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Golden Valley, Minnesota :�� p�� #��`�:� :'S '�.,� � �„°� CITY OF GOLDEN VALLEY HENNEPIN COUNTY,MINNESOTA Comprehensive Annual Financial Report for Year Ended December 31,2012 Prepared by Finance Department Sue Virnig—Finance Director Sue Watson—Accounting Coordinator Wanita Witiiams—Accountant Edie Ernst—Accounts Receivable/Elections Assistant Carol Zerull—Utility Billing/Accounts Payable Technician Norma Glagus—Assessing/Accounts Payable Technician CTTY OF GOLDEN VALLEY HENNEPIN COUNTY,NvNNESOTA Table of Contents Page INTRODUCTORY SECTION CITY COUNCII.AND OTHER OFFICIALS i ORGANIZATIONAL CHART BY DIVISION i; FINANCE DIRECTOR'S LETTER OF TRANSNIITTAL iii—vii CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING viii FINANCIAL SECTION INDEPENDENT AUDITOR'S REPORT 1 3 MANAGEMENT'S DISCUSSION AND ANALYSIS 4-15 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements Statement of Net Position 16 Statement of Activities 1� Fund Financial Statements Governmental Funds Balance Sheet I8-19 Reconciliation of the Balance Sheet to the Statement of Net Position 2p Statement of Revenue,Expenditures,and Changes in Fund Balances 21-22 Reconciliation of the Statement of Revenue,Expenditures,and Changes in Fund Balances to the Statement of Activities 23 Statement of Revenue,Expenditures,and Changes in Fund Balances— General Fund—Budget and Actual 24 Proprietary Funds Statement of Net Position 25_26 Statement of Revenue,Expenses,and Changes in Net Position 27 2g Statement of Cash Flows 29-30 Notes to Basic Financial Statements 31-57 REQUIItED SUPPLEMENTARY INFORMATION Golden Valley Fire Department Relief Association Schedule of Funding Progress 58 City of Golden Valley Other Post-Employment Benefits Plan Schedule of Funding Progress Sg , SUPPLEMENTAL INFORMATION COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES Nonmajar Governtnental Funds 59 Combining Balance Sheet 60 Combining Statement of Revenue,Expenditures;and Changes in Fund Balances 61 CITY OF GOLDEN VALLEY HENNEPIN COUNTY,MINNESOTA Table of Contents(continued) Page COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES (CONTINUED) Nonmajor Governmental Funds(continued) Nonmajor Special Revenue Funds Combining Balance Sheet 62 Combining Statement of Revenue,Expenditures,and Changes in Fund Balances 63 Nonmajor Debt Service Funds Combining Balance Sheet 64 Combining Statement of Revenue,Expenditures,and Changes in Fund Balances 65 Nonmajor Capital Project Funds Combining Balance Sheet 66-b7 Combining Statement of Revenue,Expenditures,and Changes in Fund Balances 68-b9 General Fund Schedule of Re�venue-Budget and Actual 70 Schedule of Expenditures-Budget and Actual 71-72 Internal Service Funds �3 Combining Statement of Net Position 74 Combining Statement of Revenue,Expenses,and Changes in Net Position 75 Combining Statement of Cash Flows 76 OTHER CITY INFORMATION Schedules of Sources and Uses of Public Funds for Tax Increment Financing Districts Golden Hills No. 1503 77 North Wirth Parkway No. 1505 78 STATISTICAL SECTION(UNAUDTTED) 79 Net Position by Component 80-81 Changes in Net Position 82-85 Governmental Activities Taa�Revenues by Source 86 Fund Balances of Governmental Funds 87-88 Changes in Fund Balances of Governmental Funds 89-90 General Governmental Taac Revenues by Source 91 Assessed Value and Estimated Actual Value of TaaLable Property 92-93 Property Tax Rates 94 Principal Property Taxpayers 95 Property T�Levies and Collections 96 Ratios of Outstanding Debt by Type 97-98 Ratios of General Bonded Debt Outstanding 99 Direct and Overlapping Governmental Activities Debt 100 Legal Debt Margin Information 101-102 Pledged Revenue Coverage 103-104 Demographic and Economic Statistics 105 Principal Employers 106 Full-Time Equivalent City Government Employees by Function 107-108 Operating Indicators by Function 109-110 Capital Asset Statistics by Function 111-112 1NTRODUCTORY SECTION CITY OF GOLDEN VALLEY HENNEPIN COUNTY,MINNESOTA City Council and Other Officials Year Ended December 31, 2012 CITY COUNCIL Term Expires Shep Harris Mayor 12/31/2015 Joanie Clausen Councilmember 12/31/2015 Mike Freiberg Councilmember 12/31/2015 Paula Pentel Councilmember 12/31/2013 DeDe Scanlon Councilmember 12/31/2013 CITY OFFICIALS Thomas Burt City Manager Appointed Sue Virnig Finance Director Appointed CITY CONSULTANTS Best and Flanagan City Attorney Appointed Springsted, Inc. Bond Consultants Appointed -i- � 0 :S Q � O � v � � � C �+ ~ u a "" �� .o � � � o �°'C> � � � a.'� C � u � ,a�. ^ � C � .� � a� L1.i '�^ y C �� a�-r � w u °� � 0 p 0 � ,� ^O ~ C � � e�a � � C o .� � � Y ��T C, Q '�� Q"•� x -o � °-� � o U o � O � '�'� '�"y :� .� � a°. �' ��y � ..� -�.� .� � w �o w �. � � � � O �i V.. a�' � � �S o �+ bn ,� � � � �c C cd Q rr�� y � p � A � � .L 'r.J' � -� � � x � ° � � � � � � c� � � � .� :a�� o -�° � .� a, `a �o �� N c�� ....� � � � a � �„r � a � .o c� � �v �� b,f? • � N Q •� "� w � � �� .� �C o � � .ti � u U O � °' u � Q ,� o v �% E o c r o U C� o °� ;° _, '� C ar O a-. O � �' �LZi a� C O " � .° `� W � "5 � C O i'�' � U ~L^.� � � a.� 'S o .c"�. v� � W C.� °' � a sa„ -� � � U � o � �� •S L • C ,'!y Q .� -� �-� ,� � N ,� � w o � �C�" � v� o V � � _�1_ iit)� cj � .,- �(�lt.��.�� va��_e Y 7800 Golder�Vailey Road Colden Valley,MN 554?.7 May 21,2013 Dear Honorable Mayor,City Council,City Manager,and residents of Golden Valley: I am pleased to present the comprehensive annual financial report(CAFR) of the City of Golden Valley, Minnesota (the City) for the fiscal year ended December 31, 2012. Responsibility for both the accuracy of the data and the completeness and fairness of thc prescntation, including All disclosures, rests with the City. To the best of our knowledge and belief,the enclosed data is accurate, in alt material respects,and is reported in a manner designed to present fairly the financial position and results of operations of the various funds of the City. All disclosures necessary to enable the reader to gain an understanding of the City's finunciul nctivitica have baen includad. The City's financial statements have been audited by Malloy;Montague, Karnowski, Radosevich & Co., P.A., a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City for the fiscal year ended December 31, 2012 are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the City's financial statements for the fiscal year ended December 31, 2012 are fairly presented in conformity with accounting principles generally accepted in the United States of America. The independent auditor's report is presented as the first component of the financial section of this report. The preparation of this CAFR is a requirement of state law. Also, the CAPR is required by the bond rating agencies before they will rate the City's bonds. The report can be used by the City Council and the citizens of the City to gain a better understanding of the financial condition of the City. Accounting principles generally accepted in the United States of America require that management provide a narrative introduction, overview, and analysis to accompany the basie financial statements 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's MD&A can be found immediately following the report of the auditors. The CAFR includes all agencies and entities for which the City is financially accountable, including the Housing and Redevelopment Authority (HRA), which is reported as a blended component unit of the City. -iii- 763-593-$000 763-593-8109 � : r 763-593-3968 < < ._ PROFILE OF THE CITY The City, incorporated in 1886, is an almost fully developed community in Hennepin CounTy. It encompasses about 10.73 square miles and has an estimated population of 20,371. The City is a Statutory Plan B form of government. The City is governed by the City Council,composed of the mayor and four councilmembers. The City Council is responsible for setting policies and ordinances that govern the City and for appointing the city manager and city attorney. The city manager is responsible for carrying out the policies and hiring the employees that oversee the day-to-day operations of the City. Police services are provided by 30 sworn off'icers, which include the police chief and two cammanders. Fire services are provided by 50 paid on-call firefighters,chief of fire and inspection services,deputy fire marshal,education specialist,and code enforcement officer. The City has a Class 4 insurance rating. The 2012-2013 biennial budget was created to help serve as the foundation for the City's financial plann'vng and control. Departments submit budget requests to the Finance Department in May and the city manager presents the proposed budget to the City Council for review starting in July to be approved by September 15 each yeaz for a proposed tax rate for its property owners. All budget workshops are open to the public. The final adoption of the budget and levy are approved in December. Each yeax the first yeaz is adopted and the second year is approved in concept only. ECONONIIC CONDITION AND OUTLOOK The City's top priarities have been maintaining the City's infrastructur�–streets,water and sewer,pipes, parks,public buildings—representing a significant community investrnent. After all,the value of private property relates directly to what sunounds it. In 2012,the sta.te of Minnesota was trying to balance the budget deficit that left cities without portions or all of their Local Government Aid(LGA)or Market Value Homestead Credit(MVHC). The Legislature changed the MVHC to an exclusion for taxes payable in 2012. Although the City lost market value through this change, it was no longer subject to losing part of its levy due to the state of Minnesota not paying its MVHC. The exclusion shifted the talc responsibility to higher valued homes and commercial properties. In 20�2, an improving economy resulted in less tax delinquencies and higher building permit revenues. The mild climate helped reduce expenditures for 2012. The City will once again take a conservative approach for the 2013 budget year as values decline again. Residential and industrial values all declined and commercial properties increased in 2012. This will limit the City's ability to raise taxes to fund operations and debt service, since taxpayers do not dii�erentiate between increases in property taxes caused by an increase in the levy and increases caused by the shift in ta�c burden. The loss of property values will hapefully stabilize or increase due to new development. In 2012, building permits increased due to the economic climate improving with commercial properties and some residential properties. With this surge, the City will still remain conservative in the next few years while waiting for the residential market to come back. The financial uncertainties mentioned above will make the next few years challenging. Fortunately, the City has tried to maintain an adequate fund balance in the General Fund, which will help,but there is no question that there will have to be some changes in the City's operations in the future to deal with all the financial uncertainties. -iv- The following table shows the City's building activity for the last 10 years: Total Permits Yeaz Number Value 2003 963 $ 43,119,137 2004 949 $ 65,131,091 2005 994 $ 121,188,696 2006 880 $ 57,701,882 2007 1,410 $ 61,103,910 2008 3,556 $ 67,452,357 2009 1,310 $ 29,321,560 2010 1,109 $ 28,800,511 2011 1,172 $ 51,419,406 2012 798 $ 53,201,489 The City's HRA was invalved with the following projects: North Wirth District No.3—This ta7c increment district was set up in 2004 and is a pay-as-you-go soil remediation district. The land was sold to GVEC Properties in January 2006. The developrnent will consist of six buildings totaling up to 31,600 square feet to be divided and sold as o�ce condominium suites marketed as the Golden Valley Executive Center. Tax increment is to be used to reimburse the developer for actual costs incurred to remediate contaminatetl soils and deal with poor soil structure. Utility construction for the full project has been completed. Golden Hills Redevelopment Area—The Golden Hills Tax Increment Financing District is scheduled to end in 2014 for taxes payable in 2015. Highway 55 West District No. 1 —On Decernber 18, 2012,the City approved the establishment of Tax Increment Financing(Renewal and Renovation)Highway 55 West District No. 1. Public improvements proposed in the area include improvements to the Highway 55 access/exit to Decatur Avenue Nprth, sidewalks and lighting to improve pedestrian safety, burial of overhead electrical lines, addition of regional storm water facilities,and sanitary lining. Other developments in the City: General Mills — #1' General Mills Boulevard — Construction for remodeling at #1 General Mills Boulevazd continues. Remodeling of the East Wing was completed and had a permit construction value of$350,000. Total construction value at#1 General Mills Boulevard is$800,000. General Mills — 9000 Plymouth Avenue North (JFB) — Construction was completed on the Level 6 Lab remodel with a value of$52,000. Phase 1 of the Level 2 Wing 16 was completed with a construction value of$350,000; a permit was issued for Phase 2 of the same project with a value of$450,000. Work is near completion on the Boiler House remodel which had a construction value of$5,000,000. Total construction value at JFB is$5,852,000. 123 Ottawa Avenue North (Breck School) — A permit with a value of $1,056,558 was issued to construct temporary classrooms for students during the demolition and construction of the new high school. An additional permit was issued for the demolition and construction of the new high school;the value of this permit was$16,350,784. Total construction value for Breck School is$17,407,342. 850 Louisiana Avenue North (Benihana Restaurant) — A permit was issued for the relocation of the front door; the value of this permit was $150,000. An additional permit was issued to remadel the interior of the restaurant at a value of$750,000. The total construction value for Benihana Restaurant was$900,000. _v_ 700 Meadow Lane North (Mortenson Construction)—A permit was issued and work was completed in 2012 for the rernodeling of the 4th floor in the North Building. The permit construction value for this project was$2,300,000. An additional permit was issued and work was completed for the remodel of the 6th floor of the South Building; the value of this project was $660,000. Total construction value for Mortenson Construction was$2,960,000. 8501 Golden Valley Road (NW Eye Clinic)—A permit was issued and work is nearing completion on the entire lst floor of NW Eye Clinic. The permit construction value was$1,200,000. 1751 Kelly Drive(Olson School)—A permit was issued for two additions to Olson School. The permit construction value was$1,071,000. 7200 Wayzata Boulevard (Lupient Infinity) —A building permit was issued for two additions to this car dealership. One addition was for the showroom, tlie other was a car wash. The tota.l construction value for Lupient Infinity was$550,000. 5920 Golden Hills Drive (SpanLink) — A permit was issued for the remodel of a tenant space. The permit construction value was$423,000. 7100 Wayzata (Lupient Buick GMC) —A permit was issued for the remodel of a car dealership. The permit construction value was$400,004. LONG-TERM FINANCIAL PLANNING An unassigned fund balance goal in the General Fund of 60 percent of cunent year budgeted General Fund expenditures was approved in the fund balance policy adopted by the City Council for budgetary and planning purposes. This amount is higher than the level recommended by the Minnesota Office of the State Auditor. However, the City believes maintaining this higher level of fund balance is prudent due to its debt load and the increased uncertainty of its revenue sources. This practice is also supported by the City's bond rating agency. Through its Pavement Management Program, in 1995 the City began reconstructing its streets that did not meet standards, completing 85 of 120 miles through 2012 (22 miles had been constructed before 1995). To lessen the impact on taxpayers by reducing bonded debt needs, the City will annually reevaluate the remaining 14 miles of street and possibly reduce the number of miles that will be reconstructed each year,although this may increase maintenance costs. INTERNAL CONTROL Management assumes full responsibility for the completeness and reliability of the informatian contained in this report,based upon the comprehensive framework of internal control that it has established for this purpose. Because the cost of internal cantrol should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. -vi- MAJOR INITIATIVE5 The City is a member of the Joint Water Commission (JWC), a joint powers organization that also includes the cities of New Hope and Crystal. The JWC purchases water from the City of Minneapolis for resale to the customers of the three cities. The JWC was set up in the eaxly 1960s and has functioned effectively. In 2013, the JWC will be renegotiating rates for another five-year renewal. In 2003, a decision was made not to build a facility to operate the City's own water system. The l�linnesota Department of Natural Resources has mandated a conservation rate system starting in January 2010. The directive is for education and awareness with regards to the use of water. The City has implemented a conservation rate structure in 2010 but it will be evaluated each year to monitor consumption. AWARDS AND ACKNOWLEDGEMENTS The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its CAFR for the fiscal year ended December 31, 2011. The Ciiy has received this award since 1987. In order to be awarded a Certificate of Achievement, the government had to publish an easily readable and efficiently organized CAFR that satisfied both accounting principles generally accepted in the United States of America and applicable legal requirements. The Certificate of Achievement is valid for one year only. We believe our current CAFR continues to meet the Certificate of Achievement program requirements. We are submitting it to the GFOA to determine its eligibility for another certificate. The 2012 CAFR meets the highest professional standards and was prepared in a timely and cost effective manner. This could never have been accomplished without the excellent work of our Finance Department. Edie Ernst,Norma Gla�us, Sue Watson, Wanita Williams, and Carol Zerull have all helped with the work needed to finish this report. Credit also must be given to the Mayor and City Council for support for maintaining the highest standards of professionalism in the management of the City's finances. Yours Truly, i��u,� C� � � . ��u�' Susan M.Virnig Finance Director -vii- Certificate of Achievement for E�cellence in Financial Reportin - � r�enr�d to City of �olden �alley . � Minnesota. . ��co��,� Fuia�tcial Report for the Fscal Year Ended . I�cember 31,2011 . A Certifcate of Aclrieveme�t for Excellence in Finamcial �P°�$�s P��bY�Ciovemment F'u�attce UFficers A�sociation of du Unit�States and Canada to 8'�'��nt units and publio employee retiremenit �Ysteaa�s vvhose comprehensive annusl fiivancial ret�orte(CAFE2s)achieve tt�e tughest . gt�datds in governmont accounring and fiASncaal repoxting. �� .: � � I �. � � �l President � � . � . � Execative Director -viii- FINANCIAL SECTION � � � PRINCIPATS Thomas M.Monta�ue,t:FA 'I`homa.c A,Karnc�wski.(:1'A Pau)rl.Radosr�i4h,CPA � � Wiiliam).l.aaer.CPR C E R T I F I E [) P U B L I C james I-i.Eiehrcn,C:hA }� (; (; () � � 'j' }� �tj `j' $ Aamn).Nielsen.C:1'A Vicraria L.Molinka,E;PA INDEPENDENT AUDITOR'S REPORT To the City Council and Management City of Golden Valley,Minnesota REPORT ON THE FINANCIAL STATFMENTS 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 of Golden Valley, Minnesota(the City) as of and for the year ended December 31, 2012, and the related notes to the fmancial 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 prineiples generally accepted in the United States of America; this includes the desiga, implementation, and maintenance of intemal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. AUDTTOR'S RESPONS�ILITY 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 Stcmdards, 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 fmancial staternents 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 fmancial statements,whether due to fraud or enor. 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) -1- R4allo}�, Montaguc, Karnocvski, Raciosevith, & C:o., t'.A. i3ii �''a}�zar� Bc�ulrrard•SuC�r 4I{i • h�inar�poli�. Ad'� 5�•SI6•TaleFh�nc: �K�-44�-f1-0?� +Trlrfas: 9i2-545-(iKb9 � wwu�,mmkt.t�m 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 at December 31, 2012, and the respective changes in financial position and, where applicable, cash flows thereof, and the budgetary comparison for the General Fund for the year then ended, in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 1 of the notes to basic financial statements,the City has implemented Governmental Accounting Standards Board {GASB) Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Itesources, and Net position, and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities during the year ended December 31,2012. 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 schedules of funding progress for the Golden Valley Fire Departtnent Relief Association and the City of Golden Valley Other Post-Employment Benefits Plan, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic fmancial statements, is required by GASB who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, ecanomic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of tlie basic fmancial 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, supplemental information, and statistical section, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The supplemental information is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic fmancial 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 supplemental information is fairly stated, in all material respects, in relation to the basic fmancial 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 it. (continued) -2- OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we have also issued our report dated May 21, 2013 on our consideration of the City's intemal control over fmancial 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 fmancial reporting or on compliance. T'hat 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. �r'� �K� , �a�.oc.�' �a.�.4e�.r.�.�;(,, � �-e,., � �¢ . 4.