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Comprehensive Annual Financial Report - 2013 � �: ��"�"°�+�'�,.��'r. a t�~�t�,. .� �," �. � , �° �. �-x � � � �r s �'", �,��' � � s� z�� t .�` , r ,x �§ '�'..: �� "s�'� ^� j �� '� . � . . � �, �� . 5� �'� � .� { IBr, � , .. V :� i I�,l�'I� � � y�Id�I� �� (I�I'I�� I �I � ,d ,i ��, ' r� .�� ° II',iil�`f � ;� '� �` . � = . s. � �. r.;_ .. �.�i�' 4 •. � . `.: . i s' I�� '� � iI . .��: . . ,r�,,. . „, , , , =,: .<A , . ,, � , � . :� ,. � x . � • � �.. ,,�r � , � .- . `.;. � , ...;. �.. � : ,��F�..,, _ — ,..� a� �� a�� ' .;: �rr- . .,'.. ��'; ��':;.��iu�nu�nunununnnnin�unm�num�iu�nunmuinnuwnnnnnuiunuuwun�muiniNflllitll�+ , MIP1111111111111i111111111�11�it�11�1�1�11�11 t-8 i �' t> ; �"D�t�+�� . �� Com rehenslve �' Annual Financial Re ort p For the Fiscal Year December 31, 2013 • Golden Valley, Minnesota d ^ ,Y,S3's !� n',�,.„'�r. ' .. , , ��.�,.: Ri"b= `. ., „«-,.�. .F�.r ,t^�..:.5 ,_ . �, � � �� ' ..;....� ,�P+- x a�, . . . $,.:['H ;'�$�F'°.. �.�''.,� tl� .. �-.. . . . .. .. . . ... . . CITY OF GOLDEN VALLEY HENNEPIN COUNTY,MINNESOTA Comprehensive Annual Financial Report for Year Ended December 31,2013 Prepared by Finance Department Sue Virnig—Finance Directar Sue Watson—Accounting Coordinator Wanita Williams—Accountant Edie Ernst—Accounts Receivable/Elections Assistant Caro]Zerull—Utility Billing/Accounts Payable Technician Norma Glagus—Assessing/Accounts Payable Technician THIS PAGE INTENTIONALLY LEFT BLANK CITY OF GOLDEN VALLEY HENNEPIN COUNTY,MINNESOTA Table of Contents Page INTRODUCTORY SECTION CITY COUNCIL AND OTHER OFFICIALS i ORGANIZATIONAL CHART BY DIVISION ii FINANCE DIRECTOR'S LETTER OF TRANSMITTAL »>—��] 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 18-19 Reconciliation of the Balance Sheet to the Statement of Net Position 2p Statement of Revenue,Expenditures,and Changes in Fund Balances 2]-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 2'7—Zg Statement of Cash Flows 29-30 Notes to Basic Financial Statements 31-57 REQUIRED 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 Nonmajor Governmental Funds 59 Combining Balance Sheet 60 Combining Stateinent 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 Nomnajar 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 66-67 Combining Statement of Revenue, Expenditures, and Changes in Fund Balances 68-69 General Fund Schedule of Revenue—Budget and Actua] 70 Schedule of Expenditures—Budget and Actual 71-72 Internal Service Funds 73 Combining Stateinent 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 lncrement Financing Districts Golden Hills No. 1503 77 North Wirth Parkway No. 1505 78 STATISTICAL SECTION(UNAUDITED) 79 Net Position by Component 80-81 Cl�anges in Net Position 82-85 Governmental Activities Tax Revenues by Source 86 Fund Balances of Governmental Funds 87-88 Changes in Fund Balances of Governmental Funds 89-90 General Governmental Tax Revenues by Source 91 Assessed Value and Estimated Actual Value of Taxable Properry 92-93 Property Tax Rates 94 Principal Property Taxpayers 95 Property Tax 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—]04 Demographic and Econoinic Statistics 105 Principal Einployers 106 Full-Time Equivalent City Government Employees by Function 107-108 Operating Indicators by Function 109-1 10 Capital Asset Statistics by Function 1 11-1 12 INTRODUCTORY SECTION TAB CITY OF GOLDEN VALLEY HENNEPIN COUNTY,MINNESOTA City Council and Other Officials Year Ended December 31, 2013 CITY COUNCIL Tenn Expires Shep Harris Mayar 12/31/2015 Joanie Clausen Councilmember 12/31/2015 Paula Pentel Councilmember 12/31/2013 DeDe Scanlon Councihnember 12/31/2013 Steve Schinidgall Councilmember 12/31/2015 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- ;, � t f g ;. .,, .... -��c�l��rt ��i��.�� .a�� ,�� r��e� Citizens of Golden Valley City Council/ HRA Board of Zoning Civil Service Appeals Commission Environmental Human Rights Commission Commission Human Services Open Space& Fund Recreation Commission Planning Envision Executive Commission Board City Manager Administrative park&Recreation �ommunity public Works Police Fire Services Development Finance Community Center Planning Engineering Information Brookview Inspections Storm Sewers Technology Golf Course Services Recycling Elections Public Works Motor Vehicle Maintenance Licensing Park Street Utilities Vehicle Maintenance Maintenance Maintenance Maintenance Building Operations -ii- , : �` '' � ��r� v�.��.� � 7800 Goiden V�iley F�oad f10�C1t�'-.±3�:P-;?�q.aa,�.!i/it'v c;�,r��,�� . June 4,2014 Dear Honorable Mayar,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, 2013. Responsibility for both the accuracy of the data and the coinpleteness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief,the enclosed data is accurate,in all 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 financial activities have been included. The City's financial statements have been audited by Malloy, Montague, Karnowski, Radosevich & Co., P.A., a finn of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City far the fiscal year ended Deceinber 31,2013 are free of material misstatement. The independent audit involved examining, on a test basis, evidence supparting the amounts and disclosures in the financial stateinents, assessing the accounting principles used and significant estimates inade by management, and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis far rendering an unmodified opinion that the City's financial statements far the fiscal year ended December 31, 2013 are fairly presented in confonnity 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 CAFR 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 Ainerica require that management provide a narrative introduction, overview, and analysis to accompany the basic 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- ��`�J��-8{}�}0 7��"��:i'�� {"��"rl`'�J—��f�� PROFILE OF THE CITY The City, incorparated in 1886, is an almost fully developed coinmunity in Hennepin County. It encompasses about 10.73 square miles and has an estimated population of 20,642. The City is a Statutory Plan B fonn of government, governed by a City Council coinposed of the mayor and four councilmeinbers. 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 Ciry. Police services are provided by 30 sworn officers, which include the police chief and two commanders. Fire services are provided by 50 paid on-call firefighters, fire chief,deputy fire chief,education specialist, and code enfarcement officer. The City has a Class 4 insurance rating. The 2013-2014 biennial budget was created to help serve as the foundation for the City's financial planning and control. Departments submit budget requests to the Finance Department in May and the city inanager presents the proposed budget to the City Council for review starting in July to be approved by September 15 each year for a proposed tax rate for its property owners. All budget warkshops are open to the public. The final adoption of the budget and levy are approved in Deceinber. Each year the first year is adopted and the second year is approved in concept only. ECONOMIC CONDITION AND OUTLOOK The City's top priarities have been maintaining the City's infrastructure—streets, water and sewer, pipes, parks, public buildings—representing a significant community investment. After all, the value of private property relates directly to what surrounds it. Beginning in 2012, the state of Minnesota changed the Market Value Homestead Credit (MVHC) to Hoinestead Market Value Exclusion. Instead of a replacing a portion of the City's levy with a state paid tax credit, a portion of homestead property market value is excluded from the tax base. Although the City lost market value through this change, it is no longer subject to losing part of its levy due to the state of Minnesota not paying its MVHC. The exclusion shifted the tax responsibility to higher valued homes and coinmercial properties. In 2013, an improving economy resulted in less tax delinquencies and higher building permit revenues. Retirements and cost containment helped keep total overall expenditures under budget. The City will once again take a conservative approach for the 2014 budget year as inarket values declined again. Residential and industrial market values declined and coinmercial properties increased in 2013. This will li�nit the City's ability to raise taxes to fund operations and debt service, since taxpayers do not differentiate between increases in property taxes caused by an increase in the levy and increases caused by the shift in tax burden. The loss of property values will hopefizlly stabilize or increase due to new development. In 2013, building pennits increased due to the economic cliinate improving with cominercial properties and soine 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 maintained 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 l 0 years: Total Permits Year Number Value 2004 949 $ 65,131,091 2005 994 $ 121,188,696 2006 880 $ 57,701,882 2007 1410 $ 61,103,910 2008 3556 $ 67,452,357 2009 1310 $ 29,321,560 2010 1109 $ 28,800,511 2011 1172 $ 51,419,406 2012 798 $ 53,201,489 2013 984 $ 65,531,059 The City's HRA was involved with the following projects: North Wirth District No. 3 — This tax increment district was set up in 2004 and is a pay-as-you-go soil remediarion district. The land was sold to GVEC Properties in January 2006. The developinent will consist of six buildings totaling up to 31,600 square feet to be divided and sold as office condominium suites. Late in 2012, Bank Mutual took over ownership from GVEC. In 2013,part of the land was sold to Koch Properties. Tax increment is to be used to reimburse the developer for actual costs incurred to reinediate contaminated soils and deal with poor soil structure. Utility construction for the full project has been completed. At the end of 2013, $279,733 was owed on the note. 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 December l 8, 2012, the City approved the establishment of Tax Increment Financing (Renewal and Renovation) Highway 55 West District No. 1. Public improveinents proposed in the area include unprovements to the Highway 55 access/exit to Decatur Avenue North, sidewalks and lighting to improve pedestrian safety, burial of overhead electrical lines, addition of regional storm water facilities, and sanitary lining. Other developinents in the City: 1 General Mills Boulevard(General Mills) Permit to remodel Level 3 Fuse was issued and completed, construction value was $450,000. Pennit is in the process of being issued for Main Buildin� Leve] l — West. Construction value — $3,050,000. Total construction value at 1 General Mills Blvd is $3,500,000. 9000 Plymouth Avenue North (General Mills—JFB) Permit to reinodel Level 2 Wing 16 was issued and completed, construction value —$],200,000. Permit was issued and a 2-story addition called Wing 5 is under construction, value of construction is $11,536,000. Total construction value at JFB is $12,736,000. 8501 Golden Valley Road (N.W.Eye Clinic) Permit was issued and work was completed for an eye clinic on the entire first floar of 8501 Golden Valley Road. The pennit construction value was $1,200,000. 3275 Glenwood Avenue(Wirth Park Pavilion) Permit was issued to the City of Minneapolis Park Board to reinodel the pavilion in Wirth Park. The pennit value was $690,000. -v- 845 Meadow Lane(Animal Humane Society) Pennit to remodel was issued and work was completed. The permit value was $469,550. 5500 Wayzata Boulevard (Colonnade) A pennit was issued and wark was completed to remodel the sixth and ninth floars for Pentaire. The pennit construction value was $1,015,000. A pennit was issued and wark is underway on the first, second, and third floars for Bell State Bank — value $1,800,000. Total value of Colonnade construction was $2,815,000. 2601 Noble Avenue North(Noble School) A pennit was issued for exterior and interior remodel. The value for the permit was$1,243,590. 705 Louisiana Avenue South(Mini Cooper) A permit was issued and work is nearing completion for a car dealership. The permit value was $5,100,000. 3915 Golden Valley Road(Courage Center) Permit was issued to replace a portion of the roo£ Pennit construction value is $800,000. 8525 Golden Valley Road(Retaii Center) A permit was issued and work is underway on a retail center. The permit value was $900,000. 901 Xenia Avenue South (Arcata) In August 2013, a permit was issued far the foundation and parking garage, the value of this pennit was $4,392,403. In January 2014, a permit was issued far a 165-unit aparnnent building at a value of $20,675,182. The total value for Arcata was $25,067,585. 1985 Douglas Drive(HoneyweIl) Permit for partial roof replacement, value of$2,100,000. A permit was issued and work is underway on a test tower,value of$735,000. Total value for Honeywell is $2,845,000. 5653 Duluth Street(HCMC) Retnodel of strip mall for Hennepin County Medical Center. The permit value was $1,275,000. 600 Boone Avenue North(BP) A permit was issued and work was completed on a remodel and car wash addition to a convenience stare. The permit value was $600,000. 8845 7th Avenue North(Culvers) A permit was issued and wark was coinpleted for a Culvers Restaurant. Permit value was$1,012,000. 5501 Glenwood Avenue(Golden Valley Lutheran Church) A pennit was issued and work is in progress on a church addition. Pennit value is $1,600,000. LONG-TERM FINANCIAL PLANNING An unassigned fund balance goal in the General Fund of 60 percent of current year budgeted General Fund expenditures was approved in the fund balance policy adopted by the City Council for budgetary and planning purposes. This ainount 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. -vi- Through its Pavement Management Program,in 1995 the City began reconstructing its streets that did not ineet standards, completing 109 of 120 iniles through 2013 (22 miles had been constructed before 1995). In 20l 5, the City will increase their number of miles constructed to 2.3 miles. INTERNAL CONTROL Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon the comprehensive framewark of internal control that it has established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. MAJOR INITIATIVES The City is a meinber 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 ciries. The JWC was set up in the early 1960s and has functioned effectively. In 2013, the JWC negotiated a new rate structure with the City of Minneapolis. In 2003, a decision was made not to build a facility to operate the City's own water system. The Minnesota 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 iir�plemented 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 far Excellence in Financia] Reporting to the City far its CAFR for the fiscal year ended December 31, 2012. The City 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 lega] requirements. The Certificate of Achieveinent is valid far one year only. We believe our current CAFR continues to meet the Certificate of Achieveinent prograin requirements. We are submitting it to the GFOA to detennine its eligibility for another certificate. The 2013 CAFR ineets 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 Glagus, Sue Watson, Wanita Williams, and Carol Zerull have all helped with the wark needed to finish this report. Credit also inust be given to the Mayor and Ciry Council for support for maintaining the highest standards of professionalism in the management of the City's finances. Yours Truly, �,�, v . Susan M. Virn�G c%�` " g Finance Director -vii- Government Finance Officers Association Certificate of Achievement for Excellence in Financi�l � Reporting Presented to City of Golden Valley Minnesota For its Comprehensive Annual Financial Report for the Fiscal Year Ended December 31, 2012 ,�',��"��,,,. Executive Director/CEO -viii- FINANCIAL SECTION TAB I'I2IiVCII'AIS ]'hooias M.A9��ncagur.(:PA l hc�ma,;1. Karnawski.C PA i�:,�,E n. �r,�a�,��,��h.c�r,� �t'llli:un I. laucr.CI'A C,' F. R"f 1 F I C? C) P'li l;l,f C �a�rxs H. G��htrn,c;P�� ,�1 C (; C) U N �I� �4 N �T S Aaron).Nirlscn.CPA 4'iccuria l_. I1��linka,Ci'A INDEPENDENT AUDITOR'S REPORT To the Ciry Council and Management City of Golden Valley, Minnesota REPORT ON THE FINANCIAL STATEMENTS We have audited the financial stateinents of the governinental activities, the business-rype activities, each majar fund, and the aggregate remaining fund infonnation of the City of Golden Valley, Minnesota (the City) as of and for the year ended Deceinber 31, 2013, and the related notes to the financial statements, which collectively co�nprise the City's basic financial statements as listed in the table of contents. MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS Manageinent is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and inaintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstateinent, whether due to fraud or error. AUDITOR'S RESPONSIBILITY Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud ar error. In making those risk assessments, the auditor considers interna1 control relevant to the City's preparation and fair presentation of the financial stateinents 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. Accardingly, 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 manageinent, 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- \1allo��. Liontaguc, Kcarncj.vski. Radusc�•ic'h. �'ii Cu.. I'.:1. iiii 1C'� ai.i H„�Ic 3rd •<i;ii.�In. A1inn.�p,li+. M\ SiAt(+� lel�ph�,nc. '�i�-ii�.n;'�� .lrl�l'»: �3i`-5.ii-Oit,9 . auw�.mmAr.��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 governinental activities, the business-type activities, each inajor fund, and the aggregate remaining fund information of the City at December 31, 2013, 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 confonniry with accounting principles generally accepted in the United States of America. OTHER MATTERS Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, and the schedules of funding progress for the Golden Valley Fire Deparnnent 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 financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accardance with auditing standards generally accepted in the United States of America,which consisted of inquiries of inanagement about the methods of preparing the infonnation and comparing the infonnation for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the infonnation 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 stateinents that collectively comprise the City's basic financial statements. The introductory section, suppleinental information, and statistical section, as listed in the table of contents, are presented for purposes of additional analysis and are not required parts of the basic financial stateinents. The supplemental information is the responsibiliry of manageinent and was derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such infonnation has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such infonnation directly to the underlying accounting and other records used to prepare the basic �nancial statements or to the basic financial stateinents themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplemental infonnation is fairly stated,in all material respects,in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. (continued) -2- OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we have also issued our report dated June 4,2014 on our consideration of the City's internal control over financia] 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 coinpliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's interna] control over financial reporting and compliance. ��''C�� I'C� � l�Ah.t�,oGt�o�/�rt� ��.a�x�c�., �►` t--o.� r. � - � �� Minneapolis,Minnesota June 4,2014 -3- TH1S PAGE INTENTIONALLY LEFT BLANK CITY OF GOLDEN VALLEY Management's Discussion and Analysis Year Ended December 31,2013 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, 2013. 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 fiscal 2013 by $107,661,827 (net position), which represents an increase of $5,941,140 fro�n the previous year. At year-end, the City was able to report a positive balance in all categories of net position. At the e�7d of the fiscal year, the unassigned fund balance for the City's General Fund was $8,207,985, which represents 51.6 percent of total General Fund expenditures and transfers out for 20l 3. The City sold four (three coinbined into one issue) new bond issues, two of which were to refinance previous issues. Total long-tenn bonded debt increased $3,205,000 in 2013. 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) govermnent-wide financial statements, 2) fund financial statements, and 3) notes to basic financial statements. This report also contains other supplementary infonnation 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 sectar businesses. The Statement of Net Position presents information on all of the City's assets and ]iabilities, 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 Ciry is improving or deteriorating. The Statement of Activities presents information showing how the City's net position changed during the most recent fiscal year. A11 changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the tiining of related cash flows. Thus, revenues and expenses are reported in this statement far some items that will only result in cash flows in future fiscal periods (delinquent taxes and special assessinents). 