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052714CompleteAgenda CITY OF RICHFIELD, MINNESOTA TUESDAY, MAY 27, 2014 RICHFIELD MUNICIPAL CENTER 6700 PORTLAND AVENUE ******************************************************************************************************* REGULAR CITY COUNCIL MEETING COUNCIL CHAMBERS 7:00 P.M. AGENDA INTRODUCTORY PROCEEDINGS Call to order Open forum (15 minutes maximum) Each speaker is to keep their comment period to three minutes to allow sufficient time for others. Comments are to be an opportunity to address the Council on items not on the agenda. Individuals who wish to address the Council must have registered prior to the meeting. Notes: __________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ Pledge of Allegiance Approval of the minutes of the (1) Special City Council Worksession of May 13, 2014 and (2) Regular City Council Meeting of May 13, 2014 PRESENTATIONS 1. Presentation and receipt of the City of Richfield Comprehensive Annual Financial Report for the fiscal year ended December 31, 2013 (Council Memo No. 54) Staff Report No. 94 Notes: __________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ 2. Presentation regarding National Public Works Week COUNCIL DISCUSSION 3. Council discussion  Hats Off to Hometown Hits Notes: __________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ AGENDA APPROVAL 4. Council approval of the agenda Consent Calendar contains several separate items, which are acted upon by the 5. City Council in one motion. Once the Consent Calendar has been approved, the individual items and recommended actions have also been approved. No further Council action on these items is necessary. However, any Council Member may request that an item be removed from the Consent Calendar and placed on the regular agenda for Council discussion and action. All items listed on the Consent Calendar are recommended for approval. A. Consideration of the approval of a resolution authorizing the Richfield HRA to reduce the original tax capacity of the City Bella Redevelopment Tax Increment District due to Homestead Market Value Exclusion S.R. No. 95 B. Consideration of approval of a resolution modifying the Health Care Savings Plan for eligible LELS Local #162 employees S.R. No. 96 C. Consideration of the approval of an agreement between Hennepin County and the City of Richfield for funding a rain garden for Wood Lake Nature Center S.R .No. 97 Notes: __________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ 6. Consideration of item(s), if any, removed from Consent Calendar Notes: __________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ PROPOSED ORDINANCE 7. Consideration of a second reading of an ordinance that will remove/correct outdated terminology; clarify a number of definitions; allow home occupations to operate within garages and accessory structures; correct and add references; add parking requirements for two-family and cluster housing developments; revise setbacks from Two-Family Residential (MR-1) properties; and clarify screening and temporary banner requirements and a resolution authorizing summary publication of the ordinance Staff Report No. 98 Notes: __________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ RESOLUTIONS 8. Consideration of a resolution supporting the METRO Orange Line Bus Rapid Transit Project and the proposed Knox Avenue alignment within Richfield Staff Report No. 99 Notes: __________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ 9. Consideration of a resolution accepting Agreement No. 05795 between the Minnesota Department of Transportation and the City of Richfield for additional right-of-way funds for the Lyndale Avenue Bridge Staff Report No. 100 Notes: __________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ CITY MANAGER’S REPORT 10. City Manager’s Report Notes: __________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ 11. Claims and payrolls Open forum (additional 15 minutes if more time needed after first Open Forum and by majority vote of the City Council) Each speaker is to keep their comment period to three minutes to allow sufficient time for others. Comments are to be an opportunity to address the Council on items not on the agenda. Individuals who wish to address the Council must have registered prior to the meeting. Notes: __________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ 12. Adjournment Auxiliary aids for individuals with disabilities are available upon request. Requests must be made at least 96 hours in advance to the City Clerk at 612-861-9738. CITY COUNCIL MINUTES Richfield, Minnesota Special City Council Worksession May 13, 2014 CALL TO ORDER The meeting was called to order by Mayor Goettel at 6:00 p.m. in the Bartholomew Room. Council Members Debbie Goettel, Mayor; Sue Sandahl; Edwina Garcia; Pat Elliott; and Tom Present: Fitzhenry. Staff Present: Steven L. Devich, City Manager; Jim Topitzhofer, Recreation Services Director; Todd Sandell, Public Safety Director; John Stark, Community Development Director; Pam Dmytrenko, Assistant City Manager; Betsy Osborn, Health Administrator; Christine Costello, Economic Development Coordinator; Amy Markle, Naturalist; and Cheryl Krumholz, Executive Coordinator. Item # 1 DISCUSSION REGARDING FOOD TRUCKS (COUNCIL MEMO NO. 50) City Manager Devich discussed a meeting with individuals who approached the City concerning the ability for food trucks to be present in the City of Richfield. Health Administrator Osborn explained that Richfield is currently set up to allow food trucks on a temporary basis for up to 21 calendar days each year. She also explained the food inspection process. John Levy, Food Truck Association and AZ Canteen owner, and PJ Fiske, owner/operator of Kona-Ice, discussed the operation of food trucks in the metro area and that having a presence in Richfield is an opportunity to add to the City’s revitalization. Mr. Levy stated the association would like to partner with the City on revising the City Code involving food trucks. Angie Schaefbauer, Richfield Chamber of Commerce, stated that the Chamber was excited about the concept but that there needed to be parity between the food truck business and brick and mortar business. Special Worksession Minutes -2- May 13, 2014 The City Council consensus was to proceed with the staff recommendation to allow some temporary events this summer involving food trucks under the current guidelines and to see what transpires. Mr. Fiske suggested that if there is a fee for a food truck to participate in a special event, consideration should be given to the contribution back to the community from that food truck business. Item # 2 DISCUSSION REGARDING A PARKS AND EVENTS PERMIT POLICY (COUNCIL MEMO NO. 51) Naturalist Markle, Race Director of Urban Wildland Half Marathon, presented the proposed policy regarding event permits for use of public streets and/or parks in the City of Richfield developed by the Community Services Commission. She stated the City’s current fees are low compared to other metro area cities so the policy includes an increase in fees. The City Council consensus was to proceed with the policy. ADJOURNMENT The meeting was adjourned by unanimous consent at 6:55 p.m. Date Approved: May 27, 2014 Debbie Goettel Mayor Cheryl Krumholz Steven L. Devich Executive Coordinator City Manager CITY COUNCIL MEETING MINUTES Richfield, Minnesota Regular Meeting May 13, 2014 CALL TO ORDER The meeting was called to order by Mayor Goettel at 7:00 p.m. Members Present: Debbie Goettel, Mayor; Sue Sandahl; Pat Elliott; Edwina Garcia; and Tom Fitzhenry. Staff Present: Steven L. Devich, City Manager; Mike Eastling, Public Works Director; Todd Sandell, Public Safety Director; Jim Topitzhofer, Recreation Services Director; Karen Barton, Assistant Community Development Director; Pam Dmytrenko, Assistant City Manager; Mary Tietjen, City Attorney; and Cheryl Krumholz, Executive Coordinator. OPEN FORUM Susan Rosenberg; 6633 Thomas Avenue, announced the upcoming annual Garden Club plant sale. Rob Foreman, 7500 Morgan Avenue, discussed the insufficient back stop and fencing at th the Richfield Middle School ballfield on 75 Street because balls are entering private lots resulting in issues. City Manager Devich stated these ballfields belong to the school district. The City Council requested staff contact the school to resolve this issue due to the risk of th chasing balls across 75 Street. PLEDGE OF ALLEGIANCE Mayor Goettel led the audience in the Pledge of Allegiance. APPROVAL OF MINUTES M/Garcia, S/Fitzhenry to approve the minutes of the (1) Special City Council Worksession of April 22, 2014; (2) Special Concurrent City Council and HRA Worksession of April 22, 2014; and . (3) Regular City Council Meeting of April 22, 2014 Motion carried 5-0. Council Meeting Minutes -2- May 13, 2014 Item #1 PRESENTATION OF CERTIFICATES OF APPRECIATION TO MISS RICHFIELD AMBASSADORS AND JUNIOR AMBASSADORS (COUNCIL MEMO NO. 52) Council Member Sandahl presented the certificates. Item #2 ANNUAL MEETING WITH THE ADVISORY BOARD OF HEALTH Erin Rykken, Advisory Board of Health Co-chair, provided the annual report. Item #3 PRESENTATION REGARDING NATIONAL PUBLIC WORKS WEEK Mayor Goettel stated this presentation was postponed to the May 27, 2014 City Council Meeting. Item #4 COUNCIL DISCUSSION  Fourth of July Parade Participation  Hats Off to Hometown Hits The City Council agreed to participate in the Fourth of July parade. Council Member Garcia announced the following:  September 21 Open Streets at Penn Fest  May 15-17 Lakewinds job fair at the Eden Prairie office  May 13 Unity in the Community at Veterans Park  May 16-19 City-wide garage sale  May 26 All Veterans Memorial ceremony at Veterans Park  April 1-June 30 Commuter Challenge Council Member Sandahl announced the Farmers’ Market at Veterans Park and Lyndale Gardens. Council Member Elliott acknowledged the life-saving efforts by the Richfield Fire Department at a recent incident at LA Fitness. Council Member Sandahl announced that she is not seeking re-election to the City Council in November. Mayor Goettel discussed Edina’s proposed project on Xerxes Avenue on the Richfield/Edina border. Item #5 COUNCIL APPROVAL OF AGENDA Mayor Goettel moved Consent Calendar Item 6J to Item 7 for separate consideration. M/Elliott, S/Garcia to approve the agenda, as amended. Motion carried 5-0. Council Meeting Minutes -3- May 13, 2014 Item #6 CONSENT CALENDAR A. Consideration of the approval of a resolution authorizing the Richfield Department of Public Safety to accept grant monies from the U.S. Department of Justice, Office of Justice Programs, the Justice Assistance Grant (JAG) Program S.R. No. 80 RESOLUTION NO. 10928 RESOLUTION AUTHORIZING THE DEPARTMENT OF PUBLIC SAFETY/POLICE TO ACCEPT THE EDWARD BYRNE MEMORIAL JUSTICE ASSISTANCE GRANT (JAG) FOR $10,240 FROM THE OFFICE OF JUSTICE PROGRAMS TO BE USED FOR REPLACING THE SQUAD CAR RIFLES CURRENTLY USED BY RICHFIELD POLICE DEPARTMENT OFFICERS This resolution appears as Resolution No. 10928. B. Consideration of approval of a resolution authorizing the City Council to affirm the monetary limits on municipal tort liability established by Minnesota Statutes 466.04 S.R. No. 81 RESOLUTION NO. 10929 RESOLUTION AFFIRMING MUNICIPAL TORT LIABILITY LIMITS ESTABLISHED BY MINNESOTA STATUTES 466.04 This resolution appears as Resolution No. 10929. C. Consideration of the approval of a resolution authorizing a partnership agreement between the City of Richfield and the Minnesota Department of Transportation for the purchase/storage of salt until June 30, 2018 S.R. No. 82 RESOLUTION NO. 10930 RESOLUTION AUTHORIZING THE CITY OF RICHFIELD TO ENTER INTO MN/DOT PARTNERSHIP AGREEMENT NO. 04565 WITH THE MINNESOTA DEPARTMENT OF TRANSPORTATION FOR THE PURCHASE/STORAGE OF SALT UNTIL JUNE 30, 2018 This resolution appears as Resolution No. 10930. D. Consideration of the approval of a resolution authorizing the partnership agreement with the State of Minnesota Department of Transportation for the purchase of fuel until June 30, 2018 S.R. No. 83 RESOLUTION NO. 10931 RESOLUTION AUTHORIZING THE CITY OF RICHFIELD TO ENTER INTO Mn/DOT PARTNERSHIP AGREEMENT NO 04963 WITH THE MINNESOTA DEPARTMENT OF TRANSPORTATION FOR PURCHASE OF FUEL UNTIL JUNE 30, 2018 This resolution appears as Resolution No. 10931. E. Consideration of the approval of a work proposal from Short Elliott Hendrickson, Inc. for th engineering services to design the City’s sanitary and water main utilities as part of the 66 th Street Reconstruction Project between 16 Avenue and Xerxes Avenue S.R. No. 84 F. Consideration of the approval of an agreement between Hennepin County and the City of Richfield for funding of soccer goals and equipment in the amount of $7,500 S.R .No. 85 Council Meeting Minutes -4- May 13, 2014 G. Consideration of the approval of an agreement between the City of Richfield and Sprint Spectrum L.P. for a short term lease for use of Veterans Memorial Park as a temporary site th for a mobile communications facility during the 4 of July Celebration S.R. No. 86 H. Consideration of the approval of an agreement between the City of Richfield and the Richfield Foundation for the Richfield Foundation to act as fiscal sponsor of donations received for a community band shell S.R. No. 87 I. Consideration of the approval of an agreement between the City of Richfield and the Richfield Foundation for the Richfield Foundation to act as fiscal sponsor of donations received for Wood Lake Nature Center S.R. No. 88 J. Moved to Item 7. K. Consideration of the approval of a resolution authorizing an amended Planned Unit Development, Conditional Use Permit and Final Development Plan for Richfield- Bloomington Honda S.R. No. 90 RESOLUTION NO. 10932 RESOLUTION APPROVING AN AMENDMENT TO THE FINAL DEVELOPMENT PLAN AND CONDITIONAL USE PERMIT FOR A PLANNED UNIT DEVELOPMENT AT 401-77TH STREET WEST, 501-77TH STREET WEST, 7724 HARRIET AVENUE, 400-78TH STREET WEST, 500-78TH STREET WEST AND 520-78TH STREET WEST This resolution appears as Resolution No. 10932. L. Consideration of the approval of Contract Change Order #2 for the Richfield Ice Arena – 2013 Locker Room Addition Project in the amount of $11,411 S.R. No. 91 M/Goettel, S/Elliott to approve the Consent Calendar, as amended. Motion carried 5-0. Item #7 CONSIDERATION OF ITEMS, IF ANY, REMOVED FROM THE CONSENT CALENDAR Item 6J. Consideration of the approval of the first reading of an ordinance that will remove/correct outdated terminology; clarify a number of definitions; allow home occupations to operate within garages and accessory structures; correct and add references; add parking requirements for two-family and cluster housing developments; revise setbacks from Two-Family Residential (MR-1) properties; clarify language related to drive-thru facilities in the Mixed Use Districts; and clarify screening and temporary banner requirements S.R. No. 89 Community Development Director Stark presented Staff Report No. 89. He explained the primary amendments are related to home occupations in accessory buildings/garages, screening, and drive-up service in the Mixed Use Districts. Mr. Stark explained staff is requesting City Council direction on the section of the code related to drive-up service because the language could be read two ways. He continued that staff recommended a proposed amendment that would permit drive-up service only if it was part of a mixed-use development, unless a variance was granted. Mr. Stark stated that the staff report for the second reading would include the identification of existing uses that would be made legally non-conforming. M/Goettel, S/Fitzhenry to approve first reading of an ordinance that will remove/correct outdated terminology; clarify a number of definitions; allow home occupations to operate within garages and accessory structures; correct and add references; add parking requirements for two- family and cluster housing developments; revise setbacks from Two-Family Residential (MR-1) Council Meeting Minutes -5- May 13, 2014 properties; clarify language related to drive-thru facilities in the Mixed Use Districts; and clarify screening and temporary banner requirements. Motion carried 5-0. Item #8 PUBLIC HEARING REGARDING A CONDITIONAL USE PERMIT AND VARIANCES TO ALLOW CONSTRUCTION OF A 75-FOOT TELECOMMUNICATION TOWER AND ACCESSORY STRUCTURE AT THE TH RICHFIELD PUBLIC WORKS BUILDING, 1901 66 STREET EAST S.R. NO. 92 Council Member Garcia presented Staff Report No. 92. Rob Viera, Buell Consulting, was available for questions. M/Elliott, S/Garcia to close the public hearing. Motion carried 5-0. M/Garcia, S/Goettel that the following resolution be adopted and that it be made part of these minutes: RESOLUTION NO. 10933 RESOLUTION APPROVING A CONDITIONAL USE PERMIT AND VARIANCES TO ALLOW CONSTRUCTION OF A 75-FOOT TELECOMMUNICATION TOWER AND ACCESSORY STRUCTURE AT 1901 66TH STREET EAST Motion carried 5-0. This resolution appears as Resolution No. 10933. Item #9 CONSIDERATION OF THE CONSTRUCTION OF METROPOLITAN COUNCIL LIVABLE COMMUNITIES TRANSIT-ORIENTED DEVELOPMENT GRANT- RELATED IMPROVEMENTS AT LYNDALE GARDENS S.R. NO. 93 Mayor Goettel presented Staff Report No. 93. Beth Pfeifer, Cornerstone Group, reviewed the proposed quasi-public improvements and the construction site which benefits the public even though part of it is on private land. She stated with Lakewinds Co-op opening soon, they are excited to have these improvements completed this season. Beth Reetz, Metropolitan Council Director, Housing and Livable Communities, explained the Met Council grant timeframe which includes a maximum extension of five years as long as there is progress toward the outcome. She added that it would be an unusual circumstance for the Met Council to require a repayment of the grant because they realize these projects take time and that cities are in good faith supporting the success of the project. Council Member Elliott stated he would support negotiating a hold harmless indemnification agreement to protect the City without delaying the project. City Attorney Tietjen responded that she would need to review the agreement before providing an opinion on a hold harmless agreement. M/Goettel, S/Sandahl to approve the construction of Metropolitan Council Livable Communities Transit-Oriented Development Grant related improvements at Lyndale Gardens. Motion carried 4-0. (Elliott abstain) Council Meeting Minutes -6- May 13, 2014 Colleen Cary, Cornerstone Group, provided a project financing update. Item #10 CITY MANAGER’S REPORT th City Manager Devich provided an update on the 77 Street Underpass project. Item #11 CLAIMS AND PAYROLLS M/Fitzhenry, S/Sandahl that the following claims and payrolls be approved: U.S. Bank 05/13/14 A/P Checks: 230692-231180 $ 1,684,704.96 Payroll: 100803-101438 $ 1,121,462.76 TOTAL $ 2,806,167.72 Motion carried 5-0. OPEN FORUM None. ADJOURNMENT The City Council meeting was adjourned by unanimous consent at 8:19 p.m. Date Approved: May 27, 2014 Debbie Goettel Mayor Cheryl Krumholz Steven L. Devich Executive Coordinator City Manager AGENDA SECTION: PRESENTATION AGENDA ITEM# 1 REPORT# 94 STAFF REPORT ,, 1 CITY COUNCIL MEETING MAY 27, 2014 REPORT PREPARED BY: CHRIS REGIS, FINANCE MANAGER NAME,TITLE DEPARTMENT DIRECTOR [M1 REVIEW: SIGNATURE DEPARTMENT DIRECTOR ❑ N/A -3 REVIEW: REVIEWED BY CITY MANAGER: ATIPIErf ITEM FOR COUNCIL CONSIDERATION: Receipt of the City of Richfield Comprehensive Annual Financial Report (CAFR) for the fiscal year ended December 31, 2013. I. RECOMMENDED ACTION: By Motion: Accept the Comprehensive Annual Financial Report of the City for the year ended December 31, 2013. II. EXECUTIVE SUMMARY As required by state law all general purpose local governments must be audited in accordance with U.S. generally accepted auditing standards by a firm of licensed certified public accountants. In addition, state law also requires that local governments publish within six months of the close of each fiscal year a complete set of financial statements presented in conformance with U.S. generally accepted accounting standards. Accordingly, the City's auditing firm, KDV, has completed the annual audit of the City's financial records and has issued an unqualified opinion on those records for the fiscal year ended December 31, 2013. In addition, the financial statements will be published locally and submitted to the State of Minnesota and the Government Finance Officers Association. Therefore, staff presents to the City Council, the Comprehensive Annual Financial Report (CAFR) for fiscal year ended December 31, 2013. III. BR ASIS OF ECOMMENDATION A. B ACKGROUND  The City’s auditing firm, KDV, has completed the annual audit of the City’s financial records for the fiscal year ended December 31, 2013.  As part of the audit, KDV has issued an unqualified opinion on the City’s financial statements for the year ending December 31, 2013.  A representative of KDV will be present at the tonight’s Council meeting to make a brief presentation on the 2013 financial information and answer questions.  In addition, the CAFR will be submitted to the State of Minnesota pursuant to State law and to the Government Finance Officers Association for the Certificate of Achievement for Excellence in Financial Reporting program. B. P OLICY  Action to be taken at the May 27, 2014 City Council meeting is the official receipt of the December 31, 2013 City of Richfield Comprehensive Annual Financial Report by the City Council.  The City’s auditor has performed an audit of the City’s financial records for the year ended December 31, 2013 and prepared reports to the City Council concerning legal compliance and internal controls. C. CTI RITICAL IMING SSUES  Action on this item is requested at the May 27, 2014 City Council meeting. D. F INANCIAL  N/A E. L EGAL  The CAFR will be submitted to the State of Minnesota, pursuant to State law.  The CAFR will be published in the Sun Current the week of June 2, 2014. F. EC NVIRONMENTAL ONSIDERATIONS  N/A IV. AR() LTERNATIVE ECOMMENDATIONS  The City Council could ask the auditors for further explanations of their findings at a future Study Session. V. A TTACHMENTS  None VI. PPEM RINCIPAL ARTIES XPECTED AT EETING  Matthew Mayer, CPA, KDV CITY OF RICHFIELD, MINNESOTA Office of City Manager May 22, 2014 Council Memorandum No. 54 The Honorable Mayor and Members of the City Council Subject: 2013 Comprehensive Annual Financial Report (Agenda Item No. 1) Council Members: At the May 27, 2014 City Council meeting, Matthew Mayer, a representative of the City's audit firm KDV, will make a presentation on the 2013 Audit and the 2013 Comprehensive Annual Financial Report (CAFR). The 2013 City CAFR and HRA CAFR, 2013 Schedule of Expenditures of Federal Awards and Independent Auditor's Reports and the 2013 Communications Letter are attached. Mr. Mayer's presentation will concentrate on information contained in the 2013 Communications Letter. The Communications Letter and Schedule of Expenditures of Federal Funds and Independent Auditor's Reports will be provided at the meeting. Finally, subsequent to Mr. Mayer's presentation, the City Council will be asked to formally accept the Comprehensive Annual Financial Report (CAFR) for the year ended 2013. Relctf Ily submit,•, -n L. Devi City Manager SLD: tjs Attachments E-mail: Department Directors Assistant City Manager T' D ended L ec. -3 1 2013'. Ar For the T' D ended L ec. -3 1 2013'. COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF RICHFIELD, MINNESOTA .J For The Year Ended DECEMBER 31, 2013 DEPARTMENT OF FINANCE Christopher T. Regis, Finance Manager Member of Government Finance Officers Association of United States and Canada THIS PAGE WAS LEFT BLANK INTENTIONALLY TABLE OF CONTENTS Reference Page I. INTRODUCTORY SECTION Letter of Transmittal 3 Certificate of Achievement 7 City Officials 9 Organization Chart 10 II - FINANCIAL SECTION Independent Auditor's Report 13 Management's Discussion and Analysis 17 Basic Financial Statements: Government -Wide Financial Statements: Statement of Net Position Statement 1 29 Statement of Activities Statement 2 30 Fund Financial Statements: Balance Sheet — Governmental Funds Statement 3 32 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds Statement 4 33 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Statement 5 34 Statement of Net Position — Proprietary Funds Statement 6 35 Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary Funds Statement 7 36 Statement of Cash Flows — Proprietary Funds Statement 8 37 Statement of Fiduciary Assets and Liabilities — Fiduciary Funds Statement 9 38 Notes to the Financial Statements 39 Required Supplementary information: Budgetary Comparison Schedule — General Fund Schedule 10 63 Other Post -Employment Benefits Plan - Schedule of Funding Progress Schedule 11 67 Note to RSI 68 Combining and Individual Fund Statements and Schedules: Combining Balance Sheet — Nonmajor Governmental Funds Statement 12 72 Combining Statement of Revenues, Expenditures and Changes in Fund Balance - Nonmajor Governmental Funds Statement 13 73 Subcombining Balance Sheet — Nonmajor Special Revenue Funds Statement 14 76 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Special Revenue Funds Statement 15 78 Special Revenue Funds: Schedules of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual: Liquor Contribution Schedule 16 80 Tourism Administration Schedule 17 81 Communications Schedule 18 82 Elections Schedule 19 83 Drug/Felony Forfeiture Schedule 20 84 911 Fees Schedule 21 85 Public Safety Compliance Schedule 22 86 Recreation Contributions Schedule 23 87 Nature Center Contributions Schedule 24 88 Reference Paqe Community Center Days Out Schedule 25 89 Public Health Grants Schedule 26 90 Wood Lake Half Marathon Schedule 27 91 Utility Franchise Fees Schedule 28 92 Combining Statement of Net Position — Internal Service Funds Statement 29 94 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position - Internal Service Funds Statement 30 95 Combining Statement of Cash Flows — Internal Service Funds Statement 31 96 Combining Statement of Assets and Liabilities - Fiduciary Funds Statement 32 99 Combining Statement of Changes in Assets and Liabilities - Fiduciary Funds Statement 33 100 Supplementary Financial Information: Housing and Redevelopment Authority: Combined Balance Sheet — Governmental Funds Statement 34 104 Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds Statement 35 106 Housing Choice Vouchers Financial Data Schedule - Balance Sheet Statement 36 108 Housing Choice Vouchers Financial Data Schedule - Income Statement Statement 37 109 III - STATISTICAL SECTION (UNAUDITED) Net Position by Components Schedule 1 112 Changes in Net Position Schedule 2 114 Fund Balance - Governmental Funds Schedule 3 116 Changes in Fund Balance - Governmental Funds Schedule 4 117 Assessed Value and Actual Value of Taxable Property Schedule 5 118 Property Tax Rates - Direct and Overlapping Governments Schedule 6 119 Principal Property Tax Payers Schedule 7 120 Property Tax Levies and Collections Schedule 8 121 Ratios of Outstanding Debt by Type Schedule 9 122 Ratios of General Bonded Debt Outstanding Schedule 10 123 Direct and Overlapping Governmental Activities Debt Schedule 11 124 Legal Debt Margin Information Schedule 12 125 Revenue Bond Coverage Schedule 13 126 Demographic and Economic Statistics Schedule 14 127 Principal Employers Schedule 15 128 Full -Time Equivalent City Employees by Function/Program Schedule 16 129 Operation Indications by Function/Program Schedule 17 130 Capital Asset Statistics by Function/Program Schedule 18 131 I. INTRODUCTORY SECTION - 1 - THIS PAGE WAS LEFT BLANK INTENTIONALLY -2- MAYOR DEBBIE GOETTEL CITY COUNCIL PAT ELLIOTT TOM FITZHENRY EDWINA GARCIA SUZANNE M.SANDAHL May 6, 2014 The Honorable Mayor and Members of the City Council, City of Richfield, Minnesota State law requires that all general-purpose local governments publish within six months of the close of each fiscal year a complete set of financial statements presented in conformance with U.S. generally accepted accounting principles (GAAP) and audited in accordance with U.S. generally accepted auditing standards by a firm of licensed certified public accountants. Pursuant to that requirement, we hereby issue the comprehensive annual financial report of the City of Richfield for the fiscal year ended December 31, 2013. This report consists of management's representations concerning the finances of the City CITY MANAGER of Richfield. Consequently, management assumes full responsibility for the completeness STEVEN L. DEVICH and reliability of all the information presented in this report. To provide a reasonable basis for making these representations, management of the City of Richfield has established a comprehensive internal control framework that is designed both to protect the government's assets from loss, theft, misuse and to compile sufficient reliable information for the preparation of the City of Richfield's financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City of Richfield's comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The City of Richfield's financial statements have been audited by KDV, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City of Richfield for the fiscal year ended December 31, 2013, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the City of Richfield's financial statements for the fiscal year ended December 31, 2013, are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the City of Richfield was part of a broader, federally mandated "Single Audit" designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government's internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. Those reports are available in the City of Richfield's separately issued Special Purpose Audit Reports. The Urban Hometown www.cityofrichfield.org -3- AN EQUAL OPPORTUNITY EMPLOYER GAAP 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 MD&A and should be read in conjunction with it. The City of Richfield's MD&A can be found immediately following the report of the independent auditors. Profile of the Government The City was incorporated on February 26, 1908. Since 1964, the City has operated under a council/manager form of government, as authorized by its charter, and exists under the laws of the State of Minnesota. The City has a population of 35,979 (2012 Metropolitan Council Estimate) and covers an area of approximately seven square miles. Located in Hennepin County, Richfield is the first suburb south of Minneapolis. Richfield is bordered on the north by the Crosstown Highway 62; bordered on the east by the Minneapolis -St. Paul International Airport; bordered on the south by Interstate 494; and bordered on the west by Xerxes Avenue and the City of Edina. In addition, Interstate 35W, the major north/south thoroughfare in the Twin City area, runs north/south through the middle of Richfield. The City of Richfield provides a full range of services, including police and fire protection; the construction and maintenance of streets and other infrastructure; and recreational activities and cultural events. The City of Richfield also operates four municipal liquor stores, water and sewer utility, storm water utility, and a recreation fund. The annual budget serves as the foundation for the City of Richfield's financial planning and control. All departments of the City are required to submit requests for appropriation to the City Manager. The City Manager uses these requests as the starting point for developing a proposed budget. The City Manager then presents this proposed budget to the City Council for review prior to September 15. The Council is required to hold public hearings on the proposed budget and to adopt a final budget by no later than the last date established by law for the County Auditor to levy taxes. Budget -to -actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. For the general fund this comparison is presented in the Required Supplementary Information section. For nonmajor governmental funds with appropriated annual budgets, this comparison is presented in the combining and individual fund statements and schedules. Factors Affecting Financial Condition Richfield was initially developed as a residential community. Residents of Richfield generally work at the adjacent airport, in the downtown Minneapolis -St. Paul area or on the 1-494 strip. Richfield's commercial/industrial base is comparatively small when looking at other Twin City metropolitan area communities. In fact, when viewing the total estimated market value of the community, approximately 71% of the market value is comprised of residential properties, 10% apartments, and only 19% commercial/industrial property. Changes in the state's tax policy have indicated for some time a need for a more diversified tax base, including more commercial development. Richfield has responded to this by encouraging commercial development within the City. However, over 99% of the land area in Richfield is already developed. Commercial development in Richfield is a more complex process that requires extensive redevelopment and often the use of tax increment financing assistance. Since 1975, the City has created twenty-three tax increment districts. These tax increment districts were formed in order to help transform areas which are becoming market obsolete into a more vital commercial tax base. The City has transformed itself as a result of this redevelopment which includes the development of a corporate headquarters of a Fortune 500 company within the City. Consequently, as the tax increment districts decertify, the City will realize the full market value benefit of these districts. The City has had one district decertified in 2002, a second district decertified in 2010, with a third district decertified in 2012. In addition to the City's efforts in commercial redevelopment, several housing programs have been established to encourage reinvestment in the City's housing stock. -4- The City enjoys an AA+ bond rating and an Aa2 bond rating from Standard and Poor's and Moody's respectively. Long-term financial planning The Metropolitan Council requires all cities in the seven -county metropolitan area to have a Comprehensive Plan and State law requires cities to update their plans every 10 years. The Comprehensive Plan guides development and redevelopment and addresses changes likely to occur due to various social and market forces. The City of Richfield's Comprehensive Plan has been recently updated and approved by the City Council in 2010. In addition, the City on an annual basis engages in long-term financial and capital planning. The objective of this process is to provide a framework for decision making required to identify and implement strategies that will assure long-term community viability. Accordingly, outcomes of the process include promotion of long-term community affordability and livability, reinvesting in the City's housing stock to position the City to compete with other communities, addressing transportation impacts within the City, establish a financial framework to maintain and replace the City's physical and technical infrastructure, and review options and opportunities to improve delivery of City services. Relevant financial policies The City has adopted a set of financial management policies that focus on such areas as capital budgeting, revenue policies, debt management, general fund balances, cash and investments, risk management and operating budgets. The City has established a fund balance policy for the general fund with a goal of maintaining an unassigned fund balance of 40% of general fund revenues. At the end of 2013, the City is working toward this goal and the level is currently at 39%. Major Initiatives Major initiatives in 2013 included the following: Right Of Way Improvements: During 2013 the City began to acquire right of way and begin road reconstruction as part of the Richfield Parkway Projects. This project is broken into two components. The First component is Taft Lake/North Richfield Parkway, which includes the creation of a storm water pre-treatment facility for Taft Lake and the construction of roadway on the south side of Taft Park. The second component is the reconstruction of Richfield Parkway north of 66th Street to 65th Street. Total cost incurred to date is $4,555,667. The funding for the projects will come from the issuance of the series 2013 A & B bonds, municipal state aid, county funds, and utility funds. Public Facilities • Fire Station 2 began a significant renovation during 2013. The renovation work is still ongoing as of December 31. The cost incurred to date is $961,503. • Richfield Liquor Store #1, located at 66th and Lyndale began and completed a significant renovation during 2013. The store was closed for approximately six weeks during the renovation. The total cost incurred was $948,232. Commercial Redevelopment and Housing Initiatives The City continues to seek commercial development and redevelopment opportunities. The market for commercial development and redevelopment in 2013 continued to improve. A number of redevelopment initiatives were completed in 2012, and several were underway in 2013. Three significant projects within the Lakes at Lyndale area were completed in 2012: redevelopment of the former -5- Kmart site (6501 Lyndale Avenue), the construction of a new 94 unit apartment building on the southeast corner of 64th Street and Lyndale Avenue, and the redevelopment of the vacant former Bridgeman's restaurant at 800 West 66th into a new Pizza Luce restaurant. The redevelopment of the Menards (7701 Nicollet Avenue) and O'Reilly's Auto Parts (1120 E. 66th Street) was completed in 2013. Work also began in 2013 on the redevelopment of the Richfield -Bloomington Honda car dealership (400 W 78th Street), the development of LaMettry's Auto Body (301 W 77th Street) and Lakewinds Natural Foods (6400 Lyndale Avenue). To complement the commercial redevelopment, the City has established several programs that encourage reinvestment in the City's housing stock. These programs include but are not limited to, incentive loan programs for remodeling homes to higher values, funding assistance for the replacement of small substandard homes with larger new -construction, and a program to provide home ownership opportunities for low- to moderate -income households working with non-profit builders and developers like Habitat for Humanity. The City also has three new programs, the Penn Avenue Fagade Improvement program, the Residential Facade Improvement program and the Rental Conversion program, that were established to help address the property maintenance and provide incentives for property improvements within the City. Awards and Acknowledgments The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement in Financial Reporting to the City of Richfield, Minnesota for its comprehensive annual financial report for the fiscal year ended December 31, 2012. This was the twenty-eighth consecutive year that the City has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program requirements, and we are submitting it to GFOA to determine its eligibility for another certificate. In addition, the City also received the GFOA's award for Distinguished Budget Presentation for its annual budget for the fiscal year beginning January 1, 2013. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan, and as a communications medium. The award is valid for a period of one year only. We believe our current budget continues to conform to program requirements, and we have submitted to GFOA the report to determine its eligibility for another award. The preparation of this report could not be accomplished without the efficient and dedicated services of the entire staff of the finance division. We express our appreciation to all members of the division who assisted and contributed to its preparation. We also thank the Mayor and members of the City Council for their interest and support in planning and conducting the financial operations for the City of Richfield in a responsible and progressive manner. Respectfully submitted, eve L. Devfch City Manager` r _ Chris R ~ is Finance Manager E Government Finance officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Richfield Minnesota For its Comprehensive Annual Financial Report for the Fiscal Year Ended December 31, 2012 Executive Director/CEO THIS PAGE WAS LEFT BLANK INTENTIONALLY -8- CITY OF RICHFIELD, MINNESOTA CITY OFFICIALS MAYOR -DEBBIE GOETTEL COUNCILMEMBER - SUZANNE M. SANDAHL COUNCILMEMBER - EDWINA GARCIA COUNCILMEMBER - TOM FITZHENRY COUNCILMEMBER - PAT ELLIOTT ADMINISTRATIVE STAFF STEVEN L. DEVICH - CITY MANAGER CHRIS REGIS - FINANCE MANAGER NANCY GIBBS - CITY CLERK � � m ) § K ) k a = �(U 22 2} §§ )) \at e yU) 'o �J E 4� o } J v u § o r _ . H a L Q . r co a 7 2 . a 2:' . e � N 2 m « k = ; » ® J ■■ a » 7 " q 2 5 w U- 0 U Lw 2 { o w Q —1 § vw cn Z E 2 ) Ll 0 _ a f) r -L § E� 2& E 2 m /do _ w $ / '2 'LA CL 0 ® � � m ) § K ) k a = �(U 22 2} §§ )) \at e yU) 'o �J E 4� o } J v u § o r _ . H a L Q . r co a 7 2 . a 2:' . e � N 2 m « k = ; » ® J ■■ a » 7 " q 2 5 w U- 0 U Lw 2 { o w Q —1 § vw cn Z E 2 ) Ll & � \ f) 0 § E� 2& CL 2 m w / '2 'LA 22 a 2 � 'A , {) 2 2 »a � § � � m ) § K ) k a = �(U 22 2} §§ )) \at e yU) 'o �J E 4� o } J v u § o r _ . H a L Q . r co a 7 2 . a 2:' . e � N 2 m « k = ; » ® J ■■ a » 7 " q 2 5 w U- 0 U Lw 2 { o w Q —1 § vw cn Z E 2 ) � k � Ll & � \ § 2& a '2 'LA 22 c; 'A , 2 »a , § G° a �« r. �� / / 0 § ¥ � § o E �m , c . S f CL L$ jf IL ak / 2 � k � & 2& a 22 c; G° a �« �� � § ¥ � § o E �m , c . jf ak / 2 « �e _ � k � II. FINANCIAL SECTION THIS PAGE WAS LEFT BLANK INTENTIONALLY -12- IDV Expert advice. When you need it.5' INDEPENDENT AUDITOR'S REPORT Honorable Mayor and Members of the City Council City of Richfield Richfield, Minnesota Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business -type activities, the discretely presented component unit, each major fund and the aggregate remaining fund information of the City of Richfield, Minnesota, as of and for the year ended December 31, 2013, and the related Notes to the Financial Statements, which collectively comprise the City's basic financial statements as listed in the Table of Contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. Expert advice. When you need it. °L1 St. Cloud Twin Cities www.kdv.com 220 Park Avenue S. 3800 American Boulevard W. Certified Public Accountants P.O. Box 1304 Suite 1000 Toll Free Wealth 111anag-ement St. Cloud, Minnesota Minneapolis, Minnesota 877.912.7696 Payroll Services 56302 55431 Business Valuations Phone: 320.251.7010 Phone: 952.563.6800 Technology Help Desk Technology Services Fax: 320.251.1784 Fax: 952.563.6801 866.400.6426 -13- KD*V Auditor's Responsibility We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, the discretely presented component unit, each major fund and the aggregate remaining fund information of the City of Richfield, Minnesota, as of December 31, 2013, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Implementation of GASB 65 As discussed in Note 1 to the financial statements, the City has adopted the provisions of the Governmental Accounting Standards Board (GASB) Statement No. 65, Items Previously Reported as Assets and Liabilities. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, which follows this report letter and the Budgetary Comparison Schedule for the General Fund as well as the Schedule of Funding Progress — Other Post Employment Benefit 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 accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Richfield's basic financial statements. The introductory section, combining and individual fund financial statements and schedules, supplementary financial information and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. -14- Y\�D.N The combining and individual fund financial statements and schedules and supplementary financial information are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund financial statements and schedules and supplementary financial information are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory section and statistical section 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. Report on Summarized Comparative Information The prior year partial comparative information has been derived from the City's 2012 financial statements audited by other auditors. In their report dated May 10, 2013, they expressed unmodified opinions on the governmental activities, business type activities, the discretely presented component unit, each major fund and the aggregate remaining fund information. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated May 6, 2014 on our consideration of the City of Richfield's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City of Richfield's internal control over financial reporting and compliance. KERN, DEWENTER, VIERE, LTD. Minneapolis, Minnesota May 6, 2014 -15- THIS PAGE WAS LEFT BLANK INTENTIONALLY Management's Discussion and Analysis As management of the City of Richfield, we offer readers of the City of Richfield's financial statements this narrative overview and analysis of the financial activities of the City of Richfield 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, which can be found on pages 3 through 6 of this report. Financial Highlights • The assets of the City of Richfield exceeded its liabilities at the close of the most recent fiscal year by $95,154,736 (net position). Of this amount, $24,211,874 (unrestricted net position) may be used to meet the government's ongoing obligations to citizens and creditors. • The government's total net position decreased by $461,818 prior to a change in accounting principle of $114,018 in the business -type activities. • As of the close of the current fiscal year, the City of Richfield's governmental funds reported combined ending fund balances of $25,145,032. Of this total amount, $79,743 is classified as nonspendable, $3,360,006 as restricted, $6,703,091 as committed by City Council action, $7,539,435 as assigned and $7,462,757 as unassigned. • At the end of the current fiscal year, the general fund balance of $7,752,180 included $72,413 as nonspendable and $7,679,767 as unassigned. • The City of Richfield's total bonded debt increased by $3,618,957 (8.57 percent) during the current fiscal year from $42,235,000 to $45,853,957. Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the City of Richfield's basic financial statements. The City of Richfield's basic financial statements comprise three components: 1) government -wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government -wide financial statements. The government -wide financial statements are designed to provide readers with a broad overview of the City of Richfield's finances, in a manner similar to a private -sector business. The statement of net position presents information on all of the City of Richfield's assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City of Richfield is improving or deteriorating. The statement of activities presents information showing how the government's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Both of the government -wide financial statements distinguish functions of the City of Richfield that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City of Richfield include general government, public safety, fire, community development, public works, and parks and recreation. The business -type activities of the City of Richfield include a municipal liquor operation, water and sewer utility, a storm sewer utility, and a recreation enterprise operation that includes an ice arena, swimming pool and mini golf operations. -17- The government -wide financial statements include not only the City of Richfield itself (known as the primary government), but also the Richfield Housing and Redevelopment Authority, a discretely presented component unit. Financial information for this component unit is reported separately from the financial information presented for the primary government itself. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Richfield, 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 of Richfield can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near- term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City of Richfield maintains eighteen individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, improvement bonds fund, and the capital improvements fund, all of which are considered to be major funds. Data from the other fifteen governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The City of Richfield adopts an annual appropriated budget for its general and special revenue funds. A budgetary comparison statement has been provided for these funds to demonstrate compliance with this budget. Proprietary funds. The City of Richfield maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statements. The City of Richfield uses enterprise funds to account for its liquor operation, water and sewer utility, storm sewer utility, and for its recreation enterprise operation, all of which are considered to be major funds of the City. