HomeMy WebLinkAbout3.b. Presentation and Acceptance of 2015 Comprehensive Annual Financial ReportEXECUTIVE SUMMARY
City Council Meeting Date:June 7,2016
AGENDA ITEM: Presentation and Acceptance of 2015
AGENDA SECTION:
Comprehensive Annual Financial Report
Presentations
(CAFR)
PREPARED BY: Jeff May, Finance DirectorAGENDA NO. 3.b.
ATTACHMENTS: Resolution,PowerPoint Presentation,
CAFR, ManagementReport,Special APPROVED BY: ddj
Purpose Audit Reports
RECOMMENDED ACTION: Motion to adopt aResolution Accepting the 2015
Comprehensive Annual Financial Report.
ISSUE
Review and accept the 2015 CAFR.
BACKGROUND
A representative from our audit firm, Malloy, Montague, Karnowski, Radosevich, & Co., P.A. (MMKR),
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will be here on Tuesday evening, June 7, to review the City of Rosemount’s 2015CAFR. The
representative will give a brief presentation, highlighting items that may be worthy of your attention and
will also be available to answer any questions that you may have
SUMMARY
Recommend the above motion to accept the 2015CAFR.
CITY OF ROSEMOUNT
DAKOTA COUNTY, MINNESOTA
RESOLUTION 2016-
A RESOLUTION ACCEPTING THE 2015COMPREHENSIVE ANNUAL
FINANCIAL REPORT
WHEREAS,the City of Rosemount has been presented its 2015Comprehensive
Annual Financial Report, prepared with the assistance of thefirm ofBaker TillyVirchow
Krause, LLPand audited by our audit firm of Malloy, Montague, Karnowski, Radosevich,
& Co., P.A.
NOW, THEREFORE, BE IT RESOLVED,that the City Council of the City of
Rosemount, accepts its 2015Comprehensive Annual Financial Report, audited byour
audit firm ofMalloy, Montague, Karnowski, Radosevich, & Co., P.A.
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ADOPTEDthis 7day ofJune, 2016.
_____________________________
William H. Droste, Mayor
ATTEST:
__________________________
Clarissa Hadler, City Clerk
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AUDITOR’S ROLE
Financial statements are fairly presented in accordance with accounting principles generally accepted in the United States of AmericaFinancial Statement AuditMN Legal Compliance Audit
Opinion on Financial StatementsReports on Internal Controls and
Compliance
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AUDIT OPINIONS AND FINDINGS
Unmodified opinion implementation of new pension standard Significant deficiency segregation of dutiesTimely payment of invoices Missing payroll declaration for timecard
Opinion on Financial StatementsInternal Controls Over Financial ReportingLegal Compliance Audit Findings
GOVERNMENTAL FUNDS
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STATEMENT OF NET POSITION
COMPREHENSIVE
ANNUAL
FINANCIAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 2015
19ROSEMOUNT
MINNESOTA
CITY OF ROSEMOUNT, MINNESOTA
CITY OF ROSEMOUNT, MINNESOTA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 2015
PREPARED BY THE DEPARTMENTS OF
ADMINISTRATION AND FINANCE
DWIGHT D. JOHNSON, City Administrator
JEFFREY A. MAY, Finance Director
CITY OF ROSEMOUNT
COMPREHENSIVE ANNUAL FINANCIAL REPORT
As of and for the Year Ended December 31, 2015
TABLE OF CONTENTS
Page
INTRODUCTORY SECTION
Letter of Transmittal i
GFOA Certificate of Achievement ix
Organizational Chart x
List of Elected and Appointed Officials, Consultants and Advisors xi
FINANCIAL SECTION
Independent Auditors' Report
xii - xiv
Management's Discussion and Analysis
1 - 10
Basic Financial Statements:
Government -wide Financial Statements:
Statement of Net Position
11
Statement of Activities
12
Fund Financial Statements:
Balance Sheet — Governmental Funds
13
Statement of Revenues, Expenditures and Changes in Fund Balances -
Governmental Funds
14
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the Statement
of Activities
15
Statement of Net Position — Proprietary Funds
16
Statement of Revenues, Expenses, and Changes in Net Position -
Proprietary Funds
17
Statement of Cash Flows — Proprietary Funds
18-19
Notes to the Financial Statements
20-57
Required Supplementary Information:
Schedule of Revenues Compared to Budget (Budgetary Basis) — Budget and
Actual — General Fund
58
Schedule of Expenditures and Other Uses (Budgetary Basis) — Budget and
Actual — General Fund
59
Schedule of City's Proportionate Share of the Net Pension Liability—
Public Employees General Employees Retirement Fund
60
Schedule of Employer Contributions — Public Employees General Employees Retirement Fund
60
Schedule of Changes in the Rosemount Fire Department Relief Association's Net Pension
Asset and Related Ratios
61
Schedule of Employer Contributions — Rosemount Fire Department Relief Association
61
Schedule of City's Proportionate Share of the Net Pension Liability —
Public Employees Police and Fire Fund
62
Schedule of Employer Contributions — Public Employees Police and Fire Fund
62
Notes to Required Supplementary Information
63
Supplementary Information:
Combining and Individual Fund Statements and Schedules:
Combining Balance Sheet — Nonmajor Governmental Funds
64
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances — Nonmajor Governmental Funds
65
Schedules of Revenues, Expenditures and Changes in Fund Balances (Budgetary Basis) —
Budget and Actual:
Building CIP Capital Project Sub -Fund
66
Street CIP Capital Project Sub -Fund
67
Equipment CIP Capital Project Sub -Fund
68
CITY OF ROSEMOUNT
COMPREHENSIVE ANNUAL FINANCIAL REPORT
As of and for the Year Ended December 31, 2015
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 Information
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
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sC ROSEMOUNT
MINNESOTA
May 11, 2016
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 principles (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, 2015.
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 Malloy Montague Karnowski
Radosevich & Co., P.A. (MMKR), 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, 2015, 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 unmodified opinion that the City's financial
statements for the fiscal year ended December 31, 2015, 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
Rosemount City Hall • 2875 145th Strelet West • Rosemount, MN 55068-4997
651 -423-441 1 • TDD/TTY 651-423-6219 • Fax 651-423-5203
www.ci.rosemount.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 110 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 approximately 650 acres of industrial and
commercially zoned property ready for development. There is also slightly under 1,000 acres 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 1St 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 30th. 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.
Population
Percent
Population
Increase
Increase
2015 Staff Estimate
23,244
1,370
6.26%
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 110 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 approximately 650 acres of industrial and
commercially zoned property ready for development. There is also slightly under 1,000 acres 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 1St 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 30th. 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.
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 58-59 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 continues to have a significant amount of land available for future
development. The western one third of the community is urbanized with new neighborhoods under
construction in the central portion of the community. This is the area which was the subject of an
Alternative Urban Areawide Review (AUAR) completed in 2007. A similar review was undertaken and
approved in 2013 for the 5,000 acres owned by the University of Minnesota in Rosemount and to the
south, in Empire Township. The City continues to work with University representatives to market the
business park area on the east side of the landholdings and attract residential development in the west.
The City is experiencing more inquiries about available land for new residential and industrial
development. Projects that were abandoned several years ago are now being purchased by builders
looking to finish the neighborhoods. The largest taxpayers continue to be the same landholders the City
has seen for the last several years. Flint Hills Resources continues to be the largest tax payer with
approximately 12% of the City's total local tax capacity.
Labor market data is very impressive for the State, Minneapolis/St. Paul metropolitan area and Dakota
County, in which Rosemount is located. 2015 labor force numbers were 3,033,597; 1,942,269; and
234,664 respectively with unemployment rates of 3.6%; 3.1 % and 3.0% to match. These figures compare
quite favorably with national figures.
Community leadership has preserved 533 beautiful acres of land for 29 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. In 2015, the
City opened a 10,000 square foot addition to the Steeple Center to house a variety of activities and
events.
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 in the City is guided by the adopted 2030
Comprehensive Plan. The Plan, approved in 2009, has been amended on several occasions to permit
new development more reflective of the current market demand than what was envisioned when adopted.
The City has started to compile information associated with the 2040 Comprehensive Plan process. The
current plan anticipates 6,500 more acres of urbanized growth for all types of development; residential,
industrial and commercial. It is anticipated that land uses, and potentially future development locations
may be modified in the upcoming Comprehensive Plan due to market demand, existing infrastructure and
land ownership.
Other factors New residential units continue to compare favorably to the previous year. In 2014 there
were 180 building permits pulled for new residential units; in 2015 there were 173 permitted units. A 60 -
unit senior housing complex constructed by the Dakota County Community Development Agency was
underway on property previously owned by the City's Port Authority to promote redevelopment in the
City's historic Downtown. There are presently 263 platted lots available for residential development of
which 87 are designated for multi -family construction. Two different developers have each started
construction in two multi -family neighborhoods, working to complete both of those projects in 2016.
Recent construction has bounced back to the levels experienced in the early 2000's. New housing
continues to generate the largest increase in building valuation at $39,739,000 for 2015, although non-
residential development is also on the increase. In 2015 the total of commercial, industrial and
institutional development was valued at $23,591,000, which is similar to that experienced in 2014. There
was not a lot of new construction in 2015 as most non-residential construction was in remodeling of
occupied space. Some of the larger projects were two remodeling projects in Dakota County Technical
College, a remodel of Marcus Theatres, Dairy Queen, Burger King, Proto Labs a tenant improvement for
a daycare.
Mobile Technology In 2015, we continued our extensive use of web mapping applications for all the
utility maintenance processes (hydrant flushing, gate valve inspections, sump inspections / cleaning and
sewer jetting). Support staff also spent numerous hours exploring different asset management programs
as we prepare to migrate to the new Cartegraph OMS platform in 2017.
Capital Improvement Projects The Public Works Department coordinated and / or completed several
capital improvement projects in 2015:
• Pump recondition at Well 12 (replace soft start)
• Repairs and reconditioning at East Side Tower
• Interior and exterior painting at Fire Station 1
• Interior and exterior painting at Public Works North
• Color coat tennis court surface at Claret Park
• Sealcoat Erickson Park parking lot
• New generator at City Hall
• Energy efficiency improvements at the Family Resource Center (outside building)
• Police Department remodel
• New keyless entry system at City Hall, Public Works and Fire Stations
2015 Street Improvements No street reconstruction projects were planned for 2015. The Danbury Way
project is budgeted as a 2 -year project with construction scheduled for 2016.
Construction Projects
The Engineering Division coordinated the work on several construction projects in 2015:
• Trail Improvements — Pedestrian improvements were completed along a section of Diamond Path
from 155th Street to 152nd Street, as well as two locations in Innisfree Park. These improvements
were necessary to correct drainage issues and eliminate root intrusion issues on existing
bituminous trails. An additional 3.9 miles of bituminous were fog sealed in 2015.
• Prestwick Place 11th and 12th Additions — These neighborhoods include a total of 65 single-family
homes. It is the continuation of the development of Prestwick Place, located west of Akron
Avenue along Connemara Trail.
• Greystone 4th Addition — This fourth phase of the Greystone development includes 47 single-
family homes. It is located on the east side of Akron Avenue, north of CSAH 42.
• Bella Vista P Addition — This neighborhood includes 28 single-family homes and is the second
phase of the Bella Vista development located east of Bacardi Avenue and north of Bonaire Path.
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Well 16 — The City's eighth municipal well is located on Bacardi Avenue at the northwest corner
of the Bella Vista development. The production well was drilled in 2015 and will be pump -tested
in early 2016. Well 16 will go online after the completion of the well house, which may be late in
2016 or more likely in 2017.
Sealing Wells 4 & 5 and Drilling New Observation Well — The City began plans for sealing
abandoned Wells 4 and 5 in Chippendale Park. In order for the DNR appropriations permit to be
approved for Well 16, a new observation well must be constructed in the central part of the City.
If Well 4 is unsuitable to be converted to an observation well, both wells will be sealed and a new
observation well will be constructed at the same site.
1.5 MG Ground Storage Tank & Booster Station — The City began plans for an underground
water storage facility located north of Fire Station 2, near the Bacardi Water Tower. Construction
is expected to begin in 2016.
The Police Department is responsible for policing services to the community to ensure safety and
response to service calls. A Community Oriented Policing philosophy is core to all services through
partnerships and relationships with citizens, businesses and community organizations. Staffing levels are
continually evaluated to meet the needs of a growing community. The specific service functions within
the Police Department are described below.
Police Administration — This budget provides for the overall leadership, planning, coordination and
management of personnel and administration of activities within the Police Department. This includes
the collection, preparation and filing of crime data and miscellaneous reports with the State of
Minnesota; preparation and oversight of the operating and capital improvements budgets; and
strategic planning for the future needs of the Department and the community. Police Department
leadership is also involved in many consolidated services governance boards that contribute to
policing services for the city. The Dakota Communications Center (DCC), Criminal Justice Integrated
Information Network (CJIIN), Dakota County Drug Task Forces and Dakota County Multi -Agency
Assistance Group (MAAG) are consolidated services organizations that contribute to Rosemount's
policing services.
Records Unit — The Police Department's Records Unit is responsible for the processing of over 2,200
case reports each year. Reports require transcription and compilation for transmittal to the city or
county prosecutor's office or any other agency (e.g., social services, county crises, corrections)
requiring information for service to the community. Records staff ensure the Police Department is
compliant with all Minnesota Bureau of Criminal Apprehension data management laws, regulations
and reporting requirements. Administrative support is provided to the entire Police Department for
gun permit applications, criminal background checks and city licensing requirements.
Patrol Operations — Uniformed patrol is the core function of the Police Department and the most
visible in the community. Through 24-hour daily patrols in marked police vehicles, patrol officers
respond to calls for service, investigate traffic accidents, conduct preliminary criminal investigations,
enforce traffic laws and enforce criminal laws. Patrol Officers respond to medical calls as trained first
responders. Through patrol operations the Police Department meets its goal of the protection of life
and property and creating a sense of safety and security in the community. Patrol Officers spend a
significant amount of time developing relationships within the community and contacting members of
community organizations. Patrol Officers perform additional specialty assignments as Crime Scene
Technicians, Use -of -Force Instructors, Multi -Agency Assistance Group (MAAG) Tactical Officers,
Drug Recognition Experts, and Field Training Officers.
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Criminal Investigations — Patrol Officers and investigators are responsible for the investigation of
criminal incidents through evidence gathering and analysis, witness and suspect interviews, and court
preparation and testimony. Complex investigations or those requiring multi -jurisdictional or agency
involvement are coordinated by the investigator. This is accomplished by working cooperatively with
other police agencies, the County Attorney's Office, Child Protection, victim services and other local,
state and federal law enforcement agencies. One investigator is assigned to the Dakota County Drug
Task Force, a multi -jurisdictional joint powers entity, whose mission is to investigate drug crimes in
the City of Rosemount and throughout Dakota County.
• Crime Prevention and Community Education
A significant effort is made by the Police Department to inform residents of crime within the
community, methods that citizens can take to help prevent crimes and building relationships with
community members. While these objectives are part of each officer's daily responsibilities, there are
specific programs that are frequently associated with community policing and that emphasize the
need for the police and citizens to work together to prevent criminal activity and reduce the
opportunities for criminals to commit crimes.
➢ School Liaison — Officers serve as a liaison to the Rosemount Middle and the Rosemount
High School. One officer is assigned full-time to the High School and a second officer
spends one-quarter time at the Middle School. The liaison officers investigate criminal
incidents that occur at the schools or that involve students at the schools. In addition, the
liaisons work with the school staff to enhance the safety and security for both staff and
students, specifically providing school safety planning, and armed intruder prevention and
response planning. Presentations on a variety of topics are made by the liaison to classes at
all grade levels. The Middle School officer also spends time at each of the elementary
schools, working with staff on any issues and making presentations in classes.
➢ Community Education — In order to work together with the community, police must share
information concerning criminal activity and crime prevention with the community. Officers
are available to make presentations to community groups and organizations on a variety of
topics. In addition, officers provide prevention tips to persons on a daily basis who report
criminal activity. Several events are also held throughout the year in an effort to build
relationships with the residents and business persons. These include Night -to -Unite block
parties and gatherings, Neighborhood Watch meetings and Public Safety in the Park events.
➢ Reserve Officer Program — Reserve officers are volunteers who supplement the staff of
sworn officers of the Department. The reserve officers are utilized to handle traffic and crowd
control duties during city festivals and celebrations or emergencies, such as hazardous
materials spills or leaks, damage resulting from tornadoes or other severe weather and major
criminal incidents. Reserve officers patrol on some evenings and handle service calls; for
example, assisting stalled motorists and animal complaints. They are also utilized regularly
to provide crime prevention information to citizens at community events or through other
programs.
➢ Chaplain Program — The Police Chaplains assist in a variety of situations in which individuals
or families are having difficulties. Chaplains are able to provide support to persons that are
experiencing stress as a result of the death of a loved one, marital or family problems,
financial struggles or any other event. By utilizing the chaplains to console and counsel
persons in crisis, police officers are able to focus on their primary duties, while the chaplains
are able to remain with the persons involved in the crisis.
➢ Explorer Program — Exploring is a community based, co-educational program supervised by
the local police department. The Explorer program is designed for young adults ages 14-21
that want to learn more about law enforcement. The program is part of the Boy Scouts of
America and is open to both young men and young women. Membership in the Rosemount
Police Department Explorer Post is restricted to those young people that live in Rosemount or
attend school in Rosemount. Residents of other communities that do not attend school in
Rosemount are turned away. The Rosemount Police Explorer Post was formed in 2014.
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Explorers meet twice a month under the direction of the two officers that serve as Post
advisors. During these meetings they conduct post business and train in law enforcement
skills. The Explorers also take part in the statewide Explorer Conference where they
compete against other Explorer Posts in law enforcement scenarios including crime scene
processing, domestic disturbance calls, building searches, etc. In the past, the Explorers
attended the national conference every other year. Five years ago, due to budget
constraints, we ended this. Although the Explorers paid their own way to the conference
there was a cost associated with sending the two officers that serve as post advisors. The
Explorer Post is an opportunity for youth of our community to become exposed to law
enforcement. Some just want to learn more about the police department. Others are truly
"exploring" law enforcement as a potential future career. In either case it brings teenagers
closer to the police department in a service capacity. As such it fits with the department's
mission of improving quality of life in our community.
➢ Adult Citizen Academy Program — The Adult Citizen Academy has been a project of the
Rosemount Police Department for the past 6 years. It is a way to offer those who live or work
in Rosemount an inside look at the operation of their police department. It also allows them
an opportunity to meet the officers who serve them. The academy covers topics such as
recruiting, ethics, criminal investigations, the charging process, drug task force, use of force,
traffic enforcement, forensics, and includes a citizen ride -along with a patrol officer. As such
it helps fulfill the department's educational mission.
• Animal Control — The Police Department is responsible for the enforcement of ordinances related to
the control and care of domestic animals. These tasks are mainly handled by Community Service
Officers. Their duties include the licensing of dogs and ferrets, assisting in the handling of stray, lost
or injured animals and other complaints of animals causing a nuisance by barking, howling or being
allowed to roam off the owner's property.
Code Enforcement — The Police Department assists the Community Development Department with
code enforcement of city ordinances related to property maintenance and outside storage. The
Department's Community Service Officers primarily handle this effort. Property owners that are
observed to be in violation of an ordinance are notified of the violation and given an explanation of
how to remedy the violation. The enforcement of city ordinances is important to maintain community
standards, which help the City attain its mission of providing a safe, healthy and pleasant community.
Emergency Management — The City has an all -hazards emergency plan and the Chief of Police
serves as the City's emergency manager. The emergency manager is responsible for the
development of emergency plans in the event of a chemical, technical or natural disaster in the
community (e.g. tornado, flooding, school shooting, or hazardous materials release). The Chief of
Police represents the City of Rosemount on the Dakota County Domestic Preparedness Committee
(DCDPC). The DCDPC is comprised of police, fire, dispatch, EMS, public health, and medical facility
representatives to aid all Dakota County cities and Dakota County with all -hazards emergency
planning and leadership.
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.
vii
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, 2014. This was the
nineteenth 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.
pAecl y s i�tted,
1-0
ffeMay
Finance Director
viii
CIJ
Government Finance Officers Association
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, 2014
*/O**v - - 4 0-� PA*. - �
Executive Director/CEO
ix
CITY OF ROSEMOUNT
CITY OFFICIALS
As of and for the Year Ended December 31, 2015
ELECTED OFFICIALS:
Mayor Bill Droste
Council member Mark DeBettignies
Council member Vanessa Demuth
Council member Shaun Nelson
Council member Jeff Weisensel
APPOINTED OFFICIALS:
City Administrator
Finance Director
Assistant City Administrator
City Engineer/Public Works Director
Community Development Director
Police Chief
Fire Chief
Parks and Recreation Director
CONSULTANTS AND ADVISORS:
Legal
Auditing
Fiscal
Engineering
Xi
Term of Office
Four Years
Four Years
Four Years
Four Years
Four Years
Dwight D. Johnson
Jeffrey A. May
Emmy Foster
Patrick W rase
Kim Lindquist
Mitchell Scott
Richard Schroeder
Dan Schultz
Term Expires
December 31, 2018
December 31, 2018
December 31, 2016
December 31, 2018
December 31, 2016
Kennedy & Graven
Fluegel Law Firm, P.A.
Baker Tilly Virchow Krause, LLP
Malloy, Montague, Karnowski, Radosevich & Co., PA
Springsted, Inc.
Ehlers & Associates, Inc.
WSB & Associates
Short, Elliot, Hendrickson, Inc.
KLM Engineering
Summit Envirosolutions, Inc.
THIS PAGE INTENTIONALLY LEFT BLANK
MMKR
C E RT IF I E D PUBLIC
ACCOUNTANTS
INDEPENDENT AUDITOR'S REPORT
To the City Council and Management
City of Rosemount, Minnesota
REPORT ON THE FINANCIAL STATEMENTS
PRINCIPALS
Thomas M. Montanus. CPA
`rhomas A. Karnowski, CPA
Paul A. Radoscvich, CPA
William J. Lauer. CPA
James H. Eichtsn, CPA
Aaron J. Nielsen, CPA
Vicaoria L. Holinka, CPA
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, 2015, and the related notes to the
financial statements, which collectively comprise the City's basic financial statements as listed in the
table of contents.
MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
AUDITOR'S RESPONSIBILITY
Our responsibility is to express opinions on these financial statements based on our audit. We conducted
our audit in accordance with auditing standards generally accepted in the United States of America and
the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the City's preparation
and fair presentation of the financial statements in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's
internal control. Accordingly, we express no such opinion. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of significant accounting estimates
made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
(continued)
xu
Malloy. Montague. Karnowski. Rado,evich. & Co.. P.A.
ilii \1'c�uta lioulourd \u." 110 \l unuxpuln. MN i5416 • 1'11q,1nnc: 9i2-i4i-11429 • I'vlclaa. 9i2-590-069 w�,w mm6r..om
OPINIONS
In our opinion, the financial statements referred to on the previous page present fairly, in all material
respects, the respective financial position of the governmental activities, the business -type activities, each
major fund, and the aggregate remaining fund information of the City as of December 31, 2015, and the
respective changes in financial position and, where applicable, cash flows thereof, for the year then
ended, in accordance with accounting principles generally accepted in the United States of America.
EMPHASIS OF MATTER
As described in Note 1 of the notes to basic financial statements, the City has implemented Governmental
Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for
Pensions—an amendment of GASB Statement No. 27, and GASB Statement No. 71, Pension Transition
for Contributions Made Subsequent to the Measurement Date—an amendment of GASB Statement No. 68,
during the year ended December 31, 2015. Our opinion is not modified with respect to this matter.
