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HomeMy WebLinkAbout8.a. Accept Bids and Award Sale – G.O. Improvement Bonds, Series 2013A4ROSEMOUNTEXECUTIVE SUMMARY CITY COUNCIL City Council Meeting Date: September 3, 2013 AGENDA ITEM: Accept Bids and Award Sale — G.O. AGENDA SECTION: Improvement Bonds, Series 2013A Old Business PREPARED BY: Jeff May, Finance Director AGENDA NO.. ATTACHMENTS: Resolution and Official Statement APPROVED BY: RECOMMENDED ACTION: Motion to adopt a Resolution Awarding the Sale of $1,500,000 General Obligation Improvement Bonds, Series 2013A; and Providing for their Issuance. ISSUE Accept bids and award sale of improvement bonds for the construction of street and utility improvements for the City projects Greystone 2nd Addition and Prestwick Place 7`" Addition. BACKGROUND This item is on the agenda for Council to formally award the sale of the improvement bonds. At 10:00 A.M. Tuesday, September 3, 2013, sealed bids for G.O. Improvement Bonds, Series 2013A, will be opened and the results tabulated at the offices of Springsted, our financial advisors for the sale. A representative from Springsted will be at the Council meeting that evening to give their recommendation for the issuance of these bonds and to answer any questions that you may have. Because the bid opening is not until earlier in the day Tuesday, you will receive information regarding the bids at the meeting that evening. SUMMARY Recommend the above motion. CITY OF ROSEMOUNT DAKOTA COUNTY, MINNESOTA RESOLUTION NO. A RESOLUTION AWARDING THE SALE OF $1,500,000 GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2013A; AND PROVIDING FOR THEIR ISSUANCE BE IT RESOLVED By the City Council of the City of Rosemount, Dakota County, Minnesota (the "City ") as follows: Section 1. Sale of Bonds. 1.01 Authorization. It is hereby determined that it is necessary and expedient that the City issue approximately $1,500,000 General Obligation Improvement Bonds, Series 2013A (the "Bonds ") pursuant to Minnesota Statutes, Chapters 429 and 475 (the "Act ") to provide financing for various infrastructure improvement projects in the City (the "Improvements "). The City is authorized by Minnesota Statutes, Section 475.60, Subdivision 2(9) to negotiate the sale of the Bonds if the City has retained an independent financial advisor in connection with such sale. The City has retained Springsted Incorporated as an independent financial consultant in connection with the sale of the Bonds. 1.02 Award to the Purchaser and Interest Rates. The proposal of (the "Purchaser ") to purchase $1,500,000 General Obligation Improvement Bonds, Series 2013A (the "Bonds ") of the City described in the Terms of Proposal thereof is determined to be the most favorable offer and is accepted, the proposal being to purchase the Bonds at a price of $ plus accrued interest to date of delivery, for Bonds bearing interest as follows: Year Interest Rate Year Interest Rate 2015 2018 2016 2019 2017 1.03. Purchase. The sum of $ being the amount proposed by the Purchaser in excess of $1,489,500 shall be credited to the Debt Service Fund hereinafter created, or deposited in the Construction Fund under Section 4.01 hereof, as determined by the City's financial advisor and the City Finance Director. The City Finance Director is directed to retain the good faith check of the Purchaser, pending completion of the sale of the Bonds, and to return the good faith checks of the unsuccessful proposers forthwith. The Mayor and City Clerk are authorized to execute a contract with the Purchaser on behalf of the City. 1.04. Terms and Principal Amount of the Bonds. The City will forthwith issue and sell the Bonds pursuant to Minnesota Statutes, Chapter 475 (the "Act ") in the total principal amount of $1,500,000, originally dated October 1, 2013, in the denomination of $5,000 each or any integral multiple thereof, numbered No. R -1, upward, bearing interest as above set forth, and which mature serially on February 1 without option of prior payment in the years and amounts as follows: 429115v1 JSB RS125 -14 RESOLUTION 2013 - Year Amount Year Amount 2015 $290,000 2018 $305,000 2016 295,000 2019 310,000 2017 300,000 As may be requested by the Purchaser, one or more term Bonds may be issued having mandatory sinking fund redemption and final maturity amounts conforming to the foregoing principal repayment schedule, and corresponding additions may be made to the provision of the applicable Bond(s). 1.05. No Optional Redemption. The Bonds are not subject to prepayment prior to their maturity at the option of the City. Section 2. Registration and Payment. 2.01. Registered Form. The Bonds will be issued only in fully registered form. The interest thereon and, upon surrender of each Bond, the principal amount thereof, is payable by check or draft issued by the Registrar described herein. 2.02. Dates; Interest Payment Dates. Each Bond will be dated as of the last interest payment date preceding the date of authentication to which interest on the Bond has been paid or made available for payment, unless (i) the date of authentication is an interest payment date to which interest has been paid or made available for payment, in which case the Bond will be dated as of the date of authentication, or (ii) the date of authentication is prior to the first interest payment date, in which case the Bond will be dated as of the date of original issue. The interest on the Bonds is payable on February 1 and August 1 of each year, commencing August 1, 2013, to the registered owners of record as of the close of business on the fifteenth day of the immediately preceding month, whether or not that day is a business day. 2.03. Registration. The City will appoint, and will maintain, a bond registrar, transfer agent, authenticating agent and paying agent (the "Registrar "). The effect of registration and the rights and duties of the City and the Registrar with respect thereto are as follows: (a) Register. The Registrar must keep at its principal corporate trust office a bond register in which the Registrar provides for the registration of ownership of Bonds and the registration of transfers and exchanges of Bonds entitled to be registered, transferred or exchanged. (b) Transfer of Bonds. Upon surrender for transfer of a Bond duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar will authenticate and deliver, in the name of the designated transferee or transferees, one or more new Bonds of a like aggregate principal amount and maturity, as requested by the transferor. The Registrar may, however, close the books for registration of any transfer after the fifteenth day of the month preceding each interest payment date and until that interest payment date. (c) Exchange of Bonds. When Bonds are surrendered by the registered owner for exchange the Registrar will authenticate and deliver one or more new Bonds of a like aggregate principal amount and maturity as requested by the registered owner or the owner's attorney in writing. 429115v1 JSB RS125 -14 2 RESOLUTION 2013 - (d) Cancellation. Bonds surrendered upon transfer or exchange will be promptly cancelled by the Registrar and thereafter disposed of as directed by the City. (e) Improper or Unauthorized Transfer. When a Bond is presented to the Registrar for transfer, the Registrar may refuse to transfer the Bond until the Registrar is satisfied that the endorsement on the Bond or separate instrument of transfer is valid and genuine and that the requested transfer is legally authorized. The Registrar will incur no liability for the refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. (fl Persons Deemed Owners. The City and the Registrar may treat the person in whose name a Bond is registered in the bond register as the absolute owner of the Bond, whether the Bond is overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on the Bond and for all other purposes, and payments so made to a registered owner or upon the owner's order will be valid and effectual to satisfy and discharge the liability upon the Bond to the extent of the sum or sums so paid. (g) Taxes, Fees and Charges. The Registrar may impose a charge upon the owner thereof for a transfer or exchange of Bonds sufficient to reimburse the Registrar for any tax, fee or other governmental charge required to be paid with respect to the transfer or exchange. (h) Mutilated, Lost, Stolen or Destroyed Bonds. If a Bond becomes mutilated or is destroyed, stolen or lost, the Registrar will deliver a new Bond of like amount, number, maturity date and tenor in exchange and substitution for and upon cancellation of the mutilated Bond or in lieu of and in substitution for any Bond destroyed, stolen or lost, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case of a Bond destroyed, stolen or lost, upon filing with the Registrar of evidence satisfactory to it that the Bond was destroyed, stolen or lost, and of the ownership thereof, and upon furnishing to the Registrar an appropriate bond or indemnity in form, substance and amount satisfactory to it and as provided by law, in which both the City and the Registrar must be named as obligees. Bonds so surrendered to the Registrar will be cancelled by the Registrar and evidence of such cancellation must be given to the City. If the mutilated, destroyed, stolen or lost Bond has already matured or been called for redemption in accordance with its terms it is not necessary to issue a new Bond prior to payment. 2.04. Appointment of Initial Registr ar. The City appoints U.S. Bank National Association, St. Paul, Minnesota, as the initial Registrar. The Mayor and the City Clerk are authorized to execute and deliver, on behalf of the City, a contract with the Registrar. Upon merger or consolidation of the Registrar with another corporation, if the resulting corporation is a bank or trust company authorized by law to conduct such business, the resulting corporation is authorized to act as successor Registrar. The City agrees to pay the reasonable and customary charges of the Registrar for the services performed. The City reserves the right to remove the Registrar upon 30 days' notice and upon the appointment of a successor Registrar, in which event the predecessor Registrar must deliver all cash and Bonds in its possession to the successor Registrar and must deliver the bond register to the successor Registrar. On or before each principal or interest due date, without further order of this Council, the City Clerk must transmit to the Registrar monies sufficient for the payment of all principal and interest then due. 2.05. Execution, Authentication and Deliverv. The Bonds will be prepared under the direction of the City Clerk and executed on behalf of the City by the signatures of the Mayor and the City Clerk, provided that all signatures may be printed, engraved or lithographed facsimiles of the originals. If 4291150 JSB RS125 -14 RESOLUTION 2013 - an officer whose signature or a facsimile of whose signature appears on the Bonds ceases to be such officer before the delivery of any Bond, that signature or facsimile will nevertheless be valid and sufficient for all purposes, the same as if the officer had remained in office until delivery. Notwithstanding such execution, a Bond will not be valid or obligatory for any purpose or entitled to any security or benefit under this Resolution unless and until a certificate of authentication on the Bond has been duly executed by the manual signature of an authorized representative of the Registrar. Certificates of authentication on different Bonds need not be signed by the same representative. The executed certificate of authentication on a Bond is conclusive evidence that it has been authenticated and delivered under this Resolution. When the Bonds have been so prepared, executed and authenticated, the City Finance Director will deliver the same to the Purchaser upon payment of the purchase price in accordance with the contract of sale heretofore made and executed, and the Purchaser is not obligated to see to the application of the purchase price. 2.06. Temporary Bonds. The City may elect to deliver in lieu of printed definitive Bonds one or more typewritten temporary Bonds in substantially the form set forth in Section 3 with such changes as may be necessary to reflect more than one maturity in a single temporary bond. Upon the execution and delivery of definitive Bonds the temporary Bonds will be exchanged therefor and cancelled. Section 3. Form of Bond. 3.01. The Bonds will be printed or typewritten in substantially the following form: No. R- UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF DAKOTA CITY OF ROSEMOUNT GENERAL OBLIGATION IMPROVEMENT BOND, SERIES 2013A Date of Rate Maturity Original Issue CUSIP , 20_ October 1, 2013 Registered Owner: Cede & Co. The City of Rosemount, Minnesota, a duly organized and existing municipal corporation in Dakota County, Minnesota (the "City "), acknowledges itself to be indebted and for value received promises to pay to the Registered Owner specified above, or registered assigns, the principal sum set forth above on the maturity date specified above without option of prior payment, with interest thereon from the date hereof at the annual rate specified above, payable February 1 and August 1 in each year, commencing August 1, 2014, to the person in whose name this Bond is registered at the close of business on the fifteenth day (whether or not a business day) of the immediately preceding 429115v1 JSB RS125 -14 4 RESOLUTION 2013 - month. The interest hereon and, upon presentation and surrender hereof, the principal hereof are payable in lawful money of the United States of America by check or draft by U.S. Bank National Association, St. Paul, Minnesota, as Registrar, Paying Agent, Transfer Agent and Authenticating Agent, or its designated successor under the Resolution described herein. For the prompt and full payment of such principal and interest as the same respectively become due, the full faith and credit and taxing powers of the City have been and are hereby irrevocably pledged. This Bond is one of an issue in the aggregate principal amount of $1,500,000 all of like original issue date and tenor, except as to number, denomination, maturity date, and interest rate, all issued pursuant to a resolution adopted by the City Council on September 3, 2013 (the "Resolution "), for the purpose of providing money to finance various infrastructure improvement projects within the City, pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Chapters 429 and 475, and the principal hereof and interest hereon are payable from special assessments against property specifically benefited by local improvements and from ad valorem taxes, as set forth in the Resolution to which references is made for a full statement of rights and powers thereby conferred. The full faith and credit of the City are irrevocably pledged for payment of this Bond and the City Council has obligated itself to levy ad valorem taxes on all taxable property in the City, which taxes may be levied without limitation as to rate or amount. The Bonds of this series are issued only as fully registered Bonds in denominations of $5,000 or any integral multiple thereof of single maturities. As provided in the Resolution and subject to certain limitations set forth therein, this Bond is transferable upon the books of the City at the principal office of the Registrar, by the registered owner hereof in person or by the owner's attorney duly authorized in writing, upon surrender hereof together with a written instrument of transfer satisfactory to the Registrar, duly executed by the registered owner or the owner's attorney; and may also be surrendered in exchange for Bonds of other authorized denominations. Upon such transfer or exchange the City will cause a new Bond or Bonds to be issued in the name of the transferee or registered owner, of the same aggregate principal amount, bearing interest at the same rate and maturing on the same date, subject to reimbursement for any tax, fee or governmental charge required to be paid with respect to such transfer or exchange. The City Council has designated the issue of Bonds of which this Bond forms a part as "qualified tax exempt obligations" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code "). The City and the Registrar may deem and treat the person in whose name this Bond is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose of receiving payment and for all other purposes, and neither the City nor the Registrar will be affected by any notice to the contrary. IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts, conditions and things required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen and to be performed preliminary to and in the issuance of this Bond in order to make it a valid and binding general obligation of the City in accordance with its terms, have been done, do exist, have happened and have been performed as so required, and that the issuance of this Bond does not cause the indebtedness of the City to exceed any constitutional, or statutory limitation of indebtedness. 429115vl JSB RS125 -14 5 RESOLUTION 2013 - This Bond is not valid or obligatory for any purpose or entitled to any security or benefit under the Resolution until the Certificate of Authentication hereon has been executed by the Registrar by manual signature of one of its authorized representatives. IN WITNESS WHEREOF, the City of Rosemount, Dakota County, Minnesota, by its City Council, has caused this Bond to be executed on its behalf by the facsimile or manual signatures of the Mayor and City Clerk and has caused this Bond to be dated as of the date set forth below. Dated: , 2013 CITY OF ROSEMOUNT, MINNESOTA (Facsimiles (Facsimile) City Clerk Mayor CERTIFICATE OF AUTHENTICATION This is one of the Bonds delivered pursuant to the Resolution mentioned within. U.S. BANK NATIONAL ASSOCIATION By Authorized Representative The following abbreviations, when used in the inscription on the face of this Bond, will be construed as though they were written out in full according to applicable laws or regulations: TEN COM -- as tenants UNIF GIFT MIN ACT Custodian in common (Cust) (Minor) TEN ENT -- as tenants by entireties JT TEN -- as joint tenants with right of survivorship and not as tenants in common under Uniform Gifts or Transfers to Minors Act........... (State) Additional abbreviations may also be used though not in the above list. 429115v1 JSB RS125 -14 6 RESOLUTION 2013 - ASSIGNMENT For value received, the undersigned hereby sells, assigns and transfers unto the within Bond and all rights thereunder, and does hereby irrevocably constitute and appoint attorney to transfer the said Bond on the books kept for registration of the within Bond, with full power of substitution in the premises. Dated: Notice: The assignor's signature to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration or any change whatever. Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by a financial institution that is a member of the Securities Transfer Agent Medallion Program ( "STAMP "), the Stock Exchange Medallion Program ( "SEMP "), the New York Stock Exchange, Inc. Medallion Signatures Program ("MSP ") or other such "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, SEMP or MSP, all in accordance with the Securities Exchange Act of 1934, as amended. The Registrar will not effect transfer of this Bond unless the information concerning the assignee requested below is provided. Name and Address: (Include information for all joint owners if this Bond is held by joint account.) Please insert social security or other identifying number of assignee 429115v1JSB RS125 -14 RESOLUTION 2013 - PROVISIONS AS TO REGISTRATION The ownership of the principal of and interest on the within Bond has been registered on the books of the Registrar in the name of the person last noted below. Date of Registration Registered Owner Signature of Registrar Cede & Co. Federal ID #13- 2555119 3.02. Approving Legal Opinion. The City Finance Director is authorized and directed to obtain a copy of the proposed approving legal opinion of Kennedy & Graven, Chartered, Minneapolis, Minnesota, which is to be complete except as to dating thereof and cause the opinion to be printed on or accompany each Bond. Section 4. Payment: Security, Pledges and Covenants. 4.01 Debt Service Fund. (a) The Bonds are payable from the General Obligation Improvement Bonds, Series 2013A Debt Service Fund (the "Debt Service Fund ") hereby created, and the proceeds of general taxes hereinafter levied, and special assessments (the "Assessments ") levied or to be levied for the Improvements are hereby pledged to the Debt Service Fund. If a payment of principal or interest on the Bonds becomes due when there is not sufficient money in the Debt Service Fund to pay the same, the City Finance Director is directed to pay such principal or interest from other funds of the City, and such fund will be reimbursed for those advances out of the proceeds of Assessments and Taxes when collected. There is appropriated to the Debt Service Fund (i) any amount over the minimum purchase price paid by the Purchaser, to the extent designated for deposit in the Debt Service Fund in accordance with Section 1.03, and (ii) the accrued interest paid by the Purchaser upon closing and delivery of the Bonds. (b) Construction Fund. The proceeds of the Bonds, less the appropriations made in paragraph (a), together any other funds appropriated for the Improvements and Assessments collected during the construction of the Improvements will be deposited in a separate construction fund (the "Construction Fund ") to be used solely to defray expenses of the Improvements and the payment of principal and interest on the Bonds prior to the completion and payment of all costs of the Improvements. Any balance remaining in the Construction Fund after completion of the Improvements may be used to pay the cost in whole or in part of any other improvement instituted under the Act. When the Improvements are completed and the cost thereof paid, the Construction Fund is to be closed and subsequent collections of Assessments for the Improvements are to be deposited in the Debt Service Fund. 4.02. City Covenants. The City hereby covenants with the holders from time to time of the Bonds as follows: (a) It is hereby determined that at least 20% of the costs of the Improvements to the City will be paid by Assessments. The City has caused or will cause the Assessments for the Improvements to be promptly levied so that the first installment will be collectible not later than 2014 and will take all steps necessary to assure prompt collection, and the levy of the Assessments is hereby authorized. The City Council will cause to be taken with due diligence all further actions that are required for the construction of each Improvement financed wholly or partly from the proceeds of 429115v1 JSB RS125 -14 8 RESOLUTION 2013 - the Bonds, and will take all further actions necessary for the final and valid levy of the Assessments and the appropriation of any other funds needed to pay the Bonds and interest thereon when due. (b) In the event of any current or anticipated deficiency in Assessments, the City Council will levy ad valorem taxes in the amount of the current or anticipated deficiency. (c) The City will keep complete and accurate books and records showing: receipts and disbursements in connection with the Improvements, Assessments levied therefor and other funds appropriated for their payment, collections thereof and disbursements therefrom, monies on hand and, the balance of unpaid Assessments. (d) The City will cause its books and records to be audited at least annually and will furnish copies of such audit reports to any interested person upon request. 4.03. Pledge of Tax Levy. For the purpose of paying the principal of and interest on the Bonds, there is levied a direct annual irrepealable ad valorem tax (the "Taxes ") upon all of the taxable property in the City, which will be spread upon the tax rolls and collected with and as part of other general taxes of the City. The taxes will be credited to the Debt Service Fund above provided and will be in the years and amounts as follows (year stated being year of collection: Year L v (See EXHIBIT B) It is hereby determined that the estimated collections of Assessments and the foregoing Taxes will produce at least 5% in excess of the amount needed to meet when due the principal and interest payments on the Bonds. 4.04. Certification to County Auditor as to Debt Service Fund Amount. It is hereby determined that the estimated collections of Assessments and the foregoing Taxes will produce at least 5% in excess of the amount needed to meet when due the principal and interest payments on the Bonds. The tax levy herein provided is irrepealable until all of the Bonds are paid, provided that at the time the City makes its annual tax levies the City Finance Director may certify to the County Auditor of Dakota County the amount available in the Debt Service Fund to pay principal and interest due during the ensuing year, and the County Auditor will thereupon reduce the levy collectible during such year by the amount so certified. 4.05. County Auditor Certificate as to Registration. The City Administrator is authorized and directed to file a certified copy of this resolution with the County Auditor of Dakota County and to obtain the certificate required by Minnesota Statutes, Section 475.63. Section 5. Authentication of Transcript. 5.01. Authority Proceedings and Records. The officers of the City are authorized and directed to prepare and furnish to the Purchaser and to the attorneys approving the Bonds, certified copies of proceedings and records of the City relating to the Bonds and to the financial condition and affairs of the City, and such other certificates, affidavits and transcripts as may be required to show the facts within their knowledge or as shown by the books and records in their custody and under their 4291150 JSB RS125 -14 RESOLUTION 2013 - control, relating to the validity and marketability of the Bonds and such instruments, including any heretofore furnished, will be deemed representations of the City as to the facts stated therein. 5.02. Certificate as to Official Statement. The Mayor and City Clerk are hereby authorized and directed to certify that they have examined the Official Statement prepared and circulated in connection with the issuance and sale of the Bonds and that to the best of their knowledge and belief the Official Statement is a complete and accurate representation of the facts and representations made therein as of the date of the Official Statement. Section 6. Tax Covenant. 6.01. Tax Exempt Bonds. The City covenants and agrees with the holders from time to time of the Bonds that it will not take or permit to be taken by any of its officers, employees or agents any action which would cause the interest on the Bonds to become subject to taxation under the Internal Revenue Code of 1986, as amended (the "Code "), and the Treasury Regulations promulgated thereunder, in effect at the time of such actions, and that it will take or cause its officers, employees or agents to take, all affirmative action within its power that may be necessary to ensure that such interest will not become subject to taxation under the Code and applicable Treasury Regulations, as presently existing or as hereafter amended and made applicable to the Bonds. 6.02. No Rebate Required. (a) The City will comply with requirements necessary under the Code to establish and maintain the exclusion from gross income of the interest on the Bonds under Section 103 of the Code, including without limitation requirements relating to temporary periods for investments and limitations on amounts invested at a yield greater than the yield on the Bonds. (b) For purposes of qualifying for the small- issuer exception to the federal arbitrage rebate requirements, the City finds, determines and declares that the aggregate face amount of all tax - exempt bonds (other than private activity bonds) issued by the City (and all subordinate entities of the City) during the calendar year in which the Bonds are issued is not reasonably expected to exceed $5,000,000, within the meaning of Section 148(�(4)(C) of the Code. 6.03. Not Private Activity Bonds. The City further covenants not to use the proceeds of the Bonds or to cause or permit them or any of them to be used, in such a manner as to cause the Bonds to be "private activity bonds" within the meaning of Sections 103 and 141 through 150 of the Code. 6.04. Bank Qualified. In order to qualify the Bonds as "qualified tax - exempt obligations" within the meaning of Section 265(b)(3) of the Code, the City makes the following factual statements and representations: (a) the Bonds are not "private activity bonds" as defined in Section 141 of the Code; (b) the City hereby designates the Bonds as "qualified tax - exempt obligations" for purposes of Section 265(b)(3) of the Code; (c) the reasonably anticipated amount of tax - exempt obligations (other than private activity bonds, that are not qualified 501(c) (3) bonds) which will be issued by the City (and all subordinate entities of the City) during calendar year 2013 will not exceed $10,000,000; and 429115v1 JSB RS 125 -14 10 RESOLUTION 2013 - (d) not more than $10,000,000 of obligations issued by the City during calendar year 2013 have been designated for purposes of Section 265(b)(3) of the Code. 6.05. Procedural Requirements. The City will use its best efforts to comply with any federal procedural requirements which may apply in order to effectuate the designations made by this section. Section 7. Book -Entry System; Limited Obligation of City. 7.01. DTC. The Bonds will be initially issued in the form of a separate single typewritten or printed fully registered Bond for each of the maturities set forth in Section 1.02 hereof Upon initial issuance, the ownership of each Bond will be registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York, and its successors and assigns ( "DTC "). Except as provided in this section, all of the outstanding Bonds will be registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC. 7.02. Participants. With respect to Bonds registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC, the City, the Registrar and the Paying Agent will have no responsibility or obligation to any broker dealers, banks and other financial institutions from time to time for which DTC holds Bonds as securities depository (the "Participants ") or to any other person on behalf of which a Participant holds an interest in the Bonds, including but not limited to any responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any Participant or any other person (other than a registered owner of Bonds, as shown by the registration books kept by the Registrar), of any notice with respect to the Bonds, including any notice of redemption, or (iii) the payment to any Participant or any other person, other than a registered owner of Bonds, of any amount with respect to principal of, premium, if any, or interest on the Bonds. The City, the Registrar and the Paying Agent may treat and consider the person in whose name each Bond is registered in the registration books kept by the Registrar as the holder and absolute owner of such Bond for the purpose of payment of principal, premium and interest with respect to such Bond, for the purpose of registering transfers with respect to such Bonds, and for all other purposes. The Paying Agent will pay all principal of, premium, if any, and interest on the Bonds only to or on the order of the respective registered owners, as shown in the registration books kept by the Registrar, and all such payments will be valid and effectual to fully satisfy and discharge the City's obligations with respect to payment of principal of, premium, if any, or interest on the Bonds to the extent of the sum or sums so paid. No person other than a registered owner of Bonds, as shown in the registration books kept by the Registrar, will receive a certificated Bond evidencing the obligation of this resolution. Upon delivery by DTC to the City Clerk of a written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., the words "Cede & Co.," will refer to such new nominee of DTC; and upon receipt of such a notice, the City Clerk will promptly deliver a copy of the same to the Registrar and Paying Agent. 7.03. Representation Letter. The City has heretofore executed and delivered to DTC a Blanket Issuer Letter of Representations (the "Representation Letter ") which will govern payment of principal of, premium, if any, and interest on the Bonds and notices with respect to the Bonds. Any Paying Agent or Registrar subsequently appointed by the City with respect to the Bonds will agree to take all action necessary for all representations of the City in the Representation letter with respect to the Registrar and Paying Agent, respectively, to be complied with at all times. 429115v1 JSB RS125 -14 11 RESOLUTION 2013 - 7.04. Transfers Outside Book- Entr:System. In the event the City, by resolution of the City Council, determines that it is in the best interests of the persons having beneficial interests in the Bonds that they be able to obtain Bond certificates, the City will notify DTC, whereupon DTC will notify the Participants, of the availability through DTC of Bond certificates. In such event the City will issue, transfer and exchange Bond certificates as requested by DTC and any other registered owners in accordance with the provisions of this Resolution. DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving notice to the City and discharging its responsibilities with respect thereto under applicable law. In such event, if no successor securities depository is appointed, the City will issue and the Registrar will authenticate Bond certificates in accordance with this resolution and the provisions hereof will apply to the transfer, exchange and method of payment thereof. 7.05. Payments to Cede & Co. Notwithstanding any other provision of this Resolution to the contrary, so long as a Bond is registered in the name of Cede & Co., as nominee of DTC, payments with respect to principal of, premium, if any, and interest on the Bond and notices with respect to the Bond will be made and given, respectively in the manner provided in DTC's Operational Arrangements as set forth in the Representation Letter. Section 8. Continuing Disclosure. 8.01. City Compliance with Provisions of Continuing Disclosure Certificate. The City hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate. Notwithstanding any other provision of this Resolution, failure of the City to comply with the Continuing Disclosure Certificate will not be considered an event of default with respect to the Bonds; however, any bondholder may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this section. 8.02. Execution of Continuing Disclosure Certificate. "Continuing Disclosure Certificate" means that certain Continuing Disclosure Certificate executed by the Mayor and City Clerk and dated the date of issuance and delivery of the Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof. Section 9. Defeasance. 9.01. Defeasance. When all Bonds and all interest thereon, have been discharged as provided in this section, all pledges, covenants and other rights granted by this resolution to the holders of the Bonds will cease, except that the pledge of the full faith and credit of the City for the prompt and full payment of the principal of and interest on the Bonds will remain in full force and effect. The City may discharge all Bonds which are due on any date by depositing with the Registrar on or before that date a sum sufficient for the payment thereof in full. If any Bond should not be paid when due, it may nevertheless be discharged by depositing with the Registrar a sum sufficient for the payment thereof in full with interest accrued to the date of such deposit. (The remainder of this page is intentionally left blank.) 429115v1 JSB RS 125 -14 12 RESOLUTION 2013 - ADOPTED this 3rd day of September, 2013, by the City Council of the City of Rosemount. William H. Droste, Mayor ATTEST: Amy Domeier, City Clerk 429115v1 JSB RS125 -14 13 RESOLUTION 2013 - CERTIFICATE STATE OF MINNESOTA ) COUNTY OF DAKOTA ) ss CITY OF ROSEMOUNT ) I am the duly appointed, acting and qualified City Clerk of the City of Rosemount, Dakota County, Minnesota do hereby certify that I have examined the City of Rosemount records and the Minute Book of said City for the meeting of the 3rd of September, 2013 and that the attached copy of the Resolution 2013 - A RESOLUTION AWARDING THE SALE OF $1,500,000 GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2013A; AND PROVIDING FOR THEIR ISSUANCE was approved and is a true and correct copy of the City Proceedings relating to said Resolution. IN WITNESS WHEREOF, I have hereunto set my hand and seal of said City this day of 2013. City Clerk City of Rosemount Dakota County, Minnesota 429115v1 JSB RS125 -14 14 STATE OF MINNESOTA COUNTY OF DAKOTA COUNTY AUDITOR'S CERTIFICATE AS TO TAX LEVY AND REGISTRATION I, the undersigned County Auditor of Dakota County, Minnesota, hereby certify that a resolution adopted by the City Council of the City of Rosemount, Minnesota, on September 3, 2013, levying taxes for the payment of General Obligation Improvement Bonds, Series 2013A, in the amount of $1,500,000 dated October 1, 2013, has been filed in my office and said obligations have been registered on the register of obligations in my office and that such tax has been levied as required by law. WITNESS My hand and official seal this day of (SEAL) 429115v1 JSB RS125 -14 2013. County Auditor Dakota County, Minnesota Deputy EXHIBIT A PROPOSALS 429115v1JSB RS125 -14 B_1 EXHIBIT B TAX LEVY 429115v1JSB RS125 -14 B -1 OFFICIAL STATEMENT DATED AUGUST 20, 2013 NEW ISSUE Rating: Requested from Moody's Investor's Service In the opinion of Kennedy & Graven, Chartered, Bond Counsel, based on present federal and Minnesota laws, regulations, rulings and decisions, at the time of their issuance and delivery to the original Purchaser, interest on the Bonds is excluded from gross income for purposes of United States income tax and is excluded, to the same extent, in computing both gross and taxable net income for purposes of State of Minnesota income tax (other than Minnesota franchise taxes measured by income and imposed on corporations and financial institutions). Interest on the Bonds is not an item of tax preference for purposes of the alternative minimum tax imposed on individuals and corporations; however, interest is taken into account in determining adjusted current earnings for purposes of computing the federal alternative minimum tax imposed on corporations. No opinion will be expressed by Bond Counsel regarding other state or federal tax consequences caused by the receipt or accrual of interest on the Bonds or arising with respect to ownership of the Bonds. See "TAX EXEMPTION" and "OTHER FEDERAL AND STATE TAX CONSIDERATIONS' herein. $11500,000* City of Rosemount, Minnesota General Obligation Improvement Bonds, Series 2013A (Book Entry Only) Dated Date: Date of Delivery Interest Due: Each February 1 and August 1, commencing August 1, 2014 The Bonds will mature February 1 as follows: 2015 $290,000 2016 $295,000 2017 $300,000 2018 $305,000 2019 $310,000 The Bonds will not be subject to payment in advance of their respective stated maturity dates. The Bonds are general obligations of the City for which the City pledges its full faith and credit and power to levy direct general ad valorem taxes. In addition, the City will pledge special assessments against benefited properties. The proceeds will be used to finance various infrastructure improvement projects within the City. Proposals shall be for not less than $1,489,500, plus accrued interest, if any, on the total principal amount of the Bonds. Proposals shall specify rates in integral multiples of 1/100 or 1/8 of 1 %. The initial price to the public for each maturity must be 98.0% or greater. Proposals must be accompanied by a good faith deposit in the amount of $15,000 in the form of a certified or cashier's check payable to the order of the City, a wire transfer, or a Financial Surety Bond and delivered to Springsted Incorporated prior to the time proposals will be opened. Award of the Bonds will be on the basis of True Interest Cost (TIC). The City will designate the Bonds as "qualified tax - exempt obligations" pursuant to Section 265(b)(3) of the Internal Revenue Code of 1986, as amended, and the Bonds will not be subject to the alternative minimum tax for individuals. The Bonds will be issued as fully registered bonds without coupons and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company ( "DTC "). DTC will act as securities depository for the Bonds. Individual purchases may be made in book -entry form only, in the principal amount of $5,000 and integral multiples thereof. Investors will not receive physical certificates representing their interest in the Bonds purchased. (See "Book Entry System" herein.) U.S. Bank National Association, St. Paul, Minnesota will serve as registrar (the "Registrar") for the Bonds. The Bonds will be available for delivery at DTC on or about October 1, 2013. * Preliminary; subject to change. PROPOSALS RECEIVED: September 3, 2013 (Tuesday) until 10:00 A.M., Central Time AWARD: September 3, 2013 (Tuesday) at 7:30 P.M., Central Time Further information may be obtained from SPRINGSTED < Incorporated, Financial Advisor to the City, 380 Jackson Street, Suite 300, Saint Paul, Minnesota 55101 -2887 (651) 223 -3000 For purposes of compliance with Rule 15c2 -12 of the Securities and Exchange Commission, this document, as the same may be supplemented or corrected by the Issuer from time to time (collectively, the "Official Statement "), may be treated as an Official Statement with respect to the Obligations described herein that is deemed final as of the date hereof (or of any such supplement or correction) by the Issuer, except for the omission of certain information referred to in the succeeding paragraph. The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts and interest rates of the Obligations, together with any other information required by law, shall constitute a "Final Official Statement" of the Issuer with respect to the Obligations, as that term is defined in Rule 15c2 -12. Any such addendum shall, on and after the date thereof, be fully incorporated herein and made a part hereof by reference. By awarding the Obligations to any underwriter or underwriting syndicate submitting a Proposal therefor, the Issuer agrees that, no more than seven business days after the date of such award, it shall provide without cost to the senior managing underwriter of the syndicate to which the Obligations are awarded copies of the Official Statement and the addendum or addenda described in the preceding paragraph in the amount specified in the Terms of Proposal. The Issuer designates the senior managing underwriter of the syndicate to which the Obligations are awarded as its agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Any underwriter delivering a Proposal with respect to the Obligations agrees thereby that if its bid is accepted by the Issuer (i) it shall accept such designation and (ii) it shall enter into a contractual relationship with all Participating Underwriters of the Obligations for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. No dealer, broker, salesman or other person has been authorized by the Issuer to give any information or to make any representations with respect to the Obligations, other than as contained in the Official Statement or the Final Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by the Issuer. Certain information contained in the Official Statement and the Final Official Statement may have been obtained from sources other than records of the Issuer and, while believed to be reliable, is not guaranteed as to completeness or accuracy. THE INFORMATION AND EXPRESSIONS OF OPINION IN THE OFFICIAL STATEMENT AND THE FINAL OFFICIAL STATEMENT ARE SUBJECT TO CHANGE, AND NEITHER THE DELIVERY OF THE OFFICIAL STATEMENT OR THE FINAL OFFICIAL STATEMENT NOR ANY SALE MADE UNDER EITHER SUCH DOCUMENT SHALL CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE ISSUER SINCE THE DATE THEREOF. References herein to laws, rules, regulations, resolutions, agreements, reports and other documents do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document, the full text of which may contain qualifications of and exceptions to statements made herein. Where full texts of documents prepared by or on behalf of the Issuer have not been included as appendices to the Official Statement or the Final Official Statement, they will be furnished on request. Any CUSIP numbers for the Obligations included in the Final Official Statement are provided for convenience of the owners and prospective investors. The CUSIP numbers for the Obligations have been assigned by an organization unaffiliated with the Issuer. The Issuer is not responsible for the selection of the CUSIP numbers and makes no representation as to the accuracy thereof as printed on the Obligations or as set forth in the Final Official Statement. No assurance can be given that the CUSIP numbers for the Obligations will remain the same after the date of issuance and delivery of the Obligations. TABLE OF CONTENTS Page(s) Termsof Proposal ............................................................................. ............................... i -v Introductory Statement ....................................................................... ............................... 