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 warks, and parks and recreation. The business-type activities of the Ciry include enterprises for water and sewer, storm sewer, golf course,motor vehicle licensing,and recycling. -4- The governinent-wide �nancial statements include not only the Ciry 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 i��tegral part of the City's financial statements. Fund Financial Statements —A fund is a grouping of related accounts that is used to inaintain 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: govermnental 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 stateinents. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-tenn inflows and outflows of spendable resources, as well as the balances of spendable resources available at the end of the fiscal year. Such infonnation may be useful in evaluating a govermnent's near-tenn financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the infonnation presented for governmental funds with siinilar infonnation presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the govern�nent'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 governinental funds and govermnental activities. The City maintains 20 individual governmental funds. Information is presented separately in the governinental funds Balance Sheet and Stateinent of Revenue, Expenditures, and Changes in Fund Balances for the General, Golden Hills Tax Increment Special Revenue, Street Reconstruction 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 fonn 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-rype activities in the govermnent-wide financial stateinents. The City uses enterprise funds to account for its water and sewer (utility), stonn sewer, golf course, motor vehicle licensing, and recycling operations. Internal service funds are an accounting device used to accmnulate 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 these 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 far 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 coinbined into a single, aggregated presentation in the proprietary fund financial stateinents. Individual fund data for the internal service funds is provided in the fonn of combining statements elsewhere in this report. Notes to Basic Financial Statements — The notes to basic financial state��ents provide additional information that is essential to a full understanding of the data provided in the govermnent-wide and fund financial stateinents. 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 nomnajor funds are presented iinmediately following the RSL Statistical tables are presented as the last section in this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier,net positions may serve over tune as a useful indicator of the City's financial position. In the case of the City, assets exceeded liabilities by $107,661,827 at the end of the 2013 fiscal year. This represents an overall improvement in the City's net position of$5,941,140 from the previous year. Net Position — The City has 46.7 percent of its total net position invested in capital assets (land, ]and 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 Ciry 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 liquidate these liabilities. An additional 27.4 percent of the City's net position represents resources that are subject to external restrictions on how they may be used. The remaining 25.9 percent of net position is unrestricted and inay be used to meet the City's ongoing obligations. The following is a summary of the City's net position: Governmental Activities Bnsiness-Type Activities Total 2013 2012 2013 2012 2013 2012 Cun�ent and otlie��assets $ 69,287,920 $ 60,247,242 $ 19,082,229 $ 18,409,817 $ 88,370,149 $ 78,657,059 Capital assets 75,473,228 77,064,314 30,977,621 30,286,740 106,450,849 107,351>054 Total assets 144,761,148 137,311,556 50,059,850 48,696,55'7 194,820,998 ]86,008,113 Noncwrent liabilities (including cuirent po�tion) 80,934,062 77,459,219 2,550,000 2,870,000 83,484,062 80>329,219 Otl�er liabilities 3,155,203 3,056,982 519,906 901,225 3,675,109 3,958,207 Totalliabilities 84,089,265 80,516,201 3,069,906 3,771,225 87,159,171 84,287,426 Net position Net investment in capital assets 21,829,745 22,622,764 28,427,621 27,416,740 50,257,366 50,039,504 Restricted 29,535,846 26,673,032 — — 29,535,846 26,673,032 Unrestricted 9,306,292 7,499,559 18,562,323 ]7,508,592 27,868,615 25,008,151 Total netposition $ 60,671,883 $ 56,795,355 $ 46,989,944 � 44,925,332 $107,661,827 $]Ol,'720,687 -f)- The following is a summary of the City's changes in net position: Governmental Activities Business-Type Activities Total 2013 2012 2013 2012 2013 2012 Revenues Program revenues Charges for services $ 3,143,286 $ 2,906,048 $ 12,189,276 $ 12,607,920 $ 15,332,562 $ 15,513,968 Operating grants and contributions 559,246 464,187 495,451 128,893 1,054,697 593,080 Capital grants and contributions 1,882,698 3,595,000 852,075 32,162 2,734,773 3,627,162 General revenues Properrytaxes 2],757,173 20,946,972 - - 21,757,173 20,946,972 Franchise taxes 904,928 621,585 - - 904,928 621,585 Other general revenues 338,245 353,033 - - 338,245 353,033 Investmentearnings 112,817 214,493 38,459 96,035 151,276 310,528 Gain on sale of capital assets 24,735 76,852 - 65,978 24,735 142,830 Total revenues 28,723,128 29,778,170 13,575,261 13,930,988 42,298,3A9 42,]09,]58 Expenses General government 2,914,823 3,121,543 � - 2,914,823 3,121,543 Public safety 7,310,946 6,906,449 - - 7,310,946 6,906,449 Public works ]0,325,068 9,758,495 - - 10,325,068 9,758,495 Parks and recreation 1,588,798 1,692,346 - - 1,588,798 7,692,346 ]nterest and fiscal char};es 2,633,359 2,724,495 - - 2,633,359 2,724,495 Water and sewer - - 7,611,92I 8,023,803 7,611,927 8,023,803 Storm sewer - - 1,589,410 1,383,594 1,589,410 1,383,594 Golfcourse - - 1,645,728 1,724,174 1,645,728 ],724,174 Motor vehicle licensing - 326,382 ]54,492 326,382 154,492 Recycling - - 470,808 299,809 410,808 299,809 Total expenses 24,772,994 24,203,328 11,584,255 11,585,872 36,357,249 35,789,200 Increase in net posi[ion before transters 3,950,134 4,974,842 1,997,006 1,345,ll6 5,941,140 6,319,958 Transfers (73,606) 1]8,523 73,606 (l 18,523) - - Increase in oet position 3,876,528 5,093,365 2,064,612 1,226,593 5,941,140 6,319,958 Netposition-beginning 56,795,355 51,701,990 44,925,332 43,698,739 101,720,687 95,400,729 Net position-ending $ 60,671,883 $ 56,795,355 S 46,989,944 $ 44,925,332 $107,661,827 $101,720,687 Governmental Activities-Governmental activities increased net positio»by $3,876,528, accounting far 65.2 percent of the total growth in the City's net position. Key elements of this net increase include: • Capital grants and contributions decreased$1,712,302 from the prior year,mainly due to the City receiving over$2.4 inillion in state aid revenue for a street improvement project in 2012. • Revenue from property taxes increased $810,201 from the prior year due to increases in the City's levies far general purposes and debt service, as well as an increase of about $206,000 in tax increments generated in the City's two remaining tax increment districts. • Franchise taxes increased $283,343 from last year due to the addition of Centerpoint Energy. • Expenses increased by $569,666 from the previous year. General government expenses decreased $206,720 due to retirements and lower legal fees. Public safety costs increased $404,497 due to equipment purchases and increased staffing. Public works expenses increased $566,573 due to increased snow removal and street maintenance. Interest and fiscal charges were $91,136 lower than last year due to some bonded debt refinancing. -7- Expenses and Program Revenues—Governmental Activities $I1,000,000 $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 pperating Grants and 11% ContriUutions ?% Other 2°l0 Capital Grants and Contributions �r 6% T�es 79°io -8- Business-Type Activities — Business-type activities increased the City's net position by $2,064,612, accounting for 34.8 percent of the total growth in the City's net position from operations. Water and Sewer Utility Fund net position increased by $504,684. The City's water rates were increased 2.9 percent in 2013 to offset the increased cost of water purchased from the City of Minneapolis through the Joint Water Coinmission, and to pay for planned infrastructure iinprovements. Sanitary sewer rates increased slightly for residential users on all tiers that are billed on winter quarter usage. Commercial sewer accounts received a 3.4 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 Utiliry Fund net position increased by $1,805,581. No rate increases were inade in 2013. The 2013 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 stonn sewer costs associated with the Trunk Highway 55/General Mills Boulevard/Boone Avenue North intersection and flood proofing unprovement project In 2014, the 2004C bonds will be repaid five years early. Brookview Operating (Golf Course) Fund net position decreased by $152,783. Par 3 and regulation 18 greens fees were lower than anticipated due to weather and a decline in rounds played. Other business-type activities did not have a significant impact on net position in 2013. -9- Expenses and Program Revenues—Business-Type Activities $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 Cou�se ■Expenses ❑Program Revenues Revenue by Source—Business-Type Activities Capital Grants and Contributions Other Operating Grants and 6o,a �10 0 Con#ributions 4°ro Charges for Sen�ices 90°ro -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$60,746,393, an increase of$8,942,339 in coinparison with the prior year. The use of $43,287,123 of fund balance is restricted by various externally imposed constraints. Additional amounts of $718,723 and $8,532,562 are cominitted and assigned, respectively, for internally imposed spending constraints. The remaining $8,207,985 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 $391,928 to $9,707,985 at December 31, 2013. The unassigned fund balance at December 31, 2013 of $8,207,985 is equal to 51.6 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 far expenditures until properry tax dollars are received by the City in July and December. General Fund operating results can be summarized as follows: 2013 2012 Fund balance—beginning of year $ 9,316,057 $ 9,218,998 Additions Revenue 16,197,707 15,742,802 Other sources 100,000 86,810 Total additions 16,297,707 15,829,612 Deductions Expenditures 14,721,069 14,547,843 Other uses 1,184,710 1,184,710 Total deductions 15,905,779 15,732,553 Fund balance—end of year $ 9,707,985 $ 9,316,057 Of the reinaining fund balance, $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, $8,207,985, is far 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—wltil July of each year. -11- General Fund Revenues-The following is an analysis of 2013 General Fund revenue: Original Final Over(Under) Percent Over Revenue Budget Budget Actual Final Budget (Under)Budget Ad valorem taxes $ 11,967,780 $ ]],967,780 $ 12,121,603 $ 153,823 1.3 % Licenses 191,510 191,510 240,629 49,119 25.6 Pennits 693,200 693,200 1,255,824 562,624 81.2 Intergovernmental 34,500 34,500 85,963 51,463 149.2 Charges for services ],740,195 1,740,195 1,846,614 106,419 6.1 Fines and forfeits 280,000 280,000 366,059 86,059 30.7 Investmentincome 100,000 100,000 18,994 (81,006) (81.0) Otherrevenue 227,200 227,200 262,021 34,821 15.3 Totals $ 15,234,385 $ 15,234,385 � 16,197,707 $ 963,322 6.3 Ad valorem taxes were over budget due to delinquencies that were paid from previous years. Pennits were over budget due to an increase in building construction. Intergovernmental revenue exceeded budget due to several sinall grants froin the state and federal governinent. Charges for services were higher due to an increase in park and recreation programs participation. Investment income came in under budget because of lower interest rates and market value adjustments on the City's investment portfolio. General Fund Expenditures-The following is an analysis of 20]3 General Fund expenditures: Original Final Over(Under) Percent Over Expenditure Budget Budget Actual Final Budget (Under)Budget General govemment � 1,15Q995 $ 1,183,995 $ 1,042,901 $ (141,094) (ll.9) % Administrative services 1,594,515 1,595,515 1,558,386 (37,129) (2.3) Casualtyinsurance 300,000 300,000 222,559 (77,44]) (25.8) Building operations 525,990 525,990 562,130 36,140 6.9 Public safety 6,453,655 6,621,655 6,570,981 (50,674) (0.8) Public works 3,382,300 3,388,300 3,283,160 (105,140) (3.1) Planning and developinent 323,750 325,750 297,689 (28,061) (8.6) Parks and recreation 1,158,470 1,158,470 1,183,263 24,793 21 Totals $ 14,889,675 $ 15,099,675 S 14,721,069 S (378,606) (2.5) General government expenditures were under budget in personal services and legal fees. Casualty insurance was lower than budget due to a premium adjustment. Building operations exceeded budget due to required maintenance and iinproveinents. Public works and planning and development were under budget in personal service costs. Programs for parks and recreation were over budget due to popular programs that were reimbursed by higher program revenues. -]2- Other Major Governmental Funds—The City reported three other major governmental funds for 2013. One of these funds relates to the City's Golde�� Hills Tax Increment District. The Golden Hills Tax Increinent Special Revenue Fund is used to account for the tax increinent 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 iinprovements. Fund balance decreased $381,728 as tax increment revenue collected was less than transfers for debt service and administrative costs. At December 31, 2013, this fund had a net equity of$7,225,521. The two other inajor 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 unproveinent bonds issued to finance street improvements. At year-end, this fund had a fund balance of $21,424,268 accumulated for future debt service. Fund balance increased by $7,299,859 in 2013, mainly due to the issuance of$7.025 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. The Street Reconstruction Capital Project Fund ended the year with a fund balance of$3,208,656, which decreased $568,232 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 for the business-type activities found in the government-wide financial statements,but in inore detail. The unrestricted net positions of the City's enterprise funds totaled $19,315,411 at the end of the fiscal year. The Utility Fund had an increase in net position of$504,684 due to positive operating results and capital contributions. The Storm Sewer Utility Fund had an increase in net positions of$1,805,581 due to positive operaring results and capital contributions. The Brookview Operating (Golf Course) Fund had a decrease in net position of$152,783 due to lower revenue caused by unfavorable weather. The Motor Vehicle Operating Fund had a decrease in net position of $65,270, as this fund has not regained all of the business lost from being closed for a portion of 2012. The Recycling Fund had an increase in net position of$9,114 due to reimbursements received for stonn damage. -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, 2013 amounts to $106,450,849. This balance represents a net decrease of$900,205 from the prior year. The City's capital assets for the last two years are as follows: Govermnental Activities Business-Type Activities Total 2013 2012 2013 2012 2013 2012 Land $ 3,527,685 $ 3,527,685 $ 857,044 $ 857,044 $ 4,384,729 � 4,384,729 Land i�nprovements S,O17,020 4,727,307 2,949,542 2,949,542 7,966,562 '7,676,849 Buildings and improve�nents 12,353,227 11,94I,656 667,657 667,657 13,020,884 12,609,313 Machinery and equipment 10,585,370 10,176,771 3,928,051 3,698,999 14,513,421 13,875,770 [nfi-ashucture ]05,430,655 102,891,540 37,957,559 36,187,105 143,388,214 139,078,645 Construction in progress 5,564,967 5,266,507 1,594,386 1,482,243 7,]59,353 6,'J48,750 Less accumulated depreciation (67,005,696) (61,467,152) (16,976,618) (]5,555,850) (83,982,314) (77,023,002) Net tota] $ 75,473,228 � 77,064,314 $ 30,977,621 $ 30,286,740 �106,450,849 $107,351,054 Because of the completion of some street reconstruction projects,the costs were inoved 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 far 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 far these funds include annual tax levies, tax increinent transferred from the HRA Genera] Special Revenue Fund, and special assessments. At year-end, there was $28,063,240 of fund balances restricted for debt service in the governmental funds. The revenue bonds will be paid from the designated business activity for stonn water. The following table presents the City's long-term liabilities as of the last two year-ends: Governmenlal Activities Business-Type Activities Total 2013 2012 2013 2012 2013 2012 G.O.specia]assessment bonds $ 62,230,000 $ 56,350,000 $ — � — � 62,230,000 $ 56,350,000 G.O.tax increment bonds 9,290,000 11,565,000 — — 9,290,000 11,565,000 G.O.ce�lificates of indebtedness 2,145,000 2,095,000 — — 2,145,000 2,095,000 G.O.tax abatement bonds 2,075,000 2,420,000 — — 2,075,000 2,420,000 G.O.state-aid street bonds 1,985,000 2,090,000 — — 1,985,000 2,090,000 Unamoilrzedpremiums 1,116,249 819,122 — — 1,116,249 819,122 Compensated absences ],524,119 1,614,498 — — 1,524,119 1,614,498 Net OPEB obligation 568,694 505,599 — — 568,694 505,599 Revenue bonds — — 2,550,000 2,870,000 2,550,000 2,870,000 Total $ 80,934,062 $77,459,219 $ 2,550,000 $ 2,870,000 $ 83,484,062 $ 80,329,219 -14- ln 2013,the City sold the following bond issues: 1) $1,735,000 G.O. Improvement Bonds, Series 2013A—The proceeds of this issue are being used to finance improvements from the 2013 pavement management program. 2) $750,000 G.O. Equipment Certificates of Indebtedness, Series 2013A—The proceeds of these certificates financed the purchases of various pieces of equipment included in the City's 2013— 2017 capital improvement program. 3) $2,075,000 G.O. Tax Abatement Refunding Bonds, Series 2013A—The proceeds of this issue were used to refund the 2014 through 2019 maturities of the City's G.O. Tax Abatement Bonds, Services 2004B during 2013. 4) $7,025,000 G.O. Improvement Refunding Bonds, Series 2013B — The proceeds of this issue and interest earned thereon will be used to refund the 2017 through 2026 maturities of the City's G.O. Improvement Bonds, Services 2006B on their February 1,2016 call date. Additional details of long-tenn debt activity for the year can be found in Note 5 of the notes to basic financial stateinents. ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES Econoinic factors affect the preparation of annual budgets. Factors considered in preparing the 2014 budget were the following: • The state of Minnesota enacted levy limits for cities, but excluded bonded debt levies and had little unpact on the Ciry for 2014. • The City's 2014 budgeted tax levy went up by 2.90 percent from 2013. • Utility rates are reviewed with the budget process and reflect a change due to the providers such as the Ciry of Minneapolis that sells water to the Joint Water Cominission and the Metropolitan Council Environmental Services that treats sewage. Water rates were increased 3.94 percent per 1,000 gallons starting in April 2014. Sewer rates will change to nine flat rates based on consumption for residential accounts, and will increase $3.80 per 1,000 gallons for commercial accounts starting in April 2014. REQUESTS FOR INFORMATION Questions concerning any of the infonnation provided in this report or requests for additional infonnation 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 TAB THIS PAGE 1NTENTIONALLY LEFT BLANK CITY OF GOLDEN VALLEY Statement of Net Position December 31,2013 Governmental Business-Type Activities Activities Total Assets Cash and temporary investments $ 50,696,092 $ 17,936,406 $ 68,632,498 Receivables Delinquent taxes 100,775 — 100,775 Special assessments(net of allowance) 3,277,503 384,506 3,662,009 Accounts and interest receivable 637,009 1,418,857 2,055,866 Due from other governmental units 522,084 75,461 597,545 Internal balances 753,088 (753,088) — Inventory 141,742 20,087 161,829 Restricted assets—temporarily restricted Cash and temporary investments 13,138,631 — 13,138,631 Interest receivable 20,996 — 20,996 Capital assets Not depreciated 9,092,652 2,451,430 11,544,082 De�reciated,net of accumulated depreciation 66,380,576 28,526,191 94,906,767 Total assets $ 144,761,148 $ 50,059,850 $ 194,820,998 Liabilities Accounts and contracts payable $ 553,130 $ 169,037 $ 722,167 Accrued interest payable 1,109,333 45,194 1,154,527 Accrued salaries and employee benefits 750,258 — 750,258 Due to other governmental units 206,099 125,700 331,799 Deposits 536,383 179,975 716,358 Long-term liabilities Due within one year 9,632,215 330,000 9,962,215 Due in more than one year 71,301,847 2,220,000 73,521,847 Total long-term liabilities � 80,934,062 2,550,000 83,484,062 Totalliabilities 84,089,265 3,069,906 87,159,171 Net position Net investment in capital assets 21,829,745 28,427,621 50,257,366 Restricted for Debt service 16,736,835 — 16,736,835 Redevelopment 7,660,597 — 7,660,597 Capital improvements 4,978,485 — 4,978,485 Cemetery maintenance 73,279 — 73,279 DWI enforcement 86,650 — 86,650 Unrestricted 9,306,292 18,562,323 27,868,615 Total netposition 60,671,883 46,989,944 107,661,827 Total liabilities and net position $ 144,761,148 $ 50,059,850 $ 194,820,998 See notes to basic financia]statements -16- CITY OF GOLDEN VALLEY Statement of Activities Year Ended December 31,2013 Program Revenues Net(Expenses) Operating Capital Revenue and Changes in Net Position Charges for Grants and Grants and Governmenlal Business-Type Functions/Programs Expenses Seivices Conh-ibutions Contributions Activities Activities Total Goveimnental activitie: General governmeni $ 2,914,823 $ 279,725 $ 91,232 $ - $ (2,543,866) $ - $ (2,543,866) Public safery 7,310,946 1,861,48] 468,014 - (4,981,451) - (4,981,45]) Public works 10,325,068 407,938 - 1,870,204 (8,046,926) - (8,046,926) Parks and recreation 1,588,798 594,142 - 12,494 (982,162) - (982,162) Interest and fiscal charges 2,633,359 - - - (2,633,359) - (2,633,359) Total governmental activities 24,772,994 3,143,286 559,246 1,882,698 (19,187,764) - (19,187,764) Business-rype activitie� Water and sewer 7,611,927 7,831,307 125,522 - - 344,902 344,902 Stonn sewer 1,589,410 2,274,549 209,371 852,075 - 1,746,585 1,746,585 Golfcom�se 1,645,728 1,502,897 18,935 - - (123,896) (123,896) Motorvel�iclelicensing 326,382 304,424 - - - (2],958) (21,958) Recycling 410,808 276,099 141,623 - - 6,914 6.914 Total business-type activiries 11,584,255 12,189,276 495,451 852,075 - 1,952,547 1,952,547 Total governinental and business-type activities $36,357,249 $15,332,562 $ 1,054,697 $2,734,773 (]9,187,764) 1,952,547 (17,235,217) General revenues Property taxes 21,757,173 - 21,757,173 Franchise taxes 904,928 - 904,928 Othe��general revenue� 338,245 - 338,245 Inveshnenteainings 112,817 38,459 ]51,276 Gain on sale of capital asset� 24,735 - 24,735 Transfeis (73,606) 73,606 - Total general revenues and transfer� 23,064,292 112,065 23,176,357 Change in net position 3,876,528 2,064,612 5,941,140 Net position-beginning 56,795,355 44,925,332 101,720,687 Net position-ending $60,671,883 $46,989,944 $107,661,827 See notes to basic f7naneial statement� -17- THIS PAGE INTENTIONALLY LEFT BLANK FUND FINANCIAL STATEMENTS TAB THIS PAGE 1NTENTIONALLY LEFT BLANK CITY OF GOLDEN VALLEY Balance Sheet Governmental Funds December 31,2013 Golden Hills Street Tax Increment Reconstruction General Special Revenue Debt Service Assets Cash and temporary investments $ 10,459,303 $ 7,234,047 $ 8,269,641 Cash held with trustee — — 13,138,631 Receivables Delinquent taxes 100,775 — — Special assessments 33,681 — 2,942,555 Accounts 47,626 — — Accrued interest 275,026 — 20,996 Due from other funds 74,569 — — Due from other governmental units 242,030 — — Total assets $ 11,233,010 $ 7,234,047 $ 24,371,823 Liabilities Accounts payable $ 118,749 $ — $ — Contracts payable 19,390 — — Accrued salaries payable 750,258 — — Due to other governmental units 195,822 — — Deposits 306,350 — 5,000 Due to other funds — 8,526 — Total liabilities 1,390,569 8,526 5,000 Deferred inflows of resources Unavailable revenue—property taxes 100,775 — — Unavailable revenue—special assessments 33,681 — 2,942,555 Unavailable revenue—other — — — Total deferred inflows of resources 134,456 — 2,942,555 Fund balances Restricted — 7,225,521 21,424,268 Committed — — — Assigned 1,500,000 — — Unassigned 8,207,985 — — Tota] fund balances 9,707,985 7,225,521 21,424,268 Total liabilities,deferred inflows of resources,and fund balances $ 11,233,010 $ 7,234,047 $ 24,371,823 See notes to basic financial statements -18- Street Reconstruction Capital Project Nonmajor Totals $ 3,357,382 $ 19,155,410 $ 48,475,783 - - 13,138,631 - - 100,775 181,639 119,628 3,277,503 - 296,068 343,694 - 8,689 304,711 - - 74,569 - 280,054 522,084 $ 3,539,021 $ 19,859,849 $ 66,237,750 $ 24,435 $ 85,339 $ 228,523 94,166 197,177 310,733 - - 750,258 - 8,168 203,990 30,125 181,531 523,006 - 66,043 74,569 148,726 538,258 2,091,079 - - 100,775 181,639 119,628 3,277,503 - 22,000 22,000 181,639 141,628 3,400,278 2,748,139 11,889,195 43,287,123 - 718,723 718,723 460,517 6,572,045 8,532,562 - - 8,207,985 3,208,656 19,179,963 60,746,393 $ 3,539,021 $ 19,859,849 $ 66,237,750 -19- THIS PAGE 1NTENTIONALLY LEFT BLANK CITY OF GOLDEN VALLEY Reconciliation of the Balance Sheet to the Statement of Net Position Governmental Funds December 31,2013 Total fund balances—governmental funds $ 60,746,393 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported as assets in governmental funds. Cost of capital assets 142,360,665 Less accumulated depreciation (66,948,449) Long-term liabilities, including bonds payable, are not due or payable in the current period and, therefore, are not reported as liabilities in governmental funds. Long-term liabiliries at year-end consist of: Bonds and certificates of indebtedness payable (77,725,000) Certain receivables (including delinquent taxes, special assessments, and other receivables 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. 3,400,278 Accrued interest payable is included in net position, but is excluded from fund balances until due and payable. (1,109,333) 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 internal service funds are included in governmental activities in the Statement of Net Position. Internal service balances included in governmental activities 310,490 Add internal service balances allocated to business-type activities 753,088 Governmental funds report debt premiums as other financing sources at the time of issuance. Premiums are reported as liabilities in the Statement of Net Position. (1,116,249) Total net position—governmental activities $ 60,671,883 See notes to basic financial statements -20- CITY OF GOLDEN VALLEY Statement of Revenue,Expenditures,and Changes in Fund Balances Governmental Funds Year Ended December 31,2013 Golden Hills Street Tax Incre�nent Reconstruction General Special Revenue Debt Service Revenue Ad valorem taxes $ 12,121,603 $ — $ 3,688,150 Tax increments — 4,803,927 — Special assessments 16,858 — 1,117,178 Franchise taxes — — — Licenses and permits 1,496,453 — — Intergoverninental revenue 85,963 — — Charges for services 1,846,614 — — Fines and forfeits 366,059 — — Investmentincome 18,994 1,871 46,659 Other revenue 245,163 — — Total revenue 16,197,707 4,805,798 4,851,987 Expenditures Current General government 1,042,901 8,526 — Administrative services 1,558,386 — — Casualty insurance 222,559 — — Building operations 562,130 — — Public safety 6,570,981 — — Public works 3,283,160 — — Planning and development 297,689 — — Parks and recreation 1,183,263 — — Capital outlay — — — Debt service Principal — — 2,880,000 Interest and fiscal charges — — 2,086,059 Total expenditures 14,72],069 8,526 4,966,059 Excess(deficiency)of revenue over expenditures 1,476,638 4,797,272 (ll 4,072) Other financing sources(uses) Sale of capital assets — — — Bonds issued — — 48,388 Refunding bonds issued — — 7,025,000 Premiums on bonds issued — — 340,543 Paid to refunded bond escrow agent — — — Transf'ers in 100.000 — — Transfers(out) (1,184,710) (5,179,000) — Total other financing sources(uses) (1,084,710) (5,179,000) 7,413,931 Net change in fund balances 391,928 (381,728) 7,299,859 Fund balances Beginning of year 9,316,057 7,607,249 14,124,409 End of year $ 9,707,985 $ 7,225,521 $ 21,424,268 See notes to basic financial statements -21- Street Reconstruction � Capital Project Nomnajor Totals $ — $ 1,038,016 $ 16,847,769 — 30,636 4,834,563 — 89,084 1,223,120 — 904,928 904,928 — — 1,496,453 93,407 805,250 984,620 — 42,864 1,889,478 — — 366,059 8,429 31,810 107,763 — 405,587 650,750 101,836 3,348,175 29,305,503 — 216,614 1,268,041 — — 1,558,386 — — 222,559 — — 562,130 — 23,395 6,594,376 — — 3,283,160 — — 297,689 — — 1,183,263 2,415,068 3,783,777 6,198,845 — 3,415,000 6,295,000 — 747,034 2,833,093 2,415,068 8,185,820 30,296,542 (2,313,232) (4,837,645) (991,039) — 80,875 80,875 1,686,612 750,000 2,485,000 — 2,075,000 9,100,000 58,388 53,572 452,503 — (2,085,000) (2,085,000) — 6,348,710 6,448,710 — (185,000) (6,548,710) 1,745,000 7,038,157 9,933,378 (568,232) 2,200,512 8,942,339 3,776,888 16,979,451 51,804,054 $ 3,208,656 $ 19,179,963 $ 60,746,393 -22- THIS PAGE INTENTIONALLY LEFT BLANK CITY OF GOLDEN VALLEY Recoi�ciliation of the Statement of Revenue,Expenditures,and Changes in Fund Balances to the Statement of Activities Governmental Funds Year Ended December 31,2013 Total net change in fund balances—governmental funds $ 8,942,339 Amounts reported for governmental activities in the Statement of Activities are different because: Capital outlays are reported in governmental funds as expenditures. However, in the Statement of Activities the cost of those assets is aliocated over the estimated useful lives as depreciation expense. Capital outlays 4,623,106 Depreciation expense (5,964,O11) A gain or loss on the disposal ar transfer 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. (279,010) The amount of bond proceeds used to finance the acquisition of capital assets is reported in the governmental funds as a source of financing. Bond proceeds are not revenues in the Statement of Activities,but rather constitute long-term liabilities. (11,585,000) Repayment of long-term liabilities is an expenditure in the governmental funds,but the repayment reduces long-term liabilities in the Statement of Net Position. 8,380,000 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 expenditure in the funds when it is due, and thus requires the use of current financial resources. In the Statement of Activities, however, interest expense is recognized as the interest accrues,regardless of when it is due. 44,358 Govemmental funds report debt issuance premiums as other financing sources at the time of issuance.Premiums are reported as liabilities in the Statement of Net Position. (297,127) Certain receivables (including delinquent taxes, special assessments, and other receivables not collected within sixty days of year-end) are 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. (124,408) Internal service funds are used by management to charge the costs of employee benefits and vehicle maintenance to individual fwlds. The net revenue/expense of certain activities of internal service funds is reported with governmental activities in the government-wide financial statements. Internal service fund activity included in governmental activities 99,567 Add back internal service fund activity allocated to business-type activities 36,714 Change in net position—governmental activities $ 3,876,528 See notes to basic financial statements -23- THIS PAGE INTENTIONALLY LEFT BLANK CITY OF GOLDEN VALLEY Statement of Revenue,Expenditures,and Changes in Fund Balances General Fund-Budget and Actual Year Ended December 31,2013 Original Final Over(Under) BUdget Budget Actual Budget Revenue Ad valorem taxes $ 11,967,780 $ 11,967,780 $ 12,121,603 $ 153,823 Special assessments 10,000 10,000 16,858 6,858 Licenses and permits 884,710 884,710 1,496,453 611,743 Intergovernmental revenue 34,500 34,500 85,963 51,463 Charges for services 1,740,195 1,740,195 1,846,614 106,419 Fines and forfeits 280,000 280,000 366,059 86,059 Investment income 100,000 100,000 18,994 (81,006) Other revenue 217,200 217,200 245,163 27,963 Total revenue 15,234,385 15,234,385 16,197,707 963,322 Expenditures Current General government 1,150,995 1,183,995 1,042,901 (141,094) Administrative services 1,594,515 ],595,515 1,558,386 (37,129) Casualty insurance 300,000 300,000 222,559 (77,441) Building operations 525,990 525,990 562,130 36,140 Public safety 6,453,655 6,621,655 6,570,981 (50,674) Public works 3,382,300 3,388,300 3,283,160 (105,140) Planning and development 323,750 325,750 297,689 (28,061) Parksandrecreation 1,158,470 1,158,470 1,183,263 24,793 Total expenditures 14,889,675 15,099,675 14,721,069 (378,606) Excess of revenue over expenditures 344,710 134,710 1,476,638 1,341,928 Other financing sources(uses) Transfers in 100,000 100,000 100,000 - Transfers(out) (444,710) (294,710) (1,184,710) (890,000) Total other financing sources(uses) (344,710) (194,710) (1,084,710) (890,000) Net change in fund balances $ - $ (60,000) 391,928 $ 451,928 Fund balances Beginning of year 9,316,057 End of year $ 9,707,985 See notes to basic financial statements -24- CITY OF GOLDEN VALLEY Statement of Net Position Proprietary Funds December 31,2013 Business-Type Activities—Enterprise Funds Govemmental Stonn Sewer Brookview Motor Vehicle Activities Utility Utility Operating Operating Recycling Totals Internal Service Assets Current assets Cash and temporary invest�ne�ts 6,495,418 $ 8,749,089 $ 1,118,735 $ 587,333 $ 985,831 $17,936,406 $ 2,220,309 Receivables Special assessments 439,497 — — — — 439,497 — Accounts 1,418,519 — 338 — — 1,418,857 9,600 Allowance for uncollectibles (54,991) — — — — (54,99]) — Due from other governmental units — 48,076 374 — 27,011 75,461 — Inventory 8,784 — ]],303 — — 2Q087 141,742 Totalcurrentassets 8,307,227 8,797,165 1,130,750 587,333 ],O12,842 19,835,317 2,371,651 Noncurrent assets Capital assets Land — — 857,044 — — 857,044 — Land'nnprovements 30,054 — 2,919,488 — — 2,949,542 — Buildings and improve�nents 505,490 — 162,167 — — 667,657 — Machinery and equipinent 1,994,8ll 607,616 1,317,358 14,266 — 3,928,05] i18,259 lnfrastructure—distribution and collection systems 20,614,703 17,342,856 — — — 37,957,559 — Construction in progress 711,467 882,919 — — — 1,594,386 — 23,856,525 18,827,391 5,256,057 14,266 — 47,954,239 118,259 Less accumulated depreciation (9,165,476) (4,089,773) (3,717,080) (4,289) — (16,976,618) (57,247) Totalnoncurrentassets 14,691,049 14,737,618 1,538,977 9,977 — 30,977,621 61,012 Total assets $22,998,276 $23,534,783 $ 2,669,727 $ 597,310 $ 1,012,842 $50,812,938 $ 2,432,663 See notes to basic 6nancial statements (continued) -25- CITY OF GOLDEN VALLEY Statement of Net Position Proprietary Funds(continued) Dece�nber 3l,2013 Business-Type Activities-Enterprise Funds Governmental Storm Sewer Brookview Motor Vehicle Activities Utiliry Utility Operating Operating Recycling Totals Internal Service Liabilities and Net Position Current liabilities Accounts payable $ 18,951 $ 27,888 $ 46,439 $ 282 $ 20,900 $ 108,460 $ 13,874 Accruedinterestpayable - 45,194 - - - 45,194 - Contracts payable 31,933 28,644 - - - 60,577 - Accrued compensated absences-current - - - - - - 912,215 Due to other governuiental units 121,205 2,177 189 - 2,129 125,700 2,109 Deposits 107,984 71,991 - - - 179,975 13,377 Bonds payable-current - 330,000 - - - 330,000 - Total current liabilities 280,073 499,894 46,628 282 23,029 849,906 941,575 Noncuirent liabilities Net OPEB obligation - - - - - - 568,694 Accrued compensated absences and severance - - - - - - 6ll,904 Bonds payable-lot�g-term - 2,220,000 - - - 2,220,000 - Totalnoncurrentliabilities - 2,220,000 - - - 2,220,000 1,180,598 Totalliabilities 280,073 2,719,894 46,628 282 23,029 3,069,906 2,122,173 Net position Net inveshnent in capital assets 14,691,049 12,187,678 1,538,977 9,977 - 28,427,621 61,O12 Unrestricted 8,027,154 8,627,271 1,084,122 587,051 989,813 ]9,375,471 249,478 Total net posirion 22,718,203 20,874,889 2,623,099 597,028 989,813 47,743,032 310,490 Total liabilities and net position $22,998,276 $23,534,783 $ 2,669,727 $ 597,310 $ ],O12,842 $50,812,938 $ 2,432,663 Total net position-enterprise funds $47,743,032 Adjushnent to reflect the consolidation of internal service fund activity related to enterprise funds (753,088) Net position-business-type activities $46,989,944 -26- CITY OF GOLDEN VALLEY Statement of Revenue,Expenses,and Changes in Net Position Proprietary Funds Year Ended December 31,2013 Business-Type Activities—Enterprise Funds Storm Sewer Brookview Utility Utility Operating Operating revenue Charges far services $ 7,819,950 $ 2,274,549 $ 1,029,346 Sales and rentals 11,357 — 503,315 Less sales tax and credit card fees — — (29,764) Total operating revenue 7,831,307 2,274,549 1,502,897 Operating expenses Enterprise operations 6,848,906 875,378 1,504,319 Other services — — — Depreciation 746,989 594,895 130,180 Total operating expenses 7,595,895 1,470,273 1,634,499 Operating income(loss) 235,412 804,276 (131,602) Nonoperating revenue(expense) Intergovernmental revenue 125,522 112,092 14,979 Investment income 13,825 18,616 2,650 Other income(expense) — 97,279 3,956 Gain(loss)on sale of capital assets (1,130) Interest expense — (113,174) (900) Total nonoperating revenue(expense) 139,347 114,813 19,555 Income(loss)befare transfers 374,759 919,089 (112,047) Capital contributions 175,683 886,492 — Transfer in — — 9,264 Transfers(out) (45,758) — (50,000) Change in net position 504,684 1,805,581 (152,783) Net position Beginning of year 22,213,519 19,009,308 2,775,882 End of year $ 22,718,203 $ 20,814,889 $ 2,623,099 See notes to basic financial statements -27- Governmental Motor Vehicle Activities Operating Recycling Totals Internal Service $ 304,424 $ 276,099 $ 11,704,368 $ 6,423,386 - - 514,672 - - - (29,764) - 304,424 276,099 12,189,276 6,423,386 317,755 410,808 9,957,166 - - - - 6,971,676 2,851 - 1,474,915 7,665 320,606 410,808 11,432,081 6,979,341 �ib,is2� �i34,�o9� �s�,i9s �sss,9ss� - 133,517 386,110 386,465 1,168 2,200 38,459 5,054 (256) 8,106 109,085 14,739 - - (1,130) 12,770 - - (114,074) - 912 143,823 418,450 419,028 (]5,270) 9,]14 1,175,645 (136,927) 1,062,175 - - - 9,264 236,494 �so,000� - �i4s,�sa� - (65,270) 9,114 2,101,326 99,567 � 662,298 980,699 45,641,706 210,923 $ 597,028 $ 989,813 $ 47,743,032 $ 310,490 Change in net position- enterprise funds $ 2,101,326 Adjustment to reflect the consolidation of internal service fund activities related to the enterprise funds (36,714) Change in net position- business-type activities $ 2,064,612 -28- C1TY OF GOLDEN VALLEY Statement of Cash Flows Proprietary Funds Year Ended December 31,2013 Business-Type Activities-Enterprise Fuuds Stonn Sewer Brookview Utility Utility Operating Cash flows from operating activities Receipts from customers and users $ 7,981,279 $ 2,323,752 $ 1,532,699 Receipts from interfund services provided - - - Paid to suppliers/service providers (5,934,129) (522,894) (604,288) Paid to employees (858,238) (325,765) (841,922) Payments far interfund services (275,000) (200,000) (85,000) Net cash flows from operating activities 913,912 1,275,693 ],489 Cash flows from capital and related financing activities Acquisition of capital assets (603,260) (1,367,503) (39,014) Repayment of advances froin other funds - - (45,000) Proceeds from sale of capital assets - - 10,457 Capital conrributions from other goveminental units - 852,075 - Principal paid on capital debt - (320,000) - Jnterest paid on capital debt - (118,749) (1,350) Net cash flows from capital and related financing activities (603,260) (948,177) (74,907) Cash flows from investing activities Interest received on invesUnents 13,825 18,616 2,650 Cash flows froin noncapital financing activities Intergovemmental revenue 125,522 112,092 14,979 Transfers in - - - Transfers(out) - - (50,000) Net cash flows from noncapital financing activities 125,522 112,092 (35,021) Net increase(decrease)in cash and temporary invest�nents/cash equivalents 449,999 458,224 (]05,789) Cash and temporary investments/cash equivalents Beginning of year 6,045,419 8,290,865 1,224,524 Endofyear $ 6,495,418 $ 8,749,089 $ 1,118,735 Reconciliation of operaring income(loss)to net cash flows from operating activities Operating income(loss) $ 235,412 $ 804,276 $ (131,602) Adjustments to reconcile operating income(loss)to net cash flows from operating activities Depreciation 746,989 594,895 ]30,180 Other income(expense) - 97,279 3,956 Change in assets and liabilities Receivables Delinquent special assessments 5,034 - - Deferred special assessments 84,582 - - Accounts 58,230 - 65 Due from other governmental units 2,126 (48,076) (374) Inventory (5,210) - (3,609) Accounts payable (49,225) (110,347) 2,990 Contracts payable (5,025) (9,005) - Net OPEB obligation - - - Accrued co�npensated absences - - - Due to other govemmental units (251,035) 2,177 (]]7) Deposits 92,034 (55,506) - Net cash flows from operating activities $ 913,912 $ 1,275,693 $ 1,489 Schedule of noncash capital and related financing activities Capital assets contributed froin other funds $ 129,925 $ 34,417 $ 9,264 See notes to basic financial statements -29- Governmental Motor Vehicle Activities Operating Recycling Totals Intemal Service $ 304,168 $ 284,205 $ 12,426,103 $ 1,366,874 - - - 5,063,532 (32,]08) (351,643) (7,445,062) (4,719,722) (255,547) - (2,280,872) (2,294,084) (30,000) (51,500) (641,500) - (13,487) (]18,938) 2,058,669 (583,400) - - (2,003,777) - - - (45,000) - - - ]0,457 12,770 - - 852,075 - - - (320,000) - - - (120,099) - - - (1,626,344) L2,770 1,168 2,200 38,459 5,054 - 106,506 359,099 386,465 - - - 200,000 (50,000) - (100,000) - (50,000) 106,506 259,099 586,465 (62,319) (10,232) 729,883 20,889 649,652 996,063 17,206,523 2,199,420 $ 587,333 $ 985,831 $ ]7,936,406 $ 2,220,309 $ (16,182) $ (134,709) $ 757,195 � (555,955) 2,851 - 1,474,915 7,665 (256) 8,106 109,085 14,739 - - 5,034 - - - 84,582 - - - 58,295 (7,719) - - (46,324) - - - (8,819) 11,60] ]00 5,536 (150,946) (26,747) - - (14,030) - - - - 63,095 - - - (89,867) - 2,129 (246,846) (3,818) - - 36,528 3,606 $ Q 3,487) � (178,938) � 2,058,669 $ (583,400) $ - $ - � 173,606 $ 36,494 -30- THIS PAGE INTENTIONALLY LEFT BLANK CITY OF GOLDEN VALLEY Notes to Basic Financial Statements December 31,2013 NOTE 1—SIGNIFICANT ACCOUNTING POLICIES A. Organization The Ciry 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 Ciry 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 inanager, who is appointed by the Ciry Council, is responsible for the proper administration of all affairs relating to the City. The accounting policies of the City confonn 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 component units. Coinponent 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 stateinents of the primary government misleading. The criteria used to determine if the primary governinent is financially accountable for a component unit includes whether or not the primary government appoints the voting inajority 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 ar 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 Redevelopinent Authoriry (HRA) is a legally separate organization created in accordance with Minnesota Statute §469. Its purpose is to clear and redevelop blighted areas in the Ciry 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 coinponent unit of the City,with its funds reported as funds of the Ciry. 2. Joint Ventures — The Ciry participates in two joint ventures: the Bassett Creek Water Management Commission and the Joint Water Commission. Descriptions and condensed financial infonnation for these organizations are included later in these notes. 