OTHER MATTERS
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's
Discussion and Analysis and the required supplementary information (RSI), as listed in the table of
contents, be presented to supplement the basic financial statements. Such information, although not a part
of the basic financial statements, is required by the GASB, who considers it to be an essential part of
financial reporting for placing the basic financial statements in an appropriate operational, economic, or
historical context. We have applied certain limited procedures to the RSI in accordance with auditing
standards generally accepted in the United States of America, which consisted of inquiries of
management about the methods of preparing the information and comparing the information for
consistency with management's responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audit of the basic financial statements. We do not express an opinion
or provide any assurance on the information because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City's basic financial statements. The introductory section, supplementary information, and
statistical section, as listed in the table of contents, are presented for purposes of additional analysis and
are not required parts of the basic financial statements.
The supplementary 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.
Such information has been subjected to the auditing procedures applied in the audit of the basic financial
statements and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the basic financial statements or to
the basic financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America. In our opinion, the information is fairly
stated, in all material respects, in relation to the basic financial statements as a whole.
The introductory and statistical sections have not been subjected to the auditing procedures applied in the
audit of the basic financial statements and, accordingly, we do not express an opinion or provide any
assurance on them.
(continued)
Prior Year Comparative Information
The City's 2014 financial statements were audited by other auditors who expressed unmodified audit
opinions on the respective financial statements of the governmental activities, the business -type activities,
each major fund, and the aggregate remaining fund information in their report dated June 9, 2015. In our
opinion, the partial comparative information presented herein as of and for the year ended December 31,
2014 is consistent, in all material respects, with the audited financial statements from which it has been
derived.
OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS
In accordance with Government Auditing Standards, we have also issued our report dated May 11, 2016,
on our consideration of the City's internal control over financial reporting and on our tests of its
compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters.
The purpose of that report is to describe the scope of our testing of internal control over financial
reporting and compliance and the results of that testing, and not to provide an opinion on internal control
over financial reporting or on compliance. That report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the City's internal control over financial
reporting and compliance.
Minneapolis, Minnesota
May 11, 2016
xiv
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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, 2015. We encourage readers to consider the information presented here in conjunction
with the City's financial statements following this section.
Financial Highlights
> The assets and deferred outflows of resources of the City exceeded its liabilities and deferred
inflows of resources at the close of the most recent fiscal year by $204,539,767 (net position). Of
this amount, $33,408,666 (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 $5,204,800. Most of this increase is attributable to an
increase in capital assets funded by grants or developers. The increase excludes the effect of the
change in accounting principle for the implementation of GASB No. 68 and 71, which resulted in
a restatement of beginning net position of ($4,258,328).
> At year end, unassigned fund balance for the General Fund was $6,506,697, 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 bonded debt increased by $3,950,000 (approximately 23%) during the current
year, however nearly 75% of that increase related to refunding bonds for which the payoff of the
refunded debt will occur in 2016 and 2017. In the meantime, the funds available from the new
debt are reported within assets on the financial statements.
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, liabilities, deferred
outflows/inflows of resources, with the difference reported as net position. Over time, increases or
decreases in net position may serve as a useful indicator of whether the financial position of the City is
improving or deteriorating.
The statement of activities presents information showing how the 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).
Page 1
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 11-12 of this report.
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 two categories: governmental funds and proprietary funds.
Governmental funds
Governmental funds are used to account for essentially the same functions reported as governmental
activities in the government -wide financial statements. However, unlike the government -wide financial
statements, governmental fund financial statements focus on 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 13-15 of this report.
Page 2
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 16-19 of this report.
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 20-57 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 64-68 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 and deferred outflows of resources exceeded liabilities and
deferred inflows of resources by $204,539,767 at the close of the most recent fiscal year.
The largest portion of the City's net position (79 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.
Page 3
Current and other assets
Capital assets
Total assets
Deferred outflows of resources
Long-term liabilities outstanding
Other liabilities
Total liabilities
Deferred inflows of resources
Net position:
Net investment in capital
assets
Restricted
Unrestricted
Total net position
City of Rosemount's Statement of Net Position
Governmental Business -Type
Activities Activities
$ 34,768,779 $ 22,863,509
79,135,040 98,302,192
113,903,819
121,165,701
1,118,263
115,926
24,962,238
1,480,799
3,667,616
319,420
26,443,037
3,987,036
1,224,588
109,281
2015 Governmental Business -Type 2014
Totals Activities Activities Totals
$ 57,632,288 $ 30,691,981 $ 19,807,097 $ 50,499,078
177,437,232
74,553,402
99,594,408
174,147,810
235,069,520
105,245,383
119,401,505
224,646,888
1,234,189
-
-
-
28,629,854
17,088,572
1,615,299
18,703,871
1,800,219
1,713,810
243,361
1,957,171
30,430,073
18,802,382
1,858,660
20,661,042
1,333,869
392,551
-
392,551
64,684,403
96,808,557 161,492,960
58,438,402
98,194,408 156,632,810
9,638,141
- 9,638,141
9,698,513
- 9,698,513
13,031,913
20,376,753 33,408,666
17,913,535
19,348,437 37,261,972
$ 87,354,457
$ 117,185,310 $ 204,539,767 $
86,050,450
$ 117,542,845 $ 203,593,295
An additional portion of the City's net position ($9,638,141 or 5%) represents resources that are subject to
external restrictions on how they may be used. The remaining balance representing unrestricted net
position ($33,408,666 or 16%) 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.
Governmental activities
Governmental activities increased the City's net position by $4,753,023, accounting for 91 % of the total
growth in the government's net position. This change excludes the effect of the change in accounting
principle for the implementation of GASB No. 68 and 71, which resulted in a restatement of beginning net
position of ($3,449,016).This compares to an increase (from governmental activities) of $5,271,633 in
2014. Revenues decreased by approximately $5,100,000 related to capital grants and contributions in
2015 as the prior year included significantly more state aid construction funding and the timing of the
revenue recognition for special assessments was also a factor. Expenses decreased by approximately
$2,100,000 due primarily to a loss on the disposal of capital assets of a similar amount in 2014. Transfers
to business -type activities related to capital projects decreased by approximately $2,300,000.
Business -type activities
Business -type activities increased the City's net position by $451,777, accounting for 9% of the total
growth in the government's net position. This change excludes the effect of the change in accounting
principle for the implementation of GASB No. 68 and 71, which resulted in a restatement of beginning net
position of ($809,312). This compares to an increase of $3,180,597 in 2014. The primary reason for the
smaller current year increase was a decrease in the net transfers from governmental activities of
approximately $2,300,000 related to capital projects.
Page 4
Elements of these changes are as follows:
City's Changes in Net Position
Page 5
Business-
Business -
Governmental
Type
2015
Governmental
Type
2014
Activities
Activities
Totals
Activities
Activities
Totals
Revenues:
Program revenues:
Charges for services
$ 4,161,564
$ 6,378,84 $
10,540,406
$ 3,980,356
$ 5,855,683 $
9,836,039
Operating grants and contributions
478,239
478,239
362,882
29,581
392,463
Capital grants and contributions
1,937,954
204,178
2,142,132
7,066,093
472,833
7,538,926
General revenues:
Property taxes
11,574,093
11,574,093
11,350,967
11,350,967
Other taxes
332,290
332,290
288,425
288,425
Interest earnings
181,754
272,336
454,090
221,243
333,929
555,172
Change in fair value of investments
(1,788)
(24,638)
(26,426)
319,644
276,379
596,023
Other
111,565
111,565
103,615
103,615
Total revenues
18,775,671
6,830,718
25,606,389
23,693,225
6,968,405
30,661,630
Expenses:
General government
2,878,070
2,878,070
2,961,500
2,961,500
Public safety
4,378,347
4,378,347
4,233,610
4,233,610
Public works
4,468,049
4,468,049
5,764,176
5,764,176
Recreation
1,643,886
1,643,886
1,613,600
1,613,600
Economic development
53,040
53,040
1,032,304
1,032,304
Interest on long-term debt
569,722
569,722
501,682
501,682
Water
2,219,781
2,219,781
1,962,833
1,962,833
Sewer
2,575,330
2,575,330
2,522,913
2,522,913
Storm water
1,117,526
1,117,526
1,122,839
1,122,839
Arena
497,838
497,838
493,943
493,943
Total expenses
13,991,114
6,410,475
20,401,589
16,106,872
6,102,528
22,209,400
Increase in net position
before transfers
4,784,557
420,243
5,204,800
7,586,353
865,877
8,452,230
Transfers
(31,534)
31,534
(2,314,720)
2,314,720
Increase in net position
4,753,023
451,777
5,204,800
5,271,633
3,180,597
8,452,230
Net position - Beginning of Year
86,050,450
117,542,845
203,593,295
80,778,817
114,362,248
195,141,065
Change in accounting principle for pensions
(3,449,016)
(809,312)
(4,258,328)
Restated net position - Beginning of Year
82,601,434
116,733,533
199,334,967
80,778,817
114,362,248
195,141,065
Net position - End of Year
$ 87,354,457
$ 117,185,31 $
204,539,767
$ 86,050,450
$ 117,542,845 $
203,593,295
Page 5
4.5
4
35
3
2.5
Millions
2
15
9
05
0
Expenses and Program Revenues — Governmental Activities
General Government Public Safely Pubr;c Warks Recreation Community Development interest on long-term debt
Fines and
0.1
Licenses and permits
3.4%
Public charges for s
16.5%
Revenues by Source — Governmental Funds
Investment income and
Intergovernmental
4.3%
Taxes
57.4%
Page 6
CEspenses
.Revenue
Millions
Expenses and Program Revenues — Business -Type Activities
Water Sewer Storm water Ice Arena
Revenues by Source — Proprietary Funds
Connection fees
78.4%
Water meters
0.7%
Surcharges and nenalties
Charges for services
72.3%
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 7
OExpenses
�Reaenue
As of the end of the current fiscal year, the City's governmental funds reported combined ending fund
balances of $28,063,237, an increase of $3,281,229 in comparison with the prior year. $6,506,697
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
($79,954) is classified as nonspendable in regards to prepaid items, $11,380,258 is classified as
restricted to meet debt service requirements or relates to donations for capital projects 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 $6,506,697, while total fund balance reached $9,557,677. The
following table shows year-end General Fund balances as compared to the adopted expenditure budget
of the following year:
Year
Budget
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
2014
11,098,600
2015
11,423,500
2016
11,835,528
* This amount represents the unassigned General Fund balance
Amount
4,806,577
5,747,445
5,688,243
5,693,475
5,731,123
5,700,071
5,905,056
6,001,628
6,288,615
6,506,697
Fund Balance
Percent of Next Budget
52%
54%
55%
55%
55%
* 54%
* 55%
* 54%
* 55%
* 55%
During the current fiscal year, unassigned fund balance in the General Fund increased by $218,082. 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, 2015, 100 percent of the unassigned fund balance of the General Fund has been
designated to meet working capital needs.
The debt service fund balance increased by $280,704 primarily due to special assessment payments
collected for future debt service payments. The capital projects fund balance decreased by $806,356 due
to new debt being issued in the prior year and being spent down in 2015. The Port Authority TIF fund
balance increased by $3,512,687 due to the crossover refunding that occurred in 2015 for which related
funds totaling $3,350,294 were in escrow at year-end that will be used to make remaining payments on
the refunded debt in 2016 and 2017.
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 $20,127,745 while the
arena fund had an unrestricted net position amounting to $249,008. The increase in total net position for
the utility funds was $413,543 after $811,167 of capital contributions from governmental activities. The
increase in total net position for the arena fund was $38,234 which included net transfers in of $126,500.
Page 8
General Fund Budgetary Highlights
There were a few significant variances between final budgeted revenues and actual amounts. Building
permit revenue exceeded budget by approximately $150,000 because of more activity than expected.
General government charges for services exceeded budget by approximately $101,000 due mostly to an
increase in plan checking fees and zoning fees related to volume of activity. All other revenue areas
experienced either small surpluses or deficits that led to the final surplus amount. Overall, total
expenditures and other financing uses were 3.3% over budget with most departments being slightly less
than budget and a few being just slightly over budget. The reason for the final expenditures and other
financing uses being more than budgeted were due to transfers made prior to the final year-end close that
adjusted the fund balance to 55% per the City's Fund Balance Policy.
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, 2015, amounts to $177,437,232 (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.
Land
Land improvements
Buildings
Machinery and equipment
Mains and lines
Infrastructure
Construction in progress
Accumulated depreciation
Total capital assets
City of Rosemount's Capital Assets
(net of depreciation)
Governmental Business -Type
Activities Activities
$ 9,018,127 $ 2,668,667
5,792,578 -
16,764,481 11,085,341
11,322,955 3,485,500
- 134,861,304
59,296,690
1,370,309
(24,430,100)
$ 79,135,040
1,034,636
(54,833,256)
$ 98, 302,192
Totals
$ 11, 686, 794
5,792,578
27,849,822
14,808,455
134,861,304
59,296,690
2,404,945
(79,263,356)
$ 177,437,232
Additional information on the City's capital assets can be found in Note IV.C. on pages 36-37 of this
report.
Long-term debt
At the end of the current fiscal year, the City had total bonded debt outstanding of $21,465,000 (including
debt recorded in the Port Authority). Of this amount, $5,865,000 was for general obligation improvement
debt which has financed special assessment construction as part the continuing development within the
City. An additional $9,985,000 was general obligation debt issued by the Port Authority which financed
the City's economic development and redevelopment programs. Another $2,515,000 was general
obligation revenue bond debt issued to add to and improve the water and storm water utility systems
within the City. The remaining $3,100,000 was general obligation and general obligation refunding debt.
Page 9
The City's total debt increased by $3,950,000 (approximately 23%) during the current year, however
nearly 75% of that increase related to refunding bonds for which the payoff of the refunded debt will occur
in 2016 and 2017. In the meantime, the funds available from the new debt are reported within assets on
the financial statements.
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
$63,827,939. Of the City's $21,465,000 in outstanding general obligation debt at the current fiscal year
end, $3,100,000 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 40-42 of this
report.
Economic Factors
> Dakota County's unemployment rate ended the year at 3.0 percent, which compares favorably
with the state unemployment rate of 3.6 percent, and the national unemployment rate of 4.8
percent.
> City building permits were down slightly in quantity and in value in 2015, as compared to 2014. A
total of 2,677 permits with a total valuation of $63,330,428 were issued in 2015.
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,
2875145 th Street West, Rosemount, Minnesota 55068-4997.
Page 10
CITY OF ROSEMOUNT
STATEMENT OF NET POSITION
As of December 31, 2015
(With Summarized Information as of December 31, 2014)
Total Net Position $ 87,354,457 $ 117,185,310 $ 204,539,767 $ 203,593,295
See accompanying notes to financial statements.
Page 11
Business -
Governmental
Type
Totals
Activities
Activities
2015
2014
ASSETS
Cash and investments
$ 27,846,995
$ 21,263,621
$ 49,110,616
$ 44,055,019
Receivables
Taxes
623,663
-
623,663
688,001
Delinquent taxes
11,519
-
11,519
71,655
Accounts
162,675
976,740
1,139,415
1,161,873
Special assessments
1,370,891
154,580
1,525,471
3,429,198
Due from other governmental units
131,460
272,415
403,875
786,098
Internal balances
(65,358)
65,358
-
-
Prepaid items
213,096
130,795
343,891
307,234
Cash and investments with fiscal agent
3,350,294
-
3,350,294
-
Net pension asset
1,123,544
-
1,123,544
-
Capital assets
Land
9,018,127
2,668,667
11,686,794
11,654,894
Construction in progress
1,370,309
1,034,636
2,404,945
5,274,353
Land improvements
5,792,578
-
5,792,578
4,997,104
Buildings
16,764,481
11,085,341
27,849,822
25,500,985
Machinery and equipment
11,322,955
3,485,500
14,808,455
14,155,711
Infrastructure
59,296,690
134,861,304
194,157, 994
187,819,599
Less: accumulated depreciation
(24,430,100)
(54,833,256)
(79,263,356)
(75,254,836)
Total Assets
113,903,819
121,165,701
235,069,520
224,646,888
DEFERRED OUTFLOWS OF RESOURCES
Pension related amounts
1,118,263
115,926
1,234,189
-
LIABILITIES
Accounts payable
715,417
226,346
941,763
1,335,970
Accrued payroll and payroll taxes
175,529
75,942
251,471
199,232
Other accrued liabilities and deposits
589,853
17,132
606,985
421,969
Noncurrent liabilities
Net pension liability
4,932,320
830,583
5,762,903
-
Due within one year
4,221,655
536,125
4,757,780
2,825,842
Due in more than one year
15,808,263
2,300,908
18,109,171
15,878,029
Total Liabilities
26,443,037
3,987,036
30,430,073
20,661,042
DEFERRED INFLOWS OF RESOURCES
Contributions received for subsequent year
501,584
-
501,584
392,551
Pension related amounts
723,004
109,281
832,285
-
Total Deferred Inflows of Resources
1,224,588
109,281
1,333,869
392,551
NET POSITION
Net investment in capital assets
64,684,403
96,808,557
161,492,960
156,632,810
Restricted for debt service
6,925,597
-
6,925,597
7,709,903
Restricted donations for future construction
1,589,000
-
1,589,000
1,988,610
Restricted for pension
1,123,544
-
1,123,544
-
Unrestricted
13,031,913
20,376,753
33,408,666
37,261,972
Total Net Position $ 87,354,457 $ 117,185,310 $ 204,539,767 $ 203,593,295
See accompanying notes to financial statements.
Page 11
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ASSETS
Cash and investments
Cash and Investments with fiscal agent
Receivables from:
Taxes
Accounts
Special assessments
Delinquent special assessments
Due from other governmental units
Prepaid items
Total assets
LIABILITIES, DEFERRED INFLOWS OF RESOURCES,
AND FUND BALANCES
Liabilities
Accounts payable
Accrued payroll and payroll taxes
Bonds payable
Deposits payable
Advances from other funds
Total liabilities
Deferred Inflows of Resources
Unavailable revenue
Contributions received for subsequent year
Total deferred inflows of resources
Fund Balances
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total fund balances
CITY OF ROSEMOUNT
BALANCE SHEET - GOVERNMENTAL FUNDS
As of December 31, 2015
Port Nonmajor Total
Authority Governmental Governmental
General Debt Service Capital Projects TIF Funds Funds
$ 9,694,642 $ 6,881,300 $ 9,267,650 $ 1,182,291 $ 192,424 $ 27,218,307
- - - 3,350,294 - 3,350,294
633,350 - 1,832 635,182
42,110 - 120,565 - 162,675
3,685 677,212 683,327 1,364,224
201 5,670 796 6,667
123,462 - 7,998 - 131,460
69,348 - 10,000 606 79,954
$ 10,566,798 $ 7,564,182 $ 10,090,336 $ 4,534,417 $ 193,030 $ 32,948,763
$ 372,940 $ $ 319,724 $ $ 1,271 $ 693,935
175,317 - 212 175,529
- 1,625,000 - 1,625,000
392,145 - - 392,145
- 65,358 65,358
940,402 1,625,000 385,082 1,483 2,951,967
68,719
682,341
680,915
1,431,975
Amounts reported for governmental activities in the statement of net position are different because:
501,584
501,584
68,719
682,341
1,182,499
- 1,933,559
Internal service funds are reported in the statement of net position as governmental activities.
740,348
69,348
-
10,000 -
606 79,954
-
5,256,841
1,589,000 4,534,417
- 11,380,258
-
-
- -
190,941 190,941
2,981,632
6,923,755
- 9,905,387
6,506,697
$ 87,354,457
- -
6,506,697
9,557,677
5,256,841
8,522,755 4,534,417
191,547 28,063,237
Total liabilities, deferred inflows of resources,
and fund balances $ 10,566,798 $ 7,564,182 $ 10,090,336 $ 4,534,417 $
193,030
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.
79,135,040
Some receivables that are not currently available are reported as deferred inflows of resources in the fund financial
statements but are recognized as revenue when earned in the government -wide statements.
1,431,975
Internal service funds are reported in the statement of net position as governmental activities.
740,348
The net pension asset does not relate to current financial resources and is not reported in the governmental funds.
1,123,544
The net pension liability does not relate to current financial resources and is not reported in the governmental funds.
(4,932,320)
Deferred outflows of resources related to pensions do not relate to current financial resources and is not reported
in the governmental funds.
1,118,263
Deferred inflows of resources related to pensions do not relate to current financial resources and is not reported
(723,004)
in the governmental funds.
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.
(18,602,626)
NET POSITION OF GOVERNMENTAL ACTIVITIES
$ 87,354,457
See accompanying notes to financial statements.
Page 13
CITY OF ROSEMOUNT
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS
For the Year Ended December 31, 2015
See accompanying notes to financial statements.
Page 14
Port
Nonmajor
Total
Authority
Governmental
Governmental
General
Debt Service
Capital Projects
TIF
Funds
Funds
REVENUES
Taxes
$ 9,185,173
$ 373,247
$ 1,324,000 $
720,963
$ 58,000
$ 11,661,383
Intergovernmental
459,069
-
136,771
-
287,090
882,930
Public charges for services
1,282,351
2,060,628
-
9,240
3,352,219
Licenses and permits
694,765
-
-
-
694,765
Fines and forfeitures
114,580
-
-
-
114,580
Special assessments
-
1,632,761
735,642
-
-
2,368,403
Interest earnings
123,551
8,290
43,599
1,381
-
176,821
Change in fair value of investments
16,629
-
680
(19,097)
-
(1,788)
Donations/contributions
-
1,644
-
-
1,644
Miscellaneous
121,234
-
941,599
-
724
1,063,557
Total Revenues
11,997,352
2,014,298
5,244,563
703,247
355,054
20,314,514
EXPENDITURES
Current:
General government
2,589,416
-
8,829
162,167
81,363
2,841,775
Public safety
4,014,411
-
-
-
-
4,014,411
Public works
2,940,423
-
17,529
-
2,957,952
Parks and recreation
1,298,271
-
-
-
1,298,271
Capital Outlay
146,924
-
6,397,644
-
287,090
6,831,658
Debt Service:
Principal retirement
-
3,320,000
-
150,000
-
3,470,000
Interest and fiscal charges
-
239,523
4,255
329,829
-
573,607
Total Expenditures
10,989,445
3,559,523
6,428,257
641,996
368,453
21,987,674
Excess (deficiency) of revenues
over expenditures
1,007,907
(1,545,225)
(1,183,694)
61,251
(13,399)
(1,673,160)
OTHER FINANCING SOURCES (USES)
Issuance of long-term debt
-
1,345,000
-
3,335,000
-
4,680,000
Premium on long-term debt
79,201
101,436
-
180,637
Sale of capital assets
-
-
54,578
15,000
-
69,578
Transfers in
16,123
401,728
591,132
-
-
1,008,983
Transfers out
(630,000)
-
(268,372)
-
(86,437)
(984,809)
Total Other Financing Sources (Uses)
(613,877)
1,825,929
377,338
3,451,436
(86,437)
4,954,389
Net Change in Fund Balances
394,030
280,704
(806,356)
3,512,687
(99,836)
3,281,229
FUND BALANCES - Beginning
9,163,647
4,976,137
9,329,111
1,021,730
291,383
24,782,008
FUND BALANCES - ENDING
$ 9,557,677
$ 5,256,841
$ 8,522,755 $
4,534,417
$ 191,547
$ 28,063,237
See accompanying notes to financial statements.
