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052615CompleteAgendaSPECIAL CONCURRENT CITY COUNCIL AND HOUSING AND REDEVELOPMENT AUTHORITY MEETING RICHFIELD MUNICIPAL CENTER, BARTHOLOMEW ROOM MAY 26, 2015 6:00 PM Call to order Consideration of the ranking of development proposals received for the Cedar Point Housing Redevelopment area. Council Staff Report No. 77/HRA Staff Report No. 20 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. AGENDA SECTION: Special Meeting Items AGENDA ITEM # COUNCIL STAFF REPORT NO. 77/HRA STAFF REPORT NO. 20 CITY COUNCIL MEETING 5/26/2015 REPORT PREPARED BY: Karen Barton, Community Development Assistant Director DEPARTMENT DIRECTOR REVIEW: John Stark, Community Development Director 5/19/2015 OTHER DEPARTMENT REVIEW: None CITY MANAGER REVIEW: Steven L. Devich 5/20/2015 ITEM FOR COUNCIL CONSIDERATION: Consideration of the ranking of development proposals received for the Cedar Point Housing Redevelopment area. EXECUTIVE SUMMARY: In 2004, the Cedar Point Housing area was designated by the City Council as a redevelopment project area included in the larger Cedar Corridor Redevelopment. The Cedar Point Housing area, bounded by 63rd Street to the north, 65th Street to the south, 16th Avenue to the west, and Richfield Parkway to the east is guided in the City of Richfield 2008 Comprehensive Plan for High -Density Multi -family housing, calling for a minimum of 24 units per acre. The zoning of this area was changed in 2010 to reflect this designation. Over the past several months, a number of developers have approached the City offering development proposals for the Cedar Point Housing area. The developers were invited to present their proposals to the City Council and the Richfield Housing and Redevelopment Authority (HRA) at a work session on April 14, 2015. Given the large number of proposals, the Council and HRA directed staff to gather additional information from the developers and subsequently held a second work session on May 12, 2015 to further discuss the proposals. At this time, the developers are eager to have the Council and HRA select a preferred developer for the project to ensure a timely commencement of the project and avoid delaying construction. In an effort to facilitate this process, City Council members and HRA commissioners will be asked to individually rank their development proposal preferences at tonight's meeting. Staff will subsequently compile the rankings and provide the Council and HRA with a follow-up memo detailing the results. Once a preferred developer is selected, that developer will be asked to begin the development process by commencing a comprehensive public input undertaking to refine their proposal in such a way that incorporates the community needs and desires to the fullest extent possible. RECOMMENDED ACTION: No Formal Action Required. BASIS OF RECOMMENDATION: A. HISTORICAL CONTEXT • The Cedar Point Housing area was designated as a redevelopment area in 2004. • The Cedar Point Housing area is guided in the City of Richfield's 2008 Comprehensive Plan for high-density, multi -family housing at a minimum of 24 units per acre. • The Cedar Point Housing area is currently zoned for high-density, multi -family housing. • There have been several proposals for development of the area between 2008 and 2014. • City Staff issued a Request for Qualifications (RFQ) in 2008 and two Request for Proposals (RFP) in 2008 and again in 2013. • The HRA selected LaNel Financial to develop a senior housing project for the area in 2008. However, due to the economic downturn, the development did not materialize. • In 2013, Sherman and Associates presented a proposal for the development of senior housing in the project area. However, policy makers were not interested in a senior housing development at that time. • In 2014, Projectus International submitted a proposal for a market -rate rental housing development in the project area. Projectus later withdrew their proposal. • In the past several months, six developers have approached the City with various development proposals for the project area. • Letters have been sent to the neighbors across from the project area notifying them of the current proceedings. • Community and resident feedback was solicited via Richfield Connect, the City's Website, Facebook, Twitter, and mailings. A summary of the comments received was provided to the City Council and HRA in a memo dated May 21, 2015. B. POLICIES (resolutions, ordinances, regulations, statutes, etc): City of Richfield 2008 Comprehensive Plan Goals and Policies: • Ensure sufficient diversity in the housing stock to provide for a range of household sizes, income levels, and needs. • Ensure redevelopment and infill projects maintain the integrity of existing neighborhoods. • Maintain an appropriate mix of housing types in each neighborhood based on available amenities, transportation resources and adjacent land uses. • Limit redevelopment of single-family neighborhoods into other uses except where such neighborhoods are directly adjacent to commercial areas or areas adversely affected by major roadways, the airport, or other major developments. • Maintain a housing supply that meets changing needs while sustaining the integrity of existing neighborhoods. • Develop residential standards (scale, density, etc.) for redevelopment areas that creates neighborhood character. • Maintain and provide quality amenities and a safe living environment. • Maintaining a diversity of housing types and price ranges. • Provide housing options for all points in a person's life. C. CRITICAL TIMING ISSUES: • Selection of a preferred developer is critical in ensuring timely commencement of the development process and avoiding delay of construction. D. FINANCIAL IMPACT: • The developers have expended significant time and money preparing and presenting the preliminary proposals. • Development of the Cedar Point Housing area will likely require the use of Tax Increment Financing. E. LEGAL CONSIDERATION: None. ALTERNATIVE RECOMMENDATION(S): None. PRINCIPAL PARTIES EXPECTED AT MEETING: Representatives from the six development teams. ATTACHMENTS: Description Type ❑ Cedar Point II May 20, 2015 MCD Backup Material ❑ Cedar Shores Letter to the City of Richfield Backup Material ❑ Boisclair additional information 05202015 Backup Material ❑ Olson-Tushie Additional Information 05212015 Backup Material nn C;3 MESABA CAPITAL 11ARTNE,, CEDAR POINT II HOUSING - RICHFIELD, MN Mesaba Capital & Trident Development Our proposed site plan has been informed by four overarching design objectives: 1. Provide a park -like transition from existing neighborhood: 16th Avenue Park. 2. To comply with all existing zoning requirements without requests for variances. 3. To enhance the community through design excellence. 4. To engage the community in the process. 16th Avenue 'Park': • A key driver of the site concept is the 50'-0" boulevard 'park' along 16th Avenue, from back of curb. We have removed the surface parking in this area and relocated underground. The depth of this boulevard park is equal to a five story building. Our priority is to preserve the character of the residential neighborhood and the natural amenities of the site, including — and especially - the large, mature boulevard trees along 16th Avenue. • The boulevard park will provide a pedestrian and bike connection to Taft Park and beyond. • Parking surfaces will be heavily screened with beautifully landscaped berms, and not visible from the adjacent single-family properties. • Primary vehicular access to the site is from Richfield Parkway, minimizing traffic impact to 16th Avenue and surrounding neighborhoods. Zonina Reauirements: • Our team understands the importance of zoning regulations. We have diligently reviewed, met with City Staff, and incorporated the zoning ordinances, without future requests for variances. • Parking - We also understand the importance of providing the required parking on site, to ensure that the surrounding neighborhoods do not feel the impact of additional street parking. We have provided parking to code. *Note: from our original site plan (April 14), we have reduce surface parking and increased underground. ■ Upscale Market Rate Apts. - 320 Stalls TOTAL (88 surface & 232 underground) ■ Assisted Living — 114 Stalls TOTAL (40 surface & 74 underground) • Open Space and Building Lot Coverage — meets and/or exceeds the zoning ordinances. Design Excellence: • The vertical built elements are concentrated on the east side of the site along Richfield Pkwy, with the proposed structure set back over 100'-0" from back of curb on 16th Avenue. • Shadows from the new construction will be cast on the development site and NOT on the existing adjacent residential neighbors. • First floor units will be town home -style, providing pedestrian activities and entries at the ground level. • Architecture will provide articulation and scaling elements that will address both its residential and commercial neighbors. Engaae the Community • We understand that people are the most important component of all our projects; those we work with, those who occupy the buildings, those who visit, and those who live in Richfield. • To gain public support and help reduce potential conflicts, citizen input is essential. Our team has a depth of expertise in public participation. Mesaba Capital Development will host public meetings in partnership with the City of Richfield. Assemblage of single-family homes: • Our team has the depth of experience required to assemble the single-family homes. • However, should there be a hold-out, we can move forward with our design with minor modifications along 16th Avenue. Pg. 1 05.20.2015 May 20, 2015 LOMMEN ABDO MN/WI/NY Karen Barton Community Development Assistant Director City of Richfield 6700 Portland Avenue Richfield, MN 55423 Dear Ms. Barton: Cedar Shores Development Group thanks you for the opportunity to offer a final overview of our proposal. We will highlight its unique features and demonstrate that our proposal is the most financially feasible option and creates the most value for the City. Driving this project is the cost of land acquisition. With an assessment in excess of $780,000 and the cost to relocated existing homes, land acquisition will be at least $3,750,000. This requires a careful consideration of density balancing construction costs and supportable rents. The site is suited for up to 500,000 square feet of living space. Weis Construction is confident that our design can be realized at a cost of $115/ square foot. The market will currently support market rate rent of $1.60/ square foot and affordable units at $.095/ square foot. We anticipate an initial TIF contribution of $550,000. Current financing rates are favorable, but rates and construction costs will increase over the life of this project. Considering these parameters, the highest and best use of the property is market-based apartments with a 20% affordable component. Lower density options are simply not viable. We propose 296 units consisting of 23 studio, 100 one bedroom, 28 one bedroom plus den, 116 two bedroom and 27 three bedroom units. The average rent will be in the $1,500 range. The revenue generated from this mix will cover the cost of development and fairly compensate the investors. This mix can be modified as residents are given the opportunity to voice their preference. Our proposal also adds the most value to the City. The design is groundbreaking and offers the same type of urban lifestyle product in a suburban environment as is seen in the Excelsior & Grand development. Key to our proposal is an open design that incorporates amenities that are available to the neighborhood, not just the residents, building a true sense of community. The buildings are integrated into the landscape, with warm earth colors and wood siding to create a more intimate feel. Sound and light mitigation are built into the design, along with sustainable technology such as solar powered utilities, green walls, wind powered lights, rain gardens to buffer the boundary, community gardens, an art park, and an open piazza to draw neighbors into the development. We believe you will find the value offered by our proposal to be unmatched and the financial viability will ensure the project's success. Very truly yours, U , -�vL- Michael R. Moline Michael R. Moline �mmoline@lommen.c_om 1000 International Centre lommen.com Attorney at Law tel 612.336.9354 920 Second Avenue South 800.752.4297 Locomen Abdo, P.A. fax 612.436.1479 Minneapolis, MN 55402 BOISCLAIR C O R p O R A T 1 O N Developing and Managing Real Estate Since 1974 Cedar Point II Apartments Cedar Point II Townhomes Richfield, MN May 20, 2015 On behalf of the entire Development Team we want to extend our Warmest Thank You for the opportunity to submit our proposal for Cedar Point II Apartments and Cedar Point II Townhomes. Below is additional information on our proposal since its submittal. - Tax Increment Financing — We understand the district to be a Redevelopment District and as such affordability restrictions do not apply. It is a corporate mission to promote and include affordable housing in our developments. We strongly believe; the inclusion of mixed housing promotes economic and social integration. If deemed appropriate for Cedar Point II we would propose to include a set aside of 20/50 Area median income or 46 units. Project Development Plan — Our original proposal included two phases, however due to the flexibility of our site plan; would like to stress that our proposed development plan could be phased out in one, two or three phases. - Financing — Ready for deployment to existing Lender relationships. - Property Management — Cedar Point II will be owned and managed by Boisclair Corporation. Boisclair Corporation has been developing and managing closely held investments in real estate for the past 41 years. Our mission is to provide residents with exemplary service in a safe, quality -driven home environment, to provide partners and clients with maximized real estate asset values and provide communities with increased tax base, ease their housing needs or add more jobs to the community. We quickly adapt to the diversity of individual investors, markets and residents through sound leadership, an unparalleled industry expertise and our unwavering commitment to service. Cedar Point II will be a jewel in the City of Richfield given its sound leadership of the Mayor, City Council, HRA and Community Members. Sincerely, Lori Boisclair Karen Barton From: Gary Tushie <GaryT@tmiarchitects.com> Sent: Wednesday, May 13, 2015 10:51 AM To: John Stark; Karen Barton Cc: 'kristilind@outlook.com'; 'Rick Fenske' Subject: CEDAR POINT REDEVELOPMENT Attachments: 201505131019.pdf John/Karen; Thank you for including our team in consideration for the redevelopment of the remaining Cedar Point site. Last night's workshop session was an interesting discussion with the 6 developers. We would like to bring your attention to some key points that were not discussed. 1) Senior housing with services, which is what we are proposing, not only is in strong demand by Richfield residents (see the attached article) but offers a unique opportunity to future Richfield residents by freeing up their affordable single family homes to new families and young professionals as these current older residents transition into our new building at Cedar Point. 2) Senior Housing with services is the lowest traffic generator, by a wide margin, of all the proposal's submitted which reduces the traffic impact to the surrounding single family neighborhood. 3) The special design requirements for sound mitigation on this site do not allow for individual outdoor decks or patio's. Since all of the proposals, except ours, included market rate apartments which typically have this feature. Are they aware of this requirement? 4) 1 don't think it was made clear last night that our project does include 60 memory care units which is in very high demand in Richfield, more so than market rate or affordable apartments. 5) It was apparent from the site plans submitted that our plan had the greatest amount of green space which is of great value to the surrounding neighborhood. 6) Although I am a strong proponent of affordable housing, based upon our past experience in Richfield, Richfield residents do not appear to support this kind of housing as they feel Richfield already has enough affordable housing. So proceeding with a decision on a specific proposal that includes an affordable component without sufficient public input may lead to unfavorable political issues latter in the process as they did with our previous project. I think this discussion needs to occur both internally and publically. Once again, thank you for working with our Team on this project. We look forward to moving forward with the next phases of this process. Gary Tushie ; E °rar';IilE:frf 'FUSHIE MONTGOMERY ARCI.1U1-FC`1'S y, .i:.,r Averrm, ;t fA i oih .� i • 1: � � 41iS: • F.... , . ,i. Architects I Space Planners I Landscape Architects I Interior Designers REGULAR CITY COUNCIL MEETING RICHFIELD MUNICIPAL CENTER, COUNCIL CHAMBERS MAY 26, 2015 7:00 PM 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. Pledge of Allegiance Approval of the minutes of the (1) Special City Council Worksession of May 12, 2015; (2) Special Concurrent City Council and HRA Worksession of May 12, 2015; and (3) Regular City Council Meeting of May 12, 2015. PRESENTATIONS 1. Choir concert presented by the combined STEM/RDLS fifth graders 2. Presentation and receipt of the City of Richfield Comprehensive Annual Financial Report (CAFR) for the fiscal year ended December 31, 2014. Staff Report No. 78 3. Annual meeting with the Advisory Board of Health 4. Presentation of 2014 Food Safety Awards (Council Memo No. 36) 5. Presentation of the Richfield Tourism Promotion Board, Inc. financial report for year-end December 31, 2014 and 2013 6. Presentation of the Association of Public Management Professionals Assistant of the Year award to Richfield Assistant City Manager/HR Manager Pam Dmytrenko COUNCIL DISCUSSION 7. • Cancel Tuesday, August 25 Regular City Council Meeting • Schedule Monday, August 24 Special City Council Meeting regarding 2015 Revised/2016 Proposed Budget • Hats off to Hometown Hits AGENDA APPROVAL 8. Approval of the agenda. 9. Consent Calendar contains several separate items, which are acted upon by the 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 City to affirm the monetary limits on statutory municipality tort liability. Staff Report No. 79 B. Consideration of the approval of the setting of a public hearing to be held on June 23, 2015, for the consideration of the issuance of new On Sale Intoxicating Liquor and Sunday licenses for GM Richfield, LLC, d/b/a Four Points by Sheraton Minneapolis Airport located at 7745 Lyndale Avenue South. Staff Report No. 80 10. Consideration of items, if any, removed from Consent Calendar PUBLIC HEARINGS 11. Public hearing for the consideration of the issuance of new On Sale Intoxicating Liquor and Sunday licenses for Thompson's Fireside Pizza, Inc., d/b/a Fireside Pizza, located at 6736 Penn Avenue South. Staff Report No. 81 RESOLUTIONS 12. Consideration of a resolution regarding a request for a six-month extension of land use approvals granted for 6330, 6400 and 6440 Lyndale Avenue (Lyndale Gardens). Staff Report No. 82 OTHER BUSINESS 13. Consideration of a Metropolitan Council Livable Communities Transportation Oriented Development Grant amendment request relating to the Lyndale Gardens project. Staff Report No. 83 CITY MANAGER'S REPORT 14. City Manager's Report CLAIMS AND PAYROLLS 15. Claims and payrolls 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. 16. 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 12 2015 CALL TO ORDER The meeting was called to order by Mayor Goettel at 5:45 p.m. in the Bartholomew Room. Council Members Debbie Goettel, Mayor; Edwina Garcia; Pat Elliott; Michael Howard; and Present: Tom Fitzhenry. Staff Present: Steven L. Devich, City Manager; Karen Barton, Acting Community Development Director; and Cheryl Krumholz, Executive Coordinator. Item # 1 DISCUSSION REGARDING THE RICHFIELD HISTORICAL SOCIETY FUNDING REQUEST (COUNCIL MEMO NO. 35) City Manager Devich explained the local Historical Society's request for funding and the City's limitations of funding for on-going operations, which was supported by the opinions of the City Attorney and the State Auditors. The City Council consensus was for staff to assist the Historical Society in seeking another funding source because the City is unable to provide on-going funding. ADJOURNMENT The meeting was adjourned by unanimous consent at 5:55 p.m. Date Approved: May 26, 2015 Cheryl Krumholz Executive Coordinator Debbie Goettel Mayor Steven L. Devich City Manager CITY COUNCIL MINUTES Richfield, Minnesota Special Concurrent City Council and Housing and Redevelopment Authority Worksession May 12, 2015 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; Pat Elliott; Michael Howard; Edwina Garcia; and Tom Present: Fitzhenry. HRA Members Mary Supple, HRA Chair, Pat Elliott; Debbie Goettel; Doris Rubenstein; Present: and David Gepner. Staff Present: Steven L. Devich, City Manager/HRA Executive Director; John Stark, Community Development Director; Karen Barton, Assistant Community Development Director; Pam Dmytrenko, Assistant City Manager/HR Manager; and Cheryl Krumholz, Executive Coordinator. Item #1 DISCUSSION REGARDING CEDAR POINT II HOUSING REDEVELOPMENT AREA PROPOSALS (COUNCIL MEMO NO. 35/HRA MEMO NO. 17) City Manager/HRA Executive Director Devich explained six development teams presented preliminary proposals for the development of the Cedar Point housing area at a previous worksession. The City Council and HRA requested additional time to review the proposals and directed staff to gather and provide additional information from the developers. Assistant Community Development Director Barton stated a summary of the six proposals, including the additional information requested, was provided to the City Council and HRA prior to tonight's worksession. Community Development Director Stark discussed the Richfield Connect feedback which would be summarized and provided to the City Council and HRA at the end of the posting. Mr. Stark continued that the Public Works Department has no significant concerns regarding infrastructure or traffic impacts related to the proposed density. The question is the neighborhood tolerance for the development. He added that the TIF analysis would be determined when the number of developers is reduced and there would be a financing mechanism with benchmarks to ensure the project was progressing. He also discussed the market rate analysis which indicated a desire for studio living. Mr. Stark provided an update on the TIF extension legislation for this area. Each developer discussed their project's proposed plan highlights and modifications, if any, from the initial presentation. Special Worksession Minutes -2- May 12, 2015 Mayor Goettel asked about the neighborhood feedback process. Ms. Barton explained the homeowners on both sides of 16th Avenue were sent letters informing them of the process. She said the development teams selected to proceed will meet with the neighborhood. Council Member Fitzhenry stated the concerns he has received regarding the project include sustainability, maintaining the texture of the neighborhood, not all brick, owner occupied, and that it not be monolith