3. Jointly Governed Organization — The City is a member of Local Governmental Infonnation Systems (LOGIS), a consartium of Minnesota municipalities that provides data processing services and support to its members. LOGIS is a legally separate entiry 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 2013 fiscal year,the City paid LOGIS $565,453 for services provided. -31- NOTE 1—SIGNIFICANT ACCOUNTING POLICIES(CONTINUED) C. Government-Wide Financial Statements The governinent-wide financial statements (Statement of Net Position and Statement of Activities) display infonnation about the reporting government 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-rype 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: 1) 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 contriburions, including special assessinents 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 reparted 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 taxes and special assessments are recognized as revenues in the fiscal year far which they are certified for levy. Grants and sunilar items are recognized when all eligibility requirements imposed by the provider bave been met. As a general rule,the effect of interfund activiry 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. Tbe 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 reparted separately on the Statement of Activities. D. Fund Financial Statement Presentation Separate fund financial statements are provided for governmental and proprietary funds. Major individual governinental and enterprise funds are reported as separate columns in the fund financial stateinents. Aggregated information for the remaining nonmajar 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 recarded 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 detennined 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 susceptible to accrual as revenue of the current period. Grants and similar iteins 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 invesnnents. 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- NOTE 1—SIGNIFICANT ACCOUNTING POLICIES(CONTINUED) 2. Recording of Expenditures — Expenditures are generally recorded when a liability is incurred, except for principal and interest on long-tenn debt and coinpensated 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 stateinents. 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, adininistrative expenses, and depreciation on capital assets. All revenues and expenses that do not ineet 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 �overnment-wide financial statements. The cost of these services is reported in the appropriate functional activiry. Description of Funds The City reports the following inajar 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. Golden Hills Tax Increment Special Revenue Fund — This fund is used to account far taY increment revenue received for the Golden Hills Tax 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 fina��ce the City's street reconstruction program. Street Reconstruction Capital Project Fund— This fund is used to account for financial resources (prunarily improvement bond proceeds)to be used for the City's street reconstruction program. The City reports the 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 far the operation, maintenance, and improvement of the City's storm water drainage system. Brookview Operating Fund — This fund is used to account for the operation, maintenance, and improvement of the City's ]8-hole regulation and 9-hole par three golf course faciliries. -33- NOTE 1—SIGNIFICANT ACCOUNTING POLICIES(CONTINUED) Motor Vehicle Operating Fund—This fund is used to account for the operation and mai�lte��ance of the City's Deputy Registrar function. Recycling Fund—This fund is used to account far the operation of the City's recycling, spring brush pickup,and fall leaf drop-off programs. The Ciry also reparts the following fund type: Internal Service Funds — These funds are used to account for the City's vehicle maintenance operation, warkers' compensation insurance, and payroll benefits. Internal service funds operate in a manner similar to enterprise funds; however, they provide services primarily to other departinents within the City. E. Budgets and Budgetary Accounting Each fall, after holding a truth in taxation public bearing, the Ciry Council adopts a General Fund budget for the following fiscal year beginning January l. Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of Ainerica. 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 manageinent 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, Cash Equivalents,and Investments Cash balances from all funds are combined and invested to the extent available in short-term invesrinents. 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 balances 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(4M)Fund in an external investment pool regulated by Minnesota Statutes that is not registered with the Securities and Exchange Cominission (SEC), but follows the same regulatory rules of the SEC under rule 2a7. The City's investment in 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. 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 inonths or less to be cash equivalents. The proprietary funds' portion in the government-wide cash and invesUnent management pool is considered to be cash equivalent. G. Receivables Utility and miscellaneous accounts receivable are reported at gross. Since the City is generally able to certify delinquent amounts to tbe 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 —SIGNIFICANT ACCOUNTING POLICIES(CONTINUED) H. Property Taxes Property tax levies are set by the City Council in Deceinber of each year, and are certified to Hennepin County for collection in the following year. In Minnesota, counties act as collection agents far all property taxes. The county spreads the levies over all taxable property. Such taxes becoine a lien on January 1 and are recorded as receivables by the Ciry on that date. Real property taxes inay be paid by taxpayers in two equal installments on May 15 and October I5. Personal property taxes are due in full on May 15. The county provides tax settlements to cities and other taxing districts three tnnes a year; in July, Deceinber, and January. Property taxes are recognized as revenue in the year levied in the government-wide financial statements and proprietary fund financial statements. In the governinental 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. L Special Assessments Special assessments represent the financing for public improvements paid far by benefiting property owners. Special assessments are recorded as receivables upon certification to the county. Special assessinents are recognized as revenue in the year levied in the government-wide financial stateinents and proprietary fund financial statements. In the governinental fund financial statements, special assessments are recognized as revenue when received in cash or within 60 days after year-end. Governinental fund special assessments receivable which reinain unpaid on Deceinber 31 are offset by a deferred inflow of resources in the governmental fund financial statements. Special assessments receivable at December 31,2013 consist of the following: Enterprise Governmental Funds Funds Street Street Reconstruction Reconstruction General Debt Service Capital Project Nonmajor Utility Special assessments receivable Delinquent $ 10,773 $ 22,154 $ — � 242 $ 54,991 Deferred 22,908 2,920,401 181,639 119,386 384,506 Total 33,681 2,942,555 181,639 119,628 439,497 Allowance for uncollectible — — — — (54,991) Net of Allowance $ 33,681 $ 2,942,555 $ 181,639 $ 119,628 � 384,506 J. Inventories The inventories of the City's proprietary funds are stated at cost (far supplies) or the lower of cost or market(far merchandise held for resale) 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—SIGNIFICANT ACCOUNTING POLICIES(CONTINUED) K. Interfund Receivables and Payables In the fund financial statements, activiry between 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, buildings, improvements, equipinent, and infrastructure assets (roads,bridges, sidewalks, and similar items) are reported in the applicable governmental or business-type activities columns in the government-wide financial stateinents. Such assets are capitalized at historical cost, or estimated historical cost for assets where actual historical cost is not available. Donated assets are recarded as capital assets at their estiinated fair inarket value on the date of donation. The City defines capital assets as those with an initial, individual cost of$5,000 or inore 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 government-wide and proprietary fund financial statements, but are not reported in the governinental 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 iinprovements and buildings and improvements, 3 to 20 years for machinery and equipment, and 20 to 50 years for infrastructure. 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 inay be accumulated up to a maximum of two times the employee's annual vacation allowance. Unused sick leave inay be accumulated up to a maximum of 800 hours. Employees in good standing are paid for any unused vacation time upon tennination. 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 1, 2009 earn personal tiine off (PTO) rather than vacation and sick leave. PTO may be accuinulated up to various inaximum ainounts 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 tenninates. 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 are reported as liabilities. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. In the fund financial statements, governmental fund types recognize bond premiuins and discounts during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. -36- NOTE 1—SIGNIFICANT ACCOUNTING POLICIES(CONTINUED) 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 tiine. 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, unavailable revenue, is reported only in the governmental funds Balance Sheet. The governmental funds report unavailable revenue from three sources: property taxes, special assessinents, and other receivables not collected within 60 days of year-end. These ainounts are deferred and recognized as an inflow of resources in the period the amounts become available. P. Use of Estimates The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America, requires inanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported ainounts of revenue and expenditures/expenses during the reporting period.Actual results could differ from those estimates. Q. Fund Balance Classi�cations In the fund financial statements, governmental funds report fund balance in classifications that disclose constraints for which ainounts 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 CounciL Those coimnitted amounts cannot be used for any other purpose unless the City Council removes or changes the specified use by taking the same type of action it employed to previously commit those amounts. • Assigned — Consists of internally imposed constraints. These constraints consist of amounts intended to be used by the Ciry 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 governing body delegates the authoriry. Pursuant to City Council resolution, the City Council is authorized to establish assignments of fund balance. • Unassigned — The residua] classification for the General Fund which also reflects 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 cominitted, assigned, or unassigned resources are available for use, it is the Ciry's policy to use resources in the following order: 1)committed,2)assigned,and 3)unassigned. -37- NOTE 1 —SIGNIFICANT ACCOUNT�NG POLICIES(CONTINUED) R Net Position In the governinent-wide and proprietary fund financial statements, net position represent the difference between assets, deferred outflows of resources (if any), liabilities, and deferred inflows of resources. Net position is displayed in three components: • Net Investment in Capital Assets — Consists of capital assets, net of accumu1ated 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 creditars, grantors, ar laws or regulations of other governments. • Unrestricted Net Position—All other ele�r�ents of net position that do not meet the definition of "restricted"or"net investment in capital assets." S. Risk Management The Ciry is exposed to various risks of loss related to torts: theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The City participates in the League of Minnesota Cities Insurance Trust (LMCIT), a public entity risk poo] for its general property and casualty, workers' compensation, and other miscellaneous insurance coverage. LMCIT operates as a common risk management and insurance program for a large number of cities in Minnesota. The 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 cominercial companies for claims in excess of certain limits. The City also carries commercial insurance for certain other risks of loss. Settled claims resulting from these risks did not exceed insurance coverage in any of the last three fiscal years. There were no significant reductions in insurance coverage in 2013. T. Restricted Assets Restricted assets are cash, investments, and interest accrued thereon; the use of which is limited by external requirements such as a bond indenture or trust agreements. -38- NOTE 2—CASH AND INVESTMENTS A. Components of Cash and Investments Cash and inveshnents at year-end consist of the following: Deposits $ 594,401 Investments 81,172,163 Cash on hand 4,565 Total $ 81,771,129 Cash and investments are presented in the financial statements as follows: Cash and temporary investments— Statement of Net Assets $ 68,632,498 Restricted assets—cash and temporary investments— Statement ofNet Assets 13,138,631 Total $ 81,771,129 B. Deposits In accordance with applicable Minnesota Statutes, the Ciry maintains deposits at depository banks authorized by the City Council,including checking accounts and certificates of deposit. The following is considered the most significant risk associated 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 inarket 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 ar in an account at a trust department of a cominercial bank or other financial institution that is not owned or controlled by the financial institution furnishing the collateral. The City has no additional deposit policies addressing custodial credit risk. At year-end, the carryi�lg amount of the City's deposits was $594,401 while the balance on the bank records was $586,062. At Deceinber 31, 2013, all deposits were fully covered by federal depository insurance or collateral held by the City's agent in the City's name. -39- NOTE 2—CASH AND INVESTMENTS(CONTTNUED) C. Investments The City has the following inveshnents at year-end: Interest Risk— Concentration Risk Credit Risk Maturity Duration in Years Greater Than InvesGnent Type Rating Agency Less Than 1 1 to 5 7'otal 5 Percent U.S.treasury securities N/A N/A $ 246,139 $12,891,741 $13,137,880 N/A U.S.agency debt securities Federal Home Loan Bank AA S&P — 1,249,4R5 1,249,485 No Federal Home Loan Mortgage Corporation AA S&P 499,212 4,480,530 4,979,742 No Federal Nadonal Mortgage Association AA S&P 499,82I 16,263,228 16,763,049 Yes Repurchase agreement(U.S.agency—FNMA underlying secu�ity) AA S&P 7,196,973 — 7,196,973 Yes Negotiable ceriiticates ofdeposit N/R N/R 998,002 1,729,634 2,727,636 No Local government debt securities AAA Moody 305,878 — 305,878 No Local govermnent debt securities AA S&P 1,714,731 506,L60 2,220,891 No Local govermnent debt secwities AA Moody 439,503 1,142,582 1,582,085 No Localgovernmentdebtsecurities A Moody 601,963 1,0]8,548 1,620,511 No Local govero�nent debt securities A S&P 1,561,115 2,615,933 4,177,048 No State of Illinois debt securities A S&P 6,000,000 1,009,I 65 7,009,165 Yes Investment pool/mutual funds 4M Fund N/R N/R 18,201,820 — 18,201,820 No Totalinvestments �38,265,157 $42,907,006 $81,172,163 N/A—Not Applicable N/R—Not Rated Investments are subject to various risks,the following of which are considered the most significant: 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"ar 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 Systein; 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 270 days or less; Guaranteed Investment Contracts guaranteed by a United States coinmercial bank,domestic branch of a foreign bank, or a United States insurance company, 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 qualified as a "depository" by the government entiry, with banks that are meinbers 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 Ciry's investment policies do not further address credit risk. -40- NOTE 2—CASH AND INVESTMENTS(CONTINUED) Custodial Credit Risk — For investments, 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 investments or collatera] securities that are in the possession of an outside party. The City does not have a fonnal investment policy addressing this risk, but typically limits its exposure by purchasing insured or registered investments,or by control of who holds the securities. 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 investments resulting from changes in interest rates (the longer the period far which an interest rate is fixed, the greater the risk). The City does not have an invesrinent policy liuiiting 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 $ 8,526 Short-term cash flow Special Revenue Fund General Fund Nonmajor governmental funds $ 66,043 Short-term cash flow B. Interfund Transfers Interfund transfers for the 2013 fiscal year were as follows: Transfers In Brookview Internal Governmental Operating Service Transfers Out General Fund Funds Enterprise Fund Funds Total Generai Fund $ — $ 984,710 $ — $ 200,000 $ 1,184,710 Golden Hills Tax[ncrement Special Revenue Fund — 5,179,000 — — 5,179,000 Nonmajor Governmei�tal Funds — ]85,000 — — 185,000 Utility Enterprise Fund 9,264 36,494 45,758 Brookview Operating Enterprise Fund 50,000 — — — 50,000 Motor Vehicle Operating Enterprise Fund 50,000 — — — 50,000 $ 100,000 $ 6,348,7]0 $ 9,264 $ 236,494 $ 6,694,468 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 requireinents. -41- NOTE 4—CAPITAL ASSETS Capital asset activiry for the year ended December 3l, 2013 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 prog�ess 5,266,507 3,400,385 (18,543) (3,083,382) 5,564,967 Total capital assets,not depreciated 8,794,192 3,400,385 (18,543) (3,083,382) 9,092,652 Capital assets,depreciated Land iinprovements 4,727,307 153,713 — 136,000 5,017,020 Buildi�gs and improvements 11,941,656 178,987 — 232,584 12,353,227 Machinery and equipment 10,176,771 890,021 (512,700) 31,278 10,585,370 Infrasnvcture ]02,891,540 — — 2,539,115 105,430,655 Total capital assets,depreciated 129,737,274 1,222,721 (512,700) 2,938,977 133,386,272 Less accumulated depreciation on Land improvements (3,126,778) (139,607) — — (3,266,385) Buildings and improvements (9,721,754) (247,098) — — (9,968,852) Machine�yandequipment (5,702,113) (742,473) 462,333 (29,201) (6,011,454) Infi•astructure (42,916,507) (4,842,498) — — (47,759,005) Totalaccumulateddepreciation (61,467,152) (5,971,676) 462,333 (29,201) (67,005,696) Net capital assets,depreciated 68,264,265 (4,748,955) (50,367) 2,909,776 66,380,576 Total capital assets,net $ 77,064,314 � (1,348,570) $ (68,910) $ (173,606) � 75,473,228 B. Changes in Capital Assets Used in Business-Type Activities Transfers and Beginning Completed of Year Additions Deletions Construction End of Year Capital assets,not depreciated Land $ 857,044 $ — $ — � — $ 857,044 Construction in progress ],482,243 1,672,901 (14,660) (1,546,098) 1,594,386 Total capital assets,not depreciated 2,339,287 1,672,901 (14,660) (1,546,098) 2,451,430 Capital assets,depreciated Land improvements 2,949,542 — — — 2,949,542 Buildings and i�nprovements 667,657 — — — 667,657 Machinery and equipment 3,698,999 296,863 (36,533) (31,278) 3,928,OS1 Infrastructure—distribution and collection systems 36,187,105 48,673 — 1,721,781 37,957,559 Total capital assets,depreciated 43,503,303 345,536 (36,533) 1,690,503 45,502,809 Less accumulated depreciation on Land improvements (2,374,190) (54,615) — — (2,428,805) Buildingsandimprovements (430,458) (17,463) — — (447,921) Machine�y and equipment (2,184,612) (298,396) 24,946 29,201 (2,428,861) Infrastructure—distribution andcollectionsystems (10,566,590) (1,104,441) — — (11,671,031) Total accumulated depreciation (15,555,850) (1,474,915) 