Page 14
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, 2015
Net change in fund balances - total governmental funds $ 3,281,229
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
6,831,658
Some items reported as capital outlay but not capitalized
(121,013)
Depreciation is reported in the government -wide statements
(2,011,049)
Utility infrastructure constructed by capital projects funds not reported
as governmental activities
(811,167)
Capital outlay constructed by utility funds capitalized
within governmental activities in the government -wide statements
755,459
In the statement of activities, the gain of $7,328 on the disposal of
capital assets is reported. In the fund financial statements, proceeds from the sale
of capital assets ($69,578) are reported because the proceeds increase
financial resources
(62,250)
Internal service funds are reported in the statement of activities. (18,117)
Receivables not currently available are reported as unavailable revenue in the fund financial
statements but are recognized as revenue when earned in the government -wide
financial statements. (1,815,113)
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. (4,680,000)
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. 3,470,000
Governmental funds report the effect of premiums and discounts, and similar
items when debt is first issued, whereas these amounts were amortized in the
statement of activities. (180,637)
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 74,291
Accrued interest on debt 4,233
Net pension liability (169,368)
Net pension asset 235,336
Deferred outflows of resources related to pensions 692,535
Deferred inflows of resources related to pensions (723,004)
CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES $ 4,753,023
See accompanying notes to financial statements. Page 15
ASSETS
Current assets:
Cash and investments
Accounts receivable
Special assessments receivable
Due from other governments
Prepaid and other assets
Total current assets
Non-current assets:
Advance to other funds
Property and equipment:
Land
Construction in progress
Buildings
Mains and lines
Other improvements
Machinery and equipment
Less accumulated depreciation
Net property and equipment
Total non-current assets
CITY OF ROSEMOUNT
STATEMENT OF NET POSITION - PROPRIETARY FUNDS
As of December 31, 2015
Business-Tvoe Activities - Enterprise Funds
Governmental
Activities -
Storm Non -major Internal Service
Water Sewer Water Arena Totals Fund
$ 8,817,128
$ 5,650,932
$ 6,376,504
$ 419,057
$ 21,263,621 $ 628,688
392,429
361,189
223,122
-
976,740 -
51,440
64,989
38,151
-
154,580 -
-
-
272,415
-
272,415 -
9,841
108,648
6,115
6,191
130,795 133,142
9,270,838
6,185,758
6,916,307
425,248
22,798,151 761,830
Current liabilities:
-
92,591
-
-
92,591 -
1,008,628
547,158
1,112,881
-
2,668,667 -
540,591
-
494,045
-
1,034,636 -
6,794,504
401,414
1,489,523
2,399,900
11,085,341 -
22,229,225
18,991,910
27,648,880
-
68,870,015 -
16,528,701
36,927,459
12,535,129
-
65,991,289 -
1,896,388
735,710
716,802
136,600
3,485,500 -
(14,939,483)
(29,093,634)
(9,663,311)
(1,136,828)
(54,833,256) -
34,058,554
28,510,017
34,333,949
1,399,672
98,302,192 -
Accrued compensated absences
34,058,554
28,602,608
34,333,949
1,399,672
98,394,783 -
Total Assets
43,329,392
34,788,366
41,250,256
1,824,920
121,192,934
761,830
DEFERRED OUTFLOWS OF RESOURCES
Pension related amounts
39,520
39,495
18,288
18,623
115,926
-
LIABILITIES
Current liabilities:
Accounts payable
183,832
10,566
26,548
5,400
226,346
21,482
Accrued liabilities
30,997
9,274
26,284
9,387
75,942
-
Accrued interest
12,817
-
4,315
-
17,132
-
Current portion of long term obligations
285,450
40,450
196,220
14,005
536,125
-
Total current liabilities
513,096
60,290
253,367
28,792
855,545
21,482
Noncurrent liabilities:
Accrued compensated absences
43,821
43,821
17,572
15,172
120,386
-
General obligation debt
1,810,000
-
280,000
-
2,090,000
-
Unamortized premium
90,522
-
-
-
90,522
-
Advances from other funds
27,233
-
-
-
27,233
-
Net pension liability
283,826
283,574
129,829
133,354
830,583
-
Total noncurrent liabilities
2,255,402
327,395
427,401
148,526
3,158,724
-
Total Liabilities
2,768,498
387,685
680,768
177,318
4,014,269
21,482
DEFERRED INFLOWS OF RESOURCES
Pension related amounts 37,345 37,310 17,081 17,545 109,281 -
NET POSITION
Net investment in capital assets 33,024,919 28,510,017 33,873,949 1,399,672 96,808,557 -
Unrestricted 7,538,150 5,892,849 6,696,746 249,008 20,376,753 740,348
TOTAL NET POSITION $ 40,563,069 $ 34,402,866 $ 40,570,695 $ 1,648,680 $ 117,185,310 $ 740,348
See accompanying notes to financial statements.
Page 16
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
For the Year Ended December 31, 2015
Operating Income (Loss)
(458,344)
Business -Type
Activities - Enterprise Funds
(88,964) (1,531,509)
(267,890)
NONOPERATING REVENUES (EXPENSES)
425,887
(1,379,849)
502,834
(88,266)
(539,394) (18,117)
Governmental
520,760
271,028
425,657
- 1,217,445
-
Taxes
Activities -
-
-
- -
Storm
Non -major
98,683
Internal Service
86,313
Water
Sewer
Water
Arena
Totals
Funds
OPERATING REVENUES
-
Loss from disposal of capital assets
(494)
-
-
- (494)
Charges for services
$ 1,681,666
$ 1,587,636
$ 1,109,201
$ 408,874 $
4,787,377
$
Water meters
49,058
-
-
-
49,058
-
Miscellaneous
592
772
- (755,459)
-
1,364
-
Total Operating Revenues
1,731,316
1,588,408
1,109,201
408,874
4,837,799
-
OPERATING EXPENSES
Personnel services
471,173
469,574
206,093
213,285
1,360,125
-
Supplies
169,201
8,573
4,289
25,101
207,164
9,549
Professional services and charges
162,492
26,504
126,989
42,190
358,175
25,349
Other services and charges
599,008
106,491
87,173
159,291
951,963
232,992
Metro sewer charges
-
1,077,415
-
-
1,077,415
-
Depreciation
787,786
886,773
681,936
57,971
2,414,466
-
Total Operating Expenses
2,189,660
2,575,330
1,106,480
497,838
6,369,308
267,890
Operating Income (Loss)
(458,344)
(986,922)
2,721
(88,964) (1,531,509)
(267,890)
NONOPERATING REVENUES (EXPENSES)
425,887
(1,379,849)
502,834
(88,266)
(539,394) (18,117)
Connection fees
520,760
271,028
425,657
- 1,217,445
-
Taxes
-
-
-
- -
245,000
Interest earnings
98,683
86,642
86,313
698 272,336
4,773
Change in fair value of investments
(5,138)
(9,389)
(10,111)
- (24,638)
-
Loss from disposal of capital assets
(494)
-
-
- (494)
451,777 (18,117)
Surcharges and penalties
300,047
14,251
9,300
- 323,598
116,733,533 758,465
Interest expense and fiscal agent fees
(29,627)
-
(11,046)
- (40,673)
Contribution to governmental activities
-
(755,459)
- (755,459)
-
Total Nonoperating Revenues
884,231
(392,927)
500,113
698 992,115
249,773
Income (loss) before contributions
and transfers
425,887
(1,379,849)
502,834
(88,266)
(539,394) (18,117)
Capital contributions, including
special assessments
284,848
410,117
320,380
-
1,015,345
Transfers in
-
-
209,021
130,000
339,021
Transfers out
(355,000)
-
(4,695)
(3,500)
(363,195)
Change in Net Position
355,735
(969,732)
1,027,540
38,234
451,777 (18,117)
TOTAL NET POSITION - Beginning (as restated)
40,207,334
35,372,598
39,543,155
1,610,446
116,733,533 758,465
TOTAL NET POSITION - ENDING $ 40,563,069 $ 34,402,866 $ 40,570,695 $ 1,648,680 $ 117,185,310 $ 740,348
See accompanying notes to financial statements.
Page 17
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THIS PAGE INTENTIONALLY LEFT BLANK
CITY OF ROSEMOUNT
INDEX TO NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE Page
Summary of Significant Accounting Policies
21
A. Reporting Entity
21
B. Government -Wide and Fund Financial Statements
22
C. Measurement Focus, Basis of Accounting,
35
and Financial Statement Presentation
24
D. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows
D.
of Resources, and Net Position or Equity
25
1. Deposits and Investments
25
2. Receivables
26
3. Inventories and Prepaid Items
27
4. Capital Assets
28
5. Deferred Outflows of Resources
28
6. Compensated Absences
29
7. Long -Term Obligations/Conduit Debt
29
8. Deferred Inflows of Resources
29
9. Equity Classifications
30
10. Prior Period Information
31
11. Basis for Existing Rates
31
II. Reconciliation of Government -Wide and Fund Financial Statements 31
A. Explanation of Certain Differences Between the
Governmental Funds Balance Sheet and the Statement of Net Position 31
III. Stewardship, Compliance, and Accountability 32
A. Budgetary Information 32
IV. Detailed Notes on All Funds
33
A.
Deposits and Investments
33
B.
Receivables
35
C.
Capital Assets
36
D.
Interfund Advances and Transfers
38
E.
Long -Term Obligations
40
F.
Net Position/Fund Balances
43
G.
Restatement of Net Position
45
V. Other Information 46
A. Employees' Retirement System 46
B. Risk Management 56
C. Commitments and Contingencies 56
D. Effect of New Accounting Standards on Current -Period Financial Statements 57
Page 20
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Rosemount, Minnesota (the "City") 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 terms of two of the Council members. Elections take place every two years.
The accounting 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 is the Governmental
Accounting Standards Board (GASB).
A. REPORTING ENTITY
This report includes all of the funds of the City. The reporting entity for the City consists of the primary
government and its component unit. Component units are legally separate organizations for which the
primary government is financially accountable or 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. The primary government is financially
accountable if (1) it appoints a voting majority of the organization's governing body and it is able to
impose its will on that organization, (2) it appoints a voting majority of the organization's governing body
and there is a potential for the organization to provide specific financial benefits to, or impose specific
financial burdens on, the primary government, (3) the organization is fiscally dependent on and there is a
potential for the organization to provide specific financial benefits to, or impose specific financial burdens
on, the primary government. Certain legally separate, tax exempt organizations should also be reported
as a component unit if 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 benefit of the primary
government, its component units, or its constituents; (2) the primary government or its component units,
is entitled to, or has the ability to access, a majority of the economic resources received or held by the
separate organization; and (3) the economic resources received or held by an individual organization
that the primary government, or its component units, is entitled to, or has the ability to otherwise access,
are significant to the primary government.
Component units are reported using one of two methods, discrete presentation or blending. Generally,
component units should be discretely presented in a separate column in the financial statements. A
component unit should be reported as part of the primary government using the blending method if it
meets any one of the following criteria: (1) the primary government and the component unit have
substantially the same governing body and a financial benefit or burden relationship exists, (2) the
primary government and the component unit have substantially the same governing body and
management of the primary government has operational responsibility for the component unit, (3) the
component unit serves or benefits, exclusively or almost exclusively, the primary government rather than
its citizens, or (4) the total debt of the component unit will be paid entirely or almost entirely from
resources of the primary government. The financial statements include the Rosemount Port Authority as
a blended component unit. The Port Authority serves all the citizens of the government and is governed
by a board comprised of three of five of the primary government's elected council and four citizens
appointed at large. The bond issuance authorizations are approved by the primary government's council
and the legal liability for the general obligation portion of the Port Authority's debt remains with the
primary government. The Port Authority is reported in a special revenue fund and debt service fund. The
Rosemount Port Authority does not issue separate financial statements.
Page 21
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE I — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
B. GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS
In June 2012, the GASB issued statement No. 68 - Accounting and Financial Reporting for Pensions - an
amendment of GASB Statement No. 27. This statement establishes standards for measuring and
recognizing assets, liabilities, deferred outflows of resources, deferred inflows of resources, and
expense/expenditures related to pensions. In November 2013, the GASB issued statement No. 71 -
Pension Transition for Contributions Made Subsequent to the Measurement Date - an amendment of
GASB Statement No. 68. These standards were implemented January 1, 2015.
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, or 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 City 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, deferred outflows or resources, liabilities, deferred inflows of resources, net
position/fund equity, revenues, and expenditures/expenses.
Funds are organized as major funds or nonmajor funds within the governmental and proprietary
statements. An emphasis is placed on major funds within the governmental and proprietary categories. A
fund is considered major if 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
expenditures/expenses of that individual governmental or enterprise fund are at least 10% 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% testis
at least 5% 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.
Page 22
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE I — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
B. GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS (cont.)
Fund Financial Statements (cont.)
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.
The City reports the following major governmental funds:
General Fund — accounts for the City's primary operating activities. It is used to account for and
report all financial resources except those accounted for and reported 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.
Storm 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.
Page 23
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE I — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
B. GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS (cont.)
Fund Financial Statements (cont.)
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 claims, and
pays for a majority of the general liability insurance and workers compensation insurance
premiums for the City.
C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND FINANCIAL STATEMENT PRESENTATION
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 interfund 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.
Fund Financial 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 if they are collected within 60 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 paid with expendable available financial resources.
Page 24
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE f — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND FINANCIAL STATEMENT PRESENTATION (cont.)
Fund Financial Statements (cont.)
Property taxes, special assessments, intergovernmental revenues, charges for services and interest
associated with the current fiscal period are all considered to susceptible to accrual and so have been
recognized as revenues of the current fiscal period. Only the portion of special assessments receivable
due within the current fiscal period is considered to be susceptible to accrual as revenue of the current
period. All other revenue items are considered to be measurable and available only when cash is received
by the City.
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.
The proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating
revenues and expenses generally result from providing services and producing and delivering goods in
connection with a proprietary fund's principal ongoing operations. The principal operating revenues of
the water, sewer, storm water, and arena funds are charges to customers for sales and services.
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.
All 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,
deferred inflows of resources, liabilities, and deferred inflows of resources 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 OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES,
AND NET POSITION OR EQUITY
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:
a. 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.
b. General obligations of the State of Minnesota or any of its municipalities.
Page 25
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE I — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
D. ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES,
AND NET POSITION OR EQUITY (cont.)
1. Deposits and Investments (cont.)
c. Bankers acceptances of United States banks eligible for purchase by the Federal Reserve System.
d. 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.
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 it 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 City's investment policy limits the amount of investments with
maturities of more than five years to 35% of the City's 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. Fair 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. The
difference between the bank statement balance and carrying value is due to outstanding checks and/or
deposits in transit.
See Note [V.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 property 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.
Page 26
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE I — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
D. ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES,
AND NET POSITION OR EQUITY (cont.)
2. Receivables (cont.)
Taxes which remain unpaid 60 days after year end are classified as delinquent taxes receivable and are
fully offset by unavailable revenue (deferred inflow of resources) 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. Property
owners are allowed to prepay total future installments without interest or prepayment penalties.
Special assessments receivable includes the following components:
> Current - amount collected by Dakota County and not remitted to the City.
> Delinquent - amounts billed to property owners but not paid.
> Unavailable - 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 loans are reported as "due to and from other funds." Long-term
interfund loans (noncurrent portion) are reported as "advances from and to other funds." Interfund
receivables and payables between funds within governmental activities are eliminated in the statement of
net position. 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 they 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 Prepaid Items
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 and expensed as the items are
used (consumption method).
Page 27
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE I — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
D. ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES,
AND NET POSITION OR EQUITY (cont.)
4. Capital Assets
Government — Wide 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 cost 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 netted 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 cost 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 assets' 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
Machinery and equipment
4-20 Years
Other improvements
60 Years
Utility system
65 Years
Infrastructure
35-50 Years
Fund Financial 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.
5. Deferred Outflows of Resources
A deferred outflow of resources represents a consumption of net position/fund balance that applies to a
future period and will not be recognized as an outflow of resources (expense/expenditure) until that future
time.
Page 28
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE I — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
D. ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES,
AND NET POSITION OR EQUITY (cont.)
6. 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 -wide and
proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if
they have matured, for example, as a result 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, 2015 are determined on
the basis of current salary rates and include salary related payments.
7. Long -Term Obligations/Conduit Debt
All long-term obligations to be repaid from governmental and business -type resources are reported as
liabilities in the government -wide statements. The long-term obligations consist primarily of notes and
bonds payable, accrued compensated absences, and net pension liability.
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 another financing source 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.
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 four issues
outstanding could not be determined; however, their original issue amounts totaled $13,094,720.
8. Deferred Inflows of Resources
A deferred inflow of resources represents an acquisition of net position that applies to a future period and
therefore will not be recognized as inflow of resources (revenue) until that future time.
Page 29
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE I — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
D. ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES,
AND NET POSITION OR EQUITY (cont.)
9. Equity Classifications
Government—Wide 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 (excluding unspent
debt proceeds) of any bonds, mortgages, notes, or other borrowings that are attributable to
the acquisition, construction, or improvement of those assets.
b. Restricted net position - Consists of net position 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.
c. Unrestricted net position - All other net positions that do not meet the definitions of "restricted"
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, then unrestricted resources as they are needed.
Fund Statements
Governmental fund balances are displayed 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.
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 Council. 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 Council
that originally created the commitment.
d. Assigned - Includes spendable fund balance amounts that are intended to be used for specific
purposes that do not meet the criteria to be classified as restricted or committed. The City Council
has authorized the Finance Director and/or Administrator to assign amounts for a specific
purpose. Assignments may take place after the end of the reporting period.
Page 30
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE I — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
D. ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES,
AND NET POSITION OR EQUITY (cont.)
9. Equity Classifications (cont.)
Fund Statements (cont.)
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 any governmental fund if expenditures exceed amounts restricted or
committed for those purposes.
Proprietary fund equity is classified 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 / contracts that prohibit doing this, such as in grant
agreements requiring dollar for dollar spending. Additionally, the City would first 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
$6,506,697, or 55 percent, and is included in unassigned general fund balance.
10. Prior Period Information
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, 2014, from which the summarized information was derived.
11. Basis for Existing Rates
Current utility rates were approved by the City Council on December 16, 2014.
NOTE II — RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS
A. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUNDS BALANCE SHEET AND
THE STATEMENT OF NET POSITION
The governmental fund balance sheet includes a reconciliation between fund balance — total
governmental funds and net position — governmental activities as reported in the government -wide
statement of net position. One element 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 $18,602,626 difference are as follows:
Page 31
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE 11 — RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS (cont.)
A. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUNDS BALANCE SHEET AND
THE STATEMENT OF NET POSITION (cont.)
Long-term liabilities 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. All liabilities - both current and
long-term - are reported in the statement of net position.
Bonds and notes payable
$ 18,950,000
Current refunded bonds included on fund statements
(1,625,000)
Compensated absences
899,281
Unamortized premium on bonds payable
180,637
Accrued interest
197,708
Combined Adjustment for Long -Term Liabilities
$ 18,602,626
NOTE III — STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
A. BUDGETARY INFORMATION
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 not employed for debt service funds because effective budgetary control is
alternatively achieved through general obligation bond indenture provisions.
The budgeted amounts presented include 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
$5,335,707.
Page 32
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE IV - DETAILED NOTES ON ALL FUNDS
A. DEPOSITS AND INVESTMENTS
The City maintains a cash and investment pool 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 following:
Petty cash and cash on hand
Demand deposits
U.S. instrumentalities
Total Cash and Investments
Reconciliation to the financial statements
Carrying Statement Associated
Value Balances Risks
2,400 $ 2,400
35,088,023 35,713,365
17, 370, 487 17, 370, 487
$ 52,460,910 $ 53,086,252
Per statement of net position
Cash and investments
Cash and investments with fiscal agent
Total Cash and Investments
N/A
Custodial credit risk
Custodial credit, credit,
concentration of credit,
interest rate risk
$ 49,110,616
3,350,294
$ 52,460,910
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) and $250,000 for demand deposit accounts (interest-bearing
and noninterest -bearing). 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 government-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.
Custodial Credit Risk
Deposits
Custodial credit risk is the risk that in the event of a financial institution failure, the City's deposits may not
be returned to the City.
The City maintains collateral agreements with its banks. At December 31, 2015, the banks had pledged
various government securities in the amount of $34,181,981 to secure the City's deposits. The City has no
custodial credit risk in regards to deposits at December 31, 2015.
Page 33
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE IV — DETAILED NOTES ON ALL FUNDS (cont.)
A. DEPOSITS AND INVESTMENTS (cont.)
Custodial Credit Risk (cont.)
Investments
For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, 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.
Credit Risk
Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations.
As of December 31, 2015, all of the City of Rosemount's investments were U.S. agency obligations which
received AA+ and/or AAA ratings from Standard & Poor's and/or Moody's Investors Service, respectively.
Concentration of Credit Risk
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, 2015, all of the City of Rosemount's investments were U.S. agency obligations, as
follows:
Issuer
Fair Value
Federal Home Loan Bank $ 5,162,358
Federal Home Loan Mortgage Corporation 4,976,100
Federal Farm Credit Bank 3,175,897
Federal National Mortgage Association 1,662,885
Treasury Notes 2,393,247
$ 17,370,487
Interest Rate Risk
Percentage of Total
30%
29%
18%
9%
14%
Interest rate risk is the risk that changes in interest rates will adversely affect the value of an investment.
As of December 31, 2015, 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 $ 17,370,487 $ 140,674 $ 4,196,937 $ 13,032,876 $ -
Page 34
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE IV — DETAILED NOTES ON ALL FUNDS (cont.)
A. DEPOSITS AND INVESTMENTS (cont.)
Interest Rate Risk (cont.)
At December 31, 2015, the City held $3,081,134 in U.S. Agency Obligations that are callable at increasing
stepped interest rates.
See Note I.D.1 for further information on deposit and investment policies.
B. RECEIVABLES
Receivable amounts not expected to be collected within one year are listed below:
Governmental Activities
Amounts not expected to be collected
General
Debt
Service
Capital
Projects Totals
within one year
$ 1,621 $
297,973
$ 300,664 $ 600,258
Water
Sewer
Storm Water
Business -Type Activities
Utility
Utility
Utility Totals
Amounts not expected to be collected
within one year
$ 22,634 $
28,595
$ 180,235 $ 231,464
Governmental funds report unavailable or unearned 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 current fiscal year, the various components of unavailable revenue and unearned revenue
reported in the governmental funds were as follows:
Delinquent property taxes receivable
Delinquent special assessments
Special assessments not yet due
Donations receivable for future projects
Total Unearned/Unavailable Revenue
for Governmental Funds
1 InnvniInhla
$ 11,519 $
6,526
1,360,615
53,315
Ilnaarnari Tntnlc
$ 11,519
6,526
501,584 1,862,199
- 53,315
$ 1,431,975 $ 501,584 $ 1,933,559
Page 35
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE IV — DETAILED NOTES ON ALL FUNDS (cont.)
