140,855 Total current liabilities 123,140 - 140,855 Noncurrent liabilities: Compensated absences payable - - 1,267,691 Total OPEB liability - 2,038,900 - Net pension liability - - - Total noncurrent liabilities - 2,038,900 1,267,691 Total liabilities 123,140 2,038,900 1,408,546 DEFERRED INFLOWS OF RESOURCES Deferred pension resources - - - Deferred OPEB resources - 93,034 - Total deferred inflows of resources - 93,034 - NET POSITION Net investment in capital assets 3,713,631 - - Unrestricted 4,725,173 (1,718,694) - Total net position 8,438,804$ (1,718,694)$ -$ 152 Total Pension -Pension - Internal GERF PEPFF Service -$ -$ 6,316,987$ - - 37,216 - - 17,211 - - 21,279 - - 550 - - 6,393,243 - - 166,108 - - 10,383,028 - - 10,549,136 - - (6,835,505) - - 3,713,631 - - 3,713,631 - - 10,106,874 570,644 4,798,644 5,369,288 - - 276,856 570,644 4,798,644 5,646,144 - - 112,918 - - 10,026 - - 196 - - 140,855 - - 263,995 - - 1,267,691 - - 2,038,900 6,573,715 4,772,607 11,346,322 6,573,715 4,772,607 14,652,913 6,573,715 4,772,607 14,916,908 1,242,612 7,087,388 8,330,000 - - 93,034 1,242,612 7,087,388 8,423,034 - - 3,713,631 (7,245,683) (7,061,351) (11,300,555) (7,245,683)$ (7,061,351)$ (7,586,924)$ 153 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS For the Year Ended December 31, 2019 Central EE Retirement EE Comp Garage Benefit Absences OPERATING REVENUES Sales and user fees 1,784,831$ 34,651$ 142,736$ OPERATING EXPENSES Personal services 424,895 221,881 185,292 Supplies 462,978 - - Other services 174,804 - - Insurance 58,163 - - Utilities 675 - - Depreciation 828,781 - - Total operating expenses 1,950,296 221,881 185,292 Operating income (loss)(165,465) (187,230) (42,556) NONOPERATING REVENUES Intergovernmental - - - Investment earnings (net of market value adjustment)149,547 5,283 42,556 Gain on sale of capital assets 49,669 - - Other revenue 25,895 - - Total nonoperating revenues 225,111 5,283 42,556 Change in net position 59,646 (181,947) - Net position - January 1 8,379,158 (1,536,747) - Net position - December 31 8,438,804$ (1,718,694)$ -$ 154 Total Pension -Pension - Internal GERF PEPFF Service 651,633$ 818,676$ 3,432,527$ 760,097 698,582 2,290,747 - - 462,978 - - 174,804 - - 58,163 - - 675 - - 828,781 760,097 698,582 3,816,148 (108,464) 120,094 (383,621) 15,302 60,521 75,823 - - 197,386 - - 49,669 - - 25,895 15,302 60,521 348,773 (93,162) 180,615 (34,848) (7,152,521) (7,241,966) (7,552,076) (7,245,683)$ (7,061,351)$ (7,586,924)$ 155 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the Year Ended December 31, 2019 Central EE Retirement EE Comp Garage Benefit Absences CASH FLOWS FROM OPERATING ACTIVITIES Receipts from interfund services provided 1,773,961$ 34,651$ 142,736$ Other operating receipts 25,895 - - Payments for interfund services received (19,903) - - Payments to suppliers (700,551) - - Payments to employees (399,297) (141,915) (100,215) Net cash flows provided (used) by operating activities 680,105 (107,264) 42,521 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (787,810) - - Proceeds from sale of assets 52,599 - - Net cash flows provided (used) by capital and related financing activities (735,211) - - CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments 149,547 5,283 42,556 Net increase (decrease) in cash and cash equivalents 94,441 (101,981) 85,077 Cash and cash equivalents - January 1 4,678,115 237,866 1,323,469 Cash and cash equivalents - December 31 4,772,556$ 135,885$ 1,408,546$ RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES Operating income (loss) (165,465)$ (187,230)$ (42,556)$ Adjustments to reconcile operating income (loss) to net cash flows provided (used) by operating activities: Other income related to operations 25,895 - - Depreciation 828,781 - - (Increase) decrease in assets: Accounts receivable (10,870) - - Inventories 57 - - Prepaid items (550) - - (Increase) decrease in deferred outflows of resources: Deferred pension resources - (34,159) - Increase (decrease) in liabilities: Accounts payable (930) - - Net pension liability - - - Accrued salaries and wages 3,187 21,091 85,077 (Increase) decrease in deferred inflows of resources: Deferred pension resources - 93,034 - Net cash provided (used) by operating activities 680,105$ (107,264)$ 42,521$ NONCASH FINANCING ACTIVITIES Acquisitions of capital assets on account 47,037$ -$ -$ Grants deposited with pension plan -$ -$ -$ 156 Total Pension -Pension - Internal GERF PEPFF Service 651,633$ 818,676$ 3,421,657$ - - 25,895 - - (19,903) - - (700,551) (651,633) (818,676) (2,111,736) - - 615,362 - - (787,810) - - 52,599 - - (735,211) - - 197,386 - - 77,537 - - 6,239,450 -$ -$ 6,316,987$ (108,464)$ 120,094$ (383,621)$ 15,302 60,521 101,718 - - 828,781 - - (10,870) - - 57 - - (550) 652,473 1,807,927 2,426,241 - - (930) (50,107) 157,273 107,166 - - 109,355 (509,204) (2,145,815) (2,561,985) -$ -$ 615,362$ -$ -$ 47,037$ 2,784$ 39,690$ 42,474$ 157 This page has been left blank intentionally. 158 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 160 These tables contain trend information to help the reader understand the City’s financial performance by placing it in historical perspective. Revenue Capacity 174 These tables contain information to help the reader assess the City’s most significant “own-source” revenue, property taxes. Debt Capacity 180 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 187 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 189 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. 159 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) NET POSITION BY COMPONENT Last ten fiscal years (accrual basis of accounting) 2010 2011 2012 2013 Governmental activities Net investment in capital assets 40,978,165$ 45,761,042$ 45,261,629$ 42,281,203$ Restricted 22,067,726 24,847,507 24,259,292 27,219,086 Unrestricted 6,985,972 4,376,334 5,875,289 11,205,289 Total governmental activities net position 70,031,863$ 74,984,883$ 75,396,210$ 80,705,578$ Business-type activities Net investment in capital assets 42,800,624$ 45,051,128$ 42,406,210$ 42,466,488$ Unrestricted 8,673,168 8,300,659 11,856,924 12,208,126 Total business-type activities net position 51,473,792$ 53,351,787$ 54,263,134$ 54,674,614$ Primary government Net investment in capital assets 83,778,789$ 90,812,170$ 87,667,839$ 84,747,691$ Restricted 22,067,726 24,847,507 24,259,292 27,219,086 Unrestricted 15,659,140 12,676,993 17,732,213 23,413,415 Total primary government net position 121,505,655$ 128,336,670$ 129,659,344$ 135,380,192$ 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. The City implemented GASB Statement No. 75 in fiscal 2018. Years prior to 2018 have not been restated. 160 Table 1 2014 2015 2016 2017 2018 2019 42,947,577$ 47,941,800$ 48,358,875$ 53,152,985$ 52,794,327$ 52,560,591$ 28,061,977 36,810,593 29,554,944 27,309,336 30,501,419 35,743,847 12,357,196 (5,495,836) 789,884 1,400,658 3,010,220 5,152,891 83,366,750$ 79,256,557$ 78,703,703$ 81,862,979$ 86,305,966$ 93,457,329$ 48,537,132$ 47,201,239$ 43,483,294$ 43,553,672$ 42,831,977$ 43,450,307$ 6,819,765 8,452,630 13,606,322 14,613,409 15,827,178 16,005,070 55,356,897$ 55,653,869$ 57,089,616$ 58,167,081$ 58,659,155$ 59,455,377$ 91,484,709$ 95,143,039$ 91,842,169$ 96,706,657$ 95,626,304$ 96,010,898$ 28,061,977 36,810,593 29,554,944 27,309,336 30,501,419 35,743,847 19,176,961 2,956,794 14,396,206 16,014,067 18,837,398 21,157,961 138,723,647$ 134,910,426$ 135,793,319$ 140,030,060$ 144,965,121$ 152,912,706$ 161 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) 2010 2011 2012 2013 GOVERNMENTAL ACTIVITIES Expenses General government 3,553,737$ 3,216,321$ 3,246,015$ 3,165,400$ Public safety 9,125,547 9,268,897 9,604,521 9,618,906 Public works 2,747,641 2,771,602 3,561,914 4,215,855 Community services 82,645 100,849 141,505 149,203 Parks and recreation 2,732,401 2,895,769 2,796,561 2,752,539 Economic development 6,504,034 2,542,520 5,438,372 3,833,915 Interest on long-term debt 974,950 865,799 768,241 490,162 Total expenses 25,720,955 21,661,757 25,557,129 24,225,980 Program Revenues Charges for services: General government 1,081,998 1,078,109 1,082,741 798,088 Public safety 1,501,513 1,547,446 1,402,204 786,828 Public works 43,194 16,191 270,680 5,879 Parks and recreation 725,891 721,663 897,592 650,522 Economic development 5,525 88,737 19,734 90,656 Operating grants and contributions 2,013,099 1,637,743 3,165,588 3,089,220 Capital grants and contributions 6,627,777 5,299,705 491,404 4,427,586 Total program revenues 11,998,997 10,389,594 7,329,943 9,848,779 Net (expense) / revenue (13,721,958) (11,272,163) (18,227,186) (14,377,201) General Revenues and Transfers Taxes: Property 12,949,069 13,336,056 14,307,993 14,943,008 Tax increments 3,127,373 2,525,057 2,751,249 3,098,620 Lodging taxes 696,746 852,302 882,620 881,252 Unrestricted grants and contributions 411,378 549,649 496,679 590,916 Investment earnings (net)33,885 191,510 85,560 (81,438) Gain on disposal of capital asset - 111,530 113,976 54,211 Transfers (126,275) (749,308) 436 200,000 Transfers - capital assets - - - - Total general revenues and transfers 17,092,176 16,816,796 18,638,513 19,686,569 Change in Net Position 3,370,218$ 5,544,633$ 411,327$ 5,309,368$ 162 Table 2 Page 1 of 3 2014 2015 2016 2017 2018 2019 3,736,487$ 3,527,323$ 3,891,671$ 4,007,850$ 4,426,549$ 4,423,425$ 10,186,645 10,707,602 13,222,625 12,438,818 11,757,362 12,706,644 3,688,238 3,867,406 4,099,559 4,542,244 6,501,746 12,787,805 145,503 135,604 136,349 143,103 164,544 181,159 2,977,707 3,053,328 3,183,198 2,995,396 3,234,386 3,827,299 3,234,623 5,419,304 6,825,271 1,917,039 2,543,381 2,146,011 887,190 723,000 654,205 540,799 693,575 666,343 24,856,393 27,433,567 32,012,878 26,585,249 29,321,543 36,738,686 651,188 653,535 563,744 530,459 483,572 476,377 722,697 548,669 656,642 683,172 1,047,683 1,030,980 157,889 226,645 79,987 46,359 464,254 259,675 598,173 564,217 635,597 608,590 593,692 754,408 477,088 225,057 417,332 296,103 212,847 260,155 1,746,637 2,605,477 2,323,913 1,716,671 3,872,109 9,562,139 1,671,830 5,184,381 4,061,903 1,407,482 3,435,074 3,148,710 6,025,502 10,007,981 8,739,118 5,288,836 10,109,231 15,492,444 (18,830,891) (17,425,586) (23,273,760) (21,296,413) (19,212,312) (21,246,242) 14,988,007 15,320,998 15,757,198 16,736,759 17,650,461 19,073,449 3,790,363 3,805,367 3,667,590 4,652,373 5,147,964 5,354,749 914,651 1,075,425 1,159,519 1,206,565 1,167,961 1,091,105 1,499,015 1,670,928 1,939,431 1,701,232 2,065,832 2,239,180 236,936 254,366 230,705 265,604 442,835 1,271,500 27,100 27,800 57,765 88,326 80,786 58,869 675,257 236,312 93,935 67,898 (782,750) 325,487 (639,266) (1,034,574) (185,237) (263,068) 478,610 (1,016,734) 21,492,063 21,356,622 22,720,906 24,455,689 26,251,699 28,397,605 2,661,172$ 3,931,036$ (552,854)$ 3,159,276$ 7,039,387$ 7,151,363$ 163 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) CHANGES IN NET POSITION - CONTINUED Last ten fiscal years (accrual basis of accounting) 2010 2011 2012 2013 BUSINESS-TYPE ACTIVITIES Expenses Municipal liquor 1,262,076$ 1,218,399$ 1,274,375$ 5,674,937$ Golf course 317,539 284,673 273,023 263,425 Earle Brown Heritage Center 2,345,920 2,602,074 2,768,719 4,835,131 Water utility 1,792,628 1,825,558 1,855,345 2,025,496 Sanitary sewer utility 3,282,472 3,277,874 3,317,427 3,382,810 Storm drainage utility 1,348,974 1,407,712 1,501,652 1,552,327 Recycling utility 278,381 284,440 285,853 289,043 Street light utility 213,752 232,716 222,835 257,079 Total expenses 10,841,742 11,133,446 11,499,229 18,280,248 Program Revenues Charges for services: Municipal liquor 1,538,403 1,620,315 1,656,125 6,072,334 Earle Brown Heritage Center 1,879,902 2,026,063 2,293,386 4,294,723 Water utility 1,959,684 1,990,664 2,321,539 2,318,176 Sanitary sewer utility 3,321,373 3,474,588 3,592,530 3,675,936 Storm drainage utility 1,575,679 1,621,104 1,660,849 1,622,012 Other activities 760,757 778,584 853,585 882,995 Operating grants and contributions - - - 52,775 Capital grants and contributions - 80,186 - - Total program revenues 11,035,798 11,591,504 12,378,014 18,918,951 Net (expense) / revenue 194,056 458,058 878,785 638,703 General Revenues and Transfers Investment earnings (net)20,707 79,016 32,998 (27,223) Transfers 126,275 749,308 (436) (200,000) Transfers - capital assets - - - - Total general revenues and transfers 146,982 828,324 32,562 (227,223) Change in Net Position 341,038$ 1,286,382$ 911,347$ 411,480$ 164 Table 2 Page 2 of 3 2014 2015 2016 2017 2018 2019 5,690,792$ 5,816,363$ 6,123,608$ 6,241,998$ 6,478,599$ 6,775,430$ 271,698 270,307 309,910 335,029 333,768 - 5,137,712 4,739,543 4,507,406 4,825,489 4,874,026 5,242,416 1,900,518 2,179,892 2,903,198 3,294,345 3,670,089 4,148,609 3,514,687 3,694,880 3,864,514 4,068,468 4,213,511 4,546,350 1,784,907 1,883,154 1,700,515 1,848,887 1,959,195 2,407,046 291,239 292,282 291,980 366,608 385,811 410,610 245,426 281,661 272,072 267,069 274,252 333,744 18,836,979 19,158,082 19,973,203 21,247,893 22,189,251 23,864,205 5,861,066 6,061,680 6,206,584 6,503,094 6,745,617 6,860,482 4,578,433 4,649,162 4,731,876 4,917,167 4,858,384 5,068,900 2,235,332 2,640,665 3,216,506 3,585,597 3,888,716 3,819,747 3,942,534 4,095,017 4,210,081 4,288,655 4,406,741 4,555,940 1,638,575 1,635,655 1,620,452 1,598,624 1,681,733 1,680,454 1,127,116 988,038 1,088,695 1,071,232 1,119,322 871,838 63,547 30,522 16,481 - - - - - 106,488 - - 455,363 19,446,603 20,100,739 21,197,163 21,964,369 22,700,513 23,312,724 609,624 942,657 1,223,960 716,476 511,262 (551,481) 108,650 127,686 120,485 165,819 258,591 656,456 (675,257) (236,312) (93,935) (67,898) 782,750 (325,487) 639,266 1,034,574 185,237 263,068 (478,610) 1,016,734 72,659 925,948 211,787 360,989 562,731 1,347,703 682,283$ 1,868,605$ 1,435,747$ 1,077,465$ 1,073,993$ 796,222$ 165 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) CHANGES IN NET POSITION - CONTINUED Last ten fiscal years (accrual basis of accounting) 2010 2011 2012 2013 TOTAL PRIMARY GOVERNMENT Expenses Governmental activities 25,720,955$ 21,661,757$ 25,557,129$ 24,225,980$ Business-type activities 10,841,742 11,133,446 11,499,229 18,280,248 Total expenses 36,562,697 32,795,203 37,056,358 42,506,228 Program Revenues Governmental activities 11,998,997 10,389,594 7,329,943 9,848,779 Business-type activities 11,035,798 11,591,504 12,378,014 18,918,951 Total program revenues 23,034,795 21,981,098 19,707,957 28,767,730 Net (expense) / revenue (13,527,902) (10,814,105) (17,348,401) (13,738,498) General Revenues and Transfers Governmental activities 17,092,176 16,816,796 18,638,513 19,686,569 Business-type activities 146,982 828,324 32,562 (227,223) Total general revenues and transfers 17,239,158 17,645,120 18,671,075 19,459,346 Change in Net Position 3,711,256$ 6,831,015$ 1,322,674$ 5,720,848$ 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 The City implemented GASB Statement No. 75 in fiscal 2018. Years prior to 2018 have not been restated. 