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City of Richfield's various functions. The City of Richfield uses internal service funds to account for its central garage & equipment, for its information technology systems, its self insurance program, its building services function, and its compensated absences liability. Because all of these services predominantly benefit governmental rather than business -type functions, they have been included within governmental activities in the government -wide financial statements. The internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government -wide financial statements because the resources of those funds are not available to support the City of Richfield's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. -18- Other information. Required supplementary information can be found following the Notes to the Financial Statements. The combining statements referred to earlier in connection with nonmajor governmental funds, internal service funds and fiduciary funds are presented immediately following the required supplementary information. Government -Wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the City of Richfield, assets exceeded liabilities by $95,154,736 at the close of the most recent fiscal year. By far the largest portion of the City of Richfield's net position (71 percent) reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment); less any related debt used to acquire those assets that is still outstanding. The City of Richfield uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City of Richfield's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. CITY OF RICHFIELD'S NET POSITION Governmental Business -type Activities Activities Total 2013 2012 2013 2012 2013 2012 Current and other assets $39,178,607 $36,500,745 $7,554,140 $7,106,058 $46,732,747 $43,606,803 Capital assets 73,775,701 74,599,652 29,408,739 27,859,042 103,184,440 102,458,694 Total assets 112,954,308 111,100,397 36,962,879 34,965,100 149,917,187 146,065,497 Long-term liabilities outstanding 38,209,264 34,290,808 12,095,005 9,154,364 50,304,269 43,445,172 Other liabilities 2,966,290 4,896,395 1,491,892 1,993,358 4,458,182 6,889,753 Total liabilities 41,175,554 39,187,203 13,586,897 11,147,722 54,762,451 50,334,925 Net position: Net investment in capital assets 48,633,166 50,719,652 19,212,879 18,482,474 67,846,045 69,202,126 Restricted 2,824,310 4,773,505 272,507 272,507 3,096,817 5,046,012 Unrestricted 20,321,278 16,420,037 3,890,596 5,062,397 24,211,874 21,482,434 Total net position $71,778,754 $71,913,194 $23,375,982 $23,817,378 $95,154,736 $95,730,572 An additional portion of the City of Richfield's net position represents resources that are subject to external restrictions on how they may used. At December 31, 2013, the City had restricted net position of $3,096,817. The remaining balance of unrestricted net position ($24,211,874) may be used to meet the government's ongoing obligations to citizens and creditors. The government's net position decreased by $461,818, compared to an increase of $2,640,653 in 2012. The decrease can be attributed to a combination of a decrease in charges for service, operating grant and contributions and capital grants and contributions in 2013. Governmental activities. Governmental activities decreased the City of Richfield's net position by $134,440. Key elements of this decrease are as follows: im City of Richfield's Changes in Net position Net position — January 1 71,913,194 69,591,805 23,817,378 23,498,114 95,730,572 93,089,919 Change in accounting principle - - (114,018) - (114,018) - Net position—January 1 - Restated 71,913,194 69,591,805 23,703,360 23,498,114 95,616,554 93,089,919 Net position — December 31 $71,778,754 $71,913,194 $23,375,982 $23,817,378 $95,154,736 $95,730,572 • Charges for Services decreased by $745,074 in 2013 from 2012. The decrease can be traced to the City's Liquor operation. During 2013 the store at 6444 Lyndale was closed for six weeks while it was renovated. In addition, at the Penn Avenue location, sales were negatively affected by road construction that limited access to the store for approximately six months. • Operating Grants and Contributions decreased by $153,183 in 2013 from 2012. The decrease is attributed to a reduction in operating grant revenue in 2013, specifically a Fire SAFER grant being fully utilized in 2012. • Capital Grants and Contributions decreased by $636,075 in 2013 as compared to 2012. The decrease is the result of a reduction in intergovernmental revenues, specifically decreases in debt service transfers from the City's component unit to the City to service debt issued by the City on behalf of the component unit. GASB 34 requires that these transfers be treated as intergovernmental revenue and during 2013, the level of transfers decreased from 2012 to 2013. -20- Governmental Business -type activities activities Total 2013 2012 2013 2012 2013 2012 Revenues: Program Revenues: Charges for services $3,094,551 $3,105,477 $20,383,439 $21,117,587 $23,477,990 $24,223,064 Operating grants and contributions 1,295,566 1,448,749 1,295,566 1,448749 Capital grants and contributions 2,585,689 3,221,764 2,585,689 3,221,764 General revenues: Property taxes 17,985,988 17,025,767 17,985,988 17,025,767 Franchise taxes 1,304,716 1,259,670 1,304,716 1,259,670 Grants and contributions not restricted to specific programs 1,223,981 1,230,268 - - 1,223,981 1,230,268 Other 710,988 631,131 481,633 181,527 1,192,621 812,658 Total revenues 28,201,479 27,922,826 20,865,072 21,299,114 49,066,551 49,221,940 Expenses: General government 3,042,891 2,874,868 - - 3,042,891 2,874,868 Public safety 8,369,982 8,207,554 8,369,982 8,207,554 Fire 3,365,043 3,427,929 3,365,043 3,427,929 Community Development 1,322,175 1,136,623 1,322,175 1,136,623 Public Works 9,545,980 7,076,058 9,545,980 7,076,058 Parks and recreation 2,154,180 2,015,873 2,154,180 2,015,873 Interest on long-term debt 1,196,968 1,496,022 - - 1,196,968 1,496,022 Liquor Operations - - 10,308,021 10,799,198 10,308,021 10,799,198 Water & Sewer Utility 7,217,814 6,699,992 7,217,814 6,699,992 Storm Sewer Utility 1,260,211 1,167,332 1,260,211 1,167,332 Recreation Fund - - 1,745,104 1,679,838 1,745,104 1,679,838 Total expenses 28,997,219 26,234,927 20,531,150 20,346,360 49,528,369 46,581,287 Change in net position before transfers (795,740) 1,687,899 333,922 957,454 (461,818) 2,640,653 Transfers 661,300 633,490 (661,300) (633,490) Change in net position (134,440) 2,321,389 (327,378) 319,264 (461,818) 2,640,653 Net position — January 1 71,913,194 69,591,805 23,817,378 23,498,114 95,730,572 93,089,919 Change in accounting principle - - (114,018) - (114,018) - Net position—January 1 - Restated 71,913,194 69,591,805 23,703,360 23,498,114 95,616,554 93,089,919 Net position — December 31 $71,778,754 $71,913,194 $23,375,982 $23,817,378 $95,154,736 $95,730,572 • Charges for Services decreased by $745,074 in 2013 from 2012. The decrease can be traced to the City's Liquor operation. During 2013 the store at 6444 Lyndale was closed for six weeks while it was renovated. In addition, at the Penn Avenue location, sales were negatively affected by road construction that limited access to the store for approximately six months. • Operating Grants and Contributions decreased by $153,183 in 2013 from 2012. The decrease is attributed to a reduction in operating grant revenue in 2013, specifically a Fire SAFER grant being fully utilized in 2012. • Capital Grants and Contributions decreased by $636,075 in 2013 as compared to 2012. The decrease is the result of a reduction in intergovernmental revenues, specifically decreases in debt service transfers from the City's component unit to the City to service debt issued by the City on behalf of the component unit. GASB 34 requires that these transfers be treated as intergovernmental revenue and during 2013, the level of transfers decreased from 2012 to 2013. -20- Revenues by Source - Government Activities Grants and Other 2% Charges for contributions not Services 11% restricted 4% Operating Grants & Contributions Franchise Taxes 5% 55% Capital Grants and Contributions 9% Property Taxes 64% Business -type activities. Business -type activities decreased the City's net position by $327,378 in 2013, before a change in accounting principle of $114,018 is applied. With the change in accounting principle included, the total reduction from 2012 is $760,660. The decrease in net position can be attributed to decreased revenues from the City's liquor operation as a result of a store closing for a major renovation that lasted six weeks and road construction that limited access to a second store for approximately six months. Expenses and Program Revenues - Business - Expenses and Program Revenues - Governmental Activities $12,000,000 ■ Expenses $12,000,000 $10,000,000 ■ Revenues $10,000,000 $6,000,000 ■ Expenses $8,000,000 $2,000,000 $_ $6,000,000 Liquor Water & Storm Recreation Operations Sewer Sewer $4,000,000 $2,000,000 $_ Government Public Fire Community Public Parks & Interest on General Safety Development Works Recreation LT Debt Revenues by Source - Government Activities Grants and Other 2% Charges for contributions not Services 11% restricted 4% Operating Grants & Contributions Franchise Taxes 5% 55% Capital Grants and Contributions 9% Property Taxes 64% Business -type activities. Business -type activities decreased the City's net position by $327,378 in 2013, before a change in accounting principle of $114,018 is applied. With the change in accounting principle included, the total reduction from 2012 is $760,660. The decrease in net position can be attributed to decreased revenues from the City's liquor operation as a result of a store closing for a major renovation that lasted six weeks and road construction that limited access to a second store for approximately six months. Expenses and Program Revenues - Business - Type Activities ■ Revenues ■ Expenses $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $_ Liquor Water & Storm Recreation Operations Sewer Sewer Activities -21 - Revenues by Source - Business - type Activities Miscellaneous Charges for Services 97.69% Unrestricted Investment Earnings .21% Financial Analysis of the Government's Funds As noted earlier, the City of Richfield uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. Governmental funds. The focus of the City of Richfield's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of Richfield's financing requirements. Fund balances are identified based on a hierarchy of the constraints placed on the use of financial resources within governmental funds. Accordingly, fund balances are classified as: nonspendable, restricted, committed, assigned, and unassigned. As of the end of the current fiscal year, the City of Richfield's governmental funds reported combined ending fund balances of $25,145,032 an increase of $3,642,333, which is comprised of a prior period adjustment of $1,316,300 and current year net increase of $2,326,033. The prior period adjustment is the result of properly accounting for long term assets (land held for resale) as part of fund balance instead of prior period treatment as deferred revenue. Consequently, the year-end balance consists of the following: less than 1% (79,743) are amounts that are not in spendable form such as prepaid items. 13% ($3,360,006) constitutes restricted fund balances which limits the spending of these balances to externally imposed constraints, i.e. debt service covenants. 27% ($6,703,091) represents committed fund balances which are determined by resolution of the City Council. 30% ($7,539,435) is classified as assigned. These amounts represent intended uses established by the City Council or by an official designated by the City Council. Finally, 30% ($7,462,757) consists of balances classified as unassigned, which includes the fund balance of the General Fund and deficit fund balances of other governmental funds. The general fund is the chief operating fund of the City of Richfield. At the end of the current year, the unassigned fund balance of the general fund was $7,679,767 while total fund balance was $7,752,767. As a measure of the general fund liquidity, it may be useful to compare unassigned fund balance to total general fund revenues. Unassigned fund balance represents approximately 39% of total general fund revenues and 38% of total general fund expenditures. Moreover, the State Auditor has set a standard that unrestricted, unassigned fund balance should be between 35 and 50 percent of yearly general fund revenues. The City has adopted a policy that strives to maintain a minimum fund balance equal to 40% of total general fund revenues. The City's fund balance for its general fund increased by $443,666 due to an increase in tax revenues, charges for service, and license and permits in 2013 over 2012. The G.O. Improvement Bonds fund has a fund balance of $4,041,155, of which $1,717,778 is restricted for the payment of debt service. The fund balance increased in 2013 by $193,637 due to increased property tax revenues as a result of increased debt service levies in 2013. The Capital Improvement fund accounts for public improvements and road right-of-way projects undertaken by the City. This fund balance increased by $1,563,129 before a prior period adjustment -22- of $1,316,300 in 2013. The increase can be attributed to the issuance of bonds to provide funding for the Richfield Parkway project. The nonmajor governmental funds consist of the City's Special Revenue funds, Redevelopment Bond fund, and the Park and Recreation Development Capital Project fund. The combined total of these funds increased by $125,601 in 2013. Proprietary funds. The City of Richfield's proprietary funds provide the same type of information found in the government -wide financial statements, but in more detail. Unrestricted net position of the liquor operation at the end of the year amounted to $1,173,582, for the water and sewer utility $3,470,678, for the storm sewer utility 1,103,693, and for the recreation enterprise operation a deficit of ($566,023). The total increase (decrease) in net position for all of these funds was $170,102, ($189,833), $155,076, and ($288,694) respectively. Budgetary Highlights General Fund As part of the annual budget process, the current general fund revenue and expenditure budgets are revised to reflect a more accurate picture throughout the current fiscal year. The intent of this annual budget process is for the City to continue to provide and maintain quality services to its residents while trying to maintain the tax levy at a reasonable level. However, with the past history of state aid reductions, and the City's past dependence on state aids, the Richfield City Council has made the decision to end the City's dependence on state aids, specifically Local Government Aid (LGA). In 2013, the City only recognized budgeted LGA revenues of $400,000, despite the State certifying to the City approximately $1.2 million. Accordingly, for the 2014 budget only $300,000 of LGA revenues was budgeted. The offset to the budgeted reduction in LGA is to increase the City's general tax levy and the City will need to continue to phase out LGA in order to minimize the impact of levy increases on property owners. At the end of 2013 the City's General Fund realized a surplus of $443,666 to its fund balance. This was accomplished through the combination of better than expected results in Property Taxes, Charges for Services, and License and Permit revenue, while at the same time, expenditures for the fund were under budget by $261,105. Capital Asset and Debt Administration Capital assets. The City of Richfield's investment in capital assets for its governmental and business type activities as of December 31, 2013 amounts to $103,184,440 (net of accumulated depreciation). This investment in capital assets includes land, buildings and structures, other improvements, machinery and equipment, infrastructure, and construction in progress. Major capital asset events during 2013 included the following: • Completion of the renovation at 6444 Lyndale location within the Liquor operation. Total cost of the project was $948,232. • Completion of Water Plant improvements. The total cost of the improvements was $1,035,508. • Completion of the 77th Street Joint Repair project. The total cost of the project was $911,827. • Purchase of a new Street Sweeper for the Storm Sewer Fund at a total cost of $185,688. -23- City of Richfield's Capital Assets (net of depreciation) Governmental Business -type activities Activities Total 2013 2012 2013 2012 2013 2012 Land $9,232,335 $9,232,335 $759,943 $759,943 $9,992,278 $9,992,278 Buildings and structures 34,874,739 35,765,870 6,426,793 5,937,949 41,301,532 41,703,819 Machinery and equipment 3,319,887 3,334,070 4,687,635 4,755,274 8,007,522 8,089,344 Other improvements 2,085,291 2,204,350 15,488,331 15,318,650 17,544,644 17,523,000 Streets (Infrastructures) 23,110,660 23,802,746 - - 23,110,660 23,802,746 Construction in progress 1,152,789 260,281 2,046,037 1,087,226 3,198,826 1,347,507 Total capital assets $73,775,701 $74,599,652 $29,408,739 $27,859,042 $103,184,440 $102,458,694 Additional information on the City's capital assets can be found in Note 1 N and Note 3 Capital Assets in the accompanying notes to the basic financial statements. Long-term debt. At the end of the current fiscal year, the City of Richfield had total bonded debt outstanding of $45,853,957. The debt service for the general obligation redevelopment bonds is provided through the collection of tax increments from Hennepin County. On an annual basis tax increment proceeds are transferred to meet annual debt service requirements. The general obligation improvement bonds are serviced by special assessment collections and tax levies. In 2013 the City issued $3,120,000 General Obligation Improvements Bonds, Series 2013A and $2,770,000 General Obligation Stormwater Revenue Bonds, Series 20138. The series 2013A bonds provided funding for the acquisition of right-of-way for the construction of the southern leg of Richfield Parkway. The 2013A bonds will be serviced through annual debt service tax levies. The series 2013B bonds will provide funding for the construction of the northern portion of Richfield Parkway and a storm sewer treatment facility at Taft Lake. This project was planned and will be in cooperation with the Minnehaha Creek Watershed District (MCWD). In conjunction with a cooperative agreement between MCWD and the City, MCWD has agreed to fund the annual principal and interest payments on the 2013B bonds. City of Richfield's Outstanding Debt General Obligation and Revenue Bonds The City of Richfield maintains an AA+ rating from Standard & Poor's and an "Aa2" rating from Moody's Investor Service, for general obligation debt. State Statutes limit the amount of general obligation debt a governmental entity may issue to 3 percent of its total assessed valuation. The current debt limitation for the City of Richfield is $73,493,000, which is in excess of the City of Richfield's outstanding general obligation debt. Additional details of the City's long-term debt activity can be found in Note 5, Long -Term Liabilities, in the accompanying notes to the basic financial statements. -24- Governmental Business -type activities activities Total 2013 2012 2013 2012 2013 2012 General obligation redevelopment bonds $8,340,000 $8,955,000 $ - $ - $8,340,000 $8,955,000 General obligation improvement bonds 25,785,000 23,880,000 - - 25,785,000 23,880,000 Revenue bonds - - 11,728,957 9,400,000 11,728,957 9,400,000 Total $34,125,000 $32,835,000 $11,728,957 $9,400,000 $45,853,957 $42,235,000 The City of Richfield maintains an AA+ rating from Standard & Poor's and an "Aa2" rating from Moody's Investor Service, for general obligation debt. State Statutes limit the amount of general obligation debt a governmental entity may issue to 3 percent of its total assessed valuation. The current debt limitation for the City of Richfield is $73,493,000, which is in excess of the City of Richfield's outstanding general obligation debt. Additional details of the City's long-term debt activity can be found in Note 5, Long -Term Liabilities, in the accompanying notes to the basic financial statements. -24- Economic Factors and Next Year's Budgets and Rates The following items are an integral part of the City's planning for and dealing with near-term financial issues: As has been documented, the economic and financial issues faced by the State of Minnesota have had a direct and challenging impact on the City and its ability to provide basic services to its residents. However, with the passage of the 2013 Omnibus Tax Bill, which brought reform to Local Government Aid (LGA) and a sales tax exemption to cities and counties the outlook is improving. In addition, it appears that the State of Minnesota's past budget issues are a thing of the past and their financial outlook is improving. It is estimated that for the most recent biennial budget the State will realize a budget surplus. However, despite the State's positive financial outlook, the City intends to continue its policy of eliminating its dependence on LGA • In addition, the state of the economy, both local and national, has and will have an impact on the City. The economy has had a negative effect on overall property values of the City, which have realized decreases over the past several years. However, as the economy hints at improvement, it is forecasted that property values in the City are stabilizing for 2014 and may reflect modest increases in 2015. • Rates for the Utility operations increased for 2013. For 2014 water rates were projected to increase 5.0% or 15 cents per thousand gallons to help fund continued operating costs and infrastructure improvements, while wastewater rates will increase only 6.6% or 24 cents to keep pace with increased costs of Met Council Environmental Services. Rates for the Storm Sewer Utility will increase by 3% or 35 cents to offset increased operating costs. Requests for Information This financial report is designed to provide a general overview of the City of Richfield's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Office of the Finance Manager, City of Richfield, 6700 Portland Avenue South, Richfield, MN 55423. -25- THIS PAGE WAS LEFT BLANK INTENTIONALLY -26- BASIC FINANCIAL STATEMENTS -27- THIS PAGE WAS LEFT BLANK INTENTIONALLY -28- ASSETS: Cash & investments Accrued interest Due from other governments Accounts receivable - net Inventories Internal balances Due from component unit Prepaid items Property taxes receivable: Delinquent Delinquent tax increment Special assessments receivable Assets held for resale Deferred charges Restricted assets: Cash & investments Long term second mortgage receivable Allowance for uncollectible accounts Capital assets (not depreciable) Capital assets (net of accumulated depr.) Total assets LIABILITIES: Accounts and contracts payable Due to other governmental units Due to primary government Salaries payable Unearned revenue Accrued interest payable Noncurrent liabilities: Due within one year Due in more than one year Total Liabilities NET POSITION: Net investment in capital assets Restricted for: Debt service Capital projects Other purposes Unrestricted Total net position CITY OF RICHFIELD, MINNESOTA STATEMENT OF NET POSITION December 31, 2013 Statement 1 - - - 560 618,649 - 618,649 - 1,968,702 - 1,968,702 2,346,078 - Primary Government 272,507 Component Unit Governmental Business -type - Housing & Redev. Activities Activities Total Authority $ 31,189,006 $ 5,935,062 $ 37,124,068 $ 8,195,323 123,938 - 123,938 2,293 1,581,638 11,778 1,593,416 21,152 556,919 2,755,011 3,311,930 51,473 - 1,192,746 1,192,746 - 2,631,780 (2,631,780) - - 426,982 - 426,982 - 80,993 18,816 99,809 - - - - 560 618,649 - 618,649 - 1,968,702 - 1,968,702 2,346,078 - 272,507 272,507 5,508 - - - 2,815,600 - - - (2,815,600) 10,385,124 2,805,980 13,191,104 - 63,390,577 26,602,759 89,993,336 - 112,954,308 36,962,879 149,917,187 10,622,387 773,668 998,786 1,772,454 495,388 137,885 140,708 278,593 1,486 - - - 426,982 815,595 153,933 969,528 - 727,262 - 727,262 - 511,880 198,465 710,345 - 2,597,800 715,068 3,312,868 - 35,611,464 11,379,937 46,991,401 - 41,175,554 13,586,897 54,762,451 923,856 48,633,166 19,212,879 67,846,045 - 1,680,344 272,507 1,952,851 - 761,604 - 761,604 6,117,262 382,362 - 382,362 175,174 20,321,278 3,890,596 24,211,874 3,406,095 $ 71,778,754 $ 23,375,982 $ 95,154,736 $ 9,698,531 The accompanying notes are an integral part of these financial statements. -29- CITY OF RICHFIELD, MINNESOTA STATEMENT OF ACTIVITIES For The Year Ended December 31, 2013 Functions/Programs Primary government: Governmental Activities: General Government Public Safety Fire Community Development Public Works Parks and Recreation Interest on long-term debt Total governmental activities Business -type activities: Liquor Operations Water & Sewer Utility Storm Sewer Utility Recreation Activities Total business -type activities Total primary government Component units: Housing & Redevelopment Authority Total Component Unit Charges for Expenses Services ogram Revenues Operating Capital Grants and Grants and Contributions Contributions $ 3,042,891 $ 545,092 $ - $ - 8,369,982 822,423 776,911 - 3,365, 043 12,140 163,949 - 1,322,175 985,884 - 820,737 9,545,980 309,848 328,310 1,764,952 2,154,180 419,164 26,396 - 1,196,968 - - - 28,997,219 3,094,551 1,295,566 2,585,689 10, 308, 021 11,137,402 - - 7,217,814 7,008,087 - - 1,260,211 1,117,761 - - 1,745,104 1,120,189 - - 20,531,150 20,383,439 - - $ 49,528,369 $ 23,477,990 $ 1,295,566 $ 2,585,689 $ 7,098,345 $ 52,174 $ 2,029,246 $ - $ 7,098,345 $ 52,174 $ 2,029,246 $ - General Revenues: Taxes: Property taxes, levied for general purposes Franchise taxes Tax Increments Grants & contributions not restricted to specific programs Unrestricted investment earnings Miscellaneous Transfers Total general revenues and transfers Change in net position Net position - beginning Prior period adjustment Change in accounting principle Net position - beginning - restated Net position - ending The accompanying notes are an integral part of these financial statements. -30- Statement 2 Net (Expense) Revenue and Changes in Net Position Primary Government Governmental Business -Type Component Activities Activities Total Unit $ (2,497,799) $ - $ (2,497,799) $ - (6,770,648) - (6,770,648) - (3,188,954) - (3,188,954) - 484,446 - 484,446 - (7,142,870) - (7,142,870) - (1,708,620) - (1,708,620) - (1,196,968) - (1,196,968) - (22,021,413) - (22,021,413) - - 829,381 829,381 - - (209,727) (209,727) - - (142,450) (142,450) - - (624,915) (624,915) - - (147,711) (147,711) - $ (22,021,413) $ (147,711) $ (22,169,124) $ - $ (5,016,925) $ (5,016,925) $ 17,985,988 $ - $ 17,985,988 $ 454,189 1,304,716 - 1,304,716 - - - - 4,106,597 1,223,981 - 1,223,981 - 65,696 42,896 108,592 (5,567) 645,292 438,737 1,084,029 571,290 661,300 (661,300) - - 21,886,973 (179,667) 21,707,306 5,126,509 (134,440) (327,378) (461,818) 109,584 71,913,194 23,817,378 95,730,572 10,559,685 - - - (970,738) - (114,018) (114,018) - 71,913,194 23,703,360 95,616,554 9,588,947 $ 71,778,754 $ 23,375,982 $ 95,154,736 $ 9,698,531 The accompanying notes are an integral part of these financial statements. -31 - Assets Cash and investments Accrued Interest Due from other governments Receivables, net Due from other funds Prepaid items Special assessments receivable Advances to other funds Assets held for resale Total assets Liabilities, Deferred Inflows of Resources and Fund Balances Liabilities: Accounts payable Accrued salaries and benefits Due to other funds Payable to other governments Unearned revenue Advances from other funds Total liabilities Deferred Inflows of Resources: Unavailabe revenue - special assessments Unavailable revenue - licenses Total Deferred Inflows of Resources CITY OF RICHFIELD, MINNESOTA BALANCE SHEET GOVERNMENTALFUNDS December 31, 2013 Improvement Capital General Bonds Improvements Statement 3 Other Total Governmental Governmental Funds Funds $ 8,343,398 $ 3,881,824 $ 6,668,747 $ 3,895,098 $ 22,789,067 - 123,938 778,586 - 123,938 309,121 35,393 1,201,100 36,024 1,581,638 140,211 10,710 666,552 416,708 556,919 - - 96,887 - 96,887 72,413 522,733 2,625,664 7,330 79,743 Unassigned 474,446 144,203 144,203 $ 618,649 618,649 - 623,802 4,041,155 623,802 - - 1,968,702 - 1,968,702 $ 8,865,143 $ 4,515,601 $ 10,703,441 $ 4,355,160 $ 28,439,345 $ 204,263 $ $ 322,994 $ 41,862 $ 569,119 773,668 - 4,918 778,586 - - 61,600 61,600 124,322 422 13,073 137,817 10,710 666,552 Committed 677,262 - - - 401,280 401,280 1,112,963 - 989,968 522,733 2,625,664 do not require the use of current financial resources and are not reported as liabilities in 7,539,435 Unassigned 7,679,767 $ $ 474,446 $ 144,203 $ $ 618,649 Total fund balances 50,000 4,041,155 50,000 474,446 194,203 Total liabilities, deferred inflows of resources and fund balances 668,649 Fund balances: $ 25,145,032 Amounts reported for governmental activities in the statement of net position are different because: Nonspendable 72,413 financial resources, and therefore, are not reported in the funds 70,516,217 7,330 79,743 Restricted 1,717,778 1,259,866 382,362 3,360,006 Committed 1,728,565 1,467,163 3,507,363 6,703,091 Assigned 426,982 594,812 6,944,623 do not require the use of current financial resources and are not reported as liabilities in 7,539,435 Unassigned 7,679,767 Long-term liabilities, including bonds payable, are not due and (152,382) (64,628) 7,462,757 Total fund balances 7,752,180 4,041,155 9,519,270 3,832,427 25,145,032 Total liabilities, deferred inflows of resources and fund balances $ 8,865,143 $ 4,515,601 $ 10,703,441 $ 4,355,160 $ 28,439,345 Fund balance reported above $ 25,145,032 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 in the funds 70,516,217 Other long-term assets are not available to pay for current - period expenditures and therefore, are deferred in the funds. Special assessments not yet due 618,649 The assets and liabilities of certain Internal Service Funds are included in governmental activities in the statement of net position Net position of internal service funds 9,505,232 Allocation to reflect consolidation of internal service fund activities related to enterprise funds 1,301,334 Allocation to reflect consolidation of internal service fund activities related to component unit 426,982 Net other post -employment benefit obligations payable reported in the Statement of Net Position do not require the use of current financial resources and are not reported as liabilities in governmental funds until actually due. (1,097,812) Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds: Bonds payable (34,125,000) Accrued interest payable (511,880) Net position of governmental activities $ 71,778,754 The accompanying notes are an integral part of these financial statements. -32- CITY OF RICHFIELD, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTALFUNDS For The Year Ended December 31, 2013 EXPENDITURES: Other Total Current: Improvement Capital Governmental Governmental Legislative/Executive General Bonds Improvements Funds Funds REVENUES: 999,327 467,324 1,466,651 Property taxes $ 15,084,282 $ 2,021,926 $ 1,010,229 $ - $ 18,116,437 Franchise taxes - - - 1,304,716 1,304,716 Special assessments - 68,804 226,580 - 295,384 Fees and fines 373,274 - - 93,821 467,095 License and permits 938,455 - - - 938,455 Intergovernmental 1,585,661 2,382,022 935,965 4,903,648 Charges for Services 1,689,001 - - - 1,689,001 Investment earnings 5,820 3,501 21,452 4,582 35,355 Miscellaneous 176,318 - - 462,170 638,488 Total revenues 19,852,811 2,094,231 3,640,283 2,801,254 28,388,579 EXPENDITURES: Current: Legislative/Executive 741,064 - 741,064 Administrative Services 999,327 467,324 1,466,651 Public Safety 7,996,522 232,197 8,228,719 Fire 3,495,925 - 3,495,925 Community Development 1,215,361 - 1,215,361 Public Works 4,257,277 2,987,670 - 7,244,947 Recreation Services 1,632,130 - - 163,431 1,795,561 Debt service: Principal - 1,215,000 615,000 1,830,000 Interest and other charges - 1,023,716 207,188 1,230,904 Capital outlay 17,589 - - 31,047 48,636 Construction/acquisition costs - - 1,934,877 - 1,934,877 Total expenditures 20,355,195 2,238,716 4,922,547 1,716,187 29,232,645 Revenues over (under) expenditures (502,384) (144,485) (1,282,264) 1,085,067 (844,066) Other financing sources (uses): Transfers in 946,050 225,731 3,928,635 672,613 5,773,029 Transfers out (3,083,974) (1,083,242) (1,638,883) (5,806,099) Bands issued 3,120,000 3,120,000 Premiums (Discounts) on bonds issued 76,365 - 76,365 Proceeds from sale of capital assets - - - 6,804 6,804 Total other financing sources and (uses) 946,050 338,122 2,845,393 (959,466) 3,170,099 Net increase (decrease) in fund balance 443,666 193,637 1,563,129 125,601 2,326,033 Fund Balances - January 1 7,308,514 3,847,518 6,639,841 3,706,826 21,502,699 Prior Period Adjustment - - 1,316,300 - 1,316,300 Fund Balances - January 1 - Restated 7,308,514 3,847,518 7,956,141 3,706,826 22,818,999 Fund balances - December 31 $ 7,752,180 $ 4,041,155 $ 9,519,270 $ 3,832,427 $ 25,145,032 The accompanying notes are an integral part of these financial statements. -33- Statement 4 CITY OF RICHFIELD, MINNESOTA Statement 5 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For The Year Ended December 31, 2013 Net Change in fund balances - total governmental funds $ 2,326,033 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the state- ment of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which depreciation ($2,792,763) was exceeded by capital outlay ($1,983,513) in the current period. (809,250) The net effect of various miscellaneous transactions involving capital assets (i.e. sales, trade-ins, disposals and donations) is to decrease net position. (48,538) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. The amounts of these differences are as follows: Delinquent property taxes (130,449) Deferred special assessments (93,796) The issuance of long-term debt (e.g. bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long- term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. The amounts of these differences are: Principal payments on long-term debt 1,830,000 Issuance of long-term debt (3,120,000) Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Expenses reported in the statement of activities include the effects of the changes in these expense accruals as follows: Change in accrued interest payable (42,429) Net other post -employment benefit obligations payable reported in the Statement of Activities do not require the use of current financial resources and are not reported as expenditures in governmental funds until actually due. (179,247) Internal service funds are used by management to charge the costs of certain activities, such as insurance and telecommunication, to individual funds. The net revenue (expense) of certain internal service funds is reported with governmental activities. Investment earnings 30,341 Consolidation of internal service fund activities related to government activities (591,475) Transfers in 694,370 Change in net position of governmental activities $ (134,440) The accompanying notes are an integral part of these financial statements. -34- CITY OF RICHFIELD, MINNESOTA Statement 6 STATEMENT OF NET POSITION PROPRIETARY FUNDS December 31, 2013 Noncurrent assets: 542,982 123,047 24,799 36,806 727,634 Governmental Restricted cash and cash equivalents - Business Type Activities - Enterprise Funds 154,725 Activities - 272,507 - Water and Storm - - Internal 401,280 Municipal Sewer Sewer Recreation Service 140,708 Liquor Fund Utility Fund Fund Fund Total Fund ASSETS: 473,708 Construction in progress - 76,487 1,817,398 152,152 Current assets: - Distribution and collection systems - 17,382,900 12,895,570 - Cash and cash equivalents $ 836,419 $ 2,457,357 $ 2,613,753 $ 27,533 $ 5,935,062 $ 8,399,939 Receivables, net - 2,258,350 286,967 209,694 2,755,011 - Due from other funds (5,209,178) Total capital assets (net of 61,600 61,600 57,465 Due from other governments - 11,778 2,298,435 - 11,778 - Inventories 1,192,746 - 2,298,435 15,031,822 1,192,746 - Prepaid items 18,816 - - - 18,816 1,250 Total current assets 2,047,981 4,727,485 2,900,720 298,827 9,975,013 8,458,654 Noncurrent assets: 542,982 123,047 24,799 36,806 727,634 204,549 Restricted cash and cash equivalents - 51,819 154,725 272,507 272,507 - Advances to other funds - - - 401,280 401,280 1,015,172 Capital assets: 116,661 21,736 2,311 140,708 68 Land 499,188 53,550 85,935 121,270 759,943 473,708 Construction in progress - 76,487 1,817,398 152,152 2,046,037 - Distribution and collection systems - 17,382,900 12,895,570 - 30,278,470 - Buildings and equipment 3,691,998 14,677,946 437,407 10,272,335 29,079,686 8,468,662 Less accumulated depreciation (1,892,751) (17,159,061) (8,517,799) (5,185,786) (32,755,397) (5,209,178) Total capital assets (net of accumulated depreciation) 2,298,435 15,031,822 6,718,511 5,359,971 29,408,739 3,259,484 Total noncurrent assets 2,298,435 15,031,822 6,718,511 6,033,758 30,082,526 4,274,656 Total assets 4,346,416 19,759,307 9,619,231 6,332,585 40,057,539 12,733,310 LIABILITIES: Current Liabilities: Accounts payable 542,982 123,047 24,799 36,806 727,634 204,549 Contracts payable - 51,819 154,725 64,608 271,152 - Accrued salaries and benefits 60,062 55,108 3,262 35,501 153,933 37,009 Due to other governments 116,661 21,736 2,311 140,708 68 Compensated absences 33,161 38,197 20 3,690 75,068 473,708 Accrued interest payable - 100,517 81,066 16,882 198,465 - Due to other funds - 96,887 - 57,465 154,352 - Bonds, notes, and loans payable - 315,000 230,000 95,000 640,000 - Total current liabilities 752,866 802,311 493,872 312,263 2,361,312 715,334 Noncurrent liabilities: Advances from other funds - 623,802 1,015,172 1,638,974 - Compensated absences 94,752 109,142 58 10,542 214,494 1,398,470 Net OPEB obligation 26,781 36,552 13,153 76,486 44,626 Claims and judgments - - - - 1,069,648 Bonds, notes, and loans payable(net of unamortized premiums and discounts) - 5,843,526 4,560,431 685,000 11,088,957 - Total noncurrent liabilities 121,533 6,613,022 4,560,489 1,723,867 13,018,911 2,512,744 Total liabilities 874,399 7,415,333 5,054,361 2,036,130 15,380,223 3,228,078 NET POSITION: Net investment in capital assets 2,298,435 8,873,296 3,461,177 4,579,971 19,212,879 3,259,484 Restricted for debt service - - - 272,507 272,507 - Unrestricted 1,173,582 3,470,678 1,103,693 (556,023) 5,191,930 6,245,748 Total net position $ 3,472,017 $ 12,343,974 $ 4,564,870 $ 4,296,455 24,677,316 $ 9,505,232 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds (1,301,334) Net position of business - type activities $ 23,375,982 The accompanying notes are an integral part of these financial statements. -35- OPERATING REVENUES Charges for Service Less: cost of sales Total operating revenues OPERATING EXPENSES Personnel services Other service and charges Depreciation Total operating expenses Operating income (loss) NONOPERATING REVENUES (EXPENSES) Interest and investment revenue Intergovernmental revenue Miscellaneous revenue Gain(loss) on disposal of capital assets Discounts on bonds issued Interest expense Total nonoperating revenue (expenses) Income before transfers Transfers in Transfers out Changes in net position Total net position - beginning Change in accounting principle Total net position - beginning - restated CITY OF RICHFIELD, MINNESOTA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITON PROPRIETARY FUNDS For The Year Ended December 31, 2013 Statement 7 $ 11,137,402 $ 7,008,087 $ 1,117,761 $ 1,120,189 $ 20,383,439 $ 3,253,573 (8,290,508) (53,785) (8,344,293) 2,846,894 7,008,087 1,117,761 1,066,404 12,039,146 3,253,573- 1,360,057 Governmental Business -Type Activities - Enterprise Funds Activities - Water and Storm Internal Municipal Sewer Sewer Recreation Total Service Liquor Fund Utility Fund Fund Fund Current Year Fund $ 11,137,402 $ 7,008,087 $ 1,117,761 $ 1,120,189 $ 20,383,439 $ 3,253,573 (8,290,508) (53,785) (8,344,293) 2,846,894 7,008,087 1,117,761 1,066,404 12,039,146 3,253,573- 1,360,057 1,705,790 296,109 616,159 3,978,115 1,204,453 496,416 4,013,180 343,110 655,310 5,508,016 2,443,638 118,425 1,162,724 402,795 331,243 2,015,187 593,037 1,974,898 6,881,694 1,042,014 1,602,712 11,501,318 4,241,128 871,996 126,393 75,747 (536,308) 537,828 (987,555) 894 37,447 1,138 3,417 42,896 30,341 - 10,000 310,854 2,441 323,295 - 16,380 48,096 1,193 57,891 123,560 140,480 (10,468) 2,350 - - (8,118) 64,805 - - (61,462) - (61,462) - (259,119) (127,394) (63,535) (450,048) 6,806 (161,226) 124,329 214 (29,877) 235,626 878,802 (34,833) 200,076 (536,094) 507,951 (751,929) - - 155,000 247,400 402,400 706,870 (708,700) (155,000) (200,000) (1,063,700) (12,500) 170,102 (189,833) 155,076 (288,694) (153,349) (57,559) 3,301,915 12,630,135 4,427,484 4,585,149 9,562,791 (96,328) (17,690) 3,301,915 12,533,807 4,409,794 4,585,149 9,562,791 Total net position - ending $ 3,472,017 $ 12,343,974 $ 4,564,870 $ 4,296,455 $ 9,505,232 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds. (174,029) Change in net position of business - type activities $ (327,378) The accompanying notes are an integral part of these financial statements. -36- CITY OF RICHFIELD, MINNESOTA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For The Year Ended December 31, 2013 Statement 8 Cash flows from capital and related financing 16,380 48,096 1,193 57,891 123,560 Governmental activities: 118,425 Business Type Activities - Enterprise Funds 2,015,187 Activities - Proceeds from disposal of capital assets - Water and Storm - 2,350 Internal Proceeds from sale of bonds Municipal Sewer Sewer Recreation 2,770,000 Service Premium on bonds Liquor Fund Utility Fund Fund Fund Totals Funds Cash flows from operating activities: (918,540) (362,162) (2,019,938) (274,712) (3,575,352) (624,338) Receipts from customers and users $ 2,846,894 $ 7,023,581 $ 1,119,914 $ 1,005,337 $ 11,995,726 $ - Receipts from interfund services provided - - - - - 3,253,643 Payment to employees (1,346,899) (1,678,175) (294,789) (614,619) (3,934,482) (1,206,453) Payment to suppliers (420,122) (4,035,317) (73,446) (714,435) (5,243,320) (2,404,305) Payments for interfund services used (141,488) (257,732) (109,627) (75,504) (584,351) - Miscellaneous revenue 16,380 48,096 1,193 57,891 123,560 140,480 Net cash flows from operating activities 954,765 1,100,453 643,245 (341,330) 2,357,133 (216,635) Cash flows from noncapital financing activities: 1,508,000 2,483,033 1,155,780 877,034 6,023,847 8,397,603 Transfer from Special Revenue Fund - - - 247,400 247,400 - Transfer from Capital Project Fund - - - - - 694,370 Transfer from Enterprise Fund - - 155,000 - 155,000 Transfer to General Fund (258,700) - - - (258,700) - Transfer to Special Revenue Fund (450,000) - - - (450,000) Transfer to Capital Project Funds - - (200,000) - (200,000) - Transfer to Enterprise Funds - (155,000) - - (155,000) Interfund borrowing - (94,970) - (56,328) (151,298) 56,328 Intergovernmental grants - 10,000 310,854 - 320,854 Net cash flows from noncapital financing activities: (708,700) (239,970) 265,854 191,072 (491,744) 750,698 Cash flows from capital and related financing 16,380 48,096 1,193 57,891 123,560 140,480 activities: 118,425 1,162,724 402,795 331,243 2,015,187 593,037 Proceeds from disposal of capital assets - 2,350 - - 2,350 62,270 Proceeds from sale of bonds - - 2,770,000 - 2,770,000 - Premium on bonds - - 43,331 - 43,331 - Acquisition of capital assets (918,540) (362,162) (2,019,938) (274,712) (3,575,352) (624,338) Principal paid on capital debt - (300,000) (100,000) (90,000) (490,000) - Interest payments - (263,794) (145,657) (65,441) (474,892) 6,340 Net cash flows from capital and related 6,539 15,109 27 (15,916) 5,759 (8,340) financing activities (918,540) (923,606) 547,736 (430,153) (1,724,563) (562,068) Cash flows from investing activities: 3,950 5,873 - 1,969 11,792 6,046 Investment income 894 37,447 1,138 3,417 42,896 30,341 Net increase (decrease) in cash and cash equivalents (671,581) (25,676) 1,457,973 (576,994) 183,722 2,336 Cash and cash equivalents -January 1 1,508,000 2,483,033 1,155,780 877,034 6,023,847 8,397,603 Cash and cash equivalents - December 31 $ 836,419 $ 2,457,357 $ 2,613,753 $ 300,040 $ 6,207,569 8,399,939 Reconciliation of operating income to net cash flows from operating activities: Operating income (loss) $ 871,996 $ 126,393 $ 75,747 $ (536,308) $ 537,828 $ (987,555) Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Miscellaneous revenue (expense) 16,380 48,096 1,193 57,891 123,560 140,480 Depreciation 118,425 1,162,724 402,795 331,243 2,015,187 593,037 Changes in assets and liabilities: Decrease (increase) in receivables - 16,234 2,153 (246,008) (227,621) 70 Decrease (increase) in prepaid items 26 - - - 26 12,000 Decrease (increase) in inventory (141,657) - - - (141,657) - Increase(decrease)in payables 76,187 (285,954) 160,072 48,621 (1,074) (134,251) Increase (decrease) in salaries and benefits payable 6,619 12,506 1,293 17,456 37,874 6,340 Increase (decrease) in compensated absences 6,539 15,109 27 (15,916) 5,759 (8,340) Increase (decrease)in due to other governments (3,700) (528) (35) (278) (4,541) 27 Increase (decrease) in net OPEB obligations 3,950 5,873 - 1,969 11,792 6,046 Increase (decrease) in claims and judgments - - - - - 155,511 Total adjustments 82,769 974,060 567,498 194,978 1,819,305 770,920 Net cash flows from operating activities $ 954,765 $ 1,100,453 $ 643,245 $ (341,330) $ 2,357,133 $ (216,635) The accompanying notes are an integral part of these financial statements. -37- CITY OF RICHFIELD, MINNESOTA Statement 9 STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES FIDUCIARY FUNDS December 31, 2013 Agency Fund Assets Cash and investments $ 543,948 Due from other governments 59,078 Receivables, net 479 Total Assets $ 603,505 Liabilities Accounts payable $ 43,976 Due to other governments 138,243 Deposits 421,286 Total Liabilities $ 603,505 The accompanying notes are an integral part of these financial statements. -38- CITY OF RICHFIELD, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Summary of Sianificant Accountina Policies The City of Richfield (the City) was incorporated February 26, 1908. Since 1964, the City has operated under a Council -Manager form of government, as authorized by its City Charter. The accounting policies of the City conform to generally accepted accounting principles, as applied to governmental units by the U.S. Governmental Accounting Standards Board (GASB). The following is a summary of the more significant policies: A. Reporting Entity The financial statements present the City and its component units. The City includes all funds, organizations, institutions, agencies, departments, and offices that are not legally separate from such. Component units are legally separate organizations for which the elected officials of the City are financially accountable and are included within the general purpose financial statements of the City because of the significance of their operational or financial relationships with the City. The City is considered financially accountable for a component unit if it appoints a voting majority of the organization's governing body and it is able to impose its will on the organization by significantly influencing the programs, projects, activities, or level of services performed or provided by the organization, or there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens, on the City. As a result of applying the component unit definition criteria above, certain organizations have been defined and are presented in this report as follows: • Blended Component Units - Reported as if they were part of the City. • Discretely Presented Component Units - Entails reporting the component unit financial data in a column separate from the financial data of the City. • Related Organizations - The relationship of the City with the entity is disclosed. For each of the categories above, the specific entities are identified as follows: • Blended Components Units: The City has no blended component units. • Discretely Presented Component Units: Housing and Redevelopment Authority (HRA) in and for the City of Richfield. The HRA was established on November 12, 1974, per Minnesota State Statute 462.426 (Minnesota Housing and Redevelopment Act of 1947), and is governed by a five -member commission appointed by the Mayor. The HRA was formed by the City to provide housing and redevelopment assistance to Richfield citizens and businesses. The HRA provides this assistance through the general taxes, the use of Community Development Block Grants, and the establishment of tax increment and tax abatement financing districts. The HRA also operates the Section 8 rental subsidy program as a direct recipient from the Department of Housing and Urban Development. As the City appoints the HRA commission and has the ability to hire or dismiss those persons responsible for its day-to- day operations, the HRA is considered a component unit of the City. Financial statements of the HRA can be obtained from the administrative offices at City Hall: Richfield Housing and Redevelopment Authority 6700 Portland Avenue South Richfield, Minnesota 55423 • Related Organizations The City has no related organizations. B. Government -Wide and Fund Financial Statements The government -wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and -39- intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or business -type activity is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or business -type activity. Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or business -type activity; and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or business type activity. Taxes and other items not included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government -wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the Proprietary Fund and Fiduciary Fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Agency funds, however, are unlike all other funds, reporting only assets and liabilities. So agency funds cannot be said to have a measurement focus. They do, however, use the accrual basis of accounting to recognize receivables and payables. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers all revenues, except reimbursement grants, to be available if they are collected within 60 days of the end of the current fiscal period. Reimbursement grants are considered available if they are collected within one year of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences, OPEB obligations, and claims and judgments, are recorded only when payment is due. Property taxes, special assessments, intergovernmental revenues, charges for services and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the government. The government reports the following major governmental funds: The General Fund is the government's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Improvement Bond Debt Service Fund is used for the accumulation of resources for payment of principal and interest for outstanding general obligation issues. The Capital Improvement Capital Projects Fund is used to account for projects related to public improvement within the City. The government reports the following major proprietary funds: The Municipal Liquor Fund accounts for the operations of the four municipal liquor stores operated by the City. The Water and Sewer Utility Fund accounts for the water and sewer service charges which are used to finance the water system and sanitary sewer system operating expenses. The Storm Sewer Fund accounts for storm sewer user fees, which are used to finance storm sewer system operating expenses. -40- The Recreation Fund accounts for activities of the ice arena, swimming pool and special facilities operations. Additionally, the government reports the following fund types: Internal Service Funds account for fleet management, data processing, risk management, building maintenance services, and compensated absences, provided to other funds or departments on a cost reimbursement basis. Agency Funds are used to account for assets held by the City as an agent for individuals, private organizations, and other governments. The funds are custodial in nature and do not involve measurement of results of operation. As a general rule the effect of interfund activity has been eliminated from the government -wide financial statements. Exceptions to this general rule are transactions that would be treated as revenues, expenditures or expenses if they involved external organizations, such as buying goods and services or payments in lieu of taxes, are similarly treated when they involve other funds of the City of Richfield. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include: 1) charges to customers or applicants for goods, services, or privileges provided; 2) operating grants and contributions; and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. 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, the liquor, water, sewer, storm sewer, and recreation funds, and the City's internal service funds are from the sale of product and charges to customers for services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for an allowable use, it is the government's policy to use restricted resources first, then unrestricted resources as they are needed. D. Budgets Budgets for the General Fund and Special Revenue Funds are adopted on a basis consistent with generally accepted accounting principles. Budgetary control for Capital Projects Funds is accomplished through the use of project controls and for the Debt Service Funds by bond indentures. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditures of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration in the General, Special Revenue, and Capital Projects Funds. Encumbrances outstanding at year-end are reported within restrictions, commitments, or assignments of fund balance, as appropriate, since they do not constitute expenditures or liabilities. E. Legal Compliance - Budgets The City follows these procedures in establishing the budgetary data reflected in the financial statement and set forth in Section 7.06 of the City Charter. 1. The City Manager shall, at a special budget meeting of the Council on or before September 15, submit to the Council a proposed budget and an explanatory budget message in a form and manner as prescribed by the City Charter. 2. At the special budget meeting, the Council shall determine the plan and time of the public hearing or hearings on the budget. Public hearings are conducted to obtain taxpayer comments. 