C. CAPITAL ASSETS
Capital asset activity for the year ended December 31, 2015 was as follows:
Governmental Activities
Capital assets not being depreciated
Land
Land improvements
Construction in progress
Total Capital Assets
Not Being Depreciated
Capital assets being depreciated
Beginning
Balance
Ending
Additions Deletions Balance
$ 9,003,127 $ 15,000 $ - $ 9,018,127
1,835,087 352,803 - 2,187,890
1,923,887 2,936,415 3,489,993 1,370,309
12,762,101 3,304,218 3,489,993 12,576,326
Improvements
3,162,017
Buildings
14,415,644
Machinery and equipment
10,651,996
Infrastructure
209,037
Roads
53,687,061
Bridges
1,887,923
Parking lots
580,449
Total Capital Assets Being Depreciated 84,594,127
Less: Accumulated depreciation for
Improvements
Buildings
Machinery and equipment
Infrastructure
Roads
Bridges
Parking lots
Total Accumulated Depreciation
Net Capital Assets
Being Depreciated
Total Governmental Activities
Capital Assets, Net of
Accumulated Depreciation
442,671
- 3,604,688
2,348,837
- 16,764,481
1,114,041
443,082 11,322,955
-
- 209,037
2,785,552
- 56,472,613
146,668
- 2,034,591
-
- 580,449
6,837,769
443,082 90,988,814
(1,152,030)
(137,744)
- (1,289,774)
(4,675,621)
(291,569)
- (4,967,190)
(6,564,932)
(618,550)
383,775 (6,799,707)
(3,920)
(5,336)
- (9,256)
(9,749,380)
(895,190)
- (10,644,570)
(432,026)
(47,809)
- (479,835)
(224,917) (14,851)
- (239,768)
(22,802,826) (2,011,049)
383,775 (24,430,100)
61,791,301
4,826,720
59,307 66,558,714
$ 74,553,402 $ 8,130,938 $ 3,549,300 $ 79,135,040
Depreciation expense was charged to functions as follows:
Governmental Activities
General government
Public safety
Public works, which includes the depreciation of roads, bridges and parking lots
Leisure activities
Total Governmental Activities Depreciation Expense
$ 216,353
294,997
1,207,404
292,295
$ 2,011,049
Page 36
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE IV — DETAILED NOTES ON ALL FUNDS (cont.)
C. CAPITAL ASSETS (cont.)
Business -Type Activities
Capital assets not being depreciated
Land
Construction in progress
Total Capital Assets
Not Being Depreciated
Capital assets being depreciated
Buildings
Machinery and equipment
Mains and lines
Total Capital Assets
Being Depreciated
Less: Accumulated depreciation for
Buildings
Machinery and equipment
Mains and lines
Total Accumulated Depreciation
Net Capital Assets
Being Depreciated
Total Business -Type
Capital Assets, Net of
Accumulated Depreciation
Beginning
Ending
Balance
Additions
Deletions
Balance
$ 2,651,767 $
16,900 $
-
$ 2,668,667
3,350,466
1,845,803
4,161,633*
1,034,636
6,002,233
1,862,703
4,161,633
3,703,303
11,085,341
-
-
11,085,341
3,503,715
15,500
33,715
3,485,500
131,455,129
3,406,175
-
134,861,304
146,044,185
3,421,675
33,715
149,432,145
(3,170,106)
(236,588)
-
(3,406,694)
(1,913,108)
(149,484)
33,220
(2,029,372)
(47,368,796) (2,028,394)
-
(49,397,190)
(52,452,010) (2,414,466)
33,220
(54,833,256)
93,592,175
1,007,209
495
94,598,889
$ 99,594,408 $ 2,879,912 $ 4,162,128 $ 98,302,192
*- This amount exceeds related additions due to a capital contribution from the sewer utility to governmental activities
of $755,459.
Depreciation expense was charged to functions as follows:
Business -Type Activities
Water
Sewer
Storm water
Arena
$ 787,786
886,773
681,936
57,971
Total Business -type Activities Depreciation Expense $ 2,414,466
Page 37
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE IV — DETAILED NOTES ON ALL FUNDS (cont.)
D. INTERFUND ADVANCES AND TRANSFERS
Advances
The following is a schedule of interfund advances as of December 31, 2015:
Amount Not
Due Within
Receivable Fund Payable Fund Amount One Year
Sewer Building CIP $ 65,358 $ 44,605
Sewer Water 27,233 18,605
Subtotal — Fund financial statements 92,591 63,210
Less: Fund eliminations (27,233) (18,605)
Total — Government -Wide Statement of Net Position $ 65,358 $ 44,605
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.
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:
Principal Interest Totals
2016 $ 29,381 $ 4,619 $ 34,000
2017 30,839 3,161 34,000
2018 32,371 1,629 34,000
Total $ 92,591 $ 9,409 $ 102,000
Page 38
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE IV — DETAILED NOTES ON ALL FUNDS (cont.)
D. INTERFUND ADVANCES AND TRANSFERS (cont.)
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
Capital Projects
12,623
Reimbursement of capital
project costs
Debt Service Water
265,000
Water share of debt payment
Capital Projects
136,728
Share of capital project costs
Capital Projects Port Authority GF
86,437
Share of capital project costs
Storm Water
4,695
Share of capital project costs
General
500,000
Share of capital project costs
Enterprise
Storm Water Capital Projects
119,021
Share of capital project costs
and damages
Storm Water Water
90,000
Water share of debt payment
Arena General
130,000
Operating expenses
1,348,004
Less: Fund eliminations
(1,323,830)
Add: Contributed capital asset from enterprise
fund to governmental activities
755,459
Less: Contributed plant reclassified to a transfer
in the government -wide statements
(811,167)
Total Transfers — Government -Wide
Statement of Activities
$ (31,534)
The contributed plant figure above includes a slight difference from the amount disclosed in the non-
cash section of the statement of cash flows due to final cost allocation adjustments for the various
capital projects.
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 authorizations.
For the statement of activities, interfund transfers within the governmental activities or business -type
activities are netted and eliminated.
Page 39
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE IV — DETAILED NOTES ON ALL FUNDS (cont.)
E. LONG-TERM OBLIGATIONS
Long-term obligations activity for the year ended December 31, 2015 was as follows:
All general obligation notes and bonds payable are backed by the full faith and credit of the City. Notes and bonds in
the governmental funds 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.
Page 40
Amounts
Beginning
Ending
Due Within
Balance
Increases
Decreases
Balance
One Year
GOVERNMENTAL ACTIVITIES
Bonds and Notes Payable
General obligation debt
$ 16,115,000
$
4,680,000
$
1,845,000
$
18,950,000
$
3,790,000
Add: Premiums
-
180,637
-
180,637
-
Sub -totals
16,115,000
4,860,637
1,845,000
19,130,637
3,790,000
Other Liabilities
Vested compensated absences
973,572
393,208
467,499
899,281
431,655
Net pension liability
4,762,952
1,147,100
977,732
4,932,320
-
Total Other Liabilities
5,736,524
1,540,308
1,445,231
5,831,601
431,655
Total Governmental Activities
Long -Term Liabilities
$ 21,851,524
$
6,400,945
$
3,290,231
$
24,962,238
$
4,221,655
BUSINESS -TYPE ACTIVITIES
Bonds and Notes Payable
General obligation debt
$ 1,400,000
$
1,525,000
$
410,000
$
2,515,000
$
425,000
Add: Premiums
-
90,522
-
90,522
-
Sub -totals
1,400,000
1,615,522
410,000
2,605,522
425,000
Other Liabilities:
Vested compensated absences
215,299
119,555
103,343
231,511
111,125
Net pension liability
842,726
130,551
142,694
830,583
-
Total Other Liabilities
1,058,025
250,106
246,037
1,062,094
111,125
Total Business -type Activities
Long -Term Liabilities
$ 2,458,025
$
1,865,628
$
656,037
$
3,667,616
$
536,125
General Obligation Debt
All general obligation notes and bonds payable are backed by the full faith and credit of the City. Notes and bonds in
the governmental funds 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.
Page 40
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE IV - DETAILED NOTES ON ALL FUNDS (cont.)
Date of
Final
Interest
Original
E. LONG-TERM OBLIGATIONS (cont.)
General Obligation Debt
Issue
Maturity
Rates
Indebtedness
General Obligation Debt (cont.)
Interest
2016
Water Revenue Bonds, Series 2000A
2000
2016
Governmental Activities
Date of
Final
Interest
Original
Balance
General Obligation Debt
Issue
Maturity
Rates
Indebtedness
12-31-15
Fire Station CIP Bonds, Series 2005A
2005
2025
3.5% to 4.3%
$ 2,630,000 $
1,625,000
Fire Station Refunding Bonds, Series 2005D
2005
2016
3.2% to 3.8%
1,115,000
130,000
Improvement Bonds, Series 2006B
2006
2017
4.0%
4,405,000
915,000
Port Authority TIF, Series 2008A
2008
2024
5.0% to 5.5%
2,765,000
2,395,000
Port Authority TIF, Series 2008B
2008
2032
4.0% to 4.1%
3,275,000
3,275,000
Crossover Refunding Bonds, Series 2010B
2010
2022
1.2% to 3.7%
1,355,000
980,000
Improvement Bonds, Series 2011A
2011
2017
0.45% to 1.35%
2,080,000
845,000
Improvement Bonds, Series 2012A
2012
2018
0.4% to 1.0%
810,000
495,000
Improvement Bonds, Series 2013A
2013
2019
0.5% to 1.65%
1,500,000
1,210,000
Improvement Bonds, Series 2014A
2014
2025
0.35% to 2.4%
2,400,000
2,400,000
Fire Station Refunding Bonds, Series 2015B
2015
2025
1.5% to 3.0%
1,345,000
1,345,000
Port Authority TIF Crossover Refunding
Bonds, Series 2015A
2015
2032
3.0%
3,335,000
3,335,000
Total Governmental Activities - General Obligation Debt $ 18,950,000
Business -type Activities
Date of
Final
Interest
Original
Balance
General Obligation Debt
Issue
Maturity
Rates
Indebtedness
12-31-15
Interest
2016
Water Revenue Bonds, Series 2000A
2000
2016
4.4% to 5.4%
$ 1,160,000 $
110,000
Water Revenue Bonds, Series 2007A
2007
2018
4.0%
1,210,000
420,000
Utility Rev Refunding Bonds, Series 2010A
2010
2018
0.8% to 2.6%
1,545,000
460,000
Water Revenue Bonds, Series 2015A
2015
2026
1.5% to 3.0%
1,525,000
1,525,000
Total Business -type Activities - General
Obligation
Debt
795,000
$
2,515,000
Debt service requirements to maturity are as follows:
Page 41
Governmental Activities
Business -Type Activities
General Obligation
Debt
General Obligation
Debt
Year
Principal
Interest
Principal
Interest
2016
$ 3,790,000
$ 480,333
$ 425,000
$ 52,360
2017
5,515,000
373,694
445,000
50,560
2018
1,395,000
268,573
390,000
39,108
2019
1,260,000
239,638
145,000
31,993
2020
980,000
210,780
145,000
28,730
2021 -2025
3,170,000
661,000
795,000
82,389
2026 -2030
1,975,000
262,963
170,000
2,550
2031- 2032
865,000
26,175
-
-
Totals
$ 18,950,000
$ 2,523,156
$ 2,515,000
$ 287,690
Page 41
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE IV — DETAILED NOTES ON ALL FUNDS (cont.)
E. LONG-TERM OBLIGATIONS (cont.
Other Debt Information
Estimated payments of compensated absences and the net pension liability are not included in the debt
service requirement schedules. The compensated absences liability and net pension liability attributable to
governmental activities 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 significant 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 revenue bonds issued in 2000, 2007, 2010, and 2015. Proceeds from bonds
provided financing for utility improvements. The bonds are payable solely from water and storm water
revenues and are payable through 2026. Annual principal and interest payments on the bonds are
expected to require 10% of net revenues. The total principal and interest remaining to be paid on the
bonds is $2,802,690. Principal and interest paid for the current year and the gross customer revenues
were $447,575 and $4,096,281, respectively.
Crossover Refunding
On November 19, 2015, the city issued $3,335,000 in general obligation bonds with an average coupon
rate of 2.73% to advance refund $3,275,000 of outstanding bonds with an average coupon rate of 4.025%.
The net proceeds were used to purchase U.S. government securities. Those securities were deposited in
an account to provide for future debt service payments on the new bonds until the crossover date. The
bonds are not considered to be defeased and the liability for those bonds as well as the escrow account
are recorded in the financial statements. This type of advance refunding is commonly called a crossover
refunding.
The cash flow requirements on the refunded debt prior to the advance refunding was $5,014,739 from
2016 through 2032. The cash flow requirements on the refunding bonds are $4,571,096 from 2016
through 2032. The advance refunding resulted in an economic gain (difference between the present
values of the debt service payments on the old and new debt) of $373,276.
Current Refunding
On November 19, 2015, the city issued $1,345,000 in general obligation bonds with an average coupon
rate of 2.7% to refund $1,625,000 of outstanding bonds with an average coupon rate of 3.9%. The net
proceeds along with existing funds of the city were used to prepay the outstanding debt in January 2016.
Within the fund statements, this payoff is recorded as a payable and expenditure for 2015.
The cash flow requirements on the refunded debt prior to the current refunding was $1,986,803 from 2016
through 2025. The cash flow requirements on the refunding bonds are $1,709,783 from 2016 through
2025. The current refunding resulted in an economic gain (difference between the present values of the
debt service payments on the old and new debt) of $159,126.
Page 42
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE IV — DETAILED NOTES ON ALL FUNDS (cont.)
F. NET POSITION/FUND BALANCES
Net position reported on the government -wide statement of net position at December 31, 2015 includes
the following:
Governmental Activities
Net Investment in Capital Assets
Land $ 9,018,127
Construction in progress 1,370,309
Other capital assets, net of accumulated depreciation 68,746,604
Less: related long-term debt outstanding (excluding unspent
capital related debt proceeds) (14,450,637)
Total Net Investment in Capital Assets 64,684,403
Restricted for debt service 6,925,597
Restricted donations for future construction 1,589,000
Restricted for pension 1,123,544
Total Restricted 9,638,141
Unrestricted 13,031,913
Total Governmental Activities Net Position $ 87,354,457
Page 43
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE IV — DETAILED NOTES ON ALL FUNDS (cont.)
F. NET POSITION/FUND BALANCES (cont.)
Governmental Activities (cont.)
Governmental fund balances reported on the fund financial statements at December 31, 2015 include
the following:
Page 44
Port
Debt
Capital
Authority
Nonmajor
General Fund
Service
Projects
TIF
Funds
Totals
Fund Balances
Nonspendable:
Prepaid items
69,348
-
10,000
606
79,954
Restricted for:
Debt service
-
5,256,841
-
-
5,256,841
Capital projects
-
-
1,589,000
-
-
1,589,000
Port Authority TIF
-
-
-
4,534,417
-
4,534,417
Committed for:
Fire safety education
-
-
-
-
2,400
2,400
GIS
-
-
-
-
28,161
28,161
Port authority - general
-
-
-
-
160.380
160.380
Assigned for:
Compensated absences
899,281
-
-
-
-
899,281
Armory debt payments
259,666
-
-
-
-
259,666
Health insurance
225,000
-
-
-
-
225,000
Building maintenance
67,834
-
-
-
-
67,834
Park maintenance
322,543
-
-
-
-
322,543
Election equipment
61,733
-
-
-
-
61,733
Various projects/equipment
1,145,575
-
5,390,793
-
-
6,536,368
Building CIP
-
-
581,275
-
-
581,275
Street CIP
-
-
344,536
-
-
344,536
Equipment CIP
-
-
607,151
-
-
607,151
Unassigned:
6,506,697
-
-
-
-
6,506,697
Total Fund Balances
$ 9,557,677 $
5,256,841
$ 8,522,755
$ 4,534,417
$ 191,547
$ 28,063,237
Page 44
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE IV — DETAILED NOTES ON ALL FUNDS (cont.)
F. NET POSITION/FUND BALANCES (cont.)
Business -Type Activities
Net Investment in Capital Assets
Land $ 2,668,667
Construction in progress 1,034,636
Other capital assets, net of accumulated depreciation 94,598,889
Less: related long-term debt outstanding (excluding unspent
capital related debt proceeds) (1,493,635)
Total Net Investment in Capital Assets 96,808,557
Unrestricted 20,376,753
Total Business -Type Activities Net Position $ 117,185,310
G. RESTATEMENT OF NET POSITION
Net position has been restated as a result of the implementation of GASB Statement No. 68 - Accounting
and Financial Reporting for Pensions - an Amendment of GASB Statement No. 27 and implementation of
GASB Statement No. 71 - Pension Transition for Contributions Made Subsequent to the Measurement
Date. These statements require the net pension liability and related deferred outflows and deferred
inflows, if any, to be reported in the financial statements. The details of the restatement are as follows:
Governmental Business -type
Activities Activities Water Sewer Storm Water Arena
Net Position - December 31, 2014
(as reported) $ 86,050,450 $ 117,542,845 $ 40,483,893 $ 35,648,909 $ 39,669,659 $ 1,740,384
Add: Net pension asset 888,208 - - - - -
Add: Deferred outflows related to
pensions 425,728 33,414 11,418 11,408 5,223 5,365
Less: Net pension liability (4,762,952) (842,726) (287,977) (287,719) (131,727) (135,303)
Net Position - December 31, 2014
(as restated) $ 82,601,434 $ 116,733,533 $ 40,207,334 $ 35,372,598 $ 39,543,155 $ 1,610,446
Page 45
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE V - OTHER INFORMATION
A. EMPLOYEES' RETIREMENT SYSTEM
Public Employees Retirement Association (PERA)
Summary of Significant Accounting Policies
Pension. For purposes of measuring the net pension liability, deferred outflows/inflows of resources, and
pension expense, information about the fiduciary net position of the Public Employees Retirement
Association (PERA) and additions to/deductions from PERA's fiduciary net position have been determined
on the same basis as they are reported by PERA except that PERA's fiscal year end is June 30. For this
purpose, plan contributions are recognized as of employer payroll paid dates and benefit payments and
refunds are recognized when due and payable in accordance with the benefit terms. Investments are
reported at fair value.
General Information About the Pension Plan
Plan description. The City participates in the following cost-sharing multiple -employer defined benefit
pension plans administered by the Public Employees Retirement Association of Minnesota (PERA).
PERA's defined benefit pension plans are established and administered in accordance with Minnesota
Statutes, Chapters 353 and 356. PERA's defined benefit pension plans are tax qualified plans under
Section 401 (a) of the Internal Revenue Code.
1. General Employees Retirement Fund (GERF)
All full-time and certain part-time employees of the City are covered by the General Employees Retirement
Fund (GERF). GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan
members are covered by Social Security and Basic Plan members are not. The Basic Plan was closed to
new members in 1967. All new members must participate in the Coordinated Plan.
2. Public Employees Police and Fire Fund (PEPFF)
The PEPFF, originally established for police officers and firefighters not covered by a local relief
association, now covers all police officers and firefighters hired since 1980. Effective July 1, 1999, the
PEPFF also covers police officers and firefighters belonging to a local relief association that elected to
merge with and transfer assets and administration to PERA.
Benefits. PERA provides retirement, disability, and death benefits. Benefit provisions are established by
state statute and can only be modified by the state legislature.
Benefit increases are provided to benefit recipients each January. Increases are related to the funding
ratio of the plan. Members in plans that are at least 90 percent funded for two consecutive years are given
2.5% increases. Members in plans that have not exceeded 90% funded, or have fallen below 80%, are
given 1 % increases.
The benefit provisions stated in the following paragraphs of this section are current provisions and apply to
active plan participants. Vested, terminated employees who are entitled to benefits but are not receiving
them yet are bound by the provisions in effect at the time they last terminated their public service.
Page 46
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE V — OTHER INFORMATION (cont.)
A. EMPLOYEES' RETIREMENT SYSTEM (cont.)
Public Employees Retirement Association (PERA) (cont.)
1.GERF Benefits
Benefits are based on a member's highest average salary for any five successive years of allowable
service, age, and years of credit at termination of service. Two methods are used to compute benefits for
PERA's Coordinated and Basic Plan members. The retiring member receives the higher of a step -rate
benefit accrual formula (Method 1) or a level accrual formula (Method 2). Under Method 1, the annuity
accrual rate for a Basic Plan member is 2.2% of average salary for each of the first ten years of service
and 2.7% for each remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2% of
average salary for each of the first ten years and 1.7% for each remaining year. Under Method 2, the
annuity accrual rate is 2.7% of average salary for Basic Plan members and 1.7% for Coordinated Plan
members for each year of service. For members hired prior to July 1, 1989, a full annuity is available when
age plus years of service equal 90 and normal retirement age is 65. For members hired on or after July 1,
1989, normal retirement age is the age for unreduced Social Security benefits capped at 66. Disability
benefits are available for vested members and are based upon years of service and average high -five
salary.
2. PEPFF Benefits
Benefits for the PEPFF members first hired after June 30, 2010, but before July 1, 2014, vest on a
prorated basis from 50% after five years up to 100% after ten years of credited service. Benefits for
PEPFF members first hired after June 30, 2014, vest on a prorated basis from 50% after ten years up to
100% after twenty years of credited service. The annuity accrual rate is 3% of average salary for each
year of service. For PEPFF members who were first hired prior to July 1, 1989, a full annuity is available
when age plus years of service equal at least 90.
Contributions. Minnesota Statutes Chapter 353 sets the rates for employer and employee
contributions. Contribution rates can only be modified by the state legislature.
1. GERF Contributions
Basic Plan members and Coordinated Plan members were required to contribute 9.1% and 6.50%,
respectively, of their annual covered salary in calendar year 2015. The City was required to contribute
11.78% of pay for Basic Plan members and 7.50% for Coordinated Plan members in calendar year 2015.
The City's contributions to the GERF for the year ended December 31, 2015, were $292,241. The City's
contributions were equal to the required contributions as set by state statute.
2. PEPFF Contributions
Plan members were required to contribute 10.8% of their annual covered salary in calendar year 2015.
The City was required to contribute 16.20% of pay for PEPFF members in calendar year 2015. The City's
contributions to the PEPFF for the year ended December 31, 2015, were $321,538. The City's
contributions were equal to the required contributions as set by state statute.
Page 47
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE V — OTHER INFORMATION (cont.)
A. EMPLOYEES' RETIREMENT SYSTEM (cont.)
Public Employees Retirement Association (PERA) (cont.)
Pension Costs
1. GERF Pension Costs
At December 31, 2015, the City reported a liability of $3,342,725 for its proportionate share of the GERF's
net pension liability. The net pension liability was measured as of June 30, 2015, and the total pension
liability used to calculate the net pension liability was determined by an actuarial valuation as of that date.
The City's proportion of the net pension liability was based on the City's contributions received by PERA
during the measurement period for employer payroll paid dates from July 1, 2014, through June 30, 2015,
relative to the total employer contributions received from all of PERA's participating employers. At June
30, 2015, the City's proportion was .0645%.
For the year ended December 31, 2015, the City recognized pension expense of $340,185 for its
proportionate share of the GERF's pension expense.
At December 31, 2015, the City reported its proportionate share of the GERF's deferred outflows of
resources and deferred inflows of resources related to pensions from the following sources:
Differences between expected and actual experience
Net differences between projected and actual earnings
on pension plan investments
Changes in proportion
Employer contributions subsequent to the measurement date
Totals
Deferred Outflows Deferred Inflows
of Resources of Resources
$ - $ 168,530
316,440
271,281
147.749
$ 464,189 $ 439,811
$147,749 reported as deferred outflows related to pension resulting from City contributions subsequent to
the measurement date will be recognized as a reduction of the net pension liability in the year ended
December 31, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of
resources related to pension will be recognized in pension expense as follows:
Page 48
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE V — OTHER INFORMATION (cont.)
A. EMPLOYEES' RETIREMENT SYSTEM (cont.)
Public Employees Retirement Association (PERA) (cont.)
Year Ended Deferred Outflows Deferred Inflows
December 31: of Resources of Resources
2016 $ 79,110 $ 146,604
2017 79,110 146,604
2018 79,110 146,603
2019 79,110 -
2. PEPFF Pension Costs
At December 31, 2015, the City reported a liability of $2,420,178 for its proportionate share of the
PEPFF's net pension liability. The net pension liability was measured as of June 30, 2015, and the total
pension liability used to calculate the net pension liability was determined by an actuarial valuation as of
that date. The City's proportion of the net pension liability was based on the City's contributions received
by PERA during the measurement period for employer payroll paid dates from July 1, 2014, through June
30, 2015, relative to the total employer contributions received from all of PERA's participating employers.
At June 30, 2015, the City's proportion was .213%.