166 Table 2 Page 3 of 3 2014 2015 2016 2017 2018 2019 24,856,393$ 27,433,567$ 32,012,878$ 26,585,249$ 29,321,543$ 36,738,686$ 18,836,979 19,158,082 19,973,203 21,247,893 22,189,251 23,864,205 43,693,372 46,591,649 51,986,081 47,833,142 51,510,794 60,602,891 6,025,502 10,007,981 8,739,118 5,288,836 10,109,231 15,492,444 19,446,603 20,100,739 21,197,163 21,964,369 22,700,513 23,312,724 25,472,105 30,108,720 29,936,281 27,253,205 32,809,744 38,805,168 (18,221,267) (16,482,929) (22,049,800) (20,579,937) (18,701,050) (21,797,723) 21,492,063 21,356,622 22,720,906 24,455,689 26,251,699 28,397,605 72,659 925,948 211,787 360,989 562,731 1,347,703 21,564,722 22,282,570 22,932,693 24,816,678 26,814,430 29,745,308 3,343,455$ 5,799,641$ 882,893$ 4,236,741$ 8,113,380$ 7,947,585$ 167 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 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 2018 17,650,461 5,147,964 1,167,961 23,966,386 2019 19,073,449 5,354,749 1,091,105 25,519,303 Sources: The data for this table has been extracted from the respective years CAFR document. 168 This page has been left blank intentionally. 169 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) FUND BALANCES - GOVERNMENTAL FUNDS Last ten fiscal years (modified accrual basis of accounting) 2010 2011 2012 2013 General Fund Reserved 26,405$ -$ -$ -$ Unreserved 8,803,942 - - - Nonspendable - 32,308 88,952 26,139 Assigned - 2,614 - 2,754,124 Unassigned - 9,695,913 10,597,944 9,602,450 Total general fund 8,830,347$ 9,730,835$ 10,686,896$ 12,382,713$ All other governmental funds Reserved 7,388,488$ -$ -$ -$ Unreserved, reported in: Special revenue funds 7,095,645 - - - Capital project funds 2,203,823 - - - Nonspendable - - - - Restricted - 13,331,705 12,912,357 26,350,322 Committed - 3,021,318 3,651,995 7,579,688 Assigned - - - - Unassigned - (2,515,053) (3,425,001) (1,432,495) Total all other governmental funds 16,687,956$ 13,837,970$ 13,139,351$ 32,497,515$ 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. Note: The 2015 fund balances have been restated to align the City's reporting using GASB No. 68. 170 Table 4 2014 2015 2016 2017 2018 2019 -$ -$ -$ -$ -$ -$ - - - - - - 21,967 78,859 92,388 105,634 82,309 86,479 908,761 804,815 715,544 149,630 6,500 64,874 10,089,353 10,287,243 10,632,965 11,099,939 11,475,016 12,372,864 11,020,081$ 11,170,917$ 11,440,897$ 11,355,203$ 11,563,825$ 12,524,217$ -$ -$ -$ -$ -$ -$ - - - - - - - - - - - - - 1,500 1,500 7,976 8,163 1,630 26,434,113 30,365,411 23,355,609 23,888,356 26,097,132 32,219,640 10,514,871 9,306,224 10,852,995 9,678,002 9,007,923 9,570,360 - - - 567,537 1,534,666 1,127,793 (1,763,877) (2,425,064) (1,783,271) (1,671,355) (1,372,348) (1,131,128) 35,185,107$ 37,248,071$ 32,426,833$ 32,470,516$ 35,275,536$ 41,788,295$ 171 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS Last ten fiscal years (modified accrual basis of accounting) 2010 2011 2012 2013 2014 Revenues Property taxes 13,012,317$ 13,396,611$ 14,389,842$ 15,094,464$ 15,036,602$ Tax increments 3,111,882 2,527,316 2,685,822 3,149,533 3,795,708 Franchise fees 647,796 659,066 647,346 651,832 647,071 Lodging taxes 696,746 852,302 882,620 881,252 914,651 Special assessments 1,491,194 1,975,470 1,294,521 1,877,116 1,794,126 Licenses and permits 1,063,945 961,947 858,593 1,084,003 1,021,410 Intergovernmental 6,859,817 4,929,902 3,607,218 3,159,571 2,706,299 Charges for services 1,001,019 1,122,350 1,056,241 1,073,917 1,229,513 Fines and forfeits 359,937 340,356 336,740 315,982 364,927 Investment earnings (net)24,212 143,661 48,322 (71,059) 188,913 Miscellaneous 285,425 296,427 742,269 423,822 344,690 Total revenues 28,554,290 27,205,408 26,549,534 27,640,433 28,043,910 Expenditures General government 3,280,340 2,930,516 2,978,738 3,045,365 3,173,282 Public safety 8,524,140 8,674,195 9,090,324 9,117,541 9,622,239 Public works 1,662,343 2,030,930 1,982,540 1,982,311 2,107,959 Community services 82,645 100,849 141,505 149,203 145,503 Parks and recreation 2,442,938 2,412,952 2,532,827 2,481,763 2,457,622 Economic development 3,105,007 2,337,253 5,215,619 3,076,454 2,855,983 Nondepartmental 300,549 316,376 287,692 400,835 364,501 Capital outlay 8,549,489 5,558,718 699,563 4,319,756 3,950,187 Debt service Principal 4,676,066 2,965,613 2,666,790 2,655,000 1,905,000 Interest 1,026,800 895,053 797,785 698,702 802,892 Other charges 14,104 14,581 7,677 179,044 9,039 Total expenditures 33,664,421 28,237,036 26,401,060 28,105,974 27,394,207 Excess (deficiency) of revenues over (under) expenditures (5,110,131) (1,031,628) 148,474 (465,541) 649,703 Other financing sources (uses) Transfers in 4,888,536 3,083,093 2,320,883 4,860,459 10,463,495 Issuance of debt - - - 10,960,000 - Premium on issuance of debt - - - 367,405 - Sale of capital assets - - 108,532 - - Refunded bonds redeemed - - - - - Transfers out (4,495,948) (3,409,350) (2,320,447) (4,660,459) (9,788,238) Total other financing sources (uses)392,588 (326,257) 108,968 11,527,405 675,257 Restatements for: prior period adjustments or change in accounting principle - - - 9,992,117 - Net change in fund balances (4,717,543)$ (1,357,885)$ 257,442$ 21,053,981$ 1,324,960$ Debt service as a percentage of noncapital expenditures 22.71%17.02%13.48%14.10%11.55% 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. 172 Table 5 2015 2016 2017 2018 2019 15,115,171$ 15,906,488$ 16,728,993$ 17,677,601$ 19,026,811$ 3,669,198 3,667,013 4,824,659 5,116,958 5,384,934 653,648 664,501 702,600 705,608 711,255 1,075,425 1,159,519 1,206,565 1,167,961 1,091,105 1,715,159 1,788,247 1,766,736 1,790,485 2,052,187 859,534 932,051 904,785 1,209,029 1,172,439 4,748,476 3,745,850 3,882,902 6,349,918 12,241,725 967,707 882,473 933,608 1,060,712 1,233,678 291,682 240,197 295,184 300,324 275,183 203,172 175,675 208,441 356,841 1,074,114 429,575 884,187 419,034 698,993 734,347 29,728,747 30,046,201 31,873,507 36,434,430 44,997,778 2,938,436 3,011,710 3,231,248 3,693,876 3,732,084 10,004,475 10,309,827 10,964,032 11,406,837 12,004,521 2,031,813 2,109,867 2,168,156 2,343,902 2,491,449 135,604 136,349 143,103 164,544 181,159 2,790,624 2,678,944 2,738,418 2,793,889 3,182,921 5,269,625 5,307,692 1,764,198 2,098,968 1,960,093 450,129 527,819 505,586 462,056 520,518 10,475,770 5,987,524 10,210,993 9,811,817 13,352,312 3,025,000 2,720,000 3,502,497 3,275,978 3,677,497 826,053 829,812 625,032 674,020 736,838 127,218 127,194 51,655 79,167 42,326 38,074,747 33,746,738 35,904,918 36,805,054 41,881,718 (8,346,000) (3,700,537) (4,031,411) (370,624) 3,116,060 4,541,584 4,318,650 3,978,278 3,826,488 4,051,616 10,016,248 5,620,000 3,735,000 3,835,000 3,355,000 309,809 112,879 186,502 332,016 667,404 4,820 - - - 9,200 - (6,670,000) - - - (4,312,661) (4,232,250) (3,910,380) (4,609,238) (3,726,129) 10,559,800 (850,721) 3,989,400 3,384,266 4,357,091 - - - - - 2,213,800$ (4,551,258)$ (42,011)$ 3,013,642$ 7,473,151$ 13.95%12.79%15.98%13.44%12.09% 173 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) ASSESSED TAX CAPACITY AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY Last ten fiscal years 2010 2011 2012 2013 Estimated actual value: Real estate 1,882,823,900$ 1,682,317,900$ 1,633,327,900$ 1,506,661,400$ Personal property 14,219,700 15,487,000 16,139,200 18,257,700 Total estimated actual value 1,897,043,600$ 1,697,804,900$ 1,649,467,100$ 1,524,919,100$ Tax Capacity Real estate 23,099,333$ 20,759,133$ 18,351,627$ 17,129,016$ Personal property 278,984 304,150 316,491 358,867 Contribution to fiscal disparities (2,998,145) (2,774,593) (2,619,012) (2,335,813) Receipt from fiscal disparities 7,002,213 7,123,008 7,194,133 6,844,540 Tax increments (2,420,044) (2,093,764) (1,922,253) (2,169,035) Net tax capacity for direct rate 24,962,341$ 23,317,934$ 21,320,986$ 19,827,575$ Net Tax Capacity as a Percentage of Estimated Actual Market Value 1.32%1.37%1.29%1.30% Property Tax Levies General revenues 12,504,044$ 12,905,340$ 13,207,954$ 13,632,326$ Debt service 715,183 695,632 708,581 711,725 Housing and Redevelopment Auth.349,745 310,831 302,288 246,160 Total property taxes levied 13,568,972$ 13,911,803$ 14,218,823$ 14,590,211$ Tax Rates General revenues 48.230 54.234 61.036 67.485 Debt service 2.865 2.983 3.323 3.590 Housing and Redevelopment Auth.1.317 1.341 1.457 1.128 Total Direct Tax Rate 52.412 58.558 65.816 72.202 Sources: The data for this table has been provided by Hennepin County. 174 Table 6 2014 2015 2016 2017 2018 2019 1,497,679,200$ 1,648,833,600$ 1,758,565,800$ 1,848,110,900$ 2,032,296,900$ 2,213,280,300$ 18,319,800 18,829,900 20,237,100 22,039,201 22,289,300 20,965,000 1,515,999,000$ 1,667,663,500$ 1,778,802,900$ 1,870,150,101$ 2,054,586,200$ 2,234,245,300$ 17,358,722$ 18,953,288$ 20,185,645$ 21,298,314$ 23,515,623$ 25,525,066$ 360,506 370,476 398,267 435,044 440,046 412,752 (2,495,133) (2,690,138) (2,635,082) (2,833,028) (2,766,592) (3,196,246) 7,117,154 6,833,738 6,505,797 7,233,190 7,524,375 7,670,475 (2,675,416) (2,764,303) (2,884,208) (3,292,251) (3,592,531) (3,873,826) 19,665,833$ 20,703,061$ 21,570,419$ 22,841,269$ 25,120,921$ 26,538,221$ 1.30%1.24%1.21%1.22%1.22%1.19% 13,673,970$ 14,381,534$ 14,728,750$ 15,344,946$ 15,963,823$ 17,034,997$ 687,000 396,496 639,485 849,968 1,142,127 1,392,119 282,110 280,460 308,518 329,079 345,978 380,098 14,643,080$ 15,058,490$ 15,676,753$ 16,523,993$ 17,451,928$ 18,807,214$ 70.587 68.266 68.788 66.798 62.589 64.650 3.547 1.760 2.987 3.700 4.478 5.284 1.609 1.230 1.517 1.406 1.365 1.450 75.742 71.256 73.292 71.904 68.432 71.384 175 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 Metro Other Rate Rate Rate County District 11 District 279 District 281 District 286 Districts (1)Districts (2) 2010 49.547 2.865 52.412 42.640 19.939 22.381 28.621 51.173 2.620 5.518 2011 55.575 2.983 58.558 45.840 23.999 24.217 34.387 47.697 2.949 6.223 2012 62.493 3.323 65.816 48.231 23.325 24.930 32.810 48.020 3.084 6.439 2013 68.613 3.590 72.202 49.461 26.801 27.973 32.347 56.031 3.242 6.847 2014 72.195 3.547 75.742 49.858 28.471 30.128 35.081 54.563 3.335 7.226 2015 69.495 1.760 71.256 46.398 22.695 27.450 33.511 53.097 3.006 6.779 2016 70.305 2.987 73.292 45.356 21.105 26.545 34.115 54.720 2.899 6.631 2017 68.204 3.700 71.904 44.087 18.805 27.005 31.861 40.559 2.821 6.498 2018 63.954 4.478 68.432 42.808 18.651 25.187 32.191 46.271 2.683 6.290 2019 66.576 5.284 71.860 41.661 16.545 24.729 29.450 49.744 2.529 5.981 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 levies are applicable to all of School Districts 279 & 281, and portions of School Districts 11 & 286. City Direct Rate 176 Table 7 Total Direct and Overlapping Rates Watershed Watershed ISD 11 &ISD 11 &ISD 286 &ISD 286 & Districts A(3)Districts B(3)ISD 11 Watershed A (3)Watershed B (3)ISD 279 ISD 281 ISD 286 Watershed A (3)Watershed B (3) 0.081 0.081 123.129 123.210 123.210 125.652 131.892 154.363 154.444 154.444 0.568 0.568 137.569 138.137 138.137 138.355 148.525 161.267 161.835 161.835 0.001 0.001 146.895 146.896 146.896 148.501 156.381 171.590 171.591 171.591 0.101 0.101 158.553 158.654 158.654 159.826 164.200 187.783 187.884 187.884 0.101 0.322 164.632 164.733 164.954 166.391 171.343 190.724 190.825 191.046 0.256 0.107 150.133 150.389 150.240 155.145 161.205 180.536 180.792 180.643 0.247 0.072 149.283 149.530 149.355 154.970 162.540 182.898 183.145 182.970 0.267 0.223 144.115 144.382 144.338 152.582 157.438 165.869 166.136 166.092 0.079 0.119 138.863 138.942 138.982 145.479 152.483 166.484 166.563 166.603 0.332 0.134 138.576 138.908 138.710 147.092 151.813 171.775 172.107 171.909 177 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) PRINCIPAL PROPERTY TAXPAYERS Table 8 Current Year and Nine Years Ago 2019 2010 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 806,610$ 1 3.04%487,338$ 1 1.95% The Molasky Group Commercial 471,050 2 1.77% TLN Lanel, LTD Apartment 259,088 3 0.98% Brookdale Corner, LLC Commercial 253,010 4 0.95%216,250 8 0.87% Lake Point, LLC Apartment 252,150 5 0.95% GB Homes, LLC Commercial 251,863 6 0.95% Brooklyn Hotel Partners Commercial 244,250 7 0.92% Medtronic, Inc.Industrial 227,630 8 0.86%216,250 8 0.87% Melrose Gates LLC Apartment 217,888 9 0.82% Wal-Mart Stores Inc.Commercial 199,250 10 0.75% Twin Lakes LLC Apartment 438,672 2 1.76% Brooks Mall Properties LLC Commercial 414,290 3 1.66% Lang-Nelson Commercial 295,376 4 1.18% BCC Associates, LLC Commercial 267,250 5 1.07% Regal Cinemas, Inc.Commercial 245,758 6 0.98% CSM Freeway Airport, LLC Commercial 236,230 7 0.95% Target Commercial 165,450 10 0.66% Totals 3,182,789$ 11.99%2,982,864$ 11.95% Sources: The data for this table has been provided by Hennepin County. 