apartments. Council Member Howard concurred with Council Member Fitzhenry and added additional comments he received included the project not be large buildings with large parking lots. City Manager/Executive Director Devich stated the next step was to have a Special Concurrent City Council and HRA Meeting on May 26 for a final discussion and a ranking of developers. Council Member Fitzhenry requested an open house be held so all six proposals could be reviewed to get feedback. The City Council and HRA consensus was to conduct an open house after the ranking of the development proposals. ADJOURNMENT The worksession was adjourned by unanimous consent at 7:00 p.m. Date Approved: May 26, 2015. Mayor Goettel Mayor Cheryl Krumholz Steven L. Devich Executive Coordinator City Manager CITY COUNCIL MEETING MINUTES Richfield, Minnesota Regular Meeting May 12, 2015 CALL TO ORDER The meeting was called to order by Mayor Goettel at 7:15 p.m. in the Council Chambers. Council Members Debbie Goettel, Mayor; Michael Howard; Pat Elliott; Edwina Garcia; and Present: Tom Fitzhenry. Staff Present: Steven L. Devich, City Manager; Kristin Asher, Acting Public Works Director; Jay Henthorne, Public Safety Director/Police Chief; Jim Topitzhofer, Recreation Services Director; Wayne Kewitsch, Fire Services Director/Fire Chief; Bill Fillmore, Liquor Operations Director; Chris Regis, Finance Manager; Robert Hintgen, Utilities Superintendent; Mary Tietjen, City Attorney; and Cheryl Krumholz, Executive Coordinator. OPEN FORUM Susan Rosenberg, 6633 Thomas Avenue, announced the Garden Club plant sale at the Richfield Historical Society on May 16, 2015. PLEDGE OF ALLEGIANCE Mayor Goettel led the audience in the Pledge of Allegiance. APPROVAL OF MINUTES M/Fitzhenry, S/Elliott to approve the minutes of the (1) Special City Council Meeting of April 28, 2015; (2) Special City Council Worksession of April 28, 2015; and (3) Regular City Council Meeting of April 28, 2015. Motion carried 5-0. Item #1 PRESENTATION OF CERTIFICATES OF APPRECIATION TO MISS RICHFIELD AMBASSADORS (COUNCIL MEMO NO. 32) Mayor Goettel presented the certificates. Council Meeting Minutes -2- May 12, 2015 Item #2 PRESENTATION AND CONSIDERATION OF A RESOLUTION AUTHORIZING THE ACCEPTANCE OF A GRANT RECEIVED BY THE RICHFIELD FIRE DEPARTMENT FROM THE FIREHOUSE SUBS PUBLIC SAFETY FOUNDATION AND TO AUTHORIZE RECEIPT OF THE TRAINING EQUIPMENT TO BE UTILIZED BY THE FIRE DEPARTMENT S.R. NO. 67 Council Member Garcia presented Staff Report No. 67. M/Garcia, S/Howard that the following resolution be adopted and that it be made part of these minutes: RESOLUTION NO. 11079 RESOLUTION AUTHORIZING ACCEPTANCE OF A GRANT RECEIVED BY THE CITY OF RICHFIELD FIRE DEPARTMENT FROM FIREHOUSE SUBS PUBLIC SAFETY FOUNDATION Motion carried 5-0. This resolution appears as Resolution No. 11079. Item #3 PRESENTATION BY CENTERPOINT ENERGY ON RICHFIELD SERVICE REPLACEMENTS AND YARD RESTORATION CenterPoint representatives made the presentation. Item #4 PRESENTATION REGARDING NATIONAL PUBLIC WORKS WEEK Acting Public Works Director Asher presented a video featuring the Richfield Water Plant. Item #5 PRESENTATION OF THE RICHFIELD TOURISM PROMOTION BOARD, INC. FINANCIAL REPORT FOR YEAR-END DECEMBER 31, 2014 AND 2013 This item was postponed to the May 26, 2015 City Council meeting. Item #6 PRESENTATION OF MINNESOTA CERTIFIED CLERK CERTIFICATE FROM MINNESOTA CLERKS AND FINANCE OFFICERS ASSOCIATION TO RICHFIELD DEPUTY CITY CLERK THERESA SCHYMA Council Member Garcia presented the certificate to Ms. Schyma. Item #7 COUNCIL DISCUSSION • Hats Off to Hometown Hits Council Member Fitzhenry announced National Police Week. Council Member Fitzhenry announced the Memorial Day events at Veterans Memorial Park on May 25, 2015. Council Meeting Minutes -3- May 12, 2015 Council Member Howard stated the City Council is seeking public feedback on the Cedar Point II Housing Redevelopment Area proposals. Recreation Services Director Topitzhofer announced the Richfield All -City Garage Sale on May 14-16 and the Farmers Market opening on May 16. Council Member Garcia announced Flex Academy is having an informational session for parents and students at the Wood Lake Nature Center on May 14 and May 28. Council Member Garcia announced the May 16 Human Trafficking forum sponsored by the Richfield Human Rights Commission and League of Women Voters. Mayor Goettel encouraged people to volunteer to assist with Fourth of July activities. Item #8 COUNCIL APPROVAL OF AGENDA M/Fitzhenry, S/Garcia to approve the agenda. Motion carried 5-0. Item #9 CONSENT CALENDAR A. Consideration of the approval of the purchase of a point of sale and inventory tracking system from Retail Information technology Enterprises (RITE) for a one-time sum of $53,236.76 and a first year estimated annual maintenance cost of $9,322.71 for the four municipal liquor stores S.R. No. 68 B. Consideration of the approval of a resolution authorizing acceptance of Office of Traffic Safety (OTS) funds for a four-year grant to fully fund an officer and fully equipped squad car dedicated for DWI enforcement in Richfield S.R. No. 69 RESOLUTION NO. 11080 RESOLUTION AUTHORIZING THE DEPARTMENT OF PUBLIC SAFETY/POLICE TO ACCEPT GRANT MONIES FROM THE OFFICE OF TRANSPORTATION SAFETY IN THE AMOUNT OF $171,750 OR A LESSER AMOUNT, AS AWARDED BY THE DEPARTMENT OF PUBLIC SAFETY, TO FUND A POLICE OFFICER AND FULLY EQUIPPED SQUAD DEDICATED TO DWI ENFORCEMENT FOR FOUR YEARS This resolution appears as Resolution No. 11080. C. Consideration of the approval of a resolution authorizing the Richfield HRA to reduce the original tax capacity of the Gramercy Park Cooperative Tax Increment District due to Homestead Market Value Exclusion S.R. No. 70 RESOLUTION NO. 11081 RESOLUTION AUTHORIZING THE RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY TO ELECT TO REDUCE ORIGINAL TAX CAPACITY OF GRAMERCY PARK COOPERATIVE TAX INCREMENT DISTRICT DUE TO HOMESTEAD MARKET VALUE EXCLUSION This resolution appears as Resolution No. 11081. Council Meeting Minutes -4- May 12, 2015 D. Consideration of the approval of a resolution authorizing the Richfield HRA to reduce the original tax capacity of the Lyndale Gateway, LLC Tax Increment District due to Homestead Market Value Exclusion S.R. No.71 RESOLUTION NO. 11082 RESOLUTION AUTHORIZING THE RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY TO ELECT TO REDUCE ORIGINAL TAX CAPACITY OF LYNDALE GATEWAY, LLC TAX INCREMENT DISTRICT DUE TO HOMESTEAD MARKET VALUE EXCLUSION This resolution appears as Resolution No. 11082. E. Consideration of the approval of a resolution authorizing acceptance of grants received by Richfield Recreation Services Department from Hennepin County for youth sports equipment and to authorize the Recreation Services Director to execute the associated grant agreements S.R. No. 72 RESOLUTION NO. 11083 RESOLUTION AUTHORIZING ACCEPTANCE OF GRANTS RECEIVED BY THE CITY OF RICHFIELD -RECREATION SERVICES DEPARTMENT AND TO AUTHORIZE THE CITY TO ADMINISTER THE FUNDS IN ACCORDANCE WITH GRANT AGREEMENTS AND TERMS PRESCRIBED BY DONORS This resolution appears as Resolution No. 11083. F. Consideration of the approval of the following related to the Penn Avenue Tower Reconditioning project: • Accept the bid minutes/tabulation and award a contract for the Penn Avenue Tower Reconditioning project to TMI Coatings, Inc. in the amount of $992,450.00; • Authorize the City Manager to approve contract changes under $100,000 without further City Council action S.R. No. 73 G. Consideration of the approval of a resolution authorizing directing parallel utility undergrounding within the project limits of the Portland Avenue Reconstruction project (67th Street to 77th Street) S.R. No. 74 RESOLUTION NO. 11084 RESOLUTION DIRECTING XCEL ENERGY TO UNDERGROUND OVERHEAD UTILITIES ALONG PORTLAND AVENUE BETWEEN 67TH STREET AND 70TH STREET This resolution appears as Resolution No. 11084. M/Goettel, S/Elliott to approve the Consent Calendar. Motion carried 5-0. Item #10 CONSIDERATION OF ITEMS, IF ANY, REMOVED FROM THE CONSENT CALENDAR None. Council Meeting Minutes -5- May 12, 2015 Item #11 PUBLIC HEARING REGARDING THE CONSIDERATION OF THE CABLE COMMUNICATIONS FRANCHISE APPLICATION OF CENTURY LINK TO PROVIDE SERVICE TO THE CITY OF RICHFIELD S.R. NO. 75 Council Member Elliott presented Staff Report No. 75. Brian Grogan, Southwest Suburban Cable Commission attorney, explained the application and the process that follows the ultimate decision to grant or deny a franchise. The final City Council action on the franchise agreement is expected to occur in early summer. Tyler Middleton and Patrick Haggerty, Century Link representatives, discussed the PRISM technical, operational and financial elements of the application and the legal aspects of the federal and state law contradictions. M/Goettel, S/Fitzhenry to close the public hearing. Motion carried 5-0. Item #12 CONSIDERATION OF A RESOLUTION AWARDING THE SALE OF $9,435,000 GENERAL OBLIGATION STREET RECONSTRUCTION BONDS, SERIES 2015A S.R. NO. 76 Council Member Fitzhenry presented Staff Report No. 76. Brian Reilly, Ehlers and Associates, explained the bond sale report, including the award of sale to Piper Jaffray & Co., in the amount of $9.1 million. M/Fitzhenry, S/Howard that the following resolution be adopted and that it be made part of these minutes: RESOLUTION NO. 11085 RESOLUTION AWARDING THE SALE OF GENERAL OBLIGATION STREET RECONSTRUCTION BONDS, SERIES 2015A, IN THE ORIGINAL AGGREGATE PRINCIPAL AMOUNT OF $9,435,000; FIXING THEIR FORM AND SPECIFICATIONS; DIRECTING THEIR EXECUTION AND DELIVERY; AND PROVIDING FOR THEIR PAYMENT Motion carried 5-0. This resolution appears as Resolution No. 11085. Item #13 CITY MANAGER'S REPORT None. Item #14 CLAIMS AND PAYROLLS M/Garcia, S/Elliott that the following claims and payrolls be approved: U.S. Bank 05/12/15 A/P Checks: 240359-240779 1,931,433.29 Payroll: 109933-110247, 42431 $ 564,782.16 TOTAL $ 2,496,215.45 Council Meeting Minutes -6- May 12, 2015 Motion carried 5-0. OPEN FORUM None. ADJOURNMENT The City Council Meeting was adjourned by unanimous consent at 8:35 p.m. Date Approved: May 26, 2015 Debbie Goettel Mayor Cheryl Krumholz Steven L. Devich Executive Coordinator City Manager REPORT PREPARED BY: AGENDA SECTION: PRESENTATIONS AGENDA ITEM # 2. STAFF REPORT NO. 78 CITY COUNCIL MEETING 5/26/2015 Chris Regis, Finance Manager DEPARTMENT DIRECTOR REVIEW: Steven L. Devich, Administrative Services Director 5/20/2015 OTHER DEPARTMENT REVIEW: N/A CITY MANAGER REVIEW: Steven L. Devich 5/20/2015 ITEM FOR COUNCIL CONSIDERATION: Presentation and receipt of the City of Richfield Comprehensive Annual Financial Report (CAFR) for the fiscal year ended December 31, 2014. 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, 2014. 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, 2014. RECOMMENDED ACTION: By Motion: Accept the Comprehensive Annual Financial Report of the City for the year ended December 31, 2014. BASIS OF RECOMMENDATION: A. HISTORICAL CONTEXT The City's auditing firm, KDV, has completed the annual audit of the City's financial records for the fiscal year ended December 31, 2014. As part of the audit, KDV has issued an unqualified opinion on the City's financial statements for the year ending December 31, 2014. A representative of KDV will be present at the tonight's Council meeting to make a brief presentation on the 2014 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. POLICIES (resolutions, ordinances, regulations, statutes, etc): Action to be taken at the May 26, 2015 City Council meeting is the official receipt of the December 31, 2014 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, 2014 and prepared reports to the City Council concerning legal compliance and internal controls. C. CRITICAL TIMING ISSUES: • Action on this item is requested at the May 26, 2015 City Council meeting. D. FINANCIAL IMPACT: None. E. LEGAL CONSIDERATION: • 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 1, 2015. ALTERNATIVE RECOMMENDATION(S): • The City Council could ask the auditors for further explanations of their findings at a future Study Session. PRINCIPAL PARTIES EXPECTED AT MEETING: - Matthew Mayer, CPA, KDV ATTACHMENTS: Description D Council Memo No. 37 Type Backup Material CITY OF RICHFIELD, MINNESOTA Office of City Manager May 21, 2015 Council Memorandum No. 37 The Honorable Mayor and Members of the City Council Subject: 2014 Comprehensive Annual Financial Report Council Members: At the May 26, 2015 City Council meeting, Matthew Mayer, a representative of the City's audit firm KDV, will make a presentation on the 2014 Audit and the 2014 Comprehensive Annual Financial Report (CAFR). Included in your packet for the May 26, 2015 meeting will be two reports; the 2014 Schedule of Expenditures of Federal Awards and Independent Auditor's Reports and the 2014 Communications Letter. In addition, City Council member will be receiving the 2014 City Comprehensive Annual Financial Report (CAFR), and the 2014 Housing and Redevelopment Authority CAFR through an email to your individual email account. Mr. Mayer's presentation will concentrate on information contained in the 2014 Communications Letter; however he will touch briefly on the 2014 Schedule of Expenditures of Federal Awards and Independent Auditor's Reports. Consequently, Council may find it helpful to bring both of the reports to the meeting to have as a reference to Mr. Mayer's presentation. 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 2014. ,.c Ily submitt n L. De ich City Manager SLD:CR Attachments: Email: Department Directors w/o attachments Finance Manager w/o attachment Assistant City Manager w/o attachments y�y y —all 1f � � � `•11 FNr .iR�, �"`nHr��. : ��w�� .y`�� ■b...•a: _ ti ��y •. ' �• 7-- VVI ± �� A A' •'! of I' 1. 1�14 42 y r �� a - .5►°w.:'CDr Minhesotaa r ' * ✓ � � � `�I�s" ua ,� R'i.' s S tom. •_ � r� .. o ^�-meq"� f e �, ��1 ' ► e`p- a -Pp�1 yid ! r• a +i iia !� •ll� y44 y fy; V. 1# o!v c � ' 4M 1 � i'�1F :d '� '_.. :.: ' Jim.,_ :� •'?':, y..A 'w.. �.1'� �' h¢ A � om re h e."' nsive A;.n n u a ...-.m , Foinanciai or tk For,the'vear ended Dec..31 2014 • ._ FIV vow e. ,r s - Tc 7V � _7J•F `>Cw'W :s,. ,`.. T i�h,�z a�.a,.� 1 •� � ..r w..� .sc+' t �..a4' �'A'ww 4.4 NL— `^'� ��'....... .-�. � -� ,. :�'"_ ....� � ... y. .'� '-s' . ' �• �Mrw•6.-+rte. COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF RICHFIELD, MINNESOTA J For The Year Ended DECEMBER 31, 2014 DEPARTMENT OF FINANCE Christopher T. Regis, Finance Manager Member of Government Finance Officers Association of the 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 Budgetary Comparison Schedule — Ice Arena Fund Schedule 11 67 Budgetary Comparison Schedule — Swimming Pool Fund Schedule 12 68 Other Post -Employment Benefits Plan - Schedule of Funding Progress Schedule 13 69 Note to RSI 70 Combining and Individual Fund Statements and Schedules: Combining Balance Sheet — Nonmajor Governmental Funds Statement 14 74 Combining Statement of Revenues, Expenditures and Changes in Fund Balance - Nonmajor Governmental Funds Statement 15 75 Subcombining Balance Sheet — Nonmajor Special Revenue Funds Statement 16 78 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Special Revenue Funds Statement 17 80 Special Revenue Funds: Schedules of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual: Liquor Contribution Schedule 18 82 Tourism Administration Schedule 19 83 Communications Schedule 20 84 Elections Schedule 21 85 Drug/Felony Forfeiture Schedule 22 86 911 Fees Schedule 23 87 Reference Page Public Safety Compliance Schedule 24 88 Recreation Contributions Schedule 25 89 Nature Center Contributions Schedule 26 90 Community Center Days Out Schedule 27 91 Public Health Grants Schedule 28 92 Wood Lake Half Marathon Schedule 29 93 Utility Franchise Fees Schedule 30 94 Special Facilities Schedule 31 95 Combining Statement of Net Position — Internal Service Funds Statement 32 97 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position - Internal Service Funds Statement 33 98 Combining Statement of Cash Flows — Internal Service Funds Statement 34 99 Combining Statement of Assets and Liabilities - Fiduciary Funds Statement 35 101 Combining Statement of Changes in Assets and Liabilities - Fiduciary Funds Statement 36 102 Supplementary Financial Information: Housing and Redevelopment Authority: Combined Balance Sheet — Governmental Funds Statement 37 106 Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds Statement 38 108 Housing Choice Vouchers Financial Data Schedule - Balance Sheet Statement 39 110 Housing Choice Vouchers Financial Data Schedule - Income Statement Statement 40 111 III - STATISTICAL SECTION (UNAUDITED) Net Position by Components Schedule 1 114 Changes in Net Position Schedule 2 116 Fund Balance - Governmental Funds Schedule 3 118 Changes in Fund Balance - Governmental Funds Schedule 4 119 Assessed Value and Actual Value of Taxable Property Schedule 5 120 Property Tax Rates - Direct and Overlapping Governments Schedule 6 121 Principal Property Tax Payers Schedule 7 122 Property Tax Levies and Collections Schedule 8 123 Ratios of Outstanding Debt by Type Schedule 9 124 Ratios of General Bonded Debt Outstanding Schedule 10 125 Direct and Overlapping Governmental Activities Debt Schedule 11 126 Legal Debt Margin Information Schedule 12 127 Revenue Bond Coverage Schedule 13 128 Demographic and Economic Statistics Schedule 14 129 Principal Employers Schedule 15 130 Full -Time Equivalent City Employees by Function/Program Schedule 16 131 Operation Indications by Function/Program Schedule 17 132 Capital Asset Statistics by Function/Program Schedule 18 133 I. INTRODUCTORY SECTION - 1 - THIS PAGE WAS LEFT BLANK INTENTIONALLY - 2- MAYOR DEBBIE GOETTEL CITY COUNCIL PAT ELLIOTT TOM FITZHENRY EDWINA GARCIA MICHAEL HOWARD May 5, 2015 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, 2014. 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, 2014, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the City of Richfield's financial statements for the fiscal year ended December 31, 2014, 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.cltyofrlchfleld.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 36,041 (2013 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, a two sheet ice arena, a municipal swimming pool and a mini golf course. 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 67% of the market value is comprised of residential properties, 11 % apartments, and only 22% 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. - 4- 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. 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 2014, the unassigned fund balance of the general fund is at 41 % of general fund revenues. Major Initiatives Major initiatives in 2014 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. Work continued on both components in 2014 with construction completion planned for summer of 2015 for both projects. Total cost incurred to date is $6,953,890. 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 The City completed the construction of a new locker room at the City's Ice Arena facility. The total cost incurred for the new locker room was $641,454. Commercial Redevelopment and Housing Initiatives The market for commercial development and redevelopment continued to see improvement in 2014. A number of redevelopment initiatives were completed and several were begun in 2014, including the construction of the Lakewinds grocery store on the former Lyndale Gardens site; the substantial renovation and remodeling of the Richfield Municipal Liquor store at 65th and Lyndale; the - 5- completion of the Richfield -Bloomington Mitsubishi dealership (401 W .78th Street); the development of LaMettry's Auto Body (301 W. 77th Street) and the construction of the second phase of the Lyndale Station development, which consists of the addition of a 9,000 square foot, free-standing building at the Northeast corner of 66th and Lyndale to be completed in 2015. Work also continues on the redevelopment of the Richfield -Bloomington Honda car dealership (400 W 78th Street), with an anticipated completion date in 2015. • 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 has also began several new programs in 2014, including the Penn Avenue Streetscape Improvement Program, the rental -conversion program, and the implementation of way -finding signage in the Lakes at Lyndale downtown area. 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, 2014. 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, 2014. 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 tev n L. Devi Chrisegis� City Manage Finance Mang 11J 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, 2013 *1:�Oe 440-�qAe--� Executive Director/CEO - 7- THIS PAGE WAS LEFT BLANK INTENTIONALLY - s- CITY OF RICHFIELD, MINNESOTA CITY OFFICIALS MAYOR -DEBBIE GOETTEL COUNCILMEMBER - MICHAEL HOWARD COUNCILMEMBER - TOM FITZHENRY COUNCILMEMBER - EDWINA GARCIA COUNCILMEMBER - PAT ELLIOTT ADMINISTRATIVE STAFF STEVEN L. DEVICH - CITY MANAGER CHRISTOPHER T. REGIS - FINANCE MANAGER ELIZABETH VANHOOSE - CITY CLERK OR —M—� � t 0 7 � 04A }, J 9 U UP CL CL 0 L OR —M—� � t G 4 E o c E n D dF L — M = V a J 1 G }}} Li is .YCr. a! Gtr ',,,,,,, ti C µ C Q C ry up diL _ U Z O V Lifj W~ 6. Y C c V = Q r s w LL 0 w id O w d } > tir U < H N Z_ O � Q � y G L W d Q_ ,LM s E d c # 6 C [d G CU {} CL .7u w C E OL OL CP C u E FL C 4 63r R ?�Y O C v t5 0w ° m p E R G = ci U e E vs 'y 40 'F.0 'o m tJe[ti .� II. FINANCIAL SECTION THIS PAGE WAS LEFT BLANK INTENTIONALLY - 12- IDV i✓xpert advice. When you creed it.':' 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, 2014, and the related Notes to the Financial Statements, which collectively comprise the City's basic financial statements as listed in the Table of Contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Expert advice. When you need it. °'11 Certified Public Accountants Wealth Management Payroll Services Business Valuations Technology Services St. Cloud 220 Park Avenue S. P.O. Box 1304 St. Cloud, Minnesota 56302 Phone: 320.251.7010 Fax: 320.251.1784 - 13- Twin Cities 3800 American Boulevard W. Suite 1000 Minneapolis, Minnesota 55431 Phone: 952.563.6800 Fax: 952.563.6801 www.kdv.com Toll Free 877.912.7696 Technology Help Desk 866.400.6426 K.D'V Opinions In our opinion, the financial statements referred to on the previous page present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, the discretely presented component unit, each major fund and the aggregate remaining fund information of the City of Richfield, Minnesota, as of December 31, 2014, 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. 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, the Ice Arena Fund and the Swimming Pool 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. 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. - 14- K.D'V Report on Summarized Comparative Information We have previously audited the City's 2013 financial statements and our report, dated May 6, 2014, expressed unmodified opinions on the respective financial statements of 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 5, 2015 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. f KERN, DEWENTER, VIERE, LTD. Minneapolis, Minnesota May 5, 2015 - 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, 2014. 