3. The Council shall adopt the budget no later than the last date established by law for the County Auditor to levy taxes. The budget shall set forth the total for each budgeted fund and each department with such segregation as to objects and purposes of expenditures -41 - as the Council deems necessary for purposes of budget control for the General and Special Revenue Funds. 4. Reported budget amounts are as originally adopted or as amended by Council -approved budget transfers. During 2013 the General Fund budget was amended to increase budgeted expenditures and transfers out by $11,920. The City Manager is authorized to transfer budgeted amounts between divisions within any department; however, any revisions that alter the total expenditures of any department must be approved by the City Council with formal adoption by resolution. All budgeted appropriations lapse at the end of the year. 5. Expenditures may not legally exceed budgeted appropriations at the total department level. Monitoring of budgets is maintained at the expenditure category (i.e., salaries, wages, and benefits; material, supplies, and services; and capital outlay) within each activity. Budgetary monitoring, by departments or divisions and by category, is required by the City Charter. F. Cash, Cash Equivalents, and Investments Cash and investment balances from all funds are pooled and invested to the extent available in authorized investments. Earnings from such investments are allocated to the respective funds on the basis of applicable cash balance participation by each fund. Investments are stated at fair value, based upon quoted market prices. Investment income is accrued at the balance sheet date. For purposes of the statement of cash flows, the Proprietary Funds consider investments held in the City's cash management pool to be cash equivalents because this pool is used essentially as a demand deposit account. G. Short -Term Interfund and Primary Government/Component Unit Receivable/Payables During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. These receivables and payables are classified as "advances to other funds" or "advances from other funds" on the balance sheet. Payables/receivables between the primary government and its component unit are classified as "due to/from component unit" on the primary government's balance sheet and "due to/from primary government" on the component unit's balance sheet. Property taxes and special assessments have been reported net of estimated uncollectible accounts. (See Note 1H and I.) Because utility bills are considered liens on property, no estimated uncollectible amounts are established. Uncollectible amounts are not material for other receivables and have not been reported. H. Property Tax Revenue Recognition The City Council annually adopts a tax levy and certifies it to the County in December (levy/assessment date) of each year for collection in the following year. The County is responsible for billing and collecting all property taxes for itself, the City, the local School District and other taxing authorities. Such taxes become a lien on January 1 and are recorded as receivables by the City at that date. Real property taxes are payable (by property owners) on May 15 and October 15 of each calendar year. Personal property taxes are payable by taxpayers on February 28 and June 30 of each year. These taxes are collected by the County and remitted to the City on or before July 2 and December 2 of the same year. Delinquent collections for November and December are received the following January. The City has no ability to enforce payment of property taxes by property owners. The County possesses this authority. Government -Wide Financial Statements The City recognizes property tax revenue in the period for which the taxes were levied. Uncollectible property taxes are not material and have not been reported. Governmental Fund Financial Statements The City recognizes property tax revenue when it becomes both measurable and available to finance expenditures of the current period. In practice, current and delinquent taxes and State credits received by the City in July, December and January are recognized as revenue for the current year. Taxes collected by the County by December 31 (remitted to the City the following January) and taxes and credits not received at the year end are classified as delinquent and due from County taxes receivable. The portion of delinquent taxes not collected by the City in January is fully offset by deferred revenue because they are not available to finance current expenditures. -42- Special Assessment Revenue Recognition Special assessments are levied against benefited properties for the cost or a portion of the cost of special assessment improvement projects in accordance with State Statutes. These assessments are collectible by the City over a term of years usually consistent with the term of the related bond issue. Collection of annual installments (including interest) is handled by the County Auditor in the same manner as property taxes. Property owners are allowed to (and often do) prepay future installments without interest or prepayment penalties. Once a special assessment roll is adopted, the amount attributed to each parcel is a lien upon that property until full payment is made or the amount is determined to be excessive by the City Council or court action. If special assessments are allowed to go delinquent, the property is subject to tax forfeit sale. Proceeds of sales from tax forfeit properties are allocated first to the County's costs of administering all tax forfeit properties. Pursuant to State Statutes, a property shall be subject to a tax forfeit sale after three years unless it is homesteaded, agricultural or seasonal recreational land in which event the property is subject to such sale after five years. Government -Wide Financial Statements The City recognizes special assessment revenue in the period that the assessment roll was adopted by the City Council. Uncollectible special assessments are not material and have not been reported. Governmental Fund Financial Statements Revenue from special assessments is recognized by the City when it becomes measurable and available to finance expenditures of the current fiscal period. In practice, current and delinquent special assessments received by the City are recognized as revenue for the current year. Special assessments that are collected by the County by December 31 (remitted to the City the following January) and are also recognized as revenue for the current year. All remaining delinquent, deferred and special deferred assessments receivable in governmental funding are completely offset by deferred revenues. J. Inventories Inventories are valued at cost, on a first -in, first -out basis. The cost of inventory in the Proprietary Funds is recognized as cost of sales or expense of operation at the time the inventory is sold or used. K. Restricted Assets Restricted assets include cash and investments, the use of which is limited by applicable bond covenants. L. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government -wide and fund financial statements. Accordingly, prepaid items are accounted for using the consumption method, where expense is recognized in the periods that the service or benefit is provided. M. Land Held for Resale Land held for resale represents property purchased by the City with the intent to resell in the future for redevelopment. These assets are stated at the lower of cost of net realizable value. N. Capital Assets Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business -type activities columns in the government -wide financial statements. Infrastructure assets that are reported within the government -wide financial statements include assets that were acquired on or after 1960. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 (amount not rounded) and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business -type activities is -43- W 19 ES included as part of the capitalized value of the assets constructed. For the year ended December 31, 2013, no interest was capitalized in connection with construction in progress. Property, plant and equipment of the primary government, as well as the component units, is depreciated using the straight-line method, while infrastructure assets are depreciated using the composite method. Capital assets are depreciated over the following estimated useful lives: Assets Buildings and structures 20-50 years Machinery and equipment 3-15 years Furniture and fixtures 10 years Other improvements 10- 50 years Storm sewers 25 years Streets 25 years Street lights 25 years Distribution and collection systems 50 years Compensated Absences It is the City's policy to permit employees to accumulate earned but unused vacation and personal leave pay benefits. In addition, the fire employees are paid one-third of their unused sick pay upon termination. All vacation pay is accrued when incurred in the government -wide and proprietary fund financial statements. A liability for governmental fund employees is accrued in the Compensated Absences Fund as they are incurred. In accordance with the provisions of Statement of Government Accounting Standards No. 16, Accounting for Compensated Absences, no liability is recorded for nonvesting accumulating rights to receive sick pay benefits. However, a liability is recognized for that portion of accumulating sick leave benefits that is vested as severance pay. Compensated absences for governmental funds are accounted for in the Compensated Absences Internal Service Fund. Lona -Term Obligations In the government -wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund type statement of net position. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Fund Equity In the fund financial statements, governmental funds report fund balance classifications that disclose constraints for which amounts in those funds can be spent. These classifications are as follows: Nonspendable — Consists of amounts that are not in spendable form, such as prepaid items, inventory, and other long-term assets. Restricted —Consists of amounts related to externally imposed constraints established by creditors, grantors, or contributors; or constraints imposed by state statutory provisions. Committed —Consists of internally imposed constraints that are established by resolution of the City Council. Those committed 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 City for specific purposes but do not meet the criteria to be classified as restricted or committed. In governmental funds, assigned amounts represent intended uses established by the governing body itself or by an official to which the governing body delegates the authority. Pursuant to City Council resolution, the City's Finance Manager is authorized to establish assignments of fund balance. Unassigned —The residual classification for the General Fund which also reflects negative residual amounts in other funds. -44- When both restricted and unrestricted resources are available for use, it is the City's policy to first use restricted resources, and then use unrestricted resources as they are needed. When committed, assigned, or unassigned resources are available for use, it is the City's policy to use resources in the following order: 1) committed, 2) assigned, and 3) unassigned. R. Net position In the government -wide and proprietary fund financial statements, net position represents the difference between assets and liabilities. Net position is displayed in three components: Net Investment in Capital Assets — Consists of capital assets, net of accumulated depreciation reduced by any outstanding debt attributable to acquire capital assets. Restricted Net position —Consists of net position restricted when there are limitations imposed on their use through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. Unrestricted Net position —All other net positions that do not meet the definition of "restricted" or "invested in capital assets." S. Targeted Fund Balance The City has established a targeted fund balance policy for its General Fund where it will strive to maintain an unassigned fund balance of an amount not less than 40% of the current year end actual General Fund revenues. The dollar amount of the target may fluctuate with each year's actual results. T. Interfund Transactions Interfund services provided and used are accounted for as revenues, expenditures or expenses. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund, are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the fund that is reimbursed. Interfund loans are reported as an interfund loan receivable or payable which offsets the movement of cash between funds. All other interfund transactions are reported as transfers. U. Reclassified Certain 2012 amounts have been reclassified to conform to the 2013 presentation. V. Use of Estimates The preparation of financial statements, in accordance with accounting principles generally accepted in the United States of America, requires management to make estimates that affect amounts reported in the financial statements during the reporting period. Actual results could differ from such estimates. W. Change in Accounting Principle For the fiscal year ended December 31, 2013, the City implemented Governmental Accounting Standards Board (GASB) Statement No. 65, Financial Reporting of Items Previously Reported as Assets and Liabilities. This statement establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items previously reported as assets and liabilities. It also recognizes, as outflows or inflows of resources, certain items previously reported as assets and liabilities. In addition, also during 2013, the City implemented a change in accounting principle that allows for governments to expense in the current period bond issuance costs. In prior periods the City has amortized these costs over the life of the bond within the business type activity funds. Accordingly, the City has expensed in the current period the remaining unamortized balances. The effect of this change in accounting principle will be a reduction in the beginning net position of the business type activity funds of $114,018. 2. Deposits and Investments A. Deposits Minnesota Statutes require that all deposits with financial institutions must be collateralized in an amount equal to 110% of deposits in excess of FDIC insurance. Deposits include checking, savings and certificates of deposits. -45- The December 31, 2013 bank balance and carrying amount of the City's deposits with financial institutions was $842 and the cash on hand was $49,921. B. Investments The City and HRA is authorized by Minnesota Statutes Chapter 118A to invest in the following: a) Direct obligations or obligations guaranteed by the United States or its agencies. b) Shares of investment companies registered under the Federal Investment Company Act of 1940 and whose only investments are in securities described in a) above. c) General obligations of the State of Minnesota or any of its municipalities. d) Bankers' acceptances of United States banks eligible for purchase by the Federal Reserve System. e) Commercial paper, issued by United States corporations of their Canadian subsidiaries, of the highest quality, and maturing in 270 days or less. f) Repurchase or reverse repurchase agreements with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000, a primary reporting dealer in U.S. government securities in the Federal Reserve Bank of New York, or certain Minnesota securities broker-dealers. g) Guaranteed investment contracts (GIC) issued or guaranteed by a United States commercial bank or domestic branch of a foreign bank or a United States insurance company or its Canadian or United States subsidiary. h) Mortgage-backed securities that are direct obligations or guaranteed or insured issues of the United States, its agencies, and its instrumentality's, or organizations created by an act of Congress. The City's investments are categorized by level of risk as provided in GASB Statement No. 40, Deposit and Investment Risk Disclosures, in the following manner: 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 collateral securities that are in the possession of an outside party. The City's investment policies do not formally address this risk, but the City typically limits its exposure by purchasing insured or registered investments, or by the control of who holds the securities. To protect against potential fraud and embezzlement, the investments of the City and HRA are secured through a third party custody and safekeeping arrangement. Interest Rate Risk — To control the risk of market price changes, the City's formal investment policy recommends investment maturities shall match the City's projected cash flows. Investments in securities with maturities in excess of two years shall be placed with the intention to hold the security until maturity. Credit Risk — To control credit risk, investments purchased shall include those authorized by Minnesota Statutes, such as U.S. Government Securities and the highest quality commercial paper. Investments in U.S. Government Securities were rated Aaa by Moody's Investors Services and AA+ by Standard & Poors. The City has purchased six securities that are rated less that Aaa by Moody's Investors Services and thirty three that are rated less than AAA by Standard and Poors. The ratings assigned to these securities range from A- to AA+ for Standard and Poor's and A3 to Aa1 for Moody's. The City's investment policy does not further address credit risk. The City participates in the 4M Fund, an external investment pool. The City's investment in the 4M Fund at December 31, 2013 is $4,547,566. The 4M Fund is regulated by Minnesota Statutes and the Board of Directors of the League of Minnesota Cities. The 4M Fund is an unrated 2a7 -like pool and the fair value of the position in the pool is the same as the value of pool shares. Money market mutual funds invested as part of the City's trust arrangement at Wells Fargo are rated Aaa by Moody's Investors Services and AAA by Standard & Poors and consist entirely of money market 2a7 funds. Concentration of Credit Risk — The City's investment policy places no limit on the amount the City may invest in any one issuer. Approximately 56% of the City's investments are with U.S. Government Securities. -46- The following is a summary of the City's and HRA's investments, stated at fair value. The majority of the HRA investments are in the investment pool of the City. Therefore, the HRA investments are not segregated for disclosure. As of December 31, 2013, the City and HRA had the following investments and maturities: Investment Maturities (In Years) Investment % of Fair Less Years Years Tvoe Total Value Than 1 Year 1-5 6-10 U.S Agencies: Federal Home Loan Bank Federal Home Loan Mortgage Corporation Federal National Mortgage Association Federal Farm Credit Federal Agricultural Mortgage Corporation Financing Corporation Strips Municipal Bond Certificates of Deposit Money Markets: 26.21% $12,075,986 $8,393,713 $3,682,273 $- 13.52% 6,232,601 2,824,415 3,408,186 - 4.69% 2,162,950 - 2,162,950 - 8.57% 3,951,654 3,951,654 - - 1.41 % 651,592 651,592 - - 1.69% 778,192 778,192 - - 8.76% 4,038,160 3,536,690 501,470 - 6.46% 2,978,465 2,481,770 496,695 - Money Market Mutual Fund Investments 18.82% 8,673,425 8,673,425 - - External Investment Pool 9.87% 4,547,566 4,547,566 - - Total 100.00% $46,090,591 $35,839,017 $10,251,574 $- -47- 3. Capital Assets Capital asset activity for the year ended December 31, 2013: Beginning Ending Primary Government Balance Additions Deletions Balance Governmental activities: Capital assets, not being depreciated: Land $ 9,232,335 $ - $ - $ 9,232,335 Construction in progress 260,281 991,260 (98,752) 1,152,789 Total capital assets, not being depreciated 9,492,616 991,260 (98,752) 10,385,124 Capital assets, being depreciated Buildings and structures 40,102,134 - - 40,102,134 Machinery and equipment 10,599,572 691,068 (1,535,440) 9,755,200 Other improvements 4,503,536 80,206 (200,676) 4,383,066 Streets (Infrastructures) 69,867,002 943,621 (48,397) 70,810,623 Total capital assets, being depreciated 125,072,244 1,714,895 (1,736,116) 125,051,023 Less accumulated depreciation for: Buildings and structures 4,336,264 891,131 - 5,227,395 Machinery and equipment 7,265,502 659,697 (1,489,886) 6,435,313 Other improvements 2,299,186 199,265 (200,676) 2,297,775 Streets (Infrastructures) 46,064,256 1,635,707 (376,433) 47,699,963 Total accumulated depreciation 59,965,208 3,385,800 (1,690,562) 61,660,446 Total capital assets being depreciated -net 65,107,036 (1,670,905) (45,554) 63,390,577 Governmental activities capital assets -net 74,599,652 (679,645) (144,306) 73,775,701 Business -type activities: Capital assets, not being depreciated: Land $759,943 - $759,943 Construction in process 1,087,226 2,959,538 (2,000,727) 2,046,037 Total capital assets, not being depreciated 1,847,169 2,959,538 (2,000,727) 2,805,980 Capital assets, being depreciated: $ 118,425 Business -type activities capital assets - net 27,859,042 3,560,895 (2,011,198) 29,408,739 1,162,724 Depreciation expense was charged to functions/programs of the primary government Buildings and structures 15,160,474 1,023,932 (132,336) 16,052,070 Machinery and equipment 11,800,493 420,584 (206,171) 12,014,906 Other improvements 30,167,549 1,172,028 (48,397) 31,291,180 Total capital assets, being depreciated 57,128,516 2,616,544 (386,904) 59,358,156 Less accumulated depreciation for: Buildings and structures 9,222,525 524,617 (121,865) 9,625,277 Machinery and equipment 7,045,219 488,222 (206,170) 7,327,271 Other improvements 14,848,899 1,002,348 (48,398) 15,802,849 Total accumulated depreciation 31,116,643 2,015,187 (376,433) 32,755,397 Total capital assets being depreciated — net 26,011,873 601,357 (10,471) 26,602,759 $ 118,425 Business -type activities capital assets - net 27,859,042 3,560,895 (2,011,198) 29,408,739 1,162,724 Depreciation expense was charged to functions/programs of the primary government as follows: Governmental activities: 331,243 General government $ 479,672 Public safety 65,947 Fire 7,064 Public works, including depreciation of general infrastructure assets 1,964,838 Parks and recreation 275,242 Internal service funds 593,037 Total depreciation expense — governmental activities $3,385,800 Business -type activities Liquor operations $ 118,425 Water & Sewer utility 1,162,724 Storm Sewer utility 402,795 Recreation activities 331,243 Total depreciation expense — business -type activities $2,015,187 -48- Construction Commitments At December 31, 2013, the City had construction project contracts in progress. The commitments related to the remaining contract balances are summarized as follows: 4 I✓ Project # 41005 41011 51000 54000 Risk Management Pro'ect Taft Lake Richfield Parkway Fire Station 2 Remodel Water Soda Ash Improvements Ice Arena Locker Room Contract Remaining Amount Commitment $1,089,369 $124,664 $808,517 $22,442 $402,050 $360,231 $510,900 $408,150 The City is exposed to various risks such as loss related to: torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. It is the City's policy to be self insured for workers' compensation, dental insurance and short-term disability insurance. Additionally, the City maintains a risk retention program for property, general liability, and auto liability insurance coverage by maintaining high deductibles. Accordingly, a Self - Insurance Fund (an Internal Service Fund) was established to account for and finance the City's uninsured risk of loss. Under this program, the Self Insurance Fund provides coverage for up to a maximum of $450,000 for each Workers' Compensation claim, and $50,000 ($300,000 aggregate) for each general liability and property damage claim. The City purchases insurance from the League of Minnesota Cities Insurance Trust (LIVICIT) for property and municipal liability and the Workers' Compensation Reinsurance Association for claims in excess of coverage provided by the Fund and for all other risks of loss. The City has realized no significant reductions in insurance coverage during 2013. Finally, settled claims have not exceeded this commercial coverage in any of the past three fiscal years. Insurance reimbursements to the Self -Insurance Fund are charged back to the affected Governmental and Proprietary funds in the form of an insurance charge to fund future premiums and estimated prior and current year claims. The claims and judgments liability of $1,069,648 reported in the fund at December 31, 2013 is based on the requirements of Governmental Accounting Standards Board Statement No. 10 which requires a liability for claims reported if it is probable that a liability has been incurred at the date of the financial statements and the amount of loss can be reasonably estimated. Liabilities of the fund are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported (IBNRs). The result of the process to estimate the claims liability is not an exact amount as it depends on many complex factors, such as inflation, changes in legal doctrines, and damage awards. Accordingly, claims are reevaluated periodically to consider the effects of inflation, recent claim settlement trends (including frequency and amount of pay -outs), and other economic and social factors. The estimate of the claims liability also includes amounts for incremental claim adjustment expenses related to specific claims and other claim adjustment expenses regardless of whether allocated to specific claims. Estimated recoveries, for example from salvage or subrogation, are another component of the claims liability estimate. A summary of the claims and judgments liability amount at December 31, 2013 and 2012 are as follows: Long -Term Liabilities Claim Payments -Net (282,811) (194,028) Balance at Fiscal Year End $ 914,137 $1,069,648 The City issues general obligation bonds and capital notes to provide funds for the acquisition and construction of capital projects. The reporting entity and long-term debt is segregated between the amounts repaid from governmental activities and amounts to be repaid from business -type activities. Redevelopment bonds are paid primarily from tax increments derived from increases in the taxable valuation of property within a redevelopment area in the City. The full faith and credit of the City is pledged on the bonds. Improvement bonds are paid primarily from debt service tax levies and proceeds of special assessments levied against property owners benefiting from improvements -49- Current Year Beginning Claims & of Fiscal Year Changes Liability in Estimates 2012 $781,463 415,485 2013 $914,137 349,539 Long -Term Liabilities Claim Payments -Net (282,811) (194,028) Balance at Fiscal Year End $ 914,137 $1,069,648 The City issues general obligation bonds and capital notes to provide funds for the acquisition and construction of capital projects. The reporting entity and long-term debt is segregated between the amounts repaid from governmental activities and amounts to be repaid from business -type activities. Redevelopment bonds are paid primarily from tax increments derived from increases in the taxable valuation of property within a redevelopment area in the City. The full faith and credit of the City is pledged on the bonds. Improvement bonds are paid primarily from debt service tax levies and proceeds of special assessments levied against property owners benefiting from improvements -49- made. The full faith and credit of the City is pledged on the bonds. The Water and Sewer Revenue Bonds debt requirements are paid from the revenues of the operation of Water and Sewer Utility Fund. The Storm Sewer Revenue Bonds debt requirements are paid from net revenue of the operation of the Enterprise - Storm Sewer Utility Fund. The Ice Arena Revenue Bonds are paid from the activities of the Ice Arena operation within the Recreation Activities Fund. During 2013, the City issued $3,120,000 in G.O. Street Improvement Bonds, Series 2013A. The proceeds will be used for the acquisition of right-of-way for the construction of the southern leg of Richfield Parkway. The 2013A bonds will be serviced through an annual debt service tax levy. In addition, the City also issued $2,770,000 in G.O. Storm Sewer Bonds, Series 2013B. The proceeds of this issue will be used to construct the northern leg of Richfield Parkway and a storm sewer treatment facility at Taft Lake. This project was planned and will be in cooperation with the Minnehaha Creek Watershed District (MCWD). As such MCWD has agreed to fund the annual principal and interest payments on the debt issued. Governmental Activities As of December 31, 2013, the governmental long-term bonded debt of the financial reporting entity consisted of the following: Net Final Interest Issue Maturity Original Payable Rate Date Date Issued 12/31/13 REDEVELOPMENT BONDS G.O. Tax Increment Refunding Bonds, 20108 3.05% 12/30/2010 2/2/2024 6,355,000 5,545,000 G.O. Tax Increment Refunding Bonds, 2012B 2.25% 9/6/2012 2/1/2025 2,970,000 2,795,000 Total Redevelopment Bonds 2.18% 3/21/2013 2/1/2034 9,325,000 8,340,000 IMPROVEMENT BONDS G.O. Capital Improvement Bonds Series, 2007A 4.27% 7/10/2008 2/1/2028 4,705,000 3,870,000 G.O. Improvement Bonds, Series 2007B 4.27% 7/10/2008 2/1/2028 4,250,000 3,495,000 G.O. Capital Improvement Bonds Series, 2008A 4.60% 12/23/2008 2/1/2029 9,480,000 8,580,000 G.O. Capital Improvement Bonds Series, 2009A 4.49% 1/14/2009 2/1/2029 4,550,000 4,115,000 G.O. Bonds, 2010A 1.89% 5/19/2010 2/1/2021 1,500,000 485,000 G.O. Street Reconstruction Bonds Series 2012A 2.35% 9/6/2012 2/1/2033 2,120,000 2,120,000 G.O. Improvement Bonds, Series 2013A 2.18% 3/21/2013 2/1/2034 3,120,000 3,120,000 Total Improvement Bonds 29,725,000 25,785,000 TOTAL GOVERNMENTAL INDEBTEDNESS 39,050,000 34,125,000 ENTERPRISE BONDS Gross Revenue Ice Arena Bonds, Series 1999 5.26% 5/1/1999 2/1/2020 1,660,000 780,000 Water & Sewer Revenue Bonds, Series 2006A 4.21% 5/18/2006 2/1/2027 6,080,000 4,730,000 Storm Sewer Revenue Bonds, Series 2006B 4.07% 12/21/2006 2/1/2027 2,500,000 1,979,300 Water Revenue Bonds, Series 2011 A 3.67% 5/18/2011 2/1/2032 1,480,000 1,428,526 G.O. Storm Sewer Bonds, Series 2013B 2.26% 3/21/2013 2/1/2033 2,770,000 2,811,131 TOTAL BUSINESS -TYPE ACTIVITY INDEBTEDNESS 14,490,000 11,728,957 TOTAL CITY INDEBTEDNESS $53,540,000 $45,853,957 Annual debt service requirements to maturity for general obligation bonds are as follows: Redevelopment Bonds Improvement Bonds Water & Sewer Storm Sewer Ice Arena Year Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest 2014 655,000 205,186 1,325,000 983,579 315,000 236,398 230,000 160,787 95,000 38,228 2015 665,000 197,686 1,900,000 921,213 325,000 224,929 230,000 132,025 100,000 33,205 2016 680,000 188,451 1,205,000 877,608 335,000 213,063 235,000 125,125 105,000 27,875 2017 695,000 177,156 1,255,000 833,034 345,000 200,759 245,000 117,975 110,000 22,285 2018 705,000 163,416 1,290,000 786,336 365,000 187,764 250,000 110,575 115,000 16,406 2019-2023 3,830,000 524,197 7,290,000 3,126,115 2,035,000 714,192 1,355,000 433,323 255,000 13,518 2024-2028 1,110,000 27,994 8,955,000 1,467,641 2,055,000 263,084 1,400,000 203,211 - - 2029-2033 - - 2,420,000 143,000 380,000 31,975 800,000 54,138 2034 145,000 2,175 - - - - TOTALS $8,340,000 $1,484,086 $25,785,000 $9,140,701 $6,155,000 $2,072,164 $4,745,000 $1,337,160 $780,000 $151,517 -50- Change in Long -Term Liabilities Long-term liability activity for the year ended December 31, 2013, was as follows Other Liabilities: Net OPEB obligation 64,694 16,534 (4,742) 76,486 - Compensated absences 283,803 57,687 (51,928) 289,562 75,068 Business -type activities long-term liabilities $9,756,923 $2,887,552 $(549,470) $12,095,005 $715,068 For the governmental activities, compensated absences are generally liquidated by the compensated absences fund. Net OPEB obligations are generally liquidated by the General Fund and Enterprise Funds. Claims and judgments are generally liquidated by the Self Insurance Fund. All long-term bonded indebtedness outstanding at December 31, 2013 is backed by the full faith and credit of the City, including special assessment and revenue bond issues. Special assessment receivable at December 31, 2013 totaled $618,649. Revenue Pledaed Future revenue pledged for the payment of long-term debt is as follows: Bond Issue Use of Proceeds Type Revenue Pledged Percent of Total Debt Service Term of Pledge Amounts Current Year Principal Pledged and Interest Revenue Paid Received Beginning Ice Arena User Ending Due Within Balance Additions Reductions Balance One Year Governmental Activities 1999-2020 $931,519 $ 132,945 836,396 Water & Sewer Revenue Bonds, Bonds and notes payable: Utility Redevelopment Bonds $8,955,000 $ - $(615,000) $8,340,000 $655,000 Improvement Bonds 23,880,000 3,120,000 (1,215,000) 25,785,000 1,325,000 Total bonds and notes payable 32,835,000 3,120,000 (1,830,000) 34,125,000 1,980,000 Other Liabilities: Charges 100% 2006-2027 2,607,497 183,045 Claims and judgments 914,137 349,539 (194,028) 1,069,648 144,092 Net OPEB obligation 957,144 259,621 (74,327) 1,142,438 - Compensated absences 1,880,517 64,499 (72,838) 1,872,178 473,708 Governmental activities long-term liabilities $36,586,798 $3,793,659 $(2,171,193) $38,209,264 $2,597,800 Business - Type Activities 2013B Infrastructure Charges 100% 2013-2033 Bonds and notes payable: 0 1,117,761 Ice Arena Bonds $ 870,000 $ - $ (90,000) $ 780,000 $ 95,000 Water & Sewer Revenue Bonds 4,975,000 - (245,000) 4,730,000 255,000 Storm Sewer Revenue Bonds 2,075,000 2,770,000 (100,000) 4,745,000 230,000 Water Revenue Bonds 1,480,000 - (55,000) 1,425,000 60,000 Premium (Discount) on bonds payable 8,426 43,331 (2,800) 48,957 - Total bonds and notes payable 9,408,426 2,813,331 (492,800) 11,728,957 640,000 Other Liabilities: Net OPEB obligation 64,694 16,534 (4,742) 76,486 - Compensated absences 283,803 57,687 (51,928) 289,562 75,068 Business -type activities long-term liabilities $9,756,923 $2,887,552 $(549,470) $12,095,005 $715,068 For the governmental activities, compensated absences are generally liquidated by the compensated absences fund. Net OPEB obligations are generally liquidated by the General Fund and Enterprise Funds. Claims and judgments are generally liquidated by the Self Insurance Fund. All long-term bonded indebtedness outstanding at December 31, 2013 is backed by the full faith and credit of the City, including special assessment and revenue bond issues. Special assessment receivable at December 31, 2013 totaled $618,649. Revenue Pledaed Future revenue pledged for the payment of long-term debt is as follows: Bond Issue Use of Proceeds Type Revenue Pledged Percent of Total Debt Service Term of Pledge Remaining Principal and Interest Current Year Principal Pledged and Interest Revenue Paid Received Gross Revenue Ice Arena Bonds, Ice Arena User Series 1999 Construction Fees 100% 1999-2020 $931,519 $ 132,945 836,396 Water & Sewer Revenue Bonds, Utility Utility Series 2006A Infrastructure Charges 100% 2006-2027 6,251,340 444,414 7,008,087 Storm Sewer Revenue Bonds, Utility Utility Series 2006B Infrastructure Charges 100% 2006-2027 2,607,497 183,045 1,117,761 Water Revenue Bonds, Utility Utility Series 2011A Infrastructure Charges 100% 2012-2032 1,975,826 103,010 3,483,510 G.O. Storm Sewer Bonds, Series Utility Utility 2013B Infrastructure Charges 100% 2013-2033 3,474,661 0 1,117,761 -51 - 6. Interfund balances and transactions Interfund transfers as of December 31, 2013 are as follows: Transfers in Transfers out Improvement Bonds Capital Improvement Nonmajor governmental Liquor Enterprise Water & Sewer Utility Storm Sewer Utility Internal Service General Improvement Capital Nonmajor Storm Sewer Recreation Internal Fund Bonds Improvements Governmental Utility Activities Service Total 3,083,974 3,083,974 5,350 225,731 152,161 - 682,000 - 480,000 222,613 258,7000 - 450,000 200,000 12,500 - 700,000 1,083,242 247,400 6,980 1,638,883 - - - 708,700 155,000 155,000 - 200,000 17 snn $946,050 $225,731 $3,928,635 $672,613 155,000 247,400 $706,870 $6,882,299 Interfund transfers allow the City to allocate financial resources to funds to provide funding for services to be provided or to provide financing for specific capital projects. In 2009, the City's Recreation Enterprise Fund made an advance to the Park and Recreational Development Capital Project Fund to finance the Lincoln Field Park reconstruction project. The advance will be repaid over the next five years using funds from the City's Liquor Contribution Special Revenue Fund with 0% interest. In addition, the City's Self Insurance Fund made an advance to the Recreation Enterprise Fund to finance energy improvements at the City's Ice Arena. The term of the advance will be twenty (20) years with a beginning interest rate of 2%. The City Manager is authorized to adjust the interest rate as market conditions may dictate. At December 31, 2013 the balance of the respective advances (due in more than a year) was $156,740 and $1,015,173. The portion of the advances that is due in one year is $28,600 and $57,465 respectively. In 2011, the City's Capital Improvements Fund made an advance to the Water & Sewer Utility Fund to help provide funding for certain capital projects to be undertaken within the water operation. The advance will be repaid over the next ten years with at 2% interest rate, using funds generated from the water utility operation. The City Manager is authorized to adjust the interest rate as market conditions may dictate. At December 31, 2013, the balance of the advance was $720,689. The portion of this advance that is due in one year, $96,887 is included in interfund receivables and payables. In 2013, the City's Recreation Enterprise Fund made an advance to the Park and Recreational Development Capital Project Fund to finance the Honoring All Veterans Memorial monument located in Veterans Park. The advance will be repaid over the next five years using proceeds received from monument engravings at 0% interest. At December 31, 2013 the portion of the advance that is due in one year is $33,000, and the portion due in more than one year is $244,540. Individual fund interfund receivables and payables balances at year-end were as follows: Due From Other Funds Due to Other Funds Amount Capital Project Funds Water & Sewer Utility $96,887 Recreation Enterprise Fund Park and Recreational Development $28,600 Park and Recreational Development $33,000 Self Insurance Fund Recreation Enterprise Fund $57,465 Individual fund advances to and advances from at year-end were as follows: Advances to Other Funds Advances from Other Funds Amount Capital Project Funds Water & Sewer Utility $ 623,802 Recreation Enterprise Fund Park and Recreational Development $ 156,740 Park and Recreational Development $ 244,540 Self Insurance Fund Recreation Enterprise Fund $1,015,172 7. Restricted Assets Restricted assets are monies restricted by legal requirements for the payment of bonds and interest. The balances at December 31, 2013 are as follows: Recreation Enterprise Fund $ 272,507 -52- E-* Individual Fund Disclosures Expenditures exceeded appropriations (budget) in the following individual funds for the year ended December 31, 2013: The Park and Recreational Development Capital Projects nonmajor governmental fund had a deficit fund balance of $64,628 as of December 31, 2013. -53- Final Over Budget Actual Budget Primary Government: Nonmajor Special Revenue Funds: Communications $ 279,170 $ 280,358 $1,188 Drug Forfeiture 90,000 104,380 14,380 911 Fees 51,000 56,637 5,637 Public Safety Compliance 41,500 46,238 4,738 Recreation Contributions 32,500 38,000 5,500 Community Center Days Out 21,140 24,820 3,680 Utility Franchise Fees 95,000 96,237 1,237 The Park and Recreational Development Capital Projects nonmajor governmental fund had a deficit fund balance of $64,628 as of December 31, 2013. -53- 9. Fund Balances Debt related expenditures - 594,812 The following is a breakdown of equity components of governmental funds which are defined earlier in the report. Any such restrictions which have an accumulated deficit rather than positive balance at December 31 are included in unassigned fund balance in the City's financial statements in accordance with generally accepted accounting principles. General Fund 7,679,767 - At December 31, 2013, a summary of the City's governmental fund balance classifications are as follows: Park Improvement projects - - - (64,628) (64,628) Total unassigned 7,679,767 - Other Total $7,752,180 $4,041,155 General Improvement Capital Governmental Fund Bonds Improvements Funds Total Nonspendable Prepaid items $72,413 $- $- $7,330 $ 79,743 Total nonspendable 72,413 - - 7,330 79,743 Restricted Future debt service - 1,717,778 - - 1,717,778 Future MSA projects - - 101,591 - 101,591 North Richfield Parkway - - 1,119,729 - 1,119,729 Cedar Point abatement - - 38,546 - 38,546 Law enforcement drug forfeitures - - - 217,963 217,963 Public Safety State Grants - - - 13 13 Public Safety Federal grants - - - 6,340 6,340 Recreation services donations - - - 30,456 30,456 Wood Lake Nature Center donations - - - 64,549 64,549 Public health assessment - - - 63,041 63,041 Total restricted - 1,717,778 1,259,866 382,362 3,360,006 Committed Street Improvements - 1,728,565 - - 1,726,796 Local improvement funding - - 1,235,462 - 1,146,058 Recycling Grant - - 231,701 - 231,701 Park Improvement projects - - - 131,681 131,681 Tourism administration - - - 43,098 43,098 Public Cable TV & information activities - - - 1,938,177 1,938,177 National, State, and Local elections - - - 625,243 625,243 Alcohol and Tobacco Compliance - - - 83,487 83,487 Senior Citizen Recreation Programs - - - 9,999 9,999 Wood Lake Nature Center Donations - - - 10,354 10,354 Street Maintenance & forestry programs - - - 665,324 665,324 Total committed - 1,728,565 1,467,163 3,507,363 6,703,091 Assigned Debt related expenditures - 594,812 - - 594,812 Future capital projects - - 6,944,623 - 6,944,623 Total assigned - 594,812 6,944,623 - 7,539,435 Unassigned General Fund 7,679,767 - - - 7,679,767 Capital Projects - - (152,382) - (152,382) Park Improvement projects - - - (64,628) (64,628) Total unassigned 7,679,767 - (152,382) (64,628) 7,462,757 Total $7,752,180 $4,041,155 $9,519,270 $3,832,427 $25,145,032 10. Contingencies and Litigation The City is currently involved in various pending litigation cases. After evaluation by the City's attorney it is believed that the resolution of these cases will not have a material impact on the financial statements. -54- The City has entered into an agreement with the Metropolitan Airports Commission (MAC), where the City will purchase certain right -of -way -properties as part of the 661" Street/171" Avenue intersection constructed in 2007. As part of the agreement, MAC will provide to the City the funds necessary to finance the right-of-way acquisitions. In addition, the City agrees to repay to MAC payments made by MAC to the City for the right-of-way acquisitions. However, within the agreements there are specific provisions that must be met in order for repayment to MAC to occur. The cumulative amount of funds provided to the City for right-of-way acquisitions as of December 31, 2013 by MAC is $1,080,779. In 2013 the City received no funds from MAC for right of way acquisitions as part of the intersection project. This potential liability is not recorded on the financial statements. The likelihood of the specific provisions being met is considered remote. 11. Defined Benefit Pension Plans - Statewide A. Plan Description All full-time and certain part-time employees of the City of Richfield are covered by defined benefit plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the General Employees Retirement Fund (GERF) and the Public Employees Police and Fire Fund (PEPFF) which are cost-sharing, multiple - employer retirement plans. These plans are established and administered in accordance with Minnesota Statutes, Chapters 353 and 356. GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. All new members must participate in the Coordinated Plan. All police officers, firefighters and peace officers who qualify for membership by statute are covered by the PEPFF. PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by State Statute, and vest after 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. Two methods are used to compute benefits for PERA's Coordinated and Basic Plan members. The retiring member receives the higher of a step -rate benefit accrual formula (Method 1) or a level accrual formula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2 percent of average salary for each of the first 10 years of service and 2.7 percent for each remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2 percent of average salary for each of the first 10 years and 1.7 percent for each remaining year. Under Method 2, the annuity accrual rate is 2.7 percent of average salary for Basic Plan members and 1.7 percent for Coordinated Plan members for each year of service. For PEPFF members, the annuity accrual rate is 3.0 percent for each year of service. The annuity accrual rate is 1.9 percent for each year of service for PECF members. For all PEPFF members, 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. Normal retirement age is 55 for PEPFF members and 65 for Basic and Coordinated members hired prior to July 1, 1989. Normal retirement age is the age for unreduced Social Security benefits capped at 66 for Coordinated members hired on or after July 1, 1989. A reduced retirement annuity is also available to eligible members seeking early retirement. There are different types of annuities available to members upon retirement. A single -life annuity is a lifetime annuity that ceases upon the death of the retiree --no survivor annuity is payable. There are also various types of joint and survivor annuity options available which will be payable over joint lives. Members may also leave their contributions in the fund upon termination of public service in order to qualify for a deferred annuity at retirement age. Refunds of contributions are available at any time to members who leave public service, but before retirement benefits begin. The benefit provisions stated in the previous paragraphs of this section are current provisions and apply to active plan participants. Vested, terminated employees who are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. PERA issues a publicly available financial report that includes financial statements and required supplementary information for GERF and PEPFF. That report may be obtained on the internet at www.mnpera.org, by writing to PERA, 60 Empire Drive #200, St. Paul, Minnesota, 55103 or by calling (651)296-7460 or 1-800-652-9026. -55- B. Funding Policy Minnesota Statutes, Chapter 353 sets the rates for employer and employee contributions. These statutes are established and amended by the State Legislature. The City makes annual contributions to the pension plans equal to the amount required by state statutes. GERF Basic Plan members and Coordinated Plan members were required to contribute 9.1 percent and 6.25 percent, respectively, of their annual covered 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 GERF members, 7.25 percent for Coordinated Plan GERF members, and 14.4 percent for PEPFF members. The City's contributions for the past three years ending December 31, which were equal to the contractually required contributions for each year as set by state statutes, were as follows: Year Ended 2013 Annual required contribution December 31 GERF PEPFF 2011 643,876 785,898 2012 650,160 791,655 2013 670,510 823,341 12. Other Post Employments Benefits Net OPEB obligation — end of year 1,218,924 A. Plan Description The City provides post -employment insurance benefits to certain eligible employees as required by State law, through a single -employer defined benefit plan administered by the City. All post - employment benefits are based on contractual agreements with employee groups. These contractual agreements do not include any specific contribution or funding requirements. The plan does not issue a publicly available financial report. These benefits are summarized as follows: Post -Employment 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 employee reaches the age of eligibility for Medicare. For members of all employee groups, the retiree must pay the full premium to continue coverage for medical and dental insurance. The City is legally required to include any retirees for whom it provides health insurance coverage in the same insurance pool as its active employees, whether the premiums are paid by the City or the retiree. Consequently, participating retirees are considered to receive a secondary benefit known as an "implicit rate subsidy." This benefit relates to the assumption that the retiree is receiving 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. 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. There is no invested plan assets accumulated for payment of future benefits. 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 normal costs each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. The following table shows the components of the City's annual OPEB cost for the year, the amount actually contributed to the plan, and the changes in the City's net OPEB obligation to the plan: -56- 2013 Annual required contribution 269,608 Interest on net OPEB obligation 45,983 Adjustment to annual required contribution (39,436) Annual OPEB cost (Expense) 276,155 Contributions made 79,069 Increase in net OPEB obligation 197,086 Net OPEB obligation — beginning of year 1,021,838 Net OPEB obligation — end of year 1,218,924 -56- The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the years ended 2011, 2012, and 2013 are as follows: D. Funded Status and Funding Progress As of January 1, 2012, the most recent actuarial valuation date, the plan was zero percent funded. The actuarial accrued liability for benefits was $2,528,372, and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $2,528,372. The covered payroll (annual payroll of active employees covered by the plan) was $13,137,406 and the ratio of the UAAL to the covered payroll was 19.2 percent. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and ARCs 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 immediately following the notes to the basic financial statements presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. E. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial 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-term perspective of the calculations. In the January 1, 2012 actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions included: a 4.5 percent discount, Pay -As -You -Go funding, Projected Unit Credit actuarial cost method, an annual health care cost trend rate of 9.0 percent initially, which includes a 3% inflation rate, reduced by decrements to an ultimate rate of 5.0 percent after twelve years for medical insurance, a 30 year open amortization period of the UAAL increasing at 3.75% per year using the payroll growth rate and with the level percentage of payroll amortization method. The remaining amortization periods at January 1, 2012 for the various amortization layers ranged from 28 to 30 years. 