1 Continuing Disclosure ........................................................................ ............................... 1 TheBonds ......................................................................................... ............................... 2 Authorityand Purpose ....................................................................... ............................... 4 Securityand Financing ....................................................................... ............................... 5 FutureFinancing ................................................................................ ............................... 5 Litigation............................................................................................ ............................... 5 Legality.............................................................................................. ............................... 5 TaxExemption ................................................................................... ............................... 5 Other Federal and State Tax Considerations ..................................... ............................... 6 Bank - Qualified Tax - Exempt Obligations ............................................ ............................... 7 Rating................................................................................................ ............................... 7 FinancialAdvisor ................................................................................ ............................... 8 Certification........................................................................................ ............................... 8 CityProperty Values .......................................................................... ............................... 9 CityIndebtedness .............................................................................. ............................... 10 City Tax Rates, Levies and Collections .............................................. ............................... 14 Fundson Hand .................................................................................. ............................... 15 CityInvestments ................................................................................ ............................... 15 General Information Concerning the City ........................................... ............................... 16 Governmental Organization and Services .......................................... ............................... 20 Proposed Form of Legal Opinion .............................................. ............................... Appendix I Continuing Disclosure Certificate .............................................. ............................... Appendix 11 Summary of Tax Levies, Payment Provisions, and Minnesota Real Property Valuation ........................................ ............................... Appendix II I Audited 2012 Comprehensive Annual Financial Report ............ ............................... Appendix IV THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: TERMS OF PROPOSAL $1,500,000 CITY OF ROSEMOUNT, MINNESOTA GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2013A (BOOK ENTRY ONLY) Proposals for the Bonds and the Good Faith Deposit ( "Deposit ") will be received on Tuesday, September 3, 2013, until 10:00 A.M., Central Time, at the offices of Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota, after which time proposals will be opened and tabulated. Consideration for award of the Bonds will be by the City Council at 7:30 P.M., Central Time, of the same day. SUBMISSION OF PROPOSALS Springsted will assume no liability for the inability of the bidder to reach Springsted prior to the time of sale specified above. All bidders are advised that each Proposal shall be deemed to constitute a contract between the bidder and the City to purchase the Bonds regardless of the manner in which the Proposal is submitted. (a) Sealed Bidding. Proposals may be submitted in a sealed envelope or by fax (651) 223 -3046 to Springsted. Signed Proposals, without final price or coupons, may be submitted to Springsted prior to the time of sale. The bidder shall be responsible for submitting to Springsted the final Proposal price and coupons, by telephone (651) 223 -3000 or fax (651) 223 -3046 for inclusion in the submitted Proposal. OR (b) Electronic Bidding. Notice is hereby given that electronic proposals will be received via PARITY For purposes of the electronic bidding process, the time as maintained by PARITY® shall constitute the official time with respect to all Bids submitted to PARITY ®. Each bidder shall be solely responsible for making necessary arrangements to access PARITY`' for purposes of submitting its electronic Bid in a timely manner and in compliance with the requirements of the Terms of Proposal. Neither the City, its agents nor PARITY® shall have any duty or obligation to undertake registration to bid for any prospective bidder or to provide or ensure electronic access to any qualified prospective bidder, and neither the City, its agents nor PARITY® shall be responsible for a bidder's failure to register to bid or for any failure in the proper operation of, or have any liability for any delays or interruptions of or any damages caused by the services of PARITY ®. The City is using the services of PARITY® sole as a communication mechanism to conduct the electronic bidding for the Bonds, and PARITYU is not an agent of the City. If any provisions of this Terms of Proposal conflict with information provided by PARITY ®, this Terms of Proposal shall control. Further information about PARITY ®, including any fee charged, may be obtained from: PARITY ®, 1359 Broadway, 2nd Floor, New York, New York 10018 Customer Support: (212) 849 -5000 Preliminary; subject to change. DETAILS OF THE BONDS The Bonds will be dated October 1, 2013, as the date of original issue, and will bear interest payable on February 1 and August 1 of each year, commencing August 1, 2014. Interest will be computed on the basis of a 360 -day year of twelve 30 -day months. The Bonds will mature February 1 in the years and amounts* as follows: 2015 $290,000 2016 $295,000 2017 $300,000 2018 $305,000 2019 $310,000 * The City reserves the right, after proposals are opened and prior to award, to increase or reduce the principal amount of the Bonds or the amount of any maturity in multiples of $5,000. In the event the amount of any maturity is modified, the aggregate purchase price will be adjusted to result in the same gross spread per $1,000 of Bonds as that of the original proposal. Gross spread is the differential between the price paid to the City for the new issue and the prices at which the securities are initially offered to the investing public. BOOK ENTRY SYSTEM The Bonds will be issued by means of a book entry system with no physical distribution of Bonds made to the public. The Bonds will be issued in fully registered form and one Bond, representing the aggregate principal amount of the Bonds maturing in each year, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company ( "DTC), New York, New York, which will act as securities depository of the Bonds. Individual purchases of the Bonds may be made in the principal amount of $5,000 or any multiple thereof of a single maturity through book entries made on the books and records of DTC and its participants. Principal and interest are payable by the registrar to DTC or its nominee as registered owner of the Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The purchaser, as a condition of delivery of the Bonds, will be required to deposit the Bonds with DTC. REGISTRAR The City will name the registrar which shall be subject to applicable SEC regulations. The City will pay for the services of the registrar. OPTIONAL REDEMPTION The Bonds will not be subject to payment in advance of their respective stated maturity dates. SECURITY AND PURPOSE The Bonds will be general obligations of the City for which the City will pledge its full faith and credit and power to levy direct general ad valorem taxes. In addition, the City will pledge special assessments against benefited properties. The proceeds will be used to finance various infrastructure improvement projects within the City. BIDDING PARAMETERS Proposals shall be for not less than $1,489,500 plus accrued interest, if any, on the total principal amount of the Bonds. No proposal can be withdrawn or amended after the time set for receiving proposals unless the meeting of the City scheduled for award of the Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been made. Rates shall be in integral multiples of 1/100 or 1/8 of 1 %. The initial price to the public for each maturity must be 98.0% or greater. Bonds of the same maturity shall bear a single rate from the date of the Bonds to the date of maturity. No conditional proposals will be accepted. GOOD FAITH DEPOSIT Proposals, regardless of method of submission, shall be accompanied by a Deposit in the amount of $15,000, in the form of a certified or cashier's check, a wire transfer, or Financial Surety Bond and delivered to Springsted Incorporated prior to the time proposals will be opened. Each bidder shall be solely responsible for the timely delivery of their Deposit whether by check, wire transfer or Financial Surety Bond. Neither the City nor Springsted Incorporated have any liability for delays in the transmission of the Deposit. Any Deposit made by certified or cashier's check should be made payable to the City and delivered to Springsted Incorporated, 380 Jackson Street, Suite 300, St. Paul, Minnesota 55101. Any Deposit sent via wire transfer should be sent to Springsted Incorporated as the City's agent according to the following instructions: Wells Fargo Bank, N.A., San Francisco, CA 94104 ABA #121000248 for credit to Springsted Incorporated, Account #635- 5007954 Ref: Rosemount, MN Series 2013A Good Faith Deposit Contemporaneously with such wire transfer, the bidder shall send an e-mail to bond services(a)springsted.com, including the following information; (i) indication that a wire transfer has been made, (ii) the amount of the wire transfer, (iii) the issue to which it applies, and (iv) the return wire instructions if such bidder is not awarded the Bonds. Any Deposit made by the successful bidder by check or wire transfer will be delivered to the City following the award of the Bonds. Any Deposit made by check or wire transfer by an unsuccessful bidder will be returned to such bidder following City action relative to an award of the Bonds. If a Financial Surety Bond is used, it must be from an insurance company licensed to issue such a bond in the State of Minnesota and pre- approved by the City. Such bond must be submitted to Springsted Incorporated prior to the opening of the proposals. The Financial Surety Bond must identify each underwriter whose Deposit is guaranteed by such Financial Surety Bond. If the Bonds are awarded to an underwriter using a Financial Surety Bond, then that underwriter is required to submit its Deposit to the City in the form of a certified or cashier's check or wire transfer as instructed by Springsted Incorporated not later than 3:30 P.M., Central Time on the next business day following the award. If such Deposit is not received by that time, the Financial Surety Bond may be drawn by the City to satisfy the Deposit requirement. The Deposit received from the purchaser, the amount of which will be deducted at settlement, will be deposited by the City and no interest will accrue to the purchaser. In the event the purchaser fails to comply with the accepted proposal, said amount will be retained by the City. AWARD The Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost (TIC) basis calculated on the proposal prior to any adjustment made by the City. The City's computation of the interest rate of each proposal, in accordance with customary practice, will be controlling. The City will reserve the right to: (i) waive non - substantive informalities of any proposal or of matters relating to the receipt of proposals and award of the Bonds, (ii) reject all proposals without cause, and (iii) reject any proposal that the City determines to have failed to comply with the terms herein. BOND INSURANCE AT PURCHASER'S OPTION The City has not applied for or pre- approved a commitment for any policy of municipal bond insurance with respect to the Bonds. If the Bonds qualify for municipal bond insurance and a bidder desires to purchase a policy, such indication, the maturities to be insured, and the name of the desired insurer must be set forth on the bidder's Proposal. The City specifically reserves the right to reject any bid specifying municipal bond insurance, even though such bid may result in the lowest TIC to the City. All costs associated with the issuance and administration of such policy and associated ratings and expenses (other than any independent rating requested by the City) shall be paid by the successful bidder. Failure of the municipal bond insurer to issue the policy after the award of the Bonds shall not constitute cause for failure or refusal by the successful bidder to accept delivery of the Bonds. CUSIP NUMBERS If the Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Bonds, but neither the failure to print such numbers on any Bond nor any error with respect thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the purchaser. SETTLEMENT On or about October 1, 2013, the Bonds will be delivered without cost to the purchaser through DTC in New York, New York. Delivery will be subject to receipt by the purchaser of an approving legal opinion of Kennedy & Graven, Chartered of Minneapolis, Minnesota, and of customary closing papers, including a no- litigation certificate. On the date of settlement, payment for the Bonds shall be made in federal, or equivalent, funds that shall be received at the offices of the City or its designee not later than 12:00 Noon, Central Time. Unless compliance with the terms of payment for the Bonds has been made impossible by action of the City, or its agents, the purchaser shall be liable to the City for any loss suffered by the City by reason of the purchaser's non - compliance with said terms for payment. CONTINUING DISCLOSURE In accordance with SEC Rule 15c2- 12(b)(5), the City will undertake, pursuant to the resolution awarding sale of the Bonds, to provide annual reports and notices of certain events. A description of this undertaking is set forth in the Official Statement. The purchaser's obligation to purchase the Bonds will be conditioned upon receiving evidence of this undertaking at or prior to delivery of the Bonds. OFFICIAL STATEMENT The City has authorized the preparation of an Official Statement containing pertinent information relative to the Bonds, and said Official Statement will serve as a nearly final Official Statement within the meaning of Rule 15c2 -12 of the Securities and Exchange Commission. For copies of the Official Statement or for any additional information prior to sale, any prospective purchaser is referred to the Financial Advisor to the City, Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota 55101, telephone (651) 223 -3000. The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts and interest rates of the Bonds, together with any other information required by law, shall constitute a "Final Official Statement" of the City with respect to the Bonds, as that term is defined in Rule 15c2 -12. By awarding the Bonds to any underwriter or underwriting syndicate submitting a proposal therefor, the City agrees that, no more than seven business days after the date of such award, it shall provide without cost to the - iv- senior managing underwriter of the syndicate to which the Bonds are awarded up to 25 copies of the Official Statement and the addendum or addenda described above. The City designates the senior managing underwriter of the syndicate to which the Bonds are awarded as its agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Any underwriter delivering a proposal with respect to the Bonds agrees thereby that if its proposal is accepted by the City (i) it shall accept such designation and (ii) it shall enter into a contractual relationship with all Participating Underwriters of the Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. Dated August 5, 2013 -v - BY ORDER OF THE CITY COUNCIL /s/ Amy Domeier City Clerk OFFICIAL STATEMENT $1,500,000* CITY OF ROSEMOUNT, MINNESOTA GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2013A (BOOK ENTRY ONLY) INTRODUCTORY STATEMENT This Official Statement contains certain information relating to the City of Rosemount, Minnesota (the "City" or the "Issuer ") and its issuance of $1,500,000* General Obligation Improvement Bonds, Series 2013A (the "Bonds," the "Obligations," or the "Issue "). The Bonds are general obligations of the City for which the City pledges its full faith and credit and power to levy direct general ad valorem taxes. In addition, the City will pledge special assessments against benefited properties. Inquiries may be directed to Mr. Jeffrey May, Finance Director, City of Rosemount, 2875 145th Street West, Rosemount, Minnesota 55068 -4997, or by telephoning (651) 423 -4411. Inquiries may also be made to Springsted Incorporated, 380 Jackson Street, Suite 300, St. Paul, Minnesota 55101 -2887, or by telephoning (651) 223 -3000. CONTINUING DISCLOSURE In order to assist the Underwriters in complying with SEC Rule 15c2 -12 (the "Rule "), pursuant to the Award Resolution and Continuing Disclosure Certificate to be executed on behalf of the City on or before closing, the City has and will covenant (the "Undertaking ") for the benefit of holders or beneficial owners of the Bonds to provide certain financial information and operating data relating to the City to the Municipal Securities Rulemaking Board annually, and to provide notices of the occurrence of certain events enumerated in the Rule to the Municipal Securities Rulemaking Board and to any state information depository. The specific nature of the Undertaking, as well as the information to be contained in the annual report or the notices of material events, is set forth in the Undertaking in substantially the form attached hereto as Appendix II, subject to such modifications thereof or additions thereto are: (i) consistent with requirements under the Rule, (ii) required by the purchaser of the Bonds from the City and (iii) acceptable to the Mayor and Clerk of the City. The City has not failed to comply within the previous five years in all material respects with all previous undertakings under the Rule to provide annual reports or notices of material events. A failure by the City to comply with the Undertaking will not constitute an event of default on the Bonds (although holders or other beneficial owners of the Bonds will have the sole remedy of * The City reserves the right, after proposals are opened and prior to award, to increase or reduce the principal amount of the Bonds or the amount of any maturity in multiples of $5,000. In the event the amount of any maturity is modified, the aggregate purchase price will be adjusted to result in the same gross spread per $1,000 of Bonds as that of the original proposal. Gross spread is the differential between the price paid to the City for the new issue and the prices at which the securities are initially offered to the investing public. - 1 - bringing an action for specific performance). Nevertheless, any such failure within the last five years must be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Bonds in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Bonds and their market price. THE BONDS General Description The Bonds are dated as of the date of delivery and issued in book entry form. Interest on the Bonds is payable February 1 and August 1 of each year, commencing August 1, 2014. Interest will be payable to the holder (initially Cede & Co.) registered on the books of the Registrar as of the fifteenth day of the calendar month next preceding such interest payment date. Principal of and interest on the Bonds will be paid as described in the section herein entitled "Book Entry System." Bonds will mature in the amounts and on the dates shown on the cover of this Official Statement. U.S. Bank National Association, St. Paul, Minnesota will serve as Registrar for the Bonds. The City will pay for registration services. Optional Redemption The Bonds will not be subject to payment in advance of their respective stated maturity dates. Book Entry System The Depository Trust Company ( "DTC "), New York, New York, will act as securities depository for the Obligations. The Obligations will be issued as fully- registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully- registered certificate will be issued for each maturity of the Obligations, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC is a limited - purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for securities that its participants ( "Direct Participants ") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation ( "DTCC "). DTCC is the holding company for DTC, National Securities Clearing Corporation, and Fixed Income Clearing Corporation all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( "Indirect Participants "). The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. -2- Purchases of Obligations under the DTC system must be made by or through Direct Participants, which will receive a credit for the Obligations on DTC's records. The ownership interest of each actual purchaser of each Obligation ( "Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Obligations are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Obligations, except in the event that use of the book -entry system for the Obligations is discontinued. To facilitate subsequent transfers, all Obligations deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Obligations with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Obligations; DTC's records reflect only the identity of the Direct Participants to whose accounts such Obligations are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Obligations may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Obligations, such as redemptions, tenders, defaults, and proposed amendments to the Obligation documents. For example, Beneficial Owners of the Obligations may wish to ascertain that the nominee holding the Obligations for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of the notices be provided directly to them. Redemption notices are required to be sent to DTC. If less than all of the Obligations within a maturity are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor any such other DTC nominee) will consent or vote with respect to the Obligations unless authorized by a Direct Participant in accordance with DTC's procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer or Bond Registrar as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Obligations are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Obligations will be made to Cede & Co. or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the Issuer or its agent on the payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, Agent, the Bond Registrar, or the Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such -3- other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Bond Registrar, Issuer, or the Issuer's agent. Disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. A Beneficial Owner shall give notice to elect to have its Obligations purchased or tendered, through its Participant, to Agent, and shall effect delivery of such Obligations by causing the Direct Participant to transfer the Participant's interest in the Obligations, on DTC's records, to Agent. The requirement for physical delivery of Obligations in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Obligations are transferred by Direct Participants on DTC's records and followed by a book - entry credit of tendered Obligations to Trustee's DTC account. DTC may discontinue providing its services as securities depository with respect to the Obligations at any time by giving reasonable notice to the Issuer or its agent. Under such circumstances, in the event that a successor securities depository is not obtained, certificates are required to be printed and delivered. The Issuer may decide to discontinue use of the system of book - entry-only transfers through DTC (or a successor securities depository). In that event, certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC's book -entry system has been obtained from sources that the Issuer believes to be reliable, but the Issuer takes no responsibility for the accuracy thereof. AUTHORITY AND PURPOSE The Bonds are being issued pursuant to Minnesota Statues, Chapters 429 and 475. The proceeds of the Bonds, along with available City funds, will be used to finance various infrastructure improvement projects within the City. The composition of the Bonds is as follows: Sources of Funds: Principal Amount Available City Funds Prepaid Assessments Total Sources of Funds Uses of Funds: Deposit to Project Fund Costs of Issuance Allowance for Discount Bidding Total Uses of Funds $1,500,000 997,380 147,831 $2,645,211 $2,596,854 37,857 10,500 $2,645,211 SECURITY AND FINANCING The Bonds are general obligations of the City for which the City pledges its full faith and credit and power to levy direct general ad valorem taxes. In addition, the City will pledge special assessments filed against benefited properties for repayment of the Bonds. Special assessments in the amount of $1,451,643 are expected to be filed on or about November 1, 2013 for first collection in 2014. The City anticipates receiving payments of approximately $147,831. The remaining assessment balance of approximately $1,303,812 will be collected over a term of five years with equal annual payments of principal and interest. Interest on the unpaid balance will be charged at a rate of 2.00% over the true interest rate received on the Bonds. The City will make its first levy in 2013 for collection in 2014. Each year's collection of taxes and special assessments, if collected in full, will be sufficient to pay 105% of the interest payment due August 1 in the collection year and the principal and interest payment due February 1 of the following year. FUTURE FINANCING The City does not anticipate issuing any additional long -term general obligation debt within the next 90 days. LITIGATION The City is not aware of any threatened or pending litigation affecting the validity of the Bonds or the City's ability to meet its financial obligations. LEGALITY The Bonds are subject to approval as to certain matters by Kennedy & Graven, Chartered, of Minneapolis, Minnesota, as Bond Counsel. Bond Counsel has not participated in the preparation of this Official Statement and will not pass upon its accuracy, completeness, or sufficiency. Bond Counsel has not examined nor attempted to examine or verify, any of the financial or statistical statements, or data contained in this Official Statement and will express no opinion with respect thereto. A legal opinion in substantially the form set out in Appendix I herein will be delivered at closing. TAX EXEMPTION At closing Kennedy & Graven, Chartered, of Minneapolis, Minnesota, Bond Counsel, will render an opinion that, at the time of their issuance and delivery to the original purchaser, under present federal and State of Minnesota laws, regulations, rulings and decisions (which excludes any pending legislation which may have a retroactive effect), the interest on each Bond is excluded from gross income for purposes of United States income tax and is excluded, to the same extent, from taxable net income of individuals, estates and trusts for Minnesota income -5- purposes, and is not a preference item for purposes of computing the federal alternative minimum tax or the Minnesota alternative minimum tax imposed on individuals, trusts, and estates. Such interest is taken into account in determining adjusted current earnings for the purpose of computing the federal alternative minimum tax imposed on certain corporations and is subject to Minnesota franchise taxes on corporations (including financial institutions) measured by income. No opinion will be expressed by Bond Counsel regarding other federal or state tax consequences caused by the receipt or accrual of interest on the Bonds or arising with respect to ownership of the Bonds. Preservation of the exclusion of interest on the Bonds from federal gross income and state gross and taxable net income, however, depends upon compliance by the City with all requirements of the Internal Revenue Code of 1986, as amended, (the "Code ") that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be (or continue to be) excluded from federal gross income and state gross and taxable net income. The City will covenant to comply with requirements necessary under the Code to establish and maintain the Bonds as tax - exempt under Section 103 thereof, including without limitation, requirements relating to temporary periods for investments and limitations on amounts invested at a yield greater than the yield on the Bonds. OTHER FEDERAL AND STATE TAX CONSIDERATIONS Property and Casualty Insurance Companies Property and casualty insurance companies are required to reduce the amount of their loss reserve deduction by 15% of the amount of tax - exempt interest received or accrued during the taxable year on certain obligations, including interest on the Bonds. Foreign Insurance Companies Foreign companies carrying on an insurance business in the United States are subject to a tax on income which is effectively connected with their conduct of any trade or business in the United States, including "net investment income." Net investment income includes tax - exempt interest such as interest on the Bonds. Branch Profits Tax A foreign corporation is subject to a branch profits tax equal to 30% of the "dividend equivalent amount" for the taxable year. The "dividend equivalent amount" is the foreign corporation's "effectively connected earnings and profits" adjusted for increase or decrease in "U.S. net equity." A branch's earnings and profits may include tax - exempt municipal bond interest, such as interest on the Bonds. Passive Investment Income of S Corporations Passive investment income, including interest on the Bonds, may be subject to federal income taxation under Section 1375 of the Code for an S corporation that has Subchapter C earnings and profits at the close of the taxable year if more than 25% of the gross receipts of such S corporation is passive investment income. Financial Institutions Financial institutions are generally not entitled to a deduction for interest expenses allocable to the owners of tax - exempt obligations purchased after August 7, 1986. The City will designate the Bonds as qualified tax - exempt obligations pursuant to Section 265(b)(3) of the Code. Future Tax Legislation The exclusion of interest on the Bonds from gross income for federal income tax purposes and the exclusion of interest on the Bonds from the net taxable income of individuals, estates, and trusts for State income tax purposes is not mandated or guaranteed by the United States Constitution or the Minnesota Constitution. Accordingly, federal laws providing that interest on the obligations of the states and the political subdivisions of the states is excluded from gross income for federal income tax purposes and Minnesota laws providing that interest on the obligations of the State is excluded, to the same extent, from the net taxable income of individuals, estates, and trusts for State income tax purposes may be subject to change. In the event federal or Minnesota law is amended in a manner that results in interest on the Bonds becoming subject to federal or Minnesota income taxation, or if federal or Minnesota income tax rates are reduced, the market value of the Bonds may be adversely affected. Bond Counsel's opinion is given as of its date and Bond Counsel assumes no obligation to update, revise, or supplement such opinion to reflect any changes in facts or circumstances or any changes in law that may hereafter occur. General The preceding is not a comprehensive list of all federal or State tax consequences which may arise from the receipt or accrual of interest on the Bonds. The receipt or accrual of interest on the Bonds may otherwise affect the federal income tax (or Minnesota income tax or franchise tax) liability of the recipient based on the particular taxes to which the recipient is subject and the particular tax status of other items of income or deductions. All prospective purchasers of the Bonds are advised to consult their own tax advisors as to the tax consequences of, or tax considerations for, purchasing or holding the Bonds. BANK - QUALIFIED TAX - EXEMPT OBLIGATIONS The City will designate the Bonds as "qualified tax - exempt obligations" for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended, relating to the ability of financial institutions to deduct from income for federal income tax purposes, interest expense that is allocable to carrying and acquiring tax - exempt obligations. RATING An application for rating of the Bonds has been made to Moody's Investors Service ( "Moody's "), 7 World Trade Center, 250 Greenwich Street, 23d Floor, New York, New York. If a rating is assigned, it will reflect only the opinion of Moody's. Any explanation of the significance of the rating may be obtained only from Moody's. There is no assurance that the rating, if assigned, that such rating will not be revised or withdrawn if, so warrant. A revision or withdrawal of the rating price of the Bonds. 7- will continue for any given period of time, or in the judgment of Moody's, circumstances may have an adverse effect on the market FINANCIAL ADVISOR The City has retained Springsted Incorporated, Public Sector Advisors, of St. Paul, Minnesota, as financial advisor (the "Financial Advisor ") in connection with the issuance of the Bonds. In preparing the Official Statement, the Financial Advisor has relied upon governmental officials, and other sources, who have access to relevant data to provide accurate information for the Official Statement, and the Financial Advisor has not been engaged, nor has it undertaken, to independently verify the accuracy of such information. The Financial Advisor is not a public accounting firm and has not been engaged by the City to compile, review, examine or audit any information in the Official Statement in accordance with accounting standards. The Financial Advisor is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities and therefore will not participate in the underwriting of the Bonds. CERTIFICATION The City has authorized the distribution of this Official Statement for use in connection with the initial sale of the Bonds. As of the date of the settlement of the Bonds, the Purchaser will be furnished with a certificate signed by the appropriate officers of the City. The certificate will state that the Official Statement did not and does not, as of the date of the certificate, contain any untrue statement of material fact or omit to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. (The Balance of This Page Has Been Intentionally Left Blank) CITY PROPERTY VALUES Trend of Values(a) Assessment/ Assessor's Market Value Collection Estimated Sales Economic Homestead Taxable Taxable Net Year Market Value Ratio(b) Market Value(c) Exclusion Market Value Tax Capacity 2013/14(4) N/A N/A N/A N/A $1,952,221,344 N/A 2012/13 $2,014,851,100 N/A N/A $119,450,681 1,866,877,179 $21,507,331 2011/12 2,060,480,700 93.0% $2,215,570,645 115,495,251 1,914,176,616 22,124,926 2010/11 2,146,847,500 96.1 2,233,972,425 N/A 2,113,658,000 24,311,493 2009/10 2,277,122,400 N/A N/A N/A 2,238,851,500 25,430,852 2008/09 2,414,099,100 N/A N/A N/A 2,367,003,800 26,648,399 (a) For a description of the Minnesota property tax system, see Appendix 111. (b) Sales Ratio Study for the year of assessment as posted by the Minnesota Department of Revenue, http: //www. revenue. state. mn. us /propertytax /Pages /statistics- imv.aspx. These ratios did not exist prior to 2010/11. (c) Economic market value equals the assessor's estimated market value divided by the sales ratio. These valuations cannot be calculated for years prior to 2010111. (d) 2013114 valuations are preliminary and are subject to change as posted by Dakota County, Minnesota hitp://www. co. dakota.mn. us. Source: Dakota County Assessor's office, July 2013, except as otherwise noted. 2012/13 Taxable Net Tax Capacity: $21,507,331* Real Estate: Residential Homestead Commercial /Industrial, Public Utility, and Railroad Agricultural Residential Non - Homestead Personal Property $14,623,324 67.1% 5,542,272 25.4 486,102 2.2 425,243 2.0 728,110 3.3 2012/13 Net Tax Capacity $21,805,051 100.0% Less: Captured Tax Increment Tax Capacity (568,507) Contribution to Fiscal Disparities (2,358,171) Plus: Distribution from Fiscal Disparities 2,628,958 2012/13 Taxable Net Tax Capacity $21,507,331 * Excludes mobile home valuation of $22,944. Ten of the Largest Taxpayers in the City 2012/13 Net Taxpayer Type of Business Tax Capacity Great Northern Oil Co. /Flint Hills Resources /Koch Refining Oil Refinery $2,807,369 Xcel Energy Utility 334,430 Clarel Corporation Retail 185,686 146th Street Partners LP Commercial 159,261 Northern Natural Gas Company Utility 125,012 Rosemount Crossing LLC Retail 94,842 Minnesota Pipeline Utility 92,356 CF Industries, Inc. (Cenex) Fertilizer 87,740 Individuals Commercial 84,948 Bigos- Rosemount LLC Commercial 80,866 Total $4,052,510" Great Northern Oil Co. /Flint Hills Resources /Koch Refining represents 13.1 % of the City's 2012113 taxable net tax capacity. The remaining nine taxpayers represent 5.8% of the City's 2012113 taxable net tax capacity. CITY INDEBTEDNESS Legal Debt Limit and Margin* Debt Limit (3% of Taxable Market Value) $56,006,315 Less: Outstanding Debt Subject to Limit (3,625,000) Legal Debt Margin at October 1, 2013 $52,381,315 The legal debt margin is referred to statutorily as the "Net Debt Limit" and permits debt to be offset by debt service funds and current revenues which are applicable to the payment of debt in the current fiscal year. No such offset has been used to increase the margin as shown above. -10- General Obligation Debt Supported by Taxes(a) (a) These issues are subject to the legal debt limit. M Represents the City's proportionate share (4.909,o) of the Dakota Communication Center's $7,315,000 Public Safety Revenue Bonds, Series 2007, dated May 1, 2007. M These bonds were issued by the Rosemount Port Authority and are being repaid from ad valorem taxes levied by the City. General Obligation Debt Supported Primarily by Special Assessments Est. Principal Date Original Final Final Est. Principal Date Original Purpose Final Outstanding of Issue Amount Purpose Maturity As of 10 -1 -13 6 -15 -05 $2,630,000 Fire Station 2 -1 -2025 $1,880,000 11 -1 -05 1,115,000 Fire Station Refunding 2 -1 -2016 375,000 5 -1 -07 360,000 Public Safety Revenue 2 -1 -2014 55,OOO(b) 10 -30 -08 385,000 Equipment 2 -1 -2014 85,000 12 -1 -10 1,355,000 Public Facility Refunding 2 -1 -2022 1,230,000(c) Total $3,625,000 (a) These issues are subject to the legal debt limit. M Represents the City's proportionate share (4.909,o) of the Dakota Communication Center's $7,315,000 Public Safety Revenue Bonds, Series 2007, dated May 1, 2007. M These bonds were issued by the Rosemount Port Authority and are being repaid from ad valorem taxes levied by the City. General Obligation Debt Supported Primarily by Special Assessments Est. Principal Date Original Final Final Outstanding of Issue Amount Purpose Maturity As of 10 -1 -13 6 -1 -06 $4,405,000 Local Improvements 2 -1 -2017 $1,810,000 11 -15 -11 2,080,000 Local Improvements 2 -1 -2017 1,675,000 9 -1 -12 810,000 Local Improvements 2 -1 -2018 810,000 10 -1 -13 1,500,000 Local Improvements (the Bonds) 2 -1 -2019 1,500,000 Total $5,795,000 General Obligation Debt Supported by Tax Increments* Est. Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 10 -1 -13 4 -10 -08 $2,765,000 Taxable Tax Increment 2 -1 -2024 $2,655,000 4 -10 -08 3,275,000 Tax Increment 2 -1 -2032 3,275,000 Total $5,930,000 * These bonds were issued by the Rosemount Port Authority, but are secured by the general obligation pledge of the City. - 11 - General Obligation Debt Supported by Revenues Date Original of Issue Amount Purpose 9 -1 -00 $1,160,000 Water Revenue 10 -15 -07 1,210,000 Water Revenue 12 -1 -10 1,545,000 Storm Water and Water Revenue Refunding Total Est. Principal Final Outstanding Maturity As of 10 -1 -13 2 -1 -2016 $ 315,000 2 -1 -2018 675,000 2 -1 -2018 945,000 Estimated Calendar Year Debt Service Payments Including the Bonds Year 2013 (at 10 -1) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 G.O. Debt Supported by Taxes Principal Principal & Interest $1,935,000 G.O. Debt Supported Primarily by Special Assessments Principal Principal & Interest(a) (Paid) (Paid) (Paid) (Paid) $ 510,000 $ 630,810 $1,015,000 $1,113,911 380,000 486,291 1,315,000 1,394,292 390,000 483,960 1,335,000 1,388,832 275,000 358,220 1,350,000 1,375,980 280,000 354,213 470,000 478,430 290,000 354,423 310,000 312,697 300,000 353,831 310,000 352,491 325,000 355,294 180,000 200,268 190,000 202,470 195,000 199,193 Total $3,625,OOO(b) $4,331,464 $5,795,000 (a) Includes the Bonds at an assumed average annual interest rate of 1.35 %. M 89.4% of this debt will be retired within ten years. -12- $6,064,142 Estimated Calendar Year Debt Service Payments Including the Bonds (continued) Total $5,930,000* $8,821,843 $1,935,000 $2,072,094 39.8% of this debt will be retired within ten years. Indirect General Obligation Debt Taxing Unit(a) Dakota County ISD No. 196 (Rosemount - Apple Valley- Eagan) ISD No. 199 (Inver Grove - Heights) ISD No. 200 (Hastings) Metropolitan Council 2012/13 Taxable Est. G.O. Debt Net Tax Capacity As of 10- 1 -13(b) $ 390,816,299 $ 46,485,000(c) 141,864,106 24,971,711 30,460,144 2,964,890,691 91,499,247 46,625,000 46, 935, 000 16,715,000(d) Debt Applicable to Tax Capacity in City Percent Amount 4.8% $ 2,231,280 14.1 12,901,394 5.9 2,750,875 0.1 46,935 0.6 100,290 Total $18,030,774 (a) Only those units with general obligation debt outstanding are shown here. (b) Excludes general obligation debt supported by revenues and tax and aid anticipation debt. Includes annual appropriation lease revenue debt. (c) Includes Dakota County's proportionate share of the Dakota Communication Center's $7,315,000 Public Safety Revenue Bonds, Series 2007. (d) Excludes general obligation debt payable from waste water revenues, 911 user fees, housing rental payments. Includes certificates of participation. -13- G.O. Debt Supported G.O. Debt Supported by Tax Increments by Revenues Principal Principal Year Principal & Interest Principal & Interest 2013 (at 10 -1) (Paid) (Paid) (Paid) (Paid) 2014 $ 110,000 $ 378,385 $ 535,000 $ 588,940 2015 150,000 411,885 410,000 449,921 2016 195,000 448,260 425,000 450,625 2017 230,000 472,635 315,000 328,343 2018 245,000 475,760 250,000 254,265 2019 260,000 478,135 2020 270,000 474,716 2021 285,000 474,960 2022 300,000 473,873 2023 315,000 471,960 2024 330,000 469,485 2025 350,000 473,673 2026 365,000 474,373 2027 380,000 474,473 2028 395,000 473,874 2029 410,000 472,573 2030 430,000 475,563 2031 445,000 472,844 2032 465.000 474.416 Total $5,930,000* $8,821,843 $1,935,000 $2,072,094 39.8% of this debt will be retired within ten years. Indirect General Obligation Debt Taxing Unit(a) Dakota County ISD No. 196 (Rosemount - Apple Valley- Eagan) ISD No. 199 (Inver Grove - Heights) ISD No. 200 (Hastings) Metropolitan Council 2012/13 Taxable Est. G.O. Debt Net Tax Capacity As of 10- 1 -13(b) $ 390,816,299 $ 46,485,000(c) 141,864,106 24,971,711 30,460,144 2,964,890,691 91,499,247 46,625,000 46, 935, 000 16,715,000(d) Debt Applicable to Tax Capacity in City Percent Amount 4.8% $ 2,231,280 14.1 12,901,394 5.9 2,750,875 0.1 46,935 0.6 100,290 Total $18,030,774 (a) Only those units with general obligation debt outstanding are shown here. (b) Excludes general obligation debt supported by revenues and tax and aid anticipation debt. Includes annual appropriation lease revenue debt. (c) Includes Dakota County's proportionate share of the Dakota Communication Center's $7,315,000 Public Safety Revenue Bonds, Series 2007. (d) Excludes general obligation debt payable from waste water revenues, 911 user fees, housing rental payments. Includes certificates of participation. -13- Debt Ratios G.O. G.O. Indirect Direct Debt" & Direct Debt To 2012/13 Estimated Market Value ($2,014,851,100) Per Capita (22,384 — 2012 State Demographer's Estimate) 0.76% $686 Excludes general obligation debt supported by revenues. NOTE: No offset of debt service funds on hand has been used in the above calculations. CITY TAX RATES, LEVIES AND COLLECTIONS Tax Capacity Rates 1.66% $1,491 2012/13 For 2008/09 2009/10 2010/11 2011/12 Total Debt Only Dakota County 25.821% 27.269% 29.149% 31.426% 33.421% -0- City of Rosemount 42.323 43.358 44.661 46.994 48.862 2.165% ISD No. 196 (Rosemount - Apple Val ley- Eagan) (a) 21.109 25.391 26.959 28.440 27.956 11.068 Special Districts(b) 4.916 4.987 5.199 5.562 5.884 1.638 Total 94.169% 101.005% 105.968% 112.422% 116.123% 14.871% (a) Independent School District No. 196 (Rosemount -Apple Valley- Eagan) also has a 2012113 tax rate of 0.23542% spread on the market value of property in support of an excess operating levy and buildings. (b) Special districts include Metropolitan Council, Mosquito Control, Transit District, Dakota County Community Development Agency, Dakota County Light Rail, and Vermillion River Watershed District. NOTE. Taxes are determined by multiplying the net tax capacity by the tax capacity rate, plus multiplying the referendum market value by the market value rate. This table does not include the market value based rates. See Appendix 111. Tax Levies and Collections -14- Collected During Collected and /or Abated Net Collection Year as of 7 -23 -13 Levy /Collect Levy" Amount Percent Amount Percent 2012/13 $9,224,241 (In Process of Collection) 2011/12 9,074,162 $9,003,979 99.2% $9,040,250 99.6% 2010/11 9,220,079 9,135,672 99.1 9,202,904 99.8 2009/10 9,550,155 9,451,527 99.0 9,538,484 99.9 2008/09 9,931,167 9,793,023 98.6 9,922,842 99.9 The net levy excludes state aid for property tax relief and fiscal disparities, if applicable. The net levy is the basis for computing tax capacity rates. See Appendix 111. -14- FUNDS ON HAND As of June 30, 2013 Fund General Special Revenue Port Authority Debt Service: Tax Supported Assessment Supported Port Authority Supported General Obligation Revenue Supported Capital Projects Water, Sewer and Storm Water Arena Total CITY INVESTMENTS Cash and Investments $ 5,148,650 649,694 708,546 572,226 2,339,902 411,753 510,690 6,245,527 15,791,782 299,772 $32,678,542 City funds are invested in accordance with Minnesota Statutes, Section 118A and the City's investment policy which is more restrictive than State statutes. The City investment portfolio is managed in a manner to attain a market rate of return while preserving and protecting the capital of the overall portfolio. The Finance Director or the City Administrator is responsible for investing all funds, including making investment decisions on a daily basis and monitoring the portfolio. Pursuant to the City's investment policy the City is authorized to invest in the following: 1. Governmental Securities: Instruments such as bonds, notes, bills, mortgages and other securities which are direct obligations of the federal government or its agencies, with the principal fully guaranteed by the U.S. government or its agencies. The City will not invest in any mortgage or mortgage- related security unless a return of principal is completely guaranteed by a federal entity. 2. Certificate of Deposit. 3. Repurchase Agreement. 4. Reverse Repurchase Agreement. 5. Prime Commercial Paper. 6. Any security which is a general obligation of the State of Minnesota or any of its municipalities. 7. Bankers acceptances of United States banks eligible for purchase by the Federal Reserve System. Collateral ization is required on two types of investments, certificates of deposit and repurchase agreements. In order to anticipate market changes and provide a level of security for all funds, the collateral ization level is 110% of the market value of principal and accrued interest. -15- The City attempts to diversify its investments according to type and maturity. The portfolio, as much as possible, contains both short -term and long -term investments. The long -term portion of the portfolio, meaning longer than five years, may not exceed 35% of the total funds in the portfolio. This is done to reduce overall market risk of rates changing. As of June 30, 2013, the City had a total of $32,260,587 invested funds as follows: Amount Invested Type of Security Length of Investment as of 6 -30 -13 Money Market Savings N/A $10,133,986 Certificates of Deposit Less than 12 months 5,438,000 Certificates of Deposit One to ten years 4,013,000 Government Asset Backed Securities Ten years or less 12,682,601 Total $32,267,587 GENERAL INFORMATION CONCERNING THE CITY The City of Rosemount, located in northern Dakota County, is a southern suburb of the Minneapolis /Saint Paul metropolitan area, and encompasses an area of approximately 35.3 square miles (22,560 acres). The City's population trend is shown below. Sources: U.S. Census Bureau, hitp.-Avww.census.gov; and Minnesota State Demographic Center, hitp.-Avww. demography, state.mn. us /estimates. htmL A major contributor to the City's tax base and economy is an industrial complex sited on 6,200 acres in the northeastern portion of the City near the Mississippi River. Firms located there include Flint Hills Resources' Pine Bend Refinery; CF Industries, Inc.; Continental Nitrogen & Resource Corporation; Endres Processing Ltd.; SKB (industrial waste containment facility); and Spectro Alloys Corporation. Mid - American Pipeline Company transports gas from southern states and operates a bottling station at Pine Bend. Minnesota Pipeline Company transports Canadian and North Dakota crude oil to the Flint Hills Resources' Pine Bend Refinery. Flint Hills Resources' Pine Bend Refinery is a leading producer of petroleum products in Minnesota converting 320,000 barrels of crude oil into gasoline each day. This Rosemount company employs 1,000 full -time workers. The University of Minnesota's Rosemount Research Center is located on a 7,500 -acre tract of land of which approximately 3,200 acres are situated in the City. This facility is utilized by the University, other research agencies, and private firms for agricultural and other research projects. The University has complete the approval process to begin mining some of their land. -16- Percent Population Change 2012 State Demographic Center Estimate 22,384 2.3% 2010 Census 21,874 49.6 2000 Census 14,619 69.6 1990 Census 8,622 -- Sources: U.S. Census Bureau, hitp.-Avww.census.gov; and Minnesota State Demographic Center, hitp.-Avww. demography, state.mn. us /estimates. htmL A major contributor to the City's tax base and economy is an industrial complex sited on 6,200 acres in the northeastern portion of the City near the Mississippi River. Firms located there include Flint Hills Resources' Pine Bend Refinery; CF Industries, Inc.; Continental Nitrogen & Resource Corporation; Endres Processing Ltd.; SKB (industrial waste containment facility); and Spectro Alloys Corporation. Mid - American Pipeline Company transports gas from southern states and operates a bottling station at Pine Bend. Minnesota Pipeline Company transports Canadian and North Dakota crude oil to the Flint Hills Resources' Pine Bend Refinery. Flint Hills Resources' Pine Bend Refinery is a leading producer of petroleum products in Minnesota converting 320,000 barrels of crude oil into gasoline each day. This Rosemount company employs 1,000 full -time workers. The University of Minnesota's Rosemount Research Center is located on a 7,500 -acre tract of land of which approximately 3,200 acres are situated in the City. This facility is utilized by the University, other research agencies, and private firms for agricultural and other research projects. The University has complete the approval process to begin mining some of their land. -16- Major Employers Employer Independent School District No. 196 (Rosemount -Apple Valley- Eagan) Flint Hills Resources' Pine Bend Refinery Intermediate School District No. 917 Wayne Transports Bay & Bay Transportation Dakota County Technical College Cub Food's Spectro Alloys Corporation Walbon & Company Endres Processing Ltd. McDonald's City of Rosemount Greif Brothers Corporation Source: Telephone survey of individual employers, August 2013. Retail Sales and Effective Buying Income (EBI) for Dakota County Approximate Total Number Product/Service of Employees Public education 3,500 Oil refinery 1,000 Education 355 General freight trucking 325 Truck transportation services 250 Education 250 Grocery store 120* Aluminum alloys 112 Freight shipping 110 Livestock feed 90 Restaurant 82* Government 75 Multiwall bags 72 Source: Telephone survey of individual employers, August 2013. Retail Sales and Effective Buying Income (EBI) for Dakota County The 2012 median household EBI for the State of Minnesota was $44,911. Source: Claritas, Inc. Labor Force Data Total Retail Total Median Sales ($000) EBI ($000) Household EBI 2012 $5,794,034 $10,770,815 $55,539 2011 6,784,232 10,387,368 56,655 2010 6,786,831 10,287,060 56,964 2009 6,197,129 10,543,345 59,620 2008 6,694,404 10,270,100 57,581 The 2012 median household EBI for the State of Minnesota was $44,911. Source: Claritas, Inc. Labor Force Data Source: Minnesota Department of Employment and Economic Development, http : //www.positivelyminnesota.com. 2013 data are preliminary. 17- June 2013 236,317 3,006,755 4.9% 5.2 Annual Average 2009 2010 2011 2012 Labor Force: Dakota County 229,997 229,733 230,864 231,946 State of Minnesota 2,950,277 2,962,633 2,969,696 2,969,366 Unemployment Rate: Dakota County 7.4% 7.1% 6.1% 5.3% State of Minnesota 8.0 7.4 6.5 5.6 Source: Minnesota Department of Employment and Economic Development, http : //www.positivelyminnesota.com. 2013 data are preliminary. 17- June 2013 236,317 3,006,755 4.9% 5.2 Building Permits Issued by the City Recent and Proposed Development City building levels for 2012 improved over those in 2011. The first six months of 2013 are also higher than the first six months of 2012, based upon the number of new residential units. Current non - residential development permits and valuations are below those of 2012 and more consistent with the activity for 2011. Various large commercial and industrial projects in 2012 brought building valuations up to those not experienced since the recession began in 2008. New dwelling unit construction has increased in 2013, fueled by small single - family development in the Akron Avenue area. Two national builders are generating the majority of activity and several regional builders have entered the market with new subdivisions and the completion of pre- existing projects. Additional planning approvals indicate that there will be available lots for construction heading into the fall of 2013 and new subdivisions ready for the 2014 construction season. A new neighborhood, in the process of gaining entitlements, will bring a higher end product to market than the four neighborhoods under construction. The multi - family market continues to be slow; however, there are signs that demand in this market may be occurring. The City is working with a private developer to facilitate construction of a new assisted living 90 -unit rental senior housing project, which is tentatively scheduled to break ground in late fall of 2013. In 2012, approximately $38,000,000 of new valuation was added in the community. It is anticipated that new valuation in 2013 will be slightly below that figure, at approximately $30,000,000. Much of that value continues to come from residential development, through new construction and remodeling projects on existing units. -18- Total Permits New Single Family Homes Number Value Number Value 2013 (to 6 -30) 268 $ 16,846,011 41 $ 11,239,180 2012 739 38,598,718 72 21,174,849 2011 868 28,753,846 53 14,240,000 2010 851 32,177,918 80 18,197,011 2009 914 31, 839,499 88 19,190,195 2008 1,649 67,945,640 237 26,809,851 2007 1,368 63,085,633 143 27,084,690 2006 1,055 70,879,026 224 46,503,749 2005 1,293 123,374,042 454 88,551,982 2004 1,329 126,348,047 551 110,674,682 Recent and Proposed Development City building levels for 2012 improved over those in 2011. The first six months of 2013 are also higher than the first six months of 2012, based upon the number of new residential units. Current non - residential development permits and valuations are below those of 2012 and more consistent with the activity for 2011. Various large commercial and industrial projects in 2012 brought building valuations up to those not experienced since the recession began in 2008. New dwelling unit construction has increased in 2013, fueled by small single - family development in the Akron Avenue area. Two national builders are generating the majority of activity and several regional builders have entered the market with new subdivisions and the completion of pre- existing projects. Additional planning approvals indicate that there will be available lots for construction heading into the fall of 2013 and new subdivisions ready for the 2014 construction season. A new neighborhood, in the process of gaining entitlements, will bring a higher end product to market than the four neighborhoods under construction. The multi - family market continues to be slow; however, there are signs that demand in this market may be occurring. The City is working with a private developer to facilitate construction of a new assisted living 90 -unit rental senior housing project, which is tentatively scheduled to break ground in late fall of 2013. In 2012, approximately $38,000,000 of new valuation was added in the community. It is anticipated that new valuation in 2013 will be slightly below that figure, at approximately $30,000,000. Much of that value continues to come from residential development, through new construction and remodeling projects on existing units. -18- The following lists platted lots currently available for development. The majority of these lots are approved as attached housing parcels. Development/Developer Biscayne Pointe 4th Addition /Heritage Development Connemara Crossing /Basic Builders Glendalough 2nd /Lennar Glendalough 3d /Lennar GlenRose of Rosemount/ Dean Johnson Homes Harmony 2nd Addition /CPDC Harmony 3d Addition /CPDC Harmony 5th Addition /Rsmt Land Corp. Harmony 6th Addition /Rottlund Pickens /Rottlund Rosewood Estates /Progress Land Prestwick Place 2nd Addition /DR Horton Prestwick Place 3d Addition /DR Horton Greystone 1St Addition /Ryland Group Prestwick Place 4th Addition /DR Horton Prestwick Place 5th Addition /DR Horton Financial Institutions Remaining Full service banking is provided by the First State Bank of Rosemount, which had deposits of $58,186,000 as of March 31, 2013. Branches of Central Bank, TCF National Bank, and Vermillion State Bank are also located in the City. Source: Federal Deposit Insurance Corporation, http: 1/1vww4.fdic.gov /. Education The major portion of the City is part of Independent School District No. 196 (Rosemount -Apple Valley- Eagan), headquartered in the City. The District's enrollment for the 2012/13 school year was approximately 27,174 students in grades kindergarten through twelve. The District is one of the largest employers in the City with approximately 3,500 full -time and part -time employees District -wide. The physical plant of the District consists of 18 elementary schools, six middle schools, four senior high schools, and three special education schools. Of these schools, two elementary schools, one junior high school, and one senior high are located in the City. Small portions of the City are located in Independent School District No. 199 (Inver Grove Heights) and Independent School District No. 200 (Hastings), whose 2012/13 enrollments were 3,798 and 4,659, respectively. The Dakota County Technical College is also located in the City. The Technical College, located on a 96 -acre site, opened in 1973 and has a total enrollment of over 4,500 students. In addition, the Technical College offers an extensive adult education program. _19- Units lots as of Housing Approved 6 -30 -13 Single Family 73 1 Single Family 44 9 Single Family 7 1 Single Family 29 1 Multi - Family 76 64 Multi - Family 81 14 Single Family 14 1 Single Family 64 29 Single Family 49 28 Single Family 9 1 Single Family 55 1 Single Family 29 1 Single Family 27 1 Single Family 23 15 Single Family 28 19 Single Family 6 6 Full service banking is provided by the First State Bank of Rosemount, which had deposits of $58,186,000 as of March 31, 2013. Branches of Central Bank, TCF National Bank, and Vermillion State Bank are also located in the City. Source: Federal Deposit Insurance Corporation, http: 1/1vww4.fdic.gov /. Education The major portion of the City is part of Independent School District No. 196 (Rosemount -Apple Valley- Eagan), headquartered in the City. The District's enrollment for the 2012/13 school year was approximately 27,174 students in grades kindergarten through twelve. The District is one of the largest employers in the City with approximately 3,500 full -time and part -time employees District -wide. The physical plant of the District consists of 18 elementary schools, six middle schools, four senior high schools, and three special education schools. Of these schools, two elementary schools, one junior high school, and one senior high are located in the City. Small portions of the City are located in Independent School District No. 199 (Inver Grove Heights) and Independent School District No. 200 (Hastings), whose 2012/13 enrollments were 3,798 and 4,659, respectively. The Dakota County Technical College is also located in the City. The Technical College, located on a 96 -acre site, opened in 1973 and has a total enrollment of over 4,500 students. In addition, the Technical College offers an extensive adult education program. _19- GOVERNMENTAL ORGANIZATION AND SERVICES Organization Rosemount was established as a municipal corporation in 1858, and became a statutory City in 1974. The City has a Mayor - Council form of government, with the four Council members being elected to overlapping four -year terms of office. The present City Council is listed below. Expiration of Term William H. Droste Mayor December 31, 2014 Vanessa Demuth Council Member December 31, 2016 Mark DeBettignies Council Member December 31, 2014 Kimberly Shoe - Corrigan Council Member December 31, 2014 Jeffrey Weisensel Council Member December 31, 2016 The City's chief administrative officer is the City Administrator, who is appointed by and serves at the discretion of the City Council. Mr. Dwight D. Johnson was appointed to the position of City Administrator in August 2008. Mr. Jeffrey A. May, who has served in the City's Finance Department since 1985, was appointed as the City's Finance Director in March 1991. Mr. May also serves as the City Treasurer. Ms. Amy Domeier serves as the City Clerk. Growth and development of the City is guided by the Comprehensive Land Use Plan, most recently adopted in 2009, covering development expectations until the year 2030. The Comprehensive Plan outlines the long -range land use plan and development policies of the community, and is designed to encourage and promote orderly development and growth, perpetuating a sound and steady growth in the City tax base. Services Police protection for the City is provided by 22 full -time officers, and four other police personnel. Fire protection is provided by 41 trained volunteers. The City has class 4, 5, and 10 insurance ratings, depending on the availability of hydrants and location in relation to a fire station. Municipal water, sanitary sewer and storm water services are provided to virtually all of the developed areas of the City. The municipal water service is provided by eight wells with four water towers having a total storage capacity of 3,500,000 gallons. The maximum pumping capacity is 12,096,000 gallons per day with an average demand of 2,665,979 gallons pumped daily in 2012. It is the City's policy to finance all of its lateral sanitary sewer and water improvements by special assessments filed against benefited property; however, there is a provision for deferred assessments, in which case it may be necessary to provide some tax support. Core facilities are intended to be financed from water and sewer connection charges, but these too may require some tax support in the event sufficient connections do not occur in a timely manner. To date, tax support has not been necessary. The City finances the construction and long -term maintenance of its storm water core facilities through the operation of a storm water utility. Each property in the City pays a quarterly "stormwater user fee" and an initial connection charge to support the program. -20- Interceptor sewer lines and wastewater treatment plants in the seven - county metropolitan area, of which the City is a part, are under the jurisdiction of the Metropolitan Council Environmental Services ( "MCES "). MCES finances its operations through user charges based on usage. The City is responsible for the construction and maintenance of sewer laterals. Employee Pensions All full -time and certain part -time employees of the City are covered by defined benefit pension plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the General Employees Retirement Fund (GERF) and the Public Employees Police and Fire Fund ( PEPFF), which are cost - sharing multiple - employer public employees retirement plans. GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated members are covered by Social Security and Basic members are not. All employees of the City covered by GERF belong to the Coordinated Plan. All police officers, fire fighters and peace officers who qualify for membership by statute are covered by the PEPFF. The City's contributions for the past five years are as follows: GERF PEPFF 2012 $251,921 $272,834 2011 268,848 256,236 2010 258,857 249,472 2009 248,891 240,374 2008 242,631 219,322 For more information regarding the liability of the City with respect to its employees, please reference "Note V, Other Information — A. Employees' Retirement System ", of the City's Comprehensive Annual Financial Report for fiscal year ended December 31, 2012, included as Appendix IV of this Official Statement. Other Post Employment Benefits The Governmental Accounting Standards Board (GASB) has issued Statement No. 45, Accounting and Financial Reporting by Employers for Post Employment Benefits Other Than Pensions (GASB 45), which addresses how state and local governments must account for and report their obligations related to post employment healthcare and other non - pension benefits (referred to as Other Post Employment Benefits or "OPEB "). The City does not fund health insurance for retired City employees. All former employees who were eligible to participate in the City's health insurance program while employed with the City are allowed to continue their coverage after employment has ended through COBRA. However, this coverage is to be paid in full at the former employee's expense. The only cost to the City comes from the implicit rate subsidy. Under GASB 45 such costs must be accounted for on an annual basis, however; management has determined that any liability related to postemployment benefits is immaterial and is not reported the City's Comprehensive Annual Financial Report. -21- General Fund Budget Expenditures General Government 2011 2012 2012 2013 Public Safety Actual Adopted Actual Adopted Revenues: 3,165,575 3,200,300 3,492,175 3,197,000 General Property Taxes $ 8,539,709 $ 8,296,900 $ 8,225,284 $ 8,479,300 Licenses and Permits 388,616 362,300 484,644 382,300 Intergovernmental 799,371 634,500 787,949 643,100 Charges for Services 762,906 668,400 841,451 663,000 Fines and Forfeits 123,245 125,000 129,343 125,000 Recreational Fees 261,422 254,900 253,033 263,200 Miscellaneous Revenues 257,507 186,300 178,689 169,200 Transfers In 64,922 3,500 3,500 3,500 Total Revenues $11,197,698 $10,531,800 $10,903,893 $10,728,600 Expenditures General Government $ 3,327,097 $ 2,646,500 $ 2,532,659 $ 2,584,400 Public Safety 3,366,406 3,439,200 3,470,062 3,624,800 Public Works 3,165,575 3,200,300 3,492,175 3,197,000 Parks and Recreation 1,252,926 1,245,800 1,271,700 1,322,400 Total Expenditures $11,112,004 $10,531,800 $10,766,596 $10,728,600 (The Balance of This Page Has Been Intentionally Left Blank) -22- APPENDIX I PROPOSED FORM OF LEGAL OPINION Kennedy Offices in 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis Minneapolis MN 55402 Saint Paul (612) 337 -9300 telephone Graven (612) 337 -9310 fax St. Cloud http: / /www.kennedy- graven.com Affirmative Action Equal Opportunity Employer CHARTERED $1,500,000 General Obligation Improvement Bonds, Series 2013A City of Rosemount Dakota County, Minnesota We have acted as bond counsel to the City of Rosemount, Dakota County, Minnesota (the "Issuer ") in connection with the issuance by the Issuer of its General Obligation Improvement Bonds, Series 2013A (the "Bonds "), originally dated as of October 1, 2013, and issued in the original aggregate principal amount of $1,500,000. In such capacity and for the purpose of rendering this opinion we have examined certified copies of certain proceedings, certifications and other documents, and applicable laws as we have deemed necessary. Regarding questions of fact material to this opinion, we have relied on certified proceedings and other certifications of public officials and other documents furnished to us without undertaking to verify the same by independent investigation. Under existing laws, regulations, rulings and decisions in effect on the date hereof, and based on the foregoing we are of the opinion that: 1. The Bonds have been duly authorized and executed, and are valid and binding general obligations of the Issuer, enforceable in accordance with their terms. 2. The principal of and interest on the Bonds are payable from special assessments levied or to be levied on property specially benefitted by local improvements and ad valorem taxes required by law to be levied on all taxable property of the Issuer, which taxes are not subject to any limitation as to rate or amount. 3. Interest on the Bonds is excluded from gross income of the recipient for federal income tax purposes and, to the same extent, is excluded from taxable net income of individuals, trusts, and estates for Minnesota income tax purposes, and is not a preference item for purposes of the computation of the federal alternative minimum tax, or the computation of the Minnesota alternative minimum tax imposed on individuals, trusts and estates. However, such interest is taken into account in determining adjusted current earnings for the purpose of computing the federal alternative minimum tax imposed on certain corporations and is subject to Minnesota franchise taxes on corporations (including financial institutions) measured by income. The opinion set forth in this paragraph is subject to the condition that the Issuer comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes and from taxable net income for Minnesota income tax purposes. The Issuer has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes and taxable net income for Minnesota income tax purposes retroactively to the date of issuance of the Bonds. We express no opinion regarding tax consequences arising with respect to the Bonds other than as expressly set forth herein. 1 -1 4. The rights of the owners of the Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting creditor's rights generally and by equitable principles, whether considered at law or in equity. We have not been asked and have not undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds, and accordingly we express no opinion with respect thereto. This opinion is given as of the date hereof and we assume no obligation to update, revise, or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. Dated 12013 at Minneapolis, Minnesota APPENDIX II CONTINUING DISCLOSURE CERTIFICATE City of Rosemount, Minnesota General Obligation Improvement Bonds, Series 2013A 2013 This Continuing Disclosure Certificate (the "Disclosure Certificate ") is executed and delivered by the City of Rosemount, Minnesota (the "Issuer ") in connection with the issuance of its General Obligation Improvement Bonds, Series 2013A, (the "Bonds ") in the original aggregate principal amount of $1,500,000. The Bonds are being issued pursuant to resolutions adopted by the City Council of the Issuer (the "Resolutions "). The Bonds are being delivered to (the "Purchaser ") on the date hereof. Pursuant to the Resolutions, the Issuer has covenanted and agreed to provide continuing disclosure of certain financial information and operating data and timely notices of the occurrence of certain events. The Issuer hereby covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Issuer for the benefit of the Holders (as defined herein) of the Bonds in order to provide for the public availability of such information and assist the Participating Underwriter(s) (defined herein) in complying with the Rule (as defined herein). This Disclosure Certificate, together with the Resolutions, constitutes the written agreement or contract for the benefit of the Holders of the Bonds that is required by the Rule. Section 2. Definitions. In addition to the defined terms set forth in the Resolutions, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Report" means any annual report provided by the Issuer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "Audited Financial Statements" means annual financial statements of the Issuer, prepared in accordance with generally accepted accounting principles for governmental units ( "GAAP ") as prescribed by the Governmental Accounting Standards Board ( "GASB "). "Bonds" means the General Obligation Improvement Bonds, Series 2013A, issued by the Issuer in the original aggregate principal amount of $1,500,000. "Disclosure Certificate" means this Continuing Disclosure Certificate. "EMMA" means the Electronic Municipal Market Access system operated by the MSRB and designated as a nationally recognized municipal securities information repository and the exclusive portal for complying with the continuing disclosure requirements of the Rule. "Final Official Statement" means the deemed final Official Statement dated 2013, as supplemented by the Addendum, dated 2013 which constitutes the final official statement delivered in connection with the Bonds, which is available from the MSRB. "Fiscal Year" means the fiscal year of the Issuer. II -1 Bonds. "Holder" means the person in whose name a Bond is registered or a beneficial owner of such a "Issuer" means the City of Rosemount, Minnesota, which is the obligated person with respect to the "Material Event" means any of the events listed in Section 5(a) of this Disclosure Certificate. "MSRB" means the Municipal Securities Rulemaking Board located at 1900 Duke Street, Suite 600, Alexandria, VA 22314. "Participating Underwriter" means any of the original underwriter(s) of the Bonds (including the Purchaser) required to comply with the Rule in connection with the offering of the Bonds. "Purchaser" means "Repository" means EMMA, or any successor thereto designated by the SEC. "Rule" means SEC Rule 15c2- 12(b)(5) promulgated by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time, and including written interpretations thereof by the SEC. "SEC" means Securities and Exchange Commission, and any successor thereto. Section 3. Provision of Annual Financial Information and Audited Financial Statements. (a) The Issuer shall provide to the Repository, as soon as available, but not later than twelve (12) months after the end of the Fiscal Year commencing with the year that ends December 31, 2013, an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross - reference other information as provided in Section 4 of this Disclosure Certificate; provided that the Audited Financial Statements of the Issuer may be submitted separately from the balance of the Annual Report and will be submitted as soon as available. (b) If the Issuer is unable or fails to provide to the Repository an Annual Report by the date required in subsection (a), the Issuer shall send a notice of that fact to the Repository and the MSRB. (c) The Issuer shall determine each year prior to the date for providing the Annual Report the name and address of each Repository. Section 4. Content of Annual Reports. The Issuer's Annual Report shall contain or incorporate by reference the following sections of the Final Official Statement: I. City Property Values 2. City Indebtedness 3. City Tax Rates, Levies and Collections In addition to the items listed above, the Annual Report shall include Audited Financial Statements submitted in accordance with Section 3 of this Disclosure Certificate. Any or all of the items listed above may be incorporated by reference from other documents, including official statements of debt issues of the Issuer or related public entities, which have been II -1 submitted to the Repository or the SEC. If the document incorporated by reference is a final official statement, it must also be available from the MSRB. The Issuer shall clearly identify each such other document so incorporated by reference. Section 5. Reporting of Material Events. (a) This Section 5 shall govern the giving of notice of the occurrence of any of the following events ( "Material Events ") with respect to the Bonds: Principal and interest payment delinquencies; 2. Non - payment related defaults, if material; 3. Unscheduled draws on debt service reserves reflecting financial difficulties; 4. Unscheduled draws on credit enhancements reflecting financial difficulties; 5. Substitution of credit or liquidity providers, or their failure to perform; 6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701 —TEB), or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security; 7. Modifications to rights of security holders, if material; 8. Bond calls, if material, and tender offers; 9. Defeasances; 10. Release, substitution, or sale of property securing repayment of the securities, if material; 11. Rating changes; 12. Bankruptcy, insolvency, receivership or similar event of the obligated person; 13. The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and 14. Appointment of a successor or additional trustee or the change of name of a trustee, if material. (b) The Issuer shall file a notice of such occurrence with the Repository or with the MSRB within ten (10) business days of the occurrence of the Material Event. (c) Unless otherwise required by law and subject to technical and economic feasibility, the Issuer shall employ such methods of information transmission as shall be requested or recommended by the designated recipients of the Issuer's information. 11 -2 Section 6. EMMA. The SEC has designated EMMA as a nationally recognized municipal securities information repository and the exclusive portal for complying with the continuing disclosure requirements of the Rule. Until the EMMA system is amended or altered by the MSRB and the SEC, the Issuer shall make all filings required under this Disclosure Certificate solely with EMMA. Section 7. Termination of Reporting Obligation. The Issuer's obligations under the Resolutions and this Disclosure Certificate shall terminate upon [the legal defeasancej the redemption in full of all Bonds or payment in full of all Bonds. Section 8. Agent. The Issuer may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obligations under the Resolutions and this Disclosure Certificate, and may discharge any such agent, with or without appointing a successor dissemination agent. Section 9. Amendment; Waiver. Notwithstanding any other provision of the Resolutions or this Disclosure Certificate, the Issuer may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, if such amendment or waiver is supported by an opinion of nationally recognized bond counsel to the effect that such amendment or waiver would not, in and of itself, cause a violation of the Rule. The provisions of the Resolutions requiring continuing disclosure pursuant to the Rule and this Disclosure Certificate, or any provision hereof, shall be null and void in the event that the Issuer delivers to the Repository an opinion of nationally recognized bond counsel to the effect that those portions of the Rule which impose the continuing disclosure requirements of the Resolutions and the execution and delivery of this Disclosure Certificate are invalid, have been repealed retroactively or otherwise do not apply to the Bonds. The provisions of the Resolutions requiring continuing disclosure pursuant to the Rule and this Disclosure Certificate may be amended without the consent of the Holders of the Bonds, but only upon the delivery by the Issuer to the Repository of the proposed amendment and an opinion of nationally recognized bond counsel to the effect that such amendment, and giving effect thereto, will not adversely affect the compliance with the Rule. Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is required by this Disclosure Certificate. If the Issuer chooses to include any information in any Annual Report or notice of occurrence of a Material Event in addition to that which is specifically required by this Disclosure Certificate, the Issuer shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Material Event. Section 11. Default. In the event of a failure of the Issuer to comply with any provision of this Disclosure Certificate any Holder of the Bonds may take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order, to cause the Issuer to comply with its obligations under the Resolutions and this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an event of default with respect to the Bonds and the sole remedy under this Disclosure Certificate in the event of any failure of the Issuer to comply with this Disclosure Certificate shall be an action to compel performance. Section 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Issuer, the Participating Underwriters, and the Holders from time to time of the Bonds, and shall create no rights in any other person or entity. II -3 IN WITNESS WHEREOF, we have executed this Disclosure Certificate in our official capacities effective as of the date and year first written above. CITY OF ROSEMOUNT, MINNESOTA Mayor City Clerk Im APPENDIX III SUMMARY OF TAX LEVIES, PAYMENT PROVISIONS, AND MINNESOTA REAL PROPERTY VALUATION (effective through levy year 2012 /payable year 2013) Following is a summary of certain statutory provisions effective through levy year 2012 /payable year 2013 relative to tax levy procedures, tax payment and credit procedures, and the mechanics of real property valuation. The summary does not purport to be inclusive of all such provisions or of the specific provisions discussed, and is qualified by reference to the complete text of applicable statutes, rules and regulations of the State of Minnesota. Property Valuations (Chapter 273, Minnesota Statutes) Assessor's Estimated Market Value. Each parcel of real property subject to taxation must, by statute, be appraised at least once every five years as of January 2 of the year of appraisal. With certain exceptions, all property is valued at its market value, which is the value the assessor determines to be the price the property to be fairly worth, and which is referred to as the "Estimated Market Value." Taxable Market Value. The Taxable Market Value is the value that property taxes are based on, after all reductions, limitations, exemptions and deferrals. It is also the value used to calculate a municipality's legal debt limit. Net Tax Capacity. The Net Tax Capacity is the value upon which net taxes are levied, extended and collected. The Net Tax Capacity is computed by applying the class rate percentages specific to each type of property classification against the Taxable Market Value. Class rate percentages vary depending on the type of property as shown on the last page of this Appendix. The formulas and class rates for converting Taxable Market Value to Net Tax Capacity represent a basic element of the State's property tax relief system and are subject to annual revisions by the State Legislature. Property taxes are determined by multiplying the Net Tax Capacity by the tax capacity rate, plus multiplying the referendum market value by the market value rate. Market Value Homestead Exclusion. In 2011, the Market Value Homestead Exclusion Program (MVHE) was implemented to offset the elimination of the Market Value Homestead Credit Program that provided relief to certain homesteads. The MVHE reduces the taxable market value of a homestead with an Assessor's Estimated Market Value up to $413,800 in an attempt to mimic the property tax prior to the elimination of the homestead credit. The MVHE applies to property classified as Class la or lb and Class 2a, and causes a decrease in the Issuer's Taxable Market Value, even though the Assessor's Estimated Market Value on the same property did not decline. Property Tax Payments and Delinquencies (Chapters 275, 276, 277, 279 -282 and 549, Minnesota Statutes) Ad valorem property taxes levied by local governments in Minnesota are extended and collected by the various counties within the State. Each taxing jurisdiction is required to certify the annual tax levy to the county auditor within five (5) working days after December 20 of the year preceding the collection year. A listing of property taxes due is prepared by the county auditor and turned over to the county treasurer on or before the first business day in March. The county treasurer is responsible for collecting all property taxes within the county. Real estate and personal property tax statements are mailed out by March 31. One -half (1/2) of the taxes on real property is due on or before May 15. The remainder is due on or before III -1 October 15. Real property taxes not paid by their due date are assessed a penalty that, depending on the type of property, increases from 2% to 4% on the day after the due date. In the case of the first installment of real property taxes due May 15, the penalty increases to 4% or 8% on June 1. Thereafter, an additional 1% penalty shall accrue each month through October 1 of the collection year for unpaid real property taxes. In the case of the second installment of real property taxes due October 15, the penalty increases to 6% or 8% on November 1 and increases again to 8% or 12% on December 1. Personal property taxes remaining unpaid on May 16 are deemed to be delinquent and a penalty of 8% attaches to the unpaid tax. However, personal property that is owned by a tax - exempt entity, but is treated as taxable by virtue of a lease agreement, is subject to the same delinquent property tax penalties as real property. On the first business day of January of the year following collection all delinquencies are subject to an additional 2% penalty, and those delinquencies outstanding as of February 15 are filed for a tax lien judgment with the district court. By March 20 the county auditor files a publication of legal action and a mailing of notice of action to delinquent parties. Those property interests not responding to this notice have judgment entered for the amount of the delinquency and associated penalties. The amount of the judgment is subject to a variable interest determined annually by the Department of Revenue, and equal to the adjusted prime rate charged by banks but in no event is the rate less than 10% or more than 14 %. Property owners subject to a tax lien judgment generally have five years (5) in the case of all property located outside of cities or in the case of residential homestead, agricultural homestead and seasonal residential recreational property located within cities or three (3) years with respect to other types of property to redeem the property. After expiration of the redemption period, unredeemed properties are declared tax forfeit with title held in trust by the State of Minnesota for the respective taxing districts. The county auditor, or equivalent thereof, then sells those properties not claimed for a public purpose at auction. The net proceeds of the sale are first dedicated to the satisfaction of outstanding special assessments on the parcel, with any remaining balance in most cases being divided on the following basis: county - 40 %; town or city - 20 %; and school district - 40 %. Property Tax Credits (Chapter 273, Minnesota Statutes) In addition to adjusting the taxable value for various property types, primary elements of Minnesota's property tax relief system are: property tax levy reduction aids; the renters credit, which relates property taxes to income and provides relief on a sliding income scale; and targeted tax relief, which is aimed primarily at easing the effect of significant tax increases. The circuit breaker credit and targeted credits are reimbursed to the taxpayer upon application by the taxpayer. Property tax levy reduction aid includes educational aids, local governmental aid, equalization aid, county program aid and disparity reduction aid. Debt Limitations All Minnesota municipalities (counties, cities, towns and school districts) are subject to statutory "net debt' limitations under the provisions of Minnesota Statutes, Section 475.53. Net debt is defined as the amount remaining after deducting from gross debt the amount of current revenues that are applicable within the current fiscal year to the payment of any debt and the aggregate of the principal of the following: Obligations issued for improvements that are payable wholly or partially from the proceeds of special assessments levied upon benefited property. 