178 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 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 14,218,057 100.0% 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%242,833 15,058,490 100.0% 2016 15,676,753 15,563,707 99.3%72,693 15,636,400 99.7% 2017 16,523,993 16,411,246 99.3%107,141 16,518,387 100.0% 2018 17,451,928 17,356,168 99.5%73,029 17,429,197 99.9% 2019 18,807,214 18,673,395 99.3%- 18,673,395 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. 179 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.Bond Utility Lease Utility G.O.Bond Percentage Obligation Increment Improvement Premiums Revenue Revenue Revenue Improvement Premiums Total of Personal Per Bonds Bonds Bonds (Discounts)Notes (PFA)Bonds Bonds Bonds (Discounts)Debt Income Capita 2010 2,025,000$ 15,010,000$ 4,005,000$ (94,598)$ -$ -$ 2,350,000$ -$ (23,500)$ 23,271,902$ 1.41%773$ 2011 1,385,000 13,720,000 3,260,000 (80,604) - - 2,210,000 - (21,933) 20,472,463 1.18%678 2012 700,000 12,795,000 2,590,000 (68,643) - - 2,075,000 - (20,367) 18,070,990 1.00%591 2013 - 17,470,000 6,920,000 198,657 - - 1,940,000 - (18,800) 26,509,857 1.44%871 2014 - 16,040,000 6,445,000 106,966 - - 1,800,000 - (29,767) 24,362,199 1.28%815 2015 - 20,885,000 8,591,248 418,858 17,545,158 - 1,660,000 1,823,752 47,000 50,971,016 2.53%1,651 2016 - 16,180,000 9,526,248 546,888 18,663,445 - 5,125,000 1,823,752 191,851 52,057,184 2.47%1,667 2017 - 14,220,000 11,718,751 660,254 17,709,445 - 9,585,000 1,646,249 417,622 55,957,321 2.60%1,797 2018 - 11,945,000 14,552,773 903,685 16,746,445 - 13,465,000 1,472,227 747,050 59,832,180 2.60%1,852 2019 - 9,650,000 16,525,276 1,463,854 15,773,445 2,520,000 17,350,000 1,294,724 1,883,170 66,460,469 2.75%2,058 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 180 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) RATIOS OF GENERAL BONDED DEBT OUTSTANDING Table 11 Last ten fiscal years Percentage of General Plus: Net Premium Less: Amounts Net General Estimated Obligation (Discount) on General Restricted to Obligation Market Value Per Bonds Obligation Bonds Debt Service Debt of Property Capita 2010 21,040,000$ (94,598)$ 1,201,263$ 19,744,139$ 1.04%656$ 2011 18,365,000 (80,604) 1,203,611 17,080,785 1.01%566 2012 16,085,000 (68,643) 1,186,758 14,829,599 0.90%485 2013 24,390,000 198,657 1,190,972 23,397,685 1.53%769 2014 22,485,000 106,966 1,909,441 20,682,525 1.36%692 2015 29,476,248 418,858 8,747,914 21,147,192 1.27%685 2016 25,706,248 546,888 1,876,481 24,376,655 1.37%781 2017 25,938,751 660,254 1,909,441 24,689,564 1.32%793 2018 26,497,773 903,685 2,816,343 24,585,115 1.20%761 2019 26,175,276 1,463,854 3,991,322 23,647,808 1.06%732 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. 181 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) COMPUTATION OF DIRECT AND OVERLAPPING Table 12 GOVERNMENTAL ACTIVITIES DEBT December 31, 2019 Estimated Estimated Share Debt Percentage of Overlapping Governmental Unit Outstanding Applicable Debt Overlapping debt: School Districts: No. 11 Anoka 176,075,000$ 6.70%11,797,025$ No. 279 Osseo 142,725,922 3.52%5,023,952 No. 281 Robbinsdale 161,527,761 4.29%6,929,541 No. 286 Brooklyn Center 47,802,506 100.00%47,802,506 Metropolitan Council 142,583,705 0.55%784,210 Hennepin County 983,232,996 1.07%10,520,593 Hennepin Regional RR Authority 91,599,375 1.07%980,113 Three Rivers Park District 39,123,902 1.51%590,771 Total overlapping debt 1,784,671,167$ 84,428,712 City of Brooklyn Center direct debt 27,639,130 Total direct and overlapping debt 112,067,842$ Source: Hennepin County Taxpayer Services Department Note: More detailed information for the City's outstanding debt can be viewed in table 10 of the statistical section. Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. The schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. Note: The percentage of overlapping debt applicable is estimated using tax capacity values. Applicable percentages were estimated by determining the portion of each entity's tax capacity that is within the City's boundaries, and dividing it by the entity's total tax capacity. 182 This page has been left blank intentionally. 183 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) LEGAL DEBT MARGIN INFORMATION Last ten fiscal years 2010 2011 2012 2013 Taxable Market Value 1,891,591,400$ 1,692,594,600$ 1,468,159,885$ 1,338,405,415$ Debt Limit Percentage 3.00%3.00%3.00%3.00% Debt Limit 56,747,742 50,777,838 44,044,797 40,152,162 Total net debt applicable to limit 823,737 181,389 - - Legal debt margin 55,924,005$ 50,596,449$ 44,044,797$ 40,152,162$ Total net debt applicable to the limit as a percentage of debt limit 1.45%0.36%0.00%0.00% Sources: The data for this table has been provided by Hennepin County and from City financial documents. 184 Table 13 2014 2015 2016 2017 2018 2019 1,329,268,428$ 1,489,548,076$ 1,585,423,689$ 1,677,496,115$ 1,870,350,254$ 2,060,074,358$ 3.00%3.00%3.00%3.00%3.00%3.00% 39,878,053 44,686,442 47,562,711 50,324,883 56,110,508 61,802,231 - - - - - - 39,878,053$ 44,686,442$ 47,562,711$ 50,324,883$ 56,110,508$ 61,802,231$ 0.00%0.00%0.00%0.00%0.00%0.00% 185 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 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% 2018 1,138,317 1,000,978 304,587 87.19% 2019 1,547,331 1,382,497 434,643 85.15% Tax Increment Bonds Tax Increment Debt Service Collections Principal Interest Coverage 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% 2018 4,757,113 2,275,000 369,433 179.89% 2019 5,047,023 2,295,000 302,195 194.33% 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% 2018 9,895,247 9,272,926 622,321 1,607,022 532,724 29.08% 2019 9,997,139 10,407,257 (410,118) 2,055,503 736,877 -14.69% Sources: The data for this table has been provided from City financial documents. 186 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 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%32.3 38,739 20,847 12,553 2,415 2017 31,145 11,063 2,155,919,190 69,222 3.9%32.1 38,764 21,221 12,553 2,566 2018 32,299 11,289 2,301,594,441 71,259 3.3%31.8 38,802 21,472 12,546 2,492 2019 32,299 11,289 2,412,670,702 74,698 3.6%31.8 39,057 21,509 12,388 2,350 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 187 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) PRINCIPAL EMPLOYERS Table 16 Current Year and Nine Years Ago 2019 2010 Percentage of Percentage of Total City Total City Employer Employees Rank Employment Employees Rank Employment Hennepin County 9,300 *1 56.96% Promeon Inc., A Division of Medtronic 1,100 2 6.74%1,000 1 6.69% City of Brooklyn Center 437 3 2.68%156 4 1.04% Independent School District #286 436 4 2.67%300 2 2.01% Wal-Mart 278 5 1.70% Caribou Coffee Headquarters 225 6 1.38% University of Minnesota Physicians 212 7 1.30% Presbyterian Homes, Marantha Care Center 200 8 1.22% Luther Auto Group 196 9 1.20% TCR Corporation 150 10 0.92%140 5 0.94% Cub Foods 160 3 1.07% Target 140 5 0.94% Best Buy 100 7 0.67% Kohls 100 7 0.67% Nations Care Link 100 7 0.67% Cass Screw Machine Products 79 10 0.53% Totals 12,534 76.76%2,275 13.35% * Not all employees located in Brooklyn Center Sources: The data for this table has been extracted from Official Statements for bonds issued in 2010 and 2019. 188 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) FULL TIME CITY GOVERNMENT POSITIONS BY FUNCTION Table 17 Last ten fiscal years 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 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 3.5 3.5 - - - - - Human Resources 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 Communications and Engagement - - - - - - - 1.0 1.0 1.0 Information technology 2.0 2.0 2.0 2.0 2.0 2.0 2.0 3.0 3.0 3.0 Building Maintenance 4.0 4.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 Total general government 22.0 22.0 21.0 21.5 21.5 18.0 18.0 20.0 20.5 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 42.0 42.0 42.0 42.0 41.0 41.0 40.0 42.0 42.0 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 2.0 3.0 3.0 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 Total public safety 63.0 63.0 63.0 63.0 62.0 63.0 63.0 65.0 65.0 65.0 Community Development Community Development Admin - - - - - - - - 2.3 2.3 Business Development - - - - - - - - 1.2 1.2 Planning & Zoning 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 5.0 5.0 5.2 4.2 - - Code Enforcement 5.0 5.0 4.0 5.0 5.0 4.0 3.4 4.4 - - Building and Community Standards - - - - - - - - 8.5 8.5 Total Community Development 11.0 10.5 9.5 10.5 11.5 10.5 9.8 9.8 12.0 12.0 Public works Engineering & Admin 6.0 6.0 6.0 7.0 7.0 7.0 7.0 7.0 7.0 8.0 Street Maintenance 8.0 8.0 7.0 7.0 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 15.0 16.0 16.0 16.0 16.0 16.0 16.0 17.0 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 5.0 5.0 Community Center 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 Golf Course 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 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 13.0 13.0 13.0 13.0 13.0 13.0 14.0 15.0 Economic Development 2.0 2.5 2.5 2.5 2.5 2.5 2.2 2.2 2.0 2.0 Municipal Liquor 5.0 4.0 4.0 5.0 5.0 5.0 6.0 6.0 6.0 6.0 Earle Brown Heritage Center 11.0 11.0 11.0 11.0 12.0 12.0 13.0 13.0 13.0 14.0 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 2.4 2.4 2.4 2.4 2.4 2.4 2.4 3.4 Central Garage 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 Total 161.0 160.0 155.0 158.5 159.5 156.0 157.0 161.0 164.5 167.0 Sources: The data for this table has been extracted from the respective years budget document. 189 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) OPERATING INDICATORS BY FUNCTION Table 18 Last ten fiscal years Function 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Police Violent crimes 138 135 113 129 97 113 112 125 118 109 Property crimes 1,358 1,529 1,561 1,712 1,195 1,080 1,076 1,087 1,070 1,231 Total calls for service 43,069 41,347 39,736 37,370 35,914 34,997 35,558 37,041 37,658 38,370 Fire Fires/All other calls 772 774 781 634 844 769 824 726 700 798 Medical calls 980 1,135 1,209 1,209 1,263 1,212 1,348 742 720 824 Fire inspections performed 245 141 295 270 197 9 33 140 225 281 Streets Total miles 105.73 105.73 105.73 105.73 105.73 105.73 105.73 105.73 105.73 105.73 Miles of streets reconstructed 5.17 5.62 0.70 2.90 3.01 3.91 2.74 5.57 4.00 7.00 Parks and recreation Community Center Admissions 59,310 57,874 59,550 62,434 56,142 31,882 50,944 55,418 55,734 53,490 Acres of park maintained 527 527 527 527 527 527 527 527 527 527 Municipal liquor Number of stores 2 2 2 2 2 2 2 2 2 2 Sales (in thousands)$5,543 $5,789 $5,964 $6,063 $5,852 $6,057 $6,197 $6,495 $6,744 $6,856 Golf course Rounds sold 13,524 12,169 12,875 11,724 11,023 12,359 12,601 11,960 11,106 11,883 Earle Brown Heritage Center Bookings 433 548 460 397 409 374 375 371 510 1,066 Functions 1,119 1,055 1,053 1,082 1,014 935 955 861 782 994 Water Connections 8,960 8,887 8,894 8,896 8,909 8,927 8,933 8,942 8,962 8,969 Miles of water mains 121.80 121.80 121.80 119.70 119.87 119.40 121.10 121.40 121.40 121.00 Average daily consumption 3,190,000 2,939,000 3,196,072 3,000,378 2,819,874 2,794,874 2,927,562 3,067,362 2,949,468 2,747,411 Sanitary sewer Connections 8,829 8,820 8,813 8,783 8,789 8,788 8,788 8,769 8,774 8,748 Miles of sanitary sewer 105.61 105.61 105.61 105.61 105.61 97.51 98.40 98.40 98.40 98.00 Sources: The data for this table has been provided by each respective City department. 190 CITY OF BROOKLYN CENTER, MINNESOTA STATISTICAL SECTION (UNAUDITED) CAPITAL ASSET STATISTICS BY FUNCTION Table 19 Last ten fiscal years Function 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Public safety Police Stations 1 1 1 1 1 1 1 1 1 1 Patrol units Marked squads 9 9 9 10 10 10 10 11 11 12 Other vehicles 18 18 16 18 18 18 18 18 18 18 Fire Stations 2 2 2 2 2 2 2 2 2 2 Fire trucks 8 8 8 8 8 8 8 8 8 8 Other vehicles 3 3 3 3 3 5 5 5 6 5 Public works Streets (miles)105.73 105.73 105.73 105.73 105.73 105.73 105.73 105.73 105.73 105.73 Mobile equipment 14 14 14 13 14 14 14 14 14 14 Heavy duty trucks 13 13 13 12 13 13 13 13 13 14 Other vehicles 6 6 6 7 6 4 5 4 4 4 Parks and recreation Parks acreage 527 527 527 527 527 527 527 527 527 527 Trails (miles)21.6 21.6 21.6 21.6 14.2 14.9 15.3 15.7 15.7 16.6 Community centers 1 1 1 1 1 1 1 1 1 1 Ground maintenance equipment 15 15 15 14 12 11 11 11 11 12 Other vehicles 8 8 8 8 8 8 8 8 8 8 Water Water mains (miles)121.80 121.80 121.80 119.70 119.87 119.40 121.10 121.40 121.40 121.00 Wells 9 9 9 9 9 9 9 9 9 9 Water treatment plant - - - - - - 1 1 1 1 Sewer Sanitary sewers (miles)105.61 105.61 105.61 105.61 105.61 97.51 98.40 98.40 98.30 98.00 Lift Stations 10 10 10 10 10 10 10 10 10 10 Storm sewers (miles)74.20 74.20 74.20 83.01 84.55 86.28 88.18 88.60 90.00 90.16 Sources: The data for this table has been provided by each respective City department. 