�� ' �'� / Minneapolis,Minnesota May 21,2013 -3- CITY OF GOLDEN VALLEY Management's Discussion and Analysis � Year Ended December 31,2012 As management of the City of Golden Valley, Minnesota (the City), we have provided readers of the City's financial statements with this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2012. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, located earlier in this report. FINANCIAL HIGHLIGHTS The assets of the City exceeded its liabilities at the close of the most recent fiscal year by $101,720,687 (net position). At year-end,the City was able to report a positive balance in all categories of net position. At the end of the fiscal year, the unassigned fund balance for the City's General Fund was $7,756,057, which represents 49.3 percent of total General Fund expenditures and transfers out for 2012. The City sold three new bond issues and refinanced a previous issue in 2012 for a total amount of $4,970,000. The total long-term bonded debt decreased by$2,200,000 at the end of 2012. OVERVIEW OF THE FINANCIAL STATEMENTS Management's Discussion and Analysis (MD&A) is intended to serve as an introduction to the City's basic financial statements, which are comprised of three components: 1) government-wide financial statements, 2) fund �nancial statements, and 3) notes to basic financial statements. This report also contains other supplementary information in addition to the basic financial statements. 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 private sector businesses. The Statement of Net Position presents information on all of the City's assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The Statement of Activities presents information showing how the City's net position changed during the " most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of 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 (delinquent taxes and special assessments). Both of the government-wide financial statements distinguish functions of the City that are principally supported by property 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 include general government,public safety, public works, and parks and recreation. The business-type activities of the City include enterprises for water and sewer, storm sewer, golf course,motor vehicle licensing,and recycling. -4- The government-wide financial statements include not only the City itself (known as the primary government), but also the Golden Valley Housing and Redevelopment Authority (HRA). The HRA is a legally separate entity which functions, in essence, as a department of the City, to provide housing and redevelopment assistance through the administration of various programs. Therefore, the HRA has been included as an integral part of the City's financial statements. 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 near-term inflows and outflows of spendable resources, as well as the balances of spendable resources available at the end of the fiscal year. Such information may be usefu] 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 funds Balance Sheet and Statement of Revenue, Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate the comparison between governmental funds and governmental activities. The City maintains 20 individual govemmental funds. Information is presented separately in the governmental funds Balance Sheet and Statement of Revenue, Expenditures, and Changes in Fund Balances for the General, Golden Hills Tax Increment Special Revenue, Street Reconstruction Debt Service, Golden Hills Tax Increment Debt Service, and Street Reconstruction Capital Project Funds, all of which are considered to be major funds. Data from the other nonmajor 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 the General Fund. Budget-to-actual comparisons are provided in this financial report for this fund. 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 water and sewer(utility), storm sewer, golf course,motor vehicle licensing, and recycling operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City's various functions. The City uses internal service funds to account for workers' compensation, payroll benefits, and vehicle maintenance activities. Because tbese internal service fund activities predominantly benefit governmental rather than business-type functions, they have 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 the water and sewer, storm sewer, golf course, motor vehicle licensing, and recycling operations, all of which are considered to be major funds of the City. -5- The internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. Notes to Basic Financial Statements — The notes to basic financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Other Information—Required supplementary information (RSI) on the City's pension plan is presented following the notes to basic financial statements. Combining and individual fund statements and schedules for nonmajor funds are presented immediately following the RSI. Statistical tables are presented as the last section in this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net positions may serve over time as a useful indicator of the City's financial position. In the case of the City, assets exceeded liabilities by$101,720,687 at the end of the 2012 fiscal year. This represents an overall improvement in the City's net position of$6,319,958 from the previous year. Net Position — The City has 49.2 percent of its total net position invested in capital assets (land, land improvements,buildings and improvements,machinery and equipment, infrastructure, and construction in progress) less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot liyuidate these liabilities. An additional 26.2 percent of the City's net position represents resources that are subject to external restrictions on how they may be used. The remaining 24.6 percent of net position is unrestricted and may be used to meet the City's ongoing obligations. The following is a summary of the City's net position: Governmental Activities Business-Type Activities Total 2012 2011 Restated 2012 2011 Restated 2012 2011 Restated Current and other assets $60,247,242 $ 56,262,643 $18,409,817 $ 18,060,946 $ 78,657,059 $ 74,323,589 Capital assets 77,064,314 77,581,763 30,286,740 29,563,581 107,351,054 107,145,344 Total assets 137,311,556 133,844,406 48,696,557 47,624,527 186,008,113 181,468,933 Noncurrent liabilities (including current portion) 77,459,219 79,137,789 2,870,000 3,175,000 80,329,219 82,312,789 Other]iabilities 3,056,982 3,004,627 901,225 750,788 3,958,207 3,755,415 Totalliabililies 80,516,201 82,142,416 3,771,225 3,925,788 84,287,426 86,068,204 Net Position � Net investment in capital assets 22,622,764 22,753,481 27,416,740 26,460,581 50,039,504 49,214,062 Restricted 26,673,032 23,045,045 — — 26,673,032 23,045,045 Unrestricted 7,499,559 5,903,464 17,508,592 17,238,158 25,008,151 23,141,622 Total netposition $56,795,355 $ 51,701,990 $44,925,332 $ 43,698,739 $ 101,720,687 $ 95,400,729 -6- The following is a summary of the City's changes in net position: Governmental Activities Business-Type Activities Total 2012 2011 Restated 2012 2011 Restated 2011 2011 Restated Revenves Program revenues Charges for services $ 2,906,048 $ 2,686,158 $12,607,920 $ 12,902,714 ' $ 15,513,968 $ 15,588,872 Operating grants and contributions 464,187 413,826 128,893 463,650 593,080 877,476 Capatal grants and contributions 3,595,000 2,498,297 32,162 191,686 3,627,162 2,689,983 General revenues Property taxes 20,946,972 19,752,048 - - 20,946,972 19,752,048 Franchise taxes 621,585 581,600 - - 621,585 581,600 Grants and conh-ibutions not restricted to specific programs - 27,386 - - - 27,386 Othergeneralrevenues 353,033 336,139 - - 353,033 336,139 Investment eamings 214,493 300,813 96,035 142,204 31Q528 443,017 Gain on sale of capital assets 76,852 156,161 65,978 558 142,830 156,719 Totalrevenues 29,178,170 26,752,428 12,930,988 13,700,812 42,109,158 40,453,240 Expenses Generalgovernment 3,121,543 3,319,661 - - 3,121,543 3,319,661 Public safety 6,906,449 6,490,371 - - 6,906,449 6,490,371 Public works 9,758,495 9,720,753 - - 9,758,495 9,720,753 Pazks and recreation 1,692,346 1,335,562 - - 1,692,346 1,335,562 Interest and fiscal charges 2,724,495 2,93Q757 - - 2,724,495 2,930,757 Water and sewer - - 8,023,803 8,474,883 8,023,803 8,474,883 Stormsewer - - 1,383,594 1,176,603 1,383,594 1,176,603 Golfcourse - - 1,724,174 1,708,984 1,724,174 1,708,984 Motor vehicle licensing - - 154,492 260,583 154,492 260,583 Recycling - - 299,809 218,145 299,809 218,145 Total expenses 24,203,328 23,797,104 11,585,872 11,839,198 35,789,200 35,636,302 Increase in net assets before transfers 4,974,842 2,955,324 1,345,116 1,861,614 6,319,958 4,816,938 Transfers 218,523 198,600 (ll8,523) (]98,600) - - Increase in net position 5,093,365 3,153,924 1,226,593 1,663,014 6,319,958 4,816,938 Net position-beginning,restated 51,701,990 48,548,066 43,698,739 42,035,725 95,400,729 90,583,791 Netposition-ending $56,795,355 $ 51,701,990 $44,925,332 $ 43,698,739 $ 101,720,68'7 $ 95,400,729 Governmental Activities-Governmental activities increased net position by $5,093,365, accounting for 80.6 percent of the total growth in the City's net position. Key elements of this net increase include: � Capital grants and contributions increased $1,096,703 from the prior year, mainly due to the City receiving over$2.4 million in state aid revenue for a street improvement project. • Revenue from property taxes increased $1,194,924 from the prior year due to increases in the City's levies for general purposes and debt service, as well as an increase of about $634,000 in tax increments generated in the City's two remaining tax increment districts. • Expenses increased by $406,224 from the previous year. General government expenses decreased$198,118 due to a mild climate year and City cost containment measures. Public safety costs increased due to equipment purchases and increased staffing. Interest and fiscal charges were also $206,2621ower than last year due to some bonded debt refinancing. -7- Expenses and Program Revenues—Governmental Activities $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 $— General Public Safety Public Works Parks and Interest and Fiscal Government Recreation Charges ■Expenses ❑Program Revenues Revenue by Source—Governmental Activities Charges for Services �erating Grants and �Do�o Contributions 2% Other 2% Capital Grants and Contributions 12% L 9 .�,y �. �� Ta�ces 74% -8- Business-Type Activities — Business-type activities increased the City's net position by $1,226,593, accounting for 19.4 percent of the total growth in the City's net position from operations. Water and Sewer Utility Fund net position increased by$288,951. The City's water rates were increased 2.3 percent in 2012 to offset the increased cost of water purchased from the City of Minneapolis through the Joint Water Commission, and to pay for planned infrastructure improvements. Sanitary sewer rates remained the same for those residential users under 20,000 gallons of usage during the winter quarter. Those using more during the winter did see an increase in sewer rates based on usage. Commercial sewer accounts received a 2.9 percent increase on the rate per 1,000 gallons of water billed. Sanitary sewer infrastructure improvements for inflow and infiltration, and higher disposal costs charged by the Metropolitan Council Environment Services(MCES),have increased expenses for the City. Storm Sewer Utility Fund net position increased by $983,308. No adjustments to rates were made in 2012. The 2012 planned infrastructure improvements that coincided with the City's pavement management program were less than the budget. A portion of the resources of this fund will also be needed to pay the debt service of the storm sewer utility revenue bonds sold in 2004 and 2006. The proceeds of these issues financed the storm sewer costs associated with the Trunk Highway 55/General Mills BoulevardBoone Avenue North intersection and flood proofing improvement project. Motor Vehicle Operating Fund net position decreased by $80,513. The City experienced a theft by an employee of the Motor Vehicle Department in March 2011. The office was closed for internal review. Golden Valley's Motar Vehicle Licensing Department is a deputy registrar for the state of Minnesota Department of Vehicle Services and contracts with the state to operate the office. The City has fully complied with recommendations from both state and independent reviews and reopened in August 2012. Other business-type activities did not have a significant impact on net position in 2012. -9- Expenses and Program Revenues—Business-Type Activities $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 $— Water and Sewer Storm Sewer Brookview Golf Motor Vehicle Recycling Course ■Expenses ❑Program Revenues Revenue by Source—Business-Type Activities Capital Grants and Contributions Other Operating Grants and <1% 1% Contributions 1% � �� ;r; �-�,x�'�� Charges for Services 98% -10- FINANCIAL ANALYSIS OF THE CITY'S FUNDS Governmental Funds –At the end of the fiscal year, the City's governmental funds reported combined ending fund balances of$51,804,054, an increase of$4,838,500 in comparison with the prior year. The use of$33,693,776 of fund balance is restricted by various externally imposed constraints. Additional amounts of$687,458 and $9,666,763 are committed and assigned, respectively, for internally imposed spending constraints. The remaining $7,756,057 of fund balance is unassigned and may be used for any approved public purpose. General Fund – The fund balance of the General Fund increased by $97,059 to $9,316,057 at December 31, 2012. The unassigned fund balance at December 31, 2012 of $7,756,057 is equal to 49.3 percent of total expenditures and other uses in the General Fund, which puts the General Fund in an excellent financial position. These reserves help pay for expenditures until property tax dollars are received by the City in July and December. General Fund operating results can be summarized as follows: 2012 2011 Fund balance–beginning of year $ 9,218,998 $ 9,003,423 Additions Revenue 15,742,802 15,166,020 Other sources 86,810 175,000 Total additions 15,829,612 15,341,020 Deductions Expenditures 14,547,843 13,860,475 Other uses 1,184,710 1,264,970 Total deductions 15,732,553 � 15,125,445 � Pund balance–end of year $ 9,316,057 $ 9,218,998 Of the remaining fund balance, $60,000 was assigned for subsequent year expenditures. Also, $1,500,000 was assigned for self-insurance to highlight the continued use of the fund balance as a reserve for insurance deductibles as opposed to purchasing additional umbrella liability insurance. The remaining unassigned fund balance, $7,756,057, is for working capital. This is the amount needed to provide for General Fund operations during the first half of the year, since the City does not receive any significant money from its main revenue source—property taxes—until July of each year. -11- General Fund Revenues—The following is an analysis of 2012 General Fund revenue: Original and Final Over(Under) Percent Over Revenue 2012 Budget 2012 Actual Budget (Under)Budget Ad valorem taxes $ 11,702,050 $ 11,966,311 $ 264,261 2.3 % Licenses 173,800 224,463 50,663 29.2 Permits 628,070 999,385 371,315 59.1 Intergovernmental 10,500 84,373 73,873 703.6 Charges for services 1,747,145 1,814,761 67,616 3.9 Fines and forfeits 260,000 351,413 91,413 35.2 Investment income 110,000 46,253 (63,747) (58.0) Otherrevenue 182,700 255,843 73,143 40.0 Totals $ 14,814,265 $ 15,742,802 $ 928,537 63 Ad valorem taxes were over budget due to delinquencies that were paid from previous years. Permits were over budget due to an increase in building construction. Intergovernmental revenue exceeded budget due to several small grants from the state and federal government. Charges for services were lower due to less project activity for streets. Interest on investments came in under budget because of lower interest rates and market value adjustments on the City's invesrinent portfolio. General Fund Expenditures—The following is an analysis of 2012 General Fund expenditures: Original and Final Over(Under) Percent Over Category 2012 Budget 2012 Actual Budget (Under)Budget General government $ 1,105,680 $ 1,075,182 $ (30,498) (2.8) % Administrative services 1,572,160 1,513,689 (58,471) (3.7) Casualty insurance 290,000 237,152 (52,848) (18.2) Building operations 570,855 509,172 (61,683) (10.8) Public safety 6,255,980 6,454,384 198,404 3.2 Public works 3,362,100 3,277,795 � (84,305) � (2.5) Planning and development 317,035 296,890 (20,145) (6.4) Parks and recreation 1,132,555 1,183,579 51,024 4.5 Totals $ 14,606,365 $ 14,547,843 $ (58,522) (0.4) Administrative services were lower due to less lower maintenance on computer systems and reduced cost of supplies. Casualty insurance was lower than budget due to an insurance rebate. Public safety was over budget due to staf�ng needed with the security and time spent that was reimbursed by grants. Public works was under budget due to lower fuel prices, and less supplies and services. Planning and development costs were under budget due to reduced consulting fees for studies. Programs for parks and recreation were over budget due to popular programs that were reimbursed by program revenues. -12- Other Major Governmental Funds—The City reported four other major governmental funds for 2012. Two of these funds relate to the City's Golden Hills Tax Increment District. The Golden Hills Tax Increment Special Revenue Fund is used to account for the tax increment revenue collected on public improvements within the tax increment district. These revenues are primarily used, via transfers to the Golden Hills Tax Increment Debt Service Fund, to pay debt service on the tax increment bonds sold to finance the improvements. Fund balances increased $1,451,960 as tax increment revenue collected exceeded transfers for debt service and administrative costs. At December 31, 2012, this fund had a net equity of$7,607,249. The Golden Hills Tax Increment Debt Service Fund ended the year with a fund balance of $3,058,844, an increase of$1,239,742. Transfers in to this fund were more than scheduled debt service payments. The final debt service payments on the City's outstanding tax increment bonds are due in 2015. � The two other major governmental funds relate to the City's ongoing street reconstruction plan. The Street Reconstruction Debt Service Fund is used to account for the debt service on the general obligation improvement bonds issued to finance street improvements. At year-end, this fund had a fund balance of $14,124,409 accumulated for future debt service. Fund balance increased by $772,758 in 2012, mainly due to the issuance of$5.96 million of crossover refunding bonds, the proceeds of which were placed in an escrow account to call outstanding bonds from another issue in the future. A similar crossover refunding retired $4.97 million on outstanding debt this year. The Street Reconstruction Capital Project Fund ended the year with a fund balance of$3,776,888,which decreased $433,268 from the prior year as capital expenditures were higher than the proceeds from the improvement bonds issued this year. Proprietary Funds — The City's proprietary funds provide the same information far the business-type activities found in the government-wide financial statements,but in more detail. The unrestricted net positions of the City's enterprise funds totaled $18,224,966 at the end of the fiscal year. The Utility Fund had an increase in net position of$288,951 due to the timing of improvements that coincide with the pavement management projects. The Storm Sewer Utility Fund had an increase in net positions of$983,308 due to fewer improvements than anticipated to coincide with the pavement management project areas and a few project delays. The Brookview Operating (Golf Course) Fund had an increase in net position of$18,713 due to being able to have more golf days as a result of the mild climate. The Motor Vehicle Operating Fund had a decrease in net position of $80,513, due to the closure until August. The Recycling Fund had an increase in net position of $24,118 due to new contract pricing with the reimbursement for recyclable material. -13- Capital Assets — The City's investment in capital assets (net of accumulated depreciation) for its governmental and business-type activities as of December 31, 2012 amounts to $107,351,054. This balance represents a net increase of$205,710 from the prior year. The City's capital assets for the last two years are as follows: � Governmental Activities Business-Type Activities Total 2012 2011 2012 20ll Restated 2012 2011 Restated Land $ 3,527,685 $ 3,527,685 $ 857,044 $ 857,044 $ 4,384,729 $ 4,384,729 Land improvements 4,727,307 4,118,676 2,949,543 2,941,207 7,676,850 7,059,883 Buildings and improvements 11,941,656 ]1,683,530 667,657 667,657 12,609,313 I2,351,I87 Machinery and equipment 10,176,771 9,714,438 3,698,998 3,379,717 13,875,769 13,094,155 Infrastructure 102,891,540 101,202,931 36,187,105 34,338,591 139,078,645 135,541,522 Construction in progress 5,266,507 3,367,587 1,482,243 1,888,182 6,748,750 5,255,769 Less accumulated depreciarion (61,467,152) (56,033,084) (15,555,850) (14,508,817) (77,023,002) (70,541,901) Net total $ 77,064,314 $77,581,763 $30,286,740 $ 29,563,581 $ 107,351,054 $ 107,145,344 Because of the completion of some street reconstruction projects, the costs were moved from construction in progress to infrastructure. Also, this has increased depreciation now that those projects are complete. Additional details of the City's capital asset activity for the year can be found in Note 4 of the notes to basic financial statements. Long-Term Debt—The debt service funds account for the accumulation of resources to finance all of the City's governmental activity general obligation debt. The revenue sources for these funds include annual tax levies, tax increment transferred from the HRA General Special Revenue Fund, and special assessments. At year-end, there was $18,481,388 of fund balances restricted for debt service in the governmental funds. The revenue bonds will be paid from the designated business activity for storm water. The following table presents the City's bonded debt and certificates of indebtedness as of the last two year-ends: � Governmental Activities Business-Type Activities Total 2012 2011 2012 2011 2012 2011 G.O.special assessment bonds $56,350;000 $56,640,000 $ — $ — $56,350,000 $56,640,000 G.O.tax increment bonds 11,565,000 12,735,000 — — 11,565,000 12,735,000 G.O.certificates of indebtedness 2,095,000 2,l OQ000 — — 2,Q95,000 2,100,000 G.O.tax abatement bonds 2,420,000 2,750,000 — — 2,420,000 2,750,000 G.O.state-aid street bonds 2,090,000 2,190,000 — — 2,090,000 2,190,000 Unamortizedpremiums 819,122 785,719 — — 819,122 785,719 Compensated absences 1,614,498 1,560,275 — — 1,614,498 1,560,275 Net OPEB obligation 505,599 376,795 — — 505,599 376,795 Revenuebonds — — 2,870,000 3,175,000 2,87Q,000 3,175,000 Total $77,459,219 $79,137,789 $ 2,87Q000 $ 3,175,000 $80,329,2I9 $82,312,789 -14- In 2012,the City sold the following bond issues: 1) $1,575,000 G.O.Improvement Bonds, Series 2012A—The proceeds of this issue are being used to�nance improvements from the 2012 pavement management program. 