13. Right -of -Way In 2002 the City acquired three properties for a total cost of $7,000,000 for Interstate 494 widening right-of-way under the Metropolitan Council Right -of -Way Acquisition Loan Fund (RALF). Under the RALF program, the City is obligated to return to the Metropolitan Council the proceeds of all RALF properties sold to the State of Minnesota. These RALF obligations and related properties have not been recorded since they do not represent true resources or liabilities of the City. 14. Conduit Debt From time to time, the City has issued various industrial development revenue bonds to provide financial assistance to private -sector entities for the acquisition and construction of industrial and commercial facilities deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private -sector entity served by the bond issuance. Neither the City, the State, nor any political subdivision thereof is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. Finally, the City does not track the remaining outstanding principal balances on conduit debt, as the City does not have any obligation toward the debt. -57- Percentage of Fiscal Annual Employer Annual OPEB Net OPEB Year Ended OPEB Cost Contribution Cost Contributed Obligation December 31, 2011 $268,651 $107,635 40.1% $816,399 December 31, 2012 $266,486 $61,047 22.9% $1,021,838 December 31, 2013 $276,155 $79,069 28.6% $1,218,924 D. Funded Status and Funding Progress As of January 1, 2012, the most recent actuarial valuation date, the plan was zero percent funded. The actuarial accrued liability for benefits was $2,528,372, and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $2,528,372. The covered payroll (annual payroll of active employees covered by the plan) was $13,137,406 and the ratio of the UAAL to the covered payroll was 19.2 percent. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and ARCs 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 immediately following the notes to the basic financial statements presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. E. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial 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-term perspective of the calculations. In the January 1, 2012 actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions included: a 4.5 percent discount, Pay -As -You -Go funding, Projected Unit Credit actuarial cost method, an annual health care cost trend rate of 9.0 percent initially, which includes a 3% inflation rate, reduced by decrements to an ultimate rate of 5.0 percent after twelve years for medical insurance, a 30 year open amortization period of the UAAL increasing at 3.75% per year using the payroll growth rate and with the level percentage of payroll amortization method. The remaining amortization periods at January 1, 2012 for the various amortization layers ranged from 28 to 30 years. 13. Right -of -Way In 2002 the City acquired three properties for a total cost of $7,000,000 for Interstate 494 widening right-of-way under the Metropolitan Council Right -of -Way Acquisition Loan Fund (RALF). Under the RALF program, the City is obligated to return to the Metropolitan Council the proceeds of all RALF properties sold to the State of Minnesota. These RALF obligations and related properties have not been recorded since they do not represent true resources or liabilities of the City. 14. Conduit Debt From time to time, the City has issued various industrial development revenue bonds to provide financial assistance to private -sector entities for the acquisition and construction of industrial and commercial facilities deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private -sector entity served by the bond issuance. Neither the City, the State, nor any political subdivision thereof is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. Finally, the City does not track the remaining outstanding principal balances on conduit debt, as the City does not have any obligation toward the debt. -57- As of December 31, 2013 there were five bond issues outstanding with an estimated aggregate principal amount outstanding of approximately $33,968,617. As part of the Richfield Senior Housing Inc. refunding, Richfield Senior Housing Inc. requested, and the City agreed, to defer the annual administrative fee charged on the outstanding principal balance of the bonds until the final maturity December 1, 2039 or a subsequent refunding of the bonds. The deferral of the annual administrative fee is estimated to be approximately $600,000. 15. Limited Pay -As -You -Go Notes The Richfield Housing and Redevelopment Authority (HRA) have issued Limited Revenue Pay-as- you-go Notes for the purpose of helping to finance various tax increment and tax abatement projects. These notes are not general obligations of the HRA as they are payable only to the extent of the future increments received. The cash flows of the notes have been updated to show the amount of the original note, per the development agreement, rather than the present value which had been used in the past. Accordingly, total pay-as-you-go notes at December 31, 2013 equal $88,322,759. 16. Deferred Loan Program The City's Housing and Rehabilitation Authority (HRA), as part of its home remodeling program, has issued several hundred home remodeling deferred loans. The funding source of the loans is Federal Community Development Block Grants. The loans are for 30 -year terms, there is no interest charge, no monthly payment, and loan recipients must meet certain income requirements in order to qualify for the loans. The loans are only repaid if the remodeled home is sold prior to the expiration of the 30 -year loan term. At the end of 2006, the City turned over the loan portfolio and administration of all loans to Hennepin County. 17. Federal and State Funds The City received financial assistance from federal and state governmental agencies in the form of grants. The disbursement of funds received under these programs generally requires compliance with the terms and conditions specified in the grant agreements and are subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the applicable fund. However, in the opinion of management, any such disallowed claims will not have a material effect on any of the financial statements of the individual fund types included herein or on the overall financial position of the City at December 31, 2013. 18. Nature and Amount of Significant Transactions between City— HRA As noted in note 1, the HRA was established for the purpose to provide housing and redevelopment assistance to Richfield residents and businesses. The structure of the HRA is that it has no employees per se; however, it has a contract with the City where the City's Community Development department is to provide services as needed. Accordingly, the City charges the HRA for labor provided, data processing services, and office supplies, etc. In addition, to help fund redevelopment projects, the City will issue long term debt on behalf of the HRA. At the same time the HRA enters into a pledge agreement with the City whereby the HRA pledges future tax increment receipts generated by the redevelopment to service the debt issued. During 2013, the HRA transferred to the City $820,737 of tax increment receipts to fund debt service requirements for debt issued on behalf of the HRA. In addition, during 2013, the City transferred $25,000 to the HRA to fund a housing study conducted by the HRA. 19. Joint Venture Local Government Information Systems Association (LOGIS): This consortium of approximately 30 government entities provides computerized data processing and support services to its members. LOGIS is legally separate; the City does not appoint a voting majority of its board, and the Consortium is fiscally independent of the City. The total amount recorded within the 2013 financial statements of the City was $518,328 for services provided, which is allocated to the various funds based on applications. Complete financial statements may be obtained at the LOGIS offices located at 5750 Duluth Street, Golden Valley, Minnesota 55422. 20. Service Concession Arrangement The City has entered into an agreement with Wheel Fun Rentals LLC, where Wheel Fund Rentals will manage the City's Mini -Golf facility, concession sales, and bicycle rental operations during the April — September period of operation. The City will continue to own existing assets of the operation. Any new equipment purchased by Wheel Fun Rentals for the operation of the facility will be the property of Wheel Fund Rentals. -58- As compensation for operating the facility, Wheel Fun Rentals will retain gross revenues from the mini -golf facility, concessions and bike rental. Wheel Fun Rentals will pay to the City $6,000 per season plus 7.5% of gross revenues from mini -golf fees, concession sales and bike rentals, not to exceed a combined total of $12,000 per season. Wheel Fun Rentals will be responsible for managing the facility, setting hours of operation and rates, with City approval, provide sufficient staffing to operate, maintain and repair the facility during the operating season, pay utilities associated with the operation, purchase and maintain a food license, and purchase and hold the necessary insurance coverage for such an operation. 21. Joint Powers Agreement — 1-494 Corridor Commission The 1-494 Corridor Commission is a joint powers organization established in 1986 to address concerns about increasing traffic congestion along the 1-494 Corridor. The commission works to encourage economic growth and regional prosperity through improved transportation options. It works with businesses, residents and agencies to accomplish these goals. The board of the commission includes representatives from each of the five member cities, Bloomington, Edina, Eden Prairie, Minnetonka, and Richfield. It partners with the Minnesota Department of Transportation, the Metropolitan Council, and the private business community to achieve common regional transportation goals and policies. Each member city will perform the treasury function for the commission for a two year term. The City of Richfield's most recent term started on January 1, 2013 and will conclude on December 31, 2014. Accordingly, the City has reported the activity of the Commission as a Fiduciary Fund for the year ending December 31, 2013. 22. Prior Period Adjustment During 2013, the City recorded a prior period adjustment in the governmental funds in the amount of $1,316,300, in response to GASB Statement No. 54. Fund Balance Reporting and Governmental Fund Type Definitions. This objective of this statement is to enhance the usefulness of fund balance information by providing clearer fund balance classifications that can be more consistently applied. The adjustment resulted from the City reporting certain assets that were not in a spendable form in prior years as deferred revenue. It was determined during 2013 that these assets were not currently spendable and should be reported according to GASB No. 54 within the City's fund balance and classified as Nonspendable. -59- THIS PAGE WAS LEFT BLANK INTENTIONALLY Imm REQUIRED SUPPLEMENTARY INFORMATION THIS PAGE WAS LEFT BLANK INTENTIONALLY -62- Charges for Services: General Government CITY OF RICHFIELD, MINNESOTA 659,290 699,755 Schedule 10 REQUIRED SUPPLEMENTARY INFORMATION 499,000 499,000 Page 1 of 4 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Public Safety 15,500 For The Year Ended December 31, 2013 34,394 2,294 Park and Recreation 307,350 310,960 338,767 27,807 Variance with 85,890 86,430 80,397 (6,033) Final Budget 1,539,030 Budgeted Amounts 1,689,001 Over Investment Earnings Original Final Actual (Under) Taxes: 25,000 11,000 5,820 (5,180) Current ad valorem $ 11,222,193 $ 11,222,193 $ 12,322,564 $ 1,100,371 Fiscal disparities 3,199,167 3,199,167 2,761,718 (437,449) Total Taxes 14,421,360 14,421,360 15,084,282 662,922 Fees and Fines: 8,000 8,000 2,846 (5,154) Municipal court fines 308,500 320,000 373,274 53,274 Total Fees and Fines 308,500 320,000 373,274 53,274 Licenses and Permits: $ 18,561,680 $ 18,759,740 $ 19,852,811 $ 1,093,071 Business licenses 290,500 287,800 328,384 40,584 Nonbusiness licenses and permits 435,600 468,600 610,071 141,471 Total Licenses and Permits 726,100 756,400 938,455 182,055 Intergovernmental Revenues: Federal : Grants 68,000 106,050 150,081 44,031 State: Local government aid 400,000 400,000 405,037 5,037 Fire State Aid 122,150 122,150 136,991 14,841 Grants - other 19,880 42,110 26,353 (15,757) Police State Aid 335,000 330,000 355,079 25,079 Law officer training 15,000 14,690 14,695 5 State -aid street maintenance 320,500 310,140 310,140 - County - Community health services 134,380 134,380 134,313 (67) Grants - other 44,000 47,900 52,972 5,072 Total Intergovernmental Revenue 1,458,910 1,507,420 1,585,661 78,241 Charges for Services: General Government 631,290 659,290 699,755 40,465 Deputy Registrar 499,000 499,000 535,688 36,688 Public Safety 15,500 32,100 34,394 2,294 Park and Recreation 307,350 310,960 338,767 27,807 Nature Center 85,890 86,430 80,397 (6,033) Total Charges for Services 1,539,030 1,587,780 1,689,001 101,221 Investment Earnings Investment Earnings 25,000 11,000 5,820 (5,180) Total Investment Earnings 25,000 11,000 5,820 (5,180) Miscellaneous Revenues: Rent 12,780 12,780 12,800 20 Recovery - damage to City property 8,000 8,000 2,846 (5,154) Other 62,000 135,000 160,672 25,672 Total Miscellaneous Revenues 82,780 155,780 176,318 20,538 Total Revenues $ 18,561,680 $ 18,759,740 $ 19,852,811 $ 1,093,071 -63- -64- CITY OF RICHFIELD, MINNESOTA Schedule 10 REQUIRED SUPPLEMENTARY INFORMATION Page 2 of 4 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2013 Variance with Final Budget Budgeted Amounts Over Original Final Actual (Under) EXPENDITURES: LEGISLATIVE/EXECUTIVE Mayor - Council: Personnel services $ 109,320 $ 108,520 $ 108,349 $ (171) Other services and charges 77,510 114,630 84,302 (30,328) Total 186,830 223,150 192,651 (30,499) Other Agencies: Personnel services- 26,090 26,090 - Other services and charges 70,480 76,750 76,750 - Total 70,480 102,840 102,840 - City Manager: Personnel services 153,070 168,920 165,858 (3,062) Other services and charges 30,120 32,200 30,643 (1,557) Total 183,190 201,120 196,501 (4,619) Legal: Other services and charges 297,550 262,530 249,072 (13,458) Total 297,550 262,530 249,072 (13,458) Total Legislative/Executive 738,050 789,640 741,064 (48,576) ADMINISTRATIVE SERVICES: Administration: Personnel services 28,300 (49,220) (75,224) (26,004) Other services and charges 96,360 98,150 96,443 (1,707) Total 124,660 48,930 21,219 (27,711) Human Resources: Personnel services 14,800 700 26,484 25,784 Other services and charges 21,130 25,950 19,165 (6,785) Total 35,930 26,650 45,649 18,999 Finance: Personnel services 216,050 184,060 156,147 (27,913) Other services and charges 52,650 52,660 48,794 (3,866) Total 268,700 236,720 204,941 (31,779) City Clerk: Personnel services 332,560 341,590 333,542 (8,048) Other services and charges 57,480 53,170 57,347 4,177 Total 390,040 394,760 390,889 (3,871) Assessing: Personnel services 74,340 81,280 81,436 156 Other services and charges 274,600 279,010 255,193 (23,817) Total 348,940 360,290 336,629 (23,661) Total Administrative Services 1,168,270 1,067,350 999,327 (68,023) PUBLIC SAFETY: Administrative Support Services: Personnel services 434,640 445,790 443,596 (2,194) Other services and charges 418,760 472,350 473,189 839 Total 853,400 918,140 916,785 (1,355) Police Operations: Personnel services 5,988,440 5,786,890 5,797,844 10,954 Other services and charges 1,257,330 1,270,670 1,263,699 (6,971) Total 7,245,770 7,057,560 7,061,543 3,983 -64- FIRE: CITY OF RICHFIELD, MINNESOTA Schedule 10 Fire Protection: REQUIRED SUPPLEMENTARY INFORMATION Page 3 of 4 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND 3,077,190 3,019,533 (57,657) For The Year Ended December 31, 2013 511,250 505,280 476,392 (28,888) Total 3,568,360 3,582,470 Variance with (86,545) Total Fire 3,568,360 3,582,470 Final Budget (86,545) Budgeted Amounts Over Original Final Actual (Under) Emergency Services: Personnel services 225,150 184,690 Personnel services 7,440 7,440 7,450 10 Other services and charges 16,220 17,720 10,744 (6,976) Capital outlay - 18,500 17,589 (911) Total 23,660 43,660 35,783 (7,877) Total Public Safety 8,122,830 8,019,360 8,014,111 (5,249) FIRE: Fire Protection: Personnel services 3,057,110 3,077,190 3,019,533 (57,657) Other services and charges 511,250 505,280 476,392 (28,888) Total 3,568,360 3,582,470 3,495,925 (86,545) Total Fire 3,568,360 3,582,470 3,495,925 (86,545) COMMUNITY DEVELOPMENT: Administration: Personnel services 225,150 184,690 185,787 1,097 Other services and charges 84,210 88,930 86,281 (2,649) Total 309,360 273,620 272,068 (1,552) Economic Development: Personnel services - 62,770 62,770 - Other services and charges - 26,130 4,990 (21,140) Total - 88,900 67,760 (21,140) Inspection: Personnel services 701,340 718,920 710,109 (8,811) Other services and charges 183,900 174,260 165,424 (8,836) Total 885,240 893,180 875,533 (17,647) Total Community Development 1,194,600 1,255,700 1,215,361 (40,339) PUBLIC WORKS: Administration: Personnel services 146,580 131,410 135,166 3,756 Other services and charges 18,370 46,000 34,281 (11,719) Total 164,950 177,410 169,447 (7,963) Engineering: Personnel services 210,390 225,410 239,817 14,407 Other services and charges 104,480 90,570 74,451 (16,119) Total 314,870 315,980 314,268 (1,712) Streets: Personnel services 640,370 667,880 727,756 59,876 Other services and charges 1,331,280 1,415,080 1,380,800 (34,280) Total 1,971,650 2,082,960 2,108,556 25,596 Park Maintenance: Personnel services 701,470 693,220 667,276 (25,944) Other services and charges 481,940 482,770 472,891 (9,879) Total 1,183,410 1,175,990 1,140,167 (35,823) Forestry: Personnel services 281,880 296,920 316,134 19,214 Other services and charges 258,540 216,940 208,705 (8,235) Total 540,420 513,860 524,839 10,979 Total Public Works 4,175,300 4,266,200 4,257,277 (8,923) -65- CITY OF RICHFIELD, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2013 RECREATION SERVICES: Recreation Services Administration: Personnel services Other services and charges Total Recreation Programs: Personnel services Other services and charges Total Wood Lake Nature Center: Personnel services Other services and charges Total Total Recreation Services Total Expenditures Revenues over (under) expenditures Other financing sources (uses): Transfer from Debt Service Funds Transfer from Capital Project Funds Transfer from Special Revenue Funds Transfer from Enterprise Funds Total other financing sources (uses) Net increase in fund balance Fund balance - January 1 Fund Balance - December 31 Budgeted Amounts Original Final Actual Schedule 10 Page 4 of 4 Variance with Final Budget Over (Under) 250,760 245,330 250,558 5,228 70,570 75,470 69,459 (6,011) 321,330 320,800 320,017 (783) 587,600 581,850 568,295 (13,555) 278,280 283,220 287,231 4,011 865,880 865,070 855,526 (9,544) 363,130 363,560 364,576 1,016 86,630 86,150 92,011 5,861 449,760 449,710 456,587 6,877 1,636,970 1,635,580 1,632,130 (3,450) $ 20,604,380 $ 20,616,300 $ 20,355,195 $ (261,105) $ (2,042,700) $ (1,856,560) $ (502,384) $ 1,354,176 335,000 335,000 - (335,000) 670,000 430,860 5,350 (425,510) 779,000 832,000 682,000 (150,000) 258,700 258,700 258,700 - 2,042,700 1,856,560 946,050 (910,510) 443,666 443,666 7,308,514 7,308,514 7,308,514 - $ 7,308,514 $ 7,308,514 $ 7,752,180 $ 443,666 Imm CITY OF RICHFIELD, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION OTHER POST -EMPLOYMENT BENEFITS PLAN SCHEDULE OF FUNDING PROGRESS Actuarial Actuarial Valuation Accrued Date Liability January 1, 2008 $ 3,347,505 $ January 1, 2010 $ 2,573,782 $ January 1, 2012 $ 2,528,372 $ Actuarial Value of Plan Assets Unfunded Actuarial Accrued Liability $ 3,347,505 $ 2,573,782 $ 2,528,372 -67- Funded Covered Ratio Payroll $ 13,254,399 $ 12,903,221 $ 13,137,406 Schedule 11 Unfunded Liability as a Percentage of Pavroll 25.3% 19.9% 19.2% CITY OF RICHFIELD, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE NOTE TO RSI DECEMBER 31, 2013 Note 1 Legal Compliance — Budgets Budgets for the General Fund are adopted on a basis consistent with generally accepted accounting principles. The legal level of budgetary control is at the department level for the General Fund. At December 31, 2013, there were no General Fund departments whose expenditures exceeded budget appropriations. -68- COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES EWE NONMAJOR GOVERNMENTAL FUNDS -70- SPECIAL REVENUE FUNDS A Special Revenue Fund is used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified programs. GENERAL OBLIGATION REDEVELOPMENT BONDS FUND This fund is used to account for the accumulation of resources from tax increment for and the payment of, interest and principal on general obligation long-term debt. It has been established in accordance with bond indentures. PARK AND RECREATIONAL DEVELOPMENT CAPITAL PROJECTS FUND This fund accounts for financial resources to be used for the acquisition or construction of major park recreational and cultural development capital improvement purposes. -71 - CITY OF RICHFIELD, MINNESOTA Statement 12 COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS December 31, 2013 -72- Park and Recreational Total Development Nonmajor Special Redevelopment Capital Governmental Revenue Bonds Projects Funds Assets Cash and investments $ 3,496,846 - $ 398,252 $ 3,895,098 Due from other governments 36,024 - - 36,024 Receivables, net 416,708 - - 416,708 Prepaid items 7,330 - - 7,330 Total assets $ 3,956,908 $ - $ 398,252 $ 4,355,160 Liabilities and Fund Balances Liabilities: Accounts payable $ 41,862 - $ - $ 41,862 Accrued salaries and benefits 4,918 - - 4,918 Due to other funds - - 61,600 61,600 Payable to other governments 13,073 - - 13,073 Advances from other funds - - 401,280 401,280 Total liabilities 59,853 - 462,880 522,733 Fund balances Nonspendable 7,330 - - 7,330 Restricted 382,362 - - 382,362 Committed 3,507, 363 - - 3,507,363 Unassigned - - (64,628) (64,628) Total fund balances 3,897,055 - (64,628) 3,832,427 Total liabilities and fund balances $ 3,956,908 $ - $ 398,252 $ 4,355,160 -72- CITY OF RICHFIELD, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE NONMAJOR GOVERNMENTAL FUNDS For The Year Ended December 31, 2013 REVENUES: Franchise taxes Fees and fines Intergovernmental Investment earnings Miscellaneous Total revenues EXPENDITURES: Current: Administrative Services Public Safety Recreation Services Debt Service Principal Interest and other charges Capital Outlay: Administrative Services Public Safety Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Transfers in Transfers out Proceeds from Sale of Capital Assets Total other financing sources and uses Net increase (decrease) in fund balance Fund balances (deficit) - January 1 Fund balances (deficit) - December 31 Statement 13 22,486 8,561 - 893,785 8223188 1,052,479 (1,451) 214 22,486 8,561 1,716,187 039 1,085,067 456,190 - 216,423 Park and (1,625,060) - (13,823) (1,638,883) Recreational Total 6,804 (1,162,066) Development Nonmajor Special Redevelopment Capital Governmental Revenue Bonds Projects Funds $ 1,304,716 $ - $ - $ 1,304,716 93,821 - - 93,821 115,228 820,737 - 935,965 4,271 - 311 4,582 428,228 - 33,942 462,170 1,946,264 820,737 34,253 2,801,254 467,324 - - 467,324 232,197 - - 232,197 163,217 - 214 163,431 - 615,000 - 615,000 - 207,188 - 207,188 22,486 8,561 - 893,785 8223188 1,052,479 (1,451) 214 22,486 8,561 1,716,187 039 1,085,067 456,190 - 216,423 672,613 (1,625,060) - (13,823) (1,638,883) 6,804 - - 6,804 (1,162,066) - 202,600 (959,466) (109,587) (1,451) 236,639 1253601 4,006,642 1,451 (301,267) 3,706,826 $ 3,897,055 $ - $ (64,628) $ 3,8323427 -73- THIS PAGE WAS LEFT BLANK INTENTIONALLY -74- NONMAJOR SPECIAL REVENUE FUNDS Liquor Contributions Fund is maintained according to Section 7.12, Subdivision 2 of the City Charter. Its primary purpose is to receive profits from the municipal off -sale liquor operations, which are restricted in use to financing capital improvements of the type which would be financed by a general obligation bond issue. Project appropriations are authorized by ordinance. The Tourism Administration Fund is maintained to account for the collection of lodging taxes and subsequent payment to the Richfield Tourism Promotion Board. The Communications Fund is maintained to account for the quarterly cable franchise fee received and cable television city communication activities. The Elections Fund was created to better account for the cost fluctuations in conducting elections. The revenue source is rental revenue derived from leases with cell phone carriers. The Drug/Forfeiture Fund is maintained according to federal regulations and is used to account for monies allocated to the City and spent according to their guidelines. The 911 Fees Fund is maintained to account for money received from the State of Minnesota for 911 dispatching services. The Public Safety Compliance Fund is maintained to account for the collection of funds from the sale of recovered property, and fines collected from violations of alcohol and tobacco compliance checks. Contributions — Recreation, and Nature Center are used to account for private donations restricted by the donor to certain programs or used for the parks, Nature Center and recreation programs. The Community Center Days Out Fund is maintained to account for specific recreation day out programs. The Public Health Grants Fund was created to account for grant funds received for enhancing the health and environmental well being of the community. The Wood Lake Half Marathon Fund was created to separately account for the proceeds and costs associated with the Half Marathon race held at Wood Lake Nature Center. The Utility Franchise Fee Fund was created to account for gas and electric franchise fees received from gas and electric public utilities. -75- CITY OF RICHFIELD, MINNESOTA SUBCOMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS December 31, 2013 LIABILITIES AND FUND Liquor BALANCES Contributions Tourism Liabilities: Drug/ 911 Fund Admin Communications Elections Forfeiture Fees ASSETS $ 16,588 $ - Accrued salaries and benefits - - 4,918 - Cash and investments $ 131,681 $ 53,656 $ 1,840,131 $ 524,833 $ 234,767 $ 13 Due from other governments - - - 16,332 - Receivables, net 103,571 85,044 - Prepaid items - - 7,330 - - - Total Assets $ 131,681 $ 53,656 $ 1,9513032 $ 626,209 $ 234,767 $ 13 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ - $ 10,558 $ 607 $ 966 $ 16,588 $ - Accrued salaries and benefits - - 4,918 - - - Payable to other governments - - - - 216 - Total Liabilities - 10,558 5,525 966 16,804 - Fund Balances: Nonspendable - 7,330 - - Restricted - - - 217,963 13 Committed 131,681 43,098 1,938,177 625,243 - - Total Fund Balances 131,681 43,098 1,945,507 625,243 217,963 13 Total Liabilities and Fund Balances $ 131,681 $ 53,656 $ 1,951,032 $ 626,209 $ 234,767 $ 13 -76- Statement 14 $ 5,664 $ 3,305 $ 1,320 $ - $ - $ - $ 2,854 $ 41,862 - - - - - - - 4,918 - 45 - - 12,812 - - 13,073 5,664 3,350 1,320 - 12,812 - 2,854 59,853 - - - - 7,330 6,340 30,456 64,549 - 63,041 - - 382,362 83,487 - - 9,999 - 10,354 665,324 3,507,363 89,827 30,456 64,549 9,999 63,041 10,354 665,324 3,897,055 $ 95,491 $ 33,806 $ 65,869 $ 9,999 $ 75,853 $ 10,354 $ 668,178 $ 3,956,908 -77- Total Nonmajor Public Nature Community Public Wood Lake Utility Special Safety Recreation Center Center Health Half Franchise Revenue Compliance Contr. Contr. Days Out Grants Marathon Fees Funds $ 86,428 $ 33,806 $ 65,869 $ 9,999 $ 62,501 $ 10,354 $ 442,808 $ 3,496,846 6,340 - - - 13,352 - - 36,024 2,723 - - 225,370 416,708 - - - - - - 7,330 $ 95,491 $ 337806 $ 65,869 $ 9,999 $ 75,853 $ 10,354 $ 6687178 $ 3,956,908 $ 5,664 $ 3,305 $ 1,320 $ - $ - $ - $ 2,854 $ 41,862 - - - - - - - 4,918 - 45 - - 12,812 - - 13,073 5,664 3,350 1,320 - 12,812 - 2,854 59,853 - - - - 7,330 6,340 30,456 64,549 - 63,041 - - 382,362 83,487 - - 9,999 - 10,354 665,324 3,507,363 89,827 30,456 64,549 9,999 63,041 10,354 665,324 3,897,055 $ 95,491 $ 33,806 $ 65,869 $ 9,999 $ 75,853 $ 10,354 $ 668,178 $ 3,956,908 -77- CITY OF RICHFIELD SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS For The Year Ended December 31, 2013 -78- Liquor Contributions Tourism Drug/ 911 Fund Admin Communications Elections Forfeiture Fees Revenues: Franchise taxes $ - $ - $ 405,171 $ - $ - $ - Fees and fines - 93,821 Intergovernmental revenues: Federal grants - State of Minnesota - 911 Fees - - - - - 48,697 Other - County - - - - - - Total Intergovernmental Revenues - - - - - 48,697 Investment Earnings 135 56 1,846 496 245 13 Miscellaneous: Contributions - - - - - Other - 9,526 - 217,422 - - Total Miscellaneous Revenues - 9,526 - 217,422 - - Total Revenues 135 9,582 407,017 217,918 94,066 48,710 Expenditures: Current: Personnel services - 11,680 154,249 76,945 - - Other services and charges - 103,623 24,590 95,819 56,637 Capital outlay - - 22,486 - 8,561 - Total Expenditures - 11,680 280,358 101,535 104,380 56,637 Excess (Deficiency) of Revenues over Expenditures 135 (2,098) 126,659 116,383 (10,314) (7,927) Other Financing Sources (Uses): Transfers in: Special Revenue Funds - - - Enterprise Funds 450,000 - - - - - Transfers out: General Fund - - - - - - Special Revenue Funds - - - - - - Capital Project Funds (450,000) Internal Service Funds - - - - (6,870) - Proceeds from Sale of Capital Assets 6,804 Net Other Financing Sources (Uses) - - - - (66) - Net increase (decrease) in fund balance 135 (2,098) 126,659 116,383 (10,380) (7,927) Fund Balance - January 1 131,546 45,196 1,818,848 508,860 228,343 7,940 Fund Balance - December 31 $ 131,681 $ 43,098 $ 1,945,507 $ 625,243 $ 217,963 $ 13 -78- Statement 15 $ - $ - Total - $ - $ Nonmajor Public Nature Community Public Wood Lake Utility Special Safety Recreation Center Center Health Half Franchise Revenue Compliance Contr. Contr. Days Out Grants Marathon Fees Funds $ - $ - $ - $ - $ - $ - $ 899,545 $ 1,304,716 43,499 34,438 22,408 23,220 31,003 25,989 - 93,821 24,724 - - - 33,048 - 57,772 - - - - - - - 48,697 3,170 (3,641) 3,056 596 (395) 10,349 3,170 5,589 - - - - - - 5,589 33,483 - - - 33,048 - - 115,228 73 39 77 13 60 - 1,218 4,271 10,136 20,302 53,387 - - 8,661 - 92,486 17,696 14,018 - 25,403 - 51,677 - 335,742 27,832 34,320 53,387 25,403 - 60,338 - 428,228 61,388 34,359 53,464 25,416 33,108 60,338 900,763 1,946,264 2,739 3,562 28,000 1,600 2,500 24,000 - 305,275 43,499 34,438 22,408 23,220 31,003 25,989 96,237 557,463 - - - - - - - 31,047 46,238 38,000 50,408 24,820 33,503 49,989 96,237 893,785 15,150 (3,641) 3,056 596 (395) 10,349 804,526 1,052,479 6,190 6,190 - - 450,000 (682,000) (682,000) (6,190) - - - - (6,190) (480,000) (930,000) (6,870) 6,804 (6,190) - - 6,190 (1,162,000) (1,162,066) 15,150 (3,641) (3,134) 596 (395) 16,539 (357,474) (109,587) 74,677 34,097 67,683 9,403 63,436 (6,185) 1,022,798 4,006,642 $ 89,827 $ 30,456 $ 64,549 $ 9,999 $ 63,041 $ 10,354 $ 665,324 $ 3,897,055 -79- CITY OF RICHFIELD, MINNESOTA SPECIAL REVENUE FUND - LIQUOR CONTRIBUTIONS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 2013 Revenues: Investment Earnings Budgeted Amounts Original Final Ann 1brn Schedule 16 Variance with Final Budget Actual Over Amounts (Under) $ 135 $ (115) Other Financing Sources (Uses): Transfers in: Enterprise Funds 450,000 450,000 450,000 - Transfers out: Capital Project Funds (450,000) (450,000) (450,000) Net Other Financing Sources (Uses) - - - - Net increase in fund balance 400 250 135 (115) Fund Balance - January 1 131,546 131,546 131,546 - Fund Balance - December 31 $ 131,946 $ 131,796 $ 131,681 $ (115) -80- CITY OF RICHFIELD, MINNESOTA SPECIAL REVENUE FUND - TOURISM ADMINISTRATION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 2013 Revenues: Investment Earnings Miscellaneous: Other Total Revenues Budgeted Amounts Original Final $ 150 $ 120 Schedule 17 Variance with Final Budget Actual Over Amounts (Under) $ 56 $ (64) 7,000 8,200 9,526 1,326 7,150 8,320 9,582 1,262 Expenditures: Current Personnel services 11,680 11,680 11,680 - Net increase (decrease) in fund balance (4,530) (3,360) (2,098) 1,262 Fund Balance - January 1 45,196 45,196 45,196 - Fund Balance - December 31 $ 40,666 $ 41,836 $ 43,098 $ 1,262 -81 - CITY OF RICHFIELD, MINNESOTA SPECIAL REVENUE FUND - COMMUNICATIONS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 2013 Revenues: Franchise taxes Investment Earnings Total Revenues Expenditures: Current Personnel services Other services and charges Capital outlay Total Expenditures Excess of revenues over expenditures Other Financing Sources (Uses): Transfers out: General Fund Net Other Financing Sources (Uses): Net Increase (decrease) in fund balance Fund Balance - January 1 Fund Balance - December 31 Schedule 18 Variance with Final Budget Budgeted Amounts Actual Over Original Final Amounts (Under) $ 340,000 $ 360,000 $ 405,171 $ 45,171 6,500 3,500 1,846 (1,654) 346,500 363,500 407,017 43,517 157,340 164,170 154,249 (9,921) 118,000 90,000 103,623 13,623 - 25,000 22,486 (2,514) 275,340 279,170 280,358 1,188 71,160 84,330 126,659 42,329 (150,000) (150,000) - 150,000 (150,000) (150,000) - 150,000 (78,840) (65,670) 126,659 192,329 1,818,848 1,818, 848 1,818,848 $ 1,740,008 $ 1,753,178 $ 1,945,507 $ 192,329 -82- CITY OF RICHFIELD, MINNESOTA SPECIAL REVENUE FUND - ELECTIONS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 2013 Revenues: Investment Earnings Miscellaneous: Other Total Revenues Expenditures: Current Personnel services Other services and charges Total Expenditures Net increase in fund balance Fund Balance - January 1 Fund Balance - December 31 Budgeted Amounts Original Final $ 900 $ 850 Schedule 19 Variance with Final Budget Actual Over Amounts (Under) $ 496 $ (354) 225,000 212,250 217,422 5,172 225,900 213,100 217,918 4,818 98,000 95,190 76,945 (18,245) 17,500 30,000 24,590 (5,410) 115,500 125,190 101,535 (23,655) 110,400 87,910 116,383 28,473 508,860 508,860 508,860 - $ 619,260 $ 596,770 $ 625,243 $ 28,473 -83- CITY OF RICHFIELD, MINNESOTA SPECIAL REVENUE FUND - DRUG FORFEITURE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 2013 Revenues: Fees and Fines Investment Earnings Miscellaneous: Other Total Revenues Expenditures: Current Other services and charges Capital outlay Total Expenditures Excess of revenues over expenditures Other Financing Sources (Uses): Transfers out: Internal Service Fund Proceeds from sale of Capital Assets Net Other Financing Sources (Uses): Net increase (decrease) in fund balance Fund Balance - January 1 Fund Balance - December 31 Budgeted Amounts Actual Original Final Amounts Schedule 20 Variance with Final Budget Over (Under) $ 40,000 $ 40,000 $ 93,821 $ 53,821 1,000 500 245 (255) 3,000 3,000 - (3,000) 44,000 43,500 94,066 50,566 60,000 90,000 95,819 5,819 - - 8,561 8,561 60,000 90,000 104,380 14,380 (16,000) (46,500) (10,314) 36,186 - (6,870) (6,870) - - - 6,804 6,804 - (6,870) (66) 6,804 (16,000) (53,370) (10,380) 42,990 228,343 228,343 228,343 - $ 212,343 $ 174,973 $ 217,963 $ 42,990 -84- CITY OF RICHFIELD, MINNESOTA SPECIAL REVENUE FUND - 911 FEES SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 2013 Revenues: Intergovernmental revenues: 911 Fees Investment Earnings Total Revenues Expenditures: Current Other services and charges Net increase (decrease) in fund balance Fund Balance - January 1 Fund Balance - December 31 Schedule 21 Variance with Final Budget Budgeted Amounts Actual Over Original Final Amounts (Under) $ 47,470 $ 47,470 $ 48,697 $ 1,227 100 10 13 3 47,570 47,480 48,710 1,230 45,000 51,000 56,637 5,637 2,570 (3,520) (7,927) (4,407) 7,940 7,940 7,940 - $ 10,510 $ 4,420 $ 13 $ (4,407) -85- CITY OF RICHFIELD, MINNESOTA SPECIAL REVENUE FUND - PUBLIC SAFETY COMPLIANCE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 2013 Revenues: Intergovernmental: Federal Grants State County Investment Earnings Miscellaneous: Contributions Other Total Revenues Expenditures: Current Personnel services Other services and charges Total Expenditures Net increase in fund balance Fund Balance - January 1 Fund Balance - December 31 Budgeted Amounts Actual Original Final Amounts $ 29,900 $ 46,530 $ 24,724 - - 3,170 20,000 20,000 5,589 200 80 73 Schedule 22 Variance with Final Budget Over (Under) $ (21,806) 3,170 (14,411) (7) - - 10,136 10,136 21, 500 14,000 17,696 3,696 71,600 80,610 61,388 (19,222) 3,500 1,500 2,739 1,239 50,000 40,000 43,499 3,499 53,500 41,500 46,238 4,738 18,100 39,110 15,150 (23,960) 74,677 74,677 74,677 - $ 92,777 $ 113,787 $ 89,827 $ (23,960) -86- CITY OF RICHFIELD, MINNESOTA SPECIAL REVENUE FUND - RECREATION CONTRIBUTIONS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 2013 Revenues: Intergovernmental: State Investment Earnings Miscellaneous: Contributions Other Total Revenues Expenditures: Current Personnel services Other services and charges Total Expenditures Net Increase (decrease) in fund balance Fund Balance - January 1 Fund Balance - December 31 Schedule 23 Variance with Final Budget Budgeted Amounts Actual Over Original Final Amounts (Under) $ - $ 10,000 $ - (10,000) 80 80 39 (41) 9,620 9,000 20,302 11,302 - 14,540 14,018 (522) 9,700 33,620 34,359 739 - - 3,562 3,562 16,810 32,500 34,438 1,938 16,810 32,500 38,000 5,500 (7,110) 1,120 (3,641) (4,761) 34,097 34,097 34,097 - $ 26,987 $ 35,217 $ 30,456 $ (4,761) -87- CITY OF RICHFIELD, MINNESOTA SPECIAL REVENUE FUND - NATURE CENTER CONTRIBUTIONS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 2013 Revenues: Investment Earnings Miscellaneous: Contributions Total Revenues Expenditures: Current Personnel services Other services and charges Capital Outlay Total Expenditures Excess of revenues over expenditures Other Financing Sources (Uses): Transfers out: Special Revenue Fund Net Other Financing Sources (Uses): Net increase in fund balance Fund Balance - January 1 Fund Balance - December 31 Schedule 24 (6,190) (6,190) (6,190) (6,190) 8,500 4,890 (3,134) (8,024) 67,683 67,683 67,683 - $ 76,183 $ 72,573 $ 64,549 $ (8,024) -88- Variance with Final Budget Budgeted Amounts Actual Over Original Final Amounts (Under) $ 900 $ 150 $ 77 $ (73) 100,000 100,000 53,387 (46,613) 100,900 100,150 53,464 (46,686) 33,800 33,520 28,000 (5,520) 46,600 43,550 22,408 (21,142) 12,000 12,000 - (12,000) 92,400 89,070 50,408 (38,662) 8,500 11,080 3,056 (8,024) (6,190) (6,190) (6,190) (6,190) 8,500 4,890 (3,134) (8,024) 67,683 67,683 67,683 - $ 76,183 $ 72,573 $ 64,549 $ (8,024) -88- CITY OF RICHFIELD, MINNESOTA SPECIAL REVENUE FUND - COMMUNITY CENTER DAYS OUT SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 2013 Revenues: Investment Earnings Miscellaneous: Other Total Revenues Expenditures: Current Personnel services Other services and charges Total Expenditures Net increase (decrease) in fund balance Fund Balance - January 1 Fund Balance - December 31 Schedule 25 -89- Variance with Final Budget Budgeted Amounts Actual Over Original Final Amounts (Under) $ 30 $ 20 $ 13 $ (7) 17,710 20,640 25,403 4,763 17,740 20,660 25,416 4,756 1,600 1,600 1,600 - 16,190 19,540 23,220 3,680 17,790 21,140 24,820 3,680 (50) (480) 596 1,076 9,403 9,403 9,403 - $ 9,353 $ 8,923 $ 9,999 $ 1,076 -89- CITY OF RICHFIELD, MINNESOTA SPECIAL REVENUE FUND - PUBLIC HEALTH GRANTS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 2013 Revenues: Intergovernmental revenues: Federal grants Investment Earnings Total Revenues Expenditures: Current Personnel services Other services and charges Total Expenditures Net increase (decrease) in fund balance Fund Balance - January 1 Budgeted Amounts Actual Original Final Amounts Schedule 26 Variance with Final Budget Over (Under) $ 29,500 $ 35,760 $ 33,048 $ (2,712) 200 120 60 (60) 29,700 35,880 33,108 (2,772) 7,000 2,500 2,500 - 29,500 33,260 31,003 (2,257) 36,500 35,760 33,503 (2,257) (6,800) 120 (395) (515) 63,436 63,436 63,436 Fund Balance - December 31 $ 56,636 $ 63,556 $ 63,041 $ (515) CITY OF RICHFIELD, MINNESOTA SPECIAL REVENUE FUND -WOOD LAKE HALF MARATHON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 2013 Revenues: Investment Earnings Miscellaneous: Contributions Other Total Revenues Expenditures: Current Personnel services Other services and charges Total Expenditures Excess of revenues over expenditures Other Financing Sources (Uses): Transfers in: Special Revenue Fund Net Other Financing Sources (Uses): Net increase (decrease) in fund balance Fund Balance - January 1 Fund Balance - December 31 Schedule 27 Variance with Final Budget Budgeted Amounts Actual Over Original Final Amounts (Under) $ 80 $ - $ - $ - 11,000 11,000 8,661 (2,339) 65,000 60,000 51,677 (8,323) 76,080 71,000 60,338 (10,662) 24,000 23,800 24,000 200 44,000 36,200 25,989 (10,211) 68,000 60,000 49,989 (10,011) 8,080 11,000 10,349 (651) - 6,190 6,190 - - 6,190 6,190 - 8,080 17,190 16,539 (651) (6,185) (6,185) (6,185) - $ 1,895 $ 11,005 $ 10,354 $ (651) Schedule 28 CITY OF RICHFIELD, MINNESOTA SPECIAL REVENUE FUND - UTILITY FRANCHISE FEES SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 2013 -92- Variance with Final Budget Budgeted Amounts Actual Over Original Final Amounts (Under) Revenues: Franchise taxes $ 897,000 $ 898,000 $ 899,545 $ 1,545 Investment Earnings 1,500 2,000 1,218 (782) Total Revenues 898,500 900,000 900,763 763 Expenditures: Current Other services and charges 75,000 95,000 96,237 1,237 Excess of revenues over expenditures 823,500 805,000 804,526 (474) Other Financing Sources (Uses): Transfers out: General Fund (629,000) (682,000) (682,000) - Capital Project Fund - (480,000) (480,000) Net Other Financing Sources (Uses): (629,000) (1,162,000) (1,162,000) - Net increase in fund balance 194,500 (357,000) (357,474) (474) Fund Balance - January 1 1,022,798 1,022,798 1,022,798 - Fund Balance - December 31 $ 1,217,298 $ 665,798 $ 665,324 $ (474) -92- INTERNAL SERVICE FUNDS Internal Service Funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the government on a cost reimbursement basis. Internal Service Funds are authorized by Section 7.12, Subdivision 6 of the Richfield City Charter. The Central Garage and Equipment Fund, the Information Technology Fund, the Self Insurance Fund, Building Services Fund, and the Compensated Absences Fund, are self- sustaining funds providing service to other departments within the City and for which payments are made by the using department. -93- Statement 29 CITY OF RICHFIELD, MINNESOTA INTERNAL SERVICE FUNDS COMBINING STATEMENT OF NET POSITION December 31, 2013 LIABILITIES Current Liabilities: Accounts payable Central 76,774 46,549 31,356 - 204,549 Accrued salaries and benefits Garage & Information Self Building Compensated 37,009 Due to other governments Equipment Technology Insurance Services Absences 68 Compensated absences Fund Fund Fund Fund Fund Total ASSETS 67,176 107,246 46,549 54,980 439,383 715,334 Current assets: Cash and cash equivalents $ 1,127,407 $ 379,189 $ 4,311,483 $ 845,339 $ 13736,521 $ 8,399,939 Due from other funds - - 57,465 - - 57,465 Prepaid items - 1,250 - - - 1,250 Total current assets 1,127,407 380,439 4,368,948 845,339 1,736,521 8,458,654 Noncurrent assets: 110,241 159,352 1,116,197 105,767 1,736,521 3,228,078 Advances to other funds - - 1,015,172 - - 1,015,172 Capital assets: 2,805,356 223,423 - 230,705 - 3,259,484 Buildings and equipment 7,594,141 531,629 - 342,892 - 8,468,662 Less accumulated depreciation (437883785) (308,206) - (112,187) - (5,209,178) Total noncurrent assets 2,805,356 223,423 1,015,172 230,705 - 4,274,656 Total assets 3,932,763 603,862 5,384,120 1,076,044 1,736,521 12,733,310 LIABILITIES Current Liabilities: Accounts payable 49,870 76,774 46,549 31,356 - 204,549 Accrued salaries and benefits 9,240 16,630 - 11,139 - 37,009 Due to other governments 68 - - - - 68 Compensated absences 7,998 13,842 - 12,485 439,383 473,708 Total current liabilities 67,176 107,246 46,549 54,980 439,383 715,334 Noncurrent liabilities: Compensated absences 23,611 40,865 - 36,856 1,297,138 1,398,470 Net OPEB obligation 19,454 11,241 - 13,931 - 44,626 Claims and judgments - - 1,069,648 - - 1,069,648 Total noncurrent liabilities 43,065 52,106 1,069,648 50,787 1,297,138 2,512,744 Total liabilities 110,241 159,352 1,116,197 105,767 1,736,521 3,228,078 NET POSITON Net investment in capital assets 2,805,356 223,423 - 230,705 - 3,259,484 Unrestricted 1,017,166 221,087 4,267,923 739,572 6,245,748 Total net position $ 3,822,522 $ 444,510 $ 4,267,923 $ 970,277 $ $ 9,505,232 -94- Statement 30 CITY OF RICHFIELD, MINNESOTA INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION For the Year Ended December 31, 2013 NONOPERATING REVENUES Central Interest and investment revenue 916 Garage & Information Self Building Compensated 11,378 - Equipment Technology Insurance Services Absences Fund Fund Fund Fund Fund Total OPERATING REVENUES 1,801 235,626 Income before transfers (375,123) (127,059) (239,659) (10,088) Charges for Service $ 1,002,040 $ 871,665 $ 658,466 $ 7217402 $ - $ 3,253,573 Total operating revenues 1,002,040 871,665 658,466 721,402 - 3,253,573 OPERATING EXPENSES (2,059) (239,659) (22,588) - (57,559) Total net position - beginning 3,615,775 Personnel services 222,265 382,985 311,670 285,732 1,801 1,204,453 Other service and charges 714,931 564,584 742,020 422,103 - 2,443,638 Depreciation 517,066 51,453 - 24,518 - 593,037 Total operating expenses 1,454,262 999,022 1,053,690 732,353 1,801 4,241,128 Operating income (loss) (452,222) (127,357) (395,224) (10,951) (1,801) (987,555) NONOPERATING REVENUES Interest and investment revenue 916 298 26,463 863 1,801 30,341 Miscellaneous revenue 11,378 - 129,102 - - 140,480 Gain (loss) on disposal of capital assets 64,805 - 64,805 Total nonoperating revenue 77,099 298 155,565 863 1,801 235,626 Income before transfers (375,123) (127,059) (239,659) (10,088) - (751,929) Transfers in 581,870 125,000 - - - 706,870 Transfers out - - - (12,500) - (12,500) Changes in net position 206,747 (2,059) (239,659) (22,588) - (57,559) Total net position - beginning 3,615,775 446,569 4,507,582 992,865 9,562,791 Total net position - ending $ 3,822,522 $ 444,510 $ 4,267,923 $ 970,277 $ - $ 9,505,232 -95- CITY OF RICHFIELD, MINNESOTA Statement 31 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS For the Year Ended December 31, 2013 Central Garage & Information Self Building Compensated Equipment Technology Insurance Services Absences Fund Fund Fund Fund Fund Totals Cash flows from operating activities: 11,378 - 129,102 140,480 Depreciation Receipts from interfund services provided $ 1,002,040 $ 871,735 $ 658,466 $ 721,402 $ - $ 3,253,643 Payment to employees (215,495) (373,122) (311,670) (282,413) (23,753) (1,206,453) Payment to suppliers (730,264) (664,302) (578,861) (430,878) - (2,404,305) Miscellaneous revenue 11,378 Increase (decrease) in payables 129,102 (100,969) (4,352) 140,480 Net cash flows from operating activities 67,659 (165,689) (102,963) 8,111 (23,753) (216,635) Cash flows from noncapital financing activities: 4,933 7,281 1,398 (21,952) (8,340) Increase (decrease) in due to other governments Transfer from Capital Project Funds 581,870 125,000 - (12,500) Increase (decrease) in net OPEB obligations 694,370 Interfund borrowing - - 56,328 Increase (decrease) in claims and judgements - 56,328 Net cash flows from noncapital financing 155,511 Total adjustments 519,881 (38,332) 292,261 activities: 581,870 125,000 56,328 (12,500) (102,963) $ 750,698 Cash flows from capital and related financing activities: Proceeds from sale of property 62,270 - - 62,270 Acquisition of capital assets (612,506) (11,832) (624,338) Net cash flows from capital and related financing activities (550,236) (11,832) - - (562,068) Cash flows from investing activities: Investment income 916 298 26,463 863 1,801 30,341 Net increase (decrease) in cash and cash equivalents 100,209 (52,223) (20,172) (3,526) (21,952) 2,336 Cash and cash equivalents - January 1 1,027,198 431,412 4,331,655 848,865 1,758,473 8,397,603 Cash and cash equivalents - December 31 $ 1,127,407 $ 379,189 $ 4,311,483 $ 845,339 $ 1,736,521 $ 8,399,939 Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) $ (452,222) $ (127,357) $ (395,224) $ (10,951) $ (1,801) $ (987,555) Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Miscellaneous revenue 11,378 - 129,102 140,480 Depreciation 517,066 51,453 - 24,518 593,037 Changes in assets and liabilities: Decrease (increase) in receivables - 70 - 70 Decrease (increase) in prepaid items - 12,000 12,000 Increase (decrease) in payables (18,618) (100,969) (4,352) (10,312) (134,251) Increase (decrease) in salaries and benefits 1,837 2,582 1,921 6,340 Increase (decrease) in compensated absences 4,933 7,281 1,398 (21,952) (8,340) Increase (decrease) in due to other governments 27 - 27 Increase (decrease) in net OPEB obligations 3,258 1,251 - 1,537 6,046 Increase (decrease) in claims and judgements - - 155,511 155,511 Total adjustments 519,881 (38,332) 292,261 19,062 (21,952) 770,920 Net cash flows from operating activities $ 67,659 $ (165,689) $ (102,963) $ 8,111 $ (23,753) $ (216,635) FIDUCIARY FUNDS Fiduciary Funds are used to report assets held in a trustee or agency capacity for others and therefore cannot be used to support the government's own programs. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurements of results of operations. Building Permit — Surcharges Fund is maintained to account for surcharges collected for the state and to remit these funds to them. Escrow Fund is maintained to account for various deposits, mainly contractors' deposits, to guarantee work performance improvements required by the City. Snowmobile — Boat Licenses Fund accounts for monies collected for registration of snowmobile and boat licenses and remits these funds to the Department of Natural Resources. Motor Vehicle Licenses Fund accounts for monies collected for registration and license fees of motor vehicles and remits these funds to the State of Minnesota. South Hennepin Human Services is maintained to account for the payroll service that the City provides and the billings made for reimbursement for this service. As of December 31, 2013, South Hennepin Human Services has dissolved and the City no longer provides this service. 