2. Warrants or orders having no definite or fixed maturity. III -2 3. Obligations payable wholly from the income from revenue producing conveniences. 4. Obligations issued to create or maintain a permanent improvement revolving fund. 5. Obligations issued for the acquisition and betterment of public waterworks systems, and public lighting, heating or power systems, and any combination thereof, or for any other public convenience from which revenue is or may be derived. 6. Certain debt service loans and capital loans made to school districts. 7. Certain obligations to repay loans. 8. Obligations specifically excluded under the provisions of law authorizing their issuance. 9. Certain obligations to pay pension fund liabilities. 10. Debt service funds for the payment of principal and interest on obligations other than those described above. 11. Obligations issued to pay judgments against the municipality. Levies for General Obligation Debt (Sections 475.61 and 475.74, Minnesota Statutes) Any municipality that issues general obligation debt must, at the time of issuance, certify levies to the county auditor of the county(ies) within which the municipality is situated. Such levies shall be in an amount that if collected in full will, together with estimates of other revenues pledged for payment of the obligations, produce at least five percent in excess of the amount needed to pay principal and interest when due. Notwithstanding any other limitations upon the ability of a taxing unit to levy taxes, its ability to levy taxes for a deficiency in prior levies for payment of general obligation indebtedness is without limitation as to rate or amount. Metropolitan Revenue Distribution (Chapter 473F, Minnesota Statutes) "Fiscal Disparities Law" The Charles R. Weaver Metropolitan Revenue Distribution Act, more commonly known as "Fiscal Disparities," was first implemented for taxes payable in 1975. Forty percent of the increase in commercial - industrial (including public utility and railroad) net tax capacity valuation since 1971 in each assessment district in the Minneapolis /St. Paul seven - county metropolitan area (Anoka, Carver, Dakota, excluding the City of Northfield, Hennepin, Ramsey, Scott, excluding the City of New Prague, and Washington Counties) is contributed to an area -wide tax base. A distribution index, based on the factors of population and real property market value per capita, is employed in determining what proportion of the net tax capacity value in the area - wide tax base shall be distributed back to each assessment district. III -3 STATUTORY FORMULAE: CONVERSION OF TAXABLE MARKET VALUE (TMV) TO NET TAX CAPACITY FOR MAJOR PROPERTY CLASSIFICATIONS Property Type Residential Homestead (1a) Up to $500,000 Over $500,000 Residential Non - homestead Single Unit (4bbl) Up to $500,000 Over $500,000 1 -3 unit and undeveloped land (4bl) Market Rate Apartments Regular (4a) Low - Income (4d) Commercial /Industrial /Public Utility (3a) Up to $150,000 Over $150,000 Electric Generation Machinery Commercial Seasonal Residential Homestead Resorts (1c) Up to $600,000 $600,000 - $2,300,000 Over $2,300,000 Seasonal Resorts (4c) Up to $500,000 Over $500,000 Non - Commercial (4c12) Up to $500,000 Over $500,000 Disabled Homestead (1 b) Up to $50,000 $50,000 to $500,000 Over $500,000 Agricultural Land & Buildings Homestead (2a) Up to $500,000 Over $500,000 Remainder of Farm Up to $1,290,006; Over $1,290,000 Non - homestead (2b) ' Subject to the State General Property Tax. 2 Exempt from referendum market value tax. s 2012 legislative increases. Local Tax Local Tax Local Tax Local Tax Local Tax Payable Payable Payable Payable Payable 2009 2010 2011 2012 2013 1.00% 1.00% 1.00% 1.00% 1.00% 1.25% 1.25% 1.25% 1.25% 1.25% 1.00% 1.00% 1.00% 1.00% 1.00% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 0.75% 0.75% 0.75% 0.75% 0.75% 1.50 % 1.50 %' 1.50 %' 1.50 %' 1.50 %' 2.00 %' 2.00 %' 2.00 %' 2.00 %' 2.00 %' 2.00% 2.00% 2.00% 2.00% 2.00% 0.55% 0.55% 0.50% 0.50% 0.50% 1.00% 1.00% 1.00% 1.00% 1.00% 1.25 %' 1.25 %' 1.25 %' 1.25 %' 1.25 %' 1.00 %' 1.00 %' 1.00 %' 1.00 %' 1.00 %' 1.25 %' 1.25 %' 1.25 %' 1.25 %' 1.25 %' 1.00 %' 1 1.00%12 1.00%12 1.00%12 1.00%12 1.25 %' 1 1.25%'2 1.25%'2 1.25%'2 1.25%'2 0.45% 0.45% 0.45% 0.45% 0.45% 1.00% 1.00% 1.00% 1.00% 1.00% 1.25% 1.25% 1.25% 1.25% 1.25% 1.00% 1.00% 1.00% 1.00% 1.00% 1.25% 1.25% 1.25% 1.25% 1.25% 0.55 %1 0.55 %1 0.50 %1 0.50 %1 0.50 %1 1.00 %1 1.00 %1 1.00 %1 1.00 %1 1.00 %1 1.00 %1 1.00 %1 1.00 %1 1.00 %1 1.00 %1 HE APPENDIX IV AUDITED 2012 COMPREHENSIVE ANNUAL FINANCIAL REPORT The City is audited annually by an independent certified public accounting firm. This Appendix includes the City's audited Comprehensive Annual Financial Report for fiscal year ended December 31, 2012. For its comprehensive annual financial report for the fiscal years ended December 31, 1996 through 2011, the City was awarded the Certificate of Achievement for Excellence in Financial Reporting by the Government Finance Officers Association of the United States and Canada (GFOA). The Certificate of Achievement is the highest form of recognition for excellence in state and local government financial reporting. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report (CAFR), whose contents conform to program standards. Such CAFR must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. The City believes its CAFR continues to conform to the Certificate of Achievement program requirements and has submitted its CAFR for the 2012 fiscal year to GFOA. The Governmental Accounting Standards Board (GASB) issued Statement 54, Fund Balance Reporting and Governmental Fund Type Definitions for State and Local Governments in February 2009. The statement establishes a new financial reporting model for state and local governments to enhance the usefulness of fund balance information by providing clearer fund balance classifications that can be more consistently applied and by clarifying the existing governmental fund type definitions. This statement establishes fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds. COMPREHENSIVE FOR THE YEAR ENDED DECEMBER 31, 2012 i FA - il MINNESOTA CITY OF ROSEMOUNT, MINNESOTA IV -2 CITY OF ROSEMOUNT, MINNESOTA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2012 PREPARED BY THE DEPARTMENTS OF ADMINISTRATION AND FINANCE DWIGHT D. JOHNSON, City Administrator JEFFREY A. MAY, Finance Director IV -3 CITY OF ROSEMOUNT COMPREHENSIVE ANNUAL FINANCIAL REPORT As of and for the Year Ended December 31, 2012 TABLE OF CONTENTS IV -4 Page INTRODUCTORY SECTION Letter of Transmittal i GFOA Certificate of Achievement vii Organizational Chart viii List of Elected and Appointed Officials ix FINANCIAL SECTION Independent Auditors' Report 1 -2 Management's Discussion and Analysis 3-11 Basic Financial Statements: Government -wide Financial Statements: Statement of Net Position 12 Statement of Activities 13 Fund Financial Statements: Balance Sheet — Governmental Funds 14 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 15 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 16 Statement of Net Position — Proprietary Funds 17 Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary Funds 18 Statement of Cash Flows — Proprietary Funds 19-20 Statement of Net Position — Fiduciary Fund 21 Notes to the Financial Statements 22-55 Required Supplementary Information: Schedule of Revenues Compared to Budget (Budgetary Basis) — Budget and Actual — General Fund 56 Schedule of Expenditures and Other Uses (Budgetary Basis) — Budget and Actual — General Fund 57 Notes to Required Supplementary Information 58 Supplementary Information: Combining and Individual Fund Statements and Schedules: Combining Balance Sheet — Nonmajor Governmental Funds 59 Combining Statement of Revenues, Expenditures and Changes in Fund Balances — Nonmajor Governmental Funds 60 Schedules of Revenues, Expenditures and Changes in Fund Balances (Budgetary Basis) — Budget and Actual: Building CIP Capital Project Fund 61 Street CIP Capital Project Fund 62 Equipment CIP Capital Project Fund 63 Schedule of Changes in Assets and Liabilities — M.A.A.G. Agency Fund 64 IV -4 CITY OF ROSEMOUNT COMPREHENSIVE ANNUAL FINANCIAL REPORT As of and for the Year Ended December 31, 2012 TABLE OF CONTENTS STATISTICAL SECTION (Unaudited) Net Position by Component Changes in Net Position Fund Balances, Governmental Funds Changes in Fund Balances, Governmental Funds Assessed Value (or Tax Capacity) and Estimated Market Value of All Taxable Property Property Tax Rates — All Direct and Overlapping Governmental Units Principal Property Tax Payers Property Tax Levies and Collections Ratios of Outstanding Debt by Type Ratios of Net General Bonded Debt Outstanding Direct and Overlapping Governmental Activities Debt Legal Debt Margin Calculation Pledged Revenue Coverage Demographic and Economic Statistics Principal Employers Full- Time /Permanent Part-Time City Government Employees by Function /Program Operating Indicators by Function /Program Capital Asset Statistics by Function /Program IV -5 66 67 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 �cROSEMOUN-r MINNESOTA May 13, 2013 To the Honorable Mayor, Council Members, and the Citizens of the City of Rosemount Minnesota statutes require that all cities issue an annual financial report on its financial position and activity prepared in accordance with generally accepted accounting principals (GAAP), and audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants or the Office of the State Auditor. Pursuant to that requirement, we hereby issue the comprehensive annual financial report of the City of Rosemount (the City) for the fiscal year ended December 31, 2012. This report consists of management's representations concerning the finances of the City. Consequently, management assumes full responsibility for the completeness and reliability of all of the financial information presented in this report. To provide a reasonable basis for making these representations, management of the City has established a comprehensive internal control framework that is designed to protect the government's assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City's financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City's comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The City of Rosemount's financial statements have been audited by Baker Tilly Virchow Krause, LLP, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City for the fiscal year ended December 31, 2012, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the City's financial statements for the fiscal year ended December 31, 2012, are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component of the financial section of this report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statement in the form of Management's Discussion and Analysis (MD &A). This letter of transmittal is designed to complement the MD &A and should be read in conjunction with it. The City of Rosemount's MD&A can be found immediately following the report of the independent auditors. SPIRIT OF PRIDE AND PROGRESS 'SS Rosemount City Hall • 2875 145th 5triet West • Rosemount, MN 55068 -4997 651 - 423 -441 1 • TDD /TTY 651-423-6219 • Fax 651 - 423 -5203 www.ti.roslYrGunt.mn.us Profile of the Government The City was established as a municipal corporation in 1858, and became a statutory City in 1974. The City has a Mayor - Council form of government, with the four Council members being elected to overlapping four -year terms of office and the Mayor serving a four -year term coinciding with the terms of two of the Council members. This term for the Mayor was a change instituted in 1996. Prior to that, the Mayor was elected every two years. The City Council is responsible, among other things, for passing ordinances, adopting the budget, appointing committees and hiring the City's chief administrative officer. The City's chief administrative officer is the City Administrator, who is appointed by and serves at the discretion of the City Council. The City Administrator is responsible for carrying out the policies and ordinances of the City Council, for overseeing the day -to -day operations of the City and for appointing the heads of the City's various departments, with the City Council's final approval. The City of Rosemount is a growing southern suburb in the Minneapolis /St. Paul metropolitan area, located in Dakota County. The City encompasses approximately 36 square miles. The City is one of the fastest growing communities in the seven - county Minneapolis /St. Paul metropolitan area as demonstrated by the following population trend: Rosemount has an extensive system of State and County highways and 105 miles of city streets that continue to contribute to the community's growth. This extensive highway network and large tracts of attractive, developable land have made the City an ideal location for residential development and increasingly commercial /industrial development. There is over 1,000 acres of industrial and commercially zoned property ready for development. There is also well over 1,200 acres of property within the Municipal Service Area (MUSA) to permit future residential growth. Rail, air, barge and freeway access provides Rosemount's economic community with an expedient transportation system. Four major highways link Rosemount to Minneapolis, St. Paul and the rest of the metropolitan area. The City provides a full range of services, including police and fire protection; the construction and maintenance of highways, streets, and other infrastructure; water, sewer, and storm water services; and recreational activities and cultural events. Certain economic development services are provided through the Rosemount Port Authority. The Port Authority's financial data has been presented in this financial report as a blended component unit. The annual budget serves as the foundation for the City's financial planning and control. All departments of the City submit requests for appropriation to the City Administrator on or before May 15t of each year. The City Administrator uses these requests as the starting point for developing a proposed budget. The City Administrator then presents this proposed budget to the Council for review and adoption of a preliminary levy by September 15th. The council holds a public hearing on the proposed budget and must adopt a final budget and levy by no later than December 20th, prior to the close of the City's fiscal year. IV -7 Population Percent Population Increase Increase 2012 Staff Estimate 22,432 558 2.55% 2010 Census 21,874 7,255 50% 2000 Census 14,619 5,997 70% 1990 Census 8,622 3,539 70% 1980 Census 5,083 1,049 26% 1970 Census 4,034 - - Rosemount has an extensive system of State and County highways and 105 miles of city streets that continue to contribute to the community's growth. This extensive highway network and large tracts of attractive, developable land have made the City an ideal location for residential development and increasingly commercial /industrial development. There is over 1,000 acres of industrial and commercially zoned property ready for development. There is also well over 1,200 acres of property within the Municipal Service Area (MUSA) to permit future residential growth. Rail, air, barge and freeway access provides Rosemount's economic community with an expedient transportation system. Four major highways link Rosemount to Minneapolis, St. Paul and the rest of the metropolitan area. The City provides a full range of services, including police and fire protection; the construction and maintenance of highways, streets, and other infrastructure; water, sewer, and storm water services; and recreational activities and cultural events. Certain economic development services are provided through the Rosemount Port Authority. The Port Authority's financial data has been presented in this financial report as a blended component unit. The annual budget serves as the foundation for the City's financial planning and control. All departments of the City submit requests for appropriation to the City Administrator on or before May 15t of each year. The City Administrator uses these requests as the starting point for developing a proposed budget. The City Administrator then presents this proposed budget to the Council for review and adoption of a preliminary levy by September 15th. The council holds a public hearing on the proposed budget and must adopt a final budget and levy by no later than December 20th, prior to the close of the City's fiscal year. IV -7 The appropriated budget is prepared by fund, department and function. The City's department heads may make transfers of appropriations within a department; transfers of appropriation between departments require approval of the City Council. Budget -to- actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. For the general fund, this comparison is presented on pages 56 -57 as part of the Required Supplementary Information. Factors Affecting Financial Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City operates. Local economy Rosemount is unique in that a significant portion of the community is currently undeveloped. Development has occurred west to east, with the eastern portion of the City still dedicated to agricultural use. As land in the west becomes scarce, new residential development has moved to the central portion of the community, providing for orderly contiguous development. The new development is located where the City conducted in 2007 an environmental review process, an AUAR, which provides for 1,200 acres of residential and commercial development with City sewer and water. The fifteen largest taxpayers comprise a mix of residential, industrial, commercial and utilities that represent approximately 20.16% of the City's tax base. Labor market data is very impressive for the State, Minneapolis /St. Paul metropolitan area and Dakota County, in which Rosemount is located. 2012 labor force numbers were 2,959,070; 1,857,894; and 232,540 respectively with unemployment rates of 5.5 %; 5.1% and 4.8% to match. These figures compare quite favorably with national figures. Community leadership has preserved 467 beautiful acres of land for 28 parks. Residents can enjoy a round of golf on a 27 -hole public course. Bordered by the scenic Mississippi River, Rosemount also contains 270 acres of the Spring Lake Regional Park Preserve. Rosemount's Community Center, a part of the Army National Guard's regional headquarters, provides a variety of indoor recreation opportunities and meeting spaces, including an ice arena, gymnasium, auditorium and banquet facility. Given the underlying strength of the economy in the seven county metropolitan area, the diversification of tax and employment bases and Rosemount's desirable location, the future outlook is very optimistic. Long -term financial planning Growth and development is guided by the City's adopted Comprehensive Plan. The City adopted the 2030 Plan in 2009 in accordance with State law which projects population and job increases for the next 20 years. The Plan anticipates up to 6,500 more acres of urbanized growth, encompassing residential, commercial and industrial growth. The Comprehensive Plan continues to promote orderly development and growth which will perpetuate a sound tax base. Other factors New housing starts were up slightly from 2011 with 72 new residential units, almost all being single family detached housing. There are two national builders and one regional builder in the AUAR area and based upon their feedback sales have been meeting or exceeding their expectations. Approximately 180 single family lots have been created are in various stages of development with another 65 preliminarily platted but not final platted. Staff is also in conversation with several local landowners who are working with developers to sell and plat their properties. Total construction valuation in 2012 was significantly higher than in the last three years. This is in part due to the new higher value residential construction but also some larger commercial and industrial projects. The largest commercial project was the demolition and reconstruction of the local McDonald's. There were also assorted commercial ventures such as tenant finishings and remodeling of an old Pizza Hut building. Likewise a new 60,000 square foot building for Hawkins Chemical brought the industrial construction value up dramatically. Additional improvements to other local industrial companies also played a part in the valuation jump. The City and ISD 196 continued to have significant capital projects IV -8 such as reroofing at the public schools, ball fields and buildings at Dakota County Technical College, establishment of a new park and ride with transit shelter by Minnesota Valley Transit Authority and improvements to the City's community center and Steeple Center resulted in continued permit revenue in the public/ institutional sector. In total the building valuation for all construction in 2012 was $38,804,214, approximately $10,000,000 more than in 2011. Cartegraph and GIS Staff continues to upgrade and modify the existing Cartegraph and GIS systems in an effort to improve the efficiency and effectiveness, not only in the Public Works department, but across other departments as well. In 2012, we began planning for and designing a new process for gate valve inspections that will be implemented in 2013. We also began to explore the option of using iPads to document our playground and building inspections in Cartegraph. Based on research and information gathered in 2012, staff plans to purchase and implement two new iPads in 2013. Use of the iPads will expand beyond building and playground inspections as staff continues to explore new ways to apply the mobile technology that Cartegraph and GIS provide. Capital Improvement Projects The Public Works Department coordinated and / or completed several improvement projects in 2012, including rehabilitation work on Sanitary Lift Station #1; a new pump at Rural Well #10; a new roof at Fire Station #1; interior painting at City Hall and the Police Department; sealcoating the Schwarz Park parking lot; and shelter improvements at Camfield Park. 2012 Street Improvements The 2012 Street Improvement Project included mill and overlay improvements to 2.3 miles along Shannon Parkway, 145th Street West and the Shannon Hills neighborhood. Pedestrian improvements included crosswalk bumpouts, pedestrian - activated crosswalk signs and a new bituminous trail on the north side of 145th Street between Chippendale Avenue and Shannon Parkway. Construction Projects The Engineering Division coordinated the work on several construction projects in 2012: Prestwick Place 4th Addition — This neighborhood includes 34 single- family homes and is the continuation of the development of Prestwick Place, located near the northwest corner of CSAH 42 and Akron Avenue. Greystone 1 sc Addition — This neighborhood is the first to be developed on the east side of Akron Avenue. It includes 23 single - family homes. An additional 31 single - family homes will be added in the Greystone 2nd Addition in 2013. Connemara Trail Extension — This project extended Connemara Trail east to Akron Avenue. Utilities were installed along the entire segment to serve future residential and commercial development in the area. The project began in 2011 and was completed in 2012. Brazil Avenue — This project involved repaving the existing road adjacent to City Hall, paving and widening the gravel segment adjacent to Erickson Park, paving the Erickson Park parking lot and installing a turnaround at the north end of the park for enhanced traffic flow. Pedestrian Trail Improvements — Two new pedestrian trails were constructed in 2012. The first was on the east side of Diamond Path between CSAH 42 and Connemara Trail. The second was on the west side of TH 3 between the Community Center and Connemara Trail. iv IV -9 The Police Department provides professional and comprehensive law enforcement services to the community. The Department strives to maintain a safe environment. Specific efforts of the Department include: • Patrol Unit — Patrol officers are assigned to specific geographic beats to patrol. Patrolling in an assigned geographic area allows the officers to develop relationships with the residents and understand the service needs within the area they patrol on a daily basis. After becoming more familiar with area issues, it is expected that officers will develop plans to address crime or livability issues within their neighborhood. • Criminal Investigations Unit — Two full -time investigators are assigned to support the Patrol Unit beyond preliminary investigations and to partner with social services agencies and surrounding communities. The investigators received specialized training in many advanced areas. Predatory Offender Registration and compliance is conducted three times annually. Community Resource Unit and Outreach Programs ➢ School Involvement — The Department has officers working in both Rosemount High School and Rosemount Middle School as school resource officers (SRO). The SROs' main duties are education and intervention but they also do investigate criminal activity that occurs within the schools or involves students who attend the schools. In the elementary schools, an officer works cooperatively with the school social worker to make classroom presentations across all grades. Topics include Bully Preventions, Internet Safety and Drug Abuse Resistance Education. ➢ Night to Unite — Police and fire officials, along with City Council members, visit neighborhoods on the first Tuesday of August as part of this nationwide event. The event continues to grow each year and provides an opportunity for police, fire and city officials to interact with residents within their own neighborhoods. ➢ Public Safety in the Park — The Police Department partners with other City departments and community organizations to engage citizens and provide resources at various park locations. ➢ Child Safety Seat Clinics and Checks — The Police Department partners with the Dakota County CAP agency to provide training to the community on the proper installation and use of child restraint seats. ➢ Presentations and Cooperation — The Police Department makes public presentations on crime and crime prevention when requested by community members and groups. A weekly "Coffee- with -a -Cop" is held at coffee shops within the community to give citizens another forum to ask questions and seek information about police and crime topics. An annual Citizen's Academy is held to educate various community members on many aspects of the policing profession. ➢ Multi- Housing Unit — The Community Resource Officers lead the Crime Free Multi- Housing program which facilitates education opportunities for rental property owners, managers and residents. • The Department partners with other Dakota County law enforcement agencies to provide services in a more effective and efficient manner. This includes participation on a joint tactical team, drug task force and a county -wide dispatch center. • The Department has a strong emphasis on traffic enforcement, particularly DWI enforcement. Along with all other law enforcement agencies within the County, Rosemount supports and participates in the Dakota County Traffic Safety Project. This project concentrates traffic enforcement in a different area of the county each week and all agencies work traffic enforcement in the selected area. v IV -10 In 1999, a Family Resource Center building in Rosemount began operations. The 360° Communities organization (formerly the Community Action Council [CAC]) and other service providers utilize this building to work with families in need in our community. The City constructed the building with funding coming entirely from grants and donations and leases the building to 360° Communities to house their Rosemount operations. City's financial policies During the current year, none of the City's financial polices had a significant impact on the financial statements. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Rosemount for its comprehensive annual financial report (CAFR) for the fiscal year ended December 31, 2011. This was the sixteenth consecutive year that the City has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The preparation of this report on a timely basis could not have been accomplished without the efficient and dedicated services of the Finance Department. We would like to express our appreciation to all members of City staff who assisted and contributed to the preparation of this report. We would also like to express our appreciation to the Mayor and the members of the City Council for their interest and support in planning and conducting the financial operations of the City in a responsible and progressive manner. Wspec II u i tted May Finance Director Vi IV -11 Certificate of Achievement for Excellence in Financial Reporting Presented to City of Rosemount Minnesota For its Comprehensive Annual Financial Report for the Fiscal Year Ended December 31, 2011 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. OF i FfijC C. ARD MUMno President ti`1[iCi�aD • Executive Director IV -12 City of Rosemount Organizational Chart viii CITY OF ROSEMOUNT CITY OFFICIALS As of and for the Year Ended December 31, 2012 ELECTED OFFICIALS: Mayor Bill Droste Councilmember Kim Shoe Corrigan Councilmember Mark DeBettignies Councilmember Matt Kearney Councilmember Jeff Weisensel APPOINTED OFFICIALS: City Administrator Finance Director Assistant City Administrator City Engineer Community Development Director Police Chief Fire Chief Parks and Recreation Director CONSULTANTS AND ADVISORS: Legal Auditing Fiscal Engineering IV -14 ix Term of Office Four Years Four Years Four Years Four Years Four Years Dwight D. Johnson Jeffrey A. May Emmy Foster Andrew Brotzler Kim Lindquist Eric Werner Scott W. Aker Dan Schultz Kennedy & Graven Fluegel Law Firm, P.A. Baker Tilly Virchow Krause, LLP Springsted, Inc. Ehlers & Associates, Inc. WSB & Associates Term Expires December 31, 2014 December 31, 2014 December 31, 2014 December 31, 2012 December 31, 2012 THIS PAGE INTENTIONALLY LEFT BLANK IV -15 _"$BAKER TILLY VIRCHOW KRAUSE, LLP saL<, nl, v;,cbo„ tire.,, :. LLP 225 S Sinh Si. Su 2500 M'—p.1 , MN 55,02.4661 'd 612 8'6.1500 Fax 612 2M 89110 INDEPENDENT AUDITORS' REPORT bakercrl[,. To The Honorable Mayor and Members of the City Council City of Rosemount, 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 Rosemount, Minnesota (the City), as of and for the year ended December 31, 2012, 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 Stales 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. Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United Stales of America. 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 auditors' 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 Citys 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. The prior year summarized comparative information has been derived from the City's 2011 financial statements and, in our report dated May 8, 2012, we expressed unqualified opinions on the respective financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information. Opinions In our opinion, the financial statements referred to above 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 of Rosemount, Minnesota, as of December 31, 2012 and 2011 and the respective changes in financial position and, where applicable, cash flows thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 1, the City adopted the provisions of GASS Statement No. 63, Financial Reporting for Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, effective January 1, 2012 Our opinions are not modified with respect to this matter. Other Matters Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and budgetary comparison information as listed in the table of contents be presented to supplement the basic financial statements. Such information, although rat 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 required supplementary information 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. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Ckys basic financial statements. The combining and individual fund financial statements as listed in the table of contents are presented for purposes of additional analysis and are 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 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 financial statements as listed in the table of contents are fairly stated In all material respects, in relation to the basic financial statements as a whole. 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 and statistical sections are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do rat express an opinion or provide any assurance on it. �� IE $ V".,.- ice.-, ZAP Minneapolis, Minnesota May 13, 2013 IV-16 THIS PAGE INTENTIONALLY LEFT BLANK IV -17 Management's Discussion and Analysis (Unaudited) As management of the City of Rosemount (the City), we offer readers of the City's financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2012. We encourage readers to consider the information presented here in conjunction with the City's financial statements following this section. Financial Highlights • The assets of the City exceeded it's liabilities at the close of the most recent fiscal year by $190,156,865 (net position). Of this amount, $35,218,016 (unrestricted net position) may be used to meet the government's ongoing obligations to citizens and creditors. • The City's total net position increased by $5,732,710. Most of this increase is attributable to an increase of our capital assets which were primarily funded by developers. • At year end, unassigned fund balance for the General Fund was $5,905,056, or 55 percent of the total General Fund expenditures budgeted for the upcoming year. Comparison of this balance to prior years' balances is illustrated on the table on page 8. • The City's total debt decreased by $2,395,000 (11 percent) during the current year. The reason for this decrease was that there was only one new small debt issuance for new development, offset by a call on one debt issue in addition to the normally scheduled payments on existing debt. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements comprise three components: 1) government -wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report 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 and liabilities, with the difference between the two 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 government'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 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 /vested but unused vacation and sick leave). Both 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, recreation, and community development. The business - type activities of the City include water, sewer, storm water and an ice arena. The government -wide financial statements include not only the City itself, but also a legally separate port authority, which functions as the economic development arm of the City, and therefore has been blended in with the primary government. The government -wide financial statements can be found on pages 12 -13 of this report. Page 3 IV -18 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 other 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 three categories: governmental funds, proprietary funds, and fiduciary 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 the 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 financing 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 government's near -term financing 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. 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 general fund, debt service fund, capital projects fund, and the Port Authority TIF fund all of which are considered major funds. Data from the three other 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 elsewhere in this report. The City adopts an annual appropriated budget for its general fund. A budgetary comparison statement has been provided for the general fund to demonstrate compliance with this budget. The basic governmental fund financial statements can be found on pages 14 -16 of this report. Proprietary funds. 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 public utilities and ice arena operations. The internal service fund is an accounting device to accumulate and allocate costs internally among the City's various functions. The City uses its internal service fund to account for insurance premiums and deductibles and to accumulate resources for the risk of uninsured loss. Because this service predominantly benefits governmental rather than business -type functions, it has been included within governmental activities in the government -wide financial statements. Proprietary funds provide the same type of information as the government -wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for each of the public utilities, which are considered to be major funds of the City, and information on the ice arena fund, which is considered a non -major fund. The internal service fund is also presented separately in the proprietary fund financial statements. The basic proprietary fund financial statements can be found on pages 17 -20 of this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government -wide financial statements because the resources of those funds are not available to support the City's own programs. The City had one fiduciary fund for the year ended December 31, 2011 which was closed out during 2012. Page 4 IV -19 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 22 -55 of this report. Other information. The combining statements referred to earlier in connection with nonmajor governmental funds are presented following the basic financial statements. Combining and individual fund statements and schedules can be found on pages 59 -64 of this report. 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 exceeded liabilities by $190,156,865 at the close of the most recent fiscal year. The largest portion of the City's net position (78 percent) reflects its investment in capital assets (e.g., land, buildings, machinery and equipment, infrastructure) 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 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. City of Rosemount's Statement of Net Position An additional portion of the City's net position (3 percent) represents resources that are subject to external restrictions on how they may be used. The remaining balance representing unrestricted net position ($35,218,016) may be used to meet the government's ongoing obligations to citizens and creditors. 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. Page 5 IV-20 Governmental Business -Type 2012 Governmental Business -Type 2011 Activities Activities Totals Activities Activities Totals Current and other assets $ 25,253,028 $ 19,665,889 $ 44,918,917 $ 27,564,908 $ 18,299,956 $ 45,864,864 Capital assets 70,161,203 97,287,487 167,448,690 68,169,312 95,281,215 163,450,527 Total assets 95,414,231 116,953,376 212,367,607 95,734,220 113,581,171 209,315,391 Long-term liabilities outstanding 16,255,911 3,978,507 20,234,418 17,907,196 4,769,809 22,677,005 Other liabilities 1,750,460 225,864 1,976,324 1,870,813 343,418 2,214,231 Total liabilities 18,006,371 4,204,371 22,210,742 19,778,009 5,113,227 24,891,236 Net position: Net investment in capital assets 54,828,890 93,501,405 148,330,295 53,419,036 90,695,202 144,114,238 Restricted 6,608,554 - 6,608,554 5,764,792 - 5,764,792 Unrestricted 15,970,416 19,247,600 35,218,016 16,772,383 17,772,742 34,545,125 Total net position $ 77,407,860 $ 112,749,005 $ 190,156,865 $ 75,956,211 $ 108,467,944 $ 184,424,155 An additional portion of the City's net position (3 percent) represents resources that are subject to external restrictions on how they may be used. The remaining balance representing unrestricted net position ($35,218,016) may be used to meet the government's ongoing obligations to citizens and creditors. 