2) $725,000 G.O. Equipment Certificates of Indebtedness, Series 2012B—The proceeds of these certificates financed the purchases of various pieces of public works and public safety equipment included in the City's 2012-2016 capital improvement program. 3) $5,960,000 G.O. Improvement Refunding Bonds, Series 2012C — The proceeds of this issue and interest earned thereon will be used to refund the 2016 through 2025 maturities of the City's G.O. Improvement Bonds, Services 2005C on their February 1, 2015 call date. Additional details of long-term debt activity for the year can be found in Note 5 of the notes to basic financial statements. � ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES Economic factors affect the preparation of annual budgets. Factors considered in preparing the 2013 budget were the following: • The state of Minnesota has continued to face budget deficits. This is the second year using Homestead Market Value Exclusion (HMVE) instead of the tax credit. With values still decreasing overall, most higher-valued homes and commercial properties received an increase in property taxes. � The City's 2013 budgeted tax levy went up by 3.26 percent from 2012. • Utility rates are reviewed with the budget process and reflect a change due to the providers such as the City of Minneapolis that sells water to the Joint Water Commission and the Metropolitan Council Environmental Services that treats sewage. Water rates were increased 2.93 percent and sewer rates were increased 3.36 percent. REQUESTS FOR INFORMATION Questions concerning any of the information provided in this report or requests for additional information should be addressed by writing to the City of Golden Valley, Attention: Finance Director, 7800 Golden Valley Road,Golden Valley,Minnesota 55427 or by calling(763) 593-8010. -15- GOVERNMENT-WIDE FINANCIAL STATEMENTS CITY OF GOLDEN VALLEY Statement of Net Position December 31,2012 Governmental Business-Type Activities Activities Total Assets Cash and temporary investments $ 48,873,168 $ 17,206,523 $ 66,079,691 Receivables Delinquent taxes 25,934 — 25,934 Special assessments(net of allowance) 3,476,752 469,088 3,945,840 Accounts and interestreceivable 548,316 1,482,186 2,030,502 Due from other governmental units 400,583 2,126 402,709 Internal balances 761,374 (761,374) — Inventory 153,343 11,268 164,611 Deferred charges — _ _ Restricted assets—temporarily restricted Cash and temporary investments 5,995,135 — 5,995,135 Interest receivable 12,637 — 12,637 Capital assets Not depreciated 8,794,192 2,339,287 11,133,479 Depreciated,net of accumulated depreciation 68,270,122 27,947,453 96,217,575 Total assets $ 137,311,556 $ 48,696,557 $ 186,008,113 Liabilities Accounts and contracts payable $ 697,698 $ 334,013 $ 1,031,711 Accrued interest payable 1,153,691 51,219 1,204,910 Accrued salaries and employee benefits 671,328 — 671,328 Due to other governmental units 90,394 372,546 462,940 Deposits 443,871 143,447 58'7,318 Long-term liabilities Due within one yeaz 7,250,723 320,000 7,570,723 Due in more than one yeaz 74,208,496 2,550,000 72,758,496 Total long-term liabilities 77,459,219 2,870,000 80,329,219 Totalliabilities 80,516,201 3,771,225 84,28�,426 Net position Net investment in capital assets 22,b22,764 27,416,740 50,039,504 Restricted for Debt service 14,567,649 — 14,56�,649 Redevelopment 8,041,662 — 8,041,662 Capital improvements 3,958,843 — 3,958,843 Cemetery maintenance 71,913 — 71,913 DWI enforcement 32,965 — 32,965 Unrestricted 7,499,559 17,508,592 25,008,151 Total net position 56,795,355 44,925,332 101,720,687 Total liabilities and net position $ 137,311,556 $ 48,696,557 $ 186,008,113 See notes to basic financial statements -16- CITY OF GOLDEN VALLEY Statement of Activities Year Ended December 31,2012 Program Revenues Net(Expenses) Operating Capital Revenue and Changes in Net Position - Charges for Grants and Grants and Govemmental Business-Type Funcrions/Programs Expenses Services Contributions Contribudons Activities Activities Total Govemmental activities General government S 3,121,543 S 263,035 a 66,075 S - S(2,792,433) a - a (2,792,433) Pubiic safety 6,906,449 1,628,0�6 398,112 - (4,880,261) - (4,880,261) Public works 9,758,495 400,773 - 3,595,000 (5,762,722) - (5,762,722) Parksandrecreation 1,692,346 614,164 - - (1,078,182) - (1,078,182) Interest and fiscal charges 2,724,495 - - - (2,724,495� - (2,724,495) Total govemmental activiries 24,203,328 2,90b,048 464,1$7 3,595,000 (17,238,093) - (17,238,093) Business-type acdvities Water and sewer 8,023,$03 8,217,582 - - - 193,779 193,779 Storm sewer 1,383,594 2,256,336 50,244 32,162 - 955,148 955,148 Golfcourse 1,724,174 1,765,186 2,401 - - 43,413 43,413 Motor vehicle licensing 154,492 92,626 10,513 - - (51,353) (51,353) Recycling 299,809 276,190 65,735 - - 42,116 42,116 Total busi�ss-type activities 11,585,872 12,607,920 128,893 32,162 - 1;183,103 1,183,103 Total governmental and business-type acdvities �35,789,200 $15,513,968 S 593,080 $3,627,162 (17,238,093) 1,183,103 (16,054,990) Generai revenues Property taxes 2Q946,972 - 20,946,972 Franchise taxes 621,585 - 621,585 Uther general revenues 353,033 - 353,033 Investment earnings 214,493 96,035 310,528 Gain on sale of capitai assets 76,852 65,978 142,830 Transfers 118,523 (118,523) - Total general revenues and transfers 22,331,458 43,490 22,374,948 Change in net position 5,093,365 1,226,593 6,319,958 Net position-beginning,restated 51,701,990 43,698,739 95,400,729 Net position-ending $56,795,355 $44,925,332 S 101,720,687 See notes to basic financial statements -17- FUND FINANCIAL STATEMENTS 7 M M v�i 7 N � ao O d' M oo O� O �O O V N O �O �D oo M l� � O 7 N Vl N l� O --� O M v'� O W l� �n �O �n �n � l� .-. 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' � T o0 W O� y �lt V� V� Vt � . � � s., N O O O O O � � � M M M M M O X � � F Q 69 69 b9 V3 t� v� I v I r I i M I I i I O I O I v I � rn I I I rn M � � O U � ^ r � M O O � � 7 7 M Q 'O N V �� n l� N l� v'� v� l� l� 7 V l� "'� � 7 O � � � � T N M N N � � M . � z N V. N � C � 00 Vi M l� M M � V' L� � W � ia •-• O .n 00 A � C M � Q � ^ � ~ O C £ p � 69 69 69 69 N v � E � CQ w a� ; � � P, � � Q � � � o I I I I I I I o I I I I I � � I I I I � I I I � o E, � � y � � co 0o N N .•. . U x � a�i � � v �o.o r � �t" � � � �o � ° �°o � �o ,° ro � � r � c� �j � �' � � � � � I V M h .--� \O M M O\ OO 00 V O I 01 7 M I h I I O l� 1� M O M M M Vl --� oo vi co N N 1� N M M �O � O�.�/'� �/'� �n N � N �--� O� � V� v� �O Q� M N � t�l O� N O O O �n i� 00 vi M 01 O�O O � N 7 M [� 01 V� M O1 O�O �D � Vl N M Vl \O O � C' N l� 00 V� l� N M � �O N V�j � m � `p N �D N N �n l� m �p � � O � l�O� O 69 Vj 69 � W � � O �� U Vi aN+ r�i1 .� X � � � � y Vi � y +� `� Y�. .� i"i � a � �, � wo .a "i y . N � rii 0. V N � I�"� ..�+ rn � id � O � t p w� �' j � � C � O, p'O � c�i �,.�„ id � �j � � > m � v, y I I I •� � v;'t7 C � Z'� v, a�i w c°o ca � � :.°—' .°�. � � � abi A ;.°^�.' c�a � q � � � � � Y a� a� �+ a� � .; w a C C � .--, ., w o � y .°J. .y .y v�, � .° a�'i o � � - � � � � a""i ❑ � � � �:Y � � o o � >, >,'� au � .� 3 ,o w ., •v� � 3 a�i a�i `� � ' 6 � '�a a o,'c� � �i � o a� a� a� � a�i .o 'o �y � o a 'L7 ^� .� 6'itl � a� 0 � O� `i' v' �' � y ''�" O G � � t�C O C � ..Y�.� 'D G O O �.�, O � ,a > .� '� � � � � F °j � � °�' o .� o E-� ;d .� .�_� F. � � .� � .°u F F s ,a 'a� a� ¢ � � � 7 ... o � o a� > > > ,fl on y -? �' v, ti � Ca v� Q d (� Ll ^ � c � a� a a� � m �c ca v, � "m �a o � UC� � � dUdQQO w ❑ ❑ a v a� o ❑ � d :a A7 :7 � wR.' Ud � � CITY OF GOLDEN VALLEY Reconciliation of the Balance Sheet to the Statement of Net Position Governmental Funds December 31,2012 Total fund balances—governmental funds $ 51,8b4,054 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not fmancial resources and,therefore, are not reported as assets in governmental funds. Cost of capital assets 138,456,028 Less accumulated depreciation (61,423,897) Long-term liabilities, including bonds payable, are not due or payable in the current period and, therefore, aze not reported as liabilities in governmental funds. Long-term liabilities at year-end consist of: Bonds and certificates of indebtedness payable (74,520,000) Certain receivables (including delinquent t�es, special assessments, and other receiyables not collected within 60 days of year-end) are included in net position, but are excluded from fund balances until they are available to liquidate liabilities of the current period. 3,524,686 Accrued interest payable is included in net position,but is excluded from fund balances until due and payable. (1,153,691) Internal service funds are used by management to charge the costs of employee benefits and vehicle maintenance to individual funds. The assets and liabilities of the intemal service funds are included in governmental activities in the Statement of Net Position. Intemal service balances included in govemmental activities 210,923 Add intemal service balances allocated to business-type activities 71b,374 Govemmental funds report debt premiums as other financing sources at the time of issuance. Premiums are reported as liabiliries in the Statement of Net Position. (819,122) Total net position—governmental activities $ 56,795,355 See notes to basic fmancial statements -20- �A 7 O h�O h M�O�C V O O�N N h �/t O T t� O h�O o0 O�O O O O M O N O V 7 . 7 O�00 V?o?^^7 O�M� 7�.�. .�. ��o�o V�i� O 7 M N �D O O O O N l�N � V�i O m oo�l�Ki..�+1 N �D� i�7 l�M 1�T N I��O M�O Vi V 7 O M O O�O O o0 01 00 00 Vl R h N l�N N �n l� Vt O N 01�--r�+1 O�O l�O�oo M o0 7 7 00 00 O�O�O l�V N � M �O O � M�O N�O N V 00 M N�O�D (x Vl N v�7 N N.�V� �01 V M Qr�--i 01 V M lD 00 O� 00 E �O 7.-r �--i fri.-. O .--i.. �O M �•�G Vi N Q� �--� N Vi v 7 7 M 7 �O �--� . ^ M N ^ V V� 69 bq l�rn�o�n I p�lD I rn O.-� oo I I I �n I I I � O o�7 M rn O I I I cn I N rn oo t� rl l�N o0 �O �'1 �O l�O� N N 7 O M M 7 �O O N O� 7 V� O f�7 7�n 'n�n O 01�-. 7 .--� O O 7 O 0? �O O 7 O N N1 �D � N O�n�--i h O�O�O Vi o0 N O �O M rn Vi Vi 7 O O O � �n'n O N O.�D l�00 M .-� oo .-. .-. O �O V M l� N V� �N N 7J �n M � (� N ON1 z .-. N 7 . r1 .. Vi .." N •-• .-N. .-�. 69 y9 I I I I I 00 I I �n I .--� I I I I I I I I t+� I I M N I 7 I I I I I 7 00 �D 00 � M � � N 7 � b N � 0�1 N � o�o � U O O �O �O 7 V o0 V � M O �D N ~ �D N 00 v'1 v� l0 M M M L� � �� O� T O� O� O� � V� vi V N l� V] � .�, N N v .-. .-. � � M N �C � U � 69 I I I I I I I I v I V� I I I I I I I I I O N N oo I I I I I O I O N N V O O O��O �n O O 7 o V .�' N U �? M O Vi�n N O O l� .. 00 r�"i � �L � � �o�o� � W o�o M � �/�i ❑ �G� ..�n l l� O� O� tV ao O � '�O r-I' �--� �, N N .--i M N ��' Q � b9 69 � � W � l I vi I I I I I N N�o I I� I I I I I I I O 7 V � I �o O O O I I �o 00 .-� rn � O � M � � O 7 V N M O h O � �n v� O ^' O 7 7 m O O O O O l� l0 7 ?� � � a� `� � v�'i v v �n v�i�� t�v �b�� rn � v, � N W � p � � e+� v� oo,-.rn v a..a � m N a i0 N � ❑ M ^' 7 � N N V h � M 7 . ^� Q U'D�-" �� .I�i ❑ M a�Q ~ cC Z �w� � � � N A � � � y p y E A 7 i v, i i i i i i �n i o o i � � � i i i i i i o o � i i i i i o 0 o rn a � � b E � � � c � cv �o �o �o 0 0 �o 0o v C y'O � 7 M 00 00 0o O� O O O� N N P-i �w a� �,b � 8 > t� � �o ni �o � �o �o vi vi rF vi r W� W y o 0.��i v�i� �°o� v°�i . �.v. v' � ° �"' _ � � � b�� 7 V 7 M M �O l� U � � �F N > � � 69 N 0.�i w 0 � I 01 I 00 M M M V N N O�N N 7 �/1 O T I I I M O� I I I I I O O O O� 00 h y .-. V. 7 l��O.-• �n O�O �00 V1 l�oo O�O� l� 7 vl O V� O� � � �+1 � 00 cr�1�V N M oo .-.�O.--�.-.Kl l�00 vi o0 O^ 00 l�01 O O� O y � �O �n fn 7 7.:�O O N Vi m h oi 7[��O m l� V �O V h [� oo � �D � N N 00.-.h 7 M V [�.--�M O h h T 00 V O� 00 00 O� 01 }S � 01 N 00 Kl � N l� O V�N �/1 7 N N�--i Vi .-. O N M � � � .-. � vi .-. �--i �O ni �-. V .�+ O� O� � 69 N 7 ro C v a x � � > a� o v y G N � � � U N 7 C � v^i � y � � C N E ca � ? �o ? N C A % +N+ � N �+ � C N.� U sN. � y N N...� V � t=C � '�� .� ,�, � � � .� o � ._c�° � g 4°^, � � " E a� c�a� ,�,�� c a�.? 7 � b u e,^, c w' q `� •o o a�°i ..L'c. �m °�' .° C x�o � S a > o c �v� �' � �+ t a b on�a..o o�'fl 7 Y °n w . v � :° c w� � L ou�' °�.. o R.o:° °' � k y c. v a o �3 0 � o .n � � � NA �,oC � � � �.c �''' � � �,� � o '� .a.�� ai cro � e �� c � T ° o .�' � � S•�U G � � � � �' � 'O N C E �.�p A G'Yi. .�+ `n C N O X C� �C,7 O�w O � iC C O q >' � ❑ � � � a�F a�v �o a a �=° m... •� F w k. �o o E.o a c F" z -o.^ o °'�o � a�°.� °'.�� 5 �� C�4 U CQ a w a.a. �� a� �.� o a"'i ,°','A ,tA,��° 'o a°°i c � c ,�',dFmk.�?�Uis. �O aU UCa �rnG7e4aaFH �G� W � a� W O w v� CITY OF GOLDEN VALLEY Reconciliation of the Statement of Revenue,Expenditures,and Changes in Fund Balances to the Statement of Activities Governmental Funds Year Ended December 31,2012 Total net change in fund balances—govemmental funds $ 4,838,500 Amounts reported for governmental activities in the Statement of Activities aze different because: Capital outlays are reported in governmental funds as expenditures. However, in the Statement of Activities the cost of those assets is allocated over the estimated useful lives as depreciation expense. Capital outlays 5,533,344 Depreciation expense (6,038,656) A gain or]oss on the disposal of capital assets,including the difference between the carrying value and any related sale proceeds, is included in the change in net position. However, only the sale proceeds are included in the change in fund balances. (6,817) The amount of bond proceeds used to finance the acquisition of capital assets is reported in the govemmental funds as a source of financing. Bond proceeds are not revenues in the Statement of Activities,but rather constitute long-term liabilities. (8,260,000) Repayment of long-term liabilities is an expenditure in the governmental funds,but the repayment reduces long-term liabilities in the Statement of Net Posirion. 10,155,000 Interest on long-term debt in the Statement of Activities differs from the amount reported in the governmental funds because interest is recognized as an e�cpenditure in the funds when it is due, and thus requires the use of current fmancial resources. In the Statement of Acriviries, however, interest expense is recognized as the interest accrues,regardless of when it is due. 87,303 Governmental funds report debt issuance premiums as other financing sources at the time of issuance. Premiums aze reported as liabiliries in the Statement ofNet Position. (33,403) Certain receivables (including delinquent taxes, special assessments, and other receivables not collected within sixty days of year-end)aze included in the change in net position,but are excluded from the change in fund balances until they are available to liquidate liabilities of the current period. (1,091,269) Internal service funds are used by management to chazge the costs of employee benefits and vehicle maintenance to individual funds. The net revenue/expense of certain activities of internal service funds is reported with governmental activities in the govemment-wide financial statements. Internal service fund activity included in govemmental activities (98,621) Add back intemal service fund activity allocated to business-type activities 7,984 Change in net position—governmental activities $ 5,093,365 See notes to basic financial statements -23- CITY OF GOLDEN VALLEY Statement of Revenue,Expenditures,and Changes in Fund Balances General Fund-Budget and Actual Year Ended December 31,2012 Original and Over(Under) Final Budget Actual Budget Revenue Ad valorem taxes $ 11,702,050 $ 11,966,311 $ 264,261 Special assessments - 25,449 25,449 Licenses and permits 801,870 1,223,848 421,978 Intergovernmental revenue 10,500 84,373 73,873 Charges for services 1,747,145 1,814,7b1 67,616 Fines and forfeits 260,000 351,413 91,413 Investment income 110,000 46,253 (63,747} Other revenue 182,700 230,394 47,694 Total revenue 14,814;265 15,742,802 928,537 Expenditures Current General government 1,105,680 1,075,182 (30,498) Administrarive services 1,572,160 1,513,689 (58,471) Casualty insurance 290,000 237,152 (52,848) Building operations 570,855 509,172 (61,683) Public safety 6,255,980 6,454,384 198,404 Public works 3,362,100 3,277,795 (84,305) Planning and development 317,035 296,890 (20,145) Pazks and recreation 1,132,555 1,183,579 51,024 Total expenditures 14,606,365 14,547,843 (58,522) Excess of revenue over expenditures 207,900 1,194,959 987,059 Other financing sources(uses) Transfers in 86,810 86,810 - Transfers(out) (294,710) (1,184,710) ($90,000) Total other fmancing sources(uses) (207,900) (1,097,900) (890,000} Net change in fund balances $ - 97,059 $ 97,059 Fund balances Beginning of year 9,218,998 End of year $ 9,316,057 See notes to basic financial statements -24- CITY OF GOLDEN VALLEY Statement of Net Position Proprietary Funds December 31,2012 Business-Tvoe Activities-Enterprise Funds Governmental Storm Sewer Brookview Motor Velricle Activities Utility Utility Operating Oparating Recycling Totals Intern�l Service Assets Current assets Cash and temporary inveshnents $ 6,045,419 $ 8,290,865 $ 1,224,524 $ 649,b52 $ 996,063 S17,206,523 S 2,199,420 Receivables Special asscssments 529,113 - - - - 529,113 - Accounts 1,481,783 - 403 - - 1,482,186 1,881 Allowance for uncollectibles (60,025) - - - - (60,025) - Due from other governmental wuts 2,126 - - - - 2,126 - Inventory 3,574 - 7,694 - - 11,268 153,343 Total current assets 8,001,990 8,290,8b5 1,232,621 649,652 996,063 19,171,191 2,354,644 Noncurrent assets Capitai assets �d - - 857,044 - - 857,044 - Land improvements 30,054 - 2,919,488 - - 2,949,542 - Buildings and improvements 505,490 - 162,167 - - 667,657 - Machinery and equipment 1,922,301 474,845 1,287,587 14,266 - 3,698,999 75,438 Infrasdvctwe-disVibution and collection systems 20,140,942 16,046,163 - - - 36,187,105 - Construction in progress 576,714 905,529 - - - 1,482,243 - 23,175,501 17,426,537 5,226,286 14,266 - 45,842,590 75,438 L.ess accumulated depreciation {8,470,648) (3,489,944) (3,593,820) (1;438} - (15,555,850) (43,255) Total noncurrent assets 14,704,853 13,936,593 1,632,466 12,828 - 30,286,740 32,183 Totai asseks �22,706,843 S22>227,458 S 2,865,087 $ 662,480 S 996,063 S49,457,931 S 2,386,827 � S�notes to basic fmancial statements (continued) -25- CITY OF GOLDEN VALLEY Statement of Net Position Proprietary Funds(continued) DecemUer 31,2012 Business-Type Activities-Enterprise Funds Govemmental Storm Sewer Brookview Motor Vehicle Activities Utility Utility Operating Operating Recycling Totats Intemal Service Liabilities and Net Position Current liabilities Accaunupayable � 68,176 $ 132,235 S 43,449 $ 182 $ I5,364 $ 259,406 $ 40,621 Accrued interest payable - 50,769 450 - - 51,219 - Contracts payable 36,958 37,649 - - - 74,607 - Accrued compensated absences-cwrent - - - - - - 955,723 Due to othet governmental units 392,240 - 306 - - 372,546 5,415 Deposits 15,950 12'7,497 - - - 143,447 9,7?1 Due to other funds - - 45,000 - - 45,000 - Bonds payable-current - 320,000 - - - 320,000 Totat current liabilities 493,324 668,150 89,205 l82 15,364 1,266,225 1,011,530 Noncurrent liabilities Net OPEB obligation - - - - - - 505,599 Accrued compensated absenc�and severance - - - - - - 658,775 Bonds payable-long-texm - 2,550,000 - - - 2,550,000 - Total noncurrent liabilities - 2,SSQ000 - - - 2,SSQ000 1,164,374 Totalliabilities 493,324 3,218,150 89,205 182 15,364 3,816,225 2,175,904 Net posidon Net investrnent in capital assets 14,704,853 11,06b,593 1,632,466 12,828 - 27,416,740 32,183 Unrestricted 7,508,666 7,942,715 1,143,416 649,470 980,699 18,224,966 178,740 Total net position 22,213,519 19,009,308 2,775,882 662,298 980,699 45,641,706 210,923 Total lrabilities and net position S22>706,843 $22,227,458 $ 2,865,087 S 662,480 S 996,063 549,457,931 $ 2,386,827 Total net position-enterprise funds S 45,641,706 Adjustment to reflect the consolidation of interttal service fund activity related to enterprise funds (716>37A) Net position-business-type activities $44,925,332 -26- � � O I I O I M O M M O N l� M I I N � I � '7 M 00 0o N M �n O N N � M N N 7 N �y M M 7 M l� M O R�/1 l� l� �O lD Vl 01 7 y . � . y Vi �n N�n h C .7 VJ N N o�0 0�0 N 7 O ,-N. � � � � O N ? 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'� a :: � ��'j �i y •.��, v�i 0. � w .5 C .� t�i � � N v C � � � '�F'�� " � d E�c a o �� c � F ° � .a � � �' p;u � � ? o y o .. v �� L: H � a� g a y " y ,� y o°� `�' a �w c `�' '`�' �abv� `°� '� � S � E u' ^^' a �� o � h .a �'d V m `� o;a� °°C .0.� o �o � = y o. ,� ;� a � o� � .J �+ p c.F�, � � 0 5� c o'a= o N' c`�i .°�. o � c � ° �� e� a'u � a.""�n w� > o � �,7i r.G�. '�7 N U R r..' > o C� G a "� N J m N,� p,O�D G�,. � � E'�� o`o E'O ° � �'�? � �' � o � � �w' °�� °�a o E mp a'O a o °'c'� �$ �, � .`d o p p p, o 0 0 �o 0 0 �� ' a � o� 'L'« pa � ��w ?�C z �"O �'.a'�a z � � � �a' �0 2 z °��' G i, m ��G� q A �.��.�d $ �� o�O 2 0 0 2 A �' � o^ o o.?�.