24,946 29,201 (16,976,618) Net capital assets,depreciated 27,947,453 (1,129,379) (11,587) 1,719,704 28,526,191 Total capital assets,net $ 30,286,740 $ 543,522 $ (26,247) S 173,606 � 30,977,621 -42- NOTE 4—CAPITAL ASSETS(CONTINUED) C. Depreciation Expense by Function Depreciation expense for the year ended December 31,2013 was charged to the following functions: Governmental activities General government $ 132,202 Public safety 281 092 , Public works 5,273,761 Parks and recreation 276,956 Capita]assets held by the City's internal service funds— charged to the various funcrions based on usage of the assets 7,665 Total depreciation expense—governmental activities $ 5,971,676 Business-type activities Utility(water and sewer) $ 746,989 Storm sewer utility 594 895 � Brookview(golf course)operating 130,180 Motor vehicle operating 2,851 Total depreciation expense—business-type activities $ 1,474,915 -43- NOTE 5—LONG-TERM DEBT A. Bonds and Certi�cates of Indebtedness Final Balance— Original Issue Interest Rate ]ssue Date Maturity Date End of Year Governmental activities General obligafion special assessment bonds I�nprovement Bonds of2005C $ 5,990,000 4.25% 06/Ol/2005 02/O1/2025 $ 5,840,000 ImprovementBondsof2006B $ 7,320,000 4.10-425% 07/O1/2006 02/Ol/2026 7,185,000 ImprovementBondsof2007C $ 4,]05,000 4.00-4.50% 06/15/2007 02/O112027 4,070,000 ImprovementBondsof2008A $ 6,680,000 3.50�25% 06/15/2008 02/Ol/2028 6,68Q000 ImprovementBondsof2009A $ 7,305,000 2.00-4.00% OS/Ol/2009 02/O1/2029 6,345,000 hnprovementRefundingBondsof2009C $ 4,880,000 2.50-3.00% OS/Ol/2009 02/O1/2016 2,335,000 Improvement Refunding Bonds of 2009D $ 5,465,000 2.00�.00°/a 08/19/2009 02/O1/2018 4,1 15,000 ImprovementBondsof2070A $ 3,845,000 2.00�.00% 06/15/2010 02/O1/2030 3.575_000 ImprovementBondsof2011A $ 1,840,000 2.00-�.00% OS/l5/2011 02/O1/2031 1,755,000 Improve�nentRefunding Bonds of20llC $ 4,870,000 2.00-3.00% OS/15/201 I 02/O1/2019 4,035,000 Ii�iproveinentBondsof2012A $ 1,575,000 2.00-3.00% OS/15/2012 02/Ol/2032 1,575,000 ImprovementRefundingBondsof2012C $ 5,96Q000 2.00-2.25°/a OS/15/2012 02/01/2025 5,960,000 IutprovementBondsof20]3A $ 1,735,000 125-3.00% OS/2112013 02/01/2033 1,735,000 ImproveinentRefunding Bonds of2013B 5 7,025,000 2.00% OS/2]/2013 02/O1/2026 7,025,000 62,230,000 General obligation lax increment bonds T.1.Refunding 13onds of2005A $ 1,465,000 3.00-3.55% 02/O1/2005 02/O1/2015 1,025,000 T.I.Refunding Bonds of2005B $ 4,575,000 3.75-4.75% 02/O]/2005 02/O1/2015 3,215,000 T.1.Refunding Bonds of2006A $ 1],935,000 5.00% O1/O1/2006 02/Ol/2015 5,050,000 9,290,000 General obligation certifieates of indebtedness EquipmentCeriificatesof2010B $ 685,000 I.00-1.45% 06/]5/2010 02/O1/2014 23Q000 EquipmentCeriificatesof2011B $ 655,000 OJO-1.30% OS/15/2011 02/O1/2015 440,000 Equipment Certificates of 2012B $ 725,000 0.50-0.75% OS/]5/2012 02/Ol/2016 725.000 EquipmentCertificatesof2013A $ 750,000 1.25% OS/21/2013 02/O]/2017 750,000 2,145,000 General obligation tax abatement bonds Tax Abatement Ref'unding Bonds of2013A $ 2,075,000 1.25% OS/21/2013 02/O1/2019 2,075,000 General obligation state-aid street bonds State-Aid Street Bonds of2007A $ 2,560,000 4.00-4.125% 03/15/2007 04/Ol/2027 1,985,000 Unamortized premiums on debt issued 1,116,249 Compensated absences payable 1,524,119 Net OPEB obligation 568,694 Total govemmental activity long-tenn liabiliries 80,934,062 Business-type activities General obligation revenue bonds Utility Revenue Bonds of2004C $ 2,995,000 3.00—A.50% 07/Ol/2004 02/O1/2019 ],385,000 Uliliry Revenue Bonds of2006C $ 1,945,000 4.00-4.15% 07/O112006 02/OU2021 1,165,000 Tota]business-type aetivities debt 2,550,000 Total govemment-wide long-tenn liabilities $ 83,484,062 -44- NOTE 5—LONGTERM DEBT (CONTINUED) B. Descriptions of Bonds and Certificates of Indebtedness • Special Assessment Bonds—These bonds are payable primarily from special assessments ]evied 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 property in the tax increment district, will provide substantially all funds necessary to retire the bond principal and interest. In addition, future tax levies may be placed on the tax rolls annually as scheduled for supplementary financing. • Certificates of Indebtedness — The City has four outstanding issues of general obligation certificates of indebtedness, issued in accordance with Minnesota Statute § 412.301 to finance various equipment purchases,which will be repaid primarily with ad valorem tax levies. • Tax Abatement Bonds—The City has one outstanding issue of general obligation tax abatement refundin� bonds, issued in accordance with Minnesota Statute § 469.1813 to finance various improvements. The bonds will be repaid primarily with ad valorem tax levies. • State-Aid Street Bonds — The City has one outstanding issue of general obligation state-aid street bonds, issued in accardance with Minnesota Statute § 162.18 to finance various street improvements. The bonds will be repaid primarily with state-aid. • Utility Revenue Bonds — These bonds were issued for improvements or projects that directly benefit the Storm Sewer Utility Fund and will be repaid from revenue sources of that fund. • Improvement Refunding Bonds of 2012C — In May 2012, the City issued $5,960,000 of G.O. Improveinent 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, Series 2005C, totaling$5,715,000,on their February 1, 2015 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. 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. • Tax Abatement Refunding Bonds of 2013A — In May 2013, the City issued $2,075,000 of G.O. Tax Abatement Refunding Bonds, Series 2013A. The proceeds of this issue were used to refund the 2014 through 2019 inaturities of tt�e City's G.O. Tax Abatement Bonds, Series 2004B, totaling $2,085,000, on their February 1, 2013 call date. This refunding reduced the City's total future debt service payments by$252,800 and resulted in a present value savings of$244,482. • Improvement Refunding Bonds of 2013B — In May 2013, the City issued $7,025,000 of G.O. Improvement Refunding Bonds, Series 2013B. The proceeds of this issue and interest earned thereon will be used to refund the 2017 through 2026 maturities of the City's G.O.Improvement Bonds, Series 2006B, totaling$6,945,000, on their February 1, 2016 call date. Until the call date, the City will make all debt service payments on the 2006B issue, and all debt � service on the 2013B issue will be paid from the refunding escrow account. This "crossover refunding"will reduce the City's total future debt service payments by $1,169,090 and result in a present value savings of$960,871. -45- NOTE 5-LONGTERM DEBT(CONTINUED) C. Changes in Long-Term Debt Balance- Beginning Balance- Due Within of Year Additions Deletions End of Year One Year Governmental activities G.O.special assessment bonds $ 56,350,000 $ 8,760,000 $ 2,880,000 $ 62,230,000 $ 3,195,000 G.O.tax increment bonds 11,565,000 - 2,275,000 9,290,000 4,355,000 G.O.certificates of indebtedness 2,095,000 750,000 700,000 2,145,000 690,000 G.O.tax abatement bonds 2,420,000 2,075,000 2,420,000 2,075,000 370,000 G.O.state-aid street bonds 2,090,000 - 105,000 1,985,000 110,000 Unamortized premiums on debt issued 819,122 452,503 155,376 1,116,249 - Compensated absences 1,614,498 1,032,474 1,122,853 1,524,119 912,215 Net OPEB obligation 505,599 192,577 129,482 568,694 - Total governinental activities 77,459,219 ]3,262,554 9,787,711 80,934,062 9,632,215 Business-type activities Utility revenue bonds 2,870,000 - 320,000 2,550,000 330,000 Total business-type activities $ 80,329,219 $ 13,262,554 � 10,107,71 1 $ 83,484,062 $ 9,962,215 D. Minimum Debt Payments Minimum annual payments to retire bonds and certificates of indebtedness are as follows: Governmental 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 2014 $ 3,195,000 $ 2,047,723 $ 4,355,000 $ 337,772 $ 690,000 $ 20,703 2015 8,830,000 1,800,663 4,935,000 117,629 710,000 11,800 2016 10,585,000 1,434,676 - - 495,000 5,606 2017 3,435,000 1,187,351 - - 250,000 1,563 2018 3,600,000 ],083,874 - - _ _ 2019-2023 14,545,000 4,225,341 - - _ _ 2024-2028 16,025,000 1,766,779 - - _ _ 2029-2033 2,015,000 98,187 - _ $62,230,000 $13,644,594 $ 9,290,000 $ 455,401 $ 2,145,000 $ 39,672 Governmental Activities � Business-Type Activities Year Ending Tax Abatement Bonds State-Aid Street Bonds Utility Revenue Bonds December 31, Principal Interest Principal Interest Principal Interest 2014 $ 370,000 $ 28,668 $ 110,000 $ 78,431 $ 330,000 $ 101,508 2415 345,000 19,156 115,000 73,931 345,000 87,355 2016 345,000 14,844 120,000 69,231 360,000 72,572 2017 345,000 10,531 120,000 64,431 375,000 57,013 2018 340,000 6,250 125,000 59,532 395,000 40,415 2019-2023 330,000 2,063 715,000 215,878 745,000 36,664 2024-2027 - - 680,000 57,544 - - $ 2,075,000 $ 81,512 $ 1,985,000 $ 618,978 $ 2,550,000 $ 395,527 -46- NOTE 5—LONG-TERM DEBT(CONTINUED) E. Revenue Pledged Future revenue pledged for the payment of long-term debt is as follows: Revenue Pledged Cun�ent Year Percent of Remaining Principal Pledged Use of Tota) Term of Principal and Interest Revenue Bond Issue Proceeds Type Debt Service Pledge and Interest Paid Received Tax increment bonds Street and site Tax increment 100% $ 4,834,563 improvements financing Series 2005A 2005-2015 $ 1,061,221 $ 127,396 Series2005B 2005-20]5 $ 3,367,430 $ 397,310 Series2006A 2006-2015 $ 5,316,750 $ 2,246,125 Utility revenue bonds Storm sewer Utiliry charges ]00% $ 2,274,549 improvements Series 2004C 2004-2019 $ 1,576,916 $ 264,669 Series 2006C 2006-2021 $ 1,368,611 $ 170,468 F. Conduit Debt Obligations At times, the Ciry 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 payinents received on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private sector entity served by the bond issuance. Neither the Ciry, nor any political subdivision thereof,is obligated in any manner for repa}nnent of the bonds. Accordingly, the bonds are not reported as liabilities in the City's financial statements. As of December 31, 2013, the following conduit debt issues were outstanding: Number Original Type of Debt Years Issued of Issues Pri�lcipal Issued Multi-family housing revenue bonds 1999-2006 2 $ 5,499,225 Governmental/nonprofit revenue bonds 2007-2009 2 5,341,709 4 $ 10,840,934 It is not practical to determine the outstanding balances at December 31,2013. G. Pay-As-You-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 tax increment note. The note provides for the payment of principal equal to the developer's costs, plus interest at 6 percent (interest accrual coinmencing 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 ageement. 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, 2013 is $279,733. This note is not included in the City's long-term debt, because repayment is required only to the extent sufficient tax increinents are received. The City's position is that this is an obligation to assign future and uncertain revenue sources and,as such,is not actua] debt in substance. -47- NOTE 6—COMPONENTS OF FUND BALANCE At December 31,2013, the City had the following fund balances: Golden Hills Sn•eet Street Tax Increment Reconstruction Reconstruction General Special Revenue Debt Service Capital Project Nonmajor Total Restricted for Debt service $ — $ — $ 21,424,268 $ — $ 6,638,972 $28,063,240 Redevelopment — 7,225,521 — — 435,076 7,660,597 Street improvements — — — 2,748,139 — 2,748,139 State-aid street improvements — — — — 2,890,395 2,890,395 Douglas Drive improvements — — — — 1,764,823 1,764,823 Cemetery maintenance — — — — 73,279 73,279 DWI enforcement — — — — 86,650 86,650 Total restricted — 7,225,521 21,424,268 2,748,139 11,889,195 43,287,123 Coimnitted to Human service needs — — — — 143,723 ]43,723 Equipment replacement — — — — 575,000 575,000 Total committed — — — — 718,723 718,723 Assigned to Street improvements — — — 460,517 224,085 684,602 Park improvements — — — — 830,274 830,274 Equipment replacement — — — — 2,463,056 2,463,056 Capital improvements — — — — 3,054,630 3,054,630 Self-insurance ],500,000 — — — — 1,500,000 Total assi�ned I,500,000 — — 460,517 6,572,045 8,532,562 Unassigned 8,207,985 — — — — 8,207,985 Total $ 9,707,985 $ 7,225,521 � 21,424,268 $ 3,208,656 $19,179,963 $60,746,393 NOTE 7—OTHER POST-EMPLOYMENT BENEFITS(OPEB) PLAN A. Plan Description The City provides post-employment benefits to certain eligible employees through the City's Other Post-Einployment Benefits (OPEB) Plan, a single-einployer 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 financial report. These benefits are summarized as follows: Post-Empioyment Insurance Benefits — All retirees of the City have the option under state law to continue their medical insurance coverage through the City from the time of retirement until the einployee reaches the age of eligibility for Medicare. Far inembers 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 active employees. -48- NOTE 7—OTHER POST-EMPLOYMENT BENEFITS(OPEB)PLAN(CONTINUED) Termination Pay Benefits — Certain employee groups may also become eligible to earn a tennination 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 retireinent. Eligibiliry for this benefit is based on years of service and/ar miniinum age requirements. These benefits generally are paid into a post-retirement healthcare savings plan administered by the Minnesota State Retirement System. 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 Statement Nos. 43 and 45. The ARC represents a level funding that,if paid on an ongoing basis,is projected to cover nonnal 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 liabiliry 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 pla�l: ARC $ 189,338 Interest on net OPEB obligation 22,752 Adjustment to annual required contribution (19,513) Annual OPEB cost(expense) 192,577 Contributions made 129,482 Increase in net OPEB obligation 63,095 Net OPEB obligation—beginning of year 505,599 Net OPEB obligation—end of year $ 568,694 The City's annual 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 2011 $ 175,418 $ 97,088 55.3% $ 376,795 2012 $ 186,703 $ 57,899 31.0% $ 505,599 2013 $ 192,577 $ 129,482 67.2% $ 568,694 D. Funded Status and Funding Progress As of January 1, 2012, the inost 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 unfunded. 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. -49- NOTE 7—OTHER POST-EMPLOYMENT BENEFITS (OPEB)PLAN(CONTINUED) Actuarial valuarions of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability occurrence of events far into the future. Exainples include assumptions about future emplo}nnent, mortaliry, and the healthcare cost trend. Amounts detennined regarding the funded status of the plan and ARC of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The Schedule of Funding Progress iimnediately following the notes to basic financial statements presents multi-year trend infortnation about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabiliries 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 meinbers) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the einployer and plan members to that point. The actuarial methods 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-tenn perspective of the calculations. In the January 1, 2012 actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assuinptions included: a 4.5 percent investment 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 9.0 percent initially, reduced by decrements to an ultimate rate of 5.0 percent after 12 years. The UAAL is being amortized on a level dollar basis over a closed period. The remaining amortization periods at January 1, 2012 for the various amortization layers ranged froin 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 ad�ninistered 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-einployer retirement plans. These plans are established and administered in accordance with Minnesota Statutes, Chapters 353 and 356. GERF ineinbers belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. All new members must participate in the Coordinated Plan. All police officers, firefighters, and peace officers who qualify for membership by statute are covered by the PEPFF. PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon deatb of eligible members. Benefits are established by state statutes, and vest after five 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. -50- NOTE 8–DEFINED BENEFIT PENSION PLANS–STATE-WIDE(CONTINUED) Two methods are used to coinpute benefits for PERA's Coordinated and Basic Plan members. The retiring member receives the higher of a step-rate benefit accrual fonnula (Method 1) or a level accrual fonnula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan ineinber is 2.2 percent of average salary for each of the first 10 years of service and 2.7 percent for each reinaining year. The annuity accrual rate for a Coordinated Plan meinber 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 meinbers for each year of service. Far PEPFF members,the annuity accrual rate is 3.0 percent for each year of service. For all PEPFF meinbers and 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.Nonnal retirement age is 55 for PEPFF ineinbers and 65 for Basic and Coordinated Plan inembers hired prior to July 1, 1989. Nonnal retirement age is the age for unreduced Social Security benefits capped at 66 for Coordinated Plan meinbers hired on or after July 1, ]989. A reduced retireinent annuity is also available to eligible members seeking early retirement. There are different types of annuities available to members upon retirement. A single-life annuiry is a ]ifetiine annuity that ceases upon the death of the retiree—no survivor annuity is payable. There are also various types of joint and survivar 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 inembers who leave public service,but before retirement benefits begin. The benefit provisions stated in the previous paragraphs of this section are current provisions and apply to active plan participants. Vested, tenninated employees who are entitled to benefits,but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. PERA issues a publicly available financial report that includes financial statements and required suppleinentary infonnation 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; ar by calling (651) 296-7460 or(800)652-9026. B. Funding Policy Minnesota Statutes, Chapter 353 sets the rates far 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 salary in 2013. PEPFF members were required to contribute 9.6 percent of their annual covered salary in 2013. In 2013, the City was required to contribute the following percentages of annual covered payroll: 11.78 percent for Basic Plan members, 7.25 percent for Coordinated Plan meinbers, 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 contributions for each year as set by state statutes,were as follows: GERF PEPFF 2011 $ 436,095 $ 392,095 2012 $ 438,909 $ 410,027 2013 $ 442,074 $ 409,963 -51- NOTE 9—DEFINED CONTRIBUTION PENSION PLAN—STATE-WIDE The City Council members are covered by the Public Employees Defined Contribution Plan (PEDCP), a inultiple-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 investrnent earnings, less administrative expenses. Minnesota Statutes, Chapter 353D.03, specifies the employee and employer contribution rates for those qualified personnel who elect to participate. An eligible elected official who decides to participate contributes 5 percent of salary, which is matched by the elected officia]'s employer. For salaried employees, employer contributions must be a fixed percentage of salary. Einployer and employee contributions are coinbined 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 an�lually. Total contributions inade by the City during the last three fiscal years ended December 3l,which were equal to the required contributions were: Amount Percentage of Covered Payroll Required Employees Employer Employees Employer Rates 2011 $ 2,442 $ 2,442 5.00% 5.00% 5.00% 2012 $ 2,375 $ 2,375 5.00% 5.00% 5.00% 2013 $ 2,377 $ 2,377 5.00% 5.00% 5.00% NOTE 10—DEFINED BENEFIT PENSION PLAN—F1RE 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 ar 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�nancial report that includes financial statements and required suppleinentary infonnation. A copy of the report may be obtained at Golden Valley City Hall. B. Summary of Significant Accounting Policies The Association's financial statements are prepared using the accrual basis of accounting. The Association is coinprised of volunteers; therefore, members have no contribution requirements. The City's contributions are recognized when due and a formal coinmitment 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 reported sales price on the Association's Balance Sheet date. C. Funding Policy Minnesota Statutes § 69.772 sets the ininiinum contribution requirement for the City on an annual basis,a portion of which is paid by the state. The 2013 state contribution of$141,926 is reported as a revenue and expenditure/expense by the Ciry. These statutes are established and amended by the State Legislature. The Association is comprised of volunteers, and no member contribution is required. -52- 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, 2013 is as follows: Annual pension cost—total $ 182,081 Contributions made City $ 40,155 State-aid $ 141,926 Actuarial valuation date 12/31/2013 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 Year Ended Annual Pension Percentage of Net Pension December 31, Cost(APC) APC Contributed Obligation 