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 $97,887,058 (net position). Of this amount, $26,288,543 (unrestricted net position) may be used to meet the government's ongoing obligations to citizens and creditors. • The government's total net position increased by $2,732,322. • As of the close of the current fiscal year, the City of Richfield's governmental funds reported combined endin fund balances of $21,449,938. Of this total amount, $90,571 is classified as nonspendable, 3,477,447 as restricted, $7,409,218 as committed by City Council action, $7,385,044 as assigned and $3,087,658 as unassigned. • At the end of the current fiscal year, the general fund balance of $8,497,912 included $83,241 as nonspendable and $8,414,671 as unassigned. • The City of Richfield's total bonded debt decreased by $3,307,800 (7.21 percent) during the current fiscal year from $45,853,957 to $42,546,157. 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 fund. - 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 twenty one 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, ice arena fund, swimming pool fund, improvement bonds fund, and the capital improvements fund, all of which are considered to be major funds. Data from the other sixteen 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 fund, 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 $97,887,058 at the close of the most recent fiscal year. By far the largest portion of the City of Richfield's net position (69 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 2014 2013 2014 2013 2014 2013 Current and other assets $35,553,654 $39,178,607 $10,940,669 $7,554,140 $46,494,323 $46,732,747 Capital assets 78,328,489 73,775,701 24,077,290 29,408,739 102,405,779 103,184,440 Total assets 113,882,143 112,954,308 35,017,959 36,962,879 148,900,102 149,917,187 Long-term liabilities outstanding 36,352,963 38,209,264 10,745,217 12,095,005 47,098,180 50,304,269 Other liabilities 2,766,220 2,966,290 1,148,644 1,491,892 3,914,864 4,458,182 Total liabilities 39,119,183 41,175,554 11,893,861 13,586,897 51,013,044 54,762,451 Net position Net investment in capital assets 53,868,489 48,633,166 14,105,007 19,212,879 67,973,496 67,846,045 Restricted 3,625,019 2,824,310 - 272,507 3,625,019 3,096,817 Unrestricted 17,269,452 20,321,278 9,019,091 3,890,596 26,288,543 24,211,874 Total net position $74,762,960 $71,778,754 $23,124,098 $23,375,982 $97,887,058 $95,154,736 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, 2014, the City had restricted net position of $3,625,019. The remaining balance of unrestricted net position ($26,288,543) may be used to meet the government's ongoing obligations to citizens and creditors. The government's net position increased by $2,732,322, compared to a decrease of $461,818 in 2013. The increase can be attributed to a combination of an increase in charges for service, capital grants and contributions, and general revenues, and within general revenues, property taxes, franchise fees and grants and contributions not restricted to specific programs in 2014. Governmental activities. Governmental activities increased the City of Richfield's net position by $2,493,377 prior to a change in accounting principle. Key elements of this increase are as follows: 111111111MIIIIII City of Richfield's Changes in Net position Change in net position before transfers 1,626,917 (795,740) 1,105,405 333,922 2,732,322 (461,818) Transfers 866,460 661,300 (866,460) (661,300) - Change in net position 2,493,377 (134,440) 238,945 (327,378) 2,732,322 (461,818) Net position — January 1 71,778,754 71,913,194 23,375,982 23,817,378 95,154,736 95,730,572 Change in accounting principle 490,829 - (490,829) (114,018) - (114,018) Net position — January 1 - Restated 72,269,583 71,913,194 22,885,153 23,703,360 95,154,736 95,616,554 Net position — December 31 $74,762,960 $71,778,754 $23,124,098 $23,375,982 $97,887,058 $95,154,736 • Charges for Services increased by $1,663,575 in 2014 from 2013. The majority of the increase is due to the reclassification of the Ice Arena and Swimming Pool operations from business -type activities to governmental activities classification. This change accounted for $1,160,080 of the overall increase. The remaining portion of the increase can be traced to increases in Deputy Registrar and Inspections revenues. • Capital Grants and Contributions increased by $480,215 in 2014 as compared to 2013. A prepayment of a special assessment totaling $780,000 is the primary reason for increase in 2014. General Revenues reflects increases in franchise taxes of $669,035 and grants and contributions not restricted to specific programs of $713,926. The increase in franchise taxes is the result of an increase in franchise rates during 2014. Grants and contributions not restricted to specific programs increase was the result of the State of Minnesota increasing the amount of Local Government Aid certified to cities in 2014. Accordingly, the City of Richfield realized an increase in Local Government Aid of approximately $714,000 in 2014. - 20- Governmental Business -type activities activities Total 2014 2013 2014 2013 2014 2013 Revenues: Program Revenues: Charges for services $4,758,126 $3,094,551 $19,927,072 $20,383,439 $24,685,198 $23,477,990 Operating grants and contributions 1,449,484 1,295,566 1,449,484 1,295,566 Capital grants and contributions 3,065,904 2,585,689 31065,904 2,585,689 General revenues: Property taxes 18,613,321 17,985,988 18,613,321 17,985,988 Franchise taxes 1,973,751 1,304,716 1,973,751 1,304,716 Grants and contributions not restricted to specific programs 1,937,907 1,223,981 - - 1,937,907 1,223,981 Other 809,564 710,988 309,319 481,633 1,118,883 1,192,621 Total revenues 32,608,057 28,201,479 20,236,391 20,865,072 52,844,448 49,066,551 Expenses: General government 3,102,253 3,042,891 - - 31102,253 3,042,891 Public safety 8,010,123 8,369,982 8,010,123 8,369,982 Fire 3,757,653 3,365,043 3,757,653 3,365,043 Community Development 1,360,558 1,322,175 1,360,558 1,322,175 Public Works 9,647,341 9,545,980 9,647,341 9,545,980 Parks and recreation 3,882,319 2,154,180 31882,319 2,154,180 Interest on long-term debt 1,220,893 1,196,968 - - 1,220,893 1,196,968 Liquor Operations - - 10,639,175 10,308,021 10,639,175 10,308,021 Water & Sewer Utility 7,271,227 7,217,814 7,271,227 7,217,814 Storm Sewer Utility 1,220,584 1,260,211 1,220,584 1,260,211 Recreation Fund - - - 1,745,104 - 1,745,104 Total expenses 30,981,140 28,997,219 19,130,986 20,531,150 50,112,126 49,528,369 Change in net position before transfers 1,626,917 (795,740) 1,105,405 333,922 2,732,322 (461,818) Transfers 866,460 661,300 (866,460) (661,300) - Change in net position 2,493,377 (134,440) 238,945 (327,378) 2,732,322 (461,818) Net position — January 1 71,778,754 71,913,194 23,375,982 23,817,378 95,154,736 95,730,572 Change in accounting principle 490,829 - (490,829) (114,018) - (114,018) Net position — January 1 - Restated 72,269,583 71,913,194 22,885,153 23,703,360 95,154,736 95,616,554 Net position — December 31 $74,762,960 $71,778,754 $23,124,098 $23,375,982 $97,887,058 $95,154,736 • Charges for Services increased by $1,663,575 in 2014 from 2013. The majority of the increase is due to the reclassification of the Ice Arena and Swimming Pool operations from business -type activities to governmental activities classification. This change accounted for $1,160,080 of the overall increase. The remaining portion of the increase can be traced to increases in Deputy Registrar and Inspections revenues. • Capital Grants and Contributions increased by $480,215 in 2014 as compared to 2013. A prepayment of a special assessment totaling $780,000 is the primary reason for increase in 2014. General Revenues reflects increases in franchise taxes of $669,035 and grants and contributions not restricted to specific programs of $713,926. The increase in franchise taxes is the result of an increase in franchise rates during 2014. Grants and contributions not restricted to specific programs increase was the result of the State of Minnesota increasing the amount of Local Government Aid certified to cities in 2014. Accordingly, the City of Richfield realized an increase in Local Government Aid of approximately $714,000 in 2014. - 20- Expenses and Program Revenues - Governmental Activities $12,000,000 $10,000,000 o Revenues ■ Expenses $8,000,000 $6,000,000 $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 15% restricted 6% Operating Grants Franchise Taxes & Contributions 6% 4% Capital Grants and Contributions 10% Property Taxes 57% Business -type activities. Business -type activities increased the City's net position by $238,945 in 2014, before a change in accounting principle of $490,829 is applied. The change in accounting principle is the result of reclassifying the Ice Arena, Swimming Pool and Special Facilities operations from business -type enterprise funds to governmental activities funds. Expenses and Program Revenues - Business -Type Activities ❑Revenues ■ Expenses $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 Liquor Water & Storm Operations Sewer Sewer - 21 - Revenues by Source - Business - Type Activities Miscellaneous 1.28% Charges for Services 98.47% Unrestricted Investment Earnings .25% 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 $21,449,938, a decrease of $3,695,094 from 2013. The decrease is the result of the cumulative effect of a change in accounting principle as the result of the reclassification of the Ice Arena, Swimming Pool, and Special Facilities operations from a Proprietary Fund classification to a Governmental Special Revenue Fund classification. Consequently, the year-end balance consists of the following: less than 1% ($90,571) are amounts that are not in spendable form such as prepaid items. 16% ($3,477,447) constitutes restricted fund balances which limits the spending of these balances to externally imposed constraints, i.e. debt service covenants. 35% ($7,409,218) represents committed fund balances which are determined by resolution of the City Council. 34% ($7,385,044) is classified as assigned. These amounts represent intended uses established by the City Council or by an official designated by the City Council. Finally, 14% ($3,087,658) 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 $8,414,671 while total fund balance was $8,497,912. 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 41% of total general fund revenues and 42% 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. At December 31, 2014 the City of Richfield has achieved this minimum fund balance goal. The City's fund balance for its general fund increased by $745,732 in 2014. The increase is due to an increase in tax revenues, charges for service, and license and permits. The Ice Arena fund has a negative fund balance of ($4,201,967). This is the result of a decrease in fund balance of ($1,181,445) in 2014 and a cumulative effect of change in accounting principle of ($3,020,522), - 22- The Swimming Pool fund has a negative fund balance of ($1,082,825). As was the case with the Ice Arena fund, the negative fund balance is the result of a decrease in fund balance in 2014 of ($75,319) and a cumulative effect of change in accounting principle of ($1,007,506). The G.O. Improvement Bonds fund has a fund balance of $4,724,355, of which $2,397,605 is restricted for the payment of debt service. The fund balance increased in 2014 by $683,200 as a result of a prepayment of a special assessment in the amount of $780,000. The Capital Improvement fund accounts for public improvements and road right-of-way projects undertaken by the City. This fund balance decreased by $568,675. The decrease can be attributed to the spending down of bond proceeds as a result of 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 $763,168 in 2014. The increase is due primarily to an increase in the franchise fee rates in 2014. 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 $1,404,322, for the water and sewer utility $3,738,077, for the storm sewer utility 1,428,796, and for the recreation fund $3,813,697. The total increase (decrease) in net position for all of these funds was $179,887, ($41,557), $157,011, and $8,071 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 2014, the City only recognized budgeted LGA revenues of $300,000, despite the State certifying to the City approximately $1.9 million. However, for the 2015 budget, the budgeted level of LGA was increased by $140,000 to $440,000. The reason for this increase was to limit the tax levy increase and to maintain it at reasonable level. Finally, the City will continue the policy to reduce its dependence on LGA; however, this will be mitigated by the efforts to minimize the tax levy on property owners. At the end of 2014 the City's General Fund realized a surplus of $745,732 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 $585,091. 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, 2014 amounts to $102,405,779 (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 2014 included the following: • Completion of the remodel of Fire Station 2. Total cost of the project was $1,047,004. • Completion of a new locker room at Rink 1 at the City's Ice Arena Facility. The total cost of the new locker room was $641,454. • Completion of Water Plant Soda Ash upgrade. The total cost of the project was $512,685. • Purchase of a new Front End Loader for the Public Works Department at a total cost of $270,165. - 23- City of Richfield's Capital Assets (net of depreciation) Governmental Business -type activities Activities Total 2014 2013 2014 2013 2014 2013 Land $9,353,605 $9,232,335 $638,673 $759,943 $9,992,278 $9,992,278 Buildings and structures 39,152,244 34,874,739 2,600,608 6,426,793 41,752,852 41,301,532 Machinery and equipment 4,363,933 3,319,887 3,732,406 4,687,635 8,096,339 8,007,522 Other improvements 2,540,056 2,085,291 14,180,996 15,488,331 16,721,052 17,544,644 Streets (Infrastructures) 21,407,352 23,110,660 - - 21,407,352 23,110,660 Construction in progress 1,511,299 1,152,789 2,924,607 2,046,037 4,435,906 3,198,826 Total capital assets $78,328,489 $73,775,701 $24,077,290 $29,408,739 $102,405,779 $103,184,440 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 $42,546,157. 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 2014 the Gross Revenue Ice Arena Bonds, Series 1999, were called and retired. The call was financed with an internal loan to the Ice Arena Special Revenue Fund from the Recreation Enterprise Fund in the amount of $563,213. Finally, there was no new debt issued by the City during 2014. City of Richfield's Outstanding Debt General Obligation and Revenue Bonds Governmental Business -type activities activities Total 2014 2013 2014 2013 2014 2013 General obligation redevelopment bonds $7,685,000 $8,340,000 $ - $ - $7,685,000 $8,340,000 General obligation improvement bonds 24,460,000 25,785,000 - - 24,460,000 25,785,000 Revenue bonds - - 10,401,157 11,728,957 10,401,157 11,728,957 Total $32,145,000 $34,125,000 $10,401,157 $11,728,957 $42,546,157 $45,853,957 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 $78,837,000, 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. 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: - 24- • The economic and financial issues faced by the State of Minnesota over the last several years appear to be a thing of the past. As of February 2015, the State is forecasting a $1.869 billion budget surplus by the end of the fiscal year 2016-2017 biennium. This is a very strong positive for all cities in Minnesota. As for the City of Richfield, despite the positive financial forecast from the State, it intends to continue its policy of eliminating or at a minimum, reducing its dependence on Local Government Aid and to remain fiscally responsible. • In addition, the state of the economy, both local and national, has and will have an impact on the City. However, as the economy has stabilized and started to improve, the City has seen some positive signs. Market values within the City have increased for 2015 and those increases are expected to continue into 2016. Moreover, the market for redevelopment within the City is showing signs of improvement as developers are starting to seek out the City for redevelopment opportunities within the City. • Rates for the Utility operations increased for 2014. For 2015 water rates were projected to increase 5.0% or 16 cents per thousand gallons to help fund continued operating costs and infrastructure improvements, while wastewater rates will increase only 4.89% or 19 cents to keep pace with increased costs of Met Council Environmental Services. Rates for the Storm Sewer Utility will increase by 4% or 48 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 Special assessments receivable Assets held for resale 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 1 STATEMENT OF NET POSITION December 31, 2014 Primary Government Component Unit Governmental Business -type Housing & Redev. Activities Activities Total Authority $ 29,193,923 $ 8,204,368 $ 37,398,291 $ 8,126,962 90,990 - 90,990 2,293 902,245 15,142 917,387 103,405 948,021 2,559,397 3,507,418 3,178 - 1,155,448 1,155,448 - 1,011,610 (1,011,610) - - 1,218,196 - 1,218,196 - 91,821 17,924 109,745 - 242,597 - 242,597 6,420 590,188 - 590,188 - 1,264,063 - 1,264,063 2,892,477 - - - 2,637,238 - - - (2,637,238) 10,864,904 3,563,280 14,428,184 - 67,463,585 20,514,010 87,977,595 - 113,882,143 35,017,959 148,900,102 11,134,735 855,684 716,365 1,572,049 143,078 539,856 156,502 696,358 1,486 - - - 1,218,196 729,816 123,699 853,515 - 165,354 - 165,354 - 475,510 152,078 627,588 - 3,065,440 644,202 3,709,642 - 33,287,523 10,101,015 43,388,538 - 39,119,183 11,893, 861 51,013, 044 1,362,760 53,868,489 14,105,007 67,973,496 - 2,388,013 - 2,388,013 - 861,226 - 861,226 4,123,035 375,780 - 375,780 157,744 17,269,452 9,019,091 26,288,543 5,491,196 $ 74,762,960 $ 23,124,098 $ 97,887,058 $ 9,771,975 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, 2014 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 Cumulative effect of change in accounting principle Net position - beginning - restated Net position - ending The accompanying notes are an integral part of these financial statements. - 30- Program Revenues Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Primary government: Governmental Activities: General Government $ 3,102,253 $ 672,182 $ - $ - Public Safety 8,010,123 837,168 852,230 - Fire 3,757,653 25,905 141,794 - Community Development 1,360,558 1,305,144 - 861,086 Public Works 9,647,341 308,784 453,428 2,174,565 Parks and Recreation 3,882,319 1,608,943 2,032 30,253 Interest on long-term debt 1,220,893 - - - Total governmental activities 30,981,140 4,758,126 1,449,484 3,065,904 Business -type activities: Liquor Operations 10,639,175 11,500,417 - - Water & Sewer Utility 7,271,227 7,222,179 - - Storm Sewer Utility 1,220,584 1,204,476 - - Total business -type activities 19,130,986 19,927,072 - - Total primary government $ 50,112,126 $ 24,685,198 $ 1,449,484 $ 3,065,904 Component units: Housing & Redevelopment Authority $ 6,919,124 $ 56,034 $ 1,493,437 $ 704,639 Total Component Unit $ 6,919,124 $ 56,034 $ 1,493,437 $ 704,639 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 Cumulative effect of 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 The accompanying notes are an integral part of these financial statements. - 31 - Primary Government Governmental Business -Type Component Activities Activities Total Unit (2,430,071) $ - (2,430,071) $ - (6,320,725) - (6,320,725) - (3,589,954) - (3,589,954) - 805,672 - 805,672 - (6,710,564) - (6,710,564) - (2,241,091) - (2,241,091) - (1,220,893) - (1,220,893) - (21,707,626) - (21,707,626) - - 861,242 861,242 - - (49,048) (49,048) - - (16,108) (16,108) - - 796,086 796,086 - $ (21,707,626) $ 796,086 $ (20,911,540) $ - - - - $ (4,665,014) - - - $ (4,665,014) $ 18,613,321 $ - 18,613,321 $ 477,626 1,973,751 - 1,973,751 - - - - 4,128,472 1,937,907 - 1,937,907 - 103,261 49,308 152,569 38,772 706,303 260,011 966,314 93,588 866,460 (866,460) - - 24,201,003 (557,141) 23,643,862 4,738,458 2,493,377 238,945 2,732,322 73,444 71,778,754 23,375,982 95,154,736 9,698,531 490,829 (490,829) - - 72,269,583 22,885,153 95,154,736 9,698,531 $ 74,762,960 $ 23,124,098 $ 97,887,058 $ 9,771,975 The accompanying notes are an integral part of these financial statements. - 31 - Liabilities, Deferred Inflows of Resources and Fund Balances CITY OF RICHFIELD, MINNESOTA Amounts reported for governmental activities in the statement of net position are different because: Statement 3 Capital assets used in governmental activities are not BALANCE SHEET 74,904,016 Other long-term assets are not available to pay for current - period expenditures and therefore, are deferred in the funds. Delinquent property taxes GOVERNMENTALFUNDS Accounts payable $ 241,135 $ 33,119 $ 2,477 $ - $ 279,193 December 31, 2014 689,670 Accrued salaries and benefits 658,836 22,160 - - - 5,261 686,257 Other Total 2,253,504 1,080,348 Ice Swimming Improvement Capital Governmental Governmental 122,554 General Arena Pool Bonds Improvements Funds Funds Assets - - - - 165,354 - Cash and investments $ 5,873,566 $ - $ - $ 4,621,875 $ 6,523,920 $ 3,774,175 $ 20,793,536 Accrued Interest - - - 90,990 - - 90,990 Due from other governments 294,902 - - 11,490 575,537 20,316 902,245 Receivables, net 127,803 138,845 - - - 681,373 948,021 Due from other funds 3,140,925 - - - 98,843 59,311 3,299,079 Prepaid items 83,241 - - - - 7,330 90,571 Delinquent property taxes receivable 209,703 - - 28,864 4,030 - 242,597 Special assessments receivable - - - 437,054 153,134 - 590,188 Advances to other funds - - - - 524,958 598,690 1,123,648 Advances to component unit - - - - 780,000 - 780,000 Assets held for resale 375,780 3,477,447 Committed 1,264,063 - 1,264,063 Total assets $ 9,730,140 $ 138,845 $ $ 5,190,273 $ 9,924,485 $ 5,141,195 $ 30,124,938 Liabilities, Deferred Inflows of Resources and Fund Balances $ 21,449,938 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not Liabilities: 74,904,016 Other long-term assets are not available to pay for current - period expenditures and therefore, are deferred in the funds. Delinquent property taxes 242,597 Accounts payable $ 241,135 $ 33,119 $ 2,477 $ - $ 279,193 $ 133,746 $ 689,670 Accrued salaries and benefits 658,836 22,160 - - - 5,261 686,257 Due to other funds - 2,253,504 1,080,348 - - 36,047 3,369,899 Payable to other governments 122,554 5,117 - - 372,179 8,993 508,843 Unearned revenue - - - - 165,354 - 165,354 Advances from other funds 2,026,912 395,280 2,422,192 Total liabilities 1,022,525 4,340,812 1,082,825 816,726 579,327 7,842,215 Deferred Inflows of Resources: Unavailabe revenue - delinquent property taxes $ 209,703 $ - $ - $ 28,864 $ 4,030 $ - $ 242,597 Unavailabe revenue - special assessments 437,054 153,134 590,188 Total Deferred Inflows of Resources 209,703 465,918 157,164 832,785 Fund balances: Nonspendable 83,241 - - - - 7,330 90,571 Restricted - - - 2,397,605 704,062 375,780 3,477,447 Committed - - - 1,732,789 1,455,450 4,220,979 7,409,218 Assigned - - - 593,961 6,791,083 - 7,385,044 Unassigned 8,414,671 (4,201,967) (1,082,825) (42,221) 3,087,658 Total fund balances 8,497,912 (4,201,967) (1,082,825) 4,724,355 81950,595 4,561,868 21,449,938 Total liabilities, deferred inflows of resources and fund balances $ 9,730,140 $ 138,845 $ $ 5,190,273 $ 9,924,485 $ 5,141,195 $ 30,124,938 Fund balance reported above $ 21,449,938 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 74,904,016 Other long-term assets are not available to pay for current - period expenditures and therefore, are deferred in the funds. Delinquent property taxes 242,597 Special assessments not yet due 590,188 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 9,687,615 Allocation to reflect consolidation of internal service fund activities related to enterprise funds 1,365,801 Allocation to reflect consolidation of internal service fund activities related to component unit 438,196 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. (1,294,881) 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 (32,145,000) Accrued interest payable (475,510) Net position of governmental activities $ 74,762,960 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. 