1-494 Corridor Commission Fund is maintained to account for the activities of a joint powers organization established to address concerns about traffic along the 1-494 corridor. -97- THIS PAGE WAS LEFT BLANK INTENTIONALLY -98- CITY OF RICHFIELD COMBINING STATEMENT OF ASSETS AND LIABILITIES FIDUCIARY FUNDS December 31, 2013 Agency Funds Statement 32 Liabilities Accounts payable $ - $ - $ - $ 43,976 $ 43,976 Due to other governments 2,008 - 1,464 134,771 138,243 Deposits - 421,286 - - 421,286 Total Liabilities $ 2,008 $ 421,286 $ 1,464 $ 178,747 $ 603,505 IME Building Snowmobile 1-494 Total Permit Escrow Boat Corridor Fiduciary Surcharges Fund Licenses Commission Funds Assets Cash and investments $ 2,008 $ 421,286 $ 1,464 119,190 $ 543,948 Due from other governments - - - 59,078 59,078 Receivables, net - - - 479 479 $ 2,008 $ 421,286 $ 1,464 $ 178,747 $ 603,505 Liabilities Accounts payable $ - $ - $ - $ 43,976 $ 43,976 Due to other governments 2,008 - 1,464 134,771 138,243 Deposits - 421,286 - - 421,286 Total Liabilities $ 2,008 $ 421,286 $ 1,464 $ 178,747 $ 603,505 IME CITY OF RICHFIELD, MINNESOTA FIDUCIARY FUNDS COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES For the Year Ended December 31, 2013 Balance Balance January 1, December 31, 2013 Additions Deductions 2013 BUILDING PERMIT SURCHARGES ASSETS Cash and investments $ 1,478 $ 23,372 $ 22,842 $ 2,008 LIABILITIES Due to other governments $ 1,478 $ 46,727 $ 46,197 $ 2,008 ESCROW FUND ASSETS Cash and investments $ 421,059 $ 307,341 $ 307,114 $ 421,286 LIABILITIES Deposits $ 421,059 $ 304,240 $ 304,013 $ 421,286 SNOWMOBILE - BOAT LICENSES ASSETS Cash and investments $ 1,818 $ 129,786 $ 130,140 $ 1,464 LIABILITIES Due to other governments $ 1,818 $ 129,786 $ 130,140 $ 1,464 MOTOR VEHICLE LICENSES ASSETS Cash and investments $ - $ 12,063,366 $ 12,063,366 $ - LIABILITIES Due to other governments $ - $ 12,063,366 $ 12,063,366 $ - SOUTH HENNEPIN HUMAN SERVICES ASSETS Cash and investments $ 286 $ 442 $ 728 $ - $ 286 $ 442 $ 728 $ - LIABILITIES Due to other governments $ 286 - $ 286 - $ 286 $ - $ 286 $ - 1-494 CORRIDOR COMMISSION ASSETS Cash and investments $ - $ 433,153 $ 313,963 $ 119,190 Due from other governments - 59,078 - 59,078 Receivables, net - 479 - 479 $ - $ 492,710 $ 313,963 $ 178,747 LIABILITIES Accounts payable $ - 357,989 $ 314,013 $ 43,976 Due to other governments - 134,771 - 134,771 $ - $ 492,760 $ 314,013 $ 178,747 Balance January 1, 2013 Additions Deductions Statement 33 Balance December 31, 2013 TOTAL - ALL AGENCY FUNDS ASSETS Cash and investments $ 424,641 $ 12,957,460 $ 12,838,153 $ 543,948 Due from other governments - 59,078 - 59,078 Receivables, net - 479 - 479 TOTAL ASSETS $ 424,641 $ 13,017,017 $ 12,838,153 $ 603,505 LIABILITIES Accounts payable - 357,989 314,013 43,976 Due to other governments 3,582 12,374,650 12,239,989 138,243 Deposits 421,059 304,240 304,013 421,286 TOTAL LIABILITIES $ 424,641 $ 13,036,879 $ 12,858,015 $ 603,505 THIS PAGE WAS LEFT BLANK INTENTIONALLY -102- SUPPLEMENTARY FINANCIAL INFORMATION - 103- HOUSING AND REDEVELOPMENT AUTHORITY OF RICHFIELD, MINNESOTA COMBINED BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2013 LIABILITIES. DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Special Capital General Revenue Projects ASSETS & DEFERRED OUTFLOWS OF RESOURCES Due to other government - 1,486 - Cash and investments $ 1,326,126 $ 1,643,700 $ 5,225,497 Accrued interest receivable - 2,293 - Due from other governments 7,511 9,274 4,367 Accounts receivable 5,193 40,230 6,050 Taxes receivable - - 560 Assets held for resale - 157,744 2,188,334 Restricted cash - 5,508 - Long term second mortgage receivable 523,007 2,237,123 55,470 Allowance for doubtful accounts (523,007) (2,237,123) (55,470) Total Assets 1,338,830 1,858,749 7,424,808 LIABILITIES. DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable $ 65,013 $ 28,182 $ 402,193 Due to other government - 1,486 - Total Liabilities 65,013 29,668 402,193 Deferred Inflows of Resources: Unavailable revenue - property taxes $ - $ - $ - Unavailable revenue - tax increment - - 560 Unavailable revenue - land held for resale - - - Total Deferred Inflows of Resources - - 560 Fund Balances: Restricted 175,174 6,117,262 Committed - 1,525,406 - Assigned 128,501 2,726,517 Unassigned 1,273,817 - (1,821,724) Total Fund Balances 1,273,817 1,829,081 7,022,055 Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 1,338,830 $ 1,858,749 $ 7,424,808 Fund balance reported above Allocation to reflect consolidation on internal service fund activities related to component unit Other long-term assets are not available to pay for current period expenditures and therefore, are deferred in component unit funds. Delinquent tax increment Net position of component unit activities -104- Totals 2013 $ 8,195,323 2,293 21,152 51,473 560 2,346,078 5,508 2,815,600 (2,815,600) 10,622,387 $ 495,388 1,486 496,874 560 560 6,292,436 1,525,406 2,855,018 (547,907) 10,124,953 $ 10,622,387 $ 10,124,953 (426,982) 560 9,698,531 2012 $ 7,384,891 2,244 19,270 45,778 4,020 3,764,234 9,060 2,859,909 (2,859,909) $ 11,229,497 $ 218,339 41,257 259,596 3,769 251 3,764,234 3,768,254 3,852,433 1,499,313 2,710,444 (860,543) 7,201,647 $ 11,229,497 -105- Statement 34 HOUSING AND REDEVELOPMENT AUTHORITY OF RICHFIELD, MINNESOTA COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Year December 31, 2013 Revenues: Taxes Intergovernmental revenue Investment income Miscellaneous revenues Total Revenues Expenditures - Current: Personnel services Other services and charges Capital outlay Total Expenditures Excess (Deficiency) of Revenues over Expenditures Other Financing Sources (Uses): Transfers in: General Fund Special Revenue Funds Capital Project Funds Transfers out: Special Revenue Funds Capital Project Funds Net Other Financing Sources (Uses) Net Changes in Fund Balances 277,822 143,783 317,897 177,233 1,564,006 3,239,776 - - 1,361,062 455,055 1,707,789 4,918,735 39,096 (17,764) 108,478 41,897 - - 54,416 438,088 (41,897) - - (54,416) (438,088) (41,897) (12,519) 54,416 (2,801) (30,283) 162,894 Fund Balances - January 1 1,276,618 1,656,584 4,268,445 Prior Period Adjustment - 202,780 2,590,716 Fund Balances - January 1 - Restated 13276,618 1,859,364 6,859,161 Fund Balances - December 31 $ 1,273,817 $ 1,829,081 $ 7,022,055 Adjustment to reflect the consolidation of internal service fund activities related to component unit Adjustment to reflect the change in other long-term assets not available to pay current period expenditures Change in net positon of component unit activities Wi1M Special Capital General Revenue Projects $ 457,958 $ - $ 4,106,288 25,000 1,618,280 455,336 1,095 (11,484) 4,822 10,098 83,229 460,767 494,151 1,690,025 5,027,213 277,822 143,783 317,897 177,233 1,564,006 3,239,776 - - 1,361,062 455,055 1,707,789 4,918,735 39,096 (17,764) 108,478 41,897 - - 54,416 438,088 (41,897) - - (54,416) (438,088) (41,897) (12,519) 54,416 (2,801) (30,283) 162,894 Fund Balances - January 1 1,276,618 1,656,584 4,268,445 Prior Period Adjustment - 202,780 2,590,716 Fund Balances - January 1 - Restated 13276,618 1,859,364 6,859,161 Fund Balances - December 31 $ 1,273,817 $ 1,829,081 $ 7,022,055 Adjustment to reflect the consolidation of internal service fund activities related to component unit Adjustment to reflect the change in other long-term assets not available to pay current period expenditures Change in net positon of component unit activities Wi1M Totals 2013 $ 4,564,246 2,098,616 (5,567) 554,094 2012 $ 5,989,707 1,928,940 19,991 476,384 7,211,389 8,415,022 739,502 4,981,015 1,361,062 776,842 6,023,594 2,238,473 7,081,579 9,038,909 129,810 (623,887) 41,897 54,416 438,088 (41,897) (492,504) 88,108 1,128,176 (18, 548) (1,197,736) 129,810 (623,887) 7,825,534 (16,766) (3,460) 109,584 7,825,534 $ 7,201,647 -107- Statement 35 City of Richfield Statement 36 Housing and Redevelopment Authority - Housing Choice Vouchers Financial Data Schedule Balance Sheet December 31, 2013 Assets Current assets 2013 113 Cash - other restricted $ 5,508 121 Accounts receivable - PHA projects 9,274 128 Fraud recovery 10,556 128.1 Allowance for doubtful accounts - fraud (5,926) 190 Total assets $ 19,412 Liabilities and Fund Balance Current liabilities 312 Accounts payable <= 90 days $ 495 333 Accounts payable - other government 1,531 310 Total current liabilities 2,026 509.2 Fund balance reserved 94,221 512.2 Unreserved, undesignated fund balance (76,835) 513 Total fund balance 17,386 600 Total liabilities and fund balance $ 19,412 Note: Financial Data Schedules - U.S. Deuartment of Housina and Urban Development The City has presented the financial data schedules for its Housing and Redevelopment Authority. These schedules are presented on a modified accrual basis of accounting. The information in these schedules is presented in accordance with the U.S. Department of Housing and Urban Development, Office of Public Housing (HUD) and Indian Housing, Real Estate Assessment Center and the Financial Assessment Subsystem - Public Housing (FASS-PH). Accordingly, some of the amounts presented in these schedules may differ from the amounts presented in, or used in the preparation of, the City's basic financial statements. -108- City of Richfield Housing and Redevelopment Authority - Housing Choice Vouchers Financial Data Schedule Income Statement For the year ended December 31, 2013 Revenue 2013 70600 HUD PHA operating grants $1,424,111 71500 Other revenue 606,386 70000 Total revenue 2,030,497 Operating expenses Administrative expenses 91100 Administrative salaries 107,837 91200 Auditing fees 1,000 91500 Employee benefit contributions - administrative 35,946 91600 Office expenses 28,867 91900 Other 367 91000 Total operating administrative expenses 174,017 General expenses 96200 Other general expenses 16,865 96900 Total operating expenses 190,882 Excess of operating revenue over operating expenses 1,839,615 Otherexpenses 97300 Housing assistance payments 1,274,770 97350 HAP Portability -in 564,374 90000 Total other expenses 1,839,144 Net increase (decrease) in net assets 471 Net assets - beginning 16,915 Net assets - ending $ 17,386 Memo account information 11170 Administrative fee equity (76,835) 11180 Housing assstance payments equity 94,221 Total net asests $ 17,386 11190 Unit months available 2,541 11210 Number of unit months leased 2,462 Note: Financial Data Schedules - U.S. Department of Housina and Urban Development The City has presented the financial data schedules for its Housing and Redevelopment Authority. These schedules are presented on a modified accrual basis of accounting. The information in these schedules is presented in accordance with the U.S. Department of Housing and Urban Development, Office of Public Housing (HUD) and Indian Housing, Real Estate Assessment Center and the Financial Assessment Subsystem - Public Housing (FASS-PH). Accordingly, some of the amounts presented in these schedules may differ from the amounts presented in, or used in the preparation of, the City's basic financial statements. Elm Statement 37 THIS PAGE WAS LEFT BLANK INTENTIONALLY - 110- III. STATISTICAL SECTION (UNAUDITED) This part of the City of Richfield's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the government's overall financial health. Financial Trends These schedules contain trend information to help the reader understand how the government's financial performance and well-being have changed over time. Revenue Capacity These schedules contain information to help the reader assess the government's most significant local revenue source, the property tax. Debt Capacity These schedules present information to help the reader assess the affordability of the government's current levels of outstanding debt and the government's ability to issue additional debt in the future. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the government's financial activities take place. Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the government's financial report relates to the services the government provides and the activities it performs. -112- C O_ C G m n u� n 00 O ED N N ED CP a O i oD N n N n n O � tM+l v) N ED M 1� N T N ED M V ED OOf O N R C N N R C N R Cl d ` GR V R d R R R f0 N O V IA M M U O ' d U R U m a � w > c � > c d c c i � O V fD C ED N M CD N C d p V O l.L S R d a R d d O N r= R d £ N CD 7 It] 7 f� M � f0 f0 I O M M M O ED M N O cl N M O M N 7 ED v) v) O C a0 N r ao 7 CO C N (n U Z J G Z K :3 G 7 Z w � O a a Of ED V M Cf V m a` M t9 M t9 M O N O O n ED Cl OC f r O O O N 7 fD N N v) M t9 M t9 M CO Y1 Y1 Oi O N 1� O ED ED N e9 M i9 M e9 o ED rn ED f` a rn ED ED N � O f� 1(1 M fD ED O CD N Cf O fD O DD N I ED v) N � N N O O M Cll O o ti M o o N END r o o rn ut as ut as V V I N v n m v fD aD 7 v O v� o fND rn m N v N n n O M N N N d N N N i9 M i9 M i9 v) cc O ED v) H M T f� H O o0 O ftl r N N n I v) I O t0 a a LL'1 CD N M n t0 O V N � l0 r M N N m r 1A M 1A M 1A CD ti v ED 7 in M m N o ED fl ED m ap m m Yf ' f` O DD N M IA N f0' 0 M N N' r a0 N N N I N m M t9 M t9 M O M O EO O DD N � CO f O U O N LL'i M CO 7 u1 O M CD M lL V V O C1 M ED N fD N 7 N Of -i f`9 N N r m N N N M uM'] e9 M e9 M e9 -112- C O_ C G N C O O O rL O N R C N N R C N R Cl d ` GR V R d R R R T O d U d U R U m a � w > c � > c d c c i C N N U C C U C a r d E C d p V O l.L S R d a R d d O N r= R d £ CL d N d d T '36O F 7 O d N d f7 d N d f7 C O N d f7 R O a () U w% y U�- C N O N C N C N (n U Z J G Z K :3 G 7 Z w GZ WG (7 m a` -112- THIS PAGE WAS LEFT BLANK INTENTIONALLY - 113- m OJ O OJ OJ N m N M 7 m m N N N M M N !� OJ m m M M M N N N m N N V O m N A m m M_ m M_ V m_ N f`_ ' mN N_ N_ Of_ f`m Of _ _ f� O N M f� Of M Of Of m f� V m _ _ m r cD Of O f� M N V _ N cD N f� N N Neq!` m T N R ci N _ _ mR IR M Lq� f� O N 7 N N_ m_ V m Lq m_ N N N m_ M_ 7 m ' N Iq N N N_ N _ N T 7 _ _ T N _ _ m N N _ m M 7 _ T N N N 7 Of_ Of Of M N_ MI M NR Of_ R M_ m _ 7 N N 00 m N m m m M N m� M N N O N N T N N O V N m V m N N m V_ V N G N M m Lq _ N V m N �i m vi �i a M m ci a N �i vi � m N m N N V Nw N 7 N N 7 N T N m N M V m V m M N m M N m m V N M m m m N M N 0 N A c M m Mm Im m N - 1 N V M m M_ m N N N � � N - N� N m 7 N N V N Is m N m Of V V O f� � m N V � M N m m M N N li m m f� N N M m V m T N m m m N I� O N M m m N Cf m N f� N N N N N m N T fi N N 7 N ' M R N m !� N " " V N N N m N m m " f� " " I� N N Of m m N m O m N N n � M w v 3 c w c � v x m w 3 - n m n u c o a > a o a cc p p m e — W p« U w = W •3 U vi w e a d W W D C w C U p R U R U •� _ > ` DI R _T > d - C d w > C > C R D R w > > w w a} d R > "6 Y D C w d LL 3 3 U w > Y R S w Y x y a1 C d '6 >s L p S d w d d Lr - E O. w T > r w> U C.7 O 1 LL U a a = E J fn K N U O 1 LL C.7 a' a 0 0 a LL a a o V a U a a o N R R S; O N w Of N 7 N V 4 M O O n M_ M O D M N fz N N n n N N w f ON f� f� m R N V M w V Of M M N m O V M M _ Of _ ^ f: m N _ _ _ _ n w M M M m m M n N A V N N N ` N N N N m `• m m m N a a � m m m w f� N V M N m O m V O fp O M V pf IR N I� IR M Ii M m7 w_ m fes_ m I� CD I� I` M 7 m _ _ m V N V Of N N m N V m A V V m m m w��� w_ V O M Of m m M O w m M w M n f� - If) m m n m N m M w m 7 Mm w M f� m m m 7 N w m M m I� r• O N _ O O w 11 m N � N M M w N o N N m M m� N Ptm m� w' V M m _ �_ m _ _ M V N M M w N I• O M m m O N m N li w m m m m^ C w w w A�N w N r I NN N m V r N M CNO 7 ' M O 7 n I` O It 7 7 w N w m w n m n m w Nr 1� M t• t• N w r w Cr f• n N 6 � V � N 1� � M t• � 7 w V m m n n cND M �^ A w m N n w w M w V V c 0 v w p � c w v a 3 c Z w v c c R � C a U R X R •> .7 .7 •� .7 R U V �j O. d > .> y R w R R y .� d } R 5 d 5 —otj z >Lr n - N p W 6 T L y d w. 5 LL J `o N 'w v °1 'w w d a w R f7 E v w E LL' v u w w> w w E w E > R U" L R U '? 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V i N i O C O a1 Q tno-1 a w z E a E 3 Q F- ii s tin a° ¢ ¢' a LLI a ii O M 3 - 130 - r N M ti m m r r r q N r r r N LO 01 It r It It O N N N Q1 C� M 1, M r O 117 O N M r r N r r N M ti M m r r r N r r r t0 N7 01 041 -T r O q O N N N -TQ1 M O O N M r r N r r N M ti M m r r r N r r r N7 le 01 T r O q O N N N Qr1 M 1, r e r O 1C) O N M r r N r r N T le le m r r r N r r r M N7 le 01 O r O aD It O N N N Qr1 Ln UD r l r O 1C) O Nm r r N r r N T q M O r r r N r r r M 117 C1 r tD aD Ln W N N �le p 117 w r O r LO O N M r r N r r N T q M O r r r N r r r M N7 le 01 r O 00 Lr) W N N N r p Ln O r r O 117 O N M r r N r r N CD le N r r of Lr) T tq M Lf) WN N N p 117 w r r O r 1(J O N M r r N r r N T le M r r r r N r r r M 117 le 01 r O M 1L') W N N N p 117 CO r l r O 117 O N M r r N r r r N N q M r r r r N r r r 1CJ Lr) T M w M w W N N N M Q1 T C r r O r 1 (J p N M r r N r r r N O q M r r r r -q N r r r W) 117 le Im CL) (a N N N M C1CJ 6 r r O 117 F- 04 N M r r m N r > 0 a m d C CV a N L C O � R m ZA � O > C cn C O N L O N a) m N R 0 0 H C a1 a1 d a) coo N O C C L d N R R a1 U V y w i O N N <6 a1 N '° w m O Y a) C N w CL a)R umNi V $ a1 C V y C C_ _A C_ C a) In w m OL w N V ZA L1 OC 47 R V L a1 o ca .° w m U C 7 3 C R°-0 a1 m£ i �` R R£ m O O° a a1 w R y T a) V Y y s 3 ++ 0 d :° m N F h R m 0 0 o m R ° r m° m z rn a s in 2 in H -.e Q a m rn x U z ii in rn in C c i LL a ii O M w z -131 THIS PAGE WAS LEFT BLANK INTENTIONALLY -132- COMPREHENSIVE ANNUAL FINANCIAL REPORT For The Year Ended December 31, 2013 HOUSING AND REDEVELOPMENT AUTHORITY OF RICHFIELD, MINNESOTA J CITY OF RICHFIELD, MINNESOTA ANNUAL FINANCIAL REPORT HOUSING AND REDEVELOPMENT AUTHORITY RICHFIELD, MINNESOTA J For The Year Ended DECEMBER 31, 2013 DEPARTMENT OF FINANCE Christopher T. Regis, Finance Manager Member of Government Finance Officers Association of United States and Canada - 1 - THIS PAGE WAS LEFT BLANK INTENTIONALLY -2- HOUSING AND REDEVELOPMENT AUTHORITY OF RICHFIELD, MINNESOTA DECEMBER 31, 2013 TABLE OF CONTENTS INTRODUCTORY SECTION Tittle Page Table of Contents Appointed Officials 11. General Purpose Financial Statements: Combined Balance Sheet - All Fund Types and Account Group Combined Statement Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types II -A Financial Statements of Individual Funds and Account Group: General Fund: Comparative Balance Sheet Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Special Revenue Funds: Combining Balance Sheet Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Deficits) Capital Improvement Fund: Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual New Home Program Fund: Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Housing and Rehabilitation Program Fund: Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Housing Assistance Program Fund: Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Kids @ Home Program Fund: Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual -3- 1 3 5 Form A 8 Form B 10 Form C 14 Form C-1 15 Form D 16 Form D-1 18 Form E 20 Form F 21 Form G 22 Form H 23 Form 1 24 Neighborhood Stabilization Program Statement of Revenues, Expenditures, and Changes in Fund Form J 25 Balance - Budget and Actual Capital Projects Funds: Combining Balance Sheet Form K 26 Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficits) Form L 30 -4- CITY OF RICHFIELD, MINNESOTA HOUSING AND REDEVELOPMENT AUTHORITY OFFICIALS HRA COMMISSIONERS SUZANNE M. SANDAHL - CHAIR COMMISSIONER - DORIS RUBENSTEIN COMMISSIONER - MARY SUPPLE COMMISSIONER - DAVID GEPNER COMMISSIONER - DEBBIE GOETTEL ADMINISTRATIVE STAFF STEVEN L. DEVICH - EXECUTIVE DIRECTOR JOHN STARK - COMMUNITY DEVELOPMENT DIRECTOR CHRIS REGIS - FINANCE MANAGER -5- THIS PAGE WAS LEFT BLANK INTENTIONALLY II. GENERAL PURPOSE FINANCIAL STATEMENTS HOUSING AND REDEVELOPMENT AUTHORITY OF RICHFIELD, MINNESOTA COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUP December 31, 2013 Governmental Fund Types Special Capital General Revenue Projects ASSETS & DEFERRED OUTFLOWS OF RESOURCES Cash and investments $ 1,300,828 $ 1,643,700 $ 5,250,795 Accrued interest receivable - 2,293 - Due from other governments 7,511 9,274 4,367 Accounts receivable 5,193 40,230 6,050 Taxes receivable - - 560 Due from other funds 25,298 - 1,416,208 Assets held for resale - 157,744 2,188,334 Restricted cash - 5,508 - Long term second mortgage receivable 523,007 2,237,123 55,470 Allowance for uncollectible accounts (523,007) (2,237,123) (55,470) Total Assets $ 1,338,830 $ 1,858,749 $ 8,866,314 LIABILITIES. DEFERRED INFLOWS OF :7=Rfe1l1:To]=RT-11 `I1j 111 `►I ej _1IF-11 `►1:s3 4111111111 Liabilities: Accounts payable $ 65,013 $ 28,182 $ 402,193 Due to other government - 1,486 - Due to other funds - - 1,441,506 Total Liabilities 65,013 29,668 1,843,699 Deferred Inflows of Resources: Unavailable revenue - property taxes $ - $ - $ - Unavailable revenue - tax increment - - 560 Unavailable revenue - land held for resale - - - Total Deferred Inflows of Resources - - 560 Fund Balances: Restricted - 175,174 6,117,262 Committed - 1,525,406 - Assigned - 128,501 2,726,517 Unassigned 1,273,817 - (1,821,724) Total Fund Balances 1,273,817 1,829,081 7,022,055 Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 1,338,830 $ 1,858,749 $ 8,866,314 FORM A Totals (Memorandum Only) 2013 $ 8,195,323 2,293 21,152 51,473 560 1,441,506 2,346,078 5,508 2,815,600 (2,815,600) $ 12,063,893 $ 495,388 1,486 1,441,506 1,938,380 560 560 6,292,436 1,525,406 2,855,018 (547,907) 10,124,953 2012 $ 7,384,891 2,244 19,270 45,778 4,020 2,075,031 3,764,234 9,060 2,859,909 (2,859,909) $ 13,304,528 $ 218,339 41,257 2,075,031 2,334,627 3,769 251 3,764,234 3,768,254 3,852,433 1,499,313 2,710,444 (860,543) 7,201,647 $ 12,063,893 $ 13,304,528 HOUSING AND REDEVELOPMENT AUTHORITY OF RICHFIELD, MINNESOTA COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES For the Year December 31, 2013 Revenues: Taxes Intergovernmental revenue Investment income Miscellaneous revenues Total Revenues Expenditures - Personnel services Other services and charges Capital improvements Total Expenditures Excess (Deficiency) of Revenues over Expenditures Other Financing Sources (Uses): Operating transfers in: General Fund Special Revenue Funds Capital Project Funds Operating transfers out: Special Revenue Funds Capital Project Funds Net Other Financing Sources (Uses) Excess (Deficiency) of Revenues & Other Financing Sources over Expenditures & Other Financing Uses Fund Balances - January 1 Prior Period Adjustment Fund Balances - January 1 - Restated Fund Balances - December 31 Governmental Fund Special $ 457,958 25,000 1,095 1,618,280 (11,484) Capital Projects $ 4,106,288 455,336 4,822 460,767 494,151 1,690,025 5,027,213 277,822 143,783 317,897 177,233 1,564,006 3,239,776 - - 1,361,062 455,055 1,707,789 4,918,735 39,096 (17,764) 108,478 41,897 - - 54,416 438,088 (41,897) - - (54,416) (438,088) (41,897) (12,519) 54,416 (2,801) (30,283) 1,276,618 1,656,584 162,894 4,268,445 2,590,716 1,276,618 1,859,364 6,859,161 $ 1,273,817 $ 1,829,081 $ 7,022,055 -10- FORM B Totals (Memorandum Only) 2013 2012 $ 4,564,246 2,098,616 (5,567) 554,094 7,211,389 739,502 4,981,015 1,361,062 7,081,579 $ 5,989,707 1,928,940 19,991 476,384 8,415,022 776,842 6,023,594 2,238,473 9,038,909 129,810 (623,887) 41,897 54,416 438,088 (41,897) (492,504) 88,108 1,128,176 (18, 548) (1,197,736) 129,810 (623,887) 7,201,647 7,825,534 2,793,496 9,995,143 7,825,534 $ 10,124,953 $ 7,201,647 - 11 - THIS PAGE WAS LEFT BLANK INTENTIONALLY -12- II -A. FINANCIAL STATEMENTS OF INDIVIDUAL FUNDS AND ACCOUNT GROUPS -13- HOUSING AND REDEVELOPMENT AUTHORITY FORM C OF RICHFIELD, MINNESOTA GENERALFUND COMPARATIVE BALANCE SHEET December 31, 2013 and 2012 ASSETS Cash and temporary cash investments Due from other governments Accounts receivable Due from other funds Taxes receivable Deferred loan receivable Allowance for uncollectible accounts Total Assets LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCE Liabilities: Accounts payable Total Liabilities Deferred Inflows of Resources: Unavailable revenue - property taxes Fund Balances: - Unassigned Total Fund Balance Total Liabilities, Deferred Inflows of Resources and Fund Balance -14- $ 1,300,828 $ 1,332,985 7,511 2,590 5,193 - 25,298 - - 3,769 523,007 550,350 (523,007) (550,350) $ 1,338,830 $ 1,339,344 65,013 58,957 - 3,769 3,769 1,273,817 1,276,618 HOUSING AND REDEVELOPMENT AUTHORITY OF RICHFIELD, MINNESOTA GENERALFUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2013 Revenues: Taxes: Current ad valorem Delinquent ad valorem Total Taxes Intergovernmental revenues - Local: Other Total Intergovernmental Revenues Miscellaneous revenues: Investment income Other Total Miscellaneous Revenues Total Revenues Expenditures: General Government: Personal services Other services and charges Total Expenditures Excess (Deficiency) of Revenues over Expenditures Final Budget $ 447,480 AA7 AOn 2013 FORM C-1 25,000 25,000 - 25,000 25,000 - 3,000 1,095 (1,905) 2,262 13 inn A n nn0 c Ono 4C nrn AG9 CT.;; AAA AGA An A7A CA -7 CnA 238,370 Over 39,452 148,483 (Under) 2012 Actual Budget Actual $ 453,328 $ 5,848 $ 497,398 4,630 4,630 1,991 AC7 AGO An A70 Ann Ton 25,000 25,000 - 25,000 25,000 - 3,000 1,095 (1,905) 2,262 13 inn A n nn0 c Ono 4C nrn AG9 CT.;; AAA AGA An A7A CA -7 CnA 238,370 277,822 39,452 148,483 209,860 177,233 (32,627) 216,378 448,230 455,055 6,825 364,861 5,450 39,096 33,646 152,740 Other Financing Sources (Uses): Transfer from (to) other funds: HRA: Special Revenue Fund (53,270) (41,897) 11,373 (18,548) Capital Projects Funds - - - (69,560) Total Other Financing (Uses) (53,270) (41,897) 11,373 (88,108) Excess (Deficiency) of Revenues and Other Sources over Expenditures and Other Uses (47,820) (2,801) 45,019 64,632 Fund Balance - January 1 1,276,618 1,276,618 - 1,211,986 Fund Balance - December 31 $ 1,228,798 $ 1,273,817 $ 45,019 $ 1,276,618 -15- HOUSING AND REDEVELOPMENT AUTHORITY OF RICHFIELD, MINNESOTA SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET December 31, 2013 and 2012 ASSETS Cash and temporary cash investments Accrued interest receivable Due from other governments Accounts receivable Assets held for resale Restricted cash Long term secon mortgage receivable Allowance for uncollectible accounts Total Assets LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCE Liabilities: Accounts payable Due to other governments Total Liabilities Deferred Inflows of Resources: Unavailable revenue - land held for resale Total Deferred Inflows of Resources Fund Balances: Restricted Committed Assigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources and Fund Balances New Housing Capital Home Rehabilitation Improvement Program Program $ 1,126,208 $ 167,128 $ 310,014 2,293 - - - - 35,600 157,744 - 434,050 1,803,073 - (434,050) (1,803,073) $ 1,128,501 $ 324,872 $ 345,614 -16- 27,686 - - 27,686 - 157,744 - 1,000,000 167,128 317,928 128,501 - - 1,128,501 324,872 317,928 $ 1,128,501 $ 324,872 $ 345,614 -16- FORM D Housing Neighborhood Assistance Kids @ Stabilization Total Program Home Program 2013 2012 $ - $ 40,350 $ - $ 1,643,700 $ 1,639,232 - - - 2,293 2,244 9,274 - - 9,274 - 4,630 - - 40,230 9,088 - - - 157,744 412,788 5,508 - - 5,508 9,060 - - - 2,237,123 2,216,781 - - - (2,237,123) (2,216,781) $ 19,412 $ 40,350 $ - $ 1,858,749 $ 2,072,412 $ 496 $ - $ - $ 28,182 $ 2,086 1,486 - - 1,486 954 1,982 - - 29,668 3,040 - - - - 412,788 412,788 17,430 - - 175,174 16,914 40,350 1,525,406 1,499,313 - - 128,501 140,357 17,430 40,350 - 1,829,081 1,656,584 $ 19,412 $ 40,350 $ - $ 1,858,749 $ 2,072,412 -17- HOUSING AND REDEVELOPMENT AUTHORITY OF RICHFIELD, MINNESOTA SPECIAL REVENUE FUNDS COMBINGING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (DEFICITS) For the Year Ended Decemer 31, 2013 Revenues: Intergovernmental Investment income Miscellaneous revenues Total Revenues Expenditures: Personal services Other services and charges Total Expenditures Excess (Deficiency) of Revenues over Expenditures Other financing Sources (Uses): Operating transfers from (to): General Fund Capital Project Fund Total Other Financing Sources (Uses) Excess (Deficiency) of Revenues and Other Sources over Expenditures and Other Uses Fund Balances - January 1 Prior Period Adjustment Fund Balances - January 1 - Restated Fund Balances - December 31 -18- New Housing Capital Home Rehabilitation Improvement Program Program (11,856) 81 246 - 20,888 17,362 (11,856) 20,969 17,608 - (78) 47,806 - (78) 47,806 (11,856) 21,047 (30,198) - - 41,897 - (54,416) - - (54,416) 41,897 (11,856) (33,369) 11,699 1,140,357 155,461 306,229 - 202,780 - 1,140,357 358,241 306,229 1,128,501 324,872 317,928 -18- FORM D-1 Housing Neighborhood Assistance Kids @ Home Stabilization Total Program Program Program 2013 2012 $ 1,424,111 $ - $ 194,169 $ 1,618,280 $ 1,340,990 45 - - (11,484) 6,041 42,012 2,967 - 83,229 65,485 1,466,168 2,967 194,169 1,690,025 1,412,516 143,783 - - 143,783 221,475 1,321,869 240 194,169 1,564,006 1,622,899 1,465,652 240 194,169 1,707,789 1,844,374 516 2,727 - (17,764) (431,858) - - - 41,897 18,548 - - - (54,416) - - - - (12,519) 18,548 516 2,727 - (30,283) (413,310) 16,914 37,623 - 1,656,584 2,069,894 - - - 202,780 - 16,914 37,623 - 1,859,364 2,069,894 17,430 40,350 - 1,829,081 1,656,584 -19- HOUSING AND REDEVELOPMENT AUTHORITY OF RICHFIELD, MINNESOTA CAPITAL IMPROVEMENT FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2013 2013 Revenues: Miscellaneous revenues: Investment income Total Revenues Expenditures Excess of Revenues over Expenditures Fund Balance - January 1 Fund Balance - December 31 Final Budget Actual FORM E Over (Under) 2012 Budget Actual $ 4,000 $ (11,856) $ (15,856) $ 4,000 (11,856) (15,856) 4,000 1,140,457 $ 1,144,457 -20- 4,438 (11,856) (15,856) 4,438 1,140,457 - 1,135,919 $ 1,128,601 $ (15,856) $ 1,140,357 HOUSING AND REDEVELOPMENT AUTHORITY OF RICHFIELD, MINNESOTA NEW HOME PROGRAM FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2013 Revenues: Intergovernmental revenues - Community Development Block Grant $ Total Intergovernmental Revenues Miscellaneous revenues: Investment income Other miscellaneous revenues _ Total Miscellaneous Revenues Total Revenues Expenditures: Personnel services Other services and charges _ Total Expenditures Excess (Deficiency) of Revenues over Expenditures Other Financing Sources: Transfer from other funds: General Fund General Fund Total Other Financing Sources Excess (Deficiency) of Revenues and Other Sources over Expenditures Fund Balance - January 1 Prior Period Adjustment 2013 Over Final (Under) Budget Actual Budget FORM F 2012 Actual - $ - $ - $ 52,635 - - - 52,635 180 81 (99) - - 20,888 20,888 2,939 180 20,969 20,789 2,939 180 20,969 20,789 55,574 - - - 16,035 1,200 (78) (1,278) 65,429 1,200 (78) (1,278) 81,464 (1,020) 21,047 22,067 (25,890) 1,020 - (1,020) 18,200 - (54,416) (54,416) - 1,020 (54,416) (55,436) 18,200 - (33,369) (33,369) (7,690) 155,461 155,461 - 163,151 - 202,780 202,780 - Fund Balance - Janaury 1 - Restated 155,461 358,241 202,780 163,151 Fund Balance (Deficit) - December 31 $ 155,461 $ 324,872 $ 169,411 $ 155,461 -21 - HOUSING AND REDEVELOPMENT AUTHORITY FORM G OF RICHFIELD, MINNESOTA HOUSING AND REHABILITATION PROGRAM FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2013 Revenues: Miscellaneous revenues - Investment income Other Miscellaneous Revenues Total Revenues Expenditures: Personnel services Other services and charges Total Expenditures Excess ( Deficiency) of Revenues over Expenditures Other Financing Sources: Transfer from other funds: General Fund Total Other Financing Sources Deficiency of Revenues and Other Sources over Expenditures Fund Balance - January 1 Fund Balance - December 31 78,150 47,806 (30,344) 78,150 47,806 (30,344) 52,250 41,897 (10,353) 52,250 41,897 (10,353) 23,345 348 - 11,699 11,699 - 306,229 306,229 - 306,229 $ 306,229 $ 317,928 $ 11,699 $ 306,229 -22- 2013 Final Over(Under) 2012 Budget Actual Budget Actual $ 700 $ 246 $ (454) $ 732 25,200 17,362 (7,838) 29,308 25,900 17,608 (8,292) 30,040 78,150 47,806 (30,344) 78,150 47,806 (30,344) 52,250 41,897 (10,353) 52,250 41,897 (10,353) 23,345 348 - 11,699 11,699 - 306,229 306,229 - 306,229 $ 306,229 $ 317,928 $ 11,699 $ 306,229 -22- HOUSING AND REDEVELOPMENT AUTHORITY FORM H OF RICHFIELD, MINNESOTA HOUSING ASSISTANCE PROGRAM FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2013 -23- 2013 Final Over(Under) 2012 Budget Actual Budget Actual Revenues: Intergovernmental revenues - Federal Housing Assistance Plan $ 1,345,000 $ 1,424,111 $ 79,111 $ 1,080,767 Miscellaneous revenues - Investment income 400 45 (355) 532 Other 35,000 42,012 7,012 33,577 Total Miscellaneous Revenues 35,400 42,057 6,657 34,109 Total Revenues 1,380,400 1,466,168 85,768 1,114,876 Expenditures: Personnel services 144,520 143,783 (737) 182,095 Other services and charges 1,252,790 1,321,869 69,079 1,342,037 Total Expenditures 1,397,310 1,465,652 68,342 1,524,132 Excess ( Deficiency) of Revenues over Expenditures (16,910) 516 17,426 (409,256) Fund Balance - January 1 16,914 16,914 - 426,170 Fund Balance - December 31 $ 4 $ 17,430 $ 17,426 $ 16,914 -23- HOUSING AND REDEVELOPMENT AUTHORITY FORM I OF RICHFIELD, MINNESOTA KIDS @ HOME FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2013 2013 Over Final (Under) 2012 Budget Actual Budget Actual Revenues: Miscellaneous revenues - Other revenue $ - $ 2,967 $ 2,967 $ - Total Misellaneous Revenue - 2,967 2,967 - Total Revenues - 2,967 2,967 - Expenditures: Other services and charges 600 240 (360) 802 Total Expenditures 600 240 (360) 802 Excess (Deficiency) of Revenues over Expenditures (600) 2,727 3,327 (802) Fund Balance - January 1 37,623 37,623 - 38,425 Fund Balance (Deficit) - December 31 $ 37,023 $ 40,350 $ 3,327 $ 37,623 -24- FORM J HOUSING AND REDEVELOPMENT AUTHORITY OF RICHFIELD, MINNESOTA NEIGHBORHOOD STABILIZATION PROGRAM STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2013 -25- 2013 Over Final (Under) 2012 Budget Actual Budget Actual Revenues: Intergovernmental revenues: Federal Grants $ 255,000 $ 194,169 $ (60,831) $ 207,588 Total Intergovernmental Revenue 255,000 194,169 (60,831) 207,588 Total Revenues 255,000 194,169 (60,831) 207,588 Expenditures: Other services and charges 255,000 194,169 (60,831) 207,588 Total Expenditures 255,000 194,169 (60,831) 207,588 Excess (Deficiency) of Revenues over Expenditures - - - - Fund Balance - January 1 - - - - Fund Balance (Deficit) - December 31 $ - $ - $ - $ - -25- HOUSING AND REDEVELOPMENT AUTHORITY OF RICHFIELD, MINNESOTA CAPITAL PROJECTS FUNDS COMBINING BALANCE SHEET December 31, 2013 and 2012 Development Urban Lyndale Opportunities Village Gramercy Gateway ASSETS Cash and temporary cash investments $ 96,437 $ 5,219 $ (50,479) $ 335,823 Receivables: Due from other governments - - - - Accounts receivable - - - - Taxes - - - - Due from other funds - - - - Assets held for resale 1,442,844 - - - Long term second mortgage receivable - - - - Allowance for uncollectible accounts - - - - Total Assets $ 1,539,281 $ 5,219 $ (50,479) $ 335,823 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCE Liabilities: Accounts payable $ 8,468 $ - $ - $ - Due to other governments - - - - Due to other funds - - - - Total Liabilities 8,468 - - - Deferred Inflows of Resources: Unavailable revenue - tax increment - - - - Unavailable revenue - assets held for resale - - - - Total Deferred Inflows of Resources - - - - Fund Balances: Restricted 1,442,844 - - - Assigned 87,969 5,219 - 335,823 Unassigned - - (50,479) - Total Fund Balances (Deficits) 1,530,813 5,219 (50,479) 335,823 Total Liabilities, Deferred Inflows of Resources and Fund Balances (Deficits) $ 1,539,281 $ 5,219 $ (50,479) $ 335,823 -26- FORM K $ 7,315 $ - $ 15 $ - $ - $ 1,167 7,315 - 15 1,100,000 215,031 1,167 29,542 - - - - - - (4,285) (24,467) (1,359,741) (380,135) (2,617) 29,542 (4,285) (24,467) (1,359,741) (380,135) (2,617) $ 36,857 $ (4,285) $ (24,452) $ (259,741) $ (165,104) $ (1,450) -27- Lyndale Cedar Lakes at Lyndale Gateway Cedar Corridor Lyndale CARA Garden West Point TIF $ 36,857 $ (4,285) $ (28,391) $ (259,741) $ (165,104) $ (1,450) - - 3,939 - - - - - - 55,470 - - - - - (55,470) - - $ 36,857 $ (4,285) $ (24,452) $ (259,741) $ (165,104) $ (1,450) $ 7,315 $ - $ 15 $ - $ - $ 1,167 7,315 - 15 1,100,000 215,031 1,167 29,542 - - - - - - (4,285) (24,467) (1,359,741) (380,135) (2,617) 29,542 (4,285) (24,467) (1,359,741) (380,135) (2,617) $ 36,857 $ (4,285) $ (24,452) $ (259,741) $ (165,104) $ (1,450) -27- HOUSING AND REDEVELOPMENT AUTHORITY OF RICHFIELD, MINNESOTA CAPITAL PROJECTS FUNDS COMBINING BALANCE SHEET December 31, 2013 and 2012 Interstate Capital Lyndale/Nicollet Penn Projects Redevelopment Development Corridor Funding Project Fund ASSETS Cash and temporary cash investments $ 8 $ (85,000) $ - $ 851,748 Receivables: Due from other governments - - - - Accounts Receivable - - - - Taxes - - - - Due from other funds - 1,315,031 - 101,177 Assets held for resale 91,000 - - 164,000 Long Term Second Mortgage Receivable Allowance for uncollectible accounts Total Assets LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCE Liabilities: Accounts payable Due to other governments Due to other funds Total Liabilities Deferred Inflows of Resources: Unavailable revenue - tax increment Unavailable revenue - assets held for resale Total Deferred Inflows of Resources Fund Balances (Deficits): Restricted Assigned Unassigned Total Fund Balances (Deficits) Total Liabilities, Deferred Inflows of Resources and Fund Balances (Deficits) $ (85,000) $ - - (85,000) - - 91,000 - - 164,000 8 1,315,031 - 952,925 91,008 1,315,031 - 1,116,925 $ 91,008 $ 1,230,031 $ - $ 1,116,925 -28- FORM K (cont.) Tax 402,193 157,296 Increment Total 40,303 Funds 2013 2012 $ 4,519,153 $ 5,250,795 $ 4,412,674 4,367 4,367 16,680 2,111 6,050 36,690 560 560 251 - 1,416,208 2,075,031 490,490 2,188,334 3,351,446 - 55,470 92,778 - (55,470) (92,778) $ 5,016,681 $ 8,866,314 $ 9,892,772 470,228 402,193 157,296 - - 40,303 126,475 1,441,506 2,075,031 596,703 1,843,699 2,272,630 560 560 251 - - 3,351,446 560 560 3,351,697 4,419,418 6,117,262 2,814,713 - 2,726,517 2,359,512 - (1,821,724) (905,780) 4,419,418 7,022,055 4,268,445 $ 5,016,121 $ 8,866,314 $ 9,892,772 -29- HOUSING AND REDEVELOPMENT AUTHORITY OF RICHFIELD, MINNESOTA CAPITAL PROJECTS FUNDS COMBINING STATEMENT OF REVENUES, AND EXPENDITURES, AND CHANGES IN FUND BALANCES (DEFICITS) For the Year Ended December 31, 2013 Revenues: Taxes - Tax increment Intergovernmental Miscellaneous revenues: Investment income Other revenues Total Revenues Expenditures: Personnel services Other services and charges Capital outlay Total Expenditures Excess (Deficiency) of Revenues over Expenditures Other financing Sources Operating transfers in: General Fund Special Revenue Fund Capital Projects Fund Operating transfers out: Capital Projects Fund Total Other Financing Sources (Uses) Excess (Deficiency) of Revenues and Other Financing Sources over Expenditures and Other Uses Fund Balances - January 1 Prior Period Adjustment Fund Balances - January 1 - Restated Fund Balances (Deficits) - December 31 Development Urban Lyndale Opportunities Village Gramercy Gateway 88 6 - 344 18,077 - - - 18,165 6 - 344 62,461 - - - 62,461 - - - (44,296) 6 - 344 15,674 - - - 15,674 - - - (28,622) 6 - 344 116,591 5,213 (50,479) 335,479 1,442,844 - - - 1,559,435 5,213 (50,479) 335,479 $ 1,530,813 $ 5,219 $ (50,479) $ 335,823 -30- FORM L -31 - Lyndale Cedar Lakes at Lyndale Gateway Point Lyndale CARA Garden West Redevelopment 352,000 - 11,671 - - 33 - - - - (6,575) - 3,939 - - 345,458 - 15,610 - - - - 4,670 - - 19,545 - 8,977 - 1,506 352,000 - 13,323 - - 371,545 - 26,970 - 1,506 (26,087) - (11,360) - (1,506) 19,512 - - - 5,000 19,512 - - - 5,000 (6,575) - (11,360) - 3,494 36,117 (4,285) (13,107) (1,359,741) (383,629) 36,117 (4,285) (13,107) (1,359,741) (383,629) $ 29,542 $ (4,285) $ (24,467) $ (1,359,741) $ (380,135) -31 - HOUSING AND REDEVELOPMENT AUTHORITY OF RICHFIELD, MINNESOTA CAPITAL PROJECTS FUNDS COMBINING STATEMENT OF REVENUES, AND EXPENDITURES, AND CHANGES IN FUND BALANCES (DEFICITS) For the Year Ended December 31, 2013 Cedar Corridor Penn TIF Corridor Revenues: Taxes - Tax increment Intergovernmental Miscellaneous revenues: Investment income Other revenues Total Miscellanious Revenues Expenditures: Personnel services Other services and charges Capital outlay Total Expenditures Excess (Deficiency) of Revenues over Expenditures Other financing Sources Operating transfers in: General Fund Special Revenue Fund Capital Projects Fund Operating transfers out: Capital Projects Fund Total Other Financing Sources (Uses) Excess (Deficiency) of Revenues and Other Financing Sources over Expenditures and Other Uses Fund Balances (Deficits) - January 1 Fund Balances (Deficits) - December 31 Interstate Capital Lyn/Nic Projects Redevelop Development Funding Project Fund 91,665 - 758 429,435 - 429,435 92,423 5,413 527 - 4,558 7,212 - - - - 81,961 5,413 527 - 4,558 89,173 (5,413) (527) - 424,877 3,250 - 527 - - 304,356 - - - (344,893) (40,713) - 527 - (344,893) 263,643 (5,413) - - 79,984 266,893 2,796 8 1,315,031 (325,920) 758,852 - 91,000 - 245,936 91,180 2,796 91,008 1,315,031 (79,984) 850,032 $ (2,617) $ 91,008 $ 1,315,031 $ - $ 1,116,925 -32- FORM L (cont.) Tax Increment Total Funds 2013 2012 $ 4,106,288 $ 4,106,288 $ 5,490,318 - 455,336 587,950 3,593 4,822 11,688 15,891 460,767 394,949 4,125,772 5,027,213 6,484,905 4,555,275 6,859,161 313,227 317,897 406,884 3,129,577 3,239,776 4,184,317 913,778 1,361,062 2,238,473 4,356,582 4,918,735 6,829,674 (230,810) 108,478 (344,769) - - 69,560 54,416 54,416 - 93,019 438,088 1,128,176 (52,482) (438,088) (1,128,176) 94,953 54,416 69,560 (135,857) 162,894 (275,209) 3,835,519 4,268,445 4,543,654 719,756 2,590,716 - 4,555,275 6,859,161 4,543,654 $ 4,419,418 $ 7,022,055 $ 4,268,445 -33- THIS PAGE WAS LEFT BLANK INTENTIONALLY -34- CITY OF RICHFIELD Hennepin County, Minnesota SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND INDEPENDENT AUDITOR'S REPORTS For the Year Ended December 31, 2013 CITY OF RICHFIELD TABLE OF CONTENTS SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS ................................................. 1 NOTE TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS ..................... 2 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTA UDITING STANDARDS ...................................... 3 REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE AND ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BYOMB CIRCULAR A-133....................................................................................................... 5 SCHEDULE OF FINDINGS AND QUESTIONED COSTS IN ACCORDANCE WITH OMB CIRCULAR A-133................................................................................................... 8 REPORT ON LEGAL COMPLIANCE........................................................................................ 11 CITY OF RICHFIELD SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended December 31, 2013 Federal CFDA Federal Federal Agency/Pass Through Agency/Program Title Number Expenditures U.S. Department of Housing and Urban Development Received Directly: Section 8 Housing Choice Voucher Program 14.871 $ 2,026,361 Passed Through Hennepin County: Community Development Block Grant 14.228 194,169 Total U.S. Department of Housing and Urban Development 2,220,530 U.S. Department of Health and Human Services Passed Through the State of Minnesota: Centers for Disease Control 93.531 15,000 Public Health Emergency Preparedness 93.069 33,048 Total U.S. Department of Health and Human Services 48,048 U.S. Department of Homeland Security Passed Through the State of Minnesota: Homeland Security Grant Program 97.067 9,317 Received Directly: Staffing for Adequate Fire and Emergency Response 97.083 2,502 Hurricane Sandy Deployment 97.036 4,381 Training Reimbursement Through City of St. Paul FEMA/AFG 97.044 15,200 Total U.S. Department of Homeland Security 31,400 U.S. Department of Justice Received Directly: Bulletproof Vest Partnership Program 16.607 3,170 Community Oriented Police Set -vices 16.710 78,954 Passed Through Hennepin County: Edward Byrne Memorial Justice Assistance Grant 16.738 12,237 Total U.S. Department of Justice 94,361 U.S. Department of Transportation Received Directly: Hazardous Training Reimbursement 20.703 4,875 Passed Through the State of Minnesota: Highway Research and Development Program 20.200 235,998 Highway Planning and Construction 20.205 12,786 Passed Through Metropolitan Airport Commission DWI Enforcement 20.608 26,655 Total U.S. Department of Transportation 280,314 U.S. Department of Agriculture Passed Through the State of Minnesota: Summer Food Service Program for Children 10.559 2,514 Total Federal Expenditures $ 2,677,167 The Notes to the Schedule of Expenditures of Federal Awards are an integral part of this Schedule. CITY OF RICHFIELD NOTE TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS December 31, 2013 NOTE l — BASIS OF PRESENTATION The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the City and is presented on the modified accrual basis of accounting. The information in this Schedule is presented in accordance with the requirements of U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments and Nonprofit Organizations. Therefore, some amounts presented in this Schedule may differ from amounts presented in, or used in, the preparation of the basic financial statements. 2 IDV Expert advice. When you need it.' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GO VERNMENT A UDITING STANDARDS INDEPENDENT AUDITOR'S REPORT Honorable Mayor and Members of the City Council City of Richfield Richfield, Minnesota We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business -type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Richfield, Minnesota, as of and for the year ended December 31, 2013, and the related Notes to the Financial Statements, which collectively comprise the City's basic financial statements, and have issued our report thereon dated May 6, 2014. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying Schedule of Findings and Questioned Costs in Accordance with OMB Circular A-133, we identified a certain deficiency in internal control that we consider to be a material weakness. 3 KD -V A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the City's financial statements will not be prevented or detected and corrected on a timely basis. We consider- the deficiency described in the accompanying Schedule of Findings and Questioned Costs in Accordance with OMB Circular A-133, identified as audit finding 13-01 to be a material weakness. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. City's Response to Findings The City's response to the finding identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs in Accordance with OMB Circular A-133. The City's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. KERN, DEWENTER, VIERS, LTD. Minneapolis, Minnesota May 6, 2014 F IDV Expert advice. When you need it.' REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM, ON INTERNAL CONTROL OVER COMPLIANCE AND ON THE SCHEDULE OF EXPENDITURES FOR FEDERAL AWARDS REQUIRED BY OMB CIRCULAR A-133 INDEPENDENT AUDITOR'S REPORT Honorable Mayor and Members of the City Council City of Richfield Richfield, Minnesota Report on Compliance for Each Major Federal Program We have audited the compliance of the City of Richfield, Minnesota, with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the City's major federal programs for the year ended December 31, 2013 The City's major federal programs are identified in the summary of auditor's results section of the accompanying Schedule of Findings and Questioned Costs in Accordance with OMB Circular A-133. Management's Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts and grants applicable to its federal programs. Auditor's Responsibility Our responsibility is to express an opinion on compliance for each of the City's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide legal determination of the City's compliance. 5 KD -V Opinion on Each Major Federal Program In our opinion, the City of Richfield, Minnesota complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2013. Report on Internal Control Over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose. R KD_V Report on Schedule of Expenditures of Federal Awards Required by OMS Circular A-133 We have audited the financial statements of the governmental activities, the business -type activities, the discretely presented component unit, each major fund and the aggregate remaining fund information of the City of Richfield, Minnesota, as of and for the year ended December 31, 2013, and the related Notes to the Financial Statements, which collectively comprise the City's basic financial statements. We issued our report thereon dated May 6, 2014, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by OMB Circular A-133, Audits of States, Local Governments, and Nonprofit Organizations, and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to, the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the financial statements themselves, and other procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Schedule of Expenditures of Federal Awards is fairly stated in all material respects in relation to the basic financial statements as a whole. KERN, DEWENTER, VIERS, LTD. Minneapolis, Minnesota May 6, 2014 7 CITY OF RICHFIELD SCHEDULE OF FINDINGS AND QUESTIONED COSTS IN ACCORDANCE WITH OMB CIRCULAR A-133 December 31, 2013 SECTION I — SUMMARY OF AUDITOR'S RESULTS Financial Statements Type of auditor's report issued: Internal control over financial reporting: • Material weakness(es) identified? • Significant deficiency(ies) identified that are not considered to be material weakness(es)? Noncompliance material to financial statements noted'? Federal Awards Type of auditor's report issued on compliance for major programs: Internal control over major programs: • Material weakness(es) identified? • Significant deficiency(ies) identified that are not considered to be material weakness(es)? Any audit findings disclosed that are required to be reported in accordance with Section 510(a) of OMB Circular A-133? Identification of Major Programs CFDA No.: Name of Federal Program or Cluster: Dollar threshold used to distinguish between type A and type B programs: Auditee qualified as low risk auditee? Unmodified Yes, Audit Finding 13-01 No No Unmodified No No No 14.871 Section 8 Housing Choice Vouchers $ 300,000 Yes CITY OF RICHFIELD SCHEDULE OF FINDINGS AND QUESTIONED COSTS IN ACCORDANCE WITH OMB CIRCULAR A-133 December 31, 2013 SECTION II — FINANCIAL STATEMENT FINDINGS Audit Finding 13-01 Criteria or Specific Requirement: Internal control that assures all audit adjustments are identified and prepared by City personnel and recorded in the year of occurrence. Condition: During the course of our engagement, we proposed a prior period audit adjustment that was not identified as a result of the City's existing internal controls and reliance on prior auditors and, therefore, resulted in a material misstatement of the City's prior year financial statements. In order to ensure financial statements were free from misstatement, a prior period audit adjustment was required to adjust deferred revenue related to land held for resale and land held for resale asset balances. Context: This finding impacts the District's ability to internally prepare their financial statements free from material misstatements. Effect: The prior year financial statements contained material misstatements. Cause: City personnel relied on professional advice and did not make all required adjustments in the year of occurrence. Recommendation: Review the City's financial statements to assure all entries are prepared and posted. Management's Response: CORRECTIVE ACTION PLAN (CAP): 1. Explanation of Disagreement with Audit Finding There is no disagreement with the audit finding 2. Actions Planned in Response to Finding The City will review all transactions related to land held for resale to ensure correct and proper treatment. 3. Official Responsible for Ensuring Chris Regis, Finance Manager, is the official responsible for ensuring corrective action of the deficiency. 4. Planned Completion Date for CAP The planned completion date for the CAP is June 30, 2014. 5. Plan to Monitor Completion of CAP The Finance Manager will review on a monthly basis all land held for resale transactions. 0 CITY OF RICHFIELD SCHEDULE OF FINDINGS AND QUESTIONED COSTS IN ACCORDANCE WITH OMB CIRCULAR A-133 December 31, 2013 SECTION III — FEDERAL AWARD FINDINGS AND QUESTIONED COSTS None 10 IDV Expert advice. When you need it.' REPORT ON LEGAL COMPLIANCE INDEPENDENT AUDITOR'S REPORT Honorable Mayor and Members of the City Council City of Richfield Richfield, Minnesota We have audited, in accordance with auditing standards generally accepted in the United States of America, and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business -type activities, the discretely presented component unit, each major fund and the aggregate remaining fund information of the City of Richfield, Minnesota as of and for the year ended December 31, 2013, and the related Notes to the Financial Statements, and have issued our report thereon dated May 6, 2014. The Minnesota Legal Compliance Audit Guide for Political Subdivisions, promulgated by the State Auditor pursuant to Minnesota Statutes Sec. 6.65, contains seven categories of compliance to be tested: contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, miscellaneous provisions and tax increment financing. Our audit considered all of the listed categories. In connection with our audit, nothing came to our attention that caused us to believe that the City of Richfield, Minnesota failed to comply with the provisions of the Minnesota Legal Compliance Audit Guide for• Political Subdivisions. However, our audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we performed additional procedures, other matters may have come to our attention regarding the City's noncompliance with the above referenced provisions. This report is intended solely for the information and use of those charged with governance and management of the City and the State Auditor, and is not intended to be and should not be used by anyone other than these specified parties. KERN, DEWENTER, VIERS, LTD. Minneapolis, Minnesota May 6, 2014 11 CITY OF RICHFIELD Hennepin County, Minnesota COMMUNICATIONS LETTER Year Ended December 31, 2013 CITY OF RICHFIELD TABLE OF CONTENTS REPORT ON MATTERS IDENTIFIED AS A RESULT OF THE AUDIT OF THE FINANCIAL STATEMENTS............................................................... I MATERIAL WEAKNESS.............................................................................................................. 3 REQUIRED COMMUNICATION................................................................................................ 4 FINANCIALANALYSIS................................................................................................................ 