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. Page 5 IV-20 Governmental activities. Governmental activities increased the City's net position by $1,451,649, accounting for 25 percent of the total growth in the government's net position. This compares to an increase (from governmental activities) of $6,941,466 in 2011. Revenues decreased by approximately $550,000 related to capital grant proceeds in 2012. Expenses increased by approximately $1,000,000 primarily due to a loss recorded on the disposal of property. The primary factor for overall decrease from 2011 however was that the amount of net transfers to business -type activities increased by approximately $3,900,000 due to the nature of the capital projects during 2012. Business -type activities. Business -type activities increased the City's net position by $4,281,061, accounting for 75 percent of the total growth in the government's net position. This compares to a decrease of $616,339 in 2011. The primary reasons for the current year increase was an increase in the net transfers from governmental activities of $3,900,000 and an increase in charges for services of approximately $800,000 related to increases in rates, usage, and service connections. Elements of these changes are as follows: Revenues: Program revenues: Charges for services Operating grants and contributions Capital grants and contributions General revenues: Property taxes Other taxes Investment income Other Total revenues Expenses: General government Public safety Public works Recreation Community development Interest on long -term debt Water Sewer Storm water Arena Total expenses Increase in net position before transfers Transfers Increase in net position Net position - Beginning of Year Net position - End of Year City's Changes in Net Position IV -21 Page 6 Business -Type Business - Governmental 2012 Governmental Type 2011 Activities Activities Totals Activities Activities Totals $ 2,881,953 $ 5,602,284 $ 8,484,237 $ 2,392,179 $ 4,759,365 $ 7,151,544 375,913 375,913 459,054 459,054 3,667,542 863,077 4,530,619 4,214,641 544,395 4,759,036 11,039,475 11,039,475 11,202,224 11,202,224 242,491 242,491 262,783 262,783 136,310 256,852 393,162 243,193 377,868 621,061 140,865 140,865 334,263 334,263 18,484,549 6,722,213 25,206,762 19,108,337 5,681,628 24,789,965 2,701,234 2,701,234 2,612,911 2,612,911 3,872,633 3,872,633 3,763,742 3,763,742 4,341,203 4,341,203 4,336,345 4,336,345 2,405,676 2,405,676 1,496,068 1,496,068 9,069 9,069 541,386 541,386 637,609 637,609 1,827,543 1,827,543 1,792,613 1,792,613 2,317,324 2,317,324 2,386,660 2,386,660 968,935 968,935 950,114 950,114 498,118 498,118 479,707 479,707 13,862,132 5,611,920 19,474,052 12,855,744 5,609,094 18,464,838 4,622,417 1,110,293 5,732,710 6,252,593 72,534 6,325,127 (3,170,768) 3,170,768 688,873 (688,873) 1,451,649 4,281,061 5,732,710 6,941,466 (616,339) 6,325,127 75,956,211 108,467,944 184,424,155 69,014,745 109,084,283 178,099,028 $ 77,407,860 $ 112,749,005 $ 190,156,865 $ 75,956,211 $ 108,467,944 $ 184,424,155 IV -21 Page 6 Millions Expenses and Program Revenues - Governmental Activities General Government Public Safety Public Works Recreation Community Interest on long -term Development debt Revenues by Source - Governmental Funds I :Revenue •Revenue Page 7 IV -22 Millions Expenses and Program Revenues — Business -Type Activities Water Sewer Storm water Ice Arena Revenues by Source — Proprietary Funds Financial Analysis of the Government's Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance - related legal requirements. 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 a useful measure of a government's net resources available for spending at the end of the fiscal year. Page 8 IV-23 As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $19,817,270, a decrease of $1,995,883 in comparison with the prior year. $5,905,056 constitutes unassigned fund balance, which is available for spending at the government's discretion (this amount is entirely in the General Fund and is typically available to meet cash flow needs). A small amount ($90,623) is classified as nonspendable in regards to prepaid items, $5,080,900 is classified as restricted to meet debt service requirements and the remainder of the fund balance is considered to be committed or assigned and unavailable for discretionary spending. The General Fund is the chief operating fund of the City. At the end of the current fiscal year, unassigned fund balance of the General Fund was $5,905,056, while total fund balance reached $8,305,112. The following table shows year -end General Fund balances as compared to the adopted expenditure budget of the following year: Year Budget 2002 $ 6,501,600 2003 7,338,100 2004 7,409,400 2005 7,996,100 2006 8,516,300 2007 9,181,100 2008 10,574,900 2009 10,384,800 2010 10,466,000 2011 10,480,400 2012 10,531,800 2013 10,728,600 * This amount represents the unassigned General Fund balance Amount $ 5,126, 656 4,061,256 4,383,289 4,511,547 4,806,577 5,747,445 5,688,243 5,693,475 5,731,123 5,700,071 5,905,056 Fund Balance Percent of Next Budget 70% 55% 55% 53% 52% 54% 55% 55% 55% 54% 55% During the current fiscal year, unassigned fund balance in the General Fund increased by $204,985. The increase was intentional as the City has determined, through the adoption of a formal Fund Balance Policy, it would like to maintain an unassigned fund balance of 55 percent of the next General Fund operating expenditure budget. Forty to fifty percent normally provides adequate working capital to finance General Fund operations until property taxes and state aids are received. The desired unassigned fund balance level also provides a certain amount of comfort that unforeseen emergencies can be addressed without causing an immediate financial crisis. As of December 31, 2012, 100 percent of the unassigned fund balance of the General Fund has been designated to meet working capital needs. The debt service fund balance decreased by $589,192 due to a bond call that occurred in 2012 (in addition to the normal debt payments). The capital projects fund balance decreased by $2,275,135 due to the extent of the spending of bond proceeds issued during 2011 and 2012 based on the nature /timing of various projects (capital outlay increased by approximately $2 million). The Port Authority TIF fund balance increased by $210,559 due to limited spending. Proprietary funds The City's proprietary funds provide the same type of information found in the government -wide statements, but in more detail. Unrestricted net position of the utility funds at the end of the year amounted to $18,985,803 while the arena fund had an unrestricted net position amounting to $261,797. The increase in total net position for the utility funds was $4,313,710 (of which approximately 90 percent related to capital contributions) and the decrease in total net position for the arena fund was $32,649. Page 9 IV -24 General Fund Budgetary Highlights There were a few significant variances between final budgeted revenues and actual amounts. Actual building permit related revenues exceeded budgets by approximately $168,000 due to a significant increase in activity. Developer related administrative fees exceeded budgets by $97,000 because of new developments coming on line. Interest revenues were approximately $45,000 short of budget due to market conditions. All other revenue areas experienced either small surpluses or deficits that led to the final surplus amount. Overall, total department expenditures ended up being just above one and a half percent over budget with most being slightly less than budgeted and a few being just slightly over budget. The Government Buildings actual amount exceeded budget due to a year -end assignment for future debt service payments to the National Guard for the Community Center and the General Government actual total was over budget because of Wore related expenditures. Capital Asset and Debt Administration Capital assets The City's investment in capital assets for its governmental and business -type activities as of December 31, 2012, amounts to $167,448,690 (net of accumulated depreciation). This investment in capital assets includes land, buildings and structures, machinery and equipment, water, sewer, and storm water systems, infrastructure and construction in progress. Major capital assets events during the current fiscal year included the following: • Of the capital asset additions totaling $8,967,947 for the year, developers paid for approximately $2 million of them. City of Rosemount's Capital Assets (net of depreciation) Business -Type Governmental Activities Activities Land $ 10,498,466 Land improvements 2,425,671 Buildings 13,872,836 Machinery and equipment 9,248,133 Mains and lines - Infrastructure 51,804,234 Construction in progress 2,100,911 Accumulated depreciation (19,789,048) Total capital assets $ 70,161,203 Business -Type Activities Totals $ 2,643,767 $ 13,142,233 - 2,425,671 11,085,341 24,958,177 2,831,379 12,079,512 127,054,137 127,054,137 - 51,804,234 1,682,616 3,783,527 (48,009,753) (67,798,801) $ 97,287,487 $ 167,448,690 Additional information on the City's capital assets can be found in Note IV.C. on pages 39 -40 of this report. Long -term debt At the end of the current fiscal year, the City had total bonded debt outstanding of $19,125,000 (including debt recorded in the Port Authority). Of this amount, $5,140,000 was for general obligation improvement debt which has financed special assessment construction as part the continuing development within the City. An additional $7,360,000 was general obligation debt issued by the Port Authority which financed the City's economic development and redevelopment programs. Another $3,785,000 was general obligation revenue bond debt issued to add to and improve the water and storm water utility systems within the City. The remaining $2,575,000 was general obligation and general obligation refunding debt. In addition, the City had $265,000 of equipment certificates outstanding at December 31, 2012. The City's total debt decreased by $2,395,000, or 11 percent, during the current fiscal year. The reason for this decrease was that there was only one new small debt issuance for new development, offset by a call on one debt issue in addition to the normally scheduled payments on existing debt. Page 10 IV-25 Cities in Minnesota may issue general obligation debt up to a maximum of three percent of the total estimated market value of property within the city, per state statutes. The current debt limit for the City is $57,425,298. Of the City's $19,125,000 in outstanding general obligation debt at the current fiscal year end, $2,840,000 is subject to the restrictions placed by state statute. The City received a bond rating upgrade from Aa3 to Aa2 in 2010. These excellent ratings have had a positive effect on the sale of the City's bonds. Additional information on the City's long -term debt can be found in Note IV.E. on pages 43-45 of this report. Economic Factors • Dakota County's unemployment rate ended the year at 4.8 percent, which compares favorably with the state unemployment rate of 5.5 percent, and the national unemployment rate of 7.6 percent. • City building permits were down slightly in quantity but up significantly in value in 2012, as compared to 2011. A total of 766 permits with a total valuation of $38,804,214 were issued in 2012. Requests for Information This financial report is designed to provide a general overview of the City'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 information should be addressed to the Finance Director, City of Rosemount, 2875 145th Street West, Rosemount, Minnesota 55068 -4997. Page 11 IV -26 THIS PAGE INTENTIONALLY LEFT BLANK IV-27 CITY OF ROSEMOUNT STATEMENT OF NET POSITION As of December 31, 2012 (With Summarized Information as of December 31, 2011) LIABILITIES Accounts payable 1,010,599 Business - 1,156,086 841,230 Accrued payroll and payroll taxes Governmental Type Totals 107,976 Activities Activities 2012 2011 ASSETS Unearned revenue 270,643 - 270,643 Cash and investments $ 20,699,406 $ 17,539,451 $ 38,238,857 $ 39,171,939 Receivables Due within one year 1,988,328 932,363 2,920,691 Taxes 688,481 - 688,481 788,095 Delinquent taxes 134,869 - 134,869 143,279 Accounts 593,015 919,331 1,512,346 1,386,518 Special assessments 2,757,804 448,888 3,206,692 3,535,331 Due from other governmental units 312,873 508,864 821,737 524,761 Internal balances (121,817) 121,817 - - Prepaid items 188,397 127,538 315,935 314,941 Capital assets: $ 190,156,865 $ 184,424,155 Land 10,498,466 2,643,767 13,142,233 13,142,233 Construction in progress 2,100,911 1,682,616 3,783,527 5,343,047 Land improvements 2,425,671 - 2,425,671 2,212,864 Buildings 13,872,836 11,085,341 24,958,177 25,591,173 Machinery and equipment 9,248,133 2,831,379 12,079,512 11,864,873 Infrastructure 51,804,234 127,054,137 178,858,371 170,263,650 Less: accumulated depreciation (19,789,048) _(48,009,753) (67,798,801) (64,967,313) Total Assets 95,414,231 116,953,376 212,367,607 209,315,391 LIABILITIES Accounts payable 1,010,599 145,487 1,156,086 841,230 Accrued payroll and payroll taxes 107,766 29,364 137,130 107,976 Other accrued liabilities and deposits 361,452 51,013 412,465 478,718 Unearned revenue 270,643 - 270,643 786,307 Noncurrent liabilities: Due within one year 1,988,328 932,363 2,920,691 3,763,376 Due in more than one year 14,267,583 3,046,144 17,313,727 18,913,629 Total Liabilities 18,006,371 4,204,371 22,210,742 24,891,236 NET POSITION Net investment in capital assets 54,828,890 93,501,405 148,330,295 144,114,238 Restricted for debt service 6,608,554 - 6,608,554 5,764,792 Unrestricted 15,970,416 19,247,600 35,218,016 34,545,125 Total Net Position $ 77,407,860 $ 112,749,005 $ 190,156,865 $ 184,424,155 See accompanying notes to financial statements. IV-28 CITY OF ROSEMOUNT STATEMENT OF ACTIVITIES For the Year Ended December 31, 2012 (With Summarized Information for the Year Ended December 31, 2011) Net (Expense) Revenue and Program Revenues Changes in Net Position Operating Capital Primary Government Charges for Grants and Grants and Governmental Business -Type Totals Functions/Proarams Expenses Services Contributions Contributions Activities Activities 2012 2011 Primary Government: Governmental activities: General government $ 2,701,234 $ 2,286,892 $ 46,326 $ - $ (368,016) $ $ (368,016) $ (731,574) Pudic safety 3,872,633 184,011 275,114 - (3,413,508) - (3,413,508) (3,344,509) Public works 4,341,203 45,564 53,198 3,628,190 (614,251) - (614,251) 55,102 Culture, education and recreation 2,405,676 365,486 1,275 - (2,038,915) - (2,038,915) (1,189,611) Conservation and economic development - - 39,352 39,352 - 39,352 58,331 Interest and fiscal charges 541,386 (541,386) (541,386) (637,609} Total Governmental Activities 13,862,132 2,881,953 375,913 3,667,542 (6,936,724) (6,936,724) (5,789,8701 Business -Type activities Water 1,827,543 2,406,557 - 168,573 - 747,587 747,587 434,486 Sewer 2,317,324 1,707,730 - 207,422 - (402,172) (402,172) (805,496) Storm Water 968,935 1,135,067 - 487,082 - 653,214 653,214 167,337 G Arena N 498,118 352,930 (145,1881 (145,188) (101,661) Total Business- Type Activities 5,611,920 5,602,284 863,077 853,441 853,441 (305,334) Total Primary Government $ 19,474,052 $ 8,484,237 $ 375,913 $ 4,530,619 (6,936,724) 853,441 (6,083,283) (6,095,204) General revenues: Taxes Property taxes, levied for general purposes 10,001,071 - 10,001,071 10,266,170 Property taxes, levied for debt service 1,036,404 - 1,038,404 936,054 Other taxes 242,491 - 242,491 262,783 Investment income 136,310 256,852 393,162 621,061 Miscellaneous 127,817 - 127,617 204,149 Gain on sale of capital assets 13,248 - 13,248 130,114 Transfers (3,170,768) 3,170,768 Total general revenues and transfers 8,388,373 3,427,620 11,815,993 12,420,331 Change in net position 1,451,649 4,281,061 5,732,710 6,325,127 Net position - beginning Net Position - Ending See accompanying notes to financial statements. $ 75,956,211 $ 108,467,944 $ 184,424,155 $ 178,099,028 $ 77,407,860 $ 112,749,005 $ 190,156,885 $ 184,424,155 CITY OF ROSEMOUNT BALANCE SHEET- GOVERNMENTAL FUNDS As of December 31, 2012 LIABILITIES AND FUND BALANCES Liabilities Accounts payable $ 352,818 $ - $ 643,778 $ $ 738 $ 997,334 Accrued payroll and payroll taxes 107,766 - - Port Other Total - 138,510 Deferred revenue 203,637 1,750,596 1,093,603 - Authority Governmental Governmental 270,643 General Debt Service Capital Projects TIF Funds Funds ASSETS Fund Balances Nonspendable 80,623 - 10,000 - Cash and investments $ 8,088,092 $ 4,296,057 $ 6,461,203 $ 886,114 $ 192,045 $ 19,923,511 Receivables from: - 8,549,384 Unassigned 5,905,056 - - 5,905,056 Total fund balances 8,305,112 4,193,284 6,239,951 887,616 Taxes 821,848 - - 1,502 - 823,350 Accounts 96,153 - 496,862 - - 593,015 Special assessments 10,376 1,686,700 989,405 - - 2,686,481 Delinquent special assessments 560 64,693 6,070 - - 71,323 Due from other governmental units 10,191 - 302,682 - - 312,873 Prepaid items 80,623 10,000 - 90,623 Total assets $ 9,107,843 $ 6,047,450 $ 8,266,222 $ 887,616 $ 192,045 $ 24,501,176 LIABILITIES AND FUND BALANCES Liabilities Accounts payable $ 352,818 $ - $ 643,778 $ $ 738 $ 997,334 Accrued payroll and payroll taxes 107,766 - - - 107,766 Deposits payable 138,510 - - - 138,510 Deferred revenue 203,637 1,750,596 1,093,603 - 3,047,836 Unearned revenue - 103,570 167,073 - - 270,643 Advances from other funds - 121,817 121,817 Total liabilities 802,731 1,854,166 2,026,271 738 4,683,906 Fund Balances Nonspendable 80,623 - 10,000 - 90,623 Restricted - 4,193,284 - 887,616 - 5,080,900 Committed - - - - 191,307 191,307 Assigned 2,319,433 - 6,229,951 - 8,549,384 Unassigned 5,905,056 - - 5,905,056 Total fund balances 8,305,112 4,193,284 6,239,951 887,616 191,307 19,817,270 Total liabilities and fund balances $ 9,107,843 $ 6,047,450 $ 8,266,222 $ 887,616 $ 192,045 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental funds are not financial resources and, therefore, are not reported in the funds. 70,161,203 Some receivables that are not currently available are reported as deferred revenue in the fund financial statements but are recognized as revenue when earned in the government -wide statements. 3,047,836 Internal service funds are reported in the statement of net position as governmental activities. 860,405 Some liabilities, including long -term debt, are not due and payable in the current period and, therefore, are not reported in the funds. See Note II.A. (16,478,854) NET POSITION OF GOVERNMENTAL ACTIVITIES $ 77,407,860 See accompanying notes to financial statements. IV -30 CITY OF ROSEMOUNT STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS For the Year Ended December 31, 2012 REVENUES Taxes Intergovernmental Public charges for services Licenses and permits Fines and forfeitures Special assessments Investment income and miscellaneous Total Revenues EXPENDITURES Current: General government Public safety Public works Parks and recreation Capital Outlay Debt Service: Principal retirement Interest and fiscal charges Total Expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Issuance of long -term debt Sale of capital assets Transfers in Transfers out Total Other Financing Sources Net Change in Fund Balance FUND BALANCES - Beginning FUND BALANCES - ENDING $ 8,305,112 $ 4,193,284 $ 6,239,951 $ 887,616 $ 191,307 $ 19,817,270 See accompanying notes to financial statements. IV -31 Port Other Total Authority Governmental Governmental General Debt Service Capital Protects TIF Funds Funds $ 8,673,013 $ 378,378 $ 1,266,948 $ 660,056 $ 58,600 $ 11,036,995 340,218 - 244,163 - - 584,381 1,080,023 - 1,193,608 - 3,420 2,277,051 484,644 - - - - 484,644 129,343 - - - - 129,343 8,371 1,499,691 647,556 - - 2,155,618 192,015 8,646 1,570,858 1,131 599 1,773,249 10,907,627 1,886,715 4,923,133 661,187 62,619 18,441,281 2,400,271 - - 139,018 30,360 2,569,649 3,443,159 - 67,063 - - 3,510,222 3,010,658 140 22,142 - - 3,032,940 1,271,513 - - - - 1,271,513 19,900 - 8,076,966 - - 8,096,866 - 2,370,000 - 35,000 - 2,405,000 - 305,767 - 276,610 - 582,377 10,145,501 2,675,907 8,166,171 450,628 30,360 21,468,567 762,126 (789,192) (3,243,038) 210,559 32,259 (3,027,286) - - 810,000 - - 810,000 - - 12,740 - - 12,740 3,500 200,000 145,163 - - 348,663 (140,000) - - - (140,000) (136,500) 200,000 967,903 - 1,031,403 625,626 (589,192) (2,275,135) 210,559 32,259 (1,995,883) 7,679,486 4,782,476 8,515,086 677,057 159,048 21,813,153 $ 8,305,112 $ 4,193,284 $ 6,239,951 $ 887,616 $ 191,307 $ 19,817,270 See accompanying notes to financial statements. IV -31 CITY OF ROSEMOUNT 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, 2012 Net change in fund balances - total governmental funds $ (1,995,883) 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 net position the cost of these assets is capitalized and they are depreciated over their estimated useful lives with depreciation expense reported in the statement of activities. Capital outlay is reported as an expenditure in the fund financial statements but is capitalized in the government -wide financial statements 8,096,866 Depreciation is reported in the government -wide statements (1,792,723) Utility infrastructure constructed by capital projects funds not reported as governmental activities (3,379,431) In the statement of activities, the gain or loss ($904,132) on the disposal of capital assets is reported. In the fund financial statements, proceeds from the sale of capital assets ($12,740) are reported because the proceeds increase financial resources (916,872) Internal service funds are reported in the statement of activities. 56,006 Net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade -ins) is to decrease net position. (15,949) Receivables not currently available are reported as deferred revenue in the fund financial statements but are recognized as revenue when earned in the government -wide financial statements. (287,193) Issuing debt provides current financial resources to governmental funds, but issuing debt increases long -term liabilities in the statement of net position. This is the amount of debt issued during the year. (810,000) Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long -term liabilities in the statement of net position. This is the amount of principal payments paid. 2,405,000 Governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. 397 Some expenses in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. This is the change in the following liabilities. Compensated absences 55,888 Accrued interest on debt 35,543 CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES $ 1,451,649 See accompanying notes to financial statements. IV -32 CITY OF ROSEMOUNT STATEMENT OF NET POSITION - PROPRIETARY FUNDS As of December 31, 2012 See accompanying notes to financial statements. IV -33 Business -Type Activities - Enterprise Funds Governmental Activities - Stonn Non -major Internal Service Water Sewer Water Arena Totals Fund ASSETS Current assets: Cash and investments $ 6,765,911 $ 6,030,061 $ 4,461,163 $ 282,316 $ 17,539,451 $ 775,895 Customer accounts receivable 388,277 334,286 196,768 - 919,331 Special assessments receivable 186,380 210,198 52,310 - 448,888 Due from other governments - - 480,863 28,001 508,864 - Prepaid and other assets 12,361 92,757 16,103 6,317 127,538 97,774 Total current assets 7,352,929 6,667,302 5,207,207 316,634 19,544,072 873,669 Non - current assets: Advance to other funds - 172,574 - - 172,574 - Property and equipment: Land 1,000,628 547,158 1,095,981 - 2,643,767 Construction in progress 352,378 539,650 790,588 - 1,682,616 Buildings 6,794,504 401,414 1,489,523 2,399,900 11,085,341 Mains and lines 20,065,741 16,380,844 24,616,262 - 61,062,847 Other improvements 16,528,701 36,927,460 12,535,129 - 65,991,290 Machinery and equipment 1,729,901 621,974 352,200 127,304 2,831,379 Less accumulated depreciation (12,642,712) (26,598,076) (7,800,139) (968,826) (48,009,753) Net property and equipment 33,829,141 28,820,424 33,079,544 1,558,378 97,287,487 Total non - current assets 33,829,141 28,992,998 33,079,544 1,558,378 97,460,061 Total Assets 41,182,070 35,660,300 38,286,751 1,875,012 117,004,133 873,669 LIABILITIES Current liabilities: Accounts payable 60,730 25,203 37,443 22,111 145,487 13,264 Accrued liabilities 15,625 5,558 3,966 4,215 29,364 - Accrued interest 42,266 - 8,747 - 51,013 Current portion of long term obligations 562,683 32,683 323,312 13,685 932,363 Total current liabilities 681,304 63,444 373,468 40,011 1,158,227 13,264 Noncurrent liabilities: Accrued compensated absences 35,407 35,407 14,422 14,826 100,062 - General obligation debt 2,002,422 - 943,660 - 2,946,082 - Advances from other funds 50,757 - - 50,757 Total noncurrent liabilities 2,088,586 35,407 958,082 14,826 3,096,901 - Total Liabilities 2,769,890 98,851 1,331,550 54,837 4,255,128 13,264 NET POSITION Net investment in capital assets 31,296,719 28,820,424 31,825,884 1,558,378 93,501,405 - Unrestricted 7,115,461 6,741,025 5,129,317 261,797 19,247,600 860,405 TOTAL NET POSITION $ 38,412,180 $ 35,561,449 $ 36,955,201 $ 1,820,175 $ 112,749,005 $ 860,405 See accompanying notes to financial statements. IV -33 CITY OF ROSEMOUNT STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION PROPRIETARY FUNDS For the Year Ended December 31, 2012 OPERATING REVENUES Charges for services Water meters Miscellaneous Total Operating Revenues OPERATING EXPENSES Personnel services Supplies Professional services and charges Other services and charges Metro sewer charges Depreciation Total Operating Expenses Operating Income (Loss) NONOPERATING REVENUES (EXPENSES) Connection fees Taxes Special assessments Intergovernmental Investment income Net increase in fair value of investments Loss from disposal of capital assets Surcharges and penalties Interest expense and fiscal agent fees Total Nonoperating Revenues Income (loss) before contributions and transfers Capital contributions Transfers in Transfers out Change in Net Position TOTAL NET POSITION - Beginning TOTAL NET POSITION - ENDING Business -Type Activities - Enterprise Funds Governmental Activities - Storm Non -major Internal Service Water Sewer Water Arena Totals Funds $ 1,695,397 $ 1,523,006 $ 914,412 $ 352,930 $ 4,485,745 $ - 42,497 - - - 42,497 - - - - 77,449 1,737,894 1,523,006 914,412 352,930 4,528,242 77,449 425,411 427,324 176,470 197,846 1,227,051 - 152,049 13,210 7,611 16,525 189,395 4,455 101,489 14,751 48,143 41,468 205,851 26,128 281,438 68,695 109,619 187,247 646,999 242,403 - 940,900 - - 940,900 - 758,026 849,551 595,500 55,031 2,258,108 - 1,718,413 2,314,431 937,343 498,117 5,468,304 272,986 19,481 (791,425) (22,931) (145,187) (940,062) (195,537) 382,547 171,915 215,239 - 769,701 - - - - - - 245,000 148,613 207,422 22,911 - 378,946 - 19,960 - - - 19,960 - 63,846 104,952 75,444 1,038 245,280 6,543 5,131 6,940 (499) - 11,572 - (739) - - - (739) - 286,116 12,809 5,416 - 304,341 - (108,391) (2,893) (31,591) - (142,875) - 797,083 501,145 286,920 1,038 1,586,186 251,543 816,564 (290,280) 263,989 (144,149) 646,124 56,006 895,683 748,041 2,199,876 - 3,843,600 - - - 148,000 115,000 263,000 - (348,000) (14,877) (105,286) (3,500) (471,663) 1,364,247 442,884 2,506,579 (32,649) 4,281,061 56,006 37,047,933 35,118,565 34,448,622 1,852,824 108,467,944 804,399 $ 38,412,180 $ 35,561,449 $ 36,955,201 $ 1,820,175 $ 112,749,005 $ 860,405 See accompanying notes to financial statements. IV -34 CITY OF ROSEMOUNT STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2012 Business -Type Activities - Enterprise Funds Governmental Activities - Water Sewer Storm Non major Internal Utility Utility Water Arena Totals Service Fund CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 2,554,349 $ 1,885,963 $ 1,132,875 $ 349,193 $ 5,922,380 $ 77,449 Cash paid to suppliers for goods and services (499,963) (1,034,377) (137,054) (233,596) (1,904,980) (272,509) Cash paid for employees (425,411) (427,324) (176,470) (197,846) (1,227,051) - Net Cash Flows From (Used by) Operating Activities 1,628,985 424,262 819,351 (82,249) 2,790,349 (195,060) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Property taxes - - - - - 245,000 Repayment of advance to other funds - 24,163 24,163 - Advance to other funds (7,107) - - - (7,107) - Repayment of advance to other governmental units 9,483 9,483 Transfers from other funds - - 148,000 115,000 263,000 Transfers to other funds (348,000) (14,877} (105,286) (3,500) (471,663y Net Cash Flows From (Used by) Noncapital Financing Activities (355,107) 9,286 52,197 111,500 (182,124) 245,000 CASH FLOWS FROM INVESTING ACTIVITIES Marketable securities purchased (2,487,747) (5,298,133) (3,111,718) - (10,897,598) (98,000) W Ut Marketable securities sold 2,346,000 5,334,000 2,838,000 - 10,518,000 100,000 Investment income 68,977 111,892 74,945 1,038 256,852 6,543 Net Cash Flows From Investing Activities (72,770) 147,759 (198,773) 1,038 (122,746) 8,543 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Debt retired (510,000) - (290,000) - (800,000) Interest paid (116,630) (2,893) (29,915) - (149,438) Capital contributions 9,885 60,587 70,472 Acquisition and construction of capital assets (59,991) (439,173) (186,381) (30,612) (716,157} Net Cash Flows Used by Capital and Related Financing Activities (686,621) (432,181) (445,709) (30,612) (1,595,123) Net Increase(Decrease)in Cash and Cash Equivalents 514,487 149,126 227,066 (323) 890,356 58,483 CASH AND CASH EQUIVALENTS - Beginning of Year $ 3,000,736 $ 789,084 $ 833,988 $ 282,639 4,906,447 421,412 CASH AND CASH EQUIVALENTS - END OF YEAR $ 3,515,223 $ 938,210 $ 1,061,054 $ 282,316 $ 5,796,803 S 479,895 RECONCILIATION OF CASH AND CASH EQUIVALENTS Cash and Investments per Statement of Net Assets $ 6,765,911 $ 6,030,061 $ 4,461,163 $ 282,316 $ 17,539,451 $ 775,895 Less: Non Cash Equivalents (3,250,688) (5,091,851) (3,400,109) (11,742,648) (296,000) Cash and Cash Equivalents Per Statement of Cash Flows $ 3,515,223 $ 938,210 $ 1,061,054 $ 282,316 $ 5,796,803 $ 479,895 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FLOWS FROM (USED BY) OPERATING ACTIVITIES Operating income (lass) Non - operating income Adjustments to Reconcile Operating Loss to Net Cash Flows From (Used by) Operating Activities Noncash items included in income Depreciation Change in assets and liabilities Accounts receivable Other receivables Prepaid items Accounts payable Other current liabilities Accrued liabilities G NET CASH FLOWS FROM (USED BY) OPERATING ACTIVITIES Business -Type Activities - Enterprise Funds Governmental Activities - Water Sewer Storm Non major Internal Utility Utility Water Arena Totals Service Funds $ 19,481 $ (791,425) $ (22,931) $ (145,187) $ (940,062) (195,537) 837,236 392,146 243,566 - 1,472,948 - 758,026 849,551 595,500 55,031 2,258,108 (20,781) (29,189) (25,103) - (75,073) - - - (3,737) (3,737) - 4,012 (5,292) 23 7,4 32 5,986 (1,919) 22,483 4,618 12,937 10,658 50,696 2,396 9,925 2,677 1,673 1,154 15,429 - (1,397) 1,176 6,475 (200) 6,054 $ 1,628,985 $ 424,262 $ 819,351 $ (82,249) $ 2,790,349 $ (195,060) Non -cash capital, Investing and financing activities: The Water Utility received contributed plant of $895,683 during the year. The Sewer Utility received contributed plant of $738,156 during the year. The Storm Water Utility received contributed plant of $2,199,876 during the year. See accompanying notes to financial statements. CITY OF ROSEMOUNT STATEMENT OF NET POSITION FIDUCIARY FUND As of December 31, 2012 M.A.A.G. Agency Fund ASSETS Cash and investments $ LIABILITIES Due to M.A.A.G. $ - See accompanying notes to financial statements. IV -37 CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE 1— SUMMARY OF SIONiRcANT ACCOUNTING POLICIES The City of Rosemount. Minnesota (the'CiV) was formed and operates pursuant to applicable Minnesota laws and statutes. The governing body consists of a five- member City Council elected at large by voters of the City. City Council members serve four -year staggered terms and the mayor serves a four -year term coinciding with the terns of two of the Council members. Elections take place every two years. The accenting policies of the City conform to accounting principles generally accepted in the United States of America, as applicable to governmental units. The accepted standard- setting body for establishing governmental accounting and financial reporting principles in the Governmental Accounting Standards Board (GASS). A. REPOR71W ENTITY This report includes all of the funds of the City of Rosemount. The reporting entity far the City consists of (a) the primary government, (b) organizations for which the primary government is financially accountable and (c) other organizations for which the nature and significance of their relationship with the primary government are such that their exclusion would cause the reporting entity's financial statements to be misleading or incomplete. A legally separate organization should be reported as a component unit d the elected officials of the primary government are financially accountable to the organization. The primary government is financially accountable A It appoints a voting majority of the organization's governing body and (1) it is able to impose As will on that organization or (2) Mere is a potential for the organization to provide specific financial benefits to or burdens on the primary govemment. The primary government may be financially accountable A an organization is fiscally dependent on the primary government. A legally separate, tax exempt organization should be reported as a component unit of a reporting entity A all of the following criteria are met: (1) the economic resources received or held by the separate organization are entirely or almost entirely for the direct beneflY of the primary government, Its component units, or its constituents; (2) the primary government is entitled to, or has the ability to otherwise access, a majority of the economic resources received or held by the separate organization; (3) the economic resources received or held by an individual organization that the specific primary government, or its component units, is entitled to, or has the ability to otherwise access, are significant to that primary government. Blended component units, although legally separate entities, are, in substance, part of the government's operations and are reported with similar funds of the primary government Blended Component Unit Rosemount Port Authority The Port Authority serves all the citizens of the government and Is governed by a board comprised of three of five of the governments elected council and four citizens appointed at large. The bond issuance authorizations are approved by the govemmenrs council and the legal liability for the general obligation portion of the Port AuthorWs debt remains with the government. The Port Authority is reported in the special revenue fund and in the debt service fund. Separate financial statements have riot been prepared for the Rosemount Part Authority. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE I — SUMMARY OF SIGNIFICMT ACCOUNnNG POLICIES (cant.) S. GOWAMMENT- -WIDE AND FUND FINANCIAL STATEMENTS in June 2011, the GASS issued statement No. 63 — Financial Reporting of Deferred Oufdows of Resources, Referred Inflows of Resources, and Net Position. This statement provides financial reporting guidance for deferred outflows of resources and deferred inflows of resources. Previous financial reporting standards did not include guidance for these elements, which are distinct from assets and liabilities. The City made the decision to implement this standard effective January 1, 2012 Government -Wide Financial Statements The statement of net position and statement of activities display information about the reporting government as a whole. They include all funds of the reporting entity except for fiduciary funds. The statements distinguish between governmental and business -type activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange revenues. Business -type activities are financed in whole or in part by fees charged to external parties for goods or services. 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. The City does not allocate indirect expenses to functions in the statement of activities. Program revenues include 1) charges to customers or applicants who purchase, use or directly benefit from goods, services, a privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not included among program revenues are reported as general revenues. Internally dedicated resources are reported as general revenues rather than as program revenues. Fund Financial Statements Financial statements of the reporting entity are organized Into funds, each of which is considered to be a separate accounting entity. Each fund is accounted for by providing a separate set of self- balancing accounts, which constitute its assets, liabilities, net poshionKund equity, revenues, and expenditures/expenses. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government -wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Funds are organized as major funds or non -major funds within the governmental and proprietary statements. An emphasis Is placed on major funds within the governmental and proprietary calegodes. A fund is considered major h it is the primary operating fund of the City or meets the following criteria: a. Total assets /deferred outflows of resources, liabilities/deferred Inflows of resources, revenues, or expendilaeslexpenses of that Individual governmental or enterprise fund are at least 10 percent of the corresponding total for all funds of that category or type, and b. The same element of the individual governmental fund or enterprise fund that met the 10 percent test is at least 5 percent of the corresponding total for all governmental and enterprise funds combined. c. in addition, any other governmental or enterprise fund that the City believes is particularly important to financial statement users may be reported as a major fund. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31. 2012 NOTE I - SUMMARY OF SRaNIFlCANT ACCOUNTING POLICES (COnt.) B. GovERNMElrT- N4DEAND FuwDFwANcmL STATEMENTS (cord.) Fund Financial Statements (com.) The City reports the following major governmental funds: General Fund — accounts for the City's primary operating activities. It is used to account for all financial resources except those required to be accounted for in another fund. Debt Service Fund — used to account for and report financial resources that are restricted, committed, or assigned to expenditure for the payment of general long -term debt principal, interest, and related costs, other than enterprise debt. Capital Projects Fund — used to account for and report financial resources that are restricted, committed, or assigned to expenditures for capital outlays, including the acquisition or construction of capital facilities and other capital assets. The capital projects fund consists of one primary fund and three separate Internal funds maintained by the City. Port Authority TIF Fund — used to account for and report financial resources that are restricted, committed, or assigned to expenditures related to the activities of the City's Downtown — Brockway TIF District. The City reports the following major enterprise funds: Water Utility — accounts for operations of the water system. Sewer Utility — accounts for operations of the sewer system. Stone Water Utility— accounts for operations of the storm water drainage system. The City reports the following non -major governmental and enterprise funds: Special Revenue Funds — used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditures for specified purposes (other than debt service or capital projects} Fire Safety Education Fund GIS Fund Port Authority General Fund Enterprise Funds — may be used to report any activity for which a fee is charged to external uses for goods or services, and must be used for activities which meet certain debt or cost recovery criteria. Arena Fund — accounts for the activities of the City's ice arena operations. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE 1— SUMMARY OF SIGNIFICANT ACCouNTINO POLICIES (Cant.) B. GovERM1ENT- WIDEANDFUNDF /NANciALSTATEMENTs(COnL) Fund Financial Statements (con.) In addition, the City reports the following fund types: Internal service funds are used to account for the financing of goods and services provided by one department or agency to other departments or agencies of the City on a cost - reimbursement basis. Insurance Fund— accumulates resources to pay deductibles and uninsured dams, and pays for a majority of the general liability insurance and workers compensation insurance premiums for the City. Agency funds are used to account for assets held by the City in a trustee capacity or as an agent for Individuals, private organizations, and /or other governmental units. MAA.G Fund — funds are held on behalf of the Mutual Aid Assistance Group (M.A.A.G.) which is a cooperative of various Dakota County police departments. During 2012, this fund was closed out as the City is no longer serving as the fiscal agent. C. hIEASUREMENrFGCUS,BASis OFACCOUNrrNGANDF /NANCIALSTATENENTPRESENTATIDN Government -Wide Financial Statements The government -wide statement of net position and statement of activities are reported using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. Revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange - like transactions are recognized when the exchange takes place. Property taxes 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 are met. Special assessments are recorded as revenue when earned. Unbilled receivables are recorded as revenues when services are provided. As a general rule, the effect of interfurd activity has been eliminated from the government -wide financial statements. Exceptions to this general rule are charges between the City's water and sewer utility and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE I — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cost.) C. MEASUREMENT FOCUS, BASIS OFACCOUNTIMG AND FINANCIAL STATEMENTFRESENTATION(Cont) Fund Flnenclai Statements Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recorded when they are both measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. For this purpose, the City considers revenues to be available II they are collected within 00 days of the end of the current fiscal period. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on long -term debt, claims, judgments, compensated absences, and pension expenditures, which are recorded as a fund liability when expected to be pad with expendable available financial resources. Property taxes are recorded as receivables in the year levied. They are recognized as revenues when collected in the current year and In the first 60 days of the succeeding year. Intergovernmental aids and grants are recognized as revenues in the period the City is entitled to the resources and the amounts are available. Amounts owed to the City which are not available are recorded as receivables and deferred revenues. Amounts received prior to the entitlement period are also recorded as deferred revenues. Special assessments are recorded as revenues when they become measurable and available as current assets. Annual installments due in future years are reflected as receivables and deferred revenues. Revenues susceptible to accrual include properly taxes, miscellaneous taxes, public charges for services, special assessments and interest. Other general revenues such as fines and forfeitures, inspection fees, recreation fees, and miscellaneous revenues are recognized when received in cash or when measurable and available under the criteria described above. The City reports deferred revenues on its governmental funds balance sheet. Deferred revenues arise from taxes levied in the current year which are for subsequent years operations. For governmental fund financial statements, deferred revenues arise when a potential revenue does not meet both the *measurable" and "available" criteria for recognition In the current period. Deferred revenues also arise when resources are received before the City has a legal claim to them, as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the City has a legal claim to the resources, the liability for deferred revenue is removed from the balance sheet and revenue is recognized. Proprietary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as described previously in this note. Agency funds follow the accrual basis of accounting, and do not have a measurement focus. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE I — SUMMARY OF SIGNIFICANT ACCOIINTNO PGucles (font.) C. MEASUREMENT Focus, BAs /S GFAcc*uNTrNG AND F/NANCML STATEMENT PRESENTATION (cont.) Fund Financial Statements (corn.) The proprietary funds distinguish operating revenues and expenses from nonoperaling Items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary funds principal ongoing operations. The principal operating revenues of the water, sewer, storm water, and arena funds are charges to customers for sales and services. Special assessments are recorded as receivables and contribution revenue when levied. Operating expenses for proprietary 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. AN Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. D. ASSETS, DEFERRED OUTFLOWS GFRESOURCES, LIABILITIES, DEFERRED INFLOWS OFRESOURCES, AND NET POsnrov OR EourY 1. Deposits and Investments For purposes of the statement of cash flows, the City considers all highly liquid investments with an initial maturity of three months or less when acquired to be cash equivalents. Investment of City funds is restricted by state statutes. Available Investments are limited to: 1. Direct obligations or obligations guaranteed by the United States or its agencies, commercial paper, repurchase or reverse repurchase agreements with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000, a primary reporting dealer in U.S. Government Securities to the Federal Reserve Bank of New York or certain Minnesota brokers/dealers. 