2014 Statement 4 EXPENDITURES Current: Legislative/Executive 836,054 Other Total 1,145,220 266,460 Ice Swimming Improvement Capital Governmental Governmental Transfers out General Arena Pool Bonds Improvements Funds Funds REVENUES: 166,460 - 3,561,443 Community Development 1,297,986 (556,000) 106,460 Property taxes $ 15,230,039 $ $ $ 2,141,498 $ 999,187 $ $ 18,370,724 Franchise taxes 7,424,484 Recreation Services 1,710,352 853,640 394,110 1,973,751 1,973,751 Special assessments Debt service: (3,020,522) (1,007,506) 849,105 126,619 (33,727) 975,724 Fees and fines 386,139 780,000 1,325,000 4,041,155 655,000 107,808 493,947 License and permits 1,030,746 996,120 $ (1,082,825) 206,087 1,257,263 Capital outlay 1,030,746 Intergovernmental 1,597,986 544,093 1,128,508 2,865,208 1,022,838 5,486,032 Charges for Services 2,073,353 930,977 229,103 - - - 3,233,433 Investment earnings 13,666 302 Revenues over (under) 7,606 29,522 11,835 62,931 Miscellaneous 90,502 28,101 59,688 750 1,368 545,894 726,303 Total revenues 20,422,431 959,380 288,791 2,998,959 4,021,904 3,662,126 32,353,591 EXPENDITURES Current: Legislative/Executive 836,054 836,054 Administrative Services 1,145,220 266,460 90,000 30,000 497,213 1,642,433 Public Safety 7,570,660 Transfers out (100,000) 190,738 7,761,398 Fire 3,561,443 (3,227,251) Total other financing sources and (uses) 166,460 - 3,561,443 Community Development 1,297,986 (556,000) 106,460 Net increase (decrease) in fund balance 745,732 1,297,986 Public Works 3,679,158 (568,675) 763,168 3,745,326 Fund Balances - January 1 7,424,484 Recreation Services 1,710,352 853,640 394,110 3,832,427 249,827 3,207,929 Debt service: (3,020,522) (1,007,506) (33,727) (4,061,755) Principal 7,752,180 780,000 1,325,000 4,041,155 655,000 2,760,000 Interest and other charges Fund balances - December 31 55,056 996,120 $ (1,082,825) 206,087 1,257,263 Capital outlay 42,286 542,129 544,093 1,128,508 Construction/acquisition costs 1,215,892 1,215,892 Total expenditures 19,843,159 2,230,825 394,110 2,321,120 4,961,218 2,342,958 32,093,390 Revenues over (under) expenditures 579,272 (1,271,445) (105,319) 677,839 (939,314) 1,319,168 260,201 Other financing sources (uses): Transfers in 266,460 90,000 30,000 5,361 2,021,890 920,000 3,333,711 Transfers out (100,000) (1,651,251) (1,476,000) (3,227,251) Total other financing sources and (uses) 166,460 90,000 30,000 5,361 370,639 (556,000) 106,460 Net increase (decrease) in fund balance 745,732 (1,181,445) (75,319) 683,200 (568,675) 763,168 366,661 Fund Balances - January 1 7,752,180 4,041,155 9,519,270 3,832,427 25,145,032 Cumulative effect of change in accounting principle (3,020,522) (1,007,506) (33,727) (4,061,755) Fund Balances - January 1 - Restated 7,752,180 (3,020,522) (1,007,506) 4,041,155 9,519,270 3,798,700 21,083,277 Fund balances - December 31 $ 8,497,912 $ (4,201,967) $ (1,082,825) $ 4,724,355 $ 8,950,595 $ 4,561,868 $ 21,449,938 The accompanying notes are an integral pan of these financial statements. - 33- 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, 2014 Net Change in fund balances - total governmental funds $ 366,661 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 ($3,272,366) exceeded capital outlay ($2,344,400) in the current period. (927,966) The net effect of various miscellaneous transactions involving capital assets (i.e. sales, trade-ins, disposals and donations) is to decrease net position. (44,205) 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 242,597 Deferred special assessments (28,461) 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 2,760,000 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 36,370 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. (183,916) 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 40,330 Consolidation of internal service fund activities related to government activities (528,033) Transfers in 760,000 Change in net position of governmental activities $ 2,493,377 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, 2014 Noncurrent assets: 331,450 96,413 66,654 494,517 166,014 Governmental - - Business Type Activities - Enterprise Funds 866,954 866,954 Activities - Capital assets: 62,864 Water and Storm 123,699 43,559 Internal 499,188 Municipal Sewer Sewer Recreation Construction in progress Service 2,986 Liquor Fund Utility Fund Fund Fund Total Fund ASSETS: 30,278,470 - Buildings and equipment 3,765,141 15,253,387 437,407 Current assets: 8,823,356 Less accumulated depreciation (2,016,747) (18,285,157) (8,918,491) (29,220,395) Cash and cash equivalents $ 918,684 $ 2,576,320 $ 1,873,660 $ 2,835,704 $ 8,204,368 $ 8,400,387 Receivables, net - 2,261,691 297,706 - 2,559,397 - Due from other funds 14,407,666 - - 111,039 111,039 58,625 Due from other governments - 15,142 12,841,283 - 15,142 - Inventories 1,155,448 - Claims and judgments 1,155,448 - Prepaid items 17,924 - - 17,924 1,250 Total current assets 2,092,056 4,853,153 2,171,366 2,946,743 12,063,318 8,460,262 Noncurrent assets: 331,450 96,413 66,654 494,517 166,014 Advances to other funds - - - 866,954 866,954 956,548 Capital assets: 62,864 57,460 3,375 123,699 43,559 Land 499,188 53,550 85,935 - 638,673 - Construction in progress - 2,986 2,921,621 2,924,607 181,681 Distribution and collection systems - 17,382,900 12,895,570 30,278,470 - Buildings and equipment 3,765,141 15,253,387 437,407 19,455,935 8,823,356 Less accumulated depreciation (2,016,747) (18,285,157) (8,918,491) (29,220,395) (5,580,564) Total capital assets (net of 579,035 770,254 542,401 1,891,690 735,250 accumulated depreciation) 2,247,582 14,407,666 7,422,042 24,077,290 3,424,473 Total noncurrent assets 2,247,582 14,407,666 7,422,042 866,954 24,944,244 4,381,021 Total assets 4,339,638 19,260,819 9,593,408 3,813,697 37,007,562 12,841,283 LIABILITIES: Current Liabilities: Accounts payable 331,450 96,413 66,654 494,517 166,014 Contracts payable 36,354 - 185,495 221,849 - Accrued salaries and benefits 62,864 57,460 3,375 123,699 43,559 Due to other governments 110,240 46,262 - 156,502 31,012 Compensated absences 38,127 50,440 635 89,202 494,665 Accrued interest payable 95,836 56,242 152,078 Due to other funds 98,843 - 98,843 Bonds, notes, and loans payable - 325,000 230,000 555,000 - Total current liabilities 579,035 770,254 542,401 1,891,690 735,250 Noncurrent liabilities: Advances from other funds - 524,958 - 524,958 - Compensated absences 77,727 102,828 1,295 181,850 1,442,963 Net OPEB obligation 30,972 42,036 - 73,008 49,768 Claims and judgments 925,687 Bonds, notes, and loans payable(net of unamortized premiums and discounts) - 5,518,326 4,327,831 9,846,157 - Total noncurrent liabilities 108,699 6,188,148 4,329,126 10,625,973 2,418,418 Total liabilities 687,734 6,958,402 4,871,527 12,517,663 3,153,668 NET POSITION: Net investment in capital assets 2,247,582 8,564,340 3,293,085 - 14,105,007 3,424,473 Unrestricted 1,404,322 3,738,077 1,428,796 3,813,697 10,384,892 6,263,142 Total net position $ 3,651,904 $ 12,302,417 $ 4,721,881 $ 3,813,697 24,489,899 $ 9,687,615 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds (1,365,801) Net position of business - type activities $ 23,124,098 The accompanying notes are an integral part of these financial statements. - 35- CITY OF RICHFIELD, MINNESOTA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITON PROPRIETARY FUNDS For The Year Ended December 31, 2014 NONOPERATING REVENUES (EXPENSES) Interest and investment revenue Intergovernmental revenue Miscellaneous revenue Gain(loss) on disposal of capital assets Interest expense Total nonoperating revenue (expenses) Income before transfers Transfers in Transfers out Changes in net position Statement 7 Governmental Activities - Internal Total Service Current Year Fund $ 19,927,072 $ 3,411,811 (8,601,930) - 11,325,142 3,411,811 3,444,763 1,285,133 Business -Type Activities - Enterprise Funds 2,339,517 1,657,850 Water and Storm 4,270,378 Municipal Sewer Sewer Recreation - Liquor Fund Utility Fund Fund Fund OPERATING REVENUES 250,015 153,553 - Charges for Service $ 11,500,417 $ 7,222,179 $ 1,204,476 $ Less: cost of sales (8,601,930) - (134,512) Total operating revenues 2,898,487 7,222,179 1,204,476 OPERATING EXPENSES 25,187 8,071 (71,164) Personnel services 1,362,815 1,743,462 338,486 Other service and charges 531,008 4,117,013 333,472 Depreciation 123,996 1,133,160 400,694 Total operating expenses 2,017,819 6,993,635 1,072,652 Operating income (loss) 880,668 228,544 131,824 NONOPERATING REVENUES (EXPENSES) Interest and investment revenue Intergovernmental revenue Miscellaneous revenue Gain(loss) on disposal of capital assets Interest expense Total nonoperating revenue (expenses) Income before transfers Transfers in Transfers out Changes in net position Statement 7 Governmental Activities - Internal Total Service Current Year Fund $ 19,927,072 $ 3,411,811 (8,601,930) - 11,325,142 3,411,811 3,444,763 1,285,133 4,981,493 2,339,517 1,657,850 645,728 10,084,106 4,270,378 1,241,036 (858,567) 1,759 36,377 3,101 8,071 49,308 40,330 - 9,996 - - 9,996 - 13,920 79,497 156,598 250,015 153,553 - - - - - 87,067 (245,971) (134,512) (380,483) 15,679 (120,101) 25,187 8,071 (71,164) 280,950 896,347 108,443 157,011 8,071 1,169,872 (577,617) - - - - - 760,000 (716,460) (150,000) - - (866,460) - 179,887 (41,557) 157,011 8,071 303,412 182,383 Total net position - beginning 3,472,017 12,343,974 4,564,870 4,296,455 Cumulative effect of change in accounting principle (490,829) Total net position - beginning - restated 3,472,017 12,343,974 4,564,870 3,805,626 Total net position - ending $ 3,651,904 $ 12,302,417 $ 4,721,881 $ 3,813,697 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds. (64,467) Change in net position of business - type activities $ 238,945 The accompanying notes are an integral part of these financial statements. - 36- 9,505,232 9,505,232 $ 9,687,615 Cash flows from operating activities: Receipts from customers and users Receipts from interfund services provided Payment to employees Payment to suppliers Payments for interfund services used Miscellaneous revenue Net cash flows from operating activities Cash flows from noncapital financing activities: Transfer from Special Revenue Fund Transfer from Capital Project Fund Transfer from Enterprise Fund Transfer to General Fund Transfer to Special Revenue Fund Transfer to Capital Project Funds Transfer to Enterprise Funds Interfund borrowing Intergovernmental grants Change in Accounting Principle Net cash flows from noncapital financing activities: Cash flows from capital and related financing activities: Proceeds from disposal of capital assets Acquisition of capital assets Principal paid on capital debt Interest payments Net cash flows from capital and related financing activities CITY OF RICHFIELD, MINNESOTA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For The Year Ended December 31, 2014 Statement 8 60,000 700,000 (266,460) - - - (266,460) - (450,000) (450,000) (150,000) - - (150,000) - (96,888) - (515,112) (612,000) 57,464 9,996 - - 9,996 - - - 3,514,734 3,514,734 (716,460) (236,892) - 2,999,622 2,046,270 817,464 (322,862) Governmental 892 Business Type Activities - Enterprise Funds - - Activities - 42,067 Water and Storm (1,686,368) (765,717) Internal Municipal Sewer Sewer Recreation (161,937) - Service Liquor Fund Utility Fund Fund Fund Totals Funds $ 2,898,487 $ 7,218,838 $ 1,193,737 $ 209,694 $ 11,520,756 $ 3,411,811 - - - - - (1,213,133) (1,372,072) (1,735,181) (336,521) (49,733) (3,493,507) (2,485,927) (525,987) (3,929,098) (150,168) (631,990) (5,237,243) - (144,239) (239,722) (110,681) - (494,642) - 13,920 79,497 156,598 - 250,015 153,553 870,109 1,394,334 752,965 (472,029) 2,545,379 (133,696) 60,000 700,000 (266,460) - - - (266,460) - (450,000) (450,000) (150,000) - - (150,000) - (96,888) - (515,112) (612,000) 57,464 9,996 - - 9,996 - - - 3,514,734 3,514,734 (716,460) (236,892) - 2,999,622 2,046,270 817,464 (322,862) - 892 Investment income - - - - - 42,067 (73,143) (509,003) (1,104,222) - (1,686,368) (765,717) - (315,000) (230,000) - (545,000) - - (250,853) (161,937) - (412,790) - (73,143) (1,074,856) (1,496,159) - (2,644,158) (723,650) Cash flows from investing activities: (6,705) (10,739) (305,418) (322,862) - 892 Investment income 1,759 36,377 3,101 8,071 49,308 40,330 Net increase (decrease) in cash and cash equivalents 82,265 118,963 (740,093) 2,535,664 1,996,799 448 Cash and cash equivalents -January 1 836,419 2,457,357 2,613,753 300,040 6,207,569 8,399,939 Cash and cash equivalents - December 31 $ 918,684 $ 2,576,320 $ 1,873,660 $ 2,835,704 $ 8,204,368 8,400,387 Reconciliation of operating income to net cash flows from operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Miscellaneous revenue (expense) Depreciation Changes in assets and liabilities: Decrease (increase) in receivables Decrease (increase) in prepaid items Decrease (increase) in inventory Increase (decrease) in payables Increase (decrease) in salaries and benefits payable Increase (decrease) in compensated absences Increase (decrease) in due to other governments Increase (decrease) in net OPEB obligations Increase (decrease) in claims and judgments Total adjustments Net cash flows from operating activities $ 880,668 $ 228,544 $ 131,824 $ - $ 1,241,036 $ (858,567) 13,920 79,497 156,598 - 259,015 153,553 123,996 1,133,160 400,694 - 1,657,850 645,728 - (6,705) (10,739) (305,418) (322,862) - 892 - - - 892 - 37,298 - - - 37,298 - (175,178) (78,453) 72,623 (101,414) (282,422) (38,535) 2,802 2,352 113 (35,501) (30,234) 6,550 (12,059) 5,929 1,852 (14,232) (18,510) 65,450 (6,421) 24,526 - (2,311) 15,794 30,944 4,191 5,484 - (13,153) (3,478) 5,142 (143,961) (10,559) 1,165,790 621,141 (472,029) 1,304,343 724,871 $ 870,109 $ 1,394,334 $ 752,965 $ (472,029) $ 2,545,379 $ (133,696) The accompanying notes are an integral part of these financial statements. - 37- CITY OF RICHFIELD, MINNESOTA STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES FIDUCIARY FUNDS December 31, 2014 The accompanying notes are an integral part of these financial statements. - 38- Statement 9 Agency Fund Assets Cash and investments $ 513,886 Due from other governments 79,537 Total Assets $ 593,423 Liabilities Accounts payable $ 17,204 Due to other governments 151,157 Deposits 425,062 Total Liabilities $ 593,423 The accompanying notes are an integral part of these financial statements. - 38- Statement 9 CITY OF RICHFIELD, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2014 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 intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. - 39- 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 Ice Arena Fund accounts for the revenues earned and other resources generated by the operation of the City's two sheet ice arena facility. The Swimming Pool Fund accounts for the revenues and other resources generated by the activities of the City's municipal swimming pool operation. 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. - 40- The Storm Sewer Fund accounts for storm sewer user fees, which are used to finance storm sewer system operating expenses. The Recreation Fund accounts for residual assets of the City's former municipal golf course. 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 fund, 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. At December 31, 2014 there are no significant encumbrances outstanding in any major or nonmajor fund. 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 - 41 - and each department with such segregation as to objects and purposes of expenditures 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 2014 the General Fund budget was amended to decrease budgeted expenditures and transfers out by $445,080. 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/Pavables 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 inflows of resources 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 inflows of resources of 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. 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. L. 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. M. 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 included as part of the capitalized value of the assets constructed. For the year ended December 31, 2014, 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 - 43- N .s 0 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. Long -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. 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. - 44- Q. 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." R. 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. S. 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. T. Reclassified Certain 2013 amounts have been reclassified to conform to the 2014 presentation. U. 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. 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. 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. - 45- 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. The ratings assigned to these securities are noted in the table below. 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, 2014 is $2,599,144. 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 consist entirely of money market 2a7 funds and is unrated. Concentration of Credit Risk — The City's investment policy places no limit on the amount the City may invest in any one issuer. Approximately 71% of the City's investments are with U.S. Government Securities. 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, 2014, the City and HRA had the following investments and maturities: Investment U.S Agencies: Federal Home Loan Bank Federal Home Loan Mortgage Corporation Federal National Mortgage Association Federal Farm Credit Federal Agricultural Mortgage Corporation Municipal Bonds Morris County, New Jersey Oyster Bay, New York Will & Kendall County, Illinois Certificates of Deposit Money Markets: Money Market Mutual Fund Investments External Investment Pool Total Investment Maturities (In Years) S&P % of Fair Less Years Years Ratinas Total Value Than 1 Year 1-5 6-10 AA+ 23.48% $10,800,440 $6,554,637 $4,245,803 $- AA+ 12.20% 5,608,440 4,211,580 1,396,860 - AA+ 15.64% 7,194,020 3,526,490 3,667,530 - AA+ 18.48% 8,497,258 3,999,798 4,497,460 - AA+ 1.09% 500,665 500,665 - - AAA 1.09% 500,175 500,175 - - BBB 2.19% 1,007,270 1,007,270 - - A+ 3.26% 1,500,000 1,500,000 - - N/A 1.08% 498,075 498,075 - - N/A 15.84% 7,283,856 7,283,856 - - N/A 5.65% 2,599,144 2,599,144 - - 100.00% $45,989,343 $32,181,690 $13,807,653 $- - 46- 3. Capital Assets Capital asset activity for the year ended December 31, 2014: Change in Beginning 16,052,070 (7,759,487) 8,292,583 73,144 Beginning Accounting Balance 12,014,906 (1,724,021) Ending Primary Government Balance Principle Restated Additions Deletions Balance Governmental activities: 30,502,354 Total capital assets, being depreciated 59,358,156 (10,272,334) 49,085,822 Capital assets, not being depreciated: (7,063) 49,734,408 Less accumulated depreciation for: Land $ 9,232,335 121,270 9,353,605 $ - $ - $ 9,353,605 Construction in progress 1,152,789 152,152 1,304,941 1,894,816 (1,688,458) 1,511,299 Total capital assets, not being depreciated 10,385,124 273,422 10,658,546 1,894,816 (1,688,458) 10,864,904 Capital assets, being depreciated: 16,321,358 Total accumulated depreciation 32,755,397 (5,185,786) 27,569.611 Buildings and structures 40,102,134 7,759,487 47,861,621 1,796,798 (473,248) 49,185,171 Machinery and equipment 9,755,200 1,724,021 11,479,221 762,735 (393,049) 11,848,907 Other improvements 4,383,066 788,826 5,171,892 365,933 5,537,825 Streets (Infrastructures) 70,810,623 - 70,810,623 32,295 70,842,918 Total capital assets, being depreciated 125,051,023 10,272,334 135,323,357 2,957,761 (866,297) 137,414,821 Less accumulated depreciation for: Buildings and structures 5,227,395 4,083,064 9,310,459 1,173,081 (450,613) 10,032,927 Machinery and equipment 6,435,313 622,814 7,058,127 789,323 (362,476) 7,484,974 Other improvements 2,297,775 479,908 2,777,683 220,086 2,997,769 Streets (Infrastructures) 47,699,963 - 47,699,963 1,735,603 49,435,566 Total accumulated depreciation 61,660,446 5,185,786 66,846,232 3,918,093 (813,089) 69,951,236 Total capital assets being depreciated -net 63,390,577 5,086,548 68,477,125 (960,332) (53,208) 67,463,585 Governmental activities capital assets -net $73,775,701 5,359,970 79,135,671 934,484 (1,741,666) $78,328,489 Business -type activities: Capital assets, not being depreciated: Land $ 759,943 (121,270) 638,673 - - $ 638,673 Construction in process 2,046,037 (152,152) 1,893,885 1,543,407 (512,685) 2,924,607 Total capital assets, not being depreciated 2,805,980 (273,422) 2,532,558 1,543,407 (512,685) 3,563,280 Capital assets, being depreciated: Buildings and structures 16,052,070 (7,759,487) 8,292,583 73,144 8,365,727 Machinery and equipment 12,014,906 (1,724,021) 10,290,885 582,505 (7,063) 10,866,327 Other improvements 31,291,180 (788,826) 30,502,354 - 30,502,354 Total capital assets, being depreciated 59,358,156 (10,272,334) 49,085,822 655,649 (7,063) 49,734,408 Less accumulated depreciation for: Buildings and structures 9,625,277 (4,083,064) 5,542,213 222,906 5,765,119 Machinery and equipment 7,327,271 (622,814) 6,704,457 436,527 (7,063) 7,133,921 Other improvements 15,802,849 (479,908) 15,322,941 998,417 16,321,358 Total accumulated depreciation 32,755,397 (5,185,786) 27,569.611 1,657,850 (7,063) 29,220,398 Total capital assets being depreciated — net 26,602,759 (5,086,548) 21,516,211 (1,002,201) 20,514,010 Business -type activities capital assets - net $29,408,739 (5,359,970) 24,048,769 541,206 (512,685) $24,077,290 Depreciation expense was charged to functions/programs of the primary government as follows: Governmental activities: General government $ 482,686 Public safety 60,596 Fire 54,708 Public works, including depreciation of general infrastructure assets 2,064,734 Parks and recreation 609,641 Internal service funds 645,728 Total depreciation expense — governmental activities $3,918,093 Business -type activities Liquor operations $ 123,996 Water & Sewer utility 1,133,160 Storm Sewer utility 400,694 Total depreciation expense — business -type activities $1,657,850 - 47- Construction Commitments At December 31, 2014, the City had construction project contracts in progress. The commitments related to the remaining contract balances are summarized as follows: Contract Remaining Project # Pro'ect Amount Commitment 50000 Liquor Store 1 Tuck pointing $ 73,404 $ 4,384 53004 Taft Lake Richfield Parkway $930,607 $151,969 4. Risk Manaaement 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 Fundprovides coverage for up to a maximum of $480,000 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 (LMCIT) 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 2014. 