8 EMERGINGISSUES...................................................................................................................... 22 IDV Expert advice. When you need it.' REPORT ON MATTERS IDENTIFIED AS A RESULT OF THE AUDIT OF THE FINANCIAL STATEMENTS Honorable Mayor and Members of the City Council and Management City of Richfield Richfield, Minnesota In planning and performing our audit of the financial statements of the City of Richfield, Minnesota, as of and for the year ended December 31, 2013, in accordance with auditing standards generally accepted in the United States of America, we considered the City's internal control over financial reporting (internal control) as a basis for designing auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and, therefore, material weaknesses or significant deficiencies may exist that were not identified. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies in internal control, such that there is a reasonable possibility that a material misstatement of the City's financial statements will not be prevented or detected and corrected on a timely basis. The material weakness identified is stated within this letter. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. The accompanying memorandum also includes financial analysis provided as a basis for discussion. The matters discussed herein were considered by us during our audit and they do not modify the opinion expressed in our Independent Auditor's Report dated May 6, 2014, on such statements. KD -V This communication is intended solely for the information and use of the City's management, City Council, federal and state oversight agencies and others within the City and is not intended to be and should not be used by anyone other than these specified parties. KERN, DEWENTER, VIERE, LTD. Minneapolis, Minnesota May 6, 2014 0a CITY OF RICHFIELD MATERIAL WEAKNESS December 31, 2013 PRIOR PERIOD ADJUSTMENTS During the course of our engagement, prior period audit adjustments were required that would not have been identified as a result of the City's existing internal control system and, therefore, could have resulted in material misstatements of the City's financial statements. Adjustments identified were related to the City's recording of land held for resale. The City relied on prior auditors for assistance in determining proper accounting for such transactions. In order to ensure financial statements were free from material misstatements, prior period adjustments were required to: • Remove deferred revenue related to land held for related in the amounts of $ 1,316,300 and $ 3,764,234 for the City and HRA Component Unit, respectively • Reduce land held for resale by $ 970,738 for the HRA Component Unit to the estimated net realizable value 3 CITY OF RICHFIELD REQUIRED COMMUNICATION December 31, 2013 We have audited the financial statements of the City of Richfield for the year ended December 31, 2013, and have issued our report dated May 6, 2014. Professional standards require that we provide you with the following information related to our audit. OUR RESPONSIBILITY UNDER AUDITING STANDARDS GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA AND GOVERNMENT AUDITING STANDARDS AND OMB CIRCULAR A-133 As stated in our engagement letter, our responsibility, as described by professional standards, is to express an opinion about whether the financial statements prepared by management with your oversight are fairly presented, in all material respects, in conformity with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your responsibilities. In planning and performing our audit, we considered the City's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing an opinion on the financial statements and not to provide assurance on the internal control over financial reporting. We also considered internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with U.S. Office of Management and Budget (OMB) Circular A-133. As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit. Also in accordance with OMB Circular A-133, we examined, on a test basis, evidence about the City's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement applicable to each of its major federal programs for the purpose of expressing an opinion on the City's compliance with those requirements. While our audit provided a reasonable basis for our opinion, it did not provide a legal determination on the City's compliance with those requirements. Our responsibility for the supplementary information accompanying the financial statements, as described by professional standards, is to evaluate the presentation of the supplementary information in relation to the financial statements as a whole and to report on whether the supplementary information is fairly stated, in all material respects, in relation to the financial statements taken as a whole. 11 CITY OF RICHFIELD REQUIRED COMMUNICATION December 31, 2013 PLANNED SCOPE AND TIMING OF THE AUDIT An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit involved judgment about the number of transactions to be examined and the areas to be tested. Our audit included obtaining an understanding of the City and its environment, including internal control, sufficient to assess the risks of material misstatement of the financial statements and to design the nature, timing and extent of further audit procedures. Material misstatements may result from (1) errors, (2) fraudulent financial reporting, (3) misappropriation of assets or (4) violations of laws or governmental regulations that are attributable to the City or to acts by management or employees acting on behalf of the City. QUALITATIVE ASPECTS OF ACCOUNTING PRACTICES Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financial statements. During 2013, the City implemented GASB Statement No. 65, Financial Reporting ofltems Previously Reported as Assets and Liabilities. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were: Depreciation — The City is currently depreciating its capital assets over their estimated useful lives, as determined by management, using the straight-line method. Net Other Post -Employment Benefits (OPEB) Obligation This liability is based on an actuarial study using estimates of future obligations of the City for post employment benefits. Land Held for Resale Land held for resale is recorded using either the lower of historical cost or estimated resale value. We evaluated the key factors and assumptions used to develop the above estimates in determining they are reasonable in relation to the financial statements taken as a whole. The disclosures in the financial statements are neutral, consistent and clear. DIFFICULTIES ENCOUNTERED IN PERFORMING THE AUDIT We encountered no difficulties in dealing with management in performing and completing our audit. 5 CITY OF RICHFIELD REQUIRED COMMUNICATION December 31, 2013 CORRECTED AND UNCORRECTED MISSTATEMENTS Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. We identified the following uncorrected misstatements of the financial statements. Management has determined its effects are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. • Bond premium for governmental activities bond not amortized over the life of the bond. In addition, a prior period adjustment was made to adjust deferred revenue related to land held for resale and land held for resale asset balances. DISAGREEMENTS WITH MANAGEMENT For purposes of this letter, disagreement with management is a financial accounting, reporting or auditing matter, whether or not resolved to our satisfaction that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. MANAGEMENT REPRESENTATIONS We requested certain representations from management which were provided to us in the management representation letter. MANAGEMENT CONSULTATIONS WITH OTHER INDEPENDENT ACCOUNTANTS In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the City's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. OTHER AUDIT FINDINGS OR ISSUES We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. 0 CITY OF RICHFIELD REQUIRED COMMUNICATION December 31, 2013 OTHER MATTERS With respect to the supplementary information accompanying the financial statements, we made certain inquiries of management and evaluated the form, content and methods of preparing the information to determine that the information complies with accounting principles generally accepted in United States of America, the method of preparing it has not changed from the prior period and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. 7 CITY OF RICHFIELD FINANCIAL ANALYSIS December 31, 2013 The following pages provide graphic representation of select data pertaining to the financial position and operations of the City for the past five years. Our analysis of each graph is presented to provide a basis for discussion of past performance and how implementing certain changes may enhance future performance. We suggest you view each graph and document if our analysis is consistent with yours. GENERAL FUND As illustrated in the graph below, total expenditures have exceeded total revenues in the General Fund each year. Due to other financing sources each year, which consisted of $ 946,050 of transfers from other funds in 2013, the General Fund's fund balance has remained fairly consistent over the past five years. The City's total fund balance of $ 7,752,180 at December 31, 2013 represents 38% of General Fund expenditures based on 2013 spending levels. The City relies on year-end fund balance to finance much of the subsequent year's expenditures, since major property tax settlements are not received until June. The City's target General Fund balance is to maintain a minimum unassigned fund balance of 40% of the current year end actual General Fund revenues. At December 31, 2013, the City's unassigned fund balance amounted to $ 7,679,767, which excludes nonspendable fund balance for prepaid items of $ 72,413. This amount equals 38.7% of the City's 2013 actual General Fund revenues. General Fund Revenues, Expenditures and Fund Balance ,DLJ,VVV,VVV $20,000,000 $15,000,000 $10,000,000 $5,000,000 $ 2009 2010 2011 2012 2013 ■Total Revenues $17,894,771 $17,296,922 $18,197,459 $19,019,356 $19,852,811 ■Total Expenditures 18,500,033 18,770,708 19,178,471 19,422,996 20,355,195 ❑ Fund Balance 6,774,910 6,829,824 6,953,984 7,308,514 7,752,180 H CITY OF RICHFIELD FINANCIAL ANALYSIS December 31, 2013 GENERAL FUND Trends for each of the City's major revenue classifications over the past five years are graphically portrayed in the bar graph below. General Fund revenues increased $ 833,455 from 2012. The most significant increase is in Property Tax revenues, which increased $ 891,200 from 2012. This increase was due to an increase in the General Fund's levy of 3.8% from 2012 to 2013 as well as increased delinquent collections. Other sources of revenue were fairly consistent with the prior year. Charges for Services and Intergovernmental revenues decreased slightly from the prior year which partially offset the significant increase in Property Tax revenues. Charges for services decreased due to higher plan check fees and building inspection fees in 2012 for construction activity. Intergovernmental revenues decreased due primarily to the receipt of higher federal fire and emergency response grants in 2012. $16,000,000 $15,00 General Fund Revenues 0,000 $14,000,000 $13,000,000 $12,000,000 $11,000,000 $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 $ Property Taxes Fees and Fines License and Permits Intergovernmental Charges for Services Miscellaneous 02009 $11,927,538 $303,050 $733,326 $3,680,668 $1,144,284 $105,905 02010 12,318,287 296,848 901,746 2,447,816 1,221,509 110,716 02011 13,442,034 304,871 810,617 1,937,675 1,588,389 113,873 02012 14,193,082 313,512 928,747 1,691,631 1,799,387 92,997 M 201 15,084,282 373,274 938,455 1,585,661 1,689,001 182,138 9 9 CITY OF RICHFIELD FINANCIAL ANALYSIS December 31, 2013 GENERAL FUND The City's revenues by source for 2013 and 2012 are shown below. As seen the following graphs, revenues by source remained consistent from 2012 to 2013. Tntergovert 8% License, and Permits 5% Fines and Fees 2 2013 General Fund Revenues Charges for Service, Po Intergovernm 9% License and Permi 5% Fees and Fines 2% 2012 General Fund Revenues Charges for Services Taxes Property Taxes 75% 10 GENERAL FUND $9,000,( $8,000,[ $7,000,[ $6,000,[ $5,000,[ $4,000,[ $3,000,[ $2,000,[ $1,000,[ CITY OF RICHFIELD FINANCIAL ANALYSIS December 31, 2013 General Fund Expenditures VV 100 100 100 100 100 100 100 100 Lca dative/E�ecntive Administrative 1—i-, Pu111-s1fcry Fire Community Development Puhlic%,rk, Rec-[,t nier — Capinl Oud'y 02009 $651 515 ,$961,311 $8,061,533 ,$3,153,(179 5220,912 53,891,717 57,559,3(16 S - ■2010 696,172 951,818 7,310,015 3,230,065 1,07, 950 3,918,499 1,538,819 49,370 02011 672,440 994,469 7,643,659 3,251,970 1,092,855 3,919,741 1,553,457 49,991 02012 712,643 1,025,159 7,640,862 3,283,640 1,096,509 4,107,601 1,556,582 - ■2013 741,064 999,327 7,996,522 3,495,925 1,215,361 4,257,277 1,632,130 17,599 Total General Fund expenditures increased 5%, or $ 932,199, from 2012 to 2013. Each program reported a slight increase in expenditures besides Administrative Services, which decreased approximately $ 26,000. The most significant increases were in the Public Safety, Fire and Public Works categories. Public safety expenditures increased $ 355,660 or 5% due to an increase in salaries as well as contracted health inspections fees paid. Fire expenditures increased $ 212,285 or 6% due to various wage increases including step increases and cost of living increases. Public Works expenditures increased $ 149,676 or 4% due to more sealcoating work being completed in 2013, as well as higher snow removal costs. 11 CITY OF RICHFIELD FINANCIAL ANALYSIS December 31, 2013 GENERAL FUND The City's expenditures by program for 2013 and 2012 are shown below. As seen the following graphs, expenditure by program remained consistent from 2012 to 2013 due to small increases in expenditures in almost every program as discussed on the previous page. Community 6 2013 General Fund Expenditures Capital Outlay Les tbau 1% Public 21 Community Dcvclopmc 6% 17% 2012 General Fund Expenditures 17% !rvices Public Safety 39% crviccs Public Safety 39% 12 CITY OF RICHFIELD FINANCIAL ANALYSIS December 31, 2013 GENERAL FUND REVENUES Property Taxes Fines and Fees Licenses and Permits Intergovernmental Revenues Charges for Services Investment Income Miscellaneous Revenues Total Revenues EXPENDITURES Legislative/Executive Administrative Services Public Safety Fire Community Development Public Works Recreation Services Total Expenditures OTHER FINANCING SOURCES (USES) Transfers In Net Change in Fund Balances Final Budget $ 14,421,360 320,000 756,400 1,507,420 1,587,780 11,000 155,780 18,759,740 789,640 1,067,350 8,019,360 3,582,470 1,255,700 4,266,200 1,635,580 20,616,300 1,856,560 Variance Actual Final Budget - Amounts Over (Under) $ 15,084,282 373,274 938,455 1,585,661 1,689,001 5,820 176,318 19,852,811 741,064 999,327 8,014,111 3,495,925 1,215,361 4,257,277 1,632,130 20,355,195 946,050 $ 662,922 53,274 182,055 78,241 101,221 (5,180) 20,538 1,093,071 (48,576) (68,023) (5,249) (86,545) (40,339) (8,923) (3,450) (261,105) (910,510) $ - $ 443,666 $ 443,666 For the year ended December 31, 2013, the City budgeted for revenues and transfers in to the General Fund to equal expenditures. Actual revenues and transfers in exceeded expenditures by $ 443,666. Revenues were over budget by $ 1,093,071, or 6%. The most significant budget variances were related to Property Taxes and Licenses and Permits revenues. Property Taxes were $ 662,922 over budget due to budgeting conservatively for delinquent amounts. Licenses and Permits were $ 182,055 over budget due to conservative budgeting for building permits. Expenditures were $ 261,105 or I% under budget. All programs came in under budget. Transfers in to the General Fund were under budget $ 910,510 as revenues significantly exceeded budgeted amounts. 13 CITY OF RICHFIELD FINANCIAL ANALYSIS December 31, 2013 TAX LEVY, CAPACITY AND RATES The graph below presents information relating to the City's tax levy, tax capacity and rates The levy for 2013 includes the General Fund levy of $ 14,715,675 plus a levy for the Debt Service and Capital Project Funds totaling $ 3,029,276. As illustrated below, the taxable tax capacity of the City declined from 2009 to 2012 and leveled off in 2013; this decrease in prior years was due to declining property values in the City. The City's property tax levy has increased gradually over the past five years. Because the levy has increased and the taxable tax capacity has decreased, the tax capacity rate has increased from 42.53% in 2009 to 64.06% in 2013. Tax Capacity, Levy and Rates $35,000,000 70% 64.06% 60.81% $30,000,000 ■ 54.98% 60% $25,000,000 50% y $20,000,000 . . 42.53% 1 40rr % $15,000,000 $16,981,362 $17,744,951 30% U $14,305,342 $15,289,029 19 $10,000,000 20% $5,000,000 1 1 10% $- I I I I 1 0% 2009 2010 2011 2012 2013 Year ■ Taxable Tax Capacity +Certified City Levy —*—Tax Capacity Rate 14 CITY OF RICHFIELD FINANCIAL ANALYSIS December 31, 2013 TAX LEVY, CAPACITY AND RATES The chart below depicts average tax rates for the City along with the average tax rates for the seven county metro area and all Minnesota cities for 2012 and 2013. When analyzing this information, keep in mind that each city is unique in its operations. All Cities Seven County City of State -Wide* Metro Area* Richfield* 2012 2013 AVERAGE TAX RATE 2012 2013 2012 2013 City 46.26% 48.79% 43.45% 46.14% 60.81% 64.06% County 46.83% 48.46% 45.01% 47.12% 48.23% 49.46% School 27.27% 28.53% 28.49% 30.30% 28.89% 31.01% Special Taxing 6.79% 7.22% 8.67% 9.34% 11.89% 12.28% Total 127.15% 133.00% 125.62% 132.90% 149.82% 156.81% *Amounts obtained from the League of Minnesota Cities Property Tax Data Table reports. 15 CITY OF RICHFIELD FINANCIAL ANALYSIS December 31, 2013 LIQUOR FUND The City's liquor store reported a decrease in sales from 2012 to 2013 of 6%. Cost of sales correspondingly decreased by 6% as well. This decrease is due to the closing of the North Lyndale Store for renovations for approximately six weeks in 2013, as well as road work at the Penn Avenue Store cutting off traffic from the store for approximately four months. Operating expenses in the Liquor Fund remained very consistent with 2012, increasing just I%. S 13,000,000 S12,000,000 S 11,000,000 S 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 Liquor Fund $11,349,563 $11,117,676 $11,198,40 l 2013 $11,807,489 2012 Metro City of 2009 2010 2011 2012 2013 ■ Operating Expenses ■ Cost of Sales ■ sales j *Individual metro municipal and averages obtained from the Office of State Auditor, Analysis of Municipal Liquor Store Operations Report. The City's gross profit percentage remained consistent with 2012 as both sales and cost of sales decreased at the same rate. The City's gross profit percentage is similar to both the metro stores and the metro municipal average. 16 2013 2012 Metro City of City of City of City of City of Municipal Richfield Richfield Edina* Eden Prairie* Savage* Average* Sales $ 11,137,402 $ 11,807,489 $ 13,230,941 $ 12,371,628 $ 4,560,288 $ 6,040,609 Costs of Sales 8,290,508 8,802,442 9,615,928 9,014,543 3,353,290 4,483,886 Gross Profit 2,846,894 3,005,047 3,615,013 3,357,085 1,206,998 1,556,723 Operating Expenses 1,974,898 1,951,557 2,124,476 2,232,081 913,596 1,045,385 Operating Income 871,996 1,053,490 1,490,537 1,125,004 293,402 511,338 Gross Profit Percentage 25.6% 25.5% 27.3% 27.1% 26.5% 25.8% *Individual metro municipal and averages obtained from the Office of State Auditor, Analysis of Municipal Liquor Store Operations Report. The City's gross profit percentage remained consistent with 2012 as both sales and cost of sales decreased at the same rate. The City's gross profit percentage is similar to both the metro stores and the metro municipal average. 16 CITY OF RICHFIELD FINANCIAL ANALYSIS December 31, 2013 WATER AND SEWER UTILITIES FUND Charges for services in the Fund were consistent from 2012 to 2013, increasing just $ 67,296 or I%. This slight increase was the result of an increase in water and sewer rates; however, water usage decreased from 2012 to 2013. Operating expenses increased $ 532,060 or 8% from 2012 due mainly to an increase in rates paid to the Metropolitan Council for sewer and more water main breaks in 2013. The Fund had an operating income of $ 126,393 in 2013 with depreciation. This was a $ 464,764 decrease from the operating income generated in 2012, although the Fund continued to fund depreciation expense as it has since 2011. Water and Sewer Utilities Fund $7,500,000 $6,940,791 $7,008,087 $7,000,000 $6,099,325 $6,525,152 $6,500,000 $5,703,187 � $6,000,000 $5,500,000 $5,000,000 • 1 • r : ' �' $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000$1,217,153 $1 $767,163 $917,486 $1,000,000 $591,157 $500,000 $120,861 $126,393 $(500,000) 2009 2010 $(190,429) 2011 2012 2013 $(1,000,000) $(361,170) ■ Charges for Services ■ Operating Expenses ■ Operating Income without Depreciation ■ Operating Income (Loss) with Depreciation 17 CITY OF RICHFIELD FINANCIAL ANALYSIS December 31, 2013 STORM SEWER FUND Charges for services in the Fund decreased from 2012 to 2013, decreasing $ 120,506 or 10%. This decrease was due to higher service charges in 2012 from redevelopments. Operating expenses were consistent from 2012 to 2013, decreasing just $ 9,475. The Fund reported operating income of $ 75,747 in 2013 with depreciation. This was a $ 111,031 decrease from the operating income generated in 2012, although the Fund continued to fund depreciation expense as it has since 2011. Storm Sewer Fund $1,400,000 $1,200,000 $1,022,000 $1,051,489 $1,042,014 $995,837 $955,172 $1,000,000 r� $800,000 $600,000 $400,000 $200,000 $333,442 716 $429,159 $(15,760) $(200,000) $(85,491 2009 2010 ■ Charges for Services ■ ODeratin¢ Income without Denreciat: $580,236 $186,778 778 2011 2012 2013 ■ Operating Expenses ■ ODeratine Income (Loss) with Denreciation 747 z CITY OF RICHFIELD FINANCIAL ANALYSIS December 31, 2013 RECREATION FUND Charges for services in the Fund decreased slightly from 2012 to 2013, decreasing $ 10,851 or 1% as ice rentals were down all year. Cost of sales and operating expenses increased $ 71,442 or 5% from 2012 to 2013. in 2013, the City conducted a feasibility study at the ice arena. There were also more necessary repairs done in 2013. The Fund reported an operating loss with depreciation in 2013 of $ 536,308. This was an $ 82,293 increase in the operating loss compared to 2012. This Fund has continued to report operating losses from depreciation, which has been growing steadily over the five years presented. We recommend management review the operations of this fund and consider classification as a Special Revenue Fund as the operating revenues generated are consistently not covering operating expenses. $2,000,000 $1,750,000 $1,500,000 $1,250,000 $1,000,000 $750,000 $500,000 $250,000 $- $(250,000) $(500,000) $(750,000) Recreation Fund ..93,946$1,248,1. 0 $1,196,110 1 1 I $(17,775) � $(42,607) $(113,327) $(205,065) 1 6,308) 2009 2010 2011 2012 2013 ■ Sales ■ Cost of Sales and Operating Expenses ■ Operating Income (Loss) without Depreciation ■ Operating Loss with Depreciation 19 CITY OF RICHFIELD FINANCIAL ANALYSIS December 31, 2013 GOVERNMENTAL FUNDS The tables below and on the following page illustrate the City's various sources of revenue and expenditures per capita over a three year period in comparison to 2012 data for Minnesota cities ranked by various sizes. Total Revenue $ 1,007 $ 958 $ 860 $ 733 $ 772 $ 789 State-wide data obtained from the Office of the State Auditor's 2012 Minnesota City Finances Report. ** Population is estimated as of January 1, 2012 from the Met Council population data study; 2013 estimate is not available. The City has few special assessments and, thus, has consistently shown higher tax revenues per capita and lower special assessments revenues per capita compared to the state averages. Total governmental revenues increased $ 17 per capita from 2012. The most significant increase was in property taxes revenue, which increased $ 32 per capita from 2012 to 2013 due to a 4.5% increase in the tax levy. The most significant decrease was in intergovernmental revenues, which decreased $ 17 per capita from 2012 to 2013 as the City received less from the HRA in 2013 for bond payments as several bonds were paid off in 2012. W State -Wide* City of Richfield Year December 31, 2012 201 t 2012 2013** Population 2,500-10,000 10,000-20,000 20,000-100,000 35,376 35,979 35,979 Property Taxes $ 414 $ 382 $ 416 $ 436 $ 472 $ 504 Tax Increments 32 44 46 - - - Franchise Fees and Other Taxes 29 36 30 35 35 36 Special Assessments 60 54 62 9 9 8 Licenses and Permits 24 24 35 23 26 26 Tntcrgovcinmcntal Revenues 278 279 138 149 153 136 Charges for Services 104 81 83 45 50 47 Other 66 58 50 36 27 32 Total Revenue $ 1,007 $ 958 $ 860 $ 733 $ 772 $ 789 State-wide data obtained from the Office of the State Auditor's 2012 Minnesota City Finances Report. ** Population is estimated as of January 1, 2012 from the Met Council population data study; 2013 estimate is not available. The City has few special assessments and, thus, has consistently shown higher tax revenues per capita and lower special assessments revenues per capita compared to the state averages. Total governmental revenues increased $ 17 per capita from 2012. The most significant increase was in property taxes revenue, which increased $ 32 per capita from 2012 to 2013 due to a 4.5% increase in the tax levy. The most significant decrease was in intergovernmental revenues, which decreased $ 17 per capita from 2012 to 2013 as the City received less from the HRA in 2013 for bond payments as several bonds were paid off in 2012. W GOVERNMENTAL FUNDS Year Population Current: Administration Community Development Police Fire Public Works Parks and Recreation Other Total Current Capital Outlay and Construction CITY OF RICHFIELD FINANCIAL ANALYSIS December 31, 2013 State -Wide* City of Richfield Debt Sen ice: Principal $ 187 $ 135 $ 103 $ 55 $ 79 $ 51 Interest and Fiscal 58 46 39 46 45 34 Total Debt Service $ 245 $ 181 $ 142 $ 101 $ 124 $ 85 * State-wide data obtained from the Office of the State Auditor's 2012 Minnesota City Finances Report. ** Population is estimated as of January 1, 2012 from the Met Council population data study; 2013 estimate is not available. The City's current expenditures for 2013 were more than the state-wide average for a city of a comparable population, while capital outlay and construction and debt service expenditures are less. Overall, governmental expenditures increased just 1.4% 2012 to 2013. The largest variances in City expenditures per capita from 2012 to 2013 were observed in public works current expenditures, capital outlay and construction expenditures and debt service expenditures. Public Works current expenditures increased $ 66 per capita due to land purchased for redevelopment. Capital Outlay and Construction expenditures decreased $ 37 per capita due to more road construction projects in 2012 including the 76th Street project. Debt service expenditures decreased $ 39 per capita due to several bonds being paid off in 2012. 21 December 31, 2012 2011 2012 2013** 2,500-10,000 10,000-20,000 20,000-100,000 35,376 35,979 35,979 $ 127 $ 101 $ 84 $ 59 $ 61 $ 61 46 49 73 31 30 34 168 165 171 225 219 229 66 64 70 92 91 97 120 111 97 134 135 201 82 95 86 51 49 50 21 21 15 - - - $ 630 $ 606 $ 596 $ 592 $ 585 $ 672 $ 306 $ 303 $ 217 $ 245 $ 92 $ 55 Debt Sen ice: Principal $ 187 $ 135 $ 103 $ 55 $ 79 $ 51 Interest and Fiscal 58 46 39 46 45 34 Total Debt Service $ 245 $ 181 $ 142 $ 101 $ 124 $ 85 * State-wide data obtained from the Office of the State Auditor's 2012 Minnesota City Finances Report. ** Population is estimated as of January 1, 2012 from the Met Council population data study; 2013 estimate is not available. The City's current expenditures for 2013 were more than the state-wide average for a city of a comparable population, while capital outlay and construction and debt service expenditures are less. Overall, governmental expenditures increased just 1.4% 2012 to 2013. The largest variances in City expenditures per capita from 2012 to 2013 were observed in public works current expenditures, capital outlay and construction expenditures and debt service expenditures. Public Works current expenditures increased $ 66 per capita due to land purchased for redevelopment. Capital Outlay and Construction expenditures decreased $ 37 per capita due to more road construction projects in 2012 including the 76th Street project. Debt service expenditures decreased $ 39 per capita due to several bonds being paid off in 2012. 21 CITY OF RICHFIELD EMERGING ISSUES December 31, 2013 Executive Summary The following is an executive summary of financial and business related updates to assist you in staying current on emerging issues in accounting and finance. This summary will give you a preview of the new standards that have been recently issued and what is on the horizon for the near future. The most recent and significant updates include: Accounting for pensions —This accounting update has been issued and will be applied for 12/31/15 year-end reporting. Internal Control Integrated Framework — COSO has issued an updated integrated framework for internal control. The update is expected to make the integrated internal control framework easier to use and apply. In addition, the update takes into account globalization of businesses today and its interdependence on technology. This update has been issued and will supersede the original framework at the end of 2014. The following are extensive summaries of each of the current updates. As your continued business partner, we are committed to keeping you informed of new and emerging issues. We are happy to discuss these issues with you further and their applicability to your company. ACCOUNTING STANDARD UPDATE — ACCOUNTING FOR PENSIONS GASB Statement No. 68 replaces the requirements of Statement No. 27, Accounting for Pensions by State and Local Governinental Einployers and Statement No. 50, Pension Disclosures, as they relate to governments that provide pensions through pension plans administered as trusts or similar arrangements that meet certain criteria. Statement No. 68 requires governments providing defined benefit pensions to recognize their long-term obligation for pension benefits as a liability for the first time, and to more comprehensively and comparably measure the annual costs of pension benefits. ON CITY OF RICHFIELD EMERGING ISSUES December 31, 2013 COSO PROJECT — INTERNAL CONTROL INTEGRATED FRAMEWORK In 1992, the Committee on Sponsoring Organizations of the Treadway Commission (COSO) developed an internal control framework that has been adopted and used by entities worldwide. In 2013, COSO finalized and released an updated integrated internal control framework. The update is expected to make the integrated framework easier to use and apply. In addition, the update takes into account, the business environment of today and the reliance on and interdependence of technology within business systems. The internal control update is not changing the core definition of internal control, the three categories of objectives or the five components of internal control. COSO defines internal control as a process, affected by an entity's board of directors, management and other personnel. This process is designed to provide reasonable assurance regarding the achievement of the three objectives, as follows: effectiveness and efficiency of operations; reliability of financial reporting; and compliance with applicable laws and regulations. 1. Internal control is a process. It is a means to an end, not an end in itself. 2. Internal control is not merely documented by policy manuals and forms. Rather, it is put in by people at every level of an organization. 3. Internal control can provide only reasonable assurance, not absolute assurance, to an entity's management and board. 4. Internal control is geared to the achievement of objectives in one or more separate but overlapping categories. The five components of internal control, which are unchanged, are as follows: 1. Control Environment - integrity, ethics, management style, etc. 2. Risk Assessment - identification and analysis of relevant risks 3. Control Activities - policies, procedures and activities, including segregation of duties 4. Information and Communication - ensure information effectively flows up, down and across the organization, both internally and externally 5. Monitoring Activities - assessment of the systems performance over time The updated framework has changed to address the changes in business and operating environments, such as globalization of markets and operations, greater complexities in businesses, reliance on evolving technologies and expectations relating to preventing and detecting fraud. In addition, principles of effective internal controls have been added to each of the components of internal control as follows: Control Environment: 1. Demonstrates a commitment to integrity and ethical values. 2. The board of directors is independent from management and exercises oversight responsibility of the performance of internal controls. 3. Management establishes structure, reporting lines, authority and responsibility. 4. Demonstrates a commitment to attract, develop and retain competent individuals. 5. Enforces accountability for individual's internal control responsibilities. 23 CITY OF RICHFIELD EMERGING ISSUES December 31, 2013 COSO PROJECT — INTERNAL CONTROL INTEGRATED FRAMEWORK (CONTINUED) Risk Assessment: 1. Specifies suitable objectives with sufficient clarity. 2. Identifies and analyzes risk as a basis for how risks should be managed. 3. Assesses the potential for fraud risk. 4. Identifies and analyzes significant changes that could impact the system of internal controls. Control Activities: 5. Selects and develops control activities that contribute to the mitigation of risks. 6. Selects and develops general controls over technology. 7. Deploys control activities through policies that establish what is expected and procedures that put policies into place. Information and Communication: S. Uses relevant information to support the functioning of other components of internal control. 9. Communicates information internally, including objectives and responsibilities necessary to support the internal controls. 10. Communicates with external parties regarding matters affecting internal control. Monitoring Activities: 11. Conducts ongoing and/or separate evaluations to ascertain whether the components of internal control are present and functioning. 12. Evaluates and communicates deficiencies to those parties responsible for corrective actions. The updated framework also has additional examples relevant to operation, compliance and reporting objectives added. While COSO integrated internal control framework is very extensive, this is only a short summary of some of the changes of the updated framework. The updated framework will supersede the original framework at the end of 2014; however, users of the framework are encouraged to transition to the updated framework as soon as possible. 24 AGENDA SECTION: CONSENT AGENDA ITEM# 5A REPORT# 95 STAFF REPORT ee*ced CITY COUNCIL MEETING MAY 27, 2014 REPORT PREPARED BY: MYRT LINK, CD ACCOUNTANT NAME,TITLE DEPARTMENT DIRECTOR REVIEW: i dt SIGNATURE OTHER DEPARTMENT REVIEW: REVIEWED BY CITY MANAGER: ITEM FOR COUNCIL CONSIDERATION: Authorize the Richfield Housing and Redevelopment Authority to reduce the original tax capacity of the City Bella Redevelopment Tax Increment District due to Homestead Market Value Exclusion. I. RECOMMENDED ACTION: By Motion: Approve a resolution authorizing the Richfield Housing and Redevelopment Authority to reduce the original tax capacity of the City Bella Redevelopment Tax Increment District due to Homestead Market Value Exclusion. II. EXECUTIVE SUMMARY In 2011, the Legislature adopted the Homestead Market Value Exclusion, which revised the tax calculation for homestead property, and as a result, reduced the taxes that homestead properties pay. This also reduced the tax increment generated by homestead properties. In 2013, the Legislature adopted a "fix" which would allow cities an option to reduce the base in the TIF district and lessen the impact on tax increment districts that contained owner occupied housing, therefore resulting in increased tax increment. 052714 City Bella-Homestead Mkt Value Exxxx In order to allow the Housing and Redevelopment Authority (HRA) to reduce the original tax capacity, the City Council is required to pass a resolution authorizing them to do so. If the City authorizes the reduction, it will result in an increase of increment in the amount of $3,411 for the HRA to use for administration and qualified redevelopment activities and an increase of $10,231 to the Note holder for payment of the Pay-As- You-Go Note. III. BR ASIS OF ECOMMENDATION A. B ACKGROUND  The Note holders of the Pay-As-You-Go Note for the City Bella TIF District have requested that the HRA adopt a resolution allowing the base of the TIF District to be reduced, therefore increasing the amount of tax increment.  Under current projections, it is not anticipated that the principal and interest on the Pay-As-You-Go Note will be paid in full at the time of decertification of the TIF District in in 2030.  Under Pay 2014 values, if the resolution is adopted, the gross tax increment would increase by $13,642.  The HRA portion would increase by $3,411, and could be used for administration and qualified redevelopment activities.  The Note holders’ portion would increase by $10,231.  Actual increases will depend on actual market values and tax rates, which change annually. B. P OLICY  The HRA may elect to reduce the original tax capacity of the City Bella Tax Increment District only upon approval of the City Council by resolution. C. CTI RITICAL IMING SSUES  The HRA must notify the Hennepin County auditor prior to July 1, 2014 of the election to reduce the original tax capacity for it to be effective for taxes payable beginning in 2015. D. F INANCIAL  Approval to reduce the original tax capacity of the City Bella Tax Increment District would result in more increment for both the HRA and the Developer’s Pay-As- You-Go-Note payment. E. L EGAL  The resolution was drafted by HRA legal counsel. F. EC NVIRONMENTAL ONSIDERATIONS  N/A IV. AR() LTERNATIVE ECOMMENDATIONS  Do not authorize the HRA to reduce the original tax capacity for the City Bella Tax Increment District. V. A TTACHMENTS  Resolution VI. PPEM RINCIPAL ARTIES XPECTED AT EETING  None CITY OF RICHFIELD, MINNESOTA RESOLUTION NO. _______ RESOLUTION AUTHORIZING RICHFIELD HRA TO ELECT TO REDUCE ORIGINAL TAX CAPACITY OF CITY BELLA REDEVELOPMENT TAX INCREMENT DISTRICT DUE TO HOMESTEAD MARKET VALUE EXCLUSION WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield (the “HRA”) established and operates the City Bella Redevelopment Tax Increment District (the “TIF District”); and WHEREAS, previous changes to state tax law regarding the homestead market value exclusion has adversely affected tax receipts in the TIF District; and WHEREAS, the 2013 Minnesota legislature amended Minnesota Statutes, section 469.177 by adding subd. 1d which permits a redevelopment authority to elect to reduce the original net tax capacity of a qualified district by the amount of the tax capacity attributable to the market value exclusion under Minnesota Statutes, section 273.13, subd. 35; and WHEREAS, the TIF District meets the definition of a qualifying district within the meaning of Minnesota Statutes, section 469.177, subd. 1d; and WHEREAS, the HRA may make such election only upon approval of the City Council by resolution. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Richfield as follows: 1. The HRA is authorized to elect to reduce the original tax capacity of the City Bella Redevelopment Tax Increment District by the amount of the tax capacity attributable to the market value exclusion under Minnesota Statutes, section 273.13, subd. 35, but not below zero; 2. The HRA is authorized to notify the Hennepin County auditor of its election prior to July 1, 2014 in order for such election to be effective for taxes payable beginning in 2015; and 3. City and HRA staff and consultants are authorized and directed to take any and all such other actions as may be necessary or convenient to carry out the intent of this resolution. Adopted by the City Council of the City of Richfield, Minnesota this 27th day of May, 2014. Debbie Goettel, Mayor ATTEST: Nancy Gibbs, City Clerk AGENDA SECTION: CONSENT AGENDA ITEM# 5B REPORT# 96 STAFF REPORT 44iee CITY COUNCIL MEETING , MAY 27, 2014 REPORT PREPARED BY: JESSE SWENSON, ASST. HR MANAGER NAME,TITLE DEPARTMENT DIRECTOR REVIEW: [ 40 JO SIGNATURE OTHER DEPARTMENT REVIEW: SIGN REVIEWED BY CITY MANAGER: 4917,, Ara i i ITEM FOR COUNCIL CONSIDERATION: Resolution modifying the Health Care Savings Plan for LELS Local #162 Employees. I. RECOMMENDED ACTION: By Motion: Adopt a resolution modifying the Health Care Savings Plan for eligible LELS Local #162 employees. II. EXECUTIVE SUMMARY In 2001, the Minnesota legislature granted authority to the Minnesota State Retirement System (MSRS) to offer a post-employment health care savings plan to eligible employees of the State of Minnesota and other governmental subdivisions. MSRS was authorized to administer these plans after they were adopted by governmental subdivisions throughout the state. A Health Care Savings Plan was established by the City Council for LELS Local #162 (Police Supervisors) employee group in October of 2003. The LELS Local #162 group has now agreed upon a modification to the plan that modifies its bi- weekly payroll contributions. Under state statute, plan modifications may be made no more frequently than once every two years. The City does not make any contributions to this plan. PolSupv HCSP 2014xxx III. BR ASIS OF ECOMMENDATION A. B ACKGROUND  In 2001, the Minnesota legislature granted authority to the Minnesota State Retirement System (MSRS) to offer a post-employment health care savings plan to eligible employees of the State of Minnesota and other governmental subdivisions.  A post-employment health care savings plan is an employer- sponsored program that allows employees to save money to pay towards medical expenses and/or health insurance premiums after termination of employment. Employees are able to choose among different investment options provided by the State Board of Investment. Assets contributed into the program are tax-free, accumulate tax free, and if used for medical expenses, remain tax- free.  Legal authority to establish such plans is provided through Minn. Stat. 352.98 and Internal Revenue Service rulings. The establishment of each plan, including contribution formulae, must be negotiated when dealing with a collective bargaining unit or personnel policy where non-union employees are involved. Once established, the plan must be filed with MSRS to initiate or modify the plan.  Participation for each individual employee within a bargaining unit or employee group is mandatory once the plan is established for that respective group. Moreover, the amounts contributed for or by each employee in a particular group must be the same for every employee of the group. Contributed amounts between employee groups will vary however. B. P OLICY  The statues have been amended to provide the opportunity for a very valuable benefit to city employees. The City of Richfield has offered this benefit to employee groups that are interested in such a mandatory plan.  Approval by the City Council of the attached resolution will provide the City authority to proceed with this modified program for LELS Local #162 employees represented by a collective bargaining unit. Plan modifications may be made no more frequently than once every two years. C. CTI RITICAL IMING SSUES  There is no time critical issue pertaining to the timing of this modification. However, the majority of LELS Local #162 employees have expressed a desire to implement the modified program, so it should be pursued at the City’s earliest opportunity.  After City Council approval, this plan must be submitted to MSRS for filing and implementation. D. F INANCIAL  There is no cost to the City in this version of the plan since the City makes no contribution. In fact, there is a cost savings to the City in that wages and severance pay that the employee contributes to the Health Care Savings Plan are not subject to Social Security or Medicare contributions.  The plan provides a great tax savings to the participating employees and provides a tax mechanism to fund post-employment medical costs. E. L EGAL  There is legal authority for this plan in Minnesota Statutes and IRS Code.  The plan modification has been sent to the State for review and has received informal approval. F. EC NVIRONMENTAL ONSIDERATIONS  N/A IV. AR() LTERNATIVE ECOMMENDATIONS  The City Council could decide not to approve this plan modification. In that case, the current plan would remain in effect. However, this decision contradicts the wishes of the majority of this employee bargaining unit. V. A TTACHMENTS  Resolution  Health Care Savings Plan VI. PPEM RINCIPAL ARTIES XPECTED AT EETING  None RESOLUTION NO. RESOLUTION AUTHORIZING THE ESTABLISHMENT OF A POST EMPLOYMENT HEALTH CARE SAVINGS PLAN FOR LELS LOCAL #162 EMPLOYEES WHEREAS , Laws of Minnesota 2001, chapter 352.98, authorizes the Minnesota State Retirement System (MSRS) to offer a Post Employment Health Care Savings Plan (Plan) program to state employees, as well as other governmental subdivisions, and WHEREAS, the Internal Revenue Service Code provides for such Plans, and WHEREAS, the City of Richfield is interested in offering the Plan to eligible City employees as a tax free method for employees to set aside money to cover the ever increasing costs of health insurance and medical costs after termination of public employment, and WHEREAS, such plans must be established by employee group, either through a collective bargaining agreement for union employees or a personnel policy for employees not covered by a collective bargaining agreement, and WHEREAS, the provisions of a Plan have been agreed to by the LELS Local #162 group of City employees and the City of Richfield, and WHEREAS, the proposed plan is a net savings to the City of Richfield. NOW, THEREFORE, BE ITRESOLVED that the City Council of the City of Richfield hereby authorizes the City Manager to modify the Health Care Savings Plan for the LELS Local #162 group of employees in the City of Richfield. th Adopted by the City Council of the City of Richfield, Minnesota this 27 day of May, 2014. Debbie Goettel, Mayor ATTEST: Nancy Gibbs, City Clerk Police Supervisors Post Employment Health Care Savings Plan Memorandum of Agreement Between The City of Richfield & LELS Local 162 Approved by: Richfield City Council on May 27, 2014 Effective Date: June 1, 2014 Plan Purpose The City of Richfield and the Police Supervisors (LELS Local #162) bargaining unit are interested in establishing a means for eligible employees to participate in a mandatory program to help defray some of the costs of post employment health related expenses, including health insurance premiums using pre-tax dollars. Participation in the Post Employment Health Care Savings Plan, administered by the Minnesota State Retirement System (MSRS), is intended to provide an opportunity to accomplish that goal. Post A Post Employment Health Care Savings Plan (HCSP) is an Employment Employer-sponsored program that allows eligible employees to: Health Care Savings Plan 1) defer payment of a portion of unused vacation and personal leave as a severance payment at the time of termination to pay for eligible health insurance premiums and/or health expenses after separation from City service, and 2) defer a portion of an Employees’ bi-weekly salary for deposit into their HCSP for the payment of qualified healthcare related expenses after separation from City service. Employees will be able to choose among several different investment options provided by the Minnesota State Board of Investment. Under the Plan, amounts contributed into the HCSP are tax-free and not subject to FICA contributions. Assets in the HCSP will accumulate tax-free and since payouts are used for qualifying medical expenses, they will also remain tax-free. Eligibility to Participation in the Police Supervisors HCSP is mandatory for all Participate employees that meet the following requirements: 1. The Employee must be a member of the Richfield Police Supervisory Bargaining Unit at the time of termination of employment, and 2. The Employee must have been continuously employed by the City of Richfield for at least 1 year. Contribution Mandatory participation in the Police Supervisors HCSP shall be Formula in accordance with, and limited to the following formulas for contributions: I.Bi-weekly Contribution $75 per pay period 1. An eligible Employee must contribute to the Police Supervisors HCSP Employee’s account in the . Such contributions shall not exceed $75 per pay period. II. Severance Contribution Personal 1. Severance based on all accumulated but unused Leave hours shall be paid as a credit to the Employee’s account Police Supervisors HCSP in the . Vacation 2. Severance based on all accumulated but unused Leave hours shall be paid as a credit to the Employee’s account Police Supervisors HCSP in the . Holiday 3. Severance based on all accumulated but unused Leave hours shall be paid as a credit to the Employee’s account Police Supervisors HCSP in the . 