�ooN o;� �Nay oy po�w �oc w aa'... � ° � �i,cr� a�QAQLI > ovup a°i' Y .c a�i a�'�a'�a a .y cg v�'� c y c '° a b � .y v a �� :o^°Ll�J U 0.' «�7 Q U'z Q F7 Ll �o, Axxaww �¢x�r�.. �.,dF: ,�w w � Q�¢� v°', U O D U U pi ° CITY OF GOLDEN VALLEY Notes to Basic Financial Statements December 31,2012 NOTE 1—SIGIVIFICANT ACCOUNTING POLICIES A. Organization The City of Golden Valley, Minnesota (the City) operates under "Optional Plan B" as defined in Minnesota Statutes, Chapter 412. Under this plan, the government of the City is run by a council composed of an elected mayor and four councilmembers. The City Council exercises legislative authority and determines all matters of policy. The city manager, who is appointed by the City Council, is responsible far the pmper administration of all affairs relating to the City. The accounting policies of the City conform to accounting principles generally accepted in the United States of America as applicable to governmental units. B. Reporting Entity As required by accounting principles generally accepted in the United States of America, these financial statements include the City (the primary government) and its componsnt units. Component units are legally separate entities for which the primary government is financially accountable, or for which the exclusion of the component unit would render the financial statements of the primary government misleading. The criteria used to determine if the primary government is financially accountable for a component unit includes whether or not the primary government appoints the voting majority of the potential component unit's board, is able to impose its will on the potential component unit, is in a relationship of financial benefit or burden with the potential component unit,or is fiscally depended upon by the potential component unit. As a result of applying these criteria, certain organizations have been included or disclosed in this report as follows: 1. Blended Component Unit—The Golden Valley Housing and Redevelopment Authority(HRA) is a legally separate organization created in accordance with Minnesota Statute§469. Its purpose is to clear and redevelop blighted areas in the City and to provide adequate housing for low and moderate income residents. The HRA is fiscally dependent upon the City, and its governing board consists of the City's mayor and councilmembers. Therefore, the HRA has been reported as a blended component unit of the City,with its funds reported as funds of the City. 2. Joint Ventures — The City participates in two joint ventures: the Bassett Creek Water Management Cornmission and the Joint Water Commission. Descriptions and condensed financial information for these organizations are included later in these notes. 3. Jointly Governed Organization — The City is a member of Local Governmental Information Systems (LOGIS), a consortium of Minnesota municipalities that provides data processing services and support to its members. LOGIS is a legally separate entity that is financially independent of the City. Further,the City does not appoint a voting majority of LOGIS' Board of Directors. Therefore, it has not been incorporated into the City's reporting entity. During the 2012 fiscal year,the City paid LOGIS$355,610 for services provided. -31- NOTE 1—SIGl�TIFICANT ACCOUNTING POLICIES(CONTINUED) C. Government-Wide Financial Statements The government-wide financial statements (Statement of Net Position and Statement of Activities) display information about the reporting govemment as a whole. These statements include all of the financial activities of the City. Governmental activities, which are normally supported by taxes and intergovernmental revenues,are reported separately from business-type activities,which significantly rely upon sales,fees,and charges for support. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: I) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, 2) operating grants and contributions, and 3)capital grants and contributions, including special assessments that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other internally directed revenues are reported as general revenues. The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property ta�ces and special assessments are reco�nized as revenues in the fiscal year for which they are certified for levy. Grants and similar items are recognized when all eligibility requirements imposed by the provider have been met. As a general rule,the effect of interfund activity has been eliminated from the government-wide financial statements. However,charges between the City's enterprise funds and other functions are not eliminated, as that would distort the direct costs and program revenues reported in those functions. The City applies restricted resources first when an expense is incurred for.which both restricted and unrestricted resources are available. Depreciation expense is included in the direct expenses of each function. Interest on long-term debt is considered an indirect expense and is reported separately on the Statement of Activities. D. Fund Financial Statement Presentation Separate fund financial statements are provided for governmental and proprietary funds. Major individual governmental and enferprise funds are reported as separate columns in the fund fmancial statements. Aggregated information for the remaining nonmajor governmental funds is reported in a single column in the fund financial statements. . Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this basis of accounting transactions are recorded in the following manner: 1. Revenue Recognition — Revenue is recognized when it becomes measurable and available. "Measurable" means the amount of the transaction can be determined and "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 after year-end. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceprible to accrual as revenue of the current �riod. Grants and similar items are recognized when all eligibility requirements imposed by the provider have been met. Major revenue that is susceptible to accrual includes property taxes, special assessments, intergovernmental revenue, charges for services, and interest earned on investments. Major revenue that is not susceptible to accrual includes licenses and permits, fees, and miscellaneous revenue. Such revenue is recorded only when received because it is not measurable until collected. -32- N4TE 1—SIGNIFICANT ACCOUNTING POLICIES(CONTINUED) 2. Recording of Expenditures —Expenditures are generally recorded when a liability is incuned, except for principal and interest on long-term debt and compensated absences, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as capital outlay expenditures in the governmental funds. Proceeds of long-term debt and acquisitions under capital leases are reported as other financing sources. Proprietary fund financial statements are reported using the economic resources measurement focus and accrual basis of accounting, similar to the government-wide financial statements. 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 City's enterprise funds and internal service funds are charges to customers for sales and services. The operating expenses for the enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses that do not meet this definition are reported as nonoperating revenues and expenses. Aggregated information for the internal service funds is reported in a single column in the proprietary fund financial statements. Because the principal user of the internal services is the City's governmental activities, the financial statements of the internal service funds are consolidated into the governmental column when presented in the government-wide financial statements. The cost of these services is reported in the appropriate functional activity. Description of Funds The City reports the following major governmental funds: General Fund—This is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. Galden Hills Tax Increment Special Revenue Fund — This fund is used to account for ta�c increment revenue received for the Golden Hills T� Increment District, which is used primarily to pay the debt service on tax increment bonds sold to finance public improvements within the district. Street Reconstruction Debt Service Fund — This fund is used to account for the accumulation of resources for, and payment of, debt service on improvement bonds issued to finance the City's street reconstruction program. Golden Hills Tax Increment Debt Service Fund—This fund is used to account for accumulation of resources for,and payment of,debt service on bonds sold to finance improvements within the Golden Hills Tax Increment District. Street Reconstruction Capital Project Fund —This fund is used to account for financial resources (primarily improvement bond proceeds)to be used for the City's street reconstruction program. The City reportsthe following major proprietary funds: Utility Fund—This fund is used to account for the operation, maintenance, and improvement of the City's water and sanitary sewer utilities. Storm Sewer Utility Fund — This fund is used to account for the operation, maintenance, and improvement of the City's storm water drainage system. -33- NOTE 1—SIG1�iIFICANT ACCOUNTING POLICIES(CONTINUED) Brookview Operating Fund — This fund is used to account for the operation, maintenance, and improvement of the City's 18-hole regulation and 9-hole par three golf course facilities. Motor Vehicle Operating Fund—This fund is used to.account for the operation and maintenance of the City's Deputy Registrar function. Recycting Fund—This fund is used to account for the operation of the City's recycling, spring brush pickup,and fall leaf drop-off programs. The City also reports the following fund type: Internal Service Funds — These funds are used to account for the City's vehicle maintenance operation,workers' compensation, insurance, and payroll benefits. Internal service funds operate in a manner similar to enterprise funds; however, they provide services primarily to other departments within the City. E. Budgets and Budgetary Accounting Each fall, after holding a truth in taacation public hearing,the City Council adopts a General Fund budget for the following fiscal year beginning January 1. Annual budgets are adopted on a basis consistent with accounting principles generall}� accepted in the United States of America. The City has established budgetary control at the division level. City management must request City Council approval before exceeding the budget at that level. City management may transfer appropriations within the division level without City Council approval. Appropriations lapse at year-end; however, the City Council may approve the carryover of specific amounts. Encumbrance accounting is not used and there were no significant purchase commitments outstanding at year-end. F. Cash and Investments Cash balances from all funds are combined and invested to the extent available in short-term investments. Earnings from the pooled investments are allocated to the individual funds based on the average monthly cash and investment balances of the respective funds. Cash held with trustee in the Street Reconstruction Debt Service Fund includes bala.nces held in escrow accounts for future bond refundings. Earnings on these accounts are allocated directly to this fund. The City generally reports investments at fair value. The Minnesota Municipal Money Market(4IYn Fund in an external investment pool regulated by Minnesota Statutes that is not registered with the Securities and Exchange Commission(SEC),but follows the same regulatory rules of the SEC under rule 2a7. The City's investment i�this fund is measured at the net asset value per share provided by the pool, which is based on an amortized cost method that approximates fair value. G. Receivabtes Utility and miscellaneous accounts receivable are reported at gross. Since the City is generally able to certify delinquent amounts to the county for collection as special assessments, no allowance for uncollectible accounts has been provided on current receivables. The City does record an allowance for the amount of utility receivables that remain delinquent after having been certified to the county. -34- NOTE 1—SIGI�TIFICANT ACCOUNTING POLICIES(CONTINUED) H. Property Tazes Property tax levies are set by the City Council in December of each year, and are certified to Hennepin County for collection in the following year. In Minnesota, counties act as collection agents for all property taxes. The county spreads the levies over all taxable property. Such taxes become a lien on January 1 and are recorded as receivables by the City on that d�te. Real property taxes may be paid by taxpayers in two equal installments on May 15 and October 15. Personal property taxes are due in full on May 15. The county provides ta�c settlements to cities and other taxing districts three times a year; in July,December,and January. Property taxes are recognized as revenue in the year levied in the government-wide financial sta.tements and proprietary fund financial statements. l�n the governmental fund financial statements, taxes are recognized as revenue when received in cash or within 60 days after year-end. Taxes which remain unpaid on December 31 are classified as delinquent taxes receivable, and are offset by a deferred inflow of resources in the governmental fund financial statements. I. Special Assessments Special assessments represent the financing for public improvements paid for by benefiting property owners. Special assessments are recorded as receivables upon certification to the county. Special assessments are recognized as revenue in the year levied in the government-wide financial statements and proprietary fund financial statements. In the governmental fund financial statements, special assessments are recognized as revenue when received in cash or within 60 days after year-end. Governrnental fund special assessments receivable which remain unpaid on December 31 are offset by a deferred inflow of resources in tl�e governmental fund financial statements. Special assessments receivable at December 31,2012 consist of the following: Enterprise Governmental Funds Funds Street Reconstruction General Debt Service Nonmajor Utility Special assessments receivable Delinquent $ 9,288 $ 2�,893 $ 256 $ 60,025 Deferred 23,945 3,219,832 195,538 469,088 Total 33,233 3,247,725 195,794 529,113 Allowance for uncollectible — — — (b0,025) Net of Allowance $ 33,233 $ 3,247,725 $ 195,794 $ 469,088 J. Inventories The inventories of the City's proprietary funds are stated at cost on the first-in, first-out basis. Enterprise fund inventories consist of inerchandise held for resale at the Brookview Municipal Golf Course and supplies in the Utility Fund. Inventory in the internal service funds consist of parts, supplies, and gasoline for the maintenance of city-owned vehicles. -35- NOTE 1—SIG1�iIFICANT ACCOUNTING POLICIES(CONTINUED) K. Interfand Receivables and Payables In the fund financial statements, activity beiween funds that is representative of lending or borrowing arrangements is reported as either"due to/from other funds" (current portion)or"advances to/from other funds." All other outstanding balances between funds are reported as "due to/from other funds." Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as"internal balances." L. Capital Assets Capital assets, which include property, baildings, improvements, equipment, and infrastructure assets (roads,bridges,sidewallcs,and similar items)are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Such assets are capitalized at historical cost,or estimated historical cost for assets where actual historical cost is not available. Donated assets are recorded as capital assets at their estimated fair market value on the date of donation. The City defines capital assets as those with an initial, individual cost of$5,000 or more with an estimated useful life in excess of one year. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Capital assets are recorded in the govemment-wide and proprietary fund financial statements,but are not reported in the governrnental fund financial statements. Interest incurred during the construction phase of capital assets for business-type activities is included as part of the capitalized value of the assets constructed. Capital assets are depreciated using the straight-line method over their estimated useful lives. Land and construction in progress are not depreciated. Useful lives vary from 10 to 50 years for land improvements and buildings and improvements, 3 to 20 years for machinery and equipment, and 20 to 50 years for inftastructure. M. Compensated Absences Substantially all regular full-time and part-time city employees hired before January 1,2009 earn vacation and sick leave at various rates based on longevity. Unused vacation may be accumulated up to a ma�cimurn of two times the employee's annual vacation allowance. Unused sick leave may be accumulated up to a maximum of 800 hours. Employees in good standing are paid for any unused vacation time upon termination. After five years of service, employees in good standing are also paid for one-third of any unused sick leave upon termination. Employees hired on or after January l, 2009 earn personal time off(PTO) rather than vacation and sick leave. PTO may be accumulated up to various maximum amounts as specified by contract. Employees in good standing are paid for any unused PTO upon termination. All such benefits are payable at the employee's current rate of pay at the time their employment with the City terminates. These benefits are accrued as they vest in the Payroll Benefits Internal Service Fund. The liability is funded as it accrues through payments from the City's General Fund and enterprise funds. N. Long-Term Liabilities In the government-wide and proprietary fund financial statements, long-term debt and other long-term obligations aze reported as liabilities. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are reported as and expense in the period incurred. -36- NOTE 1—SIGNIFICANT ACCOUNTING POLICIES(CONTINUED) In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period.� The face amount of debt issued is reported as other fmancing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received,are reported as expenditures. O. Deferred inflows of resources In addition to liabilities, statements of financial position or balance sheets will sometimes report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of net position that applies to future periods and so will not be recognized as an inflow of resources (revenue) until that time. The City has only one type of item, which arises under a modified accrual basis of accounting, which qualifies for reporting in this category. Accordingly, the item, unavailabie revenue, is reported only in the governmental funds Balance Sheet. The governmenta.l funds report unavailable revenue from three sources: property taxes, special assessments, and other receivables not coilected within 60 days of year-end. These amounts are deferred and recognized as an inflow of resources in the period the amounts become available. P. Fund Balance Classifications In the fund financial statements, governmental funds report fund balance in classifications that disclose constraints for which amounts in those funds can be spent. These classifications are as follows: • Nonspendable — Consists of amounts that are not in spendable form, such as prepaid items, inventory,and other long-term assets. • Restricted — Consists of amounts related to externally imposed constraints established by creditors,grantors,or contributors;or constraints imposed by state statutory provisions. • Committed—Consists of internally imposed constraints that are established by resolution of the City Gouncil. Those committed amounts cannot be used for any other purpose unless the City Council removes or changes the specified use by taking the sarne type of action it employed to previausly commit those amounts. • Assigned — Consists of internally imposed constraints. These constraints consist of amounts intended to be used by the City for specific purposes but do not meet the criteria to be classified as restricted or committed. In governmental funds, assigned amounts represent intended uses established by the governing body itself or by an official to which the goveming body delegates the authority. Pursuant to City Council resolution, the City Council is authorized to establish assignments of fesnd balance. • Unassigned — The residual classification for the General Fund which also refle�ts negative residual amounts in other funds. When both restricted and unrestricted resources are available for use, it is the City's policy to first use restricted resources, then use unrestricted resources as they are needed. When committed, assigted, or unassigned resources are available for use, it is the City's policy to use resources in the following order: 1)committed,2)assigned,and 3)unassigned. -37- NOTE 1—SIGNIFICANT ACCOUNTING POLICIES(CONTINUED) Q. Net Position In the government-wide and proprietary fund financial statements, net position represent the difference between assets,deferred outflows of resources{if any), liabilities, and defened inflows of resources. Net position is displayed in three components: � Net Investment in Capital Assets — Consists of capital assets, net of accumulated depreciation reduced by any outstanding debt attributable to acquire capital assets. • Restricted Net Position—Consists of net position restricted when there are limitations imposed on their use through external restrictions imposed by creditors, grantors, or laws ar regulations of other governments. • Unrestricted Net Position—All other elements of net position that do not meet the definition of "restricted"or"net investment in capital assets." R. Statement of Cash Flows For purposes of the Statement of Cash Flows,the City considers all highly liquid debt instruments with an original maturity from the time of purchase by the City of three months or less to be cash equivalents. The proprietary funds' portion in the government-wide cash and investment management pool is considered to be cash equivalent. S. Risk Management The City is exposed to various risks of loss related to torts: theft of, damage to,and destruction of assets; errors and omissions; and natural disasters. 1'he City participates in the League of Minnesota Cities Insurance Trust (LMCI�, a public entity risk pool for its general property and casualty, workers' compensation, and other miscellaneous insurance coverages. LMCTT operates as a cornmon risk management and insurance program for a large number of cities in Minnesota. 