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 $925,687 reported in the fund at December 31, 2014 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, 2014 and 2013 are as follows: 5. Long -Term Liabilities 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 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 - 48- Current Year Beginning Claims & Balance at of Fiscal Year Changes Claim Fiscal Liability in Estimates Payments -Net Year End 2013 $914,137 349,539 (194,028) $1,069,648 2014 $1,069,648 (43,548) (100,413) $925,687 5. Long -Term Liabilities 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 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 - 48- Fund. The Storm Sewer Revenue Bonds debt requirements are paid from net revenue of the operation of the Enterprise - Storm Sewer Utility Fund. Improvement Bonds Water & Sewer Storm Sewer During 2014, the Gross Revenue Ice Arena Bonds, Series 1999, were called and retired. The call was financed with an internal loan to the Ice Arena Special Revenue Fund from the Recreation Enterprise Fund in the amount of $563,213. Principal Interest 2015 665,000 Governmental Activities 1,900,000 921,212 325,000 224,929 As of December 31, 2014, the governmental long-term bonded debt of the financial reporting entity consisted of the following: 680,000 188,451 1,205,000 877,607 335,000 Net Final 125,125 2017 695,000 Interest Issue Maturity Original Payable 200,759 Rate Date Date Issued 12/31/14 REDEVELOPMENT BONDS 1,290,000 786,336 365,000 187,764 G.O. Tax Increment Refunding Bonds, 20108 3.05% 12/30/2010 2/1/2024 6,355,000 5,100,000 G.O. Tax Increment Refunding Bonds, 2012B 2.25% 9/6/2012 2/1/2025 2,970,000 2,585,000 Total Redevelopment Bonds 2020-2024 3,960,000 9,325,000 7,685,000 IMPROVEMENT BONDS 2,120,000 632,040 1,395,000 390,678 G.O. Capital Improvement Bonds Series, 2007A 4.27% 7/10/2007 2/1/2028 4,705,000 3,680,000 G.O. Improvement Bonds, Series 2007B 4.27% 7/10/2007 2/1/2028 4,250,000 3,325,000 G.O. Capital Improvement Bonds Series, 2008A 4.60% 12/23/2008 2/1/2029 9,480,000 8,200,000 G.O. Capital Improvement Bonds Series, 2009A 4.49% 1/14/2009 2/1/2029 4,550,000 3,945,000 G.O. Bonds, 2010A 1.89% 5/19/2010 2/1/2021 1,500,000 140,000 G.O. Street Reconstruction Bonds Series 2012A 2.35% 9/6/2012 2/1/2033 2,120,000 2.050,000 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 24,460,000 TOTAL GOVERNMENTAL INDEBTEDNESS $39,050,000 $32,145,000 ENTERPRISE BONDS Gross Revenue Ice Arena Bonds, Series 1999 5.26% 5/1/1999 2/1/2020 1,660,000 - Water & Sewer Revenue Bonds, Series 2006A 4.21% 5/18/2006 2/1/2027 6,080,000 4,475,000 Storm Sewer Revenue Bonds, Series 2006B 4.07% 12/21/2006 2/1/2027 2,500,000 1,368,326 Water Revenue Bonds, Series 2011 A 3.67% 5/18/2011 2/1/2032 1,480,000 1,873,900 G.O. Storm Sewer Bonds, Series 20138 2.26% 3/21/2013 2/1/2033 2,770,000 2,683,931 TOTAL BUSINESS -TYPE ACTIVITY INDEBTEDNESS $14,490,000 $10,401,157 TOTAL CITY INDEBTEDNESS $53,540,000 $42,546,157 Annual debt service requirements to maturity for general obligation bonds are as follows - 49- Redevelopment Bonds Improvement Bonds Water & Sewer Storm Sewer Year Principal Interest Principal Interest Principal Interest Principal Interest 2015 665,000 197,686 1,900,000 921,212 325,000 224,929 230,000 132,025 2016 680,000 188,451 1,205,000 877,607 335,000 213,063 235,000 125,125 2017 695,000 177,156 1,255,000 833,034 345,000 200,759 245,000 117,975 2018 705,000 163,416 1,290,000 786,336 365,000 187,764 250,000 110,575 2019 720,000 147,146 1,345,000 736,955 375,000 173,900 255,000 102,975 2020-2024 3,960,000 401,307 7,580,000 2,830,423 2,120,000 632,040 1,395,000 390,678 2025-2029 260,000 3,738 8,690,000 1,090,869 1,685,000 185,099 1,255,000 161,721 2030-2034 - - 1,195,000 80,685 290,000 18,212 650,000 35,299 TOTALS $7,685,000 $1,278,900 $24,460,000 $8,157,121 $5,840,000 $1,835,766 $4,515,000 $1,176,373 - 49- Change in Long -Term Liabilities Long-term liability activity for the year ended December 31, 2014, was as follows: Change in Beginning Amounts Beginning Accounting Balance Ending Due Within Balance Principle Restated Additions Reductions Balance One Year Governmental Activities $ 780,000 $ (780,000) $ $ $ - $ - $ - Water & Sewer Revenue Bonds 4,730,000 (255,000) Bonds and notes payable: 265,000 Storm Sewer Revenue Bonds 4,745,000 (230,000) 4,515,000 230,000 Water Revenue Bonds Redevelopment Bonds $ 8,340,000 1,365,000 60,000 $- $(655,000) $7,685,000 $ 665,000 Improvement Bonds 25,785,000 - - 10,401,157 (1,325,000) 24,460,000 1,900,000 Ice Arena Bonds - 780,000 780,000 5,806,801 (780,000) - Storm Sewer Revenue Bonds, Total bonds and notes payable 34,125,000 780,000 780,000 (2,760,000) 32,145,000 2,565,000 Other Liabilities: Charges 100% 2006-2027 2,423,427 184,070 1,204,476 Water Revenue Bonds, Claims and judgments 1,069,648 - 1,069,648 - (143,961) 925,687 5,775 Net OPEB obligation 1,142,438 13,153 1,155,591 265,349 (76,292) 1,344,648 - Compensated absences 1,872,178 14,233 1,886,411 69,013 (17,796) 1,937,628 494,665 Governmental activities long-term liabilities $38,209,264 807,386 39,016,650 $334,362 $(2,998,049) $36,352,963 $3,065,440 Business - Type Activities Bonds and notes payable: Ice Arena Bonds $ 780,000 $ (780,000) $ $ $ - $ - $ - Water & Sewer Revenue Bonds 4,730,000 (255,000) 4,475,000 265,000 Storm Sewer Revenue Bonds 4,745,000 (230,000) 4,515,000 230,000 Water Revenue Bonds 1,425,000 (60,000) 1,365,000 60,000 Premium (Discount) on bonds payable 48,957 (2,800) 46,157 - Total bonds and notes payable 11,728,957 (547,800) 10,401,157 555,000 Other Liabilities: Net OPEB obligation 76,486 (13,153) 63,333 13,578 (3,903) 73,008 - Compensated absences 289,562 (14,233) 275,329 56,057 (60,334) 271,052 89,202 Business -type activities long-term liabilities $12,095,005 (807,386) 11,287,619 $69,635 $(612,037) $10,745,217 $644,202 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, 2014 is backed by the full faith and credit of the City, including special assessment and revenue bond issues. Special assessment receivable at December 31, 2014 totaled $590,188. Revenue Pledged 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 $ $ 818,227 $- Water & Sewer Revenue Bonds, Utility Utility Series 2006A Infrastructure Charges 100% 2006-2027 5,806,801 444,539 7,222,179 Storm Sewer Revenue Bonds, Utility Utility Series 2006B Infrastructure Charges 100% 2006-2027 2,423,427 184,070 1,204,476 Water Revenue Bonds, Utility Utility Series 2011A Infrastructure Charges 100% 2012-2032 1,868,965 106,860 3,499,254 G.O. Storm Sewer Bonds, Series Utility Utility 2013B Infrastructure Charges 100% 2013-2033 3,267,945 206,717 1,204,476 - 50- 6. Interfund balances and transactions Interfund transfers as of December 31, 2014 are as follows: Transfers in General Ice Swimming Improvement Capital Nonmajor Internal Transfers out Fund Arena Pool Bonds Improvements Governmental Service Total General Fund 50,000 30,000 20,000 $100,000 Capital Improvement - 5,361 945,890 - 700,000 $1,651,251 Nonmajor governmental - 40,000 926,000 450,000 60,000 $1,476,000 Liquor Enterprise 266,460 - - 450,000 - $716,460 Water & Sewer Utility - - - 150,000 - - $150,000 $266,460 $90,000 $30,000 $5,361 $2,021,890 $920,000 $760,000 $4,093,711 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 was to be repaid over the next five years using funds from the City's Liquor Contribution Special Revenue Fund with 0% interest. However, the final year of payment has been pushed back one year to 2016. 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, 2014 the balance of the respective advances (due in more than a year) was $156,740 and $956,548. The portion of the advances that is due in one year is $0 and $58,624 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 a 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, 2014, the balance of the advance was $623,802. The portion of this advance that is due in one year, $98,843 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, 2014 the portion of the advance that is due in one year is $19,500, and the portion due in more than one year is $238,540. In 2014, the City's Communications Fund made an advance to the Ice Arena Fund to finance the construction of a new locker room at Rink 1. The advance will be repaid over fifteen (15) years with rent received from the tenant of the locker room. In addition, the City's Recreation Fund also made an advance to the Ice Arena Fund to finance the call and retirement of the 1999 Gross Revenue Ice Arena Bonds, Series 1999. The advance will be repaid over six years at a 1 % rate of interest, using revenues generated by the Ice Arena operation. Finally, the City's Capital Improvements Fund made an advance to the Richfield Housing and Redevelopment Authority (HRA) to prepay special assessments to be levied against the HRA property as part of the North Richfield Parkway Project. The term of the loan will be twenty (20) years with no principal and interest payments due the first two years and then 1 % interest beginning in year three. The repayment of the loan will have three sources in the following priority; land sale proceeds, tax increment revenues and funds of the HRA that are legally available to pay on the loan. At December 31, 2014, the portion of the advances that is due within one year is $42,764 for the locker room, $91,539 for the bond retirement and $0 for the loan to prepay the special assessments. The portions of the loans due in more than one year are $598,690, $471,674, and $780,000 for the locker room, bond retirement and prepay of special assessments. At the end of 2014, the Ice Arena, Swimming Pool, and Special Facilities funds have overdrawn their cash positions. As a result, the General Fund has advanced to the Ice Arena and Swimming Pool, funds to cover the overdrawn cash position as of December 31, 2014. Accordingly, the Elections Special Revenue Fund has advanced the funds necessary to cover the overdrawn cash position of the Special Facilities fund as of December 31, 2014. These advances are reflected in the financial statements as due to and due from other funds. - 51 - Individual fund interfund receivables and payables balances at year-end were as follows: Due From Other Funds Recreation Enterprise Fund Self -Insurance Fund Capital Improvement Funds Recreation Enterprise Fund Communications Fund Recreation Enterprise Fund Capital Improvement Funds General Fund General Fund Elections Fund Due to Other Funds Park and Recreational Development Ice Arena Water & Sewer Utility Park and Recreational Development Ice Arena Ice Arena Component Unit Ice Arena Swimming Pool Special Facilities Individual fund advances to and advances from at year-end were as follows: 7 Advances to Other Funds Recreation Enterprise Fund Self -Insurance Fund Capital Improvements Funds Recreation Enterprise Fund Communications Fund Recreation Enterprise Fund Capital Improvement Funds Advances from Other Funds Park and Recreational Development Ice Arena Water & Sewer Utility Park and Recreational Development Ice Arena Ice Arena Component Unit Amount $0 $58,624 $98,843 $19,500 $42,764 $91,539 $0 2,060,577 1,080,348 16,547 Amount $156,740 $956,548 $524,958 $238,540 $598,690 $471,674 $780,000 Individual Fund Disclosures Expenditures exceeded appropriations (budget) in the following individual funds for the year ended December 31, 2014: Primary Government: Nonmajor Special Revenue Funds: Tourism Communications Drug Forfeiture Public Safety Compliance Recreation Contributions Nature Center Contributions Community Center Days Out Wood Lake Half Marathon Utility Franchise Fees Special Facilities Final Over Budget Actual Budget $ 11,280 $ 11,680 $ 400 302,740 311,643 $ 8,903 56,000 122,283 66,283 71,210 77,315 6,105 24,200 48,934 24,734 99,200 127,789 28,589 14,080 23,246 9,166 69,000 69,163 163 95,000 101,137 6,137 29,170 31,985 2,815 The Park and Recreational Development Capital Projects and the Special Facilities Special Revenue nonmajor governmental funds had deficit fund balances of $24,509 and $17,712 respectively, as of December 31, 2014. - 52- 8. Fund Balances 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. At December 31, 2014, a summary of the City's governmental fund balance classifications are as follows: Other General Ice Swimming Improvement Capital Governmental Fund Arena Pool Bonds Improvements Funds Total Nonspendable Prepaid items $83,241 $- $- $- $- $7,330 $ 90,571 Total nonspendable 83,241 7,330 90,571 Restricted Future debt service Future MSA projects North Richfield Parkway Cedar Point abatement Law enforcement drug forfeitures Public Safety Federal grants Recreation services donations Wood Lake Nature Center donations Public health assessment Total restricted Committed Street Improvements Local improvement funding Recycling Grant Park Improvement projects Tourism administration Public Cable TV & information activities National, State, and Local elections Alcohol and Tobacco Compliance Senior Citizen Recreation Programs Wood Lake Nature Center Donations Street Maintenance & forestry programs 2,397,605 - 1,732,789 2,397,605 - 415,690 234,583 - 415,690 235,588 132,002 235,588 52,784 - 52,784 - 213,253 213,253 83,939 1,900 1,900 2,956 46,730 46,730 3,087,658 56,185 56,185 - - 57,712 57,712 2,397,605 704,062 375,780 3,477,447 1,732,789 - 1,732,789 - 1,220,867 1,220,867 234,583 - 234,583 - 132,002 132,002 42,199 42,199 2,043,965 2,043,965 705,908 705,908 83,939 83,939 8,471 8,471 2,956 2,956 1,201,539 1,201,539 Total committed 1,732,789 1,455,450 4,220,979 7,409,218 Assigned Debt related expenditures 593,961 - 593,961 Future capital projects - 6,791,083 6,791,083 Total assigned - 593,961 6,791,083 7,385,044 Unassigned General Fund 8,414,671 - - 8,414,671 Ice Arena - (4,201,967) (4,201,967) Swimming Pool (1,082,825) (1,082,825) Special Facilities (17,712) (17,712) Park Improvement projects - (24,509) (24,509) Total unassigned 8,414,671 (4,201,967) (1,082,825) (42,221) 3,087,658 Total $8,497,912 $(4,201,967) $(1,082,825) $4,724,355 $8,950,595 $4,561,868 $21,449,938 9. 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. - 53- 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, 2014 by MAC is $1,080,779. In 2014 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. 10. 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. 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, 55103-2088 or by calling (651)296-7460 or 1-800-652-9026. - 54- 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 2014. PEPFF members were required to contribute 10.2 percent of their annual covered salary in 2014. In 2014, 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 members, and 15.3 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 December 31 GERF PEPFF 2012 $650,160 $791,655 2013 $670,510 $823,341 2014 $667,767 $858,155 Contribution rates will increase on January 1, 2015 in the Coordinated Plan (6.5% for members and 7.5% for employers) and the PEPFF (10.8% for members and 16.2% for employers). 11. Other Post Employments Benefits 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: - 55- 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 2012, 2013, and 2014 are as follows: 2014 Annual required contribution $ 270,094 Interest on net OPEB obligation 54,852 Adjustment to annual required contribution (46,018) Annual OPEB cost (Expense) 278,928 Contributions made 80,196 Increase in net OPEB obligation 198,732 Net OPEB obligation — beginning of year 1,218,924 Net OPEB obligation — end of year $1,417,656 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 2012, 2013, and 2014 are as follows: D. Funded Status and Funding Progress As of January 1, 2014, the most recent actuarial valuation date, the plan was zero percent funded. The actuarial accrued liability for benefits was $2,674,636, and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $2,674,636. The covered payroll (annual payroll of active employees covered by the plan) was $13,098,666 and the ratio of the UAAL to the covered payroll was 20.4 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, 2014 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 30 year open amortization base period resets to 30 years at each valuation date. 12. 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. - 56- Percentage of Fiscal Annual Employer Annual OPEB Net OPEB Year Ended OPEB Cost Contribution Cost Contributed Obligation December 31, 2012 $266,486 $61,047 22.9% $1,021,838 December 31, 2013 $276,155 $79,069 28.6% $1,218,924 December 31, 2014 $278,928 $80,196 28.75% $1,417,656 D. Funded Status and Funding Progress As of January 1, 2014, the most recent actuarial valuation date, the plan was zero percent funded. The actuarial accrued liability for benefits was $2,674,636, and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $2,674,636. The covered payroll (annual payroll of active employees covered by the plan) was $13,098,666 and the ratio of the UAAL to the covered payroll was 20.4 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, 2014 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 30 year open amortization base period resets to 30 years at each valuation date. 12. 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. - 56- 13. 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. As of December 31, 2014 there were five bond issues outstanding with an estimated aggregate principal amount outstanding of approximately $32,634,803. 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. 14. Limited Pav-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, 2014 equal $90,889,615. 15. Deferred Loan Proaram 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. 16. 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, 2014. 17. 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 2014, the HRA transferred to the City $861,086 of tax increment receipts to fund debt service requirements for debt issued on behalf of the HRA. In addition, during 2014, the City transferred $47,370 to the HRA to fund future internal loan payments. Finally, during 2013, as part of the North Richfield Parkway project, the City purchased several properties with the future intent to convey the properties to the HRA for future redevelopment of the site. Funding for the property purchases was provided by the $3,120,000 G.O. Improvement Bonds, Series 2013A. The bonds were issued with a debt service structure of 75% to be paid with - 57- a debt service tax levy and 25% to be paid by special assessments levied against the HRA, once the properties were conveyed to the HRA. The amount of the special assessment was $780,000. During 2014, the City conveyed the properties to the HRA at a value of $704,639 and levied the planned special assessments against the HRA. As part of the special assessment process the HRA prepaid the $780,000 with funding provided by the City in the form of an inter fund loan from the City's Capital Improvement Fund. The term of the loan will be twenty (20) years with no principal and interest payments due the first two years and then payment beginning in year three with an interest rate of 1 %.The repayment of the loan will have three sources in the following priority; land sale proceeds, tax increment revenues and funds of the HRA that are legally available to pay on the loan. 18. 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 2014 financial statements of the City was $571,559 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. 19. 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. 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. 20. 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, 2014. 21. Cumulative Effect on Change in Accounting Principle In 2014 the City reclassified three components of the Recreation Enterprise Fund, the Ice Arena, Swimming Pool, and Special Facilities operations, from an Enterprise Fund to three Special Revenue Funds. City management believes that the Special Revenue Fund type more accurately represents the activity of these three operations and that this fund type will be a more transparent approach. The change acknowledges that the three new funds may or may not be able to generate enough fee revenue to support operational costs but that management believes the businesses to be of general benefit to the community and as such, will support the existence of the operations by supplemental funding if necessary. - 58- During 2014, the following cumulative effect of change in accounting principle adjustment was made due to the fund type reclassification: Government Wide Financial Statements Fund Balance December 31, 2013 — as previously reported Current assets Capital assets Accumulated depreciation Current Liabilities Interfund loan payable Bonds payable Other postemployment benefits Compensated absences payable Cumulative effect of change in accounting principle Fund balance, January 1, 2014 Fund Financial Statements Fund Balance December 31, 2013 — as previously reported Current assets Capital assets Accumulated depreciation Current Liabilities Interfund loan payable Bonds payable Other postemployment benefits Compensated absences payable Cumulative effect of change in accounting principle Fund balance, January 1, 2014 - 59- Governmental Business -Type Activities Activities $- $490,829 (2,833,012) 2,833,012 10,545,756 (10,545,756) (5,185,786) 5,185,786 (156,106) 156,106 (1,072,637) 1,072,637 (780,000) 780,000 (13,153) 13,153 (14,233) 14,233 490,829 (490,829) $490,829 $_ Governmental Enterprise Funds Funds $- $ 490,829 (2,833,012) 2,833,012 - (10,545,756) - 5,185,786 (156,106) 156,106 (1,072,637) 1,072,637 - 780,000 - 13,153 - 14,233 (4,061,755) (490,829) $(4,061,755) $- THIS PAGE WAS LEFT BLANK INTENTIONALLY 0 REQUIRED SUPPLEMENTARY INFORMATION THIS PAGE WAS LEFT BLANK INTENTIONALLY - 62- Charges for Services: General Government CITY OF RICHFIELD, MINNESOTA 785,690 899,287 Schedule 10 REQUIRED SUPPLEMENTARY INFORMATION 499,000 555,000 Page 1 of 4 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Public Safety 32,100 For The Year Ended December 31, 2014 34,529 Park and Recreation 314,380 330,510 375,934 45,424 Nature Center Variance with 85,300 72,930 (12,370) Total Charges for Services Final Budget 1,782,700 Budgeted Amounts 290,653 Over Original Final Actual (Under) Taxes: 4,500 13,666 9,166 Total Investment Earnings Current ad valorem $ 11,008,470 $ 11,008,470 $ 12,155,430 $ 1,146,960 Fiscal disparities 3,564,880 3,564,880 3,074,609 (490,271) Total Taxes 14,573,350 14,5739350 15,2309039 656,689 Fees and Fines: 3,000 3,272 272 Other Municipal court fines 325,000 370,000 386,139 16,139 Total Fees and Fines 325,000 370,000 386,139 16,139 Licenses and Permits: $ 19,096,350 $ 20,422,431 $ 1,326,081 Business licenses 303,800 346,700 305,117 (41,583) Nonbusiness licenses and permits 581,600 512,600 725,629 213,029 Total Licenses and Permits 885,400 859,300 1,030,746 171,446 Intergovernmental Revenues: Federal : Grants 132,350 110,030 221,072 111,042 State: Local government aid 300,000 300,000 300,000 - Fire State Aid 164,100 161,400 141,794 (19,606) Grants - other 21,160 20,000 64,013 44,013 Police State Aid 330,000 338,000 371,791 33,791 Law officer training 14,000 14,700 13,516 (1,184) State -aid street maintenance 310,140 324,310 324,318 8 County - Community health services 134,380 134,310 134,313 3 Grants - other 31,360 31,190 27,169 (4,021) Total Intergovernmental Revenue 1,437,490 1,433,940 1,597,986 164,046 Charges for Services: General Government 699,290 785,690 899,287 113,597 Deputy Registrar 499,000 555,000 664,473 109,473 Public Safety 32,100 26,200 60,729 34,529 Park and Recreation 314,380 330,510 375,934 45,424 Nature Center 87,200 85,300 72,930 (12,370) Total Charges for Services 1,631,970 1,782,700 2,073,353 290,653 Investment Earnings Investment Earnings 11,000 4,500 13,666 9,166 