2011 $ 163,286 ]00% $ — 2012 $ 144,246 100% $ — 2013 $ 182,081 l00% $ — F. Schedule of Funding Progress Actuarial (Unfunded)/Assets Valuation Date— Actuarial Accrued in Excess of Funded December 31, Value of Assets Liability(AAL) AAL(UAAL) Ratio 2013 $ 4,500,389 $ 3,365,216 $ 1,135,173 133.7°/a 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. -53- NOTE 11–FLEXIBLE BENEFIT PLAN The City offers three types of flexible spending accounts: medical preiniums, medical expenses, and dependant 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. Payinents are made from the plan to participating einployees 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-tax dollars to be contributed to the plan durin�the year. For the medical expense account,the City is contingently liable for claiins 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 dependant care expense accounts are administered by the Stanton Group—a benefit consulting firm. Claims are inade directly to the Stanton Group by plan participants. The Stanton Group then reimburses the participants and bills the City for these reimbursements. All plan properry and income attributable to that property is solely the property of the Ciry subject to the claims of the City's general creditors. Participants' rights under the plan are equal to those of general creditors of the Ciry in an amount equal to the eligible healthcare and dependant care expenses incurred by the participants. The City believes it unlikely 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 authoriry for the following tax increment financing districts: Golden Hills North Wirth Redevelopment Redevelopment District No. 1503 District No. 1505 Authorizing law M.S.462 M.S.462 Year established 1984 2004 Duration of district 31 years 24 years Tax capacity–taxes payable 20l 3 Original $ 287,000 $ 6,650 Current 3,617,620 39,725 Captured–retained $ 3,330,620 $ 33,075 Total G.O.tax increment bonds $ 38,125,000 $ – Total G.O.tax increment capita] Advanced refunding bonds 27,835,000 – Total bonds issued 65,960,000 – Principal payments 56,670,000 – Outstanding at Deceinber 31,2013 $ 9,290,000 $ – -54- 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 authoriry 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 ciry is entitled to appoint one representative to the Coinmission. The nine-meinber Commission develops a budget for the year each July 1. Each member city contributes funds to cover the budgeted costs of operations based half on the assessed valuation of all taxable property, and half on total area each member city has within the boundaries of the watershed. Any capital costs incurred by the Commission are apportioned to the ineinbers based half on the real property valuation of each meinber city within the watershed, and half on the total area of each member city within the boundaries of the watershed. The following financial information is froin the Commission's audited financial statements for the year ended January 31,2014,which are available at Golden Valley City Hall: Total assets—all current $ 4,518,468 Total liabilities—all current 262,109 Net position $ 4,256,359 Revenue $ 1,555,113 Expenses 1,951,599 Change in net position $ (396,486) Of the total revenue, $515,046 represented assessinents to member cities. The City's 2013 portion was $129,156, ar 25.1 percent,of total assessinents paid by members. B. Joint Water Commission The City is a meinber of a joint powers agreeinent, together with the cities of Crystal and New Hope, which established a Joint Water Commission (JWC). The JWC was created in 1963 to provide far the creation and maintenance of a joint water supply, storage, and distribution system through which water purchased from the City of Minneapolis can be supplied to the population of the member cities. Each member ciry is entitled to appoint one ineinber 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 meinber city on the basis of water usage. Under the tenns of the joint powers agreement, upon termination the accuinulated assets of the JWC shall be divided ainongst the meinber 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 detennine its portion of JWC assets. Therefare, the City's Utility Enterprise Fund does not record any amount as an equity investment or contributed capital (for construction costs paid by other funds)related to the JWC. -55- NOTE 13—JOINT POWERS AGREEMENTS(CONTINUED) The following financial information is from the JWC's audited financial statements for the year ended December 31,2013,which are available at Golden Valley Ciry Hall: Total assets $ 4,724,449 Total liabilities 646,504 Net position $ 4,077,945 Revenue $ 8,116,279 Expenses 7,395,649 Change in net position $ 720,630 Of the total revenues, $7,958,464 represented assessments paid by meinber cities. Of the total member assessinents, $3,469,950,or 43.6 percent,was paid by the City. NOTE 14—CONTINGENCIES AND COMMITMENTS A. Legal Claims The City has the usual and custoinary type of miscellaneous legal claims pending at year-end. Although the outcoine 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 ar receivable from federal and state agencies are subject to agency audit and adjustinent. Any disallowed claims, 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 iminaterial. C. Tax Increment Districts The City's tax increment districts are subject to review by the Office of the State Auditar. Any disallowed claims or misuse of tax increments could become a liability of the applicable fund. Management has indicated that they are not aware of any instances of noncompliance which would have a inaterial effect on the financial statements. D. Future Change in Accounting Standards Governmental Accounting Standards Board (GASB) Stateinent No. 68 replaces the requirements of Statement No. 27, Accounting for Pensions by State and Local Governmental Employers and Statement No. 50, Pension Disclosures, as they relate to employer governments that provide pensions through pension plans administered as trusts or similar arrangements that ineet certain criteria. GASB Statement No. 68 requires governments providing defined benefit pensions to recognize their long-tenn obligation for pension benefits as a liability for the first time, and to more comprehensively and comparably measure the annual costs of pension benefits. This statement will be effective for fiscal years beginning after June 15, 2014. The City has not yet determined the financial statement impact of adopting this new standard. -56- NOTE 14—CONTINGENCIES AND COMMITMENTS(CONTINUED) E. Construction Commitments At Deceinber 31, 2013, the City is committed to various construction contracts far the improvement of city property. The City's remaining commitment under these contracts is approximately $1,135,257. NOTE 15—SUBSEQUENT EVENTS A. Future Debt Issues In April 2014, the City approved the sale of three new bond issues. The first issue is $2,335,000 of General Obligation Bonds, Series 2014A, will bear interest rates ranging from 1.00 percent to 3.40 percent and have a final maturity of February 1, 2035. The proceeds of the issue will be used for street improveinents. The second issue is $750,000 of General Obligation Equipment Certificates, Series 2014B, will bear interest rates ranging from 0.40 percent to 0.90 percent and have a final maturity of February 1, 2018. The proceeds of this issue will be used for equipment purchases. The third issue is $3,950,000 of General Obligation Improvement Refunding Bonds, Series 2014C, which will bear interest rates ranging from 2.00 percent to 4.00 percent and have a final maturity of February 1, 2027. The refunding bonds will be used to call the 2018 through 2027 maturities of the City's General Obligation Improvement Bonds, Series 2007C totaling$3,885,000. B. City Debt Rating On May 15, 2014, Moody's Investars Service downgraded its rating on the City's General Obligation Debt from Aaa to Aal based on a change in rating methodology. C. Debt Retirement On May 28, 2014, the City used available funds on hand to exercise an early call option retiring the February 1, 12015 through February 1, 2019 maturities of its General Obligation Storm Sewer Utiliry Revenue Bonds, Series 2004C. The total principal called was $1,180,000. -57- THIS PAGE INTENTIONALLY LEFT BLANK 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 3l, Value of Assets Liability(AAL) AAL(UAAL) Ratio 2011 $ 3,977,765 $ 3,767,599 $ 210,166 105.6% 2072 $ 4,210,687 $ 3,630,070 $ 580,617 116.0% 2013 $ 4,500,389 $ 3,365,216 $ 1,135,173 133.7% 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 TAB NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Auman Service Foundation — used to account for fundraising and pull-tab gambling proceeds remitted to the City by various nonprofit organizations that run charitable gambling operations within the City's limits. The inonies are committed to support organizations or programs that address human service needs in the City. A commission has been appointed to administer this fund. Cemetery—used to account for monies received from cemetery plot sales. These funds are restricted far 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 activities of the City's HRA, a blended component unit. DEBT SERVICE FUNDS CertiCcates 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 nnprovements within the Trunk Highway 55 and Boone Avenue intersection. Golden Hills Tax Increment—used to account for accumulation of, resources for, and payment of debt service on bonds sold to finance improvements within the Golden Hills Tax Increinent District. CAPITAL PROJECT FUNDS Building Fund—used to provide financing 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 far the street reconstruction program. Park Capital Improvement Fund — 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 Construction Fund— used to account for state construction aid received to finance qualifying road projects. Douglas Drive Improvement Fund — used to account for street improveinents related to Douglas Drive within the City. HRA Capital Project Funds—used to account for the expenditures of the City's HRA Housing Program and the redevelopment expenditures in the City's tax increment districts: Golden Hills No. 1503 and North Wirth No. 1505. -59- CITY OF GOLDEN VALLEY Nonmajor Governmental Funds Combining Balance Sheet December 31,2013 Special Revenue Debt Service Capital Project Totals Assets Cash and temporary investments $ 305,675 $ 6,638,972 $ 12,210,763 $ 19,155,410 Receivables Special assessments 119,628 119,628 Accounts 30,911 - 265,157 296,068 Accrued interest 8,689 8,689 Due from other governmental units 25,926 - 254,128 280,054 Total assets $ 371,201 $ 6,638,972 $ 12,849,676 $ 19,859,849 Liabilities Accounts payable $ 34,788 $ - $ 50,551 $ 85,339 Contracts payable 197,177 197,177 Due to other governmental units 8,168 8,168 Deposits 181,531 181,531 Due to other funds 1,733 - 64,310 66,043 Totalliabilities 36,521 - 501,737 538,258 Deferred inflows of resources Unavailable revenue-special assessments - - 119,628 119,628 Unavailable revenue-other - - 22,000 22,000 Total deferred inflows of resources 141,628 141,628 Fund balances Restricted 190,957 6,638,972 5,059,266 11,889,195 Committed 143,723 - 575,000 718,723 Assigned 6,572,045 6,572,045 Total fund balances 334,680 6,638,972 12,206,311 19,179,963 Total liabilities,deferred inflows of resources,and fund balances $ 371,201 $ 6,638,972 $ 12,849,676 $ 19,859,849 -60- CITY OF GOLDEN VALLEY Nonmajor Govemmental Funds Combining Statement of Revenue,Expenditures,and Changes in Fund Balances Year Ended December 31,2013 Special Revenue Debt Service Capital Project Totals Revenue Ad valorem tases $ - $ 1,038,016 $ - $ 1,038,016 Tax increments - - 30,636 30,636 Special assessments - - 89,084 89,084 Franchisetaxes - - 904,928 904,928 Intergovernmental revenue 25,926 - 779,324 805,250 Charges for services 42,864 42,864 Investment income 623 4,488 26,699 31,810 Other revenue Contributions 118 - - 118 Lawful gambling proceeds 41,256 41,256 Miscellaneous 163,131 142,971 58,111 364,213 Total revenue 231,054 1,185,475 1,931,646 3,348,175 Expenditures Current General government 216,614 - - 216,614 Public safety 23,395 - - 23,395 Capital outlay 26,010 - 3,757,767 3,783,777 Debt service Principal - 3,310,000 105,000 3,415,000 Interest and fiscal charges - 661,122 85,912 747,034 Total expenditures 266,019 3,971,122 3,948,679 8,185,820 Excess(deficiency)of revenue over expenditures (34,965) (2,785,647) (2,017,033) (4,837,645) Other financing sources(uses) Sale of capital assets - - 80,875 80,875 Bonds issued - 18,803 731,197 750,000 Refunding bonds issued 2,075,000 - 2,075,000 Premiums on bonds issued - 38,837 14,735 53,572 Paid to refunded bond escrow agent - (2,085,000) - (2,085,000) Transfers in 159,000 5,020,000 1,169,710 6,348,710 Transfers(out) (35,000) - (150,000) (185,000) Total other financing sources 124,000 5,067,640 1,846,517 7,038,157 Net change in fund balances 89,035 2,281,993 (170,516) 2,200,512 Fund balances Beginning of year 245,645 4,356,979 12,376,827 16,979,451 End of year $ 334,680 $ 6,638,972 $ 12,206,311 $ 19,179,963 -61- CITY OF GOLDEN VALLEY Nonmajor Special Revenue Funds Combining Balance Sheet December 31,2013 Human Service DWI HRA Foundation Cemetery Enforcement General Totals Assets Cash and temporary investments $ 144,995 $ 73,279 $ 65,824 $ 21,577 $ 305,675 Receivables Accounts 2,228 - 26,188 2,495 30,911 Accrued interest - - - 8,689 8,689 Due from other governmental units 25,926 - 25,926 Total assets � 147,223 $ 73,279 $ 117,938 $ 32,761 $ 371,201 Liabilities Accounts payable $ 3,500 � - $ 31,288 � - $ 34,788 Due to other funds - - - 1,733 1,733 Totalliabilities 3,500 - 31,288 1,733 36,521 Fund balances Restricted for cemetery maintenance - 73,279 - - 73,279 Restricted for DWI enforcement 86,650 - 86,650 Restricted for redevelopment - - - 31,028 31,028 Committed for human service needs 143,723 - - - 143,723 Total fund balances ]43,723 73,279 86,650 31,028 334,680 Total liabilities and fund balances � 147,223 $ 73,279 $ 1 17,938 $ 32,761 � 371,201 -62- CITY OF GOLDEN VALLEY Nonmajor Special Revenue Funds Combining Statement of Revenue,Expenditures,and Changes in Fund Balances Year Ended December 31,2013 Hmnan Service DWI Foundation Cemetery Enforcement HRA General Totals Revenue Intergovernmental revenue $ - $ - $ 25,926 $ - $ 25,926 Investment income 292 166 157 8 623 Other revenue Contributions 118 - - - 118 Lawful gambling proceeds 41,256 - - - 41,256 Miscellaneous 49,924 1,200 112,007 - 163,131 Total revenue 91,590 1,366 138,090 8 231,054 Expenditures C urrent General governinent Planning and administration - - - 140,000 140,000 Operating supplies 17,825 - - - 17,825 Professional services 42,500 16,289 58,789 Public safety Salaries - - 764 - 764 Operating supplies - - 22,631 - 22,631 Capital outlay - - 26,O10 - 26,010 Total expenditures 60,325 - 49,405 ]56,289 266,019 Excess(deficiency)of revenueoverexpenditures 31,265 1,366 88,685 (156,281) (34,965) Other financing sources(uses) Transfers in - - - 159,000 159,000 Transfers(out) - - (35,000) - (35,000) Tota1 other financing sources(uses) (35,000) ]59,000 124,000 Net change in fund balances 31,265 1,366 53,685 2,719 89,035 Fund balances Beginning of year ]12,458 71,913 32,965 28,309 245,645 End of year $ 143,723 $ 73,279 $ 86,650 $ 31,028 $ 334,680 -63- CITY OF GOLDEN VALLEY Nonmajar Debt Service Funds Combining Balance Sheet December 31,2013 Certificates Tax of Abatement Golden Hills Indebtedness Bonds Tax Increment Totals Assets Cash and temporary investments $ 333,886 $ 999,068 $ 5,306,018 $ 6,638,972 Fund balances Restricted far debt service $ 333,886 $ 999,068 $ 5,306,018 $ 6,638,972 -64- CITY OF GOLDEN VALLEY Nonmajor Debt Service Funds Combining Statement of Revenue,Expenditures,and Changes in Fund Balances Year Ended December 31,2013 Certificates Tax of Abatement Golden Hills Indebtedness Bonds Tax Increment Totals Revenue Ad valorem taxes $ 738,016 $ 300,000 $ - $ 1,038,016 Investment income - 2,525 1,963 4,488 Otherrevenue Miscellaneous - 142,971 - 142,971 Total revenue 738,016 445,496 1,963 1,185,475 Expenditures Debt service Principal 700,000 335,000 2,275,000 3,310,000 Interest 18,067 90,375 495,831 604,273 Fiscal charges 20,096 32,795 3,958 56,849 Total expenditures 738,163 458,170 2,774,789 3,971,122 Excess(deficiency)of revenue over expenditures (147) (12,674) (2,772,826) (2,785,647) Other financing sources(uses) Bonds issued 18,803 18,803 Refunding bonds issued - 2,075,000 - 2,075,000 Premiums on bonds issued - 38,837 - 38,837 Paid to refunded bond escrow agent - (2,085,000) - (2,085,000) Transfers in - - 5,020,000 5,020,000 Total other financing sources(uses) 18,803 28,837 5,020,000 5,067,640 Net change in fund balances 18,656 16,163 2,247,174 2,281,993 Fund balances Beginning of year 315,230 982,905 3,058,844 4,356,979 End of year $ 333,886 $ 999,068 $ 5,306,018 $ 6,638,972 -65- CITY OF GOLDEN VALLEY Nonmajor Capital Project Funds Combining Balance Sheet December 31,2013 Capital Park Capital Equipment Building Improvement Improvement Replacement Assets Cash and temporary investments $ 1,805,465 1,550,977 $ 833,277 $ 3,063,766 Receivables Special assessments — 242 Accounts 22,000 536 Due from other governmental units — — — — Total assets $ 1,805,465 $ 1,551,219 $ 855,277 $ 3,064,302 Liabilities Accounts payable $ 3,264 $ 18,175 $ — $ 18,347 Contracts payable 7,267 125,003 Due to other governmental units 198 7,899 Deposits — 147,905 3,003 — Due to other funds Totalliabilities 10,729 291,083 3,003 26,246 Deferred inflows of resources Unavailable revenue—special assessments — 242 Unavailable revenue— other — — 22,000 — Total deferred inflows of resources — 242 22,000 — Fund balances Restricted for state-aid street improvements — — — — Restricted for pouglas Drive improvements — — — — Restricted for redevelopment Committed for equipment replacement — — — 575,000 Assigned for park improvements — — 830,274 — Assigned for equipment replacement — — — 2,463,056 Assigned for street improvements — — — — Assigned far capital improvements 1,794,736 1,259,894 Total fund balances 1,794,736 1,259,894 830,274 3,038,056 Total liabilities,deferred inflows of resources,and fund balances $ 1,805,465 $ 1,551,219 $ 855,277 $ 3,064,302 -66- State-Aid Douglas Drive HRA Capital Golden Hills North Wirth No. 3 Construction Improvement Project Tax Increment Tax Increment Totals $ 3,173,791 $ 1,294,506 $ 103,785 $ 359,497 $ 25,699 $ 12,210,763 119,386 - - - - 119,628 - 242,621 - - - 265,157 - 244,128 - 10,000 - 254,128 $ 3,293,177 $ 1,781,255 $ 103,785 $ 369,497 $ 25,699 $ 12,849,676 $ - $ 10,765 $ - $ - $ - $ 50,551 64,907 - - - - 197,177 71 - - - - 8,168 - 19,978 10,645 181,531 - - - 62,752 1,558 64,310 64,978 10,765 - 82,730 12,203 501,737 119,386 ]19,628 - - - - - 22,000 119,386 - - - - 141,628 2,890,395 - - - - 2,890,395 - 1,764,823 - - - 1,764,823 103,785 286,767 13,496 404,048 - - - - - 575,000 - - - - - 830,274 - - - - - 2,463,056 218,418 5,667 - - - 224,085 - - - - - 3,054,630 3,108,813 1,770,490 103,785 286,767 13,496 12,206,311 $ 3,293,177 $ 1,781,255 $ 103,785 $ 369,497 $ 25,699 $ 12,849,676 -67- CITY OF GOLDEN VALLEY Nonmajor Capital Project Funds Coinbining Statement of Revenue,Expenditures,and Changes in Fund Balances Year Ended December 31,2013 Capital Park Capita] Equipment Building Improvement Improvement Replacement Revenue Tax increments $ - $ - $ - $ _ Special assessments - 13,493 - - Franchise taxes - _ Intergovernmental revenue - - 12,494 - Charges far services - 42,864 - - Investment income 4,998 3,335 1,840 6,706 Other revenue Miscellaneous 51,923 - 4,780 539 Total revenue 56,921 59,692 19,114 7,245 Expenditures Capital outlay Street - 1,266,185 - - City buildings and grounds 655,019 - 233,447 - Equipment - - - 928,039 HRA projects - - - _ Total capital outlay 655,019 1,266,185 233,447 928,039 Debt service Principal retirement - - Interest and fiscal charges - - - _ Total debt service - - _ Total expenditures 655,019 1,266,185 233,447 928,039 Excess(deficiency)of revenue over expenditures (598,098) (1,206,493) (214,333) (920,794) Other financing sources(uses) Sale of capital assets - - - 80 875 > Bonds issued - - - 731,197 Premiums on bonds issued - - - 14,735 Transfers in 239,970 500,000 254,740 175,000 Transfers(out) (150,000) - - Total other financing sources(uses) 89,970 500,000 254,740 1,001,807 Net change in fund balances (508,128) (706,493) 40,407 81,013 Fund balances Beginning of year 2,302,864 1,966,387 789,867 2,957,043 End of year $ 1,794,736 $ 1,259,894 $ 830,274 $ 3,038,056 -68- State-Aid Douglas Drive IIRA Capital Golden Hills North Wirth No.3 Construction Improvement Project Tax Increment Tax Increment Totals $ - $ - $ - $ - $ 30,636 $ 30,636 75,591 - - - - 89,084 - 904,928 - - - 904,928 357,671 409,159 - - - 779,324 - - - - - 42,864 7,362 2,340 27 87 4 26,699 - 869 - - - 58,111 440,624 1,317,296 27 87 30,640 1,931,646 172,685 469,582 - - - 1,908,452 - - - - - 888,466 - - - - - 928,039 - - - - 32,810 32,810 172,685 469,582 32,810 3,757,767 105,000 - - - - 105,000 85,912 - - - - 85,912 190,912 - - - - 190,912 363,597 469,582 32,810 3,948,679 77,027 847,714 27 87 (2,170) (2,O17,033) - - - - - 80,875 - - - - - 731,197 - - - - - 14,735 - - - - - 1,169,710 - - - - - (150,000) - - - - - 1,846,517 ��,02� s4�,��4 2� s� �2,i�o) �l�o,si6> 3,031,786 922,776 103,758 286,680 15,666 12,376,827 $ 3,108,813 $ 1,770,490 $ 103,785 $ 286,767 $ 13,496 $ 12,206,311 -69- THIS PAGE 1NTENTIONALLY LEFT BLANK CITY OF GOLDEN