1'he City pays an annual premium to LMCIT for insurance coverage. The LMCIT agreement provides that the trust will be self-sustaining through member premiums and will reinsure through commercial companies for claims in excess of certain limits. T'he City also carries commercial insurance for certain other risks of loss. Settled claims resulting from these risks did not exceed insurance coverage in 2010, 2011, or 2012. There were no significant reductions in insurance coverage in 2012. T. Restricted Assets Restricted assets are cash, investrnents, and interest accrued thereon; the use of which is limited by external requirements such as a bond indenture or trust agreements. U. Use of Estimates T'he preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to malce estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenditures/expenses during the reporting period. Actual results could differ from those estimates. V. Comparative Data/Reclassifications Certain amounts presented in the prior year data have been reclassified in order to be consistent with the current year presenta.tion. -38- NOTE 1—SIGI�TIFICANT ACCOUNTING POLICIES(CONTINUED) W. Changes in Accounting Principles and Prior Period Adjustments Changes in Accountiag Principles During the year ended December 31, 2012, the City implemented GASB Statement No. 63, Financial Reporting o,f De,ferred Outflows of Resources, Deferred Inflows of Resources, and Net Position and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. GASB Statement No. 63 created two new financial statement elements, deferred outftows of resources (a consumption of net position that is applicable to a future reporting period) and deferred inflows of resources (an acquisition of net position that is applicable to a future reporting periodj,which are distinct from assets and liabilities. It also defined Net Position as the residual of all other elements presented in a statement of net position (assets + deferred outflows of resources — liabilities — deferred inflows of resources = net position). GASB Statement No. 65 identified specific items previously reported as assets that will now be classified as either deferred outflows of resources or outflows (expenditures/expenses), and items previously reported as liabilities that will now be reported as either deferred inflows of resources or inflows (revenues). Both standards require retroactive implementation, which resulted in the restatement of net position as of December 31,201 L Prior Period Adjustments In the previous year,the City capitalized construction work in process for certain improvements made to properties that are not owned by the City. As a result, the expenses reported for the City's Utility Enterprise Fund and Business-Type Activities for the year ended December 31, 2011 were overstated by $897,097, and the net position of the Utility Enterprise Fund and Business-Type Activities were overstated by the same amount. The City also did not recognize revenue for reimbursernents from third parties related to one of the projects. As a result, the revenue reported for the City's Utility Enterprise Fund and Business-Type Activities for the year ended December 31, 2011 was understated by $808,102, and the net position of the Utility Enterprise Fund and Business-Type Activities were understated by the same amount. Restatement of Beginning Net Position These changes in accounting principles and prior period adjustments resulted in the following restatements of net position as of December 31,2011: Government-Wide Proprietary Fund Financial Statements Financial Statements Storm Sewer Utility Utility Governmental Business-Type Enterprise Enterprise Activities Activities Fund Fund Net position as of December 31,2011 _ As previousiy reported a 52,769,591 � 43,816,583 $ 22,013,563 $ 18,054,849 Change in accounting principle Write-offof unamortized deferred chazges (1,067,601) (28,849) — (28,849) Prior period adjustment Previonsly capitalized costs expensed — (897,097) (897,097) — Unrecorded reimbursement revenue — 848,102 808,102 — As restated $ 51,701,990 $ 43,698,739 $ 21,924,568 $ 18,026,000 -39- NOTE 2—CASH AND INVESTMENTS A. Components of Cash and Investments Cash and investments at year-end consist of�}te following: Deposits $ 465,199 Investments 71,605,062 Cash on hand 4,565 Total $ 72,074,826 Cash and investments are presented in the financial statements as follows: Cash and temporary investments— Statement of Net Assets $ 6�,079,691 Restricted assets—cash and temporary investments— Statement of Net Assets 5,995,135 Total $ 72,074,826 B. Deposits In accordance with applicable Minnesota Statutes, the City maintains deposits at depository banks autharized by the City Council, including checking accounts and certificates of deposit. The following is considered the most significant risk assuciated with deposits: Custodial Credit Risk—In the case of deposits,this is the risk that in the event of a bank failure,the City's deposits may be lost. Minnesota Statutes require that all deposits be protected by federal deposit insurance,corporate surety bond, or collateral. The market value of collateral pledged must equal 110 percent of the deposits not covered by federal deposit insurance or corporate surety bonds. Authorized collateral includes treasury bills,notes, and bonds; issues of U.S. government agencies; general obligations rated"A"or better; revenue obligations rated "AA" or better; irrevocable standard letters of credit issued by the Federal Home Loan Bank; and certificates of deposit. Minnesota Statutes require that securities pledged as collateral be held in safekeeping in a restricted account at the Federal Reserve Bank or in an account at a trust department of a commercial bank or other financial institution that is not owned or controtled by the financial institurion furnishing the collateral. The City has no additional deposit policies addressing custodial credit risk. At year-end, the canying amount of the City's depasits was $465,199 while the balance on the bank records was $526,602. At December 31, 2012, all deposits were fully covered by federal depositary insurance or collateral held by the City's agent in the City's name. -40- NOTE 2—CASH AND INVESTMENTS(CONTINUED) C. Investraents The City has the following investments at year-end: Interest Risk— Concentration Risk Credit Risk Maturity Duration in Years Greater Than Invesmient Type � AgencY Less Than 1 1 to 5 Total 5 Percent U.S.treasury securities N1A N/A $ 124,590 $ 5,869,795 $ 5,994,385 N/A U.S,agency debt securiGes Federal Home Loan Bank AA S&P — 754,8b8 754,868 No Federal Home Loan Mortgage Corporation AA S&P — 2,499,530 2,499,530 No Federal Nadonal Mortgage Association AA S&P 381,923 17,786,b76 18,168,599 Yes Federal Farm Credit Bank AA S&P — 1,001,310 1,001,310 No Repwchase agreement(U.S.agency underlying security) AA S&P 4,860,781 — 4,8b0,781 Yes Negotiable certificates ofdeposit N/R N/R — 1,983,262 1,983,262 No Locel government debt secnriries AAA S&P — 307,175 307,175 No Local government debt securities AA S&P 3,195,827 2,436,162 5,631,989 No Local government debt securities AA Moody 600,000 783,980 1,383,980 No Local govemment debt securities A Moody — 427,966 427,966 No Local government debt securities A S&P 575,919 1,609,452 2,185,371 No State of Illinois debt securities A S&P 1,486,269 7,219,466 8,705,735 Yes Investment pool/mutual funds 4M Fund N/R N1R 17,�00,111 — 17,700,111 No Total invesdnents S 28,925,420 S 42,679,642 $71,605,062 N/A—Not Applicable N/R—Not Rated Investments are subject to various risks,the following of which are considered the most significant: Custodial Credit Risk — For investrnents, this is the risk that in the event of a failure of the counterparty to an investment transaction (typically a broker-dealer) the City would not be able,to recover the value of its investrnents or collateral securities that are in the possession of an outside party. The City does not have a formal investrnent policy addressing this risk,but typically limits its exposure by purchasing insured or registered investments,or by control of who holds the securities. -41- NOTE 2—CASH AND INVESTMENTS(CONTINUED) Credit Risk—This is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Minnesota Statutes limit the City's investments to direct obligations or obligations guaranteed by the United States or its agencies; shares of investment companies registered under the Federal Investment Company Act of 1940 that receive the highest credit rating,are rated in one of the two highest rating categories by a statistical rating agency, and all of the investments have a final maturity of 13 months or less; general obligations rated"A"or better;revenue obligations rated"AA" or better; general obligations of the Minnesota Housing Finance Agency rated "A"or better; bankers' acceptances of United States banks eligible for purchase by the Federal Reserve System; commercial paper issued by United States corporations or their Canadian subsidiaries,rated of the highest quality category by at least two nationally recognized rating agencies, and maturing in 2'70 days or less; Guaranteed Investment Contracts gttaranteed by a United States commercial bank,domestic branch of a foreign bank, or a United States inswance cornpany, and with a credit quality in one of the top two highest categories;repurchase or reverse purchase agreements and securities lending agreements with financial institutions quali�ed as a "depository" by the government entity, with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000; that are a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York; or certain Minnesota securities broker-dealers. The City's investment policies do not further address credit risk. Concentration Risk— This is the risk associated with investing a significant portion of the City's investment (considered 5 percent or more) in the securities of a single issuer, excluding U.S. guaranteed investments (such as treasuries), investment pools, and mutual funds. The City's investment policies do not limit the concentration of investments. Interest Rate Risk--This is the risk of potential variability in the fair value of fixed rate investrnents resulting from changes in interest rates (the longer the period for which an interest rate is fixed, the greater the risk). The City does not have an investment policy timiting the duration of investments. NOTE 3—INTERFUND RECEIVABLES,PAYABLES,AND TRANSFERS A. Due To and Due From Other Funds Interfund receivables and payables at year-end were as follows: Receivable Fund Payable Fund Amount Reason General Fund Golden Hills Tax Increment $ 6,861 Short-term cash flow Special Revenue Fund General Fund Nonmajor governmental funds $ 14,655 Short-term cash flow General Fund Brookview Operating Fund $ 45,000 Current portion of advance In 2010,the General Fund advanced $135,000 to the Brookview Operating Fund to internally fmance the pt�rchase of equipment. The advance will be repaid in three equal installments due April 1,2011 through 2013. The agreement bears an interest rate of 3.0 percent. The balance of the advance at December 31, 2012 was$45,000,which is included in due to/due from other funds. -42- NOTE 3—INTERFUND RECEIVABLES,PAYABLES,AND TRANSFERS(CONTINUED) B. Interfund Transfers Interfund transfers for the 2412 fiscal year were as follows: Transfers In Golden Hills Nonmajor Tax Increment Govemmental Transfers Out General Fund Debt Service Funds Total General Fund $ — $ — $ 1,184,710 $ 1,184,710 Golden Hills Tax Increment Special Revenue Fund — 2,986,000 159,000 3,145,000 Storm Sewer Utility Enterprise Fund — — 8,113 8,113 Brookview Operating Enterprise Fund 50,000 — — 50,000 Motor Vehicle Operating Enterprise Fbnd 36,810 — — 36,810 Recycling Enterprise Fund — — 23,600 23,600 $ 86,810 $ 2,986,000 $ 1,375,423 $ 4,448,233 Transfers are used to move revenues from the funds in which they are collected to the funds where they are to be spent in accordance with statutory,budgetary,or contractual requirements. NOTE 4—CAPITAL ASSETS Capital asset activity for the year ended December 3 l,2012 was as follows: A. Changes in Capital Assets Used in Governmental Activities Transfers and Beginning Completed of Year Additions Deletions Construction End of Year Capital assets,not depreciated Land $ 3,527,685 $ — $ — $ — $ 3,527,685 Construction in progress 3,367,587 4,611,973 — (2,713,053) 5,266,507 Total capital assets,not depreciated 6,895,272 4,611,973 — (2,713,053) 8,794,192 Capital assets,depreciated Land improvements 4,118,676 139,735 — 468,896 4;727,307 Buildings and improvements 11,683,530 172,841 — 85,2$5 11,941,656 Machinery and equipment 9,714,438 582,336 (616,725} 496,722 10,176,771 Infrastructure 101,202,931 26,459 — 1,662,150 102,891,540 Total capital assets,depreciated 126,719,575 921,371 (616,725) 2,713,053 129,737,274 Less accumulated depreciation on Land improvements (2,977,�69) (149,009) — — (3,126,778) Buildings and improvements (9,456,988) (2b4,766) — — (9,721,754) Machi�ry and equipment (5,628,723) (683,298) b49,908 — (5,702,l 13} Infrastructure (3�,969,604) (4,946,903) — — (42,916,507) Tota1 accumulated depreciation (Sb,033,084) (6,043,976) b09,908 — (61,467,152) Net capital assets,depreciated 68,264,265 (5,122,605) (6,817) 2,713,053 68,270,122 Total capital assets,net $77,581,763 � (510,632 $ (6,817} $ — $77,064,314 -43- NOTE 4—CAPITAL ASSETS(CONTINUED) B. Changes ia Capita!Assets Used in Business-Type ActiviNes Beginning Transfers and of Year Completed Restated Additions Deletions Construction End of Year Capital assets,not depreciated Land S 857,044 a — � — S — � 857,044 Construction in progress 1,888,182 1,400,817 — (1,806,756) 1,482,243 Total capital assets,not depreciated 2,745,226 1,400,81? — (1,806,756) 2,339,287 Capital assets,depreciated Land improvements 2,941,209 8,336 — — 2,949,543 Buildings and improvements 667,65'7 • — — — 667,657 Machinery and equipment 3,379,717 685,218 (365,937) — 3,698,998 In&astructure—distribution and collection systems 34,338,591 41,758 — 1,806,756 36,187,105 Total capital assets,depreciated 41,327,172 735,312 (365,937) 1,806,756 43,503,303 Less accumulated depreciation on Land improvements {2,290,155) (58,613) — — (2,348,768) Buildings and improvements (411,498) (18,959) — — (430,457) Machinery and equipment (2,326,233) (249,739) 365,937 — (2,210,035) Infrastructure—distribu6on and collection systems �9148Q,931) (1,085,659) — — (10,56b,590) Total accumulated depreciation i14,508,817) (1,912,970) 365,937 — (15,355,850L Net capita}assets,depreciated 26,818,355 (677,658) — 1,806,756 27,947,453 Total capital assets,net � 29,563,581 S 723,159 S — $ — S 30,28b,740 C. Depreciation Ezpense by Function Depreciation expense for the year ended December 31,2012 was charged to the following functions: Governmental acrivities General government $ 130,505 Public safety 244,527 Public works 5,355,050 Parks and recreation 308,574 Capital assets held by the City's internal service funds— charged to the various functions based on usage of.the assets � 5,320 Total depreciation expense—governmental activities $ 6,043,976 Business-type activities Utility(water and sewer) $ 713,466 Storm sewer utility 554,42$ Brookview(golf course)operating 143,638 Motor vehicle operating 1,438 Total depreciation expense—business-type activities $ 1,412,970 -44- NOTE 5—LONGTERM DEBT A. Bonds and Certificates of Indebtedness Final Balance- Original Issue Interest Rate Issue Date Maturity Date End of Year Governmental activities General obligation special assessment bonds Improvement Bonds of2005C S 5,990,000 4.25% Ob/01/2005 02/O1/2025 � 5,895,000 Improvement Bonds of 2006B S 7,320,000 4.10-4.25% 07/O1/2406 02/01/2026 7,255,000 Improvement Bonds of 2007C � 4,105,000 4.00-4.50% 06/15/2007 02/01I2027 4,105,000 Improvement Bonds of 2008A $ 6,680,000 3.50-�1.25% 06/1 SI2008 02/0iJ2028 6,680,000 Improvement Bonds of 2009A $ 7,305,000 2.00-4.00% OS/O1/2009 02/Ol/2029 6,670,000 Improvement Refunding Bonds of 2009C S 4,880,000 2.50-3.00% OS/Ol/2009 02/01I2016 3,085,000 Improvement Refunding Bonds of2009D $ 5,465,000 2.0(}--4.00% 08/19/2009 02101/2018 4,790,000 Improvement Bonds of 2010A S 3,845,000 2.00-4.00% 06/15/2010 02/Ol/2030 3,625,000 Improvement Bonds of 2011A $ 1,840,000 2.00-4.00% OS/15/2011 02/01/2031 1,840,000 Improvement Refunding Bonds of 2011C S 4,8'70,000 2.00-3.00% OS/15/2011 02/O1/2019 4,870,000 Improvement Bonds of 2012A S 1,575,000 2.00-3.00% OS/15/2012 02/O1/1932 1,575,000 Improvement Refunding Bonds of 2012C S 5,960,�0 2.0�2.25% OS/I S/2012 02/O1/2025 5,960,000 56,350,000 General obligadon tax increment bonds T.I.Refunding Bonds of 2005A S 1,465,000 3.00-3.55% 02/01J2005 02/01/2015 1,115,000 T.I.Refunding Bonds of 2005B S 4,575,000 3.75-4.75% 02/Ol/2005 02/O1/2015 3,455,000 T.I.Refunding Bonds of 200bA S 11,935,000 5.00% 01/012006 02/O1/2015 6,995,000 11,565,000 General obligation certificates of indebtedness Equipment Certificates of 2009B S 750,000 1.15-1.75% OS/Ol/2009 02/01/2013 255,000 Equipment Certificates of 2010B S 685,000 1.00-1.45% 06/15/2010 02/01/2014 46Q000 Equipment Certificates of 2011B S 655,000 0.70-1.30% OS/15/2011 02/01/2015 655,000 Equipment Certificates of 2012B S 725,004 0.50-0.75% OS/15/2012 02/01/2016 725,000 � 2,095,000 Generai obligation tax abatement bonds Tax Abatement Bonds of 2004B $ 4,785,000 3.00-4.50% 07/O1/2004 02/O1/2019 2,420,000 General obligation state-aid street bonds State-Aid Street Bonds of 2007A S 2,560,000 4.00-4.125% 03/15/2007 04/O1/2027 2,090,000 Unamortized premiums on debt issued 819,122 Compensated absences payable 1,614,498 Net OPEB obligation 505,599 Total governmental activity long-term liabilities 77,459,219 Business-type activities General obligation revenue bonds Utility Revenue Bonds of 2004C S 2,995,000 3.00-4.50% 07/01/2004 02/O1/2019 1,585,000 Utility Revenue Bonds of2006C $ 1,945,000 4.00-4.15% 07/01/2006 02/O1/2021 1,285,Q00 Total business-type activities debt 2,870,000 Total government-wide long-term liabilities S 80,324,219 -45- NOTE 5—LONG-TERM DEBT(CONTINUED) B. Descriptions of Bonds and Certificates of Indebtedness • Special Assessment Bonds—These bonds are payable primarily from special assessments levied on the properties benefiting from the improvements funded by these issues. Any deficiencies in revenue to fund these issues will be provided from general property taxes. • Tax Increment Bonds—The City has established tax increment financing districts and has issued general obligation tax increment bonds in accordance with Minnesota Statutes, Chapters §462.585 and §273.77. It is anticipated that the tax increment revenues, derived from the captured assessed value of properly in the taaL increment district, will provide substantially all funds necessary to retire the bond principal and interest. In addition, future t� levies may be placed on the tax rolls annually as scheduled for supplementary financing. • Certific�tes of Indebtedness — The City has four outstanding issues of general obligation certificates of indebtedness, issued in accordance with Minnesota Statute § 412301 to finance various equipment purchases. The certificates will be repaid primarily with ad valorem tax levies. • Tax Abatement Bonds—The City has one outstanding issue of general obligation t�abatement bonds, issued in accordance with Minnesota Statute §469.1813 to fmance various improvements. The bonds will be repaid primarily with ad valorem ta�c levies. • State-Aid Street Bonds — The City has one outstanding issue of general obligation state-aid street bonds, issued in accordance with Minnesota Statute § 162.18 to finance various street improvements. The bonds will be repaid primarily with state-aid. • Utility Reveaue Bonds — These bonds were issued for improvements or projects that directly benefit the Storm Sewer Utility Fund. This debt issue will be repaid from revenue sources of the Storm Sewer Utility Fund. • Improvement Refunding Bonds of 2011C — In May 2011, the City issued $4,870,000 of G.O. Improvement Refunding Bonds, Series 2U11C. The proceeds of this issue and interest earned thereon were used to refund the 2013 through 2019 maturities of the City's G.O.Improvement Bonds, Series 2003C,totaling$4,970,000,on their February 1,2012 call date. Until the call date, the City made all debt service payrnents on the 2003C issue, and all debt service on the 2011 C issue was paid from the refunding escrow account. On February 1, 2012, the escrow account was used to call the remaining principal of the 2003C issue, and the City assumed all future principal and interest payments on the 2411 C issue. This "crossover refunding" reduced the City's total future debt service payments by $316,562 and resulted in a present value savings of$285,036. • Improvement Refunding Bonds of 2012C — In May 2012, the City issued $5,960,000 of G.O. Improvement Refunding Bonds, Series 2012C. The proceeds of this issae and interest earned thereon will be used to refund the 2016 through 2025 maturities of the City's G:O. Improvement Bonds, Series 2005C,totaling$5,715,000,on their February 1,201 S call date. Until the call date,the City will make all debt service payments on the 2005C issue, and all debt service on the 2012C issue will be paid from the refunding escrow account. On February 1,2015, the escrow account will be used to call the remaining principal of the 2005C issue, and the City will assume all future principal and interest payments on the 2012C issue. This "crossover refunding" will reduce the City's total future debt service payments by $656,975 and result in a present value savings of$567,016. -46- NOTE 5-LONG-TERM DEBT(CONTINUED) C. Changes in Long-Term Debt Balance- Beginning Balance- Due Within of Yeaz Additions Deletions End of Year One Year Governmental activities G.O.special assessment bonds $ 56,b40,000 $ 7,535,000 $ 7,825,000 $ 56,350,000 $ 2,880,000 G.O.taac increment bonds 12,735,000 - 1,170,000 11,565,000 2,275,000 G.O.certificates of indebtedness 2,100,000 725,000 730,000 2,095,000 700,000 G.O.ta�c abatement lmnds 2,750,000 - 330,000 2,420,000 335,000 G.O.state-aid street bonds 2,190,000 - 100,000 2,090,000 105,000 Unamortized premiums on debt issued 785,719 1b6,050 132,647 819,122 - Compensated absences 1,560,275 985,604 931,381 1,614,498 955,723 Net OPEB obligation 376,795 186,703 57,899 505,599 - Total governmental activities 79,137,789 9,598,357 11,276,927 77,459,219 7,250,723 Business-type activities Utility revenue bonds 3,175,000 - 305,000 2,870,000 320,000 Total government-wide $ $2,312,789 $ 9,598,357 $ 11,581,927 � 80,329,219 $ 7,570,723 D. Minimum Debt Payments Minimum annual payments to retire bonds and certificates of indebtedness are as follows: Govemmental Activities G.O.Special G.O.Certificates Year Ending Assessment Bonds G.O.Tax Increment Bonds of Indebtedness December 31, Principal Interest Principal Interest Principal Interest 2013 $ 2,880,000 $ 1,955,696 $ 2,275,000 $ 495,831 $ 700,000 $ 18,067 2014 3,045,000 1,841,SOb 4,355,000 337,773 690,000 9,505 2015 8,785,000 1,629,389 4,935,000 117,629 460,000 3,9$7 2016 3,595,000 1,409,359 - - 245,000 919 2017 3,200,000 1,307,199 - - - - 2018-2022 12,470,000 5,289,862 - - - - 2023-2027 18,895,000 2,4'74,081 - - - - 2028 2032 3,480,000 158,443 - - - - $56,350,000 $16,065,535 $11,565,000 $ 951,233 $ 2,095,000 $ 32,478 Governmental Activities. Business-Type Activities Year Ending Ta�c Abatement Bonds State-Aid Street Bonds Utility Revenue Bonds December 31, Principal Interest Principal Interest Principal Interest 2013 $ 335,000 $ 97,944 $ 105,000 $ 82,731 $ 320,000 $ 115,136 2014 340,000 83,600 110,000 78,431 330,000 101,508 2015 340,000 69,150 115,000 73,931 345,000 87,355 2016 345,000 54,594 120,000 69,231 360,000 72,573 2017 350,000 39,646 120,000 64,431 375,000 57,013 2018-2022 710,000 31,950 685,000 244,1b3 1,140,000 77,078 2023 2027 - - 835,000 88,791 - - $ 2,420,000 $ 376,844 $ 2,090,000 $ 701,709 $ 2,870,000 $ 510,663 -47- NOTE 5—LONG-TERM DEBT(CONTINUED) E. Revenue Pledged Future revenue pledged for the payment of long-term debt is as follows: Boad Issue Proceeds Type Debt Service Pledge and Interest Paid Received Tax increment bonds Street and site Tau increment 100% $ 4,597,445 improvements fipancing Series 2005A 2005-2015 $ 1,188,618 $ 125,243 Series 2005B 2005-2015 � 3,764,740 $ 402,851 Series 2006A 200b-2015 $ �,562,875 $ 1,221,000 tJtility nvenue bonds Storm sewer Utility charges 100% $ 2,256,336 improvements Series 2004C 2004-2014 S 1,841,584 $ 262,838 Series 2006C � 2006-2021 $ 1,539,079 S 170,285 F. Conduit Debt Obligations At times, the City has issued various types of revenue bonds to provide financial assistance to private sector, nonprofit, or governmental entities to finance the acquisition or construction of facilities deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. Upon repayment of the bonds, awnership of the acquired facilities transfers to the private sector entity served by the bond issuance. Neither the City, nor any political subdivision thereof, is abligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the City's financial statements. As of December 3l, 2012,the following conduit debt issues were outstanding: Number Original ' T,ype of Debt Years Issued of Issues Principal Issued Multi-family housing revenue bonds 1999-2006 2 $ 5,588,915 GovemmentaUnonprofit revenue bonds 2007-2009 2 b,033,932 4 $ 11,622,847 It is not practical to determine the outstanding balances at December 31,2012. G. Pay-As-Yoa-Go Tax Increment Note The City has a development agreement with a private developer for a property in the North Wirth Tax Increment District. As part of this agreement, the City has agreed to reimburse the developer for certain environmental remediation costs through a pay-as-you-go talc increment note. The note provides for the payment of principal equal to the developer's costs, plus interest at 6 percent (interest accrual commencing upon the developer completing the first two phases of the project). Payments of the note will be made at the lesser of the scheduled note payments or the actual net tax increment received during the period specified in the agreernent. The note will be cancelled at the end of the agreement term, whether it has been fully repaid or not. The outstanding principal balance of this note as of December 31, 2012 is $327,145. This note is not included in the City's long-term debt, because repayment is required only to the extent sufficient tax increments are received. The City's position is that this is an obligation to assign future and uncertain revenue sources and,as such, is not actual debt in substance. -48- NOTE 6—COMPONENTS OF FUND BALANCE At December 31,2012,the City had the following fund balances: Golden Hills Street Golden Hilis Street Tax Increment Reconswction Tax Increment Reconstruction General Special Revenue Debt Service Debt Service Capital Project Nonmajor Total Restricted for �� — a — S 14,124,409 $ 3,058,844 $ — S 1,298,135 $18,481,388 Redevelopment — 7,607,249 — — — 434,413 8,041,b62 Street improvements — — — — 3,324,800 — 3,324,800 State-aid street improvements — — — — — 2,820,730 2,820,730 Douglas Drive improvements — — — — — 920,318 92Q318 Cemetery maimenance — — — — — 71,913 71,913 DWI enforcement — — — — — 32,965 32,965 Total restricted — 7,607,249 14,124,409 3,058,844 3,324,8� 5,578,474 33,693,77b Committed to Human service needs — — — — — 112,458 I 12,458 Equipmeat replacement — — — — — 575,000 S75,OOQ Total committed — — — — — 687,458 687,458 Assigned to Strcet improve�nts — — — — 452,088 213,514 665,602 Park improvements — — — — — 789,867 789,867 Equipment repl�ement — — — — — 2,382,043 2,382,043 Capital improvements — — — — — 4,269,251 4,269,251 Subsequent year expenditures 60,000 — — _ _ _ bp ppp Self-insurance 1,500,000 — — — — — 1,500,000 Total assigned 1,560,000 — — — 452,088 7,b54,675 9,666,763 Unassigned 7,756,057 — — — — — 7,756,057 Total $ 9,31b,057 $ 7,b07,249 $ 14,124,409 $ 3,058,844 $ 3,776,888 $13,920,607 $51,804,054 � �� NOTE 7—OTAER POST-EMPLOYMENT BENEFITS(OPEB)PLAN A. Plan Description The City provides post-employment benefits to certain eligible employees through the City's Other Post-Employment Benefits (OPEB) Plan, a single-employer defined benefit plan administered by the City. All post-employment benefits are based on contractual agreements with employee groups. These contractual agreements do not include any specific contribution or funding requirements. The plan does not issue a publicly available fmancial report. 1'hese benefits are summarized as follows: Post-Employment Insurance Benefits—All retirees of the City have the oprion under state law to continue their medical insurance coverage through the City from the time of retirement until the employee reaches the age of eligibility for Medicare. For members of all employee groups, the retiree must pay the full premium to continue coverage for medical and dental insurance. The CiTy is legally required to include any retirees for whom it provides health insurance coverage in the same insurance pool as its active employees, whether the premiums are paid by the City or the retiree. Consequently, participating retirees are considered to receive a benefit known as an "implicit rate subsidy." This benefit relates to the assumption that the retiree receives a more favorable premium rate than they would otherwise be able to obtain if purchasing insurance on their own, due to being included in the same pool with the City's younger and statistically healthier acrive employees. Termination Pay Benefits — Certain employee groups may also become eligible to earn a termination pay benefit payable at retirement in an amount equal to one day of pay per year of service multiplied by their daily rate of pay at retirement. Eligibility for this benefit is based on years of service and/or minimum age requirements. These benefits generally are paid into a post-retirement healthcare savings plan administered by the Minnesota State Retirement System. -49- NOTE 7—OTHER POST-EMPLOYMENT BENEFITS(OPEB)PLAN(CONTINUED) B. Funding Policy The required contribution is based on projected pay-as-you-go financing requirements, with additional amounts to pre-fund benefits as determined annually by the City. C. Annual OPEB Cost and Net OPEB Obligation The City's annual OPEB cost(expense)is calculated based on annual required contributions(ARC)of the City, an amount determined on an actuarially determined basis in accordance with the parameters of GASB Staternent Nos. 43 and 45. The ARC represents a level funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. The annual OPEB cost is accrued in the Payroll Benefits Internal Service Fund. The liability is funded through payments from the City's General Fund and enterprise funds. The following table shows the components of the City's annual OPEB cost for the year, the amount actually contributed to the plan,and the changes in the City's net OPEB obligation to the plan: Annual required contribution $ 184,288 Interest on net OPEB obligation 16,95b Adjustment to annual required contriburion (14,541) Annual OPEB cost(e�ense) 186,703 Contributions made 57,894 Increase in net OPEB obligation 128,804 Net OPEB obligation—beginning of year 376,795 Net OPEB obligation—end of year $ 505,599 The City's annua.l OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the current and preceding year are as follows: Percentage of Fiscal Year Ended Annual Employer Annual OPEB Net OPEB December 31, OPEB Cost Contribution Cost Contributed Obligation 2010 $ 174,294 $ 69,477 39.9% $ 298,465 2011 $ 175,418 $ 97,088 55.3% � 3�6,795 2012 $ 186,703 $ 57,899 31.0% $ 505,599 D. Funded Status and Funding Progress As of January 1, 2012,the most recent actuarial valuation date,the actuarial accrued liability for benefits and unfunded actuarial accrued liability(UAAL) were both $1,710,953, as the plan was unfiunded. The covered payroll{annual payroll of active employees covered by the plan)was$8,136,559 and the ratio of the UAAL to the covered payroll was 21.0 percent. -50- NOTE 7—OTI�R POST-EMPLOYMENT BENEFITS(OPEB)PLAN(CONTINUED) Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability occunence of events far into the fuhue. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and ARC of the employer are subject to continual revision as actual results are compazed with past expectations and new estimates aze made about the future. The Schedule of Funding Progress immediately fol�owing the notes to basic financial statements presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. E. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members)and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial metlaods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets,consistent with the long-term perspective of the calculations. In the January 1, 2012 actuarial valuation,the projected unit credit actuarial cost method was used. The actuarial assumptions included: a 4.5 percent inveshnent rate of return (net of administrative expenses) based on the City's own investments; an annual payroll growth rate of 3.75 percent; a general inflation rate of 3.0 percent; and an annual healthcare trend rate of 9.4 percent initially, reduced by decrements to an ultirnate rate of 5.0 percent after 12 years. The UAAL is being amortized on a level dollar basis over a closed period. The remaining amortizaxion periods at January 1,2010 for the various amortization layers ranged from 26 to 30 years. NOTE 8—DEFINED BENEFIT PENSION PLANS—STATE-WIDE A. Plan Description All full-time and certain part-time employees of the City are covered by defined benefit plans administered by the Public Employees' Retirement Association (PERA) of Minnesota. PERA administers the General Employees' Retirement Fund(GERF)and the Public Employees Police and Fire Fund (PEPFF),which are cost-sharing, multiple-employer retirement plans. 1'hese plans are established and administered in accordance with Minnesota.Statutes, Chapters 353 and 356. GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan mernbers are not. All new members must participate in the Coordinated Plan. All police officers, firefighters, and peace officers who qualify for membership by statute are covered by PEPFE PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by state statutes, and vest after three years of credited service. The defined retirement 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. -51- NOTE 8—DEFINED BENEFIT PENSION PLANS—STATE-WIDE(CONTINUED) 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 percent of average salary for each of the first 10 years of service and 2.7 percent for each remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2 percent of average salary for each of the first 10 years of service and 1.7 percent for each remaining year. Under Method 2,the annuity accrual rate is 2.7 percent of average salary for Basic Plan members and 1.7 percent for Coordinated Plan members for each year of service. For PEPFF members,the annuity accrual rate is 3.0 percent for each year of service. For all PEPFF members and for GERF members hired prior to July 1, 1989 whose annuity is calculated using Method 1, a full annuity is available when age plus years of service equal 90, Normal retirement age is 55 for PEPFF members, and 65 for Basic and Coordinated Plan members hired prior to July 1, 1989. Normal retirement age is the age for unreduced Social Security benefits capped at 66 for Coordinated Plan members hired on or after July 1, 1989. A reduced retirement annuity is also available to eligible members seeking early retirement. There are different types of annuities available to members upon retirement. A single-life annuity is a lifetime annuity that ceases upon the death of the retire�no survivor annuity is payable. There are also various types of joint and survivor annuity options available which will be payable over joint lives. Members may also leave their contributions in the fund upon termination of public service in order to qualify for a deferred annuity at retirement age. Refunds of contributions are available at any time to members who leave public service,but before retirement benefits begin. The benefit provisions stated in the previous paragraphs of this section are currenf 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 terrninated their public service. PERA issues a publicly available fmancial report that includes financial statements and required supplementary information for GERF and PEPFF. That report may be obtained at mnpera.org; by writing to PERA at 60 Empire Drive, Suite 200, St. Paul, Minnesota 55103-2088; or by calling(651) 296-7460 or(800)652-9026. B. Funding Policy Minnesota Statutes, Chapter 353 sets the rates for employer and employee contributions. These statutes are established and amended by the State Legislature. The City makes annual contributions to the pension plans equal to the amount required by state statutes. GERF Basic Plan members and Coordinated Plan members were required to contribute 9.1 percent and 6.25 percent, respectively, of their annual covered sa.lary in 2012. PEPFF members were required to contribute 9.6 percent of their annual covered salary in 2012. In 2012,the City was required to contribute the following percentages of annual covered payroll: 11.78 percent for Basic Plan GERF members, 7.25 percent for Coordinated Plan GERF members, and 14.4 percent for PEPFF members. The City's contributions for the past three years ending December 31, which were equal to the contractually required cantributions for each year as set by state statutes,were as follows: GERF PEPFF 2010 $ 430,629 $ 377,925 2011 $ 436,095 $ 392,095 2012 $ 438,909 $ 410,027 -52- NOTE 9—DEFINED CONTRIBUTION PENSION PLAN—STATE-WIDE The City Council members are covered by the Public Employees Defined Contribution Plan (PEDCP), a multiple-employer deferred compensation plan administered by PERA. The PEDCP is a tax qualified plan under Section 401(a) of the Internal Revenue Code and all contributions by or on behalf of employees are tax deferred until time of withdrawal. Plan benefits depend solely on amounts contributed to the plan plus investment earnings, less administrative expenses. Minnesota Statutes, Chapter 353D.03, specifies the employee and employer contrihution rates for those qualified personnel who elect to participate. An eligible elected official who decides to participate contributes 5 percent of salary,which is matched by the elected official's employer. For salaried employees, employer contributions must be a fixed percentage of salary. Employer and employee contributions are combined and used to purchase shares in one or more of the seven accounts of the Minnesota Supplemental Investment Fund. For administering the plan, PERA receives 2 percent of employer contributions and 4/10 of 1 percent of the assets in each member's account annually. Total contributions made by the City during the last three fiscal years ended December 31,which were equal to the required contributions were: Amount Percentage of Covered Payroll Required Employees Employer Employees Employer Rates 2010 $ 2,472 $ 2,472 5.00% 5.00% 5.00% 2011 $ 2,442 $ 2,442 5.00% 5.00% 5.04% 2012 $ 2,375 $ 2,375 5.00% 5.00% 5.00% NOTE 10—DEFINED BENEFIT PENSION PLAN—FIRE RELIEF ASSOCIATION A. Plan Description All members of the Golden Valley Fire Department (the Department) are covered by a single-employer defined benefit pension plan administered by the Golden Valley Fire Department Relief Association (the Association). The plan was established in 1943, and operates under the provisions of Minnesota Statutes § 69 and § 424, as amended. The Association provides retirement, disability, and death benefits to plan members or their beneficiaries. Benefits are established in accordance with state statutes, and can be amended by the Association within the parameters provided therein. The defined retirement benefits are based on a member's years of service, and vest after 10 years of credited service. The Association issues a publicly available financial report that includes financial statements and required supplementary information. A copy of the report may be obtained at Golden Valley City Hall. B. Summary of Significant Accounting Policies The Association's fmancial statements are prepared using the accrual basis of accounting. The Association is comprised of volunteers; therefore, members have no contribution requirements. The City's contributions are recognized when due and a formal commitment to provide the contributions has been made. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. All plan investments are reported at fair value. Securities traded on a national exchange are valued at the last reparted sales price on the Association's balance sheet date. C. Funding Policy Minnesota Statutes § 69.772 sets the minimum contribution requirement for the City on an annual basis,a portion of which is paid by the state. The 2012 state contribution of$99,?,46 is reported as a revenue and expenditure/expense by the City. These statutes are established and amended by the State Legislature. The Association is comprised of volunteers,and no member contribution is required. -53- NOTE 10—DEFINED BENEFIT PENSION PLAN—FIRE RELIEF ASSOCIATION (CONTINUED) D. Annual Pension Cost The City's annual pension cost and related information for the fiscal year ended December 31, 2012 is as follows: Annual pension cost—total $ 144,246 Contributions made City $ 45,000 State-aid $ 99,246 Actuarial valuation date 12/31/2012 Actuarial cost method Entry age normal Amortization method Level dollar closed Remaining amortization period Normal cost 20 years Prior service cost 10 years Asset valuation method Market Actuarial assumptions Investment rate of return 5% Projected salary increases Not Applicable Inflation rate Not Applicable Cost of living adjustments None E. Three-Year Trend Information Fiscal Yeaz Ended Annual Pension Percentage of Net Pension December 31, Cost(APC) APC Contributed Obligation 2010 $ 252,819 100% $ — 2011 $ 163,286 100% $ — 2012 $ 144,246 100% $ — F. Schedule of Funding Progress Actuarial (Llnfunded)/Assets Valuation Date— Actuarial Accrued in Excess of Funded December 31, Value of Assets Liability(AAL) AAL(UAAL) Ratio 2012 $ 4,210,687 $ 3,630,070 $ 580,617 116.0% The Schedule of Funding Progress immediately following the notes to basic financial statements presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. -54- NOTE 11—FLEXIBLE BENEFIT PLAN The City offers three types of flexible spending accounts: medical premiums, medical expenses, and dependent care expenses. Eligible employees can elect to participate by contributing pre-tax dollars withheld from payroll checks to the plan for healthcare and dependent care benefits. Payments are rnade from the plan to participating employees upon submitting a request for reimbursement of eligible expenses actually incurred by the participant. Before the beginning of the plan year, which is from January 1 to December 31, each participant designates a total amount of pre-talc dollars to be contributed to the plan during the year. For the medical expense account,the City is contingently liable for claims against the total amount of participants' annual contributions to the plan,whether or not such contributions have been made. All plan activity is recorded in the City's General Fund. Assets of the plan are held in the City's payroll checking account. Amounts withheld to pay for employee medical insurance premiums are administered and paid out directly by the City's finance department. Medical expense and dependent care expense accounts are administered by the Stanton Grou�a benefit consulting firm. Claims are made directly to the Stanton Group by plan participants. The Stanton Group then reimburses the participants and bills the City for these reimbursements. All plan property and income attributable to that property is solely the property of the City subject to the claims of the City's general creditors. Participants' rights under the plan are equal to those of general creditors of the City in an amount equal to the eligible healthcare and dependent care expenses incurred by the participants. Tfie City l�lieves it untikely that it will use the assets to satisfy the claims of general creditors in the future. NOTE 12—TAX INCREMENT FINANCING DISTRICTS The City is the administering suthority for the following tax increment financing districts: Golden Hills North Wirth Redevelopment Redevelopment District No. 1503 District No. 1505 Aathorizing 1aw M.S.462 M.S.462 Year established 1984 2004 Duration of district 31 years 24 years Tax capacity—taxes payable 201 T Original $ 287,000 $ 6,650 Culrent 3,503,653 47,105 Captured—retained $ 3,216,653 $ 40,455 Total G.O.ta7c increment bonds $ 38,125,000 $ - Total G.O.tax increment capital Advanced refunding bonds 27,835,000 — Total bonds issued 65,960,000 — Principal payments 54,395,000 — Outstanding at December 31,2012 $ 11,565,000 $ — -55- NOTE 13—JOINT POWERS AGREEMENTS A. Bassett Creek Water Management Commission The City is a member of a joint powers agreement,together with the cities of Medicine Lake, Plymouth, Robbinsdale, Minneapolis, Minnetonka, New Hope, Crystal, and St. Louis Park, which establishes the authority for the Bassett Creek Water Management Commission (the Commission). The Commission was created to provide for the improvement and development of Bassett Creek as a storm sewer to channel storm waters from member communities to the Mississippi River. Each member city is entitled to appoint one representative to the Commission. The nine-member Commission develops a budget for the year each July 1. Each member city contributes funds to cover the budgeted costs of operatians based half on the assessed valuation of all taxable property, and half on total area each rnember city has within the boundaries of the watershed. Any capital costs incurred by the Commission are apportioned to the members based half on the real properiy valuation of each member city within the watershed, and half on the total azea of each member city within the boundaries of the watershed. The following financial information is from the Commission's audited financial statements for the year ended January 31,2013,which are available at Golden Valley City Hall: Total assets $ 5,343,419 Total liabilities—all current 690,5�4 Net position $ 4,b52,845 Revenue $ 1,409,102 Expenses 900,674 Change in net position $ 508,428 Of the total revenue, $461,045 represented assessments to member