4. All severance payments based upon Personal, Vacation and Holiday Leaves are calculated as described above, by multiplying the number of hours by the applicable rate of pay upon termination. Contributions authorized under this Plan shall continue until such time as this memorandum is amended or repealed by the City of Richfield and LELS-Local 162. HCSP The HCSP is authorized under the Internal Revenue Code and is Administration administered by the Minnesota State Retirement System. FOR THE CITY OF RICHFIELD: ___________________________________ City Manager ___________________________________ Assistant City Manager/HR Manager For LELS #162 – POLICE SUPERVISORS: ___________________________________ Union Representative ___________________________________ Union Representative AGENDA SECTION: CONSENT AGENDA ITEM# 5C REPORT# 97 STAFF REPORT CITY COUNCIL MEETING MAY 27, 2014 REPORT PREPARED BY: JIM TOPITZHOFER, RECREATION SERVICES DIRECTOR NAME,TITLE DEPARTMENT DIRECTOR REVIEW: d SIGNATURE OTHER DEPARTMENT REVIEW: D N/�®. SIGNATU•f REVIEWED BY CITY MANAGER: ITEM FOR COUNCIL CONSIDERATION: Consideration of the attached Agreement between Hennepin County and the City of Richfield for funding a rain garden for Wood Lake Nature Center. I. RECOMMENDED ACTION: By Motion: Approve the attached Agreement between Hennepin County and the City of Richfield for funding a rain garden for Wood Lake Nature Center. II. EXECUTIVE SUMMARY The City received a grant from Hennepin County to help fund the construction of a rain garden at Wood Lake Nature Center in conjunction with the scheduled parking lot reconstruction project. The amount of support received through the grant is 75% of the project cost or $15,000, whichever is less. The total project cost is $20,000 and the remaining funds are coming from this year's approved Capital Improvement Budget for Wood Lake's parking lot reconstruction project. To receive the funds, Hennepin County requires City Council approval of the attached grant agreement. III. BASIS OF RECOMMENDATION 0527 WLNC rain garden A. B ACKGROUND The parking lot rain garden is a demonstration/education garden of how parking lots can be made more environmentally friendly by directing water to natural groundwater recharge instead of sending run off to Wood Lake’s Marsh. It also helps to prevent flooding in this way. The new rain garden will allow naturalists to show visitors the value of rain gardens and how they help to mitigate storm water runoff and their impact on local water bodies. The goal of the rain garden is not to remove and replace the storm water drains but to supplement them. The size of the garden is 800-square feet. The rain garden has a graded basin and side slopes to accept and infiltrate water. Water also infiltrates through porous pavers placed in an adjacent parking stall next to the water garden, included in the project. The project includes suitable plant materials selected to thrive in wet/dry soil conditions, easy to maintain with local, native and deer resistant plants as well. The rain garden location is in the lower parking lot peninsula (see attached map). B. P OLICY  The attached agreement is a requirement of Hennepin County Department of Environmental Services and City Council considers and executes these types of agreements for the City. C. CTI RITICAL IMING SSUES  The project is scheduled to be completed this summer. D. F INANCIAL  Reconstruction of Wood Lake Nature Center’s parking is funded through the 2014 Capital Improvement Budget in the amount of $175,000, approved on January 28, 2014. The total cost of the rain garden is $20,000 of which $15,000 is funded through the Hennepin County Grant (or 15% of the rain garden cost, whichever is less). E. L EGAL  The City Attorney reviewed the attached agreement and has reviewed this staff report. F. EC NVIRONMENTAL ONSIDERATIONS  N/A IV. AR() LTERNATIVE ECOMMENDATIONS  None V. A TTACHMENTS  Hennepin County Personal/Professional Service Agreement  Map VI. PPEM RINCIPAL ARTIES XPECTED AT EETING  None BAR14-0125 Contract No: A140167 PERSONAL/PROFESSIONAL SERVICE AGREEMENT This Agreement is between the COUNTY OF HENNEPIN, STATE OF MINNESOTA, A-2300 Government Center, Minneapolis, Minnesota 55487 (the "COUNTY"), on behalf of the Hennepin County Department of Environmental Services, 701 Fourth Avenue South, Suite 700, Minneapolis, MN 55415 ("DEPARTMENT") and the City of Richfield, Wood Lake Nature Center, 6710 Lake Shore Drive, Richfield, MN 5 5423 ("GRANTEE"). The parties agree as follows: TERM AND COST OF THE AGREEMENT The term of this contract is commencing May 1, 2014 or date of execution and terminating December 31, 2015, unless terminated earlier in accordance with the Default and Cancellation provisions of this Agreement. GRANTEE shall be paid a not to exceed amount of 75% of the cost of the project or fifteen thousand dollars ($15,000), whatever is less. Items of cost for which reimbursement is claimed on the Voucher and Practice Certification Summary Form (Attachment A) are to be supported by invoices/receipts for payments and will be verified by the DEPARTMENT as practical and reasonable. The DEPARTMENT has the authority to make adjustments to the costs submitted for reimbursement. Attachment A with all necessary supporting documentation can only be submitted to the DEPARTMENT on a monthly basis for reimbursement. In no case shall the DEPARTMENT provide cost -share assistance to the GRANTEE for the reapplication of a practice that was removed by the GRANTEE during its effective life, as defined in Attachment B, without consent of the DEPARTMENT or that failed due to improper maintenance. Attachments A and B are attached and incorporated by this refrence. Reimbursable expenses are limited to activities relating to the instillation and establishment of the rain garden in the lower parking lot of the Wood Lake Nature Center (as identified in the Hennepin County Natural Resource Incentives for Critical Habitat Application for the City of Richfield, Wood Lake Nature Center dated October 28, 2013) including the preparation of project specifications and designs, and related site construction and restoration work, in kind services, operation and maintenance plans and related consulting and inspection. Form 101 (Revised 8/2013) 2. PRACTICES TO BE IMPLEMENTED Expenses incurred in performing activities specified in the Hennepin County Natural Resource Incentives for Critical Habitat (NRICH) Application submitted by the GRANTEE and as is further described in Attachment B to this Agreement or as approved by the County. Administrative costs incurred by GRANTEE are not eligible for reimbursement. The conservation practice category for which cost -share is requested for the lower parking lot runoff rain garden at the Wood Lake Nature Center, as more fully described in Attachment B. 3. COST -SHARE PAYMENT Cost -share payment shall be made directly to GRANTEE after completion of the practice(s) and upon the presentation of a claim as provided by law governing the COUNTY's payment of claims and/or invoices. The GRANTEE shall submit invoices for services related to the implementation of practices. Payment shall be made within 45 days from receipt of the invoice. GRANTEE shall not provide services under this Agreement without receiving a purchase order or purchase order number supplied by the COUNTY. All invoices shall display the COUNTY purchase order number and be sent to the central invoice receiving address supplied by the COUNTY. 4. INDEPENDENT CONTRACTOR The GRANTEE shall not be considered to be either a temporary or permanent employee of the COUNTY. The GRANTEE acts as an independent contractor and the GRANTEE'S contractor act hereunder as independent contractors and acquires no tenure rights or any rights or benefits of Workers' Compensation, Re-employment Compensation, medical and hospital care, sick and vacation leave, severance pay, retirement benefits, or any other right or benefit offered to COUNTY employees. GRANTEE shall select the means, method, and manner of performing the services. Nothing is intended or should be construed as creating or establishing the relationship of a partnership or a joint venture between the parties or as constituting GRANTEE as the agent, representative, or employee of the COUNTY for any purpose. GRANTEE is and shall remain an independent GRANTEE for all services performed under this Agreement. GRANTEE shall secure at its own expense all personnel required in performing services under this Agreement. Any personnel of GRANTEE or other persons while engaged in the performance of any work or services required by GRANTEE will have no contractual relationship with the COUNTY and will not be considered employees of the COUNTY. The COUNTY shall not be responsible for any claims that arise out of employment or alleged employment under the Minnesota Unemployment Insurance Law or the Workers' Compensation Act of the State of Minnesota on behalf of any personnel, including, without limitation, claims of discrimination against GRANTEE, its officers, agents, Form 101 (Revised 8/2013) 2 GRANTEEs, or employees. Such personnel or other persons shall neither require nor be entitled to any compensation, rights, or benefits of any kind from the COUNTY, including, without limitation, tenure rights, medical and hospital care, sick and vacation leave, Workers' Compensation, Re-employment Compensation, disability, severance pay, and retirement benefits. 5. NON-DISCRIMINATION In accordance with the COUNTY's policies against discrimination, GRANTEE agrees that it shall not exclude any person from full employment rights nor prohibit participation in or the benefits of, any program, set -vice or activity on the grounds of race, color, creed, religion, age, sex, disability, marital status, sexual orientation, public assistance status, or national origin. No person who is protected by applicable Federal or State laws against discrimination shall be subjected to discrimination. 6. INDEMNIFICATION GRANTEE agrees to defend, indemnify, and hold harmless the COUNTY, its officials, officers, agents, volunteers and employees from any liability, claims, causes of action, judgments, damages, losses, costs, or expenses, including reasonable attorney's fees, resulting directly or indirectly from any act or omission of GRANTEE, a subcontractor, anyone directly or indirectly employed by them, and/or anyone for whose acts and/or omissions they may be liable in the performance of the services required by this Agreement, and against all loss by reason of the failure of GRANTEE to perform any obligation under this Agreement. For clarification and not limitation, this obligation to defend, indemnify and hold harmless includes but is not limited to any liability, claims or actions resulting directly or indirectly from alleged infringement of any copyright or any property right of another, the employment or alleged employment of GRANTEE personnel, the unlawful disclosure and/or use of protected data, or other noncompliance with the requirements of the Data Practices provisions set forth in Section 9 hereof. 7. ACCESS FOR INSPECTIONS The GRANTEE agrees to acquire written consent from all cost -share grant recipients that the COUNTY, and any duly authorized representatives of the COUNTY, at a time that is mutually agreed upon by the cost -share recipient and the COUNTY, and as often as the COUNTY may reasonably deem necessary, shall have access to and the right to enter the cost -share recipient's property, for purposes of inspection of the practice identified herein. 8. SUCCESSORS. SUBCONTRACTING AND ASSIGNMENTS GRANTEE shall not assign, transfer or pledge this Agreement and/or the set -vices to be performed, whether in whole or in part, nor assign any monies due or to become due to it without the prior written consent of the COUNTY. A consent to assign shall be subject to such conditions and provisions as the COUNTY may deem necessary, accomplished by execution of a form prepared by the COUNTY and signed by GRANTEE, the Form 101 (Revised 8/2013) assignee and the COUNTY. Permission to assign, however, shall under no circumstances relieve GRANTEE of its liabilities and obligations under the Agreement. 9. DEFAULT AND CANCELLATION/TERMINATION Should the GRANTEE fail to maintain the practice during its effective life, the Grantee is considered to be in default and is liable to the DEPARTMENT for the full amount of financial assistance received to install and establish the practice. The GRANTEE is not liable for cost -share assistance received if the failure was caused by reasons beyond the GRANTEE's control, or if conservation practices are applied at GRANTEE's expense that provide equivalent protection of the soil and water resources. This Agreement may be canceled with or without cause by either party upon thirty (30) day written notice. If this Agreement expires or is cancelled or terminated, with or without cause, by either party, at any time, GRANTEE shall not be entitled to any payment, fees or other monies except for payments duly invoiced for then delivered In the event GRANTEE has performed work toward a Deliverable that COUNTY has not Accepted at the time of cancellation or termination, GRANTEE hereby expressly acknowledges and agrees that GRANTEE shall not be entitled to any payment for said work including but not limited to incurred costs of performance, termination expenses, profit on the work performed, other costs founded on termination for convenience theories or any other payments, fees, costs or expenses not expressly set forth herein. 10. CONTRACT ADMINISTRATION In order to coordinate the services of GRANTEE with the activities of the Hennepin County Department of Environmental Services so as to accomplish the purposes of this Agreement, James Kujawa, Senior Environmentalist, 612-348-7338, or successor shall manage this Agreement on behalf of the COUNTY and serve as liaison between the COUNTY and GRANTEE. Karen Shra66, City of Richfield, Wood Lake Nature Center Manager, Phone: 612- 861-9365, SHALL MANAGE THE AGREEMENT ON BEHALF OF GRANTEE. GRANTEE MAY REPLACE SUCH PERSON BUT SHALL IMMEDIATELY GIVE WRITTEN NOTICE TO THE COUNTY. 11. COMPLIANCE AND NON -DEBARMENT CERTIFICATION A. GRANTEE shall comply with all applicable federal, state and local statutes, regulations, rules and ordinances currently in force or later enacted. B. If the source or partial source of funds for payment of services under this Agreement is federal, state or other grant monies, GRANTEE shall comply with all applicable conditions of the specific referenced or attached grant. Form 101 (Revised 8/2013) 4 C. GRANTEE certifies that it is not prohibited from doing business with either the federal government or the State of Minnesota as a result of debarment or suspension proceedings. 12. PAPER RECYCLING The COUNTY encourages GRANTEE to develop and implement an office paper and newsprint recycling program. 13. NOTICES Any notice or demand which must be given or made by a party under this Agreement or any statute or ordinance shall be in writing, and shall be sent registered or certified mail. Notices to the COUNTY shall be sent to the County Administrator with a copy to the originating Department at the address given in the opening paragraph of the Agreement. Notice to GRANTEE shall be sent to the address stated in the opening paragraph of the Agreement or to the address stated in GRANTEE's Form W-9 provided to the COUNTY. 14. CONFLICT OF INTEREST GRANTEE affirms that to the best of GRANTEE's knowledge, GRANTEE's involvement in this Agreement does not result in a conflict of interest with any party or entity which may be affected by the terms of this Agreement. GRANTEE agrees that, should any conflict or potential conflict of interest become known to GRANTEE, GRANTEE will immediately notify the COUNTY of the conflict or potential conflict, specifying the part of this Agreement giving rise to the conflict or potential conflict, and will advise the COUNTY whether GRANTEE will or will not resign from the other engagement or representation. 15. PROMOTIONAL LITERATURE GRANTEE agrees, to the extent applicable, to abide by the current Hennepin County Communications Policy (available upon request). This obligation includes, but is not limited to, GRANTEE not using the term "Hennepin County" or any derivative in any promotional literature, advertisements of any type or form or client lists without the express prior written consent of a COUNTY Department Director or equivalent. 16. MINNESOTA LAWS GOVERN The Laws of the State of Minnesota shal I govern al I questions and interpretations concerning the validity and construction of this Agreement and the legal relations between the parties and their performance. The appropriate venue and jurisdiction for any litigation will be those courts located within the County of Hennepin, State of Minnesota. Litigation, however, in the federal courts involving the parties will be in the appropriate federal court within the State of Minnesota. If any provision of this Agreement is held invalid, illegal or unenforceable, the remaining provisions will not be affected. Form 101 (Revised 8/2013) COUNTY ADMINISTRATOR AUTHORIZATION Reviewed by the County Attorney's COUNTY OF HENNEPIN Office STATE OF MINNESOTA Assistant County Attorney M. David Hough, County Administrator Assistant County Administrator - Public Works Date: Recommended for Approval Director, Department of Environmental Services Date: CONTRACTOR The Contractor certifies that the person who executed this Agreement is authorized to do so on behalf of the Contractor as required by applicable articles, bylaws, resolutions or ordinances.* Printed Name: Signed: Title: Date: * Contractor shall submit applicable documentation (articles, bylaws, resolutions or ordinances) that confirms the signatory's delegation of authority. This documentation shall be submitted at the time Contractor returns the Agreement to the County. Documentation is not required for a sole proprietorship. Form 101 (Revised 8/2013) 6 (Attachment A) Hennepin County — Department of Environmental Services (DES) COST - SHARE VOUCHER & PRACTICE CERTIFICATION FORM PAYEE INFORMATION ❑ Check if name or address change PROJECT INFORMATION Name: 71DES T.D. Number: Address: Program: ❑ Easement ❑ Cost -Share ❑ Other City, State, & Zip Code: Practice Type (one only) Practice Area(s) Acres Completed: COST INFORMATION Basis of Request Type of Request Completion Date: ❑ Installation ❑ Establishment ❑ Reinstallation ❑ Partial ❑ Final I R - Receipted item/Invoiced item i - in - Kind Contribution (attach additional sheets as necessary) Total I certify that this is an accurate and true summation of the actual costs and quantities of material, labor, and equipment used on the above project. In cases where the receipts included items not used on the project, I have corrected them accordingly. (Payee Signature) (Date) PAYMENT INFORMATION EASEMENT PROGRAMS l(c) cannot cxcccd (a) - (b)) TOTAL, COST OF PRACTICE (from above) (a) Maximum Payment Allowed Program Cost -share Payment: _ [from box (c)] (b)Total of Previous Payments: OTHER FUNDING SOURCES (please identify source) (c)Cost -Share Payment Requested _ COST -SHARE PROGRAM {(b)+(c) cannot cxcccd 75% of(a)} _ (a) Total Cost Approved: - (b) Other public funds LAND OWNER/LAND OCCUPIER COST: (c) DES Share % (Attach additional sheets as necessary) 111]), DES CERTIFICATION I certify that an inspection has been performed and that the items identified in part I certify that I have reviewed this voucher and all supporting information and that C have been completed and are in accordance with the required practice standards to the best of my knowledge and belief, the quantities and billed costs or and specifications. disbursements are accurate and are in accordance with terms of the program identified. (DES Technical Representative) (Date) (Authorized DES Representative) (Date) Attachment B City of Richfield, Wood Lake Nature Center Parking Lot Rain Garden Project Summary The City of Richfield, Wood Lake Nature Center proposes to install a rain garden to collect the runoff from the lower parking lot. Construction of the rain garden will be on the Nature Center property at 6710 Lake Shore Drive, Richfield, MN 55423. Installation and establishment will occur between the execution of this contract and December 31, 2015 Approved Budget Activities Activities relating to the installation and establishment of the rain garden in the area of the lower parking lot at the Nature Center (as identified in the Hennepin County Natural Resource Incentives for Critical Habitat Application from the City of Richfield, Wood Lake Nature Center Rain Garden Project, dated October 28, 2013) including the preparation of project specifications and designs, and related site construction and restoration work, in kind services, operation and maintenance plans and related consulting and inspection. Hennepin County NRICH reimbursements with said work shall not exceed 75% of expenses or $15,000, whatever is less. The effective life of this practice is ten (ten) years. Form 101 (Revised 8/2013) 7 Ir l. AGENDA SECTION: ORDINANCE AGENDA ITEM# 7 REPORT# 98 STAFF REPORT Pectet," CITY COUNCIL MEETING MAY 27, 2014 REPORT PREPARED BY: MELISSA POEHLMAN, CITY PLANNER NAME,TITLE DEPARTMENT DIRECTOR REVIEW: El lg Al 4 SIGNATURE OTHER DEPARTMENT REVIEW: El .idtt SIGNA� k r REVIEWED BY CITY MANAGER: gif:- V ' — Aillie 7- i'alallA dew P. ITEM FOR COUNCIL CONSIDERATION: Second reading and consideration of summary publication of an ordinance that will remove/correct outdated terminology; clarify a number of definitions; allow home occupations to operate within garages and accessory structures; correct and add references; add parking requirements for two-family and cluster housing developments; revise setbacks from Two- Family Residential (MR-1) properties; and clarify screening and temporary banner requirements. I. RECOMMENDED ACTION: By Motion: 1) Approve the attached ordinance amending Subsections 507.07, Subdivisions 57 and 62; Subsection 509.15, Subdivision 2; Subsection 509.21, Subdivisions 5 and 15; Subsection 509.25, Subdivision 7; Subsections 512.05, 512.07, and 512.09; Subsection 514.07, Subdivision 2; Subsection 529.11, Subdivision 1; Subsection 534.11, Subdivision 1; Subsection 537.03, Subdivision 1; Subsection 542.03, Subdivision 2; Subsection 544.05; Subsection 549.21, Subdivision 4; Subsection 549.23, Subdivision 1; and Appendix I, Section 3, Clause 91; adding new Subsection 507.07, Subdivision 53; and Subsection 514.15, Subdivision 4; and repealing Subsection 507.07, Subdivisions 26 and 101. Changes are related to outdated 052714-2nd Read Ord Amend variousxxx terminology and references, clarification of definitions and language related to home occupations, setbacks, screening and temporary banners; and 2) Approve the attached resolution authorizing summary publication of an ordinance amending the City’s Zoning Ordinance. Changes are related to outdated terminology and references, clarification of definitions and language related to home occupations, setbacks, screening and temporary banners. ES II. XECUTIVE UMMARY City staff continually monitors and notes areas of the Zoning Code that may require review and/or revision. Proposed revisions may be the result of changes in State Law or its interpretation, changes in social norms and community desires, new technology or direct experience with a particular regulation. The Zoning Code is the implementation tool that helps the City bring to life its vision for the future as described by the Comprehensive Plan and other redevelopment/revitalization plans. The attached ordinance primarily addresses minor technical issues and clarifies existing regulations. There are two items that could be considered more substantial. The first change would allow home occupations to operate from residential garages or accessory buildings and the second relates to screening th requirements for mechanical equipment. (As a result of the discussion on May 13 regarding drive-thru uses in the Mixed Use Districts, this portion of the proposed ordinance has been removed for further study.) Home occupations in accessory buildings/garages A change in the Code to allow home occupation-related activities in garages and accessory structures has been discussed and support by the Planning Commission for a number of years. The objective is to allow greater opportunity and flexibility for home businesses that will not adversely impact the surrounding neighborhood. Regulations will continue to require that all activities related to a home occupation be conducted within an enclosed building, and operations that could negatively impact the neighborhood (e.g. auto repair) will continue to be prohibited. Screening Current ordinance language requires the full screening of utilities and mechanical equipment from “public areas.” Applicants have complained that “public areas” is not clearly defined. Staff research also indicates that screening requirements in the past have been more robust, requiring screening not only from public view, but also from nearby properties. The Planning Commission has indicated that the screening of mechanical equipment remains an important requirement, and believes that screening from adjacent properties is something that should be added back into the ordinance. The proposed amendment would require that equipment be screened from ground-level observation on the subject property, adjacent properties and adjacent right-of-way. In cases where roof-top equipment may be visible from above, the Community Development Director is given the authority to require that the equipment be painted to match the roof. Summary of additional changes  Remove obsolete “dance or physical culture studios” terminology in favor of “health club or studio, spa.”  Clarify existing policy related to use of pervious pavers on single- and two- family lots. Due to the required ongoing maintenance of these pavers, they are permitted, but are counted toward the allowable impervious surface limit.  Revised area calculation for Planned Unit Developments to allow, under specific circumstances, inclusion of adjacent right-of-way.  Correct terminology related to voltage limits for home occupations.  More precisely define the way in which fence height is measured.  Add language to clarify that banner regulations apply to all temporary signs.  Correct subsection references, symbology and inconsistencies left over from previous Code amendments.  Add footnotes where needed.  Correct an error related to the description of a particular property in Appendix I.  Remove unused and unnecessary definitions. III. BR ASIS OF ECOMMENDATION A. B ACKGROUND  A first reading of this ordinance was held on May 13, 2014. The Council discussed clarification of ambiguous language related to drive-thru uses in the Mixed Use Districts.  The Council requested information regarding uses that would have been made nonconforming by more definitively prohibiting drive-thru services for single-tenant developments. This is a difficult question to answer because nearly every existing drive-thru in the Mixed Use District is already nonconforming based on other design criteria. Taco Bell – Existing nonconforming use. Rebuilt as o legally nonconforming use and granted variances. Richfield Bloomington Credit Union – Existing o nonconforming use based on number of drive-thru service lanes, relation of curb cuts to drive-thru, and proximity of drive-thru to residential. CVS – Variance granted. o Walgreens – Not in Mixed Use District o Popeyes – Not in Mixed Use District o  The drive-thru service portion of the proposed ordinance has been removed so that staff can study various alternatives. The Mixed Use Districts are intended to be pedestrian-oriented; high-volume drive- thru traffic is not generally compatible with this goal. Staff is working to craft language that would potentially allow lower-intensity drive-thru service users, but more greatly restrict high-volume users. Staff is also considering proximity regulations that would limit the overall frequency of users with drive-thru service (this regulation is in place along Penn Avenue where parcels with drive-thru service must be a minimum of 150 feet from each other).  Staff hopes to propose a revision to this subsection of the Code in the next few months. B. P OLICY  The regulations of the Zoning Code are intended to promote harmonious relationships among land uses and to ensure that public and private lands ultimately are used for the purposes that are most appropriate and beneficial from the standpoint of the City as a whole.  Ongoing review and periodic updating of the Code is necessary to ensure that regulations area serving their intended purposes.  Clear and correct language is important to both staff and our customers. C. CTI RITICAL IMING SSUES  None D. F INANCIAL  N/A E. L EGAL  A public hearing was held before the Planning Commission on April 28, 2014.  Notice of the public hearing was published in the Sun Current Newspaper in accordance with State and Local requirements.  The Planning Commission recommended approval of the proposed amendment (5-0).  A first reading of the proposed ordinance was approved on May 13, 2014. F. EC NVIRONMENTAL ONSIDERATIONS  N/A IV. AR() LTERNATIVE ECOMMENDATIONS  Approve the attached ordinance with minor amendments.  Reject the attached ordinance. V. A TTACHMENTS  Ordinance  Resolution VI. PPEM RINCIPAL ARTIES XPECTED AT EETING  None BILL NO. _____ AMENDMENT TO RICHFIELD CITY CODE RELATED TO ZONING AMENDING SUBSECTION 507.07, SUBDIVISIONS 57 AND 62; SUBSECTION 509.15, SUBDIVISON 2; SUBSECTION 509.21, SUBDIVISIONS 5 AND 15; SUBSECTION 509.25, SUBDIVISION 7; SUBSECTIONS 512.05, 512.07, AND 512.09; SUBSECTION 514.07, SUBDIVISION 2; SUBSECTION 529.11, SUBDIVISION 1; SUBSECTION 534.11, SUBDIVISION 1; SUBSECTION 537.03, SUBDIVISION 1; SUBSECTION 537.05, SUBDIVISION 5; SUBSECTION 542.03, SUBDIVISION 2; SUBSECTION 544.05; SUBSECTION 549.21, SUBDIVISION 4; SUBSECTION 549.23, SUBDIVISION 1; AND APPENDIX I, SECTION 3, CLAUSE 91; ADDING NEW SUBSECTION 507.07, SUBDIVISION 53; AND SUBSECTION 514.15, SUBDIVISION 4; AND REPEALING SUBSECTION 507.07, SUBDIVISIONS 26 AND 101. THE CITY OF RICHFIELD DOES ORDAIN: Section 1 A new Subsection 507.07, Subdivision 53 of the Richfield City Code to read as follows is added, and by now renumbering all following subdivisions accordingly: Subd. 53. “Health club or studio, spa.” A facility, for profit or nonprofit, where members or nonmembers use equipment or space for the purpose of passive or active exercises related to physical fitness. Section 2 Subsection 507.07, Subdivision 57 of the Richfield City Code is amended to read as follows: Subd. 57. “Impervious surface.” A surface that has been compacted or covered with a layer of materials so that it is highly resistant to infiltration by water. It includes surfaces such as compacted sand, limerock, or clay, as well as most conventionally surfaced streets, roofs, sidewalks, parking lots, and other similar structuressurfaces. Open uncovered decks or porches are not included. Due to maintenance requirements, pervious pavers and similar materials shall not be calculated as a deduction from impervious surface for single- or two-family lots unless special approval from the Director is granted. (Figure 5) Section 3 Subsection 507.07, Subdivision 62 of the Richfield Code is amended to read as follows: Subd. 62. “Lot area.” The total horizontal area bounded by the front, side, and rear lot lines. With respect to planned unit developments only, lot area includes the site plus one-half (1/2) of the area of abutting streets and alleys may include, at the discretion of the Director, areas of the right- of-way that are improved and integral to the design of the project. Section 4 Subsection 509.15, Subdivision 2 of the Richfield Code to read as follows: Subd. 2. Definitions. a) “Hedge.” A row of shrubbery which forms or is intended to form a barrier. b) “Wall.” This term includes retaining walls, freestanding walls, and decorative or privacy walls. c) “Height of fence.” Fence height is measured to include the body of the fence, plus allowing a maximum of six inches (on average between posts) above the natural grade (i.e. for drainage purposes). Fence posts are permitted to extend a maximum of six inches above the body of the fence. Section 5 Subsection 509.21, Subdivision 5 of the Richfield Code is amended to read as follows: Subd. 5. Activities. A home occupation must be conducted in such a manner that activities connected with it are not noticeable from adjacent streets or residential lots, and except as permitted in Subd. 6 below, do not draw attention to the home occupation. All activities related to a home occupation must be conducted within a fully enclosed dwellingbuilding. Home occupations are not permitted in garages (accessory or attached). Section 6 Subsection 509.21, Subdivision 15 of the Richfield Code is amended to read as follows: Subd. 15. Use of equipment. No mechanical or electrical equipment requiring in excess of 220240 volts single phase shall be permitted in the conduct of a home occupation, and no electric motor shall exceed 3 horsepower. Section 7 Subsection 509.25, Subdivision 7 of the Richfield Code is amended to read as follows: Subd. 7. Nonconforming site improvements. This subsection is primarily aimed at upgrading nonconforming site improvements that affect the appearance and impacts of a site. It is not intended to require extensive changes that would be extremely impractical such as moving or lowering buildings. a) Nonconforming Parking. Alteration, addition or expansion which results in an increased need for off-street parking shall provide additional parking according to the following guidelines: i. Where modifications result in an increase in the applicable unit of measurement (dwelling unit, floor area, capacity, number or seats, etc.) which is 50 percent or less of the original total, additional parking shall be required only for this new or modified part of the development; ii. Where modifications result in an increase in the applicable unit of measurement which is over 50 percent of the original total, sufficient off- street parking shall be provided to bring the entire development into conformance with the requirements of this ordinance. b) Nonconforming Landscaping and Screening. Alternative landscaping or screening may be approved by the Director, where, due to existing structure placement, lot dimensions, parking requirements, or other improvements, it is not possible to provide the landscaping or screening required by this ordinance, according to the following rules: i. The alternative landscaping or screening will not be detrimental to adjacent properties; and ii. The alternative landscaping or screening complies with the purpose and intent of standards dictated by this ordinance. Additional nonconforming site improvements. In addition to the C) requirements of a) and b) above, the following nonconforming site improvements must be made conforming if a structure or use associated with the nonconforming site improvement is enlarged or expanded. i. Impervious surface coverage as required by applicable zoning district standards; ii. Irrigation as required by Subsection 542.03 544.03, Subd. 4(h); iii. Screening of refuse collection and utilitarian items in accordance with Subsection 542.05 544.05; iv. Pedestrian circulation as required by Subsection 542.15 544.15; v. Bicycle parking in accordance with Subsection 542.17544.17; and vi. Underground utilities when renovation costs exceed 50 percent of the value of the structure, in accordance with Subsection 542.19544.19. d) The Director may modify or waive any of the provisions above based on a written finding that the proposal: i. Would not be detrimental to adjacent properties; and ii. The proposal complies with the purpose and intent of standards dictated by this ordinance. (Amended: 9-17-2010) Section 8 Subsection 512.05 of the Richfield City Code is amended to read as follows: 512.05. Permitted, Conditional, Accessory and Prohibited Uses in Residential Districts. The following table summarizes which land uses are classified as permitted, accessory, conditional or prohibited in the Residential Districts. Refer to Sections 514 through 527 for complete regulations. P: Permitted A: Accessory C: Conditional N: Null or Prohibited Land Use R R-1 MR-MR-MR- 123 Residential Single-family detached dwellings P P P N N Two-family dwellings C N P P P Twin homes N N C N N Multifamily dwellings (>minimum 3 units) N N N P/C P/C Cluster home developments C N C C N Other Bed and breakfast inns C C N N N Cemeteries C N N N N Day care facilities P/C P P/C P/C P/C Emergency shelters C N C C C Fences, walls and hedges A A A A A Foster family homes A/C A/C A/C A/C A/C Garages/carports for a residential structure A A A A A Gazebos/greenhouses A A A N N Governmental buildings P N C C C Home occupations A A A A A Libraries (public) P N C C C Parking A A A A A Private driveways A A A A A Public utilities, major C C C C C Public utilities, minor A A A A A Recreational facilities, noncommercial, principal use C C C N N Religious institutions C N C C C Residential care facilities P P P/C P/C P/C Roomer A A N N N Satellite dish antennas A A A A A Schools, public or private C N C C C Storage buildings A A A A A Swimming pools, private A A A A A Telecommunication towers C C C C C Utility buildings accessory to telecommun. towers and A N A A A antennas Section 9 Subsection 512.07 of the Richfield City Code is amended to read as follows: 512.07. Permitted, Conditional, Accessory and Prohibited Uses in Commercial Districts. The following table summarizes which land uses are classified as permitted, accessory, conditional or prohibited in the Commercial Districts. Refer to Sections 529 through 534 for complete regulations. (Amended, Bill No. 2011-19) P: Permitted A: Accessory C: Conditional N: Null or not Permitted Land Use S-C-1 C-2 O Adult businessesNNP Animal kennelsNNP/C Apartments within a commercial buildingAA/CC Assembly, light manufacturing, warehouseNNA Auction housesNNP Auto mechanical/body repairNNC Auto detailingNNC Auto or boat salesNNC Auto stereo installation serviceNNP Auto washesNNC Barber or beauty shopsP/CP/CP/C Bicycle storesNP/CP/C Bicycle repair shopsP/CP/CP/C Bowling alleysNNP Carpet or paint storesNP/CP/C CemeteriesNNC Convenience storeNPP Dance or physical culture studiosPPP Day care facilitiesCPP Drug stores without drive-up facilityNP/CP/C Drug stores with drive-up windowNNC Emergency shelterNNC Enclosed storageAAA Fences, walls and hedgesAAA Financial institutions without drive-up serviceNNP Financial institutions with drive-up serviceNNC Firearms related usesNNC Fortune tellingNNP Funeral homes, mortuariesNNC Furniture or appliance storesNP/CP/C Governmental buildingsPPP Grocery storesNP/CP/C Health club or studio,spa N P P Hospital or 24-hour urgent careP/CP/CP/C Hotel or motel (6 or more units)NNC Junk yardNNN Libraries, publicPPP Liquor store, municipalNNP Nursing homePPN Office, single-tenant, professional, executive or businessP/CP/CP/C Office, multi-tenant, professional, executive, or businessP/CP/CP/C Outdoor merchandising or storage (except as allowed by NNN Section 1135 of the City Code) ParkingAAA Pawn shops and second hand goods dealers licensed underSection NNC 1186 or1187 of the City Code Public utility, minorAAA Public utility, majorCCC Religious institutionsNNP Restaurant, take-out only (Class IV)NCP Restaurant, fast food/convenience food (Class III) or any NNC restaurant with drive-up service Restaurant, traditional or cafeteria (Class II)NCC Restaurant, full service (Class I)NNC Retail, general (single or multi-tenant) NP/CP/C Schools, public or privateNNP Service stationNNC Service station/convenience storeNNC Service or non-auto repair shopP/CP/CP/C Tattoo shopsNNC Taxi or limousine serviceNNP Theater, movie or live entertainmentNNC Veterinary clinic NNP (Amended, Bill No. 2011-13; 2011-19) Section 10 Subsection 512.09 of the Richfield City Code is amended to read as follows: 512.09. Permitted, Conditional, Accessory and Prohibited Uses in Mixed-Use Districts. The following table summarizes which land uses are classified as permitted, accessory, conditional or prohibited in the Mixed-Use Districts. Refer to Section 537 for complete regulations. P: Permitted A: Accessory C: Conditional N: Null or not Permitted Land Use MU-MU-MU-R NC Residential Townhome development PNN Multifamily dwellings (min. 3 units)PPP (but see 537.07 Subd. 2a) Live-work unitsPPN Assisted living facilities, nursing, rest homesPPN Other Adult businesses NPP Animal kennelsCCC Assembly and manufacturing accessory and subordinate NA A to retail use Auto mechanical/body repairNCC Auto detailingNCC Auto rental facilities as an accessory to primary office or NAA hotel use Auto salesNNC ClinicsA*PP Convenience storeP*PP Day care facilitiesPPP Drive-up window or teller serviceNCC Firearms related usesNNC Funeral homes, mortuariesNPN Governmental buildingsAPA Health or athletic clubs, spas, yoga studiosNPP Hotel or motel (6 or more units)NPP HospitalsNNP Libraries, publicPPN OfficesAPP ParkingAAA Police sub-stationPPP Public utilitiesAAA Recreational facilities, noncommercial, principal usePPP Religious institutionsPPA Restaurant, take-out only (Class IV)PPP Restaurant, fast food/convenience food (Class III)NCC Restaurant, traditional or cafeteria (Class II)PPP Restaurant, full service (Class I)NCP Retail, neighborhood servicesPPP Retail, general servicesCPP Retail, regional servicesNCP Schools, public or privatePPC Service stationNPP Service station/convenience storeNPP Tattoo shopsN PP Theaters, movie or live entertainmentNNP Transit facilitiesAAA *Conditions apply, see section 537 for complete regulations. (Amended, Bill No. 2011-13; 2011-19) Section 11 Subsection 514.07, Subd. 2 of the Richfield City Code is amended to read as follows: Subd. 2. Two-family dwellings, provided the following conditions are met: a) The lot shall abut an arterial or collector street; b) The lot area and width shall comply with Section 514.11, Subd. 2 of this code; c) Two (2) off-street parking spaces, one (1) of which must be enclosed in a garage, shall be provided for each dwelling unit; d) Private driveways, parking areas, turnaround areas and sidewalks shall comply with Section 514.05 Subd. 8 of this code; e) For new construction each dwelling unit shall contain at least 750960 square feet of interior floor space, and for conversion of a single-family dwelling to a two-family dwelling each unit shall contain at least 500 square feet of interior floor space. For the purpose of this subsection, interior floor space shall include the total horizontal area of the dwelling unit as measured from the interior walls of the unit; and f) The structure shall meet all setback requirements for two-family dwellings as indicated under Section 514.13, except that a single-family dwelling which does not meet the required two-family interior side setback may be converted into a two-family dwelling if the dwelling is not expanded or if the expansion meets all applicable two-family dwelling requirements. Section 12 A new Subsection 514.15, Subdivision 4 of the Richfield City Code to read as follows is added, and by now renumbering all following subdivisions accordingly: Subd. 4. Parking requirement. For two-family, twin home dwellings and cluster home developments, there shall be provided on the site at least two (2) parking spaces per dwelling unit, of which at least one space per dwelling shall be enclosed in a garage. Section 13 Subsection 529.11, Subd.1 of the Richfield City Code is amended to read as follows: Subdivision 1. [Generally.] The following dimensional requirements apply to the S- O district. All dimensions are in feet unless otherwise noted. Minimum lot widthInterior lot: 60Corner lot: 75 Minimum lot area8,000 square feet Maximum impervious surface coverage75 percent Setbacks - building Principal Accessory buildingbuilding Front (see also Subd. 2) 3030 Rear Adjacent to R, R-1 or MR-1 District158 Adjacent to non-R, R-1 or MR-1 District55 Interior side Adjacent to R, R-1 District1515 Adjacent to non-R, R-1 District55 Street/corner side (see also Subd. 3)1212 Setbacks - parking (measured from property line) Front (but see Subd. 5)8 Street/corner side (but see Subd 5)8 Interior lot line Adjacent to R, R-1 or MR-1 District10 Adjacent to non-R, R-1 or MR-1 District5 Height limitations Principal Accessory buildingbuilding Maximum building height3015 Story limitations2 stories1 story Section 14 Subsection 534.11, Subd.1 of the Richfield City Code is amended to read as follows: Subdivision 1. The following dimensional requirements apply to the C-2 District. All dimensions are in feet unless otherwise indicated: Minimum lot widthInterior lot: 75Corner lot: 90 Minimum lot area9,000 square feet Maximum impervious surface coverage 85 percent Setbacks: building Principal building Accessory building Front (see also Subd. 2) 3535 Adjacent to arterial roadsSee Subdivision 2 Rear (see also Subd. 4) Adjacent to R, R-1 or MR-1 District 158 Adjacent to non-R, R-1 or MR-1 District 55 Street/corner side (but see Subd. 3)2525 Interior side (see also Subd. 4) Adjacent to R, R-1 or MR-1 District 158 Adjacent to non-R, R-1 or MR-1 District00 Maximum building height (but see Subd. 5)4015 Story limitations3 stories1 story Setbacks: parking Front (but see Subd. 6) 8 Street/corner side (but see Subd. 6)8 Interior lot line Adjacent to R, R-1 or MR-1 District 15 Adjacent to non-R, R-1 or MR-1 District5 (Amended, Bill No. 2011-13; 2011-19) Section 15 Subsection 537.03, Subd.1 of the Richfield City Code is amended to read as follows: Subdivision 1. The following table establishes permitted, conditionally permitted and accessory uses for the Mixed Use Districts: Table 1. Uses of the Mixed-Use District Note— The following abbreviations are used within the use table: P= permitted use A= accessory use C= conditionally permitted N= not permitted Use MU-MU-MU-N RC COMMERCIAL Regional retail servicesPCN General retail services PPC Neighborhood retail services PPP Restaurant Class I (serving alcohol)PCN Restaurant Class II (traditional/cafeteria)PPP Restaurant Class III (fast food/convenience)CCN Restaurant Class IV (take out only)PPP Service Station/convenience storePPN Convenience storePPP Offices and clinicsPPA Hotel/motel (defined as 6 or more rooms)PPN Mortuaries and funeral chapelsNPN Health or athletic clubs, spas, yoga studiosPPN Theaters, movie or live entertainmentPNN Auto sales or lease -new vehicles CNN Auto mechanical or body repair shopsCCN Auto detailingCCN Auto rental facilities accessory to a primary office or hotel AAN use Assembly and manufacturing accessory and subordinate AAN to a retail use Drive-up window or teller serviceCCN Adult business establishments as defined and regulated PPN under Subsection1196 of the City Code Tattoo Shops P P N Firearms related usesCNN Licensed day care facilitiesPPP Animal kennelsCCC RESIDENTIAL Dwelling, townhouseNNP Dwelling, multifamily (min. 3 units)PPP (but see537.07, Subd. 2a) Live - work unitsNPP Assisted living facilities, nursing, rest homes NPP INSTITUTIONAL/PUBLIC Places of worshipAPP Government officesAPA Police sub-stationPPP SchoolsCPP LibraryNPP Parks PPP HospitalsPNN Transit facilitiesAAA Public utility AAA (Amended, Bill No. 2011-13; 2011-19) Section 16 Subsection 542.03, Subd. 2 of the Richfield City Code is amended to read as follows: Subd. 2. Minimum area. A PUD district shall contain not less than one (1) acre (43,560 square feet) in lot area. With respect to planned unit developments only, lot area may include (at the discretion of the Director), areas of the right-of-way that are improved and integral to the design of the project. Section 17 Subsection 544.05 of the Richfield City Code is amended to read as follows: 544.05. Screening of refuse collection and utilitarian items. Refuse collection, recycling and utilitarian elements shall be designed into the interior space of buildings. All delivery and loading operations, HVAC equipment, and other utility and service function shall be grouped and arranged away from the public right-of-way and fully screened from other public areas ground level observation at any point on the property, adjacent property, or from adjacent right-of-way (exception see (c)). Plans for screening enclosures must be shown on construction plans. a) Materials. Required screening may be achieved with fences, walls, earth berms, hedges, two (2) staggered rows of coniferous trees, a dense deciduous hedge, or other landscape materials. All walls and fences shall be architecturally harmonious with the principal building. Earth berms shall not exceed a slope of 3:1 unless specially treated and approved. All walls and fences shall be architecturally harmonious with the principal building. The use of wood, in whole or in part, as a screening material for roof-top equipment shall not be considered as being architecturally compatible unless the building is constructed with a wood exterior. In cases where roof-top equipment may be visible from above, the Director will determine if the equipment must be painted to match the roof b) Locations. All required screening or buffering shall be located on the lot occupied by the use, building, facility, or structure to be screened. No screening shall be located on any public right-of-way or within eight (8) feet of the traveled portion of any street or highway. c) Site improvements or redevelopment consisting of less than a 100 percent increase in gross floor area where the above requirements are impossible to meet based on site constraints as judged by the Director shall conform to the following requirements: i. All residential structures with more than three (3) units and all commercial, industrial, and institutional uses shall provide a screening enclosure for required dumpsters. Such enclosures shall be high enough to completely screen the dumpster from all property lines; ii. Dumpster enclosures shall be constructed of durable, weather resistant materials which are properly anchored. Enclosure materials shall be similar to the principal building; iii. Dumpster enclosures shall provide sufficient space for required dumpsters and additional space for storage of recyclable materials. In no case shall they exceed 600 square feet in area; iv. Dumpster enclosures shall be located behind the front building line of the principal building (as extended to the side lot lines). Enclosures shall be set back not less than five (5) feet from any lot line or any other building on the premises, unless integrated into such building or approved by the Building Official; and v. All dumpster enclosures shall have a concrete floor. Section 18 Subsection 549.21, Subd. 4 of the Richfield City Code is amended to read as follows: Subd. 4. Banners and other temporary signs. Banners and other temporary signs, where permitted, are subject to the following standards: (Amended, Bill No. 2011-13) a) Banners shall be attached to a structure, shall be strongly constructed, and shall be securely attached to their supports; b) Banners and other temporary signs shall be removed (including all framework and supports) as soon as damaged or torn; c) There shall be no more than one (1) banner per tenant on any building frontage (see Subsection 549.23 for size allowances); d) Due to the construction methods of banners and other temporary signs and their tendency toward damage, no banner none may be displayed for more than 28 days; and e) No more than four (4) temporary sign permits shall be issued to any business organization or institution within any calendar year. Section 19 Subsection 549.23, Subd. 1 of the Richfield City Code is amended to read as follows: Subd. 1. Residential Districts. a) Within residential zoning districts, freestanding signs are permitted as follows: District Maximum sign area Maximum Total area of all of single signheightfreestanding signs R, R-1, MR-1 6 square feet 6 feet 12 square feet MR-2, MR-3 24 square feet 8 feet 36 square feet Permitted 50 square feet 25 feet 100 square feet Nonresidential Uses b) Within residential zoning districts, wall signs are permitted as follows: District Maximum sign area of single sign R, R-1, MR-1 Not permitted except as required by Section 549.21, Subd. 3. MR-2, MR-3 10 percent of total wall area of the wall to which sign is attached Permitted Nonresidential 15 percent of the total wall area of the wall to which sign is Uses attached Section 20 Appendix I, Section 3, Clause (91) of the Richfield City Code is amended to read as follows: th (91) M-5 (SW corner, 64 and LyndaleNicollet). Lot 1, Block 8, Rearrangement of Nicollet Homes 2nd Addition. Section 21 The Richfield City Code is amended by repealing Subsection 507.07, Subdivisions 26 and 101 Section 22 This Ordinance is effective in accordance with Section 3.09 of the Richfield City Charter. Passed by the City Council of the City of Richfield, Minnesota this ____ day of _____, 2014. Debbie Goettel, Mayor ATTEST: Nancy Gibbs, City Clerk RESOLUTION NO. _____ RESOLUTION APPROVING SUMMARY PUBLICATION OF AN ORDINANCE AMENDING APPENDIX B (ZONING) OF THE RICHFIELD CITY CODE WHEREAS , the City has adopted the above referenced amendment to the Richfield City Code; and WHEREAS , the verbatim text of the amendments is cumbersome, and the expense of publication of the complete text is not justified; and NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Richfield that the following summary is hereby approved for official publication: SUMMARY PUBLICATION BILL NO. 2014-___ AN ORDINANCE RELATING TO ZONING; AMENDING SUBSECTIONS 507.07, SUBDIVISIONS 57 AND 62; SUBSECTION 509.15, SUBDIVISION 2; SUBSECTION 509.21, SUBDIVISIONS 5 AND 15; SUBSECTION 509.25, SUBDIVISION 7; SUBSECTIONS 512.05, 512.07, AND 512.09; SUBSECTION 514.07, SUBDIVISION 2; SUBSECTION 529.11, SUBDIVISION 1; SUBSECTION 534.11, SUBDIVISION 1; SUBSECTION 537.03, SUBDIVISION 1; SUBSECTION 542.03, SUBDIVISION 2; SUBSECTION 544.05; SUBSECTION 549.21, SUBDIVISION 4; SUBSECTION 549.23, SUBDIVISION 1; AND APPENDIX I, SECTION 3, CLAUSE 91; ADDING NEW SUBSECTION 507.07, SUBDIVISION 53; AND SUBSECTION 514.15, SUBDIVISION 4; AND REPEALING SUBSECTION 507.07, SUBDIVISIONS 26 AND 101. CHANGES ARE RELATED TO OUTDATED TERMINOLOGY AND REFERENCES, CLARIFICATION OF DEFINITIONS AND LANGUAGE RELATED TO HOME OCCUPATIONS, SETBACKS, SCREENING AND TEMPORARY BANNERS This summary of the ordinance is published pursuant to Section 3.12 of the Richfield City Charter. The ordinance makes the following changes to the City Code: Allows the operation of home businesses from garages and accessory structures provided all other requirements are met; Enhances and clarifies screening requirements for mechanical equipment and utilities (these revisions do not apply to single- or two-family homes); Removes obsolete “dance or physical culture studios” terminology favor of “health club or studio, spa”; Clarifies existing policy related to use of pervious pavers on single- and two-family lots; Revises area calculation for Planned Unit Developments to allow, under specific circumstances, inclusion of adjacent right-of-way; Corrects terminology related to voltage limits for home occupations; More precisely defines the way in which fence height is measured; Adds languages to clarify that banner regulations apply to all temporary signs; Corrects subsection references, symbology and inconsistencies left over from previous Code amendments; Adds footnotes where needed; Corrects an error related to the description of a particular property in Appendix I; and Removes unused and unnecessary definitions. Copies of the ordinance are available for public inspection in the City Clerk’s office during normal business hours or upon request by calling the Department of Community Development at (612) 861-9760. /s/ Nancy Gibbs, City Clerk Adopted by the City Council of the City of Richfield, Minnesota this 27th day of May, 2014. Debbie, Mayor ATTEST: Nancy Gibbs, City Clerk AGENDA SECTION: RESOLUTIONS AGENDA ITEM# 8 REPORT# 99 STAFF REPORT gecqted e CITY COUNCIL MEETING MAY 27, 2014 REPORT PREPARED BY: JEFF PEARSON, TRANSPORTATION ENGINEER NAME,TITLE DEPARTMENT DIRECTOR REVIEW: Ert SIGNATURE OTHER DEPARTMENT REVIEW: 0 N ) / / SIGN' REVIEWED BY CITY MANAGER: , Aga ITEM FOR COUNCIL CONSIDERATION: Consideration of a resolution supporting the METRO Orange Line Bus Rapid Transit Project and proposed alignment within Richfield. I. RECOMMENDED ACTION: By Motion: Approve the attached resolution of support for the METRO Orange Line Bus Rapid Transit and the Knox Avenue alignment. II. EXECUTIVE SUMMARY As presented at the February 11 and April 22 Worksessions, the METRO Orange Line is a planned Bus Rapid Transit (BRT) line between downtown Minneapolis and Burnsville. The Orange Line will use roadway improvements, upgraded transit stations, Park & Ride facilities and improved bus routes to provide fast, frequent and reliable all-day service along I-35W. The goal is to operate with the service quality and reliability of rail transit with the cost savings and flexibility of bus transit. On I- 35W, many Orange Line improvements will also benefit other bus routes in the corridor. A draft Orange Line Project Plan Update has been produced and is available for public comment until May 30, 2014. This document, along with approved resolutions of support from Richfield and other agencies along the Orange Line will be used to apply for project funding from the Federal Transit Administration. The Project Plan Update will summarize all planned components of the BRT project to date as is available online at https://www.metrotransit.org/orange-line-library. The proposed Knox Avenue alignment would use a new underpass beneath I-494 into Bloomington. For purposes of the Orange Line BRT, this underpass would only need to include the following:  Transit Lanes  Sidewalk  Bike Lanes or Path Additional general purpose travel lanes could be included with the underpass. Bloomington and Richfield would be responsible for the increased expense of these lanes. However, additional traffic analysis and cost estimates are needed before proceeding with a process for including general purpose lanes on the Knox Avenue underpass. The attached resolution supports only the alignment of the BRT project and does not specify the design of the underpass roadway. III. BR ASIS OF ECOMMENDATION A. B ACKGROUND  METRO Orange Line buses will use transit advantages on Marquette and 2nd Avenues in downtown Minneapolis, providing faster service and increased capacity. South of downtown, the Orange Line will provide frequent, limited-stop service to upgraded stations at Lake 66th Street, 76th Street, American Street, 46th Street, Boulevard , 98th Street and Burnsville Transit Station.  