For the year ended December 31, 2015, the City recognized pension expense of $399,125 for its
proportionate share of the PEPFF's pension expense. The City also recognized $19,170 for the year
ended December 31, 2015, as pension expense (and grant revenue) for its proportionate share of the
State of Minnesota's on -behalf contributions to the PEPFF. Legislation passed in 2013 required the State
of Minnesota to begin contributing $9 million to the PEPFF each year, starting in fiscal year 2014.
At December 31, 2015, the City reported its proportionate share of the PEPFF's deferred outflows of
resources and deferred inflows of resources related to pensions from the following sources:
Differences between expected and actual experience
Net differences between projected and actual earnings
on pension plan investments
Changes in proportion
Employer contributions subsequent to the measurement date
Totals
Deferred Outflows Deferred Inflows
of Resources of Resources
$ - $ 392,474
421,676
72,003
167,321
$ 661,000 $ 392,474
Page 49
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE V — OTHER INFORMATION (cont.)
A. EMPLOYEES' RETIREMENT SYSTEM (cont.)
Public Employees Retirement Association (PERA) (cont.)
$167,321 reported as deferred outflows of resources related to pensions resulting from City contributions
subsequent to the measurement date will be recognized as a reduction of the net pension liability in the
year ended December 31, 2016. Other amounts reported as deferred outflows and inflows of resources
related to pensions will be recognized in pension expense as follows:
Year Ended
December 31:
Deferred Outflows
of Resources
2016 $
2017
2018
2019
2020
Actuarial Assumptions
Deferred Inflows
of Resources
119,820 $
78,495
119,820
78,495
119,820
78,495
119,820
78,495
14,399
78,494
The total pension liability in the June 30, 2015, actuarial valuation was determined using the following
actuarial assumptions:
Inflation 2.75% per year
Active Member Payroll Growth 3.50% per year
Investment Rate of Return 7.90%
Salary increases were based on a service -related table. Mortality rates for active members, retirees,
survivors and disabilitants were based on RP -2000 tables for males or females, as appropriate, with slight
adjustments. Cost of living benefit increases for retirees are assumed to be 1 % effective every January
1 st through 2034 and 2.5% thereafter.
Actuarial assumptions used in the June 30, 2015, valuation were based on the results of actuarial
experience studies. The experience study in the GERF was for the period July 1, 2004, through June 30,
2008, with an update of economic assumptions in 2014. The experience study for PEPFF was for the
period July 1, 2004, through June 30, 2009.
There were no changes in actuarial assumptions in 2015.
Page 50
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE V — OTHER INFORMATION (cont.)
A. EMPLOYEES' RETIREMENT SYSTEM (cont.)
Public Employees Retirement Association (PERA) (cont.)
The long-term expected rate of return on pension plan investments is 7.9%. The State Board of
Investment, which manages the investments of PERA, prepares an analysis of the reasonableness of the
long-term expected rate of return on a regular basis using a building-block method in which best -estimate
ranges of expected future rates of return are developed for each major asset class. These ranges are
combined to produce an expected long-term rate of return by weighting the expected future rates of return
by the target asset allocation percentages. The target allocation and best estimates of arithmetic real rates
of return for each major asset class are summarized in the following table:
Discount rate. The discount rate used to measure the total pension liability was 7.9%. The projection of
cash flows used to determine the discount rate assumed that employee and employer contributions will be
made at the rate specified in statute. Based on that assumption, each of the pension plan's fiduciary net
position was projected to be available to make all projected future benefit payments of current active and
inactive employees. Therefore, the long-term expected rate of return on pension plan investments was
applied to all periods of projected benefit payments to determine the total pension liability.
Pension Liability Sensitivity. The following presents the City's proportionate share of the net pension
liability for all plans it participates in, calculated using the discount rate disclosed in the preceding
paragraph, as well as what the City's proportionate share of the net pension liability would be if it were
calculated using a discount rate 1 percentage point lower or 1 percentage point higher than the current
discount rate:
Long -Term Real
Asset Class
Rate of Return
Target Allocation
Domestic Stocks
5.50%
45%
International Stocks
6.00
15
Bonds
1.45
18
Alternative Assets
6.40
20
Cash
0.50
2
Discount rate. The discount rate used to measure the total pension liability was 7.9%. The projection of
cash flows used to determine the discount rate assumed that employee and employer contributions will be
made at the rate specified in statute. Based on that assumption, each of the pension plan's fiduciary net
position was projected to be available to make all projected future benefit payments of current active and
inactive employees. Therefore, the long-term expected rate of return on pension plan investments was
applied to all periods of projected benefit payments to determine the total pension liability.
Pension Liability Sensitivity. The following presents the City's proportionate share of the net pension
liability for all plans it participates in, calculated using the discount rate disclosed in the preceding
paragraph, as well as what the City's proportionate share of the net pension liability would be if it were
calculated using a discount rate 1 percentage point lower or 1 percentage point higher than the current
discount rate:
Pension Plan Fiduciary Net Position. Detailed information about each pension plan's fiduciary net
position is available in a separately -issued PERA financial report that includes financial statements and
required supplementary information. That report may be obtained on the Internet at www.mnpera.org; by
writing to PERA at 60 Empire Drive #200, St. Paul, Minnesota, 55103-2088; or by calling (651) 296-7460
or 1-800-652-9026.
Page 51
1 % Decrease to
1 % Increase to
Discount Rate
Current Discount
Discount Rate
(6.90%)
Rate (7.90%)
(8.90%)
City's proportionate share of the
GERF net pension liability
$5,255,951
$3,342,725
$1,762,693
City's proportionate share of the
PEPFF net pension liability
$4,716,953
$2,420,178
$522,642
Pension Plan Fiduciary Net Position. Detailed information about each pension plan's fiduciary net
position is available in a separately -issued PERA financial report that includes financial statements and
required supplementary information. That report may be obtained on the Internet at www.mnpera.org; by
writing to PERA at 60 Empire Drive #200, St. Paul, Minnesota, 55103-2088; or by calling (651) 296-7460
or 1-800-652-9026.
Page 51
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE V — OTHER INFORMATION (cont.
A. EMPLOYEES' RETIREMENT SYSTEM (cont.
Rosemount Fire Department Relief Association -Defined Benefit Pension Plan
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.
Benefits. Individuals with at least 20 years of service who have reached 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.
Employees covered by benefit terms. At December 31, 2014, the following employees were covered by
the benefit terms:
Inactive employees or beneficiaries currently receiving benefits -
Inactive employees entitled to but not yet receiving benefits 7
Active members 40
47
Contributions. 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.
Pension Costs. At December 31, 2015, the City reported a net pension asset of $1,123,544 for the
plan. The net pension asset was measured as of December 31, 2014. The total pension liability used to
calculate the net pension asset in accordance with GASB 68 was determined by applying an actuarial
formula to specific census data certified by the Department as of December 31, 2014.
Page 52
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE V — OTHER INFORMATION (cont.)
A. EMPLOYEES' RETIREMENT SYSTEM (cont.)
Rosemount Fire Department Relief Association -Defined Benerit Pension Plan (cont.)
The following table presents the changes in net pension asset during the year.
Total net changes
239,310 474,646 (235,336)
Ending balance, December 31, 2015 $ 2,225,232 $ 3,348,776 $ (1,123,544)
For the year ended December 31, 2015, the city recognized pension expense of $65,462.
At December 31, 2015, the City reported deferred inflows of resources and deferred outflows of
resources, its contributions subsequent to the measurement date, related to pension from the following
sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Employer contributions subsequent to the
measurement date $ 109,000 $ -
Deferred outflows of resources totaling $109,000 related to pensions resulting from the City's
contributions to the plan subsequent to the measurement date will be recognized as a reduction of the net
pension liability (asset) in the year ended December 31, 2016.
Page 53
Total
Plan
Net Pension
Pension
Fiduciary Net
Liability
Liability
Position
(Asset)
(a)
(b)
(a -b)
Beginning balance, January 1, 2015
$ 1,985,922
$ 2,874,130
$ (888,208)
Changes for the year
Service cost
113,354
-
113,354
Interest on pension liability
125,956
-
125,956
Contributions (State and local)
-
296,595
(296,595)
Net investment income
-
186,351
(186,351)
Administrative costs
-
(8,300)
8,300
Total net changes
239,310 474,646 (235,336)
Ending balance, December 31, 2015 $ 2,225,232 $ 3,348,776 $ (1,123,544)
For the year ended December 31, 2015, the city recognized pension expense of $65,462.
At December 31, 2015, the City reported deferred inflows of resources and deferred outflows of
resources, its contributions subsequent to the measurement date, related to pension from the following
sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Employer contributions subsequent to the
measurement date $ 109,000 $ -
Deferred outflows of resources totaling $109,000 related to pensions resulting from the City's
contributions to the plan subsequent to the measurement date will be recognized as a reduction of the net
pension liability (asset) in the year ended December 31, 2016.
Page 53
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE V — OTHER INFORMATION (cont.)
A. EMPLOYEES' RETIREMENT SYSTEM (cont.)
Rosemount Fire Department Relief Association -Defined Benefit Pension Plan (cont.)
Actuarial assumptions. The total pension liability at December 31, 2014 was determined using the entry
age normal actuarial cost method and the following actuarial assumptions:
50 percent of active members will retire when reaching retirement eligibility (later of age 50 and 20 years
of service); then 50 percent retire each subsequent year until 100 percent retirement at the earlier of age
65 or 30 years of service.
Actuarial Valuation Date:
Measurement Date of Net Pension Asset:
Actuarial Cost Method:
Index rate for 20 -year, tax exempt municipal bonds
Long -Term Expected Rate of Return:
Discount Rate:
Inflation:
Mortality:
There were no changes in actuarial assumptions in 2014.
December 31, 2014
December 31, 2014
Entry Age
3.56%
6.0%
6.0%
2.75%
RP -2000 tables (July 1, 2015 Minnesota
PERA Police & Fire Plan actuarial valuation)
The long-term expected rate of return on pension plan investments was determined using a building-block
method in which best estimates for expected future real rates of return (expected returns, net of pension
plan investment expense and inflation) were developed for each major asset class. The asset class
estimates were combined to produce the portfolio long-term expected rate of return by weighting the
expected future real rates of return by the current asset allocation percentage and by adding expected
inflation (2.75%).
The best estimates of geometric real and nominal rates of return for each major asset class are
summarized in the following table:
Page 54
Long -Term
Long-term
Allocation at
Expected Real
Expected Nominal
Asset Class
Measurement Date
Rate of Return
Rate of Return
Domestic equity
57.82%
5.00%
7.75%
International equity
1.52
5.00
7.75
Fixed income
16.53
1.75
4.5
Real estate and alternatives
0.85
4.00
6.75
Cash and cash equivalents
23.28
0.25
3.00
Total
100.00%
3.25%
6.00%
Page 54
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE V — OTHER INFORMATION (cont.)
A. EMPLOYEES' RETIREMENT SYSTEM (cont.)
Rosemount Fire Department Relief Association -Defined Benefit Pension Plan (cont.)
Discount rate. The discount rate used to measure the total pension liability was 6 percent. The discount
rate was developed using the alternative method. Considering the plan's current overfunded status,
combined with statutory funding requirements, it is assumed the projected plan assets will be adequate to
pay future retiree benefits. Therefore, the long-term expected rate of return on pension plan investments
was applied to all periods of projected benefit payments to determine the total pension liability.
Net pension asset sensitivity. The following presents the City's net pension asset for the plan,
calculated using the discount rate disclosed in the preceding paragraph, as well as what the City's net
pension asset would be if it were calculated using a discount rate 1 percent lower or 1 percent higher than
the current discount rate:
1 Percent 1 Percent
Decrease Current Increase
(5.00%) (6.00%) (7.00%)
Defined benefit plan $ 1,047,658 $ 1,123,544 $ 1,197,090
Pension plan fiduciary net position. 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 145th Street West, Rosemount, Minnesota 55068-4997, or
by calling (651) 423-4411.
Page 55
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE V — OTHER INFORMATION (cont.)
B. RISK MANAGEMENT
The City is exposed to various risks of loss related to torts; theft of, damage to, or destruction of assets;
errors and omissions; 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 risks of loss. Settled claims have not exceeded
coverage in any of the past three years. There were no significant reductions in coverage compared to the
prior year.
The City has established an internal service fund (Insurance Fund) to account for and finance uninsured
risks of loss related to torts, theft of, damage to and destruction of assets, including deductibles. The
majority of the City's general liability and workers compensation insurance premiums are paid for by this
fund. At December 31, 2015, there are no claims liabilities 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 if 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.
C. COMMITMENTS AND CONTINGENCIES
Claims and judgments are recorded as liabilities if all the conditions of Governmental Accounting
Standards Board pronouncements 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.
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 and the City
attorney that the likelihood is remote that any such claims or proceedings will have a material adverse
effect on the City's financial position or results of operations.
Page 56
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2015
NOTE V — OTHER INFORMATION (cont.)
C. COMMITMENTS AND CONTINGENCIES (cont.)
The City has received federal and state grants for specific 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.
The City has active construction projects as of December 31, 2015. Work that has been completed on
these projects but not yet paid for (including contract retainages) is reflected as accounts payable and
expenditures. $672,529 remains on commitments on signed contracts that was not year complete as of
year-end.
In 2007, the City committed to a municipal revenue obligation as part of a development agreement with
146th Street Partners, Limited Partnership. The amount of the obligation is $1,500,000, 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 4.96%. The obligation does
not constitute a charge upon any funds of the city. In the event that future tax increments are not sufficient
to pay off the obligation, the obligation terminates 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. EFFECT OF NEW ACCOUNTING STANDARDS ON CURRENT -PERIOD FINANCIAL STATEMENTS
The Governmental Accounting Standards Board (GASB) has approved the following:
> Statement No. 72, Fair Value Measurement and Application
> Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are
Not Within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB
Statements 67 and 68
> Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension
Plans
> Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than
Pensions
> Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local
Government
> Statement No. 77, Tax Abatement Disclosures
> Statement No. 78, Pensions Provided Through Certain Multiple -Employer Defined Benefit Pension
Plans
> Statement No. 79, Certain External Investment Pools and Pool Participants
When they become effective, application of these standards may restate portions of these financial
statements.
Page 57
REQUIRED SUPPLEMENTARY INFORMATION
CITY OF ROSEMOUNT
REQUIRED SUPPLEMENTARY INFORMATION
GENERALFUND
SCHEDULE OF REVENUES COMPARED TO BUDGET (BUDGETARY BASIS) - BUDGET AND ACTUAL
For the Year Ended December 31, 2015
REVENUES
TAXES
General property tax
Fiscal disparities
Other
Total Taxes
INTERGOVERNMENTAL REVENUES
Federal grants
State aid - police
State aid - general government
State aid - highway
Other
Total Intergovernmental Revenues
PUBLIC CHARGES FOR SERVICES
General government
Public safety
Highways and streets
Parks and recreation
SAC
Total Charges for Services
LICENSES AND PERMITS
Business
Non -business
Total Licenses and Permits
FINES AND FORFEITURES
County
SPECIAL ASSESSMENTS
INVESTMENT INCOME AND MISCELLANEOUS
Interest earnings
Change in fair value of investments
Miscellaneous general revenues
Donations
Rents
Total Investment income and miscellaneous
Total Revenues
OTHER FINANCING SOURCES
Transfers in
Budgeted Amounts
Variance with
Original
Final
Actual
Final Budget
$ 7,655,301 $
7,655,301
$ 7,674,368
$ 19,067
1,172,199
1,172,199
1,172,199
-
355,000
355,000
338,606
(16,394)
9,182, 500
9,182, 500
9,185,173
2,673
-
-
96,190
96,190
160,000
160,000
177,808
17,808
35,000
35,000
46,220
11,220
32,800
32,800
41,235
8,435
87,400
89,900
97,616
7,716
315,200
317,700
459,069
141,369
828,400
828,400
929,647
101,247
37,400
37,400
36,589
(811)
32,500
32,500
93,652
61,152
242,200
242,200
217,056
(25,144)
2,500
2,500
5,407
2,907
1,143, 000
1,143, 000
1,282,351
139,351
51,000
51,000
60,015
9,015
484,800
484,800
634,750
149,950
535,800
535,800
694,765
158,965
125,000
125,000
114,580
(10,420)
1,000
1,000
-
(1,000)
90,500
90,500
123,551
33,051
-
-
16,629
16,629
4,000
116,371
63,034
(53,337)
-
40,048
39,800
(248)
23,000
23,000
18,400
(4,600)
117,500
269,919
261,414
(8,505)
11,420,000
11,574,919
11,997,352
422,433
3,500
3,500
16,123
12,623
Total Revenues and Other Financing Sources $ 11,423,500 $ 11,578,419 $ 12,013,475 $ 435,056
See auditors' report and accompanying notes to required supplementary information.
Page 58
CITY OF ROSEMOUNT
REQUIRED SUPPLEMENTARY INFORMATION
GENERALFUND
SCHEDULE OF EXPENDITURES AND OTHER USES (BUDGETARY BASIS) - BUDGET AND ACTUAL
For the Year Ended December 31, 2015
CURRENT EXPENDITURES
GENERAL GOVERNMENT
Mayor and council
Executive
Elections
Finance
Community development
General government
TOTAL GENERAL GOVERNMENT
PUBLIC SAFETY
Police department
Fire department
TOTAL PUBLIC SAFETY
PUBLIC WORKS
Government building maintenance
Fleet maintenance
Street maintenance
Park maintenance
TOTAL PUBLIC WORKS
PARKS AND RECREATION
CAPITAL OUTLAY
OTHER FINANCING USES
Transfers out
TOTAL EXPENDITURES AND
OTHER FINANCING USES
Beginning of year budget basis encumbrances
End of year budget basis encumbrances
GAAP basis expenditures and other financing uses
Budgeted
Amounts
3,595,426
Variance with
Original
Final
Actual
Final Budget
$ 180,600
$ 180,600 $
505,009
$ (324,409)
515,600
522,971
530,507
(7,536)
20,000
20,000
17,555
2,445
496,100
496,100
469,640
26,460
943,900
943,900
937,761
6,139
351,100
351,100
372,684
(21,584)
2,507,300 2,514,671 2,833,156 (318,485)
3,545,400
3,657,292
3,595,426
61,866
410,100
438,575
418,985
19,590
3,955,500
4,095,867
4,014,411
81,456
521,600
521,600
483,399
38,201
691,300
691,300
582,935
108,365
1,332,100
1,332,100
1,173,084
159,016
912,400
912,400
795,254
117,146
3,457,400
3,457,400
3,034,672
422,728
1,373,300
1,380,481
1,298,271
82,210
146,924 (146,924)
130,000 130,000 630,000 (500,000)
$ 11,423,500 $ 11,578,419 11,957,434 $(379,015)
1,689,607
(2,027,596)
$ 11,619,445
See auditors' report and accompanying notes to required supplementary information.
Page 59
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CITY OF ROSEMOUNT
SCHEDULE OF CHANGES IN THE ROSEMOUNT FIRE DEPARTMENT
RELIEF ASSOCIATION'S NET PENSION ASSET AND RELATED RATIOS
REQUIRED SUPPLEMENTARY INFORMATION (Last Ten Years*)
For the Year Ended December 31, 2015
City's year end 2015
Measurement date 2014
Total Pension Liability
Service cost $ 113,354
Interest 125,956
Net change in total pension liability 239,310
Total pension liability- beginning 1,985,922
Total pension liability - ending $ 2,225,232
Plan Fiduciary Net Position
Contributions (State and local)
$ 296,595
Net investment income
186,351
Administrative costs
(8,300)
Net change in plan fiduciary net position
474,646
Plan fiduciary net position - beginning
2,874,130
Plan fiduciary net position - ending
$ 3,348,776
Net pension liability/(asset) - ending
$ (1,123,544)
Plan fiduciary net position as a
percentage of the total pension liability
150.49%
* This schedule is provided prospectively beginning with the fiscal year ended December 31, 2015.
SCHEDULE OF EMPLOYER CONTRIBUTIONS -
ROSEMOUNT FIRE DEPARTMENT RELIEF ASSOCIATION
REQUIRED SUPPLEMENTARY INFORMATION (Last Ten Years*)
For the Year Ended December 31, 2015
Contributions in
Relation to the
City Fiscal Statutorily Statutorily Contribution
Year End Required Required Deficiency
Date Contributions (a) Contributions (b) (Excess) (a -b)
12/31/15 $ 109,000 $ 109,000 $
* This schedule is provided prospectively beginning with the fiscal year ended December 31, 2015.
See auditors' report and accompanying notes to required supplementary information. Page 61
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CITY OF ROSEMOUNT
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
As of and for the Year Ended December 31, 2015
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
Mayor and council $ 180,600 $ 505,009 $ 324,409
Executive 522,971 530,507 7,536
General government 351,100 372,684 21,584
Capital outlay - 146,924 146,924
See auditors' report
Page 63
THIS PAGE INTENTIONALLY LEFT BLANK
SUPPLEMENTARY INFORMATION
CITY OF ROSEMOUNT
COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS
As of December 31, 2015
Special Revenue Funds
Page 64
Total
Fire
Nonmajor
Safety
Port
Authority
Governmental
Education
GIS
General
Funds
ASSETS
Cash and investments
$
2,400
$
28,161
$
161,863
$
192,424
Prepaid items
-
-
606
606
Total assets
$
2,400
$
28,161
$
162,469
$
193,030
LIABILITIES
Accounts payable
$
-
$
-
$
1,271
$
1,271
Accrued liabilities
-
-
212
212
Total liabilities
-
-
1,483
1,483
FUND BALANCES
Nonspendable
-
-
606
606
Committed
2,400
28,161
160,380
190,941
Total fund balances
2,400
28,161
160,986
191,547
Total liabilities and fund balances
$
2,400
$
28,161
$
162,469
$
193,030
Page 64
CITY OF ROSEMOUNT
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2015
REVENUES
Taxes
Intergovernmental
Public charges for services
Investment income and miscellaneous
Total Revenues
EXPENDITURES
Current:
General government
Capital Outlay
Total Expenditures
Excess (deficiency) of revenues over expenditures
OTHER FINANCING SOURCES (USES)
Transfers out:
Capital projects fund
Net change in fund balance
FUND BALANCES - Beginning of Year
FUND BALANCES - END OF YEAR
Special Revenue Funds
Total
Fire Nonmajor
Safety Port Authority Governmental
$ - $ - $ 58,000 $ 58,000
- 287,090 287,090
- 9,240 - 9,240
564 28 132 724
564 9,268 345,222 355,054
- - 81,363
81,363
- - 287,090
287,090
- - 368,453
368,453
564 9,268 (23,231) (13,399)
(86,437) (86,437)
564 9,268 (109,668) (99,836)
1,836 18,893 270,654 291,383
$ 2,400 $ 28,161 $ 160,986 $ 191,547
Page 65
CITY OF ROSEMOUNT
BUILDING 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, 2015
EXPENDITURES
Current:
General government
Capital Outlay
Debt Service:
Interest on lease
Total Expenditures
Net Change in Fund Balance
FUND BALANCE - Beginning
FUND BALANCE - ENDING
2,500
Budgeted Amounts
2,844
Variance with
REVENUES
Original
Amounts
Actual
Final Budget
Taxes
$ 24,000
$ 24,000 $
24,000
$ -
Charges for services
800,000
800,000
1,424,116
624,116
Contributions and donations
-
400,000
-
(400,000)
Investment income
10,500
10,500
16,647
6,147
2,205,275
Total Revenues
834,500
1,234,500
1,464,763
230,263
EXPENDITURES
Current:
General government
Capital Outlay
Debt Service:
Interest on lease
Total Expenditures
Net Change in Fund Balance
FUND BALANCE - Beginning
FUND BALANCE - ENDING
2,500
2,500
2,844
(344)
3,134,800
3,534,800
2,808,950
725,850
4,200
4,200
4,255
(55)
3,141,500
3,541,500
2,816,049
725,451
(2,307,000)
(2,307,000)
(1,351,286)
955,714
2,205,275
2,205,275
2,205,275
$ (101,725)
$ (101,725) $
853,989
$ 955,714
Page 66
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 Year Ended December 31, 2015
REVENUES
Taxes
Charges for services
Special assessments
Investment income
Miscellaneous
Original and
Final Budgeted
Amounts
Variance with
Actual Final Budget
760,000 $ 760,000 $ -
125,000 125,000 -
- 668,236 668,236
2,500 (4,585) (7,085)
- 7,998 7,998
Total Revenues
887,500
1,556,649
669,149
EXPENDITURES
Current:
General government
2,500
3,484
(984)
Public works
-
17,529
(17,529)
Capital Outlay
949,300
348,649
600,651
Total Expenditures
951,800
369,662
582,138
Excess (deficiency) of revenues over expenditures (64,300) 1,186,987 1,251,287
OTHER FINANCING SOURCES (USES)
Transfers in
Net Change in Fund Balance
FUND BALANCE - Beginning
FUND BALANCE - ENDING
47,577 47,577
(64,300) 1,234,564 1,298,864
2,392,325 2,392,325 -
$ 2,328,025 $ 3,626,889 $ 1,298,864
Page 67
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, 2015
REVENUES
Taxes
Investment income
Miscellaneous
Total Revenues
EXPENDITURES
Current:
General government
Capital Outlay
Total Expenditures
Original and
Final Budgeted Variance with
Amounts Actual Final Budget
$ 540,000 $ 540,000 $ -
7,500 25,008 17,508
- 1,644 1,644
547,500 566,652 19,152
2,500 2,500 -
856,100 683,944 172,156
858,600 686,444 172,156
Excess (deficiency) of revenues over expenditures (311,100) (119,792) 191,308
OTHER FINANCING SOURCES
Sale of capital assets
Transfers in
Total Other Financing Sources
Net Change in Fund Balance
FUND BALANCE - Beginning
FUND BALANCE - ENDING
9,000
54,578
45,578
-
500,000
500,000
9,000
554,578
545,578
(302,100)
434,786
736,886
1,456,097
1,456,097
-
$ 1,153,997 $ 1,890,883 $ 736,886
Page 68
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 69
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 74
These schedules contain information to help the reader assess the government's
most significant local revenue source, the property tax.