cities. The City's 2012 portion was $115,080,or 25.0 percent,of total assessments paid by members. B. Joint Water Commission The CiTy is a member of a joint powers agreernent, together with the cities of Crystal and New Hope, which established a Joint Water Commission (JWC). The JWC was created in 1963 to provide for the creation and maintenance of a joint water supply, storage, and distribution system through which water purchatsed from the City of Minneapolis can be supplied to the population of the member cities. Each member city is entitled to appoint one member to the JWC. Original construction costs were allocated to the member cities based on percentages agreed upon in the joint powers agreement. All subsequent operating and maintenance costs are apportioned to and paid by each meml�r city on the basis of water usage. Under the terms of the joint powers agreement, upon termination the accumulated assets of the JWC shall be divided amongst the mernber cities in a manner to be determined and unanimously approved by the member cities. Because the manner in which the JWC's assets would be divided upon termination is not specified, it is not practical for the City to determine its portion of JWC assets. Therefore, the City's Utility Enterprise Fund dces not record any amount as an equity investrnent or contributed capital(for construction costs paid by other funds)related to the JWC. -56- NOTE 13—JOINT POWERS AGREEMENTS(CONTINUED) The following financial information is from the JWC's audited financial statements for the year ended December 3 l,2012,which are available at Golden Valley City Hall: Total assets $ 4,223,876 Total liabilities 866,561 Net position $ 3,357,315 Revenue $ 8,811,370 Expenses 8,039,752 Change in net posirion $ 771,618 Of the total revenues, $8,639,175 represented assessments paid by member cities. Of the total member assessments,$3,772,868,or 43.7 percent,was paid by the City. NOTE 14—COMbII.TMENTS AND CONTINGENCIES A. Legal Claims The City has the usual and customary type of miscellaneous legal claims pending at year-end. Although the outcome of these lawsuits is not presently determinable,the City's management believes that the City will not incur any material monetary loss resulting from these claims. No loss has been recorded on the City's financial statements relating to these claims. B. Federal and State Receivables Amounts recorded or receivable from federal and state agencies are subject to agency audit and adjustment. Any disallowed ctaims,including amounts already collected,may constitute a liability of the applicable funds. The amount, if any, of claims which may be disallowed by the grantor agencies cannot be determined at this time,although the City expects such amounts,if any,to be immaterial. C. Construction Commitments At December 31, 2012, the City is committed to various construction contracts for the improvement of city property. The City's remaining commiirnent under these contracts is approximately$289,816. NOTE 15—SUBSEQUENT EVENTS In Apri12013,the City approved the sale of two new bond issues.The first issue is$4,560,000 of General Obligation Bonds, Series 2012A,which will beaz interest rates ranging from 1.25 percent to 3.00 percent and have a fmal maturity of February 1, 2033. The proceeds of the issue will be used for street irnprovements, equipment purchases, and to refund 2013 through 2019 maturities of the City's General Obligation Tax Abatement Bonds, Series 2004B. The second issue is $7,025,000 of General Obligation Improvement Refunding Bonds, Series 2013B,which will bear an interest rate of 2.00 percent and have a final maturity of February l, 2026. The refunding bonds will be used to call the 2017 through 2026 maturities of the City's General Obligation Improvement Bonds, Series 2006B. -57- REQUIRED SUPPLEMENTARY INFORMATION CITY OF GOLDEN VALLEY Required Supplementary Information Golden Valley Fire Department Relief Association Schedule of Funding Progress (Unfunded)/ Actuarial Actuarial Assets Valuation Date— Accrued in Excess of Funded December 31, Value of Assets Liability(AAL) AAL(UAAL) Ratio 2010 $ 4,854,204 $ 4,296,209 $ 557,995 113.0% 2011 $ 3,977,765 $ 3,767,599 $ 210,166 105.6% 2012 $ 4,210,687 $ 3,630,070 $ 580,617 116.0% City of Golden Valley Other Post-Employment Benefits Plan Schedule of Funding Progress (Unfunded) Unfunded Fiscal Year Actuarial Actuarial Actuarial Liability as a Ended Valuation Date— Accrued Actuarial Value, Accrued Funded Covered Percentage of December 31, January 1, Liability of Plan Assets Liability Ratio Payroll Payroll 2008 2008 $ 1,971,998 � — $ 1,971,998 — % � 7,761,296 25.4% 2010 2010 $ 1,641,256 � — $ 1,641,256 — % � 8,247,626 19.9% 2012 2012 $ 1,710,953 $ — $ 1,710,953 — % $ 8,136,559 21.0% -58- SUPPLEMENTAL INFORMATION NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Human Service Foundallon—used to account for fundraising and pull-tab gambling proceeds remitted to the City by various nonprofit organizations that run charitable garnbling operations within the City's limits. The monies are committed to support organizations or programs that address human service needs in the City. A commission has besn appointed to administer this fund. Cemetery—used to account for monies received from cemetety plot sales. These funds are restricted for maintenance of the city-owned cemetery. DWI Enforcement—used to account for monies received from DWI related fines and forfeitures. These funds are restricted for DWI enforcement and education. HRA General—used to account for the general ac�ivities of the City's HRA, a blended component unit. DEBT SERVICE FUNDS Certificates of Indebtedness—used to account for accumulation of, resources for, and payment of debt service on the City's general obligation certificates of indebtedness. Tax Abatement Bonds—used to account for accumulation of,resources for,and payment of debt service on bonds sold to finance improvements within the Trunk Highway 55 and Boone Avenue intersection. CAPITAL PROJECT FUNDS Building Fund—used to provide fmancing for major capital improvements made to the City's buildings. Capital Improvement Fund —used to provide financing for major street and streetlight projects in the City, including a portion of the financing for the street reconstruction progam. Park Capital Improvement Fand — used to provide financing for major improvements to the City's parks and open space areas. Equipment Replacement Fund—used to provide financing for major vehicle and equipment purchases for the City's General Fund divisions. State-Aid Canstruction Fund—used to account for state construction aid received to finance qualifying road projects. Douglas Drive Improvement Fund—used to account for street improvements related to Douglas Drive within the City. H1tA Capital Project Funds—used to account for the expenditures of the City's HRA Housing Progam and the redevelopment expenditures in the City's taY increment districts: Golden Hills No. 1503, and North Wirth No. 1505. -59- CITY OF GOLDEN VALLEY Nonmajor Governmental Funds Combining Balance Sheet December 31,2012 Special Revenue Debt Service Capital Project Totals Assets Cash and temporary invesiments $ 247,595 $ 1,298,135 $ 12,538,392 $ 14,084,122 Receivables Special assessments - - 195,795 195,795 Accounts 2,681 - 173,631 176,312 Accrued interest 37 - - 37 Total assets $ 250,313 $ 1,298,135 $ 12,907,818 $ 14,456,266 Liabiliries Accounts payable $ 3,025 $ - $ 67,6b2 $ 70,687 Contracts payable - - 88,962 88,962 Due to other governmental units - - 1,755 1,755 llcposits - - 141,805 141,805 Due to other funds 1,643 - 13,012 14,655 Totalliabilities 4,668 - 313,196 317,864 Deferred inflows of resources Unavailable revenue-special assessments - - 195,795 195,795 Unavailable revenue-other - - 22,000 22,000 Total deferred inflows of resources - - 217,795 21�,795 Fund balances Restricted 133,187 1,298,135 4,147,152 5,578,474 Committed 112,458 - 575,000 687,458 Assigned - - 7,654,675 7,654,675 Total fund balances 245,645 1,298,135 12,376,$27 13,920,607 Total liabilities,deferred inflows of resources,and fund balances $ 250,313 $ 1,298,135 $ 12,907,818 $ 14,456,266 -60- CITY OF GOLDEN VALLEY Nonmajor Governmental Funds Combining Statement of Revenue,Expenditures,and Changes in Fund Balances Year Ended December 31,?012 Special Revenue Debt Service Capital Project Totals Revenue Ad valorem taxes $ - $ 1,052,737 $ - $ 1,052,737 Tax increments - - 30,479 30,4'79 Special assessments - - 105,426 105,426 Franchise taxes - - 621,585 621,585 Intergovernmental revenue - - 2,407,569 2,407,569 Charges for services - - 61,356 61,356 Investment income 1,129 4,078 64,862 70,069 Otherrevenue Contributions 346 - - 346 Lawful gambling proceeds 30,075 - - 30,075 Miscellaneous 80,463 177,941 98,145 356,549 Totalrevenue 112,013 1,234,756 3,389,422 4,736,191 Expenditures Current General government 215,428 - - 215,428 Public safety 8,123 - - 8,123 Capital outlay - - 3,582,044 3,582,044 Debt service Principal - 1,060,000 100,000 1,160,000 Interest and fiscal charges - 156,757 87,682 244,439 Total expenditures 223,551 1,216,757 3,769,726 5,210,034 Excess(deficiency)of revenue over expenditures (111,538) 17,999 (380,304) (473,843) Other fmancing sources Sale of capital assets - - 83,669 83,669 Bonds issued - 25,000 700,000 725,000 Transfers in 159,000 - 1,216,423 1,375,423 Total other financing sources 159,000 25,000 2,000,092 2,184,092 Net change in fund balances 47,462 42,999 1,619,788 1,710,249 Fund balances Beginning ofyear 198,183 1,255,136 10,757,039 12,210,358 End ofyear $ 245,645 $ 1,298,135 $ 12,376,827 $ 13,920,607 -61- CITY OF GOLDEN VALLEY Nonmajor Special Revenue Funds Combining Balance Sheet December 31,2012 Human Service DWI HRA Foundation Cemetery Enforcement Genera! Totals Assets Cash and temporary investments $ 112,402 $ 71,913 $ 33,365 $ 29,915 $ 247,595 Receivables Accounts 2,681 - - - 2,681 Accrued interest - - - 37 37 Total assets $ 115,083 $ 71,913 $ 33,365 $ 29,952 $ 250,313 Liabilities Accounts payable $ 2,625 $ - $ 400 $ - $ 3,025 Due to other funds - - - 1,643 1,b43 Total iiabilities 2,625 - 400 1,643 4,668 Fund balances Restricted for cemetery maintenance - 71,913 - - 71,913 Restricted for DWI enforcement - - 32,965 - 32,965 Restricted for redevelopment - - - 28,309 28,309 Committed for human service needs 112,458 - - - 112,458 Total fund balances 112,458 71,913 32,965 28,304 245,645 Total liabilities and fund balances $ 115,083 $ 71,913 $ 33,365 $ 29,952 $ 250,313 -62- CITY OF GOLDEN VALLEY Nonmajor Special Revenue Funds Combining Statement of Revenue,Expenditures,and Changes in Fand Balances Year Ended December 31,2012 Human Service DWI Foundation Cemetery Enforcement HRA General Totals Revenue ' Investment income $ 631 $ 400 $ 73 $ 25 $ 1,129 Otherrevenue Contributions 34b - - - 346 Lawful gambling proceeds 30,075 - - - 30,075 Misceltaneous 35,$48 3,600 41,015 - 80,463 Total revenue 66,900 4,000 41,088 25 112,013 Expenditures General government Planning and administration - - - 140,000 140,000 � Operating supplies 12,779 - - - 12,779 Professional services 45,000 - - 17,649 62,649 Pubiic safety Salaries - - 2,913 - 2,913 Operating supplies - - 5,210 - 5,210 Total expenditures 57,779 - 8,123 157,649 223,551 Excess(deficiency)of revenue over expenditures 9,121 4,000 32,965 (157,624) (111,538) Other financing sources Transfers in - - - 159,000 159,000 Net change in fund balances 9,121 4,000 32,965 1,376 47,462 Fund balances Beginning of year 103,337 67,913 - 26,933 19$,183 End of yeaz $ I 12,458 $ 71,913 $ 32,9b5 $ 28,309 $ 245,645 -63- CITY OF GOLDEN VALLEY Nonmajor Debt Service Funds Combining Balance Sheet December 31,2012 Certificates Tax of Abatement Indebtedness Bonds Tatals Assets Cash and temporary investments $ 315,230 $ 982,905 $ 1,298,135 Fund balances Restricted for debt service $ 315,230 $ 982,905 $ 1,298,135 -64- CITY OF GOLDEN VALLEY Nonmajor Debt Service Funds Combining Statement of Revenue,Expenditures,and Changes in Fund Balances Yeaz Ended December 31,2012 Certificates T� of Abatement Indebtedness Bonds Totals Revenue Ad valorem taYes $. 752,737 $ 300,000 $ 1,052,737 Investment income — 4,078 4,078 Other revenue Miscellaneous — 177,941 177,941 Total revenue 752,737 482,019 1,234,756 Expenditures Debt service Principal 730,000 330,000 1,060,000 Interest 24,978 111,869 136,847 Fiscal charges 13,979 5,931 19,910 Total expenditures 768,95� 447,800 1,216,757 Excess(deficiency)of revenue over expenditures (16,220) 34,219 17,999 Other financing sources Bonds issued � 25,000 — 25,000 Net change in fund balances 8,780 34,219 42,999 Fund balances Beginning ofyear 306,450 948,686 1,�55,136 Endofyear $ 315,230 $ 982,905 $ 1,298,135 -65- N �n .-� oo N N '/� �/t N �O vt O V� O o0 7 O 1� M � �--� l� o0 O� O� M -. l0 �O v� O �--� O� O� O O� M � O O �D d' �/t N �--� m 1� \O o0 l0 01 l� oo O .-� l� O 1� t� M •-. 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OA � � � 49 G � D I --� I I �o �o -+ ef t� I I I h I I I t� M I I O O � O t� E y V v� T M N O O O oo O O 1� ao O � N M �n N 1� l� h V O Op �n ao M U � y � �O � 0�0 0�0 0�0 0�0 O O O T � l�p �ry ` �--� � v l0 �O 7 a Ql � � � V I I I O I T \O �n i v� I I � I I I vt O I I O O O V 7 7 7 O O�i .-�. .�. � N �Q�i r � a�o � V1 � 00 V1 01 O� Ql M Q1 01 �D �D N '9 N M l� a0 00 00 .r l� 1� �D M O mN N N � . � � N N � V3 N � w � � 7 G w O R 7 � O�q O C � C �O �y � U y U � V � � V ❑ G � � R V � C � � E U � G �:+ ❑ � v°'i �'" C . y 3 N N t�. � '�O 0. p R y pq y y � X' � d F 7 a�Di F � G a�i `c° y 'o v°� a�i m aki on� o R w ^� ti N � w° F y :_° `�y F ,� ,° �i o ,� � '� m m 5 � j � ��'� 'S " � Do �+ � � � y � o o � � a o Z .a o o x o � � �, K o � c ,�, a� � ia� o a�.� uF' � yp a� F y 3 � F F W �w "' wF 2 � 'C c.. � .c . � `n en :0 5 � �'•'� � c a� w, o .ti R � o � K a�i � v ee >� � a�i °�v�i U w x � nC. � °' a F p 'en ro m a z m a> v o f.° �o a> ❑ '� FmwSU ° O �U L � v� a1F � W W W: w O w GENERAL FUNDSCHEDULES CITY OF GOLDEN VALLEY General Fund Schedule of Revenue-Budget and Actual Year Ended December 31,2012 (With Comparative Actual Amounts for the Year Ended December 31,2011) 2012 2011 Over(Under) Budget Actual Budget Actual Revenue Taxes Ad valorem $ 11,702,050 $ 11,926,9'75 $ 224,925 $ 11,564,833 Penalties and interest - 39,336 39,336 35,952 Total talces 11,702,050 11,966,311 264,261 11,600,785 Special assessments - 25,449 25,449 26,209 Licenses and permits Licenses 173,800 224,4b3 50,663 213,564 Permits 628,070 999,385 371,315 948,342 Total licenses and pernuts 801,870 1,223,848 421,978 1,161,906 Intergovernmental revenue Federal grants 10,500 43,047 32,547 103,096 State grants - 18,283 18,283 29,689 County - 23,043 23,043 25,595 Total intergovemmental revenue 10,500 84,373 73,873 158,380 Charges for services General government 43,550 52,580 9,030 54,784 Public safety 181,745 195,268 13,523 220,125 Public works 125,000 153,098 28,098 146,846 Parks and recreation 395,350 557,936 162,586 413,679 Other funds 1,001,500 855,879 (145,621) 763,214 Total charges for services 1,�47,145 1,814,761 67,616 1,598,648 Fines and forfeitures 260,000 351,413 91,413 303,908 Investment income 110,000 46,253 (63,747) 64,533 Other revenue Rents 179,200 210,455 31,255 223,117 Miscellaneous 3,500 19,939 16,439 28,534 Total other revenue 182,700 230,394 47,694 251,651 Totalrevenue $ 14,$14,265 $ 15,742,802 $ 928,537 $ 15,166,020 -70- l� M 7 �O �O 7 M O� 00 V o0 7 N 7 00 7 N O O N �n � � h ~ O M M �n �O �--� l� �--� O N l� �n �n ^ 7 �n O l� . l� l� �D N. 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M M � �O 7 �--� �O � �"� M �-+ l0 .-� M � b9 yq � O � � t. v y o v v � w p � " � � q � '�' v, �o ° ° c°�i a� 3 0 � v � � v � � y�j � �� p � � � •� � � C '° > � C a�i °A a�i � a) C'+ ca 0 � ca .D o y � .� � y .O c> � � A, a� � on•� a°'o � � � �,��a ¢ � a. � ro �.� � a, b � �o �'' p o. v o � � � ia � .5 0 � � � � �a � � '� �a . � � °�' N '� .o � °� °A ° `° �' o �, c`'"a 'c � � o ° "� a°Ji � C° o nn b 'c � � o 0 :o v .�,' �'' �F� �� o � � y F� � •� .6 a� � F" a � �� o F. F� � ^- �. o • °°y � � 'o o v a°i � UUa � � •� � Qa°. wa` � � W �na ca ; QUoG ¢C7 d U W a w a a W INTERNAL SERVICE FUNDS Workers' Compensation Fund — used to account for the financing of all of the City's workers' compensation benefits. Payroll Benefits Fund—used to account for the financing of all of the City's employee benefits, such as vacation leave, sick leave, holiday pay, pension contributions, group insurance contributions, and termination pay. Vehicle Maintenance Fund—used to account for the maintenance of motor vehicles of all departments and related costs. -73- CITY OF GOLDEN VALLEY Internal Service Funds Combining Statement of Net Position December 31,2012 Workers' Payroll Vehicle Compensation Benefits Maintenance Totals Assets Current assets Cash and temporary investrnents $ 34,805 $ 2,131,813 $ 32,802 $ 2,199,420 Receivables Accounts - 1,881 - 1,881 Inventory - - 153,343 153,343 Total current assets 34,805 2,133,694 186,145 2,354,644 Noncuurent assets Capital assets Machinery and equipment - - 75,438 75,438 Less accumulated depreciation - - (43,255) (43,255) Total noncurrent assets - - 32,183 32,183 Total assets $ 34,805 $ 2,133,694 $ 218,328 $ 2,386,827 --� Liabilities and Net Position Current liabilities Accounts payable $ - $ 7,050 $ 33,571 $ 40,621 Accrued compensated absences-current - 955,723 - 955,723 Due to other govemmental units - 5,415 - 5,415 Deposits - 9,771 - 9,771 Total current liabilities - 977,959 33,571 1,011,530 Noncurrent liabilities Net OPEB obligation - 505,599 - 505,599 Accrued compensated absences - 658,775 - 658,775 Total noncurrent liabilities - 1,164,374 - 1,164,374 Totalliabilities - 2,142,333 33,571 2,175,904 Net position Net investment in capital assets - - 32,183 32,183 Unrestricted 34,805 (8,639) 152,574 178,740 Total net position 34,805 (8,639) 184,757 210,923 Total liabiliries and net position $ 34,805 $ 2,133,694 $ 218,328 $ 2,386,827 -74- CITY OF GOLDEN VALLEY Intemal Service Funds Combining Statement of Revenue,Expenses,and Changes in Net Position Year Ended December 31,2012 Workers' Payroll Vehicle Compensation Benefits Maintenance Totals Operating revenue Charges to other funds $ 141,962 $ 4,751,332 $ 284,671 $ 5,177,965 Payroll benefits charged to employees — 1,087,415 — 1,087,415 Total operating revenue 141,9b2 5,838,747 284,671 6,265,380 Operating expenses Workers' compensation charges 188,558 — — 188,558 Payroll benefits charges — 6,314,224 — 6,314,224 Vehicle maintenance operations — — 279,631 279,b31 Depreciation — — 5,320 5,320 Total operating expenses 188,558 6,314,224 284,951 6,787,733 Operating income(loss) (46,596) (475,477) (280) (522,353) Nonoperating revenue Ad valorem taxes - 45,000 — 45,000 Intergovernmental revenue — 301,422 — 301,422 Interest income 344 11,903 280 12,527 Other income — 64,783 — 64,783 Total nonoperating revenue 344 423,108 280 423,732 Change in net position (46,252) {52,369) — (98,621) Net position Beginning ofyear 81,057 43,730 184,757 309,544 End of year $ 34,805 $ (8,639) $ 184,757 $ 210,923 -75- CITY OF GOLDEN VALLEY Internal Service Funds Combining Statement of Cash Flows Year Ended December 31,2012 Workers' Payroll Vehicle Compensation Benefits Maintenance Totals Cash flows from operating activities Receipts from customers and users $ 141,962 $ 4,823,152 $ - $ 4,965,114 Receipts from interfund services provided - 1,087,415 284,671 1,372,086 Paid to suppliers/service providers (188,558) (4,328,333) (44,539) (4,561,430) Paid to employees - (1,8�7,0�4) (226,004) (2,103,078) Net cash flows from operating activities (46,596) (294,840) 14,128 (327,308) Cash flows from investing activities Interest received on investments 344 11,903 2$0 12,527 Cash flows from noncapital financing activities Intergovernmental revenue - 301,422 - 341,422 Ad valorem taaLes - 45,000 - 45,400 Net cash flows from noncapital fmancing acrivities - 346,422 - 346,422 Net increase(decrease)in cash and temporary investments/cash equivalents (46,252) 63,485 14,408 31,641 Cash and temporary inveshnents/cash equivalents Beginningofyeaz 81,057 2,068,328 18,394 2,167,779 End ofyeaz $ 34,805 $ 2,131,813 $ 32,802 $ 2,199,420 Reconciliation of operating income(loss)to net cash flows from operating activities Operating income(loss) $ (46;596) $ (475,47'7) $ (280) $ (522,353) Adjustments to reconcile operating income(loss) to net cash flows from operating activities Depreciation - - 5 320 5 320 , � Other income - 64,7$3 - 64,783 Change in assets and liabilities Receivables Accounts - 7,037 - 7,437 Inventory - - 11,936 11,936 Accounts payable - 5,156 (2,848) 2,308 Net OPEB obligation - 128,804 - 128,804 Accrued compensated absences - 54,223 - 54,223 Due to other governmental units - (298) - (298) Deposits - (79,068) - (79,068) Net cash provided(used)by operating activities $ (46,596) $ (294,840) $ 14,128 $ (327,308) -76- OTI-IER CTTY INFORMATION CITY OF GOLDEN VALLEY Schedule of Sources and Uses of Public Funds for Golden Hills No.1503,a Tax Increment Financing District Year Ended December 31,2012 Original Amended Accounted for Current Amount Budget Budget in Prior Years Year Remaining Sources of funds Bond proceeds S 27,150,000 $ 56,165,000 � 41,957,893 $ — $ 14,207,107 Proceeds of refunding bond issues — — 26,440,490 — (26,440,490) Tax increments received 45,692,720 . 92,515,000 59,356,656 4,597,445 28,560,899 Interest earnings 886,370 1,461,370 8,338,177 10,974 (6,887,?81) Real estate sales 5,700,000 9,990,000 12,61$,936 — (2,628,936) Rental income — — 81,648 — (81,648) Misceilaneous — — 109,811 7 (109,818) Total sources of funds 79,429,090 160,131,370 148,903,611 4,608,426 6,619,333 Uses of funds Land and building acquisition 17,921,280 41,909,116 41,184,307 — 724,809 Site preparation 1,276,910 5,820,753 739,350 400 5,081,003 Public improvements 2,691,270 6,770,854 5,519,775 — 1,251,079 Relocation 3,221,340 6,157,989 931,613 — 5,226,376 Bond discount 408,000 — 55,928 — (55,928) Bond issuance costs 271,500 703,475 199,411 — 506,064 Administrativecosts 2,239,190 4,831,094 691,130 6,860 4,133,104 Financing costs — — 85,267 — (85,267} Contingency — 60,790 600 — 60,190 Paid to escrow agent to defease refunded bond issue — — 26,271,665 — (26,271,665) Principal 27,150,000 56,165,000 27,780,000 1,170,000 27,215,000 Interest and fiscal costs 24,249,600 37,712,299 24,800,88$ 580,562 12,330,849 Total uses of funds 79,429,090 16Q131,370 128,25'7,934 1,757,822 30,115,614 District balance(deficit) — — 20,645,677 2,850,604 (23,496,28I) Transfers(to)from other funds — — (12,384,508) (159,000) 12,543,50$ Funds remaining(deficit) $ — � — $ . 