2. General obligations of the State of Minnesota or any of its municipalities. 3. Bankers acceptances of United States banks eligible for purchase by the Federal Reserve System. 4. Shares of investment companies registered under the Federal Investment Company Act of 1940 and whose only investments are direct obligations guaranteed by the United States or its agencies. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE I — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) D. ASSETS, DEFERRED OUTFLOWS OFRESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSMON OR&"TY(cont.) I. Deposits and Investments (oont.) The City has adopted an investment policy. The policy contains the following guidelines: Credit Risk- The policy follows state statutes for allowable investments except that k does not permit the purchase of shares of investment companies registered under the Federal Investment Company Act of 1940 whose only investments are direct obligations guaranteed by the United States or its agencies. Concentration of Credit Risk - The policy does not limit the amount the City may invest in any one issuer. Interest Rate Risk - As a means of limiting Its exposure to fair value losses arising from rising Interest rates, the Citys investment policy limits the amount of investments with maturities of more than five years to 35% of the Cftys total investment portfolio (including certificates of deposit). Investments are stated at fair value, which is the amount at which an Investment could be exchanged in a current transaction between willing parties. Fah values are based on quoted market prices. No Investments are reported at amortized cost. Adjustments necessary to record investments at fair value are recorded in the operating statement as increases or decreases in investment Income. Investment purchases are charged and maturities are deposited to the consolidated bank account. The purpose of this consolidation is to reduce administrative costs and to provide a single cash balance available for the maximization of investment earnings. Each fund shares In the investment earnings according to its average cash and Investment balances. Cash is transferred from those funds with available cash resources to cover any negative cash balances In other funds at year-end. The difference between the bank balance and carrying value is due to outstanding checks and/or deposits in transit See Note W.A. for further information. 2. Receivables Property tax levies are set by the City Council in the fall each year and are certified to Dakota County for collection In the following year. In Minnesota, counties act as collection agents for all properly taxes. The County spreads all levies over taxable property. Such taxes become a lien on January 1 and are recorded as receivables by the City at that date. Property taxes are accrued and recognized as revenue in the year collectible, net of delinquencies. Real property taxes may be paid by taxpayers in two equal Installments on May 15 and October 15. Personal property taxes may be paid on February 28 and June 30. The County provides tax settlements to the City three times per year, in January. July, and December. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE I — SUMMARY OF SIGNIFICANT AccouNTINO POLICIES (cunt.) D. ASSETS, DEFERRED OuMOWS OF RESOURCES, L/ABAJTIES, DEFERREDMFLOws OF RESOURCES, AND NET POSITION OR Eaunry (cont.) 2. Receivables(oont.) Taxes which remain unpaid 80 days after year end are classified as delinquent taxes receivable and are fully offset by deferred revenue because they are not known to be available to finance current expenditures. Special assessments are levied against the benefited properties for the assessable costs of special assessments improvement projects in accordance with state statutes. The City usually adopts the assessment rolls when the Individual projects are complete. The assessments are collectible over a term of years generally consistent with the term of years of the related bond issue. Collection of annual installments (including interest) is handled by the County in the same manner as property taxes. Properly owners are allowed to prepay total future installments without interest or prepayment penalties. Special assessments receivable Inctudes the following components: • Current -amount collected by Dakota County and not remitted to the City. • Delinquent -amounts billed to property owners but not paid. • Deferred - assessment installments, which will be billed to property owners In future years. • Other - assessments for which payment has been postponed based on council action. Accounts receivable are considered to be 100% collectible. During the course of operations, transactions occur between individual funds that may result in amounts owed between funds. Short-term interfund bans are reported as "due to and from other funds." Long -term Interfund loans (noncurrent portion) are reported as 'advances from and to other funds." Inlerfund receivables and payables between funds within governmental activities are eliminated In the statement of net assets. Any residual balances outstanding between the governmental activities and business -type activities are reported in the government -wide financial statements as 'internal balances". In the governmental fund financial statements, advances to other funds are offset equally by a nonspendable fund balance account which indicates that [hey do not constitute expendable available financial resources and. therefore, are not available for appropriation, or by a restricted fund balance account, if the funds will ultimately be restricted when the advance is repaid. 3. Inventories and Prepa/d Norms Governmental fund inventory Items are charged to expenditure accounts when purchased. Year-end inventory was not significant Proprietary fund inventories are generally used for construction and for operation and maintenance work. They are not for resale. They are valued at cost based on weighted average, and charged to construction and/or operation and maintenance expense when used. 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. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (COnt.) D. ASSETS, DEFERRED OUTFLOWS OF RE souRCEs, LiAso.RrES, DEFERRED hatows of REsouitces, AND NET PosmoNON Eoun y(font.) 4. Capital Assets Government — Wilde Statements Capital assets, which include property, plant and equipment, are reported in the government-wide financial statements - Capital assets are defined by the government as assets with an initial cost of more than $5,000 for general capital assets and infrastructure assets, and an estimated useful life In excess of one year. All capital assets are valued at historical coat or estimated historical cost if actual amounts are unavailable. Donated capital assets are recorded at their estimated fair value at the date of donation. Additions to and replacements of capital assets of business -type activities are recorded at original cost, which Includes material, labor, overhead, and an allowance for the cost of funds used during construction when significant. For tax -exempt debt, the amount of interest capitalized equals the interest expense incurred during construction neaed against any interest revenue from temporary investment of borrowed fund proceeds. No Interest was capitalized during the current year. The cost of renewals and betterments relating to retirement units is added to plant accounts. The cast of property replaced retired or otherwise disposed of, Is deducted from plant accounts and, generally, together with removal costs less salvage, is charged to accumulated depreciation. Depreciation of all exhaustible capital assets is recorded as an allocated expense in the statement of activities, with accumulated depreciation reflected In the statement of net position. Depreciation is provided over the easels' estimated useful lives using the straight-line method of depreciation. The range of estimated useful lives by type of asset is as follows: Buildings 30-65 Years Machineryand equipment 4-20 Years Other improvements 60 Years Utility system 65 Years Irdraslnrckire 35 -50 Years Fund Ffnandaf Statements In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Capital assets used in proprietary fund operations are accounted for the same way as in the government -wide statements. 3. OMarAssets In governmental funds, debt issuance costs are recognized as expenditures In the current period. For the government -vide and the proprietary fund type financial statements, debt issuance costs are deferred and amortized over the term of the debt issue. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING Poucses (corn.) D. ASSETS, DEFERRED OUTFLOWS OF RESOURCES, WINLRfES, DEFERRED INFLOWS OF RESOURCES, AND NET POsmow oR EGurry(com.) S. Deferred Outflows of Resources A deferred outflow of resources represents a consumption of net position that applies to a future period and will not be recognized as an outflow of resources (expense/expenditure) until that future time. 7. Compensated Absences Under terms of employment, employees are granted vacation, sick and comp time benefits in varying amounts. These benefits are based upon union contracts and City actions as applicable. Amounts carried forward for vacation and comp time accruals are governed by these contracts and actions. Sick pay accruals may be carried forward indefinitely. All vested vacation, sick leave and comp time pay is accrued when Incurred in the government - vide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only If they have matured, for example, as a recruit of employee resignations and retirements, and are payable with expendable available resources. Payments for vacation, sick and comp time leave will be made at rates in effect when the benefits are used. Accumulated vacation, sick and comp time leave liabilities at December 31, 2012 are determined on the basis of current salary rates and include salary related payments. & Long -Tenn ObNgations/Comfuft Debt Ali long -term obligations to he repaid from governmental and business -type resources are reported as liabilities in the government -wide statements. The long -tens obligations consist primarily of notes and bonds payable, and accrued compensated absences. Long-term obligations for governmental funds are not reported as liabilities in the fund financial statements. The face value of debts (plus any premiums) are reported as other financing sources and payments of principal and interest are reported as expenditures. The accounting in proprietary funds is the same as it is in the government -wide statements. For the govemmem -wide statements and proprietary fund statements, bond premiums and discounts are deferred and amortized over the fife of the issue using the effective Interest method. Gains or losses on prior refundings are amortized over the remaining fife of the old debt, or the life of the new debt, whichever is shorter. The balance at year end for both premiums/discounts and gainsAosses, as applicable, is shown as an increase or decrease in the liability section of the statement of net assets. The City has approved the Issuance of industrial revenue bonds (IRB) for the benefit of private business enterprises. IRB's are secured by mortgages or revenue agreements on the associated projects, and do not constitute indebtedness of the City. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. At year end, the aggregate principal amount for the five issues outstanding could not be determined; however, their original issue amounts totaled $14,294,720. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE I — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cunt.) D. ASSETS, DEFERRED OUTFLOWS OF RESOURCES, L U77ES, DEFERRED IN-LAWS OF RESOURCES, AND NET PosimoNOR EOWTY(cont.) 9. Claims and Judgments Claims and judgments are recorded as liabilities if all the conditions of Governmental Accounting Standards Board guidance are met. The liability and expenditure for claims and judgments are only reported in governmental funds if it has matured. Claims and judgments are recorded in the government -wide statements and proprietary funds as expenses when the related liabilities are incurred. There were no significant claims or judgments at year end. 10. Deferred inflows of Resources A deferred inflow of resources represents an acquisition of net position that applies to a future period and therefore Will be recognized as Mow of resources (revenue) until that future time. It Equity Clash lcagons Go ernment YVIde Statements Equity is classified as net position and displayed in three components: a. Net investment in capital assets — Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances (including unspent debt proceeds) of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisSion, construction, or improvement of those assets. b. Restricted net position— Consists of net position with constraints placed on their use either by 1) extemal groups such as creditors, grantors, contributors, or laws or regulations of other governments or, 2) law through constitutional provisions or enabling legislation. c. Unrestricted net position — AS other net positions that do not meet the definitions of'restrieted" or 'net investment in capital assets.' When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, than unrestricted resources as they are treaded. Fund Statements Governmental fund equity is classified as fund balance. In accordance with Governmental Accounting Standards Board Statement No. 54 - Fund Balance Reporting and Governmental Fund Type Definitions, the City classifies governmental fund balance as follows: a. Nonspendable - Includes fund balance amounts that cannot be spent either because they are not in spendable form or because legal or contractual requirements require them to be maintained Intact. b. Restricted - Consists of fund balances with constraints placed on their use either by 1) external groups such as creditors, grantors, Contributors, or laws or regulations of other governments or 2) law through constitutional provisions or enabling legislation. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE I — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (0011.) D. ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LAwLmEs, DEFERRED INFLOWS OF RESOURCES, AND NET POSmoN OR EOuav (cunt. ) ff. Equity Classif(cations (cunt.) Fund Statements (cons.) c. Committed - Includes fund balance amounts that are constrained for specific purposes that are internally imposed by the government through formal action of the highest level of decision making authority. Fund balance amounts are committed through a formal action (resolution) of the City. This formal action must occur prior to the end of the reporting period, but the amount of the commitment, which will be subject to the constraints, may be determined In the subsequent period. Any changes to the constraints imposed require the same formal action of the City that originally created the commitment. d. Assigned - Includes spendable fund balance amounts that are intended to be used for specific purposes that are not considered restricted a committed. Fund balance may be assigned through the following: 1) The City has authorized the Finance Director andlor Administrator to assign amounts for a specific purpose. 2) All remaining positive spendable amounts in governmental funds, other than the general fund, that are neither restricted or committed. Assignments may take place after the end of the reporting period. e. Unassigned - Includes residual positive fund balance within the general fund which has not been classified within the other above mentioned categories. Unassigned fund balance may also include negative balances for arty governmental fund ff expenditures exceed amounts restricted, committed, or assigned for those purposes. Proprietary fund equity is classed the same as in the government -wide statements. The City considers restricted amounts to be spent first when both restricted and unrestricted fund balance is available unless there are legal documents I contracts that prohibit doing this, such as in grant agreements requiring dollar for dollar spending. Additionally, the City would feat use committed, then assigned and lastly unassigned amounts of unrestricted fund balance when expenditures are made. The City has a formal minimum fund balance policy. That policy is to maintain a working capital fund of 45 to 55 percent of the subsequent year's general fund expenditures. The balance at year end was $5,905,056, or 55 percent, and is included in unassigned general fund balance. f2. Pifor Peviodinformation The basic financial statements include certain prior -year summarized Comparative information in total, but not at the level of detail required for a presentation in conformity with generally accepted accounting principles. Accordingly, such Information should be read In conjunction with the government's financial statements for the year ended December 31, 2011, from which the summarized information was derived. 13. Basis for Existing Rates Current utility rates were approved by the City Council on December 6, 2011 CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE 11- RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS A. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND BALANCE SHEETAND THE STATEMENTOFNETPoSnmN The governmental fund balance sheet includes a reconciliation between fund balance – total governmental funds and net positron – governmental acdvilies as reported in the government -wide statement of net position. One dement of that reconciliation explains that "Some liabilities, Including long -term debt, are not due and payable In the current period and, therefore, are not reported in the funds'. The details of this $16,478,854 difference are as follows: Long -term Ilablitfes applicable to the City's governmental activities are not due and payable in the current period, and accordingly, are not reported as fund liabilities. Interest on long -term debt Is not accrued In governmental funds, but rather is recognized as an expenditure when due. Al liabilities - both current and long- term - are reported in the statement of net position. Bands and notes payable (excluding unspent capital related proceeds) $ 15,340,DOD Compensated absences 923,598 Accrued interest 222,943 Unamortized debt discount and issuance costs (7,687) Combined Adjustment for Long -Tenn Liabilities $ 16,478,864 NOTE 111- STEWARDSHIP, COMPLukm AND ACCOUNTABILrtY A. BUDGETARrMFoRMAnom Budgetary infonnatkin is derived from the annual operating budget and is presented using the same basis of accounting for each fund as described in Note I. C. with departures from generally accepted accounting principles for encumbrances. Annual budgets have been adopted for the general fund and the capital project fund that is created by the following sub - funds, Building CIP, Street CIP and Equipment CIP. The remaining capital project sub funds adopt project- length budgets and therefore are not included in the annual budgeting process. Formal budgetary integration is no employed for debt service funds because effective budgetary control Is alternatively achieved through general obligation bond indenture provisions. The budgeted amounts presented indude any amendments made. The appropriated budget is prepared by fund, department and function. The legal level of budgetary control is at the department level. The City Council may authorize department heads to transfer budgeted appropriations within departments. The Council approved several supplemental budgetary appropriations during the year, but they were not considered material. Appropriations lapse at year end unless specifically carried over. Carryovers to the following year were $1,351,284. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE IV – DETAILED NOTES ON ALL FUNDS A. DEPOSITS AND &VESTMENTS The City maintains a cash and investment pod that is available for use by all funds. Each fund type's portion of this pool is displayed on the statement of net position and balance sheet as cash and investments. In addition, investments are separately held by several of the City's funds. The City's cash and investments at year end were comprised of the folkiwirg: Carrying Statement Associated Value Balance Risks Petty cash and cash on hand $ 2,400 It 2,400 NIA Demand deposits 26,062,606 26,885,697 Custodial credit Custodial credit, credit, concentration of credit, U.S. instrumentalities 12,173,851 12,173,851 interest rate Total Cash and investments $ 38,238,857 $ 39,061,948 Deposits in each local and area bank are insured by the FDIC in the amount of $250,000 for time and savings accounts (Including NOW accounts), $250,000 for Interest- bearing demand deposit accounts, and unlimited amounts for nordmerest- bearing transaction accounts through December 31, 2012. On January 1, 2013, the temporary unlimited coverage for noninterest- beerkng transaction accounts expired. Therefore, demand deposit accounts (interest - bearing and nonlnterest- bearing) are insured for a total of $250,000 beginning January 1, 2013. In addition, If deposits are held in an Institution outside of the state in which the government is located, insured amounts are further limited to a total of $250,000 for the combined amount of all deposit accounts. The Securities Investor Protection Corporation (SIPC), created by the Securities Investor Protection Act of 1970, Is an independent Bove— ard-sponsored corporation (not an agency of the U.S. government). SIPC membership provides account protection up to a maximum of $500,000 per customer, of which $100,000 may be in cash. Custodfat Credit Risk Deposits Custodial credit risk is the risk that in the event of a financial Institution failure, the Citys deposits may not be returned to the City. The City maintains collateral agreements with its banks. At December 31, 2012, the banks had pledged various government securities in the amount of $27,758,378 to secure the City's deposits. The City has no custodial credit risk exposure in regards to deposits at December 31, 2012. Investments For an investment, custodial credit risk's the risk that, in the event of the failure of the oDunterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City does not have any investments exposed to custodial credit risk. G A CrI CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE IV - DETAILED Notes oN ALL FUNDS (cont.) A. DEPosn3ANDIM0E8TYENrs(cont.) Credit Risk Credit risk Is the risk that an Issuer or otter counterparty to an investment will not fulfill its obligations. As of December 31, 2012, all of the City of RDsemount's investments were U.S. agency obligations which received AAA ratings from Standard & Poor's and/or Moodys Investors Service, respectively. Concentration of Creogf iNsk Concentration of credit risk is the risk of loss attributed to the magnitude of the City's Investment in a single issuer. As of December 31, 2012, all of the City of Rosemount's investments were U.S. agency obligations, as follows: Issuer Fair Value Percentage of Total Federal Home Loan Bank $ 7,738,050 64% Federal Home Loan Mortgage Corporation 4,435,801 3e% $ 12,173,851 Interest Rate Risk Interest rate risk is the risk that changes in interest rates will adversely affect the value of an Investment. As of December 31, 2012, the City of Rosemount's investments were as follows: Investment Maturities (in years) Total Fair Less More Investment Type Value than 1 1-5 6-10 than 10 U.S. Agency Obligations $ 12,173,851 $ - $ - $ 12,173,851 $ At December 31, 2012, the City held $11,671,096 in U.S. Agency Obligations that are callable at increasing stepped interest rates. See Note LOA for further Information on deposit and investment policies. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE N -DETAILED NOTES ON ALL FUNDS (COnt.) B. RECEIVABLES Receivables as of year end for the government's individual major funds and non -major and internal service funds in the aggregate, including the applicable allowances for uncoilectible accounts, are as follows: Debt Capital Port Authority Govsmmentsf Aetivkiss General Service Projects TIF Totals Receivables: Taxes $ 821,848 $ - $ - $ 1,502 $ 823,350 Accounts 96,153 - 496,862 - 593,015 Special assessments 10,376 1,686,700 989,405 - 2,686,481 Delinquent special assessments 560 64 ,693 6,070 - 71,323 Due from other governments 10,191 302,682 - 312,873 Total Receivables $ 939,128 $ 1,751,393 $ 11795,019 $ 1,502 $ 4,487,042 Amounts not expected to be collected within one year $ 5,914 $ 961,419 $ 563,961 $ - $ 1,531,294 Nonmajor Water Sewer Storm Water Arena Business -Type AOtfvifies Ublity Utility Utility Fund Totals Receivables: Customer accounts $ 388,277 $ 334.286 $ 196,768 $ - $ 919,331 Special assessments 186,380 210,198 52,310 - 448,888 Due from other govemments - 480,883 28,001 508,864 Total Receivables $ 574,657 $ 544,484 $ 7291941 $ 28,001 $ 1.677,083 Amounts not expected to be collected within one year $ 106,237 $ 119,813 $ 411,197 $ - If 637,247 Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the curent fiscal year, the various components of deferred revenue and unearned revenue reported In the governmental funds were as follows: Unavailable Unearned Totals Delinquent property taxes receivable $ 134,869 $ $ 134,869 Delinquent special assessments 70,525 - 70,525 Special assessments not yet due 2,664,609 270,643 2,955,252 Grant funds received more then 60 days after year-end 100,000 - 100,000 Donations receivable for future projects 57,833 57,833 Thai Deferred/Uneemed Revenue for Governmental Funds $ 3,947,836 $ 270,643 $ 3,318,479 G A O) CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE IV — DETAILED NOTES aN ILLL FunDs (cunt.) C. CAPITAL ASSETS (a0nt.) C. CAPITALASSETB Beginning Capital asset activity for the year ended December 31, 2012 was as follows: Ending Balance Beginning Deletions Balance Business-Type Activities Ending Balance Additions Deletions Balance Governmental Activities Land $ 2,643,767 S - $ - $ 2,643.767 Capital assets not being depreciated: 2,617,034 4.164,969 5,089,387 1.682.616 Total Capital Assets Land $ 10,498,466 ; - $ - ; 10,498,466 Land improvements - 159,745 - 159,745 Construction in progress 2,728,013 4,20D. 4,825.446 2,100,911 Total Capital Assets 2,743,882 100,151 12,454 2,831,379 Mains and Imes Not Being Depwisted 13,220.479 4,360,189 4,825.446 12,759.122 Capital assets being depredated: Being Depreciated 135,783,773 5,199,538 Improvements 2,212,864 53,062 2,265,926 Buildings 14,505,832 242.838 875,832 13,872,836 Machinery and equipment 9,121,191 5101850 383,908 9,248,133 Infrastructure - 90.941 - 90,941 Roads 45,978,528 4,132,495 866,102 49,244,921 Bridges 1,887,923 - - 1,887,923 Parking lots 442,449 138,000 580.449 Total Capital Assets $ 95.281,215 S 7,106,399 $ 5,100,127 $ 97,287,487 Depreciation expense was charged to functions as follows Being Depreciated 74,148,787 5,158,184 2,125,842 77.191.129 Less: Accumulated depredation for Water $ 758,026 Improvements $ (865,540) $ (96,044) $ - $ (961,684) Buildings (3,958,655) (289.190) (137,214) (4,110,831) Machinery and equipment (5,941,560) (545.968) (361,494) (6,126,034) Infrastructure (466) - (466) Roads (7,966,810) (799,698) (708,921) (8.057,487) Bridges (290,432) (47.198) - (337,630) Parking lots (180,957) (14,2591 (195,216) Total Accumulated Depreciation 119,203,954) (1,792,723) (1.207,8291 (19.789,048) Net Capital Assets Being Depreciated 54,944,833 3.375,461 918,213 57,402,081 Total Governmental Act(Wtles Capital Assets. Net of Depreciation $ 68,189,312 $ 7,735,550 $ 5,743,659 $ 70,161,203 Depreciation expense was charged to functions as follows: 6ovemmemal Activities General govemment $ 201,637 Public safely 298,953 PuNk works, which includes the depredation of roads, bridges and parking lots 1,105,229 Leisure activities 188,901 Total GovaInmentei Activities Depreciation Expense S 1,792,723 CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE IV — DETAtLEO Notes tAt M.L FUNO9 (crnttJ C. CAPITAL ASSETS (a0nt.) Beginning Ending Balance Additions Deletions Balance Business-Type Activities Capital assets not being depredated: Land $ 2,643,767 S - $ - $ 2,643.767 Construction in progress 2,617,034 4.164,969 5,089,387 1.682.616 Total Capital Assets Not Being Depreciated 5,260,801 4.164,969 5 099.387 4,328,383 Capital Assets Being Depreciated: Buildings 11.085,341 - - 11,085,341 Machinery and equipment 2,743,882 100,151 12,454 2,831,379 Mains and Imes 121,954,750 5,099,387 127,054,137 Total Capital Assets Being Depreciated 135,783,773 5,199,538 12,454 140,970,857 Less: Accumulated depreciation for. Buildings $ (2,400,342) $ (230,588) $ - $ (2,896,930) Machinery and equipment (1,764,764) (145,418) (11,714) (1,898,468) Mains and lines (41,538,253) (1,876.102) - (43,414,355) Total Accumulated Depredation (45,703,359) (2,258,108) (11,714) (48,009,753) Net Capital Assets Being Depreciated 90,020,414 2.941,430 740 92,961,104 Total Business -Type Capital Assets, Not of Depreciation $ 95.281,215 S 7,106,399 $ 5,100,127 $ 97,287,487 Depreciation expense was charged to functions as follows Business-Type Activities Water $ 758,026 Sewer 849,551 Storm water 595.500 Arens 55,031 Total Business -type Activities Depredation Expense $ 2,258,108 G A J CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE N - DETALED NOTES oN ALL FUNDS (cunt) D. INTERFOORECENASLESIPAYABLES AND TRANSFERS D. LwERWNDRECEIYABLEs)PAYABLEs ARDTRANSFERS(cortt.) The following is a schedule of interfund recelvaNeladvances as of December 31, 2012: The following is a schedule of interfund transfers: Amount Not Fund Transferred To Fund Transferred From Due Within Receivable Fund Payable Fund Amount One Year Sewer Bu1ding CIP S 121,817 $ 103,890 Sewer Water 50,757 43,304 Subtotal - Fund financial statements 172,574 147,194 Less: Fund eliminations (50,757) (43,304) Total - Government -Wide Statement of Net Position $ 121,817 $ 103,890 The principal purpose of these Interfund loans was to finance the public works building expansion in 1999, and to purchase and renovate a building In the Downtown- Brockway Tax Increment Financing District in 2005. For the statement of net position, interfund balances which are owed within the governmental activities or business -type activities are netted and eliminated. Storm Water The sewer fund advanced funds to the water fund and capital projects fund. The sewer fund is charging the other funds Interest on the advance based on the average outstanding advance balance during the year at a rate of 5 %. Following is a detailed repayment schedule for the sewer fund advance: 25,000 Principal Interest Totals 2013 $ 25,371 $ 8,629 $ 34,000 2014 28,640 7,360 34,000 2015 27,972 6,028 34,000 2018 29,370 4,630 34,000 2017 30,839 3,161 34,000 2018 32,382 1,618 34,000 Total $ 172,574 $ 31,421) $ 204,000 CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE N - DETAILED Notes oN ALL FuNos (cunt.) D. LwERWNDRECEIYABLEs)PAYABLEs ARDTRANSFERS(cortt.) The following is a schedule of interfund transfers: Fund Transferred To Fund Transferred From Amount Principal Purpose General Arena $ 3,500 Building and grounds maintenance Debt Service Water 200,000 Water share of debt payment Capital Projects Sewer 14,877 Sewer share of project and to close construction funds Storm Water 105,286 Storm water share of project General 25,000 Future improvements Enterprise Storm Water Water Arena General Less: Fund eliminations Less: Contributed plant reclassified to a transfer in the government -wile statements Total Transfers - Government-Wide 148,000 Water share of debt payments 115,000 Operating expenses 611,663 (173,000) (3,609,431) Statement of Activities $ (3,170,766) Generally, transfers are used to (1) move revenues from the fund that collects them to the fund that the budget requires to expend them, (2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund, and (3) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary aulhori�tions. For the statement of activities, interfund transfers within the governmental activities or bustness -type activities are netted and eliminated. G DO DO CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE IV - DETAILED NOTES ON ALL FUNDS (conL) E. Loxo-TERm0BuGAnaNs Long -temh obligations activity for the year ended December 31, 2012 was as follows: CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE IV - DETAILED NOTES ON ALL FUNDS (cont.) E. LONG -TERM OBLIGATIONS (Cont.) Amounts Giu and Obligaepn Debt Beginning Ending Due Within the City. Notes and bonds in the Bslanre increases Decreases Balance One Year GO VERNMENTALACTIVITIES Governmental Activities Data of Final interest Bands and Notes Payable: Genera Obligation Debt Issue Maturity Rates Indebtedness 12 -31 -12 Refunding Bond %Series 2001E General obligation debt $ 16,935,000 $ 810,000 $ 2,405,000 $ 15,340,000 S 1,545,000 Netdiscourd (7,290) (397) (7,6871 2006 2017 4.0% Sub4otal 18,927,710 809,803 2,405,000 15,332,313 1,545,000 Other Liabilities 385,000 165,050 Port Authority TIF, Series 2008A 2008 2024 6.0% to 55% 2,765,000 2,730,000 Vested compensated absences 979 ,486 414,288 470,154 923,598 443,328 Total GovemmeMal Activities 1,355,000 1,355,DOD Improvement Bonds, Series 2011A 2011 2017 0.45% to 1.35% 2,000,000 2,080,000 Long -Term Liabilities $ 17,907,196 S 1,223,889 $ 2,875,154 $ 16,255,911 $ 1,988,328 BUSINESS -TYPE ACTIVITIES Business -Type Actnnies Data of Final Interest Original Balance General Obligation Debt Brads and Notes Payable: Indebtedness 12 -31 -12 Water Revenue Bonds, Sense 20DOA 2000 2016 4.4 %e 5.4% $ 1,160,ODD $ 410,000 General obligation debt $ 4,585,000 $ - $ 800,000 $ 3,785,000 $ 840,000 Net dscounttpremium 1,013 2010 2018 0.8 % to 2.6% (69) 1,082 Total Business -Type Activities - General Sub -total 4,586,013 - 799,931 3,786,082 840.OW Other Liabilities: Business -Type Activities Germ Obiigadon Debt General Obligation Debt Vested compensated absences 183,798 98,851 88,222 192,425 92,383 Total Business -Type Activtties 1,500,000 473,854 860,000 85,315 2015 1,555,000 430,571 Long -Term Liabilities S 4,769,809 S 98,851 $ 888,153 $ 3,978,507 $ 932,963 CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE IV - DETAILED NOTES ON ALL FUNDS (cont.) E. LONG -TERM OBLIGATIONS (Cont.) Giu and Obligaepn Debt The City issues general obligation debt to provide funds for the acquisition and construction of major capital facirdies. All general obligation notes and bonds payable are backed by the full faith and credit of the City. Notes and bonds in the governmental finds will be retired by future property tax levies or tax increments accumulated by the debt service fund. Business -type activities debt Is payable by revenues from user fees of those funds or. If the revenues are not sufficient by future tax levies. Governmental Activities Data of Final interest Original Balance Genera Obligation Debt Issue Maturity Rates Indebtedness 12 -31 -12 Refunding Bond %Series 2001E 2001 2013 3.1% to 4.6% $ 725,000 $ 85,000 Fie Staten CIP Bonds, Series 2005A 2005 2025 3.5% to 4.3% 2,650,000 2,ODD,0D0 Fine Staten Refunding Bonds, Series 2005D 2005 2016 32% to 3.8% 1,115,000 490,000 Imme -mad Bonds, Series 2006B 2006 2017 4.0% 4,405,000 2,250,000 Equipment Certificates, Senm 20078 2007 2013 3.5% to 3.6% 450,000 100,000 E:quilxnent Cemifhcetes, Senm 2008A 2008 2014 199% 385,000 165,050 Port Authority TIF, Series 2008A 2008 2024 6.0% to 55% 2,765,000 2,730,000 Part Authority TIF, Series 20088 20DO 2032 4.0% to 4.1% 3,275,000 3,275,000 Crossover Refunding Bonds, Seder 20108 2010 2022 1.2% to 3.7% 1,355,000 1,355,DOD Improvement Bonds, Series 2011A 2011 2017 0.45% to 1.35% 2,000,000 2,080,000 Improvement Bonds, Seders 2012A 2012 2018 0.4% to 1.0rA 810,000 810,000 Total Governmental ActivHies - General Obligation Debt $ 15,340,000 Business -Type Actnnies Data of Final Interest Original Balance General Obligation Debt Issue Maturity Rates Indebtedness 12 -31 -12 Water Revenue Bonds, Sense 20DOA 2000 2016 4.4 %e 5.4% $ 1,160,ODD $ 410,000 Water Revenue Bonds. Series 20050 2005 2016 3.5% to 3.8% 2.990,000 1,325,ODD Water Revenue Bonds, Series 2007A 2007 2018 4.0% 1,210,000 795,000 t'llity Rev Refunding Bonds, Series 2010A 2010 2018 0.8 % to 2.6% 1,545,000 1,255,(00 Total Business -Type Activities - General Obligation Debt Debt service requirements to maturity are as foliovis: Govemmenial Activitim Business -Type Activities Germ Obiigadon Debt General Obligation Debt Year Principal Interest Principal Interest 2013 $ 1,545,000 $ 515.815 $ 840,(00 $ 110,313 2014 1,500,000 473,854 860,000 85,315 2015 1,555,000 430,571 745,000 58,328 2018 1,625,000 388,338 775,000 32,188 2017 1,555,000 340,234 315,000 13.343 2018 -2022 3,030.000 1,283,520 250,000 4,265 2023 -2027 2,305000 660,893 - - 2028 -2032 2,145,000 224,268 Total $ 15,340,000 $ 4,315,494 $ 3,785,000 $ 304,752 The City paid o8 the remaining balance on the 2005C bonds on February 1, 2013. G A CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE N — DETA&No Noyes oN ALL Fume (cunt) E. LOWTERWOamArrion(cant.) General ObUgeffon Dabt (cunt.) Other Debt infonnallon Estimated payments of compensated absences are not included in the debt service requirement schedules. The compensated absences liability attributable to governmental aclivitles will be liquidated primarily by the general fund. There are a number of limitations and restrictions contained in the various bond indentures and loan agreements. The City believes it Is In compliance with all signifxtent limitations and restrictions, including federal arbitrage regulations. The water and storm water utilities have pledged future water and storm water revenues net of specified operating expenses to repay $6,905,000 In water and storm water revenue bonds issued in 2000, 2005, 2007, and 2010. Proceeds from bonds provided financing for utility improvements. The bonds are payable solely from water and storm water revenues and are payable through 2018. Annual principal and interest payments on the bonds are expected to require 25% of net revenues. The total principal and interest remaining to be paid on the bonds is $4,089,752. Scheduled principal and interest paid for the current year and the gross customer revenues were $933,478 and $3,713,148, respectively. Crossover Rebinding On December 1, 2010, the City issued $1,355,000 in general obligation public facility refunding bonds with an average interest rate of 2.90/6 to crossover refund $1,370,000 of outstanding 2001 C general obligation public facilities bonds with an average interest rate of 4.5 %. The net proceeds of $1,310,503 (after underwriter's discount of $11,179, Issuance costs of $34,732 and accrued interest of $1,414) were placed on deposit with an escrow agent to payofficall the 2001 C general obligation public facilities bonds on February 1, 2012. The cash flow requirements on the refunding bonds and notes prior to the crossover refunding were $1.936,203 from 2011 through 2022. The cash flow requirements on the 2010 refunding bonds are $1,872,715 from 2011 through 2022. The crossover refunding results In an economic gain (difference between the present value of the debt service payments on the old and new debt) of $55,287. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE N — DETAILED NOTES ON ALL FUNDS (cunt.) F. NETP0Wf;WFVNDBALANces Net position reported on the government -wide statement of net position at December 31, 2012 includes the following: Govemmentief AegNBes Net Investment in Capital Assets Land $ 10,498,466 Construction In progress 2,100,911 Otter capital assets, net of accumulated depreciation 57,561,825 Less: related longterm debt outstanding (excluding unspent capital related debt proceeds) (15,332,313) Total Net Investment in Capital Assets 54,828,890 Restricted for debt service 6,608,554 Unrestricted 15,970,416 Total Governmental Activities Net Position $ 77,407,860 Governmental fund balances reported on the fund financial statements at December 31, 2012 include the following: Non - spendable fund balance as of December 31, 2012, includes the following Items: Fund Amount Restriction Major Funds General $ 80,623 Prepaid items Capital Projects 10,000 Prepaid items Total $ 90,623 Restricted fund balance as of December 31, 2012, Includes the following items: Fund Amount Restriction Major Funds Debt Service $ 4,193,284 Future debt service Pod Authority TIF 887,616 Future debt service Total $ 5,080,900 G 0 O CITY OF ROSEMOUNT CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 As of and for the Year Ended December 31, 2012 NOTE IV — DETAfLro NoTEs ON ALL FUNDS (cunt.) NOTE IV — OETAaPp No1Es ON ALL FuNOs (cunt.) F. NET PosmoWFunp BALANCE$(conf.) F. NETPasmcj%FuNDBALANcrs(cont.) Govemmental Acdv/des (aunt.) Govemmentai Acdvldes (cord.) Committed fund balance as of December 31, 2012, includes the following items: Unassigned fund balance as of December 31, 2012, includes the following items: Fund Amount Purpose Fund Amount Non -Major Special Revenue Funds Major Funds Fie Safety Education $ $68 Fund related expenditures General $ 51905,056 GIs 7,828 Fund related expenditures Port Auttwity General 182,611 Fund related expenditures Total $ 5,905,056 Total $ 191,307 Business -Type Aedvitlet; Aasgn ed turd balance as of December 31, 2012, includes the following items: Net Investment in Capital Assets Land $ 2,643,767 Fund Amount Purpose Construction in progress 1,632,616 Other capital assets, net of accumulated depreciation 92,961,104 Major Funds Less: related long -term debt outstanding (excluding unspent General Fund capital related debt proceeds) (3,766.082) $ 923,598 Compensated absences Total Net Investment in Capital Assets 93,501,405 430,000 Armory debt payments 225,000 Health Insurance Unrestricted 19,247,600 144,572 Building maintenance Total Business -Type Activities Net Position $ 112,749,005 139,400 Park maintenance 131,733 Election equipment 325,130 Various projects I equipment Total General Fund 2,319,433 Capital Projects Fund $ 377,670 Building CIP 375,959 Street CIP 472,643 Equipment CIP 5,003,679 Various projects Total Capital Projects Fund 6,229,951 Total $ 8,549,384 CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE V— OTHER IHFORMATIM A. EMVCoYEEa'REnsiEMEN7SySTEN City employees and firefighters participate in the pension plans administered by the Public Employees Retirement Association of Minnesota (PERA) and the Rosemount Volunteer Fire Relief Association. In accordance with GASB Statement No. 27, the PERA plans are classlfled as multiple- employar, cost -sharing plans, and the Association's plan is classified as a single - employer plan. 1. Public Employees Retirement Association a. Plan Description AO Rill -time and certain part -time employees of the City of Rosemount Minnesota are covered by defined benefit plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the General Employees Retirement Fund (GERF) and the Public Employees Police and Fire Fund (PEPFF) which are cost - sharing, mtiltiple- employer retirement plans. These plans are established and administered in accordance with Mtrmesola Statutes, Chapters 353 and 366. GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. All new members must participate in the Coordinated Plan. All police officers, firefighters and peace officers who qualify for membership by statute are covered by the PEPFF. PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by State Statute, and vest after three years of credited service. The defined retirement benefts are based on a member's highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. Two methods are used to compute benefits for PERA's Coordinated and Basic Plan members. The retiring member receives the higher of a step -rate benefit accrual formula (Method 1) or a level accrual formula (Method 2). Under Method 1, the annuity accrual rate for a Bask Plan member Is 2.2 percent of average salary for each of the first 10 years of service and 2.7 percent for each remaining year. The annuity accrual rate for Coordinated Plan member Is 1.2 percent of average salary for each of the first 10 years and 1.7 percent for each remaining year. Under Method 2, the annuity accrual rate is 2.7 percent of average salary for Basic Plan members and 1.7 percent for Coordinated Plan members for each year of service. For PEPFF members, the annuity accrual rate is 3.0 percent for each year of service. For all PEPFF members and for GERF members whose annuity is calculated using Method 1, a full annuity is available when age plus years of service equal 90. A reduced retirement annuity is also available to eligible members seeking early retirement. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE V —OTHER IHFORMATioN (cont.) A. EUPGoYEE3'PXTMNENYSYSrEM(eont.) 1. Public Employees Retirement Association (cunt.) a. Plan Description (cunt.) There are different Was of annuities available to members upon retirement. A normal annuity is a lifetime annuity that uses upon the death of the retiree — no survivor annuity Is payable. There are also various types of joint and survivor annuity options available which will reduce the monthly normal annuity amount, because the annuity Is payable over joint lives. Members may also leave their contributions in the fund upon termination of public service in order to qualify for a deferred annuity at retirement age. Refunds of contributions are available at any time to members who leave public service, but before retirement benefits begin. The benefit provisions stated in the previous paragraphs of this section are current provisions and apply to active plan participants. Vested, terminated employees who are entitled to benerds but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. PERA issues a publl* available financial report that includes financial statements and required supplementary information for GERF and PEPFF. That report may be obtained on the Internet at www.mnoera.om, by writing to PERA at 60 Empire Drive #200, St. Paul, Minnesota, 55103 -2088 or by calling (651) 296 -7460 or 1- 800652 -9026. b. Funding Policy Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. These statutes are established and amended by the state legislature. The City makes annual contributions to the pension plans equal to the amount required by state statutes. GERF Bask Plan members and Coordinated Plan members were required to contribute 9.1 % and 6.25 %, respectively, of their annual covered salary in 2012. PEPFF members were required to contribute 9.6% of their annual covered salary in 2012. In 2012, the City of Rosemount was required to contribute the following percentages of annual covered payroll: 1118% for Basic Plan members, 7.265/6 for Coordinated Plan members, and 14.4% for PEPFF members. The City's contributions to the General Employees Retirement Fund for the years ending December 31, 2012, 2011 and 2010 were $251,921, $268,848 and $258,857, respectively. The City's contributions to the Public Employees Police & Fire Fund for the years ending December 31, 2012, 2011 and 2010 were $272,834, $256,236 and $249,472, respectively. The Cittys contributions were equal to the contractually required contributions for each year as set by state statute. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE V - OTHER INFORMATION (COnt.) A- EMPLOYEES'RE7IREMENTSYsTEm(cont.) 2. Rosemount Fire Department Relief Association- Defined Benefit Pension Plan a. Plan Description The City of Rosemount contributes to the Rosemount Fire Department Relief Association Pension Plan; a single- employer retirement system administered by the Rosemount Fire Department Relief Association. The Rosemount Fire Department Relief Association provides a lump -sum benefit to its members upon retirement, total disability or death. These benefit provisions are established and can be amended by the Rosemount Fire Department Relief Association's Board of Trustees with approval by the Rosemount City Council. The Rosemount Fire Department Relief Association issues a publicly available financial report that includes financial statements and required supplementary information for the Rosemount Fire Department Relief Association Pension Plan. That report may be obtained by writing to City of Rosemount, 2875 145' Street West, Rosemount, Minnesota 550684907, a by calling (651) 423.4411. b. Funding Policy The contribution requirements are established and may be amended by the Minnesota State Legislature. The Rosemount Fire Department Relief Association Is comprised of volunteers. Therefore, there are no covered payroll amounts or member contributions required. Individuals with IV at least 20 years of service who have readied age 50 are entitled to a lump -sum payment of $6,900 per year of service. In the event an otherwise qualified member has less than 20 years of service, the member is eligible for a pension payment of 60 percent after 10 years of service, increasing 4 percent for each year of service after 10 years to a maximum of 100 percent. Members retiring before 50 do not receive distributions until age 50, but interest at 5% per year is added to their retirement benefit until paid. C. Annual Pension Cost and Net Pension Obligations Financial requirements of the Association are determined based on a formula prescribed in Minnesota Statues 69.772. Those statutes prescribe a set amount of funding, per $100 of lump-sum benefits payable per year of service. Fa associations with assets exceeding the statutory pension liability, the financial requirements shall be the increase In the statutory pension liability for the next year over the current year, reduced by an amount equal to one -tenth of the surplus. For associations with a deficit of assets to fund the statutory pension liability, the financial requirements shall be the increase in the statutory pension liability for the next year over the current year, increased by an amount equal to one -tenth the defidt. The Cltys minimum obligation is the finandal requirement for the year less anticipated state aids and Interest on investments calculated at a rate of 5 percent. The value of assets was determined using fair value in accordance with GASB Statement No. 25. Securities traded on national exchanges are valued at the last reported sales price. Investments that do not have an established market value are reported at estimated fair value. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE V- OTHER INFORMATION (Cant.) A. EMPLOYEEs'REOREMERr SYs7EM(cont.) 2. Rosemount Fire Department Relief Association - Defined Benefit Pension Plan (cunt.) c. Annual Pension Cost and Net Pension Obligations (cunt.) The annual pension cost for the Rosemount Fire Department Relief Association Pension Plan for the year ended December 31, 2012 was as follows: Amount State of Minnesota contribution $ 91,845 City of Rosemount contribution 171,000 $ 262,845 The City recognizes the State of Minnesota's contributions to the Rosemount Fire Department Relief Association Pension Plan as revenue and expense. Three Year Trend Information Percentage Fiscal Year Annual Pension of APC Net Pension Ending Cost (APC) Contribution Obligation 2012 $ 282,845 100.0% $ 2011 253,718 100.0% 2010 234,590 100.0% A formal actuarial valuation is not required by Minnesota Statutes because the pension benefit is a lump -sum distribution. The formula used to compute pension contributions requirements Is substantially the same as that used to determine the standardized measure of the net pension obligation. The computation of the pension contribution requirements for 2012 was based on the same formula, funding method and other factors that were used in previous years. d. Required Supplementary information, Schedule of Funding Progress Ten-year historical trend information is presented in the Rosemount Firefighters Relief Association's Annual Financial Report. This information is useful in assessing the pension plan's accumulation of sufficient assets to pay pension benefits as they become due. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE V —OTHER INFoRMAT1oti (cons.) A. EMPLOYEES 'RETIREMENrSYS7EM(cont.) 2. Rosemount Fire Department Relief Assoclation- Defined Benefit Pension Plan (cunt.) d. Required Supplementary Information, Schedule of Funding Progress (cont.) The following historical trend information was obtained from the Association's financial report for the yew ended December 31, 2012: Assets as a Overfunded Percentage of (Underfunded) Accrued Accrued Accrued Date Assets Liabilities Liabilities Liabilities 12 -31 -12 S 2,504,979 S 2,523,870 99% $ (18,891) 12.31 -11 2,783,038 3,034,808 92% (251,570) 12 -31 -10 2,815,897 2,902,338 90% (288,441) Computations of the unfunded net pension obligation and employer contributions as a percent of covered payroll are not applicable since the fire department is a volunteer organization and no covered payroll exists. The accrued liabilities were determined pursuant to state statutes. Significant assumptions Include: the entry age normal cost method was used to determine the normal cost of all benefits, the rate of investment return used in making the valuation was 5% per annum compounded annually, age and service at retirement was assumed to occur at age 50, no turnover or early retirements, and the actuarial valuation period is open. a. Related Party Transactions As of December 31, 2012 and for the year then ended, the Association held no securities issued by City or other related parties. B. RISKMAMAIGEMENT The City Is exposed to various risks of loss related to torts; theft of, damage to, or destruction of assets; errors and omiasions; workers compensation; and health care of its employees. The City purchases commercial insurance and participates In a public entity risk pool called the Minnesota League of Cities Insurance Trust to provide coverage for these various Asks of loss. Sallied claims have not exceeded coverage in any of the past three years. There were no significant reductions In coverage compared to the prior yew. The Gty has established an internal service fund (Insurance Fund) to account for and finance uninsured risks of krss related to torts, theft of, damage to and destruction of assets, including deductibles. The majority of the Cites general liability and workers compensation insurance premiums are paid for by this fund. At December 31, 2012, there are no claims liabilftes in the Insurance Fund based on the requirements of Governmental Accounting Standards Board Statement Number 10, which requires that a liability for claims be reported information prior to the Issuance of the financial statements Indicates that it is probable a liability has been incurred at the date of the financial statements and the amount of loss can be reasonably estimated. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE V — Oman INFoRMATsox (corn.) C. COMMUMENTS AND CONT00GENaES From time to time, the City is party to various pending claims and legal proceedings. Although the outcome of such matters cannot be forecasted with certainty, it is the opinion of management that the likelihood Is remote that any such claims or proceedings will have a material adverse effect on the Cites financial position or results of operations. The City has received federal and state grants for spec purposes that are Subject to review and audit by the grantor agencies. Such audits could lead to requests for reimbursements to the grantor agency for expenditures disallowed under terms of the grants. Management believes such disallowances, if any, would be immaterial. Funding for the operating budget of the City comes from marry sources, including property taxes, grants and aids from other units of government user fees, fines and permits, and other miscellaneous revenues. The State of Minnesota provides a variety of aid and grant programs which benefit the City. Those aid and grant programs we dependent on continued approval and funding by the Minnesota governor and legislature, through their budget processes. The State of Minnesota is currently experiencing budget problems, and is considering numerous alternatives including reducing aid to local governments. Any changes made by the State to funding or eligibility of local aid programs could have a significant impact on the future operating results of the City. The City has active construction projects as of December 31, 2012. Work that has been completed on these projects but rat yet paid for (including contract retainages) is reflected in accounts payable and expenditures. In 2007, the City committed to a municipal revenue obligation as part of a development agreement with 14e Street Partners, Limited Partnership. The amount of the obligation is 81,500,000, and Is payable to the developer solely from available tax Increments collected from a specific portion of the development. Payments are scheduled through the year 2032, and carry an interest rate of 4.90 %. The obligation does rat constitute a charge upon arty funds of the city. In the event that future tax increments are not sufficient to pay oft the obligation, the obligation laminates with no further liability to the city. Since the amount of future payments is contingent on the collection of future TIF increments, the obligation is not reported as a liability in the accompanying financial statements. The balance of the commitment outstanding at year end has not been determined. D. JOINT POWERS DEBT CoMMrTNENT On August 25, 2005 the City of Rosemount entered into a joint powers agreement with the Cities of Apple Valley, Burnsville, Eagan, Farmington, Hastings, Inver Grove Heights, Lakeville, Mendota Heights, South St. Paul, West St. Paul, Minnesota, and Dakota County Minnesota, to establish the Dakota Communications Center (DCC), a Minnesota nonprofit corporation. The purpose of the DCC is to engage in the operation and maintenance of a countywide public safety answering point and communications center for law enforcement, fire, emergency medical services, and other public safety services for the mutual benefit of residents residing in the abovementioned cities and county, (members). Pursuant to the joint powers agreement, members are required to provide DCC their pro rata share of cost of operations and maintenance, and capital projects. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012 NOTE V- OTmE.R INPoRMATION (cunt.) D. JOINTPowERSDEBTCoMNRNENr(oont.) On May 1, 2007, the DCC issued Public Safety Revenue Bonds, Series 2007 in the amount of $7,315,000 to provide financing for the acquisition of equipment and reimbursement for conversion costs. The bonds are special obligations of the DCC, payable from revenues to be received from members. Pursuant to the pint powers agreement, members will levy taxes for the payment of their pro rata share of the principal and Interest payments due on the bonds. The bonds mature February 1, 2014, and hear interest rates ranging from 4.5 %- 5.0%. The debt will be re-pald with member assessments over a seven year amortization. All members reserve the right to prepay. In whole or in part on any date, its allocated share of principal and interest on the bonds. Payments from the City of Rosemount are provided from General Fund appropriations. The City of Rosemount s future member payments to DCC as of December 31, 2012 are as follows: REQUIRED SUPPLEMENTARY INFORMATION Pavment Year Amount 2013 $ 57,570 Total $ 57,570 Pursuant to Section 9.5 of the Joint powers agreement, member payments are submitted monthly and held in escrow by U.S. Bank National Association (trustee) until the funds are remitted to the bond holders according to the established bond principal and interest due dates. The interest earnings from the escrow account will reduce future member obligations on the debt. Information regarding the Dakota Communications Center can be obtained at the wehsite www.mn- lcc.orgistats.aso or by contacting Jeff May at the City of Rosemount, 2875 145' Street West, Rosemount, Minnesota 55068. Telephone 651 -322 -2031 or email address ieff. mavQld. rosemount mn.0 s. E. RELArEDORGAMAwN The City entered Into an agreement with SKB Environmental, Inc. for the purpose of providing for the construction and maintenance of facilities for public recreation, to improve living and working conditions within the City, further public educational opportunities, and to provide for the charitable needs of the City. This agreement created a trust called the City of Rosemount - SKB Environmental Trust Fund. Beginning in 2011, the amount of distributions to the City would be equal to the excess of the trust value over $1,525,000. The trust agreement states the funds can be used by the City for any lawful public purpose. During 2012, the City received approximately $350,000 from the trust. F. EnwcroFNEwAccouvnNGSTAmmRDsoNCURRENT- PEaaDFrNANciALSTATememTs The Governmental Accounting Standards Board (GASB) has approved GASS Statement No. 61, The Financial Reporting Entity. Omnibus; Statement No. 65, Items Previously Reported as Assets and Liabflilres; Statement No. 66, Technical Corrections - 2012 - an amendment of GASB Statements No. 10 and No. 62; Statement No. 67, Financial Reporting for Pension Piens- an amendment of GASB Statement No. 25; and Statement No. 66, Accounting and Financial Reporting for Pensions - an amendment of GASB Statement No. 27. Application of these standards may restate portioca of these financial statements. G CrI CITY OF ROSEMOUNT REQUIRED SUPPLEMENTARY INFORMATION GENERALFUND SCHEDULE OF REVENUES COMPARED TO BUDGET (BUDGETARY BASIS) - BUDGET AND ACTUAL For the Year Ended December 31, 2012 Total Revenues and Other Financing Sources S 10,531,800 S 10,574,438 $ 10,911,127 $ 336.689 See auditors' report and accompanying notes to required supplementary information. CITY OF ROSEMOUNT REQUIRED SUPPLEMENTARY INFORMATION GENERAL FUND SCHEDULE OF EXPENDITURES AND OTHER USES (BUDGETARY BASIS) - BUDGET AND ACTUAL For the Year Ended December 31, 2012 Budgeted Amounts Variance with REVENUES Original Final Actual Final Budget TAXES General property Tax $ 7,129,946 S 7,129,946 S 7,165,167 $ 35,221 Fiscal disparities 1,252,954 1,252,954 1,252,954 5,853 Other 267,000 267,000 254,892 (12,1081 Total Taxes 8,649,900 8.649,900 8,673,013 23,113 INTERGOVERNMENTAL REVENUES 897,30D 897,300 857,950 39,350 Federal grams - - 26,044 26,044 State aid - police 144,000 144,000 144,515 515 State aid - general government 25,000 25,000 48,732 23,732 State aid - highway 30,000 30,000 32,625 2,625 Other 82,500 82,500 88.302 5.802 Total Intergovernmental Revenues 281,500 281,500 340,218 58,718 PUBLIC CHARGES FOR SERVICES General govemment 618,700 618,700 741,220 122,520 Public safety 36,200 36,200 64,668 18,468 Highways and streets 11,600 11,500 42,703 31,203 Parks and recreation 245,900 245,900 238,572 (7,328) SAC 2,000 2,000 2,860 860 Total Charges for Services 914,300 914,300 1,080,023 165,723 LICENSES AND PERMITS 19,91K) 19,900 19,900 Business 61,000 61,000 61,317 317 Non- business 301,300 301,30D 423,327 122,027 Total Licenses and Permits 362,300 362,300 484,544 122,344 FINES AND FORFEITURES County 125,000 125,000 129.343 4.343 SPECIAL ASSESSMENTS 1,000 1,000 8,371 7,371 INVESTMENT INCOME AND MISCELLANEOUS Investment income 141,000 141,000 95,022 (45,978) Net increase in the fair value of investnems - - 2,588 2,588 Miscellaneous general revenues 25,000 25,000 14,674 (10,328) Donations - 42,638 42,638 (0) Rents 28.300 26.300 37.093 8,793 Total Investment Income and miscellaneous 194,300 236.938 192,015 (44,923) Total Revenues 10,528,300 10,570.938 1D,907,627 336,689 OTHER FINANCING SOURCES Transfers in 3.500 3.500 3.500 - Total Revenues and Other Financing Sources S 10,531,800 S 10,574,438 $ 10,911,127 $ 336.689 See auditors' report and accompanying notes to required supplementary information. CITY OF ROSEMOUNT REQUIRED SUPPLEMENTARY INFORMATION GENERAL FUND SCHEDULE OF EXPENDITURES AND OTHER USES (BUDGETARY BASIS) - BUDGET AND ACTUAL For the Year Ended December 31, 2012 End of year budget basis encumbrances (1,351,725) GAAP basis expenditures and other financing uses $ 10,285,501 See auditors' report and accompanying notes to required supplementary information. Budgeted Amounts Variance with CURRENT EXPENDITURES Odginal Final Actual Final Budget GENERAL GOVERNMENT Mayor and oaundl $ 231,900 $ 231,900 It 176,347 $ 55,553 Executive 513,000 513,000 507,147 5,853 Elections 42,000 42,000 32,634 9,366 Finance 424,900 424,900 415,886 9,014 Community development 897,30D 897,300 857,950 39,350 General government 378,500 378,500 407,515 (29,015) TOTAL GENERAL GOVERNMENT 2,487,600 2,487,600 2,397,479 90,121 PUBLIC SAFETY Police department 3,069,600 3,095,538 3,083,674 11,664 Fire department 378,300 378,300 366,289 12,011 TOTAL PUBLIC SAFETY 3,447,900 3,473,838 3,450,163 23,675 PUBLIC WORKS Government building maintenance 484 ,400 484,40D 939,632 (455,232) Fleet maintenance 637,400 637,400 633,899 3,501 Street maintenance 1,319.800 11319,800 1,229,994 89,806 Park maintenance 736,200 736,200 688,834 47,366 TOTAL PUBLIC WORKS 31177,800 3,177,800 3,492,359 (314,569) PARKS AND RECREATION 1,253,500 1270,200 1,271,513 (1,313} CAPITAL OUTLAY 19,91K) 19,900 19,900 OTHER FINANCING USES Transfers out 115.000 115.000 140.000 (25,000) TOTAL EXPENDITURES $ 10,501,700 $ 10,544,338 10,771,414 $ (227,076) Beginning of year budget basis encumbrances 865,812 End of year budget basis encumbrances (1,351,725) GAAP basis expenditures and other financing uses $ 10,285,501 See auditors' report and accompanying notes to required supplementary information. CITY OF ROSEMOUNT NOTES TO REQUIRED SUPPLEMENTARY INFORMATION As of and for the Year Ended December 31, 2012 Budgetary Information Budgetary information is derived from the annual operating budget and is presented using generally accepted accounting principles and the modified accrual basis of accounting with departures from generally accepted accounting principles for encumbrances. Excess expenditures over appropriations are as follows: Final General Fund Budget Expenditures Excess General government $ 378,500 $ 407,515 $ 29.015 Government building maintenance 484,400 939,632 455,232 Parks and recreation 1,270,200 1,271,513 1,313 Rosemount Fire Department Relief Association -Defined Benefit Penelon Plan Required Supplementary Information, Schedule of Funding Progress The fallowing historical trend information was obtained from the Association's financial report for the year ended December 31, 2012. Assets as a Overfunded Percentage of (Underfunded) Accrued Accrued Accrued Date Assets Liabilities Liabilities Liabilities 12 -31 -12 $ 2,504,979 S 2,523,870 99% $ (18,891) 12.31 -11 2,783,038 3,034,608 92% (251,570) 12.31 -10 2,615,897 2,902,338 00% (286,441) Computations of the unfunded net pension obligation and employer contributions as a percent of covered payroll are not applicable since the fire department Is a volunteer organization and no covered payroll exists. See audhors' report SUPPLEMENTARY INFORMATION G (P J CITY OF ROSEMOUNT COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS As of December 31, 2012 CITY OF ROSEMOUNT COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS For the Year Ended December 31, 2012 Special Revenue Funds REVENUES Taxes Public charges for services Investment income and miscellaneous Total Revenues EXPENDITURES Current: General government Total Expenditures Net change in fund balance FUND BALANCES - Beginning of Year FUND BALANCES - END OF YEAR Total Special Revenue Furls Nonmajor Safety Port Authority Governmental Education GIS General Funds $ - $ - $ 58,600 $ 58,600 - 3,420 - Total 452 11 136 599 Fee 62,619 Nonmajor Safety Port Authority Governmental Education GIs General Funds ASSETS Cash and investments $ 889 S 7,828 $ 183,349 $ 192,045 Totes assets $ S88 S 7,828 $ 183,349 S 192,045 LIABILITIES Accounts payable $ - $ $ 738 S 738 Total llabiBies 738 738 FUND BALANCES Committed $ 868 $ 7,928 $ 182,811 $ 191,307 Total fund balances 888 7,828 182,611 191,307 Total liabilities and fund balances $ 888 $ 7,828 $ 183,349 $ 192,045 CITY OF ROSEMOUNT COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS For the Year Ended December 31, 2012 Special Revenue Funds REVENUES Taxes Public charges for services Investment income and miscellaneous Total Revenues EXPENDITURES Current: General government Total Expenditures Net change in fund balance FUND BALANCES - Beginning of Year FUND BALANCES - END OF YEAR 30,360 30,360 30,360 30,360 452 3,431 28,376 32,259 416 4,397 154,235 159,048 $ 868 S 7,828 $ 182,611 $ 191,307 Total Fire Nonmajor Safety Port Authority Governmental Education GIS General Funds $ - $ - $ 58,600 $ 58,600 - 3,420 - 3,420 452 11 136 599 452 3,431 58,736 62,619 30,360 30,360 30,360 30,360 452 3,431 28,376 32,259 416 4,397 154,235 159,048 $ 868 S 7,828 $ 182,611 $ 191,307 CITY OF ROSEMOUNT BUILDING CIP CAPITAL PROJECT SUB -FUND SCHEDULE OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCE (BUDGETARY BASIS) - BUDGET AND ACTUAL For the Year Ended December 31, 2012 EXPENDITURES Current: General government Capital Outlay Debt Service: Interest on lease GTotal Expenditures Ot W Excess of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total Other Financing Sources (Uses) Net Change in Fund Balance FUND BALANCE - Beginning FUND BALANCE - ENDING 2,500 Original and 288,050 760,247 (472,197) Final Budgeted Variance with REVENUES Amounts Actual Final Budget Taxes $ 24,000 $ 24,000 $ - Intergovernmental - 209,261 209,281 Charges for services 600,000 878,355 278,355 Investment income/ fat value adjustment 10,500 26,017 15,517 Total Revenues 634,500 1,137,653 503.153 EXPENDITURES Current: General government Capital Outlay Debt Service: Interest on lease GTotal Expenditures Ot W Excess of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total Other Financing Sources (Uses) Net Change in Fund Balance FUND BALANCE - Beginning FUND BALANCE - ENDING 2,500 2,500 - 288,050 760,247 (472,197) 6,950 6,944 6 297,500 769,691 (472,1911 337,000 367,962 30,962 25,000 25,ODD (511,748) (511,748) (486,748) (486,748) 337,000 (118,786) (455,786) 3,247,792 $ 3,247,792 - $ 3,584,792 $ 3,129,006 $ (455,786) CITY OF ROSEMOUNT STREET CIP CAPITAL PROJECT SUB -FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE (BUDGETARY BASIS) - BUDGET AND ACTUAL For the Yew Ended December 31, 2012 EXPENDITURES Current: General government Public works Capital Outlay Total Expenditures Excess of revenues over expencitures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total Other Financing Sources (Uses) Net Change in Fund Balance FUND BALANCE - Beginning FUND BALANCE - ENDING 2,500 3,367 (867) - 9,766 (9,766) 895,000 833,832 61.168 897,500 846,965 50,535 8,000 701,511 895,511 644,540 644,540 (1,116,596) (1,116,598) (472,056) (472,058) 5.000 229,455 223,455 1,285,803 $ 1,285,603 $ 1,291,603 $ 1,515,058 $ 223,455 Original and Final Budgeted Variance with REVENUES Amounts Actual Final Budget Taxes $ 720,000 $ 720,000 $ - Charges for services 175.000 179,253 4,253 Special assessments - 647,556 647,556 Investment income 8,500 846 (7,654) Miscellaneous 821 821 Toted Revenues 903,500 1.548.476 644.976 EXPENDITURES Current: General government Public works Capital Outlay Total Expenditures Excess of revenues over expencitures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total Other Financing Sources (Uses) Net Change in Fund Balance FUND BALANCE - Beginning FUND BALANCE - ENDING 2,500 3,367 (867) - 9,766 (9,766) 895,000 833,832 61.168 897,500 846,965 50,535 8,000 701,511 895,511 644,540 644,540 (1,116,596) (1,116,598) (472,056) (472,058) 5.000 229,455 223,455 1,285,803 $ 1,285,603 $ 1,291,603 $ 1,515,058 $ 223,455 CITY OF ROSEMOUNT EQUIPMENT CIP CAPITAL PROJECT SUB -FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE (BUDGETARY BASIS) - BUDGET AND ACTUAL For the Year Ended December 31, 2012 Total Revenues 490.448 529.034 38.58e EXPENDITURES Current: General government Capital Outlay Debt Service: Principal retirement _ Total Expenditures G (P Excess of revenues over expenditures OTHER FINANCING SOURCES Sale of capital assets Total Other Financing Sources Net Change in Fund Balance FUND BALANCE - Beginning FUND BALANCE - ENDING 2,500 Original and 278,000 325,243 (49,243) Final Budgeted Variancewith REVENUES Amounts Actual Final Budget Taxes $ 482,948 $ 522,948 $ 40,000 Investment Income 7,500 4,180 (3,320) Miscellaneous - 1,908 1,908 Total Revenues 490.448 529.034 38.58e EXPENDITURES Current: General government Capital Outlay Debt Service: Principal retirement _ Total Expenditures G (P Excess of revenues over expenditures OTHER FINANCING SOURCES Sale of capital assets Total Other Financing Sources Net Change in Fund Balance FUND BALANCE - Beginning FUND BALANCE - ENDING 2,500 2,500 - 278,000 325,243 (49,243) 62,948 60,119 2,829 341,448 387,962 (46,414) 149,000 141,172 (7,828) 12,740 12,740 12,740 12,740 149,000 153,912 4,912 1,399,555 $ 1,399,585 $ 1,548,555 $ 1,553,477 $ 4,912 CITY OF ROSEMOUNT SCHEDULE OF CHANGES IN ASSETS AND LIABILITIES - M.A.A.G. AGENCY FUND For the Year Ended December 31, 2012 Balance Balance 1112012 Receipts Disbursements 12131/2012 ASSETS Cash and investments $ 34,305 $ - $ 34,305 $ LIABILITIES Due to M.A.A.G. $ 34,305 $ - $ 34,305 $ THIS PAGE INTENTIONALLY LEFT BLANK IV-60 STATISTICAL SECTION This part of the City of Rosemount's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the government's overall financial health. Contents Page Financial Trends 66 These schedules contain trend information to help the reader understand how the government's financial performance and well -being have changed over time. Revenue Capacity 72 These schedules contain information to help the reader assess the govemment's most significant local revenue source, the property tax. Debt Capacity 76 These schedules present information to help the reader assess the affordability of the government's current levels of outstanding debt and the government's ability to issue additional debt in the future. Demographic and Economic Information 81 These schedules offer demographic and economic indicators to help the reader understand the environment within which the government's financial activities take place. Operating Information 83 These schedules contain service and infrastructure data to help the reader understand how the information in the government's financial report relates to the services the government 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. Page 65 IV -61 G N Schedule 4 City of Rosemount Net Position by Component Last Ten Fiscal Years (Accrual Basis of Accounting) Fiscal Years 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Governmental activities Net Investment in capital assets $ 19273,447 $ 17,030,985 $ 24,737,314 $ 34,221,147 $ 39,140,878 $ 37,876,848 $ 41,347,888 $ 49,563,765 $ 53,419,036 $ 54,828,890 Restricted - - 9,632,707 7,554,872 8,736,586 6,621,026 4,637,711 5,361,675 5,764,792 6,608,554 Unrestricted 21,839,805 26,487,766 20,397,787 11,090,854 9,602,486 14,114,135 14,979,767 14,089,305 16,772,383 15,970,416 Total governmental activities net position 41,113,252 43,518,751 54,767,808 52,866,673 57,479,950 58,612,009 60,965,366 69,014,745 75,956,211 77,407,860 Business -type activities Net investment in capital assets $ 62,897,357 $ 69,812,374 $ 72,422,792 $ 82,445,638 $ 86,225,033 $ 89,687,681 $ 91,948,323 $ 89,025,234 $ 90,695,202 $ 93,501,405 Unrestricted 17,154,440 19,960,935 24,431,214 21,187,968 21,307,733 20,158,226 18,517,148 20,059,049 17,772,742 19,247,600 Total business -type activities net position 80,051,797 89,773,309 96,854,006 103,633,608 107,532,766 109,845,907 110,465,471 109,084,283 108,467,944 112,749,005 Primary government Net investment in capital assets $ 82,170,804 $ 86,843,359 $ 97,160,106 $ 116,666,785 $125,365,911 $ 127,564,529 $ 133,296,211 $ 138,588,999 $144,114,238 $ 148,330,295 Restricted - - 9,632,707 7,554,872 8,736,586 6,621,026 4,637,711 5,361,675 5,764,792 6,608,554 Unrestricted 38,994,245 46,448,701 44,829,001 32,278,822 30,910,219 34,272,361 33,496,915 34,148,354 34,545,125 35.218,016 Total primary government net position $121,165,049 $133,292,060 $151,621,814 $156,500.479 $165,012,716 $168,457,916 $171,430,837 $178,099,026 $184,424,155 $190,156,865 Source: City of Rosemount Comprehensive Annual Financial Reports Page 66 Schedule 2 City of Rosemount Changes in Net Position Last Ten Fiscal Years (Accrual Basis of Accounting) Expenses Governmental activities General government Public safety Public works Culture, education and recreation Conservation and economic development Interest and fiscal charges Total governmental activities expenses Business -Type activities Water Utility Sewer Utility Storm Water Utility Arena Total Business -Type activities expenses Total primary government expenses G Program Revenues Governmental activities t.J Charges for services General government Public safety Public works Culture, education and recreation Operating grants and contributions General govemmenl Public safety Public works Culture, education and recreation Conservation and economic development Capital grants and contributions General government Public safety Public works Culture, education and recreation Conservation and economic development Total governmental activities program revenues Fiscal Years 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 $ 1,772,833 $ 2,068,246 $ 2,739,933 $ 2,722,728 $ 2,610,367 $ 2,639,752 $ 2,754,573 $ 2,671,886 $ 2,612,911 $ 2,701,234 2,350,428 2,466,826 2,730,428 2,928,783 3,293,615 3,468,249 3,688,656 3,819,520 3,763,742 3,872,633 3,814,357 5,893,405 8,344,837 7,724,300 4,974,625 5,279,784 4,260,284 4,328,903 4,336,345 4,341,203 1,099,990 1,154,709 1,250,743 1,257,556 1,386,322 1,417,400 1,378,619 1,477,525 1,496,068 2,405,876 2,648 23,598 2,297 342 9,677 1,956,865 648,476 149,701 9,069 - 971,498 802,957 1,067,478 921,318 841,108 956,900 750,226 690,896 637,609 541,386 10,011,754 12,411,741 16,135,716 15,555,027 13,115,714 15,720,950 13,480,836 13,136,431 12,855,744 13,862,132 1,266,363 1,763,570 1,671,775 1,603,391 2,366,263 1,893,099 1,878,310 1,861,467 1,792,613 1,827,543 1,482,577 1,703,280 1,975,164 1,913,071 2,059,411 2,123,397 2,313,576 2,305,503 2,386,660 2,317,324 839,499 737,401 842,701 916,557 1,245,492 988,716 989,808 1,010,678 950,114 968,935 359,630 391,570 443,128 457,897 468,017 537,530 456,706 484,278 479,707 498,118 3,950,089 4,595,821 4,932,766 4,890,916 6,139,183 5,542,742 5,638,400 5,661,926 5,609,094 5,611920 $ 13,961,823 $ 17,007.562 $ 21,068,484 $ 20,445,943 $ 19,254,897 $ 21,263,692 $ 19,119,236 $ 18,798,357 $ 18,464,838 $ 19,474,052 $ 1,854,322 $ 2,591,883 $ 2,695,090 $ 2,065,514 $ 1,876,616 $ 2,031,866 $ 1,501,756 $ 1,672,014 $ 1,881,337 $ 2,286,892 130,581 135,673 120,182 117,017 159,624 203,056 169,112 151,802 169,718 184,011 43,377 97,140 37,497 25,159 8,893 32.160 15,050 20,912 68,166 45,564 355,981 1,365,568 1,137,357 351,867 693,482 403,560 244,374 263,238 272,958 365,486 12,889 65,600 11,802 152,036 182,122 252,907 1,315,865 1,738,997 354,618 23,633 19,076 169,866 18,019 15,000 - 3,435,395 - - 152,495 9,167,679 8,672,316 13,294,175 - 1,024,357 210,863 13,202,596 14,890,951 22, 760,814 25,608 212,885 169,586 1,135 18,500 8,746 5,218,862 1,349 8,216228 25,823 251,262 926,545 1,163 15,400 117,025 1,562 4,667,378 423,305 9,168,078 22,580 - 233,349 254,175 392,136 380,737 628 659 82,803 60,100 1,775 7,118 337 3,971 3,762,115 1,206,361 531 4,203 522,179 256,357 7,689,075 4,103,973 - - 46,326 246,346 249,515 275,114 311,630 108,640 53,198 26,484 33,499 1,275 20,100 67,400 - 697 - 5,320,892 4,214,641 3,628,190 9,218 - 19,425 39,352 8,062,758 7,065,874 6,925,408 Page 67 G 41 A Schedule 2 (continued) City of Rosemount Changes in Net Position Last Ten Fiscal Years (Accrual Basis of Accounting) Fiscal Years 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Business -Type activities Charges for services Water Utility 2,626,145 3,361,166 2,562,552 2,115,864 2,092,633 2,027,618 1,784,784 1,952,359 1,983,264 2,406,557 Sewer Utility 1,837,761 2,089,244 1,946,694 1,722,929 1,677,768 1,767,732 1,482,651 1,470,801 1,470,626 1,707,730 Storm Water Utility 1,510,114 1,739,183 1,999,635 1,167,514 1,056,510 1,137,287 852,704 888,995 927,429 1,135,067 Arena 308,461 337,912 331,205 351,808 373,504 390,631 370,964 406.797 378,046 352,930 Operating grants and contributions Water Utility 1,570 - - - - - - - - Sewer Utility 930 - - - - - - - - Capital grants and contributions Water Utility 111,117 288,615 44,989 107,855 46,807 56,388 70.279 72,960 243,835 168,573 Sewer Utility 525,459 126,936 87,619 90,776 88,515 392,757 416,493 71,656 110,538 207,422 Stone Water Utility 729,012 846.683 - 80 - 18,165 1,075,041 85,242 190,022 487,082 Arena 39,900 Total Business -Type activities program revenues 7,690,469 8,789,739 6,972,894 5,556,826 5,335,738 5,790,578 6,032,916 4,948,810 5,303,760 6,465,361 Total primary govemment program revenues 20,893,065 23,680.690 29,733,708 13.773,054 14,503,816 13,479,653 10,136,889 13,011,568 12,369,634 13,390,789 Net (Expense) Revenue Governmental activities 3,190,842 2,479,210 6,625,098 (7,338,799) (3,947,636) (8,031,875) (9,376,863) (5,073,673) (5,789,870) (6,936,724) Business -Type activities 3,740,400 4,193,918 2,040,126 665,910 (803,445) 247,836 394,516 (713,116) (305,334) 853,441 Total primary government net expense $ 6,931,242 $ 6,673,128 $ 8,665,224 $ (6,672,869) $ (4,751,081) $ (7,784,039} $ (8,982,347) $ (5,786,789) $ (6,095,204) $ (6,083,283) General Revenues and Other Changes in Not Position Governmental activities Property taxes, levied for general purposes $ 5,832,653 $ 6,325,217 $ 6,902,852 $ 7,275,781 $ 8,640,194 $ 9,437,336 $ 9,768,391 $ 10,023,255 $ 10.266,170 $ 10,001,071 Property taxes, levied for debt service 266,011 1,644,099 1,377,159 1,951,327 2,025,349 2,005,338 1,711,452 1,257,365 936,054 1,038,404 Othertaxes 133,525 141,642 173,719 184,868 201,446 208,667 224,276 264,808 262,783 242,491 Public gifts and /or grants 77,884 - - - - - - - - - Investment income 391,103 376,200 567,112 1,064,315 967,337 611,533 297,536 164,474 243,193 136,310 Gain (loss) on the sale of assets (232,155) - - - - (2,125,256) (851,439) - 130,114 13,248 Miscellaneous 5,127 29,244 71,371 131,352 326,263 365,516 340,763 429,150 204,149 127,617 Transfers (5,476,125) (5,087,288) (4,468,254) (5,169,779) (3,599,876) _(1,339,200) 239,241 984,000 688,873 (3,170,768) Total governmental activities 998 ,023 3,429.114 4,623,959 5,437.864 8,560,713 9,163,934 11,730,220 13,123,052 12,731,336 8,388,373 Business -Type activities Investment income 299,851 440,306 572,317 943,911 1,102,729 726,105 464,289 315,928 377,868 256,852 Gain (loss) on the sale ofassets (1,604) - - - - - - - - - Transfers 5,476,125 5,087,288 4,468,254 5,169,779 3,599,876 1,339,2(10 (239,241) (984,000) (688,873) 3,170,768 Total Business-Typs activities 5.774,372 5,527,594 5,040,571 6,113.690 4,702,605 2,065,305 225,048 (668,072) (311,0051 3.427.620 Total primary government 6,772395 8,956.708 9,664,530 11,551,554 13,263,318 11,229,239 11,955,268 12,454,980 12,420,331 11,815,993 Change in Net Position Governmental activities 4,188,865 5,908,324 11,249,057 (1,900,935) 4,613,077 1,132,059 2,353,357 8,049,379 6,941,466 1,451,649 Business -Type activities 9,514,772 9,721,512 7,080,697 6,779,600 3.899.160 2,313,141 619.564 (1.381188) (616.339) 4,281061 Total primary govemment $ 13,703,637 15629836 $ 181329,754 L 4,878.865 $ 8,512,237 $ 3,445,200 $ 2,972,921 $ 6,668,191 $ 6,325,127 $ 5,732,710 Source: City of Rosemount Comprehensive Annual Financial Reports Page 68 G U1 Schedule 3 City of Rosemount Fund Balances, Governmental Funds Last Ten Fiscal Years (Modified Accrual Basis of Accounting) Fiscal Years 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 General Fund Reserved for Prepaid items $ 27,979 $ 30,048 $ 29,926 $ 31,447 $ 25,797 $ 34,120 $ 78,379 $ 33,280 $ - $ - Encumbrances 147,339 503,524 599,962 334,104 558,190 524,904 638,254 465,544 - - Unreserved Designated 4,525,008 4,931,177 5,162,364 5,429,801 6,456,649 6,480,777 6,536,929 6,653,352 - - Undesignated 12,821 13,999 15,486 17,508 8,967 10,059 15,549 32,941 - - Nonspendable - - - - - - - - 85,067 80,623 Restricted - - - - - - - - - - Assigned 1,894,348 2,319,433 Unassigned - - - - - - 5,700,071 5.905,056 Total General Fund 4,713,147 5,478,748 5,807,738 5,812,860 7,049,603 7,049,860 7,269,111 7,185,117 7,679,486 8,305,112 All Other Governmental Funds Reserved for Debt service 7,563,183 9,508,673 9,784,931 7,570,248 7,180,264 5,582,205 3,854,760 6,173,964 - - Special revenue funds - prepaid items - 335 364 391 416 - - - - - Capitalpro)ectsfunds - encumbrances 1,128,712 1,630,159 1,168,027 727,152 239,803 331,014 1,118,650 1,061,526 - - Unreserved Designated Capital projects funds 2,507,528 2,712,870 6,395,862 4,862,317 4,662,910 5,297,333 4,984,835 3,510,512 - - Special revenue funds 1,666,889 3,117,074 3,706,078 52,603 48,791 15,017 9,374 6,900 - - Undesignated Port Authority TIF fund - - - (2,971,333) (3,370,688) 182,826 262,577 429,284 - - Special revenue funds (98,266) (92,969) (331,928) 232,497 114,581 109,523 125,132 134,919 Nonspendabie for Capital projects funds - - - - - - - - - 10,000 Restricted for Debt service - - - - - - - - 4,782,476 4,193,284 Port Authority TIF fund - - - - - - - - 677,057 887,616 Committed for Special revenue funds 159,048 191,307 Assigned for Capital projects funds 8,515,086 5,229,951 Total All Other Governmental Funds 12,768,046 16,876,142 20,723,334 10,473,875 8,876,077 11,517,918 10,355,328 11,317,105 14,133,667 11,512,158 Total All Funds $17,481,193 $ 22,354,890 $ 26,531,072 $16,286,735 $ 15,925,680 $18,567,778 $17,624,439 $18,502,222 $ 21,813,153 $19,817,270 Source: City of Rosemount Comprehensive Annual Financial Reports Note: Beginning in 2011 the way Fund Balances are classified has changed with the implementation of GASB 54 Page 69 G Schedule 4 City of Rosemount Changes in Fund Balances, Governmental Funds Last Tan Fiscal Years (Modified Accrual Basis of Accounting) Fiscal Years Expenditures 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Revenues 1,605,319 1,898,739 2,482,348 2,270,416 2,380,884 2,579,263 2,522,244 2,368,489 2,382,663 2,569,649 Taxes $ 6,232,189 $ 8,110,958 $ 8,176,465 $ 9,111,739 $ 10,447,961 $ 11,079,607 $ 11,049,769 $ 10,822,174 $ 10,643,333 $ 10,376,939 Tax Increments - - 22,264 40,236 159,030 296,735 379,351 448,253 576,675 660,056 Intergovernmental 1,650,656 1,983,738 619,637 402,106 1,194,371 1,511,195 947,554 4,051,643 2,394,400 584,381 Public charges for services 1,378,920 2,798,197 2,708,131 1,671,934 1,967,889 1,844,648 1,382,597 1,540,191 2,226,976 2,277,051 Licenses and permits 915,589 1,295,164 1,194,106 799,650 650,634 698,756 430,551 453,900 388,615 484,644 Fines and forfeitures 89,752 98,947 90,787 90,776 120,870 129,220 124,068 122,394 124,324 129,343 Special assessments 1,557,386 1,590,026 1,382,539 1,373,904 1,582,277 962,950 757,223 832,686 496,386 2,155,618 Investment income and miscellaneous 7,817,963 8,544,963 12,891,807 6.171,310 4,426,241 3,538,350 1,268,846 1,224,178 1,552,188 1,773,249 Total revenues 19,642,455 24,421,993 27,085,736 19,661,655 20,549,273 20,061,461 16,339,959 19,495,419 18,402,897 18,441,281 Expenditures General government 1,605,319 1,898,739 2,482,348 2,270,416 2,380,884 2,579,263 2,522,244 2,368,489 2,382,663 2,569,649 Public safety 2,091,444 2,234,367 2,464,679 2,626,053 2,913,163 3,096,468 3,297,520 3,366,500 3,436,225 3,510,222 Public works 2,055,389 2,623,105 2,190,297 2,822,803 2,568,514 3,105,778 2,687,294 2,805,767 3,078,059 3,032,940 Parks and recreation 907,100 980,841 1,034,193 1,080,786 1,152,615 1,186,883 1,153,777 1,239,742 1,239,857 1,271,513 Conservation and development 297 - - - - 1,944,457 160,445 139,965 - - Other 21,050 - - - - - - 12,505 - 12,740 Capital Outlay 7,356,580 12,469,486 15,932,567 22,873,101 9,719,678 6,689,680 3,635,826 7,808,264 61185,959 8,096,866 Debt Service (7,928,1061 (2,070,942) (1,516,783) (219,031) (185,469) (1,469,493) (797,053) (2,778,822) (804,755) (140,000) Principal retirement 10,265,948 3,011,929 3,811,892 4,106,223 3,565,000 4,300,000 3,645,000 1,840,000 2,225,000 2,405,000 Interest and fiscal charges 1,137,023 981,801 938,522 903,470 1,013,010 843,205 826,350 726,876 677,469 582,377 Total expenditures 25,440,150 24,200,268 28,852,518 36,682,852 23,312,864 23,745,734 18,128,466 20,295,605 19,225,232 21,468,567 Excess (deficiency) of revenues $ 20.582,488 $ 22,354,890 $ 26,531,072 $16,286,735 $ 15,925,680 $18.567,778 $17,624,439 $18,502,222 $ 21,813,153 $ 19,817270 over (under) expenditures (5,797,695) 221,725 (1,766,782) (17,021,197) (2,763,591) (3,684,273) (1,788,497) (800,186y (822,335) (3,027,288) Other financing sources (uses) Issuance of long -term debt 1,945,000 - 5,280,000 4,775,000 450,000 6,425,000 - 1,355,000 2,080,000 810,000 Payment to escrow agent - - - (1,182,525) (1,800) - - - - - Premlum on long -term debt - - 21,147 - - - - - - Discount on long -term debt - - - (3,533) - - - - - - Capital leases 74.257 - - - - - - - - - Set- of capital assets 37,513 6,350 2,650 101,841 19,005 4,780 3,000 12,505 10,121 12,740 Transfers in 2,451,981 3,615,269 2,177,097 3283,961 2,120,800 1,366,084 1,639,211 3,089,286 2,847,900 348,663 Transfers out (7,928,1061 (2,070,942) (1,516,783) (219,031) (185,469) (1,469,493) (797,053) (2,778,822) (804,755) (140,000) Total other financing sources (uses) (3,419,355) 1,55,677 5,942,964 6,776,880 2,402,536 6,326,371 845,158 1,677,969 4,133,266 1,031,403 Net change in fund balances $ (9.217,050) 1,772,402 $ 4,176,182 $(10,244,337) $ (361,055) $ 2,642,098 $ (943,339) $ 877,783 $ 3,310,931 $ (1,995,883) Fund balances - Beginning 29.799,538 20,562,488 22,354,890 26,531,072 16,286,735 15,925,680 18,567,778 17,624,439 18,502,222 21.813.153 Fund balances - Ending $ 20.582,488 $ 22,354,890 $ 26,531,072 $16,286,735 $ 15,925,680 $18.567,778 $17,624,439 $18,502,222 $ 21,813,153 $ 19,817270 Debt service as a percentage of norlcapital expenditures 63.1% 34.0% 36.81/6 363% 33.7% 30.2% 31.3% 20.1% 22.0% 22.3% Source: City of Rosemount Comprehensive Annual Financial Reports Page 70 G J Schedule 5 City of Rosemount Assessed Value (or Tax Capacity) and Estimated Market Value of All Taxable Property Last Ten Fiscal Years Source: Dakota County Assessor's Office, Usage Classification Report - Real Estate and Personal Properties Note: Property values shown are established at January 1 of the year preceding the "Pay -Year" listed. They are the basis of the taxes collected and applied to the "Pay- Year ". (1) For 1997 and 1998, the State Legislature changed the class rates of many types of property. This did not have an impact on the estimated market values but it did have the effect of lowering the overall net tax capacity rates. Beginning with 2001, payable 2002, the State made massive changes to the class rates of almost all properties. This resulted in large decreases in the overall net tax capacity rates. To offset part of this change, the State added a new "Slate Tax" on commercial and industrial properties that helped make up part of the losses. Beginning with 2011, the State made changes in the valuations by adding a "Market Value Exclusion" for properties valued at less than $414,000 that resulted in large reductions in the Estimated Market Values and the Net Tax Capacity Values. (2) Rates taken from Schedule 6 Page 71 Total Tax Capacity as % of Estimated Market Value t�fp;in Total Tax Capacity Real Property Personal Property Total as % of ?