Debt Capacity 78
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 83
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 85
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.
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Schedule 7
City of Rosemount
Principal Property Tax Payers
Current Year and Nine Years Ago
Source: Dakota County Treasurer -Auditor
(1) These figures do not include the dollars collected but the tax capacity for each entity.
2006
Percentage
2015
of Total
Local Tax
Rank
Capacity
Percentage
5.86%
2
Local
3
of Total
Local
Tax
0.38%
Local Tax
Tax
Taxpayer
Capacity (1)
Rank
Capacity
Capacity (1)
Flint Hills Resources Pine Bend LLC (Merged w/below)
$ 2,947,426
1
12.03%
$ 1,266,910
Great Northern Oil Company (2006 - Koch Refining)
667,483
Northern States Power Co.
345,068
2
1.41%
292,021
Clarel Corporation (Cub Foods)
185,686
3
0.76%
194,366
146th Street Partners LP (Waterford Commons)
168,254
4
0.69%
-
CF Industries Sales LLC (Cenex)
128,806
5
0.53%
81,510
Northern Natural Gas Co.
127,292
6
0.52%
-
Minnesota Pipeline Co.
111,575
7
0.46%
-
Hawkins Inc.
102,642
8
0.42%
-
Minnesota Energy Resources Corp.
89,200
9
0.36%
-
Rosemount Crossing LLC (Aldi's)
85,250
10
0.35%
-
Francis & Patricia Dolejs (Celtic Crossing)
84,948
11
0.35%
-
Proto Labs Inc. (2006 - Webb Properties LLC)
84,080
12
0.34%
89,864
MHC Rosemount Woods LLC
79,310
13
0.32%
-
CMC Properties LLC (Wayne Transport)
78,844
14
0.32%
-
Limerick Way LLC
78,542
15
0.32%
78,752
Bigos - Rosemount LLC (Cannon Equipment)
-
86,770
Continental Nitrogen & Resources (CNR)
-
78,718
Hidden Valley SPE LLC
-
71,937
Flint Hills Resources LP
-
59,183
Lundgren Brothers Construction Inc.
-
56,298
Progress Land Company
-
55,045
Centex Homes
-
51,648
DR Horton Inc. Minnesota
-
45,192
Principal Taxpayers Total
$ 4,696,923
19.17%
$ 3,175,697
Total City Tax Capacity
$ 24,503,702
$ 21,604,139
Source: Dakota County Treasurer -Auditor
(1) These figures do not include the dollars collected but the tax capacity for each entity.
2006
5
8
6
9
10
11
12
13
14
15
0.42%
0.36%
0.40%
0.36%
0.33%
0.27%
0.26%
0.25%
0.24%
0.21%
14.70%
Page 76
Percentage
of Total
Local Tax
Rank
Capacity
1
5.86%
2
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3
1.35%
4
7
0.38%
5
8
6
9
10
11
12
13
14
15
0.42%
0.36%
0.40%
0.36%
0.33%
0.27%
0.26%
0.25%
0.24%
0.21%
14.70%
Page 76
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Schedule 11
City of Rosemount
Direct and Overlapping Governmental Activities Debt
As of December 31, 2015
Governmental
Activities
Debt
Governmental Units (1) Outstanding
Direct Debt:
City of Rosemount $ 18,950,000
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
82,720,000
64,175, 000
39,225,000
23,420,000 (3)
20,500,000 (4)
$ 230,040,000
$ 248,990,000
(1) Only those units with outstanding general obligation debt are shown here.
Estimated
Estimated
Percentage
Amount
Applicable
Applicable
to City (2), (5)
to City
(2) Excludes general obligation tax and aid anticipation certificates and revenue -supported debt.
100.00% $ 18,950,000
14.00%
11,580,800
5.90%
3,786,325
0.10%
39,225
5.50% 1,288,100
0.70% 143,500
(3) Includes the February 1, 2017 through February 1, 2026 maturities of the General Obligation Crossover
Refunding Bonds, Series 2007A, dated January 1, 2007 scheduled for call on February 1, 2016.
(4) Excludes general obligation debt supported by wastewater revenues and housing rental payments.
Includes certificates of participation.
(5) Percent of governmental unit within the City of Rosemount's boundaries calculated
by the city's Financial Advisors, Springsted Inc.
$ 16,837,950
$ 35,787,950
Page 80
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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)
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%
35.9
2008
22,750
46,357
1,054,621,750
4,623
6.1%
36.1
2009
23,750
44,374
1,053,882,500
5,266
7.0%
36.2
2010
21,874
45,192
988,529,808
5,179
6.3%
36.7
2011
22,239
46,475
1,033,557,525
4,745
5.2%
37.2
2012
22,432
49,847
1,118,167,904
4,860
4.8%
37.5
2013
22,711
50,687
1,151,152,457
4,889
4.1%
37.4
2014
23,044
50,687
1,168,031,228
4,910
3.2%
37.4
2015
23,244
50,687
1,178,168,628
5,074
3.0%
37.4
(1) 2010 is a regular decennial census figure. All years from 2006 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 2013 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. The total school enrollment includes
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.
2013's median age is the most current information available so 2014 & 2015 shown as the same age.
Page 83
Schedule 15
City of Rosemount
Principal Employers
Current Year and Nine Years Ago
2015
2006
Percentage Percentage
of Total of Total
City City
Employer Employees Rank Employment Employees Rank 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 84
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IL
Management Report
for
City of Rosemount, Minnesota
December 31, 2015
THIS PAGE INTENTIONALLY LEFT BLANK
To the City Council and Management
City of Rosemount, Minnesota
We have prepared this management report in conjunction with our audit of the City of Rosemount,
Minnesota’s (the City) financial statements for the year ended December 31, 2015. The purpose of this
report is to provide comments resulting from our audit process and to communicate information relevant
to city finances in Minnesota. We have organized this report into the following sections:
Audit Summary
Governmental Funds Overview
Enterprise Funds Overview
Government-Wide Financial Statements
Legislative Updates
Accounting and Auditing Updates
We would be pleased to further discuss any of the information contained in this report or any other
concerns that you would like us to address. We would also like to express our thanks for the courtesy and
assistance extended to us during the course of our audit.
The purpose of this report is solely to provide those charged with governance of the City, management,
and those who have responsibility for oversight of the financial reporting process comments resulting
from our audit process and information relevant to city finances in Minnesota. Accordingly, this report is
not suitable for any other purpose.
Minneapolis, Minnesota
May 11, 2016
THIS PAGE INTENTIONALLY LEFT BLANK
AUDIT SUMMARY
The following is a summary of our audit work, key conclusions, and other information that we consider
important or that is required to be communicated to the City Council, administration, or those charged
with governance of the City.
O UR R ESPONSIBILITY U NDER A UDITING S TANDARDS G ENERALLY A CCEPTED IN THE U NITED
S TATES OF A MERICA AND G OVERNMENT A UDITING S TANDARDS
We have audited the financial statements of the governmental activities, the business-type activities, each
major fund, and the aggregate remaining fund information of the City as of and for the year ended
December 31, 2015, and the related notes to the financial statements. Professional standards require that
we provide you with information about our responsibilities under auditing standards generally accepted in
the United States of America and Government Auditing Standards, as well as certain information related
to the planned scope and timing of our audit. We have communicated such information to you verbally
and in our audit engagement letter. Professional standards also require that we communicate the following
information related to our audit.
P LANNED S COPE AND T IMING OF THE A UDIT
We performed the audit according to the planned scope and timing previously discussed and coordinated
in order to obtain sufficient audit evidence and complete an effective audit.
A UDIT O PINION AND F INDINGS
Based on our audit of the City’s financial statements for the year ended December 31, 2015:
We have issued an unmodified opinion on the City’s basic financial statements. Our report
included a paragraph emphasizing that the City implemented Governmental Accounting
Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions—
an amendment of GASB Statement No. 27, and GASB Statement No. 71, Pension Transition for
Contributions Made Subsequent to the Measurement Date—an amendment of GASB Statement
No. 68,during the year ended December 31, 2015. Our opinion was not modified with respect to
this matter.
We reported one matter involving the City’s internal control over financial reporting that we
consider to be a significant deficiency. Due to the limited size of the City’s office staff, the City
has limited segregation of duties in certain areas.
The results of our testing disclosed no instances of noncompliance that are required to be reported
underGovernment Auditing Standards.
We reported two findings based on our testing of the City’s compliance with Minnesota laws and
regulations:
1.We noted that 1 of 40 disbursements tested was not paid within the 35-day period as
required by Minnesota Statute § 471.425, Subd. 2.
2.We noted that the payroll declaration was not obtained for timecard employees as
required by Minnesota Statute § 412.271, Subd. 2.
-1-
S IGNIFICANT A CCOUNTING P OLICIES
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the City are described in Note 1 of the notes to basic financial statements.
The City implemented GASB Statement Nos. 68 and 71 during the year ended December 31, 2015. These
statements provide new guidance on accounting and financial reporting for pensions accounted for in the
financial statements of plan employers. Implementation of these standards resulted in an adjustment to the
beginning equity reported in the City’s government-wide and enterprise fund financial statements, as
described in the notes to basic financial statements. The application of remaining policies was not
changed during the year ended December 31, 2015.
We noted no transactions entered into by the City during the year for which there is a lack of authoritative
guidance or consensus. All significant transactions have been recognized in the financial statements in the
proper period.
A CCOUNTING E STIMATES AND M ANAGEMENT J UDGMENTS
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management’s knowledge and experience about past and current events and assumptions about
future events. Certain accounting estimates are particularly sensitive because of their significance to the
financial statements and because of the possibility that future events affecting them may differ
significantly from those expected. The most sensitive estimates affecting the financial statements were:
Depreciation – Management’s estimates of depreciation expense are based on the estimated
useful lives of the assets.
Compensated Absences – Management’s estimate is based on current rates of pay and balances
for compensated absences.
Pension Benefits – The City has recorded liabilities and activities for pension benefits. Actuarial
estimates of the net pension liabilities are calculated using actuarial methodologies described in
GASB Statement No. 68. The actuarial calculations include significant assumptions, including
projected changes, investment returns, retirement ages, proportionate share, and employee
turnover.
We evaluated the key factors and assumptions used by management to develop these estimates in
determining that they are reasonable in relation to the basic financial statements taken as a whole.
The financial statement disclosures are neutral, consistent, and clear.
C ORRECTED AND U NCORRECTED M ISSTATEMENTS
Professional standards require us to accumulate all known and likely misstatements identified during the
audit, other than those that are trivial, and communicate them to the appropriate level of management.
Where applicable, management has corrected all such misstatements. In addition, none of the
misstatements detected as a result of audit procedures and corrected by management, when applicable,
were material, either individually or in the aggregate, to each opinion unit’s financial statements taken as
a whole.
-2-
D IFFICULTIES E NCOUNTERED IN P ERFORMING THE A UDIT
We encountered no significant difficulties in dealing with management in performing and completing our
audit.
D ISAGREEMENTS W ITH M ANAGEMENT
For purposes of this report, professional standards define a disagreement with management as a financial
accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be
significant to the financial statements or the auditor’s report. We are pleased to report that no such
disagreements arose during the course of our audit.
M ANAGEMENT R EPRESENTATIONS
We have requested certain representations from management that are included in the management
representation letter dated May 11, 2016.
M ANAGEMENT C ONSULTATIONS W ITH O THER I NDEPENDENT A CCOUNTANTS
In some cases, management may decide to consult with other accountants about auditing and accounting
matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves
application of an accounting principle to the City’s financial statements or a determination of the type of
auditor’s opinion that may be expressed on those statements, our professional standards require the
consulting accountant to check with us to determine that the consultant has all the relevant facts. To our
knowledge, there were no such consultations with other accountants.
O THER A UDIT F INDINGS OR I SSUES
We generally discuss a variety of matters, including the application of accounting principles and auditing
retention
standards, with management each year prior to as the City’s auditors. However, these discussions
occurred in the normal course of our professional relationship and our responses were not a condition to
our retention.
O THER M ATTERS
We applied certain limited procedures to Management’s Discussion and Analysis and the remaining
required supplementary information (RSI) that supplements the basic financial statements. Our
procedures consisted of inquiries of management regarding the methods of preparing the information and
comparing the information for consistency with management’s responses to our inquiries, the basic
financial statements, and other knowledge we obtained during our audit of the basic financial statements.
We did not audit the RSI and do not express an opinion or provide any assurance on the RSI.
We were engaged to report on the combining and individual fund statements and schedules, reported as
supplementary information accompanying the financial statements, which are not RSI. With respect to
this supplementary information, we made certain inquiries of management and evaluated the form,
content, and methods of preparing the information to determine that the information complies with
accounting principles generally accepted in the United States of America, the method of preparing it has
not changed from the prior period, and the information is appropriate and complete in relation to our audit
of the financial statements. We compared and reconciled the supplementary information to the underlying
accounting records used to prepare the financial statements or to the financial statements themselves.
We were not engaged to report on the introductory section and the statistical section which accompany
the financial statements but are not RSI. We did not audit or perform other procedures on this other
information and we do not express an opinion or provide any assurance on it.
-3-
GOVERNMENTAL FUNDS OVERVIEW
This section of the report provides you with an overview of the financial trends and activities of the City’s
governmental funds, which includes the General, special revenue, debt service, and capital project funds.
These funds are used to account for the basic services the City provides to all of its citizens, which are
financed primarily with property taxes. The governmental fund information in the City’s financial
statements focuses on budgetary compliance, and the sufficiency of each governmental fund’s current
assets to finance its current liabilities.
P ROPERTY T AXES
Minnesota cities rely heavily on local property tax levies to support their governmental fund activities.
For the 2014 fiscal year, local ad valorem property tax levies provided 39.0 percent of the total
governmental fund revenues for cities over 2,500 in population, and 35.5 percent for cities under 2,500 in
population. Property tax levies certified by Minnesota cities for 2015 increased about 4.0 percent over
2014, compared to an increase of 1.6 percent the prior year. A one-year levy limit imposed on cities over
2,500 in population for the 2014 levy year was lifted for the 2015 levy year.
The total market value of property in Minnesota cities increased about 8.5 percent for the 2015 levy year,
following a modest increase of 1.1 percent for levy year 2014 and a four-year trend of declining market
values for levy years 2010 through 2013. Market values showed increases across all property categories
for 2015, with gains in the market values of residential homestead properties (10.0 percent) and
non-homestead residential properties (9.7 percent) outpacing the market value gain of
commercial/industrial properties (2.2 percent). Because the assessed valuation used for levying property
taxes is based on values from the previous fiscal year (e.g., the market value for taxes payable in 2015 is
based on estimated values as of January 1, 2014), market value improvement has lagged behind recent
upturns in the housing market and the economy in general.
The City’s taxable market value increased 4.4 percent for taxes payable in 2014 and increased 9.2 percent
for taxes payable in 2015. The following graph shows the City’s changes in taxable market value over the
past 10 years:
Estimated Market Value
$2,500,000,000
$2,000,000,000
$1,500,000,000
$1,000,000,000
$500,000,000
$–
2006200720082009201020112012201320142015
-4-
Tax capacity is considered the actual base available for taxation. It is calculated by applying the state’s
property classification system to each property’s market value. Each property classification, such as
commercial or residential, has a different calculation and uses different rates. Consequently, a city’s total
tax capacity will change at a different rate than its total market value, as tax capacity is affected by the
proportion of the City’s tax base that is in each property classification from year-to-year, as well as
legislative changes to tax rates. The City’s tax capacity increased 4.0 percent for 2014 and 8.0 percent for
2015.
The following graph shows the City’s change in tax capacities over the past 10 years:
Taxable Tax Capacity
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$–
2006200720082009201020112012201320142015
The improvement in property tax capacities contributed to decreases to the overall state-wide and metro
area tax rates for 2015. The following table presents the average tax rates applied to city residents for
each of the last two levy years, along with comparative state-wide and metro area rates:
Rates expressed as a percentage of net tax capacity
All CitiesSeven-County
City of
State-WideMetro Area
Rosemount
201420152014201520142015
Average tax rate
City 46.948.8 46.0 43.4
45.247.7
County 44.747.6 46.6 42.9
29.631.8
School28.9 27.1 30.9 28.3
24.128.1
Special taxing7.3 6.9 9.5 8.8
5.05.5
Total132.6 125.6133.0123.4
113.1103.9
There are a number of factors contributing to the City’s lower than average total tax rate. As presented in
the table above, the decrease from the prior year was spread across all taxing authorities. The general
decrease in current year rates reflects the increase in taxable tax capacity discussed earlier.
-5-
G OVERNMENTAL F UND B ALANCES
The following table summarizes the changes in the fund balances of the City’s governmental funds during
the year ended December 31, 2015, presented both by fund balance classification and by fund:
Governmental Funds Change in Fund Balance
Fund Balance
Increase
as of December 31,
(Decrease)
20152014
Fund balances of governmental funds
Total by classification
Nonspendable79,954$ 76,787$ 3,167$
Restricted11,380,258 7,986,477 3,393,781
(99,893)
Committed190,941 290,834
gned9,905,387 10,139,295 (233,908)
Assi
gned6,506,697 6,288,615 218,082
Unassi
$ 24,782,00828,063,237$ 3,281,229$
governmental funds
Total –
Total by fund
General9,557,677$ 9,163,647$ 394,030$
Debt Service5,256,841 4,976,137 280,704
Capital Projects8,522,755 9,329,111 (806,356)
y TIF4,534,417 1,021,730 3,512,687
Port Authorit
jor funds191,547 291,383 (99,836)
Nonma
$ 24,782,00828,063,237$ 3,281,229$
governmental funds
Total –
In total, the fund balances of the City’s governmental funds increased by $3,281,229 during the year
ended December 31, 2015.
The largest change was the increase in restricted fund balance in the Port Authority TIF fund. The City
issued refunding bonds in the current year, increasing restricted fund balance as of December 31, 2015
that will be used to pay outstanding debt in the future.
-6-
G OVERNMENTAL F UNDS R EVENUE AND E XPENDITURES
The following table presents the per capita revenue of the City’s governmental funds for the past three
years, along with state-wide averages.
We have included the most recent comparative state-wide averages available from the Office of the State
Auditor to provide a benchmark for interpreting your city’s data. The amounts received from the typical
major sources of governmental fund revenue will naturally vary between cities based on factors such as
the City’s stage of development, location, size and density of its population, property values, services it
provides, and other attributes. It will also differ from year-to-year due to the effect of inflation and
changes in the City’s operation. Also, certain data on these tables may be classified differently than how it
appears on the City’s financial statements in order to be more comparable to the state-wide information,
particularly in separating capital expenditures from current expenditures.
We have designed this section of our management report using per capita data in order to better identify
unique or unusual trends and activities of your city. We intend for this type of comparative and trend
information to complement, rather than duplicate, information in the Management’s Discussion and
Analysis. An inherent difficulty in presenting per capita information is the accuracy of the population
count, which for most years is based on estimates.
Governmental Funds Revenue per Capita
With State-Wide Averages by Population Class
State-Wide
City of Rosemount
December 31, 2014
Year201320142015
Population2,500–10,00010,000–20,00020,000–100,000
22,71123,04423,244
Property taxes427$ 396$ 427$
$ 456452$ 460$
Tax increments26 37 46 2829 31
Franchise and other taxes32 42 37
1111 11
Special assessments59 51 64 9268 102
Licenses and permits28 27 41
3223 30
Intergovernmental revenues298 264 166
109101 38
Charges for services105 82 90 136104 144
Other66 72 65
14133 58
Total revenue1,041$ 971$ 936$
$ 1,005821$ 874$
The City’s governmental fund revenues for 2015 were $20,314,514, a decrease of $2,828,101
(12.2 percent) from the prior year. On a per capita basis, the City received $874 in governmental fund
revenue for 2015, a decrease of $131 from the prior year.
A city’s stage of development, along with the way a city finances various capital projects, will impact the
mix of revenue sources it receives. The largest change in the table above occurred in the “other” category
of revenues, which decreased $83 per capita from the prior year. This decrease was caused by the change
in unrealized gain on marking investments to market at year-end in accordance with GASB standards
compared to the prior year. The second largest change in the table above occurred in intergovernmental
revenues, which decreased $71 per capita from the prior year. This decrease was caused by the City
recognizing more Municipal State Aid and Met Council Grant funds in the prior year that did not apply to
the current year.
-7-
The expenditures of governmental funds will also vary from state-wide averages and from year-to-year,
based on the City’s circumstances. Expenditures are classified into three types as follows:
Current – These are typically the general operating type expenditures occurring on an annual
basis, and are primarily funded by general sources such as taxes and intergovernmental revenues.
Capital Outlay and Construction – These expenditures do not occur on a consistent basis, more
typically fluctuating significantly from year-to-year. Many of these expenditures are
project-oriented, and are often funded by specific sources that have benefited from the
expenditure, such as special assessment improvement projects.
Debt Service – Although the expenditures for debt service may be relatively consistent over the
term of the respective debt, the funding source is the important factor. Some debt may be repaid
through specific sources such as special assessments or redevelopment funding, while other debt
may be repaid with general property taxes.