Total Investment Earnings 11,000 4,500 13,666 9,166 Miscellaneous Revenues: Rent 13,160 13,160 13,160 - Recovery - damage to City property 8,000 3,000 3,272 272 Other 66,500 56,400 74,070 17,670 Total Miscellaneous Revenues 87,660 72,560 90,502 17,942 Total Revenues $ 18,951,870 $ 19,096,350 $ 20,422,431 $ 1,326,081 - 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, 2014 Variance with Final Budget Budgeted Amounts Over Original Final Actual (Under) EXPENDITURES: LEGISLATIVE/EXECUTIVE Mayor - Council: Personnel services $ 110,850 $ 111,370 $ 112,872 $ 1,502 Other services and charges 90,120 144,360 165,819 21,459 Total 200,970 255,730 278,691 22,961 Other Agencies: Personnel services 26,620 26,620 26,620 - Other services and charges 70,480 70,480 70,480 - Total 97,100 97,100 97,100 - City Manager: Personnel services 179,260 174,120 175,456 1,336 Other services and charges 32,830 33,010 29,008 (4,002) Total 212,090 207,130 204,464 (2,666) Legal: Other services and charges 306,860 305,420 255,799 (49,621) Total 306,860 305,420 255,799 (49,621) Total Legislative/Executive 817,020 865,380 836,054 (29,326) ADMINISTRATIVE SERVICES: Administration: Personnel services 21,960 21,880 (76,619) (98,499) Other services and charges 100,520 100,910 98,702 (2,208) Total 122,480 122,790 22,083 (100,707) Human Resources: Personnel services 1,100 18,870 26,706 7,836 Other services and charges 22,280 24,660 14,455 (10,205) Total 23,380 43,530 41,161 (2,369) Finance: Personnel services 212,700 207,580 180,110 (27,470) Other services and charges 53,900 55,780 53,666 (2,114) Total 266,600 263,360 233,776 (29,584) City Clerk: Personnel services 365,620 371,710 429,170 57,460 Other services and charges 55,990 56,880 63,183 6,303 Total 421,610 428,590 492,353 63,763 Assessing: Personnel services 87,370 89,580 89,170 (410) Other services and charges 281,930 281,580 266,677 (14,903) Total 369,300 371,160 355,847 (15,313) Total Administrative Services 1,203,370 1,229,430 1,145,220 (84,210) PUBLIC SAFETY: Administrative Support Services: Personnel services 448,450 445,190 447,807 2,617 Other services and charges 431,370 416,540 407,769 (8,771) Total 879,820 861,730 855,576 (6,154) Police Operations: Personnel services 5,744,170 5,443,410 5,157,271 (286,139) Other services and charges 1,341,250 1,588,050 1,535,588 (52,462) Total 7,085,420 7,031,460 6,692,859 (338,601) - 64- - 65- CITY OF RICHFIELD, MINNESOTA Schedule 10 REQUIRED SUPPLEMENTARY INFORMATION Page 3 of 4 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2014 Variance with Final Budget Budgeted Amounts Over Original Final Actual (Under) Emergency Services: Personnel services 7,440 7,440 7,440 Other services and charges 16,220 16,220 14,785 (1,435) Total 23,660 23,660 22,225 (1,435) Total Public Safety 7,988,900 7,916,850 7,570,660 (346,190) FIRE: Fire Protection: Personnel services 3,115,370 3,122,560 3,028,125 (94,435) Other services and charges 524,090 542,410 533,318 (9,092) Capital outlay 60,000 42,290 42,286 (4) Total 3,699,460 3,707,260 3,603,729 (103,531) Total Fire 3,699,460 3,707,260 3,603,729 (103,531) COMMUNITY DEVELOPMENT: Administration: Personnel services 193,210 191,520 225,462 33,942 Other services and charges 89,040 85,040 75,065 (9,975) Total 282,250 276,560 300,527 23,967 Economic Development: Personnel services 64,120 67,370 62,950 (4,420) Other services and charges 62,530 36,390 30,387 (6,003) Total 126,650 103,760 93,337 (10,423) Inspection: Personnel services 740,830 736,610 735,622 (988) Other services and charges 177,580 186,210 168,500 (17,710) Total 918,410 922,820 904,122 (18,698) Total Community Development 1,327,310 1,303,140 1,297,986 (5,154) PUBLIC WORKS: Administration: Personnel services 138,440 145,630 104,291 (41,339) Other services and charges 30,540 23,350 24,967 1,617 Total 168,980 168,980 129,258 (39,722) Engineering: Personnel services 215,930 191,760 230,264 38,504 Other services and charges 108,250 130,700 96,573 (34,127) Total 324,180 322,460 326,837 4,377 Streets: Personnel services 675,370 684,870 703,542 18,672 Other services and charges 1,318,670 752,850 737,757 (15,093) Total 1,994,040 1,437,720 1,441,299 3,579 Park Maintenance: Personnel services 703,270 681,590 729,973 48,383 Other services and charges 508,670 530,230 485,537 (44,693) Total 1,211,940 1,211,820 1,215,510 3,690 Forestry: Personnel services 305,040 311,420 324,110 12,690 Other services and charges 228,520 236,690 242,144 5,454 Total 533,560 548,110 566,254 18,144 Total Public Works 4,232,700 3,689,090 3,679,158 (9,932) - 65- CITY OF RICHFIELD, MINNESOTA Schedule 10 REQUIRED SUPPLEMENTARY INFORMATION Page 4 of 4 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2014 Variance with Final Budget Budgeted Amounts Over Original Final Actual (Under) RECREATION SERVICES: Recreation Services Administration: Personnel services 252,490 256,080 259,422 3,342 Other services and charges 75,350 76,330 72,670 (3,660) Total 327,840 332,410 332,092 (318) Recreation Programs: Personnel services 602,410 598,440 591,517 (6,923) Other services and charges 288,750 303,030 310,139 7,109 Total 891,160 901,470 901,656 186 Wood Lake Nature Center: Personnel services 398,510 394,560 387,751 (6,809) Other services and charges 87,060 88,660 88,853 193 Total 485,570 483,220 476,604 (6,616) Total Recreation Services 1,704,570 1,717,100 1,710,352 (6,748) Total Expenditures $ 20,973,330 $ 20,428,250 $ 19,843,159 $ (585,091) Revenues over (under) expenditures $ (2,021,460) $ (1,331,900) $ 579,272 $ 1,911,172 Other financing sources (uses): Transfer from Special Revenue Funds 150,000 150,000 - (150,000) Transfer from Debt Service Funds 935,000 426,760 - (426,760) Transfer from Capital Project Funds 670,000 588,680 - (588,680) Transfer from Enterprise Funds 266,460 266,460 266,460 Transfer to Special Revenue Funds - (100,000) (100,000) Total other financing sources (uses) 2,021,460 1,331,900 166,460 (1,165,440) Net increase in fund balance - - 745,732 745,732 Fund balance - January 1 7,752,180 7,752,180 7,752,180 - Fund Balance - December 31 $ 7,752,180 $ 7,7529180 $ 8,4979912 $ 745,732 W. CITY OF RICHFIELD, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - ICE ARENA FUND For the Year Ended December 31, 2014 Revenues: Charges for Services Investment Earnings Miscellaneous Total Revenues Expenditures: Current Personnel services Other services and charges Debt Service Principal Interest Capital outlay Total Expenditures Excess of revenues under expenditures Other Financing Sources: Transfers in: General Fund Capital Project Fund Net Other Financing Sources: Net decrease in fund balance Fund Balance - January 1 Cumulative effect of change in accounting prindiple Fund Balance - January 1 - Restated Fund Balance - December 31 Schedule 11 - 67- Variance with Final Budget Budgeted Amounts Actual Over Original Final Amounts (Under) $ 928,850 $ 928,850 $ 930,977 $ 2,127 100 100 302 202 43,950 43,950 28,101 (15,849) 972,900 972,900 959,380 (13,520) 387,580 387,580 416,310 28,730 433,630 433,630 437,330 3,700 - - 780,000 780,000 59,600 59,600 55,056 (4,544) 480,000 480,000 542,129 62,129 1,360,810 1,360,810 2,230,825 870,015 (387,910) (387,910) (1,271,445) (883,535) 50,000 50,000 50,000 - 40,000 40,000 40,000 - 90,000 90,000 90,000 - (297,910) (297,910) (1,181,445) (883,535) (3,020,522) (3,020,522) (3,020,522) - (3,020,522) (3,020,522) (3,020,522) - $ (3,318,432) $ (3,318,432) $ (4,201,967) $ (883,535) - 67- CITY OF RICHFIELD, MINNESOTA Schedule 12 REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - SWIMMING POOL FUND For the Year Ended December 31, 2014 - 68- Variance with Final Budget Budgeted Amounts Actual Over Original Final Amounts (Under) Revenues: Charges for services $ 298,090 $ 298,090 $ 2295103 $ (68,987) Miscellaneous 300 300 59,688 59,388 Total Revenues 298,390 2983390 288,791 (9,599) Expenditures: Current Personnel services 197,310 197,310 187,579 (9,731) Other services and charges 196,840 1963840 206,531 9,691 Total Expenditures 3945150 3943150 3945110 (40) Excess of revenues under expenditures (95,760) (95,760) (1055319) (95559) Other Financing Sources: Transfers in: General Fund 30,000 30,000 30,000 Net Other Financing Sources: 303000 30,000 303000 - Net decrease in fund balance (65,760) (65,760) (75,319) (95559) Fund Balance - January 1 - - - - Cumulative effect of change in accounting prindiple (1,007,506) (1,007,506) (1,007,506) - Fund Balance - January 1 - Restated (1,007,506) (1,007,506) (1,007,506) - Fund Balance - December 31 $ (150735266) $ (1,0733266) $ (150825825) $ (95559) - 68- Schedule 13 CITY OF RICHFIELD, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION OTHER POST -EMPLOYMENT BENEFITS PLAN SCHEDULE OF FUNDING PROGRESS Unfunded Unfunded Actuarial Actuarial Actuarial Actuarial Liability as a Valuation Accrued Value of Accrued Funded Covered Percentage of Date Liability Plan Assets Liability Ratio Payroll Payroll January 1, 2008 $ 3,347,505 $ - $ 3,347,505 - $ 13,254,399 25.3% January 1, 2010 $ 2,573,782 $ - $ 2,573,782 - $ 12,903,221 19.9% January 1, 2012 $ 2,528,372 $ - $ 2,528,372 - $ 13,137,406 19.2% January 1, 2014 $ 2,674,636 $ - $ 2,674,636 - $ 13,098,666 20.4% SWUM CITY OF RICHFIELD, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE NOTE TO RSI DECEMBER 31, 2014 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, 2014, there were no General Fund departments whose expenditures exceeded budget appropriations. - 70- COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES - 71 - NONMAJOR GOVERNMENTAL FUNDS - 72- 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. - 73- Assets Cash and investments Due from other governments Receivables, net Due from other funds Prepaid items Advances to other funds Total assets Liabilities and Fund Balances Liabilities: Accounts payable Accrued salaries and benefits Due to other funds Payable to other governments Advances from other funds Total liabilities CITY OF RICHFIELD, MINNESOTA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS December 31, 2014 Special Redevelopment Revenue Bonds $ 3,311,484 - 20,316 - 681,373 - 59,311 - 7,330 - 598,690 - $ 4,678,504 $ - Park and Recreational Development Capital Projects $ 462,691 $ 462,691 Statement 14 Total Nonmajor Governmental Funds $ 3,774,175 20,316 681,373 59,311 7,330 598,690 $ 5,141,195 $ 61,326 - $ 72,420 $ 133,746 5,261 - - 5,261 16,547 - 19,500 36,047 8,993 - - 8,993 - - 395,280 395,280 92,127 - 487,200 579,327 Fund balances Nonspendable 7,330 Restricted 375,780 Committed 4,220,979 Unassigned (17,712) _ Total fund balances 4,586,377 _ Total liabilities and fund balances $ 4,678,504 $ - 74 - 7,330 375,780 4,220,979 (24,509) (42,221) (24,509) 4,561,868 $ 462,691 $ 5,141,195 - 75- CITY OF RICHFIELD, MINNESOTA Statement 15 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE NONMAJOR GOVERNMENTAL FUNDS Park and For The Year Ended December 31, 2014 Recreational Total Development Nonmajor Special Redevelopment Capital Governmental Revenue Bonds Projects Funds REVENUES: Franchise taxes $ 1,973,751 $ - $ - $ 1,973,751 Fees and fines 107,808 - - 107,808 Intergovernmental 161,751 861,087 - 1,022,838 Investment earnings 103914 - 921 11,835 Miscellaneous 506,306 - 39,588 545,894 Total revenues 2,760,530 861,087 40,509 3,662,126 EXPENDITURES: Current: Administrative Services 497,213 - - 497,213 Public Safety 190,738 - - 190,738 Recreation Services 235,656 - 14,171 249,827 Debt Service Principal - 655,000 - 655,000 Interest and other charges - 206,087 - 206,087 Capital Outlay: Administrative Services 41,523 - - 41,523 Public Safety 403890 - - 40,890 Recreation Services 65,461 - 396,219 461,680 Total expenditures 1,071,481 861,087 410,390 2,342,958 Excess (deficiency) of revenues over expenditures 1,689,049 - (369,881) 1,319,168 OTHER FINANCING SOURCES (USES): Transfers in 470,000 - 450,000 920,000 Transfers out (1,436,000) - (40,000) (1,476,000) Total other financing sources and uses (966,000) - 410,000 (556,000) Net increase in fund balance 723,049 - 40,119 763,168 Fund balances (deficit) - January 1 3,897,055 - (64,628) 3,832,427 Cumulative effect of change in accounting principle (33,727) - - (33,727) Fund balances (deficit) - January 1 - Restated 3,863,328 - (64,628) 3,798,700 Fund balances (deficit) - December 31 $ 4,586,377 $ - $ (24,509) $ 4,561,868 - 75- THIS PAGE WAS LEFT BLANK INTENTIONALLY - 76- 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. The Special Facilities Fund is used to account for the City's mini golf and picnic shelter operations at Veteran's Memorial Park. - 77- CITY OF RICHFIELD, MINNESOTA SUBCOMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS December 31, 2014 LIABILITIES AND FUND Liquor BALANCES Contributions Tourism Drug/ 911 Accounts payable Fund Admin Communications Elections Forfeiture Fees ASSETS - - Due to other funds - - Cash and investments $ 132,002 $ 42,199 $ 1,304,924 $ 601,684 $ 219,864 $ Due from other governments - - - - - Receivables, net 7,330 - 103,429 120,676 - - Due from other funds 213,253 Committed 42,764 16,547 - - Prepaid items - - - - 7,330 - 132,002 42,199 2,051,295 Advances to other funds 213,253 - Total Liabilities and 598,690 - - - Total Assets $ 132,002 $ 42,199 $ 2,057,137 $ 738,907 $ 219,864 $ - LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ $ $ 581 $ 32,999 $ 6,395 $ Accrued salaries and benefits 5,261 - - - Due to other funds - - Payable to other governments - - 216 - Total Liabilities 5,842 32,999 6,611 - Fund Balances: Nonspendable 7,330 - - Restricted - - 213,253 Committed 132,002 42,199 2,043,965 705,908 - - Unassigned - - - - Total Fund Balances 132,002 42,199 2,051,295 705,908 213,253 - Total Liabilities and Fund Balances $ 132,002 $ 42,199 $ 2,057,137 $ 738,907 $ 219,864 $ - 78- Statement 16 $ 1,252 $ 18,170 $ 313 $ $ $ 722 $ $ 894 $ 617326 - - 5,261 - - - 16,547 16,547 751 44 86 - 7,625 - 271 8,993 2,003 18,214 399 - 7,625 722 17,712 92,127 - - - - 7,330 1,900 46,730 56,185 - 57,712 - - 375,780 83,939 8,471 2,956 1,201,539 - 4,220,979 - - - - - - - (17,712) (17,712) 85,839 46,730 56,185 8,471 57,712 2,956 1,201,539 (17,712) 4,586,377 $ 87,842 $ 64,944 $ 56,584 $ 8,471 $ 65,337 $ 3,678 $ 1,201,539 $ - 79- $ 4,678,504 Total Nonmajor Public Nature Community Public Wood Lake utility Special Safety Recreation Center Center Health Half Franchise Special Revenue Compliance Contr. Contr. Days Out Grants Marathon Fees Facilities Funds $ 82,686 $ 64,944 $ 46,331 $ 8,471 $ 57,174 $ 3,678 $ 747,527 $ $ 3,311,484 1,900 - 10,253 - 8,163 - - 20,316 3,256 - - - 454,012 - 681,373 - - 59,311 7,330 - - - - - 598,690 $ 87,842 $ 64,944 $ 56,584 $ 8,471 $ 65,337 $ 3,678 $ 1,201,539 $ - $ 4,678,504 $ 1,252 $ 18,170 $ 313 $ $ $ 722 $ $ 894 $ 617326 - - 5,261 - - - 16,547 16,547 751 44 86 - 7,625 - 271 8,993 2,003 18,214 399 - 7,625 722 17,712 92,127 - - - - 7,330 1,900 46,730 56,185 - 57,712 - - 375,780 83,939 8,471 2,956 1,201,539 - 4,220,979 - - - - - - - (17,712) (17,712) 85,839 46,730 56,185 8,471 57,712 2,956 1,201,539 (17,712) 4,586,377 $ 87,842 $ 64,944 $ 56,584 $ 8,471 $ 65,337 $ 3,678 $ 1,201,539 $ - 79- $ 4,678,504 CITY OF RICHFIELD SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS For The Year Ended December 31, 2014 Liquor Contributions Tourism Drug/ 911 Fund Admin Communications Elections Forfeiture Fees Revenues: Franchise taxes $ - $ - $ 412,816 $ - $ - $ - Fees and fines - 107,808 Intergovernmental revenues: Federal grants - - - - 69,100 - State of Minnesota - 911 Fees - - - - - 3,955 Other - - - - - - County - Total Intergovernmental Revenues - - - - 69,100 3,955 Investment Earnings 321 131 4,615 1,527 665 - Miscellaneous: Contributions - - - - - - Other 10,650 193,414 Total Miscellaneous Revenues - 10,650 - 193,414 - - Total Revenues 321 10,781 417,431 194,941 177,573 3,955 Expenditures: Current: Personnel services - 11,680 159,847 89,972 - - Other services and charges - - 110,273 24,304 122,283 3,968 Capital outlay 41,523 Total Expenditures - 11,680 311,643 114,276 122,283 3,968 Excess (Deficiency) of Revenues over Expenditures 321 (899) 105,788 80,665 55,290 (13) Other Financing Sources (Uses): Transfers in: General Fund - - - - - - Enterprise Funds 450,000 Transfers out: Capital Project Funds (450,000) - - - - - Internal Service Funds (60,000) Net Other Financing Sources (Uses) - - - - (60,000) - Net increase (decrease) in fund balance 321 (899) 105,788 80,665 (4,710) (13) Fund Balance - January 1 131,681 43,098 1,945,507 625,243 217,963 13 Cummulative effect on change in accounting principle - - - - - - Fund Balance - January 1 - Restated 131,681 43,098 1,945,507 625,243 217,963 13 Fund Balance - December 31 $ 132,002 $ 42,199 $ 2,051,295 $ 705,908 $ 213,253 $ - - 80- Public Nature Community Public Wood Lake Utility Safety Recreation Center Center Health Half Franchise Special Compliance Contr. Contr. Days Out Grants Marathon Fees Facilities Statement 17 Total Nonmajor Special Revenue Funds $ - $ - $ - $ - $ - $ - $ 1,560,935 $ - $ 1,973,751 - 107,808 21,535 - - - 22,589 - - - 113,224 - - - - - - - - 3,955 28,295 - 10,253 - - - - - 38,548 6,024 - - 6,024 55,854 - 10,253 - 22,589 - - - 161,751 194 103 753 27 144 17 2,417 - 10,914 5,827 65,105 108,419 - - 12,294 - - 191,645 11,452 - 21,691 49,454 28,000 314,661 17,279 65,105 108,419 21,691 - 61,748 - 28,000 506,306 73,327 65,208 119,425 21,718 22,733 61,765 1,563,352 28,000 2,760,530 2,088 - 35,910 - - 34,200 - 9,389 343,086 34,337 31,404 43,948 23,246 28,062 34,963 101,137 22,596 580,521 40,890 17,530 47,931 - 147,874 77,315 48,934 127,789 23,246 28,062 693163 101,137 31,985 1,071,481 (3,988) 16,274 (8,364) (1,528) (5,329) (7,398) 1,462,215 (3,985) 1,689,049 - - - - - - - 20,000 20,000 - 450,000 - - - - - - (926,000) - (1,376,000) (60,000) - - - - - - (926,000) 20,000 (966,000) (3,988) 16,274 (8,364) (1,528) (5,329) (7,398) 536,215 16,015 723,049 89,827 30,456 64,549 9,999 63,041 10,354 665,324 - 3,897,055 - - - - - - - (33,727) (33,727) 89,827 30,456 64,549 9,999 63,041 10,354 665,324 (33,727) 3,863,328 $ 85,839 $ 46,730 $ 56,185 $ 8,471 $ 57,712 $ 2,956 $ 1,201,539 $ (17,712) $ 4,586,377 - 81 - 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, 2014 Revenues: Investment Earnings Other Financing Sources (Uses): Transfers in: Enterprise Funds Transfers out: Capital Project Funds Net Other Financing Sources (Uses) Net increase in fund balance Fund Balance - January 1 Fund Balance - December 31 Budgeted Amounts Original Final Schedule 18 Variance with Final Budget Actual Over Amounts (Under) $ 321 $ 221 450,000 450,000 450,000 - (450,000) (450,000) (450,000) - 100 100 321 221 131,681 131,681 131,681 - $ 131,781 $ 131,781 $ 132,002 $ - 82 - 221 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, 2014 Schedule 19 - 83- Variance with Final Budget Budgeted Amounts Actual Over Original Final Amounts (Under) Revenues: Investment Earnings $ 120 $ 50 $ 131 $ 81 Miscellaneous: Other 8,200 9,300 10,650 1,350 Total Revenues 8,320 9,350 10,781 1,431 Expenditures: Current Personnel services 11,680 11,280 11,680 400 Net increase (decrease) in fund balance (3,360) (1,930) (899) 1,031 Fund Balance - January 1 43,098 43,098 43,098 - Fund Balance - December 31 $ 39,738 $ 41,168 $ 42,199 $ 1,031 - 83- 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, 2014 Revenues: Franchise taxes Investment Earnings Total Revenues Expenditures: Current Personnel services Other services and charges Capital outlay Total Expenditures Excess of revenues over (under) expenditures Other Financing Uses: Transfers out: General Fund Net Other Financing Uses: Net Increase (decrease) in fund balance Fund Balance - January 1 Fund Balance - December 31 Schedule 20 Variance with Final Budget Budgeted Amounts Actual Over Original Final Amounts (Under) $ 360,000 $ 411,000 $ 412,816 $ 1,816 3,400 1,500 4,615 3,115 363,400 412,500 417,431 4,931 171,740 165,740 159,847 (5,893) 95,000 105,000 110,273 5,273 25,000 32,000 41,523 9,523 291,740 302,740 311,643 8,903 71,660 109,760 105,788 (3,972) (78,340) (40,240) 150,000 - 150,000 105,788 146,028 1,945,507 - $ 1,867,167 $ 1,905,267 $ 2,051,295 $ 146,028 - 84- 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, 2014 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 Schedule 21 - 85- Variance with Final Budget Budgeted Amounts Actual Over Original Final Amounts (Under) $ 850 $ 450 $ 1,527 $ 1,077 220,740 130,000 193,414 63,414 221,590 130,450 194,941 64,491 98,000 85,000 89,972 4,972 30,000 30,000 24,304 (5,696) 128,000 115,000 114,276 (724) 93,590 15,450 80,665 65,215 625,243 625,243 625,243 - $ 718,833 $ 640,693 $ 705,908 $ 65,215 - 85- 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, 2014 Revenues: Fees and Fines Intergovernmental Investment Earnings Miscellaneous: Other Total Revenues Expenditures: Current Other services and charges Excess of revenues over (under) expenditures Other Financing Uses: Transfers out: Internal Service Fund Net Other Financing Uses: Net increase (decrease) in fund balance Fund Balance - January 1 Fund Balance - December 31 Schedule 22 - 86- Variance with Final Budget Budgeted Amounts Actual Over Original Final Amounts (Under) $ 40,000 $ 89,700 $ 107,808 $ 18,108 - - 69,100 69,100 500 200 665 465 3,000 9,570 - (9,570) 43,500 99,470 177,573 78,103 95,000 56,000 122,283 66,283 (51,500) 43,470 55,290 11,820 - (60,000) (60,000) - - (60,000) (60,000) - (51,500) (16,530) (4,710) 11,820 217,963 217,963 217,963 - $ 166,463 $ 201,433 $ 213,253 $ 11,820 - 86- 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, 2014 Revenues: Intergovernmental revenues: 911 Fees Investment Earnings Total Revenues Expenditures: Current Other services and charges Net 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) $ 47,470 $ 3,960 $ 3,955 $ (5) 10 - - - 47,480 3,960 3,955 (5) 51,000 3,970 3,968 (2) (3,520) (10) (13) (3) 13 13 13 - $ (3,507) $ 3 $ - $ (3) - 87- 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, 2014 Revenues: Intergovernmental: Federal Grants State County Investment Earnings Miscellaneous: Contributions Other Total Revenues Expenditures: Current Personnel services Other services and charges Capital Outlay Total Expenditures Net increase (decrease) in fund balance Fund Balance - January 1 Fund Balance - December 31 Schedule 24 Variance with Final Budget Budgeted Amounts Actual Over Original Final Amounts (Under) $ 31,940 $ 37,480 $ 21,535 $ (15,945) - 26,300 28,295 1,995 20,000 20,000 6,024 (13,976) 80 60 194 134 - - 5,827 5,827 14,000 13,000 11,452 (1,548) 66,020 96,840 73,327 (23,513) - 2,740 2,088 (652) 40,000 68,470 34,337 (34,133) - - 40,890 40,890 40,000 71,210 77,315 6,105 26,020 25,630 (3,988) (29,618) 89,827 89,827 89,827 - $ 115,847 $ 115,457 $ 85,839 $ (29,618) - 88- 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, 2014 Revenues: Intergovernmental: State Investment Earnings Miscellaneous: Contributions Other Total Revenues Expenditures: Current Other services and charges Capital outlay Total Expenditures Net Increase (decrease) in fund balance Fund Balance - January 1 Fund Balance - December 31 Schedule 25 Variance with Final Budget Budgeted Amounts Actual Over Original Final Amounts (Under) $ 10,000 $ - $ - $ - 80 40 103 63 9,000 9,000 65,105 56,105 15,200 15,200 - (15,200) 34,280 24,240 65,208 40,968 36,000 24,200 31,404 7,204 - - 17,530 17,530 36,000 24,200 48,934 24,734 (1,720) 40 16,274 16,234 30,456 30,456 30,456 - $ 28,736 $ 30,496 $ 46,730 $ 16,234 - 89- 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, 2014 Revenues: Intergovernmental: State Investment Earnings Miscellaneous: Contributions Total Revenues Expenditures: Current Personnel services Other services and