} 2004 2005 2006 2007 2008 2009 2010 2011 2012 Local Tax Estimated Local Tax Estimated Local Tax Estimated City Estimated State Tax Net Tax Market Net Tax Market Net Tax Market Tax Market Net Tax Pay -Year Capacity (1) Value Capacity (1) Value Capacity (1) Value Rate 2 Value Capacity (1) 2003 $ 13,098,497 $ 1,131,403,300 $ 426,870 $ 22,150,000 $ 13,525,367 $ 1,153,553,300 57.123 1.17% $ 3,859,896 2004 15,324,087 1,343,848,700 435,343 22,497,500 15,759,430 1,366,346,200 52368 1.15% 4,025,191 2005 17,813,205 1,582,376,400 468,371 24,240,300 18,281,576 1,606,616,700 46.041 1.14% 4,224,695 2006 21,137,682 1,895,644,700 466,457 24,291,000 21,604,139 1,919,935,700 43.755 1.13% 4,611,764 2007 24,048,070 2,160,568,300 484,629 25,212,600 24,532,699 2,185,780,900 42.521 1.12% 5,088,943 2008 26,171,550 2,340,595,000 479,034 25,165,300 26,650,584 2,365,760,300 42440 1.13% 5,661,820 2009 26,303,216 2,338,770,100 539,678 28,233,700 26,842,894 2,367,003,800 42.323 1.13% 6,048,039 2010 25,067,278 2,209,334,700 566,090 29,516,800 25,633,368 2,238,851,500 43.358 1.14% 6,321,515 2011 23,635,880 2,078,373,200 685,721 35,284,800 24,321,601 2,113,658,000 44.661 1.15% 6,248,792 2012 21,590,701 1,878,822,866 689,398 35,353,750 22,280,099 1,914,176,616 46.994 1.16% 6,203,052 Source: Dakota County Assessor's Office, Usage Classification Report - Real Estate and Personal Properties Note: Property values shown are established at January 1 of the year preceding the "Pay -Year" listed. They are the basis of the taxes collected and applied to the "Pay- Year ". (1) For 1997 and 1998, the State Legislature changed the class rates of many types of property. This did not have an impact on the estimated market values but it did have the effect of lowering the overall net tax capacity rates. Beginning with 2001, payable 2002, the State made massive changes to the class rates of almost all properties. This resulted in large decreases in the overall net tax capacity rates. To offset part of this change, the State added a new "Slate Tax" on commercial and industrial properties that helped make up part of the losses. Beginning with 2011, the State made changes in the valuations by adding a "Market Value Exclusion" for properties valued at less than $414,000 that resulted in large reductions in the Estimated Market Values and the Net Tax Capacity Values. (2) Rates taken from Schedule 6 Page 71 Total Tax Capacity as % of Estimated Market Value t�fp;in 19.41•,. 2003 ?} 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Dakota County Assessor's Office, Usage Classification Report - Real Estate and Personal Properties Note: Property values shown are established at January 1 of the year preceding the "Pay -Year" listed. They are the basis of the taxes collected and applied to the "Pay- Year ". (1) For 1997 and 1998, the State Legislature changed the class rates of many types of property. This did not have an impact on the estimated market values but it did have the effect of lowering the overall net tax capacity rates. Beginning with 2001, payable 2002, the State made massive changes to the class rates of almost all properties. This resulted in large decreases in the overall net tax capacity rates. To offset part of this change, the State added a new "Slate Tax" on commercial and industrial properties that helped make up part of the losses. Beginning with 2011, the State made changes in the valuations by adding a "Market Value Exclusion" for properties valued at less than $414,000 that resulted in large reductions in the Estimated Market Values and the Net Tax Capacity Values. (2) Rates taken from Schedule 6 Page 71 Schedule 6 City of Rosemount Property Tax Rates - All Direct and Overlapping Governmental Units Last Ten Fiscal Years (Rate par 1% of Market Value) Source: Dakota Courky Treasurer- Audkor Note: All rates are overlapping rates except for the "City' and the "City Market Referendum Rates" (these two are the Citys direct rates). Overlapping rates consist of the "School Districts ". "Dakota County" and the "Special Districts ". (1) Beginning with property taxes payable in 1996, levies for voter approved referendums were based on market _ value- Therefore, a separate rate for these market valued levies will be included for the appiicable entity for the life of the levies. Since these rates are calculated separately, they are not included In the total tax rates. 6 00 nra - Not Applicable Page 72 150 196 130 199 ISO 200 Dakota Totals City Market School Markel School Markel School Market County School School School Year Referendum District Referendum District Referendum District Referendum Dakota Referendum Special District District District Collectible City Rates (1) No. 196 Rates (1) No. 199 Rates (1) No.200 Rates (1) County Rates (1) Districts (1) No. 196 No. 199 No. 200 2003 57.123 0.01382 27.638 0.16120 14.565 0.19527 22.906 0.01575 32,463 0.00935 5.563 122.787 109.714 118.055 2004 52.368 0.01138 26.074 0.13978 10.032 0.17096 22.050 0.19486 30200 0.00754 5.128 113.870 97.828 109.846 2005 46.041 0.00972 26.251 0.10862 7.793 0.15316 22.126 0.09646 28.267 0.00666 5.216 105.775 87.317 101.650 2006 43.755 0.00818 27.554 0.22437 17.796 014799 18.683 0.24688 26.318 0.00592 5.256 102.883 93.125 94.012 2007 42.521 0.00665 23.607 0.20824 16.607 0.13682 18.157 0.22957 25.127 0.00516 5.024 96.279 89.279 90.829 2008 42.440 0.00623 21.136 0.21274 19.764 0.13159 16.676 0.22733 25.184 0.00471 4,996 93.756 92.384 89.296 2008 42.323 0.00631 21.109 0.21032 19.303 0.13392 16735 0.22372 25.821 0.00471 4.916 94.169 92.363 89.795 2010 43.358 0.00652 25.391 0.22268 21.795 0.15183 20.206 0.25903 27.269 0.00501 4.987 101.005 97.409 95.820 2011 44.661 0.00697 26.959 0.22601 24.679 0.15606 22.140 0.26626 29.149 0.00537 5.199 105.968 103.688 101.149 2012 46.994 Na 28.440 0.22131 28.363 0.16428 25435 0.28618 31.426 0.00551 5.562 112.422 112.345 109.417 Source: Dakota Courky Treasurer- Audkor Note: All rates are overlapping rates except for the "City' and the "City Market Referendum Rates" (these two are the Citys direct rates). Overlapping rates consist of the "School Districts ". "Dakota County" and the "Special Districts ". (1) Beginning with property taxes payable in 1996, levies for voter approved referendums were based on market _ value- Therefore, a separate rate for these market valued levies will be included for the appiicable entity for the life of the levies. Since these rates are calculated separately, they are not included In the total tax rates. 6 00 nra - Not Applicable Page 72 Schedule 7 City of Rosemount Principal Property Tax Payers Current Year and Nine Years Ago Principal Taxpayers Total $ 4,491,234 Total City Tax Capacity $ 22,280,099 Source: Dakota County Treasurer - Auditor 2012 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Local 2003 Tax Taxpayer Capacity (1) Great Northern Oil Co. $ 1,602,740 Flint Hills Resources LP (2003 - Koch Refining Co.) 1,220,889 Northern States Power Co. 294,308 146th Street Partners LP (Waterford Commons) 192,247 Clarel Corporation (Cub Foods) 187,560 CF Industries, Inc. (Cenex) 151,554 Northern Natural Gas Co. 124,242 Rosemount Properties LLC (Rsmt Market Square) 112,640 Rosemount Crossing LLC (Aldi's) 98,680 Webb Properties LLC 92,898 Francis & Patricia Doles 87,938 Bigos - Rosemount LLC (Cannon Equipment) 85,372 Minnesota Pipeline Co. 82,674 Hidden Valley Spe LLC (Rosemount Woods) 79,310 Minnesota Energy Resources Corp. 78,182 Limerick Way LLC - Cue Properties LLC (blintz Companies) - DR Horton Inc. Minnesota - Continental Nitrogen & Resources (CNR) - Centex Homes - Contractor Property Developers (CPDC) - Gruett- Labriola Partnership (AWP) - Principal Taxpayers Total $ 4,491,234 Total City Tax Capacity $ 22,280,099 Source: Dakota County Treasurer - Auditor 2012 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 (1) These figures do not include the dollars collected but the tax capacity for each entity. Page 73 IV-69 2003 Percentage Percentage of Total Local of Total Local Tax Tax Local Tax Capacity Capacity (1) Rank Capacity 7.19% $ 1,376,457 1 10.18% 5.48% 694,303 2 5.13% 1.32% 336,629 3 2.49% 0.86% - 0.84% 227,899 4 1.68% 0.68% 89,957 6 0.67% 0.56% - - 0.00% 0.44% - 0.42% 49,196 13 0.36% 0.39% - 0.38% 54,759 12 0.40% 0.37% - 0.36% 82,583 9 0.61% 0.35% - 94,927 5 0.70% 89,151 7 0.66% 89,148 8 0.66% 82,440 10 0.61% 77,417 11 0.57% 43,818 14 0.32% 42,148 15 0.31% 20.16% $ 3,430,832 25.37% $ 13,525,367 (1) These figures do not include the dollars collected but the tax capacity for each entity. Page 73 IV-69 Schedule 8 City of Rosemount Property Tax Levies and Collections Last Ten Fiscal Years Year Total Tax Levy (1) Current Tax Collections Percent of Current Taxes Collected Delinquent Tax Collections (2) Total Tax Collections Outstanding Delinquent Taxes Ratio of Total Tax Collections to Total Tax Levy 2003 $ 7,740,247 $ 7,652,125 98.86% $ 59,833 $ 7,711,958 $ - 100.00% 2004 8,383,035 8,331,061 99.38% 102,935 8,433,996 100.00% 2005 8,660,018 8,600,178 99.31% 64,730 8,664,908 - 100.00% 2006 9,616,019 9,519,884 99.00% 87,425 9,607,309 4,349 99.95% 2007 10,561,484 10,440,106 98.85% 108,978 10,549,084 3,364 99.97% 2008 11,368,729 11,202,867 98.54% 128,875 11,331,742 9,183 99.92% 2009 11,411,690 11,279,747 98.84% 144,999 11,424,746 10,112 99.91% 2010 11,160,169 11,059,249 99.10% 161,848 11,221,097 12,879 99.88% 2011 10,985,813 10,898,846 99.21% 123,066 11,021,912 21,319 99.81% 0 2012 10,490,554 10,418,211 99.31% 99,300 10,517,511 69,329 99.34% Source: Dakota County Treasurer - Auditor (1) The total tax levy differs from actual levy certified to the County by the City because of fiscal disparity calculations done by the County after certification. (2) Delinquent tax collections are all delinquent collections during that tax year - not just for the delinquent collections of that calendar year. Page 74 Schedule 9 City of Rosemount Ratios of Outstanding Debt by Type Last Ten Fiscal Years G Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. J �(1) Population and personal Income figures are taken from Schedule 14. (2) Figures taken from City of Rosemount bond documents. Page 75 Business - Type Governmental Activities Activities G.O. and G.O. and G.O. Property G.O. Tax Revenue Special G.O. Municipal G.O. Total Percentage Personal Tax Increment Equipment Supported Assessment State Aid Revenue Primary of Personal Per Year Population(1) Income(1) Supported(2) Supported(2) Certificates(2) (PortAuth.)(2) Supported(2) Supported(2) Bonds(2) Government Income Capita 2003 18,700 $ 726,607,200 $ 2,040,000 $ $ $ 7,710,000 $ 13,405,000 $ $ 7,075,000 $ 30,230,000 4.16% $ 1,617 2004 19,907 807,189,036 1,905,000 7,150,000 11,340,000 6,475,000 26,870,000 3.33% 1,350 2005 20,837 869,027,922 5,510,000 1,535,000 6,570,000 9,025,000 8,730,000 31,370,000 3.61% 1,505 2006 22,049 950,201,655 4,275,000 1,615,000 4,985,000 11,325,000 8,165,000 30,365,000 3.20% 1,377 2007 22,397 1,008,872,865 4,030,000 1,765,000 3,585,000 9,705,000 8,555,000 27,640,000 214% 1,234 2008 22,750 1,054,621,750 3,760,000 6,040,000 1,775,000 3,350,000 6,285,000 6,850,000 28,060,000 2.66% 1,233 2009 23,750 1,053,882,500 3,475,000 6,040,000 1,310,000 1,555,000 5,185,000 6,160,000 23,725,000 2.25% 999 2010 21,874 984,811,228 3,185,000 6,040,000 760,000 2,820,000 4,275,000 - 6,965,000 24,045,000 2.441/ 1,099 2011 22,239 1,001,244,258 2,885,000 6,040,000 520,000 2,725,000 4,765,000 4,585,000 21,520,000 2.151/6 968 2012 22,432 1,009,933,504 2,575,000 6,005,000 265,000 1,355,000 5,140,000 3,785,000 19,125,000 1.89% 853 G Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. J �(1) Population and personal Income figures are taken from Schedule 14. (2) Figures taken from City of Rosemount bond documents. Page 75 Schedule 10 City of Rosemount Ratios of Net General Bonded Debt Outstanding Last Ten Fiscal Years General Bonded Debt Outstanding Total Less Restricted Debt Service Funds Estimated G.O. Property $ 327,215 $ 1,712,785 1,905,000 Market Tax Equipment Year Population(1) Value(2) Supported(3) Certificates(3) 2003 18,700 $ 1,153,553,300 $ 2,040,000 $ 2004 19,907 1,366,346,200 1,905,000 - 2005 20,837 1,606,616,700 5,510,000 1,535,000 2006 22,049 1,919,935,700 4,275,000 1,615,000 2007 22,397 2,185,780,900 4,030,000 1,765,000 2008 22,750 2,365,760,300 3,760,000 1,775,000 2009 23,750 2,367,003,800 3,475,000 1,310,000 N 2010 21,874 2,238,851,500 3,185,000 760,000 2011 22,239 2,113,658,000 2,885,000 520,000 2012 22,432 1,914,176,616 2,575,000 265,000 Total Less Restricted Debt Service Funds Total General Bonded Debt $ 2,040,000 $ 327,215 $ 1,712,785 1,905,000 343,515 1,561,485 7,045,000 1,503,014 5,541,986 5,890,000 560,562 5,329,438 5,795,000 709,370 5,085,630 5,535,000 866,988 4,668,012 4,785,000 2,038,321 2,746,679 3,945,000 1,936,318 2,008,682 3,405,000 1,605,726 1,799,274 2,840,000 1,129,632 1,710,368 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. (1) Population figures are taken from Schedule 14. (2) Estimated Market Value figures are taken from Schedule 5. (3) Figures taken from City of Rosemount bond documents. Percentage of Estimated Market Per Value Capita 0.15% $ 92 0.11 %u 78 0.34% 266 0.28% 242 0.23% 227 0.20% 205 0.12% 116 0.09% 92 0.09% 81 0.09% 76 Page 76 Schedule 11 City of Rosemount Direct and Overlapping Governmental Activities Debt As of December 31, 2012 Net General Obligation Bonded Debt Governmental Units (1) Outstanding (2) Direct Debt: City of Rosemount $ 1,710,368 (3) Overlapping Debt: School Districts: I.S.D. 196 - Rosemount I.S.D. 199 - Inver Grove Heights I.S.D. 200 - Hastings Dakota County Regional: Metropolitan Council Total Overlapping Debt Total Direct & Overlapping Debt 101,792,344 48,680,000 49,515,000 52,415,000 (4) 21,200,000 (5) $ 273,602,344 $ 275,312,712 (1) Only those units with debt outstanding are shown here. Estimated Estimated Percentage Amount Applicable Applicable to city (6) to city 100.00% $ 1,710,368 13.90% 14,149,136 5.30% 2,580,040 0.10% 49,515 5.40% 2,830,410 0.70% 148,400 (2) Excludes general obligation debt supported by revenues and tax and aid anticipation debt. Includes annual appropriation lease revenue debt. $ 19,757,501 $ 21,467,869 (3) Net general obligation bonded debt of the city supported by property taxes (see Schedule 10). (4) Includes Dakota County's proportionate share ($305,000) of the Dakota Communication Center's $7,315,000 Public Safety Revenue Bonds, Series 2007. (5) Excludes general obligation debt payable from waste water revenues, 911 user fees and housing rental payments, Includes certificates of participation. (6) Percent of governmental unit within the City of Rosemount's boundaries calculated by the city's Financial Advisors, Springsted Inc. Page 77 IV -73 G J A Schedule 12 City of Rosemount Legal Debt Margin Information Last Ten Fiscal Years Legal Debt Margin Calculation for Fiscal Year 2012 Estimated Market Value $ 1,914,176,616 Debt Limitation - 3% of Estimated Market Value 57,425,298 Debt Applicable to Limitation; Total Bonded Debt $ 19,125,000 Less: Special Assessment Bonds $ 5,140,000 2006 2 Tax increment Bonds 6,005,000 2009 2 Revenue Bonds 3,785,000 2012 Port Authority Bonds 1,355,000 $ 1,366,346,200 $ State Aid Street Bards - $ 2,185,780,900 $ Amount Avaifabe for Repayment $ 2,307,003,800 $ $ 2,238,851,500 $ of G.O. Bonds 1,129,632 17,414,632 Total Debt Applicable to Limitation 27,326,924 3 1,710,368 Legal Debt Margin 43,715,618 7 $ 55,714,930 3,085,630 4,668,012 2,746,679 2,008,682 1,799,274 1,710,368 Legal Debt Margin $ 21,358,281 25,765.439 $ 26,590,348 $ 33,069,276 $ 38,629,988 $ 66,304,797 $ 68,263,435 $ 65,156,863 E 61,610.466 $ 55,714,930 Legal debt margin as a percentage of the debt limit 92.58% 94.29% 82.75% 86.12% 88.37% 93.42% 96.13% 97.01% 97.16% Note: Under State law, the City's outstanding general debt cannot exceed 3% of the total estimated market value of the City. (Debt limit was 2% prior to 2008) The legal debt margin is the City's available borrowing authority under State law and is calculated by subtracting the net debt applicable to the legal debt limit from the legal debt limit. 97.02% Page 78 Fiscal Year 2003 2 2004 2 2005 2 2006 2 207 2 22008 2 2009 2 2010 2 2011 2 2012 Estimated Market Value $ $ 1,153,553,300 $ $ 1,366,346,200 $ $ 1,606,616,700 $ $ 1,919,935,700 $ $ 2,185,780,900 $ $ 2,365,760,300 $ $ 2,307,003,800 $ $ 2,238,851,500 $ $ 2,113,658,000 $ $ 1,914,176,616 Debt Limit -3% of Estimated Market Value- 2 23,071,066 2 27,326,924 3 32,132,334 3 38,398,714 4 43,715,618 7 70,972,809 7 71,010,114 6 67,165,545 6 63,409,740 5 57,425,298 Limit was 2% prior to 2008 Total Net Debt Applicable to Debt Limit 1 1,712,785 1 1,561,485 5 5,541,986 5 5,329,438 Legal Debt Margin $ 21,358,281 25,765.439 $ 26,590,348 $ 33,069,276 $ 38,629,988 $ 66,304,797 $ 68,263,435 $ 65,156,863 E 61,610.466 $ 55,714,930 Legal debt margin as a percentage of the debt limit 92.58% 94.29% 82.75% 86.12% 88.37% 93.42% 96.13% 97.01% 97.16% Note: Under State law, the City's outstanding general debt cannot exceed 3% of the total estimated market value of the City. (Debt limit was 2% prior to 2008) The legal debt margin is the City's available borrowing authority under State law and is calculated by subtracting the net debt applicable to the legal debt limit from the legal debt limit. 97.02% Page 78 G J Net Revenue Available Debt Service Requirements Gross For Debt Year Revenue Expenses (1) Service Principal (2) Interest Total Coverage 2003 $ 3,082,235 $ 1,892,152 $ 1,190,083 $ 615,000 $ 237,038 $ 852,038 139.67% 2004 2,916,501 2,390,070 526,431 600,000 286,546 886,546 59.38% 2005 2,917,231 2,536,543 380,888 735,000 257,063 992,063 38.37% 2006 3,268,002 2,357,636 910,366 565,000 312,294 877,294 103.77% 2007 3,299,851 3,285,070 14,781 820,000 313,579 1,133,579 1.30% 2008 3,327,919 2,616,921 710,998 1,705,000 298,025 2,003,025 35.50°% 2009 3,379,397 2,744,735 634,662 690,000 256,788 946,788 67.03% 2010 3,543,743 2,771,544 772,199 740,000 230,836 970,836 79.54% 2011 3,744,722 2,737,918 1,006,804 2,380,000 218,295 2,598,295 38.75% 2012 4,175,312 2,767,111 1,408,201 800,000 133,478 933,478 150.86% CrI Schedule 13 City of Rosemount Pledged- Revenue Coverage Last Ten Fiscal Years G.O. Revenue Bonds G.O. Special Assessment Bonds Note: Details regarding the City s outstanding debt can be found in the notes to the financial statements. Special Debt Service Requirements Assessment Collections Principal (3) Interest Total $ 1,533,648 $ 9,115,000 $ 713,511 $ 9,828,511 1,590,026 2,065,000 481,117 2,546,117 1,382,539 2,315,000 396,663 2,711,683 1,373,904 2,105,000 314,634 2,419,634 1,582,277 1,620,000 450,362 2,070,362 962,950 3,420,000 330,859 3,750,859 757,223 1,100,000 224,448 1,324,448 832,686 910,000 184,068 1,094,068 496,386 1,590,000 147,850 1,737,850 2,155,618 435,000 112,512 547,512 (1) Figure does not include depreciation expense. (2) 2008 includes call payments on 19966 & 1999C bonds and 2011 includes call payments on 2001B, 2002B & 20033 bonds. (3) 2003 includes bond call /defeasance program for several bonds, 2008 includes call /defeasance program for 19993 & 2001A bonds and 2011 includes calls for 2002A & 2003A bonds. Coverage 15.60% 62.45% 50.98% 56.78% 76.43% 25.67% 57.17% 76.11% 28.56% 393.71% Page 79 Schedule 14 City of Rosemount Demographic and Economic Statistics Last Ten Calendar Years Calendar Per Capita Personal School Unemployment Median Year Population (1) Income (2) Income (3) Enrollment (4) Rate (5) Age (6) 2003 18,700 $ 38,856 $ 726,607,200 3,849 4.0% 33.7 2004 19,907 40,548 807,189,036 4,111 3.7% 34.7 2005 20,837 41,706 869,027,922 4,474 3.7% 35.2 2006 22,049 43,095 950,201,655 4,551 3.7% 35.7 2007 22,397 45,045 1,008,872,865 4,458 4.4% 34.6 2008 22,750 46,357 1,054,621,750 4,623 6.1% 36.0 2009 23,750 44,374 1,053,882,500 5,266 7.0% 34.6 2010 21,874 45,022 984,811,228 5,179 6.3% 36.8 2011 22,239 45,022 1,001,244,258 4,745 5.2% 36.5 2012 22,432 45,022 1,009,933,504 4,860 4.8% 36.5 (1) 2010 is a regular decennial census figure. All years from 2003 and on (except for 2010) are the City staffs best estimates as of 12/31 of each year to give a more indicative estimate of the actual population. (2) These figures are provided by and are for Dakota County. These figures usually have a 2 to 3 -year lag time so that is why the two most current years use the 2010 figure for computing the "Personal Income" figure. (3) These figures are derived by multiplying the City's population figure times Dakota County's per capita income figures. (4) School enrollment is the total number of students who reside within the Rosemount High School boundaries and go to Independent School District No. 196 schools located in Rosemount. Beginning in 2000, the total school enrollment will show the total number of students with homes in the City of Rosemount. (5) Unemployment rates were compiled by the Minnesota Local Area Unemployment Statistics (LAUS) - for Dakota County. (6) These figures are provided by Dakota County. The 2003 figure was unavailable (the figure provided is the median age for 2001). 2011's median age is the most current information available so 2012 is shown as the same age. Page 80 IV -76 Schedule 15 City of Rosemount Principal Employers Current Year and Nine Years Ago Employer Employees 2012 Percentage of Total City Rank Employment Employees 2003 Rank Percentage of Total City Employment Note: The City of Rosemount does not track this information and there are no sources at the County or State level to provide this information. Page 81 IV -77 G 00 W Schedule 16 City of Rosemount Full- TimeiPermanent Part-Time City Gowmm nt Employees by FunctbNProgram Last Ten Fiscal Years Function/Program General Govemment Administration Finance Community Development Police Sworn Officers Non -Swum Employees Fire Firefighters and Officers Fire Marshall Public Works Building Maintenance Fleet Maintenance Street Maintenance Parks Maintenance Parks and Recreation Parks 8 Rec Arens Utilities Water Sewer Storm Water am 2007 2008 2009 2010 2011 2012 4.00 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 3.50 3.00 3.25 125 3.50 3.50 4.50 4.30 4.30 4.30 4.30 8.75 11.00 11.00 10.50 10.50 10.50 10.50 9.75 9.75 9.50 18.00 1900 . III= 20.00 21.00 22.00 22.00 2200 22.00 22.00 3.00 3.00 3.00 3.00 3.00 3.25 3.25 3.25 3.25 3.25 42.00 37.00 41.00 41.00 39.00 43.00 44.00 43.00 43.00 41.00 0.50 0.50 0.50 0.50 0.50 - - - - - 1.00 1.00 1.00 1.00 1.00 - - - - 0.80 220 2.10 2.10 2.10 2.10 2.10 2.10 2.10 2.10 2.20 6.60 5.90 6.60 6.60 6.60 6.60 6.60 6.40 6.40 5.80 5.20 5.10 5.60 5.60 5.60 5.60 5.60 5.60 5.60 4.60 8.25 9.25 10.00 10.00 10.00 9.50 9.50 9.50 9.50 9.50 1.75 1.80 2.30 2.30 2.30 1.80 1.85 1.85 1.85 1.85 3.35 4.13 4.43 4.83 5.33 5.33 5.13 5.13 4.83 4.68 3.35 4.13 4.43 4.83 5.33 5.33 5.13 5.13 4.83 4.68 2.80 1.65 2.05 2.25 2.25 2.25 2.30 2.30 2.10 2.10 113.75 113.50 120.75 122.50 122.50 126.25 12676 124.81 124.01 119.75 Sources: Finance Department Note: Employees listed arefull -time and permanent part-time employees. Seasonal and temporary positions are not included. Page 82 G J Schedule 17 City of Rosemount Operating Indicators by Func11on1Program Last Ten Fiscal Years Function/Program General Gavemment Building Permits Issued Sugding Inspections Conducted Police Number of Calls for Service Number of Patrol Miles Adult Aureate Juvenile Anesis Traffic Violations Parking Violations Fire Number of Calls Answered Fkes Extinguished Public Works Street Resudadng (Miles) Park Acres Mowed Parks and Recreation O-111 Program Participation Hours of Ice Time used Water Connecdon Water Main Breaks Average Dairy Consumption On Gallons) Sewer Connections, Sources: Various City departments. n1a - Information not available. 2003 20044 am 2006 2007 2008 2009 2010 2011 2012 1,127 1,329 1,293 1,055 1,368 1,649 941 851 868 766 9,349 12,655 11,223 8,821 5,505 5,774 4,572 4,311 4,048 3,553 13,669 13,128 14,330 14,603 17ASS 16,105 16,354 14,432 14,554 14,346 200,996 200,117 216,079 195,059 216291 209,310 206,619 211,460 152,087 194,764 297 307 435 415 586 646 424 346 432 369 379 2B6 272 166 209 239 206 182 146 107 '1. 1,348 1,404 1,116 2,378 1,522 1,548 1,6D5 2,232 2,610 n/a 506 162 113 261 160 3D7 284 296 378 480 550 619 573 652 769 632 630 690 724 n/a n/a nfa 40 63 5 59 34 34 52 0.95 1.20 4.10 1.60 0.75 1.20 0.64 10.50 1.30 2.30 100 103 113 130 135 127 127 134 134 154 12,500 13,000 13,500 14,000 14,000 14.000 14.200 14,500 14,500 14,5Q0 2,382 2,415 2,289 2,344 2,544 2,545 2,466 2,577 2515 2,577 5,217 5,687 5,989 6,032 6.075 5,188 6,273 6,381 8,431 7.464 1 - - 2 2 - - - - 2,OBB,850 2,007,841 2,115,603 2,749281 2,604,281 2,494,238 2,569,474 2261,972 2,344,546 2,665,979 5,090 5,555 509 6,007 51057 6,170 6,255 6,363 6,414 7,446 Page 83 G W O Schedule 1S City of Rosemount Capital Asset Statistics by FunctionlProgram Last Ton Fiscal Years Page 84 2004 2005 2006 2007 2008 2009 2010 2011 2012 FunctionlProgram General Govemment City HaUsiOther Buildings 1 1 1 1 1 1 1 1 1 1 Police Stations 1 1 1 1 1 1 1 1 1 1 Pabol Urets(Marked/LnmeAed) 813 89 814 814 814 9/4 914 914 914 914 Fro Stations 2 2 2 2 2 2 2 2 2 2 Fire Units (Vehicles 8 Trailer) 13 12 12 14 14 14 14 14 14 14 Public Works Bulidmgs 3 3 3 3 3 3 3 3 3 3 City Maintained Streets (Mies) (1) 118 121 100 101 102 102 103 103 103 105 SVeet Lights 1,004 1,032 1,271 1,290 1,290 1,300 1,488 1,500 1,50D 1,510 Parks and Recreation Community Cantors 1 1 1 1 1 1 1 1 1 1 Sheilers/Olher Buildings 3 3 3 3 3 3 3 3 3 3 Acreage 302 302 35T 357 430 430 440 440 467 467 Parks 23 23 23 24 26 26 27 27 28 28 Playgrounds 18 18 19 19 19 19 20 20 20 20 BesebelUSOfONI Olamonds 17 17 18 19 19 19 20 20 20 22 SocredFoodbalt Fields 11 12 12 13 13 13 16 16 16 16 T-ft Courts 4 4 4 6 6 6 8 8 8 8 Water WatarMalns(Mlles) 93 97 111 116 119 119 122 122 125 127 Welb(MunicpaUiWrol) 6 6 7 7 8 7 8 8 8 8 Water Towers 3 3 3 3 4 4 4 4 4 4 Fire Hydranls 823 872 976 1,049 1,082 1,279 1,281 11330 1,342 1,342 Storage Capacity 2,000,000 2.000.000 2,000.000 3500,000 3,500.000 3500000 31500,000 3.500.000 31500,000 3,500,000 Masimum Pumping Capacity 6.000.000 6,000,000 9,648,000 9,648,000 11,664,000 10,994,000 12,096,000 12,096.DDC 12,0 96,000 12,096,000 Sewer Sanitary Sewer Mains ( Mles) 66 70 81 85 90 90 91 91 95 97 Storm Sewer Mains (Miles) 45 61 69 75 78 81 82 84 84 86 Public Education FadOUes: Number of Elementary Schools 2 2 2 2 2 2 2 2 2 2 Number of Secondary Sbhocs 2 2 2 2 2 2 2 2 2 2 Number of Sp.cW Education Schools 1 1 1 1 1 1 2 2 2 2 (Dakota County Technical College) Sources: Various City departments. (1) Prior to 2005, Street Mlles consisted of all Streets and highways within the City, Including County, Slate, Federal and private roads. Beginning in 2005, only City maintained steels are included. Page 84 PROPOSAL SALE DATE: September 3, 2013 TO: Mr. Jeffrey May, Finance Director City of Rosemount, Minnesota c/o Springsted Incorporated 380 Jackson Street, Suite 300 St. Paul, MN 55101 -2887 Phone: (651) 223 -3000 Fax: (651) 223 -3046 RE: $1,500,000* General Obligation Improvement Bonds, Series 2013A For the Bonds of this Issue which shall mature and bear interest at the respective annual rates, as follow, we offer a price of $ (which may not be less than $1,489,500) plus accrued interest, if any, to the date of delivery. Designation of Term Maturities Years of Term Maturities * The City reserves the right, after proposals are opened and prior to award, to increase or reduce the principal amount of the Bonds or the amount of any maturity in multiples of $5,000. In the event the amount of any maturity is modified, the aggregate purchase price will be adjusted to result in the same gross spread per $1,000 of Bonds as that of the original proposal. Gross spread is the differential between the price paid to the City for the new issue and the prices at which the securities are initially offered to the investing public. In making this offer we accept all of the terms and conditions of the Terms of Proposal published in the Official Statement dated August 20, 2013. In the event of failure to deliver these Bonds in accordance with the Terms of Proposal as printed in the Official Statement and made a part hereof, we reserve the right to withdraw our offer, whereupon the deposit accompanying it will be immediately returned. All blank spaces of this offer are intentional and are not to be construed as an omission. Subject to any applicable exemption in the Rule, this offer to purchase /bid is subject to the City's covenant and agreement to take all steps necessary to assist us in complying with SEC Rule 15c2 -12, as amended. Not as a part of our offer, the above quoted prices being controlling, but only as an aid for the verification of the offer, we have made the following computations: NET INTEREST COST: $ TRUE INTEREST RATE: The Bidder ❑ will ❑ will not purchase municipal bond insurance from Account Members By: _ Phone: The foregoing proposal has been accepted by the City. Attest: Date: Account Manager SURE -BID Wire Transfer Good Faith Check Submitted Interest Dollar Interest Dollar Year Rate % Yield % Price Year Rate % Yield % Price 2015 % % % 2018 % % % 2016 % % % 2019 % % % 2017 % % % Designation of Term Maturities Years of Term Maturities * The City reserves the right, after proposals are opened and prior to award, to increase or reduce the principal amount of the Bonds or the amount of any maturity in multiples of $5,000. In the event the amount of any maturity is modified, the aggregate purchase price will be adjusted to result in the same gross spread per $1,000 of Bonds as that of the original proposal. Gross spread is the differential between the price paid to the City for the new issue and the prices at which the securities are initially offered to the investing public. In making this offer we accept all of the terms and conditions of the Terms of Proposal published in the Official Statement dated August 20, 2013. In the event of failure to deliver these Bonds in accordance with the Terms of Proposal as printed in the Official Statement and made a part hereof, we reserve the right to withdraw our offer, whereupon the deposit accompanying it will be immediately returned. All blank spaces of this offer are intentional and are not to be construed as an omission. Subject to any applicable exemption in the Rule, this offer to purchase /bid is subject to the City's covenant and agreement to take all steps necessary to assist us in complying with SEC Rule 15c2 -12, as amended. Not as a part of our offer, the above quoted prices being controlling, but only as an aid for the verification of the offer, we have made the following computations: NET INTEREST COST: $ TRUE INTEREST RATE: The Bidder ❑ will ❑ will not purchase municipal bond insurance from Account Members By: _ Phone: The foregoing proposal has been accepted by the City. Attest: Date: Account Manager SURE -BID Wire Transfer Good Faith Check Submitted MOODY'S INVESTORS SERVICE New Issue: Moody's Moody' assigns Aa2 to Rosemount, MN's $1.5M GO Bonds S r. 2013A Global Credit Research - 00 Aug 2010 Affects $17.3M including current offering ROSEMOUNT (CITY OF) MN Cities (including Towns, Villages and Townships) MN Moody's Rating ISSUE RATING General Obligation Improvement Bonds, Series 2013A Aa2 Sale Amount Expected Sale Date Rating Description Moody's Outlook NOO Opinion $1,500,000 09/03/13 General Obligation NEW YORK, August 30, 2013 -- Moody's Investors Service has assigned a Aa2 rating to the City of Rosemount, MN's $1.5 million General Obligation Improvement Bonds, Series 2013A. Concurrently, Moody's has affirmed the Aa2 rating on the city's outstanding general obligation debt. The bonds are secured by the city's general obligation unlimited tax pledge and proceeds will finance street and infrastructure improvements. Special assessments are pledged to cover debt service on the bonds. Post -sale, the city will have $17.3 million of general obligation unlimited tax debt. SUMMARY RATING RATIONALE The Aa2 rating reflects the city's moderately -sized and concentrated tax base that is favorably located in the southern Twin Cities metropolitan area; strong financial management team that has guided the city's favorable financial operations and maintenance of ample reserves; and a modestly sized debt burden. STRENGTHS - Strong management practices, leading to maintenance of healthy General Fund reserves and substantial alternate liquidity -Availability of land for future development - Low debt burden CHALLENGES - Tax base exhibits concentration, with oil refinery comprising 13.1% of assessed valuation - Tax base size is below national medians for the rating category DETAILED CREDIT DISCUSSION CONCENTRATED TAX BASE FAVORABLY LOCATED IN TWIN CITIES METROPOLITAN AREA; STABILIZING TAX BASE VALUE AFTER SIZEABLE RECENT DECLINES We expect Rosemount's tax base will continue to stabilize given its favorable location in the Twin Cities area and the presence of ongoing residential and industrial development. Located in northern Dakota County (general obligation rated Aaa /stable outlook) in the southern suburbs of the Twin Cities metropolitan area, the city experienced rapid growth over the past several decades, both in terms of population and full value. The city's population increased from 1,300 in 1970 to 21,800 in 2010, and management estimates for the city's 2012 population of 22,400 indicate that the growth trend is continuing. The city's full valuation growth was rapid in prior years, with the city's moderately sized tax base (currently $2.2 billion in full valuation) experiencing annual double digit annual growth through 2007, driven by both appreciation of residential property and increased housing stock from population growth. However, during the national economic downturn, development slowed and the residential property market softened. As a result, the city's full valuation declined annually from 2008 through 2011. Favorably, the city's tax base has since stabilized and estimated figures for 2013 show modest approximately 4% growth. Rosemount's tax base is concentrated, with an oil refinery owned by Flint Hills Resources, LLC (long -term rated Al /stable outlook) representing 13.1% of the city's assessed valuation in 2012. We note the presence of credit risk associated with this degree of dependence on a single taxpayer. However, the refinery has operated in Rosemount since 1955, and its oil producing capacity has since grown significantly. The plant is Minnesota's largest source of gasoline for vehicular transportation and jet fuel for aircraft at the Minneapolis -St. Paul airport and has approximately 1,000 employees. The company is planning a start a substantial $400 million facility upgrade to increase efficiency in 2014. The plant's important role in the state's economy and the parent company's continued investment in the plant demonstrate its relative stability as a taxpayer. Development within the city has been ongoing, though at a slower pace since the recent economic downturn. New home starts over the last three years have averaged 68 annually, well below annual figures of up to 550 earlier in the decade. Management notes that year to date figures for 2013 show an uptick in new development. The city has substantial land available for new development. The University of Minnesota (revenue rated Aal /stable outlook) has a strong presence in Rosemount, and owns a 3,200 acres parcel of land located in the city. While the parcel currently is devoted to agricultural research, it also is one of the largest remaining sand and gravel sources in close proximity to the metro area and the University has received the required permits to mine a portion of the site starting in 2014. Based on current plans, affirmed by the University's Board of Regents in December 2006, the university expects to use the proceeds of the gravel mining operation as start -up funds to begin developing a large environmentally sustainable mixed -use community on the site. The timing of the project is yet to be determined. At 4.9% in June 2013, Dakota County's unemployment rate was slightly lower than the state's rate of 5.2% and well below the national rate of 7.8% for the same time period. The city's resident income levels are strong, with median family income at 146.6% of the nation and 129.5% of the state according to 2006 -2010 estimates from the American Community Survey. WELL- MANAGED FINANCIAL OPERATIONS WITH AMPLE RESERVES We expect the city's finances to continue to be healthy, given its strong management team, and the presence of ample General Fund and other available sources of reserves. The city's formal General Fund balance policy calls for the maintenance of a General Fund unassigned balance at a maximum of 55% of the subsequent year's budgeted General Fund expenditures. Amounts in excess of policy are typically transferred to the city's various capital improvement projects funds or assigned for other one -time purposes. The city has a history of budgeting conservatively, including a practice of budgeting zero for commercial and industrial permit revenues and for collections of delinquent taxes. The city's conservative revenue -side budgeting, combined with maintenance of essentially flat operating expenditures over the last four audited fiscal years, has grown its General Fund reserves overtime. For fiscal 2012, the city realized a $626,000 operating surplus due to conservative budgeting for development - related revenues. This increased the total General Fund balance to $8.3 million, or a strong 76.1 % of revenues, and unassigned reserves to $5.9 million, or a similarly strong 54.1% of revenues. The city adopted a balanced budget for fiscal 2013 and notes that revenues are tracking above budget while expenditures are on target. The city is in the process of developing its fiscal 2014 budget and balanced operations are expected. The city's primary operating revenue source is property taxes, which represented 80% of General Fund revenues in fiscal 2012, followed by charges for services (10 %), and licenses and permits (4 %). The city does not receive Local Government Aid (LGA), isolating it from the state's cuts to LGA in recent years. The city has strong liquidity, with General Fund cash of $8.1 million, or an ample 74.1% of revenues, and strong alternate liquidity available in its Building CIP, Streets CIP, and Equipment CIP capital projects funds. Collectively, the funds held $6.5 million of cash at the end of fiscal 2012, which is available for operational contingencies with council approval. Additionally, the city's utilities, consisting of water, sewer and storm water, have very strong liquidity, with fiscal 2012 net cash of $6.8 million, $6.0 million and $4.5 million, respectively, or a very robust 350% of operating expenses. MANAGEABLE DEBT BURDEN WITH LIMITED FUTURE BORROWING PLANS We expect the city's debt burden to remain manageable given limited future borrowing needs. At 0.7% and 1.5% of full valuation, the city's direct and overall debt burdens compare favorably to state and national medians. Principal amortization is sound with 77.1 % of all debt retired in ten years. The city may issue $1 million to $2 million of bonds to support road improvements in the next year. All of the city's debt is in fixed rate mode, and the city is not a party to any interest rate swap agreements. The city has an above average employee pension burden, based on unfunded liabilities for its share of two multiple - employer plans administered by the state and one single employer plan that it administers independently. For analytic purposes, Moody's has allocated liabilities of state cost - sharing plans in proportion to the city's contributions to each plan. The city's share of unfunded pension liabilities allocated by Moody's on a reported basis is $6.0 million, including a $3.3 million share of the statewide Government Employees Retirement Fund (GERF) and a $2.5 million share of the Public Employees Police and Fire Fund ( PEPFF). It also includes the $162,000 reported unfunded liability for the city's single employer plan, the Rosemount Fire Department Relief Association Pension Plan. The actuarial valuation date for all three plans is December 31, 2011. The city's total annual contribution to the retirement systems in fiscal 2011 was $1 million, equal to 8.9% of operating revenues (General Fund and Debt Service Fund). Moody's adjusted net pension liability (ANPL) for the city as of fiscal 2011 related to GERF, PEPFF and the city's fire pension plan, under our methodology for adjusting reported pension data, is $19.0 million, or 1.63 times operating revenues. This figure is moderately above the average of 1 times operating revenues for the sector. Moody's ANPL reflects certain adjustments we make to improve the comparability of reported pension liabilities. The adjustments are not intended to replace the city's reported liability information, but to improve comparability with other rated entities. WHAT WOULD CHANGE THE RATING UP - Substantial growth and diversification of the city's tax base - Maintenance of healthy reserves and liquidity WHAT WOULD CHANGE THE RATING DOWN: - Significant erosion of the city's tax base - Material deterioration in General Fund reserves to a level inconsistent with similarly rated credits KEY STATISTICS 2010 Census population: 21,874 (49.6% increase from 2000) 2012 Full valuation: $2.2 billion Estimated Full value per capita: $96,434 2006 -2010 Median family income: 146.6% of nation and 129.5% of state Dakota County unemployment rate (June 2013): 4.9% (state at 5.2 %; US at 7.8 %) Fiscal 2012 General Fund balance: $8.3 million (76.1% of General Fund revenues) Direct debt burden: 0.7% Overall debt burden: 1.5% Principal amortization (10 years): 77.1% Post -sale general obligation debt outstanding: $17.3 million Moody's adjusted net pension liability: 1.63 times operating revenues PRINCIPAL METHODOLOGY The principal methodology used in this rating was General Obligation Bonds Issued by US Local Governments published in April 2013. 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