VALLEY General Fund Schedule of Revenue-Budget and Actual Year Ended December 31,2013 (With Comparative Actual Ainounts for the Year Ended December 31,2012) 2013 2012 Final Over(Under) Budget Actual Budget Actual Revenue Taxes Ad valorem $ 11,967,780 $ 12,099,851 $ 132,071 $ 11,926,975 Penalties and interest - 21,752 21,752 39,336 Total taxes 11,967,780 12,121,603 153,823 11,966,31] Special assessments 10,000 16,858 6,858 25,449 Licenses and pennits Licenses 191,510 240,629 49,ll9 224,463 Permits 693,200 1,255,824 562,624 999,385 Total licenses and permits 884,710 1,496,453 611,743 1,223,848 Intergovernmental revenue Federal grants 10,500 45,616 35,116 43,047 State grants - 17,304 17,304 18,283 County 24,000 23,043 (957) 23,043 Total intergovernmental revenue 34,500 85,963 51,463 84,373 Charges for services General government 43,560 57,872 14,312 52,580 Public safety 151,385 159,400 8,015 195,268 Public works 140,000 151,020 11,020 153,098 Parks and recreation 423,750 589,362 165,612 557,936 Other funds 981,500 888,960 (92,540) 855,879 Total charges for services 1,740,195 1,846,614 106,419 1,814,761 Fines and forfeitures 280,000 366,059 86,059 351,413 Investment income 100,000 18,994 (81,006) 46,253 Other revenue Rents 211,200 221,853 10,653 210,455 Miscellaneous 6,000 23,310 17,310 19,939 Total other revenue 217,200 245,163 27,963 230,394 Total revenue $ 15,234,385 $ 16,197,707 $ 963,322 $ 15,742,802 -70- CITY OF GOLDEN VALLEY General Fund Schedule of Expenditures-Budget and Actual Year Ended Dece�nber 31,2013 (With Comparative Actual Amounts for the Year Ended December 31,2012) 2013 Actual Final Personal Supplies and Budget Services Services CapitalOutlay Expenditures General government City Council $ 316,185 $ 137,815 $ 165,790 $ - City manager 732,810 586,674 68,804 - Legal service 135,000 83,818 - - Total general government 1,183,995 808,307 234,594 - Administrative services 1,595,515 791,665 766,721 - Casualty insurance 300,000 - 222,559 - Building operations 525,990 12,757 542,373 7,000 Public safety Administration 862,920 828,716 30,664 - Police 3,897,050 3,239,038 657,709 - Fire and inspections 1,594,200 1,314,427 268,934 - Prosecution and court 267,485 29,369 202,124 - Total public safery 6,621,655 5,411,550 1,159,431 - Public warks Administration 321,545 297,392 19,661 - Engineering 670,245 236,797 349,298 - Street maintenance 1,387,615 775,128 625,826 - Park maintenance 1,008,895 712,897 266,161 - Total public works 3,388,300 2,022,214 1,260,946 - Planning and development 325,750 289,768 7,921 - Parks and recreation Administration 665,465 539,398 78,684 - Community center 72,910 42,589 16,542 - Recreation programs 420,095 143,682 362,368 - Total parks and recreation 1,158,470 725,669 457,594 - Total expenditures $ 15,099,675 $ 10,061,930 $ 4,652,139 $ 7,000 -71- 2012 Over(Under) Total Budget Actual $ 303,605 $ (12,580) $ 282,435 655,478 (77,332) 669,878 83,818 (51,182) 122,869 1,042,901 (141,094) 1,075,182 1,558,386 (37,129) 1,513,689 222,559 (77,441) 237,152 562,130 36,140 509,172 859,380 (3,540) 824,758 3,896,747 (303) 3,855,320 1,583,361 (10,839) 1,527,042 231,493 (35,992) 247,264 6,570,981 (50,674) 6,454,384 317,053 (4,492) 312,295 586,095 (84,150) 634,600 1,400,954 13,339 1,371,887 979,058 (29,837) 959,013 3,283,160 (105,140) 3,277,795 29�,6s9 �zg,o6i� 296,s90 618,082 (47,383) 633,769 s9,131 �13,��9� 6i,1�1 506,050 85,955 488,639 1,183,263 24,793 1,183,5'79 $ 14,721,069 $ (378,606) $ 14,547,843 -72- THIS PAGE INTENTIONALLY LEFT BLANK INTERNAL SERVICE FUNDS Workers' Compensation Fund — used to account for the financing of al) 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 contriburions, and tennination pay. Vehicle Maintenance Fund— used to account for the maintenance of motar vehicles of all departments and related costs. -73- CITY OF GOLDEN VALLEY Internal Service Funds Combining Statement of Net Position December 31,2013 Workers' Payroll Vehicle Compensation Benefits Maintenance Totals Assets Current assets Cash and temparary investments $ 235,346 $ 1,953,142 $ 31,821 $ 2,220,309 Receivables Accounts - 9,600 - 9,600 ]nventory 141,742 141,742 Total current assets 235,346 1,962,742 173,563 2,371,651 Noncurrent assets Capital assets Machinery and equipment 118,259 118,259 Less accumulated depreciation - (57,247) (57,247) Total noncurrent assets 61,012 61,012 Total assets $ 235,346 $ 1,962,742 $ 234,575 $ 2,432,663 Liabilities and Net Position Current liabilities Accounts payable $ - $ 549 $ 13,325 $ 13,874 Accrued compensated absences-current - 912,2]5 - 912,215 Due to other governmental units - 2,109 - 2,109 Deposits - 13,377 - 13,377 Total current liabilities - 928,250 13,325 941,575 Noncurrent liabilities Net OPEB obligation - 568,694 - 568,694 Accrued compensated absences - 61],904 - 611,904 Total noncurrent liabilities - 1,180,598 - 1,180,598 Totalliabilities - 2,108,848 13,325 2,122,173 Net position Net investment in capital assets 61,012 61,012 Unrestricted 235,346 (146,106) 160,238 249,478 Total net position 235,346 (146,106) 221,250 310,490 Total liabilities and net position $ 235,346 $ 1,962,742 $ 234,575 $ 2,432,663 -74- CITY OF GOLDEN VALLEY Internal Service Funds Combining Statement of Revenue,Expenses,and Changes in Net Position Year Ended December 31,2013 Workers' Payroll Vehicle Compensation Benefits Maintenance Totals Operating revenue Charges to other funds $ 197,504 $ 4,774,630 $ 281,882 $ 5,254,016 Payroll benefits charged to employees - 1,169,370 - 1,169,370 Total operating revenue 197,504 5,944,000 281,882 6,423,386 Operating expenses Workers' compensation charges 196,963 196,963 Payroll benefits charges - 6,487,609 - 6,487,609 Vehicle maintenance operations 287,104 287,104 Depreciation 7,665 7,665 Total operating expenses 196,963 6,487,609 294,769 6,979,341 Operating income(loss) 541 (543,609) (12,887) (555,955) Nonoperating revenue Intergovernmental revenue - 386,465 - 386,465 Interest income - 4,938 116 5,054 Gain on sale of capital assets 12,770 12,770 Other income - 14,739 - 14,739 Total nonoperating revenue - 406,142 12,886 419,028 Income(loss)before transfers 541 (137,467) (1) (136,927) Transfers in 200,000 - 36,494 236,494 Change in net position 200,541 (137,467) 36,493 99,567 Net position Beginning of year 34,805 (8,639) 184,757 210,923 End of year $ 235,346 $ (146,106) $ 221,250 $ 310,490 -75- CITY OF GOLDEN VALLEY Internal Service Funds Combining Statement of Cash Flows Year Ended December 31,2013 Workers' Payroll Vehicle Compensation Benefits Maintenance Totals Cash flows from operating activities Receipts from customers and users $ 197,504 $ 1,169,370 $ — $ 1,366,874 Receipts from interfund services provided — 4,781,650 281,882 5,063,532 Paid to suppliers/service providers (196,963) (4,468,210) (54,549) (4,719,722) Paid to employees — (2,052,884) (241,200) (2,294,084) Net cash flows from operating activities 541 (570,074) (13,867) (583,400) Cash flows from capital and related financing activities Proceeds from sale of capital assets 12,770 l 2,770 Cash flows from investing activities Interest received on investments — 4,938 1 16 5,054 Cash flows from noncapita]financing activities Intergovernmenta]revenue — 386,465 — 386,465 Transfers in 200.000 — — 200,000 Net cash flows from noncapital financing activities 200,000 386,465 — 586,465 Net increase(decrease)in cash and temporary investments/cash equivalents 200,541 (178,671) (981) 20,889 Cash and temporary investments/cash equivalents Beginning of year 34,805 2,131,813 32,802 2,199,420 Endofyear $ 235,346 $ 1,953,142 � 31,821 $ 2,220,309 Reconciliation of operating income(loss)to net cash flows from operating activities Operating income(loss) $ 541 $ (543,609) $ (12,887) $ (555,955) Adjustments to reconcile operating income(loss) to net cash flows from operating activities Depreciation 7,665 7,665 Other income — 14,739 — 14,739 Change in assets and liabi]ities Receivables Accounts — (7,719) — (7,719) 1 nventory 11,601 11,601 Accounts payable — (6,50]) (20,246) (26,747) Net OPEB obligation — 63,095 — 63,095 Accrued compensated absences — (89,867) — (89,867) Due to other governmental units — (3,818) — (3,818) Deposits — 3,606 — 3,606 Net cash provided(used)by operating activities $ 54] $ (570,074) $ (13,867) $ (583,400) Schedule of noncash capital and related financing activities Capita(assets contributed from other funds $ — $ — $ 36,494 $ 36,494 -76- OTHER CITY INFORMATION CITY OF GOLDEN VALLEY Schedule of Sources and Uses of Public Funds for Golden Hills No. 1503,a Tax]ncrement Financing District Year Ended Deceinber 3],2013 Original Amended Accounted for Cun-ent Amount Budget Budget in Priar Years Year Remaining Sources of funds Bond proceeds �27,150,000 $56,165,000 $41,957,893 $ — $ 14,207,107 Proceeds of refunding bond issues — — 26,440,490 — (26,440,490) Tax increinents received � 45,692,720 92,515,000 63,954,101 4,803,927 23,756,972 Interestearnings 886,370 1,461,370 8,349,151 3,921 (6,891,702) Real estate sales 5,700,000 9,990,000 ]2,618,936 — (2,628,936) Rental income — — 81,648 — (81,648) Miscellaneous — — ]09,818 — (109,818) Total sources offunds 79,429,090 ]60,131,370 153,512,037 4,807,848 1,811,485 Uses of funds Land and building acquisition 17,921,280 41,909,116 41,184,307 — 724,809 Sitepreparation 1,276,910 5,820,753 739,750 — 5,081,003 Public iinprovements 2,691,270 6,770,854 5,519,775 — 1,251,079 Relocation 3,221,340 6,157,989 931,613 — 5,226,376 Bonddiscount 408,000 — 55,928 — (55,928) Bond issuance costs 271,500 703,475 197,411 — 506,064 Adminish•ativecosts 2,239,190 4,831,094 697,990 8,526 4,124,578 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 28,950,000 2,275,000 24,940,000 Interest and fiscal costs 24,249,600 37,712,299 25,381,450 499,789 11,831,060 Total uses of funds 79,429,090 160,131,370 130,015,756 2,783,315 27,332,299 District balance(deficit) — — 23,496,281 2,024,533 (25,520,814) Transfers(to)from other funds — — (12,543,508) (]59,000) 12,702,508 Funds remaining(deficit) $ — $ — $ 10,952,773 $ 1,865,533 $(12,818,306) Note: Real Estate Sales Property purchased and sold to developers: Purchaser/Developer Project 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 CyberOptics 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 Lifc Insurance Company Office building 4,677,428 9,076,107 ISD No.270—Hopkins Meadowbrook Community Center 135,000 3,469,850 $ 12,623,768 $34,72],958 Property purchased,but not sold as of December 31,2013: Project Properry 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 December 31,2013 Accounted for Current Amount Budget in Prior Years Year Remaining Sources of funds Tax increments received $ 920,000 $ 180,668 $ 30,636 $ 708,696 Real estate sales 575,000 523,431 — S1,569 Interest earnings — 3,897 4 (3,901) Total sources of funds 1,495,000 707,996 30,640 756,364 Uses of funds Land and building acquisition — 67,885 16,169 (84,054) Site preparation and improvements ],000,000 621,135 — 378,865 Administrative costs 16,058 (16,058) Interest and fiscal costs 495,000 3,310 583 491,107 Totalusesoffunds 1,495,000 692,330 32,810 769,860 Funds remaining(deficit) $ — $ 15,666 $ (2,170) $ (13,496) 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 Tax Increment Financing District prior to the establishment of this district. -78- THIS PAGE iNTENTIONALLY LEFT BLANK STATISTICAL SECTION (UNAUDITEDI TAB 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 far understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. Page ConYents: Financial Trends gp These schedules contain trend information to help the reader understand how the Ciry's financial 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 9� 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 financial activities take place. Operating Indicators 107 These schedules contain service and infrastructure data to help the reader understand how the infonnation in the City's financial report relates to the services the City provides,and the activities it performs. Sources: Unless otherwise noted,the information in these schedules is derived from the CAFR far the relevant year. -79- CITY OF GOLDEN VALLEY Net Position by Component Last Ten Fiscal Years (Accrual Basis of Accounting) Fiscal Year 2004 2005 2006 2007 Governmental activities Net investment in capital assets $ 6,330,982 $ 10,980,485 $ 12,290,076 $ 21,062,593 Restricted 29,403,142 26,872,829 26,809,309 28,599,235 Unrestricted (20,894,504) (17,813,718) (13,451,588) (11,098,272) Total governmentai activities net position $ 14,839,620 $ 20,039,596 $ 25,647,797 $ 38,563,556 Business-type activities Net investment in capital assets $ 18,897,155 $ 18,772,924 $ 19,505,942 $ 20,786,526 Unrestricted 7,513,501 10,]40,315 11,907,990 13,787,483 Total business-type activities net position $ 26,410,656 $ 28,913,239 $ 31,413,932 $ 34,574,009 Primary government Net investment in capital assets $ 25,228,137 $ 29,753,409 $ 31,796,018 $ 41,849,119 Restricted 29,403,142 26,872,829 26,809,309 28,599,235 Unrestricted (13,381,003) (7,673,403) (1,543,598) 2,689,211 Total primary government net position $ 41,250,276 $ 48,952,835 $ 57,061,729 $ 73,137,565 Note: The City implemented GASB Statement No. 65 in 2012. Net position far 2011 was restated for the effects of implementing this standard.Net position for previous years has not been restated. -80- 2008 2009 2010 2011 2012 2013 $ 23,613,301 $ 24,388,008 $ 21,635,548 $ 22,753,481 $ 22,622,764 $ 21,829,745 30,192,456 28,061,624 22,187,677 23,045,045 26,673,032 29,535,846 (7,377,599) (3,510,363) 5,812,640 5,903,464 7,499,559 9,306,292 $ 46,428,158 $ 48,939,269 $ 49,635,865 $ 51,701,990 $ 56,795,355 $ 60,671,883 $ 22,427,619 $ 23,564,184 $ 24,838,885 $ 27,268,683 $ 27,416,740 $ 28,427,621 15,962,676 16,572,658 17,231,676 16,430,056 17,508,592 18,562,323 $ 38,390,295 $ 40,136,842 $ 42,070,561 $ 43,698,739 $ 44,925,332 $ 46,989,944 $ 46,040,920 $ 47,952,192 $ 46,474,433 $ 50,022,164 $ 50,039,504 $ 50,257,366 30,192,456 28,061,624 22,187,677 23,045,045 26,673,032 29,535,846 8,585,077 13,062,295 23,044,316 22,333,520 25,008,151 27,868,615 $ 84,818,453 $ 89,076,111 $ 91,706,426 $ 95,400,729 $ 101,720,687 $ 107,661,827 -81- CITY OF GOLDEN VALLEY Changes in Net Position Last Ten Fiscal Years (Accrual Basis of Accounting) Fiscal Year 2004 2005 2006 2007 Expenses Governmenta]activities General government $ 3,096,148 $ 2,504,104 $ 3,455,764 $ 3,325,458 Public safety 5,039,739 5,066,489 5,680,284 5,763,034 Public warks 4,108,528 5,504,742 5,501,829 6,330,917 Parks and recreation 1,281,206 1,150,314 1,299,840 1,292,912 Interest and fiscal charges 3,500,057 3,318,666 2,970,622 3,560,215 Total governmental activities expenses 17,025,678 17,544,315 18,908,339 20,272,536 Business-type activities Water and sewer 4,992,609 5,155,353 5,869,045 6,310,133 Storm sewer 695,741 798,585 1,009,009 1,114,087 Golf course 1,826,139 1,827,339 1,809,843 1,797,055 Motor vehicle licensing 391,049 408,733 374,089 387,613 Recycling 185,384 159,908 155,739 172,324 Total business-type activities expenses 8,090,922 8,349,918 9,217,725 9,781,212 Total primary government expenses $ 25,ll6,600 $ 25,894,233 $ 28,126,064 $ 30,053,748 Program revenues Governmental activities Charges for services General government $ 282,888 $ 255,048 $ 196,661 $ 217,961 Public safety 1,651,431 2,159,727 1,733,014 1,728,325 Public works 260,358 222,354 543,520 394,146 Parks and recreation 380,143 300,920 292,305 314,502 Operating grants and contributions 296,501 297,556 292,213 306,055 Capital grants and contributions 4,466,394 1,963,530 2,576,547 3,093,771 Total governmental activities program revenues 7,337,715 5,199,135 5,634,260 6,054,760 Business-type activities Charges for services Water and sewer 5,951,470 6,155,683 6,558,605 7,268,146 Storm sewer 1,929,727 2,037,814 2,116,794 2,233,2ll Golf course 1,687,551 1,693,507 1,703,750 1,742,650 Motor vehicle licensing 510,062 531,243 609,522 624,381 Recycling 219,082 220,258 220,730 221,449 Operating grants and contributions 266,240 52,052 51,424 123,701 Capital grants and contributions 162,868 - - 427,353 Total business-type activities program revenues 10,727,000 10,690,557 11,260,825 12,640,891 Total primary government program revenues $ 18,064,715 $ 15,889,692 $ 16,895,085 $ 18,695,651 -82- 2008 2009 2010 2011 2012 2013 $ 3,265,940 $ 3,271,352 $ 3,801,269 $ 3,319,661 $ 3,121,543 $ 2,914,823 6,091,866 6,298,431 6,585,990 6,490,371 6,906,449 7,310,946 8,282,504 8,322,099 9,864,540 9,720,753 9,758,495 10,325,068 1,331,180 1,476,771 1,338,155 1,335,562 1,692,346 1,588,798 3,329,662 3,544,117 3,272,726 2,930,757 2,724,495 2,633,359 22,301,152 22,912,770 24,862,680 23,797,104 24,203,328 24,772,994 6,038,783 6,952,047 6,561,335 8,474,883 8,023,803 7,611,927 1,313,173 1,299,813 1,239,080 1,176,603 1,383,594 1,589,410 1,819,557 1,770,491 1,736,551 1,708,984 1,724,174 I,645,728 420,91] 409,032 423,423 260,583 154,492 326,382 139,970 349,100 290,818 218,145 299,809 410,808 9,732,394 10,780,483 10,251,207 11,839,198 11,585,872 11,584,255 $ 32,033,546 $ 33,693,253 $ 35,ll3,887 $ 35,636,302 $ 35,789,200 $ 36,357,249 $ 255,249 $ 264,357 $ 273,318 $ 277,901 $ 263,035 $ 279,725 1,827,820 1,194,484 1,311,914 l,609,601 1,628,076 1,861,481 335,906 352,630 337,146 360,307 400,773 407,938 348,536 340,072 379,356 438,349 614,164 594,142 285,576 294,902 410,767 413,826 464,187 559,246 3,288,594 1,097,097 1,831,662 2,498,297 3,595,000 1,882,698 6,341,681 3,543,542 4,544,163 5,598,281 6,965,235 5,585,230 7,428,721 7,638,314 7,391,493 8,636,333 8,217,582 7,831,307 2,245,005 2,265,937 2,279,840 2,279,633 2,256,336 2,274,549 1,766,714 1,719,611 1,676,136 1,580,954 1,765,186 1,502,897 598,635 534,559 531,074 138,936 92,626 304,424 221,261 220,829 220,809 266,858 276,190 276,099 76,039 139,432 177,601 463,650 128,893 495,451 846,164 56,081 - 191,686 32,162 852,075 13,182,539 12,574,763 12,276,953 13,558,050 12,768,975 13,536,802 $ 19,524,220 $ 16,118,305 $ 16,821,116 $ 19,156,331 $ 19,734,210 $ 19,122,032 (continued) -83- CITY OF GOLDEN VALLEY Changes in Net Pos�tion(continued) Last Ten Fiscal Years (Accrual Basis of Accounting) Fiscal Year 2004 2005 2006 2007 Net(expense)revenue Governmental activities $ (9,687,963) $ (12,345,180) $ (13,274,079) $ (14,217,776) Business-type activities 2,636,078 2,340,639 2,043,100 2,859,679 Total primary government net expense $ (7,051,885) $ (10,004,541) $ (11,230,979) $ (11,358,097) General revenues and other changes in net position Governmental activities Property taxes $ 15,262,333 $ 15,977,539 $ 16,958,547 $ 17,385,413 Franchise taxes — — — — Unrestricted grants and contributions 27,386 27,386 2'7,386 27,386 Other general revenues 357,757 332,232 277,319 557,955 lnvestmentearnings 432,202 806,006 1,299,523 1,771,384 Gain on sale of capital assets 703,991 276,993 144,505 18,597 Transfers (304,893) 125,000 1�75,000 175,000 Total governmental activities 16,478,776 17,545,156 18,882,280 19,935,735 Business-type activities Other general revenues 169,038 15,861 5,611 59,898 Investment earnings 169,372 271,083 626,982 615,500 Transfers 304,893 (125,000) (175,000) (175,000) Total business-type activities 643,303 161,944 457,593 500,398 Total primary government $ 17,122,079 $ 17,707,100 $ 19,339,873 $ 20,436,133 Changes in net position Governmental activities $ 6,790,813 $ 5,199,976 $ 5,608,201 $ 5,717,959 Business-type activities 3,279,381 2,502,583 2,500,693 3,360,077 Total primary government $ 10,070,194 $ 7,702,559 $ 8,108,894 $ 9,078,036 Note: The City implemented GASB Statement No. 65 in 2012. Change in net position for 2011 was restated for the effect of implementing this standard.Change in net position for previous years has not been restated. -84- 2008 2009 2010 2011 2012 2013 $ (15,959,471) $ (19,369,228) $ (20,318,517) $ (18,198,823) $ (17,238,093) $ (19,187,764) 3,450,145 1,794,280 2,025,746 1,718,852 1,183,103 1,952,547 $ (12,509,326) $ (17,574,948) $ (18,292,771) $ (16,479,971) $ (16,054,990) $ (17,235,217) $ 19,464,163 $ 20,727,498 $ 20,143,891 $ 19,752,048 $ 20,946,972 $ 21,757,173 - - - 581,600 621,585 904,928 27,385 13,693 2�,386 27,386 - - 498,523 263,702 350,183 336,139 353,033 338,245 1,328,642 552,835 250,723 300,813 214,493 112,817 54,025 55,611 44,330 156,161 76,852 24,735 1'75,000 267,000 198,600 198,600 118,523 (73,606) 21,547,738 21,880,339 21,015,113 21,352,747 22,331,458 23,064,292 - - 5,330 558 65,978 - 541,141 219,267 101,243 142,204 96,035 38,459 (175,000) (267,000) (198,600) (198,600) (118,523) 73,606 366,141 (47,733) (92,027) (55,838) 43,490 112,065 $ 21,913,879 $ 21,832,606 $ 20,923,086 $ 21,296,909 $ 22,374,948 $ 23,176,357 $ 5,588,267 $ 2,Sll,ll1 $ 696,596 $ 3,153,924 $ 5,093,365 $ 3,876,528 3,816,286 1,746,547 1,933,719 1,663,014 1,226,593 2,064,612 $ 9,404,553 $ 4,257,658 $ 2,630,315 $ 4,816,938 $ 6,319,958 $ 5,941,140 -85- THIS PAGE INTENTIONALLY LEFT BLANK 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 2004 $ 10,818,165 $ 4,444,168 $ — $ 15,262,333 2005 11,878,484 4,099,055 — ]5,977,539 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 2009 15,337,158 5,390,340 — 20,727,498 2010 15,901,115 4,242,776 — 20,143,891 2011 15,807,735 3,944,313 581,600 20,333,648 2012 16,219,048 4,627,924 621,585 21,468,557 2013 16,922,610 4,834,563 904,928 22,662,101 -86- CITY OF GOLDEN VALLEY Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified Accrual Basis of Accounting) Fiscal Year 2004 2005 2006 2007 General Fund Reserved $ — $ — $ — $ — Unreserved 8,154,452 8,678,657 8,652,199 8,807,130 Nonspendable — — — — Assigned — — — — Unassigned — — — — Total General Fund $ 8,154,452 $ 8,678,657 $ 8,652,199 $ 8,807,130 