charges Capital Outlay Total Expenditures Net increase (decrease) in fund balance Fund Balance - January 1 Fund Balance - December 31 Schedule 26 Variance with Final Budget Budgeted Amounts Actual Over Original Final Amounts (Under) $ - $ - $ 10,253 10,253 150 60 753 693 100,000 100,000 108,419 8,419 100,150 100,060 119,425 19,365 33,800 22,100 35,910 13,810 46,600 25,100 43,948 18,848 12,000 52,000 47,931 (4,069) 92,400 99,200 127,789 28,589 7,750 860 (8,364) (9,224) 64,549 64,549 64,549 - $ 72,299 $ 65,409 $ 56,185 $ (9,224) 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, 2014 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 27 Variance with Final Budget Budgeted Amounts Actual Over Original Final Amounts (Under) $ 20 $ 10 $ 27 $ 17 21,050 14,730 21,691 6,961 21,070 14,740 21,718 6,978 1,600 1,240 - (1,240) 19,940 12,840 23,246 10,406 21,540 14,080 23,246 9,166 (470) 660 (1,528) (2,188) 9,999 9,999 9,999 - $ 9,529 $ 10,659 $ 8,471 $ (2,188) 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, 2014 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 Fund Balance - December 31 Schedule 28 Variance with Final Budget Budgeted Amounts Actual Over Original Final Amounts (Under) $ 35,760 $ 28,120 $ 22,589 $ (5,531) 120 50 144 94 35,880 28,170 22,733 (5,437) 2,500 - - - 33,260 28,120 28,062 (58) 35,760 28,120 28,062 (58) 120 50 (5,329) (5,379) 63,041 63,041 63,041 - $ 63,161 $ 63,091 $ 57,712 $ (5,379) - 92- 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, 2014 Revenues: 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 Budgeted Amounts Original Final Schedule 29 Variance with Final Budget Actual Over Amounts (Under) $ 17 $ 17 11,000 11,000 12,294 1,294 60,000 60,000 49,454 (10,546) 71,000 71,000 61,765 (9,235) 24,000 34,000 34,200 200 363200 353000 34,963 (37) 60,200 69,000 69,163 163 103800 2,000 (7,398) (9,398) 10,354 10,354 10,354 - $ 21,154 $ 12,354 $ 2,956 $ (9,398) - 93- 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, 2014 Revenues: Franchise taxes Investment Earnings Total Revenues Expenditures: Current Other services and charges Excess of revenues over (under) expenditures Other Financing Uses: Transfers out: General Fund Capital Project Fund Net Other Financing Uses: Net increase in fund balance Fund Balance - January 1 Fund Balance - December 31 Budgeted Amounts Original Final $ 1,604,000 $ 1,604,000 Schedule 30 1,563,352 (41,648) 95,000 Variance with 101,137 Final Budget Actual Over Amounts (Under) (47,785) $ 1,560,935 $ (43,065) 2,417 1,417 1,563,352 (41,648) 95,000 95,000 101,137 6,137 1,510,500 1,510,000 1,462,215 (47,785) (600,000) - - 910,500 584,000 536,215 (47,785) $ 1,575,824 $ 1,249,324 $ 1,201,539 $ (47,785) - 94- CITY OF RICHFIELD, MINNESOTA SPECIAL REVENUE FUND - SPECIAL FACILITIES SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 2014 Revenues: Miscellaneous: Other Total Revenues Expenditures: Current Personnel services Other services and charges Total Expenditures Excess of revenues over (under) expenditures Other Financing Sources: Transfers in: General Fund Net Other Financing Sources: Net increase (decrease) in fund balance Schedule 31 Variance with Final Budget Budgeted Amounts Actual Over Original Final Amounts (Under) $ 34,600 $ 34,600 $ 28,000 $ (6,600) 34,600 34,600 28,000 (6,600) 9,300 9,300 9,389 89 19,870 19,870 22,596 2,726 29,170 29,170 31,985 2,815 5,430 5,430 (3,985) (9,415) 20,000 20,000 20,000 gn nnn gn nnn gn nnn 25,430 25,430 16,015 (9,415) Fund Balance - January 1 - - - - Cumulative effect of change in accounting principle (33,727) (33,727) (33,727) - Fund Balance - January 1 - Restated (33,727) (33,727) (33,727) - Fund Balance - December 31 $ (8,297) $ (8,297) $ (17,712) $ (9,415) - 95- 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. ASSETS Current assets: Cash and cash equivalents Due from other funds Prepaid items Total current assets Noncurrent assets: Advances to other funds Capital assets: Construction in progress Buildings and equipment Less accumulated depreciation Total noncurrent assets Total assets LIABILITIES Current Liabilities: Accounts payable Accrued salaries and benefits Due to other governments Compensated absences Total current liabilities CITY OF RICHFIELD, MINNESOTA INTERNAL SERVICE FUNDS COMBINING STATEMENT OF NET POSITION December 31, 2014 Central Garage & Information Self Equipment Technology Insurance Fund Fund Fund Statement 32 Building Compensated Services Absences Fund Fund Total $ 1,032,815 $ 375,030 $ 4,338,726 $ 841,373 $ 1,812,443 $ 8,400,387 - - 58,625 - - 58,625 - 1,250 - - - 1,250 1,032,815 376,280 4,397,351 841,373 1,812,443 8,460,262 956,548 - - 956,548 181,681 - - 181,681 7,912,551 567,913 342,892 8,823,356 (5,099,804) (344,055) - (136,705) (5,580,564) 2,994,428 223,858 956,548 206,187 - 4,381,021 4,027,243 600,138 5,353,899 1,047,560 1,812,443 12,841,283 20,687 105,994 19,443 19,890 - 166,014 12,497 18,543 - 12,519 43,559 10,447 99 20,466 - - 31,012 3,526 15,779 - 12,654 462,706 494,665 47,157 140,415 39,909 45,063 462,706 735,250 Noncurrent liabilities: Compensated absences 10,287 46,027 - 36,912 1,349,737 1,442,963 Net OPEB obligation 21,705 12,589 - 15,474 - 49,768 Claims and judgments - - 925,687 - - 925,687 Total noncurrent liabilities 31,992 58,616 925,687 52,386 1,349,737 2,418,418 Total liabilities 79,149 199,031 965,596 97,449 1,812,443 3,153,668 NET POSITON Net investment in capital assets 2,994,428 223,858 - 206,187 - 3,424,473 Unrestricted 953,666 177,249 4,388,303 743,924 - 6,263,142 Total net position $ 3,948,094 $ 401,107 $ 4,388,303 $ 950,111 $ - $ 9,687,615 - 97- CITY OF RICHFIELD, MINNESOTA INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION For the Year Ended December 31, 2014 OPERATING REVENUES Charges for Service Total operating revenues OPERATING EXPENSES Personnel services Other service and charges Depreciation Total operating expenses Operating loss NONOPERATING REVENUES Interest and investment revenue Miscellaneous revenue Gain (loss) on disposal of capital assets Total nonoperating revenue Income (loss) before transfers Transfers in Changes in net position Total net position - beginning Total net position - ending Central Garage & Information Self Equipment Technology Insurance Fund Fund Fund Statement 33 Building Compensated Services Absences Fund Fund Total $ 1,047,390 $ 882,039 $ 738,383 $ 743,999 $ - $ 3,411,811 1,047,390 882,039 738,383 743,999 - 3,411,811 87,067 - - - - 87,067 223,658 408,120 350,005 299,107 4,243 1,285,133 872,976 607,251 416,452 442,838 - 2,339,517 585,361 35,849 - 24,518 - 645,728 11681,995 150515220 766,457 766,463 4,243 452705378 (634,605) (169,181) (28,074) (22,464) (4,243) (858,567) 1,896 778 31,397 2,016 4,243 40,330 36,214 - 117,057 282 - 153,553 87,067 - - - - 87,067 125,177 778 148,454 2,298 4,243 280,950 (509,428) (168,403) 120,380 (20,166) - (577,617) 635,000 125,000 - - - 760,000 125,572 (43,403) 120,380 (20,166) - 182,383 3,822,522 444,510 4,267,923 970,277 - 9,505,232 $ 3,948,094 $ 401,107 $ 4,388,303 $ 950,111 $ - $ 9,687,615 - 98- CITY OF RICHFIELD, MINNESOTA Statement 34 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS For the Year Ended December 31, 2014 Central Garage & Information Self Building Compensated Equipment Technology Insurance Services Absences Fund Fund Fund Fund Fund Totals Cash flows from operating activities: 36,214 117,057 282 153,553 Depreciation Receipts from interfund services provided $ 1,047,390 $ 882,039 $ 738,383 $ 743,999 $ - $ 3,411,811 Payment to employees (238,197) (399,108) (350,005) (297,502) 71,679 (1,213,133) Payment to suppliers (889,529) (576,584) (567,053) (452,761) - (2,485,927) Miscellaneous revenue 36,214 Increase (decrease) in compensated absences 117,057 282 - 153,553 Net cash flows from operating activities (44,122) (93,653) (61,618) (5,982) 71,679 (133,696) Cash flows from noncapital financing activities: 2,251 1,348 - 1,543 5,142 Increase (decrease) in claims and judgements Transfer from Special Revenue Funds 60,000 (143,961) - (143,961) - 60,000 Transfer from Capital Project Funds 575,000 125,000 - Net cash flows from operating activities $ (44,122) $ 700,000 Interfund borrowing - 71,679 $ (133,696) 57,464 57,464 Net cash flows from noncapital financing activities: 635,000 125,000 57,464 817,464 Cash flows from capital and related financing activities: Proceeds from sale of property 42,067 42,067 Acquisition of capital assets (729,433) (36,284) (765,717) Net cash flows from capital and related financing activities (687,366) (36,284) - - (723,650) Cash flows from investing activities: Investment income 1,896 778 31,397 2,016 4,243 40,330 Net increase (decrease) in cash and cash equivalents (94,592) (4,159) 27,243 (3,966) 75,922 448 Cash and cash equivalents - January 1 1,127,407 379,189 4,311,483 845,339 1,736,521 8,399,939 Cash and cash equivalents - December 31 $ 1,032,815 $ 375,030 $ 4,338,726 $ 841,373 $ 1,812,443 $ 8,400,387 Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) $ (634,605) $ (169,181) $ (28,074) $ (22,464) $ (4,243) $ (858,567) Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Miscellaneous revenue 36,214 117,057 282 153,553 Depreciation 585,361 35,849 - 24,518 645,728 Changes in assets and liabilities: Increase (decrease) in payables (29,183) 29,220 (27,106) (11,466) (38,535) Increase (decrease) in salaries and benefits 3,257 1,913 1,380 - 6,550 Increase (decrease) in compensated absences (17,796) 7,099 - 225 75,922 65,450 Increase (decrease) in due to other governments 10,379 99 20,466 - 30,944 Increase (decrease) in net OPEB obligations 2,251 1,348 - 1,543 5,142 Increase (decrease) in claims and judgements - (143,961) - (143,961) Total adjustments 590,483 75,528 (33,544) 16,482 75,922 724,871 Net cash flows from operating activities $ (44,122) $ (93,653) $ (61,618) $ (5,982) $ 71,679 $ (133,696) EWA 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. 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. Liabilities Accounts payable $ - $ - $ - $ 17,204 $ 17,204 Due to other governments 1,736 - 1,484 147,937 151,157 Deposits - 425,062 - - 425,062 Total Liabilities $ 1,736 $ 425,062 $ 1,484 $ 165,141 $ 593,423 - 101 - CITY OF RICHFIELD Statement 35 COMBINING STATEMENT OF ASSETS AND LIABILITIES FIDUCIARY FUNDS December 31, 2014 Agency Funds Building Snowmobile 1-494 Total Permit Escrow Boat Corridor Fiduciary Surcharges Fund Licenses Commission Funds Assets Cash and investments $ 1,736 $ 425,062 $ 1,484 85,604 $ 513,886 Due from other governments - - - 79,537 79,537 $ 1,736 $ 425,062 $ 1,484 $ 165,141 $ 593,423 Liabilities Accounts payable $ - $ - $ - $ 17,204 $ 17,204 Due to other governments 1,736 - 1,484 147,937 151,157 Deposits - 425,062 - - 425,062 Total Liabilities $ 1,736 $ 425,062 $ 1,484 $ 165,141 $ 593,423 - 101 - - 102- CITY OF RICHFIELD, MINNESOTA FIDUCIARY FUNDS COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES For the Year Ended December 31, 2014 Balance Balance January 1, December 31, 2014 Additions Deductions 2014 BUILDING PERMIT SURCHARGES ASSETS Cash and investments $ 2,008 $ 26,547 $ 26,819 $ 1,736 LIABILITIES Due to other governments $ 2,008 $ 53,056 $ 53,328 $ 1,736 ESCROW FUND ASSETS Cash and investments $ 421,286 $ 305,855 $ 302,079 $ 425,062 LIABILITIES Deposits $ 421,286 $ 303,861 $ 300,085 $ 425,062 SNOWMOBILE - BOAT LICENSES ASSETS Cash and investments $ 1,464 $ 59,866 $ 59,846 $ 1,484 LIABILITIES Due to other governments $ 1,464 $ 59,866 $ 59,846 $ 1,484 MOTOR VEHICLE LICENSES ASSETS Cash and investments $ - $ 13,876,621 $ 13,876,621 $ - LIABILITIES Due to other governments $ - $ 13,876,621 $ 13,876,621 $ - 1-494 CORRIDOR COMMISSION ASSETS Cash and investments $ 119,190 $ 345,993 $ 379,579 $ 85,604 Due from other governments 59,078 79,537 59,078 79,537 Receivables, net 479 - 479 - $ 178,747 $ 425,530 $ 439,136 $ 1653141 LIABILITIES Accounts payable $ 43,976 2503543 $ 2773315 $ 17,204 Due to other governments 134,771 13,166 - 147,937 $ 178,747 $ 263,709 $ 277,315 $ 165,141 - 102- Statement 36 - 103- Balance Balance January 1, December 31, 2014 Additions Deductions 2014 TOTAL - ALL AGENCY FUNDS ASSETS Cash and investments $ 543,948 $ 14,614,882 $ 14,644,944 $ 513,886 Due from other governments 59,078 79,537 59,078 79,537 Receivables, net 479 - 479 - TOTAL ASSETS $ 603,505 $ 14,694,419 $ 14,704,501 $ 593,423 LIABILITIES Accounts payable 43,976 250,543 277,315 17,204 Due to other governments 138,243 14,002,709 13,989,795 151,157 Deposits 421,286 303,861 300,085 425,062 TOTAL LIABILITIES $ 603,505 $ 14,557,113 $ 14,567,195 $ 593,423 - 103- THIS PAGE WAS LEFT BLANK INTENTIONALLY - 104- SUPPLEMENTARY FINANCIAL INFORMATION - 105- HOUSING AND REDEVELOPMENT AUTHORITY OF RICHFIELD, MINNESOTA COMBINED BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2014 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 property taxes Net position of component unit activities Special Capital General Revenue Projects ASSETS & DEFERRED OUTFLOWS OF RESOURCES Cash and investments $ 2,276,436 $ 1,591,443 $ 4,259,083 Accrued interest receivable - 2,293 - Due from other governments 2,156 100,556 693 Accounts receivable - 3,178 - Taxes receivable 6,420 - - Assets held for resale - 157,744 2,734,733 Restricted cash - - - Long term second mortgage receivable 356,972 2,224,796 55,470 Allowance for doubtful accounts (356,972) (2,224,796) (55,470) Total Assets $2,285,012 1,855,214 6,994,509 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable $ 22,604 $ 101,928 $ 18,546 Due to other government - 1,486 - Due to primary government 780,000 - - Total Liabilities 802,604 103,414 18,546 Deferred Inflows of Resources: Unavailable revenue - property taxes $ 6,420 $ - $ - Unavailable revenue - tax increment - - - Total Deferred Inflows of Resources 6,420 - - Fund Balances: Restricted - 157,744 4,123,035 Committed - 1,449,902 - Assigned - 144,154 2,852,928 Unassigned 1,475,988 - - Total Fund Balances 1,475,988 1,751,800 6,975,963 Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 2,285,012 $ 1,855,214 $ 6,994,509 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 property taxes Net position of component unit activities Totals 2014 $ 8,126,962 2,293 103,405 3,178 6,420 2,892,477 2,637,238 (2,637,238) 11,134,735 $ 143,078 1,486 780,000 924,564 $ 6,420 6,420 4,280,779 1,449,902 2,997,082 1,475,988 10,203,751 $ 11,134,735 $ 10,203,751 (438,196) 6,420 $ 9,771,975 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 - 107- Statement 37 HOUSING AND REDEVELOPMENT AUTHORITY OF RICHFIELD, MINNESOTA COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTALFUNDS For the Year December 31, 2014 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 - 108- Special Capital General Revenue Projects Revenues: Taxes $ 471,206 $ - $ 4,129,032 Intergovernmental revenue 47,370 1,397,289 - Investment income 4,728 17,800 16,244 Miscellaneous revenues 27,922 90,503 784,614 Total Revenues 551,226 1,505,592 4,929,890 Expenditures - Current: Personnel services 245,814 155,461 327,490 Other services and charges 113,511 1,409,857 4,376,450 Capital outlay - - 279,327 Total Expenditures 359,325 1,565,318 4,983,267 Excess (Deficiency) of Revenues over Expenditures 191,901 (59,726) (53,377) Other Financing Sources (Uses): Transfers in: General Fund - - 7,285 Special Revenue Funds 41,655 24,100 - Capital Project Funds - - 2,698,366 Transfers out: General Fund - (41,655) - Special Revenue Funds (24,100) - - Capital Project Funds (7,285) - (2,698,366) Net Other Financing Sources (Uses) 10,270 (17,555) 7,285 Net Changes in Fund Balances 202,171 (77,281) (46,092) Fund Balances - January 1 1,273,817 1,829,081 7,022,055 Prior Period Adjustment - - - Fund Balances - January 1 - Restated 1,273,817 1,829,081 7,022,055 Fund Balances - December 31 $ 1,475,988 $ 1,751,800 $ 6,975,963 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 - 108- Statement 38 Totals 2014 2013 $ 4,600,238 $ 4,564,246 1,444,659 2,098,616 38,772 (5,567) 903,039 554,094 6,986,708 7,211,389 728,765 739,502 5,899,818 4,981,015 279,327 1,361,062 6,907,910 7,081,579 78,798 129,810 7,285 41,897 65,755 54,416 2,698,366 438,088 (41,655) - (24,100) (41,897) (2,705,651) (492,504) 78,798 129,810 7,201,647 2,793,496 9,995,143 $ 10,124,953 (11,214) 5,860 73,444 City of Richfield Statement 39 Housing and Redevelopment Authority - Housing Choice Vouchers Financial Data Schedule Balance Sheet December 31, 2014 Assets Current assets 2014 121 Accounts receivable - PHA projects 4,782 128 Fraud recovery 7,084 128.1 Allowance for doubtful accounts - fraud (5,926) 190 Total assets $ 5,940 Liabilities and Fund Balance Current liabilities 311 Bank overdraft $ 5,292 312 Accounts payable <= 90 days 162 333 Accounts payable - other government 1,486 310 Total current liabilities 6,940 509.2 Fund balance reserved 58,974 512.2 Unreserved, undesignated fund balance (59,974) 513 Total fund balance (1,000) 600 Total liabilities and fund balance $ 5,940 Note: Financial Data Schedules - U.S. Department of Housing 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. ®i City of Richfield Housing and Redevelopment Authority - Housing Choice Vouchers Financial Data Schedule Income Statement For the year ended December 31, 2014 Revenue 2014 70600 HUD PHA operating grants $ 1,301,515 71500 Other revenue 705,777 70000 Total revenue 2,007,292 Operating expenses 17,386 Administrative expenses $ (1,000) 91100 Administrative salaries 117,570 91500 Employee benefit contributions - administrative 39,190 91600 Office expenses 26,293 91900 Other 120 91000 Total operating administrative expenses 183,173 General expenses 2,338 96200 Other general expenses 17,629 96900 Total operating expenses 200,802 Excess of operating revenue over operating expenses 1,806,490 Otherexpenses 97300 Housing assistance payments 1,188,336 97350 HAP Portability -in 660,640 90000 Total other expenses 1,848,976 Other financing sources 10030 Operating Transfers from Primary Government 24,100 10100 Total Other financing sources 24,100 Net increase (decrease) in net position (18,386) Net position - beginning 17,386 Net position - ending $ (1,000) Memo account information 11170 Administrative fee equity 58,974 11180 Housing assstance payments equity (59,974) Total net position $ Liao—OA 11190 Unit months available 2,772 11210 Number of unit months leased 2,338 Note: Financial Data Schedules - U.S. Department of Housing 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. Statement 40 THIS PAGE WAS LEFT BLANK INTENTIONALLY - 112- 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. - 113- m rn N o n GO O rn O N OO O CO CO CO G C O O CL 40 fD N f` O Of fD Gl R y N Gl R d Gl R G d 12O G R uu R Gf R v) O O 7 CO 1� OJ N N n m f- u1 40oc o Gn ICl N Go C)f a O I GO m a I w > O OJ aO M f� N N GO M GO O N GD N O C C)f M M f` M 1A p 1A 1A d 1A 1A I N It1 f� V V 1� r GO V7 N_ N O O M LL'i O CO f` 7 O CO LL'i M f` M N O ' CO r N r m r r O f7 R f� 1� V of V N o GO N o N N C ui U Z J v G G G Z G C R G 7 G G Z w C R n G £ G G Z R G C7 � t9 t9 t9 t9 t9 N CP V N V 1� M V O ttl I M cl r GOD N LL09 M U m I OJ w 0i r GO N O 7 aO Of r 7 u0i f; N 7 7 r M N N OO N OO Cll 1� f� 7 H LL9 7 N r O N O O M G)f N cl N M N O O O N e9 e9 e9 e9 e9 O GD GD O n O N GD GO I GO r� N N ao v) r� v) O In v O o m a N I M I O M T m r o N V M N O V N r M � M N � r N f00 O O O O r 7 O O e0 N V O 1� N M O GO O GA ICl C)f GO O O O N aO t0+1 M o ti V n N � W o O O O 1� M O O N GO O O N O � M ti M N ti 40 I 7 i9 OJ i9 N i9 N i9 OJ i9 V v I n ti to V O m N O a s N V N N m V o n o M N N N r O N N N t9 t9 t9 t9 t9 V) fD N C)f N O f` N 1D I fD ti M V N V) O M C)f V M I O V) -e w G7 I N 7 1A v) 1A 1A N 1A N 1A O r H r r 7 Gp V7 � O 1� V a0 7 N M O O O O 40 GO f` 0 fp N M I{9 N 1D O O O � N' r O GD GD GD It] I e9 e9 e9 e9 e9 - 114- C O_ � O N w G C O O CL C C OC. 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The Richfield Advisory Board of Health will be involved in this effort on an annual basis and believes it is important to place a priority on recognizing Richfield restaurants that are doing an excellent job of maintaining a food safety establishment. It is important for these successful establishments to be recognized, and encourages other establishments to strive for the same outcome. The awards will be presented to the winners at the City Council meeting on May 26, 2015 by Erin Rykken, Chair of the Richfield Advisory Board of Health. submi SWV-�n"T— Dev City Manager SLD:bao Attachment Email: Department Directors City Manager Richfield Food Safety Awards -- 2014 • Annual awards to acknowledge excellence in food safety and service — Focus on the good work that restaurants do rather than the bad. • Richfield Advisory Board of Health recommended starting a program in Richfield, similar to the existing award program in Bloomington — Began in 2006. • The health inspector nominates 3 to 4 candidates in two risk categories based on: • Food Collaborative Interviews • Inspection results • Those categories are: full service (or large) restaurant, and fast food/pizza carry out/cafeteria service. • A team of interviewers visited each site together to conduct the interviews. These folks are members of the Richfield/Bloomington Food Collaborative and meet regularly with inspection staff and one another to discuss common interest areas. Nominees were judged on how they manage risk factors on a daily basis, how the establishment encourages workers to be continually motivated about serving safe food, whether they can list five critical factors that affect food safety, have procedures in place when they receive customer complaints about customers feeling ill after having eaten there, what is the establishment's policy when an employee shows up for work with obvious symptoms of illness, a description of food safety training programs and policies, management's overall commitment to food safety and rating of the physical appearance of the establishment at the time of the interview The results are provided to the Richfield Advisory Board of Health and they present the awards to the winners at a City Council meeting. Nominees will receive certificates via the mail. Photos of the presentation and a short article will be given to the Richfield Sun Current for publicity and positive exposure for the establishments. 