Long-term, a second phase of the project could extend service from Burnsville to Lakeville.  The Orange Line will provide direct connections to planned transit improvements at Lake Street and American Boulevard, and provide convenient connections to the METRO Blue and Green lines in downtown Minneapolis. The line will also connect with local bus service and several Park & Ride lots.  The design and construction of new stations is being coordinated through the I-35W/Lake Transit Access Project and MnDOT’s I- 494/35W Vision Layout Project. All Orange Line stations will have upgrades in platform ticketing, information technology and customer amenities.  The draft Project Plan Update is intended to encourage community discussion, providing an opportunity for Metro Transit to better understand local preferences and needs for BRT in each station area. The plan summarizes all planned components of the BRT project to date and includes:  Previous planning and investments  Preferred station locations  BRT routing and right-of-way needs  Technology recommendations  Service frequency and fleet  Estimated budget and sources  After public comments are received and incorporated, the plan will be reviewed by Metropolitan Council and upon adoption, this document will:  Inform local and federal funding applications  Help determine a path for environmental processes, per the National Environmental Policy Act  Refine and update the Metropolitan Council’s regional Transportation Policy Plan B. P OLICY  The METRO Orange Line BRT is consistent with the City’s Comprehensive Plan (Transportation p. 6-39).  The Knox Avenue alignment is consistent with direction from Council at the February 11, 2014 Worksession. C. CTI RITICAL IMING SSUES  Metro Transit has requested comments to the Project Plan Update by May 30, 2014 in order to finalize the plan and apply for federal funding in 2014. D. F INANCIAL  There are no financial impacts to the resolution of support. E. EC NVIRONMENTAL ONSIDERATIONS  N/A IV. AR() LTERNATIVE ECOMMENDATIONS  Council may choose not to adopt the proposed resolution. V. A TTACHMENTS  Support Resolution  2014 Project Updates VI. PPEM RINCIPAL ARTIES XPECTED AT EETING  None RESOLUTION NO. RESOLUTION OF SUPPORT FOR THE METRO ORANGE LINE BUS RAPID TRANSIT PROJECT AND KNOX AVENUE ALIGNMENT WHEREAS, The City of Richfield promotes an integrated transportation system that will serve the future needs of its residents, businesses and visitors, support the City’s redevelopment plans and complement the portion of the metropolitan transportation system; and WHEREAS, the City’s Comprehensive Plan promotes mass transit options, such as bus rapid transit, to reduce dependence on automobiles and provide a diverse, balanced set of public transportation alternatives; and WHEREAS, the City’s Comprehensive Plan promotes improvement of non- motorized and pedestrian travel in the City by connecting pedestrian and bike trails to adjacent communities; and WHEREAS, METRO Orange Line Bus Rapid Transit (BRT) is planned on I-35W, thth with BRT stations at 66 Street and 76 Street and a new transitway across I-494 at Knox Avenue that would accommodate pedestrians and bicycles; and WHEREAS, METRO Orange Line would enhance transit service frequency and access to both I-35W transit routes and local routes; and WHEREAS, METRO Orange Line using the Knox Avenue alignment would provide the greatest benefit to Richfield residents and those working within the city; and WHEREAS, METRO Orange Line station location has been closely integrated with MnDOT’s I-494/35W Interchange Vision Layout process to advance and benefit both projects; and WHEREAS, Metropolitan Council has provided the draft Orange Line Bus Rapid Transit Project Plan Update for public comments through May 30, 2014; and WHEREAS, receiving public comments on the Orange Line Project Plan provides an opportunity for Metro Transit and Metropolitan Council to better understand the preferences and needs for BRT in our community; and WHEREAS, after the comments are received and incorporated into the plan, it will be brought to the Metropolitan Council for review and adoption; and WHEREAS, the finalized document will be used to support local and federal funding applications, help determine a path for environmental processes, and refine and update the Metropolitan Council’s Regional Transportation Policy Plan. NOW, THEREFORE, BE IT RESOLVED , that the City of Richfield hereby supports the METRO Orange Line Bus Rapid Transit Project; and BE IT FURTHER RESOLVED , that the City supports the Knox Avenue alignment for the METRO Orange Line. Adopted by the City Council of the City of Richfield, Minnesota this 27th day of May, 2014. Debbie Goettel, Mayor ATTEST: Nancy Gibbs, City Clerk Web Version T Orange Line Like Tweet Forward Coming to 1-35W: METRO Orange Line The METRO Orange Line Bus Rapid Transit (BRT) project will use roadway improvements, upgraded transit stations, and improved bus service to provide fast, frequent and reliable transit service along 1-35W. The 16 -mile corridor is the most heavily -traveled express bus corridor in the region, with about 14,000 daily rides. On 1-35W, many Orange Line improvements will also benefit other bus routes in the corridor. Downtown stations and 46th Street Station were implemented with roadway reconstruction in 2010, and are already served by 1-35W express routes. The Orange Line will complement express routes by providing all -day bi-directional service, and connect customers to the larger METRO system. The project is expected to open in 2019. What is Bus Rapid Transit? BRT is a package of transit enhancements that lead to a faster trip and an improved customer experience. METRO Red Line, which opened in June 2013, is an example of this type of service. • Fewer stops speed up travel and makes buses more reliable. • Transit priority allows buses to move through traffic signals more quickly. • Customers buy tickets from machines at stations before boarding, reducing delays at the farebox. • Low -floor buses and the ability to board through all doors allow faster boarding. • Enhanced shelters provide protection from the weather and a safe, comfortable and convenient waiting space. • Station amenities include push-button heating, security cameras and emergency call buttons, real-time departure information, ticket machines, and covered bike parking. Do you currently ride Route 535, or travel in the 1-35W corridor? Please take a few minutes to complete this survey to share your ideas on how we can improve transit service and facilities in this corridor. Where will the Orange Line go? Buses will travel on Marquette and 2nd avenues in downtown Minneapolis, using congestion -free, transit -only lanes. South of downtown, the Orange Line will provide frequent, limited -stop seance to upgraded stations along 1-35W at Lake Street, 46th Street, 66th Street, American Boulevard, 98th Street and Burnsville Transit Station. Buses will use both MnPASS lanes and shoulders to reduce traffic delay. Major roadway and bridge improvements are planned in coordination with Lake Street and American Boulevard stations. The design and construction of these improvements is being coordinated through the 1-35W LakeTransit/Access Project and MnD07s I - 494/35W Interchange Vision Layout Project. All Orange Line stations will have upgrades in platform ticketing, information technology and customer amenities. For more information, please visit the Station Planning and Design page. A Year of Progress METRO g4 DOWNTOWN MINNEAPOLIS 5#h St Station r 7th St Station k 9th St Station 11th St Station —Lake -St Station U46tkh MINNEAPOLIS 46th St Station 66th Station RICIC HFIELD 66th St American Blvd AY_7�771111 Station 98th -St -Station BLOOMINGTON 98th St f/ f Burnsville Transit Station BfJRNSVILLE In January 2013, Metro Transit hired a project manager to coordinate implementation of the Orange Line. Public outreach and station design have been a major focus of work this year, which has included these tasks: • Documenting previous corridor planning and environmental work; • Documenting project purpose and need, existing transit service and facilities, existing and planned land uses, and station area opportunities and challenges; • Outlining and initiating public engagement; • Providing a strong presence and opportunities for input at community destinations, meetings and events; • Creating an Orange Line website and email list; • Beginning conceptual design work on 66th Street, 98th Street and Burnsville Transit Station; • Coordinating with Hennepin County and MnDOT on Lake Street Station design; • Coordinating with MnDOT and local municipalities on the 1-494/35W Interchange Vision Layout Project, studying options for the BRT alignment, station location, and new park-and-ride facility; and • Refining the scope and budget of the project. A summary of this work will be developed into a Project Plan Update, to be released in draft form in early 2014. Next Steps In 2014, progress will continue on all station planning and design. Also, work will begin on environmental documentation and applying to enter a multi-year federal funding program. The METRO Orange Line is a planned Bus Rapid Transit (BRT) line along 1-35W between downtown Minneapolis and Burnsville. Itwill use roadway improvements, upgraded transit stations, Park & Ride facilities and improved bus routes to provide fast, frequent and reliable all-dayservice. Implementation is expected in 2019. For details, visit metrotransit.org/OrangeLine or contact Project Manager Christina Morrison at brtprojects@metrotransit.org or 612-349-7690. © 2013 Metro Transit. All rights reserved. 560 Sixth Avenue North, Minneapolis, MN 55411 You're receiving this because you have subscribed to METRO Orange Line Project Update newsletter. Edit your subscription Unsubscribe Web Version J T Orange Line Knox Avenue Option Recommended METRO Orange Line station improvements for American Boulevard are being planned as part of the larger 1-494/35W Interchange Vision Layout, led by the Minnesota Department of Transportation. Over the last year, two potential routes were studied for bus rapid transit through this area: • Orange Line would stay on 1-35W, stopping at a new two-story median station at American Boulevard, similar to the existing station on 1-35W at 46th Street; or • Orange Line would serve two sidewalk - adjacent stations along Knox Avenue through Southtown, via 82nd Street and 76th Street. This option would require connecting Knox Avenue under 1-494, and would allow for stations in both Bloomington and Richfield. Like Tweet Forward I i I i j i I i i i I 76th sf RICHFIELD - ------__. ---_-- - lJnderpass�� ----------- '_J ---------_ a 0 American Blvd a BLOOMINGTON Ii 82nd 5t i 1 ----------f After detailed evaluation and public input, the 1-494/35W Interchange Technical Advisory Committee recommended the second option to move forward for further study. Routing the Orange Line on Knox Avenue provides a better opportunity to serve existing destinations, and to integrate frequent, reliable transit into a growing neighborhood. This two -station configuration provides several other benefits to the corridor, which are outlined in more detail here. Designs Developed for 66th & 98th Street Stations The planned 66th and 98th Street Stations are smaller, neighborhood stations that will cater primarily to walking, biking, and bus transfers.These platforms will have amenities similar to METRO Blue and Red Lines: substanial shelter areas, ticket vending machines, lighting, real time information, push-button heating, and bicycle parking. Conceptual designs for each station have been developed, and can be found here. Penn American District Plan Adopted Proposed Orange Line investments complement local planning in the Penn American District, and area along American Boulevard primarily between Penn Avenue and 1-35W. The Penn American District Plan was adopted by the City of Bloomington in January, providing a clear vision to guide future redevelopment and infrastructure investments. Key elements of the Penn American vision include: • Adding new, pedestrian -friendly streets and creating smaller development blocks over time; • Increasing development intensity and diversifying the mix of land uses; • Improving the quality and character of buildings and public spaces; • Increasing mobility through targeted FGd 0 -ft - hnuary27, msq improvements to roads, bikeways, and sidewalks; and • Leveraging substantial investments in transit and transportation infrastructure. BLOOMINGTON PENN AMERICAN Ui;TRICT PLAN Transit Service Changes The following changes were made to 1-35W bus service and facilities in early March: Route 535 • Route 535 is now rerouted to 94th Street and Lyndale Avenue in Bloomington to serve the Hennepin County Service Center and the VEAP Food Pantry. • Route 535C trips is rerouted to 98th Street, James Avenue, 94th Street, and Penn Avenue. • Schedule times have be adjusted. Lake Street at 1-35W 0 The northbound shelter on 1-35W at Lake was removed because the stop is used only for drop- offs requested during non -peak service. • While 125 average daily riders disembark at Lake Street stop northbound, less than 2 people were boarding here daily because of these service restrictions. • Planning and design for the Lake Street Station in the center of 1-35W will allow all buses on all 1-35W routes to stop here without merging across traffic, improving safety, service, and accessibility. The METRO Orange Line is a planned Bus Rapid Transit (BRT) line along 1-35W between downtown Minneapolis and Burnsville. Itwill use roadway improvements, upgraded transit stations, Park & Ride facilities and improved bus routes to provide fast, frequent and reliable all-dayservice. Implementation is expected in 2019. For details, visit metrotransit.org/OrangeLine or contact Project Manager Christina Morrison at brtprojects@metrotransit.org or 612-349-7690. © 2013 Metro Transit. All rights reserved. 560 Sixth Avenue North, Minneapolis, MN 55411 You're receiving this because you have subscribed to METRO Orange Line Project Update newsletter. Edit your subscription Unsubscribe Web Version T Orange Line Like Tweet Forward Draft Project Plan Update to be released April 30th The Orange Line Project Plan Update will summarize all planned components of the BRT project to date. It will include: • Previous planning and investments • Preferred station locations • BRT routing and right-of-way needs • Technology recommendations • Service frequency and fleet • Estimated budget and sources The draft is intended to encourage community discussion, providing an opportunity for Metro Transit to better understand local preferences and needs for BRT in each station area. After public comments are received and incorporated, the plan will be reviewed by Metropolitan Council. Upon adoption, this document will: METRO Orange Lina Bus Rapid Transit Project Plan Update • Inform local and federal funding applications • Help determine a path for environmental processes • Refine and update the Metropolitan Council's regional Transportation Policy Plan The Metropolitan Council is scheduled to release the draft Project Plan Update on April 30, and will accept comments through May 30. The draft will be available on the Orange Line website and will be included in the May edition of this newsletter, along with information on how and where to provide comments. 494/35W Interchange Layout Study Open House Monday, April 28, 4:30 to 6:30 p.m. St. Richard's Catholic Church 66th Street Reconstruction Open House Thursday, May 1, 4:30 to 6:30 p.m. Wood Lake Nature Center Community Room 7540 Penn Avenue South, Richfield Served by bus routes 4, 535, 538, 539, 540, 542 and 558 Hear more about interchange options and transit planning, inlcuding Orange Line stations planned for the intersections of 76th Street/Knox Avenue and American Boulevard/Knox Avenue. Meet with staff from the Minnesota Department of Transportation, Metro Transit and the cities of Bloomington and Richfield to provide your feedback and share ideas on the study. 6710 Lakeshore Drive, Richfield Served by bus routes 4, 515, 535 and 558 Hennepin County is working with the City of Richfield to develop a preliminary design plan for the reconstruction of 66th Street (County Road 53) to improve safety for pedestrians, bicyclists and vehicles, and to improve the condition of the pavement. The project will replace the deteriorating roadway and sidewalks. The project extends from Xerxes Avenue to 16th Avenue South, and includes the planned 66th Street Orange Line Station at I - 35W . The METRO Orange Line is a planned Bus Rapid Transit (BRT) line along 1-35W between downtown Minneapolis and Burnsville. Itwill use roadway improvements, upgraded transit stations, Park & Ride facilities and improved bus routes to provide fast, frequent and reliable all-dayservice. Implementation is expected in 2019. For details, visit metrotransit.org/OrangeLine or contact Project Manager Christina Morrison at brtprojects@metrotransit.org or 612-349-7690. © 2013 Metro Transit. All rights reserved. 560 Sixth Avenue North, Minneapolis, MN 55411 You're receiving this because you have subscribed to METRO Orange Line Project Update newsletter. Edit your subscription Unsubscribe Web Version T Orange Line Like Tweet Forward Project Plan Released for Public Review The draft Orange Line Project Plan Update summarizes the work that has been done to date, detailing preferred station locations, routing and right of way needs, frequency of service and technology recommendations. The report also includes an estimated project timeline, budget and funding information. Download the draft Orange Line Project Plan Update Public comments will be accepted through May 30, 2014. This comment period is meant to encourage discussion about the progress of the Orange Line project, and helps Metro Transit and the Metropolitan Council better understand the preferences and needs for BRT in various communities in the 1-35W corridor. If you have questions about the plan, or would like to have Metro Transit present to your organization, event or neighborhood meeting, please contact the BRT Office via email, or call 612-349-7690. am ,UNNOWNHWEENf Join us for an Orange Line Tweet Chat: May 20 at noon Join a live Twitter conversation about the draft Orange Line Project Plan Update. Use this online event to ask questions about the Orange Line BRT project and to give feedback. Learn more about the event. Share Your Feedback Make your voice heard! Comments or letters regarding the Orange Line Project Plan Update can be submitted via email or via U.S. mail to: Christina Morrison Metro Transit BRT Project Office 1810 East Franklin Avenue Minneapolis, MN 55454 After comments are incorporated, the plan will be brought to the Metropolitan Council for review and adoption. The final document will inform local and federal funding applications, help determine a path for environmental processes and refine and update the Metropolitan Council's regional Transportation Policy Plan. The METRO Orange Line is a planned Bus Rapid Transit (BRT) line along 1-35W between downtown Minneapolis and Burnsville. Itwill use roadway improvements, upgraded transit stations, Park & Ride facilities and improved bus routes to provide fast, frequent and reliable all-dayservice. Implementation is expected in 2019. For details, visit metrotransit.org/OrangeLine or contact Project Manager Christina Morrison at brtprojects@metrotransit.org or 612-349-7690. © 2013 Metro Transit. All rights reserved. 560 Sixth Avenue North, Minneapolis, MN 55411 You're receiving this because you have subscribed to METRO Orange Line Project Update newsletter. Edit your subscription Unsubscribe AGENDA SECTION: RESOLUTIONS AGENDA ITEM# 9 REPORT# 100 STAFF REPORT RICHFIELD CITY COUNCIL MEETING wassomm MAY 27, 2014 REPORT PREPARED BY: ELIZABETH FINNEGAN, CIVIL ENGINEER NAME,TITLE DEPARTMENT DIRECTOR REVIEW: Dr injt SIGNATURE OTHER DEPARTMENT REVIEW: El N/A Am SIGNATU 9 REVIEWED BY CITY MANAGER: d ITEM FOR COUNCIL CONSIDERATION: Consideration of Agency Agreement No. 05795 between the Minnesota Department of Transportation and the City of Richfield for additional Right-of-Way funds. I. RECOMMENDED ACTION: By Motion: Approve the attached resolution accepting agreement No. 05795 between the Minnesota Department of Transportation (Mn/DOT) and the City of Richfield for additional Right-of-Way Funds for the Lyndale Avenue Bridge. II. EXECUTIVE SUMMARY In 2009, the City reconstructed the Lyndale Avenue Bridge over 1-494. The $34 million project required $5.1 million in right of way in Richfield including a $1.4 million settlement with the former Hampton Inn (Ramada), now The Four Points by Sheraton. The City's MSA (gas tax) portion of the right of way settlements was over $1.3 million. City staff has been persistent in pursuing additional federal/state funds for these acquisition costs. After closing out other accounts in the project, Mn/DOT informed the City that there were some underspent federal funds that could be applied to the Richfield acquisition portion of the project. To that end, Mn/DOT worked with the City to draft an agency agreement between the two parties that would reimburse the 052720014LyndaleBridgeROW City with an additional $444,193.03 in federal dollars. The net effect for the City is to reduce the City's MSA portion for acquisition down to $915,243.13. III. BASIS OF RECOMMENDATION A. BACKGROUND • The Lyndale Avenue Bridge Project was constructed in 2009. The additional right-of-way needed was purchased at that time. • Total spent by City on right-of-way costs was $1,359,436.15 using MSA funds. • Additional federal dollars are now available in the amount of $444,193.03 to be applied to the right-of-way costs reducing the City MSA share to $915,243.13. B. POLICY • Right of way acquisition procedures set forth by the Minnesota Department of Transportation and the Federal Highway Administration were followed. C. CRITICAL TIMING ISSUES • The acceptance of the resolution will assure the City of Richfield will receive the additional federal dollars. D. FINANCIAL • Federal Highway High Priority Project (HPP) funds will pay the additional $444,193.03 available to apply towards the additional right- of-way costs. E. LEGAL • The City attorney has reviewed the agreement and will be available to answer any questions. F. ENVIRONMENTAL CONSIDERATIONS • NA IV. ALTERNATIVE RECOMMENDATION(S) • The Council may choose not to approve the resolution for the MN/Dot agreement but that may result in the loss of the additional right-of-way funds. V. ATTACHMENTS • Resolution • Mn/DOT Agreement No. 05795 VI. PRINCIPAL PARTIES EXPECTED AT MEETING None anticipated. RESOLUTION NO. RESOLUTION AUTHORIZING ACCEPTANCE OF STATE OF MINNESOTA AGENCY AGREEMENT NO. 05795 BETWEEN THE MINNESOTA DEPARTMENT OF TRANSPORATION AND THE CITY OF RICHFIELD FOR FEDERAL PARTICIPATION IN RIGHT OF WAY ACQUISTION WHEREAS, the City of Richfield, Minnesota is proposing to use federal funds for the right of way acquisition. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Richfield, Minnesota as follows: 1. That pursuant to Minnesota Stat. Sec. 161.36, the Commissioner of Transportation be appointed as Agent of the City of Richfield to accept as its agent, federal funds available for eligible transportation related projects. 2. That the City Manager and Mayor are hereby authorized and directed for on behalf of the City to execute and enter into an agreement with the Commissioner of Transportation prescribing the terms and conditions of said federal aid participation as set forth and contained in "Minnesota Department of Transportation Agency Agreement No. 05975," a copy of which said agreement was before the City Council Board and which is made a part hereof by reference. Adopted by the City Council of the City of Richfield, Minnesota this 27th day of May, 2014. Debbie Goettel, Mayor ATTEST: Nancy Gibbs, City Clerk MnDOT Agreement No. 05795 STATE OF MINNESOTA AGENCY AGREEMENT BETWEEN DEPARTMENT OF TRANSPORTATION AND CITY OF RICHFIELD FOR FEDERAL PARTICIPATION IN RIGHT OF WAY FOR S.P. 157-363-026 and 107-415-026; M.P. OMO3MN10(107), CAO4MN078(100) and TA05MN090(101) This agreement is entered into by and between City of Richfield ("City") and the State of Minnesota acting through its Commissioner of Transportation ("MnDOT"), Pursuant to Minnesota Statutes Section 161.36, the City desires MnDOT to act as the City's agent to accept and disburse federal funds for the construction, improvement, or enhancement of transportation financed in whole or in part by federal funds, hereinafter referred to as the "Project"; and The City has completed a project to purchase right of way for the reconstructed interchange of Lyndale Avenue and Interstate 494, hereinafter referred to as the "Right of way Acquisition"; and The Right of way Acquisition is eligible for the expenditure of federal aid funds, and is identified in MnDOT records as State Project 157-363-026 and 107-415-026, and in Federal Highway Administration ("FHWA") records as Minnesota Project OMO3MN10(107), CAO4MN078(100) and TAO5MN090(101); and A previous agreement was written Number 91829 for MnDOT to act as agent to receive the federal funds for Right of way Acquisition. Savings on the construction portion of the project has freed up federal funds to be used to cover additional Right of way acquisition costs not previously reimbursed with federal funds. Agreement Number 91829 has expired so this agreement is written to allow for reimbursement.; and The CFDA number for this project is 20.205; and MnDOT requires that the terms and conditions of this agency be set forth in an agreement. THE PARTIES AGREE AS FOLLOWS: I. DUTIES OF THE CITY. A. DESIGNATION. The City designates MnDOT to act as its agent to accept and disburse federal funds made available for the Project. Agreement no.05795 -1- B. ELIGIBILITY / COSTS. The estimated cost of the Right of way Acquisition is $444,193.03. 1. It is anticipated that 100% (up to $444,193.03) of the cost of the Right of way Acquisition is to be paid from federal funds made available by the FHWA. The City will pay any part of the cost or expense of the work that the FHWA does not pay. 2. Any costs incurred by the City prior to authorization of the Federal Funds, will not be eligible for federal participation. 3. Eligible cost and expense, if approved, may consist of the following: a) The cost of purchasing right of way and relocation costs. b) The direct labor charges for City employees for the time that said employees are performing work pursuant to this agreement. Said labor charges may include the prorata share of"labor additives" applicable to said labor charges. Costs to the City of"labor additives" consisting of holiday pay, vacation, sick leave, retirement, pension, unemployment taxes, compensation and liability insurance, lost time charges and similar costs incidental to labor employment will be reimbursed only when supported by adequate records. c) The applicable equipment rental charges for City owned equipment used by the City and mileage charges for employee owned vehicles used by the City on work performed pursuant to this agreement, at rates reflective of the City actual cost. d) Expenditures for materials, supplies, mechanical data processing and equipment rental, limited to the actual expenditures for the purposes of this agreement. e) The cost incurred by the City to employ outside forces to perform any or all of the work pursuant to this agreement is subject to the provisions of section I.D. SUBLETTING. f) Purchase price, appraisal fees incurred by the City, appraisal fees incurred by the property owner(up to a maximum of$1,500 for single family and two- family residential property and minimum damages acquisitions and $5,000 for other types of property), condemnation costs, title work, title insurance, recording fees, and closing costs. g) A credit will be required for any building sales or rental income. 4. Expenditures for general administration, supervision, maintenance and other overhead or incidental expenses of the City are not eligible for federal participation. 5. Acceptability of costs under this agreement will be determined in accordance with the cost principles and procedures set forth in the applicable Federal Acquisition Regulations, Contract Cost Principals and Procedures, 48 Code of Federal Regulations (CFR) 31 which is hereby incorporated by reference and made a Agreement no.05795 -2- part of this agreement. 6. For costs expected to exceed $444,193.03, the City must request the preparation and execution of a supplement to this agreement, prior to incurring such costs. C. STAFFING. 1. The City will designate a publicly employed registered engineer or land surveyor, ("Project Engineer"), to be in responsible charge of the Project and to supervise and direct the work performed under any contract let for the Project. If City elects to use a private consultant for engineering services, the City will provide a qualified, full-time public employee of the City, to be in responsible charge of the Project. The services of the City to be performed pursuant to this agreement may not be assigned, sublet, or transferred unless the City is notified in writing by MnDOT that such action is permitted under 23 CFR 1.33 and 23 CFR 635.105 and state law. This written consent will in no way relieve the City from its primary responsibility for performance of the work. 2. During the progress of the work on the Project, the City authorizes its Project Engineer to request in writing specific engineering and/or technical services from MnDOT, pursuant to Minnesota Statutes Section 161.39. Such services may be covered by other technical service agreements. If MnDOT furnishes the services requested, and if MnDOT requests reimbursement, then the City will promptly pay MnDOT to reimburse the state trunk highway fund for the full cost and expense of furnishing such services. The costs and expenses will include the current MnDOT labor additives and overhead rates, subject to adjustment based on actual direct costs that have been verified by audit. Provision of such services will not be deemed to make MnDOT a principal or co-principal with respect to the Project. 3. The City will furnish the personnel, services, supplies, and equipment necessary to properly supervise, inspect, and document the work for the Project. D. SUBLETTING. The City will prepare request for proposals in accordance with Minnesota law and applicable Federal laws and regulations. 1. The City will solicit proposals after obtaining written notification from MnDOT that the FHWA has authorized the Project. Any Project advertised prior to authorization will not be eligible for federal reimbursement. 2. The City will prepare the request for proposal, which will include all of the federal- aid provisions supplied by MnDOT. 3. The City will prepare and publish the proposal solicitation for the Project as required by state and federal laws. The City will include in the solicitation the required language for federal-aid contracts as supplied by MnDOT. The solicitation will state where the City will receive the sealed proposals. 4. The City may not include other work in the contract for the authorized Project without obtaining prior notification from MnDOT that such work is allowed by FHWA. Failure to obtain such notification may result in the loss of some or all of Agreement no.05795 -3- the federal funds for the Project. 5. The City will prepare and distribute any addendums, if needed. 6. The City will receive open, and evaluate proposals. 7. After the proposals are opened, the City governing body will consider the proposals and will award the contract as required by state and federal laws, or reject all proposals. If the proposal contains a goal for Disadvantaged Business Enterprises, the City will not award the contract until it has received certification of the Disadvantaged Business Enterprise participation from the MnDOT Equal Employment Opportunity Office. 8. This written consent will in no way relieve the City from its primary responsibility for performance of the work. Subcontractor agreements must contain all appropriate terms and conditions of this agreement. E. CONTRACT ADMINISTRATION. 1. The City will request approval from MnDOT for all costs in excess of the amount of federal funds previously approved for the Project prior to incurring such costs. Failure to obtain such approval may result in such costs being disallowed for reimbursement. 2. The City will prepare reports, keep records, and perform work so as to enable MnDOT to collect the federal aid sought by the City. The City will retain all records and reports in accordance with MnDOT's record retention schedule for federal aid projects. 3. Upon completion of the Project, the Project Engineer will determine whether the work will be accepted. F. PAYMENTS. 1. The entire cost of the Project is to be paid from federal funds made available by the FHWA, including eligible costs incurred as of the federal authorization date of September 10, 2007 and prior to the effective date of this Agreement, and by other funds provided by the City. The City will pay any part of the cost or expense of the Project that is not paid by federal funds. 2. The City may request partial payments not more than once each thirty (30) days. The Project Engineer will certify the amount of each partial estimate. 3. The invoice and supplements thereto, will contain all details that may be necessary for a proper audit. Such details will consist of at least the following: (a) A breakdown of labor by individual, classification, dates and hours worked times the applicable rate to arrive at a total dollar amount for each individual. (b) The labor additive may be applied to total labor dollars, not including Agreement no.05795 -4- overtime labor dollars. (c) The equipment charges shall be broken down by type of equipment times the applicable rate and dates used to arrive at total equipment charges. (d) A detailed breakdown of outside services used and supporting invoices and documentation that costs of outside services have been paid. (e) Detail for materials, supplies, and other items with the description, units, and unit prices included in the invoice. If materials or supplies are purchased from an outside source, a copy of that invoice should be included. (f) The invoices will include 100% of eligible charges applicable to the Right of way Acquisition so that the prorata share of federal and City participation can be applied to the total costs. 4. Following certification, by the Project Engineer, of the final estimate, the City may request reimbursement for costs eligible for federal funds. The City's request will be made to MnDOT and will include a copy of the certified final estimate along with the required records. 5. Reimbursement of costs under this agreement will be based on actual costs, but limited to eligible items. G. LIMITATIONS. 1. The City will comply with all applicable Federal, State, and local laws, ordinances, and regulations. 2. Nondiscrimination. It is the policy of the FHWA and the State of Minnesota that no person in the United States will, on the grounds of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance (42 U.S.C. 2000d). Through expansion of the mandate for nondiscrimination in Title VI and through parallel legislation, the proscribed bases of discrimination include race, color, sex, national origin, age, and disability. In addition, the Title VI program has been extended to cover all programs, activities and services of an entity receiving Federal financial assistance, whether such programs and activities are Federally assisted or not. Even in the absence of prior discriminatory practice or usage, a recipient in administering a program or activity to which this part applies, is expected to take affirmative action to assure that no person is excluded from participation in, or is denied the benefits of, the program or activity on the grounds of race, color, national origin, sex, age, or disability. It is the responsibility of the City to carry out the above requirements. 3. Workers' Compensation. Any and all employees of the City or other persons while engaged in the performance of any work or services required or permitted by the City under this agreement will not be considered employees of MnDOT, and any and all claims that may arise under the Workers' Compensation Act of Minnesota on behalf of said employees, or other persons while so engaged, will Agreement no.05795 -5- in no way be the obligation or responsibility of MnDOT. The City will require proof of Workers' Compensation Insurance from any contractor and sub- contractor. H. AUDIT. 1. The City will comply with the Single Audit Act of 1984 and Office of Management and Budget (OMB) circular A-133 including amendments and successors thereto, which are incorporated herein by reference. 2. As provided under Minnesota Statutes Section 16C.05, subdivision 5, all books, records, documents, and accounting procedures and practices of the City are subject to examination by the United States Government, MnDOT, and either the Legislative Auditor or the State Auditor as appropriate, for a minimum of six years. The City will be responsible for any costs associated with the performance of the audit. MAINTENANCE. The City assumes full responsibility for the operation and maintenance of any facility constructed or improved under this Agreement. J. CLAIMS. The City acknowledges that MnDOT is acting only as the City's agent for acceptance and disbursement of federal funds, and not as a principal or co- principal with respect to the Project. The City will pay any and all lawful claims arising out of or incidental to the Project including, without limitation, claims related to contractor selection (including the solicitation, evaluation, and acceptance or rejection of bids or proposals), acts or omissions in performing the Project work, and any ultra vires acts. The City will indemnify, defend (to the extent permitted by the Minnesota Attorney General), and hold MnDOT harmless from any claims or costs arising out of or incidental to the Project, including reasonable attorney fees incurred by MnDOT. The City indemnification obligation extends to any actions related to the certification of DBE participation, even if such actions are recommended by MnDOT. K. FEDERAL FUNDING ACCOUNTABILITY AND TRANSPARENCY ACT (FFATA). This Agreement requires the City to provide supplies and/or services that are funded in whole or in part by federal funds that are subject to FFATA. The City is responsible for ensuring that all applicable requirements, including but not limited to those set forth herein, of FFATA are met and that the City provides information to the MnDOT as required. The City shall comply with the following: 1, Reporting of Total Compensation of the City's Executives. (a) The City shall report the names and total compensation of each of its five most highly compensated executives for the City's preceding completed fiscal year, if in the City's preceding fiscal year it received: i. 80 percent or more of the City's annual gross revenues from Federal procurement contracts and Federal financial Agreement no.05795 -6- assistance subject to the Transparency Act, as defined at 2 CFR 170.320 (and subawards); and ii. $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts), and Federal financial assistance subject to the Transparency Act (and subawards); and iii. The public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986. (To determine if the public has access to the compensation information, see the U.S. Security and Exchange Commission total compensation filings at http://www.sec.gov/answers/execomp.htm.). Executive means officers, managing partners, or any other employees in management positions. (b) Total compensation means the cash and noncash dollar value earned by the executive during the City's preceding fiscal year and includes the following (for more information see 17 CFR 229.402(c)(2)): i. Salary and bonus. ii. Awards of stock, stock options, and stock appreciation rights. Use the dollar amount recognized for financial statement reporting purposes with respect to the fiscal year in accordance with the Statement of Financial Accounting Standards No. 123 (Revised 2004) (FAS 123R), Shared Based Payments. iii. Earnings for services under non-equity incentive plans. This does not include group life, health, hospitalization or medical reimbursement plans that do not discriminate in favor of executives, and are available generally to all salaried employees. iv. Change in pension value. This is the change in present value of defined benefit and actuarial pension plans. v. Above-market earnings on deferred compensation which is not tax qualified. vi. Other compensation, if the aggregate value of all such other compensation (e.g. severance, termination payments, value of life insurance paid on behalf of the employee, perquisites or property) for the executive exceeds $10,000. 2. The City must report executive total compensation described above to the MnDOT by the end of the month during which this agreement is awarded. 3. The City will obtain a Data Universal Numbering System (DUNS) number and maintain its DUNS number for the term of this agreement. This number shall be provided to MnDOT on the plan review checklist submitted with the plans for each project. More information about obtaining a DUNS Number can be found at: http://fedgov.dnb.com/webform/. Agreement no.05795 -7- 4. The City's failure to comply with the above requirements is a material breach of this agreement for which the MnDOT may terminate this agreement for cause. The MnDOT will not be obligated to pay any outstanding invoice received from the City unless and until the City is in full compliance with the above requirements. II. DUTIES OF MnDOT. A. ACCEPTANCE. MnDOT accepts designation as Agent of the City for the receipt and disbursement of federal funds and will act in accordance herewith. B. PROJECT ACTIVITIES. 1. MnDOT will make the necessary requests to the FHWA for authorization to use federal funds for the Project, and for reimbursement of eligible costs pursuant to the terms of this agreement. 2. MnDOT will provide to the City copies of the required Federal-aid clauses to be included in the proposal solicitation and will provide the required Federal-aid provisions to be included in the Proposal. 3. MnDOT will review and certify the DBE participation and notify the City when certification is complete. If certification of DBE participation (or good faith efforts to achieve such participation) cannot be obtained, then the City must decide whether to proceed with awarding the contract. Failure to obtain such certification will result in the project becoming ineligible for federal assistance, and the City must make up any shortfall. C. PAYMENTS. 1. MnDOT will receive the federal funds paid by the FHWA for the Project, pursuant to Minnesota Statutes § 161.36, Subdivision 2. 2. MnDOT will review and sign each partial pay request. Following certification of the partial estimate, MnDOT will reimburse the City, from said federal funds made available to the Project, for each partial payment request, subject to the availability and limits of those funds. 3. Upon completion of the Project, the City will prepare a final payment request in accordance with the terms of this agreement. MnDOT will review and certify the final payment request with a final audit. 4. No more than 90% of the reimbursement due under this agreement will be paid until completion of the final audit and approval by MnDOT's authorized representative. 5. In the event MnDOT does not obtain funding from the FHWA or other funding source, or funding cannot be continued at a sufficient level to allow for the processing of the federal aid reimbursement requests, the City may continue the work with local funds only, until such time as MnDOT is able to process the federal aid reimbursement requests. Agreement no.05795 -8- D. AUTHORITY. MnDOT may withhold federal funds, if MnDOT or the FHWA determines that the Project was not completed in compliance with federal requirements. E. INSPECTION. MnDOT, the FHWA, or duly authorized representatives of the state and federal government will have the right to audit, evaluate and monitor the work performed under this agreement. The City will make available all books, records, and documents pertaining to the work hereunder, for a minimum of seven years following the closing of the construction contract. III. AUTHORIZED REPRESENTATIVES. Each authorized representative will have responsibility to insure that all payments due to the other party are paid pursuant to the terms of this agreement. A. The City authorized representative for the purposes of administration of this agreement is Liz Finnegan, City of Richfield Engineering, 6700 Portland Avenue, Richfield, MN 55423, phone 612.861.9792, or her successor. B. MnDOT's authorized representative is Lynnette Roshell, Minnesota Department of Transportation, State Aid for Local Transportation, Mail Stop 500, St Paul, MN 55155, phone 651-366-3822, or her successor. IV. TORT LIABILITY. Each party is responsible for its own acts and omissions and the results thereof to the extent authorized by law and will not be responsible for the acts and omissions of any others and the results thereof. The Minnesota Tort Claims Act, Minnesota Statutes Section 3.736, governs MnDOT liability. V. ASSIGNMENT. Neither party will assign or transfer any rights or obligations under this agreement without prior written approval of the other party. VI. AMENDMENTS. Any amendments/supplements to this Agreement will be in writing and executed by the same parties who executed the original agreement, or their successors in office. VII. TERM OF AGREEMENT. This agreement will be effective upon execution by appropriate State officials, pursuant to Minnesota Statutes Section 16C.05, for eligible funds under the federal authorization dated September 10, 2007 and will remain in effect for five (5) years from the effective date or until all obligations set forth in this agreement have been satisfactorily fulfilled, whichever occurs first. VIII. TERMINATION. This agreement may be terminated by the City or MnDOT at any time, with or without cause, upon ninety (90) days written notice to the other party. Such termination will not remove any unfulfilled financial obligations of the City as set forth in this Agreement. In the event of such a termination the City will be entitled to reimbursement for MnDOT-approved federally eligible expenses incurred for work satisfactorily performed on the Project to the date of termination subject to the terms of this agreement. Agreement no.05795 -9- IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed intending to be bound thereby. CITY City certifies that the appropriate person(s) DEPARTMENT OF TRANSPORTATION have executed the contract on its behalf as required by applicable resolutions,ordinances,or charter By: provisions Title: Director, State Aid for Local Transportation By: Date: Date: COMMISSIONER OF ADMINISTRATION Title: By: By: Date: Date: Title: Agreement no.05795 -10-