The City’s expenditures per capita of its governmental funds for the past three years, together with
state-wide averages, are presented in the following table:
Governmental Funds Expenditures per Capita
With State-Wide Averages by Population Class
State-Wide
City of Rosemount
December 31, 2014
Year201320142015
Population2,500–10,00010,000–20,00020,000–100,00022,71123,04423,244
Current
General government131$ 104$ 87$
$ 119110$ 122$
Public safety 237248 254 163160 173
Street maintenance
and lighting 119121 114 139145 127
Culture and recreation86 101 92
5758 56
All other 8969 98
16– –
Total current
650655 645
494473 478
Capital outlay
and construction357 278 276
411336 294
Debt service
Principal180 163 115 6968 149
Interest and fiscal54 40 34 2223 25
Total debt service
203234 149 9191 174
Total expenditures
$ 1,1311,246$ 1,070$ $ 996900$ 946$
Total expenditures in the City’s governmental funds for 2015 were $21,987,674, a decrease of $960,192
(4.2 percent) from the prior year. On a per capita basis, the City expended a total of $946 in 2015, a
decrease of $50 from the previous year.
As the above table reflects, the City’s expenditures per capita have historically been below the state-wide
average. The largest changes occurred in capital outlay and debt service spending compared to the prior
year. Capital outlay and construction decreased primarily due to timing of projects that fluctuate from
year-to-year. Debt Service Fund spending increased with scheduled debt payments and refunding
transactions approved in 2015.
-8-
G ENERAL F UND
The City’s General Fund accounts for the financial activity of the basic services provided to the
community. The primary services included within this fund are the administration of the municipal
operation, police and fire protection, building inspection, streets and highway maintenance, and culture
and recreation. The graph below illustrates the change in the General Fund financial position over the last
five years. We have also included a line representing annual revenues to reflect the change in the size of
the General Fund operation over the same period.
General Fund Financial Position
Year Ended December 31,
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$–
20112012201320142015
Fund BalanceCash BalanceRevenue
The City’s General Fund cash and investments balance at December 31, 2015 was $9,694,642, an
increase of $549,544 from the previous year. Total fund balance at year-end was $9,557,677, an increase
of $394,030 from the prior year.
As the graph illustrates, the City has generally been able to maintain healthy cash and fund balance levels
as the volume of financial activity has fluctuated. This is an important factor because a government, like
any organization, requires a certain amount of equity to operate. A healthy financial position allows the
City to avoid volatility in tax rates; helps minimize the impact of state funding changes; allows for the
adequate and consistent funding of services, repairs, and unexpected costs; and is a factor in determining
the City’s bond rating and resulting interest costs. Maintaining an adequate fund balance has become
increasingly important given the fluctuations in state funding for cities in recent years.
A trend that is typical to Minnesota local governments, especially the General Fund of cities, is the
unusual cash flow experienced throughout the year. The City’s General Fund cash disbursements are
made fairly evenly during the year other than the impact of seasonal services such as snowplowing, street
maintenance, and park activities. Cash receipts of the General Fund are quite a different story. Taxes
comprise about 77 percent of the fund’s total annual revenue. Approximately half of these revenues are
received by the City in July and the rest in December. Consequently, the City needs to have adequate cash
reserves to finance its everyday operations between these payments.
The City’s unassigned General Fund balance at the end of the 2015 fiscal year represents approximately
55 percent of annual expenditures based on projected 2016 levels.
-9-
The following graph reflects the City’s General Fund revenue sources for 2015 compared to budget:
General Fund Revenue –Budget and Actual (Budgetary Basis)
$10,000,000
$9,000,000
$8,000,000
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$–
TaxesLicenses andIntergovernmentalChargesOther
Permitsfor
Services
ActualBudget
General Fund revenue for 2015 was $11,997,352, which was $422,433 (3.6 percent) more than budget.
Favorable variances in nearly every category, due in part to conservative budgeting, contributed to the
overall revenue variance. Other was the only category with actual sources coming in under budget
($19,925), as presented in the graph above.
The following graph presents the City’s General Fund revenues by source for the last five years. The
graph reflects the City’s reliance on property and other taxes, which represented 77 percent of General
Fund revenues in 2015:
General Fund Revenue by Source
Year Ended December 31,
$10,000,000
$9,000,000
$8,000,000
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$–
TaxesIntergovernmentalAll Other
20112012201320142015
Total General Fund revenue for 2015 was $19,506 (0.2 percent) lower than last year. Taxes increased by
$125,039 due to an increase in the approved tax levy. Intergovernmental revenue was $116,911 more than
last year with an increase in federal sources recognized for an Americans with Disabilities Act
improvement grant received in the current year. Remaining revenue sources of the General Fund were
$261,456 lower than 2014, due to the significant recognized market adjustment experienced in the prior
year and increasing investment earnings compared to the more stable market adjustment in 2015.
-10-
The following graph illustrates the components of General Fund spending for 2015 compared to budget:
General Fund Expenditures –Budget and Actual (Budgetary Basis)
$4,500,000
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$–
GeneralPublic SafetyPublic WorksParks andCapital Outlay
GovernmentRecreation
ActualBudget
General Fund expenditures for 2015 on a budgetary basis were $11,327,434, which was $120,985
(1.1 percent) less than budget. City efforts to maintain fiscal responsibility and spend within approved
appropriations contributed to the expenditure variance. Savings in public safety, public works, and parks
and recreation more than covered the general government and capital outlay spending in excess of budget.
The following graph presents the City’s General Fund expenditures by function for the last five years:
General Fund Expenditures by Function
Year Ended December 31,
$4,500,000
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$–
GeneralPublic SafetyPublic WorksParks andCapital Outlay
GovernmentRecreation
20112012201320142015
Total General Fund expenditures for 2015 on an accounting principles generally accepted in the United
States of America-basis were $246,583 (2.3 percent) more than the previous year. Public safety increased
$251,585 as planned in the police and fire budgets. Savings in building, fleet, and street maintenance
contributed to the decrease of $225,192 in public works. Capital outlay expenditures increased $146,924
for various projects during the year.
-11-
ENTERPRISE FUNDS OVERVIEW
The City maintains several enterprise funds to account for services the City provides that are financed
primarily through fees charged to those utilizing the service. This section of the report provides you with
an overview of the financial trends and activities of the City’s enterprise funds, which include the Water,
Sewer, Storm Water, and Arena Funds.
The utility funds comprise a considerable portion of the City’s activities. These funds help to defray
overhead and administrative costs and provide additional support to general government operations by
way of annual transfers. We understand that the City is proactive in reviewing these activities on an
ongoing basis and we want to reiterate the importance of continually monitoring these operations. Over
the years, we have emphasized to our city clients the importance of these utility operations being
self-sustaining, preventing additional burdens on general government funds. This would include the
accumulation of net position for future capital improvements and to provide a cushion in the event of a
negative trend in operations.
E NTERPRISE F UNDS F INANCIAL P OSITION
The following table summarizes the changes in the financial position of the City’s enterprise funds during
the year ended December 31, 2015, presented both by classification and by fund:
Enterprise Funds Change in Financial Position
Net Position
Increase
as of December 31,
(Decrease)
20152014
Net position of enterprise funds
Total by classification
Net investment in capital assets96,808,557$ 98,194,408$$ (1,385,851)
Unrestricted20,376,753 19,348,437 1,028,316
$ 117,542,845117,185,310$ (357,535)$
Total – enterprise funds
Total by fund
Water40,563,069$ 40,483,893$ 79,176$
Sewer34,402,866 35,648,909 (1,246,043)
Storm Water40,570,695 39,669,659 901,036
Arena1,648,680 1,740,384 (91,704)
$ 117,542,845117,185,310$ (357,535)$
Total – enterprise funds
In total, the net position of the City’s enterprise funds decreased by $357,535 during the year ended
December 31, 2015. The decrease in net position is primarily related to a capital contribution from the
Sewer Fund to governmental activities in the current year totaling $755,459 and the change in accounting
principle for pension, as mentioned earlier, contributing $809,312 to the decrease in net position.
Connection fees and capital contributions received from developers offset a portion of the decreases
previously mentioned.
-12-
W ATER F UND
At December 31, 2015, the Water Fund had a cash balance (net of borrowing) of $8,789,895 and total net
position of $40,563,069. Of this net position total, $33,024,919 is the investment in capital assets, while
unrestricted has a balance of $7,538,150. The following graph shows the financial position of the Water
Fund over the past five years:
Water Fund Financial Position
Year Ended December 31,
$45,000,000
$40,000,000
$35,000,000
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$–
20112012201320142015
Cash, Net of Interfund LoansTotal Net PositionOperating Revenue
The following graph shows the operating results of the Water Fund over the last five years:
Water Fund Operating Results
Year Ended December 31,
$2,250,000
$2,000,000
$1,750,000
$1,500,000
$1,250,000
$1,000,000
$750,000
$500,000
$250,000
$–
20112012201320142015
Operating ExpensesOperating Revenue
The City should continue to review utility rates during its annual budget process to make sure an
adequate, yet fair rate is charged for the services provided. The Water Fund maintains a healthy financial
position. During fiscal 2015, the Water Fund experienced an operating loss of $458,344, compared to an
operating loss of $308,511 in fiscal 2014. Consumption will fluctuate from year-to-year based on many
factors, including weather patterns and number of utility customers.
-13-
S EWER F UND
At December 31, 2015, the Sewer Fund had a cash balance (net of borrowing) of $5,743,523 and total net
position of $34,402,866. Of this net position total, $28,510,017 is the investment in capital assets, while
$5,892,849 is unrestricted. The following graph shows the financial position of the Sewer Fund over the
past five years:
Sewer Fund Financial Position
Year Ended December 31,
$40,000,000
$35,000,000
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$–
20112012201320142015
Cash, Net of Interfund LoansTotal Net PositionOperating Revenue
The following graph shows the operating results of the Sewer Fund for the last five years:
Sewer Fund Operating Results
Year Ended December 31,
$2,750,000
$2,500,000
$2,250,000
$2,000,000
$1,750,000
$1,500,000
$1,250,000
$1,000,000
$750,000
$500,000
$250,000
$–
20112012201320142015
MCES CostsOther Operating ExpensesOperating Revenue
The major expense of the sanitary sewer operation is the charge from the Metropolitan Council
Environmental Services (MCES). The main cause of the expense fluctuations from year-to-year, shown
on the graph above, are generally changes made to the charges from the MCES, reflecting the results of
their sewer treatment operations.
The City should continue to review utility rates during its annual budget process to make sure an
adequate, yet fair rate is charged for the services provided. The Sewer Fund maintains a healthy financial
position. During fiscal 2015, the Sewer Fund experienced an operating loss of $986,922, compared to an
operating loss of $989,395 in fiscal 2014.
-14-
S TORM W ATER F UND
At December 31, 2015, the Storm Water Fund had a cash balance of $6,376,504 and total net position of
$40,570,695. Of this net position total, $33,873,949 is the investment in capital assets, while $6,696,746
is unrestricted. The following graph shows the financial position of the Storm Water Fund over the past
five years:
Storm Water Fund Financial Position
Year Ended December 31,
$45,000,000
$40,000,000
$35,000,000
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$–
20112012201320142015
Cash, Net of Interfund LoansTotal Net PositionOperating Revenue
The following graph shows the operating results of the Storm Water Fund for the last five years:
Storm Water Fund Operating Results
Year Ended December 31,
$1,200,000
$1,100,000
$1,000,000
$900,000
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$–
20112012201320142015
Operating ExpensesOperating Revenue
The Storm Water Fund has been near break-even operating results most of the past five years, as
presented in the table above. The Storm Water Fund maintains a healthy financial position. During fiscal
2015, the Storm Water Fund experienced operating income of $2,721, compared to an operating loss of
$64,053 in fiscal 2014. An increase in current year charges for services contributed to the change in
current year operations.
-15-
A RENA F UND
At December 31, 2015, the Arena Fund had a cash balance of $419,057 and total net position of
$1,648,680. Of this net position total, $1,399,672 is the investment in capital assets, while $249,008 is
unrestricted. The following graph shows the financial position of the Arena Fund over the past five years:
Arena Fund Financial Position
Year Ended December 31,
$2,000,000
$1,800,000
$1,600,000
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$–
20112012201320142015
Cash, Net of Interfund LoansTotal Net PositionOperating Revenue
The following graph shows the operating results of the Arena Fund for the last five years:
Arena Fund Operating Results
Year Ended December 31,
$600,000
$550,000
$500,000
$450,000
$400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$–
20112012201320142015
Operating ExpensesOperating Revenue
During fiscal 2015, the Arena Fund experienced an operating loss of $88,964, compared to an operating
loss of $101,312 in fiscal 2014. Increased charges for services contributed to the change in current year
operations.
-16-
GOVERNMENT-WIDE FINANCIAL STATEMENTS
In addition to fund-based information, the current reporting model for governmental entities also requires
the inclusion of two government-wide financial statements designed to present a clear picture of the City
as a single, unified entity. These government-wide financial statements provide information on the total
cost of delivering services, including capital assets and long-term liabilities.
S TATEMENT OF N ET P OSITION
The Statement of Net Position essentially tells you what your city owns and owes at a given point in time,
the last day of the fiscal year. Theoretically, net position represents the resources the City has leftover to
use for providing services after its debts are settled. However, those resources are not always in spendable
form, or there may be restrictions on how some of those resources can be used. Therefore, net position is
divided into three components: net investment in capital assets, restricted, and unrestricted.
The following table presents the components of the City’s net position as of December 31, 2015 and
2014, for governmental activities and business-type activities:
As of December 31,
Increase
(Decrease)
20152014
Net position
Governmental activities
Net investment in capital assets64,684,403$ 58,438,402$ 6,246,001$
Restricted9,638,141 9,698,513 (60,372)
Unrestricted13,031,913 17,913,535 (4,881,622)
Total governmental activities87,354,457 86,050,450 1,304,007
Business-type activities
Net investment in capital assets96,808,557 98,194,408 (1,385,851)
Unrestricted20,376,753 19,348,437 1,028,316
Total business-type activities117,185,310 117,542,845 (357,535)
$ 203,593,295204,539,767$ 946,472$
Total net position
The City’s total net position at December 31, 2015 was $946,472 more than the previous year.
Governmental activities increased $1,304,007, while business-type activities decreased by $357,535.The
City recorded a change in accounting principle for reporting its participation in the pension plan that
reduced beginning unrestricted net position in governmental activities by $3,449,016 and business-type
activities by $809,312, for a total reduction of $4,258,328.
The change in components of governmental activity net position reflects the City’s continued investment
in street infrastructure in the current year. Capital contributions from developers and business-type
activities also increased the net investment in capital assets of governmental activities. The decrease in
business-type activities net position reflects the Enterprise Fund operating activity previously discussed.
At the end of the current fiscal year, the City is able to present positive balances in all categories of net
position, both for the government as a whole, as well as for its separate governmental and business-type
activities. The same situation held true for the prior fiscal year.
-17-
S TATEMENT OF A CTIVITIES
The Statement of Activities tracks the City’s yearly revenues and expenses, as well as any other
transactions that increase or reduce total net positions. These amounts represent the full cost of providing
services. The Statement of Activities provides a more comprehensive measure than just the amount of
cash that changed hands, as reflected in the fund-based financial statements. This statement includes the
cost of supplies used, depreciation of long-lived capital assets, and other accrual-based expenses.
The following table presents the change in the net position of the City for the years ended December 31,
2015 and 2014:
2015
2014
Program
ExpensesRevenuesNet ChangeNet Change
Net (expense) revenue
Governmental activities
$ 3,182,7692,878,070$ 304,699$ 2,229,854$
General government
(3,820,522) (3,785,411)
Public safety 557,8254,378,347
(2,676,890) (1,332,552)
Public works4,468,049 1,791,159
(907,972) (1,038,642)
Culture, education, and recreation1,643,886 735,914
257,050 (269,108)
Conservation and economic development 310,09053,040
(569,722) (501,682)
Interest and fiscal changes569,722 –
Business-type activities
Water 2,627,7452,219,781 606,783407,964
(615,795) (690,404)
Sewer2,575,330 1,959,535
440,502469,340
Storm water1,117,526 1,586,866
(88,964) (101,312)
Arena497,838 408,874
$ 13,160,77720,401,589$ (7,240,812) (4,441,972)
Total net (expense) revenue
General revenues
Taxes11,906,383 11,639,392
Unrestricted investment earnings427,664 1,151,195
Other 103,615104,237
pital assets7,328 –
Gain on sale or trade of ca
Total general revenues
12,894,20212,445,612
Change in net position
8,452,2305,204,800
Net position – beginning, as previously stated203,593,295 195,141,065
Change in accountingprinciple (4,258,328) –
Net position – beginning, restated199,334,967 195,141,065
$203,593,295204,539,767$
Net position – ending
One of the goals of this statement is to provide a side-by-side comparison to illustrate the difference in the
way the City’s governmental and business-type operations are financed. The table clearly illustrates the
dependence of the City’s governmental operations on general revenues, such as property taxes and
unrestricted investment earnings. In contrast, the City’s business-type activities tend to rely more heavily
on program revenues like charges for services (sales) and program specific grants to cover expenses. This
is critical given the current downward pressures on the general revenue sources.
-18-
LEGISLATIVE UPDATES
Despite the 2015 legislative session beginning with a projected budget excess of $1.87 billion for the
2016–2017 biennium, the most favorable budget forecast in over a decade, little was accomplished during
the regular legislative session due to partisan disagreement. The regular session adjourned without the
Legislature bringing forth a number of significant funding bills, including the Omnibus Legacy Bill
(funding for outdoor heritage, clean water, parks and trails, arts, and cultural heritage) and a bonding bill
for capital projects. The Governor subsequently vetoed a number of other funding bills, including the
Omnibus E–12 Education Bill due to the Legislature not addressing his demand for a universal preschool
provision. Eventually, a one-day special session produced funding bills for E–12 education, jobs and
energy, Legacy programs, environment and agriculture, and capital investment.
The following is a summary of recent legislation affecting Minnesota cities in 2015 and into the future:
Local Government Aid (LGA) – The Legislature completely overhauled the LGA formula for fiscal
year 2014 and thereafter, creating a three-tiered formula that includes separate “need factor”
calculations for cities with populations under 2,500, between 2,500 and 10,000, or over 10,000. The
new formula simplified the LGA calculation, and reduced the volatility of the LGA distribution by
limiting the amount it may decline in a given year. Beginning in 2015, any reduction to a city’s
calculated LGA distribution will be limited to the lesser of $10 per capita, or 5 percent of their
previous year net tax levy. For cities that gain under the new formula, the increases will be distributed
proportionate to their unmet need, as determined by the new “need factor” calculations. The
state-wide LGA appropriation was $516.9 million for fiscal 2015, and is $519.4 million for fiscal
2016 and thereafter.
Sales Tax Exemption – Cities (both home-rule and statutory) were exempted from paying sales tax
on qualifying purchases, effective for purchases made on or after January 1, 2014. Purchases of goods
or services by an exempt local government for a publicly-provided liquor store, gas or electric utility,
golf course, marina, campground, café, laundromat, solid waste hauling or recycling operation, or
landfill will remain taxable.
The 2014 Legislature extended the definition of tax exempt local government to include all special
district; city, county, or township instrumentalities; economic development authorities; housing and
redevelopment authorities; and all joint power boards or organizations. However, the effective date of
this expanded exemption list was delayed until January 1, 2017 by the 2015 Legislature.
Omnibus Bonding Bill – The Legislature approved a scaled-down Omnibus Bonding Bill during the
special session, authorizing approximately $370 million in capital improvements. Included in the
funding approved was $172.5 million for transportation infrastructure, $23.5 million for flood hazard
mitigation, $10 million for Public Financing Agency (PFA) grants to municipalities for wastewater
infrastructure, and $1.5 million to the Metropolitan Council for inflow and infiltration improvement
grants to metro area cities.
Legacy Funding – The Legacy bill included $9.25 million annually to finance grants for city water
infrastructure improvements through the PFA. It also included $17.25 million annually to fund
“SCORE” block grants to counties for recycling and waste reduction (a portion of which is passed
through to cities) and $1 million of annual funding for a new grant program to establish or improve
recycling programs in non-metro area cities.
Broadband Initiative – The Omnibus Jobs and Energy Bill passed in the special session included
$10.6 million to finance the Border-to-Border Broadband Grant Program, a one-time appropriation
available until June 30, 2017.
-19-
Municipal State-Aid Streets – Included in the Omnibus Transportation Bill were annual funding
allocations for municipal state-aid streets of $107.7 million for fiscal 2016 and $178.1 million for
fiscal 2017, which represents an increase of approximately $41 million over the previous biennium.
Small Cities Assistance Account – A one-time appropriation of $12.5 million was provided to create
a new Small Cities Assistance Account to assist with construction and maintenance of roads located
within eligible cities, defined as a statutory or home-rule charter city that does not receive municipal
state aid street financing (generally those with a population under 5,000). The aid will be distributed
to eligible cities biannually in each year funds are available based on the following formula: 5 percent
equally to all eligible cities; 35 percent allocated proportionately on each city’s share of lane miles to
the total for all eligible cities; 35 percent allocated proportionately on each city’s population to the
total for all eligible cities; and 25 percent allocated proportionately on each city’s state-aid adjustment
factor to the total for all eligible cities.
Workforce Housing Grant Program – The Omnibus Jobs and Energy Bill included annual funding
of $2 million for fiscal 2016 and 2017 for a new Workforce Housing Grant Program. Eligible cities
can use the grants to develop “market rate residential rental property” to serve employees of
businesses located in the eligible project areas. The maximum grant award may not exceed 25 percent
of the rental housing development project cost; and awards must be matched by a local unit of
government, business, or nonprofit organization with $1 for each $2 of grant funding.
Automated License Plate Reader (ALPR) Policy – Law enforcement agencies that utilize ALPRs
are required to establish policies governing their use that are consistent with statutory guidelines. The
Legislature placed limitations on the type of data that can be collected using ALPRs, and clarified the
circumstances under which that data is considered public or private. A limitation of 60 days was
established for the retention of data collected by ALPR not related to an active criminal investigation.
Standards were established for the sharing of ALPR data between law enforcement agencies.
Elections – The Elections Omnibus Bill made numerous changes to elections administration laws,
including requirements for filing fees for statutory cities, ballot formatting and marking, absentee
ballots, and election recounts.
Energy Conservation Measures – The Uniform Municipal Contracting Law was amended to add
water metering devices that increase efficiency to the definition of energy conservation measures,
enabling municipalities to enter into guaranteed energy savings contracts for the use of water
metering devices.
Responsible Contractor Requirement – The “responsible contractor” law enacted by the 2014
Legislature became effective on January 1, 2015. Contractors who bid on public contracts in excess of
$50,000 are now required to certify that they are a “responsible bidder” in order to be awarded a
contract as the lowest responsible bidder or best value alternative. The 2015 Legislature made several
clarifications and modifications to the law, including: exempting design professionals and materials
suppliers from the requirements; making motor carriers subject to the requirements and establishing a
separate verification standard for them; excluding tax increment financing revenue from the value of
a construction contract under the law; and allowing general contractors to submit bids without
obtaining verification from all subcontractors that bid on the project (the successful prime contractor
must submit a supplemental verification under oath prior to the execution of the contract).
Appraisal Requirements for Eminent Domain – Effective July 1, 2015, the appraisal requirements
for the acquisition of property by eminent domain are changed to require the acquiring entity to
obtain at least one appraisal for the property proposed to be acquired only if the acquisition value is
greater than $25,000. For acquisitions less than $25,000, the acquiring entity may obtain a minimum
damage acquisition report in lieu of an appraisal.
-20-
Firefighter Employment Provisions and Volunteer Benefits – The Omnibus Public Safety Finance
and Policy Bill made a number of changes related to firefighters, including: allowing relief
association dues as a voluntarily payroll deduction, allowing volunteer firefighters to be paid less
frequently than every 31 days, requiring the licensure of all full-time firefighters by the State Board of
Firefighter Training and Education, and expanding “continued employer health insurance benefits” to
include dependents of volunteer firefighters killed in the line of duty.