2014 Winners are: Full Service Restaurants: Cadao Express (Winner) — 6637 Penn Avenue South — Owner: Michal Mai Davanni's, Inc. (Nominee) — 6345 Penn Avenue South - Manager — Melissa Morrissette Sandy's Tavern (Nominee) —6612 Penn Avenue South — Owner — Debra Erickson Fast Food/Pizza Carry Out/Cafeteria: Taco Bell (Winner) — 7740 2nd Avenue South, - Manager: Naomi Ransom DQ Grill and Chill (Nominee) — 2800 W. 66th Street — Director: Debra Hampton Arby's (Nominee) — 7745 5th Avenue South — Manager: Sean Boyer REPORT PREPARED BY: AGENDA SECTION: CONSENT CALENDAR AGENDA ITEM # 9.A. STAFF REPORT NO. 79 CITY COUNCIL MEETING 5/26/2015 Jesse Swenson, Asst. HR Manager DEPARTMENT DIRECTOR REVIEW: Steven L. Devich, Administrative Services Director 5/7/2015 OTHER DEPARTMENT REVIEW: N/A CITY MANAGER REVIEW: Steven L. Devich 5/6/2015 ITEM FOR COUNCIL CONSIDERATION: Consideration of the approval of a resolution authorizing the City to affirm the monetary limits on statutory municipality tort liability. EXECUTIVE SUMMARY: The City purchases its insurance from the League of Minnesota Cities Insurance Trust (LMCIT). Each year, the City must either affirm or waive its statutory limits of liability by July 1st. After reviewing cost considerations measured against potential risk, the City has, historically, affirmed the liability limits which are $500,000 for an individual claimant and $1,500,000 per occurrence. Staff is recommending the same course of action for the current period. RECOMMENDED ACTION: By Motion: Adopt a resolution authorizing the City Council to affirm the monetary limits on municipal tort liability established by Minnesota Statutes 466.04. BASIS OF RECOMMENDATION: A. HISTORICAL CONTEXT A requirement of insurance coverage through the LMCIT is an annual affirmation or waiver of statutory limits of liability. The current statutory limits of liability for Minnesota cities are $500,000 for an individual claimant and $1,500,000 per occurrence. Cities can waive these limits to allow an individual claimant to recover more than $500,000, up to the $1,500,000 per occurrence limit, if excess liability insurance is purchased. However, the cost of the excess liability insurance continues to be very expensive. An additional $1,000,000 of coverage would cost the City approximately $65,000 annually. Slightly more than half of the cities in Minnesota do not waive its limits of liability. B. POLICIES (resolutions, ordinances, regulations, statutes, etc): • The State Statute establishes liability limits for cities and the current level is $1,500,000, which appears to be a reasonable limit. • Historically, the majority of municipalities in Minnesota do not waive the monetary limits on municipality tort liability as was established by Statutes 466.04. • The Council could waive its statutory limits in future years if a decision was made to do so. • The Council may also wish to further consider purchasing excess liability in the future. If this is the case it may be purchased at any point in the future. C. CRITICAL TIMING ISSUES: • The City's insurance policy with the League of Minnesota Cities Insurance Trust will renew on July 1, 2015. This action must be completed on, or before that time. D. FINANCIAL IMPACT: • The City has historically not purchased excess liability coverage because of the cost of such coverage. The annual premium for $1 million of coverage would be between $65,000 and $75,000 if the City decided to waive its liability limits. E. LEGAL CONSIDERATION: • The tort liability limits established by Minnesota Statutes have protected cities, historically, and no Minnesota court has ever established a monetary award in excess of the statutory limits against a municipality. • Each city must annually decide whether the city would voluntarily waive the statute for both the single claims and each occurrence limit. ALTERNATIVE RECOMMENDATION(S): • If the Council determines that any single claimant should receive more than the $500,000 limit, the Council could elect to waive the statutory monetary limits. • If the Council determines that the $1,500,000 per occurrence limit is not adequate, the City could purchase excess liability coverage. PRINCIPAL PARTIES EXPECTED AT MEETING: None. ATTACHMENTS: Description D Resolution Type Resolution Letter RESOLUTION NO. RESOLUTION AFFIRMING MUNICIPAL TORT LIABILITY LIMITS ESTABLISHED BY MINNESOTA STATUTES 466.04 WHEREAS, Minnesota Statute 466.04 provides for Municipal tort liability limits for Minnesota cities; and WHEREAS, the League of Minnesota Cities Insurance Trust has asked that each city review the tort liability limits and determine if the respective city would choose to waive its limits; and WHEREAS, such decision to affirm or waive the tort liability limits must be filed with the League of Minnesota Cities Insurance Trust at the insurance renewal date. NOW, THEREFORE, BE IT RESOLVED that the City Manager is directed to report to the League of Minnesota Cities Insurance Trust that the Richfield City Council does not waive the monetary limits on the municipal tort liability established by Minnesota statutes 466.04. Adopted by the City Council of the City of Richfield, Minnesota this 26th day of May, 2015. Debbie Goettel, Mayor ATTEST: Elizabeth VanHoose, City Clerk REPORT PREPARED BY: AGENDA SECTION: CONSENT CALENDAR AGENDA ITEM # 9.13. STAFF REPORT NO. 80 CITY COUNCIL MEETING 5/26/2015 Betsy Osborn, Support Services Manager DEPARTMENT DIRECTOR REVIEW: Jay Henthorne, Public Safety Director 5/15/2015 OTHER DEPARTMENT REVIEW: N/A CITY MANAGER REVIEW: Steven L. Devich 5/20/2015 ITEM FOR COUNCIL CONSIDERATION: Consideration of the approval of the setting of a public hearing to be held on June 23, 2015, for the consideration of the issuance of new On Sale Intoxicating Liquor and Sunday licenses for GM Richfield, LLC, d/b/a Four Points by Sheraton Minneapolis Airport located at 7745 Lyndale Avenue South. EXECUTIVE SUMMARY: On May 4, 2015, the City received the application materials for new On Sale Intoxicating and Sunday Liquor licenses for GM Richfield, LLC, d/b/a Four Points by Sheraton Minneapolis Airport located at 7745 Lyndale Avenue South. GM Richfield, LLC, recently acquired Four Points from Financial Guidance, Inc.. and is applying for the On Sale Intoxicating Liquor and Sunday licenses. The previous owner, Financial Guidance, Inc., had On Sale Intoxicating and Sunday licenses for Four Points. All required information and documents have been provided. All licensing fees have been received. RECOMMENDED ACTION: By Motion: Approve the setting of a public hearing to be held on June 23, 2015, for the consideration of new On Sale Intoxicating Liquor and Sunday licenses for GM Richfield, LLC, d/b/a Four Points by Sheraton Minneapolis Airport located at 7745 Lyndale Avenue South. BASIS OF RECOMMENDATION: A. HISTORICAL CONTEXT This information is contained in the Executive Summary. B. POLICIES (resolutions, ordinances, regulations, statutes, etc): • City ordinance requires the City Council conduct a public hearing to consider all On Sale Intoxicating Liquor and Sunday license applications and a date be set for the public hearing prior to the hearing. • The hearing must be scheduled and held before a new license may be considered. • The new process has been initiated. C. CRITICAL TIMING ISSUES: Holding the public hearing on June 23, 2015, will provide ample time to complete the licensing process. D. FINANCIAL IMPACT: Licensing fees have been received. E. LEGAL CONSIDERATION: The required proof of liability insurance has been submitted showing Liberty Mutual affording the coverage. ALTERNATIVE RECOMMENDATION(S): • Reject the application for new On Sale Intoxicating Liquor and Sunday licenses for Four Points by Sheraton Minneapolis Airport. • Schedule the hearing for another date. However, this will delay the licensing process. PRINCIPAL PARTIES EXPECTED AT MEETING: There are no parties expected at this meeting. REPORT PREPARED BY: AGENDA SECTION: PUBLIC HEARINGS AGENDA ITEM # 11. STAFF REPORT NO. 81 CITY COUNCIL MEETING 5/26/2015 Betsy Osborn, Support Services Manager DEPARTMENT DIRECTOR REVIEW: Jay Henthorne, Public Safety Director 5/15/2015 OTHER DEPARTMENT REVIEW: N/A CITY MANAGER REVIEW: Steven L. Devich 5/20/2015 ITEM FOR COUNCIL CONSIDERATION: Public hearing for the consideration of the issuance of new On Sale Intoxicating Liquor and Sunday licenses for Thompson's Fireside Pizza, Inc., d/b/a Fireside Pizza, located at 6736 Penn Avenue South. EXECUTIVE SUMMARY: On April 2, 2015, the City received the application materials for new On Sale Intoxicating and Sunday Liquor licenses for Thompson's Fireside Pizza, Inc., d/b/a Fireside Pizza located at 6736 Penn Avenue South. Thompson's Fireside Pizza, Inc., is owned by Rich Thompson and has been an established business in Richfield since 1996 and currently holds On -Sale Wine and 3.2 Percent Malt Liquor licenses. Due to a remodeling project of the building structure, owner Rich Thompson is requesting a change from his current license status to On Sale Intoxicating Liquor and Sunday licenses. A Public Safety background investigation was completed November 6, 2014, for the renewal of their currently held Wine and 3.2 Percent Malt Liquor licenses. The Public Safety Director reviewed the renewal background investigation report and determined an additional Public Safety background was not needed for the applications of new On Sale Intoxicating Liquor and Sunday licenses at this time. All required information and documents have been received. A pro -rated fee for the duration of six months has been received. RECOMMENDED ACTION: By Motion: Approve the issuance of new On Sale Intoxicating Liquor and Sunday licenses for Thompson's Fireside Pizza, Inc., d/b/a Fireside Pizza, located at 6736 Penn Avenue South. BASIS OF RECOMMENDATION: A. HISTORICAL CONTEXT The on premise manager is Kim Zeigler. A criminal history background check was conducted and shows he is clear of any criminal records/convictions. The applicant has satisfied the following requirements for issuance of licenses: • The required license fees have been paid. • Real estate taxes are current. • Proof of commercial and liquor liability insurance have been received showing West Bend Mutual as affording coverage. There are no distance requirements to notify neighbors of the issuance of On Sale Intoxicating Liquor and Sunday licenses. The Notice of Public Hearing was published in the Richfield Sun Current on May 14, 2015. B. POLICIES (resolutions, ordinances, regulations, statutes, etc): Richfield City Code Section 1202 requires owners of On Sale Intoxicating and Sunday Liquor license establishments to comply with all the provisions of both City Code and State Statutes. C. CRITICAL TIMING ISSUES: Holding the public hearing on May 26, 2015, will provide ample time to complete the licensing process. D. FINANCIAL IMPACT: Licensing fees have been received. E. LEGAL CONSIDERATION: The requirements of Resolution No. 9511 must be met, which outlines the discipline they can expect if any on-going problems occur. A copy of this resolution has been given to the owners of the establishment. ALTERNATIVE RECOMMENDATION(S): • The Council could decide to deny the requested licenses, which would mean the current applicants would not be able to serve On -Sale Intoxicating Liquor, however, Public Safety has found no basis to deny the license. • Schedule the hearing for another date. However, this will delay the licensing process. PRINCIPAL PARTIES EXPECTED AT MEETING: Rich Thompson - Owner, Kim Zeigler - On Premise Manager REPORT PREPARED BY: AGENDA SECTION: RESOLUTIONS AGENDA ITEM # 12. STAFF REPORT NO. 82 CITY COUNCIL MEETING 5/26/2015 Karen Barton, Community Development Assistant Director DEPARTMENT DIRECTOR REVIEW: John Stark, Community Development Director 5/19/2015 OTHER DEPARTMENT REVIEW: None CITY MANAGER REVIEW: Steven L. Devich 5/20/2015 ITEM FOR COUNCIL CONSIDERATION: Consideration of a resolution regarding a request for a six-month extension of land use approvals granted for 6330, 6400 and 6440 Lyndale Avenue (Lyndale Gardens). EXECUTIVE SUMMARY: On March 26, 2013, the City Council approved the development plans for the Lyndale Gardens project located at 6400 Lyndale Avenue. Approved plans called for a development that would include a 151 -unit apartment building; 9,000 square feet of retail space; 2,600 square feet of restaurant space; and outdoor activity areas that would coordinate with the construction of the Lakewinds Food Co-op. City approvals expire after one year unless construction has begun and substantial work has been completed. On December 10, 2013 the City Council approved an amendment to the proposed project that would allow up to 7,000 square feet of restaurant space in the development. This approval extended the permit expiration deadline to December 10, 2014. Subsequently, on October 14, 2014 the Cornerstone Group (Developer) requested and was granted a six- month extension of the land -use approvals, with an additional six-month extension contingent upon substantial completion of the construction of the quasi -public improvements and securing full project funding by June 10, 2015. The Developer is unable to meet the requirements which would allow staff to authorize the additional six-month extension, and is therefore requesting the City Council approve a 6 -month extension of the the land -use approvals at this time. Staff is recommending that if such an extension is approved, that "substantial completion" shall be defined as "receiving issuance of one or more building permits... valued at a total of $10,000,000 or more" on or before the expiration date of December 10, 2015. A representative from the Cornerstone Group will be present at the meeting to request the land use approvals extension. RECOMMENDED ACTION: Approve or deny a six-month extension of Final Development Plans and the associated Conditional Use Permit for the Lyndale Gardens Planned Unit Development at 6330, 6400 and 6440 Lyndale Avenue. BASIS OF RECOMMENDATION: A. HISTORICAL CONTEXT • The Developer received approval in May of 2014 from the Richfield City Council and the Metropolitan Council to begin construction of the grant -related quasi -public improvements. • Difficulties in securing financing for the project as proposed has led to the delay in beginning project construction. • The Developer will also be requesting an amendment to the Metropolitan Council Livable Communities Demonstration Account Transportation Oriented Development grant associated with the Lyndale Gardens project. B. POLICIES (resolutions, ordinances, regulations, statutes, etc): The term of City approvals is one year. If a project for which approvals have been granted is not substantially underway within one year, the applicant must request an extension from the City Council. The City Council my grant an extension of up to one year; no additional extensions may be granted. C. CRITICAL TIMING ISSUES: • The Developer was granted an extension to their land -use approvals by the City Council on October 14, 2014. The land -use approvals are scheduled to expire on June 10, 2015 if substantial completion of the quasi -public improvements and project financing have not occurred. • 60 -DAY RULE: The 60 -day clock 'started' when a complete application was received on May 19, 2015. A decision is required by July 19, 2015 OR the Council must notify the applicant that it is extending the deadline (up to a maxim number of 60 additional days or 120 days total) for issuing a decision. • If the requested six-month land use approvals extension is granted, the land use approvals would expire on December 10, 2015. - If substantial construction work on the proposed buildings is underway by December 10, 2015, the approvals will remain valid. • No additional extensions of the land use approvals may be granted after December 10, 2015. D. FINANCIAL IMPACT: - The required processing fee has been paid. E. LEGAL CONSIDERATION: None ALTERNATIVE RECOMMENDATION(S): • Deny an extension of the approved land use approvals. The applicant will have to begin the land use approval process anew. PRINCIPAL PARTIES EXPECTED AT MEETING: Beth Pfeiffer, The Cornerstone Group Colleen Carey, Cornerstone Group (developer) ATTACHMENTS: Description ❑ Resolution Type Resolution Letter RESOLUTION NO. RESOLUTION GRANTING EXTENSION OF LAND USE APPROVALS AT 6330, 6400 AND 6440 LYNDALE AVENUE WHEREAS, by Resolution No. 10780, adopted on March 26, 2013, the City Council approved a final development plan and conditional use permit for a planned unit development at 6330, 6400 and 6440 Lyndale Avenue; and WHEREAS, by Resolution No. 10871, adopted on December 10, 2013, the City Council approved an amendment to the final development plan and conditional use permit for a planned unit development at 6330, 6400 and 6440 Lyndale Avenue; and WHEREAS, by Resolution No. 10986, adopted on October 14, 2014, the City Council approved a six-month extension of the final development plan and conditional use permit for a planned unit development at 6330, 6400 and 6440 Lyndale Avenue; and WHEREAS, Subsections 547.09, Subdivision 9 of the Richfield City Code requires that substantial construction be completed within one year of approval, less the approval expire or the applicant request and is granted an extension; and WHEREAS, THE City staff has received a request from The Cornerstone Group (the "Applicant") for a six-month extension; and WHEREAS, the City Council wishes to provide the additional time requested. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Richfield, as follows: 1. The City Council extends the approvals granted by Resolution Nos. 10780, 10871, and 10986 for six months (December 10, 2015). Adopted by the City Council of the City of Richfield, Minnesota this 26th day of May, 2015. Debbie Goettel, Mayor /_IaI2M9 Elizabeth VanHoose, City Clerk REPORT PREPARED BY: AGENDA SECTION: OTHER BUSINESS AGENDA ITEM # 13. STAFF REPORT NO. 83 CITY COUNCIL MEETING 5/26/2015 Karen Barton, Community Development Assistant Director DEPARTMENT DIRECTOR REVIEW: John Stark, Community Development Director 5/19/2015 OTHER DEPARTMENT REVIEW: None CITY MANAGER REVIEW: Steven L. Devich 5/21/2015 ITEM FOR COUNCIL CONSIDERATION: Consideration of a Metropolitan Council Livable Communities Transportation Oriented Development Grant amendment request relating to the Lyndale Gardens project. EXECUTIVE SUMMARY: This request is contingent upon approval of the previous agenda item: Consideration of a resolution regarding a request for a six-month extension of land use approvals granted for 6330, 6400 and 6440 Lyndale Avenue (Lyndale Gardens). If the land -use approvals extension is not granted, no action will be necessary on this item. The Cornerstone Group (developer) is requesting an amendment to the Metropolitan Council's Livable Communities Development Transportation Oriented Development Program grant relating to the Lyndale Gardens project, 6400 Lyndale Avenue South. Since the grant was awarded to the City, the City would have to make the formal request to the Metropolitan Council. On April 25, 2012 the City of Richfield was awarded a $1,500,000 Livable Communities Demonstration Account (LCDA) Transit Oriented Development (TOD) Program grant from the Metropolitan Council for quasi -public improvements on the Lyndale Gardens property (6400 Lyndale Avenue). Grant -funded activities include: Site acquisition, holding costs, trail connections, bridge connection, amphitheater, water feature, outdoor gas fireplace and plaza. The grant funds are intended to reimburse the developer for the costs to construct the above-mentioned quasi -public improvements and are based on a finished project that will include a co-op grocer, retail, restaurant(s), and 120 units of multi -family housing, of which 20% of the units are to be affordable. The Cornerstone Group is requesting that the City and Metropolitan Council re-evaluate Cornerstone's original proposal to allow for a 100% market -rate multi -family housing project; removing the requirement to include 20% affordable units in the project. The developer will be presenting their request to the City Council at the May 26, 2015 regular City Council meeting. RECOMMENDED ACTION: By Motion: Approve or deny the request for an amendment to the Metropolitan Council Livable Communities Development Transportation Oriented Development Program grant. BASIS OF RECOMMENDATION: A. HISTORICAL CONTEXT • The City of Richfield was awarded the Met Council LCDA TOD grant April 25, 2012. • The Metropolitan Council approved an amendment to the grant agreement on August 13, 2014 to allow for budget reallocation amongst the approved grant activities. • On September 23, 2014 the Metropolitan Council approved a revised phasing plan for construction and a 24 -month extension to complete the grant -funded activities. • The grant is scheduled to expire on April 30, 2017. • $425,014.16 of the grant has been expended to date for acquisition, holding costs, and site design. • The Metropolitan Council has previously provided assurances that they would not require repayment of the grant should the project fail to be fully completed. B. POLICIES (resolutions, ordinances, regulations, statutes, etc): • It is City policy to seek outside funding to facilitate and enhance projects, as practicable. C. CRITICAL TIMING ISSUES: • The developer is refraining from letting the contracts for the quasi -public improvements pending approval of the requested grant amendment. • The grant is scheduled to expire on April 30, 2017. D. FINANCIAL IMPACT: • The grant award is $1,500,000.00 • $425,014.16 of the grant has been expended to date. • The Metropolitan Council has previously provided assurances that they would not require repayment of the grant should the project fail to be fully completed. E. LEGAL CONSIDERATION: None. ALTERNATIVE RECOMMENDATION(S): None. PRINCIPAL PARTIES EXPECTED AT MEETING: Beth Pfeiffer, Cornerstone Group (Developers) Colleen Carey, Cornerstone Group (Developer) ATTACHMENTS: Description Type D Cornerstone Grant Amendment Request Cover Memo Karen Barton From: Beth Pfeifer <bpfeifer@tcgmn.com> Sent: Monday, April 13, 2015 2:56 PM To: Karen Barton Cc: Colleen Carey Subject: Update on MetCouncil Analysis/ Our request Follow Up Flag: Follow up Flag Status: Flagged Categories: Priority Hi Karen, Thank you very much for meeting with us and MetCouncil last week. We reviewed the options that we discussed and wanted to provide the following update/request: We feel strongly that the best course of action for the project is to continue making forward progress with the investor we have on hand. That means a 152 unit all market rate building. In evaluating this we looked at: 1. Providing a percentage of the 152 units at 80% AMI: The project returns would not support this nor would it be supported by the investor. 2. Adding additional units along Lyndale and providing a percentage of those at 80%a AMT: This would require project redesign, potential re -platting, re -looking at the PUD and still would likely not be supported by the Investor. We feel there are too many variables to proposing this solution, including whether or not there is sufficient market demand, which will only delay the project further and may ultimately still not be viable. IN addition, the number of 80% units supported is minimal and would not be supported by the investor. 3. Moving forward with a market rate project and not building the public improvements if the grant is taken back by MetCouncil: The public improvements at this location are one of the strongest attractions to private investors in this submarket and for this site. Not building the public improvements may temper their interest in moving forward with the project. Therefore, our request to the City and MetCouncil is that they (MetCouncil) re-evaluate our original proposal as a 100%a market rate project with a goal of maintaining a high enough score to amend the grant in order to remove the affordability requirement while maintaining the entire grant amount. We believe Lyndale Gardens has the ability to exemplify the ideas of a Livable Community as envisioned with Richfield citizens, policy leaders, and staff in the original visioning sessions that shaped the project. We remain committed to providing private land for public use, opening up access to a hidden asset in the community (Richfield Lake) and providing opportunities for gathering, festivals, arts, programming, and education which all serve to create a healthy community. This is a space for the entire community to gather, not just those who are residents of the site. Thank you for your consideration. Please let me know any additional information you would like from us to make this request. Iwd �` ,wrrlt`r�lwwtl�• E,wwwdi�w Please Note New Phone Number. 612-746-0660 IIIns yiI[I lt!k)11. 2