191 This page has been left blank intentionally. 192 CITY OF BROOKLYN CENTER HENNEPIN COUNTY, MINNESOTA Special Purpose Audit Reports on Single Audit, Internal Controls, and Compliance With Laws and Regulations Year Ended December 31, 2019 THIS PAGE INTENTIONALLY LEFT BLANK Page Schedule of Expenditures of Federal Awards 1 Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 2–3 Independent Auditor’s Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance 4–6 Independent Auditor’s Report on Minnesota Legal Compliance 7 Schedule of Findings and Questioned Costs 8–9 Table of Contents CITY OF BROOKLYN CENTER HENNEPIN COUNTY, MINNESOTA THIS PAGE INTENTIONALLY LEFT BLANK Federal CFDA No. U.S. Department of Housing and Urban Development Passed through Hennepin County Community Development Block Grants – Entitlement Grants 14.218 150,000$ U.S. Department of Justice Direct program Bulletproof Vest Partnership Program 16.607 9,946 Passed through Hennepin County Edward Byrne Memorial Justice Assistance Grant Program 16.738 19,164 U.S. Department of Transportation Passed through the State of Minnesota Highway Planning and Construction 20.205 6,161,277 Passed through the City of Brooklyn Park Highway safety cluster State and Community Highway Safety 20.600 2,775$ National Priority Safety Programs 20.616 3,768 Subtotal for highway safety cluster 6,543 Passed through the City of Brooklyn Park Minimum Penalties for Repeat Offenders for Driving While Intoxicated 20.608 4,842 Total federal awards 6,351,772$ Note 1: Note 2: Note 3: CITY OF BROOKLYN CENTER Schedule of Expenditures of Federal Awards Year Ended December 31, 2019 The Schedule of Expenditures of Federal Awards is prepared on the accrual basis of accounting.The information in this schedule is presented in accordance with the OMB’s Uniform Administrative Requirements,Cost Principles,and Audit Requirements for Federal Awards.Therefore,some amounts presented in this schedule may differ from the amounts presented in, or used in the preparation of, the City’s basic financial statements. All pass-through entities listed above use the same CFDA numbers as the federal grantors to identify these grants,and have not assigned any additional identifying numbers. The City did not elect to use the 10 percent de minimis indirect cost rate. Federal Grantor/Pass-Through Grantor/Program Title Federal Expenditures -1- THIS PAGE INTENTIONALLY LEFT BLANK -2- INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the City Council and Management City of Brooklyn Center, Minnesota We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Brooklyn Center, Minnesota (the City) as of and for the year ended December 31, 2019, and the related notes to the financial statements, which collectively comprise the City ’s basic financial statements, and have issued our report thereon dated May 20, 2020. INTERNAL CONTROL OVER FINANCIAL REPORTING In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the City’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. (continued) C E R T I F I E D A C C O U N T A N T S 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 Jaclyn M. Huegel, CPA Kalen T. Karnowski, CPA 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 Standard Letterhead-r2.qxp_167639 Letterhead-RV1 9/7/18 6:34 PM Page 1 -3- COMPLIANCE AND OTHER MATTERS As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. PURPOSE OF THIS REPORT The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control and compliance. Accordingly, this report is not suitable for any other purpose. Minneapolis, Minnesota May 20, 2020 -4- INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE To the City Council and Management City of Brooklyn Center, Minnesota REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM We have audited the City of Brooklyn Center, Minnesota’s (the City) compliance with the types of compliance requirements described in the U.S. Office of Management and Budget Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the year ended December 31, 2019. The City’s major federal programs are identified in the Summary of Audit Results section of the accompanying Schedule of Findings and Questioned Costs. MANAGEMENT’S RESPONSIBILITY Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. AUDITOR’S RESPONSIBILITY Our responsibility is to express an opinion on compliance for each of the City’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the City’s compliance. (continued) C E R T I F I E D A C C O U N T A N T S 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 Jaclyn M. Huegel, CPA Kalen T. Karnowski, CPA 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 Standard Letterhead-r2.qxp_167639 Letterhead-RV1 9/7/18 6:34 PM Page 1 -5- OPINION ON EACH MAJOR FEDERAL PROGRAM In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to on the previous page that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2019. REPORT ON INTERNAL CONTROL OVER COMPLIANCE Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to on the previous page. In planning and performing our audit of compliance, we considered the City’s internal control over compliance with the types of requirements that could have a direct and material effect on each majo r federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program, and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. PURPOSE OF THIS REPORT The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. (continued) -6- REPORT ON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of and for the year ended December 31, 2019, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements. We issued our report thereon dated May 20, 2020, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Schedule of Expenditures of Federal Awards is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Minneapolis, Minnesota May 20, 2020 THIS PAGE INTENTIONALLY LEFT BLANK -7- INDEPENDENT AUDITOR’S REPORT ON MINNESOTA LEGAL COMPLIANCE To the City Council and Management City of Brooklyn Center, Minnesota We have audited, in accordance with auditing standards generally accepted in the United States of America, and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Brooklyn Center, Minnesota (the City) as of and for the year ended December 31, 20 19, and the related notes to the financial statements, which collectively comprise the City ’s basic financial statements, and have issued our report thereon dated May 20, 2020. MINNESOTA LEGAL COMPLIANCE In connection with our audit, nothing came to our attention that caused us to believe that the City failed to comply with the provisions of the contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, miscellaneous provisions, and tax increment financing sections of the Minnesota Legal Compliance Audit Guide for Cities, promulgated by the State Auditor pursuant to Minnesota Statutes § 6.65, insofar as they relate to accounting matters. However, our audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we performed additional procedures, other matters may have come to our attention regarding the City’s noncompliance with the above referenced provisions, insofar as they relate to accounting matters. PURPOSE OF THIS REPORT The purpose of this report is solely to describe the scope of our testing of compliance and the results of that testing, and not to provide an opinion on compliance. Accordingly, this report is not suitable for any other purpose. Minneapolis, Minnesota May 20, 2020 C E R T I F I E D A C C O U N T A N T S 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 Jaclyn M. Huegel, CPA Kalen T. Karnowski, CPA 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 Standard Letterhead-r2.qxp_167639 Letterhead-RV1 9/7/18 6:34 PM Page 1 CITY OF BROOKLYN CENTER Schedule of Findings and Questioned Costs Year Ended December 31, 2019 -8- A. SUMMARY OF AUDIT RESULTS This summary is formatted to provide federal granting agencies and pass-through agencies answers to specific questions regarding the audit of federal awards. Financial Statements What type of auditor’s report is issued?X Unmodified Qualified Adverse Disclaimer Internal control over financial reporting: Material weakness(es) identified?Yes X No Significant deficiency(ies) identified?Yes X None reported Noncompliance material to the financial statements noted?Yes X No Federal Awards Internal controls over major federal award programs: Material weakness(es) identified?Yes X No Significant deficiency(ies) identified?Yes X None reported Type of auditor’s report issued on compliance for major programs?X Unmodified Qualified Adverse Disclaimer Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)?Yes X No Programs tested as major programs: Program or Cluster U.S. Department of Transportation Passed through the State of Minnesota Highway Planning and Construction 20.205 Threshold for distinguishing between type A and B programs: Does the auditee qualify as a low-risk auditee?Yes X No CFDA No. 750,000$ CITY OF BROOKLYN CENTER Schedule of Findings and Questioned Costs (continued) Year Ended December 31, 2019 -9- B. FINANCIAL STATEMENT FINDINGS None. C. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS None. D. MINNESOTA LEGAL COMPLIANCE FINDINGS None. THIS PAGE INTENTIONALLY LEFT BLANK Management Report for City of Brooklyn Center, Minnesota December 31, 2019 THIS PAGE INTENTIONALLY LEFT BLANK To the City Council and Management City of Brooklyn Center, Minnesota We have prepared this management report in conjunction with our audit of the City of Brooklyn Center, Minnesota’s (the City) financial statements for the year ended December 31, 2019. We have organized this report into the following sections: •Audit Summary •Governmental Funds Overview •Enterprise Funds Overview •Government-Wide Financial Statements •Legislative Updates •Accounting and Auditing Updates We would be pleased to further discuss any of the information contained in this report or any other concerns that you would like us to address. We would also like to express our thanks for the courtesy and assistance extended to us during the course of our audit. The purpose of this report is solely to provide those charged with governance of the City, mana gement, and those who have responsibility for oversight of the financial reporting process comments resulting from our audit process and information relevant to city finances in Minnesota . Accordingly, this report is not suitable for any other purpose. Minneapolis, Minnesota May 20, 2020 C E R T I F I E D A C C O U N T A N T S 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 Jaclyn M. Huegel, CPA Kalen T. Karnowski, CPA 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 Standard Letterhead-r2.qxp_167639 Letterhead-RV1 9/7/18 6:34 PM Page 1 THIS PAGE INTENTIONALLY LEFT BLANK -1- AUDIT SUMMARY The following is a summary of our audit work, key conclusions, and other information that we consider important or that is required to be communicated to the City Council, administration, or those charged with governance of the City. OUR RESPONSIBILITY UNDER AUDITING STANDARDS GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA, GOVERNMENT AUDITING STANDARDS, AND TITLE 2 U.S. CODE OF FEDERAL REGULATIONS PART 200, UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS (UNIFORM GUIDANCE) We have audited the financial statements of the governmental activities, the busines s-type activities, each major fund, and the aggregate remaining fund information of the City as of and for the year ended December 31, 2019. Professional standards require that we provide you with information about our responsibilities under auditing standards generally accepted in the United States of America, Government Auditing Standards, the Uniform Guidance, as well as certain information related to the planned scope and timing of our audit. We have communicated such information to you verbally and in our audit engagement letter. Professional standards also require that we communicate the following information related to our audit. PLANNED SCOPE AND TIMING OF THE AUDIT We performed the audit according to the planned scope and timing previously disc ussed and coordinated in order to obtain sufficient audit evidence and complete an effective audit. AUDIT OPINION AND FINDINGS Based on our audit of the City’s financial statements for the year ended December 31, 2019: • We have issued an unmodified opinion on the City’s basic financial statements. • We reported no deficiencies in the City’s internal control over financial reporting that we considered to be material weaknesses. • The results of our testing disclosed no instances of noncompliance required to be reported under Government Auditing Standards. • We reported that the Schedule of Expenditures of Federal Awards is fairly stated, in all material respects, in relation to the basic financial statements. • The results of our tests indicate that the City has complied, in all material respects, with the types of compliance requirements that could have a direct and material effect on each of its major federal programs. • We reported no deficiencies in the City’s internal controls over compliance that we considered to be material weaknesses with the types of compliance requirements that could have a