8,261,169 S 2,691,604 $ 10( .952,773) Note: Real Estate Sales Property purchased and sold to developers: Purchaser/Developer Proiect Sale Price Cost State of Minnesota I-394 frontage road � 1,331,591 $ 1,331,591 Trammell Crow Colonnade Office Building 1,549,012 5,171,518 MEPC CyberOprics 845,187 2,454,649 MEPC Holiday Express 100,000 140,862 Duke Realty Golden Hills West Area 2,361,390 8,987,381 United Properties Golden Hills Central Area 1,624,160 4,150,000 Allianz Life Inswance Company Office building 4,677,428 9,016,107 ISD No.2'IO—Hopkins Meadowbrook Community Center 135,000 3,469,850 $ 12,623,768 S 34,721,958 Property purchased,but not sold as of December 31,2012: Project Property Cost Golden Hills East Area Affiliated Emergency Veterinary Services $ 160,000 -77- CITY OF GOLDEN VALLEY Schedule of Sources and Uses of Public Funds for North Wirth Parkway No. 1505,a Tax Increment Financing District Year Ended Decemlier 31,2012 Accounted for Current Amount Budget in Prior Years Year Remaining Sources of funds Tax increments received $ 920,000 $ 150,189 $ 30,479 $ 739,332 Real estate sales 575,000 523,431 — 51,569 Interest earnings — 3,873 24 (3,897) Total sources of funds 1,495,000 677,493 30,543 787,004 Uses of funds Land and building acquisition — 37,354 30,531 (67,885) Site preparation and improvements 1,000,000 621,135 — 378,865 Interest and fiscal costs 495,000 2,783 527 491,690 Total uses of funds 1,495,000 661,272 31,058 &02,670 Funds remaining(deficit) $ — $ 16,221 $ (555) $ (15,666) Note: Real Estate Sales Property purchased and sold to developers: Purchaser/Developer Project Sale Price Cost GVEC,LLC Business Center $ 523,431 $ 1,093,241 The cost of the property sold to GVEC, LLC includes the $567,685 original purchase price that was paid by the North Wirth Parkway No. 1501 Tarc Increment Financing District prior to the establishment of this district. -78- STATISTICAL SECTION �UNAUDITED� STATISTICAL SECTION (UNAUDITED) This part of the City of Golden Valley, Minnesota's (the City) comprehensive annual financial report (CAFR) presents detailed information as a context for understanding what the information in the fmancial statements, note disclosures, and required supplementary information says about the City's overall financial health. Page Conteats: Financial Trends gp These schedules contain trend information to help the reader understand how the City's fmancial performance and well-being have changed over time. Revenue Capacity 92 These schedules contain information to help the reader assess the City's most significant revenue source, including the property tax and utility revenue. Debt Capacity 97 These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in.the future. Demographic and Economic Information 105 These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's fmancial activities take place. Operating Indicatars 107 These schedules contain service and infrastructure data to help the reader understand how the information in the City's fmancial report relates to the services the City provides,and the activities it performs. Sources: Unless otherwise noted,the information in these schedules is derived from the CAFR for the relevant year. -79- �O v�'� c+� �� M v�i O �--� � � N N r� O�i �O N M r O N O �� r �� O�D O 1� N N N � v�i N� 7 �N N O Vi 69 59 b9 69 V9 � 7 O 7 Q^ �D O M �p O � .. M Vl M 00 O 00 ry v1 M O Vt 7 O O �D M O� N 7 cn O p r O O� f^ N 7 �D O O M � N N M�/1 1��O M O M N V� N N �n N�--� 7 �n N N O� Vi Vi fA b9 69 N 00 1� O �n �n �O M 1� �O �O ��it�� 0�0 0�0� V�i V b �n .� � �.�+ � M�N M �M � �00 7 O � O � � � �N O � �-. O t� N N N � 7 N^+ 7 7 N N O� �" A H9 uv fA vi Vi Vf y P O N �O �D 0�0 v� 7 ONi N O� � O�O M N �-.�O o0 �--i�D N e3 00 O T 7 N �O N �N �D 'fl p� 00�D '. 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C� G, � m � � N � m V N �p � �N N � � A y� � A V ❑ E O � H �U � �D O W O ��y O O � E O .L' G.�' N E-� 'G'� �� N a�3 N.� F"' v �i y F F �+ N F . F vm.5 A v �a `�s' > m � .5� > � ^> v.5 o � � oaw �O�C7F ��J�F co � z�`° �� `° v�`° z CITY OF GOLDEN VALLEY Governmental Activities Tax Revenues by Source Last Ten Fiscal Years (Accrual Basis of Accounting) Ad Valorem Fiscal Year Property Taxes Tax Increments Franchise Tax Total 2003 $ 10,132,485 $ 4,364,166 $ — $ 14,49b,651 2004 10,818,165 4,444,168 — 15,262,333 2005 11,878,484 4,099,055 — 15,977,539 2006 12,771,144 4,187,403 — 16,958,547 2007 13,735,821 3,649,592 — 17,385,413 2008 14,877,502 4,586,661 — 19,464,163 2(}09 15,337,158 5,390,340 — 20,727,49$ 2010 15,901,115 4,242,776 — 20,143,891 2011 15,807,735 3,944,313 581,640 20,333,648 �012 16,219,048 4,627,924 621,585 21,468,557 -86- i i i o° o o i i i i � � � � N O �D �O M I� �O l� � O v�i n rl ��O � V N ^ r � M 00 N M � V3 69 69 5q I I O vNi 7 p�i I I I I O t� O� �O O M �O O� N M O� vl N C�1 O� � ^ V1 00 Vl 00 N 00 V1 \O O � l� c�l N 7 ONi M r ^ l�. 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R.0.P.U U A .�.:V]pa P�.pr p.F F y K O Q N CITY OF GOLDEN VALLEY General Govemmental Taic Revenues by Source Last Ten Fiscal Years (Modified Accrual Basis of Accounting) Ad Valorem Fiscal Year Properiy Tax Tax Increments Franchise Tax Total 2003 $ 10,272,977 $ 4,361,100 $ — $ 14,634,077 2004 10,730,169 4,446,204 — 15,176,373 2005 11,880,730 4,495,987 — 15,976,71'7 2006 12,688,287 4,188,563 — 16,876,850 2007 13,739,116 3,652,563 — 17,391,679 2008 14,842,187 4,663,365 — 19,505,552 2U09 15,316,495 5,322,240 — 20,63 8,735 2010 15,760,353 4,344,739 — 20,105,092 2011 15,791,136 3,993,985 581,600 20,36b,721 2012 1b,378,425 4,627,924 621,585 21,627,934 -91- \° �w o O � y � tNtl �� O � Q� O�i O O� T � � � � O �' y � �--� O O O --� O O O O O ¢ � � T `n Itl U � � a � a ¢ �' > � � `� � � � � o 0 0 0 � o 0 0 � o � M N l� Q� N l� � M 00 01 U Q , N v1 �n O� O � .--i ' �O O �D � y� �D O 01 �O l l� N Or M aj � � M �n � � N � � N O � � '^ � N N N N M M M M M N � W F � U � N C R .b � 7 �M M N 0�1 O� N O o�o � F ti �O V'1 V1 M N � 00 M V1 7J �:_. v v v 7 v v 7 � �n �n �o �'� � � v �Q � `° U � � H � � � a � > v � �n v r cv oo �c rn �o . a� >' � � N M OMi^ N � �-�. 7 7 ''�' y � � �D N o0 00 00 ..-. 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W O � .a a� �' [� O� M l� �--i O V1 M 00 l� a+ , , �' O �j O O� O �O l� M oo N � �D � p� � w Z � Y a� v �n v°Oi � � v ° `t�' vMi^ cNV^ N � Q � Q� Q � � ,� � � � � � � � � � � � � N O �o W a�i � c � � � � Q � `� � b�i0 � � F y «3 � �, N ,� a H w .� �j � % c� °o v�, o o � v o�o °t�° rMi o�o �, tC v� v� � ,� V y� O N V v� �O N l� -- .0 N •� y� � ..�. vi 01 7 O �O �O �O O �n � � c. �D v� oo M O �O oo O� N l� a � � � p„i ir o0 01 M l� O l� V1 l� N o0 � �A O � � � � � v � �D �D l0 V U a� U a� �, A � v � z w � �. � v, d � a 0 � � � � ao M l� N O � o�o O �D ¢ � v� V O� �O l� �D 7 l� �n l� � O � � � � � N 7 7 � O � P�-i N N M M cN+1 �M N N M M �, � O �.N � UX � a. 69 c0 N C � � l� O O� 00 V'� O� o0 0o K " O �n 7 M V'� M � O� oMO N V O � � r-i ^-� � cd � M � O� M \O � M �O M � .fl p., oo --� M h O M � N oo �D ,.�, ,�+ � N M M M �' �} � � M M � � GJ ' U � � b 69 y ,� N y a � T � � � ❑ � a� � o � c� s U � y.� � U �.. f0 N 'O V � � � � '"i F. � M 7 �n �O l� oo O� O � N X � C O U CL N � ,� N O O O O N O O N O E�-�' �' r�', �'w N C � � � � � CITY OF GOLDEN VALLEY Property Tax Rates Direct and Overlapping(1)Governments Last Ten Fiscal Years For the City/ISD No.281 Direct Rates(2) Overlapping Rates Total Direct and Hennepin Special Overlapping Year General Levy Debt Lery City Total County ISD No.281 Districts Rates 2003 - � - 46.95 50.61 34.26 7.75 139.57 2004 - - 45.45 47.32 34.42 7.19 134.38 2005 35.32 9.98 45.30 44.T7 29.99 8.70 128.16 2006 33.44 9.87 4331 41.02 28.49 7.42 120.24 2007 32.16 9.12 41.28 39.11 28.'75 7.45 116.59 2008 33.13 9.86 42.99 38.57 27.24 8.05 116.85 2009 34.85 11.06 45.91 40.41 27.21 7.69 121.22 2010 36.94 11.26 48.20 42.64 2$.62 8.$3 128.29 2011 40.65 12.41 53.06 45.84 34.39 9.87 143.16 2012 41.82 13.98 55.80 48.23 32.81 10.14 146.98 For the City/ISD No.Z70 Direct Rates(2) Overlappin�Rates Total Direct and Hennepin Special Overlapping Year General Levy Debt Levy City Total County ISD No.270 Districts Rates 2003 - - 46.95 50.61 20.59 7.75 125.90 2004 - - 45.45 47.32 22.20 7.19 122.16 2005 35.32 9.98 45.30 44.17 19.18 8.70 117.35 20Q6 33.44 9.87 43.31 41.02 21.57 '7.42 113.32 2007 32.16 9.12 41.28 39.11 19.02 7.45 106.86 2008 33,13 9.86 42.99 38.57 19,22 8.05 108.83 2009 34.85 11.06 45.91 40.41 20,08 7.69 114.09 2010 36.94 11.26 48.20 42.64 23.05 8.83 122.72 2011 40.65 12.41 53.06 45.84 26.46 9.87 135.23 2012 41.82 13.98 55.$0 48.23 29.27 10.14 143.44 (1) Information reflects total tax rates levied by each entity. Tax rates are expressed in terms of "net taac capacity." A praperty's tax capacity is determined by multiplying its taxable market value by a state determined class rate. Class rates vary by property type and change periodically based on state legislation. (2) Inforrnation on the components of the City's direct tax rates is not readily available for levy years prior to 2005. Source: Hennepin County -94- CITY OF GOLDEN VALLEY Principal Property Taxpayers Current Year and Nine Years Ago 2012 2003 Percentage of Percentage of Net Tax Applied Tax Net Tax Applied Tax Taxpayer Capacity Rank Capacity Capacity Rank Capacity General Mills,Inc. $ 1,843,700 1 6.7 % $ 1,283,340 1 5.5 % Allianz Life Insurance Company 1,281,790 2 4.6 1,048,290 2 4.5 DRA Advisors,LLC 820,770 3 3.0 — — — Golden Jack,LLC 561,990 4 �.0 413,610 7 1.8 United Health Care 402,130 5 1.5 42'7,250 5 1.8 Honeywell 274,750 6 1.0 416,700 6 1.8 North Wirth Building 253,330 7 0.9 206,278 10 0.9 TCA Real Estate,LLC 214,550 8 0.8 — — — Menazds,Inc. 211,070 9 0.8 — — — The Luther Company,LLP 206,'790 10 0.7 — — — Teacher's Insurance and Annuity — — — 850,050 3 3.6 Duke Reaity — — — 621,170 4 2.7 Valley Creek Developrnent,LLC — — — 264,770 8 1.1 G.H.Tennant Company — — — 252,680 9 1.1 Total $ 6,070,870 21.9 % $ 5,784,138 24.8 % Soarce: Hennepin County -95- CITY OF GOLDEN VALLEY Property Tax Levies and Collections(1) Last Ten Fiscal Years Collected Within the Fiscal Year Total Tax Fiscal Year of the Levy Collections in Total Collections to Date Ended Levy for Percentage Subsequent Percentage December 31, Fiscal Year(2) Amount(3) of Levy Years(4) Amount of Levy 2003 $ 10,852,316 $ 10,857,447 100.1 % $ (14,161) $ 10,843,286 99.9 % 2004 11,323,486 11,244,630 99.3 77,573 11,322,203 100.0 2005 12,519,830 12,431,206 99.3 88,624 12,519,830 100.0 2006 13,234,278 13,107,657 99.0 12b,621 13,234,278 100.0 2007 14,099,021 13,956,573 99.0 142,448 14,099,021 100.0 2008 15,192,449 15,039,1 l 0 99.0 153,339 15,192,449 100.0 2009 15,980,242 15,801,948 98.9 178,294 15,980,242 100.0 2010 16,306,687 16,084,726 98.6 221,961 16,306,68? 100.0 2011 1b,379,567 16,190,773 98.9 150,351 16,341,124 99.8 2012 16,395,177 16,274,052 993 — 16,274,052 99.3 (1) Does not include tax increments levied and collected. (2) Total levy is net of current year cancellarions and abatements. (3) Total tax levy and current tax collections include state paid tax credits. (4) Includes county adjustments for prior year over collections,cancellations,and abatements. -96- � M N �O o0 O �n M O� o0 �D l� l� 01 O� O Ve o0 l� y�, M M M M M � V � M M . .a R � Yn N Q�+ � �� 0 +.�- O y ^. � N 0�0 V�j �-. O �D O V1 y �i �' W l� l� h [� l� 00 l� l� �O � a � 0.+ O .��i �� M O O O O O O O O O y� �--� O O O O O O O O O � � oo � oo � O M oo � O� O� p�", � N N M �O N 7 7 �n M � � � r � � � � � � � r O � F" � 69 y i O O O O O O O O O � � O O O O O O O O O O F. •y �n O V'1 v� O O O � O � .� �'� O� 01 [� 00 N � l� � f� � 9 .--� y � � �? N O t' � o0 � V ,� � N N 7 7� �t M M M N .� Q y v � � � m I I f I o 0 o O o 0 � 'd c o 0 0 0 0 0 � � o � �, � C� �°o � o�o o°� rn rn (..i �n 7 M N O � � a �, � N N N N N N cV pp ¢ A � � e�'+ � 01 A y � � � 'C � A � aa � � °q � � °o °o °o °o °o °o °o °o °o .ti v � A :� �' o 0 0 0 0 0 0 0 0 � a q �+ x, � b �n �n o vi� vi� vi o 0 0 � a� y . � y N � .-�+ O � � m O n 7 O � 7 � ..�+ � w � F � � V d' � V M M M N N O N a � 0 � d (�.' � '" � a � U � O � � Ot�.��., �� y � I I I I I I I I I � y � M � � ~ � � .�. a � W O .; :� O N . � N Q V 69 � i: CC N f3 ¢, ,�" °J N vi o o O o 0 0 0 0 0 0 � � � � .�� O O O O O O O O O O � �p �> �-+ O +� � .D O� O O O� M Q� O O�. � O N ^' O � W � � N N N N N N N .�. N � � y ^. � �--i V] � 'O � J � � V O O O O O O O O O O O � O ,D O O O O O O O O O O U u� O O O O O O O O O O W pq � 'D O O � �O � � o�0 7 M � 'C C cXC � Q O� N �D 7 v'� Q� l� �n t�tl � F V � �M M N N N N � � � J ti �-F'"i � � O . � OIJ � o �T R O O O O O O O O O O Ca U �'+ O O O O O O O O O O W � ,J .�., b O Vi Vi O O O Vi V'i O O � N � oMO O� � � O �O ..Nr N � M � C � � � oo Vi o0 N � l� N oo �D �O TJ 'O � v M M M V � � l0 h Vl V1 d� �-' Q U � 69 (/� i N rn � N d � �+ M 7 �n �D t� oo O� O N V] Ca O O O O O O O ~ iC O O O O O O O O O O y � N N N N N N N N N N w " z CITY OF GOLDEN VALLEY Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years Less Amounts Percentage of General Restricted for Estimated Actual Obligation Repaying Taxable Value Fiscal Year Bonds(1) Principal(2) Total of Property(3) Per Capita(4) 2003 $ 76,120,000 $ 15,950,394 $ 60,169,606 2.58 % $ 2,916 2004 74,275,000 14,463,275 59,811,725 2.32 2,917 2005 73,590,000 13,613,836 59,976,164 2.24 2,901 2006 76,035,000 13,275,728 62,759,272 2.12 3,060 2007 76,915,000 12,930,925 63,984,075 1.99 3,143 2008 77,415,000 13,106,172 b4,308,828 1.89 3,158 2009 88,730,000 25,069,221 63,660,779 1.86 3,132 2010 80,705,000 1$,126,689 62,57$,311 1.91 3,072 2011 76,415,000 16,425,889 59,989,111 2.00 2,937 2012 74,520,000 18,481,3$8 56,038,612 1.98 2,743 (1) Does not inctude revenue bonds. Tax incrernent,special assessment,and tax abatement bonds are included because property taxes will be levied to pay the debt service on these issues should the primary sources fail to provide adequate revenue. (2) The amounts restricted for repaying principal include the amounts available in all debt service funds for future debt service,which are restricted by bond covenant. (3) See the Schedute of Assessed Value arzd Estimated Actual Value of Taxable Property on pages 92-93 for property value data. (4) Population data can be found in the Schedule of Demographic and Economic Statistics on page 105. Note: Details regarding the City's outstanding debt can be found in the notes to basic financial statements. -99- CITY OF GOLDEN VALLEY Direct and Overlapping Governmental Activities Debt as af December 31,2012 Estimated Estimated Debt Percentage Share of Govemmental Unit Outstanding(1) Applicable(1) Overlapping Debt Direct debt City of Golden Valley $ 74,520,000 100.00 % $ 74,520,000 Overlapping debt ISD No.270,Hopkins 148,613,052 15.35 22,812,103 ISD No.281,Robbinsdale 157,744,112 20.24 31,927,408 ISD No.283,St.Louis Park 50,057,386 0.04 20,023 Hennepin County 673,838,501 2.22 14,959,215 Three Rivers Park District 72,840,200 3.01 2,192,490 Nennepin Regional RR Authority 38,770,299 2.22 860,701 Metropolitan Council 193,377,711 I.QI 1,953,115 Total overlapping debt $ 1,335,241,261 74,725,055 Total direct and overlapping debt $ 149,245,055 (1) Tax increment, special assessment, and tax abatement bonds have been included in this table because property taxes will be used to pay the debt on these issues should other revenue sources fail to provide adeyuate amounts. Note: Overlapping govemments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City. T'his process recognizes that,when considering the City's ability to issue and repay long-term debt, the entire debt burden bome by the residents and businesses should be taken into account. However,this does not imply that every taxpayer is a resident and,therefore,responsible for repaying the debt of each overlapping government. Source: Hennepin County Taxpayer Services -100- o p o � '" ° o � ° � o o � ° . � N o0 0�o rn N � oo m rn �' 0o h O M ao 1� O C � O � � � � � � � Ni FiY � �y N S'.+ N O O o O� O O O O O O � O O O O O M h1 'n l� � N O O O O O O N V � � � ,_. O O O Vi O O�/i� � ~ � l� M F v�i �O h r��M 7 � � � y� � ��N�N M� ' � Vi 49 V 5q � O w � � 0 0�0 `.� _ `Q . . � � O� M vt � Q p O N � p '"' .P+O iE N O^ M y O � � � � � U � � v� v3 .�' '� � . � � � a;� �a � M o T 7 v�i oo M � 0 it p � 1� r+i � (� W +R- N � �y�' O r O�i r ~ itl � �'D ,�p N N O A �C O N.0 . > O O � > ,�, �A'�'O'C'O�^� q Fs9 fH xi. 0. N O O O O^ � W N p p A L �a A O � � � K G � � � � � P. � � 7, N '�'' � 'L-' N N� � y � M � M y ° � G' A �" 10 b i�-� t�p G b � O� � � � R G p F � W p O O�i O ^ > y G � V � .'�'C I� J � � $ p C. F X a�� N � 0 � '^^.. m N V� F F T/].�. �' ��+ p � y� Q LL � O � � 4 Q F�a � O O N 'T ° vNi v�i rn o o N 0 o a; � .] ia p� O � � �a o � � N .0 O N O N O� M z •�-� � N � � t� C� W � V fA b9 T W.� Q Q � � w � � N V� W A u °� o°o o�i W � N GJ p Q >- o, o0 0 o ai c� �, � `.� �o�o � � rn M c`' 0.i F� on y°� ,-• oo N . � U a w N o; � h �" �n c � v� vi .�. v O M � � N o d N V p 0�1 M � M N O V? l� 00 N � �, � O b � � O � N O N 'a O M � � b ^ � � t� � p O N h N � � O 'n ? O � O �n vi "" -fl � � 69 69 O.� t�-� W � ... � � � ° 00 O 7 O� 7 � � w O ❑ � r vNi � N . 'a �' . O vi O� �D � W ti m N � � � ..�. Fs' `�' � a � :: U �p E « �v �� y �'� � y 0 0.E � y a� a�^ � a a a b � o "4" y � � � a O h .� � „ „ � � °° � � b � � � � �' :7 0 E c 'b c a `° `° o .� � � � y z o H a H `° � M N M 7 N M M N N N � O O O O O O O O O O � N � O N � • � � C � � � 0o O� N � M o�o 00 �n .� O� V � � 7 O� N l� O � r�i � N S `� l� � 7 �D vi �O o0 M �--� vi O b i.�i O\ M \O 00 � � M �O 7 �O l� � O M O O� _ O CO Q ^'i ^ "" ^ ^'i N N N � ,0 � � ^. N V 6q � � � G h � p O O O O O O O O O O � � Q v O O O O O O O O O O � � C � � � O �n �n O v'� O �n v� � P. N O� � � O O M oMO a�o o�o � � . ^� L1i .c? N N m M M ri ri N N N G� � G � a 64 pp G � 7 O� �O � ^. � 00 l� �O � N � 00 V�i 7 � � � p O� N v� N O� �D 00 M 01 O� � �n 00 vi 01 7 M 7 7 N � U � N O`. N O� M �O M d' � � � � _y M M � 01 M h l� M M Uj . � y p �--�. .r .--i �--i �--i �--i � .--i � �-r � GJ � V � � I N 'b 7 I 0�1 0�0 � N � ONO o�0 0�1 V�i � � � 7 7 7 �t' N N M N � 7 > � O > � � W � � p � � � �' (� � Q � � I �n oo �O t� . N r v� rn c� oi "'C1 � V � O O� O M �n N �n N � y �. z N M Ll C f° a'�i N .-Ni � �° .-�-� � � � N °� O � � � � � r, w v y � ~ � ro N O p°'p � � c c�C >- a�i '� �n c Q+ F- a � :. .^. � � �. ._. .. ..r *� a � U Q � � °o °o °o °o °o °o °o °o � 0 0 0 0 0 0 0 0 � � N � N N o N N M � O U y ,� N y .Ni �" •O b C 59 ��' Q � �, o y .ti � a � °° C o � � r v, r, � o t� c� �n rn ... � 'n O M M �^ Cq � N oo O� v� 7 •-N. N � o�o N � �❑:{ � � p O t �O l0 l� O� h � � +-� �.r '� y > > oo �O 7 O � N N [� 3 �" � � � a� ,-. '. '-i c•j ry" � .-.� ^-i ,-. � 0 � � � � � N V z � � o � � � o � � � � � �� o � � � o � � � o � � � N �{ � N l� O� b � N O �n 7 N .-r 7 h O� O � c�d L1 N v� Vl 00 O� ..N.. ,_N. [� M �O �+ � y � O O N � O � m W . .-. ,--i � '-i ,--i � �'r � ctl b a � ttl � �' � � U v' � N C I 7 � ONO � � ONO OMO N � O f3 '� N 00 l0 M M M O� 01 00 M .O a � y l� N 00 N 01 O '-+ �n 7 . N U � �" 7 ^� N O� N M M l� M C+ G � y N N N N M N N N N � ¢ � O � y �, � � � � � i. � W (� c7 N � M d' �n �D 1� 0o T O N ,-, y � o 0 0 0 0 0 0 0 0 0 ,_, � z w CITY OF GOLDBN VALLEY Demographic and Economic Statistics Last Ten Fiscal Years Per Capita Personal School Unemployment Fiscal Year Population(1) Personal Income(2) Income(3) Enrollment(4) Rate(5) 2003 20,736 $ 940,425,088 $ 45,333 2,197 4.2 % 2004 20,674 992,786,154 48,021 2,122 3.7 2005 20,510 1,016,598,660 49,566 2,435 3.4 2006 20,355 1,033,950,120 50,412 2,304 3.5 2007 20,362 1,076,881,275 52,905 2,295 4.2 2008 20,326 1,145,973,360 56,280 2,163 5.9 2009 20,312 1,148,927,968 56,564 2,147 6.7 2010 20,371 1,100,196,968 54,008 2,111 6.1 2011 20,427 1,122,443,223 54,949 2,137 5.2 2012 20,427 1,174,062,252 57,476 2,0'78 4.8 Sources: (1) Metropolitan Council—Regional Statistics and Data (2) This estimated personal incorne number is calculated by taking the per capita personal income of Hennepin County and multiplying it by the City's population. Also see note(3)regarding the per capita personal incorne figures. {3) Bureau of Economic Analysis, U.S. Deparlment of Commerce —Hennepin County. The per capita personal income used is for that of Hennepin County, in which the City resides, the smallest region applicable to the City that this information is available for. {4) School districts (5) Minnesota Department of Economic Security—Hennepin County -105- CITY OF GOLDEN VALLEY Principal Employers Current Year and Nine Years Ago 2012 2003 Percentage Percentage of Tota1 City of Total City Employer Employees Rank �Employment Emplo�ees Rank Employment General Mills,Inc. 5,500 1 16.0 % 3,700 1 N/A M.A.Mortenson 2,102 2 6.1 — — N/A Allianz Life Insurance Company 2,096 3 6.1 — — N/A OptumHealth 1,700 4 4.9 — — N/A Honeywell 1,350 5 3.9 655 4 N/A G.H.Tennant Company 700 6 2.0 2,000 2 N/A Courage Center 600 7 1.7 450 5 N/A Lupient Automobile Group 325 8 0.9 300 7 N/A Preferred One 315 9 0.9 — — NJA McKesson Corporation 300 10 0.9 385 6 N/A United Health Care — — — 1,100 3 NIA KARE-TV — — — 220 8 N/A Syngenta Seeds,Inc. — — — 120 9 N1A CyberOptics — — — I10 10 N/A Total 14,988 43.58 % 9,040 N/A—Not Available Note: Total city employment information is not available for 2003. Source: Metrapolitan Council—Regional Statistics and Data. -106- O � � � M � O O M N � O O �n .-. �l� � �O ^. V'1 M .-+ (V O N O � �+ O O� O O O V'1 �O l� O� �n �n O O O M � O N vi O �--� l\ �n N O N O � �--� O O� O O O �n -� N O� oo �n O O O �O p oo N O � O � l� �n O ,--i U1 M M O N O �/'1 �--i O O� O O O V') �--i N O� 00 Vl O O O �D p� oo � � �n O �--� l� v� O 0 .-� V1 M �--i (vy O N O � ^-^ O O� O O �/'� O � �-+ N O� oo �n O O � 7 � . 0 ap W N � � O � l� vl N p V1 M M U � � N 7 FL. A � � � ,,, � � � N 01 0�0 V�"� O O l� � W � � r �D O M V'� O �--� l� vi N � W y U O O N z g � b � A � � b � •� > w pj ° OOao°oc�n °oo° � °� ° � Zj � � � �coM vio; ,-: rvi �o � O �`N >" °N �" cb�U �. V � o G. 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N O N � oM0 � M .�-.� � � O "" l� l� O N '. oo M � O � O O� N M � � ,-. oo V O "" [� l� O N .-� oo M V O N O O� N O� N � F'i y � W d' M M � ,.�, � '"i p � � l� l� W � o .a � c�i N � a w N � � � � � w Q z � � c° w � U ,--� oo M � O � O O� N N � Q � `� � oMO 7 M aO 'y�' C O � ~ � � � � � N N � W � � � � N � Q+ �• Q � � � �--� oo M 7 O N O O� N M �n U R � � � M N 0 U O �"' l� l� O N .-� oo M � oo N O O� N l� o0 ^-' N 7 M N M p � h l� O N � � O m � oo N O O� N l� 00 � �--� V N � M O �D � M � N V N m p � �--� l� l� O N ti � �. � � ro � �' � � ,o � �o v � ro � �i �. � O � U � . �+' � � � � p V ti +��+ m 'C � i�i b!1 f�V' � V .n v, � �� Q C . v, c� ai C � �, C C. O y � 7 .� � �.0 t�. s�. 'O O '� � � � W � � vJ b�D U ❑ U U V v�i GJ • O T �n �. � ctl cC y � � � , o .° •-° `° � aNi 3 a°�i v � � � c � �i c v � v V] P-� � .0 „s-, U � � P�. W �azvi � 0, 0. E- U � U yU� � '��' L4 'a+ Py 3 V� w c°n