All other governmental funds Reserved $ 1,468,217 $ 120,129 $ 1,141,733 $ 1,021,281 Unreserved,reported in Special revenue funds (863,213) (1,056,149) 96,213 115,395 Capital project funds 11,867,748 10,726,228 10,524,743 12,883,682 Debt service funds 14,463,275 13,613,836 13,275,728 12,930,925 Restricted — — — — Committed — — Assigned — — — — Total all other governmental funds $ 26,936,027 $ 23,404,044 $ 25,038,417 $ 26,951,283 Note: The City implemented GASB Statement No. 54 in 201 l,which changed fund balance classifications.Fund balances for previous years have not been restated. -87- 2008 2009 2010 2011 2012 2013 $ - $ - $ 90,000 $ - $ - $ - 8,894,990 8,985,030 8,913,423 - - - - - - 45,000 - - - - - 1,'778,352 1,560,000 1,500,000 - 7,395,646 7,756,057 8,207,985 $ 8,894,990 $ 8,985,030 $ 9,003,423 $ 9,218,998 $ 9,316,057 $ 9,707,985 $ 1,795,677 $ 13,598,736 $ 9,673,542 $ - $ - $ - 145,519 159,243 183,065 - - - 14,304,072 14,296,961 14,216,671 - - - 13,106,172 14,391,151 12,624,401 - - - - - - 29,472,220 33,693,776 43,287,123 - - - 928,337 687,458 718,723 - - - 7,345,999 8,106,763 7,032,562 $ 29,351,440 $ 42,446,091 $ 36,697,679 $ 37,746,556 $ 42,487,997 $ 51,038,408 -88- CITY OF GOLDEN VALLEY Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified Accrua]Basis of Accounting) Fiscal Year 2004 2005 2006 2007 Revenues Taxes $ 10,730,169 $ 11,880,730 $ 12,688,287 $ 13,739,116 Tax increments 4,446,204 4,095,987 4,188,563 3,652,563 Special assessments 1,377,972 1,895,018 1,915,216 1,469,984 Franchise taxes - - - - Licenses and permits l,176,625 1,634,416 1,131,047 1,204,750 Intergovernmental 2,359,041 209,405 567,381 2,085,068 Charges far services 1,737,272 1,721,605 1,913,726 1,832,666 Fines and forfeits 320,900 330,305 362,409 253,594 Investmentincome 394,458 721,932 1,152,628 1,585,067 Otherrevenue 1,849,837 872,884 744,222 706,234 Tota]revenues 24,392,4�8 23,362,282 24,663,479 26,529,042 Expenditures Genera]government ],178,852 1,234,695 1,298,923 1,329,568 Administrative services 1,261,167 1,343,]14 1,266,287 1,325,111 Casualty insurance 172,350 158,496 204,579 300,489 Building operations 453,270 482,152 468,864 502,953 Public safety 4,737,576 5,109,341 5,250,598 5,486,793 Public works 2,360,819 2,650,630 2,655,982 2,870,754 Planning and development 215,742 282,43] 261,747 336,293 Parks and recreation 896,633 934,850 919,519 971,222 Capitaloutlay-notcapitalized ],608,793 707,121 ],622,642 609,761 Construction/acquisition of capital assets 11,033,854 9,675,585 8,571,663 8,520,178 Debt service Principal retirement 7,416,131 7,460,000 6,450,000 6,515,000 Interest and fisca]charges 3,694,727 3,445,162 3,059,275 3,341,31 l Total expenditures 35,029,914 33,483,577 32,030,079 32,109,433 Excess ofrevenues over(under)expenditures (10,637,436) (10,121,295) (7,366,600) (5,580,391) Other financing sources(uses) Sale of capital assets 759,311 293,339 716,349 47,766 Bonds issued 5,410,000 6,690,000 8,020,000 7,395,000 Refunding bonds issued 1,260,000 6,040,000 11,935,000 - Premiums(discounts)on debt issues 46,945 10,243 (75,234) 30,422 Payments to refunded bond escrow agent (1,260,000) (6,045,065) (11,796,600) - Transfers in 15,322,566 8,068,869 5,002,225 5,928,624 Transtiers(out) (15,627,459) (7,943,869) (4,827,225) (5,753,624) Total other financing sources(uses) 5,911,363 7,113,517 8,974,515 7,648,188 Net change in fund balances $ (4,726,073) $ (3,007,778) $ 1,607,915 $ 2,067,797 Debt service as a percentage of noncapital expenditures 46.3% 45.8% 40.5% 41.8% -89- 2008 2009 2010 2011 2012 2013 $ 14,842,187 $ 15,316,495 $ 15,760,353 $ 15,791,136 $ 16,378,425 $ 16,847,769 4,663,365 5,322,240 4,344,739 3,993,985 4,627,924 4,834,563 1,693,632 1,781,804 1,415,935 1,389,200 1,273,820 1,223,120 - - - 581,600 621,585 904,928 1,432,351 839,306 872,669 1,161,906 1,223,848 1,496,453 417,463 741,496 643,328 951,285 3,452,180 984,620 ],769,064 1,808,325 1,722,697 1,631,110 1,876,l 17 1,889,478 223,317 210,181 284,600 303,908 351,413 366,059 1,195,453 51Q028 236,086 281,770 201,966 107,763 681,185 555,088 678,249 637,606 617,366 650,750 26,918,017 27,084,963 25,958>656 26,723,506 30,624,644 29,305,503 1,322,117 1,377,347 1,774,439 1,379,620 1,297,470 1,268,041 1,374,942 1,423,084 1,460,063 1,460,704 1,513,689 1,558,386 214,600 223,209 277,016 255,536 237,152 222,559 624,137 495,052 572,671 501,636 509,172 562,130 5,722,290 5,824,971 5,879,957 6,010,214 6,462,507 6,594,376 2,923,813 2,989,017 2,940,268 3,089,258 3,277,795 3,283,160 305,125 370,262 279,607 310,914 296,890 297,689 1,066,232 1,039,353 ],033,593 1,068,002 1,183,579 1,183,263 822,165 420,753 1,432,608 1,049,696 1,003,343 1,575,739 7,519,949 8,336,626 4,646,495 3,659,158 5,533,344 4,623,106 6,930,000 7,085,000 7,620,000 6,235,000 5,185,000 6,295,000 3,363,075 3,520,776 3,517,239 3,110,626 2,944,445 2,833,093 32,188,445 33,105,450 31,373,956 28,130,364 29,444,386 30,296,542 (5,270,428) (6,020,487) (5,415,300) (1,406,858) 1,180,258 (991,039) �2,915 90,075 82,420 236,593 83,669 80,875 7,430,000 8,055,000 4,530,000 2,495,000 2,300,000 2,485,000 - 10,345,000 - 4,870,000 5,960,000 9,100,000 80,530 448,103 109,261 291,117 166,050 452,503 - - (4,935,000) (5,420,000) (4,970,000) (2,085,000) 6,177,000 6,290,970 4,650,385 3,402,570 4,448,233 6,448,710 (6,002,000) (6,023,970) (4,751,785) (3,203,970) (4,329,710) (6,548,710) 7,758,445 19,205,178 (314,719) 2,671,310 3,658,242 9,933,378 $ 2,488,017 $ 13,184,691 $ (5,730,019) $ 1,264,452 $ 4,838,500 $ 8,942,339 41.7% 42.8% 41.7% 38.2% 34.0% 35.6% -90- THIS PAGE INTENTIONALLY LEFT BLANK CITY OF GOLDEN VALLEY General Governmental Tax Revenues by Source Last Ten Fiscal Years (Modified Accrual Basis of Accounring) Ad Valorem Fiscal Year Property Tax Tax Increments Franchise Tax Total 2004 $ 10,730,169 $ 4,446,204 $ — $ 15,176,373 2005 11,880,730 4,095,987 — 15,976,717 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 2009 15,316,495 5,322,240 — 20,638,735 2010 15,760,353 4,344,739 — 20,105,092 2011 15,791,136 3,993,985 581,600 20,366,721 2012 16,378,425 4,627,924 621,585 21,627,934 2013 16,847,769 4,834,563 904,928 22,587,260 -91- CITY OF GOLDEN VALLEY Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years Tax Capacities(1) Net Decrease Levy Collectible From Fiscal Decrease From in Fiscal Year Real Property Personal Property Disparities Tax Increments 2004 $ 31,181,407 $ 298,486 $ (2,955,457) $ (3,581,949) 2005 33,953,310 313,936 (4,389,008) (3,530,013) 2006 37,306,569 317,673 (4,734,201) (3,671,697) 2007 40,662,398 326,724 (5,000,474) (3,429,711) 2008 43,508,495 302,601 (5,766,544) (4,303,310) 2009 44,352,919 294,419 (6,586,685) (4,739,865) 2010 42,049,838 284,789 (6,796,278) (3,536,203) 2011 38,371,218 311,502 (6,220,733) (3,227,508) 2012 36,478,494� 320,766 (5,875,187) (3,242,617) 2013 35,693,380 416,456 (5,460,857) (3,275,801) (1) Tax rates are expressed in terms of "net tax capacity." A property's t� capacity is determined by multiplying its taxable market value by a state detennined class rate. Class rates vary by property type and change periodically based on state legislation. Source:Hennepin County -92- Assessed Total City Tax Value as a Applied Capacity Estimated Actual Percentage of Tax Capacity Rate Applied Taxable Value Actual Value $ 24,942,487 45.45 $ 2,575,052,100 0.97 % 26,348,225 45.30 2,679,957,500 0.98 29,218,344 43.31 2,955,699,000 0.99 32,558,937 41.28 3,213,702,600 1.01 33,741,242 42.99 3,400,157,300 0.99 33,320,788 45.91 3,425,714,700 0.97 32,002,146 48.20 3,274,263,500 0.98 29,234,479 53.06 3,004,908,600 0.97 27,681,456 55.80 2,829,369,027 0.98 27,373,178 58.2] 2,744,389,240 1.00 -93- 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 Levy City Total County ISD No.281 Districts Rates 2004 - - 45.45 47.32 34.42 7.19 134.38 2005 35.32 9.98 45.30 44.17 29.99 8.70 128.16 2006 33.44 9.87 43.31 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 28.62 8.83 128.29 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 2013 43.00 15.21 58.21 49.46 32.35 10.93 150.95 For the City/ISD No.270 Direct Rates(2) Overlapping Rates Total Direct and Hennepin Special Overlapping Year General Levy Debt Levy City Total County ISD No.270 Districts Rates 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 2006 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 55.80 48.23 29.27 10.14 143.44 2013 43.00 15.21 58.21 49.46 29.73 10.93 14833 (1) Informadon reflects total tax rates levied by each entiry. Tax rates are expressed in terms of "net tax capacity."A property's tax capacity is determined by multiplying its t�able market value by a state determined class rate.Class rates vary by property type and change periodically based on state legislation. (2) Information 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 2013 2004 Percentage of Percentage of Net Tax Applied Tax Net Tax Applied Tax Taxpayer Capacity Rank Capacity Capacity Rank Capacity General Mills,Inc. $ 1,817,220 1 6.6 % $ 1,856,560 1 7.4 % Allianz Life Insurance Company 1,281,790 2 4.7 948,610 2 3.8 ND Properties Incorporated 855,290 3 3.1 — — — Golden Jack,LLC 561,990 4 2.1 413,610 6 1.7 Menards,Inc. 481,510 5 1.8 — — — United Health Care 402,130 6 1.5 427,250 5 1.7 Honeywell 274,750 7 1.0 229,250 10 0.9 North Wirth Building 220,430 8 0.8 — TCA Real Estate,LLC 214,550 9 0.8 — — — The Luther Company,LLP 206,790 10 0.8 — — — Teacher's Insurance and Annuity — — — 801,390 3 3.2 Duke Realty — — — 576,320 4 2.3 Valley Creek Development,LLC — — — 276,830 7 1.1 Laurence Lajune — — — 256,360 8 1.0 G.H.Tennant Company — — — 234,580 9 0.9 Total $ 6,316,450 23.1 % $ 6,020,760 24.1 % Source: Hennepin County -95- THIS PAGE INTENTIONALLY LEFT BLANK 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 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 99.0 126,621 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 15,039,110 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 16,306,687 100.0 20ll 16,379,567 16,190,773 98.9 175,445 16,366,218 99.9 2012 16,395,177 16,274,052 99.3 65,591 16,339,643 99.7 2013 16,932,407 16,777,814 99.1 — 16,777,814 99.1 (1) Does not include tax increments levied and collected. (2) Total levy is net of current year cancellations 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- CITY OF GOLDEN VALLEY Ratios of Outstanding Debt by Type Last Ten Fiscal Years Governmental Activities Special Tax Certificates Tax Net Assessment Increment of Abatement State-Aid Premiums Fiscal Year Bonds Bonds Indebtedness Bonds Street Bonds (Discounts) 2004 $ 35,915,000 $ 31,950,000 $ 1,625,000 $ 4,785,000 $ — $ 133,521 2005 38,765,000 28,215,000 1,935,000 4,675,000 — 124,502 2006 42,980,000 26,665,000 2,030,000 4,360,000 — 108,479 2007 44,000,000 24,190,000 2,120,000 4,045,000 2,560,000 117,714 2008 47,610,000 21,410,000 2,195,000 3,725,000 2,475,000 175,490 2009 62,125,000 18,580,000 2,235,000 3,405,000 2,385,000 562,329 2010 58,205,000 14,940,000 2,190,000 3,080,000 2,290,000 590,508 20ll 56,640,000 12,735,000 2,100,000 2,750,000 2,190,000 785,719 2012 56,350,000 11,565,000 2,095,000 2,420,000 2,090,000 819,122 2013 62,230,000 9,290,000 2,145,000 2,075,000 1,985,000 1,116,249 (1) See the Schedule of Demographic and Econo�nic Statistics on page 105 for personal income and popularion data. Note: Details regarding the City's outstanding debt can be found in the notes to basic financial statements. -97- Business-Type Activities Percentage Utility Total Primary of Personal Total Revenue Bonds Government lncome(1) Per Capita(1) $ 74,408,521 $ 2,995,000 $ 77,403,521 7.80 % $ 3,744 73,714,502 2,790,000 76,504,502 7.53 3,730 76,143,479 4,575,000 80,718,479 7.81 3,966 77,032,714 4,285,000 81,317,714 7.55 3,994 77,590,490 4,020,000 81,610,490 7.12 4,015 89,292,329 3,750,000 93,042,329 8.10 4,581 81,295,508 3,470,000 84,765,508 7.70 4,161 77,200,719 3,175,000 80,375,719 7.16 3,935 75,339,122 2,870,000 78,209,122 6.59 3,789 78,841,249 2,550,000 81,391,249 6.69 3,943 -98- CITY OF GOLDEN VALLEY Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years Less Amounts Percentage of Genera] Restricted far Estimated Actual Obligation Repaying Taxable Value Fiscal Year Bonds(1) Principal(2) Total of Property(3) Per Capita(4) 2004 $ 74,408,521 $ 14,463,275 $ 59,811,725 2.32 % $ 2,917 2005 73,714,502 13,613,836 59,976,164 2.24 2,901 2006 76,143,479 13,275,728 62,759,272 2.12 3,060 2007 77,032,714 12,930,925 63,984,075 1.99 3,143 2008 77,590,490 13,106,172 64,308,828 1.89 3,158 2009 89,292,329 25,069,221 63,660,7'79 1.86 3,132 2010 81,295,508 18,126,689 63,168,819 1.93 3,101 2011 77,200,719 16,425,889 60,774,830 2.02 2,975 2012 75,339,122 18,481,388 56,857,734 2.01 2,754 2013 78,841,249 28,063,240 50,778,009 1.85 2,460 (1) Reported net of premiums and discounts. Does not include revenue bonds. Tax increment,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 far repaying principal include the amounts available in all debt service funds far future debt service,which are restricted by bond covenant. (3) See the Schedule of Assessed Value and Estimated Actual Value of Taxable Property on pages 92-93 far 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 of December 31,2013 Estimated Estimated Debt Percentage Share of Governmental Unit Outstanding(1) Applicable(1) Overlapping Debt Direct debt City of Golden Valley $ 78,841,249 100.00 % $ 78,841,249 Overlapping debt ISD No.270,Hopkins 169,181,538 14.94 25,275,722 ISD No.281,Robbinsdale 152,926,696 19.88 30,401,827 ISD No.283,St.Louis Park 39,643,656 0.04 15,857 Hennepin Counry 723,264,582 2.16 15,622,515 Three Rivers Park Disri-ict 54,166,123 2.94 1,592,484 Hennepin Regional RR Authority 37,350,216 2.94 1,098,096 Metropolitan Council 158,664,771 0.99 1,570,781 Total overlapping debt $ 1,335,197,582 75,577,283 Total direct and overlapping debt $ 154,418,532 (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 adequate 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.This process recognizes that,when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However,this does not imply that every taxpayer is a resident and, therefore, responsible for repaying the debt of each overlapping government. Source: Hennepin County Taxpayer Services -100- CITY OF GOLDEN VALLEY Legal Debt Margin Information Last Ten Fiscal Years Fiscal Year 2004 2005 2006 2007 Debt limit $ 51,501,042 $ 53,599,150 $ 59,113,980 $ 64,274,052 Total net debt applicable to limit 1,423,350 1,738,908 1,818,896 1,911,054 Legal debt margin $ 50,077,692 $ 51,860,242 $ 57,295,084 $ 62,362,998 Total net debt applicable to the limit as a percentage of debt limit 2.76% 3.24°/o 3.08% 2.97% Note: Under state finance law,the City's outstanding general obligation debt should not exceed 3 percent(2 percent for years prior to 2008) of total market property value.By]aw,the general obligation debt subject to the limitation may be offset by amounts set aside for repaying general obligation bonds. -101- 2008 2009 2010 20ll 2012 2013 $ ]02,004,719 $ 102,771,441 $ 98,227,905 $ 90,147,258 $ 84,881,071 $ 82,331,677 1,964,316 1,987,568 1,918,389 1,793,550 1,784,770 2,927,363 $ 100,040,403 $ 100,783,873 $ 96,309,516 $ 88,353,708 $ 83,096,301 $ 79,404,314 1.93% 1.93% 1.95% 1.99% 2.10% 3.56% Legal Debt Margin Calculation for Fiscal Year 2013 Market value $2,744,389,240 Debt limit(3%of market value) 82,331,677 Total bonded debt � $ 81,391,249 Less Debt not payable primarily from tax levies Special assessment bonds 62,230,000 Tax increment bonds 9,290,000 Tax abatement bonds 2,075,000 State-aid street bonds 1,985,000 Utility revenue bonds 2,550,000 Fund balances available for tax supported debt 333,886 Total net debt applicable to limit 2,927,363 Legal debt margin $ 79,404,314 -102- CITY OF GOLDEN VALLEY Pledged Revenue Coverage Last Ten Fiscal Years Revenue Bonds(1) Less Operating Net Available Debt Service Fiscal Year Gross Revenue Expenses Revenue Principal Interest 2004 $ 2,417,846 $ 527,039 $ 1,890,807 $ — $ 23,075 2005 2,122,614 504,699 1,617,915 205,000 127,938 2006 2,268,382 851,849 1,416,533 160,000 148,076 2007 2,962,313 945,877 2,016,436 290,000 186,387 2008 3,299,370 1,122,250 2,177,120 265,000 175,562 2009 2,350,982 1,121,715 1,229,267 270,000 165,227 2010 2,321,983 1,074,191 1,247,792 280,000 154,595 2011 2,755,829 1,037,944 1,717,885 295,000 140,299 2012 2,384,379 1,269,110 1,115,269 305,000 128,123 2013 2,502,536 1,470,273 1,032,263 320,000 118,749 (1) Utility revenue bonds,payable from the Storm Sewer Utility Fund. (2) Excludes principal refunded from the proceeds of refunding bond issues. Note: Details regarding the City's outstanding debt can be found in the notes to basic financial statements. Gross revenue includes investment earnings.Operating expenses do not include interest. -103- Special Assessment Bonds Special Assessment Debt Service Coverage Collections Principal(2) Interest Coverage $ 82 $ 1,325,279 $ 2,915,000 $ 1,634,491 0.29 4.86 1,498,566 3,140,000 1,464,922 0.33 4.60 1,915,215 3,105,000 1,616,260 0.41 4.23 1,329,952 3,085,000 1,785,736 0.27 4.94 1,594,627 3,070,000 1,846,084 0.32 2.82 1,733,879 3,135,000 2,008,648 0.34 2.87 1,364,381 2,830,000 2,343,345 0.26 3.95 1,334,959 2,855,000 2,051,651 0.27 2.57 1,142,945 2,855,000 1,975,259 0.24 2.35 1,223,120 2,880,000 1,955,697 0.25 -]04- CITY OF GOLDEN VALLEY Demogaphic and Economic Statistics Last Ten Fiscal Years Per Capita Personal School Unemployment Fiscal Year Population(1) Personal lncome(2) Income(3) Enrollment(4) Rate(5) 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 20,3 71 1,100,196,968 54,008 2,111 6.1 2011 20,427 1,122,443,223 54,949 2,137 5.2 2012 20,642 1,186,419,592 57,476 2,078 4.8 2013 20,642 1,215,772,516 58,898 2,088 4.1 Sources: (l) Metropolitan Council—Regional Statistics and Data except for 2013—City estimate. (2) This estimated personal income 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 income figures. (3) Bureau of Economic Analysis, U.S. Department of Commerce — Hennepin County. The per capita personal income used is for that of Hennepin Counry,in which the Ciry resides,the smallest region applicable to the City that this information is available far. (4) School districts (5) Minnesota Department of Economic Security—Hennepin County -105- CITY OF GOLDEN VALLEY Principal Employers Current Year and Nine Years Ago 2013 2004 Percentage Percentage of Total City of Total City Employer Employees Rank Employment Employees Rank Employment General Mills,Inc. 5,500 1 15.7 % 3,700 1 N/A M.A.Mortenson 2,102 2 6.0 N/A Allianz Life lnsurance Company 2,096 3 6.0 N/A OptumHealth 1,700 4 4.9 N/A Honeywell 1,350 5 3.9 750 4 N/A G.H.Tennant Company 700 6 2.0 1,900 2 N/A Courage Center 600 7 1.7 500 5 N/A Lupient Automobile Group 325 8 0.9 260 7 N/A Preferred One 315 9 0.9 N/A McKesson Corporation 300 10 0.9 450 6 N/A United Health Care 1,200 3 N/A KARE-TV 200 8 N/A CyberOptics 170 9 N/A Syngenta Seeds,Inc. 120 10 N/A Total 14,988 42.90 °/o 9,250 N/A—Not Available Note: Total city employment information is not available for 2004. Source: Metropolitan Council—Regional Statistics and Data. -106- CITY OF GOLDEN VALLEY Full-Time Equivalent City Government Employees by Function Last Ten Fiscal Years Full-Time Equivalent Employees as of Year Ended December 31, 2004 2005 2006 2007 Function General government 16.00 16.10 16.10 16.10 Public safety 49.30 50.30 50.00 50.25 Public warks 30.66 31.41 31.41 31.91 Parks and recreation 5.80 5.80 5.80 5.80 Water and sewer 9.34 9.34 9.34 10.59 Storm sewer 1.00 1.00 1.00 L00 Golf course 8.00 7.00 7.00 7.00 Motor vehicle licensing 6.00 5.00 5.75 5.75 Total 126.10 125.95 126.40 128.40 Source: Various city departments -107- 2008 2009 2010 2011 2012 2013 18.10 18.10 18.10 17.60 17.10 23.10 52.25 51.25 52.25 50.75 50.75 44.75 31.91 31.91 30.91 29.91 30.66 31.66 5.80 5.80 5.80 5.50 5.50 5.50 10.59 10.59 10.59 10.59 11.34 12.34 1.00 1.00 1.00 1.00 7.00 7.00 7.00 7.00 7.00 7.00 5.75 5.00 5.00 5.00 4.00 4.00 132.40 130.65 130.65 127.35 126.35 128.35 -108- CITY OF GOLDEN VALLEY Operating Indicatars by Function Last Ten Fiscal Years Fiscal Year 2004 2005 2006 2007 Function Police Adult arrests 1,583 1,429 1,423 1,079 Juvenile arrests 88 102 163 113 Citations written 2,338 1,905 3,194 2,890 Fire Number of calls answered 743 701 762 754 Highways and streets Street resurfacing(miles) N/A 5.1 3.3 3.8 Water New(removed)connections 56 59 (3) (150) Water main breaks 31 31 26 18 Average daily consumption (thousands of gallons) 2,677 2,767 2,851 2,816 N/A—Not Available Sources: Various city departments -109- 2008 2009 2010 20ll 2012 2013 1,025 1,025 1,338 1,177 1,399 1,103 106 106 80 107 70 61 2,847 2,847 3,184 5,036 3,828 3,524 693 693 715 726 648 797 4.2 4.2 2.7 1.1 1.2 1.0 11 11 (7) 1 (5) 2 18 18 17 27 26 10 2,759 2,759 2,433 2,561 2,765 2,518 -110- CITY OF GOLDEN VALLEY Capital Asset Staristics by Function Last Ten Fiscal Years Fiscal Year 2004 2005 2006 2007 Function Public safety Police Stations 1 1 1 1 Patrol units g 8 g g Fire stations 3 3 3 3 Highways and streets Streets(miles) 144 144 144 144 Streetlights � 1,228 1,830 1,830 1,830 Parks and recreation Parksacreage 462 462 462 462 Parks and nature areas 30 30 30 30 Tennis court locations 9 9 9 9 Community centers � � 2 � Water Connections 7,207 7,263 7,322 7,319 Sewer Connections 7,368 7,105 7,160 7,152 Sources: Various city departments -111- 2008 2009 2010 2011 2012 2013 1 1 1 1 1 1 8 8 8 8 8 8 3 3 3 3 3 3 144 144 144 144 144 144 1,830 1,830 1,830 1,830 1,838 1,840 462 462 462 462 462 462 30 30 30 30 30 30 9 9 9 9 9 9 2 2 2 2 2 2 7,139 7,150 7,143 7,144 7,139 7,141 7,164 7,172 7,175 7,l 74 7,169 7,179 -112- THIS PAGE INTENTIONALLY LEFT BLANK