direct and material effect on each of its major federal programs. • We reported no findings based on our testing of the City’s compliance with Minnesota laws and regulations. -2- OTHER OBSERVATIONS AND RECOMMENDATIONS Impact of Novel Coronavirus (COVID-19) Shortly after the end of the 2019 fiscal year, the onset of the novel coronavirus (COVID-19) pandemic caused substantial volatility in economic conditions and tremendous disruption in the way governments, businesses, and individuals function. Minnesota cities may experience the impact of this pandemic in a myriad of financial areas, such as: declines in investment rates of return, cash flow issues, increased utility billing and property tax delinquencies, significant increases in the number and frequency of employees working remotely, challenges in processing general and payroll disbursements, disruption of prescribed internal control procedures, delays in internal and external financial reporting, and new compliance requirements attached to potential federal relief subsidies. As your city adapts to the new normal of municipal operations in a post-COVID-19 world, the assessment of and responses to new risks that may accompany operational changes will be critical to the safeguarding of city resources and sound financial stewardship. We encourage management and governance to include a robust financial risk assessment process when planning responses to these challenges, and to reassess and adapt internal controls over financial transactions and reporting to align with significant changes made to daily operations, even those intended to be temporary. SIGNIFICANT ACCOUNTING POLICIES Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 of the notes to basic financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the year ended December 31, 2019; however, the City implemented the following governmental accounting standards during the fiscal year: • Governmental Accounting Standards Board (GASB) Statement No. 83, Certain Asset Retirement Obligations, which addressed accounting and financial reporting for certain asset retirement obligations, which are legally enforceable liabilities associated with the retirement of a tangible capital asset. • GASB Statement No. 84, Fiduciary Activities, which established new criteria for identifying and reporting fiduciary activities. • GASB Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements, which improved and clarified the information to be disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements. • GASB Statement No. 90, Majority Equity Interest—an amendment of GASB Statements No. 14 and No. 61, which improved the consistency and comparability of reporting a government’s majority equity interest in a legally separate organization and the relevance of financial statement information for certain component units. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. -3- ACCOUNTING ESTIMATES AND MANAGEMENT JUDGMENTS Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were: • Net Other Post-Employment Benefits (OPEB) and Pension Liabilities – The City has recorded liabilities and activity for OPEB and pension benefits. These obligations are calculated using actuarial methodologies described in GASB Statement Nos. 68 and 75. These actuarial calculations include significant assumptions, including projected changes, healthcare insurance costs, investment returns, retirement ages, proportionate share, and employee turnover. • Depreciation – Management’s estimates of depreciation expense are based on the estimated useful lives of the assets. • Compensated Absences – Management’s estimate is based on current rates of pay and sick leave balances. • Assets Held for Resale – Management’s estimates of this asset are based on the lower of cost or acquisition value. We evaluated the key factors and assumptions used by management to develop these accounting estimates in determining that they are reasonable in relation to the basic financial statements taken as a whole. Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The disclosures included in the notes to the basic financial statements related to OPEB and pension benefits are particularly sensitive, due to the materiality of the liabilities, and the large and complex estimates involved in determining the disclosures. The financial statement disclosures are neutral, consistent, and clear. CORRECTED AND UNCORRECTED MISSTATEMENTS Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. There were no misstatements detected as a result of audit procedures that were material, either individually or in the aggregate, to each opinion unit’s financial statements taken as a whole. DIFFICULTIES ENCOUNTERED IN PERFORMING THE AUDIT We encountered no significant difficulties in dealing with management in performing and completing our audit. DISAGREEMENTS WITH MANAGEMENT For purposes of this report, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit. -4- MANAGEMENT REPRESENTATIONS We have requested certain representations from management that are included in the management representation letter dated May 20, 2020. MANAGEMENT CONSULTATIONS WITH OTHER INDEPENDENT ACCOUNTANTS In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations . If a consultation involves application of an accounting principle to the City’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. OTHER AUDIT FINDINGS OR ISSUES We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City’s auditors. However, these discussions occurred in the normal course of our pr ofessional relationship and our responses were not a condition to our retention. OTHER MATTERS We applied certain limited procedures to the management’s discussion and analysis (MD&A) and the pension and OPEB-related required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management ’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. We were engaged to report on the combining and individual fund statements and schedules accompanying the financial statements and the separately issued Schedule of Expenditures of Federal Awards, which are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the combining and individual fund statements and schedules to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. We were not engaged to report on the introductory section and statistical section, which accompany the financial statements, but are not RSI. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it. -5- GOVERNMENTAL FUNDS OVERVIEW This section of the report provides you with an overview of the financial trends and activities of the City’s governmental funds, which includes the General, special revenue, debt service, and capital project funds. These funds are used to account for the basic services the City provides to all of its citizens, which are financed primarily with property taxes. The governmental fund information in the City’s financial statements focuses on budgetary compliance and the sufficiency of each governmental fund’s current assets to finance its current liabilities. PROPERTY TAXES Minnesota cities rely heavily on local property tax levies to support their governmental fund activities. For the 2018 fiscal year, local ad valorem property tax levies provided 41.5 percent of the total governmental fund revenues for cities over 2,500 in population, and 36.7 percent for cities under 2,500 in population. Total property taxes levied by all Minnesota cities for taxes payable in 2019 increased 5.6 percent from the prior year. The total tax capacity value of property in Minnesota cities increased about 7.1 percent for the 2019 levy year. The tax capacity values used for levying property taxes are based on the assessed market values for the previous fiscal year (e.g., tax capacity values for taxes levied in 2019 were based on assessed market values as of January 1, 2018), so the trend of change in these tax capacity values lags somewhat behind the housing market and economy in general. The City’s taxable market value increased 11.5 percent for taxes payable in 2018 and increased 10.1 percent for taxes payable in 2019. The following graph shows the City’s changes in taxable market value over the past 10 years: $– $500,000,000 $1,000,000,000 $1,500,000,000 $2,000,000,000 $2,500,000,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Taxable Market Value -6- Tax capacity is considered the actual base available for taxation. It is calculated by applying the state’s property classification system to each property’s market value. Each property classification, such as commercial or residential, has a different calculation and uses different rates. Consequently, a city’s total tax capacity will change at a different rate than its total market value, as tax capacity is affected by the proportion of its tax base that is in each property classification from year-to-year, as well as legislative changes to tax rates. The City’s tax capacity increased 10.0 percent for taxes payable in 2018 and increased 5.6 percent for taxes payable in 2019. The following graph shows the City’s change in tax capacities over the past 10 years: $– $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Tax Capacity The following table presents the average tax rates applied to city residents for each of the last three levy years: 2017 2018 2019 Average tax rate City 70.5 67.1 70.4 County 44.1 42.8 41.9 School 40.6 46.3 50.2 Special taxing 11.0 10.4 10.0 Total 166.2 166.6 172.5 City of Brooklyn Center The total average tax rate increased from the prior year. An increase in the City and school rates were offset by decreases in the county and special taxing authority rates. -7- GOVERNMENTAL FUNDS REVENUE AND EXPENDITURES The following table presents the per capita revenue of the City’s governmental funds for the past three years, along with state-wide averages. We have included the most recent comparative state-wide averages available from the Office of the State Auditor to provide a benchmark for interpreting the City’s data. The amounts received from the typical major sources of governmental fund revenue will naturally vary between cities based on factors such as a city’s stage of development, location, size and density of its population, property values, services it provides, and other attributes. It will also differ from year -to-year, due to the effect of inflation and changes in its operation. Also, certain data on these tables may be classified differently than how they appear in the City’s financial statements in order to be more comparable to the state-wide information, particularly in separating capital expenditures from current expenditures. We have designed this section of our management report using per capita data in order to better identify unique or unusual trends and activities of the City. We intend for this type of comparative and trend information to complement, rather than duplicate, information in the MD&A. An inherent difficulty in presenting per capita information is the accuracy of the population count, which for most years is based on estimates. Year 2017 2018 2019 Population 2,500–10,000 10,000–20,000 20,000–100,000 31,145 32,299 32,299 Property taxes 495$ 472$ 493$ 537$ 547$ 589$ Tax increments 28 27 43 155 158 167 Franchise fees and other taxes 41 48 50 61 58 56 Special assessments 53 40 57 57 55 64 Licenses and permits 38 35 47 29 37 36 Intergovernmental revenues 303 271 157 125 197 379 Charges for services 130 102 112 30 33 38 Other 97 78 49 30 42 65 Total revenue 1,185$ 1,073$ 1,008$ 1,024$ 1,127$ 1,394$ December 31, 2018 Governmental Funds Revenue per Capita With State-Wide Averages by Population Class State-Wide City of Brooklyn Center The City relies more on property tax revenue for its governmental funds revenue compared to the average Minnesota city. The City continues to generate significantly more tax increment revenue per capita than average, as it has made extensive use of this tool to finance commercial development. The City’s per capita governmental funds revenue for 2019 was $1,394, an increase of about 23.7 percent from the prior year. Property tax revenue increased $42 per capita, due to the increased tax levy. Intergovernmental revenues increased $182 per capita, due to the federal grant and county funds received for the Brooklyn Boulevard improvement project. -8- The expenditures of governmental funds will also vary from state -wide averages and from year-to-year, based on the City’s circumstances. Expenditures are classified into three types as follows: • Current – These are typically the general operating type expenditures occurring on an annual basis, and are primarily funded by general sources, such as taxes and intergovernmental revenues. • Capital Outlay and Construction – These expenditures do not occur on a consistent basis, more typically fluctuating significantly from year-to-year. Many of these expenditures are project-oriented, and are often funded by specific sources that have benefited from the expenditure, such as special assessment improvement projects. • Debt Service – Although the expenditures for debt service may be relatively consistent over the term of the respective debt, the funding source is the important factor. Some debt may be repaid through specific sources, such as special assessments or redevelopment funding, while other debt may be repaid with general property taxes. The City’s expenditures