Police and Firefighter Retirement Supplemental State Aid – The volunteer firefighter portion of
the Police and Firefighter Retirement Supplemental State Aid Program was made permanent. The
minimum obligation of municipalities to an associated relief association special fund is now reduced
by the amount of both fire state aid and police and firefighter retirement supplemental state aid. Police
and firefighter retirement supplemental state aid is also added to the calculation of the exception to
municipal ratification requirement for lump-sum plans.
Pensions – A number of changes to the pension plans administered by the Public Employees
Retirement Association (PERA) were adopted, effective June 30, 2015, including:
The future interest rate actuarial assumption for the PERA General Plan and PERA
Police and Fire Plan are changed from 8.5 percent to 8.0 percent for actuarial valuations
prepared after June 30, 2015.
The refund repayment interest rate and prior service credit purchase payment
determination rate for the PERA General Plan and PERA Police and Fire Plan are also
changed from 8.5 percent to 8.0 percent.
The CPI-based post-retirement adjustment mechanism for the PERA Police and Fire Plan
is replaced with a flat 2.5 percent increase when the plan reaches a 90 percent funding
level.
The contribution stabilizer mechanisms applicable to the PERA General Plan are revised,
broadening the factors the plan’s Board of Trustees may consider before recommending
an increase in the plan contribution rates.
Definitions of salary, termination of service, allowable service, retirement, and volunteer
firefighter were revised for all applicable PERA plans.
Changes in eligibility, service pension levels, ancillary benefits, and service time
calculations were made to the PERA Statewide Volunteer Firefighter Plan, lump sum
retirement division. A change was also made to create a “monthly benefit retirement
division” within this plan to facilitate the transfer of individual volunteer firefighter
association monthly benefit plans to the statewide plan.
A number of administrative language changes were made to complete the merger of the
Minneapolis Employees Retirement Fund into the PERA General Plan, which was
effective January 1, 2015.
-21-
ACCOUNTING AND AUDITING UPDATES
GASBS TATEMENT N O.72,F AIR V ALUE M EASURE AND A PPLICATION
The primary objective of this statement is to address accounting and financial reporting issues related to
fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date. This statement
provides guidance for determining a fair value measurement for financial reporting purposes. It also
provides guidance for applying fair value to certain investments and disclosures related to all fair value
measurements.
This statement generally requires investments to be measured at fair value. An investment is defined as a
security or other asset that (a) a government holds primarily for the purpose of income or profit and
(b) has a present service capacity based solely on its ability to generate cash or to be sold to generate cash.
This statement is effective for financial statements for fiscal years beginning after June 15, 2015. Earlier
application is encouraged.
GASBS TATEMENT N O.73,A CCOUNTING AND F INANCIAL R EPORTING FOR P ENSIONS AND R ELATED
A SSETS T HAT A RE N OT WITHIN THE S COPE OF GASBS TATEMENT 68, AND A MENDMENTS TO
C ERTAIN P ROVISIONS OF GASBS TATEMENTS 67 AND 68
The objective of this statement is to improve the usefulness of information about pensions included in
financial statements of state and local governments for making decisions and assessing accountability.
This statement also clarifies the application of certain provisions of GASB Statement Nos. 67 and 68
regarding 10-year schedules of required supplementary information (RSI) and other recognition issues
pertaining to employers and nonemployer contributing entities. These changes will improve financial
reporting by establishing a single framework for the presentation of information about pensions,
enhancing comparability for similar information reported by employers and nonemployer contributing
entities.
The requirements of this statement that address accounting and financial reporting by employers and
governmental nonemployer contributing entities for pensions not within the scope of GASB Statement
No. 68 are effective for financial statements for fiscal years beginning after June 15, 2016, and the
requirements of this statement that address financial reporting for assets accumulated for purposes of
providing those pensions are effective for fiscal years beginning after June 15, 2015. The requirements of
this statement for pension plans that are within the scope of GASB Statement No. 67 or for pensions that
are within the scope of GASB Statement No. 68 are effective for fiscal years beginning after June 15,
2015. Earlier application is encouraged.
GASBS TATEMENT N O.74,F INANCIAL R EPORTING FOR P OSTEMPLOYMENT B ENEFIT P LANS O THER
T HAN P ENSION P LANS
The objective of this statement is to improve the usefulness of information about post-employment
benefits other than pensions (other post-employment benefits \[OPEB\]). This statement replaces GASB
Statement Nos. 43 and 57. It also includes requirements for defined contribution OPEB plans that replace
the requirements for those OPEB plans in GASB Statement Nos. 25, 43, and 50. GASB Statement No. 75,
Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, establishes new
accounting and financial reporting requirements for governments whose employees are provided with
OPEB, as well as for certain nonemployer governments that have a legal obligation to provide financial
support for OPEB provided to the employees of other entities.
-22-
This statement will improve financial reporting primarily through enhanced note disclosures and
schedules of RSI that will be presented by OPEB plans administered through trusts meeting the specified
criteria. The new information will enhance the decision-usefulness of the financial reports of those OPEB
plans, their value for assessing accountability, and their transparency by providing information about
measures of net OPEB liabilities and explanations of how and why those liabilities changed from
year-to-year. The net OPEB liability information, including ratios, will offer an up-to-date indication of
the extent to which the total OPEB liability is covered by the fiduciary net position of the OPEB plan.
The comparability of the reported information for similar types of OPEB plans will be improved by the
changes related to the attribution method used to determine the total OPEB liability. The contribution
schedule will provide measures to evaluate decisions related to the assessment of contribution rates in
comparison with actuarially determined rates, if such rates are determined. In addition, new information
about rates of return on OPEB plan investments will inform financial report users about the effects of
market conditions on the OPEB plan’s assets over time and provide information for users to assess the
relative success of the OPEB plan’s investment strategy and the relative contribution that investment
earnings provide to the OPEB plan’s ability to pay benefits to plan members when they come due.
This statement is effective for financial statements for fiscal years beginning after June 15, 2016. Earlier
application is encouraged.
GASBS TATEMENT N O.75,A CCOUNTING AND F INANCIAL R EPORTING FOR P OSTEMPLOYMENT
B ENEFITS O THER T HAN P ENSIONS
The primary objective of this statement is to improve accounting and financial reporting by state and local
governments for post-employment benefits other than pensions (OPEB). It also improves information
provided by state and local governmental employers about financial support for OPEB that is provided by
other entities. This statement replaces the requirements of GASB Statement Nos. 45 and 57. GASB
Statement No. 74 establishes new accounting and financial reporting requirements for OPEB plans.
This statement establishes standards for recognizing and measuring liabilities, deferred outflows of
resources, deferred inflows of resources, and expense/expenditures. For defined benefit OPEB, this
statement identifies the methods and assumptions that are required to be used to project benefit payments,
discount projected benefit payments to their actuarial present value, and attribute that present value to
periods of employee service. Note disclosure and RSI requirements about defined benefit OPEB also are
addressed. This statement is effective for fiscal years beginning after June 15, 2017. Earlier application is
encouraged.
Similar to changes implemented for pensions, this statement requires the liability of employers and
nonemployer contributing entities to employees for defined benefit OPEB (net OPEB liability) to be
measured as the portion of the present value of projected benefit payments to be provided to current
active and inactive employees that is attributed to those employees’ past periods of service (total OPEB
liability), less the amount of the OPEB plan’s fiduciary net position.
GASBS TATEMENT N O.77,T AX A BATEMENT D ISCLOSURES
This statement requires disclosure of tax abatement information about (1) a reporting government’s own
tax abatement agreements, and (2) those that are entered into by other governments and that reduce the
reporting government’s tax revenues. Tax abatements are widely used by state and local governments,
particularly to encourage economic development. For financial reporting purposes, this statement defines
a tax abatement as resulting from an agreement between a government and an individual or entity in
which the government promises to forgo tax revenues and the individual or entity promises to
subsequently take a specific action that contributes to economic development or otherwise benefits the
government or its citizens.
-23-
The requirements of this statement improve financial reporting by giving users of financial statements
essential information that is not consistently or comprehensively reported to the public at present.
Disclosure of information about the nature and magnitude of tax abatements will make these transactions
more transparent to financial statement users. As a result, users will be better equipped to understand
(1) how tax abatements affect a government’s future ability to raise resources and meet its financial
obligations, and (2) the impact those abatements have on a government’s financial position and economic
condition. The requirements of this statement are effective for financial statements for periods beginning
after December 15, 2015. Earlier application is encouraged.
GASBS TATEMENT N O.78,P ENSIONS P ROVIDED THROUGH C ERTAIN M ULTIPLE-E MPLOYER D EFINED
B ENEFIT P ENSION P LANS
The objective of this statement is to address a practice issue regarding the scope and applicability of
GASB Statement No. 68,Accounting and Financial Reporting for Pensions—an amendment of GASB
Statement No. 27. This issue is associated with pensions provided through certain multiple-employer
defined benefit pension plans and to state or local governmental employers whose employees are
provided with such pensions. Prior to the issuance of this statement, the requirements of GASB Statement
No. 68 applied to the financial statements of all state and local governmental employers whose employees
are provided with pensions through pension plans that are administered through trusts that meet the
criteria in paragraph 4 of GASB Statement No. 68.
This statement amends the scope and applicability of GASB Statement No. 68 to exclude pensions
provided to employees of state or local governmental employers through a cost-sharing,
multiple-employer defined benefit pension plan that (1) is not a state or local governmental pension plan,
(2) is used to provide defined benefit pensions both to employees of state or local governmental
employers and to employees of employers that are not state or local governmental employers, and (3) has
no predominant state or local governmental employer (either individually or collectively with other state
or local governmental employers that provide pensions through the pension plan). This statement
establishes requirements for recognition and measurement of pension expense, expenditures, and
liabilities; note disclosures; and RSI for pensions that have the characteristics described above. The
requirements of this statement are effective for reporting periods beginning after December 15, 2015.
Early application is encouraged.
GASBS TATEMENT N O.79,C ERTAIN E XTERNAL I NVESTMENT P OOLS AND P OOL P ARTICIPANTS
This statement establishes criteria for an external investment pool to qualify for making the election to
measure all of its investments at amortized cost for financial reporting purposes. An external investment
pool qualifies for that reporting if it meets all of the applicable criteria established in this statement. The
specific criteria address (1) how the external investment pool transacts with participants; (2) requirements
for portfolio maturity, quality, diversification, and liquidity; and (3) calculation and requirements of a
shadow price. Significant noncompliance prevents the external investment pool from measuring all of its
investments at amortized cost for financial reporting purposes. If an external investment pool meets the
criteria in this statement and measures all of its investments at amortized cost, the pool’s participants also
should measure their investments in that external investment pool at amortized cost for financial reporting
purposes. If an external investment pool does not meet the criteria in this statement, the pool’s
participants should measure their investments in that pool at fair value.
This statement establishes additional note disclosure requirements for qualifying external investment
pools that measure all of their investments at amortized cost for financial reporting purposes and for
governments that participate in those pools. Those disclosures for both the qualifying external investment
pools and their participants include information about any limitations or restrictions on participant
withdrawals. The requirements of this statement are effective for reporting periods beginning after
June 15, 2015, except for certain provisions on portfolio quality, custodial credit risk, and shadow pricing.
Those provisions are effective for reporting periods beginning after December 15, 2015. Earlier
application is encouraged.
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GASBS TATEMENT N O.80,B LENDING R EQUIREMENTS FOR C ERTAIN C OMPONENT U NITS—AN
AMENDMENT OF GASBS TATEMENT N O.14
The objective of this statement is to clarify the financial statement presentation requirements for certain
component units. This statement amends the blending requirements for the financial statement
presentation of component units of all state and local governments. The additional criterion requires
blending of a component unit incorporated as a not-for-profit corporation in which the primary
government is the sole corporate member. The additional criterion does not apply to component units
included in the financial reporting entity pursuant to the provisions of GASB Statement No. 39,
Determining Whether Certain Organizations Are Component Units—an amendment of GASB Statement
No. 14. The requirements of this statement are effective for reporting periods beginning after June 15,
2016. Earlier application is encouraged.
C HANGES TO R EQUIREMENTS FOR F EDERAL G RANTS
In December 2013, the U.S. Office of Management and Budget (OMB) Circular released final guidance
on administrative requirements, cost principles, and audit requirements for federal awards. The final
guidance, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal
Awards (“Uniform Guidance”), supersedes and streamlines eight existing OMB Circulars into one
document that includes OMB Circulars A-21, A-87, A-89, A-102, A-110, A-122, A-133, and the
guidance in OMB Circular A-50 on Single Audit Act follow-up.
The Uniform Guidance, which is located in Title 2 of the Code of Federal Regulations (CFR),
consolidates previous guidance into a streamlined format that aims to improve both its clarity and
accessibility, lessen administrative burdens for federal award recipients, and reduce the risk of waste,
fraud, and abuse.
The Following is a Summary of Significant Changes for Grant Recipients:
Changes time and effort documentation requirements by providing possibilities for alternative
methods of accounting for salaries and wages based on achievement of performance outcomes.
Non-federal entities must have a financial management system that includes, but is not limited to:
a comparison of expenditures with budget amounts for each federal award, written procedures to
implement the requirements of cash management, and written procedures for determining the
allowability of costs in accordance with Subpart E – Cost Principles.
Governments must comply with the new general procurement standards which include, but are
not limited to: written standards covering conflicts of interest of employees engaged in the
selection, award, and administration of contracts and documented procurement procedures that
include an analysis of lease versus purchase alternatives when appropriate.
Governments will now be required to follow the five procurement methods which include, at
times, more restrictive compliance requirements than Minnesota Statutes. For example: small
purchases (over $3,000 prior to October 1, 2015 and over $3,500 after October 1, 2015) will
require quotes.
There are new requirements for governments with subrecipients (or those making subawards),
which include, but are not limited to: a required written risk assessment of each subrecipient,
which may require you to provide training and on-site reviews of their program operations.
For governments with subrecipients or those that operate as a fiscal host of a federal grant award
and thus provide subawards, payments must be made in advance to the subrecipients, unless
certain requirements are not met, then the reimbursement method can be used.
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Among Other Matters Specifically Applicable to Auditors, Changes to the Uniform Guidance Include:
Raising both the threshold that triggers a Single Audit and the threshold for Type A/B program
determination to $750,000.
Changing the high-risk program criteria for Type A programs.
Reducing the number of high-risk Type B programs that must be tested as major programs.
Revising the Type B small program floor.
Reducing the percentage of coverage requirement to 40 percent for normal auditees and
20 percent for low-risk auditees.
Revising the criteria for low-risk auditee status.
Increasing the threshold for reporting findings to $25,000 in questioned costs and requiring more
detailed information to be reported.
Effective Dates:
Year beginning January 1, 2015 –
All administrative requirements and cost principles will apply to new awards made after
December 26, 2014.
Governmental entities are required to comply with the Uniform Guidance once the new
regulations are in effect at the Federal government level (December 26, 2014).
Any funding drawdowns made after January 1, 2015 must comply with the Uniform Guidance.
Must document whether the entity is in compliance with the old or new procurement standards
listed in Subpart D, Sections 200.317–200.326. The federal government has provided a two-year
grace period for implementing the new procurement standards.
Year beginning January 1, 2016 –
All administrative requirements and cost principles will apply to new awards made after
December 26, 2014.
Subpart F – Audit Requirements are applicable.
Year beginning January 1, 2017 –
Must have implemented the new procurement standards of the Uniform Guidance, if the
government initially elected the two-year grace beginning January 1, 2015.
At this point, all of the new Uniform Guidance at Title 2 CFR 200 is applicable.
Recommended Action Items:
We recommend that award recipients familiarize themselves with the new requirements contained in the
Uniform Guidance and develop a plan to become compliant with the new regulations.
Consider the following –
Attend training on the new uniform administrative requirements.
Identify needed policy and procedure changes, especially in the areas of:
o Financial management
o Payment
o Procurement
o Compensation
o Travel costs
Identify internal controls that might need to be established or modified.
Determine who within your organization is responsible for each action item.
Determine the timing of each action item.
Determine when you will implement the new procurement standards and document in writing.
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CITY OF ROSEMOUNT
DAKOTA COUNTY, MINNESOTA
Special Purpose Audit Reports
Year Ended
December 31, 2015
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CITY OF ROSEMOUNT
DAKOTA COUNTY, MINNESOTA
Special Purpose Audit Reports
Year Ended December 31, 2015
Table of Contents
Page
Independent Auditor’s Report on Internal Control Over Financial Reporting and
on Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance With Government Auditing Standards1–2
Independent Auditor’s Report on Minnesota Legal Compliance3
Schedule of Findings and Responses4–5
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INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the City Council and Management
City of Rosemount, Minnesota
We have audited, in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States, the financial statements of the governmental
activities, the business-type activities, each major fund, and the aggregate remaining fund information of
the City of Rosemount, Minnesota (the City) as of and for the year ended December 31, 2015, and the
related notes to the financial statements, which collectively comprise the City’s basic financial statements,
and have issued our report thereon dated May 11, 2016.
I NTERNAL C ONTROL O VER F INANCIAL R EPORTING
In planning and performing our audit of the financial statements, we considered the City’s internal control
over financial reporting (internal control) to determine the audit procedures that are appropriate in the
circumstances for the purpose of expressing our opinions on the financial statements, but not for the
purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do
not express an opinion on the effectiveness of the City’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination
of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement
of the City’s financial statements will not be prevented, or detected and corrected, on a timely basis. A
significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less
severe than a material weakness, yet important enough to merit attention by those charged with
governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies and, therefore, material weaknesses or significant deficiencies may
exist that were not identified. Given these limitations, during our audit we did not identify any
deficiencies in internal control that we consider to be material weaknesses. We did identify one deficiency
in internal control, described in the accompanying Schedule of Findings and Responses as item 2015-001
that we consider to be a significant deficiency.
(continued)
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C OMPLIANCE AND O THER M ATTERS
As part of obtaining reasonable assurance about whether the City’s financial statements are free from
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on compliance with those
provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The
results of our tests disclosed no instances of noncompliance or other matters that are required to be
reported under Government Auditing Standards.
C ITY’S R ESPONSE TO F INDING
The City’s response to the finding identified in our audit is described in the accompanying Schedule of
Findings and Responses. The City’s response was not subjected to the auditing procedures applied in the
audit of the financial statements and, accordingly, we express no opinion on it.
P URPOSE OF T HIS R EPORT
The purpose of this report is solely to describe the scope of our testing of internal control and compliance
and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal
control or on compliance. This report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the City’s internal control and compliance. Accordingly,
this report is not suitable for any other purpose.
Minneapolis, Minnesota
May 11, 2016
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INDEPENDENT AUDITOR’S REPORT
ON MINNESOTA LEGAL COMPLIANCE
To the City Council and Management
City of Rosemount, Minnesota
We have audited, in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States, the financial statements of the governmental
activities, the business-type activities, each major fund, and the aggregate remaining fund information of
the City of Rosemount, Minnesota (the City) as of and for the year ended December 31, 2015, and the
related notes to the financial statements, which collectively comprise the City’s basic financial statements,
and have issued our report thereon dated May 11, 2016.
M INNESOTA L EGAL C OMPLIANCE
TheMinnesota Legal Compliance Audit Guide for Cities, promulgated by the Office of the State Auditor
pursuant to Minnesota Statute § 6.65, contains seven categories of compliance to be tested: contracting
and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and
disbursements, miscellaneous provisions, and tax increment financing. Our audit considered all of the
listed categories.
In connection with our audit, nothing came to our attention that caused us to believe that the City failed to
comply with the provisions of the Minnesota Legal Compliance Audit Guide for Cities, except as
described in the Schedule of Findings and Responses as items 2015-002 and 2015-003. However, our
audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had
we performed additional procedures, other matters may have come to our attention regarding the City’s
noncompliance with the above referenced provisions.
C ITY’S R ESPONSES TO F INDINGS
The City’s responses to the findings identified in our audit are described in the accompanying Schedule of
Findings and Responses. The City’s responses were not subjected to the auditing procedures applied in
the audit of the financial statements and, accordingly, we express no opinion on them.
P URPOSE OF T HIS R EPORT
The purpose of this report is solely to describe the scope of our testing of compliance and the results of
that testing, and not to provide an opinion on compliance. Accordingly, this report is not suitable for any
other purpose.
Minneapolis, Minnesota
May 11, 2016
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CITY OF ROSEMOUNT
Schedule of Findings and Responses
Year Ended December 31, 2015
A.FINDINGS – SIGNIFICANT DEFICIENCY IN INTERNAL CONTROL OVER FINANCIAL
REPORTING
2015-001 S EGREGATION OF D UTIES
Criteria – Internal control over financial reporting.
Condition – The City of Rosemount, Minnesota (the City) has limited segregation of duties
in a number of areas.
Context–This is a current year and prior year finding.
Cause–The limited segregation of duties is primarily caused by the limited size of the City’s
business office staff.
Effect– One important element of internal accounting controls is an adequate segregation of
duties such that no individual has responsibility to execute a transaction, have physical access
to the related assets, and have responsibility or authority to record the transaction. A lack of
segregation of duties subjects the City to a higher risk that errors or fraud could occur and not
be detected in a timely manner in the normal course of business.
Recommendation –We recommend that the City continue to segregate duties as best it can
within the limits of what the City considers to be cost beneficial.
Management Response – There is no disagreement with the audit finding. The City reviews
and makes improvements to its internal control structure on an ongoing basis and attempts to
maximize the segregation of duties in all areas within the limits of the staff available.
However, the City does not consider it cost beneficial at this time to increase the size of its
staff in order to further segregate accounting functions.
B. FINDINGS – MINNESOTA LEGAL COMPLIANCE AUDIT
2015-002 P AYMENT OF I NVOICES
Criteria– Minnesota Statute § 471.425, Subd. 2.
Condition – Minnesota Statute requires prompt payment of local government bills within a
standard payment period of 35 days from the receipt of goods and services for governing
boards that meet at least once a month. One disbursement tested was not paid within the
statutory time limit.
Context– One of forty disbursements tested were not in compliance. This is a current year
finding.
Cause– This was an oversightby city personnel.
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CITY OF ROSEMOUNT
Schedule of Findings and Responses (continued)
Year Ended December 31, 2015
B. FINDINGS – MINNESOTA LEGAL COMPLIANCE AUDIT (CONTINUED)
2015-002 P AYMENT OF I NVOICES (CONTINUED)
Effect– Certain payments made to vendors were not paid within the timeframe as required
by state statute.
Recommendation – We recommend that the City review current procedures in place to
ensure that all invoices are paid within statutory requirements.
Management Response –There is no disagreement with the audit finding. The City will
review its procedures in place to ensure future compliance with the statute.
2015-003 P AYROLL D ECLARATION
Criteria– Minnesota Statute § 412.271, Subd. 2.
Condition – Minnesota Statute requires that when any claim for wages listed on a payroll is
paid, the employee shall sign a declaration, which may be a part of the payroll, to the effect
that the employee has received the wages and done the work for which the wages have been
paid. Each employee claiming payment from the City is required to make the following
written declaration: “I declare under penalties of perjury that this claim is just and correct and
no part of it has been paid.” This declaration was not obtained for the timecard employees
tested in fiscal year 2015.
Context– This is a current year finding.
Cause– This was an oversightby city personnel.
Effect – The City did not properly obtain this declaration for timecard employees tested in
2015 as required by Minnesota law.
Recommendation – We recommend that the City include the required declaration on each
timesheet in the future to ensure compliance with this requirement.
Management Response –There is no disagreement with the audit finding. The City will
review its procedures in place to ensure future compliance with the statute.
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