per capita of its governmental funds for the past three years, together with state-wide averages, are presented in the following table: Year 2017 2018 2019 Population 2,500–10,000 10,000–20,000 20,000–100,000 31,145 32,299 32,299 Current General government 150$ 121$ 104$ 104$ 114$ 116$ Public safety 286 272 294 352 353 372 Street maintenance 135 125 106 70 73 77 Parks and recreation 96 115 104 88 87 99 All other 75 74 78 77 84 82 742$ 707$ 686$ 691$ 711$ 746$ Capital outlay and construction 417$ 351$ 307$ 328$ 304$ 413$ Debt service Principal 178$ 153$ 109$ 112$ 101$ 114$ Interest and fiscal 41 39 29 22 23 24 219$ 192$ 138$ 134$ 124$ 138$ Total expenditures 1,378$ 1,250$ 1,131$ 1,153$ 1,139$ 1,297$ State-Wide December 31, 2018 Governmental Funds Expenditures per Capita With State-Wide Averages by Population Class City of Brooklyn Center The City’s governmental funds current per capita expenditures are higher than state-wide averages for cities in the same population class. The City’s current operating costs are higher than average, due to above average public safety costs. The City’s per capita current expenditures increased $35 per capita in 2019, mainly due to the $19 per capita increase in public safety and $12 per capita increase in parks and recreation. Capital outlay costs per capita increased $109 in the current year, due to the Brooklyn Boulevard project. -9- GOVERNMENTAL FUND BALANCES The following table summarizes the changes in the fund balances of the City’s governmental funds during the year ended December 31, 2019, presented both by fund balance classification and by fund: Increase 2019 2018 (Decrease) Fund balances of governmental funds Total by classification Nonspendable 88,109$ 90,472$ (2,363)$ Restricted 32,219,640 26,097,132 6,122,508 Committed 9,570,360 9,007,923 562,437 Assigned 1,192,667 1,541,166 (348,499) Unassigned 11,241,736 10,102,668 1,139,068 Total governmental funds 54,312,512$ 46,839,361$ 7,473,151$ Total by fund General 12,524,217$ 11,563,825$ 960,392$ Tax Increment District No. 3 21,614,535 19,557,596 2,056,939 Debt Service 3,991,322 2,816,343 1,174,979 Capital Improvements 1,613,299 2,043,360 (430,061) Municipal State Aid for Construction 1,294,135 289,415 1,004,720 Special Assessment Construction 2,742,063 1,534,666 1,207,397 Nonmajor funds 10,532,941 9,034,156 1,498,785 Total governmental funds 54,312,512$ 46,839,361$ 7,473,151$ Governmental Funds Change in Fund Balance Fund Balance as of December 31, In total, the fund balances of the City’s governmental funds increased by $7,473,151 during the year ended December 31, 2019. The majority of the increase was in restricted fund balances. Restricted fund balances increased $6,122,508, mainly in the restricted fund balance in the Tax Increment District No. 3 Fund, Debt Service Fund, Municipal State Aid for Construction Fund, and Special Assessment Construction Fund. -10- GENERAL FUND The City’s General Fund accounts for the financial activity of the basic services provided to the community. The primary services included within this fund are the administration of the municipal operation, police and fire protection, building inspection, streets and highway maintenance, and parks and recreation. The graph below illustrates the change in the General Fund financial position over the last five years. We have also included a line representing annual expenditures to reflect the change in the size of the General Fund operation over the same period. 2015 2016 2017 2018 2019 Fund Balance $11,170,917 $11,440,897 $11,355,203 $11,563,825 $12,524,217 Cash (Net)$11,602,236 $12,326,654 $12,057,840 $12,199,624 $13,671,153 Expenditures $18,047,798 $18,849,079 $19,873,539 $21,181,481 $21,958,748 $– $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 $20,000,000 $22,000,000 $24,000,000 General Fund Financial Position Year Ended December 31, The City’s General Fund cash and investments balance (net of interfund borrowing) at December 31, 2019 was $13,671,153, which increased $1,471,529 from 2018. Total fund balance at December 31, 2019 was $12,524,217, an increase of $960,392 from the prior year. Having an appropriate fund balance is an important factor in assessing the City’s financial health because a government, like any organization, requires a certain amount of equity to operate. Generally, the amount of equity required typically increases as the size of the operation increases. A healthy financial position allows the City to avoid volatility in tax rates; helps minimize the impact of state funding changes; allows for the adequate and consistent funding of services, repairs, and unexpected costs; and can be a factor in determining the City’s bond rating and resulting interest costs. The City has an approved fund balance policy that states the General Fund will manage its cash flow by having a year-end target unassigned fund balance of between 50 percent and 52 percent of next year’s General Fund budgeted expenditures. At December 31, 2019, the City’s General Fund had an unassigned fund balance of 52 percent of the subsequent year’s budgeted expenditures. -11- The following graph reflects the City’s General Fund revenue sources for 2019 compared to budget: Other Charges for Services Intergovernmental Licenses and Permits Taxes General Fund Revenue Budget Actual Total General Fund revenues for 2019 were $22,979,140, which was $712,571 (3.2 percent) over the final budget. The majority of this variance was from other revenue and licenses and permits. Other revenue was $409,075 over budget, mainly in investment earnings and conduit debt fees, due to conservative budgeting in this category. Licenses and permits revenue was $311,124 over budget from more than anticipated building-related activities. The following graph presents the City’s General Fund revenues by source for the last five years: Taxes Intergovernmental Other 2015 $15,532,039 $1,410,695 $2,230,529 2016 $16,128,373 $1,466,341 $2,397,091 2017 $16,766,847 $1,496,165 $2,275,377 2018 $17,361,854 $1,658,391 $2,663,288 2019 $18,357,019 $1,692,425 $2,929,696 $– $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 $20,000,000 General Fund Revenue by Source Year Ended December 31, Overall, General Fund revenues increased $1,295,607 (6.0 percent) from the previous year, mainly in tax revenue and other revenue. Tax revenue increased $995,165, mainly due to the increased property tax levy approved by the City Council for 2019. Other revenue increased $266,408, mainly due to the increased investment earnings and conduit debt fees received as previously discussed. -12- The following graph illustrates the components of General Fund spending for 2019 compared to budget: Other Parks and Recreation Public Works Public Safety General Government General Fund Expenditures Budget Actual Total General Fund expenditures for 2019 were $21,958,748, which was $247,821 (1.1 percent) less than budget. The largest variance occurred in the parks and recreation function, which was under budget $218,751, mainly in the recreation programs department, due to a reduction in adult and teen recreation programs. The following graph presents the City’s General Fund expenditures by function for the last five years: General Government Public Safety Public Works Parks and Recreation Other 2015 $2,769,009 $9,809,177 $1,880,792 $2,492,260 $1,096,560 2016 $3,019,888 $10,067,963 $1,918,330 $2,627,958 $1,214,940 2017 $3,223,766 $10,687,408 $2,037,136 $2,703,475 $1,221,754 2018 $3,605,573 $11,201,317 $2,234,407 $2,761,005 $1,379,179 2019 $3,545,278 $11,861,461 $2,288,390 $2,839,662 $1,423,957 $– $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000 $11,000,000 $12,000,000 General Fund Expenditures by Function Year Ended December 31, General Fund expenditures increased by $777,267, or 3.7 percent, from the prior year, mainly due to the $660,144 increase in the public safety function. Public safety expenditures increased, mainly due to increased personal services in the police protection department. -13- ENTERPRISE FUNDS OVERVIEW The City maintains several enterprise funds to account for services the City provides that are financed primarily through fees charged to those utilizing the service. This section of the report provides you with an overview of the financial trends and activities of the City’s enterprise funds, which include the Municipal Liquor, Earle Brown Heritage Center, Water Utility, Sanitary Sewer Utility, Storm Drainage Utility, Street Light Utility, and Recycling Utility Funds. The utility funds comprise a considerable portion of the City’s activities. These funds significantly help to defray overhead and administrative costs and provide additional support to general government operations by way of annual transfers. We understand that the City is proactive in reviewing these activities on an ongoing basis and we want to reiterate the importance of continually monitoring these opera tions. Over the years, we have emphasized to our city clients the importance of these utility operations being self-sustaining, preventing additional burdens on general government funds. This would include the accumulation of net position for future capital improvements and to provide a cushion in the event of a negative trend in operations. ENTERPRISE FUNDS FINANCIAL POSITION The following table summarizes the changes in the financial position of the City’s enterprise funds during the year ended December 31, 2019, presented both by classification and by fund: Increase 2019 2018 (Decrease) Net position of enterprise funds Total by classification Net investment in capital assets 43,450,307$ 42,831,977$ 618,330$ Unrestricted 18,604,787 18,347,909 256,878 Total enterprise funds 62,055,094$ 61,179,886$ 875,208$ Total by fund Municipal Liquor 2,718,036$ 2,889,498$ (171,462)$ Earle Brown Heritage Center 5,877,018 5,937,528 (60,510) Water Utility 13,223,758 13,413,803 (190,045) Sanitary Sewer Utility 15,639,348 14,994,868 644,480 Storm Drainage Utility 21,811,793 21,779,268 32,525 Street Light Utility 2,501,755 1,882,448 619,307 Recycling Utility 283,386 282,473 913 Total enterprise funds 62,055,094$ 61,179,886$ 875,208$ Enterprise Funds Change in Financial Position Net Position as of December 31, In total, the net position of the City’s enterprise funds increased by $875,208 during the year ended December 31, 2019. -14- Water Fund The following graph presents five years of operating results for the Water Fund: 2015 2016 2017 2018 2019 Oper Rev $2,573,493 $3,191,538 $3,543,323 $3,807,272 $3,760,995 Oper Exp $2,008,333 $2,681,066 $3,158,986 $3,270,522 $3,702,180 Oper Inc (Loss)$565,160 $510,472 $384,337 $536,750 $58,815 Oper Inc Excl Dep $1,269,093 $1,654,136 $2,019,592 $2,130,291 $1,723,736 $– $250,000 $500,000 $750,000 $1,000,000 $1,250,000 $1,500,000 $1,750,000 $2,000,000 $2,250,000 $2,500,000 $2,750,000 $3,000,000 $3,250,000 $3,500,000 $3,750,000 $4,000,000 Water Fund Year Ended December 31, The Water Fund ended 2019 with a net position of $13,223,758, a decrease of $190,045 from the prior year. Of this, $10,362,421 represents the net investment in utility distribution system capital assets, leaving $2,861,337 of unrestricted net position. Water Fund operating revenue was $3,760,995 for 2019, a decrease of $46,277 (1.2 percent) from the prior year, due to a decrease in consumption in the current year. Operating expenses of $3,702,180 were $431,658 (13.2 percent) more than last year, mainly due to an increase in supplies and other services expense in the current year. -15- Sanitary Sewer Fund The following graph presents five years of operating results for the Sanitary Sewer Fund: 2015 2016 2017 2018 2019 Oper Rev $4,093,725 $4,204,962 $4,287,674 $4,406,741 $4,555,940 Oper Exp $3,656,994 $3,812,606 $3,969,011 $4,121,002 $4,353,701 Oper Inc (Loss)$436,731 $392,356 $318,663 $285,739 $202,239 Oper Inc Excl Dep $1,220,231 $1,209,977 $1,216,466 $1,188,019 $1,194,190 $– $250,000 $500,000 $750,000 $1,000,000 $1,250,000 $1,500,000 $1,750,000 $2,000,000 $2,250,000 $2,500,000 $2,750,000 $3,000,000 $3,250,000 $3,500,000 $3,750,000 $4,000,000 $4,250,000 $4,500,000 $4,750,000 Sanitary Sewer Fund Year Ended December 31, The Sanitary Sewer Fund ended 2019 with a net position of $15,639,348, an increase of $644,480 from the prior year. Of this, $9,895,624 represents the net investment in the sanitary sewer capital assets, leaving $5,743,724 of unrestricted net position. Sanitary Sewer Fund operating revenues for 2019 were $4,555,940, which was an increase of $149,199 (3.4 percent) from the prior year, due to an approved rate increase. Operating expenses for 2019 were $4,353,701, which was an increase of $232,699 (5.7 percent) from the prior year. The largest operating expense of this fund is to Metropolitan Council Environmental Services (MCES) for sewer service charges. MCES disposal charges in 2019 increased by $76,645 from the prior year. -16- Storm Drainage Fund The following graph presents five years of operating results for the Storm Drainage Fund: 2015 2016 2017 2018 2019 Oper Rev $1,635,555 $1,620,302 $1,598,374 $1,681,234 $1,680,204 Oper Exp $1,875,824 $1,700,595 $1,815,673 $1,881,402 $2,351,376 Oper Inc (Loss)$(240,269)$(80,293)$(217,299)$(200,168)$(671,172) Oper Inc Excl Dep $866,007 $1,065,816 $1,060,584 $1,109,286 $765,936 $(750,000) $(500,000) $(250,000) $– $250,000 $500,000 $750,000 $1,000,000 $1,250,000 $1,500,000 $1,750,000 $2,000,000 $2,250,000 $2,500,000 Storm Drainage Fund Year Ended December 31, The Storm Drainage Fund ended 2019 with a net position of $21,811,793, an increase of $32,525 from the prior year. Of this, $16,795,514 represents the net investment in capital assets, leaving $5,016,279 of unrestricted net position. Storm Drainage Fund operating revenues for 2019 were $1,680,204, which was a slight decrease of $1,030 from the prior year. Operating expenses for 2019 were $2,351,376, which was $469,974 higher than the prior year, mainly due to an increase in pond maintenance projects in the current year. The Storm Drainage Fund received capital contributions of $560,675 from governmental activities in the current year. -17- OTHER ENTERPRISE FUNDS Liquor Fund The following graph presents five years of operating results for the Liquor Fund: 2015 2016 2017 2018 2019 Sales $6,056,668 $6,197,094 $6,495,300 $6,743,790 $6,855,696 Cost of Sales $4,431,501 $4,611,919 $4,769,844 $4,865,400 $5,008,694 Oper Exp $1,367,050 $1,465,790 $1,434,340 $1,613,573 $1,647,164 Oper Inc (Loss)$258,117 $119,385 $291,116 $264,817 $199,838 Oper Inc Excl Dep $275,083 $140,379 $312,919 $286,620 $218,292 $– $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000 $5,500,000 $6,000,000 $6,500,000 $7,000,000 Liquor Fund Year Ended December 31, The Liquor Fund ended 2019 with a net position of $2,718,036, a decrease of $171,462 from the prior year. Of the net position balance, $1,216,868 represents the net investment in liquor capital assets, leaving $1,501,168 of unrestricted net position. Liquor sales for 2019 were $6,855,696, which is $111,906 (1.7 percent) more than the prior year. The Liquor Fund generated operating income of $199,838 in 2019, or about 2.9 percent of gross sales, which is a decrease from the 3.9 percent of gross sales in fiscal 2018. In 2019, the Liquor Fund transferred $325,487 to the Capital Improvements Fund for future capital projects. The Liquor Fund’s gross profit margin was 26.94 in fiscal 2019, which is higher than the average gross profit margin of 26.69 seen over the previous five years. -18- Earle Brown Heritage Center Fund The following graph presents five years of operating results for the Earle Brown Heritage Center Fund: 2015 2016 2017 2018 2019 Sales and User Fees $4,487,260 $4,700,175 $4,891,574 $4,844,775 $5,066,519 Cost of Sales $2,033,464 $2,066,065 $2,257,315 $2,208,993 $2,385,593 Oper Exp $2,689,723 $2,388,597 $2,519,580 $2,660,841 $2,831,460 Oper Inc (Loss)$(235,927)$245,513 $114,679 $(25,059)$(150,534) Oper Inc Excl Dep $384,322 $427,518 $293,066 $174,805 $75,349 $(400,000) $– $400,000 $800,000 $1,200,000 $1,600,000 $2,000,000 $2,400,000 $2,800,000 $3,200,000 $3,600,000 $4,000,000 $4,400,000 $4,800,000 $5,200,000 Earle Brown Heritage Center Fund Year Ended December 31, The Earle Brown Heritage Center Fund ended 2019 with a net position of $5,877,018, a decrease of $60,510 from the prior year. Of the net position balance, $3,691,341 represents investments in Earle Brown Heritage Center capital assets, leaving $2,185,677 of unrestricted net position. Earle Brown Heritage Center Fund sales and user fees for 2019 were $5,066,519, which is $221,744 (4.6 percent) more than last year. Operating expenses for 2019 were $2,831,460, an increase of $170,619 from the prior year. The increase in operating expense is mainly due to increased personal services. During fiscal 2019, this fund experienced depreciation expense totaling $225,883. -19- GOVERNMENT-WIDE FINANCIAL STATEMENTS In addition to fund-based information, the current reporting model for governmental entities also requires the inclusion of two government-wide financial statements designed to present a clear picture of the City as a single, unified entity. These government-wide financial statements provide information on the total cost of delivering services, including capital assets and long-term liabilities. STATEMENT OF NET POSITION The Statement of Net Position essentially tells you what the City owns and owes at a given point in time, the last day of the fiscal year. Theoretically, net position represents the resources the City has leftover to use for providing services after its debts are settled. However, those resources are not always in spendable form, or there may be restrictions on how some of those resources can be used. Therefore, the Statement of Net Position divides the net position into three components: • Net Investment in Capital Assets – The portion of net position reflecting equity in capital assets (i.e., capital assets minus related debt). • Restricted Net Position – The portion of net position equal to resources whose use is legally restricted minus any noncapital-related liabilities payable from those same resources. • Unrestricted Net Position – The residual balance of net position after the elimination of net investment in capital assets and restricted net position. The following table presents the components of the City’s net position as of December 31, 2019 and 2018 for governmental activities and business-type activities: Increase 2019 2018 (Decrease) Net position Governmental activities Net investment in capital assets 52,560,591$ 52,794,327$ (233,736)$ Restricted 35,743,847 30,501,419 5,242,428 Unrestricted 5,152,891 3,010,220 2,142,671 Total governmental activities 93,457,329 86,305,966 7,151,363 Business-type activities Net investment in capital assets 43,450,307 42,831,977 618,330 Unrestricted 16,005,070 15,827,178 177,892 Total business-type activities 59,455,377 58,659,155 796,222 Total net position 152,912,706$ 144,965,121$ 7,947,585$ As of December 31, The City’s total net position at December 31, 2019 was $7,947,585 higher than the previous year-end. Of the increase, $7,151,363 came from governmental activities and $796,222 came from business-type activities. The increase in the governmental activities was due to increases in restricted balances for Tax Increment, Debt Service, Municipal State Aid for Construction, and Special Assessment Construction. The increase in unrestricted is due to the positive operating results of the City as a whole. -20- STATEMENT OF ACTIVITIES The Statement of Activities tracks the City’s yearly revenues and expenses, as well as any other transactions that increase or reduce total net position. These amounts represent the full cost of providing services. The Statement of Activities provides a more comprehensive measure than just the amount of cash that changed hands, as reflected in the fund-based financial statements. This statement includes the cost of supplies used, depreciation of long-lived capital assets, and other accrual-based expenses. The following table presents the change in the net position of the City for the years ended December 31, 2019 and 2018: 2018 Program Expenses Revenues Net Change Net Change Governmental activities General government 4,423,425$ 476,377$ (3,947,048)$ (3,942,977)$ Public safety 12,706,644 2,281,270 (10,425,374) (9,409,481) Public works 12,787,805 11,338,912 (1,448,893) (354,645) Community service 181,159 – (181,159) (164,544) Parks and recreation 3,827,299 971,334 (2,855,965) (2,544,740) Economic development 2,146,011 424,551 (1,721,460) (2,102,350) Interest on long-term debt 666,343 – (666,343) (693,575) Business-type activities Municipal liquor 6,775,430 6,860,482 85,052 267,018 Golf course – – – (109,233) Earle Brown Heritage Center 5,242,416 5,068,900 (173,516) (15,642) Water utility 4,148,609 3,819,747 (328,862) 218,627 Sanitary sewer utility 4,546,350 5,011,303 464,953 193,230 Storm drainage utility 2,407,046 1,680,454 (726,592) (277,462) Street light utility 333,744 466,857 133,113 203,996 Recycling utility 410,610 404,981 (5,629) 30,728 Total net (expense) revenue 60,602,891$ 38,805,168$ (21,797,723) (18,701,050) General revenues Property taxes 19,073,449 17,650,461 Tax increments 5,354,749 5,147,964 Lodging taxes 1,091,105 1,167,961 Grants and contributions not restricted to specific programs 2,234,683 2,065,832 Unrestricted investment earnings 1,927,956 701,426 Gain on disposal of capital assets 63,366 80,786 Total general revenues 29,745,308 26,814,430 Change in net position 7,947,585$ 8,113,380$ Net (expense) revenue 2019 One of the goals of this statement is to provide a side-by-side comparison to illustrate the difference in the way the City’s governmental and business-type operations are financed. The table clearly illustrates the dependence of the City’s governmental operations on general revenues, such as property taxes and unrestricted grants. It also shows if the City’s business-type activities are generating sufficient program revenues (service charges and program-specific grants) to cover expenses. This is critical given the current downward pressures on the general revenue sources. -21- LEGISLATIVE UPDATES The 2019 legislative session began with a projected state general fund surplus of $1.052 billion. The legislative agenda was primarily focused on setting an operating budget for the state’s fiscal 2020-2021 biennium. At the end of the regular session, only a higher education budget bill had been completed. However, after a special session, the Legislature was able to address the 11 remaining budget bills, as well as pass an omnibus tax bill and small pension bill. The following is a brief summary of specific legislative changes from the 2019 session or previous legislative sessions potentially impacting Minnesota cities. Local Government Aid (LGA) – An additional $26 million was added to the appropriation for the city LGA formula beginning in fiscal 2020, bringing the total state-wide appropriation to $560.4 million. An additional $4 million was added to the appropriation beginning in fiscal 2021. The LGA distribution formula for 2020 was altered to provide that a city’s 2020 LGA may not be less than its 2019 aid, an d the cap on maximum aid losses in any year thereafter was modified. Bonding Bill – The 2019 bonding bill provided financing for approximately $102 million of projects and funding authorized by the 2018 omnibus bonding bill, which had been legally challenged due to their reliance on the use of the Environment and Natural Resources Trust Fund to generate appropriation bonds. The 2019 Legislature changed the funding source for these projects to general obligation bonds, clearing the way for the projects to go forward. Included in this was $59 million earmarked for city water and wastewater projects through the state Public Facilities Authority. Local Option Sales Tax Process – Effective May 1, 2019, the process for cities to enact a local option sales tax have been modified, requiring special legislation prior to a local referendum vote. Cities must now adopt a resolution specifying the proposed sales tax rate and time frame for the sales tax. The resolution must also include a detailed description of the project or projects (up to five) to be funded by the sales tax, the amount to be raised for each project, and documentation of the regional significance of each project. The resolution must be submitted to the House and Senate tax committee chairs by January 31st to be considered for special legislation by the State Legislature. If special legislation is approved, voter approval must be obtained by referendum at a general election within two years of legislative approval. Wage Theft – The Legislature enacted a number of changes in employment law aimed at reducing wage theft by employers. The changes require employers to provide written notice to new employees of specific wage information including rate of pay, allowances, paid leave, deductions, days in a pay period, and the employer’s legal name, address, and phone number. Employers must also provide an earnings statement that includes similar information. The changes also create new requirements for employer recordkeeping for hours worked each day and each workweek, and imposes penalties for failure to do so and for refusal to make the records available for inspection by the Department of Labor. Written Estimates of Consulting Fees – Effective August 1, 2019, upon request by applicants for a permit, license, or other approval relating to real estate development or construction, cities are required to provide a written, nonbinding estimate of consulting fees to be charged to the applicant based on information available at that time. The related application will not be considered complete until the city has provided the estimate, received the required application fees, and received the applicant’s signed acceptance of the fee estimate along with a signed statement that the applicant has not relied on the fe e estimate in its decision to proceed with the application. Contract Retainage – Effective for contracts entered into August 1, 2019 or later, contract retainage must be released no later than 60 days after the related construction project reaches substantial completion as defined by statute. After substantial completion, cities can still withhold amounts equal to, 1) 250 percent of the cost to correct or complete work known at the time of substantial completion, and 2) the greater of $500 or 1 percent of the value of the contract pending the completion of “final paperwork,” including documents required to fulfill contractual obligations such as operating manuals, payroll documents for projects subject to prevailing wage requirements, and contractor payroll tax withholding affidavits. Any resulting reduction in retainage must be passed from the contractor to all subcontractors at the same rate. -22- Driver and Vehicle Registration System (VTRS) – The Legislature selected VTRS, a third party vendor system, to replace the failed Minnesota Licensing and Registration System (MNLARS). Fees from driver’s licenses, license plates, and filing fees were increased and a technology surcharge imposed on vehicle registration renewals to pay for the implementation of VTRS, the decommissioning of MNLARS, and to temporarily increase the capacity of Driver and Vehicle Services to meet public service needs. Included in this is $13 million appropriated in 2019 for reimbursement grants to deputy registrars for costs related to MNLARS. The grants, which would be determined by formula, would require the deputy registrar accepting the grant to release the state from any further liability or claims related to MNLARS. Vaping Ordinance Authority – Effective July 1, 2019, cities are allowed to enact and enforce ordinances with more stringent measures than the Minnesota Clean Indoor Air Act to protect individuals from involuntary exposure to aerosol or vapor from electronic delivery devices. Water Connection Fees – Effective January 1, 2020, the annual water connection fees cities are required to collect on behalf of the Minnesota Department of Health for water testing and support has been increased from $6.36 to $9.72. Military Exception to Open Meeting Law – Effective August 1, 2019, members of a public body that are in the military will be allowed to participate in public meetings via interactive television when they are at a required drill, deployed, or on active duty. The member may participate under this exception up to three times a year. Pension Plan Changes – The 2019 pension bill included several changes to the various pension plans throughout the state: • Changes to plans administered by the Public Employees Retirement Association (PERA) included: o The rights of PERA General Employees Retirement Fund (GERF) plan and Public Employees Police and Fire Fund (PEPFF) plan members to purchase service credit for periods of military leave were expanded. This gives plan members the right to purchase up to five years of service credit for military service leave that is not federally protected because the service occurred prior to public employment or the member did not meet the payment deadlines applicable to federally protected leave service credit purchases. o The Phased Retirement Option (PRO) program, which gives cities an opportunity to retain potentially retiring employees that are GERF plan members aged 62 or over, was altered and made permanent. Under a PRO arrangement, an employee would begin collecting a retirement annuity, but could continue working for their current employer for up to five years if they agree to a work schedule that represents a reduction of at least 25 percent each pay period from their current schedule, up to a maximum of 1,044 hours per year. Employees would not be allowed to contribute to a pension benefit plan or accrue additional service time while working under a PRO. o A process was established for municipalities and joint powers entities to terminate participation in the PERA Statewide Volunteer Firefighter (SVF) plan if, 1) the entity has either eliminated its fire department or ceased using the services of all departing firefighters and any other noncareer or volunteer firefighters, and 2) the entity’s account has assets sufficient to cover all liabilities including the fully vested liabilities for all departing firefighters and administrative expenses. -23- • Changes impacting volunteer firefighter relief associations (VRFAs) included: o Effective January 1, 2020, vesting schedules for defined contribution plans cannot require that a member have more than 20 years of active service to become 100 percent vested in the member’s account, or provide for a larger vesting percentage with respect to the completed years of service than as provided in the statutory schedule. o Effective January 1, 2020, the permitted graded vesting schedule for defined benefit pension plans is reduced from 20 years to 10 years for full vesting. Also, plans cannot require that a member have more than 20 years of active service to become 100 percent vested in the member’s accrued service pension, or provide for a larger vesting percentage with respect to the completed years of service than as provided in the statutory schedule. o Effective January 1, 2020, supplemental benefits are allowed to be paid to designated beneficiaries or estates when plan members have no surviving spouse or children. THIS PAGE INTENTIONALLY LEFT BLANK -24- ACCOUNTING AND AUDITING UPDATES The following is a summary of GASB standards expected to be implemented in the next few years. Due to the COVID-19 outbreak, the GASB has delayed the original implementation dates of these and other standards as described below. At this point, the implementation dates for the standards listed below are tentative and may be subject to change. GASB STATEMENT NO. 87, LEASES A lease is a contract that transfers control of the right to use another entity’s nonfinancial asset as specified in the contract for a period of time in an exchange or exchange-like transaction. Examples of nonfinancial assets include buildings, land, vehicles, and equipment. Any contract that meets this definition should be accounted for under the leases guidance, unless specifically excluded in this statement. Governments enter into leases for many types of assets. Under the previous guidance, leases were classified as either capital or operating depending on whether the lease met any of the four tests. In many cases, the previous guidance resulted in reporting lease transactions differently than similar nonlease financing transactions. The goal of this statement is to better meet the information needs of users by improving accounting and financial reporting for leases by governments. It establishes a singl e model for lease accounting based on the principle that leases are financings of the right to use an underlying asset. This statement increases the usefulness of financial statements by requiring recognition of certain lease assets and liabilities for lea ses that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. Under this statement, a lessee is required to recognize a lease liability and an intan gible right to use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments’ leasing activities. To reduce the cost of implementation, this statement includes an exception for short-term leases, defined as a lease that, at the commencement of the lease term, has a maximum possible term under the lease contract of 12 months (or less), including any options to extend, regardless o f their probability of being exercised. Lessees and lessors should recognize short-term lease payments as outflows of resources or inflows of resources, respectively, based on the payment provisions of the lease contract. The requirements of this statement were originally effective for reporting periods beginning after December 15, 2019 and are now effective for fiscal years beginning after June 15, 2021. GASB STATEMENT NO. 91, CONDUIT DEBT OBLIGATIONS The primary objectives of this statement are to provide a single method of reporting conduit debt obligations by issuers and eliminate diversity in practice associated with (1) commitments extended by issuers, (2) arrangements associated with conduit debt obligations, and (3) related note disclosures. This statement achieves those objectives by clarifying the existing definition of a conduit debt obligation; establishing that a conduit debt obligation is not a liability of the issuer; establishing standards for accounting and financial reporting of additional commitments and voluntary commitments extended by issuers and arrangements associated with conduit debt obligations; and improving required note disclosures. -25- A conduit debt obligation is defined as a debt instrument having all of the following characteristics: • There are at least three parties involved: (1) an issuer, (2) a third party obligor, and (3) a debt holder or a debt trustee. • The issuer and the third party obligor are not within the same financial reporting entity. • The debt obligation is not a parity bond of the issuer, nor is it cross-collateralized with other debt of the issuer. • The third party obligor or its agent, not the issuer, ultimately receives the proceeds from the debt issuance. • The third party obligor, not the issuer, is primarily obligated for the payment of all amounts associated with the debt obligation (debt service payments). This statement also addresses arrangements, often characterized as leases, that are associated with conduit debt obligations. In those arrangements, capital assets are constructed or acquired with the proceeds of a conduit debt obligation and used by third party obligors in the course of their activities. This statement requires issuers to disclose general information about their conduit debt obligations, organized by type of commitment, including the aggregate outstanding principal amount of the issuers’ conduit debt obligations and a description of each type of commitment. Issuers that recognize liabilities related to supporting the debt service of conduit debt obligations also should disclose information about the amount recognized and how the liabilities changed during the reporting period. The requirements of this statement were originally effective for reporting periods beginning after December 15, 2020 and are now effective after December 15, 2021. Earlier application is encouraged. CITY OF BROOKLYN CENTER Corrective Action Plans and Summary Schedule of Prior Audit Findings Year Ended December 31, 2019 A. FINANCIAL STATEMENT FINDINGS None. B. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS None. C. MINNESOTA LEGAL COMPLIANCE FINDINGS None. D. SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS No audit findings were reported for the year ended December 31, 2018. 2019 Comprehensive Annual Financial ReportOctober 8, 2018ReviewCity Council/Financial Commission Joint Work Session ‐ June 1, 2020Mark Ebensteiner, Finance Director General Fund•October 8, 2018•Positive operating budget results of $960,392•Net increase in fund balance of $960,392 (no transfer to the Capital Improvements Fund – Additional $64,874 assigned in general fund)•General Fund unassigned fund balance represents 52% of next year’s budgeted expenditures•Fund Balance >52% needed for capital projects transfer2 General Fund Revenues•October 8, 2018•Revenues over budget by $712,57132019 Significant Budget Variances AmountInvestment Earnings (net of market value) $234,085Building permits $232,294Miscellaneous Revenue $209,095Lodging tax($88,895)Property tax revenue $75,456Community Center Fees($72,583) General Fund Expenditures•October 8, 2018•Expenses under budget by $282,49642018 Significant Budget Variances AmountRecreation Programs $118,604Community Center $77,004Information Technology $68,298Police Protection $67,972Nondepartmental expenditures($223,173) Enterprise Funds•Municipal Liquor•Operating income of $199,838, compared to $264,817 in 2018. •Received $2.7 million of lease revenue bonds for construction of liquor store #1•EBHC•Operating loss of $150,534 compared to a operating loss of $25,059 in 2018.5Enterprise Fund Change in CashMunicipal Liquor $483,913EBHC ($277,443) Utility Funds•Water received $2.7 million in bond proceeds to pay its’ portion of neighborhood improvement project costs•Sanitary Sewer received $2.1 million in bond proceeds as a result of planned project costs•Storm Drainage received $1.6 million in bond proceeds to pay its’ portion of neighborhood improvement project costs 6Utility Fund Change in CashWater $51,395Sanitary Sewer $2,813,937Storm Drainage $1,519,315Street Light $146,221Recycling($58,476) Other•Interstate Area Improvements‐ $2.3 million•Continued work on Brooklyn Blvd. Improvements•Firehouse Park Area Neighborhood Reconstruction Project completed•Evergreen Park Area Infrastructure project completion•Mill and overlay projects ‐ $3.5 million•Water Tower #2 and #3 Rehab – total cost $3.5 million•Liquor store #1 purchase and construction ‐$2.9 million7Significant capital investments made during the year ($12.5 million)•Central Garage ‐ Added/Replaced 16 piece of equipment totaling $721,246, including a trash pump, striper, small garbage truck, Freightliner M2, Wester Star 4700, and police vehicles.•Debt – Retired $5,733,000 of principal on previously issued bonds and issued $10,665,000 in new debt for infrastructure projects and liquor store construction. Other Continued…•October 8, 2018•Net Investment gain of $1,927,956, compared to an investment gain of $701,426 in 2018•Net investment gain includes:•Investment income of $1,266,690 (2018 was $1,007,027)•Unrealized gain on investments of $661,266 (2018 was loss of $305,615)•Unrealized (paper gain) due to lowering interest rates•Investments anticipated to be held to maturity•City/EDA owned $18.6 million in assets held for resale at year‐end8 Questions?9 COU N C IL ITEM MEMOR ANDUM DAT E:6/1/2020 TO :C urt Boganey, C ity Manager T HR O